Interim Report 1 January - 31 March, 2000

Interim Report 1 January - 31 March, 2000 (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 31-12-1999.) * The profit after tax improved sharply to SEK 35.1 million (3.7) * The property management profit was more than SEK 30 million * The profit per share increased to SEK 1.85 (0.20) The profit after tax increased sharply to SEK 35.1 million (3.7), an improvement of SEK 31.4 million. The profit on property operations and a higher operating surplus are the main reasons behind this improvement. The profit from property management rose to SEK 4.7 million (3.9), an improvement of 20%. Proportionally speaking, the profit for the first quarter is lower than for the other three quarters. This is a consequence of higher operating costs compared with the following quarters. Interim Report 1 January - 31 March, 2000 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. Since 1996, Wallenstam's objective has been to increase its profit from property management, before depreciation, to SEK 100 million by the year 2000. Wallenstam's assessment is that the necessary conditions exist for this target to be reached. Profit The profit after tax rose sharply to SEK 35.1 million (3.7), which is equivalent to a profit per share of SEK 1.85 (0.20). The profit on property operations accounts for most of this profit increase. Property management The Group's rental income during the period increased to SEK 187 million (184). This increase is primarily due both to reletting in newly acquired properties and to rent increases in commercial properties. The profit margin rose to 56.1% (55.2). Interest subsidies during the period amounted to SEK 0.7 million (3.3) at the same time as interest expenses dropped to SEK 76 million (82). The profit on property management after net financial items, but before depreciation on properties, was SEK 13.1 million (11.1). The profit on property management after net financial items (and before depreciation on properties) amounted to SEK 4.7 million (3.9). The profit for the first and fourth quarters is substantially lower than for the second and third quarter as operating costs, particularly heating costs, are higher during the winter months. Property business During the period, Wallenstam sold three properties for a total of SEK 71 million (22). The profit posted by the property operation improved sharply to SEK 30.7 million (0.2). Two of the properties were sold to tenant-owners' associations, a project in Gothenburg and a property in Stockholm. The improved profit is mainly due to Wallenstam having taken advantage of the large demand for tenant- owner apartments which generated larger profits on the sale of properties. The total selling price was 77% higher than the value of the properties according to Wallenstam's internal valuation principles. Investments During the first quarter, Wallenstam acquired two office properties in Gothenburg for a total of SEK 50 million (42). A total of SEK 63 million (81) was invested in building and construction during the period. The majority of these investments were made in Gothenburg and Stockholm. Property portfolio On 31 March, Wallenstam's total floor space amounted to 1,081,222 m2, which is an increase of about 3,000 m2 compared with the end of last year. The book value of the properties is SEK 6,028 million (5,962). 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 on 31 March, based on the valuation carried out at the end of last year and adjusted for this year's acquisitions, construction and sales, was SEK 7,482 million (7,441). The property value per share was SEK 395 (393). The rental level of the properties (floor space) was 95% (95). The demand for Wallenstam's residential accommodation and commercial premises remains high. 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 5,159 million (SEK 5,121). Despite the increase in interest rates during the first quarter of this year, the average interest rate was limited to 5.94% (5.82%). On 31 March, equity totalled SEK 940 million, which is equivalent to SEK 49.63 (47.78) per share. The adjusted equity ratio, based on the valuation carried out on 31-12-1999, was 30.8% (30.8). As a result of the redemption of shares carried out at the beginning of May, the reported equity ratio dropped to 13.6% (12.1). On 31 March, the Group's available liquid funds, including unutilised bank draft facilities, amounted to SEK 136 million (167). Net worth per share was SEK 126 (126). 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 31 March was SEK 43.10. Accordingly, the reported equity is valued at 87% and the net asset value of SEK 126/share is valued at 34%. After the completion of the share redemption program on 12 May, the number of shares amounts to 17,990,563. Wallenstam's Board of Directors has proposed to the Annual General Meeting that it be given a mandate, up until the next annual general meeting, to redeem a maximum of 10% of the outstanding shares. Environment The preliminary study of the environmental impact of our business operations has resulted in a draft environmental policy. This environmental policy will form the basis of continuing intensive work on environmental questions. The future The profit objective for 2000 is a property management profit of SEK 100 million before depreciation. Wallenstam is currently working on further developing and refining its business concept, including its strategy and objectives for the next 5-year period. This business concept will be presented in the autumn. The full-year profit on property management operations is expected to substantially exceed the profit for 1999. Gothenburg, 23 May, 2000 Hans Wallenstam Managing Director This Interim Report has not been examined by Wallenstam's accountants. For further information, please contact Lennart Ekelund, Chief Financial Officer, tel. +46-31 200 000, or Anders Berntsson, Deputy Managing Director, tel. +46-31 200 000. INCOME STATEMENT SEK million 01-01-2000- 01-01-1999-01-01-1999- 31-03-2000 31-03-1999 31-12-1999 PROPERTY MANAGEMENT Rental income 187.0 184.5 727.7 Operating -82.2 -82.6 -292.5 expenses Operating surplus 104.8 101.9 435.2 Depreciation, properties -8.4 -7.2 -29.3 Gross profit 96.5 94.7 405.9 Management and -16.8 -14.4 -60.6 administrative expenses Operating profit 79.7 80.3 345.3 Interest 1.8 8.6 income Interest 0.7 3.3 8.7 subsidies Interest expenses -75.6 -81.5 -301.6 Financial -74.9 -76.4 -284.3 items, net Profit from property 4.7 3.9 61.0 management PROPERTY OPERATION Sales 71.0 22.0 871.2 Cost of properties, sold -39.3 -20.8 -741.0 Administrative expenses -1.0 -1.0 -5.0 Profit from property 30.7 0.2 125.2 operations Profit before tax 35.5 4.1 186.2 Tax -0.4 -0.4 -1.9 Profit after tax 35.1 3.7 184.3 BALANCE SHEET SEK million 31-03-2000 31-03-1999 31-12-1999 ASSETS Properties under 6028 5922 5962 management Other fixed assets 89 51 89 Current assets 204 219 215 Total assets 6321 6192 6266 EQUITY AND LIABILITIES Equity 940 739 904 Provisions 21 20 21 Interest-bearing 5159 5243 5121 liabilities Non nterest-bearing 201 190 220 liabilities Total equity and 6321 6192 6266 liabilities CASH-FLOW ANALYSIS SEK million 01-01-200001-01-1999-01-01-1999- -31-03-2000 31-03-1999 31-12-1999 Operating surplus 109 102 454 from property management Management and -16 -13 -59 administrative expenses excluding depreciation Interest 1 3 9 subsidies Financial items, -85 -80 -296 net, excluding interest subsidies Dividen - - -14 d Cash flow before change in 9 12 94 working capital and investments Change in working 10 -3 10 capital Cash flow before 19 9 104 investments/sales and financing Investments/Sales Investments, -99 -122 -792 properties Sale of 70 1 693 properties Net investment, -1 -1 -2 equipment Total, -31 -122 -100 investments Financi 25 114 8 ng Change in liquid 13 1 12 funds KEY FIGURES 31-03- 31-03- 31-03- 31-12- 2000 1999 1998 1999 Profit after tax, SEK 35.1 3.7 -9.1 184.3 million Book value of 6028 5922 5683 5962 properties, SEK million Market value of 7482 7366 7049 7441 properties, SEK million* Profit margin, 56.1 55.2 55.0 59.8 % Direct rate of return 7.5 7.7 7.7 7.6 of properties, %** Loan level, % 69 71 72 69 Equity ratio, 14.9 11.9 11.8 14.4 % Adjusted 30.8 28.6 28.1 30.8 equity ratio, % Average interest rate 5.94 6.11 7.28 5.82 on accounting date, % Return on reported 25.6 5.9 8.3 22.5 equity, %** Return on total equity, 8.2 6.4 7.4 7.9 %** Rental level - floor 95 96 98 95 space, % 2000-1999-03- 1998-1999-12- 03-31 31 03-31 31 Per share data (SEK) Profit on property 0.69 0.59 -0.03 4.77 management before depreciation Profit after 1.85 0.20 -0.48 9.74 tax P/E ratio, 4 21 17 5 times** Value of properties 395 389 372 393 according to valuation* Reported 49.63 39.05 37.45 47.78 equity Net worth* 126 115 110 126 Share price 43.10 43.50 51.00 47.50 Share price / net 34 38 46 38 worth, % Number of 18930 18930 18930 18930 shares, 1,000s * Based on the valuation carried out on 31-12- 1999 and adjusted for property acquisitions and sales during the period. ** Interim figures are based on a rolling 12-month period. DURATION OF FIXED-TERM LOANS / AVERAGE INTEREST AS OF 31-03-2000 SEK million Debt Average Share interest rate Short-term loans 2 452 4.35% 47% Long-term loans, 2000 528 8.43% 10% Long-term loans, 2001 359 10.47% 7% Long-term loans, 2002 423 7.04% 8% Long-term loans, 2003 656 6.59% 13% Long-term loans, 2004 383 6.23% 8% Long-term loans, 2005- 358 5.82% 7% Total 5 159 5.94% The loan portfolio contains only loans in SEK STRUCTURE OF PROPERTY HOLDINGS ON 31-03-2000 Rentable floor space, sq. m. Residential Office ShopsInd./war Others Total ehouse Gothenbur 177 600 11 55410 858 3 62412 538 216 174 20% g Stockholm 342 827 16 219 8 396 5 23931 325 404 006 37% Helsingbo 119 871 6 538 8 915 3 053 3 520 141 897 13% rg Commercia 3 610 161 208 9 975 94 72849 624 319 145 30% l premises Total 643 908 195 51938 144 106 64497 007 1 081 222 60% 18% 3% 10% 9% 100% Property acquisitions in 2000 Year built/ResidentialCommercial Total Property Street address refurbished sq. m. sq. m. sq. m. designation Gothenburg Bagaregården Byfogdegatan 11 1942/1986 - 4 447 4447 56:1 Lorensberg Lennart 1926 - 1500 1500 17:32 Torstenssongatan 11 Total: 0 5 947 5 947 Property sales in 2000 Year built/ResidentialCommercial Total Property Street address refurbished sq. m. sq. m. sq. m. designation Gothenburg Heden 25:2 * Engelbrektsgatan 1929 868 90 958 65 Brämaregården Gamla Tuvevägen 1955 - 1 082 1 082 38:6 4 Masthugget Plantagegatan - - - 1:6-9 17/Värmlandsgata n 26 Stockholm Hägerberget 57 Kammakargatan 1931 1 542 242 1 784 14/Döbelnsgatan 2 Total: 2 410 1 414 3 824 * Property sold after 31-03-2000 OWNERSHIP STRUCTURE, 31- Number (1,000s) 03-2000 A shares B shares Capit Votes al Hans Wallenstam with 1 150 000 850 000 10.6% 42.2% companies SEB fonder 1 415 7.5% 4.8% 034 6:e AP-fonden 1 292 6.8% 4.4% 600 Sjögren family with 1 398 7.4% 4.8% companies 175 Berntsson family with 1 186 6.3% 4.1% companies 300 Apotekens 920 000 4.9% 3.1% Pensionsstiftelse Eskil Johannesson family 431 800 2.3% 1.5% with companies Brandström family with 362 956 1.9% 1.2% companies Lennart Wallenstam family 350 722 1.9% 1.2% Försäkringsbolaget SPP 250 000 1.3% 0.9% Länsförsäkringar Wasa Liv 215 000 1.1% 0.7% Morgan Stanley intl ldn 200 000 1.1% 0.7% Nordbanken 197 622 1.0% 0.7% Chalmers Tekniska 102 550 0.5% 0.4% Högskola, Stiftelsen Other approx. 4,600 7 141 37.7% 24.3% owners 773 Total: 1 150 000 17 780 100.0 100.0% 232 % DEFINITIONS Loan level Interest-bearing liabilities as a percentage of the market value of the properties. Operating surplus Rental income less operating expenses including property tax. Direct rate of return of properties Operating surplus as a percentage of the weighted average book value of the properties. Market value of properties The assessed real value of the property portfolio according to an internal valuation. Profit from property management Profit after net financial items but before property sales, i.e. profit before tax on property management, Adjusted profit from property management before depreciation Profit from property management including depreciation on properties but excluding income and expenses of a non-recurring nature. Adjusted equity ratio Net asset value in relation to capital employed plus surplus value in. Cash flow per share Net worth in relation to capital employed plus surplus value in properties. P/E ratio The share price at the end of the period in relation to the profit after tax per share. Profit per share after tax Profit after tax in relation to the number of shares. Profit on reported equity Profit after tax in relation to average reported equity. Profit on total equity Profit before tax plus interest expenses in relation to average capital employed. Equity ratio Reported equity in relation to capital employed. Net asset value Reported equity plus surplus value in properties. Rental level - floor space Rented floor space in relation to total floor space. Profit margin Operating surplus as a percentage of rental income. Surplus value in properties Difference between the market value and book value of the properties. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/05/23/20000523BIT00250/bit0001.doc http://www.bit.se/bitonline/2000/05/23/20000523BIT00250/bit0002.pdf