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"Net sales increased by 36 per cent to SEK 556 m while gross profit increased by 47 per cent to SEK 335 m with a larger property portfolio and milder winter."Kungsleden's interim report for the first quarter 2012 can be downloaded at www.kungsleden.se/financialreports
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Welcome to Kungsleden
First quarter 2012
Thomas Erséus, Chief Executive
Johan Risberg, CFO
Owning and managing properties with satisfied customers
Always open to new opportunities
—regardless of property type or geography
High and stable returns for the long term with
risk diversification as a key ingredient
A quality portfolio with good returns
317 wholly owned
properties,
SEK 15,533 m
Industrial/war
ehouse
SEK 6,236 m
Retail
SEK 2,113 m
Modules for schools,
pre-schools, offices
and portable units
Nordic Modular SEK
1,535 m.
Office
SEK 4,172 m
Other
SEK 1,477 m
Strong gross profit for the first quarter 2012
■ Net sales increased by 36% to SEK 556 (407) m
■ Gross profit increased by 47% to SEK 335 (228) m
■ Profit before tax was SEK 458 (492) m and after tax SEK 113 (406) m. The
profit decrease is largely due to provisioning for tax rulings and lower profits
from Hemsö
■ Profit for calculating dividends was SEK 121 (78) m, or SEK 0.90 (0.60) per
share
■ Seven properties sold for SEK 230 (5) m with a profit of SEK 20 (3) m
■ Syndicated loan replaced by a new SEK 4,500 m facility
■ Kungsleden secured a 2nd place in the Great Place to Work survey
Post-balance sheet events
■ In April, Kungsleden received two tax rulings from the Administrative
Court of Appeal, where the Court found against Kungsleden. Profit
for calculating dividends was charged with SEK 80 m, and the
Income Statement was charged with a tax cost of SEK 260 m
■ Remaining refinancing requirement for 2012 largely secured in April.
Profit for calculating dividends
2012 2011
SEK m Jan-Mar Jan-Mar
Gross profit 335 228
Sales and administration costs -68 -56
Net financial position -140 -124
Sub-total 127 48
Realised items
Trading net on sale 20 3
Realised value changes, properties 27 -
Deduction for deferred tax on sale -8 -
Realised value changes, financial instruments -4 -8
Realised items 35 -5
Profit for calculating dividends from Hemsö 44 41
Taxes payable -85 -6
Profit for calculating dividends 121 78
Unchanged net letting
■ New contracts with annual rental value of SEK 37 m
■ Economic occupancy levels of 89.1 (89.2)%
■ Average remaining lease term 4.8 years
■ Partnering with tenants to reduce environmental impact through
lower energy consumption
Potential for to keep growing
■ Since 2009, Hemsö has been owned 50:50 by Kungsleden and
AP3.
■ Hemsö owns, manages and develops premises for social services,
with property value of over SEK 21 bn.
■ The market for public properties is an estimated 90,000,000 sq.m. in
Sweden; Hemsö’s market share is about 1.7%.
■ The largest tenants are Västra Götaland County Council, education
company Academedia and healthcare provider Attendo.
Income Statement, Hemsö
SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 452 387
Property costs -139 -136
Gross profit 313 251
Trading net - -
Sales and administration costs -42 -34
Net financial position -176 -129
Unrealised value changes 134 328
Profit before tax 229 416
Tax -61 -186
Net profit 168 230
First quarter
2012 in figures
Transfer to new accounting method
■ On 1 January 2012 the way Hemsö is consolidated changed from
the proportional method to the equity method
■ Half of Hemsö’s profit or loss is recognised on a line in the Income
Statement as profit/loss from participations in joint ventures
■ Half of the value of Hemsö’s equity is recognised as an asset on a
separate line in the Statement of Financial Position
■ This change does not affect equity, net profit or profit for calculating
dividends
■ Property values and loans become lower, reducing total assets and
increasing the equity ratio
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Increase mainly
sourced from
properties
purchased in the
past year
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Up 19% due to
good order book at
the Gråbo plant
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Net sales
increased by 36%
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• 47% increase due
to purchases in
2011
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Comparing sales
proceeds to
acquisition cost gives
the effect of sales on
profit for calculating
dividends, which is
SEK 39 m
• Value changes of
SEK 27 m and
deductions for
deferred tax of SEK -
8 m are additional to
the trading net of
SEK 20 m
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• The increase is
mainly a
consequence of a
larger property
portfolio
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Corresponds to
50% of Hemsö’s
profit after tax. The
lower figure is
mainly due to lower
unrealised value
changes on
properties
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Negative change
mainly explained
by higher loan
volumes and higher
interest margins
than the loan
portfolio
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Positive impact in
the year from rising
long interest rates.
