K L Ö V E R N. Year end report 2005

Transcription

1 Year end report 2005 K L Ö V E R N Rental revenues amounted to SEK 639 million (485) Net profit for the year increased to SEK 379 million (213) Earnings per share increased to SEK 3.27 (2.30) The Board of Directors proposes a dividend of SEK 1.00 per share (0.75) During the year 55 properties (64) have been acquired for SEK 2,108 million (1,476) and 36 properties (20) sold for SEK 557 million (347) Profit Net profit for the year was SEK 379 million (213). The result includes realised changes in value from property sales of SEK 25 million (30), unrealised changes in the value of properties of SEK 133 million (30) and revaluation of deferred tax claim of SEK 48 million (31). Net financial items amounted to SEK -181 million (-129). Cash flow and financial position The cash flow for the year amounted to SEK 31 million (-25). The equity ratio at the end of the year was 34.8 per cent, in comparison with 36.9 per cent at the beginning of the year. Shareholders equity was SEK 2,264 million, in comparison with SEK 1,701 million at the beginning of the year. Liquid funds were SEK 141 million (110) and interest-bearing liabilities were SEK 3,987 million (2,703). Rental revenues and property costs Rental revenues amounted to SEK 639 million (485) during the year, property costs were SEK 247 million (199) and the operating surplus amounted to SEK 391 million (286). Fourth quarter 2005 Net profit for the fourth quarter was SEK 112 million (76). The result includes realised changes in value from property sales of SEK 6 million (10) and unrealised changes in the value of properties of SEK 25 million (12). In connection with refinancing, one-off costs of SEK 20 million were charged to income for redemption of loans. The operating surplus was SEK 99 million (73), net financial items SEK -56 million (-35) and the cash flow was SEK 32 million (-112). Market and property holdings Klövern is a real estate company with local ties which actively develops commercial properties in large Swedish cities. Continuous adaptation of the property portfolio takes place by sales. Demand and new letting have increased in some of Klövern s market segments, compared both with the third quarter of 2005 and the fourth quarter of There have only been limited changes in rental levels although some market segments are showing a small increase. Net new letting during the year totalled SEK 10 million, of which almost SEK 4 million took place during the fourth quarter. 1

2 Property holdings as of December 31, 2005 Number of Area, thousand Rental value, Economic Type of premises properties sq.m. SEKm occupancy ratio, % Offices Industry/warehouse Retail Education/health care/sports facilities Restaurant/hotel Residential Other 1) Total 162 1, ) Refers to garages, parking spaces, sign spaces, sites and telecom masts. Contract structure as of December 31, 2005 Number of Year of maturity 1) contracts Area, thousand sq.m. Contract value, SEKm Share of contract value, % Commercial premises > Sum 1, Residential Sum excl. garage/parking 2, Garage/parking id i l 1, Total 3, ) The average lease period was 2.8 years as of December 31, Financing At the end of the year, interest-bearing liabilities totalled SEK 3,987 million, in comparison with SEK 2,703 million at the beginning of the year. The average interest rate was 3.5 per cent (5.1) and the average fixed-interest period 1.0 year (2.1). During the fourth quarter, refinancing of loans entailed one-off costs of SEK 20 million. Loans, including loans with floating interest rate, maturing during 2006 had at the end of the year, an average fixed-interest period of 49 days (170). The average duration of tied-up capital was 4.6 years (4.0). During the first six months of the year loans totalling SEK 929 million with floating interest have been provided with an interest cap at 4.0 per cent related to STIBOR 30 and 90 days respectively. SEK 330 million with interest cap has a maturity of four years and SEK 599 million a maturity of five years. As of 31 December 2005, the not-realised changes of Klövern s financial instruments, which are reported as net financial items, was SEK -2.7 million (-0.2). Loan structure as of December 31, 2005 Average Year of maturity SEKm interest rate, % % of total Floating 1) 2, Total 3, ) Loans with floating interest rate means loans with a maturity of 90 days or shorter. Of these, SEK 929 million have been provided with interest cap. 2

3 Acquisitions and investments During the year, 55 properties (64) have been acquired for SEK 2,108 million (1,476) with a total area of around 332,000 sq.m. The majority of the properties are located in Linköping and were acquired in connection with Klövern s purchase of major property holdings from ByggVesta and Diligentia. The year s total investments in reconstruction was SEK 67 million (69) relating to properties mainly in Borås, Karlstad, Linköping, Nyköping and Västerås. Property sales During the year, 36 properties (20) have been sold for a total sales price of SEK 557 million (347), which exceeded the most recently reported actual value by SEK 25 million (20). The properties sold, of approximately 95,000 sq.m, consist among others of eleven properties in northern Sweden, which have been sold to the newly established property company Diös. Other properties sold, of which approximately half are residential, are located in Eskilstuna, Halmstad, Kalmar, Kristianstad, Linköping, Uppsala, Vadstena, Västerås and Örnsköldsvik. Valuation of properties Every quarter, Klövern values 100 per cent of the portfolio. 25 per cent of the valuations are made by an external valuation company and the remaining valuations are made internally. This means that every property in the portfolio is externally valued during a rolling 12-month period. As of 31 December 2005, Klövern had externally valued 43 properties. The external valuations have been made by DTZ Sweden. Summary Valuation date 31 December 2005 Actual value SEK 5,968 million Calculation period Mainly five years (in longer important leases, the calculation period has been adapted to the duration of the lease) Direct yield Between 6.25 and 13.0 per cent Cost of capital Between 8.0 and 15.0 per cent Long-term vacancy Normally between 5 and 10 per cent Operation and maintenance costs Outcome for respective property and experience of comparable properties Inflation Two per cent (The Riksbank s inflation target) The unrealised change in value of the properties The actual value of Klövern s properties amounted to SEK 5,968 million on 31 December The unrealised increase in value during the fourth quarter of 2005 was SEK 25 million. The unrealised change in value for the full year 2005 was SEK 133 million. Valuation model Klövern applies valuation of earnings according to the cash flow model. The actual value of the property before deduction for selling expenses is obtained from the cash flow model. The forecast future operating surpluses are based on an analysis of each market and every property s future rental income, operation and maintenance costs and investments. An individual assessment of the market rent after the expiry of the lease has been made for every lease at the properties. Calculation of residual value is made by perpetual capitalisation of the estimated market net operating income during the final year of the calculation period for each property. The residual value has been calculated on the basis of the direct yield requirement set for each property. The internal valuations have been made in the same valuation program (FIA) as that used by the external valuers (DTZ Sweden). 3

4 Klövern s owners As of 31 December 2005, the number of shares in Klövern was 120,364,259 divided among approximately 27,900 owners. Number of shares, million Holding, % Owner Arvid Svensson Invest Lantbrukarnas Riksförbund Skandia Liv Investment AB Öresund Fortis Banque Luxembourg Länsförsäkringar Södermanland Robur Fonder HQ Fonder SEB Fonder Länsförsäkringar Fastighetsfonden Total largest shareholders Other shareholders Total all shareholders Proposed dividend The Board of Directors proposes a dividend of SEK 1.00 per share (0.75) be paid for the 2005 financial year, corresponding to a total of SEK 120 million. The proposal means that approximately 60 per cent of result excluding unrealised changes in value and tax, is to be distributed to the owners. Organization and personnel During 2005, the organization has grown apace with the expansion of the Group. At the beginning of the year, Klövern had 51 employees, which increased to 75 persons by the end of the year. Klövern is organized in nine local units based on the geographical location of the properties, with a head office with group functions in Nyköping. During the year, the units in Linköping and Norrköping, in particular, have been expanded in connection with property acquisitions and the unit in Sundsvall has been wound up after sale of properties. Central administration Costs for central administration totalled SEK 35 million (30) during the year. SEK 3 (2) million of this amount was allocated to a profit share trust for Klövern s employees. Parent company The role of the Parent Company is to handle overall Group functions and to own the Group s subsidiaries. The profit after tax in the parent company amounted to SEK 12 million (10). The parent company has received SEK 85 million (181) in group contributions from subsidiaries. As of 31 December, parent company liquid assets were SEK 15 million, compared to SEK 13 million at the beginning of the year. Net investments in shares, certificates and equipment amounted to SEK 1 million (1). Tax situation For the tax year of 2004, Klövern had tax loss carry forwards and a basis for depreciation for tax purposes, in addition to book, on equipment and goodwill totalling SEK 2,153 million. The deficit is mainly attributable to divestments of Swedish and foreign subsidiaries in the former IT consultancy operation. The basis for depreciation is largely attributable to fixed assets and goodwill in the foreign operations previously engaged in. After the end of the 2003 tax assessment period, Klövern filed a claim for a capital loss on the sale of a subsidiary for an additional amount of approximately SEK 5,000 million. The claim is therefore formally treated 4

5 as a request for reconsideration of the tax assessment for In response to an enquiry from Klövern, the Tax Agency has indicated that it will complete the investigation into the right of deduction during 2006 and thereby state the Tax Agency s view on the claim for deduction. In the financial statements for 2005, the Company reports a deferred tax claim of SEK 279 million, which is based on Klövern s assessment of the Company s current earning capacity. The deferred tax claim has thereby increased by SEK 48 million as of 31 December The calculation of the deferred tax claim is based on the current tax rate, 28 per cent, on the company s current annual profit before tax excluding unrealised changes in value on properties, SEK 199 million, for a period of five years. The deferred tax claim is attributable to the tax loss carry forwards and basis for depreciation for tax purposes, in addition to book, on equipment and goodwill. The deferred tax claim is subject to re-examination at each accounting year-end. Klövern s reported temporary differences between residual values of properties for tax purposes and actual value for properties amounts to SEK 425 million as of 31 December At a 28 per cent tax rate, the deferred tax liability for temporary differences amounts to SEK 119 million, which has been set off in Klövern s accounts against deferred tax claims of the same amount. Accounting principles This interim report has been prepared in compliance with IAS 34 Interim reporting, which is in accordance with the requirements made in the Swedish Financial Accounting Standards Council s recommendation RR 31 Interim reports for groups. The accounting principles applied in this interim report are those described in Klövern s annual report for 2004, note 19. It is stated there, among other things, that the International Financial Reporting Standards (IFRS) are applied from 2005 and that the comparison figures for 2004 have been recalculated. In accordance with the rules for transition to IFRS, the new principles for financial instruments (for Klövern interest caps and swaps) will only be applied in the parts of the accounts that refer to The most important effect of the transition to IFRS for Klövern relate to the reporting of properties. Properties are classified as management properties and valued at their actual value in the balance sheet with unrealised changes in value in the income statement. Previously, Klövern s properties were reported as current assets (inventories) at the lowest of acquisition value and actual value. Property sales are reported under the headline changes in value realised in the income statement, which is calculated as the difference between the sales price and the most recently reported actual value. Previously, the income from property sales has consisted of the difference between the sales price and the lowest of the acquisition price and the actual price of the properties. Income Statement Recalculation to IFRS, SEKm 2004 Jan - Dec Net profit according to previous accounting principles 193 Reported net income property sales, according to previous accounting principles -40 Changes in value properties, realised 30 Changes in value properties, not-realised 30 Changes in value financial instrument, not-realised 0 Net profit 213 Shareholders equity Recalculation to IFRS, SEKm Shareholders equity according to previous accounting principles 1, Reporting of properties at actual value Financial instruments at actual value 1) 0 0 Shareholders equity 1, ) Amounts to SEK -0.2 million. 5

6 Events after the end of the period Acquisition of properties Klövern has acquired two properties at a total purchase price of SEK 66 million. One of the properties are located in Borås and the other in Örebro. Transfer of possession have taken place during the first quarter of Sale of properties Klövern has sold three properties for SEK 92 million. Two of the properties are located in Västerås and one in Uppsala. The sales price exceeds the last reported actual value by SEK seven million, which will affect Klövern s profit for the first quarter of Prospects for the full year 2006 The result for the full year of 2006, excluding tax and changes in value, is expected to exceed SEK 250 million. Annual Report and Annual General Meeting The Annual Report for 2005 will be available at the Company s head office in Nyköping and at Klövern s website, from mid-march. The Annual General Meeting of Klövern AB will be held at 4:00 p.m., Wednesday, April 5, 2006 at Restaurangskolan, Gästabudsvägen 4, Nyköpings Strand in Nyköping. Calendar 2006 Annual Report 2005 March Annual General Meeting Wednesday April 5 Interim Report January March 2006 Thursday April 27 Interim Report January June 2006 Thursday July 20 Interim Report January September 2006 Thursday October 26 Reports are available at Klövern s website, where visitors may also subscribe to annual reports, interim reports and press releases. Nyköping 8 February 2006 Klövern AB (publ) Board of Directors Review report We have briefly reviewed this year end report according to the recommendation issued by FAR (the institute for the accountancy profession in Sweden). A review is considerably more limited in scope compared with an audit. Nothing has come to our attention which causes us to believe that this year end report does not comply with the requirements of the stock exchange and annual accounts legislation. Stockholm, 8 February 2006 Ernst & Young AB, Björn Fernström, Authorized Public Accountant For further information: Gustaf Hermelin, CEO, telephone , , gustaf.hermelin@klovern.se Anders Lundquist, CFO, telephone , , anders.lundquist@klovern.se Britt-Marie Einar, Information Manager, tel , , britt-marie.einar@klovern.se Klövern is a real estate company active in the Swedish real estate market by acquiring, developing and disposing of properties with a focus on high return on equity. As of December 31, 2005 the value of the properties amounts to appr. 6.0 billion Swedish kronor and rental revenue on an annual basis is approximately SEK 690 million. The Klövern share is listed at Stockholmsbörsen s O-list. Klövern AB (publ), P.O. Box 1024, SE Nyköping, Sweden Tel , Fax Organization number Registered office: Nyköping. Website: 6

7 Groups Income of Statements SEKm 3 months 3 months 12 months 12 months Oct-Dec Oct-Dec Jan-Dec Jan-Dec Rental revenues Property costs Operating surplus Changes in value properties, realised Changes in value properties, notrealised Depreciation of equipments Central administration Operating profit Financial incomes Changes in value financial items, notrealised Financial costs 1) Profit after financial items Current tax 2) 3) Deferred tax 4) Net profit for the year Earnings per share before dilution, SEK Earnings per share after dilution, SEK Number of shares outstanding at the end of the period before dilution, million Number of shares outstanding at the end of the period after dilution, million Average number of shares outstanding before dilution, million Average number of shares outstanding after dilution, million ) The amounts for the fourth quarter and the full year 2005 include one-off costs for redemption of loans at SEK 20 million and SEK 24 million. 2) Current tax on acquisition of subsidiaries in 2005 totals SEK 0.2 million. 3) Re-taxation of previous financial years entailed SEK 2.9 million in current tax for ) Revaluation of deferred tax claim affected the result for 2005 positively by SEK 48 million and for 2004 positively by SEK 31 million. 7

8 Consolidated Balance Sheets SEKm ASSETS Properties 5, ,193.1 Equipment Deferred tax claim Short-term receivables etc 1) Escrow accounts 2) Liquid funds TOTAL ASSETS 6, ,603.9 SHAREHOLDER S EQUITY AND LIABILITIES Share capital 2, ,701.0 Provisions Interest-bearing liabilities 3, ,703.4 Derivatives Accounts payable Other liabilities Accrued expenses and prepaid income TOTAL SHAREHOLDER S EQUITY AND LIABILITIES 6, , ) SEK 46 million of the amount consists of shares in Diös, which were received as part payment for property sales during the third quarter of ) Consists of amounts in escrow accounts as collateral for repayment of loans or to be used for financing of investments in properties. Groups changes in shareholder s equity, SEKm Shareholder s equity Shareholder s equity according to IFRS New issue Conversion of convertible debenture loan 49.0 Dividend Net profit for the period Shareholder s equity according to IFRS 1,700.9 New issue Dividend Net profit for the year Shareholder s equity according to IFRS 2,

9 Statements of Cash Flow for the Group SEKm Current operations 3 months 3 months 12 months 12 months Oct-Dec Oct-Dec Jan-Dec Jan-Dec Profit after financial items excluding depreciation and changes in value Realised changes in value, properties Income tax paid Cash flow from current operations before change in working capital Change in working capital Change in operating receivables 1) Change in operating liabilities Total change in working capital Cash flow from current operations Investment operations Sale of properties Acquisition of properties 2) , ,206.6 Acquisition of tangible fixed assets Change in amounts in escrow accounts Cash flow from investment operations , Financing operations Raised/repaid loans , Dividend Cash flow from financing operations , Cash flow for the period Liquid funds at the beginning of the period Liquid funds at the end of the period ) SEK 46 million of the amount consists of shares in Diös, which was received as part payment for property sales during the third quarter of ) The property acquisitions have been partly financed by issues in kind, totalling SEK 269 million during the first six months, 2005 and SEK 334 million for

10 Key financial indicators months 3 months 12 months 12 months Oct-Dec Oct-Dec Jan-Dec Jan-Dec Return on equity before dilution, % Return on equity after dilution, % Equity ratio at the end of the period, % Equity per share at the end of the period, SEK Interest coverage ratio, times Definitions Calculation of ratios Ratios based on average number of shares outstanding are calculated based on weighted averages. In reported ratios after dilution, due consideration was given to the effect of issued warrants and for 2004 effects of issued subordinated convertible debenture loan with an amount of SEK 50 million. Equity per share Reported equity in relation to the number of shares outstanding at end of period. Equity ratio Reported shareholders equity in relation to reported total assets at the end of the period. Earnings per share Profit for the period in relation to average number of shares outstanding. Interest coverage ratio Profit after financial items, plus financial costs, in relation to financial costs. Rental value Rental revenue plus estimated market rent for spaces not rented. Return on equity Profit after taxes in relation to average shareholders equity. 10