interim report january - june 2016 - sagax · interim report january - june 2016 1 sagax’s...

Interim Report January - June 2016

AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in

the warehouse and light industry segment.

Interim Report January - June 2016

FIRST SIX MONTHS OF 2016 ■ Rental revenue increased 19% to SEK 731 M (616 for the year-earlier period).

■ Profit from property management increased 31% to SEK 516 M (395).Profit from property management per common share after dilution rose 36% to SEK 2.88 (2.12).

■ In total, property revaluation affected profit by SEK 801 M (430), of which joint ventures and associated companies accounted for SEK 151 M (89).

■ Revaluation of financial instruments had a negative impact totaling SEK 261 M (pos: 86) on profit. Fixed-income derivatives accounted for a loss of SEK 268 M (profit: 86), of which joint ventures and associated companies accounted for a loss of SEK 99 M (profit: 44).

■ Profit after tax for the period amounted to SEK 894 M (720). ■ Cash flow from operating activities before changes in work-ing capital amounted to SEK 517 M (322), corresponding to SEK 2.89 (1.66) per common share after dilution.

■ During the period, Sagax invested a net amount of SEK 1,233 M (770), of which acquisitions of 193 properties accounted for SEK 1,182 M.

SECOND QUARTER OF 2016 ■ Rental revenue increased 22% to SEK 378 M (309 for the year-earlier period).

■ Profit from property management increased 42% to SEK 279 M (196).

■ In total, property revaluation affected profit by SEK 542 M (346), of which joint ventures accounted for SEK 87 M (48).

■ In total, revaluation of financial instruments had a negative impact totaling SEK 98 M (pos: 149). Fixed-income de-rivatives accounted for a loss of SEK 105 M (profit: 149), of which joint ventures accounted for a loss of SEK 35 M (profit: 79).

■ Profit after tax for the period amounted to SEK 622 M (536).

■ Cash flow from operating activities before changes in working capital amounted to SEK 334 M (169).

■ During the second quarter of 2016, Sagax net invested SEK 1,153 M (348) in properties. Sagax acquired 191 properties and divested two properties during the quarter.

UNCHANGED FORECAST FOR 2016Profit from property management for 2016, meaning profit before revaluations and tax, is expected to amount to SEK 1,060 M based on the current property portfolio and announced acquisitions and divestments. The forecast was presented when the Interim Report for January-March 2016 was published.

The period in brief

Selected key performance indicators

2016 2015 2015 2014 2013 2012 2011Jan-Jun Jan-Jun Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec

Profit from property management per common share, SEK 2.88 2.12 4.90 3.73 2.73 2.15 2.06 Change compared with preceding year 36% 26% 31% 37% 27% 4% 14%Earnings per common share, SEK 5.28 4.18 9.85 4.05 4.44 1.82 0.31Dividend per common share, SEK – – 1.15 0.80 0.55 0.43 0.36Dividend per preference share, SEK – – 2.00 2.00 2.00 2.00 2.00Properties’ market value, SEK M 18,222 14,378 16,189 13,428 10,825 9,396 8,961Yield 7.2% 7.4% 7.4% 7.6% 7.7% 7.8% 7.7%Lease term, years 7.4 7.7 7.4 8.2 8.0 8.4 7.9

1Interim Report January - June 2016

SAGAX’S EARNINGS TRENDSagax’s profit from property management for the first six months of the year amounted to SEK 516 M, which was the highest profit from property management Sagax has been able to report and represented a year-on-year improvement of 22%, adjusted for nonrecurring expenses that impacted the comparative figure. The increase in earnings amounted to SEK 121 M and comprised a higher net operating income (SEK +98 M) and increased profit from joint ventures (SEK +10 M), while central administration costs were unchanged and financial expenses declined (SEK +13 M).

The increase in net operating income was primarily attrib-utable to Sagax acquiring properties for approximately SEK 2.7 billion in the past year. Reported financial expenses were lower than the year-earlier period as a result of a nonrecurring cost of SEK 28 M incurred by the premature refinancing of SEK 4.4 billion during the second quarter of 2015. Adjusted for the nonrecurring cost mentioned above, financial expenses for the first six months of 2016 increased SEK 15 M year-on-year, which is a consequence of increased borrowing due to the Group’s investing activities.

My assessment is that the company has shown strong earnings in line with what its owners’ can expect, taking into account the positive prevailing conditions on the company’s markets.

THE COMPANY’S FINANCIAL POSITIONOperating cash flow increased by SEK 195 M to SEK 517 M during the first six months of the year, of which SEK 93 M can be attributed to increased earnings and SEK 117 M to higher dividends from joint ventures. The interest coverage ratio increased to a multiple of 3.7 as a result of the increased cash flow. Interest-bearing net debt in relation to the proper-ties’ market value also declined by 2 percentage points to 62% despite increased borrowing as a result of the rising market value of the company’s property holdings. However, the aver-age interest-bearing net debt in relation to net operating in-come has increased from the level seen during the previous year (a multiple of 8.4) to a multiple of 8.7.

INVESTMENT MARKETThe Swedish property market has in general, and particularly the Stockholm market, shown a strong trend with extensive interest from many investors and historically high prices as a result. My perception is that this has applied to all property segments. This has naturally been beneficial for Sagax inso-far as the company has seen the value of its property hold-ings rise. It has also led to a challenging environment for the company in terms of finding attractive new invest ments in the Stockholm market. Unfortunately, I do not currently see any reason as to why this market dynamic would change in either

the short or medium term. In other words, I expect the very expensive and competitive market in Stockholm to be sus-tained.

The company’s view of pricing in Stockholm is reflected in the structure of the past year’s investments: Of the SEK 2.7 billion invested over the past 12 months, only approximately SEK 300 M pertained to Stockholm, despite it being Sagax’s largest market segment. A full SEK 2.4 billion has been in-vested in our foreign market segments. Our operations in Finland have provided the clear majority of our investment opportunities and now represent 39% of the company’s prop-erty holdings.

Our operations in Paris are our newest market segment and were launched in July 2014. In September, the Paris segment will contribute approximately SEK 675 M to Sagax’s property holdings. Investments made so far will generate an average yield of approximately 7%. The extent of these investments could be considered modest when comparing to Sagax’s other operations. However, it should be considered that Sagax could not replace these investments with equivalent investments in any of the company’s other market segments. This growth would therefore be lost without this new venture. It is also worth considering that the Paris operations are now as big as the Finnish operation was in July 2008; those operations now represent a property portfolio worth just over SEK 7 billion. In other words, experience shows that it takes time to build up both a market position and a successful local organization.

POTENTIAL NEW MARKETIn line with my comments in the 2015 Annual Report, we have examined the conditions for establishing another new market segment for Sagax against the background outlined above. Our current assessment is that the “Randstad” in the Netherlands, which includes the cities of Amsterdam, Rotter-dam, Utrecht and The Hague, could potentially offer a strong risk-adjusted yield within the light industry segment. The area is generally considered to encompass approximately 8,000 km2 and 7 million inhabitants, which can be compared with the 6,500 km2 and 2.2 million inhabitants of Greater Stock-holm. We now intend to continue analyzing the market seg-ment and potentially make certain minor investments.

Stockholm, July 13, 2016

DAVID MINDUSChief Executive Officer

CEO’s comments

2 Interim Report January - June 2016

BUSINESS CONCEPTAB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industry segment.

COMPANY GOALSThe overriding goal is the long-term generation of the maxi-mum risk-adjusted return to the company’s owners. To reach this goal, Sagax has set the following business targets:

■ Operations must generate a long-term sustainable return and strengthen cash flow.

■ The company is to continue to grow through property acquisitions after taking into account the risk-adjusted return.

■ Measured in real terms, the company is to create cash-flow growth from the existing property portfolio.

FINANCIAL TARGETS ■ The return on equity, measured over a five-year period, should not fall below 15% per year. During the period, it was 28%. The average return over the past five years has been 21% per year.

■ Profit from property management per common share should increase by a minimum of 15% per year. During the period, it increased to SEK 2.88 (2.12) per common share, up 36% compared with the year-earlier period. The average annual increase over the past five years has been 24%.

■ The long-term target for the interest coverage ratio is a minimum of 150%. The interest coverage ratio amounted to 374% and the average over the past five years has been 258%.

■ The long-term target for the debt ratio is that it should be less than 70%. The debt ratio was 58% and the average over the past five years has been 62%.

The following diagram illustrates the outcome for the past five years in relation to the financial targets.

Business concept, goals and strategies

Debt ratioOver the long term, must never exceed 70%

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Market value

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STRATEGIESInvestment strategySagax invests primarily in warehouse and industrial properties. Properties designed as warehouses and for light industries are attractive investment objects, as a result of a high continuous yield in combination with a low rate of new production and stable leasing rates. Sagax invests in complementary acquisi-tions and investments in existing properties. Property acqui-sitions and investments in the existing portfolio are aimed at increasing cash flow and diversifying rental revenue to thereby reduce the company’s operational and financial risks. The fol-lowing diagram illustrates the trend in the properties’ market value and lettable area.

Financing strategyThe financing structure of Sagax is designed with a clear focus on operating cash flow and the interest coverage ratio. This is expected to create excellent prerequisites for expansion and an attractive return on shareholders’ capital. The diagram below shows Sagax’s profit from property management and cash flow from operating activities. As illustrated, cash flow corresponds closely to profit from property management. The deviation is due mainly to profit from joint ventures, which is not recog-nized as cash flow. Dividends received from joint ventures are recognized as cash flow from operating activities.

Sagax adopts a conservative approach to the assumption of risk and endeavors to achieve well-balanced fixed interest and loan maturity periods to secure operating cash flow. The aver-age fixed-interest period was 3.1 (3.4) years at the end of the quarter. The long fixed-interest period reduces interest-rate sensitivity but results in a higher average interest rate than a shorter fixed-interest period. The company also endeavors to have a low refinancing risk. The average maturity period was 3.8 (4.7) years at the end of the quarter.

The company has three classes of shares: Class A com-mon shares, Class B common shares, and preference shares. The preference shares attract investor categories that value a steady stream of dividends.

The preference shares diversify Sagax’s capital base and allow the company to increase the Group’s equity without increas-ing the number of common shares. Class B shares have been issued to positively impact the liquidity and pricing of com-mon shares while contributing to enhancing the company’s financial flexibility.

