Admission to Trading on Nasdaq Stockholm for Shares Of

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) IMPORTANT NOTICE ment nevertheless be provided or made, it tion statements include, but are not limited to, This prospectus (the “Prospectus”) has been should not be considered to have been those described in the section “Risk factors”. prepared due to the resolution of the annual approved by Bonava, and Bonava is not respon- These risk factors include, inter alia, that general meeting of NCC AB (publ) (“NCC”) on sible for such information or statements. Neither Bonava’s earning capacity is dependent on its 12 April 2016 to distribute all shares in Bonava the publication or distribution of this Prospectus, ability to sell housing units to, inter alia, AB (publ) (“Bonava”) through a dividend to the nor any transaction made in respect of the consumers on satisfactory terms, that Bonava’s shareholders of NCC and the application by the Prospectus, shall be deemed to imply that the operations are affected by project related risks board of directors of Bonava to have Bonava’s information in this Prospectus is accurate or and Bonava’s ability to acquire building rights as shares of series A and shares of series B applicable at any time other than on the date of well as Bonava’s ability to maintain equivalent admitted to trading on Nasdaq Stockholm. the publication of this Prospectus or that there brand awareness and position in the market as For definitions of certain terms used in the have been no changes in Bonava’s business Bonava enjoyed as a part of the NCC group. Prospectus, please see the section “Certain since this date. If significant changes in the infor- Bonava does not undertake to announce any definitions” below. mation in this Prospectus occur, such changes updates or changes in the forward-looking will be announced in accordance with the provi- information as a result of new information, future The Prospectus is governed by Swedish law. sions on supplements to a prospectus under the events or similar circumstances other than as Disputes arising out of the Prospectus and Swedish Financial Instruments Trading Act. required by applicable laws and regulations. related legal matters shall be settled exclusively The shares in Bonava have not been, and will not Industry and market information by Swedish courts. This Prospectus has been be, registered under the United States Securities This Prospectus contains industry and market prepared in both Swedish and English language Act of 1933, as amended (the “U.S. Securities information attributable to Bonava’s operation versions. In the event of any conflict between the Act”) or the securities legislation of any state or and the market on which the Company operates. versions, the Swedish version shall prevail. The other jurisdiction in the United States and may Such information is based on the Company’s Swedish version of the Prospectus has been not be offered, sold or otherwise transferred, analysis of several different sources. approved by and registered with the Swedish directly or indirectly, in or into the United States Financial Supervisory Authority in accordance except under an available exemption from, or Industry publications or reports usually indicates with the provisions in Chapter 2, Sections 25 transaction not subject to, the registration that the information inside has been obtained and 26 of the Swedish Financial Instruments requirements under the U.S. Securities Act and from sources deemed to be reliable, but that the Trading Act (1991:980). The approval and regis- in compliance with the securities legislation in correctness and completeness of the informa- tration do not imply that the Swedish Financial the relevant state or any other jurisdiction of the tion cannot be guaranteed. The Company has Supervisory Authority guarantees that the United States. The shares in Bonava have neither not singly verified, and can therefore not factual information provided is correct or been approved nor rejected by the United States guarantee the correctness of, the industry and complete. Securities and Exchange Commission, any state market information in this Prospectus which is This Prospectus has been prepared in connec- securities authority or any other authority in the derived from these industry publications or tion with an application to have the shares in United States. Furthermore, the foregoing reports. Industry and market information is Bonava admitted to trading on Nasdaq Stock- authorities have not confirmed the accuracy or inherently forward-looking, subject to uncer- holm and does not contain any offer to subscribe determined the adequacy of this Prospectus. To tainty and does not necessarily reflect actual for, or in any other way acquire, shares or other assert the contrary is a criminal offence in the market conditions. Such information is based on financial instruments in the Company, whether United States. market surveys, which in turn are based on selection and subjective assessments, including in Sweden or in any other jurisdiction. This This Prospectus is available at Bonava’s office assessments on which type of products and Prospectus, marketing material or other material and website, www.bonava.com, as well as on transactions that should be included in the related to the Prospectus may not be distributed Handelsbanken’s website, www.handelsbanken. relevant market, both of those conducting the or published in any jurisdiction other than in se/investeringserbjudande. accordance with applicable laws and regula- assessments and of the respondents. Forward-looking information and risk factors tions. Recipients of this Prospectus are required Information derived from a third party have been The Prospectus contains certain forward-looking to inform themselves about, and comply with reproduced correctly and as far as the Company information that reflects Bonava’s present view these restrictions, and in particular, not publish knows and can ascertain, by comparisons with of future events as well as financial and opera- or distribute the Prospectus in conflict with other published information from the third party tional development. Words such as “intend”, applicable laws and regulations. Any failure to concerned, no information has been omitted in a “assess”, “expect”, “may”, “plan”, “believe”, comply with these restrictions may result in a way which would make the published informa- “estimate” and other expressions entailing violation of applicable securities regulations. tion incorrect or misleading. indications or predictions of future development Certain risks apply when investments in securi- or trends, not based on historical facts, consti- Presentation of financial information ties are made (see the section “Risk factors”). tute forward-looking information. Forward- Certain financial and other information that is When investors make an investment decision, looking information is inherently associated with presented in the Prospectus has been rounded they must rely on their own analysis of Bonava, both known and unknown risks and uncertain- off in order to make the information more including applicable facts and risks. Potential ties as it depends on future events and circum- accessible for the reader. Consequently, in investors should, before making an investment stances. Forward-looking information is not a certain columns the numbers do not exactly decision, engage their own professional advisers guarantee of future results or development and correspond to the stated total amount. Unless and carefully evaluate and consider their invest- actual outcomes may differ materially from the otherwise explicitly stated, no information in the ment decision. Investors may only rely on the statements set forth in the forward-looking Prospectus has been audited or reviewed by the information in this Prospectus and any possible information. Company’s auditors. supplements to this Prospectus. No person is authorised to provide any information or make Factors that may result in any difference in any statements other than those made in this Bonava’s future results and development from Prospectus. Should such information or state- those set forth in the forward-looking informa- Contents

Summary 2 Capital structure and other financial information 70 Risk factors 12 Board of directors, senior executives and auditor 73 Background and reasons 18 Corporate governance 80 Comments from the CEO 19 Shares, share capital and ownership structure 83 Information regarding distribution 21 Articles of association 86 Market overview 23 Legal issues and supplementary information 88 Business description 33 Certain tax issues in Sweden 91 Presentation of financial information 54 Historical financial information 93 Selected financial information 55 Auditors’ reports on combined financial statements of 165 historical financial information Operational and financial review 63 Addresses 167

IMPORTANT DATES Certain definitions

Bonava’s capital markets day 31 May 2016 The “Company” or “Bonava” refers to, depending on the context, Bonava AB (publ), reg. no. 556928-0380, or the group in which Bonava AB (publ) Final day for trading in shares of series A and series B of 2 June 2016 is the parent company. NCC, including rights to distribution of shares of Bonava “Euroclear” refers to Euroclear Sweden AB.

Shares of series A and series B of NCC are traded 3 June 2016 “Handelsbanken” refers to, depending on the context, Svenska Handels- exclusive rights to distribution of shares of Bonava banken AB (publ), reg. no. 502007-7862, or Handelsbanken Capital Record date for receiving shares of Bonava 7 June 2016 Markets (a part of Svenska Handelsbanken AB (publ)). Estimated first day of trading of shares of series A 9 June 2016 The “Group” refers to the group in which Bonava AB (publ) is the parent and series B of Bonava on Nasdaq Stockholm company.

“Nasdaq Stockholm” refers to Nasdaq Stockholm AB’s main market. Other “NCC” refers to, depending on the context, NCC AB (publ), reg. no. ISIN code for shares of series A SE0008091573 556034-5174, or the group in which NCC AB (publ) is the parent company. ISIN code for shares of series B SE0008091581 Ticker for shares of series A on Nasdaq Stockholm BONA A The “Prospectus” refers to this prospectus. Ticker for shares of series B on Nasdaq Stockholm BONA B “SEK”, “EUR”, “DKK”, “NOK”, “RUB” refer to the Swedish krona, euro, Danish krona, Norwegian krona and Russian ruble; ”SEK million” refers to millions of Swedish kronor; and “SEK billion” refers to billions of Swedish FINANCIAL CALENDAR kronor. Quarterly report for the period 19 July 2016 1 January 2016 – 30 June 2016 Quarterly report for the period 8 November 2016 1 January 2016 – 30 September 2016

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 1 Summary

This summary contains specific disclosure requirements arranged in paragraphs. The paragraphs are numbered under the sections A–E (A.1–E.7). This summary contains the paragraphs required for a prospectus summary for this type of securities and issuer. Since some items are not applicable for all types of prospectuses, there may be gaps between the numbering in some of the paragraphs. Although the inclusion of a paragraph for a particular type of activity may be required in this type of prospectus summary, the equivalent information may not always be available. In this case, the element is marked “not applicable” followed by a brief description of the disclosure requirement.

Section A – Introduction and warnings A.1 Introduction and • This summary should be read as an introduction to the Prospectus. warnings • Any decision to invest in Bonava should be based on an assessment of the Prospectus in its entirety by the investor. • Where a claim relating to the information contained in the Prospectus is brought before a court, the plain- tiff investor may, under the national legislation of the member states, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. • Civil liability can be imposed on those persons who have composed the summary, including any transla- tions thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or if it does not provide, when read together with the other parts of the Prospectus, key information designed to aid investors when considering whether to invest in Bonava.

A.2 Consent and finan- Not applicable. Financial intermediaries are not entitled to use this Prospectus for subsequent resell or final cial intermediaries placement of securities.

Section B – Issuer

B.1 Legal and The Company’s registered legal and trade name is Bonava AB (publ), with reg. no. 556928-0380. The trade name Company’s shares will be traded on Nasdaq Stockholm under the ticker BONA A for shares of series A and under the ticker BONA B for shares of series B.

B.2 Registered office The board of directors has its registered office in Solna, Stockholm County, Sweden. The Company was and legal form, etc. incorporated in Sweden and is a Swedish public limited liability company governed by the Swedish Companies Act (2005:551).

B.3 Nature of the Bonava is one of the leading housing developers in northern Europe. Bonava develops and sells affordable operations and and sustainable housing units to consumers and investors in selected markets in Sweden, Germany, Finland, principal activities Denmark, Norway, St. Petersburg and Estonia/Latvia. Bonava operates in metropolitan regions demonstrating a distinct growth and a stable local labour market, thus creating demand for new housing units over time. The Company offers both multi-family and single-family houses (under varying ownership forms) to two categories of customers; consumers and investors. The majority of the customers are private individuals investing in their own home, although investors (in Sweden, Germany and Finland) accounted for approximately 30 per cent of Bonava’s sold housing units during 2015. The Company’s housing development process encompasses the entire value chain, from site planning to finished homes.

2 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Summary

B.4a Trends The housing market and the conditions for housing development are affected by inter alia a number of macroeconomic factors. Expected GDP growth, higher employment and disposable income, relatively low interest rates as well as demographic factors such as population growth and continued urbanisation are examples of such factors that the Group considers jointly create opportunities for a continued strong housing market.

During the first quarter 2016, the demand for housing units remained overall favourable in the markets where Bonava operates. In Sweden and Germany the demand remained favourable with increasing prices. In Finland, the prices increased in the beginning of the year, following a long period of weaker demand. Demand for small, affordable housing units remained strong both in the investor market and among consumers in Finland. Demand for housing units was favourable in Copenhagen and the prices increased in other parts of the country. Demand in Norway improved and prices increased during the first quarter 2016. In St. Petersburg, the market slowed down as the purchase-decisions take longer time.

B.5 Description of the Bonava is parent company of the group which, in addition to the Company, comprised approximately 150 Group directly and indirectly owned subsidiaries as per 31 December 2015.

B.6 Major shareholders, In Sweden, the minimum threshold for notifiable major shareholdings (so-called flagging) is 5 per cent of all notifiable shares or the voting rights for all shares. As per the day of the Prospectus, NCC holds all of the shares in the individuals Company. Aside from NCC, no other natural or legal persons are deemed to notify a major shareholding as of the publication date of the Prospectus due to their shareholdings.

According to a resolution by NCC’s annual general meeting in 2016, the shares of Bonava are being distributed to the shareholders of NCC in proportion to the holding in NCC of each individual shareholder (the record date for the distribution is 7 June 2016), which is why, at the time of the distribution of the shares to the shareholders of NCC, Bonava’s ownership structure will initially be identical to the ownership structure of NCC. The table below shows the notifiable shareholders of NCC as per 30 April 2016.

Number of shares Percentage share Shares of Shares of Total number Notifiable major shareholders series A series B of shares Capital Votes Nordstjernan AB1) 19,700,000 2,041,804 21,741,804 20.1 62.2 AMF Försäkring & Fonder 6,875,993 6,875,993 6.3 2.1 SEB Fonder 5,768,748 5,768,748 5.3 1.8

1) According to a notice of major shareholding from Nordstjernan AB on 20 May 2016, Nordstjernan AB held 20.1 per cent of all shares and 49.4 per cent of all votes in NCC as per the day of the notice.

In addition to shareholders listed in the table above, Bonava has no information concerning additional natural or legal persons who, due to their shareholdings in NCC, are obligated to report changes in major shareholdings.

B.7 Condensed The combined historical financial information that is presented below has been derived from the Company’s financial informa- unaudited quarterly report for the first quarter of 2016 (the “Unaudited Financial Statements”) and from the tion/Selected Company’s audited combined financial statements for the financial years 2013, 2014 and 2015 (the historical financial “Audited Combined Financial Statements”) or, together with the Unaudited Financial Statements, the information “Financial Statements”). As per 31 March 2016, when the Finnish operations were acquired, the formation of the Group was finalised. Accordingly, the consolidated financial statements have been compiled as of this date. The Unaudited Financial Statements, which for the period 1 January–31 March 2016 have been reviewed by the Company’s auditor, Ernst & Young AB, have been prepared in accordance with IAS 34 Interim Financial Reporting. The Audited Combined Financial Statements, which have been audited by the Company’s former auditor, PricewaterhouseCoopers AB (years 2013 and 2014), and the current auditor, Ernst & Young AB (year 2015), have been prepared in accordance with IFRS, as adopted by the EU, and the Swedish Financial Reporting Board’s recommendation RFR 1 “Supplementary Accounting Rules for Groups”. Rounding-off differences may arise in all tables.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 3 Summary

B.7 Condensed Condensed income statement for Bonava financial information/Selected Unaudited Audited historical financial Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec information, SEK million 2016 2015 2015 2014 2013 continued Net sales 1,877 1,764 13,070 10,226 9,196 Production costs –1,550 –1,551 –11,016 –8,717 –8,032 Gross profit 328 213 2,054 1,508 1,165

Selling and administrative expense –144 –138 –640 –564 –541 Other operating expense –1 –36 –2 0 Operating profit 184 74 1,377 942 623

Financial income 3 3 11 18 22 Financial expense –73 –88 –356 –407 –378 Net financial items –71 –85 –345 –389 –356

Profit/loss after financial items 113 –11 1,033 553 267 Tax on profit/loss for the period –26 2 –235 –81 –56 Net profit/loss for the period 88 –9 798 472 211

condensed Balance sheet for bonava

Unaudited Audited 31 Mar 31 Mar 31 Dec 31 Dec 31 Dec SEK million 2016 2015 2015 2014 2013

ASSETS Fixed assets 869 679 773 654 510

Current assets Properties held for future development 5,100 6,082 4,737 6,092 6,333 Ongoing housing projects 7,770 7,031 7,043 6,361 5,426 Completed housing units 414 702 599 867 1,074 Accounts receivable 1,910 1,238 1,769 1,302 1,094 Cash and cash equivalents 640 534 585 463 391 Total current assets 15,835 15,587 14,732 15,085 14,319 TOTAL ASSETS 16,704 16,267 15,506 15,739 14,829

SHAREHOLDERS’ EQUITY Equity related to the owners of the parent company 4,756 249 4,672 294 517 Non-controlling interests 58 42 60 44 28 Total shareholders' equity 4,814 291 4,732 338 545

LIABILITIES Long-term liabilities Long-term interest-bearing liabilities 2,089 1,431 2,033 1,281 872 Other long-term liabilities 135 223 487 297 133 Long-term provisions 740 346 357 364 330 Total long-term liabilities 2,963 1,999 2,877 1,942 1,335

Current liabilities Current interest-bearing liabilities 3,334 9,365 3,046 9,020 8,539 Other current liabilities 5,593 4,611 4,850 4,439 4,409 Total current liabilities 8,927 13,976 7,896 13,459 12,949 Total liabilities 11,891 15,975 10,773 15,400 14,283 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 16,704 16,267 15,506 15,739 14,829

4 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Summary

B.7 Condensed Condensed cash flow statement for Bonava financial information/Selected Unaudited Audited historical financial Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec information, SEK million 2016 2015 2015 2014 2013 continued OPERATING ACTIVITIES Profit/loss after financial items 113 –11 1,033 553 267 Adjustments for items not included in cash flow 11 13 52 48 27 Tax paid –48 –27 –125 –91 –127 Cash flow from operating activities before changes in working capital 77 –25 959 510 167

Cash flow from changes in working capital Sales of housing projects 1,489 1,503 10,075 8,840 7,210 Investments in housing projects –2,393 –1,959 –9,842 –9,694 –7,959 Other changes in working capital 300 36 258 250 911 Cash flow from changes in working capital –604 –420 491 –603 162

Cash flow from operating activities –527 –445 1,450 –94 328

INVESTING ACTIVITIES Investments for the period –49 –9 –13 –53 –34 Cash flow from investing activities –49 –9 –13 –53 –34

CASH FLOW BEFORE FINANCING –576 –454 1,437 –147 295

FINANCING ACTIVITIES Cash flow from financing activities 628 526 –1,301 231 –308 CASH FLOW DURING THE PERIOD 52 72 136 84 –13

Cash and cash equivalents at the beginning of period 585 463 463 391 404 Exchange-rate difference in cash and cash equivalents 3 0 –14 –12 0 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 640 534 585 463 391

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 5 Summary

B.7 Condensed OVERVIEW of selected key RATIOS1) financial informa- Unless otherwise stated, the table below contains certain financial and operational key ratios that are not tion/Selected defined according to IFRS. The information below referring to the financial years 2013–2015 and the first historical financial quarter of 2015 and 2016 is of material value to investors since it enables a better evaluation of Bonava’s information, financial position and earnings. Unless otherwise stated, the key ratios below are unaudited but have been continued calculated on the basis of the figures in the Audited Combined Financial Statements 2013–2015, which have been audited by the Company’s auditor, and the figures in the Unaudited Financial Statements for the period 1 January – 31 March 2016, which have been reviewed by the Company’s auditor.

Unaudited Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec SEK million unless otherwise stated 2016 2015 2015 2014 2013

Profitability ratios Return on capital employed, %2) 14 8 12 8 6

Financial ratios at period-end Interest-coverage ratio, times2) 4.4 2.4 3.9 2.4 1.7 Equity/assets ratio, % 29 2 31 2 4 Interest bearing liabilities/ total assets, % 32 67 33 66 64 Net debt 4,552 10,155 4,216 9,600 8,826 Debt/equity ratio, times 0.9 34.9 0.9 28.4 16.2 Capital employed at period end 10,236 11,141 9,811 10,688 9,978 Capital employed, average 10,791 11,118 10,882 10,885 10,300 Capital turnover rate, times2) 1.2 1.0 1.2 0.9 0.9 Share of risk-bearing capital, % 29 2 31 2 4 Average interest rate, at period end, %3) 3.07 3.84 3.06 3.26 3.48 Average period of fixed interest, year3) 0.1 0.2 0.2 0.2 0.3 Average interest rate, at period end, %4) 1.16 1.49 1.26 1.76 2.65 Average period of fixed interest, year4) 0.1 0.1 0.1 0.1 0.1

PER SHARE DATA BEFORE AND AFTER DILUTION Profit after tax, SEK (defined according to IFRS, audited for the full-years 2013–2015) 0.84 –0.07 7.08 4.15 1.78 Cash flow from operating activities, SEK –4.86 –4.10 13.37 –0.86 3.03 Dividend, SEK 0 0 0 0 0 Shareholders’ equity, SEK 43.86 2.30 43.08 2.71 4.76 Number of shares in million, average 108.4 108.4 108.4 108.4 108.4

1) The historical financial key ratios are affected by Bonava’s historical capital structure, since it, as a business area within the NCC group, has not reflected the capital structure of an independent, publicly traded company. Accordingly, a shareholders’ contribution of approximately SEK 5 billion was provided in late 2015 via a receivable from NCC. This transaction is presented in other capital contributions in Bonava. 2) Calculations are made on the basis of a 12-month average. 3) Excluding loans in Swedish tenant owner associations and Finnish housing companies. For more information, see the heading “Indebtedness pertaining to tenant owner associations and housing companies” in the section “Capital structure and other financial information.” 4) Pertains to loans in Swedish tenant owner associations and Finnish housing companies. For more information, see the heading “Indebtedness pertaining to tenant owner associations and housing companies” in the section “Capital structure and other financial information.”

Definitions Industry-related definitions Housing units in production Refers to the period from production start to completion of a building. A housing unit is considered complete on receipt of the inspection documentation.

Building right Estimated possibility to develop a site. With respect to housing units, a building right corresponds to an apartment or a semi-detached or detached house. Either ownership of a site or an option on ownership of the site concerned is a prerequisite for being granted access to a building right.

6 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Summary

B.7 Condensed Production start financial informa- The time at which Bonava starts production of a building. At this time, capitalised expenditure for the site tion/Selected and development expenses are recognised as housing units in production. historical financial Properties held for future development information, Refers to Bonava’s holding of land and building rights for future housing development and capitalised continued project development of properties.

Completed housing units Refers to housing units for which inspection documentation has been received but the unit has not yet been sold; alternatively, where the finished housing unit has been sold but not yet occupied by the tenant.

Completion rate Recognised costs in relation to estimated total costs for ongoing housing projects.

Sales rate Number of sold housing units in production in relation to total number of housing units in production.

Reservation rate Number of reserved housing units in production in relation to total number of housing units in production.

Profit-recognised housing units Number of housing units taken possession of by the purchaser. When the purchaser takes possession, the purchase consideration is recognised as net sales and costs incurred in the housing unit are recognised as production costs.

Housing units sold Number of housing units for which binding sales contracts have been signed with the customer and production of the housing unit has started.

Key financial ratios Share of risk-bearing capital Sum total of shareholders’ equity and deferred tax liabilities as a percentage of total assets.

Return on capital employed Profit/loss after financial items including results from participations in associated companies following the reversal of interest expense in relation to average capital employed.

Total assets Sum total of assets, liabilities and shareholders’ equity respectively. Average interest rate Nominal interest rate weighted by interest-bearing liabilities outstanding on the balance-sheet date.

Average period of fixed interest The remaining period of fixed interest weighted by interest-bearing liabilities outstanding.

Average shareholders’ equity Average of the balances at 1 January, 31 March, 30 June, 30 September and 31 December.

Capital turnover rate Net sales divided by average capital employed.

Production costs Costs incurred for land, such as development expenses for architects and other contractor-related costs, utility-connection fees and production of a building.

Net debt Interest-bearing liabilities and provisions less interest-bearing assets including cash and cash equivalents.

Net sales Net sales are recognised when the housing unit is transferred to the end customer. Property sales are recognised on the date when significant risks and rewards are transferred to the buyer, which normally coincides with transfer of the ownership.

Earnings per share Net profit/loss for the year attributable to Bonava’s shareholders divided by the weighted number of shares during the year in question.

Interest-coverage ratio Profit/loss after financial items plus financial expense divided by financial expense.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 7 Summary

B.7 Condensed Operating margin financial informa- Operating profit as a percentage of net sales. tion/Selected Debt/equity ratio historical financial Net debt divided by shareholders’ equity. information, continued Equity/assets ratio Shareholders’ equity as a percentage of total assets.

Capital employed Total assets less interest-free liabilities including deferred tax liabilities. Average capital employed is calculated as the average of the balances at 1 January, 31 March, 30 June, 30 September and 31 December.

SIGNIFICANT CHANGES SINCE 31 MARCH 2016 In April 2016, Bonava entered into a credit agreement for a multicurrency revolving credit facility, intended to be used for Bonava’s general corporate needs and as working capital within the Group. The credit has a maturity of five years and amounts to SEK 2.7 billion, provided that Bonava is listed during 2016 and that customary terms and conditions are fulfilled. After 31 March 2016, Bonava has also entered into a credit agreement for term loans of EUR 30 million with a maturity of four years and EUR 30 million with a maturity of five years.

On 22 April 2016, the annual general meeting resolved to inter alia make a bonus issue and to re-elect all directors of the board of directors and the Company’s auditor. On 17 May 2016, the Listing Committee of Nasdaq Stockholm resolved to approve that Bonava’s shares are admitted for trading on Nasdaq Stockholm, provided that customary terms and conditions are fulfilled. On 17 May 2016 NCC announced that Bonava is selling a total of 352 newly developed Nordic Swan ecolabelled rental units in Linköping and Karlstad to the housing company Willhem. The sale, which corresponds to a value of SEK 595 million, will be profit recognised during the first quarter of 2017 and the fourth quarter of 2018. Bonava is responsible for leasing and provides customary rental guarantees to the buyer.

On 18 May 2016, the extra general meeting of Bonava resolved to make another bonus issue.

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

B.9 Earnings forecast Not applicable. The Prospectus does not contain a profit forecast or calculation of expected earnings.

B.10 Remarks in Not applicable. There are no remarks in the audit report. the audit report

B.11 Working capital In the opinion of the board of directors of Bonava, the Group’s working capital is adequate for the Group’s current needs for the next 12-month period.

8 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Summary

Section C – Securities

C.1 Type of securities Shares of series A (ISIN code SE0008091573) and shares of series B (ISIN code SE0008091581) of Bonava AB (publ).

C.2 Denomination The shares are denominated in SEK.

C.3 Total number of As of the date of the Prospectus, the Company’s registered share capital amounts to SEK 433,743,288, shares represented by 108,435,822 shares of which 14,522,665 were shares of series A and 93,913,157 were shares of series B. All shares are fully paid. The nominal value per share is SEK 4.0.

C.4 Rights attached to Each share of series A in the Company entitles the holder to ten votes at general meetings and each share of the securities series B in the Company entitles the holder to one vote at general meetings. Each shareholder is entitled to vote for all of the shares held by the shareholder in the Company. If the Company resolves to issue new shares of series A and shares of series B, through an issuance that is not paid in kind, holders of shares of series A and shares of series B shall have preferential rights to subscribe for new shares of the same type in relation to the number of shares already held (primary preferential right). Shares that are not subscribed for on the basis of primary preferential right will be offered to all shareholders for subscription (subsidiary preferential right). Should the Company resolve to only issue shares of series A or shares of series B, through an issuance that is not paid in kind, all holders of shares, regardless of whether they hold shares of series A or shares of series B, shall have preferential rights to subscribe for new shares in relation to the number of shares already held. All shares in the Company carry equal rights to dividends and the Company’s assets and any surpluses in the event of liquidation. A resolution on the distribution of profit is resolved by a general meeting and payment is administered by Euroclear. Entitlement to receive dividends is limited to shareholders registered in the share register maintained by Euroclear on the record date determined by the general meeting. Holders of shares of series A are entitled to request that shares of series A be converted to shares of series B. The conversion become effective when the shares have been registered and a note of this has been entered in the share register.

C.5 Restrictions on the Not applicable. The shares will not be subject to any restrictions on the right to be transferred from the first free transferability date of trading.

C.6 Admission On 17 May 2016, Nasdaq Stockholm’s Listing Committee resolved to approve the application by Bonava to to trading admit the Company’s shares of series A and shares of series B to trading on Nasdaq Stockholm provided that, inter alia, the distribution requirement for the Company’s shares of series A and shares of series B be met. Trading is expected to commence on 9 June 2016.

C.7 Dividend policy Bonava’s dividend policy is that at least 40 per cent of the Group’s consolidated profit/loss for the year after tax shall be distributed to the shareholders.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 9 Summary

Section D – Risks

D.1 Main risks that are In the Prospectus, Bonava has identified a number of risk factors that, in the view of the Company, could specific to the issuer have a negative effect on the Group’s operations, financial position and earnings, affect the Company’s or its industry prospects, and/or entail a decline in the value of the Company’s shares. The risk factors are not listed in order of significance or their potential financial impact on the Company, and there may be additional risk factors of which the Company is not presently aware of.

Main risks related to Bonava include inter alia: • Sales of housing units Bonava’s earnings capacity is dependent on the opportunity for Bonava to sell housing units to, inter alia, consumers on satisfactory terms. If the consumers will or capacity to pay for the housing units offered by Bonava declines, or if Bonava fails in its pricing strategy of housing units, this could have a negative effect on the Group’s operations, earnings and financial position. • Project-related risks Bonava’s operations include project development of housing units, which depends on a number of factors such as receipt of necessary permits and decisions from authorities, as well as the procurement of materials and construction services on terms that are acceptable to the Company. In connection with new construction, technical risks arise for which Bonava may be held liable. If project-related risks were to be realised, this could result in projects being implemented at a loss or at inferior profitability. • Acquisition of building rights If Bonava fails to acquire new building rights on terms that are favourable to the Company, this could have a negative impact on Bonava’s operations, earnings and financial position. • Market position and market awareness of Bonava’s brand As a new company, Bonava may experience difficulties in retaining brand recognition and market position equivalent to that enjoyed by the Company as part of the NCC group. A weakened market position could lead to lower demand for the housing units developed by the Group, as well as increased sales and marketing costs, which could have a negative impact on the Group’s operations, earnings and financial position. • Implementation of a new IT strategy and IT environment Bonava has, as an independent company, implemented a new IT strategy and a new IT environment. Certain new IT systems will not be implemented until after the Company has been listed, including business-critical systems and applications in areas such as production, finance and HR. Disruptions in the IT systems and their implementation could have a negative impact on the Group's operations, earnings and financial position. • Exchange-rate risks Exchange rate risk refers to the risk of fluctations in exchange rates having a negative impact on Bonava’s income statement, balance sheet and/or cash flow. Bonava is exposed to exchange rate risks when fluctuations arise between the Company’s accounting currency and the subsidiaries functional currency, which is SEK, and foreign currencies used in transactions with suppliers and customers outside Sweden (mainly in EUR and RUB). Furthermore, exchange-rate differences can arise at Group level when the income statements and balance sheets of foreign subsidiaries are consolidated (known as translation risk).

10 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Summary

D.3 Main risks that are The main risks related to the shares include inter alia: specific to the General share-related risks securities • Risk and risk-taking is an unavoidable part of share ownership. Since an investment in shares may increase or decrease in value, there is a risk that an investor will not recover its investment. • An active, liquid and working market Prior to the listing on Nasdaq Stockholm, no market exists for the Company's shares and there is a risk that an active trading in the shares will not develop following the admission to trading of the shares on Nasdaq Stockholm. Accordingly, the share price may prove volatile and potential investors may lose their investment in part or in full. • Future dividends Future dividends, and the extent of any such dividends, to the shareholders depend on the subsidiaries’ and the Company’s future earnings, financial position, cash flows, working capital requirements and other factors. • Shareholders with significant influence After the distribution of the shares of Bonava, Nordstjernan AB will have a significant influence over the outcome of matters referred to Bonava’s shareholders for approval. Nordstjernan AB may have interests that diverge from or compete with those of the Company or other shareholders.

Section E – Offering

E.1 Issue amount and No new shares or other securities will be issued by Bonava in connection with the preparation of this expenses Prospectus, why no issue proceeds will accrue to the Company.

Bonava has no expenses attributable to the admission to trading of the Company’s shares of series A and shares of series B on Nasdaq Stockholm; all expenses attributable to this will be borne by NCC in its capacity as the sole shareholder prior to the distribution of the shares of Bonava.

Separation costs for creating an independent Bonava are borne by Bonava. Of separation costs amounting to SEK 68 million, such as costs for new IT tools, new premises and new functions, SEK 57 million was charged to Bonava’s earnings for 2015 and SEK 11 million was charged to Bonava’s earnings for the first quarter of 2016. Additional separation costs of SEK 90 millions are estimated to be charged to Bonava’s earnings during 2016. Stamp tax on real estate is capitalised in the projects and is not charged to the earnings, but rather recognised in pace with the delivery of the projects.

E.2a Reasons and use of Not applicable. The Company does not offer any new securities. the issue proceeds

E.3 Terms and condi- The shares of Bonava will be distributed to NCC’s shareholders in proportion to the shareholding of each tions of the offer individual shareholder in NCC on the record date for distribution established by the board of directors, which is 7 June 2016, whereupon each share of series A in NCC entitles to one share of series A in Bonava and each share of series B in NCC entitles to one share of series B in Bonava.

E.4 Interests and Financial adviser in connection with the distribution and listing on Nasdaq Stockholm is Handelsbanken. conflicting interests Handelsbanken (and affiliates to Handelsbanken) has provided, and may in the future provide, various banking, financial, investment, commercial and other services to Bonava for which Handelsbanken has received, or may receive, compensation. In addition, Handelsbanken is also lender to Bonava.

E.5 Lock-up agreement Not applicable. There are no lock-up agreements in place in connection with the admission to trading of the Company’s shares.

E.6 Dilution effect Not applicable. The Company does not offer any new securities.

E.7 Expenses charged Not applicable. Investors will not incur any costs in connection with the admission to trading of the to investors Company’s shares.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 11 Risk factors

A number of factors could affect Bonava’s operations. There are risks involving circumstances pertaining to Bonava and risks that have no specific connection with Bonava, but that impact the industry served by Bonava. It is therefore important to carefully analyse the risk factors that are considered to be material for the future performance of the Company and its shares. A description of the material risk factors to which Bonava is exposed is provided below, in no particular order. The description below does not claim to be exhaustive and it is not possible to foresee and describe in detail all potential risk factors. In addition to this section, readers should also take into consideration the other information contained in the Prospectus in its entirety. The risks and uncertainties presented below could, individually or collectively, have a material adverse effect on Bonava’s operations, financial position and/or results. They could also result in a decrease in the value of Bonava’s shares, which could lead to Bonava’s shareholders losing all or part of their invested capital. Additional factors of which Bonava is currently unaware, or which it currently deems not to constitute risks, could also have corresponding negative effects.

MARKET, INDUSTRY AND COMPANY- demand, activity in the housing market, Bonava’s operations are affected by future RELATED RISKS general trends in housing prices and legislation, regulations and other Demand for Bonava’s housing units is demographic factors such as immigration or regulatory requirements, as well their affected by macroeconomic factors in the emigration in the areas where Bonava sells application by the relevant authorities markets served by Bonava housing units. Willingness to pay is also Bonava’s operations are governed and Demand for Bonava’s housing units is strongly affected by the cost of and access to alterna- affected by laws and regulatory frameworks, affected by macroeconomic factors such as tive types of housing. How Bonava prices the as well as processes and decisions related to the general state of the economy, the level of housing units it develops is a significant factor these regulatory frameworks. The body of employment, the rate of new housing produc- for consumer willingness to buy and pay for rules and regulations applies to issues such as tion, changes in infrastructure, demographic the units in question. Regarding the consum- land acquisition, planning and building regu- trends and population growth, consumer ers’ willingness to pay, it is essential that lations and safety regulations, environmental optimism as well as inflation and interest Bonava is able to predict which housing units standards, efficiency standards for water and rates. Bonava operates in eight different and housing environments that will be attrac- energy consumption, sustainability, restric- countries and the target groups for its various tive in the future. If Bonava misjudges the tions on the use of various materials, recycling housing development projects differ. The risk future preferences of the consumers, it will and other social and sustainability require- is thus not concentrated to a particular coun- render it more difficult to sell the housing ments that apply when developing housing try, region or target group. A negative devel- units. The consumers’ ability to pay for environments. Using and developing the opment of one or more of these factors in one housing units is affected by the households’ Group’s properties also requires various or more countries where Bonava operates ability to obtain loans, amortisation require- permits and decisions involving detailed plans could have an adverse impact on the Group’s ments, trends in mortgage interest rates and and various types of land paraceling, which operations, earnings and financial position. the maximum allowed LTV ratio. Consumers’ are granted and issued by parties including ability to pay is also affected by wage trends, municipalities (or their foreign equivalents) Bonava’s earning capacity depends on the level of employment, level of taxes and and government authorities. The Company’s Bonava’s ability to sell housing units to, fees, fuel prices and other factors that affect operations may also be affected by rules and inter alia, consumers on satisfactory household economy. Measures intended to regulations that address consumers and that terms reduce household indebtedness, not least affect the consumers’ ability to buy housing political decisions, could have an adverse In 2015, sales of housing units to consumers units, for example the ability to obtain and the impact on the households’ ability to pay. If accounted for approximately 70 per cent of costs for credits. There are risks that regula- consumers’ willingness or ability to pay for the Bonava’s total revenues, meaning that tory developments and the application of housing units offered by Bonava declines, or if consumers’ willingness and ability to pay for regulations by municipalities and government Bonava’s pricing strategy for the housing units housing units developed by Bonava is impor- authorities could have undesirable effects for fails, this could have an adverse impact on the tant to Bonava’s earnings and to the Compa- Bonava, which in turn could have an adverse Group’s operations, earnings and financial ny’s operations and financial position in the impact on the Group’s operations, earnings position. long term. Consumers’ willingness to pay for and financial position. housing units depends on factors including how well a particular unit meets local market

12 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Risk factors

Risks associated with Bonava’s operations cause delays or higher costs for the produc- some attractive areas such as the Greater in St. Petersburg tion of the Company’s housing units. It is also Stockholm area, thus making it more difficult Bonava operates in St. Petersburg, Russia. possible that Bonava fails to receive the to acquire land on terms that are favourable to Legal, financial and political risks in Russia are necessary permissions and approvals from the Company. If Bonava fails to acquire new greater than those in the Group’s other public agencies for production or for its building rights on terms favourable to the markets. The Russian economic situation is intended use of acquired properties; or that Company, this could have an adverse impact challenging, and the country has been the changes in permits, plans, regulations or legis- on Bonava’s operations, earnings and financial target of sanctions by the EU and the US since lation result in a housing development project position in the long term. However, if Bonava 2014. In addition, the exchange-rate risk in being delayed, incurring higher costs or being acquires too many building rights, there is a Russia is high (please see more below under unable to be completed. If one or more of the risk that the capital tied-up in these building the heading “Exposure to exchange-rate risk risks described above were to occur, this rights will be excessive, whereby Bonava will could impact Bonava’s cash flow, income could lead to Bonava experiencing difficulties not have sufficient capital to develop the statement and balance sheet”). As a company in selling housing units, being forced to housing units. If, at certain times, Bonava fails domiciled in an EU country, Bonava could reduce the prices of its housing units, to acquire a suitable number of building experience a higher risk of actions such as unwanted capital tied-up in operations and rights, this could have an adverse impact on currency restrictions and other forms of politi- higher costs, which could in turn have an the Group’s operations, earnings and financial cal intervention, depending on factors includ- adverse impact on the Group’s operations, position. ing how the sanction issue develops. In addi- earnings and financial position. tion, corruption is more widespread in Russia Bonava’s market position could be than in Bonava’s other markets. Deterioration Bonava could fail to implement its weakened because Bonava’s brand is not in the economic situation in St. Petersburg, strategy as an independent company well-known in the market political intervention or influence from corrup- In the opinion of Bonava’s board of directors NCC is a relatively well-known brand in most tion could have a negative impact on the and management, the separation of Bonava markets where the Group operates. However, Group’s operations, earnings and financial from NCC will enable Bonava to implement a prerequisite for Bonava to maintain its position. independent strategies. Reducing production market position is for the Group and its brands costs and cutting the time spent on various to become well-known and associated with Bonava is exposed to project-related risks stages of Bonava’s housing development are positive values by consumers, investors, land- Bonava’s operations include project develop- important parts of the Company’s future owners, government authorities and other ment of housing units. Such project develop- strategy. Measures for carrying out this strat- stakeholders. As a new company, Bonava ment includes inter alia reports, analyses, egy include increasing the efficiency of the could experience difficulties in retaining calculations and applications for official development process, additional purchasing brand recognition and a market position permits if a project is to realise a result. The coordination, an increased focus on custom- equivalent to that enjoyed by the Company as profitability of the projects depends on a ers, greater industrialisation and more dedi- part of the NCC group, which has been estab- number of factors, such as receiving the requi- cated resources for project engineering and lished internationally for a long time. A weak- site permits and decisions from authorities. construction. However, the measures required ened market position could lead to lower Bonava is also exposed to price changes in for Bonava’s business to achieve its full poten- demand for the housing units developed by connection with the procurement of materials tial could take longer to implement than the Group, as well as higher sales and market- and contract-related services. There is a risk expected, or they could prove to be more diffi- ing costs. These factors could have an adverse that procured contracted services could be cult to implement than expected within one or impact on the Group’s operations, earnings delayed or not completed for reasons attribut- more of Bonava’s segments. If Bonava fails to and financial position. able to the contractor, which could in turn implement its strategy and the measures it result in higher project engineering costs or in takes do not have the desired effect, this could Bonava operates in a competitive market claims being lodged by Bonava’s customers have an adverse impact on the Group’s opera- and the Group may fail to compete in a against Bonava for breach of contract. Project tions, earnings and financial position. successful way development also entails strategic decisions The Group has competitors in all its geograph- in connection with land acquisitions for new Bonava could fail to acquire suitable ical markets. Which competitors Bonava faces construction, where wrongful decisions may building rights in the different geographical markets as well lead to decreased profitability for Bonava. The As per 31 March 2016, Bonava had 28,900 as the competition in general varies since the profitability of projects is also affected by building rights, of which 18,500 is recognised market for housing development is relatively whether the projects sufficiently match market in the balance sheet. Bonava continuously local. The competitors comprise big, well demand, whether the price of or demand for acquires building rights in its operations. The established financial operators as well as housing units in general changes, cost control, ability to predict where consumers will want to smaller niche operators which are especially changes in taxes or fees and other factors that live in the future, and thus where it is attractive competitive within certain product groups. could result in delays or higher and unfore- to invest in land and on what terms, is funda- Some competitors may have competitive seen project costs. New construction entails mental for Bonava’s operations. If Bonava’s advantages compared to Bonava, they may for technical risks that Bonava could be held analysis is faulty and it acquires land in loca- instance be particularly financially strong, responsible for, even in cases where someone tions where it is not sufficiently profitable to have a local organisation for housing develop- other than Bonava is building the housing develop housing units in the future, this will ment in markets where Bonava does not, have units. These include the risks of construction have an adverse impact on the Group’s opera- a higher degree of specialisation or a greater flaws, other hidden errors or defects and tions, earnings and financial position in the local focus and thereby also an increased pollution. Such technical problems could long term. Access to land may be limited in proximity to local decision makers and

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 13 Risk factors

customer groups. In the future Bonava could Bonava’s implementation of a new IT Shortcomings among Bonava’s suppliers, also face competition from new operators. strategy and environment could fail, and in the employees’ work environment or in Bonava’s position on existing markets can future disruptions to IT systems could the housing units sold by Bonava could rapidly deteriorate due to the competition. If occur impair Bonava’s reputation and cause Bonava’s position deteriorate in relation to its Due to that Bonava has historically been a other adverse impacts on Bonava’s competitors and/or the competition increases, business area within NCC, the IT strategy and operations it could have an adverse impact on the environment that Bonava has utilised and One factor contributing to the Group’s long- Group’s operations, earnings and financial employed has not been completely custom- term profitability is that consumers, investors position. ised to the needs of Bonava’s operations. and other stakeholders, including municipali- Before the distribution of the shares in ties, associate Bonava with positive values and Bonava’s ability to operate successfully Bonava, Bonava has implemented a new IT quality. Bonava employees, suppliers engaged could be negatively impacted due to new strategy and environment that include several by Bonava and other people associated with functions and work processes being newly IT infrastructure-related applications and Bonava could violate Bonava’s code of established within Bonava services. Some of the new IT systems will be conduct, which could impair the Group’s repu- Before the distribution of the shares in Bonava implemented after the Company has been tation. The architecture, design, concepts and and the listing on Nasdaq Stockholm, the listed. These include business-critical systems methods used by Bonava could also prove to operations that were previously performed by and applications in areas such as production, be flawed or unsuitable, which in addition to NCC’s Housing business have been separated finance and HR. The changes in the IT envi- hurting Bonava’s reputation, could result in from NCC and transferred to Bonava. Due to ronment could demand considerable higher production costs and higher costs to the separation, several new functions and resources as well as the time of the Company’s meet warrant commitments. There is also a work processes (for example, relating to management, and they could also affect work risk of events occurring such as local strikes, Investor Relations, external financial report- processes. The implementation could be cost- factory fires, natural disasters or other events ing, Treasury and IT) have been established at lier than anticipated, it could be delayed with that disrupt production at Bonava’s suppliers Bonava in their present forms within a rela- negative consequences, or it could cause or cause contracted deliveries of materials to tively short period as well as organisational disruptions to operations, including having an be delayed or cancelled. Work on construc- changes. The fact that functions and work adverse impact on availability and customer tion sites could entail a greater risk of occupa- processes in certain instances are newly satisfaction. There is also a risk that IT tional injuries to some of the Group’s employ- established in their present forms could systems will experience service interruptions ees and hired contractors. It is essential for increase the risk of misunderstandings or or downtime for various reasons; for example, Bonava to be able to offer a safe and healthy uncertainties, which could have an adverse if the Company were to be subject to data work environment. If the Group fails to do so, impact on the Group’s operations, earnings infringements, or if the systems prove to be employees or other people could be injured or and financial position. deficient and the backup system fails to func- killed and project delays could occur, and the tion properly in connection with service inter- Group and its management could be subject After separating from NCC, Bonava will ruptions. Data infringements could also result to civil liability. If any of these risks were to continue to be dependent on NCC as a in unauthorised parties gaining access to materialise, this could have an adverse impact supplier for certain functions and in confidential information about Bonava. on the Group’s operations, earnings and finan- certain markets over a transitional period Disruptions in IT systems could have an cial position. Bonava and NCC have entered into an agree- adverse impact on the Group’s operations, ment whereby NCC will provide services to earnings and financial position. Bonava’s historical combined financial Bonava in a number of areas over a transi- information in the Prospectus does not tional period. These services include inter alia An inability to recruit and retain qualified necessarily provide the same accounting. Bonava will also be a tenant of staff and senior executives could have an representation as if Bonava historically NCC in some office premises. Bonava and adverse impact on Bonava’s operations had been a separate group NCC have also entered into a licensing agree- The Group and its operations are dependent Bonava’s historical combined financial infor- ment entitling Bonava to use the NCC brand in on several key personnel, including senior mation in the Prospectus does not necessarily its operations without compensation over a executives and staff members with specialist provide an accurate and complete representa- two-year transitional period. In addition to competencies. These key personnel have tion of what Bonava’s operations, earnings and these agreements, NCC’s Building business long-term experience and competencies in financial position would have been had the area will continue to be an important supplier housing development. Because the key separation from NCC been completed by the to Bonava as a housing production contractor. personnel within the organisation have gener- presented dates. Nor should the information Bonava does not currently have its own local ally built up knowledge of the local market be used as a basis for conclusions about organisation in the Nordic countries, and must through their experience, as well as good rela- Bonava’s future operations, earnings and therefore purchase services such as project tionships with operators in this market, these financial position. Bonava has not historically managers, site managers and supervisors key personnel are important to the successful been a separate group, but rather a business from NCC or another third party. Shortcom- development of the Group’s operations. If the area with earnings consolidated within the ings in NCC’s fulfilment of its commitments to Group fails to recruit and retain key personnel, framework of NCC’s earnings, financial posi- Bonava, disagreements regarding interpreta- it could have an adverse impact on the tion and cash flow. The historical combined tion of agreements or other disruptions to Group’s operations, earnings and financial financial information has been prepared on Bonava’s relationship with NCC could have an position. the basis of the financial information adverse impact on the Group’s operations, presented as the Housing operating segment earnings and financial position. in NCC’s consolidated financial statements for

14 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Risk factors

the financial years 2013, 2014 and 2015, as Bonava could be charged with costs for Financial risks well as the quarterly report for the first quarter remedial actions or be ordered to pay Bonava could encounter difficulties in of 2016, although with some adjustments. damages due to its deployment of the securing financing on reasonable terms for single-step method to seal façades in the Company, or securing financing at all Legal risks housing units Refinancing risk is defined as the risk that Bonava is exposed to tax-related risks In two judgements on 19 March 2015 and financing cannot be secured at a certain point Bonava pursues operations and is subject to 22 December 2015, the Supreme Court of in time, that financing can only be secured income tax in Sweden, Germany, Finland, Sweden ruled that a certain construction with a resulting increase in costs or that credi- Denmark, Norway, Russia and Estonia/Latvia method involving single-step sealing of tors will have difficulties fulfilling their obliga- with different tax regulations in each of these façades constituted a fault in the consumer tions. Historically, Bonava has obtained countries. There is a risk that the Company’s contract, in the relevant cases performed by financing via NCC, but prior to the listing on interpretation and application of applicable Myresjöhus AB (a company which is not, and Nasdaq Stockholm it has entered into credit legislation, tax treaties and regulations, as well have not been, a part of the NCC group or the agreements with Danske Bank A/S, Skandina- as the practices of courts and tax authorities, Group), and that the provision governing of viska Enskilda Banken AB (publ), Svenska are not correct or are amended, perhaps with liability limitation contained in the consumer Handelsbanken AB (publ) and Swedbank AB retroactive effect. Due to decisions by the contract does not prevent property owners (publ) and with AB Svensk Exportkredit. As authorities involved, the Company’s tax situa- from asserting claims for liability from the per 31 March 2016, the Group’s current and tion could change and adversely affect the contractor. Bonava has as well as several other long term interest-bearing liabilities amounted Group’s operations, earnings and financial construction companies, during the years to SEK 5,422 million. There is a risk that it will position. 1998 to 2007, together with NCC used not be possible to secure future refinancing methods involving single-step sealing of on reasonable terms, which could have an Disputes, claims, inquiries and proceedings façades in approximately 1,000 consumer adverse impact on the Group’s operations, could lead to Bonava being compelled to contracts. The majority of the housing units earnings and financial position. Besides the pay damages or terminate certain developed by Bonava using the methods in Group’s cash flow and shareholders’ equity, operations question are encompassed by binding agree- the Group’s operations, particularly in relation Bonava is involved in disputes within the ments previously entered into with the entitled to land acquisitions and housing projects in framework of normal business operations and persons concerned. Bonava and NCC has ongoing production, are largely financed risks becoming the subject of civil law claims entered into an agreement stipulating that through loans from external lenders. Develop- in, for example, proceedings pertaining to future relevant costs for customer claims will ment of housing projects could be delayed or defects or deficiencies in sold housing units be split 50/50 between the parties. Bonava affected by unforeseen or increased costs due (please see below under the heading “Bonava has reserved a minor amount for potential to factors within or beyond the control of the could be charged with costs for remedial claims, related to single-step sealing of Group. If such circumstances occur, it could actions or be ordered to pay damages due to façades, not covered by previous agreements result in projects not being completed before its deployment of the single-step method to with customers. Potential future disputes and the loan falls due for repayment, or that such seal façades in housing units”). Moreover, claims could have an adverse impact on the increased costs are not covered by the Bonava and its subsidiaries (or these compa- Group’s operations, earnings and financial granted credit facilities as well as the cash nies’ senior executives, managers, employees position. flow being adversely affected resulting in an or related parties) could become the subject increased need for external financing. If the of criminal investigations and other investiga- Bonava’s operations are exposed to Group is unable to secure financing for tions by authorities. Disputes, claims, inquiries environmental risks acquisitions, development and production, and proceedings of these types can prove Property operation and utilisation of property extension or expansion of existing financing time consuming, disrupt normal operations, has an impact on the environment and is regu- or refinancing of previously secured financing, involve considerable cost, adversely affect the lated by an extensive environmental legisla- or is only able to obtain such financing on Group’s reputation and result in administrative tion regarding for example building materials, unfavourable terms, this could have an and/or legal sanctions and measures, as well noise and pollution. As a consequence of adverse impact on the Group’s operations, as substantial costs. If such disputes, claims, Bonava’s operations as property owner and earnings and financial position. inquiries and proceedings occur and Bonava, developer, claims could be directed against or its subsidiaries, is held responsible, there is Bonava for soil remediation or reclamation Bonava is exposed to the risk that its a risk that the claims will not be fully covered relating to the presence or suspicion of counterparties cannot fulfil their financial by the Group’s insurance policy. Potential contamination in soil, catchment areas or obligations towards Bonava disputes, claims, inquiries and proceedings groundwater in accordance with the provi- Bonava is exposed to the risk of not receiving could have an adverse impact on the Group’s sions of applicable environmental legislation. payment for the housing units which the operations, earnings and financial position. Such claims could have an adverse impact on Group has entered into agreements to sell. the Group’s operations, earnings and financial The Company is also exposed to credit risks in position. relation to banks in which the Company places its cash and cash equivalents or against which it has claims. If these counterparties cannot fulfil their obligations towards Bonava, this could have an adverse impact on the Group’s operations, earnings and financial position.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 15 Risk factors

Bonava may not be able to meet its the fair value of financial assets and liabilities translation risk). Bonava’s policy requires payment obligations due to insufficient negatively. In addition to the amount of inter- capital in foreign business units to be currency liquidity est-bearing liabilities, interest expenses are hedged to a maximum of 90 per cent (exclud- Liquidity risk is the risk that the Company is mainly affected by the level of current market ing tax effects). If Bonava’s activities to hedge, unable to meet its payment obligations when interest rates, the margins from credit institu- or in another manner manage, the effects of they are due without a significant increase in tions and the strategy chosen by the Group movements in exchange rates prove insuffi- the cost of obtaining the funds. As per when selecting terms of fixed interest. Bona- cient, this could have an adverse impact on 31 March 2016, Bonava’s cash and cash va’s policy for interest rate risk is that the aver- the Group’s operations, earnings and financial equivalents amounted to SEK 640 million in age remaining fixed rate term is to be between position. the form of bank balances, and the Group also six and 18 months and that the interest rate has access to the credit of the scope maturity structure of the debt portfolio should RISKS RELATED TO AN INVESTMENT described under the heading “Financial be adequately spread over time. IN THE COMPANY’S SHARES commitments in loan agreements” below. Share ownership is always associated with Market interest rates are influenced a great Should the Company’s sources of liquidity a certain degree of risk-taking. If an deal by the anticipated level of inflation. prove to be insufficient, this could have an active, liquid and functioning market for Short-term interest rates are mainly affected adverse impact on the Company’s operations, trading in the Company’s shares does not by the so called repo rate, which is an instru- earnings and financial position. emerge, the share price could prove ment of monetary policy. In times of rising volatile and potential investors could inflation expectations, interest rates could be Financial commitments in loan agreements partly or completely lose their investment expected to increase, and in times of declining Prior to the listing on Nasdaq Stockholm, inflation expectations, the interest rates could Share ownership is inevitably associated with Bonava has entered into credit agreements be expected to decline. The longer the aver- risk and risk-taking. Since an investment in with Danske Bank A/S, Skandinaviska age fixed-interest term on the Group’s loans, shares could increase or decrease in value, Enskilda Banken AB (publ), Svenska Handels- the longer it will take for a change in interest there is a risk that investors will not recover banken AB (publ) and Swedbank AB (publ) of rates to impact the Group’s interest expenses. their investment. Prior to the listing on totally SEK 2.7 billion and with AB Svensk The Group is impacted by interest rate situa- Nasdaq Stockholm, no market exists for the Exportkredit of totally EUR 60 million. The tion associated with the currencies in which Company’s shares. Accordingly, there is a risk terms and conditions of the credit agreements the Group has assets (EUR, SEK, DKK, NOK that an active market for trading in the shares are linked to two financial commitments and RUB, for example). A higher level of inter- will not develop following the listing on pertaining to equity/assets ratio (so called est rates and thus an increase in interest Nasdaq Stockholm. The share price trend will “equity to total assets ratio”) and interest- expenses could have an adverse impact on the depend on a number of factors, some of which coverage ratio (inter alia “ratio of EBITDA to Group’s operations, earnings and financial are company specific and others linked to the Net Financial Expenses”). position. stock market as a whole. These factors could increase share price volatility. It is not possible There are also customary provisions regarding for Bonava to control all of the factors that defaults. Such default exists under the credit Exposure to exchange-rate risk could could impact its share price, therefore every agreement if a default under another credit impact Bonava’s cash flow, income decision to invest should be preceded by a facility taken up by Bonava or any of Bonava’s statement and balance sheet thorough analysis. subsidiaries would be at hand (so called “cross Exchange rate risk pertains to the risk of default”); however, certain thresholds apply in fluctuations in exchange rates having an Furthermore, there is a risk that the liquidity of relation to this basis for termination. adverse impact on Bonava’s income state- Bonava’s shares of series A will be more ment, balance sheet and cash flow. Bonava is limited than the liquidity of Bonava’s shares of Should Bonava or any other company in the exposed to exchange rate risk when fluctua- series B. Low liquidity of Bonava’s shares of Group violate one or more of these commit- tions arise between the Company’s account- series A could entail difficulties in selling ments in the loan agreements, it could result ing currency and the functional currency of shares of series A at a point in time that is in the loan or loans being terminated for the subsidiaries respectively, which is SEK, considered desirable for the shareholder or at immediate repayment by the relevant credit and foreign currencies used in transactions a price level that could be obtained if a favour- institution, which could have an adverse with suppliers and customers outside Sweden able liquidity situation prevailed. impact on the Group’s operations, earnings (mainly EUR and RUB) (known as transaction and financial position. risk). In recent years, the RUB has weakened If Bonava issues new shares through a cash and has periodically exhibited very volatile issue, the shareholders generally have prefer- Bonava is exposed to interest rate risk that fluctuations. The measures that Bonava has ential rights to subscribe for new shares could lead to increased costs due to taken or will take to hedge exchange rate proportionally to the number of shares held movements in market interest rates movements, such as for example currency prior to the issue. Shareholders in certain In addition to the use of shareholders’ equity, hedging, could prove insufficient. Exchange other countries could, however, be subject to following the distribution of shares in Bonava, rate fluctuations could also affect Bonava’s limitations that prevent them from participat- the Group’s operations will largely be financed competitiveness or customer demand and ing in such rights issues, or that otherwise by cash flow from business operations and by thus lead to a reduction in Bonava’s market make participation difficult or limited. For loans from credit institutions, which is why shares and adversely impact Bonava’s opera- example, shareholders in the US could be interest expense is one of the Group’s largest tions. Furthermore, exchange rate differences prevented from exercising such preferential cost entrys. The Group is exposed to interest can arise at Group level when the income rights unless the shares or the subscription rate risk insofar as fluctuations in the interest statements and balance sheets of foreign rights are registered in accordance with the rate situation impact the Group’s cash flow or subsidiaries are consolidated (so called U.S. Securities Act, and if no exemption from

16 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Risk factors

the registration requirements are applicable. Shareholders in other jurisdictions outside Sweden could be similarly affected if the subscription rights or the new shares being offered have not been registered with, or approved by, the relevant authorities in such jurisdictions. Bonava is under no obligation to file a registration statement under the U.S. Securities Act or to seek corresponding approvals or relevant exemptions according to the laws of any other jurisdiction outside Sweden in respect of such subscription rights and shares. Doing so in the future could be impractical and costly. Insofar as Bonava’s shareholders in jurisdictions outside Sweden are not able to exercise their rights to subscribe for new shares in any future rights issues, their proportional interests in the Company will be reduced.

The Company’s potential to pay dividends to its shareholders depends on the subsidiaries and the Company’s future earnings, financial position, cash flows, working capital requirements and other factors Shares in Bonava entitle to dividends (assuming dividends are approved) as of the date on which the holders of shares in Bonava are included in the share register maintained by Euroclear. The shares held on the record date resolved by the general meeting or the board of directors entitle to dividends. Future dividends, and the extent of any such dividends, depend on the Company’s future earnings, financial position, cash flows, working capital requirements and other factors. There are also many other risks that could adversely impact the Group’s operations (see above in this section), which could entail that Bonava’s future earnings do not permit dividends in the future.

After the distribution of the shares in Bonava, a single shareholder, Nordstjernan AB, will exercise significant influence over Bonava Following the distribution of shares in Bonava, Nordstjernan AB will hold approximately 20.1 per cent of the shares and 49.4 per cent of the votes in the Company. Consequently, Nord stjernan AB will have a significant influence over the outcome of matters referred to Bonava’s shareholders for approval, such as the election of directors of the board, any mergers and amendments to the Company’s articles of association, share issues and the appropriation of profit. Nordstjernan AB could have interests that diverge from or compete with those of the Company or other share holders.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 17 Background and reasons

At NCC’s annual general meeting on 12 April 2016, the shareholders of NCC resolved, in accordance with the board of directors’ proposal, to transfer all of the shares of the subsidiary Bonava by distribution to the share holders of NCC. The intention is that Bonava’s shares of series A and shares of series B shall be admitted to trading on Nasdaq Stockholm with 9 June 2016 as the first day of trading.

Bonava has been an independent business area within NCC since 2009 and its sales have since then grown from approximately SEK 11 billion to approximately SEK 13 billion during 2015. Bonava has evolved into a leading housing developer in northern Europe with strong positions in several markets. A demerger of NCC and a separate listing of Bonava are natural steps in order for Bonava to continue to develop, additionally increase its specialisation and create greater potential to capitalise on growth opportunities in both the housing market and the construction market.

The assessment is that the separation will enable Bonava, as an independent company, to further focus on developing sustainable and affordable housing units, increase the efficiency of the project development process and optimise its position in the value chain. The advantages of being an independent company also include the opportunity to establish a distinct and strong brand that differentiates Bonava from other opera tors. By increasing the efficiency of the project development process in terms of time and expenses, Bonava can offer increased quality at a lower cost. As an independent company, Bonava can fulfil its strategy while maintaining stable growth combined with healthy profitability.

In the opinion of the boards of directors of NCC and Bonava, the value for the shareholders will increase over the long term through a demerger of the operations and a distribution of Bonava. A separate listing also provides an opportunity for current and new shareholders to invest directly in Bonava.

This Prospectus has been prepared by the board of directors of Bonava due to the admission for trading on Nasdaq Stockholm of shares of series A and series B of Bonava. The board of directors of Bonava is responsible for the content of this Prospectus. Assurance is hereby given that all reasonable precautions have been taken to ensure that, to the knowledge of the board of directors of Bonava, the information in the Prospectus complies with actual circumstances and that no information has been omitted that could materially affect its meaning.

Solna, 24 May 2016 Bonava AB (publ) The board of directors

18 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Comments from the CEO

Bonava originates from NCC’s business area Housing and has created homes and neighbourhoods since the 1930s. The business area Housing was established in 2009, following the separation of Housing from NCC Construction. As an independent business area, new opportunities arose at the same time as the control of the project portfolio improved.

When I assumed the role as Business Area Manager in 2012, we took the next step in our development as we launched the change program Housing Inc., whose purpose was to leverage the synergies between our markets and thus increase profitability. Two of the key elements were to increase focus on sales and marketing as well as to recruit customer-focused employees with the right set of skills. The work contributed to increase the business area’s sales and earnings, while the position as one of the leading housing developers in northern Europe was strengthened. In 2015, we commenced the work to enhance the control of design, planning and production of our housing units.

Since the business area was established in 2009, sales have increased by approximately SEK 2 billion to an amount of approximately SEK 13 billion in 2015. It demonstrates our ability to create long-term value for our customers, employees and shareholders. I am proud that we have come a long way in establishing a strong organisation, distinct processes and solid business units.

There are still a lot left to do. We have a new strategy that is based on increasing the customer value through strengthened customer focus all the way from planning to after sales; to use the capital where it creates most value on the most attractive markets, as well as reduce expenses by increased industrialisation and standardi sation of our housing units in order to offer a good home to more.

Bonava operates in markets with a favourable underlying demand. The urbanisation trend is expected to conti nue and we assesses that the demand for housing units at competitive prices likely will continue to increase in the future. By operating in eight countries, the effects of local variations in demand are evened out.

The Swedish bo means living and nav means hub. That is what Bonava is all about. We don’t just build houses. We create homes and neighbourhoods where people live their lives. Our vision is to create happy neighbour hoods, where people have the highest quality of life. We understand that this means different things to diffe rent people and that it might vary over time. This is why we are on a constant quest to find out what makes people happy where they live. Based on these insights, we will continue to build our new brand where the needs of people as to housing and living environment are at focus.

Joachim Hallengren

CEO and President

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 19

Information regarding distribution

Resolution on distribution Receipt of shares Bonava does not intend to apply to have the In accordance with the board of directors’ Those entered in the register of shareholders Company’s shares admitted for trading on any proposal, the annual general meeting of NCC in NCC maintained by Euroclear on the record other exchange or marketplace than Nasdaq on 12 April 2016 resolved to distribute all date will receive shares of Bonava without Stockholm. Nor does Bonava intend to regis shares of the wholly owned subsidiary Bonava taking any further action. The shares of ter shares under the U.S. Securities Act or to the shareholders of NCC. The shares of Bonava will be available in the CSD-account another foreign equivalent, or take any other Bonava will be distributed to NCC’s share (Sw. VP-konto) of those shareholders who are actions that may entail that Bonava is subject holders in proportion to the holding of each entitled to receive the distribution (or the to the reporting requirements of the SEC individual shareholder on the record date for CSD-account belonging to the party who is (United States Securities and Exchange distribution resolved by the board of directors otherwise entitled to receive the distribution) Commission). of NCC, on 7 June 2016, whereupon each two banking days after the record date. There share of series A in NCC entitles to one share after, Euroclear will send a statement contain Entitlement to dividends of series A in Bonava and each share of series ing information on the number of shares regis The shares of Bonava entitle to dividends for B in NCC entitles to one share of series B in tered in the CSD-account of the recipients. the first time on the record date for dividends Bonava. Aside from being registered as a occurring immediately after the distribution of shareholder on the record date for distribution Nominee registered holdings the shares of Bonava has been executed. Any (directly registered or nominee registered), no Shareholders whose holdings in NCC are dividends will be paid following a resolution further actions are required in order to receive nominee registered with a bank or other nomi by a general meeting. The payment of any shares of Bonava. The distribution is expected nee will not receive an account statement dividends will be administered by Euroclear to fulfil the requirements of the Lex ASEA from Euroclear. Notification will instead be or, should the shares be nominee registered, rules regarding taxation. For further informa made in accordance with the procedures of in accordance with the procedures of the tion, please see the section “Certain tax issues the various nominees. individual nominee. Entitlement to dividends in Sweden”. is limited to shareholders registered in the listing share register maintained by Euroclear on the Distribution ratio The board of directors of Bonava has applied record date for the dividend set by the general The intention is to distribute the shares of for a listing of the Company’s shares of series meeting. For information regarding Swedish Bonava in accordance with the Lex ASEA A and shares of series B on Nasdaq Stock preliminary tax, please see the section on rules, meaning in proportion to the share holm. On 17 May 2016, Nasdaq Stockholm’s “Certain tax issues in Sweden”. Also see the holding in NCC of each individual shareholder Listing Committee decided to approve heading “Financial objectives” in the section on the record date for distribution. For each Bonava’s application to admit the Company’s “Business description”. share of series A of NCC, one share of series A shares to trading on Nasdaq Stockholm, provi of Bonava is received and for each share of ded that inter alia the distribution requirement series B of NCC, one share of series B of for the Company’s shares are fulfilled. The Bonava is received. Shares held in treasury by first day of trading is expected to be 9 June NCC on the record date do not entitle to 2016. The Company’s ticker on Nasdaq distribution. In total, all 108,435,822 shares Stockholm will be BONA A for shares of series in Bonava will be distributed. At a general A and BONA B for shares of series B. The ISIN meeting in Bonava, each share of series A code for the shares of series A of Bonava is entitles to ten votes and each share of series B SE0008091573. The ISIN code for the shares entitles to one vote. For further information, of series B of Bonava is SE0008091581. please see the section on “Shares, share capital and ownership structure”. Example – Distribution of shares of series A and shares of series B

Record date Share of series A Share of series A The record date with Euroclear for entitlement in NCC in Bonava to receive shares of Bonava is 7 June 2016. The final day for trading in shares of NCC 1 share of series A in … 1 share of series A NCC entitles to… in Bonava including the right to receive shares in Bonava is 2 June 2016. The shares of NCC will be Share of series B Share of series B traded excluding the right to receive shares in in NCC in Bonava Bonava as of 3 June 2016.

1 share of series B in … 1 share of series B NCC entitles to… in Bonava

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 21

Market overview

Some information in this section has been obtained from external sources and publicly available reports. Market reviews and industry publications often state that the data they contain has been obtained from sources considered reliable, but that the accuracy and completeness of the information cannot be guaranteed. Such third-party information has been accurately reproduced, but the Company has not independently verified the information and cannot guarantee its accuracy or completeness. Forecasts and forward-looking information in this section do not constitute a guarantee of future results, and actual events and circumstances may differ significantly from current expectations.

INTRODUCTION St. Petersburg are associated with uncertainty MACROECONOMIC FACTORS Bonava is a leading housing developer in and the value of the statistics is limited, so The housing market and the conditions for northern Europe. Bonava develops and sells complete statistics for this region are not housing development are affected by a affordable and sustainable housing units to presented in this section. number of macroeconomic factors. Bonava consumers and investors in selected markets considers the following to be the most Investments in housing development in in Sweden, Germany, Finland, Denmark, important macroeconomic factors: Sweden, Germany, Finland, Denmark and Norway, St. Petersburg and Estonia/Latvia. A Norway were estimated at approximately EUR employment; number of macroeconomic, demographic and • 67 billion in 20141). In Bonava’s view, multiple regional factors have affected and will gross domestic product (GDP); factors contribute to the likelihood that the • continue to affect the Group’s operations in housing market will remain strong: expected interest rates; these geographic areas. The factors that affect • GDP growth, higher employment and dispos- the Company’s primary markets are described disposable income; and able income, relatively low interest rates and • in this section. In Russia, Bonava only operates positive demographic factors such as popula- households’ savings rates. in St. Petersburg. Market statistics on • tion growth and continued urbanisation. economic and demographic development for

Investments in new housing construction in Europe in 2014 (EUR billion)

Annual growth in investments 2014–2018e

Sweden, 5 Denmark, 2 9% 5% 1%

Germany, 47 Norway, 8

Finland, 5 Other European 7% 1% countries, 181 Markets where Bonava operates, 67

Source: Euroconstruct, December 2015. The figures in the diagram include new housing construction. The entry “Other European countries” includes Belgium, France, the Netherlands, Ireland, Italy, Poland, Portugal, Switzerland, Slovakia, Spain, the UK, the Czech Republic, Hungary and Austria. The figures refer to 2014 prices in EUR.

1) Euroconstruct, December 2015.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 23 Market overview

Employment the rate of employment correlates with rising countries. The level of employment is Level of employment measures the number of economic activity and/or population growth, expected to grow in the Nordic countries and individuals with paid work in a specific area. which has a positive effect on consumption Germany in the future1). The table below Employment is of great importance for a and the willingness to invest among compa- shows the indexed trend for the number of country’s economic development. When more nies and consumers. The employment growth individuals employed in Sweden, Germany, individuals are employed, production and in the Nordic countries and Germany has Finland, Denmark and Norway, and in the EU household incomes rise. A positive trend in generally been higher than in other EU as a whole.

Indexed CAGR CAGR (100) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e 05–15 2) 15–17e

Sweden 100 101.7 104.0 105.0 102.4 103.4 105.6 106.4 107.4 108.9 110.5 112.3 114.2 1.0% 1.7% Germany 100 100.9 102.6 104.0 104.1 104.5 105.9 107.1 107.8 108.7 109.5 110.5 111.3 0.9% 0.8% Finland 100 101.8 104.0 106.3 103.8 103.0 104.4 105.3 104.5 103.6 103.2 103.5 104.1 0.3% 0.4% Denmark 100 102.1 103.7 104.6 101.8 99.4 99.4 98.9 99.0 99.9 100.9 101.8 102.7 0.1% 0.9% Norway 100 103.4 107.7 111.2 110.7 110.1 111.7 114.0 115.3 116.6 117.5 118.2 119.3 1.6% 0.7% EU 100 101.8 103.6 104.7 102.9 102.2 102.3 101.9 101.4 102.5 103.6 104.6 105.6 0.4% 0.9%

Source: European Commission (Directorate-General for Economic and Financial Affairs, DG ECFIN) The table is indexed to 100, beginning in 2005. The indexed figure is subsequently calculated as the annual percentage trend.

GDP The Nordic countries, Germany and the euro also expected to continue experiencing GDP is a measurement of the level of total area as a whole have historically demonstrated stronger growth than the euro area as a economic activity in a specific geographic stable and positive GDP growth, except for whole.3) The table below shows nominal area during a given time period, usually one 2008, which was affected by the financial historical and forecast GDP growth for the year. When assessing levels of consumption, crisis. The Nordic countries and Germany Nordic countries and Germany, compared investments and expenditures during a given have historically demonstrated a stronger with the euro area as a whole. period of time, positive GDP growth is a sign GDP growth than the euro area as a whole. of economic growth in the geographic area. Sweden, Germany, Denmark and Norway are

Indexed CAGR CAGR (100) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e 05–14 14–17e

Sweden 100 106.8 111.6 108.0 112.6 119.7 120.5 123.5 127.4 134.1 140.1 147.3 152.5 3.3% 4.4% Germany 100 104.2 109.1 104.7 107.2 111.5 112.9 114.8 115.4 120.1 122.6 127.8 131.2 2.1% 3.0% Finland 100 107.1 113.9 107.6 107.8 114.9 118.4 118.2 120.4 121.1 122.0 125.8 128.1 2.1% 1.9% Denmark 100 103.8 116.4 109.1 117.1 124.9 137.6 138.0 144.2 143.8 148.1 154.8 159.8 4.1% 3.6% Norway 100 106.0 109.9 103.8 107.3 114.3 116.9 118.7 123.7 127.5 131.5 135.9 139.4 2.7% 3.0% The euro area 100 105.6 108.2 104.3 107.2 110.1 110.5 111.6 113.5 116.6 120.1 124.1 124.1 1.7% 2.1%

Source: Macrobond The table is indexed to 100, beginning in 2005. The indexed figure is subsequently calculated as the annual percentage trend. The gross domestic product is stated in nominal figures (local currencies).

1) European Commission (Directorate-General for Economic and Financial Affairs, DG ECFIN). 2) CAGR refers to average annual growth rate. 3) Macrobond.

24 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Market overview

Interest rates Interest rates are usually divided into two cate- in both Sweden and Denmark on 31 March The interest rate is a central monetary policy gories: (i) the policy interest rate, which is 2016. Government bonds often have longer tool that can be used to affect a country’s determined by the central bank as part of its duration, and the interest rate on 10-year economic activity and stimulate its consump- monetary policy initiatives; and (ii) the govern- government bonds is the rate that the market tion and investments. When the interest rate is ment bond rate, which states the interest rate generally uses as a reference rate when low, capital tends to flow to the property that governments must pay in order to borrow comparing different countries’ cost of lending. markets, thus leading to higher housing prices money from investors and other countries. The table below shows the historic 10-year and contributing to new construction. More The policy interest rate is at historically low government bond interest rate for the Nordic over the mortgage interest rate and thus the levels in several of Bonava’s markets. For countries, Germany, Russia and the euro area. households’ housing costs are also affected. example, the policy interest rate was negative

% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sweden 3.4 3.7 4.2 3.9 3.3 2.9 2.6 1.6 2.1 1.7 0.7 Germany 3.4 3.8 4.2 4.0 3.2 2.7 2.6 1.5 1.6 1.2 0.5 Finland 3.4 3.8 4.3 4.3 3.7 3.0 3.0 1.9 1.9 1.5 0.7 Denmark 3.4 3.8 4.3 4.3 3.6 2.9 2.7 1.4 1.8 1.3 0.6 Norway 3.8 4.1 4.8 4.5 4.0 3.5 3.1 2.1 2.6 2.5 1.5 Russia 8.1 7.0 6.7 7.5 9.9 7.8 8.1 8.2 7.3 8.5 10.9 The euro area 3.4 3.8 4.3 4.3 3.8 3.6 4.2 3.7 2.9 2.0 1.2

Source: OECD 10-year government bond yield.

Disposable income purchase products and services, as well as in inter alia housing prices. The table below Disposable income is a measure of how much their ability to invest. As individual house- shows historic and forecast disposable the country’s households have available to holds’ disposable income rises, consumption income, indexed to 2005, for the Nordic spend, adjusted for income tax and net and the willingness to invest rise as well. This countries, Germany and the EU. transfers. Trends in the disposable income of provides a positive relation between the households affect consumers’ ability to growth in disposable income and the growth

Indexed CAGR CAGR (100) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e 05–14 14–17e

Sweden 100 108.4 113.8 119.2 121.9 130.3 135.8 140.1 143.8 149.2 157.3 164.4 169.8 4.5% 4.4% Germany 100 101.7 104.0 103.8 104.7 108.2 112.3 112.6 115.0 118.4 121.1 125.0 127.8 1.9% 2.6% Finland 100 105.5 111.5 114.8 119.9 124.9 128.2 131.7 132.4 135.0 137.4 139.6 139.6 3.4% 1.1% Denmark 100 100.9 102.8 106.9 113.5 117.3 119.8 119.3 118.9 126.0 128.9 131.3 131.3 2.6% 1.4% Norway 100 107.4 114.8 121.4 126.8 133.5 140.9 149.2 157.1 165.0 172.0 180.7 180.7 5.7% 3.1% EU 100 105.7 105.4 98.7 103.6 106.8 108.3 108.9 112.3 118.0 121.9 126.7 126.7 1.9% 2.4%

Source: Macrobond The table is indexed to 100, beginning in 2005. The indexed figure is subsequently calculated as the annual percentage trend. Disposable income is stated in nominal figures (local currencies).

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 25 Market overview

The households’ savings rates geographic area. The share of households’ economic and financial challenges. The table The households’ savings rate is a measure of disposable income that is not saved is used for below shows the historical savings rate for how large the share of the disposable income consumption. A high savings rate means that households in Sweden, Germany, Finland, of households that is reserved for savings in a households have better resistance against Denmark, Norway and the EU.

% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Sweden 8.4 9.9 12.3 15.4 15.0 13.9 15.4 17.9 17.6 17.8 Germany 16.2 16.3 16.7 17.1 16.8 16.8 16.5 16.4 16.4 16.9 Finland 7.9 6.7 7.0 7.2 10.4 9.8 8.1 7.8 8.4 7.1 Denmark 3.2 5.8 5.0 4.4 8.0 9.1 7.8 7.1 6.7 2.0 Norway 14.4 5.4 6.9 9.4 10.8 9.7 11.5 12.7 13.2 13.5 EU 11.4 10.9 10.7 11.0 13.1 12.2 11.5 11.1 11.1 10.5

Source: European Commission (Directorate-General for Economic and Financial Affairs, DG ECFIN) It is defined as household savings (gross, including changes in the value of pension savings) through disposable gross income.

DEMOGRAPHIC FACTORS Population growth and Norway have historically demonstrated The housing market and the conditions for Demography is the science of a population’s the highest rate of growth among the coun- housing development are also affected by size, allocation and composition within a tries in northern Europe. In the future, the rate demographic factors. In Bonava’s view, the specific geographic area. At an overall level, of growth in the Nordic countries and most important demographic factors are demographic changes primarily entail Germany is expected to exceed the average population growth and urbanisation. changes in population figures and changes in for the EU as a whole.1) The tabel below the population pyramid, which are important illustates the historical and the estimated driving forces for growth in the housing population growth for the period between market. A growing population leads, inter alia, 2005 and 2017. to a higher demand for housing units. Sweden

Indexed CAGR CAGR (100) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e 05–15 15–17e

Sweden 100 100.6 101.3 102.1 103.0 103.9 104.6 105.4 106.3 107.4 108.7 110.6 112.9 0.8% 1.9% Germany 100 99.8 99.6 99.3 99.0 98.7 98.7 98.9 99.2 99.6 100.3 101.0 101.3 0.0% 0.5% Finland 100 100.4 100.8 101.3 101.8 102.2 102.7 103.2 103.7 104.1 104.5 104.9 105.3 0.4% 0.4% Denmark 100 100.3 100.8 101.4 101.9 102.4 102.8 103.2 103.6 104.1 104.7 105.2 105.7 0.5% 0.4% Norway 100 100.8 101.9 103.1 104.5 105.8 107.1 108.6 109.9 111.1 111.4 111.4 112.5 1.1% 0.5% EU 100 100.4 100.8 101.2 101.5 101.8 102.0 102.2 102.4 102.7 103.0 103.4 103.7 0.3% 0.3%

1) European Commission (Directorate-General for Economic and Financial Affairs, DG ECFIN)

26 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Market overview

Urbanisation that lives in urban areas. When the degree of Europe is strong and is expected to continue Urbanisation is a concept that means that urbanisation in a country increases, the be strong going forward.1) The diagram below population shift from rural to urban areas. concentration of the population in urban areas illustrates the forecast degree of urbanisation The degree of urbanisation is a measure of the rises, leading to a higher demand for housing for the years 2015, 2020 and 2050. share of the population in a geographic area units in these areas. The urbanisation trend in

Degree of urbanisation

95%

90%

85%

80%

75%

70%

65%

60% Sweden Germany Finland Denmark Norway Russia Estonia Latvia Europe

2015e 2020e 2050e

Source: United Nations (World Urbanisation Prospects 2014).

