Citycon Oyj

Annual / Quarterly Financial Statement • Feb 29, 2008

Financial Statements 2007

Contents

	Report by the Board of Directors 3
	Consolidated Income Statement, IFRS 14
	Consolidated Balance Sheet, IFRS 15
	Consolidated Cash Flow Statement, IFRS 16
	Consolidated Statement of
	Changes in Shareholders' Equity, IFRS 17
	Notes to the Consolidated Financial Statements, IFRS 18
1.	Total Revenues 24
2.	Total Expenses Excluding Financial Expenses 24
3.	Reconciliation Between
	Direct and Indirect Result 24
4.	Segment Information 24
5.	Other Expenses from Leasing Operations 26
6.	Personnel Expenses 26
7.	Depreciation and Amortization 27
8.	Other Operating Income and Expenses 27
9.	Net Financial Income and Expenses 27
	10. Income Tax Expense 27
	11. Earnings Per Share and Net
	Asset Value Per Share 27
	12. Investment Property 29
	13. Development Property 29
	14. Property, Plant and Equipment 29
	15. Intangible Assets 30
	16. Trade and Other Receivables 30
	17. Cash and Cash Equivalents 30
	18. Shareholders' Equity 30
	19. Interest-Bearing Liabilities 31
	20. Financial Instruments 33
	21. Deferred Tax Liabilities 37
	22. Trade and Other Payables 38
	23. Employee Benefits 39
	24. Commitments and Contingent Liabilities 41
	25. Related Party Transactions42
	26. Post Balance Sheet Events 43

Consolidated Key Figures and Ratios
for Four Years, IFRS 44
Parent Company Income Statement, FAS 45
Parent Company Balance Sheet, FAS 46
Parent Company Cash Flow Statement, FAS 47
Notes to the Parent Company's
Financial Statements, FAS 48
1. Turnover 48
2. Other Expenses from Leasing Operations 48
3. Personnel Expenses 48
4. Depreciation and Amortization 48
5. Other Operating Income and Expenses 49
6. Net Financial Income and Expenses 49
7. Income Tax Expense 49
8. Intangible Assets 49
9. Tangible Assets 49
10. Shares in Subsidiaries 50
11. Shares in Associated Companies 50
12. Other Investments50
13. Subsidiaries 50
14. Associated Companies 51
15. Short-Term Receivables 51
16. Shareholders' Equity 52
17. Liabilities 52
18. Contingent Liabilities 53
Consolidated Key Figures and Ratios
for Five Years, IFRS and FAS 54
Shareholders and Shares 55
Formulas for Key Figures and Ratios 57
Signatures to the Financial Statements 58
Auditors' Report 58
List of Properties 2007 59
Valuation Statement 62

Report by the Board of Directors

SUMMARY OF THE LAST QUARTER OF 2007

• In order to improve the transparency of disclosure, financial results are now split between direct and indirect result in the Notes.
• Direct result per share (EPRA EPS) i.e. earnings per share excluding the effects of changes in fair value and other extraordinary items grew to EUR 0.06 (Q3: EUR 0.03). Earnings per share came to EUR 0.04 (EUR 0.12), the decrease resulting mainly from the fair value changes and taxes.
• The fair value change of the investment properties was EUR 0.7 million (EUR 21.1 million) and the fair value of the investment properties increased by EUR 24.4 million to EUR 2,215.7 million (EUR 2,191.2 million) mainly due to acquisitions and investments.
• Citycon raised a total of EUR 99.3 million in new capital through a successful rights issue.
• In the last quarter of the financial year, Citycon's net rental income came close to the third quarter and amounted to EUR 27,1 million (EUR 27.3 million). The decrease is resulting largely from increased

redevelopment activities as well as seasonal and timing variation of maintenance and repair expenses.

• The company signed a EUR 350 million unsecured credit facility agreement to finance Iso Omena acquisition with an international bank group. The loan was oversubscribed, and the related credit margins remained close to previous agreements in spite of the general turbulence in the financial markets.
• The second and third stages of the extension and redevelopment of the Estonian Rocca al Mare shopping centre were begun with an additional investment of around EUR 38.9 million. In Lahti, Finland, the first redevelopment stage of the Trio shopping centre was completed.
• Citycon aims to obtain an international environmental rating for three of its initiated pilot projects in sustainable construction.
• The Board of Directors proposes a per-share dividend of EUR 0.04 (EUR 0.14) and, additionally, a return of equity from invested unrestricted equity fund of EUR 0.10 per share.

KEY FIGURES

	Q4 2007	Q4 2006	Q3 2007	2007	2006	Change 1)
Turnover, EUR million	43.3	33.0	38.0	151.4	119.4	26.9%
Net rental income, EUR million	27.1	22.1	27.3	103.4	82.8	24.9%
Operating profit, EUR million	24.5	42.5	44.3	300.7	196.5	53.0%
% of turnover	56.6%	128.7%	116.7%	198.6%	164.6%	−
Profit before taxes, EUR million	10.0	33.8	31.0	253.5	165.6	53.0%
Profit attributable to parent company
shareholders, EUR million	9.3	24.9	23.4	200.3	124.9	60.4%
Earnings per share (basic), EUR	0.04	0.15	0.12	1.00	0.76	31.4%
Earnings per share (diluted), EUR	0.04	0.13	0.11	0.91	0.73	25.0%
Direct result per share (diluted), (Diluted EPRA EPS), EUR 2)	0.06	0.05	0.03	0.18	0.20	-9.6%
Net cash from operating activities per share, EUR	0.06	0.06	0.03	0.20	0.20	0.4%
Fair market value of investment properties, EUR million			2,191.2	2,215.7	1,447.9	53.0%
Equity per share, EUR				4.44	3.30	34.6%
Net asset value (EPRA NAV) per share, EUR 3)				4.83	3.53	36.8%
EPRA NNNAV, EUR				4.42	3.14	40.5%
Equity ratio, %				43.9	39.1	−
Gearing, %				111.8	136.6	−
Net interest-bearing debt (fair value), EUR million				1,147.3	811.2	41.4%
Net rental yield, % 4)				5.8	7.1	−
Occupancy rate, %				95.7	97.1	−
Personnel (at the end of the period)				102	73	39.7%
Dividend per share, EUR				0.04 *)	0.14	-71.4%
Return from invested unrestricted
equity fund per share, EUR				0.10 *)	-
Dividend and return from invested
unrestricted equity fund per share total, EUR				0.14 *)	0.14	0.0%

1) Change % is calculated from exact figures and refers to the change between 2006 and 2007.

2) 2) Previously disclosed "Earnings per share excluding the effects of changes in fair value gains, gains on sale and other extraordinary items" have been replaced with the "Direct result per share (diluted)" -key figure. Please see the note "Reconciliation between direct and indirect result" for direct result calculations.

3) The calculation of NAV has been modified to comply with EPRA definitions (previously deferred taxes were deducted).

4) Includes the lots for development projects.

*) Proposal by the Board.

Key Figures for the past four years can be found on page 44 in the annual report 2007 in the Notes to the consolidated Financial Statements.

SUMMARY OF THE YEAR 2007

• Turnover increased by 26.9 per cent, to EUR 151.4 million (2006: EUR 119.4 million), due mainly to new acquisitions.
• Net rental income grew by 24.9 per cent to EUR 103.4 million (EUR 82.8 million) due mainly to acquisitions. Net rental income from like-for-like properties grew by 6.2 per cent.
• Profit before taxes amounted to EUR 253.5 million (EUR 165.6 million), including a EUR 213.4 million (EUR 120.1 million) in fair value gains of investment properties.
• Net financial expenses came to EUR 47.3 million (EUR 30.9 million), the interest rate of interest-bearing debt averaging 4.68 per cent (4.35%).
• Earnings per share were EUR 1.00 (EUR 0.76). The growth was due mainly to fair value gains.
• Direct result per share (EPRA EPS) came to EUR 0.18 (EUR 0.20). The decrease resulted mainly from increased financing expenses related to new property acquisitions, increase in administrative costs related to strengthening of the organisation, increased property development activities and from the increased number of shares. The decrease was partly mitigated by the lower current tax.
• Net cash flow from operating activities per share remained strong and amounted to EUR 0.20 (EUR 0.20).
• Net asset value per share (EPRA NAV) grew to EUR 4.83 (EUR 3.53).
• According to an external appraiser, the average net yield requirement for investment properties was at 5.6 per cent at the end of 2007.
• Equity ratio rose to 43.9 per cent (39.1%).
• During the financial year, Citycon made its largest ever shopping centre acquisition by acquiring the Iso Omena shopping centre, located in Espoo, Finland. In Sweden, Citycon acquired the Tumba Centrum and Strömpilen shopping centres and the Länken retail centre and, in Estonia, the Magistral shopping centre.
• At the end of the year, Citycon had development and redevelopment projects underway in Finland, Sweden and Estonia to the total value of around EUR 330 million.

BUSINESS ENVIRONMENT

In 2007, retail trade growth remained strong, with new sales records attained during the Christmas season. As a result of tax cuts and wage agreements made in Sweden and Finland during the year, consumer purchasing power increased. Consumer confidence in economic growth, however, weakened towards the end of the year. The prevailing uncertainty is caused by growing inflationary pressure, particularly in the Baltic countries, and by increased volatility and weakened condition of the financial markets. So far, this uncertainty has not had a significant effect for Citycon with regard to the availability of financing and the credit margins paid by the company.

In 2007, construction costs rose by 5.6 per cent in Finland (source: Statistics Finland), 5.4 per cent in Sweden (source: Byggindex) and 12.7 per cent in Estonia (source: Statistics Estonia). Citycon monitors construction cost trends and, in its property development, focuses particularly on project management which can contribute to curbing the effects of increasing costs.

BUSINESS AND PROPERTY PORTFOLIO SUMMARY

Citycon is specialised in shopping centres and other large retail units, its market areas comprising Finland, Sweden and the Baltic countries. In Finland, Citycon is the market leader in the shopping centre business, while in Sweden it is one of the fastest-growing and most dynamic operators in the real estate sector. The company has established a firm foothold in the Baltic countries.

Citycon continues its responsible growth strategy by expanding its retail property portfolio in selected markets and by developing and redeveloping its properties into entities that serve the needs of retail even better. Citycon's preferred acquisition targets are shopping centres that offer redevelopment and/or refurbishment opportunities, and whose net rental income can be increased with active retail property management.

Thanks to its careful market research and good local knowledge, Citycon has been able to acquire some of the most interesting shopping centres in the major growth centres in the countries where it operates. Similarly, Citycon's new investments are focused on areas where the population and its purchasing power can be expected to grow.

At the end of the reporting period, Citycon owned 33 (26) shopping centres and 53 (53) other properties. Of the shopping centres, 22 (19) were located in Finland, eight (5) in Sweden and three (2) in the Baltic countries.

The market value of the company's property portfolio totalled EUR 2,215.7 million, of which Finnish properties accounted for 71.6 per cent (69.7%), Swedish properties for 23.4 per cent (24.5%) and Baltic ones for 5.0 per cent (5.8%). The gross leasable area at the end of the period was 923,980 square metres.

CHANGES IN FAIR VALUE OF INVESTMENT PROPERTIES

Citycon measures its investment property at fair value, under the IAS 40 standard, according to which changes in investment properties' fair value are recognised through profit or loss. 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. However, in 2007, Citycon chose to have its properties valued by an external appraiser on a quarterly basis, due to market activity and rapidly changing market conditions.

At the end of the year 2007, Citycon's property portfolio was valued for the third time by Realia Management Oy, a part of the Realia Group. Realia Management Oy works in association with the world's leading provider of real estate services, the international company CB Richard Ellis. A summary of Realia Management Oy's Property Valuation Statement on the year-end status can be found at www.citycon.fi.

During the financial year, the fair value of Citycon's property portfolio rose by EUR 213.4 million as a result of development and redevelopment projects, and changes in general market conditions and the leasing business. The year saw a total value increase of EUR 220.9 million and a total value decrease of EUR 7.5 million.

The average net yield requirement defined by Realia Management Oy for Citycon's property portfolio decreased to 5.6 per cent (Q3/2007: 5.7%). The decrease in yield requirement was due mainly to new property acquisitions, which were included in the valuation for the first time during the last quarter, especially the inclusion of shopping centre Iso Omena in the property portfolio.

LEASE PORTFOLIO AND OCCUPANCY RATE

At the end of the financial year, Citycon had a total of 3,700 (3,080) leases. The average length of the lease agreements was 3.0 (2.9) years. The period-end occupancy rate for Citycon's property portfolio was 95.7 per cent (97.1%), and net rental yield was 5.8 per cent (7.1%). The decrease in net rental income yield was mainly due the changes in the property portfolio's fair value. The occupancy rate reduced slightly compared to December 2006, due to an increase in the number of premises temporarily vacated due to redevelopment projects.

The company's net rental income grew by 24.9 per cent to EUR 103.4 million. The leasable area rose by 25.0 per cent to 923,980 square metres. Net rental income for like-for-like properties grew by 6.2 per cent.

Like-for-like properties are properties held by Citycon throughout the 24-month reference period, excluding properties under development and expansion as well as lots. The majority of like-for-like properties are located in Finland. In the last quarter, properties located in Sweden were also included in like-for-like properties for the first time.

The calculation method for net yield and standing (like-for-like) investments is based on guidelines issued by the KTI Institute for Real Estate Economics and the Investment Property Databank (IPD).

Lease portfolio summary	2007	2006	Change -%
Number of leases started
during the period	512	369	38.8
Total area of leases
started, sq.m.	103,408	73,300	41.1
Occupancy rate at
end of the period ,%	95.7	97.1	-1.4
Average length of lease portfolio
at the end of the period, year	3.0	2.9	3.4

ACQUISITIONS

Alongside its property portfolio's growth, Citycon has shifted its business focus towards the development of its current shopping centres. However, the company is continuously seeking new acquisition opportunities in all of its market areas.

The largest acquisition during the year, and in the company's history, was the purchase of the Iso Omena shopping centre in September for EUR 329 million. The keystone in Iso Omena's takeover and management is Citycon's own organisation operating in the shopping centre itself and responsible for its management and marketing as well as for the property's technical functioning. With an objective to tune up the centre's service offering to serve its customer base even better, the organisation also aims to support Citycon's shopping centre offering in the Espoo region, where the company already has several shopping centres. Immediately following the acquisition, Citycon began planning the shopping centre's extension and initiated the project's implementation. Iso Omena can be expanded by a total of some 7,000 square metres, and the future underground line will also create new opportunities for the development of the shopping centre.

The construction, commissioned by Citycon, of a new retail centre in Lentola, located in Kangasala in the Tampere region, Finland, was completed in the last quarter of 2007, and the centre was transferred to Citycon's ownership. The property acquisitions conducted during the year are presented in the table below. In addition, the company has carried out several share transactions in order to increase its holdings in properties partially owned by it.

Acquisitions 2007 1)			Acquisition cost 2)	Post-acquisition
Property	Company	Location	(EUR million)	holdings, %
Finland
Shopping centre Iso Omena	Big Apple Acquisition Oy	Espoo	329.0	100
Shopping centre Trio	Kiinteistö Oy Lahden Hansa	Lahti	17.3
Retail centre Lillinkulma	Kiinteistö Oy Lillinkulma	Kaarina	10.9	100
	Shopping centre Espoontori Kiinteistö Oy Espoon Asemakuja 2	Espoo	9.23)	100
Retail centre	Myllypuron Ostoskeskus Oy,
Myllypuro	Kiinteistö Oy Kivensilmänkuja 1	Helsinki	2.7 4)	73.5
Retail centre Lentola	Lentolan Perusyhtiö Oy	Kangasala	16.1	100
Sweden
Shopping centre	Tumba Centrum-	Botkyrka,
Tumba Centrum	fastigheter AB	Greater Stockholm	59.4	100
Shopping centre Strömpilen and	Strömpilen AB
retail centre Länken	(formerly Balticgruppen Handel AB)	Umeå	52.9	75
Baltic Countries
Shopping centre Magistral	Real estate transaction	Tallinn	16,2	100

1) Includes investments with purchase price exceeding EUR 1 million.

2) Acquisition prices stated are debt free purchase prices with transaction expenses, using acquisition date exchange rates.

3) The purchase price totals EUR 11 million and the rest of it is payable upon approval of the change in city plan.

4) Includes several transactions.

DEVELOPMENT AND REDEVELOPMENT PROJECTS

Maintaining its properties as attractive and dynamic centres for shopping for both customers and lessees is the key element in Citycon's business. The company aims to increase the long-term cash-flow and return from its retail properties through development projects. In the short term, however, such projects may weaken returns from some properties, as part of the retail premises have to be temporarily vacated for refurbishment, and this affects the rental income.

In its development projects, Citycon pays attention to environmental issues, such as recycling and construction materials. The company's pilot projects in sustainable construction include building a new shopping centre in Liljeholmen, Stockholm, and the refurbishment and extension projects of the Rocca al Mare shopping centre in Tallinn and the Trio shopping centre in Lahti. For these projects, Citycon is seeking an international environmental rating.

The assessment applied in the pilot projects comprises a total of over 60 points, reviewing various factors such as the energy efficiency of the property, indoor air quality, the choice of materials, the utilisation of public transport and minimising the environmental impacts of construction work. On the basis of the assessment, concrete development measures will be planned in order to establish systematic sustainable construction practices.

The table below shows a list of the most significant development and redevelopment projects in progress, as decided by the Board of Directors. In addition, Citycon is planning and preparing a number of other development and redevelopment projects. More information on planned projects can be found in the management presentations available on Citycon's website at www.citycon.fi and the Annual Report, which will be published towards the end of February.

During the year, capital expenditure in the development projects amounted to EUR 39.5 million in Finland, EUR 16.8 million in Sweden and EUR 15.5 million in the Baltic Countries.

Development Projects in Progress	Estimated total	Actual gross expen-
Property	Location	need (EUR million)	diture by the end of the period (EUR million)	Estimated year of completion
Lippulaiva	Espoo, Finland	60-70 1)	8.9	2008
Trio	Lahti, Finland	602)	21.5	2009
Torikeskus	Seinäjoki, Finland	4.0	2.1	2008
Åkersberga Centrum	Österåker, Sweden	27 3)	3.3	2009
Liljeholmstorget	Stockholm, Sweden	120	17.6	2009
Rocca al Mare	Tallinn, Estonia	68	13.2	2009

1)Both planned development stages are included in the figure.

2) Estimated total need has been adjusted to EUR 60 million.

3) Citycon owns 75 per cent of Åkersberga shopping centre, and the overall project cost totals approximately EUR 40 million.

The company's most significant development project is the construction of a new shopping centre in Liljeholmen, Stockholm. The project advances within the planned budget and schedule. The related investment plan was adjusted towards the end of the year, as agreement was reached with the City of Stockholm and its transport services on arrangements allowing both the expansion of the shopping centre's lowest floor on a larger area than originally planned and its direct connection with underground and bus stations. The new shopping centre is expected to open its doors in October–November 2009, but the first agreements with new tenants have already been signed.

Åkersberga shopping centre development and redevelopment project has delayed due to changes to the plans arising from a dispute with one of the centre's tenants. Currently, an alteration of the city plan is pending and the preparation of the new development and expansion plan is underway.

The first redevelopment stage of the Trio shopping centre in downtown Lahti was completed in November as planned. After the completion of the first stage, the construction plans have been revised and, as a result, the project's total investment is estimated to increase to EUR 60 million from the original estimate of EUR 50.5 million. Following the completion of the development project, the shopping centre's sales are expected to rise from the current figure of EUR 80 million to EUR 110 million. The aim is to attract approximately 7 million customers to the shopping centre annually.

Refurbishing and extension of the Rocca al Mare shopping centre acquired in Tallinn commenced in February 2007. The first stage of the shopping centre's modernisation is planned to be completed in the spring of 2008, and the second and third stages of the development project are also underway. The completely refurbished Rocca al Mare is expected to open its doors ahead of the planned schedule, in the autumn of 2009.

The zoning appeal related to the expansion of the Lippulaiva shopping centre in Espoo was dismissed by the Supreme Administrative Court at the beginning of September, after which the project has continued according to the original plan.

Completed Development Projects

The period saw the completion of several development projects. The major ones are listed on the table below.

Actual gross expenditure Estimated by the end of total cost the period Property Location (EUR million) (EUR million) Duo Tampere, Finland 27.3 25.5 Lillinkulma Kaarina, Finland 8.2 10.9 1) Lentola Kangasala, Finland 16.6 16.2 Linjuri Salo, Finland 1.8 1.2

The most significant project completed during the year was the refurbishment and extension of the old Hervanta retail centre located in Hervanta, Tampere, into the shopping centre Duo. The Duo extension was completed in April and the entirely refurbished shopping centre was opened for the Christmas season. The leasable area of Duo is 15,500 square metres, consisting of the old Hervanta retail centre (5,200 sq.m.) and the new extension (10,300 sq.m.). Exceptionally, Duo has three large grocery stores as anchor tenants. For 2008, the targeted number of customers is 3.5 million, the sales target being EUR 55 million. The project was completed on budget and on schedule.

The new retail centre built in Lentola, Kangasala, was completed towards the end of the year and transferred, fully leased, to Citycon's ownership. Located in Kaarina, the new Lillinkulma retail centre was completed in May.

In the centre of the town of Salo, a Citycon retail property was redeveloped into a shopping centre and was opened for Christmas 2007. At Myyrmanni in Vantaa, modernisation of the food court doubled the shopping centre's existing restaurant services.

BUSINESS UNITS

Citycon's business operations are divided into three business units: Finland, Sweden and the Baltic Countries. These are further divided into business areas Retail Properties and Property Development.

Finland

Citycon is the market leader in the Finnish shopping centre business. The company's net rental income from Finnish operations grew by 10.1 per cent, to EUR 75.7 million. Net rental income from like-for-like properties rose by 6.6 per cent.

The business unit accounted for 73.2 per cent of the company's total net rental income. During the last 12 months, rolling twelve-month occupancy cost ratio for like-for-like properties was 8.6 per cent. The occupancy cost ratio is calculated as a share of net rent and potential service charges paid by a tenant to Citycon out of the tenant's sales excluding VAT. The VAT percentage is an estimate.

Property acquisitions as well as development projects in progress or completed in Finland have been covered previously in this document.

Lease portfolio summary, Finland

	2007	2006	Change -%
Number of leases started
during the period	442	321	37.7
Total area of leases started, sq.m. 74,400		66,500	11.9
Occupancy rate at end of
the period ,%	95.6	97.2	-1.6
Average length of lease portfolio
at the end of the period, year	3.1	3.1	0.0

1) Includes stages 1 and 2. The second stage was completed earlier than anticipated.

Financial performance, Finland

	2007	2006	Change -%
Gross rental income, EUR million	100.7	93.1	8.2
Turnover, EUR million	104.3	95.8	8.9
Net rental income, EUR million	75.7	68.8	10.1
Net fair value gains on investment
property, EUR million	148.5	104.8	41.7
Operating profit, EUR million	218.7	176.1	24.2
Capital expenditure, EUR million	428.8	152.8	180.6
Fair market value of investment
properties, EUR million	1,587.0	1,009.7	57.2
Net rental yield, % (1	6.2	7.6	−
Net rental yield, like-for-like
properties, %	7.1	7.9	−

1) Includes the lots for development projects.

Sweden

Citycon has achieved a substantial position in the Swedish shopping centre market and has eight (5) shopping centres and seven (7) other retail properties in Sweden, located in Stockholm and Gothenburg areas and Umeå. The company's net rental income from Swedish operations improved by 133.6 per cent, to EUR 21.6 million, and the business unit's net rental income accounted for 20.9 per cent of Citycon's total net rental income.

Property acquisitions and development projects in progress in Sweden have been covered previously in this document.

Lease Portfolio Summary, Sweden

	2007	2006	Change -%
Number of leases started
during the period	49	32	53.1
Total area of leases started, sq.m. 25,800		3,900	561.5
Occupancy rate at end of the
period ,%	95.1	96.3	-1.2
Average length of lease portfolio
at the end of the period, year	2.4	2.2	11.6

Financial performance, Sweden

	2007	2006	Change -%
Gross rental income, EUR million	35.4	15.9	121.8
Turnover, EUR million	39.0	17.3	125.1
Net rental income, EUR million	21.6	9.3	133.6
Net fair value gains on investment
property, EUR million	55.6	8.7	539.3
Operating profit, EUR million	74.3	16.8	343.4
Capital expenditure, EUR million	142.4	267.2	-46.7
Fair market value of investment
properties, EUR million	517.5	354.8	45.9
Net rental yield, % (1	4.6	5.1	−
Net rental yield, like-for-like
properties, %	5.3	6.8	−

1) Includes the lots for development projects.

