Interim Report 1 January 31 March 2005

Transcription

1

2 > Profit before taxes amounted to EUR 7.8 million (EUR 7.4 million) > Turnover totalled EUR 21.2 million (EUR 21.0 million) > Earnings per share were EUR 0.05 (EUR 0.08) > Demand and occupancy rates for retail premises remained strong > Citycon continuously enhances its readiness to expand its international operations Key figures 1 3/ / /2004 Turnover, EUR million Operating profit, EUR million % of turnover Profit before taxes, EUR million Profit, EUR million Earnings per share, EUR Earnings per share, diluted, EUR Equity per share, EUR P/E (price/earnings) ratio Return on equity (ROE), % Return on investment (ROI), % Equity ratio, % Gearing, % Net rental yield, % Occupancy rate, % Personnel at the end of period Citycon and IFRS Citycon Oyj applies for the first time IAS/IFRS standards (International Financial Reporting Standards) in its interim reports, financial statements for 2005 and comparable figures for In 2004, Citycon already disclosed preliminary IFRS-comparative figures on the opening balance sheet of 1 January 2004 and for each quarter, on 31 August 2004, 21 October 2004 and 18 February Information related to this change is also available in the company s Annual Report for The main changes related to IFRS-compliant reporting, and their impact on the opening balance sheet as of 1 January 2005, are as follows: EUR million FAS Shareholders equity 31 Dec IAS 40 Change in valuation of investment properties 18.6 IAS 39 Change in values of interest rate derivatives IAS 32 Reclassification of treasury shares -4.7 IAS 32 Reclassification of capital loan IAS 12 Change in deferred tax assets and liabilities -3.0 IFRS Shareholders equity 1 Jan

3 The most essential changes in the income statement involve the abolishment of depreciation related to investment properties from, and the inclusion of the change in value in, the income statement. The impact of IFRS-related changes on taxes also affects the income statement. As of 1 January 2005, the net rental yield percentage of the property portfolio has been calculated on the basis of the fair value of property, using the time-weighted returns method based on the guidelines of the KTI Institute for Real Estate Economics and the Investment Property Databank. Trends in the Business Environment Developments in the Finnish retail business remained favourable in the first quarter of Retail sales grew by 4.2 per cent 1) in the period from December 2004 to February 2005, buoying up demand for leased retail premises and keeping their average vacancy rates low. Financial markets remained stable, interest rates in the euro zone were lower than ever and international interest in the Finnish property market remained high. 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 property development. Citycon operates in three divisions (business segments) according to customer needs and the type of premises: Shopping Centres, Supermarkets and Shops, and Property Development. At the end of the reporting period, Citycon owned 144 properties (148) with a fair value totalling EUR million (EUR million). Practically all of the company s property portfolio consists of retail properties. The company owned 16 shopping centres and 128 supermarkets and shops. Shopping centres accounted for 60.8 per cent and supermarket and shop premises for 39.2 per cent of the property portfolio s fair value. In terms of fair values, 45.0 per cent of the properties were in the Helsinki Metropolitan Area, 37.0 in other major Finnish cities and 18.0 in other parts of Finland at the end of the period. Customers, Lease Portfolio and Occupancy Rate At the end of the period, Citycon had a total of 1,463 leases with roughly 845 lessees. The average length of leases was 3.6 years. The period-end occupancy rate for Citycon s property portfolio was 96.4 per cent (97.1%), the change in the occupancy rate being due to normal fluctuations in the leasing business. Lease portfolio summary 1 3/ /2004 Number of leases started during the period, total Total area of leases started, sq.m. 19,684 24,603 Occupancy rate at end of period, % Average length of lease portfolio at end of period, in years

4 Shopping Centres Division Shopping Centres Division s key figures Lease portfolio summary 1 3/ /2004 Number of leases started during the period, total Total area for leases started, sq.m. 6,051 11,039 Occupancy rate at end of period, % Average length of lease portfolio at end of period, in years Financial performance 1 3/ /2004 Turnover, EUR million Operating profit, EUR million Gross rental income, EUR million Net rental income, EUR million Net rental yield, % Net rental yield, standing investments, % Market value of property portfolio, EUR million Gross investments, EUR million Standing investments means those properties which have been Citycon-held for the entire comparison year. Properties subject to development and extension have been eliminated from the figures. Also lots have been eliminated. Supermarkets and Shops Division Supermarkets and Shops Division s key figures Lease portfolio summary 1 3/ /2004 Number of leases started during the period, total Total area for leases started, sq.m. 13,633 13,564 Occupancy rate at end of period, % Average length of lease portfolio at end of period, in years Financial performance 1 3/ /2004 Turnover, EUR million Operating profit, EUR million Gross rental income, EUR million Net rental income, EUR million Net rental yield, % Net rental yield, standing investments, % Market value of property portfolio, EUR million Gross investments, EUR million

