year end report - cisionmb.cision.com/main/8760/9925180/482269.pdf · 2016-02-25 · surpassed with...

YEAR END REPORT 2015

2015Q4

2 D. Carnegie & Co AB (publ)


KEY FIGURES Jan – Dec2015

Fourth quarter2015

Jan – Dec 2014

Fourth quarter 2014

Rental income, SEK m 1,217,4 316,7 608,7 281,9

Net operating income, SEK m 554,1 133,3 257,6 98,3

Profit margin 45.4 41.8 42.3 34.7

Income from property management, SEK m 186,2 48,3 42,4 -0,2

Profit after tax, SEK m 1,139,1 734,2 233,1 142,4

Earnings per share SEK, basic 16.10 10.37 4.80 2.01

Earnings per share SEK, diluted 13.50 8.52 4,30 1.59

Equity per share, SEK 62.06 62.06 45,70 45.70

Equity EPRA NAV per share, SEK 73.50 73.50 51,99 51.99

Fair value properties, SEK m 13,826,4 13,826,4 11,520,8 11,520,80

Solidity, % 28.2 28.2 25.4 25.4

Solidity EPRA NAV, % 33.4 33.4 29.1 29.1


• Rental income increased to SEK 1,217 million (609)

• Net operating income increased to SEK 554 million (258)

• Income from property management increased to SEK 186 million (42)

• Changes in the value of investment properties of SEK 1,307 million (278)

• Changes in the value of derivatives of SEK -11 million (-14)

• Profi t before tax increased to SEK 1,422 million (307)

• Profi t after tax increased to SEK 1,139 million (233)

• Earnings per share increased to SEK 16.10 (4.80) before dilution and increased to SEK 13.50 (4.30) after dilution*

• Rental income increased to SEK 317 million (282)• Net operating income increased to SEK 133

million (98)• Income from property management increased to

SEK 48 million (0)• Changes in the value of investment properties

and derivatives of SEK 867 million (200)• Changes in the value of derivatives of SEK 39

million (-7)• Profi t before tax increased to SEK 853 million

(194)• Profi t after tax increased to SEK 734 million (142)• Earnings per share increased to SEK 10.37

(2.01) before dilution and increased to SEK 8.52 (1.59) after dilution*

SIGNIFICANT EVENTS DURING THE FOURTH QUARTER• Entered into an agreement regarding the sale of

Hammarkullen in Gothenburg with 890 apartments and an agreed property value of SEK 493 million

• Announcement in December of the new valuation of the property portfolio amounting to SEK 13,600 million, just over SEK 1 billion above the previously reported value

• Entered into an agreement regarding the acquisition of a property in Uppsala with an underlying property value of SEK 78 million and execution simultaneously of an agreement regarding the sale of potential building rights in Solna with an underlying value of SEK 49 million

SIGNIFICANT EVENTS AFTER THE FOURTH QUARTER• Completed the sale of Hammarkullen in Gothenburg

with 890 apartments and an agreed property value of SEK 493 million, strengthening cash on account by SEK 250 million

• Entered into an agreement regarding repayment of convertible subordinated loans – reduces dilution and improves fi nancial

JANUARY 1 – DECEMBER 31, 2015 FOURTH QUARTER 2015

*Upon calculation of the profit per share after dilution, the annual interest savings regarding the convertible debenture in the amount ofSEK 51 million has been taken into consideration. The effect of the savings per share is SEK 0.72/year.

D. Carnegie & Co AB (publ) 3

2015 YEAR END REPORT

I am also happy to note that we have reached our target of a total return of at least 10 per cent, which led to an increase in the adjusted shareholders’ equity by 38 per cent during the year. Earning capacity increased from the beginning of the year by 50 per cent to SEK 307 million on a rolling 12-month basis.

During the quarter, the company completed the acquisi-tion of just over 100 apartments in Norrköping, further strengthening our earning capacity. During the period, we continued to improve the efficiency of the renovation of apartments and to industrialize this process. The fore-cast of renovating at least 500 apartments in 2015 was surpassed with 524 apartments renovated over the course of the year. Even the annual rate of 1,000 apartments per year was achieved during the fourth quarter. We have also continued investing at a rapid pace in façades, heating facilities, laundry rooms, etc. which increases our rental income and reduces the costs of repairs and maintenance.

Increased rent and lower costs is reflected in an improved net operating income, which for the quarter amounted to SEK 133 million as compared with SEK 98 million for the same quarter of last year. For the year, net operating income doubled to SEK 554 million as compared with SEK 258 million last year. Earning capacity increased to SEK 307 million at an annual rate as per January 1, 2016 as compared with SEK 205 million at the beginning of last year. Increases in value in the property portfolio

during the quarter amounted to SEK 867 million, after deductions for investments, and SEK 1,307 million for the entire year.

Taken as a whole, the improvements entail a strong improvement in reported earnings. The profit for the quarter before taxes was SEK 953 million, and for the entire year all of SEK 1,422 million, as compared with SEK 194 million for the fourth quarter of 2014 and SEK 307 million for all of 2014. Earnings per share after taxes amounted to SEK 10.37 as compared with SEK 2.01 for the fourth quarter of 2014. This means a profit after taxes for the year of SEK 1,139 million, which corresponds to SEK 16.10 per share.

We will continue on our chosen path this year seeking out additional acquisitions in the Stockholm region and will continue our work in renovating our portfolio, which will further increase our profitability. We will also push the development of building rights, so that we can start new construction during next year.

Stockholm, February 25, 2016

ULF NILSSONCEO of D. Carnegie & Co

Statement from the CEO

Over the course of the year, we have found our identity as one of Sweden’s largest mana-gers of residential properties following several years of strong growth and the mergers of several property companies. At the same time, we have streamlined and focused, acquiring additional apartments adjacent to our existing properties. D. Carnegie & Co is thus now a residential property company focusing on the Stockholm region. This has also involved intensive renovation work and 292 apartments were renovated during the fourth quarter.

The number of completed housing in Stockholm County

Housing needs (600 units per 1,000 inhabitants)

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1975

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Population growth in Stockholm County

Number



D. Carnegie & Co is a property company focusing on owning and developing rental properties in the “Million Program” housing program in the Stockholm region.

Good return – low risk

There are good possibilities for creating value through renovations since few extensive improvement programs have been implemented since the buildings were con-structed from 1965 – 75, but the buildings are often in very good locations with well-built basic structures. The need for renovations also means that they often can be acquired at an advantageous price.

The rent levels are generally low in the Million Program buildings. This means that the potential for increased rents after renovation is great. Maintenance costs are also significantly reduced through renovation. Renovations not only have a positive effect on cash flow, they also generate significant increases in the value of the properties.

D. Carnegie & Co.’s model entails that individual apart-ments are renovated in conjunction with natural tenant turnover rather than an entire wing of the building being dealt with on a single occasion. In this way, lengthy and expensive evacuations can be avoided and the vacancy

cost held to a minimum. This method of renovating apartments is also appreciated by the tenants since it takes place when natural vacancies occur or when an agreement has been reached with the tenants.

The geographic concentration of properties means that D. Carnegie & Co can manage the properties cost-effec-tively. The property management is conducted through local area offices which also contributes to creating a close relationship with the tenants. In order to reduce costs and increase the level of service, many of the workmen, such as painters, are even employed by the group.

The terrific pressure on the residential market in the Stockholm region is expected to continue in the foreseea-ble future. This means that the risk of vacancy is almost non-existent in D. Carnegie & Co.’s portfolio. The wait-ing list in the portfolio is currently six years.

Source: Statistics Sweden

THE DEVELOPMENT OF THE NUMBER OF HOUSING VERSUS POPULATION GROWTH IN STOCKHOLM

Despite the fact that the number of newly constructed residences has significantly risen over the past few years and that the trend is expected to continue, the shortage of residences in the Stockholm region is increasing since the population growth is significantly outpacing new construction.

