Wihlborgs Fastigheter AB The Annual Report · The Annual Report ”We’re sitting in the middle of the floW of business prospects Which means that We can react quickly ... Pennan

The Annual Report

”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 JarlChief Executive Officer

Wihlborgs Fastigheter AB

January–December 2006

contents 1 The year in summary

2 CEO’s review

4 History

6 Operations

8 Organisation and employees

10 The Environment

12 The share

14 Market overview

17 Property portfolio

32 Projects and development

34 List of property acquisitions and sales

36 Valuation principles

39 List of properties

46 Risk factors

47 Tax situation

48 Administration Report

financial reports

51 Profit and loss account

52 Balance sheet

54 Changes in equity

55 Cash flow statement

56 Accounting principles

62 Notes

69 Audit Report

70 Corporate Governance Report

78 Five-year Summary and Definitions

79 Articles of Association

production:

Wihlborgs in collaboration with

Pennan AB, Lund 2007.

Svanenmärkt, license no. 341 115.

Photographs: Marcus Carlsson,

Bertil Hagberg, Ola Hansson,

Stefan Larsson, Martin Palvén.

Print: Markaryds Grafiska AB

MILJÖMÄRKT

341 115T RY C K S A K

invitation to the annual general meetingThe Annual General Meeting of Wihlborgs Fastigheter AB (publ) will take place

at 5 p.m. on Thursday 26 April 2007 at Slagthuset, Jörgen Kocksgatan 7A, Malmö.

Shareholders wishing to attend the meeting must be included in the register of

shareholders maintained by VPC AB by 20 April 2007 at the latest, and must also

send notification of their participation by letter to Wihlborgs Fastigheter AB,

Box 97, 201 20 Malmö, or by e-mail to [email protected] or phone

on +46 40 690 57 70 or fax on +46 40 23 45 52.

Notification must reach Wihlborgs by 4 p.m. on Friday 20 April 2007.

The notification must state the shareholders’ name, civic registration number/

corporate identity number, address, telephone number and number of shares

owned. Shareholder with nominee-registered shares in order to participate must

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

20 April 2007.

financial information 2007

Interim report January-March: 26 April

Interim report January-June: 16 August

Interim report January-September: 1 November

Wihlborgs is the leading property company in the Öresund

region. the properties’ book value totals sek 11 billion with

a lettable area of approximately 1 million sq.m. and an annual

rental value of sek 1 billion.

Wihlborgs shares are listed on the stockholm stock exchange,

mid cap segment.

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 Rentalincomefor2006amountedtoSEK909m(736m)

n TheprofitfortheyearaftertaxwasSEK850m(470m)

n EarningspershareincreasedtoSEK22,12(12,33)

n TheBoardofDirectorsareproposingadividendofSEK5,50(3,50) pershare

n Equity/assetsratiowas32.7(34.8).

Key ratios1 2006 2005Rental income, SEKm 909 736Net operating income, SEKm 627 497Profit after financial items, SEKm 1,064 649Return on equity, % 26,6 18,2Equity/assets ratio, % 32,7 34,8Interest coverage ratio, multiple 3,3 2,9Earnings per share, SEK 22,12 12,33Cash flow per share, SEK 10,96 8,24Dividend 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

�� Wihlborgs�ANNUAl�rEPorT��006

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

also quite obvious. It is a dynamic region which has excellent prospects for con-tinued, positive growth.

Growth in the coming year is estimated at 4.5 per cent. All it needs is a quick look at the map to see how close the Öresund region is to the Continent’s pop-

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 paths and, not least, good premises which can be refined in good locations.

These are premises that we have been able to acquire thanks to our local knowledge and long-term presence. That’s the other part of our business – transactions and project development. This is where we create value through acquiring and redeveloping properties which, later on, are sold on to other serious managers. Our portfolio is dynamic and we expect 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.

In plain words this means a strong presence in Lund, for example, which for vari-ous reasons is highly interesting and is therefore given priority. It is against this background that we should view the acquisition of Ideon AB. An area where we see considerable development potential. I am convinced that we can do a lot more 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

”To�be�best�at�meeting�our�customers’�requirements�

and�demands,�we�will�concentrate�our�activities�on�commercial�properties�in�the�Öresund�region.”

”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.”

”realised�and�anticipated�interest�

increases�will�provide�a�correction�of�market�prices.”�

WIhLBoRgS ANNUAL REPoRT 2006 3

Anders JarlChief Executive officer

Photo: Marcus Carlsson

”And we have the resources to invest in good properties.”

”Environment as an integral part”

VästraHamnensinceMalmö’sofficemarketisgrowingoutwardstowardstheharbouratanever-increasingrate.Thisiswherewewillbemovingourselvesduringthesummer.Thismeansthatwewillbemovingnearertomanyofourcustomers.

Copenhagenisanotherpriorityareawherewealreadyhaveapresence.Wewillbeincreasingourpresenceinordertocreateacriticalmassforeffectivemanage-ment.AtthesametimewewillgainabridgeheadforfurtherdevelopmentontheDanishsideoftheÖresundregion.Amarketwhichaftermanyyearsofstagnat-ingleaselevelsisbeginningtoappearincreasinglyinteresting.

Therecenttime’sfocusonenvironmentalissues,andCO2emissionsinparticular,issome-thingwetakeveryseriously.Withtheenvironmentasanintegralpartofour

activities,weareworkingcontinuouslywithenvironment-enhancingmeas-ures.Ourlong-termenvironmentalobjectiveuntil2009istoreducethecon-

sumptionofelectricityandheating(kWh/sq.m.)by6percentinourproperties.

Ialsobelievethatwewillseeanumberofbusinessopportunitiesasearlyasduringthecurrentyear.Idonotbelievethatwewillseeanymajorpricefalls.Butasufficientdeclinetoinitiateanumberofsalesofbothgoodandlessdesirableproperties.Atrendthatwillpossiblyarisewillalsobestrengthenedbyforeigninvestorschangingtheirinvestmenthorizon.

Withintheframeworkofthegivensolidity,Wihlborgs’balancesheetcanwithstandfur-theracquisitionstothevalueofapproximatelySEK2billion.Referalsototheincomestatement.Wehavetraditionallychosentofinanceouractivitieswithalargeproportionofvariableinterestratessincethathasbeenshowntobethemostprofitable.Toreduceinterestcostsduringrisingshort-terminterestratesin2007weusedifferentinterestderiv-atives.ToouracquisitioncapacityIcanaddthe10percentrenewalofthepropertyport-foliothatIspokeaboutearlier.Ialsoexpectthatwewillbeabletoexpandourportfoliobyafurther10percentthroughtheprofitandcashflowsthatwegeneratecontinuously.ThisisbecauseIbelieveingoodgrowthfor2007withfurtherreductionsinvacancies.Therewasstronggrowtheveninthefourthquarterof2006.Independentassessorsfore-castgoodgrowthinSwedenandnotleastintheexpansiveÖresundregionwhereintegra-tionisincreasingataneverhigherrate.

Ihavegreatconfidenceinourdynamicorganisationwithallitsemployeesandtheircapacitytomanagethepropertiesinacompetitivemannerinthefuturetherebycreatingvalueforourcustomers.AndIwouldliketotaketheopportunitytothankallemployeesfortheorganisation’sachievementsinbothdevelopmentandmanagement.Lastbutnotleast,I’mlookingforwardtoanexciting2007.

�� Wihlborgs�ANNUAl�rEPorT�2006

History

n The�Annual�general�Meeting�of�9�May�2005�decided�in�accordance�with�the�board’s�proposal�to�change�the�name�of�the�Company�from�Wihlborgs�Fastigheter�Ab�to�Fabege�Ab.�This�occured�as�a�result�of�the�impending�distribution�of�the�Company’s�portfolio�in�the�Öresund�region�under�the�Company�Wihlborgs�Fastigheter�Ab.�The�following��section�presents�the�history�underlying�the�development�of�the�property�portfolio�in�the�Öresund�region.�The�company�referred�to�below�up�to�the�year�200��as�Wihlborgs�Fastigheter�Ab�is�the�current�Fabege�Ab.

1924 In1924,masterbuilderOPWihlborgestablishedabuildingcompanyin MalmöthatprovidedthenameforWihlborgsFastigheterAB.Forapro- tractedperiod,theCompanybuilt,ownedandadministratedproperties inMalmö.

1985 BuildingoperationsaresoldtotheActiveGroup,basedinMalmö,and theCompanybecomesatraditionalpropertycompany.

1990 WihlborgsFastigheterABislistedontheStockholmStockExchange’s O-List.PeabABbecomesthenewmajorityshareholderinWihlborgs FastigheterAB.

1993 InconjunctionwithanewshareissueofSEK371m,Wihlborgs FastigheterABacquires33propertiesinSweden,ofwhich22properties arelocatedinMalmöandHelsingborg.Bergalidenbecomesthenew majorshareholderinWihlborgsFastigheterAB.

1995 FastighetsABStillmanisacquiredandWihlborgsFastigheterABgains propertiesinMalmö,LundandLandskronawithtotallettableareaof 44,000sq.m.

1996 WihlborgsFastigheterABacquires76propertieswithtotallettableareaof 178,000sq.m.fromRetriva(currentlyKungsleden).WihlborgsFastigheterAB andFastighetsABStorhedenconductanexchangeofproperties,through whichtheCompanytakesover35propertiesinSkånewithlettablearea of78,100sq.m. TheBoardofDirectorsinWihlborgsFastigheterABmakesapublic offertoacquireM2FastigheterABon22November1996,involvingthe acquisitionofpropertieswithlettableareatotalling364,000sq.m. ThecompanyestablishesapresenceinDenmarkthroughtheacquisition oftwoproperties.

1997 Duringthespring,WihlborgsFastigheterABcompletestheacquisitionof M2FastigheterAB.On14September1997,theBoardofDirectorsin WihlborgsFastigheterABmakesapublicoffertoacquireKlövern FastigheterAB.


1998 WihlborgsFastigheterABcompletestheacquisitionofKlövern FastigheterABandgainspropertiesinMalmöandHelsingborg,aswellas inotherpartsofSwedenandtheNetherlands,withtotallettableareaof 934,000sq.m. On14April1998,WihlborgsFastigheterABmakesanofferfor FastighetsABStorheden. Asaresult,theStockholmareabecomesakeypartoftheCompany’s operations.

2000 JM,PeabandWihlborgsFastigheterABestablishanewjointdevelop- mentcompanyforthedevelopmentoftheDockandistrictinWestern Harbour,Malmö.

2004 WihlborgsFastigheterABacquirestheStockholm-basedpropertycompany, FabegeAB. InDecember,theBoardofDirectorsinWihlborgsFastigheterABpro- posesthattheAnnualGeneralMeetingof9May2005approvethedistri- butionandseparatelistinginaccordancewithLexASEAoftheproperty portfoliointheÖresundregion.

2005 ThedistributedcompanyisgiventhenameWihlborgsFastigheterAB andthedistributingcompanychangesitsnametoFabegeAB.

2006 Wihlborgsacquires14propertiesinMalmöwithatotallettableareaof 182,000sq.m.fromTornet.WihlborgsacquiresIdeonABinLundbypur- chasing40percentoftheshares.Theacquisitionoftheremainingshares issubjecttogovernmentapproval.Thepurchaseincludestheproperty BetahusetatIdeon(Vätet1)totalling24,000sq.m. DuringMayWihlborgsimplementsa2:1sharesplit,oneoldsharewas replacedwithtwonewshares.

6 WIhLBoRgS ANNUAL REPoRT 2006

Business concept, overall objectives and strategies

n Wihlborgs is a property company focusing on commercial property in the Öresund region. The criteria for long-term and acceptable value growth are created by activities being characterised by a clear, cashflow-oriented strategy where the creation and realisation of added value are important factors. Together with a clear dividend policy the overriding objective is to create a good overall yield for the shareholders.

Business conceptWihlborgsshallown,manageanddevelopcommercialpropertieswithafocusonwell-functioningsub-marketsintheÖresundregion.

Overall objectives and strategiesWihlborgsaimstobetheleadingandmostprofitablepropertycompanyintheÖresundmarket.Toattainthis,Wihlborgsmust:n ConsolidateandfurtherstrengthenitsmarketpositionsintheÖresundregion byconcentratingonselectedsub-markets.n Activelyimprovethepropertyportfoliobypurchasing,developinganddivesting properties.Realisationofvaluegrowthwillformakeypartoftheoperations.n Activelyandefficientlymanagethepropertyportfoliowiththefocusonhigh cost-effectivenessandahighoccupancyratebybeingamarketleaderineach sub-market.n Strengthencustomerrelationsbyactiveinvolvementandofferingahighlevel ofserviceinordertocreatethenecessaryconditionsforlong-termrental relationships.n Activelycultivatetherentalmarkettoobtainnewcustomersandstrengthen thebrandinordertobecomethepreferredchoiceforcustomers.

Financial goalsWihlborgsistoshow:n Areturnonshareholders’equitythatexceedstherisk-freeinterestratebyat leastfourpercentagepoints¹.n Anequity/assetsratioofaminimum25percentandamaximumof35percent.n Aninterestcoverageratiotoatleast2.0.

Theabovefinancialgoalshavetobeachievedthroughtheactivedevelopmentofassetsandliabilitiesandcapitalstructure.Wihlborgsshallalwayshaveacapitalstruc-turethatgivesthemaximumreturntoshareholders,withdueconsiderationofrisk.


Dividend policyWihlborgs’dividendpolicyisbased,firstly,ontransferringpartoftheprofitgeneratedbypropertymanagementand,secondly,ontransferringrealizedvaluegrowth:n Thedividendistoamountto50percentofprofitfromongoingproperty management².n Inaddition,50percentofrealisedprofitsfrompropertysalesaretobe distributed³.

1. The risk-free rate of interest is defined as the rate on a 5-year Swedish government bond.2. Pre-tax profit, excluding realised and unrealised changes in value, charged with 28 per cent standard tax.3. Difference between the sales price and total capital invested, charged with 28 per cent standard tax.


Organisation and employees

n Wihlborgs is characterised by a flat organisation with short decision paths. Wihlborgs’ organisation is designed to increase profit from day-to-day management while creating new business at the same time.

Legal structureWihlborgsFastigheterAB(publ),corporateIDnumber556367-0230,istheparentcompanyofagroupwithatotalof102groupcompaniesandfourjointventures.

Joint VenturesWihlborgsowns40percentofMedeonAB.ThisisamarketingcompanythatisoperatedtogetherwithMalmöStad.Wihlborgsalsoowns33.3percentofDockanExploateringAB.ThecompanyisengagedinthedevelopmentofthenewDockandistrictlocatedatVästraHamneninMalmö.JMandPeabeachownequalsharesinDockanExploatering.

Operating structureTheoperativeorganisationcomprisesManagementandtheBusinessDevelopmentfunction.Managementisadaptedaccordingtolocalmarketcriteriaandisorganisedassevengeographically-distributedmanagementunits.Thepurposeistocreatethecriteriaformanagementthatiseffectiveandclosetothecustomer.Employeesshallalwaysbeclosetothecustomersand,inthisway,meettenants’expectationsanddemands.Eachmanagementunithasamanagerwithaclearprofitresponsibility. Businessdevelopmentcomprisestwoparts–ProjectsandDevelopment,andTransactions.ProjectsandDevelopmenthasacentralroleforimprovementstothepropertyportfolioandisresponsiblefornewandredevelopmentprojectsaswellasprocurementandmonitoring.Investmentsinpropertiesarepreparedandevaluatedbytherespectivemanagertogetherwithaprojectmanager.InvestmentsinexcessofSEK10mshallbeapprovedbytheboard. Transactionsareresponsibleforallthecompany’spurchasesandsalesofproper-ties.Thetransactionsunitcontinuouslymonitorspotentialbusiness.EvaluationisoftenperformedinconsultationwithAdministrationtomakethemostofskillsithasintermsoflocalmarketknowledgeetc.Whenassessingpropertyacquisitionstheanalysesconductedincludetheproperty’slong-termyield,technicalstandard,developmentpotentialandtenantstructure. InadditiontotheoperativeorganisationtherearethegroupfunctionsEconomy/FinanceaswellasCommunicationandIT. GroupManagementcomprisestheCEO,economyandfinancedirector,propertydirector,informationdirectorandassistanttotheCEO.Theresponsibilitiesofgroupmanagementincludeoverallresponsibilityforstrategyissuesandbusinessdevelopment,economiccontrolandprofitmonitoringaswellasissuesconcerninginformation.

EmployeesTheskillsandcommitmentoftheemployeesarevitaltothegroup’sdevelopmentandforthequalityoftheserviceofferedtocustomers.Staffpolicyisstructuredandstronglylinkedtothecompany’sactivities.Employeesareencouragedtoengageininnovativethinkingandtheirowninitiativessincethisisanimportantdrivingforceforthecompany’sdevelopment.


Asat1January2007,thenumberofemployeeswas77.Theproportionofemployeeswithanacademicqualificationwas29percent.Theaverageageoftheemployeeswas49andtheproportionofwomenamountedto31percent.Thelargestagegroupthatcomprises25peoplewasthoseaged46-55.Thecompany’sstaffturnoverin2006amountedto13percent.

Sickness absenceWihlborgshasalowlevelofsicknessabsencewhichin2006amountedto3.5percent.Theproportionoflong-termsicknessabsenceofthetotalsicknessabsencefor2006was58.1percent.

WellnessGoodhealthisaresourcefortheindividualaswellasthecompany.ThisiswhywellnessisofsignificantimportancetoWihlborgs’activitiesandprofitability.Allemployeesareofferedwellnessassessmentandmonitoring.Jointtrainingisalsoofferedintheformofdifferentfitnessactivities.

Skills developmentWihlborgsencouragesitsemployeestoengageinskillsdevelopmentandhaspartici-patedinaVäxtkraftMål3projectsinceMay2006.TheprojectissupportedthroughtheEuropeanSocialFund(ESF)whichcontributestoincreasedemployment,equalitybetweenmenandwomen,sustainabledevelopmentaswellaseconomicandsocialcohesion.Wihlborgsfollowstheapprovedskillsdevelopmentplanthathasbeendrawnupaccordingtothestaff’sindividualcriteriaandskillsdevelopmentrequirements.

Incentive programmeEmployeesinthegroup,withtheexceptionoftheCEO,benefitfromtheprofit-sharingfund.Thepurposeoftheprofit-sharingfundistostimulateemployeestoachievepredeterminedobjectivesthatarepartofthecompany’sactivities.Awholeproportionintheeventofmaxi-mumallocationcorrespondstosharesinWihlborgstoavalueofonebaseamountwhichiscurrentlySEK40,300.Allemployeesreceiveequalsharesinthefundirrespectiveoftheirpositioninthecompany.Theshareamountinthecaseofpart-timeemployeesorthosewhoworkonlypartoftheyearisadjusted. Allfundsthatareallocatedtotheprofit-sharingfundshallbeinvestedinsharesinWihlborgs.

Business Development

Projects and Development

Transactions

Economy/Finance

Communication/IT

Purchase

Environment

Group Management

Management

Malmö/Lund 3 management units

Helsingborg 3 management units

Köpenhamn 1 management unit


The environment as an integral component

n Today’s growth has meant an increased awareness of the private sector’s important role in contributing to a sustainable society. The term sustainable business development is often used in these con-texts. Wihlborgs’ environmental work is target-oriented and long-term and is operated as an integral component of both property management and business development.

Wihlborgs’ environment work Wihlborgs’environmentalworkisbasedontheISO14001standardwhereallmanda-toryrequirementsaremet:

Environmental objectives for 2006•Reducingheatconsumption(kWh/sq.m.)by1.5percentincomparisonwith2005.•Reducingelectricityconsumption(kWh/sq.m.)by2percentincomparison with2005.•Convertingoil-heatedpropertiestodistrictheating.Theenvironmentalobjectivesfor2006wereachieved,exceptforoneoil-heatedproperty.

Environmental objectives for 2007 •Reducingelectricityandheatconsumption(kWh/sq.m.)by2percentincomparison with2006.•Allpropertiesfrombetween1956and1973shallbecheckedforPCB.•Compilearedevelopmentplanfor2008onthebasisofthisPCBinventory.Long-termenvironmentalobjectivefor2007–2009:Reducingtheconsumptionofelectricityandheating(kWh/sq.m.)by6percent.

Folksam’s Climate index 2006•FolksamhasassessedWihlborgs’environmentworkonthebasisofthefollowing criteria:Corporate-wide,Properties,Production,Goodstransports,Business travel,ProductdesignandClimatework.•WihlborgswaspresentedinEkonominyheternaon30November2006asoneof thecompanieswithintheframeworkof“Nextbestintheclass”whereWihlborgs tookaleadingpositionamongpropertycompanies.

Environmental survey

Environmental policy

• Document control• Activities control• Emergency contingency measures

• Monitoring• Non-conformances, corrective action and preventive measures• Explanatory documents• Environmental audit

• Organisation and responsibility• Education and training• Communication• Documentationn

• Environmental aspects• Legislation and other requirements• Environmental objectives• Environmental management programme

Management review meetings Develop Plan

Follow up Implement


New in the environmental area 2006DuringtheyearWihlborgsemployedanenvironmentalcoordinatorwhowillworkfull-timeonplanning,implementing,monitoringanddevelopingWihlborgs’envi-ronmentalwork.

Environmental policyWihlborgs’environmentworkshallbeanaturalandintegratedcomponentofman-agement,projectsaswellaspurchasesandsalesofproperties.Ourenvironmentworkiscontinuousandobjectiveforthepurposeofpreventingandreducingnega-tiveenvironmentalimpact.Activitiesshallbeoperatedthroughtheeffectiveuseofresourcesandemployees’environmentalskillsshallbecontinuouslydeveloped.Weendeavourtoharmonisesolutionsforenergyandourtenantswastewiththeenvi-ronment.Constructionmethodsandmaterialsarechosenwithrespecttotheenvi-ronment.Wihlborgscontinuouslyimprovesitsenvironmentalwork,wherelegisla-tionisviewedasaminimumrequirement,andconductsregularfollow-ups.

Energy effectivisation 2006Problemdescription:ThepropertyUtgrundeninMalmöwaspreviouslyoil-heated.Inlinewithenvironmentalobjectivesfor2006,thepropertywasconvertedfromoilheatingtodistrictheating.Conversionalsomeantthereplacementoftechnologyandcontrolfunctions.Thecontrolsfunctionisnowdemand-regulatedinpartoftheproperty.

Environmental auditing and building harmonised with the environment•Anenvironmentalauditisalwaysconductedwhenapropertyispurchased.To facilitateanddrivetheenvironmentalworkthereisaworkinggroupcomprising representativesfrompropertymanagementandbusinessdevelopment.•AnaturalpartofWihlborgs’environmentalcommitmentistoworkwith environmentalprogrammesforallrebuildingandnewbuildingwork.•Compliancewithenvironmentalrequirementsisdemandedfromoursuppliers.

Environmental handbook and environmental databaseTofacilitateday-to-daywork,strictdemandsaremadetoensurethatenvironment-relatedinformationisavailabletoemployees.ThisinformationcanbefoundinWihl-borgs’environmentalhandbookandiscontinuouslyupdated.WihlborgshasevendevelopedandcompletedanenvironmentaldatabasethatcontainsinformationonPCB,refrigerants,radon,oilseparatorsetcforeachrespectiveproperty.

ENERGY USAGE BEFORE AND AFTER CONVERSION

Month Beforeconversion Afterconversion kWh Kwh

Jan 147 340 80 000Feb 130 970 63 116 Mar 130 000 52 725Apr 103 685 23 133May 68 760 15 228Jun 39 291 22 525 Jul 38 200 1 730Aug 40 200 221 Sep 62 210 2 831oct 88 405 39 807Nov 108 050 45 983 Dec 136 427 81 579Total: 1093538 428878


The share

n Wihlborgs’shareswerelistedontheStockholmStockExchange’sOliston23May2005.WihlborgshavebeenontheNordicMidCaplistsinceOctober2006.A2:1sharesplitwasimplementedon23May2006.AttheendoftheyearthesharecapitalamountedtoSEK192mdistributedacross38,428,364shares.Eachshareisentitledtoonevoteandeachpersonentitledtovoteattheannualgeneralmeetingmayvoteforthefullnumberofsharesheldandrepresentedbythisperson.AllsharesareentitledtoanequalshareinWihlborgs’profit.Thecompanyhasnotrepurchasedanyofitsownsharesneitherhastheboardexerciseditsauthoritytodecideonanewissueofnomorethan10percentoftheremainingshares.

