Annual General Meeting Sponda Plc. 18 March 2013 Finlandia Hall

Transcription

1 Annual General Meeting Sponda Plc 18 March 2013 Finlandia Hall

2 Composition of the Board of Directors of Sponda Plc Lauri Ratia (Chairman) Arja Talma Erkki Virtanen Raimo Valo Klaus Cawén Tuula Entelä 2

3 Main events Sponda bought properties for m euros Sponda sold properties for 400 m euros Sponda sold properties for 123 m euros Sponda bought properties for m euros Completion of three property development projects 2009 A rights issue of 200 m euros was carried out Sponda sold properties for 40 m euros Two property development projects were started- TOK retail complex, Metso production plant. 3

4 Main events Properties were sold for 60 m euros. Citycenter-project enters a new phase: office building in the middle is started. Sponda acquired Fennia block for 122 m euros Sponda starts four property development projects. Zeppelin, Kauppa-Häme, Ruoholahti, Unioninkatu 2011 Sponda sold its share in Ovenia Oy Sponda bought properties for 53 m euros Sponda sold properties for 70 m euros New hybrid bond was launched and part of the old hybrid was bought back for 37.2 m euros Sponda s balance sheet grew 2.9 bn euros -> 3.5 bn euros and turnover increased 211 m euros -> 265 m euros. 4

5 The Board s activities in 2012 In 2012 the Board met 13 times and the average attendance of Board members was 96%. The Board assesses its own performance and working procedures regularly once a year. In 2012 the assessment covered, amongst other things, the composition of the Board and the effectiveness and focal points of its work. The Board of Directors has prepared Rules of Procedures 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 committee. The Rules of Procedure are available on the company s internet pages. 5

6 Board committees The permanent Board committees: The Audit Committee, comprises as from 20 March 2012 the chairman Arja Talma, the deputy chairman Raimo Valo and the ordinary member Erkki Virtanen. In 2012 the Audit Committee met five times and the average attendance of committee members was 100%. The Structure and Remuneration Committee, comprises as from 20 March 2012 the chairman Lauri Ratia, the deputy chairman Klaus Cawén and ordinary member Tuula Entelä. In 2012 the Structure and Remuneration Committee met five times and the average attendance of committee members was 100%. The committees report regularly to the Board. 6

7 Fees paid to the Board of Directors in 2012 (compared to fees paid in 2011) 2012 /yr 2011 /yr Chairman of the Board: Deputy Chairman of the Board: 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 of the Board: shares shares Deputy Chairman: shares shares Members, total: shares shares In addition, Member of the Board of Directors are paid a fee of EUR 600 for each meeting, including committee meetings. 7

8 Sponda Plc shares owned by the Board of Directors at 31 December No. of shares Change Klaus Cawén Tuula Entelä Lauri Ratia Arja Talma Raimo Valo Erkki Virtanen

9 Short-term remuneration Sponda s personnel participate in the annual remuneration scheme of the company. The maximum annual remuneration is 40 % of the annual salary of each individual. Scheme covers all employees and is based on both company objectives and personal targets. The performance criteria of the annual remuneration are profitability, success in investments and in selling properties as well as the development of operations. 9

10 Long-term remuneration The share-based incentive scheme currently covers the members of the Executive Board, seven people altogether. The Board of Directors can decide on including new key personnel in the system. The incentive scheme comprises three three-year earning periods, which correspond to the calendar years , , and The earning criteria for the earning period are the Group s average Return on Capital Employed (ROCE, %) and the Group s cumulative Operational Cash Earnings Per Share (CEPS). The earning criteria for the earning period in addition to ROCE and CEPS is Group s Equity Ratio at the end of the period. The possible remuneration shall be paid partially in company s shares and partially money. The shares may not be disposed during the commitment period (three years). 10

11 Annual General Meeting Sponda Plc 18 March 2013 Finlandia Hall

12 Sponda Plc s financial statements and operational review Kari Inkinen, President and CEO 18 March 2013

13 Overview of reporting segments Segment in brief Fair value 1 % of portfolio 2 Yield requirement 3 Office & Retail Office and retail properties in the largest cities of Finland Focus on Helsinki CBD and the Ruoholahti area EUR 1,705.7m 52% 6.5% Shopping Centres Specialises in leasing shopping centres in the largest cities in Finland EUR 736.7m 23% 5.6% Logistics One of the largest owners and lessors of logistics properties in Finland and largest supplier in the Helsinki Metropolitan Area EUR 414.4m 13% 8.1% Property Development Sponda s development projects and land assets Currently active projects are the Citycenter project and office building in Ruoholahti. EUR 135.1m 4% n/m Russia Office and logistics properties, shopping centres and land assets in the Moscow and St Petersburg areas EUR 269.4m 8% 9.7% Real Estate Funds Owns and manages office, retail and logistics properties through real estate funds EUR 670m (assets under management) n/m n/m Notes: 1) Fair value of investment properties as at 30 December ) Share of total fair value of properties as at 30 December ) Average valuation yield requirement as at 30 December

14 Sponda s strategy Sponda's strategic goal is to seek moderate growth and profitability through customer-focused operations and property development by purchasing property, and through operating real estate funds in Finland and Russia. Sponda purchased properties for a total of EUR 53.1 million. Sponda purchased the Bakhrushina House office building in downtown Moscow. In 2012 Sponda sold investment properties for EUR 61.8 million. The most individual purchase was logistics properties sale EUR 31.5 million to Sponda Fund III wihich was established in summer. Investments for Property development and maintenance approximately EUR 75 million. The most significant property development projects were Citycenter, and an office building constructed for Talentum in Ruoholahti, Helsinki. 14

15 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 Veli-Pekka Tanhuanpää Russia Sirpa Sara-aho

16 Market Update 16

17 The Finnish property market At the end of 2012, the transaction level was at EUR 2.1 bn. Office market vacancy has now risen in all sectors of the market. Rental growth under pressure apart from Helsinki CBD. In 2013, approx m² of new office space is under construction in the HMA. 1000MEUR 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 Property transaction volume * Source: KTI and company 17

18 Helsinki Prime Yields Office Retail Indust./warehouse Source: Catella Property 18

19 Vacancy rate in HMA % % % % % 0 Retail Office Industr./warehouse Total Source: Catella Property 19

20 Rental levels of office premises EUR / sq m / year Helsinki CBD prime Helsinki CBD Keilaniemi prime Ruoholahti prime Aviapolis prime Leppävaara prime Source: Catella Property 20

21 The Russian property market GDP growth for 2012 is expected to be around 3.7 %. Outlook for 2013 GDP growth has remained in 3.7 %. Transaction volume in Russia was around USD 7 billion in In Moscow office market prime rents are still around USD 1200/m²/year. In average, rents in class A offices are USD 800/m²/year. Vacancy in offices in Moscow are between 11% and 12%. In 2013, approx m² of new office space will be completed. In St. Petersburg, rents are stable despite the fact that vacancy has declined slightly. Class A office vacancy was approx. 13% and Class B approx. 8%. Source: BoFi, company 21

22 Operational review and financial statements

23 Key issues in 2012 Growth estimate for GDP in Finland turned slightly negative for For 2012, GDP growth estimate is -0.2% For 2013, GDP growth is estimated to be 0.5% Sponda achieved a strong result in Cash flow per share was 0.40, up 8% from Net assets per share increased 5.2% from Occupancy rate was almost same as end of 2011, 88.1% (88.2%). Development for occupancy rate was positive in Helsinki CBD office premises and in Russia. Like-for-like rental growth positive in Finnish offices (5.3%) and in Russia (3.6%). Logistics rents are down due to lack of demand (-3.3 %) and Shopping Centres negative (-10.2 %). Properties were sold for EUR 61.8 million during In 2012 Sponda purchased properties for a total of EUR 53.1 million. 23

24 Key issues in 2012 Sponda purchased the Bakhrushina House office building in downtown Moscow. Purchase price was about 47 million dollars. Net initial yield for the property was over 9.5% and property is fully-rented. New fund, Sponda Fund III, was established in July The fund primarily invests in logistics, warehouse and industrial properties in mediumsized towns in Finland. The target size of the Sponda Fund III real estate fund is approximately EUR 170 million. The fund's initial investment portfolio, EUR 90 million, consists of properties sold to the fund by its shareholders. Sponda's holding in the fund is approximately 36%. Over EUR 200 million of maturing debt was refinanced. New hybrid bond was issued in December and existing hybrid bond, expiring June 2013, was partly repurchased (37.2 million). The coupon rate of the new hybrid bond is 6.75%. Sponda announced tender offer for outstanding hybrid bond that will be called in June

25 Year 2012 in focus Total revenue, M Net operating income, M Operating profit, M Earnings/share, Operating cash flow/share, NAV/share, EPRA NAV / share, Economic occupancy rate, % Dividend/share, 0.17* 0.16 *) Board proposal

