Note 17 Shareholders’ Equity and Net Asset Value

Items in equity

The share capital as of 31 December 2020 consisted of 277,262,911 registered A shares with one vote per share and a quotient value of 0.5 per share. All shares are fully paid.

There are no restrictions regarding dividend or other types of repayment. There is no potential common stock, such as convertibles, or preferential rights to accumulated dividend (preference shares).

Development of share capital

 

Date

 

Number of shares

 

Quotient value/share

 

Share capital, SEK

Formation A shares

 

27 Oct 1993

 

+500

 

100.00

 

+50,000

New share issue, A shares

 

27 Sep 1994

 

+999,500

 

100.00

 

+99,950,000

Share split 50:1

 

25 Mar 1997

 

+49,000,000

 

2.00

 

IPO

 

23 May 1997

 

50,000,000

 

2.00

 

100,000,000

New share issue, C shares

 

12 Jul 2000

 

+7,142,857

 

2.00

 

+14,285,714

Redemption, A shares

 

12 Jul 2000

 

–6,998,323

 

2.00

 

–13,996,646

Redemption, C shares

 

13 Nov 2000

 

–7,142,857

 

2.00

 

–14,285,714

Share split 4:1

 

27 Apr 2006

 

+129,005,031

 

0.50

 

New issue of shares

 

14 Jun 2016

 

+82,000,000

 

0.50

 

+41,000,000

Share issue in kind

 

15 Jun 2016

 

+19,194,458

 

0.50

 

+9,597,229

Share issue in kind

 

13 Nov 2020

 

+4,061,745

 

0.50

 

+2,030,873

Year end

 

31 Dec 2020

 

 

 

 

 

 

Other capital contribution

Other capital contribution is equity contributed by shareholders.

Currency translation reserve

Currency translation differences as a result of foreign operations.

Currency hedge reserve

Refers to the effective part of unrealised changes in value related to currency derivatives used to hedge investments in foreign operations.

Retained earnings

Retained earnings relates to earnings earned within the Group. The Group’s earlier appropriations to the statutory reserves is also included in this item.

Restricted and non-restricted equity in the Parent Company

According to the Swedish Companies Act, equity is made up of restricted (non-distributable) and non-restricted (distributable) equity. Dividends to the shareholders may only be such that after the distribution there is full coverage for restricted equity in the Parent Company. Further, distribution of profits may only be made if it is justified with respect to the demands put on the amount of equity needed by the type of business, the extent and risk of operations, company and Group consolidation needs, liquidity and financial position in general.

Repurchase of own shares

In 2000, Castellum repurchased 8,006,708 own shares for a total of MSEK 194, equivalent to 4.7% of the total registered number of shares. These repurchased shares were used in connection with the acquisition of Norrporten as a share issue in kind. In May 2020, Castellum repurchased 170,203 own shares at an average price of SEK 165.12.

Dividend

Dividend is proposed by the Board of Directors according to the rules of the Companies Act and decided by the Annual General Meeting. The proposed dividend, not yet paid out, for the financial year 2020 is SEK 6.90 per share, MSEK 1,801 in total. The proposal is to split the dividend into two payments, where the proposed record date for the first payment is 25 March 2021 and the proposed record date for the second payment is 27 September 2021. The amount is recorded as a liability only after the Annual General Meeting has approved the dividend.

Net asset value

Net asset value can be calculated both long and short term. Long term net reinstatement value (EPRA NRV) is based on the balance sheet, with adjustments for items that will not lead to any short-term payment such as – in Castellum’s case – derivatives, goodwill attributable to deferred tax and deferred tax liability. This means that equity according to the balance sheet is to increase by MSEK 1,132 and MSEK 11,437 respectively. At the same time, MSEK 1,480 is to be deducted.

Short-term net tangible assets (EPRA NTA) is equity according to the balance sheet, adjusted for the deferred tax liability and goodwill attributable to the acquisition of United Spaces. Present accounting policies state that the deferred tax liabilities are recognised at nominal tax rates, while the real deferred tax is substantially lower, due to the possibility to sell properties in a tax-efficient manner, as well as the time factor. The current assessment is that the actual discounted deferred tax liability is equivalent to MSEK 2,349 and that the aforementioned goodwill totals MSEK 193. An even more short-term net asset value is visible equity adjusted for goodwill of MSEK 1,673.

The value range of +/– 5–10% often used in property valuations should be viewed as indication of the uncertainty that exists in assessments and calculations made. For Castellum, an uncertainty range of +/– 5% is equal to MSEK +/– 4,091 after tax (based on a nominal tax rate of 20.6%).

Net asset value

 

MSEK

 

SEK/share

Equity according to the balance sheet

 

48,243

 

174

Reversed

 

 

 

 

Derivatives according to the balance sheet

 

1,132

 

4

Goodwill attributable to deferred tax

 

–1,480

 

–5

Deferred tax according to the balance sheet

 

11,376

 

41

Net reinstatement value (EPRA NRV)

 

59,271

 

214

Deduction

 

 

 

 

Goodwill due to acquisition of United Spaces

 

–193

 

–1

Estimated real liability, deferred tax 4%1)

 

–2,285

 

–8

Net tangible assets (EPRA NTA)

 

56,793

 

205

Reversed

 

 

 

 

Derivatives according to above

 

–1,132

 

–4

Deferred tax

 

–9,091

 

–33

Net disposal value (EPRA NDV)

 

46,570

 

168

1.