Baltic Countries

At the end of the reporting period, Citycon owned three shopping centres in the Baltic countries: Rocca al Mare and Magistral in Tallinn, Estonia and Mandarinas in Vilnius, Lithuania. Due to the limited size of the Baltic market and the limited availability of suitable properties, Citycon has been cautious with investments in the region. However, the company is continuously looking for potential investment opportunities in the region. Net rental income from Baltic operations increased by 25.4 per cent to EUR 6.0 million. The business unit accounted for 5.8 per cent of the company's total net rental income.

Property acquisitions and development projects in progress in the Baltic countries have been covered previously in this document.

Lease Portfolio Summary, Baltic Countries

	2007	2006	Change -%
Number of leases started during
the period	21	16	31.3
Total area of leases started, sq.m.	3,208	2,900	10.6
Occupancy rate at end of the
period ,%	100.0	100.0	0.0
Average length of lease portfolio
at the end of the period, year	2.8	3.3	-15.9

Financial performance, Baltic Countries

	2007	2006	Change -%
Gross rental income, EUR million	7.7	6.1	25.7
Turnover, EUR million	8.0	6.2	29.4
Net rental income, EUR million	6.0	4.8	25.4
Net fair value gains on investment
property, EUR million	9.3	6.6	42.0
Operating profit, EUR million	14.5	10.9	33.0
Capital expenditure, EUR million	31.7	16.2	95.1
Fair market value of investment
properties, EUR million	111.2	83.3	33.4
Net rental yield, % (1	6.2	6.7	−

1) Includes the lots for development projects.

TURNOVER AND PROFIT

Turnover for the period came to EUR 151.4 million (EUR 119.4 million), mainly coming from the rental income generated by Citycon's retail premises. Gross rental income accounted for 94.9 per cent (96.5%) of turnover.

Operating profit rose to EUR 300.7 million (EUR 196.5 million). Profit before taxes came to EUR 253.5 million (EUR 165.6 million) and profit after taxes was EUR 203.9 million (EUR 126.4 million). The increase in operating profit was chiefly due to changes in the fair value of the property portfolio and the operating profit generated by the acquired properties.

The effect of changes in fair value of the property portfolio, of gains on sales and of other one-off items on the profit attributable to the parent company's shareholders was EUR 164.6 million (EUR 92.5 million). Taking this effect into account, the direct result was EUR 3.3 million above the reference period level (see the Note Reconciliation between the Direct and Indirect Result). The profit growth results from property acquisitions and increased net rental income from like-forlike properties. Current taxes on direct result were lower during the period than during the comparison period in spite of profit growth. The lower current taxes resulted mostly from higher depreciation of buildings in Finland, reducing the parent company's result under the local Finnish Accounting Standards (FAS) and thereby also current taxes.

Earnings per share came to EUR 1.00 (EUR 0.76). Direct result per share (EPRA EPS) came to EUR 0.18 (EUR 0.20). Net cash flow from the operating activities per share amounted to EUR 0.20 (EUR 0.20).

HUMAN RESOURCES AND ADMINISTRATIVE EXPENSES

At the end of the year, Citycon Group had a total of 102 (73) employees, of whom 71 were employed in Finland, 24 in Sweden and seven in the Baltic countries. Administrative expenses rose to EUR 16.5 million (EUR 12.9 million), including EUR 0.7 million (EUR 0.9 million) in share-based, non-cash implicit expenses related to employee stock options and the company's share-based incentive scheme. The higher expenses were partly due to the expansion of the company's operations and to the cost of creating the new regional organisation.

Wages and salaries paid by the Group totalled EUR 6.6 million (EUR 4.6 million), of which those paid to the Chief Executive Officer accounted for EUR 0.3 million (EUR 0.3 million) and Board members EUR 0.5 million (EUR 0.5 million). Wages and salaries paid by the parent company totalled EUR 5.2 million (EUR 4.2 million), of which those paid to the CEO accounted for EUR 0.3 million (EUR 0.3 million) and Board members EUR 0.5 million (EUR 0.5 million).

Key figures describing the company's personnel

	2007	2006	2005
Average number during the year	93	62	43
Wages and salaries
during the year, EUR million	6.6	4.6	3.1

CAPITAL EXPENDITURE

Citycon's reported gross capital expenditure in the period totalled EUR 603.9 million (EUR 436.4 million). Of this, property acquisitions accounted for EUR 531.3 million (EUR 400.9 million), property development for EUR 71.8 million (EUR 35.4 million) and other investments for EUR 0.8 million (EUR 0.2 million).

The investments were mainly financed with the directed share issue worth approximately EUR 133.8 million, with the rights issue worth EUR 99.3 million and a bridge funding facility for EUR 350 million made with a Nordic bank group.

BALANCE SHEET AND FINANCIAL POSITION

The period-end balance sheet total stood at EUR 2,308.6 million (EUR 1,486.4 million). Liabilities totalled EUR 1,297.7 million (EUR 906.1 million), with short-term liabilities accounting for EUR 157.8 million (EUR 134.4 million). The Group's financial position remained healthy during the period. At the end of the financial year, Citycon had a total of EUR 150 million of undrawn credit limits available, and it also had the opportunity to issue EUR 45 million in short-term loans under the company's domestic commercial paper programme.

Year-on-year interest-bearing debt increased by EUR 340.0 million to EUR 1,154.0 million (EUR 814.0 million). The fair value of Group's interest-bearing debt stood at EUR 1,171.4 million (EUR 832.5 million). Short-term interest bearing debt constitutes approximately 9 per cent of the total interest-bearing debt of the group. The undrawn credit limits available at the end of financial year are sufficient to cover maturing interest-bearing debt for the next two years.

The Group's cash and cash equivalents totalled EUR 24.2 million (EUR 21.3 million). The fair value of Group interest-bearing net debt stood at EUR 1,147.3 million (EUR 811.2 million).

The year-to-date average interest rate was 4.68 per cent (4.35%) during the reporting period. The increase of the average interest rate was moderate in comparison to the rapid increase in short-term interest rates in the company's operating areas. The average loan maturity, weighted according to principals of the loans, increased to 4.7 years (4.6 years), since the short-term bridge funding was repaid using a seven year syndicated credit. The average time to fixing was 3.1 years (3.4 years). The interest rate, interest-rate swaps included, averaged 5.02 per cent on 31 December 2007.

The Group's equity ratio stood at 43.9 per cent (39.1%). Periodend gearing stood at 111.8 per cent (136.6%). The decreased gearing and the improved equity ratio during the reporting period were due to the share issues and good financial performance.

Of Citycon's period-end interest-bearing debt, 81.6 per cent (77.5%) were floating-rate loans, of which 61.1 per cent (76.2%) had been converted to fixed-rate loans by means of interest-rate swaps. Fixed-rate debt accounted for 68.3 per cent (81.6%) of the Group's period-end interest-bearing debt, interest-rate swaps included. The loan portfolio's hedging ratio has been in line with the Group's financing policy but slightly below the usual level, due to the market outlook based on a slowdown in world economic growth.

Citycon applies hedge accounting, whereby changes in the fair value of interest-rate swaps subject to hedge accounting are recognised under equity. The period-end nominal amount of interest-rate swaps totalled EUR 634.5 million (EUR 541.7 million), with hedge accounting applied to interest-rate swaps whose nominal amount totalled EUR 558.0 million (EUR 491.7 million). On 31 December 2007, the nominal amount of all the Group's derivative contracts totalled EUR 674.8 million (EUR 556.4 million), and their fair market value was EUR 9.1 million (EUR -1.8 million).

Net financial expenses increased by EUR 16.4 million, to EUR 47.3 million (EUR 30.9 million). This increase came mainly from higher interest expenses due to the higher level of interest-bearing debt, additional expenses resulting from an option on convertible bonds, higher weighted-average interest rate and from non-cash mark-tomarket loss from derivatives recognised in the income statement. The net financial expenses in the income statement include EUR 1.8 million (EUR 0.3 million) in non-cash expenses related to the option component on convertible bonds.

CAPITAL MARKET TRANSACTIONS

In 2007, Citycon obtained financing for a total of EUR 584.5 million on the stock and debt markets, and used these funds for acquiring properties and for the development of the existing ones. The conducted financing transactions and changes in the fair value of properties strengthened the company's balance sheet.

In February, Citycon arranged a directed share issue to Finnish and international institutional investors, waiving the shareholders' preemptive rights. The issue of new shares was based on the authorisation by the Extraordinary General Meeting of 26 January 2007 and was carried out in an accelerated book-building process on 12–13 February 2007. A total of 25 million new shares were subscribed for at a per-share price of EUR 5.35, resulting in net proceeds of approximately EUR 132.2 million.

In September, as part of financing the acquisition of the Iso Omena shopping centre, the Board of Directors decided on a share issue based on shareholders' pre-emptive subscription rights, worth approximately EUR 99 million. The share issue was authorised by the Annual General Meeting of 13 March 2007, and a total of 27,594,782 new shares were offered for subscription at a price of EUR 3.60 per share. The subscription period began on 19 September and ended on 3 October 2007. Citycon's shareholders had the right to subscribe for one new share per seven shares held. All offered shares were subscribed for in the share offering. A total of 27,235,387 shares were subscribed for in the primary subscription, representing 98.7 per cent of the shares offered. Since the secondary subscription was oversubscribed, the share issue became fully subscribed.

The details of the directed share issue and the rights issue are presented in the stock exchange releases issued by Citycon during the financial year, and are available on the company's website at www.citycon.fi.

Related to the acquisition of the Iso Omena shopping centre, Citycon also signed a EUR 350 million unsecured credit facility agreement with an international banking group. The agreement consists of a seven year bullet term loan of EUR 200 million and a EUR 150 million five year revolving credit facility. The facility was substantially oversubscribed at syndication. The term loan facility was used to refinance a short-term credit facility drawn for the financing of the acquisition of Iso Omena. The EUR 150 million revolving credit facility will be utilised to finance the committed development pipeline and potential property acquisitions in accordance with Citycon's strategy.

Subordinated Convertible Bonds 1/2006

In July of 2006, Citycon's Board of Directors decided to offer EUR 110 million worth of subordinated convertible bonds to international institutional investors. The subordinated convertible bonds have been listed on the OMX Nordic Exchange Helsinki since 22 August 2006. With a maturity of seven years (the maturity date is 2 August 2013), they bear an annual fixed interest rate of 4.5 per cent and their conversion period is from 12 September 2006 to 27 July 2013.

Waiving the shareholders' pre-emptive rights, the issue of the convertible bonds was based on the authorisation given by Citycon's Annual General Meeting on 14 March 2006. In accordance with the convertible bonds' terms and conditions, their conversion price was amended due to the rights issue conducted during the financial year 2007, to EUR 4.20. Following an amendment to the conversion price, the conversion of the convertible bonds may increase the number of

shares by a maximum of 26,190,476 shares and the company's share capital by a maximum of EUR 35,357,142.60. The detailed terms and conditions of the convertible capital loan as well as the accrued interest are presented in the Notes to the Financial Statements under 19, Interest-bearing debt. The terms and conditions and the accrued interest of Citycon's other capital loan are presented in the Note 19 as well.

NEAR-TERM RISKS AND UNCERTAINTIES

Risk management aims to ensure that Citycon meets its strategic and operational goals. The company's risk-management process involves identifying business-related risks, analysing their significance, planning and implementing risk-management measures, reporting on risks on a regular basis and controlling risks.

In the late 2006, Citycon initiated a large-scale project aiming at the adoption of a holistic Enterprise Risk Management (ERM) programme. The project implementation was completed during 2007. Accordingly, the company adopted ERM-compliant operating models and principles of risk management in preparing its 2008 annual plan. The company updates its guidelines for risk-management principles, approved by the Board of Directors, on a regular basis in response to possible changes in its business.

Citycon estimates that major near-term risks and uncertainties are associated with economic development in the company's operating regions and changes in the fair value of investment properties and interest rates. As the focus of Citycon's growth strategy is shifting from property acquisitions to development and construction of its own properties, the risks associated with project management and with increasing construction costs will be more significant. A marked increase in interest rates, materialisation of a major project risk, considerably higher construction costs, a decline in the fair value of investment properties or a sharp economic slowdown in Finland, Sweden or the Baltic countries could have an adverse effect on Citycon's business and profit performance.

The turbulence in the financial markets that began in the late summer has resulted in a clear increase in short-term interest rates and difficulties in banks' own funding activities, which may significantly affect the availability of funding for Citycon and increase future credit margins and financing costs if the uncertainty continues for a prolonged period. This could have a negative effect on the implementation of Citycon's strategy and on the company's business and profits. The company aims to hedge the risk of changes in the financial market by applying a conservative financing policy, which has thus far kept the company's financial expenses from rising significantly and the availability of financing from decreasing.

The company's risk management is covered in more detail in the Annual Report 2007, which will be published towards the end of February. Financing risks are also presented on pages 35-36 of the Financial Statements.

ENVIRONMENTAL RESPONSIBILITY

Energy-use control forms an integral part of property companies' operating-cost control and environmental responsibility. Citycon is involved in KRESS, the energy conservation agreement for the property and

construction sector, aimed at reducing properties' energy consumption. Other major environmental effects in shopping-centre management relate to land use, property maintenance and waste management.

Citycon pays attention to environmental issues in its development projects and is seeking an international environmental rating for them. Sustainable construction is covered above under Development and redevelopment projects.

LEGAL PROCEEDINGS

Market Court's Decision on Citycon's Appeal Regarding Ratina Tender Procedure

The Finnish Market Court issued a decision on 12 October 2007 to dismiss the petition filed by Citycon Oyj and Skanska Talonrakennus Oy on 27 April 2006 in the tender procedure regarding the construction of a shopping centre and related areas in the Ratina region of the City of Tampere, Finland. Citycon did not appeal the decision. More details on this issue are provided in the stock exchange releases published by the company on 27 April 2006 and 15 October 2007 which are available at www.citycon.fi.

ANNUAL GENERAL MEETING

Citycon's Annual General Meeting (AGM), held in Helsinki on 13 March 2007, adopted the financial statements of Citycon Oyj and the Citycon Group for 2006 and discharged the Board of Directors and the CEO from liability. The AGM decided that a per-share dividend of EUR 0.14 be paid for 2006. The dividends were paid out on 23 March 2007.

Board of Directors

Under the Articles of Association, the Board consists of a minimum of five and a maximum of eight members, elected by the AGM for a term of one year at a time. A member of the Board of Directors may be discharged only upon a decision by the general meeting of shareholders.

With the number of Board members remaining at eight in 2007, the AGM re-elected the following Board members for a one-year term: Gideon Bolotowsky, Amir Gal, Raimo Korpinen, Tuomo Lähdesmäki, Carl G. Nordman, Claes Ottosson, Dor J. Segal and Thomas W. Wernink. The Board elected Thomas W. Wernink as its Chairman and Tuomo Lähdesmäki as Deputy Chairman.

Auditor

The AGM elected Ernst & Young Oy (a firm of authorised public accountants) the company's auditor for the financial year 2007, with Tuija Korpelainen (Authorised Public Accountant) acting as the chief auditor appointed by the firm.

Board Authorisations

The AGM authorised the Board of Directors to decide on issuing new shares and disposing of treasury shares through paid or free share issues. New shares can be issued and treasury shares can be transferred to shareholders in proportion to their existing shareholding or through a directed share issue waiving the pre-emptive rights of shareholders, if a weighty financial reason exists for doing so. The Board can also

decide on a free share issue to the company itself. In addition, the Board was authorised to grant special rights referred to in Section 1 of Chapter 10 of the Finnish Limited Liability Companies Act, entitling their holders to receive, against payment, new shares in the company or treasury shares. The combined number of new shares to be issued and treasury shares to be transferred, including the shares granted on the basis of the special rights, may not exceed 100 million. This authorisation is valid for five years from the date of the AGM.

The Board exercised this authorisation on 10 September 2007, when it decided on a share issue based on the shareholders' preemptive subscription rights. A maximum of 27,594,782 shares were offered for subscription by shareholders. As a result of this, the number of shares that can be issued or disposed of on the basis of the authorisation now totals 72,405,218.

At the end of the reporting period, the Board had no other authorisations.

Alteration of the Articles of Association

Under Citycon's Articles of Association, a decision on their alteration can only be made by a shareholders' meeting with a 2/3 majority vote.

The AGM approved the proposed amendments to the Articles of Association, resulting mainly from the new Finnish Limited Liability Companies Act. The amended Articles of Association were registered in the Trade Register on 30 March 2007. The most significant amendments included deleting provisions governing the company's minimum and maximum share capital and the share's nominal value.

SHAREHOLDERS, SHARE CAPITAL AND SHARES

Citycon is a Mid Cap company in the Financials sector, sub-industry Real Estate Management & Development, on the OMX Nordic Exchange, its shares being listed on the stock exchange in Helsinki since November 1988. Its trading code is CTY1S and shares are traded in euros. The ISIN code used in international securities clearing is FI0009002471.

Trading and Share Performance

In 2007, the number of Citycon shares traded on the OMX Nordic Exchange Helsinki totalled 153.7 million (51.2 million) at a total value of EUR 738.1 million (EUR 197.6 million). The highest quotation was EUR 6.09 (EUR 5.09) and the lowest EUR 3.24 (EUR 3.02). The reported tradeweighted average price was EUR 4.76 (EUR 3.86) and the share closed at EUR 3.65 (EUR 5.05). The company's market capitalisation at the end of the financial year totalled EUR 806.6 million (EUR 844.3 million).

Shareholders

On 31 December 2007, Citycon had a total of 2,090 (1,721) registered shareholders, of which nine were account managers of nominee-registered shares. Nominee-registered and other international shareholders held 210.9 million (155.6) shares, or 95.5 per cent (93.1%) of shares and voting rights. Information on the company's major shareholders and the breakdown of shareholding is presented on pages 55-56 of the Financial Statements.

Notifications of Changes in Shareholdings

In 2007, Citycon Oyj received three notifications of changes in shareholdings:

Fidelity International Limited notified the company in February that the holdings of its direct and indirect subsidiaries in Citycon Oyj had fallen below the ten per cent threshold. According to the notification, Fidelity International Limited and its direct and indirect subsidiaries held a total of 17,297,574 Citycon shares on 14 February 2007, equivalent to nine per cent of the company's share capital and voting rights at the time.

ING Clarion Real Estate Securities, L.P. notified the company in August that its holding in Citycon Oyj's voting rights and share capital had risen above the threshold of five per cent. According to the notification, ING Clarion Real Estate Securities, L.P. held 9,726,700 shares on 24 August 2007, equivalent to 5.04 per cent of the company's share capital and voting rights at the time.

Perennial Investment Partners Ltd notified the company in November that its holding in Citycon Oyj's voting rights and share capital had risen above the threshold of five per cent. According to the notification, Perennial Investment Partners Ltd held 11,256,637 shares on 5 November 2007, equivalent to 5.10 per cent of the company's share capital and voting rights at the time.

Share Capital

At the beginning of 2007, the company's registered share capital totalled EUR 225.7 million and the number of shares 167.2 million. During the period, the company's share capital has increased by EUR 33.9 million and the number of shares by 53.8 million as a result of share issues and exercise of stock option rights. The table below shows the changes in more detail. At the end of the period, the company's registered share capital totalled EUR 259.6 million, and the number of shares came to 221.0 million. The company has a single series of shares, with each share conferring entitlement to one vote at general meetings of shareholders. Since the amendment made to the Articles of Association in March, the shares no longer have a nominal value.

Changes in Share Capital, 1 January- 31 December 2007

Reason	Change, EUR	Change, no. of shares	Share capital, EUR	No. of shares
			225,697,293.00	167,183,180
	123,217,20	91,272	225,820,510.20	167,274,452
	33,750,000,00	25,000,000	259,570,510.20	192,274,452
	-	206,441	-	192,480,893
	-	21,854	-	192,502,747
	-	307,524	-	192,810,271
	-	353,201	-	193,163,472
	-	27,594,782	-	220,758,254
	-	71,370	-	220,829,624
	-	151,587	-	220,981,211
			259,570,510.20	220,981,211
	Increase (stock options) Increase (directed share issue) Increase (stock options) Increase (stock options) Increase (stock options) Increase (stock options) Increase (rights issue, 7:1) Increase (stock options) Increase (stock options)

Own Shares

During the financial year, Citycon Oyj held no own shares.

Stock Option Schemes

Stock Options 1999

An Extraordinary General Meeting of Citycon held on 4 November 1999 authorised the issue of a maximum of 5,500,000 stock options. Of these, 5,327,500 options were granted to the personnel. The rest of the options were granted to Citycon's fully owned subsidiary Veniamo-Invest Oy.

The stock option scheme 1999 expired on 30 September 2007. By the end of the subscription period, a total of 5,631,912 Citycon shares had been subscribed by exercising the 1999 stock options, including 825,982 shares subscribed at a EUR 1.35 per-share subscription price during 2007. The shares subscribed entitle their holders to a dividend for the financial year 2007. Of the 1999 option rights, only the 172,500 held by Veniamo-Invest Oy remained unexercised. These options have expired worthless.

Stock Options 2004

The Annual General Meeting held on 15 March 2004 authorised the issue of a maximum of 3,900,000 stock options. Of these, 3,220,000 A/B/C options were held by Group employees at the end of the financial year. The stock options 2004 A and 2004 B are listed on the OMX Nordic Exchange Helsinki. Trading in 2004 B options began on 3 September 2007.

The terms and conditions of the stock option plan 2004 were amended due to the rights issue carried out during the period. Amendments made to the share subscription ratio and subscription prices also apply to the maximum number of shares that can be subscribed exercising these option rights. The table below shows basic information on the stock option scheme 2004 after the amendments valid as of 10 October 2007.

Basic Information on Stock Options 2004 as at 31 December 2007

2004 A	2004 B	2004 C
1,040,000	1,090,000	1,090,000
260,000	210,000	210,000
1:1,2127	1:1,2127	1:1,2127
2,3432	2,7308	4.4313
1 Sept. 2006	1 Sept.2007	1 Sept.2008
31 March 2009		31 March 2011
336,720	-	-
376,316	-	-
		31 March 2010

1) Veniamo-Invest Oy has no right to subscribe for its parent company's shares.

2 ) The share subscription prices are reduced by half of the per-share dividends paid. However, the share subscription price is always at least EUR 1.35.

The number of new shares subscribed during the financial year by exercising the A options attached to Citycon's 2004 stock option scheme was 286,601, including the 606 shares subscribed for in December. No 2004 B options have been exercised. Shares subscribed in 2007 entitle their holders to a dividend for the financial year 2007. The increase in the number of shares corresponding to the shares subscribed in December has not yet been registered with the Finnish Trade Register. The outstanding stock options under the 2004 option scheme entitle their holders to subscribe for a further 3,496,553 new shares.

Shares and Stock Options held by the Board of Directors and Management

On 31 December 2007, members of the Board of Directors, the CEO and other members of the Corporate Management Committee and their related parties held a total of 254,710 Citycon shares, accounting for 0.11 per cent of all shares and voting rights.

On 31 December 2007, Citycon's CEO held 75,000 stock options 2004 A, 140,000 stock options 2004 B and 140,000 stock options 2004 C. Other members of the Corporate Management Committee held a total of 150,000 stock options 2004 A, 280,000 stock options 2004 B and 280,000 stock options 2004 C. These option rights entitle the company's CEO and other members of the Corporate Management Committee to subscribe for a maximum of 1,291,525 Citycon shares. Board members are not participants of the company's stock-based incentive schemes.

Up-to-date information on the share and stock option holdings of the members of Citycon's Board of Directors and Corporate Management Committee is available on the company's website at www.citycon.fi.

The main terms of the CEO's executive contract are described on page 43 of the Financial Statements.

EVENTS AFTER THE FINANCIAL YEAR

In connection with the Lippulaiva shopping centre's extension, Citycon acquired all shares in MREC Kiinteistö Oy Majakka and, at the same time, divested its entire holding in MREC Kiinteistö Oy Ulappatori. Kiinteistö Oy Majakka owns undeveloped land in the surroundings of Lippulaiva, in the area planned for the shopping centre's extension in Espoo, Finland.