OWN AND DEVELOP RENTAL PROPERTIES FOCUSING ON STOCKHOLM

THIS IS D. CARNEGIE & CO

Commenced residential construction

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60 000

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Number

2011 2012 2013 2014 2015 2016

Population growth



Our market

There is a great shortage of residential housing in the Stockholm region – a shortage which is expected to con-tinue for the foreseeable future since relocations to the Stockholm area far exceed new production of housing. It is on this market that D. Carnegie & Co owns properties.

With respect to rental apartments, the waiting time in the Stockholm region for a residence is estimated to be nine years on average. Over 500,000 people are currently in line for an apartment. Last year, only 12,000 people acquired a new residential lease in Stockholm.

The lack of residences is so great that 700,000 new resi-dences are needed in Sweden by 2025, according to a forecast by the Swedish National Board of Housing. The shortage is largely a consequence of the continued signifi-cant increase in population. A large part of this need is found in the Stockholm region. Even if the new con-struction of residences is at a high level and expected to be 50,000 next year, the shortage of rental properties is expected to increase.

The large growth in population means that the housing shortage is expected to continue for the foreseeable future. In 2025, the shortage of residences in the country is expected to be 700,000, and a very large percentage of the need is expected to be in the Stockholm region.

LARGE DEMAND FOR RESIDENCES IN THE “MILLION PROGRAM” BUILDINGS

Source: National Board of Housing, Building and Planning

PROJECTIONS FOR THIS YEAR AND NEXT WILL INCREASE THE DEMAND FOR HOUSING

Bro



Amounts in SEK thousand 2015Jan – Dec

2014Jan – Dec

2015 Oct – Dec

2014 Oct – Dec

Rental income 1,217,356 608,727 316,703 281,855

Other income 3,459 2,441 556 1,429

Operating expenses -496,163 -254,301 -139,737 -135,311

Maintenance expenses -131,149 -76,429 -33,772 -40,426

Property tax -23,935 -12,496 -6,499 -5,508

Ground rent -15,445 -10,356 -3,907 -3,694

Net operating income 554,123 257,586 133,344 98,345

Central administration -96,779 -48,775 -22,509 -30,294

Costs related to acquisition of business - -15,276 - 23

Net finance items -271,102 -151,181 -62,556 -68,310

Income from property management 186,242 42,354 48,279 -236

Changes in value of investment property 1,306,792 278,427 867,204 200,912

Realized value changes of investment property -45,507 - -1,833 -

Changes in value of financial instruments -10,999 -14,214 39,139 -6,503

Imparment of goodwill -15,004 - - -

Profit before tax 1,421,524 306,567 952,789 194,173

Tax -282,389 -73,512 -218,599 -51,769

Net profit for the period 1,139,135 233,055 734,190 142,404

Other comprehensive income - - - -

Total comprehensive income for the period 0 0 0 0

Total comprehensive income for the period 1,139,135 233,055 734,190 142,404

Profit attribute to:

Owners of the parent company 1,138,559 234,649 734,190 145,298

Non-controlling interests 576 -1,594 - -2,894

Total comprehensive income for the period 1,139,135 233 055 734 190 142,404

Profit after tax per share SEK, before dilution 16.10 4.80 10.37 2.01

Profit after tax per share SEK, after dilution 13.50 4.30 8.52 1.59

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IN BRIEF



The period January–December 2015

Rental income and net operating incomeIncome for the period increased to SEK 1,217 million (609). The strong increase in income is largely a conse-quence of the acquisitions carried out from 4 July 2014 until the close of the period. The income for the period also increased due to the fact that the pace of apartment renovations increased, as well as the general increases in rent for 2015 which were in the range 0.5 – 1.3 per cent, with a weighted average of 1.1 per cent. The rent increases in the existing portfolio at the end of 2015, added to rental revenues on acquisitions in 2015, entailed that the rent value during the period increased by SEK 168 million per year.

The operating costs for the period amounted to SEK -667 million (-354). The increase in costs was primarily a consequence of the acquisitions carried out, which signi-ficantly expanded the property portfolio. The costs for management include operating costs, day-to-day mainte-nance and repairs, property taxes and other management costs directly related to the management of the proper-ties. Seasonal variations affect the costs differently for the different quarters, with the first and fourth quarter nor-mally having the highest costs, primarily with respect to costs for heating and measures taken to prevent people from slipping on ice. However, the fourth quarter of 2015 reported somewhat lower heating costs than a normal year due to the mild weather.

The net operating income for the period amounted to SEK 554 million (258), which generates a profit margin in management of 45.3 per cent (42.3). The significantly increased net operating income is largely linked to the acquisitions carried out from 4 July 2014 until the close of the period as well as rental increases for renovated apart-ments. The profit margin increased during the period by three percentage points, which is partly due to rental increases and partly to more efficient management.

Administration costsAdministration costs during the period amounted to SEK -97 million (-49). These costs consist primarily of personnel costs and other costs for group-wide functions,

marketing and sales costs and, during this period, costs of a one-time nature of SEK -31 million which arose in con-junction with relisting to Nasdaq Stockholm Mid Cap and in conjunction with changes in the organisation in order to adapt it to new, significantly more extensive, operations. The organisation has been gradually adapted to the current business and all appointments to important positions in the organisation had been made by the end of the period.

Net financial itemsNet financial items during the period amounted to SEK -271 million (-151). Financial income during the period amounted to SEK 17 million (0), which primarily con-sists of interest on vendor notes. Financial costs consist primarily of interest costs for loans from credit institu-tions regarding the Group’s property portfolio, interest on the convertible note issued in the amount of SEK 1,020 million, and interest on the subordinated debentu-re in the amount of SEK 1 billion issued in April 2015. In conjunction with the refinancing which was carried out during the first quarter of 2015, of approximately one-half of the Group’s loans, net financial items increased by approximately SEK -18 million in one-time costs related to costs in conjunction with early redemption of loans and interest derivatives. The interest coverage ratio for the period was 1.7 times.

Income from property managementIncome from property management (i.e. profit before changes in value and taxes) for the period amounted to SEK 186 million (42).

Changes in value in management properties/derivatives, realised changes in valueThe Group carries out valuations of the properties on a quarterly basis and the properties are reported at fair value in accordance with IFRS 13 in accordance with level 3. At the end of the accounting period, 25 per cent of the properties had been valued externally and 75 per cent of the properties valued internally, where a model for valuation and assumptions was used which corresponds to that used in the external evaluations carried out by

The earnings items reported below relate to the period January-December 2015. The comparison items stated within parentheses refer to amounts for the corresponding period during the preceding year. January-December 2014, where the period January-June 2014 primarily constituted a building-up period, is actually not comparable with January-December 2015.

Jordbro



Savills. During the period, changes in value on manage-ment properties affected the profit in the amount of SEK 1,307 million (278). The valuations were primarily affected positively by the rent increases during the period which resulted in higher net operating income, and a lower average return requirement of 4.84 per cent (5.42). The total increase in rent during the period amounted to just over SEK 168 million on an annual basis. During the period, investments which increased the value were made in the amount of SEK 491 million (164).

Following a test of impairment of goodwill, which the Group carries out on a quarterly basis, a write-down charge was taken which affected earnings by SEK -15 million (0) during the period, which largely was a con-sequence of sales of properties which was included in the business acquisition of Hyresbostäder I Sverige II AB. The earnings for the period increased to a cor-responding degree by a reversal of deferred taxes.

Changes in values of derivativesThe group uses derivative swaps to limit the interest risk in the earnings. Interest rate derivatives are reported each quarter at the market value and the value is depen-dent on changes in interest rates. The change in the value is reported in the income statement. The market value for the period affected the profit by SEK -11 milli-on (-14) due to the fact that interest rates fell somewhat during the reporting period. These changes in value do not affect cash flow.

Tax The tax cost for the period amounted to SEK -282 mil-lion (-74), of which SEK 2 million (-7) consists of cur-rent tax due to previous taxation, SEK -375 million (-67) consists of deferred tax related to temporary diffe-rences on management properties, SEK 1 million (-) consists of changes in value for derivatives, and SEK 90 million (-) consists of loss carryforwards. The effective tax rate for the period is 19.9 (24.0) percent. The somewhat lower effective tax rate can be explained by tax-free sales of companies.

