Quarterly Report • May 8, 2008
Quarterly Report
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Gross profit for the period totalled SEK 225.4 million (202.4). The gross profit for comparable holdings rose to SEK 221.8 million, an increase of 10 per cent. The increase can be attributed mainly to higher rents, new leases and renegotiations. Net rents from property management during the period amounted to SEK 317.6 million (288.4).
The turnover-based rent supplement for the NK department stores is reported during the fourth quarter. The turnover-based rent supplement for 2007 amounted to SEK 16.8 million. Apart from this there were no seasonal variations in rents.
The property management results for each business area for comparable holdings are reported on page 6.
Operations comprise parking operations at Parkaden in Stockholm.
Net revenue amounted to SEK 16.2 million (15.4), expenses amounted to SEK 11.7 million (11.2) and gross profit amounted to SEK 4.5 million $(4.2)$ .
Central administration totalled SEK -7.7 million (-6.9). Changes in the value of investment properties totalled SEK 0.0 million (0.0) and in interest derivatives SEK -17.9 million (0.0).
Net financial income and expense amounted to SEK -35.8 million (-21.5). The increased net cost can be attributed to rises in current market interest rates and the fact that interest income was higher during the preceding year as a result of the increased liquidity following the sale of the World Trade Center.
The Group's tax (actual and deferred) for the year totalled SEK -48.5 million (-53.4), of which SEK -39.1 million (-42.1) was actual tax and SEK-9.4 million (-11.3) deferred tax.
The consolidated profit after tax amounted to SEK 120.0 million (131.4), a decrease of 9 per cent.
<sup>1 The acquired property Rännilen 15 is included with effect from June 1, 2007. Otherwise, the property holdings remain unchanged compared with the same period in 2007.
Investments during the year in properties and equipment totalled SEK 45.6 million (29.8).
The fair value of the Hufvudstaden property portfolio as of March 31, 2008 was estimated at SEK 20,576 million (20,530 at the year-end). The increase can be attributed to investments in the property holdings. The rentable floor space was 353,767 square metres (353,685 at the year-end).
The total rental vacancy level as of March 31 continued to be low and was 3.8 per cent (3.3 at the year-end) and the total floor space vacancy level was 4.7 per cent (4.6 at the year-end).
At the turn of each year, Hufvudstaden makes an internal valuation of the fair value of each individual property. The assessment is based on a valuation made using the direct yield method. To assure the evaluations, external valuations are obtained for part of the property holdings.
There is a continuous update made during the vear of the internal valuation of the properties in order to take into account purchases, sales and investments. Hufvudstaden also investigates on a continuous basis whether there are other indications of changes in the fair value of the properties. This could, for example, take the form of major lettings, terminations and material changes in the yield requirement.
In the light of the above, the increase in value during 2007 was estimated at SEK 2.6 billion. The total value of the property holdings as of December 31, 2007 was SEK 20.5 billion, including investments. The increase during the first half of 2007 can be attributed mainly to an estimated lower direct yield requirement and during the second half of the year it can be attributed mainly to a strong rise in rents. The average direct yield requirement for the property holdings in conjunction with the above valuation was 4.6 per cent (4.8). Apart from investments totalling SEK 45 million no major change in the value of the property holdings is considered to have taken place during the first quarter of 2008 and consequently the fair value of the property holdings as of March 31, 2008 is set at SEK 20.6 billion.
Based on the valuation of the property holdings, the net asset value is SEK 14.8 billion or SEK 72 per share after tax. When calculating the net asset value, calculated deferred tax has been used. This has been calculated at 10 per cent of the difference between the assessed fair value and the residual value for tax purposes and has been assessed in the light of current tax legislation, which means that properties can be sold by a limited company without tax implications. The purchaser, however, loses the basis for depreciation, which could justify some compensation, which has been set at 10 per cent. If the tax rate according to the Balance Sheet (28 per cent) is used in the calculation, the net asset value would have been SEK 11.6 billion or SEK 56 per share. If the tax rate is assumed to be 0 per cent, the net asset value would have been SEK 16.7 billion or SEK 81 per share.
Interest in flexible, high-quality office space in prime locations in sub-markets of central Stockholm was stable during the period, mainly as a result of improved economic growth in the region. Vacant space in this category has fallen and rents have risen. For office leases in Stockholm's most attractive locations within the Golden Triangle, at Norrmalmstorg/Hamngatan and in the Hötorg area, rents were noted of SEK 3,800-5,000 per square metre per year, excluding the property tax supplement. Interest in well-situated retail premises in the same sub-markets was also high. Rents for prime location retailing space are in the range SEK 12,000-16,000 per square metre per year, excluding the property tax supplement.
