Definitions

Hemsö presents some financial measures in interim and annual reports that are not defined under IFRS. The company believes that these measures provide valuable supplemental information to investors and the company’s management since they enable evaluation of the company’s earnings and financial position. Since financial measures are calculated differently by different companies, they are not always comparable with the measures used by other companies.

Financial definitions

Share of secured debt
Interest-bearing secured debt in relation to the market value of investment properties.

Return on equity
Profit after tax a for the period as a percentage of average equity (rolling 12 months). Average equity is calculated as the total of the opening and closing balance, divided by two.

Loan-to-value ratio
Interest-bearing net debt in relation to the market value of the properties plus investment in associated companies.

Property yield
Net operating income over the past 12 months, adjusted for the holding period and currency of the properties during the period, in relation to the market values of the properties at period-end, excluding development properties.

Available liquidity
Cash and cash equivalents and short-term investments, plus undrawn committed credit facilities.

Profit from property management
Profit before changes in value and tax.

Average interest rate
The weighted interest rate on interest-bearing debt with consideration for interest-rate derivatives and committed credit facilities on the closing date.

Loan maturity
The average of the remaining maturities of the interest-bearing debt, taking committed credit facilities into account.

Short-term borrowings
Loan maturities within 12 months.

MTN programme and EMTN programme
Swedish and European bond programmes, respectively.

Operating cash flow
Profit from property management after reversal of depreciation and the proportion of associated companies’ profit less tax paid.

Interest-coverage ratio
Operating profit in relation to net financing costs.

Operating profit
Net operating income plus profit from associated companies less central administrative expenses.

Debt-coverage ratio
Available liquidity excluding undrawn construction credit in relation to
short-term borrowings.

Total yield
The sum of net operating income and changes in relation to average property value, adjusted for value changes over a rolling 12-month period.

Property-related definitions

Net operating income
Rental income less operating and maintenance costs, property tax and leasehold fees. As of 1 January 2019, leasehold fees are no longer included in net operating income.

Economic occupancy rate
Contracted annual rental income in relation to rental value.

Rental income
Rental value less vacancies, discounts and rental losses.

Lease duration
The weighted average remaining lease term excluding garage/parking, storage/warehouse and housing rented to private individuals.

Rental value
Contracted annual rental income plus vacancy rent.

Comparable portfolio
The properties owned throughout the entire period and entire comparative period and not classified as development properties during these periods.

Contracted annual rent
Contracted annual rental income less discounts and rental losses.

Net investments
Total of purchasing, including stamp duty and other direct transaction
costs and investments in projects, less the selling price of properties sold and the selling price of properties sold via companies and direct transaction costs.

Development property
A property or well-defined section of a property that has been vacated in order to convert and refurbish the property. A project property also refers to a building under construction, or a property with an investment of at least 20 per cent of its market value. A project property is reclassified to a completed property on 1 January of the year after completion.

Property for public use
A property that is predominantly utilised for taxpayer-funded operations and purpose-built for public services. Secure housing facilities are also included in the public properties concept.

Large cities
The definition of major cities in Sweden, Finland and Germany according to Statistics Sweden and the OECD: In Sweden and Finland, municipalities with a population of 100,000 or more, and in Germany, with a population of 200,000 or more.

Leasable area
The areas of the properties for which tenants can be debited rent at period-end.

Occupancy rate, area*
Leased area in relation to total lettable area at period-end.

Rent based on vacancy rate
Rental value of vacancy rent as a percentage of total rental value.

Vacancy rent
Estimated market rent for vacant premises in "as-is" condition.

NOI margin 
Net operating income in relation to the sum of rental income and other income.

*These ratios are operational and not considered alternatives to the ESMA's guidelines.