CITYCON OYJ STOCK EXCHANGE BULLETIN, 27 FEBRUARY 2003 AT 11.00AM
CITYCON'S
FINANCIAL STATEMENTS FOR 1 JANUARY TO 31 DECEMBER 2002
Continued earnings
progress for Citycon
- The result for the year under review before exceptional
items and
taxes rose by 8.7 per cent to EUR 19.2 million (EUR
17.6m).
Turnover was up by 2.2 per cent to EUR 79.4 million (EUR 77.7m).
-
Operating profit was down by 2.2 per cent to EUR 43.9 million
(EUR 44.9m).
-
Earnings per share were EUR 0.14 (EUR 0.12).
- Payment of a dividend of EUR
0.09 per share (EUR 0.08 per share)
is being recommended for all shares
outside the company's
ownership. The dividend corresponds to 66.5 per cent of
earnings.
- Market development was encouraging for Citycon. Demand for and
occupancy rates of retail premises remained healthy.
KEY FIGURES
Jan-Dec 2002 Jan-Dec 2001
Turnover, EUR million
79.4 77.7
Turnover, increase %
2.2 2.2
Operating profit, EUR million 43.9
44.9
as % of turnover 55.3 57.8
Result
before exceptional items
and taxes, EUR million 19.2
17.6
as % of turnover
Number of employees at 31 December 2002 33 29
EPS, EUR
0.14 0.12
Equity per share, EUR
1.96 1.91
P/E ratio
8 8
Dividend per share, EUR 0.09
0.08
(Board of Director's recommendation)
Return on equity (ROE), %
4.8 4.5
ROE excluding minority interests, % 7.1
6.7
Return on investment (ROI), % 6.0
6.1
Equity ratio, % 39.1 38.2
Equity
ratio, capital loan
included in core
capital, % 48.4 47.3
Net rental return of property
stock, % 8.6 8.3
Economic occupancy rate
of retail premises,
% 98 98
TURNOVER AND BUSINESS
ENVIRONMENT
Citycon's turnover principally consists of the rental income
from
its retail properties. During 2002 the company's turnover rose to
EUR
79.4 million (EUR 77.7m), of which gross rental income
accounted for EUR 73.7
million (EUR 71.3m). Shopping centres and
the 15 largest supermarkets account
for 75 per cent of the income
from Citycon's operations. Other turnover
consists mostly of
proceeds from the divestment of properties. In 2002,
Citycon made
gains of EUR 0.4 million (EUR 1.7m) on the divestment of
property
assets.
Citycon's turnover and rental agreement stock developed
as expected
during 2002. There was continued strong demand for retail
premises
in the Helsinki region and in Finland's largest cities. Despite
uncertainty in the economy as a whole, consumers were very
confident about
their own personal finances and there was continued
brisk consumer demand.
Figures released by Statistics Finland show
that sales in the retail trade,
excluding cars, rose by 3.7 per
cent and grocery sales by 4.7 per
cent.
Higher consumer demand sustained the strong demand for retail
premises. Despite new construction projects, overall occupancy
rates for
retail premises remained high. Slow urban planning and
construction continued
to hamper the availability of good, new
retail premises.
CLIENTS AND
RENTAL AGREEMENTS
At year-end 2002, Citycon had 700 tenants, with whom it
had
concluded 1 150 rental agreements. Most, 18.2 per cent, of
Citycon's
rental agreements are long, fixed-term agreements. The
fixed-term agreements
are valid for an average of 4.2 years.
The total annual rent of new rental
agreements signed during the
year amounted to some EUR 6.9 million. The most
significant new
agreements were signed with Kesko and HOK Liiketoiminta Oy.
Citycon's 10 largest clients generate around 69.2 per cent of the
company's
net rental income. The vacancy rate of Citycon's retail
premises remained
healthy at 2.0 per cent.
NET RENTAL INCOME AND OPERATING PROFIT
During
2002, net rental income from Citycon's property assets
totalled EUR 56.2
million (EUR 54.5m), of which 49.3 per cent was
generated by Shopping Centres
and 50.7 per cent by Supermarkets &
Shops. Calculated in accordance with the
recommendations of the
Institute for Real Estate Economics (KTI) net rental
income from
the entire property stock were 8.6 per cent (8.3%). Shopping
Centres generated a total net return of 8.2 per cent (7.6%) and
Supermarkets & Shops 9.1 per cent (9.0%). The economic occupancy
rate of
Citycon's retail premises was 98 per cent.
The operating profit for the 2002
financial year was EUR 43.9
million (EUR 44.9m) and the profit EUR 13.8
million (EUR 12.6m).
This encouraging trend was made on the back of the
completion of
the IsoKarhu Shopping Centre extension in Pori, active letting
activities and positive market development in the line of
business.
BUSINESS DEVELOPMENT PROJECTS
During the 2002 financial year,
Citycon's property assets were
divided into two portfolios: Shopping Centres
and Supermarkets &
Shops.
On the Shopping Centres front, major
development projects during
2002 involved planning for extensions to the
Myyrmanni, IsoKarhu
and Lippulaiva shopping centres in Vantaa, Pori and Espoo
respectively. These extensions seek to improve the market position
of these
shopping centres and to increase income.
On the Supermarkets & Shops front,
major development projects
during the 2002 financial year focused primarily
on property
refurbishment and other modification work necessary for tenants'
business activities.
IMPACT ON CITYCON OF THE EVENT AT THE MYYRMANNI
SHOPPING CENTRE
The damage caused by the explosion at the Myyrmanni Shopping
Centre
in October 2002 had minimum impact on Citycon's performance.
Citycon
Oyj and Kiinteistö Oy Myyrmanni were insured against the
material damage
caused by the explosion and the loss of rent
resulting from the temporary
closure of the shopping centre.
Kiinteistö Oy Myyrmanni contributed to the
fund to raise money for
the victims of the exlosion.
PROPERTY ACQUISITIONS
AND DIVESTMENTS
The 2002 financial year saw Citycon further intensify its
focus on
its chosen geographical areas and acquired retail properties or
holdings in retail properties in the Helsinki region. In line with
its
strategy, Citycon divested properties outside its core
business.
Citycon
acquired retail premises in Heikintori Oy, a shopping
centre in Tapiola
Espoo. Subsequent to these deals, Citycon's
holding in Heikintori Oy rose to
52.1 per cent and Heikintori
became a Citycon subsidiary. During the 2002
financial year,
Citycon also increased its holding in Kiinteistö Oy Saturnus,
in
Annankatu in the centre of Helsinki. Subsequent to the deal,
Citycon
owns all the commercial property in Kiinteistö Oy Saturnus.
In line with its
divestment programme, Citycon sold the entire
share capital in 18 (20)
properties and reduced its interest in two
(5) properties during 2002.
Citycon made a gain of EUR 0.4 million
(EUR 1.7m) on properties divested for
a total of EUR 6.4 (EUR
11.5m). This gain is shown as part of turnover.
BALANCE SHEET AND FINANCES
At year-end 2002, Citycon owned 152 properties,
which had a total
book value of EUR 649.2 million (EUR 660.4m). The market
value of
the properties was EUR 650.1m (EUR 666.6m). The balance sheet total
at 31 December 2002 was EUR 746.3 million (EUR 748.9m), of which
liquid
cash assets amounted to EUR 11.7 million (EUR 5.8m), or 1.6
per cent of the
balance sheet total.
Creditors at the consolidated balance sheet date
totalled EUR 383.3
million (EUR 392.5m). Interest bearing debt amounted to
EUR 440.5
million (EUR 451.5m) and zero interest-rated debt was EUR 68.5
million (EUR 68.5m). The average interest rate on debt was 5.3 per
cent
(5.8%) a year. The average borrowing period was approximately
4.9 (5.8) years
and the average interest-rate fixing period was 4.1
years (5.0). Group equity
ratio stood at 39.1 per cent (38.2%) and
48.4 per cent (47.3%) with the
capital loan included in core
capital.
Of Citycon's loan portfolio, 84 per
cent were floating loans. Half
of these were swapped to fixed rate using
interest-rate swaps and a
third was hedged through interest-rate caps. The
nominal value of
interest-rate swaps was EUR 199 million and that of
interest-rate
caps EUR 133 million. The EBITDA/interest charge ratio, which
describes debt servicing ability, was 2.1 (1.9).
Citycon Group's financial
position was good throughout the year.
Citycon signed a EUR 360 million
syndicated loan facility on 25
November 2002. Nordea Bank Finland Plc acted
as the credit
coordinator and lead manager together with managers Svenska
Handelsbanken AB of Sweden and EuroHypo AG of Germany. The loan
facility is
intended to broaden Citycon's capital base, to secure
future investments and
to restructure Citycon's existing loan
stock. The arrangement will make at
least EUR 150 million available
for Citycon to fund future new property
investments.
Gross investments made by the Group in 2002 totalled 5.9
million
(20.4m) and were mostly in the acquisition of shares in new
properties and the refurbishment of Citycon's existing
properties.
EMPLOYEES AND SALARIES
There was a moderate increase in
employee numbers during 2002. At
the end of the financial year, the Group had
a total of 33 (29)
employees, 27 (23) of which were employed by the parent
company.
Wages and salaries paid by the Citycon Group totalled EUR 2.0
million, of which EUR 0.3 million was paid to managing directors
and
members of the Board of Directors. Wages and salaries paid to
employees in
the parent company totalled EUR 1.7 million, of which
EUR 0.2 million was
paid to the CEO and to members of the Board of
Directors.
Petri Olkinuora
MSc (Tech) was appointed the company's new CEO and
Olli-Pekka Mikkola LLM
deputy CEO. Both appointments became
effective on 1 August 2002. Olli-Pekka
Mikkola left the company on
31 December 2002.
EVENTS TAKING PLACE AFTER 31
DECEMBER 2002
Citycon specified its operational model and organisation at
the
start of 2003. The company has split its property business into
three
divisions according to property type: Shopping Centres,
Supermarkets & Shops
and Retail Parks. In future, the company will
increasingly address the
development of retail premises and new
retail centres such as retail parks.
The new operational model consolidates Citycon's position as
Finland's
leading company specialising in retail premises. Retail
Park development
projects will enable Citycon to expand its target
client base, to provide a
more comprehensive service for various
sectors of the retail trade and to
provide diverse premises
solutions to support the business of its clients.
Property assets
will continue to be focused on Finland's largest cities,
where
Citycon is working on development projects to further consolidate
its
position as the best provider of retail premises and its
clients' long-term
partner of choice.
SHARE PERFORMANCE
At 31 December 2002, Citycon's share
capital was EUR 142,800,108.30
distributed among 105,777,858 shares, each
having a nominal value
of EUR 1.35.
During the year under review,
8,581,070 Citycon shares (4,652,941)
were traded on the Helsinki Exchanges
for a total of EUR
9,060,607.20 (EUR 4.7m). Nominee registered shares and
shares in
foreign ownership accounted for 908,500 Citycon shares,
corresponding to 0.87 per cent of the shares and votes.
The highest and
lowest trading prices during the year under review
were EUR 1.12 (EUR 1.07)
and EUR 0.98 (EUR 0.93) respectively. The
weighted middle price during the
period under review was EUR 1.06
(EUR 1.01) and the shares closed on the year
at EUR 1.10 (EUR
1.02). The market capitalisation value at the balance sheet
date
was EUR 112.1 million, excluding the impact of those shares owned
by
the company.