The net estimated real deferred tax liability has been estimated at 4% based on a discount rate of 3%. Further, assessments have been made that tax loss carry forwards are realised with a nominal tax of 21.4%, and that the properties are realised in 50 years and where the entire portfolio is sold indirectly in corporate wrappers where the buyers tax discount is 7%.

Capital structure

Castellum should have a stable capital structure with low financial risk, meaning a loan-to-value ratio not permanently exceeding 50% and an interest coverage ratio of at least 200%.

In the balance sheet, there are, in addition to equity, liabilities that in principle are both interest free and amortisation free and therefore can be considered as shareholders’ equity. The property industry therefore uses the loan-to-value ratio as a key metric for capital structure instead of solidity. For the same reason the net asset value can be calculated in different ways, as shown above.

Castellum’s target is based on growth in cash flow and is not directly related to the net asset value. The target is an annual growth in cash flow, i.e. income from property management per share, of at least 10%. In order to achieve this objective, net investments of at least 5% of the property value will be made yearly. At the moment, this is equivalent to approximately SEK 5 billion, net, in annual investment volume. All investments are to contribute to the objective of growth in income from property management within 1–2 years and have a potential asset growth of at least 10%. Sales of properties will take place when justified from a business standpoint and when an alternative investment with a higher return can be found.

Appropriation of profits

The Board has proposed that the earnings at the Annual General Meeting’s disposal, SEK 18,225,536,070, are to be appropriated as follows: a dividend to shareholders of SEK 6.90/share – totalling SEK 1,908,593,185 (excluding 655,203 treasury shares) – and SEK 16,316,942,855 to be carried forward.

 

 

Attributable to Parent Company shareholders

Group, MSEK (Note 15)

 

Number of shares outstanding, thousand

 

Share
contribution

 

Other capital contribution

 

Currency translation reserve

 

Currency hedge reserve

 

Non-controlling interest

 

Retained
earnings

 

Total equity

Equity, 31 Dec 2018

 

273,201

 

137

 

12,434

 

274

 

–269

 

–2

 

21,175

 

39,749

Dividend, Mar and Sep 2019 (SEK 6.10/share)

 

 

 

 

 

 

 

–1,667

 

–1,667

Net income 2019

 

 

 

 

 

 

 

5,650

 

5,650

Other comprehensive income, 2019

 

 

 

 

92

 

–47

 

 

 

45

Equity, 31 Dec 2019

 

273,201

 

137

 

12,434

 

366

 

–286

 

–2

 

31,158

 

43,777

Dividend, Mar and Sep 2020 (SEK 6.50/share)

 

 

 

 

 

 

 

–1,776

 

–1,776

Repurchase of own shares

 

–170

 

 

 

 

 

 

–28

 

–28

Share issue in kind

 

4,062

 

2

 

825

 

 

 

 

 

827

Net income 2020

 

 

 

 

 

 

 

5,615

 

5,615

Other comprehensive income, 2020

 

 

 

 

–216

 

44

 

 

 

–172

Equity, 31 Dec 2020

 

277,093

 

139

 

13,259

 

150

 

–272

 

–2

 

34,969

 

48,243

 

 

 

 

 

 

 

 

Fair value reserve

 

 

 

 

 

 

Parent company, MSEK

 

Number of shares outstanding, thousand

 

Share
contribution

 

Statutory reserves

 

Currency translation reserve

 

Currency hedge reserve

 

Share premium reserve

 

Retained
earnings

 

Total equity

Equity, 31 Dec 2018

 

273,201

 

137

 

20

 

177

 

–185

 

8,433

 

9,236

 

17,818

Dividend, Mar and Sep 2019 (SEK 6.10/share)

 

 

 

 

 

 

 

–1,667

 

–1,667

Net income 2019

 

 

 

 

 

 

 

1,504

 

1,504

Other comprehensive income, 2019

 

 

 

 

42

 

–21

 

 

 

21

Equity, 31 Dec 2019

 

273,201

 

137

 

20

 

219

 

–206

 

8,433

 

9,073

 

17,676

Dividend, Mar and Sep 2020 (SEK 6.50/share)

 

 

 

 

 

 

 

–1,776

 

–1,776

Repurchase of own shares

 

–170

 

 

 

 

 

 

–28

 

–28

Share issue in kind

 

4,062

 

2

 

 

 

 

825

 

 

827

Net income 2020

 

 

 

 

 

 

 

1,749

 

1,749

Other comprehensive income, 2020

 

 

 

 

–108

 

44

 

 

 

–64

Equity, 31 Dec 2020

 

277,093

 

139

 

20

 

111

 

–162

 

9,258

 

9,018

 

18,384