Interim Report 1 January - 31 March 2000

Interim Report 1 January - 31 March 2000 * Management profit rose by 64 per cent to SEK 23 million (14m). * Pre-tax profit amounted to SEK 31m (29m), of which 6m (10m) consisted of profits from property sales. * The company's ongoing concentration means that 89 (84) per cent of the property stock is now located in selected areas. * Since year-end 1999, the letting ratio has improved by 1.2 percentage points to 96.7 per cent. * All the housing properties in Landskrona and Markaryd have been disposed of during April. * The pre-tax profit forecast for the whole year has been adjusted upwards by SEK 15m to 145m. Mandamus aims to own, develop and manage a stock of high-yield properties concentrated in a limited number of selected areas in Southern and Central Sweden, with a high proportion of residential properties. Operations in the first quarter of 2000 Further concentration Concentration of the property stock has continued this year. This strategy involves successively replacing the company's office and industrial buildings by residential properties, and also implementing, first, sales of properties in areas where population growth is slack and, secondly, purchases in areas that are growing more strongly. This continuous improvement in Mandamus' property stock is bringing about a constant reduction in operating risk, which in turn permits a reduction in the equity ratio. This, combined with strong cash flows, enables the shareholders' dividend to be maintained at a high level. The aim is to keep an equity ratio of at least 20 per cent and distribute 75 per cent of profits after tax excluding capital gains to the shareholders, Mandamus' financial position permitting. Residential Enhancement To attain its vision of being tenants' self-evident first choice, Mandamus has made further efforts to develop extra value for residents in the company's apartments. During the period, the concept of Residential Enhancement was launched: this programme covers both additional products and services obtainable from Mandamus and the opportunity to utilise various packages by agreement with Mandamus' business partners. The agreed packages cover the areas in which the tenants, in their responses to various questionnaire surveys, have expressed most interest. This year's interim reports will present some of these offers in detail in, starting with the 'hottest' development: Mandamus' co-operation with Telia to offer tenants broadband connection and other telecoms facilities in their homes. Rent and profit trends Rental income amounted to SEK 204m (196m), representing a rise of 4 per cent on the previous year. The average economic letting ratio has improved by 1.2 percentage points, to 96.7 (94.5) per cent, since year-end. Net of property costs, trading profit was SEK 90m (85m). Trading costs during the first quarter exceed those for the rest of the year, owing to higher heating costs. Depreciation on the properties amounted to SEK 12m (12m) and central administrative expense to SEK 5m (9m). Compared with the previous year, the administrative expense attributable to operations rose by roughly SEK 12m on an annual basis. Interest expense totalled SEK 51m (50m). Management profit, i.e. profit before items affecting comparability, amounted to SEK 23m (14m), corresponding to a gross margin of 11.3 (7.1) per cent. Management profit for the (rolling) past 12-month period was SEK 124m, which is SEK 9m higher than management profit for 1999. The figure below shows management profit per quarter (the bars) and rolling 12-month profit (the graph line). Outcome per quarter Q 1 Q 2 Q 3 Q 4 Whole year Rental income, SEK m 2000 204 1999 196 193 201 204 794 1998 127 127 125 168 547 Management profit, SEK m 2000 23 1999 14 33 45 23 115 1998 8 20 19 11 58 Gross margin, % 2000 11.3 1999 7.1 17.1 22.4 11.3 14.5 1998 6.3 15.7 15.2 6.5 10.6 Management 98:1 98:2 98:3 98:4 99:1 99:2 99:3 99:4 00:1 profit Quarter 8 20 19 11 14 33 45 23 23 Rolling 12- - - - 58 64 77 103 115 124 month basis Comparison between Q1 1999 Rental Trading Surplus And Q1 2000 income Profit Ratio SEK m SEK m % Profit and loss account, Q1 1999 196 85 43 Additional income/properties acquired + 35 + 16 46 Less income/properties sold - 32 - 13 40 Total change in volume 3 3 - Change in unchanged property stock 5 2 - Profit and loss account, Q1 2000 204 90 44 Pre-tax profit, which includes such items affecting comparability as disposal profits, interest grants, quotation expense and depreciation, amounted to SEK 31m (29m). Of the profit improvement of SEK 2m compared with the corresponding period in the previous year, SEK 9m resulted from the rise in profit in current operations, while profit from property sales was SEK 4m lower and interest grants decreased by SEK 3m. Profit after estimated tax amounted to SEK 23m (21m), which represents SEK 1.12 (1.02) per share. Further concentration of property stock At 31 March, the group had properties with a book value of SEK 5,427m, against SEK 5,433m at 31 December 1999. Since 31 March 1999, property volume has risen by SEK 524m or 11 per cent. During the first quarter of 2000, a total of ten properties with a book value of SEK 24m were sold. In Partille, a property was acquired for SEK 18m. This property is a good complement to the acquisitions in Partille made at the end of last year. Through property regulation, the number of properties has fallen by two, i.e. two properties have been combined with others. Altogether, the number of properties totalled 381 at 31 March, against 392 at year-end. Investments in the existing property stock for the quarter amounted to SEK 12m (24m), which is in line with depreciation for the period. Change in property holdings BookNumbe Rentable value r area, 1,000 SEK m m2 At 31 December 1999 5,433 392 1,260 Properties sold -24 -10 -17 Remaining stock 5.409 382 1.243 Properties acquired 18 1 4 Investments/property regulation 12 -2 - Depreciation/write-down -12 - - Exchange-rate fluctuations 0 - - At 31 March 2000 5,427 381 1,247 At 31 March 2000, 89 per cent of the property stock -- one percentage point higher than at year-end -- was located in the group's selected areas. The proportion of housing had risen to 82 per cent, from 81 per cent at year-end. Financial position At 31 March 2000, the group had interest-bearing liabilities of SEK 3,742m, against SEK 3,547m at year-end. Of these liabilities, SEK 20m (25m) were in foreign currencies. The loan portfolio is subject to an average fixed-interest term of 1.9 (2.0) years, and average interest was 5.55 (5.43) per cent. Net borrowings at 31 March 2000 totalled SEK 3,714m (3,520m). At 31 March, the group had SEK 280m in confirmed unutilised credit pledges. Loan structure at Total loans Average Percent- 31 March 2000 SEK m interest age of Fixed-interest % total terms until 2000 1,455 4.66 39 2001 659 6.15 18 2002 486 6.40 13 2003 839 6.10 22 2004 91 5.50 2 2005 134 5.51 4 2006- 78 6.06 2 Totalt 3,742 5.55 100 The visible equity ratio was 26.0 per cent at 31 March, representing an improvement by 0.6 percentage points since year-end. If the general meeting of shareholders resolves to pay a dividend of SEK 272m in accordance with the Board's proposal, the equity ratio will immediately be reduced to just over 21 per cent. Events since quarter-end During April, an agreement was concluded on the sale of the group's entire stock of housing properties in Landskrona and Markaryd. Altogether, these 2 sales include some 51,000 m of rentable space in 32 properties. The group's remaining undeveloped land in the municipality of Kungälv has also been sold. The total sales value of these deals was SEK 157m, representing an aggregate sale profit of SEK 9m. Forecast In view of profit for the first quarter and agreements reached concerning the sale of properties during April, pre-tax profit for the year is expected to amount to SEK 145m. This forecast corresponds to earnings per share after tax of SEK 5.08 (9.80) and is SEK 15m higher than the previous forecast. It may be adjusted in response to disposal profits from further property sales during the year. Stockholm, 26 April 2000 Anders Johansson Managing Director This report has not been examined by the company's auditors. GROUP PROFIT AND LOSS ACCOUNT 2000 1999 1999 Figures in SEK m 3 mths 3 mths mths Rental income 204 196 794 Property expense Operating costs -82 -81 -276 Repairs and maintenance -21 -19 -78 Ground rent -2 -2 -6 Property tax -9 -9 -36 Total property expense -114 -111 -396 Trading profit 90 85 398 Depreciation on properties -12 -12 -47 Gross profit 78 73 351 Central administrative expense -5 -9 -34 Profit from property sales 6 10 166 Quotation expense etc. - - -4 Write-down on property - - -7 Operating profit 79 74 472 Interest contribution 2 5 18 Financial income 1 0 2 Financial expense -51 -50 -204 Net interest income/expense -48 -45 -184 Pre-tax profit 31 29 288 Tax expense -8 -8 -87 Net profit for the period 23 21 201 GROUP BALANCE SHEET 2000 1999 1999 Figures in SEK m 31 March 31 March 31 December Assets Properties 5,427 4,903 5,433 Other tangible fixed assets 9 9 9 Financial fixed assets 5 13 16 Other current assets 70 86 87 Liquid funds 23 12 11 Total assets 5,534 5,023 5,556 Shareholders' equity and liabilities Total shareholders' equity 1,437 1,282 1,414 Minority shareholding 0 0 0 Provisions 137 68 137 Interest-bearing liabilities 3,742 3,488 3,547 Non-interest-bearing 218 185 458 liabilities Total shareholders' equity and 5,534 5,023 5,556 liabilities GROUP CASH-FLOW STATEMENT 2000 1999 1999 Figures in SEK m 3 mths 3 mths 12 mths Cash flow before change in 29 23 126 working capital Quotation expense etc. - - -4 Change in working capital -223 -74 189 Cash flow from operations -194 -51 311 Current investments -12 -24 -105 Property acquisitions -18 -47 -1,291 Property sales 30 73 974 Provisions made - - 48 Cash flow from investments 0 2 -374 Dividend to shareholders - - -46 Cash flow from/to shareholders - - -46 Opening net debt -3,520 -3,433 -3,433 Total cash flow -194 -49 -109 Exchange-rate effect on debts 0 19 22 in foreign currency Closing net debt -3,714 -3,463 -3,520 Property stock by Rentable Rental Economic Book region area income letting value 1,000 m2 SEK m Ratio, % SEK m Skåne 274 45 96.5 1,122 Småland / Halland 216 35 97.1 865 Väst 311 46 95.7 1,427 Öst 440 77 97.5 2,005 Sweden, total 1,241 203 96.8 5,419 Abroad 6 1 52.0 8 Total 1,247 204 96.7 5,427 Of which in selected 88 88 97.0 89.0 areas, % Of which in 75 79 98.0 82.0 residential, % KEY FIGURES 2000 1999 1999 3 mths 3 mths 12 mths 31 March 31 March 31 December Book value of properties, SEK 5,427 4,903 5,433 m Economic letting ratio, % 96.7 94.5 95.5 Spatial letting ratio, % 96.3 93.3 95.8 Surplus ratio (rolling 12- 50.2 45.8 50.1 month basis), % Gross margin (rolling 12-month 15.5 10.4 14.5 basis), % Equity ratio, % 26.0 25.5 25.4 Debt/equity ratio, times 2.6 2.7 2.5 Pledge ratio, % 69 71 65 Interest-coverage ratio, times 1.5 1.4 1.6 Average interest on loans, % 5.55 5.70 5.43 Book value of properties per 4,352 4,106 4,311 m2, SEK Definitions Gross margin: Management profit in relation to rental income. Economic letting ratio: Rental income plus rental losses in relation to rental value. Pledge ratio: Interest-bearing liabilities in relation to the properties' book value. Management profit: Pre-tax profit, excluding items affecting comparability such as profit from property sales, write- down expense, quotation expense and interest contribution. Cash flow: Cash flow before change in working capital. Net borrowings: Interest-bearing liabilities less long-term claims and liquid funds. Interest-coverage ratio: Profit after financial items, excluding items affecting comparability and financial expense, in relation to financial expense. Surplus ratio: Trading profit in relation to total rental income. Enhanced residential facilities With its roughly 13,000 rental apartments in Southern and Central Sweden, Mandamus is one of the major players on the housing market. As part of Mandamus' management philosophy, the Residential Enhancement service concept has been developed. This programme imparts a new dimension to the notion of living in a rented apartment. Residential Enhancement is based on thorough customer surveys of tenants' needs and wishes for various products and services. On the basis of these studies, Mandamus has refined its services, creating extra value and increasing the tenants' influence over their own residential situation. Thanks to its size, Mandamus has been able to establish a network of strategic business partners that can offer the tenants high-quality services and products that represent good value for money. "Mandamus aims to raise the status of tenancy and add value to the tenant's situation. The content of Residential Enhancement is, as such, nothing new. The important aspect is the comprehensive packaging. the aim is to make it easy for our tenants to save both time and money,' comments Mandamus' MD Anders Johansson. 'We expect the introduction of Residential Enhancement to result in fewer vacancies, as well as a lower tenant turnover.' Broadband venture with Telia Telia is among the nation-wide companies with which Mandamus has signed co-operation agreements. The agreement with Telia is aimed at rapid and reliable implementation of broadband technology in Mandamus' rental apartments. An initial pilot project has been implemented in Borås, where Mandamus owns 1,200 apartments. The objective is, of course, to make this technology available in the majority of rented homes. Facilities available for tenants in the Kristineberg housing area in Borås include the following: @ Internet connection -- a value-for-money offer affording the opportunity for non-stop surfing on the Net at a fixed price, together with a PC package. @ Specially trained PC instructors to help tenants to solve computer problems and get online smoothly. @ A computer room where tenants can try out ADSL (asymmetric digital subscriber line), the new high-speed access technology. @ An electronic meeting-place, mandamus@home, to improve the provision of information and communication in the housing area and between the landlord and tenants. KEY FIGURES PER SHARE 2000 1999 1999 3 mths 3 mths 12 mths 31 March 31 March 31 December Closing share price, SEK 67.50 49.50 53.00 Shareholders' equity, SEK 69.95 62.41 68.83 Earnings after tax, SEK 1.12 1.02 9.80 P/E ratio (rolling 12-month 6.8 4.8 5.4 basis) Share price in relation to 96 79 77 visible equity, % Closing number of shares 20,542 20,542 20,542 ('000) Closing market value, SEK m 1,387 1,017 1,089 Major shareholders Proportion at 31 March 2000 of votes and capital, % LRF-gruppen 16.9 Nordico fonder 11.6 KPA Fond & Finans 5.4 Skandia 4.5 SPP 4.4 Fjärde AP-fonden 3.2 Independent savings banks 2.9 Riddarhusdirektionen 2.4 Savings-bank foundations 1.7 Volvoresultat Foundation 1.5 Total (10 owners) 54.5 Registered abroad 9.8 Other shareholders 35.7 Total 100.0 Financial information Interim accounts January-June 10 August 2000 Interim accounts January-September 23 October 2000 Summarised financial statements for the 2000 financial year 8 February 2001 Questions Please address any queries to Mandamus' Managing Director Anders Johansson on phone +46 8 566 130 00 or e-mail anders.johansson@mandamus.se, or to Deputy Managing Director Bengt Evaldsson, phone +46 8 566 130 00 or e-mail bengt.evaldsson@mandamus.se. Address (HQ): Mandamus Fastigheter AB, (Englundavägen 7), Box 12, SE-171 18 Solna, Sweden Telephone: +46 8 566 130 00, Telefax: +46 8 566 130 99, E-mail: mandamus@mandamus.se Home page: www.mandamus.se Mandamus Fastigheter AB (publ). Corporate identity number 556549-6360. The Board has its registered office in Stockholm. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/26/20000426BIT01130/bit0001.doc Rapport http://www.bit.se/bitonline/2000/04/26/20000426BIT01130/bit0002.pdf