Annual Report / 2020

Genova – the personal Full-year January-December 2020 Rental income amounted to SEK 231.1m property (180.6), an increase of 28%. Net operating income amounted to company SEK 177.4m (129.9), an increase of 37%. Income from property management increased 49% to SEK 60.8m (40.8), of which income from property management attributable to ordinary shareholders was SEK 18.8m (4.1), corresponding to SEK 0.53 (0.09) per ordinary share.

Net income after tax amounted to SEK 418.0m (571.0), corresponding to SEK 10.69 (11.77) per ordinary share. The decrease was due to lower changes in value for the period compared with 2019.

Long-term net asset value attributable to ordinary shareholders increased 62% to SEK 2,364.6m (1,457.0), corresponding to SEK 59.75 (47.43) per ordinary share.

Genova 2020 Annual Report 3 4 Genova 2020 Annual Report REPORT SENTED IN THE ANNUAL INITIATIVES ARE PRE RESPONSIBILITY SOCIAL GENOVA’S CORPORATE

- Contents Genova’s CEO Michael Moschewitz presents INVESTMENT PROPERTY PORTFOLIO PORTFOLIO PROPERTY INVESTMENT GENOVA’S VALUE-CREATING

the company’s for performance the year FINANCING ANDFINANCING GOVERNANCE Genova’s sustainability performance HANDELSMANNEN PROJECT HANDELSMANNEN Financial stability enables flexibility enables Financial stability Properties forProperties long-term ownership INVESTMENT PROPERTIES PROPERTIES INVESTMENT Genova’s sustainable philosophy DEVELOPMENT PROCESS FINANCIAL INFORMATION FINANCIAL PROJECT DEVELOPMENT PROJECT DEVELOPMENT Shares and ownership structure Corporate Governance Report Accounting policies and notes and policies Accounting – from building rights to rights building – from Acquisitions and divestments new homes in Norrtälje Norrtälje in homes new Development creates value Risk and risk management SUSTAINABILITY Building rights portfolio rights Building CEO STATEMENT STATEMENT CEO Ongoing construction Financial statements How we create value create we How Board of Directors of Board Senior executives Directors’ Report Business model Business Auditor’s report Tenants Target

50 20 34 62 62 28 42 42 22 87 12

6 Genova 2020 Annual Report New urban In December 2020, Genova commenced the Segerdal project with the space in Knivsta construction of new rental apartments located in central Knivsta, next to the Town Hall and directly adjacent to the train station. The property, in the form of a car park and a central building with unlet premises, is a typical acquisition for Genova, which will work together with Redito Property Investors to transform the site into a town centre for the burgeoning small town of Knivsta. Knivsta is one of the fastest growing municipalities in Sweden. That means of course that housing is needed as well as more service, shops, meeting places, green areas and a new urban space. Here, we plan to construct residential units of varying sizes, suitable for young people, families and senior citizens, thereby helping to promote social diversity in the neighbourhood and supporting urban life. Alongside housing, the new neighbourhood will also feature squares, pedestrian streets, green areas and small secluded public places to enjoy. The Segerdal project buildings will be environmentally certified and the first occupancy is scheduled for year-end 2022.

Genova 2020 Annual Report 7 GENOVA | INTRODUCTION

Genova in brief

Genova is a personal property company that owns, manages and develops prop- Property value erties with a long-term, sustainable and highly committed approach. We are focused on commercial, community service and residential properties in Greater SEK m Stockholm and the Uppsala Region. 5,355 31 December 2020 Genova’s large portfolio of own residential building rights ensures the Group’s long- term growth and continued stable growth Residential building rights of the investment property portfolio, regardless of economic conditions. We are active across the entire value chain – from acquisitions, urban and project develop- 5,890 ment to letting and property management. 31 December 2020 Our mission is to combine stable cash flows from the investment property portfolio with cost-efficient project development Loan-to-value ratio of mainly community service properties and rental apartments for our own long- term management. 55% Sustainable, safe and attractive urban envi- 31 December 2020 ronments evolve where Genova develops and invests. We see a direct link between good architecture, sustainability and prof- Long-term net asset value itability. New construction is carried out efficiently, with wood as our building material of choice, in close collaboration with well-established construction companies. SEK2,883m 31 December 2020

8 Genova 2020 Annual Report Customer perspective

Committed employees Active acquisitions

Architecture Sustainable Genova’s and design

Large project Geographic cornerstones focus portfolio

Long-term owners Value creation Urban developer

Customer perspective Sustainable Value creation

We are a personal property company, always Sustainability is our compass and we take respon- We create value through both active property close to our tenants. By trying to understand our sibility as a property owner and urban developer. management and project development. We customers and see things from their perspective, Key components are green financing, environmen- do this by increasing letting, development and we build better and more long-term relationships. tal certification of properties and social initiatives. investment in properties and projects with attractive residential units and premises. Active acquisitions Geographic focus Large project portfolio We are active in the acquisition market where we We are based and mainly growing in Greater seek properties with stable cash flows and devel- Stockholm and Uppsala, which are expansive We ensure production and growth through our opment potential, always with the starting point of regions with a major demand for residential units. own large project portfolio, mainly generated from finding opportunities for value growth. Good relationships with municipalities and local existing properties. Cash flows from our property operators create conditions for further acquisi- portfolio provide a stable foundation for financing tions and project opportunities. acquisitions and projects.

Long-term owners Architecture and design

We mainly develop rental apartments and com- We have a passion for design and architecture. munity service properties for our own long-term We see a direct link between design, architecture, management. Ownership with an eternal perspec- sustainability and profitability. Quality, design and tive motivates long-term investments and creates architecture are aligned with Genova’s long-term scope for sustainable urban development. ownership perspective.

Urban developer Committed employees

We invest in projects where the city is evolving By being responsive and committed, we want to with a holistic approach to urban development. help improve job satisfaction and quality of life in Genova helps to create sustainable and attractive a more sustainable society. Employees are Geno- environments where people want to live, work va’s most valuable asset and our most important and visit. ambassadors.

Genova 2020 Annual Report 9 InvestmentFastighetsvärde properties Yta Hyresvärde

48% Community 52% Kategori Commercial service properties properties

Total property value SEK 4,560m Gävle Investment properties

Uppsala Knivsta Project development Norrtälje Fastighetsvärde Yta Hyresvärde Enköping 8% Commercial properties Greater StockholmGeogra 28% Co-operative apartments 12% Community Kategori service 52% Rental properties apartments

Borås

Total property/project value SEK 19,322m

Ongoing construction Planned projects

Geogra Lund In Palma, in Spain, one hotel is under construction and an additional hotel is planned

“Genova’s priority markets are Greater Stockholm and Uppsala, expansive regions with a major demand for residential units. Good relationships with municipalities and local operators create conditions for further acquisitions and project opportunities.”

10 Genova 2020 Annual Report Key metrics

2020 2019 Rental income, SEKm 231.1 180.6 Net operating income, SEKm 177.4 129.9 Income from property management, SEKm1 60.8 40.8 Income from property management per ordinary share, SEK1 0.53 0.09 “2020 was a year of Residential units under construction, no.2 540 527 Residential units completed, no. 137 133 strong development Net investment, SEKm 1,074.7 1,146.1 Loan-to-value ratio, % 55.2 61.0 Equity/assets ratio, % 39.0 33.5 and growth.” Interest-coverage ratio, times3 1.8 1.8 Long-term net asset value, SEKm 2,883.0 1,975.3 Long-term net asset value attributable to ordinary shareholders, SEKm 2,364.6 1,457.0 Total no. of ordinary shares outstanding, 000s4 39,577 30,722 Long-term net asset value attributable to ordinary shareholders per ordinary share, SEK 59.75 47.43

1) Currency effects are no longer included in income from property management and are recognised separately in profit or loss. Comparative figures have been restated. Refer to Performance analysis on page 93. 2) Including 35 hotel rooms. 3) Excluding non-recurring items. 4) Restated for 2019 to correspond to the number following the withdrawal of every other share in the second quarter of 2020.

Property value, SEK billion Income from property management, SEKm 5.36

4.42

2.60 60.8 1.83 1.64 1.38 40.8

33.9

14.6 15.7 2015 2016 2017 2018 2019 2020

-9.7

Genova 2020 Annual Report 11 CEO statement

2020 was a year of strong development and growth for Genova despite the turbulence in the macro-environment caused by the coronavirus pandemic. Our ordinary share was listed on Nasdaq Stockholm and the proceeds of a new share issue strengthened our financial position and liquidity. Genova’s first rental apartments, which were environmentally certified, were completed and we expanded the portfolio with strategic acquisitions. At the start of 2021, we took additional steps towards both growth and an even greener business.

12 Genova 2020 Annual Report Genova | CEO statement

“I am grateful that most of our tenants handled the challenges of the pandemic well, and that the impact on Genova’s operations is very limited.”

The extent of the coronavirus pandemic occupied. Genova has a clear focus erty and urban developer. All buildings was impossible to imagine when I wrote on growth through the production of in our ongoing projects are being last year’s CEO statement. So as I now sustainable rental apartments, and constructed with clear sustainability summarise 2020, I am grateful to be community service properties for own profiles and will have environmental able to say that most of our tenants management. At the start of 2021, we certification, something we believe is handled the challenges well, and that significantly accelerated the pace of an effective tool for promoting long- the impact on Genova’s operations is ongoing production by starting con- term management and clear goals for very limited. Overall, property manage- struction on projects in Knivsta and improving the environmental perfor- ment, projects and transactions have Enköping, and increased the area in our mance of the properties. been able to continue efficiently, with ongoing project in Norrtälje. In total, With sustainable properties in our consideration for the guidance and these projects comprise approximately portfolio, we also create conditions for advice issued by the authorities. At the 60,000 sqm and more than 1,000 rental various forms of green financing. As same time, we are looking forward to apartments. In light of this develop- part of this, we established a new green the time when we can once again work ment, in January 2021 Genova’s Board finance framework describing Genova’s closely with our colleagues, tenants and set new and more ambitious operational operations based on a number of partners in the manner we are accus- growth targets for the construction of sustainability criteria, which has been tomed to and appreciate. residential units and the share of rental audited by CICERO Shades of Green, the income from residential and commu- Centre for International Climate and Successful letting, good profit- nity service properties. Environmental Research. For Genova, ability and strong liquidity this provides another way of ensuring In 2020, Genova continued to develop Acquisitions strengthen earnings that we are focusing on the right sus- with good profitability. We increased Genova is to grow through both project tainability activities going forward as income from property management by development and strategic acquisitions. well as presenting us with opportunities SEK 61m, a 64% increase per ordinary We supplemented the portfolio in 2020 to secure favourable financing terms. share and well above the target of annual with more properties with high develop- I am proud of what Genova achieved growth of 20%. We also outperformed our ment potential, and after the end of the in 2020. Behind this positive perfor- target of at least 20% for annual growth year we completed the largest ever trans- mance is the hard work of our fantastic in long-term net asset value per ordinary action for Genova. In March, we acquired employees who constantly demon- share. However, the value changes were a portfolio of community service proper- strated their commitment and drive greater in 2019, meaning that net income ties in attractive areas of Greater Stock- despite a challenging year. We are now after tax for the period is lower than in holm at a value of SEK 970m. With this looking ahead – 2021 has started pos- the preceding year. During the year, we transaction, we are taking a significant itively and there is a lot happening in also signed new and extended rental growth step forward and Genova’s rental the company. We have a building rights agreements for more than 30,000 sqm income from community service proper- portfolio of nearly 400,000 sqm with with stable and long-term tenants. We ties and residential units is almost 60%, considerable excess value to work with. consider this as a sign of strength and well on its way towards the target of 70%. Our balance sheet is strong, liquidity is confirmation of the attractiveness and In parallel, the portfolio will add con- good and the team is ready. All in all, future potential of our locations. This is siderably improved earnings capacity this bodes well for interesting opportu- also proof of the strong work carried out and income from property management nities this year as well. by our management activities. from stable tenants. Michael Moschewitz, CEO Accelerated pace of Sustainable development residential construction Sustainability is a key area for Genova. In summer 2020, Genova’s first green We work actively to take our responsi- rental apartments were completed and bility as a property owner and as a prop-

Genova 2020 Annual Report 13 GENOVA | INTRODUCTION

2020 in brief

Genova’s first environmentally certified rental apartments were completed in 2020 and we added several strategic acquisitions to the portfolio. The year ended with continued growth in the investment property portfolio and net operating income, and we also had more residential units under construction than ever before. Preparations were made to commence construction on three projects in early 2021 with a total of about 60,000 sqm and more than 1,000 rental apartments.

Significant events during the year

New targets Acquisition of community Genova’s Board decided to adopt new service property financial and operational targets and a An agreement was signed to acquire a new dividend policy. Q1 community service property in Ekeby, Q2 Uppsala, that is fully let to long-term Partnership in Upplands-Bro tenants. A letter of intent was signed with the International English School to build a school in Upplands-Bro, where Genova is Acquisition in Åkersberga planning to build a new district together with K2A. An agreement was signed to acquire a property in Åkers- berga, centrally located adjacent to one of Genova’s existing Plans for Gåshaga, Lidingö properties. Part of a property in Lidingö was divested with the aim of developing and supplementing an earlier site in Gåshaga, First rental apartments Lidingö, with sustainable residential units and community Genova’s first own-produced rental apartments were com- service properties. pleted in June – the company will own and manage 35 rental apartments located in Alsike in Knivsta. Acquisition in Nacka The investment property portfolio in central Nacka was Listing on Nasdaq Stockholm supplemented with the acquisition of a ground lease with The offering to subscribe for and purchase ordinary shares accession in May. was a success and the preference shares and ordinary shares were listed on Nasdaq Stockholm in June.

14 Genova 2020 Annual Report “2020 was a year of strong development and important growth steps for Genova, in a turbulent macro-environment marked by the coronavirus pandemic.”

Zoning plan approved Strategic lettings The zoning plan for Genova’s jointly A number of strategic lettings of approx- i- owned Segerdal project in central mately 6,500 sqm took place with an Knivsta came into force, and the start of Q3 annual rental value of approximately Q4 construction is being planned. SEK 10m in Stockholm and Lund.

Acquisition in Nacka Strand Acquisition of project property Genova and SBB jointly acquired and gained accession to An agreement was signed to acquire a project property for Nackahusen Holding AB, which owns six properties in Nacka warehouse and logistics strategically located in Uppsala. Strand. Greater presence in Knivsta Supplementing portfolio in Enköping An agreement was signed to acquire community service Three properties were acquired in central Enköping, close to properties in Knivsta – two properties with a school, retirement one of the company’s properties. Planning work for residential home, supermarket and rental apartments development is in progress. Barter agreement in Stockholm A strategic barter agreement was signed to divest a property with a long-stay hotel and to acquire a preschool in Kungs ängen and a school in Örnsberg.

Divestments for streamlining An agreement was signed to divest three commercial properties in Gävle and Sundsvall to streamline the portfolio to encompass the core markets and the categories of community service properties and residential units.

Construction start for housing in Knivsta The Segerdal project was commenced with the construction of about 300 new rental apartments located in central Knivsta, next to the Town Hall and directly adjacent to the train station.

Genova 2020 Annual Report 15 GENOVA | INTRODUCTION

16 Genova 2020 Annual Report GENOVA | INTRODUCTION

Impact of COVID-19

The COVID-19 outbreak had both humanitarian and economic effects on the world around us in 2020, and is posing a challenge for people, society and the business community. Genova’s priority was and is to protect the health of our employees and tenants and to prevent the risk of spreading the virus. However, the effects of the pandemic on Genova have been limited and manageable to date, and our assessment is that the basic conditions for a relatively limited impact on the company will remain favourable.

Genova has a stable financial position, Rent payments Liquidity and financing good liquidity and a diversified tenant A small number of Genova’s tenants Genova has a stable financial position mix, where approximately half of the were impacted by the effects of the and good liquidity. As of 31 December rental value is derived from publicly pandemic. Of Genova’s annual rental 2020, cash and cash equivalents and funded operations and supermarkets, income of SEK 263m, about 60% is undrawn credit facilities amounted to which were not adversely impacted due quarterly in advance, and about SEK 1,013m. Loans maturing within by the pandemic. Rental apartments 40% monthly in advance. Genova has 12 months amounted to SEK 248m, of and community service properties in engaged in discussions with a number which SEK 134m will be refinanced Greater Stockholm and the Uppsala of individual tenants with liquidity before maturity. In 2020, Genova Region account for approximately 70% concerns and offered some of these the implemented a successful spread of of Genova’s ongoing and planned proj- possibility to switch from quarterly ownership and listing of the company’s ect development. We will continue to rent payments to monthly payments. ordinary shares on Nasdaq Stockholm’s monitor the situation and are continu- Of the adjusted rent receivable due for Main Market, which generated proceeds ously assessing the risks for Genova. payment by 31 December 2020, 97.2% of approximately SEK 546m for the had been received by 15 January, which company after listing expenses. The Government grants is in line with the normal outcome. proceeds from the issue that were pro- Genova has not needed to use the Swed- vided to the company in July, combined ish government’s support for furlough Project development with existing undrawn credit facilities, schemes, give notice of termination or All of Genova’s projects are more or less allows excellent access to finance. terminate any employees. Nor has the on track, and we do not envisage any company claimed tax relief, but has significant delays at present. Should taken advantage of the possibility to material deliveries be at risk of delay, reduce employer contributions for the we will look into alternative solutions. March to June period of 2020 that was At present, we can see that the current available to all employers. timetables are being met for both our ongoing and planned construction.

Genova 2020 Annual Report 17 GENOVA | TARGETS

Targets provide a direction

Genova’s overall objective is to create value for the company’s shareholders. Value creation is measured over a business cycle as growth in both long-term net asset value and income from property management per ordinary share. The targets were determined by Genova’s Board in January 2021.

Our guiding star is to create attractive and sustainable living and working environments for people and businesses.

18 Genova 2020 Annual Report GENOVA | TARGETS

Financial targets Operational targets

Long-term net asset value Rental income >20% >70% Achieve an average annual growth of at Target Rental income from residential and com- Target least 20% in long-term net asset value per munity service properties shall account ordinary share (including any value distri- for at least 70% of Genova’s total rental butions to ordinary shareholders) over a 26% income by the end of 2023. 49% 31 Dec 2020 business cycle. 31 Dec 2020

Income from property Ongoing construction management1 >20% 1,500 Target Ongoing construction of own-produced Target Achieve an average annual growth of residential units shall amount to at least at least 20% in income from property 1,500 residential units per year as of 2022. 1 management per ordinary share over a 64% 540 31 Dec 2020 business cycle. Full-year 2020 1) Including 35 hotel rooms

1) Currency effects for the quarter and the period are no longer included in income from property management and are recognised separately in profit or loss. Com- parative figures have been restated.

The goal is to create growth in net asset value and income from property management, while maintaining a continued stable and Dividend policy strong financial position with balanced financial risk-taking, meaning that: Genova’s overall objective is to create value for the company’s shareholders. In the coming years, this is deemed best achieved by reinvesting cash flows in operations to create fur- Equity/assets ratio >35% ther growth through investments in new construction, existing properties and property acquisitions, which could lead to either Target Over time, the equity/assets ratio small or no dividends at all on ordinary shares. In the long-term, shall be at least 35%. the dividend on ordinary shares shall be at least 50% of income 39% from property management attributable to ordinary shares. 31 Dec 2020 Dividends on preference shares shall be paid in accordance with the provisions of the Articles of Association.

Loan-to-value ratio <65% Over time, the loan-to-value Target ratio shall not exceed 65%. 55% 31 Dec 2020

Interest-coverage ratio >2.0 times Target Over time, the interest-coverage ratio shall be higher than 2.0. 1.8 times 31 Dec 2020

Genova 2020 Annual Report 19 GENOVA | BUSINESS MODEL

A business model for sustainable value growth

The aim of Genova’s value-creating business model is to develop and create value sustainably and for the long term in our investment property portfolio. We achieve this by optimization of existing properties, generating building rights, developing projects in prime locations and executing strategic transactions.

aged with a long-term, profitable and We develop potential Mission sustainable approach, with the goal and building rights of creating value growth. Stable cash Identifying a property’s development To acquire, manage and flows from existing investment prop- potential on the basis of its unique con- develop modern and attrac- erties create opportunities to continue ditions is an important part of Genova’s tive commercial properties, community service proper- developing the business by investing business model. We work in a struc- ties and residential units – in acquisitions and project develop- tured manner to, for example, increase with a long-term approach, ment. With strong liquidity and our the occupancy rate or change the tenant sustainability and commit- own cost-efficient construction, we can composition, and invest in the refur- ment as our compass. acquire properties and carry out project bishment of premises and improvement development with our own building of the outdoor environment to increase rights, at our own pace and in line with the attractiveness of the properties. market needs. We primarily develop Similarly, we are always evaluating rental apartments and community ser- opportunities to develop building rights Active across the entire chain vice properties for our own long-term by building on the acquired property’s of property investments management, which motivates long- vacant land. As such, Genova primarily Genova’s operations combine property term investments and creates scope for develops its own building rights based management with project development sustainable urban development. Our on our existing investment properties. for long-term ownership. This strategy priority markets are Greater Stockholm Own-developed residential building means that we are active across the and Uppsala – expansive regions with rights mean that we are not equally entire chain of property investments – high demand for both residential units exposed to the overall price trend for from acquisitions to management and and community service properties. building rights, which creates condi- project development. A central part The way we work can be described tions for higher margins and lower risk. of the strategy is to generate building in five possible steps that illustrate the In addition, a let investment property rights from our existing properties entire process from acquisition to man- also contributes to cash-flow generation that add value when construction is agement. Refer also to the next page. during the zoning process right up to realised. • Property acquisition construction start. We acquire and develop properties, • Property development and build new residential units and • Building rights development premises, based on the demands of our • Construction tenants, customers and society. The • Management properties are developed and man-

20 Genova 2020 Annual Report GENOVA | BUSINESS MODEL

Property Management Value acquisition creation

Property development

Building rights Construction development

Property Property devel- Building rights Construction Management acquisitions opment development

Genova works pro-actively Property development Genova develops For new construction, Genova maintains a to identify interesting is always driven by the building rights from Genova is focused on long-term approach to its properties to add to its unique conditions of each existing properties and cost efficiency, short ownership with a focus on investment property port- property, with a focus on works pro-actively with construction times secure, cost-efficient and folio. The starting point is increasing cash flow. A municipalities to convert and long-term quality, value-creating property that the property must be specific business plan is commercial space combined with good management. Cash flows able to create some form created for each property into residential units in architecture and design. from the investment of value growth. and its possibilities. new zoning plans. This All construction takes properties help to finance entails operating cash place with the aim of additional investments. flow from letting until obtaining environmental construction start. certification.

Boländerna 21:4 Knivsta Vrå 1:392 Sicklaön 393:4 Liljegatan 1 Lillsätra 2

Genova 2020 Annual Report 21 Handelsmannen project

FROM BUILDING RIGHTS

Handelsmannen project TO NEW HOMES IN NORRTÄLJE

22 Genova 2020 Annual Report Handelsmannen project

Five years ago, Genova acquired the property that is now being transformed into rental apartments, a retirement home and a preschool in a new district close to the centre of Norrtälje. The Handelsmannen project typically showcases how Genova develops its properties through its value-adding business model and helps create new, exciting urban developments in growing areas.

The Övre Bryggårdsgärdet area of Norrtälje “Before we make an acquisition, it is important where Handelsmannen is taking shape is now for us to understand what is possible to develop a busy construction site full of activity. The at the site. This is something that is governed by foundation of what will become a retirement the municipality’s long-term master plan for the home and a preschool has now been laid and area. Norrtälje municipality’s future plan was to the framework is being erected. Meanwhile, create a new town district where our property construction has started on the first stage of the We saw was located, which meant that we went ahead rental apartments that are scheduled to be com- that the with the acquisition. The deal was completed pleted in 2021/2022. The property housed the and Genova took over Handelsmannen 1 in production and printers of the Norrtälje Tidning property 2016,” says Anna Molén. newspaper when Genova acquired it, and is situ- clearly had ated on the edge of an industrial and retail park potential for Planning development amongst a variety of buildings not far from the development • centre of the small town in Roslagen. with a large Carrying out a development project from start “We saw that the property clearly had potential amount of to completion takes time. But it is also a process for development with a large amount of land in that is well worth the planning and investment. an attractive location. With its walking distance land in an Building rights generated by the company itself of the picturesque town centre of Norrtälje, and attractive from its existing properties have a low entry a journey of less than an hour on public transport location. price compared with purchasing existing build- to both Stockholm and Uppsala, it provided an ing rights, which means that once the residen- opportunity to create attractive residence. At the tial or community service property is completed same time, we could let the tenant stay while we and occupied, the increase in value for Genova were planning construction,” says Anna Molén, is considerable. The time it takes to achieve this Head of Urban Development at Genova. can vary between projects. The municipality’s idea for the future of the area fits well with Genova’s plans.

Genova 2020 Annual Report 23 Handelsmannen project

For the Norrtälje project, Genova started by preparing an early plan application with a draft plan of how it envisaged the development, with varying alternatives to be as flexible as possible. The next step involved Genova working together with the municipality to change the zoning plan for the area, which almost always needs to be done to realise the project. Genova’s concept was very similar to Norrtälje municipality’s idea for the transformation of Övre Bryggårdsgärdet from a relatively underused retail and industrial park to a new, vibrant district. The framework for devel- Handels- opment in the zoning plan was drawn up, incorpo- mannen rating everything from the height and positioning of the building to noise levels, daylight and traffic project flows. The plan also stated the types of community services that must be available in the area. Location “We generally want to remain open to various Norrtälje categories of properties in our projects when we start on project planning. For Handelsmannen, Site area we initially presented plans for rental apart- 16,000 sqm ments and a retirement home, which were categories that the municipality needed to expand, Acquisition and early on in the planning stage we came into 2016 contact with an operator that was interested.

Care company Norlandia signed a 15-year rental Acquisition price agreement in 2019 to operate the retirement An underlying prop- home and preschool being constructed in the erty value project,” says Anna Molén. of SEK 40m.

A new, modern Category district with smart solutions About 400 • rental apartments, All sites are unique and no two projects are the retirement home, same. The reason for this is the geographic and preschool physical conditions of the site, its surrounding environment and buildings. Lettable area “When we were planning construction in Norr Ca 30,000 sqm tälje it was important – as it always is – to consider when completed all aspects of the site and formulate a solution spe- the balcony. The façades of the buildings are a cific to it. Our aim is always to enhance the site’s Occupancy mixture of wood, brick and stone, supplemented existing value and to create environments where From end of 2021 by leafy, green courtyards offering space for play people can thrive,” says Anna Molén. to 2022 and a quiet oasis for rest and relaxation. The aim An example of this approach is identifying is for these environments to suit both children the movement of people in the area. Do we need and older people and promote social interaction to consider footpaths and bike lanes? If so, these among neighbours. Life between the buildings need to be incorporated into the new develop- is just as important as life inside the buildings. ment thereby creating good access for the resi- With Handelsmannen, Genova has also cre- dents in the buildings and the surrounding area. ated opportunities to live a modern lifestyle and The Handelsmannen project will comprise uses smart solutions to satisfy new needs. For a total of about 400 rental apartments tailored example, there will be access to a car and bike for both single households and families. All of pool, bike workshop, office spaces and a cold the apartments feature smart planning and use storage room for food deliveries. space efficiently, letting in plenty of daylight. “We have worked on these types of solutions Apartments with a private garden have their for a modern lifestyle in Genova’s previous own entrance on the ground floor and there are co-operative apartment projects and we are now also apartments that offer enticing views from applying this experience to our rental apart-

24 Genova 2020 Annual Report Handelsmannen project

Genova’s most important conditions for sustainable urban development

1. Children and elderly people have a natural place in the city.

2. People are the focus for the homes, neighbourhoods and communities that we build and develop. The residential market shall meet the needs of individuals and provide them with the conditions to live a sustainable life.

3. When working with urban planning and development, we always proceed from local conditions to identify the sustainable features of that specific place.

4. We want to build sustainable communities where cycling and public transport are natural choices.

5. Cities should meet the needs of people and be open to change. That means a fair and healthy city where all people are able to live a good life.

Genova 2020 Annual Report 25 Handelsmannen project

ments, which we believe will be popular among other green finance options, at lower financing our tenants,” says Henrik Raspe, Head of Project costs, which the company made use of in the Development at Genova. project in Norrtälje.

Sustainability inside and out Tenants ready to move in • • Genova’s approach to urban development is that The first rental apartments in Handelsmannen the environments and the buildings are to meet will be ready for occupancy at the end of 2021, the needs of individuals and provide them with and the retirement home will also open at the the conditions to live a sustainable life. The build- same time. Genova has already initiated the pro- ings are also to be constructed and managed as cess of letting the apartments together with the smartly as possible in terms of the climate. Based municipal housing agency. on this, it is natural for Genova to carry out all “We can see that there is widespread inter- project development with the intention of hav- est in our residential units. The care shown by ing all buildings environmentally certified. The Genova in the design and quality of the apart- Handelsmannen project is being financed by With the ments at attractive rent levels is appreciated. I green bank loans and once completed will be cer- believe that Genova sets itself apart by provid- tified under the Nordic Swan Ecolabel. Nordic Swan ing higher quality and more carefully planned “The Nordic Swan Ecolabel is a defined frame- Ecolabel, the details and solutions than you would normally work that covers many different aspects of a new whole prod- expect in a rental apartment,” says Henrik construction project. The whole product becomes uct is envi- Raspe. environmentally sound from the ground up. Such ronmentally A graphic concept is designed for each certification is also driving developments among sound from Genova project. The aim is to give each neigh- producers of construction materials and prod- bourhood its own identity – yet another detail ucts, which is important,” says Henrik Raspe. the ground that can help create an emotional connection The Nordic Swan Ecolabel covers such areas up. and pride in the area among the residents and a as daylight, choices of materials for floors, kitch- sense of community. ens, mixer taps and fittings, as well as access to charging stations and energy use. One example Knowledge transfer from each project at Handelsmannen is that a system is planned to • be installed that allows each tenant to monitor Genova’s first rental apartments were ready for their own water and electricity consumption, occupancy in Alsike, Knivsta, in 2020. Taking which helps raise awareness of their individual experience from this project, Genova could fine- footprint. The installed solar panels and geo- tune its planning and work methods ahead of thermal heating provide renewable energy. the more large-scale ongoing Handelsmannen “We have established processes to ensure a project. Genova will further accelerate the pace smooth certification of buildings. Clear guide- of housing construction in 2021 when it starts lines are in place for the work methods we are to new projects in central Knivsta and Enköping. use and for documentation. We are also learning “It is important for us to continuously a great deal as we complete various projects,” improve, and that we are a learning organi- continues Henrik Raspe. sation. We actively work to ensure knowledge An important factor in environmental certifi- transfer between every project we carry out. cation is the opportunity it presents for Genova This allows us to work in an even smarter way, to finance its projects using green loans and identify better solutions, and thus ensure satisfied tenants,” concludes Henrik Raspe.

26 Genova 2020 Annual Report Handelsmannen project

Four cornerstones of Genova’s customer journey

Security

Whether buying a new home or moving into a rental apartment, this is a big step for a customer and involves major changes. For newly constructed residential units, these purchase or rental agreements are signed in most cases before the unit actually exists and it is crucial that the customer’s expectations are met. We maintain close dialogue with our customers from start until occupancy, and thereafter through personal management. Visualisation

The marketing of Genova’s projects always maintains a high level of ambition in terms of creativity and the visualisation of new residential units. A showroom and a display apartment are produced for each project. These are a concrete way to demonstrate the product before a rental or purchase decision, and then serve as a regular meeting place for customers who have already made their decision. Communication

Genova has always been driven by a deep desire to understand how people want to live. We were very early to catch on to the long-standing trend that people are increasingly interested in aspects of quality in their homes, such as design, architecture, craftsmanship and sustainability. After access, a digital platform is available for the residents to enable, for example, fault reporting and other contact between the customers and with Genova. After market and management

All customers have a contact person at Genova and customer service is a priority for the entire company. The property manager at Genova and their team are responsible for ensuring that we systematically and actively maintain contact with our customers – the people who rent or buy our residential units.

Genova 2020 Annual Report 27 Investment property portfolio

Genova owns, manages and develops properties – primarily commercial, community service and residential properties. We are based and mainly growing in Greater Stockholm and Uppsala, which are expansive regions with high demand for residential units and a strong commercial property market. On the following pages, we describe Genova’s investment property portfolio, comprising investment properties and project development, and how we work in, and develop, these areas. p.34 p.42 Investment properties Project development

28 Genova 2020 Annual Report Ekeby Bruk, Uppsala

Key metrics

SEKm 2020 2019 2018 2017 2016

Key metrics, properties Residential units under construction, no. 540 527 235 270 217 Residential units completed, no. 89 133 135 – 29 Total no. of building rights 5,890 5,406 4,984 5,218 3,635 Lettable area, commercial properties, ksqm 110.4 131.7 118.5 104.0 97.7 Lettable area, community service properties, ksqm 79.1 38.5 17.5 11.8 11.8 Total lettable area, ksqm 187.4 170.2 136.0 115.8 109.4 Economic occupancy rate, % 98.2 97.8 94.0 90.0 92.0 NOI margin, % 76.8 71.9 72.2 72.9 70.5 Net investments, SEKm 1,074.7 1,141.2 624.0 170.0 362.1

Genova 2020 Annual Report 29 Genova’s properties and projects

These maps show Genova’s investment properties and projects in our core markets – Greater Stockholm and the Uppsala Region. Our entire investment property portfolio is described in the list of properties on pages 32–33.

Investment property

Project The figures relate to the list of properties on pages 32–33.

30 Genova 2020 Annual Report Investment property

Project The figures relate to the list of properties on pages 32–33.

Genova 2020 Annual Report 31 Investment properties

Lettable area, sqm Year of con- No. of Co-op- Year of struction/ resi- Ware- Retire- erative Property acquisi- refurbish- dential Land house/ Light Resi- Educa- ment apart- No. designation Address Municipality category Property Form of tenure tion ment units area Office logistics industry Retail dential tion homes ments Other Total

Greater Stockholm 1 Elverket 1 Doktorsvägen 3 Botkyrka CS O 2019 1965 – 7,189 3,314 – – – – – – – – 3,314 2 Magneten 19 Johannesfredsvägen 9-11 Bromma CS O 2019 1954 – 5,928 2,795 893 – 135 – 5,800 – – – 9,623 3 Stegsholm 3:5 Gålövägen 30 Haninge CS O 2019 – – 34,516 – – – – – – – – 2,450 2,450 4 Odalmannen 1 Rödhakevägen 24 Huddinge C O 2018 1955 – 2,403 – – – 400 – – – – – 400 5 Brynjan 5 Vikingavägen 1 Huddinge C O 2017 1965 – 4,194 754 1,800 – – – – – – – 2,554 6 Veddesta 5:12 Bruttovägen 5 Järfälla C O 2018 2018 – 5,953 – – – – – – – – 5,600 5,600 7 Stapelbädden 31) Gåshagaleden 12 Lidingö C O 2015 1972 /2006 – 47,875 – – 5,791 – – – – – 133 5,923 8 Tattby 2:22 Solsidevägen 5 Nacka CS G 2014 2014 – 2,804 – – – – – – – – 532 532 9 Björknäs 1:978 Kvarnvägen 22 Nacka CS G 2014 2014 – 3,444 – – – – – – – – 498 498 10 Lännersta 15:33 Telegramsvägen 101 Nacka C O 2013 1987 – 2,513 – 832 – – – – – – – 832 11 Solsidan 52:1 Jaktvarvsvägen 5 Nacka C O 2015 1977 – 6,469 – 1,254 – – – – – – – 1,254 12 Sicklaön 37:45 Kvarnholmsvägen 52 Nacka C O 2016 1987 – 3,936 1,540 – 807 – – – – – 452 2,799 13 Sicklaön 386:62) Per Hallströms Väg 7 Nacka C O 2015 2003 – 6,017 – – – 1,100 – – – – – 1,100 14 Sicklaön 393:4 Vikdalsvägen 50 Nacka C O 2018 1990 – 10,819 3,485 435 – – – – – – – 3,920 15 Gördelmakaren 5 Baldersgatan 25 Norrtälje C O 2016 1987 /2017 – 15,997 – – – 5,208 – – – – – 5,208 16 Sjöborren 5 & 6 Domherrevägen 19 Sollentuna C O 2018 2019 – 3,483 – – – – – – – – 2,574 2,574 17 Lillsätra 2 Stensätravägen 13 Stockholm C G 2014 1982 /2016 – 16,231 8,840 2,496 – – – – – – – 11,336 18 Instrumentet 2 Jakobsdalsvägen 17 Stockholm CS O 2018 2014 – 3,266 – 178 – – – 5,680 – – – 5,858 19 Drevern 1 & Gråhundsvägen 82 Stockholm C O 2018 1973 – 5,729 1,215 19 – 2,745 – – – – – 3,979 Dvärgspetsen 1 20 Drevern 2 Gråhundsvägen 83 Stockholm C O 2019 1984 – 3,497 1,200 – – – – – – – – 1,200 21 Nynäs 24 Lövholmsvägen 61 Stockholm CS O 2019 – – 2,233 – – – – – 2,950 – – – 2,950

22 Viby 19:32) Energivägen 2 Upplands-Bro C O 2014 1972 – 111,073 – – – 13,388 – – – – 1,787 15,175 23 Viby 19:29 & 19:33 Effektvägen 10 Upplands-Bro C O 2019 1990 – 14,997 – – 4,437 – – – – – – 4,437 24 Runö 7:84 Sågvägen 2 Österåker C O 2016 1980 – 10,235 3,296 – – 250 – – – – 877 4,423 25 Skarpnäs 6:12 Timmermansvägen 2 Nacka C G 2020 1983 – 6,002 – 1,965 – – – – – – – 1,965 26 Jungfrun 4 Baldersgatan 26 Norrtälje CS O 2019 1989 /2019 – 5,888 – 783 – – – – – – 2,133 2,916 27 Runö 7:146 Rallarvägen 3 Österåker C O 2020 2005 – 5,728 – – – 1,098 – – – – – 1,098 28 Sicklaön 13:1394) Jakobsdalsvägen 2 Nacka CS O 2020 – – 3,349 – – – – – 320 – – – 320

Total Greater Stockholm – 351,768 26,439 10,655 11,035 24,324 – 14,750 – – 17,036 104,238

Uppsala 29 Kryddgården 6:3 Torggatan 17 Enköping C O 2016 1995 – 24,773 – – – 8,730 – – – – – 8,730 30 Part of Gredelby 21:15) Apoteksvägen 3-7 Knivsta C O 2017 1998 – 11,109 249 – – – – – – – – 249 31 Särsta 12:15) Centralvägen 12 Knivsta C O 2017 – – 1,867 – – – – – – – – 447 447 32 Vrå 1:392 Brunnbyvägen 48 Knivsta CS, RO 2015 2020 89 6,049 – – – – 1,589 692 4,263 – – 6,544 33 Boländerna 9:11 Knivstagatan 7 Uppsala C O 2015 1979 /2002 – 5,253 – 3,335 – – – – – – – 3,335 34 Luthagen 27:12 Ringgatan 31 Uppsala C O 2012 1976 – 966 – – – 763 – – – – – 763 35 Flogsta 39:1 Köpenhamnsgatan 2-4 Uppsala C O 2012 1988 – 2,730 – – – 610 – – – – – 610 36 Sunnersta 155:2 Sunnerstavägen 40 Uppsala C O 2012 1970 – 3,091 – – – 633 – – – – 175 808 37 Storvreta 3:80 Ärentunavägen 10 Uppsala C O 2012 1984 – 3,328 – – – 1,012 – – – – – 1,012 38 Almunge-Lövsta 1:48 Lilla Väsby Lövsta Uppsala C O 2012 1977 – 4,579 – – – 500 – – – – 175 675 39 Luthagen 13:2 Seminariegatan 1 Uppsala CS O 2009 1916/2011 – 10,097 3,644 – – – – 7,068 – – 73 10,785 40 Boländerna 21:4 Verkstadsgatan 10-14 Uppsala C O 2018 – – 34,012 4,147 2,485 170 470 – – – – 2,796 10,068 41 Årsta 83:1 Palmbladsgatan 8-10 Uppsala CS O 2019 – – 7,167 – – – – – – – – 3,700 3,700 42 Boländerna 8:12 Bergsbrunnagatan 9-11 Uppsala CS O 2019 – – 3,624 400 – – – – 1,502 – – 200 2,102 43 Kungsängen 32:6 Mältargatan 19A Uppsala C O 2019 – – 2,317 – – – – – – – – 858 858 44 Kungsängen 32:8 Mältargatan 17 Uppsala C O 2019 1997 – 4,317 1,350 – – – – – – – – 1,350 45 Flogsta 47:1 Ekeby Bruk 35 Uppsala CS O 2020 – – 16,679 771 726 – – – 10,437 4,588 16,522

46 Kryddgården 6:5 Östra Ringgatan 23-25 Enköping C O 2020 1983 – 5,227 – – – 2,700 – – – – – 2,700 47 Korsängen 20:2, 20:3 Torggatan 8 Enköping C O 2020 – – 5,000 1,118 – – – – – – – – 1,118 48 Gredelby 7:89 Klyvargatan 1-3 Knivsta C O 2020 2015 – 6,499 – – – 2,991 – – – – – 2,991 49 Särsta 3:398 Forsbyvägen 32A-P Knivsta CS, RO 2020 1965 /2005 16 43,131 – – – – 1,265 2,469 – – 1,960 5,694

Total Uppsala 105 201,815 11,679 6,546 170 18,409 2,854 22,168 4,263 – 14,972 81,061

Other 50 Gulmåran 76) Enedalsgatan 10 Borås C O 2016 1975 – 39,138 190 337 – 6,195 – – – – – 6,721 51 Gulmåran 86) Neumansgatan 7 Borås C O 2018 1973 – 9,964 – – – 1,530 – – – – – 1,530 52 Mackmyra 20:18 Valbovägen 318A-B Gävle C O 2018 2000 – 10,624 – – – – – – – – 3,605 3,605 53 Nordanvinden 3 Nordanväg 5-9 Lund C O 2017 1966 – 9,067 – – – 1,996 – – – – 595 2,591 54 Gustavshem 6 Gustavshemsvägen 1 Lund C O 2017 – – 4,099 220 – – 673 – – – – 3,710 4,603 55 Rivan 1 Odlarevägen 5 Lund CS O 2017 1988 – 2,997 1,484 – – – – – – – – 1,484

