Citycon's Interim Report 1 January - 30 September 2005

CITYCON OYJ Stock Exchange Release 18 Oct. 2005 at 12.00 Citycon's Interim Report 1 January - 30 September 2005 - Turnover totalled EUR 66.5 million (EUR 63.3 million) - Profit before taxes amounted to EUR 33.3 million (EUR 23.2 million), including EUR 16.1 million increase in fair value of investment property and EUR 5.7 million in one-time financial expenses - Earnings per share were EUR 0.21 (EUR 0.20, including EUR 0.025 in one-time deferred tax receivable) - The internationalisation process began with investments in Sweden and Estonia: the figures include the Åkersberga shopping centre in Sweden since 1 July 2005 and Rocca al Mare of Estonia since 21 July 2005 - Citycon raised its holding in the Trio Shopping Centre of Lahti and IsoKristiina of Lappeenranta - The private placement of 12 million shares was oversubscribed by a factor of 1.7 Key figures 1-9 2005 1-9 2004 1-12 2004 Turnover, EUR million 66.5 63.3 84.7 Operating profit, EUR million 58.8 42.7 52.6 % of turnover 88.5 67.5 62.1 Profit before taxes, EUR million 33.3 23.2 26.5 Profit, EUR million 24.2 20.9 22.7 Earnings per share, EUR 0,21 0.20 0.22 Earnings per share, diluted, EUR 0,20 0.20 0.22 Equity per share, EUR 2.15 2.02 2.01 P/E (price/earnings) ratio 13 8 10 Return on equity (ROE), % 13.5 13.8 11.0 Return on investment (ROI), % 10.1 7.9 7.3 Equity ratio, % 29.8 29.3 29.6 Gearing, % 213.3 213.5 221.5 Net rental income, % 8.6 8.6 8.8 Occupancy rate, % 96.9 97.1 95.7 Personnel at the end of period 52 43 45 Citycon and IFRS Citycon Oyj has changed its reporting practice in accordance with IAS/IFRS standards (International Financial Reporting Standards); this affects its interim reports and financial statements for 2005. Information related to this change is available on pages 35-43 in the Financial Statements and IFRS Appendix to the company's 2004 Annual Report. Business Environment Strong demand continued for retail premises in Finland in the third quarter, with high occupancy rates. Retail sales continued to grow 1) buttressed by low interest rate and low inflation. International investors have shown keen interest in the Finnish property market, which has also been reflected in the return requirements and price levels of the most sought-after properties. 1) Source: Statistics Finland Business Activities and Property Portfolio Summary Citycon's business activities comprise the entire chain of retail premises ownership i.e., ownership, leasing, management and development of properties. Citycon operates through the following four divisions: Shopping Centres, Supermarkets and Shops, Property Development, and Investments. At the end of the reporting period, Citycon owned 145 properties (146) at a fair value totalling EUR 894.2 million (EUR 740.0 million). The company's property portfolio consists almost only of retail premises. At the end of the reporting period, the company owned 18 shopping centres and 127 supermarkets and shops, shopping centres accounting for 66.9 per cent and supermarket and shop premises for 33.1 per cent of the property portfolio's fair value. At the period-end, 37.1 per cent of the properties were located in the Helsinki Metropolitan Area, 36.0 in other major Finnish cities and 14.9 in other parts of Finland. Foreign properties accounted for 12.0 of the property portfolio. All of the above ratios are based on fair values. Change in Fair Value of Investment Property during the report period In the valuation of investment properties according to IAS 40 Citycon has decided to use the fair value model, which will result in changes in value being posted to the income statement. The valuation of investment properties is assessed in accordance with International Valuation Standards (IVS) at least once a year by an external valuation professional. The latest valuation statement by Aberdeen Property Investors dated 30 September 2005 is available on Citycon's website, www.citycon.fi. The fair value of Citycon's property portfolio increased in the period under review, due to changes in market trends and leasing operations amounting to EUR 16.1 million. Increase in fair values amounted to EUR 27.7 million and decrease in fair values to EUR 11.7 million. The most significant change in the market was the ever rising international interest in the Finnish property market, and particularly in retail premises. Increasing demand lowers the yield requirements of investors and creates pressure for increasing property prices, particularly in the liveliest growth centres. Customers, Lease Portfolio and Occupancy Rate At the end of the period, Citycon had a total of 1,905 leases with 1,226 lessees. The averaged length of leases was 3.4 years. The period-end occupancy rate for Citycon's property portfolio was 96.9 per cent (97.1%), this change resulting from normal fluctuations in the leasing business and new properties in the company's property portfolio. Lease Portfolio Summary 1-9 2005 1-9 2004 Number of leases started during the period, total 187 260 Total area of leases started, m2 32,661 49,092 Average length of lease portfolio at end of period, years 3.4 3.6 Shopping Centres Division Shopping Centres Division's Key Figures Lease Portfolio Summary 1-9 2005 1-9 2004 Number of leases started during the period, total 147 196 Total area of leases started, m2 14,564 28,557 Occupancy rate at end of period, % 97.5 97.4 Average length of lease portfolio at end of period, years 2.7 2.9 Financial performance, Shopping Centres 1-9 2005 1-9 2004 Turnover, EUR million 40.7 35.9 Operating profit, EUR million 42.1 24.6 Gross rental income, EUR million 39.6 34.8 Net rental income, EUR million 28.8 25.6 Net rental yield, % 8.3 7.7 Net rental yield, standing investments, % 8.6 7.8 Market value of property portfolio, EUR million 598.0 459.0 Change in value of property portfolio, EUR million 14.3 0.0 Gross investments, EUR million 125.7 14.0 The calculation method for net income is based on the guidelines of the KTI Institute for Real Estate Economics and the IPD Investment Property Databank. Standing investments refer to properties held by Citycon through the 12-month reference period. Properties under development and expansion as well as lots are eliminated from the figures. On 31 May 2005, the Shopping Centres division expanded with the acquisition of all the shares in Kiinteistö Oy Karjalan Kauppakeskus, based in Lappeenranta, for EUR 7.9 million, making Citycon the main owner of the IsoKristiina shopping centre's retail premises. This increase in holding will improve the company's opportunities to develop the property in the future. In June, the company decided to build a new shopping centre in Hervanta, a district of Tampere, with the investment estimated to total EUR 25.3 million and net yield, after completion of the shopping centre, over 8 per cent. The extension project is estimated to be completed in the spring of 2007. In July Citycon acquired a 75 per cent holding in the Åkersberga shopping centre in Sweden. This was Citycon's first international property investment, the total investment including the launched expansion projects, amounting to approximately SEK 900-950 million (EUR 95-100 million). Citycon has agreed to acquire the remaining shares in the shopping centre once the said expansion projects have been completed. The Åkersberga shopping centre has been included in the company's accounts since 1 July 2005. In July 2005, Citycon acquired Rocca al Mare, a shopping centre in Tallinn, Estonia, and an adjoining site facilitating a major expansion of the centre. This was Citycon's first