5 Standing investments means those properties which have been Citycon-held for the entire comparison year. Properties subject to development and extension have been eliminated from the figures. Also lots have been eliminated. The most significant new lease for the Supermarkets and Shops Division was that signed with a new grocery chain on the Länsikeskus retail site in Espoo. Mainly as a result of this, the division s occupancy rate raised by 2.3 percentage points from year end The Division sold two properties at a total amount of EUR 3.6 million during the reporting period. The impact of these transactions on the results was EUR 0.3 million. Property Development Division The Property Development Division s mission is to contribute to realising the corporate strategy by developing and extending Citycon s existing retail sites, alongside the other divisions. The division is also responsible for commissioning the construction of new retail sites i.e., for acquiring land and controlling and developing the related commercial and functional planning, including negotiations on planning permission, liaison with the authorities and administering projects. The division also handles the marketing and leasing of premises on new retail sites. The division s key figures are not reported separately because it does not have property portfolio or rental income. Turnover and Profit The turnover for the period was EUR 21.2 million (EUR 21.0 million). Gross rental income accounted for 98.6 per cent (98.1 %) of turnover. Operating profit rose to EUR 14.2 million (EUR 13.9 million). Profit before taxes amounted to EUR 7.8 million (EUR 7.4 million) and profit after taxes was EUR 5.6 million (EUR 8.4 million). Profit after taxes in the corresponding period of the previous year included one time deferred tax receivable of EUR 2.6 million related to the acquisition of Torikeskus in Seinäjoki which was booked in income taxes. The profit includes EUR 0.3 million in capital gains from investment properties. Balance Sheet and Financing The period-end balance sheet total was EUR million (EUR million), of which cash and cash equivalents were EUR 23.1 million (EUR 6.7 million). The Group s financial situation remained sound. The Group s period-end liabilities totalled EUR million (EUR million). Interest-bearing liabilities decreased during the period by EUR 0.5 million to EUR million (EUR million), of which short-term liabilities accounted for EUR 36.7 million (EUR 34.0 million). The average interest rate for interest-bearing liabilities was 5.2 per cent (5.1 %), the average loan period, weighted according to loan principals, came to 3.3 years (4.3 years), and the average interest-rate fixing period was 3.4 years (4.2 years). The Group s equity ratio was 29.8 per cent (25.2 %). The interest coverage ratio, i.e. the previous twelve months profit before interest expenses, taxes and depreciation relative to net financial expenses, was 2.2 (2.1). Period-end gearing was per cent (266.2). Citycon s interest-bearing liabilities at the period end included 86.0 per cent (86.7 %) of floating rate loans, of which 80.6 per cent (76.8 %) have been converted to a fixed rate by means of interest rate swaps. The overall hedging rate of the loan portfolio was 69.1 per cent (77.0 %). On 31 March 2005, the par value of interest rate swaps was EUR million (EUR million) while the market value of derivatives was EUR million (EUR million). Net financial expenses decreased by EUR 0.1 million to EUR 6.4 million (EUR 6.5 million). Personnel At the end of the period, the Citycon Group had a total of 45 (41) employees. 4