Management strategySagax pursues efficiency and a long-term approach in its man-agement strategy. The management strategy includes actively pursuing long leases. This applies equally to new leases and to the management of existing leases. The company’s policy is to abstain from attempting to maximize rent levels at all points of time in favor of reaching lease agreements of a longer dura-tion with solvent tenants. This is regarded as being more advan-tageous since it reduces the risk of vacancies, while leading to reduced costs for letting premises and adapting premises to tenant needs. On June 30, the average remaining term under the company’s leases was 7.4 years (7.7).

Strategy for tenantsSagax endeavors to attract reputable and creditworthy tenants. The company mainly enters into triple net leases and that are thus only affected to a limited extent by changes in consump-tion or changed rates, pertaining to such utilities as heating, electricity, property tax, water and sewage.

Strategy for the rental marketSagax invests primarily in regions experiencing stable popu-lation growth and that have diversified business activities. Sagax’s greatest exposure to the rental market occurs in Stockholm and Helsinki, which are the markets regarded as offering the best potential for long-term growth in the Nordic region. The risk of a decline in the leasing rate and rent levels due to a weaker rental market is regarded as low in view of the stable demographic growth and the diversified business operations in these regions. Read more about this in the Annual Report for 2015.

Profit from property management, rolling annual valueCash flow from operating activities before change in working capital, rolling annual value

Profit from property management and cash flow

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The profit/loss and cash flow items below refer to the period January to June 2016. The comparative items refer to the year-earlier period. Amounts for the balance-sheet items and comparative figures refer to the position at the end of the period this year and end of the year-earlier period.

EARNINGSProfit from property management rose 31% to SEK 516 M (395), of which joint ventures and associated companies accounted for SEK 116 M (106). The increase was mainly attributable to property acquisitions and improved profit from joint ventures. Profit from property management per common share after dilution rose 36% to SEK 2.88 (2.12).

Changes in the value of properties increased profit by SEK 801 M (430), of which the revaluation of joint ventures and associated companies accounted for SEK 151 M (89).

In total, revaluation of financial instruments had a negative impact totaling SEK 261 M (pos: 86). Fixed-income deriva-

tives accounted for a loss of SEK 268 M (profit: 86), of which joint ventures accounted for SEK 99 M (profit: 44). All chang-es in the value of financial instruments were unrealized.

Falling market interest rates during the period were the reason for the changes in value and the higher reserves for the deficit values of fixed-income derivatives.

Profit after tax for the period amounted to SEK 894 M (720).

REVENUERental revenue increased 19% to SEK 731 M (616). Revenue was positively affected primarily by property acquisitions, as well as revenue-increasing investments in the existing prop-erty portfolio.

Other revenue of SEK 3 M (2) primarily comprised com-pensation from insurance companies regarding insurance claims.

Earnings, revenue and expenses

Rolling annual valueProfit from property management per quarter

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CHANGE IN THE ECONOMIC LEASING RATE The economic leasing rate was 95%, compared with 96% at year-end 2015. During the period, the vacancy value rose SEK 16 M (9) due to tenants vacating premises and declined SEK 15 M (7) due to occupancies. Discounts provided on a fixed-term basis amounted to SEK 18 M (20) on an annual basis at the end of the period, up SEK 1 M during 2016. The terms for the discounts are described in the table below. Stockholm and Helsinki accounted for 68% (72) of the vacancy value.

The closing vacancy value was SEK 77 M (69), a net in-crease of SEK 18 M during the period because of vacancies totaling SEK 17 M in acquired properties, mainly in Finland.

FUTURE VACANCY CHANGESNotice of termination had been served for leases with a rental value of SEK 40 M (36) at the end of the period, of which notice of renegotiation accounted for SEK 3 M (1) and notice of vacating the premises for SEK 37 M (35). Of the leases for

which notice of vacating the premises had been received, vacan-cies corresponding to SEK 3 M will occur in 2016 and SEK 34 M during the period 2017-2018. The rate of vacating premises is described in the table below. New lettings that have not yet been occupied reduced the adjusted vacancy value by SEK 22 M (7).

The adjusted closing vacancy value was SEK 95 M (97), a net increase of SEK 29 M in 2016 of which SEK 17 M was due to vacancies in acquired properties and SEK 11 M was due to the aforementioned increase in notices being served on leases for vacating properties, but which have not yet been vacated.

PROPERTY EXPENSESOperating and maintenance costs rose to a total of SEK 67 M (57). The increase was due primarily to property acquisitions during the past 12 months. Property tax and site leaseholds amounted to SEK 31 M (27). Costs for property administration amounted to SEK 15 M (11).

Vacancy changes

SEK M 2016

Jan-Jun2015

Jan-Dec

Opening vacancy for each year 59 74Vacancies 16 28Occupancies –15 –28Change in discounts provided 1 –11Vacancy value, acquired properties 17 2Vacancy value, sold properties –2 –5Change in exchange rates 1 –Closing vacancy value 77 59

Terminated for renegotiation 3 2Terminated lease, not vacated 37 28New letting, not occupied –22 –23Adjusted closing vacancy value 95 66

Vacancies, July 1, 2016

AreaRental value,

SEK MVacancy value,

SEK M1)Economic

vacancy rate1)Lettable

area, sqmVacant

area, sqm

Leasing rate by areavacancy rate

Stockholm 586 40 7% 611,000 39,000 6%Helsinki 374 12 3% 381,000 11,000 3%Rest of Sweden 222 5 2% 460,000 17,000 4%Rest of Finland 323 11 4% 489,000 19,000 4%Other 116 9 8% 107,000 4,000 3%Total 1,621 77 5% 2,048,000 89,000 4%

Terms for discounts provided

Year of maturity SEK M

2016 132017 32018 12019 –2020 –>2020 1Total 18

Leases terminated for vacancy

Year of vacancy No. of leasesRental value,

SEK M

2016 14 32017 15 272018 4 7Total 33 37

1) The vacancy value and vacancy rate both into account both vacancies and discounts provided.


CENTRAL ADMINISTRATIONCosts for the Group’s central administration amounted to SEK 30 M (29). Administration costs increased year-on-year due to the growth of the company. The Parent Company, AB Sagax, is responsible for stock market issues, such as financial reporting and stock market information. The Parent Company is also responsible for credit market issues, such as borrowing and financial risk management. Services between Group com-panies are charged on commercial terms and conditions and in accordance with market-based pricing. Intra-Group services comprise management services and internal interest charging. During the period, the Parent Company’s fees for property and company management from Group companies amounted to SEK 16 M (15) and from joint ventures to SEK 8 M (7). The Parent Company’s income statement and balance sheet are shown on page 19.

At the end of the period, the Group had 38 (33) employ-ees, of whom 16 (12) were women. 25 employees (22) work at the Parent Company and are stationed at the company’s office in Stockholm, 12 employees (10) work in one of the Finnish subsidiaries and are stationed in Helsinki and one em-ployee (1) works in France and is stationed in Paris. The other subsidiaries have no employees. Functions such as property maintenance and on-call operations are outsourced.

PROFIT FROM JOINT VENTURES AND ASSOCIATED COMPANIESProfit from joint ventures and associated companies amounted to SEK 116 M (106) and pertained to Sagax’s shares in the earnings of the company’s joint ventures and associated com-panies; refer also to page 12 for more information.

Profit for the period amounted to SEK 132 M (239), of which profit from property management accounted for SEK 116 M (106) M, changes in the value of fixed-income deriva-

tives for an expense of SEK 99 M (profit: 44) and changes in the value of properties for SEK 151 M (89). Profit was im-pacted by SEK 37 M (44) in deferred tax.

NET FINANCIAL ITEMSFinancial expenses amounted to SEK 193 M (207). The average interest rate was 3.2% (3.4) at June 30, 2016. During the past 12 months, interest-bearing liabilities have increased to SEK 11,601 M (9,360) due to financing of property acquisitions. For more information about financing at Sagax, see page 13.

The debt ratio has successively declined over time in paral-lel with a rise in the interest coverage ratio; see diagram below. This means that financial expenses have declined in relation to Group revenues. Interest-bearing net debt averaged 8.7 (8.4) times net operating income for the past 12 months.

REVALUATION OF PROPERTIESAt June 30, 2016, the property portfolio comprised 414 (201) properties with a market value of SEK 18,222 M (14,378). The value trend for operations in Sweden was an increase of SEK 221 M (329) while the value trend for foreign operations amounted to SEK 431 M (12).

New lettings and renegotiations of leases increased the mar-ket value of the properties by SEK 237 M (87), primarily due to the extension of the lease with medical devices company Baxter until 2037 for production facilities in Germany. Va-cancies and renegotiations reduced the value by SEK 27 M (33). The general change in market value for the company’s properties amounted to SEK 441 M (287), primarily due to lower yield requirements in the market. The market value of the property portfolio was revalued by a total amount of SEK 652 M (341), excluding currency effects. The change in the market value of the property portfolio is also described on page 11.

Debt ratio

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Unrealized changes in value

SEK M Jan-Jun 2016

New lettings/Renegotiations 36Vacancies/Renegotiations –4General market value changes 189Sub-total, Sweden 221

New lettings/Renegotiations 201Vacancies/Renegotiations –23General market value changes 252

Sub-total, Foreign 431

Total unrealized changes in value 652

The weighted yield requirement used in the valuations was 7.6% (7.6). The weighted cost of capital for the present value calculation of cash flows and residual values amounted to 8.2% (8.7) and 9.0% (9.5), respectively. See also the section on analysis and general conditions on page 11.

REVALUATION OF FINANCIAL DERIVATIVESSagax’s financial derivatives at June 30, 2016 comprised fixed-income derivatives in the form of nominal interest-rate swaps and interest-rate caps. All financial derivatives are recognized at market value and changes in market value are recognized as profit or loss. Changes in value for the period amounted to negative SEK 162 M (pos: 55) net, which comprised unreal-ized changes in value. The negative change in value was due to falling market interest rates during the period.