property investment in the Baltic countries. The property is fully leased and its anchor tenants are Prisma and Hobby Hall, Finnish retail chains. Rocca al Mare is included in the company's accounts since 21 July 2005. On September 13, Citycon increased its ownership in the Trio shopping centre in Lahti to 88.7 percent by buying a 33.1 per cent holding in Kiinteistö Oy Lahden Trio for EUR 18.7 million. Based on an agreement signed in September, Citycon will acquire retail centres in Åkermyntan, Kallhäll and Fruängen located in the Stockholm Metropolitan Area, Sweden, for SEK 256.3 million (EUR 27.6 million). The transaction is expected to close on 1 November 2005. The period's investment decisions will both contribute to Citycon's growth strategy in Finland and its efforts to actively develop business in Sweden and Estonia. Supermarkets and Shops Division Supermarkets and Shops Division's Key Figures Lease Portfolio Summary 1-9 2005 1-9 2004 Number of leases started during the period, total 40 64 Total area of leases started, m2 18,097 20,535 Occupancy rate at end of period, % 95.8 96.7 Average length of lease portfolio at end of period, years 4.6 4.4 Financial performance, Supermarkets & Shops 1-9 2005 1-9 2004 Turnover, EUR million 25.8 27.4 Operating profit, EUR million 21.2 20.8 Gross rental income, EUR million 25.9 27.4 Net rental income, EUR million 19.0 20.8 Net rental yield, % 9.2 10.2 Net rental yield, standing investments, % 9.3 10.4 Market value of property portfolio, EUR million 296.2 281.0 Change in value of property portfolio, EUR million 1.8 0.0 Gross investments, EUR million 3.3 0.8 The calculation method for net income is based on the guidelines of the KTI Institute for Real Estate Economics and the IPD Investment Property Databank. Standing investments refer to properties held by Citycon through the 12-month reference period. Properties under development and expansion as well as lots are eliminated from the figures. During the period, the company sold three investment properties within the Supermarkets and Shops division for EUR 3.8 million, bringing in total capital gains of EUR 0.3 million. Property Development and Investments The Property Development and Investments Divisions' mission is to develop and extend Citycon's existing and new retail sites, and to identify new investment opportunities in support of the company's expansion strategy. The divisions' key figures are not reported separately because they have no property portfolio or rental income. Personnel At the end of the period, Citycon Group staff totalled 52 (43). Turnover and Profit Turnover for the period came to EUR 66.5 million (EUR 63.3 million), with gross rental income accounting for 98,5 per cent (98.3 per cent) of turnover. Operating profit rose to EUR 58.8 million (EUR 42.7 million). Profit before taxes amounted to EUR 33.3 million (EUR 23.2 million) and after taxes EUR 24.2 million (EUR 20.9 million). The effect of changes in the fair value of investment property on the period's profit was EUR 16.1 million. The period's profit also includes one-time expenses of EUR 5.7 million resulting from premature repayment of the I/1999 capital loan. The profit of the period is at the previous year´s level taking into account the tax effects of the above mentioned items and lower income tax recorded a year ago due to the recognition of EUR 2.6 million in tax assets as income and the EUR 1.2 million fall in deferred tax liabilities as a result of a change in corporate tax rate. Balance Sheet and Financial Position The period-end balance sheet total was EUR 910.4 million (EUR 771.4 million), of which cash and cash equivalents accounted for EUR 8.8 million (EUR 27.3 million). The Group's financial position remained at a healthy level. The Group's period-end liabilities totalled EUR 639.2 million (EUR 545.7 million). Interest-bearing liabilities grew by EUR 96.8 million, to EUR 587.2 million (EUR 509.2 million). Short-term liabilities accounted for EUR 59.4 million (EUR 32.2 million) of total liabilities. The interest rate of the interest-bearing liabilities averaged 4.8 per cent (5.1 per cent), if one-time expenses stemming from the premature repayment of the capital loan are excluded. The average loan maturity, weighted according to loan principals, was 2.9 years (3.9 years) while the average interest-bearing period was 2.7 years (3.8 years). The Group's equity ratio was 29.8 per cent (29.3 per cent). Interest cover, or the previous twelve months' profit before interest expenses, taxes and depreciation relative to net financial expenses, was 2.2. Period-end gearing stood at 213.3 per cent (213.5 per cent). Citycon's interest-bearing liabilities at the period-end included 87.4 per cent (86.5 per cent) of floating rate loans, of which 69.9 per cent (77.6 per cent) had been converted into fixed rate ones, based on interest rate swaps. The overall hedging rate of the loan portfolio was 52.3 per cent. At the end of the report period, the par value of interest rate swaps totalled EUR 337.9 million (EUR 340.8 million) while the market value of derivatives came to EUR -21.5 million (EUR -16.7 million). Net financial expenses of EUR 25.5 million (EUR 19.5 million) included EUR 5.7 million in one-time expenses. Citycon Oyj repaid its I/1999 capital loan on 30 June 2005 prior to the loan's maturity and on 17 June 2005 issued a 1/2005 five-year capital loan of EUR 70 million at a fixed annual nominal interest of 4.70 per cent. The loan's issue price accounted for 99.956 per cent of the nominal loan amount, and its maturity date is 17 June 2010. As consequence of the I/1999 loan's premature repayment and issue of the new 1/2005 capital loan, the net savings in Citycon Oyj's financing expenses will, after taking into account the one-time expense of EUR 5.7 million, come to approximately EUR 1.5 million over the next four years. Share Issue In July 2005, Citycon carried out a private placement for selected Finnish and international institutional investors, in part to finance the acquisition of the Rocca al Mare shopping centre in Tallinn, Estonia. The decision by the Board of Directors to execute this share issue was based on an authorisation granted by the Annual General Meeting of 5 April 2004. A total of 12,000,000 new shares were offered for subscription at a price of EUR 3.01 per share. Prior to the issue, the new shares equalled around 10.6 per cent of Citycon's share capital and voting rights, while subsequent to it they corresponded to around 9.6 per cent. The share issue was carried out through a bookbuilding process from 25 to 26 July 2005, and was oversubscribed by a factor of 1.7. Some 99 per cent of the new shares were allocated to foreign investors and one per cent to Finnish ones. An increase of share capital of EUR 16,200,000 was entered in the Trade Register on 2 August 2005. The new shares are quoted on the Helsinki Stock Exchange's Main List since 3 August 2005. Citycon's stock exchange releases issued in July and August 2005 provide details of the private placement. Share Capital and Shares Share Capital At the beginning of the year, Citycon's share capital came to EUR 156,655,833.30 and the number of shares totalled 116,041,358. The period saw Citycon increase its share capital through stock options and private placement by EUR 17,059,045.50 and reduce it by EUR 5,229,900 by cancelling its own shares (treasury shares). The table below shows the changes in share capital in more detail. Changes in share capital from 1 January to 30 September 2005 Date Reason Change, Share capital, Number of EUR EUR shares 1 Jan. 2005 156,655,833.30 