CITYCON'S INTERIM REPORT 1 JANUARY 31 MARCH 2004
- Profit before extraordinary items and taxes rose to EUR 5.7
million (EUR 4.8 million)
- Turnover increased to EUR 21.9 million (EUR 19.4 million)
- Earnings per share increased to EUR 0.04 (EUR 0.03)
- The acquisition of the Torikeskus shopping centre in Seinäjoki
boosted Citycon's shopping centres to 16
- Demand for retail premises and occupancy rates continued to be
strong during the period
KEY INDICATORS
1-3 2004 1-3 2003 1-12 2003
Turnover, EUR million 21.9 19.4 78.1
Operating profit,
EUR million 12.2 10.8 43.3
% of turnover 55.7 55.5 55.5
Profit before extraordinary
items and taxes,
EUR million 5.7 4.8 19.1
Profit , EUR million 4.1 3.5 14.3
Earnings per share, EUR 0.04 0.03 0.14
Earnings per share,
diluted, EUR 0.04 0.03 0.14
Equity per share, EUR 1.91 1.91 2.01
P/E (price/earnings) ratio 13 7 11
Return on equity (ROE), % 8.4 7.2 7.1
Return on equity including
minority interest,% 5.6 4.9 4.9
Return on investment (ROI), % 6.0 6.0 5.8
Equity ratio, % 43.8 47.6 44.9
Equity ratio with capital loan
not counted as part of
shareholder's equity, % 35.6 38.4 36.7
Net rental income, % 8.4 8.4 8.5
Occupancy rate, % 97.1 97.3 97.3
Personnel at the end of period 41 33 34
Trend in the business environment
According to Statistics Finland, the value of retail sales in
January 2004 was 6.8 per cent and in February 5.6 per cent higher
than on the same period last year. Department store trade grew by
8.3 per cent in January and 6.2 per cent in February. Groceries
trade grew by 3.6 per cent in January and 4.4 per cent in February
compared to the figures on the same period last year.
Strong retail sales kept up healthy demand for retail premises and
vacancy rates remained low, particularly in the Helsinki
Metropolitan Area and Finland's other major cities.
Property portfolio
The book value of the property portfolio owned by Citycon was EUR
730.7 million at the end of the period (EUR 646.6 million).
Citycon owned 16 shopping centres, which comprised 58.6 per cent
of the company's property portfolio, and 132 supermarket and shop
properties, which comprised 41.4 per cent of the company's
property portfolio. At the end of the period 46.8 per cent were in
the Helsinki Metropolitan Area, 35.4 per cent were in other major
Finnish cities and 17.8 per cent were in other parts of Finland.
Customers, the trend in the portfolio of leases, and the occupancy
rate
Citycon's customers are Finnish and international speciality and
grocery retail chains, supermarkets and department stores, and
independent dealers who are not part of chains. There were no
significant changes in the customer structure.
During the period, the company signed a total of 98 leases. The
acquisition of Torikeskus in Seinäjoki meant Citycon gained 79 new
leases. At the end of the period, Citycon had a total of 1,438
leases with roughly 830 lessees. The average length of the leases
was 3.7 years. The occupancy rate for Citycon's entire property
portfolio was 97.1 per cent (97.3%).
TREND IN PORTFOLIO OF LEASES BY DIVISION
1-3 2004 1-3 2003 1-12 2003
Shopping centres
Number of leases signed during
the period 73 36 151
Total area of leases signed, sg.m. 11,039 3,304 16,399
Ooccupancy rate at the end of
period, % 97.5 97.7 97.6
Average lenght of lease portfolio
at the end of period, years 2.9 3.3 3.0
Supermarkets and shops
Number of leases signed during
the period 25 9 51
Total area of leases signed, sg.m. 13,564 2,038 9,806
Ooccupancy rate at the end of
period, % 96.9 96.9 96.8
Average lenght of lease portfolio
at the end of period, years 4.6 4.8 4.4
Rental income
The net rental income of Citycon's leasing business during the
period totalled EUR 15.2 million (EUR 13.8 million). The average
net rental yield of the properties owned by the company was 8.4
per cent.
Shopping centres accounted for 55.1 per cent of the net rental
income (49.2 %) and supermarkets and shops accounted for 44.9 per
cent (50.8 %). Of the income, roughly 47.5 per cent was generated
by properties in the Helsinki Metropolitan Area, 34.4 per cent by
properties in other major Finnish cities, and roughly 18.1 per
cent by other properties in Finland.