At the end of the period, the reserve for the deficit value of fixed-income derivatives was SEK 635 M (479); refer to the section on financing on page 13. Sagax’s earnings were also impacted negatively by a downward revaluation of SEK 99 M (pos: 44) in fixed-income derivatives in Sagax’s joint ventures. In its consolidated financial statements, Sagax continuously recognizes the company’s share of deficit values of the fixed-income derivatives of its joint ventures.

TAXSagax recognizes a current tax expense of SEK 15 M (16) pri-marily pertaining to foreign operations.

The deferred tax expense for the period amounted to SEK 111 M (128). The Group’s deferred tax assets and tax liabili-ties amounted to SEK 0 M (2) and SEK 596 M (555), respec-tively, at the end of the period. Sagax is not involved in any tax disputes.

Deferred tax liabilities by country

SEK M Jun 30, 2016

Sweden 274Finland 260Germany 61Denmark 1Tax liabilities 596

CASH FLOWCash flow from operating activities before changes in work-ing capital amounted to SEK 517 M (322). Changes in work-ing capital had a positive impact of SEK 43 M (neg: 7) on cash flow. Investing activities had a negative impact of SEK 1,248 M (976) on cash flow, while cash flow from financing activities contributed SEK 685 M (781) to Sagax. In total, cash and cash equivalents declined SEK 4 M (120) during the period. See page 16 for the statement of cash flows.


FORECAST FOR 2016Profit from property management for 2016, meaning profit be-fore revaluations and tax, is expected to amount to SEK 1,060 M based on the current property portfolio and announced acquisitions and divestments.

The forecast was presented when the Interim Report for January-March 2016 was published.

CURRENT EARNINGS CAPACITYThe table below shows Sagax’s earnings capacity on a 12-month basis at July 1, 2016. It is important to note that this capacity cannot be compared with a forecast for the forthcoming 12 months because it does not contain assess-ments about, for example, future vacancies, the interest-rate scenario, currency effects, rent trends or changes in value. Nor does it take into account repayments, when agreed rent sup-plements come into effect or when discounts provided cease to apply.

Sagax reports its current earnings capacity in conjunction with interim reports and year-end reports.

The rental value is based on contractual rental revenue on an annual basis, with supplements for estimated market rents for vacant premises. Property expenses are based on actual outcomes over the past 12 months adjusted for the holding period. Central administration costs are based on actual out-comes over the past 12 months. Net financial items are cal-culated based on interest-bearing liabilities and assets on the balance sheet date. Expenses for interest-bearing liabilities are based on the Group’s estimated average interest rate, with the addition of financing costs allocated over time. Tax is calculated at the standard tax rate of 22% and is deemed to predomi-nantly comprise deferred tax.

Sagax’s share of profit in joint ventures and associated com-panies is calculated in accordance with the same assumptions as for Sagax, taking into account the size of the participation.

Current earnings capacity

SEK M Jul 1, 2016 Jan 1, 2016

Rental value 1,621 1,453Vacancy –77 –59Rental revenue 1,544 1,394Property expenses –221 –195Net operating income 1,323 1,199Central administration –58 –57Joint ventures and associated companies 236 236

Net financial items –393 –371Profit from property management 1,109 1,008Tax –244 –222Profit after tax 865 786 – of which, holders of

preference shares 117 117 – of which, holders of

common shares 748 670

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At June 30, 2016, the property portfolio comprised 414 (201) properties with a lettable area of 2,048,000 square meters (1,707,000). The average remaining lease term was 7.4 years (7.7). The focus of the portfolio is on the Stockholm region where 40% (42) of the market value and 36% (41) of the rental value is concentrated. At year-end, the total rental value and contractual annual rent amounted to SEK 1,621 M (1,330) and SEK 1,544 M (1,261), respectively. This corre-sponds to an economic leasing rate of 95% (95).

INVESTMENTSDuring the period, Sagax invested SEK 1,354 M (770), of which property acquisitions accounted for SEK 1,182 M (698). Properties were acquired for SEK 1,054 M in Finland and for SEK 105 M in Paris. 193 properties with a total let-table area of 172,500 square meters were acquired during the period; see table below. In Finland, a property portfolio com-prising two superstores and 184 local supermarkets in Finland for a total of approximately SEK 830 M was acquired during the second quarter.

A total of SEK 172 M (72) was invested in the existing prop-erty portfolio. SEK 70 M of the investments for the period were made against rent supplements, SEK 24 M was invested in con-junction with new lettings, SEK 63 M in conjunction with new production and SEK 15 M pertained to property maintenance. New builds at the Induktorn 35 property in Stockholm were completed according to plan during the quarter.

The acquisition of a property portfolio in France comprising 14 properties for SEK 455 M was agreed during the period, with possession to be taken during the third quarter of 2016. Agreements were also signed in separate transactions during the period for the acquisition of one property in Stockholm and one property in Paris for which possession will be taken in the third quarter of 2016.

After the end of the period, possession was taken of one property in Stockholm and one property in the Rest of Finland following their acquisition.

Property portfolio

Property acquisitions January-June 2016

Property Municipality Segment Lettable area, sqm

Miklaholt 2 Stockholm Stockholm 1,900 19 Rue Blanc Mesnil Blanc Mesnil (Paris) Other 13,800 First quarter 15,700

Muonamiehentie 14 (91-46-130-27) Helsinki Helsinki 2,800Niittytie 13 (92-68-11-9) Vantaa Helsinki 7,400Niittyvillankuja 2 (92-68-10-23) Vantaa Helsinki 6,100Koskelontie 27 A Espoo Helsinki –Koskelontie 27 B Espoo Helsinki –Property portfolio (3 supermarkets) Tuusula Helsinki 4,100Property portfolio (183 supermarkets) 86 different Finnish municipalities Rest of Finland 152,100Second quarter 172,500

Total 188,200

DIVESTMENTSFive properties with a total lettable area of 5,500 square meters were divested for a total of SEK 121 M during the period; see table on page 10.

Agreements were also signed during the second quarter for the divestment of three properties in the Rest of Finland, which will be vacated during the third quarter of 2016 for a total of SEK 455 M. The divestment refers to two superstores and one local supermarket from the aforementioned property portfolio acquired during 2016. Agreements were also signed for the divestment of a property in the Rest of Sweden en-compassing 2,200 square meters of lettable area. The property will be vacated in the third quarter of 2016.

YIELD The properties’ yield is a yield measurement whereby the net operating income for the period, adjusted for holdings, is com-pared to the properties’ carrying amounts at the end of the period. The yield provides an overview of profit generation before financial expenses and central administration costs are taken into account. The yield reported by Sagax for the period was 7.2% (7.4), see below.

Calculation of yield

SEK M2016

Jun 302015

Jun 30

Net operating income according to statement of comprehensive income 621 523Addition for translation to annual value 621 523Holdings adjustment for acquisitions and divestments 69 16Currency translation to closing day rate 6 –6

Adjusted net operating income 1,317 1,056

Carrying amount of properties 18,222 14,334

Yield, % 7.2 7.4


Summary of property portfolio July 1, 2016

Market value Rental revenue

SegmentNo. of

propertiesLettable

area, sqmVacant

area, sqm SEK MSEK per

sqm

Rental value, SEK M

Percentage of

rental value

Economic leasing

rate SEK M Share

Stockholm 74 611,000 39,000 7,356 12,000 586 36% 93% 546 35%Helsinki 60 381,000 11,000 3,642 9,600 374 23% 97% 363 24%Rest of Sweden 53 460,000 17,000 2,575 5,600 222 14% 98% 217 14%Rest of Finland 216 489,000 19,000 3,396 6,900 323 20% 96% 312 20%Other 11 107,000 4,000 1,253 11,700 116 7% 92% 107 7%Total 414 2,048,000 89,000 18,222 8,900 1,621 100% 95% 1,544 100%

Helsinki 23%

Stockholm 36%

Other 7%

Rest of Finland 20%

Rest of Sweden 14%

Group’s rental valueYear of maturity of annual rent

SEK M

0

40

80

120

160

200

>2030

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

Lease terms

No. of leases

Contractual annual rent

Year of maturity Area, sqm SEK M Share

2016 152 49,000 46 3%

2017 220 126,000 116 7%

2018 120 119,000 120 8%2019 232 198,000 156 10%2020 53 264,000 195 13%

>2020 218 1,210,000 912 59%

Total 995 1,965,000 1,544 100%

Property investments January-June 2016

SEK MProperty

acquisitionsExisting

portfolio Total

Stockholm 23 48 71

Helsinki 230 77 307

Rest of Sweden – 1 1

Rest of Finland 824 46 870

Other 105 – 105

Total 1,182 172 1,354

Property sales January-June 2016

Property Municipality Segment Lettable area, sqm

Kungsängen 32:6 Uppsala Rest of Sweden 1,000Kungsängen 32:8 Uppsala Rest of Sweden 1,100Stockholmsledet 11 Lund Rest of Sweden –First quarter 2,200

Instrumentet 14 Stockholm Stockholm 1,900Grävskopan 2 Borlänge Rest of Sweden 1,400Second quarter 3,300

Total 5,500


Sagax prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Sagax has chosen to recognize its properties at fair value in accordance with the Fair Value Method.

At June 30, 2016, the total market value of Sagax’s 414 (201) properties was SEK 18,222 M (14,378). The deprecia-tion of the SEK against the EUR during the period led to for-eign property values increasing SEK 149 M (decline: 161). The total unrealized change in value during the period was SEK 652 M (341). Refer also to the table “Unrealized changes in value” on page 7.

VALUATION METHOD AND IMPLEMENTATIONThe valuations were carried out in accordance with generally accepted international valuation methods. As of June 30, 2016, all valuation objects were valued separately by authorized prop-erty appraisers from independent valuation agencies, except for three Finnish properties that were valued in accordance with agreed divestments and the five German properties which, as a result of high valuation costs in Germany, will only be valued externally at year-end.

The principle method of appraisal used was cash flow calcu-lations in which the present value of net operating income, investments and residual values was calculated. The calculation period was adjusted to the remaining term of existing leases

and varies between five and 20 years. As a rule, the calculation period is ten years. All properties have been inspected over the past three-year period. These inspections include public areas and a selection of premises with specific emphasis on major tenants and vacant premises. The purpose of the inspec-tions is to assess the properties’ overall standard, maintenance requirements, market position and the attractiveness of the premises.

ANALYSIS AND GENERAL CONDITIONSThe cost of capital for the present value calculation of cash flows (5.5–12.0%), the cost of capital for the present value cal-culation of residual values (6.3–14.0%) and the yield require-ment for the residual value calculations (5.8–15.0%) are based on analyses of transactions carried out and on individual assess-ments of the risk level and market position of each property.

The weighted cost of capital for the present value calcula-tion of cash flows and residual values for the property portfo-lio was 8.2% (8.7) and 9.0% (9.5), respectively. The weighted yield requirement amounted to 7.6% (7.6) at June 30, 2016, compared with an average yield requirement of 7.7% at December 31, 2015. By comparison, the yield reported by Sagax for the period was 7.2% (7.4). Weighted yield require-ments are compared with the recognized yield over time below.

Market value of property portfolio

Change in carrying amount of properties

SEK M No.

Property portfolio, December 31, 2015 16,189 225Acquisition of properties 1,182 193Investments in the current portfolio 172Property sales –121 –5Subdivision of property – 1Translation difference regarding foreign property values 149Unrealized changes in value 651Property portfolio, June 30, 2016 18,222 414

Market value of properties

Helsinki 20% (SEK 3,642 M)

Stockholm40% (SEK 7,356 M)

Other 7% (SEK 1,253 M)

Rest of Finland 19% (SEK 3,396 M)

Rest of Sweden 14%(SEK 2,575 M)

Yield requirement used in valautions Reported yield

Yield on 10-year government bonds

Yield compared with yield requirement

%

0

2

4

6

8

10

201620152014201320122011201020092008


Sagax’s joint ventures and associated companies contributed a total of SEK 116 M (106) to profit from property manage-ment during the period. Sagax’s share of changes in the value of properties amounted to SEK 151 M (89) and the share of changes in the value of fixed-income derivatives was a nega-tive SEK 99 M (pos: 44) during the period. The carrying amount of Sagax’s share of equity in joint ventures and associ-ated companies was SEK 1,193 M (1,073) at June 30, 2016.

Sagax owns 50% of Söderport Holding AB, with the remaining share owned by Hemfosa Fastigheter AB. Via Hemsö Intressenter AB, Sagax indirectly owns 15% of Hemsö Fastighets AB, with the remaining share owned by the Third Swedish National Pension Fund. During the period, Sagax also sold the company’s shares in a small associated company.

SÖDERPORT HOLDING ABCommissioned by Söderport, Sagax accounts for the property management and financial administration of the Söderport Group. Hemfosa performs property management activities in Gothenburg.

A total of 46% of Söderport’s lettable property area of 667,000 square meters was located in Stockholm at June 30, 2016. Söderport’s economic vacancies amounted to SEK 22 M (30) at the end of the period, corresponding to a vacancy rate of 4% (5). Of the economic vacancies, SEK 8 M (9) comprised

fixed-term rent discounts provided for new lettings. These dis-counts corresponded to 38% (31) of the economic vacancies, equivalent to 1.5 percentage points of the vacancy rate. At the end of the period, Stockholm accounted for 65% of the vacant area.

HEMSÖ INTRESSENTER ABHemsö Fastighets AB conducts operations in Sweden, Germany and Finland. Operations consist of owning, manag-ing and developing public properties. The company’s property portfolio encompasses 330 properties with a total property value of SEK 28.8 billion at June 30, 2016. The properties, which are located in the three Swedish metropolitan regions of Stockholm, Gothenburg and Malmö, accounted for 47% of the properties’ market value. The foreign property portfolio accounted for 16% of the properties’ market value.

Of Hemsö’s properties, 158 are residences for the elderly, 89 school premises, 74 health care premises and nine proper-ties for the justice and legal sector. A total of 58% of Hemsö’s rental value derives from municipalities, county councils or the state. A total of 1,776 leases with an average term of 7.8 years combined with financially stable tenants and a low vacancy rate result in stable rental revenue. More information on Hemsö Fastighets AB is available on the company’s web-site, hemso.se.

Joint ventures and associated companies

Sagax’s joint ventures

Söderport Hemsö

2016Jun 30

2015Jun 30

2016Jun 30

2015Jun 30

Sagax’s participating interest, % 50 50 15 15Rental revenue, SEK M 270 263 1,069 989Profit from property management, SEK M 120 120 512 452Profit for the period, SEK M 182 270 281 628Sagax’s share of profit from property management, SEK M 60 60 54 45No. of properties 49 68 330 302Rental value, SEK M 538 593 2,205 2,032Properties’ market value, SEK M 5,582 5,619 28,763 24,606

Lettable area, sqm 667,000 749,000 1,569,000 1,461,000

Lease term, years 5.8 4.9 7.8 7.6Economic vacancy rate, % 4 5 3 4Interest-bearing liabilities. SEK M 3,232 3,433 19,814 16,643Capital tied-up, years 3.6 4.6 2.6 2.8Fixed interest, years 3.81) 3.5 3.6 3.6Market value of fixed-income derivatives, SEK M –489 –421 –1,074 –685

1) It is assumed that in September 2016 Swedbank will utilize its right to extent the interest-rate swap agreement of SEK 2,088 to 2021.


EQUITYAt the AGM on May 3, 2016, it was resolved that SEK 299 M (246) would be distributed to shareholders. Consolidated shareholders’ equity amounted to SEK 6,621 M (5,052) at June 30, 2016. INTEREST-BEARING LIABILITIESSagax’s interest-bearing liabilities at the end of the period amounted to SEK 11,601 M (9,360). Of these interest-bear-ing liabilities, an amount corresponding to SEK 4,313 M (3,534) was recognized in EUR.

Interest-bearing net debt amounted to SEK 11,346 M (9,165), corresponding to 62% (64) of the market value of the properties. Interest-bearing gross debt to banks corresponded to 42% (53) of the market value of the properties at June 30, 2016. The re-maining gross debt corresponded to 22% (12) of the properties’ market value and comprised listed bond loans of SEK 2,869 M (1,753) and commercial paper of SEK 1,151 M (–).

Sagax’s two commercial paper programs allow the company to implement issues in SEK and EUR. The limits are SEK 1,500 M and EUR 200 M, and the maximum term is one year. At June 30, 2016, commercial paper totaling SEK 1,151 M (–) was outstanding with an average remaining term of 0.3 years. Sagax has available long-term credit facilities that cover all outstanding commercial paper at any time. Sagax raised a total of SEK 1,451 M in new loans, of which SEK 752 M consisted of an increase in issued commercial paper and SEK 578 M in issued bond loans. SEK 500 M was repaid during the period. Interest-bearing liabilities rose SEK 81 M (decline: 147) due to exchange-rate fluctuations.

In accordance with IAS 39, allocated borrowing costs of SEK 73 M (60) reduced interest-bearing liabilities in the balance sheet. Interest-bearing liabilities of SEK 11,528 M (9,300) were recognized.

The average remaining fixed-interest period and loan matu-rity was 3.1 years (3.4) and 3.8 years (4.7), respectively, at the end of the period. The average interest rate for the company’s interest-bearing liabilities was 3.2% (3.4) including effects of

derivatives at the end of the period. The average interest rate has been lowered during the past 12 months as a consequence of new borrowing at lower interest rates and renewed fixed-income derivatives at lower interest rates.

To limit interest-rate risk and increase the predictability of the company’s profit from property management, interest-rate caps and interest-rate swaps are utilized with a total nominal value of SEK 6,589 M (5,507), of which SEK 4,439 (4,499) pertain to interest-rate swaps with an average interest rate of 2.5% (2.7), see following table. Accordingly, the company’s profit from property management will be affected by changes in general interest rates by only a limited extent in the fore-seeable future; refer to the sensitivity analysis on page 26.

The reserve for the negative market value of fixed-income derivatives rose by SEK 169 M (79) during the period. The to-tal market value of Sagax’s fixed-income derivatives had a defi-cit value of SEK 635 M (479) on the balance sheet date. The reserve of SEK 635 M will be gradually dissolved and recog-nized in profit and loss by the expiry date of the derivative con-tracts, regardless of the interest-rate scenario. All other things being equal, the time factor alone entails that reserves for the deficit value of fixed-income derivatives in Sagax will be dis-solved in a total amount of SEK 124 M over the next year. Over a five-year period, based on the time factor alone and as-suming unchanged market interest rates, a total of SEK 552 M would be recognized as revenue in the consolidated financial statements.

WORKING CAPITAL AND LIQUIDITYSagax’s working capital, excluding current interest-bearing liabilities, amounted to a negative SEK 118 M (149) at June 30, 2016. At the same time, Sagax’s available access to funds was SEK 939 M (592), of which SEK 247 M (187) in the form of bank deposits and SEK 692 M (405) in the form of unutilized lines of credit. Lines of credit used to cover outstanding commercial paper are not included in available liquidity. No additional collateral needs to be pledged to utilize these lines of credit.