116,041,358 3 Feb. 2005 Increase (stock options) 124,200 156,780,033.30 116,133,358 6 April 2005 Reduction (cancellation of treasury shares) 5,229,900 151,550,133.30 112,259,358 29 April 2005 Increase (stock options) 49,950 151,600,083.30 112,296,358 21 July 2005 Increase (stock options) 626,845.50 152,226,928.80 112,760,688 2 Aug. 2005 Increase (private placement) 16,200,000 168,426,928.80 124,760,688 20 Sept. 2005 Increase (stock options) 58,050 168,484,978.80 124,803,688 30 Sept. 2005 168,484,978.80 124,803,688 At the end of September, the company's registered share capital totalled EUR 168,484,978.80 and the number of shares 124,803,688. The par value of a share is EUR 1.35, each share entitling its holder to one vote. Traded Volume and Price In January-September, the total number of Citycon shares traded on the Helsinki Stock Exchange was 32.0 million (103.5 million), at a total value of EUR 90.9 million (EUR 195.8 million). The highest quotation during the period was EUR 3.50 (EUR 2.19), and the lowest EUR 2.36 (EUR 1.52). The trade-weighted average price for the period was EUR 2.84 (EUR 1.89), and the share closed at EUR 3.49 (EUR 2.15). The company's market capitalisation at the period end totalled EUR 435.6 million (EUR 240.6 million). Shareholders At the end of the period, Citycon had a total of 1,350 (1,188) registered shareholders. Nominee-registered shareholders, mainly international investors, held 114.2 million (91.5 million) shares, or 91.5 per cent (79.0 per cent) of shares and voting rights. Treasury Shares At the end of the period, Citycon Oyj held no treasury shares due to the decision made by the 2005 AGM to reduce the company's share capital by cancelling all 3,874,000 treasury shares. The Board of Directors is not authorised to buy back company shares. Shares Held by the Board of Directors and Management On 30 September 2005, Citycon Oyj's Board members held a total of 91,227 shares accounting for 0.07 per cent of all company shares and voting rights. Citycon's CEO held 100,000 shares and other Corporate Management Committee members a total of 3,000 shares. Annual General Meeting The company's Annual General Meeting (AGM) was held in Helsinki on 5 April 2005. Its decisions are available in Citycon's interim report for 1 January 2005-31 March 2005 and on its website at www.citycon.fi. Board Authorisations The AGM authorised the Board to decide by 5 April 2006 to issue one or several convertible bonds, issue stock options and increase the company's share capital through one or several rights issues. The authorisation includes a right to deviate from the shareholders' pre-emptive subscription right. The Board of Directors exercised part of this authorisation by taking a decision on the July private placement, and retains the right to issue a maximum of 11,226,670 new shares and increase the company's share capital by a maximum of EUR 15,156,004.50. Stock Options Citycon has two stock-option schemes in force, the 1999 A/B/C scheme and the 2004 A/B/C scheme. The 1999 stock-option scheme related stock options are listed on the Helsinki Stock Exchange. From January to September 2005, 544,330 new shares at a nominal value of EUR 1.35 were subscribed as per Citycon's 1999 stock-option scheme at a subscription price of EUR 1.40 per share. As a result, the company's share capital increased by EUR 734,845.50. Under the company's 2004 stock-option scheme, Citycon's Board of Directors decided on 13 September 2005 to grant a total of 1,160,000 B stock options to all employees. These stock options were issued by Veniamo-Invest Oy, a subsidiary of Citycon Oyj. Citycon employees hold a total of 1,040,000 stock options 2004 A. Veniamo-Invest Oy retains 1,700,000 2004 A/B/C stock options, which it may issue to current and future Citycon employees upon a decision by the Board of Directors to that effect. Citycon's CEO holds 1,000,000 1999 A/B/C and 290,000 2004 A/B stock options, while other Corporate Management Committee members hold a total of 350,670 1999 A/B/C stock options and 350,000 2004 A/B stock options. The subscription period for 2004A stock options is 1 September 2006-31 March 2009, 1 September 2007-31 March 2010 for 2004B stock options and 1 September 2008- 31 March 2011 for 2004C stock options. For more detailed information on Citycon's stock-option schemes, please refer to the 2004 Annual Report and the company's website at www.citycon.fi. Events after the Report Period On 5 October 2005, Eero Sihvonen, M.Sc.(Econ.), was appointed Citycon Oyj's new Chief Financial Officer and member of the Corporate Management Committee. He will take up his duties by 5 December 2005 at the latest. After the reporting period, 189,000 shares were subscribed based on 1999 A/B/C stock options at a price of EUR 1.40 per share. The corresponding EUR 255,150.00 increase in share capital will be entered in the Trade Register on or around 19 October 2005. As a result of this share capital increase, Citycon Oyj's registered share capital totals EUR 168,740,128.80 and the number of shares 124,992,688. The new shares are expected to be publicly traded on the Helsinki Stock Exchange's Main List together with the old ones as of 20 October 2005. Stock options based on Citycon's 1999 A/B/C stock option scheme entitle their holders to subscribe a total of 4,411,170 new shares, corresponding to a further increase of EUR 5,955,079.50 in share capital. The share subscription period will expire on 30 September 2007. Future Outlook Citycon expects demand, occupancy rates and rents for its retail premises to remain stable in the Helsinki Metropolitan Area and Finland's major cities. In this increasingly intensified competitive environment, the company is seeking opportunities to expand its business in Finland, Scandinavia and the Baltic countries. Citycon estimates that its turnover and profit for 2005 will grow as a result of, among other things, the executed property transactions. Consolidated income statement EUR million 7-9 7-9 1-9 1-9 1-12 2005 2004 2005 % 2004 % 2004 Turnover 23.9 21.1 66.5 100.0 63.3 100.0 84.7 Other income 0.0 0.2 0.2 0.3 0.2 0.3 0.7 Profit on sale of investment property 0.0 0.0 0.3 0.5 0.0 0.0 0.1 Change in value of investment property 8.3 0.0 16.1 24.2 0.0 0.0 -5.0 Expenses Depreciation and impairments 0.1 0.2 0.2 0.3 0.2 0.3 0.2 Other expenses 8.9 5.9 24.0 36.1 20.6 32.5 27.8 Operating profit 23.3 15.2 58.8 88.5 42.7 67.5 52.6 Net financial expenses 7.2 6.6 25.5 38.4 19.5 30.8 26.1 Profit before taxes 16.1 8.6 33.3 50.2 23.2 36.7 26.5 Taxes -4.3 -2.4 -9.2 -13.8 -2.3 -3.7 -3.8 Profit 11.8 6.2 24.2 36.4 20.9 33.0 22.7 Profit attributable to: Shareholders of the parent company 11.7 6.2 24.1 20.9 22.7 Minority interests 0.1 0.0 0.1 0.0 0.0 Total 11.8 6.2 24.2 20.9 22.7 Earnings per share, EUR 0.10 0.06 0.21 0.20 0.22 Earnings per share, diluted, EUR 0.09 0.06 0.20 0.20 0.22 Consolidated balance sheet EUR million 30 Sept. 2005 30 Sept. 2004 31 Dec. 2004 Assets Non-current assets Intangible assets 0.5 0.3 0.5 Tangible assets 0.5 1.1 1.7 Investment properties 894.2 740.0 738.7 Investmets 0.1 0.2 0.0 Deferred tax assets 0.0 Non-current assets, total 895.4 741.6 740.8 Current assets Short-term receivables 6.3 2.4 4.2 Cash and cash equivalents 8.8 27.3 7.9 Current assets, total 15.1 29.8 12.2 Assets, total 910.4 771.4 753.0 Liabilities and shareholders' equity Equity attributable to equity holders of the parent Share capital 168.5 156.3 156.8 Share premium fund 59.7 34.9 35.0 Treasury shares 0.0 -4.7 -4.7 Fair value reserve -15.9 -10.9 -13.3 Other funds 6.6 6.6 6.6 Retained profits 25.4 22.7 22.9 Profit 24.2 20.9 22.7 Shareholders' equity, total 268.3 225.7 226.0 Minority interest 2.9 0.0 0.0 Liabilities Long-term liabilities 570.7 509.2 493.5 Deferred tax liabilities 9.1 4.3 3.0 Long-term liabilities, total 579.9 513.4 496.6 Short-term liabilities 59.4 32.2 30.5 Liabilities. total 639.2 545.7 527.0 Liabilities and shareholders' equity, total 910.4 771.4 753.0 Statement of changes in shareholders' equity Attributable to equity holders of the parent Share premium fund and Fair Share other value Treasury Retained Total EUR million capital reserves reserve shares profits equity Shareholders' equity 1 Jan. 2004 142.8 34.8 -7.7 -4.7 37.1 202.4 Cash flow hedges -3.2 -3.2 Profit 20.9 20.9 Total recognised income and expense -3.2 20.9 17.7 Dividends -14.3 -14.3 Shares issued 13.5 6.7 20.2 Other changes -0.2 -0.2 Shareholders' equity 30 Sept. 2004 156.3 41.5 -10.9 -4.7 43.5 225.7 Shareholders' equity 1 Jan. 2005 156.8 41.5 -13.3 -4.7 45.6 226.0 Change in share capital -5.2 5.2 4.7 -4.7 0.0 Cash flow hedges -2.6 -2.6 Profit 24.1 24.1 Total recognised income and expense -2.6 24.1 21.5 Dividends -15.7 -15.7 Shares issued 16.2 19.5 35.7 Shares subscribed based on warrants 0.7 0.0 0.1 0.8 Shareholders' equity 30 Sept. 2005 168.5 66.3 -15.9 0.0 49.4 268.3 Cash flow statement EUR million 1-9 2005 1-9 2004 1-12 2004 Operating activities Profit before taxes 33.3 23.2 26.5 Adjustments: Profit on sale of investment property -0.3 0.0 -0.1 Change in value of investment property -16.1 0.0 5.0 Depreciation and impairments 0.2 0.2 0.1 Financial income and expenses 25.3 19.5 26.1 Other adjustments 1.5 0.4 0.2 Cash flow before change in working capital 43.9 43.3 57.7 Change in working capital 2.4 0.3 -0.2 Cash flow from operating activities before financial items and taxes 46.3 43.6 57.5 Interest paid and payments for other financial expenses of operating activities -21.6 -16.3 -28.0 Dividend and interest received from business operations 0.3 0.5 0.8 Taxes paid -3.1 -3.5 -4.2 Cash flow from operating activities 21.8 24.3 26.1 Investing activities Investments in tangible and intangible assets -7.3 -8.5 -10.8 Shares in subsidiaries purchased -82.7 -7.6 -8.8 Shares in subsidiaries sold 0.0 0.7 0.8 Shares in associated companies sold 2.8 0.0 0.0 Other investments sold 1.0 0.0 0.1 Cash flow from investing activities -86.2 -15.3 -18.7 Financial activities Share issue 38.4 20.3 20.8 Fund payments from minority interest 0.0 0.0 0.1 Withdrawals of short-term loans 99.6 8.1 18.2 Repayments of short-term loans -78.5 -8.0 -18.1 Withdrawals of long-term loans 199.7 4.9 414.9 Repayments of long-term loans -178.3 -7.3 -435.7 Dividend paid and other distribution of profit -15.7 -14.3 -14.3 Cash flow from financial activities 65.2 3.7 -14.1 Increase in cash and cash equivalents 0.8 12.7 -6.7 Cash and cash equivalents at the beginning of period 7.9 14.7 14.7 Cash and cash equivalents at the end of period 8.8 27.3 7.9 Segment reporting EUR million 7-9 2005 7-9 2004 1-9 2005 1-9 2004 1-12 2004 Turnover Shopping Centres 15.4 12.0 40.7 35.9 48.4 Supermarkets and Shops 8.6 9.1 25.8 27.4 36.3 Others 0.0 0.0 0.0 0.0 0.0 Total 23.9 21.1 66.5 63.3 84.7 Operating profit Shopping Centres 20.1 9.4 42.1 24.6 18.8 Supermarkets and Shops 5.0 8.3 21.2 20.8 37.5 Others -1.9 -2.5 -4.5 -2.7 -3.7 Total 23.3 15.2 58.8 42.7 52.6 Key financial figures 1-9 2005 1-9 2004 1-12 2004 Earnings per share, EUR 0.21 0.20 0.22 Earnings per share, diluted, EUR 0.20 0.20 0.22 Equity per share, EUR 2.15 2.02 2.01 Return on equity (ROE), % 13.5 13.8 11.0 Return on investment (ROI), % 10.1 7.9 7.3 Equity ratio, % 29.8 29.3 29.6 Consolidated contingent liabilities EUR million 30 Sept. 2005 30 Sept. 2004 31 Dec. 2004 Mortgages on land and buildings 2.0 362.2 2.4 Group company shares pledged 0.0 76.9 0.0 Other pledged shares 0.0 76.8 0.0 Other