Financial Year February 2009 Kari Inkinen, President and CEO Robert Öhman, CFO

Transcription

1 Financial Year February 2009 Kari Inkinen, President and CEO Robert Öhman, CFO

2 Year 2008 in a nutshell Financial position Property market Operational review Year 2009 Appendix 2

3 Year 2008 in a nutshell Financial position Property market Operational review Year 2009 Appendix 3

4 Despite the weakening market Sponda had a number of successful events in 2008 Improvement in the occupancy rate in the office and retail portfolio. Increase in rents. All development projects were completed in time and on budget. During the second half of the year Sponda sold a number of properties. Successful refinancing in an extremely challenging climate. 4

5 Year 2008 and events after the period Year 2008 Net operating income rose by 9,1 % y-o-y. Occupancy rate was 88,5 ( : 91,2) %. Development gains on property development projects were EUR 43.3 million. Release of goodwill in 2008 was EUR -13,0 million. Sponda sold properties for EUR 122,9 million and bought properties for EUR 210,6 million in Altogether EUR 350 million of new financing was signed during I H EUR 150 million refinancing successfully completed in October. After 2008 Sponda sold three logistics properties for EUR 16,3 million. Sponda was ordered to pay Sampo Bank EUR 8.3 million of interest, penal interest and court costs based on an old credit agreement. No impact on Sponda s result. 5

6 and year 2008 in focus 10-12/ / / /07 Total revenue, meur Net operating income, meur Operating profit, meur Profit for the period, meur Earnings / share, eur Operating cash flow / share, eur Dec Dec 07 Fair value of inv. properties, meur NAV / share, eur EPRA NAV / share, eur Economic occupancy rate, %

7 Year 2008 in a nutshell Financial position Operational review Year 2009 Appendix 7

8 Profit & loss statement Me 10-12/ / / /2007 Total revenue Expenses (16.5) (14.5) (57.5) (58.1) Net operating income Profit on sale of inv. properties Valuation gain / loss (9.9) 0.5 (36.0) 92.9 Allocation of goodwill (13.0) - (13.0) - Profit on sale of trading properties SGA expenses (5.7) (6.7) (24.2) (25.9) Other operating income/expenses (0.9) (0.1) (1.3) 0.1 Operating profit Financial income and expenses (23.7) (16.8) (87.5) (72.3) Profit before taxes Taxes from previous and current fin. years (1.1) (0.3) (1.3) (0.4) Deferred taxes (5.4) (6.4) (10.8) (47.4) Net income for the period

9 Valuation gains/losses on assessing Sponda properties at fair value Changes in yield requirements (Finland) Changes in yield requirements (Russia) Profit from property development projects Modernization investments Change in market rents and maintenance costs (Finland) Change in market rents and maintenance costs (Russia) Investment properties, total Real estate funds Group, total 10-12/2008 (43.2) (4.3) 42.3 (5.7) 4.4 (1.7) (8.2) (1.7) (9.9) 1-12/2008 (88.8) (4.3) 43.3 (26.6) 34.4 (1.7) (43.7) 7.7 (36.0) 9

10 Balance sheet ASSETS meur meur Long-term assets Short-term assets Assets total SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity total Long-term liabilities Interest-bearing debt Liabilities Deferred tax liabilities Long-term liabilities total Short-term liabilities total Liabilities total Shareholders equity and liabilities

11 Financing /2008 Q3/2008 /2008 Q1/2008 /2007 Equity ratio 32 % 32 % 34 % 30 % 32 % Average interest rate 4.6 % 4.8 % 4.7 % 4.5 % 4.6 % Hedging 58 % 63 % 69 % 61 % 65 % Average loan maturity 3.0 yrs 3.1 yrs 2.9 yrs 2.9 yrs 2.6 yrs Average fixed interest rate period 1.7 yrs 2.2 yrs 2.4 yrs 2.5 yrs 2.6 yrs Interest cover Loan to Value 62 % 63 % 62 % 11

12 Loan maturity 31 December % Total amount of interest- bearing debt was EUR million. In 2009 only shortterm debt which consists of the backstop facility programme. 28 % 12 % 1 % 7 % 8 % 16 %

13 Interest-bearing debt by type 31 December 2008 Interest-bearing debt EUR million Nordic lender base: 7 % Danske Bank A/S, DnB NORD A/S, Handelsbanken, Ilmarinen Mutual Pension Insurance 36 % Company, Nordea Bank, Pohjola Bank, Skandiska Enskilda Banken, Swedbank. 14 % 27 % 16 % Syndicate loans Syndicate loan limits Bonds Bank loans CPs 13

14 Financing in 2009 In total of EUR 285 million of short-term loans matures in 2009 out of which: Commercial paper programme EUR 136 million. Bank limits EUR 135 million (limits in total are EUR 250 million). Others EUR 14 million. Sponda has a back-stop limit facility from the banks for the cp programme. Will be renegotiated during Project financing for shopping centre Elovainio has been refinanced. 14

