Klövern AB (publ): Interim Report January – June 2003

2003-08-21

 
* Profit after taxes amounted to MSEK 42

* Earnings per share amounted to SEK 1.03

* Rental revenues amounted to MSEK 133

* Thirteen properties in twelve localities have been sold for MSEK 159 for a gain of MSEK 17

* During the third quarter properties with an aggregate market value of MSEK 1,126 were acquired from Akelius Kontor and Mandamus
 
 
Profits
For the period January – June, profit after taxes amounted to MSEK 42. This result includes gains on sales of properties in the amount of MSEK 17. Rental revenue amounted to MSEK 133 and the operating surplus was MSEK 77. Net financial items were MSEK – 44.
Cash flow and financial position
 
The cash flow amounted to MSEK 40 and the equity ratio at the end of the period stood at 25.2 percent, equivalent to 27.4 percent after full conversion. Shareholders’ equity was MSEK 564 as of June 30, 2003, liquid funds were MSEK 103 and interest-bearing liabilities at the same point in time was MSEK 1,558. The average interest on borrowings was 5.7 percent at the end of the period, with an average interest-fixing period of 2.3 years.
 
Revenue and property costs
Rental revenue amounted to MSEK 133 for the period January – June 2003 and property costs amounted to MSEK 56, making the operating surplus MSEK 77. As of June 30 the occupancy rate for the property holdings was 89 percent of rental values, which is unchanged compared to the situation at the end of the first quarter 2003.
 
Operations
Klövern is a real estate company focused on acquiring, developing and selling high-yielding properties in large and medium-sized towns outside major city regions. Klövern seeks to expand by acquiring properties with the intention of achieving sufficient size to lay the foundations for effective management and a leading position. Klövern will also achieve sufficient operational size and stock market capitalization to create the right prospects for its share to become an attractive investment alternative for players in the stock market.
 
Market and property holdings
In markets where Klövern is active demand for commercial space was unchanged during the year so far compared to the situation during 2002. Rent levels for new leases have displayed a weak upward trend. The downward trend with weaker demand and lower market rents so prevalent in parts of the major metropolitan areas has thus not impacted the markets where Klövern is active.
 
 
Klövern’s property holdings as of June 30, 2003 are summarized below:
 
Type of property
Number of properties
Floor-space, sq.m.1)
Rental value, MSEK
Economic
   occupancy rate, %
Offices
27
138,604
122.1
89
Industry/warehouse
27
157,635
87.3
90
Retail
9
29,971
25.1
95
Education
3
17,624
14.2
76
Residential
1
9,037
7.8
90
Other 2)
4,409
9.1
94
Total
67
357,280
265.6
89
 
1)       Reclassification of space within the properties has resulted in a net change in rentable space of – 900 square meters compared to the situation December 31, 2002.
2)       This category includes parking and garage space with an aggregate rental value of MSEK 3.4.
 
Financing
As of June 30, 2003, interest-bearing liabilities stood at MSEK 1,558 with an average annual borrowing rate of 5.7 percent and an average period of fixed interest of 2.3 years, with capital tied-up for an average of 3.6 years. As of June 30, 2003, loans maturing during 2003 had an average period fixed interest of 57 days.
 
Loan structure as of June 30, 2003
 
 
Maturity
MSEK 
Average interest rate, %
Percentage
of total
2003
446
5.1
29
2004
63
6.1
4
2005
410
5.8
26
2006
129
5.6
8
2007
404
6.2
26
2008
55
5.8
4
Subordinated loan
50
6.3
3
Total
1,558
5.7
100
 
Capital expenditures
A total of MSEK 49 was invested during the period in renovations of properties, primarily in Norrköping, Nyköping, Uppsala and Karlstad. The amounts have been capitalized in their entirety.

Property sales
A total of thirteen properties where sold for a total of MSEK 159, resulting in capital gains of MSEK 17. These disposals mean that Klövern has left eleven communities where property holdings were limited.
 
