Interim Report 1 January - 30 September, 1999

Interim Report 1 January - 30 September, 1999 (Comparative figures in brackets refer to the corresponding period last year with the exception of the sections dealing with assets and financing where the figures in brackets refer to 31-12-1998.) * The profit after tax increased to SEK 112.6 million (14.1) * The profit from property management rose to SEK 57.1 million (22.8), an improvement of 150% * Share redemption proposed whereby one share for every twenty shares will be redeemed at a price of SEK 95. "As a result of the continued positive market trend, we have increased our business volume through more property sales which have generated a sharp increase in profits. Demand for our apartments and commercial premises continues to rise and our financial costs are decreasing. These factors are contributing to improvements in the profit from property management and will thus enable us to redeem shares and raise our dividend," says Hans Wallenstam, Managing Director. Interim Report 1 January - 30 September, 1999 The profit after tax rose sharply to SEK 112.6 million (14.1), an increase of SEK 98.5 million. This profit increase is primarily due to more active property trading and, as a result, higher profits on property sales as well as active financial management which, together with falling interest rates, has resulted in lower interest costs. The profit on property management continued to increase and was SEK 57.1 million (22.8), an improvement of 150%. The Board of Directors of Wallenstam has proposed that an extraordinary general meeting decide in favour of a share redemption whereby one share for every twenty shares will be redeemed at a price of SEK 95, which corresponds to the net asset value less 28% deferred tax on the surplus value of the properties as of 31 December, 1998. The average rate of interest on loans was 5.82%, a drop of 0.84% since the beginning of the year. Operations Wallenstam is a property company with properties in Gothenburg, Stockholm and Helsingborg. Its property portfolio consists mainly of residential properties, but with a large proportion of commercial properties in Gothenburg. The properties are in central locations or in attractive suburbs Wallenstam's objective is to increase its profit from property management, before depreciation, to SEK 100 million by the year 2000. With a profit of SEK 78.7 million for the first nine months, Wallenstam's profit trend is in line with its objective. Profit The profit after tax rose to SEK 112.6 million (14.1) which is equivalent to a profit per share of SEK 5.95 (0.74). This improvement is principally the result of Wallenstam having satisfied the market's demand for properties which has resulted in more active property trading resulting in higher profits on property sales as well as active financial management which, together with falling interest rates, has resulted in lower interest costs. Property management The Group's rental income during the period increased to SEK 549 million (538). This increase is primarily due both to reletting in newly acquired properties and to rent increases in commercial properties; there were only limited rent increases in the case of residential properties. Operating costs increased by SEK 10 million as a result of a larger volume of properties as well as non-recurrent repairs, totalling about SEK 6 million, carried out during the first half of the year in conjunction with the sale in Malmö. Interest subsidies during the period amounted to SEK 7.5 million (10.8) at the same time as interest expenses have fallen sharply to SEK 229 million (272). The profit on property management for the first six months of the year was SEK 57.1 million (22.8), an increase of 150%. New millennium In preparation for the new millennium, Wallenstam has carried out an inventory of all its properties in terms of what components could be affected. The administrative systems were also inventoried with the result that only a few components need to be replaced or updated to be considered Y2K compliant. Property business On 30 June, Wallenstam sold all its remaining properties in Malmö to Heimstaden A/S. The selling price was SEK 508 million which is 8% higher than Wallenstam's internal valuation on 31-12-1998. An additional property in Malmö was sold earlier this year. The profit on property sales was SEK 56.9 million (-7.3). Investments Wallenstam acquired properties for SEK 107 million (137) during the period. In the third quarter, a commercial property in Orminge, Nacka, with a floor space of approx. 17,000 m2 was acquired. A total of SEK 190 million (121) was invested in building and construction during the period. The majority of these investments were made in Gothenburg and Stockholm. Property portfolio On 30-09-1999, Wallenstam's total floor space amounted to 1,033,856 m2, which is a decrease of about 14,000 m2 compared with the end of last year. The book value of the properties is SEK 5,669 million (5,824). No valuation of the properties is made during the business year; instead, Wallenstam carries out an internal valuation of its properties at the end of each year. The market value as of 30-09-1999, based on the valuation carried out at the end of last year and adjusted for this year's acquisitions, construction and sales, was SEK 7,055 million (7,268). The property value per share was SEK 373 (384). The decrease in the property portfolio is due to the sale of the properties in Malmö. The rental level of the properties (floor space) was 96% (98). This decrease is due to the fact that recently acquired commercial properties included a high proportion of vacant floor space which represents a large potential for profit increases. The demand for Wallenstam's residential accommodation remains high and the tenant turnover rate in the residential properties continues to drop in all regions. In Gothenburg, there is further scope for rent increases on commercial premises and the Company's assessment is that the potential for reducing the vacancy rate is very good. Financial position At the end of the period, Wallenstam's total volume of loans amounted to SEK 4,907 million (SEK 5,129). The average interest rate during the period fell by 0.84% to 5.82% (6.66%). On 30-09-1999, equity totalled SEK 834 million which is equivalent to SEK 44.06 (38.86) per share. The reported equity ratio was 14.0% (12.1) and the adjusted equity ratio, based on the valuation carried out on 31-12-1998, was 30.2% (29.0). On 30-09-1999, the Group's available liquid funds, including unutilised bank draft facilities, amounted to SEK 144 million (85). Net worth per share was SEK 117 (115). The share Wallenstam's Series B shares have been quoted on the OTC list at the Stockholm Stock Exchange since 1984. There are about 4,500 shareholders. The share price on 30-09-1999 was SEK 41.10. Accordingly, the reported equity, SEK 44.06/share, is valued at 93% and the net asset value of SEK 117/share is valued at 35%. During the period the Board of Directors of Wallenstam proposed that every twentieth share be redeemed at a price of SEK 95. Events after 30 September A 15,800 m2 office property was acquired in Gårda, Gothenburg, with 1 October as the take-over date. At the same time, two refurbished residential properties in Gothenburg with a total of about 4,700m2 were sold. In addition, agreements were signed covering the purchase of residential properties with a total of about 70,000 m2 of floor space in Råcksta, Vällingby, with 31 December as the take-over date. On this date, two residential properties (Stockholm and Gothenburg) and one office property in Gothenburg will be sold. Including these transactions, Wallenstam has so far this year purchased properties for SEK 579 million and sold properties for SEK 871 million. The future The full-year profit on property management operations is expected to substantially exceed the profit for 1998. The property business, including the transactions recently completed, is expected to show a profit in excess of SEK 140 million, Gothenburg, 16 November, 1999 Hans Wallenstam Managing Director This Interim Report has not been examined by Wallenstam's accountants. For further information, please contact Thomas Dahl, Director of Marketing and Information (phone +46-31 200 000 or +46-705 171 142). ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/11/16/19991116BIT00180/bit0001.doc The full report http://www.bit.se/bitonline/1999/11/16/19991116BIT00180/bit0002.pdf The full report