Citycon Oyj's Interim Report for 1 January - 30 June 2008

CITYCON OYJ Stock Exchange Release 18 July
2008 at 9:00 hrs

Citycon Oyj's Interim Report for 1 January - 30 June 2008

Summary of the Second Quarter of 2008 Compared with the Previous
Quarter

- Turnover remained at the level of the previous quarter and was EUR
44.2 million (Q1/2008: EUR 44.3 million).
- Net rental income grew by 2.7 per cent, to EUR 30.5 million (EUR
29.7 million), resulting mainly from lower maintenance expenses such
as electricity and heating costs, the lower amount of which was due
partly to seasonal fluctuations.
- Net cash from operating activities per share remained steady at EUR
0.06 (EUR 0.06).
- The fair value change of investment properties was EUR
-84.7 million (EUR 1.4 million). The fair market value of investment
properties decreased to EUR 2,156.9 million (EUR 2,226.6 million).
- The average net yield requirement for investment properties was at
6.0 per cent (5.7%) at the end of the period, according to an
external appraiser. The increase in the average net yield requirement
was due to changes in property market.
- Earnings per share were EUR -0.26 (EUR 0.04). The decline was due
to the fair value losses.
- Direct result per share (diluted) remained at the level of the
previous quarter and was EUR 0.04 (EUR 0.04).
- The company's financing expenses decreased to EUR 14.7 million (EUR
16.1 million). The reference period included a valuation item of EUR
-1.4 million, relating to valuation of the company's interest rate
hedging contracts.

Summary of January - June 2008 Compared with the Corresponding Period
of 2007

- Turnover increased by 26.1 per cent, to EUR 88.5 million
(Q1-2/2007: EUR 70.2 million), due mainly to property acquisitions
made during 2007.
- Profit/loss before taxes was EUR -62.1 million (EUR 212.5 million),
including a EUR -83.3 million (EUR 191.6 million) change in the fair
value of investment properties.
- The company's direct result rose to EUR 18.9 million
(EUR 14.3 million), up mainly because of increased net rental income,
decreased administrative expenses and lower taxes compared to the
reference period. Changes in the fair value of the company's property
portfolio have no effect on the company's net rental income or direct
result but they will affect the company's total profit.
- Direct result per share (diluted) improved and was EUR 0.09 (EUR
0.08).
- Earnings per share amounted to EUR -0.21 (EUR 0.88). The decrease
resulted mainly from the fair value changes.
- Net rental income increased by 22.7 per cent, to EUR 60.1 million
(EUR 49.0 million).
- Net rental income from like-for-like properties rose by
0.3 per cent.
- Net cash flow from operating activities per share rose to EUR 0.12
(EUR 0.11).
- The equity ratio was 42.1 per cent (46.9%).
- Citycon signed a ten-year loan agreement with Nordic Investment
Bank for EUR 30 million to finance its key sustainable development
pilot project, Liljeholmstorget shopping centre in Stockholm. In
addition, Citycon signed two long-term loan agreements on competitive
terms during the reporting period.
- The company's total liquidity at the end of the reporting period
was EUR 349.4 million including unutilised committed long-term debt
facilities amounting to EUR 325.6 million and cash of EUR 23.8
million.

Key Figures

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 1) 2007
Turnover, EUR
million 44.2 35.9 44.3 88.5 70.2 26.1% 151.4
Net rental
income,
EUR million 30.5 25.8 29.7 60.1 49.0 22.7% 103.4
Operating
profit/loss,
EUR million -58.7 181.6 27.4 -31.3 231.9 - 300.7
% of turnover - 505.3% 61.8% - 330.5% - 198.6%
Profit/loss
before
taxes, EUR
million -73.4 171.6 11.3 -62.1 212.5 - 253.5
Profit/loss
attributable
to parent
company
shareholders,
EUR million -56.6 134.6 9.1 -47.5 167.6 - 200.3
Direct result,
EUR million 2) 9.5 7.6 9.5 18.9 14.3 32.7% 36.3
Indirect result,
EUR million -66.0 127.0 -0.4 -66.4 153.3 - 164.0

Earnings per
share (basic),
EUR -0.26 0.68 0.04 -0.21 0.88 - 1.00
Earnings per
share (diluted),
EUR -0.26 0.60 0.04 -0.21 0.78 - 0.91
Direct result
per
share(diluted),
(diluted EPRA
EPS), EUR 2) 0.04 0.04 0.04 0.09 0.08 12.5% 0.18
Net cash from
operating
activities per
share, EUR 0.06 0.06 0.06 0.12 0.11 7.3% 0.20

Fair market
value of
investment
properties,
EUR million 2,226.6 2,156.9 1,799.2 19.9% 2,215.7

Equity per
share, EUR 4.33 4.13 4.32 -4.2% 4.44
Net asset value
(EPRA
NAV) per share,
EUR 4.70 4.46 4.70 -5.1% 4.83
EPRA NNNAV per
share, EUR 4.31 4.20 4.17 0.7% 4.42
Equity ratio, % 43.0 42.1 46.9 - 43.9
Gearing, % 111.8 123.3 96.2 - 111.8
Net
interest-bearing
debt
(fair value),
EUR million 1,149.4 1,205.3 863.3 39.6% 1,147.3
Net rental
yield,% 3) 5.5 5.4 6.4 - 5.8
Occupancy rate,% 96.0 95.7 95.8 - 95.7
Personnel
(at the end of
the period) 104 110 94 17.0% 102

1) Change-% is calculated from exact figures and refers to the change
between 2008 and 2007.

2) In comparison to previous practice direct result excludes the
changes in fair value of financial instruments that are recognized in
the income statement. Please see the Note 4 "Reconciliation between
direct and indirect result" for direct result calculations and Note 5"Earnings per share" for calculation of direct result per share.

3) Includes the lots for development projects.

CEO Petri Olkinuora comments on the reporting period:"Citycon's turnover and net rental income continued to grow during
the reporting period, and the company's direct result as well as cash
flow from operating activities remained steady. Also the financing
costs were at the same level as during the previous quarter, despite
increased general interest rates and higher level of interest bearing
debt. However, the increase in the fair value of properties that had
continued for several years came to a halt and the fair value
decreased due to changes in general market conditions.

Citycon will concentrate on improving its shopping centres by both
refurbishing and redeveloping them. The aim of the company's business
activities is to increase rental cash flow and maintain the
competitiveness of its shopping centres. The company's financing
position is satisfactory and the company has sufficient committed
credit lines to complete the ongoing development and redevelopment
projects as well as other ongoing business activities until at least
the end of 2010 without any new credit facilities. This is thanks to
the company's prudent financing policy and its active implementation.

Sustainable construction and management is a key element of Citycon's
strategy. We continue taking the principles of sustainable property
development into account as planned. The company's responsible
approach to environmental issues was a key reason behind the decision
of the Nordic Investment Bank to grant Citycon a ten-year loan in
June 2008. Also, our customers and tenants are increasingly aware of
the importance of ecological choices."

Business Environment

In the beginning of the year retail trade continued performing
positively. According to Statistics Finland's preliminary data,
retail sales grew by 7.9 per cent in May 2008 compared to May the
year before. Also cumulative retail sales growth for the beginning of
the year was strong in Finland (8.2%). The Swedish retail sales
growth in May was 6.2 per cent compared to the same month year before
according to Statistics Sweden's preliminary data. Furthermore, also
the Lithuanian retail sales for the beginning of the year grew
approximately 5 per cent compared to the previous year, although the
growth was clearly slower than during the previous years (source: SEB
Economic Research, The Baltics). Respectively, according to
Statistics Estonia, the retail sales decreased by 3 per cent in the
same period.

Consumer confidence in the outlook for the national economy and
personal finances fell during the first six months of the year. This
trend was parallel in all Citycon's operating regions during the
reporting period. The decrease in consumer confidence is due mainly
to higher-than-expected inflation and higher interest rates during
the first six months of the year.

Significantly fewer transactions have taken place in the property
investment market in all of Citycon's operating countries. The spread
in yield requirements between prime and other properties has
increased significantly not only in the Baltic countries but also in
Finland and Sweden (source: Jones Lang LaSalle, Suomen
kiinteistömarkkina, 1/2008). In general, the international credit
crunch has had less severe effects in Citycon's operating regions
than at a global level, although it has resulted in weakening
consumer confidence and rising credit margins. The construction costs
have increased in all of Citycon's countries of operation, but the
increase has decelerated during the beginning of the year (sources:
Statistics Finland, Statistics Sweden, Statistics Estonia).

Business and Property Portfolio Summary

Citycon's core business includes the redevelopment and management of
shopping centres and other large retail units. The company has
acquired shopping centres, which provide potential for increased net
yield over the long-term through active redevelopment efforts and
retail property management.

