Profit for the period after tax amounted to SEK 111.2 M

Profit for the period after tax amounted to SEK 111.2 M Enclosure: Interim Report, January - June 2000. Questions will be answered by Ivo Stopner and Clas Hjorth, telephone +46 8 762 90 00. HUFVUDSTADEN Interim Report, January - June 2000 * Profit for the period after tax amounted to SEK 111.2 M (440.8). The profit includes items affecting comparability totalling SEK 56.0 M (353.7). * For comparable property holdings, the net rents from property management rose by 8.9 per cent to SEK 491.2 M, compared with the corresponding period last year. * The positive trend in rents in central Stockholm and central Gothenburg is continuing. New top annual rents were noted of SEK 5,500 per square meter in Stockholm and SEK 2,000 per square meter in Gothenburg. * The property Pumpstocken 13 at Biblioteksgatan in Stockholm was acquired for SEK 184 M, with completion on September 1, 2000. * After the end of the period an agreement was reached on the acquisition of the Citypalatset property at Norrmalmstorg in Stockholm. The total investment is SEK 1,100 M. Completion will be on October 2, 2000. * A new share issue worth SEK 845 M is proposed. CONSOLIDATED RESULTS Property management Gross profit totalled SEK 211.2 M (208.0). Excluding costs for special projects, the gross profit rose by 13.0 per cent. Net rents from property management during the period amounted to SEK 491.2 M 1 (446.1) , equivalent to an increase of 10.1 per cent. For comparable property holdings, the increase was 8.9 per cent. Of the net rents from property management, the Stockholm Business Area accounted for SEK 330.7 M (244.7), the NK Business Area for SEK 114.0 M (103.3) and the Gothenburg Business Area for SEK 46.5 M (45.1). The increase includes SEK 15.5 M net from acquisitions and divestments. 1. Property management expenses during the period totalled SEK 280.0 M (238.1) The increase in expenses of SEK 41.9 M includes expenses for special projects amounting to SEK 24.2 M. Divided according to business area, the Stockholm Business Area accounted for SEK 182.9 M (106.5), the NK Business Area for SEK 74.3 M (75.4) and the Gothenburg Business Area for SEK 22.8 M (21.2). The increase in expenses within the Stockholm Business Area is attributable mainly 1 The 1999 figure includes properties that now have been sold. to acquisitions, increased property tax and increased maintenance costs. Of the total maintenance costs for the Stockholm Business Area, special projects accounted for SEK 26.7 M (2.2). 2 Other operations Other operations include parking operations at Parkaden in Stockholm and parking and conference operations at the World Trade Center in Stockholm. The gross profit for the period totalled SEK 10.7 M (6.3). Net sales amounted to SEK 46.9 M (52.5). Operating expenses amounted to SEK 36.2 M (46.2). Other income statement items Central administration totalled SEK -13.8 M (-19.6) and comprises mainly salary and office expenses for the group management and group staffs. 3 Items affecting comparability for the period totalled SEK 56.0 M (353.7) , the whole of which is in the form of a claim against SPP. 4 The profit on participations in associated companies, SEK 3.5 M (12.5) , arose from the sale of shares in FASAB Fastighetssystem AB. Net financial income and expense amounted to SEK -115.7 M (-109.2). The Group's tax expense (both paid and deferred) for the period totalled SEK - 40.7 M (-10.9). SPECIAL PROJECTS Special projects refer to measures taken to improve and develop the properties. The costs that arise in conjunction with this are in the short term a charge on profit. In the long term, however, special projects increase the return on the property holdings. The profit for the period was charged with costs amounting to SEK 26.7 M (2.5) for two projects: Orgelpipan 7, which involves the conversion of over 10,000 square meters for Postgirot Bank AB, due for completion at the end of 2001, and the Hästhuvudet 13 property, involving extensive conversion and extension work, which has now been completed. ACQUISITIONS AND INVESTMENTS The remaining two-thirds of the shares in Vasaterminalen AB were acquired on January 1, 2000 for SEK 891 M. Vasaterminalen AB owns the World Trade Center 5 Building in Stockholm. The rentable space in the building is around 45,000 square meters plus garage space. In June, the Pumpstocken 13 property was acquired for SEK 184 M. The completion date was September 1, 2000. The property is located at Biblioteksgatan 12 in Stockholm. The rentable space is 2,791 square meters and the whole of the property has been leased out. The annual rental value, based on current contracts, is approximately SEK 8.5 M, excluding the property tax supplement. Total investments in properties and equipment, excluding acquisitions, totaled SEK 44.6 M during the period (104.7). The largest single item is the construction of a new building on the Skären block at Norrmalmstorg in Stockholm. PROPERTY PORTFOLIO The book value of Hufvudstaden's property portfolio as of June 30, 2000 was SEK 8,539.3 M and the rentable space was 485,988 square meters. The total floor space vacancy rate on the same date was 2.4 per cent (4.1 at the year- end) and the vacancy rate based on rental income was 2.1 per cent (3.7 at the year-end). THE RENTAL MARKET Rents in Hufvudstaden's prioritized market areas, central Stockholm and central Gothenburg, continued to rise during the period. The demand for well- 2 The result from the now divested Sheraton Göteborg Hotel & Towers are included in the 1999 figure. 3 Refers to the preceding year, mainly a capital gain on the disposal of shares in subsidiaries. 4 The preceding year's figure refers entirely to Vasaterminalen AB. 5 The World Trade Center building is handled entirely as a building held for resale. situated office and retail premises in the most attractive positions continued to rise and outstripped supply. New leases on offices in the most attractive locations in Stockholm, such as the Golden Triangle, carried annual rents on the SEK 5,500 per square meter level, excluding the property tax supplement. Within the same area, annual rents for retailing space were between SEK 11,000 and 15,000 per square meter, excluding the property tax supplement. Rents in Gothenburg for modern office and retailing premises in prime locations have also continued to rise, while the vacancy level continues to fall. New leases for office premises in the most attractive locations carried annual rents in the region of SEK 2,000 per square meter, excluding the property tax supplement. In the case of leases for prime site retailing space, annual rents varied from SEK 5,000 to SEK 8,500 per square meter, excluding the property tax supplement. FINANCING STRUCTURE Hufvudstaden's borrowing as of June 30, 2000 amounted to SEK 4,787.8 M (3,637.9 at the year-end). The average period of fixed interest was 20 months and the average interest rate was 5.0 per cent. Net liabilities amounted to SEK 4,673.4 M (3,563.2 at the year-end). Capital tie-up structure, June 30, 2000 Maturit Volume, % y date SEK M 2000 840.8 18 2001 816.2 17 2002 1,130.3 24 2003 600.5 12 2004 900.0 19 2005 500.0 10 Total 4,787.8 100 Fixed interest structure, June 30, 2000 Maturit Volume %Avera y date , ge SEK M APR, % 2000 1,640. 34 4.9 8 2001 816.2 17 5.8 2002 830.3 17 4.8 2003 600.5 13 4.4 2004 900.0 19 5.3 Total 4,787. 100 5.0 8 PARENT COMPANY The Parent Company reported a profit of SEK 57.8 M (173.1). Liquid funds at the period-end amounted to SEK 110.3 M (73.9 at the year-end). Investments in properties and equipment during the period amounted to SEK 30.2 M (95.1). MISCELLANEOUS The compulsory purchase proceedings to acquire the minority shareholdings in AB Nordiska Kompaniet, previously NK Cityfastigheter AB (publ), have been concluded following arbitration, upon which the redemption sum was set in accordance with Hufvudstaden's claim. The judgment is expected to take legal effect at the end of August 2000. SPP A claim against SPP in the form of company-linked surplus funds totalling SEK 90.7 M has been discounted in the light of market interest rates and the period of time it is expected to be used. EVENTS AFTER THE END OF THE PERIOD An agreement was reached on August 2 regarding the acquisition of all shares in Beheer-en Beleggingsmaatschappij Gradoma B.V., which owns the Citypalatset property at Norrmalmstorg in Stockholm. Completion will be on October 2. The purchase sum for the shares is SEK 1,100 M plus acquired liabilities and is based on an estimated property value of SEK 1,100 M. The acquisition of Citypalatset is in line with Hufvudstaden's strategy of concentrating its property holdings on central Stockholm and central Gothenburg. Citypalatset is a unique commercial building in a prime location at Norrmalmstorg, consisting of the whole of the Packarhuset 4 block, and has not been sold on the property market since it was constructed in 1932. Because of the central location of the property, Hufvudstaden feels that there are considerable economies of scale to be gained along with other properties in the so-called Golden Triangle and the NK building on Hamngatan. The property offers a number of opportunities for future development, including an increase in the retailing space. The property is on freehold land and is one of Stockholm's most well-known buildings, with a strong identity. The whole of the property has been leased out. The rentable space is approximately 15,000 square meters and is broken down as follows: Type of Floor % premises space, 2 m Office 7,900 53 Hotel 2,800 18 Retail, 3,700 25 restaurant Other 600 4 15,000 100 The annual rental income from Citypalatset, based on current contracts, is around SEK 36 M, excluding the property tax supplement. Current market rents are well above this figure. Hufvudstaden assesses the current annual market rent for the property to be SEK 65-75 M, excluding the property tax supplement. NEW SHARE ISSUE The Board has decided to propose a new share issue of SEK 845 M. Notification of an extraordinary general meeting will be sent out shortly. It is proposed that a new share issue takes place, with a preferential right for Hufvudstaden's shareholders, where for every four shares a new share may be subscribed for at a price of SEK 20. The same issue is underwritten in full by L E Lundbergföretagen AB. The reason for the new share issue is to finance in part property acquisitions made during the year at a cost of SEK 2,200 M. These are the World Trade Center building, Pumpstocken 13 on Biblioteksgatan and Citypalatset on Norrmalmstorg, all located in central Stockholm. The new share issue will reinforce Hufvudstaden's financial position, which will also provide further scope for investment in both the existing property portfolio and in new properties. FORTHCOMING INFORMATION Interim Report, October Jan-Sept 2000 25, 2000 Year-end Report February 2000 16, 2001 Annual Report March, 2000 2001 Information is also published on Hufvudstaden's website, www.hufvudstaden.se DEFINITIONS Central administration. Costs for Group Management and Group staff functions, costs for maintaining the company's stock exchange listing and other costs common to the company. It should be noted that Central administration attributable to Other operations is included in the Other operations item. Equity per share. Equity in relation to the number of shares at the period- end. Floor space vacancy rate. Total vacant floor space in square meters in relation to the total rentable floor space. Golden Triangle. The central business district in Stockholm, between Stureplan, Norrmalmstorg and Nybroplan and bordered by Birger Jarlsgatan, Norrlandsgatan and Hamngatan, is popularly known as the Golden Triangle. Investments. Expenses relating to planned maintenance, adaptation of premises and special projects, capitalized or expensed in accordance with tax legislation. Net liability. Interest-bearing liabilities less interest-bearing assets. Profit for the period. Profit after tax