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Citycon Oyj
STOCK EXCHANGE BULLETIN 29 August 2002 at 10 am
Interim report for 1 January to 30 June
2002
TURNOVER AND RESULT
FOR THE PERIOD UNDER REVIEW
Citycon Group's result for the first six months of 2002 was
EUR 7.4 million
(EUR 6.6 million a year earlier) on a turnover of EUR 40.2
million
(EUR 40.3 million). The operating profit was EUR 22.8 million
(EUR 23.1 million). Earnings per share were EUR 0.07 (EUR
0.06). Performance was in line with expectations.
BUSINESS ENVIRONMENT
Economic situation
Growing economic uncertainty and the falling stock market
eroded the optimistic view of an economic upswing already
this year. Gross production growth forecasts for the remainder
of 2002 in Finland, as in Euroland as a whole, were revised
downwards. Nevertheless, slower than expected recovery has
not been reflected in the domestic retail trade, which has
been bolstered by low inflation, falling interest rates and
the fact that consumers continue to have strong faith in their
own finances. This has translated into very good retail trade
performance during the first half of the year.
Slow economic recovery on the one hand and
increased economic uncertainty on the other continue to be
reflected in a decline in construction volume. Developers
are now thinking much more carefully before embarking on new
construction projects and there is minimal speculative building.
Vacancy rates for retail premises have remained
low owing to the continued rise of retail sales. The strongest
demand for retail premises is in the focus of Citycon's business
activities, the Helsinki Metropolitan Area and growth centres
in Finland, where there is no end to demand in sight. The
Finnish Institute of Real Estate Economics' (KTI) business
barometer indicates that although yield expectations were
rising during the first half of the year, the rise seems likely
to level off during the remainder of the year.
Trends in the retail
trade
The retail trade performed encouragingly and better than expected
during the first half of 2002. Sales in the retail trade rose
by 4.4 per cent, excluding car sales. After a long downturn,
the start of a rise in car sales was also witnessed.
According to a recent questionnaire by the
Finnish Retail Federation, grocery and department store trade
is expected to grow by 3-5 per cent, the speciality goods
trade by 2-4 per cent and the building and interior design
trade by 0-2 per cent during the remainder of 2002. Despite
slow economic recovery, this encouraging trend is in the wake
of strong consumer confidence in household finances, greater
purchasing power also in 2002 and savings rates remaining
below the long-term average.
Capital market
Long-term interest rates peaked during the first half of May
this year and have since fallen. This trend has also continued
after the period under review. The continued rise in short-term
interest rates also peaked in the first half of May. Since
then, interest rates have fallen to their lowest level to
date this year. Given the present economic conditions, there
would seem to be no pressure to raise interest rates. The
HEX index fell from 9036 points at the start of the period
under review to 6063 at 30 June and has been falling since.
CITYCON'S BUSINESS
Letting activities
During the period under review, Citycon
concluded 98 (116) rent agreements,
31 (51) of which were new lets to former tenants and 67 (65)
lets to new tenants. The rent generated by agreements averaged
4.1 per cent more than previous agreements for the same premises.
New rent agreements were concluded for a surface area totalling
around 15,000 m² (26,000 m²).
The letting rate of the property stock at
the end of the period under review
was 98 per cent (98%).
At the end of the period under review, Citycon
had 1,138 rent agreements,
the average length of which weighted by gross rent was 4.2
years. Major tenants include various units of Kesko, Nordea,
Lindex, Hennes & Mauritz, McDonald's, Tiimari, Alko, Vaatehuone,
Dressmann and Seppälä.
Changes in the property
stock
In line with its strategy, Citycon acquired retail premises
in Heikintori Oy,
a shopping centre in Tapiola Espoo, during the year under
review. Subsequent to this deal, Citycon's holding in Heikintori
Oy rose to 52.1 per cent and Heikintori became a Citycon subsidiary.
In line with its divestment programme, Citycon
sold the entire share capital in
15 (11) properties and reduced its interest in one (2) property
during the period under review. Citycon made a gain of EUR
0.4 million (EUR 1.8 million) on properties divested for a
total of EUR 5.8 million (EUR 9.5 million). This gain is shown
as a part of turnover.