Citycon is an active investment company, assuming responsibility for
the business operations and administration of its investment
properties. This differentiates Citycon from traditional real estate
companies, whose principal focus is on ownership.

Citycon is involved in the day-to-day operations of its shopping
centres and, in co-operation with its tenants, aims continuously to
increase the attractiveness, number of visitors, sales and profits of
the shopping centres. Citycon is a pioneer in the Nordic shopping
centre market, aiming to factor environmental considerations into its
shopping centre management as well as its redevelopment and
development projects.

Citycon operates in Finland, Sweden and the Baltic countries. In
Finland, Citycon is the market leader in the shopping centre
business, while in Sweden it is one of the leading operators in the
shopping centre sector. The company has established a firm foothold
in the Baltic countries. Thanks to careful market research and good
local knowledge, Citycon has been able to acquire shopping centres in
the major growth centres in the countries where it operates.
Citycon's investments are focused on areas where the population and
purchasing power are expected to grow.

At the end of the reporting period, Citycon owned 33 (30) shopping
centres and 52 (53) other properties. Of the shopping centres, 22
(20) were located in Finland, eight (8) in Sweden and three (2) in
the Baltic countries.

At the end of the reporting period, the market value of the company's
property portfolio totalled EUR 2,156.9 million (EUR 1,799, 2
million), of which Finnish properties accounted for 71.7 per cent
(66.0%), Swedish properties 23.3 per cent (29.0%) and Baltic
properties 5.0 per cent (5.0%). The gross leasable area at the end of
the reporting period totalled 926,550 square metres.

Changes in Fair Value of Investment Properties

Citycon measures its investment property at fair value, under the IAS
40 standard, according to which changes in the fair value of
investment properties are recognised in profit or loss. In accordance
with International Accounting Standards (IAS) and International
Valuation Standards (IVS), an external professional appraiser
conducts a valuation of Citycon's property portfolio on a
property-by-property basis at least once a year. However, in 2008,
Citycon will have its properties valued by an external appraiser on a
quarterly basis, due to increased market volatility.

Citycon's property portfolio is valued by Realia Management Oy, a
part of the Realia Group. Realia Management Oy works in association
with the world's leading provider of real estate services, the
international company CB Richard Ellis. A summary of Realia
Management Oy's Property Valuation Statement at the end of June
status can be found at www.citycon.com.

During the reporting period, the fair value of Citycon's property
portfolio decreased. The decrease was due to changes in general
market conditions in the property market and to higher interest
rates. The period saw a total value increase of EUR 3.8 million and a
total value decrease of EUR 87.1. The net effect of these changes on
the company's profit was EUR -83.3 million (EUR 191.6 million).

The average net yield requirement defined by Realia Management Oy for
Citycon's property portfolio came to 6.0 per cent (Q2/2007: 5.8%).
The average net yield requirement increased compared to the previous
quarter (Q1/2008: 5.7%) due to changes in property market conditions.

Lease Portfolio and Occupancy Rate

At the end of the reporting period, Citycon had a total of 3,662
(3,415) leases. The average remaining length of the lease agreements
was 2.8 (2.9) years. At the end of the reporting period, Citycon's
property portfolio's net rental yield was 5.4 per cent (6.4%) and the
occupancy rate was 95.7 per cent (95.8%). The occupancy rate reduced
as a result of an increase in the number of premises temporarily
vacated due to redevelopment projects.

The company's net rental income grew during the reporting period by
22.7 per cent, to EUR 60.1 million. Leasable area rose by 12.4
per cent to 926,550 square metres. Net rental income from
like-for-like properties grew by 0.3 per cent. Like-for-like
properties are properties held by Citycon throughout the 24-month
reference period, excluding properties under refurbishment and
redevelopment as well as undeveloped lots. The majority of
like-for-like properties are located in Finland. The calculation
method for net yield and standing (like-for-like) investments is
based on guidelines issued by the KTI Institute for Real Estate
Economics and the Investment Property Databank (IPD).

Lease Portfolio Summary

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 2007
Number of leases
started
during the period 112 122 124 236 236 0.0 512
Total area of
leases started,
sq.m. 18,170 28,745 24,240 42,410 46,705 -9.2 103,408
Occupancy rate at
end of
the period, % 96.0 95.7 95.8 -0.1 95.7
Average remaining
length
of lease portfolio
at the
end of the period,
year 3.0 2.8 2.9 -3.4 3.0

Acquisitions and Divestments

Citycon continues to focus on the development and redevelopment of
the company's shopping centres. Furthermore, the company actively
monitors developments in the shopping centre market across its
operating regions. Possible new acquisitions relate e.g. to on-going
or planned redevelopment projects. In the period under review, no new
shopping centres were acquired, but the company acquired more
minority shares in several partially-owned properties.

During the reporting period, Citycon sold 40 per cent of the Iso
Omena shopping centre to an affiliate of GIC Real Estate, the
property investment arm of the Government of Singapore Investment
Corporation. The purchase price totalled EUR 131.6 million,
equivalent to 40 per cent of the purchase price at which Citycon
bought Iso Omena in September 2007. The parties have agreed that
Citycon will continue to be responsible for the management of Iso
Omena and continue its development according to Citycon's operating
concept.

Related to the Lippulaiva shopping centre's redevelopment project,
Citycon acquired all the shares in MREC Kiinteistö Oy Majakka at the
beginning of 2008 and, at the same time, divested its entire holding
in MREC Kiinteistö Oy Ulappatori. Kiinteistö Oy Majakka owns
undeveloped land in the surroundings of Lippulaiva, in the area
planned for the extension of the shopping centre in Espoo, Finland.
Citycon continues to have a right of possession for the leasable
areas of MREC Kiinteistö Oy Ulappatori. The right of possession will
terminate when the redevelopment project is completed or during 2011
at the latest. In addition, Citycon sold its 44 per cent holding in
Pukinmäki retail centre in Helsinki, Finland.

Development Projects

Keeping its shopping centres competitive both for customers and for
lessees constitutes the core of Citycon's strategy. The company aims
to increase the long-term cash flow and return from its retail
properties as well as footfall and efficiency through development
projects. In the short term, however, such projects may weaken
returns from some properties, as some retail premises may have to be
temporarily vacated for refurbishment, so affecting rental income.
Citycon aims to carry out such projects phase by phase so that the
whole shopping centre does not have to be closed during the works.
Thus, continuous cash flow is ensured.

Sustainable Construction and Management

Citycon's redevelopment projects progressed according to plan during
the reporting period. In its redevelopment projects, Citycon is
paying increasing attention to environmental management methods and
solutions. Currently, the company is undertaking three pilot
projects, aimed at identifying best practice in the sustainable
construction and management of shopping centres. The pilot projects
include building a new shopping centre at Liljeholmen, Stockholm,
Sweden, and the redevelopment and extension of the Rocca al Mare
shopping centre in Tallinn, Estonia, and the Trio shopping centre in
Lahti, Finland.

The assessment applied in the pilot projects comprises a total of
over 60 points, reviewing various factors, such as the energy
efficiency of the property, indoor air quality, the choice of
materials, the utilisation of public transport and minimisation of
the environmental impacts of construction work. On the basis of the
assessment, practical development measures will be introduced in
order to establish systematic sustainable construction practices.

Citycon seeks to obtain the international LEED (Leadership in Energy
and Environmental Design) environmental certification for its
projects. Citycon remains confident that in the long term responsible
business operations will enhance interest in Citycon both as a
responsible actor in the shopping centre sector and an international
attractive investment object.

The table below lists the most significant development and
redevelopment projects in progress, as approved by the Board of
Directors. In addition, Citycon is planning and preparing a number of
other refurbishment and redevelopment projects. More information on
planned projects can be found on Citycon's website at
www.citycon.com, in management presentations and the Annual Report
2007.

Capital expenditure during the reporting period relating to all
development projects amounted to EUR 38.6 million in Finland,
EUR 23.4 million in Sweden and EUR 12.2 million in the Baltic
countries.

Development Projects in Progress

Actual gross
expenditure
Estimated up to Estimated
total cost 30 June 2008 year of
Property Location (EUR million) (EUR million) completion
Projects approved by the Board of Directors:
Stockholm,
Liljeholmstorget Sweden 120 38.2 2009
Tallinn,
Rocca al Mare Estonia 68 25.5 2009
Lahti,
Trio Finland 60 42.0 2008
Seinäjoki,
Torikeskus Finland 4 2.1 2009

Projects not yet approved, or partly
approved, by the Board of Directors:
Espoo,
Lippulaiva Finland 60-70 1) 21.7 2011
Åkersberga Österåker,
Centrum Sweden 27 2) 4.4 2010
Botkyrka,
Tumba Centrum Sweden 35-371) 1.8 2011

1) Both planned redevelopment stages are included in the estimate.
2) Citycon owns 75 per cent of the Åkersberga shopping centre, and
the overall project cost totals approximately EUR 40 million.

