2007-05-03 07:39:00 CEST
2007-05-03 07:39:00 CEST
REGULATED INFORMATION
Sponda - Quarterly report
Sponda Plc's interim report January - March 2007
Sponda Plc's interim report January - March 2007
Result of operations and financial position January - March 2007 (compared with
same period in 2006):
Total revenue grew to EUR 59.1 (26.8) million.
Net operating income was EUR 40.4 (20.5) million.
The operating profit was EUR 103.4 (23.2) million, including a positive change
in the value of the investment properties of EUR 47 million and profit on the
disposal of properties of EUR 22.9 million.
The profit after taxes was EUR 57.7 (11.1) million.
Earnings per share improved to EUR 0.58 (0.14).
The cash flow from operations per share was EUR 0.34 (0.14).
The fair value of investment properties was EUR 2 251.0 (1 281.4) million.
Net assets per share were EUR 8.10 (6.94).
Sponda sold property outside its strategic focus for roughly EUR 401 million on
30 March 2007.
Equity ratio increased to 36 % from the year-end figure of 20 % due to the
completed transactions.
Key figures
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| | 1-3/07 | 1-3/06 | 1-12/06 |
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| Economic occupancy rate, % | 89.3 | 87.5* | 88.8* |
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| Total revenue, M€ | 59.1 | 26.8 | 117.4 |
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| Net operating income, M€ | 40.4 | 20.5 | 87.6 |
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| Operating profit, M€ | 103.4 | 23.2 | 103.9 |
--------------------------------------------------------------------------------
| Earnings per share, € | 0.58 | 0.14 | 0.61 |
--------------------------------------------------------------------------------
| Cash flow from operations | 0.34 | 0.14 | 0.56** |
| per share, € | | | |
--------------------------------------------------------------------------------
| Net assets per share, € | 8.10 | 6.94 | 7.45 |
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| Equity ratio, % | 36 | 42 | 20 |
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| Gearing, % | 148 | 112 | 334 |
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* The figure is based on Sponda's property portfolio before the Kapiteeli
acquisition.
** Cash flow from operations per share includes sales profits and losses.
Prospects
During 2007 Sponda expects its earnings per share to improve significantly from
the previous year. Likewise the economic occupancy rate, and the cash flow from
operations per share, including profits and losses on property sales, are
expected to improve during 2007.
Business conditions
The volume of Finland's real estate investment market in 2007 is estimated to
rise to the same level as in 2006, to about EUR 5 billion. Market yield
requirements in Helsinki Central Business District at the end of 2006 were,
according to Catella Property Group, 4.9-5.4 %, which is about 0.6 percentage
points lower than in 2005. Yield requirements for retail property were
correspondingly 4.9-5.4 % and for logistics properties 6.75-7.5 %.
According to Catella, the vacancy rate for office premises in the Helsinki
Metropolitan Area was 7.9 %. The volume of vacant premises has declined
especially in the Helsinki Central Business District, where the vacancy rate for
offices was 5.4 %. Rent levels were rising mainly in the Central Business
District, in Ruoholahti, in Keilaniemi in Espoo, and in the Aviapolis area in
Vantaa.
The vacancy rate for retail premises remained low in the Helsinki Metropolitan
Area at 1.7 %. No new shopping centres are planned in 2007 for the Helsinki
Metropolitan Area, but older centres, such as the City-Center in the centre of
Helsinki, are being renovated and expanded. Rent levels are rising slightly,
especially in the Helsinki Central Business District.
The vacancy rate for logistics properties in the Helsinki Metropolitan Area
remained low at 2.5 %. Construction has started of logistics premises at
Vuosaari Harbour, which is increasing construction of warehouse premises near to
the harbour area and beside the transport routes leading to the harbour. Rent
levels for logistics premises remained stable.
Sponda's operations in the first quarter of 2007 (compared to the same period in
2006)
Sponda owns, leases and develops business properties, mainly in the Helsinki
Metropolitan Area and the largest cities in Finland, and in Russia. As from the
beginning of 2007 Sponda reorganized its operations into five business units:
Office and Retail Property, Logistics Property, Property Development, Real
Estate Funds, and Russia & the Baltic Countries.
Net operating income from Sponda's property assets totalled EUR 40.4 (20.5)
million at the end of March. Office and retail premises accounted for 77 % of
this, logistics premises for 14 %, the Real Estate Funds unit for 6 % and the
Russia & the Baltic Countries unit for 1 %. The economic occupancy rate by type
of property and geographical area was as follows (the 2006 figures are for
Sponda's property portfolio before the Kapiteeli acquisition):
--------------------------------------------------------------------------------
| By type of property | 31.3.2007 | 31.3.2006 | 31.12.2006 |
--------------------------------------------------------------------------------
| Offices and retail, % | 89.3 | 85.6 | 88.8 |
--------------------------------------------------------------------------------
| Logistics, % | 89.0 | 92.3 | 88.6 |
--------------------------------------------------------------------------------
| Total property portfolio, % | 89.3 | 87.5 | 88.8 |
--------------------------------------------------------------------------------
| By geographical area | 31.3.2007 | 31.3.2006 | 31.12.2006 |
--------------------------------------------------------------------------------
| Helsinki Business District*, % | 86.7 | 87.2 | 89.7 |
--------------------------------------------------------------------------------
| Helsinki Metropolitan Area, % | 89.1 | 82.8 | 87.5 |
--------------------------------------------------------------------------------
| HMA logistics, % | 87.7 | 90.3 | 87.1 |
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| Other areas, % | 98.0 | 95.9 | 93.4 |
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| Total property portfolio, % | 89.3 | 87.5 | 88.8 |
--------------------------------------------------------------------------------
* The boundaries of the geographical areas were revised at the beginning of 2007
to bring them in line with the corresponding boundaries used by public providers
of market information.
Total cash flow derived from leasing agreements on 31 March 2007 was EUR 768
million (31 March 2006: 430) and the average length of the lease agreements was
4.3 (4.3) years. Sponda signed a total of 235 new agreements (88 000 m²) during
the first quarter of 2007. During the period 115 agreements (41 000 m²) expired.
Sponda's largest customer sectors were retail (29 % of total rental income),
other services (15 %) and banking and investment (11 %). Sponda's leasing
contracts expire as follows:
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| Year of expiry | % of rental income |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2007 | 12.2 |
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| 2008 | 12.2 |
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| 2009 | 12.4 |
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| 2010 | 16.1 |
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| 2011 | 6.6 |
--------------------------------------------------------------------------------
| 2012 | 3.4 |
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| 2013- | 21.4 |
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| Open-ended | 15.8 |
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Property portfolio
On 31 March 2007 Sponda Group had roughly 200 investment properties with an
aggregate leasable area of about 1.3 million m². Of this some 69 % were office
and retail premises and 31 % logistics premises.
During the January-March 2007 period the fair value of Sponda's investment
properties rose by EUR 47.0 million. Capital expenditure during the period
allocated to property maintenance and improvements in quality levels was EUR 6.8
million.
Factors contributing to the rise in the fair value of the investment properties
during the first quarter were the decline in market yield requirements in all
business areas and the investments in raising the quality level of properties.
No significant changes occurred in rent levels.
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| Sponda's investment | Total | Office | Logis- | Property | Russia |
| properties | | and | tics | develop | & |
| 1 Jan.-31 | | retail | | ment | Baltic |
| Mar. 2007, M€ | | | | | |
--------------------------------------------------------------------------------
| Operating income | 52.9 | 44.3 | 7.8 | 0.5 | 0.3 |
--------------------------------------------------------------------------------
| Maintenance costs | -15.4 | -13.4 | -1.9 | -0.2 | 0.0 |
--------------------------------------------------------------------------------
| Net operating income | 37.5 | 31.0 | 5.9 | 0.3 | 0.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fair value of | 2 455.1 | 2 023.9 | 245.6 | 174.9 | 10.7 |
| investment properties | | | | | |
| at 1 Jan. 2007 | | | | | |
--------------------------------------------------------------------------------
| Purchases in 2007 | 2.9 | 2.9 | 0.0 | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Investments, property | 21.4 | 6.2 | 2.2 | 12.6 | 0.4 |
| development | | | | | |
--------------------------------------------------------------------------------
| Other transfers | -0.3 | -0.5 | 12.9 | -12.8 | 0.1 |
| between segments | | | | | |
--------------------------------------------------------------------------------
| Sales in 2007 | -275.0 | -263.5 | 0.0 | -11.5 | 0.0 |
--------------------------------------------------------------------------------
| Fair values | 47.0 | 34.3 | 12.7 | 0.0 | 0.0 |
| adjustment | | | | | |
--------------------------------------------------------------------------------
| Fair value of | 2 251.0 | 1 803.4 | 273.4 | 163.1 | 11.2 |
| investment properties | | | | | |
| at 31 Mar. 2007 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in fair value | 1.9 % | 1.7 % | 5.2 % | | |
| % | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Annual net operating | 6.8 % | 6.5 % | 9.1 % | 0.7 % | 10.8 % |
| income / fair value | | | | | |
| at 31 March 2007 *) | | | | | |
--------------------------------------------------------------------------------
| Yield requirements | | 5.4-8 % | 7.5-11. | | |
| used in calculating | | | 5 % | | |
| fair value % | | | | | |
--------------------------------------------------------------------------------
* Excluding property development
Investments and divestments
During the January-March 2007 period Sponda purchased investment properties for
altogether EUR 2.9 million, and sold property for a total of EUR 275 million.
Capital expenditure allocated to property maintenance and improvements in
quality levels amounted to EUR 6.8 million in the first quarter. Sponda invested
EUR 12.6 million in property development. Most of this went on the renovation of
the City-Center complex in the centre of Helsinki.
On 30 March 2007 Sponda sold shares in real estate companies, business
properties and land areas to Whitehall Street Real Estate Limited and Niam
Nordic Investment Fund III for roughly EUR 401 million. Sponda recorded a profit
on the sale of about EUR 18 million. The properties and land areas sold were on
the whole ones that were outside Sponda's strategic focus, and were located
outside Finland's largest cities. Sponda also sold certain investment properties
in Turku, Tampere and Oulu. Sponda retains management responsibility for the
property portfolio.
Office and retail properties
The economic occupancy rate rose from the level at the end of 2006 to 89.3 % (31
December 2006: 88.8 %). The fair value of the office and retail properties was
EUR 1 803.4 million on 31 March 2007. The change in the fair value since the
beginning of 2007 was EUR 34.3 million. The property portfolio had a leasable
area of about 860 000 m², with office premises accounting for an estimated 75 %
of this and retail premises for 25 %. The unit's total revenue, net operating
income and operating profit were as follows:
--------------------------------------------------------------------------------
| Office & retail, M€ | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Total revenue | 44.4 | 19.0 | 84.7 |
--------------------------------------------------------------------------------
| Net operating income | 31.0 | 14.3 | 63.1 |
--------------------------------------------------------------------------------
| Operating profit | 81.3 | 18.1 | 78.0 |
--------------------------------------------------------------------------------
During January-March 2007 Sponda purchased properties for EUR 2.9 million and
sold property for EUR 263.5 million. The property sold was part of the sale of a
property portfolio transaction at the end of March for EUR 401 million. In
addition in February 2007 Sponda sold three land sites to the Finnish State in
the Hakuninmaa and Honkasuo districts in Helsinki and in Vantaa for some EUR 65
million.
Capital expenditure on office and retail properties allocated to property
maintenance and improvements in quality levels amounted to EUR 6.2 million in
the first quarter.
Logistics properties
The economic occupancy rate of Sponda's logistics properties rose slightly from
the end of 2006 to 89.0 % (88.6 %). The fair value of the properties on 31 March
2007 stood at EUR 273.4 million, and the change in the fair value from the start
of 2007 was EUR 12.7 million. The comparable change in the fair value of the
properties from the beginning of 2007 was EUR 12.7 million.
The total revenue, net operating income and operating profit for the logistics
properties were as follows:
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| Logistics, M€ | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Total revenue | 7.8 | 7.7 | 28.7 |
--------------------------------------------------------------------------------
| Net operating income | 5.7 | 6.1 | 22.2 |
--------------------------------------------------------------------------------
| Operating profit | 17.8 | 5.3 | 24.9 |
--------------------------------------------------------------------------------
During the first quarter Sponda did not purchase or sell any logistics
properties.
Capital expenditure on logistics properties allocated to property maintenance
and improvements in quality levels amounted to EUR 2007 2.2 million in the
January-March period.
Property development
The fair value of Sponda's investment property development portfolio was EUR
163.1 million at the end of March 2007. During the reporting period EUR 12.6
million was spent on developing properties and new purchases.
The renovation work on the City-Center complex continued as planned and the
underground basement facilities are completed in May 2007. The first phase in
the renovation of the retail premises was completed in April and the second
phase, which includes the Kaivokatu street-level premises and station tunnel
premises, has begun. This should be completed in spring 2008.
Construction of the logistics area, gatehouse building, parking building and
passenger terminal at Vuosaari Harbour has begun as planned. The project will
have a total investment value of roughly EUR 140 million. The harbour will be
taken into operation in November 2008. Sponda is responsible for developing,
leasing and managing all the buildings.
Construction of a retail property in the Itäkeskus district of Helsinki will
begin in May 2007. The total investment value for the building will be roughly
EUR 56 million and it will have a leasable area of about 21 500 m². The property
has been leased to a single client. The building will be completed by November
2008.
Construction of the office building in the Ruoholahti district of Helsinki will
also start in May 2007. The investment cost of the project is roughly EUR 29
million and the building will have a leasable area of about 13 500 m². Just over
60 % of the building has been leased at the moment and it is expected to be
completed in autumn 2008.
In addition, Sponda is starting construction of an office building at
Lautatarhankatu 2 in the Sörnäinen district of Helsinki. Some 51 % of the
building has been leased and it will have a total investment cost of roughly EUR
22 million. The leasable area is about 9 200 m². Sponda will apply for a
building permit in the summer of 2007 and construction should begin in autumn
2007. The estimated completion date is towards the end of 2008.
Real estate funds
Sponda is a minority holder in two real estate funds, First Top LuxCo and Sponda
Real Estate Fund I Ky.
First Top LuxCo (Sponda's holding 20 %)invests in office and retail properties
outside Finland's largest cities. At the end of March 2007 the fund's property
investments had a fair value of roughly EUR 103.9 million. The fund has a target
size of EUR 150-400 million.
Sponda Real Estate Fund I Ky (Sponda's holding 47 %) invests in logistics sites
outside the Helsinki Metropolitan Area. At the end of the review period the
fund's property investments had a fair value of EUR 97.9 million, while the fund
has a target size of EUR 200 million. Sponda is responsible for managing the
funds and their properties, and receives management fees.
On 30 March 2007 Sponda sold shares in real estate companies, business
properties and land areas to Whitehall Street Real Estate Limited and Niam
Nordic Investment Fund III for roughly EUR 401 million. Sponda recorded a profit
on the sale of about EUR 18 million. The properties and land areas sold were on
the whole ones that were outside Sponda's strategic focus, and were located
outside Finland's largest cities. Sponda also sold certain investment properties
in Turku, Tampere and Oulu. Sponda retains management responsibility for the
property portfolio.
Russia and the Baltic Countries
Opening up new business ventures in Russia and the Baltic Countries requires a
broad network of contacts and a good knowledge of the area. Sponda is studying
various candidate properties for investment and development in the St Petersburg
and Moscow areas, together with Finnish and international companies that already
have experience of operating in Russia or which are seeking business
opportunities in Russia. In March 2007 Sponda opened an office in St Petersburg,
where at the moment four people are working.
Cash flow and financing
Sponda's net cash flow from operations on 31 March 2007 totalled EUR 191.3
million (31 March 2006: 14.4). Net cash flow from investing activities was EUR
239.3 million (-17.1) and after financing activities EUR -441.0 million (4.0).
Financial income and expenses at the end of the period totalled EUR -25.3
million (-6.7). Sponda's equity ratio on 31 March 2007 was 36 % (31 March 2006:
42 %) and gearing was 148 % (112 %). Interest-bearing debt amounted to EUR
1 346.1 million (619.8), the average maturity of Sponda's loans was 1.8 years
(2.9) and the average interest rate 4.6 % (4.3 %). Fixed-rate and
interest-hedged loans accounted for 88 % of the loan portfolio. The average
interest-bearing period of the whole debt portfolio was 3.3 years (1.9). The
interest margin, which describes the company's solvency, was 1.9 (2.7).
Sponda Group's debt portfolio comprises EUR 300 million in syndicated loans, EUR
355.6 million in bonds, EUR 299 million in issued commercial papers, and EUR
80.1 million in loans from financial institutions. Sponda also has a EUR 311.5
million short-term loan for financing the Kapiteeli Oy acquisition. Sponda has
EUR 200 million in unused credit limits. EUR 15.1 million of Sponda Group's debt
portfolio is secured.
Risk management
Risk management is based on the Group's capacity and willingness to bear risk,
identification of the key risks and the approved risk management policy.
Identified risks include the risks associated with the property market and the
risks related to property investments and purchases. Financing involves
refinancing risks and loan agreements have an interest rate risk. Sponda reduces
the refinancing risk by using credit agreements of varying durations, employing
a number of funding sources and maintaining the company's reputation as a
trustworthy debtor.
Sponda's operational risks are risks resulting from inadequate or defective
internal processes or systems. They also include risks associated with the legal
operating environment. Operational risks relate for example to the functionality
of the company's information systems and to the permanence of its skilled
employees.
Following the acquisition of Kapiteeli, a survey was made of the functions and
systems in use at Sponda and Kapiteeli. Common business procedures were chosen
and these were taken into use by the end of March 2007.
Personnel
During the January-March period Sponda Group had on average 220 employees (55 in
the corresponding period of 2006), of whom 132 (55) worked for the parent
company Sponda Plc. At the end of March Sponda Group had 220 (58) employees, of
whom 136 (58) were employed in the parent company. Sponda has personnel in
Finland and Russia.
All Sponda employees are included in the company's incentive bonus scheme, under
which bonuses are indexed to the company's targets. The company also operates a
long-term share-based incentive scheme for its senior executives that was
launched on 1 January 2006. Bonuses under this scheme are based on cash flow
from operations per share and return on equity, and Sponda shares are bought
with these bonuses. These shares also carry a restriction forbidding their
disposal within two years of their issue. The bonus is paid annually.
Group structure
Sponda Group comprises the parent company, the subsidiary Sponda Kiinteistöt Oy
(previously Kapiteeli Ltd) and Sponda Kiinteistöt Oy's 50.9 per cent owned
subsidiary Ovenia Oy, as well as the Group's mutually owned property companies,
which are either wholly or majority owned by Sponda Plc or Sponda Kiinteistöt
Oy. Sponda Group also includes Sponda Russia Ltd and Sponda Asset Management Oy.
The Sponda share
The weighted average price of the Sponda share in the January-March 2007 period
was EUR 11.63. The highest quotation on the Helsinki Stock Exchange was EUR
13.10 and the lowest EUR 11.01. Turnover during January-March totalled
24 210 742 shares. The closing price of the share on 30 March 2007 was EUR
12.95, and the market capitalization of the company's share capital was EUR 1.44
billion.
The Annual General Meeting on 29 March 2006 authorized the Board of Directors to
purchase the company's own shares. The authorization was not exercised during
the review period.
Sponda issued the following flagging announcements in the January-March 2007
period:
5 February 2007: Stichting Pensioenfonds ABP announced that its holding of
shares represented 5.23 % of the total number of shares and votes in Sponda Plc.
12.2.2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 4.53 % of the total number of shares and votes in Sponda Plc.
16.2.2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 5.001 % of the total number of shares and votes in Sponda Plc.
21.2.2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 4.976 % of the total number of shares and votes in Sponda Plc.
27.2.2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 5.074 % of the total number of shares and votes in Sponda Plc.
At the end of the review period on 31 March 2007 Sponda's ownership structure
was as follows:
--------------------------------------------------------------------------------
| | Number of | % of total |
| | shares | |
--------------------------------------------------------------------------------
| The Finnish state | 38 072 498 | 34.3 |
--------------------------------------------------------------------------------
| Private persons | 5 984 067 | 5.4 |
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| Finnish institutions | 5 096 458 | 4.6 |
--------------------------------------------------------------------------------
| Foreign institutions | 61 877 162 | 55.7 |
--------------------------------------------------------------------------------
| No. Of shares, total | 111 030 185 | 100.0 |
--------------------------------------------------------------------------------
Rights issue
An extraordinary general meeting of Sponda Plc shareholders held on 5 January
2007 authorized the Board of Directors to launch a rights issue in the maximum
amount of EUR 250 million. Under this authorization a total of 31 722 910 new
shares were issued at a subscription price of EUR 7.80 per share.
