INTERIM REPORT JANUARY MARCH 2006

Transcription

1 INTERIM REPORT JANUARY MARCH 2006 Rental income amounted to SEK 182 million (139) Net profi t for the period increased to SEK 183 million (42) Earnings per share increased to SEK 1,52 (0.39) SEK 125 million of the profi t consists of changes in value of properties (4) The full-year forecast is maintained: net profit is expected to exceed SEK 250 million excluding changes in the value of properties

2 Statement by CEO The unrealised changes in value are explained by new letting Unrealised changes in value of properties account for as much as SEK 112 million of Klövern s profit during the fi rst quarter. The explanation for this increase is not only decreasing required return but, to a great extent also new letting. It is extremely gratifying that it is largely our own work of letting and improvement that is contributing to the change in value of the properties and thus also profit, says Klövern s CEO Gustaf Hermelin. Klövern has noted a clear increase in demand in all geographic market segments during the first quarter of This increase is a good sign for the rest of the year and gives hope that the positive net letting that has taken place since the first quarter of 2005 will continue for the rest of Rental levels are also showing an upward trend, in particular for retail premises. Earnings Net profit for the period totalled SEK 183 million (42). This improvement is mainly due to a considerable increase in unrealised changes in value. The profit includes realised changes in value from property sales at SEK 13 million (4) and unrealised changes in value of properties at SEK 112 million (0). Net financial income was SEK 32 million ( 36). Cash flow and fi nancial position The cash fl ow for the period was SEK 16 million (99). The equity ratio at the end of the period was 36.9 per cent, compared with 34.8 per cent at the beginning of the period. Equity totalled SEK 2,447 compared with SEK 2,264 million at the beginning of the period. Liquid funds amounted to SEK 125 million (14 and interestbearing liabilities SEK 3,894 million (3,987). Net new letting Rental income and property expenses Rental income during the period was SEK 182 million (139). The increase is mainly due to an increase in the size of the property portfolio. Property expenses amounted to SEK 79 million (57). The operating surplus was SEK 103 million (8 corresponding to an operating margin of 57 per cent (59). The decrease in the operating margin is mainly due to the fi rst quarter of 2006 being unusually cold with a lot of snow. Demand has increased in all of Klövern s market segments compared with the fourth quarter of 2005 and the fi rst quarter of Rental levels have increased slightly, in particular for retail premises. Net new letting in the fi rst quarter totalled SEK 1.6 million, which is a marginal increase compared with the fi rst quarter of The economic occupancy rate was 87 per cent, which is unchanged compared with the letting situation at the beginning of the year. SEK 000 Moving in Moving out Net new letting SEK ,000 20,000 10,000 10, ,000-10,000-20, :Q1 2004:Q2 2004:Q3 2004:Q4 2005:Q1 2005:Q2 2005:Q3 2005:Q4 2006:Q1-20,000 2

3 Property portfolio On 31 March 2006, Klövern s property portfolio consisted of 159 properties compared with 162 at the beginning of the year. The rental value amounted to SEK 802 million (798) and the fair value was SEK 6,079 million (5,968). The total lettable area was 1,036,000 sq.m. (1,042,000). PROPERTY PORTFOLIO Rental Economic No. of Area, value, occupancy Type of premises properties 000sq.m. SEKm rate, % Offi ces Industry/warehouse Retail Education/health care/ recreation Restaurant/hotel Residential Other Total 159 1, Refers to leaseholds, garage, parking spaces, sign areas, sites and telecom masts CONTRACT STRUCTURE Contract Share of No. of Area, value, contract Maturity year contracts 000 sq.m. SEKm value, % Commercial premises > Sum 1, Residential Sum 2, Garage/parking spaces Total 3, The average contract time was 2.7 years as per 31 March 2006 Acquisitions and investments During the period, two properties (19) for a total of SEK 73 million (80 have been acquired with an aggregate area of around 12,000 sq.m. The total also includes the acquisition cost for a previous site leasehold in Nyköping. Acquired properties are located in Borås and Örebro. Investment in refurbishment during the period totalled SEK 29 million (1 relating to properties primarily in Eskilstuna, Linköping, Nyköping and Örebro. Property sales During the period six properties (7) have been sold for a total sales price of SEK 117 million (160), which exceeded the most recently reported fair value by SEK 13 million (4). Three of the sold properties, which totally consist of around 19,000 sq.m., are located in Västerås and one each in Nyköping, Tranås and Uppsala. Valuation of properties Every quarter, Klövern values 100 per cent of the property portfolio. 25 per cent of the valuations are carried out by an external valuation company and the rest are valued internally. This means that every property in the portfolio is externally valued during a rolling 12-month period. The external valuations have been carried out by DTZ Sweden. The valuations have been carried out in accordance with the same method as in See Klövern s annual report for 2005 for a detailed description of the valuation principles. Unrealised changes in value in the properties The fair value of Klövern s properties was SEK 6,079 on 31 March The unrealised change in value during the first quarter of 2006 was SEK 112 million (0). Financing At the end of the period, the interest-bearing liabilities totalled SEK 3,894 million, compared with SEK 3,987 million at the beginning of the period. The average interest rate was 3.8 per cent (3.5) and the average period of fixed interest 0.9 years (1.0). The loans, including variable loans, which mature during 2006 had, at the end of the period, an average fi xed-interest period of 34 days (49). The average period of tied-up capital was 4.6 years (4.6). During the fi rst quarter, loans of an additional SEK 1,000 million with variable interest have been provided with interest caps at the level of 4.5 per cent related to STIBOR with a duration of 30 days. Total loans with interest caps subsequently amount to SEK 1,929 million. Of the interest caps, SEK 330 million mature in 2009, SEK 599 million in 2010, SEK 500 million in 2011 and SEK 500 million in During the first quarter of the year, the unrealised changes in value of Klövern s fi nancial instruments, which are reported under net financial income, amounted to SEK 4.3 million ( 0.7). INTEREST RATE AND LOAN MATURITY STRUCTURE Interest maturity structure Loan maturity structure Interest Average Creedit maturity, interest agreement, Utilised, Year SEKm rate, % SEKm SEKm Variable 2, ,582 1,582 Total 3, ,071 3,894 Variable loans are loans with a maturity of 90 days or shorter. SEK 1,929 million of these loans have been provided with interest caps. 3

4 The share and shareholders The Klövern share is listed on Stockholmsbörsen s O list. The closing price on 31 March 2006 was SEK 28.30, which corresponds to a market capitalisation of SEK 3.4 billion. As per 31 March 2006, the number of shares in Klövern was 120,364,259 allocated to approximately 27,100 shareholders. LARGEST OWNERS No. of shares, Holding, million % Arvid Svensson Invest Federation of Swedish Farmers (LRF) Skandia Liv Investment AB Öresund Länsförsäkringar Södermanland Fortis Banque Luxembourg HQ Fonder Robur Fonder Länsförsäkringar Fastighetsfonden SEB Fonder Total largest owners Central administration Central administration expenses for the period amounted to SEK 13 million (8). SEK 4 million (0) of the amount was fees to advisors in Klövern s tax case for reconsideration of the tax assessment for Accounting principles This interim report has been prepared in compliance with IAS 34 Interim Financial Reporting, which is in accordance with the requirements made in the Swedish Financial Accounting Standards Council s recommendation RR 31 Interim reports for groups. The accounting principles applied in this interim report are described in Klövern s annual report for 2005, note 1. According to this note, the International Financial Reporting Standards (IFRS) have been applied since 2005 inclusive. The most important effect of the transition to IFRS relates to the reporting of properties. Properties are classified as investment properties and valued at fair value in the balance sheet with unrealised changes in income in the income statement. Previously, properties have been reported as properties for resale (inventories) at the lowest of acquisition value and actual value. Other owners Total all owners The Klövern share 35 Klövern OMX Stockholm_PI Carnegie Real Estate Index Share turnover 000s (incl. subsequent notification) , ,000 10, , (c) SIX 4

5 Events after the end of the report period Klövern s Annual General Meeting Klövern s Annual General Meeting on 5 April 2006 decided in accordance with the Board s recommendation on a dividend of SEK 1.00 per share. Board members Stefan Dahlbo (chairman), Gustaf Hermelin, Lars Holmgren, Anna-Greta Lundh, Johan Piehl, Lars Rosvall and Fredrik Svensson were re-elected. It was decided that a nominations committee was to be appointed annually consisting of the chairman of the Board and a representative of each owner whose shareholding in the company as per 31 August exceeds five per cent of the shares and votes in the company and a representative of the other shareholders. The nominations committee appoints a chairman who may not be a member of the Board. The names of the persons who are to serve on the nominations committee are to be published at the latest by 15 September on Klövern s website. The Annual General Meeting decided to adapt the articles of association to the rules that apply according to the new Companies Act. The Annual General Meeting decided that Klövern will offer shareholders, the opportunity to buy or sell, free of brokerage, the number of shares required to reach a whole trading lot (a trading lot = 500 shares). It has been left to the Board to decide on the duration of the offer and the detailed terms and conditions. Propertyacquisitions in Uppsala Klövern has acquired Pharmacia s previous head office and facility in Uppsala for SEK 225 million, taking possession on 2 May The acquisition consists of around 55,000 sq.m. high quality premises and land for development in the Fyrislund area. The property has an initial direct yield of approximately 5 per cent and the occupancy rate is around 50 per cent. With this acquisition, Klövern is taking over a staff of six and establishing a unit in Uppsala. Klövern has withdrawn its request for a tax reassessment Klövern has, in accordance with a press release April 20, 2006, withdrawn its previous request for a review of the tax assessment for 2003 as regards a loss carry-forward amounting to SEK 5 billion. This is because Klövern wishes to minimize the risk of imposition of a surcharge of SEK 500 million by the National Tax Board. The question of Klövern s withdrawal of its request for a review of the tax assessment for 2003 was discussed by the Tax Board in Stockholm on 20 April 2006, and the Board is expected to announce its decision by, at the latest, 5 May The decision will mean that Klövern s case of a review is dismissed. The decision may also mean that Klövern is imposed with a tax surcharge of SEK 500 million. It is possible to appeal against a decision of tax surcharge. The question of another review of the taxreduction claim can be brought up to date by Klövern in the future. Today s developments do not affect Klövern s other tax deduction possibilities. Klövern has tax loss carry-forwards and tax deductions for depreciation of equipment and amortization of goodwill for the tax year 2004 totalling SEK 2,153 million, in addition to book values. Given Klövern s present earnings capacity, the company is not expected to incur current tax during the next five years. Full-year forecast for 2006 The full-year forecast that Klövern s profit before tax is expected to exceed SEK 250 million, excluding changes in value relating to properties, is being maintained. Calendar 2006 Interim Report Jan Jun 2006 Interim Report Jan Sep 2006 Thursday, 20 July Thursday, 26 October Reports are available on Klövern s website se, where it is also possible to subscribe to annual reports, interim reports and press releases. Nyköping, 27 April 2006 Gustaf Hermelin CEO This interim report has not been subject to scrutiny by auditors. 5

