Kungsleden AB (publ) Interim Report 1 January-31 March 2002 · Profit before tax was SEK 129 m (74 m), corresponding to earnings per share of SEK 6.8 (3.9). · Kungsleden's operating surplus grew by 27 per cent to SEK 190 m (144 m). · Fifteen properties were divested in the period, for SEK 240 m, generating profits of SEK 36 m (2 m); one property was acquired for SEK 6 m. Kungsleden's business concept, vision and strategy Kungsleden owns and manages properties, generating high and stable long- term returns. Kungsleden's vision is that by means of skilled entrepreneurship and a high level of expertise, Kungsleden will become Sweden's most profitable and successful property company. We intend to achieve our objectives by: · Enhancing our skilled and businesslike organization; · Pursuing customer satisfaction through the active management and enhancement of our property holding; · Proceeding from our existing holding, and through acquisitions and disposals, assuring high long-term returns. Profits Kungsleden posted profit before tax of SEK 129 m (74 m) for January- March 2002; earnings per share before tax were SEK 6.8 (3.9). Kungsleden's operating surplus was SEK 190 m (144 m). The calculated earnings capacity of the property holding as of 31 March 2002 implied a property yield of 8.7 per cent-typically, the first quarter is weak, due to the influence of the weather on operating costs. The first-quarter profit margin was 58.8 (60.0) per cent. Relatively slow economic activity exerts its primary influence on Kungsleden through an ability to maintain low funding costs. The cyclical components of operating surplus-rent levels, vacancies and rental losses-have, if anything, maintained a trend-related improvement. Kungsleden's diversification into various categories of property and location alleviates the influence of universal and specific events. Moreover, rental contracts have a broad distribution over time, and in 2002, SEK 119 m of commercial rental contracts, or 10 per cent of commercial contracts, will be re-negotiated. Property trading resulted in the disposal of 15 (28) properties for SEK 240 m (243 m), at a profit of SEK 36 m (2 m). The net financial position was SEK -88 m (-65 m); interest cover was a multiple of 2.5 (2.1). Kungsleden posted a tax cost of SEK 36 m (21 m) for the period, or 28 (28) per cent; comprising deferred tax, the consequence of prevailing accounting practice for income taxation. Cash flow from operations was SEK 106 m (75 m), equivalent to SEK 5.6 (4.0) per share. Property holding and earnings capacity As of 31 March 2002, the property holding encompasses 441 properties with floor-space of 1,786,000 sq. m. and a book value of SEK 9,303 m, located in 126 municipalities. Of property book value, 60 per cent was located in the major city regions of Greater Stockholm, Greater Gothenburg and the Öresund region. During the period, Kungsleden made SEK 6 m (945 m) of property acquisitions and SEK 22.9 m of investments in existing properties. Property disposals of SEK 201.8 m book value were effected. Kungsleden concentrates on creating stable and high returns; it pursues the continuous quality enhancement of its property holding through property trading and enhanced management efficiency. A table, 'Earnings capacity of the property holding as of 31 March 2002' has been included on page 6 to clarify the situation at this date. The table is based on the following assumptions: · Properties disposed of in 2002 are excluded; · Properties acquired in 2002 have been included as if owned for the full year. Property trading In the first quarter 2002, Kungsleden acquired 1 (16) property with floor-space of 1,700 (143,000) sq. m., for SEK 6 m (945 m), a transaction effected at an estimated property yield of 11.5 (8.3) per cent; 15 (28) properties were disposed of for a total of SEK 240.5 m (243 m), generating profits of SEK 36 m (2.2 m). The disposals were effected at an estimated property yield of 7.8 (6.4) per cent; the disposals were at levels of SEK 20.5 m and 21.2 m above external and internal valuations as of 31 December 2001 respectively. The majority of those disposals effected during the period were small properties; 14 of the divested properties had sales values of less than SEK 10 m. The following table illustrates the distribution between profitable and loss-making property disposals. Properties divested Sales, Profit, Number of Mkr SEK m properties Profitable 224,6 39.0 10 At break-even 14.7 0.0 3 Loss-making 1.2 -0.3 2 Sales administration -2.7 Total 240.5 36.0 15 Funding Kungsleden's net financial position was SEK -88 m (-65 m), with interest subsidies comprising SEK 1.6 (0.1 m). Interest cover was a multiple of 2.5 (2.1). Payment for the acquisition of retarement homes will be made during the second quarter 2002; the freedom from interest payments corresponds to an estimated SEK 14 m reduction of interest costs in the period. In 2002, Kungsleden's funding portfolio has expanded from SEK 5,966 m to SEK 6,141 m. The average interest of the funding portfolio has been stable, at 5.76 per cent as of 31 March. The average interest fixing period was 2.5 years. Kungsleden has attained its interest maturity structure by extending loans with short interest-fixing periods through interest swaps. Kungsleden owns no properties in foreign countries and has no foreign currency borrowings. Interest fixing periods as of 31 March 2002 Average Interest Nom.amt, SEK m Proportion, % interest rate, % maturity 2002 3,671 59.8 5.17 2003 220 3.6 6.84 2004 100 1.6 5.19 2005 250 4.1 8.01 2006 450 7.3 5.96 2008 450 7.3 6.15 2009 100 1.6 6.12 2010 800 13.1 7.07 2011 100 1.6 6.26 Total 6,141 100.0 5.76 Shareholders' equity The closing balance of shareholders' equity was SEK 2,281 m (2,146 m), or SEK 120.3 (113.2) per share, equivalent to an equity ratio of 23.0 (27.6) per cent; dividend payments of SEK 10.50 per share meant the equity ratio declining to 21.5 per cent, ceteris paribus. The share and ownership structure Kungsleden has sustained positive share price performance in 2002; at year-end 2001, the share price was SEK 117 against SEK 139 as of 31 March 2002. The record date for dividends was 12 April when the share was quoted at SEK 135. Thereby, total returns for the period 1 January 2002 to 12 April 2002 inclusive amount to 24 per cent. As of 31 March 2002, Kungsleden had some 11,900 shareholders, a 17 per cent increase on the number as of 31 December 2001. Shareholders as of 31 march 2002 Shareholder Number of shares % of votes and capital Alecta (formerly SPP) 558,280 2.9 Olle Florén with companies 460,800 2.4 Crafoord Foundation 442,000 2.3 Management and Board 433,200 2.3 2nd AP (National 360,353 1.9 Pension Insurance) Fund Swedish Red Cross 302,000 1.6 SHB Liv Försäkring (Life) 291,200 1.5 Agria 260,000 1.4 Baltic Foundation 260,000 1.4 3rd AP (National 190,000 1.3 Pension Insurance) Fund Total, ten largest shareholders 3,557,833 18.8 Foreign owners 1,729,635 9.1 Other shareholders 13,671,152 72.1 Total 18,958,620 100.0 Human resources During the period, the average number of employees was 71(77). Parent company Parent company profit after financial items was SEK -8.8 m (1 m) in the period; the closing balance of liquid funds was SEK 0.3 m (0 m). Forecast 2002 Kungsleden is retaining the forecast for 2002 announced coincident with its annual financial statement for 2001, of profit before tax of SEK 450 m, or SEK 23.7 per share. Jens Engwall Chief Executive Kungsleden AB (publ) Stockholm, Sweden, 23 April 2002 This interim report has not been reviewed by the Kungsleden's auditors. Forthcoming reports Interim Report, January-June 2002, 15 August Interim Report, January-September 2002, 23 October For more information, please contact Jens Engwall, Chief Executive, tel: +46 (0)8 503 05204, mobile: +46 (0)70 690 6550 Johan Risberg, COO, CFO, tel: +46 (0)8 503 05206, mobile: +46 (0)70 690 6565 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/04/23/20020423BIT00570/wkr0001.doc The Full Report http://www.waymaker.net/bitonline/2002/04/23/20020423BIT00570/wkr0002.pdf The Full Report