Work with sustainability and social responsibility

Transcription

1 Q3 Interim report for NS Holding AB. January September» Rental income amounted to SEK 1,421 million (1,394). An increase of 1.9%. This increase can be explained principally by increased rents as a result of completed projects and increased leasing in Copenhagen. The rental income for a comparable portfolio increased by 2.8%.» The operating surplus increased to SEK 973 million (948). The surplus amounted to 68.5 per cent (68.0).» Profit from property management amounted to SEK 727 million (427). This increase can be explained primarily by reduced interest expenses and the fact that last year was affected by SEK -194 million in respect of realised losses on government futures.» The market value of the properties amounted to SEK 25,779 million (26,129 at the end of the year), a decrease of SEK -350 million. In March, the company's properties and operation in Hamburg were sold.» The unrealised change in the value amounted to SEK 642 million, which corresponds to 2.5 per cent.» The occupancy level increased to 95.4% (94.5).» Profit after tax for the period amounted to SEK 1,079 million (253), corresponding to SEK 396 (93) per share. Norrporten's results in summary Jul-Sep Jul-Sep Oct Sep Jan Dec Rental income, SEK million 1,421 1, ,887 1,860 Operating surplus, SEK million ,261 1,235 Profit from property management, SEK million Change in value, investment properties , Change in value, derivatives Profit for the period, SEK million 1, , Profit per share, SEK Market value, properties, SEK million 25,779 25,171 25,779 25,171 25,779 26,129 Rental occupancy, % Surplus ratio, % Interest coverage ratio, times Equity/assets ratio, % Loan-to-value ratio, % norrporten.se 12

2 This is Norrporten Norrporten is one of Sweden's largest property companies. We manage, refine and develop centrally located commercial properties of high quality in stable growth cities. The combined rental value for the properties amounts to SEK 1.9 billion and their estimated market value stands at approx. SEK 26 billion. The emphasis of the property portfolio lies in offices in regional cities that enjoy good communications, access to well educated labour and the conditions for good population growth. With our head office in Sundsvall, we conduct our operations with local organisations in Luleå, Umeå, Östersund, Sundsvall, Gävle, Stockholm, Örebro, Jönköping, Växjö, Helsingborg and Copenhagen. Up until 5 March, operations were also conducted in Hamburg. Work with sustainability and social responsibility Norrporten contributes to long-term sustainable development by conserving resources, giving consideration to the environment when making investments, paying attention to clients' environmental requirements and placing environmental demands on suppliers. Our operations in Sweden and Denmark are certified in compliance with ISO We endeavour to contribute to the positive development of our business locations through collaboration with local industry, the municipality, the university and trade organisations, as well as local cultural and sports associations. Property development with long-term, flexible solutions Solid experience of projects is a good basis for meeting the various customer requirements for changes and adaptations in the property portfolio. The aim is to create long-term, operationally flexible premises, both in the case of new-builds and refurbishments. Vision Successful workplaces create dynamic towns. Mission Beyond rooms and square metres, we see people and meeting places. Our task is to provide workplaces where operations will develop and the work will run smoothly. A place where people are happy and enjoy their work. We contribute to growth and long-term development for people, companies and organisations, and for the cities where we have operations. Business concept Norrporten manages, refines and develops centrally located commercial properties of high quality in stable growth cities. Basic values Consideration, initiative and a long-term approach. Division of rental value by market area by tenant category by type of premises Luleå, 8.5% Umeå, 6.8% Östersund, 1.2% Sundsvall, 17.1% Gävle, 7.0% Stockholm, 12.3% Örebro, 7.5% Jönköping, 8.0% Växjö, 6.1% Helsingborg, 11.0% Köpenhamn, 14.5% Myndigheter/Verk, 35.2% Kommun/Landsting, 2.8% Bank/Försäkring, 11.2% Butiker, 8.2% Bostäder, 1.6% Övrigt näringsliv, 41.0% Kontor, 83.7% Butik, 9.0% Bostad, 1.7% Övrigt, 5.6%* Note: *) Division per type of premises, other, includes e.g. garages, parking spaces, special property for the prison and probation service. 2