ProfitThe profit for the period after tax amounted to SEK 1,139 million (233), which corresponds to SEK 16.10 (4.80) per ordinary share before dilution, and SEK 13.50 (4.30) after full dilution.



Fourth quarter, October – December 2015

Rental income and net operating incomeThe profit and net operating income increased signifi-cantly during the fourth quarter of the year as compared with the same period during the preceding year. This increase is primarily a consequence of rent increases on fully renovated apartments, and the general rent increases that took effect fully during 2015.

Income during the fourth quarter increased to SEK 317 million (283), an increase of 12 per cent as compared with the fourth quarter of 2014. The largest portion of the increase in income relates to the portfolio acquired in Jordbro, title to which vested in the third quarter of 2015. Income for the fourth quarter also increased as a conse-quence of increased rental income for the fully renovated apartments, and the general rent increases, with the increases being in the range of 0.5 to 1.3 per cent. The average general rent change in 2015 was 1.1 per cent.

Operating costs for the fourth quarter decreased somewhat to SEK -184 million (-185). The lower costs, despite the new acquisitions, can be explained in part by the fact that the fourth quarter of 2015 had lower seaso-nally-linked costs compared with the same period during the preceding year, but above all due to the fact that the active management resulted in lower costs, primarily with respect to operating and maintenance costs.

Net operating income to SEK 133 million (98), an increase of 36 per cent as compared with the fourth quar-ter of 2014. The profit margin in management amounted to 41.6 per cent (34.7). The direct return increased to 4.0 per cent (3.6) and the average financing costs on the inte-rest-bearing liabilities was 2.7 per cent (3.5).

ProfitThe costs for central administration decreased during the fourth quarter to SEK -23 million (-30). The figures for the fourth quarter of 2014 were encumbered by costs of a one-time nature as a consequence of increased costs in conjunction with the replacement of the financial and management. All of the important positions in the orga-nisation were filled at the end of 2015.

Net financial income for the fourth quarter improved and amounted to SEK -63 million (-68). Despite increased

interest costs as a consequence of the acquisitions in 2015, the net financial income improved due to the refinancing carried out of a large part of the loans in the beginning of 2015, and lower interest rates for loans taken up in 2015. The Group’s average interest rate for total interest-bea-ring liabilities amounted to 2.7 per cent (3.5) at the end of the fourth quarter including derivatives. The interest coverage ratio for the fourth quarter was 1.8 (0.9) times.

Income from property management, i.e. profit before changes in value and tax, for the fourth quarter increased to SEK 48 million (0).

During the fourth quarter, changes in value in manage-ment properties affected profit by SEK 867 million (200). The valuation is based on an average required return of 4.84 (5.42) percent. The increase in value can be explai-ned by increased net operating income due to investments in the properties and an adaptation to the lower required return on the market.

Changes in value on derivatives affected profit for the fourth quarter by SEK 39 million (-7) as a consequence of the fact that interest rates rose somewhat during the fourth quarter. In total, the derivative portfolio had a nominal value of SEK 3,401, which consists exclusively of interest swaps.

Profit after tax for the fourth quarter amounted to SEK 734 million (142), which corresponds to a profit per ordi-nary share of SEK 10.37 (2.01).

The earnings items set forth below refer to the fourth quarter, October-December 2015. The comparison items stated within parentheses refer to amounts for the corresponding period during the preceding year.



Amounts in SEK thousand 2015 December 31

2014 December 31

ASSETS

Non-current assets

Goodwill 685,728 698,397

Investment properties 13 826,439 11 520,820

Equipment 4,661 4,176

Shares 558 -

Non-current receivables 6,662 172,824

Deferred tax asset 148,135 55,094

Total non-current assets 14,672,183 12 451,311

Current assets

Current assets 412,134 77,866

Cash and cash equivalents 478,524 253,168

Total current assets 890,658 331,034

TOTAL ASSETS 15,562,841 12,782,345

EQUITY AND LIABILITIES

Shareholders’ equity 4,391,588 3,251,455

Non-current liabilities

Non-current interest-bearing liabilities 7,587,332 4,759,257

Other non-current liabilities 3,143 777

Deferred tax liability 1,435,043 1,060,947

Interest rate derivatives 60,487 65,153

Total non-current liabilities 9,086,005 5,886,134

Current liabilities

Current interest-bearing liabilities 1,650,286 3,363,809

Other current liabilities 434,962 280,947

Total current liabilities 2,085,248 3,644,756

TOTAL EQUITY AND LIABILITIES 15,562,841 12,782,345

Equity attributable to:

Parent Company shareholders 4,391,588 3,210,308

Non-controlling interests - 41,147

Total equity 4,391,588 3,251,455

CONSOLIDATED STATEMENT OF FINANCIAL POSITION, SUMMARY



Consolidated statement of financial position

Management properties, goodwill The Group’s property portfolio at the close of the period consisted of 1,256,612 m² (1,175,144) with a current ren-tal value of SEK 1,292 million (1,127). The management properties are reported at fair value and amounted, at the close of the period on December 31, 2015, to SEK 13,826 million (11,521) which corresponds to a value of SEK 10,925/m2 (9,803). See further pages 14-15.

The goodwill value at the end of the period amounted to SEK 686 million (698), a value which arose in conjun-ction with the acquisition of Hyresbostäder i Sverige II AB. The value consists of the difference between the negotiated deferred tax at the time of the acquisition and the nominal tax rate of 22 per cent. A review of the value of goodwill at the end of the period resulted in an impair-ment write-down of the value of goodwill in the amount of SEK -15 million (-), largely a consequence of the fact that properties were sold during the period. A correspon-ding reversal of deferred tax has been carried out.

Long-term receivablesLong-term receivables at the end of the period amounted to SEK 7 million (173), and primarily relate to a claim under a promissory note.

Current assetsOther current assets at the close of the period amounted to SEK 412 million (78), and relate primarily to a claim under a promissory note, investments in shares, accounts receivable, and prepaid costs.

Cash and cash equivalentsThe Group’s cash and cash equivalents at the end of the period amounted to SEK 479 million (253). Cash on account was strengthened with net borrowing during the period amounting to SEK 568 million (1,063). The cash on account will be used for future acquisitions and to increase the pace of apartment renovations.

Equity The Group’s shareholders’ equity as per December 31, 2015 amounted to SEK 4,392 million (3,251) and the

equity ratio was 28.2 per cent (25.4). The change in the Group’s shareholders’ equity is primarily related to the profit for the period, but partially related to the issuance of warrants to employees in the amount of SEK 1 million.

Deferred tax Deferred tax liabilities amounted to 148 million (55) and primarily relate to loss carryforwards. The deferred tax liability amounts to SEK 1,435 million (1,061) and is pri-marily the difference between the fair value and the tax residual value of properties.

Interest-bearing liabilities The Group’s total non-current interest-bearing liabilities amount to SEK 9,313 million (8,140).

Long-term interest-bearing liabilities to credit institu-tions amount to SEK 5,916 million (6,687). In addition to liabilities to credit institutions, there is an unsecured debenture in the amount of SEK 1 billion, a convertible debenture in the amount of SEK 1,020 million (of which SEK 10 million is reported as shareholders’ equity), SEK 670 million as a non-current liability, and SEK 340 mil-lion as a current liability. The interest-bearing liabilities include a vendor note in the amount of SEK 133 million of which is long-term SEK 66 million and SEK 67 milli-on is short-term.

Other long-term liabilities Other long-term liabilities amount to SEK 3 million (1) and consist primarily of liabilities leasing companies. Other current liabilities Other current liabilities amount to SEK 435 million (281) and consist primarily of accounts payable and accrued costs.

The balance sheet items below refer to the position at the close of the period, December 31, 2015. The comparison items stated within parentheses refer to amounts at the close of the corresponding period during the preceding year.



