Invitation to Acquire Shares in SSM Holding AB (Publ)

Invitation to acquire shares in SSM Holding AB (publ)

IMPORTANT INFORMATION

This prospectus (the “Prospectus”) has been prepared by reason of the offering to the general public in Sweden and to institutional investors in Sweden and abroad in connection with the listing of shares of SSM Holding AB (publ) on Nasdaq Stockholm (the “Offer”). In this Prospectus, “SSM”, the “Company” or the “Group” refers to SSM Holding AB (publ) or SSM Holding AB (publ) and its subsidiaries, as the context requires. Skandinaviska Enskilda Banken AB (publ) (“SEB”) and ABG Sundal Collier AB (“ABG Sundal Collier”) are joint global coordinators and joint bookrunners (“Joint Global Coordinators”) in connection with the Offer. The “Selling Shareholder” refers to Eurodevelopment Holding AG. For further definitions of these and other terms in the Prospectus, reference is made to “Glossary”.

Offer structure The Offer consists of: (a) an offer to institutional and private investors in Sweden and (b) an offer to institutional investors in the rest of the world in accordance with applicable laws and exemptions. The Offer is neither directed to the general public in any country other than Sweden nor directed at such persons whose participation requires additional prospectuses, registrations or measures other than those prescribed by Swedish law. In particular, the Offer is not directed at persons resident in the United States, Australia, Hong Kong, Canada, New Zeeland, Japan, Switzerland or South Africa. The shares in the Offer have not and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state within the United States. There will be no public offer in the United States. No measures have been or will be taken in any jurisdiction, other than Sweden, that would allow offer of the shares to the public, or allow holding and distribution of this Prospectus, or any other documents pertaining to the Company or the shares in such jurisdiction. Applications to acquire shares that violate such rules may be deemed invalid. Persons into whose possession this Prospectus comes are required by the Company and the Joint Global Coordinators to inform themselves of and to observe such restrictions. Neither the Company, nor any of the Joint Global Coordinators accept legal responsibility for any violation by any person, whether or not a prospective investor, of any such restrictions. The shares in the Offer have not been recommended by any United States federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy, or determined the adequacy of the content of this Prospectus. Any representation to the contrary may be a criminal offence. The shares in the Offer have not been registered under the Securities Act. Distribution of this Prospectus to any person other than the offeree specified by the Joint Global Coordinators or their representatives, and those persons, if any, retained to advise such persons who have been offered to acquire shares in connection with the Offer, is prohibited. Any reproduction or distribution of this Prospectus in the United States, in whole or in part, is prohibited. This Prospectus is personal to each person who is offered to acquire or subscribe for shares, and does not constitute any offer to any other person or to the general public to subscribe for or acquire shares in the Offer. The Prospectus has been approved and registered by the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the “SFSA”) in accordance with Chapter 2, Sections 25 and 26 of the Swedish Financial Instruments Trading Act (Sw. lagen (1991:980) om handel med finansiella instrument) (the “Trading Act”), implementing the European Parliament and Council Directive 2003/71/EC. Approval and registration by the SFSA does not imply that the SFSA guarantees that the factual information provided herein is correct or complete. This Prospectus is an English translation of the Swedish prospectus which has been approved and registered by the SFSA. In the event of discrepancies between this Prospectus and the Swedish prospectus, the Swedish prospectus shall prevail. The Offer and this Prospectus are governed by Swedish law. The courts of Sweden have exclusive jurisdiction to settle any conflict or dispute arising out of or in connection with the Offer or this Prospectus, and the Stockholm District Court (Sw. Stockholms tingsrätt) shall be court of first instance.

Stabilisation SEB and its agents may, in connection with the Offer and on behalf of the Joint Global Coordinators, act as stabilising manager (the “Stabilising Manager”) and thereby engage in transactions that stabilise, maintain or otherwise affect the price of SSM’s shares for up to 30 days from the day on which the price of the Offer is made public. Specifically, the Joint Global Coordinators, the Selling Shareholder and the Company have agreed that the Stabilising Manager may, on behalf of the Joint Global Coordinators, overallot shares or effect transactions with a view to support the market price of the shares at a level higher than the one that would otherwise prevail in the open market. The Stabilising Manager and its agents are not required to engage in any of these activities and therefore there can be no assurances that these activities will be undertaken; if undertaken, the Stabilising Manager or its agents may end any of these activities at any time and they must be brought to an end at the end of the 30-day period mentioned above. Save as required by law or regulation, the Stabilising Manager does not intend to disclose the extent of any stabilisation and/or overallotment transactions. For more information, see section “The placing agreement etc. – Stabilisation”.

Forward-looking statements The Prospectus contains forward-looking statements which reflect SSM’s current view on future events and financial, operational and other development. Forward-looking statements can be identified by not exclusively relating to historical or present facts and events or by containing words such as ”may”, “shall”, “expect”, “believes”, “plans”, “estimates”, “prepares”, “intends”, “predict”, “attempts”, “could”, or negotiations of such terms, or similar expressions or comparable terminology. These forward-looking statements are made as per the date of the Prospectus. SSM expressly disclaims any obligation or undertaking to update these forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances. Although SSM considers the expectations expressed in such forward-looking statements to be reasonable, there is no guarantee as regards the outcome or correctness of the statements. Accordingly, prospective investors should not place undue reliance on these and other forward-looking statements.

Business and market data In the section “Risk factors” there is a non-exhaustive description of risk factors which may cause the Company’s result or development to differ materially from historical information or forward-looking statements. This Prospectus includes historical market data and industry trends. Certain information has been derived from reports prepared by third parties and SSM has strived to present such information accurately in this Prospectus. Even if the Company considers these sources to be reliable, no independent verification has been made, and the accuracy or completeness of the information cannot be guaranteed. Business and market data are inherently subject to uncertainty and do not necessarily reflect actual market conditions. The value of comparisons of statistics for different markets is limited for various reasons. Among such reasons are that markets may have been defined differently and that information may have been gathered by different methods and on the basis of different assumptions. Certain information in this Prospectus has been prepared by SSM, in some cases based on assumptions. Although the Company believes that the methods and assumptions are reasonable, the information has only to a limited extent been reviewed or verified against external sources. Against this background, the reader shall note that market statistics presented in the Prospectus are subject to uncertainty and its accuracy cannot be guaranteed. However, as far as the Company is aware and have been able to verify from information published by third parties, no facts have been omitted which would render the information provided inaccurate or misleading.

Presentation of financial information Unless otherwise stated herein, no financial information in this Prospectus has been audited or reviewed by the Company’s auditor. Financial information relating to the Company in this Prospectus, and that is not a part of the information that has been audited or reviewed by the Company’s auditor as stated herein, has been collected from the Company’s internal accounting and reporting system. Some of the key performance indicators presented in this Prospectus are so-called alternative performance measures, i.e. financial measures that are not defined under IFRS. A non-IFRS financial measure is defined as one that measures historical or future financial performance, financial position or cash flows but which excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. These non-IFRS measures should not be considered in isolation or as a substitute to performance measures derived in accordance with IFRS. In addition, such measures, as defined by the Group, may not be comparable to other similarly titled measures used by other companies. The figures included in this Prospectus have, in some cases, been rounded off. Consequently, some tables do not add up correctly. For instance, this is the case when financial amounts are presented in thousands, millions or billions, and do primarily occur in sections “Selected historical financial information in brief”, “Operating and financial review” and “Capitalisation, indebtedness and other financial information” below, and in historical financial information included in the Prospectus or incorporated by reference.

Contents

Summary ...... 2 Board of directors, senior executives and auditors . . . 73

Risk factors ...... 14 Corporate governance ...... 77

Invitation to acquire shares in SSM ...... 23 Share capital and ownership structure ...... 82

Background and reasons ...... 25 Articles of association ...... 85

Terms and conditions ...... 26 The Placing Agreement etc...... 86

Market overview ...... 29 Legal considerations and supplementary information . . 89

Business overview ...... 37 Certain tax issues in Sweden ...... 94

Selected historical financial information in brief . . . . 56 Financial reports ...... F-1

Operational and financial review ...... 65 Glossary ...... A-1

Capitalisation, indebtedness and other Adresses ...... A-2 financial information ...... 71

Summary of the Offer

Number of shares offered The Offer comprises between 8,437,500 and 10,000,000 new shares. The Company is offering such a number of new shares that will raise gross proceeds of SEK 540 million from the Offer. In addition, the Selling Shareholder reserves the right to increase the Offer with a minimum of 24,999 and a maximum of 3,333,333 existing shares depending on the final price and the demand in theO ffer.1) In order to cover potential overallotment in conjunction with the Offer, the Selling Shareholder will undertake to, upon request from the Joint Global Coordinators, sell up to 1,849,999 additional shares in the Company if the Offer is increased in full. Provided that the Offer is increased in full and that the Overallotment Option is exercised in full, in total a minimum of 13,296,875 and a maximum of 14,183,332 shares will be offered.

Price range SEK 54–64 per share. The price of the Offer will be determined through a book-building procedure. The price of the offer is expected to be announced through a press release on or around 6 April 2017.

Preliminary timetable Application period for the general public in Sweden 28 March–4 April 2017 Application period for institutional investors 28 March–5 April 2017 Information regarding allotment 6 April 2017 First day of trading on Nasdaq Stockholm 6 April 2017 Settlement date 10 April 2017

Miscellaneous information Ticker on Nasdaq Stockholm SSM ISIN code SE0009663511

Financial calendar Interim report January–March 2017 18 May 2017 Interim report January–June 2017 17 August 2017 Interim report January–September 2017 15 November 2017

1) The Selling Shareholder intends on selling shares in the Offer provided that the final price in theO ffer is at or above SEK 60 per share. Regardless of the final price in theO ffer, the Selling Shareholder will sell existing shares in the Offer in order for the “free float” in the Company to reach a minimum of 25 per cent.

Invitation to acquire shares in SSM Holding AB (publ) 1 Summary

Summary

Summaries are made up of disclosure requirements known as “elements”. These elements are numbered in sections A-E (A.1 — E.7). The summary in this Prospectus contains all the elements required to be included in a summary for this type of securities and issuer. Because some elements are not required to be addressed for all types of prospectuses, there may be gaps in the numbering sequence of the elements. Even though an element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the element. In this case, a short description of the element is included in the summary with the mention of the words “not applicable”.

Section A – Introduction and warnings

A.1 Introduction and This summary should be read as an introduction to the Prospectus. Any decision to invest in warnings the offered securities should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor may, under the national legislation of the member states, have to bear the costs of translating the Prospectus before legal proceedings being initiated. Civil liability attaches only to those persons who have tabled the summary, including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent with the other parts of the Prospectus or if it does not provide, together with other parts of the Prospectus, key information to help investors when considering whether to invest in the offered securities.

A.2 Consent for use of Not applicable. Financial intermediaries are not entitled to use the Prospectus for subsequent the Prospectus trading or final placement of securities.

Section B – Issuer

B.1 Legal and commer- The Company’s registered company name and commercial name is SSM Holding AB (publ), cial name corporate registration number 556533-3902. The Company’s shares will be traded on Nasdaq Stockholm under the ticker SSM.

B.2 Domicile and legal The Company is a Swedish public limited liability company domiciled in Stockholm. The form etc. Company was formed in Sweden and operates in accordance with the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)).

B.3 Current opera- SSM is the leading residential property developer within its niche in the Stockholm region with a tions and principal vision of a housing market with space for as many people as possible, SSM develops affordable, activities highly functional residential units with contemporary and attractive common areas, near public transport, just outside the city center for the urbanites of tomorrow – a customer group that comprises households with one or two individuals aged 20–44, who would like to make the most of everything that the city has to offer and who want to prioritise more in life than just accommodation. Thus, SSM develops value-for-money, highly functional and cleverly designed residential units with contemporary and attractive common areas, near public transports, just outside the city center. As of 31 December 2016, the Group had 5,255 apartments in its project portfolio and 1,479 apartments in projects under construction. The Company has over time chosen to cooperate with other companies and investors in the form of joint ventures, which SSM considers an efficient way to handle project risk and profit, as well as to finance future expansion. The Group’s operating profit, which contains contributions from own and joint venture projects, amounted to SEK 63, 102 and 187 million respectively, for the years 2014–2016, corresponding to an operating margin of 15, 29 and 29 per cent, respectively, over the same period.

B.4a Trends in the industry SSM’s operation is affected by the general macroeconomic development in Sweden as well as the development on the housing market and the supply of building rights in Stockholm. Except for the supply and demand of residential units, the market for residential property development is specially affected by factors such as supply of labour, population growth and the solvency of the households. Important key figures for measuring the development of the market are,inter alia, GDP, inflation, interest rate and employment rate. After the Swedish economy’s strong finish in 2015, it has continued to strengthen during 2016. However, during the first three quarters of 2016, growth declined, ultimately falling more in line with average growth rates in Sweden. The economy in the Stockholm region also strengthened during the third quarter of 2016 and is now at a level exceeding the historical average for the region, but is still lower than strong level at the end of 2015.

B.5 Group structure SSM Holding AB (publ) is parent company in the Group, which consists of 30 directly and indirectly owned subsidiaries and 22 associated companies.

2 Invitation to acquire shares in SSM Holding AB (publ) Summary

B.6 Major shareholders The table below presents the current ownership structure of the Company as of the date of this Prospectus, as well as expected ownership of shares following the completion of the Offer with the following alternative outcomes: (a) the number of shares that the Selling Shareholder may sell assuming a final price in the Offer at the high end of the Price Range, that the Selling Shareholder sells existing shares in the Offer in order for the “free float” in the Company to reach at least 25 per cent and that the Overallotment Option is not exercised (“Outcome I”), (b) the number of shares that the Selling Shareholder may sell, assuming a final price in the Offer corresponding to SEK 60 per share, that the Selling Shareholder uses its right to increase the Offer in full and that the Overallotment Option is not exercised (“Outcome II”) and (c) the number of shares that the Selling Shareholder may sell assuming a final price in the Offer corresponding to SEK 60 per share, that the Selling Shareholder uses its right to increase the Offer in full and that the Overallotment Option is exercised in full (“Outcome III”). As at the date of this Prospectus, there were, according to the Company’s knowledge, no persons or legal entities owning five per cent or more of the shares or votes in the Company, except as stated in the table below. Shareholding at the date of this Prospectus Outcome I1) Outcome II1) Outcome III1) Number Percentage Number Percentage Number Percentage of shares of shares of shares of shares of shares of shares and votes and votes and votes and votes and votes and votes in the in the in the in the in the in the Company Company Company Company Company Company after the after the after the after the after the after the Shareholder Number Percentage Offer Offer Offer Offer Offer Offer Eurodevelopment Holding AG 30,100,000 100.0 % 28,903,125 75.0% 26,766,667 68.5% 24,916,668 63.7% New shareholders2) 0 0.0 9,634,375 25.0% 12,333,333 31.5% 14,183,332 36.3% Total 30,100,000 100.0% 38,537,500 100.0% 39,100,000 100.0% 39,100,000 100.0% 1) The outcome does not consider a potential exercise of the share options etc. which the Selling Shareholder has issued. 2) New shareholders include the Cornerstone Investors. Länsförsäkringar Fondförvaltning AB (publ), Malmegårds Fastighets AB and Grandholm Fastigheter AB have undertaken to subscribe for shares in the Offer, to the Offer Price, for a total amount of SEK 180 million. Based on full subscription in the Offer and that the Overallotment Option is exercised in full, the undertakings comprise correspondingly to a minimum of 2,812,500 and a maximum of 3,333,332 shares, which corresponds to a minimum of approximately 25.4 and a maximum of approximately 28.9 per cent of the total number of shares in the Offer, if the Offer is increased in full1) and a minimum of approximately 7.3 and a maximum of approximately 8.3 per cent of the total number of shares and votes in the Company after the Offer. Each undertaking is subject to customary conditions, inter alia, that the Offer is completed within a certain time and that the final price of the Offer does not exceed the high-end of the Price Range and, as regards Länsförsäkringar Fondförvaltning, that the fund is not subject to exceptionally high net outflows during the application period. 1) The Selling Shareholder intends on selling shares in the Offer provided that the final price in the Offer is at or above SEK 60 per share. Regardless of the final price in the Offer, the Selling Shareholder will sell existing shares in the Offer in order for the “free float” in the Company to reach a minimum of 25 per cent. B.7 Selected historical The financial information for the periods 2016, 2015 and 2014 has been derived from the financial information Company’s financial statements for the financial years 2016, 2015 and 2014. The Company’s audited consolidated financial statements for the financial years ending 31 December 2016, 2015 and 2014 have been prepared in accordance with IFRS. The Group’s statement of comprehensive income Figure in SEK m 2016 2015 2014 Net sales 649.9 351.1 411.0 Expenses for production and management –502.8 –299.0 –353.5 Gross profit 147.1 52.1 57.5 Sales and administrative expenses –36.4 –27.1 –32.1 Profit participations in joint ventures 76.4 76.9 37.5 Operating profit 187.1 101.9 62.8 Financial income 11.9 10.0 1.2 Financial expenses –49.5 –19.2 –24.0 Net financial items –37.6 –9.2 –22.8 Profit before tax 149.5 92.8 40.0 Tax –4.8 2.8 –5.0 Profit for the period 144.7 95.6 35.1 Profit attributable to The shareholder of the parent company 144.7 95.5 35.0 Non-controlling interest 0.0 0.1 0.1 144.7 95.6 35.1

Invitation to acquire shares in SSM Holding AB (publ) 3 Summary

B.7 Selected historical The Group’s statement of financial position financial information Figure in SEK m 2016-12-31 2015-12-31 2014-12-31 (cont.) Assets

Fixed assets Intangible assets Software 1.4 1.5 0.0 Total intangible assets 1.4 1.5 0.0

Tangible assets Machinery and equipment 0.4 0.3 0.6 Total tangible assets 0.4 0.3 0.6

Financial assets Holdings in joint ventures 187.1 130.2 53.4 Receivables from joint ventures 69.1 22.1 6.5 Other non-current receivables 203.8 71.0 96.8 Total financial assets 460.0 223.3 156.7

Deferred tax receivables – 5.2 5.2

Total fixed assets 461.9 230.3 162.5

Current assets Inventories Project properties 208.8 115.0 53.9 Total inventories 208.8 115.0 53.9

Other current assets Accounts receivables 29.4 1.7 0.6 Recognised, non-invoiced revenue 163.4 61.9 116.2 Receivables from joint ventures 3.1 0.1 – Tax receivables 0.5 – 0.0 Other receivables 81.0 68.8 30.4 Prepaid costs and accrued income 24.0 13.9 8.2 Liquid funds 63.9 52.7 28.7 Total current assets 574.0 314.1 237.9

Total assets 1,035.8 544.4 400.4

4 Invitation to acquire shares in SSM Holding AB (publ) Summary

B.7 Selected historical The Group’s statement of financial position, cont. financial information Figure in SEK m 2016-12-31 2015-12-31 2014-12-31 (cont.) Equity and liabilities

Equity Share capital 30.1 30.1 30.1 Profit brought forward including profit for the year 271.2 143.3 50.3 Equity attributable to the shareholder of the parent company 301.3 173.4 80.4

Non-controlling interest 0.0 0.2 0.2 Total equity 301.3 173.5 80.6

Liabilities Non-current liabilities Bond loans 390.7 196.8 195.2 Liabilities to credit institutions 132.8 99.5 – Other non-current liabilities 49.6 – – Provisions 14.4 5.0 0.0 Deferred tax liabilities 1.1 1.7 4.7 Total non-current liabilities 588.6 303.1 199.9

Current liabilities Liabilities to joint ventures – – 0.1 Liabilities to credit institutions – – 71.0 Advance payment from customers – 10.4 – Accounts payable - trade 43.3 28.6 9.6 Provisions 2.8 1.5 7.4 Current tax liabilities 1.6 3.0 3.5 Other liabilities 62.7 12.0 22.6 Accrued costs and prepaid income 35.5 12.3 5.5 Total current liabilities 146.0 67.8 119.8

Total equity and liabilities 1,035.8 544.4 400.4

Invitation to acquire shares in SSM Holding AB (publ) 5 Summary

B.7 Selected historical The Group’s cash flow statement financial information Figure in SEK m 2016 2015 2014 (cont.) Cash flow from current activities Operating profit before financial expenses 187.1 101.9 62.8 Items not affecting liquidity 2.4 1.4 7.1 Recognised profits in joint ventures –76.4 –76.9 –37.5 Received dividend from joint ventures 62.0 – – Received interest 2.1 10.0 1.2 Paid interest –30.8 –19.2 –22.0 Paid income taxes –2.0 –0.7 0.0 Cash flow before changes in operating capital 144.4 16.6 11.7

Cash flow from changes in operating capital Decrease/increase in property projects –195.3 –12.1 28.1 Decrease/increase in accounts receivables –27.7 –1.2 2.0 Decrease/increase in other current receivables –25.3 –44.1 –70.4 Decrease/increase in accounts payable - trade 14.8 29.4 5.7 Decrease/increase in current liabilities 69.7 –3.9 –6.0 Total change in operating capital –163.8 –31.8 –40.6

Cash flow from current activities –19.4 –15.2 –28.9

Cash flow from investing activities Investments in intangible assets –1.0 –2.2 – Investments in tangible assets –0.4 0.0 –0.4 Investments in financial assets –221.5 –46.8 –91.3 Divestment of intangible assets – – 16.4 Divestment of tangible assets – – 0.1 Divestment of financial assets 9 – 5.4 Cash flow from investing activities –213.9 –49.1 –69.9

Cash flow from financing activities Dividend –18.6 –2.6 –3.4 Increase in non-current liabilities 516.1 163.1 213.4 Amortisation of non-current liabilities –253.0 –72.2 –199.4 Cash flow from financing activities 244.5 88.3 10.6

Decrease/increase in liquid funds 11.2 24.0 –88.2 Liquid funds, opening balance 52.7 28.7 116.8 Liquid funds at the end of the period 63.9 52.7 28.7

6 Invitation to acquire shares in SSM Holding AB (publ) Summary

B.7 Selected historical Key performance indicators financial information The tables below contain certain financial and operational key performance indicators which (cont.) have not been defined in accordance with IFRS. The Company considers these key performance indicators to provide valuable information to investors, as they in combination with (but not instead of) other key performance indicators, enable evaluation of actual trends in a valuable way. However, these key performance indicators shall not be considered a substitute for posts which are measured in accordance with IFRS. As all companies do not always measure their key performance indicators in the same manner, there is no guarantee that the presentation herein is comparable with other companies’ key performance indicators with the same name. Accordingly, please note that the following tables and calculations are unaudited and are not IFRS based, unless otherwise stated.

Figure in SEK m unless otherwise stated 2016 2015 2014 Key performance indicators defined according to IFRS Net sales 649.9 351.1 411.0 Earnings for the period 144.7 95.6 35.1 Earnings per share (SEK) 4.8 3.2 1.2

Key performance indicators not defined in IFRS Net sales, joint ventures 748.4 844.1 732.9 Net sales including joint ventures 1,398.3 1,195.2 1,143.9 Gross profit 147.1 52.1 57.5 Gross margin (%) 22.6 14.8 14.0 Operating profit 187.1 101.9 62.8 Operating margin (%) 28.8 29.0 15.3 Dividend per share (SEK) 0.6 0.1 0.1 Equity per share (SEK) 10.0 5.8 2.7 Interest coverage ratio (x) 4.0 5.8 2.7 Liquidity ratio (x) 2.5 2.9 1.5 Debt/equity ratio (%) 29.1 31.8 20.1 Return on equity (%) 61.0 75.2 53.5 Number of outstanding shares1) 30,100,000 30,100,000 30,100,000

Operational key performance indicators Number of apartments under construction, opening balance 1,287 813 455 Number of construction started apartments 238 547 515 Number of apartments completed 46 73 157 Number of apartments under construction, closing balance 1,479 1,287 813

Number of building rights, opening balance 2,337 1,752 1,022 Number of acquired building rights 2,951 513 887 Changes in existing portfolio 13 145 – Number of apartments completed 46 73 157 Number of building rights, closing balance 5,255 2,337 1,752

Number of apartments sold, accumulated, opening balance 1,249 773 230 Number of apartments sold 224 549 700 Number of apartments completed 46 73 157 Number of apartments sold, accumulated, closing balance 1,427 1,249 773

Number of apartments under construction, opening balance 1,479 1,287 813 Number of apartments sold, accumulated, closing balance 1,427 1,249 773 Percentage of sold apartments under construction, closing balance 96.5 % 97.0 % 95.1 %

Number of building rights, closing balance 5,255 2,337 1,752 Number of apartments under construction, closing balance 1,479 1,287 813 Number of building rights in planning phase, closing balance 3,776 1,050 939 1) At an extraordinary general meeting held 16 December 2016, it was resolved to carry out a share split of 100:1. The share split was registered with the Swedish Companies Registration Office (Sw.Bolagsverket ) 23 January 2017. After the share split, the total number of shares was 30,100,000.

Invitation to acquire shares in SSM Holding AB (publ) 7 Summary

B.7 Selected historical Definitions of key performance indicators defined according to IFRS financial information Net sales (cont.) Net sales for the Group.

Profit for the period Profit for the period after taxes.

Earnings per share (SEK) Profit for the period after taxes compared to the average number of outstanding shares.

Definitions of key performance indicators not defined according to IFRS

Key performance indicator Definition Purpose

Net sales joint Total net sales for SSM’s joint The Company considers the key perfor- ventures ventures. mance indicator to be facilitating for investors that want to assess the net sales for SSM’s joint ventures.

Net sales Net sales for the Group including net The Company considers the key perfor- including joint sales for joint ventures. mance indicator to be facilitating for ventures investors that want to assess the total net sales for SSM’s projects.

SEK m 2016 2015 2014 Net sales 649.9 351.1 411.0 Net sales, joint ventures 748.4 844.1 732.9 Net sales including joint ventures 1,398.3 1,195.2 1,143.9

Gross profit Net sales minus expenses for The Company considers the key perfor- production and management. mance indicator to be facilitating for investors that want to assess the profitability of the projects which SSM carries out on its own.

Gross margin (%) Gross profit divided by net sales The key performance indicator is a signif- for the period. icant complement to gross profit, which only shows changes in absolute figures, whereas the gross margin also shows how much value the changes create.

Operating profit Earnings before financial items The Company considers the key perfor- and taxes. mance indicator to be facilitating for investors that want to assess the profit generated from the operating activities, including joint ventures.

Operating margin (%) Operating income as a The key performance indicator is a signifi- percentage of net sales for the cant complement to operating profit, which period. only shows changes in absolute figures, whereas the operating margin also shows how much value the changes create.

Dividend per share Dividend in SEK by the number The Company considers this key perfor- (SEK) of outstanding shares at the mance indicator to be of interest as the balance sheet date, with adjust- Company has a dividend target, adopted ments for executed share split. by the board of directors.

Equity per share (SEK) Equity in relation to the number The Company considers the key perfor- of outstanding shares at the mance indicator to be facilitating for inves- balance sheet date, with adjust- tors that want to assess historical capital ments for executed share split. attributable to the shareholders.

8 Invitation to acquire shares in SSM Holding AB (publ) Summary

B.7 Selected historical Key perfor- financial information mance indicator Definition Purpose (cont.) Interest Profit after financial income in rela- The Company considers the key performance coverage ratio tion to financial costs for the period. indicator to be facilitating for investors that want (x) to assess the Company’s ability to pay for its financial costs.

Figure in SEK m unless otherwise stated 2016 2015 2014 Operating profit 187.1 101.9 62.8 Financial income 11.9 10.0 1.2 Profit after financial income 198.9 112.0 64.0

Financial costs 49.5 –19.2 –24.0 Interest coverage ratio (x) 4.0 5.8 2.7

Liquidity ratio Current assets not including invento- The Company considers the key performance (x) ries in relation to current liabilities at indicator to be facilitating for investors that want the balance sheet date. to assess the Company’s liquidity.

Figure in SEK m unless otherwise stated 2016 2015 2014 Total current assets 574.0 314.1 237.9 Total inventories 208.8 115.0 53.9 Total current assets, excluding inventories 365.2 199.1 184.0

Total current liabilities 146.0 67.8 119.8 Liquidity ratio (x) 2.5 2.9 1.5

Debt/equity Equity in relation to the total assets at The key performance indicator shows the ratio (%) the balance sheet date. proportion between total assets and equity, and has been included to enable investors to assess the Company’s capital structure.

Return on Profit after tax divided by average The Company considers the key performance equity (%) equity for the period. indicator to be facilitating for investors that want to assess the Company’s ability to generate return on the equity that the shareholders has put at the Company’s disposal.

Figure in SEK m unless otherwise stated 2016 2015 2014 Profit for the period 144.7 95.6 35.1 Equity, opening balance 173.5 80.6 50.5 Equity, closing balance 301.3 173.5 80.6 Equity, average 237.4 127.1 65.5 Return on equity (%) 61.0 75.2 53.5

Number of Number of outstanding shares at The Company considers the key performance outstanding the balance sheet date, adjusted for indicator to be facilitating for investors that want shares, executed share split. to assess the Company’s creation of value per thousands share.

Important events after 31 December 2016 In February 2017, SSM won the land allocation competition for the project Täby Park, arranged by Täby municipality. The project is expected to comprise 270 residential units, of which 180 will be rental apartments and the rest will be cooperative apartments. The start of construction is planned for 2018, with occupation in 2020. In March 2017 SSM acquired a new project in Stockholm municipality. The project is expected to comprise 260 cooperative apartments. Construction start is planned for 2018 with occupation during 2020.

Invitation to acquire shares in SSM Holding AB (publ) 9 Summary

B.8 Selected pro forma Not applicable. The Prospectus does not contain any pro forma accounts. financial information

B.9 Profit forecast Not applicable. The Company has not provided a profit forecast.

B.10 Audit report Not applicable. There are no qualifications in the auditor’s reports. qualifications

B.11 Insufficient working Not applicable. The board of the Company deems that the working capital is sufficient in order to capital meet the Group’s requirements for the coming twelve-month period.

Section C – Securities

C.1 Securities being The Offer comprises existing and new shares in SSM Holding AB (publ) (ISIN: SE0009663511). offered

C.2 Currency The shares are denominated in Swedish kronor (SEK).

C.3 Number of shares As of the date of this Prospectus, the Company’s registered share capital was SEK 30,100,000 issued and par value divided into 30,100,000 shares. There is one class of shares in the Company and each share has a quotient value of SEK one (1). All shares are fully paid. After the execution of the Offer assuming that the Offer Price represents the mid-point of the Price Range, the Company’s share capital will amount to no more than SEK 39,252,542, divided into a maximum of 39,252,542 shares.

C.4 Rights attached to All shares rank equally for voting purposes. Each share in SSM entitles the holder to one vote the securities at the general meeting. The shares carry equal rights to the Company’s assets and profit as well as to potential surplus in the event of liquidation. If the Company issues shares, warrants or convertibles in a cash issue or a set-off issue (Sw. kvittningsemission), the shareholders have as a main rule pre-emption rights to subscribe for such securities in proportion to the number of shares held prior to the issue.

C.5 Restrictions on free Not applicable. The shares are not subject to any restrictions on transferability. transfer

C.6 Admission to trading On 6 March 2017, Nasdaq Stockholm’s listing committee decided to admit SSM’s shares to trading on Nasdaq Stockholm, provided that the distribution requirement in respect of the Company’s shares is fulfilled no later than the first day of trading. Trading is expected to commence on or about 6 April 2017.

C.7 Dividend policy As of the annual general meeting 2018, SSM’s aim is to pay dividends to the shareholders of at least of 30 per cent of the earnings after taxes.

Section D – Risks

D.1 Main risks specific The Group is subject to risks that are wholly or partly outside of the Group’s control and which to the issuer and its affect or may affect the Group’s operations, results, financial position and future prospects. The operations following risk factors, which are non-exhaustive and described in no particular order, are considered to be the key risks for the Group’s future development. • SSM’s business is affected by macroeconomic factors, such as inflation, potential deflation and general difficulties with securing financing, and general economic downturns may ultimately have a materially adverse effect on SSM’s operations. • SSM operates within a competitive industry, and may have difficulties competing successfully in the future. • SSM is dependent on a successful investment strategy and an attractive portfolio of building rights, in terms of number, location and customer preferences. SSM is therefore subject to risks related to acquisitions, for example that the Group’s assumptions in conjunction with acquisitions are incorrect, which in turn may lead to costly development and adaption measures. Further, there is a risk that disputes occur in conjunction with an acquisition, for instance due to the property’s condition.

10 Invitation to acquire shares in SSM Holding AB (publ) Summary

D.1 Main risks specific • SSM is subject to risks related to the various phases of the projects, such as exploitation to the issuer and its risks, sales risks and production risks. The various project phases comprise, inter alia, operations (cont.) financing risks, risks related to SSM’s more complex projects and risk that the Group does not manage to sell enough apartments in order to be able to start the constructions. Further- more, the project phases comprise risk of construction errors, risk that the building cannot be converted for residential purposes in a satisfactory way in terms of construction or design technology, other concealed defects or deficiencies, damages and contamination. If such problems arise, they may entail delays to existing and planned projects or increased costs for the development of SSM’s properties.

• If SSM is unable to achieve its growth targets and implement current expansion plans successfully, SSM’s profit may deviate from the financial targets described in this Prospectus. • SSM is dependent on customers’ willingness and ability to pay for the apartments that the SSM Companies produce, as a deficient willingness or ability to pay,inter alia, may force SSM to acquire unsold apartments, which in turn may entail delays to projects and increased or unforeseen costs for the Group.

• The Group is dependent on good relations with its partners, and that agreed structures for decision-making and collaboration are working well in terms of completion and result of current as well as future projects. If one or several collaborations do not progress positively, it may lead to disputes and that joint ventures may be dissolved, and assets may be realised, on terms that are unfavourable to the Group, which in turn may lead to undesirable lock-in effects in SSM’s accounts.

• SSM is subject to a variety of regulations, and changes in legal conditions may have an adverse effect on the Group. Adapting SSM’s operations to changed legal requirements, due to either modified application of rules by municipalities and authorities or new laws and rules, may cause SSM to incur additional costs and cause significant delays to projects.

• SSM is exposed to environmental risks and related regulatory risks. In addition, failure to comply with environmental legislation and regulations may result in the Company being subject to fines, and may in certain cases even result in restrictions on the Group’s operations.

• SSM is exposed to risks related to disputes and other legal proceedings, which may be time-consuming, may disrupt daily operations, may give rise to claims involving significant amounts, and may entail significant legal expenses.

• Harm to SSM’s reputation may have a negative impact on its competitiveness, consume the time and resources of company management, and give rise to additional costs.

• SSM is exposed to the risk of being liable to pay in relation to those warranties and guarantees that the Group gives to housing associations.

• SSM is dependent on being able to retain and recruit senior executives and key personnel. In particular, SSM is dependent on individual senior executives with many years of experience of and expertise in residential development.

• SSM is exposed to liquidity, financing and refinancing risks. Thus, SSM may be adversely affected if the Company for example fails to obtain requisite financing or if SSM lacks sufficient liquidity to meet its obligations, or is only able to refinance its loan agreements on terms unfavourable to the Company.

• SSM is exposed to interest risks and there is a risk that changes in market interest rates and credit spreads will have a negative cash flow impact on SSM.

• SSM and its subsidiaries are occasionally subject to tax audits and inspections. There is a risk that tax audits and inspections may result in a Group company being ordered to pay additional tax or being refused deductions sought with in relation to acquisitions and divestments of properties and shares, financing arrangements and transactions with associated companies and housing associations in conjunction with a project.

• Changes in tax legislation, for example due to the so called bundling investigation (Sw. paketeringsutredningen) formed by the Swedish government, may increase SSM’s tax burden.

Invitation to acquire shares in SSM Holding AB (publ) 11 Summary

D.3 Main risks specific to Any investment in securities involves risks. Any such risks could cause the trading price of the securities SSM’s shares to decline significantly and investors could potentially lose all or parts of the value of their investment. The following risk factors, which are non-exhaustive and described in no particular order, are considered to be the key risks for SSM’s shares.

• An active, liquid and orderly trading market for the shares may not develop, the price of the shares may be volatile and potential investors could lose a portion or all of their investments.

• Future share issues may affect the price of the shares and lead to dilution.

• Sales of shares after the Offer may affect the price of the shares.

• SSM’s ability to pay dividends in the future may be constrained and depends on several factors.

Section E – The Offer

E.1 Issue proceeds and The Company expects to receive net proceeds amounting to approximately SEK 500 million issue costs from the new shares issue in conjunction with the Offer, after deduction of transaction costs, including commission and fees to the Joint Global Coordinators and other advisors, which are estimated to amount to approximately SEK 40 million. The Company will not receive any proceeds from the sale of the shares which are offered by the Selling Shareholder.

E.2a Reasons for the Offer SSM was founded by the entrepreneurs Ulf Sjöstrand, Ulf Morelius and Ralf Steneskog (Ralf and use of proceeds Steneskog was bought out of the Company in 1996) and has since the start in 1993 been operating in the Stockholm region. SSM is the leading residential property developer in the Stock- holm region within the niche of space-efficient, value-for-money apartments. SSM stands out in the market by developing residential unit for a specific customer segment, which the Company designates the urbanites of tomorrow. The Company’s business concept is to, based on the customers’ demands, acquire, sell and develop residential unit for the urbanites of tomorrow. As of 31 December 2016, the Group had over 5,255 apartments in its project portfolio and 1,479 apartments under construction. This makes SSM the leading residential property developer in Stockholm within its niche with attractive and space-efficient cooperative apartments for people in the age group 20–44. The Company has over time chosen to cooperate with other companies and investors in the form of joint ventures, which SSM considers an efficient way to manage project risk and profit, as well as to finance future expansion. The forthcoming listing together with the share issue means that SSM will have the possibility to continue its expansion and to increase the number of construction starts. The Offer is expected to generate a net proceed of approximately SEK 500 million to SSM, after deduction of transaction costs of approximately SEK 40 million which will be paid by the Company. The Company intends to use the net proceeds to finance the continuing growth of the Group and to optimise the capital structure. Furthermore, a listing of the Company’s shares is expected to increase attention and enhanced confidence from existing and potential customers and partners as well as to improve the Company’s possibilities to financing and access to the credit market. The Company will not receive any proceeds from the sale of the shares offered by the Selling Shareholder.

E.3 Terms and conditions The Offer comprises a minimum of 8,437,500 and a maximum of 10,000,000 new shares in of the Offer SSM, corresponding to a minimum of approximately 73.0 and a maximum of approximately 99.8 per cent of the total number of shares in the Offer. The number of shares offered by the Company is decided in order to contribute approximately SEK 500 million to SSM after transaction costs. In addition, the Selling Shareholder has reserved the right to increase the Offer with a minimum of 24,999 and a maximum of 3,333,333 existing shares, depending on the final price and demand in the Offer.1) In order to cover potential overallotment in conjunction with the Offer, the Selling Shareholder will undertake to, upon request from the Joint Global Coordinators, sell up to 15 per cent of the total number of shares in the Offer corresponding to 1,849,999 shares in the Company if the Offer is increased in full. The Offer consists of two parts: an offer to the general public in Sweden and an offer to institutional investors in Sweden and abroad. The price of the Offer will be determined within the Price Range of SEK 54–64 per share. The Price Range has been determined by the board of directors of the Company and the Selling Shareholder in consultation with the Joint Global Coordinators, based on the assessed investment interest from institutional investors. Brokerage will not be charged. The final price of the Offer is expected to be made public through a press release around 6 April 2017. 1) The Selling Shareholder intends on selling shares in the Offer provided that the final price in theO ffer is at or above SEK 60 per share. Regardless of the final price in theO ffer, the Selling Shareholder will sell existing shares in the Offer in order for the “free float” in the Company to reach a minimum of 25 per cent.

12 Invitation to acquire shares in SSM Holding AB (publ) Summary

E.3 Terms and conditions Applications to acquire shares within the scope of the Offer to the general public must be of the Offer (cont.) made during the period 28 March–4 April 2017 and relate to a minimum of 100 shares and a maximum of 20,000 shares, in even lots of 50 shares each. Applications are made to SEB or Avanza. Institutional investors in Sweden and internationally are offered the opportunity to participate through a special book-building procedure during the period 28 March–5 April 2017. Applications from institutional investors in Sweden and internationally must be made to ABG Sundal Collier or SEB (in accordance with special instructions).

E.4 Interests material to In conjunction with the Offer, the Company’s CEO has the right to acquire the equivalent of one the Offer per cent of the total number of shares in the Company, which as of the day of this Prospectus amounts to 301 thousand shares. The price of each share shall be the final price of theO ffer. The Joint Global Coordinators and their respective affiliates have previously, and may continuously, within the context of their ordinary course of business, provide the Company, the Selling Shareholder and their respective affiliates with investment banking services, financial advisory services, and other services. Additionally, the Joint Global Coordinators may, in the ordinary course of their business, hold the Company’s or the Selling Shareholder’s securities for the purpose of carrying out investments on behalf of their, or their affiliates’, respective account. With respect to certain of these transactions and services, the sharing of information is generally restricted for reasons of confidentiality, internal procedures or applicable rules and regulations. The Joint Global Coordinators have received and will receive customary fees and commissions for these transactions and services and may come to have interests that may not be aligned or could potentially conflict with the interests of potential investors, the Company and/or the Selling Shareholder.

E.5 Seller and lock-up Pursuant to the Placing Agreement, the Company will agree with the Joint Global Coordinators arrangements that it will not, for a period of 180 days after the first date of trading of the shares, without the prior written consent of the Joint Global Coordinators, submit to its shareholders any proposal for a capital increase that would enable it to, or otherwise take any action to, directly or indirectly issue, offer, pledge, sell, contract to sell, or otherwise dispose of any securities of the Company that are substantially similar to the shares, including any securities that are convertible into or exchangeable for, or that represent the right to receive, shares of the Company; and not to purchase or sell any option or other security or enter into any swap, hedge or other agreement that would have similar economic consequences to such actions. The Company’s undertaking is subject to certain customary exceptions and shall also not apply in connection with the Compa- ny’s historical, current or future share-based incentive programs. The Selling Shareholder and the members of the board of directors and senior executives of the Company will each undertake to the Joint Global Coordinators not to, with the prior written consent of the Joint Global Coordinators, offer, pledge, sell, contract to offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares or any securities of the Company that are convertible into or exercisable or exchangeable for, or that represent the right to receive, shares of the Company or any such substantially similar securities; enter into any swap, hedge or other agreement that transfers to another, in whole or in part, any of the economic consequences of ownership of the shares; or propose or vote in favour of a capital increase proposed with respect to the Company, whether any such transaction is to be settled by delivery of shares, in cash or otherwise, for a period of 360 days from the first day of trading of the shares. The foregoing shall not apply to: certain disposals of shares to family members, limited partners key employees and legal entities in which the seller has significant influence, provided that the transferee agrees to a lock-up; any disposal pursuant to a bonafide third party takeover offer or other similar transaction; any disposal in connection with a redemption or buy-back of shares by the Company; rights in connection with a pre-emptive offering by the Company; any transaction required by law or regulation; any transfer or deposition of shares to a capital insurance or an investment savings account, subject to certain conditions; transactions relating to shares or other securities acquired in open market transactions after the completion of the Offer.

E.6 Dilution The issue of the shares in connection with the Offer could, assuming a final price in theO ffer at the mid-point of the Price Range, increase the number of the Company’s shares by a maximum of 9,152,542 shares to a total maximum of 39,252,542 shares, which correspond to a dilution of 30.4 per cent of the shares and votes in the Company.

E.7 Expenses charged to Not applicable. The Company will not charge any expenses to investors. the investor

Invitation to acquire shares in SSM Holding AB (publ) 13 Risk factors

Risk factors

An investment in SSM is associated with substantial risks. Investors should carefully consider all the risks listed below and all other information in this Prospectus before making a decision to invest in the shares. If any of the below risks should materialise, the Group’s operations, earnings and financial position may be adversely affected to a material degree. In such cases the share price could fall and investors could lose all or part of their investment. The risks described below are not the only risks to which the Company and its shareholders may be subject. Additional risks not currently known to the Group or which the Group currently considers to be immaterial based on conventional risk analysis, may have a significantly adverse effect on the Group’s operations, and a materially adverse effect on the Group’s business, earnings or financial position. The order in which the risks are presented is not meant to indicate the proba- bility that they will materialise, nor is it meant to indicate their severity or significance. In addition to this section, investors should also take into consideration the information provided in the Prospectus in its entirety. The Prospectus also contains forward-looking statements that are based on assumptions and estimates, and which are subject to risks and uncertainty factors. The Group’s actual earnings could differ materially from what is anticipated by these forward-looking statements as a result of numerous factors, including the risks described below and elsewhere in this Prospectus.

Risks related to SSM The residential development sector is a competitive industry, and Industry- and market-related risks SSM may have difficulties competing successfully in the future SSM’s business is affected by macroeconomic factors SSM is active within the residential development industry, SSM’s business consists primarily of developing and selling which is a competitive industry. The Group’s competitiveness is residential units in the Stockholm area, and the Company is dependent on, inter alia, the SSM Companies’ ability to acquire dependent on customers’ willingness and ability to pay for the and develop building rights to build apartments that customers apartments built by the Group and its partly owned associated want to buy or rent, to anticipate future changes and trends in the companies (”joint ventures”, and together with the Group the industry, and to rapidly adapt to current and future market needs. “SSM Companies”). SSM is thus active on a market which has Furthermore, SSM’s competitors may have more resources been characterised by a strong price trend during the latest at their disposal than the Group and may have the capacity to decade. For instance, the average square meter price of resi- better withstand market downturns and thereby compete more dential units in the greater Stockholm area has increased by 157 successfully by, for example, being better at retaining competent per cent during the period 2005–2016. The future price trend of personnel and/or at adapting projects to customers’ preferences, residential units, and thereby also the Group’s operations, but concerning, for example, location, form of tenure and housing also the operations as such regardless of the future price trend, environment. If SSM is unable to successfully compete, this may therefore be affected by macroeconomic factors that are out- failure may materially impact on sales grade of apartments built side the Group’s control. These factors include, but are not limited by the Group, and the Group’s revenues could decline, which in to, growth in gross national product (“GNP”), interest rates, the turn may have a materially adverse effect on the Group’s opera- rate at which new residential units are built, the production costs tions, earnings and financial position. for new residential units, access to labour in the construction industry, demographic changes, growth in population, inflation Operational risks and any deflation, changes in global regulations governing SSM is dependent on a successful investment strategy and an banks’ capital adequacy and market liquidity, for example the attractive portfolio of building rights, in terms of number, location Basel Accords, and general difficulties in obtaining financing (or and customer preferences financing on terms that are acceptable to the Group or to the SSM’s business depends on the Group’s investment strategy and customers). portfolio of building rights. It is fundamental for SSM’s business to Adverse economic trends affect for example customers’ will- be able to predict where customers will want to live in the future ingness and ability to pay for new residential units, which, in turn, and thus where investments in land are attractive and on what can lead to falling housing prices, the share of unsold apartments terms investments should be made. In the Stockholm area, the in the SSM Companies’ projects rising, and the opportunities to access to building rights is also limited, which makes it more implement profitable residential development projects worsening. difficult to acquire building rights on terms that are advantageous SSM’s target group primarily comprises young adults, single to SSM. people and childless couples aged 20–44. The portion of the From time to time, SSM may divest building rights in order target group comprising students, single-person households and to, inter alia, optimise and adapt its portfolio of building rights to individuals at the start of their housing and working careers is customers’ needs, or to finance its investments. The Group is more affected by changes in economic trends, which in turn can therefore dependent on a liquid market for building rights in the negatively affect demand for the SSM Companies’ apartments. Stockholm area, which, in turn, is dependent on a number of Furthermore, adverse economic trends also increase the risk of different factors, for example macroeconomic factors, changes payment arrears or even bankruptcy on the part of customers, in potential buyers’ financial position and financing conditions, suppliers and subcontractors, which can have negative effects on changes in the general economic situation and changes to legis- SSM’s operations and cash flows. General economic downturns lations, regulations or tax policies. An illiquid market for building can lead to difficulties for SSM in obtaining financing (or financing rights in the Stockholm area may therefore have a materially on terms that are acceptable to the Group), which in turn can adverse effect on the Group’s operations, earnings and financial impair SSM’s opportunities to run its business (see “SSM is position. exposed to liquidity, financing and refinancing risks”). Ultimately, If SSM does not manage to develop and/or divest building general economic downturns can also negatively affect the value rights to housing associations or other operators in the housing of the SSM Companies’ properties. If any of the above risks are market, there is a risk that the restricted equity in the portfolio of materialised, this may have a materially adverse effect on the building rights becomes excessive and that the Group therefore Group’s operations, earnings and financial position. will not have sufficient equity available to develop the residential

14 Invitation to acquire shares in SSM Holding AB (publ) Risk factors

units. In order to develop and maintain an attractive portfolio up by the future owners of the properties in connection with the of building rights, in terms of number, location and customer conclusion of construction agreements, which also exposes preferences, the Group is dependent on a successful investment SSM to the risk that these future owners will not be able to fulfil strategy and that such investment strategy actually can be effec- their obligations under the credit agreements which have been tuated. An incorrect investment strategy or an inability to effec- entered into with lenders (see “SSM is exposed to the risk of tuate a selected investment strategy may result in investments being liable to pay in relation to those warranties and guarantees with low yield and/or lack of growth potential. If any of these risks that the Group gives to housing associations”). Furthermore, should materialise, it may have a materially adverse effect on the certain specific risks may be realised in the development phase Group’s operations, earnings and financial position. of a project that is more complex as regards, inter alia, construc- SSM acquires building rights continuously through municipal tion and planning. An example of such a project is Tellus Towers, land allocations, both through direct allocations, where SSM, on which requires special expertise within the area of high-rise its own initiative, presents ideas for residential units and land allo- construction, which, in SSM’s assessment, may only be found cations where SSM participates in competitive tender procedures with foreign operators. SSM is therefore dependent on identi- noticed by municipalities, and strategic property acquisitions fying and establishing links with a foreign partner which has the from private actors. All of SSM’s transactions are associated expertise required for the project development of Tellus Towers. with uncertainty and risks. There is a risk that SSM’s analyses Consequently, there is a risk that SSM may not obtain the exper- and studies which are carried out with purpose of identifying and tise required in order to develop more complex projects, such as reviewing the risks that an acquisition is associated with, are Tellus Towers, or that the requisite expertise will be obtained on insufficient or afflicted with gaps and flaws. Consequently, there terms that are unfavourable to SSM, which ultimately may impact is a risk that the assumptions made by the Group in conjunction the Group’s budget and income. If any of these risks should mate- with an acquisition are incorrect, and in such case SSM may need rialise, it may have a materially adverse effect on the Group’s to take costly development and adaption measures, related to for operations, earnings and financial position. instance existing tenants, decontamination, reconstruction and managing of technical problems and authority decisions. Further, • Sales risks there is a risk that disputes occur in conjunction with an acquisi- The period between the building rights being obtained and the tion, for instance due to the property’s condition. Should any of planned apartments being sold is the most critical phase for SSM these risks materialise, it may have a materially adverse effect on from a financial perspective. The Group sets internal requirement the Group’s operations, earnings and financial position. of at least 50 per cent pre-sold apartments before construction may start. In particular, this requirement is important for projects SSM is subject to risks related to the various phases of that are not financed by bank loans. If a project is financed by the projects banks, the relevant bank may set other requirements related to SSM’s operation is based on developing its properties into the share of pre-sold apartments. The requirement level varies residential units within the framework of residential development depending on the general condition of the economy, but at the projects, both through new constructing and through conversion time of this Prospectus, 60–80 per cent of apartments must of existing buildings. The residential development business is be pre-sold in order for a construction loan to be issued and in general a complex process that involves significant values, construction to be started. SSM is therefore dependent on a long lead times, extensive management and legislation, a large well-functioning sales process to be able to develop its projects number of individuals and competences involved and high and there is a risk that the Group will not succeed in selling requirements in terms of quality and sustainability. Further- enough apartments in order to take the projects into the next more, uncertainties arise as regards the long-term demand for phase. The Group’s sales ability and opportunity to carry out residential units and the conditions for obtaining project financing. profitable residential development projects within an established SSM divides the risks relating to the project’s phases essentially time-frame or without material delays is, inter alia, dependent on into three different categories: exploitation risks, sales risks and SSM’s ability to retain and recruit the requisite expertise within, production risks. for example, sales and marketing (see “SSM is dependent on being able to retain and recruit senior executives and key per- • Exploitation risks sonnel”). If the Group does not manage to sell enough apart- SSM’s project development is based on the Group’s investment ments in each project in order to be able to start the construction strategy and portfolio of building rights. It is fundamental for of the projects, it may have a materially adverse effect on the SSM’s operation to acquire building rights in attractive locations Group’s operations, earnings and financial position. to develop residential units for SSM’s target group (see “SSM is dependent on a successful investment strategy and an attrac- • Production risks tive portfolio of building rights, in terms of number, location and There are technical risks related to new constructions, exten- customer preferences”). SSM’s operation is also dependent of a sions and reconstructions of buildings. These include the risk of continuous access to financing of projects on terms acceptable construction errors, risk that the building cannot be converted for to the Group (see “SSM is exposed to liquidity, financing and residential purposes in a satisfactory way in terms of construction refinancing risks”), including, inter alia, access to credits and technology, other concealed defects or deficiencies, damage and sufficient liquidity from the Group. In certain projects, SSM is also contamination. Furthermore, new constructions, extensions and bound by exploitation agreements that have been entered into reconstructions entail risks of workplace accidents, which in turn and other agreements with municipalities, under which SSM has may lead to the Group being the subject of legal proceedings or undertaken to take certain measures within specific timeframes suffering damage to its reputation (see “SSM is exposed to risks as regards its properties. These undertakings are independent related to disputes and other legal proceedings” and “Harm to of whether SSM has the ability to finance them or not. Moreover, SSM’s reputation may have a negative impact on its competitive- SSM acts as guarantor for the construction loans which are taken ness, consume the time and resources of company management,

