FINANCIAL REVIEW
CONTENTS
ABOUT THIS REPORT
Accounting principles and key estimates and assumptions regarding business activities are presented together
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.
CFO Bret D. McLeod
comments on significant
items during the reporting
period.
The accounting
principles have been
marked with grey
background.
Information on
the key estimates
and assumptions have
been marked with red
background.
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
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 aer the reporting date ........................................ 88
FINANCIAL REVIEW
FINANCIAL STATEMENTS CONTENTS
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 instruc-
tions on how to register will be found on Citycon’s
website.
Shareholders wishing to aend the meeting
must be registered in Citycon’s shareholder regis-
ter 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 (ir@citycon.com).
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
and Financial Statements 2021 17 February
Interim Report
January–March 2022 6 May
Half-yearly Report
January–June 2022 13 July
Interim Report
January–September 2022 10 November
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.
FINANCIAL REVIEW
FINANCIAL STATEMENTS INFORMATION TO SHAREHOLDERS
2
2
7
2
4
2
5
4
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
shopping centres
FINLAND
ESTONIA
11
shopping centres
SWEDEN DENMARK
8
shopping centres
Shopping centre
43
34
23
Finland & Estonia
Norway
Sweden & Denmark
1)
BALANCED NORDIC PORTFOLIO
%
1)
Including Kista Galleria 50%
4.6
Billion
TOTAL
Helsinki
Gothenburg
Copenhagen
Tallinn
Stockholm
Bergen
Oslo
FINANCIAL REVIEW
FINANCIAL STATEMENTS THIS IS CITYCON
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),
necessity-based retail outlet with less than
6% fashion, direct connection to a new
metro, and surrounded by eight residential
buildings (six of which Citycon will own) in a
high-growth area filled with customers and
new demand to compliment the underlying
retail. By creating and owning a mixed-use
urban hub, such as Lippulaiva, we are
utilizing the development rights we already
control to produce incremental cash flow
that not only adds to but also diversifies our
overall portfolio. Further, 2021 saw us reach
major zoning and planning milestones for
the remainder of our development pipeline,
including major projects at Liljeholmen, Her-
kules, Oasen, and Trekanten. Like Lippulaiva,
these organic developments that utilize our
existing building rights will be significant
opportunities for growth going forward.
While actively transforming the portfolio
through development, we continued to
opportunistically improve the portfolio
through efficient capital recycling and
executed on a number of non-core dispo-
sitions above book value for over EUR 250
million and a combined cap rate of 5%.
These included the sale of three assets in
suburban Stockholm in March and the recent
sale of our Columbus center in Helsinki in
November. Combined with our recently
announced Norwegian dispositions, we will
have sold over EUR 400 million in the past
twelve months at pricing above book value.
These sales not only demonstrated strong
execution but also reflect the underlying
quality of our portfolio and its aractive-
ness to institutional investors. We were also
pleased to utilize a portion of the Columbus
asset sale proceeds to repurchase EUR 69
million shares at nearly a 40% discount to
NRV in a disciplined allocation of capital and
investment that benefits all shareholders.
Many of these activities can only be un-
dertaken with a strong and flexible balance
sheet and 2021 was another year where we
worked diligently to solidify the balance
sheet in an uncertain environment. We were
active in the capital markets with a EUR 350
million senior bond offering and EUR 350
million hybrid in the first half of the year.
These actions solidified our credit rating and
confirmed stable outlooks from the rating
agencies. During the year, we repaid EUR
230 million of senior notes and commercial
papers and currently have no material debt
maturities until 2024 to go alongside a well
laddered maturity schedule 4.2 years and
low weighted average cost of debt of 2.47%.
In addition, we saw consecutive quarters
of sustained improvement with EUR 48.6
million in net valuation gains, reflecting the
impact of our 2021 asset sales, improving
operating environment, and increased
investor appetite for prime, necessity
based-retail real estate in the Nordics. The
combination of increased asset value,debt
paydowns and the hybris issuance resulted
in an improvement in our IFRS loan-to-value
of 46.9% to 40.7% at year-end.
Lastly, I was pleased to present our vision
for the future and the leadership team at
our Capital Markets Day in November. Aer
a comprehensive search, we welcomed
our new CFO, Bret McLeod, to the team to
replace Eero Sihvonen, who retired as CFO
at year-end. Eero has been a terrific partner
and I am grateful for his contributions and
ensuring that Bret’s transition into the role
has been a smooth one. I am happy to have
such a strong leadership team in place to
execute on our strategy as we enter 2022.
FINANCIAL REVIEW
FINANCIAL STATEMENTS CEOS REVIEW
How would you describe Citycon’s operational
performance in 2021?
Citycon continued to be best in class and
outperform its European peers when
compared to pre-pandemic levels. Most
importantly, I am pleased to say we met our
third quarter guidance on Direct Operating
Profit and EPRA EPS even though we had to
contend with the rise of the Omicron variant
in November and December, which resulted
in varying governmental restrictions in our
markets.
Rent collection for the year, which is our
the most important cash generation metric,
was strong at 96%. A record amount of over
245,000 sq.m of new leases started during
2021 with tenant sales ahead of last year
by 3.8% on a like-for-like basis. Notably, we
witnessed outstanding pre-leasing activity
at Lippulaiva, which stands approximately at
90%, underlining our high expectations for
this flagship asset.
Increased tenant sales offset footfall
declines throughout the year, as compared
to 2020. However, footfall improved sequen-
tially throughout the year with the overall
decline lessening and December footfall up
more than +11% versus 2020 on a like-for-like
basis. During the fourth quarter like-for-like
sales were +4.9% compared to 2019 (pre-
pandemic)
Strong operational performance trans-
lated into solid financial results, despite the
continued presence of the COVID-19 pandem-
ic throughout the year and. 2021 Net Rental
Income (NRI) was EUR 202.3 million and
declined by 1.5% on a like-for-like basis. The
decline was relatively modest, when taking
into account the fact that the first quarter of
2020 was, effectively, a pre-COVID operating
environment. Notably, like-for-like NRI is
clearly approaching 2019 levels, which speaks
to the strength of our necessity-based
strategy and locations in prominent and
stable Nordic markets with governments that
offered significant support for tenants and
businesses throughout the pandemic.
As I noted, we also generated consecutive
quarters of net valuation gains in 2021,
equating to EUR 48.6 million, which is unique
amongst our peer set.
How is the increasing focus on sustainability
impacting Citycon?
Citycon has been an early real estate leader
when it comes to sustainability, and we
are fully commied to our ambitious goal
carbon neutrality by 2030. Sustainability is
embedded in our operations at every step
of the process and in 2021, Citycon became
the first real estate company in Finland to
join the Science Based Targets initiative
while commiing to reduce greenhouse gas
emissions in line with the 1.5°C Paris goal. We
also continue to be on the forefront of green
in the capital markets as both our senior
bond and hybrid offerings last year were
green financings.
As mentioned, Lippulaiva will be carbon
neutral from day one, showcasing a modern,
sustainable, necessity-based retail center.
While sustainability is a core value itself,
we have obviously noticed its increasing
importance to all our stakeholders from
investors to tenants and to consumers. I
am proud that our timely efforts have been
recognized and viewed as on the leading
edge of this critical front, including being
named one of Europe’s Top Climate Leaders
in a comprehensive study by Financial Times
last year. We will continue to seek to invest in
sustainability through a variety of measures
to improve our centers, our urban hubs and
the communities in which we operate.
What are Citycon’s focus areas for 2022?
We are focusing on the successful opening of
the necessity-based center at Lippulaiva in
April and subsequent opening of the brand-
new metro. In addition, we will continue
with the first phase of the eight residential
buildings around the center, the first four of
which will come online at the end of 2022. In
addition, our team will continue its work to
unlock the value of our 600,000 sqm devel-
opment pipeline, of which just the building
rights alone are worth approximately EUR
275 million.
We will continue our capital recycling
efforts and have already goen off to a
great start with the announcement of two
non-core Norwegian asset sales for ap-
proximately EUR 145 million and a combined
cap rate of 5.2% at a price above book
value, when considering near-term capital
requirements.
In addition, we announced the forward
funding purchase of a brand new, 200-
unit residential complex for EUR 69.5
million in the fast-growing neighborhood
of Barkarbystaden, close to our existing
necessity-based assets in Kista and
Jakobsberg in Stockholm. Once construction
is complete in 2024, we will acquire the
asset and continue the diversification of our
portfolio with additional residential product.
The transaction has been structured as a
forward commitment, whereby Citycon will
make a deposit of EUR 6.6 million once con-
struction begins in February 2022 and fund
the remaining purchase price, pro-rata, at
the completion of two construction phases
in Q1/2024 and Q2/2024. The closing of the
transaction will be aer the completion of
each phase with no additional obligations
from Citycon before construction of each
phase is complete.
We have a demonstrated track record
as disciplined allocators of capital and will
continue to seek to invest at an appropriate
risk-adjusted spread to our cost of capital
to enhance shareholder value, be it through
acquisitions, new development, investing in
our core assets, equity and debt repurchases
or dividends.
Operationally, our focus is to carry
forward the momentum of 2021 into what we
believe will be an improving economic envi-
ronment in 2022 as the impact of COVID-19
subsides. We will continue the transition
of our centers away from fashion with our
leasing efforts targeting grocery, municipal
and other service providers, in addition to
continuing our efforts to increase specialty
leasing as an overall share of our business.
Our skilled asset management teams will
continue to maximize the space and tenant
mix at our core centers, while maintaining a
keen eye on cost control and profitability.
Most importantly, we are commied to
taking care of our valued associates, cus-
tomers, and stakeholders to ensure a safe
and successful year in 2022 and beyond.
F. Sco Ball
CEO
FINANCIAL REVIEW
FINANCIAL STATEMENTS CEOS REVIEW
KEY FIGURES
Finland & Estonia
Norway
Sweden & Denmark
Other
NET RENTAL INCOME BY SEGMENTS
MEUR
MEUR
TOTAL
202.3
85.2
77.8
39.2
0.0
Q1
2021
Q2
2021
Q3
2021
Q4
2021
RENT COLLECTION RATE
%
96%
97%
96%
96%
2020 Q3 2021 Q4 2021
RETAIL OCCUPANCY RATE
1)
%
1)
Kista Galleria 50% not included.
94.5
93.7
94.2
2019 20212020
%
TENANT SALES DEVELOPMENT
1)
1)
Sales figures include estimates. Sales figures exclude VAT and the change has been
calculated using comparable exchange rates. Kista Galleria 50% not included.
Like-for-like
Total
0.9
2.6
–3.8
3.8
2.9
–1.5
%
2019 20212020
Like-for-like
Total
FOOTFALL DEVELOPMENT
1)
1)
Footfall figures include estimates. Kista Galleria 50% not included.
1.7
3.8
–1.6
–15.6
–4.0
–11.3
Key figures 2021 2020
Net rental income, MEUR 202.3 205.4
Net rental income growth -1.5% -5.5%
EPRA Earnings per share (basic) 0.703 0.767
EPRA NRV per share 11.54 11.48
Average interest rate 2.47% 2.37%
FINANCIAL REVIEW
FINANCIAL STATEMENTS KEY FIGURES
…OWN,
• Strong portfolio of 37
convenience based centres
• Located in growing urban areas
in Nordic and Baltic cities
• Long-term investor
…MANAGE,
• In-house real estate expertise
throughout the shopping centre
value chain
• Retail experts in 5 countries
• Pan-Nordic approach with synergies
and a cross-border leasing team
…DEVELOP.
• Area development – creating
aractive places for living, working
and socializing
• Improved commercial aractive-
ness and competitiveness and
beer places for our tenants for
our tenants to operate
CITYCON URBAN CONVENIENCE IN THE HEART OF COMMUNITIES
ASSETS
IN PRIME
LOCATIONS
– Top 2 cities in each
country with strong
urbanisation
– Connection to public
transportation
NECESSITYBASED
TENANT MIX
– Grocery anchored
centres with large share
of necessity tenants
– Mixed-use hubs with
growing share of
municipalities
DENSIFICATION
POTENTIAL
– Identified residential
potential in connec-
tion existing assets
– Developing new
residential and office,
municipality services
space
STRONG SOCIAL
AND COMMUNITY
RELATIONSHIPS
– Long lasting relationship
with municipalities
– Continued dialogue with
surrounding communities
– Sustainability embedded
in operating model
STABLE CORE
BUSINESS WITH
ATTRACTIVE
GROWTH
OPPORTUNITIES
WITH CLEAR
SYNERGIES
HOW WE CREATE VALUE?
FOCUSING ON PRIME ASSETS THAT WE…
FINANCIAL REVIEW
FINANCIAL STATEMENTS KEY FIGURES
REPORT BY THE BOARD OF DIRECTORS
Citycon continued to demonstrate the
strength and stability of its portfolio
in the COVID-19 environment in 2021 as
operations in Citycon´s centres are nearly
back to pre-covid levels. Rent collection rate
remained at a high level throughout the year,
being 96% for 2021. Furthermore, like-for-
like tenant sales increased and were 3.8%
above 2020.
The positive development reflects the
quality of our grocery-anchored urban hubs,
which have a high proportion of necessity
tenants, connected to transportation and in
convenient locations in the largest Nordic
cities. As a result, the stable operational
cash flow, combined with the significant
value creation associated with Citycon´s
development pipeline, provides an aractive
value proposition for all stakeholders.
Citycon’s operational performance
showed continued improvement throughout
the year. Citycon´s net rental income in 2021
excluding Kista Galleria, was EUR 202.3
million. The decrease in the like-for-like net
rental income remained relatively modest
at -1.5% compared to the previous year that
was partially pre-pandemic. The overall
financial performance remained solid in 2021
and reported EPRA Earnings per share was
EUR 0.703. Portfolio valuations increased
during 2021 as the operating properties re-
corded a fourth consecutive quarter of upli
in valuations resulting in EUR 48.6 million
total valuation gain in investment properties
in 2021.
On the divestment front, Citycon sold four
non-core assets for approx. EUR 250 million
(three in Sweden and Columbus in Finland) at
pricing that was at a premium to book values,
demonstrating Citycon´s comprehensive
ability to create value at every stage of an
asset’s life cycle. At the same time, Citycon
demonstrated efficient capital allocation
by using a proportion of the Columbus sale
proceeds to repurchase its own shares at a
significant discount to NRV.
Continuing with the balance sheet,
Citycon continued its active capital recycling
and further improved its financial position
by issuing a EUR 350 million senior bond in
March and a EUR 350 million hybrid bond in
June. In October, Citycon redeemed the EUR
161.7 million remaining on its bond maturing
in 2022, resulting in Citycon eliminating all
significant near-term maturities until 2024.
This additional balance sheet strength pro-
vides Citycon with the flexibility to pursue
its long-term strategic goals.
In addition to focusing on portfolio recy-
cling and financing activities, Citycon contin-
ued to make progress with organic growth
projects on several fronts. For example,
the mixed-use, urban development project
in Lippulaiva is progressing as planned
with the expected opening in April 2022.
Lippulaiva will have a total of 30,000 square
metres of residential space in addition to
44,000 square metres of commercial space
housing approximately 100 different units
including grocery stores, cafés, restaurants,
services and office spaces. Additionally,
area planning and zoning at Liljehomen
progressed, resulting in the launch of the
area development project in co-operation
with the City of Stockholm in January 2021.
Going forward, Citycon will continue to
focus on developing mixed-use projects and
densifying the urban environment around
Citycon´s existing centres.
MAIN EVENTS IN
General
– In 2021, Citycon continued to execute its
strategic transformation to develop and
transform its existing necessity-based
centres into mixed-use urban hubs with
a clear focus on increasing the share of
residentials in its portfolio and around its
centres while correspondingly decreasing
the proportion of non-essential retail, such
as fashion.
– Citycon was selected as one of Europe’s
Climate Leaders according to the list
draed by the Financial Times and Ger-
man research company Statista. Citycon
is the only Finnish real estate company
included in the list and was in the top quar-
ter of all European companies, regardless
of sector.
– Bret D. McLeod was appointed Citycon
Oyj’s Chief Financial Officer and member
of the Corporate Management Commiee
following the planned retirement of the
previous CFO, Mr. Eero Sihvonen. Mr.
McLeod joined Citycon´s Corporate
Management Commiee on August 1, 2021
and assumed the full responsibility of CFO
on January 1, 2022.
– In August, it was announced that F. Sco
Ball will continue as the CEO of Citycon
until 14 January, 2025
– In November, Citycon hosted a Capital
Markets Day to provide information and
additional insight on Citycon’s strategy
with a main message that Citycon offers a
stable core business with organic growth
potential focused in the largest and grow-
ing cities in the Nordics.
Development projects
– On the development front, Citycon
continued to execute on the 300,000 sqm
residential potential across the Nordics
and 600,000 sqm in total development.
The residential projects are distributed
across the operating countries with mul-
tiple locations spread out across Norway,
Sweden, Finland and Estonia.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
– Citycon’s development project in Lippulai-
va is a prototype and great example of the
company’s mixed-use development strat-
egy in action, combining retail, residentials
and office spaces. Lippulaiva’s retail centre,
which will be directly connected to the met-
ro, opens in spring 2022, to be followed by 8
residential buildings with apartments and
condominiums included to be completed
between 2022–2024.
Capital recycling
– In 2021, Citycon sold 4 non-core assets for
approx. EUR 250 million (3 in Sweden and
Columbus in Finland) at pricing that was at
a premium to book values demonstrating
Citycon´s comprehensive ability to create
value at every stage of an asset’s life cycle.
– Citycon demonstrated its efficient capital
allocation by using a proportion of the
Columbus sale proceeds to repurchase
its own shares at a significant discount
toNRV.
Financing
– In March, Citycon successfully issued a
EUR 350 million green bond with an arac-
tive coupon of 1.625%, which is the second
lowest in the company’s history. The net
proceeds were used to partially pay back
the bond maturing 2022 and pay down
other short-term debt resulting a positive
impact to the company´s maturity profile,
net liquidity and refinancing risk.
– In June, Citycon successfully issued EUR
350 million green hybrid bonds. In addition
to strengthening Citycon´s balance sheet,
the issuance solidified its stable ratings.
– As noted, Moody’s and Standard & Poor´s
affirmed Citycon’s investment grade credit
rating with an upgraded outlook to stable.
Consequently, Citycon has an investment
grade credit rating with stable outlook
from all three major credit rating agencies.
– In October Citycon redeemed the 161.7
MEUR remaining on its bond maturing in
2022 and EUR 70 million in short-term com-
mercial paper resulting in no significant
near-term maturities until 2024.
BUSINESS ENVIRONMENT
The world economy has been in a state
of great uncertainty due to the COVID-19
outbreak that the World Health Organisation
(WHO) classified as a pandemic on March
11th, 2020. The measures taken to prevent
the spread of the disease caused the
global economy to slow down and, therefore,
BUSINESS ENVIRONMENT KEY FIGURES
% Finland Norway Sweden Denmark Estonia Euro area
GDP growth forecast, 2021 3.4% 3.1% 3.9% 4.3% 9.0% 5.0%
Unemployment, 2021 6.8% 3.6% 8.3% 5.0% 5.0% 7.2%
Inflation, 2021 1.8% 3.4% 2.4% 1.7% 4.0% 2.4%
Retail sales growth, 2021 3.1% 5.5% 3.7% 3.4% 6.6% 3.2%
Sources: SEB Nordic Outlook, European Commission, Eurostat, Statistics Finland/Norway/Sweden/Estonia/
Denmark
COVID-19 has substantially affected our
business environment from March 2020
onwards. Although the virus continues
to impact the world and our markets
vaccinations and booster shots have helped
the world closer to pre-pandemic times.
During September, 2021 all Nordic countries
removed most of the remaining restrictions
and opened the society as businesses and
households have shown a strong desire to
normalise production and consumption
paerns. However, at the end of 2021 and
into early 2022, the spread of the Omicron
variant has caused some restrictions to be
reinstated in our markets. Most countries
are trying to design restrictions that limit
economic impact and as of early February
2022, countries are once again beginning to
loosen restrictions..
Finland has at least in relative terms,
been spared from the crisis both in economic
terms and from a public health perspective.
The number of COVID-19 deaths per million
inhabitants has been among the lowest in
Europe. Relatively low COVID-19 rates have
helped Finland to avoid full-scale lockdowns.
During 2021 Finnish government decided on
national and regional recommendations to
prevent the spread of COVID-19. In the laer
part of the third quarter the Finnish govern-
ment removed many restrictions while the
number of COVID cases decreased, and the
vaccination coverage increased. However,
due to the rapid increase of Omicron cases
on late 2021 Finnish government placed
some new restriction on restaurants and
high-risk free time activities.
In Sweden, the COVID-19 outbreak has
affected the retail and restaurant business
through declining turnover and footfall.
The government announced a package
where property owners could share the
cost of rental rebates with the govern-
ment and Citycon applied for this subsidy
under the government program. With most
adults vaccinated, Sweden gradually eased
some restrictions during the summer and
the autumn. However, due to the new Omi-
cron variant, some new restrictions were put
in place for restaurant and private and public
gatherings, although those are being lied
as of early February 2022.
In Norway, the acceleration of vaccina-
tions, lower infection rates and the gradual
easing of COVID-19-related restrictions
prompted a sharp rise in economic activ-
ity in 2021. The various COVID-19 control
measures and travel restrictions have led to
changed consumption paern; households
are spending less on services in favour of
necessity retail goods. Generally, this have
benefited more local, convenience-type
shopping centres, similar to the types
of assets Citycon owns. As in all Nordic
countries, the spread of the Omicron variant
in late 2021 was extremely rapid resulting in
new society, including an obligation to work
remotely. Like in other markets, restrictions
are being lied as of February 2022.
In Estonia, the vast majority of the re-
strictions were removed in late September.
However, at the end of the 2021 Estonian
government was forced to implement new
restrictions due to the increased COVID-19
cases, although those are starting to loosen
as cases come down.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
KEY FIGURES
2021 2020
%
FX Adjusted
%
1)
Net rental income MEUR 202.3 205.4 -1.5% -4.0%
Direct Operating profit
2)
MEUR 176.1 180.4 -2.4% -5.0%
IFRS Earnings per share (basic)
3)
EUR 0.55 -0.25 - -
Fair value of investment properties MEUR 4,189.2 4,152.2 0.9% -
Loan to Value (LTV)
2) 4)
% 40.7 46.9 -13.2% -
EPRA based key figures
2)
EPRA Earnings MEUR 124.4 136.6 -8.9% -11.7%
Adjusted EPRA Earnings
3)
MEUR 100.0 120.3 -16.9% -19.7%
EPRA Earnings per share (basic) EUR 0.703 0.767 -8.4% -11.2%
Adjusted EPRA Earnings per share (basic)
3)
EUR 0.565 0.676 -16.4% -19.3%
EPRA NRV per share EUR 11.54 11.48 0.5% -
1)
Change from previous year (comparable exchange rates). Change-% is calculated from exact figures.
2)
Citycon presents alternative performance measures according to the European Securities and Markets
Authority (ESMA) guidelines. More information is presented in Basis of Preparation and Accounting
Policies in the notes to the accounts.
3)
The adjusted key figure includes hybrid bond coupons and amortized fees.
4)
Highly liquid cash investments has been taken into account in net debt.
OUTLOOK
Citycon forecasts the 2022 direct operating profit to be in range EUR 164–180 million,
EPRA EPS EUR 0.62–0.72 and adjusted EPRA EPS EUR 0.48–0.58.
Direct operating profit MEUR 164–180
EPRA Earnings per share (basic) EUR 0.62–0.72
Adjusted EPRA Earnings per share (basic) EUR 0.48–0.58
The outlook assumes that there are no major changes in macroeconomic factors and that
there will not be another wave of COVID-19 with restrictions resulting in significant store
closures. These estimates are based on the existing property portfolio and recently
announced disposals as well as on the prevailing level of inflation, the EUR–SEK and
EUR–NOK exchange rates, and current interest rates.
In Denmark the government was the in
Nordics region to li COVID-19 restrictions
in September 2021. Following the outbreak
of Omicron in late 2021, some new restriction
took place, including capacity restrictions in
shopping centres, stores and restaurants.
However, in January 2022 Denmark was one
of the first countries in the European Union
to ease all domestic restrictions that were
put in place to control the spread of Covid-19.
(Sources: SEB Nordic Outlook, European
Commission, CBRE, JLL, Statistics Finland/
Norway/Sweden/Estonia/Denmark,
Eurostat)
FINANCIAL PERFORMANCE
Note: Year-over-year comparisons to 2020
are adversely impacted due to the fact that
2020 was partially pre-pandemic.
– Full year results for Direct Operating
Profit and EPRA EPS in-line with company
guidance.
– Net rental income was EUR 202.3 million
(Q1-Q4/2020: 205.4). Net rental income
continued to be affected negatively by
COVID-19 pandemic and its impact on
straight-lined discounts from 2020. In addi-
tion, the divestments made in Q1/2021 and
Q4/2021 decreased the net rental income.
On a like-for-like basis, net rental income
declined slightly (-1.5%).
– EPRA Earnings were EUR 124.4 million
(136.6) as a result of divestments’ impact
on net rental income, lower direct share
of profit of joint ventures and associated
companies and higher tax expenses. EPRA
Earnings per share (basic) was EUR 0.703
(0.767) with a positive impact from strong-
er currencies being EUR 0.024 per share.
– Adjusted EPRA earnings were EUR 100.0
million (120.3) due to the addition of newly
issued hybrid bond coupons.
– IFRS earnings per share improved to EUR
0.55 (-0.25) mainly due to stronger result
in property valuations which were up 1.2%
over 2020, and share repurchase. Net
cash from operations per share increased
to EUR 0.72 (0.71) resulting from higher
earnings.
– Citycon disposed of four non-core assets
for EUR 253.2 million and repurchased
approximately EUR 69 million shares.
– The Board of Directors proposes to the
Annual General Meeting that the Board be
authorised to decide on the profit sharing
for the financial year 2021. Based on the
proposed authorization the maximum
amount of profit sharing, to be paid as
equity repayment, would be EUR 0.50 per
share.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
NET RENTAL INCOME
The like-for-like net rental income in Q4
increased 2.9% compared to Q4/2020. Total
net rental income decreased to EUR 49.3
million (Q4/2020: 49.9) mainly due to the
divestment of 4 non-core assets.
The net rental income in Q1-Q4/2021
stands at EUR 202.3 million (205.4). 2020 is
not a fully comparable year, as Q1/2020 was
in a pre-pandemic operating environment.
In 2021, COVID-19 impacted results, particu-
larly in Q1, through higher vacancy and lower
turnover-based rents and parking income
resulting from lower footfall. In addition, the
divestments made in Q1/2021 and Q4/2021
decreased net rental income by EUR 5.9 mil-
lion during Q1-Q4. COVID-19 discounts given
in Q1-Q4/2021 were EUR 0.8 million. Under
IFRS, the total amount of rental reliefs is
accrued over the remaining contract period.
Total net rental income at historical ex-
change rates decreased by 1.5%, compared
to Q1-Q4/2020.
Net rental income from the Finnish &
Estonian operations decreased by 1.8%
against a partially pre-covid year due to the
divestment of Columbus shopping centre
in Q4/2021. Like-for-like net rental income
decreased by 0.6% against a partial
pre-covid year.
Net rental income from Swedish & Danish
operations decreased by 11.8% due to the
divestment of three non-core shopping
centres in Q1/2021. Like-for-like net rental
income decreased by 1.1% against a partial
pre-covid year.
Net rental income from the Norwegian
operations increased by 5.1% compared
to Q1-Q4/2020 mainly due to acquisitions
of Stovner and Torvbyen shopping centres
in Q1/2020. Like-for-like net rental income
decreased by 3.1% but compared to partial
pre-covid year.
NET RENTAL INCOME AND GROSS RENTAL INCOME BREAKDOWN
Net rental income
Gross
rental
income
MEUR
Finland &
Estonia Norway
Sweden &
Denmark Other Total Total
2020 86.8 74.1 44.5 0.1 205.4 224.3
Acquisitions - -0.3 - - -0.3 0.2
(Re)development
projects -0.9 1.6 -0.5 - 0.1 0.8
Divestments -0.1 -0.1 -5.7 - -5.9 -8.1
Like-for-like properties
1)
-0.4 -1.5 -0.4 - -2.3 -1.4
Other (incl. exchange
rate dierences) 0.0 4.0 1.3 -0.1 5.2 6.4
2021 85.2 77.8 39.2 0.0 202.3 222.2
1)
Like-for-like properties are properties held by Citycon throughout two full preceding periods.
Like-for-like properties exclude properties under (re)development or extension.
%
LIKE-FOR-LIKE AND TOTAL NET RENTAL INCOME DEVELOPMENT, 2021 VS. 2020
Like-for-like NRI Development (at comparable exchange rates)
Total NRI Development (at historical exchange rates)
Total NRI Development (at comparable exchange rates)
Norway TotalSweden &
Denmark
Finland &
Estonia
–0.6
–1.8
–1.8
–3.1
–0.5
–1.1
–11.8
–14.4
–1.5
–1.5
–4.0
5.1
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
OCCUPANCY, SALES AND FOOTFALL
The retail occupancy rate increased in
Q4/2021 from the previous quarter and
was 94.2% (Q3/2021: 93.7%). Also, the
economic occupancy increased and was
93.4% (Q3/2021: 93.0%). Furthermore, the
average rent per sq.m. increased to 22.6 EUR
(Q4/2020: 22.0) as we leased over 200,000
sq.m. during the year. Using comparable rate
average rent per sq.m was 22.0 EUR.
In Q4/2021 like-for-like tenant sales
increased 7.6% and at the same time like-
for-like footfall increased 8.2%. In Q1-Q4
like-for-like sales increased by 3.8% and
like-for-like grocery sales increased by 2.9%.
Total sales in Citycon’s shopping centres
decreased by -1.5% due to divested assets
in Sweden and Finland. However, total sales
in Finland & Estonia increased by 4.8% and
total sales in Norway increased by 1.1%.
Total footfall decreased by -4.0%
due to the divestments and like-for-like
footfall decreased by -1.6% compared to the
previous year again due to Q1/2020 being a
pre-covid environment. However, the aver-
age consumer spending in our centres grew
significantly compared to previous year,
more than offseing footfall declines.
%
TENANT SALES DEVELOPMENT, 2021 VS. 2020
1)
Like-for-like Total (including impact of divested assets)
1)
Sales figures include estimates. Sales figures exclude VAT and the change has been calculated using compa-
rable exchange rates. Kista Galleria 50% not included.
Finland &
Estonia
Norway Sweden &
Denmark
Total
1.1
1.1
2.6
3.8
–1.5
7.3
–15.8
4.8
%
FOOTFALL DEVELOPMENT, 2021 VS. 2020
1)
Like-for-like Total (including impact of divested assets)
1)
Footfall figures include estimates. Kista Galleria 50% not included.
Finland &
Estonia
Norway Sweden &
Denmark
Total
–1.1
–8.2
–1.8
–2.1
–1.5
–4.0
–1,6
–3.2
OCCUPANCY RATE
1)
%
31 December 2020 31 December 2021 Retail occupancy rate 31 December 2021
1)
Kista Galleria 50% not included.
Norway Sweden &
Denmark
Finland &
Estonia
Total
95.0
95.4
92.7
93.4
93.9
92.3
92.5
93.4
94.2
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
LEASE PORTFOLIO SUMMARY
31 December 2021 31 December 2020
Number of leases pcs 3,326 3,810
Average rent EUR/sq.m. 22.6 22.0
Average remaining length of lease portfolio years 3.1 2.9
Occupancy cost ratio
2)
% 8.8% 9.1%
1)
Kista Galleria 50% not included.
2)
The rolling twelve month occupancy cost ratio for like-for-like shopping centres.
PERSONNEL KEY FIGURES
2021 2020 2019
Average number of personnel (FTE) 242 239 240
Wages and salaries, EUR million 17.3 18.2 17.5
LEASING ACTIVITY
2021 2020
Total area of leases started sq.m. 247,526 224,276
Total area of leases ended sq.m. 319,011 243,959
1)
Leases started and ended do not necessarily refer to the same premises. Kista Galleria 50% not included.
FINANCIAL RESULT
Operating profit increased to EUR 217.8
million (34.1).
Administrative expenses were EUR 26.1
million (25.9). At the end of the reporting
period, Citycon Group employed a total of
251 (246) full-time employees (FTEs), includ-
ing bringing the outsourced accounting team
in-house and duplicate of CFO positions for
five months, of whom 56 worked in Finland
& Estonia, 80 in Norway, 66 in Sweden &
Denmark, and 49 in Group functions.
Net financial expenses (IFRS) increased
to EUR 55.0 million (51.8) despite a lower
average amount of debt and a higher
interest income and other financial income,
mainly due to indirect items. Indirect losses
of EUR 7.3 million (5.8) was recorded related
to cost for bond tenders and non-cash write
downs of unamortized fees on the prepaid
bonds. In addition, EUR 0.8 million indirect
losses (0.8 gains) related to fair value chang-
es of cross-currency swaps not under hedge
accounting was booked.
Share of loss of joint ventures and
associated companies totalled EUR -6.3
million (-28.0). Improved result from previous
year was mainly due to beer investment
property valuation result in Kista Galleria.
Profit for the period increased by EUR
148.9 million to EUR 121.0 million (-27.9).
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
PROPERTY PORTFOLIO VALUE
DEVELOPMENT
From year-end the fair value of investment
properties increased by EUR 37.0 million
to EUR 4,189.2 million (31 December 2020:
4,152.2). Net investments, including both
acquisitions and disposals and development
projects increased the fair value by EUR
181.3 million. Fair value gains increased the
value of investment properties by EUR
48.6 million and exchange rates by EUR
55.1 million. Changes in right-of-use –assets
increased the asset value of investment
properties by EUR 12.6 million and transfer
between categories decreased the value by
EUR 260.5 million.
PROPERTY PORTFOLIO SUMMARY
31 December 2021
No. of
properties
Gross
leasable area
Fair value,
MEUR
Properties
held for sale,
MEUR Portfolio, %
Shopping centres, Finland
& Estonia
1)
11 450,847 1,955.9 - 45%
Other properties, Finland
& Estonia 1 2,240 3.5 - 0%
Finland & Estonia, total 12 453,087 1,959.3 - 45%
Shopping centres,
Norway 17 444,100 1,389.9 150.9 36%
Rented shopping centres,
Norway
2)
1 14,500 - - -
Norway, total 18 458,600 1,389.9 150.9 36%
Shopping centres,
Sweden & Denmark 7 209,300 794.3 - 18%
Sweden & Denmark, total 7 209,300 794.3 - 18%
Shopping centres, total 36 1,118,747 4,140.1 150.9 99%
Other properties, total 1 2,240 3.5 - 0%
Investment properties, total 37 1,120,987 4,143.5 150.9 99%
Right-of-use assets
classified as investment
properties (IFRS 16) - - 45.7 - 1%
Investment properties in
the statement of financial
position, total 37 1,120,987 4,189.2 150.9 100%
Kista Galleria (50%) 1 46,300 252.2 - -
Investment properties and
Kista Galleria (50%), total 38 1,167,287 4,441.4 150.9 -
1)
Includes Lippulaiva development project.
2)
Value of rented properties is recognised within IFRS 16 investment properties based on IFRS rules.
The fair value change of investment prop-
erties amounted to EUR 48.6 million (-146.9).
The company recorded a total value increase
of EUR 106.1 million (39.8) and a total value
decrease of EUR 45.7 million (-181.1). In addi
-
tion, the application of IFRS 16 standard had
an impact of EUR -11.8 million (-5.7) to the fair
value change of investment properties during
the January-December reporting period.
Fair value change for the operational port
-
folio (without Lippulaiva) was positive EUR
76.6 million. The total fair value change was
impacted by an update of estimated project
FAIR VALUE CHANGES
MEUR 2021 2020
Finland & Estonia 3.4 -86.8
Norway 26.2 -1.3
Sweden & Denmark 30.8 -53.1
Investment properties, total 60.4 -141.2
Right-of-use assets classified as investment properties (IFRS 16) -11.8 -5.7
Investment properties in the statement of financial position, total 48.6 -146.9
Kista Galleria (50%) -1.4 -32.3
Investment properties and Kista Galleria (50%), total 47.2 -179.2
costs and Covid impacts related to Lippulaiva
project.
External appraisers, CBRE (in Norway,
Denmark and Estonia) and JLL (in Finland
and Sweden) measure the fair values for the
half-yearly report and annual financial state-
ments. Citycon measures the fair values of
the properties internally in the first and third
quarter.
