Citycon's financial statements 1 Jan. - 31 Dec. 2003
- Net profit for the financial year rose to EUR 14.3 million (EUR
13.8 million). This figure includes EUR 0.5 million in losses on
sales of fixed assets (capital gains EUR 0.7 million).
- Turnover was EUR 78.1 million (EUR 79.0 million).
- Operating profit was EUR 43.3 million (EUR 43.9 million).
- Earnings per share were EUR 0.14 (EUR 0.14).
- The proposed dividend is EUR 0.14/share (EUR 0.09/share), which
represents 100.0 per cent of the net profit.
- Demand for retail premises and occupancy rates continued to be
strong.
- Citycon's acquisitions of shopping centres in 2003 will boost the
company's turnover and net profit for 2004.
KEY FIGURES
1-12 2003 1-12 2002
Turnover, EUR million 78.1 79.0
Operating profit, EUR million 43.3 43.9
% of turnover 55.5 55.6
Profit before extraordinary items
and taxes, EUR million 19.1 19.2
Net profit for the year,
EUR million 14.3 13.8
Earnings per share, EUR 0.14 0.14
Equity per share, EUR 2.01 1.96
P/E ratio 11 8
Dividend per share, EUR
(Board of director's proposal) 0.14 0.09
Return on equity, % 7.1 7.1
Return on equity including
minority interest, % 4.9 4.8
Return on investment, % 5.8 6.0
Equity ratio, % 44.9 48.4
Equity ratio, with capital loan not
counted as part of shareholder's
equity, % 36.7 39.1
Net rental income of property
portfolio, % 8.5 8.6
Occupancy rate, % 97.3 97.8
Personnel at the year-end 34 33
The trend in the business environment
Growth in retail sales was slower than in the previous year
although it was still strong. According to Statistics Finland,
department store trade was up by 5.6 per cent and convenience goods
trade by 3.7 per cent on the previous year's figures. Consumer
demand grew in Finland faster than in the rest of the euro zone.
Strong retail sales meant that the demand for leased commercial
premises continued to be good and vacancy rates remained low,
particularly in the Helsinki Metropolitan Area and other major
Finnish cities. In the Helsinki Metropolitan Area the vacancy rate
for commercial property was 1.0 per cent and it was 1.32.5 per
cent in Tampere, Lahti and Jyväskylä.
Citycon's strong position in the present state of the market is
based on its focus on retail commercial premises, which account for
more than 98 per cent of the company's property portfolio. The
greater part, 47.4 per cent, of the property portfolio is in the
Helsinki Metropolitan Area and 35.6 per cent is in other major
Finnish cities.
The customers and the trend in the portfolio of leases
Citycon's customer structure did not change markedly in 2003. The
company's largest customer group is comprised of Finnish and
international convenience and utility goods chains as well as
companies in the banking and finance sector.
The properties acquired during the financial year, i.e., the
shopping centres Jyväskylän Forum and holdings in shopping centres
Tampereen Koskikeskus and Valkeakosken Koskikara, increased the
number of leases held by Citycon by 263 and the number of lessees
by 226.
At year-end Citycon had 1,371 (1,150) leases with 770 (700)
lessees. The average duration of the leases is 3.6 years.
Rental income
Approximately 67 per cent of Citycon's rental income came from
leases signed with the 10 biggest customers. Net rental income from
leasing business in 2003 totalled EUR 54.7 million (EUR 56.2
million). Shopping centres accounted for 50.2 per cent (49.3%) of
net rental income and supermarkets and shops accounted for 49.8 per
cent (50.7%). The rental occupancy rate of Citycon's entire
property portfolio was 97.3 per cent (97.8%). The shopping centres'
net yield rate amounted to 8.1 per cent (8.2%) and the net yield
rate of the supermarkets and shops amounted to 8.9 per cent (9.1%).
The rental income of the shopping centres acquired by Citycon at
the end of December 2003 (Tampereen Koskikeskus and Valkeakosken
Koskikara) is not included in the company's income stated for 2003.
Turnover and operating profit
Citycon's turnover in 2003 was EUR 78.1 million (EUR 79.0 million).
