Press Release
February 19, 2002
Kungsleden’s year-end report: Yet another record!
•Pretax profit amounted to SEK 380 million (316), corresponding to SEK 20.06 (16.69) per share.
•Proposal that the dividend be raised to SEK 10.50 (9.00) per share, an increase of 17 percent.
•The operating surplus rose 38 percent to SEK 638 million (461).
•Forecast for 2002 fiscal year: pretax profit of SEK 450 million.
Kungsleden’s year-end report for the 2001 fiscal year was released today.
“Kungsleden reports yet another record-breaking year. In 1997, Kungsleden’s real estate portfolio was worth almost SEK 1.8 billion, generated an operating surplus of just over SEK 100 millionand resulted in an annual loss. Five years later, the Group has a real estate portfolio with a book value of nearly SEK 9.5 billion, which yielded a pretax profit of SEK 380 million in 2001. Compared with 2000, the operating surplus rose by SEK 177 million or 38 percent. During 2001, 103 properties were divested for a total sales price of SEK 1,057 million and total capital gains of SEK 100 million, at the same time as property acquisitions amounted to SEK 3,877 million. The number of municipalities in which Kungsleden is active was reduced in 2001, while the share accounted for by major cities increased and a program of housing for the elderly was introduced. During 2002, we will increase the focus on housing for the elderly and continue to acquire commercial properties. We still see considerable opportunities for safeguarding a high and stable yield, in line with our business concept,” says Jens Engwall, Kungsleden’s Chief Executive Officer.
For more information, please contact:
Jens Engwall, Chief Executive, tel: +46 (0)8 503 05204, mobile +46 (0)70 690 65 50
Johan Risberg, Deputy Chief Executive, tel: +46 (0)8 503 05206, mobile: +46 (0)70 690 6565
Kungsleden's business concept is to own and manage properties with a high and stable long-term property yield. Kungsleden is an active participant in the change processes on the Swedish property market, by utilizing and enhancing its competencies in structuring heterogeneous property holdings. This implies Kungsleden's property holding frequently changing through acquisitions and disposals. Kungsleden's property portfolio comprises 455 properties with a book value of nearly SEK 9,5 bn. The holding is located in a total of 129 municipalities, and is concentrated on the Swedish provinces of Götaland and Svealand. Kungsleden has been quoted on the Stockholm Stock Exchange O-list
since 14 April 1999.
Financial Statement
1 January—31 December 2001
•Kungsleden’s profit before tax was SEK 380 m (316 m), equivalent to SEK 20.06 (16.69) per share.
•The proposed dividend is SEK 10.50 (9.00) per share, a 17 per cent increase.
•Kungsleden’s operating surplus rose 38 per cent to SEK 638 m (461 m).
•The forecast for the operational year 2002 is for profit before tax of SEK 450 m.
Kungsleden’s business concept, vision and operations
Kungsleden’s business concept is to own and manage properties, generating high and stable property yields. Its vision is to utilize and develop its competencies in structuring heterogeneous property holdings: its dual operational focus lies on managing and trading properties. Property yields are considered the crucial measure—more important than category or geographical location. Kungsleden is a transaction-intensive corporation, whose property holding is subject to frequent change through acquisitions and disposals.
Profit
Kungsleden posted profit before tax of SEK 380 m (316 m) in 2001. Profits in 2000 included SEK 75 m in non-recurring gains from the disposal of interest swaps. Earnings per share before tax were SEK 20.06 (16.69). The profit figure can be set against the SEK 275 m estimate issued coincident with the previous year’s Financial Statement, which was progressively revised to SEK 360 m. Kungsleden’s operating surplus amounted to SEK 638 m (461 m), with SEK 159 m (115 m) of this total occurring in the fourth quarter. These gains are primarily attributable to a larger property holding, but also to Kungsleden’s profit margin, which increased to 61.5 per cent (58.7 per cent). Until the present, the economic slowdown has exerted a favorable profit impact through lower interest rates, with so far, rental revenues not experiencing any adverse impact. Kungsleden’s diversified property holding and tenant structure confers the corporation with solid resistance to economic downturns. In 2002, SEK 119 m-worth, or 10 per cent, of commercial rental contracts will be renegotiated. Kungsleden’s property trading activities resulted in the disposal of 103 (112) properties for SEK 1,057 m (390 m), generating a profit of SEK 100 m (62 m). In the reporting period, trading generated profits of SEK 38 m (42 m). In the year, 98 (26) properties were acquired with a value of SEK 3,877 m (1,551 m). Considering the major significance of the property trading to its business, as in previous years, Kungsleden’s properties are classified as current assets, and therefore, not subject to any depreciation according to plan, but rather, to value adjustment. Properties are valued individually at the lower of cost and market value; value adjustments for the year were SEK –51 m
(–47 m).