Financing

Derivative contracts June 30, 2016

SEK MNominal amount

Years to maturity

Market value Jun 30, 2016

Market value Dec 31, 2015

Change for the period

Nominal interest-rate swaps 4,439 6.0 –636 –469 –167Interest-rate caps 2,150 3.3 1 3 –2Total 6,589 5.1 –635 –466 –169

Fixed-interest period and loan maturity June 30, 2016

Fixed interest Loan maturity Interest-rate swaps

Year of maturity SEK M Interest rate Share SEK M Share SEK M Interest rate

2016 4,644 2.5% 38% 62 1% – –

2017 359 5.8% 3% 1,594 11% – –2018 1,095 2.1% 10% 1,299 12% – –2019 706 2.7% 6% 2,248 20% 477 1.0%2020 622 4.1% 6% 1,712 15% 514 3.6%>2020 4,175 4.0% 37% 4,686 42% 3,448 2.6%Total/average 11,601 3.2% 100% 11,601 100% 4,439 2.5%


Statement of comprehensive income

SEK M2016

Jan-Jun2015

Jan-Jun2016

Apr-Jun2015

Apr-Jun2015

Jan-DecRolling

12 months

Rental revenue 731 616 378 309 1,291 1,405Other revenue 3 2 2 – 2 3Operating expenses –52 –47 -19 –17 –83 –88Maintenance costs –15 –10 -8 –5 –25 –29Site leaseholds –9 –8 -4 –4 –17 –17Property tax –22 –19 -11 –10 –40 –43Property administration –15 –11 -9 –6 –23 –28

Net operating income 621 523 328 267 1,104 1,202

Central administration –30 –29 –13 –15 –57 –58Profit from joint ventures and associated companies 132 195 86 141 439 375 – of which, profit from property management 116 106 62 59 233 243 – of which, changes in value 53 133 52 126 320 240 – of which, tax –37 –44 –28 –44 –115 –108Financial income 2 3 1 3 4 3Financial expenses –193 –207 –99 –118 –390 –375

Profit including changes in value of joint ventures and associated companies 532 485 303 278 1,100 1,147

– of which, profit from property management 516 395 279 196 895 1,015

Changes in value:Properties, realized –1 – – – 1 –1Properties, unrealized 651 341 455 298 677 987Financial instruments, realized – –13 – –13 –13 –Financial instruments, unrealized –162 55 –63 84 67 –150

Profit before tax 1,020 868 695 647 1,832 1,983

Deferred tax –111 –132 –67 –102 –139 –120Current tax –15 –16 –6 –9 –12 –10

Profit for the period 894 720 622 536 1,681 1,853

Other comprehensive income – items that may be reversed to profit and loss:Translation differences for foreign operations 86 –70 52 12 –92 34Share of other comprehensive income for joint ventures 6 –2 3 –1 –8 –

Translation differences pertaining to hedge accounting in foreign operations –24 18 –14 4 10 –32

Tax on items that may be reversed to profit and loss –5 4 –3 1 8 –1

Comprehensive income for the period 956 670 659 552 1,599 1,854

Earnings per common share, SEK 5.28 4.18 3.75 3.20 9.88 10.97Earnings per common share after dilution, SEK 5.27 4.16 3.74 3.18 9.85 10.94Average number of common shares, millions 158.3 158.3 158.3 158.3 158.3 158.3Average number of common shares after dilution, millions 158.7 158.8 158.7 158.8 158.8 158.7


Condensed statement of financial position

SEK M2016

Jun 302015

Jun 302015

Dec 31

Investment properties 17,760 14,334 16,068Investment properties for sale 462 – 121Participations in joint ventures and associated companies 1,193 1,073 1,259Deferred tax assets – 2 –Financial derivatives 1 – 4Other fixed assets 98 140 28

Total fixed assets 19,515 15,549 17,480

Cash and bank balances 247 187 251Other current assets 179 112 112

Total current assets 426 299 363

Total assets 19,941 15,849 17,843

Equity 6,621 5,052 5,981

Long-term interest-bearing liabilities 9,914 9,163 9,959Deferred tax liabilities 596 555 479Financial derivatives 636 481 470Other long-term liabilities 17 10 13

Total long-term liabilities 11,162 10,209 10,921

Commercial paper 1,151 – 399Other current interest-bearing liabilities 463 137 141 Other current liabilities 544 450 401

Total current liabilities 2,158 587 940

Total equity and liabilities 19,941 15,849 17,843


Statement of cash flows

SEK M2016

Jan-Jun2015

Jan-Jun2016

Apr-Jun2015

Apr-Jun2015

Jan-DecRolling

12 months

Profit before tax 1,020 868 695 647 1,832 1,983Change in value of financial instruments 162 –42 63 –71 –54 150Change in value of properties –650 –341 –455 –298 –677 –986Loss from ownership of joint ventures and associated companies –131 –195 –87 –141 –438 –374

Loss from joint ventures and associated companies 128 11 128 11 63 180Dissolution of allocated borrowing costs 11 28 5 24 35 18Tax paid –12 –5 –6 –4 –10 –17Other items not included in cash flow –10 –2 –9 – –1 –9

Cash flow from operating activities before changes in working capital 517 322 334 169 750 944

Cash flow from changes in current receivables –27 –4 –13 –5 –15 –38Cash flow from changes in current liabilities 70 –3 42 25 28 101

Cash flow from operating activities 560 315 363 189 763 1,007

Acquisition of properties –1,182 –698 –1,022 –319 –2,199 –2,559

Property sales 121 – 35 – 37 158

Investments in existing properties –172 –72 –133 –29 –202 –302Acquisition of shares –58 –35 – –26 –114 –137Capital contribution to joint ventures – –45 – –45 –45 –

Advance payments for property acquisitions –31 –123 – –123 – –31

Divestment of participations in associated companies 74 – 74 – – 74

Increase in other fixed assets –1 –2 –1 –1 – –

Cash flow from investing activities –1,248 –976 –1,047 –544 –2,523 –2,797

Issue of shares – 99 – – 99 –

Dividend paid to shareholders –240 –184 –211 –156 –242 –298

Incentive Plan –18 –15 –18 –15 –15 –18Borrowings 1,437 1,466 957 1,203 3,085 3,056Repayment of loans –500 –557 –85 –527 –957 –900Redemption of financial derivatives – –30 – –30 –30 –Increase in other long-term liabilities 6 2 2 – 5 8Reduction in long-term liabilities – – – – – –

Cash flow from financing activities 685 781 645 475 1,945 1,848

Cash flow for the period –4 120 –40 119 184 58

Exchange rate differences in cash and cash equivalents – – – – – –

Change in cash and cash equivalents –4 120 –40 119 184 58

Cash and cash equivalents at beginning of period 251 67 287 68 67 187

Cash and cash equivalents at the end of period 247 187 247 187 251 247


SEK M Share capital

Other contributed

capital

Reserves, translationdifferences

Profit earned incl. net. profit for the period

Total equity

Equity, December 31, 2014 376 1,605 84 2,479 4,544

New issue of preference shares 5 94 – – 99Transaction costs – –1 – – –1Dividends – – – –246 –246Redemption of Incentive Plan – – – –14 –14Incentive Plan – – – –1 –1Comprehensive income, January-June 2015 – – –41 711 670

Equity, June 30, 2015 381 1,698 43 2,929 5,052

Comprehensive income, July-December 2015 – – –41 970 929

Equity, December 31, 2015 381 1,698 2 3,899 5,981

Dividends – – – –299 –299Redemption of Incentive Plan – – – –20 –20Incentive Plan – – – 2 2Comprehensive income, January-June 2016 – – 62 894 956

Equity, June 30, 20161) 381 1,698 65 4,476 6,621

Statement of changes in equity

Segment information

1) Equity is attributable in its entirety to the Parent Company’s shareholders.

Changes in value, properties

Profit items per segment Rental revenue1)

Profit from property management Unrealized Realized

Income before tax

SEK M2016

Jan-Jun2015

Jan-Jun2016

Jan-Jun2015

Jan-Jun2016

Jan-Jun2015

Jan-Jun2016

Jan-Jun2015

Jan-Jun2016

Jan-Jun2015

Jan-Jun

Stockholm 275 237 158 99 205 233 – – 362 332Helsinki 169 143 104 80 60 22 – – 164 103Rest of Sweden 109 116 75 69 16 96 –1 – 91 165Rest of Finland 123 71 76 46 203 1 – – 279 47Other 55 50 32 28 168 –12 – – 200 16

Sub-total 731 616 445 322 652 341 –1 – 1,096 663Financial instruments – – – – – – – – –162 42Joint ventures – – 116 106 127 89 24 1 132 195Other, non-specified – – –45 –33 – – – – –45 –32

Total 731 616 516 395 779 430 23 1 1,020 868

Asset items per segment

Market value properties

Investments properties

Acquisitions properties

Divestment properties

SEK M2016

Jun 302015

Jun 302016

Jan-Jun2015

Jan-Jun2016

Jan-Jun2015

Jan-Jun2016

Jan-Jun2015

Jan-Jun

Stockholm 7,356 6,230 48 58 23 245 –50 –Helsinki 3,642 2,940 77 10 230 439 – –Rest of Sweden 2,575 2,842 1 4 – – –71 –Rest of Finland 3,396 1,430 46 – 824 – – –Other 1,253 936 – – 105 14 – –Sub-total 18,222 14,378 172 72 1,182 698 –121 –

Other, non-specified – – – – – – – –

Total 18,222 14,378 172 72 1,182 698 –121 –

1) All rental revenue pertains to external tenants.


Key performance indicators

2016Jan-Jun

2015Jan-Jun

2015Jan-Dec

2014Jan-Dec

2013Jan-Dec

2012Jan-Dec

2011Jan-Dec

Property-related

Yield, % 7.2 7.4 7.4 7.6 7.7 7.8 7.7Surplus ratio, % 85 85 86 86 87 86 86Leasing rate by area, % 96 95 97 95 93 95 97Economic leasing rate, % 95 95 96 94 92 93 93Lease term, years 7.4 7.7 7.4 8.2 8.0 8.4 7.9Lettable area, 000s of square meters 2,048 1,707 1,860 1,634 1,336 1,159 1,144No. of properties 414 201 225 184 141 134 136

Financial

Return on total capital, % 6 7 7 7 7 7 7Return on equity, % 28 30 32 18 24 15 6Average interest rate, % 3.2 3.4 3.3 4.1 4.4 4.6 4.5Fixed-interest period incl. derivatives, year 3.1 3.4 3.0 3.0 3.7 5.2 4.3Capital tied-up, years 3.8 4.7 4.2 3.2 3.5 4.3 2.9Equity/assets ratio, % 33 32 34 32 32 28 23Debt ratio, % 58 59 59 59 60 62 68Net debt/market value of the properties, % 62 64 64 62 64 63 69Interest coverage ratio, multiple 3.7 2.5 2.9 2.6 2.4 2.2 2.2

Data per common share1) 2)

Share price at the end of period, SEK 75.253) 53.253) 71.753) 44.003) 24.203) 17.14 15.00EPRA NAV, SEK 43.40 28.16 35.52 27.23 19.05 14.86 12.76Equity, SEK 30.42 20.51 26.01 17.49 13.41 8.09 6.99Equity after dilution, SEK 30.37 20.46 25.93 17.44 13.40 8.09 6.99Profit, SEK 5.28 4.18 9.88 4.06 4.44 1.82 0.33Profit after dilution, SEK 5.27 4.16 9.85 4.05 4.44 1.82 0.33Profit from property management, SEK 2.89 2.13 4.92 3.74 2.74 2.15 2.07Profit from property management after dilution, SEK 2.88 2.12 4.90 3.73 2.73 2.15 2.06Cash flow, SEK 2.90 1.67 4.00 3.00 2.12 1.79 1.88Cash flow after dilution, SEK 2.89 1.66 3.99 2.99 2.12 1.79 1.87Dividend per share, SEK – – 1.15 0.80 0.55 0.43 0.36No. at end of period, millions 158.3 158.3 158.3 158.3 158.3 147.6 147.6No. at end of period after dilution, millions 158.5 158.7 158.8 158.7 158.4 147.6 147.6Average number, millions 158.3 158.3 158.3 158.3 153.9 147.6 146.8Average number after dilution, millions 158.7 158.8 158.8 158.6 154.0 147.6 147.4

Data per preference share

Share price at the end of period, SEK 33.00 33.80 31.30 36.00 31.50 29.60 26.50Equity, SEK 31.00 31.00 32.00 32.00 32.00 32.00 32.00Profit, SEK 1.00 1.00 2.00 2.00 2.00 2.00 2.00Dividend per share, SEK – – 2.00 2.00 2.00 2.00 2.00No. at end of period, millions 58.2 58.2 58.2 55.5 50.0 50.0 37.3Average number, millions 58.2 57.3 57.8 52.2 50.0 37.8 37.3

1) Comparative figures have been adjusted for the bonus issue of Class B shares in 2013, by multiplying the number of shares by 11. The conditions of the bonus issue were ten Class B shares for each Class A share.