Invitation to acquire shares in SSM Holding AB (publ) 15 Risk factors

and give rise to additional costs”). If such problems arise, they investment strategy and an attractive portfolio of building rights, in may entail delays to existing and planned projects or increased terms of number, location and customer preferences”). costs for the development of SSM’s properties. Moreover, there is If SSM is unable to achieve its growth targets and implement a risk that project-related problems will lead to the management’s current expansion plans successfully, SSM’s profit may deviate attention being distracted from SSM’s other operation. If the from the financial targets described in this Prospectus, which in Group’s projects are delayed, this may also lead to partners and turn may have a materially adverse effect on the Group’s opera- others with whom SSM has concluded agreements regarding, for tions, earnings and financial position. example, investments, residential development or land allocation, pursuing remedies, such as damages or liquidated damages, SSM is dependent on customers’ willingness and ability to pay for against the Group. the apartments that the SSM Companies produce The Group provides customary warranties to the future The willingness to pay for the apartments that the SSM Com- owners of the properties when signing construction agreements, panies produce depends on, inter alia, how well a particular and SSM has, in its capacity as turnkey contractor, the overall residential unit corresponds to the demand on the market, the responsibility for the contracts. Each project is divided up into activity in the housing market, the general trend in prices for smaller contracts, which are carried out by external subcontrac- residential units and demographical factors, such as numbers of tors, which makes the Group dependent on access to external people moving into and out of the Stockholm area. Furthermore, suppliers and workers as well as the price for such services, customers’ willingness to pay depends on, inter alia, the access but also the price of the materials used in connection with such to and cost of alternative housing categories. SSM’s pricing of subcontracts. The Group enters into standard-form agreements the apartments that the SSM Companies produce constitutes a with its subcontractors, which are based on industry specific major factor in customers’ willingness to acquire and pay for the contract templates where each subcontractor bears the risk for its apartments in question. It is also central to customers’ willing- respective part. There is therefore a risk that difficulties will arise ness to pay that SSM manages to predict which residential units, in establishing which subcontractor has caused specific defects living environments and forms of tenure that are going to be or deficiencies, which may lead to delays in a project or increased attractive in the future. Customers’ ability to pay for the apart- costs for the Group. SSM’s agreements with such subcontractors ments the SSM Companies produce is affected in turn by the also expose the Group to counterparty risks, i.e. the risk that the ability of the households to obtain loan financing, amortisation Group’s subcontractors are unable to fulfil their obligations or requirements, interest deduction opportunities, the develop- warranties pursuant to the agreements concluded with the Group. ment of the mortgage interest rate and the rules governing the The counterparty risk may for example be realised if the Group’s maximum loan-to-value ratio stipulated in statute or applied by subcontractors, or if any of the subcontractors engaged by the the banks. Furthermore, the ability to pay is affected by, inter subcontractors, enters into bankruptcy or liquidation. alia, income trends, employment rates, levels of taxes and Complex projects such as Tellus Towers involve a material charges, and other factors that affect the households’ finances. increase of the production risks described above and therewith In addition, SSM’s target group partly comprises of students, connected risks, inter alia, due to the complexity in itself forms a single-person households and individuals at the start of their specific production risk, particularly in the light of that SSM has housing and working careers, and there is a risk that changes in never previously carried out, and thus has no direct experience the general state of the economy will affect SSM’s target group of, a complex project like Tellus Towers. The specification of more than other target groups (see “SSM’s business is affected requirement on SSM will consequently increase significantly in by macroeconomic factors”). Finally, measures or rule changes conjunction with Tellus Towers, which, in turn, implies a corre- aiming to reduce households’ indebtedness may have an adverse spondingly increased specification of requirement on SSM’s effect on households’ ability to pay. In connection with the SSM subcontractors, and if SSM and/or its subcontractors fail to meet Companies transferring projects, SSM undertakes, from time to this specification of requirement, there is a risk that the project, time, to acquire unsold apartments and to incur certain on-going inter alia, is subject to significant delays and/or significantly costs in relation to such unsold apartments. SSM’s obligation to increased costs. cover costs in conjunction with unsold cooperative apartments If any of these risks should materialise, it may have a mate- has no limitation in time. Customers’ unwillingness or inability to rially adverse effect on the Group’s operations, earnings and pay for the apartments that SSM produces, for example due to financial position. a failed pricing strategy for the apartments, may therefore lead to SSM being forced to acquire unsold apartments, which in turn SSM may encounter difficulties in achieving its growth targets may entail delays to projects and increased or unforeseen costs and in implementing current expansion plans successfully for the Group (see “SSM is exposed to the risk of being liable to The financial position, indebtedness and operative infrastructure pay in relation to those warranties and guarantees that the Group have been adapted to the growth targets and expansion plans gives to housing associations”). of the Group to enable such growth. If SSM does not manage If customers’ willingness or ability to pay for the apartments to achieve its growth targets and implement current expansion produced by the Group reduces, or if SSM fails to sell apartments plans successfully, there is therefore a risk that SSM will have that SSM builds due to the aforementioned factors, it may have a to adapt its financial position, indebtedness and operational materially adverse effect on the Group’s operations, earnings and infrastructure further, which may be costly and time-consuming financial position. for the Group. Such growth and expansion are also dependent on the Group’s ability to retain employees and recruit new personnel SSM is dependent on good relations and a good cooperation with and key employees (see “SSM is dependent on being able to other partners in joint ventures retain and recruit senior executives and key personnel”). Further- During 2016, SSM had five on-going projects,i.e. projects where more, increased growth is dependent on the Group’s investment construction had started and projects with a planned construction strategy and ability to acquire building rights and successfully start date, in joint ventures with Alecta, Profi Fastigheter and implement new projects (see “SSM is dependent on a successful Student Hill. The Group’s collaboration with such joint venture

16 Invitation to acquire shares in SSM Holding AB (publ) Risk factors

partners is governed by cooperation agreements and/or special practice or the political will or direction will change in the future in shareholder agreements, which contain, inter alia, provisions a unfavourable way to the Group. on the distribution of profits and losses, financing obligation, Adapting SSM’s operations to changed legal requirements, prohibition on assignment, decision-making and the handling of due to either modified application of rules by municipalities and deadlocks in decision-making processes between the parties. authorities or new laws and rules, may cause SSM to incur Each joint venture therefore entails different allocations of risk additional costs and significant delays to projects, which in turn and risk profiles, depending on how the collaboration and/or may have a materially adverse effect on the Group’s operations, shareholder agreement is designed. The Group is dependent earnings and financial position. on good relations with its partners and that agreed structures for decision-making and collaboration are working well in terms of SSM is exposed to environmental risks and related completion and result of current as well as future projects. If one regulatory risks or several collaborations do not progress positively, it may lead to SSM is subject to extensive environmental, health and safety disputes and that joint ventures may be dissolved. Should such legislation and regulations relating to the SSM Companies dissolution take place, the assets associated with a joint venture residential development and acquisition, ownership, possession may have to be realised. There is a risk that such realisation is and management of properties. For example, the Swedish Envi- unable to be carried out on terms that are advantageous to SSM, ronmental Code (Sw. miljöbalken (1998:808)) specifies that the or cannot be carried out at all, which in turn may lead to lost party that conducted operations contributing to pollution impacts profits on projects, reduced income and/or undesirable lock-in is also responsible for decontamination. If no such party is able effects in relation to such assets. to carry out or pay for the decontamination, the liability is to be SSM’s ability to continue current and develop new collabo- borne by the party that acquired the property after 1998, provided rations with strategic partners in joint ventures may affect the that such party, at the time of the acquisition, was aware of such Group’s ability to successfully implement started, planned and contamination or should have discovered it. SSM is subject to new projects. If such collaborations cannot be initiated or if such additional regulations concerning for example constructing mate- collaborations develop on terms that are unfavourable for the rial, working environment and occupational safety, the handling of Group, it may lead to projects being delayed, not being financed asbestos and decontamination, and may become subject to addi- or carried out as planned, or being feasible only with reduced tional such regulations in the future. Failure to comply with such profitability or loss. Furthermore, SSM is dependent on how legislation and regulations may result in the Swedish government current and future partners in joint ventures act, which may lead issuing enforcement actions, imposing fees or fines, and may in to reduced flexibility in managing and expanding the operation, certain cases even result in restrictions on the Group’s operations inter alia, in relation to investments in or divestments of properties that may be significant. In addition, pollution burdens may be dis- or building rights in joint ventures. In addition, if joint ventures covered on properties and in buildings, in particular during con- develop in a way that is negative for the Group, there is a risk that version processes or during the process of constructing buildings SSM will not be able to take the measures that the Group deems or converting of buildings for residential purposes. Actions related are most advantageous. If any of the above risks is realised, it to such pollution are part of SSM’s on-going operations and may, may have a materially adverse effect on the Group’s operations, depending on the extent of the specific pollution impact, have a earnings and financial position. materially adverse effect on the Group’s operations, earnings and financial position. SSM is subject to a variety of regulations, and changes in legal conditions may have an adverse effect on the Group SSM is exposed to risks related to disputes and other SSM’s operation is subject to various laws and rules as well as legal proceedings processes and decisions, in relation for example housing asso- SSM may become involved in legal proceedings with housing ciations, personal data, acquisitions of land, construction plans associations, subcontractors, suppliers, partners and third parties and zoning, construction standards, safety and protection rules, as part of the Group’s daily operations. Disputes, claims, investi- health and environmental rules, rules on permitted construc- gations and legal proceedings may lead to SSM being sentenced tion materials and construction classifications. Furthermore, to pay damages or to cease engaging in certain practices. The SSM’s operation is affected by laws and rules directed against SSM Companies may become involved in disputes in the course customers and which affect customers’ acquisition power when of their ordinary business activities, and risk being sued for claims acquiring residential units, for example access to and the cost of relating to defects or deficiencies in sold properties, acquisition credits. In addition, the Group’s business is affected by regional or divestment of properties, the construction or conversion of and supranational regulatory frameworks, such as EU legisla- residential units or other agreements, as well as labour disputes. tion. Legislation and other regulations may change and there is In addition, SSM or its board members, senior executives, a risk that the Group will be unable to comply with such changed employees or affiliated companies may be subject to official requirements without having to implement far-reaching measures investigations or criminal proceedings. Such disputes, claims, and incurring significant costs. In order to use, develop or convert investigations and legal proceedings may be time-consuming, the Group’s properties into residential units, various permits may disrupt daily operations, may give rise to claims involving and decisions are also required, which include zoning plans and significant amounts, and may entail significant legal expenses. In various forms of land parcelling, which are approved and granted addition, it can often be difficult to foresee the outcome of com- by municipalities and authorities. There is a risk that SSM will not plex disputes, claims, investigations and legal proceedings. Con- be granted the permits or obtains the decisions required to run sequently, disputes, claims, investigations and legal proceedings and develop properties in a desirable way. Furthermore, there is may have a materially adverse effect on the Group’s operations, a risk that decisions will be appealed and that planned projects earnings and financial position. will consequently be significantly delayed or that the decision

Invitation to acquire shares in SSM Holding AB (publ) 17 Risk factors

Harm to SSM’s reputation may have a negative impact on its that the SSM Companies will compensate the housing associa- competitiveness, consume the time and resources of company tion for: (a) all costs relating to the acquisition of the property and management, and give rise to additional costs the contract which exceed a specified purchase amount; (b) all SSM’s ability to attract and retain customers, suppliers, partners interest costs incurred due to the fact that the specified interest and tenants is to a large extent dependent on its reputation, rate in the housing association’s loan agreement exceeds a as a consequence of which its operations are sensitive to risks particular interest rate level for a period of two years after the final related to reputational harm. For instance, SSM’s reputation may account date; and (c) unsold cooperative apartments, which the be adversely affected by rumours, negative publicity or other Company undertakes to acquire. The last-mentioned warranty factors that could lead to SSM no longer being considered to be a has no limitation in time. When SSM delivers the completed competent and reputable operator on the market. If such negative property to the housing association, three different types of war- factors should occur, or if SSM’s reputation should deteriorate, ranties commences: (i) the warranty to the housing association this may reduce the Group’s profitability, competitiveness, take up regarding defects in material and goods which has been used in the time and resources of the company management and impose the construction process expires after two years, (ii) the warranty additional costs on SSM, which may have a materially adverse regarding the contractor’s work performance expires after five effect on the Group’s operations, earnings and financial position. years, and (iii) the warranty regarding material defects due to the contractor’s negligence expires after ten years. If the warranties Failures, disruptions or deficiencies in the control of SSM’s above towards housing associations are honoured, it may have a control system may have a negative impact on its operations materially adverse effect on the Group’s operations, earnings and The Group’s ability to effectively run its organisation and to main- financial position. tain effective internal control depends on having well functional In addition to the above, the Group also acts as a guarantor control systems, including IT environment and IT operations, for the construction loans that are raised by housing associations which are controlled and integrated throughout the entire organi- conclude in order to finance their acquisition of properties and sation. Failures, disruptions or deficiencies in SSM’s control sys- construction of buildings. As of 31 December 2016, these guar- tems may also impact the Group’s risk management and ability antee amounted to a total of SEK 966 million. There is a risk that to submit correct financial reports or to submit such reports in a the associations’ agreed income will not be achieved or that the timely manner, both internal and external. To the extent that SSM housing associations, for other reasons, will not be able to honour experiences a serious failure or disruption in any of its control their financial undertakings pursuant to the credit agreements systems or in other technological resource, the Group may be concluded with banks, and that SSM therefore becomes liable to rendered incapable of effectively running and managing its oper- pay. If the above risks are materialised and the Group’s guaran- ations. Serious failures and disruptions in SSM’s control systems tees are honoured, it may have a materially adverse effect on the may also impact its customer relationships, reputation, risk man- Group’s operations, earnings and financial position. agement and profitability. If the above risks should materialise, it may have a materially adverse effect on the Group’s operations, Risks related to SSM’s employees earnings and financial position. SSM is dependent on being able to retain and recruit senior executives and key personnel SSM’s insurance cover may be insufficient in the event of tort SSM is dependent on being able to retain and recruit senior exec- liability or other damages utives and key personnel with the necessary expertise within, for The Group’s insurance cover may prove to be insufficient to example, planning, production, design, construction and sales. compensate for damages related to, for example, SSM’s con- SSM’s employees are one of the Group’s most important assets, structions, conversions or properties. In particular, certain types as the business runs on the decisions and the actions they take. of risks, such as war, acts of terror, insufficient preparation in The wrong employee in the wrong place, dissatisfied staff, poor the event of natural disasters or extreme weather events, such leadership and an organisation that does not encourage engage- as floods, may be or may in the future become impossible or ment or open dialogue, and that does not stimulate personal too costly for SSM to insure itself against. If uninsured damage development may lead to employee unhappiness, underper- should occur, or if a damage event should exceed the insur- formance, and ultimately to employees leaving the Company. ance cover, SSM may lose the capital invested in the project or Dissatisfied employees and high staff turnover may lead to property in question as well as future revenues from such project elevated costs, impaired customer relations and reduced internal or property. Furthermore, the SSM may become liable to repair efficiency, which may result in reduced profitability. Furthermore, damage caused by uninsured risks and/or become liable to debts SSM is particularly dependent on individual senior executives and other obligations related to such damages. Uninsured losses with many years of experience of and expertise in residential or losses exceeding the insurance cover may therefore have a development. For example, the Company’s CEO has been an materially adverse effect on the Group’s operations, earnings and important factor in the Group’s growth and is also deemed to financial position. be one of the key individuals in the Group’s on-going expansion phase. If the Group is unable to recruit employees with the right SSM is exposed to the risk of being liable to pay in relation to expertise or retain senior executives and other key personnel, it those warranties and guarantees that the Group gives to housing may have a materially adverse effect on the Group’s operations, associations earnings and financial position. In connection with SSM selling properties and entering into construction agreements with housing associations, the SSM Risks related to SSM’s financing Companies issues customary warranties, including warranties SSM is exposed to liquidity, financing and refinancing risks related to the property’s condition, certain environmental war- Financing risk refers to the risk that financing cannot be obtained ranties, the contract’s planning, implementation and materials. or extended on maturity or that it may only be obtained or In addition, the companies gives additional warranties, including extended at drastically higher costs or on terms that are unfavour-

18 Invitation to acquire shares in SSM Holding AB (publ) Risk factors

able to SSM. Liquidity risk, in turn, refers to the risk that the Group projects, ability to refinance its loan agreements or to pursue its will not have the liquid funds to pay its financial undertakings. To acquisition strategy, or is only able to refinance its loan agree- enable the acquisition of property and project development, both ments on terms unfavourable to SSM, this may have a materially long-term and short-term financing is required, together with an adverse effect on the Group’s operations, earnings and financial adequate balance between equity and interest-bearing debt. The position. availability of financing is always an important matter in connection with the Group’s projects, and the matter will be brought to SSM is exposed to interest rate risks a head in connection with the completion of Tellus Towers. As A change in market interest rate and credit spread affects SSM’s the Group is being paid for projects at their completion and when cash flow or the fair value of debts. In addition, warranties issued customers take possession over their apartments, there is also a by the Group are affected by changes in the market interest risk that the Group’s cash flow will be unevenly distributed over rate and credit spread (see “SSM is exposed to the risk of being the accounting year. SSM is continuously working with rene- liable to pay in relation to those warranties and guarantees that gotiating and, as needed, obtaining new facilities. As security the Group gives to housing associations”). How rapidly and to for obtained loans, SSM provides the following categories of what amount changes in market interest rate and credit spread securities, ranked in order of priority, (a) property mortgages, (b) will impact on SSM’s cash flow or the fair value of debts primarily shares in subsidiaries/project companies, and (c) parent com- depends on the chosen loan maturity and fixed interest rate pany warranties (guarantees). If SSM’s securities for its loans are period. However, there is always a risk that changes in market deteriorates or if SSM, in the future, will not be able to provide interest rates and credit spreads will have a negative cash flow requisite security for new loans, there is a risk that SSM is unable impact on SSM, primarily by increased interest costs. If these to renegotiate or raise new credits and therefore secure that its risks should materialise, it may have a materially adverse effect need for long-term financing and liquidity is satisfied. on the Group’s operations, earnings and financial position. As of 31 December 2016, SSM had credit agreements in the amount of SEK 853 million, of which the long-term agreements SSM is exposed to currency risks and to changes in the value of amounted to SEK 833 million and the short-term agreements its foreign currency derivatives amounted to SEK 20 million. On a net basis, the amount availed When carrying out projects, the SSM Companies procure from of these credit agreements was SEK 533 million. SSM’s credit time to time materials and services in euro, which exposes the agreements with banks contain customary termination provisions Group to currency risk. SSM generally uses various currency and undertakings in relation to, for example, information under- derivatives to manage fluctuations in exchange rates. Derivatives takings and restrictions on the ability to incur indebtedness, grant represent a financial asset or debt which is valued at fair value security or guarantee, or resolve on dividend in certain compa- with changes in value reflected primarily in the income statement. nies within the Group. There is therefore a risk that changes in the euro exchange The Company has issued a secured bond loan of SEK 400 rate affect the market value of the Group’s currency derivatives million within a total framework amount of SEK 700 million (the negatively. The Group’s conclusion of derivative agreements also “Bonds”). The Bonds bears a floating rate of STIBOR three exposes SSM to counterparty risks. months with an additional margin of eight per cent, and mature If any of the above risks should materialise, it may have a on 9 May 2020. The terms of the Bonds are connected to certain materially adverse effect on the Group’s operations, earnings and financial covenants regarding, for example, that the Group’s financial position. consolidated debt/equity ratio shall exceed at least 22.5 per cent and that there shall be sufficient available cash to cover interest Tax risks payments of the Bonds for three months. Furthermore, the Bonds SSM’s tax situation may deteriorate if its past or present contain certain restrictions in relation to the Group’s ability to approach to tax-related issues is successfully challenged distribute dividend, incur indebtedness or grant security and SSM The tax strategies applied within the Group and therefore affect may not start a development project in relation to cooperative its tax situation are based on interpretations of prevailing tax apartments until at least 50 per cent of the cooperative apart- legislation and other tax regulations and opinions issued by the ments have been sold to customers through binding pre-agree- relevant tax authorities. The Company and its subsidiaries are ments pursuant to the provisions of the Cooperative Apartments occasionally subject to tax audits and inspections. There is a Act (Sw. bostadsrättslagen (1991:614)). The Bonds contain risk that tax audits and inspections may result a Group company customary provisions concerning grounds for termination. There being ordered to pay additional tax or being refused deductions are, inter alia, cross-default provisions, which stipulate that there sought with in relation to acquisitions and divestments of prop- is a ground for termination under the Bonds if there is a ground for erties and shares, financing arrangements and transactions with termination under another credit agreement or financial under- associated companies and housing associations in conjunction taking taken up by SSM or any of SSM’s significant subsidiaries with a project. which exceed certain thresholds. As regards, for example, transactions with associated com- There is a risk that the Group may in the future breach its panies and housing associations in connection with a project, the undertakings or financial obligations under its credit agreements, Group’s tax situation may be affected if such transactions would which may cause the lenders in question to terminate the agree- not be considered to be fair market priced on general market ments for immediate payment or to claim securities. Furthermore, terms. The matter is complex and there is no clear practice in this a downturn in the general economic climate or disruptions in the regard. Several investigations and tax proceedings initiated by capital and credit markets may result in that the Group’s access the Swedish Tax Agency are on-going in the industry in which the to financing becomes restricted and that the Group’s opportuni- Group operates, and there is thus a risk that the Group may also ties to refinance its loan agreements disappear. If SSM should become subject to such investigation. fail to obtain the requisite financing in the future, or if SSM lacks sufficient liquidity to meet its obligations, undertakings in on-going

Invitation to acquire shares in SSM Holding AB (publ) 19 Risk factors

If the Company’s interpretation of tax legislation and other After the Offer, the price of the shares may be subject to tax regulations or the application thereof should prove faulty, or if considerable fluctuation. In particular, the price of the shares may the Swedish Tax Agency or other authorities should successfully be affected by supply and demand for the shares, fluctuations in make negative tax adjustments in respect of a Group entity, or if actual or projected results, changes in earnings forecasts, failure prevailing legislation, regulations or governmental interpretations to meet stock analysts’ earnings expectations, changes in gen- of the same or the administrative practice in this regard should eral economic conditions, changes in regulatory conditions and change, including with retroactive effect, the Group’s previous other factors. Moreover, the general volatility of share price may and current handling of tax issues may be challenged (including, create pressure on the share price even if there is no reason for for example, the Group’s historical pricing of transactions with this in the Group’s operations or earnings potential. associated companies and housing associations in connection with a project). If the Swedish Tax Agency or another authority Future issues may affect the price of the shares and successfully assert such claims, this may lead to an increased lead to dilution tax burden in the form of, inter alia, income tax and value added SSM may in the future attempt to raise capital by issuing tax (VAT) as well as penalties and interest. If any of these risks additional shares or other securities. Such an issue may have a should materialise, it may have a materially adverse effect on the negative impact on the price of the shares and lead to a dilution Group’s operations, earnings and financial position. of financial and voting rights if the issue is carried out without the existing shareholder’s preferential right. Even though the timing Changes in tax legislation may increase SSM’s tax charge and term of any future issues will depend on the market condi- In June 2014, the Swedish Committee on Corporate Taxation tion at the time of the issue, the Company is unable to predict submitted a proposal to the Swedish government on the intro- or estimate the amounts, timing or terms of any future issues. duction of a new system for corporate taxation in Sweden that Consequently, shareholders should consider the risk that future incorporates restrictions on the deductibility of interest expenses issues may lower the price of the shares and/or dilute their share- and other financial expenses. The model being advocated as the holdings in the Company. basis for a revised proposal is one in which the deductibility of interest expenses is based on EBIT or EBITDA. Simultaneously, Sales of shares after the Offer may affect the price of the shares it was announced that the need for special solutions for certain In connection with the Offer, the Selling Shareholder, the mem- sectors, including property, requires analysis. SSM has signif- bers of the board of directors and other senior executives of the icant interest expenses, and if a restriction on the deductibility Company have entered into lock-up agreements with the Joint of interest expenses is implemented in Sweden, not only the Global Coordinators. When these lock-up agreements expire, Group’s but also the entire industry’s tax burden may increase, or if they are waived or terminated by the Joint Global Coordina- which may have a materially adverse effect on the Group’s operators, the shares that are subject to the lock-up agreements will tions, earnings and financial position. be available for sale in the public market or otherwise. Sales of In June 2015, the Swedish government formed an investiga- substantial amounts of shares in the public market following the tive committee with a mandate to review certain issues in the area Offer, or the perception that such sales could occur, may nega- of property and stamp duties. The investigative committee has tively affect the market price of the shares and may make it more been tasked with analysing the overall tax position of companies difficult for holders to sell their shares at a time and price that they in the property sector and in particular assess whether it is justi- deem appropriate. The Selling Shareholder may have interests fied to prevent bundling of properties (for example when divesting that are different from the Company’s other shareholders as properties to housing associations). The mandate includes regards the timing and amounts of shares that may be sold. income tax, municipal property tax, property fees, stamp duty and VAT. The investigative committee is expected to submit its SSM’s ability in the future to distribute dividends may be limited proposal no later than 31 March 2017. If regulations resulting in a and depend on several factors higher tax levy and/or limitations in the ability of bundling proper- The Company’s ability to comply with its dividend policy is ties are introduced, this may have a materially adverse effect on dependent on the Group’s earnings and economic position, the Group’s operations, earnings and financial position. future profits, cash flows, undertakings in respect of the Group’s Additional changes may occur in the area of taxation, poten- lenders, investments and other factors. In addition, Swedish law tially with retroactive effect. All such changes may have a materi- contains provisions limiting the Group’s ability to propose or pay ally adverse effect on the Group’s tax burden and on the Group’s dividends, such that only funds defined by law as being available operations, earnings and financial position. and distributable may be paid out as dividends. There is a risk that it will not be possible to propose or adopt a dividend in a Risks relating to the Offer and the shares given year. Unforeseeable future share prices The Company is the Group parent company. As a holding Prior to the Offer, there has been no public market for the Com- company, its primary assets comprise direct or direct or indirect pany’s shares. There is a risk that an active and liquid market will shareholdings in and loans to subsidiaries and joint ventures, not develop or, if developed, that it will be sustained after com- which generate the Group’s cash flow. Consequently, the pletion of the Offer. The final price of theO ffer will be determined Company’s revenues primarily stems from intercompany interest through a book-building procedure and, consequently, based payments and loan repayments by subsidiaries and joint ven- on demand and the overall market conditions. There is thereby tures, and from possible contributions and dividends from such a risk that the final price of theO ffer will reject the price at which companies. The ability on the part of the Company’s subsidiaries investors in the market will be willing to buy and sell the shares and joint ventures to make these payments to the Company may following the Offer. Investors may not be in a position to sell their be negatively adversely affected as a result of changes in their shares quickly, or at the market price, if there is no active trading operations. Group contributions, made in the form of dividends or in the shares. other financial flows, may also be restricted due to various under-

20 Invitation to acquire shares in SSM Holding AB (publ) Risk factors

takings, for instance due to credit agreements entered into by Investors with a reference currency other than SEK will be subject subsidiaries and joint ventures, tax-induced restrictions making to certain currency risks if they invest in the shares it more difficult or more expensive to effect financial transfers, The Company’s shares are listed in SEK and all dividends and lack of sufficient distributable reserves and cash and cash attributable to the shares will be paid in SEK. Investors with a equivalents with the Company’s subsidiaries and joint ventures. reference currency other than SEK may be adversely affected by The Company’s ability to pay dividends in accordance with the a decline in the value of SEK relative to the respective investor’s dividend policy is therefore highly dependent on the dividends reference currency. In addition, such investors may be affected received from its subsidiaries and joint ventures. by the additional transaction costs involved in converting SEK to Due to the Company’s outstanding bonds, the Company, its another currency. subsidiaries and joint ventures will also continue to be subject to certain restrictions in relation to, inter alia, their ability to distribute Following the listing a single shareholder will have significant dividends. Such restrictions may have a materially adverse effect influence in SSM on the Group’s business, profit and financial position and may Following the listing of the shares in SSM, Eurodevelopment above all limit the Company’s ability to distribute dividends in the Holding AG will hold approximately 71.2 per cent of the shares future. and the votes in the Company (assuming a final price in theO ffer at the mid-point of the Price Range, and assuming that the Over- The Cornerstone Investors’ undertakings are not secured allotment Option is exercised in full). Consequently, Eurodevelop- Länsförsäkringar Fondförvaltning AB (publ), Malmegårds ment Holding AG will hold a significant influence in the outcome Fastighets AB and Grandholm Fastigheter AB (the “Corner- of matters that are submitted to SSM’s shareholders for approval, stone Investors”) have undertaken to subscribe for shares for example appointment of board members, potential mergers, in the Offer, to the final price of theO ffer, for a total amount of amendment of the articles of association, issue of shares and SEK 180 million. Based on full subscription in the Offer and that the distribution of profit. Eurodevelopment Holding AG may, as the Overallotment Option is exercised in full, the undertakings a majority shareholder in the Company, have interests that differ comprise correspondingly to a minimum of 2,812,500 and a from or compete with the Company’s or other shareholders’ maximum of 3,333,332 shares, which corresponds to a minimum interests. of approximaterly 25.4 and a maximum of approximately 28.9 per cent of the total number of shares in the Offer, if the Offer is increased in full, and a minimum of approximately 7.3 and a maximum of approximately 8.3 per cent of the total number of shares and votes in the Company after the Offer. However, the Cornerstone Investors’ undertakings are not secured through bank guarantees, blocked funds, pledge or similar arrangements. Thus, there is a risk that the Cornerstone Investors will not fulfil their undertakings. Furthermore, the undertakings are subject to customary conditions, inter alia, that the Offer is completed within a certain time and that the final price of theO ffer does not exceed the high-end of the Price Range and, as regards Länsförsäkringar Fondförvaltning, that the fund is not subject to exceptionally high net outflows during the application period. Should the Corner- stone Investors not fulfil their undertakings, or if any terms of the undertakings are not met, it may have a material adverse effect on the execution of the Offer.

Invitation to acquire shares in SSM Holding AB (publ) 21 22 Invitation to acquire shares in SSM Holding AB (publ) Invitation to acquire shares in SSM

Invitation to acquire shares in SSM

SSM and the Selling Shareholder have resolved to diversify the ownership of shares in the Company. SSM’s board of directors has also applied for admission to trading of the Company’s shares on Nasdaq Stockholm. SSM and the Selling Shareholder hereby offers investors, in accordance with the terms and conditions in this Prospectus, to subscribe for a minimum of 8,437,500 and a maximum of 10,000,000 new shares, corresponding to a minimum of approximately 73.0 and a maximum of approximately 99.8 per cent of the total number of shares in the Offer. The number of shares offered by the Company is decided in order to contribute approximately SEK 500 million to SSM after transaction costs. Furthermore, the Selling Shareholder reserves the right to increase the Offer with a minimum of 24,999 and a maximum of 3,333,333 existing shares depending on final price and demand in the Offer. For further information regarding the Selling Shareholder, the number of existing shares which the Selling Shareholder is offering and the number of shares that the Selling Shareholder will have following the execution of the Offer, reference is made to section “Share capital and ownership structure – Ownership structure prior to and following the Offer”. The Offer consists of two parts: an offer to the general public in Sweden and an offer to institutional investors in Sweden and abroad. At the request of the Joint Global Coordinators, the Selling Shareholder will undertake to sell additionally a maximum of 15 per cent of the total number of shares in the Offer (the “Overallotment Option”), corresponding a minimum of 1,471,970 and a maximum of 1,849,999 shares if the Offer is fully extended1). The price of the Offer will be determined by the board of directors of the Company and the Selling Shareholder in consultation with the Joint Global Coordinators within the price range of SEK 54–64 per share in the Company (the “Price Range”). The final price of the Offer is expected to be made public around 6 April 2017 (the “Offer Price”). The Cornerstone Investors, Länsförsäkringar Fondförvaltning AB (publ), Malmegårds Fastighets AB and Grandholm Fastigheter AB, have undertaken to subscribe for shares in the Offer, to the Offer Price, for a total amount of SEK 180 million. Based on full subscription in the Offer and that the Overallotment Option is exercised in full, the undertakings comprise correspondingly of minimum 2,812,500 shares and maximum 3,333,332 shares, which correspond to a minimum of approximately 25.4 and a maximum of approximately 28.9 per cent of the total number of shares in the Offer if the Offer is fully extended1) and a minimum of approximately 7.3 and a maximum of approximately 8.3 per cent of the total number of shares and votes in the Company after the Offer. Provided that the Offer is increased in full and that the Overallotment Option is exercised in full, a minimum of totally 13,296,875 and a maximum of 14,183,332 shares will be offered, corresponding to a minimum of approximately 34.5 per cent and a maximum of approximately 36.3 per cent of the total number of shares and votes in the Company after the execution of the Offer. The Selling Share- holder and members of the board of directors and senior executives will undertake, subject to customary reservations, not to sell any shares in the Company for a certain period of time following the commencement of the trading on Nasdaq Stockholm. The total value of the Offer will amount to approximately SEK 541 million or to approximately SEK 851 million if the Offer is increased in full and the Overallotment Option is exercised in full. The Company’s costs attributable to the Offer are expected to amount to SEK 40 million.

Stockholm, 27 March 2017 Oberägeri, Switzerland, 27 March 2017

SSM Holding AB (publ) Eurodevelopment Holding AG The board of directors The board of directors

Invitation to acquire shares in SSM Holding AB (publ) 23 24 Invitation to acquire shares in SSM Holding AB (publ) Background and reasons

Background and reasons

SSM was founded by the entrepreneurs Ulf Sjöstrand, Ulf Morelius and Ralf Steneskog1) and has since the start in 1993 been operating in the Stockholm region. SSM is the leading residential property developer in the Stockholm region with the niche of space-efficient, value-for-money apartments. SSM stands out in the market by developing residential properties for a specific customer segment, which the Company designates the urbanites of tomorrow. The Company’s business concept is to, based on the customers’ demands, acquire, own and develop homes for the urbanites of tomorrow. As of 31 December 2016, the Group had 5,255 apartments in its project portfolio, and 1,479 apartments under construction. This makes SSM the leading residential property developer in Stockholm within its niche with attractive and space-efficient homes for people in the age group 20–44. The Company has over time chosen to cooperate with other companies and investors in the form of joint ventures, which SSM considers an efficient way to handle project risk and profit, as well as to finance future expansion. The forthcoming listing together with the share issue means that SSM will have the possibility to continue its expansion and to increase the number of construction starts. The Offer is expected to generate a net proceed of approximately SEK 500 million to SSM, after deduction of transaction costs of approximately SEK 40 million which the Company will pay. The Company intends to use the net proceed from the Offering to finance the continuing growth of the Group and to optimise the capital structure. Furthermore, a listing of the Company’s shares is expected to increase attention and confidence from existing and potential customers and cooperating parties as well as to improve the Company’s financing possibilities and access to the credit market. The Company will not receive any proceeds from the sale of the shares which are offered by the Selling Shareholder.

In other respects, reference is made to the full particulars of the Prospectus, which has been prepared by the board of directors of SSM on account of the application for admission to trading of the Company’s shares on Nasdaq Stockholm and the Offer submitted in conjunction therewith. The board of directors is responsible for the content of this Prospectus. It is hereby assured that all reasonable precautionary measures have been taken to ensure that the information in this Prospectus, to the best of the board of director’s knowledge, corresponds to the factual circumstances and that nothing has been omitted that would affect its purpose.

Stockholm, 27 March 2017

SSM Holding AB (publ) The board of directors

1) Ralf Steneskog was bought out of the Company in 1996.

Invitation to acquire shares in SSM Holding AB (publ) 25 Terms and conditions

Terms and conditions

The Offer Application The Offer comprises a minimum of 8,437,500 and a maximum of The Offer to the general public in Sweden 10,000,000 new shares. The Offer is divided into two parts: Applications from the general public to acquire shares in the Offer • The offer to the general public in Sweden1) must be made during the period 28 March–4 April 2017 and relate • The offer to institutional investors in Sweden and internation- to a minimum of 100 shares and a maximum of 20,000 shares, in ally2) even lots of 50 shares each. SSM and the Selling Shareholder, in consultation with the The outcome of the Offer will be published through a press Joint global Coordinators, reserve the right to extend the appli- release, which will be available on the Company’s website cation period. Such extension will be announced through a press (www.ssmlivinggroup.com), on or about 6 April 2017. release prior to expiry of the application period.

Increase of the Offer Application via SEB The Selling Shareholder has reserved the right to increase the Applicants applying to acquire shares through SEB must hold a Offer with a minimum of 24,999 and a maximum of 3,333,333 securities depository account or an investment savings account existing shares depending on final price and demand in the with SEB. Applicants who do not hold a securities depository Offer.3) account or an investment savings account with SEB must open such a securities depositing account or investment savings Overallotment option account prior to submission of the application form. Please The Selling Shareholder has issued an Overallotment Option note that it may take some time to open a securities depository to the Joint Global Coordinators to further sell a maximum of account or an investment savings account. In connection with 1,849,999 shares if the Offer is increased in full, corresponding acquisitions of shares that are to be registered in an investment to a maximum of approximately 15 per cent of the total number savings account, payment must always be made using the funds of shares covered by the Offer, to cover potential overallotment available on the investment savings account. in conjunction with Offer. The Overallotment Option may be exer- The balance on the securities depository account or the invest- cised by the Joint Global Coordinators in whole or in part during ment savings account at SEB must, for the period commencing a period of 30 days as from the first day of trading in the Compa- 00:00 CET on 5 April 2017 until 24:00 CET on 10 April 2017, corre- ny’s shares on Nasdaq Stockholm. For further information, see spond to at least the amount to which the application relates based section “The Placing Agreement etc.”. on the highest price in the Price Range. Therefore, funds must be available or deposited on the designated securities depositary Allotment of shares account or investment savings account no later than 4 April 2017 The allotment of shares between each part of the Offer will be in order to ensure that the necessary amount is available on the based on demand. The allotment will be determined by the designated securities depository account or investment savings Company’s board of directors and the Selling Shareholder in account. This means that the account holder undertakes to keep consultation with the Joint Global Coordinators. the amount available on the designated securities depository account or investment savings account during the aforementioned Book-building process period and that the holder is aware that no shares will be allotted To achieve a market-based pricing of the shares in the Offer, if the amount during such period is insufficient during this period. institutional investors will be given the opportunity to participate Note that the amount may not be withdrawn during the aforemen- in a form of book-building by submitting expressions of interest. tioned period. As soon as possible after allotment has taken place, The book-building process will commence on 28 March 2017 and the funds will be freely available for those who do not receive any continue up to and including 5 April 2017. The price per share in allotment. Funds which are not available will carry an entitlement the Offer will be determined based on the order book compiled to interest during the aforementioned period in accordance with through this process. The book-building process for institutional the terms and conditions of the securities depository account or investors may be terminated earlier. Announcement of such investment savings account designated in the application. termination will be made through a press release via one or more In order to participate in the Offer via SEB, an application to international news agencies. acquire shares must take place via SEB’s Internet bank using a so-called Digipass, BankID or MobiltBankID (detailed instructions are available on SEB’s website, www.seb.se.) Applications The Offer Price through SEB’s Internet bank must be received by SEB not later The Offer Price will be set within the Price Range of SEK 54–64 than 23.59 on 4 April 2017. per share. The Price Range has been set by the Company’s board of directors and the Selling Shareholder in consultation Application via Avanza with the Joint Global Coordinators, based on the anticipated Customers of Avanza can apply for acquisition of shares through investment interest from institutional investors. Brokerage Avanza’s Internet service. Applications to Avanza can be made commission will not be charged. The finalO ffer Price will be as of 28 March 2017 up to and including 4 April 2017. In order not determined by the Company’s board of directors and the Selling to lose the right to potential allotment, customers of Avanza must Shareholder in consultation with the Joint Global Coordinators, have liquid funds available on the account as of 4 April 2017 up and will be published through a press release on or about 6 April to and including 10 April 2017. More information is available at 2017. www.avanza.se (visiting address: Regeringsgatan 103, Stock- holm, postal address: Avanza, Box 1399, 111 93 Stockholm).

1) The offer to the general public entails an offer of shares to private individuals and legal persons that apply to acquire a maximum of 20,000 shares. 2) ‘Institutional investors’ includes private individuals and legal entities that apply to acquire more than 20,000 shares. 3) The Selling Shareholder intends on selling shares in the Offer provided that the final price in theO ffer is at or above SEK 60 per share. Regardless of the final price in theO ffer, the Selling Shareholder will sell existing shares in the Offer in order for the “free float” in the Company to reach a minimum of 25 per cent.

26 Invitation to acquire shares in SSM Holding AB (publ) Terms and conditions

The Offer to institutional investors Allotment to SSM employees Institutional investors in Sweden and internationally are offered SSM employees may be allotted shares corresponding to a value the opportunity to participate through a special book-building of maximum SEK 100 thousand per employee. process during the period 28 March–5 April 2017. Applications from institutional investors in Sweden and internationally must be Information regarding allotment and payment made to ABG Sundal Collier or SEB (in accordance with special The Offer to the general public in Sweden instructions). Allotment is expected to take place on or about 6 April 2017. The Company and the Selling Shareholder reserve the right to Shortly thereafter, a contract note will be sent to those persons shorten or extend the application period in the offer to institutional who have received allotment in the Offer. Persons who have not investors in Sweden and internationally. Notice of such modifi- been allotted shares will not be notified. cation of the application period is expected to be given by the Company through a press release on the Company’s website Information regarding allotment (www.ssmlivinggroup.com). In the event the application period is In respect of parties who have applied via SEB, it is expected shortened or extended, publication of the outcome of the Offer, that information regarding allotment may be provided as from the first day of trading and the date for allotment and payment 09.00 CET on 6 April 2017 by telephone on +46 (0)8 639 27 50. The may be adjusted correspondingly. following information must be stated in order to obtain information about allotment: name, personal ID number/corporate registra- Allotment tion number as well as investment savings account or securities Decisions regarding allotment of shares will be taken by the depository account number. Company’s board of directors and the Selling Shareholder in Parties who have applied via Avanza’s Internet service, will consultation with the Joint Global Coordinators, whereupon the receive information regarding allotment by the booking of allotted goal will be to achieve a strong institutional ownership base and shares against payment from the designated account, which is a broad distribution of the shares among the general public, in expected to occur around 09:00 CET on 6 April 2017. order to facilitate regular and liquid trading in SSM’s shares on Nasdaq Stockholm. The allotment does not depend on when Payment for shares allotted via SEB applications are submitted during the application period. Only one It is estimated that payment will be deducted from a designated application per person will be considered. securities depository account or investment savings account on 10 April 2017. Allotment to the general public in Sweden The following shall apply in respect of investment savings In the event of oversubscription, a lower number of shares may accounts at SEB: where an application has resulted in allotment, be allotted than specified in an application, whereupon allotment SEB – using liquid funds available on the connected account – may take place wholly or partially through random selection. will acquire a corresponding number of shares in the Offer for Allotment to persons receiving shares will take place primarily in sale to the account holder at the Offer Price. such a manner that a certain number of shares are allotted per application. Further allotment will take place applying a certain Payment for shares allotted via Avanza percentage – which is equal for all – of the excess number of For security depository account customers of Avanza, payment shares to which an application relates, and will take place only for allotted shares is expected to be deducted on 10 April 2017. in even lots of 50 shares. Note that, in order to be considered for Please note that liquid funds for the payment of allotted shares allotment, the balance on the securities depository account or the shall be disposable as of 4 April 2017 up to and including 10 April investment savings account held with SEB or a security depos- 2017. itory account held with Avanza stated on the application form must correspond to at least the amount to which the application Insufficient or incorrect payment relates, based on the highest price in the Price Range. In addi- In the event that sufficient funds are not available on a securi- tion, employees of the Company and certain related parties to the ties depository account or investment savings account on the Company as well as customers of the Joint Global Coordinators settlement day or if full payment is not made in due time, allotted may be considered separately during allotment. Allotment may shares may be transferred and sold to another party. The party also be made to employees of the Joint Global Coordinators, who initially received allotment of shares in the Offer may be however, without them being prioritised. In such cases, the liable for the difference in the event the selling price upon such a allotment takes place in accordance with the rules of the Swedish transfer is less than the Offer Price. Securities Dealers Association (Sw. Svenska Fondhandlare föreningen) and the SFSA’s regulations. The Offer to institutional investors Institutional investors are expected to receive information Allotment to institutional investors regarding allotment in accordance with a particular arrangement In conjunction with decisions regarding allotment of shares within on or about 6 April 2017, after which contract notes will be distrib- the scope of the offer to institutional investors in Sweden and uted. Full payment for allotted shares must be made in cash no internationally, SSM’s objective is, as mentioned above, to obtain later than 10 April 2017. Note that if full payment is not made in a strong institutional owner base. Allotment among the institutions due time, allotted shares may be transferred and sold to another that have submitted expressions of interest will be made on a party. The party who initially received allotment of shares in the wholly discretionary basis. The Cornerstone Investors are, how- Offer may be liable for the difference in the event the selling price ever, guaranteed allotment in accordance with their respective upon such transfer is less than the Offer Price. commitments.

Invitation to acquire shares in SSM Holding AB (publ) 27 Terms and conditions

Registration and reporting of allotted and Terms and conditions for completion of the Offer paid-up shares The Offer is conditional on SSM, the Selling Shareholder, and Registration of allotted and paid-up shares at Euroclear Sweden the Joint Global Coordinators entering into a placing agreement is expected to take place on or about 10 April 2017 with respect (the “Placing Agreement”), which is expected to take place on or to both institutional investors and the general public in Sweden, about 5 April 2017, on fulfilment of certain terms and conditions after which Euroclear Sweden will distribute a notice stating of the Placing Agreement, and on the Placing Agreement not the number of SSM shares that have been registered on the being terminated. For information regarding terms and conditions recipient’s securities account or service account. Notice to share- for completion of the Offer and the Placing Agreement, see also holders whose holdings are nominee-registered will be given in section “The Placing Agreement etc.”. accordance with the procedures of the respective nominee. Other information Listing on Nasdaq Stockholm The fact that ABG Sundal Collier and SEB are acting as Joint The board of directors of SSM has applied for SSM’s shares to Global Coordinators does not mean that they regard an applicant be admitted to trading on Nasdaq Stockholm. On 6 March 2017, for shares in the Offer (the “Acquirer”) as a customer of either Nasdaq Stockholm’s listing committee decided to admit SSM’s bank. In respect of the investment, the Acquirer is regarded as a shares to trading on Nasdaq Stockholm, provided that the distri- customer of either bank only if the bank has advised the Acquirer bution requirement in respect of the Company’s shares is fulfilled regarding the investment or otherwise contacted the Acquirer no later than the first day of trading. personally about the investment, or if the Acquirer applied via Trading is expected to commence on or about 6 April 2017. the bank’s office or Internet bank. Since the banks do not regard Following the Joint Global Coordinators’ processing of appli- the Acquirer to be a customer in respect of the investment, the cations, paid-up shares will be transferred to the investment investor protection rules in the Securities Market Act (Sw. lagen savings account or securities depository account designated (2007:528) om värdepappersmarknaden) will not apply to the by the acquirer. Due to the time required for transfer of payment investment. Consequently, among other things, neither so-called and transfer of paid-up shares to such acquirer, the acquirer’s customer classification nor so-called suitability assessments will shares may not be available on a designated investment savings take place with respect to the investment. The Acquirer is thus account or securities depository account earlier than on or about personally responsible for possessing sufficient experience to 10 April 2017. understand the risks associated with the investment. In the event the shares are not available on the acquirer’s investment savings account or securities depository account ear- Information regarding processing of lier than on or about 10 April 2017, it could mean that the acquirer personal data cannot sell these shares on Nasdaq Stockholm on the day the Any person acquiring shares in the Offer will provide information trading in the share begins, i.e. on or about 6 April 2017, but at the to SEB and Avanza. Personal data provided to SEB and Avanza earliest when the shares are available on the investment savings will be processed in data systems to the extent required to pro- account or securities depository account. Moreover, trading will vide services and administer customer arrangements. Personal commence before the terms and conditions for completion of the data obtained from sources other than the customer may also Offer have been fulfilled. Trading will be conditional thereof and in be processed. The personal data may also be processed in the the event the Offer is not completed, any delivered shares must data systems of companies or organisations with which SEB and be returned and any payment made must be refunded. Trading Avanza cooperates. Information pertaining to the processing of which takes place on 6 April 2017 is expected to be subject to personal data can be obtained from SEB’s offices and Avanza, delivery and settlement on 10 April 2017. which also accept requests for correction of personal data. Address details may be obtained SEB and Avanza through an Stabilisation automated procedure at Euroclear Sweden. In connection with the Offer, the Joint Global Coordinators may carry out transactions on Nasdaq Stockholm in order to stabilise the market price of the share or maintain the price at a level that deviates from what would otherwise prevail in the market. See also section “The Placing Agreement etc. – Stabilisation”.

Right to dividends The shares carry a right to dividends for the first time on the record date for dividends that occurs immediately after completion of the Offer. Potential dividends will be paid out following a resolution by the general meeting. Payment will be administrated by Euroclear or, in respect of nominee registered holdings, in accordance with the procedures of the respective nominee. A right to dividends inures to persons who, on the record date as determined by the general meeting, are registered as owners in the share register maintained by Euroclear. Regarding deduction of Swedish withholding tax, see “Certain tax issues in Sweden”. See also sections “Business overview – Targets – Financial targets – Dividend policy” and “Share capital and ownership structure – Dividends and dividend policy”.

28 Invitation to acquire shares in SSM Holding AB (publ) Market overview

Market overview

Unless otherwise stated, the information in this section is based on SSM’s evaluation from several sources, including publically available reports from property advisors and analysis companies, among others. Sector surveys and publications generally state that the information has been taken from sources assumed to be reliable, but there are no guarantees that the information is correct or complete. As SSM has no access to the facts and assumptions forming the basis of this market data or statistical information and financial indicators in such third party sources, SSM cannot verify the information and, even if SSM believes it to be reliable, there are no guarantees that the information is correct or complete. As far as SSM is aware and can estimate by a comparison with other information published by such sources, no information has been omitted that could render the information reproduced incorrect or misleading. Projections and forward-looking statements in this section do not constitute any guarantee of future growth and actual events and circumstances may differ materially from current expectations. Numerous factors could cause or contribute to such differences. See sections “Important information – Business and market data” and “Risk factors”.

Introduction by 2.5 percent in 2016 and all industry groups except for clothing SSM is the leading residential property developer in its niche, with retail grew over the same period. Even though the households business activities in the Stockholm region. Based on a vision own perception of their economy weakened slightly in December of a housing market with space for as many people as possible, 2016 the level indicates a higher optimism in the households SSM develops value-for-money, highly functional and cleverly compared to historically.1) designed residential properties with contemporary and attractive Despite low interest rates Swedes continue to save their funds common areas, near public transport, just outside the city centre, in bank accounts albeit at a slightly decreased rate. The increase for the urbanites of tomorrow: a customer group that comprises in debt growth slowed down during the two last quarters of 2016, households with one or two individuals aged 20–44, who would potentially due to the introduction of amortisation requirement on like to make the most of everything that the city has to offer and 1 June 2016. The households’ debts comprise almost 80 per cent who wants to prioritise more in life than just accommodation. of loans at banks and mortgages institutions.1) There are several factors that affect the market conditions Inflation in Sweden remains below the target of two per cent for residential property development in Sweden and above all in set by the Riksbank (Sweden’s central bank). The repo rate is still Stockholm county (the Stockholm region or greater Stockholm), low and was left unchanged at –0.5 per cent at the most recent most of which are set out in this section. monetary policy meeting held on 14 February 2017. According to the Riksbank, it is still more likely that the repo rate will be cut Economic trends in Sweden instead of raised in the near future. Slow rises are not expected 3) Following the strong finish in 2015 the Swedish economy has until the start of 2018. continued to strengthen during 2016. However, during the first three quarters of 2016, growth declined, ultimately falling more Economic trends in Stockholm in line with average growth rates in Sweden for the past ten The economy in the Stockholm region strengthened during the years.1) Similar to 2015 the end of 2016 was strong as the growth fourth quarter of 2016 and is now at a level above normal, and in the last quarter adjusted for seasonal effects was 1.0 per cent the strengthening is to a large extent driven by a more optimistic compared to the previous quarter. Sweden’s GNP grew by 3.3 sentiment on behalf of the companies. Stockholm is the country’s per cent during 2016, to be compared with 4.1 per cent during engine of job creation and growth and is therefore significant 4) 2015.1) The growth expectation for 2017 is 2.2 per cent.2) Invest- for the prosperity of the entire country. In 2015, Stockholm ment levels have grown very rapidly in recent years, inter alia, accounted for almost one-third of Sweden’s GNP. Growth in GNP, because of increased levels of residential property construction from a historical perspective, has been higher in the Stockholm and increased public consumption. Investments are expected to region than in the rest of Sweden, and between 2000 and 2014 grow more slowly henceforth, whilst exports and household con- Stockholm’s gross regional product (GRP) grew by approximately sumption are expected to take over as the driving force behind 50 per cent, whilst Sweden’s GNP rose by approximately 31 per 1) the growth.2) cent over the same period. Unemployment has continued to decline and was 6.9 per cent More than one quarter of the country’s employed population 1) at the end of 2016, whilst the employment rate has continued to work in Stockholm county. Unemployment in the Stockholm rise and was 67.2 per cent at the end of 2016, adjusted for sea- region has historically been lower than in Sweden as a whole. At sonality effects which is at the same level as before the financial the end of 2016, unemployment in the Stockholm region was at 1) crisis.1) However, in terms of economic trends in Sweden the gap 6.4 per cent, compared to 6.9 per cent in Sweden as a whole. between supply and demand in the labour market, can be seen However, companies in the Stockholm region declare that it is as worrisome as many companies have a shortage of labour with hard to recruit the right kind of labour due to the housing shortage 5) particular skills, whilst unemployment in other groups is high. This in the region. During the third quarter of 2016, employment in gap is expected to contribute to the rise in the employment rate Stockholm county grew most within the IT sector and in compa- 6) declining during 2017 and 2018.2) Household consumption grew nies operating in the healthcare industries.

1) Statistics Sweden (Sw. Statistiska centralbyrån). 2) National Institute of Economic Research (Sw. Konjunkturinstitutet). 3) The Riksbank. 4) Stockholm Chamber of Commerce. 5) Stockholm county Administrative Board (Sw. Länsstyrelsen i Stockholms län). 6) City of Stockholm, 2016.

