Increased profits and a secure foundation for growth

Increased profits and a secure foundation for growth

Financial Statement 2010


  · Net sales decreased by 11 per cent to SEK 2,304 (2,602) m, and gross
profit decreased by 15 per cent to SEK 1,545 (1,817) m due to the
previous year's transaction with AP3 (the Swedish Third Pension
Insurance Fund) and increased costs relating to the severe winter.
  · Profit before tax was SEK 1,186 (351) m. Profit after tax was SEK
841 (250) m, equivalent to SEK 6.20 (1.80) per share.
  · As of 31 December 2010, the property portfolio comprised 592 (585)
properties with a book value of SEK 21,501 (21,861) m.
  · 64 (18) properties were acquired for SEK 2,356 (1,307) m. 63 (274)
properties were also divested for SEK 2,929 (7,808) m, generating a
profit of SEK 33 (-135) m. These divestments affected profit for
calculating dividends by SEK 53 (895) m. After the end of the interim
period, a final agreement was signed to acquire 36 properties for SEK
3.6 bn from NR Nordic & Russia Properties Ltd.
  · Profit for calculating dividends for 2010 was SEK 530 (1,022) m,
equivalent to SEK 3.90 (7.50) per share.
  · The Board of Directors is proposing a dividend of SEK 2.00 (3.75)
per share.
  · The estimated profit for calculating dividends for the full year
2011 is SEK 650 m, or SEK 4.80 per share.

Fourth quarter (October-December)

  · Net sales rose by 2 per cent to SEK 599 (588) m.
  · Profit before tax was SEK 781 (41) m after the value of financial
instruments increased. Net profit after tax was SEK 524 (-90) m, or SEK
3.80 (-0.70) per share.
 

“Going into 2010, we anticipated a weak increase in vacancies, and
somewhat lower revenues due to a negative consumer price index. What we
didn't anticipate was such a cold winter and the resulting increased
costs. Summarising the year, I can conclude that profits for the quarter
and year were stable, even if the winter weather and somewhat higher
vacancy levels did impact our figures adversely.

Comparisons with the full year 2009 are affected by the part-sale of
public properties to AP3 (the Swedish Third Pension Insurance Fund), and
the fact that earlier in 2010, we were net sellers of property. In
like-for-like terms, our rental revenues reduced by 2 per cent. At
year-end, the average property yield was 6.4 per cent, against 7.0 per
cent in the year before.

Net profit increased robustly, largely thanks to increased unrealised
values on properties and financial instruments totalling SEK 617 m.

Transaction volumes expanded markedly in the fourth quarter, and this
also applied to Kungsleden. The largest transactions included the
now-unconditional acquisition of 36 properties for SEK 3.6 billion
including transaction costs from NR Nordic & Russia Properties Ltd. at a
property yield of approximately 10 per cent. The sale of six commercial
properties in Ludvika, central Sweden, to ABB for SEK 800 m can be
considered as Kungsleden relocating the ABB holding to Västerås, north
west of Stockholm, reducing a potential location risk in Ludvika. In the
fourth quarter, we also sold our retirement homes holding in Germany to
Hemsö, our 50 per cent owned company, for SEK 1.3 billion.

With a stronger Swedish economy, the prospects of retail properties are
improving, and in 2010, Kungsleden made some SEK 800 m of acquisitions
of stores and shopping centres. Their tenants represent strong brands
and these properties are in good retail locations. One example is the
acquisition of six retail properties, several of them in the Mälardalen
region, for around SEK 520 m at a property yield of about 8 per cent.

With the transactions completed in 2010 and the formation of Hemsö,
Kungsleden has undergone extensive change over the past year, and is now
a company in good shape, and to some extent, a new form. But its
foundation is the same business model that Kungsleden has always had.

The intensive activity of the quarter corroborates the transaction
market has come back to life. I view our prospects of continuing to
maintain higher activity levels, and thus getting Kungsleden's portfolio
to grow, with confidence.

My view is that vacancy levels stabilised in late-2010. Looking forward,
we are seeing a gradual improvement on the transaction and lettings
markets. We are also seeing signs of inflation returning, and that there
will be opportunities for some rent increases.

The proposed dividend for 2010 is SEK 2.00 (3.75) per share. The Board
of Directors' estimate of profit for calculating dividends for 2011 is
SEK 650 m.”

Thomas Erséus
Chief Executive

Kungsleden AB (publ) discloses the information in this press release
according to the Swedish Securities Markets Act and/or the Swedish
Financial Trading Act. The information was provided for public release
on 17 February 2011 at 08.00 a.m.

For more information, please contact:

Thomas Erséus, CEO Kungsleden | phone +46 (0)8 503 052 04 | mobile +46
(0)70 378 20 24
Johan Risberg, Deputy CEO Kungsleden | phone +46 (0)8 503 052 06 |
mobile +46 (0)70 690 65 65