om.jm.se · ANNUAL REPORT 2003 -03 JM AB (publ) Postal address SE-16982 Stockholm Visitors’...

ANNUA L R EPORT2 0 0 3 -03JM AB (publ)

Postal address SE-169 82 StockholmVisitors’ address Telegrafgatan 4, SolnaTelephone +46 8 782 87 00Fax +46 8 782 86 00Internet www.jm.se

JM AN

NUAL REPO

RT 2003JM’s business concept is to create attractive living and working environments

that satisfy individual needs both today and in the future.

Cover: Kanbergslunden, Linköping

PRESENTING JM

“We are reducing our costs and working increasingly efficiently withproduct design and production. At the same time,we are broadeningour range of homes to meet customer demands in more segments.”

Johan Skoglund, President and CEO



JM AN

NUAL REPO

RT 2003

JM’s business concept is to create attractive living and working environments that satisfy individual needs both today and in the future.


PRESENTING JM



HEAD OFFICE AND

STOCKHOLM OFFICE

JM AB

Telegrafgatan 4, Solna

SE-169 82 Stockholm

Tel. +46 8 782 87 00, fax +46 8 782 86 00

www.jm.se

REGIONAL AND LOCAL OFFICES

EAST REGION

Uppsala

Sylveniusgatan 2

Box 1334, SE-751 43 Uppsala

Tel. +46 18 66 03 00, fax +46 18 66 03 10

CENTRAL REGION

Jönköping

Herkulesvägen 6, SE-553 03 Jönköping

Tel. +46 36 12 03 40, fax +46 36 12 03 66

Linköping (regional office)

Brigadgatan 24, SE-581 31 Linköping

Tel. +46 13 37 14 00, fax +46 13 37 14 09

Strängnäs

Trädgårdsgatan 15, SE-645 31 Strängnäs

Tel. +46 21 81 20 00, fax +46 152 222 59

Västerås

Signalistgatan 17, SE-721 31 Västerås

Tel. +46 21 81 20 00, fax +46 21 81 20 10

Örebro

Vasastrand 11, SE-703 54 Örebro

Tel. +46 19 10 29 40, fax +46 19 10 29 15

WEST REGION

Gothenburg

Gårdatorget 2, SE-412 50 Gothenburg

Tel. +46 31 703 57 00, fax +46 31 335 88 70

SOUTH REGION

Halmstad

Brogatan 1, SE-302 43 Halmstad

Tel. +46 35 10 63 60, fax +46 35 10 67 45

Helsingborg

Prästgatan 24, SE-252 24 Helsingborg

Tel. +46 42 28 98 90, fax +46 42 13 82 24

Lund (regional office)

Åldermansgatan 13

Box 21, SE-221 00 Lund

Tel. +46 46 30 00 00, fax +46 46 30 01 38

Malmö

Övägen 6, Limhamn

Box 60228, SE-216 09 Malmö

Tel. +46 40 16 98 80, fax +46 40 16 98 98

SUBSIDIARIES IN SWEDEN

AB Borätt

Sjöängsvägen 17

Box 956, SE-191 29 Sollentuna

Tel. +46 8 626 66 30, fax +46 8 626 98 20

www.boratt.se

Seniorgården AB

Sjöängsvägen 17


Tel. +46 8 626 66 30, fax +46 8 626 98 20

www.seniorgarden.se

O.Timblads Målerifirma AB

Strandbergsgatan 53, SE-112 51 Stockholm

Tel. + 46 8 619 51 00, fax +46 8 618 16 01

www.timblad.se

SUBSIDIARIES ABROAD

Belgium

JM Construction S.A.

Avenue Louise 287, Bte 1

B-1050 Brussels

Tel. +32 2 646 11 12, fax +32 2 646 96 26

www.jmconstruction.be

Denmark

JM Danmark A/S

Vester Farimagsgade 37

DK-1606 Copenhagen V

Tel. +45 33 45 70 00, fax +45 33 45 70 70

www.jmdanmark.dk

Norway

Byggholt AS (head office)

Bærumsveien 473,

Postboks 33

N-1306 Bærum

Tel. +47 67 17 60 00, fax +47 67 17 60 01

www.byggholt.no

Bergen

Damsgårdsveien 125

Postboks 178

N-5847 Bergen

Tel. +47 55 15 53 00, fax +47 55 15 53 01

Skien

Lundegate 4C

Postboks 45

N-3701 Skien

Tel. +47 35 54 33 50, fax +47 35 54 33 60

Tønsberg

Ålyveien 19

Postboks 2053

N-3103 Tønsberg

Tel. +47 33 30 03 00, fax +47 33 30 03 33

Seniorbo AS

Kjørbokollen 30

N-1337 Sandvika

Tel. +47 67 55 19 40, fax +47 67 55 19 41

www.seniorbo.no

Vikevåg Bolig AS

Gamle Forusveien 12

N-4033 Stavanger

Tel: +47 51 81 58 50, fax +47 51 81 58 01

www.vikevaag.no

ADDRESSES

Production: JM and Inte RioText: JM, BBD Financial Communications and NewSec Translation: Morton CommunicationsPhotography: Torbjörn Bergkvist and Nina BrobergIllustrations: Leif ÅbjörnssonArchitects' drawings: AIX, Cinnober Arkitekter and FFNS ArkitekterRepro and printing: SILKOREKORD, Stockholm 2004Paper: Incada Silk 220g (cover), Scandia 2000 130g (inside pages) and Silverblade Art 170g (JM in pictures)

JM is one of the Nordic region’s leading housing developers.Operations

focus on new production of homes in attractive areas of growth markets,

with the main focus on metropolitan areas and university towns in

Sweden,Norway,Denmark and Belgium.

JM is also involved in development of residential properties,and

conducts limited project development of commercial premises,primarily

in the Greater Stockholm area.

The Group is divided into five business units:JM Residential Stockholm,

JM Residential Sweden, JM Production, JM Commercial and JM International.

JM had 2,368 employees at the end of 2003. JM AB is a public limited

company and is listed on the Stockholm Stock Exchange.

GEOGRAPHIC BREAKDOWN OF NET SALES

NET SALES AND PROFIT AFTER TAX

JM 1999–2003

1999 Property portfolio in Skåne and Gothenburg sold.Operations focused to project development.Establishment in Denmark.New financial targets and change of name to JM AB.

2000 Growth-oriented operational targets.Principal owner Skanska sells its shareholding.Major property sales in Stockholm.

2001 Continued focus on project development.Continued major property sales.Share buy-backs.

2002 Good sales result, investment properties.Continued strategic reduction of property portfolio.Share buy-backs.New President and CEO.Problems in Stockholm projects.

2003 Focus on routines for improved control and oversight.Programme for group-wide pre-construction routines.Continued sale of fully developed properties.Major acquisition of residential properties for development.Good sales trend, homes.

0

2,000

4,000

6,000

8,000

10,000

12,000

200320022001200019990

200

400

600

800

1,000

1,200

Net sales, SEKm Profit after tax, SEKm

SEKm SEKm

NorwaySweden

Belgium

Denmark

Stockholm53%

Rest of Sweden26%

International21%

NorwaySweden

Belgium

Denmark

KEY FIGURES

SEKm 2003 2002 2001Net sales 7,787 8,872 8,642Operating profit 478 652 1,964Profit after financial items 267 368 1,629Project development margin (%) 2.4 5.4 11.8Earnings per share (SEK) 6.60 8.50 36.30Dividend per share (SEK) 51) 10 14Return on equity (%) 5.5 6.8 30.11)Proposed by the Board

JM AB (publ) has its registered office in StockholmCompany reg.no.556045-2103

1C O N T E N T S

j m d e l å r s r a p p o r t j a n u a r i – m a r s 2 0 0 2j m a n n u a l r e p o r t 2 0 0 3

2

6

8

10

13

16

19

25

30

33

35

38

40

P1– P12

41

46

53

54

56

58

59

62

77

77

78

79

81

82

83

85

91

92

CEO’S COMMENTS

SHARE DATA

BUSINESS CONCEPT, GOALS AND STRATEGIES

CORPORATE GOVERNANCE

BOARD OF DIRECTORS AND SENIOR EXECUTIVES

JM’S CORE BUSINESS

MARKET OVERVIEW HOUSING

MARKET OVERVIEW RESIDENTIAL AND COMMERCIAL PROPERTIES

OPPORTUNITIES AND RISKS

FINANCIAL ITEMS

ENVIRONMENT

HUMAN RESOURCES

THE BRAND

JM IN PICTURES

BUSINESS UNITS

BOARD OF DIRECTORS’ REPORT

INCOME STATEMENT

BALANCE SHEET

CASH FLOW STATEMENT

STATEMENT OF SHAREHOLDERS’ EQUITY

ACCOUNTING AND VALUATION PRINCIPLES

NOTES TO THE FINANCIAL STATEMENTS

PROPOSED DISPOSITION OF EARNINGS

AUDITORS’ REPORT

PROJECT DEVELOPMENT – NET SALES AND PROFIT

FIVE-YEAR SUMMARY

QUARTERLY OVERVIEW – GROUP

QUARTERLY OVERVIEW – BUSINESS UNITS

DEFINITIONS

JM’S PROPERTIES

TABLES, ILLUSTRATIONS AND DIAGRAMS

NOTICE OF ANNUAL GENERAL MEETING

Marielundsviken,Mariefred P4

Focus on profitability

In 2003 the focus was on building the foundations for amore efficient and more profitable JM.

At the end of 2002, deficiencies came to light in control,oversight and implementation of a number of projects inStockholm. These events led to a total review of JM’s opera-tions and working methods.

MARKING TIME

All major projects were examined in detail during the year.Several projects were revised, and all in all this led to a verylow number of production starts during the first ninemonths of the year.

IMPROVED CONTROL AND OVERSIGHT

A lot of effort has been put into improving the internal struc-tures for control and oversight. Among other things we haveintroduced new routines for project oversight and follow upof costs, new decision-making routines ahead of project andproduction starts, and new monitoring routines for projectswith a significant financial impact. Several key project deci-sions are now centralised to business unit management,group management and in certain cases to the Board.

COSTS MUST BE REDUCED

For most of the 1990s through to 2001, JM was able toincrease its revenues substantially due to major price in-creases for homes, particularly in Stockholm. Our costs,however, went up even more. To sum up, substantiallyincreased costs, too great an emphasis on exclusive apart-ments and rapid growth meant that JM’s profitability wasswiftly undermined, despite basically good conditions in themarket.

MORE STANDARDISED PRE-CONSTRUCTION

I expect that JM’s new pre-construction routines, whichwere developed and implemented during 2003, will lead tolower costs with no loss of quality. By using more standardsolutions for those parts of housing construction that do not

have high customer value, we will reduce the number ofcomponents, consolidate our purchasing volumes to fewersuppliers and reduce the time spent on pre-construction andproduction.

DEVELOPMENT IN 2003

With a profit from project development that amounted toSEK 182m, 2003 – like 2002 – was a weak year. This weakresult was mainly attributable to a number of major projectsin the Stockholm area. Over the next few years, project qual-ity will steadily improve as newly started projects form alarger proportion of project volume. Operating profitamounted to SEK 478m, underpinned by continued success-ful sales of fully developed properties.

There are several bright spots, however. We beat our previ-ous sales record in 2003 and the strong inflow of customersmeant that we could substantially increase the number ofhousing starts in the fourth quarter, which had a positiveimpact on both net sales and cash flow. The improved cashflow meant that the interest-bearing net debt could bereduced by SEK 1.4 billion in the final quarter of 2003.

The fourth quarter was also something of a turning pointfor JM’s Stockholm operations. There were almost 600 hous-ing starts, compared with a total of 380 for the first ninemonths. JM Residential Stockholm showed a profit in thefinal quarter of 2003 and could thus break its negative earn-ings trend.

Furthermore, we can see that the measures adopted relat-ing to project oversight, control and follow-up of costs arestarting to yield results. With a volume of 2,700 productionstarts in 2003, we remained at the 2002 level, with theimportant difference that projects are now better plannedand the reservation rate at production start is higher.

Major acquisitions of residential properties in Nacka and

2 C E O ’ S C O M M E N T S


COST-CUTTING PROGRAMME

• Fewer platforms and components.• Greater standardisation in product design.• Group-wide pre-construction process will reduce the number

of errors.• Training.• New purchasing strategy.

Vaxholm outside Stockholm provide a new market segmentfor project development. This has also helped to reduceexposure to the commercial property market. Acquisition ofthe Norwegian project development company Vikevåg, basedin Stavanger, has further strengthened our position in theNorwegian market.

STRATEGIC DEVELOPMENT

These acquisitions are excellent examples of the new strate-gic plan adopted by JM. The strategic plan also means aneven clearer focus on housing development, a broadening ofthe product range as regards both form of tenure and priceband, and a focus on growth outside Stockholm. Further-more, the size of the building rights portfolio in the balancesheet will be adjusted to reflect four years’ planned produc-tion.

Historically, JM has realised substantial values through thesale of fully developed commercial properties. This type ofvalue creation will in future be more clearly linked to re-sidential properties. The residential portfolio we haveacquired contains excellent development opportunities in theform of densification through new construction and throughconversion to tenant-owned apartments. Furthermore, theportfolio has low vacancy rates and stable cash flows.

SHAREHOLDER VALUE

JM’s share price development between the all-time-high in2002 until the beginning of 2004 has been weak, and the tar-get that JM’s shareholders should receive a total return thatis higher than companies with similar operations and riskprofiles has not been met.

Profitable growth is a basic prerequisite for buildingshareholder value over time. JM’s profitability depends on

3C E O ’ S C O M M E N T S

j m a n n u a l r e p o r t 2 0 0 3

0

5,000

10,000

15,000

20,000

25,000

2003200220012000199919981997199619951994

Demographic growth in the County of Stockholm

Number of housing starts in multi-family dwellings (information for 2003 is preliminary)

Source: Statistics Sweden, SCB

Number

DEMOGRAPHIC GROWTH AND NEW HOUSING, COUNTY OF STOCKHOLM

Liljekonvaljen,Värmdö P8

4 C E O ’ S C O M M E N T S


MORE EFFICIENT PRE-CONSTRUCTION

JM must be able to efficiently produce attractive homesof high quality at the lowest possible total cost. Newprocedures for pre-construction were introduced in2003.

Each housing estate or residential property is designed and pro-duced on the basis of requirements where position, demand inthe local market, detailed planning requirements and other fac-tors are taken into consideration.

With its new pre-construction procedures, JM is now intro-ducing a more industrial way of working and production meth-ods for its housing development. Fewer components andconsistent and proven processes throughout the entire organi-sation and in project development phases will lead to lowercosts, shorter lead times and improved quality.

This change means that pre-construction decisions will bemade centrally, which will in turn guide the planning work car-ried out internally at JM and by external consultants.The pre-construction procedures have been drawn up by some 60 ofJM’s most qualified quantity surveyors, project managers andcraftsmen and are based on well-tried and cost-effectivechoices of materials and working methods.

One basic prerequisite is that the new procedures do not have anegative impact on customer relations and market offerings.Pre-construction decisions therefore take into account param-eters such as “customer values” i.e. insulation standard,windowdesign and exterior, as well as “non-customer values” such aswall elements, joists, installations, roofing,etc.Based on this divi-sion, a more expensive component can be included provided itin some way creates added value for the customer. In othercases more expensive components or solutions are chosen toreduce the risk of error and costly supplementary work,increase useful economic life and reduce operating costs.

The new pre-construction procedures will increase produc-tivity, quality and customer benefit.The new pre-constructiondecisions also lay the foundation for greater savings within pur-chasing since purchasing volumes will be more focused towardsa lower number and more standardised components.

Examples show that the savings potential can amount tobetween 10 and 20% on individual components, by consolidat-ing volumes to a few suppliers and reducing time spend in pre-construction and production.

The new pre-construction procedures for apartment blocksbecame effective in December 2003.

EXAMPLE OF WORKING DRAWING

Working drawing from the new pre-construction procedureswhich shows jointing of prefabricated concrete uprightsthrough a floor.

GOALS FOR NEW PRE-CONSTRUCTION PROCEDURES

• Fewer errors – increased customer benefit.• Fewer platforms and components.• Lower purchasing costs,material and

consultants.• Shorter lead times.• More cost-effective production.

Embedded plastic tube ø 60 tobe filled with expanding mortar

Top edge prefab upright= top edge flat bearing surface

Dowel ø 25 length 700 mmprotrudes 400 over upright top

Prefab upright

our ability to offer attractive and well-built homes at com-petitive prices and at the lowest possible total cost. I feelconfident that we can achieve this.

Broadening our product range means that more peoplewill be able to afford to buy a JM home. This does not mean,however, that we will be renouncing quality, margins or ourlong-term approach. The houses we build will stand for avery long time.

Since we already operate in the most attractive Nordicmarkets, it is natural for us primarily to seek growth throughorganic expansion in existing locations. Of course this doesnot rule out acquisitions, if good opportunities should arise.

TOWARDS SIMPLER REVENUE RECOGNITION

The Swedish Construction Federation is preparing a newindustry recommendation for revenue recognition of resi-dential production conducted by the companies. The newprinciple, which is planned to be adopted by JM with effectfrom the 2005 financial year, is based on revenue beingrecognised as the end customers sign purchasing contracts.This will facilitate analysis of our business and make revenuerecognition more conservative.

PROSPECTS FOR 2004

JM focuses on building homes on attractive sites in areas withgood economic growth. The long-term trend with more peoplemoving to cities and university towns in the Nordic countriesis continuing. These housing markets, as well as surroundingmunicipalities and other areas with good communications, areshowing positive development. We anticipate substantial andlasting demand for homes developed by JM in the foreseeablefuture. We have a well positioned building rights portfoliowith approximately 23,400 residential units in attractivelocations.

We will continue to give priority to our markets in Sweden,Norway, Denmark and Belgium. Some shifting of position willtake place to reduce JM’s dependence on the Stockholm mar-ket, although without forgoing the potential we have in ourlargest market. Major projects outside Stockholm include theDockan area in the port of Malmö, Sannegårdshamnen inGothenburg, and Industristaden in Uppsala. In Oslo, devel-opment is under way of the station area in Grefsen.

We expect a stable, possibly slightly weaker price trend.Even if revenues remain unchanged, a greater degree of stan-

dardisation, increased use of joint platforms, reduced pur-chasing costs and a clearer focus on costs will propel JMtowards improved profitability.

We will also further strengthen our customer and marketorientation. The level of service in our business will be devel-oped and the proportion of satisfied customers will rise.

JM already has a strong brand, satisfied customers, long-term operations and employees with a high level of compe-tence. I feel that there is strength in the company and a strongdetermination to achieve our goals.

Stockholm, March 2004

Johan SkoglundPresident and CEO

5C E O ’ S C O M M E N T S


6


Some recovery

SHARE CAPITAL

JM shares are listed on the A list of the Stockholm StockExchange (Stockholmsbörsen). The share capital amounts toSEK 112.3m represented by 28.1 million shares each with a parvalue of SEK 4 and equal voting rights. A trading block amountsto 200 shares.

SHAREHOLDER TARGET

JM’s shareholders should receive a higher total return, i.e. div-idends and price appreciation on JM shares, than shareholdersin companies with similar operations and risk profiles.

SHARE PRICE TREND AND RETURN

JM shares are included in Stockholmsbörsen’s index“SX4040 Real Estate”. In 2003, JM’s share price fell 34.6%,compared with an increase of 24.7% for the SX4040. Divi-dend yield, i.e. proposed dividend in relation to share priceat year-end, was 4.7%.

TRADING AND MARKET CAPITALISATION

In 2003 JM shares were traded to a total value of SEK 2.6 bil-lion. Average daily trading was approximately SEK 10m (14).The turnover rate, i.e. the liquidity of the shares on Stock-holmsbörsen, was 85.6% during the year compared with anaverage for the entire stock exchange of 114.7%. The company’smarket capitalisation amounted to SEK 3.0 billion at year-end.

OWNERSHIP STRUCTURE

The number of shareholders at 29 February 2004 was 4,987.The ten largest Swedish shareholders account for 48% of theshare capital and foreign shareholders for 28%.

DIVIDEND POLICY

Over time, the dividend should reflect the earnings trend inthe total operating activities. The average dividend over abusiness cycle should correspond to 50% of consolidatedprofit after tax. Capital gains from property sales are a natu-ral part of JM’s project development operations and there-fore included in the calculation of dividends.

SHARE BUY-BACK PROGRAMME

JM prioritises active management of the consolidated bal-ance sheet. To the extent the visible equity ratio and interestcoverage are assessed as exceeding the optimal capital struc-ture on a continuing basis, capital will be transferred toshareholders in a form that is appropriate at the time.

In 2003, in accordance with its mandate from the 2002Annual General Meeting, JM repurchased 1,400,000 of itsown shares at an average price of SEK 110 per share. At theAnnual General Meeting in April 2003 it was decided toeliminate through cancellation the 2,300,000 shares repur-chased by the company since the previous annual generalmeeting. The share capital therefore decreased by SEK 9.2m.

OWNERSHIP STRUCTURE AT 31 DECEMBER 2003

No.of % of all Total no. % ofSize of share- share- of shares shareholding holders holders owned capital

1–500 4,231 79.0 580,670 2.1

501–1,000 515 9.6 438,103 1.6

1,001–5,000 369 6.9 882,978 3.1

5,001–20,000 117 2.2 1,282,408 4.6

20,001–100,000 64 1.2 3,115,778 11.1

100,001– 57 1.1 21,765,470 77.5

Total 5,353 100.0 28,065,407 100.0

SHARE PRICE TREND 1 JANUARY 2003 – 29 FEBRUARY 2004

S H A R E DATA

03

Trading volume(000s)SEK

Source: SIXNo. of shares tradedSAX All Share indexSX4040 Real EstateJM

500

1,000

1,500

80

100

120

140

160

180

200

220

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan04

Feb

7

j m d e l å r s r a p p o r t j a n u a r i – m a r s 2 0 0 2

SHAREHOLDERS AT 29 FEBRUARY 2004

Shareholder % of shares

SEB funds and foundations Gamla Livförsäkrings AB SEB Trygg Liv 11.1

Robur funds 9.1

AFA Försäkringar 5.9

Handelsbanken funds 4.4

Stefan Persson Placering AB 4.3

Alecta 4.2

Fourth National Pension Fund 2.7

Eikos 2.6

Länsförsäkringar Liv Försäkrings AB Länsförsäkringar – funds 2.0

Livförsäkrings AB Skandia 1.9

Foreign shareholders 28.0

Other shareholders 23.8

Total 100.0

Number of shareholders at 29 February 2004:4,987.Number of shares at 29 February 2004 amounts to 28,065,407.

CHANGES IN SHARE CAPITAL 1998–2003

RedemptionNew issue, of shares, Number of Par value/ Share capital,

Year SEKm SEKm shares share,SEK SEKm

1998 2.41) 33,241,000 4 133.0

2001 1.51) –13.3 30,289,363 4 121.2

2002 0.21) 30,363,614 4 121.4

2003 0.01) –9.2 28,065,407 4 112.2

1)Conversion of debenture loan.

STOCKBROKERS WHO CONTINUOUSLY MONITOR JM

Company Analyst

ABG Sundal Collier Fredrik Grevelius

Alfred Berg Fondkommission Lars-Åke Bokenberger

CAI Cheuvreux Nordic Tomas Ramsälv

D.Carnegie Fredrik Skoglund

Deutsche Bank David Halldén

Enskilda Securities Erik Nyman

Handelsbanken Securities Jonas Eixmann

Merrill Lynch Bernd Stahli

Nordea Securities Jonas Andersson

Swedbank Markets Tobias Kaj

S H A R E DATA

SHARE DATA

SEK per share 2003 2002 2001 2000 1999

Share price at 31 Dec 106 162 217.50 209 164

Highest price during the year 162 272 263 238 174

Lowest price during the year 82 150 182 143 111

Dividend yield at 31 Dec (%) 4.7 6.2 6.4 4.8 4.1

Market capitalisation at 31 Dec (SEKm) 2,975 4,889 6,523 6,947 5,452

Earnings after tax, total 1) 6.60 8.50 36.30 25.40 13.30

Investment properties

Market value 114 118 212 289 277

Book value 101 94 157 194 206

Shareholders’ equity (reported) 117 121 128 113 95

Dividend 5.00 2) 10.00 14.00 10.00 6.75

Dividend as a % of profit after tax 75 118 37 39 50

P/E ratio at 31 Dec 16 19 6 8 12

Number of shares, 31 Dec 28,065,407 29,463,614 3) 29,989,363 33,241,000 33,241,000

1)Earnings after tax after full dilution 6.60 8.50 36.10 25.10 13.20

2) Proposed by the Board.3) Excluding 900,000 repurchased shares.


Strategy for high total return

BUSINESS CONCEPT

To create attractive living and working environments that sat-isfy individual needs both today and in the future.

The business concept means that JM is a project developerof housing and to a selective extent of commercial premises.JM gives priority to high quality and a holistic approach in itsdesign. The aim is to create living and working environmentsthat will remain attractive over time.

VISION

JM shall be a leading developer of high-quality housing proj-ects in the Nordic region.

OBJECTIVE FOR SHAREHOLDER VALUE

The goal is to give shareholders a higher total return, divi-dends plus JM share price appreciation, than other companieswith similar operations and risk profiles.

STRATEGY

In order, within the framework of the business concept, toachieve its vision and meet its shareholder value objective, JMhas the following strategies:• JM will develop housing in growth areas with good demo-

graphic and socio-economic conditions over time. Theseare currently metropolitan areas as well as university andcollege towns primarily in Sweden, Norway, Denmark andBelgium.

• The focus must be clearly on high quality and eco-compli-ant homes and workplaces with a high customer value andin attractive locations.

• JM will focus on cash flows and effective utilisation of the balance sheet. This will be achieved by maintaining ahigh rate of start-ups, implementation and sales of propertyprojects.

• Homes will mainly be sold for private ownership, but mayalso include rentals.

• Project development of commercial properties will be lim-ited and primarily support housing development.

• JM should internally secure a certain proportion of pro-

duction resources and will therefore maintain a limitedbut effective construction and contracting business. How-ever, the company’s own efficiency must always be exam-ined in relation to costs of external production resources.

• Continued volume growth will be generated both organi-cally and through acquisitions, with the priority ofstrengthening the Group’s position in existing markets.Growth will be achieved subject to good profitability anda market-leading position.

PROFITABILITY TARGET

After-tax return on visible equity to amount to 10–15% over abusiness cycle.

This target reflects the long lead times and cyclical natureof JM’s business.

AMBITION FOR GROWTH

JM aims to grow over time but housing starts will take place inresponse to secured demand as well as quality assured pre-construction and production planning.

DIVIDEND TARGET

The average dividend over a business cycle should correspondto 50% of consolidated profit after tax.

ASSETS AND CAPITAL STRUCTURE

JM’s ambition is to maintain over time an optimal composi-tion of assets and capital structure, suitable for the com-pany’s project development activities.

The building rights portfolio will be continuously opti-mised with regard to demand trends, planned productionand tied-up capital. The balance sheet should normally notcontain development properties exceeding four years’ pro-duction expressed in number of building rights.

The balance sheet item investment properties will entirelycomprise project assets and mainly consist of residentialproperties for project development, in the form of conversionto tenant-owner apartments or densification. JM’s aim isthat the balance sheet should not contain any fully developedcommercial properties, these should be sold as soon as possi-ble following completion.

The cyclical nature of commercial project developmentand a varying supply of residential properties for sale meansthat the item investment properties can vary in size.

8 B U S I N E S S C O N C E P T, G O A L S A N D S T R AT E G I E S


The visible equity ratio should amount to 35% over a busi-ness cycle. To the extent the visible equity ratio and interestcoverage are assessed as exceeding the optimal capital struc-ture on a lasting basis, capital will be transferred to share-holders in a form that is appropriate at the time.

The equity ratio target is a simplified consequence of amore extensive analysis where shareholders’ equity has beenallocated to the balance sheet’s different asset classes andtypes of operations taking assessed operating risk intoaccount. A falling proportion of fully developed investmentproperties requires a higher equity ratio.

Since project development demands ongoing, effective cap-ital allocation in a partly cyclical market, a dynamic approachto financial strength and interest coverage is required. Theassessment is that the present equity ratio target providesappropriate financial stability over a business cycle.

REQUIRED RATE OF RETURN

In order to generate the highest possible shareholder value,JM must have good knowledge of which investments are prof-itable and achieve the Group’s required rate of return. Everyinvestment in a project must therefore generate a return thatcovers its cost of capital. The investment’s cash flow is calcu-lated and discounted on the basis of a required rate of return.If the net present value of these cash flows is positive, theinvestment creates value. Return requirements are set forJM’s various operations where JM’s average required rate ofreturn can be simplified as a balance of JM’s costs for share-holders’ equity and borrowed capital as follows:

Ccost of capital, shareholders,equity

• Risk-free return – average return on a five-year govern-ment bond is approximately 5%.

• Risk premium – for the risk the investor takes when invest-ing in JM shares, the risk premium is estimated at 5%.

• The required rate of return on equity (risk-free return plusrisk premium) – 10%.

cost of capital, borrowed capital

• Risk-free return – see above 5%.• Risk premium which is paid on loan financing – 1%.• Tax deduction – since interest expenses reduce the profit on

which tax is paid, the actual cost is lower, with corporatetax at 28% the interest expense after tax is reduced by 28%to 4.3%.

capital structure

• Debt/equity ratio – JM’s target is an equity ratio of 35%over a business cycle. In the individual projects, the debt/equity ratio is assumed, on average, to be 1.0.

The Group’s weighted cost of capital (WACC) and thereforeits basic required rate of return is 7.2%. This means that theGroup’s average investments must generate cash flow afterpayment of all operating expenses and tax, but before inter-est expenses, of at least 7.2% of the basic investment in orderto be profitable.

9B U S I N E S S C O N C E P T, G O A L S A N D S T R AT E G I E S


FINANCIAL TARGETS

% Target 2003 2002 2001 2000 1999

Return on equity, 5-year weighted 10–151) 6 17 19 14 13

Dividend, as a % of profit after tax 50 752) 118 37 39 50

Equity ratio 35 36 34 30 31 28

Project development margin 3) 10 2.4 5.4 11.8 10.3 6.51)Over a business cycle with effect from 2004.2)As proposed by the Board.3)Operating margin as of 2004.


Structure for governance and reporting

This section provides a description of the structure andprocedures for the Board and Executive Management,and shows how responsibility and authority are dele-gated within the organisation.

THE COMPOSITION OF THE BOARD

In 2003, JM’s Board comprised seven members, withoutdeputies, who were elected by the Annual General Meeting,and two members with two deputies who were appointed bythe employee organisations.

NOMINATION

Nominations of Board members ahead of an election at anAnnual General Meeting are made through a NominationCommittee comprising representatives for the four largestshareholders in the company, at any time, as well as the Chair-man of the Board. The composition of the Nomination Com-mittee is announced at the end of the fourth quarter at thelatest. Composition is not affected by any changes in owner-ship structure between the date of presentation of the Nomi-nation Committee and the next Annual General Meeting.

The key task of the Nomination Committee is to presentthe Annual General Meeting with proposals for Board mem-bers and fees to Board members as well as, when so required,to propose election of auditors. Ahead of the 2004 AnnualGeneral Meeting, the Nomination Committee comprised:Mats Tunér (SEB fonder), chairman, Marianne Nilsson(Robur fonder), Anders Algotsson (AFA Försäkringar), KjellNorling (Handelsbanken fonder) as well as the Chairman ofthe Board, Per Westlund. Proposed nominations to the Boardare specified in the notice of the Annual General Meeting.

THE WORK OF THE BOARD

The work of the Board concentrates on strategic issues suchas operational focus, finance and financial position, controland efficiency, as well as decisions on production starts,

investments and sales of development land and fully devel-oped properties above certain ceiling amounts.

Eleven Board meeting were held during the year, includingone statutory meeting.

The duties of the Chairman of the Board are estimated toamount to approximately 60 working days per year and about20 working days for non-executive Board members. TheChairman of the Board makes an annual evaluation of thework of the Board with the Board members.

REPORTING

The President is responsible for ensuring that the Boardreceives reports and information that are of a quality thatallows the Board to make well-founded decisions and qualifiedassessments. Economic and financial reports are presented ateach scheduled Board meeting. Quarterly and year-endreports comprise the basic reporting and are complementedwith information from the business units obtained from JM’sinternal reporting system. The President is also charged withreporting to each Board meeting the total purchase price foracquired and sold properties and on decisions for investmentin properties. Before each meeting, Board members are pro-vided with documentation of which to base their decisions.

COMPENSATION AND AUDIT COMMITTEES

A Compensation Committee and an Audit Committee wereappointed in February 2003. Each committee comprisesthree members of the Board. The committees are, with a fewexceptions, preparatory bodies in relation to the Board.

Until the 2004 Annual General Meeting, the CompensationCommittee comprises Per Westlund (chairman), Per Olofssonand Lennart Sundén, with the President as a co-opted mem-ber. The President does not participate in matters concerninghis own compensation. Four meetings were held during theyear. Work has included an external evaluation where compen-sation levels and principles for members of Executive Manage-ment were compared with both the building trade and thetotal private labour market. The Compensation Committeehas also developed new, stricter principles for variable com-pensation. Details of compensation principles for senior exec-utives can be found on page 38 (Human Resources).

Until the 2004 Annual General Meeting, the Audit Com-mittee comprises Berthold Lindqvist (chairman), ElisabetAnnell and Björn Björnsson. The company’s two auditors and

10 C O R P O R AT E G O V E R N A N C E


the President are co-opted members. Eight meetings wereheld in 2003. Work has focused on measures for better con-trol and oversight, initially directed at weaknesses in theexisting organisation, as well as measures that managementwished to adopt. The committee then established a pro-gramme for control and oversight. The committee has,through an extra assignment to the auditors, verified thatmeasures adopted and routines have been introduced andapplied, and that they have had the desired effect.