TREND IN RENTAL INCOME BY DIVISION
1-9 2003 1-12 2002 1-12 2003
Shopping centres
Gross rental income,
EUR million 11.4 8.8 36.5
Net rental income,
EUR million 8.4 6.7 27.5
Net rental yield, % *7.9 7.9 *8.1
*Figures include uncompleted projects
Supermarkets and shops
Gross rental income, EUR million 9.2 9.2 36.5
Net rental income, EUR million 6.8 6.9 27.2
Net rental yield, % 9,1 9,0 8.9
Investments and development projects
Citycon's gross investments amounted to EUR 9.4 million (EUR 0.2
million). Gross investments include the acquisition of a new
shopping centre, Torikeskus in Seinäjoki, for EUR 7.1 million, and
EUR 2.3 million for business development projects.
The Shopping Centres Division's property portfolio grew during the
period with Torikeskus in Seinäjoki, one of the foremost shopping
centres in the Southern Ostrobothnia region. Torikeskus became
owned by Citycon on 1 March 2004. The net rental yield of
Torikeskus on the acquisition price at the date of the transaction
was 8.6 per cent.
The Shopping Centres Division's biggest investments under way were
extensions and conversions at the shopping centres IsoKarhu in
Pori and Jyväskeskus in Jyväskylä. The combined total of the
investments is roughly EUR 12.0 million. The projects are
scheduled for completion in the third quarter. The investments
will begin to have a positive effect on income in the fourth
quarter. The shopping Centres Division also continued the planning
for extension at the Myyrmanni shopping centre in Vantaa and the
Lippulaiva shopping centre in Espoo.
The Supermarkets and Shops Division did not make any significant
investments during the period.
The Property Development Division continued the planning of
development projects for Citycon's retail sites together with the
other divisions as well as investigating the commercial framework
for new shopping centres in the Helsinki Metropolitan Area and in
the Tampere and Turku market zones. Citycon deployed effort in the
processes of land acquisition and city planning according to plan
during the period.
Divestments
During the period, Citycon sold one property in accordance with
its strategy. The sale did not have a significant impact on
profit.
Turnover and profit
During the period, Citycon's turnover increased to EUR 21.9
million (EUR 19.4 million). The increase was largely due to the
acquisitions of shopping centres at the end of 2003. Gross rental
income accounted for 94.1 per cent of turnover (93.3 %).
Operating profit increased to EUR 12.2 million (EUR 10.8 million)
due to the acquisitions in the end of 2003.
Balance sheet and financing
The Group's financing situation remained good during the period.
The balance sheet total was EUR 836.4 million (EUR 745.8 million),
of which cash and cash equivalents were EUR 7.2 million (EUR 13.4
million).
At the end of the period, Citycon had a total of EUR 467.3 million
(EUR 388.8 million) of liabilities. Interest-bearing liabilities
increased by EUR 4.5 million during the period to EUR 516.5
million (EUR 440.4 million), when capital loan EUR 68.5 million
(EUR 68.5 million) was included in the figure. The average
interest rate for interest-bearing liabilities during the period
was 5.1 per cent (5.4 %). The average loan period, weighted
according to the principals of the loans, was roughly 4.3 years
(5.3 years), and the average interest-rate fixing period was 4.2
years (3.8 years).
Citycon's interest-bearing liabilities included 86.7 per cent of
floating rate loans, of which 76.8 per cent has been converted to
a fixed rate by means of interest rate swaps and 12.1 per cent has
been hedged with interest rate caps. The par value of the interest
rate swaps at the end of the period was EUR 342.2 million and that
of the interest rate caps was EUR 53.8 million. The interest
coverage ratio, the previous twelve months' profit before interest
expenses, taxes and depreciation to net financial expenses was
2.2. The Group's equity ratio was 43.8 per cent (47.6 %). If the
capital loan is not included in shareholders' equity, the equity
ratio was 35.6 per cent (38.4 %).
Financial income and expenses rose to EUR 6.5 million (EUR 5.9
million).
Citycon and IFRS
Citycon Oyj is to go over to reporting in accordance with IAS/IFRS
standards (International Financial Reporting Standards) in its
interim reports and financial statements in 2005. The company made
decisions on the main optional accounting principles in IFRS at
the beginning of 2004 and examined the effect of adoption IFRS on
its accounting principles in its financial statements bulletin
released on 12 February 2004.
