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D-Carnegie-Co-Annual-Report-2016-1.Pdf ANNUAL REPORT 2016 Jerker Andersson Born in Bollnäs in 1963. Painter, draughtsman and printmaker. Attended the Gerlesborg Art School in Stockholm, but is otherwise self-taught. Jerker Anders- son enjoys painting folklore subjects and often seeks inspiration from events and ideas in the traditions of Hälsingland. In recent years, Jerker Andersson has also worked in granite, including large sculptures carved from a single piece of rock. Jerker Andersson’s work is represented in collections owned by Bollnäs Munici- pality, Folkparkernas Riksorganisation, the Swedish Public Employment Service in Bollnäs, Sankt Lars Kapell etc. D. Carnegie & Co supports contemporary artists, preferably related to the Swedish “Million Programme” public housing project. CONTENTS The Year in brief D. Carnegie & Co in brief Statement from CEO 2 Strategy and market 4 Property portfolio 12 Renovation and improvement 16 Sustainable development 24 Share, shareholders and risks 30 Corporate governance 40 Board of Directors and auditors 48 Senior Management 50 FINANCIAL STATEMENTS 52 Directors’ Report 53 Consolidated Income Statement 60 Consolidated Statement of Comprehensive Income 60 Consolidated Balance Sheet 61 Consolidated Statement of Changes in Equity 62 Consolidated Cash Flow Statement 63 Parent Company Income Statement 64 Parent Company Balance Sheet 65 Parent Company Statement of Changes in Equity 66 Parent Company Cash Flow Statement 67 Notes 68 Audit Report 93 List of Properties 96 Definitions 132 Investor Information Calendar 133 The year in brief Conducts directed share issue Q1 Q2 to new and current shareholders. Completes disposal of Purchases of property portfolios Announces investment pro- Gothenburg portfolio. in Eskilstuna and Katrineholm. gram equivalent to SEK 900 million over the next five years Entered into agreement Guldkupol educates D. Carnegie regarding repayment of con- & Co tenants on energy efficiency Issues bond amounting SEK vertible debentures to improve measures. 1,000 million net financial items and reduce dilution. Acquires property in Uppsala and divests a property with a potential development right in Solna. New renovation team in place Q3 with the long-term capacity to Blackstone through Vega renovate over 1,000 apartments Holdco S.à.r.l.* becomes the per year. company’s new principal owner. AIK Football team becomes Q4 a new collaborative partner. Four major social sustainability First building permit granted projects will be implemented on the company’s own land. together in the Stockholm 40 new housing units at suburbs where D. Carnegie & Co the Finnsta 1:17 property in owns apartments, starting at the Upplands-Bro municipality. beginning of 2017. * A company that is wholly owned by real estate funds, advised by an affiliate to Blackstone Group L.P. KEY FIGURES Jan – Dec Jan – Dec Jan – Dec 2016 2015 2014 Rental income, SEK m 1,284.3 1,217.4 608.7 Net operating income, SEK m 630.5 554.1 257.6 Surplus ratio, % 49.1 45.4 42.3 Income from property management, SEK m 269.4 186.2 42.4 After-tax profit, SEK m 1,678.3 1,139.1 233.1 Earnings per share SEK, before dilution 22.20 16.10 4.8 Earnings per share SEK, after dilution 21.93 13.50 4.3 Equity per share SEK 82.60 62.06 45.7 Adjusted equity (European Public Real Estate Association (EPRA) net asset value (NAV)) per share, SEK 101.96 73.50 51.99 Market value of investment properties, SEK m 16,997.9 13,826.4 11, 52 0 . 8 0 Equity/assets ratio, % 33.8 28.2 25.4 Equity/assets ratio, adjusted, % 41.7 33.4 29.1 NO. OF APARTMENTS 16,358 D. Carnegie & Co in brief MARKET VALUE D. Carnegie & Co owns and manages residential properties with focus on Stockholm. Property management close to the tenant in SEK m order to provide the highest possible level of service, and we coop- 16,998 erate closely with the communities in order to make our properties a long-term good place to live. D. Carnegie & Co shall focus on: Managing and developing properties in-house RENTAL INCOME, ANNUAL RATE Improving its portfolio and creating increased cash flows and strong value growth through D. Carnegie & Co’s well-tested renovation process SEK 1,379 m Developing building rights across the existing portfolio NET OPERATING INCOME, ANNUAL RATE START COMPLETED! 