Market capitalisation and turnoverIn2006therewasaturnoverofatotalof22.4millionshareswhichcorrespondsto91,000sharesperday.Thefigureiscorrectedforthesharespliton23May2006.Thiscorrespondstoaturnoverrateof58percentoftheaveragenumberofout-standingshares.AttheyearendthepriceofaWilhlborgs’sharewasSEK142.75which,withalloutstandingshares,correspondstoasharevalueofSEK5.5billion.ThehighestandlowestquotationfortheWihlborgs’sharein2006wasSEK147.75andSEK92.75respectively.

Dividend and dividend policyWihlborgs’dividendpolicyisbasedpartlyontransferring50percentofthecurrentinvestmentresult,andpartly50percentoftherealisedresultfrompropertysales.Bothwerereducedbyastandardtaxrateof28percent.Theboard’sdividendpro-posalfor2006isSEK5.50(3.50).Thiscorrespondstoadirectyieldof3.9percentbasedonthesharepriceattheendoftheyear.Iftheannualgeneralmeetingapprovestheboard’sproposalforadividendofSEK5.50andtherecorddayof2May,thedividendwillbepaidon7May2007.TheWilhlborgs’sharewillbetradedincludingthedividenduptoandincludingthedayoftheannualgeneralmeeting,Thursday26April2007.

2:1 Share splitWihlborgsimplementeda2:1sharesplitwhichmeansthatoneoldsharewillbereplacedwithtwonewshares.Thenumberofsharesincreasedfrom19,214,182to38,428,364.Thesharesplitwasregisteredon10Mayandthefirstdayoftradingafterthesplitwas23May2006.

Wihlborgs – Number of shares traded (’000)

SEK

150

140

130

120

110

100

90

80

70

60

50

Number of shares (‘000)

SX4040 Real EstateOMX StockholmWihlborgs

20062005

Source: SIX / Hallvarsson & Halvarsson AB

may jun jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov dec

5 000

4 000

3 000

2 000

1 000

0

n International owners, 30.3 %

n Swedish legal persons, 24.8 %

n Swedish private individuals, 22.7 %

n Funds, 10.7 %

n Financial companies, 6.3 %

n Insurance, pension AP funds, 3.6 %

n Association organisations, 1.6 %

Shares development 2006 Shareholders, 31 Dec 2006


Ownership structureThelargestshareholdersinWihlborgsareMathsOSundqvistscompanyandBrino-vaFastigheterABwhoown10.7and10.1percentofthesharesrespectively.Attheendof2006,thetenlargestshareholdersheld38.3percentofthesharesandthenumberofshareholdersamountedto29,437.Thisisafallofaround2,000share-holders.TheproportionofforeignownersattheendofDecemberamountedto30.3percent,anincreaseof7.1percentsincethepreviousyearend.Oftheforeignown-ers,34percentarefromtheUSA,17percentfromLuxembourg,15percentfromGreatBritain,9percentfromTheNetherlandsand25percentfromothercountries.

Information to shareholdersAllWihlborgs’shareholdershavebeenaskediftheywouldlikeprintedfinancialinfor-mationfromWihlborgs.Totheshareholderswhosowish,Wihlborgsdistributestheannualaccountsandthreequarterlyreports.Pressreleasesofunauditednotestotheaccountsarenotprinted.AllfinancialreportsandpressreleasesareavailableonWihl-borgs’websiteatwww.wihlborgs.se.ThewebsitehasbeenavailableinEnglishsincethebeginningof2007asareWihlborgs’pressreleases.ThewebsitealsocontainscurrentinformationonthemovementofWihlborgs’shares.Contactswiththesharemarkettakeplaceinconnectionwiththequarterlyfinancialreportsthroughpressreleasesandcorporatepresentationsindifferentcontextswithinvestors,analysts,sharesaversandothers.

SHARE DATA Abbreviated name WIhL Listed since 2005 Traded Stockholm Stock Exchange List Mid Cap Sector Financials Trading block 100 shares

Largest shareholders in Wihlborgs at 31 december 2006 Number of shares Perc. of share capital

thousands and voting rights, %

Maths o Sundqvist with company 4,110 10,7Brinova Fastigheter AB 3,867 10,1Investment AB Öresund 2,000 5,2Länsförsäkringar Fund 915 2,4SEB Funds 885 2,3Robur Funds 866 2,2hQ Funds 750 2,0Mats Qviberg including family 569 1,5Förvaltnings AB Färgax 450 1,2Fjärde AP-fonden 316 0,8Shareholders reg. abroad 11,652 30,3other shareholders reg. in Sweden 12,048 31,3Total outstanding shares 38,428 100,0

Distribution of shares at 31 December 2006 Number of Number of shares Per cent

shareholders thousands of shares

1–100 12,432 388 1101–500 13,410 3,184 8501–1000 2,003 1,507 41001–5000 1,231 2,607 75001–10000 148 1,072 310001–100000 164 5,030 13100001–500000 37 8,997 23500001–1000000 6 4,217 111000001–2000000 5 11,426 30

Total 29,437 38,428 100,0

Källa: VPC AB


Market overview

n growth within the Öresund region during 2004 was good and in 2005 it accelerated further. According to the Øresund Institute the major breakthrough came in 2005 and we can talk about the “ketchup effect”. This concerned primarily the housing and employment markets.

“Ketchup effect” in the Öresund regionTheÖresundregionhasnotexperiencedsuchastrongbusinesscyclesincearound1990andtheregion’seconomyhasnotbeensooptimisticaboutthefutureatanytimeduringtheperiodfrom1996to2006accordingtotheweightedindicatorsthattheØresundInstitutehascompiledfromtheDanishconsumerconfidenceindicatorandtheSwedishconfidenceindicatorCCI. IntermsoftheÖresundregion,thestrongbusinesscyclemeansthattheregionisexperiencingitsmostexpansivestagetodateandthattheintegrationofthehousingandemploymentmarketshassuddenlyhappenedveryquickly.In2006,4,700DanesmovedtoSkåne,ofwhich2,900movedtoMalmö.Thisrepresentsa50percentincreaseintheinflowtoSkåne. CommutingacrosstheÖresundBridgehasalsoincreasedsignificantly.In2006,14,000commuteddailyacrossthebridge.Intotaltherewere20,000peoplewhogainedsomeoftheirincomefromtheothersideofthesound.Onaverageapproxi-mately60,000peopletravelledoverthebridgeeveryday.Thisrepresentsa17percenttrafficincreasein2006. Approximately3,630,000peopleliveintheregion(ZealandandSkåne).Thepopu-lationisalsoontheincrease,primarilyontheSwedishside.ThisisaconsequenceoftheintegrationthathasmeantthatmoreandmoreDanesaremovingtoSkåne. Theincreasinginflowcreatesanincreaseddemandforcommerceandservicewhich,inturncreateanincreaseddemandforactivitieswithinthesesectors.Inthelongrunthisgrowthwilldriveanincreaseddemandforalltypesofcommercialpremises.

The region creates growthThebusinessclimatecontinuestobestronginDenmarkandCopenhagen.Thebusi-nessclimatehasalsoimprovedinSkånewithagreaterdemandformanpower.This

Per

cent

Expectations of the future from the households in the Öresund region


hassimilarlyresultedinanincreaseddemandforpremises. AnimportantfactorofthisgrowthisthemobiletelephoneclusterthathasemergedintheregionofwhichSonyEricssonisanexampleofasignificantandexpansivemotor.Thereisalsosignificantgrowthinmedicineandbiotechnologywherecross-bordercollaborationsuchasMediconValleyhashadapositiveeffect. Agrowingnumberofcompaniesintheregionexperiencesanincreaseinturn-overandprofit.Thisleadstomorenewjobsandinvestmentswhich,inturn,createanincreaseddemandforcommercialpremises. TheregionisalsocharacterisedbyalargenumberofprojectsinprogresssuchasBrunnshöginLundandVästrahamnen,HyllieandCitytunnelninMalmö. ActivitywithintheconstructionindustryisalsohighinCopenhagen.Copenhagen’slocalauthorityexpectsthepopulationtoincreaseby40,000overthenext15years.Thenumberofhousingprojectsincreasedbyafactoroffivefrom800intheyear2000to4,000in2005. In2006thecapitalcityregionwasresponsibleforapproximately30percentofthetotalinvestmentinproperties.AccordingtothetradeorganisationDanskByggeri,2007willbeatthesamelevelorhigher. EvidencethattheSwedishsideoftheÖresundregionisinterestingisshownbytheincreasingnumberofnewcompaniesandprimarilyDanishcompanies.Itisworthnot-ingthattheDanish/NorwegianpropertyinsurancecompanyTrygVestchosetoestab-lishitsSwedishheadofficeinMalmö.Thisisaninterestingbreakinthetrendsinceinsurancecompaniestendtoestablishtheirnationalofficesinthecapitalcityregions. Approximately60percentoftheSwedishsubsidiariesinDenmarkareinGreaterCopenhagenand24percentoftheDanishsubsidiariesareinSkåne.IntermsofthepopulationsofDenmarkandSweden,35percentinthecapitalregionand13percentinSkåneareanover-representationofaround100percent. WhentheØresundInstitutemeasuredthecapitalcityregions’attractivenessinFeb-ruary2006onthebasisoftheUSbusinessmagazineForbes’listoftheworld’s403largestcompaniesinsevenselectedindustriesandhowtheyarelocalisedintheNordicRegion,itwasfoundthattheÖresundregionandStockholmtogetherhad86percentofthe112NordicheadofficesofwhichStockholmhad49andtheÖresundregion47. GrowthalsoindicatesashifttowardstheÖresundregionaftertheyear2000.Skåneinparticularisforgingaheadwith8.5newheadofficesinadvanceofOslo,GothenburgandHelsinki.

Forecast GNP growth (real in %) Number of established / reorganised Nordic head offices per region and time

SwedenDenmark

Source: Nordea, Danske Bank, DnB NOR, Øl

Real

in p

er c

ent

Before 2000 2000 and after Total

Stockholm

Öresund region

of Copenhagen

of Skåne

Gothenburg

Oslo

Helsinki

Odense/Vejle

Total

Source: Øresundsinstituttet


Stronger business climateSwedishbusinessandcommerceisundergoingstructuralchange.Thegreatestgrowthisoccurringintheservicesandtradesectorwhereastheindustrialsectorisexperiencingdecline.ThisiswhereSkånehastheadvantagesincetherearemanyknowledgecompaniesintheregionwhichcanfillthegapswhenindustrialcompa-niescutback.TheknowledgecontentisontheincreasewithinmostactivitieswhereSonyEricssoncanbeseenasoneofthemanyexamples. Theirgrowthcreatesalargenumberofperipheralcompaniesthatservethetele-comssectorindifferentways. ItisalsoexpectedthatthebusinessclimatewillcontinuetobestrongandmostindicatorsshowfurthermorethatthiswillbestrongerinSkånethantherestofthecountrybecauseoftheÖresundregion. Thegrossregionalgrowthisexpectedtobe4.5percentduring2006–2007.ThisisgrowththatwillbesignificantforbothDenmark’sandSweden’seconomiessincetheÖresundregionmakesup26.7percentofboththecountries’overalleconomy. MonetarypolicyremainsexpansiveinbothDenmarkandSweden.Thisfurtherstrengthensthebusinessclimate.Thereisariskthattheeconomycouldoverheat.Therearesignsinhousingandcommerce. InCopenhagentheeffectshaveevenreachedtheemploymentmarketthatissuf-feringfromthelackofavailableresources,somethingwhichnowbenefitstheemploymentmarketinSkåne. AccordingtoSkatØresund,thenumberofSwedish-registeredtaxpayersincreasedinCopenhagenby150percentunder2006.ThisshowsaccelerationinemploymentmarketintegrationacrossÖresund. Aboveall,youngpeopleinSkåneareexperiencingamorefavourablesituationthaninotherpartsofSweden.Unemploymentamongyoungpeopleaged18-24inMalmöis1.2percentageunitslowerthanthecountryoverall.AccordingtotheRegionalEmploymentBoardinSkåne,employmentopportunitiesareexpectedtoincreaseby2.6percentduring2007andthisisattributedtogooddomesticandDanishdemandformanpower.Theofficiallevelofunemploymentisforecasttobe3.6percentattheendof2007. ForSkånethismeansthatthelabourforcecanupgradeitsskillsandthecostsofunemploymentcanbereduced.ForDenmarkthismeansthatthefavourablebusi-nessclimatecanbeextended,thatnewknowledgeisbroughtintothecountryandthatDanishbusinessandcommercecanexpandintotheSwedishmarket.

Sources:TheØresundInstituteandtheSkåneRegionalEmploymentBoard

Unemployment youths Unemployment total

Per

cent

Sourse: AMS

Malmö Country

Per

cent

Sourse: AMS

Malmö Country

Wihlborgs ANNUAl rEPorT 2006 17

1. Wihlborgs reports its investment properties (in accordance with iAs investment Property) at their market value, which means that the book value corresponds to the market value of the investment properties. Properties classified as project properties (according to iAs) are reported at their acquisition value. With the exception of a land site in Malmö, all Wihlborgs properties are classified as investment properties.

helsingborg, 31 % Malmö, 55 %

rest of Öresund, 14 %

Rental value peR Region

industrial/Ware-house, 28 %

office/retail, 70 %

Project& land, 2 %

Rental value peR pRopeRty categoRy

rest of Öresund, 16 %

Malmö, 57 %helsingborg, 27 %

Book value By Region

Book value By pRopeRty categoRy

Project & land, 5 %

office/retail, 75 %

industrial/Ware-house 20 %

Helsingborg

Lund

Malmö

Copenhagen

Wihlborgs property portfolio

n pRopeRty poRtFolio aS oF 31 decemBeR 2006Wihlborgs’ property portfolio consists of commercial properties in the Öresund region, located in Malmö, Helsingborg, Lund and Copenhagen. As at 31 December 2006, the property portfolio comprised 219 properties with a total lettable area of some 1,160,000 sq.m. Fifteen of these properties have a site leasehold right. The book value of the properties was SEK 10,888m, which corresponds to the proper-ties’ assessed market value1. The total rental value was SEK 1,079m and the con-tracted rental income was SEK 987m on an annual basis. The economic occupancy rate was 92 per cent. The properties in Malmö and Helsingborg accounted for 86 per cent of the total rental value and 84 per cent of the properties’ book value. The rental value of office and retail properties, in addition to industrial and warehouse properties, totalled 70 and 28 per cent of the total rental value respectively.

The properties in Malmö and Helsingborg, where Wihlborgs is one of the leading property companies, are divided into sub-markets with different market conditions. Malmö is divided into the sub-markets of Centre & Western Harbour, Fosie & Lim-hamn and Northern Harbour & Arlöv. Centre & Western Harbour, with a lettable area of 290,000 sq.m., is Wihlborgs’ largest single sub-market. Helsingborg is divid-ed into sub-markets of Centre, South and Berga. The Centre sub-market is Wihl-borgs’ largest sub-market in Helsingborg. In the rest of the Öresund region, Wihlborgs primarily owns properties in Copenhagen and Lund with a property value of SEK 1,713m.

Wihlborgs implements regular value-creating project within the existing property portfolio by conversion, extension and new production. Projects & land account for SEK 550m of the total book value of the properties. Wihlborgs’ largest development area is the Dockan area, in Western Harbour in Malmö. Wihlborgs current and future building rights in the Dockan area are estimated at 90,000 sq.m.

Wihlborgs’ property portfolio is located in the Öresund region – the most densely populated region in the Nordic region with 3,6 million inhabitants, of whom 2,4 million live in Denmark and 1,2 million in sweden.

18 Wihlborgs ANNUAl rEPorT 2006

pRopeRty poRtFolio aS oF 31 decemBeR 2006

The schedule presented below is based on Wihlborgs’ property portfolio as per 31 December 2006. Rental income refers to contractual rental income on an annual basis as of 31 December 2006. Net operating income is based the earnings capacity on an annual basis as of 31 December 2006, proceeding on the basis of the contrac-tual rental income, operating and maintenance costs and property administration over a rolling twelve months and property tax and ground rent.

diStRiBution By Region and pRopeRty categoRy Numberof Lettable Ekonomic Rental Netop. Surplus properties areaBookvalueRentalvalue occupancy income income Yield ratio sq.m. SEKM SEK/sq.m. SEKM SEK/sq.m. % SEKM SEKM % %distribution per regionMalmö 111 571,248 6,197 10,849 592 1,037 93 548 384 6,2 70

helsingborg 83 427,753 2,978 6,961 331 773 91 301 210 7,0 70

rest of the Öresund region1 25 160,851 1,713 10,651 156 968 89 138 99 5,8 72

total Wihlborgs 219 1,159,852 10,888 9,388 1,079 930 92 987 693 6,4 70

distribution per categoryoffices/retail2 88 611,453 8,127 13,292 758 1 240 92 701 508 6,3 72

industrial/warehouse 94 512,248 2,211 4,317 305 596 90 275 184 8,3 67

Projects & land3 37 36,151 550 15,205 16 434 71 11 1 0,2 8

total Wihlborgs 219 1,159,852 10,888 9,388 1,079 930 92 987 693 6,4 70

1. one property located in hamburg, germany, with lettable area of 8,107 sq.m., is reported in the rest of the Öresund region.2. Two hotel properties located in helsingborg, with lettable area of 21,262 sq.m. are reported in offices/retail.3. According to the iFrs def. of project properties, Wihlborgs owns a project property – the site of the Dockan area in Malmö - with a book value of sEK 181m.

diStRiBution By pRopeRty categoRy By Region Region/ Numberof Lettable Ekonomic Rental Netop. Surpluspropertycategory properties areaBookvalueRentalvalue occupancy income income Yield ratio sq.m. SEKM SEK/sq.m. SEKM SEK/sq.m. % SEKM SEKM % %malmöoffices/retail 43 347,500 4,903 14,109 454 1,307 93 423 308 6,3 73

industrial/warehouse 46 207,745 932 4,488 132 637 91 120 76 8,1 63

Projects & land3 22 16,003 362 22,628 6 362 90 5 1 0,3 20

total malmö 111 571,248 6,197 10,849 592 1,037 93 548 384 6,2 70

Helsingborg offices/retail2 34 148,518 1,758 11,835 167 1,123 93 155 111 6,3 71

industrial/warehouse 44 269,131 1,162 4,317 161 599 89 143 99 8,5 69

Projects & land 5 10,104 58 5,760 3 271 68 2 0 -0,4 -13

total Helsingborg 83 427,753 2,978 6,961 331 773 91 301 210 7,0 70

Rest of the Öresund region1 offices/retail 11 115,435 1,467 12,705 137 1,186 90 123 90 6,1 73

industrial/warehouse 4 35,372 117 3,314 12 328 100 12 10 8,2 83

Projects & land 10 10,044 129 12,879 7 714 58 4 0 0,1 3

total 25 160,851 1,713 10,651 156 968 89 138 99 5,8 72

total Wihlborgs 219 1,159,852 10,888 9,388 1,079 930 92 987 693 6,4 70

diStRiBution oF lettaBle aRea By Region and type oF pRemiSeS LettableareabytypeofpremisesRegion Offices Retail Industrial/warehouse Hotel Residential Other Garage Total Proportion sq.m. sq.m. sq.m. sq.m. sq.m. sq.m. sq.m. sq.m. %Malmö 284,367 36,545 222,817 2,947 11,981 10,768 1,821 571,246 49,3

helsingborg 141,951 37,623 215,690 20,799 5,367 6,133 190 427,753 36,9

rest of the Öresund region1 110,303 4,680 45,661 - - 208 - 160,852 13,9

total Wihlborgs 536,621 78,848 484,168 23,746 17,348 17,109 2,011 1,159,851 100,0Proportions, % 46,3 6,8 41,7 2,0 1,5 1,5 0,2 100,0 100,0


Rental value and occupancy rateThe total rental value of the property portfolio at 31 December 2006 amounted to SEK 1,079m, of which the rental value for vacant premises is estimated to account for SEK 92m. The properties’ total lettable area at 31 December 2006 was about 1,160,000 sq.m. The economic occupancy rate at 31 December 2006 was 92 per cent, with 93 per cent in Malmö, 91 per cent in Helsingborg and 89 per cent in the rest of the Öre-sund region. The occupancy rate for office and retail property was 92 per cent, with 90 per cent for industrial and warehouse facilities and 71 per cent for projects & land.

Rental income and lease structureFor Wihlborgs property portfolio at 31 December 2006, contractual rental income on an annual basis was SEK 987. Rental income includes surcharges for property tax, heating and electricity costs that Wihlborgs passes on to tenants. Wihlborgs estimates that renal income as a whole is on a market level. At 31 December 2006, Wihlborgs has a total of 1,653 leases with a contractual rental income of SEK 951m and a average maturity of 3.5 years. Leases with a matu-rity of 3 years of more are normally subject to annual rent adjustments in view of changes in the consumer price index. Overall, the index clauses in Wihlborgs’ leas-es mean that rents rise at a pace of 90 per cent of the rate of inflation. Rental income from Wihlborgs’ ten largest tenants totalled SEK 211m on an annual basis at 31 December 2006, corresponding to 21 per cent of the contractual rental income.

contRactual Rental income aS peR 31 decemBeR 2006 By leaSe value

NumberLettablePer31Dec2006Contractualsize,SEKM leases area,sq.m. SEKMpropo,%

Leases for renting premises

>3,0 54 328 097 352 37

2,0–3,0 38 100 712 93 10

1,0–2,0 136 191 979 186 20

0,5–1,0 181 136 630 125 13

0,25–0,50 298 110 392 100 11

<0,25 946 123 336 95 10

Total commercial leases 1 653 991 146 951 100

residential leases 233 17 403 16

Parking spaces etc. 684 0 20

Total 2 570 1 008 549 987

matuRity StRuctuRe FoR WiHlBoRgS’ leaSeS aS peR 31 decemBeR 2006

Number Lettable Per31Dec2006Expiresinyear ofleases area,sq.m. SEKMpropo,%

Leases for renting premises

2007 434 178 637 143 15

2008 457 223 852 185 19

2009 420 186 794 175 18

2010 220 155 425 168 18

2011 52 106 436 94 10

2012 28 23 726 24 3

>2012 42 116 276 162 17

Total commercial leases 1653 991 146 951 100

residential leases 233 17 403 16

Parking spaces etc. 684 0 20

Total 2 570 1 008 549 987

tHe ten laRgeSt tenantS

Tenant Area

Teliasonera Malmö

Malmö University College Malmö

Teleca Malmö/lund

Elite hotels helsingborg

Malmö City Malmö

Abb Fastighet Malmö

green Cargo Köpenhamn/hbg

Tullverket Malmö

region skåne Malmö

helsingborgs City hbg

1. rental income during the period plus the rental value of vacant premises during the period.2. one property located in hamburg, germany, with lettable area of 8,107 sq.m., is reported in the rest of the Öresund region.3. Two hotel properties located in helsingborg, with lettable area of 21,262 sq.m. are reported in offices/retail.

tRendS in gRoSS Rental income and occupancy Rate Fot WiHlBoRgS pRopeRty poRtFolio Per31December2005 Per31December2006 Rentalvalue, Economic Rentalvalue, Economic SEKM1 occupancy,% SEKM occupancy,%distribution per regionMalmö 443 92 592 93

helsingborg 275 91 331 91

rest of the Öresund region2 121 87 156 89

total Wihlborgs 839 90 1 079 92

distribution per categoryoffice/retail3 566 92 758 92

industrial/Warehouse 251 88 305 90

Project & land 22 83 16 71

total Wihlborgs 839 90 1 079 92


pRopeRty eXpenSeS

operating expensesWihlborgs’ largest operating expenses are heating, electricity and water as well as property upkeep. Examples of other operating expenses are insurance, security and alarm systems as well as refuse management. Operating expenses for the prop-erty portfolio during 2006 totalled SEK 153m. Wihlborgs is focusing in effectiveness in management and work continuously together with the tenants to reduce the operating expenses.