Since Citycon continues to have a right of possession into the leasable areas of MREC Kiinteistö Oy Ulappatori, the divestment of holding in MREC Kiinteistö Oy Ulappatori is not treated as a disposal of investment property in Citycon's consolidated financial statements prepared in accordance with IFRS. The right of possession terminates when the extension construction is completed or in 2011 at the latest.

Citycon signed an agreement on 12 February for the sale of part of shopping centre Iso Omena to an affiliate of GIC Real Estate, the property investment arm of the Government of Singapore Investment Corporation. Upon closing of the agreement, Citycon will own 60 per cent of the shopping centre and GIC Real Estate, 40 per cent. The parties have agreed that Citycon will continue to be responsible for the business and management of the shopping centre on customary terms. The agreed debt-free purchase price, EUR 131.6 million, is equivalent to 40 per cent of the original acquisition price of EUR 329 million paid by Citycon.

BOARD PROPOSAL FOR PROFIT DISTRIBUTION AND DISTRIBUTION OF ASSETS FROM THE INVESTED UNRESTRICTED EQUITY FUND

The parent company's distributable funds amount to EUR 12.6 million, of which profit for the period accounts for EUR 8.4 million. On the date of publication of the Financial Statements, funds in the parent company's invested unrestricted equity fund total EUR 201.1 million.

On the basis of the Financial Statements to be adopted for the financial year ending on 31 December 2007, the Board of Directors proposes to the Annual General Meeting of 13 March 2008 that a per-share dividend of EUR 0.04 be paid out from the retained earnings, corresponding to a total of EUR 8.8 million, and that EUR 0.10 per share be returned from the invested unrestricted equity fund, corresponding to a total of EUR 22.1 million. The Board of Directors proposes that the record date for dividend payment and equity return be 18 March 2008 and that the dividend and equity return be paid on 2 April 2008.

It is the Board of Directors' opinion that the proposed profit distribution and return of equity do not risk the company's solvency.

OUTLOOK

Citycon's focus will continue to be on increasing net operating income and cash flow. The company expects the development and redevelopment projects to continue to play a central role in its business in 2008. The company will remain active in developing its shopping centres while also seeking acquisition opportunities to implement its expansion strategy. Citycon is also considering to divest non-core properties.

The company expects its net rental income and direct operating profit excluding fair value changes to increase in 2008. The estimate is based on the property portfolio's growth, including the acquisition of Iso Omena shopping centre in September 2007, on investments in shopping-centre management as well as on expansion and redevelopment projects coming on line.

Helsinki, 14 February 2008

Citycon Oyj

Board of Directors

Consolidated Income Statement, IFRS

EUR million	Note	1 Jan.-31 Dec. 2007	1 Jan.-31 Dec. 2006
Total revenues	1	373.1	325.1
Total expenses excluding financial expenses	2	-72.4	-128.6
Gross rental income		143.7	115.1
Service charge income		7.7	4.2
Turnover	4	151.4	119.4
Property operating expenses	6	47.8	36.0
Other expenses from leasing operations	5	0.3	0.6
Net rental income		103.4	82.8
Administrative expenses	6, 7	16.5	12.9
Other operating income and expenses	8	0.5	0.6
Fair value gains on investment property		220.9	131.3
Fair value losses on investment property		-7.5	-11.2
Net fair value gains on investment property		213.4	120.1
Investment property disposal proceeds		0.2	73.9
Carrying value of investment property disposals		-0.3	-67.9
Losses/profit on disposal of investment property		-0.1	5.9
Operating profit		300.7	196.5
Financial income	9	10.6	12.2
Financial expenses	9	-57.9	-43.0
Net financial income and expenses		-47.3	-30.9
Profit before taxes		253.5	165.6
Current taxes	10	-3.4	-7.4
Change in deferred taxes	10, 21	-46.2	-31.8
Income tax expense		-49.6	-39.2
Profit for the period		203.9	126.4
Attributable to
Parent company shareholders		200.3	124.9
Minority interest		3.6	1.5
Earnings per share attributable to parent company shareholders:
Earnings per share (basic), EUR	11	1.00	0.76
Earnings per share (diluted), EUR	11	0.91	0.73
Direct result	3	35.7	32.4
Indirect result	3	164.6	92.5
Profit for the period attributable to parent company shareholders		200.3	124.9

Consolidated Balance Sheet, IFRS

ASSETS Non-current assets 12 Investment property 2,215.7 1,447.9 13 Development property 33.2 14 Property, plant and equipment 0.9 0.6 15 Intangible assets 0.5 0.3 20 Derivative financial instruments 10.1 4.5 Total non-current assets 2,260.5 1,453.3 Current assets 16 Trade and other receivables 22.7 11.3	- 0.4
20 Derivative financial instruments 1.2
17 Cash and cash equivalents 24.2 21.3
Total current assets 48.1 33.1
Total assets 2,308.6 1,486.4
LIABILITIES AND SHAREHOLDERS' EQUITY
18 Equity attributable to parent company shareholders
Share capital 259.6 225.7
Share issue - 0.1
Share premium fund 131.1 131.1
Fair value reserve 4.9 -1.3
Invested unrestricted equity fund 199.3	-
Other reserves 0.0 0.0
Translation reserve -0.3 0.0
Retained earnings 387.3 209.7
Total equity attributable to parent company shareholders 982.0 565.3
Minority interest 28.9 15.0
Total shareholders' equity 1,010.9 580.3
LIABILITIES
Long-term liabilities
19 Interest-bearing liabilities 1,049.3 726.3
20 Derivative financial instruments 2.3 4.8
Other non-interest-bearing liabilities 0.2 0.1
21 Deferred tax liabilities 88.1 40.4
Total long-term liabilities 1,139.9 771.7
Short-term liabilities
19 Interest-bearing liabilities 104.7 87.6
22 Trade and other payables 53.1 46.8
Total short-term liabilities 157.8 134.4
Total liabilities 1,297.7 906.1
Total liabilities and shareholders' equity 2,308.6 1,486.4

Consolidated Cash Flow Statement, IFRS

Me	Note	1 Jan.-31 Dec. 2007	1 Jan.-31 Dec. 2006
Cash flow from operating activities
Profit before taxes		253.5	165.6
Adjustments:
Depreciation and amortization	7	0.5	0.2
Net fair value gains on investment property	12	-213.4	-120.1
Losses/profit on disposal of investment property	12	0.1	-5.9
Financial income	9	-10.6	-12.2
Financial expenses	9	57.9	43.0
Other adjustments		0.6	0.9
Cash flow before change in working capital		88.5	71.6
Change in working capital		0.2	-0.5
Cash generated from operations		88.8	71.1
Interest and other financial expenses paid		-42.7	-34.1
Interest and other financial income received		3.1	0.9
Taxes paid		-10.0	-5.9
Net cash from operating activities		39.3	32.0
Cash flow from investing activities
Acquisition of subsidiaries, less cash acquired	12	-517.6	-331.8
Acquisition of investment properties	12	-16.0	-33.6
Capital expenditure on investment properties	12	-39.3	-35.6
Capital expenditure on development
properties, PP&E and intangible assets	13, 14, 15	-24.5	-
Sale of investment properties	12	0.3	73.9
Net cash used in investing activities		-597.1	-327.1
Cash flow from financing activities
Proceeds from share issue		232.4	77.4
Proceeds from short-term loans		773.1	421.2
Repayments of short-term loans		-727.9	-392.2
Proceeds from long-term loans		535.8	675.3
Repayments of long-term loans		-228.9	-461.8
Dividends paid		-23.4	-19.2
Net cash from used in financing activities		561.1	300.8
Net change in cash and cash equivalents		3.3	5.7
Cash and cash equivalents at period-start	17	21.3	15.6
Effects of exchange rate changes		-0.4	0.0
Cash and cash equivalents at period-end	17	24.2	21.3

Consolidated Statement of Changes in Shareholders' Equity, IFRS

	Equity attributable to parent company shareholders
	Share capital	Share issue	Share premium fund	value reserve	Invested Fair unrestricted equity fund	reserves	Other Translation Retained reserve	earnings	Total	Minority interest	Total share- holders equity
Balance at 31 Dec. 2005	184.1	1.1	78.8	-10.5	-	6.6	0.0	96.5	356.6	3.6	360.2
Cash flow hedges				9.3					9.3		9.3
Net gains recognised in equity	0.0	0.0	0.0	9.3	0.0	0.0	0.0	0.0	9.3	0.0	9.3
Profit for the period								124.9	124.9	1.5	126.4
Total recognised income and
expense for the period	0.0	0.0	0.0	9.3	0.0	0.0	0.0	124.9	134.1	1.5	135.7
Share issues	36.8		37.1						73.9		73.9
Share subscriptions based
on stock options	4.8	-0.9	0.1						3.9		3.9
Dividends						-6.6		-12.6	-19.2		-19.2
Equity instrument of
convertible capital loan			15.1						15.1		15.1
Translation differences							0.0		0.0		0.0
Share-based payments (Note 23)								0.9	0.9		0.9
Other changes									0.0	9.9	9.9
Balance at 31 Dec. 2006	225.7	0.1	131.1	-1.3	-	0.0	0.0	209.7	565.3	15.0	580.3
Cash flow hedges				6.3					6.3		6.3
Net gains recognised in equity				6.3					6.3	0.0	6.3
Profit for the period								200.3	200.3	3.6	203.9
Total recognised income
and expense for the period				6.3				200.3	206.6	3.6	210.2
Share issues	33.8				197.6				231.3		231.3
Share subscriptions based
on stock options	0.1	-0.1	0.0		1.8				1.8		1.8
Dividends								-23.4	-23.4		-23.4
Translation differences							-0.3		-0.3	-0.7	-1.0
Share-based payments (Note 23)								0.6	0.6		0.6
Other changes									0.0	11.0	11.0
Balance at 31 Dec. 2007	259.6	-	131.1	4.9	199.3	0.0	-0.3	387.3	982.0	28.9	1,010.9

Notes to the Consolidated Financial Statements, IFRS

ACCOUNTING POLICIES

Basic company data

As a real estate company specialising in retail properties, Citycon operates largely in the Helsinki Metropolitan Area and Finland's major regional centres as well as in Sweden and the Baltic Countries. Citycon is a Finnish, public limited company established under Finnish law and domiciled in Helsinki, the address of its registered office being Pohjoisesplanadi 35 AB, FI-00100 Helsinki. The Board of Directors approved the financial statements on 14 February 2008.

Basis of preparation

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 2007, 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. In addition, the best practices policy recommendations of the European Public Real Estate Association (EPRA) have been applied in preparing Citycon's financial statements. EPRA is the representative body of the publicly traded real estate sector in Europe, publishing recommendations on the presentation of financial information for the sector.

Citycon has used IFRS as the primary basis of its financial statements preparation from the beginning of 2005. Availablefor-sale 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.

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 that are believed to be reasonable under the circumstances, the results of which form the basis of making 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 period and future periods if the revision affects both current and future periods. The section 'Management's judgement in applying the most significant accounting policies and other key assumptions about future risks and uncertainties' below provides a more detailed description of the factors underlying judgements and assumptions.

Changes in IFRS and accounting policies

During the financial year 2007, Citycon adopted the following new and revised IFRS rules. Their adoption had no effect on Citycon's financial results and financial position but has required the presentation of new notes to the financial statements.

• IFRS 7 Financial Instruments: Disclosures
• Amendment to IAS 1 Presentation of Financial Statements.

IFRS 7 Financial Instruments: Disclosures requires information on the significance of financial instruments for an entity's financial position and performance, and on the nature and extent of exposure to risks arising from financial instruments and how the entity manages these risks. Based on Citycon's assessment of the IFRS 7 requirements, the company has supplemented Note 19 Interest-bearing liabilities and Note 20 Financial instruments with new information.

Amendment to IAS 1 Presentation of Financial Statements – Capital Disclosures requires that the company disclose information related to its capital management in the notes to the financial statements. This new information can be found in Note 20 Financial instruments – Capital management.

Citycon did not apply the new IFRS 8 Operating Segments in its consolidated financial statements for 2007. This standard must be applied for financial years starting on 1 January 2009.

On 1 January 2007, Citycon changed its accounting policies related to the accounting treatment of IAS 23 Borrowing Costs by switching over to the allowed alternative treatment, i.e. borrowing costs, such as interest expenses and management fees, are capitalised at cost of properties under construction. The adoption of this accounting treatment had no material effect on the financial statements for 2006.

Group accounting

The consolidated financial statements include Citycon Oyj and its subsidiaries, as well as holdings in its associated and jointventure companies.

Subsidiaries refer to companies in which the Group holds a controlling interest. This controlling interest implies that the Group has the power to govern the entity's financial and operating policies for the purpose of profiting from its operations. The consolidated financial statements have been prepared in accordance with the historical cost convention under which the historical cost of subsidiary shares in the parent company's non-current assets has been eliminated against the shareholders' equity of the subsidiary on the date of the subsidiary's acquisition. The portion of the acquired company's net assets exceeding their carrying amounts on the acquisition date has primarily been allocated to land and buildings up to their fair value. 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.

Mutual real estate companies refer to jointly controlled assets included in the consolidated financial statements using proportionate consolidation, as required by IAS 31 Interests in Joint Ventures, whereby the Group's share of assets, liabilities, income and expenses are included in the consolidated financial statements. The proportionate consolidation method applies to all joint ventures of this kind, regardless of the Group's holding in the joint venture.

Citycon has no associated companies as referred to in IFRS since all mutual real estate companies are stated as jointly controlled assets, as described above.

Property acquisition is treated as such when the Group actually acquires a holding in a property. This acquisition does not generate goodwill, but the entire acquisition cost is allocated to land, buildings and other assets and liabilities.

If the property is included in the acquired business, IFRS 3 Business Combinations will apply, whereby the acquisition cost is allocated to the acquired assets and liabilities at their fair value. Goodwill is the residual stemming from the fair value of the acquired net assets exceeding that of the consideration given.

Foreign currency transactions

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 items included in shareholders' equity following their acquisitions are recognised under shareholders' equity.

Investment property

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 the investment properties are subject to a fair value model valuation, which is conducted by an external appraiser for the first time at the end of the quarter following the acquisition.

Fair value is defined as the amount for which an asset could be exchanged between knowledgeable, willing parties in an arms' length transaction. An investment property's fair value reflects the actual market position and circumstances on the balance-sheet date, best manifested in prices paid for properties on the active market on the review date, the location and condition of these properties corresponding to those of the property under review while applying similar lease or other contracts.

Using International Valuation Standards (IVS), an external professional appraiser conducts the valuation of the company's property at least once a year, or at more regular intervals due to any major changes in the market. In the event of no major market changes, the company updates these valuations using the basic quarterly data and the market variables used by the external appraiser for the latest valuation.

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 lease 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 propertyspecific yield requirements. Yield requirements are determined for each property in view of property-specific and market risks. The total value of the property portfolio is calculated as the sum of the individual properties based on the cash- flow method.

Citycon redevelops its investment properties. When Citycon begins to redevelop its existing investment property, the property remains as an investment property, which is measured based on a fair value model in accordance with IAS 40. The significant extension projects for existing investment properties are exceptions and are treated in accordance with the IAS 16 Property, Plant and Equipment standard until the project is completed.

The fair value of development projects is determined under IAS 40 and Citycon uses a special project model to measure the fair value of its development projects. This project model is a cash flow analysis, which takes account of capital expenditure on the development project and the property's future cash flows according

to the development project's schedule. Citycon considers using the model on a case-by-case basis. As a rule, Citycon makes use of the model as soon as the Board of Directors has made a positive investment decision on the project and the external appraiser considers that all information required for a reliable valuation is available.

All potential development projects have been left out of the valuation conducted by the external appraiser. The valuation of properties with potential development projects is based on the situation and the estimated rental value on the valuation date. All undeveloped lots, or those under development, are evaluated based on their zoning on the valuation date. The value in each case was set based on market observations.

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 that have not been 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 stated as separate items in the income statement. Investment property is derecognised when it is disposed of or withdrawn from use permanently and its disposal has no future economic value.

The IAS 16 Property, Plant and Equipment standard is applied until the completion of investment properties under construction and built for future use as investment properties. After their completion, these properties are transferred to the investment property at cost, which is the accumulated capital expenditure up to the completion date. Subsequently, they are measured at fair value in accordance with IAS 40.

	Standard	Recognition principle	In the balance sheet	In the income statement	Other
Property held	IAS 40	Initially at cost and	Investment	Fair value change
to earn rental	Investment	subsequently at fair	property	recognised
income or	Property	value using the cash		as valuation
capital appreciation		flow analysis model		gain or loss
Ordinary development	IAS 40	Initially at cost and	Investment	Fair value change
project aimed at	Investment	subsequently at fair	property	recognised
improving premises	Property	value using the project		as valuation
within the existing		model based on the		gain or loss
investment property		cash flow analysis
Property which is	IAS 16	At cost,	Development	Impairment	Upon completion,
currently under	Property,	including financing	property	losses	accounting
construction and which	plant and	costs arising			treatment
will be used as an	equipment	from the project			under IAS 40
investment property
upon completion
Major development	IAS 16	Development project	Development	Impairment	Upon completion
project, based on	Property,	(new building	property	losses	accounting
constructing either a new	plant and	or an extension)			treatment
building or an extension	equipment	is recognized at cost,			under IAS 40
to the existing		including financing costs
investment property		arising from the project

Summary of accounting principles for the treatment of investment properties in Citycon's financial statements:

Property, plant and equipment

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 straight-line 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, and if any major differences occur between the values, the depreciation plan will be revised to correspond to these new values. The following depreciation periods apply:

• Machinery and equipment are depreciated on a straight-line basis over ten years.
• Other PPEs are depreciated on a straight-line basis over three to ten years.
• This also applies to tangible assets leased under finance lease. Such an asset is depreciated over its useful economic life or within the shorter lease term.

Capital gains or losses on the sale of PPEs are recognised in the income statement.

Intangible assets

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 flow to the company.

Intangible assets are measured at cost less amortisation and any impairment losses.

These assets include computer software amortised on a straight-line basis over five years.

Impairment

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.

Financial assets and liabilities

Recognition and measurement

As required by IAS 39, financial assets are classified into the following categories for measurement purposes: originated loans and other receivables not held for trading, available-for-sale assets and financial assets at fair value through profit or loss. The classification of a financial asset is determined by the purpose for which the asset is purchased at the time of its purchase.

Originated 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 short-term and long-term financial assets are carried at amortised cost. Their balance sheet value is impaired by the amount of any credit loss.

Investments intended to be held for an indefinite period are classified as available-for-sale assets, which can be sold at the time deemed appropriate. These financial assets are carried at fair value subsequent to their initial recognition. 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.

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 at fair value through profit or loss or as other liabilities. Non-derivative debt contracts concluded for purposes other than trading are classified as other financial liabilities.

Financial assets and liabilities are recognised in the balance sheet on the basis of the settlement date. They are initially measured at cost, and are recognised at amortised cost using the effective yield method.

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.

Derivative contracts and hedge accounting

Derivatives are initially measured at cost (if available) and remeasured 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 in the fair value reserve under shareholders' equity, whereas the amount stemming from ineffective hedging is recognised in the income statement. The amount in the fair value reserve is recognised in the income statement 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. The fair value of interest rate swaps is shown in current or non-current receivables or short-term or long-term liabilities in the balance sheet. The fair value of interest rate swaps is based on the present value of estimated future cash flows.

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 income statement, since fair value changes related to financial assets and liabilities denominated in foreign currencies are also recognised therein.

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 income statement. The Group has no embedded derivatives.

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, this resulting impairment loss must be recognised in the income statement. 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.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, 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.

Borrowing costs

Borrowing costs are expensed as incurred. Borrowing costs, such as interest expenses and arrangement fees, arising from the construction of new buildings or extensions and treated under IAS 16 are capitalised at the cost of property under construction. Capitalisation commences when 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.

Loan-related transaction expenses clearly associated with a specific loan are included in the loan's cost on an accrual basis and recognised as interest expenses using the effective interest method.

Taxes

Income taxes include taxes based on taxable profit for the financial period, adjustments for previous periods' taxes and changes in deferred taxes. Tax based on taxable income for the period is calculated applying the tax legislation valid 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 may arise between the fair value and taxable value of investment properties. In such a case, taxes are calculated on the difference between property's fair value and the debt-free acquisition cost of shares in the mutual real estate company in question, or the nondepreciated 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 foreign properties, such deferred taxes are not recognised because property disposal does not lead to tax implications, due to the ownership structure.

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.

Income recognition

Citycon's income consists mainly of rental income from investment properties. Rental income is recognised in the income statement on a straight-line basis over the term of the lease.

Leases

Leases based on Citycon as a lessor renting out investment properties are not classified as finance leases.

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.

Lease incentives

Citycon mainly uses alteration work on leased premises as lease incentives. On behalf of the lessee, Citycon performs alteration work on premises rented by the lessee and charges the lessee for the resulting costs in terms 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.

Citycon has no significant leases that would involve rent-free periods or rent reductions.

Pensions

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. Currently, Citycon has no defined benefit pension plan in place.

Share-based payment

Citycon has applied IFRS 2 Share-based Payment to its stock options granted after 7 November 2002 and not vested before 1 January 2005, and to the long-term share-based incentive plan decided by the Board of Directors on 26 April 2007. 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 option-pricing model to measure the fair value of stock options.

MANAGEMENT'S JUDGEMENT IN APPLYING THE MOST SIGNIFICANT ACCOUNTING POLICIES AND OTHER KEY AS-SUMPTIONS ABOUT FUTURE RISKS AND UNCERTAINTIES

Fair value of investment properties

Measuring the fair value of investment property forms one of the most significant accounting policy aspects, which involves the management's judgement and assumptions about future uncertainties. Market rents, occupancy rate, operating expenses and yield requirement form the key variables used in the investment property's fair-value measurement, whose measurement involves the management's judgement and assumptions.

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 investment property. The key parameters of the cash flow analysis are the following items:

• Market rents, which affect rental income in the cash flow analysis, are determined by market supply and demand. The external appraiser defines the market rents for each property.
• The occupancy rate stands for that part of the leasable space (Gross Leasable Area, GLA) that is leased. The occupancy rate is determined by the lease agreements valid on the valuation date. Upon a lease expiry, measuring the occupancy rate involves the management's assumptions. The occupancy rate affects the yearly rental income.
• Operating expenses comprise costs resulting from the property's management, maintenance, heating, electricity, water supply etc. Operating expenses are determined based on the previous year's operating expenses and the benchmark data collected by the external appraiser.
• The yield requirement comprises risk-free interest as well as property-specific and market risk. The property-specific risk is defined by Citycon and this definition involves the management's judgement and assumptions. Market risks are defined by an external appraiser. Yield requirement is used as the discount rate in the cash flow analysis. When yield requirement decreases, the fair value of investment properties increases.

Other variables involving judgment and assumptions are the current leases' extension probability, the duration of vacant areas, investments, the inflation rate and the rental growth assumptions.

Citycon uses a special project model to measure the fair value of its development projects. This project model is a cash flow analysis, which takes account of capital expenditure on the development project and the property's future cash flows according to the development project's schedule. Although the model applies principles similar to those used in the cash flow analysis measuring the investment property's fair value, it is better suited to modelling changes, in many cases significant ones, in premises and contracts during the development project. In the project model, the property can be divided into different parts and the current leases, future leases, project schedules and capital expenditure can be defined for each of these parts, which may comprise the various floors, areas or a larger space within the building. In addition, risks associated with the development project and the property's future use can be defined for the yield requirement for development projects. Following this, each part is subject to the cash flow analysis and the parts' combined cash flow constitutes the development project's fair value.

The use of a special project model in the valuation of development projects requires the management's judgement or assumptions about future investments, rental agreements and the project's timetable.

Deferred tax assets

Judgement and assumptions are also included in the recognition of deferred tax assets with respect to estimates of probable disposable income subject to tax.

Business acquisitions and asset acquisitions

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's management 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. Criteria for business acquisitions identified by Citycon include acquired access to new market areas, a new business line, brand or another intangible asset related to customer relationships etc. However, this is not an exhaustive list, since Citycon's management assesses each investment property purchase on a case-by-case basis.

1. TOTAL REVENUES

EUR million	2007	2006
Gross rental income	143.7	115.1
Service charge income	7.7	4.2
Other operating income	0.5	0.6
Fair value gains on investment property	220.9	131.3
Investment property disposal proceeds	0.2	73.9
Total	373.1	325.1

Total revenues disclosure is in accordance with

the EPRA Recommendations.