FINANCE
The consolidated balance sheet total was EUR 748.7 million
(EUR 764.1 million) at
30 June 2002. The group's interest bearing debt was EUR 446.6
million
(EUR 467.9 million). The average interest rate on debt was
5.4 per cent (5.9%) p.a. The average borrowing period was
5.5 years (6 years) and the average interest-rate fixing period
was 4.3 years (5 years). Group equity ratio stood at 38.1
per cent (36.7%) and 47.3 per cent (45.7%) with the capital
loan included in core capital. The EBITDA/interest charge
ratio, which describes debt servicing ability was 2.1.
SHARE PERFORMANCE
At the start of the period under review, Citycon shares were
trading at EUR 1.02 and at 28 June 2002, the last trading
day of the period under review, at EUR 1.05. During the period
under review the lowest and highest trading prices were EUR
0.98 and
EUR 1.12 respectively. The middle trading price weighted by
the number of shares traded was EUR 1.06. The market capitalisation
at the end of June 2002 was
EUR 107 million (EUR 106 million).
Citycon owned 3,874,000 of its own shares, which it had acquired
for a total of EUR 4,675,812.76. The number of shares acquired
corresponded to 3.7 per cent of Citycon's share capital and
votes.
ANNUAL GENERAL MEETING
Citycon's annual general meeting held on 26 March 2002 adopted
the company's financial statements for 2001 and released the
members of the Board of Directors and the Managing Director
from liability. The annual general meeting voted in favour
of the Board of Directors' recommendation to declare a dividend
for the financial year ended 31 December 2001 of EUR 0.08
per share on those shares outside the company and to retain
the remaining profit. The dividend was paid to shareholders
on 10 April 2002.
The other decisions made by the Annual General
Meeting of Shareholders appear in the interim report for Q1
2002. None of the authorisations granted by the AGM have been
exercised.
Board of Directors
The Annual General Meeting confirmed the number of Board members
at six. Members of Citycon's Board of Directors are Stig-Erik
Bergström DSc, Heikki Hyppönen MSc (Econ & Bus
Admin), Juhani Järvi Executive Vice President CFO (finance
and administration), Jorma Lehtonen, Director, Real Estate,
Carl G. Nordman Counsellor of Industry (Hon) and Juha Olkinuora,
Unit Managing Director. The Board of Directors elected Stig-Erik
Bergström as Chairman and Jorma Lehtonen as Deputy Chairman.
Auditors
Ari Ahti authorised public accountant and Jaakko Nyman authorised
public accountant are the company's auditors. Authorised Public
Accountants KPMG Wideri Oy Ab are the company's deputy auditors.
CHANGES WITHIN THE
ORGANISATION
At its meeting of 30 April 2002, the Board of Directors appointed
Petri Olkinuora MSc (Tech), MBA as Citycon's new managing
director effective 1 August 2002. He has linear responsibility
also for Citycon's entire property business. Olli-Pekka Mikkola
LLM assumed a new post as the company's Deputy Managing Director
on 1 August 2002. He is responsible for financial and legal
affairs, financial relations and long-term balance sheet planning.
EMPLOYEES
At the end of the period under review, the group had a total
of 33 (24) employees, 27 (14) of which were employed by the
parent company.
FUTURE OUTLOOK
The trend in retail sales during the first half of the year
was in line with expectations and sales rose by more than
4 per cent. This was against a background of greater purchasing
power and consumers' strong belief in their own finances.
This trend is reflected in the property market through good
demand for retail premises, especially in major growth centres.
There are no signs of a decline in the need for retail premises
in the retail and speciality goods trade. Falling interest
rates and business effected in line with plans give Citycon's
management reason to believe that the result for 2002 will
be at least on a par with that of 2001.
