Earnings Release • Feb 27, 2019
Earnings Release
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Fastighets AB Balder Year-end report
January-December 2018
Fastighets AB Balder is a listed property company which shall meet the needs of different customer groups for premises and housing based on local support. Balder's real estate portfolio had a value of SEK 118.1 billion (98.4) as of 31 December 2018. The Balder share is listed on Nasdaq Stockholm, Large Cap. 8 Fenchurch Place, London
Comparisons stated in parenthesis refer to the corresponding period of the previous year.
| 2018 Oct-Dec |
2017 Oct-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
2016 Jan-Dec |
2015 Jan-Dec |
2014 Jan-Dec |
2013 Jan-Dec |
2012 Jan-Dec |
|---|---|---|---|---|---|---|---|---|
| 1,787 | 1,558 | 6,714 | 5,915 | 5,373 | 2,711 | 2,525 | 1,884 | 1,701 |
| 876 | 748 | 3,304 | 2,804 | 2,265 | 1,780 | 1,275 | 854 | 691 |
| 1,657 | 1,754 | 8,007 | 5,336 | 4,932 | 3,388 | 3,050 | 854 | 812 |
| –58 | –16 | –34 | 144 | –114 | 227 | –624 | 433 | –71 |
| 2,039 | 2,148 | 9,308 | 7,118 | 5,474 | 4,916 | 3,128 | 1,738 | 1,162 |
| 116,542 | 98,360 | 116,542 | 98,360 | 86,177 | 68,456 | 37,382 | 27,532 | 22,278 |
| 1,598 | – | 1,598 | – | – | – | – | – | – |
| Average number of shares, thousands | 180,000 | 180,000 | 180,000 180,000 173,598 162,753 161,786 159,537 159,537 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Profit after tax, SEK | 11.33 | 11.93 | 51.71 | 38.71 | 30.38 | 28.98 | 18.10 | 10.11 | 6.69 |
| Profit from property management, SEK | 4.86 | 4.16 | 18.35 | 14.74 | 11.89 | 9.71 | 6.64 | 4.57 | 3.73 |
| Outstanding number of shares, thousands | 180,000 | 180,000 | 180,000 180,000 180,000 172,397 162,397 159,537 159,537 | ||||||
| Shareholders' equity, SEK | 225.60 | 185.02 | 225.60 | 185.02 | 157.63 | 128.03 | 70.10 | 52.14 | 42.15 |
| Long-term net asset value (NAV), SEK | 280.17 | 229.25 | 280.17 | 229.25 | 198.49 | 159.14 | 86.33 | 60.50 | 50.37 |
| Share price on the closing date, SEK | 252.00 | 219.40 | 252.00 | 219.40 | 184.10 | 208.70 | 110.25 | 66.00 | 37.30 |
1) Attributable to parent company shareholders.
2) Listed associated companies at market value refers to Collector AB (publ) and Brinova Fastigheter AB (publ).
2 FASTIGHETS AB BALDER · YEAR-END REPORT 2018
Profit from property management per share increased by 17 % during the fourth quarter and during the full-year 2018 the increase was 25 % to SEK 18.35 per share.
The net asset value increased by 22 % to SEK 280 per share. We can therefore say that Balder performed well financially but even the organisation and Balder as a platform are getting better and better with the years. Having said that, I might add that I think our best years still lie ahead of us.
Net investments increased compared to the previous year and despite a continued strong interest in properties, I think we succeeded in finding relatively good acquisitions and project investments. It also looks hopeful on that front in the near future.
The fact that we now also have a presence in Germany and the UK provides us with new opportunities and opens new doors.
In this report, for the first time in the balance sheet, we have a separate line item for Development properties. This part of our project property portfolio relates to projects, which are not retained as investment properties after completion but that instead are mainly sold as tenant-owner's apartments. Going forward, the profit/loss from sales of Development properties will also be recognised separately.
Recently, there have been a lot of articles, opinions and theories regarding revenue recognition, primarily in relation to tenant-owners' association projects. Balder has not applied the percentage of completion method so our balance sheet item consists of acquisition and other incurred costs. Although the housing market is slower at present than a couple of years ago, I believe that we will display a good performance over time, although we will see uneven results between quarters and years in this part of our operations.
Our highly regarded associated companies also continued to perform well during the year with a profit from property management that improved by 13 %. Collector continued its trend of increasing profits, although at a slower pace than we have become accustomed to. Since the start in 1999, the company has increased its profit every year and I am still positive about its future prospects. However, the share price fell sharply during the year but my focus as usual is on the company/business itself. The share price is often unfair in the short term (both too high and too low) but in the long term the share price, in principle, is always fair.
Balder's financial goals were achieved as of December 31. In order to emphasise and clarify that we are also aiming for a stronger balance sheet going forward, the Board decided to raise the goal for the equity/assets ratio so that it should not be less than 40 % over time (previously 35 %).
Compared to 31 December 2018, this means that the equity/assets ratio should rise a few per cent (and therefore the loan-to-value ratio with the current composition of the balance sheet should fall a few per cent).
It seems bright on many fronts in my view. Even when it comes to our own dear company Balder, we have reason to be optimistic. I want to say a big and warm thank you to all of you that make this possible.
Erik Selin Chief Executive Officer
Balder presents its earning capacity on a twelve-month basis in the table below. It is important to note that the current earning capacity should not be placed on a par with a forecast for the coming 12 months. For instance, the earning capacity contains no estimate of rental, vacancy, currency or interest rate changes.
Balder's income statement is also impacted by the development in the value of the real estate portfolio as well as future property acquisitions and/or property divestments. Additional items affecting the operating result are changes in value of derivatives. None of the above has been considered in the current earning capacity.
The earning capacity is based on the real estate portfolio's contracted rental income, estimated property costs during a normal year as well as administrative costs. The costs of the interest-bearing liabilities are based on the group's average interest rate level including the effect of derivative instruments. The tax is calculated using the effective tax rate during each period.
| SEKm | 2018 31 Dec |
2018 30 Sep |
2018 30 June |
2018 31 March |
2017 31 Dec |
2017 30 Sep |
2017 30 June |
2017 31 March |
2016 31 Dec |
2016 30 Sep |
2016 30 June |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Rental income | 7,000 | 6,800 | 6,665 | 6,430 | 6,240 | 5,920 | 5,860 | 5,700 | 5,800 | 5,470 | 5,325 |
| Property costs | –1,885 | –1,845 | –1,815 | –1,760 | –1,720 | –1,655 | –1,690 | –1,660 | –1,695 | –1,690 | –1,685 |
| Net operating income | 5,115 | 4,955 | 4,850 | 4,670 | 4,520 | 4,265 | 4,170 | 4,040 | 4,105 | 3,780 | 3,640 |
| Management and | |||||||||||
| administrative costs | –595 | –590 | –590 | –565 | –550 | –510 | –490 | –490 | –490 | –490 | –480 |
| Profit from property | |||||||||||
| management from | |||||||||||
| associated companies | 735 | 660 | 650 | 650 | 640 | 600 | 530 | 530 | 505 | 470 | 420 |
| Operating profit | 5,255 | 5,025 | 4,910 | 4,755 | 4,610 | 4,355 | 4,210 | 4,080 | 4,120 | 3,760 | 3,580 |
| Net financial items | –1,125 | –1,100 | –1,120 | –1,120 | –1,060 | –1,050 | –950 | –950 | –1,040 | –1,025 | –1,010 |
| Of which non-controlling | |||||||||||
| interests | –565 | –555 | –555 | –550 | –525 | –475 | –455 | –450 | –445 | –445 | –380 |
| Profit from | |||||||||||
| property management 1) | 3,565 | 3,370 | 3,235 | 3,085 | 3,025 | 2,830 | 2,805 | 2,680 | 2,635 | 2,290 | 2,190 |
| Tax | –750 | –730 | –700 | –665 | –650 | –610 | –605 | –580 | –570 | –490 | –470 |
| Profit after tax | 2,815 | 2,640 | 2,535 | 2,420 | 2,375 | 2,220 | 2,200 | 2,100 | 2,065 | 1,800 | 1,720 |
| Profit from property manage | |||||||||||
| ment per share, SEK | 19.81 | 18.72 | 17.97 | 17.14 | 16.81 | 15.72 | 14.47 | 13.78 | 13.52 | 11.92 | 11.55 |
1) Attributable to parent company shareholders.