JLL’s and CBRE’s valuation statements
are available on Citycon’s website below
Investors.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
ACQUISITIONS AND DIVESTMENTS
Location
Gross leasable
area, sq.m. Date
Price,
MEUR
Divestments
Portfolio of 3 centres 31 March 2021 147
(1
Tumba Shopping centre Botkyrka, Sweden 23,200
Högdalen Shopping centre Bandhagen, Sweden 20,000
Fruängen Shopping centre Hägersten, Sweden 14,700
Columbus Shopping centre Helsinki, Finland 22,600 106.2
Divestments, total 80,500 253.2
Acquisitions
Heikintori ( 7%)
2)
Shopping centre Espoo, Finland 6,200 29 April 2021 0.7
Acquisitions, total 6,200 0.7
1)
Gross purchase price
2)
Citycon owned approx. 93% of the shopping centre. Aer the transactions Citycon ownership is 100%
RECYCLING OF CAPITAL CONTINUED
In 2021, Citycon continued to execute on
opportunistic capital recycling. In February,
Citycon signed an agreement to sell three
shopping centres in Sweden with the gross
purchase price of approximately EUR 147
million. The divestment follows Citycon’
s strategy to focus on larger, grocery /
municipal services-anchored, urban hubs
with a connection to transportation links
and which provide further densification
potential to add residential units, offices and
other complimentary uses. The closing of the
transaction was 31 March 2021.
In October, Citycon signed an agreement
to sell Columbus located in Helsinki, Finland
with a gross purchase price of approximately
EUR 106.2 million. Columbus demonstrates
Citycon´s ability to create additional
value through active asset management
at every stage of the property life cycle.
During Citycon´s ownership, Columbus was
transformed to a grocery-anchored urban
hub, which was reflected in its increase in
value. Subsequent to the sale, a portion of
the proceeds from the transaction was used
to buy back shares.
The company will continue evaluating
opportunistic capital recycling actions going
forward.
REDEVELOPMENT PROJECTS
PROGRESSED
At the end of the reporting period, Citycon
had one major (re)development project un-
derway: the Lippulaiva project in the Helsinki
REDEVELOPMENT PROJECTS IN PROGRESS ON DECEMBER
Location
Area before/
after, sq.m.
Expected net
investment,
MEUR
Actual net
investment by
31 December
2021, MEUR Completion
Lippulaiva
shopping centre
Helsinki metropolitan
area, Finland 19,200/44,300 357.2
1)
310.6
1)
2022
Lippulaiva
residentials
Helsinki metropolitan
area, Finland -/18,000 90.5 32.7 2022–2024
1)
Expected gross investment is 410 MEUR with the proceeds from net rental income of Pikkulaiva, sale of
additional building rights and metrobus terminal offseing for a expexted net investment of 357.2 MEUR.
Actual gross investment by 31 December 2021 is 363.5 MEUR.
COMPLETED REDEVELOPMENT PROJECTS IN
Location
Area before/
after, sq.m.
Expected gross
investment,
MEUR
Actual gross
investment by
31 December
2021, MEUR Completion
Oasen Kjøpe-
senter (phase I) Bergen, Norway - 11,6 11,7 2021
Metropolitan area. Citycon also completed
the first phase of one smaller development
project in Oasen Kjøpesenter in Norway, in
which over 6,000 square meters of office
space was converted into premises for a new
health centre, F&B and daily shopping.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
CAPITAL EXPENDITURE
MEUR 2021 2020
Acquisitions of properties
1)
-0.6 156.0
Acquisitions of and investments in joint
ventures 29.2 5.1
Property development
2)
191.0 182.5
Goodwill and other investments 4.5 2.0
Total capital expenditure incl. acquisitions 224.1 345.6
Capital expenditure by segment
Finland & Estonia 163.6 150.5
Norway 21.7 178.3
Sweden & Denmark 35.2 14.9
Group administration 3.6 1.9
Total capital expenditure incl. acquisitions 224.1 345.6
Divestments
3)
265.3 10.0
1)
Capital expenditure takes into account deduction in the purchase price calculations and FX rate changes.
2)
Comprises mainly of investments in Lippulaiva.
3)
Excluding transfers into ‘Investment properties held for sale’ -category.
SHAREHOLDERS’ EQUITY
Equity per share was EUR 14.80 (31 Decem-
ber 2020: 12.17). The successful issuance of
new hybrid bond, result for the period and
translation gains increased equity per share,
partly offset by dividends, equity return and
hybrid bond interest.
At period-end, shareholders’ equity at-
tributable to parent company’s shareholders
was EUR 1,800.1 million (31 December 2020:
1,818.6).
FINANCING
In January, Kista Galleria, a joint venture
company 50% owned by Citycon, refinanced
its external debt by signing a new SEK
2,439 million secured bank facility with the
existing three lenders. The loan has a tenor
of approx. 4.5 years. As the debt of Kista
Galleria is not consolidated on Group level,
this does not affect any of the reported debt
related key ratios.
In February, Citycon announced that it had
signed an agreement to sell a portfolio of three
shopping centres (Tumba, Högdalen, Fruängen)
in the Stockholm area. The gross purchase
price for the assets was approximately EUR
147 million. The transaction closed in March and
proceeds were used to repay short-term debt,
thereby strengthening the balance sheet.
In March, Citycon successfully placed
a new EUR 350 million green Eurobond.
KEY FINANCING FIGURES
31 December 2021 31 December 2020
Fair value of debt MEUR 1,860.3 2,098.0
Interest-bearing liabilities, carrying value
1)
MEUR 1,878.5 2,121.2
Available liquidity MEUR 583.7 447.0
Average loan maturity years 4.2 3.8
Loan to Value (LTV)
2) 3)
% 40.7 46.9
Interest cover ratio (financial covenant > 1.8) x 4.1 4.1
Net debt to total assets (financial covenant < 0.60) x 0.38 0.45
Solvency ratio (financial covenant < 0.65) x 0.39 0.46
Secured solvency ratio (financial covenant < 0.25) x 0.00 0.02
1)
Including EUR 43.2 million (48.8) IFRS 16 lease liabilities.
2)
Hybrid bond treated as equity as according to IFRS. Excluding both right-of-use assets recognized as part
of investment properties, as well as lease liabilities pertaining to these right-of-use assets, which are
based on IFRS 16 requirements In addition, highly liquid cash investments has been taken into account in
net debt.
3)
Net debt to total assets is a new covenant and replaces equity ratio covenant in the Revolving
Credit Facility.
The 7-year senior unsecured fixed rate
EUR-denominated Bond matures on 12
March 2028 and pays a fixed coupon of
1.625%. The issuer is Citycon Treasury
B.V. and the guarantor is Citycon Oyj. The
bond is issued under the issuer’s EMTN
Programme and listed on the Irish Stock
Exchange (Euronext Dublin). The demand
for the bond was strong with an orderbook
close to five times over-subscribed, which
allowed Citycon to issue the bond at an
aractive spread, at pre-covid level, and
with a coupon that is the second lowest in
the company’s history. This highlights the
quality of Citycon’s credit and its access to
the capital markets.
Through a tender process, EUR 93
million of the net proceeds of the issue
were used to partially buy back the bond
maturing in 2022, and the rest of the pro-
ceeds were used to repay the outstanding
loan under the Revolving Credit Facility and
other short-term debt. As a result of this
successful issuance and short-term debt
prepayments, Citycon’s debt maturity pro-
file was significantly improved, refinancing
risk further reduced and net liquidity
improved.
The Annual General Meeting authorized
the Board of Directors to quarterly decide in
its discretion on the distribution of dividend
and equity repayment with an annual max-
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
imum total amount of EUR 0.50 per share.
The dividends and equity repayment paid in
2021 were mainly financed by operative cash
flow.
In June, Citycon successfully placed
a EUR 350 million Green Hybrid Bond
(Subordinated Fixed to Reset Rate Green
Capital Securities). The demand was very
strong with an order book reaching around
one billion euros and with approximately
150 investors. The hybrid bond is treated as
equity in Citycon’s consolidated financial
statements prepared in accordance with
IFRS, but do not confer on their holders the
rights of a shareholder nor do they dilute
the holdings of the current shareholders.
The hybrid bond was issued under
Citycon’s Green Financing Framework,
which integrates Citycon’s sustainability
targets with our financing activities. The
issuance strengthened the balance sheet
and demonstrates Citycon’s commitment
to improving its investment grade credit
ratings. In addition, the issuance brings
flexibility to execute on our transformation
strategy and enables the diversification of
our portfolio both organically and through
potential acquisitions. It will bear a fixed
rate coupon of 3.625 per cent per annum
until the first reset date 10 September 2026
and thereaer, the interest rate will reset
on each fih anniversary. The hybrid bond
does not have a specified maturity date but
Citycon is entitled to redeem it on any date
in three months up to, and including, the
First Reset Date, and subsequently, on each
annual interest payment date. The issue
date was on 4 June 2021, and it is listed on
Euronext Dublin.
In June, both Moody’s and Standard &
Poor’s affirmed Citycon’s investment grade
credit ratings with upgraded outlooks to
stable, so Citycon now has an investment
grade credit rating with a stable outlook
from all three major credit agencies,
including Fitch. The outlook upgrades reflect
sufficient headroom for Citycon’s credit
metrics, the resilience of our necessity-
based urban hubs, the stability of our
markets, and a positive view towards our
transformation toward a more residential
and mixed-use portfolio.
Citycon updated the terms of its Euro
Medium Term Note programme by increasing
the size to EUR 2,500,000,000. The original
EMTN Programme was established by
Citycon Treasury B.V. on 18 July 2017, and
any notes issued under the Programme
by Citycon Treasury B.V. benefit from a
guarantee by Citycon Oyj. Following this
update of the Programme, both Citycon Oyj
and Citycon Treasury B.V. can act as an issuer
of the notes issued under the Programme.
Otherwise, the terms of the Programme
remain unchanged. The Central Bank of
Ireland approved the updated Offering
Circular for the Programme on 24 June 2021.
In September, Citycon decided to
exercise its right to redeem its 2022 notes
with an outstanding nominal amount of EUR
161.7 million. The redemption date was 19
October 2021 and the company used funds
from its liquid cash investments to sele
the redemption. Following the redemption,
the majority of Citycon’s short term debt
maturities were repaid and the debt level
reduced.
In October, Citycon divested Columbus
retail center in Helsinki, Finland for an
amount of approx. EUR 106.2 million.
Proceeds were used to repay short term
debt maturities and the repurchase of
shares in November and December 2021.
In November, Citycon Oyj successfully
carried out the repurchase of a total amount
of 9,500,000 shares in the company, for a
total purchase price of EUR 65.8 million as a
result of a market based reverse accelerated
bookbuild process. The repurchased shares
were cancelled on 30 November 2021.
In December, Citycon launched a share
buy-back programme and continued to
repurchase 500,000 of the company’s own
shares. The buy-back programme started
on 20 December 2021 and ended on 10
January 2022. During this period, a total
of 500,000 own shares were repurchased.
The total amount used for the repurchase
was approximately EUR 3.49 million. A total
of 10,415 own shares held by the Company
was used for payment of rewards under
the Company’s share-based incentive
plan to four key persons. The rest of the
repurchased shares, 489,585 shares, were
cancelled on 14 January 2022.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
INTERESTBEARING DEBT
The fair value of interest-bearing debt
decreased during 2021 by EUR 237.6 million to
EUR 1,860.3 million mainly following the hybrid
issue in June, despite capital investments and
a stronger NOK currency rate. The carrying
amount of interest-bearing liabilities in the
balance sheet was EUR 1,878.5 million including
IFRS 16 liabilities. At year-end cash, including
cash investments, stood at EUR 54.7 million.
The weighted average loan maturity
increased during the year to 4.2 years.
LTV (IFRS) decreased considerably during
the year to 40.7% mainly as a result of the
hybrid issuance in June.
FINANCIAL EXPENSES
The direct net financial expenses (EPRA)
increased slightly compared to last year
despite higher capitalized interest on devel-
opment projects and higher interest income,
mainly due to higher average cost of debt
and a stronger NOK currency rate.
Net financial expenses (IFRS) increased to
EUR 55.0 million (51.8) mainly following one-
off indirect expenses related to bond buy-
backs and fair value changes of derivatives.
Indirect losses of EUR 7.3 million (5.8) were
recorded related to costs for bond tenders
and non-cash write-downs of unamortized
fees on the prepaid bonds. In addition, EUR
0.8 million indirect losses (0.8 gains) related
to fair value changes of cross-currency swaps
not under hedge accounting was booked.
The financial income mainly consisted of
interest income on a loan to Kista Galleria.
The period-end average cost of debt
was2.47%.
FINANCIAL RISK MANAGEMENT
Citycon uses interest rate swaps to hedge the
floating interest rate risk exposure. According
to the company’s treasury policy, the currency
net transaction risk exposure with profit and
loss impact is fully hedged through currency
forwards and cross-currency swaps that
convert EUR debt into SEK and NOK.
CHANGES IN CORPORATE MANAGEMENT
On 22 June 2021 it was published that Bret D.
McLeod had been appointed Citycon Oyj’s
Chief Financial Officer (CFO) and member
of the Corporate Management Commiee.
Mr. McLeod joined Citycon´s Corporate
Management Commiee on August 1, 2021
and assumed the full responsibility of CFO
on January 1, 2022. Eero Sihvonen, who was
the company’s CFO since 2005, retired on
December 31, 2021.
On 23 August 2021, it was announced that F.
Sco Ball will continue as the CEO of Citycon
until 14 January, 2025.
FINANCIAL EXPENSES KEY FIGURES
2021 2020
Financial expenses
1)
MEUR -62.0 -57.5
Financial income
1)
MEUR 7.1 5.8
Net financial expenses (IFRS) MEUR -55.0 -51.8
Direct net financial expenses (EPRA) MEUR -46.8 -46.0
Weighted average interest rate
2)
% 2.47 2.39
Weighted average interest rate excluding
derivatives % 2.48 2.37
Year-to-date weighted average interest rate
2)
% 2.41 2.34
1)
The foreign exchange differences are need in the financial expenses.
2)
Including interest rate swaps and cross-currency swaps.
Bank loans
Bonds
Commercial papers
BREAKDOWN OF LOANS
%
MEUR
TOTAL
1,860.3
100%
80
550
500
230
350 350
300
2022 2023 2024 2025 2026 2027 2028
DEBT MATURITIES
MEUR
Bonds
Commercial papers
Bank loans
Undrawn committed credit facilities
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
SUSTAINABILITY
Citycon’s strategy is to be a forerunner in
sustainable shopping centre management.
Citycon´s sustainability strategy was up-
dated in 2017 and Citycon has set ambitious
targets that extend to 2030.
Citycon uses BREEAM In-Use to assess
and develop the sustainable management
of its shopping centres. 96% of Citycon’s
shopping centres, measured by fair value,
had acquired the certification at period-end.
Citycon now boasts the largest shopping
centre portfolio with BREEAM In-Use certi-
fication in the Nordic countries.
In its sustainability reporting, Citycon
applies the GRI Standards Core option,
European Public Real Estate Association
(EPRA) Best Practice Recommendations on
Sustainability Reporting (3rd Edition) and
Citycon’s own internal reporting principles
(Criteria). Citycon’s sustainability strategy,
targets and measures are described in
detail in the upcoming Sustainability
Accounts2021.
Citycon’s Annual and Sustainability
Report 2020 was awarded as one of the best
within the industry. Citycon received the
EPRA Gold Award in the Sustainability Best
Practices series for the tenth year in a row.
Citycon has received a rating of AA in the
MSCI ESG Ratings assessment. Citycon also
has the ISS-Oekom “Prime” rating, awarded
to companies that achieve the best ESG
scores among their sector peers.
Key environmental indicators 2021:
– Citycon’s total energy consumption (incl.
electricity consumption in common areas,
heating and cooling) amounted to 217giga-
wa hours (195 GWh).
– The recycling rate in shopping centres
remained at the same level as the previous
year and was 99%.
Disclosure according to the Taxonomy
Regulation Delegated Act:
Citycon’s sustainability and finance teams
have classified the company’s activities by
mapping Citycon group’s consolidated IFRS
income statement accounts based on wheth-
er they are covered by a NACE code included
in the Taxonomy. Based on this classification
97% of Citycon’s total turnover, 99% of
capital expenditure and 67% of operational
expenditure is derived from Taxonomy-eligi-
ble activities.
RISKS AND UNCERTAINTIES
The outbreak of the COVID-19 pandemic
also in the Nordics and in Estonia has had
negative effects on Citycon’s business. Both
changed consumer behaviour and authority
restrictions in our operating countries have
substantially changed our business environ-
ment and also affected the results to some
extent. The crisis has however had a minimal
impact on Citycon’s ability to collect rents on
time or in full, and the effect going forward is
difficult to predict.
The most significant other near-term
risks and uncertainties in Citycon’s business
operations are associated with the general
development of the economy and consumer
confidence in the Nordic countries and
Estonia as well as how this affects the fair
values, occupancy rates and rental levels of
the shopping centres and thereby Citycon’s
financial result. Increased competition
might affect demand for retail premises,
which could lead to lower rental levels or
increased vacancy, especially outside capital
city regions. Costs of development projects
could increase due to rising construction
costs or projects could be delayed due to
unforeseeable challenges.
The main risks that can materially affect
Citycon’s business and financial results,
along with the main risk management ac-
tions, are presented in detail on pages 37–38
in the Financial Statements 2021, in Note
3.5 A) as well as on Citycon’s website in the
Corporate Governance section.
LEGAL PROCEEDINGS
Certain lawsuits, claims and legal disputes
based on various grounds are pending
against Citycon relating to the company’s
business operations. In the company’s view,
it is improbable that the outcome of these
lawsuits, claims and legal disputes will have
a material impact on the company’s financial
position.
GENERAL MEETING
Annual General Meeting 2021
Citycon’s Annual General Meeting 2021
(AGM) was held in Espoo, Finland on 22
March 2021. In order to prevent the spread of
the COVID-19 pandemic, the AGM was held
without shareholders’ and their proxy rep-
resentatives’ presence at the venue of the
meeting. The shareholders of the company
participated in the meeting and exercised
their shareholder’s rights by voting in ad-
vance. A total of 205 shareholders aended
the AGM either personally or through a
proxy representative, representing 80.8%
of shares and votes in the company.
The General Meeting approved all the
proposals made by the Board of Directors to
the General Meeting.
The AGM adopted the company’s
Financial Statements and discharged the
members of the Board of Directors and the
CEO from liability for the financial year 2020
and decided to adopt the Remuneration
Report for the governing bodies.
The General Meeting decided that no
dividend is distributed by a resolution of the
AGM and authorised the Board of Directors
to decide in its discretion on the distribution
of dividend and assets from the invested
unrestricted equity fund. Based on the
authorisation, the maximum amount of divi-
dend to be distributed shall not exceed EUR
0.05 per share and the maximum amount
of equity repayment to be distributed
from the invested unrestricted equity fund
shall not exceed EUR 0.45 per share. The
authorisation is valid until the opening of the
next AGM.
The AGM decisions and the minutes of the
AGM are available on the company’s website
at citycon.com/agm2021.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
EXTRAORDINARY GENERAL
MEETING
Citycon´s Extraordinary General Meeting
(EMG) held on 2 August 2021 decided on the
election of two new Board members, Ms
Ljudmila Popova and Citycon`s CEO Mr F.
Sco Ball. Furthermore, the EGM decided to
adopt the revised remuneration policy. Fur-
ther information available on the company´s
website at citycon.com/egm2021.
BOARD OF DIRECTORS
Under the Articles of Association, the Board
of Directors of the company consists of a
minimum of five and a maximum of ten mem-
bers, elected by the General Meeting for a
term of one year that will end at the close of
the following Annual General Meeting.
The AGM resolved the number of
members of the Board of Directors to be ten.
Chaim Katzman, Yehuda (Judah) L. Angster,
Arnold de Haan, Zvi Gordon, Alexandre
(Sandy) Koifman, David Lukes, Andrea Orlan-
di, Per-Anders Ovin, Ofer Stark and Ariella
Zochovitzky were re-elected to the Board of
Directors.
Following the resignation of Andrea
Orlandi and Ariella Zochovitzky, the EGM
held on 2 August 2021 decided to elect Ljud-
mila Popova and F. Sco Ball as new Board
members of the company.
Chaim Katzman was the Chairman of the
Board of Directors in 2021. Ariella Zochovitz-
ky was the Deputy Chairman until 30 June
2021 and from 4 August onwards Alexandre
(Sandy) Koifman was Vice Chairman of the
Board of Directors.
AUDITOR
Since 2006, the company’s auditor has been
Ernst & Young Oy, a firm of authorised public
accountants, which had designated Author-
ised Public Accountant Ani Suominen to
act as the responsible auditor of Citycon in
2021.
CHIEF EXECUTIVE OFFICER CEO
From 1 January 2019 onwards, F. Sco Ball
has been the company´s CEO. Eero Sihvonen,
Chief Financial Officer, was Citycon’s Execu-
tive Vice President until his retirement on 31
December 2021. Their personal details, career
histories and positions of trust can be found
on the company’s website at citycon.com/
management. Information on the CEO’s exec-
utive contract and its terms and conditions
are available on pages 57–59 of the Financial
Statements.
CORPORATE GOVERNANCE
STATEMENT
Citycon has published Citycon Group’s
Corporate Governance Statement 2021 as
a separate report, distinct from the Report
by the Board of Directors. The statement
is prepared in accordance with the rec-
ommendations of the Finnish Corporate
Governance Code 2020 and is available
on the company’s website at citycon.com/
corporate-governance.
SHARES, SHARE CAPITAL AND
SHAREHOLDERS
The company has a single series of shares, with
each share entitling to one vote at a General
SHARES AND SHARE CAPITAL
2021
Share capital at period-start MEUR 259.6
Share capital at period-end MEUR 259.6
Number of shares at period-start 177,998,525
Number of shares at period-end 168,498,525
Nominee-registered shareholdings
Directly registered shareholdings
SHAREHOLDERS 31 DECEMBER 2021
% of shares and voting rights
(116.2 million
shares)
(52.3 million
shares)
31.0
69.0
Meeting of shareholders. In November 2021,
Citycon repurchased 9,500,000 of its own
shares in a reverse accelerated bookbuild.
The repurchased shares were cancelled on 30
November 2021. At the end of the period, the
total number of shares was 168,498,525 and
the company held 296,463 own shares. Thus,
at the end of December 2021, the total number
of shares outstanding in the company was
168,202,062. The shares have no nominal value.
During 2021, there were no changes in the
company’s share capital.
At the end of December 2021, Citycon had
a total of 28,577 (22,499) registered share-
holders, of which 11 were account managers
of nominee-registered shares. Holders
of the nominee-registered shares held
approximately 116.2 million (140.3) shares,
or 69.0% (78.8%) of shares and voting
rights in the company. The most significant
registered shareholders at year-end can be
found on company’s website citycon.com/
major-shareholders.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
DIVIDEND AND EQUITY REPAYMENT
Citycon’s dividend for the financial year 2020 and equity repayments paid in 2021:
shares to be repurchased and/or accepted
as pledge shall not exceed 10 million shares,
which corresponded to approximately
5.62% of all the shares in the company at
the period-end. The authorisation is valid
until the close of the next AGM, however,
no longer than until 30 June 2022.
During January – December 2021, the
Board of Directors used three times its
authorisation to repurchase its own shares
and cancel them or issue them by conveying
repurchased shares for payment of rewards
earned under the company’s share plans in
accordance with the terms and conditions of
the plans:
Restricted Share Plan 2015
– On 8 January 2021, the company repur-
chased total of 8,800 of its own shares and
conveyed them on 13 January 2021 to four
key persons of the company.
Restricted Share Plan 2018–2020
– On 8 January 2021, the company repur-
chased total of 4,000 of its own shares and
conveyed them on 13 January 2021 to two
key persons of the company.
Matching Share Plan 2018–2020
– On 1 March 2021, the company repurchased
total of 5,493 of its own shares and
conveyed them on 5 March 2021 to one key
person of the company.
Additionally, the Board of Directors used
two times its authorisation to repurchase
its own to distribute surplus funds received
from the divestment of necessity-based
retail centre Columbus to the shareholders
of Citycon:
Market based reverse accelerated bookbuild
– On 25 November 2021 company repurchased
9,500,000 own shares in a reverse accel
-
erated bookbuild. The repurchased shares
were cancelled on 30 November 2021
Share buy-back program
– On 17 December 2021, the Board of Direc-
tors of Citycon decided to launch a buyback
program. According to the Board decision,
the maximum number of shares to be re-
purchased was 500,000 and the maximum
amount to be used for the repurchases was
EUR 3.75 million. The share repurchases
started on 22 December 2021 and ended on
10 January 2022. At the end of the reporting
period, 31 December 2021, 296,463 share
were repurchased under the share buy-
back programme.
OWN SHARES
During the reporting period, the company
held a total of 9,814,756 of the company’s
own shares of which 9,500,000 shares were
cancelled and 18,293 shares were conveyed
to implement payments of rewards earned
under the company’s share plans as described
in the section Board authorisations. At the
end of the period, the company held 296,463
own shares representing 0.18 per cent of the
total number of shares in Citycon Oyj.
FLAGGING NOTICES
During 2021 Citycon Oyj received the
following notification pursuant to Chapter
9, Section 5 of the Finnish Securities Market
Act:
– On 17 March 2021 a flagging notification,
according to which the total holdings of
CPP Investment Board Europe S.à.r.l in
Citycon Oyj has fallen below 10 per cent
flagging threshold.
– On 11 October 2021 a flagging notification,
according to which the total holdings of
Alecta pensionsförsäkring, ömsesidigt
in Citycon Oyj has fallen below 5 per cent
flagging threshold.
– On 26 November a flagging notification,
according to which the total holdings of
CPP Investment Board Europe S.à.r.l in
Citycon Oyj has fallen below 5 per cent
flagging threshold.
– On 1 December a flagging notification, ac-
cording to which the total holdings of Gazit-
Globe Ltd in Citycon Oyj has increased
above 50 per cent flagging threshold.
– On 28 December 2021 a flagging notification
according to which Gazit-Globe Ltd.’s direct
DIVIDENDS AND EQUITY REPAYMENTS PAID ON DECEMBER
Record date Payment date EUR / share
Dividend for 2020 24 March 2021 31 March 2021 0.05
Equity repayment Q1 24 March 2021 31 March 2021 0.075
Equity repayment Q2 21 June 2021 30 June 2021 0.125
Equity repayment Q3 22 September 2021 30 September 2021 0.125
Equity repayment Q4 16 December 2021 30 December 2021 0.125
Total 0.50
1)
Board decision based on the authorisation issued by the AGM 2021.
BOARD AUTHORISATIONS
In addition to the above explained asset
distribution authorisation of the Board of
Directors, the Board of Directors of the
company had two valid authorisations at the
period-end granted by the AGM held on 22
March 2021:
• The Board of Directors may decide on an
issuance of a maximum of 17 million shares
or special rights entitling to shares referred
to in Chapter 10 Section 1 of the Finnish
Companies Act, which corresponded to
approximately 9.55% of all the shares in the
company at the period-end. The authorisa
-
tion is valid until the close of the next AGM,
however, no longer than until 30 June 2022.
• The Board of Directors may decide on the
repurchase and/or on the acceptance as
pledge of the company’s own shares in one
or several tranches. The amount of own
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
holding of shares in Citycon will decrease
below 50 per cent flagging threshold. The
share purchase agreement in question will
not affect the aggregate total direct and
indirect holdings of Gazit-Globe Ltd.
Additionally, Citycon has filed the following
flagging notifications pursuant to Chapter 9,
Section 5 of the Finnish Securities Markets
Act to the FIN-FSA:
– On 26 November 2021 a flagging notifi-
cation, according to which Citycon’s total
holding of own shares has increased above
5 per cent.
– On 1 December 2021 a flagging notification,
according to which Citycon’s total holding
of own shares has decreased below 5 per
cent.
SHARERELATED EVENTS
Shareholder agreements
The company has no knowledge of any
effective shareholder agreements.
The Governance Agreement entered
into between CPPIBE and Gazit-Globe Ltd.
on 12 May 2014, as disclosed by Citycon Oyj
through stock exchange releases on 13 May
2014 and 17 March 2020, is terminated in
accordance with its terms and conditions
aer CPPIBE ceased to hold at least ten
per cent of Citycon shares, directly or indi-
rectly, for more than 30 consecutive days.
CPPIBE´s total holding of shares of Citycon
Oyj decreased below the threshold of ten
percent on 17 March 2021.
Further information on the terminated
agreement between Gazit-Globe Ltd. and
CPPIBE is available on the company’s web-
site at citycon.com/shareholder-agreements.
INCENTIVE PLANS
Long-term Share-based Incentive Plans
Citycon has six long-term share-based incen-
tive plans for the Group key employees:
– CEO Restricted Share Plan 2021–2025
– CFO Restricted Share Plan 2021–2024
– Performance Share Plan 2020–2022
(Corporate Management Commiee excl.
the CEO)
– Matching Share Plan 2018–2020 (Corpo-
rate Management Commiee)
– Restricted Share Plan 2020–2022 (Key
employees, excl. Corporate Management
Commiee) and
– Restricted Share Plan 2018–2020 (Key
employees)
The main terms of the long-term share-
based incentive plans are explained in the
Note 1.6 on pages 57–58 of the Financial
Statements.
More information on the share-based
incentive plans is available on the company’s
website at citycon.com/remuneration.
SHARES HELD BY MEMBERS OF THE
BOARD OF DIRECTORS AND BY THE
COMPANY MANAGEMENT
The members of the Board of Directors of
Citycon, the CEO, the other Corporate Man-
agement Commiee members held a total
of 225,715 company shares on 31 December
2021. These shareholdings represented
0.13% of the company’s total shares and
total voting rights.
Details of the shareholdings of the
members of the Board of Directors, the CEO
and the other members of the Corporate
Management Commiee are available on
the company’s website at www.citycon.com/
managers-holdings-shares.
EVENTS AFTER THE REPORTING
PERIOD
On 19 January 2022 was published that Mr
Ofer Stark elected to resign from the Board
as of 31 January 2022.
On 7 February 2022 was published
that Citycon acquired a residential asset,
comprising more than 200 apartments, in
Sweden and divested two non-core centres
in Norway.
OUTLOOK
Citycon forecasts the 2022 direct operating
profit to be in range EUR 164–180 million,
EPRA EPS EUR 0.62–0.72 and adjusted
EPRA EPS EUR 0.48–0.58.
Direct operating profit MEUR 164–180
EPRA Earnings per share
(basic) EUR 0.62–0.72
Adjusted EPRA Earnings per
share (basic) EUR 0.48–0.58
The outlook assumes that there are no major
changes in macroeconomic factors and that
there will not be another wave of COVID-19
with restrictions resulting in significant
store closures. These estimates are based
on the existing property portfolio and
recently announced disposals as well as on
the prevailing level of inflation, the EUR–SEK
and EUR–NOK exchange rates, and current
interest rates.
Helsinki, 17 February 2022
Citycon Oyj
Board of Directors
FINANCIAL REVIEW
FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS
EPRA (European Public Real Estate Associ-
ation) is a common interest group for listed
real estate companies in Europe. Citycon is
an active member of EPRA. EPRA’s objective
is to encourage greater investment in Euro-
pean listed real estate companies and strive
for ‘best practices’ in accounting, financial
reporting and corporate governance in
order to provide high-quality information to
investors and to increase the comparability
of different companies. The best practices
also create a framework for discussion and
decision-making on the issues that deter-
mine the future of the sector. In addition,
EPRA publishes the FTSE EPRA/NAREIT
index in association with FTSE, which tracks
the performance of the largest European
and North-American listed real estate com-
panies. Citycon is included in the FTSE EPRA
index, which increases international interest
towards Citycon as an investment.
Citycon applies the best practices policy
recommendations of EPRA for financial
reporting and also for sustainability report-
ing. This section in Citycon’s financial state-
ments presents the EPRA performance
measures and their calculations. For more
information about EPRA and EPRA’s best
practice policies please visit EPRA’s web
page: www.epra.com.
EPRA PERFORMANCE MEASURES
EPRA PERFORMANCE MEASURES
Note 2021 2020 2019 2018 2017
EPRA Earnings, MEUR 1 124.4 136.6 145.6 143.5 152.3
Adjusted EPRA Earnings, MEUR
2)
1 100.0 120.3 143.9 143.5 152.3
EPRA Earnings per share (basic), EUR
1)
1 0.703 0.767 0.818 0.806 0.856
Adjusted EPRA Earnings per share (basic), EUR
1) 2)
1 0.565 0.676 0.809 0.806 0.856
EPRA NRV per share, EUR
1)
2 11.54 11.48 12.45 13.13 13.75
EPRA NAV per share, EUR
1)
2 - 11.30 12.28 12.95 13.57
EPRA Cost Ratio (including direct vacancy costs), % 3 18.1 18.3 14.1 17.1 18.7
EPRA Cost Ratio (excluding direct vacancy costs), % 3 14.9 15.6 11.7 15.1 16.5
EPRA Net Initial Yield (NIY), % 4 5.2 5.4 5.3 5.2 5.2
EPRA 'topped-up' NIY, % 4 5.2 5.4 5.4 5.2 5.3
EPRA vacancy rate, %
3)
5 6.6 6.1 4.5 3.7 4.0
1)
Key ratios have been adjusted in the comparison periods to reflect the new number of shares aer the reversed share split executed in March 2019.
2)
The adjusted key figure includes hybrid bond coupons and amortized fees.
3)
Kista Galleria 50% not included.
EUR
20 2117 18 19
EPRA NRV PER SHARE
13.75
13.13
12.45
11.48
11.54
%
20 2117 18 19
EPRA COST RATIO
18.7
17.1
14.1
18.3
18.1
FINANCIAL REVIEW
FINANCIAL STATEMENTS EPRA PERFORMANCE MEASURES
. EPRA EARNINGS AND EPRA EARNINGS PER SHARE BASIC
EPRA Earnings presents the underlying operating performance of a real estate company
excluding all so called non-recurring items such as net fair value gains/losses on investment
properties, profit/loss on disposals and other non-recurring items. EPRA Earnings is
2021 2020
MEUR
Average
number
of shares
(1,000)
per
share,
EUR MEUR
Average
number
of shares
(1,000)
per
share,
EUR
Earnings in IFRS Consolidated
Income Statement
121.0 177,033 0.684 -28.0 177,998 -0.157
+/- Net fair value losses/gains on invest-
ment property
-48.6 177,033 -0.274 146.9 177,998 0.826
-/+ Net gains/losses on disposal of
investment property
6.5 177,033 0.037 -0.7 177,998 -0.004
+/- Indirect other operating expenses 0.4 177,033 - - 177,998 -
+ Early close-out costs of debt and
financial instruments
7.3 177,033 0.041 0.8 177,998 0.004
-/+ Fair value gains/losses of financial
instruments
0.8 177,033 0.005 5.0 177,998 0.028
+/- Indirect losses/gains of joint ventures
and associated companies
2.3 177,033 0.013 27.2 177,998 0.153
-/+ Change in deferred taxes arising
from the items above
34.6 177,033 0.195 -14.7 177,998 -0.083
EPRA Earnings (basic) 124.4 177,033 0.703 136.6 177,998 0.767
-/+ Hybrid bond coupons and amortized
fees -24.3 177,033 -0.138 -16.2 177,998 -0.091
Adjusted EPRA Earnings (basic) 100.0 177,033 0.565 120.3 177,998 0.676
2021 2020
MEUR
Average
number
of shares
(1,000)
per
share,
EUR MEUR
Average
number
of shares
(1,000)
per
share,
EUR
Net rental income (NRI) 202.3 177,033 1.143 205.4 177,998 1.154
Direct administrative expenses -26.1 177,033 -0.148 -25.9 177,998 -0.146
Direct other operating income and
expenses
0.0 177,033 0.000 0.9 177,998 0.005
Direct Operating profit 176.1 177,033 0.995 180.4 177,998 1.013
Direct net financial income and expenses -46.8 177,033 -0.264 -46.0 177,998 -0.258
Direct share of profit/loss of joint ventures
and associated companies
-4.0 177,033 -0.023 -0.8 177,998 -0.004
Direct current taxes -3.3 177,033 -0.019 -1.8 177,998 -0.010
Change in direct deferred taxes 2.4 177,033 0.013 4.8 177,998 0.027
Direct non-controlling interest 0.0 177,033 0.000 -0.1 177,998 -0.001
EPRA Earnings (basic) 124.4 177,033 0.703 136.6 177,998 0.767
Hybrid bond coupons and amortized fees -24.3 177,033 -0.138 -16.2 177,998 -0.091
Adjusted EPRA Earnings (basic) 100.0 177,033 0.565 120.3 177,998 0.676
especially important for investors who want to assess the extent to which dividends are
supported by recurring income.
EPRA Earnings can also be calculated from the statement of comprehensive income from
top to boom. The EPRA Earnings calculation is presented in the below table with this differ-
ent method, which also presents the Direct Operating profit.
EPRA Earnings was EUR 124.4 million and EPRA EPS was EUR 0.703.
EPRA earnings was lower mainly due to the reasons related to Covid-19 pandemic, divestments and lower
result of joint ventures.
2020 1 2 3 4 5 6 2021
CHANGE IN EPRA EARNINGS
136.6
-3.1
-0.8
-0.2
-0.9
-4.0
-3.1
124.4
1 Net rental income
2 Direct net financial
income and expenses
3 Direct administrative
expenses
4 Direct other operating
income and expenses
5 Direct current and
deferred taxes
6 Other direct items
MEUR
EPRA
Earnings
EPRA
Earnings
FINANCIAL REVIEW
FINANCIAL STATEMENTS EPRA PERFORMANCE MEASURES
. EPRA NET ASSET VALUE METRICS
EPRA NAV metrics present the fair value
of net assets of a real estate company. In
October 2019, the European Public Real
Estate Association (‘EPRA’) published new
Best Practice Recommendations (‘BPR’) for
financial disclosures by listed real estate
companies. The BPR introduced three new
measures of net asset value: EPRA Net
Reinstatement Value (NRV), Net Tangible
Assets (NTA), and Net Disposal Value (NDV),
which replace previously reported measures
EPRA NAV and NNNAV. The metrics have
been updated to beer reflect the develop-
ment of real estate companies from passive
asset owners to active asset managers and
capital allocators and hence presents three
different scenarios from which the company
can choose one as the most representative.
The EPRA NRV scenario, aims to represent
the value required to rebuild the entity and
assumes that no selling of assets takes place.
EPRA NRV intends to reflect the fair value of
a business on a going-concern basis, all items
arising from future disposals (e.g. deferred
taxes on disposals), the fair value of financial
instruments are excluded from EPRA NRV.
The transfer tax cost to rebuild the portfolio
increases EPRA NRV.
The EPRA NTA is focused on reflecting a
company’s tangible assets and assumes that
entities buy and sell assets, thereby crystal-
lising certain levels of unavoidable deferred
tax liability.
EPRA NDV aims to represent the
shareholders’ value under an orderly sale
of business, where deferred tax, financial
instruments and certain other adjustments
are calculated to the full extent of their
liability, net of any resulting tax. EPRA NDV
is a measure of the real estate company’s
“spot” fair value at the balance sheet date.
Spot fair value means that EPRA NDV reflects
the fair value of net assets of the company
at a particular day as opposed to EPRA NRV,
which reflects the fair value of net assets on
a going-concern basis. However, EPRA NDV
is not a liquidation NAV as the fair values
of assets and liabilities are not based on a
liquidation scenario.
Citycon has adopted these guidelines
in the year ended 31 December 2020 and
considers EPRA NRV to be the most relevant
measure for its business. EPRA NRV is closest
to previously reported EPRA NAV. EPRA
NRV will now be Citycon’s primary measure
of net asset value, replacing the previously
reported EPRA NAV and EPRA NAV per share
measures.
Closing share price of Citycon was 7.00
EUR per share on 31 December 2021.
The tables below present calculation of
the three new EPRA net asset value measures
NRV, NTA and NDV.
EPRA
Net Asset Value measures
31 December 2021 EPRA NRV EPRA NTA EPRA NDV
Equity attributable to parent company shareholders 1,800.1 1,800.1 1,800.1
Deferred taxes from the dierence of fair value and
fiscal value of investment properties
3)
295.0 147.5 -
Fair value of financial instruments -0.2 -0.2 -
Goodwill as a result of deferred taxes -84.8 - -
Goodwill as per the consolidated balance sheet - -145.4 -145.4
Intangible assets as per the consolidated balance sheet - -7.6 -
The dierence between the secondary market price
and carrying value of bonds
1)
- - 73.3
Real estate transfer taxes
2)
32.7 - -
TOTAL 2,042.9 1,794.5 1,728.1
Weighted average number of ordinary shares, million 177.0 177.0 177.0
Net Asset Value per share 11.54 10.14 9.76
31 December 2020
Equity attributable to parent company shareholders 1,818.6 1,818.6 1,818.6
Deferred taxes from the dierence of fair value and
fiscal value of investment properties
3)
274.2 137.1 -
Fair value of financial instruments -0.2 -0.2 -
Goodwill as a result of deferred taxes -80.9 - -
Goodwill as per the consolidated balance sheet - -141.1 -141.1
Intangible assets as per the consolidated balance sheet - -17.6 -
The dierence between the secondary market price
and carrying value of bonds
1)
- - 47.4
Real estate transfer taxes
2)
31.8 - -
TOTAL 2,043.6 1,796.9 1,724.9
Weighted average number of ordinary shares, million 178.0 178.0 178.0
Net Asset Value per share 11.48 10.09 9.69
1)
When calculating the EPRA NDV in accordance with EPRA’s recommendations, the shareholders’ equity
is adjusted using EPRA’s guidelines so that bonds are valued based on secondary market prices. In
accordance with Citycon’s accounting policies, the carrying amount and fair value of bonds are different
from this secondary market price. The difference between the secondary market price and the carrying
value of the bonds was EUR 73.3 million (47.4) as of 31 December 2021.
2)
The real estate transfer tax adjustment in EPRA NRV calculation is based on the transfer tax cost for the
buyer for share deal in Finland. Share deals are not subject to transfer tax in other group operating countries.
3)
In the EPRA NTA formula, 50% of the deferred tax liability related to investment property fair value is
added back, according to EPRA guidelines.
EPRA NRV per share improved by EUR 0.06 to EUR 11.54 (11.48) mainly due to fair value gains,
distribution of funds to shareholders, share buybacks and foreign exchange movements.
FINANCIAL REVIEW
FINANCIAL STATEMENTS EPRA PERFORMANCE MEASURES
. EPRA COST RATIOS
EPRA Cost Ratios reflect the relevant overhead and operating costs of the business and
provide a recognized and understood reference point for analysis of a company’s costs. The
EPRA Cost Ratio (including direct vacancy costs) includes all administrative and operating
expenses in the IFRS statements including the share of joint ventures’ overheads and operat-
ing expenses (net of any service fees). The EPRA Cost Ratio (excluding direct vacancy costs) is
calculated as above, but with an adjustment to exclude vacancy costs. Both EPRA Cost Ratios
are calculated as a percentage of Gross Rental Income less ground rent costs, including a share
of joint venture Gross Rental Income less ground rent costs.
MEUR 2021 2020
Include:
Administrative expenses
1) 2)
26.1 25.9
Property operating expenses and other expenses from leasing operations less
service charge costs 68.9 70.4
Net service charge costs/fees 12.7 12.4
Management fees less actual/estimated profit element -0.4 -1.0
Other operating income/recharges intended to cover costs less any related profit -8.1 -8.5
Share of joint venture expenses 4.9 5.1
Exclude:
Ground rent costs -5.2 -5.1
Service charge costs recovered through rents but not separately invoiced -55.8 -55.3
Share of joint venture investment property depreciation, ground rent costs and
service charge costs recovered through rents but not separately invoiced -2.1 -1.7
EPRA Costs (including direct vacancy costs) (A) 41.0 42.2
Direct vacancy costs -7.1 -6.4
EPRA Costs (excluding direct vacancy costs) (B) 33.9 35.8
Gross rental income less ground rent costs 217.0 219.3
Add: share of joint ventures (Gross rental income less ground rent costs less service
fees in GRI) 9.8 10.9
Gross Rental Income (C) 226.7 230.2
EPRA Cost Ratio (including direct vacancy costs) (A/C, %) 18.1 18.3
EPRA Cost Ratio (excluding direct vacancy costs) (B/C, %) 14.9 15.6
1)
Administrative expenses are net of costs capitalised of EUR 3.7 million in 2021 and EUR 4.0 million in
2020. Citycon’s policy is to capitalise, for example, expenses related to property development projects
and major soware development projects.
2)
Expenses related to management and organizational changes EUR 0.5 million in 2021 are excluded from
the administrative expenses. In 2020 the expenses related to management and organizational changes
were EUR 0.1 million.
2020 1 2 3 4 5 2021
FINANCIAL REVIEW / EPRA PERFORMANCE MEASURES
21. Worknumber
EPRA
NRV
EPRA
NRV
CHANGE OF NET REINSTATEMENT VALUE (EPRA NRV)
1 EPRA Earnings
2 Indirect result
3 Translation reserve
4 Dividends paid and equity return
5 Other
EUR
0.70
0.21
–0.18
–0.16
–0.52
11.48
11.54
EPRA Cost Ratio decreased to 18.1% (18.3%)
EPRA Cost Ratio (including direct vacancy costs) decreased to 18.1% (18.3%) and EPRA Cost Ratio (excluding
direct vacancy costs) decreased to 14.9% (15.6%) % from previous year.
FINANCIAL REVIEW
FINANCIAL STATEMENTS EPRA PERFORMANCE MEASURES
. EPRA VACANCY RATE,
The EPRA vacancy rate presents how much out of the full potential rental income is not
received because of vacancy.
The EPRA vacancy rate is calculated by dividing the estimated rental value of vacant
premises by the estimated rental value of the whole property portfolio if all premises were
fully leased. The EPRA vacancy rate is calculated using the same principles as the economic
occupancy rate, which Citycon also discloses.
MEUR 31 December 2021 31 December 2020
Annualised potential rental value of vacant premises 17.8 17.3
÷ Annualised potential rental value for the whole property portfolio 271.1 285.2
EPRA vacancy rate, %
1)
6.6 6.1
1)
Kista Galleria 50% not included.
. PROPERTY RELATED CAPEX
2021 2020
MEUR
Group
(excl. Joint
ventures)
Joint ventures
(proportionate
share) Total
Group
(excl. Joint
ventures)
Joint ventures
(proportionate
share) Total
Acquisitions -0.6 -0.6 156.0 - 156.0
(Re)development 158.3 3.3 161.7 156.6 2.6 159.2
Investment properties
No incremental lettable space 17.0 17.0 9.5 - 9.5
Tenant incentives 8.8 8.8 11.4 - 11.4
Capitalised interest 6.9 6.9 4.9 0.2 5.2
Total capital expenditure 190.4 3.3 193.7 338.5 2.8 341.3
Conversion from accrual to cash basis
-1.1 0.0 -1.1 -174.9 -0.2 -175.1
Total capital expenditure on
cash basis 189.3 3.4 192.7 163.6 2.5 166.2
EPRA vacancy rate increased from last years’ level
The EPRA vacancy rate at the end of 2021 for the entire property portfolio was 6.6%. Vacancy was slightly
higher in all operating countries due to covid-19.
. EPRA NET INITIAL YIELD NIY, AND EPRA ‘TOPPEDUP’ NIY,
EPRA initial yields present property portfolio’s ability to generate rent.
EPRA NIY, % is calculated by dividing the net rental income for the completed property
portfolio, based on the valid lease portfolio on the balance sheet date, by the gross market
value of the completed property portfolio. EPRA initial yields calculation does not include
Kista Galleria.
In EPRA ‘topped-up’ NIY, the net rental income is ‘topped-up’ to reflect rent aer the expiry
of lease incentives such as rent free periods and rental discounts.
MEUR 31 December 2021 31 December 2020
Fair value of investment properties determined by the external
appraiser 4,268.2 4,231.1
Less (re)development properties, unused building rights and proper-
ties which valuation is based on the value of the building right -437.0 -303.1
Completed property portfolio 3,831.2 3,928.0
Plus the estimated purchasers' transaction costs 66.9 68.7
Gross value of completed property portfolio (A) 3,898.2 3,996.7
Annualised gross rents for completed property portfolio 270.8 287.9
Property portfolio's operating expenses -69.3 -72.2
Annualised net rents (B) 201.6 215.8
Plus the notional rent expiration of rent free periods or other lease
incentives 1.0 1.3
Topped-up annualised net rents (C) 202.6 217.1
EPRA Net Initial Yield (NIY), % (B/A) 5.2 5.4
EPRA 'topped-up' NIY, % (C/A) 5.2 5.4
EPRA NIY and EPRA ‘TOPPED-UP’ NIY decreased
EPRA initial yields decreased during the year due to positive fair value development in our property portfolio.
Capex disclosed in the table are categorised according to the new EPRA recommendations
issued in October 2019. The comparison period figures have also been presented accordingly.
Investments include both income-producing and maintenance capex.
FINANCIAL REVIEW
FINANCIAL STATEMENTS EPRA PERFORMANCE MEASURES
MEUR 2021 2020 2019 2018 2017
Net rental income 202.3 205.4 217.4 214.9 228.5
Direct administrative expenses -26.1 -25.9 -26.8 -28.0 -29.1
Direct other operating income and expenses 0.0 0.9 2.8 0.8 1.1
Direct operating profit 176.1 180.4 193.5 187.6 200.5
Direct net financial income and expenses -46.8 -46.0 -48.9 -50.1 -54.4
Direct share of profit/loss of joint ventures and
associated companies -4.0 -0.8 2.8 5.3 6.2
Direct current taxes -3.3 -1.8 -2.0 -0.2 -0.8
Change in direct deferred taxes 2.4 4.8 0.1 0.9 0.7
Direct non-controlling interest 0.0 -0.1 0.0 0.0 0.0
EPRA Earnings 124.4 136.6 145.6 143.5 152.3
Hybrid bond coupons and amortized fees -24.3 -16.2 -1.7 - -
Adjusted EPRA Earnings 100.0 120.3 143.9 143.5 152.3
Issue-adjusted average number of shares, million
1)
177,033 177,998 177,997 177,997 177,998
EPRA Earnings per share (basic), EUR
1)
0.703 0.767 0.818 0.806 0.856
Adjusted EPRA Earnings per share (basic), EUR
1)
0.565 0.676 0.809 0.806 0.856
1)
Key ratios have been adjusted in the comparison periods to reflect the new number of shares aer the
reversed share split executed in March 2019.
EPRA Earnings can also be calculated from the consolidated income statement from top to
boom. The EPRA Earnings calculation is presented in the below table with this different
method, which also presents the Direct Operating profit.
. EPRA EARNINGS FOR FIVE YEARS
MEUR 2021 2020 2019 2018 2017
Earnings in IFRS Consolidated Income Statement 121.0 -28.0 8.9 16.6 87.4
+/- Net fair value losses/gains on investment property -48.6 146.9 121.9 72.5 42.9
-/+ Net gains/losses on disposal of investment
property 6.5 -0.7 -1.5 0.2 -6.0
-/+ Indirect other operating expenses 0.4 - - 10.3 12.8
-/+ Fair value gains/losses of financial instruments and
early close-out costs of debt and financial instruments 8.2 5.8 5.3 20.3 2.0
+/- Indirect losses/gains of joint ventures and associ-
ated companies 2.3 27.2 19.5 17.9 6.9
-/+ Change in deferred taxes arising from the items
above 34.6 -14.7 -8.5 5.7 5.8
+/- Non-controlling interest arising from the items
above - - - 0.0 0.5
EPRA Earnings (basic) 124.4 136.6 145.6 143.5 152.3
-/+ Hybrid bond coupons and amortized fees -24.3 -16.2 -1.7 - -
Adjusted EPRA Earnings (basic) 100.0 120.3 143.9 143.5 152.3
Issue-adjusted average number of shares, million
1)
177,033 177,998 177,997 177,997 177,998
EPRA Earnings per share (basic), EUR
1)
0.703 0.767 0.818 0.806 0.856
Adjusted EPRA Earnings per share (basic), EUR
1)
0.565 0.676 0.809 0.806 0.856
1)
Key ratios have been adjusted in the comparison periods to reflect the new number of shares aer the
reversed share split executed in March 2019.
FINANCIAL REVIEW
FINANCIAL STATEMENTS EPRA PERFORMANCE MEASURES
OPERATIONAL KEY FIGURES
FAIR VALUE
No. of properties Fair value, EUR million
Fair value change,
EUR million Average yield requirement, %
Average market rent,
EUR/sq.m./month
31 December 2021 31 December 2021 31 December 2020 2021 31 December 2021 31 December 2020 31 December 2021
Shopping centres, Finland & Estonia
1)
11 1,955.9 1,907.4 3.0 - - -
Other retail properties, Finland & Estonia 1 3.5 3.0 0.4 - - -
Finland & Estonia, total 12 1,959.3 1,910.5 3.4 5.3 5.5 27.8
Shopping centres, Norway 17 1,389.9 1,426.8 26.2 - - -
Rented shopping centres, Norway
2)
1 - - - - - -
Norway, total 18 1,389.9 1,426.8 26.2 5.4 5.6 21.8
Shopping centres, Sweden & Denmark 7 794.3 769.9 30.8 - - -
Sweden & Denmark, total 7 794.3 769.9 30.8 5.5 5.7 26.6
Shopping centres, total 36 4,140.1 4,104.2 60.0 - - -
Other retail properties, total 1 3.5 3.0 0.4 - - -
Investment properties, total 37 4,143.5 4,107.2 60.4 5.4 5.6 25.4
Right-of-use assets classified as investment properties (IFRS 16) - 45.7 45.0 -11.8 - - -
Investment properties in the statement of financial position, total 37 4,189.2 4,152.2 48.6 5.4 5.6 25.4
Kista Galleria, 50% 1 252.2 255.6 -1.4 - - -
Investment properties in the statement of financial position and
Kista Galleria (50%), total 38 4,441.4 4,407.8 47.2 5.4 5.5 25.7
1)
Includes Lippulaiva development project.
2)
Value of rented properties is recognized within IFRS 16 investment properties based on IFRS rules.
LIKEFORLIKE PORTFOLIO
No. of properties Fair value, EUR million
Fair value change,
EUR million Average yield requirement, %
Average market rent,
EUR/sq.m./month
31 December 2021 31 December 2021 31 December 2020 2021 31 December 2021 31 December 2020 31 December 2021
Shopping centres, Finland & Estonia 6 1,446.5 1,417.1 19.3 - - -
Other retail properties, Finland & Estonia 1 3.469 3.0 0.4 - - -
Finland & Estonia, total 7 1,449.9 1,420.2 19.6 5.3 5.4 28.8
Shopping centres, Norway 11 864.9 897.9 25.5 - - -
Rented shopping centres, Norway
1)
1 - - - - - -
Norway, total 12 864.9 897.9 25.5 5.4 5.5 22.1
Shopping centres, Sweden & Denmark 6 719.1 698.4 26.4 - - -
Sweden & Denmark, total 6 719.1 698.4 26.4 5.4 5.5 27.6
Like-for-like properties, total 25 3,033.9 3,016.5 71.5 5.3 5.5 26.6
Right-of-use assets classified as like-for-like properties (IFRS 16) - 43.0 39.5 -5.7 - - -
Like-for-like properties in the statement of financial position, total 25 3,077.0 3,056.0 65.9 5.3 5.5 26.6
1)
Value of rented properties is recognized within IFRS 16 investment properties based on IFRS rules.
FINANCIAL REVIEW
FINANCIAL STATEMENTS OPERATIONAL KEY FIGURES
AVERAGE RENT
Average remaining length of
lease agreements, years
Average rent, EUR/sq.m./
month
31 December 2021 31 December 2021
Finland & Estonia 3.5 24.6
Norway 2.8 20.6
Sweden & Denmark 2.7 23.3
Total 3.1 22.6
RENTAL INCOME BY BUSINESS UNITS
Gross rental income, MEUR Net rental income, MEUR
2021 2020 2021 2020
Finland & Estonia 90.7 91.5 85.2 86.8
Norway 85.8 81.3 77.8 74.1
Sweden & Denmark 45.7 51.5 39.2 44.5
Other 0.0 - 0.0 0.1
Investment properties, total 222.2 224.3 202.3 205.4
Kista Galleria, 50% 9.8 10.9 6.4 7.6
Investment properties and Kista Galleria (50%), total 231.9 235.2 208.7 213.0
RENTAL INCOME BY CATEGORY,
Finland & Estonia Norway Sweden & Denmark Total
Cafes and Restaurants 10.8 7.0 10.9
9.3
Cosmetics and Pharmacies 6.8 9.8 9.2
8.4
Fashion and Accessories 21.8 26.0 20.1
23.2
Groceries 21.6 11.3 17.7
16.7
Home and Sporting Goods 16.2 27.5 13.2
20.1
Leisure 1.7 0.2 1.1
1.0
Residentials and Hotels 1.2 0.0 1.1
0.7
Services and Oces 14.6 12.5 18.2
14.5
Specialty Stores 2.6 1.1 0.9
1.7
Wellness 2.6 4.5 7.7
4.4
Total 100.0 100.0 100.0
100.0
FINANCIAL REVIEW
FINANCIAL STATEMENTS OPERATIONAL KEY FIGURES
SHOPPING CENTRES
Location GLA, sq.m. Retail GLA, sq.m.
Economic occupancy rate, %
31 December 2021 Year of acquisition
Year built/latest
year of renovation
Finland & Estonia
Shopping centres, Helsinki area Finland
Heikintori Espoo 9,300 7,000 - 1998–2021 1968
Isomyyri Vantaa 11,700 8,300 - 1999 1987
Iso Omena Espoo 101,800 84,400 98.2 2007 2001/2016,2017
Pikkulaiva Espoo 8,400 8,100 99.9 2017 2017
Myyrmanni Vantaa 41,500 31,400 97.8 1999 1994/2016
Shopping centres, other areas in Finland
IsoKarhu Pori 15,100 12,700 64.8 1999 1972/2014
IsoKristiina Lappeenranta 16,950 12,800 93.0 1999, 2005 1987,1993/2015
Koskikeskus Tampere 35,100 29,800 92.0 1999, 2003 1988/2012
Trio Lahti 46,200 27,400 81.8 1999, 2007 1977, 1992/2010
Shopping centres, Estonia
Kristiine Keskus Tallinn 45,100 44,600 97.1 2011 1999/2019
Rocca al Mare Tallinn 57,800 56,800 96.1 2005 1998/2009
Shopping centres, total - 388,950 323,300 95.1 - -
Other retail properties, total - 2,240 700 52.0 - -
Finland & Estonia, total - 391,190 324,000 95.0 - -
Norway
Shopping centres, Oslo area
Buskerud Storsenter Krokstadelva 32,000 28,500 95.9 2015 1984/2017
Kolbotn Torg Kolbotn 18,700 16,400 93.2 2015 2008
Liertoppen Kjøpesenter Lierskogen 26,600 24,600 95.1 2015 1987/1990
Linderud Senter Oslo 21,500 16,800 98.4 2015 1967/2009
Magasinet Drammen Drammen 15,000 9,900 77.0 2015 1992/2008
Stovner Senter Oslo 42,900 32,200 92.9 2020 1975/2016
Trekanten Asker 24,100 16,900 99.1 2015 1997/2008
FINANCIAL REVIEW
FINANCIAL STATEMENTS OPERATIONAL KEY FIGURES
Location GLA, sq.m. Retail GLA, sq.m.
Economic occupancy rate, %
31 December 2021 Year of acquisition
Year built/latest
year of renovation
Shopping centres, other areas in Norway
Down Town Porsgrunn 36,700 31,900 85.4 2015 1988/2019
Herkules Skien 50,200 44,400 94.9 2015 1969/2013
Kilden Kjøpesenter Stavanger 23,300 19,500 96.8 2015 1989/2015
Kongssenteret Kongsvinger 17,900 15,800 77.2 2015 2001/2016
Kremmertorget Elverum 20,500 17,400 81.4 2015 1979/2012
Oasen Kjøpesenter Fyllingsdalen 50,200 26,700 91.2 2015 1971/2014
Sjøsiden Horten 11,300 9,900 92.8 2015 2001
Solsiden
2)
Trondheim 14,500 13,700 97.4 2015 2000
Stopp Tune Sarpsborg 13,500 12,700 97.4 2015 1993
Storbyen Sarpsborg 25,600 23,900 86.9 2015 1999/2015
Torvbyen Fredrikstad 14,100 11,900 97.3 2020 1988/2012
Norway, total - 458,600 373,100 92.3 - -
Sweden & Denmark
Shopping centres, Stockholm area
Jakobsbergs Centrum Järfalla 42,400 26,100 78.4 2006 1959/1993
Kista Galleria, 50% Stockholm 46,300 29,100 86.1 2013 1977,2002/ 2014
Liljeholmstorget Galleria Stockholm 41,100 27,200 98.2 2006 1973/2009
Åkersberga Centrum Åkersberga 28,000 22,900 90.0 2005, 2015 1985/2011
Shopping centres, Gothenburg area
Stenungstorg Centrum Stenungsund 35,400 22,000 92.7 2006 1967/2016
Mölndals Galleria Mölndal 26,300 24,200 93.8 2014/2018 2018
Shopping centres, Denmark
Albertslund Centrum Copenhagen 17,000 12,700 99.6 2012 1965/2015
Strædet Køge 19,100 17,300 96.1 2017, 2018 2017, 2018
Sweden & Denmark, total - 255,600 181,500 91.2 - -
Total - 1,105,390 878,600 93.0 - -
1)
Including Kista Galleria 50%. Does not include properties under construction.
2)
Rented property
FINANCIAL REVIEW
FINANCIAL STATEMENTS OPERATIONAL KEY FIGURES
LEASING ACTIVITY, INVESTMENT PROPERTIES
Number of lease
agreements Leased area, sq.m.
Average rent,
EUR/sq.m./month
31 December 2020 3,810 1,016,363 22.0
Leases started 965 247,526 22.1
Leases ended 1,445 319,011 23.5
Acquisitions - - -
Other changes -4 -3,225 -
31 December 2021 3,326 941,652 22.6
CITYCON’S FIVE LARGEST PROPERTIES
Average rent,
EUR/sq.m./
month
Gross rental
income, EUR
million
Net rental
income, EUR
million
Fair value,
EUR million
Fair value
change, EUR
million
31 December
2021 2021 2021
31 December
2021 2021
Iso Omena 34.0 33.2 31.4 750.2 4.2
Liljeholmstorget Galleria 35.0 15.3 13.8 333.5 17.8
Oasen 24.2 10.5 9.5 213.1 2.9
Rocca al Mare 23.6 12.4 11.9 184.6 0.4
Herkules 19.3 9.3 9.0 181.0 7.4
Five largest properties, total 28.2 80.7 75.7 1,662.4 32.7
1)
Properties under construction not included.
TOP TEN TENANTS
Proportion of rental income based on valid rent roll
at 31 December 2021. %
Kesko Group 4.1%
S Group 4.1%
Varner Group 3.8%
NorgesGruppen 2.2%
ICA Group 1.9%
Coop 1.9%
Clas Ohlson 1.8%
H&M 1.7%
Gresvig 1.6%
Stockmann Group 1.5%
Total 24.7%
FINANCIAL REVIEW
FINANCIAL STATEMENTS OPERATIONAL KEY FIGURES
Location Area before/after, sq.m. Expected investment, MEUR
Actual gross investment by
31 December 2021, MEUR Completion
Lippulaiva shopping centre Helsinki metropolitan area, Finland 19,200/44,300 357.2
1)
310.6
1)
2022
Lippulaiva residentials Helsinki metropolitan area, Finland -/18,000 90.5 32.7 2022–2024
1)
Expected gross investment is 410 MEUR with the proceeds from net rental income of Pikkulaiva, sale of additional building rights and metro&bus terminal offseing for a expected net investment of 357.2 MEUR.
Actual gross investment by 31 December 2021 was 363.5 MEUR.
COMPLETED REDEVELOPMENT PROJECTS IN
Location Area before/after, sq.m. Expected investment, MEUR
Actual gross investment by
31 December 2021, MEUR Completion
Oasen Kjøpesenter (phase I) Bergen, Norway - 11.6 11.7 2021
REDEVELOPMENT PROJECTS IN PROGRESS
ON DECEMBER
FINANCIAL REVIEW
FINANCIAL STATEMENTS REDEVELOPMENT PROJECTS
POTENTIAL REDEVELOPMENT PROJECTS
Citycon is investigating the following development and/or extension opportunities
Area before/after, sq.m.
Liljeholmstorget Galleria Stockholm, Sweden 40,500/90,000
Extension possibility of the shopping centre to meet the strong demand for more retail, oce/healthcare and services including culture and library,
entertainment and food, all directly connected to the metro station and bus terminal. Plans also include creating building rights for residentials.
Stenungstorg Steungssund, Sweden 30,400/30,900
The plan is to tranform the current shopping centre area into a modern city center and to create a urban hub with a mix of residential areas, hotel,
retail and services.
Trekanten Oslo, Norway 23,800/45,000
Extension possibility of the shopping centre with the main objective to increase the oering of shops and services as well as create more visible
and inviting entrances and improved circulation. Plans also include adding residential, oces, healthcare and sports facilities on top of the centre.
Oasen Kjøpesenter (phase II) Bergen, Norway 56,800/68,800 A residential development project which includes opportunity to build several residential towers in connection with the existing shopping centre.
Isomyyri Vantaa, Finland 11,650/27,800
Aim to develop a retail centre on an urban city block. The project includes new residential buildings and demolishing the present building. Retail,
commercial premises and services are planned to be located on the street level of the new residentials. Includes also potential for oces.
FINANCIAL REVIEW
FINANCIAL STATEMENTS REDEVELOPMENT PROJECTS
RISKS AND RISK MANAGEMENT
The objective of Citycon’s risk
management is to ensure
that the business targets are
achieved by identifying,
assessing and monitoring key
risks which may threaten
these targets, and to the extent
possible, avoid, transfer
or mitigate these risks.
RISK MANAGEMENT PRINCIPLES
Citycon is exposed to various risks through
the normal course of its activities. No busi-
ness can be conducted without accepting a
certain risk level, and expected gains are to
be assessed against the involved risks. Suc-
cessful risk management implemented in the
business processes decreases the likelihood
of risk realization and mitigates
the negative effects of realised risk.
Many of the risks and threats have not only
potential negative effects, but could also
develop in a favourable manner, or if effective
proactive measures are taken, be turned into
opportunities for Citycon.
The Board of Directors determines
Citycon’s strategic direction and is jointly
with the Management Commiee responsible
for the long term and overall management
of strategic risks. The operational risks,
financial risks and hazard risks are managed
in the various functions as a part of oper-
ational management. Each function has a
dedicated person who is the owner of the
risks in that area and also responsible for the
reporting of the risks, the mitigation plans
and the follow-up on their implementation.
RISK REPORTING
The risk management and reporting process
involves identifying, assessing, quantifying,
mitigating and monitoring risks in all main
business operations and processes. The
process also includes evaluation of existing,
and the planning of new, risk mitigation plans
for the identified risks in order to continu-
ously improve risk management processes.
The risk reporting process gathers data
on risks and the respective mitigation plans
into one group-wide risk register. A Risk
steering commiee is responsible for the risk
reporting process and evaluates which risks
to present to Citycon’s Board of Directors
to facilitate discussion and inform about the
major risks in the company. This is done during
the budgeting process so that the risks are
linked to the annual targets. In order to evalu-
ate the importance of each risk and to improve
the comparativeness, an estimate of the loss
associated with each risk is determined to-
gether with the probability of risk realization.
The realised risks during the previous year are
also estimated and reported.
INSURANCES
To transfer certain operational and hazard
risks, Citycon maintains a comprehensive
insurance coverage to cover damages, claims
and liabilities potentially arising from the
Group’s business. The properties are insured
under the property damage policy to their full
reconstruction value, including business in-
terruption insurance and third-party liability
insurance. Citycon also have other customary
insurance policies.
Board of
Directors
Internal audit
Internal
control
Risk management as part of
continuous operational
management in Management Committee
Risk Report
Business operations and functions
• Operations
• Leasing
• Business development
• Property transactions
• Property development
• Reporting and accounting
• Property valuations
• Tax
• Funding
• Financial risk management
• Communication and IR
• Legal
• IT
• HR
Identify
Assess &
quantify
Create mitigation
plans
Report risks
and mitigation
plans to the board
Monitor
FINANCIAL REVIEW
FINANCIAL STATEMENTS RISK AND RISK MANAGEMENT
RISK AND IMPACT RISK MANAGEMENT MEASURES
Leasing
• The prolonged COVID-19 pandemic has had continued negative eects on our
business. Both changed consumer behaviour and authority restrictions in our operating
countries has substantially changed our business environment. It has impacted our ability
to collect rents on time or in full. The eect going forward is dicult to predict as it will
depend on whether the exiting from the COVID-19 pandemic is prolonged further due
to new variants of the virus. A prolongation of Covid-19 pandemic would negatively
impact sales and footfall, and increase the risk of tenant bankruptcies and weaken tenant’s
capability to pay rent which could increase Citycon’s vacancy and weaken results.
• The economic development in Citycon’s operating countries impacts consumer
confidence which could aect demand for retail premises. This may lead to lower rental
levels or increased vacancy. It could also increase the risks for credit losses or decrease
turnover based rental income.
• The growing online retailing that aects customer behaviour, or increased local
competition may aect demand for retail premises and put pressure on rental levels or
increase vacancy, especially in less urban locations.
• Citycon’s strategy to focus on grocery anchored, urban shopping centres connected to public transportation with necessity- driven retail
has proven to be a recession proof business model with steady cash flows, occupancy and low credit losses also during a downturn. This
strategy also decreases the negative eects of the increasing online retailing.
• The fact that most of the company’s assets are in AAA/AA+ rated countries decreases the risk of a major downturn aecting the retail
sector.
• Citycon is continuously following and analysing tenants to identify risk tenants, and requires a rent collateral.
• Tenant diversification has improved considerably through focused leasing eorts and through pan-Nordic strategy and the share of risk
tenants has actively been decreased.
* Citycon tries to mitigate the eects of Covid-19 by following strict cleaning and hygiene routines, and authority recommendations.
Property
Development
& transactions
• Increased costs in development projects due to rising construction costs or delays due
to unforeseeable challenges.
• Reduced demand for new retail space could result in a low occupancy rate or lower
than planned rent levels in new premises.
• Planned divestments of non-core properties could be delayed due to relatively low
liquidity for secondary assets
• Construction costs are managed through competitive tendering, careful project monitoring of costs and by entering into contracts with
price caps when appropriate.
• Leasing risks are minimised by having strict pre-leasing requirements prior to project start, by signing agreements with key anchor tenants
at an early stage and by carrying out developments in proven retail locations with strong and growing demographics.
• Maintaining relatively low level of development exposure and keeping no landbank.
Operations
• A major accident, system failure, or terrorist incident could threaten the safety of
shoppers and retailers, leading to loss of consumer confidence and thereby loss of
income and extra costs.
• Risk of increased operating cost for e.g. maintenance, energy or security. In some lease
agreements the rent paid by the lessee is not aected by changed operating expenses,
and a rise in operating expenses higher than inflation would decrease the profitability.
Also, when the higher costs can be passed to tenants, rising operating expenses may
reduce tenants’ rental payment capacity.
• Governmental restrictions due to pandemic could threaten footfall and tenants’ ability
to conduct business.
• Risk of accidents and incidents mitigated by adequate security plans and incident procedures supported by crisis case exercises for
personnel.
• Comprehensive insurance coverage.
• Citycon tries to minimize the impact of rising operating expenses by lease contracts with specified rent components when possible and
charging tenants based on actual operating costs.
• Ecient centralized procurement, frame contracts with service providers and suppliers, cost monitoring and cost benchmarking between
shopping centres.
• To mitigate the risk of energy price hikes, electricity prices are fixed according to a hedging policy, and energy eciency actions have
been implemented
Property
values
• The value of the properties can decrease for a number of reasons: a weaker economic
environment impacting consumer purchase power, changes in competition and
consumer behaviour towards internet shopping, reduced availability and higher cost of
financing and the relative attractiveness of other asset classes. The changes may lead
to higher yield requirements, decreased market rents and increased vacancy rates.
• While many of the factors aecting property values cannot be influenced, Citycon seeks to impact the fair market value through active
shopping centre management and optimising the profitability of its centres.
• Citycon’s strategy to focus on urban mixed-use centres with necessity-driven retail and services in strong and growing locations results in
relatively stable property valuations throughout the economic cycle.
• Citycon’s presence in five highly rated countries gives country risk diversification and decreases the volatility of the total property values
Environment
• Environmental concerns, customer expectations or legislation might restrict or impact
Citycon’s business, land use and construction.
• Risks associated with e.g. climate change might aect Citycon’s business environment.
For example, extreme weather conditions and regulation implemented to mitigate and
adapt to climate change can increase energy, maintenance and construction costs.
• Environmental impact assessments are conducted in connection with major projects.
• Ensuring the environmental compliance of our buildings through energy investments, internal management practices, green energy
purchase and production as well as external standards and certifications.
• Sustainability strategy with clear short- and long-term targets
People
• An expert organisation of Citycon’s nature relies heavily on its personnel for success,
and therefore it is crucial to attract and retain the right people, develop competencies
and ensure clear roles and targets
• Citycon sees good leadership as essential to reduce personnel related risks and places great emphasis on target-setting and performance
management, competence development, career advancement, and commitment of key employees.
Financing
• Both bank and bond financing have been available for Citycon, but willingness to lend
at competitive terms could decline due to credit rating downgrades, turmoil in financial
markets, tightening regulation or other reasons, which could aect the availability or
cost of debt financing
• Interest rates continue to be historically low and will inevitably increase over time
• Citycon has a conservative but active financing policy, with a focus on long-term financing, a solid balance sheet and keeping 70–90% of
debt tied to fixed interest rates to reduce the eects of increased interest rates.
• Investment grade credit ratings by Standard & Poor’s (BBB-, negative outlook), Moody’s (Baa3, negative outlook) and Fitch (BBB-,
Stable outlook) supports the availability and cost of financing. Several long-term bond issues have reduced the refinancing risk and
dependency on bank financing
FINANCIAL REVIEW
FINANCIAL STATEMENTS RISK AND RISK MANAGEMENT
SHARES AND SHAREHOLDERS
Listing
Market place Nasdaq Helsinki
Listed since 1988
Trading currency euro
Segment Suuret yhtiöt / Large Cap
Sector Financials
Sub-industry Real Estate Operating
Companies
Trading code CTY1S
ISIN code FI4000369947
owned by nominee-registered parties
equaled 69.0% at year-end 2020 (78.8%).
Citycon is one of the companies on the
Helsinki Stock Exchange with the most
international ownership base.
LARGEST SHAREHOLDERS
Citycon’s largest shareholders according
to Euroclear Finland are listed in the table
below.
In total, Gazit and wholly-owned subsid-
iary Gazit Europe Netherlands own 51.96%
of the total shares and votes in the company
(87,559,016 shares as of 31 December 2021).
Their shareholdings are mostly nominee-reg-
istered. The above-mentioned shareholdings
include their direct ownership mentioned on
the table above.
DIVIDEND PAYOUT
Cityon’s financial target is to pay out a
minimum of 50% of the profit for the period
aer taxes, excluding fair value changes on
investment properties.
The Board of Directors proposes to
the AGM that the Board of Directors be
authorized to decide in its discretion on the
distribution of assets from the invested
unrestricted equity fund in the manner set
forth below.
Based on this authorization, the max-
imum total amount of equity repayment
distributed from the invested unrestricted
Share price and trading
2021 2020 2019 2018 2017
Number of shares traded
1)
*1,000 94,293 68,046 28,320 49,253 35,457
Stock turnover % 56.0 38.2 15.9 27.7 19.9
Share price, high
1)
EUR 8.18 9.99 10.08 11.24 12.51
Share price, low
1)
EUR 6.67 5.22 8.10 7.98 10.42
Share price, average
1)
EUR 7.37 7.19 9.18 9.30 11.15
Share price, closing
1)
EUR 7.00 7.93 9.37 8.08 10.79
Market capitalisation, period-end MEUR 1,179.50 1,411.53 1,666.96 1,437.34 1,920.60
Number of shares, period-end *1,000 168,499 177,999 177,999 889,993 889,993
1)
Comparative figures adjusted to reflect the reverse split on March 18, 2019.
10
9
8
7
6
5
SHARE PRICE AND VOLUME
Number of shares, thousand
EUR
Citycon
share price
Citycon
share volume
January 2021 December 2021
12,000
10,000
8,000
6,000
4,000
2,000
0
SHARES AND SHARE CAPITAL
Citycon Oyj’s shares are listed on Nasdaq
Helsinki. Citycon has one series of shares
and each share entitles its holder to one
vote at the General Meeting and to an equal
dividend. The shares have no nominal value.
At year-end 2021, Citycon’s total number
of shares was 168,498,525. The market
capitalisation of Citycon at the end of 2021
was EUR 1,2 billion based on the stock price
of EUR 7.00.
In 2021, approximately 94.3 million
Citycon shares were traded on the Helsinki
Stock Exchange. The daily average trading
volume was 374,179 shares, representing
a daily average turnover of approximately
EUR 2.7 million.
SHAREHOLDERS
The number of registered shareholders at
year-end 2021 was 28,577 (22,499). Shares
Preliminary payment date Preliminary record date
31 March 2022 24 March 2022
30 June 2022 23 June 2022
30 September 2022 23 September 2022
30 December 2022 15 December 2022
FINANCIAL REVIEW
FINANCIAL STATEMENTS SHARES AND SHAREHOLDERS
equity fund shall not exceed EUR 0.50 per
share. Based on the current total number of
issued shares in the company (168,008,940),
the authorization would equal to a maximum
of EUR 84,004,470 in equity repayment.
The authorization is valid until the open-
ing of the next Annual General Meeting.
Unless the Board of Directors decides
otherwise for a justified reason, the au-
thorization will be used to distribute equity
repayment four times during the period of
validity of the authorization. The Board of
Directors will make separate resolutions on
each distribution of the equity repayment
so that the preliminary record and payment
dates will be as set out below. Citycon shall
make separate announcements of each such
Board resolution.
The equity repayment based on the
resolution of the Board of Directors will be
paid to a shareholder registered in the com-
pany’s shareholders’ register maintained by
Euroclear Finland Ltd on the record date of
the dividend and/or equity repayment.
MAJOR SHAREHOLDERS
DECEMBER
In total, Gazit-Globe Ltd. and its whol-
ly-owned subsidiary Gazit Europe Nether-
lands own 51.96% of the total shares and
votes in the company (87,559,016 shares as
of 31 December 2021). Their shareholdings
are mostly nominee-registered. The
above-mentioned shareholdings include
their direct ownership mentioned on the list
below. More information on ownership of
Gazit Ltd and Gazit Europe Netherlands BV
is available on company´s website
citycon.com/investors/major-shareholders
Shareholders by owner groups
31 December 2021
Number of
shareholders % Number of shares %
Financial and insurance corporations 32 0.11 96,950,735 57.54
Corporations 1,213 4.24 6,614,501 3.93
Households 27,053 94.67 24,842,329 14.74
General government 9 0.03 14,744,765 8.75
Foreign 91 0.32 23,228,550 13.79
Non-profit institutions 179 0.63 2,117,645 1.26
Total 28,577 100.00 168,498,525 100.00
Shareholdings by number of shares
31 December 2021
Number of shares
Number of
shareholders % Number of shares %
1–100 9,063 31.71 422,923 0.25
101–1,000 14,398 50.38 5,698,525 3.38
1,001–10,000 4,630 16.20 12,883,298 7.65
10,001–100,000 450 1.58 11,313,577 6.71
100,001–1,000,000 30 0.11 9,334,539 5.54
1,000,001 + 6 0.02 128,845,663 76.47
Total 28,577 100.00 168,498,525 100.00
Major shareholders 31 December 2021 Shares %
Ilmarinen Mutual Pension Insurance Company 12,694,139 7.53
The State Pension Fund 1,200,000 0.71
Elo Mutual Pension Insurance Company 764,515 0.45
OP-Henkivakuutus Ltd. 720,095 0.43
Nordea Life Assurance Finland Ltd. 688,983 0.41
Zeroman Oy 636,666 0.38
Merivirta Jyri Tapio 500,000 0.30
Pakkanen Mikko Pertti Juhani 500,000 0.30
Gazit Globe Ltd* 382,174 0.23
Mandatum Life Insurance Company Ltd. 347,316 0.21
10 largets shareholders, total 18,433,888 10.94
Nominee-registered shares 116,214,092 68.97
Others 33,850,545 20.09
Total 168,498,525 100
* Includes non-nominee-registered ownership. In total, Gazit-Globe Ltd. and its wholly-owned subsidiary
Gazit Europe Netherlands own 51.96% of the total shares and votes in the company (87,559,016 shares
as of 31 December 2021).
FINANCIAL REVIEW
FINANCIAL STATEMENTS SHARES AND SHAREHOLDERS
KEY FIGURES AND FINANCIAL DEVELOPMENT FOR FIVE YEARS
MEUR 2021 2020 2019 2018 2017
Income statement data
Gross rental income 222.2 224.3 232.1 237.0 257.4
Net rental income
Finland & Estonia 85.2 86.8 94.4 96.9 106.9
Norway 77.8 74.1 75.4 74.3 79.6
Sweden & Denmark 39.2 44.5 47.3 43.5 41.3
Other 0.0 0.1 0.3 0.2 0.7
Net rental income total 202.3 205.4 217.4 214.9 228.5
Other operating income and expense -0.4 0.9 2.8 -9.5 -11.6
Operating profit/loss 217.8 34.1 73.1 104.7 150.9
Profit/loss before taxes 156.5 -45.7 2.2 21.7 93.8
Profit/loss attributable to parent company shareholders 121.0 -28.0 8.9 16.6 87.4
Statement of financial position data
Investment properties 4,189.2 4,152.2 4,160.2 4,131.3 4,183.4
Current assets 145.0 77.8 74.2 56.2 43.7
Total equity 2,489.5 2,166.0 2,325.2 2,089.0 2,208.5
Equity attributable to parent company shareholders 1,800.1 1,818.6 1,978.4 2,088.9 2,208.1
Non-controlling interest 0.3 0.2 0.1 0.1 1.2
Interest-bearing liabilities 1,878.5 2,121.2 1,874.4 2,140.0 2,083.9
Total liabilities 2,313.5 2,514.0 2,257.1 2,533.7 2,468.6
Total liabilities and shareholders’ equity 4,803.0 4,680.0 4,582.3 4,622.7 4,678.0
FINANCIAL REVIEW
FINANCIAL STATEMENTS KEY FIGURES AND RATIOS
MEUR Formula 2021 2020 2019 2018 2017
Key performance ratios
Equity ratio, % 1 52.0 46.4 50.9 45.4 47.4
Loan to value (LTV), % 2 40.7 46.9 42.4 48.7 46.7
Return on equity, % (ROE) 3 6.6 0.0 0.4 0.8 3.8
Return on investment, % (ROI) 4 4.8 2.8 2.3 4.1 5.8
Quick ratio 5 2.6 0.7 0.3 0.6 0.4
Gross capital expenditure, MEUR 224.1 344.4 106.0 168.8 298.7
% of gross rental income 100.9 153.5 45.7 71.2 116.0
Per-share figures and ratios
1)
Earnings per share, EUR 6 0.55 -0.25 0.04 0.09 0.49
Earnings per share, diluted, EUR 7 0.54 -0.25 0.04 0.09 0.49
Net cash from operating activities per share, EUR 8 0.72 0.71 0.76 0.54 0.83
Equity per share, EUR 9 14.80 12.17 13.06 11.74 12.41
P/E (price/earnings) ratio 10 - - 187 87 22
Return from invested unrestricted equity fund per share, EUR
2)
0.45 0.49 0.60 0.60 0.60
Dividend per share, EUR
2)
0.05 0.05 0.05 0.05 0.05
Dividend and return from invested unrestricted equity fund per
share total, EUR
2)
0.50 0.54 0.65 0.65 0.65
Dividend and return of equity per earnings, % 11 - - 1,603.1 696.2 132.4
Eective dividend and return of equity yield, % 12 7.1 6.8 6.9 8.0 6.0
Issue-adjusted average number of shares (1,000)
4)
177,033 177,998 177,997 889,987 889,992
Issue-adjusted number of shares at the end of financial year (1,000)
4)
168,202 177,999 177,999 889,993 889,993
Operative key ratios
Occupancy rate (economic), %
3)
13 93.4 93.9 95.5 96.3 96.0
Citycon's GLA, sq.m.
3)
1,059,090 1,136,390 1,074,590 1,106,490 1,137,890
Personnel (at the end of the period) 251 246 234 264 265
1)
Per-share figures and ratios have been adjusted in the comparison periods to reflect the new number of shares aer the reversed share split executed in March 2019.
2)
The Board of Directors proposes that based on the balance sheet to be adopted for the financial period ended on 31 December 2021, no dividend is distributed by a resolution of the Annual General Meeting. Nonethe-
less, the Board of Directors proposes that the Board of Directors be authorized to decide in its discretion on the distribution of assets from the invested unrestricted equity fund in the manner set forth below. Based
on this authorization, the maximum total amount of equity repayment distributed from the invested unrestricted equity fund shall not exceed EUR 0.50 per share.
3)
Kista Galleria 50% not included.
4)
Issue-adjusted number of shares excluding Treasury shares held by the company.
KEY FIGURES AND FINANCIAL DEVELOPMENT FOR FIVE YEARS
FINANCIAL REVIEW
FINANCIAL STATEMENTS KEY FIGURES AND RATIOS
FORMULAS FOR KEY FIGURES AND RATIOS
1) Equity ratio, % Shareholders’ equity
X 100
Balance sheet total - advances received
2) Loan to value (LTV), % Interest bearing liabilities – lease liabilities (IFRS 16) – cash and
cash equivalents
X 100
Fair value of investment properties + properties held for sale +
investments in joint ventures - right-of-use assets classified as
investment properties (IFRS 16)
3) Return on equity (ROE), % Profit/loss for the period
X 100
Shareholders’ equity excluding Hybrid Bonds
(weighted average)
4) Return on investment (ROI), % Profit/loss before taxes + interest and other financial expenses
X 100
Balance sheet total (average) - non-interest-bearing liabilities
(average)
5) Quick ratio Current assets
Short-term liabilities
6) Earnings per share (EPS), EUR
1)
Profit/loss for the period
X 100
Average number of shares for the period
7) Earnings per share, diluted, EUR
1)
Profit/loss for the period
X 100
Diluted average number of shares for the period
8) Net cash from operating activities
per share, EUR
Net cash from operating activities
X 100
Average number of shares for the period
9) Equity per share, EUR Total equity
Number of shares on the balance sheet date
10) P/E ratio (price/earnings) Closing price at year-end
EPS
11) Dividend and return of equity per
earnings, %
Dividend and return of equity per share
X 100
EPS
12) Eective dividend and return of
equity yield, %
Dividend and return of equity per share
X 100
Closing price at year-end
13) Occupancy rate (economic), % Gross rental income as per leases
X 100
Estimated market rent of vacant premises + gross rental
income as per leases
1)
Transaction costs and coupons on hybrid bond are deducted from the profit/loss for the period
aributable to parent company shareholders, despite the recognition date (coupons are recorded
based on the commitment to the payment)
FINANCIAL REVIEW
FINANCIAL STATEMENTS FORMULAS FOR KEY FIGURES AND RATIOS
FINANCIAL REVIEW
FINANCIAL STATEMENTS FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
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
CITYCON OYJ’S CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT, IFRS
MEUR Note 2021 2020
Gross rental income 1.2. 222.2 224.3
Service charge income 1.3. 70.2 71.2
Property operating expenses 1.4. -88.6 -84.9
Other expenses from leasing operations -1.4 -5.3
Net rental income 1.1. 202.3 205.4
Administrative expenses 1.5. -26.1 -25.9
Other operating income and expenses 1.3, 1.7. -0.4 0.9
Net fair value gains/losses on investment property 2.1. 48.6 -146.9
Net gains/losses on sale of investment property 2.1., 2.2. -6.5 0.7
Operating profit 217.8 34.1
Financial income 25.0 113.3
Financial expenses -80.0 -165.1
Net financial income and expenses 3.2. -55.0 -51.8
Share of profit of associated companies and joint ventures 2.4. -6.3 -28.0
Profit before taxes 156.5 -45.7
Current taxes 4.1. -3.3 -1.8
Change in deferred taxes 4.2. -32.2 19.6
Income taxes -35.5 17.8
Profit for the period 121.0 -27.9
Profit attributable to
Parent company shareholders 121.0 -28.0
Non-controlling interest 0.0 0.1
Earnings per share attributable to parent company shareholders
1)
:
Earnings per share (basic), EUR 1.8. 0.55 -0.25
Earnings per share (diluted), EUR 1.8. 0.54 -0.25
1)
The key figure includes hybrid bond coupons and amortized fees.
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME, IFRS
MEUR Note 2021 2020
Profit for the period 121.0 -27.9
Other comprehensive expenses/income
Items that may be reclassified to profit or loss in subsequent periods
Net gains/losses on cash flow hedges 3.2. 1.2 -1.3
Share of other comprehensive income of associated companies and
joint ventures
Exchange gains/losses on translating foreign operations 36.0 -30.5
Net other comprehensive income that may be reclassified to
profit or loss in subsequent periods
Other comprehensive expenses for the period, net of tax 37.3 -31.8
Total comprehensive profit/loss for the period 158.3 -59.6
Total comprehensive profit/loss attributable to
Parent company shareholders 158.2 -59.8
Non-controlling interest 0.0 0.1
2020 20211 2 3 4 5
CHANGE IN OPERATING PROFIT
1 Change in net rental income
2 Change in administrative expenses
3 Change in other operating income and expenses
4 Change in fair value gains/losses
5 Change in gains/losses on sale
-3.1
-1.3
-7.2
34.1
-0.2
195.5
217.8
MEUR
Operating profit and profit
for the period increased
significantly due to positive investment
property fair value development
Net rental income stayed close to
previous year’s levels despite the
pandemic and divestments. The net fair
value gain from investment properties
was EUR 48.6 million and share of
profit of associated companies and joint
ventures improved EUR 21.7 million
from the previous year due to better
valuation result in Kista.
FINANCIAL REVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION, IFRS
MEUR Note 31 December 2021 31 December 2020
ASSETS
Non-current assets
Investment properties 2.1. 4,189.2 4,152.2
Goodwill 5.1. 145.4 141.1
Investments in associated companies and joint ventures 2.4. 129.3 108.6
Intangible assets 4.3. 7.6 17.6
Property, plant and equipment 3.4 3.5
Deferred tax assets 4.2. 16.4 14.2
Derivative financial instruments and other non-current
assets
3.6. 15.8 15.4
Total non-current assets 4,507.2 4,452.5
Investment properties held for sale 2.2. 150.9 149.7
Current assets
Derivative financial instruments 3.6. 1.0 0.2
Current tax receivables 4.1. 0.2 0.3
Trade and other receivables 3.3., 4.4. 89.1 51.5
Cash, cash equivalents and
current financial investments
3.8. 54.7 25.9
Total current assets 145.0 77.8
Total assets 4,803.0 4,680.0
MEUR Note 31 December 2021 31 December 2020
EQUITY AND LIABILITIES
Equity 3.1.
Share capital 259.6 259.6
Share premium fund 131.1 131.1
Fair value reserve 1.4 0.2
Invested unrestricted equity fund 744.2 823.2
Translation reserve -114.8 -150.9
Retained earnings 778.6 755.4
Total equity attributable to parent company shareholders 1,800.1 1,818.6
Hybrid bond 3.1. 689.1 347.2
Non-controlling interest 0.3 0.2
Total equity 2,489.5 2,166.0
Long-term liabilities
Loans 3.3., 3.4. 1,871.9 1,863.8
Derivative financial instruments 3.3., 3.6. 11.5 18.5
Deferred tax liabilities 4.2. 296.7 275.7
Other liabilities 3.3. 0.3 1.0
Total long-term liabilities 2,180.5 2,159.0
Short-term liabilities
Loans 3.3., 3.4. 6.5 257.4
Derivative financial instruments 3.3., 3.6. 5.1 8.3
Current tax liabilities 4.1. 2.4 2.3
Trade and other payables 3.3., 4.5. 118.9 87.0
Total short-term liabilities 133.0 355.0
Total liabilities 2,313.5 2,514.0
Total liabilities and equity 4,803.0 4,680.0
Investment property values improved
The value of properties increased due to investments and acquisitions of EUR 190.4 million, due to
fair value gains of EUR 48.6 million and EUR 55.1 million due to stronger NOK and SEK currencies.
On the contrary, divestments decreased the value of investment properties by EUR 9.1 million and transfers to
held-for-sale by EUR 260.5 million. Equity increased due to new hybrid bond issued in Q2 2021.
2021 20212020 2020
ASSETS EQUITY AND LIABILITIES
Other current assets
Cash and cash
equivalents
Investment properties
held for sale
Other non-current
assets
Goodwill
Investments in
associated companies
and joint ventures
Investment properties
Other short-term
liabilities
Other long-term
liabilities
Deferred tax
liabilities
Loans
Total equity
5,000
4,000
3,000
2,000
1,000
0
5,000
4,000
3,000
2,000
1,000
0
MEUR MEUR
FINANCIAL REVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT, IFRS
MEUR Note 2021 2020
Cash flow from operating activities
Profit before taxes 156.5 -45.7
Adjustments 22.7 230.5
Cash flow before change in working capital 179.3 184.8
Change in trade and other receivables 4.4. -16.1 -6.0
Change in trade and other payables 4.5. 23.7 5.8
Change in working capital 7.7 -0.3
Cash generated from operations 186.9 184.6
Interest expenses and other financial expenses paid -58.6 -58.2
Interest income and other financial income received 0.5 1.4
Taxes paid -2.1 -2.0
Net cash from operating activities 126.7 125.7
Cash flow from investing activities
Acquisition of subsidiaries, less cash acquired 2.1. 0.6 -7.9
Capital expenditure on investment properties 2.1. -189.9 -155.8
Capital expenditure on investments in joint ventures,
intangible assets and PP&E
2.4., 4.3. -26.8 -2.5
Sale of investment properties 2.1., 2.2. 226.0 10.8
Purchase of current financial investments -285.0 -
Repayment of current financial investments 264.9 -
Net cash used in investing activities -10.2 -155.4
Cash flow from financing activities
Proceeds from short-term loans 3.4. 862.3 831.4
Repayments of short-term loans 3.4. -1,082.5 -942.8
Proceeds from long-term loans 3.4. 346.1 554.2
Repayments of long-term loans 3.4. -386.9 -306.3
Proceeds from hybrid bond 3.1. 342.5 -
Hybrid bond interest and expenses 3.1. -20.3 -4.4
Repurchase of treasury shares and costs -68.6 -
Dividends and return from the invested unrestricted equity fund -87.8 -95.7
Realised exchange rate gains and losses -12.7 3.8
Net cash from/used in financing activities -107.8 40.3
Net change in cash and cash equivalents 8.6 10.7
Cash and cash equivalents at period-start 3.8. 25.9 14.2
Eects of exchange rate changes 0.3 1.0
Cash and cash equivalents at period-end 3.8. 34.7 25.9
MEUR Note 2021 2020
Adjustments:
Depreciation and amortisation 1.5., 4.3. 2.7 2.6
Net fair value gains/losses on investment property 2.1. -48.6 146.9
Gains/losses on disposal of investment property 2.2. 6.5 -0.7
Financial income 3.2. -25.0 -113.3
Financial expenses 3.2. 80.0 165.1
Share of profit of associated companies and joint ventures 2.4. 6.3 28.0
Share-based payments 1.6. 0.8 0.7
Other adjustments 0.1 1.2
Total 22.7 230.5
MEUR 2021 2020
Net cash from operating activities 126.7 125.7
Average number of shares (1,000) 177,033 177,998
Net cash from operating activities per share 0.72 0.71
Net cash from operating activities per share increased slightly to EUR 0.72 from previous year’s
EUR 0.71.
Net cash from operations per share increased slightly from previous year. During 2021 Citycon invested EUR
216.2 million in aqcuisitions and development projects, which were financed mainly by selling three properties in
Sweden and one in Finland. The biggest development investment in 2021 was Lippulaiva.
2020 20211 2 3 4 5 6 87
CASH NEEDS AND CASH PROCEEDS
MEUR
1 Acquisitions and
investments
2 Dividends and equity
returns
3 Repurchase of treasury
shares and costs
4 Sale of properties
5 Cash from operations
6 Changes in current
financial investments
7 Cash from financing
8
Other
25.9
34.7
-216.2
-87.8
0.3
126.7
-68. 6
-20.1
226.0
48.6
FINANCIAL REVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY, IFRS
Equity attributable to parent company shareholders
MEUR Share capital
Share
premium
fund
Fair value
reserve
Invested
unrestricted
equity fund
Translation
reserve
Retained
earnings Total
Hybrid
bond
Non-
controlling
interest Total equity
Balance at 31 December2019 259.6 131.1 1.4 909.9 -120.3 796.7 1,978.4 346.6 0.1 2,325.2
Profit for the period 2020 -28.0 -28.0 0.1 -27.9
Net gains on cash flow hedges (Note 3.2.) -1.3 -1.3 -1.3
Share of other comprehensive income of joint ventures 0.0 0.0
Exchange gains/losses on translating foreign operations -30.5 -30.5 0.0 -30.5
Total other comprehensive expenses/income for the period, net of tax -1.3 -30.5 -31.8 0.0 -31.8
Total comprehensive loss/profit for the period -1.3 -30.5 -28.0 -59.8 0.1 -59.6
Proceeds from hybrid bond
Hybrid bond interest and expenses -4.5 -4.5 0.6 -3.9
Dividends and return from the invested unrestricted equity fund (Note 3.1.) -86.8 -8.9 -95.7 -95.7
Share-based payments (Note 1.6.) 0.0 0.0 0.0
Acquisition of non-controlling-interests 0.0 0.0 0.0
Balance at 31 December 2020 259.6 131.1 0.2 823.2 -150.9 755.4 1,818.6 347.2 0.2 2,166.0
Profit for the period 2021 121.0 121.0 0.0 121.0
Net gains on cash flow hedges (Note 3.2.) 1.2 1.2 1.2
Share of other comprehensive income of joint ventures 0.0 0.0
Exchange gains/losses on translating foreign operations 36.0 36.0 0.0 36.0
Total other comprehensive income/expenses for the period, net of tax 1.2 36.0 37.3 0.0 37.3
Total comprehensive profit/loss for the period 1.2 36.0 121.0 158.2 0.0 158.3
Hybrid bond interest and expenses -20.5 -20.5 0.6 -19.8
Proceeds from hybrid bond 0.0 341.2 341.2
Repurchase of treasury shares and costs -68.6 -68.6 -68.6
Dividends and return from the invested unrestricted equity fund (Note 3.1.) -78.9 -8.9 -87.8 -87.8
Share-based payments (Note 1.6.) 0.4 0.4 0.4
Other changes -0.2 -0.2 -0.2
Balance at 31 December 2021 259.6 131.1 1.4 744.2 -114.8 778.6 1,800.1 689.1 0.3 2,489.5
The issuance of Green Hybrid Bond increased the equity and strenghtened the balance sheet.
Hybrid bond increased the equity by EUR 341.2 million. During 2021, Citycon paid a dividend of EUR 0.05
per share and an equity return of EUR 0.45 per share from the invested unrestricted equity fund. Distributed dividends
were EUR 8.9 million and equity return EUR 78.9 million. In November, Citycon Oyj carried out the repurchase of a
total amount of 9,500,000 shares in the company as a result of a market based reverse accelerated bookbuild process,
for a total purchase price of EUR 65.8 million. The repurchased shares were cancelled on 30November.
2020 20211 2 3 4 5 6 7
DEVELOPMENT OF EQUITY ATTRIBUTABLE TO
PARENT COMPANY SHAREHOLDERS PER SHARE
MEUR
1 Profit for the period
2 Translation dierences
3 Dividends and
equity return
4 Repurchase of treasury
shares and costs
5 Eect of cancellation of
repurchased Treasury
shares on share amount
6 Hybrid bond interest and
expenses
7 Other changes
12.17
14.80
0.72
0.21
- 0.41
-0.52
1.91
0.71
0.01
Equity/share Equity/share
FINANCIAL REVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS
This table presents the Notes to the Financial Statements of Citycon
Group and the accounting principles related to the Notes. In addition,
the table presents the IFRS standards in which the accounting princi-
ples are based on.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounting Principle Note Number IFRS
Segment information Segment information 1.1. IFRS8
Revenue recognition, other income and trade and other receivables Gross rental income, Revenue from contracts with customers,
Other operating income and expenses, Trade and other
receivables
1.2., 1.3., 1.7., 4.4. IFRS16, IFRS15, IFRS9
Employee benefits and share-based payments Employee benefits and personnel expenses 1.6. IAS19, IFRS2
Earnings per share Earnings per share 1.8. IAS33
Investment property Investment properties and related liabilities, Right-of-use assets 2.1., 2.3 IAS40, IFRS13, IFRS16
Assets held for sale Investment properties held for sale 2.2. IAS40, IFRS5
Investments in associates and joint ventures Investments in joint ventures, Investments in associates 2.4. IAS28, IFRS11, IFRS12
Financial Instruments: Disclosures, Presentation, Recognition and Measurement Equity, Net financial income and expenses, Classification
of financial instruments, Loans, Financial risk management,
Derivative financial instruments, Cash and cash equivalents,
Trade and other receivables, Trade and other payables
3.1, 3.2., 3.3., 3.4., 3.5., 3.6., 3.8., 4.4., 4.5. IAS32, IFRS7, IFRS9, IFRS16
Provisions, Contingent Liabilities, Contingent Assets Commitments and contingent liabilities 2.1., 3.7. IAS37
Consolidated Financial Statements, Business Combination Business Combinations, Goodwill, Acquisition of non-
controlling interests
5.1., 5.2. IFRS10, IFRS3
Related Party Disclosures Related party transactions and changes in group structure 5.3. IAS24
Impairment of Assets Goodwill, Intangible assets, Trade and other receivables 4.3., 4.4., 5.1. IAS36, IFRS9
Income taxes Income taxes, Deferred tax assets and liabilities 4.1., 4.2 IAS12
Intangible assets Intangible assets 4.3. IAS38
Events after the Reporting Period Post balance sheet date events 5.5. IAS10
Contingent liabilities Capital Commitments, VAT refund liabilities,
Securities and Pledges
2.1., 3.7. -
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BASIC COMPANY DATA
As a real estate investment company spe-
cialising in retail properties, Citycon oper-
ates in Finland, Norway, Sweden, Estonia and
Denmark. Citycon is a Finnish public limited
liability company established under Finnish
law and domiciled in Helsinki, the address of
its registered office being Piispansilta 9 A 1,
02230 Espoo.
The Board of Directors has approved the
financial statements of the company on 16th
February 2022. In accordance with the Finnish
Limited Liability Companies Act, Annual
General Meeting has the right to not approve
the financial statements approved by the
Board of Directors and return the financial
statements back to the Board of Directors
for a correction.
A copy of Citycon’s consolidated financial
statements is available on the corporate
website at www.citycon.com and from the
Group’s headquarters at the address Piispan-
silta 9 A FI-02230 Espoo, Finland.
BASIS OF PREPARATION
Citycon has prepared its consolidated
financial statements in accordance with the
International Financial Reporting Standards
(IFRS) and applied the International
Accounting Standards (IAS) and IFRS as
well as Standing Interpretations Commiee
(SIC) and International Financial Reporting
Interpretations Commiee (IFRIC) interpre-
tations effective as of 31 December 2021.
International financial reporting standards
refer to the approved applicable standards
and their interpretations under Finnish
accounting legislation and the following
rules on European Union Regulation No.
1606/2002. Notes to the consolidated
financial statements are also in compliance
with Finnish accounting legislation and
community legislation.
Available-for-sale financial assets,
derivative contracts and investment prop-
erties, are measured at fair value following
their initial recognition. In other respects,
the consolidated financial statements are
prepared at historical cost.
The financial statements are shown in
millions of euros and rounded in hundred
thousands of euros.
KEY ESTIMATES AND ASSUMPTIONS
AND ACCOUNTING POLICIES
REQUIRING JUDGMENT
Preparing the financial statements under IFRS requires that
the company’s management make certain accounting esti-
mates and assumptions, which have an effect on the applica-
tion of the accounting policies and the reported amounts of
assets, liabilities, income and expenses, as well as notes to
the accounts. These estimates and associated assumptions
are based on historical experience and various other factors
deemed reasonable under the circumstances, the results of
which form the basis of management judgements about the
carrying values of assets and liabilities that are not readily
apparent from other sources. Although these estimates are
based on the best knowledge and current information avail-
able, the actual results may differ from the estimates due to
uncertainty related to these assumptions and estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised for the period in which the estimate is revised
if the revision affects only that period, or in the current and
future periods if the revision affects both current and future
periods.
Key estimates and assumptions and accounting policies
requiring judgment regarding business activities are pre-
sented together with the relevant note.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
. OPERATING PERFORMANCE
.. SEGMENT INFORMATION
The geographical segments of Citycon are
Finland & Estonia, Norway and Sweden
& Denmark. The segment Other mainly
includes administrative expenses arising
from the Group’s functions.
The Board of Directors follows IFRS
segment result and in addition Kista Galle-
ria’s financial performance separately, and
therefore, segment information includes
both IFRS segment results and Kista Galleria
result. The Board of Directors follow Kista
Galleria’s result and financial position based
on a 50% share.
Citycon’s Board of directors assess
the business units’ performance on the
basis of Net Rental Income and Direct
Operating Profit. Fair value changes are also
reported to Citycon’s Board of directors, by
businessunit.
Segment assets and liabilities consist of
operating items which the segment uses in
its operations or which can be allocated to
the segment on a reasonable basis. Unallo-
cated items include tax and financial items,
as well as corporate items. No internal sales
take place between segments.
Capital expenditure includes additions
to the investment properties, associated
companies , joint ventures, property, plant
and equipment and intangible assets in the
statement of financial position.
None of the tenants’ proportion of
Citycon’s gross rental income exceeded 10%
during financial years 2021 and 2020, and the
management does not manage operations
according to customer segments.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JANUARY DECEMBER
MEUR Finland & Estonia Norway Sweden & Denmark Other Total IFRS segments Kista Galleria (50%)
Gross rental income 90.7 85.8 45.7 0.0 222.2 9.8
Service charge income 30.1 27.0 13.0 0.0 70.2 3.6
Property operating expenses -34.8 -34.8 -18.8 -0.2 -88.6 -6.2
Other expenses from leasing operations -0.7 -0.2 -0.7 0.2 -1.4 -0.8
Net rental income 85.2 77.8 39.2 0.0 202.3 6.4
Direct administrative expenses -2.6 -4.5 -5.2 -13.8 -26.1 -0.1
Direct other operating income and expenses -0.1 0.2 -0.1 0.0 0.0 -0.2
Direct operating profit 82.5 73.6 33.8 -13.8 176.1 6.1
Indirect other operating income and expenses - - -0.4 - -0.4 -
Net fair value losses/gains on investment property 2.7 16.0 29.9 - 48.6 -1.4
Gains/losses on disposal of investment property -2.2 0.0 -4.3 - -6.5 -
Operating profit/loss 83.0 89.5 59.1 -13.8 217.8 4.7
Allocated assets
Investment properties 1,961.2 1,427.3 800.7 - 4,189.2 252.2
Investment properties held for sale 0.0 150.9 0.0 - 150.9 -
Other allocated assets 48.6 121.8 20.4 239.6 430.3 11.1
Unallocated assets
Deferred tax assets 16.4 16.4
Derivative financial instruments 16.2 16.2
Assets 2,009.8 1,699.9 821.1 272.2 4,803.0 263.3
Allocated liabilities
Trade and other payables 39.8 36.4 131.6 -88.9 118.9 8.5
Unallocated liabilities
Interest-bearing liabilities 1,878.5 1,878.5 237.3
Deferred tax liabilities 296.7 296.7 -
Derivative financial instruments 16.7 16.7 -
Other unallocated liabilities 2.7 2.7 11.1
Liabilities 39.8 36.4 131.6 2,105.7 2,313.5 256.8
Capital expenditure 163.6 21.7 35.2 3.6 224.1 3.3
Number of shopping centres 11 18 7 1
Number of other properties 1 - - -
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JANUARY DECEMBER
MEUR Finland & Estonia Norway Sweden & Denmark Other Total IFRS segments Kista Galleria (50%)
Gross rental income 91.5 81.3 51.5 - 224.3 10.9
Service charge income 30.3 26.0 14.9 - 71.2 3.5
Property operating expenses -32.7 -32.0 -20.6 0.3 -84.9 -5.8
Other expenses from leasing operations -2.5 -1.3 -1.3 -0.2 -5.3 -1.0
Net rental income 86.8 74.1 44.5 0.1 205.4 7.6
Direct administrative expenses -3.1 -3.6 -5.9 -13.3 -25.9 -0.1
Direct other operating income and expenses 0.1 -0.2 1.0 - 0.9 -0.4
Direct operating profit 83.7 70.2 39.6 -13.2 180.4 7.0
Indirect other operating income and expenses - - - - - -
Net fair value losses/gains on investment property -87.5 -5.3 -54.2 - -146.9 -32.3
Gains/losses on disposal of investment property 0.3 0.4 0.0 - 0.7 -
Operating profit/loss -3.5 65.4 -14.6 -13.2 34.1 -25.2
Allocated assets
Investment properties 1,913.0 1,459.9 779.3 - 4,152.2 255.6
Investment properties held for sale 0.0 0.0 149.7 - 149.7 -
Other allocated assets 9.9 164.9 134.2 39.9 348.9 9.8
Unallocated assets
Deferred tax assets 14.2 14.2
Derivative financial instruments 15.0 15.0
Assets 1,922.9 1,624.8 1,063.2 69.1 4,680.0 265.4
Allocated liabilities
Trade and other payables 21.3 60.9 33.5 -28.6 87.0 7.6
Unallocated liabilities
Interest-bearing liabilities 2,121.2 2,121.2 235.5
Deferred tax liabilities 275.7 275.7 -
Derivative financial instruments 26.8 26.8 -
Other unallocated liabilities 3.3 3.3 9.9
Liabilities 21.3 60.9 33.5 2,398.4 2,514.0 253.0
Capital expenditure 150.5 178.3 14.9 1.9 345.6 2.9
Number of shopping centres 12 18 10 - 40 1
Number of other properties 1 - - - 1 -
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the below table,
Citycon had 3,326 (3,810) lease agreements
on 31 December 2021. The decrease in the
number of lease agreements was mainly due
to divested properties in Finland & Estonia
and Sweden & Denmark.
Number of leases
31
December
2021
31
December
2020
Finland & Estonia 1,262 1,373
Norway 1,306 1,324
Sweden & Denmark 758 1,113
Total 3,326 3,810
In accordance with the table presented
below, the average remaining length of
Citycon’s lease portfolio was 3.1 (2.9) years
on 31 December 2021. The duration of a new
lease depends on the type of premises to be
leased and the tenant. With larger anchor
tenants, Citycon typically concludes long-
term leases of 10–15 or even 20 years while
leases for smaller retail premises are mainly
agreed for a term of 3 to 5 years.
Average remaining length of lease portfolio, years
31
December
2021
31
December
2020
Finland & Estonia 3.5 2.9
Norway 2.8 2.9
Sweden & Denmark 2.7 2.8
Average 3.1 2.9
Breakdown of gross rental income
MEUR 2021 2020
Straight-lining of lease
incentives
-0.5 2.4
Temporary and contractual
rental discounts
-4.7 -4.0
Gross rental income
(excl. items above) 227.4 226.0
Total 222.2 224.3
General description of Citycon’s lease agreements
In the majority, i.e. in 89% (90) of Citycon’s
lease agreements the rent is divided into
base rent and maintenance rent. Base rent is
typically tied to a yearly rent revision which
is based on an index, such as cost-of-living
index, or percentual minimum increase.
Maintenance rent, charged separately from
the lessee, are used for covering operating
expenses incurred by the property owner
due to property maintenance.
Part of Citycon’s lease agreements also
contain a turnover-linked component in
addition to base rent. In addition, Citycon
also has some lease agreements which are
fully tied to tenant’s turnover. At the end
of 2021 approximately 66% (66%) of lease
agreements in Citycon’s lease portfolio had
turnover based components.
Because the majority of the lease port-
folio is tied to indexation, a predetermined
minimum rent increase and/or the tenant’s
turnover, Citycon’s leases are mainly leases
with contingent rent payments in accord-
ance with IFRS 16.
.. GROSS RENTAL INCOME Citycon mainly seeks to sign fixed-term
leases with the exception of apartment,
storage and individual parking space leases.
At the year end 2021, fixed-term leases
represented around 91% (91), initially fixed-
term leases 5% (5) and leases in effect until
further notice 4% (4) of Citycon’s lease
portfolio.
The table below presents the future
minimum lease payments by first possible
termination dates based on the valid rent roll
at the end of the year 2021 and 2020.
The Investment properties leases, in which
Citycon is a lessor, are classified under
operating leases, since Citycon retains a
significant share of risks and rewards of
ownership. Rental income from operating
leases is spread evenly over the lease term.
Lease incentives, such as rent-free
periods or rental discounts, that have been
agreed at the start of the lease agreement
are recognised on a straight-line basis over
the lease term. The accounting treatment
for lease incentives given during the lease
agreement are recognized differently
depending whether the lease incentive is
based on the original lease agreement or
not. If the discounts given during the lease
term are not based on the original lease
agreement but, the leaseholder has re-
quested a rental discount due to the market
situation or the property’s (re)development
project, the discounts will be, according to
IFRS 16, considered to form a new lease
agreement, which means that the discounts
are to be recognized on a straight-line basis
during the remaining lease term. However,
if the discounts given during the lease term
are based on original lease agreement, then
the discount costs should berecognised in
the consolidated income statement within
the gross rental income during the period
for which the rent reductions have been
granted.
On behalf of the lessee, Citycon may
perform alteration work on the premises
rented by the lessee and charge the lessee
for the resulting costs, in the form of a rent
increase. Citycon recognises the altera-
tion-related rent increase as rental income
over the lease term. The rent increase and
expenses arising from the alteration work
are taken into account when measuring the
fair value of the investment property.
Future minimum lease payments receivable under
non-cancellable leases
1)
MEUR
31
December
2021
31
December
2020
Not later than 1 year 71.2 75.9
1–5 years 141.9 151.8
Over 5 years 42.6 40.0
Total 255.6 267.7
1)
Non-cancellable leases include fixed-term and
initially fixed-term leases until the end of their
terms. Leases in effect until further notice are
assumed as non-cancellable leases for the
equivalent of their notice period.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. REVENUE FROM CONTRACTS WITH CUSTOMERS
Breakdown of revenues 1 January–31 December 2021
MEUR
Finland &
Estonia Norway
Sweden &
Denmark Other Total
Service charges
1)
23.7 19.4 10.6 - 53.6
Utility charges
1)
4.3 3.1 1.0 0.0 8.4
Other service income
1)
2.1 4.5 1.4 0.0 8.1
Total 30.1 27.0 13.0 0.0 70.2
Management fees
2)
0.1 0.4 0.4 0.0 0.9
Total 0.1 0.4 0.4 0.0 0.9
Revenue from contracts
with customers 30.2 27.4 13.4 0.0 71.1
1)
Is included in the line item Service charge income in the Consolidated income statement.
2)
Is included in the line item Other operating income and expenses in the Consolidated income statement.
Breakdown of revenues 1 January–31 December 2020
MEUR
Finland &
Estonia Norway
Sweden &
Denmark Other Total
Service charges
1)
24.3 18.7 12.2 - 55.3
Utility charges
1)
3.8 2.8 1.0 - 7.6
Other service income
1)
2.2 4.5 1.7 - 8.3
Total 30.3 26.0 14.9 - 71.2
Management fees
2)
0.2 2.0 0.8 - 3.1
Total 0.2 2.0 0.8 - 3.1
Revenue from contracts
with customers 30.5 28.1 15.7 - 74.3
1)
Is included in the line item Service charge income in the Consolidated income statement.
2)
Is included in the line item Other operating income and expenses in the Consolidated income statement.
SERVICE CHARGES
The sales revenues linked to service
charges consist of the repair, mainte-
nance and administration services for
the business premises and common
areas of Citycon’s shopping centre
properties that Citycon provides for its
customers on the basis of the contracts
made with the customers (lease
agreement).
UTILITY CHARGES
The sales revenues linked to utility
charges comprise fees charged from
customers to cover, e.g. the costs
arising from the energy consumption,
heating and waste management of the
business premises of the shopping cen-
tre properties in accordance with the
customer contract (lease agreement).
Citycon Group’s lease agreements and man-
agement contracts typically include a clear
description of the obligations of the service
provider and the customer purchasing the
service as well as a break down of the price
of the service provided. As a result, the
service obligations as well as the basis for
the transaction prices of each performance
obligation in accordance with the IFRS 15
standard connected to Citycon Group’s cus-
tomer contracts have been clearly defined.
Contracts with customers
In the business operations of Citycon Group, the guidance provided in the IFRS 15 Revenue
from Contracts with Customers standard applies to the following sales revenues: Service
charges, utility charges, other service income as well as management fees.
THE EFFECTS OF COVID TO RENTAL
INCOME
Citycon has given minimal rent concessions
to its tenants in various forms due to diffi-
culties imposed by COVID-19 during years
2021 and 2020. These rent concessions have
included rental discounts, payment schedule
changes and rent-free periods during the
pandemic. The rent discounts or rent-free
periods have been given to tenants in Finland
& Estonia and Sweden & Denmark segments.
The total amount of rent discounts given
was 0.8 EUR million in 2021 (EUR 4.4 million
in 2020).
Based on contract analysis prepared
by the company, the COVID-19 related
discounts given during the pandemic have
not been based on the original lease agree-
ment and should be booked as a new lease
agreement. Hence, the COVID-19 related
discounts given have been straight-lined to
the remaining lease term.
Government grant programs to com-
panies negatively affected by COVID-19
have been published in some of the Group’s
operating countries during the pandemic.
Some of these government grants have
been aimed at Citycon’s tenants and some
have been aimed at shopping center owners.
Citycon follows the IAS 20 standard related
to government grants and accrues the
government grants that will probably be
received to the periods when the costs relat-
ed to the grant is booked. The management
of the company uses judgement in assessing
whether Citycon fulfills the requirements for
the grants and if the grants will be received.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. PROPERTY OPERATING EXPENSES
MEUR 2021 2020
Heating and electricity -19.5 -17.7
Maintenance expenses -31.4 -31.5
Property personnel
expenses
-8.9 -8.3
Administrative and
management fees
-4.0 -3.8
Marketing expenses -7.8 -8.3
Property insurances -1.4 -1.1
Property taxes -9.1 -9.0
Repair expenses -3.5 -3.2
Other property operating
expenses
-3.1 -1.8
Total -88.6 -84.9
PROPERTY OPERATING
EXPENSES
Property operating expenses are
recognized on an accrual basis for the
period for which those are subject to.
Property operating expenses are costs
caused by e.g. property maintenance,
energy consumption and marketing.
Heating and electricity
Maintenance expenses
Land lease fees and
other rents
Property personnel
expenses
Administrative and
management fees
OPERATING EXPENSES 2021
Marketing
expenses
Property
insurances
Property taxes
Repair expenses
Other property
operating expenses
MEUR
TOTAL
MEUR
-88.6
–31.0
–0.4
–19.5
–3.5
–7.8
–8.9
–4.0
–1.4
–9.1
–3.1
to the business premises owned by Citycon
Group or the management service provided
for shopping centres owned by joint ven-
tures or third parties when Citycon provides
the customer with the service.
The service charges are presented
in Citycon’s as gross because in its view,
Citycon is providing services acts as the
principal in accordance with the definition in
the IFRS 15 standard. For example, Citycon
selects the maintenance and cleaning
service providers for its properties, makes a
contract with the providers and carries the
credit risk pertaining to the provision of the
service. This being the case, the customer
may not choose the service provider or
influence the service provider’s pricing.
The services provided by Citycon
Group do not include a significant financial
component because the payments based on
customer contracts typically become due
before the start of the lease period or im-
mediately upon its beginning. Citycon Group
will not become subject to costs of obtaining
a contract in accordance with the IFRS 15
standard. When it comes to the leases for
business premises included in Citycon’s
core business, the accounting treatment of
costs resulting from obtaining the contract
and the expenses treated in accordance
with the instructions in the IAS 40 standard,
such as alteration works or commissions of
the leased property, is described in detail in
Note 1.2.
Contract balances
MEUR 2021 2020
Contract assets 4.8 6.2
Contract liabilities 5.3 3.6
CONTRACT BALANCES
The contract assets on customer con-
tracts are open sales receivables relat-
ed to service charges, and the contract
iabilities based on the contract are
advance payments received for service
charges. The contract assets based
on customer contracts are expected
to be received within three (3) months
and the contract liabilities based on
the contract are excpeceted to be
recognised as income within the next
twelve (12) months.
OTHER SERVICE INCOME
The sales revenues linked to other
service income consist mainly of fees
charged from customers to cover the
costs arising from the planning and
implementation of the marketing of
Citycon Group’s shopping centres.
MANAGEMENTS FEES
Sales revenues related to management
fees consists of the administrative
services provided by Citycon Group
to shopping centres owned by joint
ventures or third parties.
The transaction prices of all sales
revenue groups primarily consist of variable
considerations based on, e.g. the amount
of services used by the customer or the
changing prices of goods. Hence, Citycon
estimates the amount of sales revenues
recorded from the contracts on the basis of
the expected value of sales revenues from
the reporting period.
With regard to all customer contracts, the
sales revenues are recorded over time, as
the customer simultaneously receives and
uses the financial benefit resulting from the
maintenance and service operations related
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. EMPLOYEE BENEFITS AND
PERSONNEL EXPENSES
MEUR Note 2021 2020
Wages and salaries of
management
CEO A -1.2 -1.2
Management
committee B -1.7 -1.4
Board C -0.7 -0.6
Other wages and salaries -13.7 -14.9
Pension charges: defined
contribution plans -2.4 -2.5
Social charges -3.3 -3.1
Expense of share based
payments D -0.8 -0.7
Total -23.8 -24.5
Depreciation and amortisation
Depreciation and amortisation are booked
from intangible and tangible assets.
Audit fees
The following audit fees and services from
the audit firm Ernst & Young are included in
the line consulting and advisory fees within
the administrative expenses and in the line
administrative and management fees within
the property operating expenses.
Personnel expenses of EUR 12.7 million (12.6)
are included in administrative expenses,
EUR 8.9 million (8.3) in property operating
expenses and EUR 2.2 million (2.5) in other
operating income and expenses. In addition,
during 2020 EUR 1.1 million were charged from
the managed centers owned by third parties.
PENSIONS
The Group’s employee pension cover is
based on statutory pension insurance.
Pension schemes are classified into
two categories: defined contribution
plans and defined benefit plans. At
Citycon, all pension covers are classi-
fied as contribution plans, which are
recognised in the consolidated income
statement for the period during which
such contributions are made.
MEUR
2021
Group
2021
Parent
company
Audit fees -1.0 -0.3
Ernst & Young Oy -0.3 -0.3
Other EY oces -0.7 -
Other advisory services -0.3 -0.3
Ernst & Young Oy -0.3 -0.3
Other EY oces - -
Total -1.2 -0.5
MEUR
2020
Group
2020
Parent
company
Audit fees -1.0 -0.4
Ernst & Young Oy -0.5 -0.4
Other EY oces -0.5 -
Other advisory services 0.0 0.0
Ernst & Young Oy 0.0 0.0
Other EY oces 0.0 -
Total -1.0 -0.4
.. ADMINISTRATIVE EXPENSES
MEUR 2021 2020
Personnel expenses -12.7 -12.6
Expenses related to
management and
organizational changes
-0.5 -0.2
Consultancy and advisory
fees as well as external
services
-5.7 -6.1
Oce and other
administrative expenses
-4.6 -4.4
Depreciation and
amortisation
-2.7 -2.6
Total -26.1 -25.9
A) CEO wages and salaries
2021 2020
Base salary including
benefits 698,183 702,380
Short-term incentives 486,000 507,600
Long-term incentives and
other one-time payments 365,106 446,395
Total 1,549,289 1,656,375
Group full-time equiva-
lent (FTE) by Business
Units as at 31 December 2021 2020
Finland & Estonia 56 49
Norway 80 97
Sweden & Denmark 66 61
Group functions 49 39
Total 251 246
F. Sco Ball (B.Sc., born 1961) started as CEO
of Citycon on 1 January 2019. According to
his service agreement, the CEO’s gross base
salary in 2021 amounted to EUR 625,000. In
November 2021, a new service agreement
entered into force, seing an annual salary
of EUR 660,000.
Citycon’s Board will evaluate the achieve-
ment of the CEO’s performance targets and
decide on the CEO’s performance bonus
amount payable for each financial year
during the first quarter of the following
calendar year.
The CEO is included in the CEO Restricted
Share Plan 2018–2021. The plan includes
three vesting periods ending on 15 November
2019, 2020 and 2021. The rewards under the
plan are paid in three equal instalments aer
each vesting period including taxes and any
employment related expenses payable. All
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C) Remuneration of the members of the Board
of Directors
EUR 2021 2020
Chaim Katzman 165,000 165,000
Ariella Zochovitzky
(until 1 July 2021) 43,900 88,000
Yehuda (Judah) L. Angster
(as of11 June 2020) 65,000 32,540
Arnold de Haan 63,800 64,400
Zvi Gordon (as of 11June 2020) 60,200 31,940
Bernd Knobloch
(until 17 March 2020) - 1,800
Alexandre (Sandy) Koifman 78,100 62,000
David Lukes 65,200 65,400
Andrea Orlandi
1
(until 26 April 2021) - -
Per-Anders Ovin 63,200 60,200
Ofer Stark
2
59,600 59,600
F. Scott Ball
3
(as of 2 August 2021) - -
Ljudmila Popova
(as of 2 August 2021) 31,000 -
Total 695,000 630,880
1)
Andrea Orlandi has notified the company that he
will not accept any annual fees or meeting fees
payable by the company.
2)
Transactions with The Board Members are pre-
sented in Note 5.3.B Related party transactions.
3)
As set out in the Remuneration Policy, Mr F.
Sco Ball, CEO of Citycon, is not entitled to
separate fee for the Board membership.
2021–2024 decided on 20 September 2021
and CEO Restricted Share Plan 2021–2025
decided on 27 October 2021) and two to key
employees of the group (Restricted Share
Plan 2018–2020 decided on 23 February
2018 and Restricted Share Plan 2020–2022
decided on 11 December 2019).
During 2021 the CEO Restricted Share
Plan 2018–2021 decided on 12 December
2018 expired aer its last vesting date.
The aim of the share-based incentive
plans is to combine the objectives of the
shareholders and the key employees to
increase the value of the company in the
long-term, to retain the key employees in the
service of the company, and to offer them
competitive reward plans based on earning
and accumulating the company´s shares.
In 2021, expenses from long-term
share-based incentive plans recognised in
consolidated financial statements amounted
to EUR 0.6 million (0.7).
MATCHING SHARE PLAN
The Matching Share Plan 2018–2020 is
directed to the members of the Corporate
Management Commiee.
The Matching Share Plan 2018–2020 in-
cludes three matching periods, calendar years
2018–2019, 2019–2020 and 2020–2021. The
prerequisite for participation in the plan and
for reward payment is that the member of the
Corporate Management Commiee invests
in the company’s shares a pre-determined
percentage of the bonus earned from the com-
pany’s short-term performance bonus scheme
during the calendar year preceding a matching
period. If share ownership prerequisite is
B) Personnel expenses for the Corporate
Management Committee (excl. CEO)
MEUR 2021 2020
Wages and salaries -1.7 -1.4
Pensions: defined
contribution plans -0.2 -0.2
Social charges -0.6 -0.3
Total -2.5 -1.9
During 2021, the travel expenses of the Board
members amounted to EUR 0.0 million (0.1).
Board members do not participate in the
company’s share-based incentive schemes
(excluding CEO F. Sco Ball).
shares allocated under the CEO Restricted
Share Plan are eligible for dividend equiva-
lent at the beginning of vesting periods. The
value of the dividend equivalent per reward
share shall equal to the distributed dividends
or other distributed assets per share.
In 2021, in connection with the vesting
date of 15 November, the CEO was paid the
value of 40,000 shares in cash, including
taxes and employment related payments,
and he was obliged to acquire company’s
shares with the amount of paid net reward.
In accordance with the new agreement
that entered into force in November 2021,
going forward, the CEO is included CEO
Restricted Share Plan 2021–2025 and Stock
Option Plan 2022
The CEO’s pension benefit is in line
with mandatory provisions of the Swedish
Pension Act.
fulfilled and his or her employment or service
is in force with a Citycon group company
upon reward payment, he or she will receive
free matching shares for the invested shares
subject to the share ownership prerequisite.
The rewards to be paid under the plan
correspond to the value of a maximum
total of 40,000 shares. In addition, a cash
proportion is included to cover taxes and
tax-related costs arising from the reward to
the participant in accordance with the terms
and conditions of the plan.
The rewards paid on the basis of the
matching period 2019–2020 corresponded
to the total value of 5,493 shares, and in
addition a cash proportion was included in
the reward to cover taxes and tax-related
costs arising from the reward in accordance
with the terms and conditions of the plan.
PERFORMANCE SHARE PLAN
The Performance Share Plan 2020–2022 is
directed to the members of the Corporate
Management Commiee, excluding the CEO.
The Performance Share Plan 2020–2022
includes three performance periods, each
three years, spanning from March 2020, 2021
and 2022 until the end of February 2023, 2024
and 2025, respectively. The rewards payable
are based on the participants achieving the
strategic individual criteria set for each
performance period and a valid employment
or service contract. The rewards to be paid
correspond to the value of a maximum total
of 150,000 shares including any cash propor-
tion for taxes and tax-related costs.
The rewards allocated and to be paid
based on the performance period 2021–2024
D) Long-term share-based incentive plans
Citycon has currently six long-term incentive
plans based on shares. Four of these are di-
rected only to the members of the Corporate
Management Commiee (Matching Share
Plan 2018–2020 decided on 23 February 2018,
Performance Share Plan 2020–2022 decided
on 17 March 2020, CFO Restricted Share Plan
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
correspond to the value of an approximate
maximum total of 50,000 shares, including
any cash proportion to be used for taxes and
tax-related costs.
RESTRICTED SHARE PLAN
The Restricted Share Plan 2018–2020 is
directed to selected key employees.
The rewards from the Restricted
Share Plan 2018–2020 were allocated in
2018–2020. The rewards will be based on a
valid employment or service contract of a key
employee upon the reward payment, and it
will be paid partly in shares and partly in cash,
to be used for taxes and tax-related costs,
aer the end of a vesting period of 12 to 36
months.The rewards to be paid correspond to
the value of an approximate maximum total of
40,000shares, including any cash proportion
for taxes and tax-related costs.
The rewards paid in 2021 corresponded
to the total value of 8,000 shares, including
cash proportion to cover taxes and tax-relat-
ed costs.
RESTRICTED SHARE PLAN
The Restricted Share Plan 2020–2022
is directed to selected key employees,
excluding the CEO and other members of the
Corporate Management Commiee.
The rewards from the plan may be allocat-
ed in 2020–2022. The reward will be based on
a valid employment or service contract of a
key employee upon the reward payment, and
it maybe paid partly in the company’s shares
and partly in cash, to be used for taxes and
tax-related costs, aer the end of a vesting
period of 24 to 36 months.
The rewards to be paid on the basis of the
plan in total correspond to the value of a maxi-
mum total of 60,000 shares including any cash
proportion for taxes and tax-related costs.
The rewards allocated in 2021 correspond
to the value of a total 43,000 shares, includ-
ing any cash proportion to cover taxes and
tax-related costs.
THE CFO RESTRICTED SHARE
PLAN
The CFO Restricted Share Plan 2021–2024 is
directed to the CFO Bret D. McLeod.
The CFO Restricted Share Plan 2021–2024
includes three vesting periods starting on 20
September and ending on 1 August 2022, 2023
and 2024. The rewards to be paid corresponded
to the value of a total of 45,000 shares. The
rewards are paid in three equal instalments of
maximum of 15,000 shares aer the end of each
vesting period based on the CFO performance.
The rewards may be paid partly in shares or
partly or fully in cash to cover taxes and tax
related costs, in which case the CFO may be
obliged to acquire shares with the net reward.
The payment of the rewards requires that the
CFO has not terminated his director contract.
THE CEO RESTRICTED SHARE
PLAN
The CEO Restricted Share Plan 2021–2025 is
directed to the CEO F. Sco Ball.
The CEO Restricted Share Plan 2021–2025
includes three vesting periods starting on
27 October 2021 and ending on 15 November
2023, 2024 and 2025. The rewards to be paid
correspond to the value of a total of 570,000
shares. The rewards are paid in three equal
instalments of 190,000 shares aer the end
of each vesting period. The rewards may
be paid partly in shares or partly or fully in
cash to cover taxes and tax related costs, in
which case the CEO may be obliged to acquire
shares with the net reward. All unvested
shares under the CEO Restricted Share Plan
are eligible for dividend equivalent at the
beginning of the vesting periods. The value
of dividend equivalent per reward share
equals to the distributed dividends or other
distributed assets per share. All paid shares
shall be subject to a lock-up undertaking by
the CEO until 14 January 2025 unless the CEO
agreement is terminated prior to such date.
Should the CEO be relieved from the CEO
position before the reward payment, the
CEO shall be entitled to the allocated reward
prorated until the date of relief.
LONGTERM INCENTIVE PLANS
EXPIRED DURING AND
The CEO Restricted Share Plan 2018–2021
expired during the financial year 2021
The CEO Restricted Share Plan 2018–2021
was directed to CEO F. Sco Ball.
The CEO Restricted Share Plan 2018–2021
included three vesting periods ending on 15
November 2019, 2020 and 2021. The rewards
paid on the basis of the plan corresponded
to the value of a total of 120,000 shares. The
rewards from the plan were paid in three
equal instalments of 40,000 shares aer the
end of each vesting period. The rewards may
have been paid partly in company´s shares
or partly or fully in cash to cover taxes and
tax related costs, in which case the CEO may
have been obliged to acquire shares with
the net reward. All unvested shares under
the CEO Restricted Share Plan were eligible
for dividend equivalent at the beginning of
the vesting periods. The value of dividend
equivalent per reward share equalled to the
distributed dividends or other distributed
assets per share. The payment of the rewards
under the CEO Restricted Share Plan were due
by the end of each respective calendar year on
2019, 2020 and 2021 provided that the CEO had
not terminated his director contract.
The reward paid on the basis of the plan in 2021
corresponded to the value of 40,000 shares.
Restricted Share Plan 2015
The Restricted Share Plan 2015 was directed
to selected key employees, including mem-
bers of the Corporate Management Commit-
tee. The rewards from the plan were allocated
during 2015–2018. The rewards were based on
a valid employment or service contract of a
key employee upon the reward payment and
paid aer the end of a two-year or a three-
year individual vesting period. In January
2021 a total of 17,600 shares, including cash
proportion to be used for tax and tax-related
costs, that had vested in December 2020 were
paid based on the plan.
Further information on the long-term
share-based incentive plans is available
on the company’s website at citycon.com/
remuneration.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Earnings per share, basic 2021 2020
Profit/loss attributable to
parent company share-
holders (MEUR)
121.0 -28.0
Hybrid bond coupons
and amortized fees
2)
-24.3 -16.2
Weighted average number
of ordinary shares (1,000)
1)
177,033 177,998
Earnings per share
(basic) (EUR) 0.55 -0.25
Earnings per share,
diluted 2021 2020
Profit/loss attributable to
parent company share-
holders (MEUR)
121.0 -28.0
Hybrid bond coupons
and amortized fees
2)
-24.3 -16.2
Adjustment for share-
based incentive plans
(1,000)
369 258
Weighted average number
of ordinary shares, diluted
(1,000)
177,403 178,256
Earnings per share
(diluted)
1)
0.54 -0.25
1)
The key figure includes hybrid bond coupons and
amortized fees.
Diluted Earnings per share is
calculated by adjusting the weighted
average number of shares to assume
the conversion of all dilutive potential
shares. The number of shares is
increased by dilutive shares arising
from stock options and long-term
share-based incentive plans.
The share-based incentive scheme
has a dilutive effect during the earning
period when the performance condi-
tions for the bonus have been fulfilled,
and the shares have not yet been
granted.
. PROPERTY PORTFOLIO AND ASSETS
.. INVESTMENT PROPERTIES AND RELATED LIABILITIES
INVESTMENT PROPERTIES IN
THE FINANCIAL STATEMENT
Investment property refers to land or a
building, or part of a building, held to earn
rental income or capital appreciation, or
both. Under IAS 40, investment property
is measured at fair value, with gains and
losses resulting from fair value changes
for investment properties are need and
stated as a separate item in the consoli-
dated income statement.
The investment properties are meas-
ured initially at cost, including transaction
costs such as consultant fees and transfer
taxes. Aer their initial measurement
investment properties are valued at fair
value at the end of the quarter following
the acquisition.
The fair valuation of the company’s
properties is conducted half-yearly by an
independent external appraiser according
to the International Valuation Standards
(IVS) while on the first and third quarter of
the year Citycon conducts the fair value
measurement internally except for new
acquired properties which are valuated
externally. When measuring the values in-
ternally, Citycon has based the valuations
on the yields and market rent indications
received from the external appraiser.
In addition, the external appraiser
conducts the fair value evaluation of
properties under (re)development.
(Re)development projects are classi-
fied as investment properties and deter-
mined at fair value aer an investment
decision has been made and the external
appraiser considers that sufficient infor-
mation is available for a reliable valuation.
In the fair value valuation on 31 December
2021 property (1) was classified as (re)de-
velopment project. Potential development
projects are projects whose realization
is uncertain. Therefore they have been
le out of the valuation conducted by the
external appraiser.
The fair value of Citycon’s investment
properties in the consolidated statement
of financial position consists of the prop-
erty portfolio’s total value determined
by the external appraiser, less transfers
into investment properties held for sale,
added by capital expenditure on potential
development projects that are not taken
into account by the external appraiser,
as well as the value of new properties ac-
quired during the reporting quarter if not
possible measure at fair value , in regard to
timing and reliable information available.
.. EARNINGS PER SHARE
Earnings per share (basic) is calculated by
dividing the net profit/loss aributable to
parent company shareholders by the share
issue adjusted weighted average number of
shares.
Weighted average number of ordinary shares used
in the calculation of Earnings per share (diluted)
Days
No. of
shares
Weighted average (daily)
number of shares 365 177,402,910
.. OTHER OPERATING
INCOME AND EXPENSES
MEUR 2021 2020
Management fees 0.9 3.1
Management fee related
expenses
- -1.3
Depreciation on contract
values of managed and
rented centres
- -0.9
Other operating income -1.3 0.0
Total -0.4 0.9
MANAGEMENT FEES
Cityon manages some of the
shopping centres owned by joint
ventures and third parties and
recognizes management fees
over the contract period.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of Citycon’s properties was
measured by CBRE (Norway, Denmark,
Estonia) and JLL (Finland, Sweden) for the
financial statements for 2021 and 2020.
The resulting fixed fees based on the 2021
valuations totaled EUR 0.3 million (0.3). The
reconciliation between the fair value deter-
mined by the external appraiser and the fair
value of investment properties in Citycon’s
balance sheet, is presented below:
MEUR
31
December
2021
31
December
2020
Fair value of investment
properties determined by
the external appraiser per
31 December
4,268.2 4,231.1
Capital expenditure on
development projects
26.2 25.8
Right-of-use assets
classified as investment
properties (IFRS 16)
45.7 45.0
Transfer into investment
properties held for sale
-150.9 -149.7
Acquisition cost of prop-
erties acquired during the
last quarter of the year
- -
Fair value of investment
properties per 31
December 4,189.2 4,152.2
FAIR VALUE DEFINITION
AND HIERARCHY
In accordance with IFRS 13, the fair
value is defined as the price that would
be received from the sale of an asset in
an orderly transaction between market
participants at the measurement date.
Citycon uses valuation techniques
that are appropriate under the existing
circumstances, and for which sufficient
data is available to measure fair value,
maximising the use of relevant observ-
able inputs and minimising the use of
unobservable inputs. Input data used
in valuation method to determine the
fair value is categorized into three fair
value hierarchy levels in accordance
with IFRS 13. Investment property
measured at fair value is categorised
to the same fair value hierarchy level as
the lowest level input, which is signifi-
cant to the fair value measurement as
a whole.
Yield requirement is an important input pa-
rameter in the valuation measurement and it
is derived from comparable market transac-
tions. Citycon has decided to categorise all
property fair valuations as level 3, because
properties and especially shopping centres
are usually heterogeneous and transactions
are infrequent. Transfers between levels in
the hierarchy did not occur during the year.
FAIR VALUE MEASUREMENT OF
INVESTMENT PROPERTIES,
FAIR VALUE MEASUREMENT
HIERARCHY
MEUR
31
December
2021
31
December
2020
Quoted prices (Level 1) - -
Observable inputs (Level 2) - -
Unobservable inputs
(Level 3)
4,268.2 4,231.1
Total 4,268.2 4,231.1
FAIR VALUE MEASUREMENT
The fair value measurement of
Citycon’s investment properties is
based on 10-year cash flow analysis,
conducted separately for each prop-
erty. The basic cash flow is determined
by the lease agreements valid at the
valuation date. Upon a lease’s expiry,
the market rent assessed by an ex-
ternal appraiser replace the contract
rent. Potential gross rental income
less vacancy assumption, operating
expenses and investments equals
cash flow, which is then discounted at
the property-specific discount rate
comprising of yield requirement and
inflation assumption. The total value of
the property equals to the value of the
discounted cash flow, residual value
and the value of the unused building
rights. The total value of the property
portfolio is calculated as the sum of the
individual properties’ fair values.
The valuation of on-going (re)
development projects is based on a
cash flow analysis, in which the capital
expenditure on the (re)development
project and the property’s future cash
flows are taken into account according
to the (re)development project’s
schedule.
FAIR VALUE OF
INVESTMENT PROPERTIES
Measuring the fair value of investment
properties is a key accounting policy
that is based on assessments and
assumptions about future uncer-
tainties. Yield requirement, market
rents, vacancy rate and operating
expenses form the key variables used
in an investment property’s fair value
measurement. The evaluation of these
variables involves Citycon manage-
ment’s judgment and assumptions.
Also, the evaluation of the fair value
of (re)development projects requires
management’s judgment and assump-
tions regarding investments, rental
levels and the timetable of the project.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INPUTS
31 December 2021
MEUR
Finland &
Estonia Norway
Sweden &
Denmark Average
Yield requirement (%) 5.3 5.4 5.5 5.4
Market rents (EUR/sq.m.) 27.8 21.8 26.6 25.4
Operating expenses (EUR/sq.m.) 6.1 5.4 7.0 6.0
Vacancy during the cash flow period (%) 4.7 3.8 4.4 4.3
Market rent growth assumption (%) 2.1 2.1 2.0 -
Operating expense growth assumption (%) 1.9 2.1 2.0 -
31 December 2020
MEUR
Finland &
Estonia Norway
Sweden &
Denmark Average
Yield requirement (%) 5.5 5.6 5.7 5.6
Market rents (EUR/sq.m.) 29.4 21.5 26.8 26.2
Operating expenses (EUR/sq.m.) 6.0 4.9 6.7 5.7
Vacancy during the cash flow period (%) 5.2 3.6 4.1 4.4
Market rent growth assumption (%) 1.7 2.0 1.8 -
Operating expense growth assumption (%) 1.7 2.0 1.8 -
INPUTS
The segments’ inputs used by the external
appraisers in the cash flow analysis per 31
December 2021 and 31 December 2020 are
presented in the following tables.
The weighted average yield requirement
decreased in all segments compared to the
comparison period.
The weighted average market rent for
the whole property portfolio was 25.4 EUR/
sq.m. (26.2). The weighted average vacancy
assumption for the cash flow period was
4.3% (4.4).
SENSITIVITY ANALYSIS
Sensitivity to change in the properties’ fair
value, or the risk associated with fair value,
can be tested by altering the key parame-
ters. The sensitivity analysis below uses the
investment properties’ fair value of EUR
4,268.2 million defined by the external ap-
praiser at 31 December 2021 as the starting
value. Sensitivity analysis indicates that the
market value is most sensitive to changes
in market rents and yield requirement. A
10% increase in market rents increases the
market value of the investment properties
by approximately 13%. Correspondingly,
a 10% decrease in the yield requirement
results in an approximately 11% increase in
market value.
The market value reacts to changes in
vacancy and operating expenses, but their
relative effect is not as great as changes to
market rent and yield requirement. In sen-
sitivity analyses one parameter is changed
at a time. In reality, changes in different
parameters oen occur simultaneously. For
example, a change in vacancy may connect
to a change in market rents and yield
requirement when they impact fair value
simultaneously.
SENSITIVITY ANALYSIS
Fair value (MEUR)
Change % -10% -5% ±0% +5% +10%
Yield requirement 4,734.6 4,489.2 4,268.2 4,068.3 3,886.6
Market rents 3,721.7 3,995.0 4,268.2 4,541.5 4,814.8
Operating expenses 4,412.0 4,340.1 4,268.2 4,196.3 4,124.5
Change, percentage points -2 -1 ±0 1 2
Vacancy 4,390.1 4,329.2 4,268.2 4,207.3 4,146.3
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INVESTMENT PROPERTY CHANGES AND CLASSIFICATION
31 December 2021
MEUR
Investment
properties under
construction
Operative
investment
properties
Investment
properties total
At period-start 271.5 3,880.7 4,152.2
Acquisitions - -0.6 -0.6
Investments 141.0 43.1 184.1
Disposals -9.1 0.0 -9.1
Capitalised interest 6.5 0.4 6.9
Fair value gains on investment property - 106.1 106.1
Fair value losses on investment property -27.7 -18.0 -45.7
Valuation gains and losses from Right-of-Use-Assets - -11.8 -11.8
Exchange dierences - 55.1 55.1
Transfer between operative investment properties, joint
ventures and transfer into investment properties held for
sale - -260.5 -260.5
Changes in right-of-use assets classified as investment
properties (IFRS 16) - 12.6 12.6
At period-end 382.3 3,807.0 4,189.2
2019 202051 2 3 64 7 8 9
INVESTMENT PROPERTIES 2020
MEUR
1 Acquisitions
2 Investments and
capitalised interest
3 Disposals
4 Fair value gains
5 Fair value losses
6 Valuation gains and losses
from Right-of-Use-Assets
7 Exchange dierences
8 Right-of-use assets
classified as investment
properties (IFRS 16)
9 Transfers between items
156.0
182. 5
4 ,106.2
–10.0
–181.1
–5.7
–43.4
–0.4
–145.8
3 9.8
4,152.2
2020
2021
51 2 3 64 7 8 9
INVESTMENT PROPERTIES 2021
MEUR
1 Acquisitions
2 Investments and
capitalised interest
3 Disposals
4 Fair value gains
5 Fair value losses
6 Valuation gains and losses
from Right-of-Use-Assets
7 Exchange dierences
8 Changes in
right-of-use assets
classified as investment
properties (IFRS 16)
9 Transfers between items
4,152.2
191.0
106.1
-11.8
12.6
-0.6
-9.1
-45.7
55.1
-260.5
4,189.2
31 December 2020
MEUR
Investment
properties under
construction
Operative
investment
properties
Investment
properties total
At period-start 169.0 3,991.2 4,160.2
Acquisitions 0.0 156.0 156.0
Investments 121.5 56.1 177.6
Disposals 0.0 -10.0 -10.0
Capitalised interest 4.6 0.3 4.9
Fair value gains on investment property 0.0 39.8 39.8
Fair value losses on investment property -23.6 -157.5 -181.1
Valuation gains and losses from Right-of-Use-Assets 0.0 -5.7 -5.7
Exchange dierences 0.0 -43.4 -43.4
Transfer between operative investment properties, joint
ventures and transfer into investment properties held for
sale 0.0 -145.8 -145.8
Changes in right-of-use assets classified as investment
properties (IFRS 16) 0.0 -0.4 -0.4
At period-end 271.5 3,880.7 4,152.2
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Citycon divides its investment properties
into two categories: Investment Properties
Under Construction (IPUC) and Operative
Investment Properties. On reporting date
and the comparable period 31 December
2020, the first mentioned category included
Lippulaiva in Finland.
IPUC-category includes the fair value of
the whole property even though only part of
the property may be under construction.
Contractual obligations to purchase,
construct or develop investment properties
are presented below.
Contingent liabilities related to investment
properties
MEUR
31
December
2021
31
December
2020
Capital commitments 81.7 183.9
VAT refund liabilities 108.2 91.4
Capital commitments
Capital commitments relate mainly to
on-going (re)development projects.
VAT refund liability
There are value-added tax refund liabilities
arising from capitalised renovations and new
investments in Citycon’s investment proper-
ties. The VAT refund liabilities will realise if
the investment property is transferred for
non-VAT-liability use within 10 years.
.. INVESTMENT PROPERTIES
HELD FOR SALE
MEUR 2021 2020
Acquisition cost January 1 149.7 0.0
Disposals -256.3 0.0
Exchange dierences -3.2 0.0
Transfers from investment
properties
260.5 149.7
Accumulated acquisition
cost December 31 150.9 149.7
The Held for Sale Investment Properties
consisted of two shopping centers in Norway
on 31 December 2021. One investment prop-
erty in Finland & Estonia segment was sold
during Q4 2021. On 31 December 2020 Invest-
ment Properties Held for Sale comprised
of three properties in Sweden & Denmark
segment, which were sold during Q1 2021.
Transfer from investment properties in-
cludes also fair value changes of properties
in Investment Properties Held for Sale.
An investment property is reclassified in the financial statement in cases where the
investment property is divested or permanently withdrawn from use, and no future
economic benefits are expected.
For Citycon, the characteristics of a sale of a business include, for example, the sale
of a major line of business or geographical area of operations that also involves the
transfer of staff and/or management essential to the business.
In the case of the sale of a business, IFRS 5, Assets Held for Sale based accounting
treatment is applied. Businesses, i.e. disposal groups such as segments or property
portfolios, are classified as non-current assets held for sale when their book values are
to be recovered (principally through a sale transaction) and a sale is considered highly
probable.
In the case of a real estate sale IAS 40 Investment Property or IAS 2 Inventory based
accounting treatment, is applied.
If the sale of an operative investment property is deemed highly probable, such a
property is transferred to ‘Investment properties held for sale’ in the financial state-
ment.
A sale is deemed highly probable when
– the management is commied to a plan to sell the property and an active programme
to locate a buyer and complete the plan has been initiated
– the property is actively marketed for sale at a price that is reasonable in relation to it’s
current fair value,
– the sale is being expected to qualify for recognition as a completed sale within one
year.
Investment properties held for sale are still recognized at fair value in accordance
with IAS 40.
Classifying properties into invest-
ment properties or investment
properties held for sales requires
management’s judgement. In addition
judgement is used when determing
whether the sale of an investment
property is to be classified as a real
estate sale or sale of a business.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. RIGHTOFUSE ASSETS
Assessing the propability of exercicing
extension options included in lease
agreements requires judgement. At the
commencement date, Citycon assesses
whether it is reasonably certain that
the entity will exercise an extension
option included in the lease agreement.
Citycon considers all relevant facts and
circumstances that create an economic
incentive for the entity to exercise , or
not to exercise, the option.
The IFRS 16 Leases standard replaced the IAS
17 standard at the beginning of the 2019 finan-
cial period. First and foremost, the standard
provided reporting entities with instructions
on the accounting treatment of leases in the
lessee’s financial statements, changed the
definition of leasing and set the principles
regarding the recognition of leases in the
balance sheet both as a right-of-use asset and
a lease liability. The application of the stand-
ard did not result in any changes to the ac-
counting treatment of leases where Citycon
Group acts as the lessor. Nonetheless, with
regard to the majority of the Group’s leases
where Citycon acts as the lessee, Citycon
has recognized assets and liabilities to the
Group’s balance sheet pertaining to these
leases starting from Q1 2019 .
Citycon Group has recognized right-
of-use assets from the leases subject to
the scope of the standard as part of the
‘Investment properties’ and ‘Tangible assets’
balance sheet items. The right-of-use assets
recognized as part of investment properties
consist of leases subject to Citycon Group’s
core business, such as the leases of shopping
centres, shopping centre land areas and
shopping centre machinery. The right-of-use
assets recognized as tangible assets, on the
other hand, have primarily been recognized
for leases included in administrative expens-
es, such as office leases, IT assets and leased
cars. The lease liability of Citycon Group
has been valued by discounting the lease
payment liabilities of the leases subject to
the scope of the IFRS 16 standard to their
present value using as the discounting factor
the view of the company’s management
on the incremental borrowing rate at the
starting time of the lease.
The majority of the leased right-of-use
assets of Citycon Group are fixedly linked to
Citycon’s investment properties. As a result,
Citycon has disclosed its lease expenses
primarily as part of the fair value changes
of its investment properties (comparable to
straight-line depreciations) and as interest
expenses determined by the interest rate
factor of the lease liability. The impacts on
profit pertaining to the right-of-use assets
classified as ’Tangible assets’ are disclosed
in the profit and loss account as interest
expenses and as depreciations included in
the line item ’Administrative expenses’.
Citycon applies the recognition exemp-
tions permied by the standard and, hence,
does not apply the standard to short-term
leases with a duration of less than a year or
leases of a low value, such as leases applica-
ble to specific office equipment.
During the finacial year 2021 the contract
values of managed and rented centers were
transferred to Right-of-use assets according
to IFRS 16.
The impact from the standard to
Citycon’s reporting in 2021 is as follows:
Consolidated income statement
MEUR 2021 2020
Property operating expenses 6.8 6.6
Net rental income 6.8 6.6
Administrative expenses 0.0 0.0
Net fair value losses on investment
property
1)
-11.8 -5.7
Other operating income and expenses 0.0 0.0
Operating profit -5.0 1.0
Net financial income and expenses -1.5 -1.6
Loss before taxes -6.5 -0.6
Deferred taxes 0.1 0.1
Loss/profit for the period -6.4 -0.5
1) Includes a one-off amortization of EUR 5.6
million to the contract value of rented centers.
Consolidated cash flow statement
MEUR 2021 2020
Net cash flows from operating
activities 5.3 5.0
Net cash flows from financing
activities -5.3 -5.0
Depreciations of right-of-use assets by asset class
MEUR 2021 2020
Valuation gains/losses -11.8 -5.7
Depreciation of right-of use
assets -0.8 -0.9
Impact of recognition exemptions
permitted by the standard
MEUR 2021 2020
Short-term leases 0.0 0.0
Low-value assets 0.1 0.1
Variable rents 0.0 0
Maturity profile of liabilities
related to right-of-use assets
MEUR 2021 2020
Less than 1 month 0.6 0.5
1 to 12 months 5.9 5.5
1–5 years 23.4 26.0
over 5 years 13.3 16.8
Total 43.2 48.8
Consolidated statement of financial position
MEUR
Invest-
ment
proper-
ties
Tan-
gible
assets
Total
Right-
of-use
assets
Lease
liabili-
ties
1 January
2021 45.0 2.4 47.4 48.8
31 December
2021 45.7 2.1 47.7 43.2
1 January
2020 51.1 3.3 54.4 55.2
31 December
2020 45.0 2.4 47.4 48.8
THE EFFECT OF IFRS TO
CALCULATION OF KEY FIGURES
When calculating loan to value (LTV), both
the right-of-use assets classified as part of
investment properties, as well as lease liabil-
ities pertaining to these right-of-use assets,
have not been taken into account. Thus,
IFRS 16 has no impact on LTV calculations
as compared to earlier periods. The LTV
formula is presented in section Formulas for
key figures and ratios.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
Following table represents the Citycon Group’s interest in the assets and liabilities, revenues and expenses of the joint ventures. The financial
information presented in the table is based on the financial statements of the joint venture entities prepared in accordance with IFRS.
A) Investments in joint ventures
2021
2020
MEUR
Kista Galleria
Group
Norwegian
joint ventures
Joint
ventures total
Kista Galleria
Group
Norwegian
joint ventures
Joint
ventures total
Investment property 504.4 3.1 507.5 511.2 2.9 514.1
Other non-current assets 5.4 6.8 12.2 0.0 0.1 0.1
Cash and cash equivalents 7.5 0.8 8.3 7.4 1.0 8.4
Other current assets 9.3 0.4 9.7 12.2 1.7 13.9
Long-term loans 474.5 0.0 474.5 471.0 0.2 471.2
Deferred tax liabilities 22.2 0.0 22.2 19.8 - 19.8
Short-term liabilities 16.9 1.9 18.8 15.2 0.4 15.6
Equity 12.9 9.2 22.1 24.8 5.3 30.1
Portion of the Group's ownership, % 50% 50% 50% 50%
Share of joint venture's equity 6.5 4.6 11.1 12.4 2.6 15.0
Share of loans of joint ventures 118.4 - 118.4 93.5 - 93.5
Investments in joint ventures 124.8 4.6 129.3 105.9 2.6 108.6
Gross rental income 19.5 - 19.5 21.8 - 21.8
Net rental income 12.8 - 12.8 15.2 - 15.2
Administrative expenses -0.2 0.0 -0.2 -0.3 -3.8 -4.1
Other operating income/expenses -0.4 -0.1 -0.5 -0.8 3.8 3.0
Net fair value losses/gains on investment property -2.8 0.0 -2.8 -64.5 - -64.5
Operating profit 9.4 0.0 9.4 -50.4 0.0 -50.4
Financial income 1.3 0.0 1.3 0.0 0.0 0.0
Financial expenses -20.4 0.0 -20.4 -15.8 0.0 -15.8
Taxes -2.9 0.0 -2.9 10.0 0.0 10.0
Loss / Profit for the period -12.5 0.0 -12.5 -56.3 0.0 -56.3
Share of loss/profit of joint ventures -6.3 0.0 -6.3 -28.1 0.0 -28.1
Other comprehensive income for the period, net of tax 0.0 0.0 0.0 0.0 0.0 0.0
Exchange losses/gains on translating foreign operations 7.1 0.0 7.1 -13.2 -0.4 -13.6
Share of other comprehensive income of associated
companies and joint ventures 3.5 0.0 3.5 -6.6 -0.2 -6.8
Total comprehensive loss/profit for the period -5.4 0.0 -5.4 -69.4 -0.2 -69.6
INVESTMENTS IN
ASSOCIATES AND
JOINT VENTURES
Citycon recognises its investment
in joint ventures and associate
companies using the equity method
in the consolidated financial state-
ments.
Joint ventures owned by Citycon
are treated according to the IFRS
11 Joint Arrangements. In joint ven-
tures, venturers have a contractual
arrangement that establishes joint
control over the economic activities
of the entity. The most significant
business and financing decisions
regarding the joint ventures are
made jointly among the owners.
An associated company is an
entity over which the Group has
significant influence. Significant
influence is created usually when
the Group owns over 20% of the
voting rights of the company or
when the Group has otherwise
significant power over company, but
not the control.
The Group presents the aggre-
gate share of profit or loss from
the associated companies and joint
ventures on the face of its state-
ment of comprehensive income in
line “Share of profit of associated
companies and joint ventures” and
“Share of other comprehensive
income of associated companies
and joint ventures”.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KISTA GALLERIA SHOPPING CENTRE
Citycon owns a 50% interest in Kista Galleria
shopping centre in Sweden, the other 50% is
owned by a Canadian partner (CPPIB). Each
partner has equal number of members in the
board of directors taking decisions related
to the Kista Galleria. Material operating
and capital decisions in the board are made
unanimously. Consequently the entity is
considered to be jointly controlled and
consolidated under the equity method. The
Group has granted a shareholder loan to the
Kista Galleria joint venture. Pursuant to the
agreement between the Kista Galleria joint
venture partners, the Kista Galleria joint
venture shall not distribute any dividends
until shareholder loans have been repaid
and the Group shall take no action or make
no decision with respect to the shareholder
loan without the prior consent of the other
partner. All payments made by the Kista
Galleria joint venture in respect of the share-
holder loan shall be made pro rata to each of
the joint venture partners.
JOINT VENTURES IN NORWAY
Citycon acquired all the shares in Norwegian
shopping centre company Sektor on 14 July
2015. The acquired portfolio includes five
joint ventures: Klosterfoss Utvikling AS,
Dr Juells Park AS, Sandtranda Bolig AS,
Centerteam AS and Magasinet Drammen
AS, all of which Citycon owns 50% of the
shares. First three of the former companies
are residential real estate development
companies, others operate outside of the
real estate business.The 50% ownership of
Centerteam AS was sold on 18.12.2020 and it
is not included in the group balance sheet on
31.12.2020.
B) Investments in associated companies
MEUR 2021 2020
Investment properties 0.0 0.0
Current assets 1.3 0.4
Short-term liabilities 1.2 0.3
Long-term liabilities 0.0 0.0
Total shareholders' equity 0.1 0.1
Portion of the Group's ownership, % 38% 38%
Share of associated companies' equity 0.0 0.0
Share of loans of associated companies 0.0 0.0
Investments in associated companies 0.1 0.0
Gross rental income 2.1 1.3
Net rental income 0.4 0.9
Net fair value losses/gains on investment property 0.0 0.0
Net financial income and expenses 0.0 -0.6
Taxes 0.0 0.0
Profit for the period 0.1 0.3
Share of loss/profit of associated companies 0.0 0.1
Share of other comprehensive income of associated
companies and joint ventures 0.0 0.0
Total comprehensive loss/profit for the period 0.1 0.3
ASSOCIATED COMPANIES IN NORWAY
Citycon acquired on 14 July 2015 all the
shares in Norwegian shopping centre com-
pany Sektor. At the end of 2019, the acquired
portfolio included associate interests in
three shopping centres: Markedet, Stovner
Senter and Torvbyen. Citycon owned 20%
interest in all of these shopping centres at
the end of period 31.12.2019.
Citycon acquired the remaining interest
in Sektor Portefolje II AS on 5th February
2020 and sold one of the three shopping
centres (Markedet) during Q1 2020. Aer the
transactions, Citycon owns 100% of Stovner
and Torvbyen shopping centers, which have
been consolidated as subsidiaries regarding
the period aer the transaction. The result
of Sektor Portefolje II AS prior to acquisition
has been consolidated to consolidated
income statement on row share of profit of
associated companies and joint ventures.
On the reporting date 31.12.2021 and the
comparison period 31.12.2020 Citycon has
only one associated company, Torvbyen Dri
AS, from which the group owns 38%.
The table presents summarised financial
information of the Citycon’s investments in
associated companies.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. FINANCING
.. EQUITY
A) Description of funds and reserves included in the equity
SHARE CAPITAL
The company has single series of shares, each share entitling to one vote at General Meeting
of shareholders. The shares have no nominal value and the share capital has no maximum
value.
SHARE PREMIUM FUND
Since the 2006 entry into force of the current Finnish Limited Liability Companies Act, no new
items are recognised in the share premium fund. The share premium fund accumulated before
2007 due to option schemes and share issues.
INVESTED UNRESTRICTED EQUITY FUND
The invested unrestricted equity fund is credited, for instance, with that part of the subscrip-
tion price of the shares that, according to the Memorandum of Association or the share issue
decision, is not to be credited to the share capital. Incremental transaction costs (net of taxes)
directly aributable to the issue of new shares or options are deducted from the proceeds.
FAIR VALUE RESERVE
The fair value reserve contains fair value changes of derivative instruments used to hedge
cash flows.
TRANSLATION RESERVE
The translation reserve contains translation differences arising from the currency translation
of foreign subsidiaries’ financial statements.
HYBRID BOND
Citycon has two EUR 350 million hybrid bonds, issued in November 2019 and in June 2021. The
hybrid bond is treated as a part of shareholder’s equity in the IFRS financial statements. The
hybrid bonds are unsecured, subordinated to all debt and senior only to ordinary share capital.
A holder of hybrid bond notes has no shareholder rights. The hybrid bonds have fixed coupons
until the first reset date 10 September 2026, and thereaer coupons are reset every five years
with applicable 5 year swap rate plus margin. Citycon has the right to postpone interest pay-
ment if it does not distribute dividend or any other equity to its shareholders. The bonds have
no set maturity date, but the company has the right to redeem them aer five years from the
issue date and thereaer on every yearly interest payment date. Fees related to the hybrids are
amortised in retained earnings and interest is recorded in retained earnings upon payment or
when the commitment to payment arises. Earnings per share includes the interests. The hybrid
loans have an off-balance sheet accrued interest of EUR 17.3 million as of 31 December 2021.
TREASURY SHARES
Where any group company purchases the company’s equity share capital (treasury shares), the
consideration paid, including any directly aributable incremental costs (net of income taxes)
is deducted from equity aributable to the company’s equity holders until the shares are reis-
sued. Where such ordinary shares are subsequently reissued, any consideration received, net
of any directly aributable incremental transaction costs and the related income tax effects,
is included in equity aributable to the company’s equity holders.
Citycon Oyj repurchased 9,796,463 treasury shares during year 2021. 30 November 2021
Citycon reversed 9,500,000 repurchased shares. Purchase price of cancelled shares recorded
as a deduction of retained earnings. On 31 December 2021 Citycon holds a total of 296,463
treasury shares.
B) Board proposal for dividend and return from the invested unrestricted equity fund
The Board of Directors proposes that based on the balance sheet to be adopted for the finan-
cial period ended on 31 December 2021, no dividend is distributed by a resolution of the Annual
General Meeting.
Nonetheless, the Board of Directors proposes that the Board of Directors be authorized to
decide in its discretion on the distribution assets from the invested unrestricted equity fund in
the manner set forth below.
Based on this authorization, the maximum total amount of equity repayment distributed
from the invested unrestricted equity fund shall not exceed EUR 0.50 per share. Based on
the current total number of issued shares in the company, the authorization would equal to a
maximum of EUR 84,004,470 in equity repayment.
The authorization is valid until the opening of the next Annual General Meeting.
Unless the Board of Directors decides otherwise for a justified reason, the authorization
will be used to distribute equity repayment four times during the period of validity of the au-
thorization. The Board of Directors will make separate resolutions on each distribution of the
equity repayment so that the preliminary record and payment dates will be as set out below.
Citycon shall make separate announcements of each such Board resolution.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Preliminary payment date Preliminary record date
31 March 2022 24 March 2022
30 June 2022 23 June 2022
30 September 2022 23 September 2022
30 December 2022 15 December 2022
The equity repayment based on the resolution of the Board of Directors will be paid to a share-
holder registered in the company’s shareholders’ register maintained by Euroclear Finland Ltd
on the record date of the equity repayment.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. NET FINANCIAL INCOME AND EXPENSES
INTEREST INCOME
Interest income is recognised according
to the time that has elapsed, using the
effective interest method.
DIVIDEND INCOME
Dividend income is recognised when the
right to receive a dividend is established.
BORROWING COSTS
Borrowing costs are usually expensed as
incurred. However, borrowing costs, such
as interest expenses and arrangement
fees, directly aributable to the acquisi
-
tion, construction or production of a qual-
ifying asset are capitalised as part of the
cost of that asset. A qualifying asset is an
asset that necessarily takes a substantial
period of time to be ready for its intended
use or sale. Capitalisation commences
when the refurbishment of a property,
or the construction of a new building or
extension, begins and ceases once the
building is ready for lease. Capitalis
-
able borrowing costs include costs of
funds borrowed for a construction project
or costs aributable to a construction
project multiplied by the capitalisation
rate. The capitalisation rate is the weight
-
ed average cost of Citycon’s borrowings
for the financial year. Borrowing costs
arising from the purchase cost of land are
also capitalised on the development pro
-
ject, but only when activities necessary to
preparing the asset for development are
in progress on the purchased land.
Loan-related transaction expenses
clearly associated with a specific loan are
included in the loan’s cost on an accrual
basis and recognised as financial expens-
es, using the effective interest method.
Expenses related to hybrid bonds are
recognised in retained earnings, see note
3.1.
A) Recognised in the consolidated income statement
MEUR 2021 2020
Interest income on loans 6.9 5.7
Interest income on derivatives and other items 0.0 0.1
Foreign exchange gains 18.0 107.5
Fair value gain from derivatives 0.0 0.0
Other financial income 0.1 0.0
Financial income, total 25.0 113.3
Interest expenses on loans -49.5 -47.7
Interest expenses on derivatives and other items -3.0 -2.6
Foreign exchange losses -17.9 -107.6
Fair value loss from derivatives -0.8 -5.1
Development interest capitalised 8.1 4.9
Other financial expenses -15.4 -5.4
Interest expenses on IFRS 16 lease liabilities -1.5 -1.6
Financial expenses, total -80.0 -165.1
Net financial income and expenses -55.0 -51.8
Of which attributable to financial instrument categories:
Interest-bearing loans and receivables -31.2 -30.0
Lease liabilities (IFRS 16) -1.5 -1.6
Derivative financial instruments -21.5 -19.8
Other liabilities and receivables -0.8 -0.4
Net financial income and expenses -55.0 -51.8
B) Recognised in the other consolidated comprehensive income
MEUR 2021 2020
Gains/losses arising during the period from cash flow hedges 1.2 -1.3
Added (Less): interest income (expenses) recognised in the consolidated
income statement on cash flow hedges -0.1 -0.3
Net gains/losses on cash flow hedges 1.1 -1.6
Net financial expenses increased compared to last year mainly following one-off indirect losses
related to bond buy-backs and fair value changes of derivatives. Indirect losses of EUR 7.3 million
(5.8) were recorded related to cost for bond tenders and non-cash write downs of unamortized
fees on the prepaid bonds. In addition, EUR 0.8 million indirect losses (0.8 gains) related to fair
value changes of cross-currency swaps not under hedge accounting was booked.
In 2021, foreign exchange gains of EUR 0.0 million (2.5) and foreign exchange losses of EUR -17.9
million (-15.6) were recognised in the consolidated income statement from debt instruments.
Citycon’s weighted average interest rate was 2.47% (2.39%) and the weighted average
interest excluding derivatives was 2.48% (2.37%) as at 31 December 2021. Interest on develop-
ment expenditure is capitalised at a rate of 2.74% (2.51%) as at 31 December 2021.
Citycon’s interest expenses in the consolidated income statement contain interest expens-
es from interest-bearing debt as well as all interest expenses arising from derivative financial
instruments used for hedging purposes. Additional information on Citycon’s derivative
financial instruments, their fair values and hedge accounting treatment can be found in Note
3.6. Derivative Financial Instruments.
Fair value gains and losses of derivatives relate to cross-currency swaps not under hedge
accounting. Other financial expenses mainly consist of amortisations and write-downs of
arrangement fees, paid commitment fees and other bank fees.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. CLASSIFICATION OF FINANCIAL INSTRUMENTS
FINANCIAL ASSETS AND LIABILITIES
Recognition and measurement
Starting 1 January 2018 Citycon has taken into use IFRS 9 for recognition and measure-
ment of financial assets and liabilities. Financial assets are classified into the following
categories for measurement purposes according to IFRS 9
1. financial assets at amortised cost or
2. financial assets at fair value through profit or loss.
The classification of a financial asset is determined based on the entity’s business model
for managing the asset and whether the assets’ contractual cash flows represent ‘solely
payments of principal and interest ‘ on the principal amount outstanding.
Assets classified at amortised cost include financial assets which the company has
created by providing money, goods or services directly to the debtor. Initially recognised at
fair value these assets under current and non-current assets are carried at amortised cost.
Their balance sheet value is impaired by the amount of any credit loss. In the company’s
consolidated statements of financial position as at 31 December 2021 and 31 December
2020, financial assets held at amortised cost include rent and trade receivables, interest
receivables and cash and cash equivalents, which are reported in the balance sheet within
the following items ”Trade and other receivables” and ”Cash and cash equivalents”.
In the company’s consolidated statements of financial position as at 31 December
2021 financial assets at fair value through profit or loss cost include cash investments into
highly liquid money market funds which are reported in the balance sheet within “Current
financial investments”.
Citycon concludes derivative contracts for hedging purposes only. Derivative contracts
not fulfilling the criteria set for hedge accounting, or for which Citycon has decided not to
apply hedge accounting, are classified as financial assets or liabilities at fair value through
profit or loss.
Financial liabilities are classified as
1. financial liabilities at fair value through profit or loss or
2. financial liabilities at amortised costs
Financial liabilities are initially recognised at fair value. Aerwards, financial liabilities
excluding derivative debt are recognised at amortised cost using the effective interest
method. In the company’s consolidated statement of financial position, on 31 December
2021 and 31 December 2020, financial liabilities at amortised cost include loans, trade
payables and interest payables which are reported in the balance sheet under the items
”Loans” and ”Trade payables and other payables”. On 31December 2021 and 31 December
2020 Citycon had foreign exchange derivative contracts and cross currency interest rate
swaps classified as financial assets and liabilities at fair value through profit or loss.
Financial assets and liabilities are recognised in the statement of financial position on
the basis of the selement date.
Carrying
amount Fair value
Carrying
amount Fair value
MEUR Note 2021 2021 2020 2020
Financial assets
I Financial assets amortised at cost
Financial assets within Rent, trade and other
receivables 4.4. 19.7 19.7 20.6 20.6
Cash and cash equivalents 3.8. 34.7 34.7 25.9 25.9
II Financial assets at fair value through profit
and loss
Money market funds 3.8. 19.9 20.0 - -
Derivative financial instruments 3.6. 14.8 14.8 14.8 14.8
III Derivative contracts under hedge accounting
Derivative financial instruments 3.6. 1.4 1.4 0.2 0.2
Financial liabilities
I Financial liabilities amortised at cost
I.I Loans
Loans from financial institutions 3.4. - - 313.6 313.6
Bonds 3.4. 1,835.3 1,860.3 1,758.8 1,784.4
Lease liabilities (IFRS 16) 2.3. 43.2 43.2 48.8 48.8
I.II Other liabilities
Financial liabilities within Trade and other payables 4.5. 52.4 52.4 36.0 36.0
II Financial liabilities at fair value through profit
and loss
Derivative financial instruments 3.6. 16.7 16.7 26.8 26.8
III Derivative contracts under hedge accounting
Derivative financial instruments 3.6. - - 0.0 0.0
A) Classification of financial instruments and their carrying amounts and fair values
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B) The principles for determining the fair values
of financial instruments
Citycon applies IFRS valuation principles
when determing the fair values of financial
instruments. The following presents the
principles for determining the fair values of
all financial assets and liabilities.
CASH AND CASH EQUIVALENTS,
INVESTMENTS, TRADE AND OTHER
RECEIVABLES, TRADE PAYABLES
AND OTHER PAYABLES
Due to their short maturity, the fair value of
trade payables and receivables and other
short-term receivables and payables is
regarded as corresponding to their original
carrying amount.
Cash investments into highly liquid money
market funds are EUR 19.9 million. The fair
value of cash investments corresponds to
level 2 of the fair value hierarchy according
to IFRS13.72-90.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are initially
measured at fair value in the statement of
financial position and subsequently re-meas-
ured at their fair value on each balance-sheet
date. The fair value of interest rate swaps
is calculated using the present value of
estimated future cash flows. The fair value
of Citycon’s interest rate derivatives is
determined based on customary valuation
techniques used by market participants in
the OTC derivative market. An interest rate
curve is determined based on observable
market rates. The curve is used to determine
future interest payments, which are then
discounted to present value.
The fair value of a currency forward
agreement is based on the difference be-
tween the exchange rate of the agreement
and the prevailing exchange rate fixing
on each balance-sheet date as well as the
currency basis spreads between the respec-
tive currencies. The fair value of derivative
financial instruments is the estimated
amount that Citycon would receive or pay to
sele the related agreements. The fair value
of foreign exchange derivative contracts is
based on quoted market prices.
The fair value of cross-currency swaps
consists of the fair value due to the interest
rate change and the fair value due to the
currency rate. The interest rate fair value
is determined by the counterparty banks in
the same way as in interest rate swaps men-
tioned above and the reported values are
based on the valuations of the counterparty
banks. The currency fair value is determined
in a similar way as in currency forward
agreements.
The fair value of both interest rate
and foreign exchange derivative financial
instruments corresponds to level 2 of the
fair value hierarchy according to IFRS13.72-
90. For financial instruments that are
recognised at fair value on a recurring basis,
Citycon determines whether transfers have
occurred between levels in the hierarchy by
re-assessing categorisation (based on the
lowest level input that is significant to the
fair value measurement as a whole) at the
end of each reporting period. During the
period there was no transfers between the
levels of the fair value hierarchy.
LOANS FROM FINANCIAL INSTITUTIONS
Citycon’s loans from financial institutions
(if credit limit drawn) are floating rate loans
which have a fair value equal to the nominal
amount of the loan. The difference between
the fair value and carrying amount is the
unamortised capitalised arrangement fees
of the loans. The fair value of loans from
financial institutions corresponds to level 2
according to IFRS13.72-90.
BONDS
All bonds are loans which have fair values
equal to the nominal amount of the loans.
The difference between the fair value and
carrying amount is the unamortised capi-
talised arrangement fees for the bonds, and
for fixed rate bonds also the unamortised
reoffer discount. The fair value of the
bonds corresponds to level 1 according to
IFRS13.72-90.
According to Citycon’s accounting policy
the fair value of bonds differs from the
secondary market price. As of 31 December
2021 the secondary market price was EUR
48.2 million higher (21.8 higher) than the
fair value of the bonds and EUR 73.3 million
higher (47.4 higher) than the carrying amount
of bonds.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. LOANS
All Citycon loans were interest-bearing liabilities on 31 December 2021 and 2020. These interest-bearing loans are explained here in detail.
Breakdown of interest-bearing liabilities
Eective interest Carrying amount Carrying amount
MEUR Maturity rate, % 2021 2020
Long-term interest-bearing liabilities
Bonds
Eurobond 1/2014 10/2024 2.64 348.1 347.4
NOK Bond 2/2015 9/2025 3.90 129.7 123.7
Eurobond 3/2015 9/2022 2.40 - 254.3
Eurobond 1/2016 9/2026 1.26 348.7 348.4
NOK Bond 1/2017 9/2025 2.77 99.6 94.9
Eurobond 1/2018 1/2027 2.50 297.1 296.6
Eurobond 1/2020 (1/2014 bond tap) 10/2024 4.50 188.1 184.1
NOK Bond 2/2020 11/2023 3M Nibor +2.80 79.8 76.0
Eurobond 1/2021 3/2028 1.79 344.2 -
Syndicated revolving credit facilities
EUR 250 million unsecured revolving
credit facility 6/2024
Reference rate +
2.40
1)
- -
EUR 250 million secured revolving
credit facility 6/2024
Reference rate +
1.90
1)
- 95.5
Lease liabilities (IFRS 16) - - 36.7 42.9
Total long-term interest-bearing
liabilities 1,871.9 1,863.8
Short-term interest-bearing liabilities
NOK Bond 1/2015 3/2021 3M Nibor +1.55 - 33.4
Commercial papers 1–9/2021 - - 218.1
Lease liabilities (IFRS 16) - - 6.5 5.9
Total short-term interest-bearing
liabilities 6.5 257.4
1)
Margin is linked to the group’s credit rating and sustainability targets.
The carrying amounts of syndicated loans
and bonds are stated at amortised cost,
using the effective yield method. The fair
values of liabilities are shown in Note 3.3.
Classification of Financial Instruments.
Maturity of long-term interest-bearing debt
(excl. IFRS16 liabilities)
MEUR 2021 2020
1–2 years 79.8 254.3
2–3 years 536.2 76.0
3–4 years 229.4 627.0
4–5 years 348.7 218.6
over 5 years 641.3 645.0
Total 1,835.3 1,820.9
Long-term interest-bearing liabilities by currency
MEUR 2021 2020
EUR 1,202.0 1,099.7
NOK 309.2 390.1
SEK 324.2 331.2
Total 1,835.3 1,820.9
Short-term interest-bearing liabilities by currency
MEUR 2021 2020
EUR - 200.6
NOK - 33.4
SEK - 17.5
Total - 251.5
Currency split is including cross-currency
swaps. Maturity of liabilities related to IFRS
16 right-of-use assets is presented in note 2.3.
.. FINANCIAL RISK MANAGEMENT
A) Financial risk management
The objective of financial risk management
is to ensure that Citycon will reach its
targets in financing and cost of finance and
to identify and mitigate key risks which may
threaten its ability to meet these targets
before they realise.
The Board of Directors has approved a
Treasury Policy which defines the objectives,
responsibilities and risk management
targets, responsibilities and indicators. The
execution and controlling of financial risk
management is performed by two Assistant
Treasurers, under the supervision of the
CFO. The Assistant Treasurers report com-
pliance with the objectives, in conjunction
with the interim and annual report, to the
CFO, who reports to the Board’s Audit and
Governance Commiee.
Financial risks have been identified as
business critical risks for Citycon. Financial
risk arises for Citycon in the form of financial
instruments, which are mainly used to raise
financing for operations. The Group uses
interest rate and foreign exchange deriva-
tives to manage interest rate and currency
risks arising from operations and financing
sources.
Citycon’s identified, key financial risks
include interest rate risk, liquidity risk, credit
risk and foreign currency risk. These risks
are summarised below.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INTEREST RATE RISK
One of Citycon’s key financial risks is the
interest rate risk of its interest bearing
liabilities, whereby changes in money market
interest rates lead to fluctuations in future
interest cash flows on floating rate borrow-
ings. Interest rate risk management aims to
reduce or eliminate the adverse effect of
interest rate fluctuations on the company’s
profit and cash flow. The company aims at a
loan portfolio with the right balance of fixed
and variable rate debt.
During recent years, the amount of fixed
rate debt has increased, so now a relatively
small part of Citycon’s debt is floating rate.
This floating rate debt has been converted to
fixed rate using interest rate swaps. Under
the company’s interest rate risk manage-
ment policy, the target debt portfolio is one
in which a minimum of 70% and a maximum
of 90% of interest bearing liabilities are
based on fixed interest rates over time. At
year-end the ratio of fixed rate debt was
100.0%.
The interest sensitivity of Citycon’s loan
portfolio at the end of 2021 is described by
the fact that a one-percentage point rise in
money market interest rates would increase
its interest expenses by EUR 0.0 million on
a yearly basis, while a fall of one-percentage
point in such rates would decrease them by
EUR 0.0 million.
Eect on interest expenses of an increase of
100-basis points
MEUR 2021 2020
Euro - 2.0
Norwegian crown - 1.0
Swedish crown - 0.2
Total - 3.1
Eect on shareholders equity of an increase of 100
basis points
MEUR 2021 2020
Euro - -
Norwegian crown 1.7 2.3
Swedish crown - -
Total 1.7 2.3
The following table shows the consolidated
shareholders’ equity’s sensitivity to a 100 ba-
sis point change in short term interest rates,
assuming that all other variables remain
constant. The impact is shown as a change in
shareholders’ equity resulting from changes
in interest rates, which relate to interest
rate derivatives under hedge accounting
treatment.
LIQUIDITY RISK
As a real estate company with a large
balance sheet, Citycon needs both equity
capital and debt financing. Minimum
shareholders’ equity is determined by
the company’s loan covenants. The Group
uses cash-flow forecasts to continuously
assess and monitor financing required for
its business. Here, the goal is to arrange
financing on a long term basis and avoid any
large concentration of due dates for the loan
agreements in the near term. Citycon aims
to guarantee the availability and flexibility
of financing, through sufficient commied
unused credit limits and by using several
banks and financing sources as sources of
finance.
Citycon’s financing policy states that all
maturing debt, commied capital expendi-
tures and commied acquisitions for the
coming rolling 12 months period, not covered
by Operating cash flow in approved budget
or forecast or by commied disposals of
assets must be covered by available liquidity
consisting of cash and long-term commied
credit limit facilities. On 31 December 2021,
unused commied credit limits amounted
to EUR 500.0 million, in addition Citycon had
unused cash pool limits of EUR 17.0 million
and unrestricted cash and cash equivalents
of EUR 46.7 million.
Despite the continuation of Covid-19 dur-
ing 2021, the capital and commercial paper
markets fully recovered and showed even
lower spreads than pre-Covid. Therefore,
Citycon issued a 7 year EUR 350 million bond
in March 2021 and a EURO 350 million hybrid
bond in June 2021. Proceeds were used to buy
back the 2022 notes fully and repay all other
short term debt including commercial paper
and a NOK 350 million bond. As of year end
2021 Citycon had no short term refinancing
needs and the next refinancing need is not
until November 2023 for NOK 800 million.
The next table summarises the maturity
profile of the Group’s financial liabilities,
based on contractual payments. The table
includes both principal and interest flows of
loans and payments arising from derivative
financial instruments. Future interest
payments of floating rate loans have been
determined based on the interest rate appli-
cable on the balance sheet date, and are not
discounted. Future interest payments for
derivative financial instruments are based
on discounted net present values and future
interest rates are obtained through interpo-
lation based on the yield curve prevailing on
the balance sheet date.
INTEREST RATE SENSITIVITY
The following table shows interest expenses’
sensitivity to a 100 basis point change in
short term interest rates, assuming that all
other variables remain constant. The impact
is shown as a change in interest expenses
resulting from changes in the interest rate
related to floating rate debt.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Maturity profile of financial liabilities
including interest flows
Less than
1 month
1 to 12
months
1–5
years
Over
5 years TotalMEUR
31 December 2021
Loans from financial institutions - - - - -
Bonds 7.1 34.6 1,645.8 355.7 2,043.2
Derivative financial instruments 0.3 1.1 0.3 - 1.7
Financial liabilities within Trade and other
payables 31.2 21.2 - - 52.4
MEUR
31 December 2020
Loans from financial institutions 93.0 125.7 95.5 - 314.3
Bonds 7.1 67.7 1,229.0 668.6 1,972.5
Derivative financial instruments 0.2 -0.1 -0.4 0.0 -0.3
Financial liabilities within Trade and
other payables 25.8 10.2 0.0 0.0 36.0
Changes in liabilities from financing activities
MEUR
1 January
2021
Cash
flow
Foreign
exchange
movement
Change in
fair values
Amortised
fees
Other
changes
31 December
2021
Long term interest
bearing liabilities 1,820.9 -7.9 17.9 - 4.4 0.0 1,835.3
Short-term interest
bearing liabilities 251.5 -251.9 0.4 0.0 0.0 - -
Derivatives 26.8 0.0 -10.0 -0.2 0.0 0.0 16.7
Total in liabilities
from financing
activities 2,099.2 -259.7 8.3 -0.2 4.4 0.0 1,851.9
MEUR
1 January
2020
Cash
flow
Foreign
exchange
movement
Change in
fair values
Amortised
fees
Other
changes
31 December
2020
Long term interest
bearing liabilities 1,613.4 248.0 -4.7 - -2.3 -33.4 1,820.9
Short-term interest
bearing liabilities 205.7 -105.4 0.0 - -0.1 151.3 251.5
Derivatives 7.5 0.0 19.1 0.2 - - 26.8
Total in liabilities
from financing
activities. 1,826.6 142.5 14.4 0.2 -2.4 117.9 2,099.2
Less than
1 month
1 to 12
months
1–5
years
Over
5 years TotalMEUR
31 December 2021
Undrawn committed credit facilities - - 500.0 - 500.0
MEUR
31 December 2020
Undrawn committed credit facilities - - 405.7 - 405.7
Citycon’s rent revision procedures, long leases and high occupancy ratio generate a stable
long-term cash flow profile. Citycon expects to meet its short-term liabilities shown in the
table above from this stable cash flow and undrawn commied credit facilities. In the long
term, loan refinancings, new bond issues, or disposals of investment properties will be done.
The table below shows the maturity profile of the undrawn commied credit facilities.
The above mentioned credit facilities are freely available to Citycon based on the group’s
financing needs.
CREDIT RISK
Citycon controls its receivables within the framework of the given credit limits and has not so
far identified any major credit risk associated with them. Credit risk management caters for
customer risk management, which is aimed at minimising the adverse effect of unexpected
changes in the customers’ financial standing on Citycon’s business and financial results.
Customer risk management is primarily based on the knowledge of the customers’ business
and active monitoring of customer data. Citycon’s lease agreements include lease deposit
provisions used to contribute to managing customers’ risks. The maximum exposure from
trade receivables is the carrying amount as disclosed in Note 4.4. Trade and other receivables.
Credit risk arising from cash and cash equivalents and certain derivative agreements relate
to the default of a counterparty with a maximum exposure equal to the carrying amount
of these instruments. Citycon invests its liquidity in a manner which minimizes the risk and
does not, for example, invest in equity markets. Citycon’s cash and cash equivalents are
primarily placed on bank accounts and in short term deposits, in which the counterparties
are commercial banks participating in Citycon’s credit agreements. Citycon’s financing policy
also sets forth approved financial instruments in which the company can invest, and includes
counterparty limits for those investments.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
EXCHANGE RATE RISK
Citycon’s presence in countries outside
the eurozone exposes the company to
exchange rate risk. Exchange rate risk stems
from transaction risks resulting from the
conversion of foreign currency denominated
transactions into local currency, as well as
from translation risks in the balance sheet
and profit and loss statement associated
with investments in foreign subsidiaries. The
company uses foreign exchange derivatives
to manage the transaction risk on commied
transactions. The company manages its
exchange rate risk in the balance sheet by
aiming to finance its foreign investments
mainly in the local currency. Currently, the
company’s exchange rate risk relates to
fluctuations in the Euro/Swedish crown and
the Euro/Norwegian crown exchange rates.
FOREIGN EXCHANGE SENSITIVITY
The following table shows the sensitivity in
the net financial expenses of the consoli-
dated income statement to a 5% change in
foreign exchange rates, assuming that all
other variables remain constant. This impact
is mainly aributable to the change in the
fair value of financial instruments and the
change in interest expenses paid in other
currencies as the principals are fully hedged.
MEUR 2021 2020
Swedish crown 0.2 0.1
Norwegian crown -0.6 -0.7
Total -0.4 -0.6
Equity ratio:
MEUR 2021 2020
Total shareholders' equity (A) 2,489.5 2,166.0
Total assets 4,803.0 4,680.0
Less advances received 17.7 16.0
./. (Total assets - advances received) (B) 4,785.3 4,664.0
Equity ratio, % (A/B) 52.0% 46.4%
LTV (Loan to value) -%:
MEUR 2021 2020
Interest-bearing debt total (Note 3.4.) 1,878.5 2,121.2
Less lease liabilities (IFRS 16, Note 2.3) 43.2 48.8
Less cash and cash equivalents (Note 3.8.) 54.7 25.9
Interest-bearing net debt (A) 1,780.6 2,046.5
Fair value of investment properties including properties held for sale and investments
in joint ventures (Notes 2.1 and 2.2) 4,423.7 4,410.5
Less right-of-use assets classified as investment properties (IFRS 16, Note 2.3) -47.7 -45.0
Fair value of investment properties (B) 4,376.0 4,365.5
LTV, % (A/B) 40.7% 46.9%
Eect of a five percent strengthening in foreign
exchange rates on net financial expenses
B) Capital management and financial covenants
CAPITAL MANAGEMENT
The objective of the company’s capital management is to support the strategy, maximise
shareholder value, comply with loan agreement provisions and ensure the company’s ability to
pay dividend. Citycon’s capital structure is managed in an active manner and capital structure
requirements are taken into account when considering various financing alternatives. The
company can adjust the capital structure by deciding on the issuance of new shares, raising
debt financing, raising hybrid financing, divesting investment properties or making adjust-
ments to the dividend.
Citycon monitors its capital structure based on equity ratio and loan-to-value (LTV). The
company’s long term LTV target is 40–45%.
FINANCIAL COVENANTS
Under a commitment given in the terms of
the revolving credit facilities, the Group
undertakes to maintain its net debt to total
assets ratio under 0.60 and its interest cov-
erage ratio at a minimum of 1.8. The net debt
to total assets ratio is calculated by dividing
the Group’s consolidated net debt with
total assets excluding advances received.
The interest coverage ratio is calculated by
dividing the EBITDA adjusted by extraordi-
nary gains/losses, provisions and non-cash
items, by net financial expenses. In addition,
the loan-to-value in loan drawn under the
secured RCF shall not exceed 55 per cent.
Accordingly, net debt to total asset ratio
on 31 December 2021 stood at 0.38 (0.45) and
interest coverage ratio stood at 4.1 (4.1).
Under a commitment given in the terms
of the Trust Deeds regarding all issued
bonds Citycon undertakes to maintain the
group’s solvency ratio at under 0.65 and its
secured solvency ratio at under of 0.25. The
solvency ratio is calculated by dividing the
Group’s consolidated net debt with total
assets excluding intangible assets. The se-
cured solvency ratio is calculated by dividing
the Group’s consolidated secured debt with
total assets excluding intangible assets.
Accordingly, the solvency ratio on 31
December 2021 stood at 0.39 (0.46) and the
secured solvency ratio at 0.00 (0.02).
LTV decreased considerably in 2021 mainly as a result of the hybrid issuance in June and higher
property values. Loan to value is calculated excluding both hybrid debt and IFRS16 lease
liabilities.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative contracts and hedge accounting
Derivative financial instruments are used in accordance with Citycon’s Treasury Policy to
hedge the interest rate risk of interest bearing liabilities and foreign currency risk.
Derivatives are initially measured at fair value (if available) and re-measured at fair value on
each statement of financial position date.
Citycon uses interest rate swaps to hedge the interest rate cash flow risk. These interest
rate swaps hedge against volatility in future interest payment cash flows (cash flow hedging)
resulting from interest rate fluctuations, and the resulting profit fluctuations. Hedged
instruments consist of long term floating rate debt, which is expected to be refinanced upon
maturity on similar terms. Starting 1 January 2018 Citycon applies hedge accounting according
to IFRS 9 to its interest rate swaps. Before 1 January 2018 Citycon applied hedge accounting
according to IAS 39 to its interest rate swaps. Hedge accounting for Citycon’s interest rate
swaps did not change in practice when implementing IFRS 9, even though IFRS 9 sets out dif-
ferent requirements for applying hedge accounting than IAS 39. Subsequently, the fair value
change of the effective part of the derivative hedge is recognised in the fair value reserve in
equity and correspondingly under other consolidated comprehensive income. Any significant
fair value change resulting from an ineffective part of the derivative hedge is recognised in the
statement of consolidated comprehensive income under financial income and expenses. The
amount in the fair value reserve is recognised in the statement of consolidated comprehen-
sive income during the period when the cash flow from the hedged item is realised and affects
earnings. If the criteria for hedge accounting are not met, changes in fair value are recognised
in full through profit or loss. At the moment Citycon has one interest rate swap under hedge
accounting with a nominal of NOK 800 million, corresponding to EUR 80.1 million.
Interest payments based on interest rate swaps are included in interest expenses. Fair value
changes that are booked through profit or loss are recognised as financial expenses or income,
if hedge accounting is not applied. The fair value of interest rate swaps is shown in current
or non-current receivables or current and non-current liabilities in the statement of financial
position. As of 31 December 2021 Citycon’s interest rate swap was under hedge accounting.
The company uses foreign exchange derivatives like forwards and cross-currency swaps
to hedge against exchange rate risk relating to financial assets and liabilities denominated in
foreign currency. Fair value changes related to foreign exchange derivatives are recognised
in the statement of consolidated comprehensive income, since fair value changes related to
financial assets and liabilities denominated in foreign currencies are also recognised therein.
The interest payments of cross-currency swaps and forward points of currency forwards are
included in interest expenses.
As at 31 December 2021 Citycon does not apply hedge accounting to any of its cross-curren-
cy swaps.
A) Nominal amounts and fair values of derivative financial instruments
Nominal
amount Fair value
Nominal
amount Fair value
MEUR 2021 2021 2020 2020
Interest rate swaps
Maturity:
less than 1 year - - 33.4 0.0
1–5 years 80.1 1.4 76.4 0.2
over 5 years - - - -
Subtotal 80.1 1.4 109.8 0.2
Cross-currency swaps
Maturity:
less than 1 years - - - -
1–5 years 314.8 2.3 - -
over 5 years - - 314.8 -3.9
Subtotal 314.8 2.3 314.8 -3.9
Foreign exchange forward agreements
Maturity:
less than 1 year 322.1 -4.1 317.8 -8.1
Total 717.0 -0.4 742.4 -11.8
The fair value of a derivative financial instrument represents the market value of the instru-
ment at the prices prevailing on the balance sheet date. See also note 3.3. Classification of
financial instuments part B) for principles on determining fair values of derivatives.
The fair values include a foreign exchange loss of EUR -12.5 million (-24.2) from foreign
exchange rate derivatives and cross-currency swaps, which is recognised in the consolidated
income statement.
The average fixed interest rate of the interest rate swaps and cross-currency swaps as at
31 December 2021 was 1.07% (1.08%).
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group applies hedge accounting in accordance with IFRS 9 to all of its interest rate swaps
valid as at 31 December 2021, according to which the amount of financial instruments’ fair value
change from effective hedging is recognised under other consolidated comprehensive income.
Fair value gains and losses are transferred to the statement of consolidated income when the
forecasted cash flows realize and affect the statement of consolidated income. Citycon also
has cross-currency swaps to effectively convert EUR debt into SEK debt, for these, hedge
accounting is currently not applied as of 31 December 2021.
Hedge accounting is applied to an interest derivative which has a nominal amount of EUR
80.1 million (109.8). The fixed interest rate in this derivative is 0.525%.
Beginning 1 January 2018 hedge effectiveness requirements are assessed and documented
in accordance with IFRS 9. There is an economic relationship between the hedged item and
the hedging instrument since the critical terms of the interest rate derivatives have been
negotiated to match the respective terms of the variable rate loans. Furthermore, credit risk
does not dominate the value changes in the hedge according to Citycon’s credit risk assess-
ment and the hedge ratio is 1:1, meaning that the nominal of the hedge and the underlying are
closely aligned. A possible source of ineffectiveness would be if reference rates are negative,
whereas there could be a gap between fair value changes in the hedging instrument, which has
no interest flooring, and the hedged item which has 0% interest floor.
The cash flow from all hedged liabilities over time is the basis for determining the gain and
loss on the effective portions of derivatives designated as cash flow hedges.
At 31 December 2021 and at 31 December 2020, derivatives under hedge accounting were
assessed as highly effective. The fair values of these derivatives were EUR 1.4 million (0.2) and
the change of these fair values EUR 1.2 million (-1.3) is recognised under other consolidated
comprehensive income.
B) Derivatives under hedge accounting C) Impact of hedging instruments on the financial statements
Impact of hedging instruments under hedge accounting on the statement of financial position
MEUR
Nominal
amount
Carrying
amount
Line item in
statement of
financial position
Change in fair
value used
for measuring
eectiveness
for the period
As at 31 December 2021
Interest rate swaps 80.1 1.4
Non-current assets,
Derivative financial
instruments 1.2
As at 31 December 2020
Interest rate swaps 109.8 0.2
Non-current
assets and short-term
liabilitites, Derivative
financial instruments -1.3
Eect of cash flow hedges on the statement of profit or loss and other comprehensive income
MEUR
Total hedging
gain/loss
recognised
in OCI
Ineectiveness
recognised in
profit or loss
Line item in
statement of
profit and loss
Amount
recycled
from OCI to
profit or loss
Line item in
statement of
profit and loss
Year ended 31
December 2021
Interest rate swaps 1.4 - - - -
Year ended 31
December 2020
Interest rate swaps 0.2 - - -0.5 Financial expenses
Interest rate swaps Assets Liabilities Assets Liabilities
MEUR 2021 2021 2020 2020
Interest rate swaps, fair value 1,4 - 0.2 0.0
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. OTHER NOTES TO THE ACCOUNTS
.. INCOME TAXES
MEUR 2021 2020
Current taxes -3.3 -1.7
Taxes for prior periods 0.0 0.0
Deferred taxes -32.2 19.6
Income tax -35.5 17.8
MEUR 2021 2020
Profit before taxes 156.5 -45.7
Taxes at Finnish tax rate -31.3 9.1
Change in subsidiaries' tax rate 0.0 2.2
Decision by the Eu Court related
to prior years interest deductibility
in Swedish companies 0.0 7.2
Fair value of investment properties -8.8 -4.4
Dierence in foreign subsidiaries’
tax rate 4.6 3.8
Unrecognised tax receivables from
losses 0.0 -0.9
Utilisation of tax losses 0.8 2.0
Tax free income deducted by
non-deductible expenses 0.0 -0.7
Other -0.7 -0.5
Income taxes -35.5 17.8
Citycon did not recognise any current taxes
directly in the equity during 2021 and 2020.
Income taxes include taxes based
on the taxable income of Group
companies for the financial period,
adjustments for previous periods’
taxes and changes in deferred taxes.
Tax based on taxable income for the
period is calculated in accordance with
the tax legislation enacted in each
country. If the recognition of deferred
taxes is aributable to an item recog-
nised in shareholders’ equity, such as a
change in the fair value of a derivative
instrument used for hedging purposes,
deferred taxes will also be recognised
in shareholders’ equity.
Citycon is subject to income
taxation in several countries. The
complexity of tax legislation, as well
as constant changes in it and in the
operating environment, require Citycon
to use estimates and assumptions
when preparing its tax calculations. Tax
legislation specifically related to tax
deductibility of interest expenses has
changed and is changing in the countries
Citycon operates in. Citycon monitors
and analyses the impact of these chang-
es as part of its normal operations.
Future taxable income is uncertain,
and the final amount of taxes may
deviate from the originally recorded
amount. If final tax deviates from
originally recorded amounts, such dif-
ferences may affect the period’s taxable
profit, tax receivables or liabilities as
well as deferred tax assets or liabilities.
Reconciliation between tax charge and Group tax
at the Finnish tax rate (20.0%):
Pledges and other contingent liabilities
MEUR 2021 2020
Loans, for which mortgages are given in security and shares pledged
Loans from financial institutions - 95.5
Contingent liabilities for loans
Mortgages on land and buildings 250.0 250.0
Bank guarantees and parent company guarantees 92.8 93.6
MEUR 2021 2020
Cash in hand and at bank 26.8 16.7
Restricted cash 7.9 9.2
Total cash 34.7 25.9
Current financial investments 19.9 -
Total cash and cash investments 54.7 25.9
Mortgages on land and buildings
Mortgages relates to the revolving credit facility of the parent company where the group has given
security on the loan via mortgages from certain subsidiaries. Citycon owns 50% of Kista Galleria joint
venture. Shares in the joint venture have been pledged as security for the loans of the joint venture.
Bank guarantees and parent company guarantees
Guarantees are mainly related to parent company guarantees on behalf of subsidiaries for third
parties, or alternatively third party bank guarantees.
Capital commitments related to (re)development projects are presented in note 2.1.
.. COMMITMENTS AND CONTINGENT LIABILITIES
.. CASH AND CASH INVESTMENTS
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash, bank deposits withdrawable on call, and other
short-term, highly liquid investments. A maximum maturity of three months from the
date of acquisition applies to cash and cash equivalents. Current financial investments
consist of cash invested into highly liquid money market funds.
Cash and cash equivalents in the cash flow statement comprise the items presented above.
Restricted cash mainly relates to gi cards, tax and rental deposits.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MEUR
1 January
2021
Recognised
in income
statement
Recognised in
other comprehensive
income
Items
recognised
in equity
Exchange rate
dierences
31 December
2021
Deferred tax assets
Tax losses 13.8 2.1 - - - 15.9
Measurement of interest-rate swaps at fair value 0.0 - - - - 0.0
Other items 0.4 0.1 - - - 0.5
Deferred tax assets, total 14.2 2.2 - - - 16.4
Deferred tax liabilities
Measurement of investment property at fair value
1)
274.2 34.7 - - -14.0 295.0
Contract values of managed and rented centre 1.0 -0.3 - - 0.0 0.8
Temporary dierence in financial expenses 0.5 - - 0.5 - 1.0
Deferred tax discounts due to sales of assets 0.0 - - - - 0.0
Deferred tax liabilities, total 275.7 34.5 - 0.5 -13.9 296.7
1)
Deferred tax liabilities are net of EUR 16.1 million of deferred tax assest arising from confirmed tax losses. The deferred tax asset increase in financial state-
ment 2020 includes EUR 7.2 million due to a positive decision by the EU Court of Justice given to a company, which does not belong to Citycon Group. The decision
has a positive effect also to the deductibility of prior years interest expenses in Citycon’s Swedish companies.
MEUR
1 January
2020
Recognised
in income
statement
Recognised in
other comprehensive
income
Items
recognised
in equity
Exchange rate
dierences
31 December
2020
Deferred tax assets
Tax losses 9.2 4.6 - - - 13.8
Measurement of interest-rate swaps at fair value 0.0 - - - 0.0
Other items 0.2 0.2 - - - 0.4
Deferred tax assets, total 9.4 4.8 0.0 0.0 0.0 14.2
Deferred tax liabilities
Measurement of investment property at fair value
1)
294.6 -14.6 - - -5.8 274.2
Contract values of managed and rented centers 1.3 -0.2 - - -0.1 1.0
Temporary dierence in financial expenses 0.6 - - -0.1 - 0.5
Deferred tax discounts due to sales of assets 0.0 - - - - 0.0
Deferred tax liabilities, total 296.4 -14.8 0.0 -0.1 -5.9 275.7
1)
Deferred tax liabilities are net of EUR 15.2 million of deferred tax assets arising from confirmed tax losses. The deferred tax asset increase in financial state-
ment 2020 includes EUR 7.2 million due to a positive decision by the EU Court of Justice given to a company, which does not belong to Citycon Group. The decision
has a positive effect also to the deductibility of prior years interest expenses in Citycon’s Swedish companies.
.. DEFERRED TAX ASSETS AND LIABILITIES
Changes in deferred tax assets and liabilities in 2020:
Deferred tax assets and liabilities are
calculated on temporary differences
arising between the tax bases of assets
and liabilities, and their carrying amounts.
A major temporary difference arises
between the fair value and taxable value
of investment properties. In such a case,
taxes are calculated on the difference
between the property’s fair value and
residual tax value of the underlying asset.
This rule applies even if the property is
disposed by selling the shares of the prop-
erty company and includes no assessment
of likelihood of such tax consequences.
Other main temporary differences
relate to among other things unused tax
losses and financial instruments. Deferred
tax assets are recognised to the extent
that it appears probable that future tax-
able profit will be available, against which
the temporary differences can be utilised.
When tax receivables are recognised
for tax losses that have been confirmed
in taxation, the company must evaluate
whether it is probable that such tax loss-
es can be used against a taxable profit
arising in the future.
On 31 December 2021, Group companies had
confirmed losses of EUR 1.4 million (1.5) for
which deferred tax assets were not recognised,
since these Group companies are unlikely to
record a taxable profit, before the expiration of
carry forwards of these losses, against which
loss carry forwards can be utilised.
Changes in deferred tax assets and liabilities in 2021:
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. INTANGIBLE ASSETS
MEUR 2021 2020
Acquisition cost January 1. 36.4 36.4
Additions during the period 3.7 1.9
Disposals during the period - -0.7
Transfers between items -12.7 -
Exchange rate dierences 0.9 -1.2
Accumulated acquisition cost
December 31. 28.4 36.4
Accumulated depreciation
and impairment losses,
January 1. -18.8 -17.1
Amortization during the period -1.6 -2.1
Exchange rate dierences -0.4 0.3
Accumulated depreciation
and impairment losses, Dec 31. -20.8 -18.8
Net carrying amount
January 1. 17.6 19.3
Net carrying amount
December 31. 7.6 17.6
.. TRADE AND OTHER RECEIVABLES
MEUR 2021 2020
Rent and trade receivables 20.6 24.8
Expected credit losses -6.7 -9.6
Rent and trade receivables (net) 13.9 15.2
Interest receivables 5.9 5.5
Financial assets total 19.7 20.6
Accrued income and prepaid
expenses 43.6 15.0
VAT-receivables 13.5 3.9
Other receivables 12.3 12.0
Total 89.1 51.5
Ageing structure of rent and trade receivables:
MEUR 2021
Expected
credit loss
rate
Expected
credit
loss
Not past due 1.5 4.2% 0.1
Past due, less than
1 month 2.9 1.1% 0.0
Past due, 1–3
months 2.4 30.9% 0.7
Past due, 3–6
months 2.2 45.6% 1.0
Past due, 6–12
months 4.6 59.5% 2.8
Past due, 1–5 years 7.1 29.6% 2.1
Total 20.6 6.7
Ageing structure of rent and trade receivables:
MEUR 2020
Expected
credit loss
rate
Expected
credit
loss
NOT past due 2.5 10.8% 0.3
Past due, less than 1
month 3.6 11.9% 0.4
Past due, 1–3
months 1.9 55.0% 1.0
Past due, 3–6
months 2.4 19.1% 0.5
Past due, 6–12
months 7.4 64.6% 5.1
Past due, 1–5 years 7.1 32.7% 2.3
Total 24.8 9.6
Movement in expected credit loss:
MEUR 2021 2020
At the beginning of the year -9.6 -4.9
Charge for the year -3.1 -5.7
Utilised 2.6 0.6
Unused amounts reversed 3.3 0.4
Expected credit loss at the
end of the year -6.7 -9.6
Intangible assets consist of computer
soware and licenses. The contract values
of managed and rented centers were trans-
ferred to Right-of-use assets according to
IFRS16.
INTANGIBLE ASSETS
An intangible asset is recognised in
the statement of financial position,
provided its historical cost can be
measured reliably and it is probable
that expected economic benefits will
flow to the company.
Intangible assets are measured at cost
less amortisation and any impairment
losses.
The following depreciation periods
apply:
Contract value of rented centers is
amortized on a straight-line basis over
the contract period.
Contract value of managed centers
is amortized on a straight-line basis
over the contract period.
Soware is amortised over their
useful life on a straight-line basis over
three to seven years.
IMPAIRMENT OF
INTANGIBLE ASSETS
On each balance-sheet date, property,
plant and equipment and intangible
assets are assessed to determine
whether there is any indication of
impairment. If any indication of an
impaired asset exists, the asset’s re-
coverable amount must be estimated.
Should the asset’s carrying amount
exceed its recoverable amount, it is
impaired, and the resulting impairment
loss is recognised in the consolidated
income statement.
Rent and Trade receivables are non-interest
bearing and their payment terms vary
between 2–20 days. The rent guarantee is
equal to between 2–6 months of rent and
other payments.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
EXPECTED CREDIT LOSSES
IFRS 9 Financial Instruments standard
includes guidelines pertaining to impair-
ment losses recognised in financial assets.
From Citycon Group’s point of view, the
key effect of the standard is that the
credit risk applicable to rent and sales
receivables should be taken into account
in the valuation of receivables at the time
of reporting for the full lifetime of the
receivables.
In Citycon’s view, the credit risk
pertaining to the Group’s receivables is
for the material part already included in
the carrying amount of the Group’s rent
and sales receivables as a result of the
receivable-specific review of the rent and
sales receivables carried out by the Group.
However, according to IFRS 9 standard,
Citycon Group also takes into account in
its reporting the expected credit losses
in its receivables base for the full lifetime,
which does affect especially the valuation
of receivables that are still unmatured.
Citycon will estimate the amount of
expected credit losses in its receivables
base on the basis of the available historic
data pertaining to the Group’s accrued
credit losses and expectations regarding
the development of the economic
situation. The expectations regarding the
development of the economic situation
are primarily based on statistics that
provide references to the development
of Citycon Group’s operations and
customers’ financial situation.
When it comes to the estimation of
expected credit losses, Citycon has
applied the simplified method allowed
by the standard. Due to the nature
of the Group’s business, the rent and
sales receivables of Citycon Group do
not include the significant financial
component referred to in the IFRS 15
standard.
.. TRADE AND OTHER PAYABLES
MEUR 2021 2020
Trade payables 33.0 19.2
Interest liabilities 19.4 16.8
Financial liabilities total 52.4 36.0
Short-term advances
received 17.6 15.2
VAT-liabilities 13.0 4.3
Accrued expenses and other
short-term payables 35.9 31.5
Non-interest bearing short-
term liabilities total 66.5 51.0
Total 118.9 87.0
MEUR 2021 2020
Due in less than 1 month 101.1 71.8
Due in 1–3 months 16.1 4.3
Due in 3–6 months 0.4 0.1
Due in 6–12 months 0.9 9.7
Due in 1–2 years 0.4 1.1
Total 118.9 87.0
Due dates of future payments of trade and
other payables:
FINANCIAL LIABILITIES
Financial liabilities include trade and
interest liabilities, which are initially
recognised at fair value. Aerwards,
financial liabilities are recognised at
amortised cost using the effective
interest method
FINANCIAL ASSETS
Financial assets include trade receiv-
ables and other receivables not held
for trading, which the company has
created by providing money, goods or
services directly to the debtor. Initially
recognised at fair value these assets
under current and non-current assets
are carried at amortised cost. Their
balance sheet value is impaired by the
amount of any credit loss.
IMPAIRMENT OF
FINANCIAL ASSETS
A financial asset is impaired if its
carrying amount exceeds its estimated
recoverable amount. If there is
objective evidence that a financial
asset measured at amortized cost is
impaired, the resulting impairment loss
must be recognized in the consolidated
income statement. If the amount of
impairment loss decreases during a
subsequent financial period and this
fall can be regarded as relating to an
event aer the date of impairment
recognition, the asset’s impairment will
be reversed.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. CONSOLIDATION
GROUP ACCOUNTING POLICIES
The consolidated financial statements
include Citycon Oyj and its subsidiaries,
holdings in its associated, joint venture and
joint operations companies.
SUBSIDIARIES
Subsidiaries refer to companies in which
the Group has control. The Group controls
an investee if the Group has: power over
the investee (i.e. existing rights that give
it the current ability to direct the relevant
activities of the investee), exposure, or
rights, to variable returns from its involve-
ment with the investee, and the ability to
use its power over the investee to affect
its returns.
When the Group has less than a ma-
jority of the voting or similar rights of an
investee, the Group considers all relevant
facts and circumstances in assessing
whether it has power over an investee,
including contractual agreements with
the other vote holders of the investee. The
Group re-assesses whether or not it con-
trols an investee if facts and circumstanc-
es indicate that there are changes to one
or more of the three elements of control.
Subsidiaries are consolidated from the
date on which control is transferred to the
Group, until the date on which said control
ceases.
Intra-Group transactions and profit
allocation are eliminated in the consolidat-
ed financial statements.
JOINT OPERATIONS
Mutual real estate companies in Finland,
in which the ownership of Citycon is less
than 100%, are treated as joint operations
in accordance with IFRS 11 Joint Arrange-
ments. The Group recognizes its assets
and liabilities in relation to its joint opera-
tions, including its share of any assets held
and liabilities incurred jointly. In addition,
the Group recognizes its revenue and
expenses in relation to its joint operations,
including its share of revenue of the joint
operation and expenses incurred jointly.
The consolidation method described above
applies to all joint operations of this kind.
Mutual real estate companies, in which
the ownership is less than 50%, are treat-
ed as joint operations, as described above.
FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign
currencies are measured at the exchange
rate quoted on the transaction date. Any
exchange rate differences resulting from
currency translation are entered under
financial expenses and income in the
statement of comprehensive income.
Monetary assets and liabilities
denominated in foreign currencies on the
statement of financial position date are
measured at the exchange rate quoted
on the statement of financial position
date. Non-monetary items denominated
in foreign currencies and measured at fair
value are translated into euros using the
exchange rates quoted on the valuation
date, while other non-monetary items are
measured at the exchange rate quoted on
the transaction date.
Foreign subsidiaries’ statement of
comprehensive income have been trans-
lated into euros using average exchange
rates quoted for the financial period and
statement of financial positions using the
exchange rate quoted on the statement
of financial position date. Any resulting
exchange rate difference is recognised
as a translation difference under other
comprehensive income. Translation dif-
ferences resulting from the elimination of
the historical cost of foreign subsidiaries
and from items included in shareholders’
equity following their acquisition, are
recognised under shareholders’ equity.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. BUSINESS COMBINATIONS AND GOODWILL
BUSINESS ACQUISITIONS
If business acquisition is made, IFRS 3
Business Combinations will apply, where-
by the acquisition cost is allocated to the
acquired assets, liabilities and contingent
liabilities at their fair value. Goodwill aris-
es when the given consideration exceeds
the fair value of the acquired net assets.
GOODWILL
Goodwill arises when the given considera-
tion exceeds the fair value of the acquired
net assets. Goodwill has been allocated to
cash generating units (CGUs). Goodwill is
recognised at cost less any accumulated
impairment losses.
Deferred tax liabilities are valued
at nominal value (not fair value). On
the acquisition of business deferred
tax liabilities generate goodwill, if the
nominal value of deferred tax liabilities
is higher than their fair value at the time
of acquisition.
To the extent that the deferred tax
liabilities’ difference between nominal
value and fair value reduces later, for
example, through a change in the tax cir-
cumstances, such as decrease in tax rate
of the Group, the goodwill arising from
the initial recognition of the deferred tax
provision may become reduced.
If part of the CGU, to which goodwill
has been allocated, is disposed, goodwill
that has been allocated to that disposed
part is booked in other operating expens-
es . Goodwill is allocated to the disposed
part based on the relative values of the
disposed operations and the portion of
the retained part.
BUSINESS ACQUISITIONS AND
ASSET ACQUISITIONS
Citycon purchases investment properties
through business acquisitions and asset
acquisitions.
Citycon applies IFRS 3 Business
Combinations to the accounting treat-
ment of business acquisitions and IAS
40 Investment Property to the asset
acquisitions. Citycon exercises judgement
in assessing whether the purchase of
an investment property portfolio or
an investment property is classified
as a business combination or an asset
acquisition. Acquisitions are treated as
business combinations when significant
set of activities is acquired in addition to
the property. The significance of activ-
ities is assessed in accordance with the
definition of business (e.g. maintenance,
cleaning, security, book-keeping, etc.) of
IFRS 3.
A) Business combinations and goodwill
MEUR 2021 2020
Acquisition cost January 1 141.1 146.5
Change from exchange rate 4.3 -5.5
Accumulated acquisition
cost December 31 145.4 141.1
Goodwill at the end of 2021 results fully from
the acquisition of Norwegian business unit
on 14.7.2015. The goodwill is allocated to the
Norway business unit as a whole. During
financial year 2021 no shopping centres were
sold. In 2020 one shopping centre (Marke-
det) was sold.
Citycon did not acquire any businesses
during financial years 2021 and 2020.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MEUR 2021 2020
Total goodwill 145.4 141.1
Residual balance of deferred
tax liability, in excess of the
fair value, initially provided on
acquisition -84.8 -80.9
Goodwill tested for
impairment 60.6 60.2
B) Impairment testing of Goodwill
IMPAIRMENT TESTING OF GOODWILL
Goodwill is tested for impairment at least
annually and when circumstances indicate
that the carrying value may be impaired.
Goodwill is not amortized. Impairment
is determined for goodwill by assessing
the recoverable amount of each CGU (or
group of CGUs) to which the goodwill
relates. When the recoverable amount of
the CGU is less than its carrying amount,
an impairment loss is recognised. Impair-
ment losses relating to goodwill cannot be
reversed in future periods.
Citycon determines recoverable
amounts using value in use cash flows
based on cash flows used in investment
property fair value evaluation over
10 year period prepared by external
appraiser as presented in notes 2.1 and
administrative expenses as well as other
operating income and expenses according
to budget approved by Board of Directors.
Cash flows do not include restructuring
activities that Citycon is not yet commit-
ted to or significant future uncommied
investments that will enhance the assets’
performance of the cash generating unit
being tested. The recoverable amount
is sensitive especially to assumption of
discount rate and net rental income.
Impairment testing is performed to
the net amount of goodwill, the difference
between nominal and fair value of deferred
tax liabilities determined at the time of
acquisition is reduced from goodwill.
Testing of goodwill for impairment
involves the management’s judgement
and assumptions especially in determ-
ing the recoverable amount, which is
sensitive for instance to assumption of
discount rate and net rental income.
Total carrying value including goodwill to
be tested was approximately EUR 1,568.1
million (1,469.3) .The pre-tax discount rate
applied to the cash flow projections was
4,94% (5.00). The recoverable amount of
Norway amounted to EUR 1,679.1 million
(1,539.9) with an impairment cushion of EUR
111.0 million (70.6) to balance value, hence
there is no need for goodwill impairment.
KEY ASSUMPTIONS USED IN
VALUE IN USE CALCULATIONS
The calculation of value in use is most sensi-
tive to discount rate and assumptions used
in net rental income projections. Net rental
income is based on external appraiser’s 10
year cash flow analysis to determine fair
value of investment properties. The assump-
tion related to aforementioned cash flows
are presented in Note 2.1. Discount rate
represents the current market assessment
of the risks specific to Norway, taking into
consideration the time value of money and
individual risks of Norway. The discount rate
calculation is based on weighted average
cost of capital (WACC). Terminal value is
capitalized with external appraiser’s yield
assumption 5.45% (5.58) which reflects
property specific risks and market risks.
SENSITIVITY TO CHANGES
IN ASSUMPTIONS
The implications of the key assumptions
for the recoverable amount are net rental
income and yield requirement as presented
in Note 2.1. Sensitivity has been analysed
regarding net rental income and yield as-
sumptions seperately. Asset’s total recover-
able amount would fall below total carrying
value if net rental income decreased more
than 5.74% (3.96) from current level. If both
WACC determined by the company 4.94%
(5.00) and yield assumption determined
by external appraiser 5.45% (5.58) would
increase more than 0.38% points (0.27), then
total recoverable amount of asset would fall
below total carrying value.
.. ACQUISITION OF NON
CONTROLLING INTERESTS
On 29th 2021 of April Citycon bought the
remaining 7% minority interest in Heikintori
Oy. Aer the transaction Citycon now owns
100% of Heikintori Oy.
During, 2020 Citycon bought out 24% of
minority shareholders in Heikintori, which
increased Citycon’s ownership of Heikintori
to 93%.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
.. RELATED PARTY TRANSACTIONS AND CHANGES IN GROUP STRUCTURE
A) Related parties
Group companies on 31 December 2021 Country Group holding, % Parent company holding, %
Parent company: Citycon Oyj Finland
Albertslund Centrum ApS Denmark 100
Asematie 3 Koy Finland 100
Asunto Oy Espoon Huukkari
1
Finland 100
Asunto Oy Espoon Jolla
1
Finland 100
Asunto Oy Lippulaivan Loiste Finland 100
Asunto Oy Lippulaivan Luoto Finland 100
Asunto Oy Lippulaivan Lysti Finland 100
Big Apple Top Oy Finland 100
Citycon AB Sweden 100 100
Citycon Buskerud Eiendom AS Norway 100
Citycon Buskerud Invest AS Norway 100
Citycon Buskerud Invest KS Norway 100
Citycon Denmark ApS Denmark 100 100
Citycon Development AB Sweden 100
Citycon Down Town Eiendom AS Norway 100
Citycon Eiendomsmegling AS Norway 100
Citycon Finland Oy Finland 100 100
Citycon Herkules Eiendom AS Norway 100
Citycon Holding AS Norway 100 100
Citycon Jakobsbergs Centrum AB Sweden 100
Citycon Kilden Eiendom AS Norway 100
Citycon Kolbotn Torg Eiendom AS Norway 100
Citycon Kolbotn Torg Næring AS Norway 100
Citycon Kongssenteret Eiendom AS Norway 100
Citycon Kremmertorget Eiendom AS Norway 100
Citycon Liertoppen Eiendom AS Norway 100
Citycon Liljeholmen Bostad AB Sweden 100
Citycon Liljeholmstorget Galleria AB Sweden 100
Citycon Linderud Eiendom AS Norway 100
Citycon Magasinet Drammen Eiendom AS Norway 100
Group companies on 31 December 2021 Country Group holding, % Parent company holding, %
Citycon Magasinet Drammen Invest AS Norway 100
Citycon Magasinet Drammen Invest I ANS Norway 100
Citycon Magasinet Drammen Invest II
ANS Norway 100
Citycon Norway AS Norway 100
Citycon Oasen Eiendom AS Norway 100
Citycon Oasen Kontoreiendom AS Norway 100
Citycon Residentials Finland Oy Finland 100
Citycon Residentials Oy Finland 100 100
Citycon Senterdrift AS Norway 100
Citycon Services AB Sweden 100
Citycon Shopping Centers AB Sweden 100
Citycon Sjøsiden Eiendom AS Norway 100
Citycon Solsiden Eiendom AS Norway 100
Citycon Stopp Eiendom AS Norway 100
Citycon Storbyen Eiendom AS Norway 100
Citycon Strædet Cinema ApS Denmark 100
Citycon Strædet Pedestrian Street ApS Denmark 100
Citycon Innovation Sweden Ab Sweden 100
Citycon Treasury B.V. The Netherlands 100 100
Citycon Trekanten Eiendom AS Norway 100
Espoonlahden Bussiterminaali Koy Finland 100
Espoonlahden Metroasema Koy Finland 100
Kauppakeskus Isokarhu Oy Finland 100
Kristiina Management Oy Finland 100
Kristiine Keskus Oü Estonia 100
Lahden Hansa Koy Finland 100
Lippulaiva Koy Finland 100
Citycon Group’s related parties comprise the parent company Citycon Oyj and its subsidiaries,
associated companies and joint ventures; Board members; CEO and other Corporate Manage-
ment Commiee members; and the company’s largest shareholder Gazit-Globe Ltd.
In total, Gazit and its wholly owned subsidiaries own 51.96% (31 December 2020: 48.9%) of the
total shares and votes in the company (87,559,016 shares as of 31 December 2021).
Group companies and changes in group structure
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Group companies on 31 December 2021 Country Group holding, % Parent company holding, %
Lippulaivan Palvelutilat Koy Finland 100
Manhattan Acquisition Oy Finland 100
Montalbas B.V. The Netherlands 100
Myyrmanni Koy Finland 100
Mölndals Galleria AB Sweden 100
Mölndals Galleria Fastighets AB Sweden 100
Riddarplatsen Fastigheter HB Sweden 100
Rocca al Mare Kaubanduskeskuse AS Estonia 100
Sektor Stovner Eiendom AS Norway 100
Sektor Torvbyen Eiendom AS Norway 100
Stenungs Torg Fastighets AB Sweden 100
Tampereen Koskikeskus Koy Finland 100
Torvbyen Utvikling AS Norway 100
Åkersberga Centrum AB Sweden 100
Lahden Trio Koy Finland 89.5
Myyrmäen Kauppakeskus Koy Finland 78.6
Heikintori Oy Finland 100
Myyrmäen Autopaikoitus Oy Finland 62.7
Dr Juells Park AS Norway 50
Holding Big Apple Housing Oy Finland 50
Lappeenrannan Villimiehen Vitonen Oy Finland 50
Kista Galleria JV AB Sweden 50
Kista Galleria Kommanditbolag Sweden 50
Kista Galleria Holding AB Sweden 50
Kista Galleria LP AB Sweden 50
Klosterfoss Utvikling AS Norway 50
Magasinet Drammen AS Norway 50
Retail Park Oy Finland 50
Sandstranda Bolig AS Norway 50
Tikkurilan Kassatalo As Oy Finland 39
Hansaparkki Koy Finland 36
Liesikujan Autopaikat Oy Finland 35.7
Branch oces:
Citycon Oyj filial Sweden
Partnerships for taxation purposes:
Parkeringshuset Väpnaren Sweden 64
Companies sold (Group holding, % on the time of sale)
Citycon Tumba Centrumfastigheter AB (100%) Sweden 31 March 2021
Citycon Högdalen Centrum AB (100%) Sweden 31 March 2021
Fruängen (100%) Sweden 31 March 2021
Kiinteistö Oy Kauppakeskus Columbus Oy (100%) Finland 31 November 2021
Companies established
Asunto Oy Lippulaivan Loiste Finland 2 June 2021
Asunto Oy Lippulaivan Luoto Finland 2 June 2021
Asunto Oy Lippulaivan Lysti Finland 2 June 2021
Citycon Residentials Finland Oy Finland 19 May 2021
Citycon Residentials Oy Finland 19 May 2021
Acquired companies
Heikintori Oy (92.7->100%) Finland 29 April 2021
Merged centres
Sektor Portefolje II AS merged to Citycon Norway AS Norway 3 March 2021
Liquidated companies
Red City Ab Sweden 16 January 2021
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B) Related party transactions
GROUP COMPANIES
Group companies have paid each other fees
such as maintenance and financial charges,
interest expenses, loan repayments and
other administrative service charges.
Such income and expenses have been elim-
inated from the consolidated financial state-
ments. There have been no other related party
transactions between Group companies.
MANAGEMENT REMUNERATION
Information on management remuneration
is presented in notes 1.6. employee benefits
and personnel expenses.
TRANSACTIONS WITH GAZITGLOBE LTD.
Purchases of services and
expenses charged forward
Over the period, Citycon paid expenses to
Gazit-Globe Ltd and its subsidiaries 0.0 EUR
and invoiced EUR 0.0 million expenses forward
to Gazit-Globe Ltd and its subsidiaries (0.0).
REPORTING TO GAZITGLOBE LTD.
The company’s main shareholder is Gazit-
Globe Ltd. In total, Gazit and its wholly
owned subsidiaries own 51.96% of the
shares in the company. Gazit-Globe has
announced that it has been applying IFRS
in its financial reporting starting from
2007. Gazit-Globe Ltd. holds the view that it
exercises a controlling interest, as defined
in IFRS, in Citycon Oyj based on the fact
that it has been able to exercise controlling
interest in Citycon’s shareholders’ meetings
pursuant to its shareholding. In accordance
with an agreement concluded between the
companies, Citycon will provide Gazit-Globe
Ltd. with a more detailed breakdown of
the accounting information it discloses in
its interim and full-year reports, so that
Gazit-Globe Ltd. can consolidate Citycon
Group figures into its own IFRS financial
statements.
.. CHANGES IN IFRS AND
ACCOUNTING POLICIES
New standards as well as interpretations and
amendments applied in 2021
In April 2021, IFRS Interpretations Commit-
tee published their final agenda decision
on the accounting of configuration and
customization costs in a cloud computing
arrangement (IAS 38 Intangible Assets).
In this agenda decision, the Commiee
considered when an intangible asset can be
recognized in relation to configuration and
customization of an application soware.
As the IFRIC agenda decisions do not have
a date when they enter into force, they are
expected to be applied as soon as possible.
Citycon has analyzed the effects of the
agenda decision to its accounting principles
and the IFRIC decision did not have signifi-
cant impact to Citycon’s financial reporting.
.. EVENTS AFTER THE REPORTING
DATE
On 19 January 2022 was published that Mr
Ofer Stark elected to resign from the Board
as of 31 January 2022.
On 7 February 2022 was published
that Citycon acquired a residential asset,
comprising more than 200 apartments, in
Sweden and divested two non-core centres
in Norway.
FINANCIAL REVIEW
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS, FAS
MEUR Note
1 January–
31 December 2021
1 January–
31 December 2020
Service charge income 3.5 4.8
Turnover 2 3.5 4.8
Administrative expenses 3.4 -13.4 -14.8
Other operating income and expenses 5 -0.1 0.0
Operating profit -10.0 -10.0
Financial income 84.5 120.3
Financial expenses -106.6 -133.8
Net financial income and expenses 6 -22.1 -13.5
Profit/loss before appropriations and taxes -32.1 -23.4
Group contributions 24.4 -
Income tax expense 7 0.0 -0.1
Profit/loss for the period -7.7 -23.5
PARENT COMPANY INCOME STATEMENT, FAS
FINANCIAL REVIEW
FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS, FAS
MEUR Note 31 December 2021 31 December 2020
ASSETS
Non-current assets
Intangible assets 8 7.4 5.5
Tangible assets 9 0.3 0.5
Investments
Shares in subsidiaries 10 1,350.4 1,350.4
Loan receivables and derivative contracts 11 2,197.5 2,174.3
Total investments 3,547.9 3,524.7
Total non-current assets 3,555.7 3,530.7
Current assets
Short-term receivables 13 128.1 135.2
Current financial investments 19.9 -
Cash and cash equivalents 7.0 0.0
Total current assets 155.1 135.2
Total assets 3,710.8 3,666.0
PARENT COMPANY BALANCE SHEET, FAS
MEUR Note 31 December 2021 31 December 2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Shareholders’ equity 14
Share capital 259.6 259.6
Share premium fund 133.1 133.1
Invested unrestricted equity fund 760.0 838.9
Holds of treasury shares -2.0 -
Retained earnings -6.2 92.1
Profit for the period -7.7 -23.5
Total shareholders’ equity 1,136.7 1,300.1
Liabilities 15
Long-term liabilities
Loans - 95.5
Hybrid bond 690.1 347.7
Other long-term liabilities 1,657.3 1,562.5
Total long-term liabilities 2,347.5 2,005.6
Short-term liabilities
Short-term liabilities 226.6 360.2
Total short-term liabilities 226.6 360.2
Total liabilities 2,574.1 2,365.8
Total liabilities and shareholders’ equity 3,710.8 3,666.0
FINANCIAL REVIEW
FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS, FAS
MEUR 1 January–31 December 2021 1 January–31 December 2020
Cash flow from operating activities
Profit before taxes -32.1 -23.4
Adjustments:
Depreciation and impairment loss 1.8 1.5
Net financial income and expenses 22.1 13.5
Cash flow before change in working capital -8.1 -8.5
Change in working capital 31.2 28.6
Cash generated from operations 23.1 20.1
Interest expense and other financial expenses paid -65.7 -47.5
Interest income and other financial income received 58.2 53.4
Realised exchange rate gains and losses -18.2 4.9
Net cash flow from operating activities -2.6 30.9
Cash flow used in investing activities
Investment in tangible and intangible assets -3.6 -1.9
Loans granted -605.6 -784.8
Repayments of loans receivable 721.8 808.3
Purchase of current financial investments -285.0 -
Repayment of current financial investments 264.9 -
Net cash from investing activities 92.6 21.6
Cash flow from financing activities
Proceeds from short-term loans 810.8 837.9
Repayments of short-term loans -1,033.2 -825.7
Proceeds from long-term loans - 94.7
Repayments of long-term loans -94.7 -
Proceeds from hybrid bond 342.5 -
Received group contributions 1.7 -
Dividends paid and return from the invested unrestricted equity fund -87.8 -95.7
Purchase and costs of purchase of treasury shares -68.6 -
Net cash used in financing activities -129.3 11.3
Net change in cash and cash equivalents -39.3 63.8
Cash and cash equivalents at period-start -90.0 -153.8
Cash and cash equivalents at period-end
1)
-129.3 -90.0
1)
Cash and cash equivalents of Citycon Oyj EUR -129.3 million consist of EUR 7.0 million cash and bank receivables in the balance sheet, EUR 19.9 million of current
financial investments and Group cash pool account EUR -156.2 million. Cash pool balance of EUR -156.2 million has been recognised in the parent company’s
balance sheet under short-term liabilities.
PARENT COMPANY CASH FLOW STATEMENT, FAS
FINANCIAL REVIEW
FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS, FAS
NOTES TO THE PARENT COMPANY‘S FINANCIAL STATEMENTS, FAS
. ACCOUNTING POLICIES
The parent company’s financial statements
are prepared in accordance with the Finnish
law.
Income statement format
The income statement is presented in
accordance with the function-based format.
Non-current assets
Non-current assets are recognised in the
balance sheet at acquisition cost less impair-
ment losses and depreciation/amortisation.
Intangible assets
Intangible assets include IT soware and
other non-current assets, including office
improvement expenses. IT soware is
depreciated over 3–7 years as straight line
basis and office improvement expenses
are depreciated over the term of the lease
agreement.
Tangible assets
Tangible assets include machinery and
equipment and construction in progress.
Machinery and equipment is depreciated
at 25 percent annually, using the reducing
balance method of depreciation.
Pension schemes
The company’s employee pension cover is
based on statutory pension insurance.
. TURNOVER
MEUR 2021 2020
Turnover by country:
Finland 1.0 1.6
Other countries 2.5 3.2
Total 3.5 4.8
. PERSONNEL EXPENSES
MEUR 2021 2020
Average number of employees
during period 46 39
Personnel expenses
Wages and salaries -6.9 -6.2
Pension charges -1.0 -1.1
Other social charges -0.3 -0.2
Total -8.2 -7.5
. DEPRECIATION AND
AMORTISATION AND IMPAIRMENTS
The following depreciation and amortisation as
well as impairments are included in the administra-
tive expenses:
MEUR 2021 2020
Amortisation on
intangible assets -1.6 -1.3
Depreciation on
machinery and equipment -0.2 -0.2
Total -1.8 -1.5
Personnel expenses include the following manage-
ment wages and salaries
MEUR 2021 2020
CEO’s wages and salaries -1.1 -1.1
Board remuneration -0.7 -0.6
Total -1.9 -1.8
Parent company turnover includes the following
administrative fees received from Group companies:
MEUR 2021 2020
Administrative fees from
Group companies 3.5 4.8
Foreign currency receivables and payables
Receivables and payables denominated in
foreign currencies as well as forward rate
agreements are measured at the exchange
rate quoted on the balance sheet date. Any
exchange rate differences resulting from
currency translations are recognised as
exchange rate differences in the income
statement.
Income taxes
Current taxes are recognised on an accrual
basis.
Deferred taxes arising from temporary
differences between the book and fiscal
values have been recognised separately in
the income statement and the balance sheet.
Derivatives
All derivatives are valued according to the
Finnish bookkeeping act KPL 5.2a at fair
value.
Important note
Individual figures and sum totals presented
in the financial statements have been
rounded to the nearest hundreds thousands
of euros; this may cause minor discrepancies
between the sum totals and the sums of
individual figures as given.
. OTHER OPERATING INCOME
AND EXPENSES
MEUR 2021 2020
Other operating income -0.1 0.0
Total -0.1 0.0
The wages and salaries of the CEO includes
the gross base salary and a yearly perfor-
mance bonus. In addition, the CEO is included
in the Restricted Share Plan and has been
rewarded under the plan during the year.
FINANCIAL REVIEW
FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS, FAS
. NET FINANCIAL INCOME
AND EXPENSES
MEUR 2021 2020
Interest and other financial
income
From Group companies 62.2 57.9
Foreign exchange gains 20.9 62.3
Other interest and
financial income 1.4 0.1
Total 84.5 120.3
Total financial income 84.5 120.3
Interest and other financial
expenses
To Group companies 56.8 39.5
Foreign exchange losses 17.4 65.9
Interest and other finan-
cial expenses 32.3 28.5
Total financial expenses 106.6 133.8
Net financial income and
expenses -22.1 -13.5
. INTANGIBLE ASSETS
MEUR 2021 2020
Intangible rights
Acquisition cost 1 January 11.8 11.0
Additions during the period 3.5 0.8
Accumulated acquisition
costs 31 December 15.3 11.8
Accumulated depreciation
1 January -7.2 -6.0
Depreciation for the period -1.5 -1.2
Accumulated depreciation
31 December -8.7 -7.2
Net carrying amount
31 December 6.6 4.6
Other non-current assets
Acquisition cost 1 January 2.6 1.7
Additions during the period 0.0 1.0
Accumulated acquisition
costs 31 December 2.6 2.6
Accumulated depreciation
1 January -1.7 -1.6
Depreciation for the period -0.2 0.0
Accumulated depreciation
31 December -1.8 -1.7
Net carrying amount
31 December 0.8 1.0
Total intangible assets
31 December 7.5 5.5
. TANGIBLE ASSETS
MEUR 2021 2020
Machinery and equipment
Acquisition cost 1 January 2.1 1.9
Additions during the period 0.1 0.1
Accumulated acquisition
costs 31 December 2.1 2.1
Accumulated depreciation
1 January -1.6 -1.4
Depreciation for the period -0.2 -0.2
Accumulated depreciation
31 December -1.8 -1.6
Net carrying amount
31 December 0.3 0.5
Construction in progress
Acquisition cost 1 January 0.0 0.0
Net carrying amount
31 December 0.0 0.0
Total tangible assets 31
December 0.3 0.5
. SHARES IN SUBSIDIARIES
MEUR 2021 2020
Acquisition cost 1 January 1,350.4 1,350.4
Net carrying amount
31 December 1,350.4 1,350.4
. LONGTERM LOAN RECEIVABLES
AND DERIVATIVE CONTRACTS
MEUR 2021 2020
Loan receivables from
Group companies 2,182.3 2,159.4
Derivative financial
instruments, from outside
the Group 15.2 14.8
Total other investments
31 December 2,197.5 2,174.2
Total investments
31 December 3,547.9 3,524.7
. SUBSIDIARIES AND ASSOCIATED
COMPANIES
Parent company’s subsidiaries and associat-
ed companies are presented in the Note 5.3.
Related Party Transactions in the Notes to
the Consolidated Financial Statements.
. INCOME TAX EXPENSE
MEUR 2021 2020
Income tax expense 0.0 -0.1
Total 0.0 -0.1
Income taxes for the financial year consist
of the income tax of the Swedish branch of
Citycon Oyj.
The parent company has taxable losses
(including not yet confirmed year 2021) of
EUR 79.8 million from which the parent
company has not recognized deferred tax
asset of EUR 15.9 million.
FINANCIAL REVIEW
FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS, FAS
. SHORTTERM RECEIVABLES AND
CASH AND CASH EQUIVALENTS
MEUR 2021 2020
Receivables from outside
the Group
Trade receivables 0.1 0.1
Derivative financial
instruments 1.0 0.2
Other receivables 0.1 0.1
Cash and cash
equivalents 7.0 0.0
Current financial
investments 19.9 -
Accrued income and
prepaid expenses 4.3 3.1
Total 32.5 3.5
Receivables from Group
companies
Trade receivables 0.0 1.2
Loan receivables 84.1 82.6
Derivative financial
instruments 0.0 0.0
Other receivables - 1.5
Total other receivables 84.1 84.1
Interest receivables 14.0 12.5
Group contributions
receivables 24.4 34.0
Total 122.6 131.8
Total short-term
receivables 155.1 135.2
. SHAREHOLDERS’ EQUITY
MEUR 2021 2020
Share capital at 1 January 259.6 259.6
Share capital at
31 December 259.6 259.6
Share premium fund at
1 January 133.1 133.1
Share premium fund at
31 December 133.1 133.1
Invested unrestricted
equity fund at 1 January 838.9 925.7
Equity return from the
invested unrestricted
equity fund -78.9 -86.8
Invested unrestricted
equity fund at 31 December 760.0 838.9
Retained earnings at
1 January 68.6 101.0
Dividends -8.9 -8.9
Profit for the period -7.7 -23.5
Reversed repurchased
Shares -65.8 -
Repurchase of own shares -2.0 -
Retained earnings at
31 December -15.9 68.6
Citycon Oyj repurchased 9,796,463 treasury shares
during year 2021. 30 November 2021 Citycon
reversed 9,500,000 repurchased shares. Purchase
price of cancelled shares recorded as a deduction of
retained earnings. On 31 December 2021 Citycon
holds a total of 296,463 treasury shares.
Total shareholders’ equity
at 31 December 1,136.7 1,300.1
B) Short-term liabilities
MEUR 2021 2020
Short-term interest-bearing
liabilities
Commercial paper 0.0 218.1
Loans from Group
companies 158.4 92.2
Total 158.4 310.2
Short-term non-interest-
bearing liabilities
Payables to outside the
Group
Accounts payable 0.8 0.5
Derivative financial
instruments 5.1 8.0
Total other payables 5.1 8.0
Interest liability 17.5 14.2
Other accrued expenses
and deferred income 9.8 4.9
Total accrued expenses
and deferred income 27.3 19.1
Total 33.2 27.6
Payables to Group
companies
Accounts payable 15.0 4.7
Other payables 0.0 1.2
Interest liability 20.1 16.4
Total accrued expenses
and deferred income 20.1 16.4
Total 35.0 22.4
Total short-term liabilities 226.6 360.2
Total liabilities 2,574.1 2,365.8
. LIABILITIES
A) Long-term liabilities
MEUR 2021 2020
Long-term interest-bearing
liabilities
Syndicated Revolving
Credit Facility - 95.5
Hybrid bond 690.1 347.7
Loans from Group
companies 1,644.4 1,543.8
Total 2,334.5 1,986.9
Derivative financial
instruments 11.5 18.5
Derivative financial
instruments, from
Group companies 1.4 0.2
Total long-term liabilities 2,347.5 2,005.6
Loans maturing later
than 5 years 1,350.0 1,093.2
FINANCIAL REVIEW
FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS, FAS
The company has a syndicated revolving
credit facility, which matures in 2024. In
addition, the company has a hybrid bond
issued in November 2019, which is reported
under long term liabilities. The hybrid bond is
unsecured, subordinated to all debt and sen-
ior only to ordinary share capital. A holder of
hybrid bond notes has no shareholder rights.
Citycon has the right to postpone interest
payment on its hybrid bonds if it does not
distribute dividend or any other equity to
its shareholders. The hybrids has no set
maturity date, but the company has the right
to redeem it aer five years from the issue
date and thereaer on every yearly interest
payment date.
Derivative financial instruments are
used in Citycon group in accordance with
the Treasury Policy to hedge the interest
rate risk of interest bearing liabilities and
foreign currency risk. All Group external
derivative financial instruments in Citycon
are executed by the parent company Citycon
Oyj. Citycon Oyj values derivatives according
to the Finnish bookkeeping act KPL 5.2a
fair value model and fair value changes are
booked through profit and loss. The fair
value definition of derivatives are presented
in note 3.6 of the consolidated Financial
Statements. In addition Citycon Oyj had
group internal derivatives as of 31 December
2021 with a fair value of EUR -1.4 million (-0.2)
and a nominal amount of EUR 80.1 million
(109.8).
. CONTINGENT LIABILITIES
The parent company does not have any
mortgages nor given securities.
A) Lease liabilities
MEUR 2021 2020
Payables on lease
commitments
Maturing next financial year 0.4 0.3
Maturing later 1.6 1.8
Total 2.0 2.1
Citycon’s finance leases mainly apply to
computer hardware, machinery and equip-
ment and cars.
B) Guarantees given
MEUR 2021 2020
Guarantees 1,956.6 1,886.9
Of which on behalf of
Group companies 1,956.6 1,886.9
Guarantees in 2021 and in 2020 mainly
relate to issued bonds of subsidiaries which
Citycon Oyj has guaranteed via parent
guarantee or alternatively third party bank
guarantees.
FINANCIAL REVIEW
FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS, FAS
SIGNATURES TO THE FINANCIAL STATEMENTS
Signatures to the Financial Statements 1 January - 31 December 2021
Helsinki, 16 February 2022
F. Sco Ball
CEO, member of the Board
We have today submied the report on the conducted audit.
Helsinki, 16 February 2022
Ernst & Young Oy
Authorized Public Accountant Firm
Ani Suominen
Authorized Public Accountant
Alexandre Koifman
Zvi Gordon
David Lukes
Ljudmila Popova
Chaim Katzman
Judah Agnster
Arnold de Haan
Per-Anders Ovin
FINANCIAL REVIEW
FINANCIAL STATEMENTS SIGNATURES
AUDITOR’S REPORT
TO THE ANNUAL GENERAL MEETING OF CITYCON OYJ
REPORT ON THE AUDIT OF
FINANCIAL STATEMENTS
Opinion
We have audited the financial statements
of Citycon Oyj (business identity code
0699505-3) for the year ended 31 December,
2021. The financial statements comprise the
consolidated balance sheet, income state-
ment, statement of comprehensive income,
statement of changes in equity, statement
of cash flows and notes, including a summary
of significant accounting policies, as well as
the parent company’s balance sheet, income
statement, statement of cash flows and
notes.
In our opinion
– the consolidated financial statements give
a true and fair view of the group’s financial
position as well as its financial perfor-
mance and its cash flows in accordance
with International Financial Reporting
Standards (IFRS) as adopted by the EU.
– the financial statements give a true and
fair view of the parent company’s financial
performance and financial position in
accordance with the laws and regulations
governing the preparation of financial
statements in Finland and comply with
statutory requirements.
Our opinion is consistent with the additional
report submied to the Audit and Govern-
ance Commiee.
Basis for Opinion
We conducted our audit in accordance
with good auditing practice in Finland. Our
responsibilities under good auditing practice
are further described in the Auditor’s
Responsibilities for the Audit of Financial
Statements section of our report.
We are independent of the parent compa-
ny and of the group companies in accordance
with the ethical requirements that are
applicable in Finland and are relevant to our
audit, and we have fulfilled our other ethical
responsibilities in accordance with these
requirements.
In our best knowledge and understand-
ing, the non-audit services that we have
provided to the parent company and group
companies are in compliance with laws and
regulations applicable in Finland regarding
these services, and we have not provided
any prohibited non-audit services referred
to in EU Regulation No 537/2014, point (c) of
Article 10(2). The non-audit services that we
have provided have been disclosed in note 1.5
to the consolidated financial statements.
We believe that the audit evidence we
have obtained is sufficient and appropriate
to provide a basis for our opinion.
Key Audit Matters
Key audit maers are those maers that,
in our professional judgment, were of most
significance in our audit of the financial
statements of the current period. These
maers were addressed in the context of
our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion on
these maers.
We have fulfilled the responsibilities
described in the Auditor’s responsibilities
for the audit of the financial statements
section of our report, including in relation
to these maers. Accordingly, our audit
included the performance of procedures
designed to respond to our assessment of
the risks of material misstatement of the
financial statements. The results of our
audit procedures, including the procedures
performed to address the maers below,
provide the basis for our audit opinion on the
accompanying financial statements.
We have also addressed the risk of
management override of internal controls.
This includes consideration of whether there
was evidence of management bias that
represented a risk of material misstatement
due to fraud.
(Translation of the Finnish original)
FINANCIAL REVIEW
FINANCIAL STATEMENTS AUDITOR‘S REPORT
Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of Investment Properties
We refer to the note 2.1
At the balance sheet date, the fair value of investment
properties amounted to 4.189 million euro representing
87 % of the total assets and 168 % of the total equity
Fair value measurement of the investment properties
is a key audit matter, because the fair value measure-
ment involves judgment and assumptions. Market
rents, yield requirement, vacancy rate and operating
expenses form the key variables used in investment
property’s fair-value measurement. The evaluation of
these variables involves judgment and assumptions of
Citycon management.
This matter is a significant risk of material misstate-
ment referred to in EU Regulation No 537/2014, point
(c) of Article 10(2).
Our audit procedures to address the risk of material
misstatement in respect of valuation of Investment
Properties included among others:
• Our valuation specialists assisted us in evaluating
the assumptions and methodologies used.
• We assessed the competence and objectivity of the
external appraiser engaged by the management of
Citycon as well as historical accuracy of manage-
ment’s judgment and assumptions.
• We focused audit on the market rents, yield require-
ment, vacancy rate and operating expenses.
The methodologies and key inputs used in the valua-
tion and sensitivity analysis are presented in note 2.1.
We assessed the adequacy of these disclosures.
Valuation of Goodwill
We refer to the note 5.1
At the balance sheet date, the carrying amount of
goodwill amounted to 145 million euro representing 3
% of the total assets and 6 % of the total equity
Valuation of goodwill was a key audit matter because
the assessment process is complex and is based on
numerous judgmental estimates and because the
amount of goodwill is significant to the financial state-
ments. Citycon’s management uses assumptions in
respect of discount rate, net rental income projections
and other operating income and expenses.
This matter is a significant risk of material misstate-
ment referred to in EU Regulation No 537/2014, point
(c) of Article 10(2).
Our audit procedures to address the risk of material
misstatement in respect of valuation of Investment
Properties included among others:
• Our valuation specialists assisted us in evaluating
the methodologies and assumptions used, in
particular those relating to net rental income and
the weighted average cost of capital.
• We assessed the competence and objectivity of the
external appraiser engaged by the management of
Citycon as well as historical accuracy of manage-
ment’s judgment and assumptions.
• We focused audit on how much the recoverable
amount exceeds the carrying amount of goodwill,
and whether any reasonably possible change in
assumptions could cause the carrying amount to
exceed its recoverable amount.
The key assumptions used in the impairment test of
goodwill are presented in note 5.1. We assessed the
adequacy of these disclosures.
Responsibilities of the Board of Directors
and the Managing Director for the Financial
Statements
The Board of Directors and the Managing
Director are responsible for the preparation
of consolidated financial statements that
give a true and fair view in accordance with
International Financial Reporting Standards
(IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in
accordance with the laws and regulations
governing the preparation of financial state-
ments in Finland and comply with statutory
requirements. The Board of Directors and
the Managing Director are also responsible
for such internal control as they determine
is necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the financial statements, the
Board of Directors and the Managing Direc-
tor are responsible for assessing the parent
company’s and the group’s ability to continue
as going concern, disclosing, as applicable,
maers relating to going concern and using
the going concern basis of accounting. The
financial statements are prepared using the
going concern basis of accounting unless
there is an intention to liquidate the parent
company or the group or cease operations, or
there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of
Financial Statements
Our objectives are to obtain reasonable
assurance on whether the financial state-
ments as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee
that an audit conducted in accordance with
good auditing practice will always detect
a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually
or in aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of the
financialstatements.
As part of an audit in accordance with
good auditing practice, we exercise profes-
sional judgment and maintain professional
skepticism throughout the audit. We also:
– Identify and assess the risks of material
misstatement of the financial statements,
whether due to fraud or error, design and
perform audit procedures responsive to
those risks, and obtain audit evidence
that is sufficient and appropriate to
provide a basis for our opinion. The risk
of not detecting a material misstatement
resulting from fraud is higher than for one
resulting from error, as fraud may involve
collusion, forgery, intentional omissions,
misrepresentations, or the override of
internal control.
– Obtain an understanding of internal control
relevant to the audit in order to design au-
dit procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness
of the parent company’s or the group’s
internal control.
FINANCIAL REVIEW
FINANCIAL STATEMENTS AUDITOR‘S REPORT
– Evaluate the appropriateness of account-
ing policies used and the reasonableness
of accounting estimates and related
disclosures made by management.
– Conclude on the appropriateness of the
Board of Directors’ and the Managing
Director’s use of the going concern basis of
accounting and based on the audit evidence
obtained, whether a material uncertainty
exists related to events or conditions that
may cast significant doubt on the parent
company’s or the group’s ability to continue
as a going concern. If we conclude that a
material uncertainty exists, we are required
to draw aention in our auditor’s report to
the related disclosures in the financial state-
ments or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are
based on the audit evidence obtained up to
the date of our auditor’s report. However,
future events or conditions may cause the
parent company or the group to cease to
continue as a going concern.
– Evaluate the overall presentation,
structure and content of the financial
statements, including the disclosures,
and whether the financial statements
represent the underlying transactions and
events so that the financial statements
give a true and fair view.
– Obtain sufficient appropriate audit evi-
dence regarding the financial information
of the entities or business activities within
the group to express an opinion on the
consolidated financial statements. We are
responsible for the direction, supervision
and performance of the group audit.
We remain solely responsible for our
auditopinion.
We communicate with those charged with
governance regarding, among other maers,
the planned scope and timing of the audit
and significant audit findings, including any
significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with
governance with a statement that we have
complied with relevant ethical requirements
regarding independence, and communicate
with them all relationships and other maers
that may reasonably be thought to bear on
our independence, and where applicable,
related safeguards.
From the maers communicated
with those charged with governance, we
determine those maers that were of most
significance in the audit of the financial
statements of the current period and are
therefore the key audit maers. We describe
these maers in our auditor’s report unless
law or regulation precludes public disclosure
about the maer or when, in extremely rare
circumstances, we determine that a maer
should not be communicated in our report
because the adverse consequences of
doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
OTHER REPORTING REQUIREMENTS
Information on our audit engagement
We were first appointed as auditors by the
Annual General Meeting on 5 April 2005, and
our appointment represents a total period of
uninterrupted engagement of 17 years.
Other information
The Board of Directors and the Managing
Director are responsible for the other
information. The other information com-
prises the report of the Board of Directors
and the information included in the Annual
Report, but does not include the financial
statements and our auditor’s report thereon.
We have obtained the report of the Board of
Directors prior to the date of this auditor’s
report, and the Annual Report is expected to
be made available to us aer that date.
Our opinion on the financial statements
does not cover the other information.
In connection with our audit of the
financial statements, our responsibility is to
read the other information identified above
and, in doing so, consider whether the other
information is materially inconsistent with
the financial statements or our knowledge
obtained in the audit, or otherwise appears
to be materially misstated. With respect to
report of the Board of Directors, our respon-
sibility also includes considering whether the
report of the Board of Directors has been
prepared in accordance with the applicable
laws and regulations.
In our opinion, the information in the
report of the Board of Directors is consist-
ent with the information in the financial
statements and the report of the Board of
Directors has been prepared in accordance
with the applicable laws and regulations.
If, based on the work we have performed
on the other information that we obtained
prior to the date of this auditor’s report,
we conclude that there is a material mis-
statement of this other information, we are
required to report that fact. We have nothing
to report in this regard.
Helsinki 16 February 2022
Ernst & Young Oy
Authorized Public Accountant Firm
Ani Suominen
Authorized Public Accountant
FINANCIAL REVIEW
FINANCIAL STATEMENTS AUDITOR‘S REPORT