The company's largest development project and the main sustainable
construction project is the construction of a new shopping centre in
Liljeholmen, Stockholm. During the reporting period, excavation of
the car park was completed, and work to date is within budget and on
schedule. The new shopping centre is expected to open its doors in
October-November 2009, and approximately 40% of the agreements with
new tenants have already been signed.

Redevelopment of the Rocca al Mare shopping centre in Tallinn started
in February 2007. The first stage of the shopping centre's
modernisation is fully let and will be completed in the autumn of
2008, when the second and third stages of the redevelopment project
will also be started. The shopping centre will remain open during the
whole redevelopment project. The completely renovated Rocca al Mare
is expected to open its doors in the autumn of 2009.

The first stage of redevelopment of the Trio shopping centre in
downtown Lahti was completed in November 2007 and is fully let. The
second stage of the project has begun and work to date is on
schedule. The completely renovated shopping centre will be open for
the Christmas season 2008. Trio, too, has remained open during the
whole redevelopment project. The company is investing a total of
approximately EUR 60 million in Trio's redevelopment, which also
represents a major investment in the development of the city centre
and business life in Lahti.

The Åkersberga shopping centre redevelopment project has been delayed
due to a tenant's complaint. A new project plan is currently being
prepared but Citycon's Board of Directors have not approved it yet.
The refurbishment project for the interior of the Tumba Centrum
shopping centre, located in the municipality of Botkyrka, south of
Stockholm, was initiated late in 2007 and the project progressed as
planned during the reporting period. A more extensive extension
project is being planned.

Preparations for the extension project for the Lippulaiva shopping
centre in Espoo have been made during the reporting period. The
extension project has not yet been approved by the Board of
Directors.
During the reporting period, Citycon and the City of Helsinki signed
a preliminary agreement on the purchase of the lot for a new retail
centre planned to be built in Myllypuro, Helsinki. The preliminary
agreement relates to four separate lots, which have been zoned for
commercial and residential development. The aim is to develop an
attractive modern retail centre at Myllypuro.

Business Units

Citycon's business operations are divided into three business units:
Finland, Sweden and the Baltic Countries. These are sub-divided into
two business areas: Retail Properties and Property Development. The
Finnish business unit also includes a Commercial Development
function, responsible for the commercial development of Citycon's
Finnish shopping centres and the development of new commercial
concepts.

Finland

Citycon is the market leader in the Finnish shopping centre business.
During the reporting period, the company's net rental income from
Finnish operations grew by 25.6 per cent, to EUR 44.9 million, in
spite of the on-going redevelopment projects. The business unit
accounted for 74.6 per cent of the company's total net rental income.
During the last 12 months, the rolling twelve-month occupancy cost
ratio for like-for-like properties was 8.8 per cent (Q1/2008: 8.7%).
The occupancy cost ratio is calculated as the share of net rent and
potential service charges paid by a tenant to Citycon out of the
tenant's sales excluding VAT (estimate).

The key figures of the property portfolio as well as on-going
redevelopment projects in Finland are presented earlier.

Lease Portfolio Summary, Finland

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 2007
Number of leases
started
during the period 93 101 100 193 207 -6.8 442
Total area of
leases
started, sq.m. 14,310 24,350 21,800 36,110 41,250 -12.5 74,400
Occupancy rate at
end
of the period, % 95.7 95.6 95.9 -0.3 95.6
Average remaining
length of lease
portfolio
at the end of the
period,
year 3.2 3.1 3.4 -8.8 3.1

Financial Performance, Finland

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 2007
Gross rental
income,
EUR million 30.5 23.7 30.4 60.9 47.0 29.6 100.7
Turnover, EUR
million 31.6 24.7 31.4 62.9 48.6 29.5 104.3
Net rental
income,
EUR million 22.5 18.2 22.3 44.9 35.7 25.6 75.7
Net fair value
gains/losses on
Investment
property,
EUR million -58.4 120.3 -1.8 -60.2 134.3 - 148.5
Operating
profit/loss,
EUR million -37.2 137.1 19.3 -17.9 167.3 - 218.7
Capital
expenditure,
EUR million 17.8 20.5 22.8 40.6 43.3 -6.4 429.1

Fair market value
of investment
properties, EUR
million 1,587.4 1,546.2 1,187.4 30.2 1,587.0
Net rental yield,
% (1 5.8 5.6 7.0 - 6.2
Net rental yield,
like-for-like
properties, % 6.4 6.3 7.2 - 6.8

1) Includes the lots for development projects.

Sweden

Citycon has achieved a substantial position in the Swedish shopping
centre market and has eight (8) shopping centres and seven (7) other
retail properties in Sweden, located in the Greater Stockholm and
Greater Gothenburg areas and in Umeå. During the reporting period,
the company's net rental income from Swedish operations increased by
16.9 per cent, to EUR 12.2 million, and the business unit's net
rental income accounted for 20.3 per cent of Citycon's total net
rental income.

The key figures of the property portfolio as well as on-going
redevelopment projects in Sweden are presented earlier.

Lease Portfolio Summary, Sweden

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 2007
Number of leases
started
during the period 18 15 8 26 18 44.4 49
Total area of leases
started, sq.m. 3,760 4,138 840 4,600 4,408 4.4 25,800
Occupancy rate at end
of the period, % 96.1 95.2 95.0 0.2 95.1
Average remaining
length of lease
portfolio
at the end of the
period,
year 2.3 2.1 1.8 16.7 2.4

Financial Performance, Sweden

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 2007
Gross rental income,
EUR million 10.8 8.4 9.2 20.0 16.3 22.4 35.4
Turnover, EUR million 10.6 9.3 10.7 21.2 17.8 19.0 39.0
Net rental income,
EUR million 6.4 6.0 5.8 12.2 10.4 16.9 21.6
Net fair value gains/
losses on investment
property, EUR million -20.6 35.5 2.1 -18.5 50.6 - 55.6
Operating profit/loss,
EUR million -15.2 40.6 7.2 -8.1 59.4 - 74.3
Capital expenditure,
EUR million 15.9 72.2 8.2 24.1 133.9 -82.0 142.4

Fair market value of
investment properties,
EUR million 527.0 503.0 521.9 -3.6 517.5
Net rental yield, % (1 4.6 4.6 4.6 - 4.6
Net rental yield,
like-for-like
properties, % 5.6 5.5 5.9 - 5.3

1) Includes the lots for development projects.

Baltic Countries

At the end of the reporting period, Citycon owned three shopping
centres in the Baltic countries: Rocca al Mare and Magistral in
Tallinn, Estonia, and Mandarinas in Vilnius, Lithuania. Due to the
limited size of the Baltic market, the turbulence in property and
financial markets and the limited availability of suitable
properties, Citycon has been selective in making investments in the
region. During the reporting period, net rental income from Baltic
operations increased by 11.6 per cent to EUR 3.1 million. The
business unit accounted for 5.1 per cent of Citycon's total net
rental income.

The key figures of the property portfolio as well as on-going
redevelopment projects in the Baltic countries are presented earlier.

Lease Portfolio Summary, Baltic Countries

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 2007
Number of leases started
during the period 1 6 16 17 11 54.5 21
Total area of leases
started, sq.m. 100 257 1,600 1,700 1,047 62.4 3,208
Occupancy rate at end
of the period, % 100.0 100.0 99.9 0.1 100.0
Average remaining
length of lease portfolio
at the end of the period,
year 2.6 2.3 3.0 -23.3 2.8

Financial Performance, Baltic Countries

Q2/ Q2/ Q1/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 2008 2008 2007 % 2007
Gross rental income,
EUR million 2.1 1.9 2.2 4.2 3.5 21.2 7.7
Turnover, EUR million 2.1 1.9 2.2 4.3 3.7 17.4 8.0
Net rental income,
EUR million 1.5 1.4 1.6 3.1 2.8 11.6 6.0
Net fair value
gains/losses
on investment property,
EUR million -5.7 4.3 1.1 -4.6 6.7 - 9.3
Operating profit/loss,
EUR million -4.3 5.6 2.5 -1.8 9.1 - 14.5
Capital expenditure,
EUR million 6.5 3.6 5.7 12.2 3.9 215.8 31.7

Fair market value of
investment properties,
EUR million 112.2 107.8 89.9 19.9 111.2
Net rental yield, % (1 6.0 5.9 6.6 - 6.2
Net rental yield,
like-for-
like properties, % 6.9 7.0 8.0 - 7.3

1) Includes the lot for the development project.

Turnover and Profit

Turnover for the reporting period totalled EUR 88.5 million (EUR 70.2
million), principally derived from the rental income generated by
Citycon's retail premises. Gross rental income accounted for 96.2 per
cent (95.3%) of turnover.