Helsinki, 29 August 2002
CITYCON OYJ
Board of Directors
Further information is available from:
Managing Director Mr Petri Olkinuora on +358 9 680 36 738,
GSM +358 400 333 256
or from Deputy Managing Director Mr Olli-Pekka Mikkola on
+358 9 680 36 730, GSM +358 400 601 089
Distribution: Helsinki Exchanges, main media
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CONSOLIDATED
INCOME STATEMENT
EUR 1000 |
|
1-3
2002 |
1-3
2001 |
1-12
2001 |
| Turnover |
40,193 |
40,319 |
77,716 |
| Other income |
272 |
0 |
105 |
| Operating profit |
22,790 |
23,097 |
44,895 |
Financial charges (net)
|
-12,404 |
-13,877 |
-27
252 |
Profit before exceptional
items and taxes
|
10,386 |
9,220 |
17,643 |
Profit for the period
under review |
7,444 |
6,583 |
12,595 |
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| CONSOLIDATED
BALANCE SHEET |
|
|
|
| Assets |
|
|
|
| Fixed assets |
|
|
|
| Intangible assets |
6,084 |
5,276 |
5,494 |
Tangible assets
|
627,496 |
616,996 |
616,548 |
| Financial assets |
98,034 |
113,356 |
112,987 |
| Own shares |
4,068 |
4,029 |
3,951 |
| Fixed assets, total |
735,654 |
739,657 |
738,980 |
| Current assets |
|
|
|
| Debtors |
3,910 |
5,027 |
4,177 |
| Cash in hand and at bank |
9,181 |
19,460 |
5,770 |
Current assets, total
|
13,091 |
24,487 |
9,948 |
| Assets, total |
748,746 |
764,144 |
748,928 |
| Shareholders’ equity and liabilities |
|
|
|
| Subscribed capital |
197,492 |
192,117 |
198,086 |
| Capital loan |
68,452 |
68,452 |
68,452 |
| Minority interests |
90,454 |
90,771 |
89,918 |
Creditors
|
392,347 |
412,803 |
392,471 |
Long-term
|
355,632 |
361,259 |
354,873 |
| Short-term |
36,715 |
51,544 |
37,598 |
Shareholders' equity and
liabilities, total
|
748,746 |
764,144 |
748,928 |
Gross fixed asset balance
sheet investments
|
4,884 |
16,192 |
21,794 |
| as % of turnover |
12,2 |
40,2 |
28,0 |
Planned depreciation
|
3,499 |
3,334 |
6,792 |
Employees, average
|
31 |
24 |
26 |
FINANCIAL
INDICATORS
|
|
|
|
EPS, EUR
|
0.07 |
0.06 |
0.12 |
Equity per share, EUR
|
1.90 |
1.85 |
1.91 |
| Equity ratio, % |
38.1 |
36.7 |
38.2 |
Equity ratio, % (capital loan
treated as core capital)
|
47.3 |
45.7 |
47.3 |
| CONSOLIDATED
CONTINGENT LIABILITIES |
|
|
|
Shares pledged
(book value)
|
550,426 |
493,355 |
552,613 |
| Other pledges given |
598 |
46,963 |
1,663 |
Mortgages on land
and buildings
|
11,951
|
15,147 |
15,147 |
Interest rate swaps 1999
(5-year fixed interest)
nominal value of underlying
instrument
|
50,000
|
50,000 |
50,000 |
Interest rate swaps 1999
(10-year fixed interest)
nominal value of underlying
instrument
|
66,000
|
66,000 |
66,000 |
Interest rate swaps 1999
(11-year fixed interest)
nominal value of underlying
instrument
|
82,412
|
82,412 |
82,412 |
Interest rate option 1998 and
1999 (5-year interest cap)
nominal value of underlying
instrument
|
132,512
|
132,512 |
132,512 |
| The company uses derivatives solely
to reduce or eliminate risks in the balance sheet. |
OWN
SHARES
Acquired between 25 November 1999 and 30 June 2002 |
|
|
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| Number of shares, 1000 |
3,874
|
3,874 |
3,874 |
| Total nominal value |
5,230 |
5,212 |
5,212 |
| Share of subscribed capital, % |
3.7
|
3.7 |
3.7 |
| Share of votes, % |
3.7
|
3.7 |
3.7 |
| Consideration paid |
4,676
|
4,676 |
4,676 |
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Own shares have been valued at the closing
price on 30 June 2002. This is lower than the acquisition
price.
The figures are unaudited.
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