Olav Thon: January-September 2004 results (NO)

Olav Thon Eiendomsselskap ASA presented its January-September 2004 results yesterday. The highlights are: the group´s rental income as at 30 September 2004 came to NOK 526.6 million; operating profit increased to NOK 380.9 million (NOK 334.9 million); pre-tax profit was NOK 257.0 million (NOK 178.0 million).

Profit performance
The group´s rental income as at 30 September 2004 came to NOK 526.6 million, compared with NOK 507.8 million in the same period of 2003. Investments and a rise in rental income from retail premises contributed to the increase, whilst slightly lower rental income from the group´s office properties dampened it. Other operating income amounted to NOK 83.6 million (NOK 72.4 million), and relates mainly to the part of the operating expenses of the properties which is charged to the lessees (service charges).

Operating profit as at 30 September 2004 came to NOK 380.9 million (NOK 334.9 million) after charging ordinary depreciation of NOK 36.4 million (NOK 33.9 million) and other operating expenses of NOK 192.9 million (NOK 211.4 million). The decrease in operating expenses was mainly due to a smaller volume of maintenance and rehabilitation projects than in 2003. Maintenance costs totalling NOK 37.4 million (NOK 63.9 million) were charged to income

Net financial items in the first three quarters of the year amounted to NOK 123.9 million (NOK 156.9 million). The decrease is due primarily to a lower borrowing rate than in 2003. This entry also includes equity in net income of associated companies totalling NOK 20.7 million (NOK 14.9 million).

Pre-tax profit was NOK 257.0 million (NOK 178.0 million), and after provision for taxes profit as at 30 September was NOK 190.5 million (NOK 132.3 million).

Investments and sales
As at 30 September 2004 investments totalled NOK 145.8 million. No properties have been sold in 2004.

Property portfolio
The annual (theoretical) rental value of the group´s properties as at 1 October 2004 was NOK 715 million.

Occupancy has been maintained at a highly satisfactory level, with a vacancy rate of 3.0%. The vacancy rate for the company´s properties in the office segment is about 9%, whilst in the retail and restaurant segment it is about 0.5%.

On the basis of rental value, the property portfolio can be broken down into the following segments:

  • Shop and restaurant premises 57%
  • Office and teaching premises 30%
  • Hotels 5%
  • Other premises 8%

In the group´s nine shopping malls, where the rent is turnover-based, the total turnover as at 30 September was NOK 5,691 million, an increase of 5.3% from the same date in 2003. Adjusted for increases in area, the growth in turnover is estimated to be about 4%.

Property projects
A warehouse of 6,000sqm is under construction in Gardermoen Park. The building is fully let and will be completed in the first quarter of 2005.

The group has several projects in the planning stage. These include plans for an integration of the Sandvika Storsenter shopping mall and the Info-Rama property in the Municipality of Bærum, an extension of the Storo Storsenter shopping mall and a residential project in the Langaard block at Bislet in Oslo.

The Board is not aware of any matters or circumstances that may significantly affect the group´s operational situation in the short term. The group´s greatest exposure is to the shopping mall segment, which the Board regards as having good future prospects. All in all, the Board believes that the group´s solid property portfolio and financial strength provides a sound basis for future growth.

Source: Olav Thon

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