In the current earning capacity the exchange rate at the end of the reporting period has been used for translation of the foreign subsidiaries' income statement items.
Under IFRS, Collector AB (publ) and Brinova Fastigheter AB (publ) should not be recognised at market value when Balder reports its participation in the profit from associated companies from these companies. In order to clarify the listed associated companies at market value, Collector and Brinova is reported below at the share price as of 31 December.
| SEKm | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Assets | ||
| Investment properties | 116,542 | 98,360 |
| Development properties | 1,598 | – |
| Other fixed assets | 123 | 107 |
| Participations in associated companies 1,2) | 6,682 | 6,707 |
| Other receivables | 2,198 | 1,508 |
| Cash and cash equivalents and financial investments | 1,328 | 1,585 |
| Total assets | 128,471 | 108,268 |
| Shareholders' equity and liabilities | ||
| Shareholders' equity 3) | 47,871 | 39,725 |
| Deferred tax liability | 8,857 | 7,041 |
| Interest-bearing liabilities | 67,205 | 58,384 |
| –of which Hybrid capital 4) | 3,596 | 3,447 |
| Derivatives | 965 | 922 |
| Other liabilities | 3,573 | 2,196 |
| Total equity and liabilities | 128,471 | 108,268 |
| 1) Including Balder's market value of Collector AB (publ) Collector's share price (SEK) |
2,240 49.50 |
3,677 81.25 |
| 2) Including Balder's market value of Brinova Fastigheter AB (publ) Brinova's share price (SEK) |
319 17.30 |
220 11.95 |
| 3) Of which non-controlling interests | 7,262 | 6,422 |
| 4) 50 % of Hybrid capital is treated as equity by the rating agencies and thus decreases the interest-bearing liabilities when calculating the debt/equity ratio and the net debt to total assets ratio |
1,798 | 1,724 |
| SEKm | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Opening equity | 39,725 | 36,791 |
| Transition effect IFRS 9 | –92 | – |
| Changed accounting principles in Sato Oyj (IAS 12) | –124 | – |
| Total comprehensive income for the year | 10,143 | 7,791 |
| Dividend preference shares | – | –50 |
| Retiring of preference capital | – | –3,500 |
| Transactions with non-controlling interests | –111 | –8 |
| Dividend to non-controlling interests | –135 | – |
| Non-controlling interests, arising on the acquisitions of subsidiary | 8 | 6 |
| The change during the year of listed associated companies at market value | –1,545 | –1,304 |
| Closing equity | 47,871 | 39,725 |
Profit from property management for the year amounted to SEK 3,877m (3,284), of which effect of changes in exchange rates amounted to SEK 95m. Profit from property management attributable to parent company shareholders increased by 18 % and amounted to SEK 3,304m (2,804), which corresponds to an increase per share by 25 % to SEK 18.35 (14.74). Profit from property management includes SEK 658m (583) in respect of associated companies.
Net profit after tax for the year amounted to SEK 10,169m (7,769). Net profit after tax for the year attributable to parent company shareholders amounted to SEK 9,308m (7,118), corresponding to SEK 51.71 per share (38.71). Profit before tax was affected by changes in value in respect of investment properties of SEK 8,007m (5,336), changes in value of interest rate derivatives of SEK –34m (144) and profit from participations in associated companies of SEK 881m (1,010).
Rental income increased by 14 % to SEK 6,714 m (5,915), of which the effect of changes in exchange rates was SEK 220m. The increase was primarily due to acquisitions, new leases and completed projects for own management. The leasing portfolio was estimated to have a rental value on 31 December of SEK 7,260m (6,511). The average rental level for the entire real estate portfolio amounted to SEK 1,802/sq.m. (1,724) excluding project properties.
The like for like rental income has increased with 2.7 % after adjustments for currency changes.
Rental income shows a considerable diversification of risks as regards tenants, sectors and locations. The economic occupancy rate amounted to 96 % (96) on 31 December. The total rental value of unlet areas at the end of the year amounted to SEK 260m (271) on an annual basis.
Property costs amounted to SEK –1,824m (–1,695) during the year, of which the effect of changes in exchange rates was SEK –65m.
Net operating income increased by 16 % to SEK 4,890m (4,220), which implies a surplus ratio of 73 % (71).
Operating costs normally vary with the seasons. The first and fourth quarters have higher costs than the other quarters, while the third quarter usually has the lowest cost level.
Balder carried out an individual internal valuation on 31 December of the entire real estate portfolio, see page 9. Unrealised changes in value during the year amounted to SEK 7,922m (5,151). Realised changes in value amounted to SEK 86m (184). The average yield requirement as of 31 December amounted to 4.8 % (5.0), which is 0.2 percentage points lower compared to year-end last year. The change in value during the year is attributable to the market's lower yield requirement and improved net operating income.
Management and administrative costs amounted to SEK –592m (–543) during the year, of which the effect of changes in exchange rates was SEK –23m.
Balder owns property managing and project developing associated companies, see note 15 in Balder's Annual Report for 2017, and 44.1 % in Collector AB (publ) which is listed. Brinova Fastigheter AB (publ) is also listed and Balder's share amounts to 25.5 %. In order to clarify these associated companies value in Balder, Balder also reports a consolidated statement of financial position including listed associated companies at market value, see page 5.
During the fourth quarter, Balder invested in Sinoma Fastighets AB together with Folksam and Redito. Balder's ownership share is 49 %. The market value of the property portfolio amounts to approximately SEK 1,800m and consists of 38 properties with a lettable area of 174 thousand sq.m. The property portfolio mainly consists of office, warehouse and logistic properties in Stockholm and Gothenburg.
Profit from participations in associated companies amounted to SEK 881m (1,010) and Balder's participation in the associated companies profit from property management amounted to SEK 658m (583).
Profit before tax was impacted by unrealised changes in value in respect of properties and interest rate derivatives of SEK 407m (675). The tax expense for the year amounted to SEK –184m (–248).
Net financial items amounted to SEK –1,076m (–984), of which the effect of changes in exchange rates was SEK –37m. Changes in value of interest rate derivatives amounted to SEK –34m (144). The negative change in value of derivatives during the year is due to the fact that the interest rates have fallen during the year. Unrealised changes in value do not affect the cash flow.
The average interest rate was 1.7 % (1.8) on the closing date and 1.8 % (1.9) for the year.
The group's tax cost amounted to SEK –1,897m (–1,386), of which effect of changes in exchange rates amounted to SEK –46m. Current tax for the year amounts to SEK –306m (–221), mainly attributable to Sato Oyj, and also a deferred tax expense of SEK –1,591m (–1,164). Current tax attributable to parent company shareholders amounted to SEK –188m (–113).
The group's deferred tax liability has been calculated as the value of the net of fiscal deficits and the temporary differences between the carrying amounts and values for tax purposes of properties and interest rate derivatives. Deferred tax liabilities amounted to SEK 8,857m (7,041).
Following the decision on changed corporate taxation, the deferred tax liability has been recalculated to the new tax rate 20.6 % regarding the Swedish operations. The measurement of the loss carry-forwards that are expected to be utilised during the years 2019-2020 has been calculated using the current tax rates for each year. Overall, a positive non-recurring accounting effect arose of net SEK 345m for the period to and including December 2018, when the deferred tax liability was measured at the new tax rates.
In June, the Government decided to approve the proposal on changed corporate taxation. In brief, the decision means that the interest deduction will be limited to 30 % of taxable EBITDA. In addition, the tax rate is being reduced in two stages from the current rate of 22 % to 21.4 % from 2019 and to 20.6 % from 2021. The new rules apply from 1 January 2019.
Profit from property management for the fourth quarter of 2018 increased by 15 % and amounted to SEK 1,015m (883). Profit from property management attributable to parent company shareholders for the fourth quarter of 2018 increased by 17 % and amounted to SEK 876m (748) which corresponds to an increase per share of 17 % to SEK 4.86 (4.16). Profit from property management included SEK 172m (158) in respect of associated companies. Rental income amounted to SEK 1,787m (1,558) and property costs amounted to SEK –486m (–424), which meant that net operating income increased by 15 % to SEK 1,301m (1,134), of which the effect of changes in exchange rates was SEK 40m. The surplus ratio amounted to 73 % (73).
Net profit after tax for the period amounted to SEK 2,213m (2,339). Profit after tax attributable to parent company shareholders amounted to SEK 2,039m (2,148) corresponding to SEK 11.33 per share (11.93). The result was affected by changes in value in respect of investment properties of SEK 1,657m (1,754), changes in value of interest rate derivatives of SEK –58m (–16) and profit from participations in associated companies of SEK 290m (269).
Cash flow from operating activities before changes in working capital amounted to SEK 2,871m (2,508). Investing activities have burdened the cash flow by SEK –11,435m (–6,215).
During the year, acquisition of investment properties of SEK –3,861m (–4,936), investments in existing properties and projects of SEK –6,210m (–3,718), investments in property, plant and equipment, financial investments, associated companies and transactions with non-controlling interests SEK –1,832m (–531), redemption of preference capital
SEK – m (–3,500), dividends paid preference shares of SEK –m (–150), and realised changes derivatives SEK –m (–417) and dividend to non-controlling interests SEK –135m (–) adds up to SEK –12,037m (–13,252).
These have been financed through cash flow from operating activities of SEK 3,667m (2,490), by property divestments of SEK 311m (2,830), financial investments of SEK 133m (7), associated companies SEK –m (120), dividend from associated companies of SEK 24m (13) and net borrowings of SEK 7,180m (7,786), which adds up to SEK 11,314m (13,246).
Total cash flow for the year amounted to SEK –723m (–6). In addition to unutilised credit facilities of SEK 8,470m (5,940), the group's cash and cash equivalents, financial investments and unutilised overdraft facilities amounted to SEK 1,678m (1,935) on 31 December.
The number of employees on 31 December amounted to 652 persons (610), of whom 290 were women (277). Balder is organised into six regions. The head office with groupwide functions is located in Gothenburg.
The parent company's operations mainly consist of performing group-wide services but an important part relates to sales of services, principally to associated companies. Sales in the parent company amounted to SEK 289m (252) during the year.
Net profit after tax amounted to SEK 1,590m (1,234). Dividends from subsidiaries was included with SEK 1,608m (909), other net financial items amounted to SEK 110m (350) of which net interest income/expense amounted to SEK 940m (927), exchange rates differences amounted to SEK –729m (–565), changes in value of interest rate derivatives amounted to SEK –34m (133) and group contributions paid amounted to SEK –87m (–41).
Reported exchange differences mainly refer to the translation of the company's euro bonds, which from a group perspective are used for hedging of foreign net investments.
The board intends to propose to the annual general meeting that no share dividend shall be declared (–).
The annual report for 2018 will be available on Balder's website, balder.se, from week 15, 2019.
Fastighets AB Balder's annual general meeting will take place on Wednesday, 8 May 2019 at 4.00 p.m. at Elite Park Avenue Hotel, Kungsportsavenyn 36 in Gothenburg.
On 31 December Balder owned 1,185 investment properties (1,148) with a lettable area of 4,025 thousand sq.m. (3,739) and a value of SEK 116,542m (98,360). Balder's total rental value excluding projects amounted to SEK 7,252m (6,445).
In addition to investment properties Balder owns development properties. The value of the total property portfolio amounted to SEK 118,140m (98,360).
Balder's commercial properties are mainly located in the central parts of the major cities. Balder's residential properties are located in metropolitan areas and places that are growing and developing positively. Balder's ambition is to continue growing in selected markets.
| Number of properties |
Lettable area, sq.m. |
Rental value, SEKm |
Rental value, SEK/sq.m. |
Rental income, SEKm |
Economic occupancy rate, % |
Carrying amount, SEKm |
Carrying amount, % |
|
|---|---|---|---|---|---|---|---|---|
| Distributed by region | ||||||||
| Helsinki | 509 | 1,051,614 | 2,393 | 2,276 | 2,346 | 98 | 30,881 | 26 |
| Stockholm | 76 | 650,668 | 1,247 | 1,916 | 1,184 | 95 | 23,523 | 20 |
| Gothenburg | 154 | 926,961 | 1,329 | 1,434 | 1,275 | 96 | 22,448 | 19 |
| Öresund | 91 | 577,980 | 1,028 | 1,778 | 973 | 95 | 19,184 | 16 |
| East | 273 | 621,735 | 995 | 1,601 | 960 | 96 | 12,436 | 11 |
| North | 82 | 195,749 | 259 | 1,326 | 254 | 98 | 4,271 | 4 |
| Total excluding projects | 1,185 | 4,024,706 | 7,252 | 1,802 | 6,992 | 96 | 112,742 | 96 |
| Projects for own management | 8 | 8 | 3,799 | 3 | ||||
| Total investment properties | 1,185 | 4,024,706 | 7,260 | 1,802 | 7,000 | 96 | 116,542 | 99 |
| Development properties | 1,598 | 1 | ||||||
| Total real estate portfolio | 1,185 | 4,024,706 | 7,260 | 1,802 | 7,000 | 96 | 118,140 | 100 |
| Distributed by property category | ||||||||
| Residential | 944 | 2,452,348 | 4,485 | 1,829 | 4,370 | 97 | 64,559 | 55 |
| Office | 70 | 474,925 | 1,020 | 2,147 | 925 | 91 | 18,925 | 16 |
| Retail | 103 | 594,531 | 804 | 1,352 | 776 | 97 | 12,842 | 11 |
| Other | 68 | 502,902 | 944 | 1,878 | 921 | 98 | 16,417 | 14 |
| Total excluding projects | 1,185 | 4,024,706 | 7,252 | 1,802 | 6,992 | 96 | 112,742 | 96 |
| Projects for own management | 8 | 8 | 3,799 | 3 | ||||
| Total investment properties | 1,185 | 4,024,706 | 7,260 | 1,802 | 7,000 | 96 | 116,542 | 99 |
| Development properties | 1,598 | 1 | ||||||
| Total real estate portfolio | 1,185 | 4,024,706 | 7,260 | 1,802 | 7,000 | 96 | 118,140 | 100 |
1) The above table refers to the properties owned by Balder at the end of the year. Sold properties have been excluded and acquired properties have been estimated using full-year values. Other properties include hotel, educational, care, industrial and mixed-use properties.
Carrying amount distributed by property category, total real estate portfolio, %
The value of Balder's investment properties is based on internal valuations. The properties in Sweden, Denmark, Norway and Germany are valued using the cash flow based method. In Finland, in addition to the cash flow based method, the sales comparison method and valuation at acquisition cost are used. Properties under construction and project properties for own management are valued at market value reduced by estimated building expenditure and project risk, which usually results in valuation at cost. On 31 December, Balder's average yield requirement amounted to 4.8 % (5.0) excluding project properties for own management, which is 0.2 percentage points lower than last year.
In order to quality-assure its internal valuations, Balder regularly allows parts of its portfolio to be externally valued and obtain second opinions on internal valuations. During the year, external valuations or second opinions have been carried out regarding approximately 43 % (43) of the properties. The difference between the external valuations and the internal valuations was less than 1 %. Historically, deviations between external and internal valuations have been insignificant.
The overall carrying amount of Balder's investment properties amounted to SEK 116,542m (98,360) on 31 December. The unrealised change in value during the year amounted to SEK 7,922m (5,151) and is attributable to the market's lower yield requirement and improved net operating income.
During the year, a total of SEK 10,071m (8,654) was invested, of which SEK 3,861m (4,936) related to acquisitions and SEK 6,210m (3,718) related to investments in existing properties and projects for own management. During the year only
condominiums and land have been divested at a sales value of SEK 311m (3,008). Profit from property sales amounted to SEK 86m (184). The change in the real estate portfolio during the year is presented in the table below.
On 31 December, Balder has project properties for own management amounting to SEK 3.8 billion. Projects with ongoing construction are included with SEK 3.7 billion and projects where construction has not yet started amounts to SEK 0.1 billion. The ongoing construction work has an estimated total investment of approximately SEK 6.8 billion, which means that SEK 3.1 billion remains to be invested. Most of the ongoing projects relate to residential projects. The projects mainly comprise about 1,000 apartments in Copenhagen and about 1,000 apartments in Helsinki. The investments relate to owner apartments for rental use.
