RNS Number:7074X
Akademiska Hus AB
31 January 2006
Akademiska Hus Year-end Report 2005
AKADEMISKA HUS AB (Publ) Reg. No. 556459-9156
The Board and Managing Director of Akademiska Hus AB hereby present the Year-end
Report 2005.
* Profit before tax for the period amounted to SEK 9,270 million. The
corresponding figure for 2004 was SEK 821 million, which, recalculated according
to the accounting principles now being applied, is equivalent to SEK 1,324
million. The profit-affecting increase in value of the investment properties was
SEK 7,214 million. The considerable increase in profit is due largely to the
increase in the value of the Group's investment properties.
The lower maintenance costs and improved net financial items contributed to the
improvement in profit.
* The profit for the year was SEK 6,654 (950, comparision with 2004 recalculated
consistently according to IFRS).
* The investment properties' fair value was SEK 45,616 million (38,230). The
significant increase is attributable to the following factors:
- A strong general upturn on the Swedish property market during 2005.
- The new guidelines introduced by reason of IFRS, together with a new valuation
method, have resulted in greater accuracy in the valuation process and thus
fairer values.
- Investments made previously affect future maintenance requirements, resulting
in higher valuation levels.
- Increased demand for the types of property that dominate the Akademiska Hus
property portfolio, with tenants mainly from the public sector and with
relatively long leases.
* Rental income totalled SEK 4,481 million (4,482). The level of vacant space
was 3.2 per cent (2.8). Renegotiations at the majority of locations have led to
unchanged or reduced rent levels as a result of greater competition and a
general increase in the level of vacant space on the non-residential property
market.
* The average term for newly signed leases is ten years and at the year-end the
average remaining lease term was 6.5 years (6.2).
* The direct yield amounted to 6.5 per cent (7.1). The lower direct yield can be
explained by an increase in the fair values of the properties.
* In January 2005, four large buildings totalling 63,000 square
metres in Goteborg were sold to Chalmersfastigheter AB. At the same time, the
Group was assigned the task of managing all buildings for Chalmersfastigheter
AB.
* Renegotiation took place during the period of a number of large leases with
Akademiska Hus's main tenant group, universities and university colleges. These
include Lund University and Gavle University College. New tenants include the
European Institute for Infectious Disease Control and BioVitrum.
* Rentable space totalled 3,281,000 square metres (3,315,000).
* The Board will decide on a proposed dividend at its meeting on March 8, 2005.
It is the owner's aim that the dividend should amount to 2.5 per cent of equity.
+------------------------------------------------------+-----------+----------+
|Profit and key figures |2005 |2004 1) |
+------------------------------------------------------+-----------+----------+
|Management income, SEK m |4,533 |4,530 |
+------------------------------------------------------+-----------+----------+
|Net operating income, SEK m |2,727 |2,625 |
+------------------------------------------------------+-----------+----------+
|Changes in value, investment properties, SEK m |7,214 |-478 |
+------------------------------------------------------+-----------+----------+
|Profit before tax, SEK m |9,270 |1,324 |
+------------------------------------------------------+-----------+----------+
|Fair value, investment properties, SEK m |45,616 |38,230 |
+------------------------------------------------------+-----------+----------+
|Direct yield, % |6.5 |7.1 |
+------------------------------------------------------+-----------+----------+
|Net operating income per square metre |835 |799 |
+------------------------------------------------------+-----------+----------+
|Return on equity after standard tax, % |34.2 |7.9 |
+------------------------------------------------------+-----------+----------+
|Return on total capital, % |21.9 |6.3 |
+------------------------------------------------------+-----------+----------+
|Equity ratio, % |44.8 |41.1 |
+------------------------------------------------------+-----------+----------+
|Internal financing level, % |323 |92 |
+------------------------------------------------------+-----------+----------+
1) 2004 is recalculated according to IFRS.
Year-end Report 2005
Statement by the President
The improvement in profit reported by Akademiska Hus for 2005 is dramatic. The
main reason, however, is the effect of the increased - but unrealised - values
of our properties. Whilst one can take heart from these values it is not
realistic to expect the same increase in value to be repeated within the
foreseeable future.
A considerable proportion of the profit must therefore be regarded as a
non-recurring effect. Nor can one ignore the risk that a future possible fall in
value could have a very significant negative impact on profit. However, such a
fall in value is not expected in the next few years.
Even without taking into account the increase in value, the profit more than
doubled between 2004 and 2005. The main reason is that depreciation according to
plan, in line with the new accounting principles introduced as a result of IFRS,
are not charged to the consolidated profit. A gradual improvement in net
operating profit, however, is also contributing to the good profit trend.
On the market we are encountering greater competition from other property
companies. This is exerting pressure on prices, with often unchanged or reduced
rents as a result. We nevertheless take a positive view of the competition as it
benefits both our tenants and us.
The tenants benefit from the competitive pressure and we are reminded of the
need to make constant improvements. At the same time, an efficient market
produces a fairer price structure.
Particularly in times of considerable financial pressure on universities and
university colleges it is important that we are in a position to help with the
rationalisation of premises and at the same time have the expertise and capacity
to bring in other tenants that fit in to our property cluster. This reinforces
both operations and the long-term value of our property holdings.
Our vision and strategy document, AkaVision 2010, forms the basis for the
serious task of co-ordinating our activities throughout the country and
generating more co-ordination benefits. For us it is self-evident that we should
capitalise on our size in the interests of both the tenants and ourselves. In
this perspective, we have worked on investing in effective, eco-friendly energy
solutions.
Market
The Swedish economy has developed strongly over the past year and the prospects
for 2006 indicate continued positive development. This has, however, taken place
without an increase in employment, which usually ensues from an upturn in the
economy. Changes in employment are an important indicator for how demand for
premises will grow. After several years of negative development everything now
points to increased employment. For the property market, which on the whole
follows the general trend in the economy throughout the country, albeit with a
certain displacement in time, this is a much longed-for sign. The gradual
increase in the repo rate, which was predicted during 2006, could possibly have
a slight dampening effect on the interest in properties.
The value of the property transactions for the year broke all records. For the
first time the value of completed transactions exceeded SEK 100 billion. The
falling direct yield requirement and low interest rates are generating
considerable interest in property deals, which is pushing up property values.
Interest in properties used for health care and education purposes has also
increased and these are now being valued considerably higher than previously.
On the rental market for non-residential premises the level of vacant space has
for a number of years been on a high yet relatively stable level. During 2005, a
number of major lease agreements were reached in Stockholm although they have
only led to the vacant space being moved around in the holdings. No major
changes are expected during 2006 and it will take a long time before the vacant
space that exists today has been absorbed.
Rental levels have been relatively stable despite a high level of vacant space.
On a few sub-markets, mainly for efficient premises in prime locations in the
city regions, the rents are increasing. On other markets the increase in rents
is expected to be small or non-existent during the coming year.
Key events 2005
Tenants
Universities and university colleges are by far the dominant tenant group for
Akademiska Hus although new tenants have been added during the year.
Renegotiations have taken place with, among others, Lund University involving
195,000 square metres, Karlstad University involving 24,000 square metres, Gavle
University College involving 37,000 square metres, Goteborg University involving
37,000 square metres and Lulea University of Technology involving just over
16,000 square metres.
Reconstruction is taking place of parts of the Tre Vapen II property at Gardet
in Stockholm where Sida and the National Swedish Environmental Protection Agency
will be tenants.
The Swedish National Defence College, the Swedish Institute of International
Affairs and IVL, the Swedish Environmental Institute, have moved into the
Valhallavagen Campus in Stockholm. An agreement was reached during the year with
Chalmers University of Technology, which means that in January 2005 Akademiska
Hus sold four large buildings totalling 63,000 square metres. At the same time,
Akademiska Hus was assigned the task of managing all the properties on the
Chalmers Campus. The management assignment involves 155,000 square metres.
Following the transaction, Akademiska Hus and Chalmersfastigheter have roughly
equal ownership of the premises used by Chalmers.
A lease agreement for the extension of the IKSU Sports Centre in Umea has been
signed with Stiftelsen Universitetshallen. The agreement is for ten years and
covers the whole extension, which comprises just over 5,000 square metres.
Investments
Net investments in 2005 totalled SEK 469 million (1,866). The reason for the
comparatively low net investment is the sale of the properties to Chalmers. The
purchase sum was SEK 990 million.
A number of major projects were completed in 2005, including buildings for the
Swedish National Defence College, the Swedish Institute for Infectious Disease
Control in Stockholm and Gavle Library.
Major completed reconstruction and extension projects included Mathematical
Sciences on the Chalmers Campus in Goteborg, the A-building, Part A, for
Linkoping University and the former Medical Products Agency premises in Uppsala,
which have been rebuilt for Rosendal High School.
Results
Rental income
Rental income totalled SEK 4,481 million, which is in line with the same period
in 2004. The level of income was affected negatively to the amount of SEK 90
million by the sale of properties to Chalmers. In addition, a number of
renegotiations have taken place in an increasingly keener competitive climate.
This was balanced by the addition of new construction, reconstruction and
extensions, which together with a number of earlier property acquisitions have
had full impact during 2005.
Rental level and vacant space level
The total holdings amounted to 3,281,000 square metres of rentable space
(3,315,000). During 2005, four properties at Chalmers University of Technology,
totalling 63,000 square metres, were sold. Vacant space was 3.2 per cent (2.8),
which is equivalent to 103,635 square metres (93,784). The vacant space within
Akademiska Hus compared with other property companies is low. The figure
includes vacancies of SEK 88 million (78) or just 2.1 per cent (1.8) of the
rental income, fully rented plus supplements, which reflects the fact that a
large proportion of the vacant space has
a clearly lower rental value than the holdings on average. During 2006, vacant
space is expected to increase slightly, mainly in Goteborg where the Vaxthuset
block (Pedagogen, Molndal), comprising 35,000 square metres, will be vacated.
Within the near future it
is expected that the volume of vacant space, mainly in Kista and Harnosand, will
continue.
Lease agreements
The average term for newly signed lease agreements is ten years and at the turn
of the year the average remaining lease term was 6.5 years (6.2). For the
larger, more complex specialist buildings for laboratory and research operations
a lease agreement is normally required where the investment is repaid within the
agreement period. In these cases the leases are normally ten years or longer.
Operating costs
In 2005, operating costs amounted to SEK 762 million (783), of which energy and
water totalled SEK 510 million (533). Average operating costs for the Group for
the year amounted to SEK 233/m2 (238). Of the operating costs, energy, fuel and
water accounted
for SEK 155/m2 (162). Compared with other property companies, the operating
costs calculated in SEK/m2 are relatively high within Akademiska Hus due to the
high proportion of laboratories. Laboratory premises total 1.1 million square
metres (34 per cent) and from an energy point of view they are considerably more
demanding in terms of resources than other premises.
Maintenance costs
Maintenance costs for the year totalled SEK 717 million (806). Investments by
Akademiska Hus in maintenance costs extending over several years have meant that
the standard of the property holdings is now generally high and in relative
terms the maintenance levels are expected to fall in the future.
Of the maintenance costs, SEK 154 million (128) refers to tenant adaptations.
On average for the Group, maintenance costs for the year totalled SEK 220/m2
(245).
Net financial items
Net financial items for the year totalled SEK -647 million (-795). The reason
for the improvement is the average lower financing cost during the year, 3.85
per cent (4.50). (The financing cost for 2004 is not reported according to
IFRS).
(Diagramme: Net operating income, 2001-2005, Return on equity, %, Direct yield,
%)
Profitability
The net operating income, i.e. the profit on the Group's operations before
changes in value, central administration costs and net financial items, totalled
SEK 2,727 million (2,625). The net operating income ratio increased from 58 per
cent to 60 per cent.
As a result of the rise in the value of the investment properties, the direct
yield fell during 2005 and totalled 6.5 per cent (7.1).
Return on equity totalled 34.2 per cent (7.9). One of the owner's requirements
for profitability is that the return on equity shall be equivalent to the 5-year
government bond interest rate plus four percentage points viewed over a business
cycle. On average during 2005, the 5-year government bond interest rate was 2.8
per cent and the owner's requirement was thus 6.8 per cent.
Owner's financial objectives
From 2005, the owner's financial objectives have been set at:
- Yield requirement, estimated as the yield (profit after tax) on average
equity, shall be equivalent to the 5-year government bond interest rate plus
four percentage points viewed over a business cycle.
- The Group's dividend target is 2.5 per cent of equity.
- The Group's equity ratio should be at least 35 per cent.
Property valuation
The fair value of Akademiska Hus investment properties as at 31-12-2005 was
determined by means of an internal property valuation. The fair value was SEK
45.6 billion, an increase of SEK 7.4 billion since the previous year-end.
The increase is due in the first instance to the general increase in property
values in the city regions. The new guidelines introduced by reason of IFRS,
together with a new valuation method, have resulted in greater accuracy in the
valuation process and thus fairer values. The increase in value has also been
affected by investments made previously, which have an impact on future
maintenance requirements and an increase in the demand for the type of premises
that dominate the Akademiska Hus property holdings with tenants mainly from the
public sector with relatively long leases.
Prior to the Year-end Report 2005, Akademiska Hus introduced a cash flow-based
valuation as a general method to determine the fair value of the investment
properties according to IAS 40. Previously, the valuation was made using the
direct yield method. External valuations were carried out partly as a benchmark
for the internal cash flow valuations and partly for certain development
properties where the income and costs were difficult to assess.
Property valuation 31-12-2005 (SEK m)
+-------------------+-------------------+-------------------+-------------------+
|Region |Fair value, |Of which expansion |New construction in|
| |investment |reserves |progress |
| |properties | | |
+-------------------+-------------------+-------------------+-------------------+
|South |5,561 |51 |370 |
+-------------------+-------------------+-------------------+-------------------+
|West |6,717 |90 |118 |
+-------------------+-------------------+-------------------+-------------------+
|East |4,392 |167 |37 |
+-------------------+-------------------+-------------------+-------------------+
|Stockholm |18,972 |313 |395 |
+-------------------+-------------------+-------------------+-------------------+
|Uppsala |6,007 |271 |133 |
+-------------------+-------------------+-------------------+-------------------+
|North |3,967 |68 |68 |
+-------------------+-------------------+-------------------+-------------------+
|Total |45,616 |960 |1,121 |
+-------------------+-------------------+-------------------+-------------------+
Compared with 2004, the value of the investment properties has increased by SEK
7,386 million.
The change is due to different factors, which can only be calculated accurately
in part as a result of the change of valuation method. The table below shows the
changes that can be calculated accurately and a greater positive change in
value, which in the first instance is a result of the general rise in property
values in the city areas. The latter item is equivalent to an increase in value
of 16 per cent. The increase in value has been included in the new valuation
model through cost of capital and direct yield requirements, which began to fall
back in 2004 and where new levels were established with greater accuracy during
2005.
The direct yield in 2005 was 6.1 per cent, calculated on the fair value and
excluding expansion reserves, as at 31-12-2005.
In the valuation of investment properties as at 31-12-2005, SEK 3,606 million is
a market-related increase in value in Stockholm (excluding expansion reserves).
For Stockholm this is equivalent to a market-related increase in value of 26 per
cent and comprises 61 per cent of the market-related increase in value of the
Group's investment properties, excluding expansion reserves.
+------------------------------------------------------------+----------------+
|Fair value, investment properties, 31-12-2005 |SEK m |
+------------------------------------------------------------+----------------+
|Opening fair value |38,230 |
+------------------------------------------------------------+----------------+
|Investments and reclassifications from new construction in |1,101 |
|progress | |
+------------------------------------------------------------+----------------+
|Sales and disposals |-859 |
+------------------------------------------------------------+----------------+
|Lower standard maintenance costs |1,125 |
+------------------------------------------------------------+----------------+
|Change in expansion reserves |82 |
+------------------------------------------------------------+----------------+
|Market effects/corrected values/reduced yield requirements |5,937 |
+------------------------------------------------------------+----------------+
|Closing fair value |45,616 |
+------------------------------------------------------------+----------------+
Proportion, cash flow-valued objects
The internal cash flow valuation according to the above reported prerequisites
accounts for SEK 43,398 million of the reported value of the investment
properties. The expansion reserves of SEK 960 million have been calculated using
the location price method. The remaining value of SEK 1,258 million up to SEK
45,616 million refers to objects with a special valuation basis. This mainly
includes development properties with uncertain future income and costs.
Akademiska Hus's few residential objects are also included.
External valuation as a benchmark
Of the 100 Akademiska Hus valuation objects that have the highest values, 13,
divided between three regions (Stockholm, Uppsala and North), were subject to an
external valuation as a benchmark for the internal valuation. In the internal
valuation for the year-end accounts, these 13 objects were included at a total
fair value of SEK 6,039 million. The total value of these objects according to
the external valuation was SEK 6,171 million.
Profit on sales and disposals totalled SEK 69 million.
Financing
Interest-bearing liabilities
Interest-bearing liabilities at the year-end amounted to SEK 19,140 million
compared with SEK 17,648 million as at 31-12-2004 (18,549 as at 1-1-2005). The
maturity has been extended to 4.0 years from 2.4 years at the turn of the year
by way of issues within the long-term programmes.
The fixed interest period for the part of the liability portfolio covered by the
fixed interest mandate has been extended to 2.4 years compared with 1.6 years at
the beginning of the year. The change is the result of the expected rise in
interest rates in line with a slightly stronger economy and expectations of
higher inflation.
Interest-bearing liabilities
+------------------------------------------+-----------------+-----------------+
|Amounts in SEK m |31-12-2005 |31-12-2004 |
+------------------------------------------+-----------------+-----------------+
|Commercial paper |- |2,323 |
+------------------------------------------+-----------------+-----------------+
|ECP |435 |963 |
+------------------------------------------+-----------------+-----------------+
|Bonds and MTN |4,886 |2,431 |
+------------------------------------------+-----------------+-----------------+
|EMTN |10,593 |9,645 |
+------------------------------------------+-----------------+-----------------+
|Other loans |1,582 |1,776 |
+------------------------------------------+-----------------+-----------------+
|Total loans |17,496 |17,138 |
+------------------------------------------+-----------------+-----------------+
|Financial derivatives |944 |- |
+------------------------------------------+-----------------+-----------------+
|Collateral received for derivatives |498 |315 |
|entered into | | |
+------------------------------------------+-----------------+-----------------+
|Pension provision |202 |195 |
+------------------------------------------+-----------------+-----------------+
|Total, other interest-bearing liabilities |1,644 |510 |
+------------------------------------------+-----------------+-----------------+
|Total interest-bearing liabilities |19,140 |17,648 |
+------------------------------------------+-----------------+-----------------+
Financing cost
The interest cost for the period according to IFRS, including changes in market
value, totalled 3.85 per cent, measured as interest cost in relation to the
interest-bearing liability's average capital. The lower financing cost can be
explained by the positive result from interest swaps as a result of the rise in
interest rates after the summer. According to earlier accounting principles, the
interest cost was 4.10 per cent.
Financing cost breakdown
+-------------------------------------+-----------+----------------------------+
| |IFRS |According to earlier |
| | |principles |
+-------------------------------------+-----------+----------------+-----------+
| |2005-12-31 |2005-12-31 |2004-12-31 |
+-------------------------------------+-----------+----------------+-----------+
|Loan financing cost, % |2.62 |2.62 |3.05 |
+-------------------------------------+-----------+----------------+-----------+
|Interest swaps, net interest, % |1.05 |1.05 |1.20 |
+-------------------------------------+-----------+----------------+-----------+
|Period allocation and charges, % |0.03 |0.43 |0.25 |
+-------------------------------------+-----------+----------------+-----------+
|Changes in value, financial |0.15 |- |- |
|instruments, % | | | |
+-------------------------------------+-----------+----------------+-----------+
|Total financing cost |3.85 |4.10 |4.50 |
+-------------------------------------+-----------+----------------+-----------+
Five-year Summary
+--------------------------------------+--------+--------+--------+--------+--------+
| |2005 |2004 |2003 1) |2002 1) |2001 1) |
+--------------------------------------+--------+--------+--------+--------+--------+
|Income Statement, SEK m | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Management income |4,533 |4,530 |4,413 |4,240 |3,976 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Operating costs |762 |783 |730 |677 |638 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Maintenance costs |717 |806 |835 |775 |658 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Property administration |254 |245 |216 |195 |167 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Net operating income |2,727 |2,625 |2,573 |2,539 |2,462 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Change in value, investment properties|7,214 |-478 |- |- |- |
+--------------------------------------+--------+--------+--------+--------+--------+
|Central administration costs |35 |35 |22 |24 |23 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Operating profit |9,917 |2,119 |1,604 |1,604 |1,651 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Net financial income |-647 |-795 |-895 |-917 |-864 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Profit before taxes |9,270 |1,324 |710 |687 |787 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Profit for the year |6,654 |950 |503 |495 |567 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Balance sheet, SEK m | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Fair value, properties |45,616 |38,230 |36,118 |36,475 |- |
+--------------------------------------+--------+--------+--------+--------+--------+