REMUNERATION TO THE BOARD AND MANAGEMENT

Remuneration to Board members is decided by the AnnualGeneral Meeting based on proposals from the NominationCommittee. As decided by the 2003 Annual General Meet-ing, the Chairman of the Board receives a fee of SEK425,000. Non-executive Board members each receive a fee ofSEK 200,000. The Annual General Meeting also decided onfees to the Compensation and Audit Committees with a

total of SEK 200,000. These fees have been divided equallybetween the six committee members.

A specification of salary and pension terms for the Presidentas well as compensation to Executive Management is provid-ed on page 75 (Notes to the Financial Statements). Whereapplicable the Annual General Meeting decides on the intro-duction of incentive programmes for employees in the formof stock option or convertible debenture programmes.

PRESIDENT’S RIGHT OF DECISION

The Board has delegated to the President the right of deci-sion for purchases and sales of properties (to a maximumvalue of SEK 100m) and investments in properties (up to SEK400m). Other cases are decided by the Board. The Board hasalso delegated to the President the right of decision for pro-duction starts for housing projects up to a total project cost,excluding the purchase price for the property, of SEK 400m.These amounts are chosen to meet the Board’s need to exer-cise control and management’s need of freedom of action.The President has the right to further delegate some of theabove decision rights to business unit managers.

MANAGEMENT’S WORK

Managerial responsibility includes always working to ensurethat guidelines from the Board and President are followed.JM’s operations are divided into five business units eachwith a manager who has ultimate responsibility and reportsto the President.

Executive Management (EM) comprises all heads of busi-ness units and staff heads and meets at least once a month.Group-wide matters (quality, environment, employees, com-munications, etc.) are handled by EM jointly. Business mat-ters (such as production starts, investments) are handled bybusiness area managers, the President, the CFO and the sen-ior legal adviser.

The President has delegated to the business area managersthe right of decision for purchases of properties (up to SEK10m), infrastructure investments related to projects (up toSEK 10m) and production starts of projects (up to SEK 150m).These decisions are taken by the business unit managers in thebusiness committee. For companies in the JM Internationalbusiness unit, decisions are made by the board of each com-pany, with corresponding decision-making guidelines.

11C O R P O R AT E G O V E R N A N C E


AUDIT COMMITTEE – DUTIES AND RESPONSIBILITIES

• Evaluation of external auditors for recommendation to theBoard and Annual General Meeting (in consultation with theNomination Committee).

• Approval of fees and remuneration to auditors for specialassignments.

• Review of audit plans in the short and long term.• Quality assessment of internal control systems and routines.• Reporting and review of areas or projects of special interest.• Examination and review of closing accounts and interim reports.• Reporting and presenting to the Board on observations

made at reviews with auditors and management.• Initiating more extensive work within selected areas.

COMPENSATION COMMITTEE –DUTIES AND RESPONSIBILITIES

• Preparing proposals regarding salary, pension benefits andother terms for the company’s President.

• Preparing proposals regarding general principles for compen-sation to other employees,particularly variable compensation.

• Preparing proposals for any incentive programmes if theseare based on share price development.

• Deciding on salary and other terms for Executive Manage-ment (excluding the President), provided these are based ongeneral principles adopted by the Board.

12


C O R P O R AT E G O V E R N A N C E

CONTROL AND REPORTING STRUCTURE

Within JM a large number of projects are in production atany given time. It is not unusual for a project to involve morethan 100 people with an estimated order value of more thanSEK 100m. Every project is run by a project manager who isresponsible for the project’s revenues and expenses. Theproject manager reports to the regional manager who isdirectly subordinate to the business unit manager. All thesepeople have profit responsibility. The business unit manageris responsible for deciding the revenue level in the project.

Follow-up of sold and reserved units takes place on amonthly basis, with reporting to regional manager, businessunit manager and the President. Complete reviews and rec-onciliation of each project’s revenues and expenses are per-formed every quarter. A selection of major projects isreviewed by the auditors and presented in the Audit Com-mittee every quarter.

During 2003 a large number of measures were adopted toimprove control and governance of JM’s operations. A num-ber of important project decisions have been centralised,mainly to Executive Management, but also to the Board.Considerably stricter project oversight routines have beenintroduced, particularly in the Stockholm regions. For-malised “decision gateways” now precede the important proj-ect decisions: start of pre-construction, sales start and pro-

duction start. Decisions to begin work on a project are nowalways made by business unit management or ExecutiveManagement, or by the Board for major projects.

New monitoring routines have been introduced for largeprojects. Accounts are presented quarterly by the businessunit manager and regional manager to the President, Vice Pres-ident and CFO. Assessment data includes the financial historyof the project, future anticipated revenues and expenses andthe current sales and reservations situation. Special controlgroups have been set up for the very largest projects. Theassignments of external auditors have also been extended.

EFFICIENCY AND STRATEGY

Internal efficiency and JM’s future development and direc-tion are also questions that have engaged the Board and Exec-utive Management during the year. A programme to reduceproduction costs has been launched. This includes both agroup-wide pre-construction process (see page 4) and devel-opment of long-term, strategic purchasing routines.

The Board has also established JM’s strategic direction forthe years ahead. This strategy, which is based on the com-pany’s strengths within project development of homes,includes development of the product range in order to attractmore customer segments and a focusing of the property port-folio towards residential properties for project development.

Röllingby 2,Åkersberga P1

13B O A R D O F D I R E C TO R S A N D S E N I O R E X E C U T I V E S


Top row from left: Per Westlund, Elisabet Annell, Björn Björnsson, Berthold Lindqvist. Middle row from left: Per Olofsson, Johan Skoglund, Lennart Sundén,Jonatan Sundelin. Bottom row from left: Magnus Rehbinder, Leif Lundell, Johan Wegin.

B O A R D O F D I R E C TO R S

Top row from left: Johan Skoglund, Magnus Key, Zdravko Markovski, Claes Magnus Åkesson. Middle row from left: Urban Lilja, Caroline Burén, Lennart Henriz,Göran Malmberg. Bottom row from left: Sören Bergström, Sten Hamberg.

E X E C U T I V E M A N A G E M E N T

14 B O A R D O F D I R E C TO R S A N D S E N I O R E X E C U T I V E S


BOARD OF DIRECTORS

Per WestlundChairman of the BoardMember of the Board since 1998.Shares in JM:3,000

Born 1944.M.Sc.Eng. and M.B.A.

Chairman of the Swedish Society of Civil Engineers.Board member of Svenska Kaolin AB and SvenskaOstindiska Companiet AB, and the Royal SwedishAcademy of Engineering Sciences, IVA.

Former positions:Executive Vice President Skanska.

Elisabet Annell Member of the Board since 2002.Shares in JM:700

Born 1945.M.Pol.Sc.

CEO of Univero Group (former Temo Group).Board member of Axel Johnson International AB,Dande-ryds Sjukhus AB,IBS AB, AB Sardus,TV4 AB,Catella Hold-ing AB,Livförsäkrings AB Skandia,Nordic Growth MarketNGM AB and member of the Securities Council.

Former positions:President and Senior Consultant atSMG Sweden AB,President and Senior Consultant atSIFO Management Group AB,President and Consultantat Tönnerviks Revision AB.Vice President and Consul-tant at Svenska Management Gruppen AB (Mgruppen).

Björn BjörnssonMember of the Board since 2001.Shares in JM:2,000

Born 1946.M.Pol.Sc.

Financial consultant.Board member of Billerud AB,BureEquity AB,Teracom AB,Försäkrings AB Skandia andÖhman Kapitalförvaltning AB.

Former positions/assignments:President Lancelot AssetManagement AB and President Export-Invest AB.

Berthold LindqvistMember of the Board since 2001.Shares in JM:0

Born 1938.Honorary Doctor of Medicine,Engineer.

Chairman of the Board of Munters AB.Board memberof Securitas AB,Trelleborg AB,Probi AB and NovotekSverige AB.

Former positions:President of Gambro AB and Execu-tive Vice President of Sonesson AB.

Per OlofssonMember of the Board since 1998.Shares in JM:500

Born 1940.B.Sc.

Chairman of the Board of Sync BPI AB,MPI Teknik ABand Springboard Capital AB.Board member of KreatelCommunications AB,Vitea AB,KTH Executive SchoolAB and Webanalys AB.

Former positions:President of the Federation ofSwedish Industries,Vice President of IBM WorldwideHealthcare Solutions Industry,President of IBM NordicAB and President of IBM Svenska AB.

Lennart SundénMember of the Board since 2001.Shares in JM:1,500

Born 1952.M.Sc.Eng. and M.B.A.

President and CEO of Swedish Match AB.Board mem-ber of FöreningsSparbanken AB and Arnold AndréGmbH & Co.KG.

Former positions:Head of Electrolux Industrial Opera-tions for White Goods in Europe and head of ElectroluxGlobal Vacuum Cleaners and Small Appliances.

Johan SkoglundMember of the Board since 2003.Shares in JM: 5,000Number of warrants: 5,000

Born 1962. M.Sc.Eng.

President and CEO of JM. Chairman of the Board of ABBorätt and Seniorgården AB. Board member of ABBostadsgaranti, Försäkrings AB Bostadsgaranti, MentorSverige AB and SMÅÅ AB.

Former positions in JM Group: Site Engineer,President’s Assistant, Project Manager, RegionalManager and Business Unit Manager.

EMPLOYEE REPRESENTATIVES

Leif Lundell Born 1939,electrician.Member of the Board since 1977.Shares in JM:1,044Number of warrants: 0

Magnus RehbinderBorn 1944,mining engineer.Deputy member of the Board since 2003.Shares in JM:100Number of warrants: 0

Jonatan SundelinBorn 1970,construction worker.Deputy member of the Board since 2003.Shares in JM:0Number of warrants:0

Johan WeginBorn 1965, construction engineer.Member of the Board since 2002.Shares in JM:0Number of warrants: 0

SECRETARY TO THE BOARD

Urban LiljaBorn 1952, Senior Legal Adviser at JM AB.Secretary to the Board since 1996.Shares in JM:25,000Number of warrants: 10,000

AUDITORS

Öhrlings PricewaterhouseCoopers ABBertil JohansonSenior Auditor, Authorised Public Accountant

Ulf WesterbergAuthorised Public Accountant

Shareholdings pertain to personal holdings and sharesowned by immediate family members at 31 January 2004.

All warrants were acquired through purchases in 2001.

EXECUTIVE MANAGEMENT

Johan Skoglund President and CEOJM employee since 1986Shares in JM: 5,000Number of warrants: 5,000

Born 1962. M.Sc.Eng., KTH 1986. Master of ScienceProgramme Stockholm School of Economics 1998.

Site engineer 86–89, president’s assistant 89–91,project manager 91–96, regional manager Outer City96–97, regional manager Stockholm South 97–99,regional manager Commercial Properties 99–00, headof Sweden business unit 00–01, head of JM Residentialbusiness unit 01–02. President and CEO 02–.

Chairman of the Board of AB Borätt and SeniorgårdenAB. Board member of AB Bostadsgaranti, FörsäkringsAB Bostadsgaranti, Mentor Sverige AB and SMÅÅ AB.

Magnus Key Executive Vice President JM International and JM Residential SwedenJM employee since 1973Shares in JM: 25,000 Number of warrants: 10,000

Born 1944. M.Sc.Eng., Chalmers 1968

Employed at Skanska 68–73.

Site engineer, head of department and regional managerin Luleå 73–85, acting production manager inStockholm 85–89, vice president, production manager,President JM Byggnads AB 89–01. Executive VicePresident and head of international operations 01–.Head of JM Residential Sweden from 1 April 2003.

Chairman of the Stockholm Association of BuildingContractors.Board member of Sveriges Byggindustrierand Arkitektkopia.

Claes Magnus Åkesson Finance and TreasuryJM employee since 1998Shares in JM: 18,000 Number of warrants: 10,000

Born 1959.M.B.A., Stockholm School of Economics 1984.

Employed within the Ericsson Group 87–98: responsi-ble for financial co-ordination 87–93, AssistantTreasurer 93–94, senior controller, Asia/China/MiddleEast market unit 94–96, head of finance and treasuryMalaysia 96–97 and regional controller Asia 97–98.

Chief Financial Officer JM AB 98–.

Urban Lilja Legal Affairs and DevelopmentJM employee since 1996Shares in JM: 25,000 Number of warrants: 10,000

Born 1952. LL.B., Lund University 1978.Articled clerk Borås District Court 78–81.

Lawyer Swedish Association of RegisteredPhysiotherapists 81–82, lawyer Friman & Carlanderadvokatbyrå 82–86, company lawyer Celsius IndustrierAB 86–89 and company lawyer Akzo Nobel AB 89–96.

Chief Legal Counsel JM AB 96–. Secretary to JM’sBoard of Directors.

Caroline Burén Corporate CommunicationsJM employee since 2001Shares in JM: 0Number of warrants: 0

Born 1961.B.A.,Uppsala University 1989.DIHR 1991.

Project manager assistant Stockholm Convention Bureau88–90, communication officer Nynäs Petroleum 92–93 andcommunication manager Nynäs Naphthenics AB 93–01.

Director of Corporate Communications JM AB 01–.

Göran Malmberg Human ResourcesJM employee since 1991Shares in JM: 0 Number of warrants: 1,500

Born 1945. LL.B., Stockholm University 1974.

Labour legislation lawyer Apoteket AB 82–87,negotiator/lawyer Employer Organisation SFA 87–89 and personnelmanager Helsingborgs Hamn AB.

Director of Human Resources JM AB 91–.

Lennart Henriz Business Development (Quality and Environment/IT)JM employee since 1978 Shares in JM: 7,240Number of warrants: 10,000

Born 1953. M.Sc.Eng., KTH 1978.

Asst. supervisor 78–81, project manager 81–84, direc-tor’s assistant 84–86, manager/production managerOctopus Energy/Industri AB Ventilator (both JM Group)86–87, data processing manager/development manager88–91, marketing manager AB Projektgaranti 91–94,vice president and regional manager AB Projektgaranti94–98 and quality and environmental manager 98–99.Head of Business Development 00–.

Zdravko Markovski JM Residential StockholmJM employee since 1987.Shares in JM: 2,000Number of warrants: 500

Born 1964. M.Sc.Eng-, KTH 1987.

Supervisor/site engineer 87–80,contractor engineer andpurchaser 90–92,project planning manager 93–94,projectmanager 94–00.regional manager Uppland 00–01 andregional manager East 01–02.Head of JM Residential busi-ness unit 02–03.Head of JM Residential Stockholm from 1 April 2003.

Sören Bergström JM ProductionJM employee since 1988Shares in JM:0Number of warrants:2,000

Born 1956.M.Sc.Eng.,KTH, Master of ScienceProgramme Stockholm School of Economics 1996.Executive Management Programme Stockholm School ofEconomics 2001.

Project manager 88–96,president JM Stombyggnad 97–00,president JM Inredning 98–00, president JM Värmdö-strand AB 00–02 and regional manager Stockholm South00–02.Head of JM Production business unit 02–.

Chairman of the Board of O.Timblads Målerifirma AB.

Sten HambergJM CommercialJM employee since 1980 Shares in JM: 9,000 Number of warrants: 7,500

Born 1951. LL.B., Uppsala University 1976.

Assistant lawyer HSBs Riksförbund 76–80.Companylawyer JM 80–85,president AB Borätt 85–00,presidentAB Seniorgården 90–00,development manager 95–00and head of Business Development/Properties businessunit 00–01.Head of JM Commercial business unit 01–.

OTHER SENIOR EXECUTIVES

JM RESIDENTIAL STOCKHOLMMagnus Berg, Stockholm Inner City RegionPer Johansson, Stockholm Central RegionPatrik Andersson, Stockholm South City RegionRobert Jaaniste, Stockholm North Region

Birgitta Seman, AB BorättChrister Lindmark, Seniorgården AB

JM RESIDENTIAL SWEDENAnette Frumerie, East RegionMats Karlsson, Central RegionAnders Lundberg,West RegionAnders Wahrer, South Region

JM PRODUCTIONMikael Matts, Production, Greater StockholmBertrand Hennings, Production, Stockholm Inner CityJohn Eklund, Production Stockholm Central Mats Åkerlind, JM Stombyggnad AB and JM Inredning ABJohan Lundqvist, JM ByggledningGunnar Josefson, PurchasingAnders Rahm, Contracting Ove Sandin, Civil EngineeringAnders Brännström, JM FasadNils-Erik Häggström, O.Timblads Målerifirma AB

JM COMMERCIALEva Eriksson, Project Development/Transactions Lars-Olof Höglund, Property ManagementJarl-Inge Stormo, Property Management – TechnicalServices

JM INTERNATIONALEilert Flågan, Byggholt AS, Norway(resigned as President 30 June 2003)Thor Olaf Askjer, Byggholt AS, Norway(became President on 1 July 2003)Morten G. Fossum, JM Danmark A/S, DenmarkGöran Sjöborg, JM Construction SA, Belgium

GROUP-WIDE FUNCTIONSPeter Kindstrand, Financial ManagerEva Nilsson, Group TreasurerBenny Berglund,Tax and AcquisitionsTomas Wiik, IT Manager

Shareholdings pertain to personal holdings and sharesowned by immediate family members at 31 January 2004.

All warrants were acquired through purchases in 2001.

15B O A R D O F D I R E C TO R S A N D S E N I O R E X E C U T I V E S


Valuation creation at JM

JM has many years of experience and considerable expert-ise in project development,and plays a leading role in cus-tomer orientation as well as quality and environmentalwork.These are important prerequisites for a successfulproject development company.

PROJECT DEVELOPMENT

Housing development projects involve a continuous processof acquiring, developing, selling and once again acquiringnew properties. Projects are often capital-intensive andinvolve a number of phases in which value can be added.

JM’s strategy is to maintain a high sales rate in order torelease capital for new strategic investments.

PROCESS FOR HOUSING PROJECTS

Housing development projects involve a close interplay be-tween market and production processes. Market surveysare conducted regularly to analyse customer preferenceswith regard to type of housing, design and local services.These surveys are an important basis for decision bothahead of land acquisitions and before project starts.

The illustration below presents the different phases of a

housing project. Before production can start customersmust have reserved a certain proportion of the planned res-idential units. Projects are multi-year and JM’s involvementcontinues approximately two years after occupancy, whenmanagement responsibility for the property is transferredto the tenant-owner co-operative.

HOUSING PROJECTS JM

HOW LAND VALUES ARISE

Land and building rights can be said to be the options of theproperty market. When the sales price for a tenant-ownedunit or the market rent for commercial premises do not pro-vide a return on the construction investment, the buildingright has a very low value. When the sales price/market rentis high, the building right acquires a high value. Land value isin principle the residual value between the value of the com-pleted building and the production cost of the building.

Small fluctuations in the sales price can lead to major vari-ations in land value. The example below, a fictitious housingproject in a Stockholm suburb, shows that an increase in thesales price of SEK 2,000 per sq.m. (9%) means that the landvalue increases by approximately SEK 1,000 per sq.m. or 33%.

SENSITIVITY CALCULATION, LAND VALUE

Sales price SEK/sq.m. 23,000 25,000

Construction cost SEK/sq.m. –17,000 –17,000

Land value scope 6,000 8,000

Development risk 1) –3,000 –4,000

Residual land value 3,000 4,000

1) Development risk, i.e. the risk associated with market development, planning issues,environmental considerations and final production costs, approximately 50% of esti-mated surplus value of project.

16 J M ’ S C O R E B U S I N E S S


PROJECT DEVELOPMENT PHASES

ACQUISITION

Planning

Pre-construction

FinancingSALE/LEASE

Production

Occupancy

Management

Year10 2 3 4 5 6 7

Project conception

Planning

Conception phase Market process Production process

Market survey

Pricing

Reservations

Sales

Customisation

Occupancy/Living

Appeals

Detailed plan/building permit

Pre-construction

Production

Advance reservations required for production start

Management for tenant-owner co-operative

Project conception

The sales price for tenant-owned units alternatively marketrent for premises must exceed a certain critical level for newconstruction to be viable. Below this critical level, the landvalue will be low while the land value increases fast with ris-ing sales prices/rents once the critical level has been reached.

LAND VALUES IN THE PLANNING PROCESS

Land value development is affected by general macroeconomicfactors, primarily inflation and interest rates, general develop-ment in the region and the planning process. The planningprocess is highly dependent on how active the property owneris. Project development companies such as JM can influencefuture land usage and value through co-operation with themunicipality concerned.

During the planning process, the land value rises in stagesas the project takes form and elements of uncertainty are elim-inated in co-operation between JM and the municipality con-cerned. The value creation factors to be handled are use,scope, timetable and allocation of costs. The full land value isattained when the detailed plan is approved and a building per-mit has been obtained.

LAND VALUE DURING PLANNING PROCESS

Value development during the planning process can be con-siderable when raw land is converted into a finished buildingright. JM influences this through its expertise and activeparticipation. Normally it takes between one and five yearsbefore a detailed plan can be adopted. Good long-term plan-ning in operations and active work on both existing andpotential development properties are important.

JM also acquires developed properties that can be furtherdeveloped into attractive homes or modern offices. In such

cases JM creates growth in value through densification, con-version into tenant-owner co-operatives, planned demoli-tion, or conversion and extension. In this way usage can bechanged, utilisation increased, accessibility improved andattractiveness enhanced for customers and tenants.

METHOD FOR REVENUE RECOGNITION

Most of JM’s operations relate to housing project developmentto be sold as tenant-owned or freehold units. In order to calcu-late the ongoing result in these projects, in common with therest of the industry JM applies the percentage of completionmethod. This principle is based on the approach that profits ina project should be recognised in pace with its implementa-tion. The intention is to create a direct link between the finan-cial reporting and the operations conducted during theperiod. Revenue recognition is increased as the project pro-

17J M ’ S C O R E B U S I N E S S


Land value

Detailed planning

General

planning

Planning phase

Buildingpermit

Detailed planGeneral planRaw land

Amount

Prof

itsC

osts

Time

Year 1 Year 2 Year 3

Anticipated recognised revenue

Net profit

PROPERTY TERMS

JM works with two property types 1): investment properties and developmentproperties. Investment properties comprise residential properties for furtherdevelopment and commercial properties.Development properties mainly relateto land that can be developed for future production.

Type of property Definition

Investment properties Fully developed properties – for saleProperties under construction – production has startedProperties for further development – planned projects

Development properties Land with residential building rightsLand with commercial building rightsDeveloped properties for further development intoresidential projects or investment properties

A schedule of JM’s investment properties and a selection of major developmentproperties is provided on pages 85–90.

With effect from the first quarter of 2004 these will be grouped together asproperties for resale. Investment properties will be called project properties.

1)

PERCENTAGE OF COMPLETION

gresses and the final result can be defined with greater cer-tainty. The example on the previous page provides a generaldescription.

Development land is included in the costs on which per-centage of completion is based. Recalculation effects canarise if the project needs to be revalued as regards antici-pated sales revenues or production costs.

In 2003, the Swedish Construction Federation has con-ducted an inquiry together with Sweden’s leading housingproducers relating to taking up as revenue, revenue recogni-tion and balance sheet handling of housing production underown management. A new industry recommendation is beingdrawn up which is based on revenue recognition on the basisof sold homes, in the form of contracts signed with end cus-tomers, as well as accumulated costs. The new accountingprinciples, which will be introduced with effect from the2005 accounting year also follow the international account-ing principles IAS, which according to an EU directive are arequirement with effect from 2005. See further page 59(Accounting and valuation principles).

FOCUS ON CASH FLOW

Efficient cash flow management is essential since JM’s proj-ects are capital-intensive and long term. JM’s organisation isbuilt up to support and stimulate an optimal cash flowapproach in all project phases and thus achieve maximisedvalue development in the Group. While a project is underway a number of decisions are made which have a majorimpact on cash flow, see the Value Chain diagram on theright. The arrows indicate the main phases in project devel-

opment. The graph below shows the corresponding paymentflows.

When JM acquires land it is booked in the balance sheet.When production starts the land is transferred from the bal-ance sheet into the appropriate project phase. The land issold to a tenant owner co-operation formed by JM in con-junction with the start of production once a purchasing andcontractor agreement has been signed between JM and theco-operative. JM invoices the co-operative regularly whilethe project is under way in accordance with an agreed pay-ment plan. The co-operative finances the land acquisitionand contract work through a building loan.

Any residential units that remain unsold in the co-opera-tive following final settlement of contract work are pur-chased by JM at the price specified in the co-operative’sfinancial plan. JM then sells the residential units at marketprices.

18 J M ’ S C O R E B U S I N E S S


CASH FLOW IN HOUSING DEVELOPMENT

Toc pays for land JM invoices toc Final invoiceJM sells any acquired

residential units

Payments in

Payments out

JM acquires land Production costs JM acquires any unsoldresidential unitsAcquisition decision Contractor and purchase contract signed between JM and toc.

Production start decision

toc = tenant-owner co-operative

VALUE CHAIN

Value

Time

Acquisition decision

Building decision

Price decision (commercial premises)

Price decision (residential units)

Sales decision

Concept and planning

Construction

Management

Housing market 2003

Development in the housing market depends on a num-ber of factors.These include not only the region’s demo-graphic development and the age structure of the popu-lation but also demand regarding the size and location ofhomes. Infrastructure investments and commuter pat-terns also have an impact.

GROWTH CREATES ATTRACTIVE HOUSING MARKETS

So far the highest demographic growth has clearly occurredin the Stockholm region while there has been a substantialmovement of people away from the thinly populated ruralareas. The population growth rate in Greater Stockholm hasslowed in recent years. Demographic growth remains strongin the Gothenburg, and Malmö/Lund regions. Universitytowns such as Uppsala, Linköping, Jönköping and Umeå areother examples of places with demographic growth.

In growth areas, housing vacancies are low and prime loca-tions almost non-existent. According to the National Boardof Housing, Building and Planning’s most recent housingmarket survey, the housing shortage is now spreading furtheraround Greater Stockholm, Greater Gothenburg and Skåne.60 per cent of the Swedish population lives in one of the 100municipalities with a housing shortage. A shortage of smalland medium-sized apartments is most common but severalmunicipalities also report a shortage of medium-sized andlarge apartments. New proposals have been made by the gov-ernment designed to stimulate housing construction. Theseinclude lower VAT on small apartments and a change to thepresent subsidies system. However, this will not be sufficient

for more than a marginal increase in housing construction.Forecasts for population development and housing construc-tion indicate continued imbalances and an increasing short-age of housing in many of the growth regions.

JM develops housing in several regions and must follow thelocal market and development. The table on the left showstrends for the key parameters for JM’s largest markets.

PRICE TREND – SECOND-HAND MARKET

Prices for tenant-owned apartments rose in most marketsover the past year. In Sweden as a whole the price rise hasbeen between 8 and 10%. Among the major cities, there weresubstantial price increases in Malmö and Gothenburg dur-ing the year. These increases are explained by a high numberof people moving into these areas and low mortgage rates.

Average prices for tenant-owned apartments have risen fora number of years and this increase is expected to continuein 2004. In Sweden, an average of 22% of disposable incomegoes to housing. The corresponding figure for Greater Stock-holm is 25%.

Price increases also occurred in Norway and Denmark in2003. In Copenhagen demand for housing is very high due toa large influx of people to the Copenhagen area in recentyears. This high demand, combined with low interest rates,led to price increases of about 5% in 2003. In Norway,demand for housing is high primarily in Oslo, Bergen andTrondheim. Prices in these cities rose by an average of 4% in2003. Both Norway and Denmark forecast weak price in-creases in 2004 as well, mainly due to high demand and con-tinued low interest rates.

PRICE TREND TENANT-OWNED APARTMENTS

19M A R K E T O V E RV I E W H O U S I N G

Decrease compared with 2002

Increase compared with 2002

Stable development compared with 2002

Growth in the local economy

Housingproduction startedEmployment

Demographicgrowth

Greater Stockholm

Gothenburg

Malmö/Lund

Oslo

Copenhagen


TREND INDICATORS

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

200320022001200019991998

Malm öOslo Copenhagen

Source: Svensk Fastighetsförmedling, the Association of Swedish Real Estate Agents, NEF, EFF, Finn.no, ECON and Sadolin & Albæk

GothenburgStockholm inner city Greater Stockholm

SEK, NOK, DKK/sq.m.

JM’S HOUSING IN SWEDEN

In terms of size, JM’s residential units have been distributedin a similar manner in recent years. However, the number ofapartments smaller than 100 sq.m. rose slightly in 2003.

BREAKDOWN AT SALES START OF JM’S RESIDENTIAL UNITS BY SIZE BAND, SWEDEN

JM’s work with more cost-effective pre-construction, pur-chasing and production has led to cost reductions. This hasmade it possible for JM, with increased profitability, toreduce its prices for homes in all sizes which has led to higherdemand.

AVERAGE PRICE 1) AT SALES START FOR JM’S RESIDENTIAL UNITS, SWEDEN

In 2003 the proportion of homes priced at up to SEK 2mincreased to approximately 80% (62) of units on which saleshad started. Only 1% cost over SEK 4m. Most buyers of JM’shomes have their own initial funding. Approximately 80% ofbuyers come from another tenant-owned apartment or housewhile approximately 20% come from rental apartments.

BREAKDOWN AT SALES START OF JM’S RESIDENTIAL UNITS BY PRICE BAND1), SWEDEN

COMPETITORS

JM’s competitors for new housing production in Swedenmainly comprise nationwide players such as NCC, Peab andSkanska, but also include local players.

JM’S HOUSING OUTSIDE SWEDEN

norway

Through Byggholt and its subsidiaries, JM is one of the moreprominent players in the fragmented Norwegian housing mar-ket. JM’s market share amounts to approximately 10%, withsome upward and downward variations in sub-markets. Thecompetitive situation also varies between sub-markets. In allregions where JM operates the local housing co-operative is asignificant player. Other major players include nationwidecompanies Block Watne, Skanska and Veidekke and, in theOslo area, NCC and Selvåg. A number of financial players arealso involved in housing development projects.

denmark

Following low housing production in the 1990s, constructionhas gathered pace in recent years, but is still far from sufficientto meet requirements. Almost 800 residential units were com-pleted in the municipalities of Copenhagen and Frederiksberg in2003. JM is a significant player with a market share of 10–15%.The main competitors in housing development are Kuben, NCCEjerboliger, Nordicom and Sjælsø Group. JM was chosen ascompany of the year by the Erhvervsejendom magazine.

belgium

Demand for good homes in attractive locations in the Brusselsregion is increasing in pace with the continued inflow of peo-

20 M A R K E T O V E RV I E W H O U S I N G


0

5

10

15

20

25

30

35

>150131–150111–13091–11071–9051–7030–50 Size, sq.m.

%

2002 2003

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

20032002200120001999

Stockholm Rest of Sweden

1) Price = stake

SEK/unit

0

10

20

30

40

50

60

>SEK 4mSEK 3–4mSEK 2–3mSEK 1–2m<SEK 1m

%

2002 2003 1) Price = stake

21


ple. The number of inhabitants rose in 2003 for the eighthconsecutive year. Housing customers comprise both EU-attached foreign citizens and local residents. Acquisition ofhomes for personal use dominates but the proportion of cus-tomers who invest in order to rent out is increasing – Brussels’total housing portfolio is dominated by apartments acquiredfor renting. New housing in the Brussels region is stable withapproximately 2,000 units per year. JM’s market share isapproximately 5–10%. Major players include Jacques Delens,Hansen, Soficom and Wilma.

HOUSING STARTS

The tempo of JM’s project development has been high forseveral years and the number of housing starts has exceededthe number sold. This circumstance changed in 2003 whenthe number of signed contracts continued to rise, 3,200(2,500), and exceeded the number of housing starts whichremained at the 2002 level, approximately 2,700 residentialunits. This is a desirable development which reduces riskexposure in a more uncertain market climate and a result ofthe higher requirements for the proportion of reserved unitsprior to housing starts.

JM’S RESIDENTIAL BUILDING RIGHTS

JM invests continuously in land that can be developed forfuture production. The building rights portfolio containsapproximately 16,000 residential units that are reported inJM’s balance sheet. In addition, JM has access to a further some3,700 building rights in the balance sheet. These are included inthe basis for the independent valuation of the building rightsportfolio commissioned by JM, but since they are designated tobe sold, JM does not include them in its reported availablebuilding rights portfolio. Furthermore, building rights forabout 7,400 residential units are available through conditionalacquisition, co-operation agreements or postponed paymentswhere settlement has not yet been made. These building rightsare not reported in the balance sheet. By buying land through

conditional acquisition, JM meets its future land requirementsat a lower cost and the land does not need to be reported over along period in the balance sheet before new constructionstarts. In many cases, JM is able to decide both if and when theland should be purchased. These decisions often depend onhow planning work is progressing, i.e. the size of the buildingrights and the current market situation. Development proper-ties are located Sweden, Norway, Denmark and Belgium. Themajority are in Greater Stockholm, where JM owns and hasaccess to land for approximately 10,300 residential units.

JM’s total available building rights portfolio by region isshown below. This table excludes the approximately 3,700building rights that are in the balance sheet but which JMintends to sell.

JM’S TOTAL AVAILABLE BUILDING RIGHTS PORTFOLIO

Region Number of building rights

Greater Stockholm 10,300

Malmö/Lund/Helsingborg 2,550

Greater Gothenburg 2,250

Uppsala 1,600

Västerås/Linköping/Jönköping 1,000

Oslo/Stavanger/Bergen 4,500

Copenhagen 1,100

Brussels 100

Total (approximately) 23,400

DIFFERENT PLANNING PHASES

The number of building rights at different phases is constantlychanging. The diagrams on the next page show how the build-ing rights in the balance sheet (excluding conditional acquisi-tions) are distributed in different regions and planning phases.Raw land, which is unzoned, is not included since the numberof building rights for these properties is not yet defined.

The detailed planning phase covers the time from whenwork starts on the detailed plan until a building permit appli-cation is submitted. The high number of residential units at

M A R K E T O V E RV I E W H O U S I N G

NUMBER OF BUILDING RIGHTS REPORTED IN THE BALANCE SHEET

Raw land General plan Detailed planning Adopted detailed plan Building permit phase

Greater Stockholm 30 hectares 1,100 3,900 2,400 2,300

Rest of Sweden 22 hectares 1,400 1,700 1,000 1,600

International 2 hectares 200 1,700 1,600 800

Total 54 hectares 2,700 7,300 5,000 4,700

the detailed planning phase means that JM is well placed tomaintain a high level of housing starts over the next few years.It normally takes between one and five years for a detailedplan to be adopted. After adoption, it can take more timebefore production can start. For this reason good long-termplanning is essential, and it is important to work actively withexisting development properties and to invest in new ones.

The map on the opposite page shows some of JM’s ongoinghousing projects in the Stockholm region. The projects corre-spond to approximately 5,300 new homes.

LOCATIONS CLOSE TO WATER AND GOOD COMMUNICATIONS

A shortage of housing which means increased prices for housesand tenant-owned apartments, has led to people increasinglyseeking homes further out from the largest towns. Infrastruc-ture expansion such as the Mälarbanan train service and

extension of the X2000 high-speed train have greatly reducedjourney times on many routes, making it easier to commute.This enlargement of the regions has mainly started in theMälar Valley but is also taking place in the Öresund andGothenburg area and means that new markets have becomeattractive. JM’s building rights portfolio attempts to meet cus-tomers’ increased demand for good communications. Loca-tions close to water are also in high demand when choosing anew home. The diagram below shows the commuting times tothe city centre (travelling time in minutes) from JM’s plannedhousing developments in Greater Stockholm and the MälarValley as well as the proportion of homes close to water.

From approximately 80% of JM’s building rights commut-ing time to the centre of Stockholm by public transport takesless than 30 minutes. Just over half of JM’s planned residen-tial units are in locations close to water.

22 M A R K E T O V E RV I E W H O U S I N G


JM’S PLANNED HOUSING IN GREATER STOCKHOLM – TRAVELLING TIMES TO CITY CENTRE 1) AND LOCATIONS CLOSE TO WATER

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

>50SigtunaÖsteråker

40–50Täby

Södertälje

35TyresöVärmdö

30LångbroLidingö

25FrösundaÅrsta

20Essinge UddeTorsvikHägersten

15Kungsholmen ÅrstadalTelefonplan

10Gärdet

Liljeholmen

Number of residential units

1) Travelling time in minutes to Stockholm's Central Station by public transport.

Examplesof JM'sprojects

Close to water

Average commuting time in Greater Stockholm

Number of minutes

Source: SL TrafikupplysningNot close to water

NUMBER OF RESIDENTIAL UNITS AT DIFFERENT PLANNING PHASES, GREATER STOCKHOLMNumber of units

Planning phaseBuilding permitDetailed planGeneral plan

2001 2002 20030

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2001 2002 2003 2001 2002 2003

Number of units

Planning phaseBuilding permitDetailed planGeneral plan

2001 2002 20030

1,000

2,000

3,000

4,000

5,000

6,000

2001 2002 2003 2001 2002 2003

NUMBER OF RESIDENTIAL UNITS AT DIFFERENT PLANNING PHASES, REST OF SWEDEN

Number of Project Municipality remaining building rights Development period

31 Långbro Stockholm 550 2000–2010

32 Essinge Udde Stockholm 450 2001–2008

33 Bolinder Strand Järfälla 400 2001–2009

34 Liljeholmskajen Stockholm 2,400 2001–2012

35 Hägernäs Täby 500 2001–2009

36 Silverdal Sollentuna 150 2001–2008

37 Västra Daggkåpan Nacka 190 2000–2007

38 Norra Frösunda Solna 660 2001–2011

Total (approximately) 5,3001) Numbered according to the specification of JM’s properties, starting on page 86.

MAJOR ONGOING HOUSING PROJECTS IN GREATER STOCKHOLM 1)

E4

E4

E4

E18

E18

E18

E18

Stockholm

Upplands-Väsby Vallentuna

Sundbyberg

Nacka

Solna

Älvsjö

Danderyd

Täby

SollentunaJakobsberg

Lidingö

36

35

38

33

32

34

31

41

37

23



24


MARKET VALUATION – RESIDENTIAL BUILDING RIGHTS


At year-end 2003, NewSec Analys performed a valuation of allJM’s residential development properties. The appraisals aremade based on an assumed sales price for the properties atactual cash values, whereby future development gains are nottaken into account.The valuations were based on the location,attractiveness, scope and type of building planned, the stage inthe planning process and the time remaining until productionstarts.

The assessed market value of JM’s residential developmentproperties amounts to SEK 4,785m (5,132).The correspondingbook value is SEK 3,439m (3,779).The approximately 7,400 res-idential units available through conditional acquisitions were notincluded in the appraisal.

Market value breakdown is as follows:

SEKm Market value Book value

Greater Stockholm 2,921 2,219

Rest of Sweden 1,088 700

International 776 520

Total 4,785 3,439

Some of the development properties have old existing buildingsthat generate operating net and are planned to be renovated ordemolished in the future. The valuation of these buildings isbased on current rental revenue and future use taking costs foressential conversion and extension into account. The marketvalue of these buildings amounts to SEK 116m (287) and isincluded in the above summary.

NewSec has assessed the properties’ locations and attrac-tiveness in four classes, A–D. An A location represents a prime

site in the housing market concerned and includes good com-munications, proximity to commercial services as well as loca-tions close to water. Class B is a good to normal location in therespective housing market. Class C indicates a housing locationslightly further from communications and commercial services,while D locations are in peripheral areas in the housing market.The phases of the planning process have also been classified byNewSec into four planning phases: raw land, general plan,detailed plan and building permit.The diagrams below show abreakdown of the value of JM’s development properties into dif-ferent locations and planning phases. The detailed planningphase covers the period from the start of detailed planningwork until application for a building permit.

MARKET VALUE,RESIDENTIAL BUILDING RIGHTS, GREATER STOCKHOLM

MARKET VALUE,RESIDENTIAL BUILDING RIGHTS, REST OF SWEDEN

MARKET VALUE,RESIDENTIAL BUILDING RIGHTS, INTERNATIONAL

Market valueSEK 000s

Planning phaseBuilding permitDetailed planGeneral planRaw land

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Class A Class B Class C Class D

01 02 03 01 02 03 01 02 03 01 02 03



0

100,000

200,000

300,000

400,000

500,000

600,000

700,000


01 02 03 01 02 03 01 02 03 01 02 03



0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000


01 02 03 01 02 03 01 02 03 01 02 03

25


The commercial property market 2003

Growth in the Swedish economy has been weak sinceautumn 2000. The economic slowdown has had no im-pact on residential properties with rental apartments.The downturn has mainly affected commercial premises.

MARKET FOR RESIDENTIAL PROPERTIES

In growth regions the housing shortage is expected to continueand in many cases increase. A weak market should thereforenot have any negative impact on well situated residential prop-erties. Rental levels in properties with rented apartments arecontrolled by a utility value system, a principle that meansthat rental development is linked to the cost development inthe municipal housing company in the location concerned.Opportunities for large increases in value in the short term aresmall, as is the risk of a major fall in value. When investing inrental apartments there is only a risk in places with no growthand which also suffer from company closures or relocations,which can lead to increased vacancies.

RESIDENTIAL PORTFOLIO FOR PROJECT DEVELOPMENT

In spring 2003 JM carried out a major property deal withTornet. JM sold commercial properties in Mörby Centrumtotalling approximately 56,000 sq.m. and at the same timepurchased approximately 1,000 apartments in Älta, Nacka.By exercising a call option issued by Tornet in conjunctionwith this deal, JM also acquired about 1,100 apartments inVaxholm during the summer.

The deal meant that JM sold fully developed properties andat the same time acquired large housing areas with both value-added and development potential. JM has thus acquired anopportunity to improve and densify attractive areas while thetwo attractive housing portfolios with their low vacancies gen-erate reliable cash flows. JM’s aim is to increase attractiveness,develop new building rights, improve services, increase acces-sibility and create secure environments.

In autumn 2003 JM started work on developing new build-

ing rights and improving the property portfolio in Älta. An“open house” was held for the residents in Älta together withÄlta’s local authority where JM presented visions for thedesign of the Älta shopping centre. The intention was toencourage participation in this development work. In Decem-ber the residents were invited to express their views on theproposals and opinions in general. All information and JM’sfour proposals can be accessed on the municipal website.

In Vaxholm, JM has also started work on developing anddensifying the portfolio. Initially, the municipality was con-tacted to discuss and outline opportunities to create addi-tional building rights. In both Nacka and Vaxholm many ten-ants have shown an interest in conversion to tenant owner-

M A R K E T O V E RV I E W R E S I D E N T I A L A N D C O M M E R C I A L P RO P E RT I E S

ÄLTA

Ält

aväg

en

Ältasjön Stavsborgsskolan

Stensö skola

Oxe

lväg

en

Flaten

Tyresövägen

JM’s holdings in Älta, following acquisitions in 2003, amountto approximately 1,000 apartments.

VAXHOLM

Stockholmsvägen

Pålsundet Vax

Söderhamnen

Kungsgatan

In 2003, JM acquired 28 residential properties in Vaxholmwith approximately 1,100 apartments.

26


ship, which JM favours and sees as a natural part of thedevelopment of the residential portfolios.

MARKET FOR COMMERCIAL PROPERTIES

Commercial project development conducted by JM is con-centrated to Stockholm and, to a limited extent, Brussels.The market is cyclical and strongly dependent on nationaland regional growth.

In 2003 vacancies continued to rise throughout the Stock-holm area due to higher unemployment and continued spaceefficiency. Tenants are demanding modern, space-efficientoffices and the differences between old-fashioned and modernpremises became increasingly clear in 2003, with regard toboth rental levels and vacancy rates. Today it is difficult tolease out old-fashioned premises regardless of location. Thesepremises need to undergo major conversion or be leased out atconsiderably lower rents in order to be competitive. Oftencompanies choose to move to modern premises with high spaceefficiency where the cost per employee is reduced even thoughthe rent in SEK/sq.m. is higher than for unmodernised officepremises. All sub-markets in Greater Stockholm noted rentreductions in 2003. At most, market rent fell between 10 and15% for unmodernised premises in the city or inner suburbs.

At year-end 2002 the vacancy rate for offices in Stockholmcity centre was approximately 8% (7) and conversion vacan-cies were approximately 5% (4). Vacancies in Greater Stock-holm continued to rise during the year and at year-end 2003

the vacancy rate was approximately 15%. There are consider-able variations, however, with Kista being hit hardest whileparts of the inner city fared better. A number of large officeprojects were completed in 2003 in Kista, Solna, the city cen-tre and Södermalm, with total space of about 200,000 sq.m.

Current forecasts indicate stronger GDP growth in 2004but the upward turnaround in the Swedish economy is pre-dicted to be delayed until the second half of 2004. Vacanciesare expected to continue to rise slightly at the beginning of2004 and a general turnaround in rental development cantake place in spring 2005 at the earliest.

2003 saw continued major interest from foreign propertyinvestors, primarily for commercial properties. As in 2002, Ger-man pension funds and American venture capital funds werethe most active. The main characteristics of the sold propertiesare attractive locations in the city centre or inner suburbs, mod-ern or totally converted and with tenants with long leases.

Demand for functional offices in the EU district and in theadministrative centre of Brussels remains high. New addi-tions are limited and new leases are mainly for totally reno-vated or newly built office premises. In total leasing in 2003exceeded the previous year’s level and EU enlargement willhave a noticeable impact. In attractive districts the vacancyrate is about 4% and rents have reached new all-time highs.

JM’S INVESTMENT PROPERTIES

JM’s portfolio of investment properties is divided into fullydeveloped properties, properties under construction andproperties for further development. The last-named consistof existing properties where JM plans densification, changeof form of tenure, planned demolition, conversion or exten-sion to change usage, raise utilisation, improve accessibilityor in some other way enhance the value of the property.

Investment properties for further development and underconstruction show fluctuating rental revenues and operatingnets depending on the different phases of the project. Inorder to provide an accurate picture of the entire propertyportfolio, these properties are separated from fully devel-oped properties.

JM’S PROPERTY SALES

The property market shows a cyclical development, i.e. hasregular market fluctuations where both rents and propertyvalues vary substantially due to supply and demand. Each


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

Golden triangle

City Rest of inner city

Good inner suburbs

SEK/sq.m.

1998 1999 2000 2001

*

2002 2003Top rent Source: NewSec

MARKET RENTAL SPREAD, STOCKHOLM

business cycle can last up to ten years. It is therefore impor-tant for a property developer to both acquire properties fordevelopment and sell fully developed properties at the righttime. In 2003, JM sold properties for a total of SEK 2,219m.These sales provided a total capital gain of SEK 411m.

The largest deal was when JM sold the Svärdet propertiesin Mörby and acquired approximately 2,100 residential unitsin Nacka and Vaxholm at the same time.

Other major property deals included the sale of the newlydeveloped hotel property on Vasagatan, Pennfäktaren 10,and a totally renovated office property in central Brussels.

PROPERTIES UNDER CONSTRUCTION – PRODUCTION STARTED

Ongoing commercial project development continues to beconducted with considerable caution, due to the strategy toawait developments in a market with falling demand. Two

27



INVESTMENT PROPERTIES

Acquisitions Properties for Properties under Fully developed Sales Rentable space,sq.m. 2003 further development construction properties 2003

Greater Stockholm 162,951 194,962 34,712 42,434 105,126

Rest of Sweden 0 4,463 0 7,513 0

International 0 0 14,691 6,465 5,100

Total 162,951 199,425 49,403 56,412 110,226

Further information on each property is provided in the list of properties on pages 85–90.

Rental revenues

Time

Properties for further development

Properties under construction

Fully developed properties

Construction phase

Rental phase

Management phase

Planning/pre- construction phase

RENTAL REVENUES JM’S PROPERTY SALES

PROPERTY SALES IN 2003Purchase price, Capital gain,

Contract date Property/location Purchaser Date vacated SEKm Space,sq.m. SEKm

20 January Jakobsberg 34:6/Järfälla Kungsleden AB 1 April 129 7,055 0

5 February Pennfäktaren 10/Stockholm Vital Forsikring ASA 11 March 575 14,152 57

12 March Glaucus 4 and 5/Stockholm Fastighets AB Kannan 30 April 55 2,417 7

14 March Pilen 30/Stockholm Fastighets AB Linco 11 April 180 21,237 68

31 March Svärdet 7 etc./Danderyd Fastighets AB Tornet 8 May 931 56,025 235

4 June Avenue des Arts 21/Brussels MEAG 4 June 132 5,100 22

21 November Läraren 4/Stockholm AFA Trygghetsförsäkringsaktiebolag 15 December 70 4,240 7

Development properties JM Värmdöstrand Fagerdala World Foam/Landvik & Dahl etc. 92 13

Other properties 55 2

Total 2,219 411

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Capital gainsBook values

20032002200120001999

SEKm

major office projects, Barnängen and Skogskarlen, and asmall office project in Lidingö are in the final phase. Leasingis under way and currently 64% of the space is leased.

In Brussels, an office property is under development in acentral location in the Leopold district. The property hasnot been leased out.

PROPERTIES FOR FURTHER DEVELOPMENT – PLANNED PROJECTS

Development work is under way for several properties in JM’sportfolio. This work includes matters related to planning,design, and assessments of the economic climate and market.Today, most of the properties for further development com-prise the residential portfolios in Älta and Vaxholm.

In addition to properties for further development, JM alsohas available commercial building rights amounting toapproximately 200,000 sq.m.

FULLY DEVELOPED PROPERTIES – FOR SALE

The portfolio of fully developed properties decreased in 2003from SEK 2,109m to SEK 515m as a result of sales. Theremaining portfolio is concentrated to Stockholm’s inner cityand northern suburbs and Uppsala, and mainly comprisescommercial properties. JM’s portfolio of fully developedproperties outside Sweden consists of properties in Belgiumand Norway.

Most of the leases in JM’s portfolio of fully developed prop-erties run for 3–5 years. 47% of rental revenues are from leaseswhich run until the end of 2007 or longer. Vacancies in JM’sportfolio of fully developed commercial properties and resi-dential properties for further development amount to 4% (10)of annual rents and 4% (10) of space. The occupancy rate forthe Swedish office projects under construction amounts toapproximately 65% of annual rents and 64% of space.

28



Barnängshuset, Stockholm

MARKET VALUATION – INVESTMENT PROPERTIES

NewSec made an assessment of the market value of all JM’sinvestment properties at year-end 2003. The valuations wereperformed as regular cash flow analyses where the market valueis calculated as the sum of the present value of annual net pay-ment flows during the calculation period and the present valueof the market value (residual value) in the event of a sale at theend of the calculation period.The valuations were performedfor each individual property based on present lease circum-stances and an assessment of market rents, operating and main-tenance costs and the special circumstances of each asset.Basedon the market situation in the sub-market concerned, long-termvacancy and direct yield requirements were assessed.All valua-tions were performed in accordance with the Swedish PropertyIndex (SFI) rules.

The basis for the valuations are surveys conducted in2002–2003 and individual assessment of each property’s pre-requisites.

In assessments of the market value of properties which areunder construction or are intended for further development, themarket value was based on market revenues and costs in a com-pleted state,minus the assessed remaining construction costs andwith deductions for uncertainty,risk and reasonable project gains.

The following value factors were used in the assessment ofmarket value:

Market Estimated Direct yieldrent offices, long-term requirement for

Sub-market SEK/sq.m. vacancy,% residual value,%

Stockholm 1,700–2,200 4–10 7.5–8.5

Rest of Sweden 800–1,500 3–10 7.5–10

Residential properties,Greater Stockholm – 0–1 5–6.25

The large spreads of assessed market rent are due to variations asregards the standard, location and attractiveness of the premises.

Overall, JM’s investment properties are appraised at a marketvalue of SEK 3,205m at year-end 2003.The book value was SEK2,833m.

Market value is broken down as follows:

SEKm Market value Book value

Fully developed properties 640 515

Properties under construction 856 776

Properties for further development 1,709 1,542

Total 3,205 2,833

The market value of JM’s commercial development propertiesamounted to SEK 226m (108) at year-end.The book value wasSEK 187m (87).

29



MARKET VALUES 2003

Residential, south Greater Stockholm, 23%

Commercial, Stockholm inner city, 15%

Commercial, north Greater Stockholm, 23%

Commercial, International, 10%

Commercial, rest of Sweden, 4%

Residential, north Greater Stockholm, 26%

Risk management – anintegrated part of JM’s corebusiness

Value creation within JM is clearly linked to the compa-ny’s ability to manage the risks in its operations. Con-trolled risk-taking contributes to increased profitability.

MACROECONOMIC RISKS

economic trend

The general business climate affects both demand for newhousing and price levels. JM’s project development is concen-trated to areas that are assessed as having the best opportu-nities for long-term economic growth. Systematic efforts aremade to monitor economic development and its effects onthe business.

consumer spending power

JM’s housing is in a segment where a large group of householdshave sufficient regular income to finance their purchases. Theconsumer spending power trend, combined with a continuedinflux of people to metropolitan areas throughout the Nordic

region, is expected to provide a continued stable price trendfor housing, even taking temporary economic uncertainty intoaccount. After falling for a number of years, housing expendi-ture’s share of households’ disposable income rose in 2003, seediagram below. This increase was caused by both lower dis-posable income and higher housing expenditure.

general interest rate situation

The general interest rate situation is both a risk and anopportunity for JM since it affects, among other things:• Interest expenses for the Group’s net borrowing (see page

34).• The required rate of return at property valuations (see

page 29).• The sales price of both housing and commercial properties.• Demand, particularly for housing.The greatest threat which could lead to a decline in price anddemand is an interest rate hike.

MARKET RISKS

housing

Demand for new housing is mainly affected by demographicgrowth and economic development in the area, consumerspending power, prices and price development in the so-called second-hand market. The final price that JM receivesdepends on local demand, the location and attractiveness ofthe residential units and the current interest rate situation.JM gives priority to attractive locations, preferably close towater, in places with good opportunities for growth.

JM works closely with prospective home buyers in orderto ensure that planned projects meet demand and to secure a high level of advance reservations.

commercial premises

JM’s project development of commercial premises is prima-rily focused on projects that support housing developmentprojects. It is important to create stable revenue flows in theproperty. A well-composed tenant structure, combined withthe right location and high quality in the property, are ofmajor importance when it comes to a sale.

project development portfolio

JM has building rights available for future production corre-sponding to 23,400 residential units, of which approximately

30


O P P O RT U N I T I E S A N D R I S K S

Greater Stockholm

%

19

20

21

22

23

24

25

20032002200120001999Sweden incl. Greater Stockholm

Source: Temaplan

Housing expenditure represents an average for all forms of tenure (freehold, tenant-owned and tenancy). Where applicable rents, charges, amortisation and operating costs are included. Adjustments have been made for tax effects and any housing allowance. Any wealth tax is not included in the calculation.

HOUSING EXPENDITURE IN RELATION TO DISPOSABLE INCOME

31


16,000 are booked as an asset in the balance sheet, and 7,400properties available through conditional acquisition outsidethe balance sheet. The residential building rights portfoliohad a book value of SEK 3.4 billion at year-end 2003.

In addition, JM has a further some 3,700 building rights atits disposal in the balance sheet. These are included in thebasis for the independent valuation of the building rightsportfolio commissioned by JM, but are designated to be soldand JM therefore does not include them in its reported avail-able building rights portfolio.

The future net capital outlay for acquisition of the 7,400building rights available through conditional acquisition, co-operation agreements or postponed payments is assessed toamount to approximately SEK 1,500m. It is possible to con-tinue to partition and sell development land from acquiredland without affecting the number of building rights.

The portfolio of properties for future project developmentshould correspond to approximately four years’ planned pro-duction. Its size and composition provides great potentialand a theoretical risk. Lead times are long from project con-ception to final sale and major projects can represent ordervalues of several billion Swedish kronor. Projects are started,however, in phases. JM does not start a project until a certainproportion of the residential units has been reserved.

guarantee commitments for tenant-owner co-operatives

JM primarily develops homes that are sold to tenant-ownerco-operatives formed by JM (JM also handles sales to end cus-tomers). In pace with project completion, the tenant-ownerco-operative is invoiced for accumulated costs in the project.

In order to finance production, the tenant-owner co-oper-ative raises a building loan. JM issues a guarantee for thepart of the building loan that exceeds the co-operative’sfuture long-term loans. The long-term loans are secured bymortgage deeds taken out by the co-operative itself.

JM’s guarantee commitments cease when the buildingloan is redeemed when tenants move in. The theoretical riskof JM becoming liable to pay in accordance with its guaran-tee commitment is reduced by the reservations requirementprior to production starts.

competitive scenario

JM’s competitors in project development are both majornational players and smaller local project development com-

panies. JM tries to distinguish itself through a large numberof factors that interact efficiently within the company. Theseinclude the overall corporate culture, agility, expertise inacquisitions, decision-making, project implementation, qual-ity profile and sales.

OPERATING RISKS

cost control and internal oversight

Effective cost control in project development is very impor-tant. A number of measures were adopted in 2003 toimprove internal oversight and control. These are describedmore fully on page 46.

The main volume in JM’s operations is attributable tohousing development projects in Sweden. Related costs for2003 amounted to approximately SEK 4,800m.

Direct salaries/wages, direct materials and costs for sub-contractors account for 15%, 19% and 37% respectively ofJM’s project costs.

In order to ensure quality requirements and productioncompetence and contribute to effective cost control, JMmaintains some construction contractor resources. Theseresources are limited, however, which makes JM dependenton cost development at subcontractors.

In general resources are contracted well ahead of time,which means that JM normally has a controlled cost situa-tion. The number of projects, their volume, developmentphase and utilisation of subcontractors vary from year toyear. This and many other factors affect the total cost baseand the breakdown between cost groups.

SENSITIVITY ANALYSIS BY COST CATEGORY, HOUSING DEVELOPMENT PROJECTS

Category Share of costs1) Change Effect

Salaries/wages 15% +/–10% +/– SEK 72m

Materials 19% +/–10% +/– SEK 91m

Land 8% +/–10% +/– SEK 38m

Developer’s costs 10% +/–10% +/– SEK 48m

Pre-construction 4% +/–10% +/– SEK19m

Overheads 7% +/–10% +/– SEK 34m

Subcontracting 37% +/–10% +/– SEK 178m1) Share of cost base for project development of housing in Sweden was SEK 4,800m in2003.

Land pertains to the acquisition cost for land. Developer’s costs are costs not directlyrelated to contracting,such as interest on loans,municipal connection charges and reg-istration of title. Pre-construction mainly relates to costs for technical consultants.Overheads refer to incidental expenses for setting up the building site and rents forleased fixed assets such as plant and equipment.



32


revenue recognition method

JM’s current result is obtained using the percentage of comple-tion method in ongoing projects (see page 17). JM applies a con-servative percentage of completion method, but this still makeshigh demands on well-considered assessments from thoseresponsible for revenues and costs within the organisation.Conservative revenue recognition has increased in the earlyphases following the negative project revaluations that wererequired in the 2002 annual accounts due to project deficien-cies in Stockholm. A more strict model for revenue recognitionwill be introduced with effect from 2005 (see page 18).

POLITICAL RISKS

What and how much can be built, and when housing starts cantake place, very much depend on planning work. JM is depend-ent on good co-operation with the municipality concernedand on planning work not being delayed due to political deci-sions. Political decisions related to infrastructure develop-ment, and the introduction of new laws and regulations, can

have a positive or negative impact on operations. JM’s experi-ence of project development and long-term relationships withmunicipal authorities mean that JM can reduce the politicalrisks. Acquisition of building rights subject to an approveddetailed plan are another factor.

RISK ASSESSMENT

JM continuously evaluates the proportion of unreserved andunsold residential units in relation to ongoing production.The proportion of unreserved or unsold units should not betoo high, but nor should it be too low since value creation atJM is linked to a high and controlled rate of project start-ups.In 2003, the proportion of unreserved and unsold residentialunits decreased, so the risk in JM was reduced.

JM aims to have all residential units sold by final inspec-tion. Units that remain unsold after completion and finalinspection are potentially a major risk in terms of value,since JM undertakes to purchase unsold homes from the ten-ant-owner co-operatives it has formed.


SENSITIVITY ANALYSIS – BUILDING RIGHTS PORTFOLIO

One way to reflect the dynamics in the building rights portfoliois to perform a sensitivity analysis where all anticipated cashflows from the portfolio are calculated at present value. Beloware a number of simplified assumptions designed to reveal thepresent value of JM’s building rights portfolio, at a number ofassumed sales prices.

23,400 residential building rights are evenly distributed over a8-year production period.The initial investment is excluded sincethe calculation is intended to show the value of the portfolio.However, investments not yet made of approximately SEK 1,500mfor conditional acquisitions or deferred payments are included inthe analysis as a future constant outgoing cash flow during theperiod.

JM’s standard residential unit is assumed to be 88 sq.m., the

assumed tax rate is 28% and the discount rate is 7.2%.The calcu-lation does not take possible inflation into account and is not aforecast.

The table shows the assumed revenue and project expensesper sq.m. of apartment space excluding VAT. If a specific rev-enue/project expense per sq.m. is assumed to apply to the entirebuilding rights portfolio and outgoing cash flow for conditionalacquisitions is taken into account, a value is created, expressed aspresent value.The analysis shows a strong leverage effect in valuecreation depending on the company’s ability to manage both rev-enues and expenses effectively, and not least the general trend forhouse prices during the period. A price or cost change of SEK1,000 per sq.m.corresponds to about SEK 1,100m or almost SEK40 per share according to the basis for this calculation.

SENSITIVITY ANALYSIS, PRESENT VALUE IN SEKmFOR JM’S RESIDENTIAL BUILDING RIGHTS

Revenue/sq.m.,SEK 19,000 20,000 21,000 22,000 23,000

Expenses/sq.m., SEK

14,000 5,100 6,200 7,300 8,400 9,500

15,000 4,000 5,100 6,200 7,300 8,400

16,000 2,900 4,000 5,100 6,200 7,300

17,000 1,800 2,900 4,000 5,100 6,200

18,000 700 1,800 2,900 4,000 5,100

SENSITIVITY ANALYSIS, PRESENT VALUE IN SEK/SHARE FOR JM’S RESIDENTIAL BUILDING RIGHTS

Revenue/sq.m.,SEK 19,000 20,000 21,000 22,000 23,000

Expenses/sq.m., SEK

14,000 182 221 260 299 338

15,000 143 182 221 260 299

16,000 103 143 182 221 260

17,000 64 103 143 182 221

18,000 25 64 103 143 182

F I N A N C I A L I T E M S

Strong financial base

JM’s finance unit is responsible for the Group’s short- andlong-term financing,liquidity planning,cash managementand financial risk management.The division of responsi-bility, organisation and control of the Group’s overallfinancing activities are regulated by a finance policyestablished by the Board of Directors.

FINANCE POLICY

The finance policy specifies the objectives for finance opera-tions, overall responsibility and specific rules and limits. Theobjectives for the finance operations are to:• Support operating activities in residential and commercial

project development.• Optimise use of capital and cash flow management.• Control and manage the financial risks to which JM is

exposed.

FINANCIAL RISK MANAGEMENT

The Group’s financial risks primarily consist of interest raterisk, financing risk, liquidity risk and, to a limited extent,currency risk. The choice of maturities and fixed interestspread is governed by several factors, such as capital tied upin ongoing projects, business risk, anticipated dates for sale ofproperties, the terms of leases in investment properties andthe Group’s financial position in general. These factors aresummarised in the Board’s established guidelines for fixedinterest spread and maturity structure with scope for devia-tions within certain limits based on the current market situa-tion. There are also rules for handling interest rate risk inbuilding loans during the construction period and recom-mendations for final financing of tenant-owner co-operatives.

Cash is kept at a low level and any surplus liquidity mayonly be invested in banks defined by JM and in Swedishfixed-income securities without currency risk. Payment pre-paredness is maintained through overdraft facilities andcommitted credit lines.

Currency risk on transactions is eliminated as far as possible.Currency hedging against balance sheet exposure is carried outon a selective basis. Transaction volumes in foreign currency

between JM AB and subsidiaries, and to external suppliers,have so far been so limited that currency hedging has not beenrequired. JM AB has hedged NOK 85m of the net investment inByggholt AS through matching borrowing in Norwegian kroner.

Derivative instruments may only be used in order to min-imise risks.

JM is working to adapt its financial risk managementahead of introduction of IAS 39 – Financial Instruments.

FINANCE STRATEGY

JM’s basic finance strategy is to clearly link cash flows fromprojects in progress and investment properties to the com-pany’s management of borrowing and interest rate risks. Thisstrategy provides the best control of financial risks.

In order to maintain flexible administration and cost-effective debt management, existing loan agreements areguaranteed by JM’s excellent creditworthiness, which meansthat no mortgage deeds are provided.

LOAN STRUCTURE

CAPITAL AND LOAN STRUCTURE

At year-end 2003 the equity ratio was 36% (34) which is inline with the Group’s equity ratio target of 35%.

The debt/equity ratio at year-end was 0.8 times (1.0) andthe interest coverage ratio was 2.1 times (2.1). The loan-to-value ratio in the property portfolio, i.e. interest-bearing lia-bilities in relation to the estimated market values of invest-ment properties plus the book values of developmentproperties, amounted to 37% (53).

JM strives for efficient use of capital with a higher assetturnover. Efficiency is achieved with increased net sales com-bined with reduced total assets due to the sale of properties.

The JM Group’s interest-bearing liabilities at 31 Decem-

0

500

1,000

1,500

2,000

2,500

2008–2007200620052004

Loan amount, SEKm PRI liability, SEKm

0

5

10

15

20

25

Average interest, %

%SEKm

33


34


F I N A N C I A L I T E M S

0

1,000

2,000

3,000

4,000

5,000

6,000

200320022001200019990

1

2

3

4

5

6

Interest-bearing net debt, SEKm Debt/equity ratio, times

SEKm Times

ASSET TURNOVER AND INTEREST COVERAGE RATIO INTEREST-BEARING NET DEBT AND DEBT/EQUITY RATIO

INTEREST-BEARING LIABILITIES AND AVERAGE INTEREST RATES AT 31 DECEMBER 2003

Year for Loan amount, Average interest, Share of Committed credit Committed creditinterest conversion SEKm % total loans, % lines, SEKm lines, %

2004 1,019 6.2 40 800 18

2005 410 4.5 16

2006 300 4.9 12 1,800 40

2007 206 6 8

2008 and later 600 5.2 24 1,900 42

Total 2,535 5.5 100 4,500 100

PRI 2004 451 5.1

Total incl. PRI 2,986 5.5

Average fixed interest term (years) 2.5

Fixed interest terms include derivatives.

0.50

0.55

0.60

0.65

0.70

0.75

0.80

200320022001200019990

1

2

3

4

5

6

Asset turnover, times Interest coverage ratio, times

Times Times

ber 2003 amounted to SEK 2,986m (4,313), of which SEK451m (433) comprised PRI pension liabilities. The averageinterest on the debt during the year was 5.4% (5.9). The aver-age interest rate on the interest-bearing loans, excluding PRI,was 5.5% (5.9) at year-end. Most of the loans redeemed dur-ing the year had short fixed interest terms and therefore car-ried low interest. At the same time, the average fixed interestterm has increased from 2.3 to 2.5 years. In 2004, SEK2,319m (90%) of JM’s loan stock will be restructured. A 1percentage point change in interest rates corresponds tochanged interest expenses of approximately SEK 5m, includ-ing the effect from risk-minimising derivative contracts, onthe portion of the loan stock restructured in 2004.

In 2003 JM sold properties for approximately SEK 2,200m.The sales proceeds were used for redemption of loans in con-junction with the sales. At the same time, new loans wereraised to finance acquisitions of development properties inSweden and in foreign subsidiaries. The net change in inter-

est-bearing liabilities amounted to SEK –1,327m (–1,617).Net financial items improved by SEK 73m in 2003. Capi-

talisation of interest expenses related to commercial projectdevelopment amounted to SEK 1m (12). The lower interest-bearing debt made a positive contribution to improved netfinancial items.

The long-term rate (5-year interest rate swap) fell heavily inthe spring and early summer 2003 and then climbed upwardsagain to end at roughly the same level as at the beginning of theyear. The short rate was approximately 3.9% at the beginning ofthe year and had then fallen to approximately 2.9% by year-endwithout any significant upswings during the year.

NET FINANCIAL ITEMS, JM GROUP

SEKm 2003 2002 2001

Interest income 39 38 26

Interest expenses –250 –322 –361

Net financial items –211 –284 –335

Caring for the environment

The building sector is responsible for a significant partof society’s energy and materials utilisation, and there-fore has a major environmental impact. The sector isalso of major importance for a well-functioning societysince it contributes to key infrastructure such ashomes, offices and roads. JM’s aim is to meet theserequirements without jeopardising the ability of futuregenerations to meet theirs: a long-term sustainabledevelopment.

SUSTAINABLE AND PROFITABLE EFFORTS

Back in 1994, JM was the first construction company inEurope to sign an environmental policy. The company hassubsequently integrated its environmental work into itsbusiness process, with the aim of creating a more long-termapproach and credibility. This has provided competitiveadvantages and led to several respected environmentalfunds, including Banco’s Swedish environmental fund andRobur environmental fund, investing in the company formany years. During the year, JM also earned a high rating inFolksam’s annual environmental survey, the Climate Index.

JM has long been involved in the building sector’s con-certed efforts to be more sustainable from an ecological per-spective. This work has mainly been carried out via the Eco-cycle Council for the Building Sector, where an ambitiousenvironmental programme was adopted during the yeardesigned to involve the entire sector. One sector-wide proj-ect that deserves special mention is the Building Industry’sPhasing Out of Especially Hazardous Substances, calledBASTA in Sweden, which is supported by the EU. The inten-tion is, within a few years, to build up a qualification systemfor phasing out especially hazardous substances within thebuilding sector. JM is one of six partners involved in thedevelopment of BASTA.

In September, JM also pledged support for the commitmentsof the “Bygga Bo” dialogue. This involves a number of companies,municipalities and the government in a joint undertaking tocarry out certain measures within the areas of effective use ofenergy, effective use of resources and a healthy indoor climate.

CONTROL OF THE ENTIRE CHAIN

Acting simultaneously as developer, planner, contractor andmanager, gives JM control over the entire constructionprocess. This creates good opportunities to minimise theenvironmental impact of the buildings throughout theirentire life cycle, from land acquisition to finished buildingand on to management and demolition.

Opportunities are greatest during planning and pre-con-struction. During this phase the environmental impact abuilding or structure will have during its total life cycle isdetermined. Decisions made during this period have reper-cussions for a very long time. This applies in particular to

E N V I RO N M E N T

QUALITY AND ENVIRONMENTAL OBJECTIVES

• We shall focus on quality, the environment and ethics sothat every customer and project is a good reference.

• Our projects shall be structured, implemented and man-aged so as to minimise energy consumption and its impacton the environment.

• We shall reduce the volume and hazardousness of waste.• We shall use materials and methods that reduce environ-

mental impact and contribute to a healthy indoor andworking environment.

35


THE GROUP’S QUALITY ANDENVIRONMENTAL POLICY

JM shall promote long-term quality and environmental man-agement in all its operations.The company shall focus on cus-tomer needs and strive for sustainable development of society.

To accomplish this,we shall:• Preserve and contribute environmental and aesthetic val-

ues to the urban and natural landscapes.• Produce buildings with a healthy living and working environ-

ment.• Work in a structured and systematic manner that leads to

continual improvements in environmental and quality per-formance.

• Prevent the production and dispersal of pollutants and pro-mote resource conservation and closed cycles.

• Actively contribute to development of knowledge and raiseemployee awareness of quality and environmental issues.

• Apply environmental standards that are more rigorous thanexisting legal requirements.

36


two of JM’s significant environmental aspects: energy con-sumption when the buildings are in use, and the use of cer-tain building materials. Other significant environmentalaspects are handling of building waste, use of transport andmachinery, and handling contaminated land.

EFFECTIVE CONTROL

The Group has a quality and environmental policy as well asquality and environmental objectives, while each operationwithin the Group has drawn up a quality and environmentalprogramme with quantifiable and timetabled quality and envi-ronmental targets. In addition to objectives and programmesat an overall level, project programmes and environmental con-sequence analyses are conducted at project level. Follow-upincludes checks, environmental rounds, inspections, excep-tion reports and key performance indicators (KPIs).

With the aid of process-oriented operational control sys-tems, the operations receive control and support in theirdaily quality and environmental work. Internal audits areused to check how the requirements of the operational con-trol system are met in the project.

Since JM has a major indirect environmental impact via itsexternal partners – consultants, subcontractors and suppli-ers – demands are also made on them to have the requiredenvironmental routines. JM’s principal suppliers are subjectto special environmental assessments.

Each of JM’s operations has a quality and environment coun-cil that formulates targets. Practical work is co-ordinated bya quality and environmental manager, who is also responsiblefor the operational control system together with the differ-ent process owners. Each geographic region has a quality andenvironment co-ordinator who functions as an internal audi-tor and support. The Group’s Quality and Environmentdepartment is responsible for overall co-ordination.

A extensive review of both the operational control systemand audit methods was conducted during the year in orderto ensure good control towards long-term profitability,lower business risks and uniform company processes.

In addition, extensive work has been started to change thecompany’s pre-construction and purchasing routines. Theintention is to use fewer and well-tried solutions and thusincrease control over choice of materials and methods. Aspart of ongoing efforts to “industrialise” operations – with-out forgoing customer requirements – a more consistent andeffective control of energy measures and other environmen-tal activities is being sought.

Ongoing training and active development work are conduct-ed both internally and in co-operation with other players inorder to raise competence and involvement among employees.

The requirements in the quality and environmental man-agement standards ISO 9001 and ISO 14001 are essentiallymet as a result of the way JM works.


ACQUISITION PLANNING BUILDING SITE FINISHED BUILDING DEMOLITION

JM'S INFLUENCE ON THE PROCESS: THE ENVIRONMENT:

MINOR MODERATE

SCOPE TO PREVENT ENVIRONMENTAL IMPACT:

MAJOR MINORMAJOR MINOR MAJOR

TIME IN PROCESS:MONTHS

TIME IN PROCESS:1/2 YEAR – YEARS

TIME IN PROCESS:1/2 YEAR – YEARS

TIME IN PROCESS:50 – 100 YEARS

TIME IN PROCESS:MONTHS

ENVIRONMENTAL IMPACT OF PROJECT DEVELOPMENT

37



ENVIRONMENTAL KPIs – FOLLOW-UP OF TARGETS

Target 2005 2003 2002 2001

Newly produced homes’ estimated energy requirement,normal home adjusted (kWh/sq.m.UFA) 1101) 131 124 137

Newly produced homes’ estimated carbon dioxide emissions from energy consumption (kg CO2/sq.m.UFA) Reduction 7 9 –

Energy consumption offices (kWh/sq.m.UFA) Reduction 102 113 98

Landfilled waste (kg/sq.m.GFA) 6 8 10 11

Proportion of landfilled waste (%) Reduction 29 36 42

1)Target adjusted. Applies to newly planned homes.See also www.jm.se for diagrams and additional information.

ECO-COMPLIANT HOMES

The residential buildings built by JM meet a number of spec-ified requirements for methods and technical solutions.These requirements are intended to reduce the environmen-tal impact of the buildings and to create conditions for ahealthy indoor climate.

A healthy indoor climate is characterised by qualities suchas ease of cleaning, building materials, acoustics and air qual-ity. Dust-collecting surfaces are minimised and noise is keptout using sound-proofed apartment doors without letter-boxes. The entire property has three-phase, five-wire wiringand fuse boxes located away from bedrooms and living roomin order to minimise exposure to electromagnetic fields.

ENERGY EFFICIENCY

A building’s energy consumption is by far JM’s most signifi-cant environmental aspect. In order to minimise energyrequirements, high energy efficiency is planned back at thedrawing board. Mandatory procedures include use of low-energy lamps, low-energy white goods, low-flush toilets,water-saving taps, and low-energy fans. Other measures varydepending on the project and may include extra well-insu-lated windows, bespoke ventilation, individual measurementof hot water consumption or systems for renewable energysuch as solar panels, solar cells and ground heat.

Eco-labelled electricity is mandatory on all building sites.

GOOD CHOICE OF MATERIALS

In order to steer use of building materials towards lowerenvironmental impact, JM has had a unique internal systemfor eco-evaluation for a number of years. Only materials thatare approved may be used. Products that are evaluatedinclude paints, glues, jointing compounds, and floor and roofmaterials. The results are stored in JM’s environmental prod-uct database.

Building materials are assessed from a life cycle perspec-tive. This includes examining their content of hazardoussubstances that might affect the working, living and outdoorenvironments. Use of thermoplastics and products that havea high organic solvent content is avoided, as are lead/leadalloys, short-chained phthalates, chlorinated paraffin, bro-mide flame retardants and other substances hazardous tohealth and the environment.

FACTS ENVIRONMENT

2003 2002 2001

Environmentally assessed framework agreement partners 80 103 59

Internal quality and environmental audits within residential project development 105 160 110

Carbon dioxide emissions JM (tonnes) 13,900 14,540 –

Carbon dioxide emissions JM (tonnes/SEKm) 2.2 2.3 –

Investment properties with district heating (%) 891) 100 96

Products in the environmental database 2,165 2,000 1,600

Projects with KPIs (%) 88 93 84

Projects with KPIs 42 41 421)Others are acquired housing with direct electric heating.

38


High priority for employee development

JM’s focus on project development places high demandson employee competence.Significant efforts are made toincrease employees’ knowledge, develop good leadersand support professional and personal development.Investments in employee competence primarily have abusiness-support purpose.

PERSONNEL STRUCTURE

At year-end 2003, JM had 2,368 employees, comprising 1,090salaried employees and 1,278 wage-earners. A total of 296people, 97 salaried employees and 199 wage-earners, left thecompany following the issue of redundancy notices. Some 120employees chose to leave the company during the year. Theaverage age of employees has decreased in recent years, to 44for salaried employees and 40 for wage-earners. The propor-tion of graduates among salaried employees was 25% (26).

EMPLOYEE DEVELOPMENT

In its personnel policy JM has defined competence as knowl-edge, willingness and ability. These parameters form thebasis of the performance reviews between manager andemployee, and are the foundations on which employee devel-opment is conducted. In general JM works with a philosophythat practical work is the main source of individual develop-ment. Courses organised by the company are also a key partof competence development.

JM has a number of programmes designed to motivate em-ployees, increase equal opportunities and strengthen its imageas the industry’s best employer. For example, JM encouragesemployees to take out parental leave. Compensation for loss ofincome during parental leave is offered for up to six months,with up to 80% of salary regardless of income. During 2003, 63employees used this opportunity, 30 of whom were men.

Surveys indicate without exception considerable jobenjoyment among employees. An open organisation whereindividual employees are seen and given responsibility and

authority at an early state, as well as investments in compe-tence development are frequent assessments.

MANAGEMENT SUPPLY

JM mainly uses internal recruitment to meet requirementsfor managers and leaders. Internal recruitment providesgood opportunities for individual development within thecompany while the corporate culture is strengthened andknowledge of “the business” is retained. External influencesare important, however, and it is up to managers and leadersat JM to ensure that these are brought into the organisationalso in other ways than through recruitment.

All JM’s managers are also tasked with identifying futuremanagers. Management development has a clear hands-on pro-file. People identified as future managers and leaders are grad-ually given more and more responsibility and complementaryeducation is provided if required. A three-year trainee pro-gramme is one way of ensuring future leadership supply.

COMPENSATION POLICY

Approximately 270 of JM’s managers and leaders are includedin a profit-based salary system. Total salary comprises a fixedand variable component, with a maximum result for the vari-able component which, depending on position, varies be-tween two and seven monthly salaries. Apart from beingbased on financial results, which has the greatest importance,the variable salary component is also based on the results ofcustomer surveys and individual target attainment.

ETHICAL GUIDELINES

JM drew up group-wide ethical guidelines in 2002 whichwere implemented in 2003. These guidelines have beendeveloped to support individual employees in their profes-sional role, both as regards decisions relating to their workand codes of conduct for relationships with other employees,suppliers and customers. JM’s ethics committee providesongoing support to the organisation and is responsible forcontinuous development of these guidelines.

EQUAL OPPORTUNITIES

For several years JM has been making active efforts toachieve a more even gender distribution. The proportion ofwomen among salaried employees has increased steadily andamounted to 36% at the end of 2003, an increase of 1 per-

H U M A N R E S O U R C E S

39


centage point compared with 2002. Almost half of the peoplewho have attended JM’s trainee programme and 15% of theGroup’s senior executives are women.

WELLNESS PROGRAMMES

JM works actively with preventive health care in order toavoid absence due to illness and industrial injuries. Inter-nally, absence due to illness among salaried employees andwage-earners is reported separately. In 2003 long-termabsence due to illness among salaried employees was 1.7%,and 4.6% among wage-earners.

In addition to regular company health care all employeesare offered a number of wellness programmes such as exercise,treatment from a naprapath, physiotherapy, massage, andinformation about the correlation between diet and health.

Stress-related illness has become an increasingly commonreason for salaried employees being on the long-term sick list(45%) in recent years. In order to reduce stress-related absencedue to illness, JM works to prevent this based on an individualperspective and on a manager/leader perspective. All employ-ees have an opportunity to attend stress management trainingand JM’s managers are trained to identify symptoms of stressamong their employees at an early stage.

Among wage-earners injuries from falls and strain-relatedinjuries are the main reasons for long periods on the sick-list(75%). JM tries to reduce such injuries through continuousand consistent efforts in the working environment on thesites and through job rotation. One wellness concept whichhas gradually been introduced is daily warming up exercisesand stretching during working hours, body-building and fit-ness training outside working hours, and access to treatmentfrom a naprapath at the workplace. “Building gymnastics”take place on most of JM’s building sites.

Studies of JM’s wage-earners compared with workers atsites outside the wellness programme have shown both areduction in industrial injuries and that JM’s employees arein far better physical shape. JM’s ultimate aim is to reduceboth strain-related injuries and accidents to zero.

REHABILITATION

JM’s rehabilitation work is based on co-operation betweenthe central personnel function, the manager responsible, theperson on the sick-list and the care providers. JM worksactively during the illness process by initiating and paying

for measures designed to allow the employee to return towork as soon as possible. Treatment is provided by thera-pists, psychologists, physiotherapists, naprapaths and whenrequired vocational guidance.

NUMBER OF EMPLOYEES

ABSENCE DUE TO ILLNESS

ABSENCE DUE TO ILLNESS 2003 2002

Total absence due to illness/All employees’ total normal working hours,% 5.4 5.6

Absence due to illness during consecutive period of at least 60 days/Total absence due to illness,% 55.4 55.6

Women’s absence due to illness/Women’s total normal working hours,% 4.1 4.3

Men’s absence due to illness/Men’s total normal working hours,% 5.6 5.8

Breakdown of absence due to illness by ageEmployees aged –29 4.8 4.4

Employees aged 30–49 4.4 4.8

Employees aged 50– 7.4 7.6

Number of employees included in calculation 2,398 2,582

In all cases the calculation is based on the number of worked or non-worked hours.

H U M A N R E S O U R C E S

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1

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6

20032002

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%

Salaried employees, sick pay period Wage-earners, sick pay period

40


Increased marketing efforts

The purpose of JM’s brand-building activities and long-term profiling campaigns is to maintain and enhanceinterest in JM’s housing and commercial premises, andthus make a positive contribution to sales.

POSITIONING

As the market’s leading player, it is in JM’s interest to pro-mote higher demand in general for newly built homes. Thesecond-hand market, homes that are not newly built, is themain competitor. JM therefore seeks to highlight the advan-tages of buying a new home, such as opportunities to have asay in choice of materials, fittings and layout. The slogan“Room for enjoyment” summarises the values that JM repre-sents and symbolises the optimal benefit JM wishes to offerits customers.

BRAND INVESTMENTS

JM has increased its brand investments in recent years inorder to support planned volume growth and adopt a clearposition in the light of greater competition in housing devel-opment projects. Brand investments were increased consid-erably in 2003.

Co-ordinating brand campaigns with ongoing sales activi-ties provides more value per invested advertising krona.Poster campaigns, film and TV commercials and radio spotscomplement project catalogue mail shots and newspaperadvertisements.

On four occasions in 2003 these integrated campaignswere conducted before and in direct connection with JM’sregular customer activity the Grand Viewing Day. Apartfrom a substantial increase in the number of visitors onviewing days and hits on JM’s website, significant salesresults could be noted.

STRENGTH IN THE BRAND

Knowledge of and attitudes to JM are good. Surveys showthat JM is the supplier of choice in its target group – morepeople name JM than any other company when asked whothey would turn to in order to buy a newly built home.

MARKET WINDOW WWW.JM.SE

The Internet is an increasingly important search engine forprospective home buyers and a natural first direct contactwith JM. Further development of JM’s website, with a focuson user friendliness and consistent property presentations,has been carried out.

SPONSORING AND SOCIAL RESPONSIBILITY

For JM it is important that sponsoring activities are brand-building and have a link to JM’s own operations. JM also has aresponsibility to contribute to positive social development.JM has made the assessment that sport, culture and socialresponsibility are appropriate areas for sponsoring. By spon-soring Mentor, a foundation dedicated to giving young peoplea drug-free upbringing, JM is involved in the Hjulsta schoolin north Stockholm. JM is also principal sponsor of theMillesgården museum on Lidingö. Sponsoring costs totalledSEK 2.6m in 2003.

AWARDS

High ratings or mentions in industry competitions are impor-tant for JM’s image to the outside world. In 2003 two of JM’ssenior living projects received awards. The Swedish Associa-tion of Architects’ Housing award was given to the Opus 1project in Ljunghusen. The Hammarskogen project in Jär-fälla, north of Stockholm, received an award in 2003 for goodbuilding culture from Järfälla town planning office.

T H E B R A N D

Some of JM’s profile-creating advertising in 2003.


P1

Project: Röllingby 2 • Place: Åkersberga • Municipality: Österåker • Type of housing: Apartments • Number: 33 • Size: 2–4 rooms,61–119 sq.m.Location: Close to nature • Communications: Bus, commuter trains • Distance to Stockholm: 30 km • Completion: 2003Architect: FFNS Arkitekter

P1

JM in pictures

P2


Project: Solhem • Place: Spånga • Municipality: Stockholm • Type of housing: Apartments • Number: 102 • Size: 1–5 rooms,45–120 sq.m.Location: Central • Communications: Bus, commuter trains • Distance to Stockholm: 10 km • Completion: December 2003Architect: Brunnberg och Forshed Arkitektkontor


Project: Fyrtornen • Place: Gothenburg • Municipality: Gothenburg • Type of housing: Apartments • Number: 56 • Size: 2–3 rooms,61–106 sq.m.Location: Close to water • Communications: Bus,boat • Distance to Gothenburg: 6 km • Completion: 2003 • Architect: Abako Arkitektkontor

P3

Project: Marielundsviken • Place: Mariefred • Municipality: Strängnäs • Type of housing: Detached houses • Number:16 • Size:5 rooms,130–145 sq.m.Location: Close to water • Communications: Bus, train • Distance to Stockholm: 70 km • Completion: Summer 2003 • Architect: AIX

Project: Kanbergslunden • Place: Linköping • Municipality: Linköping • Type of housing: Apartments • Number:35 • Size: 3–5 rooms,92–143 sq.m.Location: Central • Communications: Bus, train • Distance to Linköping: 0 km • Completion: Summer 2003 • Architect: Brunskog Arkitekter

P4



Project: Paradsängen • Place: Hässelby strand • Municipality: Stockholm • Type of housing: Apartments • Number: 117 • Size: 1–4 rooms,39–98 sq.m.Location: Close to water • Communications: Underground • Distance to Stockholm: 10 km • Completion: Spring 2003 • Architect: Sundell Arkitekter

P5

P6


Project: Fontaines de Woluwé • Place: Woluwé-St-Lambert • Municipality: Woluwé-St-Lambert • Type of housing: Apartments • Number: 147Size:3–6 rooms,97–221 sq.m. • Location: Park • Communications: Bus,underground • Distance to Brussels: 4 km • Completion: 2004Architect: Beauvoir & Croisette Desnoyer


P7

Project: Lillegrund • Place: Amager • Municipality: Copenhagen • Type of housing: Terraced houses • Number: 43 • Size:3–5 rooms,119–126 sq.m.Location:Central • Communications: Bus,underground • Distance to Copenhagen:0 km • Completion: Autumn 2003Architect:Peter Fournais Tegnestue

P8


Project: Liljekonvaljen • Place: Värmdö • Municipality: Värmdö • Type of housing: Detached houses • Number: 32 • Size:159–167 sq.m.Location: Close to water • Communications: Bus • Distance to Stockholm: 25 km • Completion: 2004 • Architect: Cinnober Arkitekter

Project: Basbergrønningen · Place: Ringshaug · Municipality: Tønsberg · Type of housing:Apartments · Number: 16 · Size:3–7 rooms,77–168 sq.m.Location: Close to forest · Communications: Bus · Distance to Tønsberg: 5 km · Completion: Autumn 2003 · Architect: Jørn Eskeland


Project: Södra Udden,Bolinder Strand • Place: Kallhäll • Municipality: Järfälla • Type of housing: Apartments • Number: 95 • Size:1–4 rooms,52–110 sq.m.Location: Close to water • Communications: Bus, commuter trains • Distance to Stockholm: 25 km • Completion: 2003 • Architect:Wingårdhs

P9

P10


Project: Karlberga Park • Place: Södertälje • Municipality: Södertälje • Type of housing: Apartments • Number: 42 • Size: 2–4 rooms,68–124 sq.m.Location: Close to water • Communications: Bus • Distance to Stockholm: 50 km • Completion: Winter 2003 • Architect: ÅWL Arkitekter AB


Project: Västra Linné • Place: Gothenburg • Municipality: Gothenburg • Type of housing: Apartments • Number: 81 • Size:2–5 rooms,64–139 sq.m.Location: Central • Communications: Bus, tram • Distance to Gothenburg:0 km • Completion: August 2003Architect:Semrén & Månsson Arkitektkontor AB

P11

P12


Project: Vita Byn • Place:Mölle • Municipality: Höganäs • Type of housing: Apartments • Number: 29 • Size: 2–4 rooms,65–112 sq.m.Location: Close to the sea • Communications: Bus • Distance to Helsingborg: 70 km • Completion: Autumn 2002 • Architect: Möller Arkitekter

41


Strong sales increase

EARNINGS DEVELOPMENT

The business unit’s net sales fell 11% to SEK 3,218m (3,623)and earnings excluding property sales amounted to SEK–44m (–14). The capital gain from property sales amountedto SEK 22m (9). No write-downs of properties were carriedout compared with SEK 155m in the previous year.

PROJECT DEVELOPMENT

During the year, housing starts totalled 966 (1,262) and 1,547(1,044) residential units were sold. Housing starts in innersuburbs took place in Nacka, a second phase with 34 units byDanvikstrand and conversion of the former ABB building into140 residential units and a pre-school, in Täby/HägernäsStrand, two phases with a total of 69 residential units, and inLångbro Park, a second phase with 32 residential units. Pro-duction started on two major projects in Frösunda and VästraSkogen in Solna, with 96 and 86 residential units respectively.Three phases with a total of 26 single-family homes went intoproduction in Österåker, two projects totalling 89 residentialunits started production in Gustavsberg, and in Värmdö pro-duction started on 32 single-family homes and 23 apartmentsin two projects. In Stockholm, production started on a sixthphase with 35 residential units in Lilla Essingen. In addition,production starts included 96 sheltered housing units inÖstermalm and a further phase of 75 residential units inBolinder Strand.

ORGANISATION DEVELOPMENT

JM Residential Stockholm became a separate business unitduring the year, when the JM Residential business unit wasdivided into two new business units. A new regional divisionhas created four small regions, in place of the earlier two.Smaller units create closer links between business unit man-agement and the individual projects.

BUILDING RIGHTS

Approximately 10,300 building rights (11,500) were avail-able at year-end. During the year JM sold building rightswith completed detailed plans for housing in Årstadal,

Rågsved and Långbro. These deals will lead to a time shift inthe building rights portfolio, making it better adjusted forplanned production starts. The sales were made to playersthat are not regarded as competitors to JM.

B U S I N E S S U N I T S – J M R E S I D E N T I A L S TO C K H O L M

FACTS – JM RESIDENTIAL STOCKHOLM

The business unit develops mainly residential projects in pre-ferred areas of Greater Stockholm.Operations comprise acqui-sition of attractively located development properties as well asplanning,pre-construction,building and selling homes.

SUMMARY OF RESULTS

SEKm 2003 2002

Net sales 3,218 3,623

Gross profit 97 131

Selling and administrative expenses –141 –145

Gains on the sale of properties 22 9

Write-downs of properties – –155

Operating loss –22 –160

KEY FIGURES

2003 2002

Margin,% –1.4 –0.4

Return on operating capital,% –0.7 – 4.6

Number of employees 192 192

Number of acquired building rights 96 350

Number of housing starts 966 1,262

Number of building rights at end of period 10,300 11,500

Book value of development properties, SEKm 2,219 2,330

Book value of investment properties, SEKm 74 213

Number of sold residential units 1,547 1,044

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200

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B U S I N E S S U N I T S – J M R E S I D E N T I A L S W E D E N

Slightly weaker trend


Net sales decreased in 2003 by 5% to SEK 2,092m (2,205).Earnings excluding property sales and write-downsdecreased to SEK 105m (178). This lower result was partlyattributable to slower sales of large residential units inGothenburg. The capital loss from property sales amountedto SEK 7m (4 gain). No write-downs were made of propertiescompared with SEK 2m in 2002.

PROJECT DEVELOPMENT

Production started on a total of 958 residential units (1,010)and 958 units (883) were sold. There were 141 housing startsin Uppsala during the year, including a first phase of 50 resi-dential units out of a total of approximately 320 in the Indus-tristaden project. In Vallentuna, three phases started with atotal of 75 residential units, in Sigtuna a phase with 23 single-family homes started, and in Upplands Väsby productionstarted on 23 senior units. Three production starts tookplace in Linköping: two phases of 83 residential units on Kan-berget as well as a first phase of 48 units in the Garnison area.A final phase with 27 residential units started in the old railyard area in Strängnäs. In Örebro, construction started on 45apartments and 20 single-family homes, and 49 residentialunits were started in central Jönköping.

Production starts in south Sweden included the first phasewith 94 residential units in the Dockan area in Malmö har-bour, 40 single-family homes in Bunkeflostrand, 22 single-fam-ily homes in Videdal in Malmö and 32 residential units in cen-tral Vellinge. In Halmstad, a second phase with 48 residentialunits started by the Nissan river. The first phase of 21 single-family homes out of a total of over 100 started in Staffanstorp.

Work also started on 33 residential units in Ladugårds-marken in Lund and on phase two with 18 residential units inKävlinge. A first phase with 10 out of a total of 25 single-familyhomes in Partille, a second phase with 20 single-family homesin Kungsbacka and 19 single-family homes in Tuve also started.


JM Residential Sweden became a separate business unit dur-

ing the year, when the JM Residential business unit wasdivided into two new business units.

BUILDING RIGHTS

At year-end 2003 the business unit had approximately 7,400building rights (8,400) available for future production.

FACTS – JM RESIDENTIAL SWEDEN

The business unit develops mainly residential projects in pre-ferred growth areas in Sweden, excluding Greater Stockholm.Operations comprise acquisition of attractively located devel-opment properties as well as planning,pre-construction,build-ing and selling homes. Contract work is also conducted to alimited extent.

SUMMARY OF RESULTS

SEKm 2003 2002

Net sales 2,092 2,205

Gross profit 217 306


Losses/gains on the sale of properties –7 4

Write-downs of properties – –2

Operating profit 98 180

KEY FIGURES

2003 2002

Margin,% 5.0 8.1

Return on operating capital,% 10.2 16.7


Number of acquired building rights 170 350

Number of housing starts 958 1,010


Book value of development properties, SEKm 700 808


Number of sold residential units 958 883

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200

300

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B U S I N E S S U N I T S – J M P RO D U C T I O N

Improved margins


Net sales decreased according to plan and amounted to SEK701m (1,166). Operating profit amounted to SEK 34m (–27).

The business unit’s lower external volumes are attributa-ble to a lower proportion of external contracting work. Phas-ing out of unprofitable units and the sale of non-strategicoperations contributed to an improved margin.

PROJECTS

Major ongoing external contracts include new constructionof premises for the University College of Film, Radio, Televi-sion and Theatre on Stockholm’s Valhallavägen, conversion ofthe Swedish Patent and Registration Office’s premises onValhallavägen for Vasakronan and construction work for theshopping centre in Gustavsberg for KF Fastigheter.

Internal construction projects include three conversions:the ABB building in Nacka, Packhusen in Gustavsberg andJ&W’s former offices at Torsviks Torg, Lidingö. New construc-tion already in progress includes a new 12,000 sq.m. officealong the Bergshamra link road with a view over Brunnsviken.


The operations in Lindqvist Rör, with some 30 employees,were sold during the year. The sale had no earnings impact.

OPERATIONAL DEVELOPMENT

Extensive measures were carried out within the businessunit in order to achieve higher productivity. These includedemployee training as well as further development of proces-ses, routines, decision-making systems and follow-up.

FACTS – JM PRODUCTION

The business unit carries out construction work for externaland internal customers in the Greater Stockholm area.Reported net sales and operating profit include the revenue-earning construction work. Other sales and earnings, i.e. frominternal residential projects, are reported in the JM ResidentialStockholm business unit.

SUMMARY OF RESULTS

SEKm 2003 2002

Net sales 701 1,166

Gross profit 67 33


Operating profit/loss 34 –27

KEY FIGURES

2003 2002

Margin,% 4.9 –2.3

Number of employees 1,2061) 1,425


1) Of whom,809 employees work for internal customers.

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B U S I N E S S U N I T S – J M C O M M E R C I A L

Focus turns to housing


Operating profit for 2003 amounted to SEK 358m (634), ofwhich property sales accounted for SEK 374m (513). Operat-ing net amounted to SEK 95m (284). In line with the strategyto reduce the portfolio of fully developed properties, salesand earnings from property management are decreasing.

PROPERTY TRANSACTIONS

During the year the business unit completed property salesfor a total of SEK 2,219m, with a capital gain of SEK 411m.These included the sale of the hotel property Pennfäktaren10 for SEK 575m and the major deal with Tornet. In thisdeal, JM sold all the Svärdet properties, the offices inMörby, Danderyd, for SEK 931m with a capital gain of SEK235m. At the same time, 2,100 residential units wereacquired in Nacka and Vaxholm for SEK 1,422m.

PROJECT DEVELOPMENT

Work has started on detailed plans for densification of theresidential areas acquired by JM in Nacka and Vaxholm.There is also considerable interest in conversion of existingrental units into tenant-owned apartments in these areas. Atyear-end discussions were under way with four tenant-owner co-operatives in Nacka and Vaxholm, comprisingapproximately 250 apartments.

In the Barnängen block in Södermalm a 9,000 sq.m. indus-trial property is being converted into modern offices wheretenants already moved in include the architect firms Nyrénsand Sweco FFNS. Conversion is also under way of offices andretail space in the Västerbotten block in Torsvik, Lidingö.

In 2003, JM signed a lease with the transport and logisticscompany DHL for the newly built office property NorraBrunnsviken in Solna. The lease runs for five years and com-prises approximately 7,400 sq.m., corresponding to two-thirds of the property. The tenants moved in during the firstquarter of 2004.

In ongoing commercial projects, leases have so far beensigned for approximately 16,000 sq.m. out of a total of25,000 sq.m.

BUILDING RIGHTS

JM possesses land for commercial project development onprime sites in Norra Frösunda, Solna, and the Lustgårdenblock in Kungsholmen where production can start as soon asdemand is guaranteed. JM’s building rights for commercialpremises total approximately 200,000 sq.m. with a bookvalue of SEK 187m.

FACTS – JM COMMERCIAL

The business unit develops commercial property projects inGreater Stockholm.The business unit also manages JM’s com-mercial properties and is responsible for the purchase and saleof the Group’s investment properties.

SUMMARY OF RESULTS

SEKm 2003 2002

Net sales 227 424

Gross profit 98 278


Gains on the sale of properties 374 513

Write-downs of properties –63 –99


KEY FIGURES

2003 2002

Margin,% 20.7 51.9



Book value of investment properties, SEKm 2,405 2,158


Investments in properties, SEKm 1,686 345

Number of sold properties 17 10

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B U S I N E S S U N I T S – J M I N T E R N AT I O N A L

Norwegian operationsexpanding


Net sales increased in 2003 to SEK 1,683m (1,530). Sales forthe operations in Norway amounted to SEK 985m (1,114).Operating profit in 2003 amounted to SEK 72m (90). Duringthe year housing starts totalled 790 (439) and 684 residentialunits (584) were sold. At year-end 2003 the business unit hadapproximately 5,700 building rights (5,650) at its disposal.

NORWAY

Operations are conducted in the Oslo area, Tønsberg, Skienand Bergen. Market presence was broadened during the yearthrough the acquisition of the Stavanger-based project devel-opment company Vikevåg Bolig, which has been incorpo-rated as an independent subsidiary.

Housing started totalled 409 (396) and 482 residentialunits (424) were sold. 140 residential units in several largephases in the Rolvrud Skog project, in Lørenskog outsideOslo, were completed. 58 residential units in Sinsentoppen I(Oslo) and 45 residential units in Evjeveien (Bærum) werealso completed. Seniorbo completed 74 units in Nyhagen(Oslo). The available building rights portfolio at year-endcomprised 4,500 residential units (4,350).

DENMARK

Due to combined acquisitions and sales of developmentproperties, operations now focus on Copenhagen and Frede-riksberg. A homes shop was opened in central Copenhagen.Housing starts totalled 242 (43) and 152 residential units(85) were sold. The projects are primarily centrally located inCopenhagen’s harbour area and in a large area in Havnestadby Islands Brygge. JM in Denmark had a total of 1,100 resi-dential building rights (1,100) at its disposal at year-end.

BELGIUM

The operations in Belgium are concentrated to the Brusselsregion and focus on project development of both housing and

commercial premises. Housing starts totalled 139 (0). Sinceonly a limited number of residential units were available forsale, only 50 units (75) were sold.

The 5,100 sq.m. office property Arts 21 converted by JMwas sold to the German property fund MEAG for SEK 133mwith a capital gain of SEK 22m. Conversion of the 11,000sq.m. office project Science 14 in the Leopold district isunder way. The building rights portfolio corresponded toapproximately 100 residential units (200) at year-end.

FACTS – JM INTERNATIONAL

The business unit develops and sells residential properties inNorway, Denmark and Belgium. In Belgium, JM also developscentrally located commercial property projects.

SUMMARY OF RESULTS

SEKm 2003 2002

Net sales 1,683 1,530

Gross profit 156 164


Gains on the sale of properties 22 –3


KEY FIGURES

2003 2002

Margin,% 3.0 6.1



Number of housing starts 790 439




Number of sold residential units 684 584

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46


The Board of Directors and the President of JM AB (publ)hereby submit the annual report and consolidated financialstatements for 2003.

SUMMARY OF THE GROUPMARKET AND SALES

JM’s net sales decreased in 2003, mainly due to a lower num-ber of housing starts in the first nine months of the year.However, the housing market in Stockholm, which is impor-tant to JM, stabilised in the second half of the year, after thepreviously reported period of reduced demand.

The improved market, a broader product range whichincludes homes in lower price bands, and intensified salesefforts, contributed to a substantial increase in the numberof sold residential units in the form of signed contracts of27% during the year to 3,189 (2,511). The good sales duringthe fourth quarter, combined with a stable reservation rate,allowed JM to start production of a large number of residen-tial units during the fourth quarter. This had a positiveimpact on both net sales and cash flow. The negative earningstrend for JM Residential Stockholm could thus be broken.

Despite the substantially increased sales of homes, earn-ings for the full year 2003 were lower than in 2002, whichwas mainly due to low margins in older ongoing residentialprojects in Stockholm. At the same time, revenue recognitionis conservative for newly started projects. Earnings were alsoreduced by the lower sales.

The earnings trend for JM’s other operations was stable,although earnings in Norway declined compared with theprevious year due to a lower average revenue level for resi-dential units sold during the year.

IMPROVED CONTROL AND OVERSIGHT

During 2003, JM introduced a new structure for stricter con-trol and project oversight routines, particularly for newlystarted residential projects in the Group. This involved exten-sive work throughout 2003 which is now essentially completed.This also led to postponement of production starts to the latterpart of the year. Our efforts to increase internal efficiency andreduce costs continue to have high priority.

LOWER NET DEBT

The Group’s return on equity for 2003 amounted to 6%.Over the past five calendar years, the average return has

been 16%. The Group’s changed return target is 10–15% overa business cycle. Earnings per share for 2003 amounted toSEK 7. In the fourth quarter, net debt could be decreased bySEK 1,400m due to the improved cash flow.

NEW CONTROL AND PROJECT OVERSIGHT ROUTINESIn 2003 a large number of measures were adopted to improvecontrol and governance of JM’s operations. Decisions onstarting-up and overall design of projects are now alwaysmade in business unit management or group management,or, for major projects, by the Board. The assignments ofexternal auditors have been widened.

New and formalised monitoring routines have been intro-duced with a special focus on large projects. The businessarea and regional managers submit quarterly reports to thePresident, Vice President and CFO. Assessment data in-cludes the financial history of the project, future anticipatedrevenues and expenses and the sales and reservations situa-tion. Selected major projects are subject to a more in-depthexamination by auditors and are reported to JM’s AuditCommittee on a regular basis. Special oversight groups havealso been set up for the very largest projects.

Project oversight routines have been tightened up consider-ably. This applies in particular to the JM Residential Stockholmbusiness unit and JM Production, including well-documentedreviews that are carried out in conjunction with pre-construc-tion and production start. A special project inspection grouphas also reviewed all projects within JM Residential Stockholmwhere production started during 2003 in order to qualityassure the transfer to the new project oversight routines.

B O A R D O F D I R E C TO R S ’ R E P O RT

CONSOLIDATED INCOME STATEMENT

SEKm 2003 2002 2001

Net sales 7,787 8,872 8,642

Costs for production and management –7,152 –7,960 –7,022

Gross profit 635 912 1,620

Selling and administrative expenses –505 –527 –545

Gains on the sale of properties 411 523 928

Property write-downs –63 –256 –39

Operating profit 478 652 1,964

Net financial items –211 –284 –335

Tax on profit for the year –80 –115 –485

Net profit for the year 187 253 1,144

47


During 2003 major work was carried out to develop a group-wide pre-construction process designed to achieve greaterefficiency and lower costs while retaining high quality andhigh customer values.

STRATEGIC DEVELOPMENTIn line with the aim of further streamlining operationstowards residential project development, the strategy for theGroup’s market orientation, product range, geographicalspread, building rights portfolio and holding of investmentproperties has been sharpened.

JM will increase its customer and market orientation.Customer satisfaction will be further increased and the serv-ice content of JM’s business will be further developed.

The product range is being broadened both as regardstype of homes and homes in lower price bands withoutrenouncing quality homes in attractive locations.

Geographically, the focus will continue to be to operate ingrowth markets and for expansion to mainly take place in theNordic countries.

The Group’s investment properties will entirely compriseproperties intended for project development and will as faras possible consist of residential properties. Project develop-ment of commercial properties will be limited and primarilysupport residential development.

UPDATED FINANCIAL TARGETSJM’s margin target has been restated from the earlier projectdevelopment margin of 10% by 2005 to an operating marginof 10%. The new margin target includes profit from propertysales, operating net and group-wide expenses. The change-over to a new margin target is a natural consequence of thecompleted extensive sales of the older property portfoliowhere the Group’s income statement and balance sheet cannow entirely be seen as attributable to project operations.

Housing starts will take place in pace with secured de-mand and quality assured pre-construction and productionplanning.

The profitability target for return on equity after tax hasbeen changed to 10–15% over a business cycle from the pre-vious five-year weighted average of 15%.

The targets for a dividend share of 50% of net profit andan equity ratio of 35% over a business cycle remain un-changed.

MARKET TRENDSSTOCKHOLM – RESIDENTIAL

House prices stabilised in the second half of the year, in boththe second-hand market and in JM’s projects. Demand forJM’s homes is good in both ongoing and new projects. Aslightly sluggish trend can still be noted for sales of larger,more expensive homes.

STOCKHOLM – COMMERCIAL

The Stockholm property market is characterised by continuedfalls in rental levels and high vacancies. The greatest impact ofthis is on older office premises. Demand and rental levels innewly developed, space-efficient offices in locations with goodcommunications are relatively good.

REST OF SWEDEN – RESIDENTIAL

Market prices remain stable. Demand is favourable in JM’songoing projects and interest in newly started projects issubstantial. Demand and prices depend entirely, however, onthe attractiveness and location of individual projects. Salesprocesses for large homes in Gothenburg are more drawn outthan previously.

INTERNATIONAL

Demand for homes in Norway was weaker in the first half ofthe year, but this trend then reversed due to an improved busi-ness climate and falling interest rates. A more stable employ-ment situation and interest rates at an historically low levelcontributed to increased interest in JM’s projects during thesecond half. Sales of large homes in Oslo were somewhat slow.

In Denmark, the housing market in Copenhagen was char-acterised by stable demand and unchanged prices during theyear. The introduction of interest-only loans helped to stimu-late demand.

In Belgium, JM is experiencing continued high demand forboth functional offices and high-standard homes in attractivelocations. The limited number of new homes and low interestrates mean that prices continue to rise in most municipalities.

NET SALESThe JM Group’s net sales in 2003 amounted to SEK 7,787m(8,872), a decrease of 12% compared with the previous year.

The lower net sales were mainly attributable to a lowernumber of housing starts in Sweden and reduced external


48


contract work for JM Production. A lower average revenuelevel for residential development also reduced net sales.

The lower number of housing starts in the Swedish opera-tions is mainly attributable to the JM Residential Stockholmbusiness unit, where net sales decreased by 11%.

The JM Residential Sweden business unit reported morestable development. Net sales decreased by 5%.

Net sales in the JM Production business unit fell sharply.This reduction was planned and is due to the lower propor-tion of external contract work.

In the JM Commercial business unit net sales decreasedconsiderably due to continued sales of the property portfolio.

JM International showed an increase in net sales of 10%.Weaker volume development in Norway was balanced byhigher net sales in both Denmark and Belgium.

OPERATING PROFITThe JM Group’s operating profit decreased by 27% in 2003to SEK 478m (652).

This result includes gains from property sales of SEK411m (523).

The JM Residential Stockholm business unit’s operatingloss was SEK 22m (–160). This negative result was mainlydue to a lower number of production starts, but was also dueto weak earnings in a number of ongoing projects. More con-servative revenue assessment in early phases of ongoing proj-ects, re-planning costs and increased marketing and salesefforts also contributed to the negative earnings.

The JM Residential Sweden business unit reported anoperating profit of SEK 98m (180). This lower result waspartly attributable to more sluggish sales of large residentialunits in Gothenburg.

The JM Production business unit’s operating profit amount-ed to SEK 34m (–27). Phasing out of unprofitable units and thesale of non-strategic operations contributed to an improvedmargin. The negative result in 2002 was attributable to a provi-sion for risk of loss in one major project. This provision for riskof loss was reversed in the fourth quarter of 2003 with no earn-ings impact, following settlement of an outstanding dispute.

JM Commercial’s operating profit amounted to SEK 358m(634), of which SEK 374m (513) was attributable to gainsfrom property sales. The lower earnings for the businessunit, adjusted for property sales, are attributable to lowervolumes due to the continued sale of the property portfolio.

JM International’s operating profit decreased to SEK 72m(90). This less favourable result is due to a lower average rev-enue level for homes sold in Norway during the year as wellas low margins in Denmark.

NET SALES BY BUSINESS UNIT

SEKm 2003 2002 2001

JM Residential Stockholm 3,218 3,623 3,471

JM Residential Sweden 2,092 2,205 1,943

JM Production 701 1,166 1,797

JM Commercial 227 424 516

JM International 1,683 1,530 1,485

Eliminations –134 –76 –570

Total 7,787 8,872 8,642

OPERATING PROFIT BY BUSINESS UNIT

SEKm 2003 2002 2001

JM Residential Stockholm –22 –160 544

JM Residential Sweden 98 180 227

JM Production 34 –27 96

JM Commercial 358 634 1,050

JM International 72 90 111

Group-wide expenses –62 –65 –64

Total 478 652 1,964

MARGIN BY BUSINESS UNIT

% 2003 2002 2001

JM Residential Stockholm –1.4 –0.4 13.6

JM Residential Sweden 5.0 8.1 7.7

JM Production 4.9 –2.3 5.0

JM Commercial 20.7 51.9 61.6

JM International 3.0 6.1 7.4

NET FINANCIAL ITEMSNet financial items amounted to SEK –211m (–284), an im-provement of SEK 73m compared with the previous year.Capitalisation of interest expenses related to commercialproject development amounted to SEK 1m (12). Interestexpenses decreased, mainly due to a lower average debt. Inconjunction with the receipt of proceeds from propertysales, loans of approximately SEK 1,000m were redeemed inthe first quarter of 2003 which led to costs of SEK 30m forearly redemption.


49


PROFIT AFTER FINANCIAL ITEMSProfit after financial items amounted to SEK 267m (368), adecline of 27% compared with 2002.

PROFIT AFTER TAXProfit after tax amounted to SEK 187m (253). The total taxexpense amounted to SEK 80m (115), of which current taxSEK –84m (–228) and deferred tax SEK 4m (113).

Property tax, which is treated as an operating expense,was charged against earnings in the amount of SEK 25m (44).

PROJECT DEVELOPMENTProject development of housing and commercial premises isJM’s core business. Undeveloped and developed land isacquired and transformed through construction, conversion orextension into attractive living and working environments.

Profit from project development amounted to SEK 182m(459). The margin in these operations amounted to 2.4% (5.4)for 2003. Project-related property sales and write-downsmade a net contribution of SEK 45m (232).

The number of sold residential units in the form of signedcontracts during the year rose sharply to 3,189 (2,511). Theimprovement was attributable to a stabilised market, broaderproduct range and increased marketing efforts. The good salesin the fourth quarter, combined with a stable reservations rate,allowed a large number of housing starts in the fourth quarter.The number of housing starts for the full year totalled 2,714(2,711). The number of unsold residential units six monthsafter final inspection fell in the fourth quarter. The segment forlarge homes in Stockholm, Gothenburg and Oslo remains thepart of the market with the weakest demand. Both productionstarts and sales volumes can vary over time depending on thedates of project starts and the size of individual projects.

Despite increased sales, JM is retaining its higher require-ments on the proportion of reserved residential units prior toproduction starts. In addition to delays due to re-planning, thehigher reservation requirements reduced the number of hous-ing starts in the first nine months of the year. The high sales inrelation to the number of housing starts means that the level ofrisk for JM decreased during 2003. Commercial project devel-opment continues to be conducted with considerable caution.

The building rights portfolio comprises approximately23,400 residential units which can be compared with justover 25,500 at year-end 2002. Valuations, in co-operation

with external consultants, of JM’s development propertieswith a book value of SEK 3.6 billion (3.9) indicate a surplusvalue of approximately SEK 1,400m (1,400).

ORDER SITUATION

The order backlog at year-end amounted to SEK 5,685m(5,925) and mainly pertained to residential production.Order bookings in 2003 amounted to SEK 7,145m (6,690).The JM Residential Stockholm and JM Residential Swedenbusiness units report lower order bookings, while JM Inter-national is showing a significant increase.

INVESTMENTS IN DEVELOPMENT PROPERTIES

Total acquisitions of development properties in 2003amounted to SEK 664m (629). Net investments in develop-ment properties amounted to SEK –163m (–49). The portfo-lio then amounted to SEK 3,631m (3,871). These holdings area prerequisite for JM’s residential project development.

INVESTMENTS IN INVESTMENT PROPERTIES

Investments in and acquisitions of investment propertiesamounted to SEK 1,772m (645). Investments in existinginvestment properties totalled SEK 350m (483). In addition,residential properties were acquired for SEK 1,422m.

MACHINERY AND EQUIPMENT

Investments in machinery and equipment amounted to SEK18m (35).

BUILDING RIGHTS PORTFOLIO

At year-end 2003, JM had access to a total of approximately23,400 residential building rights (25,500), broken down asfollows:

NUMBER OF BUILDING RIGHTS

2003 2002

JM Residential Stockholm 10,300 11,500

JM Residential Sweden 7,400 8,400

JM International 5,700 5,650

Total (approximately) 23,400 25,550

Of the 23,400 building rights, approximately 16,000 arebooked as an asset in the balance sheet. 7,400 building rightsare available under agreements and are not booked as assets.

In addition, the JM Commercial business unit has access to


50


building rights for commercial premises corresponding toapproximately 200,000 sq.m. with a book value of SEK 187m.

INVESTMENT PROPERTIESJM’s portfolio of investment properties amounts to approxi-mately SEK 2,800m, mostly comprising residential propertiesfor further development and office projects under construction.Fully developed properties only account for a small portion.

The operating net from investment properties amounted toSEK 109m (293) in 2003. The lower operating net is due tomajor property sales in 2003 and 2002, which were carried outin line with the Group’s strategy to sell fully developed proper-ties. In 2003 properties were sold for SEK 2,219m (3,015) withcapital gains of SEK 411m (523), of which SEK 108m (473) isincluded in profit from project development. Write-downs ofinvestment properties were made with SEK 63m (34).

Investments in existing investment properties amountedto SEK 350m (483). In addition, residential properties wereacquired for SEK 1,422m.

The property market for commercial premises in Stock-holm is characterised by a continued fall in rental levels andvacancies of 15–16%. New and recently renovated premisescontinued to perform relatively well in comparison. Vacan-cies in JM’s portfolio of fully developed commercial and resi-dential properties amount to 4% (10) of annual rents and 4%(10) of space. The occupancy rate for the Swedish office proj-ects under construction amounts to approximately 65% ofannual rents and 64% of space.

The Läraren property in Stockholm was sold for SEK 70min the fourth quarter. Earlier in the year, JM sold the Svärdetproperties in Mörby for SEK 931m and at the same timeacquired 2,100 residential units in Nacka and Vaxholm forSEK 1,422m. Other major property deals during the yearincluded the sale of the newly developed hotel propertyPennfäktaren 10 on Vasagatan in Stockholm to a Norwegianinsurance company for SEK 575m, and the sale of the Pilen30 property for SEK 180m and of a newly developed officeproperty in central Brussels for SEK 133m.

Through a strategic deal comprising residential portfolios inVaxholm and Nacka, with very low vacancies and therefore securecash flows, JM acquired an opportunity to develop two attractiveproperty portfolios, among other things through densificationwith new homes. Many tenants have shown an interest in con-version to tenant-owner co-operatives, which JM also favours.

During the past year, the book value of the portfolio of fully developed commercial properties decreased from SEK2,109m to SEK 515m.

MARKET VALUES OF JM’S INVESTMENT PROPERTIES

In an appraisal conducted in co-operation with external con-sultants, the market value of JM’s portfolio of investment prop-erties at year-end 2003 was estimated at SEK 3,205m (3,478).The corresponding book value amounted to SEK 2,833m(2,774). The surplus value thus amounts to SEK 400m (700). Abreakdown of values by category is shown below:

SEKm Book value Market value

Fully developed properties 515 640

Properties under construction 776 856

Properties for further development 1) 1,542 1,709

Total 2,833 3,205

1) Includes residential properties acquired during the year.

FINANCIAL ITEMSINTEREST-BEARING LIABILITIES

At year-end 2003, interest-bearing net debt amounted toSEK 2,611m (3,665), representing a decrease of just overSEK 1,400m in the fourth quarter. The debt/equity ratioamounted to 0.8 (1.0).

Total interest-bearing loans at the end of the periodamounted to SEK 2,986m (4,313), of which the PRI liabilityaccounted for SEK 451m (433). At the end of the period theaverage interest rate for the total loan portfolio was 5.5%(5.7). The average fixed-interest period for the Group’s totalloan stock, excluding the PRI liability, was 2.5 years (2.3).

CASH FLOW

Cash flow from operating activities, which includes acquisi-tions and sales of properties, amounted to SEK 1,504m(2,161). This decline was mainly due to increased invest-ments in investment properties. Cash flow for the yearamounted to SEK –264m (–56).

LIQUIDITY

The Group’s available liquidity amounted to SEK 3,065m(2,724) at 31 December 2003. Aside from liquid assets ofSEK 332m (596), this includes unutilised overdraft facilitiesand credit lines totalling SEK 2,733m (2,128).



51OTHERSHAREHOLDERS’ EQUITY

Consolidated shareholders’ equity at 31 December 2003amounted to SEK 3,285m (3,570), divided betweenrestricted equity of SEK 1,796m (1,796) and unrestrictedequity of SEK 1,489m (1,774).

PERSONNEL

The number of employees in the Group at year-end 2003amounted to 2,368 (2,664). The number of salaried employ-ees was 1,090 (1,187) and the number of wage-earners was1,278 (1,477). 2,207 (2,250) employees were men and 359(352) women.

The average number of employees during the year was 2,566(2,602), of whom 293 (301) were employed outside Sweden.

Wages, salaries and social security expenses amounted toSEK 1,280m (1,309), of which social security expensesaccounted for SEK 390m (403).

THE WORK OF THE BOARD IN 2003At the Annual General Meeting held on 23 April 2003 it wasdecided that the Board should comprise seven regular Boardmembers as well as two employee representatives with twodeputies appointed by the trade unions.

The Board held one statutory meeting and ten subsequentmeetings. In accordance with its procedures, during 2003the Board examined especially strategic issues as well asinternal control and efficiency.

In February 2003 a Compensation Committee and AuditCommittee were set up each comprising three members of theBoard. During the year the Compensation Committee heldfour meetings and the Audit Committee held eight meetings.

CHANGED ACCOUNTING PRINCIPLES 2005 (IFRS1))During 2003, JM has carried out work to plan the changeover toIFRS where two main areas are mainly relevant to JM:

IAS2) 11 – Construction Contracts – within the frameworkof the Swedish Construction Federation, preparations havebeen made in 2003 to define a revenue recognition that meetsthe criteria according to the industry’s interpretation of IAS11. The industry has not yet stipulated the new industry rec-ommendation in every detail. The current draft stipulates a

conservative revenue recognition that is linked to sold residen-tial units. This will lead to a more conservative revenuereporting than that prescribed by the current industry recom-mendation. JM plans to change over to the new industry rec-ommendation with effect from 1 January 2005.

IAS 19 – Employee Benefits – all the Group’s pension com-mitments have been examined. The revaluation effect onopening equity for 2004 amounts to SEK –0.7m. The assump-tions made regarding discounting, return and salary develop-ment are on a par with established practice.

SHARE BUY-BACK PROGRAMMEThe Board of Directors had a mandate from the Annual Gen-eral Meeting for the repurchase of up to 10% of the number ofshares outstanding. Buy-backs for SEK 154m (1.4 millionshares) were made at the beginning of 2003. The company hasnot repurchased own shares under the present mandate sincethe Annual General Meeting in April 2003.

KEY FIGURES

2003 2002

Interest-bearing net debt (SEKm) 2,611 3,665

Debt/equity ratio (times) 0.8 1.0

Interest coverage ratio (times) 2.1 2.1

Equity ratio (visible) (%) 36 34

Pre-tax return on total capital (%) 5.2 5.9

Pre-tax return on capital employed (%) 7.3 7.8

After-tax return on equity (%) 5.5 6.8

Asset turnover rate (times) 0.79 0.75

Earnings per share, after tax (SEK) 6.60 8.50

PARENT COMPANY

The Parent Company’s core business is project developmentof residential and commercial properties.

Net sales for the Parent Company in 2003 amounted toSEK 5,836m (7,118).

The Parent Company’s profit before appropriations andtax amounted to SEK 735m (–17) for the period. Investmentsin investment properties amounted to SEK 232m (408).

The average number of employees was 2,061 (2,133), of whom1,760 men (1,833) and 301 women (300). Wages, salaries andsocial security expenses totalled SEK 1,047m (1,061). Anaccount of the number of employees and salaries and remunera-tion is provided in the notes to the financial statements.


1) International Financial Reporting Standards (IFRS)2) International Accounting Standards (IAS)

52


Marielundsviken,Mariefred P4

53


GROUP PARENT COMPANYSEKm Note 2003 2002 2003 2002Net sales 1 7,787 8,872 5,836 7,118Costs for production and management 1 –7,152 –7,960 –5,458 –6,497Gross profit 635 912 378 621

Selling and administrative expenses 1 –505 –527 –379 –436Gains on the sale of properties 1, 3 411 523 199 317Write-downs of properties 1, 4 –63 –256 –84 –92Operating profit 1 478 652 114 410

Result from financial items 1Result from group companies 5 – – 885 –130Result from associated companies – – 0 –11Result from other financial fixed assets 6 3 4 48 30Result from financial current assets 7 36 34 31 79Interest expenses and similar profit/loss items 8 –250 –322 –343 –395Profit/loss after financial items 1 267 368 735 –17

Appropriations in the Parent Company 9 86 –61

Tax on profit for the year 1, 10 –80 –115 0 21NET PROFIT/LOSS FOR THE YEAR 1 187 253 821 –57

Earnings per share before dilution (SEK) 11 6.60 8.50Earnings per share after dilution (SEK) 11 6.60 8.50

I N C O M E S TAT E M E N T

JM Residential Stockholm, 41% (40)

JM Residential Sweden, 26% (25)

JM Production, 9% (13)

JM Commercial, 3% (5)

JM International, 21% (17)

CONSOLIDATED NET SALES BY BUSINESS UNIT

54


GROUP PARENT COMPANYSEKm Note 31 Dec 2003 31 Dec 2002 31 Dec 2003 31 Dec 2002ASSETSFixed assetsIntangible fixed assets 12Goodwill 55 70 – –Other intangible fixed assets – 1 – –

55 71 – –

Tangible fixed assets 12Machinery and equipment 46 59 26 36Other tangible fixed assets 12 – – –

58 59 26 36

Financial fixed assets 13Participations in group companies – – 1,933 1,605Receivables from group companies – – 1,186 527Participations in associated companies 6 6 10 10Receivables from associated companies – – 43 145Other securities held as fixed assets 2 2 2 2Other long-term receivables 47 58 28 37Deferred tax assets 13, 21 – – 1 57

55 66 3,203 2,383

TOTAL FIXED ASSETS 168 196 3,229 2,419

Current assetsBuildings and land 14 2,833 2,774 1,106 1,627

Development properties 15 3,631 3,871 2,629 2,512

Participations in tenant-owner co-operatives and similar 16 527 358 485 290

Current receivablesAccounts receivable, trade 338 357 224 245Receivables from group companies – – 291 808Recognised revenue less progress billings 17 1,029 1,197 944 1,018Other current receivables 18 263 1,244 179 249Prepaid expenses and accrued income 24 35 18 22

1,654 2,833 1,656 2,342

Liquid assets 332 596 245 493

TOTAL CURRENT ASSETS 8,977 10,432 6,121 7,264

TOTAL ASSETS 2, 19 9,145 10,628 9,350 9,683

B A L A N C E S H E E T

55


GROUP PARENT COMPANYSEKm Note 31 Dec 2003 31 Dec 2002 31 Dec 2003 31 Dec 2002SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity 1)

Share capital 112 121 112 121Restricted reserves/statutory reserve 1,684 1,675 754 754Restricted shareholders’ equity 1,796 1,796 866 875

Unrestricted reserves/profit carried forward 1,302 1,521 487 816Net profit/loss for the year 187 253 821 –57Unrestricted equity 1,489 1,774 1,308 759

TOTAL SHAREHOLDERS’ EQUITY 3,285 3,570 2,174 1,634

Untaxed reserves in the Parent Company 20 778 864

Provisions 23Provisions for pensions and similar commitments 457 435 452 433Provisions for taxes 21 449 348 7 12Other provisions 22 139 135 84 83

1,045 918 543 528

Liabilities 23, 25, 29Liabilities to credit institutions 24 2,451 3,753 2,167 3,339Accounts payable, trade 518 520 399 420Liabilities to group companies – – 1,820 1,523Income tax liability 131 120 35 –Progress billings in excess of recognised revenue 26 915 801 862 767Other liabilities 27 288 403 201 214Accrued expenses and deferred income 28 512 543 371 394

4,815 6,140 5,855 6,657

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 2 9,145 10,628 9,350 9,683

PLEDGED ASSETSPledges and equivalent collateral to

secure own liabilities and provisions 29 183 432 100 100

CONTINGENT LIABILITIES 29 3,686 3,641 4,475 4,6711) See section Statement of shareholders’ equity.

B A L A N C E S H E E T

Fixed assets, 2% (2)

Investment properties, 31% (26)

Development properties, 40% (36)

Liquid assets, 4% (6)

Other current assets, 23% (30)

Shareholders’ equity, 36% (33)

Provisions, 11% (9)

Interest-bearing liabilities, 28% (37)

Non-interest bearing liabilities, 25% (21)

CONSOLIDATED ASSETS CONSOLIDATED CAPITAL STRUCTURE

56


GROUP PARENT COMPANYSEKm Note 2003 2002 2003 2002OPERATING ACTIVITIESOperating profit before financial items 478 652 114 410Depreciation and write-downs 109 300 101 110Other items with no effect on cash flow 32 –407 –318 –206 –176

180 634 9 344Interest received 38 37 79 113Dividends received 1 0 783 63Interest paid and other financial expenses –245 –304 –352 –360Paid tax –571) –400 0 –348

–83 –33 519 –188Investments in development properties, etc. 33 –1,578 –1,152 –1,414 –936Transfer (sale) of development properties, etc. 34 1,560 1,013 1,025 839

Increase/decrease in accounts receivable, trade –22 512 21 477Increase/decrease in other current receivables, etc. 351 –781 860 –485Increase/decrease in accounts payable, trade –3 –55 –21 11Increase/decrease in other current operating liabilities 72 119 417 –20Cash flow before investments and

sale of investment properties 297 –377 1,407 –302

Investments in investment properties, etc. 35 –1,878 –526 –232 –408Sale of investment properties, etc. 36 3,085 3,064 934 2,685Cash flow from operating activities 1,504 2,161 2,109 1,975

INVESTING ACTIVITIES, OTHERInvestments in intangible fixed assets –8 0 – –Investments in tangible fixed assets –28 –35 –10 –22Sale of tangible fixed assets 2 1 1 1Investments in group companies – – –340 –78Sale of group companies – – – 1Change in associated companies, other shares and participations – 0 – –Cash flow from investing activities, other –34 –34 –349 –98

FINANCING ACTIVITIESRepurchase of shares –154 –116 –154 –116Loans raised 1,520 1,385 1,520 1,214Amortisation of loans –2,828 –3,038 –2,807 –2,723Change in financial fixed assets 9 6 –433 133Group contributions paid – – 147 –Dividends paid –281 –420 –281 –420Cash flow from financing activities –1,734 –2,183 –2,008 –1,912

Total cash flow for the year –264 –56 –248 –35Liquid assets, 1 January 596 652 493 528Liquid assets, 31 December 332 596 245 4931) Of which, SEK 1m (225) pertains to tax on profit for the previous year.

C A S H F L O W S TAT E M E N T

57


GROUP PARENT COMPANYSEKm 2003 2002 2003 2002INTEREST-BEARING NET DEBTInterest-bearing liabilities and provisions 2,986 4,313 4,522 5,438Liquid assets –332 –596 –245 –493Interest-bearing receivables –43 –52 –1,210 –559Interest-bearing net debt, 31 December 2,611 3,665 3,067 4,386

C A S H F L O W S TAT E M E N T

Comments on the cash flow statement

Cash flow from operating activities declined to SEK 1,504m(2,161). Operating activities, before interest and tax, con-tributed SEK 180m (634). This represents a decline of SEK454m after adjustment of items with no effect on liquidassets, of which gains on the sale of properties of SEK 411maccount for a significant portion.

Sales of investment properties decreased compared with theprevious year. At the same time, the substantial decrease inreceivables from property sales (approximately SEK 1,000m)made a positive contribution so the net contribution to cashflow is unchanged compared with 2002. JM has a receivablefrom property sales of SEK 54m (1,063) which will be paid in2004. The reduced holding of investment properties also led toa lower contribution to cash flow from rental income.

JM invested in development and investment properties forapproximately SEK 3,456m (1,678). The higher level of invest-ment had a negative impact on cash flow of approximatelySEK 1,778m compared with 2002. In 2003, the JM Group’sacquisitions included properties in Vaxholm and Älta in con-junction with an exchange deal.

Change in current receivables and liabilities had a totalpositive effect on cash flow of SEK 398m.

Cash flow from operating activities was partly used fordividends to shareholders, SEK 281m, and partly for buy-backs of own shares with SEK 154m. The short-term loansraised during the year were all amortised on a current basis.

During the year cash flows for each quarter fluctuatedsubstantially (see section Quarterly Overview – Group, page81). During the quarters, JM sold large property portfolioswith postponed payment. The net effect, the sales proceedsminus the receivable, for each quarter affected cash flow byapproximately SEK 2,191m, SEK 480m, SEK 331m and SEK83m. Cash flow was affected by buy-backs in the first quar-ter by SEK 154m and by a dividend of SEK 281m in the sec-ond quarter.

58 S TAT E M E N T O F S H A R E H O L D E R S ’ E Q U I T Y


Share Restricted Unrestricted Net profit Total share-GROUP capital reserves reserves for the year holders’ equityShareholders’ equity, 31 December 2001 121 1,701 857 1,144 3,823Transfer of profit for 2001 – – 1,144 –1,144 –Buy-backs of own shares – – –116 – –116Redemption of convertible loan 0 11 – – 11Translation difference – 19 – – 19Transfer between unrestricted and restricted equity – –56 56 – –Dividend – – –420 – –420Net profit for 2002 – – – 253 253Shareholders’ equity, 31 December 2002 121 1,675 1,521 253 3,570Transfer of profit for 2002 – – 253 –253 –Buy-backs of own shares – – –154 – –154Cancellation of repurchased shares –9 – 9 – –Redemption of convertible loan 0 0 – – 0Translation difference – –37 – – –37Transfer between unrestricted and restricted equity – 46 –46 – –Dividend – – –281 – –281Net profit for 2003 – – – 187 187Shareholders’ equity, 31 December 2003 112 1,684 1,302 187 3,285

Accumulated translation difference at year-end –17

JM AB has a loan in NOK of NOK 85m.The loan is an indexation for part of the net investment in Byggholt AS, Norway.The currency gain at 31 December2003 amounted to SEK 15m (–7) and is reported as a translation difference in equity in the Group.

Proposed dividend for 2003 is SEK 5 per share (10).

Share Statutory Premium Profit brought Net profit Total share-PARENT COMPANY capital reserve reserve forward for the year holders’ equityShareholders equity, 31 December 2001 121 687 56 527 715 2,106Adjustment of changed accounting principle 1) – – – 98 – 98Shareholders’ equity, 31 December 2001 (adjusted) 121 687 56 625 715 2,204Transfer of profit for 2001 – – – 715 –715 –Buy-backs of own shares – – – –116 – –116Redemption of convertible loan 0 – 11 – – 11Merger of group companies – – – 12 – 12Dividend – – – –420 – –420Net profit for 2002 – – – – –57 –57Shareholders’ equity, 31 December 2002 121 687 67 816 –57 1,634Transfer of profit for 2002 – – – –57 57 –Buy-backs of own shares – – – –154 – –154Cancellation of repurchased shares –9 – – 9 – –Redemption of convertible loan 0 – 0 – – 0Group contribution received – – – 204 – 204Tax effect of group contribution – – – –57 – –57Merger of group companies – – – 7 – 7Dividend – – – –281 – –281Profit for 2003 – – – – 821 821Shareholders’ equity, 31 December 2003 112 687 67 487 821 2,174

Number of shares (1 vote/share) at 31 December 2003 amounts to 28,065,407. Par value per share is SEK 4.1) Changed accounting principle relates to accelerated depreciation of properties which was previously stated as an untaxed reserve.With effect from 2002,accelerated depreciation of properties (SEK 136m) is reported as shareholders’ equity to 72% (SEK 98m) and as a deferred tax liability to 28% (SEK 38m).

Accounting principlesThe accounting principles applied conform with the recommen-dations of the Swedish Financial Accounting Standards Council.Adaptations have mainly been made in accordance with theSwedish Construction Federation’s industry comments. Theaccounting and valuation principles for the Group are un-changed compared with the previous year.

ChangesWith effect from 1 January 2003, JM has applied the followingnew recommendations from the Swedish Financial AccountingStandards Council: RR 2:02 Inventories, RR 22 Presentation ofFinancial Statements,RR 25 Segment Reporting,RR 27 FinancialInstruments.

Application of the new recommendations did not affect thecompany’s income statements and balance sheets.

With regard to RR 25 Segment Reporting, JM’s accounts inessential details already conformed with the new recommenda-tion.Reporting according to the new recommendation is shownin Notes 1 and 2 in the Notes to the financial statements.

New recommendations 2004With effect from 1 January 2004, JM will apply RR 29, EmployeeBenefits.Application of RR 29 means that defined benefit pen-sion plans within all the Group’s companies will be reportedaccording to common principles. In JM’s accounts until year-end2003, such plans are reported according to local rules and regu-lations in each country. In accordance with the interim rules forthe recommendation, an opening liability will be determined asper 1 January 2004 in accordance with RR 29.This opening liabil-ity is expected to exceed the liability reported at 31 December2003, in accordance with the earlier principles, by SEK 1.0m.Theexcess liability figure will then be reported as per 1 January 2004as an increase in provisions for pensions as well as a correspon-ding decrease in shareholders’ equity. In accordance with theinterim rules for the recommendation, JM will not restate earlierfinancial years in accordance with the new recommendation.

Consolidated financial statementsThe consolidated financial statements are prepared in accor-dance with the Swedish Financial Accounting Standards Councilrecommendation RR 1:00.

The consolidated financial statements include those companiesin which the Parent Company owns more than 50% of the votingrights directly or indirectly,or otherwise has a controlling interest.

The consolidated financial statements are prepared accord-ing to the purchase accounting method, whereby consolidatedshareholders’ equity only includes the portion of subsidiaries’equity that arose after the acquisition.

If the consolidated cost of the shares exceeds the marketvalue of subsidiaries’ net assets stated in the acquisition analysis,the difference is reported as consolidated goodwill.

Companies acquired during the year are included in the consol-idated financial statements in an amount proportionate to theperiod after the acquisition. Profit from companies sold duringthe year is included in the consolidated income statement untilthe date of sale.

Foreign subsidiaries are regarded as operating as independentunits and their accounts have therefore been translated accord-ing to the current method, whereby all assets, provisions andother liabilities are translated at the closing day rate and all itemsin the income statement are translated at the average rate dur-ing the year.Translation differences thus arising are transferreddirectly to shareholders’ equity. In the event that hedging hasbeen effected to balance and hedge against exchange rate differ-ences on a net investment in an independent subsidiary, theexchange rate difference arising from translation of the hedginginstrument is transferred directly to shareholders’ equity.

In the event of different valuations of assets and liabilities atGroup and company level a tax effect arises which is reportedas a deferred tax asset or a deferred tax liability. See also thesection on reporting income taxes.

Intra-group profits are eliminated in full.Intra-group invoicing that is included in the cost of invest-

ment properties is included in net sales and amounts to SEK51m for 2003.

Joint venturesCompanies and other types of joint ventures that are formed inorder to carry out specific contracting assignments in collabo-ration with other companies are included in the accountsaccording to the proportional method. JM’s holding of associ-ated companies is negligible.

Receivables and liabilities in foreign currencyReceivables and liabilities in foreign currency are valued at theclosing day rate.

Financial instrumentsInterest rate swaps are used to change the underlying financialliabilities’ interest rate structure in order to minimise risk andare reported as a hedge of the same. Amounts to be paid orreceived as a result of derivative contracts entered into arereported on a current basis as interest income or interestexpense. Until the payment date, changes in market values arenot reported in the balance sheet.

JM’s financial instruments that are reported in the balancesheet are held until maturity and include securities, receivablesand operating liabilities. They are measured and booked atamortised cost.

Percentage of completion methodThe percentage of completion method is based on the view thatan assignment is carried out in pace with completion of the

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respective project. Revenue and profit in the project arereported period by period, in pace with recognition,providing adirect link between financial reporting and the operations con-ducted during the period.

Revaluations (changes in forecasts) of anticipated projectrevenues lead to adjustment of previously recognised revenuein the project concerned.This adjustment is included in the netprofit for the period.

Anticipated losses are charged to the profit for the period in full.The “first krona principle” is applied,whereby revenue recogni-

tion is carried out according to the percentage of completionmethod already at the preliminary stage of the project and contin-ues according to the same principle until the project is completed.

The percentage of completion method is also applied in theParent Company.

Most of JM’s operations pertain to projects conducted by JMfor subsequent sale. These operations consist of projects onJM’s own land for production of housing to be sold as apart-ments to tenant-owner co-operatives or tracts of single-familyhomes for sale directly to consumers.

However, revenue recognition from JM’s own projects forfuture sale must meet the following two basic criteria withregard to reliability:

• Declarations or preliminary agreements must exist to suchan extent that the building contractor, based on reliableexperience, can assume that the full provision of the endproduct (the future residential units) is secured.

• The building contractor’s decisions regarding the technicaland financial framework, timetable and operating organisa-tion for implementation of the project shall meet the specifi-cations made when the client-principal relationship was for-malised through the transfer of land and signing of acontracting agreement.

In residential project development the development property isnormally owned by JM at the start of the project.

When production starts the property is transferred by bookvalue to the project and included with the project’s other produc-tion costs.The cost charged for the property therefore affects therecognised project revenue at that time. Interest expenses areincluded among production costs from the start of production.

Revenue recognition,sale of propertiesIncome from the sale of properties is normally recognised asrevenue when the purchase contract is signed. This assumesthat the seller does not have to carry out any essential actionaccording to the purchase contract and that the risk of cancella-tion is not considered to exist.Reporting of every property saleis examined individually.

Investment properties (Properties held for resale)JM’s investment properties are classified as current assets and

valued in accordance with the Swedish Financial AccountingStandards Council’s recommendation RR 2:02 Inventories.Start-ing in the first quarter of 2004, these properties will be desig-nated as properties held for resale and called project properties.

In line with JM’s focus on project development, the Group’sinvestment properties are classified based on project status asfollows:

• Fully developed properties• Properties under construction• Properties for further development

Fully developed properties refer to properties fully developed by JMand properties to be sold without further development. Duringthe period until sale, the properties are managed by JM and oper-ating profit is reported as profit from property management.

Properties under construction are properties undergoing newconstruction, extension or renovation into fully developedproperties. Operating profit from rental activities during therenovation or extension period is reported as profit from prop-erty management.

Properties for further development are properties that are cur-rently rented and where plans for further development are inprogress. Operating profit here is also reported as profit fromproperty management.

Production costs for JM’s fully developed properties includeboth direct costs and a reasonable share of indirect costs.

Interest expenses pertaining to production to be held forproperty management purposes are expensed in the ParentCompany. In the consolidated financial statements,a correspond-ing amount is added to the cost of investment properties.

Development propertiesProperties, undeveloped or developed, that are intended forproduction of tenant-owned apartments/owned apartments orsingle-family homes and land for investment properties arereported as development properties.The properties are nor-mally sold immediately after production. Operating profit fromdevelopment properties is reported as profit from projectdevelopment operations. Interest is not included in the cost ofdevelopment properties.

Write-downsIf on the balance sheet date there is any indication that a tangi-ble or intangible fixed asset has impaired in value a calculation isperformed of the recoverable value of the asset. If the estimatedrecoverable value is lower than the carrying amount, a write-down is made of the asset’s recoverable value.

A write-down is reversed when the basis for the write-down,wholly or partly, no longer exists.

The term write-down is also used in conjunction with revalu-ation of properties reported as current assets. Valuation ofthese properties is performed,however, according to the lower

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of cost and market principle and follows RR 2:02, Inventories.

ProvisionsProvisions are reported when JM has or is considered to have acommitment as a result of events that have occurred and whereit is probable that payments will be required in order to meetthe commitment.A further prerequisite is that it is possible tomake a reliable estimation of the amount to be paid.

Provisions are made for future costs on the basis of guaran-tee commitments. This calculation is based on the estimatedcosts for the project concerned.

PensionsThe greater part of the JM Group’s pension commitments(Sweden and Norway) comprise defined benefit pension plans.For these plans a provision and annual cost are calculated on thebasis of the present value of earned future benefits. Provisionsand annual costs attributable to defined benefit pension benefitsare reported in JM’s income statements and balance sheetsapplying local rules and regulations in the country concerned. Insome of JM’s subsidiaries pension commitments comprisedefined contribution pension plans where payments are madeon a regular basis to independent authorities or bodies thatadminister the plan. For these defined contribution plans, a run-ning pension cost is reported which matches the amounts paid.

GoodwillGoodwill on the acquisition of Byggholt AS (1998) and AS Pro-sjektfinans (1999) in Norway is being amortised over 10 years.The amortisation period is motivated by the strategic and long-term nature of the acquisition and the reputation of these com-panies in the Norwegian market.

Machinery and equipmentThe following depreciation rates are applied:Construction machinery 10%Computers and other equipment 20–33%Vehicles 20%

LeasingThe Group has leasing agreements pertaining to office equip-ment and company cars.These are reported as operating leases.The leasing agreements are of a limited scope.

MergersMergers of wholly owned group companies are reported accord-ing to the consolidated value method, whereby all assets and lia-bilities are taken over at values based on the acquisition analysiscarried out in connection with the original acquisition of thecompany in question.The merger difference is taken directly toshareholders’ equity. Mergers are reported in accordance withgeneral advice from the Swedish Accounting Standards Board.

Group contributionsGroup contributions paid and received in the Parent Companyare reported according to the pronouncement made by theSwedish Financial Accounting Standards Council’s EmergingIssues task force, whereby Group contributions paid andreceived to minimise the Group’s tax are reported as adecrease/increase in unrestricted equity.

TaxThe Tax item in the income statement includes current anddeferred income tax for Swedish and foreign group units.Thecompanies in the Group are liable for tax according to existinglegislation in each country.The state income tax rate in Swedenwas 28% during the year and is calculated on nominal book profitwith an addition for non-deductible items and a deduction fornon-taxable income and other deductions, primarily tax-freedividends from subsidiaries.The balance sheet method is appliedto accounting for income taxes. According to this methoddeferred tax liabilities and assets are reported for all temporarydifferences between book and fiscal values respectively forassets and liabilities and for other fiscal deductions or deficits.Deferred tax liabilities and tax assets are calculated on the basisof the anticipated tax rate when the temporary difference is can-celled.The effects of changes in applicable tax rates are taken toincome in the period the change becomes law. Deferred taxassets are reduced by a valuation reserve to the extent the com-pany cannot stipulate that it is probable that the underlying taxasset can be realised within the foreseeable future.

Cash flow statementThe cash flow statement has been prepared according to theindirect method in accordance with the Swedish FinancialAccounting Standards Council’s recommendation RR 7,Accounting for cash flows.The analysis has been adapted to JM’soperations.

Since buying and selling of investment and developmentproperties are part of JM’s ongoing activities, these are reportedunder the corresponding sections of the cash flow statement.The item “reversal of investment properties” mainly refers toutilisation of properties for production and is matched by a cashflow in the form of invoicing. Investments in and sales of proper-ties are reported gross without adjustment for any assumptionor redemption of loans.

Buying and selling of fixed assets not pertaining to propertiesare reported under “Investing activities,other”.

Liquid assets are classified as cash and bank balances andshort-term financial investments that are traded on the openmarket at known amounts and are associated with only a mar-ginal risk for value fluctuations. Liquid assets also include short-term investments with a maturity of less than three monthsfrom the acquisition date.

The year’s paid tax is reported in full under operating activities.

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NOTE 1 CONSOLIDATED INCOME STATEMENT BY SEGMENTJM JM Unallocated Unallocated

Resi- Resi- items Sub- JM Sub- itemsdential dential JM JM within total Inter- total within Group

Group 2003 Stockholm Sweden Production Commercial Sweden Sweden national Group the Group totalNet sales 3,218 2,092 701 227 –134 1) 6,104 1,683 7,787 – 7,787

Costs for production and management* –3,121 –1,875 –634 –129 134 1) –5,625 –1,527 –7,152 – –7,152

Gross loss/profit –97 217 67 98 – 479 156 635 – 635

Selling and administrative expenses** –141 –112 –33 –51 – –337 –106 –443 –62 2) –505

Gains on the sale of properties 22 –7 – 374 – 389 22 411 – 411

Write-downs of properties – – – –63 – –63 – –63 – –63

Operating loss/profit (operating result) –22 98 34 358 – 468 72 540 –62 478

Net financial items –211 3) –211

Profit after financial items 540 –273 267

Tax on profit for the year –80 3) –80

NET PROFIT FOR THE YEAR 540 –353 187

Net sales – external 3,218 2,092 567 227 – 6,104 1,683 7,787 – 7,787

Net sales – internal – – 134 – –134 1) – – – – –

Total 3,218 2,092 701 227 –134 6,104 1,683 7,787 – 7,787* Of which: depreciation of intangible

fixed assets – – 1 – – 1 13 14 – 14** Of which: depreciation of tangible

fixed assets 3 3 6 1 6 19 7 26 – 26

Group 2002Net sales 3,623 2,205 1,166 424 –76 1) 7,342 1,530 8,872 – 8,872

Costs for production and management* –3,492 –1,899 –1,133 –146 76 1) –6,594 –1,366 –7,960 – –7,960

Gross loss/profit 131 306 33 278 – 748 164 192 – 912

Selling and administrative expenses** –145 –128 –60 –58 – –391 –71 –462 –65 2) –527

Gains on the sale of properties 9 4 – 513 – 526 –3 523 – 523

Write-downs of properties –155 –2 – –99 – –256 – –256 – –256

Operating loss/profit (operating result) –160 180 –27 634 – 627 90 717 –65 652

Net financial items –284 3) –284

Profit after financial items 717 –349 368

Tax on profit for the year –115 3) –115

NET PROFIT FOR THE YEAR 717 –464 253

Net sales – external 3,623 2,205 1,090 424 – 7,342 1,530 8,872 – 8,872

Net sales – internal – – 76 – –76 1) – – – – –

Total 3,623 2,205 1,166 424 –76 7,342 1,530 8,872 – 8,872* Of which: depreciation of intangible

fixed assets – – 2 – – 2 13 15 – 15** Of which: depreciation of tangible

fixed assets 3 3 5 1 6 18 6 24 – 24

Net sales by country Sweden Norway Denmark Belgium Total2003 6,104 985 525 173 7,787

2002 7,342 1,114 287 129 8,872

Comments: The JM Group’s primary basis of division for segment reporting is the geographical areas Sweden and International.The Swedish operations are also divided into fourbusiness units: JM Residential Stockholm, JM Residential Sweden, JM Production and JM Commercial, which are reported separately within the Sweden segment. JM’s secondarysegment comprises project development. Since there is only one secondary segment, information is provided in the income statements, balance sheets and cash flow statements.1) Unallocated items within Sweden comprise elimination of intra-group billing between business units.The JM Production business unit is primarily a supplier to JM Residential

Stockholm but some production is also carried out for external customers.2) Pertains to group-wide expenses.3) Net financial items and tax are not divided by segment but reported as unallocated items.

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Amounts in SEKm unless otherwise stated.

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NOTE 2 CONSOLIDATED BALANCE SHEET BY SEGMENTJM JM Unallocated Unallocated

Resi- Resi- items Sub- JM Sub- itemsGroup, 31 December 2003 dential dential JM JM within total Inter- total within GroupAssets Stockholm Sweden Production Commercial Sweden Sweden national Group the Group totalFixed assets – – – – – – 55 55 113 1) 168

Buildings and land 74 86 – 2,405 – 2,565 268 2,833 – 2,833

Development properties 2,219 700 5 187 – 3,111 520 3,631 – 3,631

Participations in tenant-owner co-operatives 398 82 – 1 3 1) 484 43 527 – 527

Current receivables 638 484 113 4 – 1,239 236 1,475 179 2) 1,654

Liquid assets – – – – – – – – 332 1) 332

Total current assets 3,329 1,352 118 2,597 3 7,399 1,067 8,466 511 8,977

TOTAL ASSETS 3,329 1,352 118 2,597 3 7,399 1,122 8,521 624 9,145

Shareholders’ equity and liabilitiesShareholders’ equity – – – – – – – – 3,285 1) 3,285

Provisions – – – – – – – – 1,045 1) 1,045

Liabilities 647 470 110 23 – 1,250 144 1,394 3,421 2) 4,815

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 647 470 110 23 – 1,250 144 1,394 7,751 9,145

Total operating capital by business unit 2,682 882 8 2,574 – – 978 – – –

Investments in fixed assets – – – – – – 8 8 30 3) 38

Group, 31 December 2002AssetsFixed assets – – 1 – – 1 70 71 125 1) 196

Buildings and land 213 85 – 2,158 – 2,456 318 2,774 2,774

Development properties 2,330 808 5 87 – 3,230 641 3,871 3,871

Participations in tenant-owner co-operatives 247 43 – – 290 68 358 358

Current receivables 837 341 164 985 – 2,327 297 2,624 209 2) 2,833

Liquid assets – – – – – – – – 596 1) 596

Total current assets 3,627 1,277 169 3,230 8,303 1,324 9,627 805 10,432

TOTAL ASSETS 3,627 1,277 170 3,230 – 8,304 1,394 9,698 930 10,628

Shareholders’ equity and liabilitiesShareholders’ equity – – – – – – – – 3,570 1) 3,570

Provisions – – – – – – – – 918 1) 918

Liabilities 749 311 132 29 – 1,221 265 1,486 4,654 2) 6,140

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 749 311 132 29 – 1,221 265 1,486 9,142 10,628

Total operating capital by business unit 2,878 966 38 3,201 – – 1,129 – – –

Investments in fixed assets – – – – – – 1 1 35 3) 36

Comments: The JM Group’s primary basis of division for segment reporting is the geographical areas Sweden and International.The Swedish operations are also divided into fourbusiness units: JM Residential Stockholm, JM Residential Sweden, JM Production and JM Commercial, which are reported separately within the Sweden segment. JM’s secondarysegment comprises project development. Since there is only one secondary segment information is provided in the income statements, balance sheets and cash flow statements.

1) The assets and liabilities and shareholders’ equity that are not included in JM’s definition of operating capital are not allocated by segment.They are reported as unallocateditems since they mainly cannot be allocated in a reasonable and fair manner.

2) The items within current receivables and liabilities that are included in JM’s definition of operating capital are allocated by segment.Other items are reported as unallocated items.

3) Investments in intangible fixed assets are allocated by segment.Tangible fixed assets are not included in JM’s definition of operating capital and these investments are thereforestated as an unallocated item.

A definition of operating capital is provided in the section Definitions, page 83.

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NOTE 3 GAINS ON THE SALE OF PROPERTIES

Group Parent CompanySales revenue 2003 2002 2003 2002

Investment properties 2,075 2,908 945 1,696

Development properties 144 107 34 44

Total 2,219 3,015 979 1,740

Book values

Investment properties 1,680 2,397 738 1,380

Development properties 128 95 42 43

Total 1,808 2,492 780 1,423

Gains

Investment properties 395 511 207 316

Development properties 16 12 –8 1

Total 411 523 199 317

NOTE 4 WRITE-DOWNS OF PROPERTIES

Group Parent Company2003 2002 2003 2002

Investment properties 63 34 54 20

Development properties – 222 30 72

Total 63 256 84 92

NOTE 5 RESULT FROM GROUP COMPANIES

Parent Company2003 2002

Dividends 896 62

Capital gain on sale – 3

Write-down –11 –195

Total 885 –130

RESULT FROM OTHERNOTE 6 FINANCIAL FIXED ASSETS


Dividend 0 0 – 1

Capital gain on the sale of securities – 0 0 0

Write-down of shares and participations – – – –4

Interest income, group companies – – 43 25

Interest income, other 3 4 5 8

Total 3 4 48 30

NOTE 7 RESULT FROM FINANCIAL CURRENT ASSETS


Interest income, other 36 34 10 22

Interest income, group companies – – 21 57

Total 36 34 31 79

INTEREST EXPENSES AND NOTE 8 SIMILAR PROFIT/LOSS ITEMS


Interest expenses,group companies – – 129 94

Interest portion of pension costs for the year 23 27 23 27

Interest expenses, other 227 295 206 267

Exchange rate differences on liabilities 0 0 –15 7

Total 250 322 343 395

NOTE 9 APPROPRIATIONS IN THE PARENT COMPANY


Depreciation in excess/below plan equipment: 9 8

Provision to tax allocation reserve –17 –75

Reversal of tax allocation reserve 94 6

Total 86 –61

NOTE 10 TAX ON PROFIT FOR THE YEAR


Profit/loss before tax

Sweden 231 301 821 –78

International 36 67 – –

Total 267 368 821 –78

Current tax

Sweden 60 211 55 62


Total 84 228 55 62

Deferred tax

Sweden 4 –126 –55 –83

International –8 13 – –

Total –4 –113 –55 –83

Total tax

Sweden 64 85 0 –21


Total 80 115 0 –21

Difference between reported tax and nominal tax rate 28%

Profit/loss before tax x 28% 75 103 230 –22

Adjustment of tax from previous years –2 6 –12 –1

Difference foreign tax 1 1 – –

Non-taxable income –2 –1 –222 –1

Non-deductible expenses 6 6 2 3

Recalculation of deferred tax from previous years 2 – 2 –

Total 80 115 0 –21

NOTE 11 EARNINGS PER SHARE

Group2003 2002

Net profit 187.0 253.3

Profit for calculation of earnings per share before dilution 187.0 253.3

Interest expenses on convertible debenture 0.2 0.5

Tax attributable to above items – –0.2

Profit for calculation of earnings per share after dilution 187.2 253.6

Average number of shares before dilution 28,311,705 29,857,486

Assumed conversion of convertible debenture – 96,874

Average number of shares after dilution 28,311,705 29,954,360

Earnings per share after dilution (SEK) 6.60 8.50

JM AB issued convertible debentures in 1999–2001 which carry entitlement to conversion to a total of 543,588 ordinary shares, during the period 16 June 2001– 1 June 2003. A total of 448,507 shares were converted, of which 1,793 in 2003.The remaining convertibles were redeemed on 1 June 2003.

In 2001 all employees in Sweden were invited to acquire subscription warrants in thecompany.The warrant programme comprises a total of 600,000 warrants. A total of376,000 warrants were subscribed for in 2001 and 2002.The price per warrant wasdetermined based on the Black & Scholes method.The price on the first subscriptiondate was SEK 20. Each warrant carries entitlement to subscribe for one share in theperiod 3 May 2004 to 30 June 2004 for SEK 271.50.The price for JM’s shares at 31December 2003 amounted to SEK 106. Outstanding warrants do not give rise to anydilution effect since the present value of the subscription price exceeds the fair valueof the shares.

The total number of shares after full conversion, but excluding warrants, amounts to28,065,407 (29,560,488).

The average number of shares before dilution for 2003 amounts to 28,311,705(29,857,486).The average number of shares after dilution for 2003 amounts to28,311,705 (29,954,360). Calculation of earnings per share before dilution is basedon net profit for the year. In the calculation of earnings per share after dilution, netprofit for the year was adjusted by interest expenses for convertible debentures ofSEK 169,000 (342,000).

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NOTE 12 INTANGIBLE AND TANGIBLE FIXED ASSETS

Other intangible Machinery and Other tangible Group 2003 Goodwill fixed assets equipment fixed assets Total

Accumulated cost

Opening balance, 1 January 129 1 167 – 297

New acquisitions 8 – 18 12 38

Reclassifications – –1 12 1 12

Translation difference –9 – –6 – –15

Sales – – –44 – –44

Closing balance, 31 December 128 – 147 13 288

Accumulated planned depreciation

Opening balance, 1 January 59 – 108 – 167

Depreciation for the year 14 – 25 1 40

Reclassifications – – 12 12

Translation difference – – –4 – –4

Sales – – –40 – –40

Closing balance, 31 December 73 – 101 1 175

Planned residual value, 31 December 55 – 46 12 113

The reported goodwill mainly pertains to goodwill at acquisition of Byggholt AS and AS Prosjektfinans in Norway.

With effect from 2003, acquired fixed assets are reported gross, i.e. divided among original accumulated cost and depreciation in acquired companies. Reclassifications underMachinery and equipment, cost and depreciation in 2003 include adjustment for previously reported net values with SEK 12m.

Machinery andParent Company 2003 equipment

Accumulated cost

Opening balance, 1 January 122

New acquisitions 10

Sales –42

Closing balance, 31 December 90



Depreciation for the year 18

Sales –40


Planned residual value, 31 December 26

67



NOTE 13 FINANCIAL FIXED ASSETS

Other Participations securities Other in associated held as fixed long-term

Group 2003 companies assets receivables Total

Opening cost 6 2 58 66

Additional receivables – – 1 1

Settled receivables – – –9 –9

Translation difference – – –3 –3

Book value, 31 December 6 2 47 55

OtherParticipations Receivables Participations Receivables securities Other

in group from group in associated from associated held as fixed long-term DeferredParent Company 2003 companies companies companies companies assets receivables tax assets Total

Opening cost 1,605 527 10 145 2 37 57 2,383

New acquisitions 340 – – – – – – 340

Additional receivables – 659 – – – – – 659

Settled receivables – – – –102 – –9 –56 –167

Write-downs 11 – – – – – – 11

Change due to merger –1 – – – – – – –1

Book value, 31 December 1,933 1,186 10 43 2 28 1 3,203

Note 13 continued next page

68


Note 13, continued

Specification of Parent Company’s shares and participations in wholly owned group companies, SEK 000s

Company No. of shares BookCompany reg. no. Domicile and participations value

AB Garantihus 556073-0524 Stockholm 5,000 1,000

JM Cityfastigheter AB 556355-8179 Stockholm 17,000,000 369,501

Mörbysvärdet AB 556471-2601 Danderyd 1,000 18,083

Förvaltningsbolaget Sicklaön HB 916619-0992 Stockholm 10,000 78,275

HB Mörby Fastighetsförvaltning1) 916505-6798 Stockholm 23,480

JM Värmdöstrand Holding AB 556275-4696 Stockholm 3,300,120 292,442

AB Stockholms Badmintonhall 556037-3655 Stockholm 2,520 312

AB Borätt 556257-9275 Stockholm 500 1,978

JM Stombyggnad AB 556173-0564 Stockholm 1,000 113

GL Bodservice AB 556161-8025 Stockholm 250,000 56,524

Seniorgården AB 556359-9082 Stockholm 1,000 100

Fastighetsbolaget Bohusmark KB 916443-1125 Gothenburg 1 120

JM Inredning i Stockholm AB 556202-8653 Stockholm 1,000 50

Sekå AB 556298-5605 Gothenburg 1,000 6,782

Bruket i Kallhäll Exploaterings KB 969653-9122 Järfälla 20,505

Bruket i Kallhäll Exploaterings AB 556561-0184 Järfälla 1,000 100

Fastighetsbolaget Göta Ark HB 916600-1082 Stockholm 1,200 104,395

Olle Timblads Målerifirma AB 556072-9492 Stockholm 5,000 4,939

HB Kojan Fastighetsförvaltning 916634-1334 Stockholm 144,944

JM Fastigheter i Lomma HB 916470-0057 Lomma 41,978

Tre Masar Produktion AB 556472-0323 Stockholm 5,000 11,602

AB Naryda 556046-9081 Stockholm 1,000 13,000

Stora Mossen Fastigheter i Bromma HB 969673-7999 Stockholm 58

E. Lindqvist Rör AB 556060-8837 Stockholm 600 50

AB Vaxholmsbostäder2) 556041-8120 Vaxholm 15,000 311,316

JM Älta Holding AB2) 556638-5372 Nacka 1,000 100

JM Construction SA, Belgium Brussels 10,000 111,906

Byggholt AS, Norway Oslo 20,000 127,687

JM Danmark AS Copenhagen 100,000 191,267

Book value, 31 December 1,932,607

Specification of the Group’s other holdings of shares and participations in wholly owned group companies, SEK 000s.

Company No. of shares BookCompany reg. no. Domicile and participations value

Norrlands Handelshus AB 556264-2198 Stockholm 9,000 19,735

JM Cityfastigheter i Helsingborg AB 556044-6766 Helsingborg 1,000 0

JM Cityfastigheter i Stockholm AB 556063-5988 Stockholm 3,800 250,358

HB Mörby Fastighetsförvaltning 916505-6798 Stockholm 880 483

Fastighets AB Strandpromenaden 556164-5523 Stockholm 25,000 9,236

KB Pelarbacken Mindre 23 916635-8920 Stockholm 1 260,101

Mariastaden AB 2) 556228-8596 Stockholm 100 102

JM Värmdöstrand AB 556001-6213 Stockholm 4,400 250,000

JM Älta Centrum AB 2) 556638-5380 Nacka 1,000 100

JM Älta 98:2 AB 2) 556638-5265 Nacka 1,000 100

JM Älta 14:27 AB 2) 556638-5281 Nacka 1,000 100

Årstapaviljongen HB 969601-0389 Stockholm 565

Seniorbo AS, Norway Bærum 1,000 12,987

Vikevåg Bolig AS, Norway 2) Stavanger 11,000 19,552

1) The holding amounts to 56% of the share capital.The remaining 44% is owned by the wholly owned subsidiary Mörbysvärdet AB.

2) Group companies acquired during the year.


69


Note 13, continued

Specification of the Parent Company’s shares and participations in associated companies, SEK 000s

Company No. of shares % of BookCompany reg. no. Domicile and participations capital value

AB Hälsingborgsbostäder 556105-9196 Helsingborg 500 50 50

AB Ramlösa Brunnsanläggning 556031-6274 Helsingborg 625 50 75

Glasberga Fastighets AB 556361-0707 Södertälje 1,000 25 100

Högmora Exploaterings AB 556395-0707 Stockholm 1,000 25 100

SMÅA AB 556497-1322 Stockholm 3,525 33 3,564

Fastighetsbolaget Glasberga KB 916643-1842 Stockholm 1 25 101

Olunda Terminal HB * 916629-6948 Järfälla 1 50 800

Exploateringsbolaget Högmora KB 916643-6258 Stockholm 1 25 1

Adolfsbergs Brunns AB 556303-8685 Örebro 340 33 34

Stockholms Mineralhantering HB * 969611-4868 Danderyd 100 50 100

AB Västerås Studentbostäder 556597-0596 Västerås 500 50 500

HB Markbyggarna Silverdal * 969680-8659 Sollentuna 1 50 1

Dockan Exploatering AB 556594-2645 Malmö 333 33 5,003

Book value, 31 December 10,429

* Unlimited liability.

Specification of the Parent Company’s other securities held as fixed assets, SEK 000s

Number of shares % of BookCompany and participations capital value

Svenskt Fastighetsindex SFI ek.för 1 8 50

CGC Centralgalaxen Bygg AB 150 20 20

Haninge Turism AB 100 1 10

Parkerings AB Dukaten 1,245 4 1,245

Garbo AB 2 70

Sverigehuset i Göteborg AB 250 100

Momentum Software AB 31,686 6 0

Other shares 49

Sub-total 1,544

Added for the Group, SEK 000s

Trygg Eiendomsmegling 586

Rörekonomi i Örebro AB 272 143

Others 1

Sub-total 730

Book value, 31 December 2,274


70


NOTE 14 BUILDINGS AND LAND (INVESTMENT PROPERTIES)

Fully developed Properties under Properties forGroup 20031) properties construction further development Total

Accumulated cost

Opening balance, 1 January 2,245 612 73 2,930

New acquisitions 89 243 618 950

Company acquisitions – – 905 905

Reclassifications 1 –4 40 37

Translation difference –10 –2 –1 –13

Sales –1,742 – – –1,742

Closing balance, 31 December 583 849 1,635 3,067


Opening balance, 1 January 115 5 2 122

Company acquisitions – – 83 83

Reclassifications –2 – – –2

Sales –49 – – –49

Closing balance, 31 December 64 5 85 154

Accumulated write-downs

Opening balance, 1 January 21 13 – 34

Reclassifications –4 – – –4

Write-downs for the year – 55 8 63

Sales –13 – – –13


Planned residual value, 31 December 515 776 1,542 2,833

Tax assessment values 477 300 1,090 1,8671)Interest expenses added to the cost of investment properties amounted to SEK 17m (78).