On 31 December 2018, development properties of SEK 1,598m (–) were separated from investment properties and reclassified to a separate line item in the consolidated balance sheet. A development property is a property that is held for refinement with the intention of being divested. These properties are continually recognised at cost and profit/loss is recognised when each property is completed, sold and handed over to the buyer. On 31 December, Balder has development properties amounting to SEK 1.6 billion. Projects with ongoing construction are included with SEK 0.5 billion and projects where construction has not begun amounts to SEK 1.1 billion. The projects with ongoing construction has an estimated total investment of approximately SEK 1.7 billion, which means that SEK 1.2 billion remains to invest. The majority of the development projects in progress refer to tenant-owner's apartments and primarily involve approx. 600 tenant-owner's apartments in Sweden.
| SEKm | Number 1) | SEKm | Number 1) | |
|---|---|---|---|---|
| Investment properties, 1 January | 98,360 | 1,148 | 86,177 | 1,220 |
| Investments in existing properties and projects | 6,210 | 3,718 | ||
| Acquisitions | 3,861 | 35 | 4,936 | 42 |
| Sales/Reclassifications | –225 | 2 | –2,824 | –114 |
| Change in value of investment properties, unrealised | 7,922 | 5,151 | ||
| Currency changes | 2,012 | 1,202 | ||
| Reclassification to development properties 2) | –1,598 | – | ||
| Investment properties, 31 December | 116,542 | 1,185 | 98,360 | 1,148 |
| Development properties, 1 January | – | – | ||
| Reclassification from investment properties 2) | 1,598 | – | ||
| Development properties, 31 December | 1,598 | – | ||
| Total real estate portfolio, 31 December | 118,140 | 98,360 |
1) Number of investment properties.
2) On 31 December 2018 ongoing projects in the form of development properties have been reclassified and thus separated from investment properties.
| Quarter | Number | Name of property | Property category | Lettable area, sq.m. | |
|---|---|---|---|---|---|
| Acquisitions | |||||
| One | 1 | Årsta 68:1 | Uppsala | Retail | 7,558 |
| One | 1 | Flygspanaren 8 | Norrtälje | Retail | 1,884 |
| One | 1 | Inom Vallgraven 19:4 | Gothenburg | Office | 1,035 |
| One | 1 | Hemsta 14:2 | Gävle | Retail | 4,100 |
| One | 1 | Hemsta 14:3 | Gävle | Retail | 1,448 |
| One | 1 | Maden 4 | Sundbyberg | Retail | 11,137 |
| Two | 1 | Kartan 1 | Sundbyberg | Other | 20,778 |
| Two | 1 | Bollspelaren 1 | Sundbyberg | Other | 9,843 |
| Two | 1 | Terränglöparen 11 | Sundbyberg | Office | 24,807 |
| Two | 1 | Kasernen 1 | Sundbyberg | Other | 1,548 |
| Two | 1 | Kasernen 2 | Sundbyberg | Other | 1,594 |
| Two | 1 | Kasernen 3 | Sundbyberg | Other | 1,555 |
| Two | 1 | Bivacken 2 | Sundbyberg | Other | 4,687 |
| Two | 1 | Kvartermästaren 1 | Sundbyberg | Retail | 4,136 |
| Two | 1 | Murmästaren 9 | Stockholm | Residential | 4,620 |
| Two | 1 | Lakkegata 3 | Oslo, Norway | Residential | 8,551 |
| Two | 7 | Flera fastigheter | Germany | Hotel | 40,381 |
| Three | 1 | Ritmallen 2 | Sollentuna | Residential | 11,011 |
| Three | 1 | Grytan 4 | Malmö | Other | 2,790 |
| Three | 1 | Grytan 9 | Malmö | Other | 13,998 |
| Three | 1 | Backa 171:4 | Gothenburg | Office | 8,837 |
| Four | 1 | Skeppshandeln 2 | Stockholm | Project | – |
| Four | 1 | Spekedal 1:104 | Kungsbacka | Residential | 2,519 |
| Four | 1 | Spekedal 1:92 | Kungsbacka | Residential | 681 |
| Four | 1 | Varla 2:394 | Kungsbacka | Other | 685 |
| Four | 1 | Varla 2:367 | Kungsbacka | Other | 563 |
| Four | 1 | Varla 2:429 | Kungsbacka | Other | 1,172 |
| Four | 1 | Kungsbacka 6:28 | Kungsbacka | Other | 2,675 |
| Four | 1 | Kungsbacka 6:29 | Kungsbacka | Other | 5,019 |
| Totalt | 35 | 199,612 |
Balder owns 50 % of a number of property companies where Balder handles the management and administration, for further information, see page 24-27 in Balder's Annual Report for 2017. Balder's 50 %-owned associated companies are shown in the table below together with Balder's share of 56 % (56) in Serena Properties AB where Balder has a joint control, for company website, see Serenaproperties.se.
Bostadsproduktion AB, 25.5 % (25.5) of Brinova Fastigheter AB (publ), 49 % (49) in Sjaelsö Management ApS, 20 % (20) in SHH Bostad AB, 25 % (25) in Rosengård Fastighets AB and 49 % (–) in Sinoma Fastighets AB. For more information about these associated companies, see each companys website: Collector.se, Tornet.se, Brinova.se, Sjaelsoemanagement.dk, Shhbostad.se and Rosengardfastigheter.se.
Apart from the 50 %-owned associated companies, Balder owns 44.1 % (44.1) in Collector AB (publ), 33 % (31) of Tornet
| Number of properties 2) |
Lettable area, sq.m. |
Rental value, SEKm |
Rental value, SEK/sq.m. |
Rental income, SEKm |
Economic occupancy rate, % |
Carrying amount, SEKm |
Carrying amount, % |
|
|---|---|---|---|---|---|---|---|---|
| Distributed by region | ||||||||
| Stockholm | 60 | 164,823 | 240 | 1,459 | 233 | 97 | 4,220 | 41 |
| Gothenburg | 18 | 104,199 | 132 | 1,263 | 128 | 97 | 1,800 | 17 |
| Öresund | 24 | 66,852 | 99 | 1,483 | 98 | 99 | 1,598 | 15 |
| East | 25 | 97,052 | 119 | 1,224 | 115 | 97 | 1,625 | 16 |
| Total excluding projects | 127 | 432,925 | 590 | 1,363 | 574 | 97 | 9,244 | 89 |
| Projects for own management | 9 | 9 | 1,112 | 11 | ||||
| Total real estate portfolio | 127 | 432,925 | 599 | 1,363 | 583 | 97 | 10,356 | 100 |
| Distributed by property category | ||||||||
| Residential | 38 | 63,717 | 112 | 1,764 | 111 | 99 | 2,375 | 23 |
| Office | 13 | 38,448 | 89 | 2,316 | 85 | 96 | 1,432 | 14 |
| Retail | 58 | 229,108 | 268 | 1,169 | 259 | 97 | 3,536 | 34 |
| Other | 18 | 101,653 | 121 | 1,187 | 119 | 99 | 1,901 | 18 |
| Total excluding projects | 127 | 432,925 | 590 | 1,363 | 574 | 97 | 9,244 | 89 |
| Projects for own management | 9 | 9 | 1,112 | 11 | ||||
| Total real estate portfolio | 127 | 432,925 | 599 | 1,363 | 583 | 97 | 10,356 | 100 |
1) The above table refers to the properties owned by the associated companies at the end of the year. Sold properties have been excluded and acquired properties have been estimated using full-year values. Other properties include hotel, educational, care, industrial and mixed-use properties.
2) Refers to the entire portfolio of the associated companies.
| SEKm | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Assets | ||
| Properties | 10,356 | 7,999 |
| Other assets | 50 | 41 |
| Cash and cash equivalents | 111 | 105 |
| Total assets | 10,517 | 8,145 |
| Shareholders' equity and liabilities | ||
| Equity/interest-bearing shareholder loan Deferred tax liability |
4,499 529 |
3,474 443 |
| Interest-bearing liabilities | 5,199 | 4,107 |
| Other liabilities | 290 | 121 |
| Total equity and liabilities | 10,517 | 8,145 |
In order to limit the risk of lower rental income and consequently a weakened occupancy rate, Balder strives to develop long-term relationships with the company's existing customers. Balder has a good diversification as regards the distribution between commercial properties and residential properties as well as the geographical distribution. The diversification strengthens the possibilities of maintaining a steady and satisfactory occupancy rate. Balder's commercial
leases have an average lease term of 7.8 years (7.4). Balder's 10 largest leases represent 5.4 % (5.3) of total rental income and the average lease term amounts to 11.9 years (11.9).
No individual lease accounts for more than 0.9 % (0.8) of Balder's total rental income and no individual customer accounts for more than 4.1 % (4.3) of total rental income.
| Maturity date | Number of leases |
Proportion, % | Contracted rent, SEKm |
Proportion, % |
|---|---|---|---|---|
| 2019 | 1,093 | 36 | 236 | 3 |
| 2020 | 670 | 22 | 266 | 4 |
| 2021 | 576 | 19 | 367 | 5 |
| 2022 | 305 | 10 | 240 | 3 |
| 2023– | 373 | 12 | 1,589 | 23 |
| Total | 3,017 | 100 | 2,698 | 39 |
| Residential 1) | 37,606 | 4,238 | 61 | |
| Car park 1) | 4,869 | 18 | 0 | |
| Garage 1) | 3,813 | 47 | 1 | |
| Total | 49,305 | 7,000 | 100 |
1) Normally runs subject to a period of notice of three months.
Balder has assets in Sweden, Norway, Denmark, Finland and Germany which means that the Group is exposed to currency risks. Balder therefore has a diversified financing structure where we use bonds and bank financing in several currencies. The single largest source of funding is bonds issued on the European bond market in Euro, followed by bank loans in various currencies, a MTN programme in Swedish kronor and a commercial paper programme in Euro and Swedish kronor. In addition to these financing sources, Balder also has issued Hybrid capital which has a maturity of 60 years and is considered as 50 % equity by the credit rating agencies. Balder has Investment Grade ratings from credit rating agencies Moody's and S&P.
Balder's Board of directors has decided to adjust the financial target regarding equity/assets ratio, it shall not be less than 40 % over time. The outcome as of 31 December amounted to 37.3 %.
| Financial Key ratios | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Interest-bearing liabilities excl. Hybrid capital, SEKm | 63,609 | 54,936 |
| Hybrid capital, SEKm | 3,596 | 3,447 |
| Available liquidity including confirmed loan commitments, SEKm | 10,148 | 7,875 |
| Average fixed credit term, years | 5.6 | 5.5 |
| Average interest rate refixing period, years | 3.1 | 4.0 |
| Net debt to total assets (financial covenant 1) < 65), % | 49.9 | 50.9 |
| Interest coverage ratio (financial covenant 1) > 1,8), times | 4.6 | 4.3 |
| Secured debt/Total assets (financial covenant 1) < 45), % | 20.0 | 21.9 |
| Credit rating S&P | BBB Stable outlook |
BBB Stable outlook |
| Credit rating Moody's | Baa3 Positive outlook |
Baa3 Positive outlook |
| Calculation of net debt | ||
| Interest-bearing liabilities excl. Hybrid capital, SEKm | 63,609 | 54,936 |
| Hybrid capital (50 % is treated as equity by rating agencies), SEKm | 1,798 | 1,724 |
| Cash and cash equivalents and financial investments, SEKm | –1,328 | –1,585 |
| Net debt | 64,079 | 55,075 |
1) Financial covenants refers to obligations that Balder has to its financiers in the form of financial key ratios.
| Financial targets | Target | Outcome 2) | |
|---|---|---|---|
| Equity/assets ratio, % | min. | 40.0 | 37.3 |
| Net debt to total assets, % | max. | 50.0 | 49.9 |
| Interest coverage ratio, times | min. | 2.0 | 4.6 |
2) Key ratios including listed associated companies at market value.
Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 Fixed interest term, years 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
| Interest maturity structure on 2018-12-31 | ||||
|---|---|---|---|---|
| Q3 Fixed interest term |
Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 | |||
| Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 Q2 Year Q4Q1Q2Q3Q4Q1Q2Q3 |
SEKm | Interest, % | Proportion, % Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 Q2 |
|
| Within one year | 29,809 | Q2Q3Q4Q1Q2Q3Q4Q1Q2Q2Q3 0.9 |
44 | Q4Q1Q2Q3Q4Q1Q2Q3 |
| Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 1–2 years |
5,513 | 2.0 | 8 | Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 |
| 2–3 years | 5,866 | 2.5 | 9 | |
| 3–4 years | 5,787 | 1.5 | 9 | |
| Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 4–5 years |
4,648 | 3.0 | 7 | |
| 5–6 years | 646 | 2.5 | 1 | |
| 6–7 years | 6,989 | 2.1 | 10 | |
| 7–8 years | 6,440 | 2.3 | 10 | |
| 8–9 years | — | — | — | |
| 9–10 years | — | — | — | |
| > 10 years | 1,508 | 3.2 | 2 | |
| Total | 67,205 | 1.7 | 100 | |
| Fixed credit term | ||
|---|---|---|
| Year | SEKm | Proportion, % |
| Within one year | 9,365 | 14 |
| 1–2 years | 10,715 | 16 |
| 2–3 years | 6,766 | 10 |
| 3–4 years | 7,458 | 11 |
| 4–5 years Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 |
7,344 | 11 |
| 5–6 years | 4,039 | 6 |
| 6–7 years | 7,508 | 11 |
| 7–8 years | 5,748 | 9 |
| 8–9 years | 149 | 0 |
| 9–10 years | 143 | 0 |
| > 10 years | 7,972 | 12 |
| Total | 67,205 | 100 |
14 FASTIGHETS AB BALDER · YEAR-END REPORT 2018
After the end of the reporting period, Balder acquired its first property in London, 8 Fenchurch Place, in central London. The property has a lettable area of just over 9,000 sq.m. and is rented mainly to insurance companies and consulting companies with a remaining average term of 9 years. The investment amounts to GBP 75 million and has rents of GBP 4.4 million. Closing will take place during the first quarter of 2019.
After the end of the reporting period no other significant events has occured.
Balder receives fees from associated companies and Erik Selin Fastigheter AB for property and company management services. These fees amounted to SEK 53m (46) during the year and are reported in management and administrative costs. In addition, services are bought from Collector AB (publ). All transactions have been priced on market terms.
Balder's operations, financial position and results may be affected by a number of risks and uncertainty factors. These are described in the Annual Report for 2017, on pages 54-57. Otherwise, no significant changes has been noted.
Balder applies IFRS (International Financial Reporting Standards) as adopted by the European Union in its consolidated accounts and the interpretations of these (IFRIC). This interim report is prepared in accordance with IAS 34, Interim Financial Reporting. In addition, relevant provisions of the Swedish Annual Accounts Act and the Swedish Securities Markets Act have also been applied. The parent company has prepared its financial statements in accordance with the Annual Accounts Act, the Securities Markets Act and RFR 2, Accounting for Legal Entities. The accounting principles follow those reported in the Annual Report 2017, with addition for reporting of development properties that are reported on a separate line in the consolidated balance sheet as of December 31, 2018, see page 9, and application of IFRS 9 as below.
From and including 1 January 2018, the Group has adopted the following new standard:
The change with IFRS 9 compared to previously applied principles relates to the new model for measurement of credit losses. The model measures expected credit losses by taking account of future-oriented information. Compared with the previous model, which was based on actual losses, this will mean an earlier recognition of credit losses. In the Annual Report for 2017, the impact of the transition was presented in Note 1 with an increased provision for accounts receivable losses, which had a net effect on equity of SEK —16m. In connection with the preparation of the Q1 report, it has also been noted that the associated company Collector reported an impact of the transition with regard to recognition of expected credit losses, whereupon the total impact of the transition on the Balder Group's equity amounted to SEK —92m for the introduction of IFRS 9. In accordance with the standard's transitional arrangements, comparative figures have not been restated for 2017.
Besides this the accounting policies and calculation methods applied are unchanged compared with the Annual Report for 2017.
IFRS 16 Leases - Effect of introduction of the standard The Group applies IFRS 16 Leases from 1 January 2019. No distinction is made between operating and finance leases any more. According to the new standard, a non-current asset (right to use a leased asset) and a financial liability relating to the liability to pay lease payments shall be recognised in the balance sheet. During the year, Balder carried out a detailed review of all leases where the Group is a lessee. During the review, site leasehold agreements were identified as the most important leases, which means that the implementation of the standard essentially means that leases relating to site leasehold rights will be recognised in the consolidated balance sheet. However, the introduction of the standard will have a limited impact on the financial statements, as the Group essentially operates as a lessor and leases where the Group is a lessee only arise to a limited extent relative to the rest of the Group's operations.
The Group will apply the modified retrospective method, which means that rights-of-use assets (site leasehold agreements), are measured at an amount equivalent to the lease liability as of 1 January 2019. The transition to IFRS 16 will thus not have any impact on the Group's equity. As the modified retrospective method will be applied, comparative figures for 2018 will not be restated.
The Group has chosen to apply the exemption not to recognise short-term leases and leases of low value assets as right-of-use assets and lease liabilities in the balance sheet. Payments related to these leases will instead be recognised as an expense on a straight line basis over the lease term. For lease obligations relating to site leasehold rights, the Group expects to recognise right-of-use assets amounting to approx. SEK 1,585m and lease liabilities of approx. SEK 1,585m on 1 January 2019. There will be no net effect from deferred tax as the asset and liability are of equal value at the time of transition to IFRS 16. The right-ofuse asset will be recognised at fair value as these represent part of the Group's investment properties.
The expense for ground rents, as an effect of the transition to IFRS 16, will be recognised in its entirety, as a financial expense as these are considered to be interest according to IFRS 16. According to the currently applied principles, these are included as part of the property expenses and affect net operating income. The recognised expense for ground rents in 2018 totalled SEK –63m.
The Group's leases largely consist of leases where the Group is a lessor. A review of these agreements has not resulted in any change in the currently applied principles in connection with the transition to IFRS 16.
Ahead of the annual general meeting on 8 May 2019, the board intends to propose the meeting to decide:
This interim report has not been subject to review by the company's auditors.
Gothenburg 27 February 2019
Erik Selin Chief Executive Officer
| SEKm | 2018 Oct-Dec |
2017 Oct-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
|---|---|---|---|---|
| Rental income | 1,787 | 1,558 | 6,714 | 5,915 |
| Property costs | –486 | –424 | –1,824 | –1,695 |
| Net operating income | 1,301 | 1,134 | 4,890 | 4,220 |
| Management and administrative costs | –156 | –138 | –592 | –543 |
| Participations in the profits of associated companies | 290 | 269 | 881 | 1,010 |
| – of which profit from property management | 172 | 158 | 658 | 583 |
| – of which changes in value | 179 | 175 | 407 | 675 |
| – of which tax | –61 | –64 | –184 | –248 |
| Other income/costs | –1 | 2 | –3 | 8 |
| Net financial items | –302 | –273 | –1,076 | –984 |
| Profit including changes in value and tax in associated companies | 1,134 | 994 | 4,100 | 3,711 |
| – of which Profit from property management | 1,015 | 883 | 3,877 | 3,284 |
| Changes in value | ||||
| Changes in value investment properties, realised | 36 | 46 | 86 | 184 |
| Changes in value investment properties, unrealised | 1,613 | 1,671 | 7,914 | 5,115 |
| Changes in value derivatives | –58 | –16 | –34 | 144 |
| Changes in value total | 1,591 | 1,701 | 7,965 | 5,443 |
| Profit before tax | 2,725 | 2,695 | 12,065 | 9,154 |
| Income tax | –511 | –356 | –1,897 | –1,386 |
| Net profit for the period/year | 2,213 | 2,339 | 10,169 | 7,769 |
| Net profit for the period/year attributable to: | ||||
| Parent company shareholders | 2,039 | 2,148 | 9,308 | 7,118 |
| Non-controlling interests | 174 | 191 | 861 | 650 |
| 2,213 | 2,339 | 10,169 | 7,769 | |
| Other comprehensive income – items that may be subsequently | ||||
| reclassified to profit or loss | ||||
| Translation difference relating to foreign operations | –58 | 12 | –45 | –103 |
| Cash flow hedges after tax | –43 | 20 | 9 | 121 |
| Participation in other comprehensive income of associated companies | –4 | 5 | 10 | 4 |
| Total comprehensive income for the period/year | 2,109 | 2,376 | 10,143 | 7,791 |
| Total comprehensive income for the period/year attributable to: | ||||
| Parent company shareholders | 1,969 | 1,997 | 9,003 | 6,906 |
| Non-controlling interests | 140 | 379 | 1,140 | 885 |
| 2,109 | 2,376 | 10,143 | 7,791 | |
| Profit from property management | 1,015 | 883 | 3,877 | 3,284 |
| Of which non-controlling interests part of Profit from property management | –140 | –135 | –573 | –480 |
| Profit from property management attributable to parent company shareholder | 876 | 748 | 3,304 | 2,804 |
| Profit from property management per share, SEK | 4.86 | 4.16 | 18.35 | 14.74 |
| Profit after tax per share, SEK | 11.33 | 11.93 | 51.71 | 38.71 |
Thers is no dilutive effect as no potential shares arise.
| SEKm | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Assets | ||
| Investment properties | 116,542 | 98,360 |
| Development properties | 1,598 | – |
| Other fixed assets | 123 | 107 |
| Participations in associated companies | 6,219 | 4,699 |
| Other receivables | 2,198 | 1,508 |
| Cash and cash equivalents and financial investments | 1,328 | 1,585 |
| Total assets | 128,008 | 106,260 |
| Shareholders' equity and liabilities Shareholders' equity 1) |
47,408 | 37,718 |
| Deferred tax liability | 8,857 | 7,041 |
| Interest-bearing liabilities | 67,205 | 58,384 |
| –of which Hybrid capital 2) | 3,596 | 3,447 |
| Derivatives | 965 | 922 |
| Other liabilities | 3,573 | 2,196 |
| Total equity and liabilities | 128,008 | 106,260 |
| 1) Of which non-controlling interests 2) 50 % of Hybrid capital is treated as equity by the rating agencies and thus decreases interest |
7,262 | 6,422 |
| bearing liabilities when calculating the debt/equity ratio and net debt to total assets ratio | 1,798 | 1,724 |
| SEKm | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Opening equity | 37,718 | 33,479 |
| Transition effect IFRS 9 | –92 | – |
| Changed accounting principles in Sato Oyj (IAS 12) | –124 | – |
| Total comprehensive income for the year | 10,143 | 7,791 |
| Dividend preference shares | – | –50 |
| Retiring of preference capital | – | –3,500 |
| Transactions with non-controlling interests | –111 | –8 |
| Dividend to non-controlling interests | –135 | – |
| Non-controlling interests arising on the acquisition of subsidiary | 8 | 6 |
| Closing equity | 47,408 | 37,718 |
| 2018 | 2017 | 2018 | 2017 | |
|---|---|---|---|---|
| SEKm | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Net operating income | 1,301 | 1,134 | 4,890 | 4,220 |
| Other income/costs | –1 | 2 | –3 | 8 |
| Management and administrative costs | –156 | –138 | –592 | –543 |
| Reversal of depreciation | 6 | 1 | 20 | 19 |
| Net financial items paid | –209 | –204 | –1,099 | –961 |
| Taxes paid | –71 | –65 | –345 | –235 |
| Cash flow from operating activities before change in working capital | 872 | 730 | 2,871 | 2,508 |
| Change in operating receivables | –291 | 11 | –394 | –86 |
| Change in operating liabilities | 634 | 114 | 1,189 | 69 |
| Cash flow from operating activities | 1,215 | 855 | 3,667 | 2,490 |
| Acquisition of properties | –295 | –1,165 | –3,861 | –4,936 |
| Acquisition/Divestment of property, plant and equipment | –23 | –11 | –44 | –27 |
| Purchase of financial investments | –235 | –17 | –593 | –41 |
| Acquisition of shares in associated companies/Capital contribution to associated | ||||
| companies/Loans to associated companies | –835 | –69 | –1,085 | –456 |
| Investment in existing properties and projects | –1,806 | –1,456 | –6,210 | –3,718 |
| Transactions with non-controlling interests | – | – | –111 | –8 |
| Sale of properties | 45 | 135 | 311 | 2,830 |
| Sale of financial investments | 126 | –1 | 133 | 7 |
| Sale of shares in associated companies | – | – | – | 120 |
| Dividend paid from associated companies | – | – | 24 | 13 |
| Cash flow from investing activities | –3,023 | –2,583 | –11,435 | –6,215 |
| Dividend paid for preference shares | – | – | – | –150 |
| Redemption of preference capital | – | –3,500 | – | –3,500 |
| Dividend paid to non-controlling interests | – | – | –135 | – |
| Changes in value derivatives, realised | – | – | – | –417 |
| Loans raised | 2,788 | 3,443 | 12,148 | 24,896 |
| Amortisation/redemption of loans sold properties/changes in | ||||
| overdraft facilities | –894 | –1,956 | –4,967 | –17,110 |
| Cash flow from financing activities | 1,894 | –2,014 | 7,046 | 3,719 |
| Cash flow for the period/year | 85 | –3,742 | –723 | –6 |
| Cash and cash equivalents at the start of the period/year | 472 | 5,023 | 1,281 | 1,287 |
| Cash and cash equivalents at the end of the period/year | 558 | 1,281 | 558 | 1,281 |
| Cash and cash equivalents | 558 | 1,281 | 558 | 1,281 |
| Unutilised overdraft facilities | 350 | 350 | 350 | 350 |
| Unutilised credit facilities | 8,470 | 5,940 | 8,470 | 5,940 |
| Financial investments | 770 | 305 | 770 | 305 |
| Available liquidity including confirmed credit commitments | 10,148 | 7,875 | 10,148 | 7,875 |
| SEKm | 2018 Oct-Dec |
2017 Oct-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
|---|---|---|---|---|
| Rental income | ||||
| Helsinki | 585 | 534 | 2,302 | 2,044 |
| Stockholm | 286 | 245 | 1,057 | 920 |
| Gothenburg | 335 | 302 | 1,255 | 1,153 |
| Öresund | 267 | 191 | 919 | 666 |
| East | 243 | 229 | 940 | 919 |
| North | 71 | 56 | 240 | 214 |
| Total | 1,787 | 1,558 | 6,714 | 5,915 |
| Net operating income | ||||
| Helsinki | 385 | 363 | 1,583 | 1,352 |
| Stockholm | 225 | 190 | 821 | 704 |
| Gothenburg | 260 | 231 | 951 | 861 |
| Öresund | 214 | 148 | 721 | 510 |
| East | 164 | 160 | 645 | 642 |
| North | 53 | 41 | 168 | 151 |
| Total | 1,301 | 1,134 | 4,890 | 4,220 |
The group's internal reporting of operations is divided into the above segments. Total net operating income corresponds with reported net operating income in the income statement. The difference between net operating income of SEK 4,890m (4,220) and profit before tax of SEK 12,065m (9,154) consists of changes in value of investment properties of SEK 8,007m (5,336), other income/costs SEK –3m (8), management and administrative costs of SEK –592m (–543), participations in profits of associated companies of SEK 881m (1,010), net financial items of SEK –1,076m (–984) and changes in value of derivatives of SEK –34m (144).
| SEKm | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Real estate portfolio | ||
| Helsinki | 30,881 | 26,918 |
| Stockholm | 23,523 | 17,675 |
| Gothenburg | 22,448 | 19,376 |
| Öresund | 19,184 | 14,591 |
| East | 12,436 | 11,402 |
| North | 4,271 | 3,334 |
| Total excluding projects | 112,742 | 93,297 |
| Projects for own management | 3,799 | 5,063 |
| Total investment properties | 116,542 | 98,360 |
| Development properties | 1,598 | – |
| Total real estate portfolio | 118,140 | 98,360 |
The carrying amounts of properties have during the year changed by investments, acquisitions, divestments, unrealised changes in value and currency changes, with SEK 3,963m in Helsinki region, SEK 5,848m in the Stockholm region, SEK 3,072m in the Gothenburg region, SEK 4,593m in the Öresund region, SEK 937m in the North region and by SEK 1,034m in the East region. The group's projects for own management has decreased by SEK –1,264m while the group's development properties has increased by SEK 1,598m. Sato's property portfolio is divided between the regions Helsinki and East. The real estate holdings in Norway is classified in the North region and the properties in Germany in the Öresund region.
| 2018 Oct-Dec |
2017 Oct-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
|
|---|---|---|---|---|
| Share-related 1) | ||||
| Average number of shares, thousands | 180,000 | 180,000 | 180,000 | 180,000 |
| Profit after tax, SEK | 11.33 | 11.93 | 51.71 | 38.71 |
| Profit after tax excluding unrealised changes in value, SEK | 3.52 | 4.44 | 17.25 | 14.36 |
| Profit from property management, SEK | 4.86 | 4.16 | 18.35 | 14.74 |
| Net operating income, SEK | 5.96 | 5.08 | 22.00 | 18.79 |
| Outstanding number of shares, thousands | 180,000 | 180,000 | 180,000 | 180,000 |
| Shareholders' equity, SEK | 225.60 | 185.02 | 225.60 | 185.02 |
| Long-term net asset value (NAV), SEK | 280.17 | 229.25 | 280.17 | 229.25 |
| Share price on the closing date, SEK | 252.00 | 219.40 | 252.00 | 219.40 |
| Property-related | ||||
| Rental value full-year, SEK/sq.m. | 1,802 | 1,724 | 1,802 | 1,724 |
| Rental income full-year, SEK/sq.m. | 1,737 | 1,651 | 1,737 | 1,651 |
| Economic occupancy rate, % | 96 | 96 | 96 | 96 |
| Vacancy rate, % | 4 | 4 | 4 | 4 |
| Surplus ratio, % | 73 | 73 | 73 | 71 |
| Carrying amount, SEK/sq.m. | 28,013 | 24,952 | 28,013 | 24,952 |
| Number of properties | 1,185 | 1,148 | 1,185 | 1,148 |
| Lettable area, sq.m. thousands | 4,025 | 3,739 | 4,025 | 3,739 |
| Profit from property management, attributable to parent company share | ||||
| holders, SEKm | 876 | 748 | 3,304 | 2,804 |
| Financial | ||||
| Return on equity, % | 10.3 | 13.7 | 25.2 | 22.6 |
| Return on total assets, % | 5.4 | 5.8 | 11.1 | 9.9 |
| Interest coverage ratio, times | 4.4 | 4.2 | 4.6 | 4.3 |
| Equity/assets ratio, % | 37.3 | 36.7 | 37.3 | 36.7 |
| Debt/equity ratio, times | 1.4 | 1.4 | 1.4 | 1.4 |
| Net debt to total assets, % | 49.9 | 50.9 | 49.9 | 50.9 |
| 2018 Oct-Dec |
2017 Oct-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
|
|---|---|---|---|---|
| Share-related 1) | ||||
| Shareholders' equity, SEK | 223.03 | 173.86 | 223.03 | 173.86 |
| Financial | ||||
| Return on equity, % | 10.5 | 14.7 | 26.1 | 24.7 |
| Return on total assets, % | 5.4 | 5.9 | 11.2 | 10.2 |
| Equity/assets ratio, % | 37.0 | 35.5 | 37.0 | 35.5 |
| Debt/equity ratio, times | 1.4 | 1.5 | 1.4 | 1.5 |
| Net debt to total assets, % | 50.1 | 51.8 | 50.1 | 51.8 |
1) There is no dilutive effect as no potential shares arise.
| SEKm | 2018 Oct-Dec |
2017 Oct-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
|---|---|---|---|---|
| Net sales | 92 | 66 | 289 | 252 |
| Administrative costs | –96 | –81 | –292 | –278 |
| Operating profit | –4 | –15 | –4 | –26 |
| Profit from financial items Dividends from subsidiaries |
– | – | 1,608 | 909 |
| Other net financial items | 80 | –235 | 110 | 350 |
| – of which exchange rate differences | 33 | –467 | –729 | –565 |
| Changes in value of derivatives | –58 | –16 | –34 | 133 |
| Profit before appropriations and taxes | 17 | –266 | 1,680 | 1,367 |
| Appropriations | ||||
| Group contributions paid | –87 | –41 | –87 | –41 |
| Profit before tax | –70 | –308 | 1,594 | 1,326 |
| Deferred tax | 14 | 68 | –3 | –92 |
| Net profit for the period/year 1) | –56 | –240 | 1,590 | 1,234 |
1) The parent company has no items reported in other comprehensive income and therefore total comprehensive income for the period/year is equal with net profit for the period/year.
| SEKm | 2018 31 Dec |
2017 31 Dec |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 18 | 9 |
| Financial non-current assets | 11,319 | 5,472 |
| Receivables from group companies | 38,337 | 36,790 |
| Current receivables | 197 | 199 |
| Cash and cash equivalents and financial investments | 1,000 | 1,152 |
| Total assets | 50,870 | 43,621 |
| Shareholders' equity and liabilities | ||
| Shareholders' equity | 11,227 | 9,637 |
| Interest-bearing liabilities | 33,275 | 28,774 |
| –of which Hybrid capital | 3,596 | 3,447 |
| Liabilities to group companies | 5,282 | 4,443 |
| Derivatives | 446 | 412 |
| Other liabilities | 640 | 355 |
| Total equity and liabilities | 50,870 | 43,621 |
Balder's share is listed on Nasdaq Stockholm, Large Cap segment. The company's market capitalisation as of 31 December amounted to SEK 45,360m (39,492).