Demand for modern, flexible office premises in the central sub-markets of Gothenburg has been stable. There was, however, a continued low level of interest in properties of low standard requiring modernization and this is the same in Stockholm. Market rents for modern, well-arranged office premises in prime locations were between SEK 1,600 and SEK 2,200 per square metre per year, excluding the property tax supplement. For prime site retail premises the market rent was SEK 5,000-9,000 per square metre per year, excluding the property tax supplement.
Hufvudstaden's borrowing as of March 31, 2008 amounted to SEK 3,400.0 million (3,400.0 at the year-end). The average fixed interest period was 39 months (40 at the year-end), the average capital tieup period was 50 months (53 at the year-end) and the average interest rate was 4.7 per cent (4.6 at the year-end). Net liabilities amounted to SEK 3,231.7 million (3,069.3 at the turn of the year).
The fair value of interest swaps as of March 31 was SEK 25.8 million (55.0 at the year-end). The change in value of financial instruments from December 31, 2007 to March 31, 2008 has affected the income statement to the amount of SEK-17.9 million, or SEK -12.9 after tax, and the hedge reserve in equity by SEK -8.0 million after tax.
| Maturity | Volume, | Share, |
|---|---|---|
| date | SEK m | $\frac{0}{0}$ |
| 2008 | 600,0 | 18 |
| 2010 | 500,0 | 15 |
| 2011 | 950,0 | 28 |
| 2012 | 250.0 | |
| 2013 | 350,0 | 10 |
| 2017 | 750.0 | 22 |
| Total | 3 400,0 | 100 |
| Maturity date |
Volume, SEK m |
Share, % |
Average AER. $\frac{0}{0}$ |
|---|---|---|---|
| 2008 | 1 200,0 | 36 | 5,2 |
| 2010 | 500.0 | 15 | 4,1 |
| 2011 | 350,0 | 10 | 3,9 |
| 2012 | 250.0 | 4,9 | |
| 2013 | 350.0 | 10 | 4,1 |
| 2017 | 750,0 | 22 | 4,8 |
| Total | 3 400,0 | 100 | 4,7 |
Hufvudstaden, whose shares are listed on the OMX Nordic Stock Exchange in Stockholm, had 19,535 shareholders at the year-end. The proportion of foreign ownership as of March 31, 2008 was 14.0 per cent of the total number of outstanding shares (20.3). The A-share price as of March 31, 2008 was SEK 62.50, equivalent to a stock exchange value of SEK 12.9 billion, calculated on the total number of outstanding shares.
The total number of shares held by Hufvudstaden as of March 31, 2008 was 5,006,000 A-shares, equivalent to 2.4 per cent of the total number of issued shares. No buy-backs were made during the period or after the end of the reporting period. At the 2008 Annual General Meeting the Board was granted renewed authorization to acquire up to 10 per cent of all the issued shares and to assign company shares.
| Total number |
Held by other |
||
|---|---|---|---|
| of sha- | Held by | share- | |
| res | Hufvudstaden | holders | |
| As of January 1, | |||
| 2008 | 211.3 | 5.0 | 206.3 |
| Buy-back | |||
| As of March 31, | |||
| 2008 | 211.3 | 5.0 | 206.3 |
The Group is mainly exposed to financing, interest and credit risks and changes in value in the property holdings. The Company has not identified any material risks and uncertainties other than those described in the Annual Report for 2007.
No material transactions took place during the period.
This interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting. The accounting principles remained unchanged compared with the most recent annual report.
Interim Report, January-June 2008
Interim Report, January-June 2008 Year-End Report for 2008 Annual Report 2008 Annual General Meeting in Stockholm 2009
August 20, 2008 November 11, 2008 February 12, 2009 March 2009 March 26, 2009
This information is also published on Hufvudstaden's website, www.hufvudstaden.se
Questions can be answered by Ivo Stopner, President, and Magnus Jacobson, Head of Finance, telephone +46-8-762 90 00.
In some cases there has been rounding off, which means that the tables and calculations do not always tally.
The information in this Interim Report is information that Hufvudstaden AB (publ) is obliged to publish according to the Securities Exchange and Clearing Operations Act. The information was published on May 8, 2008.
| 2007 2008 2007 GROUP, SEK m Net revenue 1,213.2 317.6 288.4 Property management 16.2 15.4 63.0 Parking operations 1,276.2 333.8 303.8 Property management expenses $-26.4$ $-4.9$ $-6.1$ Maintenance $-208.3$ $-53.5$ $-52.6$ Operations and administration $-16.1$ $-4.0$ $-4.0$ Ground rents $-29.8$ $-23.3$ $-114.9$ Property tax $-86.0$ $-365.7$ $-92.2$ Property management expenses $-45.4$ $-11.7$ $-11.2$ Parking operations $-411.1$ $-103.9$ $-97.2$ Operating expenses 865.1 229.9 206.6 Gross profit 202.4 847.5 225.4 - of which Property management 4.2 17.6 4.5 - of which Parking operations $-30.8$ $-6.9$ $-7.7$ Central administration 222.2 199.7 834.3 Operating profit before changes in value Changes in value 2,597.7 Investment properties 16.5 $-17.9$ Interest derivates 3 4 4 8.5 204.3 199.7 Operating profit $-126.6$ $-35.8$ $-21.5$ Financial income and expense 168.5 178.2 3,321.9 Profit before tax $-53.4$ $-927.6$ $-48.5$ Tax 2,394.3 120.0 124.8 Profit from continuing operations 6.6 6.6 Profit from discontinued operations, net after tax 2,400.9 131.4 120.0 Profit for the period Average number of outstanding shares after buy-backs 206,265,933 206,265,933 206,265,933 during the period Profit per share from remaining operations before and after 11.61 0.58 0.61 dilution 11.64 0.64 0.58 Income per share for the period, SEK BALANCE SHEETS - SUMMARY March 31, December 31, March 31, 2007 2007 2008 GROUP, SEK m 20,530.5 20,575.7 17,438.2 Investment properties 14.5 69.1 Other fixed assets 41.4 17,452.7 20,599.6 20,617.1 Total fixed assets 82.7 349.5 555.2 Current assets 21,172.3 17,535.4 20,949.1 Total assets 9,527.2 11,808.7 11,559.7 Equity 2,800.0 2,800.0 2,400.0 Non-current, interest-bearing liabilities 3.7 3.7 Other liabilities 5.0 5.7 5.3 6.2 Pension provisions 5,323.3 5,329.6 4,506.1 Deferred tax liability 6,916.0 8,132.7 8,139.9 Total non-current liabilities 600.0 600.0 665.0 Current, intrest-bearing liabilities 407.7 872.7 427.2 Other liabilities 1,092.2 1,007.7 1,472.7 Total current liabilities |
January-March | January-March | January- December |
|
|---|---|---|---|---|
| Total equity and liabilities | 21,172.3 | 17,535.4 | 20,949.1 |
$\tilde{\theta}$
| GROUP, SEK m | March 31, 2008 |
March 31, 2007 |
December 31, 2007 |
|---|---|---|---|
| Pledged assets | |||
| Mortgages | 1,706.4 | 1,476.3 | 1,706.4 |
| Endowment insurance | 3.8 | 4.1 | 4.1 |
| Total pledged assets | 1,710.2 | 1,480.4 | 1,710.5 |
| Contingent liabilities | None | None | None |
| GROUP, SEK m | March 31, 2008 |
March 31, 2007 |
December 31, 2007 |
|---|---|---|---|
| Pledged assets | |||
| Mortgages | 1,706.4 | 1,476.3 | 1,706.4 |
| Endowment insurance | 3.8 | 4.1 | 4.1 |
| Total pledged assets | 1,710.2 | 1,480.4 | 1,710.5 |
| Contingent liabilities | None | None | None |
$\sim$
| January- March |
January- March |
January- December |
|
|---|---|---|---|
| GROUP, SEK m | 2008 | 2007 | 2007 |
| Profit after financial items | 168.5 | 184.8 | 3,328.5 |
| Depreciation/impairments | 0.9 | 1.1 | 4.7 |
| Capital gain, sale of fixed assets | $-6.6$ | $-6.6$ | |
| Change, investment properties | $-2,597.7$ | ||
| Change, interest derivates | 17.9 | $-16.5$ | |
| Other changes | $-0.4$ | 0.2 | $-0.2$ |
| Tax paid | $-16.2$ | $-33.9$ | $-97.1$ |
| Cash flow from current operations | |||
| before changes in working capital | 170.7 | 145.6 | 615.1 |
| Increase/decrease in operating receivables | 27.0 | $-1.4$ | $-30.3$ |
| Increase/decrease in operating liabilities | 81.1 | $-447.5$ | $-465.5$ |
| Cash flow from current operations | 278.8 | $-303.3$ | 119.3 |
| Sale of subsidiary | 3,006.8 | 3,011.7 | |
| Investments in investment properties | $-45.2$ | $-29.4$ | $-524.0$ |
| Investments in financial assets | 0.3 | ||
| Investments in equipments | $-0.4$ | $-0.4$ | $-3.7$ |
| Amortization, non-current receivable | 0.0 | $-0.2$ | $-0.2$ |
| Cash flow from financing | $-45.3$ | 2,976.8 | 2,483.8 |
| Loans raised | 500.0 | ||
| Amortization of Ioan liability | $-300.0$ | $-465.0$ | |
| Dividend paid | $-2,392.7$ | $-2,392.7$ | |
| Cash flow from financing | 0.0 | $-2,692.7$ | $-2,357.7$ |
| Cash flow for the period | 233.5 | $-19.2$ | 245.4 |
| Liquid funds at the beginning of the period | 285.8 | 40.4 | 40.4 |
| Liquid funds at the period-end | 519.3 | 21.2 | 285.8 |
| Stockholm City East Business Area |
Stockholm City West Business Area |
Gothenburg Business Area |
Total | |||||
|---|---|---|---|---|---|---|---|---|
| GROUP, SEK m | Jan- Mar 2008 |
Jan- Mars 2007 |
Jan- Mar 2008 |
Jan- Mar 2007 |
Jan- Mar 2008 |
Jan- Mar 2007 |
Jan- Mar 2008 |
Jan- Mar 2007 |
| Nettoomsättning | 140.1 | 131.0 | 131.0 | 119.2 | 42.2 | 38.2 | 313.3 | 288.4 |
| Fastighetskostnader | $-30.4$ | $-33.2$ | $-48.8$ | $-41.1$ | $-12.3$ | $-11.7$ | $-91.5$ | $-86.0$ |
| Bruttoresultat | 109.7 | 97.8 | 82.2 | 78.1 | 29.9 | 26.5 | 221.8 | 202.4 |
| March 31, | March 31, | Full-year | Full-year | Full-year | Full-year | |
|---|---|---|---|---|---|---|
| GROUP | 2008 | 2007 | 2007 | 2006 | 2005 | 2004 |
| Property-related | ||||||
| Rentable floor space, sq. m. | 353,767 | 350,923 | 353,685 | 350,895 | 407,694 | 407,375 |
| Rental vacancy level, % | 3.8 | 5.2 | 3.3 | 6.5 | 7.1 | 8.2 |
| Floor space vacancy level, % | 4.7 | 6.7 | 4.6 | 8.1 | 8.7 | 9.5 |
| Fair value, SEK bn | 20.6 | 17.4 | 20.5 | 17.4 | 16.3 | 15.0 |
| Financial | ||||||
| Return on equity, % | 4.4 | 4.8 | 20.4 | 33.6 | 15.9 | 9.8 |
| Return on capital employed, % | 5.6 | 5.8 | 22.3 | 23.9 | 16.5 | 9.7 |
| Equity ratio, % | 54.6 | 54.3 | 56.4 | 57.4 | 52.2 | 53.8 |
| Interest coverage ratio, times | 5.7 | 6.4 | 6.1 | 5.1 | 5.7 | 3.5 |
| Loan-to-value ratio, % | 16.5 | 17.6 | 16.6 | 19.3 | 21.7 | 20.9 |
| Data per share | ||||||
| Profit for the period, SEK | 0.58 | 0.64 | 11.64 | 16.60 | 6.47 | 3.74 |
| Equity, SEK | 56.04 | 46.18 | 57.25 | 57.14 | 41.77 | 39.46 |
| Properties, fair value, SEK | 99.75 | 84.54 | 99.53 | 84.40 | 78.91 | 72.72 |
| Net asset value, SEK | 72.00 | 60.00 | 73.00 | 71.00 | 53.00 | 50.00 |
| Number of outstanding shares, 1000 | 206,266 | 206,266 | 206,266 | 206,266 | 206,266 | 206,266 |
| Number of issued shares, 1000 | 211,272 | 211,272 | 211,272 | 211,272 | 211,272 | 211,272 |
Net revenue amounted to SEK 196.9 million (176.5). Profit after net financial income and expense for the period was SEK 45.6 million (76.2).
Liquid funds at the year-end amounted to SEK 519.1 million (20.8). Investments in properties and equipment during the period amounted to SEK 14.6 million $(6.5)$ .
The Group is mainly exposed to financing, interest and credit risks. The Company has not identified
any material risks and uncertainties other than those described in the Annual Report.
No material transactions took place during the period.
The Parent Company applies the same accounting principles as in the most recent Annual Report.
| Parent company | January-March 2008 |
January- March 2007 |
January- December 2007 |
|---|---|---|---|
| Net revenue | 196.9 | 176.5 | 740.1 |
| Operating expenses | $-89.9$ | $-78.5$ | $-398.0$ |
| Gross profit | 107.0 | 98.0 | 342.1 |
| Central administration | $-7.7$ | $-6.8$ | $-30.8$ |
| Changes in value, derivatives | $-17.9$ | 16.5 | |
| Operating profit | 81.4 | 91.2 | 327.8 |
| Financial income and expense | $-35.8$ | $-21.6$ | $-125.1$ |
| Capital gain on sale subsidiary | 6.6 | 6.6 | |
| Operating profit after net interest income/expense | 45.6 | 76.2 | 209.3 |
| Appropriations | $-100.9$ | ||
| Profit before tax | 45.6 | 76.2 | 108.4 |
| Tax | $-14.2$ | $-18.8$ | $-22.7$ |
| Profit for the period | 31.4 | 57.4 | 85.7 |
ř
| PARENT COMPANY, SEK m | March 31, 2008 |
March 31, 2007 |
December 31, 2007 |
|---|---|---|---|
| Investment properties | 5,976.3 | 5,646.0 | 5,972.9 |
| Other fixed assets | 2,862.4 | 2,858.9 | 2,891.5 |
| Total fixed assets | 8,838.7 | 8,504.9 | 8,864.4 |
| ÷. Current assets |
550.9 | 60.2 | 328.4 |
| Total assets | 9,389.6 | 8,565.1 | 9,192.8 |
| Restricted equity | 1,975.2 | 1,989.2 | 1,978.7 |
| Non-restricted equity | 1.190.8 | 1,335.8 | 1,524.9 |
| Total equity | 3,166.0 | 3,325.0 | 3,503.6 |
| Untaxed reserves | 661.5 | 560.6 | 661.5 |
| Non-current liabilities | 4,027.4 | 3,635.6 | 4,035.8 |
| Current liabilities | 1,534.7 | 1,043.9 | 991.9 |
| Total liabilities | 6,223.6 | 5,240.1 | 5,689.2 |
| Total equity and liabilities | 9.389.6 | 8,565.1 | 9,192.8 |
Stockholm, May 8, 2008
Ivo Stopner
President
This interim report has not been the subject of an examination by the Company's auditor.
Annual rent. Gross rent calculated on an annual basis, excluding the turnover-based rent supplement. Vacant premises are reported at the market rent.
Capital employed. Total assets reduced by non-interestbearing liabilities and deferred tax liabilities.
Central administration. Costs for Group management and Group staff functions, costs for maintaining the Company's stock exchange listing and other costs common to the Company.
Equity per share. Equity in relation to the number of outstanding shares at the period-end.
Equity ratio. Equity at the period-end in relation to total assets.
Fair value. The estimated market value of the properties, based on an evaluation according to the direct yield method.
Floor space vacancy level. Vacant floor space in square metres in relation to the total rentable floor space.
Golden Triangle. The central business district in Stockholm, between Stureplan, Norrmalmstorg and Nybroplan and bordered by Birger Jarlsgatan, Norrlandsgatan and Hamngatan.
Interest coverage ratio. Profit after financial income and expense, excluding unrealized changes in value plus interest expense minus interest contributions in relation to the interest expense minus interest contributions.
Investments. Expenses related to value-enhancing improvements which entail future financial benefits are capitalized. Rebuilding costs of a maintenance nature are charged to profit.
Loan-to-value ratio, properties
Interest-bearing liabilities in relation to the carrying value of the properties.
Net liabilities. Interest-bearing liabilities less interestbearing assets.
Profit per share. Profit for the period in relation to the average number of outstanding shares during the period.
Property tax supplement. Property tax payments received from tenants.
Rental vacancy level. Vacant floor space at an estimated market rent in relation to the total annual rent.
Return on capital employed. Profit after appropriations and tax plus interest expense minus interest contributions in relation to the average capital employed. In the interim accounts the return has been recalculated on a full-year basis without consideration given to seasonal variations which normally arise in operations and with the exception of changes in value.
Return on equity. Profit after tax in relation to the average equity. In the interim accounts the return has been recalculated on a full-year basis without consideration given to seasonal variations which normally arise in operations and with the exception of changes in value.
Tax. Total tax for the Group comprises both actual tax and deferred tax.
Hufvudstaden AB (publ) NK 100, SE-111 77 Stockholm Visiting address: Regeringsgatan 38 Telephone: +46 8-762 90 00 Fax: +46 8-762 90 01 E-mail: [email protected] Website: www.hufvudstaden.se Company registration number: 556012-8240 Domicile: Stockholm
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