Annual General Meeting Sponda Plc. Finlandia Hall, Helsinki

Transcription

1 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

2 Composition of the Board of Directors of Sponda Plc Lauri Ratia (chairman) Timo Korvenpää (deputy chairman) Klaus Cawén Tuula Entelä Erkki Virtanen Arja Talma 2

3 The Board s activities in 2010 In 2010 the Board met 20 times and the average attendance of Board members was 95 %. The Board assesses its own performance and working procedures regularly once a year. The Board of Directors has prepared Rules of Procedure to guide the way it works and for its committees. These rules define the tasks and responsibilities of the Board, its chairman and deputy chairman, and of the committees. The Rules of Procedure are available on the company s Internet pages. 3

4 Board committees The permanent Board committees: The Audit Committee comprises as from 17 March 2010 the chairman Arja Talma and the ordinary members Timo Korvenpää and Erkki Virtanen. In 2010 the Audit Committee met five times and the average attendance of committee members was 100 per cent. The Structure and Remuneration Committee comprises as from 17 March 2010 the chairman Lauri Ratia and the ordinary members Klaus Cawén and Tuula Entelä. In 2010 the Structure and Remuneration Committee met seven times and the average attendance of committee members was 95.2 per cent. The committees report regularly to the Board. 4

5 Main events in 2010 In 2010 Sponda s focus was in reducing vacancy, refinancing and accelerating property development. In total, Sponda refinanced EUR 800 million Properties were sold for EUR 57 million - Capital gains totalled EUR 16,4 million Property development continued according to strategy - City-Center - New production plant for Metso Automation One of Sponda s strategic focus is environmental responsibility Vision is to be the leader of environmental responsibility in the real estate sector. In addition to development projects and daily operations, Sponda has also put emphasis on communications of environmental issues. 5

6 Sponda s share-based incentive scheme In the incentive scheme there are two one-year earnings periods, the (2010) and 2011 calendar years, and two threeyear earnings periods, and The earnings criteria are tied to cash flow from operations per share and return on capital employed. The Board decides on each earnings period s targets separately. 6

7 Sponda s share-based incentive scheme Possible bonus is paid partly in company shares and partly in cash. The shares may not be disposed during the commitment periods following the earinings periods. At present those in the scheme are the members of the company s Executive Board, in total seven people. In addition, the whole personnel of Sponda are entitled to an incentive bonus scheme. Maximum bonuses in the scheme range from 15 % to 40 % of annual salary according to responsibilities. The members of the Executive Board are covered by a contribution-based group pension insurance scheme. The insurance premium amounts to approximately 7.5 % of each member s fixed annual salary. 7

8 Fees paid to the Board of Directors in 2010 Fees paid to the Board in 2010 /year To the Chairman To the Deputy Chairman To the member Of the fees paid to the Board of Directors, 40 % are paid in the form of Sponda Plc shares purchased on the open market: Chairman shares Deputy Chairman shares Members, in total shares In addition, Member of the Board of Directors are paid a fee of EUR 600 for each meeting, including committee meetings. 8

9 Sponda Plc shares owned by the Board of Directors at 31 December 2010: 31 Dec 2010 No. of shares Change Klaus Cawén Tuula Entelä Timo Korvenpää Lauri Ratia Arja Talma Erkki Virtanen

10 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

11 Sponda Plc s financial statements and operational review President and CEO, Kari Inkinen 16 March 2011

12 Sponda as an investment Property portfolio focused on prime locations in the Helsinki Metropolitan Area Diversified property portfolio with a wide range of space solutions for customers High-quality and diversified tenant base and balanced lease agreement distribution Leading property development operations Experienced and committed management and employees Environmental responsibility is one of Sponda s strategic focus areas 12

13 Sponda s strategy Sponda s strategic goal is to seek growth and profitability through customer-focused operations and active property development, by purchasing property, and through operating real estate funds in Finland and Russia. In 2010 Sponda sold properties outside its strategy for EUR 57 million. With the sales, Sponda aims to focus its investments to office and retail properties and shopping centres and, at the same time, reduce the amount of logistics properties. The target is to optimise the current property portolio s rental yield. 13

14 Sponda Plc s Executive Board Sponda Plc Kari Inkinen President and CEO Communications, IR and Marketing Pia Arrhenius Finance and Treasury Erik Hjelt Investment Properties Ossi Hynynen Real Estate Funds Kari Koivu Property Development Joni Mikkola Russia Sirpa Sara-aho 14

15 Property market

16 The Finnish property market Transaction volume was just under EUR 2.0 bn at the end of Office market vacancy is expected to start declining in Market rents are slowly going up, especially in prime areas. Property transaction volume 7 6 Mrd. euroa % 17% 36% Ulkomainen International Kotimainen Domestic Source: Catella Property Group 16

17 Prime yields in the Helsinki Metropolitan Area Toimisto Retail Office Liike Teoll./Varasto Warehouse Source: Catella Property Oy 17

18 Vacancy in the Helsinki Metropolitan Area Liike Retail Toimisto Office Teoll./Varasto Warehouse Total Yhteensä Source: Catella Property Oy 18

19 Office rental levels, HMA /m 2 /kk Helsinki ydinkeskusta prime Helsinki, ydinkeskusta Keilaniemi prime Ruoholahti prime Aviapolis prime Source: Catella Property Group 19

20 Operational review and financial statements 2010

21 Property portfolio focused on prime locations in the Helsinki Metropolitan Area Approximately 84 per cent of Sponda s total property portfolio by fair value is located in the Helsinki Metropolitan Area. Helsinki Central Business District and Ruoholahti area account for approximately 65 per cent of the total portfolio. 21

22 Operations in 2010 Occupancy rates Sponda s economic occupancy rate increased Same development expected in 2011 due to improving market conditions. Rents Actual rents improving, especially in prime areas Property values Positive development in Finland and Russia Changes mainly due to decreased yields External valuation done at the end of 2010 both in Finland and in Russia Property development In 2010, projects were financed with property sales which totalled EUR 56.8 million (including sales profits, EUR 16.4 million) 22

23 We are ready for 2011 Finnish economy is improving GDP growth is steady and estimated to be 3 % in 2011 Unemployment going down Consumer confidence still strong Finnish transaction market is improving, property prices are going up Sponda had strong balance sheet at the end of 2010 Equity ratio was 39 % LTV was 53 % Unused credit limits totalled EUR 435 million Hedging level was increased to 84 % as we prepare for rising interest rates Focus will be in letting, property development, looking at transaction activities in both Finland and Russia and portfolio management. At least two new property development projects will be started in Finnish economy stats, source: Nordea 23

24 Sponda 2010: Performance highlights 1-12/ /2009 Total revenue, M * Net Operating Income, M * Operating profit, M (13.3) Cash flow from operations/share, Earnings/share, ** 0.40 (0.40) NAV/share, EPRA NAV/share, Economic occupancy rate, % Dividend/share, 0.15*** 0.12 *) The company s share of real estate fund profits in the income statement are presented on the change in fair value line instead of under total revenue which has altered the company s total revenue. The share of the profit in 2010 was EUR 5.6 million and in October-December EUR 1.4 million. The figures for comparison have been adjusted accordingly. **) The figure includes the impact of the interest on the hybrid bond. ***) Board proposal 24

25 Profit & loss statement Me 1-12/ /2009 Total revenue* Expenses (63.3) (61.4) Net operating income* Profit on sale of inv. properties Valuation gain / loss 44.4 (169.3) Profit on sale of trading properties SGA expenses (20.4) (22.0) Share of result of associated companies Other operating income/expenses (1.9) (2.1) Operating profit (13.3) Financial income and expenses (58.5) (65.0) Profit before taxes (78.3) Taxes from previous and current fin. years (3.6) (3.2) Deferred taxes (33.7) (0.1) Profit for the period (81.6) *) The company s share of real estate fund profits in the income statement are presented on the change in fair value line instead of under total revenue which has altered the company s total revenue. The share of the profit in year 2010 was EUR 5.6 million and in October-December EUR 1.4 million. The figures for comparison have been adjusted accordingly. 25

