CITYCON OYJ STOCK EXCHANGE BULLETIN 31 AUGUST 2004 10.15
A.M.
PRELIMINARY INFORMATION OF TRANSITION TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS)
Citycon will report its financial statements
for the financial year
2005 according to International Financial Reporting
Standards (IFRS).
The purpose of this release is to present the major impacts
of the
transition from Finnish Accounting Standards (FAS) to IFRS.
This
release covers the preliminary opening IFRS balance as of 1
January 2004 and
the preliminary comparative information for the
first and second quarters of
2004. For the third quarter of 2004 the
comparative IFRS figures will be
reported in connection with the FAS
interim financial reporting and for the
full year 2004 in connection
of the year-end reporting. The final
reconciliation required by IFRS 1
(First-time adoption of IFRS) will be
presented in the interim report
for the first quarter of 2005 as Citycon
starts reporting according to
IFRS for the first time.
The opening IFRS
balance sheet and the comparative information for the
first and second
quarters have been prepared in accordance with the
latest versions of IFRS.
The note -column refers to the additional
information explained in the
separate section. A summary of Citycon's
most significant IFRS accounting
principles is included in this
release.
The figures are unaudited.
Preliminary summary of effects of IFRS on shareholders' equity on as
per 1
January 2004
EUR million
Shareholders' equity FAS 31 December 2003
278.0
IAS 40 Change in valuation of investment properties
+16.0
IAS 31 Change in consolidation of mutual real estate companies
IAS
39 Change in values of interest rate derivatives -10.9
IAS 32
Reclassification of treasury shares -4.7
IAS 32
Reclassification of capita loan -68.5
IAS 12 Change
in deferred tax assets and liabilities -7.7
Shareholders' equity
IFRS 1 January 2004 202.2
Key financial figures
FAS IFRS FAS IFRS FAS IFRS
Q1 Q1 Q2 Q2 Q2 Q2
Cum. Cum.
Earnings per share,
EUR
0.04 0.08 0.04 0.06 0.08 0.14
Earnings per
share,
diluted, EUR 0.04 0.08 0.04 0.06 0.08
0.14
Equity per share, EUR 1.91 1.88 1.95 1.99 1.95
1.99
Return on equity
(ROE), % 8.4 17.5 8.6 12.7
8.5 14.8
Return on investment
(ROI), % 6.0 7.6
6.2 7.7 6.1 7.7
Equity ratio, %, note g 35.6 25.6 36.2
27.1 36.2 27.1
Preliminary IFRS opening balance sheet reconciliation
as of 1 January
2004
EUR million Note FAS IFRS
Prel. IFRS
31 Dec. change 1
Jan.
2003
2004
Assets
Non current assets
Intangible assets
4.5 -4.3 0.2
Tangible assets 729.0
-727.6 1.5
Investment properties a 726.3
726.3
Investments
Holdings in associated
Companies
b 55.5 -55.5
Treasury shares c 4.7
-4.7
Other investments 23.1 -21.8
1.3
Investments, total 83.3 -82.0
1.3
Deferred tax assets d
Non current assets, total
816.9 -87.6 729.3
Current assets
Short-term receivables
3.4 -0.5 2.9
Cash and cash equivalents
15.1 -0.4 14.7
Current assets, total
18.5 -0.9 17.5
Assets, total 835.3
-88.5 746.8
Liabilities and shareholders' equity
Equity
attributable to
equity holders of the parent
Share capital
142.8 142.8
Share premium fund
28.3 28.3
Treasury share fund c 4.7
-4.7
Treasury shares c -4.7
-4.7
Fair value reserve e -7.7
-7.7
Other funds 6.6 6.6
Retained profits a,b,d 13.0 9.7 22.7
Profit
14.3 14.3
Capital loan
f 68.5 -68.5
Shareholders' equity, total
278.0 -75.8 202.2
Minority interest 99.8
-99.8
Liabilities
Long-term liabilities f 428.3 79.4
507.8
Deferred tax liability d 7.7
7.7
Long-term liabilities, total 428.3 87.1
515.5
Short-term liabilities 29.2
29.2
Current tax liability
Short-liabilities, total 29.2
29.2
Liabilities, total 457.5 87.1
544.6
Liabilities and shareholders'
equity, total
835.3 -88.5 746.8
Preliminary IFRS Q1 2004
comparison
Income statement
EUR million Note FAS
Change Prel. IFRS
Q1 Q1
Q1
Turnover 21.9 -0.9
21.0
Other Income
Change in value of
investment property
a
Expenses
Depreciation and
impairments 1.8
-1.8
Share of associated
companies' profit b
0.1 -0.1
Other expenses 7.8
-0.7 7.1
Operating profit 12.2 1.7
13.9
Net financial expenses 6.5
6.5
Profit before taxes 5.7 1.7
7.4
Taxes d -1.6 2.6
1.0
Profit 4.1 4.3
8.4
Earnings per share, EUR 0.04 0.04
0.08
Earnings per share, diluted, EUR 0.04 0.04
0.08
Preliminary IFRS Q2 2004 comparison
Income statement
EUR million
Note FAS Change Prel. FAS Change Prel.
Q2 Q2 IFRS Q2 Q2 IFRS
Q2 Cum. Cum. Cum.
Turnover 22.1 -0.9
21.2 44.0 -1.8 42.2
Other income 0.1 -0.1
0.1 -0.1
Change in value of
investment property
a
Expenses
Depreciation and
impairments 2.0 -2.0
3.8 -3.8
Share of associated
companies' profit b
0.2 -0.2
Other expenses 7.9 -0.3 7.6 15.7
-1.0 14.7
Operating profit 12.3 1.3 13.6 24.5 3.0
27.5
Net financial expenses 6.4 6.4 12.9
12.9
Profit before taxes 5.9 1.3 7.2 11.6 3.0
14.6
Taxes d -1.7 0.9 -0.8 -3.3 3.5
0.2
Profit 4.2 2.2 6.3 8.4 6.2
14.6
Earnings per share,
EUR 0.04 0.02 0.06
0.08 0.06 0.14
Earnings per share,
diluted, EUR 0.04
0.02 0.06 0.08 0.06 0.14
Preliminary IFRS Q1, Q2 2004
comparison
Balance sheet
EUR million Note FAS Change Prel.
FAS Change Prel.
31 Mar. IFRS 30 Jun.
IFRS
2004 31 Mar. 2004 30
Jun.
2004
2004
Assets
Non-current assets
Intangible assets 4.7 -4.3
0.4 4.8 -4.4 0.4
Tangible assets 739.4 -738.0 1.3
740.0 -738.9 1.1
Investment
properties a 735.4
735.4 737.5 737.5
Investments
Holdings in associated
companies
b 55.4 -55.4 55.4 -55.4
Treasury shares c
4.7 -4.7 4.7 -4.7
Other investments 21.4 -21.4
21.4 -20.2 1.2
Investments, total 81.5 -81.5
81.5 -80.3 1.2
Deferred tax
asset d
Non-current
assets,
total 825.6 -88.4 737.1 826.3 -86.0
740.3
Current assets
Short-term receivables 3.6 -0.5 3.1 3.1
-0.5 2.7
Cash and cash equivalents 7.2 -0.5 6.7 4.8
-0.5 4.3
Current assets, total 10.8 -1.0 9.8 7.9 -1.0
7.0
Assets, total 836.4 -89.5 746.9 834.2 -87.0
747.2
Liabilities and shareholders' equity
Equity attributable to
equity
holders' of the parent
Share capital 142.8 142.8 142.8
142.8
Share premium fund 28.3 28.3 28.3
28.3
Treasury share
fund c 4.7 -4.7 4.7
-4.7
Treasury share
reserve c -4.7 -4.7
-4.7 -4.7
Fair value reserve e -12.4 -12.4
-7.6 -7.6
Other funds 6.6 6.6 6.6
6.6
Retained profits a,b,d 13.0 9.6 22.6 13.0 9.6
22.6
Profit 4.1 4.3 8.4 8.4 6.2
14.6
Capital loan f 68.5 -68.5 68.5
-68.5
Shareholders' equity,
total 267.8 -76.3 191.5
272.1 -69.5 202.6
Minority interest 101.2 -101.2 101.2
-101.2
Liabilities
Long-term
liabilities f 433.1 85.1
518.2 426.5 79.0 505.5
Deferred tax
liability d
3.1 3.1 4.8 4.8
Long-term liabilities,
total
433.1 88.2 521.3 426.5 83.8 510.3
Short-term liabilities
34.1 -0.1 34.0 34.4 -0.1 34.3
Short-term liabilities,
total 34.1 -0.1 34.0 34.4 -0.1
34.3
Liabilities, total 467.3 88.0 555.3 460.9 83.7
544.6
Liabilities and share-
holders' equity, total 836.4 -89.5 746.9
834.2 -87.0 747.2
Preliminary statement of changes in
shareholders' equity
Attributable to equity holders of parent
EUR million
Share Share Fair Treasury Retained Total
capital premium value shares profits equity
fund reserve and
and capital
other loan
reserves
FAS balance
31 Dec. 2003 142.8 34.8 73.1
27.3 278.0
IFRS balance
1 January 2004 142.8 34.8 -7.7
-4.7 36.9 202.2
Cash flow hedges -4.7
-4.7
Profit
8.4 8.4
Total recognised
income and expense -4.7
8.4 3.6
Dividends
-14.3 -14.3
IFRS Balance
31 March 2004 142.8 34.8 -12.4
-4.7 31.0 191.5
Cash flow hedges 4.8
4.8
Profit
6.3 6.3
Total recognised
income and expense 4.8
6.3 11.1
IFRS Balance
30 June 2004 142.8 34.8
-7.6 -4.7 37.3 202.6
Cash flow statements
Cash flow
statements are not presented, as the differences between
IFRS cash flow
statement and the cash flow statement prepared
according to Finnish
Accounting Standards are not considered to be
material.