The company's turnover is mainly comprised of rental income from
retail business premises, which accounted for 93.3 per cent (93.3%)
of turnover. Citycon's 15 shopping centres and 15 biggest
supermarkets generated roughly 78.9 per cent of its rental income.
Operating profit for the financial year was EUR 43.3 million (EUR
43.9 million). Operating profit was down on the previous year's
figure due to the effect of sold properties. The net profit for the
financial year was EUR 14.3 million (EUR 13.8 million). The figure
for net profit includes losses on the sale of fixed assets
totalling EUR 0.5 million (capital gains EUR 0.7 million).
Balance sheet and financing
At the end of 2003, Citycon owned 148 real properties with a
combined book value of EUR 721.8 million (EUR 649.2 million). The
properties' market value as assessed by an authorised property
appraiser was EUR 726.5 million (EUR 650.1 million). The balance
sheet total as at 31 December 2003 was EUR 835.3 million (EUR 746.3
million), of which liquid cash assets accounted for EUR 15.1
million (EUR 11.7 million).
The Group's financing situation remained favourable. To finance the
shopping centre Jyväskylän Forum, a EUR 25 million syndicated loan
was drawn down and Tampereen Koskikeskus and Valkeakosken Koskikara
were financed with a EUR 45 million syndicated loan. The periods
and terms of the loans are similar to the financing agreement made
in November 2002. The increase in liabilities reduced the Group's
equity ratio during the financial year by 3.5 percentage points to
44.9 per cent.
The liabilities on the consolidated balance sheet as at year-end
totalled EUR 457.5 million (EUR 383.3 million). Interest-bearing
debt amounted to EUR 512.3 million (EUR 440.5 million), of which
the capital loan accounted for EUR 68.5 million (EUR 68.5 million).
Citycon's net financing expenses declined to EUR 24.2 million (EUR
24.7 million). The average interest rate on interest-bearing
liabilities was 5.5 per cent (5.5%). The average loan period,
weighted according to the principal of the loans, was 4.6 years
(5.5 years) and the average interest-rate fixing period was 4.0
years (4.1 years). The Group's equity ratio was 44.9 per cent
(48.4) and 36.7 per cent (39.1) when the capital loan is excluded
from shareholders' equity.
At the end of 2003, Citycon's interest-bearing debt included 87 per
cent (84%) floating rate loans, of which 69 per cent (50%) had been
changed to fixed rate using interest rate swaps and 12 per cent
(33%) was hedged through interest rate caps. The par value of the
interest rate swaps at year-end was EUR 302.2 million (EUR 199.0
million) and that of the interest rate caps was EUR 53.8 million
(EUR 132.5 million). The market value of the derivatives as at 31
December 2003 was -EUR 11.4 million (-EUR 12.0 million). The
interest coverage ratio(the previous twelve months' profit before
interest expenses, taxes and depreciation to net financing
expenses), which describes the debt servicing ability, was 2.1
(2.1).
Citycon and IFRS
Citycon will make the changeover to reporting in accordance with
IAS/IFRS (International Financial Reporting Standards) in its
interim reports and financial statements in 2005.
Citycon made decisions on the main optional accounting principles
for financial statements under IFRS in the beginning of 2004.
According to a preliminary analysis, the adoption of IFRS will
affect the following subdivisions of Citycon's accounting
principles:
Citycon has decided to use the fair value model in the valuation of
properties, whereupon changes in value will be entered in the
profit and loss account.
Derivatives used to hedge interest rates of loans will be treated
in accordance hedge accounting principles, whereupon the
derivatives will be valued at the fair value and the change in
value will be booked in shareholders' equity.
The capital loan will be treated under IFRS as a debt.
Compliance with IFRS principles for financial statements will
affect the amount of deferred tax liabilities and credits.
The presentation of joint holdings in the financial statements will
change.
Investments
Citycon's gross investments in 2003 totalled EUR 84.2 million (EUR
5.9 million), of which new purchases accounted for EUR 79.5
million.
