Sponda Group's operating profit increased EUR 6.4 million, or 47 %, on the previous year. The pretax profit rose EUR 3.0 million, 36 %. Firstquarter earnings per share totalled EUR 0.11 (0.09), up 28 % on the same period in 2000. Net operating income from properties totalled EUR 23.0 (15.2) million.
Result
The Group recorded an operating profit of EUR 20.1 (13.7) million. The consolidated profit before appropriations, extraordinary items, provisions and taxes between January and March was EUR 11.3 (8.3) million. The profit after taxes and minority interest was EUR 9.1(6.3) million. Revenue in the 1-3/2001 period totalled EUR 29.5 (21.1) million, up 40 % on the first quarter of 2000.
Financing
Interest-bearing debt amounted to EUR 653.1 million (31 December 2000: MEUR 654.8) and the equity ratio was 42.1 % (31 December 2000: 41.6 %). The average maturity of Sponda's credit lines was 4.2 years, the average interest rate was 5.5 % and the average interest period was 2.6 years.
Sponda's property portfolio had a book value of EUR 1,167.4 million. The balance sheet on 31 March 2001 totalled EUR 1,181.9 million (31 December 2000: EUR 1,185.1 million). Shareholders' equity per share amounted to EUR 6.10 (31 December 2000: EUR 5.97).
Tenant improvements
Sponda's expenditure on property maintenance and quality improvements during the period, as well as capitalized tenant improvements, i.e. renovations required under leasing agreements, totalled EUR 4.3 million. The renovation of the Mäkkylä office building in Espoo was completed in March for a total cost of EUR 2.0 million. The renovation of the office facilities in the Seurahuone building in the Prime Central Business District of Helsinki will be completed in May. The renovation costs of this project are expected to rise to an estimated EUR 4.4 million.
Business conditions
The slowdown in the US economy is also depressing economic growth in the euro zone countries, according to the Research Institute of the Finnish Economy (Etla). GDP in Finland is forecast to rise this year by 4.5 % and growth in private consumption will increase 4.5 %. The average rate of unemployment will decline to 9.1 %. The ECB's interest rate at the beginning of April was 4.75 %. Inflation is forecast to decrease this year to 2.1 %.
Catella Real Estate Consulting Ltd's spring market survey reports that the vacancy rate of business premises in the Helsinki Metropolitan Area declined further to 1.3 %, and that rental levels have continued to rise. The Helsinki region continues to be one of Europe's fastest growing areas and the scarce availability of business premises is hampering business operations in the Helsinki Metropolitan Area, according to Catella.
Leasing between January and March 2001
Sponda focuses on four business areas: Helsinki Business District (HBD), Helsinki Metropolitan Area, Itäkeskus, and Logistics
Properties.
Net operating income from Sponda's properties totalled EUR 23.0 (15.2)
million, of which 41.6 % was derived from Helsinki CBD, 14.0 % from Helsinki Metropolitan Area, 20.6 % from the Itäkeskus Shopping Mall, 22.5 % from Logistics Properties, and 1.3 % from the rest of Finland. The economic occupancy rate of Sponda's entire property portfolio at the end of March was 94.8 % (96.2 %).
On 31 March 2001 the economic occupancy rate of Sponda's properties in Helsinki CBD was 96.3 % and net operating income totalled EUR 9.6 million (1-3/2000: MEUR 7.7). The same figures for Sponda's other business areas were as follows: Helsinki Metropolitan Area 91.0 % and EUR 3.2 (2.7) million; the Itäkeskus Shopping Mall 95.9 % and EUR 4.7 (4.3) million; Logistics Properties 93.7 % and EUR 5.2 million; and Sponda's properties in the rest of Finland 98.3 % and EUR 0.3 (0.5) million.
Property acquisitions and sales
On 6 March 2001 Sponda Plc purchased the entire share capital of Kiinteistö Oy Vantaan Vanha Porvoontie 231 from Ilmarisen Liikekiinteistöt Oy for EUR 8.6 million. The tenants in this 36,000 m2 logistics property are forwarding, importing and wholesaling companies together with the South Finland regional office of the Finnish Customs.
On 28 February 2001 Sponda Plc increased its holding in Kaivokadun Tunneli Oy from 40 % to 65.4 % after acquiring the shares (representing 718 m2) owned by Osuuspankki Realum and Okobank Osuuspankkien Keskuspankki Oyj for EUR 1.9 million. The businesses covered by this deal include a McDonalds hamburger restaurant and two goldsmith and watchsmith businesses.
On 15 January 2001 Sponda Plc sold the office building on Hämeenkatu 23 in Tampere to the Pension Foundation of Tampereen Puhelin Oyj for EUR 11.9 million. Built in 1902, this building has a leasable area totalling approx. 8,000 m2.
Sponda continued to divest its holdings outside its focus areas selling properties totalling 15,500 m2 in the Helsinki Metropolitan Area, Tampere and Kuopio for altogether EUR 6.7 million during the review period. Sponda recorded a net profit of EUR 1.9 million on these transactions.
Redemption of the Castrum shares
Sponda Plc's offer to redeem the outstanding shares and option certificates in Castrum, as required by the Securities Markets Act, ended on 18 January 2001. The offer was accepted by shareholders representing 3,761,143 shares, i.e. approximately 4.9 % of the Castrum shares and votes, raising Sponda's ownership of Castrum's shares and votes to 99.6 %.
Sponda's holding of Castrum's shares at the end of the review period totalled 99.7 %.
The redemption procedure required by the Companies Act is now in progress and, once this is completed, Sponda will apply for delisting of the Castrum shares and option certificates from the main list of the HEX Helsinki Exchanges.
Itäkeskus expansion ready in October
The 8,500 m2 new wing and 5,000 m2 renovation of the Itäkeskus Shopping Mall will be inaugurated on 4 October 2001. A further 40 new businesses will be added to the mall on two levels. Clothing enterprises include Carnet, Dressmann, Feminett, Funky Lady, Leporannat's new clothing shop for adults, Lindex, Palmroth's shoe and leathergoods outlet, Stadium and Voglia. Home furnishings and supplies are represented by Hemtex, Indiska and OnOff domestic appliances. The complex will have a further 500 parking spaces bringing the total
number of free parking slots within the Helsinki Shopping Mall to 3,000, and 4,500 if adjacent parking facilities are included.
Sales by the retail outlets in the Itäkeskus Shopping Mall between January and March 2001 totalled EUR 60 million, 1 % up on the same period last year (EUR 59 million).
Personnel
The Sponda Group had 54 (37) employees on average between January and March 2001, which included 46 (29) employed by the parent company Sponda Plc. Personnel numbered 55 (37) on 31 March, including 46 (29) in the parent company.
Group structure
Sponda Group comprises the parent company and its subsidiaries, most of which are wholly owned. With the exception of Tamsoil Oy and Castrum Oyj, these are mutual property companies. The principal subsidiaries are Castrum Oyj (99.7 %), Kauppakeskus Itäkeskus Oy and Tamsoil Oy.
Share performance
Sponda's share price in the 1-3/2001 period was slightly higher than in the previous quarter and the closing price on 31 March was EUR 4.30. The average price between January and March was EUR 4.41, the lowest price being EUR 3.70 and the highest price EUR 5.10. Sponda's market capitalization at the close of the period was EUR 353 million.
Purchase of own shares
In line with the Board of Director's decision on 14 December 2000, Sponda had purchased 654,000 of its own shares by 31 March 2001 for a total of EUR 2,739,352. The average purchase price was EUR 4.18, the highest being EUR 4.50 and the lowest being EUR 3.80. The aggregate nominal value of the purchased shares was EUR 550,647 and they represented 0.8 % of the total number of votes.
Decisions by Sponda Plc's Annual General
Meeting
Sponda Plc's Annual General Meeting held on 28 March 2001 approved the consolidated and parent company's financial statements for the year 2000 and discharged the company's officers from liability for the financial year. The meeting carried the Board of Directors' proposal to pay a dividend of FIM 1.50 (EUR 0.25) per share on the financial year 2000.
The meeting decided to restate the company's share capital and the nominal value of the shares in euros and in this connection to raise the share capital to EUR 81,982,675 by a funds transfer totalling EUR 13,040,194.43.
The meeting also decided that each share shall have a nominal value of one (1) euro.
Composition of the Board of Directors
The AGM on 28 March 2001 re-elected the following to the Board of Directors: Heikki Bergholm, President, Lassila & Tikanoja group; Harri Pynnä, Legal Counsellor, Fortum Oyj; Anssi Soila MSc; and Jarmo Väisänen, Financial Counsellor, Ministry of Finance. The following were elected as new members: Maija-Liisa Friman, President, Vattenfall Oy, and Heikki Hyppönen, Director Real Estate, Nordea. The Board elected Anssi Soila Chairman and Jarmo Väisänen as Deputy Chairman.
Auditors
The meeting appointed Sixten Nyman APA and KPMG Wideri Oy Ab as the company's auditors, and Ari Viitala APA as the deputy auditor.
Prospects
The occupancy rate of Sponda's properties will remain high and the company's leasing operations are expected to generate a better result than last year. Sponda's performance is forecast to improve during 2001.
3 May 2001
Sponda Plc
Board of Directors
The terms "Sponda', "the Group', or "the company' refer to the entire Sponda Group. The term "Sponda Plc' refers to the Group's parent company.
The full Interim report including tables can be downloaded from the enclosed link.