26 Valuation gains/losses M 1-12/ /2009 Changes in yield requirements (Finland) 22.9 (54.7) Changes in yield requirements (Russia) 11.5 (49.4) Profit/loss from property development projects 2.7 (1.2) Modernization investments (29.9) (21.3) Change in market rents and maintenance costs (Finland) 23.1 (8.4) Change in market rents and maintenance costs (Russia) 5.0 (26.9)** Change in exchange rates 5.2 (5.0)* Investment properties, total 40.5 (166.8) Real estate funds (1.7) (8.3) Realised gains/losses in re funds Group, total 44.4 (169.3) * Change in value due to changes in exchange rates 6-12/2009 ** Includes changes in value due to changes in exchange rates 1-6/

27 Balance sheet M ASSETS Non-current assets 3, ,906.6 Current assets Assets, total 3, ,990.2 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity total 1, ,113.6 Non-current liabilities Interest-bearing debt 1, ,287.2 Provisions Other liabilities Deferred tax liabilities Non-current liabilities, total 1, ,511.4 Current liabilities, total Liabilities, total 1, ,876.6 Shareholders equity and liabilities 3, ,

28 Sponda s share Source: Investis Flife 28

29 Largest Shareholders Major shareholders No. of shares Holding % 1. Solidium Oy 42,163,745 15,19 2. Ilmarinen Mutual Pension Insurance Company 27,052,730 9,75 3. Varma Mutual Pension Insurance Company 24,956,617 8,99 4. Skandinaviska Enskilda Banken AB 2,050,000 0,74 5. The State Pension Fund 1,906,111 0,69 6. FIM Funds 1,637,061 0,59 7. Bnp Arbitrage 944, 613 0,34 8. Yleisradion Eläkesäätiö S.r. 850,000 0,31 9. SEB Gyllenberg Funds 636,248 0, Norvestia Plc 597,779 0,22 Nominee registered: ; 50 % of the shares 29

30 Investment Properties Investment Properties business unit specializes in leasing Sponda s office, retail and logistics properties in Finland and in buying and selling properties. Segments Leasable area* Economic occupancy rate* Fair value* Share of total portfolio* Office and retail properties are located in the largest cities in Finland. Property portfolio focused on Helsinki CBD and Ruoholahti area. 737,000 m² 87.7 % EUR 1,495.1 million 51% Sponda s most important shopping centre, City-Center is located in the heart of Helsinki. The other shopping centres are located in Helsinki, Ylöjärvi and Oulu. 141,000 m² 98.1 % EUR million 19% One of the largest owners and lessors of logistics properties in Finland and largest supplier in the Helsinki Metropolitan Area 514,000 m² 75.8 % EUR million 15% * 31 December

31 Property Development Sponda seeks growth and profitability through active property development. The primary projects are Sponda s own land sites and buildings under renovation in the Helsinki Metropolitan Area. The Property Development business unit aims to develop buildings by applying plans that enhance the adaptability and increase the lifecycle of the premises. Balance sheet value of property dev. portfolio* Share of the undeveloped land sites* Ongoing property development projects* Share of total property portfolio* EUR million EUR 81.4 million EUR million 8% * 31 December 2010 Active property development projects: City-Center shopping centre and production property in Hakkila, Vantaa. In 2011 at least three projects will commence: expansion of Zeppelin, refurbishment of office and retail building in Tampere and construction of office building in Ruoholahti. Investment decision will be made once the project is 50 % pre-let and all permits required have been obtained. 31

32 City-Center is a sizeable project City-Center will be the centre of attraction New offie building and retail space is being built. Project will be mainly completed at the end of Total investment is EUR 125 million. By the summer 2011, City-Center will have m² new office space and m² of new retail space. 32

33 Production plant, Hakkila, Vantaa New production plant for m² has been completed for Metso Automation. In addition, Sponda will lease and renovate m² of office and warehouse space in the adjacent office building. The office space will be completed during spring Total investment is EUR 40 million. 33