2025 2015 2016 SEK 734 m 2024 2017 10,000 BEFORE-TAX PROFIT apartments are to 2023 be renovated by 2018 SEK 2,072 m 2025 2022 2019 EARNINGS PER SHARE 2021 2020 SEK Read more about the Renometer on page 6 22.20 STATEMENT FROM THE CEO Investment rate remains high 2016 has involved continued strong growth for D. Carnegie & Co. Through significant investments in existing properties and new acquisitions, we have during the past year created a healthy growth in value. At the same time, we have further strengthened our operational capacity and reduced expenses by using more efficient processes. We have also continued major investments to improve all aspects of living in our neighbourhoods. In 2016, we invested SEK 1 billion and noted an environments for our tenants. We have a number of increase in value of our properties by almost SEK 3 employees who during the evening and night to help billion. Together with a 45 per cent rise in profit from create a safe and secure neighbourhood. We have also property management, the company has thus further supported several social projects involving people from improved its financial results. This offers us favourable our communities and we have supported sports clubs to conditions to continue to renovate and develop our hold local initiatives for children and young people. I am residential areas. We have continued with large scale particularly proud when tenants themselves say that we apartment renovations, but have also invested in com- are creating more attractive neighbourhoods. mon spaces and in surrounding areas as well as measures Satisfied tenants are our reward and during the past to improve safety and well-being. Being a resident in year we have worked systematically to improve our fol- our properties should be an entirely positive and safe low-up of how tenants appraise our efforts. This enables experience. us to quickly implement improvement measures. Our strong and sustained commitment towards good housing Improving and adding value also promotes a high level of employee satisfaction. Our During 2016, we renovated 1,253 apartments, which employees feel that we do more than simply manage the far exceeds our aim to renovate 1,000 apartments each properties, which contributes to our good results. year. We also continued investments in façades, heating Outlook installations, laundry facilities etc., which reduces maintenance costs and to some extent contributes to There are strong indications of significant potential in higher rental income. In total, the renovations in 2016 our areas. Maintaining and developing existing resi- have enabled an increase in rental income by 4.7 per cent dential areas, in attractive locations is profitable and for comparable properties, while operating costs were sustainable in both socioeconomic and commercial reduced by 3.5 per cent and repairs and maintenance terms. During the year, D. Carnegie & Co will continue costs were reduced by 23 per cent. This is reflected in an to develop additional properties, invest and renovate in increase of net operating income exceeding 13 per cent existing areas. We will also intensify work with devel- for comparable properties, which explains most of the opments of building rights to increase the attractiveness value increase for the year. Our healthy profits enable us of our areas. It is likely that we will start our first new to continue investing in apartment renovations and the build in 2017. outdoor environment in our areas. Our assessment is We are continuously looking for new acquisitions, that we will have renovated our entire current portfolio within and close to the areas where we operate, and by 2025. signed an acquisition agreement in February 2017 for almost 1,700 apartments, which should close in May An overall approach for better living conditions 2017. We are very hopeful that we can complete additio- Creating good living environments requires physical nal acquisitions during the current year. investments, but also a sustained commitment. We will continue to reinvest the value we create and D. Carnegie & Co invests a considerable amount of with our own method renovate the areas – on the terms time and money in creating safe and attractive living 2 D. Carnegie & Co AB (publ) Annual Report 2016 STATEMENT FROM THE CEO D. Carnegie & Co invests a consi- derable amount of time and money in creating safe and attractive living environments for our tenants. of our tenants. This applies to apartments, common spaces and surrounding areas. Our aim is to invest even more in 2017 than in the previous year. We will also continue our commitment to the community aspects of our residential areas. The living situation in the regions where we operate remains challenging and creates an underlying demand for our properties. It also creates the preconditions to improve the living environment for many years to come. Stockholm, April 2017 Ulf Nilsson CEO, D. Carnegie & Co Annual Report 2016 D. Carnegie & Co AB (publ) 3 The Renometer D. Carnegie & Co’s progress in its thorough renovation process. p. 6 Overall and financial targets Our entire property portfolio is to be renovated within ten years. Read more about the company’s p. 6 overall and financial targets. Rental apartments an important alternative High demand for housing makes it possible to renovate our property portfolio. p. 8 4 D. Carnegie & Co AB (publ) Annual Report 2016 STRATEGY AND MARKET Vision Mission To develop and improve the company’s property D.
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