Quarterly Report • Feb 5, 2009
Quarterly Report
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The stable cash flows are expected to increase
| Revenues, SEKm | 2008 | 2007 |
|---|---|---|
| Rental income | 2,214 | 2,066 |
| Operating- and central expenses | –836 | –814 |
| Net financial (excl. changes in value) | –810 | –549 |
| Property management result | 568 | 703 |
| Changes in value | –1,908 | 1,363 |
| Tax | 829 | –254 |
| Profit after tax | –511 | 1,812 |
| Surplus ratio, % | 65 | 64 |
| Equity/assets ratio, % | 32 | 36 |
2008 will go to history as the year when Sweden moved from strong economic growth to financial crisis and an emerging recession in record time. Hardly anyone has managed to remain unscathed by this rapid transformation of the economic and financial environment for businesses, individuals and households.
In the wake of the problems affecting credit markets and their consequences for the transaction market, yield requirements increased in 2008, putting downward pressure on property values. For Fabege this had the effect of reducing the value of the company's property portfolio by SEK 1.5bn, representing an annual decline of about five per cent. Values were written down, especially in class C locations. Prime, class A locations, where most of Fabege's properties are concentrated, fared better. This is a pattern which I, and several prominent property analysts, believe is set to continue.
Operationally, 2008 proved a good year for Fabege. Rental income increased by about SEK 150m and our net operating income was up by almost 10 per cent on 2007. The occupancy rate was 93 per cent, which is one percentage point higher than last year.
In 2008 we continued our efforts to streamline and concentrate our business while developing our property management units and human resources. An example of successful streamlining is our initiative in the environmental and energy area, where we achieved an 8 per cent reduction in energy use, benefiting the environment as well as the bottom line.
There were large movements on the interest rate market during 2008. Fabege's average interest rate increased from 4.3 per cent at the beginning of the year to 5.1 per cent before the financial crisis culminated and efforts to get to grips with it brought rates back down again. At year-end Fabege's average interest rate had fallen to 3.3 per cent. We have reviewed our funding requirements, and now have good access to long-term capital.
However, the overall result was negative, SEK -0.5bn, due to negative changes in the value of properties and fixed income derivatives that had a direct impact on the profit and loss account.
Fabege was a net seller of properties in 2008. We bought two properties for SEK 201m and sold 13 properties for SEK 2,095m. Overall, activity in the property market was very weak.
The gradual decline in market interest rates is now helping to create an increasingly attractive return on properties, and it is not unlikely that we will soon see a pick-up in activity and a higher rate of transactions.
Fabege has begun the new year with a very large project letting, one of the largest in Sweden in recent years. Vattenfall, a major energy company, will be renting about 43,000 m2 of space in a new office building to be built in
Christian Hermelin, CEO
Arenastaden in Solna. This is a strong confirmation of the growing attraction of the area. In 2009, after completion of the planning process, work will begin on the construciton of the new national arena, Swedbank Arena. The vision for Arenastaden is starting to take shape, and we look forward to a number of exciting years, as a new part of town emerges in Solna, where Fabege has 15 properties.
As we move into 2009 Sweden is heading for a recession but the rental market remains stable in our main markets. When the financial crisis culminated in late autumn market players responded quickly by taking a more cautious approach, and lead times increased. But we can now see signs of a pick-up of activity in the rental market, as there still is a need, and demand, for premises.
However, Fabege is well equipped in the event of weaker economic climate. We have skilled and highly motivated staff and an organisation that can adapt rapidly to changing circumstances. The company's access to capital is good. We already know that we will have stable rental revenues in 2009, and we believe our central locations will also help to ensure stability even in a harsher economic environment. Our focus will be on caring for and maintaining our strong relationships with our customers.
Christian Hermelin
The financial turbulence culminated in the last quarter of the year as indications of an economic downturn mounted. In Stockholm this resulted in a more cautious attitude in the rental market, resulting in longer lead times. New lettings had a total contracted annual value of SEK 33m (72) while net lettings were SEK -9m.
Fabege places a strong emphasis on taking good care of its existing tenants, and successfully concluded about 30 renegotiations during the period. Rents in renegotiated contracts increased by an average of 22 per cent, resulting in an annual increase in rental income of SEK 8m.
Overall, rents in Fabege's main markets remained stable in the last few months of the year.
Fabege's rental income increased slightly, to SEK 540m (532). The occupancy rate remained unchanged at 93 per cent, which is one percentage point more than at the same time last year.
The Group posts a loss after tax of SEK -762m (634). The figure includes unrealised changes in value relating to properties of SEK -1,085m (283). Changes in the value of fixed income derivatives were SEK -440m (-1) as a result of sharply falling interest rates towards the end of the year.
The surplus ratio improved by one percentage point to 66 per cent (65%). Fabege has continued its efforts to streamline its property management activities.
The average interest rate in the loan portfolio fell by 183 basis points to 3.27 per cent.
