Report on the first three months of 2000

REPORT ON THE FIRST THREE MONTHS OF 2000 NOTE: Balder is not consolidated in this report CURRENT PROPERTY MANAGEMENT OPERATIONS · Continuing growth in cash flow Cash flow per share 2000 1999 1998 3 mos 3 mos 3 mos Outcome, SEK 2.03 1.89 1.21 · Positive trend in the comparable portfolio - Rental revenues increased 6% and operating surplus 10% compared with the first quarter of 1999 ACQUISITIONS AND SALES · Real estate acquisitions for SEK 12 billion - Drott currently owns 96% of Fastighets AB Balder - the offer to Balder's shareholders has been extended through May 10 · Sales for SEK 1.3 billion - Including the leasehold property World Fashion Centre in Amsterdam for SEK 825 M EARNINGS · Profit before tax for the period was SEK 223 M (247) - Profit from property management amounted to SEK 174 M (160) - Capital gains from real estate sales totaled SEK 48 M (87) · A rising profit from property management operations, and thus a significant improvement in cash flow, is forecast for 2000 as a whole - In addition, there will be capital gains from real estate sales, which amounted to SEK 110 M on May 5 CONTENTS PAGE Comments (I-VI) 2 Financial Statements 7 Key data 9 The Drott share 11 Drott + Balder 12 APPENDIX: Balder, January - March, 2000 13 - Comments - I. Acquisition of Balder In February Drott made an offer for all the shares in Fastighets AB Balder and by March 31, Drott had acquired shares corresponding to 63.6% of the capital and voting rights for a purchase price of SEK 2.1 billion. As of May 5, Drott holds 96% of the capital and voting rights in Balder. The offer to Balder's shareholders has been extended through May 10. The Balder share was delisted on April 26 and Drott has called for compulsory redemption of the outstanding Balder shares and has also decided to request advance occupancy. The acquisition has increased Drott's exposure to the rapidly growing Stockholm market. The real estate portfolio has increased by more than 50%, and two thirds of the market value of Drott's portfolio is now located in the Stockholm region. Drott's net asset value per share and cash flow per share are simultaneously increased, and the more efficient capital structure has enhanced Drott's prospects of continuing to generate a favorable return on shareholders' equity. The formal acquisition analysis of Balder is still in progress, and thus Balder and Drott report separate three-month reports. Drott has not consolidated Balder in its three-month report but instead reports the holding as a share item (Balder will be consolidated in the next six- month report). In order to supplement the information, Balder's three- month report is included as an appendix to this report. In addition, a special section presents an overview description of Drott's real estate portfolio and organization , including Balder (see page 13). II. Income statement, January - March, 2000 Figures in parentheses refer to the corresponding period last year · Rental revenues and operating surplus Rental revenues amounted to SEK 626 M (607). The change is due to the impact of acquisitions, sales and changes in the comparable portfolio (renegotiated leases and new leasing). Rental revenues in the comparable portfolio amounted to SEK 32 M or 6% up from the preceding year. The occupancy rate on March 31, 2000 was 95% (93). The operating surplus advanced to SEK 368 M (352). The operating surplus in the comparable portfolio rose by SEK 30 M, or 10%. Rental revenues and operating surplus for the period were adversely affected by the acquisition of properties with a lower initial yield than those sold. However, the yield on the acquired properties is expected to exceed that of those sold. · Operating profit Despite the rising operating surplus, operating profit declined as a result of lower capital gains from the