According to the final result of the rights issue, approximately 31.6 million
shares, equalling approximately 99.5 per cent of all the shares offered, were
subscribed for based on the subscription rights. About 5,200 shareholders
subscribed for shares. The lead managers of the issue obtained buyers for the
remaining shares, roughly 160 000 shares, and these had an average sale price of
roughly EUR 11.83 per share. The gross proceeds of Sponda's share issue were
roughly EUR 247 million before deductions for costs and fees. Sponda's share
capital rose to EUR 111 030 185 and the number of shares to 111 030 185 as a
result of the increase in share capital due to the share issue. The shares
subscribed in the share issue carried full dividend rights for 2006 and gave
other shareholder rights in Sponda from the date on which the increase in share
capital was recorded in the Trade Register on 9 February 2007.
Annual General Meeting
The Annual General Meeting of Sponda Plc was held in Helsinki on 4 April 2007.
The meeting adopted the consolidated financial statements and the parent
company's financial statements for the financial year of 2006 and discharged the
Board of Directors and the CEO from liability. The AGM approved the Board's
proposal to pay a dividend of 0.40 euros per share. The dividend was paid on 18
April 2007. The rest of the distributable assets, EUR 203,868,737.72, were
retained in the distributable free equity.
The AGM authorized the Board of
Directors to decide on the acquisition of own shares using the company's free
equity pursuant to the proposal of the Board of Directors. A maximum of
5,551,509 shares can be acquired in one or more tranches, however so that the
total number of own shares in the possession of the company or its subsidiaries
or shares pledged by the company may not exceed five per cent of the total
number of shares of the company. The proposed maximum number corresponds to
approximately five per cent of all shares of the company. The authorization is
valid until 30 June 2008.
Furthermore, the AGM authorized the Board of
Directors to decide on the assignment of own shares in the possession of the
company pursuant to the proposal of the Board. The authorization is for a
maximum of 5,551,509 shares. The proposed maximum amount corresponds to
approximately five per cent of all the existing shares of the company. The
authorization is valid until 30 June 2008. This authorization replaces the
Annual General Meeting's authorization on share issue of 5 January 2007.
The
AGM approved the proposal of the Board of Directors on the amendments to the
Articles of Association. The Articles of Association can be seen on Sponda's
internet site at www.sponda.fi.
The AGM decided to establish a Nomination
Committee according to the proposal of the State of Finland as shareholder. The
role of the Nomination Committee is to prepare proposals to the next Annual
General Meeting relating to the company's Board members and their remuneration.
The Nomination Committee comprises representatives of the three (3) largest
shareholders and the Chairman of the Board who acts as an expert member of the
Committee. The shareholders who hold the majority of all voting rights on the 1
November immediately preceding the next Annual General Meeting are entitled to
appoint the members representing the shareholders. The Nomination Committee is
summoned by the Chairman of the Board and the Committee elects a chairman from
its members. The Nomination Committee shall submit its proposals to the
company's Board of Directors at the latest on the 1 February immediately
preceding the Annual General Meeting.
Board of Directors and Auditors
Sponda's Annual General Meeting confirmed that the Board of Directors would
have six members. The following persons were re-elected as Board members: Ms
Tuula Entelä, Mr Timo Korvenpää, Mr Harri Pynnä and Mr Jarmo Väisänen, and Mr
Lauri Ratia and Ms Arja Talma were elected as new members, all to serve for a
term ending at the close of the next Annual General Meeting. All had given their
consent to election. At its constitutive meeting after the AGM, the Board of
Directors elected Lauri Ratia as its chairman and Jarmo Väisänen as deputy
chairman.
All Board Members are independent of the company, and five of the
six are independent of major shareholders in the company.
The AGM confirmed
that the chairman of the Board of Directors is paid a monthly remuneration of
EUR 5,000, the Deputy Chairman of the Board a monthly remuneration of EUR 3,000
and other ordinary members a monthly remuneration of EUR 2,600. In addition the
AGM confirmed that an attendance allowance of EUR 500 is paid to all members for
each meeting. Travel expenses are refunded according to the company's current
travel policy.
Mr Sixten Nyman, CPA auditor, and KPMG Oy Ab, CPA audit firm, with Ms
Raija-Leena Hankonen, CPA auditor, as principal auditor were elected as auditors
of the company, and Ms Riitta Pyykkö, CPA auditor, was elected as deputy
auditor.
Committees of the Board of Directors
On 4 April 2007 the Board of Directors established two permanent committees to
assist the Board by preparing matters for which the Board is responsible. The
permanent committees are the Audit Committee and the Structure and Remuneration
Committee.
The Audit Committee comprises chairman Arja Talma and ordinary members Tuula
Entelä and Timo Korvenpää. The Structure and Remuneration Committee comprises
chairman Lauri Ratia and ordinary members Jarmo Väisänen and Harri Pynnä.
Management
Sponda Plc's president and chief executive officer is Kari Inkinen. The
Executive Board comprises the president and CEO, the CFO, the SVP Legal Affairs
and Treasury, and the heads of the business units, in total eight persons.
Suit for payment
In a ruling issued on 11 January 2007, the Helsinki city court ordered Sponda
Plc to pay interest, penal interest and court costs totalling roughly EUR 7.6
million to Sampo Bank Plc based on a credit agreement signed on 2 July 1999.
Sponda appealed the decision to the Helsinki court of appeal on 9 February 2007.
The impact of the ruling on the 2006 result was roughly EUR 7.6 million.
Subsequent events
After the close of period Sponda issued the following flagging announcement:
17 April 2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 4.985 % of the total number of shares and votes in Sponda Plc.
Sponda expanded its investment activities in Russia where its subsidiary OOO
Veika purchased a 46-hectare land site in the Leningrad province for roughly EUR
9.5 million. The company plans to build in stages about 160 000 m² of logistics
premises on the site. The project is currently being considered by the
authorities and the aim is to start the planning work during summer 2007.
Sponda issued a Private Placement bond to domestic institutional investors. The
bond has a value of EUR 150 million and a maturity of 4 years. The bond is
floating-rate and its coupon has been confirmed as three-month Euribor plus 0.40
percentage points.
Prospects
During 2007 Sponda expects its earnings per share to improve significantly from
the previous year. Likewise the economic occupancy rate, and the cash flow from
operations per share, including profits and losses on property sales, are
expected to improve during 2007.
3 May 2007
Sponda Plc
Board of Directors
Further information: Kari Inkinen, President and CEO, tel. +358 20-431 3311 or
+358 400-402 653 and
Robert Öhman, CFO, tel. +358 020-431 3320 or +358 40-540 0741.
Distribution:
Helsinki Exchanges
Media
www.sponda.fi
This interim report is unaudited. It has been prepared applying IAS 34 (Interim
Reports). The same accounting and measurement principles have been applied in
this interim report as in the previous annual financial statements bulletin.