Repairs and maintenance costsOngoing and scheduled repairs and maintenance measures are conducted to main-tain the state of repair and standard of properties. Costs for repairs and mainte-nance during 2006 totalled SEK 48m.

property tax and ground rentState property tax is currently 1.0 per cent of the tax assessment value for commer-cial property and 0.5 per cent for residential and industrial property. Special prop-erties are not subject to property tax. The tax assessment value for the property portfolio at 31 December 2006 amounted in Sweden to SEK 4,150m and the property tax amounted to SEK 33m. Of the Group’s total property tax, SEK 31m is passed on to tenants through rent surcharges. Ground rent for Wihlborgs’ 15 properties held on leasehold amounted to SEK 5m.

distribution of responsibility between landlord and tenantTenants in commercial premises, and primarily in industrial and warehouse premises, have a relatively large responsibility for both operating and maintenance expenses. Normally, Wihlborgs assumes responsibility for exterior maintenance and tenants for interior maintenance of the buildings. In Denmark, tenants are to a large extent responsible for all operating expenses.

property administrationProperty administration consists mainly of expenses for rent invoicing, leasing and marketing. Wihlborgs expenses for property administration amounted to SEK 43m.

Rental incomeThe net operational income in relation to the rental income, surplus ratio, was 70 per cent (69).


inveStmentSExpenses arising from value-enhancing measures in existing properties are reported as investments and are not expensed. Examples of investments are costs arising from project development and customisation for tenants.

Investments amounted to a total of SEK 427m during 2006. The sum includes SEK 25m that, after an agreement with the city of Hamburg, has been paid for the freehold purchase of land for Wihlborgs’ remaining property in Hamburg. The sum also includes SEK 44m for the purchase of nine site leasehold rights in Fosie, Malmö.

The five largest investments made during 2006 were the building of a new office at Dockan in Malmö, the rebuilding of the properties Svea 7 in Helsingborg, Arma-turen 4 in Lund, Slagthuset and Förbygeln 1 in Malmö.

Planned investments in ongoing projects amounted to about SEK 413m, of which SEK 165m was invested as of 31 December 2006.



malmö

n In value terms, Malmö represents Wihlborgs largest location, with a total prop-erty value of SEK 6,197m as of 31 December 2006, corresponding to 57 per cent of the company’s total property value. Properties located in Malmö, Lomma and Burlöv are located in Malmö. The property portfolio in Malmö consisted at 31 December 2006 of 111 proper-ties, of which 11 were held on leasehold, with a total lettable area of about 571,000 sq.m. The rental value of the properties totalled SEK 592m and the contractual rental income, as of 31 December 2006, was 548m on an annual basis. Of the prop-erty value, about 79 per cent were office and retail properties. The property portfo-lio in Malmö is divided into three sub-markets: Centre & Western Harbour, Northern Harbour & Arlöv and Fosie & Limhamn.

centre and Western HarbourAt 31 December 2006 the property portfolio in Centre & Western Harbour consist-ed of 36 properties with a lettable area of about 290,000 sq.m. 72 per cent of the let-table area is offices. The properties are mainly located in the old town and in the Dockan area in Western Harbour. In value terms, the largest properties are Erik Menved 37 and Skrovet 1 with lettable area of about 24,000 sq.m. and about 13,000 sq.m., respectively. Wihlborgs largest tenant in Western Harbour is TeliaSonera. The Dockan area is Wihlborgs largest development area with several projects in progress. In Dockan area of Western Harbour, Wihlborgs owns 10 properties with lettable area of about 90,000 sq.m. In recent years, Western Harbour and Dockan have attracted a number of major companies to establish a presence such as Sigma, TeliaSonera, Malmö University College and Duni. In June 2007 Teleca will move their head-office to Dockan. The newly produced premises in Western Harbour, with their modern and space-efficient facilities, thus have a competitive edge compared with Malmö’s relatively outdated office stock. Demand in the office rental market in Western Harbour is deemed favourable. During 2006 Wihlborgs acquired nine properties with a total area of 172,000 sq.m. in Centre & Western Harbour. Wihlborgs estimates the rent level in Centre & Western Harbour for modern office area at SEK 1,500–1,900 per sq.m. with a vacancy rate of about 2.9 per cent. Corresponding office rent for older office properties is estimated at SEK 1,200–1,600 per sq.m. with a vacancy rate of 14.6 per cent.

The property portfolio in Malmö is divided into sub-markets; Centre & Western harbour mainly comprise office properties, Northern harbour & Arlöv comprise industrial/warehouse properties and Fosie & lim-hamn consist of office and industrial/warehouse properties.

ArlövNorthern Harbour

Western Harbour

Centre

Limhamn

Fosie

12

3510

17

19

11

25

27

32

1433

731

9

13

20

26

2818

6

3

3415

12

Northern Harbour

24

Fosie

Limhamn7

23

16

Arlöv

Western Harbour

Centre

Medeon

8 5

4

21

22

30

41

47

48

51

58

71

73

75

76

77

85

86

8889

92

33

45

43

50

49

54

49

4039

53

44

52

56

38

46

55

57

62

63

64

65

36

37

42

59 60

61

67

68

69

70

81

8278

29

87

90

9193

94

95

84

83

9674

72

66

8079

The properties in central Malmö are mainly located in Western harbour and in the old town. Western harbour is Wihlborgs’ largest development area and Malmö’s largest future expansion area. For property details, see list of properties.

Wihlborgs’ sub-markets in malmö Wihlborgs’ properties in the city centre and Western Harbour in malmö.



Northern Harbour and ArlövThe property portfolio in Northern Harbour & Arlöv at 31 December 2006 consist-ed of 41 properties with lettable area of about 163,000 sq.m. The properties in Northern Harbour consist mainly of office, industrial, ware-house and logistics properties that are favourably sited close to major transport links in the port area. Demand for warehouse facilities and terminal buildings are good. Demand for office area in Northern Harbour is determined largely by prox-imity to transport links. Since the ferry facilities will move from their current loca-tion in the port to Östra Hamnen, it is expected that demand for logistics premises and office will increase. During 2006 Wihlborgs acquired five properties with a total area of 37,000 sq.m. in Northern Harbour. Wihlborgs estimates that the rent level in Northern Harbour for industrial/ware-house is about SEK 700 per sq.m. and a vacancy rate of about 13 per cent. The properties in Arlöv consist primarily of small office and industrial proper-ties. The tenants in the area are small and medium sized companies linked to Arlöv. Demand for premises in Arlöv is relatively weak. Wihlborgs estimates that the rent level in Arlöv for industrial/warehouse facili-ties amounts to about SEK 600 per sq.m. and the vacancy rate to 22 per cent.

Fosie and Limhamn At 31 December 2006, Wihlborgs property portfolio in Fosie & Limhamn consisted of 34 properties with lettable area of about 119,000 sq.m. Fosie is a well-established business zone in southern Malmö, which started to exploit in 1970. With its proxim-ity to both the inner and outer ring roads, and well established public transport there is considerable interest in establishing businesses here. The property port-folio primarily consists of trading, industrial, logistics and office premises. There is considerable interest among both large as well as small size companies in establish-ing a presence in Fosie. Wihlborgs largest tenant in Fosie is ABB, which lets premis-es in the Boplatsen 3 property. During 2006 Wihlborgs acquired ten properties with a total area of 35,000 sq.m. in Fosie. Wihlborgs estimates that the rent level in Fosie for office area and industrial/warehouse facilities amounts to some SEK 800 per sq.m. and the vacancy to 7 per cent. Limhamn’s business zone is located in Annetorp in west Malmö close to the Öresund Link. The zone is home to primarily small and medium size companies, which are mainly active in light industry. During the last years Danish companies have shown their interest in establishing here. Extensive housing projects are planned to be built adjacent to the business area. During 2006 Wihlborgs acquired one property with an area of 4,000 sq.m. in Limhamn. Wihlborgs estimates that the rent level in Limhamn for office area and industrial/warehouse facilities is about SEK 800 per sq.m. and the vacancy rate 3 per cent.



Helsingborg

n In terms of value, Helsingborg represents Wihlborgs second largest location with a total property value as of 31 December 2006 of SEK 2,978m, corresponding to 27 per cent of Wihlborgs total property value. At 31 December 2006, the property portfolio in Helsingborg consisted of 83 properties, of which 4 are held on leasehold, with a total lettable area of 428,000 sq.m. At 31 December 2006, the rental value totalled SEK 331m and the contractual rental income was SEK 301m annually. The property portfolio in Helsingborg is divided into three sub-markets: Centre, South and Berga.

centreAt 31 December 2006, the property portfolio in central Helsingborg consisted of 21 properties with lettable area of about 108,000 sq.m. Centre consist primarily of offices and hotels, Elite Hotels is the largest tenant. In the autumn 2006 Svea 7 was opened after a comprehensive rebuilding. The building is fully let and consists of shops and offices.

The former Kongresscentrum (Kärnan Södra 9) has been rebuilt for the school Procivitas, with an area of 900 sq.m. Friskis & Svettis has expanded their areas with 500 sq.m. in the same property. Wihlborgs properties in central Helsingborg have variable officesizes from 100 up to 5,000 sq.m. During 2006 Wihlborgs acquired six properties in Centre with a total area of 35,000 sq.m. The rental market has shown an increased demand the last months, which should lead to reducation of vacancies. Wihlborgs estimates that the rent level and the vacancy rate for modern office area in the Centre amounts to about SEK 1,200–1,900 per sq.m. and about 6–7 per cent, respectively.

Söder

5

18

16

17

1613

9

11

10

8

7

6

4

1

12

3

2

2315

21

14

19

41

45

42

73

32

20

3022

23

24

33

25

2726

28

29 3134

35363738

4039

43

44

46

48

47

49

67

70

68

61

515052

55

54

56

57

5859

60

63

64

6553

6662

71

69 72

74

75

76

Berga

Planteringen

Hamn-City

Centre

The properties in central helsingborg comprise 40 per cent of the total portfo-lio value in helsingborg. For property details, see list of properties.

Wihlborgs’ properties in central Helsingborg

Wihlborgs’ properties in helsingborg are located in three sub-markets; Centre, south and berga. The property locations are fairly concentrated within each sub-market, facilitating efficient property management.

Centre

Berga

South

Wihlborgs’ sub-markets in Helsingborg


SouthWihlborgs owned 30 properties in the South sub-market, which consist of Harbour City and Planteringen, with lettable area of about 189,000 sq.m. The South sub-market consist primarily of industrial- and warehouse properties and large units for trading operations. An extension of high-volume trading facili-ties in the area is planned. Demand for properties, notably from logistics compa-nies, is good. During 2006 Wihlborgs acquired two properties in South with a total area of 6,000 sq.m. Wihlborgs estimates that the rent level in South for industrial/warehouse is about 400–600 per sq.m. and some SEK 700–1,200 per sq.m. for retail facilities, with the vacancy rate generally at about 14 per cent.

BergaIn Berga Wihlborgs owned 32 properties with lettable area of about 131,000 sq.m. The company’s properties in Berga mainly consist of flexible industrial buildings and office area. Berga is currently Helsingborg’s market-leading business zone and has transformed from an industrial to a trading zone. Berga will propably grow towards the Maria Park-area and Väla-area. During the past year, Berga has experienced a positive rent trend and declining vacancies. This depends on both increased demand and the fact that rents in cen-tral Helsingborg are rising, and therefore some companies seek cheaper alterna-tives in the outskirts of Helsingborg. Berga as a whole is a well-defined geographic area, permitting Wihlborgs to offer its tenants prompt service and to increase the efficiency of management of the property portfolio. During 2006 Wihlborgs acquired eight properties in Berga with a total area of 28,000 sq.m. Wihlborgs estimates that rent level for office area in Berga is about SEK 900–1,400 per sq.m. and for industrial/warehouse facilities to some SEK 650–900 per sq.m. Wihlborgs estimates that the vacancy rate in Berga is generally about 8 per cent.



Rest of the Öresund region

n At 31 December 2006, the property portfolio in the rest of the Öresund region consisted of 25 properties with total lettable area of 161,000 sq.m. and a property value of SEK 1,713m. The rental value totalled SEK 156m and the contractual rental income at 31 December 2006 was SEK 138m on an annual basis. The property portfolio in rest of the Öresund region is divided up into three sub-markets: Copenhagen, Lund and Other locations.

CopenhagenAs of 31 December 2006, Wihlborgs owned five properties. Total lettable area amounted to about 74,000 sq.m. Two of the properties are located in Lautraupvang in Ballerup Municipality, 15 km west of central Copenhagen. Lautraupvangs business zone consists of larger office properties, the tenants are primarily IT companies. Wihlborgs properties are good and located in a desirable area. The rent level in the area is about DKK 800–1,200 per sq.m. In Herlev, which is close to Lautraupvang, Wihlborgs owns one property with total lettable area of 35,000 sq.m. The former warehouse property has been converted to an office property. In connection with this an area of 6,500 sq.m. was created. The rent level for office area in Herlev is about DKK 600–800 per sq.m. During 2006 Wihlborgs acquired one industrial/warehouse property in Bröndby and one project property in Herlev. As of 31 December the vacancy rate amounts to 12.7 per cent in Copenhagen.

LundWihlborgs owns 11 properties in Lund, located in the city centre, Gastelyckans busi-ness zone and west. The total lettable area amounts to 70,000 sq.m. Wihlborgs owns attractively located office and retail properties in central Lund, close to the central station. The retail outlets mainly compete with Nova Lund, which is a newly established shopping centre in west Lund. The West includes indus-trial, office, warehouse and retail properties. Small and medium-size companies, particularly due to its proximity to the E22. The acquisition of Ideon AB will strengthen the company’s presence in Lund and Wihlborgs will gain a new bridgehead. The Vätet 1 property with a total area of 24,000 sq.m. was included in the acquisition. Wihlborgs estimates that the rent level in Lund for office area is about SEK 900–1,600 per sq.m. and for industrial/ware-house is some SEK 650–800 per sq.m. The vacancy rate is estimated at about 9 per cent.

Other locationsThe property portfolio in Other locations consists of six undeveloped sites in Lands-krona, one undeveloped site in Svedala, a warehouse property in S:t Olof and one office property in Hamburg. The total lettable area in Other locations amounted to 17,000 sq.m.


projects and development

cuRRent pRoJectS in malmÖThe biggest project in progress in Malmö is the construction of a new office building at Dockan for Teleca. The building will cover a total of 10,700 sq.m. and Teleca will lease 9,000 sq.m. of this area. The project is expected to be completed during the third quarter of 2007. The investment amounts to SEK 230m. The lease value of the property amounts to SEK 19m and the yield is expected to be 8 per cent. Renovation of Kunskapsskolan is in progress with the rebuilding of part of Båghal-larna at Dockan. The area comprises 3,000 sq.m. and will be completed in the third quarter of 2007. This investment amounts to SEK 57m. The lease value of the proper-ty amounts to SEK 6.3m and the yield is expected to be 8.8 per cent. During the year around 70 projects in Malmö was completed to a value of approximately SEK 110m.

dockan at västra HamnenIn the middle of the Öresund region in a historic part of Malmö, the old shipyard area is being converted into a modern district with commercial premises and hous-ing. In the middle of Dockan there is the shipyard dock which was previously used for building ships and has now been converted into a modern harbour for small boats. With its mix of buildings, Dockan will become a district with hustle and bustle 24 hours a day. University colleges, secondary schools and other educational build-ings will contribute to the dynamics. Many companies have already made themselves at home in their new premises. Good communications, proximity to the water and a pleasant workplace for employees are some of all the criteria that Dockan meets. When fully developed, 8,000–10,000 people will have their workplaces here. Wihlborgs is building here for a dynamic business climate and tailors new premises to meet tomorrow’s requirements for the companies who are considering moving here. The area exudes optimism and forward thinking. Dockan will become one of northern Europe’s most attractive areas for housing and companies.

dockan exploatering aB Wihlborgs, JM and Peab each own a third of Dockan Exploatering AB which, in turn, owns the undeveloped land within the Dockan. Dockan Exploatering AB was formed in 2000 to manage the development of the Dockan area. As and when detailed plans are completed, Dockan Exploatering AB will release undeveloped land to the owners which will mean that the company will not erect its own build-ings. Wihlborgs will develop the commercial premises whereas JM and Peab will construct new housing. Through its part ownership of Dockan Exploatering AB, Wihlborgs expects in the coming years to add building rights corresponding to a gross area of 30,000 sq.m. In addition to part ownership of the development company, Wihlborgs owns land areas within the Dockan area with associated building rights that correspond to a gross area of approximately 50,000 sq.m.

cuRRent pRoJectS in HelSingBoRgA large project was completed in Helsingborg in 2006. The property Svea in Centre a former hotel was converted into modern and flexible office premises and shop premises. The investment amounted to SEK 54m. All areas have been leased and the yield will be 9.3 per cent.


During the year it is expected that around 50 projects in Helsingborg will be com-pleted to a value of approximately SEK 45m.

pRoJect developmentProject development is an important part of Wihlborgs’ activities. Wihlborgs acquired the Carolus 32 property amounting to 65,000 sq.m. in May 2006. The property comprises hotels, shopping centres and housing. A three-dimensional property formation was implemented after which the hotel section became a sepa-rate property, Carolus 33, and was sold. The remaining part of Carolus 32 comprising 46,000 sq.m. of housing and shops was then sold as a company. A similar property for-mation took place in the property Erik Menved 37 where the housing section was bro-ken out as a separate property – Erik Menved 38 – which comprises 5,083 sq.m. and 87 apartments. The investments decided upon in current projects amount in total to SEK 413m of which SEK 165m was invested at the turn of the year.


list of property acquisitions and Sales January–december 2006

OperatingincomeProperty Municipality Area Category Area,sq.m Price,SEKM jan-dec,mkr1

property acquisitions Quarter 1

bronsdolken 10 Malmö Malmö industrial/Wareh. 1,368

bronsdolken 11 Malmö Malmö industrial/Wareh. 962

Flygledaren 9 Malmö Malmö industrial/Wareh. 5,821

Uven 9 Malmö Malmö office/retail 7,101

Armborstet 4 helsingborg helsingborg industrial/Wareh. 3,000

olympiaden 7 helsingborg helsingborg industrial/Wareh. 3,537

Värjan 12 helsingborg helsingborg office/retail 1,145

total quarter 1 22,934 198 9,1

property acquisitions Quarter 2

Carolus 32 Malmö Malmö office/retail 65,098

Elefanten 40 Malmö Malmö office/retail 14,004

Erik Menved 37 Malmö Malmö office/retail 29,159

grytan 3 Malmö Malmö industrial/Wareh. 2,398

gäddan 6 Malmö Malmö office/retail 2,570

Kirseberg 31:53 Malmö Malmö industrial/Wareh. 22,869

luggude 7 Malmö Malmö office/retail 2,087

löplinan 7 Malmö Malmö industrial/Wareh. 2,489

Mandelblomman 5 Malmö Malmö industrial/Wareh. 3,227

Nils 21 Malmö Malmö office/retail 29,674

Nils 24 Malmö Malmö industrial/Wareh. 560

rosengård 130:403 Malmö Malmö office/retail 8,647

sparven 15 Malmö Malmö office/retail 21,846

spillepengsmarken 6 Malmö Malmö Project/land -

sufflören 3 Malmö Malmö industrial/Wareh. 2,315

syret 12 Malmö Malmö office/retail 1,955

Vipan 7 Malmö Malmö industrial/Wareh. 1,002

Vätet 1 lund rest of Öresund office/retail 24,228

total quarter 2 234,128 2,698 85,9

property acquisitions Quarter 3 balken 10 Malmö Malmö industrial/Wareh. 3,725

Tågarp 16:19 burlöv Malmö industrial/Wareh. 4,316

belgien Norra 19 helsingborg helsingborg office/retail 9,033

huggjärnet 13 helsingborg helsingborg industrial/Wareh. 4,027

Persien 14 helsingborg helsingborg industrial/Wareh. 3,930

Persien 15 helsingborg helsingborg industrial/Wareh. 3,930

Polisen 1 helsingborg helsingborg office/retail 5,021

Polisen 3 helsingborg helsingborg Project/land 10,104

Terminalen 4 helsingborg helsingborg office/retail 3,507

Ellekaer 6 herlev rest of Öresund Project/land 5,800


property acquisitions Quarter 4 bronsdolken 3 Malmö Malmö industrial/Wareh. 9,668

bronsdolken 18 Malmö Malmö industrial/Wareh. 1,311

stångbettet 15 Malmö Malmö industrial/Wareh. 3,957

grusgropen 3 helsingborg helsingborg industrial/Wareh. 4,875

grusplanen 2 helsingborg helsingborg industrial/Wareh. 2,305

Kniven 2 helsingborg helsingborg industrial/Wareh. 5,085

Mörsaren Västra 13 helsingborg helsingborg industrial/Wareh. 3,999

orkanen 5 helsingborg helsingborg industrial/Wareh. 3,150

sadelplatsen 10 helsingborg helsingborg industrial/Wareh. 3,260

Abildager 8–14 bröndby rest of Öresund industrial/Wareh. 14,512


total property acquisitions 2006 362,577 3,583 103

1) operating income from the properties acquired and sold are included in the net profit for the period.


OperatingincomeProperty Municipality Area Category Area,sq.m Price,SEKM jan-dec,mkr1

property sales Quarter 1 Dimman 11 Malmö Malmö office/retail 11,008

Eskilstorp 14:99 Vellinge rest of Öresund industrial/Wareh. 7,611

Kvartsen 7 lund rest of Öresund office/retail 7,020

spelmanshejdan 5 Trelleborg rest of Öresund industrial/Wareh. 6,743


property sales Quarter 3 Carolus 32 Malmö Malmö office/retail 46,129

Carolus 33 Malmö Malmö office/retail 18,969

rödkallen 11 Malmö Malmö industrial/Wareh. 5,252

s:t Peter 3 Malmö Malmö office/retail 2,850

stillman 47 Malmö Malmö industrial/Wareh. 13,676

sagan 1 helsingborg helsingborg office/retail 1,190

svedala 122:71 svedala rest of Öresund office/retail 1,150

Ndr Fasanvej 117 Fredriksberg rest of Öresund office/retail 3,226

total quarter 3 92,442 1,221 22,2

property sales Quarter 4 hammaren 8 Malmö Malmö office/retail 3,030

hästhagen 4 helsingborg helsingborg industrial/Wareh. 41,598

sköldenborg 18 helsingborg helsingborg office/retail 861

Thalia 15 helsingborg helsingborg office/retail 810

Thalia 17 helsingborg helsingborg office/retail 932


total property sales Quarter 2006 172,055 1,560 27,7

1) operating income from the properties acquired and sold are included in the net profit for the period.


valuation principles

n pRopeRty valuation

valuation of Wihlborgs’ Swedish propertiesMalmöbryggan Fastighetsekonomi AB and Savills Sweden AB have valued all of Wihlborgs’ properties in Sweden. The values of the properties are individually con-sidered to correspond to the market value of the respective property. The market value has been defined in accordance with the International Valuation Standards Committee’s recommendation. “Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”. Bearing in mind that the valuations constitute the basis for the group’s economic account-ing, the valuation methodology and the accounting of the valuation results are for-mulated to conform to the international accounting standard IAS 40 (Investment Property) concerning the calculation and accounting of true value for the manage-ment properties.

valuation basisValuations are based on the following types of documentation:n Special quality-assured information from Wihlborgs within the framework of data related to contracts and data related to properties.n Information accessed from public sources including data on the properties’ land area and site leasehold as well as detailed plans for undeveloped land and development properties.n Market intelligence – current assessments of lease growth, level of vacancies and yield requirements at the time of valuation for the constituent geographic and characteristic market segments of the building stock.n Inspections.