2) Excluding 1,000,000 Class B shares bought back by AB Sagax.3) Pertains to the share price for the Class B share.


Parent Company Income Statement

Condensed Parent Company balance sheet

SEK M2016

Jan-Jun2015

Jan-Jun2015

Jan-Dec

Net sales 25 23 47Administration costs –34 –31 –62

Loss before financial income and expenses –9 –8 –15

Loss from participations in Group companies – – –16Profit from participations in joint ventures 28 11 11Financial income 121 30 195Financial expenses –97 –45 –204Profit/loss before tax and appropriations 43 –12 –28

Group contributions – – 19Tax –9 – 2Profit/loss for the period 34 –12 –7

SEK M2016

Jun 302015

Jun 302015

Dec 31

Tangible fixed assets 1 1 1Receivables from Group companies 2,201 1,245 1,844Other financial fixed assets 2,563 1,544 2,294Total fixed assets 4,765 2,790 4,139

Cash and bank balances 1 20 67Receivables from Group companies 2,775 1,613 1,817Other current assets 45 84 35Total current assets 2,821 1,717 1,919

Total assets 7,586 4,507 6,058

Equity 1,251 1,518 1,524

Long-term interest-bearing liabilities 2,869 1,998 2,297Liabilities to Group companies 719 738 738Deferred tax liabilities – 2 –Total long-term liabilities 3,588 2,738 3,035

Liabilities to Group companies 1,430 93 989Other current liabilities 1,317 158 510Total current liabilities 2,747 251 1,499

Total equity and liabilities 7,586 4,507 6,058


The Sagax share and shareholders

At the end of the period, Sagax had 7,615 (7,578) share-holders. Market capitalization amounted to SEK 13,981 M (10,504). Sagax has three classes of shares: Class A common shares, Class B common shares and preference shares. Sagax’s shares are listed on Nasdaq Stockholm, Mid Cap. There are a total of 13,416,822 Class A shares, 144,858,130

Class B shares and 58,250,000 preference shares outstanding. In addition, 1,000,000 previously bought back Class B shares were held in treasury.

Each preference share entails a preferential right to SEK 2.00 in annual dividends. The share price trend and informa-tion about share trading are provided below.

Trade number of shares, 1,000 per week Preference share

SEK Number

©

0

100

200

300

400

500

600

700

800

JunMayAprMarFebJanDecNovOctSepAugJul

0

5

10

15

20

25

30

35

40

Price trend of preference shares for the past 12 months

SEK

Trade number of shares, 1,000 per week

Carnegie Real Estate Index

Class B share

OMX Stockholm_Pl

Number

©

0

100

200

300

400

500

600

700

800

JunMayAprMarFebJanDecNovOctSepAugJul0

10

20

30

40

50

60

70

80

Price trend of Class B shares for the past 12 months

Voting rights and proportion of share capital

Class of share No.Voting rights

per share Number of votesProportion

of votesProportion

of votes

Class A shares 13,416,822 1.00 13,416,822 40% 6%Class B shares 145,858,130 0.10 14,585,813 43% 67%Preference shares 58,250,000 0.10 5,825,000 17% 27%Total 217,524,952 33,827,635 100% 100%

Trade in the shares on the Nasdaq Stockholm

Price paid, SEKTurnover rate

on an annual basis, % Average trading volume per

trading day, SEK M

Jun 30, 2016 Jun 30, 2015 Apr-Jun 2016 Apr-Jun 2015 Apr-Jun 2016 Apr-Jun 2015

Class A shares 80.75 57.25 2 4 0.1 0.1Class B shares 75.25 53.25 5 14 1.9 4.5

Preference shares 33.00 33.80 15 30 1.2 2.5


1) Comparative figures have been adjusted for the bonus issue of Class B shares in 2013, by multiplying the number of shares by 11. The conditions of the bonus issue were ten Class B shares for each Class A share.

2) Profit from property management and cash flow pertain to a rolling 12 months.3) Cash flow pertains to cash flow from operating activities before changes in working capital.4) See page 29 for definition.

Key data per common share1)

2016Jun 30

2015 Jun 30

2015 Dec 31

2014Dec 31

2013Dec 31

2012Dec 31

2011 Dec 31

Price of Class B share at the end of the period, SEK 75.25 53.25 71.75 44.00 24.20 17.14 15.00Profit from property management after dilution, SEK 2) 5.67 4.17 4.90 3.73 2.73 2.15 2.06Cash flow after dilution, SEK 2) 3) 5.22 3.45 3.99 2.99 2.12 1.79 1.87Equity after dilution, SEK 30.37 20.46 25.93 17.44 13.40 8.09 6.99EPRA NAV, SEK 4) 43.40 30.09 35.52 27.23 19.05 14.86 12.76Price of Class B share/Profit from property management, multiple 2) 13.3 12.8 14.6 11.8 8.9 8.0 7.3Price of Class B share/Cash flow, multiple 2) 3) 14.4 15.4 18.0 14.7 11.4 9.6 8.0Price of Class B share/Equity, % 248 260 277 252 181 212 215Price of Class B share/EPRA NAV, % 173 177 202 162 127 116 118

WARRANTSSagax has three warrant plans for the company’s employees. In total, Sagax’s employees hold warrants corresponding to 0.7% of the number of common shares outstanding. The com-pany’s CEO and Board members are not participating in the plans. These plans are valid for three years, encompassing the periods 2014-2017, 2015-2018 and 2016-2019. Warrants entitle the holder to subscribe for new common shares in June 2017, June 2018 and June 2019, respectively. The subscrip-tion price corresponds to the price paid for the common share at the start of the warrant plans converted using the average share price trend for the listed property companies in accord-ance with Carnegie’s property index (CREX) during the cor-responding period. Accordingly, the warrants will have a value on condition that the price performance of the Sagax share exceeds the average for all listed property companies during each three-year period.

PROFIT FROM PROPERTY MANAGEMENT PER COMMON SHARE Profit from property management per common share after dilution on a rolling 12-month basis amounted to SEK 5.67 (4.17) which, compared with the share price of the common share at the end of the period, corresponded to a multiple of 13.3 (12.8).

EQUITY PER COMMON SHARE Equity per common share after dilution amounted to SEK 30.37 (20.46). EPRA NAV per common share amounted to SEK 43.40 (30.09). For definitions of key ratios, see page 29. The share price for the Class B share at the end of the period was 248% (260) of equity per common share and 173% (177) of EPRA NAV per common share.

Share prince/profit from property management per Class B share, rolling 12 months

Share price/profit from property management per common share

Multiple

2006 2007 2008 2009 20162015201420132012201120100

5

10

15

20

25

Share price in relation to equity and EPRA NAV

Share price/EPRA NAV per Class B shareShare price/equity per Class B share

0

70

140

210

280

350%

2006 2007 2008 2009 2016201520142013201220112010


No. of sharesNo. of

shareholders

1–500 3,526

501–1,000 842

1,001–2,000 802

2,001–5,000 1,091

5,001–10,000 534

10,001–50,000 579

50,001– 241

Total 7,615

Shareholder category No.Share of

voting power

Private individuals residing in Sweden 6,559 9%

Private individuals residing abroad 65 1%

Companies/institutions in Sweden 658 82%

Companies/institutions abroad 333 8%

Total 7,615 100%

Shareholders by country No.

Share of voting power

Sweden 7,217 92%

Luxembourg 21 3%

UK 44 2%

Norway 24 1%

USA 50 1%

Other countries 259 1%

Total 7,615 100%

Shareholder structure June 30, 20161)

1) Ownership structure at June 30 is based on information from Euroclear Sweden and the Swedish Financial Supervisory Authority’s insider register. 2) Voting rights for treasury shares held by AB Sagax have been excluded.