2. TOTAL EXPENSES EXCLUDING FINANCIAL EXPENSES

EUR million	2007	2006
Property operating expenses	47.8	36.0
Other expenses from leasing operations	0.3	0.6
Administrative expenses	16.5	12.9
Fair value losses on investment property	7.5	11.2
Carrying value of investment property disposals	0.3	67.9
Total	72.4	128.6

Total expenses disclosure is in accordance with the

EPRA Recommendations.

Total revenues deducted by total expenses equals to operating profit.

3. RECONCILIATION BETWEEN DIRECT AND INDIRECT RESULT

Due to the nature of Citycon's business and the requirement to apply IFRS, the consolidated income statement includes a large number of items related to non-operating activities. In addition to the consolidated income statement under IFRS, Citycon also presents its profit for the period with direct result and indirect result separately specified, in an attempt to enhance the transparency of its operations and to facilitate comparability of financial years. Direct result describes the profitability of the Group's operations during the financial year disregarding the effects of fair value changes, gains or losses on sales and other extraordinary items. Earnings per share calculated based on direct result corresponds to the earnings per share definition recommended by EPRA.

EUR million	2007	2006
DIRECT RESULT
Net rental income	103.4	82.8
Administrative expenses	-16.5	-12.3
Other operating income and expenses	0.5	0.6
Net financial income and expenses	-47.3	-30.0
Current taxes	-3.4	-5.5
Change in deferred taxes	-0.2	-3.0
Minority interest	-0.9	-0.3
Total	35.7	32.4
Direct result per share, diluted
(Diluted EPRA EPS) 1)	0.18	0.20

EUR million	2007	2006
INDIRECT RESULT
Net fair value gains on investment property	213.4	120.1
Profit on disposal of investment property	-0.1	5.9
Administrative expenses related to disposals	-	-0.6
One-off financial income and expenses	-	-0.9
Current taxes related to disposals	-	-1.9
Change in deferred taxes	-46.0	-28.8
Minority interest	-2.7	-1.3
Total	164.6	92.5
Indirect result per share, diluted 1)	0,72	0,53
Profit for the period attributable
to parent company shareholders	200.3	124.9

1) Calculation of the number of the shares is presented in the note 11 Earning per share and net asset value per share.

4. SEGMENT INFORMATION

The presentation of segment information is based on geographical segments and business segments. Geographical segments are based on the Group's organisational structure and internal financial reporting. Segment assets and liabilities consist of operating items which the segment uses in its operations or which, on reasonable basis, can be allocated to the segment. Unallocated items include tax and financial items, as well as corporate items.

GEOGRAPHICAL SEGMENTS

Geographical segments are Finland, Sweden and the Baltic countries. Other segment includes mainly the expenses of the Group's finance and other administration.

Finland

Citycon is Finland's largest company in the shopping-centre business. It owns 22 shopping centres in addition to 46 other retail properties, of which 33 are located in the Helsinki Metropolitan Area and 35 elsewhere in Finland.

Sweden

Citycon has expanded especially in Sweden during the last two years. It now owns eight shopping centres and seven other retail properties. In 2007 Citycon extended its operations outside the Stockholm and Gothenburg economic areas, to Umeå, by acquiring 75 per cent of shopping centre Strömpilen and retail property Länken.

Seven of the sites in Sweden are located in the Greater Stockholm Area, six in the Greater Gothenburg Area and two in Umeå.

The Baltic Countries

Citycon owns three shopping centres in the Baltic region. The first acquisition in the Baltic countries, made in July 2005, was the Rocca al Mare shopping centre, located in the Estonian capital, Tallinn. In 2006, Citycon entered the Lithuanian market with the acquisition of the Mandarinas shopping centre in Vilnius. In 2007 Citycon acquired Magistral shopping centre in Tallinn.

BUSINESS SEGMENTS

Business segments comprise shopping centres and other retail properties.

Shopping centres

The Shopping centres segment consists of 33 shopping and retail centre properties, 22 of which are located in Finland, eight in

Sweden, two in Estonia, one in Lithuania. Shopping Centres form the core of Citycon's business.

Citycon leads the Finnish property market for shopping centres.

Other retail properties

The Other retail properties segment consists of 53 properties. It serves the grocery and speciality shop sector by leasing and developing supermarket and shop properties.

CAPITAL EXPENDITURE

Capital expenditure includes additions to the investment properties, development properties as well as property, plant and equipment and intangible assets in the balance sheet.

A) GEOGRAPHICAL SEGMENTS

1 JAN.-31 DEC. 2007
EUR million	Finland	Sweden	Baltic Countries	Other	Total
Gross rental income	100.7	35.4	7.7	-	143.7
Service charge income	3.6	3.7	0.4	-	7.7
Turnover	104.3	39.0	8.0	0.0	151.4
Property operating expenses	28.5	17.3	2.1	-0.1	47.8
Other expenses from leasing operations	0.1	0.1	0.0	0.0	0.3
Net rental income	75.7	21.6	6.0	0.1	103.4
Administrative expenses	5.5	3.2	0.9	6.9	16.5
Other operating income and expenses	0.2	0.2	0.1	0.0	0.5
Net fair value gains on investment property	148.5	55.6	9.3	0.0	213.4
Losses on disposal of investment property	-0.1	0.0	0.0	0.0	-0.1
Operating profit	218.7	74.3	14.5	-6.8	300.7
Net financial income and expenses				-47.3	-47.3
Income tax expense				-49.6	-49.6
Profit for the period					203.9
Assets	1,594.2	542.2	125.3	46.9	2,308.6
Liabilities	14.7	11.8	3.2	1,268.1	1,297.7
Capital expenditure	429.1	142.4	31.7	0.8	603.9

	1 JAN.-31 DEC. 2006
EUR million	Finland	Sweden	Baltic Countries	Other	Total
Gross rental income	93.1	15.9	6.1	-	115.1
Service charge income	2.7	1.4	0.1	-	4.2
Turnover	95.8	17.3	6.2	0.0	119.4
Property operating expenses	26.4	8.1	1.5	0.0	36.0
Other expenses from leasing operations	0.6	0.0	-	-	0.6
Net rental income	68.8	9.3	4.8	0.0	82.8
Administrative expenses	4.1	1.2	0.5	7.2	12.9
Other operating income and expenses	0.6	-	-	-	0.6
Net fair value gains on investment property	104.8	8.7	6.6	-	120.1
Profit on disposal of investment property	5.9	-	-	-	5.9
Operating profit	176.1	16.8	10.9	-7.2	196.5
Net financial income and expenses				-30.9	-30.9
Income tax expense				-39.2	-39.2
Profit for the period					126.4
Assets	1,016.6	358.0	83.6	28.2	1,486.4
Liabilities	9.8	21.8	0.4	874.1	906.1
Capital expenditure	152.8	267.2	16.2	0.2	436.4

B) BUSINESS SEGMENTS

EUR million	1 JAN.-31 DEC. 2007 Shopping centres	Other retail properties	Other	Total
Turnover	120.6	30.8	-	151.4
Assets	1,908.9	352.8	46.9	2,308.6
Investments	571.4	31.7	0.8	603.9

Shopping centre Linjuri was moved from Other retail properties to Shopping centre segment in 2007. 2006 figures has been restated to be in compliance with the new classification.

EUR million	1 JAN.-31 DEC. 2006 Shopping centres	Other retail properties	Other	Total
Turnover	82.4	36.9	-	119.4
Assets	1,073.6	384.6	28.1	1,486.4
Investments	384.5	51.7	0.2	436.4

5. OTHER EXPENSES FROM LEASING OPERATIONS

EUR million	2007	2006
Leased premises' changes and commissions	0.1	0.4
Credit losses	0.2	0.2
Total	0.3	0.6

Significant leased premises' changes are recognized as investments.

6. PERSONNEL EXPENSES

EUR million	2007	2006
Wages and salaries	6.6	4.6
Pensions: defined contribution plans	0.8	0.7
Social charges	1.0	0.3
Expense of share based payments	0.6	0.9
Total	9.0	6.5

Personnel expenses of EUR 0.7 million (EUR 0.3 million) is included in property operating expenses and EUR 8.3 million (EUR 6.2 million) in administrative expenses.

The share based payments plans are described in the Note 23. Em-

ployee benefits.

Average Group staff during period
Finland	68	53
Sweden	19	3
The Baltic Countries	6	6
Total	93	62

Information on management benefits and loans are presented in the notes to the consolidated financial statements under 25. Related party transactions.

7. DEPRECIATION AND AMORTIZATION

Depreciation and amortization of EUR 0.5 million (EUR 0.2 million) on machinery and equipment as well as on intangible assets is included in the administrative expenses.

EUR million	2007	2006
Other operating income	0.6	0.6
Other operating expenses	0.0	-
Total	0.5	0.6

Other operating income mainly consists of value added tax and property tax refunds.

9. NET FINANCIAL INCOME AND EXPENSES

EUR million	2007	2006
Interest income	1.4	0.9
Foreign exchange gains	9.2	9.3
Other financial income	0.1	2.0
Financial income, total	10.6	12.2
Interest expenses	44.7	31.6
Foreign exchange losses	9.3	9.2
Other financial expenses	3.9	2.2
Financial expenses, total	57.9	43.0
Net financial income and expenses	47.3	30.9
Of which attributable to
financial instrument categories:
Interest-bearing loans and receivables	51.1	26.8
Finance lease liabilities	0.0	0.0
Derivative financial instruments	-3.8	4.1
Other liabilities and receivables	-0.1	0.0
Net financial income and expenses	47.3	30.9

In 2007, foreign exchange gains of EUR 4.4 million (losses of EUR 2.1 million) were recognised in the income statement from foreign exchange derivative agreements.

In 2007, expense of EUR 0.6 million (income of EUR 2.0 million) was recognised in the income statement in "Other financial expenses" from interest rate swaps which are not under hedge accounting.

10. INCOME TAX EXPENSE

EUR million	2007	2006
Current tax	3.4	7.3
Tax for prior periods	0.0	0.1
Deferred tax	46.2	31.8
Income tax expense	49.6	39.2

Reconciliation between tax charge and Group tax at Finnish tax rate (26%):

EUR million	2007	2006
Profit before taxes	253.5	165.6
Taxes at Finnish tax rate	65.9	43.1
Foreign subsidiaries' fair value gains and losses -16.7		-4.0
Difference in foreign subsidiaries' tax rate	-0.8	-0.9
Undistributed profit of subsidiaries	-0.7	0.7
Unrecognised tax receivables from losses	3.0	0.9
Depreciation deducted in taxation	-1.9	-1.0
Utilisation of previously unrecognised tax losses	0.1	0.1
Other	0.7	0.3
Income tax expense	49.6	39.2
Effective tax rate	19.6%	23.7%

11. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE

Earnings per share (basic) is calculated by dividing the net profit attributable to parent company shareholders by the share issue adjusted weighted average number of shares.

	2007	2006
A) EARNINGS PER SHARE CALCULATED
FROM THE PROFIT FOR THE PERIOD
Earnings per share, basic
Profit attributable to parent company
shareholders (EUR million)	200.3	124.9
Issue-adjusted average number
of shares (1,000)	199,403.7	163,339.4
Earnings per share (basic) (EUR)	1.00	0.76
Earnings per share, diluted
Profit attributable to parent
company shareholders (EUR million)	200.3	124.9
Expenses arising from convertible loan, adjusted
with the tax effect deduction (EUR million)	5.7	2.3
Profit used in the calculation of diluted
earnings per share (EUR million)	206.0	127.2
Issue-adjusted average number
of shares (1,000)	199,403.7	163,339.4
Convertible capital loan impact	26,190.5	10,731.5
Adjustments for stock options (1,000)	1,527.8	1,273.9
Issue-adjusted average number of shares
used in the calculation of diluted earnings
per share (1,000)	227,122.0	175,344.9
Diluted earnings per share (EUR)	0.91	0.73

B) EARNINGS PER SHARE CALCULATED FROM THE DIRECT RESULT FOR THE PERIOD

EUR million	2007	2006
Direct result per share, diluted (Diluted EPRA EPS)
Direct result (EUR million) (Note 3)	35.7	32.4
Expenses arising from convertible loan, adjusted
with the tax effect deduction (EUR million)	5.7	2.3
Profit used in the calculation of diluted earnings
per share (EUR million)	41.4	34.7
Issue-adjusted average number of shares used
in the calculation of diluted earnings per
share (1,000)	227,122.0	175,344.9
Direct result per share, diluted (Diluted EPRA EPS) 0.18		0.20

The diluted earnings per share is calculated adjusting the weighted average number of shares to assume conversion of all dilutive potential shares. The Group has currently two categories of dilutive shares in place: convertible capital loan and stock options.

• Stock options have dilutive potential when the subscription price of shares based on the stock options is lower than the share's fair value. The dilutive potential of stock options is calculated by taking into account the total number of shares that can be subscribed based on stock options, less the number of shares that group could acquire by using the assets received from the exercise of the stock options. - The holder of the convertible loan has the right during 12 September 2006 - 27 July 2013 to convert the loan nominal amount into shares of the company. Based on the conversion price applicable on the balance sheet date, the dilution from full conversion of the loan nominal is approximately 26.2 million shares. Convertible capital loan have dilutive potential from the date of issue i.e. 2 August 2006. Expenses arising from the convertible loan are adjusted with the tax effect deduction when calculating the dilution effect.

Issue-adjusted average number of shares used in the calculation of earnings per share

	days	Share issue coefficient	number of shares
1.1.2007	39	1.02422	167,183,180
9.2.2007	6	1.02422	167,274,452
15.2.2007	71	1.02422	192,274,452
27.4.2007	48	1.02422	192,480,893
14.6.2007	40	1.02422	192,502,747
24.7.2007	49	1.02422	192,810,271
11.9.2007	29	1.02422	193,163,472
10.10.2007	14		220,758,254
24.10.2007	50		220,829,624
13.12.2007	19		220,981,211
	365
Issue-adjusted average
number of shares			199,403,727

C) NET ASSET VALUE PER SHARE

Citycon presents the net asset value (EPRA NAV) and adjusted net asset value per share (EPRA NNNAV) in accordance with the recommendations of the European Public Real Estate Association (EPRA).

	2007				2006
	EUR million	Issue-adjusted number of shares (1,000)	Per share, EUR	EUR million	Issue-adjusted number of shares (1,000)	Per share, EUR
Equity attributable to parent company shareholders	982.0	220,981.2	4.44	565.3	171,232.6	3.30
Deferred taxes from the difference of fair value and fiscal value of investment properties	84.8	220,981.2	0.38	38.8	171,232.6	0.23
Fair value of financial instruments	-		-	-		-
Net asset value (EPRA NAV)	1,066.8	220,981.2	4.83	604.1	171,232.6	3.53
Deferred taxes from the difference of fair value and fiscal value of investment properties	-84.8	220,981.2	-0.38	-38.8	171,232.6	-0.23
The difference between the mark-to-market and book value of debt	-5.8	220,981.2	-0.03	-26.9	171,232.6	-0.16
Fair value of financial instruments	-		-	-		-
EPRA NNNAV	976.2	220,981.2	4.42	538.5	171,232.6	3.14

12. INVESTMENT PROPERTY

EUR million	2007	2006
At period-start	1,447.9	956.6
Acquisitions during the period	531.3	400.9
Investments during the period	44.8	35.4
Disposals during the period	-0.3	-67.9
Transfer into the development properties	-6.2	-
Fair value gains on investment property	220.8	131.3
Fair value losses on investment property	-7.5	-11.2
Exchange differences	-15.1	2.9
At period-end	2,215.7	1,447.9

Under 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 with 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. The impact of key variables on the fair value of properties have been tested with the sensitivity analysis. Analysis indicates that the market value is most sensitive to the yield requirement and gross income levels. A 10 percent decrease in the yield requirement results in an approximately 11 percent increase in total value. Correspondingly, a 10% increase in gross income increases the value by approximately 14 percent. The segments' yield requirements and market rents used by the external appraiser in the cash flow analysis were as follows at 31 December 2007 and at 31 December 2006:

	Yield requirement (%)		Market rents (EUR/sq.m.)
	2007	2006	2007	2006
Finland	5.7	6.6	21.1	16.8
Sweden	5.4	6.4	13.2	13.0
the Baltic Countries	6.4	7.1	16.4	14.5
Total	5.6	6.6	19.0	15.6

Realia Management Oy within Realia Group conducted the valuation of Citycon's properties for the Annual Report 2007 and the Q2 and Q3/2007 Interim Reports while Aberdeen Property Investors Finland Oy did the same for the Q1/2007 Interim Report. The resulting fixed fees based on the 2007 valuations total EUR 0.2 million.

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 that haven't been taken into account by the external appraiser 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	2007	2006
Value determined by the external
appraiser as at Dec. 31	2,194.8	1,430.0
Capital expenditure on development projects	4.7	9.4
Acquisition of new properties	16.2	8.5
Fair value of investment
properties as at Dec. 31	2,215.7	1,447.9

13. DEVELOPMENT PROPERTY

When Citycon redevelops its existing investment properties, the properties remain as the investment properties in the balance sheet, and they are measured based on fair value model in accordance with IAS 40. The significant development projects, in which a new building or significant extension is constructed, are exceptions and they are treated in accordance with IAS 16 Property, Plant and Equipment standard. The significant extension projects are presented as development properties separately from the property, plant and equipment in the balance sheet based on the recommendations of the European Public Real Estate Association (EPRA). As at 31 December 2007, the development properties consisted of the capital expenditure relating to extension projects in Rocca al Mare, Åkersberga and Liljeholmen shopping centres.

EUR million	2007	2006
At period-start	-	-
Investments during the period	26.4	-
Capitalized interest	0.6	-
Transfer from investment property	6.2	-
At period-end	33.2	-

14. PROPERTY, PLANT AND EQUIPMENT

EUR million	2007	2006
Acquisition cost Jan. 1	1.4	1.2
Additions during the period	0.4	0.2
Accumulated acquisition cost Dec. 1	1.8	1.4
Accumulated depreciation and
impairment losses, Jan. 1	0.7	0.5
Depreciation during the period	0.3	0.2
Accumulated depreciation and
impairment losses, Dec 31.	1.0	0.7
Net carrying amount Jan 1.	0.6	0.7
Net carrying amount Dec 31.	0.9	0.6

Property, plant and equipment consisted mainly of machinery and equipment. Machinery and equipment acquired through financial leases amounted to EUR 0.5 million (EUR 0.4 million).

15. INTANGIBLE ASSETS

EUR million	2007	2006
Acquisition cost Jan. 1	0.6	0.4
Additions during the period	0.4	0.2
Accumulated acquisition cost Dec. 1	1.0	0.6
Accumulated depreciation and
impairment losses, Jan. 1	0.3	0.3
Depreciation during the period	0.1	0.0
Accumulated depreciation and
impairment losses, Dec 31.	0.4	0.3
Net carrying amount Jan 1.	0.3	0.2
Net carrying amount Dec 31.	0.5	0.3
Intangible assets consisted mainly of intangible rights.

16. TRADE AND OTHER RECEIVABLES

EUR million	2007	2006
Trade receivables	2.5	1.0
Accrued income and prepaid expenses	3.2	5.5
Tax receivables (incl. VAT-receivables)	16.3	4.2
Other receivables	0.7	0.6
Total	22.7	11.3

Ageing structure of trade receivables:

EUR million	2007	2006
NOT past due nor impaired	0.6	0.1
Past due, less than 1 month	1.4	0.5
Past due, 1-3 months	0.2	0.1
Past due, 3-6 months	0.1	0.0
Past due, 6-12 months	0.1	0.0
Past due, 1-2 years	0.0	0.2
Past due, 2-5 years	0.0	0.0
Past due, over 5 years	0.0	0.0
Total	2.5	1.0

17. CASH AND CASH EQUIVALENTS

EUR million	2007	2006
Cash in hand and at bank	24.2	19.4
Short-term deposits	-	1.9
Total	24.2	21.3

Cash and cash equivalents comprise in the cash flow statement comprise the items presented above.

18. SHAREHOLDERS' EQUITY

A) The effect of the changed number of shares on funds included in shareholders' equity

	Number of shares	Share capital (EUR million)	Share issue (EUR million)	Share premium (EUR million)	Invested un- restricted equity equity fund (EUR million)	Total (EUR million)
1 Jan. 2006	136,382,018	184.1	1.1	78.8	-	264.0
Directed share issue	27,274,949	36.8		37.1		73.9
Equity instrument of convertible loan				15.1		15.1
Stock options exercised	3,526,213	4.8	-0.9	0.1		3.9
31 Dec. 2006	167,183,180	225.7	0.1	131.1	-	356.9
Directed share issue	25,000,000	33.8			98.8	132.6
Rights issue	27,594,782	-			98.7	98.7
Stock options exercised	1,203,249	0.1	-0.1		1.8	1.8
31 Dec. 2007	220,981,211	259.6	-	131.1	199.3	590.0

The issue-adjusted number of shares on 31 December 2007 totalled 220 981 211 and 171 232 600 at the year-end 2006.

B) Description of funds and reserves included in shareholders' equity Share premium fund

Since the entry into force of the new Finnish Companies Act, no new items are recognised in the share premium fund. The share premium fund accumulated in 2006 due to option schemes and share issues.

Invested unrestricted equity fund

Pursuant to the new Finnish Companies Act, Citycon presents the invested unrestricted equity fund as a new equity item. 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 2007 due to subscriptions under option schemes, a directed share issue and a rights issue.

Translation reserve

Translation reserve contains translation differences arising from the currency translation of foreign subsidiaries' financial statements.

Fair value reserve

Fair value reserve contains fair value changes of derivative instruments used to hedge cash flows.

19. INTEREST-BEARING LIABILITIES

A) Breakdown of interest-bearing liabilities EUR million Effective interest rate (%) Carrying amount 2007 Carrying amount 2006 Long-term interest-bearing liabilities Loans from financial institutions EUR 435 million term loan facility EURIBOR + 0,675 392.4 418.7 EUR 165 million revolving credit facility EURIBOR + 0,5 162.4 85.0 EUR 200 million term loan facility EURIBOR + 0,675 199.2 - SEK 500 million bank loan STIBOR + 0,55 53.0 31.0 EEK 470 million bank loan 5.599 28.8 - LTL 52 million bank loan VILIBOR + 0,525 13.5 15.0 Other loans from financial institutions - 34.4 13.3 Convertible capital loan 1/2006 7.58 95.0 92.9 Subordinated capital loan 1/2005 4.7 70.0 70.0 Finance lease liabilities - 0.5 0.4 Total long-term interest-bearing liabilities 1,049.3 726.3 Short-term interest-bearing liabilities Loans from financial institutions EEK 470 million bank loan TALIBOR + 0,5 - 30.0 Commercial papers EURIBOR + 0,1 54.5 39.4 Current portion of loans from financial institutions - 20.0 18.0 Other loans from financial institutions - 30.2 0.2 Finance lease liabilities - 0.0 0.0 Total short-term interest-bearing liabilities 104.7 87.6

Carrying amount of term loan facility and convertible capital loan are stated at amortised cost using the effective yield method. The fair values of liabilities are shown in the note 19 Financial Instruments. The market value of the option component at issue date of the Convertible capital loan of EUR 15.1 million is recognized in shareholders' equity under share premium fund.

Maturity of long-term interest-bearing liabilities

EUR million	2007	2006
1-2 years	20.4	28.0
2-3 years	91.8	50.4
3-4 years	193.6	176.0
4-5 years	72.4	30.3
over 5 years	671.2	441.7
Total	1,049.3	726.3

Long-term interest-bearing liabilities by currency, EUR million

Total	1,049.3	726.3
LTL	13.5	15.0
SEK	336.2	225.9
EEK	28.8	-
EUR	670.8	485.4

Short-term interest-bearing liabilities by currency, EUR million

Total	104.7	87.6
LTL	0.8	-
SEK	7.8	8.1
EEK	1.2	30.0
EUR	94.9	49.5

B) Terms and conditions of subordinated capital loans

SUBORDINATED CAPITAL LOAN 1/2005

Citycon Oyj issued on 17 June 2005 five-year subordinated capital loan 1/2005 of EUR 70 million at a fixed annual nominal interest rate of 4.70 per cent. The loan's issue price accounted for 99.956 per cent of the nominal loan amount, and its maturity date is 17 June 2010.

The main terms and conditions of the subordinated capital loan 1/2005:

• 1) In the event of company dissolution or bankruptcy, obligations of the issuer arising for the subordinated capital loan shall be subordinated in right of payment to the claims of all unsubordinated creditors of Citycon Oyj but shall rank pari passu with all other obligations which qualify as a capital loan.
• 2) The loan's principal, including interest accumulated until the repayment date, will be repaid in one instalment on 17 June 2010 if full margin is available for the restricted shareholders' equity and other non-distributable earnings, based on the company's and its Group's latest adopted balance sheet, after the repayment. The accrued interest for the loan was EUR 1.8 million as of 31 December 2007.
• 3) Fixed annual interest of 4.70% will be paid annually in arrears on the loan's principal until 17 June 2010. Unless the loan is repaid in full on its maturity date of 17 June 2010, interest on the unpaid loan principal after that date is 12-month Euribor plus 5 percentage points. Interest can be paid only if this amount can be allocated to profit distribution based on the company's and its Group's latest adopted balance sheet.
• 4) The company has the right to repay the loan's principal in part or in full on each interest-payment date at a rate determined by discounting the remaining cash flows up to the repayment date. The interest rate to be used for discounting is the Finnish government reference rate for the same period plus 1.5 percentage points.

CONVERTIBLE CAPITAL LOAN 1/2006

Citycon Oyj issued on 2 August 2006 seven-year convertible capital loan 1/2006 of EUR 110 million at a fixed annual nominal interest rate of 4.50 per cent. The loan's conversion price is EUR 4.2000 per share and a full conversion of the loan would result in the issue of 26,190,476 shares. The loan's issue price accounted for 100.00 per cent of the nominal loan amount, and its maturity date is 2 August 2013.

The main terms and conditions of the convertible capital loan 1/2006:

1) In the event of company dissolution or bankruptcy, obligations of the issuer arising for the convertible capital loan shall be subordinated in right of payment to the claims of all unsubordinated creditors of Citycon Oyj but shall rank pari passu with all other obligations which qualify as a capital loan.

• 2) The loan's principal, including interest accumulated until the repayment date, will be repaid in one instalment on 2 August 2013 if full margin is available for the restricted shareholders' equity and other non-distributable earnings, based on the company's and its Group's latest adopted balance sheet, after the repayment. The accrued interest for the loan was EUR 2.0 million as of 31 December 2007.
• 3) Fixed annual interest of 4.50% will be paid annually in arrears on the loan's principal until 2 August 2013. In the event, that the loan is not repaid in full on its maturity date of 2 August 2013, interest on the unpaid loan principal after that date is 3-month Euribor plus 5 percentage points. Interest can be paid only if this amount can be allocated to profit distribution based on the company's and its Group's latest adopted balance sheet. In the event, that the interest is not fully paid in any interest payment date, the interest on the unpaid interest amount after the interest payment date is 3-month Euribor plus 5 percentage points.
• 4) The holder of the loan has the right during 12 September 2006 27 July 2013 convert the loan nominal amount into shares of the company. The initial conversion price of the loan is EUR 4.2000 per share. The conversion price is subject to amendments in certain circumstances as specified in the terms of the loan. Based on the initial conversion price, the conversion of the whole loan nominal would result in the issue of a maximum of 26,190,476 shares.
• 5) The company has the right to repay the loan in full on or after 23 August 2010 at its principal amount if the closing price of the share on each of at least 20 dealing days in any period of 30 consecutive dealing days exceeds 140 per cent of the conversion price in effect on such dealing day.

C) Breakdown of finance lease liabilities

EUR million	2007	2006
Maturity of finance lease liabilities:
Finance lease liabilities
- minimum lease payments
Not later than 1 year	0.3	0.3
1-5 years	0.4	0.1
Over 5 years	0.0	0.0
Total	0.7	0.4
Finance lease liabilities - present value of minimum lease payments
Not later than 1 year	0.2	0.3
1-5 years	0.3	0.1
Over 5 years	0.0	0.0
Total	0.5	0.4
Future finance charges on finance leases	0.0	0.0
Total finance lease liabilities	0.5	0.4

Citycon's finance leases mainly apply to computer hardware and machinery and equipment.

20. FINANCIAL INSTRUMENTS

A) Carrying amount and fair value of financial assets and liabilities

EUR million	Note	Carrying amount 2007	2007	Fair value Carrying amount 2006	Fair value 2006
Financial assets
Cash and cash equivalents	17	24.2	24.2	21.3	21.3
Investments		0.0	0.0	0.0	0.0
Trade and other receivables	16	22.7	22.7	11.3	11.3
Derivative financial instruments		11.4	11.4	4.9	4.9
Financial liabilities
Loans from financial institutions	19	988.5	990.9	650.6	652.1
Convertible capital loan 1/2006	19	95.0	110.0	92.9	110.0
Subordinated capital loan 1/2005	19	70.0	70.0	70.0	70.0
Finance lease liabilities	19	0.5	0.5	0.4	0.4
Trade and other payables and liabilities	22	53.1	53.1	46.8	46.8
Derivative financial instruments		2.3	2.3	4.8	4.8

Derivative financial instruments

Derivative financial instruments are initially measured at cost in the balance sheet 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 are determined by the counterparty banks using customary valuation techniques used by market participants in the OTC derivative market. The fair value of foreign exchange derivative contracts are based on quoted market prices.

Loans from financial institutions

Citycon's loans from financial institutions are floating rate loans which have fair value equal to the nominal amount of the loan. The difference between the fair value and carrying amount is the unamortized capitalized arrangement fees of the loans.

Convertible capital loan 1/2006

Convertible capital loan 1/2006 is a fixed rate loan which has fair value equal to the nominal amount of the loan. The difference between the fair value and carrying amount is the unamortized capitalized arrangement fees of the loan together with the market value of the option component at issue date. When calculating the NNNAV in accordance with EPRA's recommendations the Subordinated capital loan 1/2005 and Convertible capital loan 1/2006 have been

market-to-market using valuation from the secondary market on the balance sheet date. The secondary market valuation for Subordinated capital loan 1/2005 was 95.39 per cent and for Convertible capital loan 1/2006 108.20 per cent as of 31 December 2007.

Subordinated capital loan 1/2005

Subordinated capital loan 1/2005 is a fixed rate loan which has fair value equal to the nominal amount of the loan. The carrying amount of the loan equals the fair value.

Finance lease liabilities

The fair value of finance leases is based on discounted future cash flows. The discount rate used corresponds to that applied to similar leases.

Cash and cash equivalents, investments, trade and other receivables, trade payables and other payables

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.

B) Group's derivative financial instruments

	Nominal amount	Fair value	Nominal amount	Fair value
EUR million	2007	2007	2006	2006
Interest rate derivatives
Interest rate swaps
Maturity:
less than 1 year	40.0	0.2	50.0	0.4
1-2 years	112.5	-0.6	40.0	0.0
2-3 years	83.0	-1.1	86.0	-2.6
3-4 years	70.0	1.7	83.0	-2.6
4-5 years	20.0	0.2	40.0	-0.8
over 5 years	309.0	8.5	242.7	3.8
Total	634.5	8.8	541.7	-1.8
Foreign exchange derivatives
Forward agreements
Maturity:
less than 1 year	40.4	0.3	14.8	0.0
Total	40.4	0.3	14.8	0.0

Interest on floating-rate loans is mainly fixed every six months and the 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 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 in the fair value reserve under shareholders' equity.

The fair value of derivative financial instrument represent the market value of the instrument with 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 foreign exchange gain of EUR 1.0 million (EUR -1.9 million) which is recognized in income statement.

Hedge accounting is applied for interest rates swaps which have nominal amount of EUR 558.0 million (EUR 491.7 million). The fair value gain recognized in the fair value reserve under shareholders' equity taking account the tax effect totals EUR 4.9 million (EUR -1.3 million).

The average fixed interest rate of the interest rate swaps as at December 31, 2007 was 4.38% (4.16%).

Cash flow hedging EUR million	2007	2007	2006	2006
Interest rate derivatives		Assets Liabilities		Assets Liabilities
Fair value	8.9	-2.3	3.0	-4.8

Citycon's cash flow hedges consist of interest rate and cross-currency swaps which are used to protect against exposure of 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 at 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 designed as cash flow hedges. Gains and losses are initially recognized in equity and are transferred to the income statement when the forecast cash flows affect the income statement.

At 31 December 2007, interest rate derivatives assigned as cash flow hedges were assessed to be highly effective and the fair values recognized in the fair value reserve under shareholders' equity taking account the tax effect totals EUR 4.9 million. At 31 December 2006, interest rate derivatives assigned as cash flow hedges were assessed to be highly effective and the fair values recognized in the fair value reserve under shareholders' equity taking account the tax effect totals EUR -1.3 million.

C) Risk management

Objectives

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 is subject to updating in order to take into account changes in the business operations. During the ERM process for each business unit a risk management policy has been prepared which outlines objectives, responsibilities and development plans within the unit.

Citycon has during 2007 developed risk management functions and has implemented Enterprise Risk Management (ERM) framework within the Citycon group. The purpose of the risk management is to ensure that Citycon will reach its business targets and identify the key risks which may threaten the ability to meet the targets before they realize. Part of ERM process includes identification of existing and planning of new risk mitigation plans in the event that current action are not deemed sufficient for each risk identified. The objective of

the mitigation plans is to decrease the likelihood of risk realizing and mitigate the negative effects from realized risks.

Process

Risk management under ERM in Citycon comprises of three main elements, namely 1) risk management implemented into the main business processes 2) risk reporting and 3) continuous improvement of risk management.

Citycon has analyzed and identified five main business processes during the implementation of ERM which are property acquisitions, takeover of acquired properties, shopping centre management, property development and planning and control. Each main process has been carefully analyzed from a risk management angle and a detailed process description has been prepared for each process determining the target state of the process after implementation of improvement measures and taken into account risk management requirements. The implementation of these common best practices into the daily operations at Citycon is currently under way and an essential part of the daily risk management throughout the whole organization is to adhere to these practices.

Risk reporting process gathers analytical data on risks and the respective mitigation plans which are used when risks are reported to the Board of Directors. During the risk reporting period each business unit independently defines their near term targets, risks threatening these targets and mitigation plans which relate to the risks. In order to evaluate the importance of each risk, an estimate on the loss associated with the risk is determined together with probability of risk realization and effectiveness of each mitigation plan on the loss and/or probability. Additional feature of the risk reporting is for each business unit to report the potentially realized risks during the previous year and mitigation plans which have been put into effect during the period. Risk data is inputted into one group wide risk register from which the business unit risk reports are prepared to the Board of Directors and Audit Committee. In addition, from the risk register also a consolidated Citycon Group risk report and analysis is prepared which aims to recognize the group level risk concentrations cross the business units. Risk reports to the Board of Directors and Audit Committee are prepared in conjunction with budgeting during Autumn and strategy review during Spring. Risk management and business unit risk reports are additionally discussed four times a year in Corporate Management Committee.

Citycon aims to a continuous evaluate and develop its ERM process and risk management in general. Four times a year a risk management supervisory group meets and its tasks include the acceptance of the risk reports, evaluate annually the sufficiency of the risk management measures taken in the light of the identified risks, monitor the progress in implementation of the mitigation plans and annually asses the adequacy of the risk management capabilities of Citycon.

Organization

Each business unit has a dedicated person responsible for the ERM process who is in charge of the reporting the risks and mitigation plans and follow-up on the implementation of the plans. Group Treasurer prepares the risk report to the Board of Directors and Audit Committee. Members of the risk management supervisory group are CEO, CFO, Group Treasurer and business unit directors or the dedicated risk management person from each business unit.

Financial risk management

Financial risks have been defined to be business critical risks for Citycon. Financial risk of Citycon arises from financial instruments which are mainly used to raise financing for operations. The group also has interest rate and foreign exchange derivatives which are used in used to manage the interest rate and currency risks arising from the operations and financing sources. The Board of Directors has approved an interest rate risk management policy which defines the objectives and risk management indicators applicable for interest rate risk management. The execution of interest rate risk management is done by the Group Treasurer under the supervision of the CFO. Group Treasurer reports the 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.

Interest rate risk

Citycon's key financial risk is the interest rate risk of its interest bearing liabilities where the 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 to a loan portfolio which has a right mix between fixed and variable rate debts. Under the company's interest rate risk management policy, the target debt portfolio is such where a minimum of 70 and a maximum of 90 per cent of the 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. Portion of the hedges can also be done using inflation derivatives. The interest sensitivity of Citycon's loan portfolio at the end of 2007 is depicted by the fact that a one-percentage point rise in money market interest rates would increase its interest expenses for 2007 by EUR 2.9 million, while a fall of one-percentage point in money market interest rates would decrease them by EUR 2.9 million in 2007.

Interest rate sensitivity

The following table shows the sensitivity to a 100 basis point change in short term interest rates assuming all other variables constant. The impact is shown as a change in interest expenses resulting from changes in interest rate which relate to floating rate debt.

Effect on interest expenses from an increase of 100 basis points

EUR million	2007	2006
Euro	1.3	-0.1
Swedish krona	1.5	0.9
Other currencies	0.1	0.4
Total	2.9	1.2

Liquidity risk

Given that Citycon's strategy is to expand in Finland, the Baltic countries and Sweden, the company will need both equity capital and borrowings. The 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. The goal is to arrange financing on a long term basis and avoid large concentration of due dates of 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. On 31 December 2007, unused credit limits amounted to EUR 150 million and company had further EUR 45 million available under its commercial paper programme. Table below summarizes the maturity profile of the Group's financial liabilities based on contractual undiscounted payments.

EUR million Less than 1 month 1 to 12 months 1-5 years Over 5 years Total 31 December 2007 Loans from financial institutions 45.4 59.2 308.2 578.7 991.4 Convertible capital loan 1/2006 - - - 110.0 110.0 Subordinated capital loan 1/2005 - - 70.0 - 70.0 Finance lease liabilities - 0.2 0.3 0.0 0.5 Trade and other payables and liabilities 33.8 19.3 - - 53.1 EUR million Less than 1 month 1 to 12 months 1-5 years Over 5 years Total 31 December 2006 Loans from financial institutions 9.9 77.7 214.6 350.3 652.5 Convertible capital loan 1/2006 - - - 110.0 110.0 Subordinated capital loan 1/2005 - - 70.0 - 70.0 Finance lease liabilities - 0.3 0.1 0.0 0.4 Trade and other payables and liabilities 36.5 10.2 - - 46.8

Credit risk

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 does not currently identify any major credit risk associated with them. Credit-risk management caters for tenant-risk management, which is aimed at minimising the adverse effect of any unexpected changes in the customers' financial standing on Citycon's business and financial results. Customer-risk management focuses 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 16.

Credit risk arising from cash and cash equivalents and certain derivative agreements relate to a default of the counterparty with a maximum exposure equal to the carrying amount of these instruments.

Exchange rate risk

Citycon's entry into counties 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 are also used to hedge a possible mismatch

between assets and liabilities denominated in the same currency in the balance sheet. Currently the company's exchange rate risk relates mainly to fluctuations in the euro/ Swedish krona exchange rate.

Foreign exchange sensitivity

The following table shows the sensitivity in income statement to a five percent change in foreign exchange rates assuming all other variables constant. The impact is attributable to a change in fair value of financial instruments given the assumed change in foreign exchange rates.

Effect from a five percent change in foreign exchange rates on net financial expenses

2007	2006
0.2	-0.1
-	-
0.2	-0.1

Other currencies comprise of currencies in Estonia and Lithuania. The foreign exchange rate in these countries is tied to euro with a fixed peg.

Risks associated with the retail properties' value development

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, market 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 2,194.8 million defined by the external appraiser at 31 December 2007 as the starting value. The reconciliation between the fair value used by the external appraiser and Citycon Oyj is disclosed in note 12 Investment property. Sensitivity analysis indicates that the market value is most sensitive to the yield requirement and gross income levels. A 10 percent decrease in the yield requirement results in an approximately 11 percent increase in total value. Correspondingly, a 10% increase in gross income increases the value by approximately 14 percent. The value is not as sensitive to changes in longterm vacancy or expenses.

Sensitivity analysis:

Change %		Value of properties, EUR million
	+10%	+5%	±0%	-5%	-10%
Yield requirement	1,995.3	2,090.3	2,194.8	2,310.3	2,438.7
Gross income	2,501.6	2,348.2	2,194.8	2,041.4	1,888.0
Operating expenses	2,107.5	2,151.1	2,194.8	2,238.5	2,282.1
Vacancy	2,180.5	2,187.7	2,194.8	2,201.9	2,209.0

D) Capital management

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. Company's capital structure is managed in an active manner and the capital structure requirements are taken into consideration when considering various financing alternatives. The company can adjust the capital structure by deciding on issuance of new shares, raising debt financing or making adjustments to the dividend.

The long term equity ratio target of the company is 40 per cent and the current syndicate loan agreement requires a minimum equity ratio of 32.5 per cent. The equity ratio of the loan agreement is calculated by making certain adjustments to the IFRS equity ratio by, among other things, adding the capital loan and convertible capital loan issued by the company to the shareholders' equity. The company's equity ratio as of 31 December 2007 stood at 43.9 per cent and the equity ratio as defined in the loan agreement was 50.1 per cent.

21. DEFERRED TAX LIABILITIES

Changes in deferred tax assets and liabilities in 2007:
	2007	Income statement	Tax charged to	Exchange	Acquired/ disposed
EUR million	1 Jan.	charge	equity	differences	subsidiaries	31 Dec.
Deferred tax assets
Tax losses	0.3	-0.1				0.2
Measurement of interest-rate swaps at fair value	0.5		-2.2			-1.7
Total deferred tax assets	0.8	-0.1	-2.2	0.0	0.0	-1.5
Offset against deferred tax liabilities	-0.8	0.1	2.2	0.0	0.0	1.5
Deferred tax assets, total	0.0	0.0	0.0	0.0	0.0	0.0
Deferred tax liabilities
Measurement of investment property at fair value	38.8	46.0				84.8
Undistributed profit of subsidiaries	0.7	-0.7				0.0
Measurement of interest-rate swaps at fair value	0.5	-0.1				0.4
Temporary difference in financial expenses	1.1	0.8	-0.6			1.3
Temporary difference in provisions	0.1	0.1		0.0	0.0	0.2
Total deferred tax liabilities	41.2	46.0	-0.6			86.6
Offset against deferred tax assets	-0.8	0.1	2.2	0.0	0.0	1.5
Deferred tax liabilities, total	40.4	46.2	1.6	0.0	0.0	88.1

Changes in deferred tax assets and liabilities in 2006:

EUR million	2006 1 Jan.	Income statement charge	Tax charged to equity	Exchange differences	Acquired/ disposed subsidiaries	31 Dec.
Deferred tax assets
Tax losses	0.6	-0.3				0.3
Measurement of interest-rate swaps at fair value	3.7		-3.2			0.5
Total deferred tax assets	4.3	-0.3	-3.2	0.0	0.0	0.8
Offset against deferred tax liabilities	-4.3	0.3	3.2	0.0	0.0	-0.8
Deferred tax assets in balance sheet	0.0	0.0	0.0	0.0	0.0	0.0
Deferred tax liabilities
Measurement of investment property at fair value	10.1	28.7				38.8
Undistributed profit of subsidiaries	0.0	0.7				0.7
Measurement of interest-rate swaps at fair value	0.0	0.5				0.5
Temporary difference in financial expenses	0.0	1.5	-0.4			1.1
Temporary difference in provisions	0.0	0.1				0.1
Total deferred tax liabilities	10.1	31.5	-0.4	0.0	0.0	41.2
Offset against deferred tax assets	-4.3	0.3	3.2	0.0	0.0	-0.8
Deferred tax liabilities in balance sheet	5.8	31.8	2.8	0.0	0.0	40.4

Citycon's deferred taxes mainly arise from changes in the fair value of investment properties. In 2007, deferred taxes resulting from the changes in the investment properties' fair value recognised in the income statement totalled EUR 46.0 million (EUR 28.7 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. In Sweden and the Baltic countries, the sale of shares representing ownership in property does not have tax implications. Consequently, Citycon does not recognise deferred taxes related to the fair value of investment properties located in Sweden or in the Baltic countries. If Citycon would recognize the deferred taxes from the changes in fair values of Swedish and the Baltic properties, the tax impact would have been EUR 16.7 million in 2007 (EUR 4,0 million) (See the Note 10. Income tax expense).

On the contrary, divesting a property in Finland through an asset or share sale does have tax implications and, therefore, 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, using the formula presented below. 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. Deferred taxes in the balance sheet: 26% * (investment property's fair value – (value of shares in the mutual

real estate company in the parent company's balance sheet + parent company's loans receivable from the mutual real estate company).

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 the investment properties is measured in accordance with IFRS (International Financial Reporting Standards). The provisions of the 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 2007, Group companies had confirmed losses for which tax assets of EUR 2.0 million (EUR 3.2 million in 2006) were not recognised since these Group companies are unlikely to record taxable profit, before the expiration of carry forwards of these losses, against which loss carry forwards can be utilised. These loss carryforwards will expire between 2008 and 2009.

22. TRADE AND OTHER PAYABLES

Trade and other payables

EUR million	2007	2006
Trade payables	13.1	4.5
Advanced received	4.4	0.6
Accrued expenses	19.5	17.3
Other short-term payables	16.1	24.4
Total	53.1	46.8

Ageing structure of trade and other payables:

EUR million	2007	2006
NOT past due nor impaired	30.0	38,3
Past due, less than 1 month	14.0	3,6
Past due, 1-3 months	8.7	4,3
Past due, 3-6 months	0.0	0.0
Past due, 6-12 months	0.0	0.2
Past due, 1-2 years	0.0	0.0
Past due, 2-5 years	0.4	0.3
Past due, over 5 years	0.1	0.1
Total	53.1	46,8

Significant items included in accrued expenses:

EUR million	2007	2006
Interest liabilities	11.6	6.6
Other liabilities	7.9	10.7
Total	19.5	17.3

23. EMPLOYEE BENEFITS

Share-based payments

A) Stock-option schemes

Citycon Group has had stock-option schemes in place since 1999. The Group has applied IFRS 2 Share-based Payment to its stock options granted after 7 November 2002 and not vested before 1 January 2005. Stock options granted before 7 November 2002 have not been expensed.

In 1999, the EGM decided to grant a maximum of 5,500,000 stock options. Citycon Group employees were granted a total of 5,327,500 stock option rights and the remaining 172,500 option rights were assigned to Veniamo-Invest Oy, a Citycon subsidiary.

In 2004, the AGM decided to grant a maximum of 3,900,000 stock options. At year-end 2007, Citycon Group employees held a total of 3,220,000 options rights. The remaining 680,000 stock options 2004 A/B/C are held by Veniamo-Invest Oy. The Board of Directors of Citycon Oyj has decided that these options will no longer be distributed to current or future Group employees. If an employee leaves the Group prior to 1 September 2008, (s)he will forfeit his/her right to exercise stock options for which the share subscription period will not have begun on the date of the termination of his/her employment/executive contract. However, the Board of Directors may specifically decide that the stock-option holder may retain his/her stock options or some of them. Subsequently, the number of granted stock options may change before the said date. The forfeited stock options are held by Veniamo-Invest Oy, which, however, is not entitled to subscribe parent company shares.

Stock options entitle their holders to subscribe for company shares at the price and within the period specified in the terms and conditions of the stock-options. The terms and conditions of the 2004 scheme were amended during the reporting period as a result of the rights issue carried out during the year. Amendments were made to the share subscription prices and ratio. The new subscription ratio as well as the new subscription prices are specified in the table below.

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 income statement allocated over the instrument's

vesting period. In 2007, the expense recognised in the income statement totalled EUR 0.6 million (EUR 0.9 million in 2006). The expected volatility is determined by calculating the company share price's historical volatility.

Summary of stock-option schemes:

1999 stock options	1999 A	1999 B	1999 C
Number of options granted 1,800,000		1,800,000	1,727,500
Held by Veniamo-Invest Oy,
number	-	-	172,500
Subscription ratio,
stock option/share	1:1,0927	1:1,0927	1:1,0927
Subscription price/share, EUR	1.35	1.35	1.35
Share subscription
period started	1.9.2000	1.9.2002	1.9.2004
Share subscription
period ended	30.9.2007	30.9.2007	30.9.2007
Number of exercised
option rights	1,800,000	1,800,000	1,727,500

The stock option scheme 1999 ended on 30 September 2007. By the end of the subscription period, a total of 5,631,912 Citycon shares had been subscribed by exercising the 1999 stock options, including 825,982 shares subscribed at a EUR 1.35 per-share subscription price in 2007. Of the 1999 option rights, only the 172,500 options held by Veniamo-Invest Oy remained unexercised. These options have expired worthless.

2004 stock options	2004 A	2004 B	2004 C
Number of options granted 1,040,000		1,090,000	1,090,000
Held by Veniamo-Invest Oy,
number	260,000	210,000	210,000
Subscription ratio,
stock option/share	1:1,2127	1:1,2127	1:1,2127
Subscription price/share, EUR	2.3432	2.7308	4.4313
Share subscription period
starts/started	1.9.2006	1.9.2007	1.9.2008
Share subscription
period ends	31.3.2009	31.3.2010	31.3.2011
Number of exercised
option rights	336,720	-	-
Number of
subscribed shares	376,316	-	-

Following the amendments to the terms and conditions of the 2004 stock option scheme that took effect in October 2007, the number of shares that can be subscribed for by exercising the 2004 option rights totals 4,697,506. The subscription of shares will not result in an increase in the company's share capital, since the entire subscription price is recognised under invested unrestricted equity fund.

The initial subscription prices of the shares to be subscribed for by exercising the 2004 stock options were determined on the basis of the trade-weighted average price of Citycon share quoted on the stock exchange in Helsinki as follows:

2004A	during 1-30 April 2004
2004B	during 1-30 April 2005
2004C	during 1-30 April 2006

added with 20%. The share subscription prices will be reduced by 50 per cent of the amount of the per-share dividend paid before share subscription. The share subscription prices have been changed also due to the rights issues carried out in 2006 and 2007.

The following table provides additional information on the 2004 stock option scheme:

	2004A stock options	2004B stock options	2004C stock options
	Share-based options,	Share-based options,	Share-based options,
	granted to all staff	granted to all staff	granted to all staff
Type of scheme	Granted stock options	Granted stock options	Granted stock options
Grant date	26 May 2004	13 Sept. 2005	27 April 2006
No. of instruments granted	1,135,000	1,195,000	1,250,000
Exercise price, EUR	2.51	2.91	4.62
Share subscription price at grant date, EUR	2.09	2.48	3.86
Vesting period as per agreement (No. of days)	1,770	1,660	1,799
Vesting conditions	Employment during vesting	Employment during vesting	Employment during vesting
	period. In case of prior	period. In case of prior	period. In case of prior
	employment termination,	employment termination,	employment termination,
	stock options forfeited.	stock options forfeited.	stock options forfeited.
Exercise	In terms of shares	In terms of shares	In terms of shares
Expected volatility, %	18.60	31.18	27.84
Expected vesting period at grant date (No. of days)	943	943	856
Risk-free interest rate, %	3.56	2.58	3.79
Expected dividend/share, EUR	0,05*	0,05*	0,07*
Expected personnel reduction (at grant date), %	0	0	0
Instrument fair value determined at grant date, EUR	0.09	0.96	0.75
Option-pricing model	Black&Scholes	Black&Scholes	Black&Scholes

* Expected dividend is EUR 0.10 for stock options 2004A and 2004B and EUR 0.14 for stock options 2004C.

EUR 0.05 (for 2004A and 2004B stock options) and EUR 0.07 (for 2004C stock options) are used in the option-pricing model,

based on the distributed dividends' reducing effect on the subscription price.

Changes in the stock options and their weighted average exercise prices during the period were as follows (excluding Veniamo-Invest Oy's stock options that cannot be exercised for share subscription):

	2007 average, EUR/share	2006 Exercise price, weighted Exercise price, weighted average, EUR/share	2007 No. of stock options	2006 No. of stock options
At period-start	2.92	1.92	4,051,368	5,534,010
New stock options granted	-	4.57	-	1,390,000
Forfeited stock options	4.43	3.51	-160,000	-245,000
Exercised stock options	1.58	1.38	-1,008,088	-2,627,642
Lapsed stock options	-	-	-	-
At period-end	3.28	2.92	2,883,280	4,051,368
Exercisable stock options at period-end			1,793,280	1,711,368

The per-share exercise price of the stock options exercised during the financial year averaged EUR 1.58 (EUR 1.38 in 2006) and these were exercised evenly over the financial year. The stock options exercised during 2007 brought in EUR 1.8 million (EUR 4.0 million in 2006), which were recognised in invested unrestricted equity fund (in 2006 EUR 3.7 million were recognised in share capital, EUR 0.1 million in share premium fund and EUR 0.1 million in share issue).

Exercise prices and lapse periods of outstanding stock options on the balance sheet date were as follows:

Year of lapse	Exercise price, EUR	2007 (Number of shares, 1,000)	2006 (Number of shares, 1,000)
2008	-	-	-
2009	2.34	852	1,104
2010	2.73	1,321	1,157
2011	4.43	1,321	1,326

B) Long-term share-based incentive plan

The Board of Directors decided 26 April 2007 on a long-term sharebased incentive plan for key personnel of the Citycon Group. The aim of the plan is to encourage the key personnel to sustained efforts to increase shareholder value and to strengthen their commitment to the development of the Group's operations. The potential incentive is determined on the basis of the growth of Citycon Group's adjusted earnings per share and net rental income in 2007-2009. The incentive plan is divided into three incentive periods of 2007, 2008 and 2009. The incentives will be granted to the key personnel during the years 2008-2012 so that the incentives earned during 2007 are paid in 2008, 2009 and 2010. The Board of Directors decides annually on the key personnel participating in the long-term incentive plan and on setting of the incentive goals. The incentive granted will comprise Citycon shares, cash or both. In the incentive period 2007, the maximum number of shares granted is determined by their volume weighted average price during the first quarter in the period. The incentives paid in shares are charged to administration expenses and recognized as an increase in shareholders' equity, and incentives paid in cash are charged to administration expenses and recognized as liabilities. In 2007, the expense recognised in the income statement amounted to EUR 0.0 million.

The following table presents additional information on the sharebased incentive plan:

Incentive period 2007

Type of scheme	Share-based incentive plan
Grant date	26.4.2007
No. of key personnel	16
Maximum no. of shares 1)	103,958

1) If incentive paid completely in shares.

24. COMMITMENTS AND CONTINGENT LIABILITIES

A) Other leases -Group as lessee

The future minimum lease payments under non-cancellable other leases are as follows:

EUR million	2007	2006
Not later than 1 year	0.7	0.4
1-5 years	1.0	0.6
Over 5 years	-	-
Total	1.7	1.0

Other leases with an average length of three years include mainly leases on office premises, cars and office equipment.

B) Other leases -Group as lessor

The future minimum lease payments receivable under non-cancellable leases are as follows:

EUR million	2007	2006
Not later than 1 year	51.4	41.4
1-5 years	78.2	64.2
Over 5 years	27.4	19.8
Total	157.0	125.4

The majority of Citycon's leases falls into the category of valid-until further-notice agreements, whereby the rental rate is determined by the absolute net lease tied to the cost-of-living index, and the maintenance rent. The maintenance rent, charged separately from the lessee, covers operating expenses incurred by the property owner due to property maintenance while enabling the provision any additional services requested by the lessee. The Shopping Centres division also has leases tied to turnover generated by retailers, these accounting for roughly 16 per cent (11 per cent) of Citycon's lease portfolio. The share of the leases tied to the lessee's turnover will increase in the future.

C) Pledges and other contingent liabilities

EUR million	2007	2006
Loans, for which mortgages are given
in security and shares pledged
Loans from financial institutions	36.0	13.2
Contingent liabilities for loans
Mortgages on land and buildings	46.4	21.1
Bank guarantees	49.8	37.1
Capital commitments	31.0	40.7
VAT refund liabilities	15.6	9.9

Capital commitments relate mainly to several development projects. There are value-added tax refund liabilities arising from capitalized renovations and new investments in Citycon's investment properties. The VAT refund liabilities will realize if the investment property is sold or transferred to non-VAT-liability use within 5 years.

D) Equity ratio commitment and interest coverage ratio

Under a commitment given in the terms of the term loan facility, Citycon Group undertakes to maintain its equity ratio at above 32.5% and its interest coverage ratio at a minimum of 1.8. For the calculation of the equity ratio, the shareholders' equity includes the capital loans and excludes non-cash valuation gain/loss from derivative contracts recognized 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 2007 stood at 50.1% and interest coverage ratio at 2.0 (2006: equity ratio was 49.8 per cent and interest coverage ratio 2.3).

25. RELATED PARTY TRANSACTIONS

A) Related parties

Citycon Group's related parties comprise the parent company, subsidiaries, associated companies, Board members, CEO, Corporate Management Committee members and Gazit-Globe Ltd., whose shareholding in Citycon Oyj accounted for 39.35% on 31 December 2007.

Joint ventures refer to less than 100-% owned mutual real estate companies in Finland. 100-% owned mutual real estate companies in Finland and over 50-% owned foreign companies are referred to as subsidiaries.

The Group's parent company and subsidiary holdings are as follows:

Parent company: Citycon Oyj

Subsidiary (Citycon Group's holding of 100%)	Country
Asolantien Liikekiinteistö Oy	Finland
BHM Centrumfastigheter AB	Sweden
Big Apple Top Oy	Finland
Big Apple Mid Oy	Finland
Big Apple Acquisition Oy	Finland
Citycon AB	Sweden
Citycon Centrum Sverige AB	Sweden
Citycon Estonia OÜ	Sweden
Citycon Göteborg AB	Sweden
Citycon Sverige AB	Sweden
Espoon Asemakuja 2 Koy	Finland
Forssan Hämeentie 3 Koy	Finland
Jakobsbergs Centrum Fastighets AB	Sweden
Jakobsbergs Centrum Galleria AB	Sweden
Jakobsbergs 565 Fastighets AB	Sweden
Jyväskylän Forum Koy	Finland
Jyväskylän Kauppakatu 31 Koy	Finland
Järfälla 7055 Fastighets AB	Sweden
Kaarinan Liiketalo Koy	Finland
Karjaan Ratakatu 59 Koy	Finland
Karjalan Kauppakeskus Koy	Finland
Kauppakeskus Columbus Koy	Finland
Kauppakeskus IsoKarhu Oy	Finland
Keijutie 15 Koy	Finland
Kivensilmänkuja 1 Koy	Finland

Kotkan Keskuskatu 11 Koy	Finland
Kouvolan Valtakadun Kauppakeskus Koy	Finland
Kuopion Kauppakatu 41 Koy	Finland
Kuusankosken Kauppakatu 7 Koy	Finland
Kuvernöörintie 8 Koy	Finland
Lahden Hansa Koy	Finland
Lahden Kauppakatu 13 Koy	Finland
Lentolan Perusyhtiö Oy	Finland
Liljeholmsplan Fastighets AB	Sweden
Liljeholmstorget Development Services AB	Sweden
Liljeholmsplan Hotellfastigheter AB	Sweden
Liljeholmsplan Bostadsfastigheter AB	Sweden
Lillinkulma Koy	Finland
Lintulankulma Koy	Finland
Lippulaiva Koy	Finland
Magistral Kaubanduskeskuse Oü	Estonia
Manhattan Acquisition Oy	Finland
Martinlaakson Kivivuorentie 4 Koy	Finland
Minkkikuja 4 Koy	Finland
Montalbas B.V.	The Netherlands
Myyrmanni Koy	Finland
Naantalin Tullikatu 16 Koy	Finland
Oulun Galleria Koy	Finland
Porin Asema-aukio Koy	Finland
Porin Isolinnankatu 18 Koy	Finland
Real Estate Iso Omena S.à.r.l.	Luxemburg
Rocca al Mare Kaubanduskeskuse AS	Estonia
Runeberginkatu 33 Koy	Finland
Sinikalliontie 1 Koy	Finland
Sverige 7059 Fastighets AB	Sweden
Säkylän Liiketalo Koy	Finland
Talvikkitie 7-9 Koy	Finland
Tampereen Hatanpää Koy	Finland
Tampereen Hermanni Koy	Finland
Tampereen Suvantokatu Koy	Finland
Tumba Centrumfastigheter Aktiebolag	Sweden
UAB Citycon	Lithuania
UAB Prekybos Centras Mandarinas	Lithuania
Ulappatori Koy	Finland
Ultima Oy	Finland
Valkeakosken Torikatu 2 Koy	Finland
Vantaan Laajavuorenkuja 2 Koy	Finland
Varkauden Relanderinkatu 30 Koy	Finland
Wavulinintie 1 Koy	Finland
Veniamo-Invest Oy	Finland

Subsidiary (Citycon Group's holding less than 100 but over 50%)
Åkersberga Centrum AB	Sweden
Stenungs Torg Fastighets AB	Sweden
Strömpilen AB	Sweden

B) Related party transactions:

Joint ventures:

The parent company has paid maintenance charges to joint ventures, which these companies recognise as income in their income statements. This income and these expenses have been eliminated in the consolidated financial statements. There has been no other related party transactions.

Management benefits:

Personnel expenses for corporate

management committee, EUR million	2007	2006
Wages and salaries	0.9	0.7
Pensions: defined contribution plans	0.2	0.1
Social charges	0.1	0.0
Total	1.2	0.7
Remuneration, EUR	2007	2006
CEO	338,707	269,207
Board members
Bergström Stig-Erik, former Board member	-	4,500
Bolotowsky Gideon	45,400	34,000
Gal Amir	44,200	35,000
Korpinen Raimo	45,200	35,400
Lähdesmäki Tuomo	73,200	74,200
Nordman Carl G.	43,800	35,000
Ottosson Claes	43,000	31,800
Segal Dor J.	44,200	34,200
Wernink Thomas W.	166,600	165,500
Total	505,600	449,600

The CEO is entitled to retire upon turning 62, provided that he will remain in the company's employ until that date. The Group has pension insurance to cover this pension plan. Both the CEO and the company may terminate the CEO's executive contract at six months' notice. If the company terminates the contract for a reason not attributable to the CEO, it will pay the CEO lump-sump compensation equalling his 18-month salary in cash, in addition to the salary.

Based on his executive contract, the CEO was granted 1,500,000 stock options under the 1999 stock-option scheme in 2002, and, under the 2004 stock-option scheme, 150,000 2004A stock options in 2004, 140,000 2004B stock options in 2005, and 140,000 2004C stock options in 2006.

On 31 December 2007, the CEO held 75,000 2004A stock options, 140,000 2004 B stock options and 140,000 2004C stock options. Board members do not participate in the company's share-based incentive schemes.

Reporting to Gazit-Globe Ltd:

The company's main shareholder, Gazit-Globe Ltd, holding approximately 39 per cent of the shares in the company, has announced that it applies International Financial Reporting Standards (IFRS) in its financial reporting in 2007. According to IFRS one company may exercise a controlling interest in another company even if its shareholding it that company does not exceed 50 per cent. Gazit-Globe Ltd. holds the view that it exercises 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. The expenses resulting from the reporting responsibility have not been invoiced from Gazit-Globe Ltd in 2007.

26. POST BALANCE SHEET EVENTS

In connection with the Lippulaiva shopping centre's extension, Citycon acquired all shares in MREC Kiinteistö Oy Majakka and, at the same time, divested its entire holding in MREC Kiinteistö Oy Ulappatori. Kiinteistö Oy Majakka owns undeveloped land in the surroundings of Lippulaiva, in the area planned for the shopping centre's extension in Espoo, Finland.

Since Citycon continues to have a right of possession into the leasable areas of MREC Kiinteistö Oy Ulappatori, the divestment of holding in MREC Kiinteistö Oy Ulappatori is not treated as a disposal of investment property in Citycon's consolidated financial statements prepared in accordance with IFRS-rules. The right of possession terminates when the extension construction is completed or at the latest during 2011.

Citycon signed an agreement on 12 February for the sale of part of shopping centre Iso Omena to an affiliate of GIC Real Estate, the property investment arm of the Government of Singapore Investment Corporation. Upon closing of the agreement, Citycon will own 60 per cent of the shopping centre and GIC Real Estate, 40 per cent. The parties have agreed that Citycon will continue to be responsible for the business and management of the shopping centre on customary terms. The agreed debt-free purchase price, EUR 131.6 million, is equivalent to 40 per cent of the original acquisition price of EUR 329 million paid by Citycon.

Consolidated Key Figures and Ratios for Four Years, IFRS

	Formula	note	IFRS 2007	IFRS 2006	IFRS 2005	IFRS 2004
Income statement data
Turnover			151.4	119.4	92.2	84.7
Other operating income and expense			0.5	0.6	0.6	0.7
Planned depreciation			0.5	0.2	0.2	0.3
Operating profit			300.7	196.5	105.2	51.8
Profit before taxes			253.5	165.6	74.2	25.7
Profit attributable to parent company shareholders			200.3	124.9	59.2	19.9
Balance sheet data
Non-current assets			2,260.5	1,453.3	957.6	745.6
Current assets			48.1	33.1	25.5	12.2
Equity attributable to parent company shareholders			982.0	565.3	356.6	237.7
Minority interest			28.9	15.0	3.6	0.0
Liabilities			1,297.7	906.1	622.9	520.0
Balance sheet total			2,308.6	1,486.4	983.1	757.7
Key performance ratios
Return on equity, % (ROE)	1		23.3	25.8	22.5	9.5
Return on investment, % (ROI)	2		16.3	16.8	13.5	7.2
Equity ratio, %	3		43.9	39.1	36.7	31.4
Equity ratio for bank, %			50,1	49.8	40.8	41.2
Quick ratio	4		0.3	0.2	0.3	0.5
Gearing, %	5		111.8	136.6	156.8	201.3
Gross capital expenditure, EUR million			603.9	436.4	178.5	18.8
% of turnover			398.9	365.5	193.6	22.2
Per-share figures and ratios
Earnings per share, EUR	6	1)	1.00	0.76	0.46	0.17
Earnings per share,diluted, EUR	7	1)	0.91	0.73	0.45	0.17
Equity per share, EUR	8	1)	4.44	3.30	2.39	1.95
P/E (price/earnings) ratio	9		3	7	7	14
Return from invested unrestricted
equity fund per share, EUR		2)	0.10	-	-	-
Dividend per share, EUR		2)	0.04	0.14	0.14	0.14
Dividend and return from invested
unrestricted equity fund per share total, EUR			0.14	0.14	0.14	0.14
Dividend and return of equity per earnings, %	10	2)	13.9	18.4	30.7	80.2
Effective dividend and return of equity yield, %	11	2)	4.3	2.8	4.5	5.7

1) When calculating this ratio, the number of shares was share issue adjusted.

2) Board proposal.

Formulas are available on page 57.

Parent Company Income Statement, FAS

EUR million	Note	1 Jan.-31 Dec. 2007	1 Jan.-31 Dec. 2006
Gross rental income		89.5	89.5
Service charge income		2.9	2.1
Turnover	1	92.4	91.6
Property operating expenses		48.5	31.4
Other expenses from leasing operations	2	0.1	0.6
Net rental income		43.8	59.5
Administrative expenses	3, 4	14.0	11.7
Other operating income and expenses	5	0.3	8.7
Operating profit		30.0	56.6
Financial income		44.4	25.9
Financial expenses		-63.9	-49.0
Net financial income and expenses	6	-19.5	-23.1
Profit before taxes		10.6	33.5
Income tax expense	7	2.1	6.6
Profit for the period		8.4	26.9

Parent Company Balance Sheet, FAS

EUR million	Note	31 Dec. 2007	31 Dec. 2006
ASSETS
Non-current assets
Intangible assets	8	6.0	2.3
Tangible assets	9	31.6	30.4
Investments
Shares in subsidiaries	10, 13	733.8	672.6
Shares in associated companies	11, 14	34.7	34.2
Other investments	12	915.4	468.1
Total investments		1,683.9	1,174.9
Total non-current assets		1,721.5	1,207.5
Current assets
Short-term receivables	15	29.6	13.9
Cash and cash equivalents		3.7	2.5
Total current assets		33.3	16.5
Total assets		1,754.8	1,224.0
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity	16
Share capital		259.6	225.7
Share issue		0.0	0.1
Share premium fund		133.1	133.0
Invested unrestricted equity fund and other reserves		201.1	0.0
Retained earnings		4.1	0.6
Profit for the period		8.4	26.9
Total shareholders' equity		606.3	386.4
Liabilities	17
Subordinated loan		70.0	70.0
Convertible capital loan		95.0	92.9
Long-term liabilities		832.4	559.8
Short-term liabilities		151.1	114.9
Total liabilities		1,148.5	837.6
Total liabilities and shareholders' equity		1,754.8	1,224.0

Parent Company Cash Flow Statement, FAS

EUR million	1 Jan.-31 Dec. 2007	1 Jan.-31 Dec. 2006
Cash flow from operating activities
Profit before taxes	10.6	33.5
Adjustments:
Depreciation and impairment loss	1.8	1.5
Non-cash property operating expenses	23.5	6.2
Non-cash other income and expenses	23.1	-0.1
Net financial income and expenses	19,5	23,1
Other adjustments	-0.1	-8.2
Cash flow before change in working capital	55.3	56.0
Change in working capital	1.7	2.5
Cash flow from operating activities before financial items and taxes	57.0	58.5
Interest and other financial expenses	-40.6	-36.0
Dividend and interest received from business operations	11.6	1.5
Income tax paid	-7.2	-4.9
Net cash flow from operating activities	20.7	19.0
Cash flow from investing activities
Investment in tangible and intangible assets	-7.0	-4.5
Other investments	-0.1	-0.6
Proceeds from sale of shares in subsidiaries and other investments	0.2	6.9
Loans granted	-555.5	-298.9
Repayments of loans receivable	83.2	28.5
Purchase of subsidiary shares	-59.9	-98.7
Sale of subsidiary shares	-	56.1
Purchase of minority and associate company shares	-0.6	-
Net cash used in investing activities	-539.7	-311.2
Cash flow from financing activities
Proceeds from share issue	232.4	77.4
Proceeds from short-term loans	773.1	406.2
Repayments of short-term loans	-727.9	-392.2
Proceeds from long-term loans	479.2	675.3
Repayments of long-term loans	-223.7	-461.8
Dividends paid and other profit distribution	-23.4	-19.2
Net cash used in financing activities	509.7	285.8
Net change in cash and cash equivalents	-9.3	-6.4
Cash and cash equivalents at period-start Cash and cash equivalents at period-end 1)	2.5 -6.8	8.9 2.5

1) Cash and cash equivalents of Citycon Oyj were negative as at 31 December 2007 due to group cash pool in which the parent company's account can have a negative balance. Cash pool balance of EUR -10.5 million as at 31 December 3007 has been recognized in the parent company's balance sheet under short-term liabilities.

Notes to the Parent Company's Financial Statements, FAS

ACCOUNTING POLICIES

The parent company's financial statements are prepared in accordance with the Finnish law.

Income statement format

The income statement is presented in accordance with the function-based format and it includes both gross and net rental income.

Non-current assets

Non-current assets are recognized in the balance sheet at acquisition cost less impairment losses and depreciation/amortisation.

Property portfolio

The buildings' acquisition cost is depreciated annually on a straight line basis at 2–4 per cent. Repair costs are expensed as incurred.

Other non-current assets

Other non-current assets include capitalised costs related to the acquisition of properties, which are amortised over three years, and leased premises' changes, which are amortised during the lease term. Machinery and equipment is depreciated at 25 percent annually, using the reducing balance method of depreciation. The machinery and equipment category includes also technical equipment in buildings and the depreciation is made accordingly.

Pension scheme

The company's employee pension cover is based on statutory pension insurance.

Recognition of financial instruments

Financial instruments are measured at fair value on each balance sheet date. The fair value of forward rate agreements are based on the forward prices prevailing on the balance sheet date.

Subordinated loan and convertible capital loan

The subordinated loan and convertible capital loan are shown as separate items in liabilities.

Taxes

Taxes are recognized on an accrual basis.

Important note

Individual figures and sum totals presented in the financial statements have been rounded to the nearest million euros; this may cause minor discrepancies between the sum totals and the sums of individual figures as given.

NOTES TO THE PARENT COMPANY'S FINANCIAL STATEMENTS

1. TURNOVER
EUR million	2007	2006
Turnover by business segments:
Shopping centres
Helsinki metropolitan area	28.0	23.7
other cities in Finland	36.1	33.0
Other retail properties	28.3	34.9
Total	92.4	91.6

Geographically the parent company's turnover is generated in Finland. Parent company turnover includes buildingmanagement and administrative fees received from Group companies. 1.0 0.9

2. OTHER EXPENSES FROM LEASING OPERATIONS

EUR million	2007	2006
Leased premises' changes and commissions	0.1	0.4
Credit losses	0.1	0.2
Total	0.1	0.6

3. PERSONNEL EXPENSES

EUR million	2007	2006
Average number of employees during period	67	54
Personnel expenses
Wages and salaries	5.2	4.2
Pension charges	0.7	0.7
Other social expenses	0.5	0.4
Total	6.5	5.3
Personnel expenses include management
salaries and emoluments
CEO's salary and emoluments	0.3	0.3
Board salaries and emoluments	0.5	0.5
Total	0.8	0.8

4. DEPRECIATION AND AMORTIZATION

EUR million	2007	2006
The following depreciation and amortization
is included in the administrative expenses:
Intangible assets	0.9	0.7
Buildings and constructions	0.5	0.5
Machinery and equipment	0.4	0.3
Total	1.8	1.5

5. OTHER OPERATING INCOME AND EXPENSES

EUR million	2007	2006
Profit on disposal of shares in subsidiaries
and other investments	0.1	8.5
Other income from business operations
Other operating income	0.3	0.2
Total	0.3	8.7

6. NET FINANCIAL INCOME AND EXPENSES

EUR million	2007	2006
Dividend income
From Group companies	1.4	2.5
From others	0.0	0.0
Total dividend income	1.4	2.5
Interest and other financial income
From Group companies	33.0	13.4
Foreign exchange gains	9.2	9.3
Other interest and financial income	0.9	0.7
Total interest and other financial income	43.1	23.4
Total financial income	44.4	25.9
Interest and other financial expenses
To Group companies	7.1	4.3
Foreign exchange losses	9.3	9.2
Interest and other financial expenses	47.5	35.5
Total financial expenses	63.9	49.0
Total net financial income and expenses	-19.5	-23.1

7. INCOME TAX EXPENSE
EUR million	2007	2006
Taxes for the period	-2.1	-6.6

		8. INTANGIBLE ASSETS
2006	2007	EUR million
		Intangible rights
0.4	0.6	Acquisition cost 1 Jan.
0.2	0.3	Additions during the period
0.6	0.9	Accumulated acquisition costs 31 Dec.
0.3	0.3	Accumulated depreciation 1 Jan.
0.1	0.1	Depreciation for the period
0.3	0.5	Accumulated depreciation 31 Dec.
0.3	0.4	Net carrying amount 31 Dec.
		Connection fees
0.2	0.2	Acquisition cost 1 Jan.
0.2	0.2	Net carrying amount 31 Dec.
		Other non-current assets
5.9	5.3	Acquisition cost 1 Jan.
0.3	4.3	Additions during the period
0.9	0.0	Disposals during the period
-	0.0	Transfer between items
5.3	9.6	Accumulated acquisition costs 31 Dec.
3.1	3.4	Accumulated depreciation 1 Jan.
0.3	0.8	Depreciation for the period
3.4	4.3	Accumulated depreciation 31 Dec.
1.8	5.3	Net carrying amount 31 Dec.
2.3	6.0	Total intangible assets 31 Dec.

9. TANGIBLE ASSETS

EUR million	2007	2006
Land
Acquisition cost 1 Jan.	3.3	3.3
Accumulated acquisition costs 31 Dec.	3.3	3.3
Buildings and constructions
Acquisition cost 1 Jan.	66.5	66.5
Additions during the period	1.4	2.0
Transfer between items	0.4	-2.0
Accumulated acquisition costs 31 Dec.	68.3	66.5
Accumulated depreciation 1 Jan.	42.6	42.1
Depreciation for the period	0.5	0.5
Accumulated depreciation 31 Dec.	43.1	42.6
Net carrying amount 31 Dec.	25.1	23.9

EUR million	2007	2006
Machinery and equipment
Acquisition cost 1 Jan.	4.0	4.0
Additions during the period / merger	0.6	0.0
Transfer between items	0.2	-
Accumulated acquisition costs 31 Dec.	4.9	4.0
Accumulated depreciation 1 Jan.	3.0	2.8
Depreciation for the period	0.4	0.2
Accumulated depreciation 31 Dec.	3.5	3.0
Net carrying amount 31 Dec.	1.4	1.0

Machinery and equipment also include technical equipment in buildings.

Other tangible assets
Acquisition cost 1 Jan.	0.2	0.2
Additions during the period	0.0	0.0
Accumulated acquisition costs 31 Dec.	0.2	0.2
Accumulated depreciation 1 Jan.	0.2	0.2
Accumulated depreciation 31 Dec.	0.2	0.2
Net carrying amount 31 Dec.	0.1	0.0
Construction in progress
Acquisition cost 1 Jan.	2.2	1.6
Additions during the period	0.3	4.0
Reductions during the period	0.2	3.4
Transfer between items	-0.7	-
Net carrying amount 31 Dec.	1.7	2.2
Total tangible assets 31 Dec.	31.6	30.4

10. SHARES IN SUBSIDIARIES
EUR million	2007	2006
Acquisition cost 1 Jan.	673.1	596.2
Additions during the period	59.9	134.5
Reductions during the period	-	61.5
Transfer between items	0.8	3.9
Accumulated acquisition costs 31 Dec.	733.8	673.1
Accumulated depreciation 1 Jan.	0.5	0.5
Transfer between items	-0.5	-
Accumulated depreciation 31 Dec.	0.0	0.5
Net carrying amount 31 Dec.	733.8	672.6

11. SHARES IN ASSOCIATED COMPANIES

EUR million	2007	2006
Acquisition cost 1 Jan.	34.2	53.0
Additions during the period	0.6	0.6
Reductions during the period	-	15.8
Transfer between items	-	3.6
Accumulated acquisition costs 31 Dec.	34.7	34.2
Net carrying amount 31 Dec.	34.7	34.2

12. OTHER INVESTMENTS

EUR million	2007	2006
Minority holdings
Acquisition cost 1 Jan.	4.9	17.9
Additions during the period	0.1	0.1
Reductions during the period	-	13.1
Transfer between items	-1.3	-
Accumulated acquisition costs 31 Dec.	3.7	4.9
Net carrying amount 31 Dec.	3.7	4.9
Loans receivable
From subsidiaries	911.7	463.2
From associated companies	-	-
Total other investments 31 Dec.	915.4	468.1
Total investments 31 Dec.	1,683.9	1,174.9

13. SUBSIDIARIES

	Domicile	Parent company holding, %
Asolantien Liikekiinteistö Oy	Vantaa	100.0%
Citycon AB	Stockholm	100.0%
Espoon Asemakuja 2 Koy	Espoo	100.0%
Forssan Hämeentie 3 Koy	Forssa	100.0%
Jyväskylän Forum Koy	Jyväskylä	100.0%
Jyväskylän Kauppakatu 31 Koy	Jyväskylä	100.0%
Kaarinan Liiketalo Koy	Kaarina	100.0%
Karjaan Ratakatu 59 Koy	Karjaa	100.0%
Karjalan Kauppakeskus Koy	Lappeenranta	100.0%
Kauppakeskus Columbus Koy	Helsinki	100.0%
Kauppakeskus IsoKarhu Oy	Pori	100.0%
Keijutie 15 Koy	Lahti	100.0%
Kivensilmänkuja 1 Koy	Helsinki	100.0%
Kotkan Keskuskatu 11 Koy	Kotka	100.0%
Kouvolan Valtakadun Kauppakeskus Koy	Kouvola	100.0%
Kuopion Kauppakatu 41 Koy	Kuopio	100.0%
Kuusankosken Kauppakatu 7 Koy	Kuusankoski	100.0%
Kuvernöörintie 8 Koy	Helsinki	100.0%
Lahden Hansa Koy	Lahti	100.0%
Lahden Kauppakatu 13 Koy	Lahti	100.0%
Lentolan Perusyhtiö Oy	Kangasala	100.0%

	Domicile	Parent company holding, %
Lillinkulma Koy	Kaarina	100.0%
Lintulankulma Koy	Rovaniemi	100.0%
Lippulaiva Koy	Espoo	100.0%
Martinlaakson Kivivuorentie 4 Koy	Vantaa	100.0%
Minkkikuja 4 Koy	Vantaa	100.0%
Montalbas B.V.	Amsterdam	100.0%
Myyrmanni Koy	Vantaa	100.0%
Naantalin Tullikatu 16 Koy	Naantali	100.0%
Oulun Galleria Koy	Oulu	100.0%
Porin Asema-Aukio Koy	Pori	100.0%
Porin Isolinnankatu 18 Koy	Pori	100.0%
Runeberginkatu 33 Koy	Porvoo	100.0%
Sinikalliontie 1 Koy	Espoo	100.0%
Säkylän Liiketalo Koy	Säkylä	100.0%
Talvikkitie 7-9 Koy	Vantaa	100.0%
Tampereen Hatanpää Koy	Tampere	100.0%
Tampereen Hermanni Koy	Tampere	100.0%
Tampereen Suvantokatu Koy	Tampere	100.0%
Ulappatori Koy	Espoo	100.0%
Ultima Oy	Vantaa	100.0%
Valkeakosken Torikatu 2 Koy	Valkeakoski	100.0%
Vantaan Laajavuorenkuja 2 Koy	Vantaa	100.0%
Varkauden Relanderinkatu 30 Koy	Varkaus	100.0%
Wavulinintie 1 Koy	Helsinki	100.0%
Veniamo-Invest Oy	Helsinki	100,0%
Vaakalintu Koy	Riihimäki	95,8%
Lahden Trio Koy	Lahti	89,7%
Linjurin Kauppakeskus Koy	Salo	88,5%
Mäntyvuoksi Koy	Imatra	86,8%
Lappeenrannan Brahenkatu 7 Koy	Lappeenranta	84,5%
Tikkurilan Kauppakeskus Koy	Vantaa	83,8%
Koskikeskuksen Huolto Koy	Tampere	81,7%
Orimattilan Markkinatalo Oy	Orimattila	77,3%
Lappeen Liikekeskus Koy	Lappeenranta	75,3%
Hervannan Liikekeskus Oy	Tampere	74,6%
Myllypuron Ostoskeskus Oy	Helsinki	73,5%
Myyrmäen Kauppakeskus Koy	Vantaa	70,4%
Kirkkonummen Liikekeskus Oy	Kirkkonummi	66,7%
Espoontori Koy	Espoo	66,6%
Heikintori Oy	Espoo	65,3%
Tampereen Koskenranta Koy	Tampere	63,7%
Vantaan Säästötalo Koy	Vantaa	61,2%
Ulappapaikoitus Oy	Espoo	59,9%
Tullintori Koy	Tampere	57,4%
Laajasalon Liikekeskus Oy	Helsinki	50,4%
Subsidiaries total 67

14. ASSOCIATED COMPANIES

	Parent company
	Domicile	holding, %
Retail Park Oy	Helsinki	50,0%
Espoon Louhenkulma Koy	Espoo	48,9%
Pukinmäen Liikekeskus Oy	Helsinki	43,9%
Pihlajamäen Liiketalo Oy	Helsinki	42,7%
Länsi-Keskus Koy	Espoo	41,4%
Hakunilan Keskus Oy	Vantaa	41,1%
Otaniemen Liikekeskus Oy	Espoo	39,2%
Kontulan Asemakeskus Koy	Helsinki	34,8%
Puijonlaakson Palvelukeskus Koy	Kuopio	31,3%
Salpausseläntie 11 Koy	Helsinki	31,3%
Valtakatu 5-7 Koy	Valkeakoski	31,3%
Soukan Itäinentorni As Oy	Espoo	27,3%
Valkeakosken Liikekeskus Koy	Valkeakoski	25,4%
Lauttasaaren Liikekeskus Oy	Helsinki	23,7%
Associated companies total 14

15. SHORT-TERM RECEIVABLES

EUR million	2007	2006
Trade receivables	0.8	0.4
Other receivables	8.2	1.1
Accrued income and prepaid expenses	1.4	0.3
Receivables from Group companies
Trade receivables	1.5	-
Other receivables	2.8	12.2
Accrued income and prepaid expenses	14.9	0.0
Total	19.2	12.2
Total short-term receivables	29.6	13.9

16. SHAREHOLDERS' EQUITY

EUR million		2007	2006
Share capital	1 Jan.	225.7	184.1
	Directed share issue
	28/4/06	-	36.8
	15/2/07	33.8	-
	Stock options
	16/2/06	-	1.0
	28/3/06	-	0.0
	18/4/06	-	0.7
	4/5/06	-	0.1
	20/6/06	-	0.0
	27/7/06	-	0.4
	21/9/06	-	1.6
	25/10/06	-	0.1
	14/12/06	-	0.8
	14/12/06	-	0.1
	9/2/07	0.1	-
Share capital	31 Dec.	259.6	225.7
Share issue	1 Jan.	0.1	1.1
	Registered to share capital	-0.1	-1.1
Stock options		-	0.1
Share issue	31 Dec.	0.0	0.1
Share
premium fund	1 Jan.	133.0	79.7
Increase		0.0	53.4
Share
premium fund	31 Dec.	133.1	133.0
Other reserves	1 Jan.	-	6.6
	Transfer to retained earnings	-	-6.6
Other reserves	31 Dec.	0.0	0.0
	Invested unrestricted equity fund 1. Jan	-	-
	Directed share issue	100.0	-
	Rights issue	99.3	-
	Stock options	1.8	-
Invested unrestricted
equity fund	31.12.	201.1	-
Retained
earnings/loss	1 Jan.	27.5	13.3
	Transfer to share capital	-	6.6
	Dividend distribution	-23.4	-19.2
Retained earnings 31 Dec.		4.1	0.6
Net profit
for the period	31 Dec.	8.4	26.9
Total shareholders'
equity	31 Dec.	606.3	386.4

17. LIABILITIES
EUR million	2007	2006
Long-term liabilities
Subordinated loan 1)	70.0	70.0
Convertible capital loan 1)	95.0	92.9
Fixed-rate loans	-	1.8
Floating-rate loans, which are
converted into fixed rates through
interest-rate swaps	584.5	491.6
tied to market interest rates	240.6	91.0
Total	825.1	584.4
Current portion of long-term loans	-18.0	-48.0
Total	807.1	536.4
Long-term loans
Loans from financial institutions	807.1	536.4
Loans from Group companies	25.4	23.4
Total long-term liabilities	832.4	559.8
Loans maturing later than 5 years	653.8	254.6
Short-term interest-bearing liabilities
Loans from financial institutions	102.5	87.4
Payables to Group companies	10.5	-
Total	113.0	87.4
Short-term non interest-bearing liabilities
Advances received	-0.2	0.3
Accounts payable	1.1	1.1
Other payables	2.1	5.2
Accruals	12.5	11.8
Total	15.4	18.4
Payables to Group companies
Other payables	20.1	8.1
Accruals	2.5	1.0
Total	22.6	9.1
Total short-term liabilities	151.1	114.9
Total liabilities	1,148.5	837.6
Significant other payables Tax liability	-	1.1
VAT liability	0.9	2.4
Other accruals	1.2	1.7
Total	2.1	5.2
Significant accruals
Interest liability	10.6	6.6

1) The terms and conditions of subordinated loan and convertible capital loan are presented in the notes to the consolidated financial statements 19. Interest-bearing liabilities.

18. CONTINGENT LIABILITIES

The parent company doesn't have any mortgages nor given securities. Given bank guarantees were EUR 49,8 million (EUR 37,1 million in 2006).

Lease liabilities
EUR million	2007	2006
Payables on lease commitments
Maturing next financial year	0.8	0.6
Maturing later	0.8	0.7
Total	1.6	1.3
Citycon's finance leases mainly apply to computer hardware,
machinery and equipment, cars and office premises.
VAT refund liabilities	1.1	0.2

Consolidated Key Figures and Ratios for Five Years, IFRS and FAS

EUR million	Formula	Note	IFRS 2007	IFRS 2006	IFRS 2005	IFRS 2004	FAS 2003
Income statement data
Turnover			151.4	119.4	92.2	84.7	78.1
Other operating income and expense			0.5	0.6	0.6	0.7	-0.5
Planned depreciation			0.5	0.2	0.2	0.3	6.5
Operating profit			300.7	196.5	105.2	51.8	43.3
Profit before taxes			253.5	165.6	74.2	25.7	19.1
Profit attributable to parent company shareholders			200.3	124.9	59.2	19.9	14.3
Balance sheet data
Non-current assets			2,260.5	1,453.3	957.6	745.6	816.9
- treasury shares							4.7
Current assets			48.1	33.1	25.5	12.2	18.5
Shareholders' equity and treasury shares			982.0	565.3	356.6	237.7	209.6
Subordinated loan		3)					68.5
Minority interest			28.9	15.0	3.6	0.0	99.8
Liabilities			1,297.7	906.1	622.9	520.0	457.5
Balance sheet total			2,308.6	1,486.4	983.1	757.7	835.3
Key performance ratios
Return on equity, % (ROE)	1	1)	23.3	25.8	22.5	9.5	7.1
Return on investment, % (ROI)	2		16.3	16.8	13.5	7.2	5.8
Equity ratio, %	3		43,9	39.1	36.7	31.4	36.7
Equity ratio for bank, %			50,1	49.8	40.8	41.2	40.4
Quick ratio	4		0.3	0.2	0.3	0.5	0.6
Gearing, %	5		111.8	136.6	156.8	201.3	163.1
Gross capital expenditure, EUR million			603.9	436.4	178.5	18.8	84.2
% of turnover			398.9	365.5	193.6	22.2	107.9
Per-share figures and ratios
Earnings per share, EUR	6	1),4)	1.00	0,76	0.46	0.17	0.13
Earnings per share,diluted, EUR	7	1),4)	0.91	0.73	0.45	0.17	0.13
Equity per share, EUR	8	1),4)	4.44	3,30	2.39	1.95	1.85
P/E (price/earnings) ratio	9	1)	3	7	7	14	12
Return from invested unrestricted
equity fund per share, EUR		2)	0.10
Dividend per share, EUR		2)	0.04	0.14	0.14	0.14	0.14
Dividend and return from invested
unrestricted equity fund per share total, EUR			0.14	0.14	0.14	0.14	0.14
Dividend and return of equity per earnings, %	10	2)	13.9	18.4	30.7	80.2	100.0
Effective dividend and return of equity yield, % 11		2)	4.3	2.8	4.5	5.7	9.2

1) When calculating this ratio, treasury shares are deducted from shareholders' equity and the number of shares.

2) Board proposal.

3) The subordinated loan is shown under liabilities in IFRS-compliant figures.

4) When calculating this ratio, the number of shares was share issue adjusted.

Formulas are available on page 57.

Shareholders and Shares

MAJOR SHAREHOLDERS 31 DECEMBER 2007

Name	Number of shares	% of shares and votes
Gazit-Globe Ltd *)	31,950,000	14.46
Ilmarinen Mutual Pension Insurance Company	1,568,914	0.71
Odin Finland	1,522,085	0.69
Etera Mutual Pension Insurance Company	500,000	0.23
von Fieandt Johan	480,000	0.22
Tudeer Lauri	408,000	0.18
Odin Eiendom	290,285	0.13
Tallberg Carl	180,000	0.08
Halonen Eero	160,000	0.07
Suuri Lehtipalvelu Ky Muurinen Juha K	138,954	0.06
10 major, total	37,198,238	16.83
Nominee-registered shares
Nordea Bank Finland Plc	106,577,786	48.23
Skandinaviska Enskilda Banken AB	45,369,111	20.53
Svenska Handelsbanken AB (publ.) Filialverksamheten i Finland	24,214,410	10.96
Other nominee-registered shares	1,136,508	0.51
Nominee-registered shares, total	177,297,815	80.23
Others	6,485,158	2.67
Shares, total	220,981,211	100.00

*) Gazit-Globe Ltd. has notified the company that the number of shares held by it on 31 December 2007 totalled 86,960,096 shares accounting for 39.35 per cent of the shares and voting rights in the company at the year-end of 2007. Gazit-Globe Ltd.'s shares are partly nomineeregistered.

NOTIFICATIONS OF CHANGES IN SHAREHOLDING DURING 2007

Shareholder	Date of change in holding	New holding, No of shares	% of shares and votes on the date of change
Perennial Investment Partners Ltd	5 Nov. 2007	11,256,637	5.10
ING Clarion Real Estate Securities, L.P.	24 Aug. 2007	9,726,700	5.04
Fidelity International Limited and its direct and indirect subsidiaries	15 Feb. 2007	17,297,574	9.00

SHAREHOLDERS BY OWNERGROUP ON 31 DECEMBER 2007

	Number of owners	Number of shares	Percentage of shares and voting rights
1. Financial and insurance corporations	10	176,680,048	79.95
2. Corporations	126	2,284,564	1.03
3. Households	1,911	5,907,003	2.67
4. General government	2	2,068,914	0.94
5. Foreign	21	33,654,034	15.23
6. Non-profit institutions	20	386,648	0.17
Total	2,090	220,981,211	100.00
of which nominee-registered	9	177,297,815	80.23
Issued stock, total		220,981,211

BREAKDOWN OF SHAREHOLDERS AS AT 31 DECEMBER 2007 BY NUMBER OF SHARES

Number of shares	Number of shareholders	Percentage of shareholders, %	Number of shares	Percentage of shares and voting rights, %
1 - 1,000	1,121	53.64	401,934	0.18
1,001 - 5,000	694	33.20	1,551,550	0.70
5,001 - 10,000	127	6.08	874,598	0.40
10,001 - 50,000	119	5.69	2,481,796	1.12
50,001 - 100,000	9	0.43	586,431	0.27
100,001 -	20	0.96	215,084,902	97.33
Total	2,090	100.00	220,981,211	100.00
of which nominee-registered	9		177,297,815	80.23
Issued stock, total			220,981,211

SHARE PRICE AND TRADING VOLUME

	Formula Note		IFRS 2007	IFRS 2006	IFRS 2005	IFRS 2004	FAS 2003
Share price, transactions, EUR
Low			3.24	3.02	2.36	1.52	1.00
High			6.09	5.09	3.50	2.65	1.59
Average	12		4.76	3.86	2.95	1.94	1.47
Market capitalisation, EUR million	13	1)	806.6	844.3	424.1	273.9	154.9
Share trading volume
No. of shares traded as of year-start, 1,000			153,696	51,193	40,695	115,056	104,487
Percentage of total			69.6	30.6	29.8	102.5	102.5
Issue-adjusted average number of shares, 1,000		1)	199,404	163,339	129,903	113,767	110,744
Issue-adjusted average number of shares,
diluted, 1,000		1)	227,122	175,345	132,427	114,881	110,744
Issue-adjusted average number of shares
on 31. Dec., 1,000		1)	220,981	171,233	149,029	121,998	110,744
Treasury shares, EUR million			0.0	0.0	0.0	4.7	4.7
Treasury shares, 1,000			0	0	0	3,874	3,874

1) When calculating this figure, treasury shares are deducted from shareholders' equity and the number of shares.

Formulas are available on page 57.

Formulas for Key Figures and Ratios

1)	Return on equity (ROE), %	Profit/loss for the period Shareholders' equity (weighted average)	X 100
2)	Return on investment (ROI), %	Profit/loss before taxes + interest and other financial expenses Balance sheet total (WA) - non-interest-bearing liabilities (2-year average)	X 100
3)	Equity ratio, %	Shareholders' equity Balance sheet total - advances received	X 100
4)	Quick ratio	Current assets Short-term liabilities
5)	Gearing, %	Interest-bearing liabilities - cash and cash equivalents Shareholders' equity	X 100
6)	Earnings per share (EPS), EUR	Profit/loss for the period attributable to parent company shareholders Issue-adjusted 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 Diluted, issue-adjusted average number of shares for the period	X 100
8)	Equity per share, EUR	Equity attributable to parent company shareholders Issue-adjusted number of shares on the balance sheet date
9)	P/E ratio (price/earnings)	Issue-adjusted closing price at year-end EPS
10)	Dividend and return of equity per earnings, %	Dividend per share EPS	X 100
11)	Effective dividend and return of equity yield, %	Dividend per share Issue-adjusted closing price at year-end	X 100
12)	Average share price	Value of shares traded (EUR) Average number of shares traded
13)	Market capitalisation	Number of shares x closing price for the period excl. treasury shares
14)	Occupancy rate, %, sq.m.	Leased space Leasable space	X 100
15)	Occupancy rate, %, EUR	Rental income as per leases Estimated market rent of vacant premises + rental income as per leases	X 100
16)	Net income, %	Net rental income (last 12 months) Average fair value of investment property	X 100

Signatures to the Financial Statements

Signatures to the Financial Statements dated 31 December 2007

Helsinki, 14 February 2008

Gideon Bolotowsky Amir Gal Raimo Korpinen Carl G. Nordman Claes Ottosson Dor J. Segal

Petri Olkinuora

Thomas W. Wernink Tuomo Lähdesmäki

CEO The financial statements presented above have been prepared in accordance with good accounting practice. We have today submitted the report on the conducted audit.