pledges given 0.0 0.6 0.0 Group's derivatives 30 Sept. 30 Sept. 31 Dec. 2005 2004 2004 Par Fair Par Fair Par Fair EUR million values values values values values values Interest-rate derivatives Interest-rate swaps Maturing in 2007 78.2 -1.0 78.2 -0.3 78.2 -0.5 Maturing in 2008 50.0 -2.6 50.0 -2.1 50.0 -2.2 Maturing in 2009 126.7 -9.4 129.6 -7.4 128.2 -7.9 Maturing in 2010 83.0 -8.5 83.0 -6.8 83.0 -7.9 Total 337.9 -21.5 340.8 -16.7 339.4 -18.5 Interest-rate options Interest-rate caps purchased Maturing in 2004 0.0 0.0 53.8 0.0 0.0 0.0 Total 0.0 0.0 53.8 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 2.1 million) has been booked in interest expenses. Summary of effects of IFRS on profit EUR million 7-9/2004 1-9/2004 1-12/2004 Profit FAS 4.5 12.8 17.4 Change in valuation of investment property 2.4 5.4 2.4 Change in deferred tax assets and liabilities -0.6 2.7 3.1 Change in values of interest rate derivatives 0.0 0.0 -0.2 Changes total 1.8 8.0 5.3 Profit IFRS 6.2 20.9 22.7 Summary of effects of IFRS on shareholders' equity EUR million 1 Jan. 2004 30 Sept. 2004 31 Dec. 2004 Shareholders' equity FAS 278.0 296.9 302.0 Change in valuation of investment properties 16.2 21.6 18.6 Change in values of interest rate derivatives -10.9 -14.7 -18.3 Reclassification of treasury shares -4.7 -4.7 -4.7 Reclassification of capital loan -68.5 -68.5 -68.5 Change in deferred tax assets and liabilities -7.7 -4.3 -3.0 Other changes 0.0 -0.6 -0.2 Changes total -75.6 -71.1 -76.0 Shareholders' equity IFRS 202.4 225.7 226.0 Business combinations 1 July 2005 Citycon acquired 75% of Swedish shopping centre Åkersberga and 21 July 2005 100% of Estonian shopping centre Rocca al Mare. The identifiable assets and liabilities, corresponding the shares acquired, of Åkersberga and Rocca al Mare have been recognized at fair value. From the date of acquisition, Åkersberga and Rocca al Mare have contributed EUR 0.7 million to the Group's profit. The figures are unaudited. Accounting Principles The accounting principles applied in the annual financial statements as of 31 December 2004 are applied in these financial statements. Financial Information in 2005 Financial results for 1 January - 31 December 2005 will be published on 9 February 2006 at 12.00 noon. Further information for investors is available on Citycon's website, www.citycon.fi. Further information: CEO Mr Petri Olkinuora Tel. +358 9 6803 6738 or +358 400 333 256 petri.olkinuora@citycon.fi Distribution: Helsinki Stock Exchange Main media www.citycon.fi Report on the general review of Citycon Oyj's interim report for the period 1 January - 30 September 2005 We have generally reviewed the interim report of Citycon Oyj for the period 1 January - 30 September 2005. The Board of Directors and the Managing Director have prepared an interim report in accordance with the Securities Market Act, chapter 2, paragraph 5. Based on our interim review we express at the request of the Board of Directors a report in accordance with the Securities Market Act, chapter 2, paragraph 5. We conducted our general review in accordance with the International Standard on Auditing applicable to general review engagements. This standard requires that we plan and perform the review to obtain reasonable assurance as to whether the financial statements are free of material misstatement. The general review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Based on our general review, nothing has come to our attention that causes us to believe that the interim report does not give a true and fair view in accordance with the Securities Market Act regarding the financial position of Citycon Oyj. Helsinki, 18 October 2005 Tuija Korpelainen Mikael Holmström Authorized Public Accountant Authorized Public Accountant

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