Hemsö presents certain financial measures in the interim and annual report that are not prepared in accordance with IFRS. The company believes that these non-IFRS measures provide useful supplemental information to investors and the company's management, since they enable an evaluation of the company's performance and financial position. Since financial measures are calculated differently by different companies, they are not always comparable with the measures used by other companies. These financial measure should not therefore be considered a substitute for measures prepared in accordance with IFRS. The key figures below have not been prepared in accordance with IFRS unless otherwise stated.

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 as a percentage of the carrying amount of the properties.

Available liquidity
Cash and cash equivalents and short-term investments plus unutilised loan commitments.

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

Average interest rate
The weighted interest rate on interest-bearing liabilities with consideration for interest-rate derivatives and loan commitments on the closing date.

Loan maturity
The average of the remaining term of interest-bearing liabilities, taking loan commitments 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
Net operating income less administrative expenses in relation to net financial items.

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

Debt-coverage ratio
Available liquidity in relation to short-term borrowings.

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

Property-related definitions

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 carrying amounts of the properties at period-end, excluding project properties. The ratio measures the company's return on property operations, excluding project properties.

Net operating income
Rental income less operating and maintenance costs, property tax and leasehold fees. The ratio measures the company's profit from property operations.

Economic occupancy rate*
Rental income in relation to rental value.

Profit from property management
Profit before changes in value and tax. The ratio measures the company’s income from the operational activities of owning and managing properties.

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

Comparable portfolio*
The properties that Hemsö owned during all reported periods. Transactions pertaining to properties sold and development properties are excluded.

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

Project 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 tax-funded activities and dedicated to community services. Also includes sheltered housing under the public properties concept.

Lettable area*
The areas of the properties for which tenants can be charged rent at period-end.

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

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

Rent based on vacancy rate
Rental value of vacancy rent as a percentage of total rental value. The ratio measures the unutilised leasing potential of the property portfolio.

Vacancy rate, area*
Vacant area in relation to total lettable area.

Surplus ratio*
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.