Amounts in SEK thousand Share capital Other additional

paid-incapital

Profit brought forward

includingprofit for

the period

Equityattributable toshareholders

of the parent

Non- controlling

interests

Total equity

capital attributable to shareholders

Equity, 01-01-2014 2,989 11,544 -10,995 3,538 - 3,538

Total comprehensive income January - December 2014 - - 233,055 234,649 -1,594 233,055

Contributed capital, offset issue 898,773 2,042,740 - 2,941,513 - 2,941,513

Additional paid-in capital at acquisition - 14,608 - 14,608 42,741 57,349

Andel eget kapital konvertibelt företagslån - 16,000 - 16,000 - 16,000

Other comprehensive income January - December 2014 - - - - - -

Equity, 31-12-2014 901,762 2,084,892 222,060 3,210,308 41,147 3,251,455

Total comprehensive income January - December 2015 - 42,741 1,139,135 1,180,282 -41,147 1,139,135

Equity component subscription warrants - 998 - 998 - 998

Other comprehensive income Januari - December 2015 - - - - - 0

Closing equity, 31-12-2015 901,762 2,128,631 1,361,195 4,391,588 0 4,391,588

CONSILIDATED STATEMENT OF CHANGES IN EQUITY

Statement of changes in equity On December 31, 2015, consolidated shareholders’ equity amounted to SEK 4,392 million (3,251) and the equity ratio amounted to 28.2 per cent (25.2). Shareholders’ equity per share increased to SEK 62.06 (45.70). EPRA NAV per share amounted to SEK 73.50 (51.99).

The changes in the group’s equity are related to the profit for the period of SEK 1,139, and contributed shareholder’s equity through warranty programs directed to the personnel in the amount of SEK 1 million. Equity

without a controlling influence was divested in connec-tion with the sale of Vårberg Förvaltning AB, carried out in the second quarter amounting to SEK 41 million.



Consolidated statement of cash flows

Amount in SEK thousand 2015Jan – Dec

2014Jan – Dec

2015Oct – Dec

2014Oct – Dec

Income from property management 186,242 42,355 48,279 -235

Adjustment for items not included in cashflow 18,074 15,412 1,505 2,116

Taxes paid -1,891 - -1,488 -

Cash flow before change in working capital 202,425 57,767 48,296 1,881

Increase (-) decrease (+) of working capital 76,032 215,182 254,557 113,539

Cash flow from operating activities 278,457 272,949 302,853 115,420

Investing activities

Investments in existing properties -490,702 -163,999 -273,719 -76,368

Acquisition of Group companies/properties, business combination

- -1,181,519 - -81,897

Acquisition of Group companies/properties -372,785 -388,034 -31,288 -

Acquisition of inventories -2,103 -1,970 -362 215

Acquisition of intangeble assets - - - -

Sale of properties 243,154 - -4,080 -

Investment in financial fixed assets -107 -15,000 293 -

Share and participations, net - 19 - -

Cash flow from investing activities -622,543 -1,750,503 -309,156 -158,050

Financing activities

New issue 998 666,326 - 6,857

Raised loans 5,316,247 1,485,774 67,662 481,774

Amortization of loans -4,747,803 -422,542 -70,663 -391,944

Dividend - - - -

Cash flow from financing activities 569,442 1,729,558 -3,001 96,687

Cash flow for the period 225,356 252,004 -9,304 54,057

Cash and cash equivalents at beginning of the period 253,168 1,164 487,828 199,111

Cash and cash equivalents at end of period 478,524 253,168 478 524 253,168

Operating activities Cash flow from operations, before changes in working capital, amounted to SEK 202 million (58). After a chan-ge in working capital of SEK 76 million (215), cash flow from operations amounted to SEK 278 million (273).

Investing activitiesCash flow from investing activities amounted to SEK -623 million (-1,751) and largely comprises investments in existing properties, SEK -491 million (-164), and purcha-ses of management properties that affect cash flow, SEK -373 million (-1,570), and sales of management properties that affect cash flow, SEK 246 million (-).

Financing activitiesCash flow from financing activities amounted to SEK 569 million (1,730). The reported cash flow includes a new share issue in the amount of SEK 1 million (666), loans raised in the amount of SEK 5,316 million (1486), as well as loan repayments totalling SEK -4,748 million (-423). The newly raised loans include the subordinated SEK 1,000 million bond.

Cash flow for the periodCash flow for the period amounted to SEK 225 million (252) and, at the end of the period, cash and cash equiva-lents increased to SEK 479 million (253).

CONSOLIDATED STATEMENT OF CASH FLOWS, SUMMARY

Comparative figures in parentheses refer to amounts for the corresponding period of last year.



Property portfolio D. Carnegie & Co.’s property portfolio consists primarily of residential properties in Greater Stockholm and growth areas in Mälardalen. The property portfolio mainly comprises residential properties built between 1965-1974 as part of the “Million Program”. The center of gravity of the total property portfolio (65 percent) is located in Greater Stockholm. Comparative fi gures in parentheses relate to amounts for the corresponding period of last year.

Amounts in SEK thousand Property holdings at beginning of period

2015 January 1

2014January 1

Existing properties 11,520,820 -

Acquisitions 955,000 11,076,597

Investments in existing properties 490,702 163,999

Reclassifications - 2,202

Divestments -446,875 -

Change in value investment properties, unrealized 1,306,792 278,022

Property portfolio at end of period 13 ,826 439 11,520,820

As of December 31, 2015, D. Carnegie & Co.’s property portfolio has been valuated with an assessed market value of SEK 13,826 million. The valuation is based on the methodology described below, of which 25 percent of the portfolio was valued independently and 75 percent was valued internally. The independently valued part of the portfolio is changed every quarter, meaning that over a

period of 12 months the entire portfolio has been valued independently. The external property valuations were car-ried out by Savills. Comparative fi gures in parentheses relate to amounts for the corresponding period of last year.

STOCKHOLM

CHANGE IN CARRYING AMOUNT OF PROPERTIES

Property value

Apartment renovations In total, 689 (162) apartments out of the existing stock of 16,377 apartments were renovated using the Bosystem method since 2014, of which 524 were renovated during the period (162). Rents for these apartments have increased from an opening average of SEK 982 /sq. m. to SEK 1,372 /sq. m.

During the period, the property portfolio has changed as shown below.

Investments and divestments Investments during the period totaled SEK 1,446 million (11,241), of which SEK 491 million (164) relates to investments in existing properties and SEK 955 million (11,077) to acquisitions of new properties. Investments relate to the refurbishment of apart-ments as well as renovation of facades and roofs. During the period, fi ve property sales were completed which, in the valuation as of December 31, 2014, corresponded to a market value of SEK 447 million.



The valuation is based on a cash flow analysis whereby the property’s value is based on the present value of fore-cast cash flows and the residual value during the calcula-tion period of five years.

The return requirement on units included in the valua-tion varies from 4.10 percent to 8.00 percent, with an average of 4.84 percent (5.42). The assumption regarding the future cash flows is based on an analysis of: • Future development of the market and the immediate

vicinity• The market conditions and market position of the

property• Rent terms and conditions in line with the market • Operating and maintenance costs of similar properties

in comparison with those in the property in question

Based on the analysis, the resulting net operating income during the calculation period (2016-2020) and a residual value at the end of the calculation period have subsequently been discounted applying an estimated cost of capital in the range 6.18 - 10.16 percent. The average cost of capital for the period was 6.94 (7,52) percent. The parameters that influence value and are used in the valuation correspond to the external appraiser’s interpretation of

how a prospective buyer in the market would reason, and the sum of the present value of net operating income and the residual value constitutes the fair value.

Potential building rights have been valued based on market comparison studies and the status in the planning process. The building rights had been valued at SEK 200 – 8,000 per square meter GFA in conjunction with a final detailed zoning plan. Deductions from these values are made to reflect the estimated status in the detailed zoning plan process. The total area for potential building rights with value is estimated at 239,700 m² GFA (gross area). The potential building rights were valued on December 31, 2015 at a fair market value of SEK 353 million.