Income Statement SEK m
2012
Jan-Mar
2011
Jan-Mar
Rental revenues 475 339
Sales revenues, modular buildings 81 68
Net sales 556 407
Property costs -152 -119
Production costs, modules -69 -60
Gross profit 335 228
Trading net 20 3
Sales and administration costs -68 -56
Profit/loss from participations in Hemsö 84 150
Net financial position -140 -124
Unrealised value changes, properties 1 27
Unrealised value changes, financial instruments 226 264
Profit before tax 458 492
Tax -345 -86
Profit after tax for the period 113 406
• Lower profit mainly
because of a
provision for tax
costs and reduced
profits from Hemsö
New accounting method means reduced total assets
SEK m 2012 2011
ASSETS 31 Mar 31 Dec
Goodwill 201 201
Properties 14,627 14,788
Machinery and equipment 15 15
Participations in Hemsö 1,167 1,084
Long-term receivables from Hemsö 1,500 1,500
Deferred tax asset 766 1,020
Other long-term receivables 439 443
Non-current assets 18,715 19,051
Inventories 16 17
Current receivables 410 240
Assets held for sale—properties 906 905
Assets held for sale—other assets 117 14
Cash and bank balances 434 684
Current assets 1,883 1,860
TOTAL ASSETS 20,598 20,911
New accounting method means reduced total assets
SEK m 2012 2011
EQUITY AND LIABILITIES 31 Mar 31 Dec
Equity 7,828 7,719
Liabilities to credit institutions 8,037 8,154
Bond loans (unsecured) 1,599 1,599
Liabilities related to assets held for sale 901 901
Interest-bearing liabilities 10,537 10,654
Provisions 432 431
Derivatives 915 1,156
Other non interest-bearing liabilities 814 891
Liabilities related to assets held for sale 72 60
Non interest-bearing liabilities 2,233 2,538
TOTAL EQUITY AND LIABILITIES 20,598 20,911
Changed game plan for funding
■ High turbulence on the financial markets driven by government
finance turmoil mainly in Europe and the resulting low interest rates
historically.
■ Higher funding costs combined with more stringent capital adequacy
requirements for banks resulted in rapid expansion of interest
margins and poorer access to credit in the second half-year, in terms
of volumes and maturities.
■ 2012 started with somewhat improved market sentiment and
generally rising stock markets and yields.
■ Markedly increased interest in alternative funding sources,
especially bonds.
This year’s refinancing requirement largely secured
■ Syndicated loan rearranged with a new SEK 4,500 m facility in
January
■ The remaining refinancing requirement for 2012 has largely been
secured
■ Loans of SEK 1.6 bn extended, of which SEK 1.0 bn to 2015 and
SEK 0.5 bn to 2013
■ In addition, definitive tenders secured on SEK 1,3 bn
■ In total, Kungsleden has refinanced and secured definitive tenders
for borrowings of SEK 7.4 bn
Maturity structure, fixed-interest periods
As of 31 March 2012
Loan, SEK
m
Interest
derivativ
es,
SEK m
Ave.
interest, %
Ave. interest,
loans and
derivatives, years
Average fixed
interest term,
years
2012 10,541
2013 600 4.1
2014 1,800 4.1
2015 2,400 4.2
2016 500 3.9
2017 500 4.1
2018 3,650 4.2
2019 800 3,5
2020 800 3.7
2021 400 3.8
Total derivatives 10,541 11,450 6.3 5.4
Market value of loans and
derivatives 904
Total 11,445
Maturity structure, credits
As of 31 Mar 2012
Utilised
credits,
SEK m
Un-utilised
credits, SEK
m
Total credits,
SEK m
2012 3,769 260 4,029
2013 39 - 39
2014 600 - 600
2015 4,099 1,400 5,499
2016 2,034 - 2,034
2017 - - -
2018 - - -
2019 - - -
Total 10,541 1,660 12,201
Average conversion term, years 2.2 2.2
Equity ratio
31 Mar 12
38%
31 Dec 11
37%
31 Mar 11
34%
LTV ratio 68% 68% 75%
Tax—part of a company’s costs
The Swedish Tax Agency’s new opinion has retroactive consequences
■ The current taxation climate is different, and the Swedish Tax
Agency has changed its view of past transactions.
■ Last week, Kungsleden received two rulings from the Administrative
Court of Appeal for the fiscal year 2005 which imply a negative
liquidity effect of SEK 80 m and a tax cost of SEK 260 m that has
been charged to profits for the first quarter
■ Kungsleden will communicate potential tax rulings through press
releases and make continuous updates on its tax position in the
company’s quarterly reports
■ Kungsleden’s view is that the company has fully complied with the
laws and practice in place when submitting each tax return
■ The company verifies its position with experts continuously
18 outstanding tax cases
Kungsleden’s tax position
■ Kungsleden has provisioned SEK 325 m as a tax cost
■ A total of 18 tax proceedings are ongoing, of which 17 have not
been taken up as income
■ Given negative outcomes of all proceedings, the estimated:
– effect on equity would be approx. SEK 1,400 m (in addition to the
SEK 325 m provisioned)
– liquidity effect would be approx. SEK 780 m
■ Final outcome may be higher or lower
Total yield until the end of April 2012
10 largest shareholders represent 25% of votes & capital
■ Nordea fonder 5.9
■ Länsförsäkringar fonder 3.0
■ Olle Florén and companies 2.5
■ Norwegian Government 2.4
■ SHB fonder 2.1
■ Pensioenfonds PGGM (NL) 2.1
■ Danske Invest fonder 2.0
■ AP4 1.8
■ SEB fonder 1.4
■ AP2 1.4
24.6
Source: SIS Ägarservice, 31 Mar 2012
Stable lettings market, more active tenants
■ Kungsleden’s lettings market
– Higher activity with more terminations and more new contract
signings
– Unchanged net lettings
■ Financial markets
– Market driven by shorter credits
– Higher capital adequacy requirements for banks
– Higher borrowing costs
■ Transaction market
– The number of transactions fell by 40% in the first quarter despite
high volumes
– Property market still liquid and transparent
Focus on management and portfolio enhancement in 2012
■ Quality portfolio with good geographical risk-spread ensures stable
cash flow
■ As always, focus on customer care, portfolio enhancement and
reducing vacancies
■ Extending the base of alternative types of funding and continued
search for good transaction opportunities
■ High employee commitment offers good prospects for good profits
from property management and business development
■ The Board’s estimate of profit for calculating dividends for 2012 is
SEK 550 m
Any questions?