1) United Nations (World Urbanisation Prospects 2014).

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 27 Market overview

THE MARKET FoR NEW HOUSING ments in new housing construction dropped the market is expected to grow at an annual units temporarily in Sweden in 2012, but the invest- rate of approximately one per cent between Investments in new housing construction ments have increased since then. Investments 2014 and 2018.1) in new housing construction increased by over During the past five years, investments in new The market for housing development in 20 per cent per year from 2012 to 2014. The housing construction have had a positive Denmark amounted to approximately EUR market is expected to continue growing at an development in Bonava’s markets, with the 2 billion in 2014, equivalent to a decline of annual rate of approximately nine per cent exception of Finland where the market for approximately two per cent compared with between 2014 and 2018.1) housing development has declined in recent the preceding year. The Danish market is on years. Investments in new housing construc- The market for housing development in the verge of a turnaround, with investments in tion are expected to rise in the majority of Germany amounted to approximately EUR 47 new housing construction expected to grow at Bonava’s markets in the future. This trend is billion in 2014, which is equivalent to a an annual rate of approximately seven per expected to be strongest in Sweden and growth rate of approximately eight per cent cent between 2014 and 2018.1) Denmark, where investments in new housing compared with the preceding year. The The market for housing development in construction are expected to grow at an market has historically experienced stable Norway amounted to approximately EUR annual rate of nine and seven per cent respec- growth, and it is expected to continue growing 8 billion in 2014, equivalent to a decline of tively from 2014 to 2018. In terms of invest- at an annual rate of approximately five per approximately eight per cent compared with ments per capita, Sweden, Germany and cent between 2014 and 2018.1) Denmark have historically been at a lower the preceding year. The Norwegian market level than Finland and, above all, Norway.1) The market for housing development in showed strong growth between 2011 and Finland amounted to approximately EUR 2013, while investments in new housing The market for housing development in 5 billion in 2014, equivalent to a decline of construction declined in 2014. The market is Sweden amounted to approximately EUR approximately 13 per cent compared with the expected to return to growth with an annual 5 billion in 2014, which is equivalent to a preceding year. After several years of declin- growth rate of approximately one per cent growth rate of slightly over 20 per cent ing investments in new housing construction, between 2014 and 2018.1) compared with the preceding year. Invest-

Investments in new housing construction per year

EUR billion 2011 2012 2013 2014 2015e 2016e 2017e 2018e CAGR 11–14 CAGR 14–18e

Sweden 4.4 3.5 4.0 4.9 6.1 6.8 6.7 6.8 3% 9% Germany 39.8 41.3 43.4 47.0 49.6 53.3 55.7 56.5 6% 5% Finland 7.0 6.3 5.8 5.1 4.8 4.9 5.0 5.3 –10% 1% Denmark 2.9 2.2 1.9 1.9 2.0 2.1 2.3 2.4 –14% 7% Norway 8.8 8.8 9.1 8.4 8.5 8.8 8.9 8.9 2% 1% Other European countries 207.5 189.1 181.1 181.5 183.2 193.7 193.7 208.0 –4% 3%

Source: Euroconstruct, December 2015. The entry “Other European countries” includes Belgium, France, the Netherlands, Ireland, Italy, Poland, Portugal, Switzerland, Slovakia, Spain, the UK, the Czech Republic, Hungary and Austria. 2014 prices in EUR.

Investments per capita in new housing construction

EUR

2,000

1,500

1,000

500

0 2011 2012 2013 2014 2015e 2016e 2017e

Sweden Germany Finland Denmark Norway

Source: Euroconstruct, December 2015, for construction investments, and the European Commission (Direc- torate-General for Economic and Financial Affairs, DG ECFIN) for population. Nominal figures for price trends.

1) Euroconstruct, December 2015. 2014 prices in EUR.

28 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Market overview

The trend in housing market prices The trend in housing prices in Bonava’s markets has generally been positive over the past ten years, with the exception of the years during the financial crisis, when prices fell in most markets. Looking at individual countries, prices have developed most strongly in Sweden and Norway, while prices were more stable in Germany, Finland and Denmark after the financial crisis. There are regional differences in price trends in Bonava’s markets. In general, the metropolitan regions have experienced the strongest growth in prices in recent years.

Demand for housing units has caused housing prices in Sweden to rise gradually since 2005, with the exception of the years during the financial crisis. The price of housing units has risen by more than 100 per cent in Sweden since 2005, equivalent to an annual growth rate of approximately eight per cent. There are major regional differences in price trends viewed over a longer period. For example, prices for tenant-owner apartments have risen by approximately 69 per cent in Greater The price trend in the Finnish housing market by a decline during the financial crisis. The Stockholm over the past five years, compared have been stable since 2005, with the excep- housing prices in Denmark has risen by with 15 per cent in Malmö during the same tion of the decline during the financial crisis. approximately 40 per cent since 2005, period.2) The prices in the housing market has risen by equivalent to an annual growth rate of In Germany, housing prices have had a posi- nearly 40 per cent since 2005, equivalent to approximately three per cent.1) tive development since 2005, with an annual an annual growth rate of approximately three The price trend in the Norwegian housing growth rate of approximately two per cent. per cent.1) market have been strong, with the exception Growth has been especially strong since the Housing prices have had a positive develop- of the years during the financial crisis. The years following the financial crisis, with prices ment in Denmark since 2012. The market was housing prices in Norway has risen by approxi- showing annual growth of nearly three strong in the mid-2000s, resulting in a strong mately 100 per cent since 2005, equivalent to per cent.1) growth in housing prices, which was followed an annual growth rate of over seven per cent.1)

Indexed price development for housing units

250

200

150

100

50 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sweden Germany Finland Denmark Norway

Source: Bank for International Settlements. Includes all housing units in the country. Nominal figures. The diagram is indexed to 100, beginning in 2005. The indexed figure is subsequently calculated as the annual per centage trend.

1) Bank for International Settlements. Includes all housing units in the country. 2) Valueguard.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 29 Market overview

Planning process upon is in an area with an existing detailed In Sweden, the number of housing units The planning process is the process that development plan, building permits are started has gradually risen to current levels of guides and regulates how land areas and required to begin construction. approximately 48,000 housing units per year. catchment areas should be used and the form The Swedish National Board of Housing, The overall decision structure in Germany is that development should take. In simplified Building and Planning’s estimated construc- similar to the Swedish one, although the terms, the planning process in Bonava’s tion volumes are the highest in Sweden in over federal states (Bundesländer) generally fulfil markets can be divided into three levels: 20 years. However, they are not expected to the functions of the Swedish governmental national, regional and municipal planning. be sufficient. Instead the Swedish National and regional levels. However, German building The boundaries and legal priorities of these Board of Housing, Building and Planning legislation stipulates that there is also a right levels vary among Bonava’s markets. Some estimates that there will be a need to build to construct housing units without a detailed examples of differences among the planning nearly 75,000 housing units per year until development plan (Bebauungsplan), provided processes in the different markets follow 2020 in order to meet the demand. Politicians that the construction is in harmony with the below. are taking several different actions intended to character of existing buildings and there is no make it simpler and cheaper to build housing prior detailed plan for the area in question. In Finland, Denmark and Norway, there is a units as well as reducing the time expenditure. This simplification thus results in a signifi- clear hierarchical division that dictates how One of these measures is the proposal, cantly shorter planning process for certain the government and the regions participate in, currently under consideration by the Council German housing projects. influence and, to a certain extent, manage on Legislation, which is intended to speed up municipal planning, as well as how this is In St. Petersburg, the equivalent to local detailed plan processes through a shorter expressed in formal planning and strategy 3) general and detailed plans, is a standard plan chain of instances. documents. The national and regional levels that is legally binding, but that requires the have a more obvious role in municipal plan- A new rent control law has been introduced in granting of certain additional administrative ning activities in these countries through the the German market, which primarily applies to permits before a building permit can be compilation of important issues in formal large cities and means that rent under existing obtained. These permits are intended to documents and strategies.1) leases cannot be raised to more than ten per ensure that there are water, electricity and cent above the local average. The new legis sewage connections for the properties in In Sweden, there is national planning that lation is also expected to affect new construc- question. The time it takes to receive building serves as an overall framework for the munici- tion of rental apartments, since these housing permits varies between different projects. pal and regional planning. Regional planning units will be subject to the new legislation handles issues that extend over municipal once the first lease expires. boundaries such as infrastructure, climate and Trends and driving forces the regional housing supply. The Swedish Housing deficit drives political decisions Demographic changes are contributing to municipal planning is divided in three steps: There is a shortage of housing units in large higher demand for smaller and affordable general plan, detailed plan and building cities in northern Europe. This is due partly to housing units permit. The general plan guides decisions of a growing population, and partly to the fact The demand for smaller housing units is how land and catchment areas may be used. that new construction has been at a histori- driven by factors including a reduction in the In an area with an authoritative general plan, it 2) cally low level in recent years. New construc- average household size and a rise in housing is possible to approve legally binding detailed tion is expected to increase in Bonava’s largest costs due to higher rent levels and rising plans that regulate how land and catchment markets in order to meet the demand for housing prices. In several of Bonava’s markets, areas should be used and the form that build- housing units. the number of households composed of a ings should take. If the land that is to be built single person or two persons are increasing. For example, the share of single-person Change in share of the population aged over 60, between 2015 and 2050 households has passed 50 per cent in several Percentage units German cities, while the average household size in Finland has declined from three 15 persons per household in 1970 to two persons per household today. 4), 5) Bonava considers it 12 probable that the demand for affordable housing units will rise in the future as well. 9 The aging population has affected the demand and need for housing units, particu- 6 larly retirement homes in growing cities with good access to healthcare and other services. 3 The average age of the population in the EU is expected to rise by 4.2 years between 2014 6) 0 and 2080. Sweden Germany Finland Denmark Norway Russia Estonia Latvia

Source: United Nations, World Population Prospects 2015 revision.

1) National Board of Housing, Building and Planning. Analysis of housing production in the Nordic, 2011. 2) SCB, IW Cologne. 3) National Board of Housing, Building and Planning. Analysis of housing production in the Nordic, 2011. 4) Eurostat. People in the EU: who are we and how do we live? 2015 edition. 5) Tilastokeskus. 6) Eurostat. People in the EU: who are we and how do we live? 2015 edition.

30 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Market overview

Greater requirements by both customers and authorities drives development of housing units The trend towards energy-efficient housing units is driven by stronger customer demands for energy-efficient housing, as well as political decisions to create stricter requirements for energy-efficient new construction. Customers are demanding affordable and sustainable housing units where energy- efficient solutions for issues such as heating can help to reduce the cost of housing. In order to regulate the standard for energy- efficient buildings, EU has developed a directive whereby all new construction must meet the standard for near-zero energy buildings beginning in 2021. According to the Energy Performance of Buildings Directive, a near-zero energy building is defined as a building with high energy performance, 4) whereby the energy to a large extent must be Petersburg demonstrating population growth row in 2015. Examples of competitors in the supplied from renewable energy sources.1) and a relatively strong economy. German market are formart, BPD and CG Gruppe. As living standards improve, demand for new Competitors construction is also rising in Estonia/Latvia Bonava is a leading housing developer in Finland and St. Petersburg. Customers are demanding northern Europe. The Group operates in Bonava’s largest competitors in the Finnish more modern housing units, since the existing Sweden, Germany, Finland, Denmark, Norway, market are construction companies who also housing stock is in need of upgrades and reno- St. Petersburg and Estonia/Latvia. Since the are active within housing development such vations. Customers in St. Petersburg expect market for new housing construction is rela- as YIT, Lemminkäinen and Skanska. not only housing units of higher quality; they tively local, Bonava generally encounters are also increasingly choosing housing units different competitors in each market. The Denmark based on the projects’ concept and what the Company’s competition, broken down by The Danish market for new housing construc- area has to offer in terms of safety, the supply geography, is presented below. tion is fragmented, with a large number of of parking and environmental considerations. housing developers such as Arkitektgruppen, Sweden ELF Development and FB Gruppen. Regional differences within countries affect In Sweden, several different types of players new construction are engaged in housing development. Some Norway There are regional differences in the countries major players are construction companies The main players in the Norwegian market for where Bonava operates, leading to variations such as Skanska and Peab, who also are active new housing construction are large construc- in demand for housing units within these within housing development. In addition, tion companies such as Veidekke and Skanska countries. Certain regions have opportunities there are players that specialise in housing as well as players focused on housing devel- for new construction thanks to differences development. These include larger players opment such as OBOS, Selvaag Bolig and JM. within each country, even though these coun- with their own construction operations such tries as a whole do not show economic as JM, as well as a large number of smaller St. Petersburg growth. For example, in Norway, Stavanger players which, in some cases, are more differ- There are a large number of players in St. has been negatively affected by factors includ- entiated and do not have construction opera- Petersburg; these include foreign players that ing the low price of oil, leading to a decline in tions, such as Oscar Properties and Besqab. engage in housing development, such as YIT housing prices of approximately five per cent Several players offer both multifamily and and Lemminkäinen, and major domestic play- over the past year, while cities such as Oslo single-family houses. Producers of single-fam- ers such as Setl City and LSR. and Bergen have shown strong price growth ily houses such as Älvsbyhus and Myresjöhus with housing prices growing by approximately also engage in some degree to housing devel- Estonia/Latvia 10 and 6 per cent respectively in the past opment, although the scale and extent are 2) Examples of competitors in Estonia/Latvia are year. There are also regional differences in limited. Denmark, where housing prices in Copenha- the construction companies YIT and Merko, which are active in both Estonia/Latvia. gen have recovered since the decline in price Germany Examples of other competitors are Astlanda in in 2008 while the rest of the country has not The German market is fragmented, and the 3) Estonia and New Europe in Latvia. seen a corresponding price trend. players are often local and strong within a particular region. In this fragmented market, In the Company’s view there are also major Bonava was named as the largest property regional differences within Russia, with St. developer in Germany for the third year in a

1) National Board of Housing, Building and Planning. Proposal for Swedish application of net zero energy buildings, 2015. 2) Statistics Norway. 3) Denmark’s statistics. 4) Bulwiengesa, 2015.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 31 –

32 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) –

Business description

About Bonava priate land into new sustainable housing Bonava became a separate business area Bonava is a leading housing developer in environments, where the housing units are within NCC in 2009 and has commenced northern Europe. Bonava develops and sells adapted to customer’s needs and require- developments of and sold over 34,000 hous- affordable and sustainable housing units to ments, as well as to the unique conditions of ing units since then. Housing development consumers and investors in selected markets the area. projects are usually complex and often lasts in Sweden, Germany, Finland, Denmark, over a relatively long period. The Company’s Bonava offers both multi-family and Norway, St. Petersburg and Estonia/Latvia. focus on housing development combined with single-family houses. The Company develops Bonava operates in metropolitan regions with its geographical spread enables effective housing units for consumers and investors in demonstrated growth and a stable local labour competence utilisation and resource optimisa- cooperation with municipalities and other market that creates demand for new housing tion across the value chain, from site planning stakeholders, thus contributing to the creation units over time. The Company refines appro- to finished homes. of new vibrant urban districts.

Overview of the Company’s operations as per 31 March 2016

Allocation of building rights in the balance sheet (total of 18,500)

Sweden, 25%

Germany, 18%

Finland, 20%

Denmark/Norway, 6%

S.t Petersburg, 23%

Estonia/Latvia 8%

Allocation of housing units in ongoing production (total of 8,976)

Sweden, 26%

Germany, 26%

Finland, 20%

Denmark/Norway, 5%

S.t Petersburg, 20%

Estonia/Latvia, 3%

Bonava’s markets

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 33 Business description

History Vision Grow and capitalise on Bonava’s strong Bonava originates from NCC and the business Our vision is to create Happy Neighbour- position in the German market area NCC Housing. The Company’s history of hoods, where people have the highest quality Today, Bonava is a leading housing developer housing and community building stretches of life. We understand that this means differ- in the fragmented German market. In back to the 1930s. Through own housing ent things to different people and that it Germany, Bonava has for a long time devel- development and corporate acquisitions, the might vary over time. This is why we are on a oped a building system that has been success- entity which now is Bonava has over decades constant quest, together with our customers fully employed in the production of affordable gradually accumulated extensive experience and stakeholders, to find out what makes housing units. Growing through its existing and know-how in housing development. A few people happy where they live. Because the building system will enable Bonava to in a notable milestones in Bonava’s recent history idea of a happy neighbourhood is not just the profitable way increase its market share in are presented below. finishing touch, it’s the starting-point Germany. of it all. 1997 NCC acquires SIAB whose operation Retain cost leadership in Germany and largely comprises residential housing Business concept Estonia/Latvia while improving the cost production in both Sweden and position in the nordic markets Germany. SIAB had developed Bonava develops and sells affordable and cost-efficient systems for the produc- sustainable housing units to consumers and Bonava’s business concept of offering afford tion of single-family homes and investors in selected markets in Sweden, able and sustainable housing units to its participated in the development of Germany, Finland, Denmark, Norway, St. customers requires that the Company is able Viksjö, an area north of Stockholm, in Petersburg and Estonia/Latvia. Bonava is to produce housing units at an attractive cost the mid-1960s. When the project was completed in 1984, it was one of the active through the whole process, from land level. By increasing focus on design, produc- largest districts in northern Europe acquisition until transfer of the housing unit to tion and purchasing, and thus enabling the featuring single-family houses. the customer, in order to ensure customer utilisation of value-creating synergies within 2009 NCC Housing, now Bonava, becomes focus throughout the whole value chain. and between countries, Bonava can reduce its a separate business area within NCC. costs in all of its markets. In Bonava’s view, the By forming a separate business area Strategy Company is a cost leader in Germany and and gathering all land and housing Estonia/Latvia, and is continuing its improve- projects, the business is further Bonava has a strategy for the period 2016– focused on residential housing 2020 that both specify the position the ment efforts to maintain its competitive cost production. Company would like to secure in the market advantage. 2013– Construction operations in Latvia and how such position will be attained. 2015 (2013), Estonia (2014) and An enhanced degree of industrialisation St. Petersburg (2015) are moved Focus on affordable and sustainable and standardisation from NCC Building (formerly housing units in Sweden, Germany, Refining the Company’s building systems with Construction) Finland to Bonava. Finland, Denmark, Norway, St. Petersburg a focus on increased industrialisation and The construction operations of single-family houses in Sweden are and Estonia/Latvia standardisation can cut Bonava’s costs. moved from NCC Building Sweden to Today, affordable housing units is a large During the current strategy period, the build- NCC Housing. segment were the Company has a strong ing systems will primarily be standardised 2016 NCC’s annual general meeting market position, inter alia in Germany. By within each country but under the right condi- resolves to distribute all shares in securing exchange of experience between tions the Company will also investigate the Bonava to the shareholders of NCC. markets in order to continuously develop and possibility to standardise modules for use in improve its customer offering, Bonava is able multiple countries and thereby leveraging its to additionally strengthen its position in the high production volumes. The increased use segment of affordable housing units in all of of building systems will also ensure that the its markets.1) Company achieves a higher degree of repetition with regard to design, costing Focusing capital allocation to and production. high-growth regions By capitalising on economies of scale in terms Enhance differentiation through an of market expertise and production, Bonava is increased customer focus able to strengthen its market position in the The customer insights collected by Bonava cities and regions where the Company oper- demonstrate that the housing development ates. Capital allocation will be concentrated market is an undifferentiated market, where on the cities and regions with the greatest consumers have difficulty navigating among potential to increase Bonava’s market share. different housing development companies. An enhanced customer focus through development of both the product and the customer experience can make Bonava’s offering stand out and strengthen its brand.

1) Affordable housing units refers to housing units for consumers with disposable household income levels around the median income in the geographical area. Sustainable housing units are housing units that meet official requirements of the competent authority and the customers’ needs for sustainable housing taking into account issues such as energy efficiency, choice of materials and social sustainability.

34 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

Financial objectives To prepare Bonava for a listing on Nasdaq Stockholm, the board of directors of Bonava has adopted the following financial objectives and dividend policy for the Group.

Profitability objective Bonava’s objective is to generate a healthy return to shareholders under financial stability. The return on capital employed is to amount to 10–15 per cent. The level of the profitability objective is based on the margins and the turnover ratio for capital employed that the various units within the Group are expected to be able to generate on a sustainable basis, and on capital requirements in relation to the prevailing business focus.

Equity/assets ratio To ensure that the profitability objective is not achieved through financial risk-taking, the equity/assets ratio shall amount to at least 30 per cent.

Dividend policy Bonava’s dividend policy stipulates that at least 40 per cent of consolidated profit/loss for the year after tax is to be distributed to the shareholders. The aim of the policy is to generate a healthy return for Bonava’s shareholders and to provide Bonava with the potential to invest in its operations and thus ensure that growth can be generated while maintaining financial stability.

The financial objectives constitute forward-looking statements that do not serve as guarantees about future financial earnings. Bonava’s actual results or financial position could, due to multiple factors, deviate considerably from what is stated, explicitly or implicitly, in these forward-looking statements. These financial objectives are based on a number of assumptions (such as that Bonava’s business strategy will be successful), which in turn is exposed to material business, operational, financial and other risks, many of which are beyond Bonava’s control. Accordingly, such assumptions may change or not be realised at all. In addition, unforeseen events could impact Bonava’s actual results and financial position in the future regardless of whether Bonava’s assumptions concerning the financial year 2016 or periods there- after prove to be correct. Please also see the heading”Forward-looking information and risk factors” in the section “Important information”.

Strengths and competitive improved building system in Germany, provid- Diversified offering reduces the risk in advantages ing the Company with competitive advantages Bonava’s business model Bonava operates in markets with long- such as low production costs and short lead Bonava has a diversified offering that targets term and favourable trends times thanks to a high level of cost and quality both consumers and investors. The consumer A majority of the markets where Bonava oper- control. The Company considers that it enjoys business, which is the Company’s largest in ates demonstrate long-term favourable trends economies of scale through inter alia coordi- terms of sales, targets private individuals in such as population growth and urbanisation, nated purchasing and structured knowledge eight different geographical markets. In 2015, thus increasing the underlying demand for exchange between countries. Bonava’s strong approximately 30 per cent of the housing Bonava’s offering. Other favourable factors market position is proof that the Company has units sold by Bonava were sold to investors that contribute to the demand for housing both the capacity and the knowledge to meet such as pension funds, insurance companies units in Bonava’s markets are an increase in the expectations of consumers and investors and commercial property owners. When the real disposable income, spending a larger for sustainable and affordable housing in Company sells housing units before produc- share of disposable income on housing and a attractive locations. tion begins, which equates with a lower sales generally large housing deficit. Altogether, risk, this generally leads to a lower rate of this may have a positive impact on political Geographical diversification that enables tied-up capital and lower risk for Bonava, decisions regarding housing development and more efficient deployment of capital and since the investor accounts for a major part of building permit processes. reduces operational risk the project risk. In some cases, Bonava’s risk Today Bonava has a presence in eight coun- consists exclusively of a rental guarantee to Strong market positions through local tries. This geographic diversification enables the customer. knowledge more efficient capital utilisation, since capital Bonava has operated in housing development can be allocated between the Company’s Stable and profitable growth since the 1930s and has since then become a markets based on where demand for housing Since the establishment of the business area leading housing developer in northern is strongest and where the Company judges NCC Housing (now Bonava) in 2009, the Europe. Bonava has healthy market penetra- that the capital will be utilised most efficiently. Company’s sales have grown from approxi- tion in northern Europe, with operations in More efficient capital utilisation improves the mately SEK 11 billion to approximately SEK Sweden, Germany, Finland, Denmark, Norway, potential for greater profitability and, in the 13 billion in 2015, which is equivalent to an St. Petersburg and Estonia/Latvia and a high Company’s view, the operational risk is annual growth of approximately 3 per cent. market share in its respective regional reduced through the geographic diversifica- The Company has significantly improved its markets. Bonava has successfully established tion. Bonava’s broad geographic diversifica- profitability during the same period. strong market positions through its in-depth tion also means that changes in the macro In the view of the senior management, further knowledge of its local markets, thereby build- economic conditions in individual countries or focus on efficient capital utilisation will ing strong relationships with government other factors that affect the demand for contribute to fulfilment of the profitability authorities and other stakeholders. Bonava housing units do not affect Bonava to the objective. has a well-developed, tested and continuously same extent as other housing developers with more geographically concentrated operations.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 35 Business description

Attractive portfolio of building rights potential to, in a cost efficient way, increase • Optimise the Company’s position in the and projects its market share in its existing markets and value chain: Bonava’s position in the value For Bonava, it is critical to continuously to expand into new submarkets/cities within chain differs among the eight geographical update its land and project portfolio in order these existing markets. Germany is the markets in which it operates. In Germany, to ensure that the Company will be able to market that the Company considers to have St. Petersburg and Estonia/Latvia, Bonava continue meeting customer demand. The the greatest potential. operates through the entire value chain, from land acquisition, project engineering Company has built up an organisation that is Increased customer focus: As an independ- • of land and design to production. The able to efficiently identify customer needs, ent company, Bonava is able to accelerate Company’s position in the value chain is and by that identify attractive land that is the process of creating an increased more limited in Sweden, Finland, Denmark suitable for project development. For exam- customer focus. This process includes and Norway, where Bonava has not histori- ple, areas may become attractive for housing building a strong and clear brand and opti- cally had internal production units. In the development when cities grow or transport mising the digital offering, preferably to Company’s view, potential exists to optimise links are improved. Having a strong local customers in all platforms from purchase to Bonava’s position in its various markets presence in regional markets enables Bonava’s occupancy, as well as more defined based on the knowledge and skills found in organisation to identify attractive land in and customer segmentation and focusing its organisation at every stage of the value around cities with healthy growth at an early primarily on sustainable and affordable chain. Bonava has thus begun the process stage. housing units. of establishing internal design and produc- The Company has used a well-established The following factors are considered to tion units in all of its markets, a process it land-acquisition process to ensure that its contribute to the Company’s profitability: expects to complete by the end of the building rights portfolio matches the strategy period. Company’s strategy and the compiled • More efficient capital utilisation: In Bonava’s customer insights. The Company’s land and view, there is significant potential to Customers increase profitability by allocating capital project portfolio is allocated across growth Bonava has two categories of customers; among markets and potential projects to regions in eight countries, with a strong consumers and investors. The majority of where the capital is considered to provide presence in Sweden and Germany. Bonava’s customers are private individuals the greatest return at any given time. This is who invest in their own home, even if investors expected to benefit the return on capital Customer focus leads to more satisfied have become an increasingly significant target employed and thereby increasing the profit- customers group with greater interest in housing projects ability. Although the Company has begun Bonava has long-standing experience in in a number of markets (Sweden, Germany the process of allocating capital to markets developing sustainable and attractive housing and Finland). In 2015, investors accounted for where it is considered to provide the great- units that meet its customers’ expectations. approximately 30 per cent of the housing est return, the results of this process have The Company actively works to ensure that its units sold by Bonava. offering satisfies customers’ requirements. not yet fully been materialised. An example of this process is the increased allocation of An offering that is diversified in terms of both Bonava has implemented an initiative in capital to Germany, thus enabling a larger customer categories and product offerings recent years to strengthen its presence in building rights portfolio in the country. will enable Bonava to achieve project profita- digital channels, inter alia by strengthening its bility and thereby create value. The Company Increased industrialisation and standardisa- expertise as well as establishing processes • has the ability to adjust the project’s profit tion: Bonava will continue the process of and systems. The Company intends to potential in relation to its risk profile, depend- increasing the degree of industrialisation continue strengthening its digital offering. ing on the customer category it is intended and standardisation in its housing develop- for, as well as the ability to adjust volume ment business, while taking an increased Growth and profitability versus project time depending on the product modular approach to production. Standard- factors category selected for the project. ising aspects of design and production in Bonava’s senior management has identified a connection with development of housing number of factors that it considers will Consumers units will enable the Company to reduce its contribute to profitable growth in the future. purchasing costs and make the develop- Sales and marketing activities to consumers The following factors are considered to ment process more time and cost-effective, are directed towards relevant target groups, contribute to the Company’s growth: regardless of whether the Company is based on the customer profile initially estab- developing multi-family or single-family lished for a specific project. Bonava receives Market growth: The Company expects that • houses. In the Company’s view, this will applications of interest on its website, which demand for newly produced housing units enable Bonava to offer higher quality at a lead to various sales activities in order to culti- will continue to grow due to continued lower cost in the future. In addition, the vate customer interest and ultimately convert population growth and the trend towards Company also sees a potential for greater such interest into a purchase of a housing unit. urbanisation, along with a general housing knowledge exchange across business units When building new housing units, Bonava deficit in several of Bonava’s markets. and national borders. An example is the regularly invites potential customers to infor- • Growth in existing markets: Bonava has a processes regarding estimations and mation meetings and dialogues. Bonava also strong position in rapidly growing markets, project engineering used in Germany that regularly performs market and customer and growth in these existing markets is an successfully has been implemented in satisfaction surveys to better understand its important part of the Company’s strategy. In Estonia/Latvia. customers’ needs and preferences. the Company’s opinion, there is promising

36 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

The Group’s sales to consumers vary among enables Bonava to ensure that the project will ment, construction management, design and Bonava’s various geographical markets. Sales be on schedule and deliver solid profits. build, housing sales, economics and finance. in St. Petersburg and Estonia/Latvia are made Bonava has developed well-defined processes Decisions to acquire land are generally made exclusively by Bonava’s own staff, while sales for the development and execution of projects by Bonava’s CEO or board of directors. in Sweden, Finland and Denmark involve over a number of years. Bonava uses its external brokers to some extent. In Germany, in-depth knowledge of how and where people 2. Project development (design and external sales agents are involved in combina- want to live to develop a project concept, planning) tion with Bonava’s own staff. Sales in Norway which is followed by a value-generating The initial project plan is given a tangible form are always made with the aid of external project development process. The most signi so that the project engineering will be of brokers. ficant increase in value in the value chain sufficient business and technical quality to usually happens after land has been acquired implement the project. The Company’s ambi- Investors and during the phase when the project’s tion is to create attractive living environments Bonava’s customer category “investors” concept and design are being developed. with sustainable solutions by responding to consists of property investors such as pension what customers are asking for. The project funds, insurance companies, property funds, 1. Land acquisition engineering is refined in cooperation with private property owners and public utility Bonava works continuously to identify new inter alia architects and construction engi- housing companies. Bonava reaches this business opportunities. By analysing and neers, a process that results in more detailed customer group either through its own documenting customer needs, demand and drawings. The project engineering contains network or through acknowledgeable transac- market trends, the Company is able to deter- details of the building’s design, concerning tion consultants. Generally, Bonava sells the mine what type of housing to develop and for issues such as ventilation and electricity as housing units to investors prior to start of which target group. The project process well as the interior and exterior design. The production, through so-called “forward fund- begins by identifying available land, generally results then proceed through another round of ing” (meaning that the purchase price is paid through acquisition, creating an option or internal review to ensure that the project by the investor gradually as the project is exploiting previously acquired land in Bona- matches the target group’s preferences and completed), resulting in less tied-up capital va’s land bank,1) with development potential the Company’s profitability requirements. for Bonava compared with the consumer that matches the needs that the Company has During the process, Bonava works closely with business. In the investor business, Bonava identified in its analyses. In order to create other external parties on issues such as jointly takes responsibility for project development in attractive housing development projects that owned facilities and the organisation of tenant relation to the investor. In some cases, Bonava match the customers’ expectations and ability owner associations. The Company also works also provides rental guarantees to investors. In to pay, it is critical that both the land’s location closely with the relevant authorities in each Germany, Bonava partners with certain inves- and the project design agree with the needs of country (such as municipalities in Sweden) tors who regularly invest in one or several new the target group. when developing a detailed plan, which makes rental unit production projects. The continu- Before acquiring land, Bonava performs an it possible to implement the project, if there is ous relationship means that Bonava does not overall financial analysis while simultaneously no plan already in place. At the end of this use brokers or other transaction consultants to analysing and evaluating the project’s risks stage, a building permit is generally granted reach property investors in Germany. and opportunities. The Company establishes a by the relevant authority in each country. project-engineering framework from the value chain Bonava focuses on creating building systems beginning, including which products, building Bonava’s housing development business is for housing production in order to identify systems and technical platforms that will be based on the ability to develop appropriate economies of scale and thereby streamline the used for the project. The Company is able to land sites for new sustainable living environ- project development and the subsequent ensure that the structure of the project will ments in which buildings are adapted to building process as well as improving the result in a time and cost effective project customer requirements and needs as well as quality. An efficient building system enables development process by involving employees the area’s unique conditions. Bonava is active Bonava to develop sustainable, affordable and early on, as well as consultants and contrac- throug the entire value chain – from project attractive housing units while maintaining tors with a wide range of backgrounds and concept and analysis to the day the housing flexibility. experience in architecture, project develop- unit is transferred to the end customer. This

Illustration of Bonava’s value chain

1. 2. 3. 4. 5. Land acquisition Project development Marketing Project After sales (design and planning) and sales execution

Acccess Sales start Production Transfer of to land start housing unit

1) For more information on Bonava’s portfolio of building rights, see under the heading “Overview of current project portfolio” in this section.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 37 Business description

staff including site managers in St. Petersburg and Estonia/Latvia. Bonava also has a small number of skilled workers in St. Petersburg and Latvia, although production is primarily performed by sub-suppliers. Production in Estonia is performed exclusively by sub- suppliers.

Bonava has historically procured turn-key contracts (from NCC Building) in the nordic markets. For more information on Bonava’s current purchasing functions and suppliers, see under the heading “Purchasing and suppliers” in this section. Bonava’s objective is to develop its own in-house design and production staff in the nordic markets. This will enable the Company to procure future projects as design-and-build contracts, thus increasing the degree of centralisation and control over the production phase. Bonava has established site management for the development of single-family houses in Sweden. The Company also has its own site managers in Denmark, although to a more Once the framework for the programme, 3. Marketing and sales limited extent. An in-house design and budget, product selection etc. that emerged Marketing to relevant target groups already production staff will also enable Bonava to during the business development stage has begins during the project development. At the more efficiently make use of lessons learned taken tangible form and been approved, the beginning of this phase, the project’s market- from earlier projects. decision is made to start the project. Project ing strategy is refined and early sales activities start decisions are generally made by Bonava’s targeting potential customers are performed, Bonava has a senior project manager for all of CEO or board of directors. such as sales starts (VIP sales start). its projects (regardless of the Company’s role in production) who continuously coordinates Bonava’s sales strategy is based on personal and monitors the project’s activities, schedule communication, whereby Bonava aims to and budget throughout the process, as well as establish contact with interested parties early coordinating and managing relationships with on. In order to generate interest among government authorities, suppliers and customers early in the process, the Company contractors. For more information on procure- develops digital environments for the project ment and review of sub-suppliers, see under where customers are able to see images of the heading “Purchases and suppliers” in this interiors and exteriors, as well as the design of section. the area. By beginning the design of the project at an early stage and producing a Bonava completes the project by ensuring a detailed project plan, Bonava ensures that professional transfer to the customer. customers get a good idea of the project’s design before production has even begun. 5. After sales Visualisation tools can allow customers to The job of ensuring customer satisfaction virtually explore the housing units they are continues even after the housing unit has interested in. been transferred to the customer. For example, when customers contact Bonava’s The sales and marketing process runs at the customer service to notify them of faults, the same time as the Company’s project develop- case is investigated and an assessment is ment and implementation process. Before the made whether to classify the fault as a production start, Bonava ensures that suffi- warranty issue or not, after which the case is cient marketing is established and that there is handled in the appropriate order. an adequate number of interested parties for the project’s planned rate of sales. The Company works actively to gather customer insights of the project, in order to 4. Project execution ensure that the Company will be able to tailor The role that Bonava plays in production the structure of future projects at the stage of varies between different countries. In project concept to meet customers’ expecta- Germany, Bonava has an established internal tions while streamlining internal processes. and centralised design and production staff, with both site managers and skilled workers. The Company also has an internal production

38 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

Business units 2013–2015 and 1 January – 31 March 2015 as well as 1 January – The Company’s operations are focused on developing sustainable 31 March 2016, which are not defined by IFRS. Key ratios that are and affordable housing with the emphasis on growing regions and presented below are partly derived from the combined financial state- cities in Sweden, Germany, Finland, Denmark, Norway, St. Petersburg ments which have been prepared for the full-years 2013–2015, and and Estonia/Latvia. Bonava focuses on cities and regions whit favour- partly from the Company’s internal reporting system. The quarterly able demographic and macroeconomic factors, and where Bonava information for the first quarter 2016 respectively 2015 is derived can develop and maintain a strong market position. Bonava’s opera- from Bonava’s quarterly report 31 March 2016. For comments to tions are divided into six business units; Sweden, Germany, Finland, some key ratios during the periods, please see the heading Denmark/Norway, St. Petersburg and Estonia/Latvia. On this and the “ Comparison between periods” in the section “Operational and following pages, some financial and operational key ratios that, financial review”. For definitions of key ratios, please see the heading according to IFRS, are presented for each market for the fiscal year “Definitions” in the section “Selected financial information”.

Sweden In brief Geographic presence In Sweden, Bonava has operations focusing on consumers in five cities, of which Stockholm is the most important market. Other cities in which Bonava operates are Gothenburg, Linköping, Uppsala and Umeå. Bonava’s investor-oriented business focuses on around 15 cities.

In Sweden, Bonava’s offering is targeted at both consumers and investors, through both multi-family houses and single-family houses. As per 31 March 2016, Bonava had a total of 2,365 housing units in ongoing production, of which 2,075 housing units were targeted at consumers.

Key ratios (Measurements which are not defined according to IFRS Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec and are unaudited, unless otherwise stated) 2016 2015 2015 2014 2013

Net sales, SEK million1) 1,251 740 4,639 2,409 3,018 Operating profit, SEK million2) 261 66 706 331 229 Operating margin, % 21 9 15 14 8 Capital employed, at period end, SEK million 4,807 4,986 4,978 4,632 4,385 Return on capital employed, % 18 7 14 7 5 Building rights, at period end, number 7,100 9,100 7,600 9,400 11,200 of which, off-balance-sheet building rights, number 2,500 2,100 2,500 2,200 3,200 Housing units sold to consumers, number 249 466 1,350 1,238 854 Production starts for consumers, number 158 259 1,343 1,221 681 Profit-recognised housing units for consumers, number 294 184 956 696 713 Housing units in ongoing production for consumers, at period end, number 2,075 1,849 2,206 1,757 1,154 Sales rate, ongoing production for consumers, at period end, % 76 80 73 69 56 Housing units sold to investors, number 27 327 322 Production starts for investors, number 158 300 288 Profit-recognised housing units for investors, number 24 156 327 58 Housing units in ongoing production for investors, at period end, number 290 264 290 288 315 Sales rate, ongoing production for investors, at period end, % 55 100 55 100 91

1) Defined according to IFRS, audited for full-years 2013–2015. 2) Audited full-years 2013–2015.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 39 Business description

Germany In brief Geographic presence In Germany, Bonava operates in the regions; Region Berlin, Region Hamburg, Region Baltic Sea, Region Sachsen, Region Rhen-Ruhr, Region Cologne/Bonn, Region Rhen-Main and Region Rhen-Neckar/ Stuttgart.

In Germany, Bonava’s offering is targeted at consumers and investors through both single-family houses and multi-family houses. The Company operates on the basis of an own-produced building system in Germany, which are used in all new construction in the country, thus enabling an efficient construction process. As per 31 March 2016, Bonava had a total of 2,311 housing units in ongoing production, of which 1,571 housing units were targeted at consumers.

Key ratios (Measurements which are not defined according to IFRS Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec and are unaudited, unless otherwise stated) 2016 2015 2015 2014 2013

Net sales, SEK million1) 157 427 3,471 3,170 2,508 Operating profit, SEK million2) –28 22 422 328 229 Operating margin, % –18 5 12 10 9 Capital employed, at period end, SEK million 1,551 1,251 1,361 1,268 877 Return on capital employed, % 26 27 31 26 21 Building rights, at period end, number 6,400 4,300 5,700 4,300 3,400 of which, off-balance-sheet building rights, number 3,100 1,700 3,600 1,700 2,900 Housing units sold to consumers, number 191 187 1,154 1,026 880 Production starts for consumers, number 228 152 1,284 1,114 1,018 Profit-recognised housing units for consumers, number 46 102 896 876 714 Housing units in ongoing production for consumers, at period end, number 1,571 1,037 1,386 995 774 Sales rate, ongoing production for consumers, at period end, % 61 63 60 57 54 Housing units sold to investors, number3) 860 381 360 Production starts for investors, number3) 860 381 360 Profit-recognised housing units for investors, number3) 46 726 376 391 Housing units in ongoing production for investors, at period end, number 740 560 740 606 601 Sales rate, ongoing production for investors, at period end, % 100 100 100 100 100

1) Defined according to IFRS, audited for full-years 2013–2015. 2) Audited full-years 2013–2015. 3) Of which, 321 units pertaining to sales of part of the property portfolio in Sonnengarten, which is included in the profit under Other and eliminations for the period Jan–Dec 2015.

40 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

Finland In brief Geographic presence In Finland, Bonava operates in Helsinki and surrounding areas, Espoo, Vantaa, Turku, Tampere and Oulu.

In Finland, Bonava’s offering is targeted at consumers and investors, primarily in the form of multi-family houses. As per 31 March 2016, Bonava had a total of 1,803 housing units in ongoing production, of which 698 housing units were targeted at consumers.

Key ratios

(Measurements which are not defined according to IFRS Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec and are unaudited, unless otherwise stated) 2016 2015 2015 2014 2013

Net sales, SEK million1) 88 204 1,791 1,816 2,323 Operating profit, SEK million2) –13 9 187 146 181 Operating margin, % –15 4 10 8 8 Capital employed, at period end, SEK million 1,216 1,682 1,114 1,596 1,303 Return on capital employed, % 12 9 12 9 14 Building rights, at period end, number 8,400 8,600 8,400 8,900 9,700 of which, off-balance-sheet building rights, number 4,700 5,200 4,800 5,500 6,600 Housing units sold to consumers, number 111 117 672 638 719 Production starts for consumers, number 76 784 458 656 Profit-recognised housing units for consumers, number 32 44 639 601 859 Housing units in ongoing production for consumers, at period end, number 698 534 698 458 656 Sales rate, ongoing production for consumers, at period end, % 55 63 42 57 36 Housing units sold to investors, number 127 886 651 447 Production starts for investors, number 127 886 651 447 Profit-recognised housing units for investors, number 127 886 651 447 Housing units in ongoing production for investors, at period end, number 1,105 836 1,242 767 636 Sales rate, ongoing production for investors, at period end, % 100 100 100 100 100

1) Defined according to IFRS, audited for full-years 2013–2015. 2) Audited full-years 2013–2015.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 41 Business description

Denmark/Norway In brief Geographic presence In Denmark/Norway, Bonava operates in Copenhagen in Denmark and Bergen in Norway.

In Denmark and Norway, Bonava’s offering is primarily targeted at consumers, based on multi-family houses and single-family houses. As per 31 March 2016, 424 housing units were in ongoing production.

Key ratios (Measurements which are not defined according to IFRS Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec and are unaudited, unless otherwise stated) 2016 2015 2015 2014 2013

Net sales, SEK million1) 256 329 1,760 1,825 676 Operating profit, SEK million2) 6 –10 –3 84 –25 Operating margin, % 2 –3 0 5 –4 Capital employed, at period end, SEK million 1,371 1,839 1,076 1,896 2,281 Return on capital employed, % 1 4 0 4 –1 Building rights, at period end, number 1,300 2,000 1,300 2,000 2,800 of which, off-balance-sheet building rights, number 100 300 100 400 500 Housing units sold to consumers, number 64 64 300 339 336 Production starts for consumers, number 36 5 241 341 288 Profit-recognised housing units for consumers, number 61 70 281 393 194 Housing units in ongoing production for consumers, at period end, number 424 416 450 479 538 Sales rate, ongoing production for consumers, at period end, % 62 58 62 51 59 Housing units sold to investors, number 39 Production starts for investors, number 39 Profit-recognised housing units for investors, number 39 Housing units in ongoing production for investors, at period end, number Sales rate, ongoing production for investors, at period end, %

1) Defined according to IFRS, audited for full-years 2013–2015. 2) Audited full-years 2013–2015.

42 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

St. Petersburg In brief Geographic presence In Russia, Bonava operates solely in St. Petersburg.

In St. Petersburg, Bonava’s offering, which exclusively comprises of multi-family houses, is targeted at consumers and investors. As per 31 March 2016, Bonava had a total of 1,810 housing units in ongoing production, of which 1,736 housing units were targeted at consumers.

Key ratios (Measurements which are not defined according to IFRS Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec and are unaudited, unless otherwise stated) 2016 2015 2015 2014 2013

Net sales, SEK million1) 106 45 773 743 376 Operating profit, SEK million2) 25 17 197 142 93 Operating margin, % 24 37 26 19 25 Capital employed, at period end, SEK million 911 935 802 761 650 Return on capital employed, % 25 13 24 15 14 Building rights, at period end, number 4,300 4,700 4,700 4,700 3,900 of which, off-balance-sheet building rights, number Housing units sold to consumers, number 122 152 865 1,133 782 Production starts for consumers, number 291 96 533 1,181 935 Profit-recognised housing units for consumers, number 172 56 1,039 902 306 Housing units in ongoing production for consumers, at period end, number 1,736 2,201 1,447 2,116 1,586 Sales rate, ongoing production for consumers, at period end, % 53 58 55 53 41 Housing units sold to investors, number 74 Production starts for investors, number 74 Profit-recognised housing units for investors, number 7 Housing units in ongoing production for investors, at period end, number 74 74 74 74 Sales rate, ongoing production for investors, at period end, % 100 100 100 100

1) Defined according to IFRS, audited for full-years 2013–2015. 2) Audited full-years 2013–2015.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 43 Business description

Estonia/Latvia In brief Geographic presence In the Baltic countries, Bonava operates in Estonia/Latvia, with a focus on the capital cities Tallinn and Riga.

In Estonia/Latvia, Bonava’s offering is primarily targeted at consumers, based on multi-family houses. As per 31 March 2016, 263 housing units were in ongoing production.

Key ratios (Measurements which are not defined according to IFRS and Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec are unaudited, unless otherwise stated) 2016 2015 2015 2014 2013

Net sales, SEK million1) 19 12 129 266 344 Operating profit, SEK million2) –38 –2 –62 12 5

1) Defined according to IFRS, audited for full-years 2013–2015. 2) Audited full-years 2013–2015.

Note: Estonia/Latvia are included in the reporting segment Other. Accordingly, a limited number of key figures are provided for Estonia/Latvia.

44 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

Project portfolio Housing units sold and housing units in ongoing production Overview of completed projects Number of housing units Bonava has extensive experience of housing development and has, since NCC Housing 10,000 became a separate business area within NCC in 2009, started production of and sold 8,000 approximately 34,000 housing units. The Company has continuously increased the number of housing units in ongoing produc- 6,000 tion and, for four consecutive years, has increased the number of housing units sold. 4,000 During 2015, the number of housing units sold amounted to 6,315, of which 4,542 2,000 housing units were sold to consumers and 1,773 to investors. The diagram to the right 0 provides an overview of the number of 2013 2014 2015 housing units sold by Bonava and the number of housing units in ongoing production since Housing units sold to consumers Housing units sold to investors 2013. Housing units in production

Overview of current project portfolio customers want to live. A building right grants included in the Company’s balance sheet. As Bonava’s current project portfolio comprises entitlement to develop a land site. Bonava’s per 31 March 2016, Bonova held a total of of properties held for future development, total portfolio of building rights includes 28,900 building rights, of which 18,500 were housing projects in progress and completed building rights owned by the Company, and recognised in the balance sheet. housing units. Access to land and a solid thus recognised in the balance sheet, and Below are the building rights, housing units in building rights portfolio form the basis for the building rights that the Company has an ongoing production and completed housing Company’s operations and facilitate long-term option to acquire or that comprise right of use units recognised in the Company’s balance profitability. Bonava continuously invests in regarding land. The building rights that sheet as per 31 December 2015, presented. land suitable for future production and to Bonova has an option to acquire or that repre- secure the Company’s access to land where sent right of use regarding land are not

Project portfolio

Number of housing units/building rights Of a total portfolio of approximately 38,300 15,000 building rights, housing units in production 36% and housing units completed as per 31 30% December 2015, approximately 68 per cent 12,000 were well advanced in the development process and had approved building permits 23% 9,000 or detailed plans. For the remaining portion of the project portfolio, most have a general plan for housing development in place. A 6,000 major part of the value generation in housing development derives from a 9% successful work with detailed plans together 3,000 with authorities, in order to develop attrac- 1% 1% tive residential environments. 0 Not planned General plan Detailed plan Building permit Ongoing Completed production

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 45 Business description

Bonava has housing units in ongoing production in eight countries, of The diagram below to the left presents the Company’s housing units which the majority are located in Sweden and Germany. The offering in ongoing production per segment as per 31 March 2016. The of housing units targets both consumers and investors. As per diagram below to the right presents the completion rate and sales 31 March 2016, a total of 8,976 housing units were in ongoing rate for ongoing projects as per 31 March 2016. In terms of selling production, of which 6,767 housing units target consumers and value, Sweden and Germany represent the largest markets. 2,209 target investors. Of the housing units in ongoing production targeting consumers, 62 per cent were sold, with a completion rate of 53 per cent. Of the housing units targeting investors, 94 per cent were sold, with a completion rate of 64 per cent.

Housing units in ongoing production (number) Completion rate and sales rate for housing units in ongoing production

44% Sweden 2,365 Sweden 73%

Germany 2,311 Germany 42% 74%

83% Finland 1,803 Finland 82%

58% Denmark/Norway 424 Denmark/Norway 62%

60% S.t Petersburg 1,810 S.t Petersburg 55%

48% Estonia/Latvia 263 Estonia/Latvia 38%

Completion rate Sales rate

Bonava’s operations are impacted by seasonal variations, such as a lower production rate during the winter (half of the year) because of cold weather, and that a large part of the yearly production is completed and transferred to the customers in the fourth quarter. The diagram below illustrates the seasonal variations in the Company’s operations, reflected in operating profit per quarter since 2014.

Operating profit per quarter

SEK million

1,200

1,000

800

600

400

200

0 Q1:14 Q2:14 Q3:14 Q4:14 Q1:15 Q2:15 Q3:15 Q4:15 Q1:16

1) The quarterly information for the years 2014–2015 and the first quarter 2016 derive from Bonava’s internal reporting system. The information has been prepared in accordance with the same accounting principles that are described in Note 1 in the Financial Reports.

46 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ)

Business description Business description

Selection of projects implemented by Bonava

Project name: Bisketti Location: Helsinki Housing category: Multi-family houses Number of housing units: 44 Development period: 2013–2015 Project Bisketti is located approximately 15 minutes from central Helsinki, close to the sea and with good access to public transportation.

Project name: Quartier Kirschallee Location: Potsdam Housing category: Multi-family houses Number of housing units: 184 Development period: 2013–2015 The housing units are located in the Bornstedt city district, which previously was a recreation area but has become an attractive residential area. The city district is growing strong and the number of inhabitants has doubled since 2000.

Project name: Kvarntornen Location: Uppsala Housing category: Multi-family houses Number of housing units: 55 Development period: 2012–2015 Kvarntornen is a new landmark in Uppsala with a number of energy-innovative solutions that contribute to reduced operating costs. The property also has a 500 square meter large, Japanese-inspired roof park.

Project name: Havnevigen Concept houses Location: Copenhagen Housing category: Row houses Number of housing units: 49 Development period: 2011–2013 The housing units are located in central Copenhagen, close to the sea and recreation areas. The project is part of a larger area, which will comprise 400 housing units when it is ready.

Project name: Tammeõue Location: Tallinn Housing category: Multi-family houses Number of housing units: 588 Development period: 2004–2014 The housing units are located close to the sea, with good public transportation to the heart of the city center, which is located 10 km away. The area includes inter alia schools, a shopping center, a cinema, etc.

48 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

Selection of Bonava’s ongoing projects

Project name: Skandi Klubb Location: Petrogradsky, St. Petersburg Housing category: Multi-family houses Number of housing units: 1,200 Development period: 2013–2018 The housing area is being built in four stages and is located in a well-reputed area by the city’s river. The housing units are environ- mentally certified by GreenZoom.

Project name: LonaParken #1 Location: Bergen Housing category: Multi-family houses Number of housing units: 101 Development period: 2013–2016 LonaParken #1 is located in Åsane, less than 10 km from central Bergen. The area’s common spaces are car-free and have elements of waterside features. The project is the first Nordic Swan Ecolabeled project in Norway.

Project name: Sjömannen Location: Ekerö (outside of Stockholm) Housing category: Single-family houses Number of housing units: 34 Development period: 2014–2017 Sjömannen is a close-to-nature waterside town in Ekerö, outside of Stockholm, comprising of 34 Nordic Swan Ecolabeled, chain houses in various colours, located along roads that are framed by lawns and patios.

Project name: Steglitzer ParkQuartier Location: Berlin Housing category: Multi-family houses and row houses Number of housing units: 354 Development period: 2014–2017 The project is located in a popular area in south-west Berlin and is one of the largest housing development projects in the city. Public transportation are good, close to buses, an underground railway, etc.

Project name: Fælled Husene Location: Arena Quarter, Ørestad (outside of Copenhagen) Housing category: Row houses Number of housing units: 56 Development period: 2015–2017 Ørestad is located near the Fields shopping center, and the journey to central Copenhagen only takes 12 minutes by subway. Fælled Husene is surrounded by the Kalvebod Fælled natural area and will be car-free. Fælled Husene is Bonava’s first project in Denmark to be implemented by its own production organisation.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 49 Business description

Bonava commissions a large number of subcontractors in its operations and it is essential that there are competent suppliers who can deliver what Bonava requires. Bonava requires its suppliers to follow a Code of Conduct, and every supplier usually pledges to comply with it. The Company follows up on and educates its suppliers through audits that assess a supplier’s ability to comply with Bonava’s Code of Conduct, their social responsibility, compliance with legal requirements, quality and environmental efforts, work environment and more. Bonava uses an audit cycle to assess all suppliers that the Company considers to belong to a higher risk group, in order to ensure compliance and development in these areas. If serious deviations are recorded for any supplier, and they are not rectified after having been commented on, it will lead to termination of the partnership. Bonava combines its own audits, conducted by its own in-house staff with consultants who conduct third-party audits.

Sustainability PURCHASES AND SUPPLIERS increase its control over purchases and make The housing units developed by Bonava must The Group’s purchasing functions vary them more efficient. provide good conditions for a sustainable life- between the different geographical markets. style. A natural way of taking responsibility is Bonava’s purchases are made in accordance In Germany, St. Petersburg and Estonia/ to look beyond the building and develop new with an established purchasing policy. In Latvia, local purchasing functions are estab- city districts with high social and environmen- Bonava’s view, greater coordination of lished that handle all purchases of relevance tal values. Engaging in dialogue and coopera- purchases will be a critical factor for capitalis- to the Company’s design and production. With tion with residents, municipalities and local ing on synergies within the Group, increase centralised processes, combined with local players early on, makes it possible to develop efficiency and thus cutting costs in the future. presence, the purchasing functions manage areas in a beneficial way for many more Greater coordination of purchases is expected both direct purchases of materials, as well as people than those who live there, which also to make it easier to realise synergies between purchases of expendable supplies and various facilitates and speed up the path to comple- projects and countries, which also reduces types of construction and consulting services tion. In other words, engaging in dialogue with costs. in the local markets. By coordinating and controlling every operational purchasing level, Bonava not only enhance its efficiency, it also reduces its purchasing costs.

Bonava has limited purchasing resources in the nordic markets. In these markets, the Company usually procures turn-key contracts for each project, with the exception of single-family houses in Sweden and certain projects in Denmark. The background to the current nordic purchasing model is that Bonava, as a part of NCC, historically hired NCC Building as a contractor, and NCC Building in turn managed the underlying purchasing level. After separating from NCC, Bonava has begun to develop its own local purchasing functions in all the nordic countries. Initially, Bonava intends to continue to procure turn-key contracts in these markets, and then gradually perform project engineering itself and make the move to procuring contractors for different parts of a project instead (such as earthworks, construction and installation). By assuming a larger role in the production process, Bonava will be able to

50 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Business description

residents before constructing housing units is critical to Bonava’s efforts to create social sustainability. In the city of Sigtuna in Sweden, for example, extensive dialogues with citizens resulted in Bonava receiving the assignment to build an entirely new city district.

A healthy indoor environment is a decisive factor for a sustainable housing unit. Using customary environmental certifications as a basis for continuous improvements is part of Bonava’s sustainability strategy, inter alia in order to avoid building materials that are hazardous to health or environment. A building with environmental certification is a confirma- tion that it is a low-energy building with a good indoor environment; that the construction process is eco-adapted; and that materials have been selected with considerable attention to human health and environment. In Sweden, Bonava has well-established concepts for incorporating Nordic Swan Ecola- beled buildings. In addition, Sweden Green Building Council certification is used as a basis in all of its housing developments. Bonava was the first company in the market to offer Nordic Swan Ecolabeled multi-family houses in both well-being of city dwellers. Another example is Bonava’s Code of Conduct is based on the Denmark and Norway. In markets where the working with municipalities and local players Company’s values and on voluntary initiatives Nordic Swan, which is a Nordic eco-label, is to develop innovative parking solutions and such as the OECD’s Guidelines for Multina- not relevant, Bonava works systematically to facilitate the use of sustainable transport alter- tional Companies and the UN Global harmonise its in-house processes and the natives. As a major player in the housing Compact, which, for example have set up performance of its products against interna- market, Bonava also have an important role in principles for the management of human tional, comprehensive holistic environmental the society by virtue of its ability to accelerate rights, labour conditions, environment and certifications such as BREEAM and DGNB or the development towards sustainable housing corruption. All employees receive regular more specialised standards such as the passive development with the aid of experiences from training in the fundamentals of the Code of building standard. In 2015, Bonava received the various markets in which Bonava operates. Conduct and are expected to comply with the DGNB gold certificate for projects in For example, Bonava has transferred its these principles in their daily work. In addition Germany, where typical buildings and normal knowledge of low-energy buildings to to the Company’s Code of Conduct, Bonava processes in its operations were graded and St. Petersburg, thus accelerating the develop- has established its own compliance certified for their energy consumption, choice ment in that market. programme for the management and control of materials, quantities of waste and carbon of the value process and regulatory compli- emissions during the construction process. Governance and organisation ance. These must also be verified after the building The CEO is ultimately responsible for Bonava’s is completed and the residents have moved in. sustainability work. Bonava’s SVP Strategy & Reporting Corporate Development (member of the Bonava prepares a sustainability report in The residents’ behaviour is also important for senior management) is also responsible for accordance with the international framework a housing unit to maintain high environmental the Group’s sustainability work. The Sustaina- Global Reporting Initiative (GRI) and the performance. When moving in, residents bility Manager, who focuses on sustainability updated G4 guidelines. Internal analyses of receive support and advice on how to use and issues on a daily basis and reports to Bonava’s strategic issues, driving forces in society and take care of the housing unit to ensure long- SVP Strategy & Corporate Development, is the results of stakeholder dialogs, lead to a term sustainability. Bonava also offers various responsible for coordination. The unit cooper- definition of the sustainability issues that are tools to assist customers in controlling and ates with other functions in the organisation, most significant for Bonava. The method for limiting their energy consumption, thus such as representatives of the Company’s defining these significant issues follows the helping them to save money and reduce the business units, purchasing functions and HR GRI G4 guidelines and comprises of identifi- environmental impact. functions. cation, prioritisation and validation. Regular Bonava actively contributes to meet the checks will be carried out with Bonava’s stake- demands for housing development as a result Values that form the foundation of the holders to ensure that Bonava’s priorities are of the increased pace of urbanisation. Exam- business and the Code of Conduct relevant for the market, society and the Group. ples of measures by the Company are incorpo- Bonava’s values and Code of Conduct are the rating green space into building plans in order basis for all actions in its operations. Together, to counter the effects of climate change and they function as a compass for employees and facilitate cultivation, which may have a posi- business partners, and provide guidance for tive effect on the urban ecosystems and the the daily operations.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 51 Business description

Employees and organisation employees broken down by Bonava’s six busi- proportion of women and men on the board of Employees ness units during 2013–2015 and the first directors was 16 per cent and 84 per cent, The average number of employees in the quarter of 2016. During 2015, the proportion respectively, and among senior executives was Group amounted to 1,331 during 2015. The of women and men was 33.7 per cent and 18 per cent and 82 per cent, respectively. 66.3 per cent, respectively. During 2015, the table below shows the average number of

Average number of employees Business unit: Jan–March 2016 2015 2014 2013

Sweden 154 153 126 149 Germany 776 745 715 686 Finland 84 76 78 70 Denmark/Norway 42 48 39 40 St. Petersburg 267 254 232 187 Estonia/Latvia 42 55 76 82 Total 1,365 1,331 1,266 1,214

Organisation Latvia. In contrast to the other business units, Counsel, BU Presidents from Sweden, Bonava’s organisation complies with the Estonia/Latvia does not represent a separate Germany, Finland, Denmark/Norway and breakdown into business units. At the level segment in Bonava’s financial reporting. St. Petersburg are members of Bonava’s under Group level, there are the different Alongside Bonava’s CEO, CFO and Head of IR, Group senior management. business units in Sweden, Germany, Finland, the SVP Strategy & Corporate Development, Denmark/Norway, St. Petersburg and Estonia/ SVP HR, SVP Marketing & Sales and General

PRESIDENT & CEO Joachim Hallengren

STRATEGY & BUSINESS DEVELOPMENT SVP Magnus Ljung FINANCE & IT CFO & Head of IR, including IT Ann-Soﬁ Danielsson HR SVP HR Jenny Lilja Lagercrantz MARKETING & SALES SVP Soﬁa Rudbeck LEGAL General Counsel Joakim Månsson

BUSINESS UNIT BUSINESS UNIT BUSINESS UNIT BUSINESS UNIT BUSINESS UNIT BUSINESS UNIT SWEDEN GERMANY FINLAND DENMARK/NORWAY ST. PETERSBURG ESTONIA/LATVIA BU President BU President BU President BU President BU President BU President Fredrik Hemborg Olle Boback Juuso Hietanen Torben Modvig Juuso Hietanen Michael Björklund1)

1) Not a member of Bonava’s Group senior management.

52 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ)

Presentation of financial information

During 2015 and the first half of 2016, a ments, the “Financial Statements”). As per Statements, is composed of the companies restructuring of the NCC group was imple- 31 March 2016, when the Finnish operations specified in Note 25 of the Audited Combined mented, through which the NCC group was were acquired, the formation of the Group was Financial Statements, which thus means that divided up into two separate legal structures finalised. Accordingly, the consolidated finan- it was not a legal group for the periods (the intention was to demerge the former cial statements have been compiled as of this presented in the Financial Statements. business area NCC Housing from the existing date. The Unaudited Financial Statements, Accordingly, the Financial Statements are an NCC group). Bonava became the new parent which have been reviewed by the Company’s aggregation of the historical financial informa- company of the new Group. auditor for the period 1 January – 31 March tion for these companies. The Financial State- 2016, Ernst & Young AB, have been prepared ments have been prepared especially for this Accordingly, the starting point for the financial in accordance with IAS 34 Interim Financial Prospectus and thus combine results and statements in this Prospectus is the financial Reporting. The Audited Combined Financial assets and liabilities for each and every one of information that has been presented for the Statements, which have been audited by the the companies that constitute Bonava through Housing operating segment in NCC’s consoli- Company’s former auditor, Pricewaterhouse- the application of the policies that are dated financial statements for the respective Coopers AB (years 2013 and 2014), and the described in the Financial Statements for the financial year, although subject to certain current auditor, Ernst & Young AB (year financial years 2013, 2014 and 2015. adjustments. The units presented in this 2015), have been prepared in accordance financial information are controlled by the This means that the financial information for with IFRS and the Swedish Financial Report- Company on the date of publication of this those companies that constitute Bonava have ing Board’s recommendation RFR 1 “Supple- Prospectus. been prepared for the same reporting periods mentary Accounting Rules for Groups”. The and with consistently applied accounting Unless otherwise stated, Bonava’s historical Financial Statements, including the auditors’ principles. All intra-Group undertakings, financial information presented in this reports from PricewaterhouseCoopers AB and transactions, income and expenses, as well as Prospectus has been derived from the Ernst & Young AB, are presented in another gains and losses have been eliminated. The Company’s unaudited interim report for the section of this Prospectus. Financial Statements are presented in SEK first quarter of 2016 (the “Unaudited Finan- All companies that are included in the million, unless otherwise stated. cial Statements”) and from the Company’s Financial Statements are subject to audited combined financial statements for the controlling influence, as all of the units have financial years 2013, 2014 and 2015 (the been controlled by NCC during all presented “Audited Combined Financial Statements” or, periods. Bonava, as presented in the Financial together with the Unaudited Financial State-

54 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Selected financial information

The following tables comprise a summary of combined financial information for the 2013–2015 financial years, and for the 1 January to 31 March 2016 period, with comparative figures for the corresponding period in 2015. The information has been collected from the Financial Statements prepared according to IFRS as adopted by the EU. The Audited Combined Financial Statements for the 2013 and 2014 financial years have been audited by Bonava’s former auditor, Pricewaterhouse- Coopers AB. The Audited Combined Financial Statements for the 2015 financial year have been audited by Bonava’s current auditor, Ernst & Young AB. The Unaudited Financial Statements for the period 1 January to 31 March 2016 are unaudited, and have been reviewed by Bonava’s auditors. For information on the preparation of the Combined Financial Statements, reference is made to the section “Presentation of financial information”. This section “Selected financial information” should be read together with the section “Operational and financial review” and the Financial Statements, along with their associated notes, which are included elsewhere in this Prospectus. Rounding-off differences may arise in all tables.

Condensed income statement for Bonava

Unaudited Audited Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec SEK million 2016 2015 2015 2014 2013

Net sales 1,877 1,764 13,070 10,226 9,196 Production costs –1,550 –1,551 –11,016 –8,717 –8,032 Gross profit 328 213 2,054 1,508 1,165

Selling and administrative expenses –144 –138 –640 –564 –541 Other operating expenses –1 –36 –2 0 Operating profit 184 74 1,377 942 623

Financial income 3 3 11 18 22 Financial expenses –73 –88 –356 –407 –378 Net financial items –71 –85 –345 –389 –356

Profit/loss after financial items 113 –11 1,033 553 267 Tax on profit/loss for the period –26 2 –235 –81 –56 Net profit/loss for the period 88 –9 798 472 211

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 55 Selected financial information

Statement of comprehensive income

Unaudited Audited Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec SEK million 2016 2015 2015 2014 2013

Profit/loss for the period 88 –9 798 472 211

Items that may be reclassified to profit or loss Translation differences for the period 19 –27 –59 75 24 Hedging of exchange-rate risk in foreign operations –20 24 41 –56 –15 Cash flow hedges 3 33 2 11 Tax related to items that may be reclassified to profit or loss 4 –6 –16 12 1 4 –6 –2 33 21

Items that will not be reclassified to profit or loss Revaluation of defined-benefit pension plans –2 –8 –23 10 Tax related to items that will not be reclassified to profit or loss 0 2 5 –2 0 –1 –6 –18 8

Other comprehensive income for the period 4 –8 –8 15 29 Comprehensive income for the period 92 –16 790 487 240 Attributable to: Bonava’s shareholders 94 –14 759 462 222 Non-controlling interests –2 –2 31 25 18 Total comprehensive income for the period 92 –16 790 487 240

56 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Selected financial information

condensed Balance sheet for bonava

Unaudited Audited 31 Mar 31 Mar 31 Dec 31 Dec 31 Dec SEK million 2016 2015 2015 2014 2013

ASSETS Fixed assets 869 679 773 654 510

SHAREHOLDERS’ EQUITY Equity related to the owners of the parent company 4,756 249 4,672 294 517 Non-controlling interests 58 42 60 44 28 Total shareholders' equity 4,814 291 4,732 338 545

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 57 Selected financial information

Condensed cash flow statement for Bonava

Unaudited Audited Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec SEK million 2016 2015 2015 2014 2013

OPERATING ACTIVITIES Profit/loss after financial items 113 –11 1,033 553 267 Adjustments for items not included in cash flow 11 13 52 48 27 Tax paid –48 –27 –125 –91 –127 Cash flow from operating activities before changes in working capital 77 –25 959 510 167

Cash flow from operating activities –527 –445 1,450 –94 328

INVESTING ACTIVITIES Investments for the period –49 –9 –13 –53 –34 Cash flow from investing activities –49 –9 –13 –53 –34

CASH FLOW BEFORE FINANCING –576 –454 1,437 –147 295

FINANCING ACTIVITIES Cash flow from financing activities 628 526 –1,301 231 –308 CASH FLOW DURING THE PERIOD 52 72 136 84 –13

58 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Selected financial information

OVERVIEW of selected key RATIOS1) Unless otherwise stated, the table below contains certain financial and operational key ratios that are not defined according to IFRS. The information below, referring to the financial years 2013–2015 and the first quarter of 2015 and 2016, is of material value to investors since it enables a better evaluation of Bonava’s financial position and earnings. Unless otherwise stated, the key ratios below are unaudited but have been calculated on the basis of the figures in the Audited Combined Financial Statements 2013–2015, which have been audited by the Compa- ny’s auditor, and the figures in the Unaudited Financial Statements for the period 1 January – 31 March 2016, which have been reviewed by the Company’s auditor. For definitions of key ratios, please see the heading “Definitions” in the section “Selected financial information”.

Unaudited Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec SEK million unless otherwise stated 2016 2015 2015 2014 2013

Profitability ratios Return on capital employed, %2) 14 8 12 8 6

Financial ratios at period-end Interest-coverage ratio, times2) 4.4 2.4 3.9 2.4 1.7 Equity/assets ratio, % 29 2 31 2 4 Interest bearing liabilities/total assets, % 32 67 33 66 64 Net debt 4,552 10,155 4,216 9,600 8,826 Debt/equity ratio, times 0.9 34.9 0.9 28.4 16.2 Capital employed at period end 10,236 11,141 9,811 10,688 9,978 Capital employed, average 10,791 11,118 10,882 10,885 10,300 Capital turnover rate, times2) 1.2 1.0 1.2 0.9 0.9 Share of risk-bearing capital, % 29 2 31 2 4 Average interest rate, at period end, %3) 3.07 3.84 3.06 3.26 3.48 Average period of fixed interest, years3) 0.1 0.2 0.2 0.2 0.3 Average interest rate, at period end, %4) 1.16 1.49 1.26 1.76 2.65 Average period of fixed interest, years4) 0.1 0.1 0.1 0.1 0.1

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 59 Selected financial information

Unaudited information for Bonava not defined by IFRS The table below contains certain financial and operational key ratios that are not defined according to IFRS and that derive from Bonava’s internal reporting system. These key ratios, which are unaudited, are presented because they are used by the management to monitor the underlying performance of Bonava’s operations and are of material value to investors since they enable better evaluation of Bonava’s financial position and earnings. Key ratios that are not calculated in accordance with IFRS or in a consistent manner are not prepared by all companies. As a consequence, these key ratios are not necessarily comparable with key ratios with the same or different designations used by other companies.

Housing development Unaudited Jan–Mar Jan–Mar Jan–Dec Jan–Dec Jan–Dec Bonava (number of housing units unless otherwise stated) 2016 2015 2015 2014 2013

Building rights, at period end 28,900 30,800 29,100 31,300 33,200 Of which, off-balance building rights 10,400 9,300 11,000 9,800 13,200

Housing development for consumers Profit-recognised housing units during the period 629 471 3,968 3,661 2,951 Production starts during the period 747 588 4,452 4,503 3,715 Housing units sold during the period 788 1,015 4,542 4,575 3,747 Housing units in ongoing production, at period end 6,767 6,171 6,432 5,952 4,831 Sales rate, ongoing production, at period end, % 62 65 60 58 47 Reservation rate, ongoing production, at period end, % 6 11 6 12 9 Completion rate, ongoing production, at period end, % 53 51 46 45 49 Completed housing units, not profit-recognised, at period end 212 325 429 438 717 Housing units for sale (ongoing and completed), at period end 2,669 2,374 2,713 2,812 2,884

Housing development for investors Profit-recognised housing units during the period 0 197 1,768 1,393 903 Production starts during the period 0 127 1,904 1,445 1,095 Housing units sold during the period 0 127 1,773 1,472 1,129 Housing units in ongoing production, at period end 2,209 1,734 2,346 1,735 1,552 Sales rate, ongoing production, at period end, % 94 100 94 100 98 Completion rate, ongoing production, at period end, % 64 72 69 65 38 Completed housing units, not profit-recognised, at period end 0 0 0 0 0 Housing units for sale (ongoing and completed), at period end 131 0 131 0 27

60 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Selected financial information

Quarterly information In the Company’s opinion, the quarterly information below is of value to investors because it enables better assessment of the Company’s performance and seasonal variations. Note, however, that the quarterly information has not been audited by the Company’s auditors, apart from the period 1 January–31 March 2016, which has been reviewed.

Unaudited Jan–Mar Oct–Dec Jul–Sep Apr–Jun Jan–Mar Oct–Dec Jul–Sep Apr–Jun Jan–Mar SEK million 2016 2015 2015 2015 2015 2014 2014 2014 2014

Net sales 1,877 7,314 2,128 1,864 1,764 4,564 2,257 2,051 1,353 Operating profit 184 1,015 180 108 74 491 241 158 51 Profit/loss after financial items 113 939 93 12 –11 388 144 57 –37 Profit after tax for the period 88 723 75 9 –9 345 112 44 –28

Cash flow from operating activities 77 976 7 2 –25 410 178 –19 –59

Cash flow from changes in working capital Divestment of housing projects 1,489 5,079 1,920 1,574 1,503 3,856 1,961 1,754 1,270 Gross investments in housing projects –2,393 –3,195 –2,423 –2,265 –1,959 –2,694 –2,557 –2,130 –2,312 Other changes in working capital 300 –759 667 314 36 –481 130 575 25 Cash flow from changes in working capital –604 1,124 164 –377 –420 681 –466 199 –1,017

Net debt 4,552 4,216 10,355 10,620 10,155 9,600 10,412 10,030 9,922

Average number of employees 1,365 1,332 1,280 1,299 1,263 1,266 1,258 1,254 1,181

Definitions Completion rate Total assets Industry-related definitions Recognised costs in relation to estimated Sum total of assets, liabilities and share Housing units in production total costs for ongoing housing projects. holders’ equity respectively. Refers to the period from production start to Sales rate Average interest rate completion of a building. A housing unit is Number of sold housing units in production in Nominal interest rate weighted by considered complete on receipt of the relation to total number of housing units in interest-bearing liabilities outstanding on the inspection documentation. production. balance-sheet date.

Building right Reservation rate Average period of fixed interest Estimated possibility to develop a site. With Number of reserved housing units in The remaining period of fixed interest respect to housing units, a building right production in relation to total number of weighted by interest-bearing liabilities corresponds to an apartment or a semi- housing units in production. outstanding. detached or detached house. Either ownership of a site or an option on ownership of the Profit-recognised housing units Average shareholders’ equity site concerned is a prerequisite for being Number of housing units taken possession of Average of the balances at 1 January, granted access to a building right. by the purchaser. When the purchaser takes 31 March, 30 June, 30 September and possession, the purchase consideration is 31 December. Production start recognised as net sales and costs incurred in Capital turnover rate The time at which Bonava starts production of the housing unit are recognised as production Net sales divided by average capital a building. At this time, capitalised expendi- costs. ture for the site and development expenses employed. recognised as housing units in production. Housing units sold Production costs Number of housing units for which binding Costs incurred for land, such as development Properties held for future development sales contracts have been signed with the expenses for architects and other contrac- Refers to Bonava’s holding of land and build- customer and production of the housing unit tor-related costs, utility-connection fees and ing rights for future housing development and has started. capitalised project development of properties. production of a building. Key financial ratios Completed housing units Net debt Share of risk-bearing capital Refers to housing units for which inspection Interest-bearing liabilities and provisions less Sum total of shareholders' equity and deferred documentation has been received but the unit interest-bearing assets including cash and tax liabilities as a percentage of total assets. has not yet been sold; alternatively, where the cash equivalents. finished housing unit has been sold but not Return on capital employed yet occupied by the tenant. Profit/loss after financial items including results from participations in associated companies following the reversal of interest expense in relation to average capital employed.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 61 Selected financial information

Net sales Net sales are recognised when the housing unit is transferred to the end customer. Property sales are recognised on the date when significant risks and rewards are transferred to the buyer, which normally coincides with transfer of the ownership.

Earnings per share Net profit/loss for the year attributable to Bonava’s shareholders divided by the weighted number of shares during the year in question.

Interest-coverage ratio Profit/loss after financial items plus financial expense divided by financial expense.

Operating margin Operating profit as a percentage of net sales.

Debt/equity ratio Net debt divided by shareholders’ equity.

Equity/assets ratio Shareholders’ equity as a percentage of total assets.

Capital employed Total assets less interest-free liabilities including deferred tax liabilities. Average capital employed is calculated as the average of the balances at 1 January, 31 March, 30 June, 30 September and 31 December.

62 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Operational and financial review

The information below should be read together with the section “Selected financial information” and the Financial Statements prepared in accordance with IFRS as adopted by the EU and presented elsewhere in this Prospectus. For information on the preparation of the Financial Statements, reference is made to the section “Presentation of financial information”. For information about the Company’s accounting principles, please see the section “Historical financial information – Note 1 Significant accounting principles”. This section contains forward-looking information. Such information is based on estimates and assumptions and are subject to risks, uncertainties and other factors, including those stated in the section “Risk factors”. These factors could cause the Company’s future operating profit, financial position or cash flows to deviate significantly from the information stated or indicated in such forward-looking statements. Please see the section “Important information” under the heading “Forward- looking information and risk factors” for a description of the risks associated with relying on forward-looking information.