3 The President's comments The positive development for Norrporten is continuing. The trend of a strong profit from property management and consistently improved key figures is still in evidence. The surplus for the third quarter amounts to 70.1%, which is the highest measured in the company to date. Increased rental income and lower financing costs combined with a positive change in the value of the existing property portfolio are generating a profit after tax of SEK 1,079 million (253). Development of the portfolio In September we took possession of a further three properties and associated building rights in the Norr district in Östersund. The deal with Peab, which was announced earlier in the year, covers approx. 19,000 square metres of offices and around 15,000 square metres of building rights. Since the establishment of the Östersund market area, the portfolio has grown to seven properties covering approx. 37,000 square metres in less than a year.»the surplus of 70% is the highest measured in the company to date.«jörgen Lundgren, President 3 Rental income for the period amounts to SEK 1,421 million (1,394). The operating surplus has increased to SEK 973 million (948), net interest has improved to SEK -185 million (-267) and profit from property management has increased to SEK 727 million (427). All in all a very pleasing development, largely due to the low interest rate, increased leasing in Copenhagen, where the market is increasingly picking up speed, as well as several successful rental negotiations in a growing portfolio in other cities. The demand for centrally located office premises in all of Norrporten's market areas is good. Major leasings A number of important rental agreements have been renegotiated during the quarter. These include: Jönköping Municipality (approx. 12,000 square metres), the Swedish Tax Agency in Örebro (approx. 5,300 square metres), the Idrottskliniken sports clinic in Växjö (approx. 2,600 square metres), Sabis in Stockholm (approx. 1,000 square metres) and Clas Ohlson in Umeå's MVG shopping centre (approx. 1,800 square metres). The occupancy level increased to 95.4%. One example of a new rental agreement during the period is Folkuniversitetet university in Helsingborg, which is increasing its area by approx. 1,300 square metres. In Växjö, the work of developing Företagsstaden I11 has been intensified with new building rights totalling 45,000 square metres. The detailed plan for the construction of a new 22-storey hotel and office building has been adopted by the municipality, and discussions are ongoing with future business partners. Sustainability The work of environmentally certifying Norrporten's properties is progressing. A further three properties have been awarded environmental certification during the quarter. Tullpaviljongen 1 in Sundsvall has been classified as LEED Gold. Måsen 14 in Sundsvall has been certified in accordance with BREEAM In Use and Läkaren 10 in Stockholm has been awarded the Green Building distinction. Norrporten has once again achieved a high ranking in GRESB, the annual international sustainability comparison for the property companies. Last year's third place in the Nordic region has been improved upon with the company now in second place, which has generated the Green Star distinction. Satisfied customers In the middle of October, the Real Estate Barometer was presented, in which a large number of Sweden's major commercial property companies compare their customer satisfaction index (CSI) results. Norrporten has once again achieved a high position, coming second in Sweden with a CSI of 82.

4 Consolidated statement of comprehensive income, summary Jul Sep Jul Sep Oct Jan Dec SEK million Sep Rental income 1,421 1, ,887 1,860 Operating costs Maintenance costs Property management Property tax Total property costs Operating surplus ,261 1,235 Central administration and marketing costs Financial items excluding realised changes in value of government futures Realised changes in value of government futures Profit from property management Changes in value, investment properties , Changes in value, derivatives Profit before tax 1, , Tax Profit for the period 1, , Other comprehensive income Entries that have been or can be transferred to the profit for the period Translation difference in overseas operations Change in value of derivatives, hedging net investments in overseas subsidiary companies Entries that cannot be transferred to the profit for the period Revaluations of defined-benefit pension plans Other comprehensive income for the period Comprehensive income for the period 1, , Profit for the period attributable to: Parent company's owners 1, , Holdings without controlling influence Comparable portfolio*, SEK million Change, % Rental income 1,386 1, Property costs Operating surplus Surplus ratio, % *Refers to properties that have been owned throughout the period 1 January to 30 September. The results for overseas subsidiary companies have been translated at the same average exchange rate as the results. 4

5 Comments on the statement of comprehensive income, summary The good development witnessed in the first half of the year is continuing NS Holding is the parent company of the Group that includes Fastighetsaktiebolaget Norrporten and its subsidiary. The profit items refer to the period January September and are compared with the corresponding period in the previous year. The quarter relates to June September and the year to January December. Rental income Rental income during the period amounted to SEK 1,421 million (1,394). This change can be explained principally by increased rents as a result of leased, completed projects and increased leasing in Copenhagen. Contracted annual rent at the end of the period amounted to SEK 1,883 million (1,953) with an average remaining duration of 5.0 years (5.2). The reduction is a result of the sale of the operation in Hamburg. The financial occupancy level amounted to 95.4 per cent (94.5). Property costs Property costs amounted to SEK -448 million (-446). Operating surplus Operating surplus during the period amounted to SEK 973 million (948). The increase can be explained by increased rental income. Central administration and marketing costs Central administration and marketing costs amounted to SEK -61 million (-60). Financial items Net financial items excluding realised changes in value of government futures amounted to SEK -185 million (-267). Last year's net financial items were affected by realised losses on government futures amounting to SEK -194 million. Norrporten's average interest rate including interest rate derivatives for the period amounted to 1.8 per cent (2.4) and the interest coverage ratio amounted to 4.9 times (3.3). The calculations include the effects of interest rate hedging through derivative instruments, but exclude the lost of government futures last year. Profit from property management Profit from property management amounted to SEK 727 million (427). Change in value, investment properties As at 30 September, the entire property portfolio has been valued internally. The change in value amounted to SEK 649 million and can be explained primarily by lower yield requirements and increase net operations. The unrealised change in the value amounted to SEK 642 million (450), which corresponds to 2.5 per cent (1.8). Change in value, derivatives Unrealised changes in the value of derivatives had a negative impact on results totalling SEK -21 million (-126). The negative change in the value is primarily due to lower long-range market interest rates. The unrealised change in value has no effect on cash flow and will not have any effect on profits if the derivatives are held until maturity. Tax Tax recognised for the period amounts to SEK -276 million (-74), of which current tax totals SEK -14 million (-11) and deferred tax SEK -262 million (-63). Recognised tax amounts to 20% of profits before tax, as a result of tax-exempt profit from the sale of shares. The current tax expense refers to operations in Denmark. The deferred tax expense refers primarily to tax on changes in temporary differences in respect of investment properties, derivatives and loss carryforwards. Q1 Q3 in brief» Rental income SEK 1,421 million (1,394)» Operating surplus SEK 973 million (948)» Profit from property management SEK 727 million (427)» Profit before tax SEK 1,355 million (327) 5

6 Consolidated statement of financial position, summary SEK million 30/09/ 30/09/ 31/12/ ASSETS Fixed assets Investment properties 25,779 25,171 26,129 Machinery and equipment Derivatives Other long-term receivables Total fixed assets 25,849 25,260 26,180 Current assets Customer receivables Derivatives Other receivables Cash and cash equivalents Total current assets TOTAL ASSETS 26,295 25,854 26,748 EQUITY AND LIABILITIES Equity 11,227 9,950 10,407 Long-term liabilities Long-term interest-bearing liabilities 8,632 3,038 9,189 Derivatives Deferred tax liabilities 1, ,084 Other liabilities and provisions Total long-term liabilities 10,532 4,515 10,816 Short-term liabilities Short-term interest-bearing liabilities 3,807 10,657 4,829 Other liabilities Total short-term liabilities 4,536 11,389 5,525 TOTAL LIABILITIES 15,068 15,903 16,341 TOTAL EQUITY AND LIABILITIES 26,295 25,854 26,748 6

7 Consolidated change in equity, summary SEK million Number of outstanding shares Share capital Other contributed capital Currency translation reserve Retained profits Total Holdings without controlling influence Total equity Equity 01/01/ 3,639, , ,747 9, ,684 Profit for the period Other comprehensive income Equity 30/09/ 3,639, , ,000 9, ,950 Profit for the period Other comprehensive income Equity 31/12/ 3,639, , ,426 10, ,407 Dividend Profit for the period 1,079 1,079 1,079 Other comprehensive income Equity 30/09/ 3,639, , ,263 11, ,227 7

8 Comments on the statement of financial position, summary The balance sheet items refer to the position at the end of the period, and are compared with the nearest preceding year end. Investment properties Norrporten's portfolio comprises 125 properties with a leasable area of 1.1 million square metres. The majority of the portfolio is made up of modern office properties situated in central locations in the cities where Norrporten conducts operations. As at 30 September, the entire property portfolio has been valued internally. The market value is affected by property-specific events that affect the value, such as new and renewed rental contracts, tenants moving out and investments. Consideration has also been given to the changes that are judged to have occurred in market rent, yield requirements and vacancy expectations. The unrealised change in value amounts to SEK 642 million and can be explained primarily by lower yield requirements and increase net operations. The average yield requirement for the above amounted to 5.8 per cent (5.9). Property projects Ongoing property projects have a total estimated investment volume of approx. SEK 570 million (1,400), of which approx. SEK 448 million (1,200) had been SEK million Jan Dec Opening actual value on 1 January 26,129 24,593 Acquisitions Divestments -1,237 0 Investments in existing properties Changes in value recognised in the results, unrealised Exchange rate fluctuations Closing actual value 25,779 26,129 processed as of 30 September. Overall the projects have a low risk thanks to a high occupancy level and the fact that long rental agreements have been entered into with tenants. Deferred tax Deferred tax is calculated with a nominal rate of approx. 22 per cent on differences between recognised value and taxable value of assets and liabilities. Net deferred tax liability amounted to SEK 1,345 million (1,084) and is mainly attributable to investment properties. Interest-bearing liabilities Norrporten's debt portfolio as of 30 September amounted to SEK 12,439 million (14,018) and was solely made up of secured bank loans. Available but unutilised credit amounted to SEK 3,011 million (1,968), of which the unutilised overdraft facility was SEK 596 million (558). Average capital tied up amounted to 3.6 years (3.3) and the proportion of short-term borrowing amounted to 31 per cent (30). The average fixed interest period including interest caps amounted to 3.9 years (3.5) and the loan-to-value ratio amounted to 48.3 per cent (53.6). Equity Shareholders' equity increased during the period by a total of SEK 820 million to SEK 11,227 million (10,407). This change can be explained by the comprehensive income of SEK 1,062 million and is reduced by the paid dividend of SEK -242 million. The equity/assets ratio amounted to 42.7 per cent (38.9). Rental agreements' maturity structure Tied-up capital and fixed interest periods Annual rent Maturity year SEK million Proportion, % > Residential, garages 72 3 Total 1, SEK million Tying up of capital Fixed interest periods* Maturity year Credit agreement Utilised Capital Proportion, % , ,628 3, ,423 2,958 1, ,228 2, ,000 1, >2019 2,448 2,448 4, Total: 15,450 12,439 12, * The fixed interest period is calculated exclusive of interest caps. 8

9 Consolidated statement of comprehensive income, summary Oct Sep Jan Dec Current operating activities Profit from property management Adjustments for other items not included in cash flow Taxes paid Cash flow before changes in working capital Increase(-)/Decrease(+) in working capital Cash flow from current operating activities Investment activities Investment in existing properties Acquisition of properties Divestment of properties Other tangible fixed assets, net Financial fixed assets, net Cash flow from investment activities Financing activities Interest-bearing liabilities taken out 4, ,008 3,942 Amortisation of interest-bearing liabilities -5, ,171-4,291 Divestment of derivatives Dividend Cash flow from financing activities -1, , Cash flow for the period Cash and cash equivalents at the beginning of the year Exchange rate differences in cash and cash equivalents Cash and cash equivalents at the end of the period Operating activities Cash flow from operating activities before changes in working capital amounted to SEK 734 million (419) and can be explained by the improved profit from property management. After the change in working capital of SEK 94 million (258), the cash flow from current operations amounted to SEK 828 million (677). Investment activities The cash flow from investment activities amounted to SEK 616 million (-452) and the increase principally relates to the divestment of the operation in Hamburg. Financing activities The cash flow from financing activities amounted to SEK -1,466 million (-355). The net interest-bearing liabilities have decreased during the period as a result of amortisation. Cash flow for the period The cash flow for the period amounted to SEK -22 million (-130), and cash and cash equivalents amounted to SEK 193 million (338) at the end of the period. 9

10 Operating surplus SEK million Rental income Market value Rental income Operating surplus Market value Rental income and operating surplus per segment Regional cities, North , ,345 Regional cities, South , ,770 Metropolitan regions , ,056 Total rental income and operating surplus 1, ,779 1, ,171 Notes: Regional cities, North, include: Luleå, Umeå, Östersund, Sundsvall, Gävle Regional cities, South, include: Örebro, Växjö, Jönköping, Helsingborg Metropolitan regions include: Stockholm, Copenhagen, Hamburg (only 2 months of ) Segment reporting Identification of reportable segments is performed on the basis of internal reporting. The Group management primarily uses operating surplus per segment when analysing results. Administrative costs, financial income and financial expenses as well as income tax are dealt with at Group level. Financial instruments recognised at their actual value Actual value SEK million 30/09/ 30/09/ 31/12/ Assets Derivatives Interest cap Basis swaps/currency swaps Total derivative assets Actual value SEK million 30/09/ 30/09/ 31/12/ Liabilities Derivatives Interest rate swaps Interest cap Basis swaps/currency swaps Electricity derivatives Total derivative liabilities Net derivative liability Financial instruments recognised at their actual value The financial instruments that are valued at their actual value in the balance sheet comprise derivative instruments that are held with the aim of safeguarding Norrporten's exposure to interest rate, currency and electricity price risks. The table specifies the actual value of these instruments on the balance sheet date. All derivatives belong to level 2 in the hierarchy for valuing at actual value as described in IFRS 13. Reported value is deemed to be a reasonable approximation of actual value for all financial assets and liabilities. The recognised value for the interestbearing liabilities on 30 September amounted to SEK 12,439 million (14,018). The difference between recognised and actual value for interest-bearing liabilities is not deemed to be significant, as these have a short fixed interest period. The actual value of interest rate swaps is calculated through discounting of the calculated future cash flows by the market interest rate for similar instruments on the balance sheet date. For interest caps, basis swaps, currency swaps and electricity derivatives, the actual value is based on the communicating unit's valuation. 10

11 NS Holding AB parent company in summary Income statement, parent company SEK million Income 0 0 Expenses 0 0 Operating profit 0 0 Profit on financial items Net financial items 0 0 Profit before tax 0 0 Comments on the Parent Company The Parent Company is primarily engaged in owning and managing shares in Fastighetsaktiebolaget Norrporten. The Parent Company's profit before tax amounted to SEK 0 million (0) when rounded to the nearest SEK million. The equity/assets ratio amounted to 100 per cent (100). As in the previous year, the Parent Company had no cash and cash equivalents. The unused overdraft facility amounted to SEK 50 million (50). Tax 0 0 Profit for the period 0 0 Balance sheet, Parent Company SEK million 30/09/ 30/09/ Shares in affiliated companies 5,188 5,188 Deferred tax claims Total fixed assets 5,298 5,298 Receivables from affiliated companies Total current assets TOTAL ASSETS 5,794 6,036 Equity 5,794 6,036 TOTAL EQUITY AND LIABILITIES 5,794 6,036 Collateral pledged None None Contingent liabilities 9,786 10,870 11