Operating profit/loss decreased to EUR -31.3 million (EUR 231.9
million). Profit/loss before taxes amounted to EUR -62.1 million (EUR
212.5 million) and profit/loss after taxes was EUR -51.6 million (EUR
170.4 million). The decrease in operating profit was due mainly to
the fair value losses of the property portfolio. On the other hand,
operating profit rose due to net rental income from properties
acquired.

The effect of changes in the fair value of the property portfolio, of
gains on sales and of other indirect items on the profit attributable
to the parent company's shareholders was EUR -66.4 million (EUR 153.3
million), tax effects included. Taking this effect into account, the
direct result (after taxes) was EUR 4.7 million above the reference
period level (cf. Annex Reconciliation between direct and indirect
result). The growth in direct profit resulted from increased net
rental income and lower administrative expenses. Current taxes on
direct results were lower during the reporting period than during the
comparison period, notwithstanding profit growth. The lower current
taxes during the reporting period resulted principally from amended
depreciation policy applied since the end of 2007, which resulted in
higher depreciation of buildings in Finland, reducing the parent
company's result under local Finnish Accounting Standards (FAS) and
thereby also current taxes on direct profit during the reporting
period.

Earnings per share amounted to EUR -0.21 (EUR 0.88). Direct result
per share (diluted) (diluted EPRA EPS) amounted to EUR 0.09
(EUR 0.08). Net cash flow from the operating activities per share
amounted to EUR 0.12 (EUR 0.11).

Human Resources and Administrative Expenses

At the end of the reporting period, Citycon Group employed a total of
110 (94) persons, of whom 77 were employed in Finland, 26 in Sweden
and seven in the Baltic countries. Administrative expenses decreased
to EUR 8.4 million (EUR 8.6 million), including EUR 0.2 million
(EUR 0.5 million) calculated non-cash expenses related to employee
stock options and the company's share-based incentive scheme. The
lower expenses when compared to the reference period's figure were
due to lower annual employee bonuses and capitalisation of wages and
salaries relating to development and redevelopment projects.

Capital Expenditure and Divestments

Citycon's reported gross capital expenditure in the reporting period
totalled EUR 77.3 million (EUR 181.3 million). Of this, property
acquisitions accounted for EUR 2.5 million (EUR 158.7 million),
property development EUR 74.2 million (EUR 22.5 million) and other
investments EUR 0.6 million (EUR 0.2 million). The investments were
financed with the cash flow from operations and existing financing
arrangements.

The reporting period saw a partial divestment of the shopping centre
Iso Omena, involving the sale of a 40 per cent holding to a company
in the GIC Real Estate Group. The purchase price amounted to EUR
131.6 million.

Balance Sheet and Financial Position

The balance sheet total at the end of the reporting period stood at
EUR 2,293.0 million (EUR 1,878.1 million). Liabilities totalled
EUR 1,328.6 million at the end of the reporting period (EUR 998.5
million), with short-term liabilities accounting for EUR 179.2
million (EUR 131.8 million). The Group's liquidity remained good
during the reporting period. At the end of the reporting period,
Citycon's liquidity was EUR 349.4 million, of which EUR 325.6 million
consisted of undrawn, committed long-term credit facilities and EUR
23.8 million of cash and cash equivalents. At the end of the
reporting period, Citycon's liquidity, commercial papers and
short-term credit limits excluded, stood at EUR 227.6 million.

For the purpose of short-term liquidity management the company uses a
EUR 100 million non-binding Finnish commercial paper programme and a
non-binding Swedish commercial paper programme worth SEK one billion.
At the end of the reporting period, the company had issued Finnish
commercial papers worth of EUR 72 million and Swedish commercial
papers worth SEK 200 million.

From the reference period, interest-bearing debt increased by EUR
326.9 million to EUR 1,212.9 million (EUR 886.0 million). The fair
value of the Group's interest-bearing debt stood at
EUR 1,229.2 million (EUR 903.5 million). Short-term interest-bearing
debt constitutes approximately 11.7 per cent of the total
interest-bearing debt of the Group.

The Group's cash and cash equivalents totalled EUR 23.8 million
(EUR 40.1 million). The fair value of Group interest-bearing net debt
stood at EUR 1,205.3 million (EUR 863.3 million).

The year-to-date weighted average interest rate decreased compared to
the first quarter and was 4.90 per cent (4.60% during reference
period). The average loan maturity, weighted according to the
principal amount of the loans, increased to 4.8 years (4.5 years).
The average time to fixing was 3.0 years (3.4 years).

The weighted interest rate, interest-rate swaps included, averaged
4.88 per cent on 30 June 2008.

The Group's equity ratio stood at 42.1 per cent (46.9%). Period-end
gearing stood at 123.3 per cent (96.2%).

Of Citycon's period-end interest-bearing debt, 73.8 per cent (79.4%)
was in floating-rate loans, of which 68.8 per cent (68.1%) had been
converted to fixed-rate loans by means of interest-rate swaps.
Fixed-rate debt accounted for 76.9 per cent (74.7%) of the Group's
period-end interest-bearing debt, interest-rate swaps included. The
loan portfolio's hedging ratio is in line with the Group's financing
policy, and the company increased the hedging ratio during the
reporting period.

Citycon applies hedge accounting, whereby changes in the fair value
of interest-rate swaps subject to hedge accounting are recognised
under equity. The period-end nominal amount of interest-rate swaps
totalled EUR 674.0 million (EUR 539.1 million), with hedge accounting
applied to interest-rate swaps whose nominal amount totalled
EUR 597.6 million (EUR 489.1 million).

On 30 June 2008, the nominal amount of all the Group's derivative
contracts totalled EUR 798.0 million (EUR 627.6 million), and their
fair market value was EUR 23.2 million (EUR 11.1 million).

Net financial expenses increased by EUR 11.4 million, to EUR 30.8
million (EUR 19.4 million). This increase came mainly from higher
interest expenses due to the higher level of interest-bearing debt,
mark-to-market loss from derivatives and a higher weighted-average
interest rate.

Net financial expenses excluding the non-cash profit effect of
derivatives during the first quarter remained at the level of the
previous quarter. Net financial expenses in the income statement
include EUR 0.9 million (EUR 0.9 million) in non-cash expenses
related to the option component on convertible bonds.

The IFRS standard IAS 23 has been adjusted during the reporting
period concerning the recognition of interest expenses relating to
redevelopment projects. In order to enter into force the adjustment
still needs to be endorsed by the EU and thus has no effect on the
figures presented in this interim report. After entering into force,
this adjustment will have retrospective effect as of 1 January 2007.
The adjustment of the IAS 23 standard will, most importantly, affect
the company's financial expenses in the income statement as the new
IAS 23 standard enables the capitalization of interest expenses
arising from the development of existing properties and the
acquisition of lots for development projects in the balance sheet.
The effect is discussed in greater detail in the Notes to this
interim report.

Loan Market Transactions

Despite the prevailing uncertainty in the financial market, Citycon
signed three long-term loan agreements during the reporting period.
Local financing for the Magistral shopping centre, acquired in the
summer of 2007, was finalised through the signing of a loan agreement
for EEK 280 million, for a term of approximately five years.
Additionally, the company increased its committed long-term credit
limits by signing a EUR 50 million five-year revolving credit
facility agreement. In June, Citycon and the Nordic Investment Bank
(NIB) agreed on a loan amounting to EUR 30 million to be used to
finance the development of the Liljeholmstorget shopping centre,
located in Stockholm. Liljeholmstorget is Citycon's main sustainable
development project, which was an essential factor in NIB's decision
to participate in the financing of the project. The maturity of the
loan is 10 years. The company managed to conclude all three loan
agreements on competitive loan margins.

On 15 April 2008, Citycon agreed with a Nordic bank group on a
commercial paper programme in Sweden worth SEK one billion
(approximately EUR 105.6 million). Citycon intends to use the
proceeds from the commercial paper programme in the short-term
liquidity management of the Group's Swedish operations. Under the
programme, commercial papers may be issued either in Swedish crowns
or in euros.

Short-term Risks and Uncertainties

Citycon's risk management aims to ensure that the company meets its
strategic and operational goals. The company's risk-management
process involves identifying business-related risks, analysing their
significance, planning and implementing risk-management actions,
reporting on risks on a regular basis and controlling risks. During
2007, Citycon rolled out its holistic Enterprise Risk Management
(ERM) programme. The company updates its guidelines on
risk-management principles, approved by the Board of Directors, on a
regular basis in response to possible changes in its business.

Citycon estimates that major short-term risks and uncertainties are
associated with economic developments in the company's operating
regions and changes in the fair value of investment properties and
interest rates. Due to the increasing amount of development and
construction of its own properties, the risks associated with project
management and with increasing construction costs will be more
significant. A marked increase in interest rates, a decline in the
fair value of investment properties, materialisation of a major
project risk, considerably higher construction costs, or a sharp
economic slowdown in Finland, Sweden or the Baltic countries could
have an adverse effect on Citycon's business and profit performance.

The turbulence in financial markets that began in the summer of 2007
has resulted in a clear increase in short-term interest rates and
difficulties in banks' own funding activities, which may
significantly affect the availability of funding for Citycon and
increase future credit margins and financing costs. If realised, this
could have a negative effect on the implementation of Citycon's
strategy and on the company's business and profits. The company aims
to hedge the risk of changes in the financial market by applying a
conservative financing policy, which has thus far kept the company's
financial expenses from rising significantly and the availability of
financing from decreasing.

More details of the company's risk management are available in the
Annual Report 2007 and, concerning financing risks, in the Financial
Statements 2007, on pages 35-36.

Annual General Meeting 2008

Citycon Oyj's Annual General Meeting (AGM) took place in Helsinki,
Finland, on 13 March 2008. The AGM adopted the consolidated financial
statements and the parent company's financial statements for the
financial year 2007 and discharged the members of the Board of
Directors and the Chief Executive Officer from liability. The AGM
decided on a dividend of EUR 0.04 per share for the financial year
2007 and, in addition, on equity return of EUR 0.10 per share from
the invested unrestricted equity fund. The record date for the
dividend payment and equity return was 18 March 2008, and the
dividend and the equity return were paid on 2 April 2008.

Other decisions taken by the AGM have been reported in the interim
report issued on 24 April 2008.

Shareholders, Share Capital and Shares

Trading and Share Performance

During the January- June period, the value of Citycon shares traded
on the OMX Nordic Exchange Helsinki totalled EUR 275.0 million (EUR
357.6 million), equivalent to 74.0 million (66.4 million) shares. The
highest quotation during the reporting period was EUR 4.28 (EUR 6.09)
and the lowest EUR 3.03 (EUR 4.61). The reported trade-weighted
average price was EUR 3.71 (EUR 5.39) per share and the shares closed
at EUR 3.21 (EUR 4.77). The company's market capitalisation at the
end of June totalled EUR 709.4 million (EUR 918.2 million).

Notifications of Changes in Shareholdings

During the reporting period, Citycon Oyj received three notifications
of changes in shareholdings from two different shareholders:

FIL Limited (formerly Fidelity International Limited) notified the
company in March that the holdings of its direct and indirect
subsidiaries in Citycon Oyj had fallen below the five per cent
threshold. According to the notification, FIL Limited and its direct
and indirect subsidiaries held a total of 10,904,704 Citycon shares
on 5 March 2008, equivalent to 4.93 per cent of the company's share
capital and voting rights.

AXA Investment Managers notified the company in March that the
holdings of AXA S.A. and its subsidiaries in Citycon Oyj's voting
rights and share capital had risen above the threshold of
five per cent. According to the notification, AXA Group held
11,892,688 shares on 21 March 2008, equivalent to 5.38 per cent of
the company's voting rights and share capital. In May, AXA
Investments Managers notified the company that the holdings of AXA
S.A. and its subsidiaries in Citycon Oyj's voting rights and share
capital had fallen below the five per cent threshold to 4.99 per cent
due to stock trading that took place on 13 May 2008. According to the
notification, the AXA Group owned at that time a total of 11,017,656
Citycon shares.

Share Capital

At the beginning of 2008, the company's registered share capital
totalled EUR 259.6 million and the number of shares 221.0 million.
During the reporting period, the number of shares increased by
4,335 shares as a result of exercise of stock option rights and by
7,040 shares that were granted to the company's key personnel by a
directed share issue without payment relating to the company's
share-based incentive plan. At the end of the reporting period, the
company's registered share capital totalled EUR 259,570,510.20, and
the number of shares amounted to 220,992,586. The company has a
single series of shares, with each share conferring entitlement to
one vote at general meetings of shareholders. The shares have no
nominal value.

Board Authorisations

The AGM for 2007 authorised the Board of Directors to decide on
issuing new shares and disposing of treasury shares through paid or
free share issues. New shares can be issued and treasury shares can
be transferred to shareholders in proportion to their existing
shareholding or through a directed share issue waiving the
pre-emptive rights of shareholders, if a weighty financial reason
exists for doing so. The Board can also decide on a free share issue
to the company itself. In addition, the Board was authorised to grant
special rights referred to in Section 1 of Chapter 10 of the Finnish
Limited Liability Companies Act, entitling their holders to receive,
against payment, new shares in the company or treasury shares. The
combined number of new shares to be issued and treasury shares to be
transferred, including the shares granted on the basis of the special
rights, may not exceed 100 million.

The Board exercised this authorisation in September 2007, when it
decided on a share issue based on the shareholders' pre-emptive
subscription right, and in May 2008, when it decided on a directed
share issue without payment relating to the company's share-based
incentive plan. As a result of these decisions, the number of shares
that can be issued or disposed of on the basis of the authorisation
now totals 72,398,178. This authorisation is valid until 13 March
2012.

The Board of Directors has no other authorisations.

Stock Options 2004

The Annual General Meeting held on 15 March 2004 authorised the issue
of a maximum of 3,900,000 stock options. The stock options 2004 A and
2004 B are listed on the OMX Nordic Exchange Helsinki.

The terms and conditions of the company's stock option plan 2004 were
amended during the reporting period under a decision taken by the
AGM. Valid basic information on the option plan 2004 is presented in
the enclosed table.

Basic Information on Stock Options 2004 as at 30 June 2008

2004 A 2004 B 2004 C
No. of options granted 1,040,000 1,090,000 1,050,000
No. held by Veniamo-Invest 260,000 210,000 250,000
Oy ¹)
Subscription ratio, 1:1.2127 1:1.2127 1:1.2127
option/shares
Subscription price per 2.2732 2.6608 4.3613
share, EUR ²)
Subscription period 1 Sept. 2006 1 Sept. 2007 1 Sept. 2008
begins/began
Subscription period ends 31 March 2009 31 March 2010 31 March 2011
No. of options exercised 339,795 - -
No. of shares subscribed 380,045 - -
with options

¹) Veniamo-Invest Oy cannot subscribe for its parent company's
shares.
²) Following the dividend payment and equity return in 2008. The
share subscription prices are reduced by half of the per-share
dividends paid and per-share equity returned. However, the share
subscription price is always at least EUR 1.35.

During the reporting period, 3,729 shares were subscribed based on
the A stock options relating to Citycon's stock option plan 2004, at
a per-share subscription price of EUR 2.2732. After the reporting
period, 6,403 shares were subscribed at a per-share subscription
price of EUR 2.2732. These shares are expected to be registered with
the Finnish Trade Register on 22 June 2008. The outstanding stock
options under the 2004 option scheme entitle their holders to
subscribe for a further maximum of 3,486,421 new shares. Shares
subscribed entitle their holders to a dividend for the financial year
2008.

Outlook

Citycon continues to focus on increasing net operating income and
cash flow. The company expects development and redevelopment projects
to continue to play an important role in its business for the current
financial year. Seeking to implement its strategy, the company will
focus on developing and redeveloping its shopping centres as well as
monitoring the market for potential acquisitions. Citycon is also
considering the divestment of its non-core properties - such as its
residential properties in Sweden.

In 2008 the company expects its year-on-year net rental income and
direct profit excluding fair value changes to increase. The estimate
is based on expansion and redevelopment projects coming on stream, on
the property portfolio's growth due to completed acquisitions and
further improvements in shopping-centre management.