The principal owner in Fastighets AB Balder is Erik Selin Fastigheter AB, which owns 36.4 % (36.4) of the capital and 49.9 % (49.9) of the votes. Foreign ownership amounts to approximately 26 % (24) of outstanding shares.
At the end of the year, approximately 13,000 shareholders (14,000) held shares. During the year, approximately 72.1 million shares were traded (79.1) which corresponds to an average of about 292,000 shares per trading day (317,000). The annual turnover rate amounted to 40 % (44). The price of the share was SEK 252.00 (219.40) on 31 December, corresponding to an increase of 14.9 % since previous year-end.
On 31 December, the share capital in Balder amounted to SEK 180,000,000 distributed among 180,000,000 shares. Each share has a quota value of SEK 1, where of 11,229,432 shares are of Class A and 168,770,568 of Class B. The total number of outstanding shares as of 31 December amounts to 180,000,000. Each Class A share carries one vote and each Class B share carries one tenth of one vote.
| Owner | A shares | B shares | Total number of shares |
Capital, % | Votes, % |
|---|---|---|---|---|---|
| Erik Selin via company | 8,309,328 | 57,210,900 | 65,520,228 | 36.4 | 49.9 |
| Arvid Svensson Invest AB | 2,915,892 | 13,542,540 | 16,458,432 | 9.1 | 15.2 |
| Swedbank Robur fonder | — | 8,948,111 | 8,948,,111 | 5.0 | 3.2 |
| SEB Investment Management | — | 7,805,607 | 7,805,607 | 4.3 | 2.8 |
| Länsförsäkringar fondförvaltning AB | — | 6,367,710 | 6,367,710 | 3.5 | 2.3 |
| Handelsbanken Fonder AB | — | 5,441,575 | 5,441,575 | 3.0 | 1.9 |
| Second Swedish National Pension Fund | — | 4,155,593 | 4,155,593 | 2.3 | 1.5 |
| Vanguard | — | 3,301,480 | 3,301,480 | 1.8 | 1.2 |
| CBNY-Norges Bank | — | 2,586,858 | 2,586,858 | 1.4 | 0.9 |
| Afa Försäkring | — | 1,845,041 | 1,845,041 | 1.0 | 0.7 |
| Other | 4,212 | 57,565,153 | 57,569,365 | 32.0 | 20.5 |
| Total | 11,229,432 | 168,770,568 | 180,000,000 | 100 | 100 |
The company presents a number of financial metrics in the interim report that are not defined according to IFRS (so-called Alternative Performance Measures according to ESMA's guidelines). These performance measures provide valuable supplementary information to investors, the company's management and other stakeholders since they facilitate effective evaluation and analysis of the company's financial position and performance. These alternative performance measures are not always comparable with measures used by other companies and shall therefore be considered as a complement to measures defined according to IFRS. Fastighets AB Balder will apply these alternative performance measures consistently over time. The key ratios are alternative performance measures according to ESMA's guidelines unless otherwise stated. A description follows below of how Fastighets AB Balder's key ratio's are defined and calculated.
Profit after tax in relation to average equity. The values were converted to a full-year basis in the interim accounts without taking account of seasonal variations that normally arise in the operations and with the exception of changes in value.
Profit before tax with addition of net financial items in relation to average balance sheet total. The values were converted to a full-year basis in the interim accounts without taking account of seasonal variations that normally arise in the operations and with the exception of changes in value.
Net debt in relation to total assets.
Profit before tax with reversal of changes in value. Reversal of changes in value and tax as regards participation in profits of associated companies also takes place. When calculating profit from property management before tax attributable to parent company shareholders, the profit from property management is also reduced with the noncontrolling interests' share.
Interest expenses in the period recalculated to annual value in relation to the average interest-bearing liabilities.
Interest-bearinging liabilities decreased by cash and cash equivalents, financial investments and 50 % of Hybrid capital which is treated as 50 % equity by the rating agencies.
Profit before tax with reversal of net financial items, changes in value and changes in value and tax as regards participation in profits of associated companies, in relation to net financial items.
Interest-bearing liabilities decreased by 50 % of Hybrid capital in relation to shareholders' equity.
Shareholders' equity including non-controlling interests in relation to the balance sheet total at the end of the year.
Shareholders' equity in relation to the number of outstanding shares at the end of the year.
Profit from property management divided by the average number of outstanding shares.
The number of outstanding shares at the start of the year, adjusted by the number of shares issued during the year weighted by the number of days that the shares have been outstanding in relation to the total number of days during the year.
Equity per share with reversal of interest rate derivatives and deferred tax according to balance sheet.
Profit attributable to the average number of shares.
Yield, % Estimated net operating income on an
annual basis in relation to the fair value of the properties at the end of the year.
Rental income less property costs.
Contracted rent for leases which are running at the end of the year in relation to rental value.
Refers to properties constructed with the intention of being divested after completion.
Refers to both investment properties and development properties.
Classified according to the principal use of the property. The break-down is made into office, retail, residential and other properties. Other properties include hotel, educational, care, industrial/warehouse and mixed-use properties. The property category is determined by what the largest part of the property is used for.
This item includes direct property costs, such as operating expenses, utility expenses, maintenance, ground rent and property tax.
Refers to properties that are held with the objective of generating rental income or an increase in value or a combination of these.
Contracted rent and estimated market rent for vacant premises.
Net operating income in relation to rental income.
FASTIGHETS AB BALDER · YEAR-END REPORT 2018 25 1) The key ratio is operational and is not considered to be a alternative key ratio according to ESMA's guidelines.
The information in this report is such that Fastighets AB Balder (publ) is obliged to disclose according to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. This information has been published at 08.00 a.m. on February 27, 2019.
For additional information, please contact CEO Erik Selin, telephone +46 706 074 790 or CFO Magnus Björndahl, telephone +46 735 582 929.
Overall information about the company's operations, board of directors and management, financial reporting and press releases, may be found on Balder's website, balder.se.
Annual General Meeting 8 May 2019 Interim report Jan-Mar 2019 8 May 2019 Interim report Jan-June 2019 17 July 2019 Interim report Jan-Sep 2019 25 October 2019 Year-end report 2019 27 February 2020
| Head office | Parkgatan 49 · Box 53 121 · 411 38 Gothenburg · Tel: +46 31-10 95 70 · Fax: +46 31-10 95 99 |
|---|---|
| Letting | Tel: +46 20-151 151 |
| Customer service Tel: +46 774-49 49 49 | |
| Region |
| Gothenburg | Parkgatan 49 · Box 53 121 · 411 38 Gothenburg · Tel: +46 31-10 95 70 |
|---|---|
| Timmervägen 9 A · 541 64 Skövde · Tel: +46 500-47 88 50 | |
| Helsinki | Panuntie 4 · PO Box 401 · 00610 Helsinki · Tel: +358-201 34 4000 |
| North | Forskarvägen 27 · 804 23 Gävle · Tel: +46 26-54 55 80 |
| Sandbäcksgatan 5 · 653 40 Karlstad · Tel: +46 54-14 81 80 | |
| Affärsgatan 4 D · 862 31 Kvissleby · Tel: +46 60-52 45 50 | |
| Stockholm | Tulegatan 2A · 113 58 Stockholm · Tel: +46 8-735 37 70 |
| Vårby Allé 18 · 143 40 Vårby · Tel: +46 8-735 37 70 | |
| Öresund | Kalendegatan 26 · 211 35 Malmö · Tel: +46 40-600 96 50 |
| Esplanaden 15 · 265 34 Åstorp · Tel: +46 42-569 40 | |
| Bryggaregatan 7 · 252 27 Helsingborg · Tel: +46 42-17 21 30 | |
| Vesterbrogade 1 E, 5. sal · 1620 København V · Tel: +45-88 13 61 51 | |
| East | Hospitalsgatan 11 · 602 27 Norrköping · Tel: +46 11-15 88 90 |
| Rönnbergagatan 10 · 723 46 Västerås · Tel: +46 21-10 98 90 |
This report is a translation of the Swedish Interim Report January-December 2018. In the event of any disparities between this report and the Swedish version, the latter will have priority.
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