Invitation to acquire shares in SSM Holding AB (publ) 29 Market overview

GDP growth The historical population growth in Stockholm county

8.0% 40,000

6.0% 35,000 30,000 4.0% 25,000 2.0% 20,000 0.0% 15,000 –2.0% 10,000

–4.0% 5,000

–6.0% 0 2001 2003 2005 2007 2009 2011 2013 2015 2017 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 The greater Stockholm area Sweden Net birth Net migration Source: Statistics Sweden Source: Statistics Sweden

Demographic trends in Sweden 2016, 60 per cent of the increase in population is attributable to Demographic trends and distribution depend mostly on net births net relocations. Most of the net relocations are attributable in turn and net migration. Net births in Sweden are contributing positively to relocations from other countries, as the positive net relocations to the increase in the population, as more people are being born from abroad have exceeded the positive net relocations from than are dying, due to the life expectancy growing from year to the rest of Sweden since 2000.1) Immigration is attributable to year. The country’s demographics and increased immigration seeking refuge from unrest and warzones, but also to relocations are also affecting the anticipated population growth, such as for the purposes of study and work. the large birth cohorts at the start of 1990s, which resulted in A large proportion of the country’s relocation flows depend the number of young people aged 19–24 peaking in 2013. A low on work or study prompting relocation to the major cities. Whilst point in the number of people aged 19–24 is anticipated in 2020, the population in rural areas has remained largely unchanged whilst the number of people aged 25–39 is expected to grow by between 2010 and 2015, the degree of urbanisation (the pro- 300 thousand by 2025, which to a great extent is due to the large portion of the population living in densely population areas) has birth cohorts at the start of the 1990s, but is a consequence also continued to increase. Most of the growth in population is taking of increased immigration.1) For the time being, immigration into place in the larger, densely populated areas, with more than 100 Sweden is much higher than emigration, which is giving rise to thousand inhabitants.1) In 2015, the City of Stockholm had posi- positive net migration, and net migration is expected to remain tive net relocations compared to municipalities outside Stockholm positive for the next few years, due to unrest in various parts of county but negative net relocations compared to other munici- the world. Apart from seeking refuge, other common reasons for palities in the county. The largest relocation flows were between immigration into Sweden are study and work, whilst emigration the City of Stockholm and other municipalities in the county, the from Sweden is dependent for example on the labour market, as greatest of which were between the City of Stockholm and Solna, many people emigrate when it is hard to find work in Sweden.1) Huddinge and Nacka, which is in line with historical data.2) New However, it is hard to reliably forecast the impact of immigration families are moving to larger apartments and houses outside the on future population growth. inner city, whilst young adults are seeking to move to the inner city. Net inbound relocations to the City of Stockholm are highest Demographic trends in Stockholm amongst young adults aged 20–29, which is a major cause of the According to the Stockholm Chamber of Commerce, the Stock- population rise in the City of Stockholm.2) holm region is one of the fastest growing regions in Europe and The housing shortage is reducing mobility in the housing Europe’s fastest growing capital. Today, the City of Stockholm market, which in turn is affecting the relocation flows. People has slightly over 900 thousand inhabitants and is expected to aged 20–34 move the most, whilst mobility reduces as age reach one million inhabitants by 2020.2) Currently, Stockholm increases. In 2016, the age group 20–34 accounted for approx- county has 2.2 million inhabitants, and over the last ten years imately 46 per cent of all relocations within Sweden. If this age the population has grown by over 350 thousand people, which group is extended to match SSM’s target group (people aged corresponds to two busloads per day (just under 100 people 20–44) the corresponding figure is approximately 58 per cent.1) daily). During 2015, the number of residents in Stockholm county In its demographic spread, the Stockholm region has a higher grew by approximately 37,621 people.1) Growth is expected to proportion of people aged 20–44 than in Sweden as a whole, continue, and by 2030 the number of inhabitants is expected to which should probably increase the rate of relocations. Annually, grow by an additional 400 thousand people to 2.6 million.3) approximately 40 thousand apartments are sold in the Stockholm Over recent years, the increase in population has consisted region, of which almost 55 per cent have one or two rooms.4) If to a great extent in net relocations, with the number of inbound the number of apartment sales increases in line with population relocations exceeding the number of outbound relocations. In

1) Statistics Sweden. 2) City of Stockholm. 3) Stockholm county Administrative Board. 4) Värderingsdata.

30 Invitation to acquire shares in SSM Holding AB (publ) Market overview

growth, this could mean almost 18 per cent more apartment sales Ability to pay and disposable income in 2030 compared to today’s 40 thousand. Households’ disposable income is a major factor in price trends Stockholm county has a young population compared with in the housing market. The ability to pay is affected by macroeco- the rest of the country. Both the greater Stockholm area and the nomic factors, such as unemployment trends, income trends and city of Stockholm have a higher proportion of young adults than interest trends. Average accommodation costs as a proportion Sweden as a whole. The demographics are affecting the demand of disposable income have fallen over recent years. Owners for different types of residential units. Younger people need of cooperative apartments spend a lower proportion of their smaller and cheaper residential units, whilst older people more disposable income on accommodation on average than tenancy typically need residential units with improved accessibility.1) holders. Whilst accommodation costs have fallen, disposable income has risen, which means that Swedes have more money Demography 2016 left over to live on each month. In 2015, accommodation costs as a proportion of disposable income were 20.7 per cent in Sweden and 20.2 per cent in the greater Stockholm area.5) Between 2006

40% and 2013, disposable income rose for Swedish households by 2) 36% 20–44 years approximately 29 per cent. The Stockholm region is financially 33% Other ages strong, and in 2015 inhabitants of Stockholm county averaged 67% an approximately 17 per cent higher average income than the 64% 60% population of Sweden as a whole.2) Sweden The greater Stockholm area Housing cost in relation to disposable income and The City of Stockholm average income SEK t 27% Source: Statistics Sweden 400

25% 350 300 23% A certain degree of mobility and degree of vacancy is required in 250 the housing market to enable people to find residential units and 21% relocate. At the moment, the housing shortage is limiting mobility. 200 More residential units are needed to increase and facilitate mobility 19% 150 1) but also to exploit the existing housing stock more effectively. 100 17% Young adults who want to enter the housing market are most 50 affected by a lower level of mobility and the housing shortage. New 15% 0 constructions of small residential units aimed at this target group 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 would facilitate their entry into the housing market. Housing cost % of disposable income Sweden Housing cost % disposable income in the greater Stockholm aarea Avg. income Sweden Number of moves per age 2016 Avg. income in the city of Stockholm

70,000 Source: Statistics Sweden

60,000 The loan-to-value ratio for new residential mortgages has been 50,000 relatively stable at approximately 70 per cent since 2008. By contrast, the households’ debts have increased as a result of 40,000 increased housing prices.2) The debt to income ratio has also 30,000 risen, since the households’ debts have been rising more rapidly than incomes for a long time, whilst the number of residential 20,000 units owned has increased. In 2015, the total households’ debt 10,000 to income ratio was 177 per cent of the disposable income, com- 0 pared with approximately 166 per cent in 2010. Whilst the debt to 0 20 44 years income ratio has increased, households’ interest payments have Source: Statistics Sweden fallen as a proportion of disposable income, due to the historically low interest rates.2) The proportion of households’ income paid out as interest expenses has fallen significantly over recent years. Also, the total proportion of households’ income paid out as borrowing costs, interest and amortisations has been falling despite increased amortisation. The EU Commission has high- lighted the risks in the Swedish housing market and has proposed that measures should be taken.2) Measures to reduce debt levels have been taken in the form of the amortisation requirement, which was introduced on 1 June 2016.

1) Stockholm county Administrative Board. 2) Statistics Sweden

Invitation to acquire shares in SSM Holding AB (publ) 31 Market overview

Average loan to value, new mortgages Cost of debt and indebtness in relation to disposable income1)

Percentage of disposal income Debt to income ratio 75% 12% 450%

400% 2.4% 70% 10% 1.8% 2.7% 350% 3.2% 8% 8.6% 8.2% 300% 65% 3.3% 6.9% 250% 6% 5.8% 200% 60% 4% 4.5% 150%

55% 100% 2% 50%

50% 0% 0% 2002 2004 2006 2008 2010 2012 2014 2011 2012 2013 2014 2015 Interest ratio Amortisation ratio Debt of income ratio (total debt) Source: The SFSA Source: The SFSA

1) Relates to new residential mortgages.

As a result of the increased loan-to-value ratio, the banks that the high levels of residential property development will started to impose requirements for increased amortisation even continue.2) During 2016, 12,829 residential units were completed before the statutory amortisation requirement was introduced. In of which 10,394 were apartments in multifamily houses according 2015, 67 per cent of all households made amortisations on new to preliminary figures from Statistics Sweden, to be compared to loans, compared to 2011, when the corresponding figure was 44 12,352 completed residential units in 2015 of which 9,907 were per cent. Before the banks approve residential mortgages, they apartments in multifamily homes. Also the number of commenced assess households’ ability to pay using a formula to estimate units increased compared to the previous year. During 2016, the how much households have left of their disposable income once construction of 19,417 residential units commenced, of which accommodation and living costs are paid. By using this calcu- 16,784 were apartments in multifamily homes, to be compared lation, the banks also ensure that households can cope with with 13,576 during 2015, of which 10,983 was apartments in paying higher interest rates. The banks’ average interest rate for multifamily houses.3) The municipalities in the county report the purposes of the calculation was approximately 6.5 per cent, increased residential property development in the forecast for the compared with the average residential mortgage interest rate of number of new residential units, see the section “Market overview 1.7 per cent in the SFSA’s sampling for 2015 with data from over – Future constructing”. 31 thousand households.1) The average Stockholm resident lives in a smaller area than Despite the rising debt ratio, the SFSA’s stress tests show that the average Swede. In the city of Stockholm, the average floor households’ ability to pay has been improving over recent years space 2015 was 33 square meters per person, and in greater and that there are few households that would encounter problems Stockholm, the average floor space was 36 square meters, whilst repaying their mortgages if interest rates rose or incomes fell. The the corresponding figure for the whole of Sweden was 42 square share of households with small margins has therefore declined meters.3) Of the county’s approximately one million residential over recent years.1) units, just under half have two or three rooms. Two- or three-room residential units have been the most commonly built format in Supply of housing in the Stockholm region recent years. In 2015, 37 per cent of the county’s residential units Approximately 2.2 million people live in Stockholm county, were rental apartments, which represents a reduction compared distributed across just under one million residential units.2) to 1990, when the corresponding figure was 60 per cent. The The average of 2.2 individuals per household is in line with the explanation for the reduced number of rental apartments is the average for Sweden as a whole.3) Since the beginning of the conversion of rental apartments into cooperative apartments, and 1990s, with the exception of 2003–2005, the ratio between the the fact that more cooperative apartments than rental apartments population rise and the number of completed residential units have been built since the mid-1990s. The reduced number of in Stockholm county has been higher than 2.2, which has led to rental apartments and the more stringent requirements for the an accumulated housing shortage and all municipalities in the approval of residential mortgages have been hampering entry Stockholm region reported that they had a shortage of housing into the housing market. The demand for housing is substantial, in the Housing Market Survey in 2016. The regional target of 16 particularly for small apartments, both rental apartments and thousand completed residential units per year 2016 has not yet cooperative apartments. However, to meet people’s differing been achieved, but prospects for the future are good, as both the demands, a mixture of housing types is required in terms of both 2) National Board of Housing, Building and Planning (Sw. Boverket), size and form of ownership. and the county Administrative Board (Sw. Länsstyrelsen) believe

1) The SFSA. 2) Stockholm county Administrative Board. 3) Statistics Sweden. 4) Stockholm Housing Agency.

32 Invitation to acquire shares in SSM Holding AB (publ) Market overview

The increase in residential units and population growth in the greater Stockholm area

40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Completed residential properties Regional target Population growth (number of people) Source: Statistics Sweden, Stockholm county Administration Board

Accumulated housing shortage since 20051) Average waiting time for a rental apartment via Stockholm housing agency

Years on waiting list 50,000 10 9.0 9 40,000 8 7 30,000 6 5 20,000 4 3 10,000 2 1 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Statistics Sweden Source: Stockholm Housing Agency 1) Accumulated housing shortage calculated as a demand of 0.5 apartments per person for the population rise for the age group exceeding 19 years, adjusted for the number of units completed.

At the end of 2016 approximately 556 thousand people were An extension of the public transport system, in particular on the waiting list to be allocated a residential unit through the public rail transport, is increasing commuting opportunities within Stockholm Housing Agency (Sw. Stockholms Bostadsförmed the county. The biggest project is the Stockholm City Line ling), and the average waiting time was nine years. The waiting (Sw. Citybanan), which is due to open in 2017, but the extension list is growing annually, and in 2005 the average waiting time was of the subway system is also expected to be extremely signifi- 4.7 years.1) However, newly completed apartments have a shorter cant for residential property development. The extension of the waiting time due to the higher rent. The shortage of rental apart- subway system to Nacka Centrum, Arenastaden in Solna and ments is resulting in even more people resorting to the secondary Barkarby Station in Järfälla is creating the conditions for the market, continuing to live with their parents or being referred to municipalities to build 78 thousand residential units by 2030.2) housing requiring a capital contribution. The Stockholm region is The planned start date for the extension to the subway system the major urban region in Sweden where the proportion of young is 2018, and the construction is expected to take seven to eight adults who do not have their own residential units is the highest. years.3) An example of another area where public rail transport The housing shortage is primarily affecting households with has been very significant for residential property development is little or no saved capital and low incomes, which are challenges Hammarby Sjöstad, which is expected to comprise approximately mostly facing young people, families with children and newly twelve thousand apartments once completed.4) arrived individuals.2)

1) Stockholm Housing Agency. 2) Stockholm county Administrative Board. 3) Stockholm county council. 4) City of Stockholm.

Invitation to acquire shares in SSM Holding AB (publ) 33 Market overview

Future constructing to negotiate with the municipality for a certain period concerning In greater Stockholm, the municipalities are planning the building new use of the land, which can take place through a direct land of 334 thousand new residential units between 2016 and 2030, allocation or a land allocation competition. A direct land alloca- of which 290 thousand are located in SSM’s prioritised munic- tion involves an interested party proposing the development of a ipalities. The high number of planned residential units means certain area, which the municipality then approves. A direct land opportunities for greater Stockholm’s residential property devel- allocation may take place also through the municipality proposing opers to find new projects, but construction companies are also a particular developer for a particular project. A land allocation seeing increased demand for their services. In greater Stock- competition involves a municipality gathering proposals from holm, investments in housing, premises and infrastructure have interested parties for how a certain plot of land can be used. The been at the level of approximately SEK 50 billion annually for a winner of the bidding process is determined by the municipality number of years, but during 2015 the level of investments rose to on the basis of certain selection criteria, which can vary between approximately SEK 85 billion.1) All of the municipalities’ housing different land allocation competitions. In the first three quarters plans do not have fully approved zoning plans yet, which means of 2016, 6,828 building rights were granted through the city of that the schedules may be adjusted in the future. An increase in Stockholm. The prices per square metre of gross building area the housing stock above the regional target would help to reduce varied between SEK 2.5 thousand and SEK 31 thousand.2) In the housing shortage. The housing shortage in Stockholm county 2016 a total of 10,616 building rights were granted through the is high, and the accumulated shortfall is substantial. During the city of Stockholm.2) period of 2010–2015, approximately eleven thousand new residential units on average came onto the market every year, com- Price trends in the housing market pared with the regional target of 16 thousand residential units.1) Over the last decade, the prices of cooperative apartments have risen substantially in the areas where SSM operates, except The municipalities annual planned housing increase in during the financial crisis of 2008 and 2009. The increases in the greater Stockholm area1) relative terms have been most substantial in the inner suburbs

35,000 of Stockholm. In recent years, the market conditions for rises in housing prices have been favoured by population growth, an 30,000 increasing housing shortage, falling interest rates and rising dis- 25,000 posable income. At the same time, there are factors suggesting that prices should have stagnated, for example the fact that 20,000 residential mortgage interest rates have reached historically low 15,000 levels and increased regulation.3) The demand has nonetheless 10,000 been higher than the supply, which has driven up the prices. At the end of 2016, the average price per square metre in greater 5,000 Stockholm was SEK 58,219, which corresponds to a price rise of 0 157 per cent since 2005.4) 2016 2018 2020 2022 2024 2026 2028 2030

Other municipalities SSM’s prioritised municipalities Regional target Price development for cooperative apartments Source: Stockholm county council and Statistics Sweden 2.8 2.6 1) Residential property development in the period 2028–2030 is reported as a consolidated figure but has been split evenly over the three years in the graph. 2.4 2.2 Building rights 2.0 A residential property developer’s business depends on access 1.8 to building rights. Building rights are required for a property 1.6 owner to use land to build apartments, with one building right 1.4 corresponding to one apartment. Building rights may be acquired 1.2 from private property owners and municipalities. Acquisition from 1.0 private property owners can take place through a separate nego- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q41) tiation between a vendor and a purchaser or through a bidding The greater Stockholm area Stockholm inner suburbs process, in which several potential purchasers participate. Under Stockholm (city)

municipal land allocations, the city allocates land to various inter- Source: Svensk Mäklarstatistik AB ested parties. A land allocation confers on the holder a sole right 1) Average price, 2016 Q4.

1) Stockholm county Administrative Board. 2) City of Stockholm. 3) Statistics Sweden. 4) Svensk Mäklarstatistik AB.

34 Invitation to acquire shares in SSM Holding AB (publ) Market overview

Regulations and statutory requirements In the market for newly built residential properties in Stock- Laws and regulations can be introduced on the housing market holm, SSM encounters competition from several different types to slow the growth in prices and increase mobility, which can of operators. Examples of such operators include relatively large improve the use of the existing housing stock. A stable market is construction companies with project development activities, such an important factor for both vendors and purchasers. as NCC, Peab, Skanska, Veidekke, and project development companies with or without their own construction business, such The amortisation requirement as Alm Equity, Besqab, BoKlok, Bonava, Einar Matsson, HSB, On 1 June 2016, the SFSA introduced an amortisation requirement Ikano Bostad, JM, Järntorget, Oscar Properties, Riksbyggen and to reduce household indebtedness. The amortisation requirement Tobin Properties. applies to all new residential mortgages with residential units as Certain operators, like SSM, are regional, whilst others are security and means that new residential mortgages with a loan- national in scope. However, what all of SSM’s competitors have to-value ratio exceeding 70 per cent must be repaid at a rate of at in common is that they are competing for building rights in the least two per cent on the original amount annually until the loan-to- Stockholm area. value ratio is 70 per cent and thereafter at least one per cent of the original amount annually until the loan-to-value ratio is 50 per cent. Segmentation of the market For example, the rules apply to banks that provide or increase According to SSM, the operators in the market can be divided credit secured on residential properties. First-time buyers of newly into four groups: those who are building exclusively in outlying completed apartments may be exempted from the amortisation locations, those who are building exclusively in central locations, requirement for a maximum of five years, according to the SFSA.1) those who are building affordable residential units in outlying This provides relief for customers of residential property devel- locations, and those who are building affordable residential units opers but does not prevent banks from applying the amortisation in central locations. SSM builds affordable residential units in requirements when lending to such customers. fairly central locations and believes it has an unique position in its In the first three months after the introduction of the amortisa- group, due to the strong focus on the target group of the urbanites tion requirement, prices of cooperative apartments fell in Sweden of tomorrow, by building attractive cooperative apartments that by two per cent compared with the same period in the previous make effective use of space and have shared social areas, in the year. The same price trend occurred also in Central Stockholm Stockholm area. and greater Stockholm.2) However, the market recovered rapidly and once again shows rising prices, albeit with a lower growth Peripheral and exclusive focus rate. During 2016, the prices of cooperative apartments increased This segment comprises exclusive properties in peaceful envi- by six per cent in Stockholm county and four per cent in Central ronments, where both location and standard of accommodation Stockholm, compared with 2015.2) are prioritised. The target group in the segment mostly comprises families and future pensioners with high demands in terms of Other regulations accommodation. The operators in this segment are assessed to On 8 December 2016, the Swedish parliament (Sw. Riksdagen) include Bonava, HSB and Veidekke. decided that the previous cap for the deferral of capital gains tax of SEK 1.45 million on the sale of residential properties will be Central and exclusive focus abolished for sales occurring between 21 June 2016 and 30 June This segment comprises exclusive properties located cen- 2020. The government’s view is that the abolition of the cap for trally, where both location and standard of accommodation are a limited period would increase the incentive to move.3) Other prioritised. The target group in the segment mostly comprises measures discussed to increase mobility in the housing market middle-aged people with substantial capital and future pen- are to introduce a debt to income ratio cap, which would mean a sioners, who for instance have sold their detached house to move cap on the value of a loan in relation to disposable income and a into the city centre. The operators in this segment are assessed gradual reduction in the deductibility of interest.4) to include Einar Mattsson, JM, Oscar Properties, Riksbyggen and Tobin Properties. The competitive situation The information in this section is based on publicly available Peripheral and affordable focus information from the competitors referred to in the section and the The properties in this segment offer value for money in a peaceful Company’s own assessments. setting near animals and nature. A peaceful environment is SSM is a residential property developer driven by a vision of a more important than the individual standard of accommodation. housing market with space for as many people as possible. The The target group in the segment mostly comprises families and Group develops residential units with a high degree of functionality people born in the 1940’s who would like to get away from the incorporated into each square metre, near public transport, just out- stresses of the working week. Operators in this segment are side the city centre. SSM is one of few operators in the Stockholm assessed to include BoKlok, Järntorget and Peab. region that have adopted this strategy as an overall concept. The Group develops residential units for the target group, designated Central and affordable focus the urbanites of tomorrow, meaning households with one to two The properties in this segment offer value for money and are individuals aged 20–44. In this segment, the demand for residential near the city with a good location and layout as priorities. The units is high, although the consumer would like to have money left target group in the segment mostly comprises young adults aged over once accommodation costs are paid. SSM carefully considers 20–44 who have started their professional careers who live in location before building rights are acquired, as the target group single-person households or together with a live-in or live-out views public trail transport and total travelling time as more signifi- partner. SSM assesses that it falls within this segment together cant factors than geographical distance. with Besqab and Ikano Bostad, for example.

1) The SFSA. 2) Svensk Mäklarstatistik AB. 3) Government Offices of Sweden. 4) Statistics Sweden.

Invitation to acquire shares in SSM Holding AB (publ) 35 36 Invitation to acquire shares in SSM Holding AB (publ) Business overview

Business overview

Overview New partnerships and expansion – 2011–2016 SSM is the leading residential property developer in its niche, with During 2011, SSM and the occupational pensions company its business activities in the Stockholm region. Based on a vision Alecta entered into a joint venture agreement in order to acquire of a housing market with space for as many people as possible, offices and industrial premises to convert into residential units. SSM develops value-for-money, highly functional and cleverly The aim of this partnership is now to expand the joint project port- designed residential units with contemporary and attractive folio in order to build additional attractive cooperative apartments common areas, near public transport, just outside the city centre, in the Stockholm area together. for the urbanites of tomorrow – a customer group that comprises A new business plan was established when the current CEO households with one or two individuals aged 20–44, who would was recruited. The plan, which has since been updated, included like to make the most of everything that the city has to offer and 500 construction starts per year from 2017, either through who want to prioritise more in life than just accommodation. external partnerships or trough in-house ventures. The business plan also defined and established the Company’s focus on the History customer segment the Stockholm residents of tomorrow. An entrepreneurial organisation focusing on own In February 2013, SSM acquired 50 per cent of the com- management – 1993–1998 pany Studentbacken AB, with the intention of offering student SSM has been operating since 1993, when it was founded by apartments in the form of cooperative and rental apartments. Ralf Steneskog together with the Company’s main shareholders, Studentbacken’s business concept is to create space-efficient, Ulf Sjöstrand and Ulf Morelius, hence the name SSM. The busi- high-quality student apartments with smart solutions. ness concept was initially to acquire, own and manage residen- During 2014, SSM entered into a partnership with Profi Fas- tial properties in Stockholm. Over a short time, SSM acquired tigheter to develop Centralkvarteret in Järla sjö. The partnership more than two thousand apartments for its own management. In was expanded in 2016 with a joint development of a property addition, approximately 20 thousand square meters of business portfolio at Brommaplan. premises were converted into over 200 apartments. In 1996, Ralf In December 2016, SSM and LIBU Invest commenced a Steneskog was bought out by the co-founders. In the late 1990s, partnership by establishing a joint venture to carry out a project in the property portfolio was phased out as the Company’s business Nacka Stad with the ambition of producing 350 apartments, most concept was developed into focusing solely on project develop- of which would be for households of one to two people. ment of residential properties and new construction. Today, SSM is one of Stockholm’s leading residential property developers, and has during almost 25 years in the industry been Overhaul with a focus on project development and involved in the development of many attractive residential areas new construction – 1999–2010 in the region, such as Telefonplan and Fruängen. The projects A number of larger projects were developed and produced by have varied in size and complexity. In total, over 1.5 thousand SSM, such as Sjöfortet in Gröndal, where 109 apartments were apartments have been developed, built and sold by SSM, completed, and the projects Midsommarblomman, Ängs- excluding the conversion and rental projects which the Group blomman, Blomsteräng, Midsommarblomster and Ängsgräset carried out in the 1990s. at Telefonplan, where a total of 350 apartments were completed between 2005 and 2010, which have been important to the Group’s development and success. Limitations of capital, suitable building rights and internal resources led the Group to focus on one or a small number of projects at a time, which impeded development and expansion.

Invitation to acquire shares in SSM Holding AB (publ) 37 Business overview

• SSM is founded by Ulf Morelius, Ulf Sjöstrand and Ralf Steneskog and begins its operations 1993 in Stockholm.

• Through its own projects and projects acquired in Rinkeby and Jordbro, SSM at this stage has 1996 over two thousand apartments under management. • Ralf Steneskog is bought out by Ulf Morelius and Ulf Sjöstrand. organisation management focusing on own An entrepreneurial 1998 • The projects in Jordbro and Rinkeby are divested to GE Real Estate.

• Projects in Nacka, Telefonplan and Fruängen are acquired. 1999 • The business plan is revised and SSM focuses on development of cooperative apartments.

2003 • Development and construction in Nacka is commenced.

2005 • The first of several residential property development projects at Telefonplan is commenced. Overhaul with a focus on project new construction development and 2009 • Development and construction in Fruängen is commenced, and is completed in 2012 and 2013.

2011 • A long-term joint venture agreement with Alecta is signed.

• Mattias Roos is appointed CEO in November. 2012 • A new business plan is adopted, with the aim of starting construction of 500 new apartments per year from 2017.

• In December 2013, SSM issues a bond of SEK 200 million, which listed for trading on Nasdaq Stockholm in December 2014. 2013 • Two new projects are acquired as part of the partnership with Alecta, West Side Solna and The Lab, comprising a total of 532 building rights. • Construction of 369 new apartments is started in three projects during the course of the year.

• Close to 900 building rights are acquired during the course of the year, including the Group’s largest own project to date – Bromma Tracks. 2014 • A joint venture agreement with Profi Fastigheter is signed. • Construction of 515 apartments is started in two projects during the course of the year.

• An updated business plan is adopted with a target of reaching one thousand construction starts per year as of 2018. 2015 • A total of 513 building rights are acquired during the course of the year. • Construction of 547 apartments is started in four projects during the course of the year.

• A new bond loan of SEK 400 million within a total framework of SEK 700 million is issued. In the New partnerships and expansion same transaction, the previous bond loan of SEK 200 million from 2013 is redeemed. • Acquires almost three thousand building rights. • Appoints a new board of directors, which decides on a new business plan with the intention to 2016 increase the number of construction starts in order to reach a level of 1.8 thousand construction starts per year in 2021. • Construction of 238 apartments is commenced in four projects in the course of the year. • A relocated land allocation for Tellus Towers is obtained.

• New financial targets are announced. 2017 • Wins land allocation competition in Täby Park, comprising 270 building rights. • A new project comprising 260 building rights within Stockholm municipality is acquired.

38 Invitation to acquire shares in SSM Holding AB (publ) Business overview

Business concept, vision, target group and Dividend policy customer promise SSM’s target is to pay a dividend to its shareholders of at least 30 Business concept per cent of the profit after tax to its shareholders as of the annual To acquire, develop, sell and build residential units for the urban- general meeting 2018. The Company’s dividend target aims to ites of tomorrow on the basis of customers’ needs. secure the shareholders’ return on invested capital as well as the funds required by the Company to develop the business. Vision A housing market with space for as many people as possible. Strengths and competitive advantages SSM is one of the leading residential property developers in the Target group greater Stockholm area, with a unique concept – Smaller spaces. SSM’s target group – the urbanites of tomorrow – is at an eventful Larger living. – directed at what the Company calls the urbanites stage in life, with new jobs or studies, relationships and friend- of tomorrow. SSM is deemed to have a number of strengths and ships. They live in households of one to two people and prioritise competitive advantages, which when combined give the Group more than just their accommodation: for example, they want to good conditions for continued growth and a strong position within be close to the fast pace of the city, with financial possibility for its market niche. activities such as travelling and eating out. They are looking for an affordable, well-planned apartment in which functional and Strong structural growth for residential property creative solutions ensure that every square metre is used to its development in the greater Stockholm area full advantage. A good location with convenient access to public SSM conducts its operations in the housing market in the greater transport is therefore important for the target group. Stockholm area, which is characterised by particularly favourable conditions. The region has a high expected population growth, Customer promise with the number of inhabitants expected to increase from around SSM’s customer promise is to ensure that a larger number of 2.2 million in 2015 to almost 2.6 million in 2030. This strong people can afford to live a richer life by offering more people growth can be explained by factors such as a positive net birth the possibility to reside well. The Group does this by building rate in the existing population, increasing urbanisation with a apartments in which full use is made of every square metre, in concentration of economic activity in metropolitan areas, and a locations near public transport links outside the inner city. In this high rate of immigration both from other regions of Sweden and way, SSM creates residential units with affordable prices for the from other countries. urbanites of tomorrow who want to live a full, active life. The cus- From a macroeconomic perspective, Sweden and the greater tomer promise is summarised in SSM’s motto: Smaller spaces. Stockholm area are characterised by having good GDP growth, Larger living. increasing disposable income and low unemployment combined with an environment of low interest rates. Sweden’s GDP grew Targets by 3.3 per cent in 2016, and the expected growth for 2017 is 2.2 1) Operational targets per cent. Despite a robust, growing economy, the construction SSM’s intention is to, as of 2017, start the construction of approx- of new residential units has for a long time failed to meet the imately one thousand apartments, in order to thereafter gradually high demand, which means that the supply of residential units increase the construction volume on an annual basis to reach a has fallen behind. Every municipality in Stockholm county has target of 1.8 thousand apartments per year by 2021. reported a housing shortage in 2016, and the county’s stated According to SSM’s business plan, the Company’s offer shall target of 16 thousand completed apartments per year has up to comprise 60 per cent cooperative apartments, 30 per cent rental and including 2016 not been met. According to Stockholm county apartments and 10 per cent student apartments by 2018. council’s population projections, the population of Stockholm county is expected to continue to increase, and the municipalities Financial targets in the region are planning to complete 334 thousand new apart- SSM’s financial targets aim to maintain long-term stable prof- ments by 2030. Around 290 thousand of these potential residen- itability and growth in value so that shareholders receive good tial units are planned in municipalities that SSM considers to be returns. of strategic interest to the Company. Therefore SSM perceives significant opportunities for acquiring new projects in areas that Debt/equity ratio are relevant to its target group. SSM shall have a debt/equity ratio of more than 30 per cent. A leading residential property developer in an Operating margin attractive niche The operating margin shall exceed 20 per cent. SSM is one of the leading residential property developers in the greater Stockholm area, with around 1.5 thousand apartments Return on equity completed since its foundation, approximately 1.5 thousand The return on equity shall exceed 25 per cent. apartments in construction and a building rights portfolio of approximately 3.8 thousand apartments as of 31 December 2016. Interest coverage ratio The Company targets the customer group which they call the SSM’s interest coverage ratio is defined as operating profit/loss urbanites of tomorrow: people aged 20–44 who are working and/ plus financial income in relation to financial costs. The interest or studying and who live in single-person households or together coverage ratio shall be at least two times. with a live-in or live-out partner. People in this target group are typically at an early stage of their careers and living situations,

1) National Institute of Economic Research.

Invitation to acquire shares in SSM Holding AB (publ) 39 Business overview

have an urban lifestyle, want to be close to the fast pace of the The Group has a history of successful joint venture projects. city and are frequent visitors of restaurants, bars and cultural SSM’s capacity to enter into joint ventures emphasises the events. For people in this group, SSM offers cooperative, rental commercial appeal of projects identified by SSM as well as the and student apartments, with a focus on developing smaller, Group’s ability to develop these further. Joint venture projects are space-efficient and well-designed apartments in positions close normally established in order to obtain co-funding of a project, to the city center and near rail transport links. SSM considers this allowing the Group to take on a number of large projects in to be an attractive concept for its target group that will provide parallel as well as to obtain and develop attractive building rights well to the residential needs of the urbanites of tomorrow. in cases where the partner company does not have the ability to Statistics from Statistics Sweden indicate that the average develop the building rights in-house. SSM has been engaged in Swede moves approximately ten to twelve times during his or her ten joint venture projects over the last ten years. lifetime. The 20–44 age group, SSM’s target group, is overrep- resented in terms of number of moves compared to other age A solid financial history with strong growth in profits – groups. In 2015, people aged 20–44 made up 31 per cent of attributable to in-house and joint venture projects Sweden’s population, 36 per cent of the population of Stockholm SSM’s historical positive financial trend can be explained by its county and 41 per cent of the population of Stockholm munici- high level of activity in residential property development, where pality, but represented as much as 58 per cent of the number of the Group during the years 2014–2016 acquired 887, 513 and moves in Sweden. 2,951 building rights, respectively. The Group’s income has followed this positive trend, with a Proven business model with a clear history as a development of SEK 411, 351 and 650 million respectively during turnkey contractor the years 2014–2016. The corresponding income trend after full Since 2009, SSM and its joint ventures have acted as turnkey consolidation of the Group’s joint venture projects amounts to contractors and taken overall responsibility for their residential SEK 1,144, 1,195 and 1,398 million respectively, over the same property development projects in terms of acquiring, developing, period. selling and building apartments. This has allowed SSM to build up The Group’s operating profit, which contains contributions an industrial base of experience with a broad network of subcon- from both own and joint venture projects, amounted to SEK tractors, material suppliers, municipalities, property owners and 63, 102 and 187 million, respectively, for the years 2014–2016, real estate agents. corresponding to an operating margin of 15, 29 and 29 per cent The acquisition and development process is driven solely by over the same period. The operating margin has expanded the requirements for refining the building rights into attractive considerably during the period as a consequence of the increase accommodation for the Group’s target customers. In doing so, in project operations and the proportion of joint venture projects in the opportunity often arises to add more apartments per area of the portfolio. land than originally planned. This means that more apartments The Group’s equity has developed well, amounting to SEK 81, are built on existing land and often leads to an economic benefit 174 and 301 million, respectively, for the period 2014–2016, with for the Group, which obtains more apartments for sale. On 31 a return on equity of 54, 75 and 61 per cent. The balance sheet December 2016, SSM’s building rights portfolio amounted to was strengthened during the same period and the debt/equity about 5.3 thousand building rights, all in positions close to the city ratio amounted to 20, 32 and 29 per cent, respectively. center and near public transportation hubs with a real potential for development into smaller, space-efficient, functional apartments. Experienced management and project organisation teams The Group sets internal requirements for at least 50 per cent supported by long-term and dedicated owners of apartments to be sold in advance before construction can SSM has an experienced management team with extensive start. This requirement is mainly important for projects that are experience in residential property development and has com- not financed by bank loans. If a project is financed by a bank, pleted six projects comprising over 500 apartments and has also then the bank may set other advance purchase requirements acquired 4,351 building rights during the period 2014–2016. In instead. The requirement level varies depending on the general 2012, the Company launched a new business plan that resulted condition of the economy, but at the time of this Prospectus the in a gradual strengthening of the organisation, both at a project requirement is usually that 60–80 per cent of the apartments have level in terms of site managers, project managers and pro- to be sold in advance in order for a construction loan to be issued duction managers, and at a central level in terms of business so that construction can begin. All signed advance contracts are development, marketing, finance, purchasing and IT. Today, legally binding, and SSM and the housing association are jointly the organisation consists of about 70 full-time employees. This entitled to compensation for any financial losses in the event that organisation is well-equipped in terms of resources and expertise a customer does not carry out a purchase. Overall, SSM is of in order to allow business activities to continue expanding in line the opinion that this creates safe conditions for customers and with operational and financial targets. The Company’s founders, housing associations and for the Group and its stakeholders. Ulf Morelius and Ulf Sjöstrand, who now indirectly own SSM, The construction process is managed and monitored by SSM represent history and continuity and are currently active members through officers who are employed by the Group and who are of the Company’s board of directors. present on the construction site. Other resources and labour are obtained by a number of subcontractors procured for each pro- A unique platform and a strong project portfolio for further ject. SSM has strong, long-standing relationships with a number expansion and growth of subcontractors, which has been shown to increase both cost As the leading residential property developer in its market niche control and the propensity to find cost-saving opportunities in in the greater Stockholm area, SSM is well positioned to develop the process. Since 2016, services within property management its building right portfolio, and the Group has a proven capacity have been performed by in-house staff, and the intention is that for acquiring new building rights over time with a real potential this staff should also manage the on-going operations of a future for conversion into attractive apartments. The Group evaluates in-house property portfolio. a wide range of projects continuously, including everything from smaller projects of simpler character (such as The Loft)

40 Invitation to acquire shares in SSM Holding AB (publ) Business overview

to large and more complex projects (such as Tellus Towers). In similarly suited for SSM’s concept. Given the current market situ- conjunction with such evaluations, the Group also discusses and ation, there are many active operators in the residential property negotiates with different parties regarding, inter alia, acquisition development industry, especially in and around the Nordic capital of building rights or the foundation of new, or changes in existing, cities where populations are rising. This has led to a fragmented joint ventures. For instance, as of the day of this Prospectus, the market with long-term potential for future consolidation. Company evaluates the possibility to enter into a new joint ven- SSM sees opportunities to invest in strategically attractive ture with a party in relation to a project which comprises 400–500 investment properties in order to maximise the net operating residential units. Furthermore, the Exploitation council intends to income and harness the potential to develop new building rights. make a decision regarding an additional land allocation in relation SSM has the knowledge and procedures in place to manage to the Group’s project Spånga Studios on 6 April 2017. properties through SSM Property Services, the Group’s own In addition to the short-term development potential in the property management organisation. SSM Property Services is Group’s building right portfolio, the Tellus Towers project also responsible for managing the properties sold by the Group for at provides a unique and attractive opportunity which could become least two years after the handover from SSM to housing associa- a milestone in Swedish construction history. The project consists tions. In the long term, SSM Property Services has the potential of two buildings, containing 660 and 580 building rights distrib- to manage a future portfolio of SSM’s investment properties. uted over 78 and 58 stories respectively, as well as a building containing 20 building rights. Upon completion, the project should Business model produce a significant positive effect on the income and profit of SSM’s business model is to acquire, develop, sell and pro- SSM. For more information on the Tellus Towers project, see duce attractive residential units in metropolitan areas. In a joint the section “Business overview – Project portfolio – Selection of process, the management and employees have agreed to projects in development”. summarise the Company’s core values in the following keywords: In the greater Stockholm area, SSM has identified high-pri- energy, commitment, joy, innovation and inspiration. These five ority municipalities which the Company deems to be of particular words capture the Company’s business model and characterise interest and suitability for SSM’s concept, in part since these the relationships and cooperation between employees and cus- municipalities have a high proportion of single-person households tomers, suppliers and partners. and households without children in the age group 20–44. Exam- The Company differentiates itself from many other operators ples of such municipalities include Danderyd, Järfälla, Nacka, Sol- in the industry by virtue of being purely a residential property lentuna, Solna, Stockholm, Sundbyberg and Täby. To complement developer carrying out work directed at a specific target group. its operations in the greater Stockholm area, SSM is investigating SSM owns its entire business process and carries out all aspects the possibility of establishing operations in Uppsala, which the of residential property development through its own managers. Company considers to have similar underlying trends and to be

SSM’s business process

Affordable and efficiently Investment sourcing planned apartments 1 Property management2)

7 8 Handover & property 2 Project development services

Construction 6 Potential divestment 3 Planning 5 Divestment to housing association1) 4

Apartment sales1)

1) Not applicable for rental apartment projects 2) SSM is able to keep completed rental projects as investment properties

1. Investment owner or a municipality. SSM maintains an on-going dialogue The Company invests in properties or undeveloped land where with private property owners, politicians and officials in strategic a potential for value growth has been identified. There are two municipalities, i.e. municipalities along rail transport routes. The critical factors for profitable project development: finding attrac- Company is actively working to obtain direct land allocations tive building rights for the right price, and building residential for building rights from the municipalities by presenting creative properties that appeal to the Company’s target group. SSM’s ideas for building residential properties on its own initiative. solid experience in the industry allows it to identify these pro- SSM also participates in competitive tenders announced by jects, and the Company works actively to acquire new projects. the municipalities, in which the selection criteria may vary. The SSM’s investment committee, which consists of members of the Company’s clear target group often creates an advantage when Company’s board of directors, decides on strategic acquisitions engaging with municipalities. This is because well-planned, where a potential for value growth has been identified and con- functionally designed and space-efficient apartments contribute firmed. The selling party in the acquisition may be either a private to the sustainable development of the urban environment.

Invitation to acquire shares in SSM Holding AB (publ) 41 Business overview

Modern supplementary residential facilities such as car pools water, which together typically account for about 60 to 75 per cent and plenty of bicycle spaces also tend to be appreciated by the of the building costs in a project. The SSM concept is used as a municipalities. As a result of SSM’s active work in maintaining framework for all projects and includes building standards and on-going dialogues and creative work, close to 80 per cent of cost-effective solutions. Thus, the SSM concept provides more the Group’s current project portfolio has been acquired outside control of building costs for the Group’s projects. auction processes, either bilaterally with a private counterparty or through a direct land allocation from a municipality. When 4. Sales of apartments making an acquisition, SSM’s purchase is normally conditional Sales begin once SSM has received a predetermined level of on an approved zoning plan that is legally binding. In practice, notices of interest for the apartments in a project. Notices of this means that most of the purchase price is only paid by SSM interest are submitted through SSM’s website. Prospective cus- once a zoning plan is legally binding, and SSM has the right not tomers find the projects through the Company’s digital marketing to complete the purchase if the zoning plan is not approved. This on social media, advertisements on housing sites, keyword mar- decreases SSM’s exposure to risks from individual investments keting and in SSM’s existing register of interests, but also through while also allowing the Company to tie up less capital. recommendations from friends and acquaintances who are SSM customers. A certain amount of strategic planning and project Private property owners Municipalities planning, such as the completion of construction documents and on-site purchasing, continues to run in parallel with sales. SSM Direct discussions Direct land allocations works with real estate agents and offers prospective customers the chance for physical meetings, but the actual booking will 55% 29% be made digitally through SSM’s website. The introduction of

of current of current 84% digital bookings has led to faster processing for customers and portfolio1) portfolio1) interested parties. The system also allows prospective customers Off market to see their place on the waiting list for specific apartments in real time. The increased transparency has led to a distribution of prospective customers among the available apartments, which Opportunities Land allocations in turn has led to that more customers have obtained their first from brokers with competition choice. The digitisation of the process has also meant a faster rate of sales compared to manually processing paper contracts. 14% 2% The reduction in time between the start of sales and a binding of current of current 16% agreement with the customer thus also means more security for portfolio1) portfolio1) SSM and its stakeholders. Auction process

5. Disposal to housing associations The Group establishes internal requirements of at least 50 per 1) At 31 december 2016 cent of apartments to be sold before the construction can start. This requirement is mainly important for projects that are not financed by bank loans. If a project is financed by a bank, then 2. Development the bank may set other advance purchase requirements instead. The value increase of the acquisition is primarily achieved The requirement level varies depending on the economy, but as through the development of a residential concept, where SSM of the date of this Prospectus, requirements are that 60–80 per identifies the way to generate the highest value for the Com- cent of the apartments have to be sold in advance for construc- pany’s target group. On the basis of the project’s residential tion loans to be issued in order for the construction to start. When concept, SSM works together with selected architecture firms to a sales requirement has been met, the disposal of the property develop projects into an approved, legally binding zoning plan to a housing association is carried out. The housing association and a granted building permit. Once a zoning plan with defined finances the acquisition by way of a promissory note. The prom- building rights has been developed, the Company’s investment issory note is repaid when the cooperative apartment owners committee determines whether the project is to be sold as pay their respective deposits to the housing association, which building rights or carried out as a project. Decisions are based occurs in connection with handover of the completed apartments. on the project’s expected return and a thorough risk analysis However, the Group begins to account for profits in relation to a focusing to great extent on the project’s sales risk and production project at the time of disposal of the property to the housing asso- risk. ciation in question. When a project enters this phase, the procure- ment of subcontractors for construction of the new apartments is 3. Project planning also completed. The preparatory work for the project’s implementation begins with project planning and sales planning. Drawings and descrip- 6. Production tions prepared during the zoning plan process form the basis Once the sales requirements have been achieved, it also means for the sales material to be produced before project sales begin. a green light for construction to start, where new apartments Building permission is granted during the project planning phase. are produced through an effective and sustainable construction To take advantage of the solid project planning expertise of process. SSM, acts as a turnkey contractor, either directly or SSM’s employees and subcontractors, SSM has produced and through a joint venture, in all of the Group’s projects and has a developed the SSM concept, which formalises and governs the project organisation team in place that manages the day-to-day project planning phase and subsequent construction. The SSM work. Throughout the process, SSM works to form long-term concept covers project planning, the construction of the foun- relationships with subcontractors. Around 20 different contractors dation and framework and the installation of electricity, heating, are typically used in SSM’s projects.

42 Invitation to acquire shares in SSM Holding AB (publ) Business overview

8. Management 7. Handover and management SSM is able to build rental apartments with the aim of conducting Production is completed and the building is handed over to the its own property management. Such rental apartments are housing association or property owner. Upon handover, three retained in SSM’s portfolio and are intended to be managed by different types of warranties are issued. The shortest warranty SSM Property Services, which creates synergies through the period expires after two years and covers defects in materials use of a common management organisation for cooperative and and products used in the construction process. The warranty rental apartments. period covering the contractor’s work performance, such as the handling of materials and goods, expires after five years. The Management of the project process last remaining warranty period expires after ten years and covers Residential property development is generally characterised by significant defects due to negligence by the contractor. With significant financial value, long lead times, extensive processing regard to property management, SSM has had its own organisa- and legislation, the involvement of several parties and competen- tion since 2016, SSM Property Services, which it aims to expand cies, and demands for high quality and sustainability. In addition over time in order to cover the management needs of its own to this, there are also factors such as long-term demand for res- management portfolio (point 8 below). When a building is handed idential units and the conditions for financing. For SSM, careful over to a housing association, the association signs a two-year process management permeates the entire business at each agreement with SSM Property Services regarding the manage- stage, from project idea to completed, delivered apartments. The ment of the property. After two years, the association may procure Company divides the project development process into three a property manager of its choice. phases: the development phase, the sales phase and the production phase. The figure below shows the development of the project’s value and financial risk during the project development process.

Exploitation phase Zoning Sales phase Construction phase plan

1 2 3 4 5 6 7 Investment Project Planning Apartment Divestment to Construction Handover & sourcing development sales1) housing 8 property services Potential association1) Property divestment management Financial risk Project value

1) Step 4 and 5 are only carried through in relation to development of cooperative apartments.

Management of the development phase strategic approach with respect to the Company’s target group Acquisition of building rights than simply taking part in land allocation competitions, where the Despite the high demand for residential units in the Stockholm municipality determines the concept and position for the planned region, the supply of building rights is limited and environmental residential property development. and cultural value-related factors play a significant role. SSM is SSM also works intensively in its high-priority municipalities also exposed to competition from other market operators. SSM to acquire potential projects from private property owners. This is works together with a number of strategically selected municipal- done through the Company’s own analyses of, and its own ideas ities to create projects that focus on the Company’s target group. for, potential projects for other owners’ properties with the aim of Good relationships with these municipalities are important for the acquiring the property or entering into a partnership with the prop- development of new residential property development projects. In erty owner. In addition, SSM also participates in relevant tender order to acquire projects from these municipalities, the Company processes in relation to interesting projects for sale and may also takes part in land allocation competitions but, in particular, new acquire investment properties of strategic interest. In 2016, SSM project ideas are analysed and created internally within SSM. acquired the rights to build close to three thousand building rights Direct land allocations often require high-quality ideas and a from municipal and private property owners. unique concept. SSM considers this to be a more rational and

Invitation to acquire shares in SSM Holding AB (publ) 43 Business overview

Investments Management of the sales phase Before any investment decision is made, SSM’s management SSM’s target group in the greater Stockholm area has a basic team collates documentation and puts together a report, in need for residential units over time, and it is the Company’s close collaboration with the internal business development assessment that the demand from the target group, relative to department. The report provides a review of the completed due the Swedish population as a whole, is less inclined to vary as a diligence including tax risks, environmental risks and risks related consequence of movements in the stock exchange and access to to the zoning plan. The report also lays out the estimated time financing. The Company’s strategy is to develop small, space-ef- schedule, completed volume, building rights, square meters and ficient apartments which a larger number of people are consid- project finances. If there are specific risks related to the zoning ered to have the financial capacity to buy or rent. The purpose of plan, environment or development, they will also be stated in the focusing on this target group with this strategy is to create prod- report. Information regarding the potential investment is then ucts which are less sensitive to economic cycles. As the product forwarded by the CEO to the Company’s investment committee. is attractive to a large proportion of the applicants for residential units in Stockholm, SSM has historically enjoyed a significant Project properties amount of interest in its projects, which in turn has decreased the The Company’s strategy when acquiring new projects is to sign risk when the sales phase commences. During the development an agreement for binding transfer conditional on the zoning plan phase of a project, a register of interested parties is put together being approved and becoming legally binding. The purchase which will form the basis for any decisions regarding how the price is calculated according to the total area of apartments (in project progresses. This register is built on, inter alia, general lists square metres) that the final zoning plan allows, upon which SSM containing approximately 23 thousand email addresses collected finalises and optimises the zoning plan based on the agreed from people who have expressed interest or been involved in objectives for the project. This results in limited development risk previous SSM projects, through marketing in social media or as a for the Group as it ensures that the final zoning plan cannot differ result of participation in events aimed at the target group. too significantly from the proposed plan at the time of purchase. SSM is working to eliminate sales risk in projects before the construction start. The Group generally sells or rents out a high Investment properties proportion of apartments through residential prospectuses prior As mentioned above, SSM can also invest in strategically attrac- to the construction start. The construction of projects generally tive investment properties in order to maximise the net operating does not start until an internal advance purchase requirement has income and harness the potential to develop new building rights. been reached; this normally corresponds to a percentage of the In the case of the acquisition of investment properties with ten- total number of apartments which needs to have already been ants, the investment committee makes its assessment based on sold. SSM’s internal advance purchase requirement is at least predicted cash flow after the investment, and the potential for it to 50 per cent. Banks financing constructions projects can also set increase in value. This increased cash flow and growth in value minimal requirements for advance purchase. The percentage can be created by means of supplementary rental, or by creating required by banks depends on the general economic conditions new building rights for residential purposes or offices, hotels prevailing at the time. Currently, banks are demanding between or other commercial purposes. The calculation comprises the 60 to 80 per cent to be sold in order to issue a construction loan agreed income, estimated charges based on the technical, tax so that the construction can be started. The figures below show and legal conditions, and the required return. SSM’s advance purchase requirement and the time (in weeks)

Turbinhallen West Side Solna Metronomen Declared interest 7,133 Declared interest 7,137 Declared interest 4,964 Number of apartments: 205 Number of apartments: 266 Number of apartments: 188 Interest/apartments: 35x Interest/apartments: 27x Interest/apartments: 26x

Sales start: Oct 2015 Sales start: Oct 2015 Sales start: May 2016 Required pre-sales: 75% Required pre-sales: 75% Required pre-sales: 75% Required pre-sales reached: Dec 2015 Required pre-sales reached: Dec 2015 Required pre-sales reached: Oct 2016

No. of apartments No. of apartments No. of apartments 300 300 300 Summer period with 250 250 250 limited sales activity 200 200 200

150 150 150

100 100 100

50 50 50

0 0 0 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 10 1 3 5 7 9 11 13 15 17 19 21 23 25 Week1) Week1) Week1) Binding agreement Booking agreement Binding agreement Booking agreement Binding agreement Booking agreement Required pre-sales Required pre-sales Required pre-sales

1) Number of weeks after salessales start.start

44 Invitation to acquire shares in SSM Holding AB (publ) Business overview

it took before the number of binding agreements reached the nerships to be an effective way of distributing and managing the requirement for three of the Company’s projects. SSM’s manage- ownership, risk, profit and the financing of projects. The Group ment of the sales phase has led to that the Group often reaches primarily offers expertise within project development to partners its pre-sale targets for projects in just six to eight weeks. who wish to invest in residential property development projects in exchange for financing and access to development property with Management of the production phase good potential for a return. The ownership, risk and profit are then SSM’s strategy for managing the production risk when imple- distributed between the SSM and the strategic partner in propor- menting large contracts is for to the Group to take on overall respon- tion to each party’s contribution to the project. However, other fac- sibility for the contract on behalf of the future owner of the building. tors can also affect the relationship. Residential property devel- The Group staffs all projects and sites with its own officers, upon opment within the framework of a joint venture is mainly based which the execution of the overall project is divided into smaller on the same principles as for residential property development contracts. Each project has around 20 different subcontractors. carried out by SSM alone and is carried out through setting up These companies take on the risk for their respective parts, with co-owned associated companies. The associated companies are SSM assuming the responsibility for and the risk involved in coordi- thus financed by capital contributions in the form of shareholder nating the subcontractors in order to ensure that the operations are contributions and loans from SSM and the strategic partner, and completed on time and in accordance with the initial agreements. external financing from credit institutions. SSM has implemented SSM also works strategically in order to negotiate long-term a series of joint ventures projects in partnership with financially cooperation agreements with three to four contractors per construc- strong operators or property owners which own development tion type in a project. Over time, this means that the Company and properties which are attractive to the Group. These partnerships the contractors can streamline processes and minimise activities create competitive project groups which can compete for and which do not create value. As the prices of apartments are set in implement large projects in an effective manner. advance (in practise, one to two years before the customers move In 2016, SSM had a total of five on-going projects with Alecta, in), revenue can be safely budgeted for. SSM also ensures that sub- Student Hill and Profi Fastigheter in the form of joint ventures. For contractors are procured as early as possible in the process. Long- further information, see section “Project portfolio”. term partnerships with suppliers of larger units such as frames, land improvements, electrical installations, ventilation, sanitation and Alecta interior design facilitate SSM’s control of the project cost structures. Alecta is a pension fund manager and one of Sweden’s largest As a result of careful planning and work based on the frame- property owners, as well as one of the largest operators on the work defined in the SSM concept (see the section “Business Swedish financial market. Alecta’s total assets under manage- model”), the Group can hand over properties to newly-created ment amounted to just over SEK 750 billion in December 2016. housing associations with long-term sustainable debt levels SSM can profit from Alecta’s good reputation and financial and affordable fees for their members. In most of the Group’s strength, and Alecta can profit from SSM’s expertise in the area of projects, SSM’s target debt levels do not exceed approximately residential property development. SEK 13.5 thousand per square metre of living area. In projects where commercial premises are included, the level of debt per Profi Fastigheter square metre can exceed that. For example, SSM completed Profi Fastigheter is a Swedish real estate company which carries the project Flygplansfabriken located at Telefonplan in Stock- out the management and development of commercial proper- holm in 2013. The association’s debt levels amounted to SEK ties, focusing on the greater Stockholm area. Profi Fastigheter 13.5 thousand per square metre, and the property contained no has a property portfolio which primarily consists of commercial commercial premises. The sales price was SEK 43 thousand per premises. For SSM, this agreement means access to interesting square metre for SSM’s end customers, which corresponds to projects for the Group, while Profi Fastigheter gains a competent a loan-to-value ratio of approximately 31 per cent. Three years partner to implement projects. later in 2016, SSM launched the project Metronomen located just a few hundred meters from Flygplansfabriken. The level of Student Hill debt in the Metronomen project was also SEK 13.5 thousand per In order to facilitate and improve the situation for students in the square metre living area. The property also included commercial Stockholm region, SSM and Student Hill AB founded Student- premises with debt levels of around SEK 23 thousand per square backen AB in 2012, with the intention of developing and offering metre. The sales price of SEK 73 thousand per square meter to student apartments in the form of both cooperative apartments end customers gave the housing association a debt/equity ratio and rental apartments. of approximately 23 per cent. The annual fee for end customers in the Metronomen project was SEK 800 per square meter, which Lindbäcks Bygg is equivalent to about SEK two thousand per month for a typical Lindbäcks Bygg is a company specialising in industrial construc- 30 square meter one-room apartment, and approximately SEK tion of apartment buildings and also runs a production facility in three thousand per month for a typical 45 square meter two-room Piteå. Lindbäcks Bygg is part of Lindbäcks Group AB, which also apartment. This can be compared to SEK 6991) per square metre owns and manages properties. Through this partnership, SSM per year for Flygplansfabriken end customers, equivalent to gains access to expertise in industrial construction. The partner- approximately SEK 1,750 and SEK 2.6 thousand per month for ship is currently subject to negotiations between the parties. the apartments of the sizes given above. Thus, SSM hands over financially sustainable products to its customers. LIBU Invest LIBU Invest is a privately owned real estate company. Through this Joint ventures partnership, SSM gains access to a project which is attractive to A joint venture refers to SSM entering into a cooperation agree- the Group, and LIBU Invest gains access a construction partner. ment with a strategic partner to work with residential property development in conjunction. SSM considers this type of part-

1) The main reason for the difference between the fees for residents in Metronomen and Flygplansfabriken are the TV and broadband fees.