real estate sales. Operating profit amounted to SEK 347 M (382), of which capital gains from real estate sales accounted for SEK 48 M (87). · Net financial items Interest expense totaled SEK 147 M (149), of which SEK 10 M is attributable to interest on loans raised to finance the acquisition of Balder. The average loan volume was higher during the first quarter of 2000 than during the corresponding period in 1999 while the average borrowing cost was lower. At the end of the period, Drott's average rate of interest was 5.0%, with an average fixed interest term of 2.7 years. Net financial items were positively affected by capital gains of SEK 11 M from the sale of shares1. Interest subsidies declined to SEK 8 M (11) due to scheduled reduction in such subsidies. · Profit before tax for the period Profit before tax decreased SEK 24 M to SEK 223 M (247). The change is primarily due to lower capital gains from real estate sales (SEK -39 M) and to the improvement in profit from current property management operations2 (+ SEK 14 M). In addition, non-recurring items added SEK 1 M to profit3. Profit from current property management operations amounted to SEK 174 M (160), The outcome was positively affected by a higher operating surplus in the comparable portfolio and by a lower average interest rate. Profit from current property management operations was negatively affected by real estate write-ups of SEK 3.6 billion at year-end (resulting in increased depreciation of SEK 7 M), and by the fact that property acquisitions were made at lower average yields than property sales. · Net profit for the period Net profit for the period amounted to SEK 189 M (214) following a tax expense of SEK 34 M (33). The decline in net profit was due mainly to lower capital gains from real estate sales, as well as to increased depreciation as a result of the aforementioned real estate write-up. Excluding capital gains from real estate sales and non-recurring items, net profit rose to SEK 149 M (138). III. Balance sheet, March 31, 2000 Figures in parentheses refer to Dec. 31, 1999 · Real estate During the period, 19 properties, with a total floor space 20,246 sq.m., were acquired for an aggregate payment of SEK 205 M. In addition to an office property in Stadshagen in Stockholm (Lustgården 11) and a residential property in Gothenburg (Olivedal 7:17), Drott paid SEK 39 M for supplementary land holdings along the E4 highway in Sollentuna, north of Stockholm, made up of 17 small sites Real estate acquired, 3 months 2000 Sweden Overseas Total Number 19 - 19 Rentable space, sq.m. 20 246 - 20 246 - of which, residential 7 256 - 7 256 Book value of acquisitions, SEK M 205 - 205 16 properties were sold for SEK 1,280 M (after deductions for selling expenses). Capital gains from real estate sales amounted to SEK 48 M. Among other facilities, Drott sold its single largest property - the World Fashion Centre in Holland leasehold property - for SEK 825 M, with a capital gain of SEK 40 M. Real estate sales, 3 Sweden Overse Total months, 2000 as Number 15 1 16 Rentable space, sq.m. 67 200 85 232 152 432 - of which, 34 559 - 34 residential 559 Sale price, SEK M 455 825 1 280 Capital gain, real 8 40 48 estate sales, SEK M In addition to the above acquisitions and sales, Drott, together with AP- Fastigheter, has organized its assets in the Värtahamnen zone (3 km from Stockholm city) in a 50% jointly owned real estate and project company, which initially owns real estate valued at almost SEK 1 billion. The new company, Position Stockholm, initially owns the Neapel 3 and Rotterdam 1 properties with a total rentable space of some 60,000 sq.m. At the end of the period, Drott owned 542 properties (538) with a total rentable space of 2,816,000 sq.m. (2,932, 000), and a book value of SEK 22,335 M (23,321). DROTT TOTAL4 Mar. 31, Dec. 31, 2000 1999 Number of 