6 Share Capital and Shares Share Capital At the beginning of the reporting period, the company s share capital was EUR 156,655, and the number of shares was 116,041,358. The share capital increased by EUR 124,200 during the period as a result of share subscriptions based on Citycon s 1999 option scheme. A total of 92,000 new Citycon shares with a par value of EUR 1.35 per share were subscribed in December 2004 at a per-share subscription price of EUR 1.54, exercising the A/B/C options based on the option scheme. The corresponding share capital increase was entered in the Trade Register on 3 February The new shares have been traded on the Helsinki Stock Exchange s Main list together with the old shares as of 4 February At the end of the reporting period, Citycon s registered share capital stood at EUR 156,780, and the number of shares totalled 116,133,358. The par value of a share is EUR 1.35, each share conferring one vote. Traded Volume and Price During the period, a total of 7,8 million Citycon shares were traded on the Helsinki Stock Exchange, providing a turnover of EUR 21,1 million. The high price quoted during the period was EUR 3.03 and the low was EUR The weighted average price for the period was EUR 2.71 and the closing price EUR The company s market capitalisation at the end of the period was EUR million (EUR million), after deducting the portion of treasury shares from the total. Shareholding At the end of the period, Citycon had a total of 1,296 registered shareholders. Nominee-registered shareholders, mostly international investors, had 101,496,158 shares, which is 87.4 per cent of the number of shares and voting rights in the company. Treasury Shares and the Shareholdings of the Board of Directors and the Management The number of treasury shares remained unchanged during the period, at 3,874,000 shares, which was the equivalent of 3.3 per cent of the company s total shares and voting rights at the end of the period. The total purchase price of the shares was EUR 4.7 million. The book value of treasury shares on 31 March 2005 corresponded to their purchase price, which was lower than their market value at the end of the period. The effect of treasury shares has been deducted for the calculation of the key figures. Citycon s Board of Directors decided to propose to the Annual General Meeting the cancellation of treasury shares. The Board members of Citycon Oyj held a total of 91,173 shares on 31 March 2005, which was 0.08 per cent of the company s total shares and voting rights. Citycon s CEO held 100,000 shares and 1,650,000 stock options while the other members of the Corporate Management Committee held a total of 3,000 shares and 971,670 stock options at the end of the reporting period. Stock Options Citycon has two option schemes in force, the 1999 A/B/C scheme and the 2004 A/B/C scheme. By the end of March, 355,500 shares had been subscribed with warrants issued in 1999, while a maximum of 5,144,500 shares can still be subscribed for based on these warrants. The warrants related to the 1999 option scheme are listed on the Helsinki Stock Exchange. A total of 1,135,000 A-warrants of the 2004 option scheme have been issued to the personnel of the Citycon Group. The remaining 2,765,000 (A/B/C) warrants were granted to Veniamo-Invest Oy, a subsidiary of Citycon Oyj, to be further distributed to the present and future personnel of the Citycon Group. Further information on the company s option schemes is available in the Annual Report 2004 and on the company s website. Events after the End of the Reporting Period Annual General Meeting Citycon s Annual General Meeting was held on 5 April 2005 in Helsinki. The AGM adopted the financial statements of Citycon Oyj and the Citycon Group for 2004 and released the Board of Directors and the CEO from personal liability. The AGM also decided that a per-share dividend of EUR 0.14 be paid for The dividends were paid on 15 April

7 Board of Directors and Board Remunerations The number of Board members remained at eight. The following persons were re-elected for a one-year term: Stig-Erik Bergström, Amir Gal, Raimo Korpinen, Tuomo Lähdesmäki, Carl G. Nordman, Claes Ottosson and Dor (Dori) Segal while Thomas (Thom) Wernink, a Dutch citizen, was elected as a new member. Stig-Erik Bergström will continue as the Chairman of the Board. The Board elected Thom Wernink as Deputy Chairman of the Board. The AGM decided that the Chairman of the Board be paid an annual fee of EUR 40,000, the Deputy Chairman an annual fee of EUR 30,000 and ordinary members of the Board an annual fee of EUR 20,000. It was further resolved that the Chairman of the Board be paid a meeting fee of EUR 500 and the Deputy Chairman and ordinary members of the Board a meeting fee of EUR 400 for each meeting. The meeting fee shall also be paid for Board committee meetings. The payment of the annual fee to Finnish members of the Board is conditional upon their signing an undertaking to purchase Citycon shares with the amount of fee remaining after the deduction of the applicable taxes. Board Committees The following Board members were elected to Board committees at the Board meeting which convened immediately after the Annual General Meeting: Audit Committee: Raimo Korpinen (Chairman), Stig-Erik Bergström, Thom Wernink Compensation Committee: Stig-Erik Bergström (Chairman), Tuomo Lähdesmäki, Carl G. Nordman Investment Committee: Thom Wernink (Chairman), Stig-Erik Bergström, Amir Gal, Dori Segal Nomination Committee: Tuomo Lähdesmäki (Chairman), Stig-Erik Bergström, Amir Gal, Claes Ottosson At the same meeting, the Board of Directors also decided to sign a consultation agreement with Thom Wernink on the development of Citycon s international operations, on the basis of which he will be paid a consultancy fee of EUR 40,000 for a year. Independence of Board Members It is the view of the Board of Directors that all members of the Board except Thom Wernink, who has entered into a consultancy agreement with the company, are independent of the company. Furthermore, it is the view of the Board of Directors that Stig-Erik Bergström, Raimo Korpinen, Tuomo Lähdesmäki, Carl G. Nordman and Thom Wernink are independent of any major shareholder. According to the company s rules of Procedure the members of the Audit Committee shall be independent of the company. As an exception to this rule the Board has elected Thom Wernink as a member of the Audit Committee due to his background as the chairman of EPRA (European Public Real Estate Association). During his chairmanship EPRA published Best Practice Policy Recommendations for public real estate companies on compliance with IFRS standards. Auditors Authorised public accountants Tuija Korpelainen and Mikael Holmström were elected as the company s auditors for the financial year 2005, and a firm of authorised public accountants Ernst & Young Oy as the deputy auditor, with authorised public accountant Tiina Lind serving as auditor-in-charge appointed by Ernst & Young. Furthermore, the Annual General Meeting approved the following proposals made by the Board: Amendment to the Articles of Association The AGM decided to amend Article 3 of the Articles of Association, changing the maximum share capital of the company to EUR 500 million, and Article 12, to stipulate that notice of a general meeting be issued to shareholders by means of an advertisement published in at least one national newspaper appearing in Helsinki. 6

8 Share Capital Reduction The AGM decided to reduce the company s share capital by EUR 5,229,900 through cancellation without payment of 3,874,000 treasury shares. This reduction in share capital was executed by transferring the total nominal value of the cancelled shares to the share premium fund with no effects on the restricted shareholders equity. The change in share capital was registered in the Trade Register on 6 April After the reduction, the company s share capital is EUR 151,550,133.30, and the number of shares is 112,259,358. After the cancellation of treasury shares, the company has no such shares. Authorisation for a Share Capital Increase 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 share issues in such a way that the total increases in the company s share capital based on these issues do not exceed EUR 31,356, and that a maximum of 23,226,670 new shares with a nominal value of EUR 1.35 may be offered. This authorisation includes the right to deviate from the shareholders pre-emptive subscription right. Selling of Shares in the Joint Book-entry Account The AGM decided to sell the company s shares held in the joint book-entry account for the benefit of their owners in accordance with Chapter 3a, Article 3a of the Finnish Companies Act authorising the Board to take any and all actions provided for by the said Act to execute the sale. The number of shares in the joint book-entry account as of 2 March 2005 was 7,537, corresponding to per cent of the total number of shares in the company. Subscription of Shares with Warrants After the reporting period, 37,000 shares were subscribed for based on the option rights 1999 A/B/C at a per-share subscription price of EUR The corresponding increase in share capital, EUR 49,950 has not yet been entered in the Trade Register. After the increase the registered share capital of Citycon Oyj is EUR 151,600, and the total amount of shares is 112,296,358. The new shares will be traded on the Helsinki Stock Exchange s Main list together with the old shares approx. as of 2 May The unexercised stock options based on Citycon s stock option scheme 1999 entitle their holders to subscribe 5,107,500 new shares, corresponding to a further capital increase of EUR 6,895,125. The share subscription period will expire on 30 September Future Outlook Citycon forecasts that demand, occupancy rates and rents for its retail premises will continue to remain stable in the Helsinki Metropolitan Area and Finland s major cities. In the increasingly tightening competitive environment, the company is seeking opportunities to expand its operations in Finland, the Baltic countries and Scandinavia. Implementation of this growth strategy is expected to begin in The company estimates that turnover and profit for 2005 will be at least on the level of the 2004 figures. Helsinki, 27 April 2005 Citycon Oyj Board of Directors 7

9 Consolidated income statement EUR million 1 3/2005 % 1 3/2004 % 1 12/2004 Turnover Other income 0.7 Profit on sale of investment property Change in value of investment property Expenses Depreciation and impairments Other expenses Operating profit Net financial expenses Profit before taxes Taxes Profit Earnings per share, EUR Earnings per share, diluted, EUR ,22 Consolidated balance sheet EUR million Assets Non-current assets Intangible assets Tangible assets Investment properties Investmets Deferred tax assets Non-current assets, total Current assets Short-term receivables Cash and cash equivalents Current assets, total Assets, total Liabilities and shareholders equity Equity attributable to equity holders of the parent Share capital Share premium fund Treasury shares Fair value reserve

10 Other funds Retained profits Profit Shareholders equity, total Liabilities Long-term liabilities Deferred tax liabilities Long-term liabilities, total Short-term liabilities Liabilities, total Liabilities and shareholders equity, total Statement of changes in shareholders equity Attributable to equity holders of the parent Share premium Share fund and Fair value Treasury Retained Total EUR million capital other reserves reserve shares profits equity IFRS Shareholders equity 1 Jan Cash flow hedges Profit Total recognised income and expense Dividends IFRS Shareholders equity 31 Mar IFRS Shareholders equity 1 Jan Cash flow hedges Profit Total recognised income and expense Dividends 0.0 IFRS Shareholders equity 31 Mar

11 Cash flow statement EUR million 1 3/ / /2004 Operating activities Profit before taxes Adjustments: Profit on sale of investment property Change in value of investment property Depreciation and impairments Financial income and expenses Other adjustments Cash flow before change in working capital Change in working capital Cash flow from operating activities before financial items and taxes Interest paid and payments for other financial expenses of operating activities Dividend and interest received from business operations Taxes paid Cash flow from operating activities Investing activities Investments in tangible and intangible assets Shares in associated companies sold Shares in subsidiaries purchased Shares in subsidiaries sold Other investments sold Cash flow from investing activities Financial activities Share issue Fund payments from minority interest Withdrawals of short-term loans Repayments of short-term loans Withdrawals of long-term loans Repayments of long-term loans Dividend paid and other distribution of profit Cash flow from financial activities Increase in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period

12 Segment reporting EUR million 1 3/ / /2004 Turnover Shopping Centres Supermarkets and Shops Others Total Operating profit Shopping Centres Supermarkets and Shops Others Total Key financial figures 1 3/ / /2004 Earnings per share, EUR Earnings per share, diluted, EUR Equity per share, EUR Return on equity (ROE), % Return on investment (ROI), % Equity ratio, % Consolidated contingent liabilities EUR million Mortgages on land and buildings Group company shares pledged Other pledged shares Other pledges given Group s derivatives EUR million Par values Fair values Par values Fair values Par values Fair values Interest-rate derivatives Interest-rate swaps Maturing in Maturing in Maturing in Maturing in Total Interest-rate options Interest-rate caps purchased Maturing in Total

13 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 1.7 million) has been booked in interest expenses. Summary of effects of IFRS on profit EUR million 1 3/ /2004 Profit FAS IAS 40 Change in valuation of investment property IAS 12 Change in deferred tax assets and liabilities Other changes Changes total Profit IFRS Summary of effects of IFRS on shareholders equity EUR million Shareholders equity FAS IAS 40 Change in valuation of investment properties IAS 39 Change in values of interest rate derivatives IAS 32 Reclassification of treasury shares IAS 32 Reclassification of capital loan IAS 12 Change in deferred tax assets and liabilities Other changes Changes total Shareholders equity IFRS The figures are unaudited. Accounting Principles The IFRS accounting principles applied in the annual financial statements as of 31 December 2004 have been applied to these financial statements. Financial Information in 2005 Citycon will publish interim reports for 2005 as follows: January June 20 July 2005 at 12:00 January September 18 October 2005 at 12:00 12

14 Further information for investors is available on Citycon s website, Further information: CEO Mr Petri Olkinuora Tel or petri.olkinuora@citycon.fi CFO Ms Pirkko Salminen Tel or pirkko.salminen@citycon.fi Distribution: Helsinki Stock Exchange Main media Report on the general review of Citycon Oyj s interim report for the period We have generally reviewed the interim report of Citycon Oyj for the period 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, 27 April 2005 Tuija Korpelainen Authorized Public Accountant Mikael Holmström Authorized Public Accountant 13