Total other – 75,889 1,894 337 – 10,394 – – – – 7,910 20,534

Total properties under management 105 629,472 40,012 17,538 11,205 53,127 2,854 36,918 4,263 – 39,918 205,833

32 Genova 2020 Annual Report Project

Lettable area, sqm No. of Co-op- Year of resi- Ware- Retire- erative Property acquisi- dential Land house/ Light Resi- Educa- ment apart- No. designation5 Address Municipality category Property Form of tenure tion Project name units area Office logistics industry Retail dential tion homes ments Other Total

Greater Stockholm 56 Part of Odalmannen 1 Rödhakevägen 24 Huddinge R O 2018 Odalmannen 56 2,403 – – – – 2,960 – – – – 2,960 57 Part of Brynjan 5 Vikingavägen 1 Huddinge R O 2017 Brynjan 5 145 4,194 – – – 1,350 7,875 – – – – 9,225 58 Part of Stapelbädden 31) Gåshagaleden 12 Lidingö R, Co O 2015 Gåshaga 385 47,875 – – – – 11,500 – – 11,500 – 23,000 59 Part of Sicklaön 393:4 Vikdalsvägen 50 Nacka R O 2018 Sydöstra Vikdalen 250 10,819 – – – – 14,600 – – – – 14,600 60 Part of Solsidan 52:1 Jaktvarvsvägen 5 Nacka Co O 2015 Jaktvarvet 90 6,469 – – – – – – – 4,750 – 4,750 61 Part of Sicklaön 37:45 Kvarnholmsvägen 52 Nacka Co O 2016 Gäddviken 100 3,936 – – – – – – – 6,840 – 6,840 62 Part of Sicklaön 386:62) Per Hallströms Väg 7 Nacka Co O 2015 Skvaltan 175 6,017 – – – – – – – 9,625 – 9,625 63 Handelsmannen 19) Diamantgatan 7-9 Norrtälje R O 2016 Handelsmannen 1 355 15,568 – – – – 13,257 1,296 6,021 – – 20,574 64 Part of Instrumentet 2 Jakobsdalsvägen 17 Stockholm Co O 2018 Örnsberg 120 3,266 – – – – – – – 7,500 – 7,500 65 Part of Drevern 1 & 2 Gråhundsvägen 82-83 Stockholm R O 2018 Drevern 1, 2 200 9,226 – – – 2,250 7,700 1,380 6,440 – – 17,770 66 Part of Dvärgspetsen 1 Gråhundsvägen 9 Stockholm R O 2018 Dvärgspetsen 1 150 4,184 – – – – 7,700 – – – – 7,700 67 Part of Viby 19:33) Energivägen 2 Upplands-Bro R O 2014 Viby 910 111,073 – – – 1,530 38,250 5,788 4,140 17,100 – 66,808 68 Part of Runö 7:84 Sågvägen 2 Österåker Co O 2016 Runö 7:84 258 10,235 – – – – 6,000 – – 8,250 – 14,250 69 Part of Runö 7:146 Rallarvägen 3 Österåker CS O 2020 Runö 7:146 – 5,728 – – – – – – – – 5,850 5,850 70 Part of Sicklaön 13:1394) Jakobsdalsvägen 2 Nacka Co O 2020 Nacka Strand 44 3,349 – – – – – – – 2,850 – 2,850 71 Part of Sicklaön 13:244) Fabrikörvägen 16 Nacka Co O 2020 Nacka Strand 52 – – – – – – – – 3,420 – 3,420 72 Part of Sicklaön 13:784) Cylindervägen 8-20 Nacka R O 2020 Nacka Strand 25 – – – – – 1,520 – – – – 1,520 73 Sicklaön 362:14) Enspännarvägen 1 Nacka R O 2020 Nacka Strand 70 3,054 – – – – 4,180 – – – – 4,180

Total Greater Stockholm 3,385 247,396 – – – 5,130 115,542 8,464 16,601 71,835 5,850 223,422

Uppsala 74 Part of Kryddgården Torggatan 17 Enköping R O 2016 Kryddgården 6:3 655 24,773 – – – 3,600 23,730 1,395 6,045 5,390 – 40,160 6:3 & 6:5 75 Part of Gredelby 21:15) Apoteksvägen 3-7, Knivsta R O 2017 Segerdal 150 12,976 – – – 222 8,328 – – – – 8,550 Centralvägen 12 76 Västra Knivsta10) - Knivsta R - - Västra Knivsta 250 – – – – – 15,400 – – – – 15,400 77 Part of Boländerna 21:4 Verkstadsgatan 10-14 Uppsala C O 2018 Boländerna 21:4 – 34,012 6,400 – – – – – – – – 6,400 78 Part of Luthagen 27:12 Jumkilsgatan 1 Uppsala Co O 2012 Luthagen 45 966 – – – 680 – – – 1,500 2,180 79 Part of Storvreta 3:80 Ärentunavägen 10 Uppsala R O 2012 Storvreta 80 3,328 – – – – 4,560 – – – – 4,560 80 Part of Flogsta 39:1 Köpenhamnsgatan 2-4 Uppsala Co O 2012 Ekeby 90 2,730 – – – 900 4,500 – – – – 5,400 81 Part of Kungsängen Mältargatan 17-19 Uppsala R O 2019 Kungsängen 175 6,634 – – – – 10,000 – – – – 10,000 32:6 & 32:8 82 Part of Korsängen Torggatan 8 Enköping R O 2020 Korsängen 220 5,000 – – – 300 10,500 – – – – 10,800 20:2 & 20:3 83 Danmarks-Kumla 8:31 Grafikgatan 30 Uppsala C O 2020 Danmarks-Kumla – 21,000 – 21,460 – – – – – – – 21,460 8:31 84 Part of Gredelby 7:89 Klyvargatan 1-3 Knivsta R O 2020 Gredelby 45 6,499 – – – 570 2,250 – – – – 2,820 85 Part of Särsta 3:398 Forsbyvägen 32A-P Knivsta CS, RO 2020 Särsta 110 43,131 – – – – 6,000 3,600 – – – 9,600

Total Uppsala 1,820 161,049 6,400 21,460 – 6,272 85,268 4,995 6,045 6,890 – 137,330

Other 86 Part of Gulmåran 7 & 86) Enedalsgatan 10, Neu- Borås R O 2016, Gulmåran 7, 8 315 49,102 – – – – 15,400 465 4,185 – – 20,050 mansgatan 7 2018 87 Part of Nordanvinden 3 Nordanväg 5-9 Lund R O 2017 Klostergården 165 9,067 – – – – 7,700 – – – – 7,700 88 Part of Rivan 1 Odlarevägen 5 Lund R O 2017 Rivan 50 2,997 – – – – 3,465 – – – – 3,465 89 Part of Gustavshem 6 Gustavshemsvägen 1 Lund R O 2017 Västerbo 80 4,099 – – – – 4,620 – – – – 4,620 90 Conception Carrer Concepcio 34 Palma C O 2016 Hotell Nobis 35 857 – – – – – – – – 2,300 2,300 91 Can Oliver Carrer Caputixines 9 Palma C O 2016 Hotell Can Oliver 40 1,086 – – – – – – – – 3,300 3,300

Total other 685 67,208 – – – – 31,185 465 4,185 – 5,600 41,435

Total projects 5,890 475,653 6,400 21,460 – 11,402 231,995 13,924 26,831 78,725 11,450 402,187

Ownership rights is the form of tenure for all properties except for Tattby 2:22, Björknäs 1:978, Lillsätra 2 and Skarpnäs 6:12 , which are C Commercial properties ground leases CS Community service properties R Rental apartments 1) Stapelbädden 3 is 50/50 owned by Genova and SBB. The lettable area refers to Genova’s stake. Co Co-operative apartments 2) Sicklaön 386:6 is 50/50 owned by Genova and Fastator. The lettable area refers to Genova’s stake. O Ownership rights 3) Viby 19:3 is 70/30 owned by Genova and K2A. The lettable area refers to the total lettable area. G Ground lease 4) Sicklaön 13:139, Part of Sicklaön 13:78, Part of Sicklaön 13:24 and Sicklaön 362:1 are 50/50 owned by Genova and SBB. The lettable area refers to Genova’s stake. 5) Gredelby 21:1 and Särsta 12:1 are 50/50 owned by Genova and Redito. The lettable area refers to Genova’s stake. 6) Gulmåran 7 and 8 are 50/50 owned by Genova and Järngrinden. The lettable area refers to Genova’s stake. 7) For all jointly owned projects, the number of residential units and the area corresponding to Genova’s financial stake is presented. 8) ‘Part of’ is used for properties that are currently investment properties. 9) Handelsmannen 1 has been redesigned and will be considerably larger with approximately 440 rental apartments. The table is updated in the Q1 report. 10) Through an option, Genova has obtained a land-use agreement for the construction of about 250 new residential units in Västra Knivsta. The option provides a basis for future negotiations and is not tied to any specific property.

Genova 2020 Annual Report 33 GENOVA | INVESTMENT PROPERTIES

Investment properties

Genova acquires and develops properties for the company’s own long- term management. Ownership with an eternal perspective motivates long-term investments and creates scope for sustainable urban development.

34 Genova 2020 Annual Report Rental apartments in Alsike, Knivsta. GENOVA | INVESTMENT PROPERTIES

Properties for long-term ownership

Genova’s investment property portfolio largely comprises commercial properties (retail stores, office buildings and warehouses) and community service properties. The property portfolio was supplemented with our first rental apartments in 2020. Genova also owns properties with ongoing planning for future rental apartments combined with community service properties, mostly in new districts, and we also have several development projects in various phases.

Our investment properties are generat- erties will account for a higher share of itself to specific categories, and to con- ing stable cash flows that, with contin- the investment property portfolio. tinuously identify properties that will uous optimization and development contribute to achieving our financial of existing building rights, will secure The acquisition process and operational targets. Hallmarks of Genova’s long-term growth. As ongoing Genova works pro-actively to identify Genova’s acquisition candidates are construction projects are completed, attractive properties to supplement the that they generate cash flows and also residential and community service prop- existing portfolio but without limiting have potential for value growth. Poten-

Investment properties per property category 31 December 2020

Property value Lettable area Rental value FastighetsvärdeTotal SEK 4,560m Total 189,543Yta sqm Total SEKHyresvärde 269m

52% 58% 51% Commercial Commercial Commercial Fastighetsvärde properties Yta properties Hyresvärde properties

42% Community 49% Kategori 48% service Community Community properties service service properties properties Kategori

Investment properties per geography 31 December 2020

Property value Lettable area Rental value Total SEK 4,560m Total 189,543 sqm Total SEK 269m

5% 52% 9% 51% 7% 49% Other Greater Other Greater Other Greater Geogra Stockholm Stockholm Stockholm

Geogra

43% 40% 44% Uppsala Uppsala Uppsala

Genova 2020 Annual Report 35 GENOVA | INVESTMENT PROPERTIES

tial acquisition candidates include comprised 48 properties with a total The lettable area is about 1,100 sqm, cash flow-generating properties, fully lettable area of about 190,000 sqm, with an approximate lot size of 6,000 or partly let, and vacant buildings with mainly in Greater Stockholm and the sqm. The property is fully let to Lidl potential for letting, renegotiations, Uppsala Region, with a market value of Sweden, has an annual rental value of investments or long-term management. almost SEK 4.6 billion. The total prop- approximately SEK 1.3m and a rental Genova’s aim is that the acquired property value, taking accessed properties, term of approximately 3.5 years. erties will eventually provide opportu- properties under construction and joint In August, a community service nities to create building rights for new ventures into account, was approxi- property in Ekeby, Uppsala, was construction projects in the future. If mately SEK 6.0 billion. Properties in accessed at an underlying property we see opportunities for developing res- Greater Stockholm and the Uppsala value of SEK 350m. The lettable area idential units and community service Region account for approximately 95% is approximately 16,500 sqm with a lot properties, an active process to prepare of the property value and 91% of the size of about 16,700 sqm. new zoning plans is initiated together total lettable area. In August, Genova and SBB jointly with the municipalities. acquired and gained accession to Nack- The category of properties we are Acquisitions during the year ahusen Holding AB, which owns six seeking can often be found outside city During the year, Genova acquired and properties in Nacka Strand. The prop- centres, but still attractively located in accessed investment properties with an erties, which contained building rights terms of public transport and transpor- underlying property value of approxi- of approximately 40,000 sqm of gross tation. Through renovation and active mately SEK 736m. lighted floor area, were acquired for management, the properties can be In May, a ground lease in central SEK 1. The parties assumed the existing converted into attractive premises for Nacka was accessed at an underlying bond loan of approximately SEK 360m. more, or new, tenants. property value of approximately SEK Following the settlement of Nacka- 40m. The rental term is 11 years, with husen Holding’s previously divested Development 2020 an annual rental value of approximately properties, Genova and SBB will jointly In 2020, Genova’s investment property SEK 2.8m, and the let area is approxi- control properties and building rights portfolio continued to grow through mately 2,000 sqm. of about 30,000 sqm of gross lighted investments in the existing portfolio, In July, a property in Åkersberga floor area. The properties are owned new property acquisitions and project was accessed at an underlying prop- through a joint venture, where Genova’s development. Both property values erty value of SEK 20m. The property is investment commitment amounts and rental values increased. At year- located in central Åkersberga adjacent initially to SEK 30m. end, the investment property portfolio to one of Genova’s existing properties.

Construction of warehouse and logistics properties in Uppsala

36 Genova 2020 Annual Report GENOVA | INVESTMENT PROPERTIES

In October, three properties in central In October, a project property for school, retirement home, supermarket Enköping were accessed at an under- warehouse and logistics strategically and rental apartments in Knivsta were lying property value of SEK 91m. The located in Uppsala was accessed. When accessed at an underlying property properties are directly adjacent to a completed, the property will contain value of SEK 246m before deductions property that is already owned, where approximately 21,500 sqm of lettable for deferred tax. The total lettable area planning is in progress for the future area and entail a total investment of is approximately 8,700 sqm and the development of residential units. The SEK 275m. In connection with the properties also include land of approx- annual rental value of the let commer- accession, Genova paid consideration of imately 50,000 sqm with the potential cial space is approximately SEK 2.8m. SEK 25m. The property is scheduled for for future development of residential The properties include residential completion in September 2021 and the units and community service proper- building rights that have gained legal property value when the project is com- ties. The annual rental value for the force of approximately 14,000 sqm of pleted is estimated to SEK 360m, with properties is approximately SEK 14m gross lighted floor area and an esti- a total rental value of approximately with an expected net operating income mated potential to develop a further SEK 23.5m and expected net operating of approximately SEK 12m. The average approximately 12,000 sqm of gross income of approximately SEK 22m. remaining term for the rental agree- lighted residential floor area. In December, two properties with a ments exceeds seven years.

Investment property portfolio 31 December 2020

Property Net operating Contracted Property value Rental value costs income No. of Lettable Occu- annual proper- area, SEK/ SEK/ pancy rent1, SEK/ SEK/ ties sqm SEKm sqm SEKm sqm rate, % SEKm SEKm sqm SEKm sqm Per property category Commercial properties 33 110,409 2,355 21,331 136 1,234 96.1 131 –38 –344 93 839 Community service properties2 15 79,134 2,205 27,858 133 1,680 99.2 132 –23 –290 109 1,377

Total per property category 48 189,543 4,560 24,056 269 1,420 97.6 263 –61 –322 202 1,064

Per geography Greater Stockholm 25 96,895 2,371 24,472 131 1,351 98.2 129 –30 –309 99 1,017 Uppsala 17 76,547 1,946 25,416 118 1,547 96.9 115 –26 –342 89 1,157 Other 6 16,101 243 15,086 20 1,232 97.3 19 –5 –296 15 903

Total per geography 48 189,543 4,560 24,056 269 1,420 97.6 263 –61 –322 202 1,064

Ongoing construction 416 Planned projects 380

Total as per the balance sheet 5,355

Acquired, not yet accessed properties and near-term completed constructions3 3 5,741 246 15 2,561 100.0 15 –0.5 –81 14 2,481

Total 51 195,284 5,601 284 1,454 97.7 277 –61 –315 216 1,106

Divested, but not exited properties –1 –2,574 –111 –6 2,368 100.0 –6 0.2 –60 –6 2,308

Total 50 192,710 5,490 278 1,441 97.6 271 –61 –318 210 1,089

In addition: Properties owned through 654 joint ventures

1) Not including rental discounts of SEK 6.3m. 2) Of which two properties pertain to 51 rental apartments. 3) Ongoing construction that will generate rental income within 12 months, not including rental discounts of SEK 4m. The above summary pertains to the properties owned by Genova at the end of the period, with the addition of acquired but not accessed properties and near-term completed constructions. The table reflects income from, and costs of, the properties as if they had been owned throughout the entire period.

Genova 2020 Annual Report 37 GENOVA | INVESTMENT PROPERTIES

Retirement home and preschool in Alsike, Knivsta

Divestments and In December, three commercial proper- property portfolio in 2020 in order to reclassifications ties in Gävle and Sundsvall were exited increase letting and create value. Genova In June, 50% of the shares in the prop- at an underlying property value of SEK signed several new rental agreements in erty-owning company that owns Stapel- 128m before deductions for deferred the Greater Stockholm and the Uppsala bädden 3 in Lidingö were divested. The tax. The selling price exceeded the book Region as well as Lund. Genova’s first shares were accessed by Samhällsbygg- value by approximately 10%. The divest- rental apartments for own long-term nadsbolaget i Norden AB (SBB), and the ment comprises two properties with car management were completed and we parties will develop the property jointly sales premises in Sundsvall and Gävle, also signed letters of intent for the con- with a focus on sustainable, commu- and one property with retail in an out-of- struction and letting of future projects. nity-oriented residential units. The town shopping centre in Gävle. In March, Genova signed a letter of underlying property value of SEK 400m intent with the International English in the transaction exceeded Genova’s Lettings School to build an elementary school book value by approximately SEK 220m, In addition to acquisitions, Genova was with a 20-year rental agreement in the which was recognised as a value change also focused on new lettings and rene- Viby 19:3 property in Upplands-Bro, in the first quarter. gotiations in the existing investment where Genova is planning to build a

38 Genova 2020 Annual Report GENOVA | INVESTMENT PROPERTIES

Structure of rental agreements 10 largest tenants 31 December 2020 31 December 2020

No. of Contract- Percent- Contracted rent, % of total rental Area ed rent, age Tenants SEKm portfolio agreements Ksqm SEKm % Coop Sverige Fastigheter AB 13.5 5.14 Term Uppsala Music School Trust 12.9 4.91 2021 64 13 17 6 HOOM Home & Hotel AB 11.4 4.33 2022 50 23 34 13 City of Stockholm, Education 11.3 4.31 2023 33 25 30 11 Administration 2024 34 26 32 12 Uppsala Municipality 11.2 4.26 2025 10 24 40 15 Gluntens Montessori School 10.3 3.93 >2025 35 66 104 39 Yrkesplugget i Sverige AB 9.8 3.72

Total 226 178 257 98 Norlandia Care AB 9.5 3.60 Rental apartments 51 3 5 2 Dagab Inköp och Logistik AB 9.3 3.54 Parking spaces and other 3 – – – Scanreco AB 8.6 3.28

Total 280 181 262 100 Total 107.7 41.03 Vacant 9 7 Average weighted remaining term, years 6.22 Total 190 269

new district together with housing Genova extended the rental agreement relationship with us as their landlord, company K2A. with Gluntens Montessori School for contributes to their security and value. During the first quarter, rental agree- the Flogsta 47:1 property with approxi- For our tenants in commercial premises ments for approximately 4,500 sqm in mately 6,000 sqm and an annual rental and community service properties, it two properties in Lund were extended, value of approximately SEK 11m until is essential that we act professionally, with an annual rental value of approxi- 31 August 2041. In addition, the rental listen to our customers’ needs and offer mately SEK 6.2m. The agreements have agreement with Leo’s Lekland for the a product that is adapted thereafter. terms of five and eight years, respec- Mackmyra 20:18 property of approxi- An important part of property man- tively, with National Historical Muse- mately 3,600 sqm and an annual rental agement is to contribute to the devel- ums and Friskis & Svettis as the tenants. value of SEK 4.5m was extended for opment of both the premises and the In June, Genova’s first own-produced three years until 2029. surrounding environment to create the rental apartments were completed and During and after the end of the best possible conditions for our custom- occupied. Genova will own and manage fourth quarter, more than 10,000 sqm ers’ operations. the 35 rental apartments, which are were newly let in the project property located in Alsike in Knivsta. for warehouse and logistics in Uppsala Tenants In October, Genova conducted a num- that was acquired in October 2020, and Genova’s investment property port- ber of strategic lettings of approximately construction started immediately at the folio is generally characterised by 6,500 sqm with an annual rental value beginning of 2021. tenants with a long time horizon for of approximately SEK 10m in Stockholm their activities in the premises. A large and Lund. Genova also signed a letter Genova’s management proportion of our tenants operate in of intent with Axfood pertaining to the Genova’s management is characterised the public sector and the grocery trade. development of the Viby 19:3 property in by close relationships with tenants. At year-end, the average term for the Upplands-Bro, where Genova is planning Successful property ownership requires rental agreements in Genova’s invest- to build a new district. The parties are active management and an understand- ment property portfolio was almost to work to construct a supermarket with ing of our customers’ business, our seven years, allocated between about Hemköp covering a floor area of 1,200- tenants’ needs and the overall role of 280 tenants. Our tenants include both 2,000 sqm with a 10-year rental agree- our properties. private and public sector operators: ment, at a minimum, on market terms. For Genova, it is important to build municipal care providers, authorities, The project in Upplands-Bro is being run long-term relationships with our ten- trade unions, regions, leading compa- together with K2A and is expected to ants and we want them to feel that their nies in the defence industry, trading commence in 2021. premises and homes, and thereby their companies and the Uppsala Music

Genova 2020 Annual Report 39 GENOVA | INVESTMENT PROPERTIES

School Trust. From 2020, Genova’s ten- is not a forecast for the next 12 months. financial items have been calculated on ants also include private individuals in The earnings capacity does not include, the basis of current interest-bearing net our rental apartments. Genova’s share for example, an assessment of occu- debt. No interest is received on cash and of tenants in rental apartments will pancy, vacancy or interest-rate changes. cash equivalents, and interest on the grow as ongoing construction projects Genova’s earnings are also impacted interest-bearing debt has been calcu- are completed. by changes in the value of investment lated using the average interest rate at The three largest tenants were Coop properties. Earnings are also affected by the end of the period. Sverige, Uppsala Music School Trust tax. Genova’s current earnings capacity After the end of the period, accession and HOOM Home & Hotel AB, which does not account for any of the above was gained to the Kungsängen Tibble together accounted for approximately factors. 25:1 and Örnsberg 2 properties. At the 15% of rental income. Of the total rental Rental income is based on con- same time, the Sjöborren 5 & 6 proper- value, the proportion derived from tracted income at the end of the period. ties were exited. These transactions had publicly funded tenants amounted to Decreasing rental discounts of SEK a marginal effect on rental value and nearly 49%. If supermarkets are also 6.3m have not been deducted from the net operating income. Since the proper- included, the proportion of total rental rental value. Property costs reflect the ties had not been accessed, respectively value amounted to nearly 60%. past 12-month outcome for properties exited, as of 31 December 2020, they are owned throughout the entire period. not included in the table of estimated Earnings capacity Properties acquired and projects com- earnings capacity. The table shows Genova’s current earn- pleted have been adjusted to an annual ings capacity on a 12-month basis. The rate. Administrative expenses pertain earnings capacity is based on the invest- to costs attributable to property man- ment properties accessed by Genova at agement, and are based on estimated the end of the period. It is important to costs for the next 12-month period, note that the current earnings capacity excluding any non-recurring costs. Net

Key metrics, property value Estimated earnings capacity of investment properties 31 Dec 31 Dec 2020 2019 SEKm Rental value, SEK/sqm 1,420 1,325 Rental value1 269 Economic occupancy rate, % 98 98 Vacancy rate –7 Property costs, SEK/sqm 322 302 Rental income 263 Net operating income, SEK/sqm 1,064 993 NOI margin, % 77 72 Operating costs –45 Investment property value, SEK/sqm 24,056 21,515 Maintenance costs –10 Lettable area, ksqm 189,543 170,174 Property tax –6

No. of properties 48 43 Total property costs –61

Net operating income 202

Central administration, –13 Annual property costs per sqm property management Genova’s share of income from 12 Commercial Community service property management through SEK/sqm properties properties Total joint ventures Operation –232.6 –245.6 –237.8 Net financial items –90 Maintenance –65.8 –27.7 –50.7 Income from property man- 110 Property tax –49.9 –7.3 –33.1 agement2

Total –348.4 –280.7 –321.6 1) Not including rental discounts of SEK 6.3m. 2) Currency effects are no longer included in income from property management and are recognised separately in profit or loss. Comparative figures have been restated. Refer to Performance analysis on page 93.

40 Genova 2020 Annual Report GENOVA | INVESTMENT PROPERTIES

Genova 2020 Annual Report 41 Project development

Quality and function. Environmental certification. A carefully designed environment. These are key to creating attractive residential units and premises, or well-functioning blocks. Genova will contribute to the city through responsible development and high-quality construction and by supporting initiatives that create long-term value for the places where we build.

42 Genova 2020 Annual Report Handelsmannen 1, Norrtälje

Genova 2020 Annual Report 43 GENOVA | PROJECT DEVELOPMENT

We build for long-term ownership Genova develops properties for own long-term management as part of profitable and sustainable growth of the company. New construction projects usually proceed from building rights created from our existing properties and mainly comprise the development of rental apartments, community services and commercial premises but also future co-operative apartments.

Long-term and sustainable development also includes, to a lesser Sustainability is a key area for Genova project development extent, the construction of co-operative and we work actively to take our respon- Construction of new rental apartments, apartments. Thus, Genova is active sibility as a property owner and urban community service properties and across the entire chain of property developer. Our long-term target is that commercial premises accounts for a investments – from acquisitions to all newly constructed properties in growing proportion of Genova’s project property management, project devel- our portfolio will be environmentally development. We construct buildings opment and construction, where the certified in order to meet customer for long-term ownership and property assignment often includes contributing requirements, reduce greenhouse gas management as part of profitable and to the development of new districts. emissions and risk, increase value and sustainable growth. Genova’s project receive more favourable loan terms.

Project development per property category 31 December 2020

Property/Project value Lettable area Rental value TotalFastighetsvärde SEK 19,322m Total 402,187Yta sqm TotalHyresvärde SEK 671m 8% 11% 11% Commercial Commercial Commercial properties properties properties 28% Fastighetsvärde 19% Yta Hyresvärde Co-operative Co-operative apartments apartments 12% 12% Community Community Kategori 15% service service Community 74% 52% properties 58% properties service Rental apartments Rental apartments Rental apartments properties Kategori

Project development per geography 31 December 2020

Property/Project value Lettable area Rental value Total SEK 19,322m Total 402,187 sqm Total SEK 671m

10% 63% 10% 56% 13% 50% Other Greater Other Greater Other Greater Geogra Stockholm Stockholm Stockholm

Geogra

27% 34% 37% Uppsala Uppsala Uppsala

44 Genova 2020 Annual Report GENOVA | PROJECT DEVELOPMENT

Rental apartments in Alsike, Knivsta.

Read more about Genova’s sustainabil- Ongoing construction right, which means that the project will ity activities on pages 50–61. At the end of 2020, Genova had 540 increase by about 50% from approxi- residential units under construction, of mately 21,000 sqm of lettable area to Project portfolio of which 35 hotel rooms, with a book value about 30,000 sqm. The ongoing project own building rights of SEK 416m. comprises two blocks containing one Genova’s project portfolio is mainly The units under construction retirement home with 80 residential focused on the creation of building are Hotell Nobis in Palma, Majorca, units, one preschool with 125 places and rights from the company’s own invest- Handelsmannen 1 in Norrtälje com- approximately 400 rental apartments. ment properties using existing cash prising a retirement home, preschool The first occupancies are scheduled for flow. We work together with municipal- and rental apartments, and Segerdal in the end of 2021. ities to enable the conversion of these Knivsta with rental apartments. When In December, the Segerdal project properties from mainly commercial these projects are completed, they will was started in central Knivsta, next to space to residential units or community remain owned and managed by Genova. the Town Hall and directly adjacent to services. As of 31 December 2020, Geno- The Segerdal project is being carried the train station. The project comprises va’s project portfolio comprised approx- out as a joint venture together with new construction of approximately 300 imately 400,000 sqm of lettable area Redito and comprises a total of 300 rental apartments with a lettable area allocated between 5,890 residential rental apartments, of which 150 are rec- of approximately 17,000 sqm. The build- building rights, of which 77% consisted ognised as ongoing construction, which ings will be environmentally certified of rental apartments and community corresponds to Genova’s stake. and the first occupancy is scheduled for service properties that Genova intends The project in Palma is scheduled year-end 2022/2023. to develop for own long-term manage- for completion in the second quarter of In October, Genova agreed to acquire ment, and approximately 23% co-op- 2021, when the tenant Nobis will take the Danmarks-Kumla 8:31 project erative apartments and commercial over the hotel. property in Uppsala. The property is properties. 88% of the building rights For the Handelsmannen 1 project strategically located adjoining the E4 are located in Greater Stockholm and in Norrtälje, Genova has worked on motorway and will contain approxi- the Uppsala Region. the plan, and thereby increased the mately 21,500 sqm of lettable area for utilisation of the existing building warehouse and logistics purposes.

Genova 2020 Annual Report 45 GENOVA | PROJECT DEVELOPMENT

When completed, the total investment Excess value in building rights, and Planned projects had a book will amount to SEK 275m before deduc- rights portfolio value of approximately SEK 1.5 billion. tions for deferred tax. Construction of Genova uses an estimated excess value On the basis of this valuation, a review the property started immediately in to indicate the value of the company’s was carried out on 31 December 2020 early 2021 and is scheduled for comple- building rights portfolio in Sweden. The and the assessment is that the excess tion in October 2021. Approximately 50% excess value is based on an externally value in the Group’s building rights of the area was let on 1 March 2021. The estimated market value of the unused portfolio amounted to approximately property value when completed is esti- building rights. This could be relevant SEK 1.1 billion at the end of the report- mated at approximately SEK 360m with if Genova did not follow its business ing period. a total rental value of approximately SEK plan to develop the building rights 23.5m and an expected net operating and instead chose to divest them. At 31 Planned projects income of approximately SEK 22m. December 2020, CBRE’s market evalu- Genova’s planned projects comprised a During the fourth quarter, the ation of the expected unused building total of approximately 5,350 expected Liljegatan 1 co-operative apartment rights in Sweden included in Planned residential building rights allocated project in central Uppsala, comprising projects was just over SEK 2.6 billion. At between approximately 370,000 sqm, 48 residential units, was completed. 31 December 2020, the existing build- of which about 78% is intended for own ings on these properties, which in some long-term management with a focus cases will need to be demolished when on Greater Stockholm and Uppsala. using the planned unused building The number of residential units under

Ongoing construction projects

Segerdal, Knivsta Handelsmannen 1, Norrtälje

Property: Knivsta Gredelby 21:1 / Särsta 12:1. Property: Norrtälje Handelsmannen 1. Category: Rental apartments, commercial properties. Category: Community service properties, rental apartments. Background: In 2017, Genova and the property company Redito Background: In 2016, Genova acquired Handelsmannen 1 for jointly acquired the properties for an underlying property value of an underlying property value of SEK 40m. The large site area of SEK 62m. The two properties are located in central Knvista directly approximately 16,000 sqm generated a large project volume that adjacent to the train station. The property was able to generate Genova has developed into about 30,000 sqm of residential units. cash flows from stable tenants, such as PostNord, Systembolaget The low intrinsic value created favourable conditions to develop (Swedish alcohol monopoly) and Swedbank, during the planning high-quality residential units and community service properties process. with carefully planned details.

Development: Approximately 300 rental apartments and Development: A retirement home comprising 80 residential units commercial premises. The project’s tenants will include for the elderly, a preschool with 125 places and about 400 rental Systembolaget. apartments. Genova has signed a 15-year agreement with Nor- landia that will operate the retirement home and preschool. Occupancy: Year-end 2022/start of 2023. From fourth quarter 2021. Environmental certification: Nordic Swan Ecolabel. Occupancy: Environmental certification: Nordic Swan Ecolabel.

46 Genova 2020 Annual Report GENOVA | PROJECT DEVELOPMENT

construction will further increase at are currently let, comprise a total of date of Genova and SBB’s joint acquisi- the end of the first quarter of 2021 when approximately 2,132 residential building tion and accession in August 2020. In we commence construction of the rights (of which Genova’s share is 1,066 November, Nackahusen Holding also Korsängen project in central Enköping, and included in the total number of repaid the bond loan of SEK 360m that comprising approximately 11,000 sqm 5,890 building rights recognised for the was assumed in connection with the of lettable area and approximately 220 future development of residential units). acquisition and replaced it with a new rental apartments. The first occupan- Nackahusen Holding AB, which was bank loan, which means significantly cies in the Korsängen project are sched- acquired and accessed in August, is lower financing costs for the jointly uled for year-end 2022/2023. owned in a joint venture with SBB. The owned company. estimated market value of the acquired Joint ventures properties was SEK 478m, resulting in Genova owns 50% of the shares in five a positive value change of SEK 118m. joint ventures, together with SBB, Fasta- Genova’s share of the value change was tor, Redito and Järngrinden. These joint SEK 46.8m (after deferred tax) and was ventures own 11 properties with a total recognised in the third quarter of 2020. property value of SEK 654m, of which In November, properties were exited by Genova’s stake is SEK 327m. Shares in Nackahusen Holding AB and a payment joint ventures are recognised using the of nearly SEK 50m was received. The equity method. The properties, which properties were already divested on the

Danmarks-Kumla Uppsala Nobis Palma, Majorca

Category: Warehouse and logistics Category: Hotel Background: Genova acquired the project property in Uppsala in Background: In 2016, Genova acquired two properties centrally October 2020 and construction commenced at the end of 2020. located in the old town of Palma, Majorca, to construct a hotel. The property is strategically located adjoining the E4 motorway. Construction and conversion of an old private palace started in As of today, almost 50% of the existing area is let, for example, to 2019 for the first of two planned hotels. The completed hotel will Örebro Padelcenter, which has a 15-year rental agreement. The have 35 rooms and be operated by the Nobis Group with a 20-year property value when completed is estimated at approximately SEK rental agreement. Construction on the second hotel is scheduled 360m (SEK 16,750/sqm) with an estimated total annual rental value to begin in 2021 and will also be operated by the Nobis Group. of approximately SEK 23.5m and an expected annual net operating 35 hotel rooms income of approximately SEK 22m. Development: Occupancy: Second quarter 2021. Development: Approximately 21,500 sqm of lettable area for warehouse and logistics.

Occupancy: November 2021.

Genova 2020 Annual Report 47 GENOVA | PROJECT DEVELOPMENT

Ongoing construction 31 December 2020

No. of Lettable area, sqm Property value1 Rental value Investment, SEKm Planned resi- Book Munici- Construc- comple- dential Residen- Estimat- Accum- value, Project pality Category tion start tion units tial units Premises SEKm SEK/sqm SEKm SEK/sqm ed ulated SEKm Hotell Nobis Palma Commercial Q3 2019 Q2 2021 35 2,300 – 253 110,000 7 3,250 116 92 161 properties

Handelsmannen 12 Norrtälje Community service Q4 2019 Q4 2021 80 6,021 1,296 337 46,057 16 2,132 251 100 126 properties

Handelsmannen 12 Norrtälje Rental apartments Q4 2019 Q4 2021/ 275 13,257 – 588 44,354 29 2,150 486 96 128 Q2 2022

Segerdal3 Knivsta Rental apartments Q4 2020 Q4 2023 150 8,328 222 392 45,844 19 2,232 331 29 0

Total ongoing construction 540 29,906 1,518 1,570 49,961 71 2,248 1,184 317 416

1) Refers to fair value of the completed investment. 2) Handelsmannen 1 has been redesigned and will be considerably larger with approximately 400 rental apartments, which will have a major impact on the project’s completion date. The table is updated in the Q1 report. 3) The Segerdal project is 50/50 owned by Genova and Redito. The table only shows the information that corresponds to Genova’s financial stake.

Planned projects 31 December 2020

Lettable area, sqm Property value1 Rental value Investment, SEKm No. of Book residen- Residen- Estimat- Accum- value, Project tial units tial units Premises SEKm SEK/sqm SEKm SEK/sqm ed ulated SEKm

Per category Rental apartments 3,771 210,410 – 9,504 45,167 449 2,135 7,798 83 134

Community service properties 290 20,810 18,478 1,683 42,846 83 2,106 1,367 4 4

Commercial properties2 40 3,300 39,040 1,210 28,578 69 1,626 953 174 183

Co-operative apartments 1,249 78,725 – 5,355 68,025 – – 3,924 30 58

Total per category 5,350 313,245 57,518 17,752 47,880 601 2,057 14,043 292 380

Per geography – Own management Greater Stockholm 1,926 112,865 18,148 6,161 47,024 290 2,210 5,078 16 56

Uppsala 1,525 82,985 38,905 4,545 37,288 231 1,895 3,708 106 116

Other 650 38,670 465 1,691 43,212 80 2,048 1,332 139 149

Total per geography 4,101 234,520 57,518 12,397 42,450 601 2,057 10,118 261 321

Per geography – Co-operative apartments Greater Stockholm 1,104 71,835 0 5,019 69,868 0 0 3,657 23 51

Uppsala 145 6,890 0 336 48,807 0 0 267 9 9

Other 0 0 0 0 0 0 0 0 0 0

Total per geography 1,249 78,725 0 5,355 68,025 0 0 3,924 31 59

Per geography – Own management and co-operative apartments Greater Stockholm 3,030 184,700 18,148 11,180 55,114 290 2,210 8,735 39 107

Uppsala 1,670 89,875 38,905 4,881 37,905 231 1,895 3,975 114 124

Other 650 38,670 465 1,691 43,212 80 2,048 1,332 139 149

Total own management and co-operative apartments per geography 5,350 313,245 57,518 17,752 47,880 601 2,057 14,043 292 380

1) Refers to fair value of the completed investment. 2) Where the number and lettable area of residential units specified in the ‘Commercial properties’ category refers to hotel development. The table only shows the number of residential units, area, property and rental value, investment amount and book value that correspond to Genova’s financial stake in jointly owned properties.

Information about ongoing construction and planned projects value of projects. The information about ongoing construction in the interim report is based on assessments of size, focus and planned projects is regularly reviewed and assessments and scope, and when projects are scheduled for start-up and and assumptions are adjusted as ongoing construction is com- completion. The information is also based on assessments of pleted or added, and circumstances change. For projects not future project costs and rental value. These assessments and yet started, financing has not been arranged, which means that assumptions should not be considered a forecast. Assessments financing for planned projects represents an uncertainty. and assumptions entail uncertainties in regard to the implementation, design, size, timetables, project costs and future rental

48 Genova 2020 Annual Report GENOVA | PROJECT DEVELOPMENT

Project

31 December 2020 Phase

Estimated No. of construction Estimated residential Lettable Project specification Municipality Category1 start completion units area, sqm Planning permission decision Planning consulta tion Review Enacted zoning plan

Ongoing construction Hotell Nobis Palma Commercial properties Q3 2019 Q2 2021 35 2,300 • • • • Handelsmannen 12 Norrtälje Community service properties Q4 2019 Q4 2021 80 7,317 • • • • Rental apartments Q4 2019 Q4 2021/Q2 2022 275 13,257 • • • • Segerdal3 Knivsta Rental apartments Q4 2020 Q4 2023 150 8,550 • • • •

540 31,424 WHOLLY OWNED PROJECTS Planned projects Korsängen Enköping Rental apartments 2021 2023 220 10,800 • • • • Danmarks-Kumla 8:31 Uppsala Commercial properties 2021 2021 21,460 • • • • Hotell Can Oliver Palma Commercial properties 2021 2023 40 3,300 • • • • Boländerna 21:4 Uppsala Commercial properties 2021 2022 6,400 • • • • Luthagen Uppsala Commercial properties 2021 2023 680 • • • • Co-operative apartments 2021 2023 45 1,500 • • • • Gredelby Knivsta Rental apartments 2021 2023 45 2,250 • • • • Commercial properties 2021 2023 570 • • • • Klostergården Lund Rental apartments 2021 2023 165 7,700 • • Ekeby Uppsala Rental apartments 2022 2024 90 4,500 • • Commercial properties 2022 2024 900 • • Storvreta Uppsala Rental apartments 2022 2024 80 4,560 • Drevern 1, 2 Stockholm Rental apartments 2022 2024 140 7,700 • • Community service properties 2022 2024 60 7,820 • • Commercial properties 2022 2024 2,250 • • Dvärgspetsen 1 Stockholm Rental apartments 2022 2024 150 7,700 • • Odalmannen Huddinge Rental apartments 2022 2024 56 2,960 • Jaktvarvet Nacka Co-operative apartments 2022 2024 90 4,750 • • Kryddgården Enköping Rental apartments 2022 2026 475 23,730 • • Co-operative apartments 2022 2026 100 5,390 • • Community service properties 2022 2026 80 7,440 • • Commercial properties 2022 2026 3,600 • • Västra Knivsta Knivsta Rental apartments 2022 2024 250 15,400 • Sydöstra Vikdalen Nacka Rental apartments 2022 2024 250 14,600 • • Brynjan 5 Huddinge Rental apartments 2023 2025 145 7,875 • Commercial properties 2023 2025 1,350 • Gäddviken Nacka Co-operative apartments 2023 2025 100 6,840 • • Örnsberg Stockholm Co-operative apartments 2023 2025 120 7,500 • • Runö 7:84 Österåker Rental apartments 2023 2025 120 6,000 • Co-operative apartments 2023 2025 138 8,250 • Särsta Knivsta Rental apartments 2023 2025 110 6,000 • Community service properties 2023 2025 3,600 • Runö 7:146 Österåker Community service properties 2023 2025 5,850 • Rivan Lund Rental apartments 2025 2027 50 3,465 • Västerbo Lund Rental apartments 2025 2027 80 4,620 • Kungsängen Uppsala Rental apartments 2025 2027 175 10,000 •

Total 3,374 239,310

4 JOINTLY OWNED PROJECTS (Refers to Genova’s stake ) Planned projects Viby5 Upplands-Bro Rental apartments 2021 2028 620 38,250 • • • Co-operative apartments 2021 2028 210 17,100 • • • Community service properties 2021 2028 80 9,928 • • • Commercial properties 2021 2028 1,530 • • • Gulmåran 7, 86 Borås Community service properties 2022 2024 70 4,650 • • Rental apartments 2022 2024 245 15,400 • • Nacka Strand7 Nacka Co-operative apartments 2022 2025 53 3,420 • • Co-operative apartments 2022 2025 44 2,850 • • Rental apartments 2023 2025 25 1,520 • • Rental apartments 2025 2027 70 4,180 • • Skvaltan8 Nacka Co-operative apartments 2024 2026 175 9,625 • Gåshaga9 Lidingö Rental apartments 2025 2027 210 11,500 • Co-operative apartments 2025 2027 175 11,500 •

Total 1,976 131,453

Total 5,890 402,187

1) Where the number of residential units specified in the ‘Commercial proper- 4) The table only shows the number of residential units and area that ties’ category refers to hotel development. correspond to Genova’s financial stake in jointly owned properties. 2) Handelsmannen 1 has been redesigned and will be considerably larger with 5) Viby is 70/30 owned by Genova and K2A. approximately 400 rental apartments, which will have a major impact on 6) Gulmåran is 50/50 owned by Genova and Järngrinden. the project’s completion date. Updated in the Q1 report. 7) Nacka Strand is 50/50 owned by Genova and SBB. 3) The Segerdal project is 50/50 owned by Genova and Redito. The table only shows the information that corresponds to Genova’s financial stake. 8) Skvaltan is 50/50 owned by Genova and Fastator. 9) Gåshaga is 50/50 owned by Genova and SBB.

Genova 2020 Annual Report 49 Sustainable development

Sustainability is the compass for Genova’s operations and we accept our responsibilities as a property owner and urban developer with a long-term perspective. For us, the concept of sustainability means to develop and work responsibly with our properties on the basis of ecological, social and financial aspects. Key components are energy efficiency, environmental certification of properties, green financing and social initiatives. In 2020, we continued our work on developing Genova’s sustainability activities, both strategically and operationally, and strengthened options for various forms of green financing.

50 Genova 2020 Annual Report Construction with a distinct sustainability profile

We significantly accelerated the pace of Genova’s ongoing construction of properties for own long-term management in winter 2020/2021 by starting the construction of rental apartment projects in Knivsta and Enköping, and significantly increased the area in Norrtälje. In total, these projects comprise approximately 60,000 sqm and more than 1,000 rental apartments. All of the projects are being constructed with a clear sustainability profile and will be environmentally certified. As part of this, we established a new green finance framework that has been audited by the Centre for International Climate and Environmental Research (Cicero). Read more about environmental certification and green financing on the following pages.

Genova 2020 Annual Report 51 GENOVA | SUSTAINABILITY

Sustainability is a key area

Sustainability is a key area for Genova and we work actively to take our responsibility as both a property owner and as a property and urban developer. We are committed to ensuring that the properties we develop are constructed sustainably and that their impact on the climate is minimised. We continuously evaluate how we can help reduce our carbon footprint and in 2021 we aim to further systematise our sustainability activities.

Genova’s sustainability strategy is There are several ways to improve proactively in several different areas, for based on our vision, mission and the the sustainability performance of our example, by reducing our waste gen- company’s values. A strategic approach properties. The starting point is to lower eration, mainly purchasing renewable makes it possible to manage sustain- greenhouse gas emissions by reducing electricity, and installing photovoltaic ability-related business risks effectively, the amount of energy used in our new systems and geothermal heating in order while also taking advantage of the production. But we also contribute to fulfil our responsibilities as a prop- opportunities that are created. Genova’s to sustainable development in other erty owner and become an even more brand shall symbolise long-term secu- ways. These include the objective that attractive landlord. These initiatives rity for our customers, tenants, employ- all of our new properties will be envi- will lead to long-term and sustainable ees and other stakeholders. We see a ronmentally certified. We are working profitability. direct link between good architecture, sustainability and profitability.

3 dimensions

Environmental sustainability Economic sustainability Social sustainability

• Newly constructed residential units are • Long-term sustainable growth and high re- • As a property company with a long-term always built with the aim of obtaining at least turns are creating value for Genova’s stake- management perspective, we are able to in- SGBC Silver level certification or the Nordic holders and enabling continued investment. fluence and contribute social value creation Swan Ecolabel, and compliance with the • Strive to increase the proportion of green in our zoning plan processes, together with BREEAM International New Construction forms of financing. municipalities, tenants and other stake- standard for non-residential properties. holders. • Develop and build for various forms of • Monitor energy consumption in the in- tenure. • Through work in early stages of the com- vestment property portfolio and regularly munity planning process, we are helping evaluate opportunities to reduce energy • Develop and build primarily for own long- to develop districts and surrounding areas consumption. term management. into socially sustainable environments, also • Offer green rental agreements that include through measures to increase security. action plans with measures that can help to • Apply the Swedish Property Industry’s Code improve the environment. of Conduct for Suppliers, based on the Ten Principles of the UN Global Compact • Support Maskrosbarn children’s rights organisation and Läxhjälpen homework help foundation.

52 Genova 2020 Annual Report GENOVA | SUSTAINABILITY

Based on a long-term approach

Genova’s contribution to a more sustainable society is based on our long-term approach. Being a property owner with an eternal ownership perspective enables and motivates us to work with, and to influence, many dimensions of sustainability – including energy consumption, choice of materials, waste management, transportation and occupational health and safety – for our customers, employees and suppliers.

Organisation and guidelines development, while the business units and make them a natural part of our Genova’s Board has adopted a Sus- are operationally responsible for ensur- decision-making processes. The aim tainability Policy that sets out guide- ing compliance with the environmental is to create a platform from which we, lines for how Genova’s sustainability and sustainability strategies and that together with our partners, can effec- agenda is to be pursued. The company’s they are applied in management and tively promote sustainable development. efforts are to contribute to sustainable when making decisions about our new development and be an integrated and construction. Integrating Genova’s sus- Focus of sustainability activities natural part of the operations based on tainability activities into all parts of the Genova’s long-term goal is climate-neu- involvement and commitment. Current organisation continued during the year. tral construction. The use of energy legislation and environmental require- and materials combined account for ments, together with Genova’s Code of UN Sustainable the property industry’s greatest envi- Conduct and Sustainability Policy, form Development Goals ronmental impact. By partly building the basis of our sustainability efforts, National and international standards with wood, we can reduce our carbon and involve employees and tenants are a starting point for Genova’s sustain- footprint and thereby our greenhouse as well as suppliers and contractors. ability agenda. The SDGs are guiding gas emissions. When building new or There are also guidelines to ensure that our work onwards. For Genova, the SDGs developing existing properties, such as Genova’s employees have the expertise serve as a framework for understand- adapting premises for new tenants, we and experience that is required to con- ing how the company’s sustainability apply a sustainable approach. Ripping tribute to the development of Genova’s performance contributes to the rest of out material that is in good condition is sustainability efforts. The Sustainabil- the world’s efforts to achieve sustainable a real waste of resources. It is import- ity Policy is subject to an annual review development and human rights. Genova ant, therefore, to focus on flexibility and analyses of current stakeholder dia- has identified five of the 17 SDGs that and high-quality timeless materials logue are taken into account. Genova’s the company can mainly contribute to from the start. However, Genova’s new CEO is strategically responsible for the achieving. We are working to integrate construction plays a critical role in our Group’s sustainability performance and the goals in a sustainability strategy sustainability performance. Being a proactive and knowledgeable partner when it comes to sustainability creates clear business opportunities. UN Sustainable Development Goals

Genova has identified five of the 17 SDGs that the company can contribute to achieving. Responsible business relationships Environmental: Economic: Social: Life on land Decent work and Good health and Genova purchases both services and economic growth well-being materials at all levels of its operations. Genova’s employee manual and Code of Responsible Sustainable cities consumption and communities Conduct set out the rules and guidelines and production for how we should act professionally and

Genova 2020 Annual Report 53 GENOVA | SUSTAINABILITY

ethically in our contact with suppliers are working to identify new and sus- minimise risk, increase value and facili- and contractors. Genova also applies tainable solutions and thereby helping tate more favourable loan terms. Genova the Swedish Property Industry’s Code of to accelerate the pace of development in believes that certification is a useful Conduct for Suppliers. The Code is based our area. By collaborating with experts, tool for promoting long-term manage- on the Ten Principles of the UN Global suppliers and other stakeholders in ment and clear goals for improving Compact. Genova otherwise applies the other industries, we can also develop the environmental performance of the UN Global Compact’s principles and the products and technical solutions based properties. Genova’s newly constructed precautionary approach at all levels of on ideas from other areas of business. residential units shall always be built its operations. Our efforts to successively All technical developments are tested in with the aim of obtaining at least SGBC develop procurement processes will our existing environments and solu- Silver level certification or the Nordic continue, in order to reduce risk. tions that work well are implemented Swan Ecolabel. For commercial prop- in the properties. During the year, we erties, Genova has chosen to comply Innovation is driving commenced new, and strengthened with the BREEAM International New development existing, partnerships to find more sus- Construction standard. We are working to develop strategic tainable solutions in our projects. In 2020, Genova constructed its partnerships with suppliers and other first Nordic Swan Ecolabelled building stakeholders around sustainable devel- Environmental certification of in the form of 35 rental apartments opment in order to effectively contrib- properties in Knivsta. Construction of rental ute to the achievement of the SDGs and Genova’s long-term goal is that all newly apartments and community service to meet the ever-increasing demands constructed properties in our portfolio properties also started in Norrtälje and and expectations of our customers. We will be environmentally certified in Knivsta during the year, which will all are convinced that partnerships with order to meet customer requirements, be environmentally certified. other operators lead to new ideas. We reduce its greenhouse gas emissions,

Nordic Swan Ecolabel BREEAM

The Nordic Swan Ecolabel helps consumers make a sound choice for the BREEAM (BRE Environmental Assessment Method) is a sustainability environment. The Swedish government has given Miljömärkning Sverige assessment method from the UK that was established in 1990. The AB overall responsibility for the Swan Ecolabel in Sweden, and the com- Sweden Green Building Council has managed the Swedish version, pany is wholly owned by the Swedish state. The business has no financial BREEAM-SE, since 2013. profit purpose and is funded partly through a fee from the companies BREEAM-SE is used to certify newly constructed buildings and their that have eco-label licenses and partly through a state subsidy. environmental performance in a number of different areas. For example, The Swan Ecolabel sets strict requirements on the use of energy, chem- the building’s energy consumption, indoor climate, water control and ical products, construction products/materials and a number of indoor waste management are assessed and rated. Assessments can also environment factors relevant to people’s health and the environment. include project management, the location of the building in relation Furthermore, the Swan Ecolabel sets quality management requirements to public transport, the choice of building materials and the pollution in the construction process and for the handover of the building to the caused by the building. Extra points may be awarded for the degree of residents and asset manager/operator. innovation in the building’s technical solutions.

Miljöbyggnad LEED

Environmentally certifying a building means that a third party audits the LEED (Leadership in Energy and Environmental Design) is an interna- sustainability activities and the environmental performance of the build- tional rating system for green buildings. It focuses on reducing the use ing. This system is owned and has been developed by the Sweden Green of such resources as land, water, energy and building materials. The Building Council (SGBC), which also administers the certifications. system was developed and administered by the non-profit organisation The SGBC’s Miljöbyggnad system measures a total of 16 different criteria U.S. Green Building Council. The first version was released in 1999. that are then audited by an independent third party before the certifi- The Sweden Green Building Council has been an official partner of the cation is issued. The SGBC returns to new buildings and remodelled USGBC since 2013. buildings within three years and checks the continued fulfilment of the certification criteria.

54 Genova 2020 Annual Report Genova develops and works sustainably on the basis of environmental, economic and social aspects. 1 Environmental sustainability All ecosystems must be protected and able to develop. Nature must be able to regenerate the resources that are used. Our three dimensions 3 2 Economic sustainability Social sustainability The environment must not be damaged A fair and equal society where in order to promote economic growth. people lead a good life and enjoy Consumption and production must good health, with no unjust differ- be sustainable and resources used ences. efficiently

Genova 2020 Annual Report 55 Environmental sustainability

Building in wood terms of façades and design so that every obtaining at least SGBC Silver level certi- With a focus on sustainability, wood is building can have its own expression. fication or the Nordic Swan Ecolabel. For a material that Genova appreciates and commercial properties, we have chosen uses in parts of its construction, which Environmental certification to comply with the BREEAM Interna- helps us reduce our carbon footprint and of properties tional New Construction standard. Read thereby our greenhouse gas emissions. Genova’s long-term goal is that all newly more about environmental certification Wood is a renewable and resource-effi- constructed properties in our portfolio and standards on page 54. cient material that stores and delays CO2 will be environmentally certified in emissions, while wood-framed buildings order to meet customer requirements, Energy consumption offer a more comfortable indoor climate reduce our greenhouse gas emissions, Genova monitors energy consumption and reduce overall noise. In addition, minimise risk, increase value and obtain in the investment property portfolio wood offers many advantages in the con- more favourable loan terms. The certi- and regularly evaluates opportunities struction process since it reduces noise fications are a useful tool for creating to reduce energy consumption. Other at the building site and requires less long-term management and clear goals measures include installation of motion construction traffic. As well as environ- for improving the environmental perfor- sensor lighting, laying green spaces and mental benefits, building with wood also mance of the properties. We can also see flower beds, developing recycling rooms, generates business gains. In line with a that a greater focus on environmental increasing the proportion of bicycle park- greater emphasis on rental apartments, certification is also driving sub-suppliers ing and more efficient stormwater man- the focus may shift towards a higher and the entire industry towards more agement. Rooftop photovoltaic systems degree of module production, with a con- sustainable and energy-efficient solu- and geothermal heating are additional tinued high level of ambition in terms of tions, which in turn advances and makes action taken to achieve both sustainabil- architecture and design. Wood is a mate- sustainable construction more easier. ity targets and favourable profitability. rial that is well suited to prefabrication, Genova’s newly constructed residential Action plans are created for every project and can also be adapted and varied in units shall always be built with aim of to ensure that the sustainability aspect

56 Genova 2020 Annual Report is observed in planning and implemen- internally and in the industry. For new solve by introducing a smart charging tation, and construction is carried out construction, Genova intends to sign infrastructure that distributes the load taking certification requirements into framework agreements for waste man- more evenly; a system that measures account. Extensions or minor adapta- agement whereby waste contractors the power output in the charging points tions are also carried out in our existing will be required to provide statistics for and distributes the available power investment property portfolio, while all projects. That will enable us to set between the points. initiatives requiring more investment targets to reduce the amount of waste are carried out in our newly constructed we generate. Our recycling has become Green rental agreements properties. In 2021, Genova plans to set more efficient, which means that a large We see a growing willingness and ambi- quantitative energy and emissions tar- proportion can now be used for energy tion among our tenants to work together gets and start reporting their outcomes. recovery instead of going to landfill. with Genova to achieve a more sustain- Our goal is recycle as much waste as able society. We therefore offer green Water and waste management possible. Waste collections are also rental agreements, which means that the Water is a key issue all over the world. In organised together with the supplier tenant, together with Genova, draws up Sweden, the challenge is mainly linked to minimise vehicle transport. That is a specific action plan with measures that to urbanisation where the load on exist- helping to reduce our CO2 emissions. can help to improve the environment. ing systems is continuously increasing. Genova is working to reduce water Charging infrastructure consumption through various initia- The use of hybrid and electric cars is tives, including installation of low-flow growing and we consider the installa- water appliances, such as toilets, sinks tion of charging stations an obvious and shower heads. Resource wastage feature in new construction. Electric- when adapting premises is a challenge, ity supply is often limited in existing, and a frequent topic of discussion both older properties, which we are trying to

Genova 2020 Annual Report 57 Economic sustainability

Sustainable economy their lending to be sustainable and Green finance framework Genova’s overall objective is to generate make a difference for the environment. We took the next step in creating more growth and high returns in a long-term For Genova as a property company, the opportunities for securing different and sustainable manner. Good profit- equivalent requirement is to invest and forms of green financing in 2020. We ability is a prerequisite for being able to build in accordance with established worked together with Swedbank to invest with full force in sustainability, environmental standards – at least LEED produce a green finance framework which in turn can contribute to the (Gold), BREEAM (Very good), SGBC (Sil- that outlines Genova’s operations based company’s profitability. Being a finan- ver) or the Nordic Swan Ecolabel. on a number of sustainability criteria, cially stable business partner promotes Genova’s focus on sustainable proj- focusing on energy-efficient buildings. relationships with customers, tenants, ect development is well suited to the The framework is applicable for issuance suppliers and creditors, while a strong funding model. In 2019, Genova signed of green finance instruments including financial position is crucial for attract- a green financing agreement for the green bonds, green loans and other ing and retaining talented employees. Handelsmannen 1 project in Norrtälje, types of debt instruments and require Genova has grown with strong and which is planned to meet the Nordic that Genova reports on the outcome stable profitability since the company Swan Ecolabel criteria. Green financing based on a number of parameters related was founded in 2006. In 2020, Genova’s is helping to lift our sustainability efforts to climate impact. CICERO Shades of income from property management per to a new level; the connection between Green has reviewed the framework and ordinary share increased from SEK 0.09 sustainability and profitability becomes provided a second opinion under which to SEK 0.53, and long-term net asset even clearer when it is possible to influ- Genova was awarded a Medium Green value per ordinary share rose 26%. ence our costs by running projects and shading, the second highest level on the management with a sustainability focus. CICERO scale. For Genova, this means Green financing With green financing, the project is sus- another tool that contributes to con- Genova is aiming to increase the pro- tainable before it even starts. It confirms tinued positive sustainability efforts in portion of projects with green financing. that we are working with sustainability society and opportunities for favourable Green financing refers to loans from in a long-term and serious manner. financing terms. banks and credit institutions that want

58 Genova 2020 Annual Report Social sustainability

Sustainable urban development the buildings will create good condi- The most recent measurement was Genova’s ambition is for sustainable, tions for our customers’ varying needs. carried out in spring 2018 and generated safe and attractive urban environments Good architecture with a long aesthetic a very positive image of Genova’s work. to evolve where Genova develops and life and a sustainable approach to pro- We outperformed sector indexes in all invests. We develop the sites where we duction will lead to a more sustainable sub-segments of the survey. operate from a holistic perspective, with society, and is therefore an import- the aim of creating both growth oppor- ant building block for us. We work Supporting society tunities and urban values. The environ- according to the predicate that good For many years Genova has supported ment between the buildings is just as architecture is a balance between form, Maskrosbarn, an organisation that important as the actual buildings. function, finance and sustainability. helps children and young people whose Genova develops districts and blocks parents are ill or suffer from addiction. by creating sustainable and attractive Sustainable customer service We believe that through Maskrosbarn, environments where people want to live Genova works to follow up customer we can contribute to an important and work, with good access to public service, ensure quality management organisation that benefits society. transport. Our aim is that the function and understand how we can continue to From 2021, Genova will also become and architecture of our properties will develop our sustainability performance a partner of the Läxhjälpen foundation contribute to mixed, smart and circular based on a tenant perspective. These to finance homework help for 13-16 year cities, and to social development in efforts include in-house workshops olds with low grades in socio-economi- general. Another ambition is to always and measuring customer satisfaction cally disadvantaged areas, with the aim strive for a safe and secure society, using a Satisfied Customer Index (CSI). of helping more pupils finish school, which also contributes to attractive Our CSI (Customer Satisfaction Index) raise their grade and increase opportu- and accessible properties and environ- score is measured every second year. nities for their future. ments. Here, we work closely with the relevant municipality and expertise. To ensure quality and value for everyone, we use various methods such as the Social Value Creation Assessment and Child Impact Assessments. To further strengthen attractiveness and contribute to sustainable development, we are working to increase biodiversity. These initiatives include beehives on our roofs, flower beds and more access to green spaces.

Sustainable architecture A good city is long-lasting. We believe that buildings with high-quality architecture combined with flexibility, modern materials and innovative technical solutions both enrich the city and are more attractive to our tenants. The design of an area shows whether it has been planned with a long-term perspective. The level of ambition for Genova’s new construction and development of existing properties is high. We build with high architectural ambitions. We want our properties to make a positive contribution to the urban fabric, and

Genova 2020 Annual Report 59 GENOVA | SUSTAINABILITY

Genova’s employees

Genova works to create a sustainable company culture where employees are recognised as critical assets for the company’s success. A good workplace environment, personal skills development and a formal right to fair and equal treatment are some of Genova’s basic principles.

5 cornerstones of our company culture

RESPONSIBLE EMPLOYER EQUALITY AND DIVERSITY EMPLOYEE WELLNESS At Genova, employees are recognised Genova’s operations are characterised The company’s joint aim is to reduce ill- as the company’s most valuable asset by the view that everyone has – and will ness and absenteeism. The vision is that and most important ambassadors. be assured of – equal rights regardless the company will encourage its employ- Genova works pro-actively to build and of sex, ethnicity, religious affiliation, ees to develop and feel healthy, strong strengthen the brand, and strives to be faith or sexual orientation. This is and important, both professionally and an attractive and responsible employer. reflected in our day-to-day operations privately. Genova works pro-actively to Genova offers favourable terms of and recruitments. We want everyone to promote employee health and well-be- employment and opportunities for feel safe and secure in our environment. ing, and offers all employees a physical more rewarding and stimulating work We work actively to prevent all forms of fitness and wellness subsidy and joint where innovation is promoted and high harassment. When recruiting, Genova physical fitness sessions. Physical fit- quality is vital. The company also works strives to achieve a gender balance and ness sessions are held once every week pro-actively to create a secure and sus- workplace diversity. The ability for our and the company provides lunch for all tainable workplace for its employees. employees to achieve a work-life bal- participants afterwards. ance is also important. SKILLS DEVELOPMENT Genova promotes the personal growth OCCUPATIONAL HEALTH AND of its employees and encourages them SAFETY (OHS) POLICY to present their own suggestions for Genova’s overall objective is to create development opportunities that will a good workplace environment for benefit both individuals and the com- all employees. Risks of physical and pany. Discussions are held during per- mental illness must be reduced. One Responsible business formance reviews, which largely deal aim is that everyone, regardless of their with the employee’s work situation and position, should be offered opportu- Pro-active efforts to create a culture where ethical business practises and anti-corruption the goals in place for the next review. nities to both influence and grow, and are high on the agenda, and to help create A tools to improve the implementation for teamwork and social contacts. All sustainable urban environments. and follow-up the discussion has been employees are responsible for health introduced. A salary review is held and safety in their day-to-day activities. annually with all employees, where sal- It is vital that employees not only follow ary setting and adjustment principles instructions and regulations, but are are presented and explained. also observant and report any potential Responsible risks or threats in their workplace. employer

An attractive and responsible employer.

60 Genova 2020 Annual Report Owner Board of Directors No. of women 14

No. of men 15

Michael Moschewitz CEO

Mikaela Tschöp Office Manager Executive Management Team

Investment Accounting & Urban Project Residential properties Finance development development

Henrik Sandström Linda Frisk Edvard Schéele Anna Molén Henrik Raspe Head of Properties Head of Residential CFO Head of Urban Development Head of Project Development

Angelica Gedlund Marie Moström Beatrice Hedquist Customer Service Manager Head of Accounting Project Manager

Business Management Linda Ljungdahl Jakob Stenfelt development Corporate Accountant Project Manager

Projects Quality Market/ Assurance Projects Erik Von Essen William Smedberg Daniel Andersson Property Manager Analyst Project & Finance Controller

Johan Gustafsson Stefan Karlsson Madeleine Nilsson Project Director Quality Assurance Manager Project Manager Mikaela Malmgren Emma Mineur Property Manager Accountant

Henrik Enström Lars Persson Niklas Ekenman Project Director Quality Assurance Manager Project Manager Christelle Lestander Margarita Salonikidis Property Manager Corporate Accountant

Sandra Tamm Sara Andersson Project Director Project employee Jacob Öman Property Manager

Örjan Grip Project Director

Genova 2020 Annual Report 61 Financing and governance

62 Genova 2020 Annual Report Genova 2020 Annual Report 63 GENOVA | FINANCING

Strong earnings provide stability

Strong earnings are a prerequisite for Genova’s ability to follow its chosen strategy and achieve its objectives. Financial stability is important not only in the company’s dialogue with the capital market, but also in relationships with its customers, tenants, suppliers and employees. Genova is financially stable and well-equipped for the future.

Financing issued corporate bonds with a total but Genova is also active in the capital Owning and developing properties is a nominal amount of SEK 400m, to be market through preference shares and capital-intensive pursuit and interest used for the repurchase of existing bonds. Access to long-term and stable expense is Genova’s largest cost item. 2017/2021 series bonds and for acquisi- financing is paramount for a long-term Maintaining access to cost-efficient tions. In total, the activities we carried and sustainable business operation. financing is therefore important. out during the year diversified our Long-lasting and trusting relationships Financing is raised through either equity investor base and strengthened Geno- with creditors are therefore important for capital or by external borrowing. The va’s financial preparedness for invest- Genova. The company’s creditors mainly distribution between these two methods ments in properties. comprise the largest Nordic banks, sup- is determined by balancing required rate plemented by borrowing in the Swedish of return against financial stability. Refinancing of the debt portfolio capital market. Bank loans are secured Genova’s ownership structure was Extensive refinancing with Swedbank by mortgaging our properties. diversified in 2020 when the compa- and Nordea took place in 2019 for a total ny’s ordinary shares were listed on amount of approximately SEK 1,300m Equity and net asset value Nasdaq Stockholm. A new share issue with five-year maturities. The aim was As of 31 December 2020, consolidated was implemented in connection with to secure long-term financing at advan- equity amounted to SEK 2,647.8m the listed, providing the company with tageous terms. To create conditions for (1,773.2) and the equity/assets ratio was proceeds of SEK 546m after listing good financing opportunities, Genova 39% (35). Long-term net asset value expenses. In 2020, Genova also con- has formed relationships with several amounted to SEK 2,883.0m (1,975.3), tinued to diversify its borrowings and counterparties among the large banks, up 62% (65). Long-term net asset value

GENOVA | FINANCIAL STRATEGY

Credit Diversification Strength Transparency Flexibility worthiness Genova shall have a The Group’s financial key Genova shall encourage Genova shall have flexible Genova shall strive, over diversified loan portfolio metrics should be strong long-term relationships financing in order to sup- the long term, to be a and avoid dependence with a maximum loan-to- with banks and other port the company’s de- Group with an Invest- on both a single source value ratio of 65%. The creditors/investors, and velopment in relation to ment Grade credit rating of finance and a single strength of the property aim to be transparent acquisitions, divestments (or the equivalent) in counterparty. Further- portfolio is enhanced by in order to increase the and project development. order to attract creditors, more, the maturities the quality of our cash relevant parties’ under- Genova shall track and and to achieve the low- of various sources of flow, and the compo- standing of the Group’s monitor developments est possible borrowing finance and individual sition of our debt and operations and thereby in financial markets in cost. credit facilities should be interest rate portfolio. its credit exposure. order to act fast, and to spread over time. match the needs of the business operations at the right time.

64 Genova 2020 Annual Report GENOVA | FINANCING

attributable to ordinary shareholders Bank financing was raised during the regulate the allocation of responsibili- amounted to SEK 2,364.6m (1,457.0) year for all acquisitions carried out and ties for financial risk management and corresponding to SEK 59.75 (47.43) per ongoing projects. As of 31 December 2019, the financing operations at Genova. ordinary share. the average maturity was 3.0 years (3.6). The financing operations of Genova and its subsidiaries are concentrated to Interest-bearing liabilities Interest-rate derivatives the Group’s central Finance function. At 31 December 2020, the Group’s inter- Since 2018, a four-year interest-rate cap The Finance function is responsibly for est-bearing liabilities attributable to agreement has limited the interest rate to the company’s financing activities as investment properties and project prop- 2% for a total amount of SEK 300m of the delegated by the CEO and Board, and erties were approximately SEK 3,534m loan portfolio. In the second quarter of determines frameworks for securing (2,796), representing a loan-to-value 2019, the interest-rate cap was expanded the Group’s long and short-term capital ratio of about 55% (61), adjusted for cash and at the end of the period, limited the procurement and the risks allowed. and cash equivalents. At 31 December interest rate to 2% for a total amount of The target for the Group’s equity/ 2020, the average interest rate was SEK 600m with terms until 2022 and assets ratio is a minimum of 35%. How- approximately 2.1% (2.9% including the 2023. At the end of the period, the Group ever, Genova can allow the equity/assets bond loan) and the equity/assets ratio had no other outstanding derivatives or ratio to be less than 35% with consider- was 39% (35). interest-rate swaps, and all loans carried ation for the medium-term outlook and As of 31 December 2020, the Group’s variable interest rates with three-month the company’s current risk profile in total interest-bearing liabilities of SEK STIBOR as the reference base. general. 2,559m (2,112) to credit institutions were attributable to acquisition financing, Financing policy refinancing of the existing property The Group has a financing policy that portfolio and project financing. The has the overall aim of ensuring short Group’s credit facilities contain cus- and long-term capital procurement, a tomary loan guarantees and covenants, long-term and stable capital structure including the requirement that Genova and limited risk exposure. Financial and its subsidiaries meet certain finan- transactions are to take place based cial key metrics, such as the loan-to- on an assessment of the Group’s total value ratio and interest-coverage ratio. liquidity requirements, financing and During the year, Genova was granted interest-rate risk. The overall objective an extended revolving credit facil- of Genova’s financing activities is to ity of SEK 200m. The total undrawn minimise interest-rate and borrowing portion of the revolving credit facility risk, and to ensure that the Group’s amounted to SEK 360m. The bank over- debt financing take place by engaging draft was also extended to SEK 75m. several banks. The policy also aims to

Capital structure Credit term structure 31 December 2020 31 December 2020

SEKm % SEKm Equity, SEKm 7,000 100 2,000 2,648 6,000 400 80 Liabilities, SEKm 5,000 1,726 1,500 66 1,499 Long-term 62 59 60 4,000 55 50 bank loans, SEKm 1,135 Loan-to-value ratio, % 1,000 43 3,000 39 39 40 36 34 2,000 927 1,007 500 525 20 Equity/ Bond loans, SEKm 1,000 50 1,252 1,594 2,039 3,423 4,137 assets ratio, % 341 198 98 267

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 /2022 /2023 /2024 /2025 /2026

Genova 2020 Annual Report 65 GENOVA | RISKS

Risk and risk management

Through its operations, Genova is exposed to various risks that could have a material effect on the company’s future performance, earnings and financial position. Genova can reduce the risk of a negative impact on the company by analysing relevant uncertainty factors that can be controlled to varying extents and working in a structured manner to manage them. Risks that Genova may be exposed to can be divided into market, operational and financial risk.

Market risk

Macroeconomic factors Description Management The property industry is highly sensitive to macroeconomic fac- Genova follows these macroeconomic indicators closely and tors such as the overall economy, regional economic trends, deems that the company, due to its business model and flexible employment rates, the production rate of new residential units and agile organisation, is well-equipped to adapt its operations and premises, changes in infrastructure, population growth, the to any changes in the market. With both cash flow-generating population structure, inflation, interest rates and so forth. property management and residential construction, Genova can choose, in a weaker residential market, to defer residential projects or adapt planned residential projects to changing conditions by, for example, building properties with rental units for long-term ownership instead of producing co-operative apartments.

Geographic risk Description Management The company is mainly active in Stockholm and the Uppsala Demand for premises and residential units has been high for Region and there is a risk that demand can decline in some of the some time in Genova’s core markets of Stockholm and Uppsala, company’s geographic markets. and Genova deems there are many factors to suggest that this rate of development will continue in the long term.

Policy decisions Description Management Genova’s operations could be affected by decisions made by Genova continuously monitors developments in the areas in state and local government. These decisions may be the result which the company operates by engaging in regular dialogue with of external factors such as economic conditions, political compo- policy-makers in the relevant municipalities, including public offi- sition and public opinion. The consequences of policy decisions cials and politicians. Genova has diversified its project portfolio could include the non-materialisation of planned projects, a need to reduce the company’s dependence on single projects. The to modify time and cost-intensive zoning/project plans, and lead company has also identified and documented alternative plans to lower contributions or higher costs. for planned projects to enable adaptation to changed conditions.

66 Genova 2020 Annual Report GENOVA | RISKS

The ability to sell properties and residential units Description Management A minor part of Genova’s operations comprises the develop- The production of co-operative apartments accounts for a lim- ment and sale of co-operative apartments and properties, which ited part of Genova’s operations and production does not com- means that both the willingness and the ability to pay for these mence until most of the co-operative apartments in the first apartments and properties is significant for the company. The stage have been sold. Since Genova constructs new community company is also responsible for the financial plans for develop- service and commercial properties, rental agreements must be ment projects and guarantees rental income from unsold co-op- signed before production starts. Demand for the type of co-operative apartments for a certain period. erative apartments offered by the Group is generally high, and Genova sees conditions for continued favourable sales of the co-operative apartments produced. In regard to project implementation, Genova has a well-established project process and an experienced organisation that drives development projects towards set targets and frameworks, which reduces the risk of deviation from project planning and creates the conditions for sales to proceed as planned.

Dependence on laws, permits and decisions Description Management Genova’s operations are regulated and impacted by a wide range Genova follows developments in relevant areas closely in of laws and regulations, as well as various procedures and deci- order to adapt the company’s operations to legal or regulatory sions related to these regulatory frameworks. changes at an early stage.

Operational risk

Value changes in the company’s properties Description Management Genova’s investment properties are measured at fair value on the The vast majority of Genova’s properties are located in markets balance sheet and the value changes are recognised in profit or deemed by the company to have stable demand for premises loss. Property-specific deteriorations, such as lower rent levels and residential units. The tenants are active in various sectors and higher vacancy rates, and market-specific deteriorations, with a high degree of taxpayer-funded community services and such as a higher internal rate of return, may cause the company to deemed to have high creditworthiness, and for some major ten- write down the fair value of its properties. ants, there are a wide range of rental agreements with varying rental terms. The market value of Genova’s investment properties market is determined quarterly and external, independent property valuers also perform a review semi-annually.

Rental income Description Management Genova’s income could be adversely impacted by declining occu- Genova has a number of tenants in various sectors with a pancy rates or rent levels. The company has some large tenants high degree of taxpayer-funded community services, who are and there is a risk that these will not renew or extend their rental deemed to have high creditworthiness, and for some major ten- agreements when they expire, which could lead to lower rental ants, there are a wide range of rental agreements with varying income or higher vacancies in the long term. The company is rental terms. Tenants are analysed carefully in the letting pro- dependent on tenants paying their agreed rent on time, which cess and monitored continuously. The conditions for new letting means there is a risk that tenants are unable to pay their rent or when a tenant leaves are considered generally favourable. otherwise fulfil their obligations.

Genova 2020 Annual Report 67 GENOVA | RISKS

Project risk Description Management Some of Genova’s operations comprise property development Genova has a well-established project process and an experi- projects. The economic viability of property development proj- enced organisation that drives development projects towards ects is dependent on several factors, including the company’s set targets and frameworks, and in collaboration with reputable ability to recruit and retain essential expertise, to obtain the per- partners, which reduces the risk of deviation from project plan- mits and regulatory approvals required, to procure construction ning. Genova minimises the risk of problems in a specific com- contracts for project implementation on acceptable terms for the pany having a negative impact on other companies in the Group company, and other factors that could lead to delays or additional via the principle that all properties or projects should be run in or unforeseen project costs. Genova’s property development is separate companies. also dependent on continuous supply and financing of new projects on acceptable terms, and that the projects adequately meet market demand.

Breach of contract by a contractor Description Management In Genova’s project development, there is a risk that engaged Genova works to reduce the risks of breach of contract by col- contractors are unable to comply with the agreed conditions laborating with only a few selected contractors and who are regarding cost, time or quality. The risk is mainly related to finan- known by the company. Documented inspections of contractors cially unstable and unreliable contractor or sub-contractors. are carried out, regular meetings are held throughout the course Genova may suffer due to inadequate documentation in the ten- of projects, and budgets are monitored on a monthly basis. All dering procedure, unclear agreements or no agreements. The properties and projects are run as separate companies to avoid monitoring of ongoing projects could be defective. The conse- any negative impact on the Group. quences could be overdue or more expensive property projects, poorer quality deliveries than promised, legal procedures or a damaged brand.

Transaction risk Description Management Property transactions are conducted within the framework of Genova has a well-established acquisition process and an Genova’s operations. All such transactions are associated with experienced organisation drives efforts to identify and imple- risk and uncertainty. Property acquisitions, for example, are asso- ment acquisitions that can meet set targets and frameworks. ciated with uncertainty in terms of tenant management, unfore- The sharp growth of recent years shows that Genova has the seen costs for environmental remediation, refurbishment and ability to identify and implement acquisitions at prices consid- technical problems, regulatory decisions and disputes related to ered reasonable, even in a competitive market. the acquisition or condition of the property, which could also lead to delays or additional or unforeseen project costs. Moreover, one prerequisite for the company’s acquisitions is the availability of suitable investment objects at reasonable prices.

Technical and environmental risk Description Management Property management and property development projects, as Genova has well-established acquisition and project processes, well as property investments, are associated with technical risks which include assessments of any technical and environmental such as design defects, other hidden faults or defects, damage risks. Genova is working to increasingly integrate a sustainabil- and pollution. The occurrence of such technical problems could ity perspective into both property management and residential delay planned property development projects, or increase costs construction, and to increase the level of experience and knowl- for upgrading and managing Genova’s properties. edge in this area within the organisation.

68 Genova 2020 Annual Report GENOVA | RISKS

Dependence on key individuals and other employees Description Management Genova works to ensure the proper functioning of corporate gov- Over the past three years, Genova has continuously strength- ernance, internal control and management of various parts of ened its organisation with new and relevant expertise to ensure the operations through relevant procedures and guidance doc- a proper functioning business operation, to reduce its depen- uments, appropriate administrative systems, skills development dence on key individuals and to manage a growing company. and access to reliable measurement and risk models. Genova and its operations are dependent on a number of key individuals who, in addition to the CEO Michael Moschewitz, are members of the company’s Executive Management Team.

Financial risk

Interest-rate risk Description Management In addition to equity, Genova’s operations are largely financed by Interest expense is a significant cost item for Genova and inter- loans from credit institutions, whereby interest expense is one of est-rate risk is assessed continuously in all acquisition and proj- the company’s largest cost items. The company is exposed to ect estimates. An interest-rate cap agreement has been signed interest-rate risk, since interest rate fluctuations affect the com- for an amount of SEK 600m. pany’s interest expense.

Funding risk Description Management Funding risk refers to the risk that financing cannot be obtained, Genova follows an established financing policy, and the overall or only obtained at unfavourable terms for the company. Geno- objective of financing activities is to minimise interest-rate and va’s operations, especially property acquisitions, are largely credit risk. The risk of problems in a specific company having a financed by loans from external creditors, and interest expense negative impact on other companies in the Group is minimised is the company’s largest cost item. Some of Genova’s operations by the principle that all properties or projects should be run in comprise property development projects, which may be delayed separate companies. With a stable financial position and diver- or impacted by unforeseen or additional costs. sified capital base, Genova deems that the company’s ability to obtain financing on favourable terms will continue.

Loan covenants Description Management The Group’s credit facilities contain customary loan guarantees Genova follows an established financing policy and financial tar- and covenants, including the requirement that Genova and its gets to ensure that all loan covenants are met at every stage. subsidiaries meet certain financial key metrics, such as the loan- to-value ratio and interest-coverage ratio. The financial key metrics in such agreements are adversely impacted, at least in the short term, when the company acquires properties through loans from external creditors. Should the company be unable to meet one or more of these loan covenants, this could result in the loans being terminated for immediate repayment or the realisation of collateral by the relevant credit institution.

Genova 2020 Annual Report 69 GENOVA | THE SHARE

Shares and ownership structure

Genova has two classes of shares – ordinary shares and preference shares. The ordinary shares were listed on Nasdaq Stockholm as of 30 June 2020. The preference shares were listed on Nasdaq Stockholm as of 12 June 2020 and were previously listed on Nasdaq First North Premier Growth Market as of 20 November 2015.

At year-end, Genova had a total of tenth of a vote at the Annual General a maximum of SEK 650m (excluding 43,576,966 shares, of which 39,576,966 Meeting (AGM). At the AGM, every over-allotment), of which new ordinary were ordinary shares and 4,000,000 person with voting rights may vote for shares accounted for SEK 500.5m and were preference shares distributed the total number of shares they own existing ordinary shares in the company between 4,829 shareholders. As of 30 and represent, with no restriction on for SEK 149.5m, which were offered by December 2020, the closing price for the voting rights. the company’s largest shareholders ordinary share was SEK 73.90 and for Micael Bile and Andreas Eneskjöld. the preference share SEK 127.00. Ordinary shares The price per ordinary share in the Each preference share entitles the As of 18 June, Genova Property Group offering was SEK 65, corresponding to owner to an annual dividend of SEK decided on an offering to subscribe for a valuation of Genova of approximately 10.50, which is paid out quarterly. The and purchase ordinary shares in the SEK 1,997m prior to the offering. The next payment date for the quarterly divi- company, and a subsequent listing of offering was directed to the public in dend on preference shares is 20 May 2021. the ordinary shares on Nasdaq Stock- Sweden, and to institutional investors Each ordinary share carries one vote, holm, with 30 June 2020 as the first in Sweden and internationally. A high and each preference share carries one- day of trading. The offering comprised level of interest was shown by the public

Ordinary share

SEK Thousands 1,500 110

100 1,200

90 900

80 600

70 300

Jul Aug Sep Oct Nov Dec Jan Feb Mar 2020 2021

The price per ordinary Genova Property Group Trading volume in thousands of shares per month share in the IPO offering OMX Stockholm PI was SEK 65.