|New construction in progress |1,121 |806 |1,555 |1,251 |1,594 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Other assets |3,414 |1,365 |1,471 |2,708 |2,940 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Equity |22,455 |16,618 |7,506 |7,248 |7,024 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Interest-bearing liabilities |19,140 |17,454 |16,794 |17,390 |17,267 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Other liabilities and provisions |8,556 |6,349 |3,138 |3,099 |2,868 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Cash flow, SEK m | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Cash flow from current operations |1,675 |1,200 |1,591 |1,575 |1,522 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Investments |-328 |-1,502 |-1,894 |-1,766 |-2,780 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Cash flow before financing |1,347 |-302 |-303 |-191 |-1,257 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Cash flow from financing |-450 |164 |-840 |-147 |2,043 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Cash flow for the year |897 |-138 |-1,143 |-338 |786 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Property-related key figures | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Direct yield on fair value, % |6.5 |7.1 |7.1 |7.0 |- |
+--------------------------------------+--------+--------+--------+--------+--------+
|Rental income per m2 |1,372 |1,365 |1,342 |1,302 |1,255 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Operating costs per m2 |233 |238 |225 |210 |205 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Maintenance costs per m2 (including |219 |245 |257 |240 |210 |
|tenant adaptations) | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Net operating income in relation to |60 |58 |58 |60 |62 |
|management income, % | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Net operating income per m2 |835 |799 |791 |787 |784 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Level of vacant space, area |3.2 |2.8 |1.8 |1.8 |1.6 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Level of vacant space, rent |2.1 |1.8 |1.2 |1.1 |0.8 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Fair value, properties, SEK/m2 |13,902 |11,534 |11,089 |11,243 |- |
+--------------------------------------+--------+--------+--------+--------+--------+
|Carrying value, properties in regional|25,818 |26,021 |24,412 |23,778 |22,625 |
|companies, SEK m | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Financial key figures | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Return on equity after standard tax, %|34.2 |7.9 |6.9 |6.9 |8.4 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Return on total capital, % |21.9 |6.3 |5.9 |6.0 |6.7 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Net debt, SEK m |17,915 |17,126 |16,327 |15,779 |15,318 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Equity ratio, % carrying value |44.8 |27.5 |27.4 |26.1 |25.9 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Equity ratio, % fair value |44.8 |41.1 |- |- |- |
+--------------------------------------+--------+--------+--------+--------+--------+
|Internal financing level, % |323 |92 |85 |85 |53 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Interest cost in relation to average |3.6 |4.7 |5.3 |5.6 |5.6 |
|interest-bearing liability, % | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Tenants and personnel | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Satisfied Tenant Index |75 |73 |- |- |- |
|(Fastighetsbarometern) | | | | | |
+--------------------------------------+--------+--------+--------+--------+--------+
|Satisfied Tenant Index (NKI) |67 |67 |67 |63 |62 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Average number of employees |446 |440 |430 |427 |411 |
+--------------------------------------+--------+--------+--------+--------+--------+
|Satisfied Employee Index (NMI) |66 |66 |67 |63 |61 |
+--------------------------------------+--------+--------+--------+--------+--------+
1) Not recalculated according to IFRS.
Accounting principles
Historically, Akademiska Hus's financial reports have been prepared in
accordance with the Annual Accounts Act and the recommendations of the Swedish
Financial Accounting Standards Council. Since January 1, 2004, Akademiska Hus's
consolidated accounts have been prepared according to the International
Financial Reporting Standards (IFRS) as IFRS demands a comparison year. The
financial information for the Group for 2004 according to Swedish accounting
principles has been recalculated to satisfy IFRS requirements. At the end of
this Interim Report, under the heading 'Transition to International Financial
Reporting Standards (IFRS)', there is a presentation of how the transition from
Swedish accounting principles to IFRS has affected the financial position,
results and cash flow of Akademiska Hus.
The transition to IFRS entails changes in certain Akademiska Hus accounting
principles. In other respects the accounting principles and calculation methods
applied are the same as in the Annual Report. The implementation of IFRS is
reported on pages 12-17 in this Interim Report.
This report has not been the subject of an examination by the auditors.
Consolidated Income Statement, Summary
+--------------------------------+-----------+-----------+----------+---------+
| |Jan-Dec |Jan-Dec |Oct-Dec |Oct-Dec |
+--------------------------------+-----------+-----------+----------+---------+
|Amounts in SEK m |2005 |2004 |2005 |2004 |
+--------------------------------+-----------+-----------+----------+---------+
|Rental income |4,481 |4,482 |1,147 |1,146 |
+--------------------------------+-----------+-----------+----------+---------+
|Other property management income|52 |48 |13 |12 |
+--------------------------------+-----------+-----------+----------+---------+
|Total income from property |4,533 |4,530 |1,160 |1,158 |
|management | | | | |
+--------------------------------+-----------+-----------+----------+---------+
|Property management costs | | | | |
+--------------------------------+-----------+-----------+----------+---------+
|Operating costs |-762 |-783 |-209 |-225 |
+--------------------------------+-----------+-----------+----------+---------+
|Maintenance costs |-717 |-806 |-216 |-192 |
+--------------------------------+-----------+-----------+----------+---------+
|Property administration |-254 |-245 |-84 |-75 |
+--------------------------------+-----------+-----------+----------+---------+
|Other property management costs |-73 |-71 |-17 |-18 |
+--------------------------------+-----------+-----------+----------+---------+
|Net operating income |2,727 |2,625 |634 |648 |
+--------------------------------+-----------+-----------+----------+---------+
|Changes in value, properties |7,214 |-478 |7,158 |529 |
+--------------------------------+-----------+-----------+----------+---------+
|Central administration costs |-35 |-35 |-15 |-17 |
+--------------------------------+-----------+-----------+----------+---------+
|Other operating income |72 |51 |22 |14 |
+--------------------------------+-----------+-----------+----------+---------+
|Other operating costs |-61 |-44 |-7 |-13 |
+--------------------------------+-----------+-----------+----------+---------+
|Profit before financial items |9,917 |2,119 |7,791 |513 |
+--------------------------------+-----------+-----------+----------+---------+
|Net financial income/expense |-647 |-795 |-127 |-196 |
+--------------------------------+-----------+-----------+----------+---------+
|Profit before taxes |9,270 |1,324 |7,664 |317 |
+--------------------------------+-----------+-----------+----------+---------+
|Taxes |-2,616 |-374 |-2,168 |-80 |
+--------------------------------+-----------+-----------+----------+---------+
|Net profit for the period |6,654 |950 |5,496 |237 |
+--------------------------------+-----------+-----------+----------+---------+
Consolidated Balance Sheet, Summary
+--------------------------------------------+------------+------------+
|Amounts in SEK m |31-12-2005 |31-12-2004 |
+--------------------------------------------+------------+------------+
|ASSETS | | |
+--------------------------------------------+------------+------------+
|Intangible assets |- |10 |
+--------------------------------------------+------------+------------+
|Tangible assets | | |
+--------------------------------------------+------------+------------+
|Investment properties |45,616 |38,230 |
+--------------------------------------------+------------+------------+
|New construction in progress, investment |1,121 |806 |
|properties | | |
+--------------------------------------------+------------+------------+
|Equipment and fittings |27 |41 |
+--------------------------------------------+------------+------------+
|Total tangible assets |46,764 |39,077 |
+--------------------------------------------+------------+------------+
|Financial assets |1,074 |0 |
+--------------------------------------------+------------+------------+
|Current assets | | |
+--------------------------------------------+------------+------------+
|Current receivables |1,088 |1,005 |
+--------------------------------------------+------------+------------+
|Liquid funds |1,225 |329 |
+--------------------------------------------+------------+------------+
|Total current assets |2,313 |1,334 |
+--------------------------------------------+------------+------------+
|TOTAL ASSETS |50,151 |40,421 |
+--------------------------------------------+------------+------------+
|EQUITY AND LIABILITIES | | |
+--------------------------------------------+------------+------------+
|Equity | | |
+--------------------------------------------+------------+------------+
|Share capital |2,135 |2,135 |
+--------------------------------------------+------------+------------+
|Other contributed capital/share premium |2,135 |2,135 |
|reserve | | |
+--------------------------------------------+------------+------------+
|Profit brought forward |18,185 |12,348 |
+--------------------------------------------+------------+------------+
|Total equity |22,455 |16,618 |
+--------------------------------------------+------------+------------+
|Liabilities | | |
+--------------------------------------------+------------+------------+
|Non-current liabilities | | |
+--------------------------------------------+------------+------------+
|Loans |13,472 |11,664 |
+--------------------------------------------+------------+------------+
|Other non-current liabilities |7,386 |4,261 |
+--------------------------------------------+------------+------------+
|Total non-current liabilities |20,858 |15,925 |
+--------------------------------------------+------------+------------+
|Current liabilities | | |
+--------------------------------------------+------------+------------+
|Loans |4,023 |5,790 |
+--------------------------------------------+------------+------------+
|Other current liabilities |2,815 |2,088 |
+--------------------------------------------+------------+------------+
|Total current liabilities |6,838 |7,878 |
+--------------------------------------------+------------+------------+
|Total liabilities |27,696 |23,803 |
+--------------------------------------------+------------+------------+
|TOTAL EQUITY AND LIABILITIES |50,151 |40,421 |
+--------------------------------------------+------------+------------+
Changes in consolidated equity
Attributable to the Parent Company's shareholders
+---------------------------------------+--------+--------+--------+--------+--------+
|Amounts in SEK m |Share |Share |Hedging |Profit |Total |
| |capital |premium |reserve |brought |equity |
| | |reserve | |forward | |
+---------------------------------------+--------+--------+--------+--------+--------+
|OPENING BALANCE AS AT JANUARY 1, 2004 |2,135 |2,135 |- |11,648 |15,917 |
+---------------------------------------+--------+--------+--------+--------+--------+
|Dividend |- |- |- |-250 |-250 |
+---------------------------------------+--------+--------+--------+--------+--------+
|Profit for the year |- |- |- |950 |950 |
+---------------------------------------+--------+--------+--------+--------+--------+
|CLOSING BALANCE AS AT DECEMBER 31, 2004|2,135 |2,135 |- |12,348 |16,618 |
+---------------------------------------+--------+--------+--------+--------+--------+
|OPENING BALANCE AS AT JANUARY 1, 2005 |2,135 |2,135 |- |12,348 |16,618 |
+---------------------------------------+--------+--------+--------+--------+--------+
|Adjustment in conjunction with the |- |- |-22 |-633 |-655 |
|change of recognition principle IAS 39 | | | | | |
+---------------------------------------+--------+--------+--------+--------+--------+
|Tax effect of the change of recognition|- |- |6 |177 |183 |
|principle | | | | | |
+---------------------------------------+--------+--------+--------+--------+--------+
|ADJUSTED OPENING BALANCE AS AT JANUARY |2,135 |2,135 |-16 |11,892 |16,146 |
|1, 2005 | | | | | |
+---------------------------------------+--------+--------+--------+--------+--------+
|Cash flow hedge |- |- |68 |- |68 |
+---------------------------------------+--------+--------+--------+--------+--------+
|Tax attributable to items reported |- |- |-19 |- |-19 |
|against equity | | | | | |
+---------------------------------------+--------+--------+--------+--------+--------+
|Dividend |- |- |- |-394 |-394 |
+---------------------------------------+--------+--------+--------+--------+--------+
|Profit for the year |- |- |- |6,654 |6,654 |
+---------------------------------------+--------+--------+--------+--------+--------+
|CLOSING BALANCE AS AT DECEMBER 31, 2005|2,135 |2,135 |33 |18,152 |22,455 |
+---------------------------------------+--------+--------+--------+--------+--------+
Consolidated Cash Flow Statement, Summary
+-----------------------------------------------+--------------+--------------+
|Amounts in SEK m |2005 |2004 |
+-----------------------------------------------+--------------+--------------+
|Cash flow from current operations before |1,516 |1,690 |
|changes in working capital | | |
+-----------------------------------------------+--------------+--------------+
|Change in working capital (excl. liquid funds) |159 |-490 |
+-----------------------------------------------+--------------+--------------+
|Cash flow from current operations |1,675 |1,200 |
+-----------------------------------------------+--------------+--------------+
|Investments |-1,340 |-1,528 |
+-----------------------------------------------+--------------+--------------+
|Sales |1,016 |26 |
+-----------------------------------------------+--------------+--------------+
|Increase in non-current receivables |-4 |- |
+-----------------------------------------------+--------------+--------------+
|Cash flow from investments |-328 |-1,502 |
+-----------------------------------------------+--------------+--------------+
|Dividend granted |-394 |-250 |
+-----------------------------------------------+--------------+--------------+
|Raising/amortisation of interest-bearing loans,|-56 |414 |
|excluding refinancing | | |
+-----------------------------------------------+--------------+--------------+
|Cash flow from financing |-450 |164 |
+-----------------------------------------------+--------------+--------------+
|CASH FLOW FOR THE PERIOD |897 |-138 |
+-----------------------------------------------+--------------+--------------+
Group's Geographical Areas, Summary
+--------------------------------------+-----------+------------+
| |Full year |Full year |
+--------------------------------------+-----------+------------+
|Income, including other operating |2005 |2004 |
|income | | |
+--------------------------------------+-----------+------------+
|South |654 |641 |
+--------------------------------------+-----------+------------+
|West |749 |823 |
+--------------------------------------+-----------+------------+
|East |451 |443 |
+--------------------------------------+-----------+------------+
|Uppsala |717 |716 |
+--------------------------------------+-----------+------------+
|Stockholm |1,563 |1,508 |
+--------------------------------------+-----------+------------+
|North |473 |450 |
+--------------------------------------+-----------+------------+
|Other operations |107 |95 |
+--------------------------------------+-----------+------------+
|Elimination of intra-Group income |-108 |-95 |
+--------------------------------------+-----------+------------+
|Total income |4,606 |4,581 |
+--------------------------------------+-----------+------------+
Profit before financial items, excluding central overheads
+-----------------------------------+---------------+---------------+
|South |1,053 |308 |
+-----------------------------------+---------------+---------------+
|West |1,466 |416 |
+-----------------------------------+---------------+---------------+
|East |712 |88 |
+-----------------------------------+---------------+---------------+
|Uppsala |728 |66 |
+-----------------------------------+---------------+---------------+
|Stockholm |4,920 |921 |
+-----------------------------------+---------------+---------------+
|North |1,109 |330 |
+-----------------------------------+---------------+---------------+
|Other operations |-18 |4 |
+-----------------------------------+---------------+---------------+
|Elimination of intra-Group income |-18 |21 |
+-----------------------------------+---------------+---------------+
|Profit before financial items, |9,952 |2,154 |
|excluding central overheads | | |
+-----------------------------------+---------------+---------------+
Income statement reconciliation
+-------------------------------------+---------------+---------------+
|Operating profit, excluding central |9,952 |2,154 |
|overheads | | |
+-------------------------------------+---------------+---------------+
|Central overheads |-35 |-35 |
+-------------------------------------+---------------+---------------+
|Profit on financial items (net) |-647 |-795 |
+-------------------------------------+---------------+---------------+
|Tax for the period |-2,616 |-374 |
+-------------------------------------+---------------+---------------+
|Profit for the period according to |6,654 |950 |
|the Income Statement | | |
+-------------------------------------+---------------+---------------+
Transition to International Financial Reporting Standards (IFRS)
Akademiska Hus's date for the transition to IFRS was January 1, 2004 as IFRS
demands a comparison year. The financial information for the Group in 2004
according to Swedish accounting principles has been recalculated to comply with
IFRS. The following is an account of the reporting of the transition from
Akademiska Hus's previous accounting principles to IFRS together with the
effects the transition had on equity, the balance sheet and the reported profit
in conjunction with the transition.
The IFRS recommendations that had an effect on equity, the balance sheet and the
reported profit are mainly:
- IAS 39 Financial instruments: recognition and measurement have led to a change
in the measurement and recognition principles for financial instruments. Up to
December 31, 2004, all financial instruments were in principle recognised at the
acquisition value and financial derivatives were not recognised in the balance
sheet. In addition, realised profits on closed derivative contracts as well as
the repurchase of bonds issued were carried forward and allocated to a period
across the term of the underlying instruments/loans to secure an even loan cost
over the years. The transition to IAS 39 means that the main rule for
measurement is that financial assets and all derivatives are at fair value
whilst all financial liabilities should be recognised at the accrued acquisition
value. Hedge accounting may only be applied when specific requirements are met
according to defined hedging methods.
In conjunction with a fair value hedge both loan financing and financial
derivatives are recognised at the fair value with changes in value recognised in
profit and loss. Financial derivatives that qualify for cash flow hedging are
measured at the fair value and the changes in value are recognised continuously
against equity (hedge reserve) until the underlying changes in value of the
transaction affects profit or loss.
- IAS 40 Investment properties has led to a change in the recognition principles
for investment properties: Through to December 31, 2003, investment properties
were recognised in the Balance Sheet at the acquisition value with a supplement
for value-enhancing improvements, reduced by accumulated depreciation according
to plan, impairments and reversed impairments. According to IFRS, the investment
properties are measured at the fair value and the changes in value are
recognised in profit and loss.
- Akademiska Hus has previously made the assessment that two acquisitions of
shares in subsidiaries which essentially only contain one investment property in
each company constituted a business combination. Akademiska Hus has thus
previously recognised a goodwill item related to these two combinations. In
accordance with IFRS 3, these two combinations have instead been classified as a
combination of a group of assets or net assets which do not constitute a
business and consequently the costs for the Group have been divided over the
individually identifiable assets and liabilities based on their relative fair
value at the time of acquisition.
- IAS 1 Presentation of financial statements has affected the presentation of
the interest-bearing liabilities and tax receivables.
The changes have not had any effect on the Group's reported profit or total
assets.
Other IAS/IFRS recommendations have not entailed any material changes or effects
compared with the accounting principles previously applied in the Group.
Application of the transition rules (IFRS 1)
The transition to IFRS is reported in accordance with IFRS 1 'First-time
Adoption of IFRS'. The main rule in IFRS 1 requires that a company applies all
IFRS standards retrospectively when adopting the opening balance according to
IFRS. Certain exceptions to the retrospective application are permitted however.
Akademiska Hus has chosen to apply the following:
- IFRS 3 Business combinations. The rules in IFRS 3 are applied prospectively to
business combinations that take place from and including the transition date,
January 1, 2004.
- IAS 19 Employee benefits. On January 1, 2004, Akademiska Hus implemented RR 29
Employee benefits. RR 29 concurs essentially with IAS 19 and consequently the
pension liability calculated and reported as at January 1, 2004 concurs with
IFRS. Akademiska Hus has opted, in accordance with the rules in IFRS 1, not to
apply IAS 19 retrospectively. Retrospective application would mean that the
accumulated effect from the beginning of each pension plan would be allocated to
the part which affected the calculations and to a non-reported part, the
'corridor'. Akademiska Hus instead reports all these effects directly in opening
equity as at January 1, 2004. Consequently, the introduction of IAS 19 will have
no effect in conjunction with the transition to IFRS.
- IAS 39 Financial instruments: recognition and measurement. Akademiska Hus has
applied IAS 39 since January 1, 2005 and uses the exception granted in IFRS 1
for companies that are applying IFRS for the first time to not re-calculate
comparison figures/information for 2004. Consequently, recognition and
measurement of financial instruments, the handling of cash flow and fair value
hedging and the application of hedge accounting have taken place in accordance
with generally accepted Swedish accounting principles.
In the opinion of the management, the following tables present and quantify the
most material effects of the transition to IFRS. The application of IAS 39
(reference B), IAS 40 (A), IFRS 3 (D) and IAS 1 (C) have resulted in the
following effects on the Income Statement and the Balance Sheet.
Consolidated Income Statement 2004
+----------------------------+------------+------------+------------+------------+
| | |According to|Effect of | |
| | |Swedish | | |
+----------------------------+------------+------------+------------+------------+
|Amounts in KSEK |Reference |accounting |transition |IFRS 2004 |
| | |principles |to IFRS | |
+----------------------------+------------+------------+------------+------------+
|Net operating profit | |2,646,853 |- |2,646,853 |
+----------------------------+------------+------------+------------+------------+
|Depreciation and impairment |A, D |-1,013,444 |991,411 |-22,033 |
|losses and reversed | | | | |
|impairment losses in | | | | |
|property management | | | | |
+----------------------------+------------+------------+------------+------------+
|Changes in value, properties|A |- |-478,255 |-478,255 |
+----------------------------+------------+------------+------------+------------+
|Total changes in value, | |-1,013,444 |513,156 |-500,288 |
|properties | | | | |
+----------------------------+------------+------------+------------+------------+
|Gross profit | |1,633,409 |513,156 |2,146,565 |
+----------------------------+------------+------------+------------+------------+
|Central administration costs| |-34,541 |- |-34,541 |
+----------------------------+------------+------------+------------+------------+
|Other operating income |A |68,869 |-17,750 |51,119 |
+----------------------------+------------+------------+------------+------------+
|Other operating costs |A |-51,999 |7,510 |-44,489 |
+----------------------------+------------+------------+------------+------------+
|Total, other operating items| |-17,671 |-10,240 |6,630 |
+----------------------------+------------+------------+------------+------------+
|Profit before financial | |1,615,738 |502,916 |2,118,654 |
|items | | | | |
+----------------------------+------------+------------+------------+------------+
|Profit on financial items | |-794,447 |- |-794,447 |
+----------------------------+------------+------------+------------+------------+
|Profit after financial items| |821,291 |502,916 |1,324,207 |
+----------------------------+------------+------------+------------+------------+
|Appropriations |- |- |- | |
+----------------------------+------------+------------+------------+------------+
|Profit before taxes | |821,291 |502,916 |1,324,207 |
+----------------------------+------------+------------+------------+------------+
|Taxes |A, E |-233,351 |-140,644 |-373,995 |
+----------------------------+------------+------------+------------+------------+
|NET PROFIT FOR THE YEAR | |587,940 |362,272 |950,212 |
+----------------------------+------------+------------+------------+------------+
Consolidated Balance Sheet 1-1-2004, 31-12-2004 and opening balance 1-1-2005
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | |According | | |According | | | | |
| | |to | | |to | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | |Swedish |Effect of | |Swedish |Effect of | |Effect of | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | |accounting|transition| |accounting|transition| |transition| |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | |principles|to IFRS |IFRS |principles|to IFRS |IFRS |to IFRS |IFRS |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|Amounts in |Ref-erence|1-1-2004 |1-1-2004 |1-1-2004 |31-12-2004|31-12-2004|31-12-2004|1-1-2005 |1-1-2005 |
|KSEK | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|ASSETS | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|Intangible |D |6,117 |- |6,117 |32,704 |-22,929 |9,775 |- |9,775 |
|assets | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|Investment |A |24,411,923|11,706,077|36,118,000|26,021,331|12,208,917|38,230,248|- |38,230,248|
|properties | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|New | |1,555,497 |- |1,555,497 |805,790 |- |805,790 |- |805,790 |
|construction| | | | | | | | | |
|in progress | | | | | | | | | |
|in | | | | | | | | | |
|investment | | | | | | | | | |
|properties | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|Other | |52,109 |- |52,109 |41,216 |- |41,216 |- |41,216 |
|tangible | | | | | | | | | |
|assets | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|Financial |E |185,217 |-185,167 |50 |194,132 |-194,082 |50 |542,494 |542,544 |
|assets | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|Current |B, C |1,227,949 |- |1,227,949 |1,345,245 |-65,242 |1,280,003 |32,755 |1,312,758 |
|assets | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|Current |C |- |- |0 |- |54,087 |54,087 |- |54,087 |
|prepaid tax | | | | | | | | | |
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
|TOTAL ASSETS| |27,438,812|11,520,910|38,959,722|28,440,418|11,980,751|40,421,169|575,249 |40,996,418|
+------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
EQUITY AND LIABILITIES
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Equity | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Restricted equity | |5,951,662 |- |5,951,662 |6,188,381 |- |6,188,381 |- |6,188,381 |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Non-restricted |A,|1,051,896 |8,428,375 |9,480,271 |1,050,841 |8,428,375 |9,479,216 |-471,994 |9,007,222 |
|reserves/profit |B | | | | | | | | |
|brought forward | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Profit for the year |A,|502,534 |, |502,534 |587,940 |362,272 |950,212 |- |950,212 |
| |D,| | | | | | | | |
| |E | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Total equity | |7,506,092 |8,428,375 |15,934,467|7,827,162 |8,790,647 |16,617,809|-471,994 |16,145,815|
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Liabilities | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Non-current |B,|16,794,471| |16,794,471|17,454,179|-5,789,687|11,664,492|930,449 |12,594,941|
|interest-bearing |C | | | | | | | | |
|liabilities | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Provision for | |163,272 | |163,272 |194,541 |- |194,541 |- |194,541 |
|employee benefits | | | | | | | | | |
|and similar | | | | | | | | | |
|undertakings | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Provision, deferred |E |745,111 |3,092,535 |3,837,646 |864,843 |3,201,259 |4,066,102 |-183,553 |3,882,549 |
|tax | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Current |B,|- | |0 |- |5,789,687 |5,789,687 |-29,390 |5,760,297 |
|interest-bearing |C | | | | | | | | |
|liabilities | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Non-interest-bearing|B,|2,229,866 | |2,229,866 |2,099,693 |-11,155 |2,088,538 |329,737 |2,418,275 |
|liabilities |C | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|Total liabilities | |19,932,720|3,092,535 |23,025,255|20,613,256|3,190,104 |23,803,360|1,047,243|24,850,603|
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
|TOTAL EQUITY AND | |27,438,812|11,520,910|38,959,722|28,440,418|11,980,751|40,421,169|575,249 |40,996,418|
|LIABILITIES | | | | | | | | | |
+--------------------+--+----------+----------+----------+----------+----------+----------+---------+----------+
Changes in Group equity as at 1-1-2004, 31-12-2004 and 1-1-2005
+-----------------------------------+----------+------------+--------------+----------+
|Amounts in KSEK |Ref-erence|Share |Earlier |Total |
| | |capital |restricted and|equity |
| | | |non-restricted| |
| | | |equity | |
+-----------------------------------+----------+------------+--------------+----------+
|Equity 1-1-2004 according to | |2,135,000 |5,371,092 |7,506,092 |
|Swedish accounting principles | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Effects in conjunction with the | | | | |
|transition to IFRS | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Fair value, investment properties, |A |- |11,706,077 |11,706,077|
|opening balance adjustment | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Deferred tax |E |- |-3,277,702 |-3,277,702|
+-----------------------------------+----------+------------+--------------+----------+
|Equity as at 1-1-2004 according to | |2,135,000 |13,799,467 |15,934,467|
|IFRS | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Equity as at 31-12-2004 according | |2,135,000 |5,692,162 |7,827,162 |
|to Swedish accounting principles | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Effects in conjunction with the | | | | |
|transition to IFRS | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Adjustment of opening effects as at|A |- |8,428,375 |8,428,375 |
|1-1-2004 (see above, investment | | | | |
|properties after tax) | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Fair value, investment properties |A |- |502,299 |502,299 |
+-----------------------------------+----------+------------+--------------+----------+
|Reversal, goodwill amortisation |D |- |617 |617 |
+-----------------------------------+----------+------------+--------------+----------+
|Deferred tax |E |- |-140,644 |-140,644 |
+-----------------------------------+----------+------------+--------------+----------+
|Equity as at 31-12-2004 according | |2,135,000 |14,482,809 |16,617,809|
|to IFRS | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Non-recurring effects in |B | | | |
|conjunction with the transition to | | | | |
|IFRS (IAS 39) | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Profits and losses brought forward,| |- |-221,323 |-221,323 |
|closed derivative contracts | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Financial assets measured at fair | |- |135,351 |135,351 |
|value through profit or loss, fair | | | | |
|value, financial derivatives | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Financial liabilities measured at | |- |-559,902 |-559,902 |
|fair value through profit or loss, | | | | |
|fair value, financial derivatives | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Other financial liabilities, | |- |-3,122 |-3,122 |
|accrued acquisition value, | | | | |
|financial loan liabilities | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Hedging of fair value (currency and| |- |15,430 |15,430 |
|interest) | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Effects of the transition to IFRS |B | | | |
|to be carried forward/allocated to | | | | |
|a specific period (IAS 39) | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Cash flow hedging (currency and | |- |-993 |-993 |
|interest) | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Cash flow hedging (electricity | |- |-20,988 |-20,988 |
|price) | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Deferred tax on IFRS changes (IAS |E |- |183,553 |183,553 |
|39) | | | | |
+-----------------------------------+----------+------------+--------------+----------+
|Equity 1-1-2005 according to IFRS | |2,135,000 |14,010,815 |16,145,815|
+-----------------------------------+----------+------------+--------------+----------+
Key figures 2004 and as at 1-1-2005
+-----------------------------------+---------------------------+--------+---------+
| |According to Swedish |IFRS |IFRS |
| |accounting principles 2004 | | |
| | |2004 |1-1-2005 |
+-----------------------------------+---------------------------+--------+---------+
| | | | |
+-----------------------------------+---------------------------+--------+---------+
|Direct yield, % |10.5 |7.1 |7.11) |
+-----------------------------------+---------------------------+--------+---------+
|Direct yield on fair value, % |7.1 |7.1 |7.11) |
+-----------------------------------+---------------------------+--------+---------+
|Net operating income per square |806 |806 |806 |
|metre | | | |
+-----------------------------------+---------------------------+--------+---------+
|Carrying value, investment |26,021 |38,230 |38,230 |
|properties, SEK m | | | |
+-----------------------------------+---------------------------+--------+---------+
|Fair value, investment properties, |38,230 |38,230 |38,230 |
|SEK m | | | |
+-----------------------------------+---------------------------+--------+---------+
|Return on equity after tax, % |7.7 |5.8 |5.91) |
+-----------------------------------+---------------------------+--------+---------+
|Return on total equity, % |5.8 |5.3 |5.31) |
+-----------------------------------+---------------------------+--------+---------+
|Equity ratio, % |27.5 |40.9 |39.01) |
+-----------------------------------+---------------------------+--------+---------+
|Internal financing level |90 |81 |811) |
+-----------------------------------+---------------------------+--------+---------+
|Interest coverage level |202 |265 |2651) |
+-----------------------------------+---------------------------+--------+---------+
1) Calculated on a full-year basis.
