SPONDA'S NET OPERATING INCOME AND RESULT UP
Sponda Group's operating profit increased 8.0 MEUR or 25.8 % compared to the first six months of 2000. The pretax profit rose 3.3 MEUR or 19.2 %. Earnings per share for the first six months were 0.20 EUR (0.17), an increase of 15 % on the comparable period. Net operating income from Sponda's real estate portfolio totalled 46.7 MEUR (36.5).
Result
The Group recorded an operating profit of 39.0 MEUR (31.0). The profit before appropriations, extraordinary items, provisions and taxes was 20.5 MEUR (17.2). The profit after taxes and minority interest was 16.3 MEUR (12.7). Sponda's 1-6/2001 net sales totalled 60.2 MEUR (49.5), up 21.6 % on the comparable period.
Financing
Interest-bearing net debt amounted to 695.4 MEUR (31 Dec. 2000: 654.8 MEUR) and the equity ratio was 40.5 % (31 Dec. 2000: 41.6 %). The average maturity of Sponda's credit lines was 3.8 years, the average interest rate was 5.2 % and the average interest period was 2.3 years.
Sponda's property portfolio had a book value of 1 179.4 MEUR. The balance sheet on 30 June 2001 totalled 1 194.8 MEUR (31 Dec. 2000: 1 185.1 MEUR 31.12.2000). Shareholders' equity per share was 5.93 EUR (31 Dec. 2000: 5.97 EUR).
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 8.1 MEUR.
Business conditions
The Finnish economy slowed down during the first six months of the year. However, vacant business premises continue to be in extremely short supply in the Helsinki Metropolitan Area. The vacancy rate is expected to rise during the autumn and competition in the rental markets to grow more intense.
Leasing activities
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 46.7 MEUR (36.5), of which 42.4 % was derived from Helsinki CBD, 14.5 % from Helsinki Metropolitan Area, 20.8 % from the Itäkeskus Shopping Mall, 21.0 % 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 June was 95.2 % (96.9 %).
On 30 June 2001 the economic occupancy rate of Sponda's properties in Helsinki CBD was 97.8 % and net operating income totalled 19.8 MEUR (1-6/2000: 16.1 MEUR). In Helsinki Metropolitan Area the economic occupancy rate was 90.6 % and net operating income was 6.8 MEUR (5.6). In the Itäkeskus Shopping Mall the economic occupancy rate was 95.9 % and net operating income was 9.7 MEUR (8.5). In Logistics Properties the economic occupancy rate was 93.7 % and net operating income was 9.8 MEUR.
Property acquisitions and sales
Sponda did not increase its real estate portfolio during the second quarter but instead continued to focus on the Helsinki Metropolitan Area in line with its strategy. During the current year Sponda sold altogether eight properties for 21.9 MEUR outside its core business area in the following localities: Tampere, Helsinki, Kauniainen, Kuopio, Humppila and Pori. The properties in Humppila, Kauniainen and Helsinki (Ormuspellontie), totalling 2.4 MEUR, were sold after the close of the reporting period at the beginning of July.
Castrum delisted
Trading in Sponda's subsidiary Castrum's shares ceased on 1 August and the company was delisted from the Helsinki Exchanges. Sponda's and Castrum's operations have been integrated. Sponda owns all except 400 of the Castrum shares.
Inauguration of Itäkeskus extension on 4th October
The Itäkeskus Shopping Mall's 8 500 m2 extension and 5 000 m2 renovation will be officially opened on 4th October 2001. The extension gives the Mall a further 40 retail stores. Leading Nordic clothing retailers are strongly represented along with well-known domestic names.
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, or 4 500 within a short walking distance.
Sales by the retail outlets in the Itäkeskus Shopping Mall between January and June 2001 totalled 123 MEUR, which was 0.1 % more than in the same period last year (122 MEUR). Work on the new extension affected some of the existing retail stores during the entire period and 5 % of these were temporarily closed.
Personnel
The Sponda Group had 53 (37) employees on average between January and June 2001, which included 45 (29) employed by the parent company Sponda Plc. Personnel numbered 54 (37) on 30 June, including 45 (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.
Share performance
Sponda's share price in the 1-6/2001 period was slightly higher than in the previous quarter and the closing price on 30 June was 5.07 EUR. The average price between January and June was 4.90 EUR, the lowest price being 3.70 EUR and the highest price 5.25 EUR. Sponda's market capitalization at the close of the period was 416 MEUR.
Purchase of own shares
In line with the Board of Director's decision on 14 December 2000, Sponda had purchased 689 400 of its own shares by 30 June 2001 for a total of 2 914 229 EUR. The average purchase price was 4.23 EUR, the highest being 5.05 EUR and the lowest being 3.80 EUR. The aggregate nominal value of the purchased shares was 689 400 EUR and they represented 0.84 % of the total number of votes.
Decision by Sponda Plc's Annual General Meeting
The decisions taken by Sponda Plc's Annual General Meeting on 28 March 2001 are described in the company's January-March 2001 interim report.
Composition of the Board of Directors
The Board of Directors has the following members: Heikki Bergholm, President, Lassila & Tikanoja group; Maija-Liisa Friman, President, Vattenfall Oy; Heikki Hyppönen, Director Real Estate, Nordea; Harri Pynnä, Legal Counsellor, Fortum Oyj; Anssi Soila MSc(Eng.); and Jarmo Väisänen, Financial Counsellor, Ministry of Finance. The Chairman of the Board is Anssi Soila and the Deputy Chairman is Jarmo Väisänen.
Auditors
Sponda Plc's auditors are Sixten Nyman APA and KPMG Wideri Oy Ab, and the deputy auditor is Ari Viitala APA.
Prospects
Economic growth in Finland is slowing down. The vacancy rate of business premises is expected to increase to some extent. Sponda's result in 2001 will be better than last year. Leasing activities, likewise, are expected to show better performance than last year. Sponda's result in 2002 is expected to reach the same level as in 2001 or to be even better.
23 August 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 figures in this interim report are unaudited.
The full report including tables can be downloaded from the enclosed link.