Helsinki, 14 February 2008

Ernst & Young Oy Authorized Public Accountants Tuija Korpelainen Authorized Public Accountant

Auditors' Report

To the shareholders of Citycon Oyj

We have audited the accounting records, the report of the Board of Directors, the financial statements and the administration of Citycon Oyj for the period 1.1. – 31.12.2007. The Board of Directors and the Managing Director have prepared the consolidated financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, as well as the report of the Board of Directors and the parent company's financial statements, prepared in accordance with prevailing regulations in Finland, containing the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements. Based on our audit, we express an opinion on the consolidated financial statements, as well as on the report of the Board of Directors, the parent company's financial statements and the administration.

We conducted our audit in accordance with Finnish Standards on Auditing. Those standards require that we perform the audit to obtain reasonable assurance about whether the report of the Board of Directors and the financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the report and in the financial statements, assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. The purpose of our audit of the administration is to examine whether the members of the Board of Directors and the Managing Director of the parent company have complied with the rules of the Companies Act.

Consolidated financial statements

In our opinion the consolidated financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view, as defined in those

standards and in the Finnish Accounting Act, of the consolidated results of operations as well as of the financial position.

Parent company's financial statements, report of the Board of Directors and administration

In our opinion the parent company's financial statements have been prepared in accordance with the Finnish Accounting Act and other applicable Finnish rules and regulations. The parent company's financial statements give a true and fair view of the parent company's result of operations and of the financial position. In our opinion the report of the Board of Directors has been prepared in accordance with the Finnish Accounting Act and other applicable Finnish rules and regulations. The report of the Board of Directors is consistent with the consolidated financial statements and the parent company's financial statements and gives a true and fair view, as defined in the Finnish Accounting Act, of the result of operations and of the financial position.

The consolidated financial statements and the parent company's financial statements can be adopted and the members of the Board of Directors and the Managing Directors of the parent company can be discharged from liability for the period audited by us. The proposal by the Board of Directors regarding the disposal of distributable funds is in compliance with the Companies Act.

Helsinki, 14th February 2008

ERNST & YOUNG OY Authorized Public Accountants

Tuija Korpelainen Authorized Public Accountant

List of Properties 2007

Property	Address	Built in/ renovated	Holding, %	Citycon's GLA, sq.m.	Occupancy rate, %, sq.m. 1)	Occupancy rate, %, EUR 1)
FINLAND
HELSINKI METROPOLITAN AREA
1 Asolantien Liikekiinteistö Oy	Asolanväylä 50, 01360 VANTAA	1986	100%	1,900	100.0%	100.0%
2 Columbus				20,900	99.0%	99.7%
Kauppakeskus Columbus Koy	Vuotie 45, 00980 HELSINKI	1997 / 2007	100%
3 Espoon Louhenkulma Koy	Louhentie 2, 02130 ESPOO	1963	49%	880	100.0%	100.0%
4 Espoontori				15,400	77.7%	83.3%
Espoon Asemakuja 2 Koy	Asemakuja 2, 02770 ESPOO	1991	100%	6,300
Espoontori Koy	Kamreerintie 3, 02770 ESPOO	1987	67%	9,100
5 Hakarinne 4	Hakarinne 4, 02120 ESPOO	1985	56%	380	100.0%	100.0%
6 Hakunilan keskus				3,680	80.7%	76.4%
Hakucenter Koy	Laukkarinne 6, 01200 VANTAA	1986	19%	780
Hakunilan Keskus Oy	Laukkarinne 4, 01200 VANTAA	1982	41%	2,900
7 Heikintori				5,800	91.9%	96.0%
Heikintori Oy	Kauppamiehentie 1, 02100 ESPOO	1968	65%
8 Helsingin Autotalo Oy	Salomonkatu 17, 00100 HELSINKI	1958	9%	1,300	100.0%	100.0%
9 Iso Omena				60,600	98.5%	99.5%
Big Apple Acquisition Oy	Piispansilta 9, 02230 ESPOO	2001	100%
10 Isomyyri				10,400	92.3%	96.3%
Myyrmäen Kauppakeskus Koy	Liesitori 1, 01600 VANTAA	1987	70%
11 Kirkkonummen Liikekeskus Oy	Asematie 3, 02400 KIRKKONUMMI	1991	67%	5,000	100.0%	100.0%
12 Kontulan Asemakeskus Koy	Keinulaudankuja 4, 00940 HELSINKI	1988 / 2007	35%	4,400	100.0%	100.0%
13 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
14 Lauttasaaren Liikekeskus Oy	Lauttasaarentie 28-30, 00200 HELSINKI	1970 / 1995	24%	1,500	100.0%	100.0%
15 Lippulaiva				22,400	95.1%	96.9%
Lippulaiva Koy	Espoonlahdenkatu 4, 02320 ESPOO	1993 / 2007	100%	17,600
Ulappatori Koy	Ulappakatu 1, 02320 ESPOO	1991	100%	4,800
16 Länsi-Keskus Koy	Pihatörmä 1, 02210 ESPOO	1989	41%	8,600	100.0%	100.0%
17 Martinlaakson Kivivuorentie 4 Koy	Kivivuorentie 4, 01620 VANTAA	1976	100%	3,800	63.8%	74.4%
18 Minkkikuja 4 Koy	Minkkikuja 4, 01450 VANTAA	1989	100%	2,300	100.0%	100.0%
19 Myllypuron ostoskeskus				6,000	66.0%	74.7%
Kivensilmänkuja 1 Koy	Kivensilmänkuja 1, 00920 HELSINKI	1988	100%	1,400
Myllypuron Ostoskeskus Oy	Kiviparintie 2, 00920 HELSINKI	1966	73%	4,600
20 Myyrmanni				40,300	97.7%	97.7%
Myyrmanni Koy	Iskoskuja 3, 01600 VANTAA	1994 / 2007	100%
21 Otaniemen Liikekeskus Oy	Otakaari 11, 02150 ESPOO	1969	39%	340	100.0%	100.0%
22 Pihlajamäen liiketalo Oy	Meripihkatie 1, 00710 HELSINKI	1970	43%	1,700	75.6%	81.8%
23 Pukinmäen Liikekeskus Oy	Eskolantie 2, 00720 HELSINKI	1968	44%	630	0.0%	0.0%
24 Salpausseläntie 11 Koy	Salpausseläntie 11, 00710 HELSINKI	1973	31%	600	100.0%	100.0%
25 Sampotori	Heikintori, Kauppamiehentie 1, 02100 ESPOO	lot	100%	50	100.0%	100.0%
26 Sinikalliontie 1 Koy	Sinikalliontie 1, 02630 ESPOO	1964 / 1992	100%	15,700	90.4%	95.4%
27 Soukan Itäinentorni As Oy	Soukantie 16, 02360 ESPOO	1972	27%	1,600	100.0%	100.0%
28 Talvikkitie 7-9 Koy	Talvikkitie 7-9, 01300 VANTAA	1989	100%	9,800	100.0%	100.0%
29 Tikkuri				10,700	98.7%	99.4%
Tikkurilan Kauppakeskus Koy	Asematie 4-10, 01300 VANTAA	1984 / 1991	84%
30 Ultima Oy	Äyritie 1, 01510 VANTAA	lot	100%
31 Vantaan Laajavuorenkuja 2 Koy	Laajavuorenkuja 2, 01620 VANTAA	1976	100%	2,000	100.0%	100.0%

		Built in/		Citycon's	Occupancy rate,	Occupancy rate,
Property	Address	renovated	Holding, %	GLA, sq.m.	%, sq.m. 1)	%, EUR 1)
32 Vantaan Säästötalo Koy	Kielotie 20, 01300 VANTAA	1983	61%	3,800	98.1%	98.4%
33 Wavulinintie 1 Koy	Wavulinintie 1, 00210 HELSINKI	1950 / 1992	100%	1,700	8.3%	8.1%
OTHER AREAS IN FINLAND
34 Forssan Hämeentie 3 Koy	Hämeentie 3, 31100 FORSSA	1978	100%	4,500	1.1%	1.9%
35 Forum				17,500	98.2%	98.7%
Jyväskylän Forum Koy	Asemakatu 5, 40100 JYVÄSKYLÄ 1953 / 1972 / 1980 / 1991		100%
36 Galleria				3,500	97.1%	98.7%
Oulun Galleria Koy	Isokatu 23, 90100 OULU	1987	100%
37 IsoKarhu				14,900	93.9%	97.5%
Kauppakeskus IsoKarhu Oy	Yrjönkatu 14, 28100 PORI	1972 / 2001 / 2004	100%
38 IsoKristiina				18,300	89.9%	91.3%
Karjalan Kauppakeskus Koy	Brahenkatu 3, 53100 LAPPEENRANTA	1987	100%	8,400
Lappeen Liikekeskus Koy	Brahenkatu 5, 53100 LAPPEENRANTA	1987	75%	6,200
Lappeenrannan Brahenkatu 7 Koy	Brahenkatu 7, 53100 LAPPEENRANTA	1993	84%	3,700
39 Isolinnankatu 18 Koy	Isolinnankatu 18, 28100 PORI	1986	100%	5,400	100.0%	100.0%
40 Jyväskeskus				5,800	97.5%	98.8%
Jyväskylän Kauppakatu 31 Koy	Kauppakatu 31, 40100 JYVÄSKYLÄ	1955 / 1993	100%
41 Kaarinan Liiketalo Koy	Oskarinaukio 5, 20780 KAARINA	1979 / 1982	100%	9,200	100.0%	100.0%
42 Karjaan Ratakatu 59 Koy	Ratakatu 59, 10320 KARJAA	1993	100%	3,100	100.0%	100.0%
43 Duo				13,000	93.1%	97.7%
Hervannan Liikekeskus Oy	Insinöörinkatu 23, 33720 TAMPERE	1979 / 2007	75%	4,700
Tampereen Hermanni Koy	Pietilänkatu 2, 33720 TAMPERE	2007	100%	8,300
44 Keijutie 15 Koy	Keijutie 15, 15700 LAHTI	1975	100%	7,200	100.0%	100.0%
45 Koskikara				5,800	92.3%	92.6%
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
46 Koskikeskus				26,000	97.1%	98.9%
Tampereen Koskenranta Koy	Hatanpään Valtatie 1, 33100 TAMPERE	1988 / 1995	64%	10,600
Tampereen Hatanpää Koy	Hatanpään Valtatie 1, 33100 TAMPERE	1988	100%	7,000
Tampereen Suvantokatu Koy	Hatanpään Valtatie 1, 33100 TAMPERE	1988	100%	8,400
47 Kotkan Keskuskatu 11 Koy	Keskuskatu 11, 48100 KOTKA	1976	100%	4,300	100.0%	100.0%
48 Kuopion Kauppakatu 41 Koy	Kauppakatu 41, 70100 KUOPIO	1977	100%	11,200	96.7%	98.5%
49 Kuusankosken Kauppakatu 7 Koy	Kauppakatu 7, 45700 KUUSANKOSKI	1980	100%	2,100	100.0%	100.0%
50 Lahden Kauppakatu 13 Koy	Kauppakatu 13, 15140 LAHTI	1971	100%	8,600	100.0%	100.0%
51 Lentolan Perusyhtiö Oy	Mäkirinteentie 4, 36220 KANGASALA	2007	100%	11,900	84.1%	74.8%
52 Lillinkulma Koy	Jännekatu 2-4, 20760 PIISPANRISTI	2007	100%	7,400	100.0%	100.0%
53 Linjuri
Linjurin Kauppakeskus Koy	Vilhonkatu 14, 24100 SALO	1993 / 2007	89%	9,300	96.7%	96.1%
54 Mäntyvuoksi Koy	Vuoksenniskantie 50, 55800 IMATRA	1974	87%	1,300	100.0%	100.0%
55 Naantalin Tullikatu 16 Koy	Tullikatu 16, 21100 NAANTALI	1985	100%	3,100	12.9%	14.9%
56 Orimattilan Markkinatalo Oy	Erkontie 3, 16300 ORIMATTILA	1983	77%	3,500	100.0%	100.0%
57 Porin Asema-aukio Koy	Satakunnankatu 23, 28130 PORI	1957 / 1993	100%	18,900	81.8%	89.0%
	58 Puijonlaakson Palvelukeskus Koy Sammakkolammentie 6, 70200 KUOPIO	1971	31%	1,500	100.0%	100.0%
59 Runeberginkatu 33 Koy	Runeberginkatu 33, 06100 PORVOO	1988	100%	6,300	100.0%	100.0%
60 Sampokeskus				14,000	78.6%	87.2%
Rovaniemen Sampotalo	Maakuntakatu 29-31, 96200 ROVANIEMI	1990	100%	12,000
Lintulankulma Koy	Rovakatu 28, 96200 ROVANIEMI	1989 / 1990	100%	2,000
61 Säkylän Liiketalo Oy	Pyhäjärventie, 27800 SÄKYLÄ	1969 / 1999	100%	1,200	100.0%	100.0%
62 Torikeskus	Kauppatori 1, 60100 SEINÄJOKI	1992 / 2007	100%	11,400	90.6%	92.5%

		Built in/		Citycon's	Occupancy rate,	Occupancy rate,
Property	Address	renovated	Holding, %	GLA, sq.m.	%, sq.m. 1)	%, EUR 1)
63 Trio				43,900	91.4%	93.3%
Lahden Hansa Koy	Kauppakatu 10, 15140 LAHTI	1992	100%	11,400
		1977 / 1985-1987
Lahden Trio Koy	Aleksanterinkatu 20, 15140 LAHTI	/ 1992 / 2007	90%	32,500
64 Tullintori				10,300	79.1%	79.0%
Tullintori Koy	Hammareninkatu 2, 33100 TAMPERE	1930 / 1990	57%
65 Vaakalintu Koy	Keskuskatu 15, 11100 RIIHIMÄKI	1980	96%	6,700	100.0%	100.0%
66 Valtakatu 5-7 Koy	Valtakatu 5-7, 37600 VALKEAKOSKI	1938 / 1992	31%	460	100.0%	100.0%
67 Valtari				7,600	87.6%	90.7%
Kouvolan Valtakadun Kauppakeskus Koy	Valtakatu 15, 45100 KOUVOLA 1971-1975 / 1994-2002		100%
	68 Varkauden Relanderinkatu 30 Koy Relanderinkatu 28-34, 78200 VARKAUS	1990	100%	8,200	100.0%	100.0%
68 FINLAND TOTAL				594,180	92.3%	95.6%
THE BALTIC COUNTRIES
ESTONIA
1 Rocca al Mare				28,600	100.0%	100.0%
Rocca al Mare Kaubanduskeskuse AS	Paldiski mnt. 102, 13522 Tallinn	1998 / 2000	100%
2 Magistral				9,500	100.0%	100.0%
Magistral Kaubanduskeskuse Oü	Sõpruse pst 201/203, 13419 Tallinn	2000	100%
LITHUANIA
3 Mandarinas				8,000	100.0%	100.0%
UAB Prekybos Centras Mandarinas	Ateities g. 91, 06324 Vilnius	2005	100%
3 THE BALTIC COUNTRIES TOTAL				46,100	100.0%	100.0%
SWEDEN
STOCKHOLM AREA AND UMEÅ
1 Åkersberga Centrum				33,100	97.1%	100.0%
Åkersberga Centrum AB	Storängsvägen, 18430 Åkersberga	1985 / 1995 / 1996	75%
2 Åkermyntan Centrum	Drivbänksvägen 1, 16574 Hässelby	1977	100%	8,400	79.4%	84.4%
3 Kallhäll	Skarprättarvägen 36-38, 17677 Järfälla	1991	100%	3,500	100.0%	100.0%
4 Jakobsbergs Centrum				67,500	96.6%	97.6%
Jakobsberg Centrum Fastigheter AB	Tornérplatsen 30, 17730 Järfalla	1959 / 1993	100%
Jakobsberg Centrum Galleria AB	Tornérplatsen 30, 17730 Järfalla		100%
Jakobsberg 565 Fastighets AB	Tornérplatsen 30, 17730 Järfalla		100%
5 Fruängen Centrum	Fruängsgången, 12952 Hägersten	1965	100%	14,600	90.5%	93.5%
6 Liljeholmstorget				20,200	76.2%	90.1%
Liljeholmsplan Fastighets AB	Liljeholmstorget 7, 11763 Stockholm	1973 / 1986	100%
7 Strömpilen	Strömpilsplatsen, 90743 Umeå	1927 / 1997	75%	27,000	84.3%	84.9%
8 Länken	Gräddvägen 1, 90620 Umeå	1978 / 2004 / 2006	75%	7,300	100.0%	100.0%
9 Tumba Centrum				30,900	99.8%	99.8%
Tumba Centrumfastigheter Aktiebolag	Tumba Torg 115, 14730 Botkyrka	1954 / 2000	100%
GOTHENBURG AREA
10 StenungsTorg				37,600	97.4%	97.3%
	Köpmansgatan 2-16, 18A-C
Stenungs Torg Fastighets AB	Östra, 44430 Stenungsund	1967 / 1993	70%
11 Backa	Backavägen 3-5, 41705 Gothenburg	1990	100%	7,800	86.2%	88.9%
12 Floda	Rurik Holms väg, 44830 Floda	1960 / 1990	100%	11,300	91.3%	93.9%
13 Hindås	Hindås Stationsväg 41-47, 43063 Hindås	1978 / 1999	100%	1,700	93.8%	95.2%
14 Landvetter	Brattåsvägen, 43832 Landvetter	1975 / 1988 / 1999	100%	5,000	94.1%	95.2%
15 Lindome	Almåsgången , 43730 Lindome	1974	100%	7,800	100.0%	100.0%
15 SWEDEN TOTAL				283,700	93.3%	95.1%
86 TOTAL, ALL				923,980	93.0%	95.7%

1) Formulas are available on page 57.

Valuation Statement

APPRAISAL METHOD

Realia Management Oy has made a valuation of Citycon's property portfolio as of 31 December 2007. The valuation was carried out as a cash flow analysis of the net operating income for a period of 10 years. When valuing unbuilt lots and properties that are affected by city plan alterations the market value is determined by the value of unused building right.

1.1 Cash Flow Calculation Method

The year on year cash flow was calculated on Citycon's existing leases, upon the expiry of which the contract rent has been replaced with Realia Management's view of the market rent. Potential Gross Rental Income (PGI) equals leased space with respect to contract rents and vacant space with respect to market rents. Deducting both the market rent for the idle time between the expired contract and assumed new contract, and the assumed general vacancy level, results in the Effective Gross Rental Income. Effective Gross Rental Income less operating expenses (incl. repairs and tenant improvements) equals the Net Operating Income (NOI). NOI less any investment type of repairs (CAPEX) equals the bottom level cash flow (NOI2) that has been discounted to reach the present value of the income stream.

The exit value at the end of the valuation period was calculated by capitalising the 11th year cash flow (base year) with an exit yield.

The total value of the property was calculated as the sum of the yearly discounted income stream, the discounted residual value at the end of the calculation period and any other value added assets, such as unused construction rights and lots.

1.2 Transaction and Market Data Methodology

All variables were estimated based on Realia Management's market observations, such as transactions, rental levels and other observations. All of this was done in close cooperation with Citycon's property management, where Realia Management used its objective veto on the data provided.

1.3 Yield Determination

There have been no significant changes in the real estate market since Q3 of 2007. After a very active first half of the year 2007, the real estate market dampened slightly during the second half due to rising interest rate levels and uncertainty in the global financial markets. The market is still active, but there has been a change in the market participants in favour of higher equity investors. Moreover, the competitiveness of leverage investors has declined due to rising interest rate levels and overall uncertainty in the financial sector. This is likely to lead to rising yield levels in certain property sectors. All in all, recent developments have

led to greater diversification between asset classes. The same message can be heard from the financing sector; good properties will still be financed on favourable loan terms, but B and C grade properties combined with inexperienced investors will have greater loan margins, meaning higher yields.

Despite a leveling investment environment the market continued to perform quite actively during the closing stages of 2007. The overall volume in Finland for 2007 is likely to reach some 5.2 billion euros, representing a slight decline on 2006's level of 5.5 billion. It will be very interesting to see how the market as a whole, and its submarkets, perform during the spring of 2008. The latest news has indicated mounting uncertainty in the US economy, especially on the financial market. On the other hand, the rest of the world is still going strong. The future interest rate trend in Europe remains uncertain, with opinions forecasting both increases and cuts in the coming year. The ECB would be forced to act against rising inflation rates, but recent figures have indicated smaller levels of inflation and therefore declining pressure for interest rate hikes.

Overall, the Finnish real estate market has matured a great deal in recent years and we believe the market will remain on a healthy level, even in less favourable market conditions. As a result of the market trend, Realia Management has revised its input parameters to cohere with existing market characteristics. The Realia Management level describes a reasonable market level, from which unhealthy and inappropriate market behaviour has been eliminated.

1.4 Potential Development Projects

Some development projects were valued using a separate project model. This model is only used in projects accompanied by: 1) a Citycon board decision, and 2) sufficient information for a reliable valuation. Such information includes e.g. an extensive project plan, several new rental agreements, future investments etc. The appraiser makes the final decision on the use of this model. The project model is a 10year cash flow model, which takes the projects' future investments and changing cash flows into consideration. It includes present cash flows up to the end of the development phase and future cash flows after the development. The project model was used in the valuation of one (1) property: Trio shopping centre in Lahti.

All other potential development options were omitted from the valuation. These properties were evaluated based on the current situation and current estimated rental value. All undeveloped lots or those under development were evaluated based on their current zoning. The value in each case was set based on market observations.

2. RESULT

The portfolio consists of a wide range of properties with different market values and levels of quality, and its total value is calculated as the sum of the individual properties.

In this valuation, we have valued the following properties for the first time; the Magistral shopping centre in Tallinn, Estonia, the Iso Omena shopping centre in Espoo, Finland and the Asemakuja retail and office property in Espoo, Finland, which were all new acquisitions during the third quarter of 2007. During the last quarter Citycon did not divest any of its properties.

Changes in the total value of the portfolio are mainly due to new, significantly higher lease agreements in some properties (especially Koskikeskus and Jyväskylä Forum) and more precise information on operational cost levels in addition to the new acquisitions named above. Iso Omena represented a significant addition to the portfolio, comprising some 15 per cent of the total portfolio value in Q4. At the same it has had a significant effect on the weighted average yields (and other figures). Weighted averages are calculated in proportion to market value and Iso Omena having the highest market value has also the biggest impact on the weighted averages. The addition of Iso Omena alone has caused the weighted average yield of the portfolio to drop compared to 2007 Q3. The total market value of the property portfolio as of December 31 was 2,194.8 euros.

3. SENSITIVITY ANALYSIS

The sensitivity of the fair value of the portfolio was tested by changing the key input parameters of the calculations. The parameters tested were required yield, gross income, total expenses (including operational costs and repair costs) and the estimated long-term vacancy rate. For testing, the starting point was the current market value of properties. Moreover, the analysis was performed by changing one parameter at a time, while all others remained unchanged, and calculating the corresponding market value of the total portfolio. The results indicate that the market value is most sensitive to the yield requirement and gross income levels. A 10 percent decrease in the yield requirement results in an approximately 11 percent increase in total value. Correspondingly, a 10% increase in gross income increases the value by approximately 14 percent. Furthermore, a 10 percent increase in total expenses decreases the portfolio value by 4 percent. However, the value is not as sensitive to long-term vacancy levels. A ten percent change in this parameter alters the market value by less than one percent.

Pohjoisesplanadi 35 AB FI-00100 Helsinki, Finland

Tel. +358 9 680 36 70 Fax +358 9 680 36 788 www.citycon.fi info@citycon.fi