Sponda Plc
Key indicators
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| | 1-3/07 | 1-3/06 | 1-12/06 |
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| Earnings/share, € | 0.58 | 0.14 | 0.61 |
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| Equity ratio, % | 36 | 42 | 20 |
--------------------------------------------------------------------------------
| Gearing, % | 148 | 112 | 334 |
--------------------------------------------------------------------------------
| Equity/share, € | 8.10 | 6.94 | 7.45 |
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| Cash flow from operations/share, € | 0.34 | 0.14 | 0.56 |
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Consolidated income statement (IFRS)
M€
--------------------------------------------------------------------------------
| | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Revenue | | | |
--------------------------------------------------------------------------------
| | Rental income and recoverables | 57.0 | 26.7 | 115.4 |
--------------------------------------------------------------------------------
| | Interest income from finance | 0.1 | - | - |
| | leasing agreements | | | |
--------------------------------------------------------------------------------
| | Service income, fund management | 2.0 | 0.1 | 2.0 |
| | fees and share of fund profit | | | |
--------------------------------------------------------------------------------
| | | 59.1 | 26.8 | 117.4 |
--------------------------------------------------------------------------------
| Expenses | | | |
--------------------------------------------------------------------------------
| | Maintenance expenses | -18.3 | -6.3 | -29.4 |
--------------------------------------------------------------------------------
| | Service expenses and | | | |
--------------------------------------------------------------------------------
| | direct fund expenses | -0.4 | - | -0.4 |
--------------------------------------------------------------------------------
| | | -18.7 | -6.3 | -29.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net operating income | 40.4 | 20.5 | 87.6 |
--------------------------------------------------------------------------------
| Profit/loss on sales of investment | 1.3 | - | - |
| properties | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | 47.0 | 5.2 | 26.2 |
--------------------------------------------------------------------------------
| Proceeds from sale of trading | 192.3 | - | 11.6 |
| properties | | | |
--------------------------------------------------------------------------------
| Carrying amount of trading properties | -170.7 | - | -10.0 |
| sold | | | |
--------------------------------------------------------------------------------
| Profit/loss on sales of trading | 21.6 | - | 1.6 |
| properties | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales and marketing expenses | -0.5 | -0.3 | -1.1 |
--------------------------------------------------------------------------------
| Administrative expenses | -6.8 | -2.2 | -10.8 |
--------------------------------------------------------------------------------
| Other operating income | 0.5 | - | 0.9 |
--------------------------------------------------------------------------------
| Other operating expenses | -0.1 | - | -0.5 |
--------------------------------------------------------------------------------
| Operating profit | 103.4 | 23.2 | 103.9 |
--------------------------------------------------------------------------------
| Financial income | 1.8 | - | 3.7 |
--------------------------------------------------------------------------------
| Financial expenses | -27.1 | -6.7 | -34.7 |
--------------------------------------------------------------------------------
| Provision for interest expenses | - | - | -7.5 |
--------------------------------------------------------------------------------
| Financial income and expenses, net | -25.3 | -6.7 | -38.5 |
--------------------------------------------------------------------------------
| Profit before taxes | 78.1 | 16.5 | 65.4 |
--------------------------------------------------------------------------------
| Income taxes for current and previous | - | - | -0.4 |
| fiscal years | | | |
--------------------------------------------------------------------------------
| Deferred taxes | -20.4 | -5.4 | -16.7 |
--------------------------------------------------------------------------------
| Income taxes, total | -20.4 | -5.4 | -17.1 |
--------------------------------------------------------------------------------
| Profit for the period | 57.7 | 11.1 | 48.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent company | 57.8 | 11.1 | 48.4 |
--------------------------------------------------------------------------------
| Minority interest | -0.1 | - | -0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period | 57.7 | 11.1 | 48.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share based on profit | | | |
| attributable to equity holders of the | | | |
| parent company: | | | |
--------------------------------------------------------------------------------
| Earnings per share, undiluted, € | 0.58 | 0.14 | 0.61 |
--------------------------------------------------------------------------------
| Earnings per share, | | | |
--------------------------------------------------------------------------------
| diluted, € | 0.58 | 0.14 | 0.61 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of shares, million | | | |
--------------------------------------------------------------------------------
| Undiluted | 98.9 | 79.2 | 79.3 |
--------------------------------------------------------------------------------
| Diluted | 98.9 | 80.6 | 79.3 |
--------------------------------------------------------------------------------
Consolidated balance sheet (IFRS)
M€
--------------------------------------------------------------------------------
| | 31.3.2007 | 31.3.2006 | | 31.12.2006 |
--------------------------------------------------------------------------------
| ASSETS | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Investment properties | 2 251.0 | 1 281.4 | | 2 455.1 |
--------------------------------------------------------------------------------
| Investments in real estate | 21.8 | 0.5 | | 19.4 |
| funds | | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 15.6 | 8.7 | | 19.5 |
--------------------------------------------------------------------------------
| Goodwill | 27.5 | - | | 27.5 |
--------------------------------------------------------------------------------
| Other intangible assets | 4.9 | 0.3 | | 5.2 |
--------------------------------------------------------------------------------
| Finance lease receivables | 2.7 | - | | 2.7 |
--------------------------------------------------------------------------------
| Other investments | - | 0.1 | | - |
--------------------------------------------------------------------------------
| Non-current receivables | 14.9 | 0.1 | | 5.2 |
--------------------------------------------------------------------------------
| Deferred tax assts | 65.8 | 1.2 | | 110.5 |
--------------------------------------------------------------------------------
| Total non-current assets | 2 404.2 | 1 292.3 | | 2 645.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Trading properties | 60.4 | - | | 231.1 |
--------------------------------------------------------------------------------
| Trade and other receivables | 46.0 | 5.3 | | 39.6 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 13.2 | 2.1 | | 23.6 |
--------------------------------------------------------------------------------
| Total current assets | 119.6 | 7.4 | | 294.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 2 523.8 | 1 299.7 | | 2 939.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY AND | | | | |
| LIABILITIES | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to equity | | | | |
| holders | | | | |
--------------------------------------------------------------------------------
| of the parent company | | | | |
--------------------------------------------------------------------------------
| Share capital | 111.0 | 79.2 | | 79.3 |
--------------------------------------------------------------------------------
| Share premium reserve | 159.5 | 158.8 | | 159.5 |
--------------------------------------------------------------------------------
| Translation difference | 0.1 | - | | - |
--------------------------------------------------------------------------------
| Fair value reserve | 11.6 | -0.7 | | 2.3 |
--------------------------------------------------------------------------------
| Revaluation reserve | 0.6 | - | | 0.6 |
--------------------------------------------------------------------------------
| Invested non-restricted equity | 209.7 | - | | - |
| reserve | | | | |
--------------------------------------------------------------------------------
| Retained earnings | 407.1 | 312.0 | 1) | 349.3 |
--------------------------------------------------------------------------------
| | 899.6 | 549.3 | | 591.0 |
--------------------------------------------------------------------------------
| Minority interest | 1.7 | - | | 1.8 |
--------------------------------------------------------------------------------
| Total shareholders' equity | 901.3 | 549.3 | | 592.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Interest-bearing loans and | 601.3 | 549.3 | | 658.2 |
| borrowings | | | | |
--------------------------------------------------------------------------------
| Provisions | 16.5 | 1.1 | | 22.7 |
--------------------------------------------------------------------------------
| Other liabilities | - | 1.1 | | - |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 178.4 | 68.8 | | 218.7 |
--------------------------------------------------------------------------------
| Total non-current liabilities | 796.2 | 620.3 | | 899.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Current interest-bearing loans | 744.8 | 70.5 | | 1 347.4 |
| and borrowings | | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 81.5 | 59.6 | 1) | 99.6 |
--------------------------------------------------------------------------------
| Total current liabilities | 826.3 | 130.1 | | 1 447.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | 1 622.5 | 750.4 | | 2 346.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total shareholders' equity and | 2 523.8 | 1 299.7 | | 2 939.4 |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-bearing loans and | 1 346.1 | 619.8 | | 2 005.6 |
| borrowings | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) The dividend of EUR 39.6 million was deducted from retained earnings and |
| recorded in 'Other liabilities' on 31 March 2006. The impact on the cash |
| flow was presented in the second quarter. The dividend of EUR 44.4 million |
| paid for 2006 is presented in the second quarter of 2007. |
--------------------------------------------------------------------------------
Consolidated statement of cash flows (IFRS)
M€
--------------------------------------------------------------------------------
| | | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operating | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 57.7 | 11.1 | 48.3 |
--------------------------------------------------------------------------------
| Adjustments | | -28.3 | 6.8 | 29.6 |
--------------------------------------------------------------------------------
| Change in net working capital | 1) | 177.1 | 1.0 | 8.6 |
--------------------------------------------------------------------------------
| Interest received | | 0.9 | 0.1 | 0.8 |
--------------------------------------------------------------------------------
| Interest paid | | -19.3 | -4.3 | -34.3 |
--------------------------------------------------------------------------------
| Other financial items | | 3.7 | - | -6.7 |
--------------------------------------------------------------------------------
| Taxes paid | | -0.5 | -0.3 | -0.9 |
--------------------------------------------------------------------------------
| Net cash from operating | | 191.3 | 14.4 | 45.4 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Acquisition of Kapiteeli | | -15.1 | - | -929.1 |
--------------------------------------------------------------------------------
| Acquisition of investment | | -19.1 | -16.7 | -110.0 |
| properties | | | | |
--------------------------------------------------------------------------------
| Capital expenditure on real | | -2.4 | -0.5 | -19.4 |
| estate funds | | | | |
--------------------------------------------------------------------------------
| Acquisition of tangible and | | | | |
--------------------------------------------------------------------------------
| intangible assets | | -0.7 | -0.1 | -0.6 |
--------------------------------------------------------------------------------
| Proceeds from sale of | | 276.1 | 0.2 | 37.8 |
| investment properties | | | | |
--------------------------------------------------------------------------------
| Loans granted | | - | - | -0.9 |
--------------------------------------------------------------------------------
| Repayments of loan receivables | | 0.5 | - | 1.3 |
--------------------------------------------------------------------------------
| Net cash from investment | | 239.3 | -17.1 | -1 020.9 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Proceeds from the issue of | | 239.5 | - | 0.7 |
| shares | | | | |
--------------------------------------------------------------------------------
| Non-current loans, raised | | - | - | 300.0 |
--------------------------------------------------------------------------------
| Non-current loans, | | | | |
--------------------------------------------------------------------------------
| repayments | | -56.4 | - | -250.0 |
--------------------------------------------------------------------------------
| Current loans, | | | | |
--------------------------------------------------------------------------------
| raised/repayments | | -624.1 | 4.0 | 987.2 |
--------------------------------------------------------------------------------
| Dividends paid | | - | - | -39.6 |
--------------------------------------------------------------------------------
| Net cash from financing | | -441.0 | 4.0 | 998.3 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in cash and cash | | -10.4 | 1.3 | 22.8 |
| equivalents | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents, | | 23.6 | 0.8 | 0.8 |
| beginning of period | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents, end | | 13.2 | 2.1 | 23.6 |
| of period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Includes deductions for | | 170.7 | - | 10.0 |
| trading properties | | | | |
--------------------------------------------------------------------------------
Changes in Group shareholders' equity
M€
--------------------------------------------------------------------------------
| | Share | Share | Trans-l | Fair | Revalu-ati |
| | capital | premiu | ation | value | on reserve |
| | | m | differ- | reserve | |
| | | reserv | ences | | |
| | | e | | | |
--------------------------------------------------------------------------------
| Equity at 31 Dec. 2005 | 79.2 | 158.8 | - | -4.2 | - |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| Amount taken to equity | | | | 4.8 | |
--------------------------------------------------------------------------------
| Taxes on items | | | | -1.3 | |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | | 3.5 | |
| expenses recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | | 3.5 | |
| expenses for the period | | | | | |
--------------------------------------------------------------------------------
| Dividends | | | | | |
--------------------------------------------------------------------------------
| Equity at 31 March 2006 | 79.2 | 158.8 | - | -0.7 | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Invested | Retain | Total | Minorit | Total |
| | non-rest | ed | | y | share-hold |
| | ricted | earnin | | interes | ers' |
| | equity | gs | | t | equity |
| | reserve | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity at 31 Dec. 2005 | - | 340.5 | 574.3 | - | 574.3 |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| Amount taken to equity | | | 4.8 | | 4.8 |
--------------------------------------------------------------------------------
| Taxes on items | | | -1.3 | | -1.3 |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | 3.5 | | 3.5 |
| expense recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 11.1 | 11.1 | | 11.1 |
--------------------------------------------------------------------------------
| Total income and | | 11.1 | 14.6 | | 14.6 |
| expense for the period | | | | | |
--------------------------------------------------------------------------------
| Dividends | | -39.6 | -39.6 | | -39.6 |
--------------------------------------------------------------------------------
| Equity at 31 March 2006 | - | 312.0 | 549.3 | - | 549.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Changes in Group | | | | | |
| shareholders' equity | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Share | Share | Trans-l | Fair | Revalu-ati |
| | capital | premiu | ation | value | on reserve |
| | | m | differ- | reserve | |
| | | reserv | ences | | |
| | | e | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. 2006 | 79.3 | 159.5 | - | 2.3 | 0.6 |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| Amount taken to equity | | | | 11.1 | |
--------------------------------------------------------------------------------
| Amount recognized in | | | | 1.2 | |
| the income statement | | | | | |
--------------------------------------------------------------------------------
| Instruments of reversed | | | | 0.2 | |
| hedge accounting | | | | | |
--------------------------------------------------------------------------------
| Increase | | | 0.1 | | |
--------------------------------------------------------------------------------
| Share issue costs | | | | | |
--------------------------------------------------------------------------------
| Taxes on items | | | | -3.2 | |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | 0.1 | 9.3 | |
| expense recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | 0.1 | 9.3 | |
| expense for the period | | | | | |
--------------------------------------------------------------------------------
| Share issue | 31.7 | | | | |
--------------------------------------------------------------------------------
| Equity 31 March 2007 | 111.0 | 159.5 | 0.1 | 11.6 | 0.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Invested | Retain | Total | Minorit | Total |
| | non-rest | ed | | y | share-hold |
| | ricted | earnin | | interes | ers' |
| | equity | gs | | t | equity |
| | reserve | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity 31 Dec. 2006 | - | 349.3 | 591.0 | 1.8 | 592.8 |
--------------------------------------------------------------------------------
| Cash flow hedges: | | | | | |
--------------------------------------------------------------------------------
| Amount taken to equity | | | 11.1 | | 11.1 |
--------------------------------------------------------------------------------
| Amount recognized in | | | 1.2 | | 1.2 |
| the income statement | | | | | |
--------------------------------------------------------------------------------
| Instruments of reversed | | | 0.2 | | 0.2 |
| hedge accounting | | | | | |
--------------------------------------------------------------------------------
| Increase | | | 0.1 | | 0.1 |
--------------------------------------------------------------------------------
| Taxes on items | | | -3.2 | | -3.2 |
| recognized in equity or | | | | | |
| transferred from equity | | | | | |
--------------------------------------------------------------------------------
| Total income and | | | 9.4 | | 9.4 |
| expense recognized | | | | | |
| directly in equity | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 57.8 | 57.8 | -0.1 | 57.7 |
--------------------------------------------------------------------------------
| Total income and | | 57.8 | 67.2 | -0.1 | 67.1 |
| expense for the period | | | | | |
--------------------------------------------------------------------------------
| Share issue | 209.7 | | 241.4 | | 241.4 |
--------------------------------------------------------------------------------
| Equity 31 March 2007 | 209.7 | 407.1 | 899.6 | 1.7 | 901.3 |
--------------------------------------------------------------------------------
Notes to the Interim Report
The Group has adopted on 1 January 2007 IFRS 7 'Financial Instruments -
Disclosures' and the amendment to IAS 1 relating to the presentation of equity
in financial statements. Applying both standards mainly affects the information
given in future Notes to the Consolidated Financial Statements. In other
respects the accounting principles applied in the financial statements are the
same as in the Financial Statements on 31 December 2006.
Income statement and balance sheet by segment
M€
--------------------------------------------------------------------------------
| Income | Office | Logis- | Prop- | Russia/ | Funds | Other | Group, |
| statement | & | tics | erty | Baltic | | | total |
| 1-3/2007 | retail | | devel | | | | |
| | | | -opme | | | | |
| | | | nt | | | | |
--------------------------------------------------------------------------------
| Total revenue | 44.3 | 7.8 | 0.5 | 0.3 | 4.6 | 1.6 | 59.1 |
--------------------------------------------------------------------------------
| Maintenance | -13.4 | -2.1 | -0.3 | 0.0 | -2.3 | -0.6 | -18.7 |
| expenses and | | | | | | | |
| direct fund | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Net operating | 31.0 | 5.7 | 0.2 | 0.3 | 2.3 | 1.0 | 40.4 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Profit on sale | 1.3 | | | | | | 1.3 |
| of investment | | | | | | | |
| properties | | | | | | | |
--------------------------------------------------------------------------------
| Profit/loss on | 17.1 | | | | 4.5 | | 21.6 |
| sale of | | | | | | | |
| trading | | | | | | | |
| properties | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | 34.3 | 12.7 | | | | | 47.0 |
| gains and | | | | | | | |
| losses | | | | | | | |
--------------------------------------------------------------------------------
| Administration | -2.4 | -0.6 | -0.8 | -0.6 | -0.6 | -2.3 | -7.3 |
| and marketing | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Other income | | | | | | 0.5 | 0.5 |
| and expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 81.3 | 17.8 | -0.6 | -0.3 | 6.2 | -0.9 | 103.4 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income | Office | Logis- | Prop- | Russia/ | Funds | Other | Group, |
| statement | & | tics | erty | Baltic | | | total |
| 1-3/2006 | retail | | devel | | | | |
| | | | -opme | | | | |
| | | | nt | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total revenue | 19.0 | 7.7 | | | 0.1 | | 26.8 |
--------------------------------------------------------------------------------
| Maintenance | -4.7 | -1.6 | | | | | -6.3 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Net operating | 14.3 | 6.1 | | | 0.1 | | 20.5 |
| income | | | | | | | |
--------------------------------------------------------------------------------
| Valuation | 5.5 | -0.3 | | | | | 5.2 |
| gains and | | | | | | | |
| losses | | | | | | | |
--------------------------------------------------------------------------------
| Administration | -1.7 | -0.5 | -0.3 | | -0.3 | 0.3 | -2.5 |
| and marketing | | | | | | | |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 18.1 | 5.3 | -0.3 | | -0.2 | 0.3 | 23.2 |
| profit | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investment properties | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Fair value of investment | 2 455.1 | 1 259.7 | 1 259.7 |
| properties, start of period | | | |
--------------------------------------------------------------------------------
| Kapiteeli acquisition | - | - | 1 070.0 |
--------------------------------------------------------------------------------
| Purchase of investment properties | 3.2 | 11.7 | 94.3 |
--------------------------------------------------------------------------------
| Other capital expenditure on | 17.5 | 5.0 | 43.3 |
| investment properties | | | |
--------------------------------------------------------------------------------
| Disposal of investment properties | -275.0 | -0.2 | -37.7 |
--------------------------------------------------------------------------------
| Transfers to/from property, plant | 3.2 | - | -1.5 |
| and equipment | | | |
--------------------------------------------------------------------------------
| Fair value adjustment for property | - | - | 0.8 |
| in own use | | | |
--------------------------------------------------------------------------------
| Valuation gains/losses | 47.0 | 5.2 | 26.2 |
--------------------------------------------------------------------------------
| Fair value of investment | 2 251.0 | 1 281.4 | 2 455.1 |
| properties, end of period | | | |
--------------------------------------------------------------------------------
Investment properties are properties held by the company for the purpose of
earning rental revenue or for capital appreciation. Sponda has chosen the fair
value method to measure its investment properties, recognizing changes in their
fair value in the income statement.
The fair value of Sponda's investment properties is confirmed using the
company's own calculations in which Sponda applies the yield method based on
cash flow analysis. The method is in compliance with the International Valuation
Standard (IVS). All the figures used in calculating the fair value of properties
are examined at least once a year by an external expert, to ensure that the
parameters and values used in the calculations are based on market observations.
Factors contributing to the EUR 47.0 million rise in the fair value of the
investment properties during the first quarter were the decline in market yield
requirements in all business areas and the investments in raising the quality
level of properties. No significant changes occurred in rent levels.
The Group's most significant investment commitments are in the following
projects:
Renovation work on the City-Center complex, which continued as planned. The
underground basement facilities were completed in spring 2007. The first phase
in the renovation of the retail premises will be completed in May and the second
phase has begun. This phase should be completed at the beginning of 2008.
Construction of the logistics area, gatehouse building, parking building and
passenger terminal at Vuosaari Harbour has begun as planned. The project has a
total investment value of roughly EUR 140 million. The harbour will be taken
into operation in November 2008.
Office building in the Ruoholahti district of Helsinki which has an investment
cost of roughly EUR 29 million and a leasable area of about 13 500 m². The
expected completion date is autumn 2008.
Retail property in the Itäkeskus district of Helsinki with a leasable area of
about 21 500 m². The total investment value is roughly EUR 56 million. The
building will be completed by November 2008.
Office building in the Sörnäinen district of Helsinki, which has a total
investment cost of roughly EUR 22 million. The leasable area is about 9 200 m².
The estimated completion date is towards the end of 2008.
--------------------------------------------------------------------------------
| Property, plant and equipment | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Carrying amount, start of period | 19.5 | 8.8 | 8.8 |
--------------------------------------------------------------------------------
| Kapiteeli acquisition | - | - | 5.2 |
--------------------------------------------------------------------------------
| Additions | 1.0 | - | 4.5 |
--------------------------------------------------------------------------------
| Disposals | -1.5 | - | - |
--------------------------------------------------------------------------------
| Reclassifications to/from | -3.2 | - | 1.5 |
| investment properties | | | |
--------------------------------------------------------------------------------
| Depreciation for the period | -0.2 | -0.1 | -0.5 |
--------------------------------------------------------------------------------
| Carrying amount, end of period | 15.6 | 8.7 | 19.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Trading properties | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount, start of period | 231.1 | - | - |
--------------------------------------------------------------------------------
| Kapiteeli acquisition | - | | 241.8 |
--------------------------------------------------------------------------------
| Disposals | -170.7 | | -10.0 |
--------------------------------------------------------------------------------
| Other changes | - | | -0.7 |
--------------------------------------------------------------------------------
| Carrying amount, end of period | 60.4 | - | 231.1 |
--------------------------------------------------------------------------------
Sampo Bank's Suit for payment
In its ruling, the Helsinki city court ordered Sponda Plc to pay interest, penal
interest and court costs totalling EUR 7.6 million to Sampo Bank Plc based on a
credit agreement. Sponda appealed the decision to the Helsinki court of appeal
on 9 February 2007. The amount of Sampo Bank's suit for payment, EUR 7.6
million, was recognized as an expense under provisions in the 2006 financial
statements.
Contingent liabilities
Collateral and commitments given by Group
M€
--------------------------------------------------------------------------------
| | 31.3.2007 | 31.3.2006 |
--------------------------------------------------------------------------------
| Loans from financial institutions, covered | 15.1 | 0.1 |
| by collateral | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Mortgages | 0.2 | 0.1 |
--------------------------------------------------------------------------------
| Book value of pledged shares | 143.5 | - |
--------------------------------------------------------------------------------
| Guarantees given | 16.5 | - |
--------------------------------------------------------------------------------
| Total collateral | 160.2 | 0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Lease and other liabilities | | |
--------------------------------------------------------------------------------
| Lease liability | 19.5 | 20.7 |
--------------------------------------------------------------------------------
| Other liabilities | 0.1 | |
--------------------------------------------------------------------------------
| Mortgages | 2.3 | 2.2 |
--------------------------------------------------------------------------------
| Guarantees given | 0.1 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest derivatives | | |
--------------------------------------------------------------------------------
| Swap contracts, notional value | 555.0 | 305.9 |
--------------------------------------------------------------------------------
| Swap contracts, fair value | 3.8 | -1.1 |
--------------------------------------------------------------------------------
| Interest rate cap options, bought, notional | 557.0 | |
| value | | |
--------------------------------------------------------------------------------
| Interest rate cap options, bought, fair | 11.2 | |
| value | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Key indicators | 1-3/07 | 1-3/06 | 1-12/06 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings/share, € | 0.58 | 0.14 | 0.61 |
--------------------------------------------------------------------------------
| Equity ratio, % | 36 | 42 | 20 |
--------------------------------------------------------------------------------
| Gearing, % | 148 | 112 | 334 |
--------------------------------------------------------------------------------
| Equity per share, € | 8.10 | 6.94 | 7.45 |
--------------------------------------------------------------------------------
| Cash flow from operations/share, | 0.34 | 0.14 | 0.56 |
| € | | | |
--------------------------------------------------------------------------------
Calculation of financial ratios
--------------------------------------------------------------------------------
| Earnings/share, € | Share of profit for the period |
| | attributable to equity holders of the |
| | parent company / adjusted average number |
| | of shares during the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity ratio, % = 100 x | Shareholders' equity / (Balance sheet |
| | total - advances received) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gearing, % = 100 x | (Interest-bearing liabilities - cash |
| | and cash equivalents) / Shareholders' |
| | equity |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity per share,€ = | Equity attributable to equity holders of |
| | parent company on 31 Dec. / Adjusted |
| | number of shares on 31 Dec. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | (Operating profit -/+ Valuation gains and |
| operations/share = | losses +/- Changes in provisions +/- |
| | Defined benefit pension expenses - |
| | Financial income and expenses affecting |
| | cash flow - Taxes affecting cash flow) / |
| | Average adjusted number of shares during |
| | the period |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Profit on the sale of non-current assets |
| | has been deducted and losses from their |
| | sale have been added to the operating |
| | profit for the years 2004-2006. |
--------------------------------------------------------------------------------
Related party transactions
The following transactions took place with related parties:
Rental income from state institutions and companies totalled EUR 4.7 million in
the January-March 2007 period (1-12/2006: EUR 13.6 million).
--------------------------------------------------------------------------------
| Management employee benefits | 1-3/2007 | 1-3/2006 | 1-12/2006 |
--------------------------------------------------------------------------------
| Salaries and bonuses | 0.4 | 0.3 | 1.0 |
--------------------------------------------------------------------------------
| Incentive bonuses | 0.1 | 0.1 | 0.2 |
--------------------------------------------------------------------------------
| Share-based payments | 0.2 | - | 1.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 0.7 | 0.4 | 2.3 |
--------------------------------------------------------------------------------
There were no outstanding loans receivable from key management on 31 March 2007
or 31 December 2006.
Members of the Board of Directors held 29,946 shares and members of the
Executive Board 31,368 shares on 31 March 2007 (31.12.2006: 48,009 and 7,682
shares).
The Finnish state held 34.3 % of Sponda Plc's shares on 31 March 2007
(31.12.2006: 34.3 %). Finnish state exercised its rights to buy three land sites
from Sponda in February 2007 for approximately EUR 65 million.
Significant transaction
In a transaction signed on 30 March 2007, Sponda sold shares in real estate
companies, business properties and land sites that were outside its strategic
focus to Whitehall Street Real Estate Limited and Niam Nordic Investment Fund
III for EUR 401.1 million. The sale comprised in total 564 real estate items, of
which 43 were investment properties. Sponda recorded a profit on the sale of
about EUR 18 million.
Events after the close of the quarter
After the close of period Sponda issued the following flagging announcement:
17 April 2007: Stichting Pensioenfonds ABP announced that its holding of shares
represented 4.985 % of the total number of shares and votes in Sponda Plc.
Sponda expanded its investment activities in Russia where its subsidiary OOO
Veika purchased a 46-hectare land site in the Leningrad province for roughly EUR
9.5 million. The company plans to build in stages about 160,000 m² of logistics
premises on the site. The project is currently being considered by the
authorities and the aim is to start the planning work during summer 2007.
Sponda issued a Private Placement bond to domestic institutional investors. The
bond has a value of EUR 150 million and a maturity of 4 years. The bond is
floating-rate and its coupon has been confirmed as three-month Euribor plus 0.40
percentage points.
Dividends
The Annual General Meeting on 4 April 2007 decided to pay a dividend of 0.40
euros for each share in circulation, in total EUR 44,412,074.00.
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