26 Our priorities in 2012 We will guard our vacancy Occupancy was stable y-on-y. We will further develop our portfolio More than EUR 60 mn of non-core properties sold during We aim to retain the rental levels L-f-l rents were positive apart from logistics properties. We will guard our balance sheet No re-fi requirements. Equity ratio 40% at year-end. 26

27 Our priorities in 2013 Occupancy rate development Our target is to keep vacancy at the end-of-2012 level despite the challenging market conditions. We will further develop our portfolio In 2013, our aim is to continue to sell non-core properties to cover our investments at the very least. We will strengthen our balance sheet Our dividend policy is to pay out 50% of operational cash earnings per share. Activating property development Our target is to add value by starting new property development projects. 27

28 Profit & loss statement Me 10-12/ / / /2011 Total revenue Expenses (19.0) (17.4) (72.4) (68.8) Net operating income Profit on sale of inv. properties Valuation gain / loss Profit on sale of trading properties Valuation gain/loss from trading properties (1.8) SGA expenses (6.2) (6.7) (22.9) (23.1) Share of result of associated companies (0.1) Other operating income/expenses 0.1 (0.3) Operating profit Financial income and expenses (14.4) (20.4) (58.7) (75.6) Profit before taxes Taxes from previous and current fin. years (1.0) (1.0) (3.7) (3.1) Deferred taxes (12.4) (5.0) (33.0) (25.1) Change of tax base of deferred taxes Profit for the period

29 Valuation gains/losses M 10-12/ / / /2011 Changes in yield requirements (Finland) Changes in yield requirements (Russia) Profit/loss from property development projects (0.9) 0.1 (0.7) 8.2 Modernization investments (11.5) (13.3) (28.5) (50.6) Change in market rents and maintenance costs (Finland) Change in market rents and maintenance costs (Russia) (1.6) 1.7 (0.1) 2.7 Change in exchange rates (1.9) Investment properties, total Real estate funds 0.0 (1.5) 0.6 (4.4) Realised gains/losses in re funds Group, total

30 Balance sheet M ASSETS Non-current assets 3, ,311.1 Current assets Assets, total 3, ,387.3 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity total 1, ,281.1 Non-current liabilities Interest-bearing debt 1, ,380.8 Other liabilities Deferred tax liabilities Non-current liabilities, total 1, ,656.2 Current liabilities, total Liabilities, total 2, ,106.2 Shareholders equity and liabilities 3, ,

31 Financing Q4/2012 Q3/2012 Q2/2012 Q1/2012 Q4/2011 Equity ratio, % Average interest rate, % Hedging, % Average loan maturity, yrs Average fixed interest rate period, yrs Interest cover ratio 2.8x 2.7x 2.6 x 2.6 x 2.7x Loan to Value, % Long-term equity ratio target 40 % Covenants at equity ratio (28 %) and ICR (1.75 x) 31

32 Summary of reporting segments in 2012 Segment Total revenue M Net operating income M Economic occupancy rate % Net initial yield % Office and retail properties Shopping centres Logistics properties Russia Real Estate Funds + Shares of profit from real estate funds 7.5 M N/A N/A Investments in Property development in 2012: 47.5 M 32

33 Sponda s share price development Source: Bloomberg 33

34 Largest Shareholders 28 February 2013 Major shareholders No. of shares Holding % 1. Oy PALSK Ab 42,163, Varma Mutual Pension Insurance Company 29,083, Ilmarinen Mutual Pension Insurance Company 27,052, Suomi Mutual Life Assurance Company 5,500, The State Pension Fund 2,500, Skandinaviska Enskilda Banken AB 2,110, Folketrygdfondet 1,950, Etera Mutual Pension Insurance Company 1,700, Yleisradion Eläkesäätiö S.r. 850, Norvestia Plc 652, Nominee registered: 136,803,149 / 48.3% of shares 34

35 Prospects and financial targets Prospects Sponda expects the vacancy rates of its investment properties at year s end 2013 to be largely unchanged from the end of The estimate is based on the changes in rental agreements and leases already signed. Comparable net operating income in 2013 is expected to increase slightly from Reasons for this expected increase are rising rent levels in Helsinki s central business district and the completion of the company s property development projects. Financial targets Long-term equity ratio target is 40 %. Dividend policy is to pay approx. 50 % of the operational cash earnings per share, taking into account of the economic situation and company s development needs. 35

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