CITYCON'S INTERIM REPORT, 1 JAN. 30 JUNE 2003
- Profit before extraordinary items and taxes was EUR 9.9
million (EUR 10.4 million). This figure includes EUR 0.1
million in losses on sales of fixed assets (capital gains
EUR 0.4 million).
- Turnover was EUR 38.7 million (EUR 39.8 million).
- Earnings per share were EUR 0.07 (EUR 0.07).
- Demand for commercial premises and occupancy rates
continued to be strong.
KEY INDICATORS
1-6 2003 1-6 2002 1-12 2002
Turnover, EUR million 38.7 39.8 79.0
Operating profit,
EUR million 21.6 22.8 43.9
% of turnover 55.8 57.3 56.6
Profit before extraordinary
Items and taxes, EUR million 9.9 10.4 19.2
% of turnover 25.5 26.1 24.2
Number of employees
30 June, 2003 36 33 33
Earnings per share, EUR 0.07 0.07 0.14
Equity per share, EUR 1.94 1.90 1.96
Return on equity, % 5.0 5.3 4.8
Return on equity excluding
minority interest, % 7.3 7.8 7.1
Return on investment, % 6.0 6.2 6.0
Equity ratio, % 48,3 47,3 48,4
Equity ratio with loan
not counted as part of
shareholder's equity, % 39,1 38,1 39,1
Net rental income of
property portfolio, % 8.4 8.6 8.6
Financial occupancy rate
of commercial property, % 97.1 98.0 97.8
TREND IN THE BUSINESS ENVIRONMENT
Private consumer demand in Finland remained at a higher
level than in the rest of the euro area. Although growth in
retail sales has slowed since last year, growth was still
strong during the period under review: according to
Statistics Finland, in the January-June period department
store trade was up by 5.1 per cent and grocery trade was up
by 3.7 per cent on the same period last year.
The favourable trend in retail sales held up the strong
demand for commercial property, particularly in the
Helsinki Metropolitan Area and Finland's other major
cities. Rental demand for retail premises in central
locations remained strong during the period under review.
Vacancy rates for commercial property in the Helsinki
Metropolitan Area held steady at the same rate as in the
early months of the year.
The differences between commercial and office premises in
terms of demand continued to be substantial during the
period under review. Demand and rents for office premises
have not improved, and there is still a great deal of
vacant office space in the Helsinki Metropolitan Area.
CUSTOMERS AND THE TREND IN THE PORTFOLIO OF LEASES
There were no significant changes in Citycon's customer
structure and its portfolio of leases during the period
under review. At the end of the period under review Citycon
had 700 lessees, with whom 1,124 leases had been signed.
The average duration of the leases was 3.8 years. During
the period under review, the company signed a total of 84
leases, 62 of which were for premises in shopping centres
and 22 were for supermarkets and shops.
Of the leases signed for premises in Citycon's shopping
centres, 41 were with new customers and 21 were extensions
signed with old lessees. The total area covered by the
leases signed was 7,076 square metres. The main new leases
negotiated were in Tampereen Koskikeskus (750 square
metres) and Rovaniemen Sampotalo (544 sq.m.). The financial
occupancy rate of the shopping centres at the end of the
period under review continued to be strong at 97.1 per
cent. The leases have an average validity of 3.1 years.
Of the leases signed for premises in Citycon's supermarkets
and shops, 14 were with new customers and 8 were extensions
signed with old lessees. The total area covered by the
leases signed was 5,308 square metres. The financial
occupancy rate of the supermarket and shop premises
continued to be good, and at the end of the period under
review it was 96.6 per cent. The leases have an average
validity of 4.6 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 27.1 million (EUR 28.0
million). Shopping centres' share of net rental income was
49.6 per cent (49.3%) and that of supermarkets and shops
was 50.4 per cent (50.7%).
The net rental income of the company's entire property
portfolio was 8.4 per cent (8.6%), calculated according to
the recommendations of the Finnish Institute for Real
Estate Economics. The net yield rate for shopping centres
held steady at the rate in the early months of the year and
totalled 7.9 per cent (8.1%). The net yield rate for
supermarkets and shops also held steady at 8.9 per cent
(9.2%). The financial rental occupancy rate of Citycon's
business premises was 97.1 per cent (98.0%).
TURNOVER AND OPERATING PROFIT
Citycon's turnover during the period under review was EUR
38.7 million (EUR 39.8 million). Gross rental income
accounted for EUR 36.1 million (EUR 37,1 million) of
turnover. The 13 shopping centres and the 15 largest
supermarkets that Citycon owns generated more than 75 per
cent of the income from the company's operations.
The operating profit for the period under review was EUR
21.6 million (EUR 22.8 million) and net profit for the
period was EUR 7.1 million (EUR 7.4 million). The net
profit for the period under review includes EUR 0.1 million
in losses on sales of fixed assets (capital gains EUR 0.4
million).