Helsinki, 17 July 2008

Citycon Oyj

Board of Directors

UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
1 January - 30 June 2008

Condensed Consolidated Income Statement, IFRS

Q2/ Q2/ Change- Q1-Q2/ Q1-Q2/ Change-EUR million 2008 2007 % 2008 2007 % 2007

Gross rental income 43.4 34.1 27.4% 85.1 66.9 27.3% 143.7
Service charge income 0.8 1.8 -55.8% 3.4 3.3 1.8% 7.7
Turnover (Note 3) 44.2 35.9 23.1% 88.5 70.2 26.1% 151.4
Property operating
expenses 13.8 10.0 38.1% 28.4 21.1 34.5% 47.8
Other expenses from
leasing operations 0.0 0.1 -121.7% 0.0 0.1 -66.9% 0.3
Net rental income 30.5 25.8 17.9% 60.1 49.0 22.7% 103.4
Administrative
expenses 4.4 4.3 3.0% 8.4 8.6 -3.0% 16.5
Other operating
income and expenses 0.0 -0.1 - 0.1 -0.1 - 0.5
Net fair value gains/
losses on investment
property -84.7 160.1 - -83.3 191.6 - 213.4
Net gains on sale of
investment property 0.0 - - 0.1 - - -0.1

Operating profit/loss -58.7 181.6 - -31.3 231.9 - 300.7

Net financial income
and expenses 14.7 10.0 47.6% 30.8 19.4 58.5% 47.3
Profit/loss before
taxes -73.4 171.6 - -62.1 212.5 - 253.5
Current taxes -1.2 -2.8 -58.0% -3.4 -4.2 -19.0% -3.4
Change in deferred
taxes 11.7 -33.1 - 14.0 -37.9 - -46.2
Profit/loss
for the period -62.8 135.8 - -51.6 170.4 - 203.9

Attributable to
Parent company
shareholders -56.6 134.6 - -47.5 167.6 - 200.3
Minority interest -6.3 1.2 - -4.1 2.8 - 3.6

Earnings per share
(basic), EUR (Note 5) -0.26 0.68 - -0.21 0.88 - 1.00
Earnings per share
(diluted), EUR (Note
5) -0.26 0.60 - -0.21 0.78 - 0.91

Direct result (Note
4) 9.5 7.6 24.3% 18.9 14.3 32.7% 36.3
Indirect result (Note
4) -66.0 127.0 - -66.4 153.3 - 164.0
Profit/loss for the
period attributable
to parent company
shareholders -56.6 134.6 - -47.5 167.6 - 200.3

Condensed Consolidated Balance Sheet, IFRS

EUR million 30 June 2008 30 June 2007 31 Dec. 2007
Assets

Non-current assets
Investment property (Note 6) 2,156.9 1,799.2 2,215.7
Development property (Note 7) 76.2 13.6 33.2
Other property, plant and
equipment 0.9 0.7 0.9
Derivative financial
instruments and
other non-current assets (Note
9) 20.9 14.2 10.7
Total non-current assets 2,254.9 1,827.7 2,260.5

Current assets
Derivative financial
instruments (Note 9) 3.2 0.3 1.2
Trade and other receivables 11.1 10.0 22.7
Cash and cash equivalents
(Note 8) 23.8 40.1 24.2
Total current assets 38.1 50.3 48.1

Total assets 2,293.0 1,878.1 2,308.6

Liabilities and Shareholders'
Equity

Equity attributable to parent
company shareholders
Share capital 259.6 259.6 259.6
Share premium fund and other
restricted reserves 131.1 131.1 131.1
Fair value reserve (Note 9) 15.1 6.9 4.9
Invested unrestricted equity
fund
(Note 10) 177.2 99.2 199.3
Retained earnings (Note 10) 330.7 354.1 387.0
Total equity attributable to
parent
company shareholders 913.7 850.9 982.0
Minority interest 50.7 28.6 28.9
Total shareholders' equity 964.4 879.5 1,010.9

Liabilities

Interest-bearing debt (Note
11) 1,071.1 783.9 1,049.3
Derivative financial
instruments and
other non-interest bearing
liabilities
(Note 9) 0.7 2.0 2.4
Deferred tax liabilities 77.7 80.7 88.1
Total long-term liabilities 1,149.5 866.7 1,139.9

Interest-bearing debt (Note
11) 141.9 102.1 104.7
Trade and other payables 37.3 29.7 53.1
Short-term liabilities 179.2 131.8 157.8

Total liabilities 1,328.6 998.5 1,297.7

Total liabilities
and shareholders' equity 2,293.0 1,878.1 2,308.6

Condensed Consolidated Statement of Changes in Shareholders' Equity,
IFRS

EUR million Equity attributable to parent company shareholders
Share Invested
premium unre-
fund and Fair stricted
Share Share other value equity Retained
capital issue reserves reserve fund earnings

Balance at 1 Jan.
2007 225.7 0.1 131.1 -1.3 - 209.7
Cash flow hedges 8.2
Profit/loss for
the period 167.6
Total recognized
income and expense
for the period 8.2 167.6
Share issues 33.8 98.8
Share
subscriptions
based on stock
options 0.1 -0.1 0.0 0.4
Dividends (Note
10) -23.4
Translation
differences -0.3
Share-based
payments 0.5
Other changes 0.0
Balance at 30 June
2007 259.6 - 131.1 6.9 99.2 354.1

Balance at 1 Jan.
2008 259.6 - 131.1 4.9 199.3 387.0
Cash flow hedges 10.2
Profit/loss for
the period -47.5
Total recognized income and
expense for the period 10.2 -47.5
Share subscriptions
based on stock
options 0.0
Dividends and return
from
the invested
unrestricted
equity fund (Note 10) -22.1 -8.8
Translation
differences -0.2
Share-based payments 0.2
Other changes
Balance at 30 June
2008 259.6 - 131.1 15.1 177.2 330.7

Equity
attributable
to parent
company Minority Shareholders'
shareholders interest equity, total

Balance at 1 Jan. 2007 565.3 15.0 580.3
Cash flow hedges 8.2 8.2
Profit/loss for the period 167.6 2.8 170.4
Total recognized income and
expense for the period 175.8 2.8 178.6
Share issues 132.5 132.5
Share subscriptions
based on stock options 0.4 0.4
Dividends (Note 10) -23.4 -23.4
Translation differences -0.3 -0.3 -0.6
Share-based payments 0.5 0.5
Other changes 0.0 11.2 11.2
Balance at 30 June 2007 850.9 28.6 879.5

Balance at 1 Jan. 2008 982.0 28.9 1,010.9
Cash flow hedges 10.2 10.2
Profit/loss for the period -47.5 -4.1 -51.6
Total recognized income and
expense for the period -37.3 -4.1 -41.4
Share subscriptions based on
stock options 0.0 0.0
Dividends and return from
the invested unrestricted
equity fund (Note 10) -30.9 -30.9
Translation differences -0.2 -0.1 -0.3
Share-based payments 0.2 0.2
Other changes 0.0 25.9 25.9
Balance at 30 June 2008 913.7 50.7 964.4

Condensed Consolidated Cash Flow Statement, IFRS

Q1-Q2/ Q1-Q2/
EUR million 2008 2007 2007

Operating activities
Profit/loss before taxes -62.1 212.5 253.5
Adjustments 114.5 -171.5 -164.9
Cash flow before change in working capital 52.4 41.0 88.5
Change in working capital -0.7 -2.7 0.2

Cash generated from operations 51.7 38.3 88.8

Paid interest and other financial charges -30.5 -15.2 -42.7
Received interest and other financial income 1.5 1.0 3.1
Taxes paid 3.4 -3.7 -10.0

Cash flows from operating activities 26.1 20.5 39.3

Investing activities
Acquisition of subsidiaries, less cash acquired
(Note 6) -16.7 -165.3 -517.6
Acquisition of investment properties (Note 6) - - -16.0
Capital expenditure on investment properties
(Note 6) -31.7 -15.4 -39.3
Capital expenditure on development properties,
other PP&E and intangible assets (Note 7) -38.6 -7.3 -24.5
Sale of investment property 7.7 - 0.3
Cash flows from investing activities -79.3 -188.0 -597.1

Financing activities
Proceeds from share issue - 132.5 232.4
Equity contribution from minority shareholder 25.9 - -
Proceeds from short-term loans (Note 11) 67.5 130.0 773.1
Repayments of short-term loans (Note 11) -30.0 -115.5 -727.9
Proceeds from long-term loans (Note 11) 287.5 209.3 535.8
Repayments of long-term loans (Note 11) -266.9 -146.4 -228.9
Dividends paid (Note 10) -30.9 -23.4 -23.4
Cash flows from financing activities 52.9 186.6 561.1

Net change in cash and cash equivalents -0.3 19.0 3.3
Cash and cash equivalents at period-start (Note
8) 24.2 21.3 21.3
Effects of exchange rate changes 0.0 -0.2 -0.4
Cash and cash equivalents at period-end (Note 8) 23.8 40.1 24.2

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basic Company Data

Citycon is a real estate company investing in retail premises.
Citycon operates mainly in Finland, Sweden and the Baltic countries.
Citycon is a Finnish public limited company established under Finnish
law and domiciled in Helsinki. The Board of Directors approved the
interim financial statements on 17 July 2008.

2. Basis of Preparation and Accounting Policies

Citycon prepares its consolidated financial statements in accordance
with the International Financial Reporting Standards (IFRS). The
interim condensed consolidated financial statements for the six
months ended 30 June 2008 have been prepared in accordance with IAS
34 Interim Financial Reporting. Same accounting principles and
policies are followed in the interim financial statements as in the
annual financial statements for the year 2007. The interim financial
statements do not include all the disclosures required in the annual
financial statements. Therefore, they should be read in conjunction
with Citycon's annual financial statements for the year 2007.

Restatement of the Financial Information in 2007 and 2008 due to the
New IAS 23 Borrowing Costs Standard

Due to the new IAS 23 Borrowing Costs standard, Citycon re-evaluated
its accounting policy regarding the capitalisation of the interest
expenses and concluded to revise the policy. As a result of adopting
the revised accounting policy relating to the capitalisation of
interest expenses, Citycon is going to restate its 2007 and 2008
financial statements. The new standard has been issued by the IASB
but has not been endorsed by the EU. The EU is expected to endorse
the new standard by the end of 2008. Consequently, Citycon is not
able to apply the new standard in the current interim report, but
will do it in the 2008 Financial Statements.
Currently, Citycon capitalises the interest expenses arising from the
development projects, in which significant extensions or new
self-constructed properties are built and measured at cost in
accordance with IAS 16. After applying the new standard in its 2008
Financial Statements, Citycon will expand its policy of capitalizing
the interest expenses into the redevelopment projects, in which the
existing investment properties are refurbished and measured at fair
value. The following table presents the potential impact of the new
IAS 23 on the financial information for 2007 and 2008. The new IAS 23
will have no impact on the profit for the period nor the balance
sheet, since the change in financial expenses is offset by the change
in net fair value gains/losses on investment property.

Restated Restated
Q1-Q2/ Q1-Q2/ Q1/ Q1/
EUR million 2008 2008 2008 2008
Net fair value gains/losses on
investment
property -83.3 -85.1 1.4 0.5
Operating profit/loss -31.3 -33.0 27.4 26.4
Net financial income and expenses 30.8 29.0 16.1 15.1
Profit/loss before taxes -62.1 -62.1 11.3 11.3
Profit/loss for the period -51.6 -51.6 11.3 11.3
Direct result 18.9 20.6 9.5 10.4
Indirect result -66.4 -68.1 -0.4 -1.3 Restated
Restated Q1-Q3/ Q1-Q3/
EUR million 2007 2007 2007 2007
Net fair value gains/losses on
investment
property 213.4 211.4 212.7 211.5
Operating profit/loss 300.7 298.7 276.2 275.1
Net financial income and expenses 47.3 45.3 32.7 31.6
Profit/loss before taxes 253.5 253.5 243.5 243.5
Profit/loss for the period 203.9 203.9 194.0 194.0
Direct result 36.3 38.3 22.5 23.6
Indirect result 164.0 162.1 168.6 167.4

Restated
Q1-Q2/ Q1-Q2/ Q1/ Restated
EUR million 2007 2007 2007 Q1/2007
Net fair value gains/losses on
investment
property 191.6 191.2 31.5 31.4
Operating profit/loss 231.9 231.5 50.4 50.3
Net financial income and expenses 19.4 19.0 9.5 9.4
Profit/loss before taxes 212.5 212.5 40.9 40.9
Profit/loss for the period 170.4 170.4 34.6 34.6
Direct result 14.3 14.7 6.7 6.7
Indirect result 153.3 152.9 26.3 26.3

3. Segment Information

Citycon's business consists of the regional business units Finland,
Sweden and the Baltic Countries.

Q2/ Q2/ Q1-Q2/ Q1-Q2/
EUR million 2008 2007 Change-% 2008 2007 Change-% 2007
Turnover
Finland 31.6 24.7 27.8% 62.9 48.6 29.5% 104.3
Sweden 10.6 9.3 13.9% 21.2 17.8 19.0% 39.0
Baltic
Countries 2.1 1.9 9.7% 4.3 3.7 17.5% 8.0
Total 44.2 35.9 23.1% 88.5 70.2 26.1% 151.4

Operating
profit/loss
Finland -37.2 137.1 - -17.9 167.3 - 218.7
Sweden -15.2 40.6 - -8.1 59.4 - 74.3
Baltic
Countries -4.3 5.6 - -1.8 9.1 - 14.5
Other -1.9 -1.8 4.6 % -3.5 -3.8 -8.6% -6.8
Total -58.7 181.6 - -31.3 231.9 - 300.7

EUR million
30 June 30 June 31 Dec.
Assets 2008 2007 Change-% 2007
Finland 1,563.2 1,190.5 31.3 % 1,594.2
Sweden 546.6 535.8 2.0 % 542.2
Baltic
Countries 132.9 94.7 40.4 % 125.3
Other 50.3 57.2 -12.1 % 46.9
Total 2,293.0 1,878.1 22.1 % 2,308.6

The increase in segment assets is mainly due to the acquisitions of
the shopping centres.

4. Reconciliation Between Direct and Indirect Result

Due to the nature of Citycon's business and the obligation to apply
IFRS, the consolidated income statement includes several items
related to non-operating activities. In addition to the consolidated
income statement under IFRS, Citycon also presents its profit for the
period with direct result and indirect result separately specified,
in an attempt to enhance the transparency of its operations and to
facilitate comparability of financial periods. Direct result
describes the profitability of the Group's operations during the
financial period disregarding the effects of fair value changes,
gains or losses on sales and other extraordinary items. Earnings per
share calculated based on direct result corresponds to the earnings
per share definition recommended by EPRA.

In comparison to previous practice direct result excludes the changes
in fair value of financial instruments that are recognized in the
income statement. In order to hedge against interest rate risk,
Citycon has entered into, in accordance with its interest rate risk
management policy, interest rate and inflation derivatives which do
not qualify under hedge accounting treatment under IFRS. Changes in
fair value of such derivatives are recognized in the income
statement. These derivatives hedge the group against interest rate
risk and in accordance with the terms of the derivatives Citycon
receives floating money market interest rate which has a matching
interest rate determination procedure with group's floating rate
debt. The interest rate which Citycon pays under these derivatives
does not depend on the money market interest rate which means that
these derivatives hedge Citycon against rising floating interest
rates. The aim is to ensure effectiveness of the hedges by matching
the interest rate fixing procedure between the derivatives recognized
in the income statement and floating rate debt of Citycon.

Q2/ Q1/ Q4/ Q3/ Q2/
EUR million 2008 2008 2007 2007 2007

Direct result
Net rental income 30.5 29.7 27.1 27.3 25.8
Administrative expenses -4.2 -3.8 -3.9 -4.0 -4.3
Other operating income and expenses 0.0 0.0 0.6 0.0 -0.1
Net financial income and expenses -14.9 -14.7 -14.7 -11.9 -10.1
Current taxes -1.2 -1.2 3.2 -2.4 -2.8
Change in deferred taxes 0.0 -0.1 1.7 -0.5 -0.7
Minority interest -0.7 -0.4 -0.2 -0.3 -0.2
Total 9.5 9.5 13.8 8.2 7.6

Direct result per share (diluted),
(diluted EPRA EPS), EUR 1) 0.04 0.04 0.06 0.04 0.04

Indirect result
Net fair value gains/losses on
investment
property -84.7 1.4 0.7 21.1 160.1
Profit on disposal of investment
property 0.0 0.1 0.0 -0.1 -
Administrative expenses related to
disposals -0.2 -0.2 - - -
Other operating income and expenses 0.0 0.1 - - -
Movement in fair value of financial
instruments 0.2 -1.4 0.2 -1.4 0.1
Current taxes related to disposals 0.0 -1.1 - - -
Change in deferred taxes 11.6 2.4 -5.0 -4.5 -32.3
Minority interest 7.0 -1.8 -0.4 0.1 -0.9
Total -66.0 -0.4 -4.6 15.2 127.0

Indirect result per share, diluted -0.27 0.00 -0.02 0.07 0.56

Profit/loss for the period attributable
to parent company shareholders -56.6 9.1 9.3 23.4 134.6

¹) The calculation of the direct result per share is presented in the
Note 5. Earnings per share.

5. Earnings per Share

Q1-Q2/ Q1-Q2/
2008 2007 2007
A) Earnings per share calculated from
the profit/loss for the period

Earnings per share, basic
Profit/loss attributable to parent company
shareholders, EUR million -47.5 167.6 200.3
Issue-adjusted average number of shares, Million 221.0 190.5 199.4
Earnings per share (basic), EUR -0.21 0.88 1.00

Earnings per share, diluted
Profit/loss attributable to parent company
shareholders, EUR million -47.5 167.6 200.3
Expenses arising from convertible loan, adjusted
with
the tax effect deduction, EUR million - 2.8 5.7
Profit/loss used in the calculation of diluted
earnings
per share, EUR million -47.5 170.4 206.0
Issue-adjusted average number of shares, Million 221.0 190.5 199.4
Convertible capital loan impact, Million - 25.3 26.2
Adjustments for stock options, Million - 2.0 1.5
Issue-adjusted average number of shares used in
the
calculation of diluted earnings per share,
Million 221.0 217.8 227.1
Earnings per share (diluted), EUR -0.21 0.78 0.91

The incremental shares from assumed conversions or any income or cost
related to dilutive potential shares are not included in calculating
the Q1-Q2/2008 diluted per-share amounts because the profit
attributable to parent company shareholders was negative.

B) Earnings per share calculated from
the direct result for the period
Q1-Q2/ Q1-Q2/
2008 2007 2007
Direct result per share (diluted),
(diluted EPRA EPS)
Direct result, EUR million (Note 4) 18.9 14.3 36.3
Expenses arising from convertible loan,
adjusted with the tax effect deduction, EUR
million 2.9 2.8 5.7
Profit used in the calculation of direct result
per share,
EUR million 21.8 17.1 42.0
Issue-adjusted average number of shares used in
the
calculation of diluted earnings per share,
Million 248.2 217.8 227.1
Direct result per share (diluted),
(diluted EPRA EPS), EUR 0.09 0.08 0.18

6. Investment Property

EUR million 30 June 2008 30 June 2007 31 Dec. 2007

At period-start 2,215.7 1,447.9 1,447.9
Acquisitions 2.5 158.7 531.3
Investments 33.1 22.5 44.8
Disposals -7.6 - -0.3
Transfer into the development
properties -1.9 -13.6 -6.2
Fair value gains on investment
property 3.8 198.8 220.8
Fair value losses on
investment property -87.1 -7.0 -7.5
Exchange differences -1.6 -8.1 -15.1
At period-end 2,156.9 1,799.2 2,215.7

An external professional appraiser has conducted the valuation of the
company's properties with a net rental income based cash flow
analysis. Market rents, occupancy rate, operating expenses and yield
requirement form the key variables used in the cash flow analysis.
The segments' yield requirements and market rents used by the
external appraiser in the cash flow analysis were as follows:

Yield requirement (%) Market rents (€/m²)
30 June 30 June 31 Dec. 30 June 30 June 31 Dec.
2008 2007 2007 2008 2007 2007
Finland 6.0 5.9 5.7 21.3 18.5 21.1
Sweden 5.7 5.5 5.4 13.7 12.8 13.2
Baltic Countries 6.9 6.3 6.4 19.6 16.1 16.4
Average 6.0 5.8 5.6 19.4 16.9 19.0

7. Development Property

As at 30 June 2008, the development properties consisted of the
capital expenditure relating to extension projects in Rocca al Mare,
Åkersberga, Liljeholmen and Lippulaiva shopping centres.

EUR million 30 June 2008 30 June 2007 31 Dec. 2007
At period-start 33.2 - -
Acquisitions 7.1 - -
Investments 32.6 - 26.4
Capitalized interest 1.3 - 0.6
Transfer from investment
property 1.9 13.6 6.2
At period-end 76.2 13.6 33.2

8. Cash and Cash Equivalents

EUR million 30 June 2008 30 June 2007 31 Dec. 2007

Cash in hand and at bank 17.4 24.9 24.2
Short-term deposits 6.5 15.2 -
Total 23.8 40.1 24.2

9. Derivative Financial Instruments

EUR million 30 June 2008 30 June 2007 31 Dec. 2007
Nominal Fair Nominal Fair Nominal Fair
amount value amount value amount value
Interest rate derivatives
Interest rate swaps
Maturity:
less than 1 year 60.0 0.7 50.0 0.3 40.0 0.2
1-2 years 92.4 0.2 60.0 0.4 112.5 -0.6
2-3 years 40.0 2.5 149.0 -2.0 83.0 -1.1
3-4 years 70.0 2.3 40.0 1.1 70.0 1.7
4-5 years 103.0 2.3 0.0 0.0 20.0 0.2
over 5 years 308.6 13.5 240.1 11.8 309.0 8.5
Total 674.0 21.5 539.1 11.5 634.5 8.8

Foreign exchange
derivatives
Forward agreements
Maturity:
less than 1 year 124.0 1.6 88.5 -0.4 40.4 0.3
Total 124.0 1.6 88.5 -0.4 40.4 0.3

The fair value of derivative financial instruments represents the
market value of the instrument with prices prevailing on the balance
sheet date. Derivative financial instruments are used in hedging the
interest rate risk of the interest bearing liabilities and foreign
currency risk.

The fair values include foreign exchange gain of EUR 2.6 million (EUR
-0.9 million) which is recognized in the income statement.

Hedge accounting is applied for interest rates swaps which have
nominal amount of EUR 597.6 million (EUR 489.1 million). The fair
value gain recognized in the fair value reserve under shareholders'
equity taking account the tax effect totals EUR 15.1 million (EUR 6.9
million).

10. Dividends and Return from the Invested Unrestricted Equity Fund

In accordance with the proposal by the Board of Directors and the
decision by the Annual General Meeting held on 13 March 2008 dividend
for the financial year 2007 amounted to EUR 0.04 per share and EUR
0.10 per share was decided to be returned from the invested
unrestricted equity fund (dividend of EUR 0.14 for the financial year
2006).
Dividends and equity returns paid amounted to EUR 30.9 million (EUR
23.4 million) during the period.

11. Interest-bearing Liabilities

During the period, Citycon has agreed on a new long-term bank loan in
the amount of EUR 30 million as part of the Liljeholmstorget shopping
center development project in Stockholm. The loan bears a floating
interest rate and is repayable within 10 years. Also, the EUR 17.9
million loan for financing Magistral shopping centre in Tallinn was
drawn, and is repayable approximately in five years. The long-term
credit limit (a EUR 50 million five-year revolving credit facility)
remained undrawn. During the period, repayments of other bank loans
amounting to EUR 10.1 million were made in line with previously
disclosed repayment terms.

Other proceeds and repayments from/of long-term loans in the
cash-flow statement arose from the use of revolving credit
facilities.

12. Contingent Liabilities

EUR million 30 June 2008 30 June 2007 31 Dec. 2007
Mortgages on land and
buildings 46.3 47.6 46.4
Bank guarantees 48.8 20.1 49.8
Capital commitments 26.8 84.7 31.0

At 30 June 2008, Citycon had capital commitments of EUR 26.8 million
relating mainly to several development and redevelopment projects.

13. Related Party Transactions

There were no significant transactions with the related parties
during the period.

14. Key Figures

Q2/ Q2/ Q1-Q2/ Q1-Q2/ Change-
2008 2007 Change-% 2008 2007 % 2007

Earnings per
share (basic),
EUR -0.26 0.68 - -0.21 0.88 - 1.00
Earnings per
share (diluted),
EUR -0.26 0.60 - -0.21 0.78 - 0.91
Equity per
share, EUR 4.13 4.32 -4.2% 4.44
Net asset value
(EPRA NAV)
per share, EUR 4.46 4.70 -5.1% 4.83
Equity ratio, % 42.10.0 46.90.0 - 43.943.9

The formulas for key figures can be found from the 2007 annual
financial statements.

The figures are unaudited.

Financial reports in 2008

In 2008, Citycon will publish one more interim report (January -
September 2008). The interim report will be published on Thursday,
16 October 2008 at approximately 9:00 hrs.

More information for investors is available at Citycon's Internet
pages, www.citycon.com.

For further information, please contact:
Mr Petri Olkinuora, CEO
Tel. +358 9 6803 6738 or +358 400 333 256
petri.olkinuora@citycon.fi

Mr Eero Sihvonen, CFO
Tel. +358 9 6803 6730 or +358 50 557 9137
eero.sihvonen@citycon.fi

Distribution:
OMX Nordic Exchange Helsinki
Major media
www.citycon.fi.

Report on Review of Citycon Oyj's Interim Financial Information for
the period
January 1 - June 30 2008

To the Board of Directors of Citycon Oyj

Introduction

We have reviewed the accompanying consolidated balance sheet of
Citycon Oyj as of June 30, 2008 and the related statements of income,
changes in equity and cash flows for the six-month period then ended,
and explanatory notes prepared in accordance with International
Financial Reporting Standards as adopted by the EU. The board of
Directors and the Managing Director are responsible for the
preparation and fair presentation of this interim financial
information in accordance with the Securities Market Act, chapter 2,
paragraph 5 a. Based on our interim review we express at the request
of the Board of Directors a report in accordance with the Securities
Market Act, chapter 2, paragraph 5 a.

Scope of Review

We conducted our review in accordance with International Standard on
Review Engagements 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity." A review of
interim financial information consists of making inquiries, primarily
of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.

Opinion

Based on our review, nothing has come to our attention that causes us
to believe that the accompanying interim financial information,
prepared in accordance with International Financial Reporting
Standards as adopted by the EU, does not give a true and fair view of
the financial position of the entity as at June 30, 2008, and of its
financial performance and its cash flows for the six-month period
then ended in accordance with the Securities Market Act.

July 17, 2008

ERNST & YOUNG OY
Authorized Public Accountants

Tuija Korpelainen
Authorized Public Accountant