Published: 2003-05-08 09:30:42 CEST
Citycon Oyj
Quarterly report
CITYCON'S INTERIM REPORT, 1 JAN. ? 31 MA
Citycon Oyj Stock Exchange Release, 8 May 2003 at 11.30am

CITYCON'S
INTERIM REPORT, 1 JAN. – 31 MAR. 2003
- Profit before extraordinary items and
taxes was EUR 4.8 
million (EUR 5.6 million)
- The profit includes EUR 0.0
million (EUR 0.9 million) in 
capital gains from fixed assets
- Turnover was
EUR 19.4 million (EUR 19.8 million) 
- Earnings per share were EUR 0.03 (EUR
0.04)
- The market trend continued to be highly favourable to     
Citycon.
Demand and occupancy rates for commercial property 
remained strong.

KEY
INDICATORS
                        1-3 2003     1-3 2002     1-12
2002
Turnover, EUR million       19.4         19.8          79.0
Operating
profit,
EUR million                 10.8         11.8          43.9
% of
turnover                 56           59            56
Profit before
extraordinary
Items and taxes, EUR million 4.8          5.6          19.2
%
of turnover                 25           28            24
Number of
employees
31 March, 2003                33           31           
33

Earnings per share, EUR     0.03         0.04          0.14
Equity per
share, EUR       1.91         1.86          1.96
Return on equity, %         
4.9          5.7           4.8
Return on equity excluding
minority interest,
%         7.2          8.4           7.1
Return on investment, %      6.0     
    6.5           6.0
Equity ratio, %             38.4         37.6         
39.1
Equity ratio with loan 
counted as part of
shareholder's equity, %    
47.6         46.7          48.4
Net rental income of 
Property portfolio, %  
     8.4          8.5           8.6
Financial occupancy rate
of commercial
property, %   97.3         97.0          97.8

TREND IN THE BUSINESS
ENVIRONMENT 

In spite of the overall uncertainty of the economy, private

consumer demand remained at a markedly higher level in 
Finland than in the
rest of the euro area. According to 
Statistics Finland, retail sales
continued to grow in the 
early months of the year: in the January-February
period, 
department store trade was up by 2.3 per cent and grocery 
trade was
up by 4.4 per cent on the same period last year.

Growth in retail sales held
up the strong demand for 
commercial property during the period under review,

particularly in the Helsinki Metropolitan Area and 
Finland's other major
cities. Rental demand for retail 
premises in good locations remained strong
in the January-
March period. Vacancy rates for commercial property

continued to be low in the Helsinki Metropolitan Area, 
averaging two per
cent. 

The differences between commercial and office premises in 
terms of
demand are substantial as demand and rents for 
office premises have not
improved, and there has been a 
further slight rise in the number of vacant
office premises 
in the Helsinki Metropolitan Area. The vacancy rate for

office premises in the Helsinki Metropolitan Area was about 
six per cent.


CUSTOMERS AND THE TREND IN THE PORTFOLIO OF LEASES

At the end of the
period under review, Citycon had 700 
lessees, with whom 1,135 leases had been
made. The average 
duration of the leases was four years. During the period

under review, the company signed a total of 45 leases, 36 
of which were for
premises in shopping centres and 9 were 
for supermarkets and shops.

Of the
leases signed for premises in Citycon's shopping 
centres, 25 were with new
customers and 11 were extensions 
signed with old lessees. The total area
covered by the 
leases signed was 3,304 square metres. The main new leases

negotiated were in Shopping Centre Tikkuri in Vantaa (280 
sq.m.) and in
Shopping Centre IsoKristiina in Lappeenranta 
(260 sq.m.). The financial
occupancy rate of the shopping 
centres at the end of the period under review
was 97.7 per 
cent. The leases have an average validity of 3.3 years.

Of
the leases signed for premises in Citycon's supermarkets 
and shops, 5 were
with new customers and 4 were extensions 
signed with old lessees. The total
area covered by the 
leases signed was 2,038 square metres. The financial

occupancy rate of the supermarket and shop premises at the 
end of the
period under review was 96.9 per cent. The 
leases have an average validity of
4.8 years.


RENTAL INCOME
 
Of Citycon's rental income, roughly 70 per
cent comes from 
leases signed with the 10 biggest customers. The various

Kesko chains are the most important group of customers. 
Other important
lessees include international utility goods 
chains and companies in banking
and finance.

Citycon's net rental income from leasing business during 
the
period under review totalled EUR 13.5 million (EUR 13.8 
million). Shopping
centres' share of net rental income was 
49.2 per cent (47.8) and that of
supermarkets and shops was 
50.8 per cent (52.2).

The net rental income of
the company's entire property 
portfolio was 8.4 per cent (8.5%), calculated
according to 
the recommendations of the Finnish Institute for Real 
Estate
Economics. The net yield rate for shopping centres 
totalled 7.9 per cent
(7.8%) and the net yield rate for 
supermarkets and shops was 9.0 per cent
(9.2%). The 
financial rental occupancy rate of Citycon's business 
premises
stayed high during the period under review and was 
97.3 per cent.

TURNOVER
AND OPERATING PROFIT

Citycon's turnover during the period under review was
EUR 
19.4 million (EUR 19.8 million). Gross rental income 
accounted for EUR
18.1 million (EUR 18.5 million) of 
turnover. The 13 shopping centres and 15
largest 
supermarkets that Citycon owns generate more than 75 per 
cent of
the income from the company's operations.


The operating profit for the
period under review was EUR 
10.8 million (EUR 11.8 million) and net profit
for the 
period was EUR 3.5 million (EUR 4.0 million). The downturn 
in
profit was due to smaller capital gains from fixed 
assets: capital gains
during the period under review were 
EUR 40.4 thousand (EUR 857.6
thousand).

BALANCE SHEET AND FINANCE

At the end of the period under
review, Citycon owned 151 
(161) properties, with a combined book value of EUR
646.6 
million (EUR 656.6 million). The balance sheet total as at 
31 March
2003 was EUR 745.8 million (EUR 751.7 million), of 
which liquid cash assets
were EUR 13.4 million (EUR 7.3 
million).
The Group's financing situation
remained good during the 
period under review. At the end of the period under
review, 
Citycon had a total of EUR 388.8 million (EUR 398.6 
million) of
liabilities. Interest-bearing debt stood at EUR 
440.4 million (EUR 446.1
million), of which equity loan was 
EUR 68.5 million (EUR 68.5 million).
Financing expenses 
were EUR 6.0 million (EUR 6.3 million). The average

interest rate for debt was 5.4 per cent (5.5%). The average 
borrowing
period was approximately 4.7 years (5.7 years) 
and the average interest-rate
fixing period was 3.8 years 
(4.7 years). The Group's equity ratio was 38.4
per cent 
(37.6%), and with the equity loan included in shareholders' 
equity
it was 47.6 per cent (46.7%).

Of Citycon's debt portfolio, 84 per cent are
floating rate 
loans, of which roughly half has been converted to fixed 
rate
by means of interest rate swaps and 15 per cent has 
been hedged with interest
rate caps. The par value of the 
interest rate swaps at the end of the period
under review 
was EUR 199.0 million and that of the interest rate caps 
was
EUR 53.8 million. The debt management margin, i.e., the 
previous twelve
months' profit before interest expenses, 
taxes and depreciation in proportion
to net financing 
expenses, was 2.1.

The gross investments of the period
under review totalled 
EUR 0.2 million (EUR 2.7 million). The investments
focused 
on major renovations and conversions of buildings.

BUSINESS
DEVELOPMENT PROJECTS 

Citycon is focusing its property portfolio in
Finland's 
biggest cities. Through its development and improvement 
projects,
the company aims to achieve an increasingly 
strong position as a provider of
the best business premises 
and as a long-term partner for customers. As a
part of this 
trend, Citycon streamlined its business structure at the

beginning of the period under review and separated its 
operations into
three divisions: Shopping Centres, 
Supermarkets and Shops, and the Retail
Park Division. 

The new Retail Park Division is responsible for the

planning, development and marketing of new retail centres. 
This expands
Citycon's business operations into 
comprehensive development of new retail
centres in addition 
to owning, leasing and controlling commercial property.
The 
Retail Park Division also participates in the planning of 
extensions
and developments of existing shopping centres, 
supermarkets and shops.

The
main development project of the Shopping Centres 
Division currently underway
is an extension to the IsoKarhu 
shopping centre, in which EUR 10 million will
be invested 
in the 2003-2004 period. The extension will increase the

leasable area in the shopping centre by almost 40 per cent. 
The extension
will enhance IsoKarhu's market position, 
boost the number of visitors to the
shopping centre and its 
annual sales, and increase Citycon's net rental
income. 
Citycon wholly owns the IsoKarhu shopping centre, which is 
in the
city of Pori. Also during the period under review, 
the Shopping Centres
Division continued to plan extensions 
to the shopping centres Myyrmanni in
Vantaa and Lippulaiva 
in Espoo, which were started in 2002. 

The
Supermarkets and Shops Division concentrated on major 
renovations of
properties and other conversions demanded by 
customers. The most important
development project was 
launched at the Citymarket department store in Pori,
where 
Citycon has the aim of developing the property jointly with 
the
lessee to make it better fitted to today's standards 
for retailing.

The
Retail Park Division continued to investigate the 
commercial framework for
Retail Park-type shopping centres. 
Progress was made in the processes of land
acquisition and 
zoning, and marketing action was targeted on selected key

customer segments.

During the period under review, Citycon did not carry
out 
any major acquisitions or sales of the property portfolio.

PERSONNEL


At the end of the period under review, the Citycon Group 
has a total of
33 (31) employees, of whom 27 (25) were 
employed by the parent company.


ANNUAL GENERAL MEETING

Citycon's annual general meeting of shareholders,
held on 
20 March 2003, adopted the company's financial statements 
for 2002
and granted release from personal liability to the 
members of the Board of
Directors and the CEO.

Dividend
The annual general meeting decided, in
accordance with a 
proposal made by the Board of Directors, that a divided for

the financial year 1 Jan.-31 Dec. 2002 of EUR 0.09 per 
share will be paid
except for the company-held shares, and 
that the remainder of the profit will
be posted to the 
retained earnings account. The dividend was paid to the

shareholders on 1 April 2003. 

Board of Directors
The annual general
meeting confirmed the number of members 
on the Board of Directors as six. The
annual general 
meeting re-elected the following to the Board of Directors:

Doctor of Science (Econ) Stig-Erik Bergström,  MSc (Econ) 
Heikki Hyppönen,
Executive Vice President, CFO Juhani 
Järvi, Director, Rael Estate, Jorma
Lehtonen, Councellor of 
Industry (Hon)Carl G. Nordman, and Head of Unit Juha

Olkinuora. The Board of Directors elected Stig-Erik 
Bergström as its
chairman and Jorma Lehtonen as deputy 
chairman.

Auditors
The company's
auditors elected for the following term of 
office were Ari Ahti, Authorised
Public Accountant, and 
Jaakko Nyman, APA, with the APA firm KPMG Wideri Oy Ab
as 
deputy auditor.

Authorisations
The annual general meeting granted the
Board of Directors 
an authorisation to decide, within one year of the AGM, on

increasing the share capital by means of one or more new 
issues of shares,
in such a way that the total number of 
shares subscribed in the new issue is
no more than 
21,085,106 new shares in the company with a par value of 
EUR
1.35 and the company's share capital may be increased 
by a maximum of EUR
28,464,893.10. The authorisation 
includes an entitlement to waive existing
shareholders' 
preemption rights.

The annual general meeting also granted
the Board of 
Directors an authorisation to decide, within one year of 
the
AGM, on buying back and surrendering company shares. 
After the buyback, the
maximum number of shares that may be 
bought back will have a combined par
value, combined with 
the par value of the shares already held by the company,

equivalent to five per cent of the company's share capital 
and of the
voting rights conferred by all the shares. The 
authorisation therefore gives
entitlement to buy back a 
maximum of 1,414,892 shares. The authorisation to
surrender 
company shares covers all the company shares acquired on 
the
basis of the entitlement granted to the Board of 
Directors as well as all
other company shares already held 
by the company. Company shares may be
bought back and 
surrendered, for example, as consideration in prospective

property or share transactions or for the acquisition of 
other assets of
importance to the company's business.

The proposals of the Board of
Directors approved by the 
annual general meeting are shown in their entirety
in the 
stock exchange release issued on 27 February 2003. At the 
end of the
period under review, no part of the 
authorisations had been
exercised.

CITYCON SHARES AND OWNERSHIP

Citycon's share capital at the
end of the period under 
review was EUR 142,800,108.30 and the number of
shares was 
105,777,858. The par value of a share is EUR 1.35.

During the
period under review, the total for Citycon 
shares traded on the Helsinki
Exchanges was 1.1 million 
shares and EUR 1.2 million. The high price quoted
during 
the period was EUR 1.16 and the low was EUR 1.00. The 
weighted
average price for the period was EUR 1.12 and the 
last traded price on the
last trading day of the period (31 
March 2003) was EUR 1.01. The company's
market 
capitalisation at the end of the period under review was 
EUR 102.9
million, when company-held shares are deducted 
from the total.

There were
no major changes in the ownership of Citycon 
during the first quarter of the
year. At the end of the 
period under review, the company had a total of 1,165

shareholders. On 31 March 2003, the ten biggest 
shareholders held a total
of 82.4 per cent of the company's 
shares and voting rights. The biggest
shareholders were 
Nordea Bank Finland Plc, Sampo Life Insurance Company

Limited, Kesko Corporation together with its subsidiaries 
and associated
companies, and Etra Invest Oy Ab; in total, 
these held 78.0 per cent of the
company's shares and voting 
rights. The number of nominee-registered and
foreign-held 
shares was 4,036,147, being 3.9 per cent of the shares and

voting rights. 

Citycon Oyj held 3,874,000 of its own shares at the end of

the period under review. The total purchase price of the 
shares was EUR
4,675,812.76, with the lowest price per 
share being EUR 1.10 and the highest
EUR 1.35. The company-
held shares represent 3.7 per cent of all shares and
voting 
rights. The book value of company-held Citycon shares on 31 
March
2003 was EUR 3.9 million. The shares have been valued 
at the closing price of
the period under review, which is 
lower than the original acquisition
cost.

OUTLOOK FOR THE FUTURE

Citycon forecasts that demand, occupancy
rates and rental 
levels for commercial property will remain good in the

Helsinki Metropolitan Area and Finland's other major 
cities. The company
estimates that the turnover and net 
profit for the whole year will be on a
par with the figures 
for 2002.

Helsinki, 8 May 2003
Citycon Oyj
Board of
Directors


EUR 1000
                           1-3 2003    1-3 2002   1-12
2002
CONSOLIDATED INCOME STATEMENT

Turnover                     19,386     
19,808      78,950
Other income                     40         884        
735
Operating profit             10,753      11,753      43,895
Financing
expenses (net)     -5,941      -6,184     -24,715
Profit before extraordinary

items and taxes               4,812       5,568      19,180
Net profit for
the period
under review                  3,489       3,972     
13,801

CONSOLIDATED BALANCE SHEET

Assets
Fixed assets
Intangible assets
            4,074       3,692       4,036
Tangible assets             623,963 
   631,793     625,508
Financial assets             97,256     100,135     
97,710
Company shares                3,913       3,951       4,261
Fixed
assets, total         729,206     739,571     731,515
Current assets
Debtors 
                     3,241       4,816       3,088
Cash in hand and at bank   
 13,382       7,260      11,730
Current assets, total        16,623     
12,077      14,818
Assets, total               745,829     751,648    
746,333

Liabilities and 
shareholders' equity 
Shareholders' equity       
198,016     193,903     204,045
Equity loan                  68,452     
68,452      68,452
Minority interest            90,542      90,687     
90,521

Liabilities                 388,819     398,605    
383,315
Long-term                   371,781     355,673    
371,769
Short-term                   17,037      42,932     
11,545
Liabilities and 
shareholders' equity, total 745,829     751,648    
746,333

Gross investments in balance
sheet fixed assets              157   
   2,737       5,854
as % of turnover                0,8        13,8        
7,4
Planned depreciation and
value adjustments             1,625       1,719 
     7,620
Employees, average               32          30          33

CASH
FLOW STATEMENT

CASH FLOW FROM OPERATING ACTIVITIES   
                     
                1-3 2003    1-12 2002
Profit/loss before 
extraordinary items
                     4,812       19,180
Adjustments:
Planned depreciation    
                1,625        7,620
Other income and expenses not 
involving a
payment                         92          283
Financing income and expenses 
          5,941       24,715
Other adjustments                          -34   
     -448
Cash flow before change in 
working capital                        
12,435       51,350

Change in working capital:
Increase(-)/decrease (+) in
short-term
non-interest-bearing receivables          -257          
19
Increase(-)/decrease (+) in short-term 
interest-bearing debts            
        688          -13
Cash flow from operating activities 
before
financing items and taxes        12,867       51,356

Interest paid and
payments for other financing
expenses of business operations         -1,388   
  -23,814
Dividends received from business 
operations                       
           0          18
Interest received from business 
operations         
                        98         228
Direct taxes paid                      
-1,020      -3,626
Cash flow before extraordinary items    10,557     
24,162
Cash flow from operating activities A)  10,557      24,162

CASH FLOW
FROM INVESTMENTS:

Investments in tangible 
and intangible assets           
         -190      -1,943
Proceeds from the sale of tangible 
and intangible
assets                        9           0
Investments in other placements   
          0          -9
Repayments of outstanding loans              0        
  3
Shares in subsidiaries purchased             0      -5,850
Shares in
subsidiaries sold                  0       1,215
Shares in associated
companies purchased     0      -1,320
Shares in associated companies sold     
  404       5,192
Interest received from investments           1         
59
Cash flow from investments B)              223      -2,654

CASH FLOW
FROM FINANCING:

Fund payments by minority                  10          
78
Withdrawals of short-term loans             5           17
Repayments of
short-term loans              0       -7,105
Withdrawals of long-term loans   
         0         3,924
Repayments of long-term loans            -33       
-4,311
Dividend paid and other 
distribution of profit                -9,112 
      -8,152
Cash flow from financing (C)          -9,129      
-15,548

Change in cash assets (A+B+C) 
increase (+)/decrease (-)           
  1,652         5,960

Cash assets at start of 
accounting period           
         11,730        5,770

Cash assets at end of 
accounting period      
              13,382       11,730

FINANCIAL INDICATORS       1-3 2003    1-3
2002   1-12 2002

EPS, EUR                       0.03        0.04       
0.14
Equity per share, EUR          1.91        1.86        1.96
Return on
equity (ROE), %       4.9         5.7         4.8
ROE excluding minority

interest, %                     7.2         8.4         7.1
Return on
investment (ROI), %   6.0         6.5         6.0
Equity ratio, %             
  38,4        37,6        39,1
Equity ratio, % (equity 
loan counted 
as
shareholders' equity)       47.6        46.7        48.4

CONSOLIDATED
CONTINGENT LIABILITIES
Shares pledged
(book value)                 96,927    
 99,383      96,506
Shares in subsidiaries                  453,808
Other
pledges given           1,041       2,806         633
Mortgages on land
and
buildings               323,440      11,951     323,440

Interest rate swaps
2002
(2-year fixed interest)
par value of underlying
instrument             
     50,000                  50,000
market value of underlying
instrument    
               1,667                   1,491

Interest rate swaps
2002
(7-year fixed interest)
par value of underlying
instrument             
     66,000                  66,000
market value of underlying
instrument    
               6,098                   5,111

Interest rate swaps
2002
(8-year fixed interest)
par value of underlying
instrument             
     83,000                  83,000
market value of underlying
instrument    
               6,549                   5,418

Interest rate option 1998

(5-year interest cap)
par value of underlying
instrument                   
                       78,712
market value of underlying
instrument          
                                     0

Interest rate swaps 2002
(2-year
fixed interest)
par value of underlying
instrument                   53,800  
               53,800
market value of underlying
instrument                  
     0                       1

Derivatives have been valued at the market
price on the 
date of closing the books. The calculations comply with the

Finnish Financial Supervision Authority's requirements for 
credit
institutions on the valuation of derivatives in 
financial statements. The
derivatives have been used to 
hedge the loans against increases in interest
rates.
The company uses derivatives exclusively to reduce or 
eliminate risks
in the balance sheet.

COMPANY SHARES            1-3 2003     1-3 2002   1-12
2002

Acquired between 25 November 1999 and 31 March 2003
Number of shares,
1000       3,874        3,874       3,874
Total par value              5,230  
     5,212       5,230
Share of shareholders'
equity, %                     
3.7          3.7         3.7
Share of voting rights, %      3.7          3.7  
      3.7
Consideration paid           4,676        4,676      
4,676

Company shares have been valued at the closing price on 31 
March
2003. 

Other income includes capital gains on fixed assets, which 
were
previously shown as part of turnover. The figures for 
the comparison year
have been adjusted accordingly. 

The debts for 2002 1-3 includes unpaid
dividend from 31 
March 2002, being EUR 8.2 million.

The taxes used are
taxes commensurate with the net profit 
for the period under review.

The
figures are unaudited.

FINANCIAL REPORTING 

Citycon Oyj will publish it
other interim reports for 2003 
as follows:
January-June               28
Aug. 2003
January-September          30 Oct. 2003 

For further investors'
information, see Citycon's website 
www.citycon.fi. 

Further
information:
CEO Petri Olkinuora 
Tel. +358 9 680 36 738 or + 358 400 333 256

petri.olkinuora@citycon.fi

Distribution:
Helsinki Exchanges
Main
media
www.citycon.fi