542 538 properties Book value, SEK M 22 335 23 321 Rentable space, 2 815 2 932 365 sq.m. 993 Number of 17 725 18 094 residential units Annual rent, inc. vacancy rental 2 595 2 666 value, SEK M BOOK VALUE, REAL Swede Overse Total ESTATE, SEK M n as 1999-12-31 22 1 228 23 321 093 Acquisitions 205 - 205 Investments (mainly 217 1 218 projects) Establishment of -106 - -106 Position Stockholm Sales -447 -785 -1 232 Depreciation -51 -1 -52 Exchange-rate effect - -19 -19 Mar. 31, 2000 21 424 22 335 911 TYPE OF SPACE Mar. 31, Dec. 31, 2000 1999 Annual rent, inc. vacancy rental value, 2 595 2 666 SEK M Office 46% 47% Retail 8% 7% Industrial/Warehouse 6% 6% Other 4% 4% Residential 36% 36% Total 100% 100% REGION Mar. 31, Dec. 31, 2000 1999 Annual rent, inc. vacancy rental value, 2 595 2 666 SEK M Stockholm 54% 51% Gothenburg 13% 14% Öresund 16% 15% Rest of Sweden 15% 15% Overseas 2% 5% Total 100% 100% Additional real estate transactions were completed after the end of the period - see page 65. · Shares in Balder At the close of the period, Drott held 15,150,684 shares in Balder, corresponding to 63,6 % of the voting rights and capital., The shares had a book value of SEK 2,117 M. · Current assets Liquid funds, including, current investments, amounted to SEK 155 M (248). The Drott Group has total current assets of SEK 537 M (719). These include current receivables relating to properties sold during the period but for which the buyer has not yet gained occupancy. · Shareholders' equity The Group's shareholders' equity amounted to SEK 10,189 M (9,995) on March 31, 2000, distributed among 101,688,759 shares. · Provisions Total provisions amounted to SEK 222 M (280), of which SEK 193 M (250) related to provisions for deferred tax. · Interest-bearing liabilities On March 31, 2000, the Drott Group has interest-bearing liabilities totaling SEK 13,767 M (12,510). The change since year-end is partly attributable to acquisition by Drott during the period 23 February - 31 March of Balder's shares for a total of SEK 2,117 M as a result of the raising of loans and partly by the fact that during the period Drott sold its largest property, World Fashion Centre. The total interest-bearing liabilities in Drott at the end of the period carried an average rate of interest of 5.0% (4.7) and an average fixed- interest term of 2.7 years (1.8). FIXED-INTEREST RATE STRUCTURE Mar. 31, 2000 Interest due, 200 200 200 200 200 200 2006- Tot year 0 1 2 3 4 5 al Swedish kronor, 5 1 1 501 200 200 2300 13 SEK M 730 064 504 4 303 - 5,1 4,7 5,0 4,0 4,1 4,6 6,0 5,0 Average interest rate, % Foreign 464 - - - - - - 464 currency, SEK, M - 5,8 - - - - - - 5,8 Average interest rate, % Interest-bearing liabilities, SEK 6 1 1 501 2 200 2 13 M 194 064 504 004 300 767 Proportion % 45 8 11 4 14 1 17 100 - 5,1 4,7 5,0 4,0 4,1 4,6 6,0% 5,0 Average interest % % % % % % % rate, % On March 31, 2000, Drott had loan pledges that exceeded the loan volume (SEK 13,767 M) by more than SEK 3,5 billion. On March 31, 2000 the weighted maturity of the utilized volume was 3.2 years. LOAN MATURITY STRUCTURE Mar. 31, 2000 Maturity, within 200 200 200 200 200 200 2006- Tot 0 1 2 3 4 5 al Interest-bearing liabilities, SEK 2 1 3 3 2 0 1 980 13 M 206 040 044 257 240 767 Proportion, % 16% 8% 22% 24% 16% 0% 14% 100 % · Non-interest bearing liabilities Non-interest bearing liabilities amounted to SEK 855 M (1 302). IV. Parent Company The Parent Company reported a loss of SEK 27 M (loss: 23). Revenues, which derive from intra-Group services, amounted during the period to SEK 6 M (0). V. Events after the end of the period Resolutions passed at the Annual General Meeting of Drott on April 12 included: · a dividend payment of SEK 3,50 per share · a mandate for the Board of Directors to decide on the repurchase of the company's shares · re-election of all members of the Board, auditors