Annual General Meeting held April 23, 2003
At Klövern’s regularly scheduled Annual General Meeting held April 23, 2003 Stefan Dahlbo and Erik Paulsson were re-elected. The Meeting decided to elect the following as new members of the Board of Directors: Gustaf Hermelin, President & CEO of Klövern AB, Anna-Greta Lundh, President of Länsförsäkringar Södermanland, Bo Pettersson, President of Catella Capital AB, Johan Piehl, President of Förvaltnings AB Charrow and Anders Swensson, President of Nect Management AB. Directors Lars Evander and Ole Oftedal had requested not to be considered for re-election. At the subsequent statutory Board of Directors meeting Stefan Dahlbo was re-elected as Chairman.
 
Klövern’s shares again on the regular O-list 
After completing the required process of examination during the spring of 2003, the Stockholm Stock Exchange ruled that the Company satisfies the requirements for listing of its shares on the O-list of the Exchange. The Stockholm Stock Exchange therefore decided that the Company’s shares again should be traded on the O-list from April 30, 2003.
 
Parent Company
The role of the Parent Company is to handle overall Group functions and to act as owner of the Group’s subsidiaries. The loss after financial items for the first six months of the year amounted to MSEK -5.0. Net investments in shares and equipment amounted to MSEK 1.1.
 
Personnel
The total number of employees as of June 30 was 22, compared to 17 at the beginning of 2003.
 
Reporting and accounting principles
Owing to Klövern’s change of direction, from consulting operations to real estate during the second half of 2002, changes and complementary adjustments were made in the financial reporting. The same accounting principles and calculation methods were used as in Klövern’s Annual Report 2002. All historical comparative data in this interim report for the first six months of 2002 are in their entirety attributable to the then Adcore’s consulting business. Additional explanatory comments will be found in conjunction with the income statements, balance sheets, cash flow statements and key financial indicator reporting

Events after the end of the reporting period
Extra general meeting of shareholders held August 6, 2003
 
An extra general meeting of shareholders held August 6, 2003 resolved that the Board of Directors shall consist of eight directors and to elect Lars Holmgren to serve as new director. The current composition of the Board of Directors is as follows: Stefan Dahlbo, Gustaf Hermelin, Anna-Greta Lundh, Erik Paulsson, Bo Pettersson, Johan Piehl, Anders Swensson and Lars Holmgren. The extra general meeting resolved to authorize the Board of Directors to issue – on one or more occasions, and with or without departure from preferential rights for shareholders – up to 18.000.000 class B shares, each share in a nominal amount of SEK 5. Payment for the new shares may be made in kind, through offset or in cash.
 
Acquisition from Akelius Kontor and Mandamus
On July 1, 2003 it was announced that Klövern AB had agreed to purchase 29 properties from Akelius Kontor and Mandamus, with possession taken August 1, 2003, and that an option agreement had been concluded with Akelius regarding the future acquisition of companies containing properties with possession to be taken October 1, 2003. Possession of the properties covered by acquisition agreements between Klövern and Akelius, and between Klövern and Mandamus was taken on August 1, 2003 as planned. The option will be exercised, which means that Klövern on October 1, 2003 will acquire companies containing a total of nine properties
from Akelius.
 
As of October 1, 2003 Klövern’s portfolio of properties will consist of 107 properties with total rentable space of about 603,000 square meters and a book value of about 3 billion Swedish kronor. Annual rental income, pro forma, will amount to about MSEK 393, with an annual operating surplus of about MSEK 259 on a pro forma basis.
 
A total of 19.5 million newly issued Klövern class B shares will be conveyed as partial payment for the acquired properties. After the acquisitions scheduled for August 1, 2003, the number of shares outstanding in Klövern will be 60.9 million. The acquisition from Akelius Kontor October 1 means that another 6.4 million shares will be added. Akelius Kontor has previously announced its intention of selling a major portion of the Klövern shares received to the Federation of Swedish Farmers (LRF), which will then be the single largest owner in Klövern.
 
Schedule of financial reporting
 
Interim report January – September 2003                           
November 5, 2003
 
Year-end Report 2003                                                     
February 12, 2004
 
This interim report has not been subject to examination by the Company’s auditors.
 
 
Nyköping, August 21, 2003
Klövern AB (publ)
 
Gustaf Hermelin
President & CEO
 
 
The full report with tables can be downloaded from the following link: