Citycon Oyj : Financial Review 2021

FINANCIAL REVIEW 2021

		FINANCIAL REVIEW		FINANCIAL STATEMENTS	contents

CONTENTS

Information to shareholders ...............................................................................	3
Citycon in brief ............................................................................................................	4
CEO's interview...........................................................................................................	5
Key figures .....................................................................................................................	7
How we create value................................................................................................	8
Report by the Board of Directors....................................................................	9
EPRA performance measures.........................................................................	24
Operational key figures......................................................................................	30
(Re)development projects in progress.......................................................	35
Risks and risk management ..............................................................................	37
Shares and shareholders....................................................................................	39
Key figures and financial development for five years........................	41
Formulas for key figures and ratios .............................................................	43
Citycon Oyj's consolidated financial statements.................................	45
Consolidated income statement, IFRS................................................	45
Consolidated statement of
other comprehensive income, IFRS.......................................................	45
Consolidated statement of financial position, IFRS....................	46
Consolidated cash flow statement, IFRS...........................................	47
Consolidated statement of changes
in shareholders' equity, IFRS.....................................................................	48
Notes to the consolidated financial statements ..................................	49
Parent company financial statements, FAS ............................................	89
Notes to the parent company's financial statements, FAS............	92
Signatures to the financial statements .....................................................	96
Auditor's report .......................................................................................................	97

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS .................................................................................	49
1. OPERATING PERFORMANCE .....................................	51
1.1. Segment information................................................................	51
1.2. Gross rental income.................................................................	54
1.3. Revenue from contracts with customers....................	55
1.4. Property operating expenses ...........................................	56
1.5. Administrative expenses......................................................	57
1.6. Employee benefits and personnel expenses ............	57
1.7. Other operating income and expenses..........................	60
1.8. Earnings per share....................................................................	60
2. PROPERTY PORTFOLIO AND ASSETS ............	60
2.1. Investment properties and related liabilities ...........	60
2.2. Investment properties held for sale .............................	64
2.3. Right-of-use assets.................................................................	65
2.4. Investments in joint ventures and associates.........	66
3. FINANCING ...............................................................................	68
3.1. Equity ...............................................................................................	68
3.2. Net financial income and expenses ...............................	70

The accounting

3.3. Classification of financial instruments..........................	71
3.4. Loans.................................................................................................	73
3.5. Financial risk management...................................................	73
3.6. Derivative financial instruments ......................................	77
3.7. Commitments and contingent liabilities .......................	79
3.8. Cash and cash investments..................................................	79
4. OTHER NOTES TO THE ACCOUNTS.......................	79
4.1. Income taxes..................................................................................	79
4.2. Deferred tax assets and liabilities..................................	80
4.3. Intangible assets ........................................................................	81
4.4. Trade and other receivables................................................	81
4.5. Trade and other payables ......................................................	82
5. CONSOLIDATION ....................................................................	83
5.1. Business combinations and goodwill ..............................	84
5.2. Acquisition of non-controlling interests......................	85
5.3. Related party transactions and changes in group
structure ........................................................................................	86
5.4. Changes in IFRS and accounting policies ....................	88
5.5. Events after the reporting date ........................................	88

Information on	CFO Bret D. McLeod

ABOUT THIS REPORT	principles have been
marked with grey
Accounting principles and key estimates and assumptions regarding business activities are presented together
background.
with the relevant note. The aim is to improve the presentation of how operating result was formed, what assets
were used to achieve the business profits and how business and asset transactions were financed.

the key estimates	comments on significant
and assumptions have
items during the reporting
been marked with red
period.
background.

2

	FINANCIAL REVIEW		FINANCIAL STATEMENTS	information to shareholders

INFORMATION TO SHAREHOLDERS

LISTING OF CITYCON'S SHARES Citycon Oyj's shares are listed on the Nasdaq Helsinki Ltd. Large Cap list under the trading code CTY1S. Citycon has one series of shares and each share entitles its holder to one vote at the General Meeting of shareholders and to an equal dividend.

ANNUAL GENERAL MEETING

Citycon Oyj's Annual General Meeting will be held on 22 March, 2022 at 12:00 noon. The notice, topics discussed in the meeting, proposals made for the Annual General Meeting, as well as the instructions on how to register will be found on Citycon's website.

Shareholders wishing to attend the meeting

must be registered in Citycon's shareholder register at Euroclear Finland Ltd. on the record date 10 March, 2022.

CHANGES OF ADDRESS

Shareholders are requested to notify their book-entry account operator or Euroclear Finland Ltd., whichever holds the shareholder's book-entry account, of any changes to their name or address.

PUBLICATION OF FINANCIAL

INFORMATION

Citycon publishes financial information in English and Finnish. All materials can be downloaded from Citycon's website.

SUBSCRIPTION TO PUBLICATIONS Citycon's financial reports, stock exchange releases and press releases can be ordered by

registering an e-mail address on Citycon's website at citycon.com/newsroom.

INVESTOR RELATIONS CONTACTS Citycon's Investor Relations function assists in all investor relations related questions. The primary

contact is the VP, Corporate Finance and Investor Relations Sakari Järvelä ([e-mail]).

PAYMENT OF DIVIDENDS

The Board of Directors proposes to the Annual General Meeting that the Board of Directors will be authorized to decide on the distribution of dividends for the financial year 2021, and assets from the invested unrestricted equity fund.

Based on the proposed authorization, the maximum total amount of equity repayment shall not exceed 0.50 per share. Based on the current total number of issued shares in the company, the authorization would equal a maximum of EUR 84,004,470 in equity repayment. The equity repayment would be paid to shareholders in four installments.

FINANCIAL CALENDAR 2022
Financial Statements Bulletin	17 February
and Financial Statements 2021
Interim Report	6 May
January-March 2022
Half-yearly Report	13 July
January-June 2022
Interim Report	10 November
January-September 2022
AGM record date	10 March
Last day for AGM registration	15 March
AGM	22 March
PRELIMINARY PAYMENT DATE OF
EQUITY REPAYMENT
31 March 2022
30 June 2022
30 September 2022
30 December 2022

More information: Shares and shareholders, pages 39-40

1. Citycon's Board of Directors will make separate resolutions and announce- ments on each distribution of the dividend/equity repayment subject to been authorized for asset distribution by the Annual General Meeting.

3

		FINANCIAL REVIEW		FINANCIAL STATEMENTS	This is Citycon

OPERATING LOCATIONS

IN THE NORDICS

Citycon operates in the largest and fastest growing cities in the Nordics. The region is home to over 25 million consumers with high purchasing power, and the population growth in the area is among the strongest in Europe.

NORWAY

18

BALANCED NORDIC PORTFOLIO

%

23

Bergen

shopping centres			FINLAND &	5 Helsinki
			ESTONIA
Oslo	7	Stockholm 4	11	2 Tallinn
2
4

43

TOTAL

4.6

Billion

34

Finland & Estonia

Norway

Sweden & Denmark 1)

1) Including Kista Galleria 50%

Shopping centre

shopping centres

SWEDEN & DENMARK

8 2 Gothenburg

shopping centres

Copenhagen 2

4

		FINANCIAL REVIEW		FINANCIAL STATEMENTS	CEO's Review

CEO'S INTERVIEW

What were the highlights of the year for you?

I am extremely proud of what our team achieved this past year, particularly amidst the continued challenges of the ongoing COVID-19 pandemic and despite the recent surge of the Omicron in the fourth quarter.

Citycon delivered on our near and long- term goals based upon the strength and resilience of our strategic positioning. Our necessity-based urban hubs have produced solid results due to the high concentration of grocery, pharmacy, municipal, and other daily needs services, which now represent over 35% of the tenants in our portfolio. These hubs effectively act as the last mile logistics delivery location for our tenants and customers. Combine that with our presence in dense and growing population centers, direct connection to public transportation and the overall macroeconomic stability of the Nordic market and you have a recipe for the relative operational outperformance that we demonstrated in 2021.

In addition to maximizing operations at our core, necessity-based centers, we continued to lay the foundation for the portfolio's organic growth potential by taking concrete steps to further our tremendous development platform. Most importantly, 2021 was the year we brought our game-changing,mixed-use hub at Lip- pulaiva to the cusp of completion. Opening in April 2022, Lippulaiva is the perfect representation of our strategy in action: an

efficient, sustainable (net-zero emissions),	These sales not only demonstrated strong
necessity-based retail outlet with less than	execution but also reflect the underlying
6% fashion, direct connection to a new	quality of our portfolio and its attractive-
metro, and surrounded by eight residential	ness to institutional investors. We were also
buildings (six of which Citycon will own) in a	pleased to utilize a portion of the Columbus
high-growth area filled with customers and	asset sale proceeds to repurchase EUR 69
new demand to compliment the underlying	million shares at nearly a 40% discount to
retail. By creating and owning a mixed-use	NRV in a disciplined allocation of capital and
urban hub, such as Lippulaiva, we are	investment that benefits all shareholders.
utilizing the development rights we already	Many of these activities can only be un-
control to produce incremental cash flow	dertaken with a strong and flexible balance
that not only adds to but also diversifies our	sheet and 2021 was another year where we
overall portfolio. Further, 2021 saw us reach	worked diligently to solidify the balance
major zoning and planning milestones for	sheet in an uncertain environment. We were
the remainder of our development pipeline,	active in the capital markets with a EUR 350
including major projects at Liljeholmen, Her-	million senior bond offering and EUR 350
kules, Oasen, and Trekanten. Like Lippulaiva,	million hybrid in the first half of the year.
these organic developments that utilize our	These actions solidified our credit rating and
existing building rights will be significant	confirmed stable outlooks from the rating
opportunities for growth going forward.	agencies. During the year, we repaid EUR	in an improvement in our IFRS loan-to-value
While actively transforming the portfolio	230 million of senior notes and commercial	of 46.9% to 40.7% at year-end.
through development, we continued to	papers and currently have no material debt	Lastly, I was pleased to present our vision
opportunistically improve the portfolio	maturities until 2024 to go alongside a well	for the future and the leadership team at
through efficient capital recycling and	laddered maturity schedule 4.2 years and	our Capital Markets Day in November. After
executed on a number of non-core dispo-	low weighted average cost of debt of 2.47%.	a comprehensive search, we welcomed
sitions above book value for over EUR 250	In addition, we saw consecutive quarters	our new CFO, Bret McLeod, to the team to
million and a combined cap rate of 5%.	of sustained improvement with EUR 48.6	replace Eero Sihvonen, who retired as CFO
These included the sale of three assets in	million in net valuation gains, reflecting the	at year-end. Eero has been a terrific partner
suburban Stockholm in March and the recent	impact of our 2021 asset sales, improving	and I am grateful for his contributions and
sale of our Columbus center in Helsinki in	operating environment, and increased	ensuring that Bret's transition into the role
November. Combined with our recently	investor appetite for prime, necessity	has been a smooth one. I am happy to have
announced Norwegian dispositions, we will	based-retail real estate in the Nordics. The	such a strong leadership team in place to
have sold over EUR 400 million in the past	combination of increased asset value,debt	execute on our strategy as we enter 2022.
twelve months at pricing above book value.	paydowns and the hybris issuance resulted
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