and deputy auditors. After the end of the reporting period, Drott sold six properties for SEK 182 M. The capital gain amounted to SEK 62 M. Location Number Renta -of Occupan of ble which, cy Proper space residenti ties sq.m. al sold sq.m. Karlskro 5 14 6 745 00-05- na 842 02 Lidköpin 1 33 30 118 00-05- g 593 02 Total 6 48 36 863 435 Karlskrona: Dahlberg 37, Sheldon 42, Wrangel 9, Urmakaren 72, och Urmakaren 74 Lidköping: Vagnen 2 VI. Outlook for 2000 The market for office rentals continues to be very buoyant, notably in Stockholm, where new rentals in the city have passed SEK 4,000/sq. m., while around the city limits - such as in Danvikstull, Globen, Marievik, Norrtull and Värtan - rental rates have moved beyond SEK 2,000/sq.m. The acquisition of Balder will further increase Drott's exposure to the rapidly growing Stockholm market, which will steadily be reflected in the earnings and value trends. For 2000 as a whole, Drott is expected to achieve rising profit from current property management operations6 and thus a significant improvement in cash flow7. In addition, there will be capital gains, which through May 5 amounted to SEK 110 M. Stockholm, May 5, 2000 Drott AB (publ) Mats Mared President and CEO The three-month interim report has not been audited by the company's auditors. - Financial statements - Consolidated income statement 2000 1999 1999 SEK M 3 3 12 months months months Rental revenues 626 607 2 498 Other revenues 2 5 17 Operating expense, maintenance and cost of improvements for -175 -177 -652 tenants Leasehold rent -11 -12 -50 Property tax -32 -32 -135 Property administration -42 -39 -159 Operating surplus 368 352 1 519 Depreciation -54 -44 -185 Gross profit 314 308 1 334 Capital gains from real estate 48 87 511 sales Central Corporate and Group -15 -13 -62 expenses Operating profit 347 382 1 783 Interest subsidies 8 11 51 Interest income 158 3 10 Interest expense -1479 -149 -597 Profit for the period before 223 247 1 247 tax Tax -34 -33 -188 Net profit for the period 189 214 1 059 Consolidated balance sheet SEK M Mar. Mar. Dec. 31, 31, 31, 2000 1999 1999 Real estate 22 335 19 730 23 321 Machinery and equipment 26 19 21 Shares in Balder (63,6 %) 2 117 - - Other fixed assets 18 33 26 Fixed assets 24 496 19 782 23 368 Current receivables 382 391 471 Liquid funds 155 159 248 Current assets 537 550 719 ASSETS 25 033 20 332 24 087 Shareholders' equity 10 189 5 851 9 995 Provisions 222 240 280 Noninterest-bearing 855 2 481 1 302 liabilities Interest-bearing liabilities 13 767 11 760 12 510 SHAREHOLDERS' EQUITY AND 25 033 20 332 24 087 LIABILITIES Cash-flow analysis 2000 19991 1999 SEK M 3 0 12 month 3 months s month s ¨ CURRENT OPERATIONS Operating surplus 368 352 1 519 Central Corporate and Group -15 -14 -62 expenses Interest subsidies 8 11 51 Interest income 4 3 10 Interest expense -137 -149 -597 Tax paid on current property -22 -12 -85 management operations Cash-flow from current property 206 192 836 management operations Cash flow from non-recurring items, etc. Non-recurring items and difference between paid and -45 -106 -98 charged interest Tax paid on non-recurring items 2 - - Cash flow before change in 163 86 738 working capital Cash flow from changes in -523 -369 301 operating capital Cash flow from current -360 -283 1 039 operations ¨ INVESTMENT OPERATIONS Acquisition of shares in Balder -2 - - (63,6 %) 117 Investments, real estate -325 -64 -3 287 Investments, machinery and -7 -1 -11 equipment Sale of listed shares 11 - - Real estate sales (inc. Sales 1 433 328 1 919 expenses) Tax paid on capital gains -9 -9 -70 Cash flow from investment -1 254 -1 449 operations 014 ¨ FINANCING OPERATIONS Interest-bearing loans 1 281 62 842 issued/amortization of interest- bearing loans Dividends paid - - -305 Cash flow from financing 1 281 62 537 operations Change in liquid funds -93 33 127 Change in liquid funds on 248 126 126 January 1 Exchange-rate difference in 0 0 -5 liquid loans Liquid funds at the end of the 155 159 248 period - Key data - 2000 1999 1999 SEK M 3 3 12 months months months PROPERTY-RELATED DATA Rental revenues 626 607 2 498 Operating surplus 368 352 1 519 Surplus ratio, % 59 58 61 Rentable space sq.m. 2 816 3 075 2 932 000 000 000 Rent-based occupancy rate, % 95 93 94 Book value 22 335 19 730 23 321 of real estate FINANCIAL Profit 189 214 1 059 Cash flow 206 192 836 Cash flow, inc. capital gains on 247 270 1 277 real estate sales Interest-coverage ratio, times 2,5 2,7 3,1 Interest-coverage ratio - current 2,3 2,1 2,2 property management operations, times Interest-bearing liabilities 13 767 11 760 12 510 Shareholders' equity11 10 189 5 851 9 995 Balance sheet total 25 033 20 332 24 087 Equity/assets ratio, % 41 29 41 Debt/equity ratio 1,4 2,0 1,3 Return on shareholders' equity, % 1,9 3,7 17,6 DATA PER SHARE12 Number of shares 101 688 101 688 101 688 759 759 759 Earnings, SEK 1,86 2,10 10,41 Cash flow, SEK 2,03 1,89 8,22 Cash flow, inc. Capital gains on 2,43 2,66 12,56 real estate sales, SEK Shareholders' equity, SEK 100,20 57,54 98,29 Definitions PROPERTY-RELATED DATA Rent-based occupancy ratio Contractual rent for leases extending to Dec., 31, 1999, divided by the rent, inc. vacancy rental value Contractual rent Annual basic rent pursuant to the lease after indexation, adjusted for rent discounts and rent surcharges. Rentable space Total of the rented and vacant space. Rentable space includes space for garages inside buildings. Vacancy rental value Estimated rent for vacant residential facilities plus market rent for vacant commercial premises, after reasonable general renovation work. Annual rent, inc. Vacancy Total of contractual rent and vacancy rental value rental value. Surplus ratio Operating surplus as a percentage of rental income. FINANCIAL Return on shareholders' equity Profit for the period as a percentage of average shareholders' equity. Central Corporate and Group Costs that are not directly related costs to property management, such as costs for company management, staff functions and stock exchange listing. Cash flow Profit before tax with the reversal of depreciation, capital gains from property sales and nonrecurring items, plus a deduction for paid tax on current property management operations. Profit - current property Profit exc. capital gains on property management operations sales and nonrecurring items. Interest-coverage ratio Profit after net financial items, with a reversal of interest expense, divided by interest expense. Interest-coverage ratio - Profit after net financial items, current property management with a reversal of interest expense, operations capital gains on the sale of property and nonrecurring items, divided by interest expense. Debt/equity ratio Interest-bearing liabilities divided by shareholders' equity. Equity/assets ratio Shareholders' equity plus minority interests as a percentage of the balance sheet total. Earnings per share Profit for the period divided by the number of shares. Information on Drott Drott AB (publ) 55 60 50-2113 Telephone 08-545 83 000 Telefax 08-545 83 096 Website www.drott.se Postal address Box 5530, 114 85 Stockholm Visiting address Nybrogatan 57A, Stockholm Planned information Six-month report Aug. 28, 2000 Nine-month report Oct. 10, 2000 Additional information Mats Mared (President and CEO) telephone 08-545 83 010 telefax 08-545 83 098 e-mail mats.mared@drott.se Claes Linné (Vice President) telephone 08-545 83 012 telefax 08-545 83 098 e-mail claes.linne@drott.se Johan Nordenson (Communications/IR) telephone 08-545 83 019 telefax 08-545 83 099 e-mail johan.nordenson@drott.se - The Drott share - Major shareholders in Drott, April 10, 2000 Shareholder Series Series B Total Share Share A number of of capital voting rights FöreningsSparbanken's - 13 588 13 588 13,4% 12,7% mutual funds 647 647 Nordbanken's mutual - 10 204 10 204 10,0% 9,5% funds 084 084 Fourth Pension Fund 112 6 707 6 820 6,7% 7,3% 988 456 444 Handelsbanken's mutual - 4 263 4 263 4,2% 4,0% funds 400 400 Skandia - 3 934 3 934 3,9% 3,7% 996 996 SEB funds - 3 684 3 684 3,6% 3,4% 020 020 Handelsbanken Liv 2 514 2 514 2,5% 2,3% 600 600 SEB-Trygg Försäkring - 1 566 1 566 1,5% 1,5% 599 599 AMF Försäkring - 1 322 1 322 1,3% 1,2% 840 840 KP Pension & - 1 220 1 220 1,2% 1,1% Försäkring 650 650 Foreign shareholders 32 680 14 447 14 479 14,2% 13,8% 079 759 Other (50,600) 457 37 630 38 088 37,5% 39,5% 892 828 720 Total 603 101 085 101 688 100,0 % 100,0% 560 199 759 Drott AB (publ) is a dedicated real estate company focusing on the Swedish market. The Company's mission is to acquire, develop and manage commercial and residential real estate and to realize the accumulated value in fully developed properties whenever appropriate. At year-end, the real estate portfolio was valued at SEK 37.5 billion (Drott, SEK 28.8 billion + Balder, SEK 12.7 billion), of which the Stockholm region accounts for two thirds. With satisfied tenants, profitable properties and a strong local position in growth markets - primarily in office and residential real estate - Drott seeks to achieve annual earnings growth of 15%, excluding capital gains. Drott is the largest real estate company listed on the OM Stockholm Exchange. The number of shareholders amounts to some 50,000. Drott + Balder Real estate JANUARY-MARCH, 2000 Drott Balder Drott + Balder Rental revenues 628 302 930 Real estate expenses -260 -13713 -397 Operating surplus 368 165 533 March 31, 2000 Drott Balder Drott + Balder Number of properties 542 205 747 Rentable space, sq.m. 2 815 1 192 013 4 008 006 993 Number of residential 17 3 284 21 009 units 725 Annual rent inc. 2 595 1 227 3 822 vacancy, SEK M TYPE OF SPACE, March Drott Drott + Balder 31, 2000 Annual rent inc. 2 595 3 822 vacancy, SEK M Office 46% 47% Retail 8% 10% Industrial/Warehouse 6% 8% Other 4% 6% Bostäder 36% 29% Total 100% 100% REGION, March 31, 2000 Drot Drott + Balder t Annual rent inc. 2 3 822 vacancy, SEK M 595 Stockholm 54% 58% Öresund 16% 14% Gothenburg 13% 11% Rest of Sweden 16% 15% Overseas 2% 2% Total 100% 100% Organizational changes On July 1, 2000, the commercial properties in Stockholm belonging to Drott Kontor and Balder were divided into two units: "Drott Kontor North" received all properties north of Slussen, while "Drott Kontor South" received all properties south of Slussen. At the same time, all of Balder's residential properties were transferred to Drott Bostad, and Balder's commercial properties outside of Stockholm were transferred to Drott Riks. Appendix Balder, January-March, 2000 Report for the first quarter of 2000 Unless otherwise stated, figures in parentheses refer to the first quarter of 1999 unless otherwise stated. PriFast was not acquired until April 6, 1999 and, consequently, is not included in the comparative figures. See Balder's annual report for definitions. Earnings Operating profit was SEK 139 M (137), of which hotel operations accounted for SEK 0 M (5) and real estate sales for SEK 13 M (21). Profit before tax amounted to SEK 48 M (57) and after tax to SEK 36 M (53). Rental revenues for the period amounted to SEK 288 M (227), while other revenues were SEK 14 M (8). Operating net was thus SEK 180 (144). Administrative expenses totaled SEK 30 M (17). Central administrative expenses accounted for SEK 15 M (5) of this total. The increase in central administration costs is due to counteractions of Balder in response to Drott's offer and to the costs of merging with PriFast. Depreciation of real estate during the period amounted to SEK 24 M (16). Tax expense for the period is estimated at SEK 12 M (4). Real estate sales During the period, 2 (16) properties were sold for a total of SEK 31 M (303), resulting in a capital gain of SEK 13 M (21). Real estate acquisitions The Lilla Katrineberg 4 office property in Liljeholmen, Stockholm, was acquired during the period, with occupancy scheduled for October 1, 2000. The property comprises 2,600 sq.m., most of which is office space. Also during the period, occupancy took place of the Kvarnkammaren 1 property in Stockholm, consisting of 13,000 sq.m. of residential space, and of the Mercurius 3 property in Karlstad, which comprises 900 sq.m. of office space. Investments In addition to acquisitions, SEK 120 M (13) was invested in real estate. The construction of the Arenan 8 office complex in Globen City, comprising 12,000 sq.m., and the Milleniumhuset office facility in Marievik, consisting of 23,500 sq.m., both of which are located in Stockholm, progressed as scheduled during the quarter. Tenants are expected to start moving into both facilities at the end of 2000. Balder, January-March, 2000 Real estate portfolio The real estate portfolio consists of 205 properties, with a total rentable space of 1,192, 000 sq.m.. Property management The reported increase in rental revenues is due to the fact that PriFast was not included in the portfolio during the first quarter of 1999, and to new and replacement leasing. As a result of increased leasing, the rent-based vacancy rate declined from 5.3% at the beginning of 2000 to 4.8% at the end of the quarter. The corresponding change in the space-based vacancy rate was from 7.6% to 6.8%. Operating expenses, excluding leasehold rent and property tax, amounted to SEK 77 M (57). Repairs and maintenance totaled SEK 27 M (19). Financing Interest-bearing liabilities at the end of the quarter amounted to SEK 7,699 M (5,426) and the weighted average rate of interest during the period was 5.3 % compared with 5.3 % at the end of the first quarter of 1999. The average fixed-interest term at the close of the period was 1.7 years (1.5). Taxes The calculation of the tax expense for the period, SEK 12 M (4) , takes into consideration a proportional part of the Group's total loss carry- forwards of SEK 164 M (82), as well as depreciation for tax purposes. Personnel The average number of employees in the Group during the period was 127 (450). The figures for 1999 include hotel operations with 341 employees. Stockholm, April 27, 2000 Fastighets AB Balder Board of Directors This interim report has not been audited by the Company's auditors. Balder, January-March, 2000 INCOME STATEMENT Group, SEK M Q1-00 Q1-99 1999 Rental revenues 288 227 1 123 Other revenues 14 8 13 Operating expense -77 -57 -245 Property tax -14 -12 -53 Leasehold rent -4 -3 -17 Repairs and maintenance -27 -19 -121 Operating net 180 144 700 Depreciation, real estate -24 -16 -84 Profit - real estate 156 128 616 management Real estate sales 13 21 265 PROFIT - REAL ESTATE 169 149 881 OPERATIONS PROFIT- HOTEL OPERATIONS - 5 6 Administration -30 -17 -72 Operating profit 139 137 815 Interest subsidies 1 3 6 Interest -92 -83 -358 Profit before tax 48 57 463 Tax -12 -4 -89 Net profit for the period 36 53 374 BALANCE SHEET GROUP, SEK M Mar. Mar. Dec. 31, 00 31, 99 31, 99 ASSETS Managed properties 10 520 7 569 10 505 Property work in progress 331 30 254 Machinery and equipment 10 34 20 Tangible fixed assets 10 861 7 633 10 779 Financial fixed assets 108 253 120 FIXED ASSETS 10 969 7 886 10 899 Inventories - 3 - Other current assets 127 342 185 Cash and bank balances 94 2 52 CURRENT ASSETS 221 347 237 TOTAL ASSETS 11 190 8 233 11 136 SHAREHOLDERS' EQUITY AND LIABILITIES Restricted shareholders' 1 069 1 053 1 069 equity Unrestricted shareholders' 1 491 1 220 1 465 equity SHAREHOLDERS' EQUITY 2 560 2 273 2 534 PROVISIONS 406 194 398 Convertible debenture 28 28 28 loans Long-term liabilities to 