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

2003-11-05

Profits
For the period January – September, profit after taxes amounted to MSEK 63 (157)(*1). The result for the corresponding year-ago period was affected by positive items affecting comparability due to the restructuring of Adcore in an amount of MSEK 143. Gains on sales of properties account for MSEK 17 (0) of the profit. The operating surplus was MSEK 129 (31). Net financial items were MSEK – 71 (-16).
 
Cash flow and financial position
The cash flow amounted to MSEK 167 (81). The equity ratio at the end of the period stood at 25.5 percent, equivalent to 27.1 which is an increase compared to the situation at the beginning of the year, when the equity ratio was 23.4 and 25.6 percent, respectively. Shareholders’ equity was MSEK 800 (522) as of September 30, 2003, liquid funds were MSEK 230 (63) and interest-bearing liabilities at the same point in time was MSEK 2,192 (1,552).
 
Revenue and property costs
Rental revenues amounted to MSEK 213 (45) for the period January – September 2003 and property costs amounted to MSEK 84 (15), making the operating surplus MSEK 129 (31).
 
Property sales
A total of thirteen properties where sold for a total of MSEK 159 (0), resulting in capital gains of MSEK 17 (0).
 
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’s financial goal is to earn a long-term return on equity of not less than 15 percent, the equity ratio shall exceed 20 percent and the interest coverage ratio should be at least 1.3. 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
A certain weakening trend in demand was discernible in Klövern’s markets, primarily for industrial and warehousing space. However, the level of new rents was affected only marginally; the same is true with respect to the impact on the economic occupancy rate. As was the case during the first half of 2003, the net effect of new and vacating tenants was mildly positive again during the third quarter. Among major tenants taking occupancy can be mentioned the Swedish Integration Authority that moved into the Svärdet 8 property in Norrköping. The occupancy rate in the portfolio of properties was 87 percent of the rental value as of September 30, which is a drop of two percentage points compared to the situation at the end of the second quarter 2003. The decrease is attributable to the fact that the properties acquired August 1, 2003 had a lower occupancy rate compared to the existing portfolio at the same point in time.
 
Klövern’s property holdings as of September 30, 2003 are summarized below:
 
Type of property
      No. of properties
Floor-space, sq.m.
Rental value, MSEK
Economic
   occupancy rate, %
Offices
45
212,578
197.2
84
Industry/warehouse
35
273,569
152.7
89
Retail
11
42,700
33.8
95
Education
3
10,933
9.7
81
Residential
2
13,130
12.0
98
Total
96
552,910
405.4
87
 
 
Financing
As of September 30, 2003, interest-bearing liabilities stood at MSEK 2,192 (1,552) with an average annual borrowing rate of 5.4 percent (5.8) and an average period of fixed interest of 2.2 years (2.5), with capital tied-up for an average of 4.1 years (3.9). As of September 30, 2003, loans maturing during 2003 had an average period fixed interest of 50 days (66).
 
Loan structure as of September 30, 2003
Maturity
MSEK 
Average interest rate, %
Percentage
of total
 
2003
742
4.3
34
 
2004
116
5.8
5
 
2005
406
5.9
19
 
2006
229
5.8
10
 
2007
404
6.2
19
 
2008
155
6.1
7
 
2011
90
6.5
4
 
Subord. loan
50
6.3
2
 
Total
2,192
5.4
100
 
 
Capital expenditures
During the period properties have been acquired in Karlstad, Linköping, Norrköping and Örebro/Kumla for a combined sum of MSEK 831. A total of MSEK 76 was invested during the period in renovations of properties, primarily in Norrköping, Nyköping, Uppsala and Karlstad. The amounts have been capitalized in their entirety.
 
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 -8. Net investments in shares and equipment amounted to MSEK 1.
 
Klövern’s shareholders
After issuance of 19.6 million shares in connection with the acquisitions made August 1, 2003 from Akelius Kontor AB and Mandamus, the number of shares outstanding in Klövern is 60,960 630, divided among about 35,600 owners. The distribution as of December 30, 2003, with data on the ten largest owners shown below.
Shareholder

No. of shares
      Holding (%)
           Vote (%)
Lantbrukarnas Riksförbund
13,450,000
22.1
14.2
Länsförsäkringar Södermanland
4,165,174
6.8
4.4
Nect Holding B.V.
2,947,955
4.8
4.8
SEB Fonder
2,383,592
3.9
2.5
Gustaf Hermelin
2,181,385
3.6
2.3
Investment AB Öresund
1,922,307
3.2
3.9
Erik Paulsson
1,720,754
2.8
4.4
Catella Fonder
1,698,100
2.8
1.8
Banque Invik S.A.
1,498,527
2.5
4.3
HQ Fonder
1,423,249
2.3
1.5
Total 10 largest shareholders
33,391,043
54.8
44.2
Other shareholders
27,569,587
45.2
55.8
Total all shareholders
60,960,630
100
100
 
 
Nomination of directors
According to a resolution of the Annual General Meeting in Klövern held April 23, 2003 with respect to nomination of directors, the following representatives have been appointed to work out a proposal, under leadership of the Chairman of the Board, to be presented to the regularly scheduled Annual General Meeting. These representatives are: Mattias Nordin, LRF, Axel von Stockenström, Länsförsäkringar Södermanland, Anders Swensson, Nect Holding, Erik Paulsson, Henrik Strömbom, Catella Kapitalförvaltning  and Nils-Magnus Lilja. The representatives can be reached via e-mail address styrelsenominering@staging-wwwklovernse.wp4.triggerfish.cloud, or by telephone via Klövern +46+155-44 33 00.
 
Reporting and accounting principles
Klövern’s accounting principles are unchanged compared to the preceding year. The Company follows the recommendations of the Swedish Financial Accounting Standards Board and the statements of the Emerging Issues Task Force of the Swedish Financial Accounting Standards Board. A number of new recommendations came into force as of January 1, 2003. The application of these has not significantly impacted Klövern’s accounting. Since Klövern is of the opinion that the business conducted is classified as one segment, the application of RR25 Reporting of segments means that no further breakdown of the accounting is necessary. This interim report has been compiled in accordance with the recommendation of the Swedish Financial Accounting Standards Board RR20 Interim reporting. 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. 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
 
Acquisition from Akelius Kontor
Effective October 1, 2003 Klövern acquired companies containing a total of nine properties with an aggregate market value of MSEK 279 from Akelius Kontor AB. As of October 1, 2003 Klövern’s portfolio of properties consists of 105 properties with total rentable space of about 596,000 square meters and a book value of about 2.9 billion kronor and annual rental income of about MSEK 385.
 
Property sale
Klövern has sold the property Bageriet 13 in Örebro for MSEK 44 at profit of MSEK 1, which will be included in the profit for the fourth quarter 2003. The property consists of a total of approximately 7,000 square meters lettable space, 3,100 square meters of which is residential.
 
(*1) Values in parentheses are comparative data, which for profit data and cash flow refer to the period January – September 2002 and for balance sheet data to December 31, 2002.
 
Schedule of financial reporting
Year-end Report 2003                                                      February 12, 2004
 
Reports are available at Klövern’s Website, www.staging-wwwklovernse.wp4.triggerfish.cloud, where visitors may also subscribe to interim reports and press releases.
 
This interim report has not been subject to examination by the Company’s auditors.
 
Nyköping, November 5, 2003
Klövern AB (publ)
 
Gustaf Hermelin
President & CEO
 
 
The full report with tables can be downloaded from the following link: