Interim Report January March 2002

Interim Report January–March 2002 2002:I 2001:I Profit for the period, SEK m 280 71 Income before tax, SEK m 155 99 Property sales net, SEK m ...
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Interim Report January–March 2002 2002:I

2001:I

Profit for the period, SEK m

280

71

Income before tax, SEK m

155

99

Property sales net, SEK m

20

10

Cash flow, SEK m

198

137

Operating profit, SEK m

299

271

Earnings per share, SEK

11.32

2.69

178.01

150.15

92.0

93.3

Shareholders’ equity per share, SEK Occupancy ratio area, %

● Sales and acquisitions Ten properties (8) have been sold for SEK 109 million (81) with a capital gain of SEK 20 million (10). The sales price exceeds the valuation as at 31 December 2001 by SEK 7 million, which corresponds to 7 per cent. 137 properties (2), with a total area of 803 000 sq.m. (13 100), have been acquired for SEK 5 072 million (81). ● Tornet acquires Amplion Tornet has acquired all shares in Amplion Fastigheter AB. Amplion’s income is included in the statement of income as from the acquisition date, 6 March 2002. ● Repurchase of Tornet’s shares Previously repurchased shares, 2 564 301, were used on acquisition of Amplion, which means that the number of outstanding shares in Tornet is 26 562 246. ● Events after the end of the period After the end of the period, one property has been sold at a price of SEK 6 million and a capital gain of SEK 3 million. ● Forecast profit for 2002 In 2002, profit before tax is expected to exceed SEK 500 million. The previous forecast was approximately SEK 500 million. Net profit for the year is expected to exceed SEK 500 million to some extent.

V:a Ekudden 6, Vaxholm

The Group The uncertainty about the future level of interest rates has increased lately and this has, of course, also affected uncertainty about property companies’ future costs and thereby also profits. Inflation, measured as CPI, has increased by one percentage point, to 2.9 per cent, from April 2001 to March 2002 inclusive. This increase means that CPI is nudging the ceiling of the interval specified by the Riksbank within which inflation is permitted to vary. Not only actual inflation but also forecast inflation is clearly over the target of 2 per cent. This has led to the Riksbank increasing the repo rate on two occasions during the spring to the present 4.25 per cent. Many forecasters believe that there may be a further increase during the year. Both short and long market interest rates have increased during the past six months. Stibor with a three-month maturity has increased by approximately 0.7 percentage points and the five-year interest rate slightly more since the lowest notation in November 2001. The new higher interest-rate level

Sales and income from property operations Rental income for the period totalled SEK 505 million (497). Operating and administration expenses amounted to SEK 212 million (231). The operating expenses include expenses for property tax at SEK 23 million (24) and expenses for central administration at SEK 6 million (5). The operating profit was SEK 299 million (271). The operating profit includes SEK 1 million (1) for properties sold during the period. The profit ratio defined as operating profit in relation to rental income for the period amounted to 59.1 per cent (54.6). Yield for the period totalled 7.6 per cent (7.5) excluding interest subsidies and central administration. Yield excluding interest subsidies, central and regional administration was 8.4 per cent (8.4).

The area and occupancy ratio of property holdings

affects the borrowing costs of property companies to a varying

During the period, new leases have been signed for 25 100

extent, depending on financing and the loan structure, among

sq.m. (17 400) and 25 700 sq.m. (18 300) have been renegoti-

other things.

ated. The occupancy ratio of the property holdings, measured

According to Tornet’s treasury policy, the loan portfolio is to

as area, was 92.0 per cent at the end of the period (93.3).

have an average fixed-interest period of two years with a permitted variation within the interval 18 to 36 months. The

The result of financial operations

fixed-interest structure is to be adapted for conceivable future events or interest rate changes in the market in relation to the

Net interest for the period totalled SEK –136 million (–141).

current interest rate risk exposure. Tornet’s average financing

The average rate of interest for interest-bearing liabilities for

interest rate has increased marginally since 31 December 2001.

the period amounted to 5.7 per cent (5.7) and the average fixed-interest period for interest-bearing securities was 24

Integration of Amplion The work of integrating Amplion’s staff in Tornet’s organisa-

months (32) at the end of the period.