Largest shareholders June 30, 20161)

No. of shares Percentage of

Class A shares Class B shares Preference shares Share capital Votes2)

David Mindus and companies 5,015,000 37,693,025 775 19.6% 26.0%Salén family and companies 1,998,733 17,485,330 78,595 9.0% 11.1%Rutger Arnhult and companies 2,847,038 16,122,775 65,000 8.8% 13.2%Third Swedish National Pension Fund – 12,211,543 – 5.6% 3.6%Länsförsäkringar Fastighetsfond – 11,669,078 – 5.4% 3.5%Catella Hedgefond – – 7,995,047 3.7% 2.4%Swedish Foundation for Strategic Research – – 3,205,405 1.5% 1.0%Volvo Pensions Foundation – – 2,940,000 1.4% 0.9%Avanza Pension 25,363 742,276 2,163,004 1.3% 0.9%Robur Realinvest 250,000 2,500,000 – 1.3% 1.5%Fourth Swedish National Pension Fund 2,858 2,265,699 11,074 1.0% 0.7%Erik Selin Fastigheter 435,000 1,795,000 – 1.0% 1.8%Robur Småbolagsfond Sverige 133,731 1,863,275 – 0.9% 0.9%ICA-Handlarnas Förbund Finans – – 1,940,173 0.9% 0.6%Sifonen 140,000 1,668,450 10,033 0.8% 0.9%Stiftelsen Stockholms Sjukhem – – 1,800,000 0.8% 0.5%Banque Carnegie Luxembourg 696,382 903,870 5,000 0.7% 2.3%Skandia Liv 143,842 1,426,441 – 0.7% 0.8%SEB S.A. 72,750 123,200 1,332,133 0.7% 0.6%Patrik Brummer – – 1,500,000 0.7% 0.4%Second Swedish National Pension Fund – 1,476,025 – 0.7% 0.4%

Total 20 largest shareholders 11,760,697 109,945,987 23,046,239 66.5% 74.3%Other shareholders 1,656,125 34,912,143 35,203,761 33.0% 25.7%

Sub-total 13,416,822 144,858,130 58,250,000 99.5% 100.0%Treasury shares held by AB Sagax – 1,000,000 – 0.5% 0.0%

Total 13,416,822 145,858,130 58,250,000 100.0% 100.0% – of which, Board and employees 7,346,411 58,852,863 79,617 30.5% 39.2%

1) Including shares repurchased by AB Sagax.


On 1 July, 2016, Sagax acquired Tuottajantie 49 (743-5-25-34) in Seinäjoki, Finland. The purchase cost amounts to the equivalent of SEK 117 M in total, including an extension of 6,000 square meters of warehouse premises at the property, which is expected to be completed during the first quarter of 2017. The property will encompass 57,000 square meters of land and 18,000 square meters of lettable area following the aforementioned extension. The property was acquired from Tibnor, which rents the entire property for warehouse and distributionpurposes. The lease runs until 2035. Tibnor is a division within SSAB and is the Nordic region’s leading supplier of steel and metals.


At the AGM of AB Sagax on May 3, 2016, it was resolved that:

■ the income statements and balance sheets, and the Board’s proposed appropriation of profits be adopted.

■ the Board’s proposed dividend of SEK 1.15 per Class A and Class B common share and SEK 2.00 per preference share for the 2015 fiscal year, with quarterly payments of SEK 0.50 per preference share, be adopted. May 6, 2016 be adopted as the record day for payment of dividends on common shares. Thursday June 30, Friday September 30, 2016, Friday December 30, 2016 and Friday March 31, 2017 be established as the record days for the payments of dividends on preference shares. The dividend is expected to be paid by Euroclear Sweden AB on the third working day after each record day.

■ the Board members and the CEO be discharged from per-sonal liability for the 2015 fiscal year.

■ the number of Board members amount to six for the period until the next AGM.

■ the Board members Johan Cederlund, Filip Engelbert, David Mindus, Staffan Salén, Johan Thorell and Ulrika Werdelin are to be re-elected. Staffan Salén be appointed Chairman of the Board. Göran E Larsson, who had served as a Board member since 2001 and been Chairman of the Board since 2004, had declined re-election and was thanked for his service by the AGM.

■ fees be paid in the amount of SEK 300,000 to the Board Chairman and SEK 165,000 to each other non-executive Board member elected by the AGM. The fees also include remuneration for committee work.

■ principles be established for the composition of a Nomina-tion Committee for the 2017 AGM.

■ Ernst & Young AB be reelected as auditors for the forth-coming one-year period, with Magnus Fredmer as the audi-tor in charge.

■ guidelines for remuneration of senior executives be estab-lished.

■ the Incentive Plan 2016/2019 , based on the issue of a maximum of 400,000 Series 2016/2019 warrants be imple-mented. Disapplying the preferential rights of shareholders, subscription entitlement will accrue to the wholly owned subsidiary, Satrap Kapitalförvaltning AB. The warrants will be issued free of charge. Each warrant entitles the holder to subscribe for one new Class B common share in AB Sagax.

■ Satrap Kapitalförvaltning be permitted to transfer a maxi-mum of 400,000 warrants in AB Sagax of the 2016/2019 series, to employees, or to have control over the warrants in some other manner in order to secure obligations pursuant to Incentive Plan 2016/2019. Each Employee is to be offered an opportunity to acquire warrants in an amount corre-sponding to a maximum of one twelfth of the Employee’s annual salary before income tax. It is estimated that the maximum number of additional Class B common shares will not exceed 400,000, corresponding to approximately 0.27% of the total number of Class B common shares in the com-

pany, subject to full subscription and full exercise of all war-rants. The increase in share capital in such a case will amount to a maximum of SEK 700,000. The Incentive Plan is targeted at individuals who are or will be employees of AB Sagax or its subsidiaries. The company’s Board of Directors and the CEO are not covered by the offer.

■ authorization be granted to the Board, within the frame-work of the applicable Articles of Association, with or without disapplying the shareholders’ preferential rights, on one or more occasions prior to the next AGM, to make decisions to increase AB Sagax’s share capital through the new issue of Class A common shares, Class B common shares, preference shares, warrants and/or convertibles in the company. The total number of shares encompassed by such share issues may not exceed 10% of the number of votes in the company, based on the total number of votes in the company on the date of the 2016 AGM.

■ the new preference shares that may be issued under the authorization outlined above are to provide entitlement to dividends from the date on which they are entered into the shareholders' register administered by Euroclear Sweden AB.

■ authorization be granted to the Board, on one or more occasions prior to the next AGM, to make a decision to acquire a total of as many Class A common shares, Class B common shares, preference shares, warrants and/or con-vertibles as necessary so that the company’s holdings at any time do not exceed a tenth of the total number of shares in the company. Acquisitions of treasury shares are to take place on Nasdaq Stockholm and may only take place at a price within the price span applicable at any time, meaning the span between the highest bid and lowest offer price, or on the basis of an acquisition offering directed to all share-holders, whereby the acquisition is to take place at a price that on the decision date corresponds to a minimum of the applicable share price and a maximum of 150% of the applicable share price. Acquisition of treasury warrants and/or convertibles is to take place at a price that on the decision date corresponds to a maximum of the market value.

■ authorization be granted to the Board, on one or more occa-sions prior to the next AGM, to make decisions to transfer, with or without disapplying the shareholders’ preferential rights, all or portions of the company’s holdings of treasury Class A common shares, Class B common shares, preference shares and/or warrants as payment for acquisitions of proper-ties or property companies, or parts of properties or property companies, at a price corresponding to the share price or, re-garding warrants the market value, on the date of sale. Trans-fer of all or portions of the company’s holdings of treasury Class A common shares, Class B common shares and/or pref-erence shares may also occur, on one or more occasions prior to the next AGM, to finance such acquisitions, for which shares are to be sold on Nasdaq Stockholm at a price that is within the price interval applicable at any time.

Annual General Meeting of AB Sagax 2016


Risks and uncertainties

To prepare the accounts in accordance with generally accepted accounting policies, company management must make judg-ments and assumptions that affect asset and liability items, revenue and expense items recognized in the accounts and other information provided. The actual outcome may differ from these judgments.

PROPERTY-RELATED RISKSThe valuation of investment properties can be significantly affected by the judgments and assumptions made by com-pany management. To reduce the risk of incorrect valuations, Sagax has engaged authorized external appraisers to assess the market value of all of the properties, except the five German properties that, for cost-related reasons, will only be valued externally at year-end. Three Finnish properties were also valued at an agreed sales price when an agreement was signed regarding their divestment. Sagax’s other properties were valued in accordance with the externally conducted valuations at June 30. When valuing properties, considera-tion must always been taken for the uncertainties that always exist regarding the assumptions made. A sensitivity analysis is presented below, showing the effects of a change in market value on Sagax’s debt ratio.

Sagax prioritizes leasing to tenants with a high credit rat-ing and long-term leases, despite these entailing slightly lower immediate earnings. The intention is to reduce the risk of rent losses and the risk of vacancies.

FINANCIAL RISKSSagax’s financial expenses comprise the single largest expense for the Group. To reduce Sagax’s exposure to rising interest rates, the Group has a significant number of its interest ex-penses hedged by such derivatives as interest-rate swaps and interest-rate caps. Sagax values all of its financial derivatives

externally every quarter. All other things being equal, a simu-lated parallel upward shift of 1 percentage point in the under-lying swap curve would entail a positive revaluation of Sagax’s fixed-income derivatives by SEK 272 M. A corresponding downward shift of 1 percentage point would entail a negative revaluation of SEK 291 M.

Calculated based on the Group’s interest-bearing liabilities at June 30, an increase in market interest rates of 1 percentage point would increase Sagax’s interest expenses by SEK 23 M (35) on an annual basis. A reduction in market interest rates of 1 percentage point would have increased Sagax’s interest expenses by SEK 22 M (reduction: 35) on an annual basis, since many of Sagax’s contractual loan facilities include base-rate clauses that do not permit base-rates to drop below zero when setting interest rates for the interest period.

Sagax’s financing primarily comprises equity and interest-bearing liabilities. Sagax endeavors to secure a long, average remaining term of interest-bearing liabilities in a bid to limit its refinancing risk, defined as the risk that refinancing existing debt cannot take place on reasonable terms. The company’s long-term financing comprises bilateral credit facilities and listed bond loans. Counterparties in these credit facilities are usually Swedish and foreign commercial banks. In certain cases, the facilities are subject to undertakings, for example, on maintaining a certain interest coverage ratio. This means that creditors may be entitled to demand repayment of granted credit lines prematurely or request changed conditions if these undertakings are not met by the borrower. Sagax’s listed bond loans have been raised on standard terms and conditions. The complete terms and conditions for the bond loans are available at www.sagax.se.

A sensitivity analysis is presented below, showing the effects of a change in the leasing rate on Sagax’s interest coverage ratio.