6 Groups Income of Statement Rolling 3 months 3 months 12 months 12months SEKm Jan Mar Jan Mar Jan Dec Apr Mar Rental revenues Property costs Operating surplus Changes in value properties, realised Changes in value properties, unrealised Depreciation of equipments Central administration Operating profit Financial incomes Changes in value fi nancial items, unrealised Financial costs Profit after financial items Profit before tax Current tax 2) Deferred tax 3) Net profit for the period Earnings per share, SEK Number of shares outstanding atthe end of the period, million Average number of shares, million There are no outstanding warrants or convertibles. The amounts for 2005 and rolling 12 months include one-off costs for redemption of loans at SEK 24 million. 2) Current tax on acquisition of subsidiaries in 2005 totals SEK 0.2 million. 3) Re-taxation of deferred tax claim affected the profi t for 2005 by SEK 48 million. Consolidated Balance Sheets SEKm Assets Properties 6, , ,967.9 Equipment Deferred tax claim Short-term receivables etc Blocked accounts 2) Liquid funds Total assets 6, , ,506.7 Shareholder s equity and liabilities Share capital 2, , ,264.4 Provisions Interest-bearing liabilities 3, , ,987.4 Accounts payable Other liabilities Accrued expenses and prepaid income Total shareholder s equity and liabilities 6, , ,506.7 SEK 46 million of the amount consists of shares in Diös, which were received as part payment for property sales during the third quarter of ) Consists of amounts in blocked accounts as collateral for repayment of loans or to be used for financing of investments in properties. 6

7 Groups changes in shareholder s equity SEKm Shareholder s equity Shareholder s equity ,264.4 Net profit for the period Shareholder s equity ,447.0 Consolidated Statements of Cash flow Rolling 3 months 3 months 12 months 12months SEKm Jan Mar Jan Mar Jan Dec Apr Mar Current operations Profi t after financial items excluding depreciation and changes in value Realised changes in value, properties Income tax paid Cash flow from current operations before change in working capital Change in working capital Change in operating receivables Change in operating liabilities Total change in working capital Cash flow from current operations Investment operations Sale of properties Acquisition of properties 2) , ,316.9 Acquisition of tangible fi xed assets Change in amounts in blocked accounts Cash flow from investment operations , Financing operations Raised/repaid loans , Dividend Cash flow from fi nancing operations , Cash flow for the period Liquid funds at the beginning of the period Liquid funds at the end of the period SEK 46 million of the amount consists of shares in Diös, which was received as part payment for property sales during the third quarter of ) The property acquisitions have been partly fi nanced by issues in kind, totalling SEK 269 million during the fi rst six months, Key financial indicators Rolling 3 months 3 months 12 months 12months Jan Mar Jan Mar Jan Dec Apr Mar Return on equity, % Equity ratio, % Interest coverage ratio, times Shareholder s equity, SEK Debt-equity ratio, times Economic occupancy ratio, % Operating margin, %

8 Defi nitions Key ratios based on the average number of shares have been calculated on the basis of weighted averages. Debt-equity ratio Interest-bearing liabilities at the end of the period in relation to equity. Earnings per share Profi t for the period in relation to the average number of shares. Equity per share Reported equity in relation to the number of shares at the end of the period. Equity ratio Reported equity in relation to reported total assets at the end of the period. Interest coverage ratio Profi t after net financial items plus fi nancial expense in relation to fi nancial expense. Leverage, real estate Interest-bearing liabilities in relation to the reported value of the properties. Occupancy rate area Let area in relation to total area. Occupancy rate financial Rental income in relation to rental value. Operating margin Operating surplus as a percentage of rental income. Operating surplus Rental income plus assessed market rent for unlet areas, rent discounts and rent losses, operating and maintenance expenses, site leasehold charges and property tax. P/E ratio The share price at the end of the period in relation to net profi t per share for the past twelve-month period. Realised change in value, properties Property sales during the period after deduction for the fair value of the properties. Rental value Rental income plus assessed market value for unlet areas. Return on equity Net profit in relation to average equity. Unrealised change in value, properties Change in fair value for the property holding at the end of each quarter. For further information, please contact Gustaf Hermelin, CEO tel +46-(0) , +46-(0) gustaf.hermelin@klovern.se Anders Lundquist, CFO tel +46-(0) , +46-(0) anders.lundquist@klovern.se Britt-Marie Einar, Corporate Communications Offi cer tel +46-(0) , +46-(0) britt-marie.einar@klovern.se Klövern AB (publ), Box 1024, SE Nyköping, Sweden Tel +46-(0) Fax +46-(0) Company registration no Registered offi ce: Nyköping Website: