Citycon Oyj Stock Exchange Release, 8 May 2003 at 11.30am
CITYCON'S INTERIM REPORT, 1 JAN. 31 MAR. 2003
- Profit before extraordinary items and taxes was EUR 4.8
million (EUR 5.6 million)
- The profit includes EUR 0.0 million (EUR 0.9 million) in
capital gains from fixed assets
- Turnover was EUR 19.4 million (EUR 19.8 million)
- Earnings per share were EUR 0.03 (EUR 0.04)
- The market trend continued to be highly favourable to
Citycon. Demand and occupancy rates for commercial property
remained strong.
KEY INDICATORS
1-3 2003 1-3 2002 1-12 2002
Turnover, EUR million 19.4 19.8 79.0
Operating profit,
EUR million 10.8 11.8 43.9
% of turnover 56 59 56
Profit before extraordinary
Items and taxes, EUR million 4.8 5.6 19.2
% of turnover 25 28 24
Number of employees
31 March, 2003 33 31 33
Earnings per share, EUR 0.03 0.04 0.14
Equity per share, EUR 1.91 1.86 1.96
Return on equity, % 4.9 5.7 4.8
Return on equity excluding
minority interest, % 7.2 8.4 7.1
Return on investment, % 6.0 6.5 6.0
Equity ratio, % 38.4 37.6 39.1
Equity ratio with loan
counted as part of
shareholder's equity, % 47.6 46.7 48.4
Net rental income of
Property portfolio, % 8.4 8.5 8.6
Financial occupancy rate
of commercial property, % 97.3 97.0 97.8
TREND IN THE BUSINESS ENVIRONMENT
In spite of the overall uncertainty of the economy, private
consumer demand remained at a markedly higher level in
Finland than in the rest of the euro area. According to
Statistics Finland, retail sales continued to grow in the
early months of the year: in the January-February period,
department store trade was up by 2.3 per cent and grocery
trade was up by 4.4 per cent on the same period last year.
Growth in retail sales held up the strong demand for
commercial property during the period under review,
particularly in the Helsinki Metropolitan Area and
Finland's other major cities. Rental demand for retail
premises in good locations remained strong in the January-
March period. Vacancy rates for commercial property
continued to be low in the Helsinki Metropolitan Area,
averaging two per cent.
The differences between commercial and office premises in
terms of demand are substantial as demand and rents for
office premises have not improved, and there has been a
further slight rise in the number of vacant office premises
in the Helsinki Metropolitan Area. The vacancy rate for
office premises in the Helsinki Metropolitan Area was about
six per cent.
CUSTOMERS AND THE TREND IN THE PORTFOLIO OF LEASES
At the end of the period under review, Citycon had 700
lessees, with whom 1,135 leases had been made. The average
duration of the leases was four years. During the period
under review, the company signed a total of 45 leases, 36
of which were for premises in shopping centres and 9 were
for supermarkets and shops.
Of the leases signed for premises in Citycon's shopping
centres, 25 were with new customers and 11 were extensions
signed with old lessees. The total area covered by the
leases signed was 3,304 square metres. The main new leases
negotiated were in Shopping Centre Tikkuri in Vantaa (280
sq.m.) and in Shopping Centre IsoKristiina in Lappeenranta
(260 sq.m.). The financial occupancy rate of the shopping
centres at the end of the period under review was 97.7 per
cent. The leases have an average validity of 3.3 years.
Of the leases signed for premises in Citycon's supermarkets
and shops, 5 were with new customers and 4 were extensions
signed with old lessees. The total area covered by the
leases signed was 2,038 square metres. The financial
occupancy rate of the supermarket and shop premises at the
end of the period under review was 96.9 per cent. The
leases have an average validity of 4.8 years.
RENTAL INCOME
Of Citycon's rental income, roughly 70 per cent comes from
leases signed with the 10 biggest customers. The various
Kesko chains are the most important group of customers.
Other important lessees include international utility goods
chains and companies in banking and finance.
Citycon's net rental income from leasing business during
the period under review totalled EUR 13.5 million (EUR 13.8
million). Shopping centres' share of net rental income was
49.2 per cent (47.8) and that of supermarkets and shops was
50.8 per cent (52.2).
The net rental income of the company's entire property
portfolio was 8.4 per cent (8.5%), calculated according to
the recommendations of the Finnish Institute for Real
Estate Economics. The net yield rate for shopping centres
totalled 7.9 per cent (7.8%) and the net yield rate for
supermarkets and shops was 9.0 per cent (9.2%). The
financial rental occupancy rate of Citycon's business
premises stayed high during the period under review and was
97.3 per cent.
TURNOVER AND OPERATING PROFIT
Citycon's turnover during the period under review was EUR
19.4 million (EUR 19.8 million). Gross rental income
accounted for EUR 18.1 million (EUR 18.5 million) of
turnover. The 13 shopping centres and 15 largest
supermarkets that Citycon owns generate more than 75 per
cent of the income from the company's operations.
The operating profit for the period under review was EUR
10.8 million (EUR 11.8 million) and net profit for the
period was EUR 3.5 million (EUR 4.0 million). The downturn
in profit was due to smaller capital gains from fixed
assets: capital gains during the period under review were
EUR 40.4 thousand (EUR 857.6 thousand).
BALANCE SHEET AND FINANCE
At the end of the period under review, Citycon owned 151
(161) properties, with a combined book value of EUR 646.6
million (EUR 656.6 million). The balance sheet total as at
31 March 2003 was EUR 745.8 million (EUR 751.7 million), of
which liquid cash assets were EUR 13.4 million (EUR 7.3
million).
The Group's financing situation remained good during the
period under review. At the end of the period under review,
Citycon had a total of EUR 388.8 million (EUR 398.6
million) of liabilities. Interest-bearing debt stood at EUR
440.4 million (EUR 446.1 million), of which equity loan was
EUR 68.5 million (EUR 68.5 million). Financing expenses
were EUR 6.0 million (EUR 6.3 million). The average
interest rate for debt was 5.4 per cent (5.5%). The average
borrowing period was approximately 4.7 years (5.7 years)
and the average interest-rate fixing period was 3.8 years
(4.7 years). The Group's equity ratio was 38.4 per cent
(37.6%), and with the equity loan included in shareholders'
equity it was 47.6 per cent (46.7%).
Of Citycon's debt portfolio, 84 per cent are floating rate
loans, of which roughly half has been converted to fixed
rate by means of interest rate swaps and 15 per cent has
been hedged with interest rate caps. The par value of the
interest rate swaps at the end of the period under review
was EUR 199.0 million and that of the interest rate caps
was EUR 53.8 million. The debt management margin, i.e., the
previous twelve months' profit before interest expenses,
taxes and depreciation in proportion to net financing
expenses, was 2.1.
The gross investments of the period under review totalled
EUR 0.2 million (EUR 2.7 million). The investments focused
on major renovations and conversions of buildings.
BUSINESS DEVELOPMENT PROJECTS
Citycon is focusing its property portfolio in Finland's
biggest cities. Through its development and improvement
projects, the company aims to achieve an increasingly
strong position as a provider of the best business premises
and as a long-term partner for customers. As a part of this
trend, Citycon streamlined its business structure at the
beginning of the period under review and separated its
operations into three divisions: Shopping Centres,
Supermarkets and Shops, and the Retail Park Division.
The new Retail Park Division is responsible for the
planning, development and marketing of new retail centres.
This expands Citycon's business operations into
comprehensive development of new retail centres in addition
to owning, leasing and controlling commercial property. The
Retail Park Division also participates in the planning of
extensions and developments of existing shopping centres,
supermarkets and shops.
The main development project of the Shopping Centres
Division currently underway is an extension to the IsoKarhu
shopping centre, in which EUR 10 million will be invested
in the 2003-2004 period. The extension will increase the
leasable area in the shopping centre by almost 40 per cent.
The extension will enhance IsoKarhu's market position,
boost the number of visitors to the shopping centre and its
annual sales, and increase Citycon's net rental income.
Citycon wholly owns the IsoKarhu shopping centre, which is
in the city of Pori. Also during the period under review,
the Shopping Centres Division continued to plan extensions
to the shopping centres Myyrmanni in Vantaa and Lippulaiva
in Espoo, which were started in 2002.
