Kungsleden AB (publ) Interim Report

Kungsleden AB (publ) Interim Report 1 January-30 June 2001 * Profit before tax for the period amounted to SEK 191 (169) m, corresponding to earnings per share of SEK 10.1 (9.1). * Kungsleden's operating surplus increased by 52 per cent to SEK 305 (200) m. * Operating profit increased by 67 per cent to SEK 321 (193) m. * In the period, 49 properties were divested, generating SEK 447 m and profits of SEK 30 (5) m; 44 properties, with a value of SEK 1,937 m, were acquired. During the period, our group of properties has grown by more then 20 per cent. * Kungsleden is revising its forecast of profit after tax to SEK 330 m, equivalent to SEK 17,4 per share. The previous forecast was SEK 300 m. Kungsleden's business concept, vision and operations Kungsleden's business concept is to own and manage properties that generate high and stable long-term property yield. Kungsleden's vision is to utilize and develop its competencies in structuring heterogeneous property holdings. Kungsleden's dual operational focus is property management and trading. The corporation views the yield properties generate as its crucial performance measure, considering this more important than property type or geographical location. Kungsleden is a transaction-intensive corporation, with our property holding in frequent change as a consequence of acquisitions and disposals. Profits Kungsleden posted profit before tax of SEK 191 (169) m for the period January-June 2001. Additionally, last year's profits included non-recurring gains of SEK 75 m from the sale of interest rate swaps. Earnings per share were SEK 10.1 (9.1). The operating surplus for the period January-June 2001 amounted to SEK 305 (200) m, of which SEK 161 (100) m arose in the reporting period. The operating surplus increase that appeared in the first quarter continued during the second, due mainly to the growth and restructuring of Kungsleden's property holding over the past year. Capital gains from property disposals amounted to SEK 30 (5) m, with SEK 28 (4) m arising in the reporting period, with the biggest individual gains from the sale of development rights at Kungens Kurva, Huddinge, south of Stockholm. Cash flow for the period was SEK 140 (137) m, equivalent to SEK 7.4 (7.4) per share. Net financial items and borrowing Kungsleden's net financial items was SEK -130 (-23) m, with interest subsidies of SEK 0 m. Interest cover was 2.5 (8.2). Last year, Kungsleden's net financial items included SEK 75 m in capital gains from divested interest rate swaps. Payment for properties from JM, with Kungsleden taking possession on 8 March, was transferred on 30 June 2001. New property acquisitions from JM, effective 7 June 2001, will be paid on 7 December 2001. Kungsleden's interest-bearing liabilities amounted to SEK 5,240 (3,755) m as of 30 June, including a bond issue totaling SEK 500 m. The average interest rate of the funding portfolio is 6.01 (5.66) per cent. The average fixing period was 2.7 (3.2) years. Kungsleden does not own any properties in foreign countries and has no foreign currency borrowing. Fixing periods, including bonds as of 30 June 2001 Loan, SEK m Average interest, % Floating interest 3,370 5.49 2003 120 8.47 2005 150 9.78 2006 350 6.06 2008 250 6.05 2009 100 6.12 2010 800 7.07 2011 100 6.26 Total 5,240 6.01 Tax Tax paid for the period was SEK 0 m. Deferred tax was SEK 53 m, the consequence of RR's (the Swedish Financial Accounting Standards Council) new recommendations for accounting income taxes. More information is available in the section 'Accounting principles'. Property taxes amounted to SEK 21 (15) m and are included in the operating surplus. Acquisitions and disposals Kungsleden acquired 44 properties with floor-space of 262,000 m2 for a total purchase price of SEK 1,937 m in the period. These acquisitions were effected at a calculated pro forma property yield of 7.6 per cent. Kungsleden made the following major acquisitions: · Two property portfolios were acquired from JM, with Kungsleden taking possession on 8 March 2001 and 7 June 2001. The total purchase price was SEK 1,523 m. The majority of these acquisitions were office premises located in Greater Stockholm. · Three office and residential properties in Central Helsingborg from Skanska, with a purchase price of SEK 180 m, and Kungsleden taking possession on 16 May 2001. · Two office premises in Gothenburg, acquired from SKF, with a purchase price of SEK 106 m and floor-space of 29,000 m2, primarily office premises. Kungsleden divested 49 properties with floor-space of 71,000 m2, with a total value of SEK 447 m, and generating profits of SEK 30 m, in the same period. In terms of sales prices, divested properties generated a pro forma property yield of 5.7 per cent. Some property disposals were an element of Kungsleden's restructuring- 47 properties in 24 municipalities for a total purchase price of SEK 229 m, and some because of low yields -two centrally located premises in Helsingborg, for SEK 218 m. Property holding As of 30 June 2001, Kungsleden's holding comprises 455 properties with floor-space of 1,724,000 m2 and a book value of SEK 8,068 m, located in 138 municipalities. Of total property values, 90 per cent is located in 50 municipalities, with the three major city regions-Greater Stockholm, Greater Gothenburg and the Öresund region-representing 56 per cent of property values. Kungsleden's orientation towards trading and restructuring implies that its property holding is classified as current assets, with one implication being that profits are not depreciated according to plan, but instead, each property is valued individually proceeding from the expected sales price, in accordance with the LOCOM principle (lower of cost and market). Value adjustment is effected at the end of each calendar year. Earnings capacity Kungsleden focuses on the creation of stable, high yields, implying that the corporation's property holding is in continual transformation through acquisitions and disposals. In order to illustrate the earnings capacity of the holding, pro forma accounting of the holding was included in the Annual Report for 2000. A further statement, according to the same principles for the holding as of 30 June 2001, is included below. Acquisitions and disposals effected since 1 January 2001 resulted in an unchanged property yield of 8.3 per cent. The property holding in summary, as of 30 June 2001 South West East Central North Total Number 137 127 95 77 19 455 Lettable floor- 476.9 468.2 509.7 225.8 43.9 1,724.5 space, 000 m2 Book value, SEK m 1,885.7 2,107.2 2,920.2 937.0 218.1 8,068.2 Rental value, SEK m 271.8 316.0 409.7 148.6 36.4 1,182.5 Rental revenues, SEK 251.4 287.5 366.8 128.9 35.2 1,069.8 m Operating surplus, 154.3 191.5 238.6 62.1 19.7 666.2 SEK m Economic occupancy, 93.3 92.1 90.2 89.1 96.7 91.4 % Property yield, % 8.2 9.1 8.2 6.6 9.0 8.3 Warehou Resi- sing/ Offices Retail industrial dential Hotel Land Total Number 223 42 93 34 7 56 455 Lettable 871.8 143.6 616.7 67.3 25.1 - 1,724.5 floor- space, 000 m2 Book 5,538.1 767.4 1,373.4 277.4 89.2 22.7 8,068.2 value, SEK m Rental 766.5 119.2 229.1 51.8 15.9 - 1,182.5 value, SEK m Rental 700.0 107.9 204.1 44.7 13.1 - 1,069.8 revenues, SEK m Operating 446.0 62.4 129.7 20.7 8.3 -0.9 666.2 surplus, SEK m Economic 91.7 92.4 90.9 88.7 89.5 - 91.4 occupancy, % Property 8.1 8.1 9.4 7.5 9.3 - 8.3 yield, % Financial structure The closing balance of shareholders' equity was SEK 2,060 (1,957) m, or SEK 108.7 (105.4) per share, equivalent to an equity ratio of 24.1 (29.6) per cent. Share capital corresponds to SEK 47 m of total shareholders' equity. The share capital is divided between 18,958,620 shares, each with a nominal value of SEK 2.5. Investments Investments in existing properties were SEK 51 (32) m. Human resources The average number of employees in the period was 79 (78). Parent company Parent company profits after financial items amounted to SEK 0 (-10) m. Liquid funds were SEK 0 (1) m as of 30 June 2001. Accounting principles This Interim Report has been produced consistent with the recommendations of RR (the Swedish Financial Accounting Standards Council). The accounting principles and calculations used in this Interim Report are identical to those used in the latest Annual Report, with the following exception: From 2001 onwards, Kungsleden's accounting has been adapted to conform to RR's (the Swedish Financial Accounting Standards Council) recommendation regarding deferred tax (RR9). The relevant comparative figures in the Income Statement and Balance Sheet have been adjusted accordingly. RR's standard no 9; 'Accounting for deferred taxes' has exerted the following influence on Kungsleden accounts: Initially, Kungsleden accountsfor the net of the temporary differences in properties and accumulated tax losses, both valued at a nominal 28 per cent tax rate. The resulting net was positive, with a value of SEK 277.1 m. This amount has been accounted for as an adjustment to opening balances by posting a deferred tax receivable against an increase to non-restricted consolidated equity brought forward. In the interim period, Kungsleden has posted profits subject to deferred taxes of SEK 53 m, an amount accounted for as a reduction of the deferred tax asset. Outlook The companys brisk progress during the first half-year has caused the board to revise its forecast for profit after tax paid to SEK 330 m, equivalent to SEK 17,4 per share. The previous forecast was SEK 300 m. For the remainder of the year, Kungsleden will remain active on its transaction side, with the intention of enhancing the structure of the corporation's holding, and further consolidating Kungsleden's earnings capacity. Stockholm, 16 August 2001 Jens Engwall Chief Executive Kungsleden AB (publ) Forthcoming financial reports · Interim Report, January-September, 24 October 2001. · Financial Statement, February 2002. · The Annual Report for the financial year 2001, March 2002. Audit review, Kungsleden AB I have reviewed this Interim Report in accordance with the recommendation issued by FAR (the Swedish Institute of Authorized Public Accountants). This summary review is significantly more limited than a full audit. Nothing has arisen to suggest that this Interim Report does not satisfy the stipulations of prevailing Swedish stock exchange and annual accounts legislation. Stockholm, 16 August 2001 Thomas Thiel Authorized Public Accountant For further information, please contact: Jens Engwall Chief Executive Tel: +46 (0)8 50305204, mobile: +46 (0)706906550 Johan Risberg Deputy Chief Executive, Chief Financial Officer Tel: +46 (0)850305206, mobile: +46 (0)70 6906565 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/16/20010816BIT00890/bit0001.doc http://www.waymaker.net/bitonline/2001/08/16/20010816BIT00890/bit0001.pdf The full report