The Annual Report January–December 2006
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Wihlborgs Fastigheter AB The Annual Report January–December 2006 ”WE’RE SITTING IN THE MIDDLE OF THE FLOW OF BUSINESS PROSPECTS WHICH MEANS THAT WE CAN REACT QUICKLY AND MAKE DECISIONS WHEN THE OPPORTUNITY ARISES” Anders Jarl Chief Executive Officer CONTENTS Wihlborgs is the leading property company in the Öresund 1 The year in summary region. The properties’ book value totals SEK 11 billion with 2 CEO’s review 4 History a lettable area of approximately 1 million sq.m. and an annual 6 Operations rental value of SEK 1 billion. 8 Organisation and employees Wihlborgs shares are listed on the Stockholm Stock Exchange, 10 The Environment 12 The share Mid cap segment. 14 Market overview 17 Property portfolio 32 Projects and development 34 List of property acquisitions and sales Invitation to the Annual General Meeting 36 Valuation principles 39 List of properties The Annual General Meeting of Wihlborgs Fastigheter AB (publ) will take place 46 Risk factors at 5 p.m. on Thursday 26 April 2007 at Slagthuset, Jörgen Kocksgatan 7A, Malmö. 47 Tax situation 48 Administration Report Shareholders wishing to attend the meeting must be included in the register of Financial reports shareholders maintained by VPC AB by 20 April 2007 at the latest, and must also 51 Profit and loss account send notification of their participation by letter to Wihlborgs Fastigheter AB, 52 Balance sheet 54 Changes in equity Box 97, 201 20 Malmö, or by e-mail to [email protected] or phone 55 Cash flow statement on +46 40 690 57 70 or fax on +46 40 23 45 52. 56 Accounting principles 62 Notes Notification must reach Wihlborgs by 4 p.m. on Friday 20 April 2007. 69 Audit Report 70 Corporate Governance Report The notification must state the shareholders’ name, civic registration number/ 78 Five-year Summary and corporate identity number, address, telephone number and number of shares Definitions owned. Shareholder with nominee-registered shares in order to participate must 79 Articles of Association re-register their shares in their own name with VPC AB. A request for such re-registration must be made in good time before Friday MÄ JÖ RK IL T M 20 April 2007. 341 T 115 R K Y C K S A Production: Wihlborgs in collaboration with Financial information 2007 Pennan AB, Lund 2007. Interim report January-March: 26 April Svanenmärkt, license no. 341 115. Interim report January-June: 16 August Photographs: Marcus Carlsson, Bertil Hagberg, Ola Hansson, Interim report January-September: 1 November Stefan Larsson, Martin Palvén. Print: Markaryds Grafiska AB The year in summary 2006 entailed high transaction volumes both in terms of acquisitions and sales. Wihlborgs’ property portfolio has grown substantially through property acquisitions totaling SEK 3.6 billion. The acquisition total includes Tornet’s Malmö holdings of fourteen proper- ties and the Ideon property in Lund. The sales amounted a total purchase price of SEK 1.6 billion. During the year, new full-year tenancy agreements amounted to SEK 80m with notices of termination amounting to SEK 60m. Profit after taxes amounted to SEK 850m (470m). May 2006 Wihlborgs implemented a 2:1 share split, one old share was replaced with two new shares. The split meant that the number of outstand- ing and registered shares increased from 19 214 182 to 38 428 364. Wihlborgs shares are listed on the Stockholm Stock Exchange, Mid cap segment. n Rental income for 2006 amounted to SEK 909m (736m) n The profit for the year after tax was SEK 850m (470m) n Earnings per share increased to SEK 22,12 (12,33) n The Board of Directors are proposing a dividend of SEK 5,50 (3,50) per share n Equity/assets ratio was 32.7 (34.8). Key ratios1 2006 2005 Rental income, SEKm 909 736 Net operating income, SEKm 627 497 Profit after financial items, SEKm 1,064 649 Return on equity, % 26,6 18,2 Equity/assets ratio, % 32,7 34,8 Interest coverage ratio, multiple 3,3 2,9 Earnings per share, SEK 22,12 12,33 Cash flow per share, SEK 10,96 8,24 Dividend per share, SEK2 5,50 3,50 1. For definitions, see page 78. 2. This refers to the Board of Directors proposal of dividend for 2006. WIHlbORG ANNUAL REPORT 2006 1 A dynamic business in a dynamic region n Dear Shareholders, Wihlborgs’ business model for creating shareholder value is really quite simple. It’s a case of creating value for the customers and ensuring they are satisfied. But this demands that we as a landlord engage in our tenants’ (or customers as we like to call them) needs and activities. Today we are far from the traditional image of property management. For us it seems obvious to actively resolve our customers’ premises problems. This means that, together with our customers, we engage in discussion to arrive at a suitable position as well as an optimum design of the premises by starting from existing premises or a plot. The concentration on commercial properties is a case of concentrating all our efforts and resources on one area. The concentration on the Öresund region is ”Tobebestatmeeting also quite obvious. It is a dynamic region which has excellent prospects for con- ourcustomers’requirements tinued, positive growth. anddemands,wewill concentrateouractivities Growth in the coming year is estimated at 4.5 per cent. All it needs is a quick oncommercialproperties look at the map to see how close the Öresund region is to the Continent’s pop- intheÖresundregion.” ulation centres. Even now, more people live in the Öresund region than any other region in the Nordic Area. Living and working life are now being quickly integrated despite certain remaining fiscal difficulties between Denmark and Swe- den. Despite this there are good opportunities for increased movement into the region as a whole. This is stimulated by good business prospects and recreation opportunities for employees. It is easy to attract skills that can be developed at one of the 14 universities and colleges as well as even more research villages and clusters that are found in the region. Or one of the service and knowledge companies that are established here. Furthermore, the region has a well-developed communications structure, both digital and physical, and which is continuously being developed. Altogether, this means that Öresund is becoming an even more attractive region. We are sat right in the middle of this – close to our customers and their requirements. In this way we can offer short decision ”We’resittinginthe paths and, not least, good premises which can be refined in good locations. middleoftheflowof These are premises that we have been able to acquire thanks to our local businessprospectswhich knowledge and long-term presence. That’s the other part of our business meansthatwecanreact – transactions and project development. This is where we create value quicklyandmakedecisions through acquiring and redeveloping properties which, later on, are sold whentheopportunity on to other serious managers. Our portfolio is dynamic and we expect arises.” that, in the long term, we will have an average turnover of approximately 1 0 per cent of our properties. In this way we will renew our portfolio and adapt to market development. During 2006 we were very active and increased our property portfolio by acquiring 45 properties in accordance with our acquisition strategy for a value of SEK 3.6 billion. As the same time we have disposed of 17 properties for a total value of SEK 1.6 billion. And I feel that we have been successful. During our second full year as an independent company, we increased our result from SEK 470m to SEK 850m, an increase by approxi- mately 80 per cent. We will therefore continue along the chosen path by acquiring and managing commercial properties that can be developed in our carefully-selected strate- gic areas. Thereby strengthening our positions. ”Realisedand In plain words this means a strong presence in Lund, for example, which for vari- anticipatedinterest ous reasons is highly interesting and is therefore given priority. It is against this increaseswillprovide background that we should view the acquisition of Ideon AB. An area where we see acorrectionof considerable development potential. I am convinced that we can do a lot more marketprices.” with the property. But we also view it as a way to establish and develop interesting relationships within an area that is interesting for a number of reasons. We will also strengthen our existing significant presence in different ways at Dockan in WIHLBORGSANNUAL REPORT 2006 Photo: Marcus Carlsson Västra Hamnen since Malmö’s office market is growing outwards towards the harbour at an ever-increasing rate. This is where we will be moving ourselves during the summer. This means that we will be moving nearer to many of our customers. Copenhagen is another priority area where we already have a presence. We will be increasing our presence in order to create a critical mass for effective manage- ”And we have ment. At the same time we will gain a bridgehead for further development on the the resources to invest Danish side of the Öresund region. A market which after many years of stagnat- in good properties.” ing lease levels is beginning to appear increasingly interesting. The recent time’s focus on environmental issues, and CO2 emissions in particular, is some- thing we take very seriously. With the environment as an integral part of our ”Environment as activities, we are working continuously with environment-enhancing meas- an integral part” ures. Our long-term environmental objective until 2009 is to reduce the con- sumption of electricity and heating (kWh/sq.m.) by 6 per cent in our properties.