Personnel
At the end of the period, the Citycon Group had a total of 41 (33)
employees, of whom 32 (27) were employed by the parent company.
Shares and shareholdings
Citycon's share capital as at 31 March 2004 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.
Traded volume and price
During the period, the total for Citycon shares traded on the
Helsinki Exchanges was 78.8 million shares and EUR 146.7 million.
The high price quoted during the period was EUR 2.05 and the low
was EUR 1.52. The weighted average price for the period was EUR
1.86 and the closing price of the period was EUR 2.05. The
company's market capitalisation at the end of the period was EUR
208.9 million (EUR 102.9 million), after deduction the portion of
treasury shares from the total.
Shareholders
During the period Gazit-Globe (1982) Ltd announced on 3 March 2004
that it has increased its holdings in the company's shares and
voting rights to 25.43 per cent.
At the end of the period, Citycon had a total of 1,351 registered
shareholders. The registered shareholders held 56.0 million
shares, so they had 53 per cent of the shares and voting rights.
Nominee-registered shareholders had 49.8 million shares, which is
47 per cent of the number of shares and voting rights.
Treasury shares, the Board of Directors and the management share
holdings
The number of treasury shares remained the same during the period,
at 3,874,000 shares, which is the equivalent of 3.7 per cent of
the company's total shares and voting rights. The total purchase
price of the shares was EUR 4.7 million. The book value of
treasury shares on 31 March 2004 corresponded to their purchase
price, which was lower than their market value at the end of
period. The effect of treasury shares has been deducted for the
calculation of the key figures.
The members of Citycon Oyj's Board of Directors held a total of
66,453 shares on 31 March 2004, which was 0.06 per cent of the
company's total shares and voting rights. Citycon's CEO held
100,000 shares and the other members of the Corporate Management
Committee held a total of 3,000 shares on 31 March 2004.
Annual General Meeting
Citycon's Annual General Meeting of 15 March 2004 adopted the
company's financial statements for 2003 and granted release from
personal liability to the company's Board of Directors and CEO.
The Board's proposals passed by the AGM can be seen in their
entirety in the Citycon stock exchange bulletin issued on 12
February 2004.
Authorisations and warrants
The annual general meeting granted the Board of Directors an
authorisation, within one year of the AGM, to decide 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 per share 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' pre-emption rights.
The annual general meeting granted the Board of Directors an
authorisation to decide, within one year of the AGM, on buying
back company shares. 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. Company shares may be bought
back, for example, to be used as consideration in prospective
property or share transactions or for the acquisition of other
assets of importance to the company's business.
The AGM granted the Board of Directors an authorisation to decide,
within one year of the AGM, to decide on the surrender of all the
shares acquired on the basis of the authorisation granted to the
Board and other treasury shares to be used, 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 AGM decided in accordance with a proposal by the Board on
issuing warrants to personnel of Citycon Oyj and of its
subsidiaries and to a wholly owned subsidiary of Citycon Oyj.
Existing shareholders' pre-emption rights may be waived as the
warrants are intended to be part of the Group's personnel
incentive and commitment system. The number of warrants is
3,900,000. Each option will confer the right to subscribe one (1)
Citycon share. Citycon Oyj's share capital may, as a result of the
share subscriptions from the 2004 share options, increase by a
maximum total of EUR 5,265,000 and the number of shares may rise
by a maximum of 3,900,000 new shares, which is no more than 3.8
per cent of the company's total number of shares and voting rights
when treasury shares have been deducted.
At the end of the review period, no part of the authorisations had
been utilised.
Board of Directors and auditors
The annual general meeting decided to re-elect the following to
the Board of Directors: Stig-Erik Bergström and Carl G. Nordman,
and to elect as new members Executive Vice President Amir Gal,
Head of Real Estate Investments Timo Kankuri, Managing Director
Raimo Korpinen, MSc (Eng), MBA Tuomo Lähdesmäki, and CEO Claes
Ottosson. The Board of Directors elected Stig-Erik Bergström as
chairman and Tuomo Lähdesmäki as deputy chairman.
Ari Ahti, Authorised Public Accountant, and Jaakko Nyman, APA,
were re-elected as the company's auditors with the APA firm KPMG
Wideri Oy Ab as deputy auditor.
Dividend
The AGM decided, in accordance with a proposal from the Board of
Directors, to pay dividend on shares in non-company ownership for
the financial year 1 January 31 December 2003 in the amount of
EUR 0.14 per share. The dividend payment's date of record was 18
March 2004 and 25 March 2004 was the payment date.
