Sponda Group recorded a first-quarter net profit of EUR 6.9 (79.5) million. Total revenue, derived from rental income, was EUR 25.3 (26.2) million. The operating profit was EUR 14.6 (82.1) million. First-quarter earnings per share (EPS) were EUR 0.09 (0.98). Financial income and expenses amounted to EUR -5.4(-0.2) million.
Net operating income totalled EUR 18.6 (19.3) million. The book value of the property portfolio was EUR 1.0 billion. Shareholders' equity per share was EUR 6.93(31 Dec. 2002: EUR 6.81).
Financing
Interest-bearing net debt amounted to EUR 455.2 million (EUR 456.7 million on 31 Dec. 2002) and the equity ratio was 52.5 % (52.9 % on 31 Dec. 2002). The average maturity of Sponda's credit lines was 3 years and the average interest rate was 4.8 %. Sponda had EUR 133 million in unused credit facilities.
During the review period, the company increased its interest rate hedging for the loan portfolio by making five-year interest rate swaps for capital of EUR 70 million. This increased the average interest period to 2.6 years.
Business conditions
The vacancy rate for office premises in the Helsinki Metropolitan Area (HMA) has risen and now stands at 5.7 % for the whole of the Helsinki Metropolitan Area. The vacancy rate is highest in Espoo, 8.6 %. Demand for retail and logistics premises has remained stable and their vacancy rate has stayed low.
Leasing activities
Net operating income from Sponda's properties totalled EUR 18.6 (19.3) million, of which 50 % was derived from Helsinki CBD, 21.5 % from Helsinki Metropolitan Area, 17.2 % from Logistics Properties and 11.3 % from the rest of Finland. The economic occupancy rate of Sponda's entire property portfolio at the end of March was 89.7 % (31 December 2002: 90.3 %).
On 31 March 2003 the economic occupancy rate of Sponda's properties in Helsinki CBD was 92.9 % (31 December 2002: 91.9 %) and net operating income totalled EUR 9.3 million. The same figures for Sponda's other business areas were as follows: Helsinki Metropolitan Area 82.7 % (83.6 %) and EUR 4.0 million, Logistics Properties 88.1 % (92.1 %) and EUR 3.2 million, and Sponda's properties in the rest of Finland 93.3 % (94.7 %) and EUR 2.1 million.
Property purchases and sales
Sponda did not purchase any properties during the first three months of the year. Sponda sold part-owned properties during the period for altogether EUR 2.5 million, recording a profit on these transactions of EUR 0.3 million.
Personnel
The Sponda Group had 52 (51) employees on average between January and March 2002, which included 51 (48) employed by the parent company Sponda Plc. Personnel numbered 52 (50) on 31 March, including 51 (49) in the parent company.
Group structure
Sponda Group comprises the parent company and its wholly owned subsidiaries. With the exception of Tamsoil Oy, these are mutual property companies.
Share performance
Sponda's share price rose at the end of the reporting period to the same level as in the previous period and the closing price at the end of March was EUR 5.55. The average price between January and March was EUR 5.40, the lowest price being EUR 5.25 and the highest price EUR 6.00. Sponda's market capitalization at the close of the period was EUR 450 million. Following the dividend payment on 11 April 2003, the share price was EUR 4.60.
Purchase of own shares
By 31 March 2003 Sponda had purchased altogether 3,000,000 of its own shares for EUR 16.4 million. The average purchase price was EUR 5.45 per share, the highest being EUR 6.00 and the lowest EUR 5.00. The aggregate nominal value of the shares was EUR 3,000,000 euros and they represented 3.7 % of the total number of shares and voting rights. These 3,000,000 shares were annulled by the decision of the Annual General Meeting on 8 April 2003. The reduction in share capital was entered in the Trade Register on 10 April 2003.
Decisions of Sponda Plc's Annual General Meeting held on 8 April 2003
Sponda Plc's Annual General Meeting approved the consolidated and parent company's financial statements for the year 2002 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 EUR 0.90 per share on the financial year 2002.
The Meeting decided to re-approve its decision to issue convertible bonds as previously decided by the AGM on 27 March 2000 and on the same conditions. Based on this convertible bond, the Company's share capital may increase by at most 1,890,000 euros and at most 1,890,000 shares.
A convertible bond loan totalling EUR 635 750.36 was offered to personnel and Tamsoil Oy and it was altogether subscribed by them. The loan was issued in lots of three bonds marked A, B and C, the minimum subscription being EUR 504.56.
Bond A may be converted into shares between 28 April 2003 and 28 April 2006, Bond B between 28 April 2004 and 28 April 2006, and Bond C between 28 April 2005 and 28 April 2006. Each EUR 168.18 Bond may be converted into 500 Sponda Plc shares.
Subscribers are required to pay a conversion price when converting their bonds into shares. The conversion price is EUR 5.38 per share for A bonds, EUR 5.89 per share for B bonds and EUR 6.39 per share for C bonds. The conversion price will be reduced by annual dividends.
The shares carry dividend rights for the financial period during which the conversion takes place.
The Meeting decided to reduce the share capital by at most EUR 3 000 000 by annulling the 3 000 000 Sponda shares held by the company.
The Meeting authorized the Board of Directors for one year from the AGM to purchase at most 3,500,000 of the company's own shares using distributable funds, provided that after the purchase the aggregate nominal value of the shares owned by the Company and its subsidiary companies, or the voting rights carried by these shares, does not exceed five (5) percent of the Company's total share capital or the voting rights carried by all the shares.
The Meeting authorized the Board of Directors for one year from the AGM to surrender the company's shares purchased by the company. The Board may surrender at most 3,500,000 shares purchased by the company.
Composition of the Board of Directors
The AGM held on 8 April 2003 re-elected the following to the Board of Directors: Heikki Bergholm, President; Maija-Liisa Friman, President, Vattenfall Oy; Jarmo Laiho, Head of Group Finance and Senior Vice President, Nordea AB (publ); Harri Pynnä, Legal Counsel, Fortum Oyj; Anssi Soila, MSc (Eng., Econ.); and Jarmo Väisänen, Financial Councellor, Ministry of Finance. The Board elected Anssi Soila as its 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.
Subsequent events
Sponda sold an approx. 4000 m2 office building at Kellonportinkatu 2 in Tampere for EUR 8 million in April 2003, and will record a profit of EUR 2.5 million on this transaction in the second quarter.
Prospects
Economic growth is forecast to remain slow during 2003. Demand for leased business premises is expected to decline, but Sponda's result from leasing operations in 2003 should still stay at 2002 levels.
8 May 2003
Sponda Plc
Board of Directors
The full report including tables can be downloaded from the following link:
