Interim report January - March 2000

Diligentia AB Interim report January - March 2000 Operating results * Net operating income for the Swedish operations rose by 8 percent during the period to SEK 192 million (178). Total net operating income rose by 9 percent during the period to SEK 195 million (179). * Income after net financial items excluding the gain on property sales rose by 19 percent compared with the corresponding period of the previous year to SEK 69 million (58). * The net gain on property sales during the period amounted to SEK 4 million (91), of which sales in Sweden accounted for SEK 4 million. * Net income amounted to SEK 54 million (58), corresponding to earnings per share of SEK 0.86 (0.92). * Cash flow per share from operating activities amounted to SEK 1.26 (1.21). Operating results Rental income for the period totaled SEK 327 million (314), of which SEK 323 million (307) related to the Swedish property portfolio and SEK 4 million (7) to the international property portfolio. Expenses for operations, management, maintenance, tenancy modifications, tax and rents totaled SEK 132 million (135), of which the Swedish property portfolio accounted for SEK 131 million (129) and the international portfolio for SEK 1 million (6). The Group's administrative expenses amounted to SEK 20 million (18), of which SEK 5 million relates to expenses in connection with the takeover offer. Net operating income for the Group amounted to SEK 195 million (179) during the period, an increase of 9 percent. In the Swedish portfolio, net operating income rose by 8 percent compared with the corresponding period of 1999, from SEK 178 million to SEK 192 million. The net gain on property sales during the period was SEK 4 million (91). Operating income for the period amounted to SEK 156 million (231). Income after net financial items amounted to SEK 73 million (149). For the Swedish operations, income amounted to SEK 77 million (95). Income for the period after tax and minority interests amounted to SEK 54 million (58). Figure 1. Income statement for the period Jan.-March 2000 compared with the corresponding quarter of 1999 divided between Swedish and international properties SEK million Sweden Sweden Int'l Int'l Total Total 2000 1999 2000 1999 2000 1999 Rental income 323 307 4 7 327 314 Operations, -131 -129 -1 -6 -132 -135 Net operating 192 178 3 1 195 179 Depreciation -23 -21 0 0 -23 -21 Property sales gain 4 25 0 66 4 91 1) 1) Administrative -19 -17 -1 -1 -20 -18 Operating income 154 165 2 66 156 231 Net financial and expenses -77 -70 -6 -12 -83 -82 Income/loss after financial items 77 95 -4 54 73 149 Minority interests -19 -24 0 -67 -19 -91 Net income/loss 58 71 -4 -13 54 58 1.) of which SEK 5 million relates to expenses in connection with the takeover offer. Income, expressed as the yield on the property portfolio compared with the first quarter of 1999, improved from 7.1 percent to 7.2 percent for management properties. Financing and liquidity Interest-bearing financing for the majority of the Swedish properties in the Diligentia Group consists of consortium mortgage loans. Diligentia's remaining international properties and its international property-related receivables are nearly all fully financed directly or indirectly in local currency. Interest-bearing liabilities in the Group amounted to SEK 6,842 million (6,717). As of March 31, 2000, the Group's average borrowing rate was 5.7 percent (5.3). The Swedish loan portfolio of SEK 5,505 million (5,290) had an average interest rate of 5.9 percent, while the international portfolio of SEK 1,337 million (1,427) had an average rate of 5.1 percent (4.0). At the end of the period, the average fixed interest period for the Swedish loan portfolio was 1.8 years. The Group's liquid assets amounted to SEK 167 million (127) as of March 31, 2000. Unutilized loan facilities, including the consortium mortgage loan limit, amounted to slightly over SEK 1,100 million (800) on March 31. Cash flow from operating activities was SEK 79 million (76) for the period. As of March 31, 2000, shareholders' equity amounted to SEK 5,173 million (5,086). Property portfolio Of the property portfolio's total book value of SEK 11,730 million (11,305) on March 31, 2000, SEK 11,325 million (10,455) related to Sweden and SEK 405 million (850) to international properties. The total number of properties in the Group was 276 (303), of which 269 (285) were in Sweden and 7 (18) abroad. Depreciation on the Swedish properties amounted to SEK 23 million (21) during the first quarter. Because the international properties are reported as current assets, there is no depreciation. Any revaluations or write-downs of international properties are made at year-end. During the period, Diligentia signed new leases and actively renegotiated existing contracts in Sweden with annual rents of SEK 71 million and lettable area of 67,780 square meters. Changes in the property portfolio During the period, Diligentia sold 8 properties (7) for an aggregate sales value of SEK 74 million (479). The net capital gain on property sales during the period was SEK 4 million (91). Diligentia concluded the previously announced acquisition of a property in Copenhagen, Österbro, for SEK 71 M. The property's lettable area is 5,721 square meters. Net operating income on properties sold during the period amounted to SEK 1 M (1). In total, 6 (4) properties were sold in Sweden for a sales value of SEK 30 million (137) and 2 (3) internationally for SEK 44 million (342). Diligentia's remaining international property portfolio amounts to approximately SEK 405 M (850). As of March31, 2000, the total liquidation reserve for international operations amounted to SEK 43 million. A dissolution of the reserve of SEK 15 million has occurred during the first quarter in connection with the sale of properties in Germany and Portugal. Capital expenditures Diligentia allocates capital expenditures for its property portfolio on an ongoing basis. During the period, capital expenditures totaled SEK 112 million (38). Parent Company Diligentia AB is the Group's Parent Company, in which the Group's shareholders' equity is concentrated. Borrowing in the Group is done in large part through the Parent Company. The Parent Company carries on customary Group-wide activities, the expenses for which amounted to SEK 16 million (13) during the period. As of March 31, 2000, 9 (11) people were employed by the Parent Company. Summary of Skandia Liv's offer for Diligentia On March 20, 2000, Livförsäkringsbolaget Skandia (Skandia Liv) announced a public offer to Diligentia's shareholders to tender each of their shares in Diligentia for SEK 90 in cash, including any dividend paid for the financial year 1999. The Board of Directors of Diligentia has begun an evaluation of Skandia Liv's public offer to the shareholders of Diligentia. The Board will release a statement regarding the offer within a reasonable time prior to the expiration of the acceptance period. Annual General Meeting and dividend recommendation Because Skandia Liv's public offer may lead to significant changes in Diligentia's ownership, Diligentia's Board of Directors has decided to delay a dividend recommendation and postpone the Annual General Meeting to a future date that will be determined once conditions have been clarified. Financial reports in 2000 (dates subject to change) Interim report, January-June Thursday, August 17 Interim report, January-September Thursday, October 26 The information in the interim report has not been reviewed by the company's auditors. Diligentia is one of Sweden's largest real estate companies. The book value of the Group's Swedish property portfolio amounted to SEK 11,325 million on March 31, 2000. The book value of the international properties amounted to SEK 405 million. Diligentia's overall strategy is to concentrate and develop its operations in select market sectors in Stockholm, Gothenburg and the Öresund region. Diligentia is listed on the A-list of the Stockholm Stock Exchange. Stockholm, April 27, 2000 Mats Cederholm Managing Director and Chief Executive Officer For further information, please contact: Mats Cederholm, telephone: +46-8-5875 8110 or +46-70-426 8110 e-mail: mats.cederholm@diligentia.se Göran O. Westerberg, Head of Group Communications and Investor Relations telephone: +46-8-5875 8120 or +46-70-426 8120 e-mail: goran.westerberg@diligentia.se www.diligentia.se e- mail: diligentia@diligentia.se Condensed income statement 1/1-3/31 1/1-3/31 1/1-12/31 2000 1999 1999 Property management Rental income 327 314 1,253 Operating and management expenses -85 -90 -291 Expenses for maintenance and tenancy -24 -24 -117 modifications -24 -24 -117 Ground rents -3 -3 -10 Property tax -20 -18 -70 Net operating income from property 195 179 765 management Depreciation of properties -23 -21 -84 Income from property management 172 158 681 Property sales Sales proceeds 74 479 1,212 Sales expenses -2 -12 -90 Book value of properties sold -68 -376 -991 Result from property sales 4 91 131 Income after property sales 176 249 812 Administrative expenses -20 -18 -70 Operating income 156 231 742 Interest subsidies Net interest expense and other 2 3 12 financial income and expenses -85 -85 -333 Total financial income and expenses -83 -82 -321 Income after net financial items 73 149 421 1) 1) Tax paid -15 -67 -76 Deferred tax 0 -18 -40 Minority interest in income -4 -6 -20 Net income for the period 54 58 285 1) of which Japan SEK -62 million. Condensed balance sheet DiligentiaDiligentia Diligenti a Group Group Group 3-31-2000 3-31-1999 12-31- 1999 ASSETS Fixed assets Properties 11,325 10,455 11,203 Participating interests in associated companies 379 369 380 Other fixed assets 9 13 10 Receivable from minority - 67 - Total fixed assets 11,713 10,904 11,593 Current assets Properties 405 850 466 Current receivables 489 733 475 Cash and bank balances 167 127 137 Total current assets 1,061 1,710 1,078 TOTAL ASSETS 12,774 12,614 12,671 SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES Shareholders' equity 5,173 5,086 5,119 Due to minority 4 0 7 Deferred tax 52 32 53 Interest-bearing liabilities 6,842 6,717 6,711 Non-interest-bearing 703 779 781 liabilities TOTAL SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES 12,774 12,614 12,671 Cash flow statement Group 1/1-3/311/1-3/31 SEK million 2000 1999 Result from property sales 195 179 Administrative expenses excl. depreciation -19 -18 of equipment Net financial items -83 -82 Tax payments (excl. property sales) -14 -3 Cash flow from operating activities 79 76 Change in working capital Increase (-)/decrease (+) in current -14 -20 receivables Increase (+)/decrease (-) in current -79 -185 liabilities Change in working capital -93 -205 Cash flow from operating activities before capital expenditures and property sales -14 -129 Capital expenditures and acquisitions -183 -4 Property sales, net, after tax paid 71 412 Cash flow before financing -126 279 Financing Debt financing 156 -302 Net change in financing 156 -302 Change in liquid assets 30 -23 Liquid assets at beginning of year 137 150 Change in liquid assets 30 -23 Liquid assets at year-end 167 127 Property portfolio March 31, 2000 1) Book value Area No. of SEK m. % 000 % SEK/sq. properties sq.m. m. Sweden 11,325 97 1,575 98 7,192 269 International 405 3 30 2 13,669 7 Total 11,730 100 1,604 100 7,311 276 Swedish property portfolio Book value SEK m. % 000 % SEK/sq. Number sq.m. m. Stockholm 5,972 53 603 38 9,904 110 Gothenburg 3,202 28 594 38 5,391 96 *) Öresund region 2,151 19 378 24 5,691 63 Sweden, total 11,325 100 1,575 100 7,191 269 Type of property SEK m. % 000 % SEK/sq. Number sq.m. m. Multi-family 2,862 25 451 29 6,346 101 housing Office buildings 7,906 70 869 55 9,098 114 Warehouses and 548 5 255 16 2,149 49 industrial Land 9 0 0 0 0 5 Sweden, total 11,325 100 1,575 100 7,191 269 International property portfolio Diligentia Real SEK m. % 000 % Number Estate AB sq.m. Germany 325 80 23 77 5 Portugal (land) 33 8 0 0 1 USA 47 12 7 23 1 Total 405 100 30 100 7 1) The area used for projects in progress refers to both the area after completion and area for garage *) Including Copenhagen Key financial ratios 3/31 3/31 1) Yield, % 2000 1999 Sweden, excluding interest 7.2 7.1 subsidies 1) Economic occupancy rate, % Sweden 95 94 Book value of properties per share, SEK Total 187 181 Sweden 181 167 International 6 14 Other key ratios Debt to property book value, 58 59 2) 3) % Equity/assets ratio, % 40 40 Equity per share, SEK 83 81 Net asset value per share, 115 96 4) SEK Net operating income, SEK 195 179 million Share price, SEK 88.50 65.00 Earnings per share after tax, 0.86 0.92 SEK 5) Cash flow per share, SEK 1.26 1.21 Number of shares 62,709,16 62,709,16 3 3 1) Management properties 2) Interest-bearing liabilities/book value of 3) Shareholders' equity/total assets 4) Shareholders' equity plus surplus values as of 12/31 after deduction of deferred tax (28 percent) 5) Refers to cash flow from operating activities ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/27/20000427BIT01170/bit0001.doc http://www.bit.se/bitonline/2000/04/27/20000427BIT01170/bit0002.pdf