12 Other information Risks and uncertainties No significant changes are deemed to have taken place in respect of Norrporten's risks and uncertainties. These are described on pages in the Annual Report. The Annual Report can be found at Transactions with associated parties There have been no significant transactions with associated parties during the period. Accounting principles This consolidated interim report summary has been prepared in accordance with IAS 34 Interim Financial Reporting, as well as applicable provisions in the Swedish Annual Accounts Act. As from 1 January, IFRS is applied in the consolidated accounts. The new accounting principles have been applied retroactively with a recalculation of the comparative year The new accounting principles and the effects of the switch to IFRS can be seen from the Annual Report. The interim report for the Parent Company has been prepared in accordance with Section 9, Interim reporting, of the Swedish Annual Accounts Act. As Norrporten is applying IFRS in its consolidated accounts, the Parent Company applies RFR 2, Reporting of legal entities, a recommendation issued by the Swedish Financial Reporting Board. RFR 2 means that IFRS is applied as far as possible within the framework of the Annual Accounts Act, the Act on Safeguarding Pension Commitments and with regard to the link between accounting and taxation. The application of RFR 2 has not had any significant effect on the Parent Company's results and position, neither for the current year nor for the comparative year. Events after the balance sheet date There have been no events of particular significance after the balance sheet date. Sundsvall, 13 November Jörgen Lundgren President 12

13 Auditor's inspection report Fastighetsaktiebolaget Norrporten (public), corp. reg. no Introduction We have conducted a general review of the interim financial information in summary (the interim report) for Fastighetsaktiebolaget Norrporten (publ) as per 30 September and the nine-month period ending on this date. The Board of Directors and the President are responsible for the preparation and fair presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our general review. The focus and scope of the general review We have conducted our general review in accordance with the International Standard on Review Engagements ISRE 2410 General review of interim financial information carried out by the company's selected auditors. A general review consists of making enquiries, principally to people who are responsible for financial and accounting issues, performing an analytical review and conducting other general review measures. A general review has a different focus and a considerably smaller scope compared to the focus and scope of an audit according to the International Standards on Auditing and generally accepted auditing practice. The review measures that are implemented during a general review do not enable us to acquire a sufficient level of assurance that we are aware of all important circumstances that could have been identified had an audit been performed. The conclusion expressed on the basis of a general review therefore does not provide the same level of assurance as a conclusion expressed on the basis of an audit. Conclusion Based on our general review, no circumstances have emerged that give us reason to consider that the interim report has not essentially been drawn up for the company in accordance with IAS 34 and the Annual Accounts Act, as well as for the parent company in accordance with the Annual Accounts Act. Stockholm, 13 November Ernst & Young AB Mikael Ikonen Chartered Accountant 13

14 Definitions Loan-to-value ratio, % Interest-bearing liabilities in relation to the properties' estimated market value. Rental value, % Rental income for leased premises plus estimated market rent for unleased premises. Contracted annual rent, SEK million Total rent from contracts running on the balance sheet date. Interest coverage ratio, times Profit before financial expenses in relation to financial expenses, adjusted for realised changes in the value of government futures. Equity/assets ratio, % Shareholders' equity in relation to the balance sheet total on the closing day. Leasable area, m 2 Total area that is available to rent. Vacancy level, % Estimated rental value for vacant (leasable) areas in relation to total rental value. Surplus ratio, % Operating surplus in relation to rental income. Profit per share Profit for the period divided by the number of outstanding shares. Rental occupancy, % Contracted rent in relation to total rental value. Questions and further information Further information can be obtained form Norrporten's President, Jörgen Lundgren, tel. +46 (0) , or the CFO, Magnus Jacobson, on tel +46 (0) Calendar The year-end report for will be presented in February