Sensitivity analysis for property values

–20% –10% 0% +10% +20%Change in value, SEK M –3,644 –1,822 – 1,822 3,644

Debt ratio, % 71 64 58 53 49

Sensitivity analysis for changes in the leasing rate

–10% –5% 0% +5% +10%

Leasing rate, % 86 90 95 100 N/AInterest coverage ratio, % 336 355 374 393 N/A


On July 1, 2016, Sagax announced the acquisition of a prop-erty in Seinäjoki, Finland. The acquisition cost amounted to the equivalent of SEK 117 M in total, including an extension of 6,000 square meters of warehouse premises at the property, which is expected to be completed during the first quarter of 2017. The property will encompass 57,000 square meters

of land and 18,000 square meters of premises following the aforementioned extension. The property will be acquired from Tibnor, which will rent the entire property for ware-house and distributionpurposes. The lease runs until 2035. Tibnor is a division within SSAB and is the Nordic region’s leading supplier of steel and metals.

Significant events after the end of the period

Sensitivity analysis at june 30, 2016

SEK M Change

Effect on profit from property management,

annual basis

Effect on profit before tax,

annual basis

Effect on

equity5)

Economic leasing rate +/–1% +/–16 +/–12 +/–12Rental revenue +/–1% +/–15 +/–11 +/–11Property expenses +/–1% +2% +/–2 +2%Borrowing costs assuming current fixed-interest periods and changed interest rates1) +/–1% point –23/–22 –17/–16 –17/–16Borrowing costs resulting from change in average interest rate level2) +/–1% point –67/+17 –52/+13 –52/+13Revaluation of fixed-income derivatives attributable to shift in interest rate curves3) +/–1% point N/A +196/–210 +196/–210

Change in SEK/EUR exchange rate4) +/–10% +/–54 +/–36 +/–235Changed rent level for contract maturity in 2016 +/–10% +/–5 +/–4 +/–4

1) Taking into account financial derivatives.2) Not taking into account financial derivatives.3) Excluding share in profit of joint ventures and associated companies.4) Sagax’s net exposure to the SEK/EUR exchange rate comprises assets and liabilities recognized in EUR, in addition to revenue and expenses in EUR.5) Including standard tax at 22%.

SENSITIVITY ANALYSISSagax’s exposure to material risks in the company’s operations is presented below.

CURRENCY RISKSThe amounts in the consolidated balance sheet are partly ex-posed to exchange-rate fluctuations, particularly for the EUR. On June 30, 2016, net exposure – assets less liabilities in EUR – amounted to SEK 3,017 M (1,454). In accordance with IAS

21, most of the currency effects are recognized in Other com-prehensive income in conjunction with consolidation. Only a small portion of currency effects are recognized in profit or loss.

Sagax’s other risks are described in the 2015 Annual Report, on pages 56-59.


Sagax complies with the International Financial Reporting Standards (IFRS), as adopted by the EU, and the interpretations of the International Financial Reporting Interpretations Com-mittee (IFRIC). The consolidated financial statements have also been prepared in accordance with Swedish law applying Recommendation RFR 1 Supplementary Accounting Rules for Corporate Groups of the Swedish Financial Reporting Board.

This interim report has been prepared in accordance with International Accounting Standards (IAS) 34. The accounting

policies and calculation methods applied in this report are un-changed compared with those applied in the 2015 Annual Report. Rounding-off differences may occur in this report.

The properties were valued in accordance with level 3 of the IFRS fair value hierarchy. The fair value of financial instru-ments essentially corresponding with the carrying amounts. No changes to the categorization of financial instruments were made during the period. The derivatives were measured in accordance with level 2 of the fair value hierarchy.

Accounting policies

Stockholm, July 13, 2016 AB SAGAX (publ) Corporate Registration Number 556520-0028

Staffan Salén Johan Cederlund Filip Engelbert Chairman of the Board Board member Board member

David Mindus Johan Thorell Ulrika Werdelin CEO and Board member Board member Board member

This constitutes information that AB Sagax may be legally obliged to publish under the Market Abuse Regulation, the Securities Market Act and/or the Financial Instruments Trading Act. The information was released for publication on July 13, 2016 at 3:00 p.m.

The Board of Directors and CEO give their assurance that this interim report provides a fair review of the company’s and the Group’s operations, financial position and earnings and describes significant risks and uncertainties faced by the company and the companies included in the Group.


FOR FURTHER INFORMATION, PLEASE CONTACT:

David Mindus, CEO+46 8 545 83 540, [email protected]

Peter Larsen, CFO+46 8 545 83 540, [email protected]

Visit us at www.sagax.se.

Interim Report January-September 2016 October 26, 2016Year-end Report 2016 February 9, 2017

SCHEDULE OF DIVIDEND PAYMENTS TO PREFERENCE SHAREHOLDERS

September 2016

■ Final day for trading including dividend rights September 28, 2016 ■ First day for trading excluding dividend rights September 29, 2016 ■ Record date for dividend payment September 30, 2016 ■ Expected payment date by Euroclear1) October 5, 2016

December 2016 ■ Final day for trading including dividend rights December 28, 2016 ■ First day for trading excluding dividend rights December 29, 2016 ■ Record date for dividend payment December 30, 2016 ■ Expected payment date by Euroclear1) January 4, 2017

March 2017 ■ Final day for trading including dividend rights March 29, 2017 ■ First day for trading excluding dividend rights March 30, 2017 ■ Record date for dividend payment March 31, 2017 ■ Expected payment date by Euroclear1) April 5, 2017

June 2017 ■ Final day for trading including dividend rights June 28, 2017 ■ First day for trading excluding dividend rights June 29, 2017 ■ Record date for dividend payment June 30, 2017 ■ Expected payment date by Euroclear1) July 5, 2017

1) Payment is made on the third bank day following the record date for Swedish issuers. Sagax is unable to affect this date.

Financial calendar


Definitions

Cash flow per common shareProfit before tax adjusted for items not included in cash flow and less current tax in relation to the average number of common shares. The preferential rights of preference shares to dividends for the period were also deducted from profit before tax. Dividends received from joint ventures have been added to profit before tax.

Debt ratioInterest-bearing liabilities at year-end as a percentage of total assets at year-end.

DilutionDilution due to outstanding warrants has been calculated, in accordance with IAS 33, as the number of common shares that are to be issued to cover the difference between the redemption price and share price for all potential common shares (warrants) outstanding, to the extent it is probable that they will be utilized.

Earnings per common shareProfit in relation to the average number of common shares after taking into account preference shares’ portion of profit for the year.

Economic leasing rateContractual annual rent at year-end as a percentage of rental value at year-end.

EPRA NAVRecognized equity according to the bal-ance sheet with reversal of reserves for fixed-income derivatives, deferred tax pertaining to temporary differences on property values and deferred tax per-taining to reserves for fixed-income derivatives.

Equity/assets ratioEquity as a percentage of total assets.

Equity per common shareEquity at year-end as a percentage of the number of common shares at year-end after taking into account preference equity.

Equity per preference shareEquity per preference share corresponds to the preferential right of the prefer-ence share on liquidation of the Com-pany (SEK 30 per preference share) and the share’s accumulated preferential right to dividends (SEK 2 per year).

EURIBOREURIBOR, or the Euro Interbank Offered Rate, is a daily reference rate based on the average of the interest rates at which euro interbank term de-posits are being offered by one prime bank to another within the EMU zone.

Financial derivativesAgreements on lending rates that may include the factors of time, inflation and/or maximum interest rate levels. Usually signed to hedge interest rate levels for interest-bearing loans.

IFRSInternational Financial Reporting Stand-ards. International Financial Reporting Standards (IFRS), to be applied for con-solidated financial statements by listed companies within the EU.

Interest-coverage ratioProfit from property management, ex-cluding profit from joint ventures but including dividends from joint ventures, after reversal of financial expenses in relation to financial expenses.

Interest-rate swapsAn interest-rate swap is an agreement between two parties to swap interest rate conditions on loans in the same cur-rency. The swap entails that one party exchanges its variable interest rate for a fixed rate, while the other party receives a fixed rate in exchange for a variable rate. The purpose of an interest-rate swap is to reduce interest-rate risk.

Joint venturePartnership form whereby several own-ers have a shared controlling influence.

Lease termRemaining term of a lease.

Leasing rate by areaContracted area at year-end as a per-centage of total lettable area at year-end.

Net debtInterest-bearing liabilities less interest-bearing assets and cash and cash equiva-lents.

Preference equityCalculated as equity per preference share multiplied by the number of out-standing preference shares.

Profit from property managementProfit excluding changes in value and tax.

Profit from property management per common share after dilutionProfit from property management for the period reduced by preference shares’ preferential rights to dividends, divided by the average number of com-mon shares after dilution.

PropertyPertains to properties held under title or site leasehold.

Rental valueThe contractual annual rent applicable at the end of the period with supple-ments for estimated market rents for vacant premises.

Return on equityProfit for the year, recalculated to 12 months, as a percentage of average equity (opening and closing balances)/2 for the year.

Return on total capitalProfit for the year, recalculated to 12 months, after net financial items after reversal of financial expenses as a percentage of average total assets for the year.

STIBORSTIBOR, or Stockholm Interbank Offered Rate, is a daily reference rate based on the average of the interest rates at which banks offer to lend unsecured funds to other banks in the Swedish wholesale money market.

Surplus ratioNet operating income for the year as a percentage of the rental revenue for year. Total return on sharesTotal of the change in the share price during the period and the dividend paid during the year as a percentage of the share price at the end of the preceding year.

Total yield on propertyTotal of EBITDA and property revalua-tions during the year as a percentage of the average property value adjusted for revaluations for the year.

Triple net leaseA type of lease whereby the tenant pays, in addition to the rent, all costs incurred on the property that would normally have been paid by the property owner. These include operating expenses, main-tenance, property tax, site leasehold fees, insurance, property management, etc.

YieldNet operating income for the year (in-cluding property administration), recal-culated to 12 months, adjusted for the holding periods of the properties during the year as a percentage of the carrying amounts of the properties at year-end.

AB Sagax (publ), Engelbrektsplan 1, SE-114 34 Stockholm, SwedenCorp. Reg. No. 556520-0028

Tel: + 46 8 545 83 540, fax: + 46 8 545 83 549www.sagax.se

AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industry segment. Sagax’s property holdings at June 30, 2016 amounted to 2,048,000 square meters,

distributed between 414 properties. AB Sagax (publ) is listed on Nasdaq Stockholm, Mid Cap. More information is available at www.sagax.se.

interim report january - june 2016 - sagax · interim report january - june 2016 1 sagax’s...

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