Interim report january-june 1998

Interim report january-june 1998 Näckebro's profit before tax for the first half of 1998 amounted to SEK 231 M (51). Operating profit rose to SEK 501 M (165). Cash flow increased to SEK 92 M (89). After the end of the period, the property Southside in London was sold for SEK 1,080 M with a capital gain of SEK 40 M. Group Operations, January-June 1998 Summary Näckebro's profit before tax amounted to SEK 231 M (51) in the first half of 1998. These earnings include income totalling SEK 200 M from property sales and the sale of the subsidiary CarPark. Cash flow increased to SEK 92 M (89). Operating profit before these sales rose by SEK 128 M to SEK 301 M (173). Earnings per share amounted to SEK 9.63 (1.95). Shareholders' equity per share was SEK 153 (145) on 30 June. The operating surplus increased by SEK 140 M to SEK 369 M (229). Central administrative expenses fell by SEK 3 M to SEK 18 M (21). Net financial items decreased by SEK 156 M to SEK -270 M (-114). For a comparable loan portfolio, adjusted for currency effects, net financial items are largely unchanged. A higher borrowing cost in pounds sterling was compensated by a lower cost in Swedish kronor. Sweden, SEK M January-June January-June 1998 1997 Property income 451 255 Property expenses -192 -115 Operating surplus 259 140 The operating surplus from Näckebro's properties in Sweden increased by SEK 119 M, mainly due to the acquisition of Fabege, but also through increased income from Näckebro's portfolio prior to the acquisition. The leasing situation continued to improve, particularly in the Stockholm market. Outside Sweden, SEK M January-June January-June 1998 1997 Property income 138 107 Property expenses -28 -18 Operating surplus 110 89 The operating surplus outside Sweden improved by SEK 21 M, due partly to changes in the property portfolio and partly to a favourable rental trend in the UK and Norway. The effect of exchange-rate fluctuations improved the operating surplus by SEK 3 M. Operating profit for other operations amounted to SEK 10 M, most of which - SEK 7 M - was attributable to CarPark, the subsidiary sold in April. Property holdings Näckebro sold eleven properties in Sweden in the second quarter. Villa Pauli in Djursholm outside Stockholm and Mercurius 15 in Karlstad were sold in April. In May, eight small properties were sold, Linjalen 45-50, 52-53, in Täby outside Stockholm. Gärdet 3 in Säffle was sold in June. A 35% interest in a property in New York was also sold during the period. These properties were sold for a total of SEK 174 M and generated a capital loss of SEK 0.4 M. During the period Näckebro acquired Stigbygeln 3 in Solna and Pireus 1 in Värtan in Stockholm for a total of SEK 63 M. On 30 June, lettable space amounted to approximately 1,344,000 sq. m. (866,000) and book value totalled SEK 12,313 M (7,504). The number of properties in Näckebro's portfolio totalled 207 (193). Sale of CarPark In April all the shares in the wholly owned parking company CarPark AB were sold to UBS Private Equity which provided a capital gain of SEK 201 M. Näckebro became the owner of CarPark through the acquisition of Fabege in 1997. Financing and equity/assets ratio The average interest rate for all interest-bearing loans at 30 June was 6.4%. Interest-bearing loans amounted to SEK 8,624 M (4,223) of which SEK 3,551 M (1,295) had a maturity of more than one year. Näckebro also had interest rate caps at the end of the period in SEK with an underlying value of SEK 1,000 M with an average interest rate of 5.75% and in NLG with an underlying value corresponding to SEK 195 M and with an interest rate of 4.25%. The average fixed-interest period for all loans, including interest rate caps was 1.5 years (1.3). The Group's visible equity/assets ratio was 28% (44). Fixed-interest-rate structure, SEK M Year Loans Average Loans Average Total Average Swedish rate foreign rate rate kronor % currency % % 1998 2,097 5.5 1,539 6.4 3,636 5.9 1999 939 6.9 665 6.1 1,604 6.6 2000 1,197 6.8 739 7.6 1,936 7.1 2001 137 10.4 137 10.4 2002- 1,302 6.1 9 4.8 1,311 6.1 Total 5,672 6.3 2,952 6.6 8,624 6.4 Occupancy level The occupancy level for the Group, measured as the contracted rent portion of rental value, amounted to 90.8% (91.4) at 30 June. The occupancy level in Sweden rose to 90.7% (90.0). Outside Sweden, the occupancy level fell to 91.2% (95.2), which was entirely attributable to the acquisition of the Fabege property the World Fashion Centre in Amsterdam. Parent Company Property income amounted to SEK 304 M (312). The loss after financial items amounted to SEK 32 M (52 profit). Cash flow amounted to SEK 17 M (90). The Parent Company's visible