The Supermarkets and Shops Division concentrated on major
renovations of properties and other conversions demanded by
customers. The most important development project was
launched at the Citymarket department store in Pori, where
Citycon has the aim of developing the property jointly with
the lessee to make it better fitted to today's standards
for retailing.
The Retail Park Division continued to investigate the
commercial framework for Retail Park-type shopping centres.
Progress was made in the processes of land acquisition and
zoning, and marketing action was targeted on selected key
customer segments.
During the period under review, Citycon did not carry out
any major acquisitions or sales of the property portfolio.
PERSONNEL
At the end of the period under review, the Citycon Group
has a total of 33 (31) employees, of whom 27 (25) were
employed by the parent company.
ANNUAL GENERAL MEETING
Citycon's annual general meeting of shareholders, held on
20 March 2003, adopted the company's financial statements
for 2002 and granted release from personal liability to the
members of the Board of Directors and the CEO.
Dividend
The annual general meeting decided, in accordance with a
proposal made by the Board of Directors, that a divided for
the financial year 1 Jan.-31 Dec. 2002 of EUR 0.09 per
share will be paid except for the company-held shares, and
that the remainder of the profit will be posted to the
retained earnings account. The dividend was paid to the
shareholders on 1 April 2003.
Board of Directors
The annual general meeting confirmed the number of members
on the Board of Directors as six. The annual general
meeting re-elected the following to the Board of Directors:
Doctor of Science (Econ) Stig-Erik Bergström, MSc (Econ)
Heikki Hyppönen, Executive Vice President, CFO Juhani
Järvi, Director, Rael Estate, Jorma Lehtonen, Councellor of
Industry (Hon)Carl G. Nordman, and Head of Unit Juha
Olkinuora. The Board of Directors elected Stig-Erik
Bergström as its chairman and Jorma Lehtonen as deputy
chairman.
Auditors
The company's auditors elected for the following term of
office were Ari Ahti, Authorised Public Accountant, and
Jaakko Nyman, APA, with the APA firm KPMG Wideri Oy Ab as
deputy auditor.
Authorisations
The annual general meeting granted the Board of Directors
an authorisation to decide, within one year of the AGM, on
increasing the share capital by means of one or more new
issues of shares, in such a way that the total number of
shares subscribed in the new issue is no more than
21,085,106 new shares in the company with a par value of
EUR 1.35 and the company's share capital may be increased
by a maximum of EUR 28,464,893.10. The authorisation
includes an entitlement to waive existing shareholders'
preemption rights.
The annual general meeting also granted the Board of
Directors an authorisation to decide, within one year of
the AGM, on buying back and surrendering company shares.
After the buyback, the maximum number of shares that may be
bought back will have a combined par value, combined with
the par value of the shares already held by the company,
equivalent to five per cent of the company's share capital
and of the voting rights conferred by all the shares. The
authorisation therefore gives entitlement to buy back a
maximum of 1,414,892 shares. The authorisation to surrender
company shares covers all the company shares acquired on
the basis of the entitlement granted to the Board of
Directors as well as all other company shares already held
by the company. Company shares may be bought back and
surrendered, for example, as consideration in prospective
property or share transactions or for the acquisition of
other assets of importance to the company's business.
The proposals of the Board of Directors approved by the
annual general meeting are shown in their entirety in the
stock exchange release issued on 27 February 2003. At the
end of the period under review, no part of the
authorisations had been exercised.
CITYCON SHARES AND OWNERSHIP
Citycon's share capital at the end of the period under
review was EUR 142,800,108.30 and the number of shares was
105,777,858. The par value of a share is EUR 1.35.
During the period under review, the total for Citycon
shares traded on the Helsinki Exchanges was 1.1 million
shares and EUR 1.2 million. The high price quoted during
the period was EUR 1.16 and the low was EUR 1.00. The
weighted average price for the period was EUR 1.12 and the
last traded price on the last trading day of the period (31
March 2003) was EUR 1.01. The company's market
capitalisation at the end of the period under review was
EUR 102.9 million, when company-held shares are deducted
from the total.