Acquisitions of real property
The main property acquisitions of the year were the shopping centre
Jyväskylän Forum, which the company acquired from If P&C Insurance
Ltd in October, and a transaction effected in December with Polar
Real Estate Corporation, in which Citycon acquired Polar's holdings
in Tampereen Koskikeskus and Valkeakosken Koskikara. After the
transaction, Citycon's share of the gross leasable area of
Koskikeskus rose from 27 to 88 per cent. Following the deal,
Citycon owns 55 per cent of the area od Koskikara. The purchase
price for Jyväskylän Forum was EUR 28.3 million and the combined
price for Koskikeskus and Koskikara was EUR 49.3 million. In
addition, a letter of intent was made with Polar Real Estate
Corporation for the acquisition of Seinäjoen Torikeskus in February
2004.
Divestments
Citycon sold six properties and reduced its holdings in two more in
accordance with its strategy in 2003. Sales of fixed assets
resulted in a loss of EUR 0.5 million.
Other investments
Citycon invested a total of EUR 4.8 million in major renovations of
buildings and building development projects during the financial
year.
The Shopping Centres Division's most important project was an
extension to Porin IsoKarhu in which Citycon invested EUR 3.2
million during the financial year. The project advanced to the
construction stage according to plan and the company estimated that
the extension would be completed on schedule in August 2004. Demand
for new leasable premises was good, and at year-end the rental
occupancy rate for the facilities was 90 per cent. By Citycon's
estimate, the extension project will increase IsoKarhu's rental
income by 40 per cent.
In 2003, the Shopping Centres Division continued the planning for
extensions to the shopping centres Myyrmanni in Vantaa and
Lippulaiva in Espoo. In addition, the division devoted efforts to
the commercial development of the shopping centre Jyväskeskus. The
aim is to enhance the commercial attractiveness of Jyväskeskus
through a new anchor lessee and by developing the property's
restaurant services etc. The company invested roughly EUR 2 million
in the development of Jyväskeskus. The investments will have
positive impact on company figures mostly in 2005.
The Supermarkets and Shops Division completed development projects
for the Citymarket department store in Pori and a supermarket in
the Mankkaa district of Espoo in partnership with the lessee. The
aim of the projects is to enhance the properties' market
positioning. Citycon invested roughly a million euros in the
projects. The investments stimulated the properties' rental income
in the final quarter of the year under review.
The Supermarkets and Shops Division also carried out another,
similar development project at a supermarket in Valkeakoski.
Citycon invested some EUR 0.8 million in the project. The
investment will boost the property's rental income by 12 per cent
from the beginning of 2004.
The Property Development Division formerly called the Retai 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.
Organisation, personnel and salaries
In the beginning of 2003, Citycon defined its divisional structure
and organisation. The company separated its operations into three
divisions on the basis of property types: Shopping Centres,
Supermarkets and Shops, and the Retail Park Division (currently the
Property Development Division).
The Citycon Group had a total of 34 (33) employees at year-end, of
whom 27 (27) were employed by the parent company.
The Citycon Group paid EUR 2.1 million in salaries and emoluments,
of which CEO's salaries and emoluments amounted to EUR 0.2 million
and those of the Board of Directors to EUR 0.1 million . The parent
company paid EUR 1.8 million in salaries and emoluments, of which
the CEO's ans managing directors'salary and emoluments were EUR 0.2
million and those of the Board of Directors were EUR 0.1 million.
Citycon shares
Citycon's share capital on 31 December 2003 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.
A significant change in the company's ownership base took place in
November when its main owners, Nordea Bank Finland Plc, Kesko
Corporation with its subsidiaries, and Sampo Life Insurance Company
Limited sold off their entire holding, representing 73.8 per cent
of the company's shares and voting rights, through the Helsinki
Exchanges.
During the financial year, the turnover of shares picked up in the
Helsinki Exchanges and there were substantial changes in the
company's ownership base. The turnover was 104.5 million shares and
EUR 153.8 million (8.6 million shares and EUR 9.1 million).
At year-end, the company had a total of 1,450 registered
shareholders. The registered shareholders had a total of 46.1
million shares or 43.6 per cent and nominee-registered shareholders
had 59.7 million or 56.4 per cent of the total number of shares and
voting rights.
The high price quoted during the financial year was EUR 1.59 (EUR
1.12) and the low was EUR 1.00 (EUR 0.98). The weighted average
price for the period was EUR 1.47 (EUR 1.06) and the closing price
of the year was EUR 1.52 (EUR 1.10). The company's market
capitalisation on 31 December 2003 was EUR 154.9 million (EUR 112.1
million), when company-held shares are deducted from the total.
During the year, the HEX index rose by 4.4 per cent and the HEX
portfolio index by 16.2 per cent. The HEX investment index rose by
26.5 per cent. Citycon's share price rose correspondingly by 38.2
per cent.
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
4.7 million. 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 December 2003 corresponded to the purchase price,
which was lower than the market value on the date of closing the
books.The effect of the shares in the company's possession has been
deducted for the calculation of the key indicators.
The members of Citycon Oyj's Board of Directors held a total of
98,541 shares on 31 December 2003, which is 0.09 per cent of the
company's shares and voting rights. Citycon's CEO owned 100,000 and
the other members of the Corporate Management Committee owned a
total of 3,000 shares on 31 December 2003.
Authorisations
Citycon's annual general meeting of 20 March 2003 granted the Board
of Directors an authorisation 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' 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. 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.
At the end of 2003, no part of the authorisations had been
utilised. The authorisations will be valid from the decision made
by AGM for a maximum of one year.
Board of Directors and auditors
The annual general meeting of 20 March 2003 re-elected the
following to the Board of Directors: Stig-Erik Bergström, DSc
(Econ); Heikki Hyppönen MSc (Econ); Juhani Järvi, MSc (Econ); Jorma
Lehtonen, MSc (Eng); Carl G. Nordman, Counsellor of Industry (Hon);
and Juha Olkinuora, MSc (Eng). The Board of Directors re-elected
Stig-Erik Bergström as its chairman and Jorma Lehtonen as deputy
chairman.
The company's auditors re-elected were Ari Ahti, Authorised Public
Accountant, and Jaakko Nyman, APA, with the APA firm KPMG Wideri Oy
Ab as deputy auditor.
Proposal by the Board of Directors for the payment of dividend
Citycon's Board of Directors will propose to the annual general
meeting convening on 15 March 2004 that dividend is paid on shares
in non-company ownership for the financial year ending on 31
December 2003 in the amount of EUR 0.14 per share. The Board of
Directors will propose 18 March 2004 for the dividend payment's
date of record and 25 March 2004 for the payment date.
Outlook for the future
Because growth in retailing and in consumer demand is forecast to
continue in 2004, Citycon estimates that demand, occupancy rates
and rent levels for retail premises will remain good in the
Helsinki Metropolitan Area and Finland's major cities.
Citycon estimates that the turnover and net profit for 2004 will
make positive progress relative to the previous year based on
favourable market prospects and because of the shopping centres
acquired at the end of 2003.
Helsinki, 12 February 2004
Citycon Oyj
Board of Directors
Further information is available from:
CEO Mr Petri Olkinuora, tel +358 400 333 256, CFO Ms Pirkko
Salminen, tel. +358 9 680 36730
Distribution: Helsinki Exchanges and main media
www.citycon.fi
CONSOLIDATED INCOME STATEMENT
EUR million 1-12 2003 1-12 2002
Turnover 78.1 79.0
Other income -0.5 0.7
Operating profit 43.3 43.9
Financing expenses (net) -24.2 -24.7
Profit before extraordinary
items and taxes 19.1 19.2
Profit for the period 14.3 13.8
CONSOLIDATED BALANCE SHEET
EUR million
Assets
Fixed assets
Intangible assets 4.5 4.0
Tangible assets 729.1 625.5
Financial assets 78.6 97.7
Company shares 4.7 4.3
Fixed assets, total 816.9 731.5
Current assets
Debtors 3.4 3.1
