Kungsleden Annual Report Annual Report 07 Contents This is Kungsleden 1 2007 in brief 2 Chief Executive’s statement 4 Business model and implementation 07 6 Market 10 Nordic Modular 12 Organisational and human resources 14 Property portfolio 14 valuation 15 transactions in 2007 18 the holding at year-end 20 rental contracts 21 earnings capacity 25 Financing and financial risks 27 Environmental activities 28 Five-year summary 30 The share 33 Corporate governance 34 Board of Directors 36 Group management 38 Report of the Directors 42 Consolidated Income Statement 43 Consolidated Balance Sheet 44 Consolidated Statement of Changes in Shareholders’ equity and Cash Flow Statement 45 Accounting principles, group 48 Notes, group 55 Income Statement and Balance Sheet, parent company 56 Change in Shareholders’ Equity and Cash Flow Statement, parent company 57 Accounting principles and notes, parent company 59 Proposed appropriation of profits 60 Audit Report 61 Employees 64 Definitions Property register 2007 Invitation to Annual General Meeting and addresses The audited Annual Report consists of pages 38–59. This Annual Report is a translation from a Swedish original. In the event of any inconsistency between the original and the translation, the Swedish Annual Report (Årsredovisning) will take precedence. Kungsleden Annual Report Annual Report 07 Contents This is Kungsleden 1 2007 in brief 2 Chief Executive’s statement 4 Business model and implementation 07 6 Market 10 Nordic Modular 12 Organisational and human resources 14 Property portfolio 14 valuation 15 transactions in 2007 18 the holding at year-end 20 rental contracts 21 earnings capacity 25 Financing and financial risks 27 Environmental activities 28 Five-year summary 30 The share 33 Corporate governance 34 Board of Directors 36 Group management 38 Report of the Directors 42 Consolidated Income Statement 43 Consolidated Balance Sheet 44 Consolidated Statement of Changes in Shareholders’ equity and Cash Flow Statement 45 Accounting principles, group 48 Notes, group 55 Income Statement and Balance Sheet, parent company 56 Change in Shareholders’ Equity and Cash Flow Statement, parent company 57 Accounting principles and notes, parent company 59 Proposed appropriation of profits 60 Audit Report 61 Employees 64 Definitions Property register 2007 Invitation to Annual General Meeting and addresses The audited Annual Report consists of pages 38–59. This Annual Report is a translation from a Swedish original. In the event of any inconsistency between the original and the translation, the Swedish Annual Report (Årsredovisning) will take precedence. This is Kungsleden Invitation to Annual General Meeting and addresses BUSINESS MODEL VISION BRISK EXPANSION OF PROPERTY PORtfOLIO AND PROFITS The Annual General Meeting will be held on 17 April KUNGSLEDEN AB (PUBL) Kungsleden owns and manages properties, and views a By means of skilled entrepreneurship and a high level of 2008 at 2:00 p.m. at Hotel Rival, Mariatorget 3, CORP. ID. NO. 556545-1217 Property portfolio growth in 1999–2007 REG. OffICE StOckHOLM property’s returns as more important than its type or expertise, Kungsleden will become Sweden’s most Gross profit and trading net Stockholm, Sweden. geographical location. Its business model focuses on profitable and successful property company. SEK m SEK m Head office continually enhancing the composition and quality of its 30,000 2,500 APPLICATION Linköping BUSINESS CONCEPT Medborgarplatsen 25 Barnhemsgatan 4 property portfolio, with the objective of improving 25,000 2,000 Shareholders wishing to participate in the Annual Kungsleden owns and manages properties, generating 20,000 General Meeting must first, be registered in their Box 70414 SE-582 24 Linköping, portfolio risk-adjusted returns. In practice, this implies 1,500 SE-107 25 Stockholm, many acquisitions and divestments. Simultaneously, high and stable long-term returns. 15,000 own name (i.e. not nominee-registered) in the Sweden 1,000 Sweden Kungsleden prioritises being a good and efficient 10,000 share register maintained by VPC AB (the Swedish Tel +46 (0)13-12 88 68 FINANCIAL TARGETS 500 Tel +46 (0)8-503 052 00 landlord through the active management and 5,000 Central Securities Depository & Clearing Organi- Returns are • A minimum return on equity of 15 per cent Fax +46 (0)8-503 052 01 Malmö enhancement of properties. 0 0 sation) by no later than 11 April 2008, and second, more important • A minimum interest coverage multiple of 2 1999 2000 2001 2002 2003 2004 2005 2006 2007 99 00 01 02 03 04 05 06 07 Kungsleden’s ambition is to maintain high and notify their intended participation by no later than Kungsgatan 6 than building Commercial Properties Public Properties Foreign Modular Buildings Gross profit Trading net Other offices stable cash flow from operating activities. Operat- 4 p.m. on 11 April 2008, on the enclosed applica- SE-211 49 Malmö, Sweden type or location DIVIDEND POLICY Gävle ing risk is minimized by diversifying property type tion form or by writing to the company at the Tel +46 (0)40-17 44 00 The Board’s ambition is for Kungsleden to maintain N Rådmansgatan 8C and geographical location, through different types of following address: Fax +46 (0)40-17 44 19 stable dividends and a high pay-out ratio, which means SE-803 11 Gävle, Sweden Kungsleden AB tenants, and rental contract maturities. About half of the that Kungsleden will pay out at least 50 per cent of profit REALISING OBJEctIVES Tel +46 (0)26-54 55 70 total property holding is let to the public sector or to FAO: Sinikka Mukka Uddevalla for calculating dividends. This profit measure corre- Fax +46 (0)26-51 98 80 tenants whose operations are publicly financed. P.O. Box 70414, 107 25 Stockholm, Sweden Tyggården 1B sponds to the cash flow statement item cash flow from Return on equity Interest coverage multiple e-mail: [email protected] SE-451 34 Uddevalla, operating activities. Gothenburg ORGANISATIONAL RESOURCES % multiple telephone: +46 (0)8-503 052 00 Sweden 45 3.5 Operations are organised into four divisions, with each Lilla Bommen 6 Tel +46 (0)522-79 150 KUNGSLEDEN’S BAckGROUND 40 fax: +46 (0)8-503 052 02 3.0 Box 11284 division responsible for the management and letting of 35 Fax +46 (0)522-79 350 Since inception, Kungsleden has experienced rapid 2.5 or via the company’s website: its property holding. Commercial Properties concen- 30 SE-404 26 Gothenburg, changes and a high rate of turnover in its property 2.0 www.kungsleden.se 25 Sweden trates mainly on the Office, Industrial/warehouse and portfolio. As part of the Retriva AB and the Securum AB 20 1.5 Upplands Väsby 15 Tel +46 (0)31-755 56 00 Retail property types. Public Properties are divided groups, Kungsleden’s original assignment was to 1.0 Shareholders should state their name, personal/ (Nordic Modular) 10 Fax +46 (0)31-755 56 01 between the Retirement Home, School and Care types. liquidate several substantial property holdings, and in 5 0.5 corporate identity number, address, daytime Hotellvägen 5 0 0.0 Retirement Homes Germany processes the acquisition 1996 and 1997, the company completed over 500 99 00 01 02 03 04 05 06 07 99 00 01 02 03 04 05 06 07 telephone number, number of shares represented Box 914 Härnösand and management of retirement home properties on the property divestments, involving and potential representatives and assistants SE-194 29 Upplands Väsby, Return on equity Return on equity target Interest coverage multiple Target Magasinvägen 5 German market. The fourth division, Nordic Modular, The name Kungsleden approximately 800 properties with an participating. To be entitled to participate in the Sweden Risk limit, interest coverage multiple alludes to the feeling of SE-871 45 Härnösand, primarily conducts lettings, but also the produc- aggregate value of over SEK 4.5 bn. Annual General Meeting and exercise their voting Tel +46 (0)8-590 994 40 Commercial, a mountain hike – the Sweden tion and sale, of modular buildings. In December 1997, its former main rights, shareholders with nominee-registered Fax +46 (0)8-590 759 10 Public, Germany broad perspective, Tel +46 (0) 611 822 60 Kungsleden has flexible organisational owner, the government-owned Agilia holdings must temporarily re-register their shares and Modules overview and destination, Fax +46 (0) 611 822 69 resources with good local links and substantial in their own names. Such registration must be Umeå clear in the distance. Holding AB, spun off Kungsleden to a expertise in property transactions. Its head office is in group of institutional investors. The recorded at VPC AB by no later than 11 April 2008, N Obbolavägen 89 Jönköping Stockholm, and the company has offices in another 10 business concept was realigned to the present objec- which means that the nominee must be informed SE-904 22 Umeå, Sweden Oxtorgsgatan 3 or so locations in Sweden, as well as Munich, Germany. tive, linked to the express intention of utilising and in good time prior to this. Tel +46 (0) 090 12 44 22 Box 543 enhancing the company’s skills in structuring heteroge- NEW INITIATIVES DIVIDEND SE-551 17 Jönköping, neous property holdings. When ownership changed Munich, Germany In 2006, Kungsleden started a geographical expansion. The Board and Chief Executive propose that Sweden hands, the ambition to float Kungsleden on the Stock- Kungsleden Gmbh Its intention is to accumulate a retirement homes dividends of SEK 8 per share are paid to share- Tel +46 (0)36-16 70 07 holm Stock Exchange was also established – this Maximilianstr 35A property portfolio in Germany. Kungsleden regards the holders. The record day for dividends has been Fax +46 (0)36-16 70 03 occurred in April 1999. The share has been on the OMX 80539 Munich, Germany German retirement homes market as attractive because proposed as 22 April 2008.