Parent Company 2003

Accumulated cost

Opening balance, 1 January 1,274 435 48 1,757

New acquisitions 98 130 4 232

Reclassifications –68 52 55 39

Merger of group companies 3 – – 3

Sales –785 – – –785

Closing balance, 31 December 522 617 107 1,246


Opening balance, 1 January 102 5 3 110

Merger of group companies 3 – – 3

Sales –44 – – –44



Opening balance, 1 January 7 13 – 20

Write-downs for the year – 46 8 54

Sales –3 – – –3


Planned residual value, 31 December 457 553 96 1,106

Tax assessment values 470 293 41 804


71


NOTE 15 DEVELOPMENT PROPERTIES

Group 2003 Parent Company 2003

Accumulated cost

Opening balance, 1 January 4,093 2,585

New acquisitions 664 569

Reclassifications –43 –39

Translation difference –35 –

Transferred to production –698 –341

Sales –129 –43

Closing balance, 31 December 3,852 2,731


Opening balance, 1 January 222 73

Sales –1 –1

Write-downs for the year – 30

Closing balance, 31 December 221 102

Book value, 31 December 3,631 2,629

Tax assessment value 2,638 1,546

PARTICIPATIONS IN TENANT-OWNER NOTE 16 CO-OPERATIVES AND SIMILAR

Group 2003 Parent Company 2003

Accumulated cost

Opening balance, 1 January 360 290

Purchases 894 845

Sales –720 –650

Closing balance, 31 December 534 485


Opening balance, 1 January 2 –

Reclassifications 7 –

Sales –2 –

Closing balance, 31 December 7 –

Book value, 31 December 527 485

RECOGNISED REVENUE NOTE 17 LESS PROGRESS BILLINGS


Accumulated on account billing for work in progress –2,256 –4,431 –1,727 –3,515

Recognised revenue inwork in progress 3,285 5,628 2,671 4,533

Total 1,029 1,197 944 1,018

NOTE 18 OTHER CURRENT RECEIVABLES


Receivables, property sales 54 1,063 – 8

Other 209 181 179 241

Total 263 1,244 179 249

INTEREST-BEARING AND NOTE 19 NON-INTEREST BEARING ASSETS

Group 2003 Parent Company 2003Interest- Non-interest Interest- Non-interestbearing bearing bearing bearing

Intangible fixed assets – 55 – –

Tangible fixed assets – 58 – 26

Financial fixed assets 43 12 1,210 1,993

Buildings and land – 2,833 – 1,106

Development properties, etc. – 4,158 – 3,114

Current receivables – 1,654 – 1,656

Liquid assets 332 – 245 –

Total 375 8,770 1,455 7,895

UNTAXED RESERVES IN NOTE 20 THE PARENT COMPANY


Accumulated accelerated depreciation:

Equipment 4 13

Tax allocation funds:

Provision for 1998 – 94

Provision for 1999 19 19





Provision for 2004 17 –

Total 778 864

Net reversal of appropriations for the year amounts to SEK 86m (see Note 9).


72


PROVISIONS FOR TAXES/NOTE 21 DEFERRED TAX ASSETS


Deferred tax liability on untaxed reserves 285 311 – –

Other deferred tax liability 194 158 – –

Other provisions for tax 15 15 7 12

Sub-total 494 484 7 12

Deferred tax assets 45 136 1 57

Net provisions for tax 449 348 6 –45

Deferred tax liability on untaxed reserves 1)

Tax allocation funds 283 298

Accelerated depreciation,equipment 2 13

Total 285 311

Other deferred tax liability is allocated on

Buildings and land 2) 105 66

Development properties 2) 10 12

Other, net 79 80

Total 194 1581) Tax rules in Sweden allow companies to postpone taxation through provisions to

untaxed reserves in the balance sheet via appropriations in the income statement.In the consolidated financial statements, however, untaxed reserves or appropria-tions are not stated.The untaxed reserves are divided between deferred tax liabilityand restricted reserves respectively in shareholders’ equity.

2) Fiscal difference and book value.

NOTE 22 OTHER PROVISIONS

Group Provisions for Other 2003 guarantees provisions Total

Opening balance, 1 January 96 39 135

Reversals –47 – –47

Provisions 51 – 51

Closing balance, 31 December 100 39 139

Parent Company Provisions for 2003 guarantees


Reversals –45

Provisions 46


INTEREST-BEARING AND NON-INTERESTNOTE 23 BEARING LIABILITIES AND PROVISIONS

Group 2003 Parent Company 2003Interest- Non-interest Interest- Non-interestbearing bearing bearing bearing

Provisions for pensions and similar commitments 451 6 451 1

Provisions for taxes – 449 – 7

Other provisions – 139 – 84

Liabilities to credit institutions 2,451 – 2,167 –

Accounts payable, trade – 518 – 399

Liabilities to group companies – – 1,820 –

Tax liabilities – 131 – 35

Progress billings in excess of recognised revenue – 915 – 862

Other liabilities 84 204 84 117

Accrued expenses and deferred income – 512 – 371

Total 2,986 2,874 4,522 1,876

NOTE 24 LIABILITIES TO CREDIT INSTITUTIONS


Maturity less than 1 year from closing day 226 682 – 350

Maturity 1–5 years from closing day 42 61 – –

Maturity later than 5 years from closing day 2,183 3,010 2,167 2,989

Total 2,451 3,753 2,167 3,339

Exposure interest rate risk,Group < 1 year 1-5 years >5 years

2003

Loans 2,276 175 –

Effect of interest rate derivatives –1,400 1,000 400

Total 876 1,175 400

2002

Loans 3,059 694 –

Effect of interest rate derivatives –1,100 500 600

Total 1,959 1,194 600

The JM Group mainly works with short-term borrowing in credit institutions com-bined with derivatives in order to manage interest rate risk.The average interest rateon interest-bearing liabilities at 31 December 2003, excl. the PRI liability, was 5.5%.

Liabilities to credit institutions, confirmed credits

Group Parent CompanyOverdraft facilities 2003 2002 2003 2002

Granted credit ceiling 400 415 400 415

Unutilised portion –400 –415 –400 –415

Utilised credit amount – – – –

Credit agreements carry fixed interest.


73


Note 24, continued

Group Parent CompanyCredit agreements 2003 2002 2003 2002

Granted credit agreementmaturity within 1 year 800 1,800 800 1,800

Granted credit agreementmaturity more than 1 year 3,700 3,000 3,700 3,000

Unutilised portion –2,333 –1,713 –2,333 –1,713

Utilised credit agreements 2,167 3,087 2,167 3,087

FINANCIAL INSTRUMENTS AND NOTE 25 FINANCIAL RISK MANAGEMENT

JM’s Finance unit is responsible for the Group’s short- and long-term financing, liquid-ity planning, cash management and financial risk management.The division of respon-sibility and control of the Group’s overall financing activities are regulated by afinance policy established by the Board of Directors.

Finance policyThe finance policy specifies the objectives for finance operations, overall responsibili-ty and specific rules and limits.The objectives for the finance operations are to:

• Support operating activities in residential and commercial project development.• Optimise use of capital and cash flow management.• Control and manage the financial risks to which JM is exposed.

The Group’s financial risks primarily consist of interest rate risk, financing risk, liquidityrisk and, to a limited extent, currency risk.The choice of maturities and fixed interestspread is governed by several factors, such as capital tied up in ongoing projects,businessrisk, anticipated dates for sale of properties, the terms of leases in investment propertiesand the Group’s financial position in general.These factors are summarised in theBoard’s established guidelines for fixed interest spread and maturity structure withscope for deviations within certain limits based on the current market situation.Thereare also rules for handling interest rate risk in building loans during the constructionperiod and final financing of tenant-owner co-operatives.

Cash is kept at a low level and any surplus liquidity may only be invested in banks definedby JM and in Swedish fixed-income securities without currency risk.Payment prepared-ness is maintained through overdraft facilities and committed credit lines.

Currency risk is eliminated as far as possible for transaction and balance sheet exposure.

Derivative instruments may only be used in order to minimise risks.

Finance strategyJM’s basic finance strategy is to clearly link cash flows from projects in progress andinvestment properties to the company’s management of borrowing and interest raterisks.This strategy provides the best control of financial risks.

In order to maintain flexible administration and cost-effective debt management,existing loan agreements are guaranteed by JM’s excellent creditworthiness, whichmeans that no mortgage deeds are provided.

Derivative instruments

Market value at 31 December 2003 for the Group’s interest rate derivatives

Asset Liability

2003

Interest rate swaps – cash flow hedging – 39

2002

Interest rate swaps – cash flow hedging – 51

Interest rate derivatives are not reported in the balance sheet (off balance). Figuresdo not include the underlying capital amount and are indicative.

Financial instruments and financial risk managementThe nominal amount for outstanding interest rate swaps amounts to SEK 1,400m(1,100). At 31 December 2003 fixed interest rates varied between 3.18% and 5.84%(5.1% and 6%).The short rate is 2.9%.

JM AB has a loan in NOK of SEK 85m.The loan is an indexation for part of the netinvestment in Byggholt AS,Norway The exchange gain at 31 December 2003 amountedto SEK 15m (–7) and is reported as a translation difference in equity in the Group.TheGroup has not effected any other currency hedging for balance sheet exposure.Furthermore, JM has no transaction exposure since operations are only conductedwithin the respective country.

Valuation of financial assets and liabilitiesJM used generally accepted methods for calculating the fair value of the Group’sfinancial instruments as of 31 December 2003 and 2002.The fair value of interest-bearing liabilities to credit institutions is assumed to correspond to the book valuesince they mainly have a short fixed-term of less than three months. For all otherfinancial assets and liabilities, e.g. liquid assets, accounts receivable and accountspayable, the book value is assumed to provide a good approximation of the fair value.

PROGRESS BILLINGS IN NOTE 26 EXCESS OF RECOGNISED REVENUE


Accumulated billing on accountfor work in progress 10,265 6,918 9,722 6,812

Recognised revenue in work in progress –9,350 –6,117 –8,860 –6,045

Total 915 801 862 767

NOTE 27 OTHER LIABILITIES


Maturity less than 1 year from closing day 211 322 124 117

Maturity 1–5 years from closing day 60 48 60 48

Convertible debenture loan – 15 – 31

Maturity later than 5 years from closing day 17 18 17 18

Total 288 403 201 214

Convertible debenture loanThe employees were offered a convertible debentures in 1999 and have subscribedfor SEK 84m.The term of the convertible debenture is 15 June 1999 –15 June 2003,i.e. four years.

ACCRUED EXPENSES NOTE 28 AND DEFERRED INCOME


Vacation reserve, etc. 140 132 127 127

Social security contributions, etc. 139 152 105 119

Accrued interest 34 52 30 47

Deferred rents 33 73 21 31

Accrued expenses and deferred income 166 134 88 70

Total 512 543 371 394


74


ASSETS PLEDGED AND NOTE 29 CONTINGENT LIABILITIES


Assets pledged to secure own provisions and liabilities

Pertaining to provisions for pensions and similar commitments:

Corporate mortgages 100 100 100 100

Property mortgages 83 332 – –

Total assets pledged 1) 183 432 100 100

Contingent liabilities

Guarantees on behalf of group companies 2) – – 983 1,495

Guarantee commitments, other 3) 3,184 3,153 3,184 2,892

Guarantees in connection with assignments 441 420 285 251

Payment and rental guarantees 4) 51 – 13 –

Other contingent liabilities 10 68 10 33

Total contingent liabilities 3,686 3,641 4,475 4,6711) The corporate mortgage relates to the pension liability that JM Sverige has withPRI. Property mortgages are only granted to a limited extent for financing withcredit institutions.

2) Guarantees on behalf of group companies mainly relate to commitments for foreigncompanies and the subsidiaries Seniorgården and Borätt.

3) During the production period of a tenant-owner co-operative, the JM Group pro-vides guarantees for part of the short-term financing that exceeds a co-operative’sfuture long-term loans. Guarantee commitments, other relate entirely to this short-term financing.The long-term loans are secured by the mortgage deeds taken outby the co-operative itself.

4) The Parent Company and the Group also have guarantee commitments for long-term management contracts in the form of payment and rental guarantees.

The Group also has obligations to acquire unsold participations in tenant-owner co-operatives formed by JM. See Note 16 Participations in tenant-owner co-operativesand similar.

A tenant-owner co-operative’s only revenue is its monthly charges. In order toensure that the estimated monthly charges are received by the co-operative, JMprovides a 7-year guarantee.

The guarantee comprises an undertaking to buy such apartment which is returned tothe co-operative from the first owner. JM then buys the apartment for SEK 1 andthen pays the monthly charge to the co-operative until JM in its turn has sold theapartment.This guarantee has existed since 1993 and has never been utilised. JMconsiders it unlikely that the guarantee will need to be met in other than exceptionalcases.

The Parent Company has a recourse agreement against AB Bostadsgaranti regardingtheir investment guarantee for paid contributions and charges for grant of enjoy-ment.The guarantee primarily ensures that the co-operative can repay a reasonableamount (maximum contribution and charges) to the tenant-owner who has a right oftermination due to significant increases in charges during the first year after finalaccounts, subsequently Bostadsgaranti has no liability to pay anything. Bostadsgarantihas not paid out anything since 1962.

NOTE 30 FEES AND REMUNERATION


Öhrlings PricewaterhouseCoopers

Auditing assignments 4.7 3.5 3.8 2.6

Other assignments 1.1 5.91) 1.0 5.7

Total 5.8 9.4 4.8 8.31) Of which, SEK 4.8m relates to services carried out by IBM (formerly PWCConsulting).

NOTE 31 EMPLOYEES AND PAYROLL EXPENSES

Average number Of whom, Of whom,of employees 2003 men 2002 men

Parent Company

Sweden 2,061 85% 2,133 86%

Subsidiaries

Sweden 212 96% 168 99%

Belgium 15 73% 14 71%

Denmark 27 56% 25 52%

Norway 251 87% 262 87%

Total in subsidiaries 505 89% 469 89%

Total Group 2,566 86% 2,602 86%

Salaries/wages, other remuneration and social security expenses

2003 2002Salaries/ Social Salaries/ Social

wages and security wages and security remuneration expenses remuneration expenses

Parent Company 710 337 719 342

(of which, pension costs) – 67 1) – 65

Subsidiaries 180 53 187 61

(of which, pension costs) – 8 – 5

Total Group 890 390 906 403

(of which, pension costs) – 75 2) – 701) Of the Parent Company’s pension costs, SEK 2.4m (2.2) pertains to the President

and Vice President.The company’s outstanding pension commitments to theseindividuals amounts to SEK 13.9m (24.7).The company has no pension costs orpension commitments to the rest of the Board.

2) Of the Group’s pension costs, SEK 3.3m (4.1) pertains to the Group President andVice President.The Group’s outstanding pension commitments to these individualsamounts to SEK 32.2m (35.2).


1)

75


Note 31, continued

Salaries and other remuneration by country and distribution between the Board and President and other employees

2003 2002Board and Other Board and OtherPresident employees President employees

Parent Company

Sweden 7 703 10 709

(of which, variable compensation) 3 33 3 51

Subsidiaries

Sweden 1 52 1 52

(of which, variable compensation) 0 – – –

Belgium 1 8 1 6

(of which, variable compensation) 0 – – –

Denmark 1 16 1 14

(of which, variable compensation) – – – –

Norway 1 100 2 110


Total subsidiaries 4 176 5 182


Total Group 11 879 15 891


Salaries and benefits of senior executives are reported according to therecommendation of the Industry and Commerce Stock ExchangeCommittee, NBK.

Board of Directors:JM’s Board of Directors comprises a total of nine people, eight men and one woman.The Chairman of the Board received board fees amounting to a total of SEK 458,000(538,000). Other external Board members received total fees of SEK 1,167,000(1,200,000).

President & CEO:In the 2003 financial year, the President received salary and other benefits totallingSEK 3,489,000 (463,000).This amount includes variable compensation, earned inanother position in JM during the 2002 financial year, of SEK 600,000.

The result of variable compensation for the 2003 financial year amounts to SEK180,000, which will be paid in spring 2004.

The variable compensation for the 2004 financial year may be paid in an amountwithin the band SEK 0 to a maximum of SEK 1,200,000. Calculation of this compensa-tion is based to 50% on the financial result for the Group, 30% on return on operatingcapital, and 20% on a measurement of how satisfied JM’s customers are (CustomerSatisfaction Index, CSI). Payment of the resulting amount will be made in spring 2005.

The period of notice is 12 months in the event of termination by the company and 6months in the event of termination by the President. If no other employment has beensecured by the end of the notice period, severance pay shall be awarded in an amountcorresponding to 12 months’ salary. Furthermore, the President is entitled to a pen-sion through an annual premium provision of 35% of fixed monthly salary.

Executive Management:JM’s Executive Management in 2003 comprised a total of nine people, eight men andone woman. Executive Management, excluding the President, received salaries andother benefits totalling SEK 18.1m in 2003, of which variable compensation amount-ed to SEK 6.8m. Of this amount, SEK 4.0m was earned in 2001 and earlier. Thisamount was expensed in previous years but not available for payment.

For Executive Management, variable compensation can amount to a maximum of 3and 7 monthly salaries respectively depending on position.

Other senior executives:A few of the senior executives are entitled to retire at the age of 60 with pension inan amount corresponding to 70% of salary until the age of 65.The period of notice is24 months in the event of termination by the company and 12 months in the event oftermination by the employee.With regard to shares and options in JM AB held bymembers of the Board, the President and Executive Management, see pages 14–15.

Absence due to illness within JM in SwedenTotal absence due to illness amounts to 5.4% (5.6) of normal working hours.Of the total absence due to illness, 55.4% (55.6) comprises continuous absence dueto illness of more than 60 days.

Breakdown of absence due to illness by age 2003 2002

–29 4.8% 4.4%

30–49 4.4% 4.8%

50 and older 7.4% 7.6%

Breakdown of absence due to illness by gender 2003 2002

Men 5.6% 5.8%

Women 4.1% 4.3%

OTHER ITEMS WITH NO EFFECT NOTE 32 ON CASH FLOW


Gains on the sale of properties –411 –523 –199 –317

Gains on other sales 0 –1 0 –

Change in pension liability 18 24 18 24

Other provisions, etc. –14 182 –25 117

Total – 407 –318 –206 –176

INVESTMENTS IN NOTE 33 DEVELOPMENT PROPERTIES, ETC.


Investments in development properties –664 –629 –569 –406

Acquisition of participations in tenant-owner co-operatives –894 –589 –845 –530

Financing via short-term promissory notes –20 66 – –

Effect on liquid assets –1,578 –1,152 –1,414 –936

REVERSAL AND SALES NOTE 34 OF DEVELOPMENT PROPERTIES, ETC.


Reversal of development properties to production 698 583 341 472

Sold development properties 144 107 34 44

Sold participations in tenant-owner co-operatives 718 323 650 323

Effect on liquid assets 1,560 1,013 1,025 839


INVESTMENTS INNOTE 35 INVESTMENT PROPERTIES, ETC.


Investments in investment properties –1,772 –645 –232 –408

Financing via short-term promissory note –107 107 – –

Adjustment for capitalisedinterest 1 12 – –

Effect on liquid assets –1,878 –526 –232 –408

NOTE 36 SALE OF INVESTMENT PROPERTIES, ETC.


Sold investment properties 2,075 2,908 945 1,696

Reversal of properties to production – 87 – –

Receivables 1,010 69 –11 989

Effect on liquid assets 3,085 3,064 934 2,685

NOTE 37 MERGER OF GROUP COMPANIES

During the year, one group company was merged with JM AB.This transaction did notlead to any cash flow.

NOTE 38 ACQUISITION OF COMPANIES

The total value of acquired assets and liabilities, purchase prices and effect on consol-idated liquid assets for 2003 was as follows:

Properties 822

Other current assets 94

Long-term liabilities –537

Current liabilities and provisions –116

Acquired net assets 263

Purchase price paid 263

Effect on consolidated liquid assets 263

76



77


PROPOSED DISPOSITION OF EARNINGSThe Group’s unrestricted equity amounts to SEK 1,489m. No transfer to restricted equity is required.

The Board of Directors and the President propose that the Parent Company’s net profit for the year of SEK 820,541,120 andprofit carried forward of SEK 486,616,965, a total of SEK 1,307,158,085, be distributed to the shareholders as a dividend ofSEK 5 per share SEK 1,140,327,035carried forward to new account SEK 1,166,831,050

SEK 1,307,158,085

stockholm, 16 february 2004

Per WestlundChairman

Björn Björnsson Berthold Lindqvist Elisabet Annell Per Olofsson

Lennart Sundén Leif Lundell Johan Wegin

Johan SkoglundPresident & CEO

P RO P O S E D D I S P O S I T I O N O F E A R N I N G SA U D I TO R S ’ R E P O RT

AUDITORS’ REPORTTO THE ANNUAL GENERAL MEETING OF JM AB (PUBL)

COMPANY REG. NO. 556045-2103

We have examined the annual accounts, the consolidatedfinancial statements, the accounting records and the adminis-tration by the Board of Directors and the President of JM AB(publ) for the year 2003. These accounts and the administra-tion of the Company are the responsibility of the Board ofDirectors and the President. Our responsibility is to expressan opinion on the annual accounts, the consolidated financialstatements and the administration based on our audit.

We conducted our audit in accordance with generallyaccepted auditing standards in Sweden. These standardsrequire that we plan and perform the audit to obtain reason-able assurance that the annual accounts and the consolidatedfinancial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence support-ing the amounts and disclosures in the accounts. An auditalso includes assessing the accounting principles used andtheir application by the Board of Directors and the Presi-dent, as well as evaluating the overall presentation of infor-mation in the annual report and consolidated financial state-ments. As a basis for our opinion concerning discharge fromliability, we examined significant decisions, actions takenand circumstances of the Company in order to determine the

liability, if any, to the Company of any Board member or thePresident. We also examined whether any Board member ofthe President has, in any other way, acted in contravention ofthe Swedish Companies Act, the Swedish Annual AccountsAct or the Articles of Association. We believe that our auditprovides a reasonable basis for our opinion set out below.

The annual accounts and the consolidated financial state-ments have been prepared in accordance with the SwedishAnnual Accounts Act and, thereby, give a true and fair viewof the Company’s and the Group’s financial position andresults of operations in accordance with generally acceptedaccounting principles in Sweden.

We recommend to the Annual General Meeting that theincome statement and the balance sheet of the Parent Com-pany and the Group be adopted, that the profit for the Par-ent Company be dealt with in accordance with the proposalin the Board of Directors’ Report and that the members ofthe Board of Directors and the President be discharged fromliability for the financial year.

stockholm, 16 february 2004

öhrlings pricewaterhousecoopers ab

Bertil Johanson Ulf WesterbergAuthorised Public Authorised Public

Accountant Accountant

Net sales from project development by business unit

JM JM JMResidential Residential JM JM Inter- Eliminations/ Group

Group 2003 Stockholm Sweden Production Commercial national Other totalNet sales 3,218 2,092 701 227 1,683 –134 7,787Less rental revenue investment properties – – – –227 – – –227Net sales from project development 3,218 2,092 701 – 1,683 –134 7,560

Profit from project development by business unit

Group 2003Gross loss/profit –44 105 34 47 50 – 192Minus operating net investment properties – – – –55 – – –55Plus property sales 22 –7 – 374 22 – 411Minus sales of investment properties – – – –303 – – –303Plus write-down of properties – – – –63 – – –63Loss/profit from project development –22 98 34 0 72 – 182

Net sales from project development by business unit

Group 2002Net sales 3,623 2,205 1,166 424 1,530 –76 8,872Less rental revenue investment properties – – – –424 – – –424Net sales from project development 3,623 2,205 1,166 – 1,530 –76 8,448

Profit from project development by business unit

Group 2002Gross loss/profit –14 178 –27 220 93 – 450Less operating net investment properties – – – –223 – – –223Plus property sales 9 4 – 513 –3 – 523Less sales of investment properties – – – –50 – – –50Plus write-down of properties –155 –2 – –99 – – –256Less write-down of investment properties – – – 15 – – 15Loss/profit from project development –160 180 –27 376 90 – 459

78 P RO J E C T D E V E L O P M E N T – N E T S A L E S A N D P RO F I T


79


INCOME STATEMENT, SEKm 2003 2002 2001 2000 1999Net sales 7,787 8,872 8,642 6,849 5,825Costs for production and management –7,152 –7,960 –7,022 –5,519 –4,770Gross profit 635 912 1,620 1,330 1,055Selling and administrative expenses –505 –527 –545 –455 –395Gains on the sale of operations – – – 30 –Gains on the sale of properties 411 523 928 535 330Write-downs of properties –63 –256 –39 – –Non-recurring items (Alecta – surplus) – – – 78 –Operating profit 478 652 1,964 1,518 990Net financial items –211 –284 –335 –309 –356Profit after net financial items 267 368 1,629 1,209 634Tax on profit for the year –80 –115 –485 –364 –193NET PROFIT FOR THE YEAR 187 253 1,144 845 441

INCOME STATEMENT BY FUNCTION, SEKmProductionRecognised revenue 7,429 8,311 7,867 5,990 4,946Production costs –6,916 –7,739 –6,763 –5,146 –4,402Profit from production operations 513 572 1,104 844 544

Development propertiesRental revenue 144 163 133 189 137Operating expenses –120 –105 –69 –112 –72Property tax –11 –11 –6 –15 –8Profit from development properties 13 47 58 62 57

Investment propertiesRental revenue 214 398 640 660 711Interest subsidies – – 2 10 31Operating expenses –91 –72 –145 –144 –163Property tax –14 –33 –39 –43 –37Depreciation – – – –59 –88Profit from investment properties 109 293 458 424 454

Selling and administrative expenses –443 –462 –481 –399 –318

Property salesSales values 2,219 3,015 4,074 2,213 1,710Book values –1,808 –2,492 –3,146 –1,678 –1,380Gains on the sale of properties 411 523 928 535 330

Write-downs of properties –63 –256 –39 – –Group-wide costs –62 –65 –64 –56 –77Gains on the sale of operations – – – 30 –Non-recurring items (Alecta – surplus) – – – 78 –OPERATING PROFIT 478 652 1,964 1,518 990

F I V E - Y E A R S U M M A RY

80


BALANCE SHEET, SEKm 31 Dec 2003 31 Dec 2002 31 Dec 2001 31 Dec 2000 31 Dec 1999AssetsInvestment properties (fixed assets) – – – – 6,855Other fixed assets 168 196 210 254 300Investment properties (current assets) 2,833 2,774 4,717 6,445 –Development properties 3,631 3,871 4,048 3,105 2,611Other current assets 1,152 1,994 2,295 930 894Recognised revenue less progress billings 1,029 1,197 966 917 –Liquid assets 332 596 652 446 390TOTAL ASSETS 9,145 10,628 12,888 12,097 11,050

Shareholders’ equity and liabilitiesShareholders’ equity 3,285 3,570 3,823 3,770 3,144Provisions 1,045 918 1,015 936 987Interest-bearing liabilities 2,535 3,880 5,521 5,236 5,662Progress billings in excess of recognised revenue 915 801 1,073 673 28Other liabilities 1,365 1,459 1,456 1,482 1,229TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 9,145 10,628 12,888 12,097 11,050

CASH FLOW STATEMENT, SEKm 2003 2002 2001 2000 1999Cash flow –264 –56 206 56 –6

OTHER, SEKm 2003 2002 2001 2000 1999Average number of employees 2,566 2,602 2,502 2,163 2,140Investment properties:

Market values 3,205 3,478 6,371 9,619 9,202Book values 2,833 2,774 4,717 6,445 6,855Surplus values before deferred tax 372 704 1,654 3,174 2,347

Vacancy rate at 31 DecShare of total space (%) 4 10 6 2 3Share of possible rental revenue (%) 4 10 7 2 2

Order bookings 7,145 6,690 8,811 8,774 5,780Order backlog at 31 Dec 5,685 5,925 7,546 6,603 3,819

KEY RATIOS 2003 2002 2001 2000 1999Interest-bearing net debt (SEKm) 2,611 3,665 5,220 5,117 5,588Debt/equity ratio (times) 0.8 1.0 1.4 1.4 1.8Interest coverage ratio (times) 2.1 2.1 5.5 4.6 2.7Equity ratio (visible) (%) 36 34 30 31 28Pre-tax return on total capital (%) 5.2 5.9 15.9 13.8 9.3Pre-tax return on capital employed (%) 7.3 7.8 20.8 16.7 11.4After-tax return on shareholders’ equity (%) 5.5 6.8 30.1 24.4 14.8Asset turnover rate (times) 0.79 0.75 0.69 0.61 0.54

F I V E - Y E A R S U M M A RY

2003 2002INCOME STATEMENT, SEKm Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1Net sales 2,224 1,707 2,091 1,765 2,301 1,900 2,340 2,331Costs for production and management –2,026 –1,586 –1,928 –1,612 –2,355 –1,597 –2,039 –1,969Gross profit/loss 198 121 163 153 –54 303 301 362

Selling and administrative expenses –134 –109 –141 –121 –153 –99 –133 –142Gains on the sale of properties 11 1 32 367 253 94 2 174Write-downs of properties –63 – – – –243 – –13 –Operating profit/loss 12 13 54 399 –197 298 157 394Net financial items –45 –45 –51 –70 –81 –68 –65 –70Result from financial items –33 –32 3 329 –278 230 92 324Tax on profit for the period 11 7 –3 –95 71 –67 –27 –92NET LOSS/PROFIT FOR THE PERIOD –22 –25 0 234 –207 163 65 232

31 Dec 30 Sep 30 Jun 31 Mar 31 Dec 30 Sep 30 Jun 31 MarBALANCE SHEET, SEKm 2003 2003 2003 2003 2002 2002 2002 2002AssetsFixed assets 168 167 182 187 196 200 204 201Investment properties 2,833 2,926 1,989 2,039 2,774 3,583 4,150 3,996Development properties 3,631 3,773 3,635 3,767 3,871 4,038 3,934 3,964Other current assets 2,181 3,121 3,263 3,242 3,191 3,613 2,697 3,486Liquid funds 332 142 548 210 596 106 156 411Total 9,145 10,129 9,617 9,445 10,628 11,540 11,141 12,058

Shareholders’ equity and liabilitiesShareholders’ equity 3,285 3,308 3,343 3,642 3,570 3,790 3,712 4,048Provisions 1,045 1,051 967 945 918 1,082 1,056 1,049Interest-bearing liabilities 2,535 3,871 3,210 2,832 3,880 4,564 4,239 4,702Other liabilities 2,280 1,899 2,097 2,026 2,260 2,104 2,134 2,259Total 9,145 10,129 9,617 9,445 10,628 11,540 11,141 12,058

2003 2002CASH FLOW STATEMENT, SEKm Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1Cash flow from operating activities 1,530 –1,068 223 819 1,223 –270 634 574Cash flow from investing activities –24 8 –13 –5 –12 –6 –10 –6Cash flow from financing activities –1,316 654 128 –1,200 –721 226 –879 –809Total cash flow for the period 190 –406 338 –386 490 –50 –255 –241Liquid assets at the end of the period 332 142 548 210 596 106 156 411

Change in interest-bearing net debt –1,444 1,036 136 –782 –1,173 378 –177 –583

Q U A RT E R LY O V E RV I E W – G RO U P 81


82


2003 2002JM RESIDENTIAL STOCKHOLM, SEKm Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1Net sales 919 641 884 774 893 833 918 979Operating profit/loss 1) 13 –23 –15 3 –452 92 81 119Margin (%) 2) 0.8 –4.2 –3.1 0.4 –33.5 10.9 8.4 12.0Return on operating capital (%) 3) –0.7 –14.9 –11.4 –8.1 –4.6 13.5 14.7 16.3Number of building rights at end of period 10,300 10,100 10,800 11,200 11,500 12,500 12,400 12,500Book value of development properties 2,219 2,249 2,251 2,305 2,330 2,547 2,600 2,5451) Of which – property sales 6 4 12 – 2 1 4 2

– property write-downs – – – – –155 – – –

JM RESIDENTIAL SWEDEN, SEKmNet sales 585 423 623 461 697 500 535 473Operating profit 1) 33 18 29 18 64 45 36 35Margin (%) 2) 6.0 5.0 5.0 3.9 9.5 8.2 7.1 7.0Return on operating capital (%) 3) 10.2 13.2 17.0 16.5 16.7 20.0 21.3 19.9Number of building rights at end of period 7,400 7,450 7,900 8,500 8,400 8,800 8,900 9,000Book value of development properties 700 768 737 787 808 877 767 7671) Of which – property sales –2 –3 –2 – – 4 –2 2

– property write-downs – – – – –2 – – –

JM PRODUCTION, SEKmNet sales 196 172 168 165 213 174 357 422Operating profit/loss 1) 13 8 7 6 –29 5 –17 14Margin (%) 2) 6.6 4.7 4.2 3.6 –13.6 2.9 –4.8 3.31) Of which property sales – – – – – – – –Provision for risk of loss in ongoing project – – – – –35 – –30 –

JM COMMERCIAL, SEKmNet sales 64 60 49 54 102 97 111 114Operating loss/profit 1) –45 17 11 375 220 143 46 225Margin (%) 2) 17.2 28.3 22.4 14.8 51.0 55.7 53.2 48.2Return on operating capital (%) 3) 14.3 22.7 25.3 23.5 16.8 11.2 10.1 18.01) Of which – property sales 7 – – 367 254 89 – 170

– property write-downs –63 – – – –86 – –13 –

JM INTERNATIONAL, SEKmNet sales 547 425 385 326 396 350 432 352Operating profit 1) 15 6 38 13 19 24 26 21Margin (%) 2) 2.7 1.4 4.2 4.0 5.6 6.9 6.0 6.0Return on operating capital (%) 3) 6.8 7.1 8.9 7.9 9.2 10.9 12.6 13.8Number of building rights at end of period 5,700 5,400 5,500 5,600 5,650 5,100 5,000 5,200Book value of development properties 520 573 556 581 641 464 420 4421) Of which property sales – – 22 – –3 – – –

2) Excluding property sales and property write-downs.3) 12-month rolling.