Quality assurance processThe information related to properties comprises unique characteristics for each val-uation project as well as information on all lease contracts. The components of the information accessed from Wihlborgs’ different systems are the subject of a separate quality assurance process.

Yield requirements Per cent (%)malmöoffice 5.0 – 8.0industrial 6.8 – 9.0

Helsingborgoffice 5.5 – 8.0industrial 6.5 – 9.0


market value properties per31 december 2006, Sek m

Malmö 6,197helsingborg 2,978rest of the Öresund region 846Foreign country 867total 10,888

market analysisIn the case of the local authorities where most of the building stock is located (Malmö, Helsingborg, Lund and Burlöv), the market parameters that form the basis of the individual value assessments are summarised for 78 different geographic are-as. The information is divided into four segments of the lease market – housing, offices, shops, warehousing/industry – and into three different parts of the property market – housing objects, commercial objects and industry objects.

The market parameters include assumptions on:n Vacancy leveln Direct yield requirementsn Growth in properties leasedn Normalised operating and maintenance costs

valuation methodsBuilt properties intended for leasing are valued using a market simulation model. This means that the market value is assumed to correspond to the yield value that can be estimated from a five-year cashflow analysis using market-related parameters on assumptions for incoming and outgoing payments, estimating residual value and cost of capital. Future incoming lease payments are used as a basis for cashflow ana-lyses for each lease object subject to current conditions in existing contracts during the current contract period. The lease payments that refer to future lease periods and for vacant premises are estimated according to individual assessments for each individual lease object. Value assessments regarding unbuilt properties including dereliction and redevelop-ment objects are made as direct estimates of the object’s newbuild value in a future market use bearing in mind dereliction and exploitation costs. Wihlborgs’ site lease-holds, with the exception of three objects in Helsingborg, Terminalen block, are valued as though Wihlborgs owned the land.

valuation of Wihlborgs’ international propertiesWihlborgs’ properties in Denmark have been valued by DTZ in Denmark on the basis that agrees with the Swedish valuation. The remaining property in Hamburg has been valued by Collier Property Partners.

Summary of the market valuationThe following summary shows the value of Wihlborgs’ property stock at 31 Decem-ber 2006. The number of properties on 31 December 2006 amounted to 219.

changes in the properties’ book value

Changed itembook value 1 January 2006 7,890Properties sold - 1,550investments 427Acquisitions 3,529Value regulation 629Foreign-currency translation - 37Book value 31 december 2006 10,888

38� Wihlborgs�ANNUAl�rEPorT�2006

12

3510

17

19

11

25

27

32

1433

731

9

13

20

26

2818

6

3

3415

12

Northern Harbour

24

Fosie

Limhamn7

23

16

Arlöv

Western Harbour

Centre

Medeon

8 5

4

21

22

30

41

47

48

51

58

71

73

75

76

77

85

86

8889

92

33

45

43

50

49

54

49

4039

53

44

52

56

38

46

55

57

62

63

64

65

36

37

42

59 60

61

67

68

69

70

81

8278

29

87

90

9193

94

95

84

83

9674

72

66

8079

WIHLBORGS PROPERTIES IN MaLMö


Sub-market Centre & WeStern Harbour 1 Altona5 StoraNygatan38 Malmö 1929 1980 512 181 693 5 2 Altona22 StoraNygatan40 Malmö 1990 1990 701 70 771 6 3 Börshuset1 Skeppsbron2 Malmö T 1929 1987 4,478 864 5,342 65 4 Elefanten40 Storgatan20 Malmö 1988 1992 10,468 3,505 28 14,001 139 5 ErikMenved37 MästerNilsg/Kattsundsg/Österg Malmö 1971 1971 17,459 3,385 3,219 24,063 181 5 ErikMenved38 MästerNilsg/Kattsundsg/Österg Malmö 1971 5,028 5,028 33 6 Fisken18 NVallgatan100–102/Västerg35 Malmö 1988 1988 6,713 21 6,734 66 7 Forskaren1 PerAlbinHanssonsväg41 Malmö 1989 1997 16,536 225 271 17,032 122 8 Gäddan6 SNeptunigatan10/Citadellsvägen11Malmö T 1965 1965 1,941 629 2,570 11 9 Högvakten6 Gråbrödersg2/NVallgatan80 Malmö 1962 1986 3,056 545 3,601 3710 Kolga4 JörgenKocksgatan4/Stormgatan12 Malmö 1929 2001 2,236 2,236 3411 Kranen1 StVarvsg1/Isbergsgata1–13 Malmö 1965 10,308 10,308 012 Kranen2Högskolan ÖVarvsgatan11A–C Malmö 1954 15,967 650 707 17,324 013 Kranen4 ÖVarvsgatan23 Malmö 1976 1981 4,053 25 170 4,247 3114 Kranen6Båghallarna ÖVarvsgatan13A–C Malmö 1964 830 5,615 3,050 11,495 015 Kranen8Ubåtshallen ÖVarvsgatan9A-B Malmö 2001 14,885 375 10 15,270 016 Kranen9 Isbergsgata15 Malmö 2001 2001 3,710 3,710 4717 Kranen11 Dockplatsen1 Malmö 2000 2000 10,837 345 11,182 12218 Luggude7 Herrestadsgatan2–4 Malmö 1945 1945 847 1,240 2,087 1019 Malmen12 Barkgatan9-13 Malmö 1971 1971 7,501 10 7,511 3520 Nils21 Ö.Förstadsg/Drottningg/FredriksbergsgMalmö 1965 1975 10,689 1,178 1,804 3,475 7,186 5,460 24,332 10021 Oscar4 Stortorget25 Malmö 1935 1960 638 400 37 132 1,207 1122 Priorn2 S:tJohannesgatan2-6 Malmö T 1944 1970 5,698 90 60 2,538 1,670 10,056 6423 Ritaren1 Ingenjörsgatan11/Stadiong10 Malmö T 1967 1979 3,035 3,035 1424 Skrovet1 StVarvsg3-7/Isbergsgata2 Malmö 2004 2004 12,461 459 12,920 18025 Slagthuset1 Carlsgatan10-12/JörgenKocksg7 Malmö 1929 1992 8,658 8,225 130 2777 336 20,126 12526 Sparven15 Drottningg34/Storg15/Ö,VKanalg Malmö 1930 1960 13,563 7,254 20,817 7327 Sqvalperup12 Adelgatan9-11/NVallgatan60 Malmö 1929 1989 5,813 135 5,948 6228 Uven9 Diskontogången2/Lugnag80-84 Malmö 6,091 1,010 7,101 54total office and retail properties 201,684 20,632 22,070 2,947 11,509 10,236 1,670 270,747 1 62729 Hälsingland1 Åmålsgatan7-9 Malmö 1974 282 931 1,213 030 Nils24 Drottninggatan1A-B Malmö 560 560 7total industrial and warehouse properties 282 0 1,491 0 0 0 0 1,773 731 GeneralensHage49 Hospitalsgatan16 Malmö 1936 1992 4,763 472 5,235 3832 Hamnen22:188 HansMichelsensgatan8-10 Malmö 1951 1951 1,057 770 6,277 8,104 633 Kranen7 ÖVarvsgatan15 Malmö 1957 1957 249 3,449 3,698 634 Kranen10 Isbergsgata17 Malmö 035 Sirius3 Carlsgatan14 Malmö 11 total projects and land 6,069 770 9,726 0 472 0 0 17,037 61 totaL Sub-market Centre & WeStern Harbour 36 208,035 21,402 33,287 2,947 11,981 10,236 1,670 289,557 1 696

Sub-market nortHern Harbour & arLöv 36 Arlöv19:133 Hantverkaregatan18 Burlöv 1962 1965 1,100 570 1,670 537 Arlöv19:58 Hantverkaregatan4 Burlöv 1929 1975 583 1,232 532 21 2,368 538 Höjdmätaren1 Flygledaregatan5 Malmö 1990 1990 840 1,057 1,897 639 Segeholm12 Lundavägen151 Malmö 1958 1984 7,212 795 1123 8,007 4240 Spillepengsmarken8 Strömgatan11 Malmö 1978 1978 2,502 520 3,022 1641 Syret12 Scheelegatan19-21 Malmö T 1970 1970 295 1,660 1,955 4 Åkarp1:69 Tegelvägen4 Burlöv 1972 1974 5,277 5,277 2242 Åkarp1:83 Alnarpsvägen54 Burlöv 1929 1970 641 264 905 3 total office and retail properties 13,172 5,277 6,098 0 0 532 21 25,100 10243 Arlöv17:4 Arlövsvägen23 Burlöv T 1975 1975 212 3,609 3,821 944 Burlöv3:2 Smedjevägen3 Burlöv 1974 1974 738 738 045 Finngrundet4 Bjurögatan23-25 Malmö 1963 1963 1,469 2,021 131 3,621 746 Flintan3 Borrgatan4 Malmö 1963 1963 246 3,031 3,277 447 Flygledaren9 Höjdrodergatan16 Malmö 1992 1992 5,616 5,616 1748 Grytan3 Industrigatan21 Malmö 1980 1980 1,298 1,100 2,398 549 Gulsippan4 Källvattengatan9 Malmö 1992 1992 735 2,662 3,397 1150 Hanö1 Borrgatan40 Malmö 1968 1974 673 519 3,888 5,080 1051 Kirseberg31:53 Strömgatan3 Malmö 1994 1994 2,318 300 22,029 24647 7652 Skjutsstallslyckan11 Lundavägen60 Malmö 1958 1962 710 2,880 3,590 453 Spillepengshagen1 Ågatan8 Malmö 1967 1972 115 1,915 2,030 454 Spillepengshagen3 Ågatan4 Malmö T 1964 1964 5,724 5,724 1255 Stenshuvud3 Borrgatan36-38 Malmö 1966 1976 3,327 590 13,441 17,358 4956 Syret13 Industrigatan31-33 Malmö 1986 1986 1,585 1,585 4

List of propertiesMALMÖ Constr. Yearof Industrial/ Residen- Taxasess.No.Propertydesignation Address Municipality T year value Office Retail warehouseHotel tial Other Garage Total value, Lettablearea,sq.m. SEKM


57 Söderarm11 Blidögatan21-27 Malmö T 1966 1991 1,869 15,574 17,443 358 Tågarp16:19 Hammarvägen3 Burlöv 1972 1977 4,316 4,316 759 Tågarp16:25 Hammarvägen17 Burlöv 1966 1976 2,192 2,192 460 Tågarp16:26 Hammarvägen19 Burlöv 1971 1977 198 2,418 2,616 461 Tågarp16:42 Företagsvägen30 Burlöv 1968 1970 418 8,772 9,190 1862 Utgrunden8 Sturkögatan8-10 Malmö T 1962 1966 10,084 10,084 1063 Vinkeln8 Arlövsvägen9 Malmö T 1969 1987 1,954 6,842 8,796 29Total industrial and warehouse properties 15,542 1 409 120,436 0 0 0 131 137,518 288 Bjärred9:1 Västanvägen Lomma 0 0 Borgeby15:14 NorraVästkustvägen Lomma 0 1 Borgeby15:37 NorraVästkustvägen75 Lomma 0 0 Borgeby15:38 N:aVästkustvägen/Tegelbruksvägen Lomma 0 0 Borgeby15:51 NorraVästkustvägen Lomma 0 0 Borgeby17:128 Löddesnäsvägen Lomma 0 0 Borgeby17:16 Löddesnäsvägen Lomma 0 0 Borgeby17:22 Löddesnäsvägen/Västanvägen Lomma 0 0 Borgeby17:24 Löddesnäsvägen Lomma 0 064 Fältsippan11 Källvattengatan6 Malmö 0 651 Spillepengsmarken6 Lundavägen146/Strömgatan3 Malmö 365 Sunnanå12:2 Staffanstorpsvägen Burlöv 0 2Total projects and land 0 0 0 0 0 0 0 0 12 ToTal sub-markeT NorTherN harbour & arlöv 41 28,714 6 686 126,533 0 0 532 152 162,618 403

sub-markeT Fosie & limhamN 66 Boplatsen3 Boplatsgatan4-8 Malmö 1980 1997 24,972 1,855 26,827 6967 Bronsdolken25 Stenyxegatan33-35 Malmö 1985 1990 480 6872 2,954 10,306 2368 Dubbelknappen15 Kantyxegatan23 Malmö 1992 1992 1,533 25 1,558 869 Hindbygården8 ÖstraHindbyvägen74 Malmö 2004 2004 1,630 1,630 1370 Revolversvarven11 Jägershillgatan20 Malmö T 1986 1986 1170 480 1,650 671 Rosengård130:403 Agnesfridsgatan113 Malmö 1989 1989 8,232 415 8,647 49Total office and retail properties 36,847 8 457 5,314 0 0 0 0 50,618 16772 Balken7 Schaktugnsgatan5 Malmö 1989 1989 618 1,202 1,820 573 Balken10 Ringugnsgatan3 Malmö 1997 1997 3,725 3,725 1374 Blocket1 Krossverksgatan12-30 Malmö 1987 1991 3,108 3,805 6,913 2575 Bronsdolken3 Stenyxegatan15 Malmö T 1986 1986 200 9,468 9,668 2176 Bronsdolken10 Stenyxegatan27 Malmö 1,278 1,278 376 Bronsdolken11 Stenyxegatan29 Malmö T 522 440 962 377 Bronsdolken18 Stenyxegatan17 Malmö T 1984 1984 1,311 1,311 478 Bronsspannen5 Trehögsgatan7 Malmö T 1972 1972 735 735 279 Bronsspannen7 Flintyxegatan1 Malmö T 1977 1977 154 1,006 1,160 380 Bronsspannen8 Flintyxegatan3-5 Malmö 1975 1975 1,067 1,067 381 Bronsspannen9 Flintyxegatan3-5 Malmö 1975 1986 1,350 775 2,125 682 Bronsspannen13 Trehögsgatan3 Malmö 1980 1980 1,765 1,765 383 Dubbelknappen23 Risyxegatan3 Malmö 2005 2005 3,400 3,400 1184 Förbygeln1 Ridspögatan1/Skrittgatan1 Malmö T 1975 1981 5,146 5,146 1185 Löplinan7 Sporregatan13 Malmö T 1978 1980 2,489 2,489 586 Mandelblomman5 Lönngatan75 Malmö 1960 1960 640 1,992 2,632 487 Muren5 Ringugnsgatan8 Malmö 1990 1990 1,593 1,593 588 Stångbettet15 Ridbanegatan6/Travbanegatan5 Malmö T 1986 1986 179 3,778 3,957 1189 Sufflören3 AxelDanielssonsväg259 Malmö 1981 1981 828 1,487 2,315 790 Trindyxan3 Bronsyxegatan9 Malmö T 1972 1975 7,275 7,275 1591 Valvet1 Krossverksgatan5 Malmö 1990 1990 2,692 725 3,417 1092 Vipan7 Odengatan34 Malmö 1970 1970 480 522 1,002 293 Vårbuketten2 Husievägen19 Malmö 1970 1992 2,699 2,699 10Total industrial and warehouse properties 10,771 0 57,683 0 0 0 0 68,454 18294 Hindbygården7 ÖstraHindbyvägen70-72 Malmö 494 Hindbygården9 ÖstraHindbyvägen70-74 Malmö 294 Hindbygården10 ÖstraHindbyvägen70-74 Malmö 195 Hällristningen5 Boplatsgatan8 Malmö 296 Vårbuketten4 Husievägen17 Malmö 0 4 Total projects and land 0 0 0 0 0 0 0 0 12Total sub-market Fosie & limhamn 34 47,618 8,457 62,997 0 0 0 0 119,072 361 ToTal malmö 111 284,367 36,545 222,817 2,947 11,981 10,768 1 822 571,247 2,460

MALMÖ Constr. Yearof Industrial/ Residen- Taxasess.No.Propertydesignation Address Municipality T year value Office Retail warehouseHotel tial Other Garage Total value, Lettablearea,sq.m. SEKM

Wihlborgs�ANNUAl�rEPorT�2006� 41

South

5

18

16

17

1613

9

11

10

8

7

6

4

1

12

3

2

2315

21

14

19

41

45

42

73

32

20

3022

23

24

33

25

2726

28

29 3134

35363738

4039

43

44

46

48

47

49

67

70

68

61

515052

55

54

56

57

5859

60

63

64

6553

6662

71

69 72

74

75

76

Berga

Planteringen

Hamn-City

Centre

WIHLBORGS PROPERTIES IN HELSINGBORG


HELSINGBORG Constr. Yearof Industrial/ Residen- Taxasess.No.Propertydesignation Address Municipality T year value Office Retail warehouseHotel tial Other Garage Total value, Lettablearea,sq.m. SEKMSub-market Centre 1 BelgienNorra19 Gasverksg23,NedreEneborgsv2Helsingborg 1965 1965 3,831 1,359 200 2,826 9,035 40 2 JohnEricsson2 Järnvägsgatan23 Helsingborg 1896 1963 610 137 119 866 5 3 Kalifornien10 Järnvägsgatan35-37 Helsingborg 1972 1972 6,002 77 6,079 38 4 KullenVästra19 Kullagatan30 Helsingborg 1890 1986 854 430 10 372 1,666 10 5 KärnanNorra21 Stortorget17 Helsingborg 1900 1960 2,293 303 75 2,671 21 6 KärnanSödra8 SödraStorgatan7 Helsingborg 1988 1988 1,707 1,707 11 7 KärnanSödra9 SödraStorgatan11-13 Helsingborg 1979 1979 1,622 1,002 1,057 2,576 6,257 32 8 MagnusStenbock7 Strömgränden3 Helsingborg 1976 1976 402 200 602 5 9 Minerva19 SödraStorgatan31 Helsingborg 1,202 1,202 010 Mollberg1 Stortorget18 Helsingborg 1885 1959 408 7,641 8,049 4711 Najaden14 Drottninggatan7-11 Helsingborg 1994 1982 11,146 1,870 314 52 13,382 10012 Polisen1 CarlKrooksg24,KonsulPerssonspl1Helsingborg 2005 2005 5,021 5,021 9913 Ruuth35 Bruksgatan25 Helsingborg 1931 1989 1,736 589 136 2,461 1814 Stattena10 StattenaCentrum1-9 Helsingborg 1975 1990 722 2,045 541 3,308 2615 Svea7 Järnvägsgatan9-11 Helsingborg 1895 1955 4,946 1,845 313 7,104 3816 Terminalen2 Kungstorget4-6 Helsingborg T 1991 1991 55 13,158 13,213 8117 Terminalen4 Järnvägsgatan18-20 Helsingborg T 1991 1991 3,478 25 3,503 2817 Terminalen5 Järnvägsgatan22-24 Helsingborg T 1991 1992 5,733 5,733 4218 Vikingen10 Mariagatan4 Helsingborg 1935 1935 381 857 603 1,841 11 total office and retail properties 51,686 11,100 735 20,799 5,367 4,013 0 93,700 65019 Iris6 Dragaregatan2 Helsingborg 1949 1970 620 743 1,341 1,234 3,938 5 total industrial and warehouse properties 620 743 1,341 0 0 1,234 0 3,938 512 Polisen3 CarlKrooksg24,KonsulPerssonspl1Helsingborg 10,104 10,104 37 total projects and land 10,104 0 0 0 0 0 0 10,104 37 total sub-market Centre 21 62,410 11,843 2,076 20,799 5,367 5,247 0 107,742 692

Sub-market SoutH Arholma4 Frösögatan7 Helsingborg 1979 1979 115 1,475 1,590 720 Brottaren17 Hästhagsvägen3 Helsingborg 2001 2001 6,729 6,729 2421 Carnot11 NorraLjunggatan3 Helsingborg 1982 1,039 1,039 022 Gymnasten4 Planteringsvägen11 Helsingborg 1961 1977 3,535 2,290 60 5,885 2423 Manövern3 Hästhagsvägen1 Helsingborg 1939 1999 240 4,739 4,979 1524 Posten1 VästraSandgatan7 Helsingborg 1973 2,830 2,688 5,518 025 Runristaren1 Rusthållsgatan43-45 Helsingborg 1996 1996 4,300 724 5,024 21 total office and retail properties 4,224 20,778 5,702 0 0 60 0 30,764 9126 Flintyxan1 Stenbrovägen40-42 Helsingborg 1979 1979 3,220 3,220 627 Flintyxan3 Stenbrovägen36-38 Helsingborg 1979 1979 3,083 3,083 528 Flintyxan5 Stenbrovägen32-34 Helsingborg 1989 1989 125 4,215 4,340 929 Gymnasten9 Kapplöpningsgatan6 Helsingborg 1962 1973 2,490 16,510 19,000 2330 Olympiaden7 Kapplöpningsgatan5 Helsingborg 1970 1970 1,009 2,528 3,537 631 Olympiaden8 Kapplöpningsgatan3 Helsingborg 1965 1965 635 5,965 6,600 1032 Orkanen5 Landskronavägen18 Helsingborg 1969 1969 636 2,514 3,150 433 Persien14 Cindersgatan13-15 Helsingborg 1977 1977 2,524 1,310 3,834 333 Persien15 Cindersgatan17-19 Helsingborg 1977 4,026 4,026 034 Planteringen1:8 VästraTallgatan32 Helsingborg 1971 1971 522 1,343 1,865 334 Planteringen1:9 VästraTallgatan32 Helsingborg 1966 1966 782 5,504 481 6,767 835 Plåtförädlingen7 Strandbadsvägen11 Helsingborg 1975 1975 1,210 1,210 336 Plåtförädlingen8 Strandbadsvägen13 Helsingborg 1986 1990 1,745 10,118 11,863 2637 Plåtförädlingen11 Strandbadsvägen19-21 Helsingborg 1980 1983 9,072 10,755 19,827 4238 Plåtförädlingen13 Strandbadsvägen17 Helsingborg 1992 2001 2,147 14,547 16,694 3739 Plåtförädlingen15 Strandbadsvägen7 Helsingborg 1997 1997 2,496 2,496 1140 Plåtförädlingen18 Strandbadsvägen9 Helsingborg 1964 1965 170 835 1,005 441 Rausgård21 Landskronavägen9 Helsingborg 1940 1984 1,925 8,691 190 10,806 2442 Sadelplatsen10 Fäktmästaregatan5 Helsingborg 1956 1956 3,260 3,260 643 Sadelplatsen13 Planteringsvägen5-9 Helsingborg 1965 1991 1,880 706 16,369 18,955 3044 Stormen13 Landskronavägen2-12 Helsingborg 1964 1970 6,004 6,004 845 Valsen1 Svanhalsgatan17 Helsingborg 1940 1965 730 3,483 315 4,528 846 ÄttehögenMellersta6 Torbornavägen22 Helsingborg 1970 1983 559 2,080 2,639 6 total industrial and warehouse properties 30,977 706 126,040 0 0 796 190 158,709 282totaL Sub-market SoutH 30 35,201 21,484 131,742 0 0 856 190 189,473 373


Sub-market berga 47 Floretten3 Garnisonsgatan25 Helsingborg 1991 1991 4,978 315 609 5,902 3348 Grustaget1 Grustagsgatan37 Helsingborg 1988 1988 4,008 4,008 1749 Huggjärnet12 Garnisonsgatan7 Helsingborg 1990 1970 4,798 700 5,498 3050 Musköten13 Muskötgatan8b Helsingborg 2001 2001 2,290 2,290 11 Nackstycket8 Tygelvägen5-7 Helsingborg 1991 0 Nackstycket9 Tygelvägen5 Helsingborg 1991 316 316 051 Värjan12 Muskötgatan12 Helsingborg 1989 1991 1,145 1,145 652 Värjan13 Muskötgatan10 Helsingborg 1968 1968 2,810 2,085 4,895 7 total office and retail properties 20,345 315 3,394 0 0 0 0 24,054 10453 Armborstet4 LillaGarnisonsgatan31 Helsingborg 1988 1988 1,380 900 455 2,735 654 Grusgropen3 Grustagsgatan22 Helsingborg 1991 1991 634 4,241 4,875 1455 Grushögen2 Makadamgatan1 Helsingborg 1997 1984 3,057 3,057 756 Grusplanen2 Blockgatan8 Helsingborg 1989 1989 1,138 1,167 2,305 657 Grustaget2 Grustagsgatan11-15 Helsingborg 1980 1991 3,981 3,981 1058 Hakebössan1 Karbingatan28-32 Helsingborg 1981 1981 1,105 3,777 4,882 1259 Hakebössan2 Karbingatan10-20 Helsingborg 1986 1978 1,903 366 7,132 9,401 2160 Hakebössan3 Karbingatan22-26 Helsingborg 1987 1984 1,339 3,986 5,325 1361 Huggjärnet13 Kastellgatan2 Helsingborg 1967 1967 454 163 3,410 4,027 862 Kniven2 Mörsaregatan17 Helsingborg 1976 1976 150 4,935 5,085 663 Kroksabeln11 Garnisonsgatan17 Helsingborg 1968 1969 701 864 6,349 7,914 1464 Kroksabeln19 Florettgatan14 Helsingborg 1966 1973 943 192 7,083 8,218 1265 Lansen1 Florettgatan15 Helsingborg 1985 1985 9,861 14,165 24,026 6266 Lansen2 Florettgatan31-39 Helsingborg 1971 1971 1,818 3,956 30 5,804 1267 Lansen3 Florettgatan7 Helsingborg T 1971 1979 1,340 1,340 668 Musköten11 Muskötgatan6 Helsingborg 1979 1979 2,920 2,920 569 Musköten12 Muskötgatan8a Helsingborg 1992 1992 1,881 1,881 470 MörsarenVästra5 Muskötgatan5 Helsingborg 1970 1970 1,701 1,701 471MörsarenVästra13 Florettgatan4 Helsingborg 1973 1973 868 3,131 3,999 872 Spjutet1 Garnisonsgatan12 Helsingborg 1980 1980 1,496 1,512 3,008 7 total industrial and warehouse properties 23,995 3,981 78,478 0 0 30 0 106,484 23873 Barrikaden3 Fyrverkaregatan Helsingborg 074 Kroksabeln20 Muskötgatan17-27 Helsingborg 1968 1969 275 Musköten9 Muskötgatan4 Helsingborg 1967 376 Snårskogen4 Ekvändan Helsingborg 1total projects & land 0 0 0 0 0 0 0 0 7

totaL Sub-market berga 32 44,340 4,296 81,872 0 0 30 0 130,538 349

HELSINGBORG Constr. Yearof Industrial/ Residen- Taxasess.No.Propertydesignation Address Municipality T year value Office Retail warehouseHotel tial Other Garage Total value, Lettablearea,sq.m. SEKM


Köpenhamn

1 32

5

4

Copenhagen

Kastrup

BallerupHerlev

Brøndby

14

10

13

16

8

12

915

711

46Skultelyckan

SKULTELYCKAN

WIHLBORGS PROPERTIES IN COPENHaGEN

WIHLBORGS PROPERTIES IN LUND


Sub-market Copenhagen 1 Borupvang5 Borupvang5D-E Ballerup 1974 10,273 10,273 0 2 Hørkær16-28 Hørkær16-28 Herlev 1984 34,220 34,220 0 3 Lautrupvang12 Lautrupvang12 Ballerup 1998 9,349 9,349 0 total office and retail properties 53,842 0 0 0 0 0 0 53,842 0 4 Abildager8-14 Abildager8-14 Bröndby 14,512 14,512 total industrial and warehouse properties 0 0 14,512 0 0 0 0 14,512 0 5 Ellekær6 Ellekær6 Herlev 5,779 5,779 0 total projects & land 5,779 0 0 0 0 0 0 5,779 0 totaL Sub-market Copenhagen 5 59,621 0 14,512 0 0 0 0 74,133 0

Sub-market LunD 6 Armaturen4 Trollebergsv1/Gasverksg1-9 Lund 1929 1969 4,958 2,300 208 7,466 49 7 Diabasen3 Skiffervägen30-86 Lund 1988 1995 2,053 108 6,086 8,247 19 8 Gråbröder34 Klostergatan14 Lund 1929 1986 1,093 1,665 2,758 39 9 Måsen17 Fjelievägen41A-C Lund 2001 2001 4,169 64 4,233 3910 Töebacken7 Bondev2/Åldermansg13/Fjeliev Lund 3,124 1,482 169 4,775 3811 Virket2 Virkesvägen3 Lund 1962 1974 321 580 879 1,780 312 Vätet1 Scheelevägen15-17 Lund 1986 2000 23,432 183 613 24,228 51 total office and retail properties 39,150 4,018 10,111 0 0 208 0 53,486 23613 Länsmannen1 Åldermansgatan2-4 Lund 1945 1984 9,080 9,080 1714 Skiffern2 Skiffervägen14 Lund 1982 1982 2,910 2,910 5 total industrial and warehouse properties 0 0 11,990 0 0 0 0 11,990 2215 Måsen16 Starvägen9,11 Lund 1956 1956 2,077 662 178 2,917 916 Postterminalen1 Fabriksgatan1 Lund 1984 1,348 1,348 0 total projects and land 3,425 662 178 0 0 0 0 4,265 9

totaL Sub-market LunD 11 42,575 4,680 22,279 0 0 208 0 69,741 268

other areaS StGeorgSüd Lippeltstr.1 Hamburg 1966 8,107 8,107 0 total office and retail properties 8,107 0 0 0 0 0 0 8,107 0 Korreboda5:1 S:tOlof Simrishamn 1929 1994 8,870 8,870 5 total industrial and warehouse properties 0 0 8,870 0 0 0 0 8,870 5 Bilrutan5 Kamgatan Landskrona 0 2 Pedalen16 Rattgatan48 Landskrona 0 Pedalen20 Rattgatan48 Landskrona 0 Strålkastaren3 Rattgatan41 Landskrona 0 Strålkastaren4 Rattgatan43 Landskrona 0 Svedala122:85 Verkstadsgatan11 Svedala 1 Örja19:12 Rattgatan55 Landskrona 0 total projects and land 0 0 0 0 0 0 0 0 4 totaL other areaS 9 8,107 0 8,870 0 0 0 0 16,977 9 totaL reSt oF the ÖreSunD regIon 25 110,303 4,680 45,661 0 0 208 0 160,851 277

totaL WIhLborgS 219 536,621 78,848 484,168 23,746 17,348 17,109 20,12 1 159,851 4,150

REST OF THE öRESund REgiOn Constr. Yearof Industrial/ Residen- Taxasess.No.Propertydesignation Address Municipality T year value Office Retail warehouseHotel tial Other Garage Total value, Lettablearea,sq.m. SEKM


Risk factors

Wihlborgs’ activities, financial position and profit are affected by a number of risk factors. The risks that represent a decisive impact on the company’s profit growth are variations in lease income, changes in rates of interest, growth in costs, property values and taxes.

Lease income and growth in lease activitiesSupply and demand determine the growth in lease activities for commercial premi-ses. The demand for Wihlborgs’ commercial properties is influenced by general changes in the business climate and the respective location’s growth with regard to population and employment. The range of premises available on a market compri-ses an existing area as well as any possible additional, newly-produced areas. Wihl-borgs operates in a growth region and this limits risks over time. The lease level for leased premises with agreement periods longer than three years is normally linked to the consumer price index. Approximately 80 per cent of Wihlborgs’ property portfolio is subject to price adjustment at the end of each year on the basis of the consumer price index.

Leasing volumeThe leasing volume of Wihlborgs’ portfolio is primarily the result of the company’s own endeavours. Business cycle factors and structural changes also have an impact on Wihlborgs’ leasing volume.

Operating and maintenance costs, property taxMajor cost items within operations are made up of assessment-related costs such as those for heating electricity, water and waste collection. In many cases, Wihlborgs is dependent on a local supplier, often owned by a local authority, for water, district hea-ting and waste collection. Lease properties are also subject to a national property tax that amounts to 1.0 per cent of the rateable value of premises lease properties and 0.5 per cent for housing and industrial properties. The tax is calculated on the basis of the property’s rateable value. The property tax is usually passed on to the tenants.

Realised and unrealised value changesThe potential for realising future profits on disposal of properties depends on Wihl-borgs’ own capacity to enhance the properties’ market value through changing and upgrading properties, agreement structures, customer structures etc and external

factors that affect demand and supply in Wihlborgs’ property markets. Nor-mally an increase in the interest rate results in lower demand and thus falling property prices. Conversely a fall in interest rates can result in rising property prices.

Profit/loss effect, SEK million� +�-��1�%rentals� �+�-10Vacancies� �+�-11Property�expenses� �+�-�3interest�expenses� �+�-51


Other factors that are significant to the growth of property prices are the property market’s assessment of future risks and opportunities including expectations of futu-re lease growth, value increase, borrowing potential etc. An elevated rate of interest, which can have a negative effect on property prices, can result in expectations of a growth in leases as a consequence of improved growth potential and rising inflation. Expectations of an increase in lease growth can therefore wholly or partly neutralise the effects of a rising interest rate.

FinancingFor information on policy issues and risk management concerning financial questions see the section entitled “Financial instruments and financial risk management” on page 62.

WIHLBORGS TaX SITUaTIONIn the balance sheet dated 31 December 2006, the audited value of properties is sta-ted as SEK 10,888m. The audited value exceeds the value of properties in the group for tax purposes. This means that there was a deferred tax liability on properties as at 31 December 2006 of SEK 845m. This corresponds to 28 per cent of the differen-ce between the audited value and the value for tax purposes of the properties. According to the balance sheet there was also a deferred tax liability of SEK 10m related to untaxed reserves. Wihlborgs shows deferred prepaid taxes of SEK 10m for the group’s property holdings in Denmark. Wihlborgs makes a maximum annual depreciation for tax purposes of 2–5 per cent of the buildings’ acquisition values depending on the type of building. This means that the groups actual tax cost is reduced by a tax credit received. Corresponding amounts in the accounting records will be included as a deferred tax cost. Through a redistribution of the depreciation basis, property investments from buildings to building inventories for tax purposes, the current tax has been defer-red. In addition to depreciation for tax purposes, the company has used the option to make direct deductions for certain investments.

Deficit deduction for tax purposesThe total deficit deductions amount to SEK 467m (207m). This is taken into account when calculating deferred tax. SEK 335m of the deficit deductions are blocked until the year 2012. The balance sheet shows prepaid taxes of SEK 10m for Denmark. Other- wise, offset has been applied to deferred prepaid taxes and liabilities. In the tax cal-culation for 2006, SEK 154m has been used in the deficit deduction.


administration Report

The Board of Directors and Chief Executive Officer of Wihlborgs Fastigheter AB (publ), company registration number 556367–0230, hereby present their annual report for the Group and parent company in 2006.

The businessWihlborgs is a property company focusing on the Öresund region. The company’s property portfolio comprises commercial properties in Malmö, Helsingborg, Lund and Copenhagen. The total rental value was SEK 1,079m and the annual contractual rental income was SEK 987m. The financial occupancy rate was 92 per cent. Our properties in Malmö and Helsingborg accounted for 86 per cent of the total rental value and 84 per cent of the book value of the properties. Wihlborgs’ office and retail properties accounted for 70 per cent of the total rental value, and industrial and warehouse properties for 28 per cent.

ResultsThe profit after tax was SEK 850m (470m). Earnings per share was SEK 22.12 (12.33)1. The rental income was SEK 909m (736m) and net operating income increased to SEK 627m (497m). Operating income increased to SEK 1,238m (798m), including gains from property sales of SEK 10m (9m) and changes in the value of properties of SEK 629m (318m). Net financial items was negative, SEK -174m (-149m).

Cash flow and financial positionShareholders’ equity was SEK 3,667m (2,842m) and the equity/assets ratio 32.7 per cent (34.8%). Return on equity was 26.6 per cent (18.2%). Cashflow from current activities produced a surplus of SEK 394m (414m). As a consequence of a major investment volume, investment activities generated a negati-ve cashflow of SEK 2,053m. Long-term liabilities increased by SEK 1,790m and the dividend paid to shareholders amounted to SEK 134m. Overall this has resulted in liquid assets decreasing by SEK 3m which, together with the opening balance of liquid assets of SEK 89m, resulted in liquid assets at the end of the year amounting to SEK 86m. The group’s liquid assets including unused bank overdraft facilities at 31 December amounted to SEK 179m (164m).Interest-bearing liabilities at year-end was SEK 6,448m (4,388m) with an average interest rate of 3.66 per cent excluding committed lines of credit and 3.69 per cent including the cost of committed lines of credit. Out of total volume of short-term loans of SEK 6,137m, loans of SEK 1,000m were extended through an interest rate swap with a term of 10 years (see below). At year-end, the average fixed-rate term for the loans, including the effects of utilised derivate instruments, was 17 months (15). The average maturity of loans, including committed lines of credit, was 4.4 years (4.8).

Sales and acquisitions of propertiesIn 2006, Wihlborgs acquired 45 properties for a total consideration of SEK 3,529m. The acquisition total includes Tornet’s Malmö holdings of fourteen properties (SEK 2,170m) and the Ideon property in Lund 8 (SEK 420m). Four properties were aquired in Helsingborg from GE Capital (SEK 350m). 17 properties were sold for a total price of SEK 1,560m. The proceeds exceeded

1.�sEK�24,66�before�split.


the carrying amount by SEK 10m. The property Caroli City was sold for SEK 1,019m to two buyers after a three-dimensional property foundation.

Changes in valueMalmöbryggan Fastighetsekonomi AB and Savills Sweden AB have valued all of Wihlborgs’ properties in Sweden. The value of each property is assessed individually to correspond to its market value. Our Danish properties have been valued by DTZ, and the one remaining property, in Hamburg, has been valued by Colliers Property Partners. Changes in value amounts in all to SEK 629m (318m).

Investments in existing properties and current projects In 2006, Wihlborgs invested SEK 427m in its existing portfolio. Out of this amount, SEK 280m was invested in Malmö. Major projects include Dockporten 1 an invest-ment made for Teleca with SEK 101m, acquisition of nine site leasehold rights SEK 44m and re-building of the hotel situated near Slagthuset with SEK 9m. SEK 66m was invested in Helsingborg, where major projects included the re-buil-ding of Svea 7, SEK 26m. In the rest of the Öresund region Wihlborgs invested SEK 81m, of which SEK 35m refers to tenants improvements in Hörkaer, a property in Copenhagen. The sum for investments also includes the freehold purchase of land for Wihlborgs’ remaining property in Hamburg, Lippelstr. 1. Confirmed investments in current projects total SEK 413m, of which SEK 165m was invested as at 31 December 2006. The biggest current projects are Teleca in Malmö(Dockporten), and the rebuilding project for Kunskapsskolan in Båghallarna. Both situated at Dockan in Malmö.

Parent companyThe profit after tax in the parent company amounted to SEK 500m (77m). The parent company provides mostly intra-group services. Turnover amounted to SEK 70m (61m). The parent company has invested SEK 1,765m (117m) in subsidiaries.

Corporate Governance ReportA separate Corporate Governance Report is presented on pages 70–77.

IFRS accountingWihlborgs’ accounting principles and calculation methods conform with IFRS, as adopted by the EU, which also include applicable IFRIC/SIC interpretations.

Events after the end of the financial yearWihlborgs has entered into an agreement with the school Kunskapsskolan concerning rental of 2,800 sq.m. in Båghallarna, which is located in the Dockan area of Malmö. As a result of this agreement, Wihlborgs will invest SEK 57m in the property.Wihlborgs aquired Flygvärdinnan 5 (3,300 sq.m.) at the Bulltofta industrial estate in Malmö. The completion date is during the first quarter of 2007.

EnvironmentThe extent of Wihlborgs’ activities that are subject to the permit and notification requirements contained in Section 6 of Chapter 9 of the Environmental Code are very limited and normal for the industry. Read more about Wihlborgs’ environment work on pages 10–11.


Prospects for 2007There is continued strong demand on Wihlborgs’ various markets in the Öresund region. Growth is expected to remain positive in the Öresund region. During the year new projects in the Dockan area are expected to come to fruition. Wihlborgs also expects higher interest costs than in 2006. This criterion can be bridged through a greater business volume in 2007. Despite major acquisitions in 2006 Wihl-borgs has a strong position. This can be exploited for new acquisitions or projects during the year.

Proposed allocation of profits The AGM is asked to decide on the allocation of the following amounts in the parent company: Unrestricted reserves 1,008,240,395Profit for the year 500,237,821Total 1,508,478,216

The Board of Directors and Chief Executive Officer propose that the amount be allocated as follows:Dividend to the shareholders SEK 5.50 per share 211,356,002Carried forward 1,297,122,214Total 1,508,478,216

Statement of the Board of Directors on the proposed dividend GroundsThe Group’s equity has been calculated in accordance with the EU–approved IFRS standards, the interpretation of these (IFRIC) and Swedish law through the applica-tion of Recommendation RR30 of the Swedish Financial Accounting Standards Council (Supplementary Accounting Rules for Corporate Groups). Parent company equity has been calculated in accordance with Swedish law and Recommendation RR32 of the Swedish Financial Accounting Standards Council (Accounting for Legal Entities). The proposed dividend is based on 50 per cent of Wihlborgs’ income from pro-perty management and 50 per cent of realised gains from property sales less estima-ted tax at 28 per cent, which is exactly in line with Wihlborgs’ dividend policy.The Directors do not believe the proposed dividend will affect the company’s future business opportunities. The dividend does not conflict with the company’s financial objectives. Wihlborgs’ estimated equity/assets ratio after the proposed dividend is 30.8 per cent. The company’s liquidity, including credit, is more than adequate to support the proposed dividend.


Income statements

Rental income 4 909 736 - -Property expenses 5 -282 -239 - -Net operating income 627 497 0 0

Central administration and marketing 6,7 -28 -26 -14 -11Gain/loss from sale of properties 8 10 9 - -Change in value of properties 9 629 318 - -Other operating income 10 - - 70 61Other operating expenses 10 - - -70 -61Operating profit 1,238 798 -14 -11

Profit/loss from interests in Group companies 11 - - 488 76Profit/loss from interests in joint ventures 12 7 1 - -3Profit/loss from other securities and assets that are fixed assets 13 3 6 212 112Other interest income 7 8 2 42Interest expenses and similar items 14 -187 -168 -179 -137Change in value derivatives 15 -4 4 -4 -Profit after financial items 1,064 649 505 79

Tax on the profit for the year 16 -214 -179 -5 -2Profit/loss after tax 850 470 500 77

Attributable to parent company’s shareholders 850 470Attributable to minority shares - -

Data per share (there is no dilution effect, as there are no potential shares).Earnings per share, SEK 22,12 12,33Dividend per share (2006, proposed dividend) 5,5 3,5No. of shares at the end of period, million 38,4 38,4Average no. of shares, million 38,4 38,1

–––––Group –––––––Parentcompany––SEKmillions Note 2006 2005 2006 2005 1-3


Balance sheet

Fixed assetsProperties 17Investment properties 18 10,707 7,832 - -Project properties 19 181 58 - -Total properties 10,888 7,890 0 0

Equipment 20 8 7 3 4Total tangible fixed assets 10,896 7,897 3 4

Financial fixed assetsInterests in Group companies 21 - - 1,690 972Receivables from Group companies - - 8,614 4,313Interests in joint ventures 22 60 53 52 52Other long-term securities holdings 23 10 10 10 10Deferred tax asset 24 10 18 - -Other long-term receivables 25 42 60 - 12Total financial fixed assets 122 141 10,366 5,359

Total fixed assets 11,018 8,038 10,369 5,363

Current assets

Current receivablesTrade debtors 23 7 - 1Other receivables 86 26 1 6Prepayments and accrued income 26 8 13 1,320 1Total current receivables 117 46 1,321 8

Cash and bank balances 27 86 89 67 80Total current assets 203 135 1,388 88

TOTAL ASSETS 11,221 8,173 11,757 5,451

–––––Group –––––––Parentcompany––SEKmillions Note 2006 2005 2006 2005Assets


Shareholders’ equity 28 Share capital 192 192 192 192Other contributed capital 2,178 2,178 - -Reserves 4 15 - - Total restricted equity in parent company 192 192Profit brought forward 1,173 457 1,009 1,080 Profit for the year in parent company 500 77 Total unrestricted equity in parent company 1,509 1,157Minority Share 120 -Total equity 3,667 2,842 1,701 1,349

Long-term liabilitiesNon-interest-bearing liabilitiesDeferred tax liability 29 734 633 - -Other long-term liabilities 30 38 40 - -Interest-bearing liabilitiesOverdraft facility 31 - 22 - -Liabilities to credit institutions 32 6,448 4,366 5,536 3,638Loans from Group companies - - 4,493 434Total long-term liabilities 7,220 5,061 10,029 4,072

Current liabilities Non-interest-bearing liabilitiesTrade creditors 73 47 3 2Tax liabilities 15 4 - -Other liabilities 57 44 7 3Accruals and deferred income 33 189 175 17 25Total current liabilities 334 270 27 30

TOTAL EQUITY AND LIABILITIES 11,221 8,173 11,757 5,451

Commitments and contingent liabilities 34

–––––Group –––––––Parentcompany––SEKmillions Note 2006 2005 2006 2005Equity and liabilities


Changes in equity

Equity 31 December 2004 0 2 310 10 0 2,320 0 2,320

Effect of change of accounting principles – derivatives (IAS 39) - - - -13 -13 - -13Exchange rate differences - - 5 - 5 - 5Shareholder contributions - 55 - - 55 - 55New issue 192 -187 - - 5 - 5Profit for the year - - - 470 470 - 470Equity 31 December 2005 192 2,178 15 457 2,842 0 2,842

Dividends paid - - - -134 -134 - -134Minority share in the acquisition of subsidiaries - - - - 0 120 120Exchange rate differences - - -11 - -11 - -11Profit for the year - - - 850 850 - 850Equity 31 December 2006 192 2,178 4 1,173 3,547 120 3,667

Share Othercontri- Profitbrought Totalt Minority TotalSEKmillions Note capital butedcapital Reserves forward equity share equity

Group 28 attributabletotheparentcompany’sshareholders

Equity 31 December 2004 0 187 1,030 1,217 Shareholder contributions - - 55 55New issue 192 -187 - 5Group contributions made - - -7 -7 Tax on Group contributions - - 2 2 Profit for the year - - 77 77Equity 31 December 2005 192 0 1,157 1,349

Effect of change of accounting principle – derivatives (IAS 39) - - -10 -10Dividends paid - - -134 -134Group contributions made - - -6 -6Tax on Group contributions - - 2 2Profit for the year - - 500 500Equity 31 December 2006 192 0 1,509 1,701

Share Restricted Unrestricted TotalSEKmillions Note capital reserves equity equity

Parent company 28


Cash flow statement

Net operating income 1,238 798 -14 -11Adjustments made for records excluded in the cash flow 35 -638 -326 1 1Interest received and dividend 11 15 292 227Interest paid -199 -160 -203 -122Income tax paid 1 -2 - -Cash flow before change in operating capital 413 325 76 95

Change in operating capitalCurrent receivables -51 -16 7 -8Current liabilities 32 105 4 15Total change in operating capital 36 -19 89 11 7Cash flow from operations 394 414 87 102

Investing activitiesInvestments and acquisition of properties -1,028 -414 - -Sale of properties 164 149 - -Acquisition of interests in Group companies 37 -2,642 -122 -1,765 -117Sale of interests in Group companies 38 1,374 158 137 -Acquisition of interests in other companies - -10 - -10Other tangible fixed assets - -1 - -1Other financial fixed assets 79 346 -4,289 -635Cash flow from investing activities -2,053 106 -5,917 -763

Financing activitiesNew issue - 5 - 5Shareholder contributions - 55 - 55Dividends paid -134 - -134 -Change in long-term liabilities 1,790 -527 5,957 677Group contributions - - -6 -7Cash flow from financing activities 1,656 -467 5,817 730

Change in cash and cash equivalents -3 53 -13 69Cash and cash equivalents at beginning of period 89 36 80 11Cash and cash equivalents at end of period 27 86 89 67 80

–––––Group –––––––Parentcompany––SEKmillions Note 2006 2005 2006 2005

Operations


Accounting principles

n GeneralThe consolidated financial statements and annual report of Wihlborgs Fastigheter AB (the parent company) for the financial year 2006 have been approved by the Board of Directors and Chief Executive Officer for publication on 20 March 2007 and will be presented to the Annual General Meeting for final approval on 26 April. The parent company is a Swedish limited-liability company (publ) with registered office in Malmö. Wihlborgs’ applies the IFRS and the interpretation of these (IFRIC), adopted by the European Union. The consolidated financial statements have also been prepared in accordance with Recommendation RR30:05 of the Swedish Financial Accounting Standards Council (Supplementary Accounting Rules for Cor-porate Groups). The annual accounts of the parent company have been prepared in accordance with the Swedish Annual Accounts Act and Recommendation RR32:05 of the Swedish Financial Accounting Standards Council (Accounting for Legal Entities). Up to 29 December 2004, Wihlborgs was a dormant company, with no subsidiaries.

Forthcoming IFRS-standards and interpretationsEU:s Accounting Regulatory Committee, ARC, have decided to recommend the European Commission to accept IFRS 8 Operating segments, IFRIC 10 Interim Financial Reporting and Impairment and IFRIC 11 Group and Treasury Share Transactions. Before a final decision in March, IFRIC 12 ARC had an opening discussion of IFRIC 12 Service Concession Arrangements. Disclosures have been accepted earlier regarding IFRS 7 Financial Instruments. These new IFRS-standards and interpretations will probably not give any direct effects on future financial reports unless admitting further additional information.

Use of estimatesIn preparing the financial statements in accordance with generally accepted accounting principles, the company’s management and Board need to make esti-mates and assumptions which affect the reported balance sheet items and income and expense items as well as other reported information. These estimates are based on experience and on assumptions that the management and Board believe to be reasonable under present circumstances. The conclusions that are drawn from the basis for determining the carrying amounts of assets and liabilities in cases where these amounts cannot readily be determined on the basis of information from oth-er sources. Actual figures may differ from these estimates if other assumptions are made or other conditions are present. The financial statements are sensitive to the estimates and assumptions used for the valuation of investment properties. For more information about valuation basis and valuation methods see pages 36–37. Consolidated financial statementsThe consolidated financial statements comprise the parent company Wihlborgs and all companies in which the parent company directly or indirectly owns more than 50 per cent of the votes or in other ways exercises a controlling influence. The consolidated financial statements are based on accounting documents drawn up for all Group companies as at 31 December and have been prepared in accord-ance with the acquisition method. However, in this Group the Group companies that were acquired in December 2004 have been carried at the amounts reported


in the Fabege Group under the joint verification rules. In the consolidated profit and loss account acquired or divested companies have been recognised only to the extent corresponding to the period of ownership. Internal sales and transactions and profits and losses within the Group have been eliminated in the consolidated financial statements. Acquisition of properties via companiesA company acquisition can be considered either an asset acquisition or an operat-ing acquisition. A company acquisition, whose primary purpose is to gain access to the purchased company’s properties and where the company’s management organi-sation and administration are of subordinate importance for the execution of the acquisition, is normally treated as an asset acquisition. A company acquisition where the purchased company’s management organisation and administration are of great significance to the acquisition’s execution and evaluation is treated instead as an operating acquisition. In the case of an asset acquisition, there is no account of the deferred tax on the properties’ surplus value and any discount referred to the deferred tax reduces the property value instead. When assessing market values after the time of acquisition, the property value is adjusted by the discount received. In the case of an operating acquisition, the deferred tax is recorded at a nominal rate of 28 per cent on the properties’ surplus value and any temporary differences are referred to the acquired assets or liabilities. The company acquisitions that took place after the group’s formation have been treated as asset acquisitions.

Translation of foreign operationsThe functional currency of the Group’s foreign operations is the currency in which the respective Group units conduct their business activities. The Group’s financial reports are presented in Swedish kronor (SEK), which is the reporting currency of the parent company. Profit and loss accounts and balance sheets for foreign opera-tions are translated into SEK according to the current exchange rate method, which means that balance sheets are translated at the exchange rate applying on the bal-ance sheet date, except in the case of equity, which is translated at the historical exchange rate. Profit and loss accounts are translated at the average exchange rate for the period. The resulting translation difference is recognised directly in equity.

Joint Ventures Companies in which Wihlborgs has a long-term ownership commitment and exercises a controlling influence together with one or several business partners are reported in the consolidated profit and loss accounts and balance sheets according to the equity method. The income statement item resulting from participations in joint ventures shows Wihlborgs’ annual proportion of the result and, in relevant cases, the result from the sale of participations in joint ventures. The value of the participations is adjusted in the balance sheet according to the proportion of the profit and with any dividends. Adjust- ments are made to the financial statement and the balance sheet for any internal profits and write-downs. Accounts


that refer to joint ventures are based on the latest annual accounts for the respec-tive company(ies) adjusted for any deviations in the accounting principles and by an assessed adjustment for events and transactions up to the Wihlborgs group’s end of accounting period.

Transactions in foreign currencies Transactions in foreign currencies are translated into Swedish kronor at the exchange rate applying on the transaction date. Monetary assets and liabilities in foreign cur-rencies are translated at the exchange rate applying on the balance sheet date, and the resulting exchange rate differences are reported in the profit and loss account. Exchange rate differences relating to operating receivables and liabilities are reported in operating profit/loss, while exchange rate differences relating to finan-cial assets and liabilities are reported in result from financial investments.

IncomeRental income from the company’s property management activities is recognised in the profit and loss account in the period to which it refers. In cases where a tenant is offered a discounted rent for a certain period and pays a higher rent at other times, accruals are made for the resulting deficit or surplus during the term of the contract unless the rental discount was due to gradual occupation or a similar circum-stance. Income attributable to early redemption of rental agreements is recognised as income immediately unless there are outstanding obligations towards the tenant. Income from property sales are reported when the essential risks and benefits, related to the ownership of the properties, have been transferred to the buyer and when its likely that the financial benefits related to the sale accrues to Wihlborgs, normally this means the accounting is made upon the date of possession. Interest income is recognised in the period to which it refers. Dividends on sha-res are recognised in the period in which the right to receive payment is deemed to be secure.

Expenses The term property expenses include all expenses relating to the let properties. This includes direct property expenses such as operating and maintenance expenses, ground rents and property tax, as well as indirect property expenses such as expen-ses for letting and property administration. The term central administration includes expenses for Group management, expenses attributable to the public nature of the company and other expenses con-nected with the company form, including central advertising and other marketing.

Leasing Rental agreements relating to investment properties are classified as operational leases. These agreements are reported in accordance with the principles for report-ing of income describe above. There are also a number of relatively small leasing contracts in which Wihlborgs is the lessee. These leasing contracts, which primarily relate to cars, are reported as operational leases.

Compensation to employeesCompensation to employees in the form of salaries, holiday pay, paid sick leave, etc. is recognised as it is earned. Pensions and other compensation paid after termina-tion of employment are classified as defined contribution or defined benefit schemes.


Commitments relating to defined contribution schemes are met through premiums paid to the government agencies or companies that administrate the schemes. A number of Wihlborgs employees have ITP occupational pension schemes which involve regular payments to Alecta. Under IFRS these are classified as defined benefit schemes involving several employers. As there is not sufficient information to report these as defined benefit schemes, they have been reported as defined contribution schemes.

Income tax The tax on profit for the year includes current and deferred income tax for Swedish and foreign Group units. Current tax is based on the taxable profit for the year, which differs from the reported profit in that it has been adjusted for non-taxable income, non-deductible expenses and changes in temporary differences between the carrying amounts and tax bases of assets and liabilities. The Group’s current tax has been calculated on the basis of tax rates apply-ing on the balance sheet date. Deferred tax is calculated using the balance sheet lia-bility method. Under this method deferred tax liabilities and assets are recognised for all temporary differences between the carrying amounts and tax bases of assets and liabilities and for all tax deductions and loss carry-forwards. Deferred tax liabili-ties and tax assets are calculated using the expected tax rates at the time of reversal of the temporary difference. Deferred tax assets are reduced to the extent that it is unlikely that it will be possible to realise the underlying tax asset within the foreseeable future. In the case of asset acquisitions no deferred tax on consolidated goodwill and neg-ative goodwill is recognised initially for the acquired assets and liabilities. Deferred tax is recognised at the nominal current tax rate with no discount. Deferred tax assets and deferred tax liabilities are eliminated if they refer to income taxes payable to the same tax authority and if the Group is able to settle the tax by payment of the net amount. Both current and deferred tax is recognised in the profit and loss account as income or expense, except where the underlying transaction is credited or charged directly to equity. In such cases the tax is also recognised directly in equity.

Appropriations and untaxed reserves Tax laws in Sweden and certain other jurisdictions allow for the deferral of tax pay-ments through provisions to untaxed reserves in the balance sheet via the income and expense item appropriations. The legal rules on depreciation allow for deprecia-tion in excess of straight-line depreciation. Appropriations and untaxed reserves are not reported in the consolidated financial statements, however. In the consolidated balance sheet untaxed reserves have been divided into deferred tax liabilities and equity. Thereafter, equity is eliminated so that only equity earned after the time of acquisition remains. In the consolidated profit and loss account provisions to or elimination of untaxed reserves is divided into deferred tax and profit for the year.

PropertiesAll fully developed properties in the Group are classified as investment properties, as they are held for the purpose of earning rental income or for capital appreciation or a combination of the two. Investment properties are recognised at fair value in the balance sheet, in accordance with IAS 40. The change in value is recognised in


the profit and loss account and is included in operating profit/loss. The Group’s properties are reported as fixed assets in the balance sheet. As the properties are recognised at fair value, depreciation is no longer reported in the consolidatedfinancial statements. Investment properties are valued on a quarterly basis accord-ing to an internal valuation model. At year-end, the properties are valued by external values. The valuation model used is based on long-term valuations of returns using the present value of future payments with differentiated required rates of return for each property depending on location, use, condition, standard and other factors. Wihlborgs has one property which is classified as a project property and which has therefore been stated at accumulated acquisition value. Notes 17–19 describe the car-rying amounts of the property portfolio and the way in which it has been divided.

Definition of segments Wihlborgs’ primary segments are three geographical market areas: Malmö, Helsing-borg and the Rest of the Öresund region. The property portfolio is also divided into secondary segments by property category: office/retail and industrial/warehouse. Office/retail differs from industrial/warehouse in that the percentage yield is lower and the change in value is higher in percentage terms.

EquipmentAssets are recognised in the balance sheet at accumulated acquisition value less accumulated straight-line depreciation and impairment. The assets are written off at 20 per cent of acquisition value per year.


Breakdown into shareholders equity In the consolidated financial statements shareholders equity is divided into share cap-ital, other contributed capital, reserves and profit brought forward. In the consolidat-ed financial statements no breakdown into unrestricted and restricted equity is made in the balance sheet, unlike in the parent company, where such a breakdown is made in accordance with the Annual Accounts Act. Dividends to the shareholders are limited to an amount that allows for full provision to be made for restricted equity in the par-ent company after payment of the dividend. Moreover, a dividend may only be paid if the dividend is justifiable in view of the equity requirements arising from the nature, scope and risks associated with the business and the consolidation needs, liquidity and position of the company and Group.

Financial instruments Financial assets and liabilities are recognised in the balance sheet when the company becomes a party to the commercial terms and conditions of the instrument. A finan-cial asset is removed from the balance sheet when the rights inherent in the agree-ment are realised, expire or if the company loses control over them. A financial lia-bility is removed from the balance sheet when the obligation arising from the agree-ment has been met or ceased for other reasons. Financial instruments are recog-nised either at acquisition value or fair value, depending on the categorisation under IAS 39.

Long-term receivablesLong-term receivables primarily refer to promissory note loans made in connection with the sale of properties or companies. It is intended that these promissory notes will be held to maturity. The notes have been valued at acquisition value. If the interest terms attached to the promissory note loans differ from market terms, the acquisition value will differ from the nominal value.

Trade debtors Trade debtors have been valued at acquisition value. The value of each trade debtor is determined individually and only those amounts that are expected to be received are recognised in the balance sheet.

LoansLoans have been recognised at acquisition value.

DerivativesWihlborgs’ derivatives are categorised as financial assets/liabilities that are held for trading purposes and have been recognised at fair value. Any change in value is recognised in the profit and loss account. Fair value is determined on the basis of official prices on the closing date. In the parent company derivatives have been recognised at acquisition value.

Trade creditorsTrade creditors have been valued at accrued acquisition value.


NoTE 1 – EMPLoYEES AND SALARY EXPENSES, ETC.

of which of whichAverage no. of employees 2006 men 2005 menParent company 53 35 46 30subsidiaries 25 18 25 19Group, total 78 53 71 49

Salaries, other compensation and social-security contributions Salaries Social- Salaries Social- and other security and others security compens. contributions compens contributions 2006 2006 2005 2005Parent company 25 13 21 11 of which pension expenses 4 3subsidiaries 12 5 9 4 of which pension expenses 2 1Group, total 37 18 30 15 of which pension expenses, total 6 4

Sick leave 2006 2005Total sick leave as a percentage of total ordinary 3,53 1,30working time of which, share of long-term sick leave (continuous leave of 60 days or more) 58,11 -sick leave, women 5,85 1,82sick leave, men 2,34 1,05sick leave, employees <30 years 2,85 0,80sick leave, employees 30–49 years 2,54 1,02sick leave, employees >49 years 4,36 1,55

Breakdown by sex and senior executives Board of Senior Directors executives 2006 2005 2006 2005Men 6 7 3 3Woman 1 1 2 2Total 7 8 5 5

Compensation of senior executivesPrinciplesThe Chairman and other Directors are paid a total fee of sEK 750,000 in accordance with the decision of the AgM. Compensation of the Chief Executive officer and other senior executives comprises basic salary, other benefits and pension. other senior executives refers to the Finance Director, Property Director, Public relations Director and Executive Assistant to the CEo, who along with the CEo comprised group management in 2006. For the current composition of group management, see page 74. No variable or share-related compensation is paid to group management. Wihlborgs has a profit-sharing foundation that covers all employees of the Company except the CEo. This means that all employees, except the CEo, receive shares in Wihlborgs based on the profit for the year.

Compensation and other benefits in 2005, SEK ‘000 Basic Variable Other salary/fee Compens. benefits Pension TotalChairman of the board 200 - - - 200Chief Executive officer 1,841 - - 635 2,476other senior executives 3,021 - 161 990 4,172

other benefits refer to company cars.

Pension expenses refer to the expense recognised in the profit and loss account for the year. The retirement age for the Chief Executive officer is 65 years. Expenses relating to the Chief Executive officer’s pension refers to a premium of 35 per cent of the CEo’s pensionable salary dur-ing his period of employment. For other senior executives the iTP occupational pension plan applies and the retirement age is 65 years.

Severance payA mutual period of notice of six months applies for the Chief Executive officer. in case of termination by Wihlborgs the CEo is entitled to sev-erance pay equivalent to 18 months’ salary. severance pay is off-set by other income. No severance pay is due in case of termina-tion by the CEo.

A mutual notice period of two to six months applies between the company and other senior executives. in case of termination by the company the senior executive is entitled to severance pay of up to 18 months’ salary. severance pay is offset by other income. No severance pay is due in case of termination by the senior executive.

Basis of preparationThe compensation of the Chief Executive officer for the financial year 2005 was decided by the board of Directors. The compensa-tion of other senior executives was decided by the CEo.

The following fees have been paid to the company’s auditors:

Fees and expenses, SEK ‘000 Group Parent company 2006 2005 2006 2005Deloitte Ab audit assignments1 1,450 1,050 1,450 1,050other assignments 1,059 371 1,059 371Aaen & Co statsauktoriserade revisorer A/s 186 100 - -Ernst & Young audit assignments 59 - - -Ernst & Young other assignments 84 - 84 -

1) Audit assignments refers to the examination of the annual report and accounting records and of the board of Directors and CEo’s management of the company, other tasks incumbent upon the company’s auditor as well as advice and other assistance occasioned by observations made in the course of such examina-tions or the carrying-out of such other tasks. All other work is classified as other assignments.

NoTE 2 – FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Financial policy Wihlborgs’ financial activities are guided by the financial policy adopted annually by the board. The financial policy lays down a set of general rules for how Wihlborgs’ finance function should be managed and how the risks in the company’s financial activities should be limited. The finance function is a group function with responsibility for the group’s financing, liquidity planning and man-agement of financial risks. The overall objectives of the finance function are to:- secure Wihlborgs’ short- and long-term capital requirements.- optimize net financial items in view of current risk limits.- Adapt the company’s financing on the basis of Wihlborgs’ activi-- ties for the purpose of achieving and maintaining a stable long- term capital structure.

Management of financial risksLiquidity and borrowing riskliquidity and borrowing risk refers to the risk that the company will be unable to meet its payment obligations as a result of insufficient liquidity or difficulties in obtaining new loans. The objective is to ensure that Wihlborgs is always able to conclude transactions when an opportunity arises and meet its obligations. liquidity risk is managed by ensuring that Wihlborgs has access to credit lines or cash and cash equivalents that can be used at short notice. borrowing risk is the risk that finance will be una-vailable or obtainable only at highly un-favorable terms at a cer-tain time. To limit the borrowing risk, Wihlborgs strives to use credit facil-ities with long maturities as well as a broad pool of creditors. Through long-term committed lines of credit, Wihlborgs has secured access to finance. Wihlborgs’ total available credit is sEK 7,112m, of which sEK 6,444m had been drawn on 31 December 2006.

Interest riskinterest risk refers to the risk that the company’s results or cash flow will be affected by a change in market interest rates. interest expenses are the single largest expense item for Wihlborgs. how much and how fast a change in interest rates affects the results depends on the chosen fixed-rate term. increases in interest rates are often prompted by higher inflation. in commercial rental agreements rents are normally index-adjusted in line with rising inflation. This means that Wihlborgs can benefit from higher rents when interest rates rise, albeit with a slight delay. Wihlborgs

NotesUnless otherwise specified, amounts are stated in SEK million.


primarily uses loans with short fixed-rate terms. With the help of interest rate swaps the company can achieve the desired fixed-rate term and hedge its overall interest expenses. Through a combination of loans with short fixed-rate terms and interest rate swaps a large measure of flexibility can be achieved and the fixed-rate term can be adjusted to meet the targets for the com-pany’s financial activities. And without the need to renegotiate the underlying loans. To manage interest risk and achieve stabili-ty in net financial items, the average fixed-rate term of Wihl-borgs’ borrowings has been adjusted to the estimated risk level and interest rate expectations. As at 31 December 2006, Wihl-borgs’ average fixed-rate term was 17 months. The average maturity of loans, including committed lines of credit, was 4,4 years (4,8).

The derivatives portfolio contains three derivative products.Terminable swap of sEK 1m. The bank can terminate the swap each quarter. Wihlborgs pays a predetermined interest each quarter and receives interest corresponding to 3 months stibor. The swap has existed during one measurable occasion in 2006. The swap was valued at nominal value as at 31 December 2006.

Terminable swap of sEK 1m where Wihlborgs will pay interest during the first year of 2.60 per cent and receives interest corre-sponding to 3 months’ stibor. between years 2–10 Wihlborgs will pay fixed interest of 3.57 per cent and will receive interest corresponding to 3 months stibor as long as the bank does not terminate the swap. The bank may terminate the swap after year 1. The swap was valued at nominal value at 31 December 2006.

10-year threshold swap of sEK 1 billion starting in December 2007 containing an interest threshold of 4.75 per cent. Wihl-borgs will pay 3.48 per cent as long as the short-term interest 3 months stibor does not exceed 4.75 per cent. Wihlborgs will receive interest corresponding to 3 months stibor. The swap has a market value according to iAs and, at year end there was an under value of sEK 4m in the swap. The swap has affected the fixed interest according to the bank’s calculations of 3.5 years.

Interest and maturity structure as at 31 December 2006 Interest maturity Loan maturityMaturity, years Loan amount, Average inte- Available Used, SEKm rest rate,% credit, SEKm SEKm2007 5,133 3,55 221 2212008 48 4,98 106 1062009 25 4,04 1,242 1,2422010 1,035 3,95 635 6282011 - - 4,601 3,940>2011 203 4,80 307 307Total 6,444 3,66 7,112 6,444

Derivates 4 4Totalt incl. derivate 6,448 6,448

Counterparty riskCounterparty risk is the risk that a counterparty will be unable to meet its delivery or payment obligations. in Wihlborgs’ financial activities counterparty risk arises primarily when the company invests surplus liquidity, enters into an interest rate swap or obtains long-term credit commitments. To reduce counterparty risk, Wihlborgs’ financial policy states that the company should only enter into agreements with banks or equivalent credit insti-tutions with a rating of A or higher from both Moody’s and standard & Poor’s. risks relating to trade debtors are reduced through customary credit assessments of prospective tenants pri-or to acceptance. similarly, the company also assesses the credit-worthiness of any promissory note receivables arising from the sale of properties and/or businesses.

Currency riskCurrency risk refers to the risk that Wihlborgs’ profit and loss account and balance sheet will be negatively affected by a change in exchange rates. Wihlborgs owns properties in Den-mark and germany. To avoid currency risk, these properties have largely been financed in Danish kronor and euro, respectively. Any changes in exchange rates will thus affect the net profit from either country.

Operational riskoperational risk in Wihlborgs’ financial activities refers to the risk of incurring as a result of inadequate procedures and/or irregular-ities. good internal control procedures, appropriate administra-tive systems, staff training and access to reliable valuation and risk models constitute a good foundation for reducing operation-al risks. Wihlborgs’ finance function continuously monitors the company’s administrative security and control.

NoTE 3 – SEGMENTS

The group’s business is geographically divided into market areas, which also constitute the primary segment for reporting and account-ing purposes. The business is also broken down by property category. This breakdown constitutes the group’s secondary segment. bor-rowings and financial expenses have been broken down by market area based on each area’s share of the total value of the properties.

Primary segment Market areas Malmö Helsingborg Rest Öresund Unattributed Total 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005rental income 511 390 265 248 133 98 - - 909 736Property expenses -160 -124 -85 -85 -37 -30 - - -282 -239Net operating income 351 266 180 163 96 68 0 0 627 497

Central administration - - - - - - -28 -26 -28 -26gain/loss from sale of properties 4 2 3 7 3 0 - - 10 9Change in value of properties 458 105 189 109 -18 104 - - 629 318Operating profit/loss 813 373 372 279 81 172 -28 -26 1,238 798

Financial income - - - - - - 17 15 17 15Financial expenses 109 -88 -52 -48 -30 -28 - - -191 -164Profit/loss before tax 704 285 320 231 51 144 -11 -11 1,064 649

Tax on profit for the year -144 -79 -64 -63 -8 -40 2 3 -214 -179Net profit/loss 560 206 256 168 43 104 -9 -8 850 470

Properties 6,197 4,207 2,978 2,323 1,713 1,360 - - 10,888 7,890other assets - - - - - - 333 283 333 283Total assets 6,197 4,207 2,978 2,323 1,713 1,360 333 283 11,221 8,173

loans 3,670 2,340 1,764 1,292 1,014 756 - - 6,448 4,388other liabilities - - - - - - 1,106 943 1,106 943Total liabilities 3,670 2,340 1,764 1,292 1,014 756 1,106 943 7,554 5,331

Acquisition of properties for the year 2,495 80 533 57 501 127 - - 3,529 264other investments in properties 280 155 66 87 81 44 - - 427 286

Secondary segment, property category Office/Retail Industrial/Warehouse Total 2006 2005 2006 2005 2006 2005rental income 650 499 259 237 909 736Carrying amount of properties 8,348 5,863 2,540 2,027 10,888 7, 890investments and acquisition of properties 3,315 360 641 190 3 956 550


NotE 4 – RENtAL INCoME

Group Parentcompany 2006 2005 2006 2005gross�rental�income� 997� 824� -� -Cost,�unlet� -88� -88� -� - 909 736 0 0

rental�income�includes�rent�and�charges�passed�on�to�tenants�for�heating,�electricity,�water,�sewage�and�property�tax�as�well�as�deductions�for�rent�discounts�for�which�accruals�have�been�made�during�the�term�of�the�respective�contracts.

NotE 5 – PRoPERtY EXPENSES

Group Parentcompany 2006 2005 2006 2005heating,�electricity,�water�and�sewage� 96� 79� -� -operating�expenses� 57� 47� -� -repairs�and�maintenance� 48� 48� -� -Property�tax� 33� 25� -� -ground�rent� 5� 4� -� -Property�administration� 43� 36� -� - 282 239 0 0

NotE 6 – DEPRECIAtIoN

in�accordance�with�iAs�40,�investment�properties�are�reported�at�fair�value,�which�means�that�no�depreciation�is�recognised�for�the�property�portfolio.

Group ParentcompanyEquipment 2006 2005 2006 2005Property�management� 0� 0� 0� 0Central�administration�and�marketing��1� 1� 1� 1 1 1 1 1

NotE 7 – CENtRAL ADMINIStRAtIoN AND MARKEtING

refers�to�group�management�expenses,�expenses�attributable�to�the�public�nature�of�the�company�and�other�expenses�connected�with�the�company�type.�Property-related�administration�is�not�included,�as�it�is�treated�as�a�property�expense.�Expenses�for�cen-tral�administration�and�marketing�includes�depreciation�on�central�equipment�of�1�(1)�in�the�group�and�1�(1)�in�the�parent�company.

NotE 8 – GAIN/LoSS FRoM SALE oF INVEStMENt PRoPERtIES Group Parentcompany 2006 2005 2006 2005sale�proceeds� 1,560� 337� -� -Carrying�amount�and�expenditure�-1,550 -328� -� - 10 9 0 0

The�gain/loss�from�sales�of�properties�is�the�difference�between�the�sale�proceeds�and�the�carrying�amount�at�the�last�end�of�quarter�adjusted�for�investments�and�expenses.�The�carrying�amount�of�each�property�is�adjusted�every�quarter�for�changes�in�market�value.

NotE 9 – ChANGE IN VALuE oF INVEStMENt PRoPERtIES.

Group Parentcompany 2006 2005 2006 2005Change�in�value�of�investment�properties� 629� 318� -� - 629 318 0 0

To�be�able�to�determine�the�change�in�value�for�each�period,�the�market�value�of�the�properties�is�assessed�at�the�end�of�each�quarter.�internal�valuations�are�made�for�31�March,�30�June�and�30�september.�An�external�valuation�is�made�for�31�December.�Malmöbryggan�Fastighetsekonomi�Ab�and�savills�sweden�Ab�have�valued�all�of�Wihlborgs’�swedish�properties�as�at�31�Decem-ber�2005.�The�market�value�of�each�property�was�assessed�indi-vidually.�our�Danish�properties�have�been�valued�by�DTZ.�The�property�in�germany�has�been�valued�by�Colliers�international.�Pages�36-37�gives�an�account�of�valuation�methods,�value�basis,�market�parameters�etc.�that�are�used�when�assessing�the�market�value�of�the�property�stock.

NotE 10 – othER oPERAtING INCoME AND EXPENSES

Parentcompany 2006 2005other�operating�income� � � 70� 61other�operating�expenses� � � -70� -61 0 0

refers�to�expenses�passed�on�by�the�parent�company�to�other�group�companies,�primarily�property�administration,�property�management�and�share�of�central�administration.

NotE 11 – PRoFIt/LoSS FRoM INtEREStS IN GRouP CoMPANIES

Parentcompany 2006 2005Dividends�on�interests�� 1,398� 76Profit�sold�interests� � � 117� -impairment�loss�interests� � � -1,027� -� � � 488 76

NotE 12 – PRoFIt/LoSS FRoM INtEREStS IN JoINt VENtuRES Group Parentcompany 2006 2005 2006 2005share�in�profit/loss� 7� 1� -� -Additional�expense�sold�interests� -� -� -� -3 7 1 0 -3

NotE 13 – PRoFIt/LoSS FRoM othER SECuRItIES AND ASSEtS thAt ARE FIXED ASSEtS

Group Parentcompany 2006 2005 2006 2005interest�expenses,�group�companies� -� -� 212� 111interest�expenses,�other� 3� 6� -� 1 3 6 212 112

NotE 14 – INtERESt EXPENSES AND SIMILAR ItEMS

Group Parentcompany 2006 2005 2006 2005interest�expenses,�group�companies� -� -� 29� 15interest�expenses,�other� 187� 168� 150� 122� � 187 168 179 137


NoTE 15 – ChANGE IN VALUE oF DERIVATIVES

interest rate derivatives are a financial instrument which under iAs 39 should be recognised at fair value in the balance sheet. Changes in the value of interest rate derivatives are recognised in the item Change in value of derivatives in the profit and loss account. The valuation principles of derivatives appears in Note 2. As of 2006 the parent company applies to iAs 39 in valuation of derivatives. income statements before 2006 have not been translated according to the adjusted accounting principle.

NoTE 16 – TAX oN PRoFIT FoR ThE YEAR

Group Parent company 2006 2005 2006 2005Current tax on profit for the year 12 5 5 2Adjustment for current taxfrom previous years -9 - - -Total current tax 3 5 5 2Deferred tax 211 174 - -Total tax 214 179 5 2

Nominal tax (28%) on profit after financial items 298 182 141 22Tax effects of adjustment items- Dividends from subsidiaries - - -391 -21- impairment loss shares group companies - - 287 -- revaluation of loss carried forward in acquired company -32 - - -- Tax-exempt profit from sale of group companies -45 -5 -33 -- other 2 2 1 1Total tax excl current tax from previous years 223 179 5 2

Adjustment for current tax fromprevious years -9 - - -Total tax 214 179 5 2

in the parent company tax income of sEK 2m attributable to group contributions paid has been credited directly to equity.

The group shows a current tax on profit for the year of sEK 12m. The current tax is calculated on the profit subject to tax in com-panies that are part of the group. This is lower than the group profit before tax.

The principle reasons for this are:- Value change of management properties not being included in the taxable result- Permitted depreciation on buildings for tax purposes, land improvements and property inventories that do not affect the consolidated result- Direct deductible amount for tax purposes regarding rebuilding investments on properties not affecting the consolidated result.

Calculating the current tax on profit for the year in the group for 2006 Pre-tax profits 1 064Value changes -629Depreciation of properties for tax purposes -226Direct deductions, property investments -80Deficit deduction used -154Taxable profit in addition to booked property sales 15Net change to tax allocation reserve etc. 52Taxable profit 42Taxable profit 12

NoTE 17 – PRoPERTIES

With one exception, Wihlborgs’ properties are classified as build-ings held for investment purposes. At the turn of the year, Wihl-borgs had a property with a stated value of sEK 181m (58m) as a project property. This property was acquired in 2004. Construc-tion, which was started at the turn of the year 2005/2006, is expected to be completed in 2007. Wihlborgs leases offices in Copenhagen, Malmö and helsingborg in its own properties. The lease value of its own leases is less in all cases than 20 per cent

of the properties’ total lease value. This is why no classification has been made for these properties as real estate used in busi-ness operations. Wihlborgs does not have any properties that have been acquired or rebuilt with the intention of being sold and therefore no property is shown as stock.

Group Parent company 2006 2005 2006 2005investment properties 10,707 7,832 - -Project properties 181 58 - - 10,888 7,890 0 0

real estate used in business operations is shown at market value and project properties are shown at accumulated acquisition val-ue adjusted for any depreciation or write-downs. The market val-ue of the project property is sEK 270m (66m).

sEK 34m (32m) of the properties’ stated value refers to activated loan costs. When estimating the loan cost to be activated, an interest rate corresponding to the average interest on the loan portfolio has been applied.

As at 31 December 2006, the interest rate was 3.66 per cent (3.23)

2006 2005rateable value of swedish properties 4,150 3,145Net value of swedish properties 10,021 7,023

Malmöbryggan Fastighetsekonomi Ab and savills sweden Ab have valued all of Wihlborgs’ properties in sweden as at 31 December 2006. The values of the properties are individually considered to correspond to the market value of the respective property. The properties in Denmark have been valued by DTZ. The property in germany has been valued by Colliers international. Page 36-37 gives an account of valuation methods, value basis, market parameters etc that are used when assessing the market value of the property stock.

NoTE 18 – INVESTMENT PRoPERTIES

Group Parent company 2006 2005 2006 2005opening acquisition value 7,832 7,258 - -Property acquisitions 3,529 264 - -investments in existing properties 304 282 - -sales and disposals -1,550 -328 - -Change in value 629 318 - -Currency translation -37 38 - -Carrying amount 10,707 7,832 0 0

NoTE 19 – PRoJECT PRoPERTIES

Group Parent company 2006 2005 2006 2005opening acquisition value 58 54 - -investments in existing properties 123 4 - -Carrying amount 181 58 0 0

The project property is taxed jointly with properties that are reported as investment properties.

NoTE 20 – EQUIPMENT

Group Parent company 2006 2005 2006 2005opening acquisition value 30 54 5 4investments 7 1 - 1sales and disposals -2 -25 - -Closing accrued acquisition values 35 30 5 5

opening depreciation -23 -47 -1 -Acquisitions via companies -5 - - -sales and disposals 2 25 - -Depreciation charge for the year -1 -1 -1 -1

Accumulated depreciation -27 -23 -2 -1Carrying amount 8 7 3 4


NoTE 21 – INTERESTS IN GRoUP CoMPANIES

Parent Company 2006 2005opening acquisition value 972 855Acquisitions 738 30sales -20 -shareholder contributions made 1 027 87Depreciation -1 027 -Carrying amount 1 690 972

Subsidiary Registrered Capital CarryingName/Reg. no. office share % amountbastionen syd Ab, 556072-2042 Malmö 100 90Exab Utvecklings Ab, 556353-2828 Malmö 100 0Fastighets Ab bronsdolken, 556112-0345 Malmö 100 0Fastighets Ab Kvävet, 556222-8071 Malmö 100 2Fastighets Ab Plinius, 556033-6538 Malmö 100 16Fastighets Ab stillman, 556082-1752 Malmö 100 38hilab Malmö Ab, 556660-1786 Malmö 100 0ideon Ab, 556239-8718 lund 40 80Kniven 2 Ab, 556706-9355 Malmö 100 9Kolgafour Ab, 556627-7843 Malmö 100 7lunds byggmästaregille Ab, 556058-9888 Malmö 100 1M2 Fastigheter Ab, 556101-4332 Malmö 100 555Malmö börshus Ab, 556115-8543 Malmö 100 40spillepengen Fastighets Ab, 556107-5002 Malmö 100 25Utvecklings Ab Kranen, 556286-9999 Malmö 100 108Wihlborg A/s, Danmark, A/s 190 168 Copenhagen 100 79Wihlborgs boplatsg. 5 Ab, 556675-2449 Malmö 100 0Wihlborgs borgeby Ab, 556675-2639 Malmö 100 0Wihlborgs bronsdolken Ab, 556232-5919 Malmö 100 4Wihlborgs Erik Menved 37 Ab, 556704-3699 Malmö 100 156Wihlborgs Fastigheter i NVs Ab, 556271-3924 Malmö 100 3Wihlborgs Fisken 18 Ab, 556675-2357 Malmö 100 0Wihlborgs Flintan 3 Ab, 556675-2647 Malmö 100 0Wihlborgs gallerian Ab, 556704-3632 Malmö 100 163Wihlborgs grynbodagatan Ab, 556675-2597 Malmö 100 0Wihlborgs gäddan 6 Ab, 556704-3681 Malmö 100 8Wihlborgs holding Ab, 556701-2827 Malmö 100 0Wihlborgs Kirseberg Ab, 556691-4874 Malmö 100 0Wihlborgs lönngatan Ab, 556704-3657 Malmö 100 15Wihlborgs Måsen 16 Ab, 556627-7827 Malmö 100 7Wihlborgs Måsen 17 Ab, 556627-7835 Malmö 100 2Wihlborgs N.Vallgat. 80-82 Ab, 556675-2613 Malmö 100 0Wihlborgs Nils 21 Ab, 556704-3616 Malmö 100 52Wihlborgs Nils 24 Ab, 556704-3731 Malmö 100 4Wihlborgs Polisett Ab, 556703-0589 Malmö 100 0Wihlborgs Priorinnan Ab, 556675-2423 Malmö 100 0Wihlborgs ritaren 1 Ab, 556675-2605 Malmö 100 0Wihlborgs rosengård Ab, 556699-7986 Malmö 100 0Wihlborgs sparven 15 Ab, 556704-3624 Malmö 100 215Wihlborgs sqvalpan Ab, 556675-2399 Malmö 100 0Wihlborgs sufflören 3 Ab, 556704-3640 Malmö 100 7Wihlborgs söderarm 11 Ab, 556675-2407 Malmö 100 0Wihlborgs Terminalen Ab, 556681-1898 Malmö 100 0Wihlborgs Uvenine Ab, 556695-2502 Malmö 100 0Wihlborgs Vikingen 10 Ab, 556675-3082 Malmö 100 0WJ bygg Ab, 556060-0529 Malmö 100 4 1 690 The Group comprises 102 (67) companies.

NoTE 22 – INTERESTS IN JoINT VENTURES

Group Parent company 2006 2005 2006 2005opening acquisition value 53 52 52 52share in profit/loss 7 1 - -Carrying amount 60 53 52 52

Name/Reg. no. Registrered Capital CarryingParent company office share % amountMedeon Ab, 556564-5198 Malmö 40,0 4Dockan Exploatering Ab, 556594-2645 Malmö 33,3 48 52DotterbolagenPeWi bostadsutveckling hb, 969687-5492 helsingborg 50,0 8ideon Center Ab, 556239-0384 lund 50,0 0 60

NoTE 23 – oThER LoNG-TERM SECURITIES hoLDING

Group Parent company 2006 2005 2006 2005opening acquisition value 10 - 10 -Acquisitions of the year - 10 - 10Total 10 10 10 10

Group and parent company Registrered Capital CarryingName/Reg. no. office share % amountsveland sakförsäkringar Ab 516406-0229 hässleholm 5,4 10

NoTE 24 – DEFERRED TAX ASSETS

The asset refers to deferred tax relating to the group’s property holdings in Denmark. it is expected that the amount will be used to reduce taxable profits in the next few years. Note 29 shows what components the deferred tax consists of.

NoTE 25 – oThER LoNG-TERM RECEIVABLES

Group Parent company 2006 2005 2006 2005Maturity date 1-5 years from balance sheet date 37 53 - 12Maturity date later than 5 yearsfrom balance sheet date 5 7 - -Total 42 60 0 12

NoTE 26 – PREPAYMENTS AND ACCRUED INCoME

Group Parent company 2006 2005 2006 2005rental income 2 8 - -Anticipated dividends - - 1,320 -other 6 5 - 1Total 8 13 1,320 1

NoTE 27 – CASh AND BANK BALANCES

The group’s cash and cash equivalents comprise cash assets and bank balances. The group has unused overdraft facilities, which are not included in cash and cash equivalents, of sEK 93m (75m).

NoTE 28 – EQUITY

Accumulated translation differences in the group amount to sEK 4m (15m).

No. of registered shares at beginning of year 19,214,182share split 1:10 Reg. Date 06-05-10 19,214,182No. of registered shares at end of year 38,428,364

All shares carry equal voting rights, one vote per share. Proposed dividend per share, sEK 5.50 (3.50). Nominal value per share, sEK 5.00 (10.00).


NoTE 29 – DEFERRED TAX LIABILITY

Group Parent company 2006 2005 2006 2005Deferred tax has been calculated on the basis of:loss carry-forwards -131 -58 - -Difference between carrying amount and tax base in respect of properties 845 626 - -Untaxed reserves 10 47 - -Net liability 724 615 0 0Adjustment for deferred tax asset Note 24 10 18 - -Deferred tax liability 734 633 0 0

Total loss carry-forwards, which have been taken into account in calculating deferred tax, are sEK 467m (207m). sEK 335m of the tax losses are blocked until 2012. The tax losses include fixed assets of sEK 8m on the sale of immovable property which can be utilized only against gains on the sale of immovable property and a deficit in the Danish company of sEK 40m.

NoTE 30 – oThER LoNG-TERM LIABILITIES

refers largely to stamp duties that become payable only when a property is sold.

NoTE 31 – oVERDRAFT FACILITY Group Parent company 2006 2005 2006 2005Available credit limit 93 97 75 75Unused share -93 -75 -75 -75Used share 0 22 0 0

NoTE 32 – LIABILITIES To CREDIT INSTITUTIoNS

Group Parent company 2006 2005 2006 2005Maturity up to 1 yearfrom balance sheet date 217 434 - -Maturity between 1 and 5 yearsfrom balance sheet date 5,920 3,716 5,532 3,638Maturity later than 5 year from balance sheet date 307 202 - -Derivatives 4 14 4 - 6,448 4,366 5,536 3,638

As the company’s committed lines of credit at year-end exceeded loans due during the following year, the full amount of debt relating to overdraft facilities and liabilities to credit institutions has been treated as a long-term liability.

NoTE 33 – PREPAYMENTS AND ACCRUED INCoME

Group Parent company 2006 2005 2006 2005Advance payment of rents 128 93 - -Accrued interest expenses 6 18 5 15other 55 64 12 10 189 175 17 25

NoTE 34 – CoMMITMENTS AND CoNTINGENT LIABILITIES

Group Parent companyCommitments 2006 2005 2006 2005Property mortgages 7,250 5,003 - -Promissory notes - - 5,911 3,853 7,250 5,003 5,911 3,853Contingent liabilities 28 46 20 20

NoTE 35 – ADJUSTED ITEMS ThAT ARE NoT INCLUDED IN CASh FLoW ETC.

Group Parent company 2006 2005 2006 2005Change in value of investment properties -629 -318 - -gain/loss from sale of investment properties -10 -9 - -Depreciations of equipment 1 1 1 1 -638 -326 1 1

NoTE 36 – ChANGE IN oPERATING CAPITAL

Group Parent company 2006 2005 2006 2005Change according to balance sheet -7 100 -1,316 22operating capital in acquired group company -34 -3 - -operating capital in divested group company 13 3 - -Currency effect 1 - - -Change in income tax liability -4 -3 - -Change in assets and liabilities in respect of interest income, dividendsdividends and interest expenses 12 -8 1,327 -15 -19 89 11 7

NoTE 37 – ACQUISITIoN oF INTERESTS IN GRoUP CoMPANIES

According to the analyses made in connection with the acquisi-tions, the value of acquired assets and liabilities in acquired group companies were as follows: 2006 2005Properties 2,924 125other tangible fixed assets 2 -long-term receivables group company 143 -Financial fixed assets 145 -short-term receivables 23 1Cash and bank balances 228 1Minority interest -120 -long-term liabilities group companies -1,218 -113long-term liabilities -275 -Current liabilities -57 -4Purchase price 1,795 10Plus transfer of seller’s receivable 1,075 113Purchase price paid 2,870 123less cash and cash equivalents in acquired comp. -228 -1Impact on consolidated cash and cash equivalents 2,642 122

NoTE 38 – SALE oF INTERESTS IN GRoUP CoMPANIES

According to the analyses made in connection with the sales, the value of divested assets and liabilities in divested group compa-nies were as follows: 2006 2005Properties 1 ,392 177short-term receivables 3 -Cash and bank balances - 2long-term liabilities group companies -605 -128long-term liabilities -5 -7Current liabilities -16 -3Purchase price 769 41less issued promissory note - -9Plus transfer of seller’s receivable 605 128Purchase price received 1,374 160less cash and cash equivalents in divested comp. - -2Impact on consolidated cash and cash equiv. 1,374 158

NoTE 39 – RELATED-PARTY TRANSACTIoNS

Erik Paulsson and his family and company have a controlling influence in Peab Ab. in 2006, Wihlborgs received income from lettings activities of sEK 8m from the Peab group. Wihlborgs has paid sEK 124m to the Peab group for contract work. At the year end Wihlborgs has receivables from Peab amounting to sEK 3m and liabilities amounting to sEK 28m.


Balance sheets and profit and loss accounts are subject to confirmation at the Annual General Meeting on 26 April 2007. To the best of our knowledge, the annual report has been prepared in accordance with generally accepted accounting principles for listed com-panies, the information provided complies with actual circumstances and no information of material significance has been omitted that could affect the impression of the company created by the annual report.

Malmö, 21 March 2007

Erik Paulsson Kerstin Fredriksson Anders JarlChairman DeputyChairman ChiefExecutiveOfficer

Sten K Johnson Tommy Qvarfort Johan Qviberg

Lars Sköld

We presented our audit report on 23 March 2007Deloitte AB

Torbjörn SvenssonAuthorisedPublicAccountant


Audit report

n To the annual meeting of the shareholders of Wihlborgs Fastigheter AB (publ) Corporate identity number 556367-0230 We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of Wihlborgs Fastigheter AB (publ) for the financial year 2006. The annual accounts of the company are included in the printed version of this document on pages 48-68. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRS as adopted by the EU and the Annual Accounts Act when pre-paring the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the account-ing principles used and their application by the board of directors and the managing director and significant estimates made by the board of directors and the managing director when preparing the annual accounts and consolidated accounts as well as eval-uating the overall presentation of information in the annual accounts and the consoli-dated accounts. As a basis for our opinion concerning discharge from liability, we exam-ined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasona-ble basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company’s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting stand-ards IFRS as adopted by the EU and the Annual Accounts Act and give a true and fair view of the group’s financial position and results of operations. The administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.

Malmö, 23 March 2007Deloitte AB

Torbjörn Svensson, Authorized Public Accountant


Kerstin FredrikssonDeputy Chairmanborn 1942 . Elected in 2004.

Main occupation: Chairman of the Municipal Executive board in the Municipality of burlöv.

Other Board assignments:Chairman of skånet Ab. Coun-cillor of region skåne. Director of the regional Development Agency (regionala utvecklings-nämnden), sEb local board of Directors in Arlöv, sydvatten Ab and sYsAV Ab.

Shareholding in Wihlborgs:200 shares.

Corporate Governance Report n Wihlborgs Fastigheter AB implements the Swedish Code of Corporate Govern-ance. This corporate governance report does not form part of the formal financial statements but constitutes a separate report. Wihlborgs’ Corporate Governance Report has not been examined by the company’s auditors.

Corporate governance The shareholders influence the company’s governance by participating in and exer-cising their voting rights at the Annual General Meeting, which is Wihlborgs’ high-est decision-making body. All shares carry the same voting rights, i.e. a sharehold-er’s voting rights are proportionate to his share of the company’s share capital. The management of and responsibility for the Wihlborgs Group is divided between the Board of Directors and Chief Executive Officer, in accordance with the Swedish Companies Act, other laws and regulations, the listing agreement with the Stockholm Stock Exchange, the Swedish Corporate Governance Code, and the company’s Articles of Association and internal control instruments, such as the rules of procedure for the Board of Directors and the instructions to the Chief Executive Officer.

The Swedish Corporate Governance CodeThe chief purpose of the Code is to contribute to improving standards of corporate governance in Swedish companies in order to ensure that they meet the owners’ return requirements for their invested capital. Any departures from the rules contained in the Code must be reported and justified according to the principle “comply or explain”. The reasons for each departure much be clearly explained.

Wihlborgs has departed from the rules in the following respects:• No separate audit committee has been appointed. Instead, all members of the

Board except the CEO have performed the tasks of the audit committee.

THE BOARD

Anders JarlDirectorborn 1956. Elected in 2004.

Main occupation:CEo of Wihlborgs Fastighe-ter Ab.

Shareholding in Wihlborgs: 24,800 shares with family and via company.

Sten K JohnsonDirectorborn 1945. Elected in 2004.

Main occupation: CEo of Midway holding Ab.

Other Board assignments: Chairman of Midway hol-ding Ab and skåne-Möllan Ab.

Shareholding in Wihlborgs: 243,040 shares with family and via company.

Erik PaulssonChairman of the boardborn 1942. Elected in 2004.

Other Board assignments: Vice Chairman of the board in Fabege Ab. Chairman of skistar Ab. Director of Nola-to Ab.

Shareholding in Wihlborgs: 42,400 shares together with family and via company. Erik Paulsson also owns shares in brinova Fastigheter Ab.


• No separate remuneration committee has been appointed. Instead, all members of the Board except the CEO have performed the tasks of the remuneration committee. No member of the company’s management has been present when these issues have been discussed.• There are no plans to provide facilities for shareholders to participate in general meetings via remote link, the reason being that the expense does not correspond to the benefit.

The Board’s reason for not establishing an audit committee or remuneration committee is that this is not warranted in view of the size of the company. The issues involved can be discussed in connection with the regular Board meetings. Wihlborgs interest-rate council has the task of following the trend in interest rates and submitting proposals to the Board. The interest-rate councils responsibilities and tasks are not fixed in the rules of procedure but appears in accordance with current financial policy.

Articles of AssociationWihlborgs’ current Articles of Association were adopted at the Annual General Meeting held on 26 April 2006. The company’s business is to acquire, manage, improve and sell properties primarily in the Öresund region and to conduct such other activities as are compatible therewith. The Board of Directors shall be based in Malmö. The articles of association can be found on pages 79–80.

2006 Annual General MeetingWihlborgs’ Annual General Meeting took place on 26 April 2006. 25.4 per cent of the number of votes (150 shareholders) were represented at the meeting. The minutes of the Annual General Meeting is available on the Wihlborgs website, www.wihlborgs.se. Decisions taken by the meeting included the following:

Tommy QvarfortDirectorborn 1944. Elected in 2006.

Main occupation:CEo of Abitare Fastighetsut-veckling.

Other Board assignments: Chairman of APQ El Ab.

Shareholding in Wihlborgs: 50,000 shares.

Johan QvibergDirectorborn 1981. Elected in 2004.

Main occupation: Equity sales Öhman Fond-kommission.

Shareholding in Wihlborgs: 142,820 shares.

Lars SköldDirectorborn 1950. Elected in 2005. self-employed.

Other Board assignments:Chairman of Attje - a swedish museum of mountain and sami culture.

Shareholding in Wihlborgs:500 shares.


Election of Directors and auditorsThe AGM decided that the Board should consist of seven Directors. Kerstin Fre-driksson, Anders Jarl, Sten K Johnson, Erik Paulsson, Johan Qviberg and Lars Sköld were re-elected to the Board and Tommy Qvarfort was elected as a new Director. It was noted that the registered auditing firm Deloitte AB had been appointed as the company’s auditors at an extraordinary general meeting in 2004 with the Authorised Public Account Torbjörn Svensson as chief auditor.

Nomination CommitteeIt was resolved that the Nomination Committee should consist of representatives of the three largest shareholders of the company at the end of the third quarter of 2006, plus one representative of the smaller shareholders, as represented by the Swedish Shareholders’ Association (Aktiespararna). The Nomination Committee also decides if the Chairman of the Board shall be included in the Committee. The representative of the largest shareholder shall be made chairman of the Nomination Committee unless otherwise stated. No fees are paid to the members of the committee, but the company is responsible for adequate costs which arise as a result of the committees assignment.

Acquisition and transfer of shares owned by the companyThe AGM resolved to authorise the Board, during the period up to the next AGM, to buy back and transfer Wihlborgs shares up to a maximum of ten per cent of all outstanding shares.

New issueThe AGM resolved to authorise the Board, during the period up to the next AGM, to decide on the issue of new shares up to a maximum of ten per cent of all out-standing shares.

Decision upon a splitA 2:1 split was announced at the annual general meeting held on 26 April 2006. One old share, ratio value SEK 10, was replaced with two new shares, ratio value SEK 5 each, without any change in the companys share capital.

Anders JarlChief Executive officerMalmö, born 1956Employed by Wihlborgs since 2001.

Shareholding in Wihlborgs:24,800 shares together with family and via company.

GROUP MANAGEMENT

Christer JohanssonFinance Directorsvedala, born 1948Employed by Wihlborgs since 1996.

Shareholding in Wihlborgs:14,800 shares via compa-nies.

Iréne JohanssonPublic relations DirectorMalmö, born 1953Employed by Wihlborgs since 1992.

Shareholding in Wihlborgs: 7,400 shares via companies.

Catharina LachmannExecutive Assistant to the CEosvedala, born 1955Employed by Wihlborgs since 1985.

Shareholding in Wihlborgs: -

Thomas BråhagenProperty DirectorMalmö, born 1955Employed by Wihlborgs since 1990.

Shareholding in Wihlborgs: 15,600 shares together with family and via company.


The Nomination CommitteeThe Swedish Corporate Governance Code states that the appointment of the Board of Directors and auditors should be prepared through a structured and transparent process controlled by the owners which provides opportunities for all shareholders to express their views on and make proposals on these issues and which establishes a good foundation for well considered decisions. The nomination committee is the AGM’s body for preparing decisions relating to appointments.

Wihlborgs’ Nomination Committee has therefore been drawing up proposals for chairman of the AGM, Chairman of the Board, Directors and Directors’ fees, and auditors and auditors’ fees. In accordance with the AGM’s decision, the names of the candidates proposed by the Nomination Committee were announced on 18 October 2006. The Nomination Committee consists of Anders Silverbåge from Brinova Fastigheter AB, Peter Lind from Maths O Sundqvist, Erik Törnberg from Investment AB Öresund and Leif Franzon from the Swedish Shareholders’ Association (Aktiespararna). The mem-bers representing the three largest owners in the Nomination Committee together represented 26.6 per cent of the votes of Wihlborgs. Anders Silverbåge was appoint-ed as chairman of the Nomination Committee.The Nomination Committee has held two minutes meetings and has remained in contact during the periods in between. The Nomination Committee has discussed the size and composition of the Board of Directors in respect of industry experience, expertise and other criteria. Nomi-nation Committee has also discussed the issue of the Directors’ independence. The election committee proposes a re-election of Kerstin Fredriksson, Anders Jarl, Sten K Johnson, Erik Paulsson, Tommy Qvarfort and Johan Qviberg. Sara Paulsson Karlsson and Helen Olausson are proposed as new Board Members.

The Board of Directors The task of the Board of Directors is to manage the company’s business on behalf of the owners in a way that assures the owners’ interest in strong long-term return on capital in the best possible way. Under Wihlborgs’ Articles of Association, the Board of Directors must consist of at least four and no more than eight Directors. Following the AGM in April 2006, Erik Paulsson was appointed as Chairman of the Board and Kerstin Fredriksson as Deputy Chairman. The company’s Finance Director, Christer Johansson, has served as the Board’s secretary. Wihlborgs’ Board of Directors includes members that have skills and experience in fields that enable them to support, monitor and control the business of a leading property company in Sweden. The Directors have in-depth knowledge of property, the property market, finance and business development. The Board of Directors meets the requirements for Board composition laid down in the Swedish Corporate Governance Code and the Listing Rules of the Stockholm

AUDITORS

Deloitte AB

Chief AuditorTorbjörn svensson, Malmö, born 1953Authorised Public AccountantChief auditor of Wihlborgs since 2004.Previously chief auditor of Fabege since 2001.


Stock Exchange. The Chief Executive Officer, Anders Jarl, is to be regarded as dependent on the company. In 2006, the Board held 13 meetings, including constituent and per capsulam meetings. Out of the 13 meetings, seven have been ordinary Board meetings. The board’s work began with issues concerning the annual accounts and dividend as well as an assessment of the board’s work and procedures. During the spring of 2006 the work concentrated on the Tornet, Ideon and GE Capital acquisitions as well as other property purchases and sales. Preparations associated with the board’s tasks prior to the annual general meeting concerned the proposals for a split and the re-purchase of own shares and new company formation. The process of costing finished projects for 2005 has been reviewed. Information security associated with the company’s IT procedures has been highlighted. The sale of Caroli City was dealt with during the summer. During the autumn, the company’s financial policy, inte-rest review combined with different derivative products were commented on. The company’s future strategies prior to 2007 and 2008, budget and property acquisi-tions also dominated the board’s work. The board also established ethical guidelines for the company during the autumn. According to the annual general meeting’s decision, the board’s fee amounted to SEK 750,000 of which the chairman received SEK 200,000 and other board members, with the exception of the CEO, received SEK 110,000.

Directors, independent, number of meetings and attendance Independent Board meetings/AttendanceErik Paulsson, Chairman no 13 of 13Kerstin Fredriksson, Deputy Chairman yes 13 of 13Anders Jarl no 13 of 13Sten K Johnson yes 12 of 13Tommy Qvarfort yes 9 av 9 (elected at the AGM)Johan Qviberg yes 12 of 13Lars Sköld yes 13 of 13Anders Elsell yes 4 of 4 (elected at the AGM)Bo Forsén yes 4 of 4 (elected at the AGM)

Rules of procedure and instructionsThe Board of Wihlborgs operates on the basis of a set of procedural rules, which include instructions relating to the division of labour and financial reports. The rules of procedure, which constitute a supplement to the regulations contained in the Swedish Companies Act and Wihlborgs’ Articles of Association, are reviewed annually. Under the rules, the Board is responsible for ensuring that the CEO meets his obligations. The CEO’s performance is assessed annually in relation to the defined long-term and short-term objectives. Another responsibility is to continuously assess Wihlborgs’ handling procedures and administrative guidelines and investments of the company’s assets. The Board is responsible for setting and monitoring compliance with targets, key policies and strategic plans for the company and for ensuring that these are revised and updat-ed subsequent to receiving a report from the CEO. Six ordinary Board meetings should be held each calendar year, in addition to the constituent meeting. At the meetings the Directors transact business relating to financial and economic reports, sales and investments, current market issues and staff issues. Extraordinary meetings may be convened for the purpose of discussing


and deciding on issues that cannot be postponed until the next ordinary Board meeting. Under the procedural rules, it is the duty of the Chairman to monitor Wihlborgs’ performance through contacts with the CEO and to ensure that the Directors receive the information they require via the CEO. The Chairman is also required to consult with the CEO on strategic issues and ensure that the matters under con-sideration are not handled in a way that violates the provisions of the Swedish Com-panies Act, the company’s Articles of Association or the Swedish Corporate Govern-ance Code.

Group managementThe Chief Executive OfficerThe Chief Executive Officer is responsible for the day-to-day management of the company and for managing the company’s activities in accordance with the guide-lines and instructions laid down by the Board. The rules of procedure for Wihlborgs’ Board of Directors includes a set of instructions for the CEO, who is responsible for ensuring that the Board receives the information it requires for its decisions before each Board meeting and is kept up to date in between meetings, and that the financial statements are presented in a way that allows the Board to make a well-informed assessment of the information contained therein. There is also a separate reporting instruction specifying the timetables.

Group management consists of:Anders Jarl, CEOChrister Johansson, Finance DirectorThomas Bråhagen, Property DirectorIréne Johansson, Public Relations Director Catharina Lachmann, Executive Assistant to the CEO

Principles for terms of employment of the CEO and Group management Under the Corporate Governance Code, the Board is required to propose princi-ples for the compensation and other employment terms of Group management. The Board of Wihlborgs proposes that the compensation and other terms of employment should be competitive and based on market terms. All members of Group management receive a fixed compensation. Wihlborgs has a profit-sharing foundation that covers all employees of the company except the CEO. Allocations to the foundation are based on return on equity and are subject to a ceiling of one base amount per year and employee. The retirement age is 65 years for all employees of Group management. Expenses relating to the Chief Executive Officer’s pension comprise a premium of 35 per cent of the CEO’s pensionable annual salary during his period of employment. For other members of Group management the ITP occupational pension plan or an equivalent plan applies. Termination salary and severance pay combined must not exceed 24 months. Severance pay should be offset by other income. All Board Directors except the CEO decide on the principles for compensation and terms of employment of Group management and on the CEO’s compensation and terms of employment. The principles have been unchanged since 2005.

AuditingWihlborgs’ auditors are appointed by the AGM for a period of four years. The cur-rent auditors were appointed at an extraordinary general meeting in 2004, and the


next appointment will therefore take place at the 2008 AGM. The AGM appointed the auditing firm Deloitte AB as the company’s auditors with Torbjörn Svensson as chief auditor. Torbjörn Svensson has chief responsibility for the audit assignment in Wihlborgs. He has no other assignments for companies that are closely related to Wihlborgs’ major owners or the CEO. In addition to his audit assignment for Wihlborgs, Torb-jörn Svensson’s other major audit assignments are: Malmö Aviation AB, Doro AB, Flex-tronics, Dynapac AB, Thule AB and Skånemejerier. Torbjörn Svensson personally attends the Board meeting convened for the pur-pose of the discussing the company’s year-end financial statements and submits a report on his final examination of the company’s accounts. He also submits infor-mation on ongoing auditing work to the Board in its capacity as audit committee. Information about fees paid to the auditors is provided in Note 1 on page 62.

Internal controlAccording to the Companies Act and the Swedish code for company control, the board is responsible for internal control. The board shall issue a report annually of how the internal control of financial reporting is organised to the extent it concerns the financial reporting. The report is drawn up on the basis of the guidance produced by the Confederation of Swedish Enterprise and FAR SRS. This report does not form part of the formal annual accounts documentation and has not been the subject of checking by the company’s auditors. Wihlborgs applies COSO, Internal Control – Integrated Framework. This is an internationally recognised and widely-accepted framework for internal control used to describe the company’s control structure. COSO describes the control that is divided into five components – control envi-ronment, risk assessment, control activities, information and communication, and monitoring.

The control environmentThe control environment is of great significance to the organisation and forms the basis for good internal control. During the course of 2006 Wihlborgs introduced ethical guidelines for the board of directors and its staff that will form the basis of the company’s behaviour towards customers, suppliers and other interested parties. All employees have received training on these guidelines. The document has been issued to all employees and is available on the company’s intranet. In its rules of procedure the board has clarified decision delegation to the man-agement for financial reporting. The organisational structure at Wihlborgs facili-tates effective internal control. The company’s organisation in its administrative areas with an administrative manager as its head has a defined responsibility with authorities. This is described in an instruction for signing lease agreements, authorisations and projects, and a number of policies. Group reporting for Wihlborgs’ approximately 100 subsidiaries is standardised. Internal auditing is reconciled with external auditing on each reporting occasion. According to Wihlborgs staff policy, employees who work on economic issues undergo individual training programmes to ensure competence within the area.


Risk assessmentWihlborgs undertakes continuous risk assessment associated with financial report-ing. A risk analysis shows that the internal control is particularly significant with regard to procedures for lease debiting including supplementary debiting, the pur-chase and sale of properties, both private and in companies, the IT function, prop-erty valuation, project activities and risks of impropriety.

Control activitiesControl activities are designed to create methods for the company when dealing with risks. The intention is that the activities shall prevent, identify and correct the errors that can arise. The activities shall secure income and assets, check the cor-rectness and reliability of the financial reports but also ensure that stipulated regu-latory systems are complied with. Work was done in 2006 on describing different procedures. This refers primarily to the IT function, purchase and sales plus lease debiting.

Information and communicationThe way in which financial reporting is communicated is shown in the company’s instructions for reporting. Information to lenders, investors and suppliers is based on the respective interested party’s particular requirements. The stock exchange’s regulations for disseminating information and reporting are particularly important. The information department is responsible for external information. The compa-ny’s information policy includes describing how financial reporting shall be done.The board receives information on risks of errors in the financial reporting and the internal control from auditors in connection with the full-year accounts and interim audit.

MonitoringContinuous monitoring and evaluation are performed to guarantee the quality of the control system. Continuous monitoring is done on an area basis and any shortcomings that have arisen in the internal control are rectified. The audit submits its findings regarding the company’s internal control to the board at least twice a year.

Malmö, 21 March 2007The Board of Directors


Five-year summary Proforma3 Proforma3 Proforma3

2006 2005 2004 2003 2002Financialreturn on equity, % 26,6 18,2 15,5 12,3 10,2

return on total capital, % 12,5 10,1 8,5 7,0 6,8

Equity/assets ratio, % 32,7 34,8 29,6 26,5 23,8

interest coverage ratio, times 6,6 5,0 3,5 2,5 1,9

interest coverage ratio, operations, times 3,3 2,9 2,5 2,1 1,7

leverage properties, % 59,2 55,6 66,8 71,3 74,9

Debt/equity ratio, times 1,8 1,5 2,1 2,5 2,9

Share-related1 Earnings per share before tax, sEK 27,69 17,03 12,06 8,31 6,15

Earnings per share, sEK 22,12 12,33 8,68 5,98 4,43

operating earnings per share before tax, sEK 11,16 8,34 7,30 6,47 5,28

operating earnings per share, sEK 8,04 6,01 5,25 4,66 3,80

Equity per share, sEK 92,3 73,96 60,14 51,46 45,48

Cash flow from operations before change in

working capital per share, sEK 10,96 8,24 6,04 5,44 4,57

Dividend per share, sEK2 5,5 3,50 - - -

No. of shares at year-end, ‘000 38,428 38,428 38,428 38,428 38,428

Average no. of shares, ‘000 38,428 38,125 38,428 38,428 38,428

Property-relatedNo. of properties 219 197 190 190 190

Carrying amount of properties, sEKm 10,888 7,890 7,149 6,805 6,668

Yield, % 6,4 6,6 6,6 6,9 7,3

lettable area, m2 1,159,852 994,693 963,331 963,331 963,331

rental income, sEK/m2 851 761 736 730 722

Net operating income, sEK/m2 597 526 490 490 506

Financial occupancy rate, % 92 90 89 90 91

surplus ratio, % 70 69 67 67 70

EmployeesNo. of employees at year-end 77 68 71 71 71

Average no. of employees 78 71 71 71 71

1) There are no dilution effects of potential ordinary shares to be taken into account in calculating key ratios.2) Proposed dividend.3) Proforma figures for 2004, 2003 and 2002 are based on the property portfolio as at 31 March 2005.

FINANCIALReturn on equityProfit as a percentage of average shareholders’ equity.

Return on total capitalProfit before tax plus interest expenses as a percentage of average balance sheet total.

Equity/assets ratioShareholders’ equity as a percentage of balance sheet total.

Interest coverage ratioProfit after financial items and reversal of interest expenses, divided by interest expenses.

Interest coverage ratio, operationsProfit after financial items and reversal of interest expenses plus gain or loss from sales of properties and changes in value, divided by interest expenses.

Leverage propertiesInterest-bearing liabilities as a percentage of the carrying amount of the properties.

Debt/equity ratioInterest-bearing liabilities divided by shareholders’ equity.

SHARE-RELATEDEarnings per shareProfit divided by average number of outstanding shares.

Earnings per share before taxProfit before tax divided by average number of outstanding shares.

Operating earnings per shareProfit after financial items and reversal of gains/losses from the sale of properties and changes in value and 28 per cent tax, divided by average number of outstanding shares.

Operating earnings per share before taxProfit after financial items and reversal of gains/losses from the sale of properties and changes in value, divided by aver-age number of outstanding shares.

Cash flow from operations before change in working capital per shareCash flow from operations before change in working capital in relation to average number of shares.

Equity per shareShareholders’ equity at end of period in relation to total number of shares at year-end.

Dividend per shareRefers to proposed dividend for the last financial year, to approved dividends for previous years.

PROPERTY-RELATEDNo. of propertiesTotal number of properties owned by Wihlborgs as at 31 December 2005.

Carrying amount of propertiesCarrying amount of the Group’s property portfolio at year-end.

YieldNet operating income as a percentage of the carrying amount of the properties at year-end.

Lettable areaTotal area that is available to let.

Rental income per square metreAnnualised rental income divided by lettable area.

Net operating income per square metreNet operating income divided by lettable area.

Financial occupancy rateRental income as a percentage of rental value.

Surplus ratioNet operating income as a percentage of rental income.

DEFINITIONS


Articles of Association

n Articles of Association of Wihlborgs Fastigheter AB (publ),Corporate identity number: 556367-0230. § 1 Registered name of the Company is Wihlborgs Fastigheter AB, which is a public company (publ).

§ 2 The object of the Company’s operations is to acquire, manage, develop and sell properties, primarily in the Öresund region, and conduct associated operations.

§ 3 The registered office of the Board of Directors shall be Malmö, Sweden.

§ 4 The Company’s share capital shall amount to not less than SEK 155,000,000 kronor and not more than SEK 620,000,000 kronor.

§ 5 The number of share shall not be less than 15,500,000 and not more than 62,000,000.

§ 6 The Board of Directors shall consist of not fewer than four and not more than eight members.

§ 7 Of the Company’s auditors, at least the auditor and the deputy auditor must be Authorised Public Accountants. Instead of an auditor, the Annual General Meeting may elect one or two authorised accounting firms, whereby no deputy auditors need to be elected.

§ 8 The Company’s fiscal year shall consist of the calendar year.

§ 9 The Annual General Meeting shall be held in Malmö. The following items of business shall be addressed at the Annual General Meeting: 1. Election of Chairman of the Meeting. 2. Preparation and approval of the list of shareholders entitled to vote at the meeting. 3. Election for one or two minute-checkers. 4. Approval of the agenda. 5. Determination of whether the Meeting has been duly convened. 6. Presentation of the annual report and the auditors’ report an, if applicable, of the consolidated financial accounts. 7. Motions concerning the adoption of the income statement and balance sheet and, if applicable, of the consolidated income statement and consolidated balance sheet. b) the disposition to be made of the Company’s profits or losses as shown in the balance sheet adopted by the Meeting. c) the discharge of the members of the Board and the Managing Director from personal liability. d) the record date for the payment of dividends. 8. Resolution of the number of members of the Board and, where applicable, the number of auditors and deputy auditors. 9. Determination of the fees to be paid to the Board members and, where applicable, the auditors. 10. Election of the Board members. 11. When required, election of the auditors and deputy auditors. 12. Election of the Nomination committee. 13. Other business that must be addressed by the Meeting in accordance with the Annual Accounts Act or the Articles of Association. continued on next page


§ 10 Notice of a General Meeting of Shareholders shall be made in the form of an advertisement in the Official Gazette (Post- och Inrikes Tidningar) and in Svenska Dagbladet and in Sydsvenska Dagbladet or in another daily newspaper published in Skåne. If publication of Svenska Dagbladet ceases, notifica- tions will be effected through an announcement in the Swedish Official Gazette and Dagens Industri. Notice of the Annual General Meeting and of Extraordinariy General Meetings convened to address amendments to the Articles of Association shall be issued not earlier than six weeks and not later than four weeks prior to the Meeting. Notice of other General Meetings shall be issued not earlier than six weeks and not later than two weeks prior to the Meeting.§ 11 To be entitled to participate in the business of a General Meeting, shareholders must be included in the share register confirming conditions five days prior to the Meeting and must notify the Company of their intention to attend the Meeting and be accompanied by a maximum of two assistants not later than 4 p.m. on the day stipulated in the Notice of a General Meeting. This day must not be a Sunday, a public holiday, a Saturday, Midsummer’s Eve, Christ- mas Eve or New Year’s Eve and must not be more than the five weekdays before the Meeting.§ 12 The company’s shares will be recorded in a control register pursuant to the Swedish Financial Instruments Act (1998:1479).

Addresses

MalmöWihlborgs Fastigheter ABBox 97SE-201 20 Malmö, SwedenVisitors: S:t Johannesgatan 2Telephone: +46 40 690 57 00Fax: +46 40 690 57 01

HelsingborgWihlborgs Fastigheter ABGarnisonsgatan 25ASE-254 66 Helsingborg, SwedenTelephone: +46 42 490 46 00Fax: +46 42 490 46 01

DenmarkWihlborgs A/SHørkær 20, stDK-2730 Herlev, DenmarkTelephone: +45 396 161 57Fax: +45 396 161 58

[email protected] registered office: MalmöCorporate identity number: 556367-0230

”We Will continue along tHe cHosen patH

by acquiring anD Managing coMMercial

properties tHat can be DevelopeD in our

carefully-selecteD strategic areas”

Documents

Wihlborgs Fastigheter AB The Annual Report · The Annual Report ”We’re sitting in the middle of the floW of business prospects Which means that We can react quickly ... Pennan