Interim report january - march 1998

INTERIM REPORT JANUARY - MARCH 1998 · Näckebro's profit before tax for the first quarter amounted to SEK 16 M (31). · Operating profit increased to SEK 155 M (86). · Cash flow rose to SEK 47 M (46). · The parking company CarPark AB, two properties in Sweden, and one property in the US were sold in April for a total capital gain of SEK 227 M. For further information, please contact: Lennart Schönning, Chief Executive Tel. +46 8 412 19 01 Per Leopoldson, Director of Finance Tel.+46 8 412 19 10 www.nackebro.co.uk GROUP OPERATIONS, JANUARY - MARCH 1998 Summary Näckebro's profit before tax amounted to SEK 16 M (31) in the first quarter of 1998. These lower earnings are attributable to an increased debt/equity ratio following the acquisition of Fabege in 1997. Cash flow increased to SEK 47 M (46). Operating profit before property sales rose by SEK 70 M to SEK 155 M (85). Earnings per share amounted to SEK 0.64 (1.20). Shareholders' equity per share amounted to SEK 146 (145) on 31 March. The operating surplus increased by SEK 73 M to SEK 184 M (111). Central administrative expenses amounted to SEK 9 M (8).. Net financial items decreased by SEK 84 M to SEK -139 M (-55). For a comparable loan portfolio, adjusted for currency effects, net financial items are largely unchanged. Sweden SEK M January- March 1998 January- March 1997 Property income 229 126 Property expenses -103 -60 Operating surplus 126 66 The operating surplus from Näckebro's properties in Sweden increased by SEK 60 M, mainly due to the acquisition of Fabege's property holdings. New leases in the first quarter have not yet had a full impact on earnings. Outside Sweden SEK M January- March 1998 January- March 1997 Property income 73 53 Property expenses -15 -8 Operating surplus 58 45 The operating surplus outside Sweden improved by SEK 13 M, partly because of changes in the property portfolio, and partly because of a favourable rental trend in Näckebro's markets abroad. The effect of exchange-rate fluctuations improved the operating surplus by SEK 3 M. Operating profit for other operations amounted to SEK 10 M, most of which, SEK 7 M, was attributable to CarPark. Market overview The Stockholm market is currently very strong. Demand for commercial premises exceeds supply in some sub-markets. Näckebro's letting activities were successful in the first quarter. The major infrastructure investments carried out in the Malmö region have not yet had an impact on demand for commercial premises. On the other hand, demand for residential premises rose. In Gothenburg, there are positive indications in the form of a rising rental trend. Demand for office premises has increased. On the other hand, there is still a large supply of industrial premises. London is showing all the signs of a strong property market. Rents are still rising and investors' yield requirements have decreased. Property holdings No properties were sold or acquired in the first quarter. On 31 March, Näckebro had a total of 216 (200) properties in its portfolio. The book value amounted to SEK 12,413 M (7,611) and lettable space totalled approximately 1,340,000 sq. m. (910,000). Financing and equity/assets ratio Fixed-interest-rate structure, SEK M Year Loans Swedish kronor Lån Average interest rate, % Loans foreign currency Average interest rate, % Total Average interest rate, % 1998 2,287 5.6 1,727 6.3 4,014 5.9 1999 774 7.4 664 6.1 1,438 6.8 2000 1,197 6.8 743 7.6 1,940 7.1 2001 137 10.4 - - 137 10.4 2002- 1,296 6.1 9 4.8 1,305 6.1 Total 5,691 6.3 3.143 6.6 8,834 6.4 The average interest rate for all interest-bearing loans at 31 March was 6.4%. Interest-bearing loans amounted to SEK 8,834 M (4,135) of which SEK 3,808 M (598) had a maturity of more than one year. Näckebro also had interest rate caps at the end of the quarter in SEK with an underlying value of SEK 1,000 M with an average interest rate of 5.75% and in NLG with an underlying value of SEK 191 M with an interest rate of 4.25%. The average fixed-interest period for all loans, including interest rate caps, was 1.7 years (1.1). The Group's equity/assets ratio was 27% (45%). Occupancy level The occupancy level for the Group, measured as the contracted rent portion of rental value, amounted at 31 March to 90.3% (90.5%). The occupancy level in Sweden rose to 89.9% (89.1%). Outside Sweden, the occupancy level fell to 91.5% (93.8%), which was entirely attributable to the acquisition of the World Fashion Centre in Amsterdam. Parent Company Property income increased to SEK 159 M (155). The loss after financial items amounted to SEK 2 M (32 profit). Cash flow amounted to SEK 12 M (46). The Parent Company's equity/assets ratio was 37% (48%). Events after the end of the period The following divestments were made in April: all the shares in CarPark AB, a 35% interest in a property in the US, Mercurius 15 in Karlstad, and Villa Pauli in Djursholm outside Stockholm. These sales provided a total capital gain of SEK 227 M. An office property, Stigbygeln 3 in Solna, was acquired for SEK 35.5 M. Stockholm, 15 May 1998 Lennart Schönning Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT SEK M January- March 1998 January- March 1997 April 1997- March 1998 Full year 1997 Property operations Property income Rental income 294.5 178.0 1 192.2 1 200.8 Other incomer 7.9 1.4 19.4 12.9 Total property income 302.4 179.4 1 211.6 1 213.7 Total property income SEK M January- March 1998 January- March 1997 April 1997- March 1998 Full year 1997 Maintenance -26.2 -12.3 -117.1 -112.3 Operating costs -51.1 -35.7 -174.5 -176.4 Administration -15.5 -9.6 -65.4 -65.2 Leasehold fees -8.3 -2.4 -34.0 -34.3 Property tax -17.6 -8.4 -67.3 -66.3 Total property expenses -118.7 -68.4 -458.3 -454.5 Operating surplus 183.7 111.0 753.3 759.2 Depreciation -30.0 -17.4 -123.3 -124.2 Profit on property operations 153.7 93.6 630.0 635.0 Other operations SEK M January- March 1998 January- March 1997 April 1997- March 1998 Full year 1997 Operating income 97.5 - 381.1 371.6 Operating expenses -87.6 - -344.8 -340.7 Profit on other operations 9.9 - 36.3 30.9 Gross profit 163.6 93.6 666.3 665.9 Central administration -8.6 -8.3 -45.9 -49.5 Restructuring costs - - -43.9 -43.9 Profit on sale of properties 0.0 0.5 -8.1 -6.8 Operating profit 155.0 85.8 568.4 565.7 Interest subsidy 4.4 8.0 23.4 27.2 Interest income 1.2 0.6 7.7 6.9 Interest expenses -143.5 -63.4 -546.7 -524.9 Other financial items -1.0 - -3.1 -2.9 Total financial items -138.9 -54.8 -518.7 -493.7 Acquired earnings - - -14.5 -21.9 Profit before tax 16.1 31.0 35.2 50.1 Tax -0.9 -2.3 -11.3 -12.6 Profit after tax 15.2 28.7 23.9 37.5 CONSOLIDATED BALANCE SHEET SEK M 31 March 1998 31 March 1997 31 Dec. 1997 Assets Properties * 12,413.4 7,611.4 12,438.1 Work in progress 126.7 28.1 85.3 EquipmentInventarier 40.3 3.1 38.1 Shares and participations 29.1 0.0 28.6 Long-term receivables 20.6 - 20.8 Current receivables 173.2 53.7 333.4 Liquid assets 132.1 84.1 69.3 Total assets 12,935.4 7,780.4 13,013.6 Shareholders' equity and liabilities SEK M 31 March 1998 31 March 1997 31 Dec. 1997 Shareholders' equity 3,476.3 3,474.3 3,456.6 Provisions 73.0 1.7 74.4 Long-term interest bearing loans ** 3,808.2 598.1 4,119.5 Other long-term liabilities 1.1 - 1.1 Short-term interest-bearing loans *** 5,025.6 3,536.9 4,740.3 Other current liabilities 551.2 169.4 621.7 Total shareholders' equity and liabilities 12,935.4 7,780.4 13,013.6 * of which properties outside Sweden 3,067.5 2,588.8 3,072.2 ** of which long-term loans in foreign currency 1,022.8 496.3 1,412.0 *** of which short-term loans in foreign currency 2,119.6 2,071.3 1,738.7 This interim report has not been reviewed by the Company's auditors. Key data April 1997- March 1998 Full year 1997 Property income, SEK M 1,212 1,214 Operating surplus, SEK M 753 759 Profit before tax, SEK M 35 50 Cash flow, SEK M 146 142 Book value of property holdings, SEK M 12,413 12,438 Interest coverage ratio 1.1 1.1 Return on shareholders' equity, % 0.7 1.1 Equity/assets ratio, % 27 27 Debt/equity ratio 2.5 2.6 Mortgage rate, % 71 71 Occupancy level, rental income, % 90.3 90.3 Earnings per share after tax, SEK 1.00 1.57 Shareholders' equity per share, SEK 146 145 The above key data has been prepared according to the definitions presented in the 1997 annual report. Key data for 1997 includes Fabege for the full year, less acquired profit before tax to 30 June 1997. Financial information during 1998 Interim Report, January - June 1998 13 August 1998 Interim Report, January - September 1998 4 November 1998

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