Overview • capital utilisation; completion. It is important for the Company to Bonava is a leading housing developer in • exchange-rate changes; and maintain its stated time plans, since there is a northern Europe. Bonava develops and sells • Bonava as an independent company. risk that delays will have a negative impact on affordable and sustainable housing units to the project’s return and thus the Company’s consumers and investors in selected markets Demand and market conditions tied-up capital. Bonava works actively to in Sweden, Germany, Finland, Denmark, Demand for housing units and the customers’ streamline the production process by increas- Norway, St. Petersburg and Estonia/Latvia. ability to pay are affected by inter alia a ing the degree of industrialisation and stand- Bonava operates in metropolitan regions number of macroeconomic factors such as the ardising some parts of the design and produc- demonstrating definite growth and a stable state of the economy, interest rate situation tion. Having efficient building systems local labour market that creates demand for and employment rate, as well as demographic increases Bonava’s ability to reduce the time new housing units. The Company offers both factors such as population growth and urbani- spent in the development process, which is multi-family and single-family houses (under sation. The different markets specific condi- expected to result in higher returns on its varying ownership forms) to two categories of tions, such as current interest rate situation projects since the capital is tied up for a customers; consumers and investors. The and underlying market risk, are reflected in shorter time. Cost control refers to the majority of the customers are consumers the Company’s yield requirements on each Company’s ability to limit both internal and investing in their own home, although respective market, which is partly reflected in external expenses during the housing devel- investors (in Sweden, Germany and Finland) the historical operating margin of the business opment process. Measures to improve cost accounted for approximately 30 per cent of units. High interest rate levels and high market control is partly linked to meausures to control Bonava’s sales of housing units during 2015. risk generally means that the Company the cost of project related to purchases in The Company’s housing development process applies a higher yield requirement. For addi- projects, for instance by increased purchase encompasses through the entire value chain, tional information on macroeconomic, demo- coordination between the countries. The from project engineering to finished homes. graphic and risk factors, please see the Company is also working to optimise its posi- sections ”Market overview” under the heading tion in the value chain and thereby increase its Factors affecting Bonava’s “Macroeconomic factors”, ”Market overview” control over costs in the housing development earnings and cash flow under the heading “Demographic factors” as process, for example by establishing produc- Bonava believes that a number of factors well as the section “Risk factors”. The tion expertise in all business areas. directly and indirectly affect its earnings and Company operates in eight different countries cash flow. These factors may present and targets its offering to different target Sales prices opportunities for Bonava, but may also pres- groups depending on the type of housing It is critical for the Company to optimise the ent challenges and risks that Bonava will have development project. This means that Bonava sales price of its housing units. Bonava to successfully manage to continue to develop is not exposed to an individual country, region employs a pricing strategy designed to take its operations and improve its financial or target group. In addition, Bonava depends both sales risk and project profitability into position and results. These factors particularly on several factors that affect the market for consideration. The Company markets its include: new housing units, such as the extent of housing units to relevant target groups and government regulation of new construction. engages in sales activities targeted at poten- • demand and market conditions; tial customers during the project development • efficiency and cost control in the housing Efficiency and cost control in the housing process. By initiating sales activities early in development process; development process the process, the Company ensures to optimise selling prices: • Efficiency in the housing development its price level. The Company has in-depth building rights portfolio; • process refers to factors including the Compa- knowledge of its customers and works actively seasonal variations; • ny’s ability to minimise the time from the start to follow the trends that affect customer financial expenses; • of a housing development project until needs, in order to ensure that it develops

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 63 Operational and financial review

housing units that meet customers’ expecta- exposed to translation risk when it translates Selling and administrative expenses tions in terms of price, location and execution. revenues, expenses, assets and liabilities for Selling and administrative expenses refers to its operations in Germany, Finland, Denmark, expenses for accounting, IT, marketing and Building rights portfolio Norway, St. Petersburg and Estonia/Latvia to communication, HR, legal costs and office Bonava’s ability to identify appropriate land SEK. The Company practices currency rental costs. The entry also includes costs for sites that are suitable for housing develop- hedging and currency management according management and central functions. ment is critical to its future profitability. The to its adopted finance policy. Please see the Company works continuously to identify new section “Historical financial information – Net financial items business opportunities, and thus constantly Note 23 Financial instruments and financial Net financial items consist of interest income acquires new building rights. Once the risk management” for more information on the and financial expenses in respect of cash and Company has identified potential building Company’s management of exchange rate cash equivalents, interest, fees and other rights, it performs analyses to understand the risks. expenses incurred when the Company project’s potential with regard to issues such receives loans from credit institutions, includ- as customer demand and expected project Bonava as an independent company ing building loans from tenant owner associa- costs. If the investment appears to be profit Bonava’s separation from the NCC group will tions in Sweden and housing companies in able, the building right is acquired. have an effect on the Company’s operating Finland, as well as other financial expenses. costs and financial expenses going forward. Seasonal variations For Bonava as a listed company, operating Tax on profit/loss for the period Bonava does not recognise revenues and costs will primarily be affected by a limited Tax on profit/loss for the period consists of earnings from sales of housing units until the increase in administrative costs since the NCC current tax that is to be paid or received for sold and completed housing units are trans- group’s support functions will no longer be the current year, as well as adjusted tax ferred to customers. Bonava’s operations are available to Bonava. For example, Bonava’s attributable to previous periods. This entry affected by seasonal variations such as a support functions in areas such as accounting, also includes deferred tax that is recognised slower rate of production during winter due to finance, communication and IT will be on the basis of temporary differences between cold weather, and the fact that a large share of strengthened. In addition to an increase in recognised and taxable values of assets and its annual production is completed and trans- administrative costs Bonava has non-recurring liabilities. ferred to customers during the fourth quarter. costs for the separation. Non-recurring costs Accordingly, earnings are usually stronger in for the separation of SEK 68 million have been Key items in the balance sheet charged against Bonava’s profit, of which SEK the fourth quarter than in other quarters. Bonava’s housing projects are divided 57 million was charged against profit for between: 2015, and SEK 11 million for the first quarter Financial expenses Properties held for future development of 2016. During 2016, additional separations • Bonava’s earnings are affected by financial Ongoing housing projects costs of approximately SEK 90 million are • expenses, especially interest expenses. Inter- Completed housing units est expenses are primarily affected by the size expected to be charged against the profit for • Bonava. Bonava has also signed new credit of the Company’s interest-bearing liabilities, Properties held for future development agreements, which means that its historical the general level of interest rates and the inter- Properties held for future development are est rate maturity strategy chosen by Bonava financial expenses do not necessarily provide a representative view of the Company’s future Bonava’s holdings of land and building rights for interest rates. Bonava’s policy is that the for future housing development and capital- average remaining interest rate maturity financial expenses. For further information on Bonava’s new financing, please see the ised project development properties. Property should normally be between six to 18 months, with leased buildings is classified as property and that the interest-rate maturity structure of section ”Capital structure and other financial information” under the heading “Financing”. held for future development if the intention is the borrowing portfolio should be adequately to demolish or reconstruct the property. spread over time. Key entries in the income Ongoing housing projects Capital utilisation statement Net sales In connection with the start of production, the Bonava’s return on capital employed is value of land and capitalised development Bonava recognises revenues in the income affected by the Company’s capital utilisation. expenses are reclassified to ongoing projects, statement when material risks and rewards The Company’s geographic diversification together with costs incurred after the start of associated with ownership of the housing unit makes it possible to achieve efficient capital production. utilisation, since capital can be allocated have been transferred to the purchaser. Bona- va’s net sales primarily comprise three income among the Company’s markets based on Completed housing units where demand for housing units is strongest streams: housing unit sales to consumers, Project costs for completed housing units are and where the Company assesses that the profit from sales of housing projects to inves- reclassified from ongoing housing projects to capital will be utilised most efficiently. tors and, to a lesser extent, divestment of land. completed housing units at the date of final Efficient capital utilisation makes it possible to inspection. improve the return on capital employed. Production costs Production costs consist of costs for land, Key items in the cash flow Exchange-rate fluctuations land site preparation, contractor-related costs, statement Bonava is exposed to exchange-rate fluctua- project management and costs for production Sales of housing projects tions that arise between the Company’s of building. accounting currency, SEK, and foreign curren- Sales of housing units correspond to cash flow cies used in transactions with suppliers and in connection with purchase considerations customers outside Sweden. Bonava is paid by customers.

64 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Operational and financial review

Investments in housing projects less housing units for consumers were prof- Operating profit Investments in housing projects correspond to it-recognised and no housing units for inves- Bonava’s operating profit/loss for the period costs incurred in housing projects (compare tors were profit-recognised. During the period 1 January – 31 March 2016 amounted to with key items in the balance sheet). the average price increased for housing units SEK 184 million, which is an increase of to consumers that were transferred in Finland. SEK 110 million compared with the corresponding period of 2015, when the operating Other changes in working capital Denmark/Norway profit amounted to SEK 74 million. The Other changes in working capital pertain Net sales in Denmark/Norway for the period increase was primarily attributable to primarily to current receivables and liabilities 1 January – 31 March 2016 amounted to increased net sales with improved margins in in the Company’s housing development SEK 256 million, which is a decrease of SEK projects for consumers in Sweden, while the operations. 73 million compared with the corresponding result from projects to investors decreased. period of 2015, when net sales amounted to The result from divestment of land for the Comparison between periods SEK 329 million. Net sales in Denmark/ period 1 January – 31 March 2016 amounted 1 January 2016 – 31 March 2016 Norway decreased due to less delivery of to SEK 9 million compared to SEK 13 million compared with 1 January 2015 – housing units to consumers. The average for the period 1 January – 31 March 2015. 31 March 2015 price for housing units that were handed over Fluctuations in exchange rates had a negative Net sales to consumers was lower in Norway. impact of SEK 4 million on earnings during Net sales for the period 1 January – 31 March St. Petersburg the period 1 January – 31 March 2016 2016 amounted to SEK 1,877 million, which Net sales in St. Petersburg for the period compared with the corresponding period in is an increase of SEK 113 million compared 1 January – 31 March 2016 amounted to 2015. The preparation to list Bonava on with the corresponding period of 2015, when SEK 106 million, which is an increase of Nasdaq Stockholm resulted in increased costs net sales amounted to SEK 1,764 million. SEK 61 million compared with the corre- of SEK 11 million for the quarter. Higher net sales in Sweden and St. Petersburg sponding period of 2015, when net sales Sweden contributed positive, while primarily Finland amounted to SEK 45 million. In St. Petersburg Operating profit in Sweden for the period and Germany displayed lower net sales. Fluc- net sales for the quarter increased due to 1 January – 31 March 2016 amounted to tuations in exchange rates, primarily with more housing units for consumers being SEK 261 million, which is an increase of regard to RUB, had a negative impact of SEK profit-recognised. 34 million on net sales during the period SEK 195 million compared with the corresponding period of 2015, when operating 1 January – 31 March 2016 compared with Production costs the corresponding period in 2015. profit amounted to SEK 66 million. During the Bonava’s production costs for the period quarter, Sweden accounted for a large part of 1 January – 31 March 2016 amounted to SEK Sweden the Group’s profit thanks to an improved result 1,550 million, which is a decrease of SEK 1 Net sales in Sweden for the period 1 January – from housing units to consumers and million compared with the corresponding 31 March 2016 amounted to SEK 1,251 increased earnings from divestment of land. period of 2015, when production costs million, which is an increase of SEK 511 Both net sales and margins increased for amounted to SEK 1,551 million. million compared with the corresponding housing units to consumers. period of 2015, when net sales amounted to SEK 740 million. In Sweden, the number of Gross profit Germany transferred housing units to consumers Bonava’s gross profit/loss for the period 1 Operating profit in Germany for the period increased at the same time as the average January – 31 March 2016 amounted to SEK 1 January – 31 March 2016 amounted to price and net sales from divestment of land 328 million, which is an increase of SEK 115 SEK –28 million, which is a decrease of increased. million compared with the corresponding SEK 50 million compared with the corre- period of 2015, when gross profit amounted sponding period of 2015, when operating Germany to SEK 213 million. The increase was primarily profit amounted to SEK 22 million. In Net sales in Germany for the period 1 January attributable to increased net sales with Germany the profit was reduced partly since – 31 March 2016 amounted to SEK 157 improved margins in projects for consumers. less housing units were handed over to million, which is a decrease of SEK 270 consumers, partly since no projects to inves- million compared with the corresponding Other expenses tors were profit-recognised in the quarter. period of 2015, when net sales amounted to During the corresponding year the preceding Bonava’s selling and administrative costs for SEK 427 million. Net sales was lower than the year one project to investors was profit-recog- the period 1 January – 31 March 2016 preceding year in Germany due to less prof- nised in Germany. it-recognised housing units for consumers and amounted to SEK 144 million, which is an that no projects for investors were profit-rec- increase of SEK 6 million compared with the Finland ognised during the period. During the corre- corresponding period of 2015, when selling Operating profit in Finland for the period sponding period in the preceding year, one and administrative costs amounted to SEK 1 January – 31 March 2016 amounted to investor transaction was profit-recognised in 138 million. The increase was primarily SEK –13 million, which is a decrease of Germany. attributable to costs for preparation to list SEK 22 million compared with the corre- Bonava on Nasdaq Stockholm. Bonava’s other sponding period of 2015, when operating Finland expenses for the period 1 January – 31 March profit amounted to SEK 9 million. In Finland Net sales in Finland for the period 1 January – 2016 amounted to SEK 0 million, which is a the profit decreased since no housing units to 31 March 2016 amounted to SEK 88 million, decrease of SEK 1 million compared with the investors were profit-recognised. which is a decrease of SEK 116 million corresponding period of 2015, when other compared with the corresponding period of expenses amounted to SEK 1 million. 2015, when net sales amounted to SEK 204 million. Net sales decreased in Finland, since

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 65 Operational and financial review

Denmark/Norway Cash flow amounted to 588. During the period Operating profit in Denmark/Norway for the Cash flow from the operating activities for the 1 January – 31 March 2015, the number of period 1 January – 31 March 2016 amounted period 1 January – 31 March 2016 amounted production starts of housing units to investors to SEK 6 million, which is an increase of to SEK –527 million, which is a decrease of amounted to 127. SEK 16 million compared with the corre- SEK 82 million compared with the corresponding period of 2015, when operating sponding period of 2015, when the cash flow Full-year 2015 compared with full-year profit amounted to SEK –10 million. The amounted to SEK –445 million. The improved 2014 improved profit is primarily attributable to result generated an increased cash flow from Net sales increased margins from housing units to the operating activities before changes in Net sales for 2015 amounted to SEK 13,070 consumers. working capital. The cash flow from the invest- million, which is an increase of SEK 2,844 ing activities for the period 1 January – million compared with 2014, when net sales St. Petersburg 31 March 2016 amounted to SEK –49 million, amounted to SEK 10,226 million. Bonava’s Operating profit in St. Petersburg for the which is a decrease of SEK 40 million net sales increased due to a higher volume of period 1 January – 31 March 2016 amounted compared with the corresponding period of housing units being profit-recognised, at the to SEK 25 million, which is an increase of SEK 2015, when the cash flow amounted to SEK same time as the average price per unit for 8 million compared with the corresponding –9 million. The cash flow from the financing transferred and profit-recognised housing period of 2015, when operating profit activities for the period 1 January – 31 March units for consumers were higher. Furthermore, amounted to SEK 17 million. In St. Petersburg 2016 generated an inflow of SEK 628 million, a German property portfolio was sold, which the profit was improved as a result of more compared with an inflow of SEK 526 million in had a positive impact of SEK 480 million on transferred housing units to consumers. the corresponding period of 2015. High sales net sales. The impact from the sale is recog- rate in ongoing production resulted in several nised under Others and eliminations. Fluctua- Financial income and expenses production starts which lead to increased tions in exchange rates had a negative impact Bonava’s financial income for the period investments in ongoing housing projects. of SEK 66 million on net sales for 2015 1 January – 31 March 2016 amounted to Investments in properties held for future compared with the corresponding period of SEK 3 million, which means that the financial development also increased, while cash flow 2014. income was unchanged compared with the from sales remained unchanged. Other corresponding period of 2015. Bonava’s Sweden changes in working capital was affected financial expenses for the period 1 January – Net sales in Sweden amounted to SEK 4,639 positive due to increased interest-free financ- 31 March 2016 decreased by SEK 15 million, million, an increase of SEK 2,230 million ing of both land investments and housing to SEK 73 million, compared with SEK 88 compared with 2014, when net sales projects in production. million in the corresponding period in 2015. amounted to SEK 2,409 million. In Sweden, net sales increased from both consumers and Bonava’s net financial items for the period Capital employed investors. 1 January – 31 March 2016 improved and As per 31 March 2016, capital employed amounted to SEK –71 million, compared with amounted to SEK 10,236 million, which is a Germany SEK –85 million in the corresponding period decrease of SEK 905 million compared with Net sales in Germany amounted to SEK 3,471 of 2015. The improvement was driven by a the corresponding period of 2015, when million, an increase of SEK 301 million lower net debt. capital employed amounted to SEK 11,141 compared with 2014, when net sales million. The assets increased primarily with amounted to SEK 3,170 million. In Germany, Profit before and after tax for the period regard to ongoing housing projects. The net sales increased from both consumers and Bonava’s profit before tax for the period capital employed decreased due to an investors. increase of interest-free financing of ongoing 1 January – 31 March 2016 increased with Finland housing projects and land. SEK 124 million to SEK 113 million, Net sales in Finland amounted to SEK 1,791 compared with SEK –11 million in the corre- million, a decrease of SEK 25 million Housing sales and production starts sponding period of 2015. Bonava’s profit after compared with 2014, when net sales During the period 1 January – 31 March 2016, tax for the period 1 January – 31 March 2016 amounted to SEK 1,816 million. The decline a total of 788 housing units were sold to amounted to SEK 88 million, compared with was primarily due to lower sales to investors. SEK –9 million in the corresponding period of consumers, which is a decrease of 227 2015. housing units compared with the correspond- Denmark/Norway ing period of 2015, when a total of 1,015 Net sales in Denmark/Norway amounted to Tax housing units were sold to consumers. During SEK 1,760 million, a decrease of SEK 65 The calculated tax for the period 1 January – the period 1 January – 31 March 2016 no million compared with 2014, when net sales 31 March 2016 amounted to SEK –26 million, housing unit was sold to investors, which is a amounted to SEK 1,825 million. The decline which is an increased tax expense compared decrease of 127 housing units compared with was primarily due to lower land divestments. the corresponding period of 2015, when a with the corresponding period of 2015, when St. Petersburg total of 127 housing units were sold to inves- the calculated tax amounted to an income of Net sales in St. Petersburg amounted to tors. During the period 1 January – 31 March SEK 2 million. The tax during the first quarter SEK 773 million, an increase of SEK 30 2016, the number of production starts for of 2016 corresponds to an effective tax rate of million compared with 2014, when net sales housing units to consumers amounted to 747, 23 per cent, compared with 21 per cent in the amounted to SEK 743 million. The increase which is an increase of 159 housing units corresponding period of 2015. was primarily due to higher sales to consum- compared with the corresponding period of ers. 2015, when the total number of production starts of housing units to consumers

66 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Operational and financial review

Production costs utable to increased net sales from consumers Tax Bonava’s production costs in 2015 amounted with improved margins, as well as increased The calculated tax for 2015 amounted to to SEK 11,016 million, which is an increase of profit from land divestments. SEK 235 million, an increased tax expense SEK 2,299 million compared with 2014 when compared with 2014 when the calculated tax Germany production costs amounted to SEK 8,717 amounted to an expense of SEK 81 million. Operating profit in Germany in 2015 million. The increase was primarily attribut The tax for 2015 corresponds with an effec- amounted to SEK 422 million, which corre- able to higher volumes in Sweden and tive tax rate of 23 per cent, compared with 15 sponds to an increase of SEK 94 million Germany, while Finland and Denmark/Norway per cent in 2014. The increase was primarily compared with 2014 when operating profit reported a decrease. attributable to improved profit before tax and amounted to SEK 328 million. Germany tax effects on loss carryforwards. During 2014 reported higher earnings due to higher net Gross profit parts of losses carried forward, which had not sales and improved margins. Bonava’s gross profit in 2015 amounted to previously been recognised, could be used. SEK 2,054 million, an increase of SEK 546 Finland million compared with 2014 when gross profit Operating profit in Finland in 2015 amounted Cash flow amounted to SEK 1,508 million. The increase to SEK 187 million, which corresponds to an Cash flow from the operating activities in was primarily attributable to increased net increase of SEK 41 million compared with 2015 amounted to SEK 1,450 million, which sales from consumers with improved margins, 2014 when operating profit amounted to SEK is an increase of SEK 1,544 million compared as well as increased earnings from land divest- 146 million. The improved operating profit with 2014 when cash flow amounted to SEK ments in Sweden. Earnings also improved in was attributable to deals with investors with –94 million. A higher profit and a large Finland, attributable to agreements with improved margins. number of housing units completed and trans- investors. Germany reported higher gross ferred to customers improved the cash flow. Denmark/Norway profit due to higher net sales and improved Cash flow from the investing activities in 2015 Operating profit in Denmark/Norway in 2015 margins. Gross profit for St. Petersburg was amounted to SEK –13 million, which is an amounted to SEK –3 million, which corre- higher, thanks to increased net sales and improvement by SEK 40 million compared sponds to a decrease of SEK 87 million improved margins from consumers. with 2014 when the cash flow amounted to compared with 2014 when operating profit SEK –53 million. Cash flow from the investing amounted to SEK 84 million. Denmark/ activities in 2015 generated an outflow of Other expenses Norway reported a negative result due to SEK 1,301 million, compared with an inflow of Bonava’s selling and administrative costs in reductions in transferred volumes, impairment SEK 231 million in 2014. The change was 2015 amounted to SEK 640 million, which is losses and higher restructuring costs in attributable to higher amortisation of interest- an increase of SEK 76 million compared with Norway as well as higher costs for disputes in bearing liabilities. 2014 when selling and administrative costs Denmark. amounted to SEK 564 million. The increase was primarily attributable to costs of SEK 57 St. Petersburg Capital employed million for creating an independent Bonava. Operating profit in St. Petersburg in 2015 In 2014, capital employed amounted to Other expenses in 2015 amounted to SEK 36 amounted to SEK 197 million, which corre- SEK 10,688 million. In 2015, capital million, which is an increase of SEK 34 million sponds to an increase of SEK 55 million employed declined by SEK 877 million to compared with 2014 when other expenses compared with 2014 when operating profit SEK 9,811 million. The change was primarily amounted to SEK 2 million. The increase was amounted to SEK 142 million. Operating attributable to a decrease in properties held attributable to impairment losses on a receiv profit for St. Petersburg was higher thanks to for future investments and an increase in able from a joint venture. increased net sales and improved margins interest-free financing of housing projects. from consumers. Operating profit Housing sales and production starts Bonava’s operating profit in 2015 amounted Financial income and expenses During 2015, a total of 4,542 housing units to SEK 1,377 million, which is an increase of Bonava’s financial income in 2015 decreased were sold to consumers, which is a decrease SEK 435 million compared with 2014 when by SEK 7 million to SEK 11 million, compared of 33 housing units compared with 2014 operating profit amounted to SEK 942 million. with SEK 18 million in 2014. Bonava’s finan- when a total of 4,575 housing units were sold The sale of a German property portfolio had a cial expenses in 2015 declined by SEK 51 to consumers. In addition, a total of 1,773 positive impact of SEK 51 million on operating million to SEK 356 million, compared with housing units were sold to investors in 2015, profit, which is recognised under Other and SEK 407 million in 2014. Bonava’s net finan- which is an increase of 301 housing units eliminations. Costs to create an independent cial items for 2015 improved and amounted to compared with 2014 when a total of 1,472 Bonava amounted to SEK 57 million for 2015, SEK –345 million compared with SEK –389 housing units were sold to investors. In 2015, of which SEK 12 million pertained to costs for million in 2014. The improvement was driven the number of production starts of housing the head office. Fluctuations in exchange by lower average net debt. units to consumers amounted to 4,452, which rates had a negative impact of SEK 33 million is a decrease of 51 housing units compared on earnings for 2015 compared with the Profit before and after tax for the year with 2014, when the total number of produc- corresponding period for 2014. Bonava’s profit before tax in 2015 increased tion starts of housing units to consumers by SEK 480 million to SEK 1,033 million, amounted to 4,503. In 2015, the number of Sweden compared with SEK 553 million in 2014. production starts of housing units to investors Operating profit in Sweden in 2015 amounted Bonava’s profit after tax for 2015 amounted to amounted to 1,904, which is an increase of to SEK 706 million, which corresponds to an SEK 798 million, compared with SEK 472 459 housing units compared with 2014, when increase of SEK 375 million compared with million in 2014. The improvement was the total number of production starts of 2014 when operating profit amounted to SEK primarily attributable to an improved housing units to investors amounted to 1,445. 331 million. The increase was primarily attrib- operating profit.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 67 Operational and financial review

Full-year 2014 compared with full-year Gross profit Denmark/Norway 2013 Bonava’s gross profit in 2014 amounted to Operating profit in Denmark/Norway in 2014 Net sales SEK 1,508 million, which is an increase of amounted to SEK 84 million, which corre- Net sales for 2014 amounted to SEK 10,226 SEK 343 million compared with 2013 when sponds to an increase of SEK 109 million million, which is an increase of SEK 1,030 gross profit amounted to SEK 1,165 million. compared with 2013 when the operating million compared with 2013 when net sales The increase was attributable to more trans- profit amounted to SEK –25 million. The amounted to SEK 9,196 million. The increase ferred and profit-recognised housing units to increase was primarily attributable to more was primarily attributable to more transferred consumers, a higher margin to the investor housing units handed over to consumers. market and land divestments. and profit-recognised housing units to St. Petersburg consumers in Germany, Denmark/Norway and Operating profit in St. Petersburg in 2014 Other expenses St. Petersburg. Fluctuations in exchange rates amounted to SEK 142 million, which corre- had a positive impact of SEK 204 million on Bonava’s selling and administrative costs in sponds to an increase of SEK 49 million net sales for 2014 compared with 2013. 2014 amounted to SEK 564 million, which is compared with 2013 when operating profit an increase of SEK 23 million compared with Sweden amounted to SEK 93 million. The increase was 2013 when selling and administrative costs Net sales in Sweden amounted to SEK 2,409 primarily due to more housing units handed amounted to SEK 541 million. The increase million, a decrease of SEK 609 million over to consumers. was primarily attributable to support functions compared with 2013 when net sales for managing the increased project volumes. amounted to SEK 3,018 million. The decline Financial income and expenses Bonava’s other expenses in 2014 amounted to was primarily attributable to lower average Bonava’s financial income in 2014 decreased SEK 2 million, an increase of SEK 2 million prices for housing units handed over to by SEK 4 million to SEK 18 million, compared compared with 2013 when other expenses consumers. with SEK 22 million in 2013. Bonava’s finan- amounted to SEK 0 million. cial expenses in 2014 increased by SEK 29 Germany million to SEK 407 million, compared with Operating profit Net sales in Germany amounted to SEK 3,170 SEK 378 million in 2013. Bonava’s net finan- million, an increase of SEK 662 million Bonava’s operating profit in 2014 amounted cial items for 2014 declined and amounted to compared with 2013 when net sales to SEK 942 million, which is an increase of SEK –389 million compared with SEK –356 amounted to SEK 2,508 million. The increase SEK 319 million compared with 2013 when million in 2013. The decline was primarily was primarily attributable to more transferred operating profit amounted to SEK 623 million. attributable to higher loans for the operation and profit-recognised housing units to The increase was attributable to more trans- in St. Petersburg, where the interest rate was consumers compared with the preceding year. ferred and profit-recognised housing units to high in relation to other segments. consumers, a higher margin to the investor Finland market and land divestments. Fluctuations in Net sales in Finland amounted to SEK 1,816 Profit before and after tax for the year exchange rates had a positive impact of SEK 9 million, a decrease of SEK 507 million Bonava’s profit before tax increased by SEK million on the result for 2014 compared with compared with 2013 when net sales 286 million to SEK 553 million in 2014, the corresponding period in 2013. amounted to SEK 2,323 million. The decline compared with SEK 267 million in 2013. was due to lower sales to both consumers and Sweden Bonava’s profit after tax for 2014 amounted to investors. Operating profit in Sweden in 2014 amounted SEK 472 million, compared with SEK 211 to SEK 331 million, which corresponds to an million in 2013. Denmark/Norway increase of SEK 102 million compared with Net sales in Denmark/Norway amounted to 2013 when operating profit amounted to SEK Tax SEK 1,825 million, an increase of SEK 1,149 229 million. The increase was primarily due to The calculated tax for 2014 amounted to SEK million compared with 2013 when net sales higher land divestments and lower administra- 81 million, an increased tax expense amounted to SEK 676 million. The increase tion costs. compared with 2013 when the calculated tax was primarily attributable to more transferred amounted to an expense of SEK 56 million. and profit-recognised housing units to Germany The increase was primarily attributable to an consumers compared with the preceding year. Operating profit in Germany in 2014 improved profit before tax. The tax for 2014 amounted to SEK 328 million, which corre- St. Petersburg corresponds with an effective tax rate of 15 sponds to an increase of SEK 99 million Net sales in St. Petersburg amounted to SEK per cent, compared with 21 per cent in 2013. compared with 2013 when operating profit 743 million, an increase of SEK 367 million During 2014 parts of losses carried forward, amounted to SEK 229 million. The increase compared with 2013 when net sales which had not previously been recognised, was primarily attributable to more housing amounted to SEK 376 million. The increase could be used. units handed over to consumers. was primarily attributable to more transferred and profit-recognised housing units to Finland Cash flow consumers compared with the preceding year. Operating profit in Finland in 2014 amounted Cash flow from operating activities in 2014 to SEK 146 million, which corresponds to a amounted to SEK –94 million, which is a Production costs decrease of SEK 35 million compared with decrease of SEK 422 million compared with Bonava’s production costs in 2014 amounted 2013 when operating profit amounted to 2013 when the cash flow amounted to SEK to SEK 8,717 million, which is an increase of SEK 181 million. The decline was mainly due 328 million. The degradation of the cash flow SEK 685 million compared with 2013 when to fewer housing units handed over to was primarily attributable to increased invest- production costs amounted to SEK 8,032 consumers and lower margins. ments in housing projects. Cash flow from million. The increase was primarily attributa- investing activities in 2014 amounted to SEK ble to housing projects for consumers. –53 million, which is a decrease of SEK 19 million compared with 2013 when cash flow

68 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Operational and financial review

amounted to SEK –34 million. Cash flow from Working capital Significant changes since the financing activities in 2014 generated an Bonava believes that the current working 31 March 2016 inflow of SEK 231 million, compared with an capital is sufficient to meet the Company’s In April 2016, Bonava entered into a credit outflow of SEK –308 million in 2013. The needs over the next 12-month period. As per agreement for a multicurrency revolving credit change was primarily attributable to increased 31 March 2016, the Company had access to facility, intended to be used for Bonava’s interest-bearing loans. SEK 640 million in cash and cash equivalents. general corporate needs and as working capi- A description of Bonava’s financing agree- tal within the Group. The credit has a maturity Capital employed ment including the dates on which outstand- of five years and amounts to SEK 2.7 billion, In 2013, capital employed amounted to ing loans fall due for payment, is provided provided that Bonava is listed during 2016 SEK 9,978 million. In 2014, capital employed under the section “Capital structure and other and that customary terms and conditions are increased with SEK 710 million to SEK 10,688 financial information”' under the heading fulfilled. After 31 March 2016, Bonava has million. The increase was primarily attribut “Financing”. also entered into a credit agreement for term able to a larger number of housing units in loans of EUR 30 million with a maturity of four production. Tangible assets years and EUR 30 million with a maturity of The recognised net value of Bonava’s tangible five years. Housing sales and production starts assets amounted to SEK 117 million as per On 22 April 2016, the annual general meeting In 2014, a total of 4,575 housing units were 31 March 2016 and comprised of owner- resolved to inter alia make a bonus issue and sold to consumers, which is an increase of occupied properties of SEK 50 million, and to re-elect all directors of the board of direc- 828 housing units compared with 2013 when machinery and equipment of SEK 67 million. tors and the Company’s auditor. On 17 May a total of 3,747 housing units were sold to 2016, the Listing Committee of Nasdaq consumers. In addition, a total of 1,472 Trends Stockholm resolved to approve that Bonava’s housing units were sold to investors in 2014, The housing market and the conditions for shares are admitted for trading on Nasdaq which is an increase of 343 housing units housing development are affected by inter alia Stockholm, provided that customary terms compared with 2013 when a total of 1,129 a number of macroeconomic factors. and conditions are fulfilled. housing units were sold to investors. In 2014, Expected GDP growth, higher employment the number of production starts of housing and disposable income, relatively low interest On 17 May 2016 NCC announced that Bonava units to consumers amounted to 4,503, which rates as well as demographic factors such as is selling a total of 352 newly developed is an increase of 788 housing units compared population growth and continued urbanisa- Nordic Swan ecolabelled rental units in with 2013 when the total number of production are examples of such factors that the Linköping and Karlstad to the housing tion starts of housing units for consumers Group considers jointly create opportunities company Willhem. The sale, which corre- amounted to 3,715. In 2014, the number of for a continued strong housing market. sponds to a value of SEK 595 million, will be production starts of housing units for inves- profit recognised during the first quarter of During the first quarter 2016, the demand for tors amounted to 1,445, which is an increase 2017 and the fourth quarter of 2018. Bonava housing units remained overall favourable in of 350 housing units compared with 2013, is responsible for leasing and provides the markets where Bonava operates. In when the total number of production starts of customary rental guarantees to the buyer. housing units for investors amounted to Sweden and Germany the demand remained 1,095. favourable with increasing prices. In Finland, On 18 May 2016, the extra general meeting of the prices increased in the beginning of the Bonava resolved to make another bonus issue. Capital resources year, following a long period of weaker demand. Demand for small, affordable hous- Investments ing units remained strong both in the investor Acquisition of land is part of Bonava’s ongoing market and among consumers in Finland. operations and occurs continuously. Bonava Demand for housing units was favourable in does not consider land acquisitions as invest- Copenhagen and the prices increased in other ments since the land is used in Bonava’s parts of the country. Demand in Norway ongoing operations and is intended to be used improved and prices increased during the first as part of Bonava’s housing development. quarter 2016. In St. Petersburg, the market Bonava’s investments during the periods slowed down as the purchase-decisions take 2013, 2014, 2015 and 1 January – 31 March longer time. 2016 have been limited since Bonava, for example, has not made any significant purchase of machinery or equipment (please see the section “Historical financial information – Note 9 Tangible fixed assets”).

Neither has Bonava any ongoing investments or made any commitments for future investments deemed to be significant.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 69 Capital structure and other financial information

SHAREHOLDERS' EQUITY AND LIABILITIES The tables below presents Bonava’s consolidated capital structure as per 31 March 2016. The tables in this section should be read together with the information in the section “Operational and financial review” and the financial statements, with associated notes, which are found in the section “Historical financial information”. For information about the Company’s share capital and shares, please see the section “Shares, share capital and ownership structure”.

Capitalisation Net debt The table below presents Bonava’s capital structure as per 31 March The table below presents Bonava’s net debt as per 31 March 2016. 2016.

Amounts in SEK million 31 March 2016 Amounts in SEK million 31 March 2016 (A.) Cash 0 Total current interest-bearing liabilities 3,334 (B.) Cash and cash equivalents 601 In relation to sureties1) 1,153 (C.) Trading securities 39 In relation to collateral1) 561 (D.) Liquidity (A) + (B) + (C) 640 Without guarantees/sureties or other collateral 1,620 (E.) Other interest-bearing receivables1) 230 Total long-term interest-bearing liabilities 2,089 (F.) Current bank loans 3,332 In relation to sureties1) 1,897 (G.) Current share of long-term liabilities 0 In relation to collateral1) 61 (H.) Other current financial liabilities 2 Without guarantees/sureties or other collateral 130 (I.) Current interest-bearing liabilities (F) + (G) + (H) 3,334 Total current and long-term interest-bearing liabilities 5,422 (J.) Net current indebtedness (I) – (E) – (D) 2,464 Total shareholders' equity 4,814 Share capital 1 (K.) Long-term bank loans 1,987 Other contributed equity 5,003 (L.) Bonds issued 0 Other reserves 19 (M.) Other long-term loans 102 Earnings brought forward –267 (N.) Long-term interest-bearing liabilities 2,089 Non-controlling interests 58 (K) + (L) + (M)

1) In Sweden, Bonava grants surety to creditors on behalf of tenant-owner associations, while (O.) Net debt (J) + (N) 4,552 housing companies in Finland that are consolidated by Bonava use property mortgages as collateral for loans raised. 1) Other interest-bearing receivables include current interest-bearing receivables of SEK 96 million and long-term interest-bearing receivables of SEK 134 million.

FINANCING of EUR 60 million) and the credit facility with maturity of five years and amounts to SEK 2.7 Bonava’s largest sources of liquidity are, and Danske Bank A/S, Skandinaviska Enskilda billion, provided that Bonava is listed during are expected to remain, cash flow from operat- Banken AB (publ), Svenska Handelsbanken 2016 and that customary terms and condi- ing activities and borrowing from external AB (publ) and Swedbank AB (publ), which will tions are met. lenders. As per 31 March 2016, Bonava had be utilised to an amount of approximately SEK The terms and conditions of the credit agree- interest-bearing liabilities of SEK 5,422 0.9 billion (of the total of SEK 2.7 billion). The ment are linked to two financial commitments million, of which SEK 1,624 million consisted financing agreements mentioned above are pertaining to equity/assets ratio (so called of inter-company debts to NCC which do not described below. “equity to total asset ratio”) and interest-cover- correspond to Bonava’s claim on NCC in age ratio (in the credit agreement defined as accordance with previous shareholder contri- Financing agreements “ratio of EBITDA to Net Financial Expenses”). bution from NCC to Bonava. In connection to Bonava has entered into a significant credit the shares of Bonava being admitted for trad- agreement with Danske Bank, Skandinaviska According to the loan agreement, the interest ing on Nasdaq Stockholm, Bonava will obtain Enskilda Banken (publ), Svenska Handels- rate levels are based on the relevant IBORs (if external loans of approximately SEK 1.4 banken AB (publ) and Swedbank AB (publ) IBOR is negative, the base rate is assumed to billion in order to refinance Bonava’s debt to regarding a multicurrency revolving credit be zero) with a margin mark-up linked to a NCC. The loan will be obtained in accordance facility intended to be used to cover Bonava’s margin ladder based on the financial commit- with the credit agreement with AB Svensk general corporate requirements and as work- ment for the equity to total assets ratio. Exportkredit which will be fully utilised (total ing capital in the Group. The credit has a

70 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Capital structure and other financial information

The credit agreement contains customary ratio. The interest rates are based on EURI- The annual interest on the credit facilities conditions, guarantees and undertakings that, BOR 3M plus a margin mark-up and the loans described under the heading “Financing subject to certain exceptions, include restric- are to be repaid in full at the end of the loans’ agreements” and on liabilities pertaining to tions on acquisitions and divestments, lending maturities. Swedish tenant-owner associations and and guarantees, the raising of financial debt Finnish housing companies amounts to just and granting of collateral. Indebtedness pertaining to tenant-owner over 2 per cent based on current relevant associations and housing companies IBOR levels. The credit agreement contains inter alia obli- Bonava applies IFRIC 15, Agreement for the gations for the borrower to repay all credit Construction of Real Estate. Application of FINANCIAL RISK MANAGEMENT facilities if, after the listing, any party (or a IFRIC 15 entails that Swedish tenant-owner Please see the section “Historical financial group acting jointly) (with the exception of associations and Finnish housing companies information – Note 23 Financial instruments Nordstjernan AB) takes control of more than are to be recognised in the consolidated and financial risk management” for informa- 30 per cent of the shares and/or voting rights balance sheet up to such time as projects are tion about risk management and exchange in the borrower or should the borrower be completed and transferred to the end rate and sensitivity analyses. delisted (known as “change of control”). customer. This primarily increases inter- There are also customary provisions regarding est-bearing liabilities but also affect Bonava’s Other information defaults. Such provision exists under the other key ratios. In Sweden, Bonava grants At the present time, Bonava is not aware of credit agreement if a default in Bonava or any surety to creditors on behalf of tenant-owner any issues regarding public, economic, fiscal, other of Bonava’s subsidiaries (so called “cross associations, while housing companies in monetary or other political actions which, default”) credit facility exceeds a certain Finland that are consolidated by Bonava use direct or indirect, could have a significant threshold amount. property mortgages as collateral for loans effect on the Company’s operations, apart raised. For a period of one year after the defin- from what is stated in the section “Risk Bonava has also entered into a material credit itive acquisition cost of a building belonging factors”. agreement with AB Svensk Exportkredit to a tenant-owner association has been deter- regarding fixed-term loans of EUR 30 million mined, a deposit guarantee functions as over a maturity of four years and of EUR 30 collateral for deposits and concession fees million over a maturity of five years. The that have been paid to tenant-owner associa- agreement concerning the fixed-term loans tions formed by the Group. As per 31 March contains customary terms and conditions in 2016, total mortgages taken out by Bonava by accordance with AB Swedish Exportkredit’s property mortgages amounted to approxi- standard but also reflects the terms and condi- mately SEK 1,211 million. As per the same tions in the above mentioned credit agree- date, liabilities pertaining to Swedish tenant- ments and includes similar restrictions regard- owner associations and Finnish housing ing divestments and acquisitions, including companies amounted to approximately financial undertakings in respect of the SEK 3,672 million. equity/assets ratio and the interest-coverage

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 71

Board of directors, senior executives and auditor

BOARD OF DIRECTORS The board of directors of Bonava currently they are considered to be independent in At least two of the directors elected by the comprises six directors elected by the general relation to the Company and its management, general meeting shall also be independent in meeting. All directors elected by the general as well as in relation to the Company’s major relation to the Company and its management, meeting are elected for the period until the shareholders.1) In accordance with the as well as to the major shareholders of the end of the annual general meeting that will be Swedish Corporate Governance Code, more Company. These rules do not apply to any held in 2017. The table below presents the than half of the directors elected by the employee representatives. directors, their position, when they were first general meeting shall be independent in elected to the board of directors and whether relation to the Company and its management.

Independent in relation Independent to the Company and in relation to major Name Position Director since its management shareholders

Carl Engström Chairman of the board 23 Dec 2015 Yes No Viveca Ax:son Johnson Director 23 Dec 2015 No No Åsa Hedenberg Director 23 Dec 2015 Yes Yes Samir Kamal Director 23 Dec 2015 Yes Yes Magnus Rosén Director 23 Dec 2015 Yes Yes 2) Anna Wallenberg Director 23 Dec 2015 Yes Yes

On the following pages, more detailed information is provided about the directors, including education, experience, ongoing and completed assignments, and holdings in the Company.

1) The stated dependent and independent relationships pertain to relationships as per the date of the Prospectus. 2) Magnus Rosén will, in accordance with press releases from Ramirent Oyj dated 23 February 2016 and 23 March 2016, retire as President and CEO of Ramirent Oyj on 8 August 2016 and has thus been adjudged to be independent in relation to major shareholders regardless of the fact that Nordstjernan AB is the largest shareholder of Ramirent Oyj.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 73 Board of directors, senior executives and auditor

BOARD OF DIRECTORS

Carl Engström, b. 1977 Viveca Ax:son Johnson, b. 1963 Åsa Hedenberg, b. 1961 Samir Kamal, b. 1965 Magnus Rosén, b. 1962 Anna Wallenberg, b. 1975 Chairman of the board of directors Director Director Director Director Director Education and professional experience: Education and professional experience: Education and professional experience: Education and professional experience: Education and professional experience: Education and professional experience: MSc in Economics, Stockholm School of Social science secondary education (three MSc in Engineering, Royal Institute of MSc in Economics, Stockholm School of MSc in Economics, Linköping University, and MSc in Economics, Uppsala University. Economics, and MSc in Engineering, Royal years). A total of 20 years of experience from Technology in Stockholm. 20 credits in Economics. Bachelor in Engineering, Imperial MBA, Stockholm School of Economics. Operations and Sales Director for Kronans Institute of Technology in Stockholm. Work as various positions within the Nordstjernan economics, Stockholm University. Experience College London. Experience as partner at Experience as CEO and Director of BE Group Apotek. Experience as Assortment and Senior Investment Manager and is a part of Group. Experience from serving as Director of as CEO of Huge Fastigheter AB (2010– EQT Partners (2008–2014), partner at IK Sverige AB (publ) (2008–2009), SVP at Purchasing Manager Kronans Apotek (2011– the senior management of Nordstjernan AB. inter alia Skanditek Industriförvaltning AB 2014), CEO of Uppsalahem AB (2001– Investment Partners (2004–2006), Project Skandinavien Cramo Oyj (2006–2008) and 2015), Business Area Manager at Oriola AB Experience from working as a Management (publ) (2004–2009), Lundin Petroleum AB 2010), Market Area Manager Stockholm Manager at Carnegie Investment Bank CEO of Cramo Skandinavien (1998–2006). (2012) and Strategy Consultant at Accenture Consultant at Bain & Co (2004–2008). (publ) (2005–2007) and Invik & Co AB (publ) Kommersiellt Innerstad AP Fastigheter (1995–2004) and Analyst at SEB (1992– Other ongoing assignments: President and (2000–2011). Other ongoing assignments: Chairman of the (2003–2004). (1999–2001), Head of Utvecklingsfastigheter 1994). CEO of Ramirent Oyj,1) and directorship and Other ongoing assignments: Director of board of Salcomp Oyj and Salcomp Holding Other ongoing assignments: Chairman of the SEB Fastighetsförvaltning (1999), Head of Other ongoing assignments: Director of CEO assignments in other companies within Occasion Euro Events AB. Administration at Stockholm Hantverks- och AB. Director of Svea Montessoriförskola, board of Nordstjernan AB and directorship in TitanX Holding AB, and directorship in other the Ramirent Group. Director of Llentab AB. Previous assignments (completed in the past economic association. other companies within the Nordstjernan Industribyggen (1997–1999) and Head of companies within the TitanX group. Director Director of the European Rental Association. Property, among other positions, at Skanska five years): Director of Bostadsrätts Previous assignments (completed in the past group, including Director of NCC AB (publ). of GG Holding AB, and directorship in other Previous assignments (completed in the past föreningen Högberget (2011–2015). Chairman of the board of Nordstjernan AB (publ) (1986–1997). companies within the GG Holding group. five years): Director of Llentab AB (2013– five years): Chairman of the board of Shareholding in the Company: 0 shares2) 2014). Holding AB and directorship in other Other ongoing assignments: CEO of Special Director of Save-by-Solar Sweden AB, Rimas Gothenburg kärra 74:1 AB (2012–2013) and companies within the Nordstjernan Holding fastigheter Sverige AB, and directorship in Holding AB and Stiftelsen Industrifonden. Shareholding in the Company: 0 shares1) directorship in other companies within the group. Chairman of the Axel and Margaret other companies within the Specialfas Owner of Hejsan BV (100 per cent) and Ramirent Group. Ax:son Johnson Foundation for Public tigheter Sverige group. Member of the Langdal BV (100 per cent). Benefit and Director of the Axel and Margaret Council, Stockholm Chamber of Commerce. Shareholding in the Company: 1,000 shares Previous assignments (completed in the past of series B2) Ax:son Johnson Foundation. Holder of the Convening of the election committee at the five years): Director of Norrwin AB (2009– sole proprietorship Viveca Ax:son Johnson. Swedish Construction Clients. 2012), and directorship in other companies Previous assignments (completed in the past Previous assignments (completed in the past within the Norwin Group. Director of Lika Bra five years): Director of Antti Ahlström five years): Director of Sh bygg, sten och Design AB (2004–2014). Director of Perilliset Oy (2011–2016). Director and CEO anläggning AB (2013–2014), the employer’s Frostbite Holding AB (2011–2014), and of Förvaltnings Aktiebolaget Elfbacken association for the property industry, Fastigo directorship in other companies within the (1998–2016). Director of Wicanders Förvalt (2005–2014), H.B.V. Försäljnings AB (2005– Frostbite Group. nings AB (1998–2013) and Välinge Flooring 2014), Sweden Green Building Council Shareholding in the Company: 0 shares2) Technology AB (2006–2011), and various (2012–2014), BYGGHERRARNA Sverige AB directorship in companies within the Nord (2008–2012). CEO of Huge Fastigheter AB stjernan Group and the Nordstjernan Holding (2010–2014). Group. Shareholding in the Company: 0 shares1) Shareholding in the Company: 25,000 shares of series A and 123,000 shares of series B1)

1) The holding refer to holdings in Bonava under the assumption that the distribution of the Company’s shares occurred on a one-for-one basis with the record date of the distribution from NCC being as per 30 April 2016. The holdings include affiliated holdings. The directors respective shareholding in the Company as per the first day of trading of the shares in Bonava, which is estimated to be 9 June 2016, may differ from the shareholding reported above.

74 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Board of directors, senior executives and auditor

BOARD OF DIRECTORS

1) Magnus Rosén will, however, resign as President and CEO of Ramirent Oyj no later than 8 August 2016, in accordance with press releases from Ramirent Oyj dated on 23 February 2016 and 23 March 2016. 2) The holding refer to holdings in Bonava under the assumption that the distribution of the Company’s shares occurred on a one-for-one basis with the record date of the distribution from NCC being as per 30 April 2016. The holdings include affiliated holdings. The directors respective shareholding in the Company as per the first day of trading of the shares in Bonava, which is estimated to be 9 June 2016, may differ from the shareholding reported above.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 75 Board of directors, senior executives and auditor

SENIOR EXECUTIVES Bonava’s senior management comprises of centralised group functions. The table below presents the senior executives, their positions and when they became members of the senior management.

Name Position Member of the senior management since1)

Joachim Hallengren President and CEO November 2012 Ann-Sofi Danielsson CFO and Head of IR including IT January 2016 Magnus Ljung SVP Strategy & Business Development August 2014 Sofia Rudbeck SVP Marketing & Sales October 2014 Jenny Lilja Lagercrantz SVP HR May 2012 Joakim Månsson General Counsel February 2009 Fredrik Hemborg BU President Sweden May 2015 Olle Boback BU President Germany January 2009 Juuso Hietanen BU President Finland and St. Petersburg January 2011 Torben Modvig BU President Denmark/Norway August 2009

1) Senior management refers to the part of the management of NCC’s business area NCC Housing that subsequently formed Bonava.

More detailed information is presented below about the senior executives, including education, experience, ongoing and completed assignments, and holdings in the Company.

76 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Board of directors, senior executives and auditor

Joachim Hallengren, b. 1964 Ann-Sofi Danielsson, b. 1959 Magnus Ljung, b. 1975 President and CEO CFO and Head of IR including IT SVP Strategy & Business Development Education and professional experience: Education and professional experience: Education and professional experience: MSc in Civil Engineering, Chalmers University MSc in Economics, Uppsala University. MSc in Engineering, the Institute of Tech of Technology. A total of 21 years of experi Experience as CFO, Financial Director and nology at Linköping University. Experience ence from various positions within the NCC member of the senior management of NCC from senior positions within strategy and group, including as Business Area Manager of AB (publ) (2003–2015). business development at Eniro (2012–2013) NCC Property Development and member of Other ongoing assignments: Director of and EDSA (2008–2010), Management the senior management of NCC AB (publ) Pandox AB, Bulten AB and Bulten Holding Consultant at Bain & Co (2007–2008), Booz (2009–2015). AB. & Co (2005–2007) and Accenture (2001– 2004). Other ongoing assignments: Director and Previous assignments (completed in the past owner (100 per cent) of Aktiebolaget five years): CFO of NCC AB (publ) (2003– Other ongoing assignments: Director and Phlebas, and directorship in other companies 2015), and directorship within the NCC owner (100 per cent) of Avidor AB. within the Phlebas group. Chairman of the group. Director of RNB Retail and Brands AB Previous assignments (completed in the past board of Offside Press AB. Chairman of (publ) (2013–2016). five years): Head of Business Development Centre for Management of the built environ Shareholding in the Company: 8,049 shares (interim) for Eniro Sverige AB (2012–2013). ment (CMB), Chalmers. of series B1) Partner in Axholmen AB (2010–2012). Previous assignments (completed in the past Shareholding in the Company: 0 shares1) five years): Directorship within the NCC group. Director of Aktiebolaget Emilsborg, and directorship in other companies within the Emilsborg group. Shareholding in the Company: 9,229 shares of series B1)

Sofia Rudbeck, b. 1974 Jenny Lilja Lagercrantz, b. 1972 Joakim Månsson, b. 1967 SVP Marketing & Sales SVP HR General Counsel Education and professional experience: Education and professional experience: Education and professional experience: MSc in Chemical Engineering, Lund Tech BSc Philosophy, Stockholm University. Master of Laws (LL.M.), Lund University. nical University. Experience as Product and Experience from senior positions within Zertifikat über Europäische Studien, Brand Director at Fagerhult Retail (2012– human resources at Skandia (2008–2012) Universität Saarbrücken. National economy 1, 2014) and responsible for PMO and strategy and Nasdaq OMX (1999–2008). Lund University. Working as General Counsel at Fagerhult (2011–2012), various positions Other ongoing assignments: None. at NCC Housing since 2009. Under the within innovation, brand and marketing at period of 2009–2014 he has also experience Previous assignments (completed in the past Electrolux (2005–2011) as well as Manage as General Counsel at NCC Property Devel five years): None. ment Consultant at McKinsey & Company opment. Further experience as General (1998–2004). Shareholding in the Company: 466 shares of Counsel at Skanska Sverige AB (2004–2009) series B1) Other ongoing assignments: None. and Associate at Gernandt & Danielsson law firm (1997–2004). Previous assignments (completed in the past five years): Director of Fagerhult Retail AB Other ongoing assignments: None. (2012–2014), and directorship in other Previous assignments (completed in the past companies within the Fagerhult group. five years): Directorship within the NCC Shareholding in the Company: 0 shares1) group. Shareholding in the Company: 1,114 shares of series B1)

1) The holding refer to holdings in Bonava under the assumption that the distribution of the Company’s shares occurred on a one-for-one basis with the record date of the distribution from NCC being as per 30 April 2016 and with regard to shares that subsequently been allotted to the executives in accordance with NCC’s share-based incentive programme on May 3 2016. The holdings include affiliated holdings. The senior executives respective shareholding in the Company as per the first day of trading of the shares in Bonava, which is estimated to be 9 June 2016, may differ from the shareholding reported above.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 77 Board of directors, senior executives and auditor

Fredrik Hemborg, b. 1972 Olle Boback, b. 1953 Juuso Hietanen, b. 1977 BU President Sweden BU President Germany BU President Finland and Education and professional experience: Education and professional experience: St. Petersburg MSc in Civil Engineering, Royal Institute of Engineer, Rudbeckskolan in Örebro. Respon Education and professional experience: Technology in Stockholm. A total of 19 years sible for the operations of NCC Housing in MSc in Civil Engineering, Helsinki University of experience from various positions within Germany since the start in 1994. of Technology (Aalto University). Real Estate the NCC group, inter alia, as Regional Other ongoing assignments: Director in Finance, Hanken School of Economics, Manager in NCC Property Development. Bauindustrieverband Berlin-Brandenburg e.V. Finland. Studies in financing, Budapest Other ongoing assignments: Chairman of the Limited partner in GBS GmbH & Co. Vierte University of Technology, Hungary. A total board of Ursviks Exploaterings AB. Director of Scwalbenweg in Berlin-Schönfeld KG. Limited experience of 12 years from various positions Tipton Fastighet I AB, Tipton Fastighet II AB, partner in GBS GmbH & Co. Zweite Scwal within NCC in Finland, St. Petersburg and Tipton Fastighet III AB, Elinegård Holding kv benweg in Berlin-Schönfeld KG. Limited Estonia/Latvia. Responsible for NCC Hous DGHK AB, Elinegård Holding kv SS2TQ AB, partner in GBS GmbH & Co. Dritte Scwal ing’s operations in St. Petersburg since 2008 Elinegård Holding kv UXY södra VY2 AB and benweg in Berlin-Schönfeld KG. and is also, since 2015, responsible for NCC Housing in Finland. Elinegård Holding kv WZM1M2Ö AB. Previous assignments (completed in the past Previous assignments (completed in the past five years): None. Other ongoing assignments: None. five years): CEO and directorship within the Shareholding in the Company: 8,528 shares Previous assignments (completed in the past NCC group. Director of NCC Kaninen Projekt of series B1) five years): CEO of Egirei Kft (2007–2016). AB (2015–2016), NCC Kaninen Holding AB Shareholding in the Company: 0 shares1) (2015–2016), Tipton Brown AB (2014– 2015) and Beckomberga Förvaltnings AB (2014–2015), as well as directorship in other companies within the Beckomberga group. Director of Tipton Petter AB (2014). Chairman of the board of Boende Hyra tre AB (2014) and Boende Ingun AB (2014). Shareholding in the Company: 1,589 shares of series B1)

Torben Modvig, b. 1973 BU President Denmark/Norway Education and professional experience: MSc in Civil Engineering, Technical University of Denmark and BA and EMBA, Copenhagen Business School. A total of nine years as responsible for NCC’s housing development in Denmark. Experience as Director of the construction company Davidsen Partnere A/S (2005–2007) and as Nordic Engineering Manager at Shell (2003–2005). Other ongoing assignments: None. