Klövern AB (publ): Year-end report 2014

» Income increased by 14 per cent to SEK 2,521 million (2,220).

» The operating surplus increased by 18 per cent to SEK 1,643 million (1,392).

» Profit from property management increased by 24 per cent to SEK 789 million (636).

» Changes in value of properties amounted to SEK 1,207 million (-28), of derivatives to SEK -565 million (337) and share in profits of associated companies to SEK -126 million (5).

» Net profit amounted to SEK 1,164 million (808), corresponding to SEK 1.02 (0.68) per ordinary share.

» Taking possession of 19 properties for SEK 4,452 million and sale of 13 properties for SEK 531 million.

» During the fourth quarter, a new issue of preference shares, a bonus issue of Class B ordinary shares and a reverse share split were completed.

» The Board of Directors is proposing a dividend of SEK 0.30 per ordinary share and a dividend of SEK 20.00 per preference share. Adjusted for the bonus issue and the reverse share split, the dividend amounted last year to SEK 0.27 per ordinary share and SEK 20.00 per preference share.

Statement by the CEO

2014 – A very successful year for Klövern

The last quarter of the year was eventful for Klövern. Earnings continued to be very good and a number of important lease contracts were signed. Furthermore, transaction activity was high in December as usual. At an extraordinary general meeting decisions were made to introduce a new class of shares, ordinary shares of class B, and to authorize the Board of directors to resolve on a new issue of preference shares. These decisions strengthened Klövern and made the company better equipped for continued growth.

Income increased by med 12 per cent during the final quarter, mainly driven by acquisitions. The operating margin amounted to 62 per cent, to some extent negatively affected by refurbishment of recently acquired properties. For the full year 2014 this means that the operating margin came in at 65 per cent, up from 63 per cent in 2013, which is very satisfactory.

The economic occupancy rate was 90 per cent at the end of the year. A bright spot for letting was a lease contract for 3,200 sq.m. for the two top newly-built office floors at the former post office building (gamla Posthuset) in Uppsala, where Klövern is carrying out a major project in the immediate vicinity of the central station. The tenant is the infrastructure operator IP-Only AB which already has its head office in Uppsala. It was also very gratifying to sign a long lease contract with Evidensia at Kungens Kurva. Looking at the full year, the goal of a net moving-in of one per cent of the rental value was reached. Going forward, there will be an increased focus on letting and plenty of discussions are taking place with potential tenants which may have a rapid impact on the occupancy rate.

Through acquisitions in Mölndal, Norrköping, Uppsala, Örebro and Västerås we continued to strengthen our property portfolio in several prioritized cities. During the final quarter contracts were also signed to sell one property in Karlskrona and four properties in the Stockholm area which do not quite fit in Klövern’s portfolio.

At the end of the year, the property portfolio amounted to SEK 30.2 billion and 2,792,000 sq.m. lettable area, compared with SEK 24.1 billion and 2,624,000 sq.m lettable area on 31 December 2013. The increased property volume is mainly a result of acquisitions, but reduced required yields also contribute with increases in value. Required yields have fallen slightly mainly in properties in secondary locations in metropolitan areas. The gap between financial costs for properties in general and their yield continues to attract investors and thus reduce yield requirements.

During the quarter, we launched our self-storage activities under a separate brand name: Big Pink. At present, we have six facilities in five cities: Gothenburg, Malmö, Norrköping, Karlstad and Västerås. We see good growth opportunities for Big Pink, not least in a number of the regional cities where Klövern has a strong position as a property owner.

At an extraordinary general meeting held on 22 October 2014 several important resolutions were adopted. The Board was authorized to issue up to an additional 12.5 million new preference shares in order strengthen the company’s equity to facilitate additional acquisitions as well as to develop existing properties. The issue of preference shares took place in the month of November and provided the company with SEK 1,875 million in new equity before issuing costs. Another decision made was to introduce Class B shares through a bonus issue. The bonus issue was completed at the beginning
of December and the B share is now the most traded Klövern share on the stock exchange.

2014 was on the whole a very successful year for Klövern and I look forward with confidence to what we can achieve during 2015.

Rutger Arnhult
CEO, Klövern

Klövern AB (publ)

For additional information:
Rutger Arnhult, CEO, +46 (0)70-458 24 70, rutger.arnhult@klovern.se
Lars Norrby, IR, +46 (0)76-777 38 00, lars.norrby@klovern.se

Klövern is a real estate company committed to working closely with customers to offer them efficient premises in Swedish growth regions. As of December 31, 2014, the value of the properties totaled SEK 30 billion and the rental value on an annual basis was SEK 2.9 billion. Klövern is listed on Nasdaq Stockholm. For further information, see kelly.corem.se.

Klövern AB (publ), Box 1024, 611 29 Nyköping. Phone: +46 155-44 33 00. E-mail: info@klovern.se.

This information is such that Klövern AB (publ) is obliged to disclose under the Securities Market Act and/or the Financial Instruments Trading Act. The information was made available for publication on 11 February 2015.