Carnegie Real Estate Index

70 Genova 2020 Annual Report GENOVA | THE SHARE

as well as institutional investors. The ordinary shares for a total of SEK 450m, were previously listed on Nasdaq First offering was oversubscribed and initially accounted for 60% of the offering, North Premier Growth Market. brought more than 8,000 new ordinary including over-allotment. shareholders into the company. A total In connection with the offering, Dividend policy of 8,855,000 new ordinary shares were an over-allotment option was made Genova’s overall objective is to create issued in connection with the listing. available to Carnegie to purchase a value for the company’s shareholders. The former principal owners, maximum of 1,500,000 ordinary shares In the coming years, this is deemed Micael Bile and Andreas Eneskjöld, in the company. As of 8 July, it was best achieved by reinvesting cash flows are still the company’s largest share- announced that the over-allotment in operations to create further growth holders. The company’s CEO, Michael option had been exercised in full. through investments in new construc- Moschewitz, who together with the The new ordinary shares were regis- tion, existing properties and property principal owners owned all ordinary tered in July, when proceeds from the shares before the transaction, retained transaction were also recorded in the his existing ownership and, together company’s bank account. with the principal owners, entered into a 720-day lock-up agreement for their Preference shares existing ordinary shares. As of 12 June, Genova Property Group Länsförsäkringar Fondförvaltning AB’s preference shares were admitted AB, Lancelot Asset Management AB, to trading on Nasdaq Stockholm’s Main funds managed or advised by Capital Market. There was no offering to sub- Research and Management Company scribe for, or otherwise purchase, shares and Skandia Fonder AB, together when they were transferred to the new were anchor investors who purchased listing segment. The preference shares

Preference share

SEK Thousands 500 150

140 400

130 300

120

200 110

100 100

2015 2016 2017 2018 2019 2020 2021

Genova Property Group Trading volume in thousands of shares per month

Genova 2020 Annual Report 71 GENOVA | THE SHARE

acquisitions, which could lead to either small or no dividends at all on ordinary shares. In the long-term, the dividend on ordinary shares shall be at least 50% of income from property management attributable to ordinary shares. Dividends on preference shares shall be paid in accordance with the provisions of the Articles of Association.

Shareholders 31 December 2020

No. of No. of preference Name ordinary shares shares Holding (%) Votes (%) Micael Bile (via company) 17,814,999 140,000 41.20 44.60 Andreas Eneskjöld (via company) 8,111,429 39,729 18.71 20.30 Länsförsäkringar Fondförvaltning AB 3,586,926 0 8.23 8.97 Michael Moschewitz (via company) 2,150,538 22,298 4.99 5.39 Lancelot Asset Management 1,651,000 0 3.79 4.13 Avanza Pension 1,002,040 449,138 3.33 2.62 Capital Research and Management 1,384,600 0 3.18 3.46 Skandia Fonder 943,168 0 2.16 2.36 SEB Investment Management 398,107 0 0.91 1.00 Enter Fonder 306,192 0 0.70 0.77 RBC Investor Services Bank SA 0 300,000 0.69 0.08 BNP Paribas 272,350 0 0.62 0.68 Cancerfonden 230,000 0 0.53 0.58 Total other shareholders 1,725,617 3,048,835 10.96 5.08

Total 39,576,966 4,000,000 100.00 100.00

Share capital development as of 31 December 2020

Change in no. Change in no. of ordinary of preference Total Change in Total Quota Date Event shares shares no. of shares share capital share capital value (SEK) 2011 New formation 50,000 – 50,000 50,000 50,000 1 2015 New share issue 450,000 – 500,000 450,000 500,000 1 2015 Stock split 100:1 49,500,000 – 50,000,000 – 500,000 0.01 2015 New share issue – 1,750,000 51,750,000 17,500 517,500 0.01 2015 New share issue – 50,000 51,800,000 500 518,000 0.01 2016 New share issue – 1,200,000 53,000,000 12,000 530,000 0.01 2019 New share issue – 1,000,000 54,000,000 10,000 540,000 0.01 2019 Directed issue 11,443,932 – 65,443,932 114,439 654,439 0.01 2020 Bonus issue – – 65,443,932 654,439 1,308,878 0.01 2020 Withdrawal –30,721,966 – 34,721,966 –654,439 654,439 0.02 2020 Bonus issue – – 34,721,966 40,971,920 41,626,359 0.02 2020 New share issue 8,855,000 – 43,576,966 10,666,000 52,292,359 0.02

72 Genova 2020 Annual Report GENOVA | THE SHARE

Genova 2020 Annual Report 73 GENOVA | BOARD OF DIRECTORS

Board of Directors

Mikael Borg Micael Bile Jan Björk Andreas Eneskjöld

Board member since 2019 Board member since 2014 Board member since 2015 Board member since 2014 Born 1976. Master of Economics Born 1962. Qualified real estate Born 1965. Master of Science, Born 1973. Master of Science in and Master of Laws, Lund agent, Stockholm. Royal Institute Of Technology, Land Surveying, Royal Institute Of University. Lawyer and partner Stockholm. Founder and partner Technology, Stockholm. Background: Micael is the at Gernandt & Danielsson founder of Skeppsholmen of Redito. Andreas was Advokatbyrå. Background: Fastighetsmäkleri. Background: Jan has more CEO of Genova Property Group Mikael has been a than 20 years’ experience in the between 2014 and September Background: Other assignments: Board lawyer and partner at Gernandt member of Tranviks udde AB with property market. He is the former 2017. Founder, majority owner and & Danielsson Advokatbyrå since subsidiaries. Head of Investment at Alecta former CEO of Nordier Property 2009, and has more than 15 Fastigheter and has held several Group AB. Founder of Holocen years’ experience of broad-based Shareholding in the company, senior positions at Aberdeen AB, Manacor Group AB and business law in a wide range of including related parties: Asset Management. Manacor Capital AB. He was also industries, including private and 17,814,999 ordinary shares a partner at Newsec AB. (through wholly owned company Other assignments: CEO public sector M&As, and debt and Board member of Trophi Board and equity capital markets. He Tranviks udde AB), 140,000 Other assignments: preference shares (of which Fastighets AB (and assignments member of Manacor Capital regularly represents both sellers in subsidiaries), Chairman of the AB, Manacor Group AB (and and buyers in M&As. He has 120,000 preference shares are owned through Svealp Invest Board of Redito Holding AB (and assignments in subsidiaries) and extensive experience of assisting assignments in subsidiaries), ARTEME ART AB. in raising capital in the form of AB) and interest-rate bonds for a nominal SEK 10,000,000 (through Board member of BREIM AB (and bond issues and is one of the assignments in subsidiaries) and Shareholding in the company, most frequently engaged advisors Svealp Invest AB). including related parties: Chairman of the Board of Sinoma 8,111,429 ordinary shares and in Sweden in this field. Mikael Independent of the company Fastighets AB. also has extensive experience and its senior executives. Not 39,729 preference shares of assisting companies in the independent of the company’s Shareholding in the company, (through wholly owned company financial sector. He has also major shareholders. including related parties: Manacor Group AB). served as Board secretary in both 100,000 ordinary shares through Independent of the company private and listed companies. BREIM Capital 2 AB. and its senior executives. Not Independent of the company, independent of the company’s Other assignments: Board member of Gernandt & its senior executives and major major shareholders. Danielsson Advokatbyrå AB and shareholders. G&D Advokatbyrå AB.

Shareholding in the company, including related parties: 75,000 ordinary shares through companies. Independent of the company, its senior executives and major shareholders.

74 Genova 2020 Annual Report GENOVA | BOARD OF DIRECTORS

Erika Olsén Knut Ramel Maria Rankka

Board member since 2017 Board member since 2015 Board member since 2019 Born 1976. Master of Science in Born 1954. Master of Economics, Born 1975. Bachelor’s Land Surveying, Royal Institute Stockholm School of Economics. degree in Political Science, Of Technology, Stockholm. CIO of CEO of K. Ramel Advice AB. Uppsala University. Maria Areim AB. Knut has held also completed the Stanford Background: Executive Program at Stanford Background: Erika was previously various positions at Beijerinvest a Project Manager at Newsec AB, and Credit Suisse First Boston Graduate School of Business. Associate Director at JLL Cross and has 20 years’ experience from EVP Business Development and Boarder Capital Markets and Merrill Lynch & Co. He was also Communications at Takura AB and Partner at Tenzing AB. She was former Head of Nordic Region at CEO of Ankkar & Friends AB. also CIO of Castellum AB. UBS. Former Board member of Background: Maria is also the Board Tigran Technologies AB (publ). former CEO of the Stockholm Other assignments: Chamber of Commerce, Timbro member of AOE Storön AB. Other assignments: Chairman Deputy Board member of of the Board of Förslöv 2 AB and and Brunswick Group (BRNSWK Marigold AB. Löberöds Slott AB. Board member Nordic AB), partner of Prime of Advicehem AB, Fastighets PR and Board member of the Shareholding in the company, Swedish Hunters Association, 0. AB Orkesterdiket, Fastighets including related parties: AB Riggenhus, Fastighets AB Swedish Transport Administration, Independent of the company, Hammarskjöld, Fastighets AB Business Sweden and Pop its senior executives and major Skepparhus, Fastighetsbolaget House AB. She was also a shareholders. Majtalaren 5 AB, K. Ramel member of Arlandarådet. Maria Advice AB (and subsidiaries), currently works part-time as Senectus Flemmingsberg EVP Business Development AB, Senectus Liljefors Torg and Communications at Takura, AB, Senectus Tollare AB (and which is commercialising stem subsidiaries), Senectus Tollare cell research, and pursues her AB (and subsidiaries), Senectus own assignments as advisor and Valla Gränd AB, Seniorkvarter invests in health tech companies. Sollentuna AB, Tunk AB (and Other assignments: Chairman subsidiaries), and Tunkhem AB. of the Board of Ethos International Deputy Board member of Ebba – Return on your social Brahe Jewellery AB. responsibility AB. Board member of Ankkar & Friends AB, Cirkör Shareholding in the company, Aktiebolag, Sveab Holding AB, including related parties: 29,000 ordinary shares and Silver Life AB (and assignments in 22,500 preference shares (through subsidiaries), Swedish StromaBio Senectus Liljefors Torg AB). AB, ABC Labs AB, Internationella Engelska Skolan i Sverige AB and Independent of the company, Internationella Engelska Skolan its senior executives and major i Sverige Holdings II AB. Maria shareholders. is also a member of the Royal Swedish Academy of Engineering Sciences and the Global Village Foundation. Information about shareholdings as of Shareholding in the company, 31 March 2021 including related parties: 1,500 ordinary shares. Independent of the company, its senior executives and major shareholders. Genova 2020 Annual Report 75 GENOVA | SENIOR EXECUTIVES

Senior executives

Michael Moschewitz Edvard Schéele Henrik Sandström Linda Frisk

CEO CFO Head of Properties Head of Residential Employed since 2014, CEO since Employed since 2014. CFO since Employed since 2017. Employed since 2017. October 2017. October 2017. Born 1976. Born 1975. Born 1980. Born 1970. Background: Master of Science Background: Responsible for Background: Master of Eco- Background: Master of Econom- in Land Surveying, Royal Institute new production and Head of Ad- nomics and Finance plus legal ics, Uppsala University. Former Of Technology, Stockholm. Cap- ministration at Svensk Fastighets- studies, Stockholm University. Approved Public Accountant ital Markets CBRE Sweden and förmedling and most recently Former partner at Catella Corpo- at EY and most recently CFO at most recently Head of Properties Head of Sales for new production rate Finance and Group Treasurer Ektornet AB. at Fabege for the investment at Fastighetsbyrån Stockholm. at Oscar Properties Holding AB property portfolio in Solna Busi- Other assignments: Assign- Other assignments: Board (publ). ments in several of Genova ness Park. assignments for co-operative Other assignments: Assign- Property Group AB’s (publ) Other assignments: Assign- housing associations. ments in several of Genova subsidiaries. ments in Shareholding in the company, Property Group AB’s (publ) Genova Property Group AB’s 0. subsidiaries. Board member of Shareholding in the company, (publ) part-owned companies. including related parties: MayNoo AB. including related parties: 24,500 ordinary shares through Shareholding in the company, Shareholding in the company, Binno AB. including related parties: including related parties: 5,500 ordinary shares. 2,150,538 ordinary shares and 22,298 preference shares (through wholly owned company MayNoo AB).

76 Genova 2020 Annual Report GENOVA | SENIOR EXECUTIVES

Henrik Raspe Anna Molén

Head of Project Development Head of Urban Development Employed since 2016. Employed since 2018. Born 1973. Born 1979.

Background: Creative Director at Background: Master of Social Svenska Dagbladet. Founder of A Planning, Stockholm University. Perfect Guide magazine. Planning architect MSA (member of Architects Sweden). Most Other assignments: Board member of Henrik Raspe Design recently urban development strat- AB. Deputy Board member of egist at Tyréns AB. Preteritum AB. Head of Stockhol- Other assignments: None. ms Rubrik Fabrik. Shareholding in the company, Shareholding in the company, including related parties: 770 including related parties: ordinary shares. 170,000 ordinary shares through Henrik Raspe Design AB.

AUDITORS Information about shareholdings as of 31 March 2021. Ernst & Young Aktiebolag has been the company’s auditor since 2011 with Peter Lövgren was Head of Business Development and Henrik Nilsson as Auditor-in-Charge since 2018. a member of Genova’s Executive Management Team until July 31, 2020.

Genova 2020 Annual Report 77 GENOVA | CORPORATE GOVERNANCE REPORT

Corporate Governance Report

Introduction and were previously listed on Nasdaq than 34,000,000 and no more than At a Board meeting on 31 March 2021, First North Premier Growth Market as 136,000,000 shares. According to the Board of Directors of Genova Prop- of 20 November 2015. the Articles of Association, the com- erty Group AB (publ) (‘Genova’) adopted The aim of the Code is to promote pany may issue two classes of shares: this Corporate Governance Report. the role of self-regulation in the Swedish ordinary shares and preference shares. This Corporate Governance Report has business sector. The Code is based on Ordinary shares carry one vote per been prepared in accordance with the the ‘comply or explain’ approach, which share and preference shares carry one- Swedish Corporate Governance Code means that a company that applies the tenth of a vote per share. The Articles (the Code) and the Swedish Annual Code is not obligated to comply with of Association stipulate that should, Accounts Act and presents Genova’s every provision of the Code at all times. and provided that, the preference share corporate governance in 2020. The company is allowed the freedom to ratio exceed 0.45, or will exceed 0.45/1 Corporate governance in Genova aims choose alternative solutions which they after the issue of additional preference to ensure that rights and obligations are feel are better suited to their particular shares, a decision to issue additional distributed among the company’s bodies circumstances, as long as they openly preference shares may not be made. in accordance with applicable laws, report every deviation, describe the There is no restriction on the number of regulations and procedures. Effective alternative solution they have chosen votes any one shareholder may cast at a and transparent corporate governance and explain their reasons for doing so. General Meeting. enables the shareholders to assert their The Code is available at www.bolags- For more information about the com- interests vis-a-vis company manage- styrning.se, where the Swedish corporate pany’s shares and its shareholders, refer ment, while creating a clear division of governance model is also described. In to pages 70–72. roles and responsibilities between man- 2020, Genova complied with the Code’s agement and the Board, as well as other- provisions without any deviations. New share issues wise within the company. Such clear and As of 18 June, Genova Property Group transparent corporate governance results Compliance with relevant rules decided on an offering to subscribe for in efficient decision-making, enabling In 2020, Genova did not violate any and purchase ordinary shares in the Genova to act fast when new business applicable stock exchange rules or act company, and a subsequent listing of the opportunities arise. The Corporate contrary to good practice in the stock ordinary shares on Nasdaq Stockholm, Governance Report provides an overview market, and was not reported to Nasdaq with 30 June 2020 as the first day of of Genova’s corporate governance system Stockholm’s Disciplinary Committee or trading. The offering comprised a max- and includes the Board’s description of by the Swedish Securities Council. imum of SEK 650m (excluding over-al- internal control and risk management lotment), of which new ordinary shares in regard to financial reporting. Corpo- Shares and shareholders accounted for SEK 500.5m and existing rate governance in Genova is based on Genova is a central securities deposi- ordinary shares in the company for laws, the Articles of Association, Nasdaq tory (CSD)-registered company, which SEK 149.5m, which were offered by the Stockholm’s Rule Book for Issuers and means that the company’s register of company’s largest shareholders Micael the Swedish Corporate Governance Code shareholders is maintained by Euro- Bile and Andreas Eneskjöld. The price as well as the rules and recommenda- clear Sweden AB. per ordinary share in the offering was tions issued by relevant organisations. As of 31 December 2020, Geno- SEK 65, corresponding to a valuation of va’s share capital amounted to SEK Genova of approximately SEK 1,997m The Swedish Corporate 52,292,359, comprising 39,576,966 ordi- prior to the offering. The offering was Governance Code nary shares and 4,000,000 preference directed to the public in Sweden, and to Genova is a Swedish public limited com- shares, with a quota value of SEK 0.02 institutional investors in Sweden and pany that has two classes of shares – and SEK 0.01, respectively. internationally. A high level of interest ordinary shares and preference shares. According to the Articles of Asso- was shown in the offering and its was The ordinary shares were listed on ciation, the company’s share capital oversubscribed. A total of 8,855,000 new Nasdaq Stockholm as of 30 June 2020. should amount to a minimum of ordinary shares were issued in connec- The preference shares were listed on SEK 40,800,000 and a maximum of tion with the listing. In connection with Nasdaq Stockholm as of 12 June 2020 SEK 163,200,000, comprising no less the offering, an over-allotment option

78 Genova 2020 Annual Report GENOVA | CORPORATE GOVERNANCE REPORT

was made available to Carnegie to pur- sions are made, including appropriation Shareholders who wish to attend the chase a maximum of 1,500,000 ordinary of the company’s profit, adoption of the AGM must be include in the register of shares in the company. As of 8 July, it statements of comprehensive income shareholders maintained by Euroclear was announced that the over-allotment and financial position, the election and Sweden AB no later than five days prior option had been exercised in full. The remuneration of Board members and to the Meeting, and notify the company new ordinary shares were registered in auditors and any other matters arising by the date set out in the Notice. This July, when proceeds from the transac- at the AGM in accordance with the law date must not fall on a Saturday, Sun- tion were also recorded in the company’s or Genova’s Articles of Association. In day, public holiday, Midsummer Eve, bank account. addition to these matters, the share- Christmas Eve or New Year’s Eve, nor holders may also place other matters earlier than five business days prior to Corporate governance structure before the AGM. However, sharehold- the Meeting. Genova’s management and control is ers who wish to have a specific matter In order to vote at the AGM, share- distributed between the shareholders, addressed by the AGM must submit a holders whose shares are nominee-regis- the CEO and the Executive Manage- written request to the Board in advance tered with a bank or any other nominee, ment Team. The Swedish Companies of the AGM, at the address communi- in addition to notifying the company, Act, the Articles of Association and of cated on the company’s website (www. must request that their shares be tem- Genova adopted internal instructions genova.se). Resolutions made at the porarily registered in their own name in and rules govern the division of func- AGM are published after the Meeting in the register of shareholders maintained tions. Rules of procedure for the Board a press release and the minutes of are by Euroclear Sweden. Shareholders and instructions for the CEO are exam- released on the company’s website. should inform their nominees well in ples of internal rules and instructions, advance of the record date. Shareholders and these are described below. Genova’s Notice of the AGM should also notify the company of any Articles of Association are available on According to the Articles of Association, advisors in the manner set out above. the company’s website: www.genova.se Notice of an AGM is given by advertising With regard to the company’s own- The shareholders exercise their influ- in Post- och Inrikes Tidningar (the Swed- ership, the company does not consider ence at Genova’s General Meetings by ish Official Gazette) and by publishing simultaneous interpretation of the AGM resolving on, for example, the composi- the Notice on the company’s website. necessary, nor translation of the presen- tion of the Board and election of auditors. Information that Notice has been issued tations into other languages. The Board of Directors is ultimately is published in Svenska Dagbladet. responsible for Genova’s organisation Shareholder initiatives and the management of its business. The Right to attend the AGM Shareholders who wish to have a matter Board’s duties are partly prepared by At the AGM, a shareholder’s power to addressed by the AGM must submit a the company’s Executive Management influence the company is determined by written request to the Board thereof. In Team, otherwise by the Board itself. the shareholding they own. In Genova, order to have the matter addressed, the The CEO of Genova is appointed by there is no restriction on the exercise request must reach the Board by seven the Board. The CEO leads the Group’s of voting rights and shareholders may weeks prior to the AGM. Should the day-to-day operations in accordance therefore vote for their full holding. Board receive the request at a later date, with the Board’s guidelines and instruc- Shareholders’ rights may only be the matter will be addressed when it can tions for the CEO. changed by the AGM in accordance with be included in the Notice of the AGM. the law. Decisions at the AGM are nor- Annual General Meeting (AGM) mally passed by a simple majority and Annual General Meeting 24 April 2020 General in elections, the person with the highest Genova’s AGM was held on 24 April Genova’s highest decision-making body number of votes is considered elected. 2020 in Stockholm, Sweden. The res- is the AGM. The AGM is held annually, For some decisions, however, such as olutions of the AGM are summarised within six months of the end of the changes to the Articles of Association below and described in more detail in financial year. The statements of com- with deviations from the shareholders’ the press release and minutes of the prehensive income and financial posi- preemptive rights, a decision must be Meeting, which are available on the tion are presented at the AGM and deci- passed by a qualified majority. company’s website.

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• to adopt the statement of compre- • to authorise the Board for the period banking day of August in the current hensive income and statement of until the next AGM, on one or more year, an opportunity to each appoint financial position in accordance with occasions, and with or without share- a representative to be a member of the the annual statements for the 2019 holder preemptive rights, to decide Nomination Committee. Should any financial year. on an issue of new ordinary shares in of these shareholders choose to waive order to offer shares to investors in their right to appoint a member, the • to grant the Board members and the connection with listing the company’s right passes to the shareholder who, CEO discharge from liability for the shares on Nasdaq Stockholm. It must after that shareholder, has the largest company’s management during the be possible to pay for the shares in the shareholding in the company. The com- preceding financial year. form of cash, in kind or through set-off. position of the Nomination Committee shall be announced no later than six • to pay dividends to shareholders in • to authorise the Board for the period months prior to the AGM. accordance with the Board’s proposal. until the next AGM, on one or more The Nomination Committee shall occasions, and with or without share- prepare and submit proposals to the • Board fees for the period until the end holder preemptive rights, to decide on AGM for the election of a Chairman of of the next AGM. issue of new ordinary shares or war- the AGM, Board members, the Chair- rants or convertibles pertaining to such man of the Board, Board fees and other • that the Board shall consist of seven shares. It must be possible to pay for remuneration for Board assignments, members with no deputies, and that new share issues in cash and to pay for auditor fees and, where applicable, an the company shall have one auditor the issue or warrants or convertibles auditor. The Nomination Committee with no deputy. in the form of cash, in kind or through shall also prepare and submit propos- set-off. The Board’s authorisation is to als to the AGM regarding principles • to re-elect Mikael Borg as Chairman of be limited such that the total number for the composition of the Nomination the Board and to re-elect Micael Bile, of ordinary shares issued by virtue of Committee. Andreas Eneskjöld, Jan Björk, Knut the authorisation may correspond to The Nomination Committee prior to Ramel, Erika Olsén and Maria Rankka not more than 10% of the total number the 2021 Annual General Meeting com- to the Board. Information about the of ordinary shares in the company on prises Fredrik Ahlqvist, Chairman of Board members can be found on pages the date of the issue decision. the Committee and appointed by Micael 74–75 of this Annual Report. Bile with companies, Andreas Enesk- • to authorise the Board for the period jöld, appointed by Andreas Eneskjöld • to re-elect the authorised auditing until the next AGM, on one or more with companies, Johannes Wingborg, firm Ernst & Young Aktiebolag as the occasions, and with or without share- appointed by Länsförsäkringar Fond- company’s auditor until the end of holder preemptive rights, to decide förvaltning AB (publ) and Mikael Borg, the next AGM with Authorised Public on a new share issue of no more than Chairman of Genova. The mandate Accountant Henrik Nilsson as Audi- 1,000,000 preference shares. It must of the Nomination Committee runs tor-in-Charge. be possible to pay for the shares in the until a new Nomination Committee is form of cash, in kind or through set-off. appointed. • to adopt instructions for appointing the Nomination Committee. These instruc- Nomination Committee Board of Directors tions are valid until further notice. The Annual General Meeting (AGM) Duties on 24 April 2020 adopted instructions The Board is responsible for supervis- • to adopt guidelines on remuneration for appointing a Nomination Commit- ing the management of the business of senior executives to apply until tee in Genova. Genova’s Nomination on behalf of the shareholders, and for further notice. Committee shall consist of at least four the organisation of the company. The members, one of whom may be the Chairman of the Board leads the Board’s • a bonus issue. Chairman of the Board. The members work. The company’s signatories, the shall be appointed by the Chairman Board’s rules of procedure, instructions • amendments to the company’s Arti- of the Board, no later than six months for the CEO and instructions for the cles of Association. prior to the AGM, offering the four financial reporting are determined largest shareholders, or three if the at the statutory Board meeting. The • to reduce the company’s share capital Chairman of the Board is included, company’s financial situation and, if on the basis of a compulsory with- based on Euroclear Sweden AB’s list required, property transactions, value drawal of 30,721,966 ordinary shares. of registered shareholders on the last growth of the investment property

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portfolio and development stages of • review of audit report. pendent of the company and its man- the company’s projects are discussed agement. At least two of these must also at the company’s Board meetings. The • report on major investments. be independent of the company’s major company’s auditor attends and reports shareholders. The company’s Board is at Board meetings when required. • evaluation of the CEO’s performance considered to meet the independence The Board shall hold one statutory (at a Board meeting not attended by requirement, since five of the seven meeting immediately after the AGM. the CEO). elected members are independent of In addition, a minimum of five Board the company, the Executive Manage- meetings must be held every year. • evaluation of the company’s need for ment Team and the company’s major Board meetings must always be held an internal audit function. shareholders. Micael Bile and Andreas in conjunction with the submission of Eneskjöld are independent of the com- financial statements, including quar- Composition pany and Executive Management Team, terly statements. Each Board meeting The 2020 AGM re-elected Mikael Borg but not the company’s major share- addresses reports by the CEO and other (Chairman of the Board), Micael Bile, holders. Jan Björk, Erika Olsén, Knut management of: Andreas Eneskjöld, Jan Björk, Knut Ramel, Mikael Borg and Maria Rankka Ramel, Erika Olsén and Maria Rankka are independent of the company, the • the operations during the preceding to the Board. Executive Management Team or the period, including the forecast for the The ‘Board of Directors‘ section company’s major shareholders. current financial year, or a longer on pages 74–75 presents each Board period member’s year of birth, main educa- Rules of procedure tion and professional experience, their The Board determines rules of proce- • deviations from the budget and assignment in the company and any dure for the Board’s work every year. forecast. other significant assignments, their The rules of procedure describe the dependency relationship with the com- duties of the Board and the Chairman of • financial statements. pany, Executive Management Team and the Board, and contains provisions for the company’s major shareholders, the the division of responsibilities between • where applicable, quarterly state- number of shares they hold personally the Board and the CEO. The rules of ments. or via a related legal person or entity, procedure also contains provisions for and other financial instruments in the the number of Board meetings, agendas In addition to the above, the Board shall company. for Board meetings and other guidelines address the following areas once per year: In 2020, 25 Board meetings were for decision-making, financial report- held. The attendance of the members is ing and the company’s audit. • adoption of the year-end report. presented in the table below. Board work in 2020 • approval of the annual financial state- Independence requirement In 2020, the Board’s work was mainly ments and the proposed appropriation Under the Code, a majority of the conducted within the framework of for- of profits. elected Board members must be inde- mal Board meetings. In addition, regular contact was maintained between the company’s CEO, the Chairman of the Board and the Executive Manage- The Board’s composition, remuneration ment Team in order to ensure that the and attendance at meetings, Board received adequate information 1 January–31 December 2020 and decision support for its duties, and that the Board’s decisions were imple- Attendance at Board Member Elected Remuneration (SEK) meetings mented. Mikael Borg, Chairman 2019 635,000 25/25 In 2020, the Board discussed strate- Micael Bile 2011 300,000 25/25 gic issues related to development of the Andreas Eneskjöld 2014 340,000 25/25 existing investment property portfolio Jan Björk 2015 360,000 25/25 and decisions regarding additional Knut Ramel 2015 300,000 25/25 properties acquired during the year, as Erika Olsén 2017 340,000 25/25 well as ongoing and planned residen- Maria Rankka 2019 360,000 25/25 tial development projects. In addition, the Board made financing decisions,

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including the issuance of bonds, issues Remuneration Committee and other guidelines and instructions of new ordinary shares and listing the A Remuneration Committee was issued by the Board. The CEO is also company’s ordinary shares and prefer- established in January 2020, compris- responsible for ensuring compliance ence shares on Nasdaq Stockholm. ing three Board members, including with the company’s financing policy, The Board conducts annual evalua- the Chairman of the Board who is also information policy and insider trading tions of its own performance with the Chairman of the Remuneration Com- policy, including logbook procedures. aim of improving its working methods mittee. The Remuneration Committee The CEO is also responsible for ensur- and efficiency. consists of Mikael Borg, Erika Olsén and ing that the internal organisation and Andreas Eneskjöld. The members must control are appropriate. The Board’s committees be independent of both the company Michael Moschewitz was appointed The Board has established two commit- and the Executive Management Team. Genova’s CEO on 1 October 2017, and tees from within its ranks, an Audit Com- The Remuneration Committee is a succeeded Andreas Eneskjöld. Fur- mittee and a Remuneration Committee, preparatory body that mainly considers, ther information about CEO Michael both of which work according to instruc- analyses, initiates and monitors matters Moschewitz is presented on page 76 tions adopted by the Board. These com- related to remuneration principles, in the ‘Senior executives’ section. The mittees are sub-committees to the Board remuneration and other terms of information includes year of birth, main and have no right of decision-making. employment for the Executive Manage- education and professional experience, ment Team. During the year, the Remu- assignment in the company and any Audit Committee neration Committee should also monitor other significant assignments, and the An Audit Committee was established in and evaluate ongoing and completed number of shares held personally or via January 2020 and a meeting following programmes for the variable remunera- a related legal person or entity, and other election was held in February 2020. tion paid to senior executives, as well as financial instruments in the company. The Audit Committee has three current remuneration structures and lev- The Board evaluates the CEO’s Board members: Mikael Borg, Maria els within the company. Every financial performance on an ongoing basis and Rankka and Jan Björk. The members of year, the Remuneration Committee shall discusses the CEO’s evaluation at one this Committee must not be employed also prepare a report of the remuneration Board meeting during the year. by the company. At least one member paid to the company’s senior executives. must have competence in accounting or The Remuneration Committee held four Executive Management Team auditing. meetings during the year. Genova’s Executive Management Team The role of the Audit Committee is to consists of the following members: monitor the integrity of the company’s Audit • Michael Moschewitz, CEO financial statements and make recom- The auditor shall review Genova’s • Edvard Schéele, CFO mendations and proposals to ensure the annual financial statements and • Linda Frisk, Head of Residential reliability of the financial statements. accounts, and the management of the • Henrik Sandström, Head of Properties The Audit Committee shall also monitor Board and the CEO. • Henrik Raspe, Head of Project Devel- the effectiveness of Genova’s internal At the 2020 AGM, Genova’s regis- opment control systems, internal audit process tered auditing firm (Ernst & Young) was • Anna Molén, Head of Urban Develop- and risk management systems in rela- re-elected. The Auditor-in-Charge is ment tion to financial reporting. Henrik Nilsson, an authorised public The Committee shall also remain accountant and member of FAR. Ownership and governance of informed about the audit of the annual sub-Groups report and consolidated financial Chief Executive Officer The Group mainly consists of the Parent statements, and about the conclusions Genova’s CEO is responsible for the Company, Genova Property Group of the Swedish Inspectorate of Auditors’ day to day operational management of AB (publ), and four sub-Groups under quality control, and report the results of the company, pursuant to the Swedish Genova’s wholly owned subsidiaries these to the Board. An additional task Companies Act and the instructions Genova Fastigheter AB, Genova New is to review and monitor the external for the CEO and financial reporting as construction AB, Genova Building auditor’s objectivity, and to assist in the adopted by the Board. According to Holding AB and Genova Hus Holding 1 preparation of proposals for the Annual these instructions, the CEO is respon- AB, as well as a number of other com- General Meeting’s decision on the elec- sible for ensuring compliance with the panies directly under Genova. Genova tion of auditors. The Audit Committee Articles of Association, directives from holds a majority of the votes in all four held nine meetings during the year. the AGM, the Board’s rules of procedure sub-Groups.

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Remuneration of Board members, Risk and risk management risk. The risk of problems in a specific the CEO and senior executives Through its operations, Genova is company having a negative impact Remuneration of Board members exposed to various risks that could have on other companies in the Group is Fees and other remuneration paid to a material effect on the company’s future minimised by the principle that all Board members, including the Chair- performance, earnings and financial properties or projects should be run man, are determined by the Annual position. Management analyses and in separate companies. With a stable General Meeting (AGM). The AGM on updates the operational risks identified financial position and diversified 24 April 2020 resolved that Board fees on a regular basis in order to manage capital base, Genova deems that the for the period until the end of the next these risks in a structured manner. This company’s ability to obtain financing AGM should be SEK 350,000 (2019: will minimise the risk of a negative on favourable terms will continue. SEK 150,000) for the Chairman, and impact on the Group and its operations. SEK 200,000 (2019: SEK 100,000) for The risks that Genova is exposed to can Loan covenants each member. The AGM also resolved be divided into market, operational The Group’s credit facilities con- in accordance with the proposal from and financial risk. The main types of tain customary loan guarantees and the major shareholders that a fee of SEK financial risk that Genova considers covenants, including the requirement 85,000 would be paid to the Chairman the company exposed to are described that Genova and its subsidiaries meet of the Board’s Audit Committee and below. Other risks, and Genova’s man- certain financial key metrics, such as SEK 60,000 to each of the other mem- agement of these risks, are described in the loan-to-value ratio and interest-cov- bers, and that a fee of SEK 50,000 would more detail on pages 66–69. erage ratio. The financial key metrics be paid to the Chairman of the Board’s in such agreements are adversely Remuneration Committee and SEK Financial risk impacted, at least in the short term, 40,000 to each of the other members. Interest-rate risk when the company acquires properties Auditor fees shall be paid in accordance In addition to equity, Genova’s opera- through loans from external creditors. with approved invoices. tions are largely financed by loans from Should the company be unable to meet credit institutions, and interest expense one or more of these loan covenants, Remuneration guidelines for is the largest of the company’s large this could result in the loans being the CEO and senior executives cost items. The company is exposed terminated for immediate repayment The remuneration guidelines for senior to interest-rate risk, since interest rate or the realisation of collateral by the executives were adopted by the AGM on fluctuations affect the company’s inter- relevant credit institution. 24 April 2020 and shall apply until the est expense. general meeting of shareholders decides Management – Genova follows an otherwise. Management – Interest expense is a sig- established financing policy and Genova shall offer remuneration nificant cost item for Genova and inter- financial targets to ensure that all loan and other terms of employment that est-rate risk is assessed continuously in covenants are met at every stage. enable the company to attract and retain all acquisition and project estimates. senior executives with the competence Value changes in the required by the company. The general Funding risk company’s properties principle is that remuneration paid to Funding risk refers to the risk that financ- Genova’s investment properties are senior executives in the company should ing cannot be obtained, or only obtained measured at fair value on the balance be market-based and competitive. The at unfavourable terms for the company. sheet and the value changes are rec- remuneration of senior executives may Genova’s operations, especially prop- ognised in profit or loss. Property-spe- consist of basic salary, variable cash erty acquisitions, are largely financed cific deteriorations, such as lower rent remuneration, pension and other bene- by loans from external creditors, and levels and higher vacancy rates, and fits. No variable remuneration is paid to interest expense is the company’s largest market-specific deteriorations, such the Chief Executive Officer. cost item. Some of Genova’s operations as a higher internal rate of return, may The guidelines are published on the comprise property development projects, cause the company to write down the company’s website. The guidelines in which may be delayed or impacted by fair value of its properties. their entirety are available on the com- unforeseen or additional costs. pany’s website. Management – The vast majority of For more information about remu- Management – Genova follows an Genova’s properties are located in neration of the Executive Management established financing policy, and the markets deemed by the company to Team in 2020, see Note 10. overall objective of financing activities have stable demand for premises and is to minimise interest-rate and credit residential units. The tenants are active

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in various sectors with a high degree of established frameworks. The documents for supervising internal control systems taxpayer-funded community services set out positions of principle rather than are also components of Genova’s control and deemed to have high creditworthi- specify details. These could include, for environment. ness, and for some major tenants, there example, instructions in order to create The control environment does not are a wide range of rental agreements a systematic approach, clarify who is provide an overall view of internal con- with varying rental terms. The market responsible for what, identify risks and trol but is an important starting point value of Genova’s investment properties risk management and to create a sense of since the assessment of Group-wide market is determined quarterly and security in everyday decisions. controls – especially when deficiencies external, independent property valuers Genova’s Board reviews and affirms are detected – can have a significant also perform a review semi-annually. the following guidance documents at effect on the overall assessment of least annually: effectiveness in internal control and the Description of internal control • Financing policy procedures for financial reporting. over financial reporting • Dividend policy Under the Swedish Companies Act and • Authorisation and payment instruc- Risk Assessment the Code, the Board is responsible for tions To ensure good internal control over the company’s internal control sys- • Purchasing and procurement policy financial reporting, a risk-based tems. This description was prepared in • Accounting manual approach is used to identify significant accordance with section 7.4 of the Code, • Internal control policy accounts and processes where material and refers to the company’s financial • Risk policy weaknesses could occur. The risk-as- reporting. The aim of Genova’s appro- • Remuneration policy sessment is based on a combined quan- priate internal control environment • Insider trading policy, including log- titative and qualitative evaluation. and satisfactory internal control over book procedures In Genova’s business process, all financial reporting is to ensure that the • IT policy major transaction and project decisions company’s accounting and financial • Information security policy are analysed to identify risks and risk reporting to the market is accurate, fair • Communication policy management, as well as opportunities. and legally compliant. • Related-party policy The identification, assessment and man- Genova’s internal control structure • Employee manual agement of risks linked to accounting is based on the Committee of Spon- and financial reporting are integrated soring Organizations of the Treadway Genova’s control environment is with Genova’s material processes. The Commission’s (COSO) framework for designed to ensure that the entire processes, including identified risks evaluating a company’s internal control operations, processes and procedures and controls, are documented using over financial reporting. The framework are permeated by an approach where process maps and descriptions. Risk contains Control Environment, Risk internal control is central. To ensure management is integrated with Genova’s Assessment, Control Activities, Infor- an effective control environment and decision-making processes. Refer also to mation & Communication and Monitor- enable continuous evaluation, a num- ‘Risk and risk management.’ ing Activities. ber of controls have been identified. The control environment also Control activities Control Environment includes the Executive Management Controls are linked to each identified Internal control is based on divisions of Team’s relationship to good internal risk until the risk is considered elimi- responsibilities and duties through the controls and responsibility to commu- nated or reduced to an acceptable level. Board’s rules of procedure, instructions nicate the importance of conducting an The financial reporting risks identified for the committees, the CEO and finan- ethical and legally compliant business are managed by carrying out the con- cial reporting, the Code of Conduct and operation. Furthermore, organisational trol activities described in the Board’s policies. Compliance with these is mon- structure, reporting paths and divi- rules of procedure, instructions for the itored and evaluated continuously by a sions of responsibility, the Executive CEO, financing policy and information responsible person. The overall control Management Team’s participation in policy. To ensure that relevant con- environment also includes a Group-wide and attitude towards governance and trols are in place for all risks, a matrix risk assessment to identify and assess its approach to skills development are is prepared to show the controls set up risks. The Executive Management Team also included. The control environment to respond to each risk. The aim of the is responsible for ensuring that risks are also comprises a structure for policies, control activities is to prevent, detect managed in a satisfactory manner. instructions and for documentation of and correct errors and deviations. See Furthermore, Genova prepares guid- controls over financial reporting. Com- examples of control activities below. ance documents to ensure that the communication paths related to internal pany’s targets are achieved within the control-related issues, and procedures

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• Identification of risks of error in iden- Genova is continuously developing its communicating relevant information to tified material processes or transac- control activities in order to achieve the and/or from their department. tion flows. most appropriate organisation possible. Control and Monitoring Activities • Identification of controls that manage Information and Communication Continuous monitoring is carried out identified risks. Procedures for Genova’s information by the CEO preparing monthly reports, disclosure are set out in the company’s which shall include information such • As a basis for Internal Control over information security policy, communi- as an income statement for the current Financial Reporting (ICFR), there cation policy, instructions for the CEO month, cumulative results compared should also be general IT controls for and instructions for financial reporting. with the budget and the preceding year, programmes and systems used to sup- The aim of these procedures is to ensure a budgeted full-year income statement port identified material processes. that external and internal information compared with the outcome for the pre- is disclosed at the right time, is accu- ceding year, liquidity monitoring against • Documentation of identified pro- rate, relevant, clear and reliable. the budget and balance sheet for the cur- cesses, risks and controls. The internal information prepared rent month. The Executive Management within the framework of the company’s Team evaluates whether the Group-wide Examples of control activities that control activities is communicated risk assessment and management, and include risk assessments are presented between Board, CEO and management, the specific control activities performed below. which creates a basis for making the in each material process, remain relevant right decisions. for managing the material risks faced by • Board meetings. The communication of relevant Genova. The evaluation is then reported information, both upstream and to the Audit Committee and finally to the • Monthly reports prepared of the com- downstream in an organisation and to Board for discussion and approval. pany’s CEO in accordance with the external parties, is a key component of Board’s instructions for reporting the good internal control. The Executive Need for internal audit company’s financial information. Management Team’s meetings shall be Due to the internal control over finan- used as a forum for communication and cial reporting process described above, • Executive Management Team meet- information dissemination. Each Busi- the Board does not consider a separate ings. ness Area President is responsible for function for internal audit necessary.

Auditor’s statement on the Corporate Governance Report

To the Annual General Meeting of Genova Property Group AB, Corp. Reg. No.

556864-8116 ment. This means that our examination dance with Chapter 6, section 6, second Assignment and delegation of the Corporate Governance Report has paragraph, points 2–6 of the Annual of responsibilities another focus and is substantially less Accounts Act and Chapter 7, section The Board of Directors is responsible in scope compared with the focus and 31, second paragraph the same law are for ensuring that the Corporate Gover- scope of an audit in accordance with consistent with the annual accounts nance Report for 2020 on pages 78–85 International Standards on Auditing and consolidated accounts. has been prepared in accordance with and generally accepted auditing stan- the Swedish Annual Accounts Act. dards in Sweden. We believe that this Stockholm, 31 March 2021 examination has provided a sufficient Focus and scope basis for our opinions. Ernst & Young AB Our examination was conducted in accordance with FAR’s auditing stan- Conclusion Henrik Nilsson dard RevU 16, The auditor’s examina- A Corporate Governance Report has Authorised Public Accountant tion of the corporate governance state- been prepared. Disclosures in accor-

Genova 2020 Annual Report 85 86 Genova 2020 Annual Report Financial information

88 Directors’ Report 98 Key metrics 99 Consolidated statement of comprehensive income 100 Consolidated balance sheet 101 Consolidated statement of changes in equity 102 Consolidated statement of cash flows 103 Parent Company statement of comprehensive income 104 Parent Company balance sheet 105 Parent Company statement of changes in equity 106 Parent Company statement of cash flows 107 Accounting policies and notes 140 Auditor’s report 144 Definitions 145 Information to shareholders 145 Contact

Genova 2020 Annual Report 87 Genova | Directors’ Report

Directors’ Report

The Board of Directors and Chief Executive Officer of Genova Property Group AB (publ), Corp. Reg. No. 556864-8116, hereby present the Annual Report for the Group and the Parent Company for the 2020 financial year. Genova Property Group AB is also referred to as the company or the Parent Company. Genova Property Group AB and its wholly owned subsidiaries are also referred to as Genova or the Group.

About the operations for the internal control and governance of the company. To maintain Genova Property Group (Genova) was founded in 2006 and is a and develop a proper functioning control environment, Genova has personal property company that owns, manages and develops internal guidance documents containing guidelines for the division properties with a long-term, sustainable and highly committed of responsibilities and delegation, such as the Board’s rules of pro- approach. Genova is focused on commercial, community service cedure, the CEO’s instructions, authorisation order and other guid- and residential properties in Greater Stockholm and the Uppsala ance documents. Region. The Corporate Governance Report is a separate part of Genova’s Our mission is to combine stable cash flows from the invest- 2020 Annual Report and not included in the formal annual report ment property portfolio with cost-efficient project development of documents, see ‘Corporate Governance Report’ on pages 78-85. mainly rental apartments and community service properties for our Remuneration of senior executives is addressed by the Board’s own long-term management. Remuneration Committee and is decided on by the Board in its Genova’s overall objective is to create value for the company’s entirety. Senior executives are offered market-based remunera- shareholders. Value creation is measured over a business cycle tion, taking into consideration their area of responsibility and expe- as growth in long-term net asset value and income from property rience. A description of remuneration is provided on page 83 under management. The target is to achieve average annual growth of the heading “Remuneration guidelines for the CEO and senior 20% in long-term net asset value per ordinary share (including any executives.” value distributions to ordinary shareholders) and average annual growth of 20% in income from property management per ordinary Ownership structure and shares share over a business cycle. Genova has two classes of shares – ordinary shares and preference shares. The ordinary shares were listed on Nasdaq Stock-

Organisation and employees holm as of 30 June 2020. The preference shares were listed on During the year, the average number of employees in the organisa- Nasdaq Stockholm as of 12 June 2020 and were previously listed tion was 26 (26), of whom 13 (10) were women. The employees have on Nasdaq First North Premier Growth Market as of 20 November relevant and broad experience in property management, project 2015. At the end of the period, Genova had 4,829 shareholders. management, construction, finance, law, marketing and sales. For Each preference share entitles the owner to an annual dividend more information about the organisation and its senior executives, of SEK 10.50, which is paid out quarterly. The next payment date refer to Note 10. for the quarterly dividend on preference shares is 20 May 2021. As of 30 December 2020, the closing price for the ordinary share was Corporate governance SEK 73.90. As of 30 December 2020, the closing price for the pref- Governance, management and control of Genova is shared erence share was SEK 127. between the shareholders, the Board, the CEO and other senior As of 31 December 2020, the total number of shares in Genova executives. Governance is based on the Swedish Companies Act, was 43,576,966, of which 39,576,966 were ordinary shares and the Articles of Association and internal regulations and regulations. 4,000,000 preference shares. Pursuant to the Swedish Companies Act, the Board is responsible

88 Genova 2020 Annual Report Genova | Directors’ Report

Ordinary shares Significant events in 2020 As of 18 June 2020, Genova decided on an offering to subscribe for and purchase ordinary shares in the company, and a subsequent First quarter listing of the ordinary shares on Nasdaq Stockholm, with 30 June • In February, Genova’s Board adopted new financial and opera- 2020 as the first day of trading. The offering comprised a maximum tional targets and a new dividend policy. of SEK 650m (excluding over-allotment), of which new ordinary shares accounted for SEK 500.5m and existing ordinary shares in • In March, Genova concluded an agreement to divest 50% of the the company for SEK 149.5m, which were offered by the compa- shares in the property-owning company that owns Stapelbädden ny’s largest shareholders Micael Bile and Andreas Eneskjöld. The 3 in Lidingö at an underlying property value of SEK 400m before price per ordinary share in the offering was SEK 65, corresponding deductions for deferred tax. to a valuation of Genova of approximately SEK 1,997m prior to the offering. The offering was directed to the public in Sweden, and to • In March, Genova signed a letter of intent with the International institutional investors in Sweden and internationally. A high level of English School to build an elementary school with a 20-year interest was shown by the public in Sweden, as well as institutional rental agreement in the Viby 19:3 property in Upplands-Bro, investors in Sweden and internationally. The offering was oversub- where Genova is planning to build a new district together with scribed and initially brought more than 8,000 new ordinary share- housing company K2A. holders into the company. The former principal owners, Micael Bile and Andreas Enesk- • In March, Genova agreed to acquire a ground lease in Nacka at an jöld, are still the company’s largest shareholders. The company’s underlying property value of approximately SEK 40m. Accession CEO, Michael Moschewitz, who together with the principal own- took place in May 2020. ers owned all ordinary shares before the transaction, retained his existing ownership and, together with the principal owners, • During the quarter, rental agreements for approximately 4,500 entered into a 720-day lock-up agreement for their existing ordi- sqm in two properties in Lund were extended, with an annual nary shares. Länsförsäkringar Fondförvaltning AB, Lancelot Asset rental value of approximately SEK 6.2m. The agreements have Management AB, funds managed or advised by Capital Research terms of five and eight years, respectively, with National Histori- and Management Company and Skandia Fonder AB, together were cal Museums and Friskis & Svettis as the tenants. anchor investors who purchased ordinary shares for a total of SEK 450m, accounted for 60% of the offering, including over-allotment. • Genova decided to change its accounting policies and is now In connection with the offering, an over-allotment option was consolidating the co-operative housing association that owns the made available to Carnegie to purchase a maximum of 1,500,000 Liljegatan 1 project in Fålhagen, Uppsala. Under the new policies, ordinary shares in the company. As of 8 July, it was announced that the date on which income from newly constructed co-operative the over-allotment option had been exercised in full. The new ordi- apartments is recognised is the point in time when home buyers nary shares were registered in July, when proceeds from the trans- gain accession to their units and not, as previously, over a period action were also recorded in the company’s bank account. of time as the work is completed. Due to application of the new accounting policies from the first quarter of 2020, items attrib-

Preference shares utable to prior periods have been restated, which is presented in As of 12 June, Genova Property Group AB’s preference shares were Note 38. As a result of the restatement, equity decreased by SEK admitted to trading on Nasdaq Stockholm’s Main Market. There 47.0m. The project was completed in the fourth quarter of 2020, was no offering to subscribe for, or otherwise purchase, shares whereupon revenue was recognised. when they were transferred to the new listing segment. The preference shares were previously listed on Nasdaq First North Premier Growth Market.

Genova 2020 Annual Report 89 Genova | Directors’ Report

Second quarter Third quarter • In May, Genova agreed to acquire a community service property • In July, Genova announced that the over-allotment option had in Ekeby, Uppsala, at an underlying property value of SEK 350m. been fully exercised. The lettable area is approximately 16,500 sqm with a lot size of about 16,700 sqm. The largest tenants are Gluntens Montes- • In July, the zoning plan for Genova’s jointly owned project in cen- sori School, Stadsmissionens Skolstiftelse, Friskis & Svettis and tral Knivsta came into force. The zoning plan for the Segerdal Uppsala Municipality. The average remaining rental duration is project grants permission to develop approximately 25,000 sqm 2.9 years and the annual rental value approximately SEK 26m. of gross lighted floor area, where Genova is planning to construct Accession took place in August 2020. approximately 300 rental apartments combined with some commercial operations. • In June, Genova agreed to acquire a property in Åkersberga at an underlying property value of SEK 20m. The property is located in • In July, Peter Lövgren resigned from his position as Head of Busi- central Åkersberga adjacent to one of Genova’s existing proper- ness Development. In conjunction with this, Head of Properties ties. The lettable area is about 1,100 sqm, with an approximate lot Henrik Sandström assumed responsibility for Genova’s business size of 6,000 sqm. The property is fully let to Lidl Sweden, has an development. annual rental value of approximately SEK 1.3m and a rental term of approximately 3.5 years. Accession took place in July 2020. • In August, Genova and SBB jointly acquired and gained accession to Nackahusen Holding AB, which owns six properties in Nacka • In June, 50% of the shares in the property-owning company Strand. The properties, which contain building rights of approx- that owns Stapelbädden 3 in Lidingö was divested. The shares imately 40,000 sqm of gross lighted floor area, were acquired were acquired by Samhällsbyggnadsbolaget i Norden AB (SBB) for SEK 1. The parties assumed the existing bond loan of approx- in March 2020, and the parties will develop the property jointly imately SEK 360m. Following the settlement of Nackahusen with a focus on sustainable, community-oriented residential Holding’s previously divested properties, Genova and SBB will units. The underlying property value of SEK 400m in the transac- jointly control properties and building rights of about 30,000 sqm tion exceeded Genova’s book value by approximately SEK 220m, of gross lighted floor area. The properties are owned through a which was recognised as a value change in the first quarter. joint venture, where Genova’s investment commitment amounts initially to SEK 30m. • In June, Genova’s first own-produced rental apartments were completed and occupied. Genova will own and manage the 35 • In September, Genova successfully issued senior unsecured rental apartments, which are located in Alsike in Knivsta. bonds in the total amount of SEK 400m under a framework of SEK 750m. The bonds have a tenor of four years and a floating • As of 12 June, Genova’s preference shares were admitted to trad- interest rate of three-month STIBOR plus 450 bps and will mature ing on Nasdaq Stockholm’s Main Market. on 9 September 2024. The first day of trading of the bonds on the corporate bond list of Nasdaq Stockholm was 9 October 2020. • In June, Genova decided on an offering to subscribe for and purchase ordinary shares in the company, and a subsequent listing • In September, Genova announced the result of the voluntary ten- of the ordinary shares on Nasdaq Stockholm. The offering was der offer that was announced as of 24 August 2020 to the holders oversubscribed and in total, including the over-allotment option of Genova’s outstanding senior unsecured floating rate bonds that was exercised in July, the company generated proceeds of 2017/2021 with an outstanding amount of SEK 156m. The offer approximately SEK 576m before listing expenses. was accepted by holders of bonds representing a total nominal amount of SEK 106m. Genova intends to exercise its right to vol- • 30 June was the first day of trading for the ordinary shares on untary early redemption of all outstanding bonds. Nasdaq Stockholm’s Main Market. • In September, Genova agreed to acquire three properties in central Enköping at an underlying property value of SEK 91m. Acces- sion took place as of 23 October 2020. The properties are directly adjacent to a property that is already owned, where planning is in progress for the future development of residential units. The annual rental value of the let commercial space is approximately SEK 2.8m. The properties include residential building rights that have gained legal force of approximately 14,000 sqm of gross lighted floor area and an estimated potential to develop a further approximately 12,000 sqm of gross lighted residential floor area.

90 Genova 2020 Annual Report Genova | Directors’ Report

Fourth quarter • In December, Genova agreed to divest three commercial prop- • In October, Genova conducted a number of strategic lettings of erties in Gävle and Sundsvall at an underlying property value of approximately 6,500 sqm with an annual rental value of approxi- SEK 128m before deductions for deferred tax. The selling price mately SEK 10m in Stockholm and Lund. exceeds the book value by approximately 10%. The divestment comprises two properties with car sales premises in Sundsvall • In October, Genova signed a letter of intent with Axfood pertain- and Gävle, and one property with retail in an out-of-town shop- ing to the development of the Viby 19:3 property in Upplands-Bro, ping centre in Gävle. The exit date was 15 December 2020. where Genova is planning to build a new district. The parties are to work to construct a supermarket with Hemköp covering a floor • In December, Genova commenced the Segerdal project located area of 1,200-2,000 sqm with a 10-year rental agreement, at a in central Knivsta, next to the Town Hall and directly adjacent minimum, on market terms. The project in Upplands-Bro is being to the train station. The project comprises new construction run together with K2A and is expected to commence in 2021. of approximately 300 rental apartments with a lettable area of approximately 17,000 sqm. The buildings will be environmen- • In October, Genova agreed to acquire a project property for ware- tally certified and the first occupancy is scheduled for year-end house and logistics strategically located in Uppsala. When com- 2022/2023. The project is being carried out as a joint venture pleted, the property will contain approximately 21,500 sqm of let- together with Redito. table area and entail a total investment of SEK 275m. In connection with the accession, Genova paid consideration of SEK 25m. The property is scheduled for completion in September 2021 and the property value when the project is completed is estimated at SEK 360m, with a total rental value of approximately SEK 23.5m and expected net operating income of approximately SEK 22m.

• In October, Genova agreed to acquire two properties with a school, retirement home, supermarket and rental apartments in Knivsta at an underlying property value of SEK 246m before deductions for deferred tax. The total lettable area is approximately 8,700 sqm and the properties also include land of approximately 50,000 sqm with the potential for future development of residential units and community service properties. The annual rental value for the properties is approximately SEK 14m with an expected net operating income of approximately SEK 12m. The average remaining term for the rental agreements exceeds seven years. Accession took place on 1 December 2020.

• In November, properties were exited by Nackahusen Holding AB and a payment of nearly SEK 50m was received. The properties were already divested on the date of Genova and SBB’s joint acquisition and accession in August 2020. In November, Nack- ahusen Holding also repaid the bond loan of SEK 360m that was assumed in connection with the acquisition and replaced it with a new bank loan, which means significantly lower financing costs for the jointly owned company.

• In November, Genova entered into a barter transaction whereby Genova would divest the Sjöborren 5 & 6 properties in Sollentuna at an underlying property value of SEK 111m, while also acquiring one newly renovated preschool in Kungsängen and one newly renovated school in Örnsberg for a total underlying property value of SEK 129m. The divested properties were acquired in December 2018 for SEK 92.5m and contain an extended-stay hotel of approximately 2,600 sqm with an annual rental value of approximately SEK 6m. The accession/exit date was 15 February 2021.

Genova 2020 Annual Report 91 Genova | Directors’ Report

Comments on the year’s financial performance increased in line with an improved occupancy rate and is expected to improve further with the additional properties owned through

Rental income joint ventures. The value changes rose sharply compared with the During the period, the Group’s rental income amounted to SEK year-on-year period and mainly pertain to Genova’s stake in Nack- 231.1m (180.6). The increase corresponds to rental income growth ahusen Holding AB, which was acquired in the third quarter, and is of 28%. Growth in rental income was mainly attributable to a grow- owned jointly with SBB. The properties were acquired at an under- ing investment property portfolio from acquisitions. During the lying property value of SEK 360m and have an estimated market period, the lettable area increased approximately 19,000 sqm to value of SEK 478m, which means a value change of SEK 118m. 190,000 sqm, or 11%, with a total rental value of SEK 269m, corre- Genova’s share of the value change amounts to SEK 46.8m (after sponding to growth of about 19%. The community service proper- deferred tax) and was recognised in the third quarter of 2020. ties category accounted for the greatest increase. At the end of the period, the economic occupancy rate was 98% (98), which is in line Net financial items with the corresponding period of 2019. Net financial items amounted to SEK -107.1m (-77.5) during the period, where the higher financial expense compared with the

Property costs year-on-year period is attributable to increased borrowing in the During the period, property costs in the form of operating and main- growing operations. Currency effects were previously recognised tenance costs and property tax increased to SEK -53.7m (-50.7), up for this item pertaining to the projects in Palma. As of the fourth approximately 6%. The increase in property costs was largely due quarter of 2020, these currency effects are reported on a separate to the fact that Genova managed a larger investment property port- line in profit or loss and no longer included in income from property folio compared with the preceding period. management. The reason being that exchange-rate effects, which cannot be influenced, reduce comparability in the development of

Net operating income income from property management. During the period, net operating income increased to SEK 177.4m Interest-bearing liabilities, including the bond loan, increased (129.9), up 37%. The NOI margin for the period was 76.8%, an from SEK 2,943m to SEK 3,534m compared with the year-on-year increase compared with 71.9% for the corresponding period of period. As of the balance-sheet date, the average interest rate was 2019. 2.1% (2.9% including the bond loan). Financial expenses during the period include SEK 16.3m (8.3) pertaining to bond financing costs,

Listing expenses which are allocated over the terms of the loans. The higher expense The total cost of listing the company’s ordinary shares and pref- in 2020 compared with 2019 also pertains to the bond loan issued erence shares on Nasdaq Stockholm during the year was SEK in the third quarter of 2019 and the new SEK 400m loan raised in -54.9m, of which SEK -29.6m was expensed directly against equity the third quarter of 2020. As of 2019, interest expense of approxi- and SEK -25.3m was expensed as a central administration expense mately SEK -1.9m from lease liabilities is also included and mainly in the statement of profit or loss. All expenses, both against equity pertains to rents and ground rent. The interest-coverage ratio for and in the statement of profit or loss, were recognised in the third the period was 1.8 times (1.8). The interest-coverage ratio does not quarter of 2020. include bond financing costs, since these are considered non-recurring costs.

Central administration Central administrative expenses are allocated between property Income from property management management and project development. During the period, central During the period, income from property management amounted administrative expenses totalled SEK -65.2m (-34.9), correspond- to SEK 60.8m (40.8), up 49%. Rental income increased by SEK ing to an increase of SEK -30.3m or 87%. The sharp increase is 50.5m (while property costs increased by SEK 3m), and income mainly due to costs of SEK -25.3m that were expensed in the third from joint ventures also increased by SEK 30.3m, which is largely quarter relating to the listing of the company’s ordinary shares and due to a value change of SEK 46.8m from the participation in Nack- preference shares on Nasdaq Stockholm. ahusen Holding AB that was acquired during the quarter. During the period, income from property management was charged with

Share of profit from joint ventures listing expenses of SEK -25.3m and increased financing costs for The earnings effect of Genova’s properties owned through joint the larger property portfolio. Excluding listing expenses and value ventures is reported in this item. During the period, share of profit changes from joint ventures, income from property management from joint ventures amounted to SEK 55.7m (25.4) and pertained amounted to SEK 34.7m (19.8), up 75%. Currency effects were to income of SEK 4.5m (4.4) from operating activities and value previously recognised for this item pertaining to the projects in changes of SEK 51.2m (21.0). Income from operating activities Palma. As of the fourth quarter of 2020, these currency effects are

92 Genova 2020 Annual Report Genova | Directors’ Report

reported on a separate line in profit or loss and no longer included flows and the residual value during a calculation period, where in income from property management. The reason being that discounting has taken place using an estimated cost of capital. exchange-rate effects cannot be influenced and reduce compa- The average yield requirement for the property portfolio was an rability in the development of income from property management. estimated 4.42% as of the balance-sheet date. (Adjusted for the Viby 19:3 property, which has been partially divested based on a

Value changes valuation of building rights, the average yield requirement is an The sale to SBB of 50% of the shares in the company that owns the estimated 4.96%). As of 31 December 2020, the book value of the Stapelbädden 3 property, which was exited in the second quarter of Group’s investment properties was SEK 4,560m, up SEK 899m 2020, was conducted at an underlying property value of SEK 400m. year-on-year. The increase was mainly due to the completion of The agreed value exceeded Genova’s book value by approximately one community service property and rental apartments in Knivsta SEK 220m, resulting in a positive value change during the period. together with accessed properties during the period. During the Ongoing construction in Norrtälje and Palma (Majorca) contributed period, however, Stapelbädden 3 was divested to a joint venture value changes of SEK 83.3m during the period, plus an additional that, in conjunction with the exit of three properties in Gävle and SEK 7.2m in increased value from higher net operating income in Sundsvall, reduced the balance-sheet item in the Genova Group. the Gördelmakaren 5 property in Norrtälje where Sportringen is a new tenant. During the period, accessed properties had a positive Properties under construction impact of SEK 64.2m on value changes. The ongoing COVID-19 Properties under construction comprise two planned hotels in pandemic had some impact on the value of Genova’s two extend- Palma, Majorca, one of which is under construction, the Handels- ed-stay hotels which, together with a few other properties, declined mannen 1 project in Norrtälje, the Korsängen project in Enköping in value by a total of SEK –35.1m during the period due to changed which was acquired during the quarter and the warehouse and yield requirements. In the fourth quarter, we noted an increase in logistics property in Uppsala, which is now under construction. values based on both changed net operating income and lower The balance-sheet item also includes value changes in building yield requirements. In total, a positive value change of SEK 380.0m rights related to a number of upcoming projects. During the period, was subsequently recognised during the period. acquisitions and capitalisations amounted to a total of SEK 280m. During the period, the completed retirement home and the rental

Income tax apartments in Alsike, Knivsta, were reclassified as investment Recognised tax amounted to SEK -55.2m (-139.0). Current tax has properties. been calculated using a nominal tax rate of 21.4%, while deferred tax has been calculated with the lower tax rate of 20.6% that will Development properties apply from 2021 and onwards. Remaining tax loss carryforwards Development properties refers to accrued and capitalised costs are an estimated SEK 435m (381), with untaxed reserves of approx- for construction projects not yet started. At construction starts, the imately SEK 63m (55). The fair value of the properties exceeded amounts are reclassified as properties under construction. their tax base by SEK 3,091m (2,536). Deferred tax liabilities are calculated using the nominal tax rate of 20.6% of the difference Ongoing co-operative apartment projects between the book value and tax base, less the tax attributable to Genova decided to change its accounting policies and, during asset acquisitions. the year, consolidated the co-operative housing association that owns the Liljegatan 1 project in Fålhagen, Uppsala. The project is

Net income for the year presented as an Ongoing co-operative apartment project under Net income for the year amounted to SEK 418.0m (571.0). Com- current assets. Since the project was completed and occupied in pared with 2019, both net operating income and income from prop- the fourth quarter of 2020, the project was recognised at the bal- erty management increased in 2020. However, the value changes, ance-sheet date and subsequently left the Group. For a description including the provision for deferred tax, were greater in 2019, of the effects of changes in accounting policies, refer to Note 38. meaning that Genova’s net income after tax for the period is lower than in the preceding year. Property value The entire investment property portfolio is externally appraised at

Financing and liquidity least once annually. As of 31 December 2020, the entire invest- Investment properties ment property portfolio had been externally appraised by CBRE The Group’s investment properties comprise a total of 48 wholly and Newsec, based on the most recent external appraisal on 30 owned properties. The fair value of investment properties is mainly June 2020. In the fair value hierarchy, investment properties are estimated using a Discounted Cash Flow Model, where the value considered Level 3 assets, which means that the fair value of the has been calculated as the present value of expected future cash asset is based on unobservable inputs.

Genova 2020 Annual Report 93 Equity and net asset value will mature, of which SEK 50m pertains to bond loans. The aim is to As of 31 December 2020, consolidated equity amounted to SEK refinance SEK 134m prior to the maturity dates. 2,647.8m (1,726.2) and the equity/assets ratio was 39.0% (33.5). In September, Genova successfully issued senior unsecured Long-term net asset value amounted to SEK 2,883.0m (1,975.3), bonds in the total amount of SEK 400m under a framework of SEK up 46%. Long-term net asset value attributable to ordinary share- 750m. The bonds have a tenor of four years and a floating inter- holders amounted to SEK 2,364.6m (1,457.0), up 62%. Long-term est rate of three-month STIBOR plus 450 bps and will mature on 9 net asset value attributable to ordinary shareholders per ordinary September 2024. At the same time, Genova announced the result share amounted to SEK 59.75 per ordinary share (47.43). During the of the voluntary tender offer that was announced as of 24 August period, Genova completed an issue of new ordinary shares, gener- 2020 to the holders of Genova’s outstanding senior unsecured ating proceeds of SEK 546m for the Group after listing expenses. floating rate bonds 2017/2021 with an outstanding amount of SEK Genova decided to change its accounting policies and during 156m. The offer was accepted by holders of bonds representing a 2020 consolidated the co-operative housing association that total nominal amount of SEK 106m. Genova exercised its right to owns the Liljegatan 1 project in Fålhagen, Uppsala. Under the new early voluntary redemption of all outstanding bonds. The redemp- policies, the date on which income from newly constructed co-option date was 7 January 2021 and the redemption price for each of erative apartments is recognised is the point in time when home the bonds was the applicable redemption value (i.e 100.00% of the buyers gain accession to their units and not, as previously, over a nominal amount), plus accrued but not paid interest. period of time as the work is completed. Due to application of the new accounting policies from the first quarter of 2020, items attrib- Interest-rate derivatives utable to prior periods have been restated, which is presented in Genova has purchased interest-rate caps for a total of SEK 600m Note 38. For the period ending on 31 December 2019, the transi- in the loan portfolio, limiting interest rates to 2%. The caps apply tion led to a short-term decrease in equity and the difference was until 2022 for SEK 300m, and until 2023 for the remaining SEK therefore reversed in the calculation of long-term net asset value, 300m. At the end of the period, the Group had no other outstand- and long-term net asset value attributable to ordinary shareholding derivatives or interest-rate swaps, and all loans carried variable ers. The project was completed in the fourth quarter of 2020 and interest rates with three-month STIBOR as the reference base. the actual income of SEK 37m was recognised in the statement of profit or loss at the balance-sheet date. Significant risks and uncertainties Through its operations, Genova is exposed to various risks that Interest-bearing liabilities could have a material effect on the company’s future performance, As of 31 December 2020, the Group’s interest-bearing liabilities earnings and financial position. Risks that Genova may be exposed attributable to investment properties and project properties were to can be divided into market, strategic and operational, regulatory approximately SEK 3,534m (2,777), representing a loan-to-value and financial risk. ratio of about 55.1% (61.0) adjusted for cash and cash equivalents. As a property owner and housing developer, Genova is depen- As of 31 December 2020, the average interest rate was approxi- dent on being able to obtain financing on reasonable terms, that mately 2.1% (2.9% including the bond loan) and the equity/assets tenants can pay their rent and that other counterparties fulfil their ratio was 39.1% (33.5). duties. At the same time, the company is affected by any changes in As of 31 December 2020, the Group’s total interest-bearing lia- the value of the company’s properties. A business operation in the bilities of SEK 2,559m (2,238) to credit institutions were attribut- property sector is also highly sensitive to macroeconomic factors able to acquisition financing, refinancing of the existing property such as the overall economy, regional economic trends, employ- portfolio and project financing. The Group’s credit facilities contain ment rates, the production rate of new residential units and prem- customary loan guarantees and covenants, including the require- ises, changes in infrastructure, population growth, the population ment that Genova and its subsidiaries meet certain financial key structure, inflation, interest rates and so forth. metrics, such as the loan-to-value ratio and interest-coverage In Genova’s business process, all major transaction and proj- ratio. As of 31 December 2020, the average maturity was 3.0 years ect decisions are analysed to identify risks and risk management, (3.6). The credit term structure as of 31 December 2020 is shown as well as opportunities. Risk management is an integral part of in the table below. Genova’s decision-making. More information about Genova’s risks At the end of the period, undrawn credit facilities in the form of is available in a separate section of Genova’s 2020 Annual Report revolving credit and a bank overdraft totalled SEK 435m. In addition and is not included in the formal annual report documents, see to these facilities, granted construction credit of SEK 547m is still ‘Risk and risk management’ on pages 66–69. undrawn. Within 12 months of the reporting date, loans of SEK 184m

94 Genova 2020 Annual Report Environmental practices • During and after the end of the fourth quarter, more than 10,000 The sustainability aspect of Genova’s operations is important for sqm were newly let in the project property for warehouse and creating a long-term attractive and resource-efficient property logistics in Uppsala which was acquired in October 2020, and portfolio that meets the demands of our tenants. Genova’s goal construction started immediately at the beginning of 2021. The is to construct properties that are energy-efficient, have a good property will comprise a total of 21,500 sqm and is scheduled for indoor environment with sound material choices that minimise the completion in September 2021. environmental impact of the buildings during their whole life-cycle. The properties shall also offer a safe, secure and healthy environ- • Genova Property Group AB (publ) (the “Issuer” or “Genova”) has ment for the people who live and work in the premises and resi- successfully issued green capital securities of SEK 500m under dential units, which is largely governed by laws and regulations. a framework of SEK 1,250m (the “Green Capital Securities”). The Working with this methodically and with effective procedures is a Green Capital Securities have a perpetual maturity with a float- key element of Genova’s property development and production. ing interest rate of three months STIBOR plus 675 bps until first More information about Genova’s environmental practices is avail- call date. Genova intends to apply for admission to trading of the able in a separate section of Genova’s 2020 Annual Report and is Green Capital Securities on the Sustainable Bond List of Nasdaq not included in the formal annual report documents, see ‘Sustain- Stockholm. ability’ on pages 50–61. • In 2021, Genova acquired four community service properties

Significant events after the end of the financial year for SEK 970m with a total lettable area of approximately 42,300 • Genova is significantly accelerating the pace of its ongoing con- sqm and the accession date of 31 March 2021. The properties are struction of properties for own long-term management by start- strategically located in growth areas with good public transport ing the construction of projects in Knivsta and Enköping, and services in Greater Stockholm. The largest tenants are Interna- increased area in the ongoing project in Norrtälje. In total, these tionella Engelska Skolan, Botkyrka Municipality, Värmdö Tekniska projects comprise approximately 60,000 sqm and more than Gymnasium and Värmdö Municipality (the authority responsible 1,000 rental apartments. This means that Genova’s production for Gustavsbergs Gymnasium). The average remaining rental rate has increased significantly from 438 residential units under period is approximately five years, and annual rental income is construction at 30 September 2020 to more than 900 at the end approximately SEK 59m with estimated net operating income of of the first quarter of 2021. The projects are being constructed approximately SEK 46m, of which tenants with publicly funded with a clear sustainability profile and will be environmentally cer- operations account for approximately 80% of rental income. tified. As part of this process, a new green finance framework has

been established with a ‘second opinion’ from Cicero. Impact of COVID-19 The COVID-19 outbreak is continuing to have both humanitarian • In January 2021, the Board of Genova set new growth targets and economic effects on the world around us, and posing a chal- for the operations and extended the business plan to cover lenge for people, society and the business community. Genova’s the period up to the end of 2025. The operational targets were priority is to protect the health of our employees and tenants and to revised upwards and, as of 2022, will increase ongoing construc- prevent the risk of spreading the virus. We will continue to monitor tion of own-produced residential units to 1,500 per year from the the situation and are continuously assessing the risks for Genova. previous figure of 750, and increase the share of rental income However, the effects of COVID-19 on Genova have been man- from residential and community service properties to at least ageable to date, and our assessment is that the basic conditions 70% of Genova’s total rental income by the end of 2023, from for a relatively limited impact on the company will remain favour- the previous figure of 60% by the end of 2024. The company’s able. Genova has a stable financial position, good liquidity and a financial targets, risk limitations and dividend policy will remain diversified tenant mix, where approximately half of the rental value unchanged. is derived from publicly funded operations and supermarkets. Rental apartments and community service properties in Greater • After the end of the period, Genova extended the rental agree- Stockholm and the Uppsala Region account for approximately 70% ment with Gluntens Montessori School for the Flogsta 47:1 prop- of Genova’s ongoing and planned project development. erty with approximately 6,000 sqm and an annual rental value of approximately SEK 11m until 31 August 2041. In addition, the Government grants rental agreement with Leo’s Lekland for the Mackmyra 20:18 Genova has not needed to use the Swedish government’s support property of approximately 3,600 sqm and an annual rental value for furlough schemes, give notice of termination or terminate any of SEK 4.5m was extended for three years until 2029. employees. Nor has the company claimed tax relief, but has taken

Genova 2020 Annual Report 95 Genova | Directors’ Report

advantage of the possibility to reduce employer contributions for the Future trends March to June period of 2020 that was available to all employers. Group is expected to continue acquiring, developing and managing commercial properties, and to continue developing attractive resi- Rent payments dential and rental units. Moreover, efforts to develop the company’s Genova’s tenants, however, like society in general, are impacted community service property operations are ongoing, with a focus by COVID-19. Of Genova’s annual rental income of SEK 263m, on the Stockholm-Uppsala region. about 60% is due quarterly in advance, and about 40% monthly in advance. Genova has engaged in discussions with a number of Proposed distribution of profits individual tenants with liquidity concerns and offered some of these The Board of Directors and Chief Executive Officer propose that the possibility to switch from quarterly rent payments to monthly the unappropriated earnings (rounded SEK) at their disposal: payments. Of the adjusted rent receivable due for payment by 31 December 2020, 97.2% had been received by 15 January, which is Retained earnings 811,437,424 in line with the normal outcome. Loss for the year –69,964,639

741,472,784 Project development Be appropriated as follows All of Genova’s projects are more or less on track, and we do not be carried forward 741,472,784 envisage any significant delays at present. Should material deliv- 741,472,784 eries be at risk of delay, we will look into alternative solutions. At present, we can see that the timetables are being met. With regard to the results and financial position of the company and Liquidity and financing the Group in general, please refer to the following income state- Genova has a stable financial position and good liquidity. As of 31 ment, balance sheet and cash flow analysis with the accompanying December 2020, cash and cash equivalents and undrawn credit supplementary information and notes to the financial statements. facilities amounted to SEK 1,013m. Loans maturing within 12 months All amounts in the following statements are presented in millions of amounted to SEK 248m, of which SEK 134m will be refinanced Swedish kronor (SEKm), unless stated otherwise. before maturity. In the period, Genova implemented a successful spread of ownership and listing of the company’s ordinary shares on Nasdaq Stockholm’s Main Market, which in early July generated proceeds of approximately SEK 546m for the company after listing expenses. The proceeds from the issue that were provided to the company in July, combined with existing undrawn credit facilities, allows excellent access to finance.

96 Genova 2020 Annual Report Genova | Directors’ Report

Shareholders as of 31 December 2020 No. of No. of Name ordinary shares preference shares Holding (%) Votes (%) Micael Bile (via company) 17,814,999 140,000 41.20% 44.60% Andreas Eneskjöld (via company) 8,111,429 39,729 18.71% 20.30% Länsförsäkringar Fondförvaltning AB 3,586,926 0 8.23% 8.97% Michael Moschewitz (via company) 2,150,538 22,298 4.99% 5.39% Lancelot Asset Management 1,651,000 0 3.79% 4.13% Avanza Pension 1,002,040 449,138 3.33% 2.62% Capital Research and Management 1,384,600 0 3.18% 3.46% Skandia Fonder 943,168 0 2.16% 2.36% SEB Investment Management 398,107 0 0.91% 1.00% Enter Fonder 306,192 0 0.70% 0.77% RBC Investor Services Bank SA 0 300,000 0.69% 0.08% BNP Paribas 272,350 0 0.62% 0.68% Cancerfonden 230,000 0 0.53% 0.58% Total other shareholders 1,725,617 3,048,835 10.96% 5.08%

Total 39,576,966 4,000,000 100.00% 100.00%

Overview of results and financial position 1 Jan 2020– 1 Jan 2019– 1 Jan 2018– 1 Jan 2017– 1 Jan 2016– 31 Dec 2020 31 Dec 2019 31 Dec 2018 31 Dec 2017 31 Dec 2016 IFRS IFRS IFRS IFRS IFRS Rental income, SEKm 231.1 180.6 127.7 108.5 76.3 Net operating income, SEKm 177.4 129.9 92.2 79.1 53.6 Income from property management, SEKm1 60.8 40.8 21.6 33.9 14.6 Income from property management per ordinary share, SEK1 0.53 0.09 –0.40 0.10 0.29 Residential units under construction, no.2 540 527 235 270 217 Residential units completed, no. 137 133 188 – 29 Net investments, SEKm 1,074.7 1,146.1 624.0 171.2 362.1 Loan-to-value ratio, % 55.2 61.0 64.0 66.0 50.0 Equity/assets ratio, % 39.0 33.5 31.3 27.9 43.0 Interest-coverage ratio, times3 1.8 1.8 1.9 2.0 N/A Long-term net asset value, SEKm 2,883.0 1,975.3 1,188.1 1,074.6 1,008.5 Long-term net asset value attributable to ordinary shareholders, SEKm 2,364.6 1,457.0 804.4 726.8 666.3 Total no. of ordinary shares outstanding, 000s4 39,577 30,722 50,000 50,000 50,000 Long-term net asset value attributable to ordinary shareholders, SEK per 59.75 47.43 32.18 29.07 13.33 ordinary share

1) Currency effects for 2020 are no longer included in income from property management and are recognised separately in profit or loss. Comparative figures for 2019 have been restated. 2) Including 35 hotel rooms 3) Excluding non-recurring costs. 4) Restated for 2019 to correspond to the number following the withdrawal of every other share in the second quarter of 2020.

Genova 2020 Annual Report 97 Genova | Financial statements

Key metrics

20201 20191 2018 2017 2016

Financial key metrics Return on equity, % 19.1 39.2 24.6 12.8 12.9 Equity/assets ratio, % 39.0 33.5 35.6 39.0 43.0 Loan-to-value ratio, % 55.2 61.0 61.8 66.0 50.0 Average interest rate, % 2.1 2.2 2.3 2.3 2.4 Average interest rate including bond loans, % 2.9 3.0 3.2 3.1 N/A Interest-coverage ratio, times 1.8 2.2 1.9 N/A N/A Maturity, no. of years 3.0 3.6 2.3 2.9 3.7

Key metrics, shares Total no. of preference shares outstanding, 000s 4,000 4,000 3,000 3,000 3,000 Average no. of preference shares outstanding, 000s 4,000 3,400 3,000 3,000 2,827 Total dividend on preference shares, SEKm 42.0 26.2 31.5 31.5 31.1 Dividend on preference share, SEK 10.50 7.87 10.5 10.5 10.50 Total no. of ordinary shares outstanding, 000s2 39,577 30,722 50,000 50,000 50,000 Average no. of ordinary shares outstanding, 000s 35,149 47,858 50,000 50,000 50,000 Income from property management per ordinary share, SEK 0.53 0.15 –0.20 N/A N/A Income per ordinary share, SEK 10.69 7.89 4.22 2.22 1.88 Equity, SEKm 2,647.8 1,726.2 1,135.0 1,008.2 927.2 Equity attributable to ordinary shareholders, SEKm 2,129.4 1,207.9 738.9 640.1 575.2 Equity per ordinary share, SEK 53.80 39.32 14.78 12.80 11.50 Long-term net asset value, SEKm 2,883.0 1,975.3 1,200.5 1,094.9 1,018.0 Long-term net asset value attributable to ordinary sharehold- 2,364.6 1,457.0 804.4 726.8 666.3 ers, SEKm Long-term net asset value per ordinary share, SEK 59.75 47.43 16.09 14.54 13.33

1) The key metrics have been restated to reflect the changes in accounting policies. 2) Restated for 2019 to correspond to the number following the withdrawal of every other share in the second quarter of 2020.

98 Genova 2020 Annual Report Genova | Financial statements

Consolidated statement of comprehensive income

1 Jan 2020 1 Jan 2019 SEKm Note 31 Dec 2020 31 Dec 2019

Rental income 6 231.1 180.6

Operating costs 7 –43.0 –37.5 Maintenance costs 7 –4.3 –7.6 Property tax 7 –6.4 –5.6

Total Property costs –53.7 –50.7 Net operating income 177.4 129.9

Central administration, property management 8 –26.1 –12.4 Central administration, project development 8 –39.1 –22.5 Share of profit from joint ventures 21 55.7 25.4 Net financial items 11 –107.1 –79.6

Income from property management 60.8 40.8

Income from new construction, co-operative apartments 37.0 57.4 Other operating income 12 2.2 3.2 Value changes, properties 13 380.0 606.5 Currency effects, properties –6.8 2.1

Income before tax 473.2 710.0

Income tax 14 –55.2 –139.0

Net income for the year 418.0 571.0

Other comprehensive income for the period – –

Total comprehensive income for the period 418.0 571.0

Net income for the year attributable to: Parent Company shareholders 417.9 549.7 Non-controlling interests 0.1 21.3

Total comprehensive income attributable to: Parent Company shareholders 417.9 549.7 Non-controlling interests 0.1 21.3

Income per ordinary share before and after dilution, SEK1 28 10.69 11.77 No. of ordinary shares at the end of the period, 000s2 28 39,577 30,722 Average no. of ordinary shares, 000s2 28 35,149 43,574 No. of preference shares outstanding, 000s 28 4,000 4,000 Average no. of preference shares, 000s 4,000 3,500

1) Earnings in relation to average number of ordinary shares after dividends to preference shareholders. 2) Restated for 2019 to correspond to the number following the withdrawal of every other share in the second quarter of 2020.