for the period. Profit for the period per share. Profit after tax for the period in relation to the number of shares at the period-end. Property tax supplement. Property tax reimbursed to the company by tenants. Rental vacancy rate. Vacant floor space at an estimated market rent in relation to the total annual rent. Tax. Total tax for the Group comprises both paid tax and deferred tax. Visible equity ratio. Equity at the period-end in relation to total assets. CONSOLIDATED INCOME STATEMENTS - SUMMARY January-January- January- JuneJune December SEK M 20001999 1999 Net Sales Property management 491.2 446.1 865.5 Other operations 46.9 52.5 79.3 538.1 498.6 944.8 Operating expenses Maintenance (1) -72.0 -37.6 -97.1 Operation and administration -87.5 -89.1 -157.9 Ground rents -18.8 -8.9 -17.7 Property tax -44.8 -32.7 -61.1 Depreciation -56.9 -69.8 -127.4 Property management -280.0 -238.1 -461.2 Other operations -36.2 -46.2 -65.5 -316.2 -284.3 -526.7 Gross profit 221.9 214.3 418.1 - of which Property 211.2 208.0 404.3 management - of which Other operations 10.7 6.3 13.8 Central administration -13.8 -19.6 -33.0 Items affecting comparability 56.0 353.7 361.7 Operating profit 264.1 548.4 746.8 Result from participations in 3.5 12.5 30.9 associated companies Financial income and expense -115.7 -109.2 -200.7 Profit before tax 151.9 451.7 577.0 Tax -40,7 -10.9 -52.9 Profit for the period 111.2 440.8 524.1 (1) Including costs for -26.7 -2.5 -9.7 special projects CONSOLIDATED BALANCE SHEETS - SUMMARY June 30, December SEK M 2000 31, 1999 Properties 8,539.3 7,116.2 Other fixed assets 174.7 323.5 Other current assets 183.7 135.8 Total assets 8,897.7 7,575.5 Restricted equity 2,300.1 2,300.1 Non-restricted equity 977.4 1,009.8 Interest-bearing liabilities 4,787.8 3,637.9 Other liabilities 832.4 627.7 Total equity and liabilities 8,897.7 7,575.5 CONSOLIDATED CASH FLOW STATEMENTS - SUMMARY January- January- SEK M June, December 2000 1999 Cash flow from current 167.6 425.6 operations Cash flow from investment -934.0 951.5 operations Cash flow from financing 806.1 -1,378.1 operations Cash flow for the period 39.7 -1.0 Liquid funds at the 74.7 75.7 beginning of the period Liquid funds at the period- 114.4 74.7 end PROFIT TREND Janua Januar April Apri Janua Janua ry- y- - l- ry- ry- SEK M March March, June,June June, June, , 1999 2000 , 2000 1999 2000 1999 Income 276.2 266.6 261.9232. 538.1 498.6 0 Expenses - -162.7 - - - - 177.9 138.3121. 316.2 284.3 6 Gross profit 98.3 103.9 123.6110. 221.9 214.3 4 Central -7.4 -9.6 -6.4 - -13.8 -19.6 administration 10.0 Items affecting 0 317.5 56.0 36.2 56.0 353.7 comparability Net financial -55.4 -50.5 -56.8 - - -96.7 income/expense 46.2 112.2 Income tax -3.3 -5.3 -37.4 -5.6 -40.7 -10.9 Profit for the 32.2 356.0 79.0 84.8 111.2 440.8 period KEY RATIOS June June 30, December 31, 30, 1999 1999 2000 Visible equity ratio, % 36.8 38.6 43.7 Equity per share, SEK 19.39 19.09 19.58 Book value of properties 50.52 42.25 42.10 per share, SEK Profit for the period 0.66 2.61 3.10 per share, SEK Number of shares at the 169,017 169,017,547 169,017,547 period-end ,547 Stockholm, August 11, 2000 Ivo Stopner President REVIEW REPORT I have reviewed this interim report in accordance with the recommendation issued by FAR, the Swedish Institute of Authorized Public Accountants. A review is very limited compared with an audit. Nothing has emerged to indicate that this interim report does not satisfy the requirements laid down in the Swedish Stock Exchange Act and the Swedish Annual Accounts Act. Stockholm, August 11, 2000 Bo Ribers Authorized Public Accountant Hufvudstaden AB (publ) NK 100, SE-111 77 Stockholm Visiting address: Regeringsgatan 38 Telephone: +46 8 762 90 00 Fax: +46 8 762 90 01 E-mail: info@hufvudstaden.se Website: www.hufvudstaden.se Company registration number: 556012-8240 Registered office: Stockholm ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/11/20000811BIT00520/bit0001.doc http://www.bit.se/bitonline/2000/08/11/20000811BIT00520/bit0002.pdf