The total change in value in the property portfolio in 2015 was 10.44 per cent (2.47). This change in value takes into consideration acquisition of properties carried out during the year, investments in existing properties, and elimina-tion of properties divested.

In addition to this valuation Newsec conducted a valua-tion of the entire portfolio, published December 1, 2015, and this valuation is consistent with yield and valuation conducted by Savills.

City/Neighborhood Lettable area

Number of apartements

Average rent

Percentage renovated

Fair value December 31 2015

Greater Stockholm

Kista/Husby 110,024 1,528 1,047 12.8% 1,460,000

Bromsten/Rinkeby 112,132 1,303 1,041 14.1% 1,347,080

Sollentuna 33,656 454 1,076 4.2% 458,400

Flemingsberg 40,107 573 954 1.2% 450,000

Vårby/Vårberg 66,631 863 1,025 1.5% 654,000

Jordbro 157,780 1,953 1,074 3.7% 1,544,000

Södertälje 159,933 2,110 1,137 2.0% 1,993,770

Bro 43,749 540 979 2.2% 433,114

Märsta 56,965 688 980 4.1% 645,000

Total Greater Stockholm 780 977 10,012 1,056 5.7% 8,985,364

Uppsala 71,484 938 981 3.4% 790,000

Eskilstuna 135,573 1,828 961 2.9% 1,362,300

Strängnäs 35,510 411 1,084 1.0% 446,475

Norrköping 172,661 2,298 1,007 4.1% 1,655,800

Göteborg 64,899 890 917 0.0% 493,000

Total other locations 480,127 6,365 984 2.9% 4,747,575

Other (land, building rights, etc) 4,508 - - - 93,500

Total 1,265,612 16,377 1,002 4.6% 13,826,439

D. CARNEGIE & CO PROPERTY PORTFOLIO DECEMBER 31, 2015



Financing

Interest-bearing liabilities At the end of the period, D. Carnegie & Co had interest-bearing liabilities totaling SEK 9,238 million, correspon-ding to an loan-to-value of approximately 61 percent (67), of which liabilities to credit institutions accounted for SEK 7,160 million (8,123), corresponding to an loan-to-value LTV of approximately 52 percent (58). Of the liabilities to credit institutions, SEK -64 million (-) consists of prepaid opening fees. In addition to liabilities to credit institutions, there are also interest-bearing subordinated debentures of SEK 1,020 million, interest-bearing vendor notes of SEK 122 million (-), and a bond loan of SEK 1,000 million (-).

MaturityThe average term to maturity on loans owed to credit insti-tutions is 5.7 years. Of interest-bearing liabilities to credit institutions, SEK 748 million mature in 2016. Refinancing negotiations regarding these liabilities are in progress and will be completed during Q1 2016, which will further extend the fixed-rate term. Of the interest-bearing conver-tible ventures, SEK 340 million matures on 30 June 2016, in the absence of a prior conversion to shares before 9 June 2016. Loans owed to security institutions are secured through mortgages on properties and/or pledged shares, as well as undertakings to maintain certain covenants, which in certain cases limit the ability of subsidiaries to issue divi-dends.

The interest rate maturity structure for the liabilities owed to credit institutions is shown in the tables on page 17.

Fixed interest and average interest rateThe average interest rate on total interest-bearing liabilities at the end of the period was 2.74 percent (3.81). The avera-ge rate on liabilities owed to credit institutions at the end of the period was 2.27 (3.23). The interest on the convertible debentures is 5 percent, while the interest rate on the SEK 133 million vendor note is 3 percent. The interest rate on the vendor note which was repaid to Kvalitena AB during the second quarter was 6.75 per cent. The interest rate maturity structure for the interest-bearing liabilities is shown in the tables on page 17.

Interest rate derivativesD. Carnegie & Co uses interest rate derivatives to hedge the maturity structure. Interest rate derivatives represent a flexible and cost-efficient method of achieving the desired fixed rate. In accordance with accounting standard IAS 39, interest rate derivatives are marked to market. If the agreed interest rate deviates from the market rate, irrespective of the credit margin, a theoretical surplus or deficit arises on the interest rate derivative where the non-cash change in value is recognized in the income statement. As of Decem-ber 31, 2015, the market value of the interest rate derivati-ves portfolio was SEK -60 million (-65).

Financial targets D. Carnegie & Co has the following long-term financial targets.• Profit margin in management in excess of 50 percent• Annual 10 percent growth in value of existing portfolio • Loan-to-value ratio on properties not exceeding 65 percent• Equity ratio of at least 30 percent

As of December 31, 2015, the equity ratio was 28.2 percent which is below the long-term financial target. The interest-bearing liabilities include convertible debentures of SEK 1,020 million, and in the event of implemented conversion these SEK 1,020 million will convert from interesting-bea-ring debts to equity. This means that the equity ratio would exceed long-term financial target. The investments made will create growth in value, which will also strengthen the equity ratio. For these reasons, the equity ratio is comforta-ble even though D. Carnegie & Co did not achieve this long-term financial target on December 31, 2015.

The profit margin in management increased during the period to 45.4 per cent (42.3) and, given the increased pace of renovations and the active management, the long-term goal will be achieved within a two-year period.

D. Carnegie & Co endeavors to achieve a balance between debt financing and equity, with the long-term objective that the equity ratio should not fall below 30 percent and that the loan-to-value ratio shall not exceed 65 percent. On December 31, 2015, D. Carnegie & Co.’s assets were valued at SEK 15,563 million (12,782), financed through equity of SEK 4,392 million (3,251), deferred tax liability of SEK 1,435 million (1,061), interest-bearing liabilities of SEK 9,238 million (8,123), as well as non-interest-bearing liabilities of SEK 498 million (347).



Maturity SEK million Interest Percentage SEK million Percentage

2016 3,422 2.1% 37% 1,155 10%

2017 410 1.9% 4% 508 6%2018 1,473 4.0% 16% 2,022 22%2019 340 5.0% 4% 372 4%2020 1,062 1.8% 11% 1,170 13%2021 - - 0% 747 8%2022 2,606 3.2% 28% 2,619 29%2023 - - 0% 13 0%2024 - - 0% 13 0%2025 - - 0% 240 3%

>2025 - - 0% 454 5%

Total/Average 9,313 2.74% 100% 9,313 100%Prepaid arrangement fee -65 -65Included equity -10 -10

Total 9 ,238 9,238

INTEREST RATE TERM AND LOAN MATURITY DECEMBER 31, 2015, INTEREST BEARING DEBTS

INTEREST RATE TERM AND LOAN MATURITY DECEMBER 31, 2015, TOTAL INTEREST BEARING DEBTS

DERIVATIVES DECEMBER 31, 2015

Maturity SEK million Interest Percentage SEK million Percentage

2016 3,082 1.7% 43% 748 8%

2017 410 1.9% 6% 442 6%2018 - - 0% 682 10%2019 - - 0% 32 0%2020 1,062 1.8% 15% 1,170 17%2021 - - 0% 747 11%2022 2,606 3.2% 36% 2,619 38%2023 - - 0% 13 0%2024 - - 0% 13 0%2025 - - 0% 240 3%>2025 - - 0% 454 7%

Total/Average 7,160 2.27% 100% 7,160 100%Prepaid arrangement fee -65 -65

Total 7,095 7,095

CAPITAL DECEMBER 31, 2015 INTEREST BEARING DEBTS FINANCIAL INSTITUTIONS

CAPITAL DECEMBER 31, 2015 TOTAL INTEREST BEARING DEBTS

0

1 000

500

1 500

2 000

2 500

3 000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 >2025

SEK m

0

1 000

500

1 500

2 000

2 500

3 000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 >2025

SEK m

Amounts in SEK million Nominal amounts

Percentage Fair value Dec 31, 2015

Fair value Dec 31, 2014

Change for the period

Nominal interest rate swaps 3,401 100% -60 -65 5

Total 3,401 100% -60 -65 5

Maturity

Maturity

Fixed interest term

Fixed interest term



EventsAmong other things, during the period, D. Carnegie & Co continued to acquire new proper-ties and entered into agreements to sell the property portfolio in Gothenburg, a portfolio which for strategic reasons is not one of the areas covered by the business model.

SIGNIFICANT EVENTS DURING THE FOURTH QUARTER

D. Carnegie & Co AB enters into an agreement regarding the sale of the Gothenburg portfolio D. Carnegie & Co enters into an agreement regarding the sale of Hammarkullen in Gothenburg. The number of apartments is 890 and the agreed underlying property value is SEK 493 million. The area lies outside of the region in which D. Carnegie & Co AB operates. The capital gains realized on this sale were SEK 14 million.

D. Carnegie & Co AB announces new valuationjeD. Carnegie & Co AB announced in December a new valuation which was carried out by Newsec and the value at that time was SEK 13,600 million which was slightly more than SEK 1 billion above the previously reported value.

D. Carnegie & Co AB acquires properties in UppsalaD. Carnegie & Co AB has entered into an agreement regarding the acquisition of properties in Uppsala with an underlying property value of SEK 78 million, and at the same time entered into an agreement regarding the sale of potential building rights in Solna with an underlying value of SEK 49 million.

SIGNIFICANT EVENTS AFTER THE FOURTH QUARTER

D. Carnegie & Co AB has completed the sale of the Gothenburg portfolioD. Carnegie & Co AB has completed the sale of Hammarkullen in Gothenburg. The completed transaction entails that D. Carnegie & Co has strengthened its cash on account by SEK 250 million.

Entered an agreement of convertible loansEntered into an agreement regarding repayment of convertible subordinated loans – reduces dilution and improves financial.

Vårby



Parent company

Amounts in SEK thousand

2015 Jan – Dec

2014 Jan – Dec

Net sales 10,284 1,164

Operating expenses -60,142 -21,190

Profit/loss before financial items -49,858 -20,026

Financial items

Net interest -99,322 -42,392

Profit/loss before tax -149,180 -62,418

Taxes 32,741 15,354

Profit for the period -116,439 -47,064

Amounts in SEK thousand

2015 Dec 31

2014 Dec 31

ASSETS

Non-current assets

Equipment 1,838 1,524

Shares and participations in subsidiaries 4,827,870 4,827,872

Shares, other companies 252 -

Receivables from group companies 57,611 55,961

Deferred tax assets - 15,000

Non-current receivables 54,952 22,211

Total non-current assets 4,942 ,523 4,922,568

Current assets

Receivables from group companies 922 ,464 176,071

Receivables from associate companies - 3,075

Current placement 19,781 2,785

Current receivables 104,405 -

Cash and cash equivalents 237,842 22,598

Total current assets 1,284,492 204,529

TOTAL ASSETS 6,227,015 5,127,097

Equity and liabilities

Shareholders equity 2 ,798,550 2,913,991

Non-current liabilities

Interest-bearing liabilities 1,722,787 1,937,000

Total non-current liabilities 1,722 787 1,937 000

Current liabilities

Interest-bearing liabilities 406,750 67,000

Other non-interest bearing liabilities 30,742 21,064

Liabilities to subsidiaries 1,268,186 188,042

Total current liabilities 1,705,678 276,106

TOTAL EQUITY AND LIABILITIES 6,227,015 5,127,097

INCOME STATEMENT IN BRIEF BALANCE SHEET IN BRIEF

Operations in D. Carnegie & Co consist of overarching Group functions. The Parent Company does not own any properties directly. During the period, the Parent Company’s revenues amounted to SEK 10 million (1) and

the profit/loss after tax was SEK –116 million (-47). Revenues relate mainly to services on behalf of group companies. Cash and cash equivalents at the end of the period amounted to SEK 238 million (23).



The share and shareholders

Date Event Change in numberClass A-shares

Change in numberClass B-shares

Total number A + B-shares

Equitychange

Equity total

July-14 Issue of shares/at aquisition - 26,000,000 70,768,876 331,301,084 901,761,744

May-14 Issue of shares - 2,307,692 44,768,876 29,405,418 570,460,660

April-14 Issue of shares - 15,384,615 42,461,184 196,036,139 541,055,242

March-14 Off issue of shares 5,369,866 21,479,459 27,076,569 342,123,480 345,019,103

March-14 Redemption of preferred shares - - 227,244 -98,893 2,895,623

Dec-13 Aggregation 2 000 / 1 - 227,244 227,244 - 2,994,516

Sept-13 Issue of shares - 376,010,360 454,488,000 2,395,613 2,994,516

Sept-09 Issue of preferred shares - - 78,477,640 98,903 598,903

June-09 Reduction of capital - - 78,477,640 -156,457,912 500,000

June-07 Issue of shares - 146,754 78,477,640 1,870,000 156,957,912

The shareAt the end of the period, D. Carnegie & Co had 8,297 (7,125) shareholders. The market capitalization was SEK 4,618 (3,213) million. D. Carnegie & Co has two classes of shares: class A (five votes) and class B (one vote) ordina-ry shares. The shares are listed on Nasdaq Stockholm, Midcap. In total, there are 5,369,866 class A shares, 65,399,010 class B shares outstanding, totaling 70,768,876 ordinary shares. After full exercise of warrants program 1 (1,473,000 shares), warrants program 2 (998,200 shares) and conversion of convertible debentures (16,266,230 sha-res), there would be in total 89,506,306 ordinary shares.

DividendsThe proposal by the board of directors to the annual general meeting is expected to be that no dividend be paid in respect of the 2015 financial year.

Warrants programThe Company has two warrants programs carrying an entitlement to subscribe for class B shares. Warrants pro-gram 1, which was issued in 2014, covers 1,473,000 war-rants, corresponding to 2.1 per cent of the number of out-standing ordinary shares. Each warrant entitles the holder to subscribe for one new class B ordinary share in D. Car-negie & Co. The warrants may be exercised to subscribe for shares commencing January 1, 2017 up to and inclu-ding June 30, 2017. The subscription price for class B ordinary shares pursuant to the warrants is SEK 48.50 kronor. The warrants program is directed at the CEO and CFO of D. Carnegie & Co AB, the CEO of Bosystem Nordic AB, and all staff who were employed at Slottsfa-briken Egendomsförvaltning AB at the time D. Carnegie & Co was listed on NASDAQ OMX First North (April 9, 2014). Market-based pricing was applied in conjunction with the warrants offering. Warrants program 2 was issued in 2015 and covers 998,200 warrants, correspon-ding to 1.4 per cent of the number of outstanding shares. The warrants carry an entitlement to subscribe for new class B ordinary shares in D. Carnegie & Co. The war-rants may be exercised to subscribe for shares commencing May 21, 2018 up to and including August 31, 2018. The

subscription price for class B ordinary shares pursuant to the warrants is SEK 72.84 kronor. The warrants program is directed at all staff who were permanently employed by the D. Carnegie & Co Group on May 12, 2015. Market-based pricing was applied in conjunction with the war-rants offering. If all of the warrants are exercised in both of the warrants programs (2014 and 2015), this would mean that the number of ordinary class B shares would increase by 2,471,200, which corresponds to 3.5 per cent of the number of outstanding ordinary shares.

Convertible debenturesIn connection with the acquisition of I Hyresbostäder I Sverige II AB, three convertible debentures were issued, each for SEK 340 million. These three convertible deben-tures are held by Svensk Bolig Holding AB. The maturi-ties of the various debentures are as follows: debenture 1 matures on June 30, 2016 with an option, up to June 9, 2016, to convert to 6,679,764 class B ordinary shares at a conversion price of SEK 50.90; debenture 2 matures on June 30, 2018 with an option, up to June 9 2018, to con-vert to 5,112,782 class B ordinary shares at a conversion price of SEK 66.50; debenture 3 matures on June 30, 2019 with an option, up to June 9 2019, to convert to 4,473,684 class B ordinary shares at a conversion price of SEK 76.00. In the event of full conversion, 16,266,230 shares in D. Carnegie & Co will be issued, corresponding to 23.0 per-cent of the number of outstanding ordinary shares.

Share performanceThe share performed positively during 2015, with the share price dipping somewhat during the second quarter but recovering the entire loss during the third and fourth quarters. During the period, the price increased from SEK 45.40 per class B share to SEK 65.25 on December 31, 2015, an increase of 43.7 percent. Since the introduc-tion at a price of SEK 39 per class B share on April 9, 2014, the share price has increased by 67.3 percent.

ShareholdersA list of the largest shareholders in D. Carnegie & Co AB (publ) is presented on the next page.

THE SHARE, DEVELOPMENT

0

2000

4000

6000

8000

10000

12000

DEC.NOVOCT.SEPT.AUG.JUL.JUN.MAYAPR.MAR.FEB.JAN.DEC.NOV.OCT.

35

40

45

50

55

60

65

70

2014 2015Source: SIX Financial Information

Carnegie Real Estate Return IndexSIX Return Index

D. Carnegie & Co B (Total return)Number of shares traded in thousands per week



Shareholders as of December 31, 2015 Holding, A-shares

Holding, B-shares

Capital, % Votes, %

Kvalitena AB 5,270,523 10,994,804 22.98 40.49

Svensk Bolig Holding AB 0 10,252,874 14.49 11.11

Frasdale Int. BV 0 5,442,359 7.69 5.90

Länsförsäkringar Fastighetsfond 0 5,195,143 7.34 5.63

J P Morgan Clearing Corp, W9 0 2,761,862 3.90 2.99

Didner & Gerge Småbolag 0 1,662,411 2.35 1.80

SEB-Stiftelsen 0 1,650,000 2.33 1.79

Fjärde AP-fonden 0 1,605,190 2.27 1.74

Svensk Näringsliv 0 1,500,000 2.12 1.63

Per Josefsson via bolag 0 1,500,000 2.12 1.62

Staffan Rasjö 0 844,481 1.19 0.92

CBNY-Norges Bank 0 825,927 1.17 0.90

Lancelot Avalon 0 748,119 1.06 0.81

Länsförsäkringar Småbolag Sverige 0 650,000 0.92 0.70

Cancerfonden 0 631,597 0.89 0.68

MSIL IPB Client Account 0 568,878 0.80 0.62

Danske Invest Sverige Fokus 0 551,967 0.78 0.60

Deutsche Bank LDN-Prime, Brokerage 0 534,219 0.75 0.58

Avanza Pension 0 522,809 0.74 0.57

Others 99,343 16,956,370 24.11 18.92

Total number of shares 5,369,866 65,399,010 100.0 100.0

THE SHARE

LARGERST SHAREHOLDERS



Other disclosures EmployeesAt the end of the period, the Parent Company had ten employees. The Group had 159 employees at the end of the period. The breakdown was 62 women and 97 men.

Party-related transactions Kvalitena AB: In connection with the acquisition of Hyresbostäder i Sverige II AB, a party-related transac-tion took place between Kvalitena AB and Markaryds-bostäder Holding AB, a subsidiary of Hyresbostäder i Sverige II AB. The transaction consists of a claim under a promissory note whereby Markarydsbostäder Holding AB has a claim against Kvalitena AB in the amount of SEK 150 million. SEK 100 million under this promissory note became due and payable on October 31, 2015 which was extended to June 30, 2016 pursuant to a resolution adopted by the board of directors. The remaining SEK 50 million will fall due on October 31, 2016. The average rate of interest during the period was 6.75 per cent, and SEK 10.9 million was paid in interest during the period. The acquisition of Östgötaporten AB included a note payable to Kvalitena AB in the amount of SEK 150 milli-on. This debt was repaid in full during the period. During the period, interest was paid amounting to SEK 2.2 million. D. Carnegie & Co had a claim against Kvali-tena during 2015 in the amount of SEK 104 million which was fully repaid during the period. The interest rate was 4 percent. The interest income during the period on this claim was SEK 2.6 million.

Svensk Bolig Holding: SEK 200 million of the purchase price in connection with the acquisition of Hyresbostäder II i Sverige AB comprised a vendor note. This note is held by the seller of Hyresbostäder i Sverige II AB, Svensk Bolig Holding AB. On July 4, 2015, SEK 67 mil-lion was repaid on the note, leaving SEK 133 million out-standing at the close of the period. The note carries inte-rest at an annual rate of rate of 3 percent. Interest during the period was paid in the amount of SEK 6.0 million.

Bosystem Nordic AB: During the period, the D. Carnegie & Co Group made purchases worth SEK 25.7 million

from Bosystem Nordic AB, a company which is 50 per-cent owned by Kvalitena AB. These purchases of materi-als have been made on market terms.

RisksRisks and uncertainty factors relate mainly to changes in macroeconomic factors that may lead to higher vacancy rates and interest rates, increased costs and lower rents. Operating expenses may increase and not be fully com-pensated for in lease agreements; unforeseen and extensi-ve renovation needs may lead to increased maintenance costs. There is a risk that tenants will not pay the agreed rent on time. Other than these risks and uncertainty fac-tors, which are described on pages 58-59 of D. Carnegie & Co AB 2014 annual report, no other material risks have been identified during the period.

Accounting policiesThis interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.

The same accounting and valuation principles and cal-culation methods were applied as in the most recently published financial information; see D. Carnegie & Co AB annual report, pages 70-74, except that the new interpretation of IFRIC 21: Levies will be applied com-mencing the 2015 financial year. Investment properties are valued in accordance with IFRS 13 in accordance with level 3.

The fair value of financial instruments corresponds in all material respects to the reported values. Derivatives are valued in accordance with level 2 in the fair value hierar-chy, based on external valuation.

The Parent Company applies the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities.

Examination by the auditorsThis interim report has not been audited by the company’s auditors.



Board of directors

The Board of Directors and the CEO affirm that the report provides a fair review of the operations, financial position and results of the Parent Company and the Group and des-

cribes the material risks and uncertainty factors facing the Parent Company and the companies included in the Group.

The Board’s affirmation

Knut Pousette, Chairman of the Board Mats Höglund

Ronald Bengtsson Ranny Davidoff

Terje Nesbakken Eva Redhe

Ulf Nilsson, CEO

Stockholm, February 25, 2015



KEY FIGURES Q42015

Q32015

Q2 2015

Q1 2015

Q42014

Q32014

Q22014

Q12014

Finance

Equity per share, SEK 4,391,6 3,657,4 3,465,5 3,298,8 3,251,5 3,086,2 1,876,0 1,161,4

Return on equity, % 16.7 5.25 4.78 1.44 4.38 0.29 2.95 2.26

Solidity, % 28.2 25.3 25.3 25.6 25.4 26.6 50.2 38.3

Solidity EPRA NAV, % 33.4 29.7 29,1 29.8 28.8 32.1 50.7 38.6

Interest coverage ratio 1.8 2.5 1.7 1.0 0.9 1.6 2.3 1.3

Loan-to-value ratio, % 60.9 66.9 65.9 66.2 67.2 66.4 39.9 58.9

LTV Loan-to-value ratio, % 51.8 56.3 56.2 56.8 58.0 56.7 56.1 59.0

Financial cost, total interest bearing debts, average interst rate, %

2.74

2.62

2.83

2.86

3.45

3.81

2.80

3.20

Financial cost, interest bearing debts financial institutions, average interest rate, %

2.27

2.11

2.31

2.34

3.23

3.55

2.80

3.20

Property related

Income, SEK m 317.3 308.8 295.4 296.4 281.9 240.0 65.7 21.2

Net operating income, SEK m 132.8 164.2 136.5 120.2 98.3 121.6 30.1 7.5

Income from property management, SEK m 47.7 91.0 44.8 2.2 -9.3 35.2 15.3 1.2

Changes in value in management properties, SEK m 867.2 180.1 126.3 133.2 200.9 0.5 47.2 29.9

Net profit for the period, SEK m 734.2 191.9 165.7 47.4 142.4 9.0 55.4 26.2

Profit margin in management, % 41.9 53.2 46.2 40.6 34.9 50.7 45.8 35.4

Direct return, % 4.0 5.4 4.7 4.1 3.6 3.5 3.9 2.0

Market vaule, SEK m 13,826,4 12,591,5 11,547,7 11,700,1 11,520,8 10,216,8 3,118,6 2,979,4

Letteble area, Tm2 1,265,6 1,256,6 1,139,6 1,168,3 1,175,1 1,037,9 288,9 281,9

Market value, SEK/m2 10,925 10,020 10,133 10 ,015 9,804 9,844 10,795 10,569

Renovated apartments during the period, number 292 40 126 66 101 49 12 0

Renovated apartments during ackumulated year, number 524 232 192 66 162 61 12 0

Total number renovated apartments, number 686 394 354 228 162 61 12 0

Return requirement in the valuation, average % 4.84 5.16 5.16 5,.29 5.42 5.44 5.44 5.44

Average rent unrenovated, SEK/m2 982 976 977 965 947 942 919 947

Average rent renovated, SEK/m2 1,372 1,355 1,346 1,302 1,317 1 ,343 1,319 1,356

Rent development residentials, % 1.9 1,6 1.2 1.1 1.3 1.2 0.8 0.6

Rent development residentials public housing, % 0.0 0,0 1.0 0.0 0.0 0.0 1.5 0.0

The Share

Equity per share, SEK 62.06 51.68 49.60 46.60 45.70 44.00 42.10 42.90

Equity EPRA NAV per share, SEK 73.50 60.52 56.38 54.25 51.99 48.61 42.35 43.16

Profit after tax per share, SEK 10.37 2.71 2.32 0.70 2.01 0.25 1.57 0.97

Profit after tax per share after dilution, SEK 8.52 2.32 2.07 0.59 1.59 0.22 1.52 0.97



DefinitionsFINANCE

RETURN ON EQUITY, per cent, Profit for the year in relation to average shareholders’ equity.

LOAN-TO-VALUE RATIO (LTV), per cent, Interest-bearing liabilities including net reported vendor notes after deductions for market value on listed shareholdings and cash and cash equivalents in relation to the fair value of the properties at the close of the period.

LOAN-TO-VALUE RATIO PROPERTIES (LTV), per cent, Interest-bearing liabilities with security in properties in relation to the fair value of the properties at the close of the period.

INTEREST COVERAGE RATIO, times, Income from property management plus financial costs (EBIT) in relation to financial costs.

EQUITY RATIO, per cent, Reported shareholders’ equity in relation to reported total assets at the close of the period.

EQUITY RATIO, ADJUSTED, per cent Reported shareholders’ equity adjusted for the value of derivatives, goodwill and deferred tax liabilities.

PROPERTY

DIRECT RETURN, per cent, Net operating income recalculated on an annual basis in relation to the average market value of the management properties during the period.

NET OPERATING INCOME, SEK ‘000, Total income minus bad debt losses, operating and maintenance costs, property administration, rents on leasehold interest in government owned land, and property taxes.

INCOME FROM PROPERTY MANAGEMENT, SEK ‘000, Profit before changes in value and taxes.

CHANGES IN VALUE IN MANAGEMENT PROPERTIES, SEK ‘000, Change in the fair value after deductions for investments made.

TOTAL RETURN, per cent, Profit before tax in relation to market value of property portfolio.

REALISED CHANGES IN VALUE IN MANAGEMENT PROPERTIES, SEK ‘000, Property sales carried out after deductions for the most recent reported fair value of the properties and costs in conjunction with sale.

PROFIT MARGIN IN MANAGEMENT, per cent, Net operating income as a percent of total income.

SHARES

SHAREHOLDERS’ EQUITY PER SHARE, SEK, Shareholders’ equity in relation to the number of outstanding ordinary shares on the balance sheet date.

ADJUSTED SHAREHOLDERS’ EQUITY PER SHARE, Normally designated EPRA NAV, SEK, reported shareholders’ equity adjusted for the value of derivatives, goodwill and deferred tax liabilities, in relation to the number of outstanding ordinary shares on the balance sheet date.

PROFIT PER SHARE, SEK, Profit for the period after taxes in relation to the average number of outstanding ordinary shares prior to dilution.

PROFIT PER SHARE AFTER DILUTION, SEK, Profit for the period after tax in relation to the average number of outstanding ordinary shares, including full coverage and conversion of outstanding option programmes and convertible debentures. Upon calculation of the profit per share after dilution, the annual interest savings regarding the convertible debenture in the amount of SEK 51 million has been taken into consideration. The effect of the savings per share is SEK 0.72/year.



CALENDAR 2016-2017

Interim report Q1 April, 27, 2016

Annual General Meeting 2016 May, 12, 2016

Interim report Q2 July 15, 2016

Interim report Q3 November 11, 2016

Year-end report 2016 February 24, 2017

Investor information

FOR MORE INFORMATION, PLEASE CONTACT:

Ulf Nilsson, CEO+46 (0)8 12 13 17 25

Per-Axel Sundström, CFO+46 (0)8 12 13 17 25

D. Carnegie & Co ABStrandvägen 5A114 51 Stockholm

[email protected]

The information contained in this interim report is the type of information which Carnegie & Co is obligated to publish under the Swedish Securities Market Act and/or the Swedish Financial Investments Trading Act. The information was submitted for publication on February 26, 2016 at 07.00 (CET).



Earning capacity

Amounts in SEK thousand January 1 2016

January 1 2016

September 30 2015

June 30 2015

March 31 2015

January 1 2015

Rental income 1 306 846 1 178 761 1 174 125 1 162 355 1 154 765 1 138 647

Other income 0 0 602 602 602 1 831

Operating expenses -534 311 -478 356 -473 650 -477 874 -477 874 -470 921

Maintenance expenses -112 554 -100 980 -104 091 -118 169 -118 169 -114 043

Property tax -24 787 -22 849 -22 930 -22 930 -22 930 -22 550

Ground rent -15 682 -14 975 -14 642 -14 642 -14 642 -14 482

Net operating income 619 512 561 601 559 414 529 342 521 752 518 482

Central administration -61 692 -56 712 -55 559 -51 820 -51 820 -51 205

Net financial items -162 285 -149 350 -149 623 -154 155 -174 060 -221 205

Financial cost convertible bond/other bond -88 500 -88 500 -88 500 -88 500 -51 000 -51 000

Income from property management 307 035 267 039 265 732 234 867 244 872 195 072

CURRENT EARNINGS CAPACITY

Current earning capacityThe table below reflects D. Carnegie & Co.’s earning capacity on a 12-month basis as of January 1, 2016. It is important to note that the current earning capacity is not to be equated with a forecast for the coming 12 months. For example, the earning capacity does not include any assessment of rent trends, vacancies, or changes in inte-rest rates. The earning capacity also does not take into consideration contracted properties in Gothenburg, title to which has not yet vested in the purchaser.

The figures are adjusted to show a comparable portfolio, which means that divestments have been eliminated in earlier periods presented below.

Furthermore, D. Carnegie & Co.’s income statement is affected by changes in the value of investment properties as well as future property acquisitions and/or property divestments. Additional items affecting earnings include

changes in the value of derivative instruments. None of the foregoing factors have been taken into account in the current earning capacity. The current earning capacity also does not take into consideration the effects of future rent changes for renovated apartments.

The rental value is based on the property portfolio’s invoicing list on January 1, 2016, assessed budgeted pro-perty expenses for the coming 12 months, and central administration costs. Net financial items were calculated based on interest-bearing liabilities and assets as of December 31, 2015, and with consideration given to the interest rate terms applicable on that date.

The portfolio in Gothenburg was sold on February 1, 2016 - a portfolio which in the appended earning capacity has an annual rent value of SEK 60 million and net ope-rating income of SEK 11 million.

APPENDIX 1

Current portfolio Comparable portfolio

D. Carnegie & Co AB (publ) Strandvägen 5a se-114 51 Stockholm dcarnegie.se

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