15 Changes in the financial derivatives The change in fair value of interest rate derivatives, which has an effect on Sponda s equity ratio, was EUR million before tax in The change in the fair value of hedging instruments was approx. EUR -2 million in the last quarter. This is shown in the Profit & Loss Statement (interest costs). 15

16 Year 2008 in a nutshell Financial position Property market Operational review Year 2009 Appendix 16

17 Transactions volume in the Finnish Commercial Property Market (preliminary) 7,0 6,0 5,0 1000MEUR 4,0 3,0 2,0 1,0 0, preliminary Source: KTI 17

18 Finnish property market During the first half of 2008 both the occupancy rates and rents developed positively but the second half of the year has seen slowing down of the market. In 2 H 2008 the transaction market slowed down mainly because no financing was available. The Finnish institutions were active buyers. Year 2009 is expected to be challenging in Finland. Vacancy is expected to increase in In the Helsinki Metropolitan Area market rents are estimated to slightly decrease whereas the CBD and Ruoholahti will outperform other areas. 18

19 Russian market Economic growth slowed down towards the end of Nordea estimates that the GDP growth will slow down to 1 % in Rouble has devalued against euro and dollar approx. 30 %. Property development projects have been put on hold due to lack of financing. Transaction market has slowed down. Rental market is active but the demand is concentrated in smaller but good quality premises. Pressure for rent decreases is expected in Information on property market is scarce. 19

20 Year 2008 in a nutshell Financial position Property market Operational review Year 2009 Appendix 20

21 Property portfolio 31 December 2008 Properties divided by fair value, EUR million Office & retail and logistics properties (EUR million) divided by fair value 9 % 6 % Office & Retail HMA 84 % 16 % Logistics Tampere 5 % Turku 2 % 69 % Property Development Russia & the Baltic Countries Oulu 1 % St Petersburg Moscow 7 % 1 % 21

22 Operating performance Rental income (excl. Funds) Rental NOI Operating Income 10 0 /07 Q1/08 /08 Q3/08 /08 22

23 Cash yield for fair value 31 December ,0 % 8,0 % 6,0 % 4,0 % 2,0 % 0,0 % Office & retail Logistics Russia Total 6.3 % 8.5 % 10.1 % 6.8 % 23

24 Economic vacancy rate Sponda (figures withouth the Kapiteeli portfolio) Office & retail 7.7 % Logistics 22.6 % Russia 13.7 % Total property portfolio / % 24

25 Lease contracts 31 December 2008 Future cash flows EUR million (in 2007 EUR 797 million). Average length of contracts 4.6 years: O&R 5.0 years Log 3.4 years No rent-free periods. No single sector risk: approximately 30 % of total rental income comes from 10 largest tenants and the customer base is diversified. 30,0 % 25,0 % 20,0 % 15,0 % 10,0 % 5,0 % 0,0 % 1 yr 2 yrs 3 yrs 4 yrs 5 yrs 6 yrs over 6 yrs Openended 25

26 Yield requirements in property valuation (last quarter s figures in brackets) 31 Dec 2008, % Sponda CBD Helsinki/Vantaa Espoo Turku Tampere Oulu Russia Office and retail 5,2-7,2 ( ) 5,5-8,5 ( ) 6,85-8,25 ( ) 6,5-10,0 ( ) 9,5-10,25 Logistics 6,5-8,7 ( ) 7,9-8,5 ( ) 8,0-8,8 ( ) Average valuation yield for the property portfolio in Finland: 6.7 ( : 6.6) % Sponda s investment properties were valued by Catella in 2008 (excluding properties in Russia). 26

27 Business Units in brief Office and Retail Unit 10-12/ / / /2007 Total revenue, meur Net operating income, meur Operating profit, meur Economic occupancy rate, % Logistics Unit 10-12/ / /2007 Total revenue, meur Net operating income, meur Operating profit, meur Economic occupancy rate, %

28 Business Units in brief Property Funds 10-12/ / / /2007 Total revenue, meur Net operating income, meur Operating profit, meur Russia and the Baltic Countries 10-12/ / / /2007 Total revenue, meur Net operating income, meur Operating profit, meur Economic occupancy rate, %

29 Property Development At the end of 2008 the value of development portfolio was EUR million consisting land sites for EUR 81,9 million and active development projects for EUR 102,3 million. Investments for active projects were EUR million in total in During Sponda invested EUR 54.2 million. All projects, excluding City-Center, were completed at the end of the year. Profit on development projects were EUR 43.3 million. All apart from Vuosaari harbour were fully let. Vuosaari has an occupancy rate of 40 %. City-Center will continue with the underground service facilities. Sponda and the tenant has agreed to postpone the start of the next phase, construction of the office building, towards the end of 2009 at the earliest. Until 31 Dec 2008, EUR 66 million was invested in the project. Sponda has no committed projects for

30 Vuosaari Harbour 30

31 Sponda s operations in Russia From 1 Jan 2009 the name of the business unit was changed to Russia. Baltic markets will not be a strategic investment area for Sponda. Sponda s property portfolio was EUR million. The portfolio was valued internally at the end of 2008 apart from properties Ancor and Ducat. Net cash yield on 31 Dec 2008 was 10.1 % All investments are financed in euros. In current market Sponda has not immediate plans to make further investments in Russia. Approx. 50 % of the incoming rents are in dollars. Majority of the rest is either dollar or euro nominated but paid in roubles. All maintenance and administrative costs are in roubles. 31

32 Russia Inform Future Office building m² NRC Office building m² OOO Adastra Logistics building m² Land site 46 ha ZAO Ancor Office building m² Ducat II Office building m² Sun Paradise I & II Retail m² Europa Terminal Land site 20 ha 32

33 Major shareholders 31 December 2008 Shareholder No of shares % of shares 1. Solidium Oy Julius Tallberg-Kiinteistöt Oyj Ilmarinen Mutual Pension Insurance Company Kuisla Reima The State Pension Fund Laakkonen Mikko Kalervo Laakkosen Arvopaperi Oy Yleisradio Pension Fund S.r Support Fund for Commercial and Technical Sciences Danske Fund Finnish Small Cap Nominee-registered: pcs, 37.8 % 33

34 Year 2008 in a nutshell Financial position Property market Operational review Year 2009 Appendix 34

35 Prospects in 2009 Sponda forecasts: Even though both rental levels and occupancy rates are expected to fall in the property market in 2009, Sponda forecasts that the company s net operating income will be higher than in The reasons for this are that during 2008 rent levels rose and several fully leased office and retail properties were completed and added to Sponda s investment property portfolio. Because the major uncertainties relating to the financial and property markets in 2009 may have an impact on Sponda s result for the year, Sponda s prospects differ from those for In the past the company has given a forecast for net operating income, economic occupancy rate, cash flow from operations per share and earnings per share. Due to the state of the market, the company has decided that at the present it can give only the prospects for the company s net operating income. 35

36 Dividend Dividend policy is to distribute at least 80% of either earnings per share or cash flow per share, taking into account business development needs 1,4 1,2 1,27 1 0,8 0,6 0,4 0,2 0 0,81 0,61 0,57 0,56 0,53 0,5 0,5 0,5 0,37 0,4 0,04 * 0, ,78 0 * EPS CEPS Dividend * Board proposal 36

37 Dividend The Board of Directors of Sponda Plc proposes that the Annual General Meeting be held on 25 March 2009 and proposes to the AGM that no dividend be paid for the 2008 financial year. The reasons for the proposal are the uncertain state of the financial markets and developments in Sponda s equity ratio. The uncertainty in the financial markets may make it more difficult to arrange new loans and refinancing in the future. The fair values of properties are expected to continue to fall in 2009, which can have a negative impact on Sponda s equity ratio. To enable the company to secure its financial position in an uncertain market, it is proposed that no dividend be paid. 37

38 Organisational changes from 1 Jan 2009 The Logistics Property unit was combined with the Office and Retail Properties unit to form the new unit Investment Properties. Head of the new unit is Senior Vice President Ossi Hynynen, who was head of the Office and Retail Properties unit. The name of the Russia & Baltic Countries unit changed to the Russia unit. The changes were made in order to increase efficiency in operations. The number of company personnel was reduced by 8 persons. This caused a one-time cost of EUR 0.3 million in 2008, but the annual savings are estimated at EUR 0.6 million. 38

39 IR contacts: Kari Inkinen President and CEO Tel: Robert Öhman CFO Tel: Pia Arrhenius Vice President, Corporate Communications and IR Tel:

40 Year 2008 in a nutshell Financial position Property market Operational review Year 2009 Appendix 40

41 41 Prime office yields, /2008 Source: Catella 4,0 4,5 5,0 5,5 6,0 6,5 7,0 7,5 8,0 8, % CBD Leppävaara Ruoholahti Keilaniemi Aviapolis

42 Vacancy rate in the Helsinki Metropolitan Area, /2008 % ,7 % 6 4,6 % 4 2 2,5 % 1,4 % Retail Office Warehouse&industrial All premises together Source: Catella 42

43 Rental levels in office properties / m2/ year 400,0 350,0 300,0 250,0 200,0 150,0 100,0 50,0 0, Helsinki, CBD, Prime Helsinki, CBD Tapiola Tikkurila Keilaniemi, Prime Ruoholahti, Prime Aviapolis, Prime Source: Catella 43