During 2002, the HEX All Share Index fell by 34.4 per cent (31
December 2002) and the Portfolio Index by 16.7 per cent. However,
the index
reflecting the share prices of listed property investment
companies rose by
5.3 per cent during 2002.
Citycon's ownership structure remained almost
unchanged. Citycon
had 1,123 shareholders at 31 December 2002. At year-end
2002, the
ten largest shareholders owned a total of 82.4 per cent of
Citycon's shares and votes. The largest shareholders were Nordea
Bank
Finland Plc, Kesko Corporation including its subsidiaries and
associated
companies, Sampo Life Insurance Company Ltd and Etra-
Invest Oy, with a total
of 78.0 per cent of the company's shares
and votes. At 31 December 2002,
members of Citycon's Board of
Directors owned 108,257 shares, corresponding
to 1.0 per cent of
the total shares and votes. Citycon's CEO and Corporate
Management
Committee had no interests in the company's shares.
At the end
of the period under review, Citycon owned 3,874,000 of
its own shares, which
it acquired for a total of EUR 4,675,812.76,
the lowest price paid being EUR
1.10 and the highest EUR 1.35. The
shares owned by company represented 3.7
per cent of total shares
and votes.
AUTHORISATIONS
Meeting on 26 March
2002, Citycon's Annual General Meeting
authorised the Board of Directors to
decide whether to increase the
share capital by 28,464,893.10 through one or
more rights issues
offering a maximum aggregate of 21,085,106 shares.
Furthermore, the
Annual General Meeting authorised the Board of Directors to
decide
on the purchase or conveyance of a maximum of 14,124,892 of the
Company's own shares having a nominal value of 1.35 during the
validity of
this authorisation. At the end of 2002 none these
authorisations had been
exercised. The authorisations are valid
until 20 March 2003.
BOARD OF
DIRECTORS AND AUDITORS
Stig-Erik Bergström DSc (Econ & Bus Admin), Heikki
Hyppönen MSc
(Econ & Bus Admin), Juhani Järvi MSc (Econ & Bus Admin), Jorma
Lehtonen MSc (Eng), Carl G. Nordman Counsellor of Industry (Hon)
and Juha
Olkinuora MSc (Eng) were appointed to Citycon's Board of
Directors on 26
March 2002. Stig-Erik Bergström was elected as
Chairman and Jorma Lehtonen as
Deputy Chairman of the Board of
Directors.
Ari Ahti authorised public
accountant and Jaakko Nyman authorised
public accountant serve as the
company's auditors. Authorised
Public Accountants KPMG Wideri Oy Ab are the
company's deputy
auditors.
BOARD OF DIRECTORS' DIVIDEND
RECOMMENDATION
Citycon's Board of Directors is to recommend to the Annual
General
Meeting convening on 20 March 2003 that a dividend of EUR 0.09 per
share be paid for 2002 on all shares outside the company's
ownership. The
Board of Directors recommends that the record date
be 25 March 2003 and that
the dividend be paid to shareholders on 1
April 2003.
FUTURE
OUTLOOK
The demand for, occupancy rates and rent levels of retail premises
are expected to remain healthy in the Helsinki region and in
Finland's
largest cities. There is still adequate demand for good
retail premises since
consumers' have strong confidence in their
own finances and private
consumption is rising. The encouraging
trend in the retail trade is
constantly creating a need for new
premises and in turn bolstering demand for
retail premises. Despite
new construction, the scant supply of retail
premises continues to
sustain demand.
Citycon's new business model and
especially development projects
will provide a platform for long-term growth
potential. Citycon's
turnover and earnings in 2003 are expected to be in line
with those
of the previous year.
