CITYCON'S INTERIM REPORT, 1 JAN. ? 31 MA

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

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