Net financial items were SEK –276 m (–139 m), with interest subsidies comprising SEK 1 m (2 m); interest cover was a multiple of 2.4 (3.3). Tree of the major acquisitions Kungsleden effected in the year were funded interest free for six months, generating an estimated SEK 42 m interest cost reduction. Net financial items were subject to a non-recurring cost of SEK 7 m (12 m) ensuing from it reaching new funding agreements. Net financial items in the previous year were influenced by SEK 75 m gains from divested swaps contracts.
The accounted tax cost for 2001 was SEK 114 m (89 m), equivalent to a rate of 30 per cent (28 per cent), of which SEK 2 m (7 m) comprised current tax. The SEK 112 m (82 m) discrepancy comprises deferred tax—the consequence of prevailing accounting practice regarding income taxes. The deferred tax is not offset by any cash flow. Property tax was SEK 45 m (31 m) and is included in the operating surplus.
The property holding
Kungsleden’s property trading and expansion implies the ongoing transformation of its property holding. Accordingly, the Income Statement, comprising historical figures, creates an inaccurate impression of the earnings capacity of the property holding at any time. An estimate of the earnings capacity as of year-end 2001 is submitted in the following table, entitled ‘The property holding as of 31 December 2001’.
These figures are based on the following conditions:
•Properties disposed of in 2001 are excluded;
•Properties acquired in 2001 are included as if they were owned for the full year.
Kungsleden’s properties have been subject to external and internal valuations; properties acquired have undergone comprehensive valuations at the time of acquisition, effected by Forum Fastighetsekonomi and/or Svefa AB. A few existing properties, subject to special circumstances, have also undergone comprehensive valuations, performed by the same institutions. As of December 2001, Forum Fastighetsekonomi performed desktop valuations on the remainder of Kungsleden’s existing properties.
As of 31 December 2001, the property holding had an externally assessed value of SEK 10,5 bn (7,4 bn), and an internally assessed value of SEK 10,3 bn (7,2 bn).
The book value of the property holding increased to SEK 9,477 m (6,487 m). Acquisitions amounted to SEK 3,877 m (1,551 m) and reinvestments in existing properties were SEK 105 m (74 m). The book value of properties divested was SEK 941 m (320 m); SEK –51 m (–47 m) in value adjustments were effected in the year.
Kungsleden’s properties were located in 129 (138) municipalities, nine (23) less than at the previous year-end.
Property trading
In 2001, 98 (26) properties with floor-space of 546,000 (353,000) m2 were acquired for a total price of SEK 3,877 m (1,551 m). These transactions were effected at an estimated property yield net of property administration of 7.8 per cent (9.5 per cent). During 2001, 103 (112) properties with floor-space of 184,000 (93,000) m2 were divested for a total of SEK 1,057 m (390 m), and profits of SEK 100 m (62 m). Those properties disposed of were divested at an estimated property yield of 6.8 per cent (6.2 per cent).
Disposals were effected at SEK 36 m (–1 m) below Forum Fastighetsekonomi’s assessed actual value as of December 2000, and at SEK 28 m (14 m) above their internally assessed actual value at the corresponding point.
Kungsleden effected the following major acquisitions
in the year:
•A holding of sheltered accommodation for pensioners was acquired in November from JM, for SEK 1,119 m. These properties are concentrated on Stockholm, Uppsala and Norrköping;
•Commercial properties located in Malmö and Gothenburg were acquired for SEK 342 m, from Skandia. Kungsleden took possession in January 2002;
•Two holdings, mainly of office premises located in northern Stockholm, were acquired from JM, with Kungsleden taking possession on 8 March and 7 June 2001. The total purchase price was SEK 1,523 m.
Funding
During 2001, the volume of Kungsleden’s funding portfolio expanded from SEK 4,115 m to 5,966 m; the average interest rate of the portfolio was 5.73 per cent (5.74 per cent) as of 31 December 2001. The average interest fixing period was 2.7 years 2.7. (2.9) Kungsleden has achieved its interest maturity structure by extending loans with short interest fixing periods using interest swaps. Kungsleden’s syndicated loan agreement, arranged by a number of Swedish and German banks, was renegotiated in the year. The new facility amounted to SEK 4,850 m (4,200 m), with four years remaining to maturity. In 2001, Kungsleden entered a number of additional loan agreements, two of which were substantial. The first was of nearly SEK 600 m and the second of SEK 560 m. In 2001, Kungsleden also drew down the remaining SEK 250 m of the bond loan quoted on the Stockholm Stock Exchange, issued in 2000, thereby utilizing its total SEK 500 m volume. This facility is divided into a three-year tranche of 200 m at a coupon of 8.75 per cent and a five-year tranche of SEK 300 m at a coupon of 9.75 per cent. Kungsleden does not own any properties in foreign countries, nor does it have any foreign currency-denominated borrowing.
The property holding as of 31 December 2001
Total including landSouthWestEast CentralNorthTotal
Number1371181107317455
Lettable floor-space, 000 m2521471620229391 880
Book value, SEK m2 1952 1633 9559592059 477
Rental value, SEK m320320517144251 326
Rental revenues, SEK m291290468130221 201
Operating surplus, SEK m1932043267119813
Economic occupancy, %93,993,193,593,192,893,4
Property yield, %8,89,48,27,49,58,6
Profit margin, %66,570,469,554,487,167,7
Industrial/
OfficeswarehouseRetailResidentialOtherTotal
Number207100484555455
Lettable floor-space, 000 m2850688162155251 880
Book value, SEK m5 4981 6578481 3711039 477
Rental value, SEK m753271133154151 326
Rental revenues, SEK m679241123145131 201
Operating surplus, SEK m470162731017813
Economic occupancy, %93,191,994,497,093,4
Property yield, %8,59,88,67,38,6
Profit margin, %69,267,159,569,367,7
Interest maturities as of 31 December 2001
MaturityTotal, SEK mProportion, %Avarage interest rate, %
2002337656,65,10
20032203,76,84
20041001,75,19
20052504,28,01
20064507,45,96
20085709,65,86
20091001,76,12
201080013,47,07
20111001,76,26
Totalt5966100,05,73
Shareholders’ equity
The closing balance of shareholders equity was SEK 2,188 m (2,092 m), or SEK 115 (110) per share, equivalent to an equity ratio of 22 per cent (30 per cent).
Ownership structure
At 31 December 2001, Kungsleden had 10,200 (5,800) shareholders.
The closing price of the Kungsleden share in 2001 was SEK 117 (92), equating to a total market capitalization of SEK 2,218 m (1,744 m). Kungsleden’s share price rose by 27.2 per cent (19.5 per cent) in 2001; the company paid dividends of SEK 9 per share. In the same period, Carnegie’s Real Estate Index declined –6.4 per cent (+35.7 per cent), while the Stockholm Stock Exchange All-shared PI dropped –16.9 per cent (–12 per cent).
Shareholders—ten largest shareholders as of 31 December 2001
ShareholderNo. of shares% of vote and capital
Alecta (formely SPP)1 683 6198,9
Olle Florén with companies460 8002,4
Crafoordska Stiftelsen442 0002,3
Board and management428 2002,3
Second AP (National Pension Insurance) fund338 1881,8
Swedish Red Cross300 0001,6
Agria260 0001,4
Baltic Foundation260 0001,4
Third AP (National Pension Insurance) fund241 2001,3
SHB Liv Försäkring235 2001,2
Total, 10 largest shareholders4649 20724,6
Foreign shareholders1617 7518,5
Other shareholders12691 66266,9
Total18 958 620100,0
Human resources
The average number of employees in the year was 81 (77).
Parent company
Parent company revenues were SEK 0 m (0 m), with profit before appropriations of SEK 422 m (379 m).
Proposed dividends
There Board intends to propose a dividend of SEK 10,50 (9) per share to the Annual General Meeting.
Forecast 2002
The outlook for the financial year 2002 is favorable, with opportunities to enhance Kungsleden’s operating surplus, and as a consequence of brisk activity on the market for property transactions. Internal and external valuations suggest surplus values in the property holding, and the Board of Directors and management share the ambition to realize at least SEK 50 m of these surplus values yearly, through property trading.
