Due to an agenda decision by the IFRS Interpretations Committee, Citycon amends its accounting policy regarding deferred tax assets and liabilities.
Under the current policy, Citycon has calculated deferred tax assets and liabilities of investment properties based on the temporary differences between the fair value and tax bases of the assets in question. The current policy assumes the most likely way of such disposal, i.e. by sale of shares in subsidiaries owning the property, and accounting for the tax consequences accordingly.
In the IFRS Interpretations Committee’s agenda decision 15-16 July, the committee decided that the current IFRS standard requires a parent to recognise the deferred tax based on the difference between the properties’ 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 property company and includes no assessment of likelihood of such tax consequences. Citycon has amended its accounting policy to be in line with this agenda decision. The amendment will be effective as of Q3/2014 reporting.
The impact of the amendment as of 30 June 2014 would have been EUR 62.8 million on deferred tax liabilities, EUR -58.7 million on total shareholder’s equity and EUR -4.1 million on profit for the period. More detailed numbers are presented in the table below.
| Citycon Group, EUR million 1) | 30 June 2014 | |||||||
| | Deferred tax liabilities | Shareholders’ equity | Profit for the period 2) | |||||
| Attributable to parent company | Non-controlling interest | Attributable to parent company | Non-controlling interest | |||||
| Previous deferred tax policy | 60.5 | -55.9 | 0.0 | -4.6 | 0.0 | |||
| Impact of change | 62.8 | -50.2 | -8.6 | -2.8 | -1.3 | |||
| New deferred tax policy | 123.3 | -106.1 | -8.6 | -7.4 | -1.3 | |||
| Citycon Group, EUR million 1) | 31 December 2013 | |||||||
| | Deferred tax liabilities | Shareholders’ equity | Profit for the period 3) | |||||
| Attributable to parent company | Non-controlling interest | Attributable to parent company | Non-controlling interest | |||||
| Previous deferred tax policy | 55.9 | -64.0 | 0.0 | 8.0 | 0.0 | |||
| Impact of change | 59.4 | -55.1 | -8.9 | 4.3 | 0.3 | |||
| New deferred tax policy | 115.4 | -119.1 | -8.9 | 12.3 | 0.3 | |||
1) Includes only the investment property related deferred taxes
2) For the period 1 January – 30 June 2014
3) For the period 1 January – 31 December 2013
The company’s policy maintains to realise its shareholding in property companies by selling the shares rather than the underlying asset.
The accounting policy amendment does not impact Citycon’s result guidance for 2014 (EPRA Earnings and EPRA Earnings per share), but affects the EPRA NAV and indirect result in EPRA’s performance measures.
Helsinki, 22 August 2014
CITYCON OYJ
For further information, please contact:
Eero Sihvonen, Executive Vice President and CFO
Tel. +358 20 766 4459 or +358 50 557 9137
eero.sihvonen@citycon.com
Citycon Oyj (NASDAQ OMX: CTY1S) is a leading owner, developer and manager of urban grocery-anchored shopping centres in the Nordic and Baltic region, managing assets that total approximately EUR 3.3 billion and with market capitalisation of approximately EUR 1.6 billion. For more information about Citycon, please visit www.citycon.com
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