Annual Report • Feb 20, 2014
Annual Report
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Espoontori, Helsinki area
Citycon Group .......... 2 Property portfolio and business units.......20 Sustainability .................... 36 Operational key figures.........................60 Financial statements...............88
The theme of Citycon's Annual and Sustainability Report this year is 'One Citycon'. We made special effort to build on standardisation and harmonisation of Citycon competences and best practices. The year was characterised by strengthening the Citycon quality brand and hospitality of the centres.
Iso Omena, Helsinki area
We defined our values: Passion, Experience
Liljeholmstorget Galleria, Stockholm
Citycon is a leading owner, manager and developer of urban grocery-anchored shopping centres in the Nordic and Baltic regions, with assets under management totalling approximately EUR 3.3 billion and a market cap of more than EUR 1 billion at year-end. Headquartered in Helsinki and specialising in grocery-anchored retail shopping centres, Citycon is the No. 1 shopping centre owner in Finland and Estonia and among the market leaders in Sweden 3). Citycon has also established footholds in Lithuania and Denmark.
Citycon owns 37 shopping centres and 35 other retail properties 1). Its shopping centres are located in urban environments close to where customers live and work and within close reach of public transport, health care and municipal facilities.
1) In January 2014 Citycon divested one shopping centre and one other retail property 2) Kista Galleria included 3) Source: Leimdörfer research
Gross leasable area, 348,700 sq.m.
1in Estonia st
Gross leasable area, 112,800 sq.m.
Number of shopping centres Lithuania Denmark Gross leasable area, 14,700 sq.m.
1 1
Gross leasable area, 7,900 sq.m.
22
10 3
Citycon focuses on shopping centres with a leading position in their catchment area. Our properties are urban, grocery-anchored and necessity-based. They are located close to where people live and work and are easily accessible.
Citycon actively (re)develops its properties to ensure their vitality and competitiveness. The largest and well-established shopping centres represent the core of the property portfolio and joint venture partners may be selected as co-owners. These joint ventures will help to free up capital for, among other things, the (re)development of properties in the shopping centre portfolio.
Future trends in Citycon's shopping centre development are related to service variety: we see shopping centres as 'people centres', where customers can spend time and money. This means strengthening the hospitality component of the centres. Examples of this include adding more variety in restaurants and cafes, offering public services and cultural experiences, like libraries and theatres, creating versatile areas in which children can play, identifying centres with quiet spaces for working and reading, and equipping places that take account of the needs of the growing number of senior citizens.
2013 was a year of strong performance for Citycon. Turnover grew by 3.9 per cent and net rental income by 4.2 per cent. Net rental income for like-for-like properties i.e., properties owned by Citycon throughout the whole current and previous period and undergoing no (re)development or extension – grew by EUR 5.5 million, or 4.6 per cent. This growth is attributable mostly to the improved net rental income for Citycon's core shopping centres. Despite a challenging economic environment and pressure on retail sales, the economic occupancy rate and average rent remained stable, attributable to increased leasing efforts. Furthermore, the company was able to exceed its administrative cost savings target of up to EUR 5 million. Administrative expenses for 2013 totalled EUR 20.6 million, showing a decrease of EUR 5.9 million from the previous year. These savings were reached via a combination of cost management and costcutting measures, including reduction in consulting and personnel expenses and a stricter tenant recharge policy in relation to operating cost items.
The quality of the property portfolio was further improved in the course of the year as assets were (re)developed, Kista Galleria was acquired, and non-core assets were divested. In addition, 2013 saw special effort directed to strengthening the balance sheet and diversifying funding sources. The EUR 200 million equity issue in March was aimed at permanently reducing the company's leverage. Citycon's equity ratio increased from 37.8 per cent to 45.3 per cent. Citycon also received two investment-grade credit ratings, enabling the company's successful issue of a EUR 500 million Eurobond in June, and further diversifying funding sources.
| EUR million | 2013 | 2012 | Change |
|---|---|---|---|
| Turnover, EUR million | 248.6 | 239.2 | 3.9% |
| Net rental income, EUR million | 168.9 | 162.0 | 4.2% |
| Administrative expenses, EUR million | 20.6 | 26.5 | -22.2% |
| Profit attributable to parent company shareholders, EUR million |
93.1 | 77.2 | 20.6% |
| Earnings per share (basic), EUR 1) | 0.22 | 0.24 | -9.0% |
| Dividend and return from invested unrestricted equity fund per share total, EUR 1) 2) |
0.15 | 0.15 | 0.0% |
| Equity ratio, % | 45.3 | 37.8 | 20.1% |
| Loan to Value (LTV), % | 52.1 | 54.5 | -4.4% |
| Fair value of investment properties, EUR million | 2,733.5 | 2,714.2 | 0.7% |
| Net rental yield, % | 6.4 | 6.4 | 0.0% |
| Average net yield requirement by external appraiser, % | 6.3 | 6.3 | 0.0% |
| Occupancy rate (economic), % | 95.7 | 95.7 | 0.0% |
| Personnel (average for the period) | 123 | 132 | -6.8% |
| EPRA based key figures 3) | |||
| EPRA Operating profit, EUR million | 149.1 | 135.7 | 9.9% |
| EPRA Earnings, EUR million | 86.7 | 63.9 | 35.8% |
| EPRA Earnings per share (basic), EUR 1) | 0.204 | 0.199 | 2.5% |
| EPRA Cost Ratio (incl. direct vacancy costs), % | 21.8 | 26.2 | -16.9% |
| EPRA Cost Ratio (excl. direct vacancy costs), % | 19.4 | 23.3 | -16.5% |
| EPRA NAV per share, EUR 1) | 3.10 | 3.49 | -11.0% |
| EPRA NNNAV per share, EUR 1) | 2.90 | 3.08 | -5.8% |
| Sustainability key figures | |||
| Energy consumption, kWh/gross leasable area (sq.m.) | 270 | 272 | -0.7% |
| Carbon footprint, kgCO2 e/gross leasable area (sq.m.) |
50 | 50 | 0.0% |
| Water consumption, litre/visitor/year | 3.9 | 3.9 | 0.0% |
| Recycling rate, % | 85.4 | 83.2 | 2.6% |
1) Per-share key figures have been calculated with the issue-adjusted number of shares resulting from the rights issue executed in March 2013
2) Board of Directors' proposal
3) EPRA (European Public Real Estate Association) is a common interest group for listed real estate companies in Europe. Since 2006, Citycon has been applying the best practices policy recommendations of EPRA for financial reporting.
Citycon provides guidance on turnover, EPRA operating profit, EPRA earnings, and EPRA earnings per share in order to improve the predictability of its earnings. The forecasts for growth of key indicators that Citycon released in early 2013 showed a wide range; in the course of the year, the company adjusted the range of its forecasts as the outlook became clearer and on account of the increase in the number of shares in the wake of the share issue. Completed (re)development projects and acquisitions increased turnover by, in total, EUR 4.7 million, whereas property disposals reduced it by EUR 2.3 million. The EPRA operating profit and earnings both grew, due to the increase in both net rental income and cut in administrative expenses, with EPRA earnings per share coming to EUR 0.204. For 2014, the company forecasts slower growth after strong performance in 2013.
For 2014, the company forecasts slower growth after strong performance in 2013.
Iso Omena, Helsinki area
| January | February | March | April | May | |
|---|---|---|---|---|---|
| Citycon as a company |
Citycon acquired Kista Galleria, a prime shopping centre in Stockholm in partnership with the Canada Pension Plan Investment Board (CPPIB). Kista Galleria has an annual footfall of approximately 18.5 million visitors. With this investment, Citycon became one of the market leaders in Sweden. |
Citycon renewed its organisational model from country to cluster model. The model was adopted in all of Citycon's operating countries. Under the cluster organisation model, shopping centres are combined to form entities led by commercial directors. The new model is more efficient and brings decision making closer to business activities. |
Citycon received investment grade credit ratings from Standard & Poor's (BBB-) and Moody's (Baa3), both with a stable outlook. |
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| Citycon issued over 114 million new shares, in a rights issue, raising its equity by almost EUR 200 million. |
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| Business and stakeholders |
The fashion brand Desigual opened its first store in Estonia in the Kristiine shopping centre. |
Citycon began the expansion and (re)development of the shopping centre IsoKristiina in the city centre of Lappeenranta, Finland. Ilmarinen Mutual Pension Insurance Company is jointly financing and co-developing this project with Citycon, an investment project totalling approx. EUR 110 million. After the (re)development, IsoKristiina will have 34,000 square metres of leasable area. |
Citycon and NCC Property Development (NCC) launched the extension and (re)development project of the shopping centre Iso Omena, situated in Helsinki area. Through this project, the leasable retail area of Iso Omena will be increased by approximately 25,000 square metres, to over 75,000 square metres. The western line of Helsinki metro will connect the shopping centre directly to the city centre of Helsinki. |
||
| Citycon renewed its lease agreements with trading sector company Kesko for eleven grocery stores with long maturities. These stores form part of Citycon's supermarket and shops portfolio. The agreements cover some 44,000 square metres of leasable area and the renewed leases increase the average remaining length of Citycon's total lease portfolio by approximately 4 months. |
| June | July | August | September | October | November | December | |
|---|---|---|---|---|---|---|---|
| oversubscribed. | Citycon successfully placed a EUR 500 million seven year Eurobond. The bond was allocated to a broad base of European investors and the bond offering was |
Citycon held its Capital Markets Day in Kista, Stockholm. |
Citycon celebrated the company's 25th anniversary with a bell ringing at the NASDAQ OMX stock market in New York. |
25 years ago, Citycon Oyj was listed on the Helsinki Stock Exchange. |
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| Citycon renewed its brand guidance in order to support its business strategy and realise its One Citycon concept. |
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| As part of its Youth project, Citycon provided training places for community youngsters. Citycon also, together with Nuorten palvelu ry, developed a training programme for shopping centre guards and tenants, in order to improve their interaction with young people. |
Debenhams and H&M opened their first Estonian stores in Rocca al Mare. |
The foundation stone was laid for the extension of IsoKristiina shopping centre and the new Lappeenranta City theatre premises. |
The Spanish fashion brand Cortefiel opened its first store in Tallinn in Rocca al Mare. |
Citycon started the extension and (re)development of Stenungs Torg shopping centre located 45 km north of Gothenburg. The extension of 5,000 square metres has retail space for six additional stores and the opening is scheduled for November 2014. |
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| Citycon announced the plans to open a first-of-its-kind digital library at Kista Galleria in co-operation with the City of Stockholm. Kista Galleria introduced an innovative wet-waste conversion system which processes wet-waste into biogas. |
Citycon sold its 100 per cent ownership in the Torikeskus shopping centre in Seinäjoki. |
In 2013, Citycon demonstrated that high-quality, grocery-anchored urban shopping centres, combined with active management, can deliver healthy income growth even in a more challenging economic environment. In conjunction with our continued focus on operating and financial efficiency, we have delivered strong earnings growth. We have also made good progress in the implementation of our strategy for diversifying funding sources. We achieved two investment-grade credit ratings and raised EUR 500 million through a successful Eurobond issue. One of the year's clear highlights was the acquisition of Stockholm's Kista Galleria, which substantially strengthened our position and market share in Sweden and offered us a unique opportunity to further increase our relevance in the eyes of international retailers. Today, as it marks its 25th anniversary, Citycon is the market leader in Finland and Estonia and among the top market leaders in Sweden.
2013 showed continuation of a robust operating performance as evidenced by strong like-for-like
net rental income development, at 4.6 per cent. This growth was mainly a result of rental improvements, increased speciality leasing income, and strict management of operating expenses. Across our portfolio, we have seen solid results against all three of our key performance metrics of occupancy, footfall, and net rental income. In addition, our administrative cost savings programme, with a goal of saving up to EUR 5 million from 2012 levels, was successfully completed.
Divestments and new investments for further growth Citycon aims to reallocate its investments to shopping centres where we see higher growth potential. Therefore, we will continue to divest non-core properties after value-enhancing actions. The proceeds are being used for capital recycling in accretive (re) developments and extensions of our core shopping centres. In May, we successfully extended lease contracts with Kesko for 11 supermarkets and shops properties. With the extended lease terms and full inflation protection, these properties are generating solid cash flows, allowing the company to sell when market conditions are right.
Since our investments are focused on growing urban areas, they are expected to deliver solid and predictable financial performance. We believe that retail destinations that offer entertainment, 'hotspots' and regional shopping centres will maintain good performance. Equally, small but conveniently located urban shopping centres will continue to attract customers.
Citycon continues to (re)develop and extend its existing properties. We began the (re)development and extension of the Iso Omena shopping centre in the Helsinki area and IsoKristiina in Lappeenranta. Iso Omena is located in one of Finland's fastest growing and most affluent areas, and Lappeenranta is a regional university city in Eastern Finland with substantial influx of Russian visitors. Both centres are being (re)developed in joint venture structures, with NCC Property Development in Iso Omena and Ilmarinen in IsoKristiina. We are maintaining our cautious approach to (re)development and will only start new projects when the relevant financial and leasing conditions have been met.
Citycon's centres are close to where people live and work, with excellent public transport connections and links to health care, and educational and municipal facilities. This choice is also rooted in our aim of promoting social and environmental responsibility. Citycon believes in the concept of 'good neighbours' and, as part of the community, our shopping centres contribute to the residents' quality of daily life. Citycon aims to be a forerunner in sustainable shopping-centre management. With this in mind, we have integrated environmental objectives and measures into its day-to-day operations and standard practices.
Citycon's vision is to be the household name for retail real estate in the Nordics and the Baltics. To achieve this goal, we will continue to increase the quality, visibility and scale of our operations. We will see a
gradual shift from smaller to larger centres as retail shifts from selling goods and services to providing entertainment and a more appealing shopping experience in response to peoples' changing lifestyles.
We also see Citycon as the ideal gateway for international brands seeking to enter the relatively unexploited and exceptionally strong market offered by the Nordics. Since the penetration of international brands in the Nordics is almost 40 per cent less than the European average (Source: Retail-Index), Citycon is actively seeking new brands for our market areas to bring more variety and excitement to our retail offering. We believe that the Nordic region with its strong demographic trends (Stockholm, Oslo, and Helsinki are the fastestgrowing cities in Europe) and its solid economic environment (Sweden, Finland, Norway, and Denmark are all AAA-rated by the world's leading credit rating agencies) holds considerable untapped potential and offers unrivalled opportunities for international investors and retailers. By expanding the size and relevance of our portfolio and individual shopping centres, we can meet the needs of retailers and position Citycon as the first choice for new brands coming to the region.
We created 'One Citycon' by streamlining the organisation's structure. We also delineated the company's core values. Our company and our people are passionate, knowledgeable and result-oriented. Our experienced professionals aim to offer our customers the very best shopping centre experience. We believe that the primary source of knowledge is
Rocca al Mare, Tallinn
experience and cooperation. We act as one in order to be No. 1.
Citycon is well-positioned to continue to deliver solid financial performance and profitable growth on its assets. Our strategic choice for urban, groceryanchored shopping centres in the Nordic region will continue to prove the resilience of the portfolio. The company will maintain its focus on organic growth, including internal efficiency improvements, accretive (re)development and the divestment of its non-core properties.
I would like to express my warmest thanks to our tenants for their trust and collaboration. In addition, my thanks go to all Citycon employees for their dedication and a job well done. I would also like to thank all of our shareholders and business partners for their cooperation in 2013. I am certain that we will be able to bring even greater success to Citycon and that, together, we will achieve new records and milestones.
Helsinki, 5 February 2014 Marcel Kokkeel CEO
Koskikeskus, Tampere
Consumer confidence and employment figures stronger in the Nordics than in the Euro area. During the year, the aftermath of the financial crisis continued to impact the real estate markets in Europe. Economic sentiment in the European market fluctuated during the year, strengthening towards the year end. Overall, Citycon's core market, the Nordics, has been more resilient to the economic downturn compared to the rest of Europe. Relatively low unemployment and reasonably strong consumer confidence, combined with low interest rates, have continued to protect retail sales in the Nordic countries despite the market uncertainty. The outlook has improved, with the Swedish economy, in particular, showing signs of strengthening. At the same time the recovery remains somewhat elusive when it comes to the Finnish economy. The Baltic countries and especially Lithuania are forecast to be the fastest growing economies in Europe in the coming years.
The macroeconomic fundamentals in Citycon's operating countries remain solid. Finland and Sweden, representing approximately 90 per cent of Citycon's portfolio value, hold 'AAA' credit ratings. The European Commission's estimate of 2013 GDP figures, as per February 2014, show that these markets grew modestly
this year, reflecting a more challenging economic environment. In terms of GDP, Finland experienced a slightly declining trend for two consecutive years. Citycon's other operating countries showed a GDP growth, beating the Euro area average. Euro area activity is expected to slowly start to recover in 2014 as sovereign debt tensions ease. The European Commission forecasts Euro area GDP growth to reach 1.1 per cent in 2014 with Sweden (2.8%), Estonia (3.0%), Lithuania (3.6%) and Denmark (1.7%) coming in ahead of this. The 2014 GDP growth for Finland (forecast 0.6%) is dependent on both the recovery of the European export markets as well as domestic demand.
The labour markets in Citycon's operating countries continue to be healthy, with unemployment rates lower than the Euro area average, except for in Lithuania. Consensus estimates for 2014 show that unemployment is forecast to increase temporarily in Finland, whereas Citycon's other operating countries will see decreasing or stable unemployment figures driven by GDP growth. Household consumer confidence in the Nordics and Baltics also remained
above the Euro area average and showed a positive trend. In Estonia and Lithuania, household consumer confidence has nevertheless remained negative.
Retail sales growth and the inflation rate are key drivers for Citycon's business and have a direct impact on rents from business premises. Citycon is protected against inflation increases through index-linked lease agreements. A significant number of leases also feature a turnover-linked component. The rise in consumer prices slowed down during 2013 in all of Citycon's operating countries, with Swedish figures again being close to zero per cent. Retail sales in Citycon's operating countries showed milder growth this year. Sales continued to be strong in Estonia, Lithuania and Sweden, whereas Finland showed a flat development and Denmark a negative trend. Citycon's tenant sales have been protected by a large share of necessity-based services; grocery retailers represent one-fifth of Citycon's shopping centre tenants. Due to a low inflation environment, household spending is expected to remain resilient across Europe.
Transactional activity in the property investment markets remained modest in 2013. Transaction volumes in the Finnish property market were 4 per cent above 2012 level, whereas the volumes in Sweden were 21 per cent below the previous year. The demand for core assets remains strong, but investors are also starting to diversify their portfolios by looking at more value-added and secondary opportunities. Due to the strong investor demand, shopping centre prime yields in Finland and Sweden remained stable and no significant changes are expected in 2014.In Estonia, strong economic fundamentals support further yield compression despite increasing cost of financing. 1)
Due to the necessity-based urban philosophy and the strategy to focus on core assets, Citycon's property portfolio is defensively placed for an environment that will remain challenging in the short-term but well positioned to outperform in the future.
1) Jones Lang LaSalle
Retail sales growth 2)
| GDP growth rate 1) Unemployment rate 1) |
Inflation rate 2) | ||||||
|---|---|---|---|---|---|---|---|
| 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||
| Finland | -0.6% | -0.8% | 8.4% | 7.9% | 1.6% | 2.4% | |
| Sweden | 1.1% | 1.0% | 8.0% | 8.0% | 0.1% | -0.1% | |
| Estonia | 1.3% | 3.9% | 9.3% | 9.6% | 1.4% | 3.5% | |
| Lithuania | 3.4% | 3.7% | 11.4% | 12.7% | 0.4% | 2.8% | |
| Denmark | 0.3% | -0.4% | 6.9% | 7.3% | 0.8% | 2.0% | |
| Euro area | -0.4% | -0.7% | 12.0% | 11.9% | 0.8%1) | 2.2%1) |
1) Source: Eurostat
2) Source: Statistics Finland, Statistics Sweden, Statistics Estonia, Statistics Lithuania, Statistics Denmark
AR 13
CITYCON OYJ ANNUAL AND SUSTAINABILITY REPORT 2013
Own, manage and develop the shopping centres proactively as part of local community
Offer the best retail and social experience
Create strong cash flows based on conservative business model and solid balance sheet
in sustainable shopping centre management
Citycon wants to be the household name for Nordic and Baltic shopping centres
| Strategic activity | Key performance indicator | Target in 2013 | Performance in 2013 | Target (2011-2016) |
|---|---|---|---|---|
| Focus on organic growth through operational improvement and accretive (re)development projects |
Like-for-like NRI growth Rent/sq.m. growth Speciality leasing income growth Shopping centre occupancy rate Administrative expenses Investments in (re)development projects Accretive (re)development projects |
1% above CPI Above CPI >10% - EUR 5 milllion reduction - - |
4.6% EUR 21.5/sq.m., growth 4.1% EUR 3.2 million, growth 15.9% 96.3% EUR 20.6 million, decrease 22.2% EUR 89 million 100% |
1% above CPI Above CPI Growth > 5% p.a. 98% Growth 60% of portfolio size growth EUR 100-125 million p.a. on average ≥ 150 bps over required investment yield |
| Concentrate on further strengthening financial position |
Equity ratio Loan to Value (LTV) level Debt portfolio's hedge ratio Average loan maturity Dividend payout ratio |
40-45% - 70-90% - ≥ 50% |
45.3% 52.1% 83.4% 4.1 years 74% (proposal by Board) |
40-45% over the cycle ≤ 50% over the cycle 70-90% > 5 years ≥ 50% |
| Divest non-core assets 1) after value maximisation |
Divestment amount annually Divestment price premium to IFRS valuation |
EUR 40-60 million - |
EUR 60 million 2) 2.1% |
EUR 200-300 million over 5 years Premium to IFRS valuation |
| Establish joint venture partnerships for select core properties in order to recycle capital and share risks |
Top-class joint venture partners | 100% | 100% (CPPIB, Ilmarinen) | Top-class joint venture partner |
| Execute selective strategic property acquisitions |
Potential for value addition by active shopping centre management |
100% | 100% (Kista Galleria) | Potential for value addition by active shopping centre management |
| Implement systems and initiatives that create environmental, social and economic value 3) |
Energy consumption in like-for-like shopping centres Development projects and acquisitions located in urban environments, within reach of public transportation |
2-3% reduction 100% |
-5.4% 100% |
-9% (2009-2016) 100% |
1) Non-core assets include supermarket and shop properties as well as some smaller shopping centres
2) Incl. the 50% sale of shopping centre IsoKristiina
3) More detailed strategic environmental targets presented on p. 42
Passion for work. Passion to take action and deliver results. Passion for quality and detail. And a passion for acting responsibly.
A common goal. Supporting and encouraging each other. Together with our tenants and partners. Part of society in urban locations. We invest in building the community. Acting as a good neighbour, being part of the community.
We strengthened our financial position further in order to support the continuous development of our property portfolio. In line with our strategy, we are striving to create strong and predictable cash flows with a conservative business model and a solid balance sheet. This year we again demonstrated our ability to create stable and growing results even in more challenging market conditions. The year was also characterised by major successful equity and debt financing transactions in support of this strategy.
For Citycon, 2013 was a year of solid and improving performance. Earnings excluding nonrecurring items such as net fair value gains/losses (EPRA Earnings) increased by 35.8 per cent, due to both increased net rental income and reduction in administrative expenses. The EPRA Earnings per share remained at the same level as in the previous year, EUR 0.204 (EUR 0.199), meaning that we were able to increase our earnings in the same proportion as we issued new shares, thereby improving the quality of earnings.
EPRA Earnings per share
Administrative expenses EUR million
Net rental income grew by 4.2 per cent, an improvement driven mainly by successful leasing, including growth in non-rental revenue, along with proactive property and asset management, whilst operating expenses rose slightly from the previous year's level. The company has placed long-term focus on managing and cutting expenses across the board, and for 2013 a target was set to save up to EUR 5 million in administrative expenses. We are pleased to have succeeded in exceeding this target. Administrative expenses totalled EUR 20.6 million, a decrease of 22.2 per cent, or EUR 5.9 million from the previous year's level. These savings were reached via a combination of expense management and costcutting measures, including reduction in consulting and personnel expenses and an accurate tenant recharge policy in relation to operating cost items.
We set clear financing objectives for 2013: to strengthen the balance sheet, diversify our debt financing sources, and extend the average life of the loan portfolio.
Early in the year, we carried out a strategic equity increase of EUR 200 million for permanent de-gearing of the company, to pay down our credit lines after the Kista Galleria acquisition, and in general to give ourselves the flexibility to continue implementing our business plan.
In May, we received two investment-grade credit ratings, BBB- from Standard & Poor's and Baa3 from Moody's, both with a stable outlook. This was not only an important quality stamp that validates the strength of our financial profile and business strategy, but it also improved our access to debt capital markets, thereby helping us diversify our debt financing sources. We utilised this opportunity before the summer, with successful placement of Citycon's first Eurobond transaction. The EUR 500 million, seven-year Eurobond was oversubscribed, and the offering closed within a few hours. The bond was allocated to a broad base of European institutional investors. Proceeds from the offering were used mainly to refinance and make prepayments on existing debt. The
transaction increased our liquidity, diversified our funding sources, and extended our average debt maturity. The debt prepayment and the related unwinding of interest rate swaps and bond buybacks created some non-recurring indirect financial expenses in Q2. Total net financial expenses for the year were 32.2 per cent higher than last year, totalling EUR 90.1 million (EUR 68.1 million).
With these transactions, we obtained, in total, approximately EUR 700 million in financing in 2013. Our debt portfolio is now more diversified, with bonds accounting for approximately 45 per cent of the loan portfolio. Also, the maturity profile of our loans was extended by approximately 0.9 years, and at the end of 2013 we had EUR 435.4 million available liquidity covering maturing loans for the coming years. Our balance sheet has been strengthened, with loan to value ratio decreasing to 52.1 per cent (54.5 per cent). Going forward, we remain committed to an overall business plan that maintains and improves our investment-grade credit ratings.
| Citycon and CPPIB signed a standalone asset-backed loan agreement worth, in total, SEK 2,290 million (approx. EUR 265 million), for partial financing of the Kista Galleria shopping centre investment. |
Citycon received two long-term investment-grade credit ratings, Standard & Poor's BBB- and Moody's Baa3, both with a stable outlook. |
A maturing convertible capital loan amounting to EUR 39.8 million was repaid. |
|
|---|---|---|---|
| January February and voting rights. |
May The company performed a successful rights issue. Approximately EUR 200 million equity was raised with the issue of 114,408,000 new shares. The rights issue was oversubscribed, approximately 150.4 per cent of the offered share were subscribed (99.7 per cent with primary subscription rights). The shares offered were equivalent to roughly 35 per cent of Citycon's pre-issue total share capital |
June | August The company successfully placed a EUR 500 million senior unsecured bond. The seven-year bond matures on 14 June 2020 with interest at a fixed annual rate of 3.75 per cent, payable annually. Citycon repurchased some domestic senior bonds maturing in 2014 and 2017. |
%
13.8
45.0
Going forward, we want to strengthen our financial position further, in order to support the continuous development of our property portfolio. We aim to decrease our loan to value ratio over time and extend our loan maturities. To this end, we will continue to seek financing directly from the capital markets. We have set specific financing targets in this connection; these are presented on page AR 14.
| EUR million | 2013 | 2012 |
|---|---|---|
| Interest-bearing debt | 1,462.4 | 1,533.0 |
| Equity ratio, % | 45.3 | 37.8 |
| Loan to value (LTV), % | 52.1 | 54.5 |
| Current average interest rate, % | 4.12 | 4.25 |
| Average loan maturity, years | 4.1 | 3.2 |
| Available liquidity, EUR million | 435.4 | 268.4 |
Citycon aims to increase profitability and improve the company's growth outlook and valuation through active asset management, (re)development, and renewal of its property portfolio. Among the company's strengths are a stable portfolio of urban grocery-anchored properties in growing larger cities with high barriers to entry, a diverse tenant base, a balanced lease portfolio, and a solid balance sheet.
Citycon's strategy involves the divestment of non-core properties with lower growth prospects after value maximisation. The strategy is to complete accretive (re)development projects, and make selective acquisitions only in cases wherein there is potential to add value through active shopping centre management. Increasing the proportion of such profitable business with good growth potential in the portfolio supports the company's long-term profitability. The target is to create added value for our stakeholders and offer our investors a competitive return on their investment.
Responsibility is an integral part of Citycon's strategy. Good corporate governance, target-oriented leadership, appropriate work conditions, and community involvement are important elements in Citycon's way of working. Citycon's efforts in this area have gained external recognition in the GRESB survey (Green Star) and EPRA sustainability awards (gold-level). Citycon has also won the EPRA gold award in the Financial Best Practices series for four consecutive years.
Citycon's current distribution policy is to pay out, at minimum, 50 per cent of the profit for the financial period, after taxes, excluding fair value changes in investment properties. The Board of Directors proposes that a dividend of EUR 0.03 per share be paid for the 2013 financial year and that an equity repayment of EUR 0.12 per share be made from the invested unrestricted equity fund, representing a dividend pay-out ratio of approximately 5.9 per cent (5.8 per cent).
More information about shares and shareholders on page 72 in the Financial Statements.
Our shopping centre development focuses on expanding the service offering and enhancing visitor comfort. We want to make our shopping centres into places that are rich in experiences, where people enjoy spending time. As stated in our customer promise, we want our shopping centres to be easy to visit and lovely to stay.
Despite the challenging market environment, 2013 was a successful year in operational terms. The 4.6 per cent increase in net rental income from like-forlike properties exceeded our targets in all countries. This increase was attributable to higher rental income from e.g. increased average rents, specialty leasing income and maintenance charges from tenants.
The year began with an organisational change, which involved introducing a cluster-based organisation. The new organisation consists of eight clusters, four of which operate in Finland, three in Sweden and one in the Baltics and Denmark. Regardless of its geographic location, each cluster has similar organisation and duties, which makes it easier for shopping centres and countries to share best practices. Our most recent acquisition, Kista Galleria in Stockholm, was also included in the new operating model. In addition, we focused on promoting cross-border leasing activities and centralised procurement.
Citycon has made a strategic decision to focus its operations on central locations in winning cities and in regional centres. Shopping centre properties in these locations are under active development. The objective of (re)development projects is to increase the commercial attractiveness and competitiveness of shopping centres and thereby generate stronger rental growth, while consolidating the market value of our properties.
In 2013, our property portfolio projects focused on the expansion and (re)development of the Iso Omena and IsoKristiina shopping centres. Iso Omena's major strengths include its prime location in the fast-growing Helsinki area, and the forthcoming new metro station and connecting bus terminal. These will create a traffic hub and provide transportation links to Helsinki directly from the shopping centre. Furthermore, the housing of the Lappeenranta City Theatre premises within
IsoKristiina will turn the shopping centre into a novel and internationally unique retail complex. Developed in partnership with the Ilmarinen Mutual Pension Insurance Company, IsoKristiina is an excellent example of Citycon's strategy of making joint venture-based investments in shopping centres with great potential.
The year was somewhat challenging from the leasing perspective due to the uncertainties in the economic environment. Our determined work produced results, and we were able to keep the occupancy rate at the same level as previous year. Our strategy of becoming part of customers' daily lives can be witnessed with the examples of a Kesko grocery store opened in the Forum shopping centre in Jyväskylä, a gym opened at Åkersberga Centrum in Stockholm area, and an H&M store opened its doors in Arabia, Helsinki. Other events bearing testimony to Citycon's strong role as a Nordic and Baltic player included the opening of Estonia's first H&M fashion store and the first Debenhams department store in the Rocca al Mare shopping centre in 2013. In addition, the Spanish fashion brand Cortefiel opened a store in Rocca al Mare at the yearend. Citycon is constantly seeking new retail chains and concepts for introduction in its shopping centres in the Nordic and Baltic countries.
The growing popularity of online shopping is reflected in our tenant base: some segments such as travel agencies and home electronics have moved their services from shopping centres to online locations. In some specialty retail segments, this trend has led to service specialisation or concept changes, such
We are constantly seeking new retail chains and concepts for introduction in our shopping centres.
as adding a coffee shop to a bookstore. Similarly, different home delivery and pick-up services are becoming a common feature in shopping centres. Retailers encourage customers to pick up their online shopping at the store. This trend is in line with the interests of shopping centre managers, since it increases customer flows in our properties. In the future, our shopping centres will feature a wider variety of services, such as restaurants, entertainment and public services.
Citycon's shopping centres are centrally located in urban environments, making them an important part of the local community. For two years, we have been actively promoting our shopping centres on social media, with good results: for example, our centres have nearly 500,000 followers on Facebook. We have been able to build an active community in which local residents and customers are engaged in close interaction with their local shopping centre.
Rocca al Mare, Tallinn
Interaction with stakeholders is part of our strategy as we firmly believe it will enable us to build lasting customer loyalty.
Our customer promise is 'Easy to visit, lovely to stay'. On the operational side, we will continue to focus on providing services that meet our customers' daily needs. We believe that an enhanced customer experience keeps customers at our centres longer, and encourages them to use our tenants' services.
Harri Holmström Chief Operating Officer
Myyrmanni, Helsinki area
Citycon owns a total of 37 shopping centres: 22 in Finland, 10 in Sweden including Kista Galleria, three in Estonia, one in Lithuania, and one in Denmark. In addition to shopping centres, Citycon owns 35 other retail properties (supermarkets and shops), 33 in Finland and 2 in Sweden. Citycon is also responsible for the commercial management of shopping centre Galleria Esplanad in Helsinki city centre, which is owned by Ilmarinen.
In its strategy, updated in July 2011, Citycon defined supermarkets and shops as non-core properties and announced its intention to divest these properties within the next few years, after the completion of value-enhancing activities. Execution of this strategy continued in 2013. Citycon's non-core assets also include some smaller shopping centres in secondary locations. Citycon's supermarket and shop properties generally host one or two large tenants.
Citycon's strategy includes building joint venture partnerships with top-quality domestic and international players in selected core properties. At the end of 2013, Citycon had three joint venture partners, CPPIB, GIC, and Ilmarinen.
Fair value distribution 1)
11/8
1) Does not include properties held for sale.
In 2013, the most significant change in the property portfolio was the purchase of the Kista Galleria shopping centre in Stockholm in January. In partnership with the Canada Pension Plan Investment Board (CPPIB), Citycon purchased Kista Galleria for approximately EUR 530 million. Citycon and CPPIB each own 50 per cent of the shopping centre. The centre has a gross leasable area of over 90,000 square metres, of which approximately 60,000 square metres consist of retail premises. Kista Galleria attracts approximately 18.5 million visitors a year, more than any other shopping centre in the Stockholm area. Citycon made no other acquisitions during the year. In December, Citycon sold its 100 per cent ownership in the Torikeskus shopping centre in Seinäjoki for EUR 14.7 million. The centre was sold as part of the strategy to focus on the core property portfolio.
In February, Citycon sold a 50 per cent share of the IsoKristiina shopping centre in Lappeenranta to Ilmarinen Mutual Pension Insurance Company. This disposal was related to the extension and (re)-development project initiated in the shopping centre. Additionally, Citycon divested three non-core properties in Finland and three in Sweden. As a result of these divestments, the company's total gross leasable area decreased by 45,680 square metres. Since the publication of its strategy update in July 2011, the company has divested 14 non-core properties and three residential portfolios for a total value of approximately EUR 81 million.
A detailed account of Citycon's acquisitions and divestments is presented on pages 4-5 of the Financial Statements 2013.
Kista Galleria, Stockholm
Fair market value EUR 535 million GLA 94,200 sq.m.
JV partner CPPIB 50%
Iso Omena, Helsinki area Fair market value EUR 388 million GLA 63,300 sq.m. + 27,000 sq.m. JV partner GIC 40%, extension NCC PD 50%
Fair market value EUR 30 million
GLA 22,400 sq.m. + 12,000 sq.m.
JV partner Ilmarinen 50%
Kista Galleria, Stockholm
During the year, Citycon began two major (re) development projects: the Iso Omena extension and (re)development project in Helsinki area, and the IsoKristiina extension and (re)development project in Lappeenranta, Eastern Finland. Citycon's share of the estimated investments in these projects amounts to approximately EUR 88 million and EUR 54 million respectively. At the end of the year, Citycon also commenced the extension and (re)development of the Stenungs Torg shopping centre in Gothenburg, Sweden, for a total investment of approximately EUR 18 million. The renovation of Åkermyntan Centrum in Stockholm was finalised in the summer of 2013. In addition, the company conducted two projects related to tenant fit-outs at Rocca al Mare and Kristiine in Tallinn.
The ongoing (re)development projects are described in more detail on page AR 30-31 of the report.
Citycon's gross capital expenditure in 2013 totalled EUR 226.1 million, with new property acquisitions accounting for EUR 2.0 million, acquisitions of and investments in joint ventures for EUR 148.1 million, property development for EUR 75.5 million and other investments for EUR 0.5 million. The company made divestments totalling EUR 53.0 million.
In accordance with the International Accounting Standards (IAS) and the International Valuation Standards (IVS), an external professional appraiser conducts a valuation of Citycon's property portfolio on a property-by-property basis at least once a year. Over the last few years, an evaluation by an external appraiser has been conducted quarterly. Since the end of 2011, Citycon's property valuation has been conducted by Jones Lang LaSalle. The
most recent valuation statement as per the yearend 2013 is available on page 80 of the enclosed Financial Statements.
At the year-end, the fair value of Citycon's property portfolio totalled EUR 2,733.5 million, showing an increase of EUR 19.3 million on the previous year. This increase is primarily due to net fair value gains on investment properties. Net fair value gains for the year totalled EUR 26.1 million, reflecting increased net rents across the property portfolio and the lower yield requirements for Baltic properties in particular. According to Jones Lang LaSalle's evaluation, the average yield requirement for Citycon's property portfolio was 6.3 per cent at the year end, same level as last year.
This year we have initiated four (re) development projects for existing assets located in Finland and Sweden. These investments follow our core strategy to focus on shopping centres with strong growth potential in urban locations. We see many attractive investment opportunities within our portfolio and we are working on several planned (re)development projects which will continue to drive profitable growth.
Nils Styf, Chief Investment Officer
Jyväskeskus, Jyväskylä
Citycon's shopping centres are located in city centres close to where people live and work. The tenant mix is developed to cater for the daily needs of such customers, taking account of the special characteristics of the catchment area. Creation of a diverse and interesting tenant base and a balanced lease contract portfolio is a key task of Citycon's shopping centre management.
During the year, Citycon introduced several new brands in its shopping centres including Noa Noa (Iso Omena), Oxygen (Kista Galleria), Cortefiel (Rocca al Mare) and Debenhams (Rocca al Mare). The introduction of new brands and cross-border leasing continues to be high on Citycon's agenda.
The type and duration of a new lease depends on factors such as the tenant and the type of premises to be leased. In the case of anchor tenants, the company typically signs long-term leases of 10 years, whereas leases for smaller retail premises are chiefly negotiated for a term of three to five years according to market practice. New retail leases are mainly signed for a fixed period, but in some cases leases in effect until further notice or short fixed-term leases are preferred, as they provide more opportunities for revitalising the shopping centre and maintaining an attractive tenant mix. Leases in effect until further notice represent about 9 per cent (2012: 9%) of Citycon's property portfolio. Despite the short notice period of a few
months, the actual term of a lease in effect until further notice will usually in practice turn out to be very long.
Most leases include a turnover-linked component, but with a fixed minimum rent close to market rental levels. For this reason, the turnover-based part of the rent is not a significant source of additional rental income. At the end of the year, turnover-based lease agreements accounted for 52 per cent (53%) of Citycon's lease portfolio, whereas approximately 1.3 per cent (1.7%) of rental income came from the turnover-based element of leases. Today, almost all new leases signed in shopping centres are turnover-based.
Grocery and fashion stores are strongly represented in Citycon's tenant base. Most of Citycon's shopping centres are anchored by one or more grocery stores or hypermarkets. In addition, services such as pharmacies, banks, health care and medical centres play a major role. The importance of services, entertainment and the café and restaurant offering has been increasing and is expected to increase even further in the future.
Occupancy cost ratio % 5 6 7 8 9 10 2009 2010 2011 2012 2013 8.6 8.4 8.9 8.5 8.6
Citycon's largest tenant is the Finnish trading sector company Kesko, which operates a range of retail chains such as the grocery store chains K-Citymarket and K-Market and speciality goods stores such as the Intersport sporting goods chain. Kesko is a tenant in the Finnish property portfolio only. Citycon's second largest tenant is the Finnish retailing co-operative company, S Group, which operates through e.g. its Prisma hypermarket and S-Market supermarket chains. S Group is the largest individual tenant in the Baltic portfolio, although Rocca al Mare and Kristiine have a special focus on specialty retail, particularly fashion. ICA Gruppen, one of the leading grocery store retailers in Sweden, is the largest tenant in the Swedish portfolio and Citycon's third largest tenant.
The Finnish and Swedish markets are characterised by a centralised grocery retail sector. In Finland, Kesko and S Group have a market share of approximately 80 per cent. In Sweden, ICA, COOP, and Axfood dominate the market with a market share of approximately 85 per cent.
In specialty retail, the same brands are strong among Citycon's Finnish and Swedish assets e.g., Lindex, KappAhl and H&M. Despite new international brands entering Citycon's shopping centres each year, the share of rental income from non-Nordic or non-Baltic brands continues to be relatively small.
Citycon closely monitors monthly sales by its tenants. If the tenant's annual rent in relation to its sales (occupancy cost ratio, OCR) is unsustainable, Citycon will take action. In 2013, the occupancy cost ratio for like-for-like shopping centres was 8.6 per cent (8.5%), which can be considered a sustainable level considering the large proportion of income from grocery operators. This is also supported by the modest level of credit losses, at an average of approximately EUR 1 million p.a.
During 2013, Citycon was able to increase its likefor-like gross rental income mainly through index increments, increased specialty leasing income and maintenance charge uplifts. At the end of the year,
| Kesko | 16.1% |
|---|---|
| S Group | 5.7% |
| ICA Gruppen | 4.2% |
| Stockmann | 2.7% |
| Tokmanni | 2.0% |
| Top 5, total | 30.6% |
1) Calculation based on proportion of gross rental income for valid rent roll at 31 Dec. 2013
the economic occupancy rate of the portfolio was 95.7 per cent (95.7%).
Citycon's focus over the past few years on specialty leasing, e.g. aisle space leasing, has brought positive results. Specialty leasing in 2013 was up by 16 per cent on the previous year and represents approximately 1.4 per cent of Citycon's gross rental income.
At the turn of the year, the average remaining length of the lease portfolio was 3.5 years (3.5 years).
IsoKristiina, Lappeenranta
Citycon and Ilmarinen Mutual Pension Insurance Company started to expand and redevelop IsoKristiina shopping centre, located in the city centre of Lappeenranta, in March 2013. The total investment will be around EUR 110 million, with Ilmarinen and Citycon both having 50 per cent partnership in the project. At the moment IsoKristiina has a gross leasable area of 22,400 square metres (14,100 square metres of which is retail area). After the (re) development, IsoKristiina will feature 34,000 square metres of leasable area.
Lappeenranta is a growing university city. Approximately 400,000 people live within its regional catchment area. It is located near the border between Finland and Russia, only ~200 kilometres from St Petersburg, a metropolis with five million inhabitants. In recent years, the increase in tax free sales and the number of Russian tourists has been particularly high in Lappeenranta.
The objective of (re)development projects is to increase the commercial attractiveness and competitiveness of shopping centres and thereby generate stronger rental growth while consolidating market value.
A special feature of this project is that the new premises of Lappeenranta City Theatre will be located inside the renovated shopping centre.
The focus of the range of stores will be on appealing fashion brands and beauty and other speciality retailing included in city services. Dayto-day needs will also be supported by high-quality grocery stores.
In IsoKristiina, great emphasis will be placed on leisure and versatile restaurant and café services, for example, in the shopping centre's diverse international-standard food court. In addition to the city theatre, Finnkino will open a new cinema in IsoKristiina. The expanded and fully modernised IsoKristiina shopping centre will be opened in two stages in May and October 2015.
Citycon and NCC Property Development (NCC) launched the first phase of the extension and
(re)development project of Iso Omena shopping centre, Helsinki area, at the beginning of June.
Through this project, the gross leasable retail area of Iso Omena will be increased by approximately 25,000 square metres to over 75,000 square metres. Following the completion of the extension and (re) development project, the shopping centre will house over 200 different shops and other services. Measured by floor area, the number of shops and the variety of the offering, this project will make Iso Omena one of Finland's largest shopping centres. The extension and the existing shopping centre will be fully integrated.
The number of parking spaces at the centre will be increased to some 3,000 spaces. This also includes 350 commuter parking spaces. The end station of the Helsinki western metro line will be located under Iso Omena, along with a bus terminal. The new metro transport terminal will be opened in late 2015. The shopping centre extension will be completed in summer 2016.
Marko Juhokas, Senior Vice President of Group Development and Sustainability
Stenungs Torg shopping centre is located 45 km north of Gothenburg, in Stenungsund on the Swedish west coast. The centre is located near the water and it has its own marina. It offers customers from the region a wide range of shopping and commercial services with 59 stores, restaurants and cafés. Adjacent to the shopping centre there are approximately 1,000 free parking spaces.
In December 2013, Citycon started an extension of approximately 5,000 square metres with retail space for six additional stores. Citycon has already signed lease agreements with a gym operator and the fashion brand H&M. A new main entrance will also be built for the centre. The opening of the first phase will be in November 2014.
An extensive, state-of-the-art digital library is scheduled to open to the public in Kista Galleria, Stockholm, in August 2014. The library is an example of Citycon's on-going objective to nurture stronger community ties, apply principles of sustainability, and further strengthen the financial performance of its largest shopping centre.
A joint investment with the City of Stockholm, the 2,400 sq. m. library will feature the latest digital technology in addition to traditional books, offering its visitors access to various tablet, and other computers, interactive services, and a café. The library will offer many different opportunities to study – alone, in a group, or online. The library also fosters creativity supported by new technology. The centre offers great future development possibilities.
More information about development projects on pages AR 71-73.
Liljeholmstorget Galleria, Stockholm
A cluster organisational model was adopted in all of Citycon's operating countries in 2013. Based on this model, shopping centres are combined to form entities led by commercial directors. This change was intended to improve efficiency and bring decision-making closer to business activities. Commercial directors closely monitor all of the properties for which they are responsible, paying particularly close attention to customer needs and tenant feedback.
At the same time, operational processes are being streamlined and overlapping responsibilities have been eliminated. The company aims to build on the harmonisation and standardisation of Citycon's competences and best practices. This can be seen in the marketing and IT processes.
For example, the Customer Relationship Management system has been extended to cover all Citycon countries. Citycon also began a Business Platform Project to renew its lease administration systems and processes. The project will harmonise lease management, lease invoicing, and reporting procedures in all countries, while implementing new cross-border lease administration software. This will drive the establishment of One Citycon.
K-Citymarket and Prisma, library, Finnkino cinema, H&M
9.1 million Number of visitors 5.4 million EUR 388 million Fair market value EUR 183 million Anchor tenants Intersport, Gina Tricot, BikBok, Seppälä, Lindex
| Kista Galleria, Stockholm |
|---|
| Åhléns, ICA, New Yorker, StayAt Hotel, SF Bio, H&M, |
KappAhl
| Prisma, H&M, Debenhams, Lindex, Marks&Spencer, NewYorker, Rademar |
|
|---|---|
| Rocca al Mare, Tallinn | Baltic Countries | Kristiine, Tallinn |
|---|---|---|
| 57,400 sq. m. | Gross leasable area | 43,700 sq. m. |
| 6.6 million | Number of visitors | 7.5 million |
| EUR 165 million | Fair market value | EUR 125 million |
| Prisma, H&M, Debenhams, Lindex, Marks&Spencer, NewYorker, Rademar |
Anchor tenants | Prisma, H&M, Zara, Marks&Spencer, NewYorker, Benetton, JYSK |
Citycon phased out its single-partner property maintenance model and assigned property maintenance tasks to three partners: Securitas handles security guard services, Lemminkäinen takes care of technical maintenance and Lassila & Tikanoja is responsible for cleaning. This structure enabled cost savings and improved the efficiency of property maintenance.
The acquisition of Kista Galleria was the key event in Sweden in 2013, with Kista's employees being integrated to Citycon's network.
Citycon shopping centres in Estonia have attracted a number of new brands and chains. H&M, Debenhams and Cortefiel are examples of international brands that entered the market during the year.
Sustainability is part of the daily management of shopping centres, with a special emphasis on energy optimisation. Citycon continuously monitors its operating costs related to heating, electricity, and cooling. Energy optimisation is being performed in all centres. Energy intensity stayed on the same rate on the group level, the intensity varies a bit between the countries due to differences in properties and geographical location. There are also good results in recycling rates in all countries.
As a means of improving Citycon's sustainability performance, Kista Galleria introduced an innovative wet-waste conversion system. This system collects wet-waste from the food court and processes it into biogas – producing enough fuel each month to power around 12,000 km of the local bus system's operations. This environmentally and financially beneficial project is being implemented in close collaboration with the City of Stockholm and Stockholm Water.
The growing popularity of online shopping is forcing the traditional shopping centre to change. Besides things to buy, a retail venue today has to offer a positive customer experience, services, and places for people to meet. Citycon's shopping centres are already embracing this trend: the area occupied by cafes and restaurants has been growing for a number of years. Shopping centres also house services such as libraries, health care centres, hair salons and gyms.
Location close to where people live and work, and within easy access, is crucial. Citycon's shopping centres provide a variety of services to meet everyday needs, such as grocery stores, pharmacies, shoe repair services and laundries. These attract a steady customer flow to shopping centres and the different tenants.
Online shopping also introduces entirely new business models that connect online buying to traditional stores, such as pick-up services, unique products, pop-up stores and showrooms.
Citycon believes in building community engagement and customer loyalty by providing dynamic mobile experience in retail. Citycon launched a mobile application that can be downloaded to smart phones in 16 shopping centres in Finland and one in Sweden. The service will be expanded to other shopping centres during 2014. The mobile service provides commercial information, news, and up-to-date offers from tenants. It also serves as a shopping centre loyalty program and increases the interaction between customers and shopping centre management.
CITYCON OYJ ANNUAL AND SUSTAINABILITY REPORT 2013 AR 35
The majority of Citycon shopping centres are conveniently located in the cities and towns in which it serves, and within close proximity to its customers facilitating interaction between people and business. Citycon will always strive to make contributions to the continued development of these areas.
Significance to stakeholders
The GRI indicators presented in this report were selected on the basis of materiality assessment results. Topics considered material are discussed at varying length, depending on their importance.
The following factors have had an impact on the selection and reporting of material questions: considerations identified during stakeholder group activities; strategic policies; the risk management programme; changes in the internal and external operating environments, including trends, industry best practices, the framework of sustainable development and the principles of comprehensiveness governing reporting.
The materiality of reported items was assessed for the first time in 2009, and since then this assessment has been reviewed by Citycon internally and through stakeholder group studies.
Various stakeholder group studies were conducted and informal discussions with local communities were arranged to find out which issues stakeholders considered material. Similarly, account was taken of stakeholder feedback received through other channels. Themes considered material varied a great deal, depending on the stakeholder group.
Climate change Online trading Recycling and mobile applications Wellbeing Do-it-yourself Desire for experiences Community spirit
"
Being a forerunner of responsible shopping centre management is a strategic goal of Citycon. Our most important mission is to develop and maintain financially stable and successful business operations. The company's responsibility programme can generate added value for operations, improve financial performance, bolster stakeholder relations, and improve risk management.
The different aspects of responsibility – environmental, social, and economic – have been integrated with the company's operations. Business operations are supported by Group functions such as sustainable development and HR management activities. Citycon's Senior Vice President, Development and Sustainability, and Head of HR both report to the CEO.
Citycon's environmental management is governed by the company's strategy, goals and environmental programme. The objectives and measures specified in the environmental programme have been integrated into day-to-day operations and ordinary practices in shopping centre management and property development. A steering group convening every month coordinates the management of environmental matters with the objective of disseminating best practices throughout the Group. Environmental indicators are included in quarterly reporting. The measures are geared towards achieving cost savings so that the properties will be attractive to stakeholders both now and in the future.
We can once again be pleased with the results achieved during the year, with regard to both environmental targets and external acknowledgements. In recognition of Citycon's responsibility programme, Global Real Estate Sustainability Benchmark (GRESB) awarded Citycon with the second Green Star award for excellence in the management and implementation of the core aspects of responsibility. Citycon also reached gold level in the European Public Real Estate Association (EPRA) sustainability reporting. Being a pioneer requires constant renewal and listening to stakeholder groups. We intend to review the objectives of our responsibility programme in 2014 to make sure that we keep our objectives focused on creating added value in our operations and for our stakeholder groups.
Marko Juhokas, Senior Vice President, Development and Sustainability
To achieve its environmental targets, Citycon applies the following principles:
Citycon's operations have an impact on many stakeholders such as tenants, personnel, partners, and authorities. Regular interaction and reporting
increase transparency and facilitate the achievement of objectives. Social responsibility culminates in HR management and the promotion of ethical principles and good administrative practices. Community spirit and local communities play a major role, particularly in shopping centre management and property development.
According to Citycon's definition, stakeholders include parties that are or may be affected by Citycon's operations and that may affect the fulfilment of Citycon's objectives. Citycon's stakeholder groups, interaction channels and focus areas and successes in stakeholder group activities in 2013 are presented in the diagram below.
A good working relationship between Citycon and its stakeholders increases transparency, promotes the fulfillment of objectives, consolidates mutual understanding and acts as a shared learning process.
Citycon aims to further explore ways of improving interaction and taking account of issues identified in dealings with stakeholders. Citycon actively collects customer feedback from the consumer customers of its shopping centres. Received feedback is forwarded to the management teams of shopping centres, to which they respond. Feedback from tenants and consumers is used to support shopping centre management.
Citycon is an active owner and long-term developer of shopping centres, creating success for retailing. Its retail properties serve both consumers and retailers. As far as possible, the company aims to take account of environmental aspects and well-being in the areas surrounding its retail properties. Citycon's multifaceted effects on its stakeholder groups and society are illustrated on the next page.
Citycon's operations also have an economic impact on several stakeholders such as tenants, personnel, partners and authorities. The impacts of economic responsibility on various stakeholders are described in more detail on pages AR 48-49 and 82.
| Stakeholder Groups | Dialogue | Points of focus and successes in 2013 |
|---|---|---|
| Consumers | Shopping centre events, satisfaction surveys, social media, consumer surveys, customer feedback channels, shopping centre websites and social media channels |
Social media (e.g. rating app and shopping centre developers, Facebook groups); activation of consumers to solicit feedback through all marketing channels; mobile applications; Young People in Shopping Centres project |
| Tenants | Internet portals for tenants, presentation materials, customer satisfaction surveys, shopping centre events, entrepreneurs' associations and marketing groups |
Systematic satisfaction surveys after marketing campaigns and events, international Mapic trade fair |
| Owners, investors, analysts |
Annual and interim reports, stock exchange and press releases, websites, shareholders' meetings, meetings with investors and analysts, market surveys |
Quarterly investor meetings both in Finland and abroad: in 2013 company management met with more than 150 financial institutions personally or in small groups, Capital Markets Day was held in Kista, Stockholm on 12 September 2013. Citycon is one of the fastest companies in the Helsinki Stock Exhange to report on its results |
| Employees | Target and performance discussions, team meetings, supervisory work, personnel survey and discussion events on its results, Citycon days, co operation group and occupational safety committee, intranet, orientation events |
Completion rate of target and performance discussions 93% per cent (63%); shared value process with personnel, HR processes harmonised across all countries, trainee programme for young professionals |
| Partners (service providers, suppliers, contractors, consultants) |
Regular meetings, informal everyday interaction, meetings related to property development projects, such as site meetings |
Interaction training for security guards for dealing with youngsters |
| Authorities, local communities and media |
Briefings and residents' evenings, talks at events and seminars, meetings and development agreements with city administrations, journalist visits, press releases, websites, social media channels |
Resident briefings in connection with development projects; the foundation-laying of IsoKristiina; significant investment in the development of shopping centre Facebook groups |
| Industry associations and NGOs |
Advocacy in industry associations | Regular advocacy: e.g., EPRA (European Public Real Estate Association), FIGBC (Green Building Council Finland), ICSC (International Council of Shopping Centres), RAKLI (Finnish Association of Building Owners and Construction Clients), Finnish Council of Shopping Centres, NCSC (Nordic Council of Shopping Centres) |
Active owner and long-term developer of shopping centres
The impact of investments on the economic well-being of the immediate area
More than 85% of the waste generated by shopping centres is recycled
Employment in a work community that supports well-being at work and career development
Attractive retail locations for tenants
Opportunities for international retail chains
for consumers
Shopping centre
Citycon can have an impact on the prevention and reduction of emissions through the management and development of shopping centres. The best ways of cutting greenhouse gas emissions in the sector are to improve the energy efficiency of buildings, to reduce energy consumption and to increase the use of renewable energy sources in the properties' energy production and procurement.
Ecology and economy go hand in hand. At Citycon, the drivers of responsibility are:
| Targets for 2013 |
Performance in 2013 |
Targets for 2014 |
||
|---|---|---|---|---|
| Climate Change | ||||
| Reduction of greenhouse gas emission by 20 per cent by year 2020 from the 2009 level |
2-3% (in l-f-l shopping centres) |
In l-f-l shopping centres: 5.9% |
√ | 2-3% |
| Energy | ||||
| Reduction of energy consumption (electricity, heating and cooling) by 9 per cent by 2016 from 2009 level |
2-3% (in l-f-l shopping centres) |
In l-f-l shopping centres: 5.4% |
√ | 2-3% |
| Identifying solution that utilise renewable energy |
feasibility study in (re)development projects |
achieved | √ | feasibility study in (re)development projects |
| Water | ||||
| Lowering water consumption to an average level of less than 3.5 litres per visitor |
3,9 l/visitor (in l-f-l shopping centres) |
In l-f-l shopping centres: 3.6 l/ visitor |
√ | 3.7 l/visitor |
| Waste | ||||
| Shopping centre waste recycling rate to be raised to at least 80 per cent by 2015 |
80% | 85% | √ | 80% |
| Reduction of landfill waste to a maximum of 20 per cent of total waste by 2015 |
20% | 15% | √ | 20% |
| Landuse and Sustainable Construction | ||||
| All development projects to be implemented in accordance with environmental classification principles |
All projects ongoing in 2013 assessed with LEED criteria |
achieved | √ | All major projects ongoing in 2013 assessed with LEED criteria |
| Development projects are located in built-up environments, within reach of good public transport connections |
100% | achieved | √ | 100% |
√ = achieved
The opportunities that sustainability offers culminate in profitable and energy-efficient operations. Lower energy and waste costs improve profitability and make properties more attractive and competitive. Implementation of the EU-wide and national climate, energy and waste policies will affect future energy solutions, energy prices and taxation. During project planning, Citycon always investigates the potential for utilising renewable energy sources.
Waste taxes associated with waste management and landfill fees have increased substantially in the short term and are expected to rise further. Citycon seeks to sort and reduce the amount of generated waste.
Citycon's carbon footprint in 2013 totalled 73,420 tonnes of carbon dioxide equivalents. The carbon footprint reported by Citycon covers the energy and water consumption in properties, waste logistics, and the emissions generated by the Citycon organisation. Energy consumption in properties constitutes 99.4 per cent of the carbon footprint.
The carbon footprint decreased by 1.6 per cent compared to the previous year. This reduction was caused by changes in the company's property portfolio and due to a decrease in heating consumption.
The carbon footprint in relation to property area remained at the same level as in the previous year. The carbon footprint of like-for-like shopping centres decreased by 5.9 per cent.
With respect to energy used by Citycon, it is estimated that acidifying emissions total 438,000 kilogrammes of sulphur dioxide equivalents (since
electricity traders are under no statutory obligation to disclose nitrogen oxide or sulphur dioxide emissions generated by production, emissions have been estimated based on country-specific production profiles).
Citycon seeks to mitigate its impact on climate change through energy savings measures, by increasing cooperation with tenants for the conservation of energy, and by increasing the ratio of renewable energy in purchased electricity. Furthermore the central locations and good public transport connections of shopping centres reduce the harmful environmental impacts of customer traffic.
Energy consumption in Citycon's properties is mostly indirect consumption, i.e., procured energy. Only one shopping centre is equipped with a heating plant, and the fuel used by it is reported as direct energy consumption. Citycon purchased a total of 181.9 GWh of electricity in 2013.
Total electricity consumption decreased by 1.2 per cent compared to the previous year. Electricity consumption in common areas (tenant consumption excluded) amounted to 110.1 GWh; a decrease of 1.4 per cent.
In like-for-like shopping centres, electricity consumption in common areas decreased by 1.4 per cent. The decrease in electricity consumption was facilitated by active optimisation and adjustment measures, as well as by investments in energy conservation. The summer was warmer than usual, which increased cooling requirements.
Kista Galleria, Stockholm
Source: IEA energy statistics
Heating energy consumption came to 133.8 GWh. Heating energy consumption decreased by 6.7 per cent compared to the previous year, and weatheradjusted consumption, 145.9 GWh, increased by 1.1 per cent.
Heating energy consumption in like-for-like shopping centres decreased by 8.9 per cent, while weatheradjusted consumption decreased by 1.1 per cent.
The winter was milder than average, which decreased heating requirements.
Citycon's total energy consumption (incl. electricity consumption in common areas, heating and cooling) amounted to 250.5 GWh. Consumption decreased by 3.8 per cent compared to the previous year.
Total energy consumption in like-for-like shopping centre properties decreased by 5.4 per cent.
In shopping centres, energy consumption per gross leasable area stayed at the same level and and energy consumption relative to sales fell by 2.6 per cent.
Citycon's total consumption of primary energy was 1,916 terajoules. In order to improve energy efficiency, Citycon optimised the energy consumption of properties, invested in energy efficiency and improved the monitoring of consumption.
Citycon's total water consumption in 2013 was 624,447 cubic metres. Water consumption decreased by 1.2 per cent compared to the previous year. The change was caused by changes in the property portfolio. The water consumption of like-for-like shopping centres decreased by 1.1 per cent. Water consumption per visitor in shopping centres was 3.9 litres and 3.6 litres in like-for-like shopping centres.
Water consumption includes water consumed by the real-estate company and tenants. Tenant water consumption is highest in grocery stores, restaurants and cafés, hair salons, laundries and car wash facilities. A property's water consumption includes water used in public facilities and water used for cleaning and property maintenance. Citycon undertook measures, such as the installation of user-specific water meters, to reduce water consumption.
Properties managed by Citycon generated 15,097 tonnes of waste, of which 14,446 tonnes were collected from shopping centres and 651 tonnes from other properties. The recycling rate of waste materials for Citycon's shopping centres was 85.4 per cent, showing a increase of 2.2 percentage points compared to the previous year.
The amount of waste generated by shopping centres increased by 2.3 per cent compared to the previous year. The amount of waste generated by like-for-like shopping centres stayed on the same level. The waste volume proportionate to sales showed an increase of 1.1 per cent.
Heating and electricity charges EUR million
Systematic training was arranged in shopping centres to improve sorting and recycling. Instructions for sorting waste are also available to all operators in Citycon's shopping centres. Citycon's business countries show operational differences in terms of waste management. Property waste management and sorting in Citycon's properties is organised in accordance with country-specific waste legislation and other local regulations.
Citycon carries out all (re)development projects in accordance with environmental classification principles. Energy efficiency, efficient water use, materials selected, building regulations on indoor air quality and Citycon's own instructions and guidelines are taken into account in project planning. Decisions on certification are made on a projectby-project basis. Citycon has LEED certificates for the following properties: Trio shopping centre
(re)development project (certified), Rocca al Mare shopping centre extension and (re)development project (silver), Liljeholmstorget Galleria shopping centre development project (platinum), Martinlaakson Ostari shopping centre development project (gold). The IsoKristiina (re)development project and Iso Omena extension project will also be implemented in compliance with the requirements of the LEED certificate.
The company's strategic policy for property acquisitions is that they must be located in a built environment and easily accessible by public transport.
The location of shopping centres in built environments with excellent public transport connections reduces the threat they represent to biodiversity. An environmental impact assessment, including a biodiversity assessment, is conducted
in connection with most zoning and major projects. Where an environmental impact assessment is not required by law, Citycon evaluates the need for an assessment of its own on a case-by-case basis. Citycon's properties are not situated on protected land areas, although the Rocca al Mare shopping
Energy consumption in like-for-like shopping centres decreased by 5.4 per cent.
Toy collection campaign at Myyrmanni, Vantaa
2013 was a year of changes, with a new operational model and organisational structure being established at the beginning of the year. The new way of working reflects the One Citycon mentality: business operations have been divided into clusters which operate according to similar processes and harmonised roles throughout Citycon. Also, profit and loss responsibilities and decision-making have been transferred closer to business activities. Business operations are further supported by centralised functions, such as marketing, property development, legal affairs, HR, and communications.
