Six-month report 2000

SIX-MONTH REPORT 2000 CONTINUING REAL ESTATE MANAGEMENT OPERATIONS · Strong growth in cash flow - 19% higher than in corresponding year-earlier period - Rolling cash flow has increased for seven consecutive quarters · 10% rise in operating surplus from identical portfolio PURCHASES AND SALES · Property acquisitions: SEK 14.2 billion - SEK 11.9 billion via Balder acquisition (Balder is consolidated as April 1, 2000) - SEK 2.0 billion from Ericsson (access to properties as of September 1, 2000) · Property sales: SEK 2.4 billion EARNINGS AND FORECAST · Pretax profit for the period: SEK 749 M (702) - Profit from real estate management: SEK 395 M (352) - Gains from sales SEK 354 M (350) · Rising profits from real estate management and sharply improved cash flow forecast for full year 2000 - In addition, there will be gains from sales, which amounted to SEK 378 M up to August 21 · Continued increase in real estate prices - The prices of the properties sold by Drott this year (up to August 21) exceed the independent valuations made at December 31, 1999 by 11% (Swedish properties) The Company's mission is to acquire, develop and manage commercial properties in growth regions and to realize the value accrued in ready- developed properties. Annual rental revenues (including vacant premises) total SEK 4 billion, with the Stockholm area accounting for more than 70%. Drott is quoted on the OM Stockholm Exchange's O List (Attract 40) and is one of the largest listed real estate companies in Europe. The Company has 48,000 shareholders. CONTENTS PAGE Comments (I-VI) 2 Accounts 10 Key data 12 The Drott share 14 - Comments - I. Considerable investments and increased focus on Stockholm · Strong Stockholm market The consensus forecast for Sweden indicates continued GDP growth during the years immediately ahead, with the growth rate in Stockholm expected to be twice as high as the national average. During the past six years, 88,000 new jobs have been created in the region and the population has increased by 120,000, corresponding to a net population inflow of 20,000 per year. Growth is being fueled by successful commercial and industrial developments, particularly in such fast-growing sectors as telecommunications and IT, industries in which Stockholm has attained a leading international position. GDP growth results in increased demand for commercial premises and housing, and Drott's assessment is that growth in rental revenues and real estate values in the Stockholm region will be significantly higher than in other parts of the country. - Commercial premises Recently completed transactions in the real estate market indicate that the favorable price trend noted during recent years has continued into 2000. Rent levels have also continued to rise. The total vacancy rate for offices in the Stockholm region is now approximately 5% and demand is still outpacing the supply of new premises. During the three years immediately ahead, the addition of about 0.5 million square meters of new office space is expected, corresponding to approximately 5% of total office space in the region. - Housing Prices of tenant-owned apartments in central Stockholm have risen by more than 50% in the past two years. Very high demand for housing combined with limited new production indicates that the upward price trend will continue. As apartment prices rise, Drott has noted that its tenants are showing an increased interest in acquiring the apartments in which they live1. To date, up to August 21 this year, Drott has sold seven Stockholm properties to tenant-owner associations at prices that have been an average of 28% higher than the independent property appraisals made at December 31, 1999. Following central rent negotiations during the spring, housing rents in Stockholm were increased by 1.95% as of July 1, 2000, with an additional average rise of 2.2% to become effective on January 1, 2001. · Major acquisitions in Stockholm During the first half of this year, Drott acquired two large portfolios mainly comprising commercial premises in Stockholm. - Fastighets AB Balder As of June 30, 2000, following a public offer submitted on February 9, Drott had acquired slightly more than 98% of the shares in Balder and had initiated compulsory redemption of the remaining shares outstanding. The investment, which totaled SEK 3,394 M, is being financed through loans. As of April 1, 2000, Balder is consolidated in Drott's accounts, whereby Balder's revenues and expenses are included as of the same date. Based on the value of Drott's offer for the Balder shares, Balder's properties are included in an amount of SEK 11,927 M in the Drott Group's balance sheet at April 1, 2000. This value is confirmed by both the independent valuation of SEK 12.7 billion presented by Drott at December 31, 1999 and by the review of Balder's real estate portfolio that Drott implemented in accordance with the principles of the Swedish Real Estate Index /IPD. The costs associated with the merger (excluding the acquisition of shares), which totaled SEK 66 M, have been taken into account in the purchase calculation and, accordingly, have no impact on earnings for the period. - Ericsson properties In June, Drott acquired 14 properties from Ericsson for SEK 2.0 billion, with takeover as of September 1, 2000. The acquisition strengthens Drott's position in the Stockholm region, particularly in Kista, where the Group attains an additional 54,000 square meters plus a 100,000 square meter development right. Eight industrial properties in other parts of Sweden account for one fourth of the acquisition. Following the transaction, Ericsson accounts for 11% of Drott's total rental revenues. · Stockholm share increases Since Drott's IPO two years ago, the Group's annual rental revenues (incl. vacant space) have risen from SEK 1.3 billion to SEK 4.0 billion, with Stockholm accounting for the largest increase. REGIONAL DISTRIBUTION OF RENTAL REVENUES, JUNE 30, 20002 Annual rental revenues (incl. Commerci Housing Tota vacant space), SEK M al l Inner city 606 171 777 Globen, Marievik, Alvik 384 - 384 Kista 362 - 362 Other, Stockholm region3 628 208 836 Stockholm region 1 980 379 2 359 Öresund region 234 229 463 Gothenburg 161 263 424 Rest of Sweden 501 161 662 Outside Sweden 74 - 74 Total 2 950 1 032 3 982 In terms of value, Stockholm accounts for more than 70%. · More efficient capital structure Following the acquisitions described above, Drott has attained its desired capital structure. As a result of the security represented by strong cash flows from large, successful commercial tenants, and from nearly 20,000 tenants in tenant-owned apartments, Drott's equity/assets ratio has been reduced from nearly 100% to 30-35%4 - that is, to the level indicated in the Listing Particulars issued two years ago. Following the Balder and Ericsson acquisitions, the Group's annual cash flow from continuing real estate management operations amounts to approximately SEK 1 billion, which represents considerable stability in the face of changes in the rental and credit markets5. In addition, the existing leases provide potential for rent increases. For example, the average rent for Drott's existing leases in central Stockholm amounts to approximately SEK 2,000 per square meter, which is much lower than the level resulting from leases currently being signed. II. Income statement January-June 2000 The figures within parentheses below pertain to the first half of 1999 · Rental revenues and operating surplus The Group's rental revenues amounted to SEK 1,530 M (1,235). The change between the two periods is affected by acquisitions (the Balder properties are included as of April 1, 2000), divestments and changes in the identical portfolio (renegotiated leases and new leases). Based on an identical portfolio6, rental revenues increased by SEK 93 M, or 6%, compared with the year-earlier period. The occupancy ratio at June 30, 2000 was 95% (94). Due to a rise in rebuilding activity, the number of evacuated premises has increased, which had an adverse impact on the occupancy ratio7. The operating surplus rose to SEK 947 M (744). Based on an identical portfolio6 the operating surplus rose by SEK 87 M, or 10%. Rental revenues and the operating surplus for the period were adversely affected by the fact that the acquired properties initially generate a lower yield than the sold properties. However, the operating surplus from the acquired properties is expected to develop more favorably than that for the sold properties. · Operating profit Operating profit amounted to SEK 1,120 M (978), of which gains from sales of properties accounted for SEK 343 M (350). A repayment of surplus funds from SPP is not included in operating profit for the period but will be taken into account in the nine-month report. · Net financial items Interest expense amounted to SEK 406 M (305). The increase in interest expense was due entirely to the acquisition of Balder. At the end of the period, the average interest rate for Drott's loans was of 5.08% and the average period of fixed interest was 2.1 years. A gain of SEK 11 M on sales of shares8 had a favorable effect on net financial items. Interest subsidies decreased according to plan to SEK 15 M (23). As a result of the acquisition of Balder, project activities increased through the addition of a number of very large projects. Accordingly, it has become more important to report interest payments during the construction period as accurately as possible. Drott has therefore decided that interest - SEK 23 M -on the portion of the loan volume that finances large projects shall be included in the acquisition value (and not, as in the past, be expensed). This new principle provides a more accurate picture of both total investments during the period and continuing earnings from real estate management. Since the effects resulting from previous periods were insignificant, the figures for the comparative period have not been adjusted. · Pretax profit for the period Pretax profit for the period rose by SEK 47 M to SEK 749 M (702). The improvement was due primarily to higher profit from continuing real estate management operations (+43). In addition, profit was affected by lower gains from sales of properties (-7) and the sale of a shareholding (+11). - Continuing real estate management operations9 Pretax profit from management operations rose to SEK 395 M (352). A higher operating surplus for an identical portfolio had a positive impact on profit, while the main negative factor was the fact that acquisitions were effected at a lower average yield compared with sales. Profit from management operations after taxes rose to SEK 343 M (302). · Net profit for the period Net profit for the period amounted to SEK 520 M (587), after tax costs of SEK 229 M (115). The increased proportion of taxes was due entirely to gains from property sales. Effective December 31, 1999, the Groups properties were written up by SEK 3,600 M (corresponding to 72% of the excess value of the properties according to the external property appraisal dated December 31, 1999). The acquisition value of the properties for tax purposes is not affected by the write-up, which means that the taxable capital gain if and when any of the properties is sold will be the same as it would be if the write-up had not occurred. However, the capital gain reportable for accounting purposes if and when any of the properties is sold will be lower following the write-up (difference = write-up amount). III. Balance sheet at June 30, 2000 The figures within parentheses below pertain to December 31, 1999 · Properties During the period, Drott acquired 240 properties with a total of 1,750,000 square meters of floor space for SEK 14.2 billion, of which the Balder properties account for SEK 11.9 billion and the Ericsson properties for SEK 2.0 billion. A total of 47 properties were sold for SEK 2.4 billion, seven of which accounted for SEK 1,8 billion10. Gains from sales of properties totaled SEK 343 M. At June 30, 2000, Drott owned 731 (538) properties, booked at SEK 35,648 M (23,321), with 4,395,000 (2,932,000) square meters of rentable space. BOOK VALUE OF Swede Outsi Total PROPERTIES, SEK M n de Swede n Dec 31, 1999 22 1 228 23 321 093 Acquisitions 13 225 14 180 955 Investments (mainly 479 7 486 projects) Formation of Position -106 - -106 Stockholm Sales -1 -785 -2 086 301 Depreciation -124 -2 -126 Exchange-rate effect - -21 -21 June 30, 2000 34 652 35 648 996 Acquired properties, Sweden Outsi Total first six months of de 2000 Swede n Number 237 3 240 Rentable space, square 1 731 18 1 750 meters 754 598 352 - of which, housing 240 - 240 357 357 Book value of 13 955 225 14 180 acquisitions, SEK M Sold properties, Sweden Outsi Total first six months of de 2000 Swede n Number of properties 46 1 47 Rentable space, square 237 85 324 meters 101 232 333 - of which, housing 154 - 154 273 273 Selling price, SEK M 1 604 825 2 429 Gains from sales of 303 40 343 properties, SEK M DROTT TOTAL11 June December 31, 30, 1999 2000 Number of properties 731 538 Book value, SEK M 35 648 23 321 Rentable space, 4 394 2 932 365 square meters 887 Number of tenant- 19 224 18 094 owned apartments Annual rental 3 982 2 666 revenues, incl. vacant space, SEK M TYPES OF FLOOR SPACE June December 31, 30, 1999 2000 Annual rental revenues, incl. 3 982 2 666 vacant space, SEK M Office 47% 47% Retail 9% 7% Industrial/warehouse 12% 6% Other 6% 4% Housing 26% 36% Total 100% 100% REGION June December 31, 30, 1999 2000 Annual rental revenues, incl. 3 982 2 666 vacant space, SEK M Stockholm 59% 51% Öresund 12% 15% Gothenburg 11% 14% Rest of Sweden 16% 15% Outside Sweden 2% 5% Total 100% 100% Additional properties have been divested following the end of the report period - see page 912. · Current assets The Group's liquid funds, including short-term investments, amounted to SEK 229 M (248). Total current assets in the Drott Group amounted to SEK 1,007 M (719). These include current receivables related to properties sold during the period but not yet taken over by the purchaser. · Shareholders' equity Shareholders' equity in the Group amounted to SEK 10,165 M (9,995), represented by 101,688,759 shares.. · Provisions Provisions totaled SEK 807 M (280), of which SEK 760 M (250) was attributable to a provision for deferred tax. · Interest-bearing liabilities On June 30, 2000, the Drott Group's interest-bearing liabilities totaled SEK 22,197 M (12,510), with an average interest rate of 5.1% (4.7) and an average term of fixed interest of 2.1 years (1.8). The financing of major projects in progress accounted for SEK 1.1 billion of the liabilities. A. Committed lines of credit During the year, Drott renegotiated and signed new agreements regarding a credit volume totaling approximately SEK 15 billion, and thus secured access to loan capital for many years ahead. At June 30, 2000, Drott had committed lines of credit amounting to SEK 24.2 billion and other unutilized lines of credit amounting to SEK 1.9 billion. The weighted duration for utilized volume (SEK 22.2 billion) was 5.2 years (3.8). The longer duration of the loan portfolio was negotiated at virtually unchanged margins in relation to STIBOR. Following midyear, Drott has renegotiated most of the loans scheduled for rearrangement during 2001. The weighted duration for the loan portfolio was extended to approximately 6 years. More than 70% of the loan portfolio is scheduled for renegotiation during 2005 or later. B. Terms of fixed interest Drott's policy is to have an average fixed-interest term of two years +/- 12 months. In order to attain the desired fixed-interest term, Drott makes use of the derivatives market. At June 30, 2000, Drott's portfolio of derivatives had a nominal value of SEK 8.8 billion, with an average interest rate that was lower than the market rate. The discounted added value of the portfolio of derivatives and loan portfolio amounted to SEK 200 M. MATURITY STRUCTURE, JUNE 30, 2000 Interest due, year 200 200 200 200 200 200 2006- Tot 0 1 2 3 4 5 al Swedish kronor, SEK 8 2 4 1 2 501 2 21 M 250 354 206 283 551 303 448 - average 4.9 5.0 5.3 4.7 4.3 5.5 6.03 5.0 interest rate, % 1 2 0 4 6 1 6 Foreign currency, 749 - - - - - - 749 SEK M - average 5.7 - - - - - - 5.7 interest rate, % 9 9 Interest-bearing 8 2 4 1 2 501 2 22 liabilities, SEK M 999 354 206 283 551 303 197 Proportion, % 41 11 19 6 11 2 10 100 - average 4.9 5.0 5.3 4.7 4.3 5.5 6.03 5.0 interest rate, % 9 2 0 4 6 1 8 · Interest-free liabilities Interest-free liabilities totaled SEK 3,625 M (1,302), mainly attributable to liabilities to Ericsson for properties acquired during the period but not yet taken over. IV. Parent Company Parent Company reported a loss of SEK 29 M (loss: 23). Parent Company