Genova 2020 Annual Report 99 Genova | Financial statements

Consolidated balance sheet

SEKm Note 31 Dec 2020 31 Dec 2019

ASSETS Non-current assets Investment properties 15 4,559.6 3661.3 Properties under construction 16 704.1 702.0 Development properties 17 91.4 56.5 Right-of-use assets 18 32.1 37.2 Equipment 19 6.6 4.6 Deferred tax assets 14 89.6 78.6 Shares in joint ventures 21 279.4 88.5 Other non-current receivables 23 257.3 96.0

Total non-current assets 6,020.1 4,724.7

Current assets Ongoing co-operative apartment projects – 199.3 Rent receivable and accounts receivable 24 10.6 4.0 Other receivables 25 131.4 27.8 Prepaid expenses and accrued income 26 44.2 84.0 Cash and cash equivalents 27 578.4 109.1

Total current assets 764.6 424.2

TOTAL ASSETS 6,784.7 5,148.9

EQUITY 28 Share capital 52.3 0.7 Other capital contributions 1,183.0 647.6 Retained earnings including net income for the year 1,334.1 999.6 Non-controlling interests 78.4 78.3

Total equity 2,647.8 1,726.2

LIABILITIES Non-current liabilities Loans from credit institutions 29, 31 2,261.9 1,664.6 Bond loans 30, 31 901.9 659.4 Lease liabilities 18 30.6 34.4 Other non-current liabilities 32 43.1 42.1 Deferred tax liabilities 14 324.6 280.7

Total non-current liabilities 3,562.1 2,681.2

Current liabilities Loans from credit institutions 29, 31 298.1 579.3 Bond loans 30, 31 52.7 – Accounts payable 40.8 41.1 Lease liabilities 18 5.3 4.7 Current tax liabilities 14 13.5 11.0 Other liabilities 33 119.1 69.3 Accrued expenses and deferred income 34 45.3 36.1

Total current liabilities 574.8 741.5

TOTAL LIABILITIES AND EQUITY 6,784.7 5,148.9

100 Genova 2020 Annual Report Genova | Financial statements

Consolidated statement of changes in equity

No. of shares outstanding, 000s Attributable to Parent Company shareholders Retained Other earnings, Pref- capital incl. Non-con- Ordinary erence Share contri net income trolling Total SEKm shares shares capital butions for the year Total interests equity

Opening balance, 1 January 2019 50,000 3,000 0.5 319.7 748.8 1,069.0 66.1 1,135.0 Effect of change in accounting policies –65.2 –65.2 –12.4 –77.6

Opening balance according to changed 50,000 3,000 0.5 319.7 683.6 1,003.8 53.7 1,057.4 policies

Comprehensive income Net income for the year 549.7 549.7 21.3 571.0 Other comprehensive income

Total comprehensive income 549.7 549.7 21.3 571.0

Transactions with shareholders Transaction with non- –146.9 –146.9 10.3 –136.6 controlling interests Dividend (SEK 1 per ordinary share and –86.8 –86.8 –7.0 –93.8 SEK 10.50 per preference share) New issue of preference shares 1,000 0.0 124.0 124.0 124.0 Issue costs –4.5 –4.5 –4.5 New issue of ordinary shares 11,444 0.2 208.2 208.3 208.3

Total Transactions with shareholders 11,444 1,000 0.2 327.7 –233.7 94.2 3.3 97.4

Closing balance, 31 December 2019 61,444 4,000 0.7 647.6 999.6 1,647.9 78.3 1,726.2

Opening balance, 1 January 2020 61,444 4,000 0.7 647.6 999.6 1,647.9 78.3 1,726.2

Comprehensive income Net income for the year 417.9 417.9 0.1 418.0 Other comprehensive income

Total comprehensive income 417.9 417.9 0.1 418.0

Transactions with shareholders Bonus issue 0.7 –0.7 0.0 0.0 Withdrawal of ordinary shares –30,722 –0.7 0.7 0.0 0.0 Dividend (SEK 10.50 per preference share) –42.0 –42.0 –42.0 Bonus issue 41.0 –41.0 0.0 0.0 New issue of ordinary shares 8,855 10.6 565.0 575.6 575.6 Issue costs of ordinary shares –29.6 –29.6 –29.6 Currency effects –0.6 –0.6 –0.6

Total Transactions with shareholders 21,867 51.6 535.4 –83.6 503.4 503.4

Closing balance, 31 December 2020 39,577 4,000 52.3 1,183.0 1,334.1 2,569.4 78.4 2,647.8

Genova 2020 Annual Report 101 Genova | Financial statements

Consolidated statement of cash flows

1 Jan 2020 1 Jan 2019 SEKm Note 31 Dec 2020 31 Dec 2019

Cash flow from operating activities Income from property management 60.8 40.8 Adjustment for non-cash items1 –43.1 –14.3 Other operating income 2.2 3.2 Income tax paid –3.4 3.0

Cash flow from operating activities before 16.5 32.6 changes in working capital

Changes in working capital Change in accounts receivable –6.6 –2.3 Change in other operating receivables 36.7 –42.0 Change in accounts payable –0.3 –16.2 Change in other operating liabilities 50.2 34.5

Cash flow from operating activities 96.5 6.6

Cash flow from investing activities Investments in properties and projects –1,074.7 –1,146.1 Investments in equipment –2.4 –0.3 Divestments of investment properties 115.9 7.0 Increase in other financial assets 103.5 17.4

Cash flow from investing activities –857.7 –1,122.0

Cash flow from financing activities New share issue 546.0 119.7 Loans raised 1,174.3 1,503.3 Repayment of loans –447.8 –481.2 Dividends paid –42.0 –86.8 Changes in non-controlling interests – –7.0

Cash flow from financing activities 1,230.5 1,048.0 Cash flow for the period 469.3 –67.4 Opening cash and cash equivalents 109.1 176.5

Closing cash and cash equivalents 578.74 109.1

1) Other non-cash items

Reversal of depreciation and amortisation 0.4 1.3

Share of profit from joint ventures –55.7 –25.4

Accrued interest 12.2 9.8

–43.1 –14.3

Interest received 11 3.4 1.9 Interest paid 11 –92.4 –66.1

102 Genova 2020 Annual Report Genova | Financial statements

Parent Company statement of comprehensive income

1 Jan 2020 1 Jan 2019 SEKm Note 31 Dec 2020 31 Dec 2019

Net sales 3.5 –

Total operating income 3.5 –

Other external costs 8 –29.6 –0.3 Personnel costs 10 –7.8 –

Total operating expenses –37.4 –0.3

Operating loss –33.9 –0.3

Impairment of participations in Group companies 20 –52.8 –7.4 Interest income and similar profit items 11 64.1 0.3 Interest expense and similar loss items 11 –59.6 –38.7

Loss from financial items –48.3 –45.8

Income before tax –82.2 –46.1

Tax on net income for the year 14 12.2 –0.2

Net income for the year –70.0 –46.3

Other comprehensive income for the period – –

Total comprehensive income for the period –70.0 –46.3

Genova 2020 Annual Report 103 Genova | Financial statements

Parent Company balance sheet

SEKm Note 31 Dec 2020 31 Dec 2019

ASSETS Non-current assets Financial assets Participations in Group companies 20 222.0 222.1 Deferred tax assets 14 21.6 9.4 Receivables from Group companies 22 1,171.0 820.6

Total financial assets 1,414.6 1,052.1

Current receivables Other receivables 25 9.2 0.1 Prepaid expenses and accrued income 26 3.2 11.0

12.4 11.2

Cash and cash equivalents 27 514.3 57.0

Total current assets 521.9 68.1

TOTAL ASSETS 1,941.3 1,120.2

EQUITY AND LIABILITIES 28 Total comprehensive income for the period Restricted equity Share capital 52.3 0.7

Total restricted equity 52.3 0.7

Unrestricted equity Retained earnings 811.5 405.5 Net income for the year –70.0 –46.3

Total unrestricted equity 741.5 359.2

Total equity 793.8 359.9

Non-current liabilities Bond loans 30 901.9 657.3 Other non-current liabilities 32 40.0 40.0

Total non-current liabilities 941.9 697.3

Current liabilities Bond loans 30 50.0 – Liabilities to Group companies 22 116.4 60.5 Other liabilities 33 36.5 – Accrued expenses and deferred income 2.7 2.5

Total current liabilities 205.6 63.0

TOTAL LIABILITIES AND EQUITY 1,941.3 1,120.2

104 Genova 2020 Annual Report Genova | Financial statements

Parent Company statement of changes in equity

Share Retained Net income Total SEKm capital earnings for the year equity

Opening balance, 1 January 2019 0.5 94.8 70.2 165.5

Carried forward 70.2 –70.2

Net income for the year –46.3 –46.3

Transactions with shareholders Dividends –86.8 –86.8 New issue of preference shares 0.0 124.0 124.0 Issue costs –4.5 –4.5 New issue of ordinary shares 0.2 208.2 208.4

Total transactions with shareholders 0.2 240.9 240.7

Closing balance, 31 December 2019 0.7 405.5 –46.3 359.9

Opening balance, 1 January 2020 0.7 405.5 –46.3 359.9

Carried forward –46.3 46.3

Net income for the year –70.0 –70.0

Transactions with shareholders Dividends –42.0 –42.0 Bonus issue 41.0 –41.0 New issue of ordinary shares 10.6 565.0 575.6 Issue costs of ordinary shares –29.6 –29.6

Total transactions with shareholders 51.6 452.4 504.0

Closing balance, 31 December 2020 52.3 811.5 –70.0 793.8

Genova 2020 Annual Report 105 Genova | Financial statements

Parent Company statement of cash flows

1 Jan 2020 1 Jan 2019 SEKm Note 31 Dec 2020 31 Dec 2019

Cash flow from operating activities Operating loss –33.9 –0.3 Interest received 64.1 0.3 Interest paid –44.5 –35.4

Cash flow from operating activities before changes in working capital –14.3 –35.4

Change in operating receivables –1.3 –2.0 Change in operating liabilities 36.6 –86.6

Total changes in working capital 35.3 –88.6

Cash flow from operating activities 21.0 –124.0

Cash flow from investing activities Decline in other financial assets – 13.9

Cash flow from investing activities – 13.9

Cash flow from financing activities Deposits from Group companies 0.5 – Loans to Group companies –350.4 –239.5 New share issue 546.0 119.5 Bond loans issued 391.2 162.2 Sale of bond loans – 15.0 Tender of bond loans –109.0 – Non-current loan raised – 40.0 Dividends paid –42.0 –86.8

Cash flow from financing activities 436.3 10.4 Cash flow for the period 457.3 –99.7

Opening cash and cash equivalents 57.0 156.7

Closing cash and cash equivalents 514.3 57.0

106 Genova 2020 Annual Report Genova | Notes

Accounting policies and notes

Note 1 General information

This is the Annual Report and consolidated financial statements All amounts are presented in millions of Swedish kronor (SEKm), for the Swedish Parent Company Genova Property Group AB, Cor- unless stated otherwise. The figures in parentheses refer to the porate Registration Number 556864-8116, and its subsidiaries, preceding year. referred to below as ‘Genova’ or ‘the Group.’ On 31 March 2021, the Board approved these annual accounts The Parent Company is a limited liability company registered in and consolidated financial statements, which will be presented to Sweden, and its head office is located in Stockholm. The physical the Annual General Meeting on 7 May 2021 for adoption. address of the head office is Smålandsgatan 12, 111 46 Stockholm, Sweden.

Note 2 Summary of significant accounting policies

2.1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS ments and IFRS 15 Revenue from Contracts with Customers in The consolidated financial statements for Genova have been pre- relation to the recognition of income from co-operative apartment pared in accordance with International Financial Reporting Stan- projects constructed on behalf of a co-operative housing associa- dards (IFRS) and IFRIC interpretations, as adopted by the EU. In addition and whether Genova is considered to control the co-operative tion, RFR 1, Supplementary Accounting Rules for Groups, has been housing association, Genova, in line with several other operators in applied. The consolidated financial statements have been prepared the industry, has changed its accounting policy and now consoli- in accordance with the cost method, except for investment proper- dates the co-operative housing association. ties and financial instruments, which are measured at fair value. This has affected the Group’s financial earnings and position, The preparation of reports in accordance with IFRS requires the since income from the sale of a property under the previous pol- use of critical accounting estimates for measurement and recog- icy was recognised on the date of the sale to the co-operative nition. It also requires management to exercise its judgement in housing association, while income from project management the process of applying the Group’s accounting policies. The areas was recognised as the work was completed over a period of time involving a higher degree of judgement or complexity, or areas using the percentage of completion method. Due to the change where assumptions and estimates are significant for the Group, in accounting policy, the buyer, and not the co-operative housing are disclosed in Note 4. association, is considered Genova’s customer. In accordance with The Parent Company’s accounts are prepared in accordance the new accounting policy, income is recognised when the buyer with RFR 2, Accounting for Legal Entities and the Swedish Annual gains accession to the residential unit, for both the land and the Accounts Act. In cases where the Parent Company does not apply project management contract. Before the customer gains acces- the same accounting policies as the Group, this is stated sepa- sion, Genova recognises the property as a current asset: Ongo- rately at the end of this Note. ing co-operative apartment projects. The co-operative housing The accounting policies set out below have been consistently association’s other assets and liabilities as well as income and applied to all periods presented in the consolidated financial state- expenses are included in Genova’s financial statements. Internal ments, unless otherwise stated. transactions and balance sheet items between Genova and the co-operative housing association are eliminated.

Change in previously applied accounting policies As a result of the Swedish Financial Supervisory Authority’s dia- In the segment reporting, co-operative apartment projects will logue with listed residential developers over a longer period of time continue to be recognised in accordance with the previously regarding the application of IFRS 10 Consolidated Financial State- applied accounting policies during the implementation of the project, which means that income will be recognised over a period of

Genova 2020 Annual Report 107 Genova | Notes

time based on the percentage of completion of the project. Genova assumed in a business combination are initially measured at fair deems that this method of recognition is fairest and best reflects value at the acquisition date. Genova’s co-operative apartment transactions and the Board and management will continue to monitor the company’s operations Acquisition costs are expensed as incurred. using this approach. Intra-Group transactions, balance sheet items and unrealised gains or losses on transactions between Group companies are The new accounting policy has been applied as of 2020 and in eliminated. The accounting policies for subsidiaries have been accordance with IAS 8, adjusted retroactively. This means that changed where necessary to guarantee the consistent application items attributable to prior periods have been restated. The restate- of the Group’s policies. ments have also affected previously reported key metrics. See

Note 38 for more information about the restatement effects. The Business combinations and asset acquisitions new accounting policies for revenue are set out below. Under IFRS 3, the fair value of identifiable assets acquired and liabilities assumed in the acquiree is determined at the acquisition

New standards and interpretations applied from date. These fair values also include shares in the assets and liabili- the 2020 financial year ties attributable to any remaining minority interests in the acquiree. As of 2020, the IASB introduced an amendment to IFRS 3 that Identifiable assets acquired and liabilities assumed also include addresses the difference between business combinations and assets, liabilities and provisions including obligations and claims asset purchases, by issuing a new definition of business. In prac- from external parties not previously recognised on the acquiree’s tice, the new definition means that if the purchase consideration balance sheet. The difference between the cost of the acquisition for assets in a business acquisition is essentially attributable to and the acquired share of net assets in the acquiree is classified the market value of acquired properties, the acquisition comprises as goodwill and recognised as an intangible asset on the balance an asset acquisition. Simplified, this means that the entire surplus sheet. Transaction costs are immediately expensed through profit is allocated to properties and thus no goodwill arises. Other new or loss. and amended standards and interpretations from the IFRS Inter- Since acquisitions of subsidiaries are not business acquisitions pretations Committee are not currently deemed to have a material but asset acquisitions in the form of investment properties, acquisi- impact on Genova’s earnings or financial position. The accounting tion-related costs are instead allocated to the assets acquired in the policies and calculation methods were otherwise unchanged com- acquisition analysis. An acquisition of investment properties is clas- pared with last year’s Annual Report. sified as an asset acquisition if the acquisition relates to properties, with or without rental agreements, but does not include the employ-

New standards that came into effect in 2021 ees and processes required to perform the management activities. Other new and amended standards and interpretations from the One important difference in the recognition of asset acquisitions IFRS Interpretations Committee are not currently deemed to have compared with business combinations, is that some deferred tax is a material impact on Genova’s earnings or financial position. The not recognised on the initial recognition of the asset on the balance same applies to Swedish regulations. sheet. Another difference is that transaction costs are recognised as part of the acquisition-related costs in an asset acquisition.

2.2 CONSOLIDATED FINANCIAL STATEMENTS Refer also to Note 4, which addresses critical judgements and estimates when applying Genova’s accounting policies, where the

Subsidiaries differences between accounting for a business combination and Subsidiaries are all companies in which the Group has a controlling an asset acquisition are explained. interest. The Group controls a company when it is exposed, or has rights, to variable returns from its involvement with the company and Transactions with minority interests has the ability to affect those returns through its influence over the (minority shareholders) company. Subsidiaries are included in consolidated financial state- The Group recognises transactions with minority interests as ments from the date on which the controlling interest is transferred transactions with the Group’s shareholders. In acquisitions from to the Group. They are excluded from the consolidated financial minority interests, the difference between the consideration paid statements from the date on which the controlling interest ceases. and the actual acquired share of the book value of the subsidiary’s The acquisition method is used to recognise the Group’s busi- net assets is recognised in equity. Gains or losses on divestments ness combinations. The consideration for the acquisition of a to minority interests are also recognised in equity. subsidiary consist of the fair value of transferred assets, liabilities incurred by the Group to the former owners of the acquiree and the Segment reporting shares issued by the Group. The consideration also includes the Management has identified operating segments on the basis of fair value of all assets or liabilities resulting from a contingent con- internal management reports to the company’s chief operating sideration arrangement. Identifiable assets acquired and liabilities decision-maker, which the Group has identified as the CEO. Based

108 Genova 2020 Annual Report Genova | Notes

on the internal management reports, the operations are organ- on quoted prices in active markets and is the price that would be ised, managed and reported as two operating segments: Property received to sell, or be paid in an orderly transaction between mar- management and Other. The Investment properties operating ket participants. To determine their fair value, the market value of all segment has been consolidated according to the same policies as properties is calculated at the end of each quarter. External valua- for the Group as a whole. The income and expenses reported for tions are performed twice per year, otherwise internal valuations. each operating segment are actual costs. The same applies to the Changes in the fair value of investment properties are recognised assets and liabilities reported per segment and that are shown in as value changes in profit or loss. When a property is sold, the dif- the Consolidated statement of financial position. ference between the selling price and the book value is recognised In the segment reporting, ongoing residential projects are rec- in accordance with the most recently prepared report, less costs to ognised under co-operative housing associations in the Other seg- sell and plus capitalisations since the most recent interim report as ment, in accordance with the previously applied revenue recognition value changes in profit or loss. policy described in the Group’s 2019 Annual Report. As a result, Subsequent costs are only capitalised when it is probable that Genova considers the co-operative housing association an external the future economic benefits associated with the property will flow counterparty and therefore recognises income from the sale of the to the company, that the cost can be measured reliably, and that the property to the co-operative housing association at a point in time, measure refers to the replacement of an existing, or introduction of and income from the project management as the work is completed a new, identified component. Other repair and maintenance costs over a period of time using the percentage of completion method. are expensed on an ongoing basis in the period they are incurred. Income from transactions with co-operative housing associations is For major new construction, extension and refurbishment, interest recognised in the ‘Other’ segment. These policies entail that Genova expense is also capitalised during the construction period. does not apply IFRS 10 Consolidated Financial Statements in its segment reporting, since the co-operative housing associations 2.5 IMPAIRMENT OF NON-FINANCIAL ASSETS included in the consolidated financial statements are considered Tangible assets that certain intangible assets that are depreciated external parties in the segment reporting. Genova deems that this are tested for impairment whenever events or changes in circum- method of recognition best reflects Genova’s residential transac- stances indicate that their book value may not be recoverable. A tions and the Board of Directors and management will continue to impairment loss is the amount by which the book value of an asset monitor the company’s operations using this approach. exceeds its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.

2.3 EQUIPMENT To assess impairment, assets are grouped at the lowest levels for All equipment is recognised at cost less accumulated deprecia- which there are separate identifiable cash flows (cash-generating tion. The cost comprises any costs directly attributable to acqui- units). Tangible and intangible assets that have previously been sition of the asset. impaired are assessed at each balance-sheet date to determine Depreciation to break their cost down to residual value over their whether there is any need for reversal. estimated useful life using the straight-line method is as follows:

Equipment 5 years 2.6 FINANCIAL INSTRUMENTS Financial instruments are any form of agreement that gives rise to The residual value and useful life of an asset is calculated on each a financial asset in one company and a financial liability or equity balance-sheet date and adjusted if required. The book value of an instrument in another. Financial instruments recognised as finan- asset is immediately reduced to its recoverable amount when the cial assets on the balance sheet include unlisted holdings, cash asset’s recoverable amount is less than its book value. and cash equivalents, rent and accounts receivable, and other Gains or losses on divestments are determined by comparing receivables. Financial liabilities include accounts payable, loan lia- the sales proceeds with the book value and are recognised in Other bilities and other liabilities. Recognition depends on how the finan- operating income or Other operating expenses in profit or loss. cial instruments have been classified.

2.4 INVESTMENT PROPERTIES Recognition and derecognition Investment properties are held for the purpose of earning rental A financial asset or liability is recognised on the balance sheet income and for long-term capital appreciation. If a property with when the company becomes a party to the contractual provisions several possible uses is acquired, where the alternatives are to of the instrument. Rent and accounts receivable are recognised on either generate rental income and long-term capital appreciation, the balance sheet when an invoice has been sent and the company or to use the property for the development of co-operative apart- has an unconditional right to receive consideration. Liabilities are ments, the holding is initially classified as an investment property. recognised when the counterparty has performed and a contrac- Investment properties are initially measured at cost, including tual obligation to pay exists, even if an invoice has not yet been directly attributable transaction costs. received. Accounts payable are recognised when an invoice has In measurement subsequent to initial recognition, investment been received. properties are measured at fair value. Fair value is primarily based

Genova 2020 Annual Report 109 Genova | Notes

A financial asset and financial liability are offset and recognised Derivatives: measured at fair value through profit or loss. The Group in a net amount on the balance sheet when, and only when, there does not apply hedge accounting. is a legally enforceable right to set off the amounts, and an intention to either settle on a net basis, or realise the asset and settle Fair value is determined according to the description in Note 3. the liability simultaneously. A financial asset is derecognised once the contractual rights are realised or expire, or when the company Impairment of financial assets loses control over them. The same applies to financial asset com- The Group’s financial assets, except for those measured at fair ponents. A financial liability is derecognised once the contractual value through profit or loss, or equity instruments measured at fair obligation has been met or otherwise extinguished. The same value through other comprehensive income, require impairment applies to financial liability components. At each reporting date, allowances for expected credit losses. Impairment allowances for Genova tests whether there is any objective evidence that a finan- credit losses under IFRS 9 are forward-looking and a loss allow- cial asset or a group of financial assets may be impaired. ance is required for all exposure to credit risk, usually at initial rec- Gains or losses on derecognition and modification are recognition. Expected credit losses reflect the present value of all cash ognised in profit or loss. shortfalls attributable to either a 12-month risk of default occurring, or the expected remaining life of the financial instrument, depend- Classification and measurement ing on the class and credit impairment of the asset since initial Financial assets recognition. Expected credit losses reflect an objective, probabil- Debt instruments: Financial assets are classified as debt instru- ity-weighted outcome that accounts for multiple scenarios based ments based on the Group’s business model for managing the on reasonable and supportable forecasts. asset and the contractual cash flow characteristics of the asset. The simplified approach is applied for rent and accounts receiv- The instruments are measured at: able, contract assets and lease receivables. Under the simplified • amortised cost approach, a loss allowance is recognised for the expected remain- • fair value through other comprehensive income, or ing life of the asset or receivable. • fair value through profit or loss. For other items covered by expected credit losses, a three- stage impairment model is applied. The Group’s debt instruments are measured at amortised cost. Initially, and at every balance-sheet date, a loss allowance is Financial assets measured at amortised cost are initially measured at fair value plus transaction costs. Rent and accounts recognised for the next 12 months, alternatively for a shorter period receivable are initially measured at the invoiced amount. After ini- of time depending on the remaining term to maturity (stage 1). The tial recognition, the assets are subsequently measured using the Group’s assets are considered to be in stage 1, meaning there has effective interest method. According to the business model, assets not been any significant increase in credit risk. This approach is measured at amortised cost are held to collect contractual cash applied for rent and accounts receivable, and for expected credit flows that are solely payments of principal and interest on the prin- losses for financial guarantee contracts. These comprise the com- cipal amount outstanding. The assets are covered by a loss allow- pany’s guarantees on behalf of loans raised by co-operative hous- ance for expected credit losses. ing associations for financing the construction contract. Expected credit losses are estimated by assessing each asset Equity instruments: measured at fair value through profit or loss individually, based on historical experience and current conditions. unless they are not held for trading, since an irrevocable election The financial assets are measured at amortised cost on the bal- can be made to measure them at fair value through other comprehensive income with no subsequent reclassification in profit or ance sheet, that is, the gross book value net of the loss allowance. loss. The Group holds shares and participations that are measured Changes in the loss allowance are recognised in profit or loss. at fair value through profit or loss. Cash and cash equivalents Derivatives: measured at fair value through profit or loss. The Group Cash and cash equivalents comprise cash on hand and immedi- does not apply hedge accounting. ately available balances with banks and similar institutions as well as short-term liquid investments with a maturity of less than three Fair value is determined according to the description in Note 3. months from the acquisition date. Cash and cash equivalents are subject to the loss allowance required for expected credit losses. Financial liabilities Financial liabilities are measured at amortised cost except for derivatives. Financial liabilities measured at amortised cost are ini- Accounts receivable and other receivables tially measured at fair value plus transaction costs. After initial rec- For rent and accounts receivable, the Group has elected to apply ognition, they are subsequently measured at amortised cost using the simplified approach to recognise expected credit losses. This the effective interest method. means that expected credit losses are reserved for their remaining term to maturity, which is expected to be less than one year for all receivables. The Group’s loss allowance for expected credit losses is based on historical credit loss data and forward-looking infor-

110 Genova 2020 Annual Report Genova | Notes

mation. The Group’s customers are a homogeneous group with a recognised as an expense in profit or loss in the period they are similar risk profile, which is why the credit risk is initially determined incurred. Accrued interest is recognised as a component of short- collectively for all customers. Any larger single receivables are term loans from credit institutions, if the interest is expected to be assessed per counterparty. The Group writes off a receivable when paid within 12 months of the balance-sheet date. there is no longer any expectation that payment will be received and when active collection efforts have been terminated. 2.11 CURRENT AND DEFERRED TAX Genova applies a method that combines historical experience Income tax comprises current tax and deferred tax. Income tax is with other known information and forward-looking factors to esti- recognised in profit or loss except when the underlying transaction mate expected credit losses. The Group has defined default as is recognised in other comprehensive income or directly in equity, when payment of the receivable is 90 days or more overdue, or whereby any related tax effects are recognised in other compre- when other factors indicate that a payment suspension exists. A hensive income or directly equity, respectively. significant increase in credit risk was not deemed to exist for any Current tax expense is calculated using the tax rates enacted or receivable or asset at the balance-sheet date. Such an assess- substantively enacted in Sweden by the balance-sheet date (cur- ment is based on whether payment is 30 days or more overdue, or if rently 21.4%), where the Parent Company’s subsidiaries are active the credit quality has deteriorated significantly, resulting in a rating and generate taxable income. Management regularly evaluates the below investment grade. If the amounts are not deemed insignifi- claims in tax returns with respect to situations in which the applica- cant, a loss allowance for expected credit losses is recognised for ble tax rules are open to interpretation and, when deemed appro- financial instruments. priate, makes provisions for amounts that will probably be payable to the Swedish Tax Authority.

2.7 CASH FLOW Deferred tax is recognised in its entirety, using the bal- Cash and cash equivalents include cash, bank deposits and other ance-sheet method, on all temporary differences arising between current investments with maturities of less than three months from the tax base of assets and liabilities and their corresponding book their acquisition date. Overdraft facilities are recognised as bor- value in the consolidated financial statements. However, deferred rowing among current liabilities. Genova only has bank deposits at tax is not recognised if it arises on initial recognition of assets or present. Cash receipts and payments are recognised on the state- liabilities in a transaction that is not a business combination and, ment of cash flows, which is prepared using the indirect method. at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred income tax is measured at the tax rates

2.8 SHARE CAPITAL AND CALCULATION OF INCOME (and laws) enacted or substantively enacted at the balance-sheet PER SHARE date and that are expected to apply to the period when the deferred Ordinary shares and preference shares are classified as equity, asset is realised or the deferred tax liability is settled. refer to Note 28. Costs directly attributable to issuing new share Deferred tax assets are recognised only when it is probable that are recognised in equity as a deduction from the proceeds. Issue taxable profits will be available in future periods against which the costs are recognised as a deduction under the equity category of temporary differences can be utilised. Deferred tax is calculated on Other capital contributions. temporary differences associated with investments in subsidiaries, The calculation of income per ordinary share is based on the but only to the extent that the Group is able to control the timing of Group’s net income attributable to Parent Company shareholders, the reversal of the differences and it is probable that the reversal less dividends to preference shareholders, and on the weighted will not occur in the foreseeable future. average number of shares outstanding during the year.

2.12 EMPLOYEE BENEFITS 2.9 ACCOUNTS PAYABLE Short-term employee benefits Accounts payable are initially measured at nominal value and subse- Employee benefits are recognised as employees render services in quently at amortised cost, which is usually considered equal to their exchange for the benefits. The Group had no incentive or schemes nominal value since their maturities are typically short. Accounts in 2020. payable are recognised when an invoice has been received.

Pension obligations 2.10 BORROWINGS Group companies have defined-contribution plans only. Borrowings are initially measured at fair value, net after transaction For defined-contribution plans, the Group pays contributions to costs. Borrowings are subsequently measured at amortised cost and publicly or privately managed pension plans on a mandatory, con- any difference between the amount received (net, after transaction tractual or voluntary basis. The Group has no other payment obliga- costs) and the repayment amount is recognised in profit or loss allo- tions when these contributions have been paid. The contributions cated over the term of the loan using the effective interest method. are recognised as personnel costs as they arise. Prepaid contri- Borrowings are classified as current liabilities unless the Group butions are only recognised as an asset when cash repayments or has an unconditional right to defer settlement of the liability for at reductions in future payments may benefit the Group. least 12 months after the balance-sheet date. Borrowing costs are

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Termination benefits 2.15 LEASES Termination benefits are provided when a employee’s employment is terminated by Genova Properties before the normal retire- The Group as a lessee ment date, or when an employee accepts voluntarily to resign in Lease liabilities exchange for such benefits. The Group recognises severance pay On the commencement date of a lease, a lease liability is measured when the Group is demonstrably committed to either terminating at the present value of future lease payments on this date. These the employment of an employee in accordance with a formal plan lease liabilities are recognised separately from other liabilities on and there is no realistic possibility of withdrawing from the plan, or the balance sheet. to provide termination benefits as a means of encouraging volun- The lease term is defined as the non-cancellable period plus tary redundancy. Benefits due more than 12 months after the bal- periods covered by options to extend that Genova is reasonably ance-sheet date are discounted to present value. certain to exercise, and options to terminate that Genova is reasonably certain not to exercise. The lease payments include fixed

2.13 PROVISIONS payments (less any benefits in connection with signing the lease), Provisions are recognised when the Group has a legal or construc- variable lease payments linked to an index or rate, and amounts tive obligation as a result of past events, it is probable that an out- expected to be payable by the lessee under residual value guar- flow of economic resources will be required to settle the obligation, antees. The lease payments also include the exercise price of a and the amount can be estimated reliably. No provisions are made purchase option that Genova is reasonably certain to exercise, for future operating losses. and payments for terminating the lease unless it is reasonably certain that early termination will not occur. Variable lease payments

Provision for onerous contracts not linked to an index or rate are recognised as an expense in the In project management agreements with co-operative housing period to which they are attributable. associations, the Group may undertake to purchase any unsold The present value of lease payments is determined using the apartments that the association has on a specified date at a pre- interest rate implicit in the lease if it is readily determinable, otherwise determined price. In the event that the Group considers it probable at the lessee’s incremental borrowing rate. After the commencement that the obligation will be settled by purchasing apartments and date of a lease, the lease liability increases to reflect interest on that the agreed price of these is expected to exceed the fair value the lease liability and reduce the liability for lease payments made. of the apartments, the difference between the estimated market In addition, the lease liability is remeasured to reflect lease modifi- value and the agreed value is recognised as a loss provision. cations, changes to the lease term, changes in lease payments or changes in an assessment to purchase the underlying asset.

2.14 REVENUE RECOGNITION At the commencement date of ground leases, which are con- Revenue from contracts with customers refers to income from the sidered perpetual leases, future lease payments (ground rent) are sale of goods and services from Genova’s ordinary operations. discounted over the perpetual lease term. In subsequent measure- Revenue is recognised when the customer obtains control over ments, the lease liability is not repaid. Lease payments are rec- the goods or services that the company deems to be distinct in ognised in their entirety as interest expense. When ground rent is a contract and reflects the amount of consideration to which the renegotiated, the lease liability is remeasured using the changed company expects to be entitled in exchange for transferring the ground rent, since the renegotiation is considered to reflect promised goods or services to the customer. The Group’s reve- changes in market rental rates. nue is derived from lease income and recognised in accordance with IFRS 16 Leases. These principles are described in 2.15 below. Right-of-use assets Other revenue is derived from the sale of apartments to home buy- Genova recognises right-of-use assets on the balance sheet at the ers, who are normally private consumers. Agreements to purchase lease commencement date. Right-of-use assets are recognised apartments are continuously concluded with customers, and start separately from other assets on the balance sheet. before construction has commenced. The Group has identified a Right-of-use assets attributable to ground leases are measured distinct performance obligation in these agreements: the sale of a at fair value after the commencement date in accordance with IAS dwelling unit. The transaction price is fixed in its entirety. Revenue 40. Therefore, right-of-use assets attributable to ground leases are is recognised when the customer has obtained control, by allow- not depreciated in subsequent periods. ing the customer to use or benefit from the unit, whereby control Right-of-use assets for Genova’s remaining agreements are is considered transferred. Genova has made the assessment that measured at cost. The cost of these right-of-use assets includes control of the dwelling unit is transferred to the customer at a point the initial amount recognised for the corresponding lease liability, in time, when the buyer gains accession to the residential unit. This initial direct costs, any advance payments made on or before the normally takes place over a shorter period of time as the residential lease commencement date less any incentives received, and an property is completed. estimate of any reversal of loss. After the commencement date,

112 Genova 2020 Annual Report Genova | Notes

right-of-use assets are measured at cost less accumulated depre- 2.19 PARENT COMPANY ACCOUNTING POLICIES ciation and impairment losses, and adjusted for any remeasure- The accounting policies applied by the Parent Company are essen- ment of the lease liability. Provided that Genova is not reasonably tially consistent with the consolidated financial statements. The certain that it will exercise its right to use the underlying asset by Parent Company’s accounts are prepared in accordance with RFR the end of the lease term, the right-of-use asset is depreciated over 2, Accounting for Legal Entities and the Swedish Annual Accounts the lease term on a straight-line basis. Act. RFR 2 specifies exemptions from, and additions to, the standards issued by the IASB. These exemptions and additions shall Exemption from application apply from the date the legal entity applies the specific standard or Genova applies the exemptions for short-term leases and low- statement in their consolidated financial statements. value leases. Costs arising from these leases are recognised over The Parent Company does not apply the same accounting poli- the lease term on a straight-line basis as operating expenses in cies as the Group in the cases set out below. profit or loss.

Presentation of the income statement and balance sheet The Group as lessor The Parent Company applies the presentations described in the Genova classifies all rental agreements as operating leases, Swedish Annual Accounts Act, which includes a different presen- since all significant risks and rewards associated with ownership tation of equity. of the properties are retained by Genova. Rental income is noti- fied in advance and accrued over the rental term on a straight-line Shares in subsidiaries basis, unless another form of accrual is more economically viable. Shares in subsidiaries are measured at cost less impairment Advance rent is recognised as deferred income. If the rental agree- losses. If there is any indication that shares and participations in ment includes discounted rent for a certain period of time, this is subsidiaries may be impaired, their recoverable amount is esti- accrued over the current rental term on a straight-line basis. mated. If the recoverable amount is lower than the book value, an impairment loss is recognised. Impairment losses are recognised

2.16 DIVIDENDS in Profit/loss from participations in Group companies. Dividends paid to the Parent Company’s shareholders are recognised as debt in the Group’s financial statements in the period Group and shareholder contributions when the dividend is approved by the Parent Company’s share- The Parent Company recognises Group contributions using the holders. alternative rule, which means that Group contributions paid or received are recognised as appropriations. Shareholder contribu-

2.17 DEVELOPMENT PROPERTIES tions are recognised directly in equity by the recipient, and capital- Development properties are properties that are newly constructed ised in shares and participations by the contributor. Shareholder for residential or commercial purposes. Production costs include contributions received are recognised as an increase in unre- direct costs and a reasonable proportion of indirect costs and stricted equity. interest expense.

IFRS 16 Leases 2.18 JOINT ARRANGEMENTS The accounting model for recognising leases in IFRS 16 was not A joint arrangement is when the Group shares joint control of an applied in the Parent Company. This means that lease payments arrangement with other parties. Arrangements subject to joint were recognised as an expense over the lease term on a straight- control are classified as either a joint operation or a joint venture, line basis, and that right-of-use assets and lease liabilities were not depending on the contractually agreed rights and obligations of included on the Parent Company’s balance sheet. However, the each of the parties sharing control. The Group is party to arrange- identification of a lease complies with IFRS 16 – that an agreement ments classified as joint ventures. Joint ventures are recognised is, or contains, a lease if the agreement conveys the right to use using the equity method. When using the equity method, the an asset (the underlying asset) for a period of time in exchange for investment is initially measured at cost in the Group’s statement consideration. of financial position and the book value is subsequently increased or decreased to match the Group’s share of profit or loss and other comprehensive income from its investment after the acquisition date. The Group’s share of profit or loss and other comprehensive income in a joint venture is included in the Group’s profit or loss and other comprehensive income.

Genova 2020 Annual Report 113 Genova | Notes

Note 3 Financial risk management

3.1 FINANCIAL RISK FACTORS the Group’s control. The occurrence of such circumstances could Through its operations, the Group is exposed to various types of mean that projects cannot be completed before the loans are due, financial risk, which may impact the company’s financial posi- or that such additional costs are not covered by the credit facilities tion and results. The following describes the main financial risks granted. Should such a situation arise, where Genova is unable to that the Genova Group is exposed to, and how management has obtain the required credit or credit at favourable terms, a material elected to manage these risks. This note should be read together adverse effect on the Group’s operations, earnings and financial with those notes that describe the Group’s financial assets and lia- position could arise. bilities in more detail. As of 31 December 2020, the Group’s liquidity amounted to SEK At present, the Parent Company only holds shares in Group 653m (159), including an undrawn credit facility of SEK 75m (50). companies and inter-company transactions. The following descrip- The Group’s credit facility is subject to covenants comprising the tion therefore applies to the Group as a whole. achievement of several financial key metrics and several non-fi- Risk management is carried out by the CEO and CFO, in con- nancial key metrics. The financial key metrics include the loan-to- sultation with the Board. The CEO and CFO identify and assess value ratio and interest-coverage ratio. Genova works continuously financial risks. to monitor the fulfilment of its loan covenants and reports the outcome to the Board.

3.2 FUNDING RISK – LIQUIDITY RISK The undiscounted cash flows arising from the Group’s liabili- The Group’s activities, especially property acquisitions, are mainly ties in the form of financial instruments, based on the contracted financed by loans from external creditors. Interest expense is a sig- remaining maturities at the balance-sheet date, are shown in the nificant item of cost, and borrowings account for a major proportion table below. of total assets. The Group’s activities include the management of Amounts payable based on a variable interest rate, have been property development projects, which may be delayed or affected estimated using the current interest rates at the balance-sheet by unforeseen or additional costs – due to factors within or beyond date.

Between 1 and 2 Between 2 and 5 More than 5 Group, SEKm Less than 1 year years years years

As of 31 December 2020 Loans from credit institutions 202.2 101.1 2,288.1 – Bond loans 50.7 – 1,089.1 – Non-current liabilities – 44.3 – 2.1 Lease liabilities 5.7 5.5 2.5 – Accounts payable and other liabilities 40.8 – – –

Total 234.0 218.7 3,379.7 2.1

As of 31 December 2019 Loans from credit institutions 226.9 71.0 1,815.2 – Bond loans – 177.8 644.2 – Non-current liabilities – 21.6 22.5 2.1 Lease liabilities 6.6 6.0 9.9 17.6 Accounts payable and other liabilities 41.1 – – –

Total 274.6 276.4 2,491.8 19.7

114 Genova 2020 Annual Report Genova | Notes

3.3 INTEREST-RATE RISK days or more overdue, or when other factors indicate that a pay- The Group’s interest-rate risk arises from long-term loans. Variable ment suspension exists. A significant increase in credit risk was not rate loans expose the Group to interest-rate risk in regard to cash deemed to exist for any receivable or asset at the balance-sheet flow. The Group’s loans only carry STIBOR interest rates, or similar, date. Such an assessment is based on whether payment is 30 days plus a margin. This means that the Group is exposed to fluctuations or more overdue, or if the credit quality has deteriorated signifi- in STIBOR rates. Most the Group’s large credit facilities comprise cantly, resulting in a rating below investment grade. If the amounts construction credit, typically with maturities to cover a construc- are not deemed insignificant, a loss allowance for expected credit tion period of 18–24 months before being phased-out. From time losses is recognised for financial instruments. to time, the Group also raises acquisition loans and loans from minority interests, which usually have longer maturities. Changes Parent Company in interest rates may lead to changes in fair value, changes in cash The Parent Company applies the same impairment model as flows and fluctuations in the Group’s earnings. the Group for expected credit losses on current and non-cur- Genova has purchased interest-rate caps for a total of SEK rent receivables from Group companies. A significant increase in 600m in the loan portfolio, limiting interest rates to 2%. The caps credit risk was not deemed to exist for any receivable from Group apply until 2022 for SEK 300m, and until 2023 for the remaining companies at the balance-sheet date. The assessment is that no SEK 300m. At the end of the period, the Group had no other out- expected credit losses are material, and no allowance has there- standing derivatives or interest-rate swaps, and all loans carried fore been recognised. variable interest rates with three-month STIBOR as the reference base. The interest-rate cap is recognised as prepaid financial 3.5 CAPITAL RISK MANAGEMENT expenses and measured at fair value. The CEO and CFO have The aim of the capital structure is to ensure the Group’s ability to deemed the current scope of the rate cap to be satisfactory based continue operating, so that it can continue to generate returns for its on the size of the loan portfolio and current interest-rate levels. shareholders and benefits for other stakeholders, and to maintain In 2020, a 1 percentage point increase/decrease in 3-month an optimal capital structure in order to minimise its cost of capital. STIBOR would have led to a SEK 26m increase/decrease in the Like other companies in the industry, Genova uses a loan-to- Group’s interest expense for the financial year. Earnings and equity value ratio to assess the quality of its capital. This key metric is would have been impacted by the corresponding amount. The sen- calculated as interest-bearing liabilities less cash and cash equiv- sitivity analysis is estimated solely on the basis of an assumption of alents in relation to the market value of investment properties, changed STIBOR rates. properties under construction and development properties at the end of the reporting period.

