Risk Management Actions

1. Risks associated with changes in the investment properties' fair value

While Citycon cannot influence yield requirement, it seeks to have an impact on the other fair value variables through active shopping-centre management, a cornerstone of Citycon's business. The company aims to optimise the profitability of its shopping centres by conducting the entire shopping-centre management process in-house through its own employees.

2. Risks associated with the property development projects

Leasing risks in projects are minimised by securing the allocation of sufficient resources to the leasing operations of new properties, investing in new shopping centres' marketing and concluding agreements with anchor tenants prior to a project's commencement or in its initial stage. Construction costs are optimised through careful monitoring of expenses, competitive tendering and, where possible, by concluding fixed-price construction contracts.

3. Risks associated with a rise in the properties' operating expenses

Citycon tries to protect itself from the risks related to a rise in operating expenses by concluding agreements with specified rent components, hedging against electricity price risks, enhancing purchasing, improving cost monitoring and by enhancing the cost comparison between the shopping centres.

4. Risks associated with the availability and cost of financing and general interest rates

Citycon attempts to safeguard its financing costs and availability by adhering to a conservative but active financing policy, with a focus on long-term financing, and by maintaining a solid balance sheet structure showing an equity ratio of at least 40 per cent. Interest-rate risk management aims to reduce or eliminate the adverse effect of increased market rates on the company's profit, balance sheet and cash flow. Under the company's financing policy, the interest position must be tied to fixed interest rates at a minimum level of 70 per cent and at a maximum level of 90 per cent.

5. Financial risks

The Group Treasurer is responsible for the company's interest rate risk management under the supervision of the CFO. The company's Board of Directors has approved an extensive Treasury Policy for the Group, including detailed principles, targets and indicators for financial risks. The CFO reports to the Board of Directors on the financial risks at least four times a year.

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