Overall, the Board’s assessment is that profit before tax for 2002 will be SEK 450 m.
The Annual Report for 2001 will be available at the company’s offices from mid-March onwards, and will be distributed to shareholders in the latter half of March.
The annual general meeting will be held on 9 April, at 2 p.m., at the Hilton Hotel Slussen, Stockholm, Sweden.
The scheduled record date for dividends is 12 April.
Jens Engwall
Chief Executive
Kungsleden AB (publ)
Stockholm, Sweden, 19 February 2002
Forthcoming financial reports and Annual General Meeting
•The Annual Report for the financial year 2001 will be published in March 2002
•The Annual General Meeting will be held on 9 April
•Interim Report, January—March 2002, 23 April
•Interim Report, January—June 2002, 15 August
•Interim Report, January—September 2002, 23 October
For further information, please contact:
Jens Engwall, Chief Executive
Tel: +46 (0)8 503 05204, mobile: +46 (0)70 690 6550
Johan Risberg, Deputy Chief Executive,
Chief Financial Officer
Tel: +46 (0)8 503 05206, mobile: +46 (0)70 690 6565
INCOME STATEMENT
2001200020012000
SEK mJan – DecJan – DecOct – DecOct – Dec
Property management
Rental Revenue1 038,7784,7274,3210,7
Operating and maintenance costs–293,5–236,0–87,7–69,9
Property tax–44,7–31,0–11,3–6,5
Ground rent–10,3–8,0–2,2–2,7
Property administration–51,8–48,8–13,7–16,4
Operating surplus, property management638,4460,9159,4 115,2
Property trading
Sales revenue from property1 057,1390,0253,3150,4
Sales administration, including costs–16,3–7,3–5,3–3,8
Book value, divested properties–940,6–320,4–210,0–104,8
Profit from property trading100,262,338,041,8
Gross profit738,6523,2197,4157,0
Central administrative costs–30,5–20,9–10,9–3,2
Value adjustments, property–51,3–46,9–51,3–46,9
Operating profit656,8455,4135,2106,9
Profit from finuncial items
Interest income, etc.18,583,110,38,2
Interest subsidies1,21,80,60,4
Interest costs, etc.–296,2–223,9–84,8–66,4
Profit before tax380,3316,461,349,1
Tax
Current tax–2,0–7,1–2,0–3,0
Deferred tax–112,5–81,5–22,2–7,8
Net profit265,8227,837,138,3
Number of shares outstanding18 958 62018 958 62018 958 62018 958 620
Average number of shares18 958 62018 591 95318 958 62018 591 953
Profit before tax per share, SEK20,116,73,32,3
Profit before tax per ave. no. of shares, SEK20,117,03,32,6
Profit after tax per share, SEK14,012,01,91,8
Profit after tax per ave. no. of shares, SEK14,012,31,92,1
BALANCE SHEET
SEK m31 Dec 0131 Dec 01
Assets
Fixed assets56,1176,1
Current property assets9 476,96 486,7
Other current assets260,2154,6
Cash and bank balances153,7140,2
Total assets9 946,96 957,6
Liabilities and shareholders’ equity
Shareholders’ equity12 187,62 092,3
Provisions2,25,1
Interest-bearing liabilities5 926,24 115,0
Non-interest bearing liabilities1 830,9745,2
Total liabilities and shareholders’ equity9 946,96 957,6
1 Change in shareholders’ equity
Opening balance2 092,41 705,8
Effect of new accounting principle–277,1
New closing balance, after adjustment2 092,41 982,9
New issue–30,0
Dividend–170,6–148,4
Net profit265,8227,8
Closing balance2 187,62 092,3
CASH FLOW STATEMENT
SEK m20012000
Operations
Operating profit656,8455,4
Net financial items–276,5–139,0
Value adjustments51,346,9
Adjustment for items not included in cash flow from operations–1,24,1
430,4367,4
Tax paid–7,1–7,1
Cash flow from operations before change in working capital423,3360,3
Cash flow from change in working capital
Increase (–)/decrease (+) in operating receivables–52,9–13,3
Increase (+)/decrease (–) in operating liabilities135,4151,6
Cash flow from operations505,8498,6
Investment activity
Acquisitions of current property assets–3 982,0–1 582,0
Disposals of current property assets940,6320,3
Net investments in tangible fixed assets–1,4–0,5
Net investments in financial fixed assets5,520,9
Shareholders’ contributions paid
Cash flow from investment activity–3 037,3–1 241,3
Financing activity
New issue–30,0
Loans drawn down2 715,6931,1
Dividend paid–170,6–148,5
Cash flow from financing activity2 545,0812,6
Cash flow for the year13,570,0
Liquid funds, opening balance140,270,2
Liquid funds, closing balance153,7140,2
Financial key figures31 Dec 0131 Dec 00
Economic occupancy, %93,491,0