3.4 CREDIT RISK AND COUNTERPARTY RISK The Group is exposed to the risk of not receiving payment for the 3.6 CLASSIFICATION AND MEASUREMENT OF FINANCIAL residential units or properties for which Genova has entered into INSTRUMENTS an agreement to sell, and for which receivables will be due from The following table shows the Group’s financial assets and liabili- the buyers, as well as current rent and accounts receivable. The ties, measured at book value and fair value respectively, classified assessment is that credit risk has not increased significantly for into categories under IFRS 9. The Group’s financial assets and lia- any of the Group’s financial assets. Counterparties have no credit bilities for the comparative year of 2019 are presented in classifica- ratings, except for cash and cash equivalents, for which the coun- tion categories under IAS 39. terparty has a credit rating of AAA. The maximum credit risk for the assets is the net book values The financial assets covered by the general approach to loss in the following tables. The Group has not received any pledges of allowances are cash and cash equivalents, contractor agreements collateral for these net financial assets. and rent and accounts receivable. Genova applies a method that combines historical experience with other known information and forward-looking factors to estimate expected credit losses. The Group has defined default as when payment of the receivable is 90

Genova 2020 Annual Report 115 Genova | Notes

Financial assets at fair value through Assets Total Total Group, SEKm profit or loss at amortised cost book value fair value

31 Dec 2020 Assets on the balance sheet Other non-current receivables 257.3 257.3 257.3 Rent receivable and accounts receivable 10.6 10.6 10.6 Other receivables 131.4 131.4 131.4 Accrued income 7.0 7.0 7.0 Cash and cash equivalents 578.4 578.4 578.4

Total 274.9 709.8 984.7 984.7

Financial liabilities at fair value through Liabilities Total Total Group, SEKm profit or loss at amortised cost book value fair value

31 Dec 2020 Liabilities on the balance sheet Long-term loans from credit institutions 2,261.9 2,261.9 1,664.6 Other non-current liabilities 43.1 43.1 42.1 Short-term loans from credit institutions 298.1 298.1 452.9 Accounts payable 40.8 40.8 34.1 Other liabilities 119.1 119.1 69.3 Accrued expenses 7.8 7.8 10.5

Total 2,770.8 2,770.8 2,770.8

Financial assets at fair value through Assets Total Total Group, SEKm profit or loss at amortised cost book value fair value

31 Dec 2019 Assets on the balance sheet Other non-current receivables 96.0 96.0 96.0 Rent receivable and accounts receivable 4.0 4.0 4.0 Other receivables 27.8 27.8 27.8 Accrued income 60.0 Cash and cash equivalents 109.1 109.1 109.1

Total 162.6 136.9 236.9 236.9

Financial liabilities at fair value through Liabilities Total Total Group, SEKm profit or loss at amortised cost book value fair value

31 Dec 2019 Liabilities on the balance sheet Long-term loans from credit institutions 1,664.6 1,664.6 1,664.6 Other non-current liabilities 42.1 42.1 42.1 Short-term loans from credit institutions 579.3 579.3 579.3 Accounts payable 41.1 41.1 41.1 Other liabilities 69.3 69.3 69.3 Accrued expenses 10.5 10.5 10.5

Total 2,406.9 2,406.9 2,406.9

116 Genova 2020 Annual Report Genova | Notes

Note 4 Key judgements and estimates

Judgements and estimates are evaluated continuously and are CRITICAL ACCOUNTING ESTIMATES FOR THE COMPANY based on historic experience and other factors, including expec- Revenue recognition tations of future events considered reasonable under the current Estimates and limitation of variable consideration circumstances. The transaction price allocated to the project management performance obligation is variable and impacted by the outcome of the

CRITICAL ACCOUNTING ESTIMATES co-operative housing association’s contract with the customer. The AND ASSUMPTIONS Group makes an initial assessment of the outcome, which normally The Group makes estimates and assumptions about the future. The means that the consideration is partly limited due to uncertainty in accounting estimates resulting from these will, by definition, rarely the outcome of the contract. The assessment is then updated con- correspond to the actual outcome. The estimates and assumptions tinuously on the basis of historical experience from the outcomes that have a significant risk of resulting in a material adjustment to of similar projects and estimates of the future. the book values of assets and liabilities within the next financial year are described below. Method for measuring progress towards satisfaction of a performance obligation

Valuation of investment properties Revenue for fulfilment of the project management contract is rec- Investment properties are measured at fair value, which is deter- ognised when the buyer gains accession to the residential unit. mined by management on the basis of the properties’ estimated market value. Difference between a business combination and In the valuation of investment properties, judgements and an asset acquisition assumptions may affect the Group’s earnings and financial posi- The acquisition of a company is classified as either a business com- tion. Critical accounting estimates and assumptions are made bination or an asset acquisition. An asset acquisition exists if the when valuing building rights in regard to variables in develop- acquisition relates to properties, with or without rental agreements, ment estimates, vacancy rates, internal rate of return and cost of but does not include the organisation and processes required to capital. These assumptions are based on experienced valuers’ perform the management activities. All other acquisitions are busi- assessments of the capitalisation rate for comparable properties. ness combinations. Estimates of the cash flow for operating, maintenance and admin- Management assesses the criteria that have been met on a istrative expenses are based on actual costs, but also on experi- case-by-case basis. All acquisitions completed in 2018 and 2017 ence from comparable properties. Future investments have been are considered asset acquisitions. estimated on the basis of the actual needs. For more information about the assumptions made, refer to Note 15 Investment proper- Control over co-operative housing associations ties, which also contains a section on market valuation. As a result of the Swedish Financial Supervisory Authority’s dialogue with listed residential developers over a longer period of time

Deferred tax assets regarding the application of IFRS 10 Consolidated Financial State- Deferred tax assets and liabilities are recognised for deductible ments and IFRS 15 Revenue from Contracts with Customers in temporary differences and unused tax loss carryforwards. The relation to the recognition of income from co-operative apartment valuation of tax loss carryforwards and the Group’s ability to utilise projects constructed on behalf of a co-operative housing associa- tax loss carryforwards is based on the management’s estimates of tion and whether Genova is considered to control the co-operative future taxable profits in various tax areas. The largest tax loss car- housing association, Genova, in line with several other operators in ryforwards are attributable to Sweden, where they are deductible the industry, has decided to change its accounting policy and con- against taxable profits in future periods with no time limitation. For solidate the co-operative housing association. more information about tax loss carryforwards and the recognition and measurement of deferred tax assets, see Note 14.

Genova 2020 Annual Report 117 Genova | Notes

Note 5 Segment reporting

Management has identified operating segments on the basis of Revenue from Swedish customers constitutes 100% (100) of total internal management reports to the company’s chief operating Group income. Of the investment property portfolio, 95% (95) is decision-maker, which the Group has identified as the CEO. Based allocated to Sweden, 5% (5) to Spain. In 2020, the Group had one on the internal management reports, the operations are organ- customer that accounted for more than 10% of its income. This ised, managed and reported as two operating segments: Property customer’s total share of income was 14%. In 2019, the Group had management and Other. The Investment properties operating one customer that accounted for more than 10% of income. This segment has been consolidated according to the same policies as customer’s total share of income was 11%. These customers relate for the Group as a whole. The income and expenses reported for to the Other segment for both of these years. each operating segment are actual costs. The same applies to the assets and liabilities reported per segment and that are shown in the Consolidated statement of financial position.

2020 2019 Property New Property New manage- construc- Not manage- construc- Not SEK 000s ment tion allocated Total ment tion allocated Total Rental income 231.1 231.1 180.6 180.6 Income from new construction, –10.0 – 26.8 26.8 co-operative apartments

Total income 231.1 –10.0 221.1 180.6 26.8 207.4

Property costs –53.7 –53.7 –50.7 –50.7

Total costs –53.7 –53.7 –50.7 –50.7

Net operating income/Income 177.4 167.4 129.9 26.8 156.7 from new construction

Central administration –26.1 –39.1 –65.2 –12.4 –22.5 –34.9 Share of profit from joint ventures 55.7 55.7 25.4 25.4 Net financial items –107.1 –107.1 –79.6 –79.6 Other operating income 2.2 2.2 3.2 3.2 Value changes, properties 380.0 380.0 606.5 606.5 Currency effects, properties –6.8 –6.8 2.1 2.1

Income before tax 426.2 679.4

Segment-specific assets Investment properties 4,559.6 3,661.3 Properties under construction 704.9 702.0 Development properties 91.4 56.5 Shares in joint ventures 279.4 88.5 Accrued income 37.0 104.4

Segment-specific investments Acquisitions and investments 1,071.3 53.6 968.3 172.9 in properties

118 Genova 2020 Annual Report Genova | Notes

Note 6 Rental income

Rental and services income is distributed between the following Term structure of future rental income at closing date: business segments:

1 Jan 2020 1 Jan 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 1 Jan 2020 1 Jan 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Payment due within 12 months 251.6 219.0 Office/Retail 74.9 97.6 Payment due between one and five years 732.4 660.0 Community service properties 90.8 42.7 Payment due later than five years 718.2 658.9

Warehouse/industry 46.5 25.0 Total 1,702.2 1,537.9 Hotel 17.5 13.5 Other rental income 1.4 1.8 10 largest tenants: Total net sales per business segment 231.1 180.6 Contracted % of total Tenants rent portfolio Income trend: Coop Sverige Fastigheter AB 13.5 5.14% Uppsala Music School Trust 12.9 4.91% HOOM Home & Hotel AB 11.4 4.33% Jan-Dec Jan-Dec Change, City of Stockholm, Education Adminis- SEKm 2020 2019 % tration 11.3 4.31% Comparable portfolio 140.9 135.7 4 Uppsala Municipality 11.2 4.26% Properties acquired 77.9 27.5 184 Gluntens Montessori School 10.3 3.93% Properties sold 12.3 17.4 -29 Yrkesplugget i Sverige AB 9.8 3.72% Rental income 231.1 180.6 28 Norlandia Care AB 9.5 3.60% Dagab Inköp och Logistik AB 9.3 3.54% Commercial properties 140.3 129.8 8 Scanreco AB 8.6 3.28% Community service prop- 90.8 50.7 79 erties Total 107.7 41.03%

Rental income 231.1 180.6 28 Average weighted remaining term, years 6.22

Term structure of existing rental agreements at the balance-sheet date:

No. of Contract- Per- rental ed cent- agree- Area rent, age Group, SEKm ments Ksqm SEKm % Term 2021 64 13 17 6% 2022 50 23 34 13% 2023 33 25 30 11% 2024 34 26 32 12% 2025 10 24 40 15% >2025 35 66 104 39%

Total 226 178 257 98% Rental apartments 51 3 5 2% Parking spaces and other 3 – – –

Total 280 181 262 100% Vacant 9 7

Total 190 269

Genova 2020 Annual Report 119 Genova | Notes

Note 7 Property costs Note 8 Central administration

In 2020, property costs amounted to SEK -53.7m (-50.7), corre- Central administrative expenses sponding to SEK -283/sqm (-298). These amounts includes direct property costs such as costs for operation, maintenance, ground 1 Jan 2020 1 Jan 2019 rent and property tax. Group, SEKm 31 Dec 2020 31 Dec 2019

Property management Other external costs –7.3 –5.2 Operating costs Operating costs includes costs for heating, water, maintenance, Personnel costs –6.5 –5.0 waste management and insurance. Most operating costs are Depreciation of equipment and right-of-use assets –2.2 –2.2 passed on to tenants in the form of rent surcharges. Regard- Listing expenses –10.1 ing warehouse and industrial properties, the tenants are directly Central administration, responsible for most of the operating costs in many cases. In addi- property management –26.1 –12.4 tion, operating costs of SEK -43.0m (-37.5) are included, corresponding to SEK -227/sqm (-220). Project development Other external costs –9.8 –9.5 Personnel costs –10.8 –9.0 Maintenance costs Maintenance costs comprise ongoing measures to maintain the Depreciation of equipment and right-of-use assets –3.3 –4.0 property’s standard and technical systems. Maintenance costs Listing expenses –15.2 amounted to SEK -4.3m (-7.6), corresponding to SEK -23/sqm (-45). Central administration, project development –39.1 –22.5 Property tax The Group’s property tax amounted to SEK -6.4m (-5.6), corre- Parent Company sponding to SEK -34/sqm (-33). Property tax is a state tax based Other external costs in the Parent Company of SEK -29.6m (-0.3) on the taxable value of a property. In 2020, the tax rate was 1.0% primarily refer to listing expenses of SEK 25.3m and Board fees of of the taxable value for offices and 0.5% for warehouse/industry. SEK 2.6m.

The property cost trend:

Jan-Dec Jan-Dec Change, SEKm 2020 2019 % Note 9 Auditor fees Comparable portfolio –38.1 –41.2 –7 Properties acquired –13.7 –5.6 145 Properties sold –1.9 –3.9 –50 Audit assignments refer to the examination of the annual report Property costs –53.8 –50.7 6 and accounts as well as the administration by the Board and the CEO, other tasks related to the duties of the company’s auditors, Commercial properties –36.7 –42.1 –13 and consultation or other services that may result from observa- Community service prop- –17.1 –8.6 99 erties tions noted during such examinations or implementation of such other tasks. All other tasks are defined as other assignments. Property costs –53.8 –50.7 6

1 Jan 2020 1 Jan 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Ernst & Young AB Audit assignment –3.8 –2.3 Other assignments –2.1 –0.4

Total –5.9 –2.7

Parent Company In 2020 and 2019, the Parent Company did not have any costs for auditing or other services provided by the elected auditors.

120 Genova 2020 Annual Report Genova | Notes

Note 10 Employee benefits

1 Jan 2020 1 Jan 2019 1 Jan 2020 1 Jan 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Salaries and remuneration 30.0 26.5 Salaries and remuneration 8.5 – Social security costs 7.9 6.8 Social security costs 2.7 – Pension expense, defined-contribution 2.9 2.4 Total 11.2 – plans Capitalisation of ongoing projects –22.3 –19.5

Total 18.5 16.2

1 Jan 2020–31 Dec 2020 1 Jan 2019–31 Dec 2019 Salaries Salaries and other and other remuneration Pension remuneration Pension Group, SEKm (of which bonus) expense No. of (of which bonus) expense No. of Board members, CEO and other senior executives 19.3 0.7 14 15.7 1.3 14 of which bonus (4.7) (3.7) Other employees 10.7 2.2 21 10.8 1.1 21 of which bonus (1.1) (0.2)

Total 30.0 2.9 35 26.5 2.4 35

1 Jan 2020–31 Dec 2020 1 Jan 2019–31 Dec 2019 Salaries Salaries and other and other remuneration Pension remuneration Pension Parent Company, SEKm (of which bonus) expense No. of (of which bonus) expense No. of Board members, CEO and other senior executives 8.5 – 9 – – – of which bonus (4.5) –

Total 8.5 – 9 – – –

Of the Group’s Board members, CEO and other senior executives during the year, ten (ten) were men and four (three) women. The number of people referred to above refers to the total number during the year.

1 Jan 2020–31 Dec 2020 1 Jan 2019–31 Dec 2019 Average no. of Of whom Average no. of Of whom employees men employees men

Group (Sweden) 24 11 26 16 Parent Company (Sweden) 2 2 – –

Group, total 26 13 26 16

Genova 2020 Annual Report 121 Genova | Notes

Salary/ Remuneration/ Variable Pension Other SEKm Board fees remuneration expense remuneration Total

31 Dec 2020 Chairman of the Board Mikael Borg 0.6 – – – 0.6 Board member Micael Bile 0.3 – 0.3 Board member Jan Björk 0.4 – – – 0.4 Board member Knut Ramel 0.3 – – – 0.3 Board member Maria Rankka 0.4 – – – 0.4 Board member Erika Olsén 0.3 – – – 0.3 Board member Andreas Eneskjöld 0.3 – – – 0.3 CEO Michael Moschewitz 2.5 4.0 0.5 0.1 7.1 Other senior executives (6 people) 9.4 0.7 0.7 0.4 11.2

Total 14.5 4.7 1.2 0.5 20.9

Basic salary/ Variable Pension Other SEKm Board fees remuneration expense remuneration Total

31 Dec 2019 Chairman of the Board Mikael Borg 0.1 – – – 0.1 Board member Micael Bile 1.1 0.2 0.2 1.5 Board member Jan Björk 0.1 – – – 0.1 Board member Knut Ramel 0.1 – – – 0.1 Board member Maria Rankka 0.1 – – – 0.1 Board member Erika Olsén 0.1 – – – 0.1 Board member Andreas Eneskjöld1 1.1 – 0.2 – 1.3 CEO Michael Moschewitz 1.8 1.5 0.2 0.1 3.6 Other senior executives (6 people) 7.5 2.2 0.7 0.3 10.7

Total 12.0 3.7 1.3 0.6 17.6

1) Invoiced their fees through own company.

Senior executives in 2019: Michael Moschewitz, CEO Remuneration of CEO and other senior executives consisted of Linda Frisk, Head of Residential a fixed salary, other benefits and pension. The period of notice for the CEO is nine months, and three to six months for other senior Edvard Schéele, CFO executives. There are no severance pay agreements. Remuneration Anna Molén, Head of Urban Development guidelines for senior executives are presented on Genova’s website. Henrik Raspe, Head of Project Development Peter Lövgren, Head of Business Development (until 31 July 2020) Henrik Sandström, Head of Properties

122 Genova 2020 Annual Report Genova | Notes

Note 11 Net financial items Note 13 Value changes

1 Jan 2020 1 Jan 2019 1 Jan 2020 1 Jan 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Assets and liabilities measured at amor- Change in net operating income 17.3 35.3 tised cost: Ongoing construction 83.2 –18.6 Interest income from other financial 3.4 1.9 Land and unused building rights 227.5 264.1 assets Change in yield requirement –12.2 65.8 Total interest income using Acquisitions 64.2 210.4 effective interest method 3.4 1.9 Divestments – 49.5

Interest expense, loans –92.3 –66.1 Value changes, properties 380.0 606.5

Total interest expense using –92.3 –66.1 effective interest method

Other financial expenses –16.3 –13.3 Interest expense leases –1.9 –2.1 Note Income tax Total –18.2 –15.4 14

Total recognised in profit or loss –107.1 –79.6 1 Jan 2020 1 Jan 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 1 Jan 2020 1 Jan 2019 Current tax for the year –3.2 –2.3 Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Deferred tax, temporary differences –52.0 –136.7 Assets and liabilities measured at amortised cost: Total income tax –55.2 –139.0 Interest income from other financial 64.1 0.3 assets 1 Jan 2020 1 Jan 2019 Total interest income using Parent Company, SEKm 31 Dec 2020 31 Dec 2019 effective interest method 64.1 0.3 Deferred tax, temporary differences 12.2 –0.2

Interest expense, loans –43.7 –31.6 Total income tax 12.2 –0.2

Total interest expense using –43.7 –31.6 effective interest method The differences between recognised tax expense and estimated tax expense based on the applicable tax rate are as follows: Other financial income – – Other financial expenses –15.9 –7.1 1 Jan 2020 1 Jan 2019 Total –15.9 –7.1 Group, SEKm 31 Dec 2020 31 Dec 2019 Income before tax 473.2 710.0 Total recognised in profit or loss 4.5 –38.4 Income tax calculated with the Group’s applicable tax rate of 21.4% –101.3 –151.9 Non-taxable income 20.1 17.7 Non-deductible expenses –1.3 –0.1 Taxable income not included in profit or loss – –1.7 Note 12 Other operating income Deductible costs not included in profit or loss 15.7 2.2 Non-deductible net interest income –18.2 –13.0 Property transaction reversals 34.5 2.9 1 Jan 2020 1 Jan 2019 Adjustment of deferred tax for prior Group, SEKm 31 Dec 2020 31 Dec 2019 periods –6.7 – Services invoiced 0.9 1.7 Effect of changed tax rates 3.1 4.9 Other 1.3 1.5 Other –1.1 – Total other operating income 2.2 3.2 Tax for the year as per the income statement –55.2 –139.0 Effective tax 12% 20%

Genova 2020 Annual Report 123 Genova | Notes

All of the Group’s subsidiaries, except for two, are Swedish and at the balance-sheet date, had a tax rate of 21.4% (21.4), which was Note 15 Investment properties the weighted average tax rate for the Group in 2020. A tax rate of 20.6% is applied for deferred tax, which will be the applicable tax rate in Sweden as of 2021. Investment properties are measured using the fair value method. Non-taxable income is mainly attributable to earnings from res- Investment properties are properties held to earn rental income or idential construction and share of profits from joint ventures, where for capital appreciation, or both. The Group has no holdings of own- income is recognised after tax. er-occupied properties or properties leased out under an operat- Deferred tax liabilities and deferred tax assets are allocated ing lease. between the following types of temporary differences:

Group, SEKm 31 Dec 2020 31 Dec 2019 1 Jan 2020 1 Jan 2019 Opening balance 3,661.3 2,270.9 Group, SEKm 31 Dec 2020 31 Dec 2019 Investments in existing properties 23.0 8.0 Deferred tax liabilities Acquisitions 735.6 960.3 Temporary differences, properties 311.6 269.3 Divestments –465.1 –7.0 Untaxed reserves 13.0 11.4 Reclassifications 308.0 –58.0 Total deferred tax liabilities 324.6 280.7 Value changes, unrealised 296.8 487.0

Total fair value Deferred tax assets Investment properties 4,559.6 3,661.3 Tax loss carryforwards 89.6 78.6

Total deferred tax assets 89.6 78.6 Tax bases 1,414.6 1,125.3

Deferred tax liabilities, net 235.0 202.1 Unrealised value changes in investment properties held at the balance-sheet date are recognised in profit or loss on the line item

1 Jan 2020 1 Jan 2019 ‘Value changes, properties.’ Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Fair value correspond to the market value of investment prop- Deferred tax assets erties. The external valuations performed as of 31 December 2020 Tax loss carryforwards 21.6 9.4 by independent valuers comprised all properties, a total of 48. The Total deferred tax assets 21.6 9.4 market values of the properties were calculated using an estimated interval of uncertainty of +/-5.0% based on a sensitivity analysis, A deferred tax asset is recognised for an unused tax loss carryfor- meaning a value of SEK 4,331.6m – SEK 4,787.6m corresponding to ward or unused tax credit if, and only if, it is considered probable +/- SEK 228m. The value change was mainly attributable to invest- that there will be sufficient future taxable profit against which the ments in properties, new lettings, renegotiations and the fact that loss or credit carryforward can be utilised. building rights were created for residential purposes in a number of properties. The amounts recognised for investment properties The following tax loss carryforwards existed at the balance-sheet in the Group’s statement of comprehensive income are set out in date of 31 December 2020, with no time limit on their utilisation: Note 5 Segment reporting.

The ‘market value’ concept Group, SEKm Market value here refers to the most probable price for an intended Total tax loss carryforwards 435.0 sale of the valuation object in a free and transparent property market. The sale of the valuation object is assumed to take place at the valu- – Of which tax loss carryforwards on the balance sheet 435.0 ation date, after the object has been offered for sale in a customary manner for the valuation object during a normal marketing period.

Parent Company, SEKm In the intended sale, there must be no coercion to transfer the Total tax loss carryforwards 105.0 property and no special party relations.

– Of which tax loss carryforwards on the balance sheet 105.0

124 Genova 2020 Annual Report Genova | Notes

Valuation method Valuation yield per category: The grounds for all market value assessments are analyses of pre- 31 Dec 2020 31 Dec 2019 sold objects (local prices) combined with knowledge of market play- Commercial properties1 3.93% 4.18% ers’ views of various types of objects, how they arrive at these views, Community service properties 4.94% 5.16% awareness of market rent levels (local prices), and so forth. Proper- Total 4.42% 4.50% ties are rarely completely comparable, which is why standardisation 1) Viby 19:3 has been partially divested based on a valuation of building rights. Excluding of valuation factors is required. Standardisation often takes place Viby 19:3, the via the area (area approach) or net operating income (rate of return/ yield for commercial properties is 4.62% and the total yield for the entire investment property portfolio is 4.79%. capitalisation rate approach). Both of these approaches, according to Genova’s interpretation, reflect an investor’s assessment without insight into the valuation object’s actual income or costs. The most In 2020, the property value per region was allocated as follows: common method of valuation is the discounted cash flow approach, which is considered a variation of the rate of return method, but with Uppsala 43% (24) the ability to determine value based on estimated future income/cost Greater Stockholm 52% (64) changes. The discounted cash flow approach illustrates potential Rest of Sweden 5% (12) future trends in current financial factors. Inputs for this approach are the object’s closing rent levels, costs, vacancies, and so forth. These are adjusted over the calculation period with market assumptions based on local prices, or knowledge of how market players assess the current object. The value is derived from the total of the present value of each year’s net operating income, and the present value of Note 16 Properties under construction the property’s residual value at the end of the calculation period. The residual value is the expected net operating income in the first year after the end of the calculation period, in relation to a market-based Investments in existing investment properties are recognised as estimate of the internal rate of return. part of the book value of investment properties and are included in market valuation. As of 31 December 2020, properties under con-

Cost of capital struction refers to new properties under construction that, upon Cost of capital is the required rate of return the property owner completion, will be handed over for management and subsequently expects from the property tied up in capital. In Genova’s valuation, reclassified as investment properties. The completed project in cost of capital is the required rate of return on total capital since Knivsta comprising a retirement home, preschool and rental units the calculation is performed without taking any loans into account. was reclassified in 2020 from properties under construction to According to Swedish Property’s Index, cost of capital is total capi- investment properties. tal for a single object based on the current long-term bond rate plus property-related risk. In practice, assessing a market-based cost Group, SEKm 31 Dec 2020 31 Dec 2019 of capital is difficult using a theoretic model because cost of cap- Opening balance 702.0 279.0 ital cannot be observed directly in studies of completed sales. For Acquisitions 69.2 – this reason, cost of capital is determined by adjusting our assessed New construction/capitalisation 207.7 229.5 internal rate of return for inflation. Reclassifications –308.0 69.0 Divestments –50.0 – Value changes, unrealised 83.2 124.4 Other fair value disclosures As of 31 December 2020, fair value amounted to SEK 4,559.6m Closing balance 704.1 702.0 (3,661.3). In the fair value hierarchy, investment properties are considered Level 3 assets, which means that the value of the asset is based on unobservable inputs.

The following inputs were used in the above valuations for all categories of investment properties:

Forecast period: 10 years (10) Annual inflation: 2% (2) Annual rental growth: 100% (100) of CPI Annual increase in operation and maintenance: 100% (100) of CPI Cost of capital for net present value 5-10% (5-10) varies calculation depending on the property’s geographic location and letting purpose Genova 2020 Annual Report 125 Genova | Notes

The amounts attributable to leases recognised in profit or loss Note 17 Development properties during the year are presented below:

Group, SEKm 2020 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Depreciation of right-of-use assets –5.1 –4.9 Land for planned development 91.4 56.5 Interest expense on lease liabilities –2.1 –2.1

Closing balance 91.4 56.5 Total lease costs –7.1 –7.0

Group, SEKm 31 Dec 2020 31 Dec 2019 Genova recognised lease payments of SEK 4.6m (6.7) for the finan- Opening balance 56.5 50.3 cial year. For a maturity analysis of the Group’s lease liabilities, see Acquisitions for the year 34.9 22.1 Note 3. Genova has now short-term leaves or low-value leases. Reclassifications – –11.0 Value changes, unrealised – –4.9

Closing balance 91.4 56.5 Note 19 Equipment

Note Leases 18 Group, SEKm 31 Dec 2020 31 Dec 2019 Opening cost 12.4 10.9 Purchasing 5.2 1.5 Genova divides its leases into two classes of right-of-use assets: Disposals/divestments –1.1 –

Ground leases and Others. ‘Other’ includes the Group’s leases Closing accumulated for cars and premises. Genova’s closing balances for right-of-use cost 16.5 12.4 assets, lease liabilities and changes in 2019 and 2020 are pre- Opening depreciation –7.8 –3.1 sented in the table below: Disposals/divestments – – Depreciation for the year –2.1 –4.8 Right-of-use assets Closing accumulated depreciation –9.9 –7.8 Ground Lease Group, SEKm leases Other Total liabilities Closing book value 6.6 4.6 Opening balance, 1 January 2019 24.2 19.1 43.3 –43.1 Tangible assets include art amounting to SEK 1.9m (1.9), which is Additional agreements – 1.2 1.2 –1.2 not depreciated. Depreciation of right-of-use assets – –4.9 –4.9 Terminated agreements – –2.4 2.5 2.5 Interest expense on lease liabilities –2.1 Lease payments 6.7

Closing balance, 31 December 2019 24.2 14.9 42.1 –37.2

Opening balance, 1 January 2020 24.2 14.9 42.1 –37.2 Additional agreements 0.8 3.3 4.2 –4.2 Depreciation of right-of-use assets –0.1 –5.2 –5.3 Terminated agreements – –0.4 –0.4 0.4 Interest expense on lease liabilities –1.9 Lease payments 7.0

Closing balance, 31 December 2020 24.9 12.6 40.6 –35.9

126 Genova 2020 Annual Report Genova | Notes

Note 20 Participations in Group companies

Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Opening cost 276.3 60.8 Acquisitions – 0.7 Divestments –0.1 –0.9 Shareholder contributions 52.8 215.7

Closing accumulated cost 329.0 276.3

Opening impairment losses –54.2 –46.8 Impairment losses for the year –52.8 –7.4

Closing accumulated impairment losses –107.0 –54.2

Closing book value 222.0 222.1

The Parent Company owns, directly and indirectly, participations in the following subsidiaries:

Book value, SEK 000s Participa- Name Corp. Reg. No Reg. office tions (%) 31 Dec 2020 31 Dec 2019 Genova Fastigheter AB 556712-9324 Stockholm 100 13,025 13,025 Genova Retail AB 556898-0444 Stockholm 100 – – Genova Sunnersta AB 556864-7928 Stockholm 100 – – Genova Luthagen AB 556864-7936 Stockholm 100 – – Genova Almunge AB 556893-9036 Stockholm 100 – – Genova Storvreta AB 556864-7951 Stockholm 100 – – Genova Flogsta AB 556864-7944 Stockholm 100 – – Genova Knivsta Fastighet AB 559025-1970 Stockholm 100 – – Genova Lännersta AB 556848-2839 Stockholm 100 – – Genova Seminariet AB 559012-9002 Stockholm 100 – – Genova Omsorg AB 556759-5482 Stockholm 100 – – Genova Tattby AB 559012-8988 Stockholm 100 – – Genova Björknäs AB 559012-8996 Stockholm 100 – – Genova Lillsätra 2 AB 556660-2743 Stockholm 100 – – Genova Viby AB 556948-7456 Stockholm 100 – – Genova Viby Holding AB 559213-0917 Stockholm 70 Genova Viby Fastighet AB 556708-3323 Stockholm 100 – – Genova Brynjan AB 559129-9895 Stockholm 100 – – Genova Gördelmakaren 5 AB 556708-2739 Stockholm 100 – – Genova Hold Kvarnholmen AB 559068-5276 Stockholm 100 – – Genova Kvarnholmen Fastighet AB 559076-3248 Stockholm 100 – – Genova NV 3 Holding AB 559088-4861 Stockholm 100 – – Genova NV3 AB 559088-4119 Stockholm 100 – – Genova Linne Holding AB 559088-4739 Stockholm 100 – – Genova Linne AB 559088-4127 Stockholm 100 – – Genova Rivan Holding AB 559088-4838 Stockholm 100 – – Genova Rivan AB 559088-4135 Stockholm 100 – – Genova OM Holding AB 559089-0066 Stockholm 100 – – Genova Odalmannen Fastighet AB 559129-9911 Stockholm 100 – – Genova Instrumentet Holding AB 559130-7565 Stockholm 100 – – Genova Instrumentet Fastighet AB 559130-0057 Stockholm 100 – – Genova Veddesta Holding AB 559130-7573 Stockholm 100 – –

Genova 2020 Annual Report 127 Genova | Notes

Book value, SEK 000s Participa- Name Corp. Reg. No Reg. office tions (%) 31 Dec 2020 31 Dec 2019 Genova Veddesta Fastighet AB 559082-7316 Stockholm 100 – – Genova Verkstadsgatan Holding AB 559170-5040 Stockholm 100 – – Genova Verkstadsgatan AB 559129-9952 Stockholm 100 – – Genova Vikdalen Holding AB 559170-5057 Stockholm 100 – – Genova Vikdalen AB 559130-0008 Stockholm 100 – – Genova Drevern 1 AB 559170-6139 Stockholm 100 – – Genova Effektvägen AB 559220-1106 Stockholm 100 – – Genova Skarpnäs Fastighet AB 559170-5800 Stockholm 100 – 50 Genova Hold 22 AB 559191-4337 Stockholm 100 – – Magnethuset Fastighets KB 96715-9334 Stockholm 80 – – Handelsbolag Medhuset 916407-2507 Stockholm 50 – – Genova Hold 21 AB 559191-4311 Stockholm 100 – – Magnethuset Fastighets KB 96715-9334 Stockholm 20 – – Handelsbolag Medhuset 916407-2507 Stockholm 50 – – Genova Nynäs AB 559170-6097 Stockholm 100 – – Genova Jungfrun 4 AB 559191-4188 Stockholm 100 – – Genova Elverket 1 AB 559191-4287 Stockholm 100 – – Genova Bergsbrunna AB 559191-5516 Stockholm 100 – – Fastighets AB Gålö 556951-1099 Stockholm 100 – – Genova Mältargatan AB 559219-9516 Stockholm 100 – – Genova Drevern 2 AB 559219-9441 Stockholm 100 – – Genova Kungsängsesplanaden AB 559219-9276 Stockholm 100 – – Genova Ekeby Fastighet AB 559191-4345 Stockholm 100 – 50 Korskryddan AB 559116-2499 Stockholm 100 – – Korsängen Mark AB 559003-9607 Stockholm 100 – – Kryddgården Mark AB 559017-6300 Stockholm 100 – – Genova Hus Holding 1 AB 559053-5232 Stockholm 100 50 50 SBBGenova Nackahusen AB 559264-9817 Stockholm 50 – – Nackahusen Holding AB 559053-2783 Stockholm 100 – – Nacka 5 AB 559006-0900 Stockholm 100 – – Nacka 6 AB 559006-0884 Stockholm 100 – – Nacka 14 AB 559258-1994 Stockholm 100 – – Nacka 8 AB 559006-0934 Stockholm 100 – – Nacka 9 AB 559006-0926 Stockholm 100 – – Nacka 11 AB 559006-0983 Stockholm 100 – – Genova Boländerna 9:11 AB 559014-3805 Stockholm 100 – – Genova Boländerna Fastighet AB 556721-2104 Stockholm 100 – – Genova Handelsmannen Holding AB 556898-0311 Stockholm 100 – – Genova Handelsmannen Fastighet AB 559064-1436 Stockholm 100 – – Genova Runö Holding AB 556898-0303 Stockholm 100 – – Genova Runö AB 556867-9095 Stockholm 100 – – Genova Kryddgården Holding AB 559076-1523 Stockholm 100 – – Genova Kryddgården Fastighet AB 559076-2257 Stockholm 100 – – Genova Borås Holding AB 559076-1556 Stockholm 100 – – GenJärn Borås Holding AB 559076-2984 Stockholm 50 – – GenJärn Borås Fastighet AB 556708-2663 Stockholm 100 – – GenJärn Borås Fastighet 2 AB 559170-6113 Stockholm 100 – – Genova Mackmyra Holding AB 559130-7557 Stockholm 100 – – Genova Mackmyra Fastighet AB 556723-4520 Stockholm 100 – – SBBGenova Gåshaga Holdng AB 559191-4386 Stockholm 50 – 50 Genova Gåshaga AB 559018-9618 Stockholm 100 – – Genova Åleviken AB 559170-5065 Stockholm 100 – –

128 Genova 2020 Annual Report Genova | Notes

Book value, SEK 000s Participa- Name Corp. Reg. No Reg. office tions (%) 31 Dec 2020 31 Dec 2019 Genova Byggnad Holding AB 559004-5059 Stockholm 100 50 50 Genova Sicklaön Holding AB 556898-0436 Stockholm 100 – – GenovaFastator Holding AB 559017-4057 Stockholm 50 – – Konkret Fastighetsutveckling i Nacka AB 556872-0931 Stockholm 100 – – Genova Baggensfjärden Holding AB 559064-1469 Stockholm 100 – – Genova Baggensfjärden Fastighet AB 556898-0121 Stockholm 100 – – Genova Knivsta 21:1 Holding AB 559118-9468 Stockholm 100 – – GenovaRedito Holding AB 559121-8572 Stockholm 50 – – Knivsta Gredelby 21:1 AB 559120-3798 Stockholm 100 – – Knivsta Särsta 12:1 AB 556966-4450 Stockholm 100 – – Genova Sjöborren Holding AB 559130-7581 Stockholm 100 – – Genova Sjöborren AB 559076-9898 Stockholm 100 – – Genova Mejerskan Fastighet AB 559130-7540 Stockholm 100 – – Genova Mejerskan AB 556956-1581 Stockholm 100 – – Genova Segersta Fastighet AB 556898-0105 Stockholm 100 – – Genova Segersta AB 559278-2857 Stockholm 100 – – Genova Nyproduktion AB 556848-2813 Stockholm 100 50 50 Genova Bostad Projektutveckling AB 556864-9098 Stockholm 100 – – Genova Projekt Holding 1 AB 556948-7282 Stockholm 100 – – Genova Aromatic Holding AB 556948-7431 Stockholm 100 – – Genova Saltsjölunden Holding AB 556991-6165 Stockholm 100 – – Genova Rosendal Holding AB 556991-6140 Stockholm 100 – – Genova Rosendal Holding 1 AB 559100-6746 Stockholm 100 – – Genova Bostad AB 556759-5680 Stockholm 100 – – Genova 10 AB 556864-8108 Stockholm 100 – – Genova 4 AB 556848-2847 Stockholm 100 – – Genova Projekt Holding 2 AB 559026-1912 Stockholm 100 – – Genova Knivsta Holding AB 559025-2986 Stockholm 100 – – Genova Fålhagen Holding AB 559076-3008 Stockholm 100 – – Genova Fålhagen Holding 1 AB 559093-9624 Stockholm 100 – – Genova Projekt Holding 3 AB 559130-2731 Stockholm 100 – – Genova Fast 34 AB 559170-6089 Stockholm 100 – 50 Genova Danmarks-Kumla 559229-5751 Stockholm 100 – – Genova PLM AB 556898-0329 Stockholm 100 50 50 Genova PMA Spain SL Palma 100 – – Genova PLM 2 AB 559076-1515 Stockholm 100 62 62 Genova Can Olivier SL Palma 100 – – Genova Hold 1 AB 559076-1549 Stockholm 100 50 50 Genova Fast 27 AB 559088-4101 Stockholm 100 50 50 Genova Fast 43 AB 559220-2237 Stockholm 100 50 50 Genova Hold 20 AB 559173-1558 Stockholm 100 50 50 Genova Parkering & Service AB 559003-4137 Stockholm 100 50 50 Genova Hold 24 AB 559191-4378 Stockholm 100 50 50 Genova 14 AB 556948-7274 Stockholm 100 208,330 208,330 Genova 99 AB 559204-9406 Stockholm 100 – – Genova 98 AB 559204-9422 Stockholm 100 – –

Total cost in the Parent Company 221,918 222,116

Genova 2020 Annual Report 129 Genova | Notes

Note 21 Holdings recognised according to equity accounting method

Book values and share of profit from joint ventures are presented below. The Group owns 50% of the shares in five various joint ventures, which are recognised as participations using the equity method.

Book value Participa- Name Corp. Reg. No Reg. office tions (%) 31 Dec 2020 31 Dec 2019 Participations held at the end of the period

Genova Fastator Holding AB 559017-4057 Stockholm 50 18.0 23.2

GenJärn Borås Holding AB 559076-2984 Stockholm 50 41.1 41.8

GenovaRedito Holding AB 559121-8572 Stockholm 50 31.1 23.5

SBBGenova Gåshaga Holding AB 559191-4386 Stockholm 50 112.3 –

SBBGenova Nackahusen AB 559264-9817 Stockholm 50 76.9 –

279.4 88.5

Profit from participations Participa- Name Corp. Reg. No Reg. office tions (%) 31 Dec 2020 31 Dec 2019 Participations held at the end of the period

Genova Fastator Holding AB 559017-4057 Stockholm 50 2.3 1.0

GenJärn Borås Holding AB 509076-2984 Stockholm 50 4.6 18.6

GenovaRedito Holding AB 559121-8572 Stockholm 50 2.0 5.8

SBBGenova Gåshaga Holding AB 559191-4386 Stockholm 50 – –

SBBGenova Nackahusen AB 559264-9817 Stockholm 50 46.8 –

55.7 25.4

Note 22 Inter-company transactions Note 23 Other non-current receivables

Non-current receivables Group, SEKm 31 Dec 2020 31 Dec 2019 Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Opening balance 96.0 8.3 Opening balance 820.6 581.8 Incoming items 162.2 88.9 Incoming receivables 502.4 380.0 Outgoing items –0.9 –1.2 Outgoing receivables –152.0 –141.2 Total non-current receivables Closing balance 1,171.0 820.6 at the end of the period 257.3 96.0

Current liabilities Group, SEKm 31 Dec 2020 31 Dec 2019 Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Promissory notes 201.1 88.9 Opening balance 60.5 140.1 Other non-current receivables 50.0 – Incoming liabilities 92.3 24.1 Investments on behalf of tenants, allocat- Outgoing liabilities –36.4 –103.7 ed over the contract term 4.7 5.6 Rental deposits 1.5 1.5 Closing balance 116.4 60.5 Total non-current receivables 257.3 96.0

Promissory notes of SEK 88.9m fall due for 50% payment when the first building permit is obtained for the Viby project. The remaining 50% is due for payment five years after that date. The remaining promissory note of SEK 112.2m refers to the divestment of the property in Gåshaga to a joint venture with SBB. The promissory note falls due for payment when the zoning plan has gained legal force.

130 Genova 2020 Annual Report Genova | Notes

The financial assets covered by a reserve for expected credit Note 24 Rent receivable and losses under the general approach consisted of cash and cash Accounts receivable equivalents, contractor agreements and rent and accounts receivable. Genova applies a method that combines historical experi-

Group, SEKm 31 Dec 2020 31 Dec 2019 ence with other known information and forward-looking factors to Accounts receivable 11.9 4.2 estimate expected credit losses. The Group has defined default Less: allowance for expected credit as when payment of the receivable is 90 days or more overdue, or losses –1.3 –0.2 when other factors indicate that a payment suspension exists. A Accounts receivable – net 10.6 4.0 significant increase in credit risk was not deemed to exist for any receivable or asset at the balance-sheet date. Such an assess- Accounts receivable reserve ment is based on whether payment is 30 days or more overdue, or if Opening book value –0.2 –0.3 the credit quality has deteriorated significantly, resulting in a rating Reversal of past reserves below investment grade. If the amounts are not deemed insignifi- Debts written-off (confirmed credit loss) 0.2 0.3 cant, a loss allowance for expected credit losses is recognised for Reserves for the year –1.3 –0.2 financial instruments.

Closing book value –1.3 –0.2 The fair value of the Group’s accounts receivable is consistent with their book values. At the balance-sheet date, valid accounts receivable amounted to SEK 10.6m (4.0). The credit quality of receivables that are not overdue or impaired The maximum credit risk exposure of accounts receivable is is considered high. A reserve of SEK 1.3m for rent and accounts their fair value at the balance-sheet date. The Group has no assets receivable that was made during the reporting period is subject to pledged as collateral. compliance measures.

Reserves Analysis of credit risk exposure in rent and accounts receivable 31 Dec 2020 31 Dec 2019 Note 25 Other receivables Rent and accounts receivable that are neither overdue nor impaired: Overdue: – Less than two months 0.8 1.3 Group, SEKm 31 Dec 2020 31 Dec 2019 Opening balance 27.8 121.6 Total rent and accounts receivable that are neither overdue nor impaired 0.8 1.3 Incoming items 103.6 2.4 Outgoing items – –96.2

Rent and accounts receivable that Total other receivables are overdue and impaired: at the end of the period 131.4 27.8 Overdue: – Less than two months – 2.6 – More than two, but less than six months – – Group, SEKm 31 Dec 2020 31 Dec 2019 Receivables in connection with property – More than six, but less than 12 months 11.1 0.3 transactions 101.5 20.0 – More than 12 months – – Receivables from joint ventures 6.5 1.2 Total overdue 11.1 2.9 VAT-related receivables 13.3 4.5 Of which impaired –1.3 –0.2

Book value of accounts receivable 10.6 4.0 Receivable from tenants for modifications 5.7 – Other receivables 4.4 2.1

Total other receivables 131.4 27.8 Receivables are mainly rent and accounts receivable for which the Group has elected to apply the simplified approach for expected credit losses. This means that expected credit losses are reserved Parent Company, SEKm 31 Dec 2020 31 Dec 2019 for their remaining term to maturity, which is expected to be less Receivables from Group companies than one year for all receivables. The Group’s loss allowance for recognised as joint ventures 4.4 0.1 expected credit losses is based on historical credit loss data and VAT-related receivables 4.8 – forward-looking information. Any larger single receivables are Total other receivables 9.2 0.1 assessed per counterparty. The Group writes off a receivable when there is no longer any expectation that payment will be received and when active collection efforts have been terminated.

Genova 2020 Annual Report 131 Genova | Notes

Prepaid expenses and Note 26 accrued income Note 27 Cash and cash equivalents

Group, SEKm 31 Dec 2020 31 Dec 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Down payments on investment Bank deposits 578.4 109.1 property acquisitions 28.2 10.5 Prepaid expenses, operations and administration 5.1 3.7 Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Prepaid financial expenses 2.4 9.1 Bank deposits 514.4 57.0 Accrued income 7.0 60.0 Other 1.6 0.7

Total prepaid expenses and accrued income 44.2 84.0

Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Down payments on investment property acquisitions 3.2 10.5 Accrued interest income – 0.5

Total prepaid expenses and accrued income 3.2 11.0

Note 28 Equity and net asset value

Share capital in the Parent Company, Genova Property Group AB, of a vote per share. At the balance-sheet date, all registered shares amounted to SEK 52.3m (0.7), distributed between 39,576,966 were fully paid up. ordinary shares and 4,000,000 preference shares. The preference shares have preemptive rights over ordinary The quota value of the shares is SEK 0.02. Each ordinary share shares to an annual dividend of SEK 10.50. carries one vote per share, while each preference share one-tenth

Quota value/Share, Share capital performance No. of shares SEK Share capital, SEK

Ordinary shares Opening balance, 2019 50,000,000 0.01 500,000 New share issue 11,443,932 0.01 114,439 Closing balance, 2019 61,443,932 0.01 614,439 Bonus issue – 0.01 654,439 Withdrawal –30,721,966 0.02 –614,439 Bonus issue – 0.02 40,971,920 New share issue 8,855,000 0.02 10,626,000

Closing balance, 2020 39,576,966 0.02 52,252,359

Preference shares Opening balance, 2019 3,000,000 0.01 30,000 New share issue 1,000,000 0.01 10,000 Opening and closing balance, 2020 4,000,000 0.01 40,000

Total share capital 43,576,966 52,292,359

132 Genova 2020 Annual Report Genova | Notes

Long-term net asset value attributable to ordinary shareholders:

31 Dec 2020 31 Dec 2019 SEK/ SEK/ ordinary ordinary SEKm share SEKm share Equity as per the balance sheet 2,647.8 66.90 1,726.2 56.19 Reversal: Deferred tax liabilities as per the balance sheet 324.7 8.20 280.7 9.14 Effect of change in accounting policies – – 47.0 1.53 Less: Deferred tax assets as per the balance sheet –89.5 –2.26 –78.6 –12.56 Preference share capital –440.0 –11.2 –440.0 –14.32 Non-controlling interests –78.4 –1.98 –78.3 –2.55

Long-term net asset value attributable to ordinary shareholders 2,364.6 59.75 1,457.0 47.43

for the year, SEK 375.4m, was distributed between 35,149 thou-

Net income for the year attributable to Parent Company sand average number of ordinary shares outstanding. shareholders The calculation of income per ordinary and preference share for SEKm 31 Dec 2020 31 Dec 2019 2020 was based on net income for the year attributable to Parent Net income for the year attributable to Company shareholders amounting to SEK 417.9m (549.7). Income Parent Company shareholders 417.9 549.7 per preference share was calculated based on dividends to prefer- Income per ordinary share, SEK 10.69 11.77 ence shares for the year of SEK 42.5m distributed between 4 mil- Income per preference share, SEK 10.50 10.50 lion preference shares outstanding. The remainder of net income

Note 29 Loans from credit institutions In 2020, net borrowing amounted to SEK 447.0m (899.5). An arrangement fee is payable for borrowing, which is allocated over the term of the loan using the effective interest method. As of 31

Group, SEKm 31 Dec 2020 31 Dec 2019 December 2020, the average interest rate was approximately 2.1% (2.2), with an average fixed-rate period of 3.0 years (3.6). Long-term Payment due between 1 and 2 years: Bank loans 133.7 508.7 Payment due between 2 and 5 years: Bank loans 2,128.2 1,155.9

2,261.9 1,664.6 Note 30 Bond loans Short-term Bank loans 288.7 569.5 Accrued interest 9.4 9.8 Group and Parent Company, SEKm 31 Dec 2020 31 Dec 2019 298.1 579.3 Bond loan issued 1,425.0 1,025.0 Tender of bonds –450.0 –341.0 Total borrowings 2,560.0 2,243.9 Fees to accrue over the loan term –23.1 –26.7 Accrued interest 2.7 2.1

As of 31 December 2020, the Group’s total interest-bearing liabili- Total bond loans 954.6 659.4 ties to credit institutions were attributable to acquisition financing, refinancing of the Group’s existing property portfolio and project Bond loans refers to three bond issues, all of which are listed on financing. The Group’s credit facilities contain customary loan Nasdaq Stockholm. guarantees and covenants, including the requirement that Genova and its subsidiaries meet certain financial key metrics, such as the loan-to-value ratio and interest-coverage ratio.

Genova 2020 Annual Report 133 Genova | Notes

Repur- Amount Maturity/ SEKm Amount issued Interest chased outstanding redemption 2017/2018 500.0 Stibor 3 months +5.75 –450.0 50.0 January 2021

2019 525.0 Stibor 3 months +5.25 – 525.0 September 2023

2020 400.0 Stibor 3 months +4.50 – 400.0 September 2024

Total 1,425.0 –450.0 975.0

Note 31 Term structure of credit spreads and interest rates

Term structure of credit spreads and interest rates as of 31 December 2020 Fixed-rate period Maturity Credit Amount, Average agreements, Drawn, Undrawn, SEKm rate, % SEKm SEKm SEKm Term 0-1 year1 248 3.07 248 248 0 1-2 years 98 2.09 98 98 0 2-3 year2 866 3.90 866 866 0 3-4 year3 1,899 3.01 2,159 1,899 260 4-5 years 267 2.19 267 267 0 Total 3,378 3.17 3,638 3,378 260 Construction credit 156 2.85 703 156 547 Total 3,534 3.15 4,340 3,534 807

Loans, excluding Bonds and Construction credit 2,403 2.04 2,663 2,403 260

1) SEK 50m pertains to a bond interest rate of 5.75%. 2) SEK 525m pertains to a bond interest rate of 5.25%. 3) SEK 400m pertains to a bond interest rate of 4.50%.

Group, SEKm Fixed-rate period Maturity Credit Amount, Average agreements, Drawn, Undrawn, 31 Dec 2019 SEKm rate, % SEKm SEKm SEKm Term 0-1 year 222 3.28 227 222 5 1-2 years 227 4.86 230 2271) 3 2-3 years 163 2.35 169 163 6 3-4 years 525 5.25 525 5252) – 4-5 years 1,472 1.94 1,548 1,472 76 Total 2,610 3.00 2,700 2,610 90 Construction credit 312 2.52 857 312 671 Total 2,922 2.95 3,556 2,922 761

Loans, excluding Bonds and Construction credit 1,926 2.16 2,016 1,926 90

1) SEK 159m refers to a bond with an interest rate of 5.75%. 2) SEK 525m refers to a bond with an interest rate of 5.25%.

134 Genova 2020 Annual Report Genova | Notes

Accrued expenses and Note 32 Other non-current liabilities Note 34 deferred income

Group, SEKm 31 Dec 2020 31 Dec 2019 Group, SEKm 31 Dec 2020 31 Dec 2019 Prepaid rental income 37.5 25.6 Promissory notes 41.0 40.0 Accrued expenses, operations and administration 4.9 4.5 Interest-bearing loans from minority interests – – Accrued holiday pay 1.8 1.5 Rental deposits 2.1 2.1 Accrued expenses, ongoing projects 1.1 4.5

Total other non-current liabilities 43.1 42.1 Total accrued expenses and deferred income 45.3 36.1

Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Promissory notes 40.0 40.0

Total other non-current liabilities 40.0 40.0 Pledged assets, contingent Note 35 liabilities and obligations Recognised promissory notes in the Group and Parent Company refer to a promissory note of SEK 20m with a 4% interest rate and Pledged assets due in September 2022, and a promissory note of SEK 20m with a The Group has pledged properties as collateral for borrowings. 4% interest rate and due in August 2022. Other promissory notes Refer to Note 29 for a description of the Group’s borrowings. in the Group refer to a promissory note of SEK 1m that does not accrue interest and due in September 2022. The promissory notes Group, SEKm 31 Dec 2020 31 Dec 2019 are measured at amortised cost. For own liabilities and provisions: Property mortgages 3,161.4 2,220.7

Total pledged assets 3,161.4 2,220.7 Note 33 Other liabilities Pledged shares in the Group amounted to SEK 1,093.2m (1,129.5).

Contingent liabilities Group, SEKm 31 Dec 2020 31 Dec 2019 The Group has pledged collateral of SEK 415.5m (518.7) for other Settlement of ongoing projects – 50.6 companies. The Group has also issued guarantees for SEK 0.7m (0). Liabilities relating to property transactions 57.5 14.2 Parent Company Promissory notes 35.0 – The Parent Company has guarantee commitments of SEK 2,515.2m VAT liability 22.4 2.0 (2,089.1) for Group companies and SEK 415.5m (518.7) for other Employee-related liabilities 2.3 1.0 companies, totalling SEK 2,930.7m (2,630.3). Pledged shares Other 1.9 1.5 amounted to SEK 13.1m (13.7). Total other liabilities 119.1 69.3

Parent Company, SEKm 31 Dec 2020 31 Dec 2019 Promissory notes 35.0 – Employee-related liabilities 1.5 –

Total other liabilities 36.5 –

Recognised promissory notes in the Group and Parent Company refer to a promissory note of SEK 20m with a 4% interest rate and due in August 2021, and a promissory note of SEK 15m with a 4% interest rate and due in August 2021. The promissory notes are measured at amortised cost.

Genova 2020 Annual Report 135 Genova | Notes

• In January 2021, the Board of Genova set new growth targets Note 36 Related-party transactions for the operations and extended the business plan to cover the period up to the end of 2025. The operational targets were

Consulting agreement with Henrik Raspe Design AB revised upwards and, as of 2022, will increase ongoing construc- On 16 October 2016, Genova Bostad Projektutveckling AB entered tion of own-produced residential units to 1,500 per year from the into a consulting agreement with Henrik Raspe Design AB, a com- previous figure of 750, and increase the share of rental income pany wholly owned by Henrik Raspe. Under the consulting agree- from residential and community service properties to at least ment, Henrik Raspe Design AB shall provide services, including 70% of Genova’s total rental income by the end of 2023, from project development and marketing, via Henrik Raspe. In 2020, the previous figure of 60% by the end of 2024. The company’s total remuneration amounted to SEK 4.6m (2.8), excluding VAT. financial targets, risk limitations and dividend policy will remain unchanged.

Transactions with Gernandt & Danielsson Advokatbyrå KB In 2020, Genova engaged Gernandt & Danielsson Advokatbyrå KB, • After the end of the period, Genova extended the rental agree- in which the Chairman of the Board Mikael Borg is a partner, to pro- ment with Gluntens Montessori School for the Flogsta 47:1 prop- vide advisory services in connection with the listing of ordinary and erty with approximately 6,000 sqm and an annual rental value of preference shares on Nasdaq Stockholm, the issue of bonds and approximately SEK 11m until 31 August 2041. In addition, the rental recurring matters. Total invoiced and paid remuneration in 2020 agreement with Leo’s Lekland for the Mackmyra 20:18 property of amounted to SEK 9.7m (1.8), excluding VAT. approximately 3,600 sqm and an annual rental value of SEK 4.5m was extended for three years until 2029.

Transactions with Nordier Property Advisors AB In 2020, Genova engaged Nordier Property Advisors AB, in which • During and after the end of the fourth quarter, more than 10,000 Board members Micael Bile and Andreas Eneskjöld are partners, sqm were newly let in the project property for warehouse and in connection with a property transaction. Total invoiced and paid logistics in Uppsala which was acquired in October 2020, and remuneration in 2020 amounted to SEK 1.3m (0.4), excluding VAT. construction started immediately at the beginning of 2021. The property will comprise a total of 21,500 sqm and is scheduled for

Remuneration of senior executives completion in October 2021. The remuneration of senior executives in 2020 is set out in Note 10. No purchases were made with or remuneration was paid to • Genova Property Group AB (publ) (the “Issuer” or “Genova”) has companies owned via joint ventures. successfully issued green capital securities of SEK 500m under All transactions took place on market terms. a framework of SEK 1,250m (the “Green Capital Securities”). The Green Capital Securities have a perpetual maturity with a floating interest rate of three months STIBOR plus 675 bps until first call date. Genova intends to apply for admission to trading of the Green Capital Securities on the Sustainable Bond List of Nasdaq Note 37 Events after the balance-sheet date Stockholm.

• Genova is significantly accelerating the pace of its ongoing con- • In 2021, Genova acquired four community service properties struction of properties for own long-term management by start- for SEK 970m with a total lettable area of approximately 42,300 ing the construction of projects in Knivsta and Enköping, and sqm and the accession date of 31 March 2021. The properties are increased area in the ongoing project in Norrtälje. In total, these strategically located in growth areas with good public transport projects comprise approximately 60,000 sqm and more than services in Greater Stockholm. The largest tenants are Interna- 1,000 rental apartments. This means that Genova’s production tionella Engelska Skolan, Botkyrka Municipality, Värmdö Tekniska rate has increased significantly from 438 residential units under Gymnasium and Värmdö Municipality (the authority responsible construction at 30 September 2020 to more than 900 at the end for Gustavsbergs Gymnasium). The average remaining rental of the first quarter of 2021. The projects are being constructed period is approximately five years, and annual rental income is with a clear sustainability profile and will be environmentally cer- approximately SEK 59m with estimated net operating income of tified. As part of this process, a new green finance framework has approximately SEK 46m, of which tenants with publicly funded been established with a ‘second opinion’ from Cicero. operations account for approximately 80% of rental income.

136 Genova 2020 Annual Report Genova | Notes

Effects of change in an ongoing basis as part of the same balance-sheet item. This led Note 38 accounting policy to an increase of SEK 86.4m in current assets for 2019. At the same time, receivables from the co-operative housing associations, rec- Genova has decided to adjust its previously applied accounting ognised as Accrued income, decreased SEK 104.4m for 2019, and policies for co-operative apartment projects. The changed appli- Other receivables decreased SEK 65.9m for 2019. cation has been adjusted retroactively in accordance with IAS 8, refer to the section on Accounting policies for more information Loans from credit institutions about the new accounting policies. The effects on the Group’s When co-operative housing associations were consolidated, the income statement and balance sheet are described below. co-operative housing association’s loans from credit institutions to finance the construction of the residential property were included.

Effects on the income statement and balance sheet This increased the Group’s external short-term loans from credit Consolidation of co-operative housing associations institutions by SEK 126.4m for 2019. The property with the ongoing In accordance with previously applied policies, Genova considered co-operative apartment project has been pledged as collateral for each co-operative housing association a separate legal entity that the loan to the credit institution. was not under the Group’s control. Based on this assessment, the The summary on the following pages shows the effects of the co-operative housing associations were not included in the con- changed accounting policy on the Group’s financial statements for solidated financial statements. IFRS is a principle-based account- 2019. ing framework that provides scope for professional judgement. In its 2019 Annual Report, Genova has described the assessments CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME underlying the previous principle to not consolidate the co-oper- Jan-Dec ative housing associations. Based on its review and assessment 2019 of residential projects conducted by other industry operators, the according Ad- Jan-Dec to previous just- 2019 Swedish Financial Supervisory Authority deems that co-operative SEKm policies ment restated housing associations should be consolidated. Genova has followed Rental income 180.6 180.6 the course of this dialogue, analysed its own transactions and Operating costs –37.5 –37.5 made the decision to consolidate the co-operative housing asso- Maintenance costs –7.6 –7.6 ciations, which also means that the point in time for when income Property tax –5.6 – –5.6 and expenses attributable to the project should be recognised has Total Property costs –50.7 – –50.7 also changed. Net operating income 129.9 129.9

Central administration, property Revenue recognition management –12.4 –12.4 According to previous accounting policies where the co-operative Central administration, project development –22.5 –22.5 housing association was considered a separate legal entity, Genova Share of profit from joint ventures 25.4 25.4 recognised income from the sale of a property when the co-oper- Net financial items –77.5 –77.5 ative housing association acquired the property, and income from Income from property project management of the co-operative apartment project over management 42.9 42.9 the period of time that Genova completed the work. Now that the co-operative housing association is considered part of the Group, Income from new construction, co-operative apartments 26.8 30.6 57.4 the home buyer is now considered Genova’s customer. As a result, Other operating income 3.2 3.2 Genova recognises revenue as each buyer gains accession to their Value changes, properties 606.5 606.5 residential unit, which normally takes place over a shorter period of Income before tax 679.4 30.6 710.0 time as the residential property is completed. In 2019, this led to a positive change of SEK 30.6m in Income from new construction, Income tax –139.0 –139.0 co-operative apartments. Net income for the period 540.4 30.6 571.0 – – –

Ongoing co-operative apartment projects Other comprehensive income for the period – – – Due to the need for Genova to change its accounting policies, Genova recognises the co-operative housing association’s prop- Total comprehensive income erty and ongoing construction of co-operative apartment project for the period 540.4 30.6 571.0 on the balance sheet as: Ongoing co-operative apartment projects. This balance-sheet item includes the cost of the property, the Net income for the year attributable to: external contractor’s expenses, and internal expenses from proj- Parent Company shareholders 523.7 26.0 549.7 ect management of the co-operative apartment project. Interest Non-controlling rates and other borrowing costs such as origination fees for the interests 16.7 4.6 21.3 funding of the co-operative apartment project are capitalised on

Genova 2020 Annual Report 137 Genova | Notes

CONSOLIDATED BALANCE SHEET Note Proposed appropriation of profits 31 Dec 2019 39 according Ad- 31 Dec to previous just- 2019 SEKm policies ment restated The Board of Directors and Chief Executive Officer propose that ASSETS the unappropriated earnings (rounded SEK) at their disposal: Non-current assets Investment properties 3,661.3 3,661.3 Properties under construction 702.0 702.0 Development properties 56.5 56.5 Retained earnings 811,437,424 Right-of-use assets 37.2 37.2 Loss for the year –69,964,639 Equipment 4.6 4.6 Deferred tax assets 78.6 78.6 741,472,784 Be appropriated as follows Unlisted shares – 0.0 Be carried forward 741,472,784 Shares in joint ventures 88.5 88.5 Accrued income – 0.0 741,472,784 Other non-current receivables 96.0 96.0

Total non-current assets 4,724.7 4,724.7

Current assets Ongoing residential projects 0.0 199.3 199.3 Rent receivable and accounts receivable 4.0 4.0 Accrued income 104.4 –104.4 0.0 Other receivables 93.7 –65.9 27.8 Prepaid expenses and accrued income 26.6 57.4 84.0 Cash and cash equivalents 109.1 109.1 Total current assets 337.8 86.4 424.2

TOTAL ASSETS 5,062.5 86.4 5,148.9

EQUITY Total comprehensive income for the period Share capital 0.7 0.7 Other capital contributions 647.6 647.6 Retained earnings, including net income for the period 1,046.6 –47.0 999.6 Non-controlling interests 78.3 78.3

Total equity 1,773.2 –47.0 1,726.2

LIABILITIES Non-current liabilities Loans from credit institutions 1,664.6 1,664.6 Bond loans 659.4 659.4 Lease liabilities 34.4 34.4 Other non-current liabilities 42.1 42.1 Deferred tax liabilities 280.7 280.7

Total non-current liabilities 2,681.2 2,681.2

Current liabilities Loans from credit institutions 452.9 126.4 579.3 Accounts payable 34.1 7.0 41.1 Lease liabilities 4.7 4.7 Current tax liabilities 11.0 11.0 Other liabilities 69.3 69.3 Accrued expenses and deferred income 36.1 36.1

Total current liabilities 608.1 133.4 741.5 TOTAL LIABILITIES AND EQUITY 5,062.5 86.4 5,148.9

138 Genova 2020 Annual Report Genova | Notes

The consolidated financial statements and annual accounts were prepared in accordance with the international accounting standards referred to in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards, and with generally accepted accounting principles, and provide a true and fair view of the financial position and results of the Group and the Parent Company. The Directors’ Report for the Group and the Parent Company provides a true and fair view of the Parent Company and the Group’s operations, financial position and results and describes significant risks and uncertainties faced by the Parent Company and those companies included in the Group.

Stockholm, 31 March 2021

Mikael Borg Micael Bile Jan Björk Chairman of the Board Board member Board member

Erika Olsén Maria Rankka Andreas Eneskjöld Knut Ramel Board member Board member Board member Board member

Michael Moschewitz Chief Executive Officer

Our audit report was submitted on 31 March 2021

Ernst & Young AB

Henrik Nilsson Authorised public accountant

Genova 2020 Annual Report 139 Genova | Auditor’s report

Auditor’s report

To the general meeting of the shareholders of Genova Property Group AB (publ), corporate identity number 556864-8116

Report on the annual accounts and consolidated accounts

Opinions described in the Auditor’s Responsibilities section. We are inde- We have audited the annual accounts and consolidated accounts pendent of the parent company and the group in accordance with of Genova Property Group AB (publ) for the year 2020. The annual professional ethics for accountants in Sweden and have other- accounts and consolidated accounts of the company are included wise fulfilled our ethical responsibilities in accordance with these on pages 87-139 in this document. requirements. This includes that, based on the best of our knowl- In our opinion, the annual accounts have been prepared in edge and belief, no prohibited services referred to in the Audit accordance with the Annual Accounts Act and present fairly, in all Regulation (537/2014) Article 5.1 have been provided to the audited material respects, the financial position of the parent company as company or, where applicable, its parent company or its controlled of 31 December 2020 and its financial performance and cash flow companies within the EU. for the year then ended in accordance with the Annual Accounts We believe that the audit evidence we have obtained is suffi- Act. The consolidated accounts have been prepared in accor- cient and appropriate to provide a basis for our opinions. dance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December Key Audit Matters 2020 and their financial performance and cash flow for the year Key audit matters of the audit are those matters that, in our pro- then ended in accordance with International Financial Reporting fessional judgment, were of most significance in our audit of the Standards (IFRS), as adopted by the EU, and the Annual Accounts annual accounts and consolidated accounts of the current period. Act. The statutory administration report is consistent with the other These matters were addressed in the context of our audit of, and in parts of the annual accounts and consolidated accounts. forming our opinion thereon, the annual accounts and consolidated We therefore recommend that the general meeting of share- accounts as a whole, but we do not provide a separate opinion on holders adopts the income statement and balance sheet for the these matters. For each matter below, our description of how our parent company and the group. audit addressed the matter is provided in that context. Our opinions in this report on the annual accounts and consol- We have fulfilled the responsibilities described in the Auditor’s idated accounts are consistent with the content of the additional responsibilities for the audit of the financial statements section report that has been submitted to the parent company’s audit com- of our report, including in relation to these matters. Accordingly, mittee in accordance with the Audit Regulation (537/2014) Article 11. our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement

Basis for Opinions of the financial statements. The results of our audit procedures, We conducted our audit in accordance with International Stan- including the procedures performed to address the matters below, dards on Auditing (ISA) and generally accepted auditing standards provide the basis for our audit opinion on the accompanying finan- in Sweden. Our responsibilities under those standards are further cial statements.

140 Genova 2020 Annual Report Genova | Auditor’s report

Valuation of Investment properties Description How our audit addressed this key audit matter Investment properties is a significant balance sheet item and amounted to 4 560 In our audit, we have assessed objectivity, indepen- MSEK, which corresponds to 67% of the company’s total assets in the group, in the dence and competence of the external valuation com- consolidated statement of financial position as of 31 December 2020. Investment panies hired by the company. properties is recorded at fair value. The company has external valuations made twice We have evaluated the company’s process for produc- a year on all investment properties, one of them always takes place in connection to ing variables and assessments for the valuations. For a year-end. Fair value is determined by assessing the market value of each individual selection of properties, we have reviewed the valuation property, by using the cash-flow-method based on assumptions and assessments model and input of rental income and operating costs of rental income, operating cost, investments, discount rate and yield requirements. against agreements, historical outcomes and decided The yield requirement is unique for each property and decided through an analysis of investment plans. transactions made on the market as well as the properties market position. With the support of our valuation specialists, we have Valuation at fair value is by nature subject to subjective assessments where a assessed the reasonableness of assumptions about seemingly minor change in the assumptions made, that form the basis for the val- discount rates, yield requirements, rental develop- uations can have a significant effect in reported values. Due to the high degree of ment, vacancies, inflation and operating and mainte- assumptions and assessments that take place in connection with property valua- nance costs, and have calculated the valuation model. tion, together with the fact that the amounts are significant, we believe that valuation of investment properties is a particularly important area in our audit. We have reviewed information in the annual report.

A description of the company’s valuation principles regarding investment properties, see Note 2 Accounting principles and Notes 4 and 15.

Other Information than the annual accounts Responsibilities of the Board of Directors and consolidated accounts and the Managing Director This document also contains other information than the annual preparation of the annual accounts and consolidated accounts accounts and consolidated accounts and is found on pages 1-86 and that they give a fair presentation in accordance with the Annual and 144-145. The remuneration report for the financial year 2020 Accounts Act and, concerning the consolidated accounts, in also constitutes other information. The Board of Directors and the accordance with IFRS as adopted by the EU. The Board of Directors Managing Director are responsible for this other information. and the Managing Director are also responsible for such internal Our opinion on the annual accounts and consolidated accounts control as they determine is necessary to enable the preparation does not cover this other information and we do not express any of annual accounts and consolidated accounts that are free from form of assurance conclusion regarding this other information. material misstatement, whether due to fraud or error. In connection with our audit of the annual accounts and con- In preparing the annual accounts and consolidated accounts, solidated accounts, our responsibility is to read the information The Board of Directors and the Managing Director are responsi- identified above and consider whether the information is materially ble for the assessment of the company’s and the group’s ability to inconsistent with the annual accounts and consolidated accounts. continue as a going concern. They disclose, as applicable, mat- In this procedure we also take into account our knowledge other- ters related to going concern and using the going concern basis of wise obtained in the audit and assess whether the information oth- accounting. The going concern basis of accounting is however not erwise appears to be materially misstated. applied if the Board of Directors and the Managing Director intends If we, based on the work performed concerning this informa- to liquidate the company, to cease operations, or has no realistic tion, conclude that there is a material misstatement of this other alternative but to do so. information, we are required to report that fact. We have nothing to The Audit Committee shall, without prejudice to the Board of report in this regard. Director’s responsibilities and tasks in general, among other things oversee the company’s financial reporting process.

Genova 2020 Annual Report 141 Genova | Auditor’s report

Auditor’s responsibility • Conclude on the appropriateness of the Board of Directors’ and the Our objectives are to obtain reasonable assurance about whether Managing Director’s use of the going concern basis of accounting the annual accounts and consolidated accounts as a whole are in preparing the annual accounts and consolidated accounts. We free from material misstatement, whether due to fraud or error, also draw a conclusion, based on the audit evidence obtained, and to issue an auditor’s report that includes our opinions. Rea- as to whether any material uncertainty exists related to events or sonable assurance is a high level of assurance, but is not a guar- conditions that may cast significant doubt on the company’s and antee that an audit conducted in accordance with ISAs and gen- the group’s ability to continue as a going concern. If we conclude erally accepted auditing standards in Sweden will always detect that a material uncertainty exists, we are required to draw atten- a material misstatement when it exists. Misstatements can arise tion in our auditor’s report to the related disclosures in the annual from fraud or error and are considered material if, individually or in accounts and consolidated accounts or, if such disclosures are the aggregate, they could reasonably be expected to influence the inadequate, to modify our opinion about the annual accounts and economic decisions of users taken on the basis of these annual consolidated accounts. Our conclusions are based on the audit accounts and consolidated accounts. evidence obtained up to the date of our auditor’s report. However, As part of an audit in accordance with ISAs, we exercise profes- future events or conditions may cause a company and a group to sional judgment and maintain professional skepticism throughout cease to continue as a going concern. the audit. We also: • Evaluate the overall presentation, structure and content of the • Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, including the dis- annual accounts and consolidated accounts, whether due to closures, and whether the annual accounts and consolidated fraud or error, design and perform audit procedures responsive accounts represent the underlying transactions and events in a to those risks, and obtain audit evidence that is sufficient and manner that achieves fair presentation. appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher • Obtain sufficient and appropriate audit evidence regarding the than for one resulting from error, as fraud may involve collusion, financial information of the entities or business activities within the forgery, intentional omissions, misrepresentations, or the over- group to express an opinion on the consolidated accounts. We are ride of internal control. responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions. • Obtain an understanding of the company’s internal control relevant to our audit in order to design audit procedures that are We must inform the Board of Directors of, among other matters, appropriate in the circumstances, but not for the purpose of the planned scope and timing of the audit. We must also inform of expressing an opinion on the effectiveness of the company’s significant audit findings during our audit, including any significant internal control. deficiencies in internal control that we identified. We must also provide the Board of Directors with a statement • Evaluate the appropriateness of accounting policies used and that we have complied with relevant ethical requirements regarding the reasonableness of accounting estimates and related disclo- independence, and to communicate with them all relationships and sures made by the Board of Directors and the Managing Director. other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or related safeguards applied. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes disclosure about the matter.

142 Genova 2020 Annual Report Genova | Auditor’s report

Report on other legal and regulatory requirements

Opinions • has undertaken any action or been guilty of any omission which In addition to our audit of the annual accounts and consolidated can give rise to liability to the company, or accounts, we have also audited the administration of the Board of Directors and the Managing Director of Genova Property Group • in any other way has acted in contravention of the Companies Act, AB (publ) for the year 2020 and the proposed appropriations of the the Annual Accounts Act or the Articles of Association. company’s profit or loss. We recommend to the general meeting of shareholders that the Our objective concerning the audit of the proposed appropriations profit be appropriated in accordance with the proposal in the stat- of the company’s profit or loss, and thereby our opinion about this, utory administration report and that the members of the Board of is to assess with reasonable degree of assurance whether the pro- Directors and the Managing Director be discharged from liability posal is in accordance with the Companies Act. for the financial year. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally

Basis for opinions accepted auditing standards in Sweden will always detect actions We conducted the audit in accordance with generally accepted or omissions that can give rise to liability to the company, or that the auditing standards in Sweden. Our responsibilities under those proposed appropriations of the company’s profit or loss are not in standards are further described in the Auditor’s Responsibilities accordance with the Companies Act. section. We are independent of the parent company and the group As part of an audit in accordance with generally accepted audit- in accordance with professional ethics for accountants in Sweden ing standards in Sweden, we exercise professional judgment and and have otherwise fulfilled our ethical responsibilities in accor- maintain professional skepticism throughout the audit. The exam- dance with these requirements. ination of the administration and the proposed appropriations of We believe that the audit evidence we have obtained is suffi- the company’s profit or loss is based primarily on the audit of the cient and appropriate to provide a basis for our opinions. accounts. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality.

Responsibilities of the Board of Directors This means that we focus the examination on such actions, areas and the Managing Director and relationships that are material for the operations and where The Board of Directors is responsible for the proposal for appro- deviations and violations would have particular importance for the priations of the company’s profit or loss. At the proposal of a divi- company’s situation. We examine and test decisions undertaken, dend, this includes an assessment of whether the dividend is justi- support for decisions, actions taken and other circumstances that fiable considering the requirements which the company’s and the are relevant to our opinion concerning discharge from liability. As group’s type of operations, size and risks place on the size of the a basis for our opinion on the Board of Directors’ proposed appro- parent company’s and the group’s equity, consolidation require- priations of the company’s profit or loss we examined the Board ments, liquidity and position in general. of Directors’ reasoned statement and a selection of supporting The Board of Directors is responsible for the company’s orga- evidence in order to be able to assess whether the proposal is in nization and the administration of the company’s affairs. This accordance with the Companies Act. includes among other things continuous assessment of the com- Ernst & Young AB, Box 7850, 103 99 Stockholm, was appointed pany’s and the group’s financial situation and ensuring that the auditor of Genova Property Group AB (publ) by the general meeting company’s organization is designed so that the accounting, man- of the shareholders on the 24 April 2020 and has been the compa- agement of assets and the company’s financial affairs otherwise ny’s auditor since 2011. are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors’ guidelines and instructions and among other matters Ängelholm 31 March 2021 take measures that are necessary to fulfill the company’s account- Ernst & Young AB ing in accordance with law and handle the management of assets in a reassuring manner.

Auditor’s responsibility Henrik Nilsson Our objective concerning the audit of the administration, and Authorized Public Accountant thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

Genova 2020 Annual Report 143 Genova | Definitions

Definitions

Genova or the company Income from property management Long-term net asset value Genova Property Group AB (publ). per ordinary share per ordinary share Income from property management less Long-term net asset value attributable to

Return on equity dividend payments on preference shares ordinary shareholders divided by the number Net income after tax, based on a rolling during the period, in relation to the number of of ordinary shares outstanding as of the bal- 12-month period, in relation to average equity. weighted average ordinary shares outstanding ance-sheet date. Long-term net asset value Return on equity is used to assess Genova’s during the period. Income from property man- per ordinary share is used to measure the ordi- ability to generate profits from its sharehold- agement per ordinary share is used to mea- nary shareholders’ proportion of the compa- ers’ investments in the company. sure the ordinary shareholders’ proportion of ny’s long-term net asset value attributable to income from property management per ordi- ordinary shareholders per ordinary share.

Loan-to-value ratio, % nary share. Interest-bearing liabilities less cash and cash Development properties Refers to properties for further development. equivalents in relation to the market value of Rental value investment properties, properties under con- Contract value plus estimated market rent for struction and development properties at the vacant properties. Rental value is used to mea- Income per ordinary share end of the reporting period. The loan-to-value sure the Group’s potential net income. Net income for the period/year less dividends ratio is used to assess Genova’s financial risk. paid on preference shares during the period, in relation to the weighted average number of Adjusted income per ordinary share ordinary shares outstanding during the period. Net operating income Net income attributable to Parent Company Rental income less property costs. This key shareholders less dividend payments on pref- Net income after tax per ordinary share is used metric is used to measure the profitability of erence shares during the period, in relation to measure ordinary shareholders’ proportion property management before central adminis- to the number of weighted average ordinary of the company’s net income after tax per ordi- trative expenses, net financing costs and unre- shares outstanding during the period. Adjusted nary share. alised value changes. income after tax per ordinary share is used to measure Parent Company shareholders’ pro- Interest-coverage ratio Net operating income less costs for central Equity attributable to ordinary shareholders portion of the company’s net income after tax Equity less the value of all preference shares per ordinary share. administrative expenses attributable to property outstanding as of the balance-sheet date, in management in relation to net interest income (over the past 12 months). Non-recurring finan- relation to the number of ordinary shares out- Long-term net asset value standing as of the balance-sheet date. The Recognised equity with reversal of deferred tax. cial items are not included in the calculation. value of all preference shares outstanding is Long-term net asset value is used to provide The interest-coverage ratio is used to measure calculated as SEK 110 multiplied by the number stakeholders with information about Genova’s the sensitivity of the company’s income to inter- of preference shares as of the balance-sheet long-term net asset value estimated in a stan- est-rate fluctuations. date. SEK 110 corresponds to the amount per dard manner for listed property companies. preference share that the holder is entitled to Equity/assets ratio Equity at the end of the period in relation to receive, before ordinary shares, in the event of Long-term net asset value attributable total assets at the end of the period. The equity/ the company’s dissolution. Equity attributable to ordinary shareholders assets ratio is used to measure Genova’s finan- to ordinary shareholders is used to measure Long-term net asset value less the value of all cial stability. the ordinary shareholders’ proportion of the preference shares outstanding. The value of all company’s equity per ordinary share. preference shares outstanding is calculated as SEK 110 multiplied by the number of prefer- Lettable area Total area in sqm that is available to let. Investment properties ence shares as of the balance-sheet date. SEK Refers to properties with existing cash flows 110 corresponds to the amount per preference and includes commercial premises, residential share that the holder is entitled to receive, Economic occupancy rate Contract value in relation to rental value at the units and community service properties. before ordinary shares, in the event of the end of the period. This key metric is expressed company’s dissolution. Long-term net asset as a percentage and used to measure vacan- value attributable to ordinary shareholders is Income from property management cies, where a high percentage of occupancy Income before value changes and tax. Income used to clarify the proportion of long-term net equates to a low economic vacancy rate. from property management is used to mea- asset value considered attributable to ordinary sure the profitability of property management shareholders after the proportion attributable NOI margin after financial income and expenses, but not to preference shareholders and non-con- Net operating income in relation to rental unrealised value changes. trolling interests has been eliminated. income. The net operating income (NOI) margin is used to measure the profitability of property management before financial income and 144 Genova 2020 Annual Report expenses, and unrealised value changes. Genova | Information to shareholders

Information to shareholders

2021 Annual General Meeting is registered in the register of share- Meeting”, Box 5267, SE-102 46 Stock- Genova Property Group AB will hold its holders kept by Euroclear Sweden AB as holm, Sweden. The complete form is to Annual General Meeting on 7 May 2021. of Monday, 3 May 2021. Please note that have been received by Computershare Due to the COVID-19 pandemic, the this procedure also applies to shares AB no later than Thursday, 6 May 2021. Annual General Meeting will be held held in bank deposit accounts and cer- The completed and signed postal voting only by postal ballot as based on tempo- tain investment savings accounts. Reg- form may also be submitted electron- rary legislation. It will not be possible to istration in accordance with the above ically and e-mailed to info@comput- attend the Annual General Meeting in may be temporary. Shareholders whose ershare.se. Shareholders may also cast person or by proxy. shares are registered in the name of a their postal vote using their BankID on nominee must also given notice of their the company’s website www.genova. Right to participate and registration attendance at the Meeting by casting se. Shareholders voting by proxy are Shareholders who wish to participate their postal vote in accordance with the to attach a written and dated power of in the Annual General Meeting must instructions under the heading “Postal attorney to their form. Power of attor- be recorded in the register of share- voting” below so that their postal vote ney forms are provided on request and holders kept by Euroclear Sweden AB has been received by Computershare are also available from the company’s as of Thursday, 29 April 2021, and have AB no later than Thursday, 6 May 2021. website, www.genova.se. If the share- given notice of their attendance at the Registration of attendance can only holder is a legal entity, the registration Meeting by casting their postal vote in take place by postal voting. certificate or other authorisation doc- accordance with the instructions under uments are to be attached to the postal the heading “Postal voting” below so Postal voting voting form. that their postal vote has been received The Board has decided that sharehold- Shareholders may not write specific by Computershare AB no later than ers shall be able to cast their vote only instructions or conditions on their Thursday, 6 May 2021. Please note that by postal voting in accordance with postal vote, otherwise their entire registration of attendance can only take Sections 20 and 22 of the Swedish Act postal vote will be rendered invalid. place by postal voting. on Temporary Exemptions to Facilitate Further instructions and conditions are the Execution of General Meetings in provided on the postal voting form. Nominee-registered shares Companies and Associations (2020:198). To be entitled to participate in the To vote by post, shareholders are to use Meeting, shareholders whose shares the postal voting form and follow the Contact Investor Relations are registered in the name of a nominee company’s instructions available on the must request that their nominee enter company’s website www.genova.se and Michael Moschewitz, CEO their name in the register of share- at the company’s office, Smålandsgatan e-mail: [email protected] holders kept by Euroclear Sweden AB 12, SE-111 46, Stockholm, Sweden. The mobile: +46 (0)707 13 69 39 in order to participate in the Annual completed and signed postal voting General Meeting (registration of right to form is to be sent by post to Comput- Edvard Schéele, CFO vote), so that the shareholder concerned ershare AB, ”Genova Annual General e-mail: [email protected] mobile: +46 (0)703 99 69 90

Financial reports Contact

Interim report January-March 2021 7 May 2021 Street addresses Genova Gallery Head office Sysslomansgatan 9 Interim report, January-June 2021 17 August 2021 Smålandsgatan 12 SE-753 11 Uppsala, SE-111 46 Stockholm, Sweden Interim report January-September 2021 29 October 2021 Sweden

www.genova.se

Genova 2020 Annual Report 145