Events after the end of the review period
Gazit-Globe (1982) Ltd announced on 6 April 2004 that it had
increased its holdings of the company's shares and voting rights
to 33.4 per cent.
Citycon was selected for international property investment
companies' indexes as of 1 April 2004. EPRA/NAREIT Global Real
Estate Index and GPR 250 Property Securities Index serve as
comparative indexes for international investors.
Citycon's 1999 A/B warrants were included on the main list of the
Helsinki Exchanges since 23 April 2004.
Outlook for the future
Citycon forecasts that demand, occupancy rates and rents for its
retail premises will remain good in the Helsinki Metropolitan Area
and Finland's major cities. Citycon estimates that turnover and
profit for the current year will grow due to favourable market
view combined with the shopping centres acquired at the end of
2003 and the beginning of 2004.
Helsinki, 27 April 2004
Citycon Oyj
Board of Directors
CONSOLIDATED INCOME STATEMENT, EUR million
1-3 2004 1-3 2003 1-12 2003
Turnover 21.9 19.4 78.1
Other income 0.0 0.0 -0.5
Expenses
Materials and services 5.8 4.7 18.7
Salaries and social expenses 0.7 0.7 2.6
Depreciation and impairments 1.8 1.6 6.5
Rents and maintenance charges 0.8 1.0 4.1
Share of associated companies'
profit 0.1 0.1 0.4
Other expenses of business
operations 0.5 0.6 1.9
Expenses, total 9.7 8.7 34.3
Operating profit 12.2 10.8 43.3
Financial income and
expenses -6.5 -5.9 -24.2
Profit before extraordinary
items and taxes 5.7 4.8 19.1
Taxes -1.6 -1.3 -4.9
Profit 4.1 3.5 14.3
CONSOLIDATED BALANCE SHEET, EUR million
Assets
Non-current assets
Intangible assets 4.7 4.1 4.5
Tangible assets 739.4 624.0 729.1
Investments
Holdings in associated companies 55.4 74.9 55.5
Treasury shares 4.7 3.9 4.7
Other investments 21.4 22.3 23.1
Investments, total 81.5 101.2 83.3
Non-current assets, total 825.6 729.2 816.9
Current assets
Short-term receivables 3.6 3.2 3.4
Cash and cash equivalents 7.2 13.4 15.1
Current assets, total 10.8 16.6 18.5
Assets, total 836.4 745.8 835.3
Liabilities and shareholders' equity
Shareholders' equity
Share capital 142.8 142.8 142.8
Share premium fund 28.3 28.3 28,3
Treasury share reserve 4.7 3.9 4.7
Other funds 6.6 6.6 6.6
Retained profits 13.0 13.0 13.0
Profit 4.1 3.5 14.3
Capital loan 68.5 68.5 68.5
Shareholders' equity, total 267.8 266.5 278.0
Minority interest 101.2 90.5 99.8
Liabilities
Long-term liabilities 433.2 371.8 428.3
Short-term liabilities 34.1 17.0 29.2
Liabilities, total 467.3 388.8 457.5
Liabilities and shareholders'
equity, total 836.4 745.8 835.3
Gross investment in non-
current assets 9.4 0.2 84.2
% of turnover 42.9 0,8 107.9
Depreciations and
impairments 1.8 1.6 6.5
Personnel, average 39 32 33
CASH FLOW STATEMENT, EUR million
1-3 2004 1-3 2003 1-12 2003
Operating activities
Profit before
extraordinary items 5.7 4.8 19.1
Adjustments:
Depreciation 1.8 1.6 6.5
Financial income and expenses 6.5 5.9 24.2
Other adjustments 0.1 0.1 0.9
Cash flow before change in
working capital 14.2 12.4 50.8
Change in working capital 0.1 0.4 0.0
Cash flow from operating
activities before financial
items and taxes 14.2 12.9 50.7
Interest paid and payments for
other financial expenses of
operating activities -1.4 -1.4 -24.1
Dividend and interest received
from business operations 0.1 0.1 0.5
Taxes paid -1.1 -1.0 -4.7
Cash flow from operating
activities 11.9 10.6 22.4
Investing actitivies
Investments in tangible
and intangible assets -3.1 -0.2 -4.9
Shares in subsidiaries purchased -7.5 -77.1
Shares in subsidiaries sold 0.1 1.4
Shares in associated companies
purchased -0.8