Net asset value per share at 31 December was SEK 67 (76) excluding deferred tax on the surplus value of the properties.
The after-tax result for the full year 2008 was SEK -511m (1,812) and earnings per share after dilution were SEK -3.07 (9.98). The result after financial items was SEK -1,340m (2,066).
Rental income was SEK 2,214m (2,066) and net operating income SEK 1,438m (1,312). The increase in rental income was due to a net increase in properties and higher rents in the company's existing properties. For comparable properties rental income grew by 3 per cent. Realised changes in the value of properties totalled SEK 143m (446). Unrealised changes were SEK -1,545m (893) due to increased yield requirements while the value of the Group's fixed income derivatives fell by SEK -485m (37) as a result of sharply falling market interest rates at the end of year. The net interest expense increased to SEK -804m (-609) due to net investments in properties and higher interest rates.
The tax expense (current and deferred) for the year was SEK 829m (-254). The large change is due to elimination of deferred tax as a result of property sales and negative changes in value as well as valuations of additional tax loss carry-forwards. The result from property management includes full tax. At 31 December 2008, differences between the carrying amounts and tax bases of the properties were approximately SEK 8.8bn (10.5). At the same date the Group had valued tax loss carry-forwards of approximately SEK 4.7bn (3.8).
The result increased liquidity by SEK 640m (1,142). After an increase of SEK 1,104m (-491) in operating capital, which varies primarily as a result of occupancy/final settlement for acquired and divested properties, operating activities resulted in an increase in liquidity of SEK -464m (1,633). Investments and acquisitions exceeded property sales by SEK 217m (2,653). The total change in liquidity resulting from operating activities was thus SEK -681m (-1,020). Dividends to shareholders and share buybacks totalled SEK 670m (761) and SEK 361m (543), respectively. After the increase in debt, consolidated cash and cash equivalents were SEK 54m (75).
Fabege employs long-term credit lines with fixed terms and conditions and an average maturity of 5.4 years. The company's
| Amount SEKm |
Average interest rate % |
Share % |
|
|---|---|---|---|
| < 1 year | 12,652 | 2.94 | 67 |
| 1-2 years | 0 | 0 | 0 |
| 2-3 years | 300 | 4.45 | 1 |
| 3-4 years | 0 | 0 | 0 |
| 4-5 years | 2,950 | 3.85 | 16 |
| > 5 years | 3,000 | 3.97 | 16 |
| Total | 18,902 | 3.27 | 100 |
A highly concentrated and focused property company Fabege offers efficient premises that are adapted to tenant requirements, primarily offices but also retail and other premises, in the Stockholm area. The company manages and develops existing properties, and project development plays a prominent role in the Group.
Our portfolio is highly concentrated to a limited number of well located sub-markets with a strong development potential. A majority are located in the inner city of Stockholm and in Solna and Hammarby Sjöstad, where Fabege has strong market positions.
Fabege aims to create value by managing, improving and adapting its property portfolio, both through sales and acquisitions. Accrued values must be realised at the right time.
Acquire properties with better growth opportunities than existing investment properties
Realise the potential in our improvement and project portfolios
to reduce vacancy levels and increase net operating income.
Property management
Divest properties offering limited growth opportunities
creditors are major Nordic banks. Interest-bearing liabilities at year-end were SEK 18,902m (17,210). The financial turbulence during the year has not affected the company's access to longterm capital, however, the gradual rise in market interest rates up to November had a negative impact on the net interest expense. The decline in market rates during the fourth quarter has affected
| Credit agreements SEKm |
Drawn SEKm |
|
|---|---|---|
| Commercial paper programme | 5,000 | 727 |
| < 1 year | 867 | 203 |
| 1-2 years | 1,500 | 1,460 |
| 2-3 years | 4,900 | 4,700 |
| 3-4 years | 4,000 | 3,981 |
| 4-5 years | 5,800 | 5,103 |
| > 5 years | 4,281 | 2,728 |
| Total | 26,348 | 18,902 |
Fabege's average interest rate, which fell by 1.83 percentage points during the period to 3.27 per cent excluding the cost of unused committed lines of credit at year-end, or 3.29 per cent including this cost.
40 per cent of Fabege's loan portfolio is fixed through fixed income derivatives. The average fixed-rate period was 24 months, including the effect of derivatives. At 31 December the company's derivatives portfolio had a value of SEK 7,700m with maturities of up to 10 years. Out of this, SEK 5,950m refers to callable swaps, which are expected to increase to SEK 7,550m in the first quarter of 2009. The derivatives contracts were concluded in summer 2008 with the aim of improving cash flow in a situation where the market was expecting interest rates to rise. The aim was to achieve an interest rate discount or to fix interest rates at a level that was attractive from a long-term perspective.