Comments (references to the above tables)
A) Investment properties (IAS 40)
According to the accounting principles applied previously by Akademiska Hus,
investment properties were reported at the acquisition cost less a deduction for
accumulated depreciation, impairment losses and reversed impairment losses.
In the Income Statement, historical depreciation according to plan, impairment
losses and reversed impairment losses have thus affected the profit.
According to IAS 40, a company can choose between applying the cost method
(which essentially concurs with Akademiska Hus's earlier accounting principles)
and a fair value measurement. The Board of Akademiska Hus decided that the
Group's investment properties would be measured on an ongoing basis and
recognised at the fair value. The effect on equity brought forward as at January
1, 2004 and investment properties as a result of the change in measurement
principles totalled KSEK 11,706,077 before tax.
The changes in the accounting principles mean that the estimated changes in the
Group's property holdings are recognised through profit and loss and affect the
operating profit.
The change in fair value in 2004 had a negative effect on profit to the amount
of KSEK 478,255. This also means that depreciation and impairment losses and
reversed impairment losses are reversed in the 2004 Income Statement according
to IFRS, which has had a positive impact on profit of KSEK 990,794. Furthermore,
the change in principles means that the capital gain in the light of previous
carrying values is reversed and is instead replaced by what the properties sold
commanded in relation to the most recent valuation made of each property. This
affected the 2004 net capital gain positively to the amount of KSEK 10,240 and
the corresponding effect on operating profit, which is thus reversed in the 2004
Income Statement according to IFRS.
The previous definition and classification of investment properties in relation
to owner-occupied properties and properties held for sale has thus not been
changed or affected after Akademiska Hus introduced fair value as a measurement
standard for investment properties.
B) Financial instruments (IAS 39)
According to Akademiska Hus's earlier accounting principles, all financial
instruments, with the exception of derivatives, were reported initially (or at
the time of acquisition) at cost and valued according to the lowest cost
principle. In conjunction with the transition to IFRS, all financial
instruments, including derivatives, will be recognised in the Balance Sheet at
fair value at the time of acquisition.
According to IAS 39, the general principles for the measurement of financial
instruments according to IAS 39 are that financial assets and all derivatives
shall be measured at fair value whilst financial liabilities are measured at
cost. Current recognition of the changes in value of the financial instruments
is decided by the initial classification of each financial instrument. All
Akademiska Hus's financial assets are classified as 'Financial assets at fair
value in profit and loss' and measured at fair value, i.e. the changes in value
will be recognised directly in profit and loss. The financial liabilities will
be measured at the amortised cost with the ongoing changes in value recognised
in the result.
The transition to IAS 39 consequently produces effects in conjunction with
revaluation from acquisition value to fair value and accrued acquisition value,
which as affected the opening balance.
According to earlier principles, Akademiska Hus carried forward the result from
closed derivatives as well as repurchases of bonds issued and allocated these
over the term of the underlying loan/instrument. Net recognition is not
applicable under IAS 32 unless a legal right exists to net recognition, which
means that closed derivatives should be carried forward at the gross amount up
to the due date whilst realised derivatives are recognised as profit.
Repurchased bonds issued are removed from the Balance Sheet and the effects are
recognised as income. In conjunction with the transition to IFRS, a
non-recurring effect will be recognised in the opening balance.
According to Akademiska Hus's earlier accounting principles, currency and
interest derivatives entered into for hedging purposes, are recognised net with
the underlying loan financing. According to IAS 39, all derivatives will be
recognised in the Balance Sheet at fair value. The change in value for
derivatives which qualify for hedge accounting according to the requirements for
fair value hedging and derivative instruments which do not qualify for hedge
accounting are recognised directly in profit and loss. The change in value for
derivatives which qualify for hedge accounting are recognised directly in equity
until the underlying transaction is reflected in profit and loss, whereupon any
accumulated profit and loss is recognised as income.
During 2004, Akademiska Hus took over trading in electricity as well as trading
in electricity derivatives for the purpose of hedging. Electricity derivatives
that were entered into for the purpose of hedging future consumption are hedged
according to the cash flow hedging principle, which means that the realised
profit on electricity derivatives is brought forward and set off together with
the underlying actual electricity supplies against the operating profit. The
electricity derivatives held/purchased within the deviation mandate are valued
on an ongoing basis at the fair value, with changes in value recognised against
profit.
C) Division of interest-bearing liabilities into a current and non-current part
(IAS 1)
Akademiska Hus has previously divided the Group's liabilities into
interest-bearing and non-interest bearing. According to IAS 1, there will also
be a division of liabilities into a current part and a non-current part. In
conjunction with the transition to IFRS, the division of the Group's liabilities
will be made into current and non-current liabilities. Provisions are also
classified as a non-current or current liability. In addition, current tax
liabilities, which were previously included under 'Other receivables', will be
reported on a separate line in the Balance Sheet. These changes have not had any
effect on the Group's reported profit or the total assets.
D) Goodwill (IFRS 3)
According to the earlier Akademiska Hus accounting principles, the Group
recognised a goodwill item as of December 31, 2004 of KSEK 22,929 and
amortisation of goodwill of KSEK 617 for the 2004 financial year. Goodwill that
arose according to the earlier accounting principles was related to the
acquisition of shares in two companies, which are classified and recognised as
business combinations. These two companies contained essentially only one
property each. In accordance with IFRS 3, these two combinations have instead
been classified as one combination of a group of assets or net assets that do
not constitute a business and consequently the costs for the Group have been
divided among the individually identifiable assets and liabilities based on
their relative fair values at the time of acquisition. The previously recognised
goodwill as of December 31, 2004 of KSEK 22,929 and amortisation of goodwill for
the 2004 financial year of KSEK 617 are reversed in conjunction with the
preparation of comparison figures for the 2005 IFRS consolidated accounts.
E) Deferred tax on IFRS changes
The majority of the above IFRS changes mean that differences arise between the
reported value and the tax value. For those changes that entail differences,
deferred tax has been recognised. In the light of the fact that Akademiska Hus
is a Swedish group, an interest rate of 28 per cent has been used when
calculating the deferred tax.
Material effects on cash flow 2004
There are no material differences between the cash flow statement according to
Swedish accounting principles and the cash flow statement according to IFRS.
Financial information (Calendar)
Annual Report, March 2006
Interim Report, Q 1 2006, April 27, 2006
Annual General Meeting, April 27, 2006
Interim Report, Q 2 2006, July 14, 2006
Interim Report, Q 3 2006, October 31, 2006
Year-end Report 2006, January 2007
Akademiska Hus AB
Group Office - Box 483 - Stampgatan 14 - SE-401 27 Goteborg
Tel: +46 31-63 24 00 - Fax: +46 31-63 24 01 - www.akademiskahus.se -
info@akademiskahus.se
This information is provided by RNS
The company news service from the London Stock Exchange
END
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