Akademiska Hus Annual Report

OPERATIONSProfitabilityStable net operating profitNet operating profit and direct yieldIn property management the profit is stable and is increasing comparedto 2006. Operating income is increasing more than operatingcosts. The net operating profit, i.e. the profit from the Group’s propertyoperations before central administration costs and net financialincome/expense, totalled SEK 2,918 million (2,843). The net operatingprofit has been positive ever since Akademiska Hus wasfounded. The net operating profit margin was 62 per cent (62).The direct yield was 6.0 per cent (6.0) of the assessed fair value.Return on equity and total assetsThe return on equity for 2007 was 4.9 per cent (12.9) and the returnon total assets was 4.8 per cent (10.0). The negative change can beattributed mainly to the negative change in value in the investmentproperties, amounting to SEK 684 million, as a result of the increasedcost of capital in the valuations following the increase in the risk premiumsduring the year, and the net financial interest/expense fallingto SEK –610 million (–419) due to the rise in interest rates.One of the owner’s requirements for profitability is that the return onequity should be equivalent to the average five-year government bondinterest rate plus four percentage points viewed over a business cycle.The rise in interest rates during 2007 has meant that the five-yeargovernment bond interest rate increased and was on average 4.2 percent. The yield requirement has thus amounted to 8.2 per cent.Net operating profit marginSEK m %3,00064.02,90062.52,80061.02,70059.52,60058.02,50056.52,4002003 2004 2005 2006 200755.0Net operating profit, SEK mNet operating profit margin, %Income and profit, SEK m5,0004,0003,0002,0001,000Return on equity, %35302520151050Income fromproperty management2006 2007Net operatingprofitPre-tax profit02003 2004OutcomeOwner requirement200520062007Fair value, 2006–2007, SEK mDirect yield, 2006–2007, %50,000840,000630,00020,000410,00020AP FabegeFastigheterVasakronanCastellum HufvudstadenWihlborgsAkademiskaHus0AP FabegeFastigheterVasakronanCastellum HufvudstadenWihlborgsAkademiskaHus2006 20072006 2007The above information has been taken from the companies’ year-end reportsfor 2007. The majority of property companies report increasing property valuesfor 2007.The above information has been taken from the companies’ year-end reportsfor 2007. The direct yield has been defined as the net operating profit in relationto the average assessed fair value according to the income Statement andBalance Sheet as of December 31, 2007.40 Akademiska Hus Annual Report 2007 | Profitability