Cash in hand and at bank 15.1 11.7
Current assets, total 18.5 14.8
Assets, total 835.3 746.3
Liabilities and shareholders' equity
Shareholders' equity 209.6 204.0
Capital loan 68.5 68.5
Minority interest 99.8 90.5
Liabilities 457.5 383.3
Long-term 428.3 371.8
Short-term 29.2 11.5
Liabilities and
shareholders' equity, total 835.3 746.3
Gross investments in balance
sheet fixed assets 84.2 5.9
as % of turnover 107.9 7.4
Depreciation and
value adjustments 6.5 7.6
Employees, average 33 33
CASH FLOW STATEMENT
EUR million 1-12 2003 1-12 2002
CASH FLOW FROM BUSINESS OPERATIONS
Profit/loss before
extraordinary items 19.1 19.2
Adjustments:
Depreciation 6.5 7.6
Financial income and expenses 24.2 24.7
Other adjustments 0.9 -0.2
Cash flow before change in
working capital 50.8 51.4
Change in working capital 0.0 0.0
Cash flow from business operations
before financing items and taxes 50.7 51.4
Interest paid and payments for
other financing expenses of
business operations -24.1 -23.8
Dividends and interests received
from business operations 0.5 0.2
Direct taxes paid -4.7 -3.6
Cash flow from business
operations (A) 22.4 24.2
CASH FLOW FROM INVESTMENTS
Investments in tangible
and intangible assets -4.9 -1.9
Shares in subsidiaries purchased -77.1 -5.8
Shares in subsidiaries sold 1.4 1.2
Shares in associated companies purchased -0.8 -1.3
Shares in associated companies sold 1.6 5.2
Other items 0.1 0.1
Cash flow from investments (B) -79.7 -2.7
CASH FLOW FROM FINANCING
Fund payments by minority 0.0 0.1
Withdrawals of short-term loans 2.1 0.0
Repayments of short-term loans 0.0 -7,1
Withdrawals of long-term loans 67.9 3.9
Repayments of long-term loans -0.2 -4.3
Dividend paid and other
distribution of profit -9.2 -8.2
Cash flow from financing (C) 60.6 -15.5
Change in cash assets (A+B+C)
increase (+)/decrease (-) 3.3 6.0
Cash assets at start of
accounting period 11.7 5.8
Cash assets at end of
accounting period 15.1 11.7
FINANCIAL INDICATORS 1-12 2003 1-12 2002
Earnings per share, EUR 0.14 0.14
Equity per share, EUR 2.01 1.96
Return on equity (ROE), % 7.1 7.1
ROE with minority interest
included, % 4.9 4.8
Return on investment (ROI), % 5.8 6.0
Equity ratio, % 44.9 48.4
Equity ratio with capital
loan not counted as
as shareholders' equity, % 36.7 39.1
COMPANY SHARES 1-12 2003 1-12 2002
Acquired between 25 November 1999 and 31 December 2003
Number of shares, million 3.9 3.9
Total par value, EUR million 5.2 5.2
Share of shareholders'
equity, % 3.7 3.7
Share of voting rights, % 3.7 3.7
Acquisition cost paid,
EUR million 4.7 4.7
The book value of company-held Citycon shares on 31 December 2003
corresponded to the purchase price, which was lower than the market
value at year-end.
The effect of the shares in the company's possession has been
deducted for the calculation of the key indicators.
CONSOLIDATED CONTINGENT LIABILITIES
EUR million
Mortages on land and buildings 338.4 323.4
Pledged shares 76.7 96.5
Other pledges given 3.2 0.6
GROUP'S DERIVATIVES
EUR million
31.12.2003 31.12.2002
Par Fair Par Fair
values values values values
Interest-rate derivatives
Interest-rate swaps
Maturing in 2004 50.0 -1.5
Maturing in 2007 78.2 1.1
Maturing in 2008 50.0 -1.3
Maturing in 2009 91.0 -5.4 66.0 -5.1
Maturing in 2010 83.0 -5.8 83.0 -5.4
Total 302.2 -11.4 199.0 -12.0
Interest-rate options
Interest rate caps purchased
Maturing in 2003 78.7
Maturing in 2004 53.8 0.0 53.8 0.0
Total 53.8 132.5
The fair values for derivatives describe their value if all
agreements had been closed at the market prices of the balance
sheet date.
Derivatives have been used for hedging of the loan portfolio.
The accrued interest for the financial year included in the
derivatives' fair values, being EUR 0.6 million (EUR 0.3 million)
has been booked in interest expenses.
Capital gains on sales of fixed assets in 2002 have been separated
from the turnover figure.
The taxes used were the taxes corresponding to the net profit for
the year.