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Citycon Oyj CITYCON OYJ Stock Exchange Release 18 July 2008 at 9:00 hrs
Summary of the Second Quarter of 2008 Compared with the Previous Quarter
- Turnover remained at the level of the previous quarter and was EUR 44.2 million (Q1/2008: EUR 44.3 million). - Net rental income grew by 2.7 per cent, to EUR 30.5 million (EUR 29.7 million), resulting mainly from lower maintenance expenses such as electricity and heating costs, the lower amount of which was due partly to seasonal fluctuations. - Net cash from operating activities per share remained steady at EUR 0.06 (EUR 0.06). - The fair value change of investment properties was EUR -84.7 million (EUR 1.4 million). The fair market value of investment properties decreased to EUR 2,156.9 million (EUR 2,226.6 million). - The average net yield requirement for investment properties was at 6.0 per cent (5.7%) at the end of the period, according to an external appraiser. The increase in the average net yield requirement was due to changes in property market. - Earnings per share were EUR -0.26 (EUR 0.04). The decline was due to the fair value losses. - Direct result per share (diluted) remained at the level of the previous quarter and was EUR 0.04 (EUR 0.04). - The company's financing expenses decreased to EUR 14.7 million (EUR 16.1 million). The reference period included a valuation item of EUR -1.4 million, relating to valuation of the company's interest rate hedging contracts.
Summary of January - June 2008 Compared with the Corresponding Period of 2007
- Turnover increased by 26.1 per cent, to EUR 88.5 million (Q1-2/2007: EUR 70.2 million), due mainly to property acquisitions made during 2007. - Profit/loss before taxes was EUR -62.1 million (EUR 212.5 million), including a EUR -83.3 million (EUR 191.6 million) change in the fair value of investment properties. - The company's direct result rose to EUR 18.9 million (EUR 14.3 million), up mainly because of increased net rental income, decreased administrative expenses and lower taxes compared to the reference period. Changes in the fair value of the company's property portfolio have no effect on the company's net rental income or direct result but they will affect the company's total profit. - Direct result per share (diluted) improved and was EUR 0.09 (EUR 0.08). - Earnings per share amounted to EUR -0.21 (EUR 0.88). The decrease resulted mainly from the fair value changes. - Net rental income increased by 22.7 per cent, to EUR 60.1 million (EUR 49.0 million). - Net rental income from like-for-like properties rose by 0.3 per cent. - Net cash flow from operating activities per share rose to EUR 0.12 (EUR 0.11). - The equity ratio was 42.1 per cent (46.9%). - Citycon signed a ten-year loan agreement with Nordic Investment Bank for EUR 30 million to finance its key sustainable development pilot project, Liljeholmstorget shopping centre in Stockholm. In addition, Citycon signed two long-term loan agreements on competitive terms during the reporting period. - The company's total liquidity at the end of the reporting period was EUR 349.4 million including unutilised committed long-term debt facilities amounting to EUR 325.6 million and cash of EUR 23.8 million.
CEO Petri Olkinuora comments on the reporting period:
"Citycon's turnover and net rental income continued to grow during the reporting period, and the company's direct result as well as cash flow from operating activities remained steady. Also the financing costs were at the same level as during the previous quarter, despite increased general interest rates and higher level of interest bearing debt. However, the increase in the fair value of properties that had continued for several years came to a halt and the fair value decreased due to changes in general market conditions.
Citycon will concentrate on improving its shopping centres by both refurbishing and redeveloping them. The aim of the company's business activities is to increase rental cash flow and maintain the competitiveness of its shopping centres. The company's financing position is satisfactory and the company has sufficient committed credit lines to complete the ongoing development and redevelopment projects as well as other ongoing business activities until at least the end of 2010 without any new credit facilities. This is thanks to the company's prudent financing policy and its active implementation.
Sustainable construction and management is a key element of Citycon's strategy. We continue taking the principles of sustainable property development into account as planned. The company's responsible approach to environmental issues was a key reason behind the decision of the Nordic Investment Bank to grant Citycon a ten-year loan in June 2008. Also, our customers and tenants are increasingly aware of the importance of ecological choices."
Outlook
Citycon continues to focus on increasing net operating income and cash flow. The company expects development and redevelopment projects to continue to play an important role in its business for the current financial year. Seeking to implement its strategy, the company will focus on developing and redeveloping its shopping centres as well as monitoring the market for potential acquisitions. Citycon is also considering the divestment of its non-core properties - such as its residential properties in Sweden.
In 2008 the company expects its year-on-year net rental income and direct profit excluding fair value changes to increase. The estimate is based on expansion and redevelopment projects coming on stream, on the property portfolio's growth due to completed acquisitions and further improvements in shopping-centre management.
Helsinki, 17 July 2008
Citycon Oyj
Board of Directors
The entire report with tables in pdf-format can be downloaded from the link below.
Financial reports in 2008
In 2008, Citycon will publish one more interim report (January - September 2008). The interim report will be published on Thursday, 16 October 2008 at approximately 9:00 hrs.
More information for investors is available at Citycon's Internet pages, www.citycon.com.
For further information, please contact: Mr Petri Olkinuora, CEO Tel. +358 9 6803 6738 or +358 400 333 256 petri.olkinuora@citycon.fi
Mr Eero Sihvonen, CFO Tel. +358 9 6803 6730 or +358 50 557 9137 eero.sihvonen@citycon.fi
Distribution: OMX Nordic Exchange Helsinki Major media www.citycon.fi.