In compliance with the accounting rules contained in IAS 39, the derivatives portfolio has been valued at market value and the change has been passed through the profit and loss account. Following the sharp fall in market interest rates the value of the portfolio declined during the fourth quarter. At 31 December the deficit in the portfolio was SEK 471m. The derivatives portfolio has been valued at the present value of future cash flows. The change in value is of an accounting character and does not affect cash flow or leverage. The
portfolio had a positive impact of SEK 54m on the net interest expense for the year.
The average fixed-rate period for variable-rate loans is 32 days. Future changes in interest rates will thus quickly affect about 60 per cent of the loan portfolio.
At 31 December the company had unused committed lines of credit of SEK 2,446m. SEK 1,468m was refinanced in the fourth quarter.
Fabege has available long-term credit facilities covering all outstanding commercial papers at any given time. Due to falling demand in the commercial papers market during the period, the company has shifted its funding to these facilities. Outstanding commercial papers had a nominal value of SEK 740m at year-end.
The total loan volume includes loans for projects worth SEK 1,766m, on which the interest of SEK 41m has been capitalised.
Shareholders' equity at the end of the year was SEK 9,873m (11,415) and the equity/assets ratio was 32 per cent (36). Equity per share was SEK 60 (67). Net asset value per share, excluding deferred tax on the surplus value of properties, was SEK 67 (76).
| 31 Dec 2008 | 31 December 2008 | 1 January-31 December 2008 | ||||||
|---|---|---|---|---|---|---|---|---|
| Market segment | No. of properties |
Lettable area, '000 m2 |
Market value, SEKm |
Rental value SEKm |
Financial occupancy rate, % |
Rental income SEKm |
Property expenses SEKm |
Net operating income SEKm |
| Property holdings | ||||||||
| Investment properties 1) | 92 | 1,072 | 23,769 | 1,963 | 95 | 1,853 | –477 | 1,376 |
| Improvement properties 1) | 35 | 283 | 3,827 | 342 | 86 | 273 | –126 | 147 |
| Land and project properties 1) | 30 | 99 | 1,915 | 64 | 54 | 53 | –38 | 15 |
| Total | 157 | 1,454 | 29,511 | 2,369 | 93 | 2,179 | –641 | 1,538 |
| of which, Inner City | 49 | 551 | 16,937 | 1 217 | 95 | 1 152 | –295 | 857 |
| of which, Solna | 34 | 493 | 8,244 | 722 | 90 | 651 | –160 | 491 |
| of which, Hammarby Sjöstad | 13 | 147 | 1,890 | 175 | 83 | 141 | –76 | 65 |
| of which, South Stockholm | 14 | 46 | 706 | 60 | 89 | 54 | –20 | 34 |
| of which, North Stockholm | 46 | 217 | 1,711 | 195 | 93 | 181 | –90 | 91 |
| of which, outside Stockholm | 1 | 0 | 23 | 0 | 0 | 0 | 0 | 0 |
| Total | 157 | 1,454 | 29,511 | 2,369 | 93 | 2,179 | –641 | 1,538 |
| Expenses for lettings, project development and property administration. | –97 | |||||||
| Total net operating income after expenses for lettings, project development and property administration. | 1,4412) |
1 See definitions on page 11.
2The table refers to Fabege's property portfolio as at 31 December 08. Income and expenses are reported as if the properties had been held during the whole period. The difference between reported net operating income, SEK 1,441m, and net operating income in the profit and loss account, SEK 1,438m, is explained by the fact that the net operating income from divested properties has been excluded and acquired/completed properties have been adjusted upwards as if they had been owned/completed during the whole of the period January–December 2008.
| Lettable area, | |||
|---|---|---|---|
| Property | Area | Category | m2 |
| Q1 | |||
| Marievik 14 | Marievik | Office | 16,923 |
| Marievik 19 | Marievik | Office | 20,706 |
| Verdandi 9 | Vasastan | Residential | 1,399 |
| Landbyska Verket 10 | Östermalm | Office | 1,266 |
| Krejaren 2 | Östermalm | Land | – |
| Q2 | |||
| Axet 1/Bladet 1 | Bergshamra | Office | 31,688 |
| Gräddö 2&4 | Farsta | Office | 14,321 |
| Kurland 17 | Vasastan | Office | 1,798 |
| Ånsta 20:17 | Örebro | Industrial | 3,011 |
| Q3 | |||
| Kallhäll 9:35 | Kallhäll | Land | – |
| Q4 | |||
| Polacken 25 | Norrmalm | Office | 2,467 |
| Total property sales January-December 2008 |
93,579 |
| Total property acquisitions, Jan-Dec 2008 | 5,586 | ||
|---|---|---|---|
| Krejaren 2 | Östermalm | Land | – |
| Uarda 2 | Arenastaden | Warehouse | 5,586 |
| Q1 | |||
| Property | Area | Category | m2 |
| Lettable area, |
Fabege's activities in management and improvement of properties and project development are highly concentrated to a few select sub-markets with strong growth prospects in and around Stockholm. The main markets are Stockholm's inner city, Solna and Hammarby Sjöstad.
At 31 December Fabege owned 157 properties with a total rental value of SEK 2.4bn, a lettable floor area of 1.5m m2 and a book value, including project properties, of SEK 29.5bn.
Commercial premises represented 97 per cent of the rental value and residential premises 3 per cent. The financial occupancy rate for the portfolio as a whole, including project properties, was 93 per cent (92). The vacancy rate in the investment property portfolio was unchanged at 5 per cent.
New lettings during the year were SEK 193m (327) while net lettings were SEK -6m (142). Predicted terminations in future project properties, totalling SEK 40m, had a significant impact on net lettings.
Rent levels in renegotiated contracts (94 contracts covering a total area of approx. 65,000 m2) increased by an average of 18 per cent, or SEK 17m.
2008 was a year that saw both continued economic growth and financial turbulence, dramatic swings in interest rates and an emerging recession. Demand for efficient and flexible office space in Stockholm was good, although lead times in the rental market increased towards the end of the year due to uncertainty about the future of the economy. In Fabege's main markets, the inner city of Stockholm, Solna and Hammarby Sjöstad, the overall market situation is good, and rents remain stable.
During the year Fabege acquired two properties for a total consideration of SEK 201m and sold thirteen properties for SEK 2,095m. The sales resulted in a profit of SEK 143m before tax, or SEK 333m after tax. At year-end the company's priority
| Book | Of which, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Lettable | Occupancy | value | accrued | ||||||
| area, | rate %, | Estimated | 31 Dec | Estimated | 31 Dec | ||||
| Property name | Property type | Area | Completed | m2 | area* | rental value | 2008** | investment | 2008 |
| Risinge 1 et al. | Residential | Tensta/Rinkeby | Q2 2009 | 53,400 | 100 | 53 | 403 | 328 | 256 |
| Retail/Office/ | |||||||||
| Paradiset 29 (50%) | Garage | Stadshagen | Q3 2009 | 18,100 | 58 | 29 | 288 | 390 | 311 |
| Bocken 35 and 46 | Office | Norrmalm | Q4 2009 | 15,300 | 90 | 55 | 607 | 390 | 186 |
| Päronet 8 | Office | Solna Strand | Q1 2010 | 24,125 | 97 | 39 | 262 | 305 | 51 |
| Rovan 1 | Office/Retail | Huvudsta | dormant | 16,400 | 82 | 24 | 163 | 121 | 61 |
| Hammarby Gård 7 | Office | Hammarby Sjöstad | dormant | 8,900 | 20 | 20 | 121 | 185 | 86 |
| Total | 136,225 | 85 | 220 | 1,844 | 1,719 | 951 | |||
| Other project & land properties | 736 | ||||||||
| Other improvement properties | 3,162 | ||||||||
| Total project, land and improvement properties | 5,742 |
* Operational occupancy rate, 4 Feb 2009
The annual rent for the largest projects in progress can increase to SEK 220m (fully let) from SEK 77m currently as of 31 Dec 2008.
** The total value of properties was written down by SEK 209m in 2008.
sub-markets, Stockholm's inner city, Solna and Hammarby Sjöstad, represented 92 per cent of the total value of the Group's property portfolio.
All properties have been externally valued as at 31 December 2008. The total market value at year-end was SEK 29.5bn (30.8). Unrealised changes in the value of properties were SEK -1,545m, of which SEK -1,085m refers to the fourth quarter. The writedown represents a decline during the year of about 5 per cent.
The average yield requirement in Fabege's portfolio has increased by 0.5 per cent since year-end. The increase is larger in the outer suburbs than in the inner suburbs and Stockholm City. However, the net effect is significantly smaller due to improved cash flows from the properties. The investments made in the portfolio will eventually lead to lower vacancy rates and higher rents, and thereby stronger cash flows and value growth.
The property valuation is based on cash flow statements, where the present value of net operating incomes is normally calculated for a five-year calculation period, and the residual value of the property at the end of the calculation period. The discount rate used for Fabege's portfolio is based on the nominal yield on government bonds plus an increment for property-related risk. We can now see that a positive effect on many of Fabege's properties with long contracts and stable customers results in a lower risk increment.
| Total | 6.0 | 5.5 | 5.8 | |
|---|---|---|---|---|
| Hammarby Sjöstad | 6.9 | 6.3 | 6.6 | 6.5–7.5 |
| Solna | 6.5 | 5.8 | 6.1 | 6.0–7.0 |
| Inner City | 5.6 | 5.1 | 5.2 | 5.0–6.5 |
| 2008 | Weighted yield requirement, % 2006 |
Spread |
Fabege's project investments are forward-looking and are designed to reduce vacancy rates and raise rents in the portfolio, thereby improving cash flows and adding value.
A total of SEK 1,391m (966) was invested in existing properties and projects. The investments referred to land, new builds, extensions and conversions. The biggest investments referred to Paradiset 29, Bocken 35, 46 and Marievik 19, of which the latter was sold in April 2008.
The project in Bocken 35 and 46 at the junction of Lästmakargatan-Regeringsgatan in Stockholm City is proceeding according to plan and is expected to be completed in the fourth quarter of 2009. The Paradiset 29/Lindhagen project on Kungsholmen is proceeding according to plan, and the retail area will open in August 2009. The next stage of the lettings process, covering the office areas, is underway. The property has been certified under the European Commission's GreenBuilding programme.
Fabege's Päronet 8 property in Solna Strand is undergoing an internal renovation and conversion. The project will be completed in the the first quarter of 2010. The property has been fully let to the Swedish Tax Agency.
Fabege's principle is that no investment projects should be initiated before the project has essentially been let and fully funded. This means that the previously approved investments in Rovan and Hammarby Gård will now be postponed, since the goal has not been achieved.
At year-end 148 people (140) were employed in the Fabege Group.
Sales during the period were SEK 108m (108) and earnings before appropriations and tax were SEK -25m (1,048). Net investments in property, equipment and shares were SEK -140m (32). The parent company applies Recommendation RFR 2.1, Accounting for Legal Entities, of the Swedish Financial Accounting Standards Council, and the Swedish Annual Accounts Act. (See also the profit and loss account and balance sheet on page 9.)
The 2008 AGM passed a resolution authorising the Board, during the period up to the next AGM, to acquire shares. Share buybacks are subject to a limit of no more than 10 per cent of the total number of outstanding shares at any time. 6,441,451 shares (7,635,622) were repurchased during the year. At 31 December 2008 the company owned 4,929,400 treasury shares (7,635,622), which is equivalent to 2.9 per cent of the total number of registered shares. The average price paid for the shares was SEK 55.91.
The Board of Directors will propose that the Annual General Meeting on 31 March 2009 authorise:
As announced previously, the Swedish Tax Agency has decided to increase the Fabege Group's taxable income in respect of a number of property sales made through limited partnerships (see also the press release from 7 December 2006). As at 31 December 2008 the total increase in taxable incomes is SEK 4,045m. The decisions have resulted in total tax demands of SEK 1,132m plus a tax penalty of SEK 170m, i.e. a total demand of SEK 1,302m excluding interest. Fabege has strong reasons to contest the Tax Agency's decisions and has therefore appealed the decisions.
Fabege is also contesting the ruling of the Administrative Court of Appeal, which we reported on in our 2007 Annual Report (see pages 40-41).
No provision has been made in Fabege's balance sheet, but the amount has been recognised as a contingent liability, as in previous financial reports.
Risks and uncertainties relating to cash flow from operations are primarily attributable to changes in rent levels, vacancy rates and interest rates. A detailed description of the effect of these changes on consolidated earnings is given in the sensitivity analysis in the 2007 Annual Report (page 46).
Properties are recognised at fair value and changes in value are recognised in the profit and loss account. The effects of changes in value on consolidated earnings, the equity/assets ratio and leverage are shown in the sensitivity analysis in the 2007 Annual Report (page 47).
Financial risk, i.e. the risk of insufficient access to long-term funding through loans, and Fabege's management of this risk are described in the 2007 Annual Report (page 63).
No significant changes in the company's risk assessments have been made since then.
Under its adopted targets for capital structure, Fabege aims to have an equity/assets ratio of at least 30 per cent and an interest coverage ratio of at least 2 times (including realised changes in value).
Vattenfall has concluded a rental agreement with Fabege for 43,000 m2 of office space as well as garage and parking space in Arenastaden in Solna. Vattenfall's Nordic business area will be moving into a new office building located next to the Swedbank Arena and Mall of Scandinavia. Construction is scheduled to begin in 2009, subject to completion of the planning process .
The contract runs for 12 years and has an annual rental value of about SEK 100m. The total cost of the project is SEK 1,150m and funding has been arranged through a new SEK 875m facility. Vattenfall Nordic's new office building is expected to be completed in the third quarter of 2012.
At the start of 2009 the rental market in Fabege's main markets in Stockholm remains stable, and Fabege has since year-end 2008 concluded agreements on the rental of premises representing a contracted annual value of SEK 120m. With falling interest rates and good access to capital, a strong cash flow, a high occupancy rate and properties and premises that will remain attractive regardless of the state of the economy, Fabege is in a good position for 2009, which will be year of big challenges as well as interesting opportunities. Overall, there are good prospects for a balanced development of Fabege's operations and earnings in 2009.
Fabege prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). This yearend report has been prepared in accordance with IAS 34 Interim Financial Reporting. The Group has applied the same accounting principles and valuation methods as in the last annual report.
The parent company prepares its accounts in accordance with RFR 2.1, Accounting for Legal Entities, and the Swedish Annual Accounts Act and has applied the same report principles and valuation methods as in the last annual report.
Stockholm, 5 February 2009
Fabege AB (publ) The Board of Directors
We have made a partial review of the year-end financial statement of Fabege AB (publ) for the full year 2008. Responsibility for preparing this interim statement in accordance with IAS 34 and the Annual Accounts Act rests with the Board of Directors and Chief Executive Officer. Our responsibility is to express a conclusion on this interim statement based on our review.
We have performed our review in accordance with the SÖG 2410 Standard on Review Engagements, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists in making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is significantly more limited in scope than an audit performed in accordance with the Auditing Standard in Sweden (RS) and generally accepted auditing standards. The review procedures taken in a review do not enable us to obtain a degree of certainty that would make us aware of all important circumstances that would have been identified if an audit had been performed. The conclusion based on a review therefore does not have the same certainty as a conclusion based on an audit.
Based on our review, we have not discovered any circumstances that would give us reason to consider that the interim report has not, in all material respects, been prepared, in respect of the Group, in accordance with IAS 34 and the Annual Accounts Act and, in respect of the parent company, with the Annual Accounts Act.
Stockholm, 5 February 2009 Deloitte AB Svante Forsberg Authorised Public Accountant
Christian Hermelin, CEO Phone: +46 (0)8-555 148 25, +46 (0)733-87 18 25
Åsa Bergström, CFO Phone +46 (0)8-555 148 29, +46 (0)706-66 13 80
Mats Berg, Director of Corporate Communications Phone: +46 (0)8-555 148 20, +46 (0)733-87 18 20
| 2008 | 2007 | 2008 | 2007 | |
|---|---|---|---|---|
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
| Rental income | 540 | 532 | 2,214 | 2,066 |
| Property expenses Net operating income |
–186 354 |
–188 344 |
–776 1,438 |
–754 1,312 |
| Surplus ratio, % | 66 | 65 | 65 | 64 |
| Central administration and marketing | –14 | –15 | –60 | –60 |
| Realised changes in value, properties | 0 | 239 | 143 | 446 |
| Unrealised changes in value, properties | –1,085 | 283 | –1 545 | 893 |
| Operating profit/loss | –745 | 851 | –24 | 2,591 |
| Dividends | – | – | 2 | 60 |
| Net interest expense | –201 | –165 | –804 | –609 |
| Share in profit/loss of associated companies | –8 | – | –8 | – |
| Change in value, fixed income derivatives | –440 | –1 | –485 | 37 |
| Change in value, equities | –8 | –9 | –21 | –13 |
| Profit/loss after financial items | –1,402 | 676 | –1,340 | 2,066 |
| Current tax | 6 | –3 | 3 | –7 |
| Deferred tax | 634 | –39 | 826 | –247 |
| Profit/loss for period/year | –762 | 634 | –511 | 1,812 |
| Attributable to parent company shareholders | –762 | 634 | –511 | 1,812 |
| Earnings per share before dilution, SEK | –4.63 | 3.67 | –3.07 | 10.03 |
| Earnings per share after dilution, SEK | –4.63 | 3.65 | –3.07 | 9.98 |
| No. of shares at end of period before dilution, millions | 164.4 | 170.8 | 164.4 | 170.8 |
| No. of shares at end of period after dilution, millions | 165.4 | 171.9 | 165.4 | 171.9 |
| Average no. of shares before dilution, millions | 164.5 | 172.6 | 166.5 | 180.7 |
| Average no. of shares after dilution, millions | 165.6 | 173.7 | 167.5 | 181.8 |
| 2008-12-31 | 2007-12-31 2008-09-30 | ||
|---|---|---|---|
| Assets | |||
| Properties | 29,511 | 30,829 | 30,169 |
| Other tangible fixed assets |
3 | 6 | 3 |
| Financial fixed assets | 586 | 387 | 378 |
| Current assets | 388 | 458 | 471 |
| Cash and cash equivalents | 54 | 75 | 93 |
| Total assets | 30,542 | 31,755 | 31,114 |
| Equity and liabilities | |||
| Equity | 9,873 | 11,415 | 10,646 |
| Provisions | 624 | 1,393 | 1,063 |
| Interest-bearing liabilities | 18,902 | 17,210 | 18,552 |
| Derivatives | 471 | – | 31 |
| Non-interest-bearing liabilities | 672 | 1,737 | 822 |
| Total equity and liabilities |
30,542 | 31,755 | 31,114 |
| Equity/assets ratio, % | 32 | 36 | 34 |
| Contingent liabilities | 1,901 | 1,735 | 1,696 |
| Statement of changes in equity, SEKm |
Share holders' equity |
Of which attributable to parent company shareholders |
Of which, attributable to minority |
|---|---|---|---|
| Shareholder's equity, 1 Jan 2007 | 12,177 | 12,156 | 21 |
| New shares, conversion of debt instruments |
2 | 2 | – |
| Change in minority share through pre-emption rights to the shares in Fastighets AB Tornet |
–21 | – | –21 |
| Redemption of shares paid in the form of shares in Klövern |
–1,251 | –1,251 | – |
| Cash dividend | –761 | –761 | – |
| Share buybacks | –543 | –543 | – |
| Profit/loss for the year | 1,812 | 1,812 | – |
| Shareholders' equity, 31 Dec 2007 |
11,415 | 11,415 | – |
| New shares, conversion of debt instru ments |
0 | 0 | – |
| Cash dividend | –670 | –670 | – |
| Share buybacks | –361 | –361 | – |
| Profit/loss for the year | –511 | –511 | – |
| Shareholder's equity, 31 Dec 2008 |
9,873 | 9,873 | – |
| Key figures1) |
|---|
| --------------- |
| 2008 Jan-Dec |
2007 Jan-Dec |
|
|---|---|---|
| Operating profit/loss excl. depreciation and changes in value of existing properties |
1,517 | 1,706 |
| Net financial items paid | –880 | –557 |
| Income tax paid | 3 | –7 |
| Change in other working capital | –1,104 | 491 |
| Cash flow from operating activities |
–464 | 1,633 |
| Investments and acquisitions of properties |
–2,164 | –4,984 |
| Property sales, book value of divested properties |
1,942 | 2,231 |
| Other investments (net) | 5 | 100 |
| Cash flow from investing activities |
–217 | –2,653 |
| Dividend to shareholders | –670 | –761 |
| Share buybacks | –361 | –543 |
| Change in interest-bearing liabilities | 1,691 | 2,235 |
| Cash flow from financing activities |
660 | 931 |
| Change in cash and cash equivalents | –21 | –89 |
| Cash and cash equivalents at beginning of period | 75 | 164 |
| Cash and cash equivalents at end of period |
54 | 75 |
| 2008 Jan-Dec |
2007 Jan-Dec |
|
|---|---|---|
| Financial | ||
| Return on capital employed, % | –1.7 | 9.9 |
| Return on equity, % | –4.8 | 15.4 |
| Interest coverage ratio, times | 1.9 | 2.8 |
| Equity/assets ratio, % | 32 | 36 |
| Leverage properties, % | 64 | 56 |
| Debt/equity ratio, times | 1.9 | 1.5 |
| Share-related | ||
| Earnings per share for the period, SEK | –3.07 | 9.98 |
| Equity per share, SEK | 60 | 67 |
| Cash flow per share, SEK | 4.33 | 6.32 |
| No. of outstanding shares at end of period before dilution, '000 |
164,382 | 170,823 |
| No. of outstanding shares at end of period before dilution, '000 |
165,449 | 171,893 |
| Average no. of shares before dilution, '000 |
166,459 | 180,730 |
| Average no. of shares after dilution, '000 |
167,526 | 181,801 |
| Property-related | ||
| No. of properties | 157 | 167 |
| Book value of properties, SEKm | 29,511 | 30,829 |
| Lettable area, m2 | 1,454,000 | 1,546,000 |
| Financial occupancy rate, % | 93 | 92 |
| Surplus ratio, % | 65 | 64 |
1) Dilution effects of potential ordinary shares have been taken into account in calcu- calculating key figures per share. As at 31 December 2008, Fabege has a convertible bond loan with a book value of SEK 47m (nominally SEK 45m). The loan has an interest rate of 5.25 per cent and matures on 1 October 2009. Bonds may be converted into shares up to 1 September 2009. The conversion price is SEK 41.80. Full conversion would result in an increase of 1,066,558 shares.
| 2008 Jan-Dec |
2007 Jan-Dec |
|
|---|---|---|
| Income | 108 | 108 |
| Expenses | –181 | –196 |
| Net financial items | 554 | 1,112 |
| Change in value, interest rate derivatives | –485 | 37 |
| Change in value, equities | –21 | –13 |
| Profit/loss before tax | –25 | 1,048 |
| Tax | 254 | –10 |
| Profit/loss for the period/year | 229 | 1,038 |
| 2008-12-31 | 2007-12-31 | |
|---|---|---|
| Interests in Group companies | 14,987 | 15,116 |
| Other fixed assets | 21,246 | 32,313 |
| of which receivables from Group comanpies | 20,788 | 32,089 |
| Other current assets | 39 | 3 |
| Cash and cash equivalents | 43 | 58 |
| Total assets | 36,315 | 47,490 |
| Equity | 10,282 | 10,831 |
| Provisions | 63 | 62 |
| Long-term liabilities | 24,980 | 32,776 |
| of which liabilities to Group companies | 6,725 | 19,244 |
| Current liabilities | 990 | 3,821 |
| Total equity and liabilities |
36,315 | 47,490 |
| Investment | Project/improvement | Total Fabege |
||
|---|---|---|---|---|
| properties | properties | |||
| 2008, Jan-Dec | 2008, Jan-Dec | 2008, Jan-Dec | ||
| Rental income | 1,886 | 328 | 2,214 | |
| Property expenses | –595 | –181 | –776 | |
| Net operating income | 1,291 | 147 | 1,438 | |
| Surplus ratio, % | 68 | 45 | 65 | |
| Central administration and marketing | –48 | –12 | –60 | |
| Realised changes in value, properties | 49 | 94 | 143 | |
| Unrealised changes in value, properties | –1,489 | –56 | –1,545 | |
| Operating profit/loss | –197 | 173 | –24 | |
| Dividends | 2 | – | 2 | |
| Net interest expense | –680 | –124 | –804 | |
| Share in profit/loss of associated companies | –2 | –6 | –8 | |
| Change in value, fixed income derivatives | –391 | –94 | –485 | |
| Change in value, equities | –17 | –4 | –21 | |
| Profit/loss after financial items | –1,285 | –55 | –1,340 | |
| Current tax | 3 | – | 3 | |
| Deferred tax | 646 | 180 | 826 | |
| Profit/loss for period/year | –636 | 125 | –511 | |
| Occupancy rate, % | 95 | 81 | 93 | |
| Market value, 31 Dec | 23,769 | 5,742 | 29,511 | |
As of 2009 companies are required, under IFRS 8, to present financial information by segments, as viewed by management. In its briefings to market participants in 2008 Fabege has presented earnings figures for two segments, Investment properties and Project/ Improvement properties. This form of reporting by segment will be included in forthcoming quarterly interim reports.
Rental income and property expenses as well as realised and unrealised changes in value including tax are directly attributable to properties in each segment (direct income and expenses). In cases where a property changes character during the year earnings attributable to the property will be allocated to either segment based on the period of time that the property belonged to the segment. Central administration and items in net financial items have been allocated to the segments in a standardised manner based on each segment's share of the total property value (indirect income and expenses). This applies also to tax that is not directly attributable to earnings from property management or sales.
| Share of capital | ||
|---|---|---|
| Shareholder | No. of shares | and votes, % |
| Brinova AB | 23,291,092 | 14.2 |
| Maths O Sundqvist | 19,527,800 | 11.9 |
| Öresund | 11,050,036 | 6.7 |
| Danske fonder | 5,176,427 | 3.2 |
| Swedbank Robur fonder | 4,535,074 | 2.8 |
| Mats Qviberg and family | 2,703,636 | 1.6 |
| SEB fonder | 2,208,114 | 1.3 |
| Länsförsäkringar fonder | 1,639,924 | 1.0 |
| Sjunde AP-fonden | 1,368,358 | 0.8 |
| SHB/SPP fonder | 1,250,296 | 0.8 |
| Other foreign owners | 47,557,641 | 28.9 |
| Other owners | 44,073,756 | 26.8 |
| Total | 164,382,154 | 100.0 |
| Share buybacks | 4,929,400 | |
| Total no. of shares | 169,311,554 |
| Annual Report 2008 | week 11 | Interim report Jan-Mar | 28 April | |
|---|---|---|---|---|
| Annual General Meeting | 31 March | Interim report Jan-Jun | 10 July | |
| Interim report Jan-Sep | 27 October |
Profit for the period/year divided by average shareholders' equity. In interim statements the return is converted to its annualised value without taking account of seasonal variations.
Profit before tax plus interest expenses, divided by average capital employed. In interim statements the return is converted to its annualised value without taking account of seasonal variations.
Interest-bearing liabilities divided by the book value of the properties at the end of the period.
Dividend for the year divided by the share price at year-end.
Parent company shareholders' share of equity according to the balance sheet divided by the number of shares at the end of the period.
Contract value divided by rental value at the end of the period.
Properties that are being actively managed on an ongoing basis.
Properties in which a conversion or extension is in progress or planned that has a significant impact on the property's net operating income. Net operating income is affected either directly by the project or by limitations on lettings prior to impending improvement work.
Recently acquired properties (last twelve months) in which work is in progress that is aimed at significantly improving the property's net operating income compared with the time of acquisition.
Contract value plus estimated annual rent for vacant premises after a reasonable general renovation.
Profit/loss before tax plus depreciation, plus/minus unrealised changes in value less current tax, divided by average number of shares.
Stated as an annual value. Index-adjusted basic rent under the rental agreement plus rent supplements.
Land and developable properties and properties in which a new build/complete redevelopment is in progress.
New lettings during the period less terminations to vacate during the period.
Parent company shareholders' share of profit after tax for the period divided by average number of outstanding shares during the period.
Profit/loss for the period after financial items and reversal of changes in value.
Profit after financial items plus financial expenses and plus/minus unrealised changes in value, divided by financial expenses.
Interest-bearing liabilities divided by shareholders' equity.
Shareholders' equity (including minority share) divided by total assets.
Total assets less non-interest bearing liabilities and provisions.
Net operating income divided by rental income.
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