Invitation to acquire shares in SSM Holding AB (publ) 45 Business overview

Organisation and staff finance team, HR, purchasing department, the legal department, Organisational structure and employees the IT department and the communications and IR department. In recent years, SSM has built up a strong team which now These support functions allow the project organisation to focus consists of approximately 70 employees. The majority of these on the planning and execution of projects. The central organi- employees, approximately 45 people, work in the Group’s project sation enables the growth of SSM by working actively to identify organisation department which is further subdivided into three and acquire projects. All of SSM’s construction projects are led divisions. The divisions comprise production leaders, site man- by the internal project organisation which works in conjunction agers, project leaders, project managers and a department man- with subcontractors to construct the residential properties. Using ager. In addition to the CEO, around 25 people work within the subcontractors allows SSM to handle large project volumes when support functions of the Group. These include the marketing and compared to the actual relative size of the Company. sales departments, the business development department, the

2016 2015 2014 Average Average Average number of of which number of of which number of of which employees women employees women employees women SSM and subsidiaries 58 23 40 17 33 14

SSM is working actively towards achieving a good gender and acts as a forum in which the employees create contacts with age distribution across different parts of the Company. As of 31 their peers, exchange experiences, share ideas and gain new December 2016, 40 per cent of SSM’s employees were women, knowledge through such activities as arranged meetings, internal and the average age of the employees was 43. and external training sessions or seminars, and lectures in SSM’s The Company has five core values:Energy, Commitment, Joy, different business areas. Approximately two to four internal or Innovation and Inspiration. All employees in the Company are external training sessions and two to four team-building activi- expected to adhere to the values in their day-to-day interaction ties are carried out each year. These can include site visits and with colleagues, customers, partners and suppliers. To create a presentations by colleagues in different functions and depart- sense of community in the Company, SSM carries out frequent ments. In addition to YES, SSM also offers all of its employees employee activities such as team-building, health promotion and opportunities for skills development, leadership development and healthcare, as well as cultural activities. Employee activities and mentoring. meetings are held both at the head office and at construction In order to monitor the Company’s internal development, an sites in order to promote a strong sense of community across employee survey “NMI” (NMI being an abbrevation for Nöjd- the organisation. Cooperation within the Company between Medarbetar-Index, employee satisfaction index), is carried out employees in different roles has also been strengthened by the once a year, which involves all of SSM’s employees and also introduction of an activity-based working method in both the current consultants. To ensure anonymity, the survey is carried project and purchasing departments. out by an external supplier which summarises the results in a To get the most out of and develop the skills of our younger report for the Company as a whole. In 2016, the result of the NMI staff members, SSM also runs the internal YES programme was 87. The Company considers this a good result, bearing in (YES being an abbrevation for Yngre Engagerade SSM:are, mind that the number of employees has grown considerably in young committed SSM employees). All Company employees are recent years. automatically members of YES until they turn 35. The programme

SSM’s organisational structure

President & CEO

Finance Director

Chief Financial Department Department Department Development Chief Sales & Officer Head of Project Head of Project Head of Project Officer Marketing Officer Head of Business Corporate Lawyer Executive Assistant Chief Purchasing Officer Chief Information Chief Human Resources Officer Chief Communications & IR Officer

Head of Finance & Accounting

Strategic management team Site Managers Site Managers Site Managers Site Engineers Site Engineers Site Engineers Design Manager Design Manager Design Manager Project Manager Accountant Project Managers Project Managers Purchasing Agents Purchasing Business Developers Project Manager Land Project Controller Operative Assistant Accounting Real Estate Manager after Sales Specialist Manager Housing ass. Salary & HR Administrator Salary & HR Sales & Marketing Administrator Sales & Marketing Senior Project Manager Sales & Marketing

management team Market Communications Managers Project Managers Sales & Marketing

46 Invitation to acquire shares in SSM Holding AB (publ) Business overview

Completed projects Since the start in 1993, SSM has completed a total of 34 projects (excluding the conversion of rental projects carried through in the 1990s) and approximately 1.5 thousand apartments has been developed, constructed and sold by SSM. All the completed projects have been located in the Stockholm area. The majority of the apartments have been sold as cooperative apartments. SSM’s business concept, which primary focuses on residential property development in the form of new constructions, can be seen in the project list below; where the majority of the projects undertaken after 2010 were new constructions.

Overview of completed projects Year of Form of Number of Name Area construction Form of tenancy production Joint venture apartments Rosteriet1) Liljeholmen 2016 Cooperative apartment New construction Alecta 225 Twin House1) Djursholms Ösby 2016 Cooperative apartment New construction Student Hill 30 ND Studios Norra Djurgårdsstaden 2016 Cooperative apartment New construction 46 Flygplansfabriken Telefonplan 2015 Cooperative apartment New construction 73 Kungsterrassen Sätra 2014 Cooperative apartment New construction 72 Mälarhöjdsparken 2 Fruängen 2013–2014 Cooperative apartment New construction Index 85 Mälarhöjdsparken 1 Fruängen 2012 Cooperative apartment New construction Index 71 Sanda Ängshusen Upplands Väsby 2012 Cooperative apartment New construction Sanda Invest 30 Blomsteräng Telefonplan 2011 Cooperative apartment New construction 47 Ängsblomman Telefonplan 2011 Cooperative apartment New construction 53 Ängsgräset Telefonplan 2010 Cooperative apartment Conversion 54 Midsommarbuketten Telefonplan 2009 Cooperative apartment New construction 112 Midsommarblomster Telefonplan 2009 Cooperative apartment Conversion 50 Bastusjön Nacka, Sickla, Bastusjön 2009 Cooperative apartment New construction 8 Flygelradhus Nacka, Sickla, Bastusjön 2009 Cooperative apartment Ownership 3 Barnhemsvägen Nacka, Sickla, Bastusjön 2006–2009 Cooperative apartment Freehold 14 Midsommarblomman Midsommarkransen 2008 Cooperative apartment New construction 54 Sjökristallen Nacka, Sickla, Bastusjön 2008 Cooperative apartment New construction 24 Sluttningsradhus Nacka, Sickla, Bastusjön 2007 Cooperative apartment Ownership 5 Grändhus Nacka, Sickla, Bastusjön 2006–2007 Cooperative apartment Ownership 6 Lilla Isprinsessan Västertorp 2005 Cooperative apartment Conversion 37 Sjöbrisen Nacka, Sickla, Bastusjön 2008 Cooperative apartment New construction 24 Sjöfortet Gröndal 1998 Cooperative apartment Conversion 109 Fikonträdet 15 Kungsholmen 1999 Cooperative apartment Conversion 22 Konvolvulus 6 & 17 Midsommarkransen 1997–1998 Cooperative apartment Conversion 24 Kåpan 2 Västertorp 1997–1998 Cooperative apartment Conversion 24 Tegelbruksv – Nypongränd Midsommarkransen 1997 Cooperative apartment Conversion 33 Plogen 11 Södermalm 1996 Cooperative apartment Conversion 40 Valnöten 11 Kungsholmen 1995 Cooperative apartment Conversion 39 Rentals Jordbro Jordbro 1995 Rental apartment Conversion 850 Knoppen 3 Kungsholmen 1994 Cooperative apartment Conversion 23 Rentals Rinkeby Rinkeby 1994 Cooperative apartment Conversion 650 Pagen 1 Kungsholmen 1993–1994 Cooperative apartment Conversion 29 Loket 31 Kungsholmen 1993 Cooperative apartment Conversion 42 1) Rosteriet and Twin House were completed during 2016 and are in the occupation phase as of 31 December 2016.

Invitation to acquire shares in SSM Holding AB (publ) 47 Business overview

Selection of completed projects Rosteriet Rosteriet consists of a building with a total living area of 16,724 square meters distributed across 225 cooperative apartments. The project is located in Liljeholmen at a very short distance from Liljeholmstorg and within walking distance of Hornstull. Rosteriet has been built in a densely-populated area very close to rail transport connections. The apartments come in different sizes with between one and five rooms with kitchen. Most of the apartments have one or two-rooms with kitchen. The project was acquired during the first quarter of 2011 and sales started in the third quarter of 2013. The sales target was reached during the fourth quarter of 2013 and construction started during the fourth quarter of 2014. The sales process was carried out in the tradi- tional way using paper documentation as the Company had not yet implemented its real-time IT system for digital bookings; this partially explains the long delay between sales and the start of construction. Occupation took place between April and December 2016. The project was carried out with Alecta as partner.

Kungsterrassen A building consisting of 72 cooperative apartments with a total of 3,329 square meters located in Sätra. The apartments are all either one or two-room apartments with kitchen. SSM started investing in the project from the fourth quarter of 2011. Property sales started during the fourth quarter of 2012, and the sales target was reached during the first quarter of 2013, with a subsequent construction start in the second quarter of 2013. Occupation took place during the second quarter of 2015. Kungsterrassen was nominated as Building of the Year in Stockholm in 2015, and was pointed out a good example of architectural quality at a reasonable price.

Flygplansfabriken Flygplansfabriken consists of a building with a total of 73 cooperative apartments located at Telefonplan. The total living area amounts to 2,980 square meters, with apartment sizes ranging from 29 square meters up to 69 square meters. The apartments have between one and three rooms with kitchen, of which 90 per cent are two-room apartments with a kitchen. The project was acquired during the fourth quarter of 2012. Sales started in the second quarter of 2013 and the sales target was reached during the third quarter of 2013, which also was the same quarter during which SSM started construction of the project. Occupation took place during the second quarter of 2015.

48 Invitation to acquire shares in SSM Holding AB (publ) Business overview

Mälarhöjdsparken Mälarhöjdsparken comprises two projects which were completed in 2012 and 2013–2014 respectively. Both projects are located in Fruängen and contain 71 and 85 cooperative apartments respectively. The projects were carried out as a joint venture in cooperation with the investment company Index International. Common areas which were also part of the project included a pool, a garden area and an outdoor kitchen.

ND Studios A building with 1,768 square meters of living area located in the newly-built Norra Djurgårdsstaden area. It consists of 46 cooperative one to two-room apartments with kitchen. All buildings in the area are independent, and architects have therefore been able to create a building in which each apartment has its own balcony. The project, which included an approved zoning plan, was acquired from NCC during the third quarter of 2014. SSM developed the project by increasing the number of apartments in the building. Sales started during the first quarter of 2015 and the sales target was reached in the same quarter. Construction then started during the same period. Occupation took place during the second quarter of 2016. Like many of SSM’s projects, the building was constructed with a focus on maximising space and simpli- fying everyday life for its residents. ND Studios has received an environmental certificate of level Gold.

Invitation to acquire shares in SSM Holding AB (publ) 49 Business overview

Project portfolio

This section covers SSM’s project portfolio for as of 31 December 2016. The information on the Group’s project portfolio in this section is in all material aspects based on the Company’s current assessment of the project portfolio and each project as a whole. These assessments, and the final outcome of each project, may vary according to factors both within and beyond the Company’s control, for example due to the final structure of zoning plans, decisions by authorities or development in the market, as well as the fact that several of the projects are only in the planning phase and the plans may be subject to change.

SSM’s project portfolio is located in the greater Stockholm area Material changes in the project portfolio since and comprises 24 projects and in total 5,255 apartments. Two of 31 December 2016 the projects, Twin House and Rosteriet are as of 31 December In February 2017, SSM won a land allocation competition for the 2016 completed and are currently in the occupation phase. The project Täby Park, arranged by Täby municipality. The project is project portfolio consists of approximately 83 per cent coopera- expected to comprise 270 residential units, of which 180 will be tive apartments, twelve per cent rental apartments and four per rental apartments and the rest will be cooperative apartments. cent student apartments. The start of construction is planned for 2018, with occupation during 2020. Development of SSM’s project portfolio In March 2017, SSM acquired a new project in Stockholm (number of apartments municipality. The project is expected to comprise 260 cooperative 6,000 apartments. Construction start is planned for 2018, with occupa- 5,255 tion during 2020. 5,000 4,132 4,000

3,776 3,000 2,845 1,672 2,000

859 1,000 1,479 1,287 813 0 31 Dec 31 Dec 31 Dec 2014 2015 2016 Projects in construction phase Projects in development phase

Map of projects under construction and projects under development

Completed projects

50 50 Project under development or in construction

26 28 29 Cooperative apartments 27 30 Rental apartments

Student housing

Selected completed Project under 31 projects development or in 25 32 33 construction 1. ND Studios 26. Tentafabriken 2. Sätra 27. Sollentuna Hills 34 3. Fruängen 28. Sollentuna Hills 4. Upplands Väsby1) 29. Platform West 1 5. Fruängen 30. The Loft 36 6. Telefonplan 32. Kosmopoliten 35 7. Telefonplan 33. Spånga Studios 8. Telefonplan 34. The Tube 37 38 39 9. Telefonplan 35. The Lab 10. Telefonplan 36. West Side Solna 11. Nacka, Sickla 37. Bromma Tracks 12. Nacka, Sickla 38. Bromma Tracks II 13. Nacka, Sickla 39. Bromma Sq 20 14. Telefonplan 41. Metronomen 15- 13- 15. Nacka, Sickla 42. Tellus Towers 78 18 13 46, 16. Nacka, Sickla 43. Tellus Towers 65 47 44. Tellus Lamell 6-1 40 49 17. Nacka, Sickla 18. Nacka, Sickla 45. Älvsjö Quarters 14 0 21 23 19. Västertorp 46. Turbinhallen 48 41- 43 47. Järla station 22 44 20. Gröndal 3 21. Midsommarkransen 48. T17B 2 5 45 45 19 22. Västertorp 49. Elverkshuset 23. Midsommarkransen 50. Täby Park3) 24. Jordbro 25. Rinkeby 31. Twin House2) 24 40. Rosteriet2) 1) Not on map 2) Construction of Rosteriet and Twin House completed. Currently in handover phase 3) SSM was awarded the project in February 2017 (consisting of both cooperative apartments and rental apartments)

50 Invitation to acquire shares in SSM Holding AB (publ) Business overview

Overview of projects under construction and projects under development Phase

Land Land devel- Hand- Estimated allocation opment over or total Estimated Estimated agreement agree- property No. of living construc- time for with ment in Develop- Apartment Divestment Construc- manage- Project Location Ownership Type apartments area tion start occupation municipality place Investment ment Planning sales to HA tion ment

Projects in construction phase

31. Twin House Bromma 100% Cooperative 30 ~12,100 2015 2016 Yes

40. Rosteriet* Liljeholmen JV (Alecta): 50% Cooperative 225 ~16,700 2013 2016 Yes

37. Bromma Tracks Bromma 100% Cooperative 249 ~12,100 2014 2017 Yes

35. The Lab* Solna JV (Alecta): 50% Cooperative 266 ~14,400 2014 2017 Yes

36. West Side Solna* Solna JV (Alecta): 50% Cooperative 266 ~12,500 2015 2018 Yes

46. Turbinhallen* Nacka JV (Profi): 50% Cooperative 205 ~12,800 2015 2018 Yes

34. The Tube Sundbyberg 100% Cooperative 50 ~2,300 2016 2017 Yes

41. Metronomen Telefonplan 100% Cooperative 188 ~7,600 2016 2019 Yes

Total 1,479 ~90,500

Projects in development phase

32. Kosmopoliten* Kista JV (Lindbäcks1)): 50% Cooperative ~200 ~10,000 2017 2019 Yes No

26. Tentafabriken Sollentuna 100% Student2) ~80 ~1,800 2017 2018 No

42. Tellus Towers 78 Telefonplan 100% Cooperative ~700 ~29,000 2018 2021 Yes No

43. Tellus Towers 58 Telefonplan 100% Cooperative ~580 ~22,000 2018 2021 Yes No

44. Tellus Lamell Telefonplan 100% Rental ~20 ~1,500 2018 2021 Yes No

30. The Loft* Täby JV (Student Hill): 50% Student ~120 ~2,300 2017 2018 No

27. Sollentuna Hills Sollentuna 100% Cooperative ~40 ~2,600 2017 2019 No

28. Sollentuna Hills Sollentuna 100% Rental ~180 ~10,500 2017 2019 No

29. Platform West Täby 100% Cooperative ~100 ~4,800 2017 2019 Yes No

38. Bromma Tracks II Bromma 100% Cooperative ~90 ~4,200 2018 2020 No

45. Älvsjö Quarters Älvsjö 100% Rental ~450 ~25,000 2019 2021 No

47. Järla Station Nacka 100% Cooperative ~400 ~17,000 2017 2020 No

33. Spånga Studios Spånga 100% Cooperative ~80 ~3,300 2018 2019 No

39. Bromma Sq* Bromma JV (Profi): 50% Cooperative ~400 ~19,000 2019 2021 No

48. T17B Telefonplan 100% Cooperative ~60 ~2,700 2019 2020 No

49. Elverkshuset Nacka Stad JV (LIBU Invest): 50% Cooperative ~350 ~19,000 2019 2021 No

Total 3,776 ~174,700

Projects acquired after 31 Dec 2016

50. Täby Park Täby 100% Cooperative ~90 ~9,000 2018 2020 No

50. Täby Park Täby 100% Rental ~180 ~5,000 2018 2020 No

New project Stockholm 100% Cooperative ~260 ~24,0003) 2018 2020 No municipality

Total 530 ~38,000

* Joint venture projects incl. external share. The terms of a JV project are a function of distribution of risk, profit, ownership and financing. 1) Planned joint venture project. 2) Student cooperative apartments. 3) Refers to square meters, gross floor area.

Invitation to acquire shares in SSM Holding AB (publ) 51 Business overview

Selection of projects under construction This section describes a selection of projects under construction. A project is considered to be under construction once it is in production. Bromma Tracks Bromma Tracks is located in Bromma, close to both the inner city and Bromma airport. SSM acquired the project from Granen Exploateringsfastigheter Holding I AB during the second quarter of 2014 once the zoning plan had been approved, and thereafter the concept was developed. The project consists of five buildings with a total living area of 12.1 thousand square meters distributed across 249 cooperative apartments. The apartments range from one to four rooms, of which the majority have two rooms. In addition to the common areas built at the centre of the estate, each apartment is also equipped with a private balcony or an outdoor area. Bromma Tracks was SSM’s first project for which the Com- pany fully used its new digital sales process; for more information, see section “Business overview”. The sales start, the reaching of the sales targets, as well as the construction start took place during the fourth quarter of 2014. Occupation is planned for 2017. The project is wholly owned by SSM.

Turbinhallen Turbinhallen is located next to Järla sjö in Nacka, close to Saltsjöbanan (a suburban rail system) with which Södermalm in Stockholm is ten minutes of traveling time away. The area around Järla sjö was developed at the end of the 1990s and has become increasingly popular in recent years, mainly due to its prox- imity to nature, services and shopping in Sickla, and due to the communications. The project includes a conversion of Gustaf de Laval’s 12.8 thousand square-metre factory from the beginning of last century into living space, which gives the planned 205 cooperative apartments a modern, industrial feel. The apartments vary between one and five rooms, and a typical apartment is 49 square meters distributed over two rooms and kitchen. Turbin- hallen is also designed to accommodate a primary school to be run by Academedia. The project is unique for SSM, since it consists of part new construction, part conversion. The project is being carried out in conjunction with Profi Fastigheter and was acquired during the third quarter of 2014. The sales launch took place during the third quarter of 2015 and the sales target was achieved in the fourth quarter of the same year, coinciding with the construction start. Occupation is planned for 2018.

Metronomen Metronomen is located at Telefonplan, an area that has recently seen a very high pace of development. The project consists of a building with 7.6 thousand square meters of living area and 700 square meters of commercial space. In total, the building will consist of 188 cooperative apartments. These apartments are smaller in size, with a focus on one and two-room apartments. The building will have a common roof terrace, and the majority of the apartments will also be equipped with a private balcony or outdoor section. SSM invested in Metronomen in 2001. Sales started in the second quarter of 2016, and construction started during the fourth quarter of 2016. The land was originally intended for the Tellus Towers project. Occupation is planned for 2019. For further information, see section “Project portfolio – Selection of properties under development”.

52 Invitation to acquire shares in SSM Holding AB (publ) Business overview

Selection of projects under development The list below sets out the projects in SSM’s project portfolio which are under development.

Tellus Towers Tellus Towers is planned to be among the tallest residential buildings in Northern Europe consisting of two skyscrapers, 78 and 58 stories high, with a total of almost 1.3 thousand units. The buildings, which also include a seven storey low-rise apartment building, were designed by the award-winning architect Gert Wingårdh. In total, the project will consist of 52.5 thousand square meters distributed across the three buildings. 95 per cent of the apartments are designed for one to two persons, with a strong focus on functionality and an efficient planning. The apartments are designed according to Chinese architect Gary Chang’s concept for maximising and using less space. In addition to shops, cafés and grocery stores, the skyscrapers will contain a restaurant, a sky bar, a spa and a swimming pool at the top. The Tellus Towers project is located at Telefonplan right next to the subway station. The sales start is preliminary expected to take place in 2017, with occupation scheduled from 2021 and onwards. SSM obtained an early land reservation in the first quarter of 2016. The acquisition is conditional upon the zoning plan becoming approved and legally binding, which is scheduled to take place in 2017. Initially, the project plans consisted of a 240 meter tall building comprising 660 apartments distributed over 75 storeys. However, the Swedish Armed Forces halted the project in 2015. Throughout 2016, SSM has worked in conjunction with the city of Stockholm to draw up a new plan for the project as described in the paragraph above. In addition to the changes to the planned buildings, the location of the project was also altered with a few hundred meters, making it more centrally located at Telefonplan. The Company deems it very that likely the project will be developed in conjunction with external partners in terms of part ownership and financing, and pending negotiations with several potential parties is currently on-going.

Täby Platform West The project is located in western Roslag Näsby close to the Roslagsbanan (a suburban rail system) and the plans include 4.8 thousand square meters of living area distributed over approximately 100 cooperative apartments. The apartments have one to three rooms, which of the most are one or two-room apartments. SSM invested in the project during the fourth quarter of 2014 after winning a land allocation competition arranged by the municipality. The sales launch is planned for 2017, and construction is scheduled to start the same year. Occupation is preliminary planned for 2019.

Invitation to acquire shares in SSM Holding AB (publ) 53 Business overview

The Loft The project is located in Roslags Näsby in Täby next to Danderyd and close to both the Roslagsbanan and bus stops, and only 400 meters walk to the Roslags Näsby centre. The building, offering 2.3 thousand square meters of living space, is to be converted into 120 student apartments (rental apartments), of which nearly all will be one-room apartments. SSM invested in the project during the fourth quarter of 2014 after purchasing the land from HSB. The sales launch is planned for 2017, and construction is scheduled to start the same year. Occupation is planned for 2018. The project is being carried out in conjunction with Student Hill.

Kosmopoliten Kosmopoliten is in the middle of the newly-built Kista Äng area where 1,550 new residential units are planned to be built. The building will be a total of 10.8 thousand square meters distributed over approximately 200 cooperative apartments and five commercial premises on the ground floor. The units are space efficient one to two room apartments of between 35 and 55 square meters. The building design includes plans for various common areas, a pool and an orangery. SSM invested in the project in the second quarter of 2014 after receiving a direct land allocation from the municipality. The construction start and sales launch are planned for the turn of March/April 2017 with occupation planned preliminary for 2019. Lindbäcks Bygg is a partner in the project. The Partnership is currently subject to negotiations between the parties. Projects acquired after 31 December 2016 The list below sets out the projects in SSM’s project portfolio which have been acquired after 31 December 2016.

Täby Park In February 2017 it was made official that SSM was one of the winners of Täby municipality’s land allocation competition regarding the new district Täby Park. The land allocation area in question consists of three blocks with in total 450 residential units and premises on the ground floors. SSM has been entrusted with the task to develop and construct 270 of these residential units, of which 180 will be rental apartments and 90 cooperative apartments. Construction start is planned for 2018 with occupation during 2020. The new district Täby Park is attractively located 400 meters from Galoppfältet, a station of Roslagsbanan. The district will be designed in a manner where the architecture will vary as regards the heights of the buildings and the selections of materials, which will alternate between wood, brick and plaster. The area also comprises several common spaces for sponta- neous day-to-day meetings. The district is planned to provide a minimum of than six thousand residential units and between four and five thousand workplaces.

New project in Stockholm municipality In March 2017 it was made official that SSM has acquired a new project in Stockholm municipality. The project in question, which SSM will carry out on its own, comprises 24,000 square meter gross floor area which SSM intends to develop into approximately 260 cooperative apartments. Construction start is planned for 2018 with occupation during 2020. The property of the project is attractively located near good communications, such as subway, commuter train and bus.

54 Invitation to acquire shares in SSM Holding AB (publ) Business overview

Sustainability Partners and subcontractors SSM works actively to contribute to a sustainable society. The SSM assumes the responsibility for all the stages in the construc- active environmental work carried out by the Group is primarily tion, which means high demands are placed on all partners and governed by the Company’s sustainability policy which includes subcontractors. SSM requires that only environmentally approved guidelines for business ethics and management of environmental products which comply with the Basta system are used and that issues as an integral part of the business. The sustainability routines regarding, inter alia, documentation and disposal are policy covers all of the Company’s employees and contractors. applied. SSM creates sustainable housing with the lowest possible environmental footprint by constructing taller buildings, reusing Handling of waste and storm water industrial environments, developing smart sustainable solutions SSM enables sorting of waste food as standard in all projects. In and keeping environmental aspects present of all stages of pro- some projects, each apartment has been equipped with a food duction. The Group’s sustainability work also includes creation of waste disposer to further reduce the need for waste disposal. In new pleasant living environments where residents can feel safe. order to minimise collections to the area, the possibility of having a vacuum waste collection system is investigated in all projects. Clear environmental policy Green residential areas create comfort and therefore SSM adds SSM constantly strives towards surpassing the requirements plenty of vegetation, and saves large trees if possible. Environ- of environmental legislation, standards and recommendations. mentally friendly storm water solutions that the group use in order When selecting the right construction method, SSM always elects to prevent overloading of the municipal storm water networks, the option with the lowest environmental impact, which still meets include green roofs made from sedum. Detention basins are also the high quality demands. The Group takes the environmental used in order to even out the flow. impact into account when purchasing goods and services, for example by using environmentally declared materials and Pleasant living environment construction products, and by striving to minimise the amount of Life and movement create a comfortable living environment for residual products and waste. residents. To promote this, SSM creates meeting places for active social interaction both in their projects and in the surrounding Choice of materials and environmentally safe construction urban area. Pools and roof terraces are examples of common Early on in the construction process, SSM plans an efficient use areas where residents can come together. SSM promotes the of building materials and an efficient infrastructure. The choice of use of bicycle by residents as a basic means transport, inter alia materials for the buildings is made according to clear priorities in by building their project in strategic positions with good commu- order to achieve as high a degree of recyclability as possible, and nications. In 2015, the Group increased the number of bicycle soil and rock masses from the project area are reused when pos- spaces to 2.5 per apartment in selected projects. Furthermore, sible. In order to ensure that the materials used for and in SSM’s SSM works actively towards promoting car and bicycle pools with residential units do not contain any hazardous substances, the environmentally friendly cars as a complement to public trans- Company follows the Basta system. To prevent harmful damp, port. All projects launched in 2015 will be equipped with car pools damp proofing is carried out at an early stage of the construc- and charging points for electric cars. To provide a good sound tion process and then continues throughout the project work environment, SSM requires outside doors to have good sound and construction. Where possible, SSM uses natural and other isolation. By placing post boxes in the entrance hall instead of sound materials. Concrete, steel, tiles and clinkers and wood in using letterboxes in doors, the noise from staircases can be floors are examples of materials that contribute to a healthy living reduced. This also increases the sense of security in the building. environment. All SSM’s workplaces apply effective waste sorting with a target of zero landfill. Thanks to the extended soil and rock Environmental classification mass sorting and processing schemes at construction sites, SSM SSM’s goal is that its residential units shall be sustainable has managed to reduce the need for transport. The residential and have a low environmental impact. The Company strives units that are built are designed to recover heat from vented air. for that all new buildings shall meet the requirements for the The heat is used for heating and hot water in the residential unit. Miljöbyggnad Silver certification, which includes requirements These systems are smart and help keep down the building’s covering very efficient usage of energy, sound choices of mate- overall energy consumption. rials, a quiet indoor environment, good ventilation and good damp proofing. This is an effective certification protocol for environmentally sustainable buildings. The structured methodology involved in the environmental classification system facilitates the handling of with any questions arising throughout the process.

Invitation to acquire shares in SSM Holding AB (publ) 55 Selected historical financial information in brief

Selected historical financial information in brief

The selected financial information presented below has been based on SSM’s financial statements for the financial years 2016, 2015 and 2014. SSM’s financial reports have been prepared in accordance with IFRS, (International Financial Reporting Standards) as adopted by the European Union, RFR 1 “Supplementary Accounting Rules for Groups” and the Swedish Annual Accounts Act (Sw. årsredovisningslagen (1995:1554)). The financial information for the periods 2016, 2015 and 2014 has been derived from SSM’s financial statements for the financial years 2016, 2015 and 2014. In 2015 the Group changed principles for classification of investment property. The reclassification means that all investment property has been reclassified as project property and that previous adjustments of fair value and costs incurred on the property instead has been activated. More information about the effects of the reclassification may be found in the Company’s financial report from the financial year 2015. Unless otherwise stated herein, no financial information in this Prospectus has been audited or reviewed by the Company’s auditor. The information presented below should be read in conjunction with sections “Operational and financial review”, “Capitalisation, indebtedness and other financial information” and the Company’s financial reports which can be found in the section “Financial reports”. The figures included in this Prospectus have, in some cases, been rounded off. Consequently, some tables do not add up correctly.

The Group’s statement of comprehensive income Figure in SEK m 2016 2015 2014 Net sales 649.9 351.1 411.0 Expenses for production and management –502.8 –299.0 –353.5 Gross profit 147.1 52.1 57.5

Sales and administrative expenses –36.4 –27.1 –32.1 Profit participations in joint ventures 76.4 76.9 37.5 Operating profit 187.1 101.9 62.8

Financial income 11.9 10.0 1.2 Financial expenses –49.5 –19.2 –24.0 Net financial items –37.6 –9.2 –22.8

Profit before tax 149.5 92.8 40.0

Tax –4.8 2.8 –5.0 Profit for the period 144.7 95.6 35.1

Profit attributable to The shareholder of the parent company 144.7 95.5 35.0 Non-controlling interest 0.0 0.1 0.1 144.7 95.6 35.1

There are no items for the Group reported as other comprehensive income, so the total comprehensive income is the same as the profit for the period.

56 Invitation to acquire shares in SSM Holding AB (publ) Selected historical financial information in brief

The Group’s statement of financial position Figure in SEK m 2016-12-31 2015-12-31 2014-12-31 Assets

Fixed assets Intangible assets Software 1.4 1.5 – Total intangible assets 1.4 1.5 –

Tangible assets Machinery and equipment 0.4 0.3 0.6 Total tangible assets 0.4 0.3 0.6

Financial assets Holdings in joint ventures 187.1 130.2 53.4 Receivables from joint ventures 69.1 22.1 6.5 Other non-current receivables 203.8 71.0 96.8 Total financial assets 460.0 223.3 156.7

Deferred tax receivables – 5.2 5.2

Total fixed assets 461.9 230.3 162.5

Current assets Inventories Project properties 208.8 115.0 53.9 Total inventories 208.8 115.0 53.9

Total assets 1,035.8 544.4 400.4

Invitation to acquire shares in SSM Holding AB (publ) 57 Selected historical financial information in brief

Figure in SEK m 2016-12-31 2015-12-31 2014-12-31 Equity and liabilities

Equity Share capital 30.1 30.1 30.1 Profit brought forward including profit for the year 271.2 143.3 50.3 Equity attributable to the shareholder of the parent company 301.3 173.4 80.4

Non-controlling interest 0.0 0.2 0.2 Total equity 301.3 173.5 80.6

Liabilities Non-current liabilities Bond loans 390.7 196.8 195.2 Liabilities to credit institutions 132.8 99.5 – Other non-current liabilities 49.6 – – Provisions 14.4 5.0 – Deferred tax liabilities 1.1 1.7 4.7 Total non-current liabilities 588.6 303.1 199.9

Total equity and liabilities 1,035.8 544.4 400.4

58 Invitation to acquire shares in SSM Holding AB (publ) Selected historical financial information in brief

The Group’s cash flow statement Figure in SEK m 2016 2015 2014 Cash flow from current activities Operating profit before financial expenses 187.1 101.9 62.8 Items not affecting liquidity 2.4 1.4 7.1 Recognised profits in joint ventures –76.4 –76.9 –37.5 Received dividend from joint ventures 62.0 – – Received interest 2.1 10.0 1.2 Paid interest –30.8 –19.2 –22.0 Paid income taxes –2.0 –0.7 0.0 Cash flow before changes in operating capital 144.4 16.6 11.7

Cash flow from changes in operating capital Decrease/increase in property projects –195.3 –12.1 28.1 Decrease/increase in accounts receivables –27.7 –1.2 2.0 Decrease/increase in other current receivables –25.3 –44.1 –70.4 Decrease/increase in accounts payable – trade 14.8 29.4 5.7 Decrease/increase in current liabilities 69.7 –3.9 –6.0 Total change in operating capital –163.8 –31.8 –40.6

Cash flow from current activities –19.4 –15.2 –28.9

Cash flow from investing activities Investments in intangible assets –1.0 –2.2 – Investments in tangible assets –0.4 0.0 –0.4 Investments in financial assets –221.5 –46.8 –91.3 Divestment of intangible assets – – 16.4 Divestment of tangible assets – – 0.1 Decrease of financial assets 9.0 – 5.4 Cash flow from investing activities –213.9 –49.1 –69.9

Decrease/increase in liquid funds 11.2 24.0 –88.2 Liquid funds, opening balance 52.7 28.7 116.8 Liquid funds at the end of the period 63.9 52.7 28.7

Invitation to acquire shares in SSM Holding AB (publ) 59 Selected historical financial information in brief

Key performance indicators The tables below contain certain financial and operational key performance indicators which have not been defined in accordance with IFRS. The Company considers these key performance indicators to provide valuable information to investors, as they in combination with (but not instead of) other key performance indicators, enable evaluation of actual trends in a valuable way. However, these key performance indicators shall not be considered a substitute for posts which are measured in accordance with IFRS. As all companies do not always measure their key performance indicators in the same manner, there is no guarantee that the presentation herein is comparable with other companies’ key performance indicators with the same name. Accordingly, please note that the following tables and calculations are unaudited and are not IFRS based, unless otherwise stated.

Key performance indicators not defined in IFRS Net sales, joint ventures 748.4 844.1 732.9 Net sales including joint ventures 1,398.3 1,195.2 1,143.9 Gross profit 147.1 52.1 57.5 Gross margin (%) 22.6 14.8 14.0 Operating profit 187.1 101.9 62.8 Operating margin (%) 28.8 29.0 15.3 Dividend per share (SEK) 0.6 0.1 0.1 Equity per share (SEK) 10.0 5.8 2.7 Interest coverage ratio (x) 4.0 5.8 2.7 Liquidity ratio (x) 2.5 2.9 1.5 Debt/equity ratio (%) 29.1 31.9 20.1 Return on equity (%) 61.0 75.2 53.5 Number of outstanding shares1) 30,100,000 30,100,000 30,100,000

Number of building rights, closing balance 5,255 2,337 1,752 Number of apartments under construction, closing balance 1,479 1,287 813 Number of building rights in planning phase, closing balance 3,776 1,050 939 1) At an extraordinary general meeting held 16 December 2016, it was resolved to carry out a share split of 100:1. The share split was registered with the Swedish Companies Registration Office 23 January 2017. After the share split, the total number of shares amount to 30,100,000.

60 Invitation to acquire shares in SSM Holding AB (publ) Selected historical financial information in brief

Definitions of key performance indicators defined according to IFRS Net sales Net sales for the Group.

Profit for the period Profit for the period after taxes.

Earnings per share (SEK) Profit for the period after taxes compared to the average number of outstanding shares.

Definitions of key performance indicators not defined according to IFRS

Key performance indicator Definition Purpose

Net sales joint ventures Total net sales for SSM’s joint ventures. The Company considers the key performance indicator to be facilitating for investors that want to assess the net sales for SSM’s joint ventures.

Net sales including joint Net sales for the Group including net sales for joint The Company considers the key performance indicator ventures ventures. to be facilitating for investors that want to assess the total net sales for SSM’s projects.

SEK m 2016 2015 2014 Net sales 649.9 351.1 411.0 Net sales, joint ventures 748.4 844.1 732.9 Net sales including joint ventures 1,398.3 1,195.2 1,143.9

Gross profit Net sales minus expenses for production and The Company considers the key performance indicator to management. be facilitating for investors that want to assess the profitability of the projects which SSM carries out on its own.

Gross margin (%) Gross profit divided by net sales for the period. The key performance indicator is a significant complement to gross profit, which only shows changes in absolute figures, whereas the gross margin also shows how much value the changes create.

Operating profit Earnings before financial items and taxes. The Company considers the key performance indicator to be facilitating for investors that want to assess the profit generated from the operating activities, including joint ventures.

Operating margin (%) Operating income as a percentage of net sales for the The key performance indicator is a significant comple- period. ment to operating profit, which only shows changes in absolute figures, whereas the operating margin also shows how much value the changes create.

Dividend per share (SEK) Dividend divided by the number of outstanding shares at The Company considers this key performance indicator the balance sheet date, with adjustments for executed to be of interest as the Company has a dividend target, share split. adopted by the board of directors.

Equity per share (SEK) Equity in relation to the number of outstanding shares at The Company considers the key performance indicator to the balance sheet date, with adjustments for executed be facilitating for investors that want to assess historical share split. capital attributable to the shareholders.

Interest coverage ratio (x) Profit after financial income in relation to financial costs The Company considers the key performance indicator for the period. to be facilitating for investors that want to assess the Company’s ability to pay for its financial costs.

Figure in SEK m unless otherwise stated 2016 2015 2014 Operating profit 187.1 101.9 62.8 Financial income 11.9 10.0 1.2 Profit after financial income 198.9 112.0 64.0

Financial costs 49.5 –19.2 –24.0 Interest coverage ratio (x) 4.0 5.8 2.7

Invitation to acquire shares in SSM Holding AB (publ) 61 Selected historical financial information in brief

Key performance indicator Definition Purpose

Liquidity ratio (x) Current assets not including inventories in relation to The Company considers the key performance indicator current liabilities at the balance sheet date. to be facilitating for investors that want to assess the Company’s liquidity.

Figure in SEK m unless otherwise stated 2016 2015 2014 Total current assets 574.0 314.1 237.9 Total inventories 208.8 115.0 53.9 Total current assets, excluding inventories 365.2 199.1 184.0

Total current liabilities 146.0 67.8 119.8 Liquidity ratio (x) 2.5 2.9 1.5

Debt/equity ratio (%) Equity in relation to the total assets at the balance sheet The key performance indicator shows the proportion date. between total assets and equity, and has been included to enable investors to assess the Company’s capital structure.

Return on equity (%) Profit after tax divided by average equity for the period. The Company considers the key performance indicator to be facilitating for investors that want to assess the Company’s ability to generate return on the equity that the shareholders has put at the Company’s disposal.

Number of outstanding Number of outstanding shares at the balance sheet The Company considers the key performance indicator shares date, adjusted for executed share split. to be facilitating for investors that want to assess the Company’s creation of value per share.

62 Invitation to acquire shares in SSM Holding AB (publ) Selected historical financial information in brief

Quarterly information The Company considers the quarterly information below to be of value for investors, because it enables a better evaluation of the Company’s performance over time. Furthermore, financial development is, in the Company’s opinion, best analysed over a rolling twelve month period, as major differences may occur between quarters due the nature of the project business and the gradual profit recognition method. The financial information in the tables below has been derived from the Group’s internal accounting and reporting system, and has not been audited or reviewed by the Group’s auditor, except for the periods 1 July–30 September 2016 and 1 July–30 September 2015, which has been derived from the Group’s reviewed quarterly report for the period 1 January–30 September 2016.

Financial quarterly information SEK m unless otherwise Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 stated 2016 2016 2016 2016 2015 2015 2015 2015 2014 2014 2014 2014 Net sales 257.2 189.7 130.1 72.9 75.0 40.6 67.3 168.2 203.2 23.0 79.8 104.9 Net sales, joint ventures 252.8 198.8 151.9 144.9 583.9 91.2 70.3 98.7 137.9 304.8 132.2 157.9 Net sales including joint ventures 510.0 388.5 282.0 217.8 658.9 131.8 137.6 266.9 341.1 327.9 212.0 262.8 Gross profit 58.2 53.4 23.0 12.5 –4.1 4.9 24.7 26.7 26.6 2.2 15.7 13.0 Gross margin (%) 22.6 28.1 17.6 17.2 –5.5 12.1 36.7 15.9 13.1 9.6 19.6 12.4 Operating profit 61.7 63.1 33.7 28.5 41.9 9.1 20.3 30.6 30.0 6.5 16.7 9.6 Operating margin (%) 24.0 33.3 25.9 39.1 55.9 22.5 30.2 18.2 14.8 28.1 20.9 9.2 Earnings for the period 50.7 45.6 23.4 25.0 41.4 10.6 16.4 27.2 19.5 5.3 3.4 6.9 Bond loans 390.7 390.4 382.3 197.2 196.8 196.4 196.0 195.6 195.2 194.8 194.4 194.0 Liabilities to credit institutions 132.8 99.7 99.6 144.6 99.5 50.0 12.2 72.1 71.0 246.1 213.5 193.7 Equity, opening balance 249.0 215.4 195.9 173.5 132.1 121.6 107.8 80.6 62.2 56.9 57.4 50.5 Equity, closing balance 301.3 249.0 215.4 195.9 173.5 132.1 121.6 107.8 80.6 62.2 56.9 57.4 Total assets 1,035.8 836.6 742.1 617.8 544.4 421.0 384.8 430.9 400.4 532.1 507.9 512.6 Debt/equity ratio (%) 29.1 29.8 29.0 31.7 31.9 31.4 31.6 25.0 20.1 11.7 11.2 11.2

Rolling 12 months Net sales 649.9 467.7 318.6 255.8 351.1 479.3 461.8 474.3 411.0 Net sales, joint ventures 748.4 1,079.5 971.9 890.4 844.1 398.1 611.7 673.6 732.9 Net sales including joint ventures 1,398.3 1,547.2 1,290.5 1,146.1 1,195.2 877.4 1,073.5 1,147.9 1,143.9 Gross profit 147.1 84.7 36.2 37.9 52.1 82.9 80.2 71.2 57.5 Gross margin (%) 22.6 18.1 11.4 14.8 14.8 17.3 17.4 15.0 14.0 Operating profit 187.1 167.3 113.3 99.9 101.9 90.0 87.4 83.8 62.8 Operating margin (%) 28.8 35.8 35.6 39.1 29.0 18.8 18.9 17.7 15.3 Earnings for the period 144.7 135.5 100.4 93.3 95.6 73.6 68.4 55.4 35.1 Equity, opening balance 173.5 132.1 121.6 107.8 80.6 62.2 56.9 57.4 50.5 Equity, closing balance 301.3 249.0 215.4 195.9 173.5 132.1 121.6 107.8 80.6 Equity, average 237.4 190.6 168.5 151.9 127.1 97.2 89.2 82.6 65.5 Return on equity (%) 61.0 71.1 59.6 61.5 75.2 75.8 76.6 67.1 53.5

Invitation to acquire shares in SSM Holding AB (publ) 63 Selected historical financial information in brief

Operational quarterly information Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2016 2016 2016 2016 2015 2015 2015 2015 2014 2014 2014 2014 Number of apartments under construction, opening balance 1,479 1,337 1,287 1,287 786 786 859 813 636 370 455 455 Number of construction started apartments – 188 50 – 501 – – 46 249 266 – – Number of apartments completed – 46 – – – – 73 – 72 – 85 – Number of apartments under construction, closing balance 1,479 1,479 1,337 1,287 1,287 786 786 859 813 636 370 455

Number of building rights, opening balance 4,975 4,928 4,132 2,337 2,048 1,844 1,917 1,752 1,186 1,186 1,271 1,022 Number of acquired building rights 350 – 800 1,801 297 56 – 160 638 – – 249 Changes in existing portfolio –70 93 –4 –6 –8 148 – 5 – – – – Number of apartments completed – 46 – – – – 73 – 72 – 85 – Number of building rights, closing balance 5,255 4,975 4,928 4,132 2,337 2,048 1,844 1,917 1,752 1,186 1,186 1,271

Number of apartments sold, accumulated, opening balance 1,390 1,310 1,269 1,249 786 786 856 773 585 317 348 230 Number of apartments sold 37 126 41 20 463 – 3 83 260 268 54 118 Number of apartments completed – 46 – – – – 73 – 72 – 85 – Number of apartments sold, accumulated, closing balance 1,427 1,390 1,310 1,269 1,249 786 786 856 773 585 317 348

Number of apartments under construction, closing balance 1,479 1,479 1,337 1,287 1,287 786 786 859 813 636 370 455 Number of apartments sold, accumulated, closing balance 1,427 1,390 1,310 1,269 1,249 786 786 856 773 585 317 348 Percentage of sold apartments under construction, closing balance 96.5 % 94.0 % 98.0 % 98.6 % 97.0 % 100.0 % 100.0 % 99.7 % 95.1 % 92.0 % 85.7 % 76.5 %

Number of building rights, closing balance 5,225 4,975 4,928 4,132 2,337 2,048 1,844 1,917 1,752 1,186 1,186 1,271 Number of apartments under construction, closing balance 1,479 1,479 1,337 1,287 1,287 786 786 859 813 636 370 455 Number of building rights in planning phase, closing balance 3,776 3,496 3,591 2,845 1,050 1,262 1,058 1,058 939 550 816 816

64 Invitation to acquire shares in SSM Holding AB (publ) Operational and financial review

Operational and financial review

The aim of the operational and financial review in this section is to facilitate the understanding and the assessment of trends and factors which affect SSM’s earnings and financial position. The section below should be read in conjunction with sections “Selected historical financial information in brief”, “Capitalisation, indebtedness and other financial information” and “Financial reports”. The comments on the financial development below are based on the historical financial information for the financial years 2016, 2015 and 2014.

Overview Access to acquisition targets SSM is the leading residential property developer in its niche, SSM is continually working to identify and evaluate new project with operations in the Stockholm region. Based on a vision of development opportunities and is highly dependent on access to a housing market with space for as many people as possible, acquisition targets. As the Company is selective and follows an SSM develops value-for-money, highly functional and cleverly established investment strategy, it is important for the Company designed residential units with contemporary and attractive to have access to as many potential targets as possible. Acquisi- common areas, near public transport, just outside the city centre, tions may take place from both private owners and municipalities. for the urbanites of tomorrow: a customer group that comprises SSM actively works to obtain direct land allocations on building households with one or two individuals aged 20–44, who would rights from municipalities and also participates in competitions like to make the most of everything that the city has to offer and advertised by municipalities. who want to prioritise more in life than just accommodation. Project costs Factors affecting financial performance Increased project costs can have a direct impact on the Group’s SSM’s financial results have been affected, and are likely to be profit. Project costs include, among other things, costs attribut- affected in the future, by a number of factors, some of which are able to personnel, suppliers and materials. SSM uses subcon- outside the Company’s control. This section includes the key fac- tractors to carry out and complete projects. In order to spread tors that SSM believes have affected the Group’s operating profit risk, SSM uses up to 20 different subcontractors in a typical and cash flow over the period covered by the historical financial project. The Group procures all contracts with subcontractors data in the Prospectus and that it believes will continue to do so in itself through its purchasing department. the future. The list below sets out the factors that SSM considers to have the greatest impact on its financial performance: Sale prices • Macroeconomic factors and housing demand. Determining the sale price of the residential units that SSM • Access to acquisition targets. develops is a key part of the Group’s work. The Company has a • Project costs. good understanding of its intended target group before the start • Sale prices. of the project phase and takes active steps to meet customer • Partners. preferences and needs throughout the project phase in order to ensure that its residential units meet customer expectations with Macroeconomic factors and housing demand regard to quality and functionality. The Group is dependent on a functioning secondary market for its residential units, which is significantly affected by overall demand Partners for housing. This demand is, among other things, affected by a To achieve the Company’s target of one thousand construction number of macroeconomic factors. These factors include demo- starts in 2017, and a gradual increase to 1.8 thousand construc- graphic changes such as population increase and urbanisation, tion starts from 2021, it remains important for SSM to maintain interest rate levels and changes in disposable income. For further current and develop new partnerships with strategic partners. information about macroeconomic factors, see section “Market SSM offers project development expertise to partners that want to overview”. In addition, the Group is dependent on a number of invest in residential property development projects. This expertise factors affecting the market for the construction of new residential is provided in exchange for financial strength or access to project properties, such as decisions from authorities and other political properties with good return potential and distribution of risk and measures affecting new construction. profit.

Invitation to acquire shares in SSM Holding AB (publ) 65 Operational and financial review

Important estimates and assessments Accumulated profit in SSM’s projects starts to be recognised Gradual profit recognition method in projects once four criteria have been met: SSM applies the gradual profit recognition method for profit 1. The bank’s sales rate requirement has been achieved (gener- recognition in its projects. A fundamental condition for using the ally 60 to 80 per cent of residential units). gradual profit recognition method is the ability to reliably establish 2. A construction contract has been signed. project profits and project costs. Such reliability is based in part 3. The project has been sold to a third party, usually a housing on adherence to SSM’s project management systems and the association. project management team having the necessary skills. The 4. Where applicable, the third party has obtained bank financing. assessment of project revenues and project costs is based on a number of estimates and assessments that depend on the project SSM calculates accumulated profit as the factor of a project’s management’s experience and knowledge of project manage- estimated profit, its rate of completion and sales rate, as illus- ment, training and previous management of projects. The final trated below. Estimated profit refers to SSM’s estimate of the pro- outcome may differ from profits accumulated using the gradual ject’s total profit and corresponds to the outcome of the project’s profit recognition method. realisable value, calculated as the housing association members’ deposits plus the housing association’s liabilities less the project’s total estimated costs. The rate of completion is determined based on costs incurred in relation to the project’s total estimated cost. The sales rate is calculated as the percentage of deposits of the project’s total deposits sold through binding pre-agreements.

Assumed profit Completion rate Sales rate Accumulated profit

The result from the sale Determined based Share of total of stock/shares in the on the incurred apartments that project company, costs in relation to have been sold i.e. property the total projected through signing of = project costs binding CA1)-owners stake incurred agreements in + Housing relation to the total association’s debt apartments – Total project costs in the project

Illustrative examples

Assumed profit Completion rate Sales rate Accumulated profit Start

100% 30% 70% 21%

100% 50% 80% 40% Project 100% 70% 90% 63%

100% 100% 100% 100%

Finish

1) CA refers to cooperative apartment

The rate of completion in SSM’s projects usually starts from 30 recognition for a project. Given a typical sales rate of 70 per cent, per cent as the land, which accounts for a large proportion of accumulated profit is generally at least 20 per cent when revenue the total cost of a project, is usually paid for upon initial profit recognition for the project starts.

66 Invitation to acquire shares in SSM Holding AB (publ) Operational and financial review

Typical project cash flows The purpose of this section is to provide the reader with a better As a result of the use of the gradual profit recognition method, understanding of the cash flows in a typical SSM project and this SSM’s cash flows differ considerably from booked revenues, is illustrated below. costs and profits in the Group’s consolidated income statement.

Apartment Divestment to Handover Investment Development Planning sales housing association Production and management

• Building rights • Project development • Approved zoning • Construction phase • The project is acquired conditional activities with the aim plan triggers closing involving own project completed and the on approved zoning to secure zoning plan of the building rights organization together apartments are handed plan and building permits acquisitions with 10–15 over to the tenants • 10% down payment • Marketing & sales • SSM finances 75% subcontractors • SSM is reimbursed at signing, remaining efforts aimed at of the acquisition with • Gradual profit for acquisition costs share at closing reaching the project’s debt and pays the recognition method for building rights, required pre-sales remaining amount triggered in P&L construction costs and Key events (typically 70%) which (15%)1) a project margin • Housing association triggers construction reimburses SSM for 75% start of construction costs

Acquisition costs of SEK 2.5m annual 200 building rights SEK 16m + 24m = 40m project development costs (30–1,300 rights) 200 building rights 200 building rights (2.0–3.0m) Construction costs of SEK 100m

SEK 0.8m investment 2 years of project SEK 0.8m investment SEK 1.0m per building cost per building right development per building right right in annual cost of 200 building rights (0.6–1.0m) (1–3 years) (0.6–1.0m) construction (0.9–1.1m) for 2 years(1.5–2.5 years) SEK 1.0m in annual construction costs

10% down payment 15% residual to SSM’s share of 2 years reach 25%1) construction costs (25%)

15% margin (10–20%) Typical financial impact Typical = SEK 60m

SEK –16m SEK –5m SEK –24m SEK –100m SEK 200m

Development phase – approx. 2 years Construction phase – approx. 2 years

1) The debt/equity ratio is typically around 60 per cent at the time of zoning plan approval. At the time when SSM has reached its typical pre-sales requirement, the Company generally has increased its debt/equity ratio to 75 per cent.

the loan-to-value ratio to 75 per cent once the sales target has In the investment phase, SSM signs an agreement to acquire a been met. project that is conditional on an approved and legally enforceable Once the sales target is met, the production phase begins zoning plan. The typical SSM project is assumed to consist of with SSM’s own project organisation managing operations 200 building rights and the current project portfolio comprises together with a number of subcontractors. The production cost projects of around 30 to 1.3 thousand apartments. SSM invests per apartment amounts to around SEK 1 million a year for the around SEK 0.8 million per building right, which corresponds to typical project. The typical project is in the production phase for a total cost of SEK 160 million in order to acquire the project. Ten around two years. Housing associations pay SSM for 75 per cent per cent of the purchase price, in this case SEK 16 million, is paid of the production cost. The remainder, corresponding to around on the date that the agreement is entered into and the remainder SEK 100 million for two years’ production of 200 building rights, is upon approval of a zoning plan. funded through SSM’s equity. Following investment, the project development phase begins, Handover to end-customers takes place once production is which leads to the sale of apartments to end-customers. Project complete. SSM receives payment covering acquisition costs, development costs of around SEK 2.5 million per year per project production costs and a project margin. The project margin, which are common in a typical project, which can often continue for is defined as a margin on the production cost of the residential two years. In accumulated terms, this represents around SEK 5 units, can vary but is usually around 10–20 per cent in a typical million in project development costs. project. The housing association pays SSM for acquisition costs Once sales have started, and usually once the approved amounting to in total SEK 40 million and production costs of SEK zoning plan has become legally binding, the project is divested 100 million, which the Group has financed with equity. In addition to a newly formed housing association. At the same time, SSM to this, the housing association also pays a project margin of 15 has to pay the remainder (90 per cent) of the purchase price of per cent. Calculated on a construction cost of SEK 1 million per the acquisition. 75 per cent of this portion is paid through bank building right per year, and for 200 building rights over two years, loans and the remainder, which not already paid as a deposit, this corresponds to a payment to SSM of SEK 60 million. SSM corresponding to SEK 24 million, is paid through equity. When the consequently receives a total of SEK 200 million from the housing zoning plan is received before the sales target is achieved, SSM association at the handover phase. can finance around 60 per cent with bank loans, but can increase

Invitation to acquire shares in SSM Holding AB (publ) 67 Operational and financial review

Key items in the income statement Key items in the statement of cash flows Net sales Project cash flow SSM’s net sales mainly comprise recognised project revenue and Where projects are operated as joint ventures, the Company revenue from performed contracting agreements. receives a positive cash flow when the Group’s lending to the joint venture company is amortised and when the joint venture com- Production and management costs pany pays dividends. Such cash flows are consequently included The Group’s production and management costs mainly comprise in the items “decrease in financial assets” and “dividends from recognised project costs for own production and management joint ventures”. and costs for performed contracts. Operating activities Sales and administrative expenses Cash flow from operating activities is mainly affected by the SSM’s sales and administrative expenses comprise costs not Group’s operating profit. It is adjusted for items not affecting directly attributable to specific projects. liquidity, which mainly comprise deductions for the profit participations joint ventures, as well as the decrease/increase in other Profit participations in joint ventures current receivables. The participation in joint ventures comprises SSM’s share in the profit from joint ventures. Joint ventures refer to companies in Investing activities which SSM, through cooperation agreements with one or more Cash flows from investing activities are mainly affected by parties, has a joint controlling interest over the governance of the investments in financial assets, which mostly comprise changes company. Holdings in joint ventures are recognised in accord- in investments in joint ventures as well as receivables from joint ance with the equity method. When applying the equity method, ventures and housing associations. the investment is initially measured at acquisition cost and the carrying amount is subsequently increased or reduced to take Financing activities account of the Group’s share of profit or loss after the acquisition Cash flows from financing activities are mainly affected by an date. increase in non-current liabilities and the amortisation of non-current liabilities. The majority of non-current liabilities are attrib- Net financial items utable to the Company’s bond loan, but the item also includes Net financial items comprise the net amount of financial revenues liabilities to credit institutions. and costs, with interest expenses mainly being attributable to the Company’s bond loan as of 2014. Comparison between the 2016 and 2015 financial years Key items in the statement of financial position Net sales Holdings in joint ventures The Group’s net sales for the period amounted to SEK 650 million Holdings in joint ventures comprise holdings in companies in (351). The increase in net sales compared with the same period which the Group, through cooperation agreements with one or the previous year was mainly due to an increased number of own more parties, has a joint controlling interest over the governance projects, with Bromma Tracks, Metronomen, ND Studios and The of the company. Tube under construction. In 2016 the first contracts were started for the housing associations Brf Turbinhallen and Brf Twin House Other non-current receivables – which are joint venture projects and thus generate sales for the Other non-current receivables mainly comprise receivables from Group. housing associations. Production and management costs Project properties The Group’s production and management costs for the period Project properties refer to properties for which project develop- was SEK –503 million (–299), and was mainly attributable to the ment is on-going. The intention for project properties is to develop Bromma Tracks, Metronomen and ND Studios projects, and the them into residential properties. This item comprises the pur- contracting agreements in Turbinhallen and Twin House. The chase prices for properties, as well as capitalised costs incurred increase compared with the same period the previous year is for project properties. ascribed to an increase in the percentage of own projects.

Liabilities to credit institutions Gross profit Liabilities to credit institutions comprise non-current or current SSM’s gross profit for the period amounted to SEK 147 million loans from credit institutions for the financing of projects. (52).

Bond loan Sales and administrative expenses Bond loan for the financing of projects. The Group’s sales and administrative expenses for the period were SEK –36 million (–27), and were mainly attributable to personnel costs. The increase compared with the same period the previous year is ascribed to higher personnel costs.

Profit participations in joint ventures The profit participations in joint ventures in 2016 amounted to SEK 76 million (77). The profit participations regard profit from the Rosteriet, The Lab, Turbinhallen, Twin House and West Side Solna projects.

68 Invitation to acquire shares in SSM Holding AB (publ) Operational and financial review

Operating profit Gross profit Operating profit for 2016 amounted to SEK 187 million (102). The SSM’s gross profit for the period amounted to SEK 52 million difference was mainly attributable to more own projects. (58).

Net financial items Sales and administrative expenses The Group’s net financial items for the period amounted to SEK The Group’s sales and administrative expenses for the period –38 million (–9). The difference was mainly attributable to higher were SEK –27 million (–32), and were mainly attributable to interest-bearing debt financing in 2016 and a one-off cost of SEK overhead costs in the form of personnel costs. The decrease 8 million for the premature repayment of the bond loan from 2013 compared with the same period the previous year was due to cost as part of refinancing measures. reductions through the increased project allocation of overhead costs. Income tax Income tax for 2016 amounted to SEK –5 million (3). Profit participations in joint ventures Profit participations in joint ventures for the period amounted to Profit for the period SEK 77 million (37). The increase was mainly attributable to the Profit for the period amounted to SEK 145 million (96). sales and construction starts of the Turbinhallen, The Lab and Twin House projects. Cash flow The Group’s cash flow from operating activities before changes in Operating profit working capital for the period amounted to SEK 144 million (17). Operating profit for 2015 amounted to SEK 102 million (63). The Cash flow from operating activities for the period amounted increase was mainly attributable to increased profit participations to SEK –19 million (–15). The change was mainly attributable to in joint ventures, which were boosted by the sales and construc- the acquisition of project properties, accrued non-invoiced project tion starts of the Turbinhallen, The Lab and Twin House projects. revenues, and an increase in accounts payable and current liabilities. Net financial items Cash flow from investing activities for the period amounted The Group’s net financial items amounted to SEK –9 million to SEK –214 million (–49). The change was mainly attributable (–23). The difference was mainly attributable to an increase in to the increase in receivables from Brf Metronomen, Brf The financial revenues from interest income on lending. Tube and joint ventures, as well as capital contributions to joint ventures. Income tax Cash flow from financing activities for the period amounted Income tax for 2015 amounted to SEK 3 million (–5). The positive to SEK 244 million (88). The change was mainly attributable to tax effect was generated by reversed, unrealised tax provisions. replacing the bond financing from 2013 with new bond financing in 2016. Profit for the period Cash flow for the period 2016 amounted to in total SEK 11 Profit for the period amounted to SEK 96 million (35). million (24). Cash flow Comparison between the 2015 and 2014 The Group’s cash flow from operating activities before changes in financial years working capital for the period amounted to SEK 17 million (12). Net sales Cash flow from operating activities for the period amounted The Group’s net sales for the period amounted to SEK 351 million to SEK –15 million (–29). The change was mainly attributable (411). The decrease in net sales compared with the same period to acquisitions and divestments of project properties, accrued the previous year was mainly due to a decrease in the production non-invoiced project revenues and an increase in current liabili- of own projects – Flygplansfabriken and Kungsterrassen entered ties. into the completion stage and were replaced by ND Studios. Cash flow from investing activities for the period amounted to SEK –49 million (–70). The change was mainly attributable to Production and management costs investments in joint ventures and the divestment of leaseholds. The Group’s production and management costs for the period Cash flow from financing activities for the period amounted to were SEK –299 million (–353), and were mainly attributable to SEK 88 million (11). The change was mainly attributable to the Bromma Tracks and ND Studios. The decrease in the Group’s raising and repayment of construction loans and project-related costs compared with the same period the previous year was operating loans. due to a decrease in the production of own projects – Flygplans Cash flow for the period 2015 amounted to in total SEK 24 fabriken and Kungsterrassen entered into the completion stage million (–88). and were replaced by ND Studios.

Invitation to acquire shares in SSM Holding AB (publ) 69 Operational and financial review

Intangible assets The Group’s intangible assets amounted to SEK 1.4 million as of 31 December 2016. Computer software accounted for all of the intangible assets.

Tangible assets The Group’s tangible assets amounted to SEK 0.4 million as of 31 December 2016. Machinery and inventories accounted for all tangible assets.

Investments The table below summarises the Group’s total investments for the financial years 2016, 2015 and 2014.

Figure in SEK m 2016 2015 2014 Investments in intangible assets –1.0 –2.2 – Investments in tangible assets –0.4 0.0 –0.4 Investments in financial assets –221.5 –46.8 –91.3 Divestment of intangible assets – – 16.4 Divestment of tangible assets – – 0.1 Decrease of financial assets 9.0 – 5.4 Total investments –213.9 –49.1 –69.9

Investments that are on-going or that have been decided At the date of this Prospectus, SSM has no material investments in fixed assets that were on-going or that had been decided.

Important events after 31 December 2016 In February 2017 SSM was awarded the Täby Park project in a land allocation competition, organised by Täby municipality. The project is expected to comprise 270 residential units, including 180 rental apartments and 90 cooperative apartments. Construc- tion is planned to start in 2018 with the occupation in 2020. In March 2017 SSM acquired a new project in Stockholm municipality. The project is expected to comprise 260 cooperative apartments. The construction start is planned for 2018 with occupation in 2020.

70 Invitation to acquire shares in SSM Holding AB (publ) Capitalisation, indebtedness and other financial information

Capitalisation, indebtedness and other financial information

Equity and liabilities Total net debt SSM is financed with equity, interest-bearing liabilities and other SEK m As of 31 December 2016 liabilities. Interest-bearing liabilities comprise bonds and debts to (A) Cash – credit institutions. As of 31 December 2016, the Group’s equity amounted to SEK 301,300,917, of which share capital amounted (B) Cash equivalents 63.9 to SEK 30,100,000. At the same date, SSM’s liabilities amounted (C) Marketable securities – to SEK 734,529,954, of which non-current liabilities amounted to (D) Total liquidity (A) + (B) + (C) 63.9 SEK 574,127,533 and current liabilities to 145,958,380. The table below sets forth the capitalisation and indebtedness of the Group (E) Current receivables 301.3 as of 31 December 2016. The information presented below should be read in conjunction with section “Operational and (F) Current bank debt – financial review” and the Company’s financial statements and the (G) Current portion of non-current liabilities – notes related thereto in section “Financial statements”. (H) Other current financial liabilities 146.0 (I) Total current liabilities (F) + (G) + (H) 146.0 Capitalisation

SEK m As of 31 December 2016 (J) Net current liabilities (I) – (E) – (D) –219.2 Current liabilities Guaranteed – (K) Non-current bank loans 132.8 Secured – (L) Bonds issued 390.7 Unsecured credit 146.0 (M) Other non-current loans 65.1 Total current liabilities 146.0 (N) Non-current financial indebtedness 588.6 (K) + (L) + (M) Non-current liabilities Guaranteed 49.6 (O) Net financial indebtedness (J) + (N) 369.4 Secured 326.2 Unsecured credit 212.8 Total non-current liabilities 588.6

Equity Share capital 30.1 Other capital contributions – Other reserves – Retained earnings 271.2 Total equity 301.3

Statement of working capital Non balance sheet items SSM’s cash flow from operating activities amounted to SEK –19.4 The Group is guarantor for the construction loans which the million for the full financial year 2016. SSM has not undertaken housing associations enter into in order to finance their acquisi- to carry out any major investments and has no material on-going tion of property and construction of buildings. As of 31 December investments other than those described in section “Operational 2016, these guarantees amounted to in total SEK 966 million, and financial review – Investments”. In addition, SSM’s cash and which are not included in the balance sheet. In addition, the cash equivalents amounted to approximately SEK 63.9 million Group also gives warranties, including a warranty that the Group as of 31 December 2016 and its unutilised credit with Handels- will compensate the housing association for: (a) all costs relating banken amounted to SEK 20 million as of December 31 2016. to the acquisition of the property and the contract which exceed a The board of directors of SSM deems the existing working specified purchase amount; and (b) all interest costs incurred due capital to be sufficient to meet the Group’s needs during the to the fact that the specified interest rate in the housing associ- coming twelve month period. Working capital refers to SSM’s ation’s loan agreement exceeds a certain interest rate level for possibility of obtaining access to cash and cash equivalents to a period of two years after the final account date; and (c) unsold meet its payment obligations as they fall due for payment. cooperative apartments, which the company undertakes to acquire. Such warranties are also non balance sheet items. Save for the above, the Group is not party to any non-balance sheet arrangements that have, or could reasonably be expected to have, material impact on the Group’s financial position, income or expenses, earnings, liquidity, investments in fixed asset or capital resources, at present or in the future.

Invitation to acquire shares in SSM Holding AB (publ) 71 Capitalisation, indebtedness and other financial information

Financing arrangements The Group’s primary financing arrangement consists of the bond loan which was issued on 9 May 2016 with a total framwork of SEK 700 million. As of 31 December 2016, bonds corresponding to an amount of SEK 400 million were outstanding and the Company may on one or more occasions issue additional bonds for a total amount of SEK 300 million, provided that certain terms are met. The bonds are subject to a variable interest rate of the three-month STIBOR rate plus a margin of eight per cent and fall due on 9 May 2020. In addition, the Group has a bank overdraft facility of SEK 20 million at Svenska Handelsbanken. The credit facility is extended by one year on 1 January each year. Further, the Group has a SEK 33 million credit facility provided by Swed- bank AB (publ), which will be repaid when the Älvsjö Quarters project has been completed. The Group also has a SEK 100 million credit facility provided by Collector Credit AB, which will be repaid in conjunction with the completion of the Bromma Tracks project. At the end of 2016 the Group assessed that an alteration in the market rate of interest of one (1) per cent, based on the loan volume at the balance sheet date 31 December 2016, would have an effect on the net interest income/expense amounting to SEK 5,330 thousand. For more information about the Group’s financial arrangements, and the terms for the same, see section “Legal considerations and other information – Material agreements – Financial arrangements”. Financial derivatives such as currency derivatives are used to certain extent by the Group. The purpose of using currency derivatives is to reduce the Group’s risk exposure in conjunction with transactions in foreign currency. As of the date of this Prospectus the Group has no currency derivatives.

Tendencies In addition to the statements made in the section “Risk factors”, SSM has at present no information regarding public or financial measures or measures as regards fiscal or monetary policy which, directly or indirectly, could have material impact on the Group’s operations.

72 Invitation to acquire shares in SSM Holding AB (publ) Board of directors, senior executives and auditors

Board of directors, senior executives and auditors

Board of directors standard as to what is meant by “independent” but the independ- According to the Company’s articles of association, the board ence of a member of the board of directors may be questioned, of directors shall consist of three to ten members elected by the for example, in cases where the member of the board of directors, general meeting. The board of directors currently consists of directly or indirectly, has extensive business contacts or other seven members elected by the annual general meeting held on extensive financial dealings with the Company or its principal 14 March 2017 for the period until the end of the annual general shareholders. An overall assessment of a board member’s meeting 2018. relationship to the Company and its principal shareholders shall Pursuant to the requirements of the Swedish Code of be made in each individual case. All members of the board of Corporate Governance (the “Code”) (Sw. Svensk kod för bolags directors of SSM except for two are considered independent of styrning) the majority of the members of the board of directors the Company, its senior executives and principal shareholders. elected by the general meeting must be independent of the The table below sets forth the members of the board of Company and its senior executives. This requirement does not directors, their year of birth, the year of their initial election, their apply to employee representatives. Pursuant to the Code two position, whether or not they are considered to be independent members of the board of directors who are independent of the in relation to the Company, the senior executives and principal Company and the senior executives shall also be independent shareholders, and their holdings in the Company as of the date of of the Company’s principal shareholders. There is no defined this Prospectus.

Member of the board Independent of the Independent of directors Company and the of principal Holding in the Name Year of birth since Position senior executives shareholders1) Company Anders Janson 1954 2015 Chairman Yes Yes 169,000 2) Bo Andersson 1955 2016 Board member Yes Yes 105,000 2) Per Berggren 1959 2016 Board member Yes Yes 105,000 2) Sheila Florell 1965 2016 Board member Yes Yes 105,000 2) Ulf Morelius 1958 2016 Board member Yes No 15,050,000 3) Ulf Sjöstrand 1947 2016 Board member Yes No 15,050,000 3) Jonas Wikström 1972 2016 Board member Yes Yes 105,000 2) 1) “Principal shareholders” refer shareholders who directly or indirectly control ten per cent or more of the shares or votes in the Company. If a company owns more than 50 per cent of the shares, parts or votes in another company, the first company is considered to indirectly control the later company’s ownership in the other company. 2) Refers to share options in the Company issued by the Selling Shareholder, which each give the holder a right to acquire one share in the Company. See also section “Corpo- rate governance – Remuneration to the members of the board of directors and senior executives – Share option program from the Selling Shareholder etc.”. 3) Refers to shares in the Company.

Anders Janson, born 1954 i Sverige AB. Chairman of Sjövikshöjdens Gruppbostad AB Chairman of the board of directors and Parkeringsbolaget Sporthotellet AB. Member of the board since 2015. Chairman of the remu- of directors of Akelius Residential Property AB (publ), Getsec neration committee. Fastigheter AB, Risudden Holding AB and Boende Ingun AB. Education: LL.M. Stockholm Deputy member of the board of directors of Täcktö Invest AB. University. Dependence status: Independent in relation to the Company, its Other current assignments: senior executives and principal shareholders. Chairman of Netnod Internet Holding in SSM: 169 thousand share options. Exchange i Sverige AB. Member of the board of directors of Anders Bo Andersson, born 1955 Janson Advokat AB, Elisabeth Member of the board of directors Norman AB, Eurid Services AB, since 2016. Member of the audit Germanica Holding AB, Inter- committee. netkompetens i Sverige AB, Education: BA Stockholm Univer- Kalkudden Förvaltnings AB, Källastrand Bostads AB (as well as sity, Advanced Management Pro- board assignments in subsidiaries of Källastrand Bostads AB), gram Harvard Business School. Oikos Förvaltnings AB, Oikos Air AB, RisComp Tollare 2 Holding Other current assignments: AB, RisComp Tollare 2 AB, RisComp Tollare 3 Holding AB, Managing director of Bo Group RisComp Tollare 3 AB. Deputy member of the board of directors Enterprises, Inc. of Back-Hus Advokatbyrå AB, BYAK Ulf Jansson AB, Ingemar Previous assignments held during Alfrost Advokat AB, IT Consulting G Sporre AB, Langobard the past five years: Managing Förvaltnings AB, Neyof Advokat AB, Neyof Förvaltning AB, Peter director of OAO AvtoVAZ and Dyer Advokatfirma AB, RisComp Holding AB, RIKI Properties AB, OAO GAZ. Roslagsglas AB and Ungmark Asset Management AB. Dependence status: Independent in relation to the Company, its Previous assignments held during the past five years: Board senior executives and principal shareholders. assignments in previous subsidiaries of SSM. Member of the Holding in SSM: 105 thousand share options. board of directors and managing director of Foyen Advokatfirma

Invitation to acquire shares in SSM Holding AB (publ) 73 Board of directors, senior executives and auditors

Per Berggren, born 1959 of directors of SSM (as well as board assignments in subsidiaries Member of the board of directors of SSM). Member of the board of directors and managing director since 2016. Member of the audit of Getsec Fastigheter AB. Member of the board of directors of committee. Flygplansfabriken Fastighets AB, Playce AB, Boende Ingun Education: MSc in Engineering AB, Suttung 1 AB, Brf Twin House, Brf Bromma Tracks, Brf ND Royal Institute of Technology Studios, Brf Laboratoriet, Brf Tellus Towers 78, Brf Flygplansfab- Stockholm, education in economy riken, Brf Kungsterrassen, Brf Rosteriet, Brf Mälarhöjdsparken 2, Stockholm University. Brf Mälarhöjdsparken 1 and Brf Blomsteräng. Other current assignments: Dependence status: Independent in relation to the Company and Member of the board of directors its senior executives. Not independent in relation to the Compa- of Castellum AB (publ), BRIS, ny’s principal shareholders. Slättö Förvaltning AB and Vitartes Holding in SSM: 15,050 thousand shares through Eurodevelop- AB (as well as board assignments ment Holding AG. in subsidiaries of Vitartes AB). Member of the board of directors of H&P Berggren Properties AB. Ulf Sjöstrand, born 1947 Deputy member of the board of directors of Helene Berggren Member of the board of directors Office AB. since 2016. Member of the remu- Previous assignments held during the past five years: Managing neration committee. director of Hemsö Fastighets AB (as well as board assignments Education: Construction engineer, in subsidiaries of Hemsö Fastighets AB). Member of the board Erik Dahlberg Upper Secondary of directors of Arnöhem AB (as well as board assignments in School. subsidiaries of Arnöhem AB), Fastighets AB Björsäter (as well as Other current assignments: board assignments in subsidiaries of Fastighets AB Björsäter) Member of the board of directors and Fastighets AB Slumsta (as well as board assignments in sub- and managing director of Eurode- sidiaries of Fastighets AB Slumsta). Deputy member of the board velopment Holding AG. of directors of Fastigheter i Bro AB. Previous assignments held during Dependence status: Independent in relation to the Company, its the past five years: – senior executives and principal shareholders. Dependence status: Independent Holding in SSM: 105 thousand share options. in relation to the Company and its senior executives. Not independent in relation to the Company’s principal shareholders. Sheila Florell, born 1965 Holding in SSM: 15,050 thousand shares through Eurodevelop- Member of the board of directors ment Holding AG. since 2016. Member of the remuneration committee. Jonas Wikström, born 1972 Education: LL.M. Stockholm Member of the board of directors University. since 2016. Chairman of the remu- Other current assignments: Chief neration committee. Legal Officer ofV asakronan Education: MSc Business and AB (publ) (as well as board Economics Uppsala University. assignments in subsidiaries of Other current assignments: Vasakronan AB). Deputy member Member of the board of directors of the board of directors of Lars of Ramblin Brands Ltd. Johnsson Consulting AB. Previous assignments held during Previous assignments held during the past five years: – the past five years: Board assignments in subsidiaries of Vasak- Dependence status: Independent ronan AB (publ). in relation to the Company, its Dependence status: Independent in relation to the Company, its senior executives and principal senior executives and principal shareholders. shareholders. Holding in SSM: 105 thousand share options. Holding in SSM: 105 thousand share options. Ulf Morelius, born 1958 Member of the board of directors since 2016. Education: Upper secondary school economist, management education at the Institute of Man- agement Education of Stockholm School of Economics. Other current assignments: Member of the board of directors of Eurodevelopment Holding AG. Previous assignments held during the past five years: Managing director and member of the board

74 Invitation to acquire shares in SSM Holding AB (publ) Board of directors, senior executives and auditors

Senior executives in the Group The table below sets out the name, year of birth, current position, the year each person became a senior executive, and their holding in the Company as of the date of this Prospectus.

Holding in the Name Year of birth Senior executive since Position Company Mattias Roos 1973 2012 President and CEO 903,0001) Susanne Blomberg 1974 2015 Chief Sales & Marketing Officer 30,0002) Johan Ellertson 1964 2013 Head of Project Department 31,0002) Ann-Charlotte Johansson 1968 2016 Chief Communications & IR Officer 25,0002) Ola Persson 1969 2013 Chief Financial Officer 36,0002) Casper Tamm 1961 2016 Financial Director 28,0002) 1) Refers partly to 602 thousand share options in the Company issued by the Selling Shareholder, which each give the holder a right to acquire one share in the Company, partly to the CEO’s right to, on the first day of trading of the Company’s shares onN asdaq Stockholm, acquire 301 thousand shares from the Selling Shareholder. See also section “Corporate governance – Remuneration to the members of the board of directors and the senior executives – Share option program from the Selling Shareholder etc.”. 2) Refers to share options in the Company issued by the Selling Shareholder, which each gives the holder a right to acquire one share in the Company. See also section “Corporate governance – Remuneration to the members of the board of directors and senior executives – Share option program from the Selling Shareholder etc.”.

Mattias Roos, born 1973 Johan Ellertson, born 1964 President and CEO of SSM. Head of Project Department of Senior executive since 2012. SSM. Senior executive since Education: MSc in Engineering 2013. Royal Institute of Technology Education: Upper secondary Stockholm, degree in Engineering, school engineer. Gävle University. Other current assignments: – Other current assignments: Board Previous assignments held during and management assignments the past five years: Chairman of in subsidiaries of SSM. Member RCC Stockholm AB. Managing of the board of directors of Brf director of IQuity AB (as well as Aprikosen, Brf Malmkronan, Brf board and management assign- Gröndalsterrassen, Brf Aspkronan ments in subsidiaries of IQuity and Brf Flygplansfabriken. Deputy AB). Deputy member of the board member of the board of directors of Beatelund Fastighets AB. of directors of Bemynta Fastighets AB, IMIX AB, IMIX Construc- Previous assignments held during the past five years: Board tion AB, Brf Kungsterrassen and RCC Produktion AB. Member of assignments in previous subsidiaries of SSM. Member of the the board of directors of Brf Klockarlunden, Brf Roslagssommar, board of directors of Kristineberg 1:10 Exploatering AB, Tipton AB Klockarparken, BVT Holding AB (as well as board and man- Brown AB, Sollentuna Centrum Exploaterings AB and Lobb agement assignments in subsidiaries of BVT Holding AB), Bålsta Fastighets AB. Bostäder AB, My Villa Örebro AB, IQuity Varberg AB, Närke- Holding in SSM: 903 thousand share options.1) bostäder AB and RCC Hus AB. Deputy member of the board of directors of RCC Utveckling AB. Susanne Blomberg, born 1974 Holding in SSM: 31 thousand share options. Chief Sales & Marketing Officer of SSM. Senior executive since Ann-Charlotte Johansson, 2015. born 1968 Education: MSc Business and Chief Communications & IR Economics Linköping University. Officer of SSM. Senior executive Other current assignments: – since 2016. Previous assignments held during Education: MSc Business and the past five years: Member of the Economics Uppsala University, board of directors of Radiolever- studies in law Stockholm Univer- antörernas Serviceaktiebolag. sity. Holding in SSM: 30 thousand Other current assignments: – share options. Previous assignments held during the past five years: Communica- tions and IR Director of Scandic Hotels Group AB and Communica- tions and Fund-raising Manager, Svenska Röda Korset. Holding in SSM: 25 thousand share options.

1) Refers partly to 602 thousand share options in the Company issued by the Selling Shareholder, which each give the holder a right to acquire one share in the Company, partly to the CEO’s right to, on the first day of trading of the Company’s shares onN asdaq Stockholm, acquire 301 thousand shares from the Selling Shareholder.

Invitation to acquire shares in SSM Holding AB (publ) 75 Board of directors, senior executives and auditors

Ola Persson, born 1969 Other information on the board of directors and Chief Financial Officer of SSM. senior executives Senior executive since 2013. All members of the board of directors and all senior executives Education: BSc Business Admin- may be contacted at the Company’s address Kungsgatan 57 A, istration and Economics Uppsala 111 22 Stockholm. University, Master of International No member of the board of directors or senior executive has, Business University of South during the past five years, been subject to any allegations and/or Carolina, certified financial analyst sanctions on the part of any authority or professional association Stockholm School of Economics. under public law. No member of the board of directors or senior Other current assignments: Board executive has during the past five years been declared bankrupt. and management assignments in No member of the board of directors or senior executive has been subsidiaries of SSM. Member of involved in any bankruptcy or liquidation proceedings in relation the board of directors and man- to companies they have represented in the past five years.N o aging director of C Ola P Financial member of the board of directors or senior executive has been Consulting AB. convicted in any case relating to fraud in the past five years. Previous assignments held during the past five years: Board No member of the board of directors or senior executive has in and management assignments in subsidiaries of SSM as well as the past five years been subject to injunctions against carrying previous subsidiaries of SSM. Member of the board of directors on business. No special arrangements have been entered into of AB Belåning Persson & Westling Pantbank, Brf Morgondagens between principal shareholders, customers, suppliers or other Stockholmare 2, Brf Morgondagens Stockholmare 3, Brf Mor- parties according to which any of the members of the board gondagens Stockholmare 4, Brf Morgondagens Stockholmare 5, of directors or senior executives have been appointed to their Brf Morgondagens Stockholmare 6, Brf Kosmopoliten, Brf Metro- present position. nomen, Brf Platform West, Brf West Side Solna, Brf Turbinhallen There are no family ties between the members of the board and Brf Planeten 234. Deputy member of the board of directors of of directors and/or the senior executives. No member of the Oprima AB. board of directors or senior executive has any private interest Holding in SSM: 36 thousand share options. that might conflict with the Company’s interest, other than what is stated in the section below. However, certain members of the Casper Tamm, born 1961 board of directors and senior executives have certain financial Financial Director of SSM. Senior interests in the Company as a consequence of their holdings in executive since 2016. the Company. Further, none of the above mentioned members Education: MSc Business and of the board of directors or senior executives have entered into Economics Lund University. any agreement with the Company or its subsidiaries that would Other current assignments: entitle the members of the board of directors or senior executives Chairman of HACEI AB. to post-employment benefits, other than what is stated in this Previous assignments held during Prospectus. the past five years: Member The members of the board of directors Ulf Morelius and Ulf of the board of directors of Sjöstrand hold 50 per cent each of the majority shareholder Nima-Maskinteknik AB, Swedol Eurodevelopment Holding AG. A situation could thus occur, Förvaltning AB and Fastighets where Ulf Morelius and Ulf Sjöstrand, as indirect holders of a aktiebolaget Pistolvägen 4. majority block of shares in the Company, could represent inter- Holding in SSM: 28 thousand ests that could diverge from or compete with the Company’s or share options. other shareholders’ interests.

Auditor According to SSM’s articles of association, the Company shall appoint one or two auditors with or without deputy auditors. SSM’s auditors are elected annually by the annual general meeting. The most recent auditor election was at the annual general meeting 14 March 2017, when Öhrlings PricewaterhouseCoopers AB was re-elected as the Company’s auditor for the period until the end of the annual general meeting 2018, with Ola Salemyr (born 1969) as auditor in-charge. Ola Salemyr is an authorised public accountant and a member of FAR, (the Swedish Institute for Authorised and Approved Public Accountants). Öhrlings Price- waterhouseCoopers AB has been the Company’s auditor since the annual general meeting 1996. The office address of Öhrlings PricewaterhouseCoopers AB is Torsgatan 21, 113 97 Stockholm, Sweden.

76 Invitation to acquire shares in SSM Holding AB (publ) Corporate governance

Corporate governance

SSM is a Swedish public limited liability company. The corporate Nomination committee governance in SSM is based on Swedish law, primarily the Com- Pursuant to the Code, the Company shall have a nomination panies Act (Sw. aktiebolagslagen (2005:551)), the Company’s committee, the purpose of which is to make proposals relating to articles of association, internal rules, regulations and policies, the election of chairman for general meetings, candidates for the and Nasdaq Stockholm’s rules for issuers. board of directors, including the election of Chairman of the board When the Company’s shares have been listed, the Company of directors, remuneration to members of the board of directors will also be obligated to comply with the Code. The Code applies as well as for committee work, election of and remuneration to to all Swedish companies with shares listed on a regulated the auditors and proposals for the composition of the nomination market in Sweden. Companies are not required to comply with all committee for the following annual general meeting. rules in the Code; alternative solutions which are deemed more At the annual general meeting on 14 March 2017 it was suitable for the relevant company’s specific circumstances can resolved to establish a new nomination committee in preparation be chosen, provided that any such deviations and the chosen for the annual general meeting to be held in 2018 as follows. alternative solutions are described and the reasons therefore are The nomination committee shall consist of four members – explained in the corporate governance report (according to the one representative for each of the three largest shareholders with “comply or explain principle”). The Company will comply with the respect to votes at the last day of trading of shares in September, Code as of the listing of its shares on Nasdaq Stockholm, and who wish to appoint a member of the nomination committee, as does not intend to deviate from any rule in the Code. Potential well as the chairman of the board of directors. future deviations will be described in the Company’s yearly corpo- The chairman of the board of directors shall, as soon as rate governance report. possible after the information on the three largest shareholders has become known, contact the three largest shareholders to General meeting inquire whether they wish to appoint members of the nomination According to the Companies Act the general meeting is the Com- committee. Should any of the three largest shareholders abstain pany’s ultimate decision-making body. At the general meeting, from their right to appoint a member of the nomination committee, the shareholders exercise their voting rights in key issues, such the chairman of the board of directors shall offer other large as the adoption of income statements and balance sheets, shareholders to appoint members of the nomination committee. appropriation of the Company’s results, discharge from liability In this event, the offer shall be made in the order to the largest of members of the board of directors and the managing director, shareholders with respect to votes (that is, first to the fourth election of members of the board of directors and auditors and largest shareholder with respect to votes, thereafter to the fifth remuneration to the board of directors and the auditors. largest shareholder with respect to votes etc.). The procedure The annual general meeting must be held within six months shall continue until the nomination committee has four members. from the end of the financial year. In addition to the annual gen- The determination of which shareholders are entitled to eral meeting, extraordinary general meetings may be convened. appoint members of the nomination committee shall be based on According to the articles of association, general meetings are the information about shareholding and groups of shareholders convened by publication of the convening notice in the Swedish in the register of Euroclear at the last day of trading of shares National Gazette (Sw. Post- and Inrikes Tidningar) and on the in September. The name of the members and the shareholders Company’s website. At the time of the notice convening the they represent shall be made public on the Company’s website meeting, information regarding the notice shall be published in at the latest six months prior to the annual general meeting. Dagens Industri. The chairman of the board of directors shall be convenor of the nomination committee’s first convening. At this convening, the Right to participate in general meetings nomination committee shall appoint a chairman amongst its Shareholders who wish to participate in a general meeting must members. The chairman of the board of directors shall not be be included in the shareholders register maintained by Euroclear chairman of the nomination committee. The mandate period of on the day falling five workdays prior to the meeting, and notify the nomination committee shall extend until the next nomination the Company of their participation no later than on the date committee is appointed. stipulated in the notice convening the meeting. In addition to In the event that a change of ownership occurs amongst the notifying the Company, shareholders whose shares are nominee three largest shareholders with respect to votes, and a share- registered through a bank or other nominee must request that holder who has not previously had the right to appoint a member their shares are temporarily registered in their own names in of the nomination committee thereby becomes a larger share- the register of shareholders maintained by Euroclear, in order to holder then one or several of the other shareholders who have be entitled to participate in the general meeting. Shareholders appointed a member of the nomination committee (“new major should inform their nominees well in advance of the record date. shareholder”), the nomination committee shall, if the new major Shareholders may attend the general meetings in person or by shareholder requests to appoint a member of the nomination proxy and may be accompanied by a maximum of two assistants. committee, decide that the member of the nomination committee Typically, it is possible for a shareholder to register to attend the who represents the smallest shareholder with respect to votes general meeting in several different ways as indicated in the shall be dismissed and replaced by a member appointed by the notice of the meeting. new major shareholder. In the event that a new major shareholder wishes to appoint a member of the nomination committee, the Shareholder initiatives new major shareholder shall give notice of this to the chairman of Shareholders who wish to have a matter brought before the the nomination committee. The notification shall contain the name general meeting must submit a written request to the board of of the person that the new major shareholder wishes to appoint directors. Such request must normally be received by the board as member of the nomination committee. of directors no later than seven weeks prior to the annual shareholders’ meeting.

Invitation to acquire shares in SSM Holding AB (publ) 77 Corporate governance

A shareholder who has appointed a member of the nomination which are revised annually. The rules of procedure govern the committee has the right to dismiss the member and appoint a new division of work between the members of the board of directors, member. If such an exchange takes place, the shareholder shall the chairman and the CEO. The board of directors also estab- without delay give notice of this to the chairman of the nomination lishes rules of procedure for the committees of the board of committee (or, if it is the chairman of the nomination committee directors as well as guidelines for the CEO. who shall be exchanged, to the chairman of the board of direc- The board of directors is responsible for the Company’s tors). The notification shall contain the name of the dismissed organisation and the management of the Company’s matters, member and the person who shall replace him as member of the which among other things entails a responsibility for outlining nomination committee. overall, long-term strategies and objectives, budgets and busi- In the event that a member of the nomination committee who ness plans, establishing guidelines to ensure that the Compa- represents a shareholder resigns prematurely, the nomination ny’s operations create value in the long term, reviewing and committee shall without delay call upon the shareholder who establishing the accounts, making decisions on issues regarding has appointed the member to appoint a new member. If a new investments and sales, capital structure and distribution policy, member is not appointed by the shareholder, the nomination developing the Group’s policies, ensuring that control systems committee shall offer other larger shareholders with respect to exist for monitoring that policies and guidelines are observed, shares, to appoint members of the nomination committee. Such ensuring that there are systems for monitoring and controlling the offer shall be made in the order to the largest shareholders with Company’s operations and risks, significant changes in the Com- respect to shares (that is, first to the largest shareholder with pany’s organisation and operations, appointing the Company’s respect to shares who has not already appointed a member CEO and setting remuneration and other terms of employment of the nomination committee or previously abstained from the benefits for the CEO. right to do so, thereafter to the second largest shareholder with The chairman of the board of directors is among other things respect to shares who has not already appointed a member of responsible for making sure that the members of the board of the nomination committee or previously abstained from the right directors regularly receive required information from the CEO. to do so etc.). The procedure shall continue until the nomination This is in order to follow up on the Group’s financial position, committee is complete. A member who prematurely resigns from results, liquidity, financial planning and development. The his task shall give notice of this to the chairman of the nomination chairman of the board of directors is also obliged to fulfil decisions committee (or, if it is the chairman of the nomination committee made by the annual general meeting regarding the establishment who shall resign, to the chairman of the board of directors). The of a nomination committee and to participate in the work of the nomination committee shall meet the requirements of composi- committee. The chairman shall in close cooperation with the CEO tion set out in the Code. If the larger shareholders who have the monitor the Company’s results and prepare board meetings as right to appoint members of the nomination committee wish to well as be the chairman thereof. The chairman is also responsible appoint persons with the consequence that the requirements of for the yearly evaluation by the board of directors of its work and composition provided in the Code are not met, the first choice that the board of directors receives sufficient information in order of the larger shareholder shall have precedence over a smaller to carry out its work efficiently. shareholder. At the appointment of a new member, the share- The board of directors meet according to an annual predeter- holder who shall appoint the new member shall consider the mined schedule. In addition to these meetings, additional board composition of the current nomination committee. Changes in meetings may be convened to handle issues which cannot be the composition of the nomination committee shall made public postponed until the next ordinary board meeting. on the website of the board of directors as soon as they have Currently, the Company’s board of directors consists of seven occurred. ordinary members elected by the general meeting, who are The nomination committee shall fulfil the assignments which, presented in “Board of directors, senior executives and auditor – pursuant to the Code, depends on the nomination committee. members of the board of directors”. The Company shall bear reasonable costs, for example in relation to external consultants, which the nomination committee The committees of the board of directors considers necessary for the fulfilment of the nomination commit- The board of directors has three committees: the remuneration tee’s assignment. committee, the audit committee and the investment committee.

The responsibilities and work of Remuneration committee the board of directors According to the Code, the members of the remuneration The board of directors is the second-highest decision making committee shall be independent in relation to the Company and body of the Company after the general meeting. Members of the the senior executives. The board of directors’ remuneration board of directors are normally appointed by the annual share- committee continuously evaluates the remuneration to senior holders’ meeting for the period until the end of the next annual executives in view of current market conditions. The committee general meeting. According to the Company’s articles of asso- prepares matters for decisions by the board of directors. The ciation the board members which are appointed by the general remuneration committee currently consists of three members of meeting shall be a minimum of three and a maximum of ten. the board of directors; Anders Janson (chairman), Sheila Florell The responsibilities of the board of directors’ is governed by and Ulf Sjöstrand, which are all considered to be independent in the Companies Act, SSM’s articles of association and the Code, relation to the Company and the senior executives. The members the latter of which the Company will fully comply with after the of the remuneration committee are appointed annually by the listing of the Company’s shares on Nasdaq Stockholm. Further- board of directors. more, the board of directors applies written rules of procedure,

78 Invitation to acquire shares in SSM Holding AB (publ) Corporate governance

The remuneration committee’s functions are to: CEO and senior executives • Prepare matters for decisions by the board of directors on The CEO is subordinated to the board of directors and is respon- remuneration principles, remuneration and employment terms sible for the day-to-day management and operations of the Com- for the senior executives. pany. The division of work between the board of directors and the • Monitor and evaluate on-going incentive programs as well CEO is set out in the rules of procedure for the board of directors as incentive programs completed during the year, regarding and the instructions for the CEO. variable remuneration to the senior executives. The CEO is responsible for leading the operations according • Monitor and evaluate the application of the guidelines for to the guidelines and directives decided by the board of directors. remuneration to senior executives which the annual general The CEO is also responsible for providing the board of directors meeting according to law shall decide upon, and applicable with information and the necessary documentation for decision remuneration structures and remuneration levels in the making. The CEO leads the work of executive group manage- Company. ment and makes decisions after consulting its members. Further, the CEO reports at board meetings and assures that members of The Remuneration committee shall convene a minimum of two the board of directors regularly receive the information required to times per year. follow the Company’s and the Group’s financial position, results, liquidity and development. Audit committee The CEO and the other senior executives are presented in According to the Companies Act, the audit committee is to com- section “The board of directors, senior executives and auditor – prise of at least two members. The members of the committee Senior executives”. may not be employed by the Company, and at least one member shall have accounting or auditing competence. The audit com- Remuneration to the members of the board mittee currently has three members; Jonas Wikström (chairman), of directors and senior executives Bo Andersson and Per Berggren. The members of the committee Remuneration to the board of directors and the committees and its chairman are appointed by the board of director annually. of the board The audit committee’s functions are to: Fees and other remuneration to the members of the board of • Review and monitor financial reporting and provide recom- directors, including the chairman, are determined by the annual mendations and proposals to ensure the reliability of the general meeting. reporting. At the annual general meeting held on 14 March 2017, it was • In respect of the financial reporting, monitor the efficiency of resolved that remuneration shall be paid with SEK 230 thousand the Company’s internal controls and risk management. to the chairman of the board of directors and with SEK 130 thou- • Keep itself informed regarding the audit of the annual report sand to the other members of the board with the exception that and group accounts as well as regarding the conclusions of no remuneration shall be paid to the board members Ulf Morelius the Supervisory Board of Public Accountants quality controls and Ulf Sjöstrand. No remuneration shall be paid to member or (Sw. Revisorsnämnden). the chairman of the investment committee, the remuneration • Inform the board of directors of the result of the audit and the committee or the audit committee. way in which the audit contributed to the reliability of the finan- During the financial year 2017, the total remuneration to the cial reporting, as well as the function filled by the committee. members of the board of directors is thus estimated to amount • Review and monitor the impartiality and independence of the to SEK 822.1 thousand, distributed in accordance with the table auditor and, in conjunction therewith, pay special attention to below. whether the auditor provides the Company with services other than auditing services. Remuneration • Assist in conjunction with preparation of proposals to the gen- Name Function (SEK t) eral meeting’s resolution regarding election of an auditor. Anders Janson Chairman 227.3 Bo Andersson Board member 148.7 The audit committee shall convene a minimum of four times a Per Berggren Board member 148.7 year. Sheila Florell Board member 148.7 Ulf Morelius Board member – Investment committee Ulf Sjöstrand Board member – According to the board of directors’ rules of procedure, the board Jonas Wikström Board member 148.7 has established an investment committee. The investment committee currently consists of all members of the board of directors, Total 822.1 with Anders Janson as chairman. The members of the committee and the chairman are elected by the board of directors annually. The primary task of the investment committee is to make decisions regarding property and project investments within the framework of the investment volume decided by the board of directors. The board of director’s decision shall be renewed after each investment, acquisition or divestment within the decided mandate, and at each ordinary board meeting. The investment committee shall convene at least four times a year.

Invitation to acquire shares in SSM Holding AB (publ) 79 Corporate governance

During the financial year 2016, the total remuneration to the tions, competitive and reflect the employee’s area of responsi- members of the board of directors amounted to SEK 1,208 thou- bility and the complexity of the position. sand, distributed in accordance with the table below. The variable remuneration shall include payments for annual leave and be pensionable. For the CEO, the variable remunera- Remuneration tion shall not exceed twelve monthly salaries (calculated with the Name Function (SEK t) fixed monthly salary). For other senior executives, the variable Anders Janson Chairman 172 remuneration shall not exceed four monthly salaries (calculated Bo Andersson Board member 77 with the fixed monthly salary). Per Berggren Board member 77 The variable remuneration may comprise a variable cash part Sheila Florell Board member 77 and a long-term variable remuneration in the form of shares and/ Ulf Morelius1) Board member – or share related instruments in the Company. Peri Kuldkepp2) Board member 25 Variable remuneration in form of cash shall require achieve- Christofer Sjöstrand3) Board member 7033) ment of defined and objectively measurable goals which are Ulf Sjöstrand Board member – based on the Group’s reported results before taxes. Jonas Wikström Board member 77 Long-term remuneration in form of shares and/or share related instruments in SSM shall be distributed through the par- Total 1,208 ticipation in a long-term incentive program resolved upon by the 1) Ulf Morelius was elected to the board of directors 16 December 2016. 2) Peri Kuldkepp and Christofer Sjöstrand resigned in August 2016. general meeting. Such programs shall be based on performance, 3) Christofer Sjöstrand is the son of Ulf Sjöstrand (who is a member of the board of require a continuing employment in the Group and demand an directors and one of the Company’s founders and majority shareholders). Christ- investment by the participants themselves. The vesting period ofer Sjöstrand’s remuneration also includes salary which Christofer received as an employee in the Group during 2016. (alternatively, from the time at which the agreement was entered into until the time of the acquisition of a share) shall not be less Guidelines for remuneration for the CEO and than three years. The goal with the incentive program shall be to other senior executives achieve an aligned interest between the participating employee The annual general meeting held on 14 March 2017 resolved on and the Company’s shareholders, as well as to create long-term guidelines for remuneration to the senior executives of SSM, as value for the shareholders. set out below, to apply until the annual general meeting 2018. The board of directors shall annually evaluate whether a long- The guidelines shall apply on remuneration and other terms term share related incentive program shall be proposed to the of employment for the CEO and other senior executives of SSM. general meeting or not. Currently there are six senior executives of SSM, including the CEO. Pension The Group applies the ITP-plan for all employees. The CEO’s General pension shall be premium based and based on the fixed renumer- SSM shall offer remuneration and other terms of employment ation in accordance with customary principles. which enables the Company to recruit, motivate and retain senior executives with the skills that the Company needs in order to Other benefits execute its strategy and reach the targets of the operations. The Other benefits shall constitute a limited value in relation to the general principles for the remuneration to the senior executives is total remuneration, and correspond to what normally occurs at that they shall be competitive and in line with market conditions. comparable operators.

Senior executives Termination of employment Senior executives refer to the CEO and to members of the group Upon the termination of employment agreements, the notice management of the Group who report directly to the CEO. SSM’s period shall, upon termination by the Company not exceed twelve senior executives are at present the CEO, the Financial Director, months, and upon termination by the senior executive not exceed the CFO, the Chief Sales & Marketing Officer, the Head of Project six months, except in relation to the CEO where a termination Department and the Chief Communications & IR Officer (i.e. in period of twelve months shall apply. No severance pay shall be total six persons). paid.

Remuneration Miscellaneous The remuneration to the senior executives of SSM comprises of: The guidelines shall apply for employment agreements entered • fixed remuneration; into after the annual general meeting, and for potential amend- • variable remuneration; ments to existing terms. The board of directors may deviate from • pension; and the guidelines for specific reasons in a particular case. • other customary benefits. Current conditions of employment for the CEO and other Fixed remuneration senior executives The fixed remuneration shall be based on market conditions and Remuneration and benefits for the senior executives are pre- be determined with consideration of the qualitative performance pared by the remuneration committee and decided by the board of the employee. The fixed remuneration is normally reviewed of directors. The remuneration comprises a fixed salary and a once per year. variable remuneration according to an incentive program. For Variable remuneration more information about the variable remuneration according to The distribution between fixed remuneration and variable remu- the incentive program, reference is made to section “Corporate neration shall stand in proportion to the employee’s position and governance – Incentive program” below. duties. The total remuneration shall be in line with market condi-

80 Invitation to acquire shares in SSM Holding AB (publ) Corporate governance

The CEO receives pension provisions corresponding to of Graduate Engineers (Sw. Sveriges ingenjörer) and Unionen 30 per cent of his fixed salary and the other senior executives (a Swedish white-collar trade union). receive pension provisions in accordance with the applicable The below table shows remuneration from the Company and collective bargaining agreement between The Swedish Con- its subsidiaries to the CEO and other senior executives paid struction Federation (Sw. Sveriges Byggindustrier) and Ledarna during the financial year 2016. (Sweden’s organisation for managers), The Swedish Association

Fixed remunera- Variable remunera- Share related Benefits 2016 Pensions Position tion 2016 (SEK t) tion 2016 (SEK t) remuneration (SEK t) (SEK t) Total (SEK t) CEO 1,387 6,616 1,655 97 537 10,291 Remaining five senior executives of the Group 3,086 780 0 74 983 4,923

Termination of employment and severance pay CEO has the right to use the share option as of 1 July 2017 up to For the CEO’s employment in the Company, a mutual notice and including 31 December 2017. However, if the listing is exe- period of twelve months applies. The CEO is not entitled to cuted before 1 July 2017, the CEO has the right to exercise the severance pay. share option as of the first day of trading. The option premium per The other senior executives in the Company have the right to share in the Company amounts to SEK 4.48 and the redemption a notice period of between three to six months. None of the other price for each share amounts to SEK 31.56. In total, the program senior executives are entitled to severance pay. comprises two per cent of the total number of shares and votes in the Company. Incentive program SSM’s costs for the above programs is estimated to amount to The CEO is entitled to an annual bonus corresponding to two per approximately SEK 5.2 million (including social security contribu- cent of an amount which is based on the Company’s operating tions and taxes). profit including financial income from its jointly owned associated The Selling Shareholder has undertaken to, on the first day companies. The bonus cannot exceed twelve fixed monthly sala- of trading of the Company’s shares on Nasdaq Stockholm, sell ries for the last bonus-qualifying financial year. the equivalent of one per cent of the total number of shares in the The other senior executives participate in an incentive pro- Company, which at the date of this Prospectus corresponds to gram, within which they have the possibility to receive an annual 301 thousand shares, to the CEO of the Company. The purchase bonus of a maximum of four monthly salaries. The outcome of price that the CEO will pay for each share shall be the same the bonuses depend on whether certain limits have been reached as the final price of theO ffer. The CEO shall give notice to the in relation to the Group’s operating profit (before deduction of Selling Shareholder regarding whether he wishes to utilise this the Company’s incentive program), operative growth (relating to undertaking or not five days prior to the first day of trading at the number of construction starts) and customer satisfaction (relating latest. The CEO gave such notice on 25 March 2017. to the average of the “satisfied customer index”). Auditing Share option program from the Selling Shareholder etc. The auditor shall review the Group’s annual report and The Selling Shareholder has in January 2017 issued share accounting, as well as the management of the board of directors options in respect of shares in the Company to members of the and the CEO. The audit of SSM’s financial reports and accounts board of directors of the Company (excluding Ulf Morelius and Ulf as well as the management by the board of directors and the Sjöstrand), and each senior executive (excluding the CEO) and CEO, is conducted in accordance with generally accepted certain other key employees in the Group, respectively. According auditing standards in Sweden. to both programs, each share option entitles the holder to acquire Pursuant to the Company’s articles of association, the one share in the Company from the Selling Shareholder. The Company shall elect one or two auditors with or without deputy holder has the right to exercise the share option as of 1 June auditors. The Company’s auditor is Öhrlings Pricewaterhouse- 2017 up to and including 30 June 2017. However, if the listing is Coopers AB, with Ola Salemyr as auditor in-charge. The Com- executed before 1 June 2017, the holder has the right to exercise pany’s auditor is presented in more detail in section “Board of the share option as of the first day of trading of the Company’s directors, senior executives and auditor – Auditor”. shares on Nasdaq Stockholm. The option premium per share in Following each financial year, the auditor shall submit an the Company amounts to SEK 2.5 and the exercise price for each auditor report and a consolidated auditor report to the annual share amounts to SEK 31.5. In total, both programs comprise 903 general meeting. At times when the board of directors convenes thousand shares in the Company, equivalent to three per cent of with the auditor, no one from the management shall be present. the total number of shares and votes in the Company. The share The audit committee reviews and supervises the impartiality and options are subject to customary re-calculation terms. independence of the auditors. The auditors receive remuneration Furthermore, the Selling Shareholder issued 602 thousand for their work in accordance with the resolution on the annual share options (re-calculated after executed split) to the CEO in general meeting. March 2016. Each share option gives the CEO the right to acquire For the financial year 2016, the total remuneration of the one share in the Company from the Selling Shareholder. The Company’s auditors amounted to SEK 2,999 thousand.

Invitation to acquire shares in SSM Holding AB (publ) 81 Share capital and ownership structure

Share capital and ownership structure

General information Nothing in the Company’s articles of association restricts its According to SSM’s articles of association, the share capital ability to issue shares, warrants or convertibles, with deviation shall amount to a minimum of SEK 30,100,000 and a maximum from the shareholders’ pre-emption rights, if provided for in the of SEK 120,400,000 distributed over a minimum of 30,100,000 Companies Act. and a maximum of 120,400,000 shares. At the date of this Prospectus, the Company’s registered share capital amounts to Rights to dividend and liquidation proceeds SEK 30,100,000 distributed over 30,100,000 registered shares. All shares carry equal rights to dividends as well as to the Com- There is one class of shares in the Company and each share has pany’s assets and potential surplus in the event of liquidation. a quotient value of SEK 1. Resolutions regarding dividends are passed by the general The shares in the Company have been issued in accordance meeting. All shareholders registered as shareholders in the share with Swedish law and are denominated in SEK. The shares are register maintained by Euroclear on the record date adopted by fully paid for and are freely transferrable. The Company’s shares the general meeting are entitled to receive dividends. Dividends are registered in a CSD register in accordance with the Swedish are normally distributed to shareholders as a cash payment per Financial Instruments Accounts Act (Sw. lagen (1998:1479) om share through Euroclear, but may also be paid out in a manner värdepapperscentraler och kontoföring av finansiella instrument). other than cash (in kind). If shareholders cannot be reached This register is operated by Euroclear, the Swedish central secu- through Euroclear, such shareholder still retains its claim on the rities depository (Euroclear Sweden AB, Box 191, 101 23 Stock- Company to the dividend amount, subject to a statutory limitation holm, Sverige). No share certificates are issued with respect to of ten years. Upon the expiry of the limitation period, the dividend the shares. amount shall pass to the Company. There are no restrictions as to the right to dividends for share- Certain rights attached to the shares holders domiciled outside Sweden. Payments to shareholders Voting rights not resident in Sweden for tax purposes are normally subject At general meetings of shareholders, each share carries one vote to Swedish withholding tax. See further in section “Certain tax and each shareholder is entitled to vote the full number of shares issues in Sweden”. such shareholder holds in the Company. Share capital development Pre-emption rights The table below summarises the historic developments of the If the Company issues shares, warrants or convertibles in a cash Company’s share capital and the changes in the number of issue or a set-off issue (Sw. kvittningsemission), the holders of shares and the share capital that will be made in connection with shares have pre-emption rights to subscribe for such securities the listing of the shares on Nasdaq Stockholm. in proportion to the number of shares held prior to the issue.

Change in number of Total number Change in share Share capital Quotient value Year Event shares of shares capital (SEK) (SEK) 1996 Formation 1,000 1,000 100,000 100,000 100 2004 Share issue 300,000 301,000 30,000,000 30,100,000 100 2017 Share split 100:1 29,799,000 30,100,000 – 30,100,000 1 2017 Share issue in connection with the Offer1) 9,152,542 39,252,542 9,152,542 39,252,542 1 1) The general meeting in the Company will resolve upon a new issue of shares of no more than 9,152,542 shares, assuming a final price in theO ffer at the mid-point of the Price Range, in conjunction with the Offer according to this Prospectus. The change in share capital has been stated as if all of these shares are issued.

Dilution in terms of shareholding Authorisations As of the date of this Prospectus, the Group has no outstanding At the annual general meeting held on 14 March 2017, the convertibles, warrants or other share-related securities which shareholders of the Company resolved to authorise the board of would, if they were exercised, imply a dilutive effect for the share- directors to, at one or several occasions before the next annual holders of the Company. general meeting, with or without pre-emption rights for the share- The issue of the shares in connection with the Offer could, holders, resolve upon a new issue of shares in the Company. The assuming a price in the Offer at the mid-point of the Price Range, reason for deviating from the shareholders’ pre-emption rights increase the number of the Company’s shares by a maximum shall, in such case, be to enable an offering of shares to investors of 9,152,542 corresponding to a dilution of 30.4 per cent of the in connection with capital raisings and/or diversification of the shares and votes in the Company. Company’s shareholder base. Payment for subscribed shares may be made in cash, by set-off or in kind.

82 Invitation to acquire shares in SSM Holding AB (publ) Share capital and ownership structure

Ownership structure prior to and the “free float” in the Company to reach at least 25 per cent and following the offer that the Overallotment Option is not exercised (“Outcome I”), The following table presents the Selling Shareholder’s share- (b) the number of shares that the Selling Shareholder may sell, holding at the date of this Prospectus and the number of shares assuming a final price in theO ffer corresponding to SEK 60 per that the Selling Shareholder expects to sell in the Offer. The share, that the Selling Shareholder uses its right to increase the number of shares expected to be sold in the Offer by the Selling Offer in full and that the Overallotment Option is not exercised Shareholder will depend on the final price in theO ffer and is (“Outcome II”) and (c) the number of shares that the Selling indicated with the following alternative outcomes: (a) the number Shareholder may sell assuming a final price in theO ffer corre- of shares that the Selling Shareholder may sell assuming a final sponding to SEK 60 per share, that the Selling Shareholder uses price in the Offer at the high end of the Price Range, that the its right to increase the Offer in full and that the Overallotment Selling Shareholder sells existing shares in the Offer in order for Option is exercised in full (“Outcome III”).

Shareholding at the date of this Prospectus Outcome I Outcome II Outcome III Percentage Percentage Percentage Selling Shareholder Number Percentage Number of the Offer Number of the Offer Number of the Offer Eurodevelopment Holding AG 30,100,000 100.0 % 1,196,875 12.4% 3,333,333 27.0% 5,183,332 36.5%

The table below presents the current ownership structure of the date of this Prospectus, there were, according to the Company’s Company, as well as expected ownership of shares following the knowledge, no persons or legal entities owning five per cent or completion of the Offer with the following alternative outcomes: more of the shares or votes in the Company, except as stated in (a) Outcome I, (b) Outcome II and (c) Outcome III. As at the the table below.

Shareholding at the date of this Prospectus Outcome I1) Outcome II1) Outcome III1) Number Percentage Number Percentage Number Percentage of shares of shares of shares of shares of shares of shares and votes and votes and votes and votes and votes and votes in the in the in the in the in the in the Company Company Company Company Company Company after the after the after the after the after the after the Shareholder Number Percentage Offer Offer Offer Offer Offer Offer Eurodevelopment Holding AG 30,100,000 100.0 % 28,903,125 75.0% 26,766,667 68.5% 24,916,668 63.7% New shareholders2) 0 0.0 % 9,634,375 25.0% 12,333,333 31.5% 14,183,332 36.3% Total 30,100,000 100.0 % 38,537,500 100.0% 39,100,000 100.0% 39,100,000 100.0% 1) The outcome does not consider a potential exercise of the share options etc. which the Selling Shareholder has issued and which are described further in section “Corporate governance – Remuneration to the members of the board of directors and senior executives – Share option program from the Selling Shareholder etc.”. 2) New shareholders include the Cornerstone Investors.

Agreements between shareholders of any securities that are substantially similar to the shares of Insofar as the board directors of the Company is aware, there are the Company. The Selling Shareholder and the members of the no shareholder agreements, other agreements or equivalent that board of directors and senior executives of the Company will could lead to a change in control of the Company. each undertake to the Joint Global Coordinators not to, without the prior written consent of the Joint Global Coordinators, sell Subscription undertakings shares or other securities of the Company for a period of 360 See section “Legal considerations and supplementary informa- days from the first day of trading of the shares. See also section tion – Subscription undertakings” for a description of the subscrip- “The Placing Agreement etc. – Lock up”. tion undertakings. Dividends and dividend policy Lock up General After completion of the Offer, the Selling Shareholder will, Shareholders have the right to future dividends, under condition assuming a price in the Offer at the mid-point of the Price Range, that resolutions are passed thereon. All shares carry equal rights continue to hold, approximately 71.2 per cent of the shares and to dividends as well as to the Company’s assets and potential votes in the Company (assuming that the Overallotment Option is surplus in the event of liquidation. During the financial year which exercised in full). ended on 31 December 2014, 2015 and 2016, dividends have The Company will enter into an agreement with the Joint been distributed in accordance with the table below (based Global Coordinators pursuant to which it will not, for a period of on the number of shares in the Company as of the date of this 180 days after the first day of trading of the shares, without the Prospectus). prior written consent of the Joint Global Coordinators, submit to its shareholders any proposal for a capital increase that would 2014 2015 2016 enable it to, or otherwise take any action to, directly or indirectly Dividend per share (SEK) 0.1 0.1 0.6 issue, offer, pledge, sell, contract to sell, or otherwise dispose

Invitation to acquire shares in SSM Holding AB (publ) 83 Share capital and ownership structure

Dividend policy Miscellaneous information SSM’s aim is to, as of the annual general meeting 2018, distribute Shareholders registered as shareholders in the share register dividends to the shareholders of no less than 30 per cent of the maintained by Euroclear on the record date adopted by the profit after tax. The objective of the Company’s aim as regards general meeting are entitled to receive dividends. Dividends will dividends is to secure shareholders’ return on investment as well normally be paid to shareholders in SEK on a per share basis as the Group’s requirement of funds for developing the business. through Euroclear, but may also be paid in a manner other than cash (in kind). Legal requirements If shareholders cannot be reached through Euroclear, such The declaration of dividends or other capital distributions is shareholder still retains its claim on the Company to the dividend decided upon by the general meeting. Dividends or other capital amount, subject to a statutory limitation of ten years. Upon the distributions may only be declared to the extent that there is expiry of the limitation period, the dividend amount shall pass to unrestricted equity (Sw. fritt eget kapital) available, meaning that the Company. The Company declares dividends in SEK. Subject there must be full coverage for the Company’s restricted equity to any restrictions imposed by banks or clearing systems in the (Sw. bundet eget kapital) after the distribution. Restricted equity, relevant jurisdiction, payments to such shareholders are made in includes, among other things, the Company’s share capital and the same manner as for shareholders resident in Sweden. There its statutory reserve. Furthermore, in addition to the requirement are no restrictions on the right to dividends for shareholders domi- regarding full coverage for the Company’s restricted equity, ciled outside Sweden. Payments to shareholders not resident in dividends or other capital distributions may only be declared to Sweden for tax purposes are subject to Swedish withholding tax. the extent that such declaration is prudent, taking into considera- See further in section “Certain tax issues in Sweden”. tion: (a) the demands with respect to the size of the equity which are imposed by the nature, scope and risks associated with the operations of the Company and, if applicable, the Group; and (b) the need to strengthen the balance sheet, liquidity and financial position of the Company and, if applicable, the Group (designated the prudence rule, (Sw. försiktighetsregeln)). The general meetings of shareholders may, as a general rule, not declare dividends in an amount higher than the board of directors has proposed or approved. Under the Companies Act, minority shareholders that together represent at least ten per cent of all outstanding shares of the Company have the right to request a payment of dividend (to all shareholders) from the Company’s profits. Following such a request, the annual general meeting is required to resolve to distribute 50 per cent of the remaining profit for the relevant year as reported on the statement of financial position adopted at the annual general meeting, after deductions made for: (a) losses carried forward that exceed unrestricted reserves (Sw. fria fonder); (b) amounts which, by law or the articles of association, must be transferred to restricted equity; and (c) amounts which, pursuant to the articles of association, are to be used for any purpose other than distribution to the shareholders. However, the general meeting is not obliged to declare dividends in excess of five per cent of the Company’s shareholders’ equity. Moreover, the general meeting may not declare dividends to the extent that there will not be full coverage of the Company’s restricted equity or if it would not be consistent with the assessment described above.

84 Invitation to acquire shares in SSM Holding AB (publ) Articles of association

Articles of association

SSM Holding AB (publ) 556533-3902

§ 1 Registered name § 9 The Annual General Meeting The registered name of the company is SSM Holding AB (publ). At the annual general meeting, the following matters shall be addressed. § 2 Registered office (1) Election of a chairman of the meeting. The registered office of the board of directors is in Stockholm (2) Preparation and approval of the voting list. municipality. (3) Approval of the agenda. (4) Election of one or two persons to verify the minutes. § 3 Operations (5) Determination whether the meeting has been duly con- The company shall manage securities and practice consulting vened. within the construction and real estate business and conduct (6) Presentation of the annual report and the auditor’s report other business associated therewith. and, if applicable, the consolidated accounts and the auditor’s report from the audit of the group. § 4 Share capital (7) Resolutions on: The share capital shall be not less than SEK 30,100,000 and not (i) the adoption of the income statement and balance more than SEK 120,400,000. sheet and, if applicable, the consolidated income statement and the consolidated balance sheet; § 5 Number of shares (ii) the allocation of the company’s profit or loss in accord- The number of shares shall be not less than 30,100,000 and not ance with the adopted balance sheet; and more than 120,400,000. (iii) the discharge of liability of members of the board of directors and the CEO. (8) Determination of the number of directors and, if applicable, § 6 Board of directors auditors. The company’s board of directors shall consist of not less than (9) Determination of the fees to be paid to the board of directors three and not more than ten directors without deputy directors. and the auditors. The directors are appointed annually by the annual general (10) Election of the board of directors and, if applicable, auditors. meeting for the time until the end of the next annual general (11) Other matters that may be brought before the meeting meeting. pursuant to the Swedish Companies Act or the articles of association. § 7 Auditor The company shall have not less than one and not more than two auditors and an equal number of deputy auditors, or one and not § 10 Financial year The company’s financial year shall be 1 January–31 December. more than two registered accounting firms. Auditor and deputy auditor, as well as auditor in charge, shall be authorised auditors. § 11 Central securities depository registration The company’s shares shall be registered in a central securities § 8 Notice depository register pursuant to the Swedish Act on Central Secu- Notice of a general meeting shall be made by an announce- rities Depositories and the Accounting of Financial Instruments ment in the Official Gazette (Sw.Post- och Inrikes Tidningar) (SFS 1998:1479). and by making the notice available on the company’s website. The company shall advertise in Dagens Industri that notice has been made. Notice of an annual general meeting and a general Adopted at an extraordinary general meeting on the 16 December meeting where a matter of amendment of the articles of associa- 2016. tion shall be addressed, shall be made not earlier than six and not later than four weeks prior to the general meeting. Notice of other general meetings shall be made not earlier than six weeks and not later than three weeks prior to the general meeting. A shareholder that would like to participate in a general meeting shall give notice thereof to the company not later than the day set out in the notice of the general meeting. This day may not be a Sunday, other public holiday, Saturday, Midsummer Eve, Christmas Eve or New Year’s Eve and must not be earlier than the fifth weekday prior to the general meeting.

Invitation to acquire shares in SSM Holding AB (publ) 85 The Placing Agreement etc.

The Placing Agreement etc.

Placing Agreement Lock up The Company, the Selling Shareholder and the Joint Global Pursuant to the Placing Agreement, the Company will agree Coordinators intend to enter into the Placing Agreement on with the Joint Global Coordinators that it will not, for a period of or around 5 April 2017 with respect to the shares in the Offer. 180 days after the first date of trading of the shares, without the Subject to certain conditions set forth in the Placing Agreement, prior written consent of the Joint Global Coordinators, submit to the Joint Global Coordinators have agreed, severally but not its shareholders any proposal for a capital increase that would jointly, to procure purchasers for, or failing which, to purchase enable it to, or otherwise take any action to, directly or indirectly themselves, and each of the Company and the Selling Share- issue, offer, pledge, sell, contract to sell, or otherwise dispose of holder have agreed to issue or sell, as applicable, to the Joint any securities of the Company that are substantially similar to Global Coordinators shares sold in the Offer, taking account of the shares, including any securities that are convertible into or the commitments of each Joint Global Coordinators as set forth exchangeable for, or that represent the right to receive, shares in the table below, at an offer price per share to be set forth in the of the Company; and not to purchase or sell any option or other Placing Agreement and which will be announced by the Company security or enter into any swap, hedge or other agreement that on or around 6 April 2017. would have similar economic consequences to such actions. The Company’s undertaking is subject to certain customary excep- Percentage of tions and shall also not apply in connection with the Company’s Joint Global Coordinator shares in the Offer historical, current or future share-based incentive programs. SEB 50 The Selling Shareholder and the members of the board ABG 50 of directors and senior executives of the Company will each undertake to the Joint Global Coordinators not to, with the prior The obligations of the Joint Global Coordinators to procure written consent of the Joint Global Coordinators, offer, pledge, purchasers for shares are subject to the fulfilment of certain sell, contract to offer, sell any option or contract to purchase, conditions in the Placing Agreement, including the delivery of purchase any option or contract to sell, grant any option, right legal opinions on certain legal matters from legal counsel to the or warrant to purchase, lend or otherwise transfer or dispose of, Company and the Joint Global Coordinators. Pursuant to the directly or indirectly, any shares or any securities of the Company Placing Agreement, the Company makes customary representa- that are convertible into or exercisable or exchangeable for, or tions and warranties to the Joint Global Coordinators, primarily in that represent the right to receive, shares of the Company or any relation to the information in the Prospectus being correct and the such substantially similar securities; enter into any swap, hedge Prospectus fulfilling the requirements of applicable laws and reg- or other agreement that transfers to another, in whole or in part, ulations. The Company and the Selling Shareholder will pay fees any of the economic risks of ownership of the shares; or propose to the Joint Global Coordinators based on a percentage of the or vote in favour of a capital increase proposed with respect to aggregate purchase price of the shares, including pursuant to the the Company, whether any such transaction is to be settled by exercise of the Overallotment Option. In addition, the Company delivery of shares, in cash or otherwise, for a period of 360 days and the Selling Shareholders may choose to pay a discretionary from the first day of trading of the shares. The foregoing shall not fee to the Joint Global Coordinators, also calculated based on apply to: certain disposals of shares to family members, limited a percentage of the aggregate purchase price of the shares, partners, key employees and legal entities in which the seller including pursuant to the exercise of the Overallotment Option. has significant influence, provided that the transferee agrees to a The Company has agreed to reimburse the Joint Global Coor- lock-up; any disposal pursuant to a bonafide thirdparty takeover dinators for certain of their expenses in connection with the Offer. offer or other similar transaction; any disposal in connection with The Company has agreed to indemnify the Joint Global Coordi- a redemption or buy-back of shares by the Company; rights in nators against certain losses and liabilities arising in connection connection with a pre-emptive offering by the Company; any with the Offer. The Placing Agreement will provide that the Joint transaction required by law, regulation or court decision; any Global Coordinators may elect to terminate their commitments transfer or deposition of shares to a capital insurance or an under the Placing Agreement upon the occurrence of certain investment savings account, subject to certain conditions; trans- events prior to the listing of the shares, such as a general suspen- actions relating to shares or other securities acquired in open sion or other material restrictions of trading on Nasdaq Stockholm market transactions after the completion of the Offer. or upon the occurrence of any other event which entitles the Joint Global Coordinators to cancel their obligations under the Placing Agreement. Such events include, inter alia, breaches of the Placing Agreement by the Company or the Selling Shareholder, or if the warranties and representations given by the Company or the Selling Shareholder in certain offering documents should render false or misleading, or any failure to perform any covenants, in each case, which may reasonably be expected to result in a material adverse change in the condition, financial, operational, legal or otherwise, or in the earnings, management, business affairs or business prospects of the Company and its subsidiaries.

86 Invitation to acquire shares in SSM Holding AB (publ) The Placing Agreement etc.

Stabilisation The CEO’s and advisor’s interests In connection with the Offer, SEB, acting as Stabilising Manager, In conjunction with the Offer, the Company’s CEO Mattias Roos or its agents, on behalf of the Joint Global Coordinators may has the right to acquire the equivalent of one per cent of the total engage in transactions that stabilise, maintain or otherwise affect number of shares in the Company, which as of the day of this the price of the shares for up to 30 days from the first day of the Prospectus amounts to 301 thousand shares. The price of the listing of the shares on Nasdaq Stockholm. The Joint Global each share shall be the final price of theO ffer. Coordinators, the Company and the Selling Shareholder have The Joint Global Coordinators and their respective affiliates agreed that the Joint Global Coordinators may overallot shares have previously, and may continuously, within the context of by accepting offers to purchase a greater number of shares than their ordinary course of business, provide the Company, the for which they are obligated to procure purchasers under the Selling Shareholder and their respective affiliates with investment Placing Agreement, creating a short position. A short sale is cov- banking services, financial advisory services, and other services. ered if the short position is no greater than the number of shares Additionally, the Joint Global Coordinators may, in the ordinary available for purchase by the Joint Global Coordinators under course of their business, hold the Company’s or the Selling the Overallotment Option. The Joint Global Coordinators can Shareholder’s securities for the purpose of carrying out invest- close out a covered short sale by exercising the Overallotment ments on behalf of their, or their affiliates’, respective account. Option or purchasing shares in the open market. In determining With respect to certain of these transactions and services, the the source of shares to close out a covered short sale, the Joint sharing of information is generally restricted for reasons of confi- Global Coordinators will consider, among other things, the dentiality, internal procedures or applicable rules and regulations. open market price of shares compared to the price available The Joint Global Coordinators have received and will receive under the Overallotment Option. The Joint Global Coordinators customary fees and commissions for these transactions and ser- may also sell shares in excess of the Overallotment Option, vices and may come to have interests that may not be aligned or creating a naked short position. The Joint Global Coordinators could potentially conflict with the interests of potential investors, must close out any naked short position by purchasing shares the Company and/or the Selling Shareholder. in the open market. A naked short position is more likely to be created if the Stabilising Manager is concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase shares pursuant to the Offer. As an additional means of facilitating the Offer, the Stabilising Manager or its agents may effect transactions to stabilise or maintain the price of the shares or any options, warrants or rights with respect to, or interests in, the shares. These activities may support the market price of the shares at a level higher than that which might otherwise prevail in the open market. Such transactions may be effected on Nasdaq Stockholm, in the over-the-counter markets or otherwise. The Stabilising Manager and its agents are not required to engage in any of these activities and, as such, there is no assurance that these activities will be undertaken; if under taken, the Stabilising Manager or its agents may end any of these activities at any time and they must be brought to an end no later than at the end of the 30-day period mentioned above. Save as required by law or regulation, none of the Stabilising Manager or any of its agents, or the Joint Global Coordinators, will disclose the extent of any stabilisation and/or overallotment transactions in connection with the Offer.

Invitation to acquire shares in SSM Holding AB (publ) 87 88 Invitation to acquire shares in SSM Holding AB (publ) Legal considerations and supplementary information

Legal considerations and supplementary information

Introduction structure and framework of the project, to which the Group then SSM is a Swedish public limited company (corporate identifica- undertakes to conform during the exploitation. tion number 556533-3902) which was founded on 6 June 1996 and registered with the Swedish Companies Registration Office Cooperation agreement on the exploitation of on 6 August 1996. The Company’s current corporate name, SSM the property Stockholm Timotejen 17 Holding AB (publ), was registered on 11 December 2013. The The former subsidiary SSM Hold Fast 6 AB (“Hold Fast 6”), which Company’s head office is in Stockholm, Sweden. The Company’s has been transferred to Bostadsrättsföreningen Metronomen, has operations are carried out in accordance with the Companies Act. entered into a cooperation agreement with the external parties SSM’s address is Kungsgatan 57 A, 111 22 Stockholm, Sweden. Telefonplan Stockholm Property AB and Telefonplan Garage AB See the section “Legal considerations and other information – (the “Telefonplan Companies”) regarding the exploitation of Complete group structure” for a description of the Group, SSM’s the property Stockholm Timotejen 17 (the Metronomen project), position in the Group and information relating to subsidiaries and which is owned by Hold Fast 6, and two neighbouring properties joint ventures. owned by the Telefonplan Companies. The Group intends, as part of the Metronomen project, to build 189 cooperative apartments Material agreements and four permanent preschool departments within the exploita- In addition to what is stated below, there are no agreements to which tion area at Stockholm Timotejen 17. the Company or any company in the Group is a party that (a) are Pursuant to the cooperation agreement, the parties shall material to the Group and which have been entered into during the pursue to ensure that the area at the three properties is devel- two years immediately preceding the date of this Prospectus; or (b) oped in accordance with the proposed zoning plans. Also, the contain rights, obligations or commitments material to the Group as cooperation agreement governs matters such as the manage- of the date of this Prospectus. The Company’s material agreements ment of property law aspects of public spaces in the case of mainly consist of land allocation agreements, acquisition agree- the adoption of each zoning plan, the distribution of costs, and ments, exploitation agreements, cooperation agreements with part- compensation in the event that a zoning plan for only one of the ners in the Group’s associated companies, contracting agreements, properties is adopted. The parties undertake not to appeal deci- financing agreements and employment contracts. sions to adopt zoning plans or grant building permits. Pursuant to the cooperation agreement, SSM Fastigheter AB shall guarantee, Land allocation agreements as a primary obligor, the guarantee given to the city of Stockholm SSM’s business depends on access to land in order to pursue new by the owner of the Telefonplan Companies, Alm Equity AB, projects. One important procedure used by SSM in order to obtain regarding the payment of liquidated damages in the event that land is municipal land allocations. The Group’s land allocation agree- actions under the exploitation agreement with the city of Stock- ments have been entered into on customary market terms. Pursuant holm are not carried out. The guarantee is limited to an amount of to the land allocation agreements, the Company has a time limited SEK 10,675 thousand. option to exclusively negotiate agreements with the municipality In addition to the project described above, the Group has, as regarding the exploitation of the land, including acquisition agree- of the date of this Prospectus, no projects for which exploitation ments for the land in question. The land allocation agreements are agreements have been entered into, or will be entered into in the terminated without any right to claim compensation for any of the near future, where the adoption of a legally binding zoning plan parties, unless an exploitation agreement is entered into within a is required before the Group can progress the project to the next certain period. Furthermore, the land allocation agreements contain stage in the development process. certain key principles that shall apply when the Company draws up plans for the land. The distribution of costs between the Group and Cooperation agreements the municipality as a result of the exploitation is also established. The Group is a partner in joint ventures along with Alecta Moreover, the parties to the land allocation agreement will agree on Pensionsförsäkring, ömsesidigt (“Alecta”), Lindbäcks Boende the calculation of the purchase price for the transfer of the land. AB (”Lindbäcks Bygg”), Property (IV) Holding I AB and Atina Holding AB (individually “Profi Fastigheter”), Student Hill Acquisition agreements Sweden AB (“Student Hill”) and LIBU Invest AB (“LIBU Invest”). The acquisition of properties (directly or indirectly through legal All joint ventures are owned by the Group to 50 per cent. The entities) forms a central part of the Group’s on-going operations frameworks for the Group’s participation in its joint ventures are and growth strategy. In the financial years 2014, 2015 and 2016, governed in cooperation or shareholder agreements entered into the Group acquired properties corresponding to 812, 658 and with each partner. The terms and conditions of the agreements 2,906 building rights. In general, the Group’s acquisition agree- are negotiated individually and include provisions on aspects ments follow customary market terms in respect of the warranties such as how the projects will be financed and how any profits and given, warranty periods, purchase price structure, and limitations losses in the projects shall be distributed. of amounts and liabilities of the seller. The Group’s acquisition agreements are also subject to the condition that the zoning plan Partnership with Alecta in relation to the on-going projects for the relevant property is adopted and legally binding (unless West Side Solna, The Lab and Rosteriet a requisite zoning plan already exists). No individual acquisition The Company has entered into a cooperation agreement with agreement is deemed to solely entail rights or obligations that are Alecta regarding the ownership of Alfa SSM JV AB and KB Alfa material for the Group. SSM and its subsidiaries. Within the framework of the partnership, the parties intend to invest in, develop and carry out projects Exploitation agreements relating to the production of cooperative apartments. As of the The Group normally enters into exploitation agreements with the date of this Prospectus, the Company and Alecta are carrying out exploitation committee of the relevant municipality for the project. the West Side Solna, The Lab and Rosteriet projects. The purpose of the exploitation agreements is to agree on the

Invitation to acquire shares in SSM Holding AB (publ) 89 Legal considerations and supplementary information

The agreement contains standard provisions for this type The agreement contains standard provisions for this type of agreement in relation to the prohibition on transfers, deci- of agreement in relation to the prohibition on transfers, decision-making and handling of deadlocks. In addition, the agreement sion-making and handling of deadlocks and rights of first refusal. stipulates that the partnership shall be dissolved, and on-going projects be wound up and disposed of to third parties, if one of the Partnership with LIBU Invest in relation to the Elverket project parties has stated in writing that the partnership is not working and Hold JV Nacka AB has entered into a cooperation agreement with the other party has failed to adopt a remedy within 90 days. LIBU Invest regarding the joint ownership of JV Elverkshuset AB and Ekonomisk förening Nacka Elverket. After the agreement had Partnership with Lindbäcks Bygg in relation to been entered into, Ekonomisk förening Nacka Elverket acquired the Kosmopoliten project the shares of Fastighets AB Elverkshuset, after which JV Elverk- SSM Fastigheter AB has entered into a cooperation agreement shuset AB sold all holdings in Ekonomisk förening Nacka Elverket with Lindbäcks Bygg regarding the joint ownership of LB SSM to Bostadsrättsföreningen Elverkshuset. Within the framework of Stockholm JV AB and SSM LB Stockholm KB and their sub- the partnership, the parties intend to carry out the Elverket project. sidiaries. Within the framework of the partnership, the parties Hold JV Nacka AB has pledged its shares in JV Elverkshuset intend to carry out the project Kosmopoliten. As of the day of AB, and SSM Fastigheter AB has given a parent company this Prospectus, the above mentioned co-owned companies do guarantee as security for LIBU Invest’s right to payment pursuant not own the right to the property which the project relates to and to the promissory notes issued by Ekonomisk förening Nacka the partnership is currently subject to negotiations between the Elverket in relation to the purchase price relating to the acquisi- parties. tion of Fastighets AB Elverkshuset. The agreement contains standard provisions for this type The agreement contains standard provisions for this type of agreement in relation to the prohibition on transfers, deci- of agreement in relation to the prohibition on transfers, decision-making and the handling of deadlocks and rights of first sion-making and handling of deadlocks. refusal. In addition, each party has the right to demand redemption of the other party’s shares, in the event of ownership changes Contracting agreements which mean that a new owner obtains control over such company. The Group’s operations include the construction of residential properties within the framework of projects. An important step Partnership with Profi Fastigheter in relation to in the construction of housing is to enter into a turnkey contract, the Turbinhallen project where the Group is the contractor and the housing associations are SSM Fastigheter AB has entered into a shareholders’ agreement the clients. The Group’s turnkey contracts entail that the Group, as with Profi Fastigheter regarding the joint ownership of Turbinhallen the building contractor, is responsible for project planning and exe- Utveckling AB. Within the framework of the partnership, the parties cution, which among other things includes building, painting, instal- intend to carry out the Turbinhallen project. The agreement contains lation, land planning, detailed planning and management work for standard provisions for this type of agreement in relation to the pro- fully functional facilities on the clients’ properties. The Group’s con- hibition on transfers, decision-making and handling of deadlocks. struction contracts have been entered into on customary market terms, with the application of the ABT 06 standard terms. Partnership with Profi Fastigheter in relation to According to the contracting agreements, the Group normally the Bromma Gates project has an obligation to, no later than six months after the completion SSM JV Bromma AB has entered into a shareholders’ agree- of the contract, purchase cooperative apartments that have not ment with Profi Fastigheter regarding the joint ownership of been sold. The Group is also obliged to rent premises that are Brommaplan Holding AB (“Brommaplan”). Within the framework to be let with a right of tenancy and that have not been let on the of the partnership, the parties intend to carry out the Bromma final account date. Such an obligation applies for three years from Gates project on leasehold properties held by two subsidiaries of the final account date. In addition, the Group is also liable, after Brommaplan (the “Leasehold Companies”). The Parties shall the contracts have been completed, for the operating and capital give a guarantee, in equal parts, for the liabilities of Brommaplan costs, including interest costs, in relation to the construction loan and the Leasehold Companies, and other commitments required and for any unpaid deposits and leasing fees relating to unsold in order to carry out the project. Profi Stockholm 2016 AB and cooperative apartments. With regard to cooperative apartments SSM Fastigheter AB have also given guarantees, as primary that are sold, but where the occupation occurs after the final obligors, for the obligations of each party under the agreement. account date, the Group is also liable for the aforementioned The project shall be suspended if certain conditions occur costs up to the final account date. The Group’s obligation to pay (for example, if the zoning process has not begun or has not costs associated with unsold cooperative apartments applies been completed within a certain period of time) and the Parties without limitation in time. shall then endeavour to ensure that Brommaplan, and indirectly The Group gives the clients customary warranties, including the leasehold properties, are divested. The agreement contains warranties relating to the project planning, execution and materials standard provisions for this type of agreement in relation to the pro- of the contract. The Group also gives additional warranties, hibition on transfers, decision-making and handling of deadlocks. including a warranty that the Group will compensate the housing association for: (a) all costs relating to the acquisition of the prop- Partnership with Student Hill in relation to the on-going projects erty and the contract which exceed a specified purchase amount; The Loft and Twin House and (b) all interest costs incurred due to the fact that the specified SSM Fastigheter AB has entered into a cooperation agreement interest rate in the housing association’s loan agreement exceeds with Student Hill regarding the joint ownership of Studentbacken a certain interest rate level for a period of two years after the final JV AB and Studentbacken KB and its subsidiaries. Within the account date. The Group receives all income and is liable for all the framework of the partnership, the parties intend to invest in, clients’ costs under the agreement up to the final account date. The develop and carry out projects relating to the production of student payments are thereafter settled on the final account date, where- apartments. As of the date of this Prospectus, the Company and upon a final settlement takes place between the parties. Student Hill are carrying out The Loft and Twin House projects.

90 Invitation to acquire shares in SSM Holding AB (publ) Legal considerations and supplementary information

Employment contracts Loan from Collector Credit AB to SSM Hold D AB For a description of SSM’s material employment contracts, see SSM Hold D AB is the borrower in a credit facility of SEK 100 the section “Corporate governance – Remuneration of directors million provided by Collector Credit AB in order to finance the and senior executives – Current employment conditions for the Bromma Tracks project. The credit facility will be repaid in CEO and other senior executives”. connection with the completion of the Bromma Tracks project. The housing association Brf Bromma Tracks will thereafter raise Financial arrangements its own financing. As security for the loan, SSM Hold D AB has Bond loans pledged loans to the housing association. The loan contains On 9 May 2016, the Company issued bonds for a value of SEK customary terms and conditions as to, among other things, 400 million within a total framework of SEK 700 million. The restrictions on distributions, indebtedness and provision of secu- bonds are subject to a variable interest rate of the three-month rity. SSM Fastighet AB has given a guarantee, primary obligor, in STIBOR rate plus a margin of eight per cent and fall due on 9 May relation to SSM Hold D AB’s commitments under the credit facility. 2020. Each bond has a nominal value of SEK one million. The The loan falls due (i) 40 months from the agreement date of Company has pledged shares in subsidiaries as security for the 31 March 2015, or (ii) the date on which the housing association’s Company’s obligations under the terms of the bonds. The Com- construction loan is refinanced in full, whichever is the earlier. pany may on one or more occasions issue additional bonds for a total of SEK 300 million, provided that the Group’s debt/equity Loan from Swedbank AB (publ) to Fastighets AB Älvsjö Quarters ratio, calculated pro forma taking the said issue into considera- Fastighets AB Älvsjö Quarters is the borrower in a credit facility tion, exceeds 27.5 per cent. Furthermore, the Company has a of SEK 33 million provided by Swedbank AB (publ) in order to right, within 180 calendar days after the listing, to partially repay finance the ÄlvsjöQ uarters project. The credit facility will be up to 30 per cent of each bond with the addition of a premium of repaid in connection with the completion of the Älvsjö Quarters. four per cent and accrued but unpaid interest. However, such a As security for the loan, Fastighets AB Älvsjö Quarters has partial repayment does not mean that the scope of the aforemen- pledged the leasehold property Stockholm Herrgården 1 property tioned ability to issue further bonds is increased. The bonds are to Swedbank AB (publ). The loan contains customary terms and listed on Nasdaq Stockholm and additional bonds issued will be conditions as to, among other things, restrictions on indebted- listed on Nasdaq Stockholm within ten banking days. ness and provision of security. SSM Hold Stockholm 2 AB and The terms of the bonds specify that the Group’s debt/equity SSM Fastigheter AB have given a guarantee, as primary obligors, ratio must always exceed 22.5 per cent and that the Company in relation to Fastighets AB Älvsjö Quarter’s commitments under must hold liquid assets equivalent to a minimum of three months’ the credit facility. The loan falls due on 30 September 2018. interest payments on the bonds. The terms of the bonds contain restrictions on the ability of the Company and its subsidiaries to Guarantee commitments decide on distributions, including a restriction that the Company Upon the Group’s transfer of a property with associated contract may not decide on an annual dividend in excess of 20 per cent to a housing association, the Group procures a construction loan of the Group’s annual profit. However, according to the terms of with a bank, which is entered into by the housing association. In the bonds, this limit shall be raised to 50 per cent of the Group’s order for the housing association to obtain the construction loan, annual profits after theO ffer has been completed. Furthermore, a company in the Group, alone or with a partner, is required to the terms of the bonds conditions contain restrictions relating to give a guarantee for the housing association’s obligations under the Company’s and its subsidiaries’ indebtedness, provision of the construction loan. As of 31 December 2016, these guarantees security and disposal of assets as well as a commitment not to amounted to in total SEK 966 million. start the construction of cooperative apartments unless at least The housing associations’ loan agreements normally contain 50 per cent of the cooperative apartments are covered by signed obligations for the association to provide the lender with certain pre-agreement. The terms of the bonds also contain a right for the information on a continuous basis and general obligations for the agent, provided that certain events have occurred and following association regarding, for example, not to pledge assets or incur the demand from bond holders representing at least 50 per cent further indebtedness. When the construction has been completed of the nominal value of all outstanding bonds, to request imme- and occupation takes place, the construction loan is refinanced diate repayment of all bonds. Examples of such events include and the Group is released from its guarantee commitment. failure to make a payment in accordance with the terms of the However, some of the Group’s guarantees vis-à-vis the housing bonds, the existence of grounds for termination under another association are still valid. loan agreement in excess of a specific amount, an enforcement of a pledge in a material subsidiary in respect of a liability exceeding Placing Agreement a specified amount or the insolvency of a material subsidiary. For a description of the Placing Agreement in relation to the Offer, see the section “The Placing Agreement etc.”. Bank overdraft facility SSM Bygg & Fastigheter AB has a bank overdraft facility of SEK Environment 20 million at Svenska Handelsbanken. The overdraft facility is In general, the Group carries out due diligence reviews relating to extended by one year on 1 January each year, provided that environmental and health risks in connection with the acquisition neither party has given notice of termination of the overdraft facility. of new properties. At the time of the residential project planning, As security for the overdraft facility (and certain other commitments extensive investigations are also initiated in relation to applicable vis-à-vis Svenska Handelsbanken) SSM Bygg & Fastigheter AB land conditions, whereupon an environmental study report and has pledged floating charges for a total of SEK 23.7 million. an environmental plan are prepared. Common environmental problems, which are not material for the Group, relating to both land and buildings are encountered from time to time. At present, SSM is not subject to any claims for environmental remediation or claims due to environmental contamination.

Invitation to acquire shares in SSM Holding AB (publ) 91 Legal considerations and supplementary information

Disputes that the fund is not subject to exceptionally high net outflows The Group is, from time to time, a party to various types of dis- during the application period. If any of these conditions are not putes and legal proceedings. The legal proceedings to which the met, the Cornerstone Investors will not be obliged to subscribe for Group is or has been a party have arisen in the ordinary course shares in the Offer. of business. SSM neither is nor has been a party to any legal proceedings during the past twelve months that have or could have a Description of the Cornerstone Investors material adverse effect on the Group’s profit or financial position. About Länsförsäkringar Fondförvaltning AB (publ) Länsförsäkringar Fondförvaltning AB (publ) is a Swedish fund Insurance policies manager wholly owned by Länsförsäkringar Bank. Länsförsäk- The Group’s insurance cover includes business and property insur- ringar Fondförvaltning’s fund volume amounted to SEK 138.2 ance and liability insurance for members of the board of directors billion at year end 2016 and the company offers approximately (including prospectus liability) and the CEO. SSM considers that 40 investment funds.1) its insurance cover is in line with the insurance cover held by other companies in the same industry and that it is sufficient to cover the About Malmegårds Fastighets AB risks normally associated with the Company’s operations. Malmegårds Fastighets AB is a property manager and developer, partly managing its own property portfolio in the Stockholm Transactions with related parties region and partly on behalf of other property owners. Malmegårds In the operating activities of the Group, certain transactions with Fastighets AB has been operating in Stockholm’s real estate related parties occur. Such transactions refer to, for instance, market for more than 50 years. purchases and sales of goods and services to joint ventures and certain housing associations. The Group’s transactions with About Grandholm Fastigheter AB related parties are carried out on market terms and on market Grandholm Fastigheter AB is a privately owned company with conditions. For more information regarding the Group’s transac- headquarters in Stockholm that invests in real estate, real tions with related parties, reference is made to Note 7 in section estate-related companies and real estate projects in the Nordics. “Financial reports”. On 1 December 2014, the Group sold a property to a company Intellectual property rights that was indirectly owned by persons closely associated to Ulf The Company does not own any material intellectual property Sjöstrand for a total purchase price of SEK 18 million. The acqui- rights. However, the Company intends to acquire the rights to cer- sition is considered by the Company to be on market terms and tain trademarks and company names containing the word “SSM”. the property is covered by valuation certificates obtained from two different real estate agents, who valued the property at SEK 17.5 Documents that are available for inspection million and SEK 18 million, respectively. Copies of the following documents are available during the period Save for the above, the Group has not carried out any material of validity of the Prospectus at the Company’s head office at transactions with related parties during the period from 1 January Kungsgatan 57 A, 111 22 Stockholm, Sweden, for inspection on 2014 up to the day of this Prospectus. weekdays during standard office hours: • the Company’s articles of association; Subscription undertakings • the Company’s annual and consolidated reports for the finan- The Cornerstone Investors have on 27 March 2017 undertaken cial years 2014, 2015 and 2016, including auditor’s reports; and in relation to the Joint Global Coordinators, the Company and the • annual reports for each of the two preceding financial years in Selling Shareholder, to subscribe for shares in the Offer to the relation to all of the Company’s subsidiaries. final price of theO ffer, as set forth in the table below. The Cornerstone Investors will not receive any compensation The documents relating to the Company are also avail- for their undertakings, but they are, however, guaranteed to be able in electronic format on the Company’s website, allocated shares in the Offer in accordance with their respective www.ssmlivinggroup.se. undertakings. The undertakings are not secured through bank The aforementioned annual reports or information is referred guarantees, blocked funds, pledge or similar arrangements. Fur- to on the Company’s website do not constitute part of this Pro- thermore, the undertakings are subject to customary terms and spectus and are not included by reference in this Prospectus. conditions relating to that the Offer is completed within a certain time, that the final price of theO ffer does not exceed the high-end Complete Group structure of the Price Range, that the Cornerstone Investors receive full At the date of the Prospectus, SSM is the parent company of allocation in the Offer in accordance with their respective under- 30 directly or indirectly owned subsidiaries. The list below shows takings and that the Company will receive gross proceeds of at all SSM’s directly and indirectly owned subsidiaries and joint least SEK 540 million from the issuing of shares in connection ventures as of the date of this Prospectus. with the Offer, and, as regards Länsförsäkringar Fondförvaltning,

Subscription Percentage Cornerstone Investor undertaking Number of shares* in the Offer* Address Länsförsäkringar Fondförvaltning AB (publ) 100 1,562,500–1,851,851 11.8–16.1 Tegeluddsvägen 11–13,106 50 Stockholm, Sweden Malmegårds Fastighets AB 60 937,500–1,111,111 7.1–9.6 Box 1332, 111 83 Stockholm, Sweden Grandholm Fastigheter AB 20 312,500–370,370 2.4–3.2 Nybrogatan 3, 114 34 Stockholm, Sweden Total 180 2,812,500–3,333,332 21.2–28.9 * Based on full subscription in the Offer and that the Overallotment Option is exercised in full.

1) Länsförsäkringar Fondförvaltning AB (publ) invests via the investment fund for real estate investments, Länsförsäkringar Fastighetsfond, as well as the investment fund for small cap investments, Länsförsäkringar Småbolag Sverige.

92 Invitation to acquire shares in SSM Holding AB (publ) Legal considerations and supplementary information

Participating SSM:s accumu- interest of the lated participating Company, corporate registration number, registered office company above interest SSM Holding AB (publ) (556533-3902), Stockholm SSM Fastigheter AB (556947-1203), Stockholm 100 100 SSM Hold Services AB (559051-9459), Stockholm 100 100 SSM Property Services AB (559051-9467), Stockholm 100 100 SSM Hold Stockholm 2 AB (559036-7586), Stockholm 100 100 Fastighets AB Älvsjö Quarters (556099-1068), Stockholm 100 100 Fast 10 Stockholm AB (559036-7511), Stockholm 100 100 Morgondagens stockholmare AB (556984-2098), Stockholm 100 100 SSM JV Bromma AB (559065-1328), Stockholm 100 100 Brommaplan Holding AB (559065-9826), Stockholm 50 50 Brommaplan Centrum AB (556812-4159), Stockholm 100 50 Bordduken 7 AB (556812-4175), Stockholm 100 50 HoldC AB (556732-2234), Stockholm 100 100 SSM Hold Fast 5 AB (556732-2291), Stockholm 100 100 SSM Hold D AB (556925-8618), Stockholm 100 100 Linneduken 2 AB (556980-2761), Stockholm 100 100 Stockholms Bostadslägenheter AB (556919-4995), Stockholm 100 100 AB SSM Stockholm A (559062-5231), Stockholm 100 100 SSM Midsommarkransen AB (559062-5199), Stockholm 100 100 SSM Hold E AB (556984-1660), Stockholm 100 100 SSM Kista Fastighets AB (559022-3235), Stockholm 100 100 PF West AB (559090-3851), Stockholm 100 100 Sätra Stockholm Fastigheter AB (556866-8049), Stockholm 100 100 SSM Hold Stockholm 1 AB (559027-5409), Stockholm 100 100 Sollentuna Tallskogen AB (556879-9315), Stockholm 100 100 Fastighets AB Larus (559003-2602), Stockholm 100 100 Gyllene Ratten Holding AB (556795-1321), Stockholm 100 100 Gyllene Ratten AB (556773-2804), Stockholm 100 100 Hold JV Nacka AB (559084-9898), Stockholm 100 100 JV Elverkshuset AB (559084-9914), Stockholm 50 50 SSM Bygg & Fastighets AB (556529-3650), Stockholm 100 100 Sanda Ängar Holding AB (556817-6407), Stockholm 100 100 Sanda Ängar Invest AB (556805-6237), Stockholm 80 80 Studentbacken JV AB (556981-6472), Stockholm 50 50 KB Studentbacken (969773-5182), Stockholm 2 50 KB Studentbacken (969773-5182), Stockholm 49 50 Studentbacken AB (556878-8268), Stockholm 100 50 Studentbacken Holding 1 AB (556975-6389), Stockholm 100 50 Studentbacken Sågtorp AB (556975-9136), Stockholm 100 50 Turbinhallen Utveckling AB (556981-7686), Stockholm 50 50 Alfa SSM JV AB (556840-4262), Stockholm 50 50 KB Alfa SSM (969715-3998), Stockholm 2 50 KB Alfa SSM (969715-3998), Stockholm 49 50 Alfa SSM Holding AB (556840-4239), Stockholm 100 50 Alfa SSM Bygg AB (556840-9303), Stockholm 100 50 Alfa SSM BP1 Holding AB (556840-4247), Stockholm 100 50 LB SSM Stockholm JV AB (559022-7939), Stockholm 50 50 SSM LB Stockholm KB (969776-1188), Stockholm 2 50 SSM LB Stockholm KB (969776-1188), Stockholm 49 50 LBSSM Stockholm Holding AB (559021-7153), Stockholm 100 50 LBSSM Stockholm Holding 1 AB (559021-7146), Stockholm 100 50 AB SSM Stockholm 3 (559090-3869), Stockholm 100 100 Aktiebolaget Grundstenen 153820 (559043-3651), Stockholm 100 100

Invitation to acquire shares in SSM Holding AB (publ) 93 Certain tax issues in Sweden

Certain tax issues in Sweden

The following is a summary of certain Swedish tax issues related to the Offer and the admission for trading of SSM’s shares on Nasdaq Stockholm for private individuals, limited liability companies that are resident in Sweden for tax purposes and shareholders not resident in Sweden for tax purposes, unless otherwise stated. The summary is based on current legislation and is intended to provide general information only regarding the shares as from the admission for trading on Nasdaq Stockholm.

This summary does not address: Capital losses • situations where securities are held as an inventory item in a Capital losses on listed shares may be fully offset against taxable business, capital gains arising during the same year on listed shares, as • situations where securities are held by a limited partnership or well as on listed securities taxed as shares. Capital losses may partnership, however not be offset towards gains on mutual funds (Sw. värde- • the separate regulations governing tax-exempt capital gains pappersfonder) and hedge funds (Sw. specialfonder) containing (including non-deductible capital losses) and dividends paid Swedish receivables only (Sw. räntefonder). Capital losses not in the corporate sector that may be applicable for investors absorbed by these set-off rules are deductible at 70 per cent in holding shares that are considered to be held for business the capital income category. purposes (for tax purposes), Should a net loss arise in the capital income category, a • the particular rules that could apply for holders of qualified reduction is granted of the tax on income from employment and participations in companies which are, or have been, classed business operations, as well as national and municipal property as closely held companies, tax. This tax reduction is 30 per cent of the net loss that does not • the special rules that may be applicable to private individuals exceed SEK 100 thousand and 21 per cent of any excess loss. A who make or reverse a so-called investor deduction net loss cannot be carried forward to future tax years. (Sw. investeraravdrag), • foreign companies registered and operating from a permanent Allotment of shares to employees establishment in Sweden, or Normally, the allotment of shares is not a taxable event. For • foreign companies that were once Swedish companies. employees, the allotment of shares may in certain situations give rise to taxation of benefits. Taxation of benefits should, however, Furthermore, special tax rules apply to certain categories of not occur if the employees (including directors and alternate shareholders. Accordingly, the fiscal treatment of each individual directors) acquire, on the same terms and conditions as others, shareholder to some extent depends on the circumstances of the a maximum of 20 per cent of the total number of shares offered particular situation. Each shareholder should therefore consult a and the employee does not acquire shares for more than SEK 30 tax adviser with regard to the shareholder’s tax position and the thousand. tax consequences that may arise from the Offer and the trading of the shares on Nasdaq Stockholm, including the applicability and Investment savings account and effect of foreign rules and tax treaties. endowment insurance In the event that the shares are held in a Swedish investment Individuals resident in Sweden for tax purposes savings account (Sw. investeringssparkonto) or a Swedish Tax on dividends endowment insurance (Sw. kapitalförsäkring), the taxation will For private individuals resident in Sweden for tax purposes, cap- differ from what has been described above. Only a private indi- ital income such as interest income, dividends and capital gains vidual or the estate of a deceased individual is permitted to hold a is taxed in the capital income category. The tax rate in the capital Swedish investment savings account. No tax is due on the results income category is 30 per cent. A preliminary tax of 30 per cent of an investment savings account. Instead, a standard amount is generally withheld on dividends paid to individuals resident in is taxed as capital income. The standard amount of income is Sweden. The preliminary tax is withheld by Euroclear Sweden or, calculated by the party that provides the account, such as a bank for nominee-registered shares, by the Swedish nominee. or investment firm, and this is reported as income of capital in the tax return of the person liable to pay tax. The standard amount is Capital gains tax calculated in two steps. First, the capital base is calculated and, Upon the sale or other disposal of listed shares, which the shares thereafter, a standard amount of income is calculated which is are intended to become, a taxable capital gain may arise. Capital reported as capital income. The capital base is calculated annu- gains are taxed as income in the capital income category at a ally and broadly comprises one quarter of the value of the assets tax rate of 30 per cent. The capital gain or loss is calculated as on the account at the beginning of each quarter. The capital base the difference between the sales proceeds, after deducting sales must be increased by a value equivalent to the deposits to the costs, and the tax basis (i.e. the acquisition cost increased by account and the transfers of securities to the account during the the improvement costs). The tax basis for all listed shares of the respective quarter. The standard amount of income is derived by same class and type is calculated in accordance with the average multiplying the capital base, as described above, by the govern- cost method, alternatively, shareholders may choose to use 20 ment borrowing rate at the end of November the year before the per cent of the sales proceeds after deducting sales costs fiscal year. The standard amount of income is reported as capital (Sw. schablonmetoden), as the tax basis. income and taxed at 30 per cent.