Q U A RT E R LY O V E RV I E W – B U S I N E S S U N I T S

83


GROUP

CAPITAL MEASUREMENTShareholders’ equityTotal restricted and unrestricted equity according to the balance sheet.Result 2003:1,796+1,489 = SEK 3,285mResult 2002:1,796+1,774 = SEK 3,570m

Interest-bearing net debtInterest-bearing liabilities and provisions less liquid assets and interest-bearing receivables.Result 2003:2,986–332–43 = SEK 2,611mResult 2002:4,313–596–52 = SEK 3,665m

Capital employedVisible shareholders’ equity plus interest bearing liabilities and provisions.Result 2003:3,285+2,535 = SEK 6,271mResult 2002:3,570+3,880+433 = SEK 7,883m

FINANCIAL MEASUREMENT,ETC.Progress billings in excess of recognised revenueInvoicing less recognised income.Result 2003:10,265–9,350 = SEK 915mResult 2002:6,918–6,117 = SEK 801m

Net salesTotal recognised revenue according to the percentage of completion method,plus rental revenue and interest subsidies.Result 2003:7,429+358 = SEK 7,787mResult 2002:8,311+561 = SEK 8,872m

Net sales from project developmentTotal net sales minus net sales within JM Commercial.Result 2003:7,787–227 = SEK 7,560mResult 2002:8,872–424 = SEK 8,448m

Profit from project developmentOperating profit minus operating net, sales and write-downs of investment properties and eliminations at Group level.Result 2003:478–55–303+62 = SEK 182mResult 2002:652–223–50+15+65 = SEK 459m

Interest coverage ratioProfit after depreciation and financial income in relation to financial expenses.Result 2003: (478+39)/250 = 2.1 timesResult 2002: (652+38)/322 = 2.1 times

Debt/equity ratioInterest-bearing net debt in relation to shareholders’ equity.Result 2003:2,611/3,285 = 0.8 timesResult 2002:3,665/3,570 = 1.0 times

Equity ratio (visible)Visible shareholders’ equity in relation to total assets.Result 2003:3,285/9,145 = 36%Result 2002:3,570/10,628 = 34%

Recognised revenue less progress billingsRecognised revenue less invoicing.Result 2003:3,285–2,256 = SEK 1,029mResult 2002:5,628–4,431 = SEK 1,197m

Recognised revenue according to the percentage of completion methodProduction costs incurred plus recognised contribution.Result 2003:6,916+513 = SEK 7,429mResult 2002:7,739+572 = SEK 8,311m

MEASURES FOR CAPITAL INTENSITYAsset turnover rateNet sales for the year in relation to average total assets.Result 2003:7,787/((9,145+10,628)/2) = 0.8 timesResult 2002:8,872/((10,628+12,888)/2) = 0.8 times

MARGIN MEASUREMENTProject development marginProfit from project development in relation to net sales from project development.Result 2003:182/7,560 = 2.4%Result 2002:459/8,448 = 5.4%

PROFITABILITY MEASUREMENTAfter-tax return on equityProfit after tax in relation to average shareholders’ equity.Result 2003:187/((3,285+3,570)/2) = 5.5%Result 2002:253/((3,570+3,823)/2) = 6.8%

Pre-tax return on capital employed Profit before tax with reversal of financial expenses in relation to average capital employed.Result 2003: (267+250)/((6,271+7,883)/2) = 7.3%Result 2002: (368–322)/((7,883+9,753)/2) = 7.8%

Pre-tax return on total capital Profit before tax with reversal of financial expenses in relation to average total assets.Result 2003: (267+250)/((9,145+10,628)/2) = 5.2%Result 2002: (368+322)/((10,628+12,888)/2) = 5.9%

Earnings per share after taxProfit after tax in relation to average number of shares.Result 2003: SEK 186,987,000/28,311,705 = SEK 6.60Result 2002: SEK 253,271,000/29,857,486 = SEK 8.50

SHARE-RELATED MEASUREMENTDividend yieldProposed dividend in relation to market price at 31 December 2003.Result 2003: SEK 5/106 = 4.7%Result 2002: SEK 10/162 = 6.2%

OTHERDevelopment propertiesSee section on development properties under accounting and valuation principles.Result 2003: SEK 3,361mResult 2002: SEK 3,871m

Investment propertiesSee section on investment properties under accounting and valuation principles.Result 2003:515+776+1,542 = SEK 2,833mResult 2002:2,109+594+71 = SEK 2,774m

Surplus values before deferred tax in investment propertiesDifference between the market values and book values of investment properties.Result 2003:3,205–2,833 = SEK 372mResult 2002:3,478–2,774 = SEK 704m

D E F I N I T I O N S

Amounts in SEKm unless otherwise stated.

84


BUSINESS UNITSOperating capitalTotal book values of goodwill, investment properties, development properties, partici-pations in tenant-owner co-operatives, receivables from property sales and accountsreceivable minus accounts payable and plus/minus project balances.

Average operating capital is calculated as closing operating capital on five measure-ment dates (five most recent quarter-ends).

JM Residential Stockholm:Result 2003:3,091Result 2002:3,496

JM Residential SwedenResult 2003:961Result 2002:1,076

JM Commercial Result 2003:2,498Result 2002:3,776

JM InternationalResult 2003:1,059Result 2002:979

Return on operating capitalOperating profit per business unit in relation to average operating capital.

JM Residential StockholmResult 2003:–22/3,091 = –0.7%Result 2002:–160/3,496 = –4.6%

JM Residential SwedenResult 2003:98/961 = 10.2%Result 2002:180/1,076 = 16.7%

JM CommercialResult 2003:358/2,498 = 14.3%Result 2002:634/3,776 = 16.8%

JM InternationalResult 2003:72/1,059 = 6.8%Result 2002:90/979 = 9.2%

Operating profitOperating profit in the business units reported before financial items.

JM Residential StockholmResult 2003: –22Result 2002: –160

JM Residential SwedenResult 2003: 98Result 2002: 180

JM ProductionResult 2003: 34Result 2002: –27

JM CommercialResult 2003: 358Result 2002: 634

JM InternationalResult 2003: 72Result 2002: 90

Margin per business unitOperating profit before property sales and write-downs of properties in relation to net sales.

JM Residential StockholmResult 2003: (–22–22)/3,218 = –1.4%Result 2002: (–160–9+155)/3,623 = –0.4%

JM Residential SwedenResult 2003: (98+7)/2,092 = 5.0%Result 2002: (180–4+2)/2,205 = 8.1%

JM ProductionResult 2003:34/701 = 4.9%Result 2002:–27/1,166 = –2.3%

JM CommercialResult 2003: (358–374+63)/227 = 20.7%Result 2002: (634–513+99)/424 = 51.9%

JM InternationalResult 2003: (72–22)/1,683 = 3.0%Result 2002: (90+3)/1,530 = 6.1%

D E F I N I T I O N S

85


The following conditions apply to the schedule of properties:All commercial rental agreements are index-linked and thecorrelation with CPI is between 75 and 100%. In the columnfor “breakdown of rental revenue”, the approximate valuesare stated since certain leases include several different typesof space. In the “term of lease” column, residential leases areincluded in the percentage for 2004.

The selection of development properties has been madebased on the size of the projects and the time aspect - theyhave been started or will be started in the next few years.

Investment properties and a selection of development properties at 31 December 2003

J M ’ S P RO P E RT I E S

Retail, 4%

Hotel, 2%

Other, 12%

Garage, 6%

Residential, 49%

Commercial, 27%

RENTABLE SPACE 2003, BY CATEGORY

0

10

20

30

40

50

2007–Length of lease

200620052004

%

LEASE STRUCTURE, SHARE OF TOTAL RENTAL REVENUE,FULLY DEVELOPED PROPERTIES

0

20

40

60

80

100

Residential properties

Fully developed properties excl.

residential properties

Properties under construction1)

Properties for further development excl.

residential properties

%

1) Applies to lettable properties.

FINANCIAL OCCUPANCY RATIO

86


INVESTMENT PROPERTIES, FULLY DEVELOPED

No. Property Age Tax/ Total rentable Rentable space, Revenue 2003 Rental revenue, Term of Possible rental Majorrent 2003 space breakdown breakdown lease revenue tenants

Municipality Year Tax ass. value Hotel Residential Rental revenue Hotel/Office 2004 Fully rented 2004Address built/ Ground rent Office Other Retail 2005 Of which, leasedDescriptions renovated Retail Garage Residential 2006

Other/Garage >=2007SEKm/SEK000s Sq.m. Sq.m. Sq.m. SEKm % % SEKm

1 Paradiset 23 1970 133.1 15,162 0 0 12.3 86% 8% 18.5 Adena Pickos

Stockholm 8,212 3,480 5% 17% 12.5 Solidlås

Nordenflychtsv. 66 620 2,850 0% 5% Fortun Service

Office, warehouse 9% 70%

2 Spelbomskan 14 1950 0.0 2,400 0 0 2.6 100% 100% 2.6 Stift. Docendo

Stockholm 2,400 0 0% 0% 1.7 Discimus

Sandåsgatan 2 0 0 0% 0% Europaskolan

School 0% 0%

3 Gjuterihuset 1 1927 17.5 1,489 0 0 1.6 100% 35% 3.3 Design AB Propeller

Stockholm 2002 1,489 0 0% 0% 2.0 Stiftelsen Inuti

Patentgatan 2–12 0 0 0% 65%

Office 0% 0%

4 Lux 7 1908–16 27.5 2,163 0 0 3.5 47% 0% 5.5 Stockholm County

Stockholm 2002 1,526 637 0% 0% 2.9 Council

Primusg. 112–116 0 0 0% 73% Carrier Refrigeration

Office 53% 27%

5 Holar 1 1982 71.2 5,626 0 0 8.7 99% 0% 8.7 ÅF-Industriteknik

Stockholm 190.0 5,626 0 0% 1% 8.7

Skalholtsgatan 2 0 0 0% 0%

Office 1% 99%

6 Skogskarlen 1 1971 118.6 12,140 0 0 15.3 100% 0% 15.3 Sveaskog

Solna 12,140 0 0% 100% 15.3

Pipers väg 2 0 0 0% 0%

Office, warehouse 0% 0%

7 Hornlyktan 3 1943 6.1 1,008 0 785 0.9 27% 71% 0.9 17 residential units

Stockholm 41.9 223 0 0% 29% 0.9 1 commercial unit

Karlsborgsvägen 15–19 0 0 73% 0%

Residential 0% 0%

8 Sicklaön 37:9 1670 25.1 2,019 0 1,811 1.3 0% 95% 1.4 27 residential units

Nacka 1970 0 208 0% 2% 1.4 2 studios

Finnbodavägen 9A–D 0 0 95% 0%

Residential, etc. 5% 3%

9 Kvarngärdet 62:2 1988 0.0 1,482 0 0 1.5 98% 0% 1.6 Uppsala County Council

Uppsala 1,482 0 0% 0% 1.4 Uppsala Municipality

Portalgatan 4B 0 0 0% 16%

Office 2% 84%

10 Kvarngärdet 33:1 2001 8.5 2,500 0 0 4.2 100% 0% 4.6 Systeam AB

Uppsala 2,500 0 0% 0% 4.6 Udac AB

S:t Persgatan 23, etc. 0 0 0% 0%

Office 0% 100%

11 Töebacken 8 1999 27.3 2,845 0 0 3.9 100% 34% 3.9 JM AB

Lund 2,845 0 0% 58% 3.9 Trivector AB,

Åldermansg. 13, etc. 0 0 0% 8% Svenska ESF-rådet,

Office 0% 0% Lernia Bemanning AB

12 Beitostølen 1990 0.2 90 0 90 0.0 0% 0% 0.0 Used internally by JM

Beitostølen 0 0 0% 0% 0.0

Øystre Slidre 0 0 100% 0%

Cabins 0% 100%

13 Rud 1976 5.2 1,444 0 0 1.5 17% 60% 1.5 Used internally by JM

Bærum 1985 250 1,194 0% 0% 1.5

Bærumsveien 471 0 0 0% 0%

Office/warehouse 83% 40%

14 Rud 1978 4.8 1,855 1,855 0 2.3 100% 0% 2.6 Used internally by JM

Bærum 1986 0 0 0% 0% 2.6

Bærumsveien 473 0 0 0% 0%

Office 0% 100%


INVESTMENT PROPERTIES, FULLY DEVELOPED

No. Property Age Tax/ Total rentable Rentable space, Revenue 2003 Rental revenue, Term of Possible rental Majorrent 2003 space breakdown breakdown lease revenue tenants

Municipality Year Tax ass. value Hotel Residential Rental revenue Hotel/Office 2004 Fully rented 2004Address built/ Ground rent Office Other Retail 2005 Of which, leasedDescriptions renovated Retail Garage Residential 2006

Other/Garage >=2007SEKm/SEK000s Sq.m. Sq.m. Sq.m. SEKm % % SEKm

15 Sandvika 1972 13.5 3,076 3,076 0 2.4 100% 25% 2.7

Kjørbokollen 2000 0 0 0% 0% 2.3

Kjørbokollen 30 0 0 0% 0%

Office 0% 75%

16 Signalisten 7 1992 3.1 686 0 0 100% Used internally by JM

Västerås 686 0 0%

Signalistgatan 17 0 0 0%

Office 0%

17 Yxlö 3:51 1984 0.8 427 0 0 0% Used internally by JM

Nynäshamn 1993 0 427 0%

Ådudden 0 0 0%

Conference facilities 100%

Total 462.4 56,412 4,931 2,686 62.0 89% 14% 73.1

231.9 39,379 5,946 1% 32% 61.7

620 2,850 3% 8%

7% 46%

INVESTMENT PROPERTIES, UNDER CONSTRUCTION

No. Property Scheduled occupancy Total rentable space Rentable space, breakdown Possible rental rev. Major tenantsMunicipality Hotel Residential Fully rented 2004Address Office Other Of which, leasedDescription Retail Garage

Sq.m. Sq.m. Sq.m. SEKm

18 Barnängen 4 Q4 2004 11,200 0 0 25.0 Under renovation

Stockholm 9,300 0 16.0 FFNS, Nyréns,

Barnängsg. 21 0 1,900 Stockholm County

Office Council

19 Skogskarlen 1, part of Q1 2004 18,600 0 0 29.9 DHL

Solna 11,850 450 18.7

Björnstigen 85 0 6,300

Office

20 Västerbotten 19 Q4 2004 4,912 0 0 5.8 Under renovation

Lidingö 2,560 114 4.5 Sällma, IDTM

Stockholmsvägen 18 1,488 750 Intersport,Vivo

Office, retail

21 Belgium Q3 2004 11,376 0 0 23.2 Under renovation

Brussels 11,004 372 0.0

Rue de la Science 0 0

Office

22 Belgium Q3 2005 3,379 0 0 6.7 New construction

Brussels 3,379 0 0.0

Rue d´Idalie 0 0

Office

Total 49 467 0 0 90.6

38,093 936 39.2

1,488 8,950

87




88


INVESTMENT PROPERTIES, FOR FURTHER DEVELOPMENT

No. Property Age Total rentable Rentable space, Rental Rental revenue, Planned Planned Planningspace breakdown revenue 2003 breakdown use use process

Municipality Year built/ Hotel Residential Hotel/Office Description Planning phaseAddress renovated Office Other Retail Development periodDescription Retail Garage Residential

Other/GarageSq.m. Sq.m. Sq.m. SEKm % No.of apts/GFA

23 Annedal 4 1970 840 0 0 0.6 0% Office approx. 3,000 General plan

Lund 0 100 100% sq.m. 2005–2006

Annedalsvägen 8 740 0 0%

Retail 0%

24 Töebacken 7 1979 1,749 0 0 1.0 3% Office approx. 8,000 Detailed plan

Lund 1989 75 783 95% sq.m. 2003–2004

Åldermansg. 13, etc. 1999 891 0 0%

Office, retail 2%

25 Librobäck 12:2 1987 956 0 0 0.4 45% Used internally

Uppsala 450 506 0% by JM

Klockargatan 4 0 0 0%

Office, warehouse 55%

26 Tågarp 16:15 1974 918 0 0 0.0 100% Used internally

Burlöv 240 678 0% by JM

Testvägen 15A 0 0 0%

Warehouse 0%

27 Kallhäll 1:22 1907 19,500 0 0 7.1 19% Light industry Development

Järfälla 0 19,500 0% 2003–2008

Fabriksvägen 0 0 0%

Light industry 81%

28 Västerbotten 18 1972 12,511 0 1,715 6.3 7%

Lidingö 0 1,186 66%

Stjärnvägen 4,735 4,875 14%

Residential, retail 13%

29 Älta 1965–93 81,451 0 72,974 73.2 3% Densification

Nacka 2,288 4,479 4% 2003–2006

Älta 1,710 0 89%

Residential, centre 5%

30 Vaxholm 1943–94 81,500 0 71,000 77.0 5% Densification

Vaxholm 3,500 3,000 5% 2003–2006

Residential, office 2,700 1,300 85%

Retail 5%

Total 199,425 0 145,689 165.5 5%

6,553 30,232 7%

10,776 6,175 79%

9%


89


DEVELOPMENT PROPERTIES

No. Country Property/project No. of residential Development Present Rental revenue Sales price 1) Planning processunits in projects period rentable space 2003 present phase

Municipality where production Average (stake Planning phaseLocation not started SEK/sq.m.) Spread

Approx. Sq.m. SEKm Tenure Production

31 Sweden Långbro 550 2000–2010 25,000 21.5 20,000 Detailed plan – 460 residential units

Stockholm 14,000–24,000

Älvsjö Tenant-owner co-operative Production start 2000

32 Sweden Essinge Udde 450 2001–2008 33,700 Detailed plan

Stockholm 24,500– 44,000

Lilla Essingen Tenant-owner co-operative Production start 2001

33 Sweden Bolinder Strand 400 2001–2009 0 3) 4.8 17,000 Detailed plan

Järfälla 11,500–23,000

Fabriksvägen Tenant-owner co-operative Production start 2001

34 Sweden Liljeholmskajen 2,400 2001–2012 45,000 23.5 23,700 Detailed plan – 500 residential units

Stockholm 13,300–32,700

Årstadal/Liljeholmen Tenant-owner co-operative Production start 2001

35 Sweden Hägernäs 500 2001–2009 28,000 Detailed plan

Täby 19,000–36,000

Close to water Tenant-owner co-operative Production start 2002

36 Sweden Silverdal Bostäder 150 2001–2008 27,500 Detailed plan

Sollentuna 28,000–31,000

Sollentunavägen Freehold Production start 2001

37 Sweden Västra Daggkåpan 190 2000–2007 23,000 Detailed plan

Nacka 15,000–30,000

Tenant-owner co-operative Production start 2003

38 Sweden Norra Frösunda 2) 660 2001–2011 19,000 Detaljplan

Solna 13,000–27,500

Frösundavik Tenant-owner co-operative Production start 2003

39 Sweden Bällstaberg 360 2001–2011 12,000 Detailed plan

Vallentuna 10,000–14,000

Bällstabergsvägen Tenant-owner co-operative Production start 2002

40 Sweden Industristaden 270 2002–2010 15,500 Detailed plan 2002

Uppsala 13,000–22,000

Kungsängen Tenant-owner co-operative Production start 2003

41 Sweden Rickomberga 80 2001–2006 14,500 Detailed plan

Uppsala 11,000–19,000

Central Tenant-owner co-operative Production start 2001

42 Sweden Kviberg 380 2003–2010 Sales not yet started Detailed plan 2005

Göteborg

By Säveån Production start 2005

43 Sweden Norra Älvstranden 400 2002–2007 19,000 Detailed plan

Göteborg 14,500–22,000

Norra Älvstranden Tenant-owner co-operative Production start 2004

44 Sweden Dockan 550 2003–2010 19,500 Detailed plan 2003

Malmö 10,000–30,000

Västra Hamnen Tenant-owner co-operative Production start 2003

45 Sweden Lomma 740 2003–2010 33,000 9.0 Sales not yet started Detailed plan 2004

Lomma

Lomma Hamn Production start 2004

46 Sweden Vallkärratorn 300 2002–2010 Sales not yet started Detailed plan –

Lund 190 residential units 2004

Stångby Production start 2005

47 Sweden Charlottendal 300 2002–2008 24,000 Detailed plan

Värmdö 22,000–28,000

Gustavsberg Freehold Production start 2003

48 Sweden Kojan 400 2000–2008 Sales not yet started Detailed plan 2005

Stockholm

Västra Kungsholmen Production start 2005

1) Sales prices specified for residential units with tenure as tenant-owner co-operative do not include loans raised in the co-operative. JM’s total revenue comprises both stakes and loans raised in the co-operative.2) Full purchase price not yet paid.3) At year-end 2003.


90


DEVELOPMENT PROPERTIES

No. Country Property/project No. of residential Development Rental revenue Sales price 1) Planning processunits in projects period 2003 present phase

Municipality where production Average (stake Planning phaseLocation not started SEK/sq.m.) Spread

Approx. SEKm Tenure Production

49 Sweden Hagaberg 120 2002–2007 12,300 Detailed plan

Linköping 10,000–15,000

Garnisonen Tenant-owner co-operative Production start 2003

50 Norway Grefsen Stasjon2) 350 2001–2012 Sales not yet started Control planning work

Oslo 2001–2005

Central/north Oslo Production start 2005

51 Norway Rolvsrud Skog 2) 150 2001–2008 28,000 Control plan

Lørenskog 23,000–30,000

Central Freehold apartments Production start 2001

52 Norway Kjørbokollen 175 2001–2006 32,000 Control plan

Bærum 27,000–41,000

Central Sandvika Freehold apartments Production start 2001

53 Norway Hovenga 2) 130 2002–2010 Sales not yet started Control plan

Porsgrunn

Central Production start 2004

54 Norway Trulsrudmarka 150 2001–2010 20,000

Bærum

Close to nature Detached houses Production start 2001

55 Norway Natlandsterasse 190 2000–2007 Sales not yet started Control plan

Bergen


56 Norway Bragenesstrand 2) 330 2002–2009 Sales not yet started Control plan

Drammen


57 Norway Strongafjellet 2) 750 2003–2015 Sales not yet started Control plan 2004

Askøy Bergen

Close to water Production start 2005

58 Norway Ilebrekke 2) 160 2000–2010 Sales not yet started Control plan

Tønsberg

Detached houses Production start 2004

59 Norway Billingstadlia 160 2001–2007 30,000 Control plan

Asker

Production start 2004

60 Belgium R.Theodore De Cuyper 113 2001–2006 22,000 Detailed plan

Woluwé-St Lambert 20,000–24,000

Central Freehold apartments Production start 2003

61 Denmark Nordlyset, Amerika Plads 110 2002–2006 32,000 Detailed plan

Copenhagen


62 Denmark Havnestad 292 2002–2006 29,500 Detailed plan

Copenhagen

By harbour Production start 2003

63 Denmark Sluseholmen 2) 315 2003–2008 Sales not yet started Detailed plan

Copenhagen


1) Sales prices specified for residential units with tenure as tenant-owner co-operative do not include loans raised in the co-operative. JM’s total revenue comprises both stakes and loans raised in the co-operative.2) Full purchase price not yet paid.


91


Presenting JM PageKey figures inside coverGeographic breakdown of net sales inside coverNet sales and profit after tax inside coverJM 1999–2003 inside cover

CEO’s commentsCost-cutting programme 2Demographic growth and new housing,County of Stockholm 3More efficient pre-construction 4Example of working drawing 4

Share dataOwnership structure at 31 December 2003 6Share price trend 1 January 2003–29 February 2004 6Share data 7Shareholders at 29 February 2004 7Changes in share capital 1998–2003 7Stockbrokers who continuously monitor JM 7

Business concept,goals and strategiesFinancial targets 9

Corporate governanceAudit Committee – duties and responsibilities 11Compensation Committee – duties and responsibilities 11

JM’s core businessProject development phases 16Housing projects JM 16Sensitivity calculation, land value 16Land value during planning process 17Property terms 17Percentage of completion 17Value chain 18Cash flow in housing development 18

Market overview housingTrend indicators 19Price trend tenant-owned apartments 19Breakdown at sales start of JM’s residential units by size band, Sweden 20Average price at sales start for JM’s residential units, Sweden 20Breakdown at sales start of JM’s residential units by price band, Sweden 20JM’s total available building rights portfolio 21Number of building rights reported in the balance sheet 21Number of residential units at different planning phases,Greater Stockholm 22Number of residential units at different planning phases, rest of Sweden 22JM’s planned housing in Greater Stockholm – travelling times to city centre and locations close to water 22Major ongoing housing projects in Greater Stockholm 23Market value, residential building rights,Greater Stockholm 24Market value, residential building rights, rest of Sweden 24Market value, residential building rights, international 24

Market overview residential and commercial propertiesÄlta – map 25Vaxholm – map 25Market rental spread, Stockholm 26Investment properties 27Rental revenues 27JM’s property sales 27Property sales in 2003 27Market values 2003 29

Opportunities and risksHousing expenditure in relation to disposable income 30Sensitivity analysis by cost category,housing development projects 31Sensitivity analysis, present value in SEKm for JM’s residential building rights 32Sensitivity analysis, present value in SEK/share for JM’s residential building rights 32

Financial itemsLoan structure 33Asset turnover and interest coverage ratio 34Interest-bearing net debt and debt/equity ratio 34Net financial items, JM Group 34Interest-bearing liabilities and average interest rates at 31 December 2003 34

EnvironmentThe Group’s quality and environmental policy 35Quality and environmental objectives 35Environmental impact of project development 36Facts environment 37Environmental KPIs – follow-up of targets 37

Human resourcesNumber of employees 39Absence due to illness 39

Business unitsJM Residential StockholmNet sales 41Operating profit 41Summary of results 41Key figures 41JM Residential SwedenNet sales 42Operating profit 42Summary of results 42Key figures 42JM ProductionNet sales 43Operating profit 43Summary of results 43Key figures 43JM CommercialNet sales 44Operating profit 44Summary of results 44Key figures 44JM InternationalNet sales 45Operating profit 45Summary of results 45Key figures 45

Board of Directors’ reportConsolidated income statement 46Net sales by business unit 48Operating profit by business unit 48Margin by business unit 48Number of building rights 49Market values of JM’s investment properties 50Key figures 51

Income statementConsolidated net sales by business unit 53

Balance sheetConsolidated assets 55Consolidated capital structure 55

JM’s propertiesRentable space 2003,by category 85Financial occupancy ratio 85Lease structure, share of total rental revenue, fully developed properties 85

TA B L E S , I L L U S T R AT I O N S A N D D I A G R A M S

92


N OT I C E O F A N N U A L G E N E R A L M E E T I N G

Welcome to JM’s Annual General MeetingShareholders in JM AB are hereby invited to attend the Annual General Meetingto be held at 4 p.m. on Wednesday, 28 April 2004 at JM’s head office, Telegraf-gatan 4, Solna.

NOTIFICATION

Shareholders who wish to participate in the meeting must be entered in theregister of shareholders maintained by VPC AB by Friday, 16 April 2004, andmust have informed the Company of their intention to participate by 4 p.m. onFriday, 23 April 2004, using one of the following channels:

Mail: JM AB, SE-169 82 StockholmTelephone: +46 8 782 87 00Fax: +46 8 782 86 12E-mail: [email protected]

Shareholders whose shares are registered in the name of a nominee must, inorder to be entitled to participate in the Meeting, request that their shares betemporarily registered in their own name by Friday, 16 April 2004.

Admission cards to the Annual General Meeting will not be sent out.

DIVIDEND

The Board of Directors proposes that a dividend be paid to shareholders ofSEK 5 per share. The proposed record date is Monday, 3 May 2004. If the pro-posal is approved by the Meeting, dividends are expected to be distributed byVPC on Thursday, 6 May 2004.

FINANCIAL CALENDAR

28 April 2004: Annual General Meeting28 April 2004: Interim Report for the period January–March 200418 August 2004: Interim Report for the period January–June 20041 November 2004: Interim Report for the period January–September 2004

REPORTS AND FINANCIAL INFORMATION

JM’s financial information – including share data, presentation materialand financial reports, etc., can be accessed at www.jm.se

Reports are available in both Swedish and English and can be ordered from JM AB, Corporate Communications, telephone +46 8 782 87 00, fax+46 8 782 86 10 or via www.jm.se

HEAD OFFICE AND

STOCKHOLM OFFICE

JM AB

Telegrafgatan 4, Solna

SE-169 82 Stockholm

Tel. +46 8 782 87 00, fax +46 8 782 86 00

www.jm.se

REGIONAL AND LOCAL OFFICES

EAST REGION

Uppsala

Sylveniusgatan 2

Box 1334, SE-751 43 Uppsala

Tel. +46 18 66 03 00, fax +46 18 66 03 10

CENTRAL REGION

Jönköping

Herkulesvägen 6, SE-553 03 Jönköping

Tel. +46 36 12 03 40, fax +46 36 12 03 66

Linköping (regional office)

Brigadgatan 24, SE-581 31 Linköping

Tel. +46 13 37 14 00, fax +46 13 37 14 09

Strängnäs

Trädgårdsgatan 15, SE-645 31 Strängnäs

Tel. +46 21 81 20 00, fax +46 152 222 59

Västerås

Signalistgatan 17, SE-721 31 Västerås

Tel. +46 21 81 20 00, fax +46 21 81 20 10

Örebro

Vasastrand 11, SE-703 54 Örebro

Tel. +46 19 10 29 40, fax +46 19 10 29 15

WEST REGION

Gothenburg

Gårdatorget 2, SE-412 50 Gothenburg

Tel. +46 31 703 57 00, fax +46 31 335 88 70

SOUTH REGION

Halmstad

Brogatan 1, SE-302 43 Halmstad

Tel. +46 35 10 63 60, fax +46 35 10 67 45

Helsingborg

Prästgatan 24, SE-252 24 Helsingborg

Tel. +46 42 28 98 90, fax +46 42 13 82 24

Lund (regional office)

Åldermansgatan 13

Box 21, SE-221 00 Lund

Tel. +46 46 30 00 00, fax +46 46 30 01 38

Malmö

Övägen 6, Limhamn

Box 60228, SE-216 09 Malmö

Tel. +46 40 16 98 80, fax +46 40 16 98 98

SUBSIDIARIES IN SWEDEN

AB Borätt

Sjöängsvägen 17


Tel. +46 8 626 66 30, fax +46 8 626 98 20

www.boratt.se

Seniorgården AB

Sjöängsvägen 17


Tel. +46 8 626 66 30, fax +46 8 626 98 20

www.seniorgarden.se

O.Timblads Målerifirma AB

Strandbergsgatan 53, SE-112 51 Stockholm

Tel. + 46 8 619 51 00, fax +46 8 618 16 01

www.timblad.se

SUBSIDIARIES ABROAD

Belgium

JM Construction S.A.

Avenue Louise 287, Bte 1

B-1050 Brussels

Tel. +32 2 646 11 12, fax +32 2 646 96 26

www.jmconstruction.be

Denmark

JM Danmark A/S

Vester Farimagsgade 37

DK-1606 Copenhagen V

Tel. +45 33 45 70 00, fax +45 33 45 70 70

www.jmdanmark.dk

Norway

Byggholt AS (head office)

Bærumsveien 473,

Postboks 33

N-1306 Bærum

Tel. +47 67 17 60 00, fax +47 67 17 60 01

www.byggholt.no

Bergen

Damsgårdsveien 125

Postboks 178

N-5847 Bergen

Tel. +47 55 15 53 00, fax +47 55 15 53 01

Skien

Lundegate 4C

Postboks 45

N-3701 Skien

Tel. +47 35 54 33 50, fax +47 35 54 33 60

Tønsberg

Ålyveien 19

Postboks 2053

N-3103 Tønsberg

Tel. +47 33 30 03 00, fax +47 33 30 03 33

Seniorbo AS

Kjørbokollen 30

N-1337 Sandvika

Tel. +47 67 55 19 40, fax +47 67 55 19 41

www.seniorbo.no

Vikevåg Bolig AS

Gamle Forusveien 12

N-4033 Stavanger

Tel: +47 51 81 58 50, fax +47 51 81 58 01

www.vikevaag.no

ADDRESSES

Production: JM and Inte RioText: JM, BBD Financial Communications and NewSec Translation: Morton CommunicationsPhotography: Torbjörn Bergkvist and Nina BrobergIllustrations: Leif ÅbjörnssonArchitects' drawings: AIX, Cinnober Arkitekter and FFNS ArkitekterRepro and printing: SILKOREKORD, Stockholm 2004Paper: Incada Silk 220g (cover), Scandia 2000 130g (inside pages) and Silverblade Art 170g (JM in pictures)

JM is one of the Nordic region’s leading housing developers.Operations

focus on new production of homes in attractive areas of growth markets,

with the main focus on metropolitan areas and university towns in

Sweden,Norway,Denmark and Belgium.

JM is also involved in development of residential properties,and

conducts limited project development of commercial premises,primarily

in the Greater Stockholm area.

The Group is divided into five business units:JM Residential Stockholm,

JM Residential Sweden, JM Production, JM Commercial and JM International.

JM had 2,368 employees at the end of 2003. JM AB is a public limited

company and is listed on the Stockholm Stock Exchange.

GEOGRAPHIC BREAKDOWN OF NET SALES

NET SALES AND PROFIT AFTER TAX

JM 1999–2003

1999 Property portfolio in Skåne and Gothenburg sold.Operations focused to project development.Establishment in Denmark.New financial targets and change of name to JM AB.

2000 Growth-oriented operational targets.Principal owner Skanska sells its shareholding.Major property sales in Stockholm.

2001 Continued focus on project development.Continued major property sales.Share buy-backs.

2002 Good sales result, investment properties.Continued strategic reduction of property portfolio.Share buy-backs.New President and CEO.Problems in Stockholm projects.

2003 Focus on routines for improved control and oversight.Programme for group-wide pre-construction routines.Continued sale of fully developed properties.Major acquisition of residential properties for development.Good sales trend, homes.

0

2,000

4,000

6,000

8,000

10,000

12,000

200320022001200019990

200

400

600

800

1,000

1,200

Net sales, SEKm Profit after tax, SEKm

SEKm SEKm

NorwaySweden

Belgium

Denmark

Stockholm53%

Rest of Sweden26%

International21%

NorwaySweden

Belgium

Denmark

KEY FIGURES

SEKm 2003 2002 2001Net sales 7,787 8,872 8,642Operating profit 478 652 1,964Profit after financial items 267 368 1,629Project development margin (%) 2.4 5.4 11.8Earnings per share (SEK) 6.60 8.50 36.30Dividend per share (SEK) 51) 10 14Return on equity (%) 5.5 6.8 30.11)Proposed by the Board

JM AB (publ) has its registered office in StockholmCompany reg.no.556045-2103



JM AN

NUAL REPO

RT 2003

JM’s business concept is to create attractive living and working environments that satisfy individual needs both today and in the future.


PRESENTING JM



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