Organisational change was supported by internal workshops on the new way of working. Furthermore, a personnel survey was conducted in April, which confirmed that the changes had a positive impact on the clarity of roles and responsibilities and internal team spirit. The results also confirmed that Citycon
employees have a strong commitment to going the extra mile and adapting to new procedures. The fact that the results were discussed in teams meant that the employees had the opportunity to have an impact on the actions agreed together. Cross-border co-operation was promoted with the Citycon's internal 'Pinkest Act' competition in which Citycon's shopping centre personnel competed for the most innovative initiatives taken in shopping centres. When selecting the winner, special attention was paid to ways in which the initiative promoted internal cooperation.
Once again, the Citycon Days in May brought all employees together. The theme of this internal twoday development event was One Citycon. A process was begun for the identification of Citycon's values, with all employees giving their input on this topic. After the Citycon Days, the proposed themes were handled in various workshops within the organisation and, in
Citycon's personnel provides a pool of expertise on topics such as leasing, marketing, property development, accounting, financing and property transactions.
the final phase, all Citycon employees had the chance to give their opinion via the intranet. New Citycon Values (Passion, Experience, and One) were published in November and their meaning in everyday life had been discussed within all of Citycon's teams by the end of the year.
During the year, all HR-processes were harmonised throughout the organisation and a major emphasis was placed on performance management and target setting. Major progress was made in terms of the number of employee performance reviews; this year, 93.1 per cent of employees participated in at least one discussion and 58.6 per cent participated in two.
Country-level recreational evenings were held in all countries in the autumn, in order to promote the One Citycon spirit. In addition, Citycon continued to support employees' leisure time activities.
More detailed data on personnel on pages AR 80 and 81.
Citycon's shopping centres are integral parts of their local communities and have a naturally cooperative relationship with local actors and residents. In 2013, a particular emphasis was placed on helping young people feel good in shopping centres.
For many young people, shopping centres are important places where they spend time on an almost daily basis. This affects the daily work of shopping centre personnel, as some young people may question authority.
We believe that a young person who feels good and appreciated also behaves well, which is why we wish to develop our interaction with young people. Citycon entered into cooperation with the national youth service organisation Nuorten Palvelu ry in 2013, and this work will continue in 2014. Specific situations and potential problems facing individual shopping centres were reviewed in workshops.
The objective of the campaign is to increase the tenants' and service providers' understanding of young people and youth in general, and to create harmonised, locally adapted procedures for each shopping centre's security guards.
This training introduced the participants to new ways of working with young people. The related methods help guards cope with their work, while keeping interaction civil.
Introduction to working life as a 'community youngster'
Four Citycon shopping centres listened to the views of young people. Ninth-graders participating in the introduction to working life, which is part of the Finnish curriculum, worked as 'community youngsters' for a couple of weeks, producing content for various social media: Facebook, Twitter, Instagram and Pinterest.
The trainees also posted daily updates in the Framille blog (http://framille2013.tumblr.com/).
Citycon runs operations both locally and internationally. About 80 per cent of the shares of the company, listed on the Helsinki Stock Exchange (NASDAQ OMX Helsinki), are in foreign ownership. Local Cluster Directors run Citycon's operations in the Nordic and Baltic Countries.
Citycon's operations have a financial impact on several stakeholders such as tenants, personnel, suppliers, and subcontractors. The financial impact on each stakeholder group is assessed below, based on cash flows between Citycon and its stakeholders. The economic value Citycon generates and distributes is discussed in the Facts and Figures section on page AR 82.
Purchases related to property maintenance totalled EUR 66.3 million (EUR 65.6 million). Services related to property maintenance always require the use of local employees. Energy was the largest cost
item included in maintenance costs. In 2013, Citycon paid a total of EUR 25.1 million (EUR 25.1 million) to energy producers and suppliers. The principal heating method in properties is district heating, which is procured locally from each region's district heating company. Electricity is purchased on a centralised basis in all countries.
In each property (re)development project, Citycon arranges competitive bidding processes in line with the project goals. Citycon's gross capital expenditure in the year under review came to EUR 226.1 million (EUR 161.7 million), with property acquisitions accounting for EUR 2.0 million (EUR 58.8 million), acquisitions linked to joint ventures and investments in them for EUR 148.1 million (EUR 0.0 million), property development for EUR
75.5 million (EUR 101.6 million), and other investments for EUR 0.5 million (EUR 1.4 million). One of the factors contributing to the growth of capital expenditure was the acquisition of Kista Galleria in Stockholm.
The Annual Report is published annually and the information presented corresponds to the company's financial year, i.e., 1 January - 31 December. The next report will be published in the first quarter of 2015. The key financial figures presented are based on audited accounting records and approved annual accounts.
Citycon's capital expenditure totalled EUR 226.1 million.
Read more at www.citycon.com/sustainability
A key Corporate governance document of Citycon, the Code of Conduct lays down the ethical principles and business standards the company adheres to in its operations.
The Code of Conduct provides a basis for the way we do business and deal with environmental and human rights issues and in relation to our employees and other stakeholders. The Code of Conduct guides management and personnel towards ethical business practices and compliance with the laws and regulations in effect in each country. As stated in the Code of Conduct, Citycon assumes responsibility for all issues it has the authority to control within the scope of its operations.
The Code of Conduct is applied in all our operating countries. Internal communication and training is provided to promote the Code of Conduct. In 2013, the Code of Conduct was updated following a resolution by the Board of Directors. We paid special attention to providing information on the revised Code of Conduct and expected every Citycon employee familiarise themselves with it. In addition, we encourage our employees to report any problems or shortcomings detected when it comes to complying with the Code of Conduct. There are specific channels for reporting detected attempts of bribery, corruption or fraud, i.e. a letter, an e-mail or an electronic form. The report can be provided anonymously and all reports will be treated with the strictest confidentiality. The principles of the reporting procedure are recorded in Citycon's Whistleblowing Policy.
We discuss our ethical principles and our sustainable development targets with our stakeholders during contract negotiations as well as in regular meetings. Within our sphere of influence, we also aim to ensure that our partners and subcontractors adhere to Citycon's ethical principles. This is the foundation of our new and existing business relationships.
We hold the promotion and maintenance of equality in high regard. Each individual is respected and treated fairly and equally, regardless of gender,
belief, age, or other similar factors. We have a regularly revised equal opportunities scheme. No discrimination incidents were reported during the year 2013.
In line with our ethical business principles, we are explicitly opposed to corruption and bribery. Apart from gifts of only token monetary value or reasonable hospitality, Citycon or persons acting on its behalf must not offer or accept any benefits, gifts or hospitality that could influence our ability to make objective and honest decisions. Similarly, we refrain from trying to affect objective and honest decision-making by a public authority, client, partner or any other party. The appropriate travel and representation practices are specified in the company's Travel and Representation Policy. We are proud to report that 2013 was another year with no corruption, fraud or bribery cases brought to our attention.
Citycon does not support the operations of any political parties or groups. However, we want to engage in open dialogue with regional officials and political decision-makers in our operating areas. In 2013, in connection with the zoning or planning of our development projects, our representatives participated in the meetings of municipal political bodies. The purpose of this was to improve interaction. Citycon's shopping centres may be used by political parties to host election campaign events, subject to the company's standard leasing terms.
Citycon Oyj (Citycon or company) is a Finnish public limited liability company listed on the NASDAQ OMX Helsinki Oy (the Helsinki Stock Exchange). Parent company Citycon Oyj and its subsidiaries constitute the Citycon group.
Citycon's corporate governance principles are based on Finnish laws, Citycon's Articles of Association, the rules and regulations issued for the public listed companies by the Helsinki Stock Exchange and the Finnish Financial Supervisory Authority, the Finnish Corporate Governance Code 2010, and Citycon's own Corporate Governance Guidelines. Corporate governance in Citycon's subsidiaries is also governed by the laws of the country in which the subsidiary is domiciled, and by subsidiary's Articles of Association. Citycon publishes a Corporate Governance Statement annually, at the same time as its Financial Statements.
The General Meeting, the Board of Directors and the CEO are responsible for the administration and operations of Citycon. The General Meeting elects members to the company's Board of Directors, and the Board appoints the company's CEO. In managing the company's business operations, the CEO is assisted by the Corporate Management Committee whose members are appointed, upon the CEO's proposal, by the Board of Directors. The Board of Directors' work is enhanced by three Board committees. The work of the Board of Directors and its committees, the CEO and the Corporate Management Committee is governed by the Corporate Governance Guidelines approved by the Board of Directors. These guidelines contain charters for the Board and the committees, guidelines for the division of duties between the decision-making
bodies, and guidelines for the arrangement of internal control and risk management.
Citycon's Board of Directors and the Board's Audit and Governance Committee keep track of governance-related issues as part of their ordinary activities. During 2013, the Board of Directors updated the company's Code of Conduct, Corporate Governance Guidelines and Disclosure Policy. The highlights of the Code of Conduct are featured on the company's website in the Sustainability section, and the full Disclosure Policy is available in English in the Corporate Governance section.
In 2013, Citycon held two General Meetings. The Annual General Meeting (AGM) 2013 was held in Helsinki on 21 March. Notice of the meeting was published on 28 February 2013. A total of 261 shareholders attended the AGM either personally or through a proxy representative. Of the company's share capital and voting rights, 73.4 per cent (239,888,144 shares) were represented at the AGM. An Extraordinary General Meeting (EGM) was held in Helsinki on 6 February. A notice of the EGM was published on 16 January 2013.
Liljeholmstorget Galleria, Stockholm
A total of 217 shareholders attended the EGM either personally or through a proxy representative, and they represented 72.1 per cent (235,609,050 shares) of the company's total share capital and voting rights.
Citycon published the decisions taken by the General Meetings in stock exchange releases and on its website. The minutes of the meetings were available on the corporate website within two weeks of the meetings.
Minutes of the General Meetings and summaries of the decisions taken by each General Meeting since 2009 are available at www.citycon.com/gm. This section also contains general information on General Meetings and shareholders' rights.
Citycon's AGM on 21 March 2013 set the number of Board members at ten and re-elected the following Board members: Ronen Ashkenazi, Chaim Katzman, Bernd Knobloch, Kirsi Komi, Claes Ottosson, Jorma Sonninen, Yuval Yanai and Ariella Zochovitzky. Karine Ohana and Per-Anders Ovin were elected as new members to replace Roger Kempe and Per-Håkan Westin.
Personal details of the Board members and their shareholdings in the company are shown on page AR 57 and their career histories and key positions of trust is available on the corporate website at www.citycon.com/board.
Chairman of the Board in 2013 was Chaim Katzman, with Ronen Ashkenazi and also, as of 21 March 2013, Bernd Knobloch, serving as Deputy Chairmen.
According to the independence assessment conducted by the Board on 21 March 2013, all Board members are independent of the company, given that none have an employment contract, executive contract or other contractual relationship with the company. According to the Board's assessment, Bernd Knobloch, Kirsi Komi, Karine Ohana, Per-Anders Ovin, Jorma Sonninen and Yuval Yanai are also independent of the company's significant shareholders. The Board also reassessed Claes Ottosson's independency of significant shareholders and, due to changes in circumstances and on the basis of an overall assessment, considered that he can be, as of 21 March 2013, considered independent of significant shareholders. Also, Roger Kempe and Per-Håkan Westin were considered independent of significant shareholders until the termination of their Board membership. Since Ronen Ashkenazi and Chaim Katzman are in the employ by Citycon's main shareholder, Gazit-Globe Ltd. or its affiliated companies, they are not independent of significant shareholders. Furthermore, Board member Ariella Zochovitzky served as Gazit-Globe Ltd.'s representative (Chairman of the Board) in a company called U. Dori Group Ltd., in which Gazit-Globe Ltd. exercises a controlling interest, until March 2012. Due to that previous representation, the Board has considered Ariella Zochovitzky not independent of significant shareholders.
The Board of Directors convenes according to a pre-determined meeting schedule and when deemed necessary. The meeting schedule is based on the company's reporting schedule and the Board of Directors' strategy and budget meetings, as indicated in the Board's year clock shown on the next page.
| Time | Matters to be decided |
|---|---|
| February | Financial statements and report by the Board of Directors, proposal for profit distribution and other proposals for the AGM, performance-based bonuses payable for the previous year and bonus criteria and targets for the current year |
| March | Election of the Chairman and Deputy Chairman or Chairmen of the Board, election of Committee Chairmen and members, assessment of the Board members' independence |
| April | Interim Report |
| July | Interim Report |
| October | Interim Report, Strategy Day |
| December | Budget, risk management, Board's self-evaluation |
| Audit Committee | Nomination and Governance Committee |
Remuneration Committee |
Strategy and Investment Committee |
||
|---|---|---|---|---|---|
| Members | Ariella Zochovitzky (Ch.) Kirsi Komi (Ch.) | Chaim Katzman (Ch.) | Ronen Ashkenazi (Ch.) | ||
| Bernd Knobloch | Chaim Katzman | Claes Ottosson | Roger Kempe | ||
| Kirsi Komi | Roger Kempe | Per-Håkan Westin | Bernd Knobloch | ||
| Jorma Sonninen | Claes Ottosson | Yuval Yanai | Jorma Sonninen | ||
| Yuval Yanai | Ariella Zochovitzky | Ariella Zochovitzky | Per-Håkan Westin |
| Audit Committee | Remuneration Committee |
Strategy and Investment Committee |
||
|---|---|---|---|---|
| Chaim Katzman (Ch.) | Ronen Ashkenazi (Ch.) | |||
| Bernd Knobloch | Kirsi Komi | Bernd Knobloch Karine Ohana Claes Ottosson Per-Anders Ovin |
||
| Kirsi Komi | Claes Ottosson | |||
| Karine Ohana | Yuval Yanai | |||
| Per-Anders Ovin | Ariella Zochovitzky | |||
| Yuval Yanai | Jorma Sonninen | |||
| 7 | 2 | 3 | 4 | |
| 93 | 100 | 95 | 96 | |
| Ariella Zochovitzky (Ch.) |
In 2013, Citycon's Board of Directors held ten meetings in addition to its original meeting schedule and convened a total of 17 times. During the year, the Board held two meetings abroad, one in Stockholm and one in Tallinn in conjunction with visits to the local shopping centres owned by the company. Extraordinary meetings were mainly associated with the share issue executed in February-March and the Eurobond issued in June. The average attendance rate at Board meetings was 90 per cent.
The Board of Directors' work is assisted by three Board committees, which, effective as of 21 March 2013, are: the Audit and Governance Committee,
the Nomination and Remuneration Committee and the Strategy and Investment Committee. The Board had four committees until 21 March 2013, but in Board's formative meeting on 21 March 2013 the Board decided to abolish the Nomination and Governance Committee and relegate its duties to the Audit Committee which was then renamed as Audit and Governance Committee and to previous Remuneration Committee which was named as Nomination and Remuneration Committee.
The table above contains information on the Board committees' composition, number of meetings and attendance in 2013.
The AGM of 2013 decided that the Chairman of the Board of Directors be paid an annual fee of EUR 160,000, the Deputy Chairmen EUR 70,000 and ordinary members of the Board EUR 50,000. The Chairmen of the Board of Directors' committees shall be paid an additional annual fee of EUR 5,000. In addition, the AGM decided that the Chairmen of the Board committees be paid a meeting fee of EUR 800 and the other Board and committee members EUR 600 per meeting. No per-meeting fee is paid to the Chairman of the Board. Furthermore, it was decided that Board members residing outside the Greater Helsinki area would be compensated for actual travel and accommodation expenses and any other
| Meeting | |||
|---|---|---|---|
| EUR | Annual fee | fees | Total |
| Chaim Katzman | 165,000 | 5,200 | 170,200 |
| Ronen Ashkenazi | 75,000 | 9,300 | 84,300 |
| Roger Kempe | 0 | 4,000 | 4,000 |
| Bernd Knobloch | 70,000 | 17,700 | 87,700 |
| Kirsi Komi | 50,000 | 15,800 | 65,800 |
| Karine Ohana | 50,000 | 10,400 | 60,400 |
| Claes Ottosson | 50,000 | 13,700 | 63,700 |
| Per-Anders Ovin | 50,000 | 10,400 | 60,400 |
| Jorma Sonninen | 50,000 | 12,000 | 62,000 |
| Per-Håkan Westin | 0 | 4,000 | 4,000 |
| Yuval Yanai | 50,000 | 12,600 | 62,600 |
| Ariella Zochovitzky | 55,000 | 15,200 | 70,200 |
| Total | 665,000 | 130,300 | 795,300 |
| Performance bonus | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR | Annual salary | Fringe benefits | for year 2012 | Total | |||||
| Marcel Kokkeel 1) | 616,882.87 | 27,374.15 | 236,000.00 | 880,257.02 | |||||
| Other CMC members | 936,752.12 | 42,980.91 | 426,951.81 | 1,406,684.83 | |||||
| Total | 1,553,634.99 | 70,355.06 | 662,951.81 | 2,286,941.85 |
1) In addition, Kokkeel was issued 99,401 shares of the company as a share bonus related to CEO's performance bonus payment for the year 2012.
expenses resulting from their work on the Board. After having remained unaltered for four years, the annual and meeting fees were raised in 2013, and a decision was made not to pay any per-meeting fee to the Board Chairman.
Annual and meeting fees paid to Citycon's Board members in 2013 are shown in the table on the next page. Fees were paid in cash. Meeting fees include fees paid for both Board and committee meetings.
Citycon's Board members are not included in the company's share-based incentive schemes. Information on shares held by Board members at the end of 2013 is provided on page AR 57. Up-todate information on shareholdings and any changes therein can be found on the corporate website at www.citycon.com/insiders.
Marcel Kokkeel, MA (Dutch citizen, born in 1958) has served as Citycon's CEO since 24 March 2011. Eero
Sihvonen, CFO, is Citycon's Executive Vice President. Mr Kokkeel's and Mr Sihvonen's personal details are shown on page AR 57, and their career histories and any positions of trust are available on the corporate website at www.citycon.com/management.
The CEO's service agreement has been signed for a fixed term and it will expire at the end of February 2015. The company may terminate the agreement prior to this date without cause at any time, with a period of notice of six months. In this case the CEO will be paid, in addition to the salary payable for the notice period, severance pay consisting of 1.5 times the annual base salary at the moment of termination, as well as 1.5 times the most recent annual bonus payment.
CEO Marcel Kokkeel is assisted by the CMC whose members are appointed, upon the CEO's proposal, by the Board of Directors. In addition to CEO the CMC consisted of company's Executive Vice President and Chief Financial Officer, General Counsel, Chief Operating Officer and Chief Investment Officer. There were no changes in the CMC during 2013.
The CMC usually convenes twice a month. In 2013, the CMC convened 19 times.
CMC members' personal details and information on their share and stock option holdings are shown on page AR 57. CMC members' career histories and any positions of trust are shown on the corporate website at www.citycon.com/management.
Remuneration payable to the CEO and other CMC members consists of a fixed yearly or monthly salary and fringe benefits, as well as an annual performance bonus. In addition, the CEO and other CMC members are included in the Citycon Group's stock option plan 2011 for key personnel.
According to CEO's service agreement, his annual base salary in 2013 amounted to EUR 616,882.87. The CEO's base salary specified in the service agreement is tied to the consumer price index. At the Board of Directors' discretion, the CEO may be awarded an additional cash bonus up to a sum representing 80 per cent of his annual base salary. Of the bonus, 50 per cent will be paid in cash and 50 per cent in company shares. In addition to this, the CEO is entitled to a company car as well as housing, telephone and lunch benefits. The CEO's pension benefits are determined in accordance with standard Finnish employment pension legislation.
The salaries, fringe benefits and performance bonuses paid to the CEO and other CMC members in 2013 are shown in the table on the previous page. The stock options held by the CEO and CMC members are shown on page AR 57. The CEO and other CMC members hold stock options 2011, entitling them to subscribe for a total of 3,258,905 shares (subscription ratio 1.1765) in 2012-2018.
The company's statutory insiders include Board members, the CEO and the responsible auditor. Statutory insiders also comprise CMC members, whom the Board of Directors has defined as other senior executives referred to in the Finnish Securities Markets Act. Holdings in the company by statutory insiders and those closely associated with them are regarded as public information. Up-to-date information on shareholdings and any changes therein can be found on the corporate website at www.citycon.com/insiders.
In addition to statutory insiders, Citycon also has so-called permanent insiders entered in the company's company-specific insider register on the basis of their position or duties, or another contract they have concluded with the company. These company-specific insiders include the secretaries and assistants of the Board members, CEO and Corporate Management Committee members, and those in charge of corporate finances and financial reporting, financing, legal affairs, investment and development activities, corporate communications, investor relations, IT functions, as well as internal and external audit. The company-specific insider register is unavailable for public review. Project-specific insider registers are set up and maintained as necessary.
Citycon verifies the data on its statutory insiders twice a year, by requesting that insiders check the accuracy of the information contained in extracts from the insider register.
As stipulated by Citycon's Insider Guidelines, the company's statutory and permanent insiders may not trade in Citycon shares, instruments entitling to Citycon shares, or instruments entitling to Citycon shares, or other securities and financial instruments for 21 days prior to the release of the company's annual accounts or interim reports. Insiders are also required to request the opinion of the company's Compliance Officer in advance on the legality and compliance of any securities transaction in which they plan to engage. The Compliance Officer records each contact made.
Citycon's internal control includes financial and other control. Internal control is carried out in-house by the senior and executive management, as well as by all other personnel. Citycon uses the internationally recognised Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework as the framework for its internal control.
Internal control is intended to ensure the achievement of goals and objectives set, the economical and efficient use of available resources, sufficient management of risks associated with business, and safeguarding of the company's operations, information and assets. Internal control of financial reporting is intended to guarantee
the reliability and accuracy of financial and other management information. The purpose of internal control is also to ensure that the company complies with Finnish and other operating countries laws, agreed internal procedures and guidelines and that the company has sufficient and appropriate data systems and work processes to support its operations.
Citycon's Board of Directors is responsible for arranging and maintaining adequate and effective internal control. It is the CEO's duty to attend to the implementation of practical actions regarding internal control and to maintain an organisational structure in which responsibility, authority and reporting relationships are clearly and comprehensively defined in writing.
The CEO and other CMC members are responsible for ensuring compliance with currently valid laws and regulations in the Group's everyday operations, as well as compliance with the company's business principles and decisions of the Board of Directors.
The company has appropriate and reliable accounting and other data systems in place for monitoring business activities and supervising financial management. The attainment of set targets is monitored using a planning and reporting system adopted throughout the Citycon group. This system is used to monitor both actual performance and forecasts. The system also serves as a budgeting tool.
Citycon's risk management process is constantly evaluated and developed. The risk management process is carried out annually, and in connection with this process the company's risk map and annual action plan are updated to correspond with the targets of the annual plan, and they are presented to the Board of Directors at the budget meeting in December.
The arrangement of Citycon's financial risk management is documented in the company's treasury policy and key financial risks are reported on a quarterly basis to the Board's Audit and Governance Committee. Furthermore, the Board of Directors regularly monitors the company's business risks and uncertainties and reports on them in the Annual Report and in interim reports.
More extensive information on the risk management process and risks associated with business operations can be found on pages AR 58-59 of this report, on pages 53-56 of the appended Financial Statements, and on the corporate website at www.citycon.com/riskmanagement.
The purpose of internal audit is to independently and systematically evaluate and improve the company's internal control and risk management. For internal audit purposes, the Board's Audit and Governance Committee approves an annual audit plan, which forms the basis for the performance of the audit. The internal audit is governed by the company's Corporate Governance Guidelines, which contains charters for the Board and its committees and guidelines for the division of duties between the Board of Directors, the CEO and the CMC. Other guidelines include written decision-making authorisations which include approval limits in euros, Citycon Group Accounting Policy and Reporting Guidelines, Risk Management Policy, Treasury Policy and detailed process-level Control Catalogues. Persons responsible for internal audits report the internal audit results to the CEO
and the Audit and Governance Committee, who must initiate any actions required by the audit findings without delay. The planned internal audit conducted in 2013 focused on Citycon group's HR processes, (re)development project processes and operating expenses and rental income processes. Internal audit services were purchased from an external service provider, PricewaterhouseCoopers Oy. The external auditor conducts evaluations of internal controls as part of their annual audit as prescribed by law.
The AGM 2013 re-elected Ernst & Young Oy, a firm of authorised public accountants, the company's auditor, with Eija Niemi-Nikkola, Authorised Public Accountant, acting as the responsible auditor appointed by the firm. Ernst & Young Oy has served as the company's auditor since 2006. Eija Niemi-Nikkola has served as the company's responsible auditor since 2013. Tuija Korpelainen was Citycon's previous responsible auditor for seven years, which is the maximum duration of consecutive terms for a responsible auditor in a public limited liability company permitted by Finnish audit legislation.
Citycon's responsible auditor attends the Board's Audit and Governance Committee meeting in which the annual financial statements are discussed, in order to report on audit findings. The responsible auditor also attends other Audit and Governance Committee meetings.
In 2013, Citycon paid EUR 0.4 million in remuneration to its auditor related to statutory and group audit. In addition, Citycon purchased advisory services from the auditor for a total of EUR 0.2 million.
Citycon's communications principles are defined in the company's Disclosure Policy approved by the Board of Directors. The policy defines the objectives, practices and persons responsible for communications.
Citycon's Board of Directors approved the company's updated Disclosure Policy in October 2013. The purpose of the changes, which were mainly technical, was to make the policy better reflect the revised organisational structure. The company's Disclosure Policy is available in English on Citycon's website in the Corporate Governance section.
Chairman of the Board of Directors Chaim Katzman Director since 2010 LL.B.; US and Israeli citizen, born 1949 Independent of the company Main occupation: Norstar Holdings Inc. (former Gazit Inc.), founder, controlling shareholder and Chairman of the Board of Directors since 1991; Gazit-Globe Ltd., Chairman of the Board of Directors since 1998 Citycon shares: 216,405
Deputy Chairman of the Board
Main occupation: Professional non-executive director Citycon shares: 45,900
University degrees in Law and Business Administration; German citizen, born 1951 Independent of the company and significant
M.Sc (Finance); French citizen, born 1964 Independent of the company and significant shareholders Main occupation: Ohana & Co., Paris, Managing Partner since 1998; OHANA Capital (Investment fund vehicle),
Bernd Knobloch Director since 2012
shareholders
Karine Ohana Director since 2013
Deputy Chairman of the Board Ronen Ashkenazi Director since 2009 B.Sc. (Civil Engineering); Israeli citizen, born 1962 Independent of the company Main occupation: Gazit Globe Israel (Development) Ltd., CEO and minority shareholder since 2005; U. Dori Group Ltd., CEO since 2011 Citycon shares: 4,080
Kirsi Komi Director since 2011 LL.M. Finnish citizen, born 1963 Independent of the company and significant shareholders Main occupation: Professional non-executive director Citycon shares: 4,100
Claes Ottosson Director since 2004 Electrical Engineer Swedish citizen, born 1961 Independent of the company and significant shareholders Main occupation: ICA Kvantum Hovås, Managing Director since 1990 Citycon shares: 41,685
Director since 2011 Dipl. EMC (European Diploma in Marketing) Finnish citizen, born 1962 Independent of the company and significant shareholders Main occupation: Realone Oy, Owner and Managing Director since 1997 Citycon shares: 15,867 (through a closely associated party)
Director since 2012 B.A. (Economics and Accounting), CPA (Israel), MBA; Israeli citizen, born 1957 Independent of the company Main occupation: C.I.G. Consultants / Capital Investments Group Ltd., General Manager and Partner since 2001; C.I.G. Zochovitzky Ltd., General Manager & Partner since 2012 Citycon shares: 4,100
Marcel Kokkeel Chief Executive Officer M.A. (Notary Law) CMC member since: 2011 Dutch citizen, born 1958 Citycon shares: 216,405 Citycon stock options: 1,000,000
Eero Sihvonen Executive Vice President and Chief Financial Officer M.Sc. (Econ.) CMC member since: 2005 Finnish citizen, born 1957 Citycon shares: 85,826 Citycon stock options: 750,000
Anu Tuomola General Counsel, Head of Legal Affairs LL.M., Trained at the Bench CMC member since: 2011 Finnish citizen, born 1974 Citycon shares: - Citycon stock options: 300,000
Harri Holmström Chief Operating Officer M.Sc. (Surveying), Authorised Property Appraiser CMC member since: 2005 Finnish citizen, born 1956 Citycon shares: 27,036 Citycon stock options: 20,000
Nils Styf Chief Investment Officer M.Sc. (Business Administration and Economics) CMC member since: 2012 Swedish citizen, born 1976 Citycon shares: 2,080 Citycon stock options: 300,000
Partner since 2013 Citycon shares: 4,090
Director since 2013 M.Sc (Economics); Swedish citizen, born 1956 Independent of the company and significant shareholders Main occupation: Mengus Stockholm AB, Chairman of the Board, Partner and Owner since 2005; Marrakech Design, Owner since 2006; Ovin Consulting AB, Owner since 2003 Citycon shares: 5,000
B.A. (Economic and Accounting) Israeli citizen, born 1952 Independent of the company and significant shareholders Main occupation: Given Imaging Ltd, Chief Financial Officer since 2005 Citycon shares: 4,200
The objective of Citycon's risk management programme is to ensure that Citycon reaches its business targets and to identify key risks that may threaten its ability to meet those targets before they are actualised.
The risk management and reporting process involves identifying, analysing, measuring, mitigating, and controlling business-related risks in all of the main business processes. For continuous improvement in risk management processes, the process also includes identification of existing actions to mitigate risks and, in the event that current actions are not deemed sufficient, the creation of new risk mitigation plans for each risk identified. Successful risk management decreases the likelihood of risks' realisation and mitigates the negative effects of risk that is realised.
The risk reporting process compiles data for analysis of risks and the respective mitigation plans in a single group-wide risk register, for annual reporting to the Board of Directors. For evaluation of each risk's importance and to improve the ability to compare risks across units, an estimate of the loss associated with each risk's realisation is determined, along with a probability figure for that realisation. Also, the risks actualised during the previous year are estimated and reported upon.
| Market value EUR million |
||
|---|---|---|
| Yield requirement | +5% -> | 2,599.6 |
| Market rent | +5% -> | 2,913.6 |
| Vacancy rate | +2% -percentage points -> |
2,646.5 |
| Operating expenses | +5% -> | 2,739.5 |
There are two main risks related to property (re)development projects:
Planned costs can be overrun in consequence of rising construction costs or because of unforeseeable challenges or changes of plans in the construction work.
Reduced demand for retail premises could prevent rental of new premises at the planned prices, which might result in a lower occupancy rate than anticipated or in lower rent levels.
Issues of the economic development in the regions where the company operates form one of the major risks the company faces that could affect demand, vacancy rates, and market rent levels for retail premises. An uncertain economic environment, particularly trends affecting consumer confidence and behaviour, inevitably affects demand for retail premises. When economic growth is weak, the rent levels of retail premises typically falls, leasing of new premises is more difficult, and vacancy rates rise.
Weaker economic development leading to credit losses, vacancy, or decreased rental income
An economic downturn would also increase the risk of credit losses or the need to accept rent reductions in order to retain tenants. A decrease in tenants' sales would also lead to a reduction in turnover-based rental income.
Construction costs are optimised through careful monitoring of expenses, competitive bidding, and, where possible, conclusion of construction contracts with a target price and price ceiling.
Leasing risks in projects are minimised through allocation of sufficient resources to leasing operations for new properties, investment in new shopping centres' marketing, and signing of agreements with anchor tenants. In addition, by having a strict pre-leasing requirement before a project commences or in its initial stages.
The company strives to mitigate and manage the risks related to developments in the economy by continuously following and analysing tenants, to identify those with associated risks and by always requiring collateral on rent from tenants.
Citycon's strategy of focusing on urban shopping centres with necessity-driven retail has proved to be a recession resistent business model associated with steady cash flows and occupancy and with low credit losses even in times of financial crisis. Furthermore, most of the company's assets are in AAA-rated countries decreasing the risk of a major downturn affecting the retail sector.
RISK
| Rising operating expenses of properties |
Environment- and human related risks |
Decreasing fair values of investment properties |
Risks associated with availability and costs of funding |
|---|---|---|---|
| To cover its properties' operating expenses, Citycon's lease agreements stipulate either the total rent or specified rent components. The former model is applied to a certain part of the existing lease portfolio, so the rent amounts paid by the lessee are not affected by any increases or decreases in operating expenses. Consequently, a rise in operating expenses that outpaces inflation would diminish Citycon's profitability. Rising operating expenses could also reduce tenants' rental payment capacity even in cases wherein Citycon can pass on the higher costs to tenants. Some of the main operating expenses for properties are repair and maintenance fees, energy costs, and security expenses. |
Risks associated with climate change might affect Citycon's business environment in the long term. For example, extreme weather conditions could increase maintenance costs and erode profitability. Also, biodiversity could become a topic of legislation and widespread political debate,that may well address the threat that land use and construction may disrupt ecosystems and harm biodiversity. Citycon's supply chain includes low-skill and low-wage tasks, such as cleaning and construction assistance work. The hiring of people for these jobs may involve risk factors related to work conditions and human rights. An expert organisation of Citycon's nature relies heavily on its personnel for success. Personnel related risks include unclear roles, unspecified targets, and competence gaps. |
Several factors can lead to a decrease in the value of the retail properties owned by Citycon. Among these are issues of general and local economic development, interest rate levels, inflation rates, the development of market rent levels, vacancy rates, investment demand created by property investors, property investors' yield requirements, and the competitive environment. The development in fair value figures for investment properties continues to be characterised by uncertainty caused by the ongoing financial crisis and the resulting tough economic conditions. |
Growth, whether through new property acquisitions or expansion of the current shopping centres, requires new financing, which means that risks associated with the availability and cost of debt financing are of importance to Citycon. Both bank financing and bond financing from debt capital markets have recently been available to Citycon, but banks' willingness to lend could decline, and bond markets may start functioning less well. The margins required by banks or debt markets could also rise for reasons of tightening regulations or other factors. This may raise the cost of Citycon's new debt financing. Underlying base interest rates remain very low in historical terms and are expected to increase over time, also increasing Citycon's financing costs. |
| Citycon attempts to protect itself from the risks related to a rise in operating expenses by concluding agreements that entail specified rent components, hedging against electricity price risks, enhancing purchasing operations, improving monitoring of costs, and improving the cost comparisons between shopping centres. For many of the assets, Citycon also applies a true-up method, charging the tenants on the basis of actual costs. Energy costs account for a considerable proportion of property maintenance costs. To mitigate the risk created by energy price hikes, electricity prices are fixed in accordance with a hedging policy and actions geared toward energy savings and energy efficiency have been implemented. |
In connection with risks related to land use, an environmental impact assessment, including a biodiversity assessment, is conducted in connection with most zoning work and major projects. Citycon seeks to eliminate the supply-chain risk factors by preparing codes of ethics for its co-operation partners and by requiring them to act ethically and responsibly. To reduce personnel-related risks, Citycon places great emphasis on target-setting and performance management, competence development and career advancement, and commitment of key employees. Citycon sees good leadership as an important part of reducing human-related risks. |
Whereas Citycon cannot influence yield requirements, general economic developments, or interest rates, it seeks to have an impact on the other fair value variables through active shopping centre management. The company aims to optimise its shopping centres' profitability by handling the entire shopping centre management process in-house, through its own employees. The uncertainty in fair values of properties is reflected most strongly in retail properties outside major cities or in otherwise less attractive properties, because, for example, investor demand is not currently focused on these properties and banks are more reluctant to offer financing for such projects. On the other hand, the fair values of winning shopping centres, which attract investor interest even in uncertain conditions, have remained stable or even increased in 2013. Citycon's strategy of focusing on urban shopping centres with necessity-driven retail has proved to be a business model resulting in relatively steady portfolio valuations throughout the economic cycle. Furthermore, most of the company's assets being in AAA-rated countries decreases the risk of a major decrease in the valuations. |
The interest-rate risk management is aimed at reducing the adverse effect of increased market rates on the company's profit, balance sheet, and cash flow. Under the company's financing policy, 70–90% of the interest position must be tied to fixed interest rates. Citycon attempts to safeguard its financing costs and the availability of debt financing by adhering to a conservative but active financing policy, with a focus on long-term financing, and by maintaining a solid balance sheet structure. To mitigate the refinancing risk related to bank financing, the company has actively diversified its funding sources, as demonstrated by the 500-million Eurobond issued in 2013 and the 150-million Eurobond issued in 2012. The equity issues of EUR 90 million in 2012 and EUR 200 million in 2013 considerably strengthened the balance sheet and enabled public investment grade credit ratings from Standard & Poor's (BBB-) and Moody's (Baa3) in May 2013. The investment grade ratings further improved the availability of funding with competitive credit margins. |
Reporting is a matter of honour for Citycon. We want to provide accurate, consistent and transparent information on the company paying special attention to industry practices and timely reporting: Citycon is one of the first companies to report to the Helsinki Stock Exchange.
| Key indicator tables63 | |
|---|---|
| Fair value of property portfolio63 | |
| Fair value of like-for-like property portfolio63 | |
| Summary of property portfolio64 | |
| Summary of like-for-like property portfolio65 | |
| Summary of rental income of property portfolio66 | |
| Summary of rental income of like-for-like | |
| property portfolio66 | |
| Citycon's five largest properties66 | |
| Leasing activity | 67 |
| Top five tenants 68 |
|
| Shopping centre sales and number of visitors 69 | |
| Shopping centre rental income by branches | 70 |
| (Re)development projects71 |
|---|
| Completed (re)development projects |
| in 2012 and 201371 |
| Ongoing (re)development projects72 |
| Planned (re)development projects 72 |
| Potential (re)development targets73 |
| Key environmental indicators74 | |
|---|---|
| Energy74 | |
| Total energy consumption 74 | |
| Energy consumption (MWh)75 | |
| Energy consumption in like-for-like shopping | |
| centres and other retail properties (MWh)75 | |
| Energy consumption by business areas (MWh)75 | |
| Energy consumption by property type (MWh) | 76 |
| Carbon | 76 |
|---|---|
| Greenhouse gas emissions by scopes (tnCO₂e) | 76 |
| Total direct and indirect greenhouse gas | |
| emissions | 76 |
| Greenhouse gas intensity from | |
| building energy | 76 |
| Greenhouse gas intensity from building | |
| energy by business units |
76 |
| Water | 77 |
| Total water consumption |
77 |
Total water consumption by business units ................. 77
| Waste |
78 |
|---|---|
| Total waste amount by business units |
78 |
| Total waste amount | 78 |
| Total waste amount in shopping centres |
78 |
| Total waste amount in like-for-like | |
| shopping centres | 78 |
| Total weight of waste in | |
| shopping centres by types |
78 |
| Total weight of waste in shopping centres by disposal | |
| routes (tn) | 79 |
| Total weight of waste in like-for-like | |
| shopping centres by disposal routes (tn) | 79 |
| Proportion of waste by disposal route | 79 |
| Total weight of waste in like-for-like | |
| shopping centres by types (tn) | 79 |
| Recycling rate of shopping centres |
79 |
| Personnel80 | |
|---|---|
| Number of employees 80 |
|
| Personnel key figures81 | |
| Economic responsibility82 | |
| Economic value generated and distributed82 | |
| Reporting principles, methodology | |
| and boundaries 83 |
| Comparison of the report with the guidelines | |
|---|---|
| of the global reporting initiative 84 |
| Average | Average operating |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | EUR, sq.m./ month |
EUR/sq.m./ month |
initial yield, (%) |
Average reversionary yield, (%) |
|||||||
| Gains | Losses | ||||||||||
| 22 | 1,468.4 | 1,462.2 | 22.8 | -21.5 | 1.4 | 6.0 | 6.0 | 27.9 | 6.4 | 6.1 | 6.4 |
| 32 | 202.8 | 196.9 | 8.5 | -7.6 | 0.9 | 7.5 | 7.8 | 15.3 | 4.1 | 7.8 | 8.9 |
| 54 | 1,671.2 | 1,659.0 | 31.3 | -29.0 | 2.3 | 6.2 | 6.2 | 26.4 | 6.1 | 6.3 | 6.7 |
| 9 | 700.3 | 703.5 | 13.2 | -5.2 | 8.1 | 5.9 | 5.9 | 25.5 | 7.0 | 5.9 | 6.6 |
| 2 | 19.8 | 35.7 | 0.6 | -0.6 | 0.0 | 7.4 | 7.3 | 15.5 | 3.9 | 7.7 | 8.0 |
| 11 | 720.1 | 739.2 | 13.8 | -5.7 | 8.1 | 5.9 | 6.0 | 25.3 | 7.0 | 5.9 | 6.6 |
| 7.7 | |||||||||||
| 70 | 2,733.5 | 2,714.2 | 61.2 | -35.2 | 26.1 | 6.3 | 6.3 | 25.3 | 6.0 | 6.4 | 6.8 |
| 1 | 535.2 | - | 2.8 | 0.0 | 2.8 | - | - | - | - | - | - |
| 6.6 | |||||||||||
| Number of 5 71 |
FAIR VALUE OF PROPERTY PORTFOLIO 342.2 3,268.7 |
Fair value, EUR million properties 31 Dec. 2013 31 Dec. 2012 316.0 2,714.2 |
16.1 64.0 |
-0.4 -35.2 |
Fair value change, year 2013, 15.8 28.9 |
7.3 6.1 |
Average yield requirement, % 7.7 6.3 |
market rent, 20.4 27.4 |
expenses 3.5 6.8 |
Average Total 31 Dec. 2013 31 Dec. 2012 31 Dec. 2013 31 Dec. 2013 31 Dec. 2013 31 Dec. 2013 7.7 6.2 |
1) Does not include properties held for sale.
| FAIR VALUE OF LIKE-FOR-LIKE PROPERTY PORTFOLIO | Average | Average operating |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of | Fair value, EUR million |
Fair value change, year 2013, EUR million |
Average yield requirement, % |
market rent, EUR, sq.m./ month |
expenses EUR/sq.m./ month |
Average initial yield, (%) |
Average reversionary yield, (%) |
|||||
| Like-for-like properties | properties 31 Dec. 2013 31 Dec. 2012 | Gains | Losses | Total 31 Dec. 2013 31 Dec. 2012 31 Dec. 2013 31 Dec. 2013 31 Dec. 2013 31 Dec. 2013 | ||||||||
| Finland | ||||||||||||
| Shopping centres | 17 | 1,201.9 | 1,182.7 | 21.6 | -18.5 | 3.1 | 6.0 | 6.0 | 27.7 | 6.4 | 6.2 | 6.4 |
| Other retail properties | 32 | 202.8 | 195.6 | 8.5 | -7.5 | 1.0 | 7.5 | 7.8 | 15.3 | 4.1 | 7.8 | 8.9 |
| Finland, total | 49 | 1,404.7 | 1,378.2 | 30.1 | -26.0 | 4.1 | 6.2 | 6.2 | 25.9 | 6.1 | 6.4 | 6.8 |
| Sweden | ||||||||||||
| Shopping centres | 7 | 611.7 | 616.8 | 12.6 | -5.2 | 7.4 | 5.8 | 5.8 | 26.9 | 7.4 | 5.8 | 6.3 |
| Other retail properties | 2 | 19.8 | 21.0 | 0.0 | -0.6 | -0.6 | 7.4 | 7.3 | 15.5 | 3.9 | 7.7 | 8.0 |
| Sweden, total | 9 | 631.6 | 637.8 | 12.6 | -5.7 | 6.9 | 5.8 | 5.8 | 26.5 | 7.3 | 5.8 | 6.4 |
| Baltic Countries and New Business | ||||||||||||
| Shopping centres | 1 | 10.7 | 10.5 | 0.2 | 0.0 | 0.2 | 8.7 | 9.2 | 13.8 | 3.0 | 9.5 | 9.7 |
| Like-for-like properties, total | 59 | 2,047.0 | 2,026.5 | 42.9 | -31.7 | 11.2 | 6.1 | 6.1 | 26.0 | 6.4 | 6.3 | 6.7 |
| SUMMARY OF PROPERTY PORTFOLIO | Occupancy rate, % | ||||||
|---|---|---|---|---|---|---|---|
| Number of lease | Fair value, EUR million | Economic, EUR | Technical, sq.m. | ||||
| Total property portfolio | Location | Citycon's GLA, sq.m. | agreements | 31 Dec. 2013 | 31 Dec. 2012 | 31 Dec. 2013 | 31 Dec. 2013 |
| Finland | |||||||
| Shopping centres, Helsinki Metropolitan Area | |||||||
| Arabia | Helsinki | 14,300 | 50 | 22.3 | 19.7 | 97.5 | 96.7 |
| Columbus | Helsinki | 21,000 | 75 | 86.5 | 82.5 | 99.1 | 98.3 |
| Espoontori | Helsinki area | 16,300 | 50 | 46.4 | 48.3 | 92.0 | 91.5 |
| Heikintori | Helsinki area | 6,300 | 36 | 6.0 | 6.3 | 71.4 | 57.1 |
| Isomyyri | Helsinki area | 10,800 | 17 | 13.0 | 13.0 | 93.6 | 94.4 |
| Iso Omena | Helsinki area | 63,300 | 210 | 388.1 | 373.8 | 99.5 | 99.0 |
| Lippulaiva | Helsinki area | 19,000 | 49 | 69.2 | 66.6 | 96.6 | 92.4 |
| Martinlaakso Shopping Centre | Helsinki area | 7,400 | 28 | 27.0 | 27.7 | 100.0 | 100.0 |
| Myllypuro Shopping Centre | Helsinki | 7,400 | 24 | 18.6 | 20.3 | 84.6 | 82.3 |
| Myyrmanni | Helsinki area | 39,600 | 109 | 164.5 | 161.3 | 95.9 | 93.6 |
| Tikkuri | Helsinki area | 13,400 | 84 | 34.2 | 33.0 | 97.5 | 95.0 |
| Shopping centres, other areas in Finland | |||||||
| Duo | Tampere | 13,600 | 50 | 37.3 | 34.8 | 96.6 | 95.6 |
| Forum | Jyväskylä | 16,800 | 73 | 76.7 | 77.1 | 96.3 | 94.2 |
| Galleria | Oulu | 6,400 | 52 | 20.6 | 21.4 | 98.3 | 96.4 |
| IsoKarhu | Pori | 15,000 | 57 | 47.4 | 46.9 | 99.5 | 97.5 |
| IsoKristiina | Lappeenranta | 11,200 | 13 | 30.3 | 36.7 | 100.0 | 100.0 |
| Jyväskeskus | Jyväskylä | 5,800 | 62 | 13.9 | 13.8 | 94.3 | 90.2 |
| Koskikara | Valkeakoski | 5,800 | 27 | 2.8 | 4.2 | 88.6 | 84.6 |
| Koskikeskus | Tampere | 34,300 | 164 | 182.5 | 175.9 | 94.9 | 93.2 |
| Linjuri | Salo | 9,200 | 12 | 14.7 | 14.6 | 98.3 | 96.6 |
| Sampokeskus | Rovaniemi | 13,800 | 76 | 21.3 | 20.7 | 93.3 | 86.9 |
| Trio | Lahti | 45,600 | 154 | 145.0 | 150.2 | 88.8 | 89.2 |
| Shopping centres, Finland, total | 396,300 | 1,472 | 1,468.4 | 1,462.2 1) | 95.9 | 93.7 | |
| Other retail properties | 175,590 | 223 | 202.8 | 196.9 | 91.5 | 88.7 | |
| Finland, total | 571,890 | 1,695 | 1,671.2 | 1,659.0 | 95.1 | 92.2 | |
| Sweden | |||||||
| Shopping centres, Stockholm area and Umeå | |||||||
| Fruängen Centrum | Stockholm | 14,700 | 78 | 24.1 | 22.5 | 95.8 | 94.0 |
| Högdalen Centrum | Stockholm | 19,300 | 68 | 30.5 | 31.5 | 88.6 | 89.1 |
| Jakobsbergs Centrum | Stockholm | 41,500 | 164 | 106.1 | 106.5 | 95.7 | 94.6 |
| Liljeholmstorget Galleria | Stockholm | 41,000 | 152 | 257.1 | 260.2 | 97.6 | 97.4 |
| Strömpilen | Umeå | 26,900 | 34 | 47.1 | 50.2 | 97.9 | 98.1 |
| Tumba Centrum | Stockholm | 25,500 | 162 | 61.2 | 58.8 | 97.5 | 96.2 |
| Åkermyntan Centrum | Stockholm | 10,000 | 45 | 22.2 | 19.8 | 92.9 | 93.3 |
| Åkersberga Centrum | Stockholm | 28,200 | 95 | 85.6 | 87.1 | 89.9 | 87.6 |
| Shopping centres, Gothenburg area | |||||||
| Stenungs Torg | Stenungsund | 36,400 | 277 | 66.3 | 66.8 | 94.1 | 93.1 |
| Shopping centres, Sweden, total | 243,500 | 1,075 | 700.3 | 703.5 | 95.2 | 94.1 | |
| Other retail properties, total | 11,000 | 3 | 19.8 | 35.7 | 92.4 | 87.6 | |
| Sweden, total | 254,500 | 1,078 | 720.1 | 739.2 | 95.1 | 93.8 |
| Occupancy rate, % | |||||||
|---|---|---|---|---|---|---|---|
| Number of lease | Fair value, EUR million | Economic, EUR | Technical, sq.m. | ||||
| Total property portfolio | Location | Citycon's GLA, sq.m. | agreements | 31 Dec. 2013 | 31 Dec. 2012 | 31 Dec. 2013 | 31 Dec. 2013 |
| Baltic Countries and New Business | |||||||
| Estonia | |||||||
| Kristiine | Tallinn | 43,700 | 161 | 124.6 | 112.8 | 100.0 | 100.0 |
| Magistral | Tallinn | 11,700 | 69 | 24.2 | 23.1 | 100.0 | 100.0 |
| Rocca al Mare | Tallinn | 57,400 | 156 | 164.7 | 151.5 | 100.0 | 100.0 |
| Lithuania | |||||||
| Mandarinas | Vilnius | 7,900 | 61 | 10.7 | 10.5 | 100.0 | 100.0 |
| Denmark | |||||||
| Albertslund Centrum | Copenhagen | 14,700 | 67 | 18.0 | 18.1 | 96.4 | 96.2 |
| Baltic Countries and New Business, total | 135,400 | 514 | 342.2 | 316.0 | 99.7 | 99.6 | |
| Investment properties total | 961,790 | 3,287 | 2,733.5 | 2,714.2 | 95.7 | 93.7 | |
| Kista Galleria, 100% | 94,200 | 627 | 535.2 | - | 99.1 | 99.2 | |
| Investment properties and Kista Galleria, total | 1,055,990 | 3,914 | 3,268.7 | 2,714.2 | 96.2 | 94.1 |
1) Fair value includes Torikeskus shopping centre which was sold during 2013.
| SUMMARY OF LIKE-FOR-LIKE PROPERTY PORTFOLIO | Occupancy rate, % | |||||
|---|---|---|---|---|---|---|
| Like-for-like properties | Citycon's GLA, sq.m. | Number of lease agreements |
31 Dec. 2013 | Fair value, EUR million 31 Dec. 2012 |
Economic, EUR 31 Dec. 2013 |
Technical, sq.m. 31 Dec. 2013 |
| Finland | ||||||
| Shopping centres | 326,200 | 1,209 | 1,201.9 | 1,182.7 | 96.0 | 93.6 |
| Other retail properties | 175,590 | 223 | 202.8 | 195.6 | 91.5 | 88.7 |
| Finland, total | 501,790 | 1,432 | 1,404.7 | 1,378.2 | 95.1 | 91.9 |
| Sweden | ||||||
| Shopping centres | 197,100 | 753 | 611.7 | 616.8 | 95.4 | 94.3 |
| Other retail properties | 11,000 | 3 | 19.8 | 21.0 | 92.4 | 87.6 |
| Sweden, total | 208,100 | 756 | 631.6 | 637.8 | 95.3 | 93.9 |
| Baltic Countries and New Business | ||||||
| Shopping centres | 7,900 | 61 | 10.7 | 10.5 | 100.0 | 100.0 |
| Like-for-like properties, total | 717,790 | 2,249 | 2,047.0 | 2,026.5 | 95.2 | 92.6 |
| PORTFOLIO | Average remaining length | Average rent, | Gross rental income, EUR million | Net rental income, EUR million | ||
|---|---|---|---|---|---|---|
| Total portfolio | of lease agreements, years 31 Dec. 2013 |
EUR/sq.m/month 31 Dec. 2013 |
Year 2013 | Year 2012 | Year 2013 | Year 2012 |
| Finland | ||||||
| Shopping centres | 3.4 | 26.0 | 119.7 | 113.5 | 87.1 | 82.8 |
| Other retail properties | 6.4 | 13.6 | 24.5 | 23.4 | 16.4 | 15.4 |
| Finland, total | 3.9 | 22.4 | 144.2 | 137.0 | 103.5 | 98.2 |
| Sweden | ||||||
| Shopping centres | 2.8 | 20.9 | 56.7 | 56.5 | 38.2 | 37.0 |
| Other retail properties | 2.5 | 17.1 | 2.5 | 3.9 | 1.5 | 2.3 |
| Sweden, total | 2.8 | 20.8 | 59.2 | 60.3 | 39.7 | 39.2 |
| Baltic Countries and New Business, total | 3.3 | 19.8 | 30.4 | 28.6 | 25.6 | 24.6 |
| Investment properties total | 3.5 | 21.5 | 233.8 | 225.9 | 168.9 | 162.0 |
| Kista Galleria, 100% | 3.2 | 33.7 | 42.1 | - | 32.0 | - |
| Investment properties and Kista Galleria, total | 3.5 | 22.7 | 275.9 | 225.9 | 200.9 | 162.0 |
| Average remaining length | Average rent, EUR/sq.m/month 31 Dec. 2013 |
Net rental income, EUR million | ||||
|---|---|---|---|---|---|---|
| Like-for-like properties | of lease agreements, years 31 Dec. 2013 |
Year 2013 | Gross rental income, EUR million Year 2012 |
Year 2013 | Year 2012 | |
| Finland | ||||||
| Shopping centres | 3.2 | 26.0 | 98.5 | 94.8 | 72.1 | 69.1 |
| Other retail properties | 6.4 | 13.6 | 24.4 | 23.2 | 16.4 | 15.3 |
| Finland, total | 3.9 | 21.9 | 122.9 | 117.9 | 88.6 | 84.5 |
| Sweden | ||||||
| Shopping centres | 2.8 | 21.9 | 49.3 | 47.1 | 32.1 | 30.8 |
| Other retail properties | 2.5 | 17.1 | 2.0 | 2.1 | 1.3 | 1.5 |
| Sweden, total | 2.8 | 21.7 | 51.3 | 49.2 | 33.5 | 32.3 |
| Baltic Countries and New Business, total | 1.9 | 14.3 | 1.3 | 1.1 | 1.1 | 0.9 |
| Like-for-like properties, total | 3.5 | 21.7 | 175.4 | 168.2 | 123.1 | 117.7 |
| Average remaining length of lease agreements, years |
Average rent, EUR/sq.m/month |
Gross rental income, EUR million |
Net rental income, EUR million |
Fair value, EUR million |
Fair value change, EUR million |
Net rental yield, % |
Economic occupancy rate, % |
|
|---|---|---|---|---|---|---|---|---|
| 31 Dec. 2013 | 31 Dec. 2013 | Year 2013 | Year 2013 | 31 Dec. 2013 | 31 Dec. 2013 | Year 2013 | 31 Dec. 2013 | |
| Kista Galleria, 100% | 3.2 | 33.7 | 42.1 | 32.0 | 535.2 | 2.8 | 6.1 | 99.1 |
| Iso Omena | 4.2 | 33.2 | 25.1 | 20.0 | 388.1 | 14.5 | 5.4 | 99.5 |
| Liljeholmstorget Galleria | 3.0 | 32.2 | 16.6 | 12.2 | 257.1 | 4.4 | 4.8 | 97.6 |
| Koskikeskus | 3.8 | 31.4 | 13.6 | 10.6 | 182.5 | 0.4 | 6.0 | 94.9 |
| Rocca al Mare | 3.3 | 20.2 | 13.1 | 11.5 | 164.7 | 7.2 | 7.6 | 100.0 |
| Five largest properties, total | 3.5 | 30.4 | 110.5 | 86.2 | 1,527.6 | 29.3 | - | 98.6 |
| Average rent, | ||||
|---|---|---|---|---|
| Number of lease | Citycon's GLA, | Leased area, | EUR/sq.m./ | |
| agreements | sq.m. | sq.m. | month | |
| Status 1 Jan. 2013 | 1,802 | 595,670 | 529,986 | 21.4 |
| Leases started: | ||||
| New leases | 323 | 0 | 75,099 | 17.7 |
| Renewed leases | 65 | 0 | 34,809 | 21.4 |
| Leases started due to | ||||
| development projects | 2 | 700 | 384 | 7.1 |
| Leases started, total | 390 | 700 | 110,292 | 18.8 |
| Acquisitions | 1 | 1,400 | 616 | 14.1 |
| Leases ended: | ||||
| Expired leases | 342 | 1,300 | 74,291 | 18.8 |
| Expired leases due to renewals | 65 | 0 | 34,797 | 21.8 |
| Leases terminated due to | ||||
| development projects | 28 | 0 | 3,089 | 18.6 |
| Divestments | 63 | 24,580 | 21,593 | 15.3 |
| Leases ended, total | 498 | 25,880 | 133,770 | 19.0 |
| Status 31 Dec. 2013 | 1,695 | 571,890 | 507,124 | 22.4 |
| Average rent, | ||||
|---|---|---|---|---|
| Number of lease | Citycon's GLA, | Leased area, | EUR/sq.m./ | |
| agreements | sq.m. | sq.m. | month | |
| Status 1 Jan. 2013 | 1,474 | 274,300 | 252,159 | 19.3 |
| Leases started: | ||||
| New leases | 93 | 600 | 10,009 | 16.6 |
| Renewed leases | 33 | 0 | 6,173 | 28.5 |
| Leases started due to | ||||
| development projects | 7 | 700 | 598 | 25.8 |
| Leases started, total | 133 | 1,300 | 16,780 | 21.3 |
| Acquisitions | ||||
| Leases ended: | ||||
| Expired leases | 415 | 0 | 13,834 | 17.7 |
| Expired leases due to renewals | 33 | 0 | 6,173 | 25.3 |
| Leases terminated due to | ||||
| development projects | 0 | 0 | 0 | - |
| Divestments | 81 | 21,100 | 14,590 | 11.8 |
| Leases ended, total | 529 | 21,100 | 34,597 | 16.6 |
| Status 31 Dec. 2013 | 1,078 | 254,500 | 234,342 | 20.8 |
| Average rent, | ||||
|---|---|---|---|---|
| Number of lease | Citycon's GLA, | Leased area, | EUR/sq.m./ | |
| agreements | sq.m. | sq.m. | month | |
| Status 1 Jan. 2013 | 516 | 130,300 | 129,454 | 20.5 |
| Leases started: | ||||
| New leases | 33 | 0 | 5,775 | 16.3 |
| Renewed leases | 9 | 0 | 1,256 | 22.4 |
| Leases started due to | ||||
| development projects | 46 | 5,300 | 15,911 | 16.5 |
| Leases started, total | 88 | 5,300 | 22,941 | 16.7 |
| Acquisitions | 0 | 0 | 0 | - |
| Leases ended: | ||||
| Expired leases | 39 | 200 | 5,883 | 19.0 |
| Expired leases due to renewals | 9 | 0 | 1,256 | 24.2 |
| Leases terminated due to | ||||
| development projects | 42 | 0 | 11,062 | 18.3 |
| Divestments | 0 | 0 | 0 | - |
| Leases ended, total | 90 | 200 | 18,200 | 19.0 |
| Status 31 Dec. 2013 | 514 | 135,400 | 134,195 | 19.8 |
| Average rent, | ||||
|---|---|---|---|---|
| Number of lease agreements |
Citycon's GLA, sq.m. |
Leased area, sq.m. |
EUR/sq.m./ month |
|
| Status 1 Jan. 2013 | 3,792 | 1,000,270 | 911,599 | 20.7 |
| Leases started: | ||||
| New leases | 449 | 600 | 90,882 | 17.5 |
| Renewed leases | 107 | 0 | 42,238 | 22.5 |
| Leases started due to | ||||
| development projects | 55 | 6,700 | 16,893 | 16.6 |
| Leases started, total | 611 | 7,300 | 150,013 | 18.8 |
| Acquisitions | 1 | 1,400 | 616 | 14.1 |
| Leases ended: | ||||
| Expired leases | 796 | 1,500 | 94,008 | 18.6 |
| Expired leases due to renewals | 107 | 0 | 42,225 | 22.4 |
| Leases terminated due to | ||||
| development projects | 70 | 0 | 14,151 | 18.4 |
| Divestments | 144 | 45,680 | 36,183 | 13.9 |
| Leases ended, total | 1,117 | 47,180 | 186,567 | 18.6 |
| Status 31 Dec. 2013 | 3,287 | 961,790 | 875,661 | 21.5 |
| Average rent, | ||||
|---|---|---|---|---|
| Number of lease | Citycon's GLA, | Leased area, | EUR/sq.m./ | |
| agreements | sq.m. | sq.m. | month | |
| Status 1 Jan. 2013 | 3,792 | 1,000,270 | 911,599 | 20.7 |
| Leases started: | ||||
| New leases | 479 | 600 | 96,122 | 19.8 |
| Renewed leases | 129 | 0 | 45,875 | 26.3 |
| Leases started due to | ||||
| development projects | 55 | 7,000 | 16,893 | 16.6 |
| Leases started, total | 663 | 7,600 | 158,890 | 21.3 |
| Acquisitions | 634 | 95,300 | 93,997 | 34.6 |
| Leases ended: | ||||
| Expired leases | 832 | 1,500 | 100,949 | 21.2 |
| Expired leases due to renewals | 129 | 0 | 45,862 | 25.6 |
| Leases terminated due to | ||||
| development projects | 70 | 0 | 14,151 | 18.4 |
| Divestments | 144 | 45,680 | 36,183 | 13.9 |
| Leases ended, total | 1,175 | 47,180 | 197,146 | 20.7 |
| Status 31 Dec. 2013 | 3,914 | 1,055,990 | 967,341 | 22.7 |
| Proportion of gross rental income based on valid rent roll at 31 Dec 2013, % |
Average remaining length of lease agreements, years |
|
|---|---|---|
| S Group (Prisma) | 10.5 | 7.5 |
| Kaubamaja | 3.2 | 2.6 |
| ICA Group (RIMI) | 3.1 | 4.1 |
| H&M | 2.5 | 5.1 |
| Marks & Spencer | 2.5 | 9.3 |
| Top 5, total | 21.9 | 6.2 |
| Proportion of gross rental income based on valid rent roll at 31 Dec 2013, % |
Average remaining length of lease agreements, years |
|
|---|---|---|
| Kesko | 16.1 | 6.1 |
| S Group | 5.7 | 6.9 |
| ICA Gruppen | 4.2 | 3.5 |
| Stockmann | 2.7 | 2.3 |
| Tokmanni | 2.0 | 3.2 |
| Top 5, total | 30.6 | 5.4 |
| Proportion of gross rental income based on valid rent roll at 31 Dec 2013, % |
Average remaining length of lease agreements, years |
|
|---|---|---|
| Kesko | 13.9 | 6.1 |
| S Group | 4.9 | 6.9 |
| ICA Gruppen | 4.0 | 3.5 |
| Stockmann | 2.7 | 2.4 |
| H&M | 2.2 | 4.7 |
| Top 5, total | 27.6 | 5.4 |
| Proportion of gross rental income based on valid rent roll at 31 Dec 2013, % |
Average remaining length of lease agreements, years |
|
|---|---|---|
| Kesko | 26.8 | 6.1 |
| S Group | 7.1 | 6.7 |
| Stockmann | 3.4 | 2.3 |
| Tokmanni | 3.3 | 3.2 |
| Nordea | 2.4 | 4.0 |
| Top 5, total | 43.0 | 5.5 |
| Proportion of gross rental income based on valid rent roll at 31 Dec 2013, % |
Average remaining length of lease agreements, years |
|
|---|---|---|
| ICA Gruppen | 13.7 | 3.6 |
| Axfood | 4.3 | 2.2 |
| Coop | 4.3 | 5.6 |
| Systembolaget | 3.0 | 3.1 |
| Stockholms Läns Landsting | 2.8 | 2.4 |
| Top 5, total | 28.1 | 3.5 |
| Sales, EUR million 1) | Number of visitors, million | Catchment | Gross | Retail | Citycon's | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property | Location | 2013 | 2012 | Change,% | 2013 | 2012 | Change,% | area population 2) |
leasable area total, sq.m. |
premises total, sq.m. |
Sales, EUR/ sq.m./month |
gross leasable area, sq.m. |
| Finland | ||||||||||||
| Helsinki Metropolitan Area | ||||||||||||
| Arabia | Helsinki | 55.9 | 50.9 | 10% | 2.8 | 2.6 | 6% | 19,769 | 14,300 | 13,400 | 356 | 14,300 |
| Columbus | Helsinki | 98.3 | 99.6 | -1% | 6.1 | 6.8 | -10% | 84,908 | 21,000 | 19,300 | 318 | 21,000 |
| Espoontori 3) | Helsinki area | 42.0 | 40.6 | 3% | 3.7 | 3.6 | 1% | 68,713 | 23,600 | 11,900 | 392 | 16,300 |
| Heikintori | Helsinki area | 17.1 | 18.6 | -8% | 1.9 | 1.8 | 4% | 76,335 | 9,500 | 7,000 | 237 | 6,300 |
| Isomyyri | Helsinki area | 19.7 | 21.9 | -10% | 1.8 | 2.1 | -10% | 84,851 | 15,000 | 12,700 | 212 | 10,800 |
| Iso Omena | Helsinki area | 259.8 | 260.4 | 0% | 9.1 | 8.8 | 4% | 202,431 | 63,300 | 51,200 | 422 | 63,300 |
| Lippulaiva | Helsinki area | 97.1 | 94.9 | 2% | 3.9 | 3.8 | 3% | 71,143 | 19,000 | 16,900 | 466 | 19,000 |
| Martinlaakso Shopping Centre | Helsinki area | 40.0 | 35.2 | 13% | 1.8 | 1.8 | 3% | 25,447 | 7,400 | 7,300 | 434 | 7,400 |
| Myllypuro Shopping Centre | Helsinki | 22.5 | 20.0 | 12% | n/a | n/a | - | 29,389 | 7,400 | 7,200 | 309 | 7,400 |
| Myyrmanni | Helsinki area | 149.4 | 158.3 | -6% | 6.8 | 6.7 | 1% | 106,345 | 39,600 | 31,100 | 393 | 39,600 |
| Tikkuri 4) | Helsinki area | 30.3 | 31.5 | -4% | 2.6 | 2.9 | -8% | 117,195 | 15,100 | 8,000 | 325 | 10,600 |
| Other areas in Finland | ||||||||||||
| Duo | Tampere | 61.2 | 57.8 | 6% | 4.2 | 4.2 | 1% | 101,844 | 15,200 | 11,900 | 438 | 13,600 |
| Forum | Jyväskylä | 56.4 | 62.3 | -10% | 6.1 | 6.1 | 0% | 121,301 | 23,200 | 20,700 | 226 | 16,800 |
| Galleria 5) | Oulu | 5.8 | 7.9 | -27% | 0.9 | 1.1 | -19% | 95,998 | 6,400 | 2,600 | 171 | 6,400 |
| IsoKarhu | Pori | 36.6 | 36.3 | 1% | 3.0 | 3.2 | -7% | 82,151 | 15,000 | 12,600 | 242 | 15,000 |
| IsoKristiina | Lappeenranta | 26.4 | 44.2 | -40% | 2.0 | 2.9 | -31% | 59,169 | 22,400 | 15,000 | 202 | 11,200 |
| Jyväskeskus | Jyväskylä | 19.7 | 20.5 | -4% | 3.6 | 3.9 | -7% | 121,324 | 12,200 | 7,800 | 215 | 5,800 |
| Koskikara | Valkeakoski | 30.7 | 34.5 | -11% | 1.7 | 2.1 | -15% | 15,552 | 10,400 | 9,800 | 334 | 5,800 |
| Koskikeskus | Tampere | 125.0 | 111.6 | 12% | 5.4 | 5.3 | 1% | 229,222 | 34,300 | 29,600 | 364 | 34,300 |
| Linjuri | Salo | 35.6 | 36.5 | -3% | 2.7 | 2.9 | -8% | 38,579 | 10,500 | 9,400 | 432 | 9,200 |
| Sampokeskus | Rovaniemi | 18.8 | 18.7 | 1% | 1.9 | 2.0 | -9% | 51,705 | 13,800 | 8,000 | 185 | 13,800 |
| Trio | Lahti | 71.5 | 75.9 | -6% | 6.7 | 6.5 | 3% | 124,443 | 48,900 | 34,900 | 191 | 45,600 |
| Shopping centres, Finland, total | 1,319.8 | 1,338.0 | -1% | 78.7 | 81.1 | -3% | - | 447,500 | 348,300 | - | 393,500 | |
| Sweden | ||||||||||||
| Stockholm area and Umeå | ||||||||||||
| Fruängen Centrum | Stockholm | 32.8 | 32.8 | 0% | n/a | n/a | - | 60,700 | 14,700 | 6,600 | 427 | 14,700 |
| Högdalens Centrum | Stockholm | 63.0 | 61.7 | 2% | n/a | n/a | - | 45,600 | 19,300 | 16,000 | 401 | 19,300 |
| Jakobsbergs Centrum | Stockholm | 96.7 | 98.5 | -2% | 6.3 | 5.6 | 12% | 419,000 | 41,500 | 26,500 | 347 | 41,500 |
| Liljeholmstorget Galleria | Stockholm | 178.6 | 169.4 | 5% | 10.0 | 9.4 | 6% | 975,000 | 41,000 | 28,000 | 552 | 41,000 |
| Strömpilen | Umeå | 131.0 | 126.3 | 4% | 3.3 | 3.1 | 5% | 91,600 | 26,900 | 23,600 | 480 | 26,900 |
| Tumba Centrum | Stockholm | 64.1 | 62.0 | 3% | 3.5 | 3.6 | -3% | 198,200 | 25,500 | 14,100 | 408 | 25,500 |
| Åkermyntan Centrum | Stockholm | 34.3 | 30.5 | 13% | 1.8 | 1.7 | 4% | 34,500 | 10,000 | 8,100 | 456 | 10,000 |
| Åkersberga Centrum | Stockholm | 92.4 | 94.4 | -2% | 6.1 | 6.1 | 1% | 86,800 | 28,200 | 24,100 | 414 | 28,200 |
| Gothenburg area | ||||||||||||
| Stenungs Torg | Stenungsund | 69.7 | 71.6 | -3% | 2.8 | 2.8 | 0% | 257,900 | 36,400 | 17,900 | 365 | 36,400 |
| Shopping centres, Sweden, total | 762.6 | 747.2 | 2% | 33.7 | 32.4 | 4% | - | 243,500 | 164,900 | - | 243,500 |
| Sales, EUR million 1) | Number of visitors, million | Catchment area |
Gross leasable area |
Retail premises |
Sales, EUR/ | Citycon's gross leasable |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property | Location | 2013 | 2012 | Change,% | 2013 | 2012 | Change,% | population 2) | total, sq.m. | total, sq.m. | sq.m./month | area, sq.m. |
| Baltic Countries and New Business | ||||||||||||
| Estonia | ||||||||||||
| Kristiine | Tallinn | 120.9 | 119.1 | 2% | 7.5 | 7.6 | -1% | 270,000 | 43,700 | 43,600 | 237 | 43,700 |
| Magistral | Tallinn | 26.4 | 15.9 | 66% | 3.6 | 2.3 | 61% | 64,000 | 11,700 | 11,700 | 188 | 11,700 |
| Rocca al Mare | Tallinn | 143.9 | 136.6 | 5% | 6.6 | 6.4 | 2% | 340,000 | 57,400 | 56,000 | 220 | 57,400 |
| Lithuania | ||||||||||||
| Mandarinas | Vilnius | 19.1 | 18.9 | 1% | 2.4 | 2.4 | 0% | 50,000 | 7,900 | 7,900 | 201 | 7,900 |
| Denmark | ||||||||||||
| Albertslund Centrum | Copenhagen | 37.2 | 38.5 | -3% | n/a | n/a | - | - | 14,700 | 10,000 | 224 | 14,700 |
| Baltic Countries and New Business, total | 347.5 | 329.1 | 6% | 20.1 | 18.6 | 8% | - | 135,400 | 129,200 | - | 135,400 | |
| Investment properties total | 2,429.9 | 2,414.3 | 1% | 132.6 | 132.1 | 0% | - | 823,800 | 641,500 | - | 772,400 | |
| Kista Galleria, 100% | 270.3 | 275.1 | -2% | 18.5 | 18.4 | 1% | 125,000 | 94,200 | 60,800 | 486 | 94,200 | |
| Investment properties and Kista Galleria, total | 2,700.2 | 2,689.4 | 0% | 151.1 | 150.5 | 0% | 918,000 | 735,700 | - | 866,600 |
1) Sales include estimates.
2) Based on drive time estimates (5-15 minutes).
3) GLA includes Asemakuja and Asematori.
4) Does not include Asematie 3 or Kassatalo.
5) Sales and number of visitors does not include Citytalo.
| Finland | Sweden | Baltic Countries and New Business |
Citycon, investment properties total |
Citycon, investment properties and Kista Galleria total |
|
|---|---|---|---|---|---|
| Cafes and Restaurants | 9% | 8% | 5% | 8% | 9% |
| Health and Beauty | 8% | 9% | 8% | 8% | 8% |
| Other Specialty Stores | 3% | 1% | 1% | 2% | 2% |
| Services and Offices | 5% | 24% | 5% | 10% | 11% |
| Clothes and Fashion | 30% | 18% | 35% | 27% | 29% |
| Groceries | 18% | 26% | 11% | 19% | 17% |
| Department Stores | 11% | - | 6% | 7% | 9% |
| Leisure, Home Supplies | 17% | 14% | 29% | 18% | 16% |
| Total | 100% | 100% | 100% | 100% | 100% |
1) Based on valid rent roll at 31 Dec. 2013.
| Target | City, Country | Fair value, EUR million 31 Dec. 2013 |
Area before and after project completion, sq.m. |
Citycon's actual gross capital investments, EUR million |
Economic occupancy rate, % |
Expected yield on completion when stabilised, % 1) |
Additional information |
|---|---|---|---|---|---|---|---|
| Åkermyntan Centrum |
Stockholm, Sweden |
22.2 | 8,500 10,100 |
6.9 | 92.9 | 6.9 | Shopping centre modernisation project where the centre and its parking services were renovated, and energy efficiency improved. Anchor tenants: ICA, Lidl. |
| Koskikeskus | Tampere, Finland |
182.5 | 27,700 28,600 |
40.5 | 94.9 | 6.6 | A sizable shopping centre modernisation project in the centre of Tampere, strengthening the centre's offering. The project covered all retail premises owned by Citycon. The interiors, entrances, facades and technical systems of the shopping centre did all undergo a complete (re)development. Koskikeskus remained open during the entire project. Anchor tenants: Intersport Megastore, Stadium, Lindex, Gina Tricot, Seppälä, Moda Aukia. |
| Iso Omena | Helsinki area, Finland |
388.1 | 60,600 63,100 |
7.5 | 99.5 | - | Shopping centre expansion project, where the centre's former rooftop car park in the second floor was converted to retail premises. Anchor tenants: H&M, Intersport, Partioaitta. |
| Myllypuro Shopping Centre |
Helsinki, Finland |
18.6 | 7,700 7,300 |
21.3 | 84.6 | 7.4 | Construction of a new shopping centre to replace the old one next to the Myllypuro metro station. An underground car park was built for the shopping centre. Rental and right-of residence housing units, sold by Citycon, were also constructed in connection with the shopping centre. The total value of the project exceeds EUR 60 million. Anchor tenants: S-market, Pharmacy, Hesburger, Helsingin kaupungin Mediatila, HOK restaurants. |
| Magistral | Tallinn, Estonia |
24.2 | 9,500 11,700 |
7.0 | 100 | 8.3 | Shopping centre modernisation and expansion project. The interiors of Magistral were fully renovated, the shopping centre was expanded, and parking was revamped. The shopping centre was closed during the entire renovation and expansion project. Anchor tenants: Rimi, Rademar, Koduextra, Tiimari. |
1) Yield on completion, % = Expected stabilised (3rd year after completion) net rents incl. possible vacancy / total investment (=total capital invested in property by Citycon)
| Target | City, Country | Fair value, EUR million 31 Dec. 2013 |
Project area, sq.m.1) |
Area before and after project completion, sq.m. |
Citycon's expected net investment need, EUR million |
Citycon's actual gross capital investments by 31 Dec. 2013, EUR million |
Completion target |
Pre-leasing rate,% 2) |
Expected yield on completion when |
stabilised, % 3) Additional information |
|---|---|---|---|---|---|---|---|---|---|---|
| Iso Omena 4) Helsinki area, Finland |
388.1 | 34,000 | 63,300 90,000 |
88.0 (tot. 176) |
13.4 | Q3/2016 | 40 | 6.5-7.0 Extension project including partial (re)development of existing centre. The extension will be fully integrated with the new Matinkylä metro station and bus terminal. The retail mix will increasingly be focused on fashion stores and a wide offering of restaurant services. The project will make Iso Omena one of Finland's largest shopping centres. Zone 1 is carried out in 50/50 partnership with NCC PD. GIC owns 40 per cent of the existing Iso Omena shopping centre. Anchor tenants: Library, City healthcare centre, Anttila. |
||
| IsoKristiina 4) Lappeenranta, Finland |
30.3 | 32,000 | 22,400 34,000 |
54.0 (tot. 110) |
16.0 | Q4/2015 | 70 | 7.6 Refurbishment and extension of the shopping centre. The shopping centre will be developed to meet the requirements of both the local customers and Russian tourists. As a special feature, Lappeenranta City Theatre will be located inside the shopping centre's extension part. Ilmarinen is a JV partner with a 50 per cent share in the (re)development and in the existing shopping centre. Anchor tenants: Sokos, Anttila, Finnkino, S-market, K-supermarket. |
||
| Stenungs Torg |
Greater Gothenburg, Sweden |
66.3 | 5,000 | 36,400 41,400 |
18.0 | 1.5 | Q3/2015 | 67 | 7.5 An extension of about 5,000 square metres with retail space for six stores. A new main entrance will also be built for the centre. The opening of the first phase is scheduled for November 2014. New anchor tenants: H&M and Nordic Wellnes. |
|
| Kista Galleria 5) |
Stockholm, Sweden |
535.2 | 2,500 | 94,200 94,600 |
5.0 (tot. 10) |
3.3 | Q4/2014 | 100 | - Refurbishment and extension project where a 2,400 sq.m. digital library is added to the shopping centre. The library is a joint investment with the City of Stockholm. The total value of the project is approx. EUR 10 million. |
1) Refers to the current floor area undergoing alterations and extension combined
2) Signed or agreed lease agreements, pre-leasing in EUR
4) The property is owned in a joint venture
5) The property is owned in a joint venture and consolidated in Citycon's
3) Yield on completion, % = Expected stabilised (3rd year after completion) net rents incl. possible vacancy / total investment (=total capital invested in property by Citycon)
financial statements based on the equity method
| PLANNED (RE)DEVELOPMENT PROJECTS | Citycon's estimated net |
|||||||
|---|---|---|---|---|---|---|---|---|
| Target | City, country | Fair value, EUR million 31 Dec. 2013 |
Estimated project area, sq.m. 1) |
Estimated additional sq.m. |
investment need, EUR million 2) |
Target year of project launch |
Target year of project |
completion Additional information |
| Myyrmanni | Helsinki area, Finland |
164.5 | 26,600 | 16,600 | 55 | 2014 | 2016 Extension possibility of the shopping centre on two sides of the shopping centre. Prisma hypermarket and residential units are under planning to be built in connection to Myyrmanni. |
|
| Tumba Centrum |
Stockholm, Sweden |
61.2 | 7,000 - 10,000 |
7,000 - 10,000 |
34 | 2015 | 2016 Shopping centre extension project combined with a new bus terminal. Negotiations related to zoning ongoing with the Municipality and a co-operation agreement for residential construction with a construction company. |
|
| Kista Galleria 3) Stockholm, | Sweden | 535.2 | 6,000 | 500 | 6 (tot. 12) |
2014 | 2015 (Re)development possibility of the shopping centre. The plans include a facelift to the north part of the shopping centre with new entrance, additional leisure and restaurant offering as well as extension of the current food court. |
|
| Lippulaiva | Helsinki area, Finland |
69.2 | 36,000 | 23,000 | 50-70 | 2015 | 2017 Extension possibility of the shopping centre. Zoning process ongoing due to the plans to extend the western metro line and build a new bus terminal next to Lippulaiva. Plans include a new library and cutural services as well as a hypermarket. Size of extension uncertain. |
1) Refers to the current floor area undergoing alterations and extension combined
2) The amount of investment needed will change and become more precise as the planning process proceeds. The figure is the best current estimate
3) The property is owned in a joint venture and consolidated in Citycon's financial statements based on the equity method
Citycon is investigating the development and/or expansion opportunities of these targets (amongst others). No applications for city plan changes or other official decisions have been made.
| Target | City, country | Fair value, EUR million 31 Dec. 2013 |
Estimated project area, sq.m. 1) |
Additional information |
|---|---|---|---|---|
| Liljeholmstorget Galleria | Stockholm, Sweden | 257.1 | 21,000 | Extension possibility of the shopping centre over the metro tracks with the main objective to increase the retail and service offering. Plans also include creating building rights for residential and health care/office premises. |
| Kista Galleria 2) | Stockholm, Sweden | 535.2 | 12,000 | Citycon is investigating the possibility for an extension and modernisation project including extending the shopping centre towards the metro station and exploiting existing and creating new building rights for non-retail space such as residential, medical offices and/or hotel. |
| Högdalen Centrum | Stockholm, Sweden | 30.5 | 3,000 | An expansion and modernisation project is being investigated including facade and entrance renovation as well as tenant alterations. |
| Jakobsbergs Centrum | Stockholm, Sweden | 106.1 | 10,000 | A modernisation project is being investigated; plans include residential building rights. |
1) Refers to the current floor area undergoing alterations and extension combined
2) The property is owned in a joint venture and consolidated in Citycon's financial statements based on the equity method.
| EPRA Sustainability |
|||||||
|---|---|---|---|---|---|---|---|
| 2013 | 2012 | 2011 | 2010 | 2009 | GRI | BPR | |
| Electricity consumption in common areas (MWh) | 110,075 | 111,587 | 113,710 | 104,853 | 108,409 | EN4 | BPR 3.1 |
| Tenants' electricity purchased by landlord (MWh) 2) | 71,745 | 72,571 | 67,984 | 62,200 | 67,123 | EN4 | BPR 3.1 |
| Total electricity consumption (MWh) | 181,918 | 184,158 | 181,693 | 167,052 | 175,533 | EN4 | BPR 3.1 |
| Electricity consumption in Citycon's offices and business premises (MWh) |
72 | 73 | 86 | 41 | 58 | BPR 3.1 | |
| Non-renewable electricity (MWh) | 167,512 | 169,800 | 176,737 | 161,085 | 165,989 | EN4 | BPR 3.1 |
| Renewable electricity (MWh) | 14,406 | 14,358 | 4,956 | 5,967 | 9,544 | EN4 | BPR 3.1 |
| District heating (MWh) 3) | 133,790 | 143,395 | 138,163 | 171,342 | 139,495 | EN4 | BPR 3.2 |
| District cooling (MWh) 3) | 2,025 | 1,511 | 1,799 | 1,606 | 243 | EN4 | BPR 3.2 |
| Direct energy consumption (EN3) | |||||||
| Total energy consumption from fuels (MWh) | 4,590 | 3,810 | 936 | 0 | 0 | EN3 | BPR 3.3 |
| Primary energy (TJ) | 1,916 | 1,966 | 1,910 | 1,927 | 1,844 | EN3-EN4 | BPR 3.1-3.3 |
| Intensity indicators 4) | |||||||
| Building energy intensity shopping centres (kWh/m2 ) |
270 | 272 | 263 | 321 | 275 | CRE1 | BPR 3.4 |
| Building energy intensity shopping centres (kWh/visitor) 5) | 1.52 | 1.51 | 1.49 | 1.83 | 1.71 | CRE2 | BPR 3.4 |
| Building energy intensity other retail properties (kWh/m2 ) |
235 | 247 | 239 | 209 | 199 | CRE1 | BPR 3.4 |
1) Citycon's reported energy consumption covers shopping centres and other retail properties where Citycon's share of ownership is at least 50 per cent and where Citycon has operational control. Kista Galleria's environmental data is not included.
2) Citycon also reports the tenants' electricity consumption in cases where Citycon is responsible for electricity procurement. When energy procurement is on tenant's responsibility, it has been excluded from reporting.
3) Energy used for heating and cooling is reported in its entirety.
4) In terms of intensity figures, Citycon has limited the reported electricity consumption to common areas, where it can directly influence. This includes the electricity used for general lighting, ventilation and cooling, as well as lifts and escalators and other building technical systems.
5) excl. Fruängen Centrum and Högdalen Centrum where amount of visitors is not collected
| ENERGY CONSUMPTION (MWH) | ENERGY CONSUMPTION BY BUSINESS AREAS (MWH) | Total energy consumption |
||||||
|---|---|---|---|---|---|---|---|---|
| Electricity consumption in common areas |
Heat consumption |
Total energy consumption 1) |
Electricity consumption in common areas |
Heat consumption |
Total energy consumption 1) |
in like-for like shopping centres 1) |
||
| 2009 | 108,409 | 139,495 | 248,147 | Finland | ||||
| 2010 | 104,853 | 171,342 | 277,801 | 2009 | 76,854 | 104,797 | 181,652 | |
| 2011 | 113,710 | 138,163 | 254,608 | 2010 | 73,156 | 127,478 | 200,634 | |
| 2012 | 111,587 | 143,395 | 260,303 | 2011 | 79,227 | 99,320 | 178,548 | |
| 2013 | 110,075 | 133,790 | 250,481 | 2012 | 76,994 | 106,966 | 183,960 | 113,934 |
| Change-% 2013/2012 | -1.4% | -6.7% | -3.8% | 2013 | 77,309 | 99,319 | 176,629 | 105,764 |
| Change-% 2013/2009 | 1.5% | -4.1% | 0.9% | Change-% 2013/2012 | 0.4% | -7.1% | -4.0% | -7.2% |
| Change-% 2013/2009 | 0.6% | -5.2% | -2.8% | |||||
| Sweden | ||||||||
| ENERGY CONSUMPTION IN LIKE-FOR-LIKE SHOPPING CENTRES | 2009 | 25,725 | 29,640 | 55,608 | ||||
| AND OTHER RETAIL PROPERTIES (MWH) | 2010 | 25,653 | 38,289 | 65,548 | ||||
| 2011 | 25,699 | 34,931 | 62,429 | |||||
| Electricity consumption in |
Heat | Total energy | 2012 | 23,106 | 32,347 | 56,964 | 44,173 | |
| common areas | consumption | consumption 1) | 2013 | 21,685 | 30,030 | 53,740 | 43,882 | |
| Shopping Centres | Change-% 2013/2012 | -6.2% | -7.2% | -5.7% | -0.7% | |||
| 2012 | 66,394 | 91,185 | 159,073 | Change-% 2013/2009 | -15.7% | 1.3% | -3.4% | |
| 2013 | 65,448 | 83,084 | 150,522 | Baltic Countries and New | ||||
| Change-% 2013/2012 | -1.4% | -8.9% | -5.4% | Business | ||||
| Other Retail Properties | 2009 | 5,830 | 5,058 | 10,888 | ||||
| 2012 | 18,134 | 25,724 | 43,875 | 2010 | 6,044 | 5,575 | 11,619 | |
| 2013 | 16,771 | 23,453 | 40,259 | 2011 | 8,783 | 3,912 | 13,631 | |
| Change-% 2013/2012 | -7.5% | -8.8% | -8.2% | 2012 | 11,487 | 4,082 | 19,379 | 966 |
| 2013 | 11,081 | 4,441 | 20,112 | 876 | ||||
| Change-% 2013/2012 | -3.5% | 8.8% | 3.8% | -9.3% | ||||
| Change-% 2013/2009 | 90.1% | -12.2% | 84.7% |
1) Total energy consumption incl. electricity in common areas, heating and cooling.
| Electricity consumption in |
Total energy | ||
|---|---|---|---|
| common areas | Heat consumption | consumption 1) | |
| 2009 | |||
| Shopping Centres | 92,217 | 108,966 | 201,378 |
| Other Retail Properties | 16,193 | 30,529 | 46,769 |
| 2010 | |||
| Shopping Centres | 91,596 | 136,142 | 229,217 |
| Other Retail Properties | 13,256 | 35,200 | 48,584 |
| 2011 | |||
| Shopping Centres | 92,520 | 109,665 | 204,862 |
| Other Retail Properties | 21,189 | 28,498 | 49,746 |
| 2012 | |||
| Shopping Centres | 92,585 | 115,285 | 213,175 |
| Other Retail Properties | 19,002 | 28,110 | 47,129 |
| 2013 | |||
| Shopping Centres | 93,304 | 110,337 | 210,222 |
| Other Retail Properties | 16,771 | 23,453 | 40,259 |
| Change-% in SC 2013/2012 | 0.8% | -4.3% | -1.4% |
| Change-% in other 2013/2012 | -11.7% | -16.6% | -14.6% |
| Change-% in SC 2013/2009 | 1.2% | 1.3% | 4.4% |
| Change-% in other 2013/2009 | 3.6% | -23.2% | -13.9% |
| 2013 | 2012 | 2011 | 2010 | 2009 | |
|---|---|---|---|---|---|
| Electricity in common areas | 20,844 | 21,112 | 21,079 | 17,180 | 18,106 |
| Tenants' electricity supplied by the landlord 1) |
25,626 | 25,261 | 23,222 | 18,001 | 17,705 |
| District heating and cooling in properties |
26,195 | 27,484 | 25,314 | 32,335 | 26,754 |
| Electricity and heat in office occupation |
53 | 63 | 61 | 51 | 50 |
| Wastewater in properties | 233 | 234 | 239 | 210 | 202 |
| Waste in properties | 75 | 74 | 77 | 68 | 60 |
| Business travel | 317 | 303 | 275 | 473 | 282 |
| Commuting | 73 | 76 | 78 | 117 | 106 |
| Paper consumption and mail | 3 | 3 | 4 | 2 | 3 |
| Total | 73,420 | 74,609 | 70,348 | 68,438 | 63,267 |
| 2013 | 2012 | 2011 | 2010 | 2009 | |
|---|---|---|---|---|---|
| Building greenhouse gas intensity (kgCO₂e/m2 ) |
50 | 50 | 47 | 53 | 47 |
| Building greenhouse gas intensity (kgCO₂e/visitor) |
0.35 | 0.36 | 0.35 | 0.40 | 0.39 |
1) Total energy consumption incl. electricity in common areas, heating and cooling
| 2013 | 2012 | 2011 | 2010 | 2009 | |
|---|---|---|---|---|---|
| Scope 1, direct | 909 | 755 | 185 | 0 | 0 |
| Scope 2, indirect | 71,809 | 73,165 | 69,490 | 67,567 | 62,615 |
| Scope 3, indirect | 701 | 689 | 672 | 871 | 652 |
| Total | 73420 | 74,609 | 70,348 | 68,438 | 63,267 |
| Building greenhouse gas intensity (kgCO₂e/m2) | 2013 | 2012 |
|---|---|---|
| Finland | 77 | 79 |
| Sweden | 11 | 10 |
| Baltic Countries and New Business | 201 | 202 |
1) Citycon also reports emissions from tenants' electricity consumption in cases where Citycon is responsible for electricity procurement. When energy procurement is on tenant's responsibility, it has been excluded from reporting.
2) In the calculation of greenhouse gas intensity, the numerator corresponds emissions from electricity in common areas, district heating and cooling as well as emissions from waste water and waste.
| Total water consumption (m3) |
Total water consumption in shopping centres (m3) |
Total water consumption in like-for-like shopping centres (m3) |
Water intensity in shopping centres litre/visitor 1) |
Water intensity in like-for like shopping centres litre/visitor 1) |
|
|---|---|---|---|---|---|
| 2009 | 541,130 | 484,583 | 4.1 | ||
| 2010 | 562,604 | 487,275 | 3.8 | ||
| 2011 | 639,457 | 573,626 | 4.0 | ||
| 2012 | 632,306 | 581,990 | 423,816 | 3.9 | 3.6 |
| 2013 | 624,477 | 581,927 | 419,148 | 3.9 | 3.6 |
| Change-% 2013/2012 | -1.2% | -0.01% | -1.1% | ||
| Change-% 2013/2009 | 15.4% | 20.1% |
| TOTAL WATER CONSUMPTION BY BUSINESS UNITS | Total water consumption | Total water consumption in | ||
|---|---|---|---|---|
| Total water consumption by business units (m3) |
in shopping centres by business units (m3) |
like-for-like shopping centres by business units (m3) |
Water intensity by business units, litre/visitor |
|
| Finland | ||||
| 2009 | 264,840 | 223,402 | 2.7 | |
| 2010 | 277,188 | 226,221 | 2.8 | |
| 2011 | 295,336 | 253,101 | 3.1 | |
| 2012 | 295,927 | 256,281 | 194,145 | 3.1 |
| 2013 | 296,777 | 256,405 | 192,042 | 3.2 |
| Change-% 2013/2012 | 0.3% | 0.05% | -1.1% | |
| Change-% 2013/2009 | 12.1% | 14.8% | ||
| Sweden 1) | ||||
| 2009 | 243,650 | 228,541 | 9.3 | |
| 2010 | 245,834 | 221,472 | 6.8 | |
| 2011 | 287,360 | 263,764 | 6.9 | |
| 2012 | 269,635 | 258,965 | 218,841 | 5.8 |
| 2013 | 256,620 | 254,442 | 216,193 | 5.7 |
| Change-% 2013/2012 | -4.8% | -1.7% | -1.2% | |
| Change-% 2013/2009 | 5.3% | 11.3% | ||
| Baltic Countries and New Business | ||||
| 2009 | 32,640 | 32,640 | 2.9 | |
| 2010 | 39,582 | 39,582 | 3.4 | |
| 2011 | 56,761 | 56,761 | 3.2 | |
| 2012 | 66,744 | 66,744 | 10,830 | 3.5 |
| 2013 | 71,080 | 71,080 | 10,913 | 3.5 |
| Change-% 2013/2012 | 6.5% | 6.5% | 0.8% | |
| Change-% 2013/2009 | 117.8% | 117.8% |
1) Water intesity excludes Fruängen Centrum and Högdalen Centrum where amount of visitors is not collected
| tn | |
|---|---|
| Finland | |
| 2009 | 8,830 |
| 2010 | 9,314 |
| 2011 | 10,143 |
| 2012 | 9,834 |
| 2013 | 9,959 |
| Sweden | |
| 2009 | 2,598 |
| 2010 | 3,734 |
| 2011 | 4,379 |
| 2012 | 4,067 |
| 2013 | 4,117 |
| Baltic Countries and New Business | |
| 2009 | 491 |
| 2010 | 596 |
| 2011 | 839 |
| 2012 | 994 |
| 2013 | 1,021 |
| tn | |
|---|---|
| 2009 | 11,920 |
| 2010 | 13,644 |
| 2011 | 15,361 |
| 2012 | 14,896 |
| 2013 | 15,097 |
| Change-% 2013/2012 | 1.4% |
| Change-% 2013/2009 | 26.7% |
TOTAL WASTE AMOUNT
| tn | |
|---|---|
| 2009 | 11,382 |
| 2010 | 12,973 |
| 2011 | 14,596 |
| 2012 | 14,118 |
| 2013 | 14,446 |
| Change-% 2013/2012 | 2.3% |
| Change-% 2013/2009 | 26.9% |
| tn | |
|---|---|
| 2012 | 12,027 |
| 2013 | 12,085 |
| Change-% 2013/2012 | 0.48% |
| 2013 | 2012 | 2011 | 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| tn | % | tn | % | tn | % | tn | % | tn | % | ||
| Non-hazardous waste | |||||||||||
| Landfill | 1,964 | 13.6% | 2,150 | 15.2% | 3,033 | 20.8% | 2,917 | 22.5% | 2,948 | 25.9% | |
| Energy | 4,104 | 28.4% | 3,909 | 27.7% | 3,874 | 26.5% | 3,540 | 27.3% | 2,588 | 22.7% | |
| Paper | 739 | 5.1% | 683 | 4.8% | 671 | 4.6% | 440 | 3.4% | 446 | 3.9% | |
| Plastic | 66 | 0.5% | 56 | 0.4% | 54 | 0.4% | 44 | 0.3% | 66 | 0.6% | |
| Cardboard | 3,686 | 25.5% | 3,588 | 25.4% | 3,604 | 24.7% | 3,679 | 28.4% | 3,318 | 29.2% | |
| Compost | 2,658 | 18.4% | 2,711 | 19.2% | 2,193 | 15.0% | 1,557 | 12.0% | 1,398 | 12.3% | |
| Metal | 220 | 1.5% | 145 | 1.0% | 159 | 1.1% | 128 | 1.0% | 125 | 1.1% | |
| Glass | 377 | 2.6% | 287 | 2.0% | 384 | 2.6% | 378 | 2.9% | 286 | 2.5% | |
| Other recycled | 432 | 3.0% | 338 | 2.4% | 370 | 2.5% | 236 | 1.8% | 125 | 1.1% | |
| Other unsorted waste | 148 | 1.0% | 225 | 1.6% | 230 | 1.6% | 51 | 0.4% | 54 | 0.5% | |
| Hazardous | 51 | 0.4% | 26 | 0.2% | 24 | 0.2% | 3 | 0.0% | 29 | 0.3% | |
| Total | 14,446 | 100% | 14,118 | 100% | 14,596 | 100% | 12,973 | 100% | 11,382 | 100% |
| 2013 | 2012 | 2011 | 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| tn | % | tn | % | tn | % | tn | % | tn | % | ||
| Landfill waste | 2,111 | 14.7% | 2,375 | 16.8% | 3,263 | 22.4% | 2,968 | 22.9% | 3,002 | 26.4% | |
| Incinerated waste | 4,067 | 28.3% | 3,909 | 27.7% | 3,874 | 26.5% | 3,540 | 27.3% | 2,588 | 22.7% | |
| Composted waste | 2,657 | 18.5% | 2,711 | 19.2% | 2,193 | 15.0% | 1,557 | 12.0% | 1,398 | 12.3% | |
| Recycled waste | 5,063 | 35.2% | 4,759 | 33.7% | 4,872 | 33.4% | 4,669 | 36.0% | 4,241 | 37.3% | |
| Reused waste | 482 | 3.4% | 364 | 2.6% | 394 | 2.7% | 240 | 1.8% | 153 | 1.3% | |
| Total | 14,381 | 100% | 14,118 | 100% | 14,596 | 100% | 12,973 | 100% | 11,382 | 100% |
Baltic
| 2012 | ||||
|---|---|---|---|---|
| tn | 2013 % |
tn | % | |
| Landfill waste | 1,683 | 13.9% | 1,999 | 16.6% |
| Incinerated waste | 3,473 | 28.7% | 3,273 | 27.2% |
| Composted waste | 2,457 | 20.3% | 2,478 | 20.6% |
| Recycled waste | 4,224 | 35.0% | 4,066 | 33.8% |
| Reused waste | 247 | 2.0% | 211 | 1.8% |
| Total | 12,085 | 100% | 12,027 | 100% |
| Finland | Sweden | Countries and New Business |
|
|---|---|---|---|
| Landfill waste | 19,6% | 3,5% | 13,8% |
| Incinerated waste | 18,4% | 47,8% | 40,9% |
| Composted waste | 21,4% | 15,1% | 4,0% |
| Recycled waste | 37,0% | 29,6% | 41,4% |
| Reused waste | 3,4% | 4,0% | 0,0% |
| Total | 100% | 100% | 100% |
| 2013 | 2012 | |||
|---|---|---|---|---|
| tn | % | tn | % | |
| Non-hazardous waste | ||||
| Landfill | 1,538 | 12.7% | 1,785 | 14.8% |
| Energy | 3,473 | 28.7% | 3,273 | 27.2% |
| Paper | 321 | 2.7% | 282 | 2.3% |
| Plastic | 56 | 0.5% | 51 | 0.4% |
| Cardboard | 3,365 | 27.8% | 3,327 | 27.7% |
| Compost | 2,457 | 20.3% | 2,478 | 20.6% |
| Metal | 177 | 1.5% | 129 | 1.1% |
| Glass | 306 | 2.5% | 277 | 2.3% |
| Other recycled | 218 | 1.8% | 198 | 1.6% |
| Other unsorted waste | 145 | 1.2% | 214 | 1.8% |
| Hazardous | 30 | 0.2% | 13 | 0.1% |
| Total | 12,085 | 100% | 12,027 | 100% |
| Total | Finland | Sweden | Baltic Countries and New Business |
|
|---|---|---|---|---|
| 2009 | 73.6% | 69.4% | 95.7% | 34.5% |
| 2010 | 77.1% | 71.4% | 98.6% | 34.3% |
| 2011 | 77.6% | 69.8% | 94.8% | 82.1% |
| 2012 | 83.2% | 77.5% | 95.5% | 86.4% |
| 2013 | 85.4% | 80.4% | 96.5% | 86.2% |
| Total number of employees 31 Dec. (LA1) Total 127 129 136 129 Kista Galleria 10 - - - |
2013 | 2012 | 2011 | 2010 | 2009 | |
|---|---|---|---|---|---|---|
| 119 | ||||||
| - | ||||||
| Total incl. Kista Galleria | 137 | 129 | 136 | 129 | 119 | |
| Personnel by country 31 Dec. (LA1) | ||||||
| Finland 83 (60.6%) 86 (66.7%) 90 (66.2%) 84 (65.1%) |
78 (65.5%) | |||||
| Sweden incl. Kista Galleria 43 (31.4%) 32 (24.8%) 35 (25.7%) 37 (28.7%) |
33 (27.7%) | |||||
| Estonia 9 (6.6%) 9 (7.0%) 9 (6.6%) 7 (5.4%) |
7 (5.9%) | |||||
| Lithuania 1 (0.7%) 1 (0.8%) 1 (0.7%) 1 (0.8%) |
1 (0.8%) | |||||
| Netherlands 1 (0.7%) 1 (0.8%) 1 (0.7%) - |
- | |||||
| Personnel by business unit 31 Dec. (LA1) | ||||||
| Finnish business unit 47 (34.3%) 60 (46.5%) 58 (42.6%) 54 (41.9%) |
48 (40.3%) | |||||
| Swedish business unit incl. Kista Galleria 42 (30.7%) 31 (24.0%) 35 (25.7%) 37 (28.7%) |
33 (27.7%) | |||||
| Baltic Countries and New Business business unit 10 (7.3%) 10 (7.8%) 10 (7.4%) 10 (7.8%) |
11 (9.2%) | |||||
| Group functions 38 (27.7%) 28 (21.7%) 33 (24.3%) 28 (21.7%) |
27 (22.7%) |
The following mathematical formula has been used in the Social Responsibility text:
Absentee rate = Total absent days due to illness (1 Jan.-31 Dec.) X 100% Theoretical working days (1 Jan.-31 Dec.)
Number of training days per employee = Total training days (1 Jan.-31 Dec.) Employees average (1 Jan.-31 Dec.)
| 2013 | 2012 | 2011 | 2010 | 2009 | |
|---|---|---|---|---|---|
| Employment type 31 Dec. (LA1) | |||||
| Permanent employees/Fixed-term employees | 112/15 (88.2/11.8%) | 122/7 (94.6/5.4%) | 130/6 (95.6/4.4%) | 122/7 (94.6/5.4%) | 115/4 (96.6/3.4%) |
| Full-time employees/Part-time employees | 120/7 (94.5/5.5%) | 125/4 (96.9/3.1%) | 134/2 (98.5/1.5%) | 129/0 (100/0.0%) | 119/0 (100/0.0%) |
| Average age of employees and sex distribution (LA1) | |||||
| Average age, years 31 Dec. | 41 | 42 | 42 | 43 | 43 |
| Employees under age 18 during the year | 0 | 0 | 0 | 0 | 0 |
| Female/male percentage 31 Dec. | 53.5/46.5 | 52.7/47.3 | 50.0/50.0 | 48.1/51.9 | 46.2/53.8 |
| Employee turnover during the year (LA1 and LA15) | |||||
| New contracts including short-term substitutions | 31 | 28 | 26 | 29 | 16 |
| Female/male percentage of new contracts | 58.1/41.9 | 2) | 2) | 2) | 2) |
| Permanent employees left Citycon | 25 | 28 | 18 | 13 | 7 |
| Female/male percentage of left employees | 52.0/48.0 | 2) | 2) | 2) | 2) |
| Return to work after parental leave, % | 100 | 100 | 100 | 100 | 100 |
| Employee performance reviews (LA12) | |||||
| Twice a year (objective), % | 58.6 | 26.7 | 42.1 | 48.4 | 2) |
| Once a year, % | 93.1 | 62.9 | 77.2 | 92.6 | 2) |
| Training days (LA10) | |||||
| Days during the year | 516 | 469 | 563 | 437 | 810 |
| Days per employee | 4.2 | 3.6 | 4.3 | 3.6 | 6.9 |
| Sick days and work-related accidents (LA7) | |||||
| Number of sick days during the year | 220 | 424 | 409 | 296 | 422 |
| Sick days per employee | 1.8 | 3.2 | 3.1 | 2.4 | 3.6 |
| The absentee rate | 0.7 | 1.3 | 1.2 3) | 1.0 3) | 1.4 |
| Work accidents resulting in absence | 0 | 0 | 2 | 1 | 0 |
| Fatalities | 0 | 0 | 0 | 0 | 0 |
1) The figures do not include Kista Galleria
2) Not reported
3) Revised number
Citycon has signed a legal employment contract with all of its employees.
| 2013 | 2012 | 2011 | ||
|---|---|---|---|---|
| Direct economic value generated | ||||
| a) Revenues | ||||
| Finland | 150.4 | 143.2 | 132.5 | |
| Sweden | 63.3 | 63.1 | 60.1 | |
| Baltic Countries and New Business | 34.9 | 32.8 | 24.5 | |
| Turnover | 248.6 | 239.2 | 217.1 | |
| Revenues from sale of investment properties 2) | 60.2 | 31.1 | 18.3 | |
| Economic value distributed | ||||
| b) Operating costs | ||||
| Finland | -40.8 | -40.7 | -38.1 | |
| Sweden | -17.1 | -17.3 | -18.9 | |
| Baltic Countries and New Business | -8.4 | -7.6 | -5.8 | |
| Purchases related to property operating costs | -66.3 | -65.6 | -62.8 | |
| Finland | -65.1 | -119.9 | -62.5 | |
| Sweden | -150.2 | -18.1 | -45.5 | |
| Baltic Countries and New Business | -10.4 | -23.0 | -108.1 | |
| Headquarter | -0.4 | -0.7 | -0.6 | |
| Investments | -226.1 | -161.7 | -216.7 | |
| c) Employee wages and salaries | ||||
| Finland | -3.0 | -4.3 | -4.2 | |
| Sweden | -2.0 | -2.5 | -2.7 | |
| Baltic Countries and New Business | -0.6 | -0.6 | -0.6 | |
| Headquarter | -5.1 | -3.5 | -3.0 | |
| Paid wages and salaries | -10.7 | -10.9 | -10.5 | |
| Finland | 0.0 | 0.0 | -0.1 | |
| Sweden | 0.0 | -0.1 | 0.0 | |
| Baltic Countries and New Business | 0.0 | 0.0 | 0.0 | |
| Headquarter | 0.0 | 0.0 | 0.0 | |
| Funds used for employee training | -0.1 | -0.1 | -0.1 | |
| d) Payments to providers of capital 2) | ||||
| Paid dividends and return from invested unrestricted equity fund | -49.0 | -41.7 | -34.3 | |
| Loan repayments and proceeds | -47.5 | -17.4 | 143.4 | |
| Paid and received financial expenses as well as realised exchange rate losses/gains | -88.4 | -84.7 | -61.4 | |
| e) Payments to government | ||||
| Income taxes paid/received (to government/directly from) 2) | -0.7 | -0.8 | 7.2 | |
| Finland | -3.5 | -3.1 | -3.1 | |
| Sweden | -4.0 | -3.6 | -3.3 | |
| Baltic Countries and New Business | -0.5 | -0.3 | -0.1 | |
| Property taxes (payments to government as agent, recharged to tenants) | -7.9 | -7.1 | -6.4 | 1) The figures do not include Kista Galleria. |
2) Items from the cash flow.
This is Citycon's fifth integrated Annual and Sustainability Report. Reporting covers all of Citycon's operations in all operating countries. Citycon applies the construction and real-estate sector-specific (CRESS) guidelines of the Global Reporting Initiative, regarding the content and principles of sustainability reporting. Environmental responsibilities are reported in accordance with the guidelines published by EPRA in autumn 2011. Calculation methods have been retroactively revised to achieve compliance with the new and revised guidelines. Coverage in terms of GRI's G3.1 reporting recommendations is presented on pages 84-87. Based on Citycon's self-assessment,the report represents GRI Application Level B. The report is published annually and the information presented corresponds to the company's financial year i.e. 1 January-31 December.
Reported measures related to environmental responsibility covers shopping centres and other properties where Citycon's ownership is at least 50 per cent and where it has operational control. This represents 97.4 per cent of the leasable area owned by Citycon (excluding Kista Galleria). Kista Galleria shopping centre is excluded from environmental reporting as it is a full joint venture and hence consolidated into Citycon's financial statements on the equity method. Kista Galleria's energy expenses are excluded from Citycon's IFRS based figures.
Even though annual changes in property portfolio due to acquisitions, sales and (re)development do not make reasonable comparisons over years, Citycon
still reports total portfolio performance according to the limitations mentioned earlier. Citycon follows in sustainability reporting EPRA's financial Best Practices Recommendations. Properties, which have been consistently in operation, and not under development, during the two full preceding periods, are included in like-for-like portfolio. Sold properties are excluded from like-for-like comparison.
Citycon also reports the tenants' electricity consumption in cases where Citycon is responsible for electricity procurement. In shopping centres, tenants have in most of the cases own electricity meters and purchase agreement and Citycon has no availability to data related to tenants' consumption. In twenty properties out of sixty seven, electricity consumption is partially or totally recharged from tenants. When energy procurement agreement is on tenant's responsibility, it has been excluded from reporting. Energy used for heating and cooling is reported in its entirety.
In terms of intensity figures, Citycon has limited the reported electricity consumption to common areas, where it can directly influence. This includes the electricity used for general lighting, ventilation and cooling, as well as lift s and escalators and other building technical systems. Based on the case studies, the share of electricity consumption in common areas is 25-70 per cent of total electricity consumption depending on heating, lighting and other technical solutions, as well as on level of controllability. Even though a mismatch exists between numerator and denominator of the intensity indicator (kWh/sq.m.), for the denominator is chosen gross leasable area,
which still is most feasible of the alternatives. Intensity indicator is calculated also per visitors.
Primary energy use has been estimated based on country-specific energy statistics from the IEA for the year 2009.
In calculating its carbon footprint, Citycon applies the Greenhouse Gas Protocol developed by the World Resources Institute and the World Business Council for Sustainable Development. The emissions factors for energy are based on country-specific statistics gathered by the IEA consisting of five year averages (2005-2009) for electricity and heat generation. In calculation of greenhouse gas intensity from building energy, same principles are applied than in energy intensity calculation.
Acidifying emission factors (in SO2 -eqv.) are based on historical estimates on country specific emissions from energy production.
Reported water covers water consumed in common areas and by tenants. All water comes from municipal waterworks.
The recycling rate indicates recycled, incinerated or reused waste fractions as a share of the total waste volume. Landfill waste is not included in recycled items. Properties in which tenants are responsible for waste management are excluded from reporting, as there is no record available of their waste quantities.
√ = Reported, o = Partly reported, - = Not reported, Bolded indicators are core indicators.
| Code | Content | Page | Comments | Code | Content | Page | Comments | ||
|---|---|---|---|---|---|---|---|---|---|
| Strategy and Analysis | Economic Performance Indicators | ||||||||
| 1.1-1.2 | CEO's statement, key impacts, risks | √ 8-9, 12-14, 38-39, 40-41, 58-59 | Economic Performance | ||||||
| and opportunities | EC1 | Economic value generated and distributed | √ 48- 49,82 |
Further information can be found in Financial Statements. |
|||||
| Organisational Profile | EC2 | Financial implications and other risks and | √ 43, | ||||||
| 2.1-2.9 | Organizational profile | √ 2-4, 15-19, 24-27, 32-35, 46-47, 51-57 | opportunities due to climate change and | 58-59 | |||||
| 2.10 | Awards received in the reporting period | √ 39 | www.citycon.com/Sustainability | other sustainability issues. | |||||
| Report Parameters | EC3 | Coverage of the organization's defined benefit plan obligations |
√ | The company acts in accordance with legislation, not reported separately. |
|||||
| 3.1-3.11 | Report profile, scope and boundary | √ 83 | EC4 | Significant financial assistance received | √ 49 | ||||
| 3.12 | GRI Content Index | √ 84-87 | from government | ||||||
| Governance, Commitments and Engagement | Market Presence | ||||||||
| Governance | EC5 | Range of ratios of standard entry level | - | ||||||
| 4.1-4.10 Governance | √ 38,50-57 | wage compared to local minimum wage at significant locations of operation. |
|||||||
| Commitments to External Initiatives | EC6 | Policy, practices, and proportion of | √ 48-49, 82 | ||||||
| 4.11 | Explanation of whether and how the | √ 58-59 | spending on locally-based suppliers | ||||||
| precautionary approach or principle | EC7 | Procedures for local hiring and proportion | - | Not material to Citycon. | |||||
| is addressed | of senior management and all direct employees, contractors and sub |
||||||||
| 4.12 | Externally developed charters, principles, or other initiatives |
√ | Property and Building Sector Energy Efficiency Agreement in Finland |
contractors hired from the local community | |||||
| 4.13 | Memberships in associations and/ | √ 40, 84 | www.citycon.com/ | Indirect Economic Impacts | |||||
| or national/international advocacy | Sustainability | EC8 | Infrastructure investments and services | - | |||||
| organizations | provided primarily for public benefit | ||||||||
| Stakeholder Engagement | EC9 | Significant indirect economic impacts, including the extent of impacts |
- | ||||||
| 4.14- | List of stakeholder groups, basis for | √ 40-41 | www.citycon.com/Sustainability | ||||||
| 4.17 | identification, approaches to stakeholder engagement, key topics raised through |
Materials | Environmental Performance Indicators | ||||||
| stakeholder engagement | EN1-EN2 Materials used by weight, value or volume | - | Not material to Citycon. | ||||||
| Management Approach and Performance Indicators | and recycled and reused input materials | ||||||||
| Economic responsibility | √ 12-14, | www.citycon.com/Sustainability | Energy | ||||||
| 48-49 | EN3- | Direct and indirect energy consumption | √ 42-44, 74-75 | ||||||
| Environmental responsibility | √ 39, | www.citycon.com/Sustainability | EN4 | by primary energy source | |||||
| 42-43 | CRE1 | Building energy intensity | √ 43-44, 74 | ||||||
| Social Responsibility | √ 39, | www.citycon.com/Sustainability | EN5 | Energy saved due to conservation and efficiency improvements |
O 74-75 | ||||
| 46-47 |
| Code | Content | Page Comments |
Code | Content | Page Comments |
||
|---|---|---|---|---|---|---|---|
| EN6 | Initiatives to provide energy-efficient | O 74-76 | Land Degradation, Contamination and Remediation | ||||
| or renewable energy based products | CRE5 | Land and other assets remediated and in | - | ||||
| and services, and reductions in energy | need of remediation for the existing or | ||||||
| requirements as a result of these initiatives | intended land use according to applicable | ||||||
| EN7 | Initiatives to reduce indirect energy consumption and reductions achieved |
- | legal designations | ||||
| Water | Products and Services | ||||||
| EN26 | Initiatives to enhance efficiency and | O 42-45 | |||||
| EN8 | Total water withdrawal by source | √ 44, 77 | mitigate environmental impacts of products and services, and extent of |
||||
| EN9 | Water sources significantly affected by withdrawal of water |
√ | Not material to Citycon, water comes from municipal waterworks. |
impact mitigation | |||
| √ | Not material to Citycon, water | EN27 | Reclaimed products and packaging | - | Not material to Citycon. | ||
| EN10 | Percentage and total volume of water recycled and reused |
comes from municipal waterworks. | materials | ||||
| CRE2 | Building water intensity | √ 44-45, 77 | Compliance | ||||
| Biodiversity | EN28 | Non-compliance with environmental | √ | No misconducts during 2013. | |||
| EN11 | Location and size of land owned, leased, | √ 45 | laws and regulations | ||||
| managed in, or adjacent to, protected areas | Transport | ||||||
| EN12 | Significant impacts of activities on | √ 45 | EN29 | Significant environmental impacts of | √ 76 Citycon reports on CO₂e |
||
| biodiversity in protected areas | transporting products, materials and | emissions of business travel and | |||||
| EN13 | Habitats protected or restored | - | workforce | commuting. | |||
| EN14 | Strategies, current actions, and future | - | Overall | ||||
| plans for managing impacts on biodiversity | EN30 | Total environmental protection | - | ||||
| EN15 | Number of IUCN Red List species and | - | expenditures and investments by type | ||||
| national conservation list species with | Social Performance Indicators | ||||||
| habitats in areas affected by operations, | Employment | ||||||
| by level of extinction risk | LA1-LA2 Total workforce by employment type, | √ 46-47, 50, 80-81 | |||||
| Emissions, Effluents, and Waste | employment contract, and region, number | ||||||
| EN16- | Total direct and indirect greenhouse | √ 43, 76 | and rate of employee turnover by age | ||||
| EN17 | gas emissions by weight | group, gender, and region | |||||
| CRE3 | Greenhouse gas emissions intensity from buildings |
√ 43, 76 | LA3 | Benefits provided to full-time employees that are not provided to temporary or part |
√ | Benefits required by legislation are provided to both permanent and parttime |
|
| CRE4 | Greenhouse gas emissions intensity | - | Not material to Citycon. | time employees, by major operations | employees in all operating countries. | ||
| from new construction and redevelopment | Other benefits, such as company phone | ||||||
| activity | are provided, if required in the job. | ||||||
| EN18 | Initiatives to reduce greenhouse gas | O 42-43 | LA15 | Return to work and retention rates after | √ 81 | ||
| emissions and reductions achieved | parental leave, by gender | ||||||
| EN19 | Emissions of ozone-depleting substances | - | Labor / Management Relations | ||||
| by weight | LA4 | Percentage of employees covered by collective bargaining agreements |
- | ||||
| EN20 | NOx, SOx, and other significant air | √ 43 | Citycon complies with local | ||||
| emissions by type and weight | LA5 | Minimum notice period(s) regarding significant operational changes, including |
√ | legislation and regulations. | |||
| EN21 | Total water discharge by quality and | √ | Waste water and rain water is | whether it is specified in collective | |||
| destination | led to municipal sewer system. | agreements | Statutory negotiations between the employer and employees take place |
||||
| EN22 | Total weight of waste by type and disposal method |
√ 44-45, 78-79 | within a co-operation group. Employee | ||||
| No such cases in 2013. | representatives are elected for a term of two years at a time. The group discusses |
||||||
| EN23 | Total number and volume of significant spills |
√ | matters affecting the entire personnel. |
| Code | Content | Page Comments |
Code | Content | Page Comments |
||
|---|---|---|---|---|---|---|---|
| Occupational Health and Safety | Freedom of Association and Collective Bargaining | ||||||
| LA6 | Total workforce represented in formal joint management-worker health and safety committees |
√ | Co-operative occupational safety committee in Finland. Matters discussed include issues related to health and safety, and well-being in the workplace. |
HR5 | Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these |
√ | No such risks in operating areas in 2013. Citycon Code of Conduct, www.citycon.com/Sustainability. |
| LA7 | Rates of injury, occupational diseases, lost days, and absenteeism, and total |
√ 81 | Child Labor | rights | |||
| number of work-related fatalities by | HR6 | Operations identified as having significant | √ 50, 59, Citycon Code of Conduct, |
||||
| CRE6 | region and by gender Percentage of the organization operating in verified compliance with |
- | Not material to Citycon. | risk for incidents of child labor, and measures taken to contribute to the elimination of child labor |
www.citycon.com/Sustainability. 81 |
||
| an internationally recognized health | Forced and Compulsory Labor | ||||||
| LA8 | and safety management system Education, training, counselling, prevention, and risk-control programs in place to assist workforce members, their families, or community members |
- | Not material to Citycon. | HR7 | Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor |
√ 50, 59 Citycon Code of Conduct, www.citycon.com/Sustainability. |
|
| regarding serious diseases | Security Practices | ||||||
| LA9 | Health and safety topics covered in formal agreements with trade unions |
- | Not material to Citycon. | HR8 | Percentage of security personnel trained in the organization's policies or procedures |
- | Citycon does not employ directly security |
| Training and Education | concerning relevant aspects of human | personnel. | |||||
| LA10 | Average hours of training per year per employee by gender, and by employee |
√ 81 | rights Indigenous Rights |
||||
| category | HR9 | Violations involving rights of indigenous | - | Citycon's operation area | |||
| LA11 | Programs for skills management and lifelong learning that support the |
- | people and actions taken | does not reach the areas of indigenous people. |
|||
| continued employability of employees and | Assessment | ||||||
| LA12 | assist them in managing career endings Employees receiving regular performance |
√ 46-47, Company policy: Each |
HR10 | Percentage and total number of operations that have been subject to human rights |
- | ||
| and career development reviews, by | employee has annual 81 performance reviews. |
Remediation | reviews and/or impact assessments | ||||
| gender | HR11 | Number of grievances related to human | √ | No such cases in 2013. | |||
| LA13 | Diversity and Equal Opportunity Composition of governance bodies and |
√ 46-47, 81 | rights filed, addressed and resolved through formal grievance mechanisms |
||||
| breakdown of employees per category according to gender, age group, minority |
Local Communities | ||||||
| group membership | SO1 | Impacts of operations on communities, | O 9, 22-23, 39-41 | ||||
| Equal Remuneration for Women and Men | including entering, operating, and exiting | ||||||
| LA14 | Ratio of basic salary of men to women by employee category |
- | SO9 | Operations with significant potential or actual negative and positive impacts on |
O 22-23, 39-41 | ||
| Investment and Procurement Practices | local communities | ||||||
| HR1-HR2 Investment and procurement practices relating to human rights |
O 50 Citycon Code of Conduct, www.citycon.com/Sustainability. |
SO10 | Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on |
O 22-23, 39-41 | |||
| HR3 | Total hours of employee training of human rights |
- | local communities | ||||
| Non-Discrimination | CRE7 | Number of persons voluntarily and involuntarily displaced and/or resettled |
- | Not material to Citycon. | |||
| HR4 | Total number of incidents of discrimination and corrective actions taken |
√ 50 No such cases in 2013. |
by development, broken down by project |
| Code | Content | Page | Comments | Code | Content | Page Comments |
||
|---|---|---|---|---|---|---|---|---|
| Corruption | Marketing Communications | |||||||
| SO2 | Percentage and total number of business units analyzed for risks related to corruption |
√ 50 | Citycon Code of Conduct, www.citycon.com/Sustainability. |
PR6 | Programs for adherence to laws, standards, and voluntary codes related to marketing communications |
√ | In its marketing communications, Citycon complies with the law and good practice. Citycon's marketing targets both tenants and consumer customers. |
|
| SO3 | Percentage of employees trained organization's anti-corruption policies and procedures |
√ 50 | Citycon Code of Conduct, www.citycon.com/Sustainability. |
PR7 | Total number of incidents of non compliance with regulations and voluntary codes concerning marketing |
√ | No such cases in 2013. | |
| SO4 | Actions taken in response to incidents of corruption |
√ 50 | No such cases in 2013. | communications | ||||
| Public Policy | Customer Privacy | |||||||
| SO5 | Public policy positions and participation in public policy development and lobbying |
√ 50 | PR8 | Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data |
√ | No such cases in 2013. | ||
| SO6 | Total value of financial and in-kind | √ 50 | Compliance | |||||
| contributions to political parties, politicians, and related institutions by country |
PR9 | Significant fines for non-compliance with laws and regulations concerning the |
√ | No such cases in 2013. | ||||
| Anti-Competitive Behavior | provision and use of products and services | |||||||
| SO7 | Total number of legal actions for anti competitive behavior, anti-trust, and monopoly practices and their outcomes |
√ | No such cases in 2013. | |||||
| Compliance | ||||||||
| SO8 | Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations |
√ | No such cases in 2013. | |||||
| Customer Health and Safety | ||||||||
| PR1 | Life cycle stages in which health and safety impacts of products and services are assessed for improvement |
- | ||||||
| PR2 | Total number of incidents of non compliance with regulations and voluntary codes concerning health and safety impacts of products and services |
√ | No such cases in 2013. | |||||
| Product and Service Labeling | ||||||||
| PR3 | Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements |
- | ||||||
| CRE8 | Type and number of sustainability certification, rating and labeling schemes for new construction, management, occupation and redevelopment |
√ 45 | ||||||
| PR4 | Total number of incidents of non compliance with regulations and voluntary codes concerning product and service information and labeling |
√ | No such cases in 2013. | |||||
| PR5 | Practices related to customer satisfaction | √ 23, 32, 40 |
| Report by the Board of Directors3 | 14. Investment properties 44 |
Notes to the parent company's | |
|---|---|---|---|
| 15. Investments in join ventures 46 |
financial statements, FAS 69 |
||
| EPRA performance measure20 | 16. Subsidiary including material |
1. Accounting policies69 |
|
| non-controlling interest ownership47 | 2. Turnover69 |
||
| CITYCON OYJ'S CONSOLIDATED | 17. Intangible assets47 |
3. Other expenses from leasing |
|
| FINANCIAL STATEMENTS FOR | 18. Property, plant and equipment47 |
operations69 | |
| 1 JANUARY - 31 DECEMBER 201326 | 19. Deferred tax assets and liabilities 48 |
4. Personnel expenses69 |
|
| 20. Classification of financial instruments 49 |
5. Depreciation and amortisation |
||
| Consolidated statement of comprehensive | 21. Derivative financial instruments50 |
and impairments69 | |
| income, IFRS26 | 22. Investment properties held for sale50 |
6. Other operating income and expenses69 |
|
| 23. Trade and other receivables 51 |
7. Net financial income and expenses 70 |
||
| Consolidated statement | 24. Cash and cash equivalents 51 |
8. Income tax expense70 |
|
| of financial position, IFRS 27 |
25. Shareholders' equity 51 |
9. Intangible assets 70 |
|
| 26. Loans 52 |
10. Tangible assets70 |
||
| Consolidated cash flow statement, IFRS28 | 27. Trade and other payables56 |
11. Shares in subsidiaries70 |
|
| 28. Employee benefits 56 |
12. Shares in associated companies70 |
||
| Consolidated statement of changes | 29. Cash generated from operations58 |
13. Other investments70 |
|
| in shareholders' equity, IFRS29 | 30. Commitments and contingent liabilities58 |
14. Subsidiaries and associated companies70 |
|
| 31. Related party transactions59 |
15. Long- and short-term receivables |
71 | |
| Notes to the consolidated financial | 32. Changes in group structure in 201362 |
16. Shareholders' equity |
71 |
| statements, IFRS30 | 33. Post balance sheet events 62 |
17. Liabilities |
71 |
| 1. Accounting policies30 |
18. Contingent liabilities |
71 | |
| 2. Key estimates and assumptions, and |
Key figures 63 |
||
| accounting policies requiring judgment36 | 1. Consolidated key figures and ratios |
Shareholders and shares 72 |
|
| 3. Gross rental income38 |
for five years63 | ||
| 4. Segment information 38 |
2. Five year segment information 64 |
Signatures to the financial statements74 | |
| 5. Property operating expenses41 |
|||
| 6. Other expenses from leasing operations 41 |
Formulas for key figures and ratios65 | Auditors' report | 75 |
| 7. Administrative expenses 41 |
|||
| 8. Personnel expenses 42 |
Parent company income statement, FAS66 | Property list | 76 |
| 9. Depreciation and amortisation42 |
|||
| 10. Other operating income and expenses42 |
Parent company balance sheet, FAS 67 |
Valuation statement80 | |
| 11. Net financial income and expenses 42 |
|||
| 12. Income taxes 43 |
Parent company cash flow | ||
| 13. Earnings per share43 |
statement, FAS68 | ||
In 2013, Citycon's turnover and net rental income developed positively, with like-for-like net rental income growing by 4.6 per cent. As a result of a cost savings programme, administrative expenses decreased during the year by 22.2 per cent to EUR 20.6 million. In January, Citycon took ownership of the Kista Galleria shopping centre in Stockholm, Sweden, together with the Canada Pension Plan Investment Board (CPPIB). The year was also characterised by successful equity and debt financing transactions.
| IFRS based key figures | Q4/2013 Q4/2012 Q3/2013 | 2013 | 2012 Change-% 1) | |||
|---|---|---|---|---|---|---|
| Turnover, EUR million | 62.0 | 62.1 | 62.1 | 248.6 | 239.2 | 3.9% |
| Net rental income, EUR million | 41.9 | 42.1 | 43.9 | 168.9 | 162.0 | 4.2 % |
| Profit/loss attributable to parent company | ||||||
| shareholders, EUR million | 33.0 | 20.4 | 32.3 | 93.1 | 77.2 | 20.6% |
| Earnings per share (basic), EUR 2) | 0.07 | 0.06 | 0.07 | 0.22 | 0.24 | -9.0% |
| Net cash from operating activities per share, | ||||||
| EUR 2) | 0.09 | 0.05 | 0.06 | 0.13 | 0.19 | -30.5% |
| Fair value of investment properties, EUR million | 2,733.5 | 2,714.2 | 2,739.4 2,733.5 | 2,714.2 | 0.7% | |
| Equity ratio, % | 45.3 | 37.8 | 44.1 | 45.3 | 37.8 | 20.1% |
| Loan to Value (LTV), % | 52.1 | 54.5 | 53.4 | 52.1 | 54.5 | -4.4% |
| EPRA based key figures | Q4/2013 Q4/2012 Q3/2013 | 2013 | 2012 Change-% 1) | |||
| EPRA operating profit, EUR million | 36.5 | 34.2 | 39.5 | 149.1 | 135.7 | 9.9% |
| % of turnover | 58.8% | 55.1% | 63.6% | 60.0% | 56.7% | |
| EPRA Earnings, EUR million | 22.1 | 16.2 | 24.2 | 86.7 | 63.9 | 35.8% |
| EPRA Earnings per share (basic), EUR 2) | 0.050 | 0.046 | 0.055 | 0.204 | 0.199 | 2.5% |
| EPRA NAV per share, EUR | 3.10 | 3.49 | 3.06 | 3.10 | 3.49 | -11.0% |
| EPRA NNNAV per share, EUR | 2.90 | 3.08 | 2.83 | 2.90 | 3.08 | -5.8% |
1) Change-% is calculated from exact figures and refers to the change between 2013 and 2012.
2) Result per share key figures have been calculated with the issue-adjusted number of shares resulting from the rights issues executed in March 2013 and October 2012.
Citycon met the financial targets that it had announced for 2013. On the publication of its Q3 interim report, the company specified some of its targets, stating that it expected growth in turnover of EUR 8–13 million, an increase of EUR 11–16 million in EPRA operating profit, and growth in EPRA earnings of EUR 22–26 million in 2013 from 2012 figures, and it forecasted an EPRA EPS of EUR 0.200–0.215. The realised 2013 figures show that turnover grew by EUR 9.4 million from the 2012 level, the EPRA operating profit by EUR 13.5 million and EPRA earnings by EUR 22.8 million, and the EPRA earnings per share was EUR 0.204.
Turnover increased to EUR 248.6 million (2012: EUR 239.2 million).
Net rental income increased by EUR 6.9 million, or 4.2 per cent, to EUR 168.9 million (EUR 162.0 million). Net rental income for like-for-like properties rose by EUR 5.5 million, or 4.6 per cent, excluding the impact of the stronger Swedish krona, while the completion of (re)development projects and acquisition of shopping centres in 2012 increased net rental income by EUR 1.8 million.
Comments on 2013 from Marcel Kokkeel, CEO:
'In 2013, Citycon demonstrated that highquality, grocery-anchored urban shopping centres, in combination with active management, can deliver healthy income growth even in a more challenging economic environment. Our EPRA operating profit increased 9.9 per cent thanks to both successful leasing and cuts in administrative expenses. We were able to exceed the ambitious target set for 2013 of saving up to EUR 5 million on administrative expenses compared to the previous year. The economic occupancy rate of Citycon's investment properties remained stable at 95.7 per cent.
The quality of Citycon's property portfolio improved further over the course of 2013. The acquisition of Stockholm's Kista Galleria substantially strengthened Citycon's position and market share in Sweden and offered a unique opportunity to further increase the company's relevance in the eyes of international retailers. The performance of Kista Galleria has been in accordance with expectations.
Our divestment of non-core assets continued successfully in 2013. Eight properties (including one residential building) were successfully disposed of, for a total sales value of approximately EUR 60 million (including the 50 per cent sale of existing shopping centre IsoKristiina) at an average price of slightly above IFRS valuation. We will continue our strategy of maximising the value of non-core assets before divestment.
During the year we made good progress in the implementation of our strategy
of diversifying funding sources and deleveraging the company. We were awarded two investment-grade credit ratings from Standard & Poor's and Moody's, raised EUR 200 million in an oversubscribed rights issue, and refinanced EUR 500 million through a successful Eurobond issue.
Citycon continues to be active in the (re)development of its properties. In the first half of the year, we started two major (re)development projects: the extension and (re)development of Iso Omena and of IsoKristiina. These projects are proceeding as planned. There are several interesting urban (re)development projects in the pipeline, among them refurbishment and upgrade of some parts of Kista Galleria.
With a strong base of 37 shopping centres in urban locations, a pipeline of accretive (re)development projects, and a strong balance sheet, Citycon is well positioned to deliver earnings growth in 2014 also.'
On 14 June, the company issued an unsecured EUR 500 million Eurobond. This sevenyear bond will mature on 24 June 2020 and carries fixed annual interest at a rate of 3.75 per cent, payable annually. Prior to the bond issue, Citycon received two long-term corporate investment-grade credit ratings in May, BBB- from Standard & Poor's and Baa3 from Moody's, both with a stable outlook. The bond too was rated BBB- by Standard & Poor's and Baa3 by Moody's, in line with Citycon's corporate credit rating. The company used the proceeds from the bond to prepay existing bank loans, pay down lines of credit,
and repurchase some of its domestic bonds maturing in 2014 and 2017 for a total value of EUR 421.9 million). In Q3, the company also repaid the maturing convertible capital loan, issued in 2006 and amounting to EUR 39.8 million. The debt prepayment and the related unwinding of interest rate swaps and bond buy-backs caused some non-recurring indirect financial expenses in Q2. These are explained in more detail in the 'Financial Performance' section, under 'Net financial expenses'.
In February, based on the authorisation granted at the EGM of 6 February 2013, the Citycon Board of Directors decided on a share issue of approximately EUR 200 million, based on the shareholders' pre-emptive subscription rights. In total, 114,408,000 new shares were offered, at EUR 1.75 per share. The subscription period was 21 February – 7 March. All shares offered were subscribed and subsequently entered in the Finnish Trade Register on 14 March.
The economic occupancy rate of the shopping centres was 96.3 per cent (96.8%), equivalent to 95.7 per cent (95.7%) for the entire property portfolio. With 50 per cent consolidation of Kista Galleria included, the economic occupancy rate for the entire property portfolio would have been 96.0 per cent at the end of the year.
In May, Citycon renewed eleven grocery store lease agreements with the trading sector company Kesko. These stores are part of Citycon's supermarket and shops portfolio. The agreements cover some 44,000 square metres of leasable area and increased the average remaining lease length in Citycon's full leasing portfolio by approximately four months.
On 30 December, Citycon sold the Torikeskus shopping centre in Seinäjoki to a local investor for approximately EUR 14.7 million. The divestment was in line with Citycon's strategy of focusing on urban, grocery-anchored shopping centres in the Nordics and Baltics. This asset was disposed of after value-maximisation activities.
On 28 November, Citycon sold all shares in Citycon Jakobsberg Bostäder 4 AB for SEK 41 million (approx. EUR 4.6 million) to Akelius Lägenheter AB. The sold company owns 51 apartments and two office premises in Jakobsberg Centrum in Stockholm. The aggregate gross leasable area (GLA) of the apartments and office spaces was approximately 3,900 square metres.
On 18 July, Citycon sold the office and retail property Backa, in the greater Gothenburg area, to a local buyer for approximately SEK 42 million (approx. EUR 4.9 million).
On 15 July, Citycon sold the office building on Wavulinintie, Helsinki, to ELF Invest Oy for approximately EUR 1.4 million.
On 10 July, Citycon sold a retail property in the Helsinki Metropolitan Area, Espoon Louhenkulma, to a local investor for approximately EUR 1.3 million.
On 16 April, Citycon sold Lindome, an office and retail property in the greater Gothenburg area, to a local buyer for approximately SEK 81 million (approx. EUR 9.7 million).
On 7 March, the company sold its office and retail property Hindås, located in the greater Gothenburg area, to a local buyer for approximately SEK 12 million (approx. EUR 1.4 million).
On 28 February, Citycon sold its 50 per cent share of IsoKristiina shopping centre in Lappeenranta to Mutual Pension Insurance
Company Ilmarinen. This disposal was related to the (re)development project initiated.
On 27 February, Citycon sold Ultima Oy, a company owning an undeveloped plot in Vantaa, to YIT Construction Ltd for approximately EUR 4.4 million.
On 17 January, jointly with the Canada Pension Plan Investment Board (CPPIB), Citycon acquired the Kista Galleria shopping centre, in Stockholm, from DNB Livsforsikring ASA, for approximately SEK 4.6 billion (approx. EUR 530 million). Citycon and CPPIB each own 50 per cent of the shopping centre. The centre has a gross leasable area of more than 90,000 square metres, of which 60,000 square metres consist of retail premises. More information on this transaction is available in the stock exchange release issued on 17 January 2013.
In addition, during the year Citycon agreed on the sale of one non-core asset in Finland for a price of approximately EUR 2.9 million. The closing of this sale is expected to occur in Q2 2014.
In November, Citycon started an extension and (re)development project for the shopping centre Stenungs Torg, in the greater Gothenburg area. The centre's gross leasable area is to be increased by approximately 5,000 square metres, to 41,400 square metres, with retail space for six new stores.
Also, in November, a refurbishment and extension project was started in Kista Galleria. A digital library will be added to the shopping centre as a joint investment with the City of Stockholm. The project also involves tenant alterations.
In May, Citycon announced the beginning of the first phase of extension of the Iso Omena
shopping centre. The investment for this three-phase project, including partial (re) development of the existing shopping centre, is expected to total approximately EUR 175 million. The first phase of the project, covering a EUR 120 million investment, will be carried out in a 50/50 partnership with NCC Property Development Oy. The extension will expand the leasable retail area of the shopping centre, by approximately 25,000 square metres, to over 75,000 square metres. More information on the project is available in the stock exchange and press releases issued on 31 May 2013.
In February, Citycon decided to expand and (re)develop the IsoKristiina shopping centre, in the Lappeenranta city centre. The total investment will be slightly above EUR 100 million. This (re)development will increase the centre's leasable area from 22,000 to 34,000 square metres. Ilmarinen Mutual Pension Insurance Company acquired a 50 per cent share of the existing shopping centre and is a 50 per cent partner in the project. More information on the project is available in the press release issued on 28 February 2013.
The renovation of Åkermyntan Centrum, in Stockholm, was completed in Q2 of 2013.
At its annual conference, in September, the European Public Real Estate Association (EPRA), which represents listed real estate companies, acclaimed Citycon's Annual and Sustainability Report 2012 as one of the best in the industry. This was Citycon's fourth consecutive Gold Award in the Financial Best Practices series. For the second year in a row, the company also won gold for Sustainability Best Practices, a new award series introduced in 2012.
On 30 January, statutory collaborative negotiations in the Finnish Business Unit were concluded concerning the reorganisation of business operations. As a result of these negotiations, Citycon reduced the number of employees in its Finnish Business Unit by 10. At the same time, a cluster-based organisational model was adopted in all of Citycon's operating countries, resulting in shopping centres being combined to form entities under the leadership of commercial directors.
In Citycon's reporting, Kista Galleria is treated as a joint venture and the shopping centre's result or fair value does not affect the turnover, net rental income, or fair value of investment properties of the group. Kista Galleria is consolidated into 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' in the statement of comprehensive income and Citycon's share of Kista Galleria's total assets is recognised in 'Investments in joint ventures' in the statement of financial position. In addition, the management fee received by Citycon is reported under 'Other operating income and expenses' and the interest income for the shareholder loan is reported in 'Net financial income and expenses'. In 2013, Kista Galleria contributed approximately EUR 10.3 million to the IFRS based profit for the period, consisting of Citycon's share of result in Kista Galleria and interest and fee income from Kista Galleria. Citycon's management and the Board of Directors follow the performance of Kista Galleria additionally as if it were
fully consolidated with Citycon's net rental income and operating profit. The 'Notes to the Consolidated Financial Statements' on pages 38-41 (in Note 4, 'Segment Information'), include more information on Kista Galleria shopping centre.
On 20 January, Citycon signed an agreement to sell another residential portfolio in Sweden for a total price of approximately SEK 51 million (approx. EUR 5.8 million). The transaction is expected to close in Q2-Q3 2014.
On 30 January, Citycon sold retail property Säkylän Liiketalo Oy, located in Western Finland to a local buyer for approximately EUR 0.3 million.
On 31 January, Citycon sold its shares in the Koskikara shopping centre, in Valkeakoski Tampere region, to Pirkanmaan Osuuskauppa for approximately EUR 2.6 million.
Citycon focuses on increasing both its net cash flow from operating activities and its direct operating profit. Therefore, the company pursues proactive asset management, valueadded activities, and selected acquisitions.
The initiation of planned (re)development projects will be carefully evaluated against strict pre-leasing criteria. Citycon intends to continue divestment of its non-core properties after value maximisation activities.
The company expects its turnover to increase by EUR +1 to +9 million and EPRA operating profit to change by EUR -2 to +6 million compared to 2013 level, based on the existing property portfolio. The company predicts its EPRA Earnings to increase by
EUR +2 to +10 million and on the basis of the current number of shares its EPRA Earnings per share (basic) to be EUR 0.20-0.22. The EPRA Earnings per share in 2013 of EUR 0.204 has been calculated with the issue-adjusted average number of shares of approximately 425.4 million shares (current number of shares approx. 441.3 million).
These estimates are based on (re) development projects that have already been completed and on those yet to be completed, as well as on the prevailing level of inflation, the euro–Swedish krona exchange rate, and current interest rates. No major (re) development projects are scheduled to come online during 2014.
Market conditions continued to be challenging in Citycon's operating countries during 2013. There are signs of gradual strengthening of the Swedish economy, but the recovery still eludes when it comes to the Finnish economy.
Retail sales growth and the inflation rate are key factors in Citycon's business and have an impact on rent received from retail premises. Almost all of the company's leases are tied to the consumer price index. A significant number of leases also feature a turnover-linked component. Consumer prices continued to rise during the year in Finland, Estonia, and Denmark, while they remained fairly stable in Sweden and Lithuania. In December, inflation was 1.6 per cent in Finland, 0.1 per cent in Sweden, 1.4 per cent in Estonia, 0.4 per cent in Lithuania, and 0.8 per cent in Denmark (sources: Statistics Finland, Statistics Sweden, Statistics Estonia, Statistics Lithuania, and Statistics Denmark). The year saw strong growth in retail sales in Estonia and Lithuania,
positive growth in Finland and Sweden, and negative growth in Denmark. Total retail sales growth for the first eleven months was 0.4 per cent in Finland, 1.9 per cent in Sweden, 5.0 per cent in Estonia, 4.4 per cent in Lithuania and -1.5 per cent in Denmark (sources: Statistics Finland, Statistics Sweden, Statistics Estonia, Statistics Lithuania, and Statistics Denmark).
Household consumer confidence improved in all of Citycon's countries of operation during the year and remained well above the euro area's average. In Estonia and Lithuania, the household consumer confidence indicator has remained negative (source: Eurostat).
In all of Citycon's operating countries, except Lithuania, seasonally adjusted unemployment rates are lower than the euro area average, of 12.1 per cent. The unemployment rate in Finland increased somewhat in the course of the year but remained at a healthy 8.4 per cent, as in November. In Sweden, unemployment remained stable at 8.0 per cent. Denmark's unemployment rate continued to be low, 6.9 per cent in November. In Estonia, the unemployment rate has been decreasing to 9.0 per cent, whereas unemployment in Lithuania has remained high, at 11.1 per cent as per October (source: Eurostat).
In Finland the property investment market saw very few transactions during the first three quarters of 2013; however, the last quarter was relatively active, recording the highest investment volume since Q1 2008. Demand for core assets remains strong, as equity rich investors keep looking for safe havens. There are also signs of investors starting to diversify their portfolios, both in terms of risk
and geography. However, stronger economic fundamentals are needed before more robust growth can be expected. Shopping centre prime yields have remained stable both quarter-onquarter and year-on-year, and no significant change is expected in 2014. Prime shopping centre rents remained stable compared to the previous quarter and year-on-year. The softening outlook for retail sales limits the rental growth potential and has already made occupiers somewhat more cautious which has lengthened leasing negotiations and slowed down decision making.
In Sweden the demand for core retail assets remains strong. In Q4 the transaction volume for retail properties was weaker compared to the previous year. Comparing 2013 and 2012 as a whole in terms of retail transaction volume, 2013 transactions represented around 95 per cent of the previous year's volume. Prime shopping centre yields remained stable quarter-on-quarter as well as year-on-year, and no significant change is expected in 2014.
In Estonia prime shopping centre rents remained stable in Q4, but increased year-onyear by approximately two per cent. Vacancy rates in professionally managed prime shopping centres are close to zero per cent and demand for small to mid-size units is high, whereas older shopping centres in remote locations face challenges to renew contracts. The investment market in Q4 featured transactions mainly in the office and industrial segment. Lack of investment product has hindered growth of transaction volumes. Prime shopping centres yields have dropped to 7.3 per cent and strong economic fundamentals support further yield compression, although at
the same time the increasing cost of financing affects the yields negatively.
(Source: Jones Lang LaSalle Finland Oy)
During the year under review, total sales at Citycon's shopping centres increased by one per cent and footfall remained at the level of the previous year. In Finland, sales decreased by one per cent, in Sweden sales increased by two per cent and sales in the Baltic Countries and New Business grew by six per cent. Footfall in Finland fell by three per cent, while it grew by four per cent in Sweden and by eight per cent in the Baltic Countries and New Business. The growth in footfall in Sweden resulted mainly from the larger shopping centres, such as Liljeholmstorget Galleria, and in the Baltic Countries and New business from the completion of the Magistral (re)development as the centre was closed during the comparison period. Like-for-like shopping-centre sales and footfall remained at the same level as in the previous year. It should be noted that the sales and footfall figures include estimates.
The Citycon Board of Directors considers the company's major short-term risks and uncertainties to be associated with economic developments in the company's regions of operation. Such developments affect demand, vacancy rates, and market rent levels for retail premises. In addition, key near-term risks include the fair value development of properties in today's uncertain economic conditions. Also the risks of rising financial expenses due to higher loan margins or market interest rates
and lower availability of debt financing are of importance. These risks have however reduced lately, on account of the two public investment grade credit ratings received in May, the EUR 500 million Eurobond issued in June and recent positive development in banks' willingness to lend money.
Although the financial situation has so far had only minor effects on the rent levels of retail premises and on occupancy rates in Citycon's operating regions, lower demand for retail premises, higher vacancy rates, and lower market rent levels in Citycon's regions of operation pose challenges in a sluggish economic environment. Economic developments, particularly trends influencing consumer confidence and behaviour, inevitably affect demand for retail premises. Risks to economic growth persisted in 2013. In times of weak economic growth, rental levels of retail premises typically fall, leasing of new premises is more difficult, and vacancy rates rise.
The implementation of Citycon's strategy will require new financing going forward, which means that risks associated with the availability and cost of financing are meaningful to Citycon. Banks' willingness to lend money is still lower and the loan margins remain at higher levels than before the financial crises, but both the availability and cost of financing have improved during 2013. In the future we will see stricter regulation of the banking and insurance sectors (e.g., with the Basel III and Solvency II regulations) which is likely to again elevate the costs of debt financing and limit the availability of long-term bank loans. Some of Citycon's loan agreements were signed at low margins before the financial crisis; when new loans are taken out, the margins are likely to be higher. Along with
rising market interest rates, such an increase in loan margins is likely to push Citycon's average interest rate upwards in the future.
The company is actively seeking to diversify its funding sources – as is demonstrated by the EUR 500 million Eurobond issued in June – in order to mitigate the risks related to bank financing. However, there are no guarantees that such alternative funding sources will be available in the future at cost-efficient margins. Bond issues, in combination with the EUR 360 million credit facility agreement signed with Nordic banks in September 2012, the EUR 90 million rights issue in October 2012, and the EUR 200 million rights issue in March 2013, considerably strengthened the company's balance sheet, improved the available liquidity, and decreased the refinancing risk for the coming years. Also the public investment grade credit ratings received in May 2013 improved the availability of funding at competitive terms.
The fair value development of investment properties continues to be characterised by uncertainty caused by the sovereign debt crisis and the resulting tough economic conditions. Several factors affect the fair value of the investment properties owned by Citycon, among them general and local economic developments, interest rate levels, foreseeable inflation rates, trends in market rent levels, vacancy rates, property investors' yield requirements, and the competitive environment. The associated uncertainty is being reflected most strongly in developments for retail properties outside major cities or in otherwise less attractive properties, because investor demand is not currently focused on these properties and banks are more reluctant to offer financing for projects related to such
properties. On the other hand, the fair value of winning shopping centres, which attract investor interest amid uncertain conditions, remained stable or even increased during 2013.
The company's short-term risks and uncertainties, along with its risk management and the principles applied therein, are discussed in more depth at www.citycon.com/ riskmanagement; on pages 53-56 of the Financial Statements for 2013; and on pages 58-59 of the annual report for 2013, soon to be released.
Citycon's strategy is to focus on urban groceryanchored shopping centres in the Nordic and Baltic countries. Citycon seeks growth both through operational improvement, extensions, and (re)developments of its existing shopping centres and via selective shopping-centre acquisitions. In its updated strategy of July 2011, Citycon defined supermarkets and shops as non-core properties and announced its intention to divest itself of these properties within the next few years, after completion of value-enhancing activities.
At year end, the fair value of Citycon's property portfolio was EUR 2,733.5 million (EUR 2,714.2 million). The company owned 36 (37) shopping centres, excluding Kista Galleria, and 35 (41) other properties. Of the shopping centres, 22 (23) were in Finland, nine (9) in Sweden, four (4) in the Baltic countries, and one (1) in Denmark.
Citycon's gross capital expenditure (including acquisitions) in the year under review came to EUR 226.1 million (EUR 161.7 million), with property acquisitions accounting for EUR 2.0 million (EUR 58.8 million), acquisitions
linked to joint ventures and investments in them for EUR 148.1 million (EUR 0.0 million), property development for EUR 75.5 million (EUR 101.6 million), and other investments for EUR 0.5 million (EUR 1.4 million).
Gross capital expenditure (including acquisitions) for 2013 was EUR 65.1 million (EUR 119.9 million) in Finland, EUR 150.2 million (EUR 18.1 million) in Sweden, and EUR 10.4 million (EUR 23.0 million) in the Baltic Countries and New Business. Capital expenditure at the company's headquarters amounted to EUR 0.4 million (EUR 0.7 million). The company's divestments totalled EUR 53.0 million (EUR 26.4 million), and, in all, gain on sale of EUR 0.8 million (gain on sale of EUR 4.2 million) was recognised (tax effect included).
The following acquisition was made during the year:
• In January, Citycon, jointly with CPPIB, acquired Stockholm's Kista Galleria shopping centre from DNB Livsforsikring ASA, for approximately SEK 4.6 billion (approx. EUR 530 million).
The following divestments were made during the year:
| Location | Area before and after project completion, sq.m. |
Citycon's (expected) net investment need (EUR million) |
Actual gross capital investments by 30 December 2013 (EUR million) |
Completion | |
|---|---|---|---|---|---|
| Stenungsund, | 36,400 | ||||
| Stenungs Torg | Sweden | 41,400 | 18.0 | 1.5 | Q3/2015 |
| Kista Galleria 1) | Stockholm, Sweden |
94,200 94,600 |
5.0 | 3.3 | Q4/2014 |
| Iso Omena | Espoo, Finland |
63,300 90,000 |
88.0 | 13.4 | Q3/2016 |
| IsoKristiina 2) | Lappeenranta, Finland |
22,400 34,000 |
54.0 | 16.0 | Q4/2015 |
| Åkermyntan Centrum |
Stockholm, Sweden |
8,500 10,100 |
6.9 | 6.9 | completed Q2/2013 |
| Koskikeskus | Tampere, Finland |
27,700 28, 600 |
41.8 | 41.8 | completed 2012 |
| Iso Omena | Espoo, Finland |
60,600 63,100 |
7.6 | 7.6 | completed 2012 |
| Myllypuro | Helsinki, Finland |
7, 700 7,300 |
21.3 | 21.33) | completed 2012 |
| Magistral | Tallinn, Estonia |
9,500 11,700 |
7.0 | 7.0 | completed 2012 |
1) Kista Galleria is treated as a joint venture and consolidated in Citycon's financial statements based on the equity method.
2) Citycon owns 50 per cent of shopping centre IsoKristiina, Ilmarinen Mutual Pension Insurance Company owns the other 50 per cent.
3) The compensation of EUR 5.9 million and its tax impact received from the City of Helsinki in 2008 has been deducted from the actual gross investments.
area, for approximately SEK 42 million (approx. EUR 4.9 million).
As a result of these divestments, the company's total gross leasable area decreased by 45,680 square metres. Since the publication of its strategy update in July 2011, the company has divested 14 non-core properties and three residential portfolios, to a total value of approximately EUR 81 million.
Citycon is pursuing a long-term increase in the footfall, cash flow, and efficiency of its retail properties and also in the return on its investment in these properties. The purpose of the company's development activities is to keep its shopping centres competitive for both customers and tenants. In the short term, (re) development projects may weaken the return on the properties, as some retail premises have to be temporarily vacated for refurbishment and this affects rental income. Citycon aims to complete its construction projects in stages, in order to secure continuous cash flow.
At the end of the year, the company had two major (re)development projects in progress: the Iso Omena extension and (re)development project in Espoo and the IsoKristiina extension and (re)development project in Lappeenranta. During the last quarter, the company also launched an extension and (re)development project in Stenungs Torg and a refurbishment project in Kista Galleria.
Construction work at Iso Omena started in June 2013, with this three-phase project to be completed in late summer 2016. Because the new station at the end of the western metro line will be beneath the shopping centre, the extension project is being carried out in close co-operation with the metro company Länsimetro Oy. The centre's retail mix will be increasingly focused on fashion stores and a wide offering of restaurant services. The amount of pre-leased space in the area of the extension stood at approximately 40 per cent at the end of the year.
Construction work at IsoKristiina started at the beginning of April 2013. At IsoKristiina, strong emphasis will be placed on leisure and on versatile restaurant and café services. As a special feature of the (re)development, the new Lappeenranta City Theatre premises will be inside the renovated shopping centre. The amount of pre-leased space in the area
of the extension stood at approximately 70 per cent at the end of the year.
The extension and (re)development of Stenungs Torg includes creation of space for six new tenants, among them H&M, along with renovation of the main entrance of the shopping centre.
The refurbishment and extension project at Kista Galleria involves constructing a state-of-the-art 2,400 sq.m. digital library at the centre in co-operation with the City of Stockholm. The total value of the project is approximately EUR 10 million.
The renovation of Stockholm's Åkermyntan Centrum reached completion during Q2 2013.
In addition, during the year the company carried out two projects related to tenant fit-outs at Rocca al Mare and Kristiine in Tallinn, with total investments of EUR 5.3 million and EUR 3.3 million, respectively. In September, completion of the refurbishment project at Rocca al Mare was finalised when Estonia's first H&M and first branch of the Debenhams department-store chain opened at the shopping centre. The tenant fit out project at Kristiine, which involved the opening of an H&M store in the shopping centre, was completed during the end of the year.
The table below lists the most significant (re)development projects in progress, along with the projects completed in 2012-2013. Further information on the company's completed, ongoing, and planned (re) development projects can be found on the company's web site and in the upcoming 2013 annual report.
The changes in Group structure during 2013 are presented on page 62 of the Financial Statements.
The figures presented below are for 2013, and the figures in brackets are the reference figures for 2012, unless otherwise indicated.
The company's turnover comes mainly from rental income from retail properties and from utility and service charge income. Turnover came to EUR 248.6 million (EUR 239.2 million), showing growth of EUR 9.4 million, or 3.9 per cent. Turnover growth was mainly driven by like-for-like properties which contributed EUR 6.6 million to turnover growth. Completed or partly completed (re)development projects, such as those for Magistral and Koskikeskus, accounted for EUR 1.8 million of the turnover growth, with acquisitions made in 2012 contributing EUR 2.9 million. Divestments (see the discussion of 2013 divestments under 'Property Portfolio'; sales of supermarkets and shops, along with flats, in Sweden in 2012 and 2013 are also included in the reference period's divestment portfolio) decreased turnover by EUR 2.3 million. See also the table 'Net Rental Income and Turnover by Segment and Property Portfolio'.
Turnover from like-for-like properties increased in consequence of indexing and higher rental levels. Temporary rental rebates for like-for-like properties decreased to EUR 0.3 million (EUR 0.4 million).
At year end, Citycon had 3,287 (3,792) leases in total. The leasable area decreased by 3.8 per cent to 961,790 square metres. This decrease in leasable area is due to divestments. The average remaining length of leases was 3.5 years and remained at the same level as the previous
| Q4/2013 Q4/2012 Q3/2013 | 2013 | 2012 Change-% | ||||
|---|---|---|---|---|---|---|
| Number of properties at the end of the period |
71 | 78 | 72 | 71 | 78 | -9.0% |
| Gross leasable area, sq.m. | 961,790 1,000,270 | 975,790 | 961,790 | 1,000,270 | -3.8% | |
| Annualised potential rental value, EUR million 1) |
246.1 | 245.9 | 249.1 | 246.1 | 245.9 | 0.1% |
| Average rent (EUR/sq.m.) | 21.5 | 20.7 | 21.5 | 21.5 | 20.7 | 3.9% |
| Number of leases started during the period |
163 | 195 | 156 | 611 | 792 | -22.9% |
| Total area of leases started, sq.m. 2) | 52,697 | 40,257 | 26,507 | 150,013 | 141,167 | 6.3% |
| Average rent of leases started (EUR/sq.m.) 2) |
17.5 | 22.0 | 18.4 | 18.8 | 20.5 | -8.3% |
| Number of leases ended during the period |
458 | 153 | 209 | 1,117 | 1,064 | 5.0% |
| Total area of leases ended, sq.m. 2) | 66,260 | 29,728 | 19,101 | 186,567 | 149,972 | 24.4% |
| Average rent of leases ended (EUR/sq.m.) 2) |
18.3 | 24.6 | 22.3 | 18.6 | 18.6 | 0.0% |
| Occupancy rate at end of the period (economic), % |
95.7 | 95.7 | 95.8 | 95.7 | 95.7 | - |
| Average remaining length of lease portfolio at the end of the period, years |
3.5 | 3.5 | 3.6 | 3.5 | 3.5 | 0.0% |
| Net rental yield, % 3) | 6.4 | 6.4 | 6.4 | 6.4 | 6.4 | - |
| Net rental yield, like-for-like properties, % |
6.1 | 6.1 | 6.2 | 6.1 | 6.1 | - |
1) Annualised potential rental value for the portfolio includes annualised gross rent 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) Leases started and ended do not necessarily refer to the same premises.
3) Includes the value of unused building rights.
year (3.5 years). Average rent rose from EUR 20.7/ sq.m. to EUR 21.5/sq.m., mainly thanks to index increments, divestments and the strengthening of the Swedish krona. The economic occupancy rate was 95.7 per cent (95.7%). The rolling 12-month occupancy cost ratio for like-for-like shopping centre properties was 8.6 per cent (8.5%).
The property operating expenses consist of maintenance costs related to real property, such as electricity, cleaning, and repairs. Property operating expenses rose by EUR 2.6 million, or 3.4 per cent from EUR 75.8 million to EUR 78.4 million. Completed (re)development projects and acquisitions increased property operating expenses, while divestments decreased them. Like-for-like property operating expenses increased by EUR 0.7 million, mainly on account of the higher property management expenses (cf. Note 5: 'Property Operating Expenses').
Other expenses from leasing operations, consisting of tenant improvements and credit losses, totalled EUR 1.3 million (EUR 1.4 million). The decrease was attributable mainly to lower credit losses and provisions for credit losses.
Citycon's net rental income was EUR 168.9 million (EUR 162.0 million). Net rental income increased by EUR 6.9 million, or 4.2 per cent mainly thanks to like-for-like net rental income growth of EUR 5.5 million, or 4.6 per cent. Like-for-like net rental income grew mainly due to a clear increase in net rental income from shopping centres, by 4.5 million or 4.5 per cent. In addition, like-for-like net rental income
for supermarkets and shops increased by 0.9 million or 5.6 per cent. Large shopping centres, such as Iso Omena, Myyrmanni, and Liljeholmstorget Galleria, contributed to the positive development in like-for-like net rental income of shopping centres. In addition, (re)development projects such as those for Magistral and Koskikeskus increased the net rental income by EUR 0.6 million, and acquisition of the shopping centres Arabia, Citytalo, and Albertslund Centrum increased it by EUR 1.2 million, while divestments reduced net rental income by EUR 1.1 million.
The net rental yield of Citycon's property portfolio was 6.4 per cent (6.4%).
The following table presents like-for-like net rental income growth by segment of the company. 'Like-for-like properties' refers to properties held by Citycon throughout the two preceding periods, excluding properties under (re)development or extension and undeveloped lots. Measured in net rental income, 71.9 per cent of the like-for-like properties are in Finland.
Administrative expenses totalled EUR 20.6 million (EUR 26.5 million). This represents a reduction of EUR 5.9 million, or 22.2 per cent, due mainly to cost savings activities carried out in the beginning of 29013.
At the end of December, Citycon Group employed 127 (129) persons, in total, of whom 83 worked in Finland, 33 in Sweden, 10 in the Baltic countries, and 1 in the Netherlands.
In all, Citycon Group paid EUR 11.5 million (EUR 11.6million) in salaries and other remuneration, of which the Group's CEO's salaries and other remuneration consisted
| Net Rental Income by Segment and Property Portfolio | Turnover by portfolios |
|||||
|---|---|---|---|---|---|---|
| EUR million | Finland | Sweden | Baltic Countries and New Business |
Other | Total | Citycon total |
| 2011 | 90.5 | 35.4 | 18.4 | - | 144.3 | 217.1 |
| Acquisitions | 1.5 | 1.4 | 4.6 | - | 7.5 | 11.1 |
| (Re)development projects | 4.6 | 0.6 | 0.6 | - | 5.8 | 8.3 |
| Divestments | -0.5 | -1.7 | - | - | -2.3 | -4.6 |
| Like-for-like properties | 2.2 | 2.3 | 1.1 | - | 5.5 | 5.3 |
| Other (incl. exchange rate diff.) | 0.0 | 1.2 | -0.1 | 0.0 | 1.1 | 1.8 |
| 2012 | 98.2 | 39.2 | 24.6 | - | 162.0 | 239.2 |
| Acquisitions | 0.5 | 0.0 | 0.7 | - | 1.2 | 2.9 |
| (Re)development projects | 0.8 | -0.3 | 0.2 | 0.0 | 0.6 | 1.8 |
| Divestments | -0.1 | -1.0 | 0.0 | - | -1.1 | -2.3 |
| Like-for-like properties | 4.1 | 1.2 | 0.2 | 0.0 | 5.5 | 6.6 |
| Other (incl. exchange rate diff.) | 0.0 | 0.6 | 0.0 | 0.0 | 0.6 | 0.4 |
| 2013 | 103.5 | 39.7 | 25.6 | 0.0 | 168.9 | 248.6 |
of EUR 0.9 million (EUR 1.0 million) and the equivalent figure for the Board of Directors accounted for EUR 0.8 million (EUR 0.7 million). The parent company paid out, in total, EUR 5.8 million (EUR 5.8 million) in salaries and other remuneration, of which the CEO's salary and other compensation accounted for EUR 0.9 million (EUR 1.0 million) and those of the Board of Directors came to EUR 0.8 million (EUR 0.7 million).
Net fair value gains on investment properties Net fair value gains on investment properties totalled EUR 26.1 million (EUR 23.6 million). The fair value gain of the shopping centres was EUR 25.2 million, and that of the supermarket
and shop properties was EUR 0.9 million. The company recorded a total value increase of EUR 61.2 million (EUR 54.4 million) and a total value decrease of EUR 35.2 million (EUR 30.8 million). On 31 December 2013, the average net-yield requirement defined by Jones Lang LaSalle for Citycon's entire property portfolio was 6.3 per cent (31 December 2012: 6.3 %). The average net-yield requirement for properties in Finland, Sweden, and the Baltic Countries and New Business was 6.2 per cent, 5.9 per cent and 7.3 per cent respectively.
The weighted average market rent used for the valuation rose to EUR 25.3/sq.m, up from EUR 25.1/sq.m (cf. Note 14: 'Investment Properties'). Jones Lang LaSalle's year-end
| 2013 | 2012 | 2011 | |
|---|---|---|---|
| Average number of personnel | 123 | 132 | 131 |
| Salaries and other remuneration, EUR million | 11.5 | 11.6 | 11.2 |
valuation statement can be found on the company web site at www.citycon.com/ valuation.
Net gain on the sale of investment properties totalled EUR 0.8 million (gain on sale of EUR 4.2 million) (cf. 'Property Portfolio').
Operating profit came to EUR 176.0 million (EUR 163.4 million), being higher than in the corresponding period previous year. The increase resulted from net rental income growth, lower administrative expenses, and higher fair value gains.
Net financial expenses increased by EUR 21.9 million, to EUR 90.1 million (EUR 68.1 million). Financial expenses increased mainly through realised one-off expenses related to prepayment of loans and the buying back of bonds during the second quarter. These costs include the realised negative market value of interest rate swaps that were unwound in relation to the prepaid bank loans, write-off of capitalised fees related to prepaid debt, and the portion of the bond buy-back price in excess of the nominal value. Citycon uses interest rate swaps to hedge the floating interest-rate risk exposure and applies hedge accounting when marking these swaps to market. Changes in fair values are reported under other comprehensive income, with the tax effect taken into account. After the bond issue, some of the proceeds were used for prepayment of existing bank loans and the related interest rate swaps were unwound. The realised losses were booked from other comprehensive income/loss to financial expenses, with the tax effect taken into consideration. Because mark to market valuation was used, the swap unwinding did not
have a major impact on the equity.
At year end, the weighted average interest rate, inclusive of interest rate swaps, showed a decrease, to 4.12 per cent (4.25%), from the level of the previous year but had increased from that of the previous quarter (4.07%) after the repayment of the rest of the outstanding short-term commercial papers. The year-to-date weighted average interest rate for interestbearing debt, including interest rate swaps, decreased slightly to 4.06 per cent from the 4.07 per cent of the previous year's corresponding period, as well as from the previous quarter level of 4.08 per cent, with the lower interest expenses following the issue of the EUR 500 million Eurobond at the end of the second quarter.
The share of profit of joint ventures totalled EUR 4.1 million (EUR 0.2 million) and represents Citycon's share of the profit from the Kista Galleria shopping centre and Espagalleria Oy.
Current tax expenses for the year were EUR 0.7 million (EUR 1.4 million). Change in deferred taxes came to EUR 10.7 million (EUR -6.4 million). The positive change in deferred taxes resulted mainly from the corporate income tax rate cut in Finland as well as a deferred tax receivable booked in relation to the net losses from the unwinding of interest rate swaps in the first half of 2013.
Profit for the period came to EUR 100.0 million (EUR 87.7 million). Despite one-off financial expenses, profit increased due to an increase in operating profit and lower tax expenses..
At year end, the fair value of the company's property portfolio totalled EUR 2,733.5 million (EUR 2,714.2 million), with Finnish properties accounting for 61.1 per cent (61.1 %) of this, Swedish properties for 26.3 per cent (27.2 %), and the Baltic Countries and New Business properties for 12.5 per cent (11.6 %).
The fair value of investment properties increased by EUR 19.3 million from the value at the end of 2012 (31 December, 2012: EUR 2,714.2 million), due to gross capital expenditure of EUR 77.5 million, offset by divestments totalling EUR 37.0 million (see 'Property Portfolio') and by EUR 24.2 million transfer of certain residential units in Sweden and some supermarket and shop properties in Finland and Sweden to the 'investment property held for sale' category. In addition, net fair value gains on investment properties increased the value of investment properties by EUR 26.1 million (see the detailed analysis in the 'Financial Performance' section's subsection 'Net fair value gains on investment properties'). Exchange-rate changes decreased the fair value of investment properties by EUR 23.1 million.
At the end of the year, the shareholders' equity attributable to the parent company's shareholders came to EUR 1,289.6 million (EUR 1,015.7 million), increasing by EUR 273.9 million, mainly in consequence of the rights issue, the net proceeds from which amounted to EUR 196.0 million. In addition, the shareholders' equity was increased by the profit for the reporting period attributable to parent-company shareholders, by EUR 93.1 million, along with the positive fair value change in interest derivative contracts. On the other hand, dividend payments and equity returns decreased the equity by EUR 49.0 million. Citycon applies hedge accounting, which means that fair value changes of applicable interest derivatives are recorded under 'Other Items of Comprehensive Income', which affects shareholders' equity. A gain on the fair value of interest derivatives of EUR 36.7 million was recorded for the year, taking into account their tax effect (a loss of EUR 14.1 million) (cf. Note 21, 'Derivative Financial Instruments'').
Because of the above-mentioned items and the higher number of shares that resulted from the rights issue, equity per share decreased to EUR 2.92 (31 December 2012: EUR 3.11). The equity ratio increased further to 45.3 per cent (30 September 2013: 44,1%). The company's equity ratio, as specified in the loan-agreement covenants, increased to 45.2 per cent (30 September 2013: 44.1%).
Details of the company's share capital, the number of shares, and related matters can be found in the Financial Statements, in the section on Shareholders and Share.
Liabilities totalled EUR 1,634.7 million (EUR 1,758.6 million), with short-term liabilities accounting for EUR 231.6 million (EUR 209.7 million). At year-end, Citycon's available liquidity was EUR 435.4 million, of which EUR 380.0 million consisted of undrawn, committed credit facilities, EUR 38.0 million of cash and cash equivalents and EUR 17.4 million of undrawn cash pool overdraft limits. At the year end, Citycon's liquidity, exclusive of commercial papers, stood at EUR 435.4 million (30 September 2013: EUR 387.1 million).
Interest-bearing debt showed a year-onyear decrease of EUR 70.6 million, falling to EUR 1,462.4 million (EUR 1,533.0 million). The fair value of interest-bearing debt was EUR 1,471.3 million (EUR 1,538.8 million) at year end. Cash and cash equivalents totalled EUR 38.0 million (EUR 51.0 million), making the fair value of interest-bearing net debt EUR 1,433.3 million (EUR 1,487.8 million). The average loan maturity, weighted for the amount of the loans' principal, was 4.1 years (3.2 years). This increase was due to the 7 year EUR 500 million eurobond issued
in June. The average interest-rate fixing period increased to 3.9 years (3.5 years).
The interest coverage ratio increased to 2.4 (Q3/2013: 2.3).
Fixed-rate debt accounted for 83.4 per cent (89.2%) of the year-end interest-bearing debt, including interest-rate swaps with over one year to maturity.
During Q4 the company signed three new cash pool overdraft limit agreements for a total amount of EUR 18.2 million. These limits will enable to maintain lower cash levels going forward.
The company successfully issued a EUR 500 million senior unsecured Eurobond on 14 June. This seven-year bond matures on 24 June 2020. This bond carries fixed annual interest at a rate of 3.75 per cent, payable annually on 24 June, and is listed on the Official List of the Irish Stock Exchange and traded on its regulated market. Bonds were allocated to a broad base of European investors, and the bond offering was oversubscribed. Through this strategic transaction, Citycon was able to increase its liquidity, diversify the company's debt financing sources, and extend average debt maturities. The proceeds from the offering have been used to repay existing debt.
In June, Citycon repurchased some domestic senior bonds maturing in 2014 and 2017. The company repurchased a portion of its unsecured domestic bond issued on 17 December 2009 from institutional investors for 106.5 per cent of face value. The face value repurchased by the company amounted to EUR 16.9 million, corresponding to approximately 42.3 per cent of the aggregate amount of the domestic bond. The principal amount of the bond due in 2014 amounts to EUR 40 million,
and it carries interest at a rate of 5.10 per cent p.a. The deals were executed on 25 June 2013. At the same time, Citycon repurchased part of its unsecured domestic bond issued on 11 May 2012 from institutional investors for 106.4 per cent of face value. The face value repurchased by the company amounted to EUR 11.6 million, corresponding to approximately 7.7 per cent of the aggregate amount of the domestic bond. The principal amount of the bond due in 2017 comes to EUR 150 million, with interest due at a rate of 4.25 per cent p.a. The deals were executed on 25 June 2013. All repurchases of the bonds were executed on the open market. In accordance with the terms and conditions of the domestic bonds, the company will cancel the repurchased bond amounts.
An agreement for a new bilateral six-year revolving credit facility loan of EUR 50 million was signed in June.
In May, Citycon received two investmentgrade credit ratings, from Standard & Poor's (BBB-) and Moody's (Baa3).
On 12 February, the Citycon Board of Directors decided to issue as many as 114,408,000 new shares in a share issue for subscription at a price of EUR 1.75 per share, worth approximately EUR 200 million, based on an authorisation granted by the EGM of 6 February 2013. The shares offered represented around 35 per cent of the total shares and voting rights in the company prior to the offering and around 26 per cent postoffering. The share subscription period was 21 February – 7 March, and all of the shares offered were subscribed for in the share issue. The new shares were entered in the Finnish Trade Register on 14 March. More detailed
information on the rights issue can be found in the Citycon stock-exchange releases published in February and March.
On 14 January, Citycon and CPPIB signed a standalone asset-backed loan agreement for, in total, SEK 2,290 million (approx. EUR 265 million) in order to finance the Kista Galleria shopping-centre investment. The loan is secured by Kista Galleria, and the loan period is five years. This loan is granted by Skandinaviska Enskilda Banken AB (publ), which also co-ordinated the transaction, and Swedbank AB and Aareal Bank AG.
On top of the financial covenants, Citycon's debt financing agreements have other customary restrictive clauses. These include negative-pledge and change-ofcontrol clauses.
With respect to the negative pledge, Citycon's loan agreements limit the maximum amount of secured indebtedness to 7.5 per cent of the total financial indebtedness of the group. Change of control provisions are associated with a situation wherein a person or group of persons acting in concert would hold more than 50 per cent of the voting rights of Citycon and such change of control would, (i) in respect of the debt financing agreements, impose an obligation for the company to commence negotiations with the relevant lenders on an alternative basis for the continuation of financing or, alternatively, to repay the loans in question and, (ii) in respect of the debt securities, entitle the debt security holders to require the company to redeem such securities. Both clauses are subject to the applicable grace periods and possible waivers.
Net cash from operating activities totalled EUR 56.6 million (EUR 61.5 million). This decrease was mainly due to higher interest and other financial charges, which resulted from the realised fair value losses on interest rate swaps in the second quarter of the financial year.
Net cash used in investing activities totalled EUR 168.4 million (net cash used in investing activities EUR 104.9 million). Capital expenditure related to investment properties, shares in joint ventures, and tangible and intangible assets totalled EUR 226.6 million (EUR 93.9 million). Negative cash flow from investing activities was partially offset by sales of investment properties totalling EUR 60.2 million (EUR 31.1 million).
Net cash from financing activities totalled EUR 99.4 million, and comparable net cash from financing activities came to EUR 2.3 million. The net cash from financing activities includes proceeds from the EUR 500 million bond issue in June, which were used mainly for repayment of existing debt. The rights issue in March increased net cash from financing activities by EUR 196.0 million.
In March, the arbitration board rendered the award relating to arbitration proceedings against Citycon's subsidiary, MREC Espoontori related to Espoontori shopping centre's 2011 completed redevelopment project. The arbitration board awarded SRV Rakennus
Oy approximately EUR 790,000 including VAT and penal interest on basis of their claim of approximately EUR 4.7 million (incl. VAT) against MREC Espoontori, who has paid the amount to SRV Rakennus Oy in April 2013. Consequently, the dispute has been finally settled in 2013.
Some lawsuits, claims and legal disputes based on various grounds are pending against Citycon relating to the company's business operations. In the company's view, it is improbable that the outcome of these lawsuits, claims and legal disputes will have a material impact on the company's financial position.
Citycon's business operations are divided into three business units: Finland, Sweden, and Baltic Countries and New Business. These business units are divided further, into clusters. The Finnish unit is composed of four clusters, the Swedish unit of three, and the Baltic Countries and New Business unit of one cluster.
Citycon is a market leader in the Finnish shopping centre business. At year end, the company owned 22 shopping centres and 33 other properties in Finland, with a total leasable area of 571,890 square metres (595,670 sq.m.). The leasable area decreased through property disposals (cf. 'Property Portfolio'). The annualised potential rental value decreased marginally by 0.1 per cent to EUR 150.5 million due to divestments.
The lease agreements started during the year applied to a gross leasable area of 110,292 square metres (89,689 sq.m.), and ended lease agreements applied to 133,770 square metres
| Q4/2013 Q4/2012 Q3/2013 | 2013 | 2012 Change-% | ||||
|---|---|---|---|---|---|---|
| Number of properties at the end of the | ||||||
| period | 55 | 59 | 56 | 55 | 59 | -6.8% |
| Gross leasable area, sq.m. | 571,890 | 595,670 582,990 571,890 | 595,670 | -4.0% | ||
| Annualised potential rental value, EUR million 1) | 150.5 | 150.6 | 153.3 | 150.5 | 150.6 | -0.1% |
| Average rent (EUR/sq.m.) | 22.4 | 21.4 | 22.2 | 22.4 | 21.4 | 4.7% |
| Number of leases started during the period | 109 | 131 | 95 | 390 | 453 | -13.9% |
| Total area of leases started, sq.m. 2) | 40,954 | 25,402 | 16,057 110,292 | 89,689 | 23.0% | |
| Average rent of leases started (EUR/sq.m.) 2) | 17.5 | 23.1 | 19.9 | 18.8 | 21.7 | -13.4% |
| Number of leases ended during the period | 163 | 80 | 102 | 498 | 444 | 12.2% |
| Total area of leases ended, sq.m. 2) | 53,036 | 15,324 | 14,959 133,770 | 79,049 | 69.2% | |
| Average rent of leases ended (EUR/sq.m.) 2) | 18.6 | 28.4 | 22.5 | 19.0 | 21.9 | -13.2% |
| Occupancy rate at end of the period (economic), % |
95.1 | 95.3 | 95.4 | 95.1 | 95.3 | - |
| Average remaining length of lease portfolio at the end of the period, years |
3.9 | 3.7 | 4.0 | 3.9 | 3.7 | 5.4% |
| Gross rental income, EUR million | 35.7 | 35.5 | 36.1 | 144.2 | 137.0 | 5.3% |
| Turnover, EUR million | 37.4 | 37.3 | 37.6 | 150.4 | 143.2 | 5.0% |
| Net rental income, EUR million | 26.3 | 25.7 | 26.8 | 103.5 | 98.2 | 5.4% |
| Net rental yield, % 3) | 6.4 | 6.3 | 6.4 | 6.4 | 6.3 | - |
| Net rental yield, like-for-like properties, % | 6.4 | 6.4 | 6.4 | 6.4 | 6.4 | - |
| Fair value of investment properties, EUR million |
1,671.2 | 1,659.0 | 1,677.3 | 1,671.2 | 1,659.0 | 0.7% |
1) Annualised potential rental value for the portfolio includes annualised gross rent 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) Leases started and ended do not necessarily refer to the same premises.
3) Includes the value of unused building rights.
(79,049 sq.m.). The average rent for new lease agreements was slightly lower than the average rent for the ended lease agreements, mainly due to new large-unit retail leases in supermarket and shop properties which started during the last quarter of the year. The average rent rose from EUR 21.4/sq.m. to EUR 22.4/sq.m., mainly thanks to index increments and property disposals. The economic occupancy rate decreased to 95.1 per cent (95.3%), mainly due to a finalised (re)-development project with temporary vacancy. For shopping centres, the economic occupancy rate was 95.9 per cent and the average rent was EUR 26.0/sq.m.
Citycon's net rental income from Finnish operations during 2013 totalled EUR 103.5 million (EUR 98.2 million). Net rental income grew by EUR 5.3 million or 5.4 per cent. Net rental income for like-for-like properties in Finland increased by EUR 4.1 million, or 4.9%, mainly because of good performance at the shopping centres. In addition, the Finnish operations benefited from the EUR 1.3 million effect of completed (re)development projects such as Koskikeskus and acquisitions made in 2012, such as that of Arabia. The business unit accounted for 61.3 per cent (60.6%) of Citycon's total net rental income. Net rental yield was 6.4 per cent (6.3%).
At the end of the year, the company had nine shopping centres (excluding Kista Galleria) and two other retail properties in Sweden, with a total leasable area of 254,500 square metres (274,300 sq.m.). These properties are located in the greater Stockholm and Gothenburg areas and in Umeå. The leasable area decreased due to the divestment of supermarket and shop properties and residential units. The annualised potential rental value increased to EUR 63.5 million due to the strengthening of the Swedish krona.
Lease agreements started during the year applied to a gross leasable area of 16,780 square metres (33,464 sq.m.), and ended lease agreements applied to 34,597 square metres (64,629 sq.m.). The average rent level for new lease agreements was significantly higher than the average rent for ended lease agreements, especially due to divestments, along with leases that were renewed at higher rent.
Average rent rose from EUR 19.3/sq.m. to EUR 20.8/sq.m. mostly due to divestments, new leases, index increments, and the strengthening of the Swedish krona. The economic occupancy rate increased to 95.1 per cent (94.7%), mostly through the divestment of one almost completely vacant supermarket and shop property.
| Q4/2013 Q4/2012 Q3/2013 | 2013 | 2012 Change-% | ||||
|---|---|---|---|---|---|---|
| Number of properties at the end of the | ||||||
| period | 11 | 14 | 11 | 11 | 14 | -21.4% |
| Gross leasable area, sq.m. | 254,500 | 274,300 258,400 254,500 | 274,300 | -7.2% | ||
| Annualised potential rental value, EUR million 1) | 63.5 | 63.4 | 63.9 | 63.5 | 63.4 | 0.2% |
| Average rent (EUR/sq.m.) | 20.8 | 19.3 | 20.7 | 20.8 | 19.3 | 7.8% |
| Number of leases started during the period | 39 | 54 | 25 | 133 | 231 | -42.4% |
| Total area of leases started, sq.m. 2) | 5,416 | 14,218 | 2,883 | 16,780 | 33,464 | -49.9% |
| Average rent of leases started (EUR/sq.m.) 2) | 19.8 | 19.9 | 23.9 | 21.3 | 19.4 | 9.8% |
| Number of leases ended during the period | 285 | 64 | 86 | 529 | 575 | -8.0% |
| Total area of leases ended, sq.m. 2) | 9,809 | 13,776 | 3,015 34,597 | 64,629 | -46.5% | |
| Average rent of leases ended (EUR/sq.m.) 2) | 16.4 | 20.5 | 21.0 | 16.6 | 14.1 | 17.7% |
| Occupancy rate at end of the period (economic), % |
95.1 | 94.7 | 95.2 | 95.1 | 94.7 | - |
| Average remaining length of lease portfolio at the end of the period, years |
2.8 | 3.0 | 2.7 | 2.8 | 3.0 | -6.7% |
| Gross rental income, EUR million | 14.3 | 15.3 | 14.9 | 59.2 | 60.3 | -1.9% |
| Turnover, EUR million | 15.4 | 16.0 | 15.8 | 63.3 | 63.1 | 0.2% |
| Net rental income, EUR million | 9.0 | 10.0 | 10.6 | 39.7 | 39.2 | 1.3% |
| Net rental yield, % 3) | 5.6 | 5.6 | 5.7 | 5.6 | 5.6 | - |
| Net rental yield, like-for-like properties, % | 5.5 | 5.4 | 5.6 | 5.5 | 5.4 | - |
| Fair value of investment properties, EUR million |
720.1 | 739.2 | 727.2 | 720.1 | 739.2 | -2.6% |
1) Annualised potential rental value for the portfolio includes annualised gross rent 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) Leases started and ended do not necessarily refer to the same premises.
3) Includes the value of unused building rights.
The company's net rental income from Swedish operations increased by EUR 0.5 million or 1.3 per cent, to come to EUR 39.7 million (EUR 39.2 million). The increase in net rental income was due to increases from like-for-like properties, which grew by EUR 1.2 million, or 3.7 per cent, thanks mainly to improvements in net rental income from Liljeholmstorget Galleria and Jakobsberg Centrum. With the impact of the stronger Swedish krona excluded, net rental income from Swedish operations rose by EUR 0.2 million, or 0.5 per cent. The Swedish business unit accounted for 23.5 per cent (24.2%) of Citycon's total net rental income. Net rental yield was 5.6 per cent (5.6%).
Citycon has four shopping centres in the Baltic region: Rocca al Mare, Kristiine, and Magistral, in Tallinn, Estonia, and Mandarinas, in Vilnius, Lithuania. In addition, in Denmark Citycon owns Albertslund Centrum in the greater Copenhagen area.
At year end, these properties' gross leasable area totalled 135,400 square metres (130,300 sq.m.). The annualised potential rental value increased to EUR 32.1 million, mainly due to the completion of the Rocca al Mare and Kristiine tenant fit-out projects during
the second half of 2013. The average rent decreased from EUR 20.5/sq.m. to EUR 19.8/ sq.m. due to the aforementioned tenant fitout project.
Lease agreements started during the year applied to a gross leasable area of 22,941 square metres (18,014 sq.m.), and ended lease agreements applied to 18,200 square metres (6,294 sq.m.). The average rent level for new lease agreements was lower than that of ended lease agreements, mostly due to the completion of the above-mentioned tenant fit-out projects with three new large retail units. The economic occupancy rate increased to 99.7 per cent (99.6%) due to decreased vacancy in Albertslund Centrum.
Net rental income from the Baltic
Countries and New Business operations increased by EUR 1.0 million to EUR 25.6 million (EUR 24.6 million), mainly through the acquisition of the Albertslund Centrum shopping centre and completion of the (re)development project for the Magistral shopping centre. The business unit accounted for 15.2 per cent (15.2%) of Citycon's total net rental income. Net rental yield was 8.2 per cent (8.6%). The decrease in net rental yield was due to increased fair values of the properties resulting mainly from lower net yield requirements.
| Q4/2013 Q4/2012 Q3/2013 | 2013 | 2012 Change-% | ||||
|---|---|---|---|---|---|---|
| Number of properties at the end of the period |
5 | 5 | 5 | 5 | 5 | 0.0% |
| Gross leasable area, sq.m. | 135,400 | 130,300 134,400 135,400 | 130,300 | 3.9% | ||
| Annualised potential rental value, EUR million 1) | 32.1 | 31.9 | 31.9 | 32.1 | 31.9 | 0.6% |
| Average rent (EUR/sq.m.) | 19.8 | 20.5 | 20.0 | 19.8 | 20.5 | -3.4% |
| Number of leases started during the period | 15 | 10 | 36 | 88 | 108 | -18.5% |
| Total area of leases started, sq.m. 2) | 6,327 | 637 | 7,567 | 22,941 | 18,014 | 27.4% |
| Average rent of leases started (EUR/sq.m.) 2) | 15.6 | 24.8 | 13.1 | 16.7 | 16.5 | 1.2% |
| Number of leases ended during the period | 10 | 9 | 21 | 90 | 45 | 100.0% |
| Total area of leases ended, sq.m. 2) | 3,415 | 628 | 1,127 | 18,200 | 6,294 | 189.2% |
| Average rent of leases ended (EUR/sq.m.) 2) | 19.2 | 20.2 | 23.3 | 19.0 | 23.3 | -18.5% |
| Occupancy rate at end of the period (economic), % |
99.7 | 99.6 | 99.2 | 99.7 | 99.6 | - |
| Average remaining length of lease portfolio at the end of the period, years |
3.3 | 3.7 | 3.3 | 3.3 | 3.7 | -10.8% |
| Gross rental income, EUR million | 7.9 | 7.7 | 7.6 | 30.4 | 28.6 | 6.4% |
| Turnover, EUR million | 9.2 | 8.8 | 8.7 | 34.9 | 32.8 | 6.4% |
| Net rental income, EUR million | 6.6 | 6.5 | 6.4 | 25.6 | 24.6 | 4.1% |
| Net rental yield, % | 8.2 | 8.6 | 8.3 | 8.2 | 8.6 | - |
| Net rental yield, like-for-like properties, % 3) | 10.7 | 9.6 | 9.6 | 10.7 | 9.6 | - |
| Fair value of investment properties, EUR million |
342.2 | 316.0 | 334.8 | 342.2 | 316.0 | 8.3% |
1) Annualised potential rental value for the portfolio includes annualised gross rent 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) Leases started and ended do not necessarily refer to the same premises.
3) Includes only one property.
Citycon seeks to lead the way in responsible shopping centre operations and promoting sustainable development within the business. The location of Citycon's shopping centres in city centres, local centres or generally adjacent to major traffic flows, combined with excellent public transport connections, means that they are well positioned to face the demands of sustainable development.
In its sustainability reporting, Citycon applies the construction and real estate sector specific (CRESS) guidelines of the Global Reporting Initiative, as well as the Best Practices Recommendations on Sustainability Reporting published by EPRA. The results and indicators for environmental responsibility for 2013 are presented on pages 42-45 and 74- 79 of the Annual and Sustainability Report, to be published approximately in week eight.
At its annual conference in September 2013, the European Public Real Estate Association (EPRA) acclaimed Citycon's Annual and Sustainability Report 2012 as one of the best in the industry. Citycon won the gold-level award in the sustainability Best Practices series for the second time now. Citycon was honored also with Green Star status in the Global Real Estate Sustainability Benchmark (GRESB) assessment. Citycon received this recognition for the second year in a row for its outstanding management and handling of key sustainability issues.
The company defined its long-term environmental responsibility objectives in connection with its strategic planning in summer 2009. Citycon has set targets for its carbon
footprint, energy and water consumption, waste recycling rate as well as land use and sustainable construction. In 2013, Citycon's aim was to reduce its carbon footprint by 2–3 per cent and its energy consumption by 2–3 per cent in comparison to 2012. Citycon also aimed to reduce water consumption in its shopping centres to an average of 3.9 litres per visitor per year. The target for the waste recycling rate in 2013 was 80 per cent and respectively the annual target for the proportion of landfill waste out of total waste was 20 per cent. The objective for sustainable construction was to assess all on-going projects in 2013 with LEED criteria.
In 2013, Citycon procured a total of 181.9 gigawatt hours (184.2 GWh) of electricity. Total consumption decreased by 1.2 per cent due to changes in the property portfolio and due to energy saving measures. Total electricity consumption (incl. tenants' electricity) in like-for-like shopping centres decreased by 1.7 per cent from previous year. Electricity consumption in common areas (excl. electricity used by tenants) amounted to 110.1 gigawatt hours (111.6 GWh), showing a decrease of 1.4 per cent from previous year. In like-for-like shopping centres electricity consumption in common areas decreased by 1.4 per cent.
Heating energy consumption came to 133.8 gigawatt hours (143.4 GWh). Total heat consumption decreased by 6.7 per cent but weather-adjusted consumption, 145.9 gigawatt hours (144.4 QWh), increased by 1.1 per cent. The winter was milder than average, especially the temperature in December.
Heating energy consumption in like-for-like shopping centre properties decreased by 8.9 per cent, and weather-adjusted consumption decreased by 1.1 per cent.
Citycon's total energy consumption (incl. electricity consumption in common areas, heating and cooling) amounted to 250.5 gigawatt hours (260.3 GWh). In shopping centres, energy consumption per sales fell by 2.6 per cent and energy consumption per gross leasable area stayed on the same level. Total energy consumption in like-for-like shopping centres decreased by 5.4 per cent. The annual target for reducing energy consumption was attained.
In 2013, Citycon invested in measures that generate savings in consumption and costs, such as renewing lighting and lighting control solutions, or greater use of frequency transformers and control in ventilation systems. Furthermore, Citycon ensured the continuous optimisation of adjustments and temperature settings for technical systems, in order to meet consumption and cost saving targets. By the end of 2013, the Ministry of Employment and the Economy had granted energy support for the energy saving measures in seven shopping centres covering 20–25 per cent, or approximately EUR 915 000, of the investment costs.
Energy costs related to electricity and heating, 25.1 EUR million, remained at the same level as in 2012.
Citycon's reported energy consumption covers shopping centres and other properties where Citycon's share of ownership is over 50 per cent and where it has operational control. Kista Galleria is not included in the reported environmental data. Citycon
reports the tenants' electricity consumption in cases where Citycon is responsible for electricity procurement. Cases where the energy purchase agreement is under a tenant's responsibility have been excluded from reporting. In terms of key figures and results, Citycon has limited the reported electricity consumption to common areas, where Citycon can directly influence the consumption. This includes the electricity used for general lighting, ventilation and cooling, as well as lifts and escalators and other building technical systems. Energy used for heating and cooling is reported in its entirety.
In 2013, the carbon footprint totalled 73,420 tonnes of carbon dioxide equivalent (74,609 tnCO₂e). The carbon footprint reported by Citycon covers the energy and water consumption in properties, waste logistics and the emissions generated by the Citycon organisation. Energy consumption in properties constitutes 99.4 per cent of the carbon footprint. The carbon footprint decreased by 1.6 per cent compared to the previous year. The decrease in carbon footprint was caused by changes in the property portfolio and due to decrease in heating consumption. The carbon footprint in shopping centres remained at the same level per visitor. The carbon footprint of like-for-like shopping centres decreased by 5.9 per cent. The annual target for reducing the carbon footprint by 2-3 per cent was attained.
The total water consumption in all shopping centres and retail properties owned by
Citycon was 624,447 cubic metres (632,306 m³) in 2013. This includes water consumed by the real estate company and tenants. Water consumption showed a decrease of 1.2 per cent compared to the previous year. The change was caused by changes in the property portfolio. Water consumption in like-for-like shopping centre properties decreased by 1.1 per cent compared to the previous year. Water consumption proportionate to sales, decreased by 1.1 per cent compared to the previous year. In 2013, water consumption per visitor in shopping centres was 3.9 litres and 3.6 litres in like-for-like shopping centres, which means the target for reducing water consumption per visitor was met in 2013.
The total waste volume generated by Citycon's shopping centres amounted to 14,446 tonnes (14,118 tn), with landfill waste accounting for 2,112 tonnes (2,375 tn), or 14.6 per cent (15.9%). Waste volumes in shopping centres increased by 2.3 per cent compared to the previous year. Waste volume proportionate to sales showed an increase of 1.1 per cent. Waste volumes in like-for-like shopping centres stayed at the same level as in the previous year. The recycling rate in shopping centres improved compared to the previous year and was 85.4 per cent (83.2%). Citycon's annual targets set for waste processing and recycling were achieved.
In property acquisition, Citycon complies with its strategic environmental responsibility policies, which state that properties must be located in a built environment and easily
accessible by public transport. A good example of such property is the shopping centre Kista Galleria in Stockholm, which was acquired in January 2013.
Environmental certification represents a key element in Citycon's efforts towards sustainable development. The (re)development project at IsoKristiina in Lappeenranta which was launched in April 2013, and the (re)development project at Iso Omena in Espoo which started in June will follow the LEED certification requirements.
Citycon Oyj's Annual General Meeting (AGM) took place in Helsinki on 21 March 2013. The meeting was opened by Chaim Katzman, the Chairman of the Board, and chaired by Manne Airaksinen, Attorney-at-Law. A total of 261 shareholders attended the AGM either personally or through a proxy representative, representing 73.4 per cent (239,888,144 shares) of shares and votes in the company.
The AGM adopted the company's Financial Statements for the financial year 2012 and discharged the members of the Board of Directors and the Chief Executive Officer from liability. The AGM decided on a dividend of EUR 0.04 per share for the financial year 2012 and an equity return of EUR 0.11 per share from the invested unrestricted equity reserve. The record date for the dividend pay-out and equity return was 26 March 2013, and the dividend and equity returns totalling EUR 49.0 million were paid on 4 April 2013.
The other outcomes of the AGM can be seen on the company website at www.citycon.com/ agm2013. The minutes of the meeting are also available there.
| Share price development, completed trades, EUR | 2013 | 2012 |
|---|---|---|
| Lowest price | 2.12 | 2.12 |
| Highest price | 2.67 | 2.71 |
| Average price | 2.44 | 2.43 |
| Closing price | 2.56 | 2.57 |
| Market value of shares at year-end (EUR million) | 1,129.7 | 840.1 |
| Share trading development | ||
| Number of traded shares (million) | 104.5 | 82.0 |
| Value of traded shares (EUR million) | 255.0 | 199.2 |
| Share capital and shares | ||
| Share capital at year-start (EUR million) | 259.6 | 259.6 |
| Share capital at year-end (EUR million) | 259.6 | 259.6 |
| Number of shares at year-start (million) | 326.9 | 277.8 |
| Number of shares at year-end (million) | 441.3 | 326.9 |
Citycon's Board of Directors convened an Extraordinary General Meeting (EGM) for 6 February 2013. As proposed by the Board of Directors the EGM decided to authorise the Board of Directors to decide on issuance of new shares for consideration. The authorisation entitled the Board of Directors to issue a maximum of 125,000,000 shares by one or several decisions. The maximum amount corresponded to approximately 38.2 per cent of all the company's shares of that time. The minutes of the meeting can be found at Citycon's website.
Under the Articles of Association, the Board consists of a minimum of five and a maximum of ten members, elected by the General Meeting for a term of one year at a time. Amendments to the Articles of Association may be made only by the General Meeting and require a 2/3 majority vote.
In 2013 the Board of Directors had ten members: Ronen Ashkenazi, Chaim Katzman, Bernd Knobloch, Kirsi Komi, Karine Ohana (as of 21 March 2013), Claes Ottosson, Per-Anders Ovin (as of 21 March 2013), Jorma Sonninen, Yuval Yanai and Ariella Zochovitzky. Roger Kempe and Per Håkan Westin resigned from the Board of Directors as of 21 March 2013.
Chaim Katzman was the Chairman of the Board of Directors in 2013, and Ronen Ashkenazi the Deputy Chairman. Bernd Knobloch served as the second Deputy Chairman of the Board as of 21 March 2013.
Since 2006, the company's auditor has been Ernst & Young Oy, a firm of authorised public accountants, which has designated Authorised Public Accountant Eija Niemi-Nikkola to act as the responsible auditor of Citycon.
Marcel Kokkeel (MA, Dutch citizen, born in 1958) has served as Citycon's CEO since 24 March 2011. Eero Sihvonen, CFO, is Citycon's Executive Vice President. Their personal details, career histories and any positions of trust can be found on the corporate website at www.citycon.com/management. Information on the CEO's executive contract and its terms and conditions are available on page 60 of the Financial Statements.
Citycon Oyj has been listed on the NASDAQ OMX Helsinki Ltd (Helsinki Stock Exchange) since November 1988. Citycon is a Mid Cap Company in the Financials sector, sub-industry Real Estate Operating Companies. Its trading code is CTY1S and its shares are traded in euros. The ISIN code used in international securities clearing is FI0009002471.
At the end of December 2013, Citycon had 8,820 (7,177) registered shareholders, of whom 10 were account managers of nominee-registered shares. Nominee-registered and other international shareholders held 343.4 million (250.8 million) shares, or 77.8 per cent (76.7%) of shares and voting rights in the company. Details of the most significant shareholders of the company, of the distribution of ownership, and
of the notifications of changes in shareholdings received in 2013 can be found on page 75 of the Financial Statemens.
There were no changes in the company's share capital during the period, but the number of shares rose by 114,408,000 shares following the rights issue arranged in February-March. The company has a single series of shares, with each share entitling to one vote at general meetings of shareholders. The shares have no nominal value.
Based on authorisation granted by the EGM of 6 February 2013, Citycon Board of Directors decided on 12 February 2013 to issue a maximum of 114,408,000 new shares. The issued shares represented around 35.0 per cent of all the shares and votes in the company before the rights issue and around 25.9 per cent after the rights issue. The subscription period ended on 7 March 2013 and the new shares were registered in the Trade Register on 14 March 2013.
The 2013 AGM authorised the Board of Directors to decide on the issuance of a maximum of 25 million shares and the issuance of special rights entitling to shares referred to in chapter 10, section 1 of the Finnish Companies Act. The authorisation will be valid until the close of next Annual General Meeting, however, no longer than until 30 June 2014.
During the year the Board of Directors had also a share issue authorisation granted by the EGM held on 6 February 2013 to
| 2011A(I) | 2011B(I) | 2011C(I) | 2011D(I) | Total | |
|---|---|---|---|---|---|
| Chief Executive Officer (CEO) | 250,000 | 250,000 | 250,000 | 250,000 | 1,000,000 |
| 2011A(I–III) | 2011B(I-III) | 2011C(I-III) | 2011D(I-III) | ||
| Other CMC members | 412,500 | 452,500 | 452,500 | 452,500 | 1,770,000 |
issue a maximum of 125 million new shares for consideration. The Board of Directors exercised this authorisation when it decided on the rights issue in February 2013. The authorisation was valid until the end of the AGM of 2013 and it revoked the share issuance authorisation given by the AGM 2012.
The 2013 AGM authorised the Board of Directors to decide on the acquisition of 20 million of the company's own shares. The authorisation will be valid until the close of next Annual General Meeting, however, no longer than until 30 June 2014.
At the year-end the Board had no other authorisations.
During the period the company held no treasury shares.
Based on authorisation granted by the AGM of 13 March 2007, the Board of Directors of Citycon Oyj decided on 3 May 2011 to issue stock options to key personnel of the company and its subsidiaries. As stock options are intended to form part of the Group's key personnel incentive and commitment plan, the company had weighty financial reasons for issuing them. Stock options encourage
key personnel to work on a long-term basis, in order to increase shareholder value. The purpose of the stock options is also to commit key personnel to the company.
The maximum total number of stock options which can be distributed is 7,250,000, and they entitle their owners to subscribe for a maximum total of 8,529,625 new shares in the company or existing shares held by the company. The options are granted free of charge and classified as 2011A(I), 2011A(II) and 2011A(III); 2011B(I), 2011B(II) and 2011B(III); 2011C(I), 2011C(II) and 2011C(III); or 2011D(I), 2011D(II) and 2011D(III). Upon the distribution of stock options the Board of Directors decides on how the stock options are divided into sub-categories. Shares subscribed based on the Stock Option Plan 2011 may correspond to a maximum of 1.9 per cent of all shares and votes in the company after the potential share subscription, if new shares are issued in the share subscription.
In order to ensure the equal treatment of shareholders and the stock option holders, the Board of Directors of Citycon Oyj decided on 12 February 2013 and 13 March 2013, due to the rights issue, to adjust the subscription price of the stock options 2011. In addition, in 2012
the Board of Directors had decided, due to rights issue arranged in September-October 2012, to adjust the subscription ratio and the subscription price of the stock options 2011. The above mentioned adjustments were made in accordance with the terms and conditions of the Stock Option Plan 2011.The subscription ratios and subscription prices of Stock Option Plan 2011 as well as the subscription periods of the Stock Options 2011 are available on page 57 of the Financial Statements.
At the end of 2013, 2011A–D(I), 2011A–D(II) and 2011A–D(III) stock options were held by 18 key personnel of the group. On 31 December 2013 there were 6,305,000 outstanding options, entitling holders to subscribe 7,417,833 shares in 2012–2018. The table below indicates the Stock Options granted to the CEO and other Corporate Management Committee members.
A share ownership obligation, under which the members of the Corporate Management Committee are obliged to acquire Citycon's shares with 25 per cent of the income gained from the exercised stock options, is incorporated into the Stock Options 2011. The acquisition obligation will remain in force until a member of the Corporate Management Committee owns company shares to the value of his or her gross annual salary, and share ownership must continue while his or her employment or service contract is in force.
The Stock Option Plan 2011 and its terms and conditions are presented in further detail on pages 56-58 of the Financial Statements.
The terms and conditions can be found at www.citycon.com/options.
The members of the Board of Directors of Citycon, the CEO, the other Corporate Management Committee members and their related parties held a total of 331,347 company shares on 31 December 2013. These shareholdings represent 0.07 per cent of the company's total shares and total voting rights.
The number of Stock Options 2011 held by the CEO and other Corporate Management Committee members at the year-end 2013 are presented in the table above. The maximum number of shares that they can subscribe for by exercising these outstanding Stock Options 2011 amounts to 3,258,905 shares. Members of the Board of Directors are not included in the company's share-based incentive plans.
Updated details of the share and stock option holdings of the members of the Board of Directors, the CEO and the members of the Corporate Management Committee are available on the corporate website at www.citycon.com/insiders.
Helsinki, 4 February 2014
Citycon Oyj Board of Directors
EPRA (European Public Real Estate Association) is a common interest group for listed real estate companies in Europe. EPRA's mission is to promote, develop and represent the European publicly traded real estate sector. Citycon is an active member of EPRA. EPRA's objective is to encourage greater investment in European listed real estate companies and strive for 'best practices' in accounting, financial reporting and corporate governance in order to provide highquality information to investors and to increase the comparability of different companies. The best practices also create a framework for discussion and decision-making on the issues that determine the future of the sector.
Since 2006, Citycon has been applying the best practices policy recommendations of EPRA for financial reporting. And in 2011, Citycon started to follow EPRA best practice policy recommendations also for sustainability reporting (please see the section 'Responsibility'). This section in Citycon's financial statements presents the EPRA performance measures and their calculations. For more information about EPRA and EPRA's best practice policies please visit EPRA's web pages: www.epra.com.
In addition to promoting the European real estate sector and publishing best practice policies, EPRA publishes the FTSE EPRA/NAREIT index in association with FTSE, which tracks the performance of the largest European and North-American listed real estate companies. Citycon is included in the FTSE EPRA index, which increases international interest towards Citycon as an investment.
| Note | 2013 | 2012 | |
|---|---|---|---|
| EPRA Earnings, EUR million | 1 | 86.7 | 63.9 |
| EPRA Earnings per share (basic), EUR 1) | 1 | 0.204 | 0.199 |
| EPRA Cost Ratio (including direct vacancy costs) (%) | 2 | 21.8 | 26.2 |
| EPRA Cost Ratio (excluding direct vacancy costs) (%) | 2 | 19.4 | 23.3 |
| EPRA NAV per share, EUR | 3 | 3.10 | 3.49 |
| EPRA NNNAV per share, EUR | 3 | 2.90 | 3.08 |
| EPRA Net Initial Yield (NIY) (%) | 4 | 6.2 | 6.0 |
| EPRA 'topped-up' NIY (%) | 4 | 6.3 | 6.1 |
| EPRA vacancy rate (%) | 5 | 4.3 | 4.3 |
1) Per share result key figures have been calculated with the issue-adjusted number of shares resulting from the rights issues executed in March 2013 and October 2012.
The following Notes, the numbers 1-5, present how EPRA Performance Measures are calculated. The Notes 6 and 7 present the EPRA Key Performance Measures for the last 5 years.
EPRA Earnings presents the underlying operating performance of a real estate company excluding all so called non-recurring items such as net fair value gains/losses on investment properties, profit/loss on disposals and other non-recurring items. It provides a measure for recurring income, but does not exclude exceptional items that are part of normal IFRS earnings. EPRA earnings is especially important for investors who want to assess the extent to which dividends are supported by recurring income. Citycon paid 0.15 EUR/share as dividends and equity return for the financial statements 2012, and for the financial statements 2013, the Board of Directors propose for Annual General Meeting a dividend and equity return of 0.15 EUR/share.
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| Average | Average | |||||
| EUR million |
number of shares (1,000) 1) |
per share, EUR |
EUR million |
number of shares (1,000) 1) |
per share, EUR |
|
| Earnings in IFRS Consolidated Statement of Comprehensive Income |
93.1 | 425,415.5 | 0.220 | 77.2 | 321,142.0 | 0.240 |
| -/+ Net fair value gains/losses on investment property |
-26.1 | 425,415.5 | -0.061 | -23.6 | 321,142.0 | -0.073 |
| -/+ Net gains /losses on disposal of investment property |
-0.8 | 425,415.5 -0.002 | -4.2 | 321,142.0 | -0.013 | |
| Indirect other operating income and expenses |
||||||
| -/+ Fair value gains/losses of financial instruments |
27.0 | 425,415.5 | 0.063 | - | 321,142.0 | - |
| -/+ Fair value gains /losses of joint ventures |
-1.0 | 425,415.5 -0.002 | -0.3 | 321,142.0 | -0.001 | |
| +/- Change in deferred taxes arising from the items above |
-10.6 | 425,415.5 -0.025 | 6.4 | 321,142.0 | 0.020 | |
| +/- Non-controlling interest arising from the items above |
5.1 | 425,415.5 | 0.012 | 8.3 | 321,142.0 | 0.026 |
| EPRA Earnings (basic) | 86.7 | 425,415.5 | 0.204 | 63.9 | 321142.0 | 0.199 |
EPRA Earnings can also be calculated from the statement of comprehensive income from top to bottom. Below please find the EPRA Earnings calculation with this different method, which also presents the EPRA Operating profit.
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| EUR million |
Average number of shares (1,000) 1) |
per share, EUR |
EUR million |
Average number of shares (1,000) 1) |
per share, EUR |
|
| Net rental income | 168.9 | 425,415.5 | 0.397 | 162.0 | 321,142.0 | 0.504 |
| Direct administrative expenses | -20.6 | 425,415.5 | -0.048 | -26.5 | 321,142.0 | -0.083 |
| Direct other operating income and expenses |
0.9 | 425,415.5 | 0.002 | 0.2 | 321,142.0 | 0.000 |
| EPRA operating profit | 149.1 | 425,415.5 | 0.351 | 135.7 | 321,142.0 | 0.422 |
| Direct net financial income and expenses |
-63.0 | 425,415.5 | -0.148 | -68.1 | 321,142.0 | -0.212 |
| Direct share of profit/loss of joint ventures |
3.1 | 425,415.5 | 0.007 | 0.0 | 321,142.0 | 0.000 |
| Direct current taxes | -0.7 | 425,415.5 | -0.002 | -1.4 | 321,142.0 | -0.004 |
| Change in direct deferred taxes | 0.1 | 425,415.5 | 0.000 | 0.0 | 321,142.0 | 0.000 |
| Direct non-controlling interest | -1.9 | 425,415.5 | -0.004 | -2.2 | 321,142.0 | -0.007 |
| EPRA Earnings (basic) | 86.7 | 425,415.5 | 0.204 | 63.9 | 321,142.0 | 0.199 |
1) Calculation of the number of shares is presented in Note 13. Earnings per share. Number of shares has been issueadjusted resulting from the rights issues executed in 2013 and 2012.
EPRA earnings (in EUR millions) increased by EUR 22.8 million to EUR 86.7 million in 2013 from EUR 63.9 million in 2012. The increase was a result of NRI growth through acquisitions, (re)development projects and positive like-for-like growth as well as administrative cost savings, lower direct financial expenses and the share of result of joint ventures increased due mainly to the acquisition of Kista Galleria. EPRA Earnings per share (basic) increased to EUR 0.204 compared to EUR 0.199 in 2012 due to higher EPRA Earnings offset by higher number of shares, which resulted from rights issues executed in October 2012 and March 2013.
1) Calculation of the number of shares is presented in Note 13. Earnings per share. Number of shares has been issueadjusted resulting from the rights issues executed in 2013 and 2012.
EPRA Cost Ratios reflect the relevant overhead and operating costs of the business and provide a recognized and understood reference point for analysis of a company's costs. The EPRA Cost Ratio (including direct vacancy costs) includes all administrative and operating expenses in the IFRS statements including the share of joint ventures' overheads and operating expenses (net of any service fees). The EPRA Cost Ratio (excluding direct vacancy costs) is calculated as above, but with an adjustment to exclude vacancy costs. Both EPRA Cost Ratios are calculated as a percentage of Gross Rental Income less ground rent costs, including a share of joint venture Gross Rental Income less ground rent costs.
Citycon started to report EPRA Cost Ratios at year-end 2013. These cost ratios, as defined by EPRA, facilitate the comparison of cost levels of real estate companies. Both ratios improved compared to previous year. Citycon's EPRA Cost Ratio including direct vacancy costs was 21.8% in 2013, compared with 26.2% in 2012. The improvement in the cost ratio resulted mainly from lower administrative expenses and higher gross rental income. EPRA Cost Ratio excluding direct vacancy costs was 19.4% compared with 23.3% a year earlier. The improvement was mainly due to lower EPRA Cost Ratio including direct vacancy costs as well as higher occupancy rate.
| EUR million | 2013 | 2012 |
|---|---|---|
| Include: | ||
| Administrative expenses 1) | 20.6 | 26.5 |
| Property operating expenses and other expenses from leasing operations less service charge costs |
53.0 | 50.6 |
| Net service charge costs/fees | 16.7 | 17.7 |
| Management fees less actual/estimated profit element | -0.9 | -0.2 |
| Other operating income/recharges intended to cover costs less any related profit |
-4.7 | -4.4 |
| Share of joint venture expenses | 10.2 | 3.7 |
| Exclude: | ||
| Investment property depreciation | 0.0 | 0.0 |
| Ground rent costs | -1.8 | -1.8 |
| Service charge costs recovered through rents but not separately invoiced | -42.8 | -40.5 |
| Share of joint venture investment property depreciation, ground rent costs and service charge costs recovered through rents but not separately invoiced |
-4.6 | -3.5 |
| EPRA Costs (including direct vacancy costs) (A) | 45.7 | 48.3 |
| Direct vacancy costs | -5.0 | -5.4 |
| EPRA Costs (excluding direct vacancy costs) (B) | 40.7 | 42.8 |
| Gross rental income less ground rent costs | 232.0 | 224.2 |
| Less: service fee and service charge cost components of Gross Rental Income | -42.8 | -40.5 |
| Add: share of joint ventures (Gross rental income less ground rent costs less service fees in GRI) |
20.3 | 0.2 |
| Gross Rental Income (C) | 209.6 | 183.9 |
| EPRA Cost Ratio (including direct vacancy costs) (A/C , %) | 21.8 | 26.2 |
| EPRA Cost Ratio (excluding direct vacancy costs) (B/C, %) | 19.4 | 23.3 |
1) Administrative expenses are net of costs capitalised of EUR 1.0 million in 2013 and EUR 1.0 million in 2012. Citycon's policy is to capitalise, for example, expenses related to property development projects and major software development projects.
EPRA NAV presents the fair value of net assets of a real estate company. It is based on the assumption of owning and operating investment properties for a long term and therefore it is a useful tool to compare against the share price of a real estate company. The share price of Citycon was 2.56 EUR/share on December 31, 2013.
As EPRA NAV intends to reflect the fair value of a business on a going-concern basis, all items arising from future disposals and the fair value of financial instruments are excluded from EPRA NAV. Items arising from future disposals are the deferred taxes that would materialise only on disposal of properties. Fair value of financial instruments i.e. mark-to-market value of hedging instruments will end up zero when they are held to maturity. Therefore, the fair value of financial instruments at the balance sheet date is excluded from EPRA NAV.
EPRA NNNAV is including the deferred tax liabilities and fair value of financial instruments and therefore it is a measure of the real estate company's "spot" fair value at the balance sheet date. Spot fair value means that EPRA NNNAV reflects the fair value of net assets of the company at a particular day as opposed to EPRA NAV, which reflects the fair value of net assets on a going-concern basis. However, EPRA NNNAV is not either a liquidation NAV as the fair values of assets and liabilities are not based on a liquidation scenario.
| 2013 | 2012 | |||||
|---|---|---|---|---|---|---|
| EUR million |
Number of shares on the balance sheet date (1,000) |
per share, EUR |
EUR million |
Number of shares on the balance sheet date (1,000) |
per share, EUR |
|
| Equity attributable to parent company shareholders |
1,289.6 | 441,288.0 | 2.92 | 1,015.7 | 326,880.0 | 3.11 |
| Deferred taxes from the difference between the fair value and fiscal value of investment properties |
55.9 | 441,288.0 | 0.13 | 64.0 | 326,880.0 | 0.20 |
| Fair value of financial instruments | 22.8 | 441,288.0 | 0.05 | 59.8 | 326,880.0 | 0.18 |
| Net asset value (EPRA NAV) | 1,368.3 | 441,288.0 | 3.10 | 1,139.5 | 326,880.0 | 3.49 |
| Deferred taxes from the difference between the fair value and fiscal value of investment properties |
-55.9 | 441,288.0 | -0.13 | -64.0 | 326,880.0 | -0.20 |
| Difference between the secondary market price and fair value of bonds and capital loans 1) |
-9.6 | 441,288.0 | -0.02 | -9.4 | 326,880.0 | -0.03 |
| Fair value of financial instruments | -22.8 | 441,288.0 | -0.05 | -59.8 | 326,880.0 | -0.18 |
| EPRA NNNAV | 1,280.0 | 441,288.0 | 2.90 | 1,006.3 | 326,880.0 | 3.08 |
1) Secondary market price
When calculating the EPRA NNNAV in accordance with EPRA's recommendations, the shareholders' equity is adjusted using EPRA's guidelines so that bonds and capital loans are valued based on secondary market prices. In accordance with Citycon's accounting policies, the carrying amount and fair value of bonds and capital loans are different from this secondary market price. Due to this, in the calculation of this key figure convertible capital loan 1/2006, bond 1/2009, bond 1/2012 and bond 1/2013 have been valued using the price derived from the secondary market on the balance sheet date. The secondary market price for the bond 1/2009 was 103.86 per cent (105.01%) and for bond 1/2012 105.08 per cent (104.68%) and for bond 1/2013 100.33 per cent as of 31 December 2013. The convertible capital loan 1/2006 was matured and repaid in August 2013, and its secondary market price on 31 December 2012 was 100.96 per cent. The difference between the secondary market price and the fair value of the bonds and capital loans was EUR -9.6 million (EUR -9.4 million) as of 31 December 2013.
CFO's comment on the development of EPRA NAV per share and EPRA NNNAV per share: EPRA NAV per share decreased by EUR 0.39 to EUR 3.10 (EUR 3.49) due mainly to higher number of shares following the rights issue executed in March 2013. Also EPRA NNNAV per share decreased by EUR 0.18 to EUR 2.90 (EUR 3.08) due to the same reason.
There are a variety of yield performance indicators in the real estate market to present a company's ability to generate rent. In order to have a consistent yield definition and comparable yield indicators between real estate companies, EPRA has published a best practice recommendation for yield calculation i.e. EPRA Net Initial Yield (NIY).
EPRA NIY is calculated as the annualised rental income, based on the valid rent roll on the balance sheet date, divided by the gross market value of the completed property portfolio (including estimated transaction costs and excluding properties under development, lots, unused building rights and properties, the valuation of which is based on the value of the building right). Citycon also discloses net rental yield, which is calculated over the past 12-month period, by constructing an index from the monthly net rental income and from computational monthly market value figures. Net rental yield includes the total property portfolio and excludes estimated transaction costs.
EPRA 'topped-up' NIY presents the yield of a company with the full rent that is already agreed at the balance sheet date. In EPRA 'topped-up' yield, the cash rent is 'topped-up' to reflect rent after the expiry of lease incentives such as rent free periods and discounted rents.
| EUR million | 31 Dec. 2013 |
31 Dec. 2012 |
|---|---|---|
| Fair value of investment properties determined by the external appraiser | 2,729.6 | 2,704.1 |
| Less (re)development properties, lots, unused building rights and properties, the valuation of which is based on the value of the building right |
-136.4 | -389.1 |
| Completed property portfolio | 2,593.2 | 2,315.0 |
| Plus the estimated purchasers' transaction costs | 58.6 | 47.2 |
| Gross value of completed property portfolio (A) | 2,651.8 | 2,362.2 |
| Annualised gross rents for completed property portfolio | 226.3 | 206.9 |
| Property portfolio's operating expenses | -60.9 | -64.1 |
| Annualised net rents (B) | 165.4 | 142.8 |
| Plus the notional rent expiration of rent free periods or other lease incentives | 2.4 | 1.6 |
| Topped-up annualised net rents ( C) | 167.8 | 144.4 |
| EPRA Net Initial Yield (NIY) (%) (B/A) | 6.2 | 6.0 |
| EPRA 'topped-up' NIY (%) (C/A) | 6.3 | 6.1 |
EPRA initial yields increased due to higher net rental income, despite the higher fair value of the completed property portfolio following completion of certain (re)development projects. EPRA NIY and EPRA 'topped-up' NIY at the end of the year 2013 and 2012 are not fully comparable due to changes in the completed property portfolio (such as property disposals, and started/completed (re)development projects).
EPRA vacancy rate (%) presents how much out of the full potential rental income is not received because of vacancy. Technical occupancy rate, which Citycon also discloses, presents how many square meters out of total GLA is leased.
EPRA vacancy rate is calculated by dividing the estimated rental value of vacant premises by the estimated rental value of the whole portfolio if all premises were fully let. EPRA vacancy rate is calculated using the same principles as the economic occupancy rate, which Citycon also discloses.
| EUR million | 31 Dec. 2013 |
31 Dec. 2012 |
|---|---|---|
| Annualised potential rental value of vacant premises | 10.2 | 10.3 |
| ./. Annualised potential rental value for the whole portfolio | 237.6 | 239.0 |
| EPRA vacancy rate (%) | 4.3 | 4.3 |
EPRA vacancy rate at the end of 2013 for the entire portfolio was at the same level as at the end of the previous year, slightly increasing for Finland (+20 bps) offset by reduced vacancy in Sweden (-40 bps).
| 2013 | 2012 | 2011 | 2010 | 2009 | |
|---|---|---|---|---|---|
| EPRA Earnings, EUR million | 86.7 | 63.9 | 53.3 | 47.3 | 50.9 |
| EPRA Earnings per share (basic), EUR 1) | 0.204 | 0.199 | 0.183 | 0.185 | 0.206 |
| EPRA Cost Ratio (including direct vacancy costs) (%) |
21.8 | 26.2 | 30.3 | 30.9 | 27.8 |
| EPRA Cost Ratio (excluding direct vacancy costs) (%) |
19.4 | 23.3 | 26.9 | 27.4 | 24.9 |
| EPRA NAV per share, EUR | 3.10 | 3.49 | 3.62 | 3.79 | 3.64 |
| EPRA NNNAV per share, EUR | 2.90 | 3.08 | 3.29 | 3.49 | 3.35 |
| EPRA Net Initial Yield (NIY) (%) | 6.2 | 6.0 | 6.2 | 6.3 | 6.9 |
| EPRA 'topped-up' NIY (%) | 6.3 | 6.1 | 6.3 | 6.4 | 7.1 |
| EPRA vacancy rate (%) | 4.3 | 4.3 | 4.5 | 4.9 | 5.0 |
1) Per share result key figures have been calculated with the issue-adjusted number of shares resulting from the rights issues executed in 2013 and 2012.
| EUR million | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|
| Earnings in IFRS Consolidated Statement of Comprehensive Income |
93.1 | 77.2 | 13.0 | 78.3 | -34.3 |
| -/+ Net fair value gains/losses on investment property |
-26.1 | -23.6 | 35.3 | -50.8 | 97.4 |
| -/+ Net gains/losses on disposal of investment property 1) |
-0.8 | -4.2 | -0.3 | -1.9 | -0.1 |
| + Transaction costs related to investment property disposals 1) |
0.0 | 0.0 | 0.7 | 0.0 | 0.1 |
| -/+ Fair value gains/losses of financial instruments |
27.0 | - | - | -0.2 | 0.1 |
| -/+ Fair value gains/losses of joint ventures |
-1.0 | -0.3 | -0.3 | - | - |
| +/- Current taxes arising from the items above |
0.0 | - | 0.5 | - | 0.3 |
| +/- Change in deferred taxes arising from the items above |
-10.6 | 6.4 | -2.2 | 11.6 | -7.3 |
| +/- Non-controlling interest arising from the items above |
5.1 | 8.3 | 6.7 | 10.3 | -5.3 |
| EPRA Earnings (basic) | 86.7 | 63.9 | 53.3 | 47.3 | 50.9 |
| Issue-adjusted average number of shares, million 2) |
425,415.5 | 321,142.0 | 290,529.9 | 255,155.5 | 247,200.4 |
| EPRA Earnings per share (basic), EUR 2) | 0.204 | 0.199 | 0.183 | 0.185 | 0.206 |
EPRA Earnings can also be calculated from the statement of comprehensive income from top to bottom. Below please find the EPRA Earnings calculation with this different method, which also presents the EPRA Operating profit.
| EUR million | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|
| Net rental income | 168.9 | 162.0 | 144.3 | 127.2 | 125.4 |
| Direct administrative expenses | -20.6 | -26.5 | -27.1 | -22.5 | -17.7 |
| Direct other operating income and expenses |
0.9 | 0.2 | 0.2 | 0.3 | 0.0 |
| EPRA operating profit | 149.1 | 135.7 | 117.4 | 105.0 | 107.7 |
| Direct net financial income and expenses |
-63.0 | -68.1 | -62.4 | -55.1 | -47.7 |
| Direct share of profit/loss of joint ventures |
3.1 | 0.0 | 0.0 | - | - |
| Direct current taxes | -0.7 | -1.4 | -0.4 | -0.6 | -6.2 |
| Change in direct deferred taxes | 0.1 | 0.0 | 0.3 | -0.3 | -0.2 |
| Direct non-controlling interest | -1.9 | -2.2 | -1.7 | -1.8 | -2.8 |
| EPRA Earnings | 86.7 | 63.9 | 53.3 | 47.3 | 50.9 |
| Average number of shares (1,000) 1) | 425,415.5 | 321,142.0 | 290,529.9 | 255,155.5 | 247,200.4 |
| EPRA Earnings per share (basic), EUR 1) | 0.204 | 0.199 | 0.183 | 0.185 | 0.206 |
1) Number of shares has been issue-adjusted resulting from the rights issues executed in 2013 and 2012. Per share
result key figures have been calculated with the issue-adjusted number of shares.
1) Citycon has made an adjustment to its accounting policies related to the treatment of transaction costs arising from the investment property disposals in 2012. Previously Citycon reported transaction costs from the property disposals within the administrative expenses, but in the financial statements 2012, Citycon has netted the transaction costs from the successful property disposals against the net gains on sale of investment properties. The adjustment doesn't impact the EPRA Earnings.
2) Number of shares has been issue-adjusted resulting from the rights issues executed in 2013 and 2012. Per share result key figures have been calculated with the issue-adjusted number of shares.
| EUR million | Note | 1 Jan.-31 Dec. 2013 | 1 Jan.-31 Dec. 2012 |
|---|---|---|---|
| Gross rental income | 3 | 233.8 | 225.9 |
| Service charge income | 14.7 | 13.3 | |
| Turnover | 4 | 248.6 | 239.2 |
| Property operating expenses | 5 | 78.4 | 75.8 |
| Other expenses from leasing operations | 6 | 1.3 | 1.4 |
| Net rental income | 168.9 | 162.0 | |
| Administrative expenses | 7, 8, 9 | 20.6 | 26.5 |
| Other operating income and expenses | 10 | 0.9 | 0.2 |
| Net fair value gains/losses on investment property | 14 | 26.1 | 23.6 |
| Net gains on sale of investment property | 22 | 0.8 | 4.2 |
| Operating profit | 176.0 | 163.4 | |
| Financial income | 33.0 | 32.1 | |
| Financial expenses | -123.1 | -100.3 | |
| Net financial income and expenses | 11 | -90.1 | -68.1 |
| Share of profit of joint ventures | 15 | 4.1 | 0.2 |
| Profit before taxes | 90.1 | 95.5 | |
| Current taxes | -0.7 | -1.4 | |
| Change in deferred taxes | 10.7 | -6.4 | |
| Income taxes | 12, 19 | 10.0 | -7.8 |
| Profit for the period | 100.0 | 87.7 | |
| Profit attributable to | |||
| Parent company shareholders | 93.1 | 77.2 | |
| Non-controlling interest | 6.9 | 10.5 | |
| Earnings per share attributable to parent company shareholders: | |||
| Earnings per share (basic), EUR | 13 | 0.22 | 0.24 |
| Earnings per share (diluted), EUR | 13 | 0.22 | 0.24 |
| Other comprehensive expenses/income | |||
| Items that may be reclassified subsequently to profit or loss | |||
| Net gains/losses on cash flow hedges | 11 | 49.4 | -19.3 |
| Income taxes relating to cash flow hedges | 12, 19 | -12.8 | 5.2 |
| Share of other comprehensive income of joint ventures | 0.3 | - | |
| Exchange gains on translating foreign operations | -3.8 | 3.3 | |
| Net other comprehensive income to be reclassified to profit or loss in subsequent periods | 33.1 | -10.7 | |
| Other comprehensive expenses for the period, net of tax | 33.1 | -10.7 | |
| Total comprehensive profit/loss for the period | 133.2 | 77.0 | |
| Total comprehensive profit/loss attributable to | |||
| Parent company shareholders | 126.4 | 65.4 | |
| Non-controlling interest | 6.8 | 11.6 |
| EUR million | Note | 31 Dec. 2013 | 31 Dec. 2012 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Investment properties | 14 | 2,733.5 | 2,714.2 |
| Investments in joint ventures | 15 | 153.1 | 0.9 |
| Intangible assets | 17 | 2.1 | 1.7 |
| Property, plant and equipment | 18 | 0.8 | 1.4 |
| Deferred tax assets | 19 | 9.1 | 19.5 |
| Total non-current assets | 2,898.6 | 2,737.6 | |
| Investment properties held for sale | 22 | 2.3 | 5.4 |
| Current assets | |||
| Derivative financial instruments | 20, 21 | 2.4 | - |
| Current tax receivables | 12 | 0.2 | 0.0 |
| Trade and other receivables | 20, 23 | 33.8 | 24.5 |
| Cash and cash equivalents | 24 | 38.0 | 51.0 |
| Total current assets | 74.5 | 75.5 | |
| Total assets | 2,975.4 | 2,818.5 |
| EUR million | Note | 31 Dec. 2013 | 31 Dec. 2012 |
|---|---|---|---|
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Equity attributable to parent company shareholders | 25 | ||
| Share capital | 259.6 | 259.6 | |
| Share premium fund | 131.1 | 131.1 | |
| Fair value reserve | -22.8 | -59.8 | |
| Invested unrestricted equity fund | 493.0 | 333.0 | |
| Translation reserve | -9.2 | -5.5 | |
| Retained earnings | 437.9 | 357.3 | |
| Total equity attributable to parent company shareholders | 1,289.6 | 1,015.7 | |
| Non-controlling interest | 51.0 | 44.2 | |
| Total shareholders' equity | 1,340.6 | 1,059.9 | |
| LIABILITIES | |||
| Long-term liabilities | |||
| Loans | 20, 26 | 1,317.5 | 1,406.3 |
| Derivative financial instruments | 20, 21 | 27.1 | 75.6 |
| Deferred tax liabilities | 19 | 57.7 | 66.0 |
| Other liabilities | 20 | 0.8 | 1.0 |
| Total long-term liabilities | 1,403.1 | 1,548.9 | |
| Short-term liabilities | |||
| Loans | 20, 26 | 144.9 | 126.8 |
| Derivative financial instruments | 20, 21 | 5.2 | 0.7 |
| Current tax liabilities | 12 | 1.0 | 0.8 |
| Trade and other payables | 20, 27 | 80.5 | 81.4 |
| Total short-term liabilities | 231.6 | 209.7 | |
| Total liabilities | 1,634.7 | 1,758.6 | |
| Total liabilities and shareholders' equity | 2,975.4 | 2,818.5 | |
| EUR million | Note | 1 Jan.-31 Dec. 2013 | 1 Jan.-31 Dec. 2012 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before taxes | 90.1 | 95.5 | |
| Adjustments: | |||
| Depreciation and amortisation | 9, 29 | 0.9 | 1.2 |
| Net fair value gains/losses on investment property | 14, 29 | -26.1 | -23.6 |
| Profit on disposal of investment property | 14, 22, 29 | -0.8 | -4.2 |
| Financial income | 11, 29 | -33.0 | -32.1 |
| Financial expenses | 11, 29 | 123.1 | 100.3 |
| Other adjustments | 29 | -3.9 | 1.3 |
| Cash flow before change in working capital | 150.2 | 138.4 | |
| Change in working capital | 29 | -4.5 | 8.6 |
| Cash generated from operations | 145.6 | 147.0 | |
| Interest expenses and other financial expenses paid | -87.0 | -62.4 | |
| Interest income and other financial income received | 0.2 | 0.6 | |
| Realised exchange rate losses | -1.5 | -22.9 | |
| Taxes paid/received | -0.7 | -0.8 | |
| Net cash from operating activities | 56.6 | 61.5 | |
| Cash flow from investing activities | |||
| Acquisition of subsidiaries, less cash acquired | 14 | -2.0 | -41.0 |
| Acquisition of investment properties | 14 | 0.0 | -1.1 |
| Capital expenditure on investment properties | 14 | -75.6 | -92.6 |
| Capital expenditure on investments in joint ventures, intangible assets and PP&E | 15, 17, 18 | -151.0 | -1.3 |
| Sale of investment properties | 14, 22 | 60.2 | 31.1 |
| Net cash used in investing activities | -168.4 | -104.9 | |
| Cash flow from financing activities | |||
| Proceeds from rights and share issue | 25 | 196.0 | 89.9 |
| Proceeds from short-term loans | 26 | 96.7 | 117.1 |
| Repayments of short-term loans | 26 | -228.9 | -157.5 |
| Proceeds from long-term loans | 26 | 612.4 | 623.5 |
| Repayments of long-term loans | 26 | -527.7 | -600.6 |
| Acquisition of non-controlling interests | 25 | 0.0 | -28.5 |
| Dividends and return from the invested unrestricted equity fund | -49.0 | -41.7 | |
| Net cash from/used in financing activities | 99.4 | 2.3 | |
| Net change in cash and cash equivalents | -12.3 | -41.1 | |
| Cash and cash equivalents at period-start | 24 | 51.0 | 91.3 |
| Effects of exchange rate changes | -0.6 | 0.8 | |
| Cash and cash equivalents at period-end | 24 | 38.0 | 51.0 |
| Equity attributable to parent company shareholders | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Invested | Non | Total | |||||||
| EUR million | Share capital | Share premium fund |
Fair value reserve |
unrestricted equity fund |
Translation reserve |
Retained earnings |
Total | controlling interest |
shareholders' equity |
| Balance at 31 Dec. 2011 | 259.6 | 131.1 | -45.7 | 273.7 | -7.8 | 291.7 | 902.6 | 59.2 | 961.8 |
| Profit for the period | 77.2 | 77.2 | 10.5 | 87.7 | |||||
| Net losses/gains on cash flow hedges, net of tax (Notes 11, 12 and 19) |
-14.1 | -14.1 | -14.1 | ||||||
| Exchange gains/losses on translating foreign operations | 2.3 | 2.3 | 1.1 | 3.3 | |||||
| Total other comprehensive expenses/income for the period, net of tax |
-14.1 | 2.3 | -11.8 | 1.1 | -10.7 | ||||
| Total comprehensive loss/profit for the period | -14.1 | 2.3 | 77.2 | 65.4 | 11.6 | 77.0 | |||
| Rights issue (Note 25) | 90.7 | 90.7 | 90.7 | ||||||
| Arrangement fee for rights issue | -0.8 | -0.8 | -0.8 | ||||||
| Recognised gain in the equity arising from convertible bond buybacks (Note 26) |
-0.2 | -0.2 | -0.2 | ||||||
| Dividends and return from the invested unrestricted equity fund (Note 25) |
-30.6 | -11.1 | -41.7 | -41.7 | |||||
| Share-based payments (Notes 25 and 28) | 1.8 | 1.8 | 1.8 | ||||||
| Acquisition of non-controlling-interests | -2.3 | -2.3 | -26.6 | -28.9 | |||||
| Balance at 31 Dec. 2012 | 259.6 | 131.1 | -59.8 | 333.0 | -5.5 | 357.3 | 1,015.7 | 44.2 | 1,059.9 |
| Profit for the period | 93.1 | 93.1 | 6.9 | 100.0 | |||||
| Net losses/gains on cash flow hedges, net of tax (Notes 11, 12 and 19) |
36.7 | 36.7 | 36.7 | ||||||
| Share of other comprehensive income of joint ventures | 0.3 | 0.3 | 0.3 | ||||||
| Exchange gains/losses on translating foreign operations | -3.7 | -3.7 | -0.2 | -3.8 | |||||
| Total other comprehensive expenses/income for the period, net of tax |
37.0 | -3.7 | 33.3 | -0.2 | 33.1 | ||||
| Total comprehensive loss/profit for the period | 37.0 | -3.7 | 93.1 | 126.4 | 6.8 | 133.2 | |||
| Rights issue (Note 25) | 200.2 | 200.2 | 200.2 | ||||||
| Arrangement fee for rights issue | -4.2 | -4.2 | -4.2 | ||||||
| Dividends and return from the invested unrestricted equity fund (Note 25) |
-36.0 | -13.1 | -49.0 | -49.0 | |||||
| Share-based payments (Notes 25 and 28) | 0.6 | 0.6 | 0.6 | ||||||
| Balance at 31 Dec. 2013 | 259.6 | 131.1 | -22.8 | 493.0 | -9.2 | 437.9 | 1,289.6 | 51.0 | 1,340.6 |
As a real estate investment company specialising in retail properties, Citycon operates largely in the Helsinki Metropolitan Area and Finland's major regional centres as well as in Sweden, the Baltic Countries and Denmark. Citycon is a Finnish, public limited liability company established under Finnish law and domiciled in Helsinki, the address of its registered office being Korkeavuorenkatu 35, FI-00130 Helsinki. The Board of Directors has approved the financial statements on 4 February 2014. In accordance with the Finnish Limited Liability Companies Act, annual general meeting has the right to not approve the financial statements approved by the Board of Directors and return the financial statements back to the Board of Directors for a correction.
A copy of Citycon's Consolidated Financial Statements is available on the corporate website at www.citycon.fi and from the Group's headquarters at the address Korkeavuorenkatu 35, FI-00130 Helsinki, Finland.
Citycon has prepared its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) and applied the IFRS/IAS standards, effective as of 31 December 2013, which refer to the approved applicable standards and their interpretations under European Union Regulation No. 1606/2002. Notes to the consolidated financial statements are also in compliance with Finnish accounting legislation and community legislation.
Citycon has used IFRS as the primary basis of its financial statements preparation from the beginning of 2005. Available-forsale financial assets, derivative contracts and investment properties, are measured at fair value following their initial recognition. In other respects, the consolidated financial statements are prepared at historical cost. The financial statements are shown in millions of euros and rounded in hundred thousands of euros.
Preparing the financial statements under IFRS requires that the company's management make certain accounting estimates and assumptions, which have an effect on the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses, as well as notes to the accounts. These estimates and associated assumptions are based on historical experience and various other factors deemed reasonable under the circumstances, the results of which form the basis of management judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised for the period in which the estimate is revised if the revision affects only that period, or in the current and future periods if the revision affects both current and future periods. The chapter 2 "Key estimates and assumptions, and accounting policies requiring judgment" provides a more detailed description of the factors underlying judgements and assumptions.
The following new standards as well as amendments and interpretations to the existing standards have been adopted in the financial statements 2013.
IAS 1 Presentation of Financial Statements introduces a grouping of items presented in Other Comprehensive Income. The amendments affect presentation only and have no impact on the Group's financial statements.
IAS 19 changes the accounting for defined benefit pension plans. IAS 19 did not impact Citycon's financial statements as Citycon did not have any defined benefit pension plans.
IAS 27 Separate Financial Statements deals with the requirements for separate financial statements. The revision did not change Citycon's financial statements.
IAS 28 Investments in Associates and Joint Ventures sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. The revision did not change Citycon's financial statements.
IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities amends
the disclosure requirements of financial instruments. The amendment did not change Citycon's financial statements.
IFRS 10 Consolidated Financial Statements requires a parent to present consolidated financial statements as those of a single entity. The standard identifies the principles of control and introduces a single consolidation model for all entities based on control. IFRS 10 did not change Citycon's financial statements.
IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures and requires a party to a joint arrangement to determine the type of joint arrangement by assessing its rights and obligations. IFRS 11 did not change Citycon's financial position or performance but affected presentation only.
IFRS 12 Disclosure of Interests in Other Entities sets out the requirements for disclosures relating to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. The requirements in IFRS 12 are more comprehensive than the previously existing disclosure requirements for subsidiaries. Citycon's IFRS 12 disclosures are provided in Notes 15 and 16.
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 provides guidance on how to measure fair value under IFRS. IFRS 13 defines fair value as an exit price. As a result of the guidance in IFRS 13, the Group re-assessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair value measurement of liabilities. IFRS 13 also requires additional disclosures. Application of IFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in
the individual notes relating to the assets and liabilities whose fair values were determined.
IFRIC 20 Stripping costs in the production phase of a surface mine clarifies the accounting related to surface mining. The interpretation does not affect Citycon's financial statements.
The following standards and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or 1 January 2014 or later periods, but the Group has not early adopted them. These are those that Citycon reasonably expects to have an impact on disclosures, financial position or performance when applied at future date. Citycon will adopt these standards when they become effective and EU has approved them.
The following standards and amendments and interpretations to existing standards have been published and are mandatory for the group's accounting periods beginning on or after 1 January 2014 or later periods, but the group has not early adopted them. These are not relevant to Citycon, because according to the company's current view, they will not significantly change its accounting policies nor presentation of the accounts.
The consolidated financial statements include Citycon Oyj and its subsidiaries, as well as holdings in its associated and joint venture companies.
Subsidiaries refer to companies in which the Group has control. The Group controls an investee if the Group has
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including contractual agreements with the other vote holders of the investee. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are consolidated from the date on which control is transferred to
the Group, until the date on which said control ceases.
Intra-Group transactions and profit allocation are eliminated in the consolidated financial statements.
When an acquisition is made, judgment is needed whether the acquisition is treated as an asset acquisition or either as a business acquisition (see Chapter 2.2.2 Business acquisitions and asset acquisitions for judgment principles). An asset acquisition does not generate goodwill, but the entire acquisition cost is allocated to land, buildings and other assets and liabilities.
If business acquisition is made, IFRS 3 Business Combinations will apply, whereby the acquisition cost is allocated to the acquired assets, liabilities and contingent liabilities at their fair value. Goodwill arises when the given consideration exceeds the fair value of the acquired net assets.
Mutual real estate companies in Finland, in which the ownership of Citycon is less than 100%, are treated as joint operations in accordance with IFRS 11 Joint Arrangements. The Group recognizes its assets and liabilities in relation to its joint operations, including its share of any assets held and liabilities incurred jointly. In addition, the Group recognizes its revenue and expenses in relation to its joint operations, including its share of revenue of the joint operation and expenses incurred jointly. The consolidation method described above applies to all joint operations of this kind, regardless of the Group's holding in the joint operation.
Citycon has no associated companies as referred to in IFRS, since all mutual real estate
companies, also those in which the ownership is less than 50%, are treated as joint operations, as described above.
Citycon has interests in joint ventures, which are treated as joint ventures based on IFRS 11 Joint Arrangements. In joint ventures, venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. Citycon recognises its interest in joint ventures with the equity method. The Group presents the aggregate share of profit or loss from the joint ventures on the face of its income statement in line "Share of profit of joint ventures". In the Note 15 "Investments in joint ventures" the assets and liabilities of joint ventures are presented.
Transactions denominated in foreign currencies are measured at the exchange rate quoted on the transaction date. Any exchange rate differences resulting from currency translation are entered under financial expenses and income in the income statement.
Monetary receivables and payables denominated in foreign currencies on the balance sheet date are measured at the exchange rate quoted on the balance sheet date. Non-monetary items denominated in foreign currencies and measured at fair value are translated into euros using the exchange rates quoted on the valuation date, while other non-monetary items are measured at the exchange rate quoted on the transaction date.
Foreign subsidiaries' income statements have been translated into euros using average exchange rates quoted for the financial period and balance sheets using the exchange rate
quoted on the balance sheet date. Any resulting exchange rate difference is recognised as a translation difference under shareholders' equity. Translation differences resulting from the elimination of the historical cost of foreign subsidiaries and from items included in shareholders' equity following their acquisition, are recognised under shareholders' equity.
Investment property refers to land or a building, or part of a building, held to earn rental income or capital appreciation, or both. Under IAS 40, investment property is measured at fair value, with gains and losses arising from changes in fair values being included in the income statement.
The investment properties are measured initially at cost, including transaction costs such as consultant fees and transfer taxes. After their initial measurement investment properties are valued at fair value at the end of the quarter following the acquisition.
In accordance with IFRS 13, the fair value is defined as the price that would be received from the sale of an asset in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction takes place either in the principal market, or in the absence of a principal market, in the most advantageous market which is accessible to the Group at the measurement date. The fair value is measured using the assumptions that market participants would use when pricing the asset, assuming that market participants act in their economic best interest.
A fair value measurement takes into account a market participant's ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The highest and best use of Citycon's properties does not differ from their current use.
Citycon uses valuation techniques that are appropriate under the circumstances, and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All investment properties are categorised within the fair value hierarchy, described below. Categorization is based on the lowest level input that is significant to the fair value measurement as a whole:
Transfers between levels in the hierarchy are presented at the end of each reporting period.
An investment property's fair value reflects current market circumstances at the balance sheet date, taking into account prices paid for similar properties with comparable location, condition, and lease portfolio.
Using International Valuation Standards (IVS), an external professional appraiser conducts the valuation of the company's properties at least once a year. During 2013 and 2012, Citycon had its properties valued by an external appraiser on a quarterly basis.
A ten-year cash flow analysis based on the net rental income is used to determine the fair value of investment properties. The basic cash flow is determined by the company's lease agreements valid at the valuation date. Upon a lease's expiry, the market rent assessed by an external appraiser is used to replace the contract rent. Gross rental income less operating expenses and investments equals cash flow, which is then discounted at the property-specific discount rate comprising of yield requirement and inflation assumption. Yield requirements are determined for each property by taking into account propertyspecific risk and market risk. The total value of the property portfolio is calculated as the sum of the individual properties' values, which are based on the cash flow method.
(Re)development projects i.e. investment properties under construction (IPUC) are also determined at fair value. The valuation is based on a cash flow analysis, where the capital expenditure on the (re)development project and the property's future cash flows are taken into account according to the (re)development project's schedule. Citycon takes into account the (re)development projects in its fair value valuation as soon as an investment decision has been made and the external appraiser considers that sufficient information is available for a reliable valuation. In the fair value valuation on 31 December 2013, Citycon valued two properties (3 properties on 31 December 2012) as (re)development projects.
All potential development projects have been left out of the valuation conducted by the external appraiser.
The fair value of Citycon's investment properties in the balance sheet is calculated as: the property portfolio's total value determined by the external appraiser, less transfers into investment properties held for sale, capital expenditure on development projects that are not taken into account by the external appraiser, as well as the value of new properties acquired during the reporting quarter.
Gains and losses resulting from fair value changes for investment properties are netted and stated as a separate item in the income statement.
An investment property is derecognised from the statement of financial position on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. As a main rule, investment properties not under construction or development for the purpose of a sale are measured at fair value in accordance with IAS 40 and presented under 'Investment properties' in the statement of financial position. However, if the sale of an operative investment property is deemed probable, such a property is transferred to 'Investment properties held for sale' in the statement of financial position. A sale is deemed highly probable when
However, investment properties held for sale are still recognised at fair value in accordance with IAS 40. Investment properties held for sale totalled EUR 2.3 million on 31 December 2013 (EUR 5.4 million on 31 December 2012).
Under IAS 40, a property must be reclassified under inventories in the event of a change in the use of the property, evidenced by development starting with a view to a sale. If an investment property is being built/developed with a view to a sale, it will be treated in accordance with IAS 2 Inventories: it is recognised either at cost or below at net realisable value. If the property was acquired with a view to a sale, it will also be treated in accordance with IAS 2 Inventories. When a property is treated in accordance with IAS 2 Inventories, the property's value is presented under "Inventory properties" in the statement of financial position. Citycon had no inventory properties on 31 December 2013 or 31 December 2012.
Property, plant and equipment (PPE) are measured at historical cost less straight-line depreciation and any impairment losses. These assets consist mainly of office machinery and equipment and other tangible assets such as artworks. Machines and equipment leased under finance leases are also recognised within property, plant and equipment.
PPEs are depreciated on a straightline basis over the asset's expected useful economic life. The asset's useful economic life and estimated residual values are reviewed on an annual basis. If any major differences occur between the values, the depreciation plan is revised to correspond to these new values.
The following depreciation periods apply:
Capital gains or losses on the sale of PPEs are recognised in the income statement.
An intangible asset is recognised in the balance sheet, provided its historical cost can be measured reliably and it is probable that its expected economic benefits will flow to the company.
Intangible assets are measured at cost less amortisation and any impairment losses.
These assets include mainly computer software. They are amortised over their useful life on a straight-line basis over three to seven years.
On each balance-sheet date, property, plant and equipment and intangible assets are assessed to determine whether there is any indication of impairment. If any indication of an impaired asset exists, the asset's recoverable amount must be calculated. Should the asset's carrying amount exceed its recoverable amount, it is impaired, and the resulting impairment loss is recognised in the income statement.
1.4.9.1 Recognition and measurement As required by IAS 39, financial assets are classified into the following categories for measurement purposes:
The classification of a financial asset is determined by the purpose for which the asset is purchased at the time of its purchase.
Loans and other receivables not held for trading include financial assets which the company has created by providing money, goods or services directly to the debtor. Initially recognised at cost, these assets under current and non-current assets are carried at amortised cost. Their balance sheet value is impaired by the amount of any credit loss. In the company's consolidated statements of financial position as at 31 December 2013 and 31 December 2012, loans and other receivables include the items "Other non-current assets", "Trade and other receivables" and "Cash and cash equivalents".
Available-for-sale financial assets are nonderivative assets carried at fair value. Changes in their fair value are recognised in the fair value reserve under shareholders' equity and in the income statement when the asset is disposed of or it has lost its value to the extent that an impairment loss must be recognised for the asset. Available-for-sale financial assets are intended to be held for an undefined period and can be sold at a time deemed appropriate. On 31 December 2013 or 31 December 2012, Citycon had no available-for-sale financial assets.
Citycon concludes derivative contracts for hedging purposes only. Derivative contracts not fulfilling the criteria set for hedge accounting,
or for which Citycon has decided not to apply hedge accounting, are classified as financial assets or liabilities at fair value through profit or loss.
Financial liabilities are classified as
Financial liabilities are initially recognised at fair value. Afterwards, financial liabilities excluding derivative debt are recognised at amortised cost using the effective interest method. In the company's consolidated statement of financial position, on 31 December 2013 and 31 December 2012, financial liabilities at amortised cost include the items "Loans", "Other liabilities" and "Trade payables and other payables". On 31 December 2013 Citycon had foreign exchange derivative contracts classified as a financial assets and liabilities at fair value through profit or loss.
Financial assets and liabilities are recognised in the balance sheet on the basis of the settlement date.
1.4.9.2 Derivative contracts and hedge accounting Derivatives are initially measured at cost (if available) and re-measured at fair value on each balance sheet date.
Citycon uses interest rate swaps to hedge the interest rate cash flow risk. These interest rate swaps hedge against volatility in future interest payment cash flows (cash flow hedging) resulting from interest rate fluctuations, and the resulting profit fluctuations. Citycon applies hedge accounting to the majority of its interest rate swaps, under IAS 39, according to which
the amount of financial instruments' fair value change stemming from effective hedging is recognised under other comprehensive income, whereas the amount stemming from ineffective hedging is recognised in the statement of comprehensive income under financial income and expenses. The amount in the fair value reserve is recognised in the statement of comprehensive income during the period when the cash flow from the hedged item is realised and affects earnings. If the criteria for hedge accounting are not met, changes in fair value are recognised in full through profit or loss.
Interest payments based on interest rate swaps are included in interest expenses. Changes in "fair value through profit or loss" are recognised as financial expenses or income, if hedge accounting is not applied. The fair value of interest rate swaps is shown in current or non-current receivables or short-term or longterm liabilities in the statement of financial position. The fair value of interest rate swaps is based on the present value of estimated future cash flows. As of 31 December 2013 all Citycon's interest rate swaps were under hedge accounting.
The company uses foreign exchange derivatives to hedge against exchange rate risk relating to financial assets and liabilities denominated in foreign currency. Fair value changes related to foreign exchange derivatives are recognised in the statement of comprehensive income, since fair value changes related to financial assets and liabilities denominated in foreign currencies are also recognised therein.
1.4.9.3 Embedded derivatives Under IAS 39, an embedded derivative – a derivative instrument included in another
contract, or a host contract, whose financial characteristics are not closely related to those of its host contract – must be separated from the host contract under certain circumstances, accounted for at fair value and changes in its fair value must be recognised in the statement of comprehensive income. The Group has no embedded derivatives.
1.4.9.4 Impairment of financial assets A financial asset is impaired if its carrying amount exceeds its estimated recoverable amount. If there is objective evidence that a financial asset measured at amortised cost is impaired, the resulting impairment loss must be recognised in the statement of comprehensive income. If the amount of impairment loss decreases during a subsequent financial period and this fall can be regarded as relating to an event after the date of impairment recognition, the asset's impairment will be reversed.
Cash and cash equivalents consist of cash, bank deposits withdrawable on call, and other short-term, highly liquid investments. A maximum maturity of three months from the date of acquisition applies to cash and cash equivalents.
Ordinary shares are classified as equity. The company has a single series of shares, with each share entitling to one vote at general meetings of shareholders. The shares have no nominal value, and there is no maximum amount to share capital.
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any group company purchases the company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company's equity holders until the shares are reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company's equity holders.
Provisions are recognised when Citycon has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount of this obligation can be made.
Long-term provisions shown in the financial statements are based on net present values.
1.4.13.1 Rental income
Leases based on Citycon as a lessor renting out investment properties are classified under operating leases, since Citycon retains a significant share of risks and rewards of ownership. Rental income from operating leases is spread evenly over the lease term.
Citycon also has leases including rentfree periods or rental discounts and which have been agreed in the original lease. Such lease incentives are treated according to SIC Interpretation 15 Operating Leases – Incentives and are recognised on a straightline basis over the lease term, although rent payments are not received on the same basis. Citycon has also allowed rental discounts which have not been agreed in the original lease. In such cases, the leaseholder has requested a rental discount due to the market situation or the property's (re)development project. Such temporary rental discounts are recognised in the income statement during the period for which rent reductions have been granted.
On behalf of the lessee, Citycon may perform alteration work on premises rented by the lessee and charge the lessee for the resulting costs, in the form of a rent increase. The Group recognises the alteration-related rent increase as rental income over the lease term. Rent increase and the expense arising from the alteration work are taken into account when measuring the fair value of investment property.
Service charges are recognized in the period in which the expense it relates to is expensed. Service charges are included gross of the related costs in turnover as Citycon considers to act as principal in this respect.
Deeming itself the principal is based on the fact that Citycon selects the maintenance service providers for its properties, concludes agreements with property maintenance suppliers and bears the credit risk associated with maintenance. In addition, the tenant doesn't have a possibility to select the property maintenance service provider, nor can the tenant impact the service providers' pricing.
Service income, such as marketing income, is recognised for the period during which the services are provided.
1.4.13.3 Sale of an existing property A property is deemed as sold when the significant risks and rewards of ownership have been transferred to the buyer.
1.4.13.4 Sale of a property under construction When property is under (re)development and agreement has been made to sell such property when construction is complete, Citycon considers whether it was agreed to construct a property or to sell a completed property. If agreed to sell the completed property, the property is regarded as sold when the significant risks and rewards of ownership have been transferred to the buyer. If agreed to construct a property, the revenue from disposal is recognised using the percentage of completion method as construction progresses, if the risks and rewards of the work in progress are transferred to the buyer as construction progresses.
Interest income is recognised according to the time that has elapsed, using the effective interest method.
1.4.13.6 Dividend income
Dividend income is recognised when the right to receive a dividend is established.
Borrowing costs are usually expensed as incurred. However, borrowing costs, such as interest expenses and arrangement fees, directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. A qualifying asset is an asset that necessarily takes a substantial period of time to be ready
for its intended use or sale. Capitalisation commences when the refurbishment of a property, or the construction of a new building or extension, begins and ceases once the building is ready for lease. Capitalisable borrowing costs include costs of funds borrowed for a construction project or costs attributable to a construction project multiplied by the capitalisation rate. The capitalisation rate is the weighted average cost of Citycon's borrowings for the financial year. Borrowing costs arising from the purchase cost of land are also capitalised on the development project, but only when activities necessary to preparing the asset for development are in progress on the purchased land.
Loan-related transaction expenses clearly associated with a specific loan are included in the loan's cost on an accrual basis and recognised as financial expenses, using the effective interest method.
Income taxes include taxes based on the taxable income of Group companies for the financial period, adjustments for previous periods' taxes and changes in deferred taxes. Tax based on taxable income for the period is calculated in accordance with the tax legislation enacted in each country.
Deferred tax assets and liabilities are calculated on temporary differences arising between the tax bases of assets and liabilities, and their carrying amounts. A major temporary difference arises between the fair value and taxable value of investment properties. In such a case, taxes are calculated on the difference between the property's fair value and the debt-free acquisition cost of shares in the mutual real estate company in question, or the
non-depreciated residual value of the directly owned property.
It is the company's policy to realise its shareholding in property companies by selling the shares it holds. For properties owned abroad, such deferred taxes are not recognised because, due to the ownership structure, property disposal does not lead to tax implications.
No deferred tax on subsidiaries' retained earnings is recognised, to the extent that the difference is unlikely to be discharged in the foreseeable future.
Deferred tax assets are recognised to the extent that it appears probable that future taxable profit will be available, against which the temporary differences can be utilised.
If the recognition of deferred taxes is attributable to an item recognised in shareholders' equity, such as a change in the fair value of a derivative instrument used for hedging purposes, deferred taxes will also be recognised in shareholders' equity.
The tax rate enacted by the balance sheet date is used to determine deferred tax.
Leases, for which Citycon acts as a lessee, are classified as finance leases and recognised as assets and liabilities if the risks and rewards related to the property have been passed on to the company. Leases are classified at their inception and recognised at the lower of the present value of the minimum lease payments, and the fair value of the asset under PPE and financial liabilities. PPE is depreciated over its useful economic life or during the lease term. Lease payments in the income statement are recognised as interest or the repayment of financial liabilities.
Leases are classified as operating leases if substantially all of the risks and rewards inherent in holding such leased assets have not been transferred to the lessee.
The Group's employee pension cover is based on statutory pension insurance. Pension schemes are classified into two categories: defined contribution plans and defined benefit plans. Where contributions under defined contribution plans are recognised in the income statement for the period during which such contributions are made, defined benefit pension plans are based on actuarial calculations.