4 594 2 658 4 448 credit institutions LONG-TERM LIABILITIES 4 622 2 686 4 476 Current liabilities to 3 077 2 740 3 242 credit institutions Other current liabilities 525 340 486 CURRENT LIABILITIES 3 602 3 080 3 728 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 11 190 8 233 11 136 CASH-FLOW ANALYSIS GROUP, SEK M Q1-00 Q1-99 1999 CURRENT OPERATIONS Operating profit before 140 137 815 financial items Depreciation 25 16 93 Adjustment for items not -24 -21 -274 included in cash flow Interest received 16 3 6 Interest paid -119 -103 -323 Income tax paid -69 -9 -5 Change in working capital 78 -271 -167 Cash flow from current 47 -248 145 operations INVESTMENT OPERATIONS Investments in properties -120 -17 -811 Sale of properties 18 303 989 Investments in equipment - - -11 Sale of equipment 4 - - Acquisition of operations - - -1 397 Sale of hotel operations 1 - 23 Investments in financial 12 -249 -109 fixed assets Cash flow from investment -85 37 -1 operations 316 FINANCING OPERATIONS New loans raised 80 212 1 282 Dividend - - -60 Cash flow from financing 80 212 1 222 operations Cash flow for the year 42 1 51 Liquid funds, January 1 52 1 1 Liquid funds, March 31 94 2 52 Key data Mar.- Mar.- Dec.- 00 99 99 Book value of real estate, SEK 10 7 568 10 M 520 505 Book value of real estate, 8 825 7 776 8 889 SEK/sq.m. Rent-based vacancy rate, % 4,8 5,3 5,3 Weighted interest rate on 5,3 5,5 5,1 interest-bearing liabilities, % Visible equity/assets ratio, % 23 28 23 Adjusted equity/assets ratio, 34 34 34 % _______________________________ 1 Relates to shares in OM Gruppen AB, which were received via the acquisition of Näckebro 2 See definitions on page 10. 3 Capital gain on sale of shares (+SEK 11 M), interest on loans for the acquisition of Balder (SEK -10 M). 4 Including 50% of properties in jointly and equally owned companies (10 properties). 5 A specification of the properties divested/acquired by Drott during 2000 is available on www.drott.se (and may also be ordered from Drott - call Ingemo Österberg, telephone: 08-545 83 011) 6 Profit from current property management operations in 1999 was SEK 736 M before tax and SEK 635 M after tax. 7 Cash flow in 1999 amounted to SEK 836 M. 8 In addition to capital gains from real estate sales, this figure includes a capital gain of SEK 11 M from the sale of listed shares (OM- Gruppen AB). 9 The acquisition of shares in Balder was financed through the raising of loans, which added SEK 10 M to interest expense for the period. 10 Compared with Drott´s three-month report for 1999, adjustments have been made in accordance with recommendation No. 7 of the Swedish Financial Accounting Standards Council. 11 If the write-up of real estate in 1998 and 1999 with the amount of SEK 786 M and SEK 3.600 M, respectively, had been charged with full tax, shareholders´equity would have been reduced as follows: March 1999: SEK 220 M, December 1999: SEK 1,228 M, March 2000: 1,203 M. 12 In June 1999, Drott issued a convertible debenture loan of SEK 46.2 M, with preference for Drott's employees in Sweden. To date, employees have subscribed for SEK 26.9 M, while the outstanding convertibles have been subscribed for by a wholly owned subsidiary of Drott AB for future allotment to employees. Conversion may be made no later than April 30, 2004 at a price of SEK 84. On full conversion, the number of Series B shares in Drott will increase by 550,000. In the compilation of key data, the dilution effect in the event of full conversion has not been taken into account since dilution has only a marginal impact on the key data. 13 After the deduction of SEK 15 M for property management administration (see included three-month report from Balder). ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/07/20010807BIT00310/bit0002.doc http://www.waymaker.net/bitonline/2001/08/07/20010807BIT00310/bit0002.pdf