Citycon Oyj
Board of
Directors
Further information is available from:
CEO Mr Petri Olkinuora,
tel +358 680 36738 or +358 400 333
256
petri.olkinuora@citycon.fi
Distribution:
Helsinki Exchanges
Main
media
www.citycon.fi
FINANCIAL STATEMENTS
EUR 1000
Jan-Dec 2002 Jan-Dec 2001
CONSOLIDATED INCOME
STATEMENT
Turnover 79,398 77,716
Other
income 287 105
Operating profit
43,895 44,895
Financial charges (net) -24,715
-27,252
Profit before exceptional
items and taxes 19,180
17,643
Profit for the financial year 13,801
12,595
CONSOLIDATED BALANCE SHEET
Assets
Fixed assets
Intangible assets
4,036 5,494
Tangible assets
625,508 616,548
Financial assets 97,710
112,987
Own shares 4,261 3,951
Fixed
assets, total 731,515 738,980
Current assets
Debtors
3,088 4,177
Cash in hand and at bank
11,730 5,770
Current assets, total 14,818
9,948
Assets, total 746,333
748,928
Shareholders' equity and
liabilities
Subscribed capital
204,045 198,086
Capital loan 68,452
68,452
Minority interests 90,521
89,918
Creditors 383,315 392,471
Long-term
371,769 354,873
Short-term
11,545 37,598
Shareholders' equity and
liabilities, total
746,333 748,928
Gross fixed asset balance
sheet
investments 5,854 20,368
as % of turnover
7,4 26,2
Planned depreciation and
value adjustments
7,620 6,792
Employees, average 33
26
FINANCIAL INDICATORS
EPS, EUR
0.14 0.12
Equity per share, EUR 1.96
1.91
Equity ratio % 39.1 38.2
Equity
ratio %
(capital loan
treated as core capital) 48.4
47.3
CONSOLIDATED CONTINGENT LIABILITIES
Shares pledged
(book value)
95,506 111,614
Shares in subsidiaries
441,000
Other pledges given 633
1,663
Mortgages on land
and buildings 323,440
15,147
Interest-rate swaps 1999
(5-year fixed interest)
nominal value of
underlying
instrument -
50,000
market value of underlying
instrument -
447
Interest-rate swaps 1999
(10-year fixed interest)
nominal
value of
underlying instrument - 66,000
market
value of underlying
instrument -
430
Interest rate swaps 1999
(11-year fixed interest)
nominal value
of
underlying instrument - 82,412
market value
of underlying
instrument -
-231
Interest rate swaps 2002
(2-year fixed interest)
nominal value of
underlying
instrument 50,000 -
market value
of underlying
instrument 1,491
-
Interest rate swaps 2002
(7-year fixed interest)
nominal value of
underlying
instrument 66,000 -
market value
of underlying
instrument 5,111
-
Interest rate swaps 2002
(8-year fixed interest)
nominal value of
underlying
instrument 83,000 -
market value
of underlying
instrument 5,418
-
Interest rate option 1998
and 1999
(5-year interest cap)
nominal value
of underlying
instrument -
132,512
market value of underlying
instrument -
- 195
Interest rate option 2002
(5-year interest cap)
nominal
value of underlying
instrument 78,712
-
market value of underlying
instrument 0
-
Interest rate option 2002
(2-year interest cap)
nominal value of
underlying
instrument 53,800 -
market
value of underlying
instrument 1 -
As a result of the loan facility signed in November, Citycon
rearranged hedging accordingly. Derivatives have been valued using
market
prices at the balance sheet date. Calculations comply with
the Finnish
Financial Supervision Authority's regulations governing
credit institutions
on the evaluation of derivative trades in
financial statements.
The company
uses derivatives solely to reduce or eliminate risks in
the balance
sheet.
OWN SHARES
25 November 1999-31 December 2002
Number of shares, 1000
3,874
Total nominal value 5,212
Percentage of share capital 3.7
Percentage of votes
3.7
Consideration paid 4,676
Own shares have been valued at the closing price on 31 December
2002.
This is lower than the acquisition price.
The taxes correspond to the taxes
on earnings during the period
under review.
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