Shares in associated companies sold 0.4 1.6
Other items 0.1
Cash flow from investing
activities -10.5 0.2 -79.7
Financial activities
Withdrawals of short-term loans 0.2 2.1
Withdrawals of long-term loans 4.9 67.9
Repayments of long-term loans -0.5 -0.2
Dividend paid and other
distribution of profit -13.7 -9.1 -9.2
Cash flow from financial
activities -9.2 -9.1 60.6
Increase in cash and cash
Equivalents -7.9 1.7 3.3
Cash and cash equivalents at the
beginning of period 15.1 11.7 11.7
Cash and cash equivalents
at the end of period 7.2 13.4 15.1
KEY FINANCIAL FIGURES 1-3 2004 1-3 2003 1-12 2003
Earnings per share, EUR 0.04 0.03 0.14
Equity per share, EUR 1.91 1.91 2.01
Return on equity (ROE), % 8.4 7.2 7.1
Return on equity including
minority interest, % 5.6 4.9 4.9
Return on investment(ROI), % 6.0 6.0 5.8
Equity ratio, % 43.8 47.6 44.9
Equity ratio with capital
loan not counted as
part of shareholders' equity, % 35.6 38.4 36.7
TREASURY SHARES 1-3 2004 1-3 2003 1-12 2003
Acquired between
25 November 1999 and 31 March 2004
Number of shares, million 3.9 3.9 3.9
Total par value, EUR million 5.2 5.2 5.2
Share of shareholders'
equity, % 3.7 3.7 3.7
Share of voting rights, % 3.7 3.7 3.7
Acquisition cost, EUR million 4.7 4.7 4.7
The book value of treasury shares on 31 March 2004 corresponded to
the purchase price, which was lower than market value at the end
of period. The value/number of treasury shares are deducted from
shareholders' equity and the number of shares for the calculation
of the key figures.
CONSOLIDATED CONTINGENT LIABILITIES, EUR million
Mortgages on land
and buildings 338.4 323.4 338.4
Group company shares pledged 85,3 78,4
Other pledged shares 76.7 96.9 76.7
Other pledges given 0,1 1.0 3.2
GROUP'S DERIVATIVES, EUR million
31 March 2004 31 March 2003 31 Dec 2003
Par values Par values Par values
Interest-rate derivatives
Interest-rate swaps
Maturing in 2004 50.0
Maturing in 2007 78.2 78.2
Maturing in 2008 50.0 50.0
Maturing in 2009 131.0 66.0 91.0
Maturing in 2010 83.0 83.0 83.0
Total 342.2 199.0 302.2
Interest-rate options
Interest-rate caps purchased
Maturing in 2004 53.8 53.8 53.8
Total 53.8 53.8 53.8
GROUP'S DERIVATIVES, EUR million
31 March 2004 31 March 2003 31 Dec 2003
Fair values Fair values Fair values
Interest-rate derivatives
Interest-rate swaps
Maturing in 2004 -1.7
Maturing in 2007 -0.3 1.1
Maturing in 2008 -2.6 -1.3
Maturing in 2009 -8.5 -6.1 -5.4
Maturing in 2010 -7.7 -6.5 -5.8
Total -19.2 -14.3 -11.4
Interest-rate options
Interest-rate caps purchased
Maturing in 2004 0.0 0.0 0.0
Total 0.0 0.0 0.0
The fair values for derivatives describe their value if all
agreements had been closed at the market price of the end of
period.
Derivatives have been used for hedging the loan portfolio.
The accrued interest for the period included in the derivatives'
fair values, being EUR 1.7 million (EUR 1.0 million) has been
booked in interest expenses.
The taxes correspond to the profit of the period.
The figures are unaudited.
ACCOUNTING PRINCIPLES
Accounting principles applied in the annual financial statements
as of 31 December 2003 are applied in these financial statements.
FINANCIAL REPORTING
Citycon Oyj will publish its other interim reports for 2004
as follows:
January-June 11 August 2004
January-September 21 October 2004
Further information for investors can be seen on Citycon's
website, www.citycon.fi
Further information
CEO Petri Olkinuora
Tel. +358 9 6803 6738 or +358 400 333 256
petri.olkinuora@citycon.fi
CFO Pirkko Salminen
Tel. +358 9 6803 6730 or +358 50 3022 485
pirkko.salminen@citycon.fi
Distribution
Helsinki Exchanges
Main media
www.citycon.fi