BALANCE SHEET AND FINANCE
At the end of the period under review, the book value of
Citycon's property portfolio was EUR 644.2 million. The
number of properties was 149, of which 13 were shopping
centres and 136 were supermarket or shop premises. The
balance sheet total as at 30 June 2003 was EUR 742.7
million (EUR 748.7 million), of which liquid cash assets
were EUR 12.2 million (EUR 9.2 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 381.7 million (EUR 392.3
million) of liabilities. Interest-bearing debt stood at EUR
440.3 million (EUR 446.6 million), of which equity loan was
EUR 68.5 million (EUR 68.5 million). Financing expenses
were down to EUR 12.0 million (EUR 12.6 million). The
average interest rate for debt was 5.4 per cent (5.5%). The
average borrowing period was approximately 4.4 years (5.5
years) and the average interest-rate fixing period was 4.4
years (4.3 years). The Group's equity ratio was 48.3 per
cent (47.3%). With the equity loan not included in
shareholders' equity, the equity ratio was 39.1 per cent
(38.1%).
Of Citycon's debt portfolio, 84 per cent was floating rate
loans, of which 75 per cent 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 277 million and that of the interest rate caps was
EUR 54 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.
Citycon's gross investments of the period under review
totalled EUR 0.9 million (EUR 4.9 million). The investments
focused on general major renovations and conversions of
buildings as well as planning for development projects.
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. Citycon has
separated its operations into three divisions on the basis
of customer relationships: Shopping Centres, Supermarkets
and Shops, and the Retail Park Division.
The Retail Park Division, which was founded at the
beginning of the year, is responsible for the planning,
development and marketing of new retail centres. The Retail
Park Division also participates in the planning of
extensions and developments of existing shopping centres,
supermarkets and shops.
During the period under review, the Retail Park Division
continued to investigate 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 zoning according
to plan during the period under review.
The Shopping Centres Division continued the implementation
of a project for an extension to the IsoKarhu shopping
centre, which was started in the first quarter of the year.
The project advanced to the construction stage and it is
scheduled for completion in August 2004. Demand for the new
premises for lease has been brisk and 75 per cent of them
have already been leased out. The extension will enhance
IsoKarhu's market position, boost the number of visitors to
the shopping centre and its annual sales. 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 launched a development
project for the Citymarket in Pori in partnership with the
lessee. Citycon has the aim of developing the property
jointly with the lessee to make it better fitted to today's
standards for retailing. Also during the period under
review, the division carried out major renovations on
properties and other conversion work required for the
customers' business.
During the period under review, in accordance with its
selling programme, Citycon sold off four properties in
their entirety and reduced its holdings in two properties.
Citycon did not carry out any acquisitions of the property
portfolio during the period under review.
PERSONNEL
At the end of the period under review, the Citycon Group
had a total of 36 (33) employees, of whom 29 (27) were
employed by the parent company.
ANNUAL GENERAL MEETING
The resolutions of Citycon's annual general meeting of
shareholders held on 20 March 2003 were reported in the
interim report of 8 May 2003. At the end of the period
under review, all the authorisations granted by the AGM
were unused in their full amounts.
CITYCON SHARES AND HOLDINGS
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 4.6 million
shares and EUR 4.9 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 1.07 and the
last traded price on the last trading day of the period (30
June 2003) was EUR 1.08. The company's market
capitalisation at the end of the period under review was
EUR 110.1 million, when company-held shares are deducted
from the total.
At the end of the period under review, the company had a
total of 1,164 shareholders. The ten biggest shareholders
held a total of 81.9 per cent of the company's shares and
voting rights. The biggest shareholders were Nordea Bank
Finland Plc, Kesko Corporation together with its
subsidiaries and associated companies, Sampo Life Insurance
Company Limited 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 3,700,629, being 3.5 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 30
June 2003 was EUR 4.2 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 premises will remain good in the
Helsinki 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, 28 August 2003
Citycon Oyj
Board of Directors
EUR 1000
1-6 2003 1-6 2002 1-12 2002
CONSOLIDATED INCOME STATEMENT
Turnover 38,690 39,760 78,950
Other income -140 705 735
Operating profit 21,596 22,790 43,895
Financing expenses (net) -11,746 -12,404 -24,715
Profit before extraordinary
items and taxes 9 850 10,386 19,180
Net profit for the period
under review 7,140 7,444 13,801
CONSOLIDATED BALANCE SHEET
Assets
Fixed assets
Intangible assets 4,066 3,888 4,036
Tangible assets 621,314 629,666 625,508
Financial assets 97,251 98,034 97,710
Company shares 4,184 4,068 4,261
Fixed assets, total 726,814 735,654 731,515
Current assets
Debtors 3,695 3,910 3,088
Cash in hand and at bank 12,150 9,181 11,730
Current assets, total 15,845 13,091 14,818
Assets, total 742,659 748,746 746,333
Liabilities and
shareholders' equity
Shareholders' equity 201,938 197,492 204,045
Equity loan 68,452 68,452 68,452
Minority interest 90,567 90,454 90,521
Liabilities 381,702 392,347 383,315
Long-term 371,719 355,632 371,769
Short-term 9,983 36,715 11,545
Liabilities and
shareholders' equity, total 742,659 748,746 746,333
Gross investments in balance
sheet fixed assets 926 4,884 5,854
as % of turnover 2,4 12,3 7,4
Planned depreciation and
value adjustments 3,212 3,499 7,620
Employees, average 33 31 33
CASH FLOW STATEMENT
CASH FLOW FROM OPERATING ACTIVITIES
1-6 2003 1-12 2002
Profit/loss before
extraordinary items 9,850 19,180
Adjustments:
Planned depreciation 3,211 7,620
Other income and expenses not
involving a payment 204 283
Financing income and expenses 11,746 24,715
Other adjustments 100 -448
Cash flow before change in
working capital 25,112 51,350
Change in working capital:
Increase(-)/decrease (+) in short-term
non-interest-bearing receivables 397 19
Increase(-)/decrease (+) in short-term
interest-bearing debts 779 -13
Cash flow from operating activities
before financing items and taxes 26,288 51,356
Interest paid and payments for other financing
expenses of business operations -14,471 -23,814
Dividends received from business
operations 17 18
Interest received from business
operations 208 228
Direct taxes paid -2,245 -3,626
Cash flow before extraordinary items 9,797 24,162
Cash flow from operating activities A) 9,797 24,162
CASH FLOW FROM INVESTMENTS:
Investments in tangible
and intangible assets -740 -1,943
Proceeds from the sale of tangible
and intangible assets 109 0
Investments in other placements -4 -9
Repayments of outstanding loans 1 3
Shares in subsidiaries purchased 0 -5,850
Shares in subsidiaries sold 225 1,215
Shares in associated companies purchased -156 -1,320
Shares in associated companies sold 479 5,192
Interest received from investments 3 59
Cash flow from investments B) -84 -2,654
CASH FLOW FROM FINANCING:
Fund payments by minority 25 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 -154 -4,311
Dividend paid and other
distribution of profit -9,171 -8,152
Cash flow from financing (C) -9,295 -15,548
Change in cash assets (A+B+C)
increase (+)/decrease (-) 418 5,960
Cash assets at start of
accounting period 11,730 5,770
Cash assets at end of
accounting period 12,150 11,730
FINANCIAL INDICATORS 1-6 2003 1-6 2002 1-12 2002
EPS, EUR 0.07 0.07 0.14
Equity per share, EUR 1.94 1.90 1.96
Return on equity (ROE), % 5.0 5.3 4.8
ROE excluding minority
interest, % 7.3 7.8 7.1
Return on investment (ROI), % 6.0 6.2 6.0
Equity ratio, % 48,3 47,3 48,4
Equity ratio, % (equity
loan not counted
as shareholders' equity) 39,1 38,1 39,1
CONSOLIDATED CONTINGENT LIABILITIES
Shares pledged
(book value) 97,031 97,389 96,506
Shares in subsidiaries 453,037
Other pledges given 1,350 598 633
Mortgages on land
and buildings 337,196 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 1,737 1,491
Interest rate swaps 2002
(7-year fixed interest)
par value of underlying
instrument 66,000 66,000
market value of underlying
instrument 7,406 5,111
Interest rate swaps 2002
(8-year fixed interest)
par value of underlying
instrument 83,000 83,000
market value of underlying
instrument 8,652 5,418
Interest rate swaps 2003
(4-year and 5-month fixed
interest)
par value of underlying
instrument 78,200
market value of underlying
instrument 259
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 1-6 2003 1-6 2002 1-12 2002
Acquired between 25 November 1999 and 30 June 2003
Number of shares, 1000 3,874 3,874 3,874
Total par value 5,230 5,230 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 30
June 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 taxes used are taxes commensurate with the net profit
for the period under review.
The figures are unaudited.
FINANCIAL REPORTING
Citycon Oyj will publish its next interim report, for the
period January-September, on Thursday 30 October 2003.
For further investors' information, see Citycon's website
www.citycon.fi.
PRESS CONFEENCE
The company is to hold a briefing for press and analysts on
Thursday 28 August 2003, starting at 1.30 p.m. at Citycon
Oyj's premises at Pohjoisesplanadi 35 AB, Helsinki.
CEO Petri Olkinuora will address the meeting about
Citycon's activities and performance for the period under
review and about the company's future prospects. The
presentation material will be available for reading after
the conference on Citycon's website at 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