Profit margin, %61,558,7
Interest cover, multiple2,43,3
Property yield from estimated earnings capacity8,68,3
Return on equity, % (profit before tax)17,815,5
Return on equity, % (profit after tax)12,411,2
Return on total capital, %8,08,5
Gearing, multiple2,72,0
Property mortgage ratio, %63,063,4
Equity ratio, %22,030,1
Cash flow from operations, SEK m505,8498,6
Operating surplus per share, SEKr33,724,3
Book value of property per share, SEK499,9342,2
Shareholders’ equity per share, SEK115,4110,4
Cash flow from operations26,726,3
Cash flow from operations, ave. no. of shares26,726,8
DEFINITIONS
Property terminology
Property yield: annual operating surplus from properties at the end of the period as a proportion of the properties’ book value at the end of the period.
Operating surplus: rental revenue less operation and maintenance costs, ground rent, property tax and property administration. Interest subsidies not included.
Operation costs: costs for electricity, heating, water, property care, cleaning, insurance and ongoing maintenance.
Property type: the properties’ primary usage (see “Distribution of floor-space”).
Rental revenues: rent invoiced, plus supplementary items such as remuneration for heating, property tax, insurance and other revenues, less rental losses and rental discounts.
Rental value: rental revenues plus assessed market rent for un-let floor-space, rental discounts and rental losses.
Economic occupancy: rental revenue, rental discounts and rental losses in relation to rental value.
Economic vacancy: assessed market rent for un-let floor-space as a proportion of rental value.
Accommodation type: floor-space distributed by usage.
Maintenance: measures intended to maintain a property and its technical systems. Relates to planned measures entailing the replacement or renovation of parts of a building or technical systems. Also includes tenant adaptations.
Distribution of floor-space: distribution by accommodation type implies that the floor-space in a property is distributed by usage. The distribution is made between office, residential, retail, hotel, development, industrial and warehousing. Distribution by property type means the property is defined by that type of floor-space that represents the majority of total. Accordingly, a property with 51 per cent of its floor-space used as offices is considered an office property.
Area-based occupancy: let floor-space as a proportion of total lettable floor-space at the end of the period.
Area-based vacancy: vacant floor-space as a proportion of total lettable floor-space at the end of the period.
Financial terminology
Return on equity: profit in relation to average shareholders’ equity. Stated for profit before and after tax. Average shareholders’ equity is calculated as the total of opening and closing balances divided by two.
Return on total capital: profit after financial items plus interest costs less interest subsidies in relation to average assets. Average assets are calculated as the total of opening and closing balances divided by two.
Mortgage ratio: interest-bearing liabilities in relation to property book value at year-end.
Shareholders’ equity per share: shareholders’ equity in relation to the number of shares at year-end.
Book value of property per share: book value of property in relation to the number of shares at year-end.
Cash flow from operations: operating profit less net financial items adjusted for items not included in cash flow from operations, and for changes in working capital.
Interest cover: profit before net financial items in relation to net financial position.
Gearing: interest-bearing liabilities at year-end in relation to shareholders’ equity.
Equity ratio: shareholders’ equity including minority shares at year-end in relation to total assets.
Earnings per share: profit after tax at year-end divided by the number of shares at year-end.
Profit margin: operating surplus in relation to total rental revenue.
Addresses
Kungsleden AB (publ)
Head Office
Guldgränd 5, Box 70414, 107 25 Stockholm
Tel 08-503 052 00 Fax 08-503 052 01
Regional office West
Spannmålsgatan 14, Box 11284, 404 26 Gothenburg
Tel 031-755 56 00 Fax 031-755 56 01
Regional office East