There were no major changes in the ownership of Citycon
during the first quarter of the year. At the end of the
period under review, the company had a total of 1,165
shareholders. On 31 March 2003, the ten biggest
shareholders held a total of 82.4 per cent of the company's
shares and voting rights. The biggest shareholders were
Nordea Bank Finland Plc, Sampo Life Insurance Company
Limited, Kesko Corporation together with its subsidiaries
and associated companies, and Etra Invest Oy Ab; in total,
these held 78.0 per cent of the company's shares and voting
rights. The number of nominee-registered and foreign-held
shares was 4,036,147, being 3.9 per cent of the shares and
voting rights.
Citycon Oyj held 3,874,000 of its own shares at the end of
the period under review. The total purchase price of the
shares was EUR 4,675,812.76, with the lowest price per
share being EUR 1.10 and the highest EUR 1.35. The company-
held shares represent 3.7 per cent of all shares and voting
rights. The book value of company-held Citycon shares on 31
March 2003 was EUR 3.9 million. The shares have been valued
at the closing price of the period under review, which is
lower than the original acquisition cost.
OUTLOOK FOR THE FUTURE
Citycon forecasts that demand, occupancy rates and rental
levels for commercial property will remain good in the
Helsinki Metropolitan Area and Finland's other major
cities. The company estimates that the turnover and net
profit for the whole year will be on a par with the figures
for 2002.
Helsinki, 8 May 2003
Citycon Oyj
Board of Directors
EUR 1000
1-3 2003 1-3 2002 1-12 2002
CONSOLIDATED INCOME STATEMENT
Turnover 19,386 19,808 78,950
Other income 40 884 735
Operating profit 10,753 11,753 43,895
Financing expenses (net) -5,941 -6,184 -24,715
Profit before extraordinary
items and taxes 4,812 5,568 19,180
Net profit for the period
under review 3,489 3,972 13,801
CONSOLIDATED BALANCE SHEET
Assets
Fixed assets
Intangible assets 4,074 3,692 4,036
Tangible assets 623,963 631,793 625,508
Financial assets 97,256 100,135 97,710
Company shares 3,913 3,951 4,261
Fixed assets, total 729,206 739,571 731,515
Current assets
Debtors 3,241 4,816 3,088
Cash in hand and at bank 13,382 7,260 11,730
Current assets, total 16,623 12,077 14,818
Assets, total 745,829 751,648 746,333
Liabilities and
shareholders' equity
Shareholders' equity 198,016 193,903 204,045
Equity loan 68,452 68,452 68,452
Minority interest 90,542 90,687 90,521
Liabilities 388,819 398,605 383,315
Long-term 371,781 355,673 371,769
Short-term 17,037 42,932 11,545
Liabilities and
shareholders' equity, total 745,829 751,648 746,333
Gross investments in balance
sheet fixed assets 157 2,737 5,854
as % of turnover 0,8 13,8 7,4
Planned depreciation and
value adjustments 1,625 1,719 7,620
Employees, average 32 30 33
CASH FLOW STATEMENT
CASH FLOW FROM OPERATING ACTIVITIES
1-3 2003 1-12 2002
Profit/loss before
extraordinary items 4,812 19,180
Adjustments:
Planned depreciation 1,625 7,620
Other income and expenses not
involving a payment 92 283
Financing income and expenses 5,941 24,715
Other adjustments -34 -448
Cash flow before change in
working capital 12,435 51,350
Change in working capital:
Increase(-)/decrease (+) in short-term
non-interest-bearing receivables -257 19
Increase(-)/decrease (+) in short-term
interest-bearing debts 688 -13
Cash flow from operating activities
before financing items and taxes 12,867 51,356
Interest paid and payments for other financing
expenses of business operations -1,388 -23,814
Dividends received from business
operations 0 18
Interest received from business
operations 98 228
Direct taxes paid -1,020 -3,626
Cash flow before extraordinary items 10,557 24,162
Cash flow from operating activities A) 10,557 24,162
CASH FLOW FROM INVESTMENTS:
Investments in tangible
and intangible assets -190 -1,943
Proceeds from the sale of tangible
and intangible assets 9 0
Investments in other placements 0 -9
Repayments of outstanding loans 0 3
Shares in subsidiaries purchased 0 -5,850
Shares in subsidiaries sold 0 1,215
Shares in associated companies purchased 0 -1,320
Shares in associated companies sold 404 5,192
Interest received from investments 1 59
Cash flow from investments B) 223 -2,654
CASH FLOW FROM FINANCING:
Fund payments by minority 10 78
Withdrawals of short-term loans 5 17
Repayments of short-term loans 0 -7,105
Withdrawals of long-term loans 0 3,924
Repayments of long-term loans -33 -4,311
Dividend paid and other
distribution of profit -9,112 -8,152
Cash flow from financing (C) -9,129 -15,548
Change in cash assets (A+B+C)
increase (+)/decrease (-) 1,652 5,960
Cash assets at start of
accounting period 11,730 5,770
Cash assets at end of
accounting period 13,382 11,730
FINANCIAL INDICATORS 1-3 2003 1-3 2002 1-12 2002
EPS, EUR 0.03 0.04 0.14
Equity per share, EUR 1.91 1.86 1.96
Return on equity (ROE), % 4.9 5.7 4.8
ROE excluding minority
interest, % 7.2 8.4 7.1
Return on investment (ROI), % 6.0 6.5 6.0
Equity ratio, % 38,4 37,6 39,1
Equity ratio, % (equity
loan counted
as shareholders' equity) 47.6 46.7 48.4
CONSOLIDATED CONTINGENT LIABILITIES
Shares pledged
(book value) 96,927 99,383 96,506
Shares in subsidiaries 453,808
Other pledges given 1,041 2,806 633
Mortgages on land
and buildings 323,440 11,951 323,440
Interest rate swaps 2002
(2-year fixed interest)
par value of underlying
instrument 50,000 50,000
market value of underlying
instrument 1,667 1,491
Interest rate swaps 2002
(7-year fixed interest)
par value of underlying
instrument 66,000 66,000
market value of underlying
instrument 6,098 5,111
Interest rate swaps 2002
(8-year fixed interest)
par value of underlying
instrument 83,000 83,000
market value of underlying
instrument 6,549 5,418
Interest rate option 1998
(5-year interest cap)
par value of underlying
instrument 78,712
market value of underlying
instrument 0
Interest rate swaps 2002
(2-year fixed interest)
par value of underlying
instrument 53,800 53,800
market value of underlying
instrument 0 1
Derivatives have been valued at the market price on the
date of closing the books. The calculations comply with the
Finnish Financial Supervision Authority's requirements for
credit institutions on the valuation of derivatives in
financial statements. The derivatives have been used to
hedge the loans against increases in interest rates.
The company uses derivatives exclusively to reduce or
eliminate risks in the balance sheet.
COMPANY SHARES 1-3 2003 1-3 2002 1-12 2002
Acquired between 25 November 1999 and 31 March 2003
Number of shares, 1000 3,874 3,874 3,874
Total par value 5,230 5,212 5,230
Share of shareholders'
equity, % 3.7 3.7 3.7
Share of voting rights, % 3.7 3.7 3.7
Consideration paid 4,676 4,676 4,676
Company shares have been valued at the closing price on 31
March 2003.
Other income includes capital gains on fixed assets, which
were previously shown as part of turnover. The figures for
the comparison year have been adjusted accordingly.
The debts for 2002 1-3 includes unpaid dividend from 31
March 2002, being EUR 8.2 million.
The taxes used are taxes commensurate with the net profit
for the period under review.
The figures are unaudited.
FINANCIAL REPORTING
Citycon Oyj will publish it other interim reports for 2003
as follows:
January-June 28 Aug. 2003
January-September 30 Oct. 2003
For further investors' information, see Citycon's website
www.citycon.fi.
Further information:
CEO Petri Olkinuora
Tel. +358 9 680 36 738 or + 358 400 333 256
petri.olkinuora@citycon.fi
Distribution:
Helsinki Exchanges
Main media
www.citycon.fi