equity/assets ratio was 29% (47). Events after the end of the period Näckebro's largest property in the UK, Southside on Victoria Street in London, was sold in July. The purchase price was GBP 83.1 M, corresponding to SEK 1,080 M, and the capital gain is expected to amount to SEK 40 M. In July, Näckebro also sold the remaining units of a commonhold residential property in Brussels, following which no property assets remain in the Belgian market. Also after the end of the period, Näckebro sold three industrial properties in Bromma in Stockholm, Valsverket 5 and Elementet 4 and 8, and a site in Täby outside Stockholm, Måttbandet 8. The total sales price was SEK 27 M and the capital loss amounts to SEK 8 M. Näckebro's Board of Directors has decided to leave London and concentrate the company's operations to Stockholm, Malmö and Gothenburg. Consolidated profit and loss account January-June January-June July 1997- Full year SEK M 1998 1997 June 1998 1997 Property operations Property income Rental income 578.2 357.9 1,176.0 1,200.8 Other incom 10.8 4.2 15.8 12.9 Total property 589.0 362.1 1,191.8 1,213.7 income Property expenses Maintenance -50.3 -27.9 -119.3 -112.3 Operating costs -86.3 -63.8 -171.0 -176.4 Administration -33.0 -20.2 -64.4 -65.2 Leasehold fees -16.5 -4.6 -33.6 -34.3 Property tax -34.1 -17.1 -66.6 -66.3 Total property -220.2 -133.6 -454.9 -454.5 expenses Operating surplus 368.8 228.5 736.9 759.2 Depreciation -59.7 -35.2 -121.2 -124.2 Profit on property 309.1 193.3 615.7 635.0 operations Other operations Operating income 97.4 287.9 371.6 Operating expenses -87.5 -255.5 -340.7 Profit on other 9.9 32.4 30.9 operations Gross profit 319.0 193.3 648.1 665.9 Central -18.1 -20.7 -40.0 -49.5 administration Restructuring -43.9 -43.9 costs Profit on sale of 200.6 200.6 CarPark Profit on sale of -0.4 -8.0 0.0 -6.8 properties Operating profit 501.1 164.6 764.8 565.7 Interest subsidy 8.0 14.9 19.8 27.2 Interest income 4.3 1.6 9.1 6.9 Interest expenses -282.9 -130.5 -561.9 -524.9 Other financial 0.7 -1.2 -2.9 items Total financial -269.9 -114.0 -534.2 -493.7 items Acquired earnings -21.9 Profit before tax 231.2 50.6 230.6 50.1 Tax -1.7 -4.1 -10.1 -12.6 Profit after tax 229.5 46.5 220.5 37.5 Consolidated balance sheet SEK M 30 June 1998 30 June 1997 31 December 1997 Assets Properties 1) 12,312.6 7,503.7 12,438.1 Work in progress 150.4 58.9 85.3 Equipment 10.0 2.9 38.1 Shares and participations 0.4 190.0 28.6 Long-term receivables 19.8 20.8 Current receivables 194.8 50.5 333.4 Liquid assets 216.0 89.4 69.3 Total assets 12,904.0 7,895.4 13,013.6 Shareholders' equity and liabilities Shareholders' equity 3,655.0 3,461.1 3,456.6 Provisions 74.5 1.7 74.4 Long-term interest-bearing 3,550.5 1,295.4 4,119.5 loans 2) Other long-term liabilities 1.4 0.0 1.1 Short-term interest-bearing 5,073.2 2,927.5 4,740.3 loans 3) Other current liabilities 549.4 209.7 621.7 Total shareholders' equity and 12,904.0 7,895.4 13,013.6 liabilities 1) of which, properties outside 3,065.8 2,455.0 3,072.2 Sweden 2) of which, long-term loans in 848.5 1,193.8 1,412.0 foreign currency 3) of which, short-term loans 2,102.9 1,285.9 1,738.7 in foreign currency Review report We have carried out a review of this interim report in accordance with the recommendation issued by the Swedish Institute of Authorised Public Accountants (FAR). A review is significantly limited in comparison with an audit. Nothing has come to our attention which would indicate that the interim report does not meet the requirements of the Swedish Securities Exchange and Annual Accounts Acts. Stockholm, 13 August 1998 Öhrlings Coopers & Lybrand AB Eva Riben Authorised Public Accountant Stockholm, 13 August 1998 Lennart Schönning Chief Executive Key data July 1997- Full year June 1998 1997 Property income, SEK M 1,192 1,214 Operating surplus, SEK M 737 759 Profit before tax, SEK M 231 50 Cash flow, SEK M 147 142 Book value of property 12,313 12,438 holdings, SEK M Interest coverage ratio 1.4 1.1 Return on shareholders' 6.2 1.1 equity, % Visible equity/assets 28 27 ratio, % Debt/equity ratio 2.4 2.6 Mortgage rate, % 70 71 Occupancy level, rental 90.8 90.3 income, % Earnings per share after 9.25 1.57 tax, SEK Shareholders' equity per 153 145 share, SEK The above key data has been prepared according to the definitions presented in the 1997 annual report. Key data for 1997 includes Fabege for the full year, less acquired profit before tax to 30 June. Financial information during 1998/1999 Interim Report, January-September 1998 4 November 1998 Preliminary report on 1998 operations 15 February 1999 1999 Annual General Meeting 15 April 1999 Box 7114, SE-103 87 Stockholm, Sweden www.nackebro.co.uk