6-month report for 2001 January - June 2001 (six months)

6-month report for 2001 January - June 2001 (six months) · Operations 2001 2000 - profit before tax MSEK 454 MSEK 388 +17% - earnings per share SEK 3.40 SEK 2.75 +24% - cash flow per share SEK 6.07 SEK 4.77 +27% · Operations and sales 2001 2000 - profit before tax MSEK 818 MSEK 629 +30% - profit after tax MSEK 697 MSEK 456 +53% - earnings per share SEK 7.26 SEK 4.48 +62% Continued high rental growth: +8% in the like-for-like portfolio - commercial properties +11% - residential properties +3% Acquisitions SEK 0.7 billion, sales SEK 3.4 billion - capital gains on the sale of properties amounted to MSEK 351 Share buy-backs - Drott owns 8.75% as of 20 August Comments MARKET Office The effects of a general economic slowdown affects the real estate market. After several years of powerful rental development, growth is declining. In a few areas demand has weakened to the extent that market rents - i.e. the rental rates paid by tenants for new leases - have fallen somewhat. In Drott's strong areas in Stockholm (primarily the Inner-city, Marievik and Globen), Gothenburg and Malmö, market rents have stabilized or are continuing to rise, albeit at a slower rate. The downturn in the IT and telecom sector will have an impact on rents and vacancy rates in areas like Kista, where project development and rental growth will be slower. A rise in sub-letting is one factor that is holding back rental growth, though only to a limited extent so far. There is uncertainty as to whether the economic downturn is temporary or long-term. In any case, Stockholm in particular, but also the Gothenburg and Öresund regions, is expected to show higher growth than the rest of the country. The long-term rental trend in Stockholm remains positive, especially in attractive areas with good communications. The fundamentals for the region are good - strong net population growth, well educated manpower, good public transportation in an international comparison, etc. Residential The strong demand in the three metropolitan regions is showing a gradual increase towards the city centers. Substantial project development is not anticipated and will not affect demand. Rents are rising slightly, and nowadays a correlation between rental growth and closeness to the inner-city can be observed. A number of properties have been converted into housing cooperatives, Drott has however chosen to be less active than last year. INCOME STATEMENT, January - June 2001 Figures in brackets refer to January-June 2000. Rental revenues amounted to MSEK 1,941 (1,530). The increase is mainly attributable to net acquisitions, but also to renegotiation of contracts and new leases in the identical portfolio. In the like-for-like portfolio - i.e. the portfolio Drott owned both during the first half of 2000 (including Balder) and the first half of the current year - rental revenues increased by MSEK 113, or 8 percent. The increase was 3 percent in the residential portfolio and 11 percent in the commercial portfolio. Two projects in Stockholm were completed - Helgafjäll 7 (Nokia's Swedish headquarters in Kista) and Marievik 26 (the Millennium Building) - which generated rental revenue of MSEK 37 during the period. The occupancy rate at the end of the period was 95 percent, unchanged from year-end 2000 and the end of June last year. The operating surplus rose to MSEK 1,191 (947). Operating expenses in relation to rental revenue amounted to 18 percent (18). The surplus ratio declined to 61 percent (62). The operating surplus in the like-for-like portfolio improved by MSEK 76, or 9 percent. Operating profit amounted to MSEK 1,340 (1,000), of which MSEK 351 (230) referred to gains on the sale of properties and MSEK 13 (-) to non- recurring payment of a claim arising from a dispute. Net financial items totaled MSEK -522 (-371). The average rate of interest on June 30, 2001 was 5.0 percent. Interest expenses rose to MSEK 534 (406). The increase is explained by a larger average volume of loans resulting from acquisitions, but also the buy-back of Drott shares (during the period July 2000 - June 2001 Drott repurchased shares for a total of MSEK 927). Profit before tax improved by MSEK 189 to MSEK 818 (629) due to stronger earnings in operations (+66), higher gains on the sale of properties (+121) and an increase in non-recurring items (+2). Profit from operations before tax was MSEK 454 (388) - an increase of MSEK 66 or 17 percent. Profit after tax was MSEK 697 (456), after tax of MSEK 121 (173). The total tax expense is equivalent to 15 percent of profit before tax. The low tax rate is explained mainly by the period's sale of properties for which Drott had previously made substantial tax provisions. Profit from ongoing property management after 28 percent tax was MSEK 327 (280) - up MSEK 47 or 17 percent. The increase per share was 24 percent. The cash flow amounted to MSEK 583 (485), corresponding to an increase of 27 percent per share. The rolling annual cash flow - measured as the sum of the past four quarters - was MSEK 1,143. This corresponds to SEK 11.64 per share, which is 30 percent higher than in the same period of last years and 69 percent higher than two years ago. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/20/20010820BIT00470/bit0001.doc Full report http://www.waymaker.net/bitonline/2001/08/20/20010820BIT00470/bit0002.pdf Full report