Hufvudstaden-Annual-Report-2017.Pdf
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HUFVUDSTADEN 2017 English NORDSTAN Östra Hamngatan, Gothenburg Cover: Bibliotekstan, Norrlandsgatan, Stockholm BIBLIOTEKSTAN Biblioteksgatan, Stockholm NORDISKA KOMPANIET Hamngatan, Stockholm HUFVUDSTADEN 2017 5 CONTENTS This is Hufvudstaden .....................................................................................6 Year in brief ...................................................................................................7 Business concept, objectives and strategies ...................................................8 Statement by the President ..........................................................................12 Property market ...........................................................................................16 Shares and shareholders ..............................................................................26 Stockholm, page 14 Corporate social responsibility: Value-driven corporate culture ..............................................................28 Sustainable enterprise ............................................................................29 Responsible business .............................................................................30 Customer relations ................................................................................31 Sustainable properties ...........................................................................31 Sustainable workplace ...........................................................................34 Employees, page 36 Property development .................................................................................40 Stockholm Business Area ............................................................................42 NK Business Area .......................................................................................46 Gothenburg Business Area ..........................................................................50 Financial statements: Administration Report, including Corporate Governance Report ........54 Income Statements with comments – Group ........................................62 Stockholm, page 44 Balance Sheets with comments – Group ...............................................64 Changes in equity – Group ...................................................................66 Cash Flow Statements with comments – Group....................................68 Parent Company with comments ..........................................................70 Notes .....................................................................................................72 Proposed allocation of unappropriated earnings ...................................88 Auditors' Report ....................................................................................89 Gothenburg, page 59 Board of Directors and Auditors .................................................................92 Senior Executives ........................................................................................94 Multi-year review – Group ..........................................................................97 Business areas in figures ..............................................................................98 Properties ...................................................................................................100 Definitions and glossary ............................................................................103 Annual Meeting and calendar ...................................................................105 Stockholm, page 104 Addresses ...................................................................................................106 Reference to the statutory Annual Report and CSR Report The statutory Annual Report comprises pages 8 – 10, 28 – 38 and 54 – 88. Comparisons in brackets refer to the corresponding figures for the previous year. The statutory CSR Report according to the Annual Accounts Act can be found on pages 8 – 10 and 28 – 38. 6 HUFVUDSTADEN 2017 THIS IS HUFVUDSTADEN Fair value, properties Hufvudstaden is a property company listed on the Nasdaq Stockholm Large Cap list. We have managed and developed Gothenburg properties for more than 100 years in Stockholm and more SEK 7.6 bn than 60 years in Gothenburg. Our financial position is solid, 19% with a low loan-to-value ratio and good earning capacity. The holdings comprise 29 properties, mainly office and retail SEK 39.7 bn premises in the most central areas of the two foremost growth regions in Sweden – Stockholm and Gothenburg. At the end of 81% 2017, the fair value of the properties totalled SEK 39.7 billion. Stockholm SEK 32.1 bn In recent years, we have intensified our investment in development projects, although still retaining our Interest coverage ratio and net loan-to-value ratio Multiple % long-term approach to business and 10 25 9 a consistently high level of quality 8 20 7 in the management process. 6 15 5 Management of the Company's property holdings is split be- 4 10 tween three business areas. The Group also includes the 3 wholly owned subsidiary AB Nordiska Kompaniet, which 2 5 owns the NK brand and has department stores in Stockholm 1 and Gothenburg. In recent years, we have intensified our 0 0 investment in development projects, although still retaining 2008 2009 2010 2011 2012 2013 2014 20152016 2017 our long-term approach to business and a consistently high Interest coverage ratio Net loan-to-value ratio, properties level of quality in the management process. We will continue to achieve our financial objectives and in doing so generate a good return over time and with limited risk for the shareholders. Vision and aim Hufvudstaden's vision is to be consistently perceived as, and Gross profit and net revenue prove to be, the most interesting and vibrant property company SEK m in Sweden, and its aim is to have the most satisfied customers 1,800 in the industry. To measure this, we take part in the annual 1,600 Fastighetsbarometern Customer Satisfaction Survey, in which we 1,400 have been ranked among the top three companies since the 1,200 Survey began in 1997. We focus on providing our customers with a high level of service and this involves working closely 1,000 with our tenants. All the properties are within walking distance 800 of our offices and we have our own staff who manage and 600 develop the properties. 400 Sustainable development 200 The long-term approach adopted by Hufvudstaden is unique, 0 2008 2009 2010 2011 2012 2013 2014 20152016 2017 and the sustainability work that is being conducted is an in- tegral part of our operations, regardless of whether the focus Gross profit 1) Net revenue 1) 1) Property management is on financial development or on environmental and social issues. Good relations, a healthy working environment and strict observance of good business ethics are crucial to our long-term success. HUFVUDSTADEN 2017 7 YEAR IN BRIEF • Profit after tax for the year was SEK 3,895 million Financial summary (SEK m) (5,284). The decrease can be attributed to lower unrealized 2017 2016 Net revenue, property management 1,751 1,703 changes in the value of the property holdings. Gross profit, property management 1,262 1,226 Unrealized changes in value, investment properties 2,848 4,160 • Gross profit rose by 3 per cent to SEK 1,301 million Operating profit 4,031 5,425 (1,262). The increase can be attributed mainly to higher Profit for the year 3,035 4,120 Net profit from current operations 876 841 rental revenue, although it has been counteracted by costs related to vacant space that arose in conjunction Fair value, properties, SEK bn 39.7 36.5 Rental vacancy level, % 3.9 3.9 with development projects. Net loan-to-value ratio, properties, % 14.6 15.2 Interest coverage ratio, multiple 9.3 8.6 • Profit for the year after tax totalled SEK 3,035 mil- lion (4,120), equivalent to SEK 14.71 per share (19.98). • The Board proposes an increase in the dividend to SEK Dividend growth 3.50 per share (3.30). SEK 4.00 +6% • The fair value of the property holdings at the year-end was 3.50 +6% SEK 39.7 billion (36.5), resulting in a net asset value +7% 3.00 +5% +6% of SEK 152 per share (138). +6% 2.50 +7% +10% +11% • The rental vacancy level at the year-end was 3.9 per 2.00 +9% cent (3.9). Excluding current development projects, the 1.50 rental vacancy level was 2.4 per cent (2.6). 1.00 0.50 0 2008 2009 2010 2011 2012 2013 2014 20152016 2017 1) Dividend per share 1) According to a proposal by the Board Vacancy level % 10 9 8 7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012 2013 2014 20152016 2017 Floor space vacancy level Rental vacancy level 8 HUFVUDSTADEN 2017 BUSINESS CONCEPT, OBJECTIVES AND STRATEGIES Hufvudstaden was founded in 1915 and Business concept Competence development. Systematic devel- rapidly became one of the leading prop- With properties in central Stockholm opment of the knowledge and compe- erty companies in Sweden. Today it is and central Gothenburg, Hufvudstaden tence of the personnel will be ensured one of the country's strongest brands in will offer successful companies high- with a focus on professional knowledge the property sector. The brand is well quality office and retail premises in and values. known and represents high quality, good attractive marketplaces. service and long-term thinking in the Business development. Active business de- management and development of the Strategies to achieve the objectives velopment and adaptation to advances in Company's commercial properties in Customer focus. Hufvudstaden will work digitalization in