Other operating income

tion is continuing. The integration of Amplion’s properties in Tornet’s subsidiaries is expected to be completed, at the latest,

The contract for the property Hägern Mindre 6 has been recog-

during the third quarter of 2002.

nised in revenue with a preliminary income of SEK 20 million during the period.

Consolidated income The Group’s profit has increased by SEK 209 million to SEK 280 million (71) for the period. Income before tax has increased by SEK 56 million and totalled SEK 155 million (99). Depreciation of SEK 43 million (37) has been charged to income and SEK 20 million (10) from property sales has been included in income. Depreciation according to plan has been made on properties at 1 per cent of the acquisition value excluding land value and write-down and at 5 per cent on capitalised value-enhancing measures. Amplion’s income from acquisition date 6 March 2002 has been included in the statement of income in accordance with the Swedish Financial Accounting Standards Council’s recommendation 1:00.

2

Interim Report January–March 2002

Property sales During the period, 10 properties (8) have been sold at a book value of SEK 89 million (71). These sales have produced a capital gain of SEK 20 million (10). The sales price exceeds the market value on valuation on 31 December 2001 by SEK 7 million, which corresponds to 7 per cent. After the end of the period, one property has been sold at a price of SEK 6 million and a capital gain of SEK 3 million. More information on properties sold is available on Tornet’s website, www.tornet.se.

Properties sold 2002 (SEK m) No. of properties

Lettable area, sq.m.

Book value

Operating profit *

Rental value

Stockholm Gothenburg Öresund Uppsala Linköping Västerås Norrköping Karlstad Region Norr Rest of Sweden** Abroad

— 1 3 — 1 1 — 2 — 2 —

— 300 9 000 — 900 1 000 — 900 — 15 000 —

— 2 55 — 3 2 — 5 — 22 —

— 0 1 — 0 0 — 0 — 0 —

— 0 8 — 1 0 — 1 — 5 —

Total

10

27 100

89

1

15

Area

*) Operating profit for sold properties that are included in the result for the period. **) The properties are managed in three management units: Växjö, Borås and Uddevalla.

Property acquisitions During the period, 137 properties (2) have been acquired for a total purchase price of SEK 5072 million (81). The purchase price is based on a preliminary acquisition analysis regarding the acquisition of Amplion. More information on acquired properties is available on Tornet’s website, www.tornet.se.

Properties acquired 2002 (SEK m) Area Stockholm Gothenburg Öresund Uppsala Linköping Västerås Norrköping Karlstad Region Norr Rest of Sweden** Abroad Total

No. of properties

Lettable area, sq.m.

Purchase price***

Operating profit *

Rental value

16 25 20 4 — 3 5 4 34 26 —

111 600 126 300 107 900 20 600 — 17 100 32 500 22 700 195 100 169 200 —

841 1 089 930 153 — 99 183 168 1 013 596 —

4 5 5 1 — 1 1 1 6 5 —

97 136 115 20 — 15 27 22 161 96 —

137 803 000

5 072

29

689

*) Operating profit for acquired properties that are included in the result for the period. **) The properties are managed in three management units: Växjö, Borås and Uddevalla. ***) Based on a preliminary acquisition analysis.

Galleria Domino, Johannes 21, Norrköping

Interim Report January–March 2002

3

The Group Investments

Personnel

During the period, SEK 94 million (133) has been invested in

The average number of employees in the Group during the

existing holdings. The investment volume includes investments

period was 267 (242), of which 110 were women (93) and 157

in property development of SEK 63 million (74). Tornet’s two

men (149). Ten persons were employed abroad (0).

remaining properties in Germany will undergo a period of property development, which will entail a lower occupancy ratio and a negative effect on operating profit and yield from these properties.

Parent company The parent company’s income after net financial items for the period was SEK 14 million (13). The parent company’s liquidity at the end of the period was

Investments 2002 (SEK m)

SEK 157 million (79) including unused overdraft facilities of 2002

2001

Value-enhancing investments Property development

31 63

59 74

Total

94

133

SEK 156 million (79). There were 20 employees (18) in the parent company.

Taxes SEK 125 million has been added to income for a deferred tax

Financial position Shareholders’ equity amounted at the end of the period to SEK 4 728 million (3 945). The equity ratio was 23.5 per cent (25.7) and the adjusted equity ratio 31.2 per cent (34.9). The Group’s interest-bearing liabilities amounted at the end of the period to SEK 13 898 million (9 933).

asset for increased loss carry forwards, net. Loss carry forwards in the Group amount to SEK 2 770 million (1 495). The Group’s estimated loss carry forwards reduced by the calculated basis for deferred tax amounts to SEK 660 million (495).

Liquidity in the Group amounted to SEK 402 million (222) at the end of the period, including unused overdraft facilities of SEK 164 million (80).

Accounting principles The Company complies with the current recommendations of the Swedish Financial Accounting Standards Council. The accounting principles applied are unchanged in comparison

Loan structure as at 31 March 2002 Period of fixed interest rate

SEK Average SEK m interest, %

Euro Average SEK m interest, %

Total Average SEK m interest, %

2002 2003 2004 2005 2006 2007–

3 386 5 244 1 926 1 356 951 582

6.4 5.0 5.9 5.6 6.4 7.2

250 — 203 — — —

4.5 — 4.9 — — —

3 636 5 244 2 129 1 356 951 582

6.3 5.0 5.8 5.6 6.4 7.2

Total

13 445

5.7

453

4.7 13 898

5.7

with previous years. More information is available in the annual report on Tornet’s website, www.tornet.se.

Forecast profit for 2002 In 2002, profit before tax is expected to exceed SEK 500 million. The previous forecast was approximately SEK 500 million. Net profit for the year is expected to exceed SEK 500 million to some extent.

Cash flow

Stockholm, 16 May 2002

The cash flow from operations totalled SEK 198 million (137)

Fastighets AB Tornet (publ)

during the period. Sverker Lerheden

Cash flow (SEK m) Operating profit before depreciation and write-downs Financial items Actual tax paid Cash flow from operations

4

Interim Report January–March 2002

Managing Director Jan–March 2002

Jan–March 2001

333 –135 0

276 –139 0

198

137

This report has not been examined by the company’s auditors.

Jan–March 2002

Jan–March 2001

Jan–March 2000

12 months April 2001–March 2002

Full year 2001

Property operations Rental income Operating expenses Property tax Operating profit Depreciation Gross income, property operations Central administration expenses Income, other business

505 –183 –23 299 –43 256 –6 20

497 –202 –24 271 –37 234 –5 —

484 –206 –24 254 –38 216 –5 —

1 941 –756 –82 1 103 –154 949 –21 20

1 933 –775 –83 1 075 –148 927 –20 —

Items affecting comparability Property sales, net Reversal of write-downs of properties Write-downs of properties Other items affecting comparability Operating income Interest subsidies Net interest income Income before tax Actual tax paid Deferred tax Net profit for the period

20 — — — 290 1 –136 155 0 125 280

10 — — — 239 1 –141 99 0 –28 71

50 — — 0 261 2 –133 130 –1 –36 93

318 245 –133 –6 1 372 4 –530 846 –104 78 820

308 245 –133 –6 1 321 4 –535 790 –104 –75 611

Statement of income (SEK m)

Earnings per share (SEK)

11.32

2.69

9.02

32.79

24.01

No. of shares, average

24 738 743

26 506 085

29 513 606

25 004 670

25 440 453

No. of shares at the beginning of the period

23 997 945

26 562 246

29 513 606

26 272 161

26 562 246

2 564 301

–290 085



290 085

–2 564 301

26 562 246

26 272 161

29 513 606

26 562 246

23 997 945

Balance sheet (SEK m)

2002-03-31

2001-03-31

2000-03-31

2002-03-31

2001-12-31

Properties Other assets Cash and bank Total assets Equity Interest-bearing liabilities Other liabilities Total equity and liabilities

19 032 868 238 20 138 4 728 13 898 1 512 20 138

14 429 795 142 15 366 3 945 9 933 1 488 15 366

14 523 783 122 15 428 4 200 9 560 1 668 15 428

19 032 868 238 20 138 4 728 13 898 1 512 20 138

14 021 843 105 14 969 4 051 9 652 1 266 14 969

Jan–March 2002

Jan–March 2001

Jan–March 2000

April 2001–March 2002

Full year 2001

4 051 397 0 — 280 4 728

3 918 –45 1 — 71 3 945

4 107 — 0 — 93 4 200

3 945 73 –5 –105 820 4 728

3 918 –369 –4 –105 611 4 051

No. of repurchased/restored shares No. of shares at the end of the period

Equity (SEK m) Equity at the beginning of the period Repurchase/restoration of shares Exchange rate difference Dividend Net profit for the period Equity at the end of the period

Cash-flow statement (SEK m)

Jan–March 2002

Jan–March 2001

Jan–March 2000

April 2001–March 2002

Full year 2001

Cash flow from operating activities Items not included in the cash flow Cash flow from change in working capital Cash flow from operating activities Cash flow from investing activities

198 94 134 426 –609

137 9 8 154 445

168 –151 147 164 –243

786 –125 –325 336 –356

724 –209 –451 64 699

Cash flow from financing activities Cash flow for the period Exchange rate difference in liquid funds Liquid funds at end of the period

315 132 1 238

–584 15 0 142

70 –9 0 122

109 89 7 238

–792 –29 7 105

Interim Report January–March 2002

5

The Group Book value and lettable area 31 March 2002 Lettable Occupancy area, sq.m. ratio, %

No. of properties

Book value** SEK m

Rental income, SEK m

Jan–March 2002 Rental value* Operating SEK m profit, SEK m

Yield, %

Stockholm Gothenburg Öresund Uppsala Linköping Västerås Norrköping Karlstad Region Norr Rest of Sweden*** Sweden Abroad

103 86 36 17 78 30 56 30 49 35 520 3

663 100 396 900 318 100 152 900 249 100 301 500 330 600 112 800 233 200 228 300 2 986 500 89 500

93.2 91.2 94.4 98.4 94.6 96.9 92.8 89.7 88.5 81.8 92.4 77.2

4 635 2 407 2 309 1 354 1 627 1 755 1 453 935 1 160 794 18 429 603

127 57 62 36 49 50 52 24 17 16 490 15

137 61 64 36 53 52 56 26 18 19 522 20

80 33 37 23 33 28 28 14 8 8 292 7

7.8 8.1 8.7 7.4 8.0 6.5 8.4 6.9 7.2 8.4 7.8 4.6

Total

523

3 076 000

92.0

19 032

505

542

299

7.6

No. of properties

Lettable area, sq.m.

Occupancy ratio, %

Book value SEK m

Rental income, SEK m

Rental value* SEK m

Operating surplus, SEK m

Yield, %

Housing Offices Shops Industrial/storage Other Sweden Abroad

165 165 34 110 46 520 3

704 900 1 006 500 180 000 719 200 375 900 2 986 500 89 500

97.4 90.8 95.8 87.8 94.4 92.4 77.2

4 184 8 098 1 555 2 387 2 205 18 429 603

138 172 64 64 52 490 15

143 186 67 72 54 522 20

71 108 41 42 30 292 7

7.5 7.6 8.6 9.7 6.4 7.8 4.6

Total

523

3 076 000

92.0

19 032

505

542

299

7.6

Jan–March 2002

Jan–March 2001

Jan–March 2000

April 2001– March 2002

Full year 2001

7.6 8.4 59.1 92.0

7.5 8.4 54.6 93.3

7.0 7.8 52.4 91.8

7.6 8.5 56.8 92.0

7.6 8.5 55.6 93.2

198 23.5 31.2 2.9 71.0 210.1 2.1 5.7 24 1.8 1.7 6.4

137 25.7 34.9 2.5 67.2 102.6 1.7 5.7 32 1.7 1.6 1.8

168 27.2 33.1 2.2 65.0 144.7 2.0 5.5 36 1.9 1.7 2.2

786 23.5 31.2 2.9 71.0 153.2 2.5 5.7 24 8.6 7.9 18.9

724 27.1 36.7 2.3 66.9 131.1 2.4 5.7 27 9.7 8.9 15.3

26 562 246 26 272 161 29 513 606 26 562 246 164.00 151.00 122.50 164.00 11.32 2.69 3.15 32.78 178.01 150.15 142.32 178.01 716.51 549.21 492.08 716.51 8.00 5.16 5.67 31.43 3.62** 14.03** 9.71** 5.00 5.12** 7.32** 5.40** 5.22 13.42** 12.35** 10.92** 12.76

23 997 945 139.00 24.01 168.80 584.24 28.47 5.79 4.88 9.32

*) Rental value for the period, of which SEK 2 million is for rental discounts. **) Based on a preliminary acquisition analysis for properties acquired through Amplion. ***) The properties are managed in three management units: Växjö, Borås and Uddevalla.

Key ratios Property-related key ratios Yield, excluding central administration, % Yield, excluding central and regional administration, % Profit ratio, % Occupancy ratio area, % Financial key ratios Cash flow, SEK m Equity ratio, % Adjusted equity ratio, % Debt-to-equity ratio, times Debt-to-book value ratio, properties, % Self-financing ratio, % Interest coverage ratio, times Average interest on interest-bearing liabilities, % Fixed-interest period, months Return on capital employed, % Return on total capital, % Return on equity, % Data per share Number of shares at end of the period Share price at end of the period, SEK Profit, SEK * Equity, SEK Book value of properties, SEK Cash flow, SEK * P/E-ratio * P/CE-ratio * P/Ebdit-ratio *) Adjusted to take into consideration the number of shares. **) Adjusted to full-year value.

6

Interim Report January–March 2002

Ownership and the Tornet share Ownership According to VPC/SIS Ägarservice as per 31 March 2002, the largest shareholders and their percentage share of votes and equity were:

Shareholder

No. of shares

% of votes and capital

Change %-points 2002

Alecta Fidelity funds Perry Capital Ltd Lansdowne Partners Ltd Franklin-Templeton funds Highfields funds Skandia Robur funds Harbert Group SHB Livförsäkring AB Kommunals Pensionsstiftelse PVF Nederland N.V. Skandia Carlson funds Kommunalarbetareförbundet Marianne Petersson Länsförsäkringar funds

3 420 914 2 625 756 2 460 022 2 006 396 1 583 230 1 483 186 1 461 849 758 100 483 816 350 000 325 270 313 000 312 200 307 270 300 000 178 108

12.9 9.9 9.3 7.6 6.0 5.6 5.5 2.9 1.8 1.3 1.2 1.2 1.2 1.2 1.1 0.7

+7.9 ±0.0 ±0.0 ±0.0 ±0.0 ±0.0 +0.3 +1.0 +1.8 ±0.0 ±0.0 ±0.0 ±0.0 ±0.0 ±0.0 +0.1

No. of shares

% of votes and capital

Change %-points 2002

SPP Livförsäkring AB 144 517 Länsförsäkringar 125 413 Bertil Hållsten & companies 121 500 Banco funds 97 200 SHB funds 81 779 DFA funds 58 350 Odin funds 55 000 Bengt Mattsson 49 573 Other foreign owners and managers 3 278 876 Other Swedish shareholders 4 180 921 Total 26 562 246 Swedish owners 12 214 614 Foreign owners 14 347 632

0.5 0.5 0.5 0.4 0.3 0.2 0.2 0.2 12.2 15.6 100.0 46.0 54.0

±0.0 ±0.0 ±0.0 +0.4 ±0.0 ±0.0 ±0.0 ±0.0 ±0.0 –11.5 0.0 –1.8 +1.8

Shareholder

Share price development Tornet

Afv General Index

Carnegie Property Index

No. of shares traded (000s) (incl. subsequent notification)

200

150

8 000 100 6 000 4 000 2 000 50 1996

1997

1998

1999

2000

2001

2002

Total return Tornet incl. dividend

Six Return Index incl. dividend

Afv Property Index incl. dividend

250 200

150

100

50 1996

1997

1998

1999

2000

2001

2002 (c) SIX Findata

Interim Report January–March 2002

7

Definitions Adjusted equity ratio

Shareholders equity plus minority interest and surplus value in properties at the end of the period in relation to total assets plus surplus value in properties at the end of the period. Cash flow

Income before tax minus paid tax plus depreciation and write-downs. Debt ratio, properties

Net debt in relation to the book value of the properties. Debt-to-equity ratio

Net debt in relation to shareholders’ equity plus minority interest at the end of the period. Earnings per share

Profit in the period in relation to the average number of shares. Equity ratio

Shareholders’ equity plus minority interest at the end of the period in relation to total assets. Interest coverage ratio

Income before tax plus interest expense minus interest subsidies in relation to interest expense minus interest subsidies. Net debt

Interest-bearing liabilities minus interest-bearing assets. P/CE-ratio

Share price at the end of the period in relation to cash flow per share. P/E-ratio

Share price at the end of the period in relation to earnings per share.

P/Ebdit-ratio

Market capitalisation at the end of the period plus net debt minus minority interest in relation to operating profit excluding financial items affecting comparability plus depreciation. Profit ratio

Operating profit in relation to rental income. Properties’ book value per share

The properties’ book value in relation to the number of shares at the end of the period. Rental value

Rental value is calculated as the contracted rent on an annual basis plus estimated rent on unlet premises. Return on capital employed

Income before tax plus interest expenses minus interest subsidies in relation to average total assets minus average non-interest-bearing liabilities. Return on equity

Net profit for the period in relation to average shareholders’ equity. Return on total capital

Income before tax plus interest expenses minus interest subsidies in relation to average total assets. Self-financing ratio

Cash flow in relation to investments in existing holdings. Shareholders equity

Reported shareholders equity. Shareholders’ equity per share

Shareholders’ equity per share in relation to the number of shares at the end of the period. Yield

Operating profit in relation to properties’ average book value.

Financial information from Tornet during 2002

Fastighets AB Tornet (publ) Visitors Karlsrovägen 2A, Danderyd Correspondence Box 623, SE-182 16 Danderyd Telephone +46 8-544 905 00 • Telefax +46 8-544 905 30

Fastighets AB Tornet (publ) has its registered office in Stockholm. Registration No. 556256-1208

Contact persons

Sverker Lerheden, Managing Director Telephone +46 8-544 905 00 • E-mail [email protected] Britt-Marie Einar, Information and IR Manager Telephone +46 8-544 905 08 alt. +46 70-576 92 08 E-mail [email protected]

Solberg. Printed by: Gothia Offset.

• Interim Report January–June 2002: 21 August 2002 • Interim Report January–September 2002: 14 November 2002 This Interim Report is also available on www.tornet.se