34 Zeppelin Shopping centre, Oulu Shopping centre Zeppelin will be extended during Total investment is EUR 18 million. Construction will start immediately, new retail space will be in total 8 700m². Approximately 60 % of the extension has been pre-let. 34

35 Office and retail property, Hämeenkatu 16, Tampere Sponda acquired an office and retail building from the city of Tampere for EUR 10 million. The property will be renovated for EUR 6.5 million. Property will have new office space of m² and retail space of m². Renovation will be ready by the end of

36 Ruoholahden Kuntotalo, Helsinki Sponda will build a new environmentally-friendly office building in Ruoholahti. Total investment is EUR 23.5 million. Construction for new building will begin in August Building will be completed in April Total leasable area is m². Talentum is the main tenant. 70% of the premises are pre-let. 36

37 Russia Russia-unit leases, manages and develops business premises in Russia for companies and organisations operating there. Sponda s property portfolio in Russia locates in St Petersburg and Moscow regions Leasable area* Economic occupancy rate* Fair value of properties* Share of total portfolio* Four office properties Two shopping centres Logistics properties Two land sites 46,500 m² 96,4 % EUR million 7% Sponda has attractive business premises offering unique working methods and strong regional know-how. Sponda has two office in Russia, one in St Petersburg and one in Moscow. * 31 December

38 Ducat II office building 38

39 Real Estate Funds Real Estate Funds business unit owns and manages real estate funds and office, retail and logistics properties owned by them. Sponda s real estate funds operate in mid-sized cities in Finland. Sponda is responsible for managing its funds and their properties. Sponda has minority holdings in three funds. Real estate funds Investment Size Sponda s managed by Sponda strategy (asset value) holding First Top LuxCo Office & retail Duration 94.2 Meur 20 % 5 years Sponda Fund I Logistics Meur 46 % 10 years Sponda Fund II Logistics Meur 44 % 7 years Whitehall/Niam ~ 230 Meur - Assets under management, total ~ 635 Meur 39

40 Environmental responsibility targets in 2011 Energy efficiency program will continue The defined action plans will be carried out and results followed up for the first ten properties in the program Action plans will be defined for the other properties included in the program Environmental certificate will be applied for all new development projects Low-energy concept will be taken into use in all new development projects Waste Increased recycling of waste Efficient monitoring for total amount of waste produced by properties Russia Energy consumption monitoring (water and electricity) introduced to properties in Moscow Environmental certificate for one property 40

41 Prospects Sponda expects vacancy rates to continue falling in This assessment is based on the 2011 growth forecasts for the Finnish economy and increased demand for properties in prime locations. The net operating income in 2011 is expected to be higher than in 2010 due to the expected fall in vacancy rate and the completion of property development projects during the year. 41

42 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

43 Resolution on the use of the profit shown on the balance sheet and the payment of dividend The parent company s distributable funds total EUR 550,275,281.29, of which profit for the period is EUR 3,971, The Board of Directors proposes to the AGM that dividend of EUR 0.15 per share be paid. The Board of Directors proposes that dividend will be paid 28 March

44 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

45 Deciding on the remuneration of the members of the Board of Directors Main items of the proposal of the Shareholders Nomination Committee Member of the Board chosen in the AGM will be paid as an annual fee: For the Chairman of the Board EUR 60,000, For the Deputy Chairman of the Board EUR 36,000, and For each member of the Board EUR 31,200. Additional compensation of EUR 600 shall be paid for the meetings attended, including the meetings of the committees of the Board of Directors.. Of the fixed annual remuneration, 40 % will be paid in Sponda Plc s shares. 45

46 Resolution on the number of members of the Board of Directors The Nomination Committee appointed by the Annual General Meeting in 2010 proposes to the Annual General Meeting that the number of the members of the Board of Directors be confirmed as six (6) ordinary members. 46

47 Election of members of the Board of Directors The Nomination Committee appointed by the Annual General Meeting in 2010 proposes to the Annual General Meeting that - Lauri Ratia - Klaus Cawén - Tuula Entelä - Arja Talma - Erkki Virtanen from the current members of the Board of Directors be re-elected and that - Raimo Valo be elected as a new member to the Board of Directors. 47

48 Raimo Valo Experience November 2010 Present Partner Septem Partners Oy August 2008 October 2010 Chairman of The Board and CEO OAO Swedbank, Russia August 2007 July 2008 CEO Glitnir, Russia, Asset Management, Private Banking, Corporate Finance Chairman of the Management Board and CEO Svenska Handelsbanken ZAO, Moscow Chairman of The Management Board and CEO Bank Svenska Handelsbanken (Polska) Sp.A. 48

49 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

50 Resolution on the remuneration of the auditors The remuneration paid to the Auditors from the financial period 1 January 31 December 2010 consists of: Auditing fees: EUR 104,381 Consulting fees: EUR 112,376 In total: EUR 216,757 The Board proposes that, in accordance with the recommendation of the Board s Audit Committee, that the auditors be remunerated pursuant to the auditors invoice. 50

51 Election of the auditors and the deputy auditor The Board of Directors proposes to the Annual General Meeting, in accordance with the recommendation of the Board's Audit Committee, that APA Raija-Leena Hankonen and the firm of authorized public accountants KPMG Oy Ab, which has appointed APA Kai Salli as responsible auditor, be appointed as auditors and APA Ari Eskelinen be appointed as a deputy auditor. 51

52 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

53 Authorizing the Board of Directors to decide on the repurchase of the company's own shares The Board of Directors proposes to the Annual General Meeting that the Annual General Meeting authorize the Board to decide on the repurchase of the company's own shares using the funds in the company's unrestricted equity. A maximum of 13,878,000 shares can be repurchased in one or several tranches. The proposed maximum number of the authorization corresponds to approximately 5 % of all shares of the company. The shares are to be repurchased in public trading and such repurchases will therefore be carried out as directed acquisitions. The consideration paid for the shares acquired must be based on the share s price as it is quoted in public trading. The authorization is proposed to be in force until the next Annual General Meeting. This authorization replaces the Annual General Meeting's authorization for the repurchase of the company's own shares of 17 March

54 Authorizing of the Board of Directors to decide on the issuance of shares and the issuance of special rights entitling to shares The main items of the Board s proposal Based on the authorization, a maximum of 27,757,000 shares can be issued. The proposed maximum amount corresponds to approximately 10 per cent of all the current shares of the company. The Board of Directors is authorized to decide on a directed share issue in deviation from the shareholders pre-emptive rights and on the granting of special rights subject to the conditions mentioned in the Companies Act. The Board can use the authorization to purposes it decides but may not use the authorization for the implementing of incentive schemes for the company s management or key personnel. The authorization is in force until the next Annual General Meeting and it replaces the authorization decided on the Annual General Meeting on 17 March

55 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

56 Proposal on the establishment of a Nomination Board Main items of the proposal of Solidium Oy The Annual General Meeting decides to establish a Nomination Board consisting of shareholders of representatives of shareholders. The duties of the Nomination Board are: The preparation of the proposal on the members of the Board of Directors to be presented to the General Meeting; The preparation of the proposal on matters pertaining to the remuneration of the members of the Board of Directors to be presented to the General Meeting; Looking for prospective successors for the members of the Board of Directors; and The presentation of the proposals on the members of the Board of Directors and matters pertaining to their remuneration to the General Meeting. The three largest shareholders or their representatives shall be appointed to the Nomination Board, and the Nomination Board shall also include the chairman of the Board of Directors as an expert member. The Nomination Board shall give its proposal to the Company's Board of Directors on 1 February before the Annual General Meeting, at the latest. 56

57 Annual General Meeting Sponda Plc 16 March 2011 Finlandia Hall, Helsinki

58 Closing of the meeting The minutes of the Annual General Meeting shall be available for the Shareholders two weeks from the meeting on 30 March 2011 at the latest at the company s Internet pages at The meeting is closed. 58

59 Sponda Plc Korkeavuorenkatu 45 P.O. Box 940, FI Helsinki Tel Customer service centre Tel