sales, which comprise the provision of intra-Group services, amounted to SEK 11 M (0). V. Significant events following the report period · Real estate transactions Following the report period, up to August 21, 2000, Drott has sold five properties for SEK 142 M, generating a gain of SEK 24 M (to be included in the nine-month, which will be published on October 31, 2000). Region Sold Renta -of Takeo Pric properties ble which ver e Jul1, 2000 - space , date SEK Aug 21, 2000 , housi M sq. ng, m. sq. m. Stockhol Båtsmannen 2 995 1 999 00070 43 m Större 3 4 Stockhol Ingenjören 12 4 097 3 465 00070 65 m 4 Karlstad Mörmon 33:1, 10 6 001 00090 34 39:1, 48:1 013 1 Total 17 11 142 105 465 · Repurchase of own shares During July, Drott acquired 893,600 of the Company's own Series B shares for a total of SEK 89 M, at an average price of SEK 99.55 per share. At the Annual General Meeting for 2000, the Board of Directors was authorized to purchase a maximum of 10% percent of the shares in Drott up to the time of the next Annual General Meeting. VI. Forecast for 2000 The market for office rentals continues to be very buoyant, particularly in Stockholm, and the acquisitions completed in 2000 will gradually have a favorable impact on profit and cash flow. For full-year 2000, Drott is expected to show an increase in profit from management operations and thus a significant improvement in cash flow. In addition, there will be capital gains, which amounted to SEK 378 M up to August 21. Stockholm, August 21, 2000 Drott AB (publ) Mats Mared President and Chief Executive Officer This interim report is unaudited. - Accounts - Consolidated income statement Six months Q 2 12 months 2000 1999 2000 1999 1999 SEK M Jan- Jan- Apr- Apr- Jan-Dec June June June June Rental revenues 1 530 1 235 904 628 2 498 Other revenues 32 8 30 3 17 Operating, maintenance and -419 -332 -244 -155 -652 property modification costs Ground rent -25 -25 -14 -13 -50 Property tax -80 -65 -48 -33 -135 Property management -91 -77 -49 -38 -159 Operating surplus 947 744 579 392 1 519 Depreciation -132 -90 -78 -46 -185 Gross profit 815 654 501 346 1 334 Gains from property sales 343 350 295 263 511 Central Corporate and Group -38 -26 -23 -13 -62 expenses Operating profit 1 120 978 773 596 1 783 Interest subsidy 15 23 7 12 51 Interest income 20 6 5 3 10 Interest expense -406 -305 -259 -156 -597 Profit for the period before 749 702 526 455 1 247 taxes Taxes -229 -115 -195 -82 -188 Net profit for the period 520 587 331 373 1 059 Continuing real estate management operations, SEK M Profit for the period before 395 352 221 192 736 taxes Profit for the period after 343 302 194 164 635 taxes Cash flow 485 408 279 216 836 Consolidated balance sheet SEK M 2000-06- 1999-06- 1999-12- 30 30 31 Properties 35 648 19 385 23 321 Equipment 37 20 21 Other fixed assets 102 30 26 Fixed assets 35 787 19 435 23 368 Current receivables 778 758 471 Liquid funds 229 91 248 Current assets 1 007 849 719 TOTAL ASSETS 36 794 20 284 24 087 Shareholders' equity 10 165 5 922 9 995 Provisions 807 267 280 Interest-free liabilities 3 625 998 1 302 Interest-bearing liabilities 22 197 13 097 12 510 SHAREHOLDERS' EQUITY AND 36 794 20 284 24 087 LIABILITIES Cash flow statement 2000 199913 1999 SEK M 6 6 12 month month mont s s hs ¨ CONTINUING OPERATIONS Operating surplus 947 744 1 519 Central Corporate and Group -38 -26 -62 expenses Interest subsidies 15 23 51 Interest income 9 6 10 Interest expense -406 -305 -597 Taxes paid for continuing real -42 -34 -85 estate management operations Cash flow from continuing real 485 408 836 estate management operations Cash flow from nonrecurring items, etc.: Nonrecurring items plus difference between paid and 41 -123 -98 expensed interest Cash flow before change in 526 285 738 working capital Cash flow from change in working 638 93 301 capital Cash flow from continuing 1 164 378 1 operations 039 ¨ INVESTMENT OPERATIONS Investments, properties -12 -2 -3 520 020 287 Investments, equipment -22 -5 -11 Sales, listed shares 11 - - Sales of properties (incl. 2 138 641 1 selling expenses) 919 Taxes paid for capital gains -148 -45 -70 Cash flow from investment -10 -1 -1 operations 541 429 449 ¨ FINANCING OPERATIONS Raising of interest-bearing 9 714 1 321 842 loans / amortization of interest- bearing loans Dividend -356 -305 -305 Cash flow from financing 9 358 1 016 537 operations Change in liquid funds -19 -35 127 Liquid funds on January 1 248 126 126 Exchange-rate differences in - - -5 liquid funds Liquid funds at period end 229 91 248 - Key data - 2000 1999 1999 SEK M 6 6 12 months months months PROPERTY-RELATED DATA Rental revenues 1 530 1 235 2 498 Operating surplus 947 744 1 519 Surplus ratio, % 62 60 61 Rentable space, sq. m. 4 395 2 970 2 932 000 000 000 Rent-based occupancy ratio, % 95 94 94 Book value 35 648 19 385 23 321 of properties FINANCIAL DATA Profit 520 587 1 059 Cash flow 485 408 836 Cash flow, incl. gains from 680 713 1 277 property sales Interest-coverage ratio, times 2.8 3.3 3.1 Interest-coverage ratio - 2.0 2.2 2.2 continuing real estate management operations, times Interest-bearing liabilities 22 197 13 097 12 510 Shareholders' equity14 10 165 5 922 9 995 Total assets 36 794 20 284 24 087 Equity/assets ratio, % 28 29 41 Debt/equity ratio, times 2.2 2.2 1.3 Return on equity, % 5.2 10.2 17.6 DATA PER SHARE15 Number of shares 101 688 101 688 101 688 759 759 759 Earnings, SEK 5.11 5.77 10.41 Cash flow, SEK 4.77 4.01 8.22 Cash flow, incl. gains from 6.69 7.01 12.56 property sales, SEK Shareholders' equity, SEK 99.96 58.24 98.29 Continuing real 1998 1999 2000 estate management operations, per quarter Q4 Q1 Q2 Q3 Q4 Q1 Q2 Cash flow, SEK M 146 192 216 263 165 206 279 Cash flow, SEK/Share 1.28 1.89 2.12 2.59 1.62 2.03 2.74 Rolling annual cash 647 701 744 817 836 850 913 flow, SEK M Rolling annual cash 5.68 6.32 6.90 7.80 8.22 8.36 8.98 flow, SEK/share Definitions PROPERTY-RELATED Rent-based occupancy ratio Contracted rent for leases extending to Dec., 31, 1999, divided by the rent, inc. vacancy rental value. Contracted rent Basic annual leased-based rent, after indexing, adjusted for rent discounts and rent surcharges. Rentable space Contracted rental revenues plus value of vacant premises. Rentable space includes garage space within buildings. Vacant space Estimated rent for unleased housing plus market rent for unleased commer- cial premises after reasonable upgrading measures. Annual rental revenues, incl. Sum total of contracted rent and rent rent for vacant premises for vacant premises. Surplus ratio Operating surplus as a % rental revenues. FINANCIAL Return on equity Net profit for the period as a percentage of average shareholders' equity. Central Corporate and Costs that are not directly Group costs attributable to real estate management operations, such as costs for corporate management, Group Staff functions and main- taining a stock-exchange listing. Cash flow Pretax profit for the period after the reversal of depreciation, gains from sales of properties and nonrecurring items, less taxes paid for continuing real estate management operations. Profit from continuing real Profit excluding gains from sales of estate management operations properties and nonrecurring items. Interest-coverage ratio Profit after net financial items after the reversal of interest expense divided by interest expense. Interest-coverage ratio - Profit after net financial items continuing real estate after the reversal of interest management operations expense, gains from sales of properties and nonrecurring items, divided by interest ex- pense. Debt/equity ratio Interest-bearing liabilities divided by shareholders' equity. Equity/assets ratio Shareholders' equity plus minority interest as a percentage of total assets. Earnings per share Profit for the period divided by the number of shares. Information about Drott Drott AB (publ) Corporate reg. no: 55 60 50-2113 Telephone +46-8-545 83 000 Telefax +46-8-545 83 096 Website www.drott.se Postal address PO Box 5530, SE-114 85 Stockholm Street address Nybrogatan 57A, Stockholm Planned information Nine-month report October 31, 2000 Report on operations in 2000 February 20, 2001 Additional information Mats Mared (President and Chief Executive Officer) telephone +46-8-545 83 010 telefax +46-8-545 83 098 e-mail mats.mared@drott.se Claes Linné (Executive Vice President) telephone +46- 8-545 83 012 telefax +46-8-545 83 098 e-mail claes.linne@drott.se Johan Nordenson (IR) telephone +46-8-545 83 019 telefax +46-8-545 83 099 e-mail johan.nordenson@drott.se - The Drott share - Ownership structure at June 30, 2000, adjusted for known subsequent changes Shareholder Series A Series B Total Percent Percen shares shares number age of tage of share of shares capital voting rights Föreningssparbankern - 13 053 13 053 12.8% 12.2% as' mutual funds 447 447 Nordbanken's mutual - 10 405 10 405 10.2% 9.7% funds 464 464 Fourth AP Fund 112 988 6 707 6 820 6.7% 7.3% 456 444 Skandia - 3 952 3 952 3.9% 3.7% 098 098 SEB's mutual funds - 3 478 3 478 3.4% 3.3% 820 820 AMF Pension - 2 932 2 932 2.9% 2.7% 600 600 Handelsbanken Liv 2 615 2 615 2.6% 2.4% 110 110 SEB-Trygg Försäkring - 1 759 1 759 1.7% 1.6% 599 599 KP Pension & - 1 220 1 220 1.2% 1.1% Försäkring 650 650 Foreign shareholders 33 150 19 563 19 596 19.3% 18.6% 277 427 Drott - 893 600 893 600 0.8% 0.8% Others (47 600) 390 357 34 570 34 960 34.5% 36.5% 143 500 Total 536 495 101 152 101 688 100.0% 100.0% 264 759 Thus far during 2000, the facility for reclassifying Series A shares to Series B shares has been utilized by the owners in respect of 67,065 Series A shares, thereby reducing the number of Series A shares in Drott by 67, 065 shares and increasing the number of Series B shares by the same number. _______________________________ 1 Drott owns 445,000 square meters of housing space in the Stockholm region, including 187,000 square meters in the city center (June 30, 2000). 2 Although takeover of the Ericsson properties does not become effective until September 1, 2000, they are included in the table (and in this interim report) since the acquisition became effective in June 2000. Annual rental revenues (incl. vacant space) from the Ericsson properties amount to SEK 249 M. 3 Solna, Danderyd, Årsta, Danvikstull, Huddinge, Botkyrka, Haninge, among others. 4 Adjusted equity/assets ratio based on independent valuations at December 31, 1999. 5 Long-term binding loan commitments (average of 6 years) and an average period of fixed interest of slightly more than two years provide additional stability in the face of changes in credit market (see below). 6 Incl. Balder's properties. 7 According to Drott's accounting principles, premises are reported as vacant until rental revenues start to accrue. This also applies to cases in which leases for the premises have already been signed. 8 Pertains to shares in OM-Gruppen AB, which were received via the acquisition of Näckebro. 9 See definitions on page 13. 10 World Fashion Centre (Amsterdam), Arenan 1 (Stockholm), Masthugget 11:13 (Gothenburg), Vagnen 2 (Lidköping) and Hålsjön 2 and Svansjön 3+4 (Malmö). 11 Including 50% of properties in 50%-owned companies (10 properties). 12 A specification of the properties acquired/sold by Drott during 2000 may be ordered from Drott - call Ingemo Österberg (Tel: +46-8-545 83 011). 13 In accordance with recommendation No. 7 of the Financial Accounting Standards Council, an adjustment has been made compared with Drott's report on the first six months of 1999. 14 If the write-ups of properties that were implemented in 1998 and 1999 (SEK 786 and SEK 3,600 M respectively) were charged with full tax, shareholders' equity would be reduced as follows: June 1999: SEK 219 M; Dec 1999: SEK 1,228 M; June 2000; SEK 1,126 M. 15 In June 1999, Drott raised a convertible debenture loan in an amount of SEK 46.2 M with preferential rights for Drott employees in Sweden. To date, employees have subscribed for SEK 43.1 M, while the remaining convertible debentures have been subscribed by a wholly owned subsidiary of Drott AB for future allotment to employees. Conversion may occur no later than April 30, 2004 at a price of SEK 84. Based on full conversion, the number of Series B Drott shares will increase by 550,000. The dilution effect resulting from possible conversion to shares has not been taken into account in the summary of key data, since such dilution will have only a minor impact on key data. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/07/20010807BIT00260/bit0001.doc http://www.waymaker.net/bitonline/2001/08/07/20010807BIT00260/bit0001.pdf