94 Invitation to acquire shares in SSM Holding AB (publ) Certain tax issues in Sweden

The holder of a Swedish endowment insurance is not liable Shareholders not resident in Sweden for tax to pay special tax on returns (Sw. avkastningsskatt). Instead, it is purposes the life insurance company providing the insurance that is liable For shareholders not resident in Sweden for tax purposes that for any special tax on returns. However, a holder of a foreign receive dividends on shares in a Swedish limited liability com- endowment insurance may be obliged to pay special tax on pany, such as the Company, Swedish withholding tax is normally returns in Sweden. This depends on the country of residence of withheld. The same withholding tax applies to certain other pay- the assurer and whether the assurer has a permanent establish- ments made by a Swedish limited liability company, for example, ment in Sweden. Special tax on returns is not charged on the payments as a result of redemption of shares and repurchase of capital gains, but on a standard calculated amount. The standard shares through an offer directed to all shareholders or all holders calculated amount used for endowment insurance purposes is of shares of a certain class. The tax rate is 30 per cent. The tax calculated in two steps. First a capital base is calculated and, rate is generally reduced through tax treaties for the avoidance thereafter, a standard amount on this capital is calculated. The of double taxation. For example, under the tax treaty between capital base broadly constitutes the value of the insurance at the Sweden and the United States, the withholding tax on dividends beginning of the fiscal year. paid to shareholders resident in the US, shall not exceed 15 per The capital base must be increased by a value equivalent cent. Under the Treaty, furthermore, the tax rate is reduced to 5 to the sum of any premiums paid during the fiscal year. When per cent for companies possessing shares representing at least calculating this amount, only half of the premiums paid during the 10 per cent of the total voting rights of the company declaring the second half of the fiscal year should be included. The standard dividend. The tax rate for companies and pension funds may be calculated amount is derived by multiplying the capital base, as reduced to 0 per cent if certain requirements set out in the Treaty described above, by the average government borrowing rate at are met. the end of November the year before the fiscal year. The special In Sweden, withholding tax deductions are normally carried tax on returns amounts to 30 per cent of the standard calculated out by Euroclear Sweden or, in respect of nominee-registered amount. shares, by the nominee. Tax is withheld provided that necessary information is made available to Euroclear Sweden in relation to Limited liability companies resident in Sweden the person entitled to such dividends. If such information is not for tax purposes made available to Euroclear Sweden, and tax is not levied, the Tax on dividends and capital gains person entitled to such dividends may be taxed retroactively. If For limited liability companies (Sw. aktiebolag) all income, a 30 per cent withholding tax is deducted from a payment to a including taxable capital gains and taxable dividends, is taxed as person entitled to be taxed at a lower rate, or in the event that too income from business operations at a rate of 22 per cent. much tax has otherwise been withheld, a refund can be claimed from the Swedish Tax Agency (Sw. Skatteverket) prior to the Capital losses expiry of the fifth calendar year following the dividend distribution. Capital losses on listed shares may only offset taxable capital gains on shares and other securities taxed as shares. A net Capital gains tax capital loss on shares that cannot be utilised during the year Shareholders not resident in Sweden for tax purposes, which of the loss, may be carried forward and offset against taxable are not conducting business through a permanent establishment capital gains on shares and other securities taxed as shares in in Sweden, are normally not liable for capital gains taxation in future years, without any limitation in time. If a capital loss cannot Sweden upon disposals of shares. Shareholders may, however, be deducted by the company that has suffered the loss, it may be subject to taxation in their state of residence. According to a be deducted from another legal entity’s taxable capital gains on special rule, private individuals not resident in Sweden for tax shares and other securities taxed as shares, provided that the purposes remain subject to Swedish capital gains taxation upon companies are entitled to so-called group contributions with fiscal disposals of shares in the Company, if they have been residents effect and both companies request this for a tax year having the of Sweden or have had a habitual abode in Sweden at any time same filing date for each company. Special tax rules may apply to during the calendar year of disposal or the ten calendar years certain categories of companies or certain legal persons, such as preceding the year of disposal. The applicability of this rule is investment companies. often limited by the applicable tax treaty for the avoidance of double taxation.

Invitation to acquire shares in SSM Holding AB (publ) 95 96 Invitation to acquire shares in SSM Holding AB (publ) Financial reports

Financial reports

This section contains SSM’s audited financial reports for the financial years 2014, 2015 and 2016, in accordance with the schedule below.

Contents

The group’s statement of comprehensive income ...... F-2

The group’s statement of financial position ...... F-3

The group’s statement of financial position cont...... F-4

The group’s statement of changes in equity ...... F-5

The group’s cash flow statement ...... F-6

The parent company’s statement of comprehensive income ...... F-7

The parent company’s statement of financial position ...... F-8

The parent company’s changes in equity ...... F-9

The parent company’s cash flow statement ...... F-10

Notes ...... F-11

Summary of auditors’ report on selected historical financial information . . . F-33

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-1 Financial reports

The group’s statement of comprehensive income

SEK t Note 2016 2015 2014 1.5 Net sales 3.7 649,901 351,098 411,003 Production and management expenses 4 – 502,819 –298,964 –353,488 Gross profit 147,082 52,134 57,515

Sales and administration expenses 5, 6, 7, 8, 13, 14 – 36,409 –27,070 –32,142 Profit participations in joint ventures 10 76,408 76,883 37,467 Operating profit 187,081 101,947 62,840

Financial income 11 11,867 10,023 1,151 Financial expenses 11 – 49,455 –19,180 –23,966 Net financial items – 37,588 –9,157 –22,815

Profit before taxes 149,493 92,790 40,025

Income tax 12 – 4,750 2,764 –4,952 PROFIT FOR THE PERIOD 144,743 95,554 35,073

Profit attributable to The shareholder of the parent company 144,716 95,476 34,975 Non-controlling interest 27 78 98 144,743 95,554 35,073

There are no items for the group reported as other comprehensive income, so the total comprehensive income is the same as the profit for the period.

Earnings per share, before and after dilution (SEK) 4.81 3.17 1.17 Number of shares, at end of period 23 30,100,000 30,100,000 30,100,000 Average number of shares during the period 30,100,000 30,100,000 30,100,000

The registered number of shares at the end of the period was 301,000. On 23 January 2017, the Swedish Companies Registration Office registered a 100:1 share split, and the number of shares after the split amounts to 30,100,000. Earnings per share have been calculated based on the number of shares after the split.

F-2 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

The group’s statement of financial position

SEK t Note 31/12/2016 31/12/2015 31/12/2014

ASSETS Fixed assets

Intangible assets Software 13 1,388 1,469 – Total intangible assets 1,388 1,469 –

Tangible assets Machinery and equipment 14 433 349 614 Total tangible assets 433 349 614

Financial assets Holdings in joint ventures 10 187,147 130,189 53,376 Receivables from joint ventures 7, 16 69,069 22,080 6,509 Other non-current receivables 7, 16, 17 203,831 71,030 96,796 Total financial assets 460,047 223,299 156,681

Deferred tax receivables 12 – 5,223 5,223

Total fixed assets 461,868 230,340 162,518

Current assets

Inventories Project properties 18 208,799 114,952 53,856 Total inventories 208,799 114,952 53,856

Other current assets Accounts receivable 16, 19 29,394 1,714 553 Recognised, non-invoiced revenue 17, 20 163,355 61,928 116,154 Receivables from joint ventures 7, 16 3,064 95 – Tax receivables 12 459 – 19 Other receivables 7, 16, 19 80,993 68,806 30,405 Prepaid costs and accrued income 21 24,007 13,884 8,203 Liquid funds 16, 22 63,892 52,696 28,672 Total current assets 573,963 314,075 237,862

TOTAL ASSETS 1,035,831 544,415 400,380

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-3 Financial reports

The group’s statement of financial position cont.

SEK t Note 31/12/2016 31/12/2015 31/12/2014

EQUITY

Equity 23 Share capital 30,100 30,100 30,100 Profit carried forward, including profit for the year 271,136 143,293 50,315 Equity attributable to the shares of the parent company 301,263 173,393 80,415

Innehav utan bestämmande inflytande 37 151 172 Summa eget kapital 301,300 173,544 80,587

LIABILITIES

Non-current liabilities Bond loans 15, 16, 24 390,663 196,822 195,234 Liabilities to credit institutions 15, 16, 24 132,771 99,521 – Other non-current liabilities 16, 24 49,623 – – Provisions 27 14,444 5,042 – Deferred tax liabilities 12 1,071 1,678 4,715 Total non-current liabilities 588,572 303,063 199,949

Current liabilities Liabilities to joint ventures 7 – – 146 Liabilities to credit institutions 15, 16, 24 – – 70,997 Advance payments from customers – 10,425 – Accounts payable – trade 15, 16 43,332 28,656 9,638 Provisions 27 2,817 1,537 7,444 Current tax liabilities 12 1,620 3,036 3,472 Other liabilities 16, 25 62,660 11,965 22,608 Accrued costs and prepaid income 26 35,530 12,280 5,539 Total current liabilities 145,959 67,808 119,844

TOTAL LIABILITIES AND EQUITY 1,035,831 544,415 400,380

Pledged assets and contingent liabilities 28

F-4 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

The group’s statement of changes in equity

Attributable to the shareholder of the parent company Profit carried Non-controlling SEK t Note Share capital forward Total interest holdings Total equity Equity, 1 January 2014 23 30,100 15,583 45,683 4,770 50,453

Profit Profit for the year 34,975 34,975 98 35,073 Total profit – 34,975 34,975 98 35,073

Transactions with shareholders Dividend paid –2,498 –2,498 –860 –3,358 Acquisition from minority interest holdings 2,255 2,255 –3,836 –1,581 Total transactions with shareholders –243 –243 –4,696 –4,939

EQUITY, 31 DECEMBER 2014 30,100 50,315 80,415 172 80,587

Equity, 1 January 2015 23 30,100 50,315 80,415 172 80,587

Profit Profit for the year 95,476 95,476 78 95,554 Total profit 95,476 95,476 78 95,554

Transactions with shareholders Dividend paid –2,498 –2,498 –100 –2,598 Total transactions with shareholders –2,498 –2,498 –100 –2,598

EQUITY, 31 DECEMBER 2015 30,100 143,293 173,393 151 173,544

Equity, 1 January 2016 23 30,100 143,293 173,393 151 173,544

Profit Profit for the year 144,716 144,716 27 144,743 Total profit 144,716 144,716 27 144,743

Transactions with shareholders Dividend paid – 18,501 – 18,501 – 140 – 18,641 Share-related payments 1,655 1,655 – 1,655 Total transactions with shareholders – 16,846 – 16,846 – 140 – 16,986

EQUITY, 31 DECEMBER 2016 30,100 271,163 301,263 37 301,300

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-5 Financial reports

The group’s cash flow statement

SEK t 2016 2015 2014 Cash flow from current activities Operating profit before financial expenses 187,081 101,947 62,840 Items not affecting liquidity 2,371 1,385 7,130 Profit recognised in joint ventures – 76,427 – 76,883 – 37,467 Dividend received from joint ventures 62,000 – – Interest received 2,101 10,038 1,151 Interest paid – 30,766 – 19,180 – 21,964 Income taxes paid – 2,009 – 709 – 9 Cash flow before changes in operating capital 144,351 16,598 11,681

Cash flow from changes in operating capital Decrease/increase in property projects – 195,274 –12,071 28,095 Decrease/increase in accounts receivable – 27,680 –1,161 2,045 Decrease/increase in other current receivables – 25,279 –44,063 –70,376 Decrease/increase in accounts payable – trade 14,767 29,352 5,709 Decrease/increase in current liabilities 69,713 –3,901 –6,023 Total change in operating capital* – 163,753 –31,844 –40,550

Cash flow from current activities – 19,402 –15,246 –28,869

Cash flow from investing activities Investments in intangible assets – 981 –2,204 – Investments in tangible assets – 363 –42 –421 Investments in financial assets – 221,549 –46,816 –91,347 Divestments of intangible assets – – 16,410 Divestments of tangible assets – – 50 Divestments of financial assets 9,000 – 5,372 Cash flow from investing activities – 213,893 –49,062 –69,936

Cash flow from financing activities Dividend – 18,641 –2,598 –3,358 Increase in long-term liabilities 516,131 163,093 213,396 Amortisation of long-term liabilities – 253,000 –72,163 –199,394 Cash flow from financing activities 244,490 88,332 10,644

Decrease/increase in liquid funds 11,195 24,024 –88,161 Liquid funds, opening balance 52,696 28,672 116,833 LIQUID FUNDS AT THE END OF THE PERIOD 63,892 52,696 28,672

* The cash flow was reclassified in Q4 2014 regarding sub-items in the cash flow prior to the change in operating capital.

F-6 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

The parent company’s statement of comprehensive income

SEK t Note 2016 2015 2014 Net sales 3 – – – Gross profit – – –

Sales and administration expenses 4, 5, 6 – 10,686 –544 –1,265 Operating profit – 10,686 –544 –1,265

Earnings from shares and participations in group companies 46,000 10,000 6,000 Interest income and similar profit/loss items 11 26,001 15,931 19,444 Interest expenses and similar profit/loss items 11 – 40,639 –17,936 –20,652 Profit after financial items 20,676 7,451 3,527

Tax 12 – – –

PROFIT FOR THE PERIOD 20,676 7,451 3,527

There are no items for the parent company reported as other comprehensive income, so the total comprehensive income is the same as the profit for the period.

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-7 Financial reports

The parent company’s statement of financial position

SEK t Note 31/12/2016 31/12/2015 31/12/2014 Fixed assets Participations in group companies 9 92,270 92,270 92,270 Receivables from group companies 7 330,698 164,064 162,427 Other receivables 17 – 9,000 9,000 Total fixed assets 422,968 265,334 263,697

Current assets Receivables from group companies 45,030 5,000 – Prepaid costs and accrued income 21 3,611 – – Cash and bank balances 10,234 32 13 Total current assets 58,952 5,032 13

TOTAL ASSETS 481,920 270,366 263,710

EQUITY AND LIABILITIES Equity Share capital 30,100 30,100 30,100 Unrestricted equity 24,697 35,746 34,717 Profit for the year 20,676 7,451 3,527 Total equity 75,473 73,297 68,344

Long-term liabilities Other non-current liabilities 15, 16, 24 390,663 196,823 195,234 Total long-term liabilities 390,663 196,823 195,234

Current liabilities Liabilities to group companies 7 – 50 – Accounts payable - trade 15, 16 1,865 23 – Other liabilities 25 43 – – Accrued costs and prepaid liabilities 21, 26 13,876 173 132 Total current liabilities 15,784 246 132

TOTAL EQUITY AND LIABILITIES 481,920 270,366 263,710

Assets pledged and contingent liabilities 28

F-8 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

The parent company’s changes in equity

Restricted equity Unrestricted equity Profit carried SEK t Note Share capital forward Total Equity, 1 January 2014 23 30,100 37,215 67,315

Profit Profit for the year 3,527 3,527 Total profit 3,527 3,527

Transactions with shareholders Dividend paid –2,498 –2,498 Total transactions with shareholders –2,498 –2,498

EQUITY, 31 DECEMBER 2014 30,100 38,244 68,344

Equity, 1 January 2015 23 30,100 38,244 68,344

Profit Profit for the year 7,451 7,451 Total profit 7,451 7,451

Transactions with shareholders Dividend paid –2,498 –2,498 Total transactions with shareholders –2,498 –2,498

EQUITY, 31 DECEMBER 2015 30,100 43,197 73,297

Equity, 1 January 2016 23 30,100 43,197 73,297

Profit Profit for the year 20,676 20,676 Total profit 20,676 20,676

Transactions with shareholders Dividend paid – 18,501 – 18,501 Total transactions with shareholders - – 18,501 – 18,501

EQUITY, 31 DECEMBER 2016 30,100 45,373 75,473

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-9 Financial reports

The parent company’s cash flow statement

SEK t 2016 2015 2014 Cash flow from current activities Operating profit – 10,686 – 544 – 1,265 Items not affecting liquidity – 235 – – Interest received 26,007 15,931 19,444 Interest paid – 22,619 – 16,744 – 19,063 Income taxes paid – 77 – – Cash flow before changes in operating capital – 7,610 – 1,357 – 884

Cash flow from changes in operating capital Decrease/increase in other current receivables – 3,611 – 1,693 Decrease/increase in accounts payable - trade 1,842 23 –164 Decrease/increase in current liabilities 9,257 41 –17,670 Total change in operating capital* 7,488 64 –16,141

CASH FLOW FROM CURRENT ACTIVITIES – 122 –1,293 –17,025

Cash flow from investing activities Investments in financial assets – 170,683 –1,189 – Divestments of financial assets 9,000 – 13,737 Dividends received from group companies 10,000 5,000 5,000 Cash flow from investing activities – 151,683 3,811 18,737

Cash flow from financing activities Dividend paid – 18,501 –2,498 –2,498 Increase in non-current liabilities 388,508 – – Amortisation of non-current liabilities – 208,000 – – Cash flow from financing activities 162,007 –2,498 –2,498

Decrease/increase in liquid funds 10,202 20 –786 Liquid funds, opening balance 32 12 798 LIQUID FUNDS, CLOSING BALANCE 10,234 32 12

* The cash flow was reclassified in Q4 2016 regarding sub-items in the cash flow prior to the change in operating capital.

F-10 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Notes

Note 1 General information must be applied retroactively and its application is mandatory for financial SSM Holding AB (publ) (the parent company) and its subsidiaries (referred years beginning 1 January 2018 or later, but is available for earlier appli- to jointly as SSM group) acquire, develop and implement residential prop- cation. The group intends to apply the standard from and including the erty projects in the Stockholm region. financial year beginning 1 January 2018. The standard is not expected to have any known material effect on the reporting of the group’s profits. The parent company is a public limited liability company registered in Sweden with its head office in Stockholm. The address of the head office is IFRS 9 Financial instruments Kungsgatan 57A, SE-111 22 Stockholm, Sweden. SSM Holding AB (publ) IFRS 9 Financial instruments was published in full in July 2014 and is 100% owned by Eurodevelopment Holding AG (CH-170.3.022.557-3). replaces IAS 39 Financial Instruments: Measurement and Classification. The standard was approved by the EU in November 2016. IFRS 9 brings This report was approved by the board of directors on 19 February 2017. together all aspects of the reporting of financial instruments (except for macro hedges); classification, measurement, impairment and hedge All amounts are reported in SEK thousand (SEK t) unless otherwise speci- accounting. The categories for the classification of financial assets in fied. Figures in brackets refer to the previous year. IAS 39 are replaced in IFRS 9 by two categories, where measurement occurs at fair value or amortised cost. Classification is determined at initial recognition based on the company’s business model and the characteris- Note 2 Summary of significant accounting policies tics of the contractual cash flows. For financial liabilities, there are no major The key accounting policies applied in these consolidated financial state- changes compared with IAS 39. The biggest change relates to liabilities ments are set out below. These policies have been applied consistently for identified at fair value. For these, the portion of the fair value change that is all the years presented, unless otherwise stated. attributable to own credit risk must be recognised in other comprehensive income rather than the income statement, unless this causes inconsist- Basis of preparation encies in the accounts (accounting mismatch). Hedge accounting has been improved in IFRS 9, so that the effects of how a company manages The consolidated financial statements for the SSM group have been risks associated with its financial instruments are reflected clearly in the prepared in accordance with IFRS (International Financial Reporting financial reporting. The standard will apply retroactively and its application Standards), as adopted by the EU, RFR 1 Supplementary Accounting is mandatory for financial years beginning 1 January 2018 or later, but is Rules for Groups and the Swedish Annual Accounts Act (Sw. årsredo available for earlier application. The group intends to apply the standard visningslagen 1995:1554)). from and including the financial year beginning 1 January 2018. The standard is not expected to have any known material effect. An evaluation The consolidated financial statements have been prepared in accordance of the impact of this standard has been initiated, but it is too early to say with the acquisition cost method. The principal accounting policies applied whether it will have any tangible impact on the reporting of the group’s in these consolidated financial statements are set out below. profits. The parent company’s financial statements have been prepared in IFRS 16 Leases accordance with RFR 2 Reporting for Legal Entities and the Swedish Annual Accounts Act. In cases where the parent company applies different In January 2016, the IASB published a new leasing standard that will accounting policies to the group, this is stated separately at the end of this replace IAS 17 Leases and Related Interpretations. The standard requires note. that assets and liabilities attributable to all leases, with some exceptions, are recognised in the balance sheet. This is based on the approach that The preparation of financial statements in accordance with IFRS requires the lessee has a right to use an asset for a specific period of time and, the use of certain key accounting estimates. It also requires management at the same time, has an obligation to pay for that right. The accounting to make certain assessments when applying the group’s accounting poli- practices will remain essentially unchanged for the lessor. At the initial cies. Refer to the section on key estimates and assessments in this note. application of IFRS 16, companies can choose full retroactive application, or a version with relief rules. It is mandatory to apply the standard for finan- New and amended accounting policies cial years starting on 1 January 2019 or later. However, earlier application is permitted for companies applying IFRS 15. The group intends to apply None of the new and amended standards, and interpretations of existing the standard from and including the financial year beginning 1 January standards that apply for the first time for the financial year beginning 2019. The standard is expected to have material effect on the recognition 1 January 2016 or later are considered to have had a material impact on of assets and liabilities attributable to the group’s leases. the consolidated financial statements. No other new or amended IFRS standards and IFRIC interpretations New and amended accounting policies not yet applied published by the IASB, but not yet approved by the EU, are considered This section describes the new or amended standards, and interpretations relevant for the group’s accounting. of existing standards that will apply to financial years beginning later than 1 January 2016 and are considered relevant for the group. None of these Key estimates and assessments have been applied before this time. The preparation of the accounts and the application of various accounting standards are usually based on the group management’s assessments The following new or amended standards, and interpretations of existing or on assumptions and estimates considered to be reasonable under the standards that are mandatory for financial years beginning later than current conditions. These assessments and estimates are normally based 1 January 2016 are considered relevant for the group: on historical experience, but also on other factors, including expectations of future events. Estimates and assumptions are evaluated regularly and IFRS 15 Revenue from contracts with customers those that involve a considerable risk of significant adjustments to the IFRS 15 Revenue from contracts with customers was published by IASB recognised value of assets and liabilities in the next financial year are dealt in May 2014, and approved by the EU in September 2016. IFRS 15 is a with below. comprehensive, principles-based standard for all revenue recognition, regardless of the type of transaction or industry, which replaces all previ- Distinction between business acquisitions and asset acquisitions ously issued standards and interpretations dealing with revenue recogni- When a company is acquired, it constitutes either an acquisition of a tion. The principles upon which IFRS 15 is based provide users of financial business or acquisition of assets. An acquisition of assets exists if the statements with more useful information about the company’s revenue. acquisition relates to real property, with or without leases, but does not The expanded disclosure requirements mean that information about the include the organisation and the processes required to conduct manage- type of revenue, the date of settlement, uncertainties related to revenue ment activities. Other acquisitions are business acquisitions. The company recognition and cash flow attributable to the company’s customer contracts management assesses which criteria are met for each individual acqui- must be submitted. According to IFRS 15, revenue must be recognised sition. In 2016 and 2015, it is considered that only asset acquisition was when the customer obtains control of the sold product or service and has carried out. the ability to use and/or benefit from the product or service. The standard

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-11 Financial reports

Gradual profit recognition method in projects At the end of each reporting period the group assesses whether objective A fundamental condition for using the gradual profit recognition method evidence of impairment exists for the investment in joint ventures. If so, is the ability to reliably establish project revenues and project costs. Such the group calculates the impairment amount as the difference between the reliability is based in part on adherence to SSM’s project management joint ventures’ recoverable amount and the carrying value, and recognises systems and the project management team having the necessary skills. the amount in the “Profit participations in joint ventures” in the income The assessment of project revenues and project costs is based on a statement. number of estimates and assessments that depend on the project management team’s experience and knowledge of project management, training Profits and losses from the ‘upstream’ and ‘downstream’ transactions and previous management of projects. An important source of knowledge between the group and its joint ventures are recognised in the consolidated is the documentation from previous SSM projects. There may be a risk that financial statements only to the extent that they correspond to the joint the final outcome may deviate from the earnings accumulated using the ventures holdings of unrelated companies. Unrealised losses are elimi- gradual profit recognition method. nated, unless the transaction provides evidence that an impairment need exists for the transferred asset. The accounting policies that apply in joint Income recognition from property development projects ventures have been changed where necessary to guarantee a consistent application of the group’s policies. Property sales are recognised at the time when significant risks and benefits are transferred to the buyer. The timing of income recognition depends Translation of foreign currencies on the contract with the buyer and may be upon the signing of contracts, a specific leasing rate, completion, transfer of ownership or a combination of Functional currency and reporting currency these variables. This is determined from contract to contract and contains The different units of the group use the local currency as the functional elements of estimates and assessments and applies to both direct sales of currency, as the local currency has been defined as the currency used in property and to indirect sales via the sale of companies. the primary economic environment in which the relevant entity primarily operates. In the consolidated accounts, Swedish krona (SEK) is used, The group’s financial statements which is the parent company’s functional currency and the group’s Subsidiaries reporting currency. Subsidiaries are companies over which the group has a controlling influ- Transactions and balances ence. The group controls a company when it is exposed to or has the right to variable returns from its holdings in the company and is able to affect Transactions in foreign currency are converted to the functional currency the return through its influence in the company. Subsidiaries are included at the exchange rates that apply on the transaction date. Exchange gains in the consolidated accounts from and including the date on which control and losses resulting from the settlement of such transactions and from is transferred to the group. They are excluded from the consolidated converting monetary assets and liabilities denominated in foreign curren- accounts from and including the date that controlling influence ceases. cies at the rate on the balance sheet date are recognised in operating income in the income statement. The acquisition method is used to report the group’s business acquisitions. The purchase price for the acquisition of a subsidiary is the fair value of Revenue recognition transferred assets, liabilities and the shares issued by the group. The Revenue includes the fair value of what is received or will be received for purchase price also includes the fair value of all assets or liabilities that are goods sold as part of the group’s day-to-day operations and rental income. a result of an agreement on contingent consideration. Acquisition-related group revenue consists of income and profit from project development of costs are expensed as incurred. Identifiable assets acquired and liabilities cooperative apartments, construction contract income, rental income from assumed in a business acquisition are measured initially at their fair values real property, and the sale of project properties. Revenue is recognised net on the date of acquisition. of VAT and discounts, and after the elimination of intragroup sales.

The amount by which the purchase price exceeds the fair value of iden- Revenue from the sale of goods is recognised when the risks and benefits tifiable net assets acquired is recorded as goodwill. If the amount is less associated with the ownership of the goods have passed to the buyer, in than the fair value of the acquired subsidiary’s assets, in the event of a accordance with the terms of the sale, and when the revenue and associ- ‘bargain purchase’, the difference is recognised directly in the statement of ated costs can be measured reliably and it is probable that the economic comprehensive income. benefits associated with the sale of the units will accrue to the group. Rental income and significant rent discounts are distributed over the year. Intragroup transactions, balance sheet items and unrealised gains and losses on transactions between group companies are eliminated. The Property revenue accounting policies for subsidiaries differ where appropriate from the The leases are classified in their entirety as operating leases in accord- group’s policies in order to ensure a consistent application of the group’s ance with the section “Cash flow statement” below. Property income and policies. rent discounts are recognised linearly in the income statement based on the terms of the lease. Advance rent is recognised as prepaid property Sale of subsidiaries revenue. Revenue from the early termination of leases is recognised as When the group no longer has a controlling influence, each remaining income in the period in which the compensation is received, in cases holding is measured at fair value at the time when its controlling influence where no other performance is required on the part of SSM. ceases. The change in the carrying amount is recognised in the income statement. The fair value is used as the initial carrying amount and repre- Income from sale of property sents the basis for the continued recognition of the retained investment as SSM recognises revenue and expenses from acquisitions and divestments an associate company, joint venture or financial asset. of properties at the time the risks and benefits have been transferred to the buyer, which normally coincides with the completion date. In assessing Holdings in joint ventures the date for revenue recognition, consideration is given to what has been Joint ventures are companies where the group, through cooperation agree- agreed between the parties regarding risks and benefits and involvement ments with one or more parties, has joint control over the management in the day-to-day management. Consideration is also given to circum- of the company. Holdings in joint ventures are recognised in accordance stances that may affect the outcome of the transaction, and which are with the equity method. Under the equity method, the investment is initially outside the control of the seller and/or buyer. The criteria for revenue measured at acquisition value and the carrying amount is then increased recognition are applied separately to each transaction. or decreased to take into consideration the group’s share of the profits or losses after the acquisition date. Properties developed as housing projects in SSM’s operations are recognised in accordance with the section “Revenue and profit from the project The group’s share of the profits arising after the acquisition is recognised development of cooperative apartments”. in the income statement and its share of changes in other comprehensive income after the acquisition is recognised in other comprehensive income, Revenue and profit from the project development of cooperative with a corresponding change in the holding’s carrying value. When the apartments group’s share in a joint venture’s losses amounts to or exceeds its holding, SSM’s development of housing in the Stockholm region is mainly imple- including any unsecured receivables, the group does not recognise further mented in the form of a construction contract signed with an independent losses, unless the group has incurred legal or informal obligations or made housing association as the client. The group recognises revenue gradually payments on behalf of joint ventures. from and including the day a binding agreement is concluded with an

F-12 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

external party in the form of a housing association for the construction of Additional expenses are added to the asset’s carrying amount or recog- cooperative apartments. The group retains an obligation to acquire unsold nised as a separate asset, as appropriate, only when it is probable that cooperative apartments through the construction contract. future economic benefits associated with the asset are expected to benefit the group and the acquisition value of the asset can be measured reliably. Recognised revenue is based on the rate of sales and rate of completion. The carrying value of a replaced part is removed from the balance sheet. The sales rate is the sum of the agreed deposits in relation to the project’s All other forms of repair and maintenance are recognised as an expense in total deposits. Contracted deposits means that there must be a binding the income statement in the period in which they are incurred. agreement with the owners of the cooperative apartments. The rate of completion is determined based on the costs incurred in relation to the total Every part of a tangible asset with an acquisition value that is significant in forecasted project costs. Quarterly reassessments of anticipated project relation to the total acquisition value of the asset is depreciated separately. revenues entail an adjustment of previously recognised revenue in the Depreciation of other tangible assets is performed linearly as follows: project concerned. This forecast is included in the period’s reported results. Estimated losses are fully charged to the profit for the period. Equipment, tools and installations: 3–5 years:

At the start of the project, the property is transferred with the carrying The residual value and period of use of the assets are checked at the end amount to the construction project and included in the project’s other of every reporting period and adjusted where necessary. The carrying production costs. Interest expenses are included among the production amount of an asset is immediately written down to its recoverable value if costs from the start of the project. the carrying amount of an asset exceeds its estimated recoverable value.

Segment accounting Gains and losses on disposal of a tangible asset are determined by Operating segments are reported in a manner consistent with the internal comparing proceeds from the sale with the carrying amount and are recog- reporting provided to the highest executive decision-maker. The highest nised in the revenue recognition under other operating income or other executive decision-maker is the function responsible for allocating operating expenses. resources and assessing the performance of the operating segments. SSM has identified one operating segment, which is the group as a whole. This Depreciation assessment is based on the group’s management teams being the ‘highest Depreciation is performed linearly according to the estimated useful life, executive decision-maker’ and monitoring the group as a whole, as there or utilisation rate, taking into account any residual value at the end of the is no form of geographic split or division according to business sectors/ period. For machinery and equipment, the depreciation period is normally product categories, etc. The financial reporting is based on a group-wide between 5 and 10 years. IT investments are depreciated and amortised functional organisational and management structure. over 3 years. Land is not depreciated. The useful life and residual value of assets are assessed annually. The carrying amount of a tangible asset Current and deferred tax is removed from the statement of financial position upon scrapping or Tax costs for the period comprise current and deferred tax. The current divestment or when no future financial benefits are expected from the use tax costs are calculated on the basis of the tax rules decided upon, or or divestment of the asset. decided upon in practice, on the date of the balance sheet, in the countries where the parent company and its subsidiaries operate and where taxable Write-downs of non-financial fixed assets revenue is generated. Assets that are written off are estimated with regard to impairment whenever events or changes in circumstances indicate that the carrying Deferred tax is recognised in accordance with the balance sheet method amount may not be recoverable. An impairment is carried out, amounting for all temporary differences arising between the taxable value of assets to the sum with which the asset’s carrying amount exceeds its recoverable and liabilities and their carrying amount in the consolidated accounts. value. The recoverable value of an asset’s fair value is decreased by the However, if the temporary differences arose from the initial recognition of sales costs, or the utilisation rate, whichever is higher. When estimating the assets and liabilities that constitute an asset acquisition, no deferred tax impairment need, assets are grouped at the lowest levels where there are is reported. Deferred income tax is calculated by applying the tax rates separate identifiable cash flows (cash generating units). decided upon or announced on the balance sheet date and which are expected to apply when the deferred tax liability is realised or the deferred Leasing tax debt is adjusted. The group as lessee The group holds leasing agreements for copiers, vehicles, office furniture Deferred tax liabilities on loss carryforwards are recognised insofar as it and office premises. Leases where a significant portion of the risks and is likely that future tax surpluses will be available, against which the deficit benefits of ownership are retained by the lessor are classified as opera- can be utilised. Since the group has not recorded any taxable profit in tional leasing. Payments made during the leasing period are expensed recent years, there are currently no loss carryforwards included on the in the income statement linearly over the term of the lease. All leases are consolidated balance sheet. classified as operating leases in the group. Deferred tax receivables and liabilities are offset when there is a legally The group as lessor enforceable right to offset current tax receivables and tax liabilities. The deferred tax receivables and tax liabilities relate to taxes charged by the Leases where essentially all the risks and benefits are associated with same taxation authority and relate to either the same taxable entity or ownership and accrue to the lessor are classified as operating leases. different taxable entities and there is an intention to settle the balances All of the group’s leases are classified on this basis as operating leases. through net payments. Properties that are leased out under operating leases are included in the project properties item. Intangible assets Inventories Intellectual property rights Inventories comprise properties, where SSM develops projects, which are Development costs for IT systems that provide improved future earnings classified as project properties. The purpose of these properties is to sell are capitalised and carried at their acquisition value. Capitalised expenses them before construction begins. for IT systems are amortised over the useful life, which is considered to be the period the systems are market-efficient. The useful life for the current The acquisition value of the project properties includes expenses for land capitalisation is assessed as being three years. They are tested for impair- acquisition and planning/property development , as well as expenditure for ment if events or changes in circumstances indicate a possible impairment. new constructions, extensions or conversions. Expenditure for borrowing Any impairment is recognised immediately as an expense. costs is capitalised in relation to on-going projects. Other borrowing costs are expensed as incurred. Tangible assets Other tangible assets Project properties are recognised continuously in the balance sheet at Other tangible assets are recognised at cost of acquisition less depreci- the acquisition value or the net realisable value, whichever is lowest, i.e. ation. Included in the cost of acquisition are expenditures which can be the realisable value (market value) after deducting the estimated costs directly attributed to the acquisition of the asset. of completion and direct selling expenses. The net realisable value for completed project properties is estimated in accordance with the yield method, which means that the property’s current income (net operating

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-13 Financial reports

income) at full occupancy is divided by the project’s estimated yield. The assumed to correspond to their real value, because this item is short-term net realisable value of on-going projects properties is estimated as the in nature. value in completed condition, as described above, less the estimated remaining costs to complete the project. Bond loans and liabilities to credit institutions are financial instruments and are recognised initially at fair value, net of transaction costs. Borrowings Financial instruments are subsequently recognised at amortised cost and any difference between General principles the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the loan period, The purchase and sale of financial assets are recognised on the business using the effective interest method. Borrowings are classified as current day when the group undertakes to buy or sell the asset. Financial instru- liabilities unless the group has an unconditional right to defer settlement of ments are initially recognised at fair value plus transaction costs. Financial the liability for at least 12 months after the balance sheet date. The carrying assets are removed from the balance sheet when the right to receive the value of the group’s borrowings is assumed to correspond to their fair value cash flow from the instrument has expired or been transferred and the because the loans have no transaction costs and a floating market rate. group has essentially transferred all risks and benefits associated with the Borrowing costs are recognised in the statement of comprehensive income right of ownership. Financial liabilities are removed from the balance sheet in the period in which they are incurred. when contractual obligations are met or otherwise removed. Transaction costs for the signing of framework agreements for the credit Financial assets available for sale are recognised at acquisition value facility is treated as a cost to secure access to financing. The transaction when the fair value cannot be determined reliably. Loans and accounts costs are recognised as a non-current receivable in the balance sheet and receivables and other financial liabilities are recognised after the acquisi- are expensed in the income statement over the facility’s term of five years. tion date at amortised cost using the effective interest method. Liquid funds 2.1.1 Offsetting financial instruments Financial assets and liabilities are offset and recognised at a net amount Liquid funds are financial instruments and include, in both the balance in the balance sheet, only where there is a legal right to offset the amounts sheet and in the cash flow statement, bank deposits with maturities within recognised and it is intended to adjust them with a net amount or to simul- three months of the acquisition date. taneously capitalise the assets and adjust the liability. Borrowing costs Classification General and specific borrowing costs that are directly attributable to The group classifies its financial assets and liabilities in the following cate- the purchase, construction or production of qualifying assets, which are gories: loans and accounts receivables and financial liabilities measured assets that necessarily take a substantial period of time to prepare for at amortised cost. The classification depends on the reason for which the their intended use or sale, are recognised as part of the acquisition value financial asset or liability was acquired. of such assets. Capitalisation ceases when all the activities necessary to prepare the asset for its intended use or sale are essentially completed. 2.1.2 Loan receivables and accounts receivable Loan receivables and accounts receivable are non-derivative financial Financial income incurred when specifically borrowed funds are tempo- assets having fixed or fixable payments that are not listed on an active rarily invested while waiting to be used for financing the asset reduces the market. They are included in current assets, with the exception of items loan costs that can be capitalised. All other borrowing costs are expensed with a due date more than 12 months after the balance sheet date, which as incurred. are classified as fixed assets. The group’s “loans and accounts receivable” consist of receivables from joint ventures, other non-current receivables, Share capital accounts receivable, recognised non-invoiced revenues, liquid funds, and Ordinary shares are classified as equity. Transaction costs directly attrib- the financial instruments recognised under other receivables. utable to the issue of new shares are recognised, net of tax, in equity as a deduction from the proceeds from the issue. Accounts receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method, less any provision for Dividend impairment. Dividends to the shareholder of the parent company are recognised as liabilities in the consolidated financial statements in the period the dividend Impairment of assets recognised at amortised cost (loans and accounts is approved by the parent company’s shareholders. receivable): Provisions At the end of each reporting period, the group assesses whether there is Provisions are measured at the present value of the amount expected to objective evidence of an impairment need for a financial asset or a group be required to settle the obligation. A pre-tax discount rate is used for this of financial assets. A financial asset or group of financial assets has a need purpose that reflects current market assessments of the time-dependent for impairment and impaired only if there is objective evidence of a need value of money and the risks specific to the provision. The increase in the for impairment as a result of one or more events that occurred after the provision that is due to the passage of time is recognised as an interest recognition of the asset, and if this event has an impact on the estimated expense. future cash flows of the financial asset or group of financial assets that can be estimated reliably. Provisions for guarantees The impairment is calculated as the difference between the asset’s Provisions for future expenses related to guarantees are recognised at the carrying amount and the present value of estimated future cash flows, amount required to settle the obligation. Guarantee provisions of normally discounted at the financial asset’s original effective interest rate. The SEK 10,000 per apartment is charged to the project on completion and are asset’s carrying amount is written down and the impairment amount is recognised as they are expected to arise for each project. The majority of recognised in the consolidated income statement under “Sales and admin- guarantee provisions run until the guarantee inspection, which is carried istration expenses”. If the impairment decreases in a subsequent period out after two years. and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised Remuneration to employees impairment is recognised in the consolidated income statement under The group companies have various plans for post-employment benefits, “Sales and administration expenses”. including defined benefit and defined contribution pension plans.

2.1.3 Financial liabilities valued at amortised cost Pension obligations Accounts payable - trade are financial instruments and refer to obliga- A defined contribution plan is a pension plan under which the group pays tions to pay for goods and services acquired in day-to-day business from fixed contributions to a separate legal entity. The group has no legal or suppliers. Accounts payable - trade are classified as current liabilities if informal obligations to pay further contributions if this legal entity does not they fall due within one year. If not, they are recognised as non-current have sufficient assets to pay all employee benefits relating to employee liabilities. service in the current or previous periods. A defined benefit pension plan is a pension plan that does not have defined contributions. One character- Accounts payables are initially recognised at fair value and subsequently istic feature of defined benefit plans is that they define an amount for the at amortised cost for longer maturities (at least 3 months) using the effec- pension benefit that an employee will receive on retirement, usually based tive interest method. The carrying value for accounts payable – trade is on one or more factors such as age, years of service and salary.

F-14 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

For defined contribution plans, the group pays contributions to publicly or Contingent liabilities privately administered pension insurance plans on a mandatory, contrac- Contingent liabilities consist of existing obligations relating to events that tual or voluntary basis. The group has no further payment obligations once have not been recognised as a liability or provision. The reason is that it is the contributions are paid. The contributions are recognised as personnel unlikely that an outflow of resources will be required to settle the obligation expenses when they fall due. Prepaid contributions are recognised as an and that the size of the obligation cannot be estimated with sufficient asset to the extent that a cash refund or a reduction in future payments certainty. may benefit the group. Cash flow statement For salaried employees, the ITP 2 plan’s defined benefit pension The cash flow statement is prepared using the indirect method. This means commitments for retirement and household pensions are secured through that the operating profit or loss is adjusted for the effects of transactions of insurance with Alecta. According to a statement from the Swedish a non-cash nature during the period and any income or expense associ- Financial Reporting Board (Sw. Rådet för finansiell rapportering), UFR 10 ated with investing or financing cash flows. Accounting for pension plan ITP2 financed through insurance with Alecta, this is a defined benefit plan that covers multiple employers. For the current Transactions with related parties financial year, the company has not had access to information necessary in order to report its proportional share of the plan’s obligations, plan assets Affiliated companies are defined as companies in the group as well as and costs, which meant that the plan could not be recognised as a defined companies where closely associated natural persons have control, joint benefit plan. The pension plan ITP 2, which is secured through insurance control or significant influence. Associated natural persons are defined with Alecta, is therefore recognised as a defined contribution plan. The as members of the board of directors, senior executives and close family premium for the defined benefit retirement and household pension is calcu- members of such persons. Purchases and sales between related parties lated individually and is in part dependent on salary, previously earned are conducted under market conditions. Disclosure of related party trans- pension and expected remaining service. actions has occurred, i.e. a transfer of resources, services or obligations, whether compensation has been paid or not. Termination benefits The parent company’s accounting policies Termination benefits are payable when an employee is dismissed by the group before the normal retirement date or when an employee accepts The parent company applies RFR 2 Financial reporting for legal entities. voluntary resignation in exchange for such benefits. The group recognises termination benefits on the following dates, whichever is earliest: (a) when The parent company applies different accounting policies than the group in the group no longer has the option to withdraw the offer of compensa- the cases listed below. tion, and (b) when the company recognises costs for restructuring that is within the scope of IAS 37 and which involves the payment of severance Layout pay. In the event the company has made an offer to encourage voluntary The income statement and balance sheet follow the layout described in the resignation, the termination benefits are estimated based on the number of Swedish Annual Accounts Act. However, the income statement is called employees expected to accept the offer. Benefits falling due more than 12 the statement of comprehensive income and includes other comprehen- months after the reporting period are discounted to present value. sive income on a separate page. The statement of changes in equity also conforms to the group’s format but must include the columns stipulated in Profit-sharing and bonus plans the Swedish Annual Accounts Act. This results in a difference in designa- The group recognises a liability and an expense for bonuses and tions compared with the consolidated financial statements, primarily with profit-sharing, based on a formula that takes the profit attributable to the regard to financial revenue and expenses, provisions and equity. company’s shareholder after certain adjustments into account. The group recognises a provision when there is a legal obligation or an informal Participations in subsidiaries and joint ventures obligation due to previous practice. Participations in subsidiaries and joint ventures are recognised at their acquisition value, less any impairment losses. The acquisition value Share-related payments includes acquisition-related costs and any additional consideration. The group has share-based compensation plans, where the company receives services from employees as consideration for the group’s equity When there is an indication that participations in subsidiaries or joint instruments. Information on these plans is provided in the “Employee ventures have decreased in value, an estimate is made of the recoverable benefits” note. amount. If this is lower than the carrying amount, an impairment loss is applied. Impairment losses are reported in “Earnings from participations in Employee option plans group companies” and ”Profit participations in joint ventures”. The fair value of the service that entitles employees to the allocation of Group contributions and shareholders’ contributions options through the group’s employee option plan is recognised as an employee expense with a corresponding increase in equity. The total Shareholder contributions are reported as an increase in the value of amount to expense is based on the fair value of the options allocated: shares and participations in group companies. An assessment is then • including all market-related conditions (e.g. target share price) made of whether there is a need for impairment of the value of the shares • excluding any impact from employment conditions and non-market and participations in question. Both paid and received group contributions related vesting conditions (e.g. profitability, sales growth targets and are recorded as balance-sheet allocations. that the employee remains in the company’s service for a specified period of time), Leases • including the impact of conditions that are not vesting conditions (e.g. All leases, whether financial or operating leases, are classified as oper- requirements that employees should save or keep the shares for a ating leases. specified period of time). Financial instruments IAS 39 is not applied in the parent company and financial instruments are The total expense is recognised over the vesting period, the period over measured at their acquisition value. which all the specified vesting conditions must be met. At the end of each reporting period, the group revises its estimates of the number of shares Cash and bank balances expected to be vested based on the non-market related vesting condi- The definition of cash and bank balances covers cash in hand and avail- tions and service conditions. Any deviation from the original assessments able balances at banks and similar institutions. resulting from the review will be recognised in the income statement and a corresponding adjustment will be made to equity.

The social security contributions incurred in the allocation of share options is considered to be an integral part of the allocation, and the cost is treated as a cash-settled share-related payment.

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-15 Financial reports

Note 3 Net sales and major customers Note 4 Expenses classification by type Group-wide information The distribution of revenue from all goods and services is as follows: Group 2016 2015 2014 Net sales distribution group 2016 2015 2014 Changes in inventory of warehouse properties 126,622 93,284 197,141 Project revenue, contract 612,003 323,097 392,663 Subcontracting and services 268,526 127,058 106,364 Sale of other construction services 29,851 22,315 16,113 Raw materials and consumables 30,046 32,517 20,220 Sale of other construction goods 2,490 740 1,581 Costs for employee Other revenue 5,557 4,946 646 remuneration 77,989 48,744 35,626 Group total 649,901 351,098 411,003 Depreciation and write-downs 1,339 1,028 333 Shipping and transportation The group has its registered office in Sweden. Revenue from external costs 1,790 1,901 1,025 customers in Sweden amounted to SEK 649,901 thousand (2015: 351,098; 2014: 411,003). Revenue from external customers in other coun- Marketing and sales 5,926 3,409 4,630 tries does not exist for the years in question. Costs for operating leases 5,396 4,868 4,406 Other expenses 21,594 13,227 15,885 Total fixed assets other than financial instruments and deferred tax receivables (there are no assets in connection with post-employment benefits or Financial expenses and rights associated with insurance contracts) located in Sweden amounted interest 49,455 19,180 23,966 to SEK 1,821 thousand (2015: 1,818; 2014: 614) and the total of such fixed Group total 588,683 345,214 409,596 assets located in other countries amounted to SEK 0 thousand (2015: 0; 2014: 0). Parent company 2016 2015 2014 Revenue of approximately SEK 454,894 thousand (2015: 295,555; 2014: Costs for employee 353,911) is attributable to major individual external customers. remuneration 10,450 – – Other expenses 236 544 1,265 Revenue from the group’s major individual customers 2016 2015 2014 Financial expenses and interest 40,639 17,936 20,652 Brf Metronomen 134,379 – – Parent company total 51,325 18,480 21,917 Brf ND Studios 33,642 97,705 – Brf Kungsterrassen – 2,658 117,131 Brf Flygplansfabriken – 21,599 59,397 Note 5 Remuneration to the auditors Brf Turbinhallen 95,781 – – The audit assignment includes the examination of the annual financial Brf Bromma Tracks 191,092 173,593 177,382 statement and accounts, as well as the management by the board of directors and the CEO, other tasks to be performed by the company’s auditor, Group total 454,894 295,555 353,911 and consultancy or other assistance arising from observations from such examinations or the implementation of other tasks. Everything else comes under other assignments. Parent company’s sales to and purchases from group companies During the year, the parent company invoiced subsidiaries SEK 0 thousand Group – PwC 2016 2015 2014 (2015: 0, 2014 0) for group-wide services. During the year, the parent Audit assignment 1,297 581 460 company purchased services from group companies amounting to SEK 0 Audit activities in addition to thousand (2015: 0, 2014: 0). the audit assignment – 55 – Tax advice 943 142 131 Other services 759 170 973 Group total 2,999 948 1,564

Parent company – PwC 2016 2015 2014 Audit assignment 380 194 150 Tax advice 750 – – Other services 91 86 896 Parent company total 1,221 279 1,046

F-16 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Note 6 Remuneration to employees Remuneration to the board of directors and senior executives, group

2016 2015 2014 Group 2016 2015 2014 Salaries and other short-term Salaries and other remuneration 51,625 32,128 23,729 remuneration 13,216 6,724 5,990 Social security contributions 19,619 11,688 8,533 Termination benefits – – – Pension costs – defined Post-employment benefits – – – contribution plans 6,745 4,928 3,364 Other non-current benefits – – – Group total 77,989 48,744 35,626 Total 13,216 6,724 5,990

Parent company Salaries and other short-term remuneration in the table above for the 2016 Salaries and other remuneration 7,565 – – business year include expensed bonus for the CEO of SEK 6,616 thousand (2015: 4,013, 2014: 3,257), which will be paid in 2017 (2016; 2015). Social security contributions 2,871 – – For information about how bonuses are calculated, please see below Pension costs – defined under the conditions for the CEO. contribution plans 15 – – Guidelines Parent company total 10,450 – – The annual general meeting decides on the fee paid to the chairman and the members of the board of directors. No separate fee is paid for Board of directors and committee work. group management 2016 2015 2014 Other benefits for the CEO and other senior executives are paid as part of Salaries and other remuneration 13,216 6,724 5,990 the total remuneration. Bonuses – – – Social security contributions 5,000 2,229 1,785 Conditions for the CEO The CEO’s contract is subject to a mutual period of notice of 12 months, Pension costs 1,545 478 420 but under certain circumstances the company is required to pay compen- Total board and sation in the form of the applicable salary for 12 months from the date of group management 19,761 9,431 8,195 termination. The CEO is entitled to variable remuneration linked to the group’s profits. Other employees Pension for the CEO Salaries and other remuneration 38,409 25,404 17,659 The CEO is entitled to receive a pension premium based on a percentage Bonuses – – – of the monthly salary that the company pays during the employment Social security contributions 14,619 9,578 5,940 period. Pension costs 5,200 4,331 3,752 Remuneration for other senior executives Total other employees 58,228 39,313 27,351 The parent company has not paid salaries and remuneration during 2014–2015. Group total 77,989 48,744 35,546 Of the subsidiaries’ salaries and remuneration, the CEO accounts for SEK 1,352 thousand (2015: 5,273, 2014: 4,459) and the other members of the board of directors SEK 687 thousand (2015: 1,333, 2014: 1,531).

Directors’ Variable Share-related Other Pension 2016 fees/salary remuneration payment benefits* costs Total Board chairman Anders Janson 172 – – – – 172 Board member Bo Andersson 77 – – – – 77 Board member Per Berggren 77 – – – – 77 Board member Sheila Florell 77 – – – – 77 Board member Ulf Morelius – – – – – – Board member Ulf Sjöstrand – – – – – – Board member Jonas Wikström 77 – – – – 77 Resigning advisory board member Ian Harcourt 80 – – – – 80 Resigning board member Peri Kuldkepp 25 – – – – 25 Resigning board member Christofer Sjöstrand 442 140 – 96 25 703 CEO Mattias Roos 1,387 6,616 1,655 97 537 10,291 Total 2,413 6,756 1,655 193 562 11,579

Directors’ Variable Share-related Other Pension 2015 fees/salary remuneration payment benefits* costs Total Board chairman Anders Janson – – – – – – Resigning board chairman Ulf Morelius 780 – – 1 103 884 Board member Christofer Sjöstrand 406 147 – 87 68 708 CEO Mattias Roos 1,378 4,013 – 109 307 5,808 Total 2,564 4,160 – 197 478 7,400

Directors’ Variable Share-related Other Pension 2014 fees/salary remuneration payment benefits* costs Total Board chairman Ulf Morelius 994 – – 2 61 1,057 Board member Peri Kuldkepp – – – – – – Board member Christofer Sjöstrand 537 – – 14 19 570 CEO Mattias Roos 1,202 3,257 – 122 139 4,720 Total 2,733 3,257 – 138 219 6,347 * Other benefits include company car, fuel payments and insurance. INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-17 Financial reports

During 2017, remuneration to the board of directors will be paid as follows: chairman SEK 230 thousand and members of the board of directors SEK Distribution between 130 thousand each. women and men in the board of directors of Share-related remuneration the parent company 2016 2015 2014 In March 2016, the company’s CEO acquired 6,020 share options on Women 1 – – existing shares in SSM Holding AB (publ). The options were granted by the Men 6 3 3 holding company Eurodevelopment Holding AG after consideration paid Total 7 3 3 in respect of the total option premium for the program. The options do not entitle the holder to dividends or voting rights. The number of outstanding options amounted to 602,000 as of 31 December 2016, recalculated after Distribution between the 100:1 share split. women and men in the management of The share value on the acquisition date of the options was estimated the parent company 2016 2015 2014 by a weighted average of three external indicative valuations of SSM Women 1 – – Holding AB (publ), taking into account the illiquidity discount for unlisted companies. Men 2 1 1 Total 3 1 1 The calculated value on the allocation date was SEK 723 per option, noting, however, that the options were acquired at SEK 448 per option. The value of the options has been calculated using the Black & Scholes Post-employment benefits valuation model. This takes into account the redemption price, the term of the option, dilution effect (not essential as it relates to existing shares), the All of the group’s pension plans are recognised as defined contribution share price on the allocation date and the expected volatility in the share plans, as the group did not have access to information that allows this price, expected yield, the risk-free interest rate for the option’s term, and plan to be recognised as a defined benefit plan. See the information in the the correlation and volatility for a group of comparable companies. accounting principles in Note 2.

Model inputs for options that were acquired during the year were: The group’s expected charges in the next reporting period for ITP 2 insurance with Alecta amount to SEK 6,356 thousand (2015: 4,131, 2014: • the options paid for by the recipient 3,090). The parent company’s expected charges for the next reporting • the options related to existing shares, thus, they will not cause any period for ITP 2 insurance with Alecta amount to SEK 912 thousand (2015: dilution 0, 2014 0). The group’s share of the total expenses for the plan amounts to • maturity was 1.8 years 0.03175% (2015: 0.01860, 2014 0.01791). The group’s share of the total • redemption price: SEK 3,156 number of those actively insured in ITP 2 amounts to 0.00956% (2015: • allocation date: 14 March 2016 0.00680, 2014: 0.00482). • due date: 31 December 2017 • share price on allocation date: SEK 3,591 The collective consolidation ratio is the market value of Alecta’s assets as a • expected volatility in the company’s share price: 30% percentage of the insurance commitments calculated according to Alecta’s • expected yield: 1.7% actuarial methods and assumptions, which are not consistent with IAS • risk-free interest: –0.7% 19. The collective consolidation ratio is normally allowed to vary between 125% and 155%. If Alecta’s collective consolidation ratio falls below 125% The expected volatility of the share price is based on an analysis of the or exceeds 155%, measures must be taken to create conditions for the actual historical volatility of 10 comparable Swedish companies. collective consolidation ratio to return to the normal range. When the collective consolidation ratio is low, one course of action could be to raise Employees the agreed price for new policies and the expansion of existing benefits. When the collective consolidation ratio is too high, one course of action The average number of could be to introduce premium reductions. At the end of 2016, Alecta’s group employees 2016 2015 2014 collective consolidation ratio amounted to 148% (2015: 153, 2014: 143). Women 23 17 14 The amounts recognised in the income statement are as follows: Men 35 23 19 Group 2016 2015 2014 Total 58 40 33 Expenses for defined contribution pension plans, Average number of including Alecta 6,745 4,809 3,364 employees in the parent company 2016 2015 2014 Total revenue recognition 6,745 4,809 3,364 Women 0.1 – – Men 0.3 – – Parent company 2016 2015 2014 Total 0.4 – – Expenses for defined contribution pension plans, including Alecta 15 – – All are employed in Sweden. Total revenue recognition 15 – – Distribution between women and men in the boards of directors of the group 2016 2015 2014 Women 1 – – Men 11 8 8 Total 12 8 8

Distribution between women and men in the group management 2016 2015 2014 Women 2 – – Men 4 1 1 Total 6 1 1

F-18 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Note 7 Transactions with related parties SSM Holding AB (publ) is the parent company of the SSM group and was as of 31 December 2016 100% owned by Eurodevelopment Holding AG, with its head office in Switzerland. Eurodevelopment is in turn owned 50% each by Ulf Morelius and Ulf Sjöstrand, who are ultimately judged to have joint control over the SSM group. Other related parties are all subsidiaries within the group and senior executives in the group, i.e. the board of directors and the company management, as well as their family members.

Purchases and sales between related parties are conducted under market conditions.

The following transactions occurred with related parties:

Group Parent company Sale of services 2016 2015 2014 2016 2015 2014 Joint ventures 28,724 28,338 18,294 – – – Housing association, where a person closely associated with SSM was a member of the board of directors 310,119 371,253 236,779 – – – Total 338,843 399,591 255,073 – – –

Consultancy services from companies where a member of the board of directors of the parent company has financial interests:

Group Parent company Purchases of goods and services 2016 2015 2014 2016 2015 2014 Purchase of apartments from housing associations 57,298 – – – – – PKU Konsult 81 235 216 – – – WA Advokatbyrå 116 – – 116 – – Foyen Advokatfirma AB – 33 – – – – Total 57,495 268 216 116 – –

Receivables and liabilities as a result of the sale and purchase of goods and services:

Group Parent company 2016 2015 2014 2016 2015 2014 Receivables from related parties: Housing association where a person closely associated with the parent company is a member of the board of directors – 211,310 215,697 – – – Joint ventures 3,064 95 – – – – Group companies – – – 375,728 159,065 162,427 Liabilities to related parties: Group companies – – – – –50 – Joint ventures – – –146 – – – Net at year-end 3,064 211,405 215,551 375,728 159,015 162,427

Receivables from related parties are mainly from sales transactions Assets pledged and contingent liabilities on behalf of related parties and fall due based on ability to pay for the projects being implemented; In the group, collateral in the form of guarantee commitments amounting although no later than on the completion date of the homes being built. The to in total SEK 82,781 thousand (2015: 5,000, 2014: 98,000) has been group does not hold any collateral for these receivables. The group has not provided on behalf of joint ventures. made any provisions for doubtful receivables for related parties in any of the years in question. Remuneration for other senior executives See the “Payments for employees” note. The liabilities to related parties arise mainly from purchase transactions and fall due two months after the date of purchase. The liabilities bear no interest.

Loans from or to related parties

Loan to JV from the group 2016 2015 2014 Opening balance 15,392 6,509 5,975 Loans raised / Amortised amount 52,205 8,290 12 Interest costs 1,471 593 522 Closing balance 69,068 15,392 6,509

The loan agreements are specific per joint venture and project, but a quarterly interest rate is primarily used.

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-19 Financial reports

Note 8 Leases

Operating leasing, lessee Operating leases, lessor This primarily covers the rental of office premises. The leases contain This mainly covers the renting out of office premises. The leases contain indexing of future rental fees and certain other variable charges. Future indexing of future rental income and certain other variable income. Future minimum lease charges under non-cancellable operating leases in force at rental income under non-cancellable operating leases in force at the end of the end of the reporting period fall due for payment as follows: the reporting period fall due for payment as follows:

Group 2016 2015 2014 Group 2016 2015 2014 < 1 year 4,925 4,392 4,092 < 1 year 5,874 – – 1–5 years 5,400 8,040 11,085 1–5 years 4,925 – – Group total 10,325 12,433 15,177 Group total 10,799 – –

The year’s minimum lease The year’s minimum lease payments 4,682 4,614 4,392 income 4,772 – – The year’s variable fees 714 254 14 The year’s variable income 136 – – Group total 5,396 4,868 4,406 Group total 4,908 – –

Costs for operating leases in the group during the financial year amounted The parent company did not have any leases in the years in question. to SEK 5,396 thousand (2015: 4,868, 2014: 4,406).

Note 9 Participations in group companies

Parent company 2016 2015 2014 Opening carrying amount 92,270 92,270 92,270 Closing carrying amount 92,270 92,270 92,270

Accumulated write-downs for shares in group companies amounted to SEK 0 thousand (SEK 0 thousand).

Subsidiaries in the group as of 31/12/2016 Participating interest of SSM:s accumulated Company, corporate registration number, registered office the company above participating interest SSM Holding AB (publ) (556533-3902), Stockholm SSM Fastigheter AB (556947-1203), Stockholm 100 100 SSM Hold Services AB (559051-9459), Stockholm 100 100 SSM Property Services AB (559051-9467), Stockholm 100 100 SSM Hold Stockholm 2 AB (559036-7586), Stockholm 100 100 Fastighets AB Älvsjö Quarters (556099-1068), Stockholm 100 100 Fast 10 Stockholm AB (559036-7511), Stockholm 100 100 Fastighets AB Wiberg (559045-5068), Stockholm 100 100 Morgondagens stockholmare AB (556984-2098), Stockholm 100 100 SSM JV Bromma AB (559065-1328), Stockholm 100 100 HoldC AB (556732-2234), Stockholm 100 100 SSM Hold Fast 5 AB (556732-2291), Stockholm 100 100 SSM Hold D AB (556925-8618), Stockholm 100 100 Linneduken 2 AB (556980-2761), Stockholm 100 100 Stockholms Bostadslägenheter AB (556919-4995), Stockholm 100 100 AB SSM Stockholm A (559062-5231), Stockholm 100 100 SSM Midsommarkransen AB (559062-5199), Stockholm 100 100 SSM Hold E AB (556984-1660), Stockholm 100 100 SSM Kista Fastighets AB (559022-3235), Stockholm 100 100 PF West AB (559090-3851), Stockholm 100 100 Sätra Stockholm Fastigheter AB (556866-8049), Stockholm 100 100 SSM Hold Stockholm 1 AB (559027-5409), Stockholm 100 100 Sollentuna Tallskogen AB (556879-9315), Stockholm 100 100 Fastighets AB Larus (559003-2602), Stockholm 100 100 Gyllene Ratten Holding AB (556795-1321), Stockholm 100 100 Gyllene Ratten AB (556773-2804), Stockholm 100 100 Hold JV Nacka AB (559084-9898), Stockholm 100 100 SSM Bygg & Fastighets AB (556529-3650), Stockholm 100 100 Sanda Ängar Holding AB (556817-6407), Stockholm 100 100 Sanda Ängar Invest AB (556805-6237), Stockholm 80 80 AB SSM Stockholm 3 (559090-3869), Stockholm 100 100

F-20 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Note 10 Holdings in joint ventures

Share Consoli- Number of Withdrawn part of holding value capital and dated shares/ Holdings in joint ventures votes % share % parts 31/12/2016 31/12/2015 31/12/2014 Alfa SSM 50 30 KB Alfa SSM, 969715-3998 49 49 62,000 – – Alfa SSM JV AB, 556840-4262* 50 50 – – – Studentbacken 50 50 50 KB Studentbacken, 969773-5182 49 49 – – – Studentbacken JV AB, 556981-6472* 50 50 – – – Lindbäcks 50 50 LB SSM Stockholm KB, 969776-1188 49 50 49 – – – LB SSM Stockholm JV AB, 559022-7939* 50 50 – – – Turbinhallen Utveckling AB, 556981-7686 50 50 250 – – – JV Elverkshuset AB, 559084-9914 50 50 250 – – – Brommaplan Holding AB, 559065-9826 50 50 25,000 – – – Total dividends received 62,000 – –

* Complementary, owns 2% of the respective limited partnership.

All joint ventures have their registered office in Sweden and form partnerships in order to develop housing projects.

The consolidated financial statements recognise the items below using the equity method. The parent company holds no participations in joint ventures. The account tables below show the respective joint ventures’ total amounts for tangible holdings.

Profit participations in joint ventures amounted to SEK 76,408 thousand (2015: 76,883, 2014: 37,467).

Condensed income statement

Alfa SSM JV Studentbacken JV AB 2016 2015 2014 2016 2015 2014 Net sales 654,927 556,563 703,178 6,951 10,327 – Expenses for production and management –528,017 –422,178 –565,291 –2,255 –7,266 – Other operating expenses –350 –738 –923 –386 –37 – Operating profit 126,560 133,647 136,964 4,310 3,024 – Depreciation and write-downs – –851 – – – – Financial income 34,142 20,390 11,717 762 19 – Financial expenses –5,545 –6,212 –8,799 –981 – – Pre-tax profit 155,156 146,974 139,882 4,091 3,043 –

Tax on profit for the year – 13,810 –14,992 – – Profit for the year 155,156 160,784 124,890 4,091 3,043 –

Condensed balance sheet

Current assets 2016 2015 2014 2016 2015 2014 Cash and bank balances 73,951 45,461 20,093 52 84 196 Other current assets 356,494 345,739 218,807 15,055 13,676 3,819 Total current assets 430,445 391,200 238,900 15,107 13,760 4,015

Current liabilities –64,798 –60,412 –28,299 –8,732 –9,529 –2,579 Total current liabilities –64,798 –60,412 –28,299 –8,732 –9,529 –2,579

Fixed assets 55,019 256,551 195,918 900 189 1,680 Non-current financial liabilities –114,467 –245,799 –228,436 –145 –1,381 –3,027 Other non-current liabilities – –16,921 –14,970 – – – Total fixed assets and non-current liabilities –59,448 –6,169 –47,488 755 –1,192 –1,347

Net assets 306,199 324,619 163,113 7,130 3,039 89

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-21 Financial reports

Condensed income statement Turbinhallen Utveckling AB 2016 2015 2014 Net sales 80,192 276,783 – Expenses for production and management –30,173 –222,477 – Other operating expenses –14 –26 – Operating profit 50,005 54,280 – Depreciation and write-downs – – – Financial income 2,873 – – Financial expenses –2,756 – – Pre-tax profit 50,122 54,280 –

Tax on profit for the year –23 – – Profit for the year 50,099 54,280 –

Condensed balance sheet

Current assets 2016 2015 2014 Cash and bank balances 64 13,048 50 Other current assets 110,750 54,280 – Total current assets 110,814 67,328 50

Current liabilities –23 – – Total current liabilities –23 – –

Fixed assets 90,482 53,788 – Non-current financial liabilities –96,845 –66,787 – Other non-current liabilities – – – Total fixed assets and non-current liabilities –6,363 –12,999 –

Net assets 104,428 54,329 50

Assets pledged and contingent liabilities are recognised in the full amount for all joint ventures.

Pledged assets and contingent liabilities in joint ventures 2016 2015 2014 Pledged assets – 30,500 – Contingent liabilities – 5,000 –

The group’s share of the carrying amount in joint ventures Purchase/ Opening Share in the year’s shareholders/ 2016 balance profit/loss capital provision Carrying value KB Alfa SSM, 969715-3998 101,466 48,306 –62,000 87,772 Turbinhallen Utveckling AB, 556981-7686 27,165 25,049 –25 52,189 KB Studentbacken, 969773-5182 1,571 2,045 –50 3,566 Hold JV Nacka AB, 559084-9898 – – 25 25 Brommaplan Holding AB, 559065-9826 – 1,117 42,500 43,617 Others –13 –9 – –22 Holdings in joint ventures, closing balance 187,147

Purchase/ Opening Share in the year’s shareholders/ 2015 balance profit/loss capital provision Carrying value KB Alfa SSM, 969715-3998 53,231 48,235 – 101,466 Turbinhallen Utveckling AB, 556981-7686 25 27,140 – 27,165 KB Studentbacken, 969773-5182 120 1,521 –70 1,571 Others – – –13 –13 Holdings in joint ventures, closing balance 130,189

Purchase/ Opening Share in the year’s shareholders/ 2014 balance profit/loss capital provision Carrying value KB Alfa SSM, 969715-3998 12,274 37,467 3,490 53,231 Turbinhallen Utveckling AB, 556981-7686 – – 25 25 KB Studentbacken, 969773-5182 – – 120 120 Others – – – – Holdings in joint ventures, closing balance 53,376

F-22 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Note 11 Financial income and expenses

Group Financial income/Interest income 2016 2015 2015 Interest income on loans 11,867 10,023 1,151 Total financial income/interest income 11,867 10,023 1,151

Financial costs/Interest expenses Loss on disposal of subsidiaries – –15 –92 Interest expense on bond loans –27,108 –17,935 –19,424 Interest expense on liabilities to credit institutions –21,467 –1,230 – Other financial expenses –880 – –4,450 Total financial costs/interest expenses –49,455 –19,180 –23,966

Net financial items –37,588 –9,157 –22,815

Parent company Financial income/Interest income 2016 2015 2014 Interest income on loans 26,001 15,931 19,444 Dividends from subsidiaries 46,000 10,000 6,000 Total financial income/interest income 72,001 25,931 25,444

Financial costs/Interest charges Interest expense on bond loans –27,108 –17,936 –19,423 Other financial expenses –13,531 – –1,229 Total financial costs/interest charges –40,639 –17,936 –20,652

Net financial items 31,362 7,995 4,792

Note 12 Tax

Income tax Group Parent company 2016 2015 2014 2016 2015 2014 Current tax on profit for the year 134 272 2,161 – – – Deferred taxes 4,616 –3,037 2,791 – – – Income tax/Tax on profit for the year 4,750 –2,765 4,952 – – –

The differences between the recognised tax costs and an estimated tax cost based on the applicable tax rate are the following:

Pre-tax profit 149,493 92,790 40,130 20,676 2,451 3,527 Income tax calculated according to the Swedish tax rate 32,888 20,414 8,829 4,549 539 776 Tax effects from: Non-taxable income –92,937 –50,629 –10,636 –7,700 –1,100 –1,320 Non-deductible expenses 61,617 17,578 54 1 – – Utilisation of tax losses not previously recognised –6,747 –87 –2,178 – – – Tax losses for which no deferred tax receivables were recognised 9,929 9,956 7,348 3,150 561 544 Adjustments relating to deficits from previous years – – 1,535 – – – Income tax/Tax on profit for the year 4,750 –2,768 4,952 – – –

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-23 Financial reports

Deferred taxes

Group 31/12/2016 31/12/2015 31/12/2014 Deferred tax expense relating to temporary differences 4,616 –3,037 2,790 Deferred tax income related to temporary differences – – Total deferred tax in the income statement 4,616 –3,037 2,790

Deferred tax receivables Deferred tax receivables to be utilised after more than 12 months – 5,223 5,223 Total deferred tax receivables – 5,223 5,223

Deferred tax liabilities Deferred tax liabilities to be utilised after more than 12 months 1,071 1,071 1,199 Deferred tax liabilities to be utilised within 12 months – 607 3,516 Total deferred tax liabilities 1,071 1,678 4,715

Deferred tax receivables/liabilities, net –1,071 3,545 508

The parent company has not had any deferred tax liabilities or tax receivables during any of the periods in question.

Changes in deferred tax receivables and liabilities during the year, which have been recognised in the income statement, without taking offsets made within the same tax jurisdiction into account, are shown below:

Deferred tax receivables (+) and tax liabilities (–)

Reported in the Other 2016 Opening balance income statement adjustments Closing balance Project properties 5,223 –5,223 – – Consolidated gradual profit recognition –1,678 607 – –1,071 Other – – – – Total 3,545 –4,616 – –1,071

Total deferred tax receivables in the balance sheet – – – – Total deferred tax liabilities in the balance sheet – – – 1,071 Net deferred tax in the balance sheet – – – –1,071

Reported in the Other 2015 Opening balance income statement adjustments Closing balance Project properties 5,223 – – 5,223 Consolidated gradual profit recognition –4,107 2,429 – –1,678 Other –608 608 – – Total 508 3,037 – 3,545

Total deferred tax receivables in the balance sheet – – – 5,223 Total deferred tax liabilities in the balance sheet – – – –1,678 Net deferred tax in the balance sheet – – – 3,545

Reported in the Other 2014 Opening balance income statement adjustments Closing balance Project properties 5,223 – – 5,223 Consolidated gradual profit recognition – –4,107 – –4,107 Other – –608 – –608 Total 5,223 –4,715 – 508

Total deferred tax receivables in the balance sheet – – – 5,223 Total deferred tax liabilities in the balance sheet – – – –4,715 Net deferred tax in the balance sheet – – – 508

F-24 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Deferred tax receivables are recognised for tax loss carryforwards to the Note 15 Financial risk management extent that it is probable that they can be utilised through future taxable The group’s activities expose it to various financial risks; market risk profits. The group did not recognise deferred tax receivables amounting to (including interest rate risk and currency risk), credit and counterparty risk SEK 29,185 thousand (2015: 28,536, 2014: 18,483), in respect of losses and financing risk. SSM’s financial strategy is that finance operations shall amounting to SEK 132,658 thousand (2015: 129,708, 2014: 84,016), which add value to the group. Financial operations shall be centralised to achieve can be offset against future taxable profits. Loss carry-forwards do not an appropriate control and economies of scale, and to obtain favourable expire at any given time. terms on the financial markets. Negative impacts on earnings and cash flow due to short-term operations in the financial markets shall be limited Deferred tax should be considered under current regulations on temporary through hedging. Capital efficiency is to be achieved in connection with the differences on all assets and liabilities in the balance sheet, except for capital tied up in operations and the composition of the capital structure. temporary differences on properties at the asset acquisition. In this instance, the differences on the acquisition date should not be considered SSM’s overall financial objective is to ensure the group’s ability to pay when calculating deferred tax. The temporary differences in the properties and financial readiness, and to increase the return on equity through both from asset acquisition amounted on 31 December 2016 to SEK 0 thousand cost-effective and business-like financial management. However, specu- (2015: 0, 2014: 0), which means a total deferred tax of 22%. lation in financial markets, i.e. transactions that increase the financial risks arising from operating activities, are not acceptable.

Note 13 Intangible assets Risk management is handled centrally within the group’s accounts Capitalised development costs department in accordance with the financial policy adopted by the board of directors. All external financial transactions are conducted or coordinated by the central finance department. Subsidiaries are not authorised to make Group 2016 2015 2014 external financial transactions, unless these are expressly approved by the Accumulated acquisition values 3,184 2,204 – group’s finance director. The finance department identifies, evaluates and Accumulated depreciation –1,796 –735 – hedges financial risks in close cooperation with the group’s operating units.

Accumulated write-downs – – – Market risk Carrying amount 1,388 1,469 – Interest rate risk is defined as the risk that interest rate changes will have a negative impact on the group’s earnings and cash flow. The group’s interest rate risk arises mainly from non-current borrowings, which mostly Group 2016 2015 2014 have variable interest. The interest rate risk on the group’s financing shall be limited in accordance with the financial targets. The group has both At the beginning of the year 1,469 – 16,410 interest-bearing liabilities and liquid assets, which offset each other to Investments 981 2,204 – some extent in terms of risk. Given the risk limit, the goal is to achieve the Disposals and scrapping – – –16,410 lowest interest expense. Interest-bearing assets will primarily be used to reduce existing borrowings and fixed-interest periods should therefore not Write-downs for the year –1,061 –735 – extend further than the next date on which the consolidated loans can be Carrying amount 1,388 1,469 – amortised. The debt portfolio’s interest revenue structure should be spread over time. Depreciation expenses of SEK 0 thousand (2015: 735, 2014: 0) are included in the cost of production and management, SEK 1,061 thousand On the balance sheet date, bond loans and debt to credit institutions with (2015: 0, 2014: 0) in “Sales and administration expenses”. variable interest amounted to SEK 523,434 thousand (2015: 296,343, 2014: 266,231), the group’s variable lending rates amounted to SEK 69,069 thousand (2015: 22,080, 2014: 6,509) and the group’s liquid Note 14 Machinery and equipment funds amounted to SEK 63,892 thousand (2015: 52,696, 2014; 28,672). A change in interest rates of +/- 1% would have an impact on net interest income of -/+ SEK 5,330 thousand (2015: 2,743, 2014: 2,597). Group 2016 2015 2014 Accumulated acquisition values 1,550 1,187 1,617 Currency risk – SSM’s operations are exposed to changes in foreign Accumulated depreciation –1,117 –838 –1,003 exchange rates. This exposure occurs especially in connection with purchases in foreign currency (known as transaction exposure). Sales in Book value 433 349 614 foreign currencies do not occur in the current situation. SSM’s policy is to reduce transaction exposure. Transaction exposure is limited, and the risk is therefore not considered to be significant in the current situation. Group 2016 2015 2014 At the beginning of the year 349 614 526 The group’s balance sheet exposure is limited to accounts payable - trade in foreign currency owing to purchases. Otherwise there are no net assets/ Investments 363 41 421 liabilities in currencies other than the group’s consolidation currency, Disposals and scrapping 0 –471 –250 SEK (known as balance sheet exposure). As the balance sheet exposure Write-downs for the year –278 –293 –333 is limited in scope, the group’s policy is not to hedge the balance sheet exposure. Disposals 0 458 250 Book value 433 349 614 Credit and counterparty risk Credit and counterparty risk is defined as the risk that counterparties, both Depreciation expenses of SEK 0 thousand (2015: 293, 2014: 333) are financial and commercial, cannot meet their obligations on time or provide included in the cost of production and management, SEK 278 thousand security for their performance. These commitments include all financial (2015: 0, 2014: 0) in “Sales and administration expenses”. transactions where the counterparty’s suspension of payments would result in a potential loss. Counterparty risk in SSM’s financial activities arises mainly from the investment of surplus liquidity in derivative contracts and credit facility agreements.

An assessment of counterparty risk must be made prior to each transaction. The assessment shall be conducted with regard to net exposure and SSM’s total involvement with the counterparty. SSM shall endeavour to spread counterparty risk. In order to reduce counterparty risk, only approved counterparties may be used. Permitted counterparties when signing credit facilities, derivative instruments and investments are Nordic counterparties with a rating of at least A (S&P) or at least A2 (Moody’s). If a

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counterparty’s long-term rating is lowered by one rating below SSM’s rating Parent company requirement, the CEO must be informed as soon as possible. The board of As at 31 December 6 months– 1–2 2–5 directors must be informed if a counterparty’s long-term rating is lowered 2016 < 6 months 1 year years years by more than one rating below SSM’s rating requirements. Bond loans 16,000 16,000 32,000 446,133 The established credit rules according to the Accounting Handbook shall Accounts payable 1,865 – – – apply for the management of commercial credit risks. As at 31 December 6 months– 1–2 2–5 Financing risk 2015 < 6 months 1 year years years Financing risk is the risk of, at some point, not having access to, or only having access to at an increased cost, funds for refinancing, investments Bond loans 4,000 4,000 215,912 – and payments. The group’s policy is to achieve stability in the long-term Liabilities to group supply of capital and thereby limit the financing risk. This means that the companies 50 – – – group must maintain sufficiently large liquidity reserves, have a steady Accounts payable 23 – – – structure for the maturity of loans and facilities over time, and achieve diversification of financing sources and markets. The short-term supply of capital is intended to always ensure the Group’s ability to pay by main- As at 31 December 6 months– 1–2 2–5 taining sufficient payment capacityor liquidity reserves. Payment capacity 2014 < 6 months 1 year years years is defined as liquid funds, financial investments that can be converted into Bond loans 4,000 4,000 16,000 215,908 cash within three banking days, and confirmed unutilised credit lines with a remaining maturity of at least three months. Confirmed credit lines refer to Capital risk management lines of credit with an agreed interest margin. The group’s target as regards the capital structure is to secure the group’s The size of the payment capacity is determined by and shall always cover: ability to continue its operations in order to continue to generate returns for the shareholders and benefits for other stakeholders, and to maintain an • 100% of the estimated net investments for the next three months optimal capital structure to keep capital costs as low as possible.

• 100% of the next three months’ working capital requirements The group monitors the capital based on the debt/equity ratio. This key figure is calculated as the net debt divided by total capital. Net debt is Cash flow forecasts are prepared regularly by the group’s finance depart- calculated as total borrowings (including short-term borrowings and ment, with reporting to the group’s management and board of directors. non-current borrowings in the consolidated balance sheet) less liquid The finance department monitors the group’s payment capacity and funds. Total capital is calculated as net debt plus equity. liquidity reserves to ensure that the group can meet the requirements for current operations. To identify payment flows, forecasts of liquidity/cash flow shall be prepared monthly with forecasts for 31/12/2016 31/12/2015 31/12/2014 Total borrowing 523,434 296,343 266,211 • 24 months rolling in months Less liquid funds 63,892 52,696 28,672 The table below analyses the financial liabilities of the group and the Net debt 459,542 243,647 237,539 parent company, broken down according to the date on the balance sheet Equity 301,300 173,544 80,587 identified as the contractual maturity date. The amounts specified in the Total capital 760,842 417,191 318,126 table are the contractual, undiscounted cash flows. On the balance sheet date, there were no financial liabilities with maturities exceeding the range of 2–5 years. Debt/equity ratio 0.60 0.58 0.75

Group As at 31 December 6 months– 1–2 2–5 2016 < 6 months 1 year years years Bond loans 16,000 16,000 32,000 446,133 Liabilities to credit institutions 3,796 3,796 114,342 33,701 Accounts payable 43,332 – – – Other current liabilities 39,858 – – –

As at 31 December 6 months– 1–2 2–5 2015 < 6 months 1 year years years Bond loans 8,000 8,000 215,912 – Liabilities to credit institutions 3,375 3,375 6,750 103,921 Accounts payable 28,565 – – – Other current liabilities 11,965 – – –

As at 31 December 6 months– 1–2 2–5 2014 < 6 months 1 year years years Bond loans 8,000 8,000 16,000 215,908 Liabilities to credit institutions 3,375 70,997 – – Liabilities to joint ventures 146 – – – Accounts payable 9,638 – – – Other current liabilities 22,608 – – –

F-26 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Note 16 Financial instruments by category Group 31/12/2016 Loans and Financial Non-financial accounts liabilities valued at assets Total carrying Financial assets receivable amortised cost and liabilities amount Fair value Receivables from joint ventures 72,133 – 72,133 72,133 Other non-current receivables 203,831 – 203,831 203,831 Accounts receivable 29,394 – 29,394 29,394 Other receivables 80,993 – 80,993 80,993 Liquid funds 63,892 – 63,892 63,892 Total financial assets 450,243 – 450,243 450,243

Financial liabilities Bond loans 390,663 – 390,663 400,000 Liabilities to credit institutions 132,771 – 132,771 133,000 Other non-current liabilities 49,623 – 49,623 49,623 Accounts payable 43,332 – 43,332 43,332 Other debts 39,858 22,802 62,660 62,660 Total financial liabilities 656,247 22,802 679,049 688,615

Group 31/12/2015 Loans and Financial Non-financial accounts liabilities valued at assets Total carrying Financial assets receivable amortised cost and liabilities amount Fair value Receivables from joint ventures 22,175 – 22,175 22,175 Other non-current receivables 71,030 – 71,030 71,030 Accounts receivables 1,714 – 1,714 1,714 Other receivables 68,806 – 68,806 68,806 Liquid funds 52,696 – 52,696 52,696 Total financial assets 216,421 – 216,421 216,421

Financial liabilities Bond loans 196,822 – 196,822 200,000 Liabilities to credit institutions 99,521 – 99,521 100,000 Accounts payable 28,565 – 28,565 28,565 Other debts 9 11,956 11,965 11,965 Total financial liabilities 324,917 11,956 336,873 340,530

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-27 Financial reports

Group 31/12/2014 Loans and Financial Non-financial accounts liabilities valued at assets Total carrying Financial assets receivable amortised cost and liabilities amount Fair value Receivables from joint ventures 6,509 – 6,509 6,509 Other non-current receivables 96,796 – 96,796 96,796 Accounts receivables 553 – 553 553 Other receivables 30,405 – 30,405 30,405 Liquid funds 28,672 – 28,672 28,672 Total financial assets 162,935 – 162,935 162,935

Financial liabilities Bond loans 195,234 – 195,234 200,000 Liabilities to credit institutions 70,997 – 70,997 70,997 Liabilities to joint ventures 146 – 146 146 Accounts payable 9,638 – 9,638 9,638 Other debts 15,191 7,417 22,608 22,608 Financial liabilities 291,206 7,417 298,623 303,389

Parent company 31/12/2016 Loans and Financial Non-financial accounts liabilities valued at assets Total carrying Financial assets receivable amortised cost and liabilities amount Fair value Receivables from group companies 375,728 – 375,728 375,728 Cash and bank balances 10,234 – 10,234 10,234 Total financial assets 385,962 – 385,962 385,962

Financial liabilities Other non-current liabilities 390,663 – 390,663 400,000 Accounts payable 1,865 – 1,865 1,865 Total financial liabilities 392,528 – 392,528 401,865

Parent company 31/12/2015 Loans and Financial Non-financial accounts liabilities valued at assets Total carrying Financial assets receivable amortised cost and liabilities amount Fair value Receivables from group companies 169,064 – 169,064 169,064 Other receivables 9,000 – 9,000 9,000 Cash and bank balances 32 – 32 32 Total financial assets 178,096 – 178,096 178,096

Financial liabilities Other non-current liabilities 196,823 – 196,823 200,000 Liabilities to group companies 50 – 50 50 Accounts payable 23 – 23 23 Total financial liabilities 196,896 – 196,896 200,073

Parent company 31/12/2014 Loans and Financial Non-financial accounts liabilities valued at assets Total carrying Financial assets receivable amortised cost and liabilities amount Fair value Receivables fromgroup companies 162,427 – 162,427 162,427 Other receivables 9,000 – 9,000 9,000 Cash and bank balances 13 – 13 13 Total financial assets 171,440 – 171,440 171,440

Financial liabilities Other non-current liabilities 195,234 – 195,234 200,000 Total financial liabilities 195,234 – 195,234 200,000

F-28 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

The group recognises financial instruments measured at fair value in the Note 19 Trade accounts receivable and other receivables statement of financial position. This requires information on assessment of fair value by level in the following fair value hierarchy: Group 31/12/2016 31/12/2015 31/12/2014 • Level 1 – quoted prices (unadjusted) in active markets for identical Accounts receivable 29,394 1,714 553 assets or liabilities. The quoted market price used for the group’s finan- Other receivables 80,993 68,806 30,405 cial assets is the current buying rate. The group and parent company Accounts receivable and other have no financial instruments classified in level 1. receivables net 110,387 70,520 30,958 • Level 2 – observable data for the assets or liabilities other than quoted prices included in level 1, either directly (i.e. as prices) or indirectly (i.e. Overdue accounts receivable derived from prices). The group’s financial instruments included in level without impairment 24,381 1,714 337 2 consist of bonds, liabilities to credit institutions and other non-current

liabilities. The parent company’s financial instruments included in level 2 consist of bonds and other non-current liabilities. Group – Other receivables and tax receivables

31/12/2016 31/12/2015 31/12/2014 • Level 3 – data for assets or liabilities that is not based on observable market data (i.e. unobservable data). The group and parent company Deposit shares – 10,000 – have no financial instruments classified in level 3. Receivables from housing associations –86 45,871 16,723 The group or the parent company have not experienced any movements between the categories during the periods presented. Receivables from apartment buyers 52,908 – – Tax receivables – 24 1,255 Note 17 Other non-current receivables On-going project 27,977 12,460 6,545 Other receivables 195 452 5,882 Group 31/12/2016 31/12/2015 31/12/2014 Group total 80,993 68,806 30,405 Restricted liquid funds – 9,000 9,000

Deposits 3,000 – – Impairment of overdue accounts receivable is not deemed to exist. Receivables for housing associations 200,831 62,030 87,796 Age analysis of overdue accounts receivable and other receivables: Group total 203,831 71,030 96,796 31/12/2016 31/12/2015 31/12/2014 Parent company 31/12/2016 31/12/2015 31/12/2014 1–30 days 21,386 350 60 Restricted liquid funds – 9,000 9,000 31–60 days 475 1,359 277 Parent company total – 9,000 9,000 > 60 days 2,520 4 – Total overdue accounts Restricted liquid funds were comprised of security for interest payments on receivable and other bonds from 2013. The amount was blocked until the bond was redeemed receivables 24,381 1,714 337 on 2 June 2016. Changes in provisions for uncertain accounts receivable and other receivables are as follows: Note 18 Inventories 31/12/2016 31/12/2015 31/12/2014 31/12/2016 31/12/2015 31/12/2014 As at 1 January – – 553 Project properties 208,799 114,952 53,856 Actual losses – – –553 Total inventories 208,799 114,952 53,856 As at 31 December – – –

During the year, the group has capitalised borrowing costs of SEK 4,474 There are no collateral or other guarantees for the outstanding accounts thousand (2015: 5,433, 2014: 4,047) on qualifying assets in the form of receivable on the balance sheet date. project properties. Capitalised interest was determined by applying the actual interest paid.

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-29 Financial reports

Note 20 Recognised non-invoiced revenue Share capital Ordinary shares, Recognised non-invoiced in thousands of shares 2016 2015 2014 revenue – group 2016 2015 2014 Issued 1 January 301 301 301 Recognised revenue from Issued 31 December – paid 301 301 301 contracting agreements in progress 971,543 622,927 438,875 As of 31 December 2016, the registered share capital amounted to Billing of contracting 301,000 (2015: 301,000, 2014: 301,000) shares. All shares are of the agreements in progress –808,188 –560,999 –322,721 same type with the same voting rights and rights to the company’s assets Net amounts in the balance and earnings. The shares have a quotient value of SEK 100. sheet for recognised non-invocied revenue 163,355 61,928 116,154 Other contributed capital Other capital contribution refers to equity contributed by the owners. This Recognised revenue in on-going projects, including gains recognised includes share premiums from when the company was founded. minus loss provisions recognised, amounted to SEK 604,861 thousand (2015: 290,212, 2014: 213,723). Advances received amounted to SEK Retained earnings including profit for the year 441,506 thousand (2015: 228,286, 2014: 97,568). Amounts received from Retained earnings comprise the previous year’s retained earnings and the buyer amounted to SEK 0 thousand (2015: 0, 2014: 0). profit for the year after deduction of dividends paid.

Share premiums Note 21 Prepaid costs and accrued income Share premiums comprise the portion of the new issue made at a premium.

Group 31/12/2016 31/12/2015 31/12/2014 The aim in terms of capital structure is to secure the ability to continue Prepaid rental expenses 949 894 30 operations and to generate returns for shareholders and benefits for other stakeholders. Accrued interest 2,928 – – Other prepaid costs 4,560 760 147 Based on SSM’s financial targets, shown below, they are expected to Prepaid expenses in projects 15,570 10,859 7,038 provide adequate scope for the demands posed by the nature, scope and risks of the parent company and the group’s equity and liquidity. Accrued income in projects – – – Accrued personnel costs – – 989 Debt/equity ratio Debt/equity ratio shall exceed 30% Other accrued income – 1,372 – Operating margin The operating margin shall exceed 20% Group total 24,007 13,885 8,203 Earning capacity on equity Earning capacity on equity should exceed 25%

Parent company 31/12/2016 31/12/2015 31/12/2014 Interest coverage ratio The interest coverage ratio shall be at least two Other prepaid costs 3,611 – – Dividend policy The group intends to pay dividends of Accrued interest – – – at least 30% of profit after tax Parent company total 3,611 – –

Note 22 Liquid funds, and Cash at bank

Group 31/12/2016 31/12/2015 31/12/2014 Bank deposits 63,892 52,696 28,672 Group total 63,892 52,696 28,672

Parent company 31/12/2016 31/12/2015 31/12/2014 Bank deposits 10,234 32 13 Parent company total 10,234 32 13

Note 23 Equity

Group Parent company 2016 2015 2014 2016 2015 2014 Equity 301,300 173,544 80,587 75,473 73,297 68,344 Debt/equity ratio 29.1 % 31.9 % 20.3 % 15.7 % 27.1 % 25.9 % Earning capacity on equity 61.0 % 75.2 % 53.5 % 27.8 % 10.5 % 5.2 % Interest coverage ratio, times 4.0 5.8 2.7 1.5 1.4 1.2

Change in number of Total number Change in share Total share Date Event shares of shares capital, SEK t capital, SEK t Par value 1994 Foundation 1,000 1,000 100 100 0 2004 New share issue 300,000 301,000 30,000 30,100 100 2017* 1:100 share split 29,799,000 30,100,000 – 30,100 1 * At an extraordinary general meeting held 16 December 2016, it was resolved to carry out a share split of 1:100. The share split was registered with the Swedish Companies Registration Office 23 January 2017. After the share split, the total number of shares amount to 30,100,000. The share capital remains unchanged.

F-30 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Financial reports

Note 24 Borrowing Overdraft facilities SSM Bygg och Fastighets AB has a bank overdraft facility of SEK 20 The group – non-current 31/12/2016 31/12/2015 31/12/2014 million that is renegotiated each calendar year. From the overdraft facility, SEK 0 million (31/12/2015: 0; 31/12/2014: 0) was used on 31 December Bond loans 390,663 196,822 195,234 2016. The overdraft facility has an interest rate of 5.72%, which is payable Liabilities to credit institutions 132,771 99,521 – quarterly in arrears. The overdraft facility is charged annually with a Other non-current liabilities 49,623 – – contract rate of interest of 0.75%. The contract interest rate is the cost of the right to use the credit facility over a year and is recognised as a finan- Total non-current borrowing 573,057 296,343 195,234 cial cost. The company has provided a floating charge of SEK 23.7 million as security for the overdraft facility. The group – short-term 31/12/2016 31/12/2015 31/12/2014 Liabilities to credit institutions – – 70,997 The carrying amount and fair value of non-current debt are as follows: Total current borrowing – – 70,997 Carrying value 31/12/2016 31/12/2015 31/12/2014 Group – total borrowing 573,057 296,343 266,231 Bond loans 390,663 196,822 195,234 Liabilities to credit institutions 132,771 99,521 – Parent company – non-current 31/12/2016 31/12/2015 31/12/2014 Total non-current borrowing 523,434 296,343 195,234 Bond loans 390,663 196,822 195,234 Fair value 31/12/2016 31/12/2015 31/12/2014 Total non-current borrowing 390,663 196,822 195,234 Bond loans 400,000 200,000 200,000 Liabilities to credit institutions 133,000 100,000 – Parent company – total borrowing 390,663 196,822 195,234 Total non-current borrowing 533,000 300,000 200,000

The fair value of short-term debt corresponds to its carrying value, as Maturity structure the discount effect is not significant. Fair value is based on discounted cash flows using a discount rate corresponding to the estimated effective Effective interest rate for alternative borrowing and is classified in Level 2 of the fair interest value hierarchy, see Note 3.3. The difference between the carrying value 31/12/2016 SEK t rate and the fair value consists of the respective credit related to transaction < 1 year – – costs, distributed over the period of the credit. 1–2 years 132,771 5.83% 3–4 years 390,663 8.24% Note 25 Other debts Total 523,434 Group 31/12/2016 31/12/2015 31/12/2014 Effective Employee-related taxes 2,386 1,783 1,110 interest VAT 20,416 10,174 6,307 31/12/2015 SEK t rate Promissory note loan – – 9,441 1–2 years 296,343 7.80 % Liabilities for on-going projects – – 5,750 Total 296,343 Other current liabilities 39,858 9 –

Effective Group total 62,660 11,965 22,608 interest 31/12/2014 SEK t rate Parent company 31/12/2016 31/12/2015 31/12/2014 < 1 year 70,997 6.02 % VAT and personnel-related 3–4 years 195,234 8.24 % taxes 43 – – Total 266,231 Parent company total 43 – –

Bond loans The SEK 200 million corporate bond issued 27 December 2013 was Note 26 Accrued costs and prepaid income redeemed in full on 2 June 2016. A new corporate bond within a framework of SEK 700 million and initial borrowing of SEK 400 million was issued on Group 31/12/2016 31/12/2015 31/12/2014 9 May 2016. The bond loan falls due on 9 May 2020. The loan requires no Accrued social contributions, amortisations and has a coupon rate of STIBOR +8% payable quarterly. incl. holiday pay liabilities 3,815 4,455 1,409 Terms governing to the bond loan stipulate that SSM’s debt/equity ratio always shall exceed 22.5% and that the dividend may not exceed 20% of Accrued bonus 13,455 6,742 1,965 the previous year’s profits (after IPO, max. 50%). SSM shall also publish Accrued interest 4,630 133 132 quarterly reports within two months of the end of each quarter, and annual Other accrued costs 13,630 950 2,034 reports within four months of the year-end date. Collateral provided for the bond issue consists of a share pledge of all the shares in SSM Fastigheter Group total 35,530 12,280 5,539 and all shares in all of SSM Fastigheter’s direct, wholly owned subsidiaries. Future wholly owned subsidiaries of SSM Fastigheter shall also be pledged Parent company 31/12/2016 31/12/2015 31/12/2014 in favour of the bond. Accrued social contributions, incl. holiday pay liabilities 196 – – Liabilities to credit institutions Accrued bonus 9,058 – – The debt of SEK 100 million, consists of a working capital facility which falls due in July 2018 and has an annual contractual interest rate of 1.50% and Accrued interest 4,622 133 132 a disposition rate of 6.75%, which is payable quarterly in arrears. Security Other accrued costs – 40 – consists of pledges in promissory notes to Brf Bromma Tracks. The debt Parent company total 13,876 173 132 of SEK 33 million consists of property loans which fall due in September 2018, and has a disposition rate of STIBOR3M plus 2.49%. Security consists of mortgages on the property Stockholm Herrgården 1.

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-31 Financial reports

Note 27 Provisions Note 30 Allocation of profits The following profits are available for the AGM to dispose of: Guarantees housing associations 2016 2015 2014 SEK Opening balance 6,579 7,444 7,344 Retained profit 43,197,761 Provisions for the year 16,935 4,522 1,166 Profit for the year 20,675,781 Utilised during the year –6,253 –5,387 –1,066 Dividend –18,500,870 Closing balance 17,261 6,579 7,444 Total 45,372,672

Of which non-current portion 14,444 5,042 2,715 The board of directors and the CEO propose that the amount shall be disposed of as follows: Of which short-term portion 2,817 1,537 4,729 Total 17,261 6,579 7,444 SEK Carried forward 45,372,672 These provisions relate to guarantee expenses for completed contracts and other commitments to customers and provisions for future employee In 2016, dividends were distributed on three occasions: SEK 2,500,000 benefits. on 5 January, SEK 4,000,000 on 15 June and SEK 12,000,870 on 15 September.

Note 28 Assets pledged and contingent liabilities In conjunction with each distribution, the board of directors has assessed Assets pledged the proposed dividend to be justifiable considering the demands on the As security for issued bonds, shares in SSM Fastigheter AB have been size of the equity which are imposed by the nature, scope and risks asso- pledged with a consolidated value amounting to SEK 225,790 thousand ciated with the operations of the company and the group, and the need to (2015: 100,096, 2014: 12,071); and allocated funds in a blocked account strengthen the balance sheet, liquidity and financial position in general. for a total of SEK 0 thousand (2015: 9,000, 2014: 9,000). Property mort- The company’s financial position has not given rise to any assessment gages have been provided amounting to SEK 33,000 thousand (2015: other than that the company can continue its operations and that the 42,242, 2014: 42,242) and floating charges amounting to SEK 23,700 company can meet its obligations in the short and long term. In this regard, thousand (2015: 20,000, 2014: 20,000). Promissory note receivables have the board of directors has considered the company’s and group’s financial been provided amounting to SEK 67,416 thousand (2015: 0; 2014; 0) as situation based on what is stated in the most recent annual report, as well security for loans from credit institutions. as other relevant conditions known to the board of directors.

Contingent liabilities Guarantees for benefits for housing associations have been submitted to a Note 31 The signatures of the board of directors value of SEK 966,047 thousand (2015: 777,095, 2014: 331,520), for joint ventures SEK 82,781 thousand (2015: 5,000, 2014: 73,000), and for others Stockholm, 20 February 2017 SEK 0 thousand (2015: 5,000, 2014: 0).

There are also obligations pursuant to construction contracts and agree- Anders Janson ments to acquire unsold apartments once production is completed. SSM is occasionally party to a dispute. No on-going dispute is expected to have a material impact on the group’s financial position and profit. Bo Andersson Per Berggren Sheila Florell

Note 29 Cash flow analysis Items that have affected operating profit but not cash flow. Ulf Morelius Ulf Sjöstrand Jonas Wikström Group 31/12/2016 31/12/2015 31/12/2014 Depreciations of PPE and intangible assets 1,340 1,028 333 Reclassification of on-going projects – – 5,884 Other 1,031 357 913 Group total 2,371 1,385 7,130

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Summary of auditors’ report on selected historical financial information

To the board of directors of SSM Holding AB (publ)

We conducted an audit of the consolidated financial statements for SSM Holding AB (publ) covering the balance sheets from 31 December 2016, 2015 and 2014 and the consolidated income statements, statements of comprehensive income, cash flow statements and statements of changes in equity for 2016, 2015 and 2014, as well as a summary of significant accounting policies and other explanatory notes.

The board of directors’ and the CEO ‘s responsibility for the financial statements The board of directors and the CEO are responsible for ensuring that the financial statements are prepared and presented in such a way that they provide a true and fair view of the financial position, profit, changes in equity and cash flows in accordance with Inter- national Financial Reporting Standards adopted by the EU, and the Swedish Annual Accounts Act and applicable supplementary standards. This responsibility includes designing, implementing and maintaining internal control that is relevant to the preparation and fair presentation of financial statements free from material misstatement, whether due to fraud or error. The board of directors is also responsible for ensuring that the financial statements are prepared and presented in accordance with the requirements of Prospectus Regulation 809/2004/EU.

The auditor’s responsibility Our responsibility is to express an opinion on the financial statements on the basis of our audit. We conducted our audit in accordance with FAR’s recommendation RevR 5 Review of financial information in the prospectus. This means that we follow FAR’s ethical rules and have planned and performed the audit to obtain reasonable assurance that the financial statements are free from material misstatement. The audit company applies ISQC 1 (International Standard on Quality Control) and thus has a comprehensive quality control system, including documented policies and procedures regarding compliance with professional ethics, standards for professional practice and the requirements of laws and regulations. An audit in accordance with FAR’s recommendation RevR 5 Review of financial information in the prospectus involves performing procedures to obtain audit evidence for the figures and disclosures in the financial statements. The audit procedures selected depend on our assessment of the risk of material misstatement in the financial statements, whether due to fraud or error. During the risk assessment, we consider the internal control relevant to the company’s preparation and fair presentation of the financial statements a basis for designing the audit procedures that are appropriate in these circumstances, but not for expressing an opinion on the effectiveness of the internal control. An audit also involves assessing the appropriateness of the accounting policies used and the reasonableness of the significant estimates made by the board of directors and the CEO, as well as assessing the overall presentation in the financial statements. We consider the audit evidence that we have obtained to be sufficient and appropriate for providing a basis for our opinion.

Declaration In our opinion, the financial statements provide a true and fair view in accordance with the International Financial Reporting Standards adopted by the EU, and the Swedish Annual Accounts Act and applicable supplementary standards, of the position of SSM Holding AB (publ) as of 31 December 2016 (31 December 2015 and 31 December 2014) and profit, statement of changes in equity and cash flow for these years.

Stockholm, 20 February 2017

Öhrlings PricewaterhouseCoopers AB

Ola Salemyr Authorised public accountant

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) F-33 F-34 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) Glossary

Glossary

The terms defined in the table below are used regularly in the Prospectus. See also the definitions of certain financial terms provided in section “Definitions of key performance indicators defined according to IFRS” and “Definitions of key performance indicators not defined according to IFRS”

AGB Sundal Collier refers to AGB Sundal Collier AB.

Alecta refers to Alecta Pensionsförsäkring, ömsesidigt.

Avanza refers to Avanza Bank AB.

Code refers to Swedish Code of Corporate Governance.

Company, SSM or Group refers to SSM Holding AB (publ) or SSM Holding AB (publ) and its subsidiaries, as the context requires.

Cornerstone Investors refers to Länsförsäkringar Fondförvaltning AB (publ), Malmegårds Fastighets AB and Grandholm Fastigheter AB.

Euroclear refers to Euroclear Sweden AB.

GDP refers to gross domestic product.

IFRS refers to the International Financial Reporting Standards as adopted by the European Union.

Joint Global Coordinators refers to AGB Sundal Collier AB and Skandinaviska Enskilda Banken AB (publ).

Joint ventures refers to the Group’s jointly owned associated companies.

LIBU Invest refers to LIBU Invest AB.

Lindbäcks Bygg refers to Lindsbäcks Boende AB.

Offer refers to the offering to the general public in Sweden and to institutional investors in Sweden and abroad in connection with the listing of shares of SSM Holding AB (publ) on Nasdaq Stockholm in accordance with the terms in this Prospectus.

Offer Price refers to the final price in the offer, which is expected to be made public around 6 April 2017.

Overallotment Option refers to the Selling Shareholder’s undertaking to, on the request of the Joint Global Coordinators, sell an additional maximum of 15 per cent of the total number of shares in the Offer,

Placing Agreement refers to the placing agreement which SSM, the Selling Shareholder and the Joint Global Coordinators are expected to enter into around 5 April 2017.

Price Range refers to the interval SEK 54–64 per share in the Company.

Profi Fastigheter refers to each of Property IV Holding I AB and Atina Holding AB.

Prospectus refers to this document.

SEB refers to Skandinaviska Enskilda Banken AB (publ).

Securities Act refers to the U.S. Securities Act of 1933, as amended.

Selling Shareholder refers to Eurodevelopment Holding AG.

SEK refers the lawful currency in Sweden.

SEK m refers to million kronor (SEK).

SEK t refers to thousand kronor (SEK).

SSM-companies refers to the Group and all of the Company’s joint ventures.

Stabilisation Manager refers to the SEB and its agents.

Student Hill refers to Student Hill Sweden AB.

INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL) A-1 Addresses

Addresses

The Company Legal advisors to SSM Holding AB (publ) SSM Holding AB (publ) Gernandt & Danielsson Advokatbyrå KB Postal address and visiting address: Visiting address: Kungsgatan 57 A, 111 22 Stockholm Hamngatan 2, Stockholm Telephone: Postal address: +46 8 501 033 00 Box 5747 114 87 Stockholm Joint Global Coordinators Telephone: ABG Sundal Collier AB +46 8 670 66 00 Visiting address: Regeringsgatan 65, Stockholm Legal advisors to Joint Global Coordinators Postal address: Advokatfirman Hammarskiöld & Co AB Box 7269 Visiting address: 103 89 Stockholm Norra Bankogränd 2, Stockholm Telephone: Postal address: +46 8 566 286 00 Box 2278 103 17 Stockholm SEB Corporate Finance Telephone: Visiting address: +46 8 578 450 00 Kungsträdgårdsgatan 8, Stockholm Postal address: Auditor Skandinaviska Enskilda Banken AB (publ) Ola Salemyr (Öhrlings PricewaterhouseCoopers AB) 106 40 Stockholm Postal address: Telephone: Box 154 +46 771 62 10 00 191 23 Sollentuna Central security depository Euroclear Sweden AB Postal address: Box 191 101 23 Stockholm

A-2 INVITATION TO ACQUIRE SHARES IN SSM HOLDING AB (PUBL)

Ineko Finanstryck 2017 – 282291

Invitation to Acquire Shares in SSM Holding AB (Publ) ﻿

Invitation to Acquire Shares in SSM Holding AB (Publ)