Defined benefit schemes' assets are measured at fair value, their obligations at discounted present value and any net surplus or deficit is recognised in the balance sheet. Actuarial gains and losses are charged or credited to equity through other comprehensive income in the period in which they arise. Service cost is spread systematically over the working life. Professional actuaries perform these calculations using the projected credit method.
Citycon has applied IFRS 2 Share-based Payment to its stock options and to the longterm share-based incentive plan. Such stock options and share-based incentive plans are measured at fair value on the grant date and expensed over their vesting period. Stock options granted before the above date have not been expensed.
Citycon uses the Black & Scholes optionpricing model to measure the fair value of stock options.
Dividends to the company's shareholders are recognised as a liability in the consolidated statement of financial position, for the period during which the Annual General Meeting of shareholders approves the dividends.
The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions. Judgment is also required in the application of certain accounting policies. These may affect the reported assets and liabilities, recognition of income and expenses for the period, and other information such as the presentation of contingent liabilities. Although these estimates are based on the best knowledge and current information available, the actual results may differ from the estimates.
Estimates and assumptions bearing a significant risk concerning a material change in the carrying amounts of assets or liabilities are presented in the following.
Measuring the fair value of investment properties is a key accounting policy that is based on assessments and assumptions about future uncertainties. Market rents, the occupancy rate, operating expenses and the yield requirement form the key variables used in an investment property's fair-value measurement. The evaluation of these variables involves the management's judgement and assumptions. On 31 December 2013, the fair value of investment properties
totalled EUR 2,733.5 million (EUR 2,714.2 million). An analysis of investment properties' sensitivity to key variables is presented under Note 14. Investment Properties.
Citycon uses a net rental income based cash flow analysis to measure the fair value of its investment properties. Net rental income and the yield requirement of each property must be defined for the cash flow analysis. Net rental income equals gross rental income less operating expenses. The yield requirement is used for discounting the yearly net rental income less investments, to which the discounted residual value and other assets, such as unused building rights and lots, are added to obtain the fair value of an investment property. The key parameters of the cash flow analysis are the following items:
is defined by Citycon and this definition involves the management's judgement and assumptions. Market risk is defined by an external appraiser. The yield requirement added by an inflation assumption is used as the discount rate in the cash flow analysis. When the yield requirement decreases, the fair value of the investment property increases.
Other variables involving estimates and assumptions include: the current leases' extension probability, the vacancy duration of unleased areas, investments, the inflation rate, and rental growth assumptions.
Citycon uses a cash-flow analysis to measure the fair value of its (re)development projects, taking into account the project's investments and future cash flows along with the project schedule.
When evaluating the fair value of (re)development projects, estimates or assumptions must be made regarding future investments, rental agreements and the project's timetable.
Citycon is subject to income taxation in several countries. The complexity of tax legislation, as well as constant changes in it and in the operating environment, require Citycon to use estimates and assumptions when preparing its tax calculations. Tax legislation specifically related to tax deductibility of interest expenses is changing in the countries Citycon operates in. Citycon constantly monitors and analyses the impact of these changes as part of its normal operations. Future taxable income is uncertain, and the final amount of taxes may deviate from the originally recorded amount. If final
tax deviates from originally recorded amounts, such differences may affect the period's taxable profit, tax receivables or liabilities as well as deferred tax assets or liabilities. Citycon's current taxes in 2013 amounted to EUR 0.7 million (EUR 1.4 million in 2012).
Deferred tax assets and liabilities are calculated on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts.
The major temporary difference arises between the fair value and taxable value of investment properties. Under the policy adopted by Citycon, deferred tax describes the tax payable on potential gains on sale in the case of a property being sold. This means that Citycon needs to estimate the future realisation of its property sales. In the main, Citycon realises its properties' sales by selling shares representing ownership in the property and by reporting deferred tax according to this rule. Deferred tax liability recognised from the difference between the fair value and taxable value of investment properties was EUR 55.9 million on 31 December 2013 (EUR 64.0 million on 31 December 2012).
Other main temporary differences relate to unused tax losses and financial instruments. When tax receivables are recognised for tax losses that have been confirmed in taxation, the company must evaluate whether it is probable that such tax losses can be used against a taxable profit arising in the future. Deferred tax asset from tax losses amounted to EUR 3.3 million million on 31 December 2013 (EUR 1.0 million on 31 December 2012).
No deferred tax is recognised on subsidiaries' retained earnings, to the extent that it is considered unlikely that such a difference will be discharged in the future.
On 31 December 2013, Citycon had confirmed losses for which tax assets of EUR 22.7 million (EUR 22.0 million in 2012) were not recognised.
Deferred taxes are calculated on the balance sheet day using valid tax rates.
Citycon uses judgment when classifying its properties into investment properties, inventory properties or investment properties held for sale, according to the following policies:
Citycon purchases investment properties through asset acquisitions and business acquisitions. It applies IAS 40 Investment Property to the accounting treatment of asset acquisitions and IFRS 3 Business Combinations to the accounting treatment of business acquisitions. Citycon exercises judgement in assessing whether the purchase of an investment property or an investment property portfolio is classified as an asset acquisition or business acquisition. Acquisitions are treated as business acquisitions when significant set of activities is acquired in addition to the property. The significance of activities is assessed in accordance with the definition of ancillary services (e.g. maintenance, cleaning, security, book-keeping, etc.) of IAS 40. Citycon did not have any business acquisitions in 2013 and 2012.
When investment properties are sold, Citycon exercises judgement in estimating whether the sale is classified as a real estate sale or sale of a business. For Citycon, characteristics of a sale of a business include, for example, the sale of a major line of business or geographical area of operations that also involves the transfer of staff and/or management essential to the business.
In the case of real estate sale, IAS 40 Investment Property or IAS 2 Inventory based accounting treatment is applied. Policies concerning the sale of individual investment properties or properties are described in 1.4.4 "Investment properties held for sale" and 1.4.5 "Inventory properties".
In the case of sale of a business, IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations based accounting treatment is applied. Businesses i.e. disposal groups such as segments or property portfolios are classified as non-current assets held for sale when their carrying amount is to be recovered, principally through a sale transaction, and a sale is considered highly probable. A sale is considered highly probable based on the policies presented under 1.4.4 "Investment properties held for sale". Profit for the period from the business held for sale must be stated as a separate item in the consolidated statement of comprehensive income, while the business held for sale must be presented in the statement of financial position, separately from other assets. In addition, liabilities under the business held for sale must be presented in the statement of financial position, separately from other liabilities. Citycon had no businesses held for sale on 31 December 2013 or 31 December 2012.
| EUR million | 2013 | 2012 |
|---|---|---|
| Straight-lining of lease | ||
| incentives | 0.0 | 0.3 |
| Temporary rental discounts | -2.4 | -2.4 |
| Additional rent from turnover | ||
| based rental agreements Gross rental income |
3.1 | 3.9 |
| (excl. items above) | 233.1 | 224.2 |
| Total | 233.8 | 225.9 |
In accordance with the table presented below, Citycon had 3,287 lease agreements on 31 December 2013 (3,792 agreements on 31 December 2012). The decrease in the number of lease agreements was due to divestments of non-core properties in Finland and in Sweden, and due to ended parking leases relating to the outsourcing of parking services. In the majority, i.e. in 89 per cent (89% on 31 Dec. 2012) of Citycon's leases the rent is divided into base rent and maintenance charge. Base rent is typically tied to the cost-of-living index. Maintenance charge, charged separately from the lessee, covers operating expenses incurred by the property owner due to property maintenance.
Part of Citycon's lease agreements also contain a turnover-linked component in addition to a cost-of-living indexation. At the end of 2013, turnover based lease agreements accounted for roughly 52 per cent (53% on 31 Dec. 2012) of Citycon's lease portfolio. The additional rent received from turnover based lease agreements is presented in Note 3. A) Breakdown of gross rental income.
Because the majority of the lease portfolio is tied to either the cost-of-living index, a predetermined minimum rent increase and/ or the lessee's turnover, Citycon's leases are chiefly leases with contingent rent payments in accordance with IAS 17.4.
| Number of lease agreements | 31 Dec. 2013 |
31 Dec. 2012 |
|---|---|---|
| Finland | 1,695 | 1,802 |
| Sweden | 1,078 | 1,474 |
| Baltic Countries and New | ||
| Business | 514 | 516 |
| Total | 3,287 | 3,792 |
In accordance with the table presented below, the average remaining length of Citycon's lease portfolio was 3.5 years on 31 December 2013 (3.5 years on 31 December 2012). Citycon mainly seeks to prepare fixed-term contracts. As a main rule, new leases are signed for a fixed period in all countries. Alongside storage facilities and individual parking spaces, apartments form the main exception to this. Fixed-term agreements represented about 80 per cent of Citycon's property portfolio on 31 December 2013 (78% on 31 December 2012) and initially fixed-term contracts 11 per cent on 31 December 2012 (12% on 31 December 2012). The rest of the agreements are leases in effect until further notice (9% out of all leases on 31 December 2013 and 9% on 31 December 2012).
A new lease's duration depends on the type of premises to be leased and the tenant. With an anchor tenant, the company typically concludes long-term leases of 10 or even 20 years. Leases for smaller retail premises, however, are chiefly negotiated for a term of 3 to 5 years.
| Average remaining length of the lease portfolio at the end of the financial year, years |
31 Dec. 2013 |
31 Dec. 2012 |
|---|---|---|
| Finland | 3.9 | 3.7 |
| Sweden | 2.8 | 3.0 |
| Baltic Countries and New | ||
| Business | 3.3 | 3.7 |
| Average | 3.5 | 3.5 |
Non-cancellable leases include fixed-term and initially fixed-term leases until the end of their terms. Leases in effect until further notice are assumed as non-cancellable leases for the equivalent of their notice period.
| EUR million | 31 Dec. 2013 |
31 Dec. 2012 |
|---|---|---|
| Not later than 1 year | 54.0 | 45.0 |
| 1-5 years | 118.8 | 133.7 |
| Over 5 years | 53.9 | 49.0 |
| Total | 226.7 | 227.8 |
Citycon's business consists of the regional business units Finland, Sweden and Baltic Countries and New Business.
Citycon acquired ownership of 50 per cent in Kista Galleria shopping centre on January 17, 2013. Kista Galleria is consolidated into Citycon's financial statements with 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" 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" in the statement of financial position. However, Citycon's management and the Board of Directors additionally follow the
performance of Kista Galleria as if it was fully consolidated into Citycon's net rental income and operating profit. Therefore, in the segment information numbers of Sweden are presented with (Segments) and without (IFRS) Kista Galleria.
Citycon's management and Board of Directors assess the business units' performance on the basis of net rental income and EPRA operating profit. Fair value changes are also reported to Citycon's management and Board of Directors, by business unit. In addition to geographical business units, Citycon's management and Board of Directors monitor cluster and property-specific net rental income.
Segment assets and liabilities consist of operating items which the segment uses in its operations or which can be allocated to the segment on a reasonable basis. Unallocated items include tax and financial items, as well as corporate items. No internal sales take place between segments.
Capital expenditure includes additions to the investment properties, joint ventures, property, plant and equipment and intangible assets in the statement of financial position.
Citycon's turnover mainly consists of rental income. Rental income arises mainly from retail premises from two different property types: shopping centres, and supermarkets and shops. Citycon presents its gross rental income broken down by property type.
Principal customers include the five biggest tenants, one of whose share of gross rental income exceeds 10 per cent. The proportion of gross rental income and the segment is specified for each of these tenants. The proportion of gross rental income is based on the rent roll at 31 Dec. 2013 and at 31 Dec. 2012.
| A) Segment information | |
|---|---|
| ------------------------ | -- |
The geographical segments are Finland, Sweden and the Baltic Countries and New Business. The segment Other mainly includes administrative expenses arising from the Group's headquarter.
Citycon is a market leader in the Finnish shopping centre business. It owns 22 shopping centres and 33 other properties in Finland. Of the Finnish properties 27 are located in the Helsinki area and 28 elsewhere in Finland.
Citycon has nine shopping centres and two other retail properties in Sweden. Eight of the properties in Sweden are located in the Greater Stockholm area, one in the Greater Gothenburg area and two in Umeå.
Citycon owns four shopping centres in the Baltic region, three in Estonia and one in Lithuania. In addition Citycon owns one shopping centre in Denmark.
| 1 JAN.-31 DEC. 2013 EUR million |
Finland | Sweden | Baltic Countries and New Business |
Other | Total segments |
Re conciliation to IFRS |
Total IFRS Sweden IFRS | |
|---|---|---|---|---|---|---|---|---|
| Gross rental income | 144.2 | 101.3 | 30.4 | - | 275.9 | -42.1 | 233.8 | 59.2 |
| Service charge income | 6.2 | 6.5 | 4.5 | - | 17.2 | -2.4 | 14.7 | 4.0 |
| Turnover | 150.4 | 107.8 | 34.9 | - | 293.1 | -44.5 | 248.6 | 63.3 |
| Property operating expenses | 46.5 | 35.2 | 9.1 | - | 90.8 | -12.4 | 78.4 | 22.8 |
| Other expenses from leasing operations | 0.4 | 0.9 | 0.1 | - | 1.5 | -0.2 | 1.3 | 0.8 |
| Net rental income | 103.5 | 71.7 | 25.6 | - | 200.9 | -32.0 | 168.9 | 39.7 |
| Direct administrative expenses | 4.0 | 6.3 | 0.8 | 12.0 | 23.0 | -2.4 | 20.6 | 3.9 |
| Other operating income and expenses | 0.7 | 0.1 | 0.0 | - | 0.9 | - | 0.9 | 0.1 |
| EPRA operating profit | 100.3 | 65.6 | 24.8 | -12.0 | 178.7 | -29.6 | 149.1 | 36.0 |
| Net fair value gains/losses on investment property | 2.3 | 10.9 | 15.8 | - | 28.9 | -2.8 | 26.1 | 8.1 |
| Losses/gains on disposal of investment property | -0.2 | 1.1 | - | - | 1.0 | -0.1 | 0.8 | 1.1 |
| Operating profit/loss | 102.4 | 77.5 | 40.6 | -12.0 | 208.4 | -32.4 | 176.0 | 45.1 |
| Net financial income and expenses | -90.1 | |||||||
| Share of profit/loss of jointly controlled entitities | 4.1 | |||||||
| Income tax expense | 10.0 | |||||||
| Profit for the period | 100.0 | |||||||
| Allocated assets | ||||||||
| Investment properties | 1,671.2 | 1,255.3 | 342.2 | - | 3,268.7 | -535.2 | 2,733.5 | 720.1 |
| Investment properties held for sale | 2.3 | - | - | - | 2.3 | - | 2.3 | - |
| Other allocated assets | 12.8 | 15.9 | 1.1 | 204.5 | 234.2 | -6.1 | 228.1 | 9.7 |
| Unallocated assets | ||||||||
| Deferred tax assets | 9.1 | 9.1 | ||||||
| Derivative financial instruments | 2.4 | 2.4 | ||||||
| Assets | 1,686.3 | 1,271.2 | 343.2 | 204.5 | 3,516.7 | -541.3 | 2,975.4 | 729.9 |
| Allocated liabilities | ||||||||
| Trade and other payables | 15.5 | 49.3 | 21.0 | -5.3 | 80.5 | -17.5 | 63.0 | 31.8 |
| Unallocated liabilities | ||||||||
| Interest-bearing liabilities | 1,462.4 | - | 1,462.4 | |||||
| Deferred tax liabilities | 57.7 | - | 57.7 | |||||
| Derivative financial instruments | 32.3 | - | 32.3 | |||||
| Other unallocated liabilities | 19.4 | 19.4 | ||||||
| Liabilities | 15.5 | 49.3 | 21.0 | -5.3 | 1,652.2 | -17.5 | 1,634.7 | 31.8 |
| Capital expenditure | 65.1 | 547.9 | 10.4 | 0.4 | 623.8 | -397.7 | 226.1 | 150.2 |
| 1 JAN.-31 DEC. 2012 | Baltic Countries and |
Total | Re conciliation |
|||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Finland | Sweden | New Business | Other | segments | to IFRS | Total IFRS Sweden IFRS | |
| Gross rental income | 137.0 | 60.3 | 28.6 | - | 225.9 | - | 225.9 | 60.3 |
| Service charge income | 6.3 | 2.8 | 4.2 | - | 13.3 | - | 13.3 | 2.8 |
| Turnover | 143.2 | 63.1 | 32.8 | - | 239.2 | - | 239.2 | 63.1 |
| Property operating expenses | 44.7 | 22.9 | 8.2 | 0.0 | 75.8 | - | 75.8 | 22.9 |
| Other expenses from leasing operations | 0.3 | 1.0 | 0.0 | 0.0 | 1.4 | - | 1.4 | 1.0 |
| Net rental income | 98.2 | 39.2 | 24.6 | 0.0 | 162.0 | - | 162.0 | 39.2 |
| Direct administrative expenses | 9.1 | 5.1 | 1.0 | 11.3 | 26.5 | - | 26.5 | 5.1 |
| Other operating income and expenses | 0.2 | 0.0 | 0.0 | - | 0.2 | - | 0.2 | 0.0 |
| EPRA operating profit | 89.3 | 34.0 | 23.7 | -11.4 | 135.7 | - | 135.7 | 34.0 |
| Net fair value losses/gains on investment property | -0.9 | 9.0 | 15.4 | - | 23.6 | - | 23.6 | 9.0 |
| Losses on disposal of investment property | -1.0 | 5.1 | 0.0 | - | 4.2 | - | 4.2 | 5.1 |
| Operating profit/loss | 87.5 | 48.2 | 39.1 | -11.4 | 163.4 | - | 163.4 | 48.2 |
| Net financial income and expenses | -68.1 | |||||||
| Share of profit/loss of jointly controlled entitities | 0.2 | |||||||
| Income tax expense | -7.8 | |||||||
| Profit for the period | 87.7 | |||||||
| Allocated assets | ||||||||
| Investment properties | 1,659.0 | 739.2 | 316.0 | - | 2,714.2 | - | 2,714.2 | 739.2 |
| Investment properties held for sale | 5.4 | - | - | - | 5.4 | - | 5.4 | - |
| Other allocated assets | 8.5 | 10.2 | 1.1 | 59.5 | 79.4 | - | 79.4 | 10.2 |
| Unallocated assets | ||||||||
| Deferred tax assets | 19.5 | 19.5 | - | 19.5 | ||||
| Derivative financial instruments | - | - | - | - | ||||
| Assets | 1,672.9 | 749.4 | 317.1 | 79.0 | 2,818.5 | 2,818.5 | 749.4 | |
| Allocated liabilities | ||||||||
| Trade and other payables | 14.0 | 21.0 | 3.7 | 42.7 | 81.4 | - | 81.4 | 21.0 |
| Unallocated liabilities | ||||||||
| Interest-bearing liabilities | 1,533.2 | - | 1,533.2 | |||||
| Deferred tax liabilities | 66.0 | - | 66.0 | |||||
| Derivative financial instruments | 76.3 | - | 76.3 | |||||
| Other unallocated liabilities | 1.6 | - | 1.6 | |||||
| Liabilities | 14.0 | 21.0 | 3.7 | 42.7 | 1,758.6 | 1,758.6 | 21.0 | |
| Capital expenditure | 119.9 | 18.1 | 23.0 | 0.7 | 161.7 | 161.7 | 18.1 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Shopping centres | 221.3 | 210.0 |
| Supermarkets and shops | 27.3 | 29.2 |
| Total | 248.6 | 239.2 |
| 31 Dec. 2013 | Proportion of gross rental income, % 1) | Segment |
|---|---|---|
| Kesko | 16.1 | Finland |
| S Group | 5.7 | Finland and Baltic Countries and New Business |
| ICA Gruppen AB | 4.2 | Finland, Sweden and Baltic Countries and New Business |
| Stockmann | 2.7 | Finland, Sweden and Baltic Countries and New Business |
| Tokmanni | 2.0 | Finland |
| Total | 30.6 | |
1) Proportion of gross rental income is based on the rent roll on 31 Dec. 2013.
| 31 Dec. 2012 | Proportion of gross rental income, % 1) | Segment |
|---|---|---|
| Kesko | 16.9 | Finland |
| S Group | 5.7 | Finland and Baltic Countries and New Business |
| ICA AB | 3.4 | Sweden and Baltic Countries and New Business |
| Stockmann | 3.0 | Finland, Sweden and Baltic Countries and New Business |
| H & M Hennes & Mauritz AB | 1.7 | Finland and Sweden |
| Total | 30.6 |
1) Proportion of gross rental income is based on the rent roll on 31 Dec. 2012.
| EUR million | 2013 | 2012 |
|---|---|---|
| Heating and electricity | 25.1 | 25.1 |
| Maintenance expenses | 25.4 | 25.4 |
| Land lease fees and other rents | 1.8 | 1.8 |
| Property personnel expenses | 2.7 | 0.8 |
| Administrative and management fees | 3.1 | 2.3 |
| Marketing expenses | 5.6 | 5.6 |
| Property insurances | 0.5 | 0.6 |
| Property taxes | 7.1 | 7.1 |
| Repair expenses | 6.7 | 7.0 |
| Other property operating expenses | 0.5 | 0.2 |
| Total | 78.4 | 75.8 |
Two properties generated no income during the year 2013 (in 2012 two properties ), while these generated expenses of EUR 0.2 million (EUR 0.2 million).
| EUR million | 2013 | 2012 |
|---|---|---|
| Tenant improvement expenses and commissions | 0.4 | 0.1 |
| Credit losses | 0.9 | 1.2 |
| Total | 1.3 | 1.4 |
Significant tenant improvements are recognised as investments. Credit losses include decrease of EUR 0.3 million in credit loss provisions (increase of EUR 0.4 million) in the consolidated statement of comprehensive income. Credit loss provisions in the statement of financial position are presented in Note 23. Trade and other receivables.
| EUR million | 2013 | 2012 |
|---|---|---|
| Personnel expenses | 14.5 | 15.5 |
| Non-recurring personnel expenses arising from employment terminations | 0.1 | 1.5 |
| Consultancy and advisory fees as well as external services | 3.1 | 3.5 |
| Office and other administrative expenses | 2.1 | 4.8 |
| Depreciation and amortisation | 0.9 | 1.2 |
| Total | 20.6 | 26.5 |
Non-recurring personnel expenses arising from employment terminations include one-off compensations (incl. pension and social charges) payable to 3 persons in 2013 (to 7 persons in 2012).
The following audit fees and services from the audit firm Ernst & Young Oy are included within the consulting and advisory fees included in the administrative expenses and within the administrative and management fees included in the property operating expenses.
| EUR million | 2013 | 2012 |
|---|---|---|
| Audit fees | 0.4 | 0.3 |
| Other advisory services | 0.2 | 0.1 |
| Total | 0.5 | 0.3 |
| 8. PERSONNEL EXPENSES | ||
|---|---|---|
| EUR million | 2013 | 2012 |
| Wages and salaries of management | ||
| CEO | 0.9 | 1.0 |
| Management committee | 1.4 | 1.6 |
| Board | 0.8 | 0.7 |
| Other wages and salaries | 8.4 | 8.4 |
| Pension charges: defined contribution plans | 1.7 | 1.7 |
| Pension charges: defined benefit plans | - | - |
| Social charges | 1.3 | 1.2 |
| Expense of share based payments | 0.6 | 1.7 |
| Total | 15.0 | 16.2 |
Personnel expenses of EUR 2.7 million (EUR 0.8 million) are included in property operating expenses and EUR 12.3 million (EUR 15.5 million) in administrative expenses.
The share-based payment plans are described in Note 28. "Employee benefits".
Information on management benefits is presented in Note 31. "Related party transactions".
| Average Group staff by Business Units during the period | 2013 | 2012 |
|---|---|---|
| Finland | 48 | 61 |
| Sweden | 30 | 33 |
| Baltic Countries and New Business | 10 | 10 |
| Headquarter | 35 | 28 |
| Total | 123 | 132 |
Depreciation and amortisation of EUR 0.9 million (EUR 1.2 million) on machinery and equipment, as well as on intangible assets, is included in administrative expenses.
| EUR million | 2013 | 2012 |
|---|---|---|
| Other operating income | 0.9 | 0.4 |
| Other operating expenses | 0.0 | -0.2 |
| Total | 0.9 | 0.2 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Interest income | 6.5 | 0.6 |
| Foreign exchange gains | 26.5 | 31.6 |
| Other financial income | 0.0 | 0.0 |
| Financial income, total | 33.0 | 32.1 |
| Interest expenses | 66.8 | 65.0 |
| Foreign exchange losses | 26.5 | 31.6 |
| Fair value loss from derivatives | 23.0 | - |
| Development interest capitalised | -2.5 | -1.8 |
| Other financial expenses | 9.2 | 5.5 |
| Financial expenses, total | 123.1 | 100.3 |
| Net financial income and expenses | 90.1 | 68.1 |
| Of which attributable to financial instrument categories: | ||
| Interest-bearing loans and receivables | 54.6 | 48.4 |
| Finance lease liabilities | 0.0 | 0.0 |
| Derivative financial instruments | 35.4 | 19.6 |
| Other liabilities and receivables | 0.0 | 0.1 |
| Net financial income and expenses | 90.1 | 68.1 |
In 2013, foreign exchange gains of EUR 7.2 million (losses of EUR 3.3 million) were recognised in the statement of comprehensive income from foreign exchange derivative agreements.
Interest on development expenditure is capitalised at a rate of 4.39 per cent as at 31 December 2013 (4.34% as at 31 December 2012).
Citycon's interest expenses in the statement of comprehensive income contain interest expenses from interest-bearing debt as well as all interest expenses arising from derivative financial instruments used for hedging purposes. Additional information on Citycon's derivative financial instruments, their fair values and hedge accounting treatment can be found in Note "21. Derivative Financial Instruments".
| EUR million | 2013 | 2012 |
|---|---|---|
| Gains/losses arising during the period from cash flow hedges | 31.2 | -35.5 |
| Less: interest expenses recognised in the income statement on cash flow hedges | 18.2 | 16.3 |
| Net gains/losses on cash flow hedges | 49.4 | -19.3 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Current tax | 0.7 | 1.4 |
| Tax for prior periods | 0.0 | 0.0 |
| Deferred tax expense/benefit | -10.7 | 6.4 |
| Income tax expense | -10.0 | 7.8 |
Citycon did not recognise any current taxes directly in the equity during 2013 and 2012.
Reconciliation between tax charge and Group tax at the Finnish tax rate (24.5%):
| EUR million | 2013 | 2012 |
|---|---|---|
| Profit/loss before taxes | 90.1 | 95.5 |
| Taxes at Finnish tax rate | 22.1 | 23.4 |
| Change in tax rate | -12.6 | - |
| Fair value gains and losses from subsidiaries owned abroad | -10.0 | -10.7 |
| Difference in foreign subsidiaries' tax rate | -3.9 | -3.6 |
| Unrecognised tax receivables from losses | 6.2 | 2.8 |
| Utilisation of previously unrecognised tax losses | -2.6 | -0.6 |
| Depreciation and amortisation deducted in taxation | -2.0 | 2.0 |
| Tax free income deducted by non-deductible expenses | -6.9 | -5.6 |
| Other | -0.3 | 0.2 |
| Income taxes | -10.0 | 7.8 |
| Effective tax rate | -11.1% | 8.2% |
Earnings per share (basic) is calculated by dividing the net profit/loss attributable to parent company shareholders by the share issue adjusted weighted average number of shares.
| Earnings per share, basic | 2013 | 2012 |
|---|---|---|
| Profit/loss attributable to parent company shareholders (EUR million) | 93.1 | 77.2 |
| Issue-adjusted average number of shares (1,000) 1) | 425,415.5 | 321,142.0 |
| Earnings per share (basic) (EUR) | 0.22 | 0.24 |
| Earnings per share, diluted | ||
| Profit/loss attributable to parent company shareholders (EUR million) | 93.1 | 77.2 |
| Expenses from convertible capital loan, the tax effect deducted (EUR million) | 1.3 | 3.1 |
| Profit/loss used in the calculation of diluted earnings per share (EUR million) | 94.4 | 80.3 |
| Issue-adjusted average number of shares (1,000) 1) | 425,415.5 | 321,142.0 |
| Convertible capital loan impact, (1,000) | 6,029.6 | 15,077.2 |
| Adjustments for long-term share-based incentive plan (1,000) | - | 34.2 |
| Average number of shares used in the calculation of diluted earnings per share | ||
| (1,000) | 431,445.1 | 336,253.4 |
| Earnings per share (diluted) (EUR) | 0.22 | 0.24 |
1) Result per share key figures have been calculated with the issue-adjusted number of shares resulting from the rights issues executed in March 2013 and October 2012.
Diluted earnings per share is calculated by adjusting the weighted average number of shares to assume the conversion of all dilutive potential shares. The Group currently has two categories of dilutive shares in place: convertible capital loan and stock options. Long-term share-based incentive plan was finalised during 2012 and all incentives granted and paid.
| Average number of shares used in the calculation of earnings per share | days | number of shares |
|---|---|---|
| 1.1.2013 | 65 | 352,157,643 |
| 7.3.2013 | 300 | 441,288,012 |
| Weighted average (daily) number of shares | 365 | 425,415,481 |
Citycon divides its investment properties into two categories: Investment Properties Under Construction (IPUC) and Operative Investment Properties. On 31 December 2013, the first mentioned category included IsoKristiina in Finland as well as Stenungs Torg in Sweden. On 31 December 2012, the first mentioned category included Koskikeskus in Finland as well as Åkermyntan Centrum in Sweden.
IPUC-category includes the fair value of the whole property even though only part of the property may be under construction.
Contractual obligations to purchase, construct or develop investment properties are presented in Note 30. B) Pledges and other contingent liabilities.
| 31 Dec. 2013 EUR million |
Investment property under construction |
Operative investment properties |
Investment properties total |
|---|---|---|---|
| At period-start | 195.7 | 2,518.5 | 2,714.2 |
| Acquisitions during the period | 1.5 | 0.5 | 2.0 |
| Investments during the period | 8.3 | 64.6 | 72.9 |
| Disposals during the period | -18.3 | -18.7 | -37.0 |
| Capitalised interest | 0.2 | 2.5 | 2.6 |
| Fair value gains on investment property |
0.3 | 61.0 | 61.2 |
| Fair value losses on investment property |
-0.4 | -34.8 | -35.2 |
| Exchange differences | -0.6 | -22.5 | -23.1 |
| Transfer between IPUC and operative investment properties and transfer into investment properties held for sale |
-92.2 | 68.0 | -24.2 |
| At period-end | 94.4 | 2,639.0 | 2,733.5 |
| 31 Dec. 2012 EUR million |
Investment property under construction |
Operative investment properties |
Investment properties total |
|---|---|---|---|
| At period-start | 526.4 | 1,995.7 | 2,522.1 |
| Acquisitions during the period | 7.9 | 50.9 | 58.8 |
| Investments during the period | 34.1 | 65.6 | 99.7 |
| Disposals during the period | - | -1.4 | -1.4 |
| Capitalised interest | 1.1 | 0.7 | 1.8 |
| Fair value gains on investment property |
0.6 | 53.7 | 54.4 |
| Fair value losses on investment property |
-1.2 | -29.6 | -30.8 |
| Exchange differences | 0.5 | 26.3 | 26.8 |
| Transfer between IPUC and operative investment properties and transfer into investment properties held for sale |
-373.7 | 356.5 | -17.2 |
| At period-end | 195.7 | 2,518.5 | 2,714.2 |
Under the IAS 40 Investment Property standard, Citycon measures its investment properties at fair value. An external professional appraiser has conducted the valuation of the company's properties using a net rental income based cash flow analysis. Market rents, occupancy rate, operating expenses and yield requirement form the key variables used in the cash flow analysis.
A global property valuation expert, Jones Lang LaSalle, conducted the valuation of Citycon's properties for the financial statements for 2013 and 2012. The resulting fixed fees based on the 2013 valuations total EUR 0.2 million (EUR 0.2 million in 2012).
The fair value of Citycon's investment properties in the balance sheet equals the property portfolio's total value determined by the external appraiser, capital expenditure on development projects not taken into account by the external appraiser, transfer into investment properties held for sale as well as the value of new properties acquired during the reporting quarter. The reconciliation between the fair value determined by the external appraiser and the fair value of investment properties in Citycon's balance sheet, is as follows.
| EUR million | 31 Dec. 2013 | 31 Dec. 2012 |
|---|---|---|
| Fair value of investment properties determined by the | ||
| external appraiser per Dec. 31 | 2,729.6 | 2,704.1 |
| Capital expenditure on development projects | 6.1 | 10.1 |
| Transfer into investment properties held for sale | -2.3 | - |
| Fair value of investment properties per Dec. 31 | 2,733.5 | 2,714.2 |
The IFRS 13 standard categorises the valuation of a property's fair value according to a 3-level hierarchy, where categorisation is based on the inputs in the valuation measurement. Properties are usually heterogeneous and valuation inputs are often unobservable for comparable properties. Moreover, transactions are infrequent. The valuation of a property's fair value is therefore generally categorised as hierarchy level 2 or 3. In some cases, the valuation inputs in the fair value calculation can be on different levels in the hierarchy. In these cases, categorisation is based on the lowest hierarchy level input that is significant to the fair value measurement as a whole. Yield is an important input parameter in the valuation measurement. A property's yield is defined according to propertyspecific risk and market risk, and is derived from comparable market transactions. Due to the low level of transactions on the investment property market, Citycon has decided to categorise all property fair values as level 3 valuations. Transfers between levels in the hierarchy did not occur during the year.
| Fair value measurement of Investment properties, fair value measurement hierarchy |
31 Dec. 2013 | 31 Dec. 2012 |
|---|---|---|
| Quoted prices (Level 1) | - | - |
| Observable inputs (Level 2) | - | - |
| Unobservable inputs (Level 3) | 2,729.6 | 2,704.1 |
| Total | 2,729.6 | 2,704.1 |
The segments' inputs used by the external appraisers in the cash flow analysis per 31 December 2013 and 31 December 2012 are presented in the tables below. In Finland the average yield requirement remained at 6.2 per cent while in Sweden the average yield requirement decreased mainly due to divested properties. In Baltic Countries and New Business the average yield requirement decreased due to completed tenant fit-out projects and as a result of increased demand for retail properties in Estonia.
The average market rent for the whole property portfolio increased from 25.1 EUR/sq.m. per 31 December 2012 to 25.3 EUR/sq.m. per 31 December 2013 e.g. due to the divestment of non-core properties and the overall positive market rent development of prime properties. The vacancy assumption for the cash flow period decreased by 10bps to 4.7 per cent (4.8% 31 Dec. 2012), mostly due to the divestment of one nearly vacant property in Sweden.
A number of factors contribute to the value of retail properties, such as national and local economic development, investment demand created by property investors, and interest rates. While changes in investment properties' fair value have an effect on the company's profit for the financial year, they do not have an immediate impact on cash flow. The yield requirement, rents, the occupancy rate and operating expenses form the key variables used in an investment property's fair-value measurement, based on a ten-year cash-flow analysis. Sensitivity to change in the properties' fair value, or the risk associated with fair value, can be tested by altering the above key parameters. The sensitivity analysis below uses the investment properties' fair value of EUR 2,729.6 million defined by the external appraiser at 31 December 2013 as the starting value. Sensitivity analysis indicates that the market value is most sensitive to the market rents and yield requirement. A ten per cent decrease in the yield requirement results in an approximately 11 per cent increase in market value. Correspondingly, a ten per cent increase in gross income increases the value by approximately 13 per cent. The market value reacts to change in vacancy and operating expenses, but their relative effect is not as great as changes to rental income and yield requirement. In sensitivity analyses one parameter is changed at a time. In reality, changes in different parameters often occur simultaneously. For example a change in vacancy may connect to a change in market rents and yield requirement when they impact fair value simultaneously.
Value of properties (EUR million)
| 31 Dec. 2013 EUR million |
Finland | Sweden | Baltic Countries and New Business |
Average |
|---|---|---|---|---|
| Yield requirement (%) | 6.2 | 5.9 | 7.3 | 6.3 |
| Market rents (EUR/m²) | 26.4 | 25.3 | 20.4 | 25.3 |
| Operating expenses | 6.1 | 7.0 | 3.5 | 6.0 |
| Vacancy during the cash flow period (%) | 4.9 | 5.5 | 2.1 | 4.7 |
| Market rent growth assumption (%) | 2.0 | 1.8 | 1.0 | - |
| Operating expense growth assumption (%) | 2.0 | 1.8 | 2.7 | - |
Inputs
| Change % | -10% | -5% | ±0% | +5% | +10% |
|---|---|---|---|---|---|
| Yield requirement | 3,032.9 | 2,873.3 | 2,729.6 | 2,599.6 | 2,481.5 |
| Market rents | 2,361.7 | 2,545.6 | 2,729.6 | 2,913.6 | 3,097.6 |
| Operating expenses | 2,709.9 | 2,719.8 | 2,729.6 | 2,739.5 | 2,749.4 |
| Change, percentage points | -2 | -1 | ±0 | 1 | 2 |
| Vacancy | 2,812.7 | 2,771.2 | 2,729.6 | 2,688.1 | 2,646.5 |
| 31 Dec. 2012 | Baltic Countries and |
|||
|---|---|---|---|---|
| EUR million | Finland | Sweden | New Business | Average |
| Yield requirement (%) | 6.2 | 6.0 | 7.7 | 6.3 |
| Market rents (EUR/m²) | 25.9 | 25.6 | 20.0 | 25.1 |
| Operating expenses | 6.3 | 7.4 | 3.4 | 6.3 |
| Vacancy during the cash flow period (%) | 4.8 | 5.8 | 2.1 | 4.8 |
| Market rent growth assumption (%) | 2.0 | 1.9 | 1.6 | - |
| Operating expense growth assumption (%) | 2.0 | 1.9 | 3.1 | - |
In 2013, the Group acquired a 50 % interest in Kista Galleria KB, the company owning and operating the Kista Galleria shopping centre in Sweden. The remaining 50% is held by a Canadian partner. Each partner has equal number of members in the board of directors taking decisions related to the Kista Galleria shopping centre and material operating and capital decisions in the board are made unanimously. Consequently the entity is considered to be jointly controlled and consolidated under the equity method.
The Group has granted a shareholder loan to the Kista Galleria joint venture. Pursuant to the agreement between the Kista Galleria joint venture partners, the Kista Galleria joint venture shall not distribute any dividends until shareholder loans have been repaid and the Group shall take no action or make no decision with respect to the shareholder loan without the prior consent of the other partner. All payments made by the Kista Galleria joint venture in respect of the shareholder loan shall be made pro rata to each of the joint venture partners.
In 2013, the Group acquired a 50 % interest in Holding Metrokeskus Oy, which is the management company of the extension project of the Iso Omena shopping centre in Finland. In addition, the Group acquired a 50 % interest in Holding Big Apple Housing Oy, which is the management company of apartment buildings to be built to the extension of Iso Omena shopping centre. The remaining 50% of both companies is held by the same partner. Each partner has the same number of members in the board of directors and the steering group of the development project, both of which make unanimous decisions. Consequently the entities are considered to be jointly controlled and consolidated under the equity method. The Group is committed to investing EUR 54.7 million in the development project as of December 31, 2013. In addition, the Group has given commitments to purchase the other partner's share in Holding Metrokeskus Oy after the completion of the shopping center extension.
Pursuant to the project co-operation agreement between the Holding Metrokeskus Oy joint venture partners, partners are equally, in a 50/50 ratio, responsible for the financing of the companies during the shopping centre extension project. Both shareholders of Holding Metrokeskus Oy and Holding Big Apple Housing Oy have granted loans to the companies. According to the terms and conditions of such shareholder loans, the company cannot prepay its loans in whole or in part without the prior written consent of both shareholders.
The Group has a 50% interest in Espagalleria Oy, which is the management company of Galleria Esplanad shopping centre in Finland. The remaining 50% is held by one partner. Each partner has the same number of members in the board of directors which make unanimous decisions. Consequently the entity is considered to be jointly controlled and consolidated under the equity method.
Included in the consolidated financial statements are the following items that represent the Group's interest in the assets and liabilities, revenues and expenses of the joint ventures. The financial information presented in the table is based on the financial statements of the joint venture entities prepared in accordance with IFRS.
| 2013 | 2012 | |||
|---|---|---|---|---|
| Kista Galleria | Other joint | Joint ventures | Other joint | |
| EUR million | Group | ventures total | total | ventures total |
| Investment property | 535.2 | 0.0 | 535.2 | 0.0 |
| Other non-current assets | 1.1 | 27.3 | 28.5 | 1.2 |
| Cash and cash equivalents | 18.6 | 0.6 | 19.2 | 0.5 |
| Other current assets | 6.1 | 0.2 | 6.4 | 0.4 |
| Long-term loans | 463.4 | 26.9 | 490.3 | 0.0 |
| Other long-term liabilities | 0.2 | 0.0 | 0.2 | 0.0 |
| Other short-term liabilities | 29.7 | 0.4 | 30.1 | 0.4 |
| Equity | 67.7 | 0.9 | 68.6 | 1.7 |
| Portion of the Group's ownership | 50% | 50% | 50% | |
| Share of joint venture's equity | 33.9 | 0.4 | 34.3 | 0.9 |
| Share of loans of joint ventures | 105.4 | 13.4 | 118.8 | 0.0 |
| Investments in joint ventures | 139.3 | 13.8 | 153.1 | 0.9 |
| Turnover | 44.5 | 8.2 | 52.8 | 7.8 |
| Net rental income | 32.0 | -0.1 | 31.9 | 0.0 |
| Asset management fee of the property | 0.0 | 0.3 | 0.3 | 0.2 |
| Profit on valuation of investment property | 2.8 | -0.9 | 1.9 | 0.0 |
| Operating profit | 32.4 | -0.8 | 31.6 | 0.2 |
| Financial income | 0.1 | 0.0 | 0.1 | 0.0 |
| Financial expenses | -23.4 | 0.0 | -23.4 | 0.0 |
| Profit / loss for the period | 9.1 | -0.8 | 8.3 | 0.4 |
| Other comprehensive income for the period, net of tax |
0.6 | 0.0 | 0.6 | 0.0 |
| Total comprehensive profit/ loss for the period |
9.7 | -0.8 | 8.8 | 0.4 |
| Share of profit/loss of joint ventures | 4.5 | -0.4 | 4.1 | 0.2 |
The Group has a 60 % interest in Manhattan Acquisition Oy, the company owning and operating the Iso Omena shopping centre in Finland. The remaining 40% is held by one investor. Citycon has the right to nominate three out of five directors to the board of directors, including the chairman, who has a casting vote in case of equality of votes at a meeting of the board. The shareholders' agreement includes certain provisions that protect the rights of the non-controlling owner, which, however, do not prevent Citycon from exercising control in the company. Consequently the entity is fully consolidated by the Group.
Both shareholders of Manhattan Acquisition Oy have granted a loan to the company. According to the terms and conditions of such loan agreement, the loan or any part of it may not be prepaid by the company without the prior written consent of both shareholders.
Included in the consolidated financial statements are the following items that represent the Group's interest in the assets and liabilities, revenues and expenses of the subsidiary. The financial information presented in the table is based on the financial statements of the subsidiary prepared in accordance with IFRS.
| EUR million | 2013 | 2012 |
|---|---|---|
| Investment property | 388.1 | 373.8 |
| Other non-current assets | 0.1 | 0.1 |
| Cash and cash equivalents | 3.3 | 1.9 |
| Other current assets | 3.8 | 2.9 |
| Long-term loans | 266.1 | 266.1 |
| Other short-term liabilities | 9.9 | 11.9 |
| Equity | 119.2 | 100.7 |
| Equity attributable to parent company shareholders | 71.4 | 60.3 |
| Equity attributable to non-controlling interest | 47.8 | 40.4 |
| Turnover | 26.3 | 24.9 |
| Net rental income | 20.2 | 18.5 |
| Asset management fee of the property | -1.5 | -1.5 |
| Profit on valuation of investment property | 14.5 | 18.8 |
| Operating profit | 33.1 | 35.7 |
| Financial expenses | -14.6 | -14.2 |
| Profit / loss for the period | 18.5 | 21.6 |
| Profit attributable to parent company shareholders | 11.1 | 12.9 |
| Profit attributable to non-controlling interest | 7.4 | 8.6 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Acquisition cost Jan. 1 | 4.3 | 3.9 |
| Additions during the period | 0.8 | 0.5 |
| Accumulated acquisition cost Dec. 31. | 5.1 | 4.3 |
| Accumulated depreciation and impairment losses, Jan. 1 | 2.6 | 2.0 |
| Depreciation during the period | 0.4 | 0.7 |
| Accumulated depreciation and impairment losses, Dec 31. | 3.0 | 2.6 |
| Net carrying amount Jan 1. | 1.7 | 1.9 |
| Net carrying amount Dec 31. | 2.1 | 1.7 |
Intangible assets consisted mainly of computer software and licenses.
| EUR million | 2013 | 2012 |
|---|---|---|
| Acquisition cost Jan. 1 | 4.5 | 3.4 |
| Additions during the period | -0.1 | 1.1 |
| Accumulated acquisition cost Dec. 31. | 4.4 | 4.5 |
| Accumulated depreciation and impairment losses, Jan. 1 | 3.0 | 2.5 |
| Depreciation during the period | 0.5 | 0.5 |
| Accumulated depreciation and impairment losses, Dec 31. | 3.6 | 3.0 |
| Net carrying amount Jan 1. | 1.4 | 1.0 |
| Net carrying amount Dec 31. | 0.8 | 1.4 |
Property, plant and equipment consisted mainly of machinery and equipment. Machinery and equipment acquired through financial leases amounted to EUR 0.2 million (EUR 0.4 million).
Changes in deferred tax assets and liabilities in 2013:
| Recognised in income |
Recognised in other comprehensive |
|||
|---|---|---|---|---|
| Deferred tax assets, EUR million | 1 Jan. 2013 | statement | income | 31 Dec. 2013 |
| Tax losses | 1.0 | 2.3 | - | 3.3 |
| Measurement of interest-rate swaps at fair | ||||
| value | 18.5 | - | -12.8 | 5.8 |
| Deferred tax assets, total | 19.5 | 2.3 | -12.8 | 9.1 |
| Deferred tax liabilities | ||||
| Measurement of investment property at | ||||
| fair value | 64.0 | -8.0 | - | 55.9 |
| Temporary difference in financial expenses | 2.1 | -0.3 | - | 1.8 |
| Deferred tax liabilities, total | 66.0 | -8.3 | - | 57.7 |
Changes in deferred tax assets and liabilities in 2012:
| Deferred tax assets, EUR million | 1 Jan. 2012 | Recognised in income statement |
Recognised in other comprehensive income |
31 Dec. 2012 |
|---|---|---|---|---|
| Tax losses | 1.1 | -0.2 | - | 1.0 |
| Measurement of interest-rate swaps at fair value |
13.3 | - | 5.2 | 18.5 |
| Deferred tax assets, total | 14.5 | -0.2 | 5.2 | 19.5 |
| Deferred tax liabilities | ||||
| Measurement of investment property at fair value |
57.5 | 6.4 | - | 64.0 |
| Temporary difference in financial expenses | 2.3 | -0.2 | - | 2.1 |
| Deferred tax liabilities, total | 59.8 | 6.2 | - | 66.0 |
Citycon's deferred taxes mainly arise from changes in the fair value of investment properties. In 2013, deferred tax benefit resulting from the changes in the investment properties' fair value recognised in the income statement totalled EUR 8.0 million (expense of EUR 6.4 million). The fair value of an investment property reflects the market price that would be paid for the property on the date of measurement, while deferred taxes refer to taxes imposed on any gain on sale if the property were to be sold.
Citycon's policy is to realise its properties' sales by selling its shares representing ownership in the property. The ownership structure is mainly organised so that one real estate company owns one building. The sale of shares representing ownership in properties owned by subsidiaries abroad does not have tax implications. Consequently, Citycon does not recognise deferred taxes related to the fair value of investment properties owned abroad. If Citycon did recognise such deferred taxes, the tax impact would have been EUR -10.0 million in 2013 (EUR -10.7 million) (See the Note 12. Income taxes).
On the contrary, divesting a property in Finland through an asset or share sale does have tax implications, due to which, Citycon recognises deferred taxes arising from the fair value changes of its investment properties located in Finland. Deferred taxes are calculated on the difference between an investment property's fair value and its taxable value. The taxable value consists of the acquisition cost of shares in the mutual real estate company and loans receivable from the company or a directly owned property's undepreciated, residual value.
The change in deferred taxes between the opening and closing balance sheets is recognised in the income statement as expense/income.
The fair value of investment properties is measured in accordance with IFRS (International Financial Reporting Standards). The provisions of Finnish accounting and tax legislation affect the value of shares in, and loans receivable from, the mutual real estate company. For instance, investments conducted by the mutual real estate company or depreciation recorded by subsidiaries with outstanding debt entail a change in the value of shares and loans receivable.
On 31 December 2013, Group companies had confirmed losses for which tax assets of EUR 22.7 million (EUR 22.0 million in 2012) were not recognised, since these Group companies are unlikely to record a taxable profit, before the expiration of carry forwards of these losses, against which loss carry forwards can be utilised.
A) Classification of financial instruments and their carrying amounts and fair values
| Carrying | Fair | Carrying | Fair | ||
|---|---|---|---|---|---|
| EUR million | Note | amount 2013 |
value 2013 |
amount 2012 |
value 2012 |
| Financial assets | |||||
| I Loans and other receivables | |||||
| Trade and other receivables | 23 | 34.0 | 34.0 | 24.5 | 24.5 |
| Cash and cash equivalents | 24 | 38.0 | 38.0 | 51.0 | 51.0 |
| II Derivative contracts under hedge accounting | |||||
| Derivative financial instruments | 21 | 2.4 | 2.4 | - | - |
| Financial liabilities | |||||
| Financial liabilities amortised at cost | |||||
| I.I Loans | |||||
| Loans from financial institutions | 26 | 806.1 | 809.6 | 1,304.3 | 1,308.6 |
| Convertible capital loan 1/2006 | 26 | - | - | 39.1 | 39.8 |
| Bond 1/2009 | 26 | 23.0 | 23.1 | 39.7 | 40.0 |
| Bond 1/2012 | 26 | 138.0 | 138.4 | 149.5 | 150.0 |
| Bond 1/2013 | 26 | 495.0 | 500.0 | - | - |
| Finance lease liabilities | 26 | 0.2 | 0.2 | 0.4 | 0.4 |
| I.II Other liabilities | |||||
| Other liabilities | 27 | 0.8 | 0.8 | 1.0 | 1.0 |
| Trade and other payables | 27 | 81.5 | 81.5 | 82.3 | 82.3 |
| II Financial liabilities at fair value through profit and loss | |||||
| Derivative financial instruments | 21 | 3.4 | 3.4 | 0.7 | 0.7 |
| III Derivative contracts under hedge accounting | |||||
| Derivative financial instruments | 21 | 28.9 | 28.9 | 75.6 | 75.6 |
Citycon applies IFRS valuation principles when determining the fair value of financial instruments. The following presents the principles for determining the fair values of all financial assets and liabilities.
Due to their short maturity, the fair value of trade payables and receivables and other short-term receivables and payables is regarded as corresponding to their original carrying amount.
Derivative financial instruments are initially measured at cost in the statement of financial position and subsequently re-measured at their fair value on each balance-sheet date. The fair value of interest-rate swaps is calculated using the present value of estimated future cash flows. The fair value of a forward agreement is based on the difference between the exchange rate of the agreement and the prevailing exchange rate fixing on each balance-sheet date. The fair value of derivative financial instruments is the estimated amount that the Group would receive or pay to settle the related agreements.
Fair value of interest rate derivative financial instruments is determined by the counterparty banks based on customary valuation techniques used by market participants in the OTC derivative market. The fair value of foreign exchange derivative contracts is based on quoted market prices. The fair value of both interest rate and foreign exchange derivative financial instruments corresponds to level 2 according to IFRS13.72-90.
Citycon's loans from financial institutions are floating rate loans which have a fair value equal to the nominal amount of the loan. The difference between the fair value and carrying amount is the unamortised capitalised arrangement fees of the loans. The fair value of loans from financial institutions corresponds to level 2 according to IFRS13.72-90.
Convertible capital loan 1/2006 is a fixed rate loan which has a fair value equal to the nominal amount of the loan. The difference between the fair value and carrying amount is the unamortised capitalised arrangement fees of the loan, together with the market value of the option component on the issue date. The convertible capital loan 1/2006 was matured and repaid in full in August 2013.
The bonds 1/2009, 1/2012 and 1/2013 are fixed rate loans which have fair values equal to the nominal amount of the loans. The difference between the fair value and carrying amount is the unamortised capitalised arrangement fees for the bonds and for the 1/2013 bond also the unamortised reoffer discount.. The fair value of the bonds corresponds to level 1 according to IFRS13.72-90.
The fair value of finance leases is based on discounted future cash flows. The discount rate used corresponds to that applied to similar leases. The fair value of finance lease liabilities corresponds to level 2 according to IFRS13.72-90.
A) Nominal amounts and fair values of derivative financial instruments
| EUR million | Nominal amount 2013 |
Fair value 2013 |
Nominal amount 2012 |
Fair value 2012 |
|---|---|---|---|---|
| Interest rate derivatives | ||||
| Interest rate swaps | ||||
| Maturity: | ||||
| less than 1 year | 108.0 | -1.8 | - | - |
| 1-2 years | 65.0 | -2.6 | 155.6 | -6.0 |
| 2-3 years | 162.1 | -9.4 | 176.2 | -9.0 |
| 3-4 years | 140.3 | -9.1 | 263.1 | -19.9 |
| 4-5 years | 100.7 | -6.1 | 217.2 | -20.2 |
| over 5 years | - | - | 209.5 | -20.6 |
| Subtotal | 576.1 | -28.9 | 1,021.7 | -75.6 |
| Foreign exchange derivatives | ||||
| Forward agreements | ||||
| Maturity: | ||||
| less than 1 year | 421.9 | -0.9 | 67.6 | -0.7 |
| Total | 997.9 | -29.8 | 1,089.3 | -76.3 |
Interest on floating-rate loans is mainly fixed every three or six months. Interest-rate swaps have been concluded for the same days, to ensure the optimum interest cash flow hedging.
Citycon uses interest rate swaps to hedge the interest rate cash flow risk. The Group applies hedge accounting to all of its interest rate swaps valid as at 31 December 2013, under IAS 39, according to which the amount of financial instruments' fair value change stemming from effective hedging is recognised under other comprehensive income.
The fair value of a derivative financial instrument represents the market value of the instrument at the prices prevailing on the balance sheet date. Derivative financial instruments are used in hedging the interest rate risk of the interest bearing liabilities and foreign currency risk.
The fair values include a foreign exchange loss of EUR 0.6 million (loss of EUR 0.6 million) from foreign exchange rate derivatives, which is recognised in the statement of comprehensive income.
Hedge accounting is applied to interest rate swaps, which have a nominal amount of EUR 576.1 million (EUR 1,021.7 million).
The average fixed interest rate of the interest rate swaps as at 31 December 2013 was 2.88 per cent (3.07%).
Cash flow hedging
| Interest rate derivatives | Assets | Liabilities | Assets | Liabilities |
|---|---|---|---|---|
| EUR million | 2013 | 2013 | 2012 | 2012 |
| Fair value | - | -28.9 | - | -75.6 |
Citycon's cash flow hedges consist of interest rate swaps which are used to protect against exposure to changes in Citycon's interest expense cash outflow for variable rate interest bearing debt. Hedged instruments consist of long term floating rate debt and short term floating rate debt, which is expected to be refinanced upon maturity on similar terms.
The critical terms of the interest rate derivatives have been negotiated to match the respective terms of the variable rate loans.
The cash flow from all hedged liabilities over time is the basis for determining the gain and loss on the effective portions of derivatives designated as cash flow hedges. Gains and losses are initially recognised under other comprehensive income and are transferred to the statement of comprehensive income when the forecast cash flows affect the statement of comprehensive income.
At 31 December 2013 and at 31 December 2012, interest rate derivatives assigned as cash flow hedges were assessed as highly effective. The fair values (net of taxes) of these derivatives were EUR -23.1 million (EUR -57.1 million) and the change of these fair values (net of taxes) EUR 36.7 million (EUR -14.1 million) is recognised under other comprehensive income, taking the tax effect into account.
On 31 December 2013, the Investment Properties Held for Sale comprised one property located in Finland. This transaction is expected to be finalised during Q2 2014. On 31 December 2012, the Investment Properties Held for Sale included one plot and one property in Finland,which were sold in February and July 2013.
| EUR million | 2013 | 2012 |
|---|---|---|
| Acquisition cost Jan. 1 | 5.4 | 12.7 |
| Disposals | -15.2 | -25.0 |
| Exchange differences | 0.0 | 0.5 |
| Transfers from investment properties | 12.1 | 17.2 |
| Accumulated acquisition cost Dec. 31. | 2.3 | 5.4 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Trade receivables | 8.9 | 7.1 |
| Credit loss provision | -2.0 | -1.8 |
| Trade receivables (net) | 6.9 | 5.4 |
| Accrued income and prepaid expenses | 16.9 | 4.1 |
| Tax receivables (incl. VAT-receivables) | 7.6 | 10.8 |
| Other receivables | 2.7 | 4.1 |
| Total | 34.0 | 24.5 |
A) The effect of the changed number of shares on funds included in the shareholders' equity
| Outstanding number of shares 1) |
Treasury shares |
Share capital (EUR million) |
Share premium fund (EUR million) |
Invested unrestricted equity fund (EUR million) |
Total (EUR million) |
|
|---|---|---|---|---|---|---|
| 1 Jan. 2012 | 277,811,297 | 0 | 259.6 | 131.1 | 273.7 | 664.3 |
| Directed share issue without payment to Citycon Group key employees |
36,713 | - | - | - | - | - |
| Rights issue | 49,032,002 | - | - | 89.9 | 89.9 | |
| Return from the invested unrestricted equity fund |
- | - | - | - | -30.6 | -30.6 |
| 31 Dec. 2012 | 326,880,012 | 0 | 259.6 | 131.1 | 333.0 | 723.7 |
| Directed share issue without payment to Citycon Group key employees |
- | - | - | - | - | - |
| Rights issue | 114,408,000 | - | - | - | 196.0 | 196.0 |
| Return from the invested unrestricted equity fund |
- | - | - | - | -36.0 | -36.0 |
| 31 Dec. 2013 | 441,288,012 | 0 | 259.6 | 131.1 | 493.0 | 883.7 |
| EUR million | 2013 | 2012 |
|---|---|---|
| NOT past due nor impaired | 1.3 | 0.9 |
| Past due, less than 1 month | 3.3 | 2.2 |
| Past due, 1-3 months | 0.6 | 0.7 |
| Past due, 3-6 months | 0.8 | 0.9 |
| Past due, 6-12 months | 0.7 | 1.6 |
| Past due, 1-5 years | 2.1 | 0.9 |
| Total | 8.9 | 7.1 |
| EUR million | 2013 | 2012 |
|---|---|---|
| At the beginning of the year | -1.8 | -1.2 |
| Exchange difference | - | -0.1 |
| Charge for the year | -0.7 | -1.1 |
| Utilised | 0.4 | 0.5 |
| Unused amounts reversed | 0.1 | 0.0 |
| Credit loss provision at the end of the year | -2.0 | -1.8 |
Trade receivables are non-interest bearing and their payment terms vary between 2-20 days. Rent collaterals equal 2-6 month of rent and other payments.
| EUR million | 2013 | 2012 |
|---|---|---|
| Cash in hand and at bank | 38.0 | 50.6 |
| Other bank deposits | 0.0 | 0.3 |
| Total | 38.0 | 51.0 |
Cash and cash equivalents in the cash flow statement comprise the items presented above. Other bank deposits consists of pledged cash accounts related to rental guarantees and redevelopment projects.
1) All outstanding shares were fully-paid on 31 December 2013 and 31 December 2012.
The company has a single series of shares, each share entitling to one vote at general meetings of shareholders. The shares have no nominal value and the share capital has no maximum value.
Since the 2006 entry into force of the current Finnish Limited Liability Companies Act, no new items are recognised in the share premium fund. The share premium fund accumulated before 2007 due to option schemes and share issues.
The invested unrestricted equity fund is credited, for instance, with that part of the subscription price of the shares that, according to the Memorandum of Association or the share issue decision, is not to be credited to the share capital. The invested unrestricted equity fund accumulated in 2013 and 2012, due to rights issues.
The fair value reserve contains fair value changes of derivative instruments used to hedge cash flows.
The translation reserve contains translation differences arising from the currency translation of foreign subsidiaries' financial statements.
To the Annual General Meeting to be held on 19 March 2014, the Board of Directors of Citycon proposes a dividend of EUR 0.03 per share for the financial year 2013 (EUR 0.04 for the financial year 2012) and an equity return of EUR 0.12 per share from the invested unrestricted equity fund (EUR 0.11 for the financial year 2012). The proposal for dividends and equity return from the invested unrestricted equity fund has not been recognised in the consolidated financial statements on 31 December 2013.
All Citycon loans were interest-bearing liabilities on 31 December 2013 and 2012. These interestbearing loans are explained here in detail.
| EUR million | Effective interest rate (%) |
Carrying amount 2013 |
Carrying amount 2012 |
|---|---|---|---|
| Long-term interest-bearing liabilities | |||
| Bonds | |||
| Bond 1/2009 | 5.474 | - | 39.7 |
| Bond 1/2012 | 4.344 | 138.0 | 149.5 |
| Bond 1/2013 | 3.934 | 495.0 | - |
| Syndicated term loans | |||
| EUR 220 million term loan facility | Reference rate + 1.300 | 211.4 | 217.1 |
| EUR 200 million term loan facility | Reference rate + 0.625 | - | 202.1 |
| EUR 190 million term loan facility | EURIBOR + 2.100 / STIBOR + 2.450 | 184.4 | 187.3 |
| Revolving credit facilities | |||
| EUR 170 million revolving credit facility | EURIBOR + 1.700 | - | 13.0 |
| EUR 110 million revolving credit facility | EURIBOR + 0.850 | - | 103.1 |
| EUR 50 million revolving credit facility | EURIBOR + 1.400 | - | 43.9 |
| Bilateral bank loans | |||
| EUR 75 million bank loan | EURIBOR + 1.450 | 64.0 | 67.5 |
| SEK 500 million bank loan | STIBOR + 0.600 | - | 58.3 |
| EUR 50 million bank loan | Reference rate + 1.950 | - | 50.1 |
| EUR 50 million bank loan | EURIBOR + 1.525 | - | 49.9 |
| EUR 50 million bank loan | EURIBOR + 1.500 | 50.0 | 49.9 |
| EUR 30 million bank loan | EURIBOR + 0.750 | 17.5 | 22.5 |
| EUR 25 million bank loan | EURIBOR + 2.55 | 21.9 | 23.1 |
| Finance lease liabilities | - | 0.1 | 0.2 |
| Other interest-bearing liabilities | - | 135.1 | 129.0 |
| Total long-term interest-bearing liabilities | 1,317.5 | 1,406.3 | |
| Short-term interest-bearing liabilities | |||
| Convertible capital loan 1/2006 | 7.580 | - | 39.1 |
| Bond 1/2009 | 5.474 | 23.0 | - |
| Short-term syndicated and bank loans and revolving credit facilities |
- | 99.9 | 43.8 |
| Current portion of interest-bearing liabilities | - | 21.0 | 11.2 |
| Commercial papers | - | - | 32.5 |
| Cash pool overdrafts | 0.9 | - | |
| Finance lease liabilities | - | 0.1 | 0.2 |
| Total short-term interest-bearing liabilities | 144.9 | 126.8 |
The carrying amounts of term loan facilities, convertible capital loan 1/2006, bond 1/2009, bond 1/2012 and bond 1/2013 are stated at amortised cost, using the effective yield method. The fair values of liabilities are shown in Note "20. Classification of Financial Instruments".
The market value of the option component on the issue date of the convertible capital loan 1/2006 of EUR 15.1 million has been recognised in equity attributable to parent company shareholders, under the share premium fund. The convertible capital loan 1/2006 was matured and repaid in full in August 2013.
| EUR million | 2013 | 2012 |
|---|---|---|
| 1-2 years | 62.5 | 321.6 |
| 2-3 years | 229.5 | 162.5 |
| 3-4 years | 261.0 | 382.2 |
| 4-5 years | 269.6 | 283.4 |
| over 5 years | 494.9 | 256.6 |
| Total | 1,317.5 1,406.3 |
| EUR million | 2013 | 2012 |
|---|---|---|
| EUR | 1,029.3 | 844.1 |
| SEK | 279.6 | 553.3 |
| LTL | 8.6 | 8.8 |
| Total | 1,317.5 1,406.3 |
| Short-term interest-bearing liabilities by currency | ||
|---|---|---|
| ----------------------------------------------------- | -- | -- |
| EUR million | 2013 | 2012 |
|---|---|---|
| EUR | 134.3 | 100.5 |
| SEK | 10.4 | 26.0 |
| LTL | 0.2 | 0.2 |
| Total | 144.9 | 126.8 |
On 2 August 2006, Citycon Oyj issued a sevenyear convertible capital loan, 1/2006, of EUR 110 million at a fixed annual nominal interest rate of 4.50 per cent. The loan's issue price accounted for 100.00 per cent of the nominal loan amount. After the buyback transactions performed during 2008, 2009, 2010 and 2012 the outstanding amount was EUR 39.8 million. The convertible capital loan 1/2006 was matured on 2 August 2013 and the remaining amount of EUR 39.8 million was repaid in full.
During 2008, 2009, 2010 and 2012 from the open markets, Citycon has repurchased the convertible capital loan for a nominal amount of EUR 70.2 million, with a weighted average purchase price of 77.0 per cent. The amount repurchased by Citycon equaled approximately 64 per cent of the initial nominal amount of the loans issued. Net financial expenses in the statement of comprehensive income include a one-off loss of EUR 0.8 million for the buybacks of the convertible capital loan in 2012.
For more information on the main terms and conditions of the onvertible capital loan 1/2006 see Citycon Financial Statement 2012.
| EUR million | 2013 | 2012 |
|---|---|---|
| Maturity of finance lease liabilities: |
||
| Finance lease liabilities - minimum lease payments |
||
| Not later than 1 year | 0.1 | 0.2 |
| 1-5 years | 0.1 | 0.2 |
| Total | 0.2 | 0.4 |
| Finance lease liabilities - present value of minimum lease payments |
||
| Not later than 1 year | 0.1 | 0.2 |
| 1-5 years | 0.1 | 0.2 |
| Total | 0.2 | 0.4 |
| Future finance charges on finance leases |
0.0 | 0.0 |
| Total finance lease liabilities | 0.2 | 0.4 |
Citycon's finance leases mainly apply to computer hardware and office machinery and equipment.
Citycon uses a holistic Enterprise Risk Management (ERM) programme. The objective of risk management is to ensure that Citycon will reach its business targets and to identify key risks which may threaten its ability to meet these targets before they realise.
Citycon's risk management process involves identifying, analysing, measuring, mitigating and controlling business-related risks. The Board of Directors has approved the company's risk management guidelines specifying risk management principles, which are subject to updating in order to take account of changes in business operations.
Part of the ERM process includes identification of existing, and the planning of new, risk mitigation plans in the event that current actions are not deemed sufficient for each risk identified. Successful risk management decreases the likelihood of risk realisation and mitigates the negative effects of realised risk.
Risk management in Citycon comprises three main elements, namely 1) risk management implemented in the main business processes 2) risk reporting and 3) continuous improvement of risk management.
The risk reporting process gathers analytical data on risks and the respective mitigation plans, for reporting to the Board of Directors. During the risk reporting period, each of the main business and support functions independently defines their near term targets, risks threatening these targets and mitigation plans related to the risks. In order to evaluate the importance of each risk, an estimate of the loss associated with the risk is determined together with the probability of risk realisation. An additional feature of risk reporting involves each function reporting the potentially realised risks during the previous year, and mitigation plans put into effect during the period. Risk data is inputted into one group-wide risk register, from which function risk reports are prepared for the Board of Directors and Audit and Governance Committee. Risk reports to the Board of Directors and Audit and Governance Committee are prepared in conjunction with budgeting during the autumn.
Each business and support function have a dedicated person responsible for the ERM process, who is in charge of reporting the risks and mitigation plans and following up on their implementation. The Group Treasurer prepares the risk report for the Board of Directors and Audit and Governance Committee.
Financial risks have been defined as business critical risks for Citycon. Financial risk arises for Citycon in the form of financial instruments, which are mainly used to raise financing for operations. The Group also uses interest rate and foreign exchange derivatives to manage interest rate and currency risks arising from operations and financing sources. The Board of Directors has approved a Treasury Policy which defines the objectives, responsibilities and risk management indicators applicable to interest rate, foreign exchange, counterparty, liquidity and electricity risk management. The execution of financial risk management is performed by the Group Treasurer and Treasury Manager, under the supervision of the CFO. The Group Treasurer reports compliance with the objectives, in conjunction with the interim and annual report, to the Board of Directors and CFO.
Citycon's identified, key financial risks include interest rate risk related to cash flow, liquidity risk, credit risk and foreign currency risk. These risks are summarised below.
Citycon's key financial risk is the interest rate risk of its interest bearing liabilities, whereby changes in money market interest rates lead to fluctuations in future interest cash flows
on floating rate borrowings. Interest rate risk management aims to reduce or eliminate the adverse effect of interest rate fluctuations on the company's profit and cash flow. The company aims at a loan portfolio with the right balance of fixed and variable rate debts. Under the company's interest rate risk management policy, the target debt portfolio is one in which a minimum of 70 and a maximum of 90 per cent of interest bearing liabilities are based on fixed interest rates.
The company uses interest rate swaps to manage its interest rate risks and to convert floating rate loans into fixed rate loans. A portion of the hedges can also be performed using inflation dervatives. The interest sensitivity of Citycon's loan portfolio at the end of 2013 is depicted by the fact that a onepercentage point rise in money market interest rates would increase its interest expenses for 2013 by EUR 1.1 million, while a fall of onepercentage point in such rates would decrease them by EUR 1.1 million in the same year.
The following table shows interest expenses' sensitivity to a 100 basis point change in short term interest rates, assuming that all other variables remain constant. The impact is shown as a change in interest expenses resulting from changes in the interest rate related to a floating rate debt.
| EUR million | 2013 | 2012 |
|---|---|---|
| Euro | 0.6 | 0.9 |
| Swedish krona | 0.5 | 0.5 |
| Other currencies | 0.1 | 0.1 |
| Total | 1.1 | 1.4 |
The following table shows the consolidated shareholders' equity's sensitivity to a 100 basis point change in short term interest rates, assuming that all other variables remain constant. The impact is shown as a change in shareholders' equity resulting from changes in interest rates, which relate to interest rate derivatives under hedge accounting treatment.
| EUR million | 2013 | 2012 |
|---|---|---|
| Euro | 7.3 | 13.7 |
| Swedish krona | 4.4 | 13.6 |
| Total | 11.8 | 27.2 |
Given that Citycon's strategy is to expand in the Nordic and Baltic countries, the company will need both equity capital and borrowings. Minimum shareholders' equity is determined by the company's loan covenants. The Group uses cash-flow forecasts to continuously assess and monitor financing required for its business. Here, the goal is to arrange financing on a long term basis and avoid any large concentration of due dates for the loan agreements. Citycon aims to guarantee the availability and flexibility of financing, through unused credit limits and by using several banks and financing methods as sources of finance.
Citycon's financing policy states that the company's commited credit limits or liquid assets should cover all approved and on-going investments. In addition, available liquidity should provide a sufficient buffer for unexpected payments, based on the management's assesment of the amount required, and the company will arrange committed back-up limits for all funds drawn under commercial paper
programmes. On 31 December 2013, unused committed credit limits amounted to EUR 380.0 million, in addition Citycon had unused cash pool limits of EUR 17.4 million and cash and cash equivalents of EUR 38.0 million.
The table below summarises the maturity profile of the Group's financial liabilities, based on contractual payments. The table includes both principal and interest flows of loans and payments arising from derivative financial instruments. Future interest payments of floating rate loans have been determined based on the interest rate applicable on the balance sheet date, and are not discounted. Future interest payments for derivative financial instruments are based on discounted net present values and future interest rates are obtained through interpolation based on the yield curve prevailing on the balance sheet date.
| EUR million | Less than 1 month |
1 to 12 months |
1-5 years |
Over 5 years |
Total |
|---|---|---|---|---|---|
| 31 December 2013 | |||||
| Loans from financial institutions | 2.4 | 139.9 | 738.4 | - | 880.7 |
| Convertible capital loan 1/2006 | - | - | - | - | - |
| Bond 1/2009 | - | 24.3 | - | - | 24.3 |
| Bond 1/2012 | - | 5.9 | 156.0 | - | 161.9 |
| Bond 1/2013 | - | 18.8 | 75.0 | 537.5 | 631.3 |
| Finance lease liabilities | - | 0.1 | 0.1 | - | 0.2 |
| Derivative financial instruments | 1.2 | 11.3 | 17.6 | - | 30.0 |
| Trade and other payables (excl. interest liabilities) | 44.6 | 1.3 | 8.2 | 9.9 | 64.1 |
| 31 December 2012 | |||||
|---|---|---|---|---|---|
| Loans from financial institutions | 3.4 | 118.7 | 1,051.7 | 260.3 | 1,434.1 |
| Convertible capital loan 1/2006 | - | 41.6 | - | - | 41.6 |
| Bond 1/2009 | - | 2.0 | 42.0 | - | 44.1 |
| Bond 1/2012 | - | 6.4 | 175.5 | - | 181.9 |
| Bond 1/2013 | - | - | - | - | - |
| Finance lease liabilities | - | 0.2 | 0.2 | - | 0.4 |
| Derivative financial instruments | 0.9 | 18.6 | 55.8 | 1.3 | 76.6 |
| Trade and other payables (excl. interest liabilities) | 61.3 | 9.7 | 2.5 | - | 73.5 |
Citycon's rent revision procedures, long leases and high occupancy ratio generate a stable long-term cash flow profile. Citycon expects to meet its short-term liabilities shown in the table above from this stable cash flow and undrawn committed credit facilities. In the long term, loan refinancings, new bond issues, or disposals of investment properties will be considered. The table below shows the maturity profile of the undrawn committed credit facilities.
| EUR million | Less than 1 month |
1 to 12 months |
1-5 years |
Over 5 years |
Total |
|---|---|---|---|---|---|
| 31 December 2013 | |||||
| Undrawn committed credit facilities | - | - | 330.0 | 50.0 | 380.0 |
| 31 December 2012 | |||||
| Undrawn committed credit facilities | - | 50.0 | 167.4 | - | 217.4 |
The above mentioned credit facilities are freely available to Citycon based on the group's financing needs.
The Group's most significant credit-risk concentration relates to receivables from Kesko Group. Citycon controls its receivables within the framework of the given credit limits and has not so far identified any major credit risk associated with them. Credit-risk management caters for
tenant-risk management, which is aimed at minimising the adverse effect of unexpected changes in the customers' financial standing on Citycon's business and financial results. Customerrisk management is primarily based on the knowledge of the customers' business and active monitoring of customer data. Citycon's lease agreements include lease deposit provisions used to contribute to managing customers' risks. The maximum exposure from trade receivables is the carrying amount as disclosed in Note "23. Trade and other receivables".
Credit risk arising from cash and cash equivalents and certain derivative agreements relate to a default of a counterparty with a maximum exposure equal to the carrying amount of these instruments. Citycon invests its liquidity in a manner which does not put the nominal amount at risk. Citycon does not, for example, invest in equity markets. Citycon's cash and cash equivalents are primarily placed on deposit bank accounts and in short term money market deposits, in which the counterparties are commercial banks participating in Citycon's credit agreements. Citycon's financing policy also sets forth the approved financial instruments in which the company can invest, and includes counterparty limits for those investments.
Citycon's presence in countries outside the euro-zone exposes the company to exchange rate risk. Exchange rate risk stems from transaction risks resulting from the conversion of foreign currency denominated transactions into local currency, on the one hand, and from translation risks in the balance sheet associated with investments in foreign subsidiaries. The company hedges against exchange rate risk in the balance sheet by aiming to finance its foreign investments mainly in the local currency. The company uses foreign exchange derivatives to manage the transaction risk on committed transactions. Foreign exchange derivatives may also be used to hedge a mismatch between assets and liabilities denominated in the same currency in the balance sheet. Currently, the company's exchange rate risk mainly relates to fluctuations in the euro/ Swedish krona exchange rate.
The following table shows the sensitivity in the statement of comprehensive income to a five per cent change in foreign exchange rates, assuming that all other variables remain constant. Such an impact is attributable to a change in the fair value of financial instruments, given the assumed change in foreign exchange rates.
Effect of a five per cent change in foreign exchange rates on net financial expenses
| EUR million | 2013 | 2012 |
|---|---|---|
| Swedish krona | 0.4 | 0.1 |
| Lithuanian litas | 0.0 | 0.0 |
| Total | 0.4 | 0.1 |
The objective of the company's capital management is to support the growth strategy, maximise shareholder value, comply with loan agreement provisions and ensure the company's ability to pay dividends. Citycon's capital structure is managed in an active manner and capital structure requirements are taken into account when considering various financing alternatives. The company can adjust the capital structure by deciding on the issuance of new shares, raising debt financing or making adjustments to the dividend.
The company's long term equity ratio target is 45 per cent and its current syndicated loan agreements require a minimum equity ratio of 32.5 per cent. The equity ratio of the loan agreements is calculated by making certain adjustments to the equity ratio defined by the Finnish Financial Supervisory Authority regulations and guidelines 7/2013, adding the convertible capital loan issued by the company to the shareholders' equity. As of 31 December 2013, the company's equity ratio stood at 45.3 per cent and the equity ratio as defined in the loan agreement was around 45.2 per cent.
Citycon monitors its capital structure based on equity ratio and LTV (Loan-to-value). The formulas for calculating the equity ratio and LTV can be found on page 65 in the consolidated financial statements.
Equity ratio:
| EUR million | 2013 | 2012 |
|---|---|---|
| Total shareholders' equity (A) | 1,340.6 | 1,059.9 |
| Total assets | 2,975.4 | 2,818.5 |
| Less advances received | 13.3 | 12.2 |
| ./. (Total assets - advances received) (B) | 2,962.1 | 2,806.3 |
| Equity ratio (A/B) | 45.3% | 37.8% |
| EUR million | 2013 | 2012 |
|---|---|---|
| Interest-bearing debt total (Note 26) | 1,462.4 | 1,533.0 |
| Less cash and cash equivalents (Note 24) | 38.0 | 51.0 |
| Interest-bearing net debt (A) | 1,424.4 | 1,482.1 |
| Fair value of investment properties including properties held for sale (Note 14) (B) | 2,735.8 | 2,719.6 |
| LTV, % (A/B) | 52.1% | 54.5% |
Equity ratio improved considerably in 2013 due to the equity raise, the profit of the period and a less negative fair value of interest rate derivatives under hedge accounting, which led to higher equity as a proportion of total assets. The LTV improved in 2013 both as a result of a higher fair value of investment properties as well as the share issue and the the profit of the period, which resulted in a lower net interest-bearing debt.
| EUR million | 2013 | 2012 |
|---|---|---|
| Trade payables | 11.6 | 18.3 |
| Short-term advances received | 12.4 | 11.3 |
| Interest liabilities | 17.5 | 10.6 |
| Other liabilities | 19.1 | 15.6 |
| Accrued expenses total | 36.6 | 26.2 |
| VAT-liabilities | 7.0 | 11.4 |
| Other short-term payables | 13.8 | 15.1 |
| Other short-term payables total | 20.8 | 26.5 |
| Total | 81.5 | 82.3 |
Due dates of future payments of trade and other payables:
| EUR million | 2013 | 2012 |
|---|---|---|
| Due in less than 1 month | 45.9 | 61.6 |
| Due in 1-3 months | 7.8 | 6.6 |
| Due in 3-6 months | 9.1 | 2.1 |
| Due in 6-12 months | 0.6 | 1.0 |
| Due in 1-2 years | 1.0 | 2.5 |
| Due in 2-5 years | 7.2 | 8.5 |
| Due in over 5 years | 9.9 | 0.0 |
| Total | 81.5 | 82.3 |
The Board of Directors of Citycon Oyj decided on 3 May 2011, by virtue of an authorisation granted by the Annual General Meeting held on 13 March 2007, to issue stock options to the key personnel of the company and its subsidiaries. The company had a weighty financial reason for the issue of stock options, since the stock options are intended to form part of the incentive and commitment program for the key personnel. The purpose of the stock options is to encourage the key personnel to work on a long-term basis to increase shareholder value. The purpose of the stock options is also to commit the key personnel to the company.
The maximum total number of stock options that can be issued is 7,250,000, and they entitle their owners to subscribe for a maximum total of 8,529,625 new shares or treasury shares. The stock options will be issued gratuitously. Stock options entitle their holders to subscribe for company shares within the period specified in the terms and conditions of the stock options. If an employee leaves the Group, (s)he will forfeit his/her stock options for which the share subscription period has not begun on the date of the termination of his/her employment/executive contract. However, the Board of Directors can specifically decide that the stock-option holder retains his/her stock options or some of them. The Board of Directors shall also decide upon the redistribution of the stock options returned to the company.
At the end of 2013, stock options 2011A–D(I), 2011A–D(II) and 2011A–D(III) were held by 18 key employees within the Group. The amount of outstanding stock options was 6,305,000 on 31 December 2013. These option rights entitle their holders to subscribe for 7,417,833 shares in 2012-2018.
Citycon uses the Black & Scholes option-pricing model to measure the fair value of stock options at the grant date and reports them under personnel expenses in the statement of comprehensive income allocated over the instrument's vesting period. In 2013, the expense recognised in the statement of comprehensive income totalled EUR 0.6 million (EUR 1.7 million in 2012). The expected volatility is determined by calculating the company share price's historical volatility.
In order to ensure the equal treatment of shareholders and the stock option holders, the Board of Directors of Citycon Oyj decided on 12 February 2013 and 13 March 2013, due to the rights issue, to adjust the subscription price of the stock options 2011. In addition, in 2012 the Board of Directors had decided, due to rights issue arranged in September-October 2012, to adjust the subscription ratio and the subscription price of the stock options 2011. The above mentioned adjustments were made in accordance with the terms and conditions of the Stock Option Plan 2011.
| Option category | Subscription price, EUR | Subscription ratio |
|---|---|---|
| 2011A-D(I) | 2.8009 (2.9720) | 1.1765 |
| 2011A-D(II) | 2.9199 (3.0910) | 1.1765 |
| 2011A-D(III) | 2.3419 (2.5130) | 1.1765 |
The share subscription price will be recognised in the company's invested unrestricted equity fund. Each year, the per-share dividends and equity returns, differing from the company´s normal practice, may be deducted from the share subscription price.
| Share subscription period | 2011A(I-III) | 2011B(I-III) | 2011C(I-III) | 2011D(I-III) |
|---|---|---|---|---|
| Share subscription period begins | 1 April 2012 | 1 April 2013 | 1 April 2014 | 1 April 2015 |
| Share subscription period ends | 31 March 2018 | 31 March 2018 | 31 March 2018 | 31 March 2018 |
| Stock option plan 2011 | Stock options 2011A-D(I) |
Stock options 2011A-D(II) |
Stock options 2011A-D(III) |
|---|---|---|---|
| Type of scheme | Share-based options, granted to the Group's key personnel |
Share-based options, granted to the Group's key personnel |
Share-based options, granted to the Group's key personnel |
| Grant date | 3 May 2011 | 3 May 2011 | 11 October 2011 |
| No. of instruments granted | 2,250,000 | 1,990,000 | 2,065,000 |
| Exercise price at grant date, EUR | 3.17 | 3.31 | 2.63 |
| Adjusted share subscription price, EUR (as from 14 March 2013) |
2.8009 (2.9720) | 2.9199 (3.0910) | 2.3419 (2.5130) |
| Adjusted subscription ratio (as from 8 October 2012) |
1.1765 | 1.1765 | 1.1765 |
| Vesting period as per option terms (No. of days) (1 |
332-1427 | 332-1427 | 172-1267 |
| Vesting conditions | Employment during vesting period. In case of prior employment termination, stock options forfeited. |
Employment during vesting period. In case of prior employment termination, stock options forfeited. |
Employment during vesting period. In case of prior employment termination, stock options forfeited. |
| Exercise | In terms of shares | In terms of shares | In terms of shares |
| Expected volatility, % | 35.00 | 35.00 | 35.00 |
| Expected exercise period at grant date (No. of days) (1 |
1095-2190 | 1095-2190 | 1095-2190 |
| Risk-free interest rate, % | 3.18 | 2.85 | 1.73 |
| Expected dividend/share, EUR | 0.14 | 0.14 | 0.14 |
| Instrument fair value determined at grant date, EUR |
0.78 | 0.73 | 0.46 |
| Option-pricing model | Black&Scholes | Black&Scholes | Black&Scholes |
1) The number of days varies among the sub-categories of the options
Changes in the stock options and their weighted average exercise prices during the period were as follows:
| 2013 | 2012 | |||
|---|---|---|---|---|
| Exercise price, weighted average, EUR/share |
No. of stock options |
Exercise price, weighted average, EUR/share |
No. of stock options |
|
| At period-start | 2.87 | 6,505,000 | 3.12 | 5,400,000 |
| New stock options granted | 2.34 | 120,000 | 2.70 | 1,330,000 |
| Forfeited stock options | 2.78 | 320,000 | 2.82 | 1,150,000 |
| Redistributed stock options | - | - | 2.70 | 925,000 |
| Exercised stock options | - | - | - | - |
| Lapsed stock options | - | - | - | - |
| At period-end | 2.69 | 6,305,000 | 2.87 | 6,505,000 |
The company had 3,310,000 exercisable 2011A-B(I-III) stock options at period-end. No stock options were exercised during 2013.
The subscription prices of outstanding stock options were 2.8009 (2011A-D(I)), 2.9199 (2011A-D(II)) and 2.3419 (2011A-D(III)) and the subscription ratio 1.1765 at the period-end.
The lapse year is the year 2018 of the outstanding stock options.
Citycon Oyj has no valid long-term share-based incentive plan. The incentives earned through the previous long-term share-based incentive plan have been granted to the key persons of the Group during the years 2008–2012.
| 2013 | 2012 | |
|---|---|---|
| Profit before taxes | 90.1 | 95.5 |
| Adjustments for: | ||
| Depreciation and amortisation (Note 9) | 0.9 | 1.2 |
| Net fair value gains(-)/losses(+) on investment property (Note 14) | -26.1 | -23.6 |
| Profit(-)/losses(+) on disposal of investment property (Notes 14 and 22) | -0.8 | -4.2 |
| Share-based payments (Note 28) | 0.6 | 1.8 |
| Other non-cash income | -4.5 | -0.5 |
| Foreign exchange losses(+)/gains(-) in financing expenses (Note 11) | 0.0 | 0.0 |
| Interest and other financing income (Note 11) | -6.5 | -0.6 |
| Interest and other financing expenses (Note 11) | 96.6 | 68.7 |
| Changes in working capital | ||
| Trade and other receivables (Note 23) | 0.3 | 8.1 |
| Trade and other payables (Note 27) | -4.8 | 0.5 |
| Cash generated from operations | 145.6 | 147.0 |
A) Other leases - Group as lessee
Future minimum lease payments under non-cancellable other leases are as follows:
| EUR million | 2013 | 2012 |
|---|---|---|
| Not later than 1 year | 0.7 | 0.9 |
| 1-5 years | 1.6 | 1.8 |
| Over 5 years | 0.0 | 0.2 |
| Total | 2.3 | 2.9 |
Leases mainly concern premises and cars. Leases of premises are in effect until further notice and have a notice period of six months. For most leases, rent increases are tied to the cost-of-living index. Car lease agreements are in effect for three years. While the lease agreements have no renewal clause, in practice the contract period can be extended for one to two years.
Lease payments recognised as expenses during the period were EUR 0.8 million (EUR 1.1 million) and they do not include contingent rents or sublease payments. Lease expenses recognised in the statement of comprehensive income are included in Administrative expenses on row office and other administrative expenses (Note 7. Administrative expenses)
| EUR million | 2013 | 2012 |
|---|---|---|
| Loans, for which mortgages are given in security and shares pledged | ||
| Loans from financial institutions | 2.5 | 28.6 |
| Contingent liabilities for loans | ||
| Mortgages on land and buildings | 10.3 | 37.1 |
| Bank guarantees | 79.5 | 63.8 |
| Capital commitments | 213.8 | 296.1 |
| VAT refund liabilities | 80.0 | 73.4 |
Mortgages relate to certain bank loans of the subsidiaries where the subsidiary has given security on the loan via mortgages.
Bank guarantees relate to bank loans of subsidiaries which Citycon Oyj has guaranteed via parent guarantee or alternatively third party bank guarantees.
Capital commitments relate mainly to on-going (re)development projects.
There are value-added tax refund liabilities arising from capitalised renovations and new investments in Citycon's investment properties. The VAT refund liabilities will realise if the investment property is sold or transferred for non-VAT-liability use within 10 years. Exception to 10-year review rule apply to investments in Finland that have been completed prior to 2008, and the review period is 5 years.
In March, the arbitration board rendered the award relating to arbitration proceedings against Citycon's subsidiary, MREC Espoontori related to Espoontori shopping centre's 2011 completed redevelopment project. The arbitration board awarded SRV Rakennus Oy approximately EUR 790,000 including VAT and penal interest on basis of their claim of approximately EUR 4.7 million (incl. VAT) against MREC Espoontori, who has paid the amount to SRV Rakennus Oy in April 2013. Consequently the dispute has been finally settled in 2013.
Some lawsuits, claims and legal disputes based on various grounds are pending against Citycon relating to the company's business operations. In the company's view, it is improbable that the outcome of these lawsuits, claims and legal disputes will have a material impact on the company's financial position.
Under a commitment given in the terms of the syndicated loan facilities, Citycon Group undertakes to maintain its equity ratio at above 32.5 per cent and its interest coverage ratio at a minimum of 1.8. For the calculation of equity ratio, shareholders' equity includes capital loans and excludes noncash valuation gain/loss from derivative contracts recognised in equity and the minority interest. The interest coverage ratio is calculated by dividing the EBITDA - adjusted by extraordinary gains/ losses, provisions and non-cash items - by net financial expenses.
Accordingly, equity ratio on 31 December 2013 stood at around 45.2 per cent and interest coverage ratio at around 2.4 (2012: equity ratio was around 40.5 per cent and interest coverage ratio around 2.1).
Under a commitment given in the terms of the Trust Deed regarding the EUR 500 million eurobond issued in 2013, Citycon undertakes to maintain its solvency ratio at under 0.65 and its secured solvency ratio at under of 0.25. The solvency ratio is calculated by dividing the Group's consolidated net debt with total assets. The secured solvency ratio is calculated by dividing the Group's consolidated secured debt with total assets.
Accordingly, the solvency ratio on 31 December 2013 stood at around 0.48 and the secured solvency ratio at around 0.01.
Citycon Group's related parties comprise the parent company Citycon Oyj and its subsidiaries, jointly controlled entities, associated companies and minority companies; Board members; CEO; Corporate Management Committee members and Gazit-Globe Ltd., whose shareholding in Citycon Oyj accounted for 49.3 per cent on 31 December 2013 (31 December 2012: 49.0%).
| Group companies on 31 December 2013 | Country | Group holding, % |
Parent company holding, % |
|
|---|---|---|---|---|
| Parent company: Citycon Oyj | Finland | |||
| 1 | Albertslund Centrum ApS | Denmark | 100.0 | - |
| 2 | Asematie 3 Koy | Finland | 100.0 | - |
| 3 | Asolantien Liikekiinteistö Oy | Finland | 100.0 | - |
| 4 | Citycon AB | Sweden | 100.0 | 100.0 |
| 5 | Citycon Denmark ApS | Denmark | 100.0 | 100.0 |
| 6 | Citycon Development AB | Sweden | 100.0 | - |
| 7 | Citycon Estonian Investments B.V. | The Netherlands | 100.0 | - |
| 8 | Citycon Finland Oy | Finland | 100.0 | 100.0 |
| 9 | Citycon Hedging C.V. | The Netherlands | 100.0 | - |
| Group | Parent company | |||
|---|---|---|---|---|
| Group companies on 31 December 2013 | Country | holding, % | holding, % | |
| 10 Citycon Holding S.à r.l. | Luxembourg | 100.0 | 100.0 | |
| 11 | Citycon Högdalen Centrum AB | Sweden | 100.0 | - |
| 12 Citycon Jakobsbergs Centrum AB | Sweden | 100.0 | - | |
| 13 Citycon Liljeholmstorget Galleria AB | Sweden | 100.0 | - | |
| 14 Citycon Services AB | Sweden | 100.0 | - | |
| 15 Citycon Shopping Centers AB | Sweden | 100.0 | - | |
| 16 Citycon Shopping Centers Shelf 6 AB | Sweden | 100.0 | - | |
| 17 Citycon Shopping Centers Vinden AB | Sweden | 100.0 | - | |
| 18 Citycon Treasury B.V. | The Netherlands | 100.0 | - | |
| 19 Citycon Tumba Centrumfastigheter AB | Sweden | 100.0 | - | |
| 20 Espoon Asemakuja 2 Koy | Finland | 100.0 | - | |
| 21 Etelä-Suomen Kauppakiinteistöt Oy | Finland | 100.0 | - | |
| 22 Forssan Hämeentie 3 Koy | Finland | 100.0 | - | |
| 23 Helsingin Hämeentie 109-111 Koy | Finland | 100.0 | - | |
| 24 Jyväskylän Forum Koy | Finland | 100.0 | - | |
| 25 Jyväskylän Kauppakatu 31 Koy | Finland | 100.0 | - | |
| 26 Kaarinan Liiketalo Koy | Finland | 100.0 | - | |
| 27 Karjaan Ratakatu 59 Koy | Finland | 100.0 | - | |
| 28 Kauppakeskus Columbus Koy | Finland | 100.0 | - | |
| 29 Kauppakeskus Isokarhu Oy | Finland | 100.0 | - | |
| 30 Kivensilmänkuja 1 Koy | Finland | 100.0 | - | |
| 31 Kotkan Keskuskatu 11 Koy | Finland | 100.0 | - | |
| 32 Kristiina Management Oy | Finland | 100.0 | - | |
| 33 Kristiine Keskus Oü | Estonia | 100.0 | - | |
| 34 Kuopion Kauppakatu 41 Koy | Finland | 100.0 | - | |
| 35 Kuusankosken Kauppakatu 7 Koy | Finland | 100.0 | - | |
| 36 Kuvernöörintie 8 Koy | Finland | 100.0 | - | |
| 37 Lahden Hansa Koy | Finland | 100.0 | - | |
| 38 Lahden Kauppakatu 13 Koy | Finland | 100.0 | - | |
| 39 Lentolan Perusyhtiö Oy | Finland | 100.0 | - | |
| 40 Liljeholmstorget Development Services AB | Sweden | 100.0 | - | |
| 41 Lillinkulma Koy | Finland | 100.0 | - | |
| 42 Lintulankulma Koy | Finland | 100.0 | - | |
| 43 Lippulaiva Koy | Finland | 100.0 | - | |
| 44 Magistral Kaubanduskeskuse Oü | Estonia | 100.0 | - | |
| 45 Martinlaakson Kivivuorentie 4 Koy | Finland | 100.0 | - | |
| 46 Minkkikuja 4 Koy | Finland | 100.0 | - | |
| 47 Montalbas B.V. | The Netherlands | 100.0 | 100.0 | |
| 48 Myyrmanni Koy | Finland | 100.0 | - | |
| 49 New Manhattan Acquisition Oy | Finland | 100.0 | - | |
| 50 Oulu Big Street Top Oy | Finland | 100.0 | - | |
| 51 Oulun Galleria Koy | Finland | 100.0 | - | |
| 52 Oulun Isokatu 20 Koy | Finland | 100.0 | - | |
| 53 Oulun Isokatu 22 Koy | Finland | 100.0 | - | |
| 54 Porin Asema-aukio Koy | Finland | 100.0 | - | |
| 55 Porin Isolinnankatu 18 Koy | Finland | 100.0 | - |
| Group | Parent company | ||
|---|---|---|---|
| Group companies on 31 December 2013 | Country | holding, % | holding, % |
| 56 Riddarplatsen Fastigheter HB | Sweden | 100.0 | - |
| 57 Rocca al Mare Kaubanduskeskuse AS | Estonia | 100.0 | - |
| 58 Runeberginkatu 33 Koy | Finland | 100.0 | - |
| 59 Sinikalliontie 1 Koy | Finland | 100.0 | - |
| 60 Stenungs Torg Fastighets AB | Sweden | 100.0 | - |
| 61 Strömpilen AB | Sweden | 100.0 | - |
| 62 Säkylän Liiketalo Koy | Finland | 100.0 | - |
| 63 Talvikkitie 7-9 Koy | Finland | 100.0 | - |
| 64 Tampereen Hermanni Koy | Finland | 100.0 | - |
| 65 Tampereen Koskikeskus Koy | Finland | 100.0 | - |
| 66 UAB Citycon | Lithuania | 100.0 | - |
| 67 UAB Prekybos Centras Mandarinas | Lithuania | 100.0 | - |
| 68 Valkeakosken Torikatu 2 Koy | Finland | 100.0 | - |
| 69 Vantaan Laajavuorenkuja 2 Koy | Finland | 100.0 | - |
| 70 Varkauden Relanderinkatu 30 Koy | Finland | 100.0 | - |
| 71 Vaakalintu Koy | Finland | 95.8 | - |
| 72 Lahden Trio Koy | Finland | 89.5 | - |
| 73 Linjurin Kauppakeskus Koy | Finland | 88.5 | - |
| 74 Tikkurilan Kauppakeskus Koy | Finland | 83.8 | - |
| 75 Hervannan Liikekeskus Oy | Finland | 83.2 | - |
| 76 Orimattilan Markkinatalo Oy | Finland | 77.3 | - |
| 77 Åkersberga Centrum AB | Sweden | 75.0 | - |
| 78 Myyrmäen Kauppakeskus Koy | Finland | 74.0 | - |
| 79 Heikintori Oy | Finland | 68.7 | - |
| 80 Kirkkonummen Liikekeskus Oy | Finland | 66.7 | - |
| 81 Espoontori Koy | Finland | 66.6 | - |
| 82 Myyrmäen Autopaikoitus Oy | Finland | 62.7 | - |
| 83 Vantaan Säästötalo Koy | Finland | 61.2 | - |
| 84 Espoontorin Pysäköintitalo Oy | Finland | 60.1 | - |
| 85 Big Apple Top Oy | Finland | 60.0 | - |
| 86 Manhattan Acquisition Oy | Finland | 60.0 | - |
| 87 Tikkurilan Kassatalo As Oy | Finland | 59.7 | - |
| 88 Espoon Asematori Koy | Finland | 54.1 | - |
| 89 Laajasalon Liikekeskus Oy | Finland | 50.4 | - |
| 90 Lappeenrannan Villimiehen Vitonen Oy | Finland | 50.0 | - |
| 91 Espagalleria Oy | Finland | 50.0 | - |
| 92 Espoon Big Apple Housing As Oy | Finland | 50.0 | - |
| 93 Holding Big Apple Housing Oy | Finland | 50.0 | - |
| 94 Holding Metrokeskus Oy | Finland | 50.0 | - |
| 95 Kista Galleria JV AB | Sweden | 50.0 | - |
| 96 Kista Galleria Kommanditbolag | Sweden | 50.0 | - |
| 97 Kista Galleria Holding AB | Sweden | 50.0 | - |
| 98 Kista Galleria LP AB | Sweden | 50.0 | - |
| 99 New Big Apple Top Koy | Finland | 50.0 | - |
| 100 Retail Park Oy | Finland | 50.0 | - |
| Group companies on 31 December 2013 | Country | Group holding, % |
Parent company holding, % |
|---|---|---|---|
| 101 Pihlajamäen Liiketalo Oy | Finland | 42.7 | - |
| 102 Länsi-Keskus Koy | Finland | 41.4 | - |
| 103 Hakunilan Keskus Oy | Finland | 41.1 | - |
| 104 Hansaparkki Koy | Finland | 36.0 | - |
| 105 Kontulan Asemakeskus Koy | Finland | 34.8 | - |
| 106 Puijonlaakson Palvelukeskus Koy | Finland | 31.3 | - |
| 107 Salpausseläntie 11 Koy | Finland | 31.3 | - |
| 108 Jyväskylän Ydin Oy | Finland | 29.0 | - |
| 109 Soukan Itäinentorni As Oy | Finland | 27.3 | - |
| 110 Valkeakosken Liikekeskus Koy | Finland | 25.4 | - |
| 111 Lauttasaaren Liikekeskus Oy | Finland | 23.7 | - |
| 112 Hakucenter Koy | Finland | 18.7 | - |
| 113 Liesikujan Autopaikat Oy | Finland | 8.0 | - |
| 114 Martinlaakson Huolto Oy | Finland | 3.8 | - |
| Partnerships for taxation purposes: | |||
| Parkeringshuset Väpnaren | Sweden | 64.0 | - |
Group companies have paid each other fees such as maintenance and financial charges, interest expenses, loan repayments and other administrative service charges.
Such income and expenses have been eliminated from the consolidated financial statements. There have been no other related party transactions between Group companies.
Citycon Group's key personnel in the management comprise Board members, CEO and Corporate Management Committee members. The benefits of the key personnel in the management are presented in the following chapters.
| CEO wages and salaries, EUR | 2013 | 2012 |
|---|---|---|
| Marcel Kokkeel (CEO as of 24 March 2011) | 880,257 | 957,776 |
Citycon's Board of Directors appoints the CEO and decides on the terms and conditions of his/her executive contract in writing. In 2011, the Board of Directors appointed Mr. Marcel Kokkeel (MA, born in 1958), a Dutch citizen, Citycon's CEO. According to his service agreement, the CEO's gross base salary in 2013 amounted to EUR 616,882.87. The amount of the CEO's base salary shall be adjusted based on changes in the consumer price index. At the discretion of the Board of Directors, the CEO may be awarded an additional bonus up to a maximal amount corresponding to 80 per cent of his annual gross base salary. 50 per cent of the amount of the CEO's additional bonus shall be paid as cash while the other 50 per cent shall be paid as company's shares. In addition to his salary the CEO has in July 2012 received a one-off gross payment of EUR 91,844.41 to adjust the net salary paid in 2011 in accordance with his service agreement.
In Q1 of 2013, the CEO was paid as a cash bonus of EUR 236,000.00 and issued 99,401 shares of the company as a share bonus related to CEO's performance bonus payment for the year 2012.
In addition, the CEO is entitled to the following fringe benefits: company car, housing, telephone and luncheon benefits. The CEO's pension benefit is in line with mandatory provisions of the Finnish Pension Act. The CEO's service agreement has been signed for a fixed term and will expire at the end of February 2015. The company may terminate the agreement even earlier without cause at any time upon six months' notice period, in which case the CEO will be paid, in addition to the salary payable for the notice period, a severance pay consisting of 1.5 times the annual base salary at the moment of termination as well as 1.5 times the most recent annual bonus payment.
Related to the company's Stock Option Plan 2011, the CEO has been granted 1,000,000 stock options 2011A–D(I), 250,000 stock options in each sub-category.
| Personnel expenses for the entire Corporate Management Committee, | ||
|---|---|---|
| ------------------------------------------------------------------- | -- | -- |
| EUR million | 2013 | 2012 |
|---|---|---|
| Wages and salaries | 2.3 | 2.5 |
| Pensions: defined contribution plans | 0.4 | 0.5 |
| Social charges | 0.2 | 0.3 |
| Total | 2.9 | 3.2 |
In addition to wages and salaries, the Corporate Management Committee members received income of EUR 0.2 million (EUR 0.2 million) from stock options and share-based incentive plan. No nonrecurring personnel expenses arising from employment terminations of Corporate Management Committee members were recognised in 2013 (EUR 0.6 million expense recognised in 2012).
The Corporate Management Committee members including the CEO held a total of 2 770 000 stock options 2011A–D(I), 2011A–D(II) and 2011A–D(III) at the end of 2012.
| Remuneration of the members of the Board of Directors, EUR | 2013 | 2012 |
|---|---|---|
| Ashkenazi Ronen | 84,300 | 69,000 |
| Katzman Chaim | 170,200 | 174,900 |
| Kempe Roger (Board member until 21 March 2013) | 4,000 | 52,500 |
| Knobloch Bernd (Board member as of 21 March 2012) | 87,700 | 48,500 |
| Komi Kirsi | 65,800 | 54,900 |
| Ohana Karine (Board member as of 21 March 2013) | 60,400 | - |
| Ottosson Claes | 63,700 | 53,000 |
| Ovin Per-Anders (Board member as of 21 March 2013) | 60,400 | - |
| Segal Dor J. (Board member until 11 October 2012) | - | 26,205 |
| Sonninen Jorma | 62,000 | 52,000 |
| Wernink Thomas W. (Board member until 21 March 2012) | - | 2,000 |
| Westin Per-Håkan (Board member until 21 March 2013) | 4,000 | 51,000 |
| Yanai Yuval (Board member as of 11 October 2012) | 62,600 | 21,295 |
| Zochovitzky Ariella | 70,200 | 56,700 |
| Total | 795,300 | 662,000 |
Board members do not participate in the company's share-based incentive schemes. During 2013, the travel expenses of the Board members amounted to EUR 0.1 million (EUR 0.1 million 2012).
In August 2012 Citycon Oyj repurchased convertible capital bonds issued on 2 August 2006 from its main shareholder, Gazit-Globe Ltd. with face value of EUR 20 million. Based on the information Citycon has received, after the Citycon repurchases Gazit-Globe Ltd. did not hold any outstanding amount of convertible capital loan at the end of corresponding period on 31 December 2012. The maturity date of the bond was on 2 August 2013 and the convertible capital bond has been repaid in full.
Citycon has paid expenses of EUR 0.1 million (EUR 0.0 million) to Gazit-Globe Ltd. and its subsidiaries and invoiced expenses of EUR 0.2 million (EUR 0.1 million) forward to Gazit-Globe Ltd. and its subsidiaries.
In October 2012, the company issued 49 million new shares in a rights issue, raising approximately EUR 91 million in new equity. Gazit-Globe Ltd. subscribed 23.6 million shares in this rights issue.
In March 2013, the company issued approximately 114 million new shares in a rights issue, raising approximately EUR 200 million gross proceeds in new equity. Gazit-Globe Ltd. subscribed 56.1 million shares in this rights issue.
The company's main shareholder, Gazit-Globe Ltd, holding approximately 49 per cent of the shares in the company, has announced that it has been applying International Financial Reporting Standards (IFRS) in its financial reporting starting from 2007. According to IFRS, one company may exercise a controlling interest in another company even if its shareholding in that company does not exceed 50 per cent. Gazit-Globe Ltd. holds the view that it exercises a controlling interest, as defined in IFRS, in Citycon Oyj based on the fact that it has been able to exercise controlling interest in Citycon Oyj's shareholders' meetings pursuant to its shareholding. In accordance with an agreement concluded between the companies, Citycon Oyj will provide Gazit-Globe Ltd. with a more detailed breakdown of the accounting information it discloses in its interim and full-year reports, so that Gazit-Globe Ltd. can consolidate Citycon Group figures into its own IFRS financial statements.
| Companies established |
|---|
| Citycon Shopping Centers Shelf 6 AB |
| Citycon Jakobsbergs Bostäder 4 AB |
| New Big Apple Top Koy |
| Matinkylän Bussiterminaali Koy |
| Matinkylän Liityntäpysäköinti Koy |
| Espoon Big Apple Housing As Oy |
| Kristiina Management Oy (former CS13 Oy) |
|---|
| Citycon Shopping Centers Vinden AB (former Aktiebolaget Grundstenen 145489 ) |
| Holding Metrokeskus Oy (former ShelCo 22 Oy) |
| Holding Big Apple Housing Oy (former ShelCo 23 Oy) |
| New Manhattan Acquisition Oy (former ShelCo 21 Oy) |
| Kista Galleria Holding AB (former Kista Real Property Holding AB, former Goldcup 8262 AB) |
| Kista Galleria JV AB (former Kista Real Property JV AB, former Goldcup 8261 AB) |
| Kista Galleria Kommanditbolag (former Kommanditbolaget Stengrunden 981) |
| Kista Galleria LP AB (former Kista Real Property GP AB, former Goldcup 8264 AB) |
| Hervannan Liikekeskus Oy (increase of ownership by 3.8% to 83.2%) |
| Lappeen Liikekeskus Koy (increase of ownership by 9.4% to 100%) |
| Lappeenrannan Villimiehen Vitonen Oy (decrease of ownership by 50% to 50%) |
|---|
| Karjalan Kauppakeskus Koy (decrease of ownership by 50% to 50%) |
| Lappeenrannan Brahenkatu 7 Koy (decrease of ownership by 50% to 50%) |
| Lappeen Liikekeskus Koy (decrease of ownership by 50% to 50%) |
| Espoon Louhenkulma Koy |
| Ultima Oy |
| Wavulinintie 1 Koy |
| Matinkylän Bussiterminaali Koy |
| Matinkylän Liityntäpysäköinti Koy |
| Citycon Jakobsbergs Bostäder 4 AB |
| Citycon Shopping Centers Shelf 5 AB |
| Backa |
|---|
| Hindås |
| Lindome |
| Kauppatori 1 (Torikeskus, Seinäjoki) |
| Kauppatori 3 (Torikeskus, Seinäjoki) |
| Karjalan Kauppakeskus Koy (current Lappeenrannan Villimiehen Vitonen Oy) | |
|---|---|
| Lappeenrannan Brahenkatu 7 Koy (current Lappeenrannan Villimiehen Vitonen Oy) | |
| Lappeen Liikekeskus Koy (current Lappeenrannan Villimiehen Vitonen Oy) |
Citycon Estonia OÜ
| Kristiina Management Oy (former CS13 Oy) |
|---|
| Holding Metrokeskus Oy (former ShelCo 22 Oy) |
| New Manhattan Acquisition Oy (former ShelCo 21 Oy) |
| Holding Big Apple Housing Oy (former ShelCo 23 Oy) |
| Kista Galleria Holding AB (former Kista Real Property Holding AB, former Goldcup 8262 AB) |
| Kista Galleria JV AB (former Kista Real Property JV AB, former Goldcup 8261 AB) |
| Kista Galleria Kommanditbolag (former Kommanditbolaget Stengrunden 981) |
| Kista Galleria LP AB (former Kista Real Property GP AB, former Goldcup 8264 AB) |
| Citycon Shopping Centers Vinden AB (former Aktiebolaget Grundstenen 145489 ) |
On 20 January, Citycon signed an agreement to sell another residential portfolio in Sweden for a total price of approximately SEK 51 million (approx. EUR 5.8 million). The transaction is expected to close in Q2-Q3 2014.
On 30 January, Citycon sold retail property Säkylän Liiketalo Oy, located in Western Finland to a local buyer for approximately EUR 0.3 million.
On 31 January, Citycon sold its shares in the Koskikara shopping centre, in Valkeakoski Tampere region, to Pirkanmaan Osuuskauppa for approximately EUR 2.6 million.
| 1) CONSOLIDATED KEY FIGURES AND RATIOS FOR FIVE YEARS | |||||
|---|---|---|---|---|---|
| EUR million Formula |
2013 | 2012 | 2011 | 2010 | 2009 |
| Statement of comprehensive income data | |||||
| Turnover | 248.6 | 239.2 | 217.1 | 195.9 | 186.3 |
| Other operating income and expense | 0.9 | 0.2 | 0.2 | 0.3 | 0.0 |
| Operating profit/loss | 176.0 | 163.4 | 81.8 | 157.7 | 10.3 |
| Profit/loss before taxes | 90.1 | 95.5 | 19.7 | 102.8 | -37.5 |
| Profit/loss attributable to parent company shareholders | 93.1 | 77.2 | 13.0 | 78.3 | -34.3 |
| Statement of financial position data | |||||
| Investment properties | 2,733.5 | 2,714.2 | 2,522.1 | 2,367.7 | 2,147.4 |
| Current assets | 74.5 | 75.5 | 125.0 | 56.9 | 65.9 |
| Equity attributable to parent company shareholders | 1,289.6 | 1,015.7 | 902.6 | 849.5 | 731.1 |
| Non-controlling interest | 51.0 | 44.2 | 59.2 | 50.7 | 36.8 |
| Interest-bearing liabilities | 1,462.4 | 1,533.0 | 1,547.9 | 1,397.7 | 1,321.7 |
| Total liabilities | 1,634.7 | 1,758.6 | 1,715.9 | 1,536.3 | 1,485.3 |
| Total liabilities and shareholders' equity | 2,975.4 | 2,818.5 | 2,677.7 | 2,436.5 | 2,253.2 |
| Key performance ratios | |||||
| Equity ratio, % 1 |
45.3 | 37.8 | 36.0 | 37.1 | 34.2 |
| Equity ratio for the banks, % | 45.2 | 40.5 | 39.0 | 39.4 | 40.6 |
| Loan-to-value (LTV), % 2 |
52.1 | 54.5 | 57.5 | 58.2 | 59.9 |
| Return on equity, % (ROE) 3 |
8.0 | 9.0 | 2.3 | 11.1 | -4.7 |
| Return on investment, % (ROI) 4 |
7.7 | 7.7 | 3.8 | 10.6 | -0.5 |
| Quick ratio 5 |
0.4 | 0.4 | 0.5 | 0.3 | 0.4 |
| Gross capital expenditure, EUR million | 226.1 | 161.7 | 216.7 | 133.7 | 134.6 |
| % of turnover | 91.0 | 67.6 | 99.8 | 68.3 | 72.2 |
| Per-share figures and ratios | |||||
| Earnings per share, EUR 1) 6 |
0.22 | 0.24 | 0.04 | 0.31 | -0.14 |
| Earnings per share,diluted, EUR 1) 7 |
0.22 | 0.24 | 0.04 | 0.31 | -0.14 |
| Net cash from operating activities per share, EUR 1) 8 |
0.13 | 0.19 | 0.23 | 0.08 | 0.27 |
| Equity per share, EUR 9 |
2.92 | 3.11 | 3.25 | 3.47 | 3.31 |
| P/E (price/earnings) ratio 1) 10 |
12 | 11 | 52 | 10 | -21 |
| Return from invested unrestricted equity fund per share, EUR 1) | 0.12 2) | 0.11 | 0.11 | 0.10 | 0.10 |
| Dividend per share, EUR 1) | 0.03 2) | 0.04 | 0.04 | 0.04 | 0.04 |
| Dividend and return from invested unrestricted equity fund per share total, EUR 1) |
0.15 2) | 0.15 | 0.14 | 0.13 | 0.13 |
| Dividend and return of equity per earnings, % 11 |
68.3 | 62.4 | 323.9 | 43.9 | -97.2 |
| Effective dividend and return of equity yield, % 12 |
5.9 | 5.8 | 6.3 | 4.4 | 4.6 |
| Operative key ratios | |||||
| Net rental yield, % 13 |
6.4 | 6.4 | 6.0 | 5.8 | 6.1 |
| Occupancy rate (economic), % 15 |
95.7 | 95.7 | 95.5 | 95.1 | 95.0 |
| Citycon's GLA, sq.m. | 961,790 | 1,000,270 | 994,730 | 942,280 | 961,150 |
| Personnel (at the end of the period) | 127 | 129 | 136 | 129 | 119 |
1) Per share result key figures have been calculated with the issue-adjusted number of shares resulting from the rights issues executed in March 2013 and October 2012.
2) Board of Directors' proposal
Formulas are available on page 65.
| EUR million | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|
| Turnover | |||||
| Finland | 150.4 | 143.2 | 132.5 | 126.5 | 131.3 |
| Sweden | 63.3 | 63.1 | 60.1 | 52.8 | 41.0 |
| Baltic Countries and New Business | 34.9 | 32.8 | 24.5 | 16.7 | 14.0 |
| Total | 248.6 | 239.2 | 217.1 | 195.9 | 186.3 |
| Net rental income | |||||
| Finland | 103.5 | 98.2 | 90.5 | 86.7 | 92.4 |
| Sweden | 39.7 | 39.2 | 35.4 | 28.7 | 23.2 |
| Baltic Countries and New Business | 25.6 | 24.6 | 18.4 | 11.8 | 9.8 |
| Total | 168.9 | 162.0 | 144.3 | 127.2 | 125.4 |
| EPRA operating profit | |||||
| Finland | 100.3 | 89.3 | 83.2 | 80.9 | 86.3 |
| Sweden | 36.0 | 34.0 | 30.4 | 24.1 | 20.0 |
| Baltic Countries and New Business | 24.8 | 23.7 | 17.1 | 10.6 | 8.8 |
| Other | -12.0 | -11.4 | -13.4 | -10.5 | -7.4 |
| Total | 149.1 | 135.7 | 117.4 | 105.0 | 107.7 |
| Operating profit/loss | |||||
| Finland | 102.4 | 87.5 | 42.3 | 107.5 | 21.2 |
| Sweden | 45.1 | 48.2 | 32.4 | 46.7 | 0.3 |
| Baltic Countries and New Business | 40.6 | 39.1 | 20.5 | 14.1 | -3.8 |
| Other | -12.0 | -11.4 | -13.4 | -10.5 | -7.4 |
| Total | 176.0 | 163.4 | 81.8 | 157.7 | 10.3 |
| 1) | Equity ratio, % | ||
|---|---|---|---|
| Shareholders' equity | |||
| Balance sheet total - advances received | X 100 | ||
| 2) | Loan-to-value (LTV), % | ||
| Interest-bearing liabilities - cash and cash equivalents X 100 Fair value of investment properties + properties held |
|||
| for sale | |||
| 3) | Return on equity (ROE), % | ||
| Profit/loss for the period | |||
| Shareholders' equity (weighted average) | X 100 | ||
| 4) | Return on investment (ROI), % | ||
| Profit/loss before taxes + interest and other financial expenses |
|||
| Balance sheet total (weighted average) - (non | X 100 | ||
| interest-bearing liabilities on the balance sheet date + opening balance of non-interest-bearing liabilities)/2 |
|||
| 5) | Quick ratio | ||
| Current assets | |||
| Short-term liabilities | |||
| 6) | Earnings per share (EPS), EUR | ||
| Profit/loss for the period attributable to parent | |||
| company shareholders | |||
| Average number of shares for the period | X 100 | ||
| 7) | Earnings per share, diluted, EUR | ||
| Profit/loss for the period attributable to parent | |||
| company shareholders | X 100 | ||
| Diluted average number of shares for the period | |||
| 8) | Net cash from operating activities per share, EUR | ||
| Net cash from operating activities | X 100 | ||
| Average number of shares for the period | |||
| 9) | Equity per share, EUR | ||
| Equity attributable to parent company shareholders | |||
| Number of shares on the balance sheet date | |||
| 10) P/E ratio (price/earnings) | |||
| Closing price at year-end | |||
| EPS | |||
| 11) Dividend and return of equity per earnings, % | |
|---|---|
| Dividend per share | |
| EPS | X 100 |
| 12) Effective dividend and return of equity yield, % | |
| Dividend per share | |
| Closing price at year-end | X 100 |
| 13) Net rental yield, % | |
| Net rental income (last 12 months) | |
| Average fair value of investment property | X 100 |
| 14) Occupancy rate (technical), % | |
| Leased space | |
| Leasable space | X 100 |
| 15) Occupancy rate (economic), % | |
| Rental income as per leases | |
| Estimated market rent of vacant premises + rental | X 100 |
| income as per leases | |
| 16) Average share price, EUR | |
| Value of shares traded (EUR) | |
| Average number of shares traded | |
| 17) Market capitalisation | |
| Number of shares x closing price for the period | |
| excl. treasury shares | |
| 18) Net interest-bearing debt (fair value), EUR million | |
| Fair value of interest-bearing debts - cash and cash | |
| equivalents | |
| EUR million Note |
1 Jan.-31 Dec. 2013 |
1 Jan.-31 Dec. 2012 |
|---|---|---|
| Gross rental income | 0.1 | 26.9 |
| Service charge income | 0.2 | 1.3 |
| Turnover 2 |
0.3 | 28.2 |
| Property operating expenses | 0.1 | 18.4 |
| Other expenses from leasing operations 3 |
0.0 | 0.0 |
| Net rental income | 0.2 | 9.8 |
| Administrative expenses 4, 5 |
11.0 | 11.5 |
| Other operating income and expenses 6 |
-0.1 | -0.2 |
| Operating loss/profit | -10.8 | -1.9 |
| Financial income | 131.8 | 91.9 |
| Financial expenses | -151.8 | -100.0 |
| Net financial income and expenses 7 |
-20.0 | -8.1 |
| Loss/profit before appropriations and taxes | -30.8 | -10.1 |
| Group contributions | 43.9 | 27.1 |
| Income tax expense/benefit 8 |
0.0 | 0.0 |
| Profit/loss for the period | 13.1 | 17.0 |
| EUR million | Note | 31 Dec. 2013 | 31 Dec. 2012 | EUR million | Note | 31 Dec. 2013 | 31 Dec. 2012 |
|---|---|---|---|---|---|---|---|
| ASSETS | LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Non-current assets | Shareholders' equity | 16 | |||||
| Intangible assets | 9 | 1.1 | 0.5 | Share capital | 259.6 | 259.6 | |
| Tangible assets | 10 | 5.9 | 8.3 | Share premium fund | 133.1 | 133.1 | |
| Investments | Invested unrestricted equity fund | 501.6 | 337.3 | ||||
| Shares in subsidiaries | 11 | 1,423.3 | 1,226.8 | Retained earnings | 4.3 | 0.4 | |
| Shares in associated companies | 12 | - | - | Profit/loss for the period | 13.1 | 17.0 | |
| Other investments | 13 | 810.1 | 858.6 | Total shareholders' equity | 911.6 | 747.3 | |
| Total investments | 2,233.4 | 2,085.4 | |||||
| Total non-current assets | 2,240.4 | 2,094.2 | Liabilities | 17 | |||
| Current assets | Long-term liabilities | ||||||
| Long-term receivables | - | - | Bond 1/2009 | - | 39.7 | ||
| Short-term receivables | 15 | 93.1 | 72.0 | Bond 1/2012 | 138.0 | 149.5 | |
| Cash and cash equivalents | 15.7 | 16.6 | Bond 1/2013 | 495.0 | - | ||
| Total current assets | 108.8 | 88.6 | Other long-term liabilities | 545.0 | 1,074.0 | ||
| Total long-term liabilities | 1,178.1 | 1,263.3 | |||||
| Total assets | 2,349.2 | 2,182.7 | |||||
| Short-term liabilities | |||||||
| Convertible capital loan 1/2006 | - | 39.1 | |||||
| Bond 1/2009 | 23.0 | - | |||||
| Other short-term liabilities | 236.5 | 133.0 | |||||
| Total short-term liabilities | 259.5 | 172.1 |
Total liabilities 1,437.6 1,435.4
Total liabilities and shareholders' equity 2,349.2 2,182.7
| EUR million | 1 Jan.-31 Dec. 2013 | 1 Jan.-31 Dec. 2012 |
|---|---|---|
| Cash flow from operating activities | ||
| Loss/profit before taxes | -30.8 | -10.1 |
| Adjustments: | ||
| Depreciation and impairment loss | 0.2 | 0.3 |
| Non-cash property operating expenses | 0.0 | 8.7 |
| Net financial income and expenses | 20.0 | 8.1 |
| Loss/gain on sale and on liquidation of shares in subsidiaries and other investments | 0.1 | 0.2 |
| Cash flow before change in working capital | -10.6 | 7.1 |
| Change in working capital | 25.0 | 10.5 |
| Cash generated from operations | 14.5 | 17.6 |
| Interest expense and other financial expenses paid | -84.0 | -55.0 |
| Interest income and other financial income received | 83.3 | 73.7 |
| Realized exchange rate losses and gains | -36.0 | -0.4 |
| Income taxes paid | - | - |
| Net cash flow from operating activities | -22.2 | 35.8 |
| Cash flow used in investing activities | ||
| Investment in tangible and intangible assets | 1.5 | -3.8 |
| Proceeds from sale of tangible assets | 0.0 | - |
| Loans granted | -234.8 | -220.8 |
| Repayments of loans receivable | 291.7 | 57.6 |
| Increase in subsidiary shares | -170.4 | - |
| Decrease in subsidiary shares | - | 25.6 |
| Purchase of minority and associated companies' shares | - | - |
| Decrease in and sale of associated companies' shares Net cash used in investing activities |
- -111.9 |
33.9 -107.5 |
| Cash flow from financing activities | ||
| Proceeds from rights and share issue | 200.2 | 90.7 |
| Proceeds from short-term loans | 95.5 | 115.3 |
| Repayments of short-term loans | -192.3 | -131.5 |
| Proceeds from long-term loans | 607.9 | 599.6 |
| Repayments of long-term loans | -544.9 | -600.6 |
| Dividends paid and return from the invested unrestricted equity fund | -49.1 | -41.7 |
| Net cash from financing activities | 117.3 | 31.7 |
| Net change in cash and cash equivalents | -16.9 | -40.0 |
| Cash and cash equivalents at period-start | 0.4 | 40.4 |
| Effects of exchange rate changes | - | - |
| Cash and cash equivalents at period-end 1) | -16.5 | 0.4 |
1) Cash and cash equivalents of Citycon Oyj included the Group cash pool as at 31 December 2013 and at 31 December 2012, in which the parent company's bank account can have a negative balance. Cash pool balance of EUR -32.2 million as at 31 December 2013 and EUR -16.2 million as at 31 December 2012 has been recognised in the parent company's balance sheet under short-term liabilities.
The parent company's financial statements are prepared in accordance with the Finnish law.
Citycon Oyj has changed its Group structure as of 1 April 2012. Citycon's Finnish real estate operations were transferred from Citycon Oyj through business transfer to two new holding companies Citycon Finland Oy and Etelä-Suomen Kauppakiinteistöt Oy. After the business transfer, Citycon Oyj was left with the group functions and headquarter personnel. Therefore, the financial periods 2013 and 2012 are not comparable.
The income statement is presented in accordance with the function-based format and it includes both gross and net rental income.
Non-current assets are recognized in the balance sheet at acquisition cost less impairment losses and depreciation/ amortisation.
Intangible assets include IT software and other non-current assets, including office improvement expenses. IT sofware is depreciated over 3-7 years as straight line basis and office improvement expenses are depreciated over the term of the lease agreement.
Tangible assets include machinery and equipment and construction in progress. Machinery and equipment is depreciated at 25 per cent annually, using the reducing balance method of depreciation.
The company's employee pension cover is based on statutory pension insurance.
Foreign Currency Receivables and Payables Receivables and payables denominated in foreign currencies as well as forward rate agreements are measured at the exchange rate quoted on the balance sheet date. Any exchange rate differences resulting from currency translations are recognised as exchange rate differences in the income statement.
Convertible capital loan is shown as separate item in liabilities.
Current taxes are recognised on an accrual basis. Deferred taxes arising from temporary differences between the book and fiscal values have been recognised separately in the income statement and the balance sheet.
Individual figures and sum totals presented in the financial statements have been rounded to the nearest hundreds thousands of euros; this may cause minor discrepancies between the sum totals and the sums of individual figures as given.
| EUR million | 2013 | 2012 |
|---|---|---|
| Turnover by country: | ||
| Finland | 0.2 | 20.3 |
| Other countries | 0.1 | 7.9 |
| Total | 0.3 | 28.2 |
Geographically the parent company's turnover is generated mainly in Finland. Parent company turnover includes the following administrative fees received from Group companies:
| EUR million | 2013 | 2012 |
|---|---|---|
| Administrative fees from Group | ||
| companies | 0.1 | 0.3 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Tenant improvements and | - | 0.0 |
| commissions | ||
| Credit losses | 0.0 | 0.0 |
| Total | 0.0 | 0.0 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Average number of employees during period |
33 | 42 |
| Personnel expenses | ||
| Wages and salaries | 5.8 | 5.8 |
| Pension charges | 0.9 | 0.9 |
| Other social charges | 0.2 | 0.3 |
| Total | 6.9 | 6.9 |
The items presented above include CEO's statutory pension payments, EUR 0.2 million in 2013 (EUR 0.2 million in 2012). In addition, the items above include non-recurring personnel
expenses of EUR 0.1 million in 2012 arising from employment terminations.
| Personnel expenses include the following management salaries and emoluments |
||
|---|---|---|
| CEO's salary and emoluments | 0.9 | 1.0 |
| Board remuneration | 0.8 | 0.7 |
| Total | 1.7 | 1.7 |
| EUR million | 2013 | 2012 |
|---|---|---|
| The following depreciation | ||
| and amortisation as well as | ||
| impairments are included in the | ||
| administrative expenses: | ||
| Amortisation on intangible | ||
| assets | 0.1 | 0.2 |
| Depreciation on buildings and | ||
| constructions | - | 0.0 |
| Depreciation on machinery and | ||
| equipment | 0.1 | 0.0 |
| Total | 0.2 | 0.3 |
| AND EXPENSES | ||
|---|---|---|
| EUR million | 2013 | 2012 |
| Loss/gain on sale of shares in subsidiaries and other |
||
| investments | - | -0.6 |
| Loss/gain on sale of tangible | ||
| assets | -0.1 | - |
| Leasing and asset management | ||
| fees from Group companies | - | 0.1 |
| Other operating income | - | 0.3 |
| Total | -0.1 | -0.2 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Dividend income | ||
| From Group companies | 46.0 | 19.5 |
| From others | - | 0.0 |
| Total | 46.0 | 19.5 |
| Interest and other financial income |
||
| From Group companies | 38.2 | 38.3 |
| Foreign exchange gains | 47.4 | 33.8 |
| Other interest and financial income |
0.1 | 0.3 |
| Total | 85.8 | 72.4 |
| Total financial income | 131.8 | 91.9 |
| Interest and other financial expenses |
||
| To Group companies | 33.7 | 5.2 |
| Foreign exchange losses | 25.1 | 33.9 |
| Realised fair value losses from interest rate swaps |
23.0 | - |
| Interest and other financial expenses |
70.0 | 60.9 |
| Total financial expenses | 151.8 | 100.0 |
| Net financial income and |
| EUR million | 2013 | 2012 |
|---|---|---|
| Intangible rights | ||
| Acquisition cost 1 Jan. | 1.7 | 2.5 |
| Additions during the period | 0.5 | 0.3 |
| Transfer of business | - | -1.1 |
| Accumulated acquisition costs 31 Dec. |
2.2 | 1.7 |
| Accumulated depreciation 1 Jan. | -1.3 | -1.5 |
| Transfer of business | - | 0.4 |
| Depreciation for the period | 0.0 | -0.2 |
| Accumulated depreciation 31 Dec. | -1.3 | -1.3 |
| Net carrying amount 31 Dec. | 0.8 | 0.4 |
| Tenant improvements and other non-current assets |
||
| Acquisition cost 1 Jan. | 1.5 | 39.5 |
| Additions during the period | 0.2 | 0.1 |
| Transfer of business | - | -38.2 |
| Accumulated acquisition costs 31 Dec. |
1.6 | 1.5 |
| Accumulated depreciation 1 Jan. | -1.3 | -16.3 |
| Transfer of business | - | 15.0 |
| Depreciation for the period | -0.1 | 0.0 |
| Accumulated depreciation 31 Dec. | -1.4 | -1.3 |
| Net carrying amount 31 Dec. | 0.2 | 0.1 |
| Total intangible assets 31 Dec. | 1.1 | 0.5 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Machinery and equipment | ||
| Acquisition cost 1 Jan. | 1.1 | 5.9 |
| Additions during the period | 0.1 | 0.4 |
| Reductions during the period | -0.3 | - |
| Transfer of business | - | -5.2 |
| Accumulated acquisition costs 31 Dec. |
0.8 | 1.1 |
| Accumulated depreciation 1 Jan. | -0.6 | -5.0 |
| Accumulated depreciation on disposals 31 Dec. |
0.2 | - |
| Transfer of business | - | 4.4 |
| Depreciation for the period | -0.1 | 0.0 |
| Accumulated depreciation 31 Dec. | -0.5 | -0.6 |
Total tangible assets 31 Dec. 5.9 8.3
EUR million 2013 2012 Acquisition cost 1 Jan. 1,226.8 1,252.6 Additions during the period 196.5 314.5 Transfer of business - -340.2 Net carrying amount 31 Dec. 1,423.3 1,226.8
companies are presented in the Note 31 Related Party Transactions in the Notes to the Consolidated Financial Statements.
| Net financial income and | ||
|---|---|---|
| expenses | -20.0 | -8.1 |
The amount of EUR 0.9 million reported as Loss from convertible bond buy backs in the 2012 financial statements is included in Interest and other financial expenses in the table above.
| EUR million | 2013 | 2012 |
|---|---|---|
| Current taxes | - | - |
| Deferred tax benefit | - | 0.0 |
| Income taxes | - | 0.0 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Acquisition cost 1 Jan. | - | 33.0 |
| Transfer of business | - | -33.0 |
| Net carrying amount 31 Dec. | - | - |
| 2013 | 2012 |
|---|---|
| - | 0.9 |
| - | -0.9 |
| - | - |
| 810.1 | 858.6 |
| 0.0 | 0.0 |
| 810.1 | 858.6 |
| 2,233.4 2,085.4 | |
| EUR million | 2013 | 2012 |
|---|---|---|
| Receivables from outside the Group |
||
| Trade receivables | 0.5 | 0.2 |
| Derivative financial instruments |
2.4 | - |
| Other receivables | 0.6 | 1.3 |
| Accrued income and prepaid expenses |
1.0 | 0.1 |
| Total | 4.5 | 1.7 |
| 2013 | 2012 |
|---|---|
| 259.6 | 259.6 |
| 259.6 | 259.6 |
| 133.1 | 133.1 |
| 133.1 | 133.1 |
| 277.2 | |
| 90.7 | |
| - | |
| -30.6 | |
| 501.6 | 337.3 |
| 11.5 | |
| -13.1 | -11.1 |
| 13.1 | 17.0 |
| 17.4 | 17.3 |
| 911.6 | 747.3 |
| 2013 | 2012 |
| 337.3 200.2 - -36.0 17.3 |
liabilities
Loans from financial institutions, which are converted into fixed rates
Current portion of interest-
through interest-rate swaps 476.1 1,021.7 tied to market interest rates 78.0 70.9 Total 554.1 1,092.7
bearing liabilities -9.1 -27.5 Total 545.0 1,065.2 Loans from Group companies - 8.8 Total long-term liabilities 1,178.1 1,263.3
Loans maturing later than 5 years 495.0 150.1
| Share capital at 1 Jan. | 259.6 | 259.6 | Short-term interest-bearing | ||
|---|---|---|---|---|---|
| Share capital at 31 Dec. | 259.6 | 259.6 | liabilities | ||
| Convertible capital loan | |||||
| Share premium fund at 1 Jan. | 133.1 | 133.1 | 1/2006 1) | - | 39.1 |
| Share premium fund at 31 Dec. | 133.1 | 133.1 | Bond 1/2009 | 23.0 | - |
| Commercial papers | - | 32.5 | |||
| Invested unrestricted equity fund at 1 Jan. |
337.3 | 277.2 | Loans from financial institutions converted into fixed rates through interest |
||
| Proceeds from share issue | 200.2 | 90.7 | rate swaps | 99.9 | - |
| Sale of treasury shares | - | - | Current portion of interest | ||
| Equity return from the invested | bearing liabilities | 9.1 | 27.5 | ||
| unrestricted equity fund | -36.0 | -30.6 | Cash pool overdrafts | 0.9 | - |
| Invested unrestricted equity | Loans from Group companies | 72.4 | 52.1 | ||
| fund at 31 Dec. | 501.6 | 337.3 | Total | 205.2 | 151.2 |
| Retained earnings at 1 Jan. | 17.3 | 11.5 | Short-term non-interest-bearing | ||
| Dividends | -13.1 | -11.1 | liabilities | ||
| Profit/ Loss for the period | 13.1 | 17.0 | Payables to outside the Group | ||
| Retained earnings at 31 Dec. | 17.4 | 17.3 | Accounts payable | 5.2 | 0.5 |
| Derivative financial | |||||
| Total shareholders' equity | instruments | 3.4 | 0.7 | ||
| at 31 Dec. | 911.6 | 747.3 | Other payables | -0.3 | 3.8 |
| Total other payables | 3.1 | 4.5 | |||
| 17. LIABILITIES | Interest liability | 16.1 | 9.0 | ||
| A) Long-term liabilities | Other accruals | 2.8 | 2.4 | ||
| EUR million | 2013 | 2012 | Total accruals | 18.8 | 11.5 |
| Long-term interest-bearing | Total | 27.1 | 16.5 | ||
| Bond 1/2009 | - | 39.7 | 1) The terms and conditions of convertible capital loan are presented in Note 26 Loans in the Notes to the |
||
| Bond 1/2012 | 138.0 | 149.5 | Consolidated Financial Statements. | ||
| Bond 1/2013 | 495.0 | - | |||
| Loans from financial | EUR million | 2013 | 2012 | ||
| Payables to Group companies | ||
|---|---|---|
| Accounts payable | 0.0 | 0.0 |
| Other payables | 27.2 | 1.6 |
| Total other payables | 27.2 | 1.6 |
| Accruals | 0.0 | 2.9 |
| Total | 27.2 | 4.5 |
| Total short-term liabilities | 259.5 | 172.1 |
| Total liabilities | 1,437.6 1,435.4 |
| EUR million | 2013 | 2012 |
|---|---|---|
| Short-term interest-bearing liabilities |
||
| Convertible capital loan 1/2006 1) |
- | 39.1 |
| Bond 1/2009 | 23.0 | - |
| Commercial papers | - | 32.5 |
| Loans from financial institutions converted into fixed rates through interest rate swaps |
99.9 | - |
| Current portion of interest bearing liabilities |
9.1 | 27.5 |
| Cash pool overdrafts | 0.9 | - |
| Loans from Group companies | 72.4 | 52.1 |
| Total | 205.2 | 151.2 |
| Short-term non-interest-bearing liabilities |
||
| Payables to outside the Group | ||
| Accounts payable | 5.2 | 0.5 |
Citycon Oyj. Derivative financial instruments held with external counterparties are presented in Note 21. Derivative Financial Instruments in the Notes to the Consolidated Financial Statements. In addition Citycon Oyj had a group internal foreign exchange derivative as of 31 December 2013 with a fair value of EUR 9.5 million (EUR -1.5 million) and a nominal amount of EUR 712.1 million (EUR 626.3 million).
All Group external derivative financial instruments in Citycon are executed by the parent company
The parent company does not have any mortgages nor given securities.
| EUR million | 2013 | 2012 |
|---|---|---|
| Payables on lease commitments | ||
| Maturing next financial year | 0.6 | 0.6 |
| Maturing later | 0.3 | 0.3 |
| Total | 0.9 | 0.9 |
Citycon's finance leases mainly apply to computer hardware, machinery and equipment, cars and office premises.
| EUR million | 2013 | 2012 |
|---|---|---|
| Bank guarantees | 79.5 | 63.7 |
| Of which on behalf of Group | ||
| companies | 71.4 | 53.0 |
Bank guarantees relate to bank loans of subsidiaries which Citycon Oyj has guaranteed via parent guarantee or alternatively third party bank guarantees.
Citycon Oyj's shares are listed on the NASDAQ OMX Helsinki Stock Exchange Mid Cap list under the trading code CTY1S. The market capitalisation of Citycon at the end of 2013 was EUR 1.1 billion (EUR 0.8 billion).
Citycon has one share series and each share entitles its holder to one vote at the General Meeting and to an equal dividend. At year-end 2013, Citycon's total number of shares was 441,288,012 (326,880,012).
In February-March 2013, Citycon executed a share issue. All 114,408,000 offered shares were subscribed and entered in the Finnish Trade Register.
The equity markets recovered slightly in 2013 and the Citycon share price stayed stable at EUR 2.56 (EUR 2.57). The daily closing prices listed for the Citycon share during 2013 ranged from EUR 2.12 to EUR 2.67.
In 2013, 104.5 million (82.0 million) Citycon shares were traded on the Helsinki Stock Exchange for a total value of EUR 255.0 million (EUR 199.2 million). The daily average trading volume was 418,191 shares,
| Share price, transactions, EUR | 2013 | 2012 | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|
| Low | 2.12 | 2.12 | 2.02 | 2.29 | 1.3 |
| High | 2.67 | 2.71 | 3.41 | 3.31 | 3.16 |
| Average | 2.44 | 2.43 | 2.77 | 2.84 | 1.99 |
| Market capitalisation, EUR million | 1,129.70 | 840.1 | 641.7 | 753.3 | 649.9 |
| Share trading volume | |||||
| No. of shares traded as of year-start, 1,000 | 104,548 | 81,975 | 97,483 | 114,974 | 149,340 |
| Percentage of total | 23.7 | 25.1 | 35.1 | 47.0 | 67.0 |
| Average number of shares, 1,000 1) | 425,415 | 298,091 | 269,676 | 236,841 | 229,457 |
| Average number of shares, diluted, 1,000 1) | 431,445 | 313,202 | 287,420 | 255,171 | 248,627 |
| Number of shares on 31. Dec., 1,000 | 441,288 | 326,880 | 277,811 | 244,565 | 221,060 |
1) Calculation of the number of shares is presented in Note 13. Earnings per share. Number of shares has been issueadjusted resulting from the rights issue executed in 2013.
representing a daily average turnover of EUR 1.0 million.
Citycon is included in international retail indices such as the FTSE EPRA/NAREIT Global Real Estate Index, the Global Real Estate Sustainability Benchmark Survey Index and the iBoxx BBB Financial index (EUR 500 million bond).
Cityon's current distribution policy is to pay out a minimum of 50 per cent of the profit for the period after taxes, excluding fair value changes in investment properties.
The Board of Directors proposes that a dividend of EUR 0.03 per share be paid for the 2013 financial year, and an equity repayment of EUR 0.12 per share be paid from the invested unrestricted equity fund, representing a payout ratio of approximately 5.9 per cent (5.8%).
| Number of shares | Number of owners |
Percentage of owners |
Number of shares |
Percentage of shares and votes |
|---|---|---|---|---|
| 1 - 100 | 699 | 7.93 | 37,078 | 0.01 |
| 101 - 1,000 | 3,689 | 41.83 | 1,842,943 | 0.42 |
| 1,001 - 5,000 | 3,169 | 35.93 | 7,698,203 | 1.74 |
| 5,001 - 10,000 | 668 | 7.57 | 4,749,110 | 1.08 |
| 10,001 - 50,000 | 465 | 5.27 | 9,243,248 | 2.09 |
| 50,001 - 100,000 | 60 | 0.68 | 4,083,464 | 0.93 |
| 100,001 - 500,000 | 48 | 0.54 | 10,650,571 | 2.41 |
| 500,001 - 1,000,000 | 6 | 0.07 | 3,570,735 | 0.81 |
| 1,000,001 - | 16 | 0.18 | 399,412,660 | 90.51 |
| Total | 8,820 | 100.00 | 441,288,012 | 100.00 |
| of which nominee-registered | 10 | 343,405,168 | 77.82 | |
| Issued stock, total | 441,288,012 |
| Number of owners |
Percentage of owners |
Percentage of shares and votes |
|
|---|---|---|---|
| Financial and insurance corporations | 37 | 0.42 | 77.01 |
| Corporations | 551 | 6.25 | 2.46 |
| Households | 8,059 | 91.37 | 5.36 |
| General government | 8 | 0.09 | 10.46 |
| Foreign | 53 | 0.60 | 4.02 |
| Non-profit institutions | 112 | 1.27 | 0.68 |
| Total | 8,820 | 100.00 | 100.00 |
| of which nominee-registered | 10 | 77.82 |
Shares. total 441,288,012 100.00
The primary objective of Citycon's communication with capital market participants is to increase the company's appeal as an investment. The company aims to enhance investor-information transparency and improve the recognition of its business and thus generate added value to its shareholders.
Citycon actively meets with investors both in and outside Finland. In addition, the company's representatives meet investors at conferences arranged by associations or banks, in broader public events and during asset tours to the company's shopping centres.
Shareholders are requested to notify their book-entry account operator or Euroclear Finland Ltd, whichever holds the shareholder's book-entry account, of any changes to their name or address.
At year-end, Citycon had 8,820 shareholders. Foreign shareholding, including nomineeregistered shares, represented 77.8 per cent (76.7%). Citycon is one of the companies on the Helsinki Stock Exchange with the most international ownership base.
Citycon's biggest shareholders are Gazit-Globe Ltd. and Ilmarinen Mutual Pension Insurance Company. Gazit-Globe Ltd. has informed the company that the number of
shares held by it amounted to 217,574,694 shares accounting for 49.3 per cent of the shares and voting rights in the company at the year-end of 2013. Gazit-Globe Ltd.'s shareholding is nomineeregistered. Ilmarinen owned 8.98 per cent of the issued share capital at year-end.
The company did not receive any notifications of changes in shareholding during the year 2013.
Signatures to the Financial Statements 1 January - 31 December 2013
In Helsinki, on 4 February 2014
Chaim Katzman Ronen Ashkenazi
Bernd Knobloch Kirsi Komi
Karine Ohana Claes Ottosson
Per-Anders Ovin Jorma Sonninen
Yuval Yanai Ariella Zochovitzky
Marcel Kokkeel CEO
We have today submitted the report on the conducted audit.
In Helsinki, on 4 February 2014
Ernst & Young Oy Authorized Public Accountants
Eija Niemi-Nikkola Authorized Public Accountant
To the Annual General Meeting of Citycon Oyj
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Citycon Oyj for the year ended 31 December, 2013. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
Ernst & Young Oy Authorized Public Accountant Firm
Eija Niemi-Nikkola Authorized Public Accountant
| Built in / | Citycon's | Technical Occupancy |
Economic Occupancy |
||||||
|---|---|---|---|---|---|---|---|---|---|
| Property | Address | renovated in | Holding, % | GLA, sq.m. | rate, %, sq.m.1) | rate, %, EUR1) | |||
| FINLAND | |||||||||
| SHOPPING CENTRES, HELSINKI METROPOLITAN AREA | |||||||||
| 1 | Arabia | 14,300 | 96.7 | 97.5 | |||||
| Helsingin Hämeentie 109-111 Koy | Hämeentie 109-111 | 00550 HELSINKI | 1960/2002, 2013 | 100% | |||||
| 2 Columbus | 21,000 | 98.3 | 99.1 | ||||||
| Kauppakeskus Columbus Koy | Vuotie 45 | 00980 HELSINKI | 1997/2007 | 100% | |||||
| 3 Espoontori | 16,300 | 91.5 | 92.0 | ||||||
| Espoon Asemakuja 2 Koy | Asemakuja 2 | 02770 ESPOO | 1991 | 100% | 6,000 | ||||
| Espoon Asematori Koy | Kamreerintie 5 | 02770 ESPOO | 1989/2010 | 54% | 1,800 | ||||
| Espoontori Koy | Kamreerintie 3 | 02770 ESPOO | 1987/2010 | 67% | 8,500 | ||||
| Espoontorin Pysäköintitalo Oy | Kamreerintie 1 | 02770 ESPOO | 1987/2010 | 60% | |||||
| 4 Heikintori | 6,300 | 57.1 | 71.4 | ||||||
| Heikintori Oy | Kauppamiehentie 1 | 02100 | ESPOO | 1968 | 69% | ||||
| 5 Iso Omena | 63,300 | 99.0 | 99.5 | ||||||
| Big Apple Top Oy | Piispansilta 9 | 02230 ESPOO | 2001/2012 | 60% | |||||
| Holding Metrokeskus Oy | Piispansilta 9 | 02230 ESPOO | under construction | 50% | |||||
| New Big Apple Top Koy | Piispansilta 9 | 02230 ESPOO | under construction | 50% | |||||
| Holding Big Apple Housing Oy | Piispansilta 9 | 02230 ESPOO | under construction | 50% | |||||
| Espoon Big Apple Housing As Oy | Piispansilta 9 | 02230 ESPOO | under construction | 50% | |||||
| 6 Isomyyri | 10,800 | 94.4 | 93.6 | ||||||
| Myyrmäen Kauppakeskus Koy | Liesitori 1 | 01600 | VANTAA | 1987 | 74% | ||||
| Liesikujan Autopaikat Oy | Liesikuja 2 | 01600 | VANTAA | 1987 | 8% | ||||
| 7 Lippulaiva | 19,000 | 92.4 | 96.6 | ||||||
| Lippulaiva Koy | Espoonlahdenkatu 4 | 02320 ESPOO | 1993/2007 | 100% | |||||
| 8 Martinlaakson Ostari | 7,400 | 100.0 | 100.0 | ||||||
| Martinlaakson Kivivuorentie 4 Koy | Kivivuorentie 4 | 01620 | VANTAA | 2011 | 100% | ||||
| 9 Myllypuron Ostari | 7,400 | 82.3 | 84.6 | ||||||
| Kivensilmänkuja 1 Koy | Kivensilmänkuja 1 | 00920 HELSINKI | 2011, 2012 | 100% | |||||
| 10 Myyrmanni | 39,600 | 93.6 | 95.9 | ||||||
| Myyrmanni Koy | Iskoskuja 3 | 01600 | VANTAA | 1994/2007/2011 | 100% | ||||
| Myyrmäen Autopaikoitus Oy | Iskoskuja 3 | 01600 | VANTAA | 1994 | 63% | ||||
| 11 Tikkuri | 13,400 | 95.0 | 97.5 | ||||||
| Tikkurilan Kauppakeskus Koy | Asematie 4-10 | 01300 | VANTAA | 1984/1991 | 84% | 10,600 | |||
| Asematie 3 Koy | Asematie 3 | 01300 | VANTAA | 1972 | 100% | 1,400 | |||
| Tikkurilan Kassatalo As Oy | Asematie 1 | 01300 | VANTAA | 1956 | 60% | 1,400 |
| Property | Address | Built in / renovated in |
Holding, % | Citycon's GLA, sq.m. |
Technical Occupancy rate, %, sq.m.1) |
Economic Occupancy rate, %, EUR1) |
||
|---|---|---|---|---|---|---|---|---|
| SHOPPING CENTRES, OTHER AREAS IN FINLAND | ||||||||
| 12 Duo | 13,600 | 95.6 | 96.6 | |||||
| Hervannan Liikekeskus Oy | Insinöörinkatu 23 | 33720 TAMPERE | 1979 | 79% | 5,300 | |||
| Tampereen Hermanni Koy | Pietilänkatu 2 | 33720 TAMPERE | 2007 | 100% | 8,300 | |||
| 13 Forum | 16,800 | 94.2 | 96.3 | |||||
| Jyväskylän Forum Koy | Asemakatu 5 | 40100 | JYVÄSKYLÄ | 1953/1972/1980/ 1991/2010 | 100% | |||
| 14 Galleria | 6,400 | 99.0 | 99.7 | |||||
| Oulun Galleria Koy | Isokatu 23 | 90100 | OULU | 1987 | 100% | 3,400 | ||
| Oulun Isokatu 20 Koy | Isokatu 20 | 90100 | OULU | 1967/1993/1998 | 100% | 1,500 | ||
| Oulun Isokatu 22 Koy | Isokatu 22 | 90100 | OULU | 1967/1993/1998 | 100% | 1,500 | ||
| 15 IsoKarhu | 15,000 | 97.5 | 99.5 | |||||
| Kauppakeskus IsoKarhu Oy | Yrjönkatu 14 | 28100 | PORI | 1972/2001/2004 | 100% | |||
| 16 IsoKristiina | 11,200 | 100.0 | 100.0 | |||||
| Lappeenrannan Villimiehen Vitonen Oy Kaivokatu 5 | 53100 | LAPPEENRANTA 1987,1993/2013- | 50% | |||||
| 17 Jyväskeskus | 5,800 | 90.2 | 94.3 | |||||
| Jyväskylän Kauppakatu 31 Koy | Kauppakatu 31 | 40100 | JYVÄSKYLÄ | 1955/1993 | 100% | |||
| 18 Koskikara | 5,800 | 84.6 | 88.6 | |||||
| Valkeakosken Liikekeskus Koy | Valtakatu 9-11 | 37600 VALKEAKOSKI | 1993 | 25% | 1,500 | |||
| Valkeakosken Torikatu 2 Koy | Valtakatu 9-11 | 37600 VALKEAKOSKI | 1993 | 100% | 4,300 | |||
| 19 Koskikeskus | 34,300 | 93.2 | 94.9 | |||||
| Tampereen Koskikeskus Koy | Hatanpään valtatie 1 | 33100 | TAMPERE | 1988/1995/2012 | 100% | |||
| 20 Linjuri | 9,200 | 96.6 | 98.3 | |||||
| Linjurin Kauppakeskus Koy | Vilhonkatu 14 | 24100 | SALO | 1993/2007 | 89% | |||
| 21 Sampokeskus | 13,800 | 86.9 | 93.3 | |||||
| Rovaniemen Sampotalo | Maakuntakatu 29-31 | 96200 ROVANIEMI | 1990 | 100% | 11,700 | |||
| Lintulankulma Koy | Rovakatu 28 | 96200 ROVANIEMI | 1989/1990 | 100% | 2,100 | |||
| 22 Trio | 45,600 | 89.2 | 88.8 | |||||
| Lahden Hansa Koy | Kauppakatu 10 | 15140 | LAHTI | 1992/2010 | 100% | 11,000 | ||
| Lahden Trio Koy | Aleksanterinkatu 20 | 15140 | LAHTI | 1977/1985-1987/1992/2007 | 90% | 34,600 | ||
| Hansaparkki Koy | Kauppakatu 10 | 15140 | LAHTI | 1992 | 36% | |||
| OTHER RETAIL PROPERTIES, HELSINKI METROPOLITAN AREA | ||||||||
| 1 Aseman Ostari |
4,000 | 97.4 | 98.2 | |||||
| Kirkkonummen Liikekeskus Oy | Asematie 3 | 02400 KIRKKONUMMI 1991/2011 | 67% | |||||
| 2 Asolantien Liikekiinteistö Oy | Asolanväylä 50 | 01360 | VANTAA | 1986 | 100% | 1,800 | 100.0 | 100.0 |
| 3 Hakunilan Keskus | 3,780 | 92.4 | 91.3 | |||||
| Hakucenter Koy | Laukkarinne 6 | 01200 | VANTAA | 1986 | 19% | 780 | ||
| Hakunilan Keskus Oy | Laukkarinne 4 | 01200 | VANTAA | 1982 | 41% | 3,000 | ||
| 4 Kontulan Asemakeskus Koy | Keinulaudankuja 4 | 00940 HELSINKI | 1988/2007 | 35% | 4,500 | 100.0 | 100.0 | |
| 5 Laajasalon Liikekeskus | 2,660 | 100.0 | 100.0 | |||||
| Laajasalon Liikekeskus Oy | Yliskyläntie 3 | 00840 HELSINKI | 1972/1995 | 50% | 2,300 | |||
| Kuvernöörintie 8 Koy | Kuvernöörintie 8 | 00840 HELSINKI | 1982 | 100% | 360 |
| Property | Address | Built in / renovated in |
Holding, % | Citycon's GLA, sq.m. |
Technical Occupancy rate, %, sq.m.1) |
Economic Occupancy rate, %, EUR1) |
|||
|---|---|---|---|---|---|---|---|---|---|
| 6 Lauttasaaren Liikekeskus Oy | Lauttasaarentie 28-30 | 00200 HELSINKI | 1970 | 24% | 1,500 | 100.0 | 100.0 | ||
| 7 Länsi-Keskus Koy | Pihatörmä 1 | 02210 | ESPOO | 1989 | 41% | 7,900 | 90.8 | 91.9 | |
| 8 Minkkikuja 4 Koy | Minkkikuja 4 | 01450 | VANTAA | 1989 | 100% | 2,300 | 100.0 | 100.0 | |
| 9 Pihlajamäen Liiketalo Oy | Meripihkatie 1 | 00710 | HELSINKI | 1970 | 43% | 1,700 | 84.5 | 65.8 | |
| 10 Salpausseläntie 11 Koy | Salpausseläntie 11 | 00710 | HELSINKI | 1973 | 31% | 600 | 0.0 | 0.0 | |
| 11 Sampotori | Heikintori, Kauppamiehentie 1 | 02100 | ESPOO | plot | 100% | 50 | 100.0 | 100.0 | |
| 12 Sinikalliontie 1 Koy | Sinikalliontie 1 | 02630 ESPOO | 1964/1992,2013 | 100% | 15,700 | 87.7 | 94.4 | ||
| 13 Soukan Itäinentorni As Oy | Soukantie 16 | 02360 ESPOO | 1972 | 27% | 1,600 | 100.0 | 100.0 | ||
| 14 Talvikkitie 7-9 Koy | Talvikkitie 7-9 | 01300 | VANTAA | 1989 | 100% | 9,700 | 98.5 | 95.4 | |
| 15 Vantaan Laajavuorenkuja 2 Koy | Laajavuorenkuja 2 | 01620 | VANTAA | 1976 | 100% | 2,000 | 100.0 | 100.0 | |
| 16 Vantaan Säästötalo Koy | Kielotie 20 | 01300 | VANTAA | 1983 | 61% | 3,800 | 77.6 | 74.9 | |
| OTHER RETAIL PROPERTIES, OTHER AREAS IN FINLAND | |||||||||
| 17 Forssan Hämeentie 3 Koy | Hämeentie 3 | 31100 | FORSSA | 1978 | 100% | 4,500 | 0.0 | 0.0 | |
| 18 Kaarinan Liiketalo Koy | Oskarinaukio 5 | 20780 KAARINA | 1979/1982 | 100% | 9,200 | 100.0 | 100.0 | ||
| 19 Karjaan Ratakatu 59 Koy | Ratakatu 59 | 10320 | KARJAA | 1993 | 100% | 3,100 | 100.0 | 100.0 | |
| 20 Kotkan Keskuskatu 11 Koy | Keskuskatu 11 | 48100 | KOTKA | 1976 | 100% | 4,300 | 78.6 | 83.1 | |
| 21 Kuopion Kauppakatu 41 Koy | Kauppakatu 41 | 70100 | KUOPIO | 1977 | 100% | 11,200 | 93.9 | 97.2 | |
| 22 Kuusankosken Kauppakatu 7 Koy | Kauppakatu 7 | 45700 KUUSANKOSKI 1980 | 100% | 2,100 | 100.0 | 100.0 | |||
| 23 Lahden Kauppakatu 13 Koy | Kauppakatu 13 | 15140 | LAHTI | 1971 | 100% | 8,600 | 100.0 | 100.0 | |
| 24 Lentolan Perusyhtiö Oy | Mäkirinteentie 4 | 36220 KANGASALA | 2007 | 100% | 11,900 | 93.5 | 94.4 | ||
| 25 Lillinkulma Koy | Jännekatu 2-4 | 20760 PIISPANRISTI | 2007 | 100% | 7,400 | 100.0 | 100.0 | ||
| 26 Orimattilan Markkinatalo Oy | Erkontie 3 | 16300 | ORIMATTILA | 1983 | 77% | 3,100 | 86.4 | 87.8 | |
| 27 Porin Asema-aukio Koy | Satakunnankatu 23 | 28130 | PORI | 1957/1993 | 100% | 18,800 | 46.4 | 42.0 | |
| 28 Porin Isolinnankatu 18 Koy | Isolinnankatu 18 | 28100 | PORI | 1986/2012 | 100% | 4,700 | 69.2 | 74.8 | |
| 29 Puijonlaakson Palvelukeskus Koy | Sammakkolammentie 6 | 70200 KUOPIO | 1971 | 31% | 1,500 | 100.0 | 100.0 | ||
| 30 Runeberginkatu 33 Koy | Runeberginkatu 33 | 06100 | PORVOO | 1988 | 100% | 6,300 | 100.0 | 100.0 | |
| 31 Säkylän Liiketalo Koy | Pyhäjärventie 3 | 27800 SÄKYLÄ | 1969 | 100% | 1,200 | 100.0 | 100.0 | ||
| 32 Vaakalintu Koy | Keskuskatu 15 | 11100 | RIIHIMÄKI | 1980 | 96% | 5,900 | 90.0 | 93.9 | |
| 33 Varkauden Relanderinkatu 30 Koy | Relanderinkatu 28-34 | 78200 VARKAUS | 1990 | 100% | 8,200 | 100.0 | 100.0 | ||
| 55 FINLAND TOTAL | 571,890 | 92.2 | 95.1 | ||||||
| SWEDEN | |||||||||
| SHOPPING CENTRES, STOCKHOLM AREA AND UMEÅ | |||||||||
| 1 | Fruängen Centrum | Fruängsgången | 12952 | HÄGERSTERN | 1965 | 100% | 14,700 | 94.0 | 95.8 |
| 2 Högdalen Centrum | 19,300 | 89.1 | 88.6 | ||||||
| Citycon Högdalen Centrum AB | Högdalsgången 1-38 | 12454 | BANDHAGEN | 1959/1995 | 100% | ||||
| 3 Jakobsbergs Centrum | 41,500 | 94.6 | 95.7 | ||||||
| Citycon Jakobsbergs Centrum AB | Tornérplatsen 30 | 17730 | JÄRFALLA | 1959/1993 | 100% | ||||
| 4 Liljeholmstorget Galleria | 41,000 | 97.4 | 97.6 | ||||||
| Citycon Liljeholmstorget Galleria AB | Liljeholmstorget 7 | 11763 | STOCKHOLM | 1973/1986/2007 /2008/2009 | 100% |
| Property | Address | Built in / renovated in |
Holding, % | Citycon's GLA, sq.m. |
Technical Occupancy rate, %, sq.m.1) |
Economic Occupancy rate, %, EUR1) |
|||
|---|---|---|---|---|---|---|---|---|---|
| 5 Strömpilen | 26,900 | 98.1 | 97.9 | ||||||
| Strömpilen AB | Strömpilsplatsen | 90743 UMEÅ | 1927/1997 | 100% | |||||
| 6 Tumba Centrum | 25,500 | 96.2 | 97.5 | ||||||
| Citycon Tumba Centrumfastigheter AB Tumba Torg 115 | 14730 | BOTKYRKA | 1954/2000 | 100% | |||||
| 7 Åkermyntan Centrum | Drivbänksvägen 1 | 16574 | HÄSSELBY | 1977/2012 | 100% | 10,000 | 93.3 | 92.9 | |
| 8 Åkersberga Centrum | 28,200 | 87.6 | 89.9 | ||||||
| Åkersberga Centrum AB | Storängstorget | 18430 | ÅKERSBERGA | 1985/1995/1996/2010/2011 | 75% | ||||
| SHOPPING CENTRES, GOTHENBURG AREA | |||||||||
| 9 Stenungs Torg | 36,400 | 93.1 | 94.1 | ||||||
| Stenungs Torg Fastighets AB | Östra Köpmansgatan 2-16, 18A-C | 44430 STENUNGSUND 1967/1993/2013- | 100% | ||||||
| OTHER RETAIL PROPERTIES, STOCKHOLM AREA AND UMEÅ | |||||||||
| 1 | Kallhäll | Skarprättarvägen 36-38 | 17677 | JÄRFALLA | 1991 | 100% | 3,700 | 63.4 | 73.1 |
| 2 Länken | Gräddvägen 1-2 | 90620 UMEÅ | 1978/2004/2006 | 100% | 7,300 | 100.0 | 100.0 | ||
| 11 SWEDEN TOTAL | 254,500 | 93.8 | 95.1 | ||||||
| BALTIC COUNTRIES AND NEW BUSINESS | |||||||||
| ESTONIA, SHOPPING CENTRES | |||||||||
| 1 | Kristiine Keskus | 43,700 | 100.0 | 100.0 | |||||
| Kristiine Keskus Oü | Endla 45 | 10615 | TALLINN | 1999-2002/2010/2013 | 100% | ||||
| 2 Magistral | 11,700 | 100.0 | 100.0 | ||||||
| Magistral Kaubanduskeskuse Oü | Sõpruse pst 201/203 | 13419 | TALLINN | 2000/2012 | 100% | ||||
| 3 Rocca al Mare | 57,400 | 100.0 | 100.0 | ||||||
| Rocca al Mare Kaubanduskeskuse AS | Paldiski mnt 102 | 13522 | TALLINN | 1998/2000/2007-2009/2013 | 100% | ||||
| LITHUANIA, SHOPPING CENTRES | |||||||||
| 4 Mandarinas | 7,900 | 100.0 | 100.0 | ||||||
| UAB Prekybos Centras Mandarinas | Ateities g. 91 | 06324 VILNIUS | 2005 | 100% | |||||
| DENMARK, SHOPPING CENTRES | |||||||||
| 5 Albertslund Centrum | 14,700 | 96.2 | 96.4 | ||||||
| Albertslund Centrum ApS | Stationstorvet 23 | 2620 | ALBERTSLUND 1965 | 100% | |||||
| 5 BALTIC COUNTRIES AND NEW BUSINESS, TOTAL | 135,400 | 99.6 | 99.7 | ||||||
| 71 TOTAL ALL | 961,790 | 93.7 | 95.7 | ||||||
| SHOPPING CENTRES OWNED THROUGH JOINT VENTURES | |||||||||
| 1 | Kista Galleria | ||||||||
| Kista Galleria Kommanditbolag | Kista Galleria | 16453 | STOCKHOLM | 1977,2002/2009 | 50% | 94,200 | 99.2 | 99.1 |
1) Formulas are available on page 65.
In accordance with our instructions as the External Valuer of Citycon Oyj ("Company"), we have carried out a fair valuation of the properties held within the Company's investment property portfolio as at 31 December 2013, to arrive at our opinion of Fair Value.
Fair value is defined by the International Accounting Standards Board (IASB) and IFRS 13 as: "The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants on the measurement date."
The International Valuation Standards Board (IVSB) considers that definitions of Fair Value are generally consistent with Market Value and we confirm that the Fair Value reported is effectively the same as our opinion of Market Value.
We understand that this valuation is required for financial reporting and performance measurement purposes.
We confirm that our valuations are fully compliant with IFRS accounting standards and IVSC valuation standards and guidance. We also confirm that we have no involvement with the subscriber or the properties valued which is likely to cause a conflict of interest in our provision of this advice.
We carried out inspections of each of the properties during September-December 2011 when the property portfolio was evaluated by us for the first time. We have also re-inspected 59 properties after the initial valuation, as well as inspected all the properties acquired after the initial valuation.
We have not measured the properties but have relied on the leasable areas supplied to us by the Company. We have not read copies
of the leases or of other related documents, but have relied on the tenancy information provided by the Company, which reflects the latest available tenancy position.
The valuations were carried out by local Jones Lang LaSalle offices in Finland and Sweden. In Estonia, Lithuania and Denmark, we were supported in the delivery of our advice by local affiliates.
This report is addressed to and may be relied upon by the Company. It has no other purpose and should not be relied on by any other person or entity. No responsibility whatsoever is accepted on the part of any third party, other than those specified above and neither the whole of the Report, nor any part, nor references thereto, may be published in any document, statement or circular, nor in any communication with such third parties, without our prior written approval of the form and context in which it will appear.
According to Statistics Finland the GDP growth in Q3 2013 was 0% compared to the previous quarter and −1.0% compared to Q3 2012. Ministry of Finance forecasts the GDP growth for the whole year 2013 to be −1.2%. In 2014 the GDP growth forecasts are overall more positive varying from −0.8% up to 2.3%. Investments and consumer spending are forecast to remain subdued or decrease thus domestic demand will not speed up growth.
Retail sales increased by 0.2% in November (year-on-year) mainly due to the positive development of grocery store sales. The sales volume contracted respectively by -0.3%. Forecast retail sales growth in
2013-2015 has been revised slightly downwards to 1.5% p.a. This development is mainly driven by relatively low consumer confidence (the majority of consumers are expecting the economic situation in Finland to continue to weaken but, at the same time, the majority still have cautious confidence in their own economic situation and they see increase in their own saving possibilities), sluggish employment outlook and limited growth of purchasing power due to increasing tax burden with only moderate increase of salaries.
Prime shopping centre rents remained stable compared to the previous quarter and year-onyear. The softening outlook for retail sales limits the rental growth potential and has already made occupiers more cautious which has lengthened leasing negotiations and slowed down decision making. In 2014 prime rents are forecast to increase by 0.7% but the rental growth potential is limited only to prime centres and locations.
The last quarter of 2013 was relatively active for the investment market recording the highest investment volume since Q1 2008. In the retail sector the biggest deal published was the transaction of 50% of shopping centre Kamppi in the Helsinki CBD. Demand for core assets remains strong, as equity rich investors keep looking for safe havens, but there are also signs of investors starting to diversify their portfolios, both in terms of risk and geography, by looking for more value added and secondary opportunities. However, stronger economic fundamentals are needed before more robust growth could be expected. Due to strong investment demand, shopping centre prime yields have remained stable both quarter-onquarter and year-on-year and no significant change is expected in 2014.
According to the National Institute of Economic Research (NIER), Sweden's GDP growth in Q3 2013 was weak, although preliminary information suggests that the growth improved in Q4 2013. For 2013 as a whole, NIER forecasts GDP growth of 1.0% and then 2.4% in 2014. Tax reductions and low inflation are contributing to strengthening purchasing power for households while both investments by businesses as well as exports are also increasing. The labour market continues to improve with unemployment forecast to be 8.0% in 2013 and then 7.7% at the end of 2014. The Swedish Central Bank's decision to reduce the base rate from 1.0% to 0.75% during Q4 should support the economic recovery.
Retail sales increased by 1.7% in the period January to October 2013 and latest forecasts by HUI Research suggest an increase of 2.0% for 2013 as a whole; which will be the same rate of growth as 2012. Further, according to HUI Research, retail turnover is forecast to be 3% in 2014. Daily goods sales are forecast to beat the performance of non-daily goods sales in both 2013 and 2014, although the rate of growth for non-daily goods will make some progress in catching up with the daily goods growth rate in 2014, with a gradually improving economy and some pent up demand contributing to this.
Prime shopping centre rents are increasing slowly and in general terms are estimated to have increased by around 1.5% over the year. Subdued retail turnover growth and competition limits the rental growth. In 2014, prime rents are forecast to increase by 2.0 - 2.5% as retail turnover growth improves. Generally, prime retail rents will perform better than secondary retail rents in terms of growth.
Demand for core assets remains strong as equity rich investors look for safe havens. The transaction volume for retail properties in Q4 2013 was some SEK 5 billion which is less than Q4 2012 when some SEK 7.6 billion was transacted. Comparing 2013 and 2012 as a whole in terms of retail transaction volume, SEK 12.7 billion was transacted in 2013 which is around 95% of the 2012 volume. The largest transaction of both Q4 2013 and the year as a whole was KF Fastigheter's sale of a portfolio of 7 retail properties, including Bromma Blocks in Stockholm to Starwood for SEK 3.9 billion (SEK 19,024 / sqm.) Prime shopping centre yields remain stable quarter-on-quarter as well as year-on-year and no significant change is expected in 2014.
According to Statistics Estonia GDP growth in Q3 was 0.6% compared to Q2 and 0.7% compared to Q3 2012. GDP growth forecast for the full year 2013 is 1.0%. The economy is expected to resume higher growth in 2014 as GDP is forecast to increase from 2.0% to 3.0%. Strong domestic demand remains the main growth driver of the economy, supported by rise in employment and disposable income.
Retail sales increased by 7% in November (year-on-year) measured in constant prices. The main growth driver was the consumer goods segment growing by 14%. The Bank of Estonia forecasts private consumption to grow by 3.4%. Growth is supported by increasing real income, an improving labour market and high consumer confidence (indicators slightly above the 10 year average). Increasing purchasing power supports the retail sales outlook for 2014 and 2015.
Prime shopping centre rents remained stable in Q4 2013, but increased year-on-year approximately by 2.0%. The vacancy rate in professionally managed prime centres is near 0% and demand for small to mid-size units is high. At the same time retail chains are optimising their store networks and older shopping centres in remote locations face challenges to renew contracts. In 2014 prime rents are forecast to increase by 1.0-1.5%.
The investment market in Q4 2013 featured transactions mainly in the office and industrial segment, retail transactions are expected to take place in Q1 2014. Lack of investment product has hindered growth of transaction volumes. Prime yields have dropped to 7.3% and best-in-class regional centres can command premium pricing. Strong economic fundamentals support further yield compression, but at the same time, the gradually increasing cost of financing negatively affects the yields.
According to Statistics Lithuania GDP growth in Q3 was 0.2% compared to the previous quarter and 2.3% compared to Q3 2012. The Bank of Lithuania forecasts GDP growth for the full year 2013 to be 2.8% and the economy is expected to continue growing in 2014 at a level of 3.5%. The main drivers of the economy are domestic demand and growing investments.
Retail sales increased by 3.1% in November (year-on-year) measured in constant prices according to Lithuania Statistics. During the first ten months of 2013 the main growth driver was the non-food product segment growing by 5.4% whilst the food segment showed growth of 4.0%. Consumer confidence grew slightly
in the end of 2013. Growth in purchasing power supports retail sales outlook for 2014.
Prime shopping centre rents increased by 2% (year-on-year) in Q4 2013, but only in professionally managed prime centres; thus rents in secondary centres have remained stable. Demand for space in shopping centres is growing, supporting the decline in vacancy rates and in prime properties the vacancy rate is near 0%. In 2014 prime rents are forecast to increase by 1.0%.
The Lithuanian property investment market witnessed activity in office and industrial segments, but no remarkable retail property transactions were published in Q4 2013. Demand for core office and retail assets remains strong, but mainly in the small to mid-size lot sizes. There is a lack of core retail properties on the market and this has hindered growth of transaction volumes. Prime shopping centre yields have dropped to 7.5% and best-in-class regional centres can command premium pricing. Growing investment activity and strong economic fundamentals support further yield compression, but at the same time gradually increasing cost of financing affects the yields negatively.
According to Statistics Denmark GDP growth in Q3 2013 was 0.4% compared to the previous quarter and 0.5% compared to Q3 2012. For 2013 the consensus forecast indicates slightly positive growth in the area of 0.4%. For 2014 the forecasts are overall more positive varying from 1% up to 2% growth. Exports and private consumption are expected to be the primary drivers for growth in 2014 while public consumption and investments drove the growth in 2013.
Retail sales decreased by 1% in November (year-on-year) mainly due to a decrease in consumer goods sales. Measured by volume, the drop was correspondingly -0.3%. It is expected that retail sales will start to increase slightly in 2014. Private consumption levels are expected to increase and this will drive up retail sales. At the same time, consumer confidence is fairly strong and overall there is positive sentiment regarding the future economic situation in Denmark.
Prime shopping centre rents remained stable compared to the previous quarter being also stable on a year-on-year basis. The slow growth rates in retail sales limit the rental growth potential and have already made occupiers more cautious which has lengthened leasing negotiations and slowed down decision making. In the high-street market in Copenhagen however there have been significant rent increases in Q4 2013. In 2014 prime shopping centre rents are forecast to remain stable and the rents will only start to grow after a few quarters with positive economic growth.
The retail investment market have seen increasing activity in Q3 and Q4 2014. NREP have set up a new retail fund in Denmark and have started to buy up minor shopping centres. In Q4 alone they bought three shopping centres at a total volume of DKK 500 million. At the end of 2013 two large pension funds ATP and PensionDanmark announced their acquisition of the landmark department store in Copenhagen, Magasin Du Nord. The total investment is estimated to be at around DKK 2 billion. Together with a number of high street transactions the total investment volume in the retail segment has almost doubled compared
to 2012. Due to the fairly strong investment demand for prime assets, shopping centre prime yields have remained stable both quarter-on-quarter and year-on-year and no significant change is expected either in 2014.
We have adopted a 10-year cash flow as the main valuation method. The model was provided by the Company. Cash flows are calculated based on information from existing lease agreements. For the period after the expiry of these agreements, our market evaluation of the estimated rental value (ERV) replaces the contract rent.
Potential Gross Rental Income equals leased space with respect to contract rents and vacant space with respect to ERV. Deducting both the ERV for the void period between the expired contract and assumed new contract, and the assumed general vacancy level after the start of the assumed new lease, results in the Effective Gross Rental Income. Effective Gross Rental Income less operating expenses (including repairs and tenant improvements) equals the Net Operating Income (NOI). NOI less any capital expenditure equals the bottom-level cash flow that has been discounted to reach the income stream's present value.
The residual value at the end of the 10-year cash flow period is calculated by using the exit yield to capitalise the 11th year bottomlevel cash flow. The value of the property is calculated as the sum of the annually discounted net income stream, the discounted residual value at the end of the calculation period and any other assets increasing the value (e.g. unused usable building right).
Development projects are included in the valuation of the portfolio in line with information received from representatives of the Company. Adopting the applied valuation model, future rental income is based on finalised rental agreements and rental projections for the valued development project. Correspondingly, the development period is considered as a period when premises generate no/limited income and when uncommitted investments are included in the cost side of the valuation model, as a value reducing factor. Thus, the value of a development project increases automatically as investments are committed and the opening day of the renewed premises approaches.
At the end of December 2013, Citycon owned 72 properties (including Kista Galleria). This valuation statement includes all properties except Kista Galleria which is valued separately. The property portfolio under valuation consists mainly of retail properties, of which 55 are located in Finland, 11 in Sweden, three in Estonia, one in Lithuania and one in Denmark. The core of the portfolio consists of 36 shopping centre properties, which comprise 81% of the portfolio's leasable area and represent most of its value. The rest of the property portfolio consists of other retail properties such as supermarkets and shops.
Since the previous valuation in Q3, one property has been divested; Torikeskus located in Seinäjoki, Finland.
The total fair value of the portfolio in Q4 2013 was approximately EUR2,730 million. Compared to the Q3 2013 the fair value
increased by EUR10.6 million i.e. 0.4% when excluding the divested property (Torikeskus). The weighted average yield requirement of the portfolio remained at 6.3%. The increase in fair value is mainly driven by the committed investments, revision of yields and positive development of prime shopping centre rents.
In the table on the next page, weighted average yields (weighted by the value of the properties) are presented. Citycon's portfolio includes a few relatively valuable properties compared to the rest of the portfolio. This means that weighted averages are highly influenced by the changes in these properties. Iso Omena (located in Finland) is the most valuable property in the portfolio under valuation.
The fair value of the Finnish portfolio is EUR1,669 million and it increased by EUR8.4 million from Q3 when excluding Seinäjoen Torikeskus which was disposed of during Q4. Compared to Q3 the weighted average yield requirement (6.2%) has remained unchanged, as well as the weighted reversionary yield (6.7%). The weighted initial yield (6.3%) has decreased by 10 bps due to a modest decrease in contract rents. The change in the value of the Finnish portfolio is mainly driven by committed investments and by yield movement of certain properties due to new market evidence. In over half of the properties, market rents have been adjusted both down and upwards to reflect the changes in the local market.
The fair value of the Swedish portfolio is EUR719 million, meaning that the portfolio's value has decreased by 0.7% since Q3. The decrease in the value of the portfolio is entirely due to the weakening of the Swedish Crown and excluding this the value of the properties increased by EUR11.3 million due to committed investments and positive development of rents. The weighted average yield requirement for the Swedish portfolio remained unchanged being 5.9%. The weighted average initial yield has increased by 10bps (5.9%) as has the weighted average reversionary yield being now 6.6%. In two properties the yield has been moved in, in one centre due to the positive changes of sales figures and in the other centre due to the news that a project has started, where Hennes & Mauritz has signed up as an anchor tenant. In almost every property the market rents have been adjusted to reflect the changes in the local market.
Properties in Baltic Countries and Denmark The fair value of the Baltic countries and Denmark property portfolio is EUR342 million. Compared to the Q3 value, this represents a 2.2% increase in value. The increase in value is mainly driven by the revised yields of the properties in Baltic countries. The weighted average yield requirement of the portfolio has decreased by 30bps to 7.3%. The weighted average initial yield decreased by 20bps to 7.7% and the weighted average reversionary yield decreased by 30 bps to 7.7%. In four properties the yield has been moved in due to the changing features of the properties. In three properties, market rents have been adjusted up, this is mainly due to the increased attractiveness of the refurbished centres.
A sensitivity analysis of the portfolio's fair value was carried out by creating a summary cash flow based on individual cash flow calculations. Changes in fair value were tested by modifying the key input parameters of the calculations. The parameters tested were yield requirement, estimated rental value and operating expenses. The current fair value of the properties was used as a starting point for the analysis, which was performed by changing one parameter at a time while all others remain unchanged and then calculating the corresponding fair value of the total portfolio. The sensitivity analysis is a simplified model intended to support the understanding of the value effect of different parameters on the valuation.
The value of the portfolio is most sensitive to the changes in estimated rental value and yield requirement. A 10% increase in estimated rental value leads to change of around 13% in value, while a 10% fall in the yield requirement causes an increase of around 11% in value. Changes in expenses have a more modest effect on the value than other parameters.
We are of the opinion that the aggregate of the Fair Values, free of liabilities and debt, of the properties in the subject portfolio as at 31 December 2013, is ca. EUR2,730,000,000 (Two Thousand Seven Hundred and Thirty Million Euros).
In Helsinki and Stockholm 21st of January 2014 Yours faithfully
Tero Lehtonen Director For and on behalf of Jones Lang LaSalle Finland Oy
Benjamin Rush Associate Director For and on behalf of Jones Lang LaSalle AB
Maria Sirén Analyst For and on behalf of Jones Lang LaSalle Finland Oy
Fair value change: Change of property portfolios market values deducted by investments and excluding exchange rate differences.
Gross rental income: Gross rents, capital rents, maintenance charges and other possible rental income.
Net initial yield: The annualised net rental income from a property, at the balance sheet date, divided by the market value of the property where the value of the unused building right has been deducted.
Net rental income: Gross rental income added by service charge income deducted by property operating expenses from leasing operations.
Net (rental) yield: Net rental income in proportion to the property's market value. Net rental yield is calculated over the past 12 months period by constructing an index from the monthly rental income and computational monthly market value figures. Annual return is calculated by compounding the indexes.
NAV: Based on the Best Practices Policy Recommendations by EPRA, a company's net assets on a per-share basis. Formula is available in the financial statements on page 23.
Net yield requirement: For market value calculation, the net yield requirement comprises risk-free rate of interest as well as property and market-specific risk. Net yield requirement is the lowest internal rate of the return of the total investment period, at which a company is willing to invest.
NNNAV: Based on the Best Practices Policy Recommendations by EPRA, a company's adjusted per-share NAV. Formula is available in the financial statements on page 23.
Reversionary yield: The estimated rental value (market rent) of the property deducted by property operating expenses, expressed as a percentage of the market value of the property where the value of the unused building right has been deducted.
Anchor tenant: A major tenant with a strong financial standing, usually a chain, occupying a large area in a shopping or retail centre. Anchor tenants typically have a long-term lease.
Catchment area: An estimate of a shopping centre's geographic market area in Finland, based on a visitor and travel time survey by Taloustutkimus Oy and Citycon's interviews. In Sweden and in Estonia, the population within a catchment area is defined as those living within 5 to 15 minutes' travel time to the shopping centre. In Lithuania, similar data are based on estimates.
Economic occupancy rate: Rental income based on existing leases divided by vacant premises' estimated market rents, to which rental income based on existing leases is added.
Gross leasable area: An area which can be reasonably expected to be available for lease and for which the lessee is ready to pay a rent.
Investments / (Gross) Capital expenditure: Refers to gross investments in the balance sheet. Capital expenditure includes the investments on investment properties and property, plant and equipment as well as on intangible assets. The acquisition cost of investment properties consists of a debtfree purchase price and transaction costs such as consultancy fees and transfer taxes. Gross investments on development projects, refurbishments and changes in leased premises are also considered as capital expenditure.
Like-for-like property: A property owned by the company for the whole current and previous period, excluding properties under development and expansion as well as lots.
Occupancy cost ratio (OCR): Calculated as the share of annual gross rent paid by a tenant to Citycon, of the tenant's annual sales, excluding VAT. The VAT percentage is an estimate. Expresses tenant's ability to pay rent.
Occupancy rate (sq.m)/Technical occupancy rate: The ratio of leased premises to leasable premises.
Operating expenses, or the costs of operations: Costs resulting from the management and maintenance of a property, such as heating, electricity, security guard services and cleaning services for common areas.
Turnover-based rent or turnover-linked rent: Rent divided into turnover-linked capital rent and maintenance fee. In majority of the turnover-based leases capital rent contains
a minimum rent tied to the cost-of-living index. If the minimum rent is lower than the rent based on the actual turnover, the lessee will pay the resulting excess. The portion tied to turnover is determined by the lessee's field of industry and estimated sales.
Carbon dioxide, CO2 : A greenhouse gas produced during the combustion of organic matter (e.g. power plants using fossil fuels, car engines etc.). Carbon dioxide substantially contributes to climate warming, since its level in the atmosphere is over a hundred times that of other greenhouse gases in total.
Carbon footprint: Carbon footprint refers to the effect on climate warming of an individual person, organisation, event or product. Nearly all human activities have a carbon footprint that gives the amount of greenhouse gas emissions each activity produces. Presented by mass (g, kg, t).
Climate change: The increase in the average temperature of the Earth, its sea level rise and the decrease in its ice and snow cover. Effects also include changes in rainfall. Global warming is most probably primarily due to the acceleration in the planet's greenhouse effect. The greenhouse effect has gained momentum because human activities have increased the amount of carbon dioxide and other greenhouse gases in the atmosphere.
CO2 e: Carbon dioxide equivalent. A common measure for greenhouse gases, allowing the calculation of the effect of different greenhouse gas emissions on the acceleration of the greenhouse effect. This calculation converts the effects of all greenhouse gases, in order to obtain an equivalent to the effect of carbon dioxide on the climate.
Environmental impact: Any change in the environment that entirely or partly results from an organisation's activities, products or services. Such a change may be hazardous or beneficial.
G3.1 guidelines: A reporting guideline update related to GRI reporting, published in 2011.
GHG: Greenhouse gas (cf. Greenhouse gases)
GHG protocol: Greenhouse gas protocol; an accounting tool for calculating the size of carbon footprints.
Greenhouse gases: Gases appearing in the atmosphere that warm the Earth in a manner similar to glass panes in a greenhouse. Greenhouse gases allow short-wave solar light radiation to pass through the atmosphere while absorbing long-wave heat radiation emitted by the Earth's surface. The most important gases in the atmosphere, which maintain and strengthen the greenhouse effect, are carbon dioxide, methane, ozone, nitrous oxide ("laughing gas") and the Freons.
Hazardous waste: Hazardous waste, as defined in the Finnish Waste Act, means any waste which may pose a particular hazard or harm to health or the environment due to its chemical or some other properties. Examples of waste classified as hazardous waste include solvents, paints and coatings, batteries containing heavy metals,
fluorescent tubes, cooling appliances, TV sets and computer displays as well as waste oil.
Primary energy: Primary energy is energy found in nature that has not been converted. It is divided into renewable (e.g. wind power) and non-renewable (e.g. oil) energy.
Sustainable development: Sustainable development is continuous, guided societal change, with the aim of safeguarding the possibilities for a good life of present and future generations. Sustainable development can be divided into four dimensions: economic, ecological, social and cultural.
CRESS: Construction and Real Estate Sector Supplement. GRI's Construction and Real Estate Sector Supplement which provides guidance for anyone who invests in, develops, constructs, or manages buildings.
Association. A common interest group which publishes 'best practice' in accounting, financial reporting and corporate governance for European listed real estate companies. 1)
Benchmark. Global survey of property funds and real estate companies disclosing information on environmental management and performance. The survey's initiative origins from a global consortium of institutional investors. The survey was conducted by GRESB Foundation.
GRI: Global Reporting Initiative. A non-profit organization that works towards a sustainable global economy by providing sustainability reporting guidance.
ICSC: The International Council of Shopping Centers. 1)
IEA: The International Energy Agency.
NCSC: The Nordic Council of Shopping Centers. 1)
RAKLI ry: The Finnish Association of Building Owners and Construction Clients. 1)
SIPA: Scandinavian International Property Association. 1)
WBCSD: World Business Council for Sustainable Development.
WRI: World Resource Institute.
kWh = kilowatt hour MWh = megawatt hour MJ = megajoule TJ = terajoule t = tonne m³ = cubic metre
1) Citycon is a member
Citycon's GLA 14,300 sq.m. Anchor tenants S-Market, K-Supermarket, Alko, Pharmacy, Tarjoustalo, H&M
Duo, Tampere Citycon's GLA 13,600 sq.m. Anchor tenants LIDL, S-Market, K-Market, Alko, Posti
Espoontori, Helsinki area Citycon's GLA 16,300 sq.m. Anchor tenants K-Supermarket, Tarjoustalo
Forum, Jyväskylä Citycon's GLA 16,800 sq.m. Anchor tenants Seppälä, Tokmanni, Pentik, Top-Sport, Vero Moda
Galleria, Oulu Citycon's GLA 6,400 sq.m. Anchor tenants Lindex, Life, Top-Sport
Heikintori, Helsinki area Citycon's GLA 6,300 sq.m. Anchor tenants Alko, Eurokangas, Itella (post office)
Isomyyri, Helsinki area Citycon's GLA 10,800 sq.m. Anchor tenants S-Market, Tarjoustalo
IsoKarhu, Pori
Muksumassi
Citycon's GLA 15,000 sq.m. Anchor tenants H&M, Intersport,
IsoKristiina, Lappeenranta Citycon's GLA 11,200 sq.m. Anchor tenants Anttila, Alko
Iso Omena, Helsinki area Citycon's GLA 63,300 sq.m. Anchor tenants Prisma, Citymarket, H&M, Intersport, Finnkino
Jyväskeskus, Jyväskylä Citycon's GLA 5,800 sq.m. Anchor tenants H&M, KappAhl, Finnkino, Seppälä
Koskikara, Valkeakoski Citycon's GLA 5,800 sq.m. Anchor tenants Alko, Seppälä
Koskikeskus, Tampere Citycon's GLA 34,300 sq.m. Anchor tenants Intersport, Stadium, Lindex
Linjuri, Salo Citycon's GLA 9,200 sq.m. Anchor tenants K-Market, Alko, Itella (post office), Intersport
Lippulaiva, Helsinki area Citycon's GLA 19,000 sq.m. Anchor tenants Lidl, K-Supermarket, Anttila, Alko, Clas Ohlson
Martinlaakson Ostari, Helsinki area Citycon's GLA 7,400 sq.m. Anchor tenants Lidl, S-Market, Pharmacy
Myllypuron Ostari, Helsinki Citycon's GLA 7,400 sq.m. Anchor tenants S-Market, K-Supermarket, Pharmacy
Myyrmanni, Helsinki area Citycon's GLA 39,600 sq.m. Anchor tenants Citymarket, Anttila, H&M, Clas Ohlson, Alko
Sampokeskus, Rovaniemi Citycon's GLA 13,800 sq.m. Anchor tenants Moda, Sportia, Pentik, Dressmann, Cubus, Gina Tricot, Pharmacy
Tikkuri, Helsinki area Citycon's GLA 13,400 sq.m. Anchor tenants Valintatalo, Aleksi 13, Seppälä
Trio, Lahti Citycon's GLA 45,600 sq.m. Anchor tenants K-Supermarket, Cumulus, H&M, Gina Tricot
Fruängen Centrum, Stockholm Citycon's GLA 14,700 sq.m. Anchor tenants Coop, Systembolaget
Högdalen Centrum, Stockholm Citycon's GLA 19,300 sq.m. Anchor tenants Coop, Systembolaget
Jakobsbergs Centrum, Stockholm Citycon's GLA 41,500 sq.m. Anchor tenants Coop, Axfood
Kista Galleria, Stockholm Citycon's GLA 94,200 sq.m. Anchor tenants Åhlens, ICA, New Yorker, StayAt Hotel, SF Bio, H&M, KappAhl
Liljeholmstorget Galleria, Stockholm
Stenungs Torg, Stenungsund Citycon's GLA 36,400 sq.m.
Anchor tenants Coop, Systembolaget
Tumba Centrum, Stockholm Citycon's GLA 25,500 sq.m. Anchor tenants ICA, Systembolaget
Åkermyntan Centrum, Stockholm Citycon's GLA 10,000 sq.m. Anchor tenants ICA, Lidl
Kristiine, Tallinn Citycon's GLA 43,700 sq.m. Anchor tenants Prisma, H&M, Zara, NewYorker, Marks&Spencer, JYSK
Magistral, Tallinn Citycon's GLA 11,700 sq.m. Anchor tenants Rimi, Koduextra, Rademar, Seppälä
Mandarinas, Vilnius Citycon's GLA 7,900 sq.m. Anchor tenants Rimi, Pharmacy
Albertslund Centrum, Copenhagen Citycon's GLA 14,700 sq.m. Anchor tenants SuperBest and ALDI, Vero Moda
88 CITYCON OYJ
| INFORMATION | Financial Statement Release, Financial Statements, Report by the Board of Directors and Corporate Governance Statement |
Company research | |
|---|---|---|---|
| for the financial year January-December 2013 | 5 February at approx. 9.00 a.m. | ||
| Annual and Sustainability Report 2013 | week 8 | ||
| Notice of AGM | 5 February | ||
| AGM record date | 7 March | ||
| Last day for pre-registration for the AGM | 14 March | ||
| Annual General Meeting (AGM) | 19 March at 2:00 p.m., Helsinki | and statements. | |
| Ex-dividend date | 20 March | ||
| Record date for dividend payment | 24 March | ABG Sundal Collier | |
| Dividend payment date | 31 March | ABN Amro | |
| Interim Report for January-March 2014 | 24 April at approx. 9.00 a.m. | ||
| Interim Report for January-June 2014 | 10 July at approx. 9.00 a.m. | Danske Bank Markets | |
| Interim Report for January-September 2014 | 16 October at approx. 9.00 a.m. | DnB Bank Evli Bank Plc |
|
The key channel for Citycon's investor communications is the corporate website, where all stock exchange and press releases, financial statements, interim reports, annual reports and notices of general meetings are published. Also available on the website are the executive presentations on the financial results, webcast recordings of these events, as well as the presentation material for regular investor meetings. Web access to the company's financial results presentation events and possible Capital Markets Days is enabled. Investor information material published by Citycon can be ordered from the corporate website or by e-mail from [email protected].
According to company information, the analysts listed below monitor Citycon Oyj and its performance. The list may not be fully complete and it may vary over time. Citycon takes no responsibility for analysts' views and statements.
ABG Sundal Collier ABN Amro Carnegie Investment Bank Danske Bank Markets DnB Bank Evli Bank Plc Goldman Sachs International Green Street Advisors Handelsbanken Inderes Oy Kempen & Co Nordea Bank Plc Oddo Securities - Oddo & Cie Pohjola Bank Plc SEB Enskilda Equities UBS
Executive Vice President and CFO Eero Sihvonen Tel. +358 20 766 4459 +358 50 557 9137 [email protected]
Investor Relations Manager Henrica Ginström Tel. +358 20 766 4428 +358 50 554 4296 [email protected]
Korkeavuorenkatu 35 FI-00130 Helsinki, Finland Tel. +358 207 664 400 [email protected] | www.citycon.com
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