Notes to the
preliminary opening IFRS balance sheet reconciliation and
comparative
financial information for Q1 and Q2 in 2004
a) Investment properties have
been valued at fair value and the change
in values has been recorded income
statement (and the equity in the
opening balance).
b) Consolidation
principles of mutual real estate companies have been
changed.
c) Own shares
held by the parent company are not presented in assets,
but are deducted from
equity.
d) Deferred tax has been calculated from IFRS adjustments.
e) The
fair value of cash flow hedging derivatives has been included
in the balance
sheet and the changes in the values in cash flow hedge
reserve in equity.
f)
Capital loan has been classified as a liability in the IFRS balance
sheet.
g) The covenant calculation used in the financial agreements will
remain the same.
Summary of Citycon's most significant IFRS accounting
principles
The consolidated financial statements for 2005 of Citycon are to
be
prepared in accordance with International Financial Reporting
Standards
(IFRS). The comparative figures of 2004 are restated from
previous applied
Finnish Accounting Standards (FAS) to IFRS.
Principles of
consolidation
Mutual real estate companies are consolidated by proportional
consolidation, where Citycon's share of assets, liabilities, income
and
expenses of the company is combined line by line with similar
items in the
Citycon's financial statements.
Investment properties
Investment property
is property (land or building or part of a
building or both) held to earn
rental income or capital gain or
both. 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 on
external valuer.
Property, plant and equipment
Property (other than
investment property), plant and equipment are
recorded at historical cost and
depreciated over the estimated
economic lives of the assets. Machinery and
equipment is depreciated
over a period of from 4 to 10 years.
Intangible
assets
Intangible assets include software licenses. They are recorded at cost
and amortised on straight-line basis over 5 years.
Impairment
Property,
plant and equipment and intangible assets are assessed at
each balance sheet
date to determine whether there is any indication
of impairment. If such
indication exists, the recoverable amount shall
be estimated. An impairment
loss is recognised in the income statement
if the carrying amount exceeds the
recoverable amount.
Revenue recognition
Revenue comprise mainly of rental
income from investment property.
Rental income is recognised on a
straight-line basis over the term of
the lease.
Leases
Leases, for which
Citycon acts as a lessee, are classified as finance
leases and recognised as
assets and liabilities if the risks and
rewards have been transferred. A
lease is classified as an operating
lease if it does not transfer
substantially all the risks and rewards
incidental to ownership.
Pension
benefits
Employee pension cover has been arranged through statutory pension
insurance. The contributions to defined contribution plans are charged
to
the income statement in the period to which they relate.
Equity and
equity-related compensation benefits
IFRS 2 Share-based payment -standard has
been applied to share options
that were granted after 7 November 2002 and
have not vested before 1
January 2005. For such option plans the fair value
of the equity
instruments granted is measured at grand date and the options
are
expensed over the vesting period of the instrument.
Capital loan
The
capital loan is treated under IFRS as a liability.
Reacquired own equity
instruments (treasury shares)
Treasury shares are deducted from the
shareholders' equity.
Derivatives
Interest rate derivatives are used as
hedging instruments. They are
designated as cash flow hedges of the future
interest payments on
variable rate liabilities. Hedging instruments are
measured at fair
value and the change in value that relates to the effective
part of
the hedge is recognised directly in equity. The ineffective part, if
any, is recognised in the income statement. Fair value changes remain
in
equity until the hedged cash flow is recognised.
Provisions
Provisions are
recognised, when the group has a present legal or
constructive obligation as
a result of past events, when it is
probable that an outflow of resources
will be required to settle the
obligation and when a reliable estimate of the
amount can be made.
Taxes
Income taxes include taxes based on taxable
profit for the financial
period, adjustments to prior year taxes and change
in deferred taxes.
Deferred tax assets and liabilities are recognised using
the liability
method for all temporary differences arising from the
difference
between the tax basis of assets and liabilities and their carrying
values in IFRS. The enacted tax rate is used in the determination of
deferred income tax.
Helsinki, 31 August 2004
Citycon Oyj
Board of
Directors
Further information
CEO Petri Olkinuora
Tel. +358 9 6803 6738
or +358 400 333 256
petri.olkinuora@citycon.fi
CFO Pirkko Salminen
Te.
+358 9 6803 6730 or + 358 50 3022
485
pirkko.salminen@citycon.fi
Distribution
Helsinki Exchanges
Main
media
www.citycon.fi
Independent Auditors' Review Report to the Board of
Directors of
Citycon Oyj
We have reviewed the preliminary opening balance
as of January 1 2004
and the preliminary comparative information for the
first and second
quarters of 2004, which have been prepared in accordance
with
International Financial Reporting Standards (IFRS). These statements
are the responsibility of the management.
We conducted our review in
accordance with the International Standard
on Auditing applicable to review
engagements. This standard requires
that we plan and perform the review to
obtain moderate assurance as to
whether the financial statements are free of
material misstatement. A
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 review,
nothing has come to our attention that causes us
to believe that the
preliminary opening balance sheet as of January 1
2004 and the preliminary
comparative information for the first and
second quarters of 2004 do not
include the major adjustments between
Finnish Accounting Standards and
IFRS.
Helsinki, August 31, 2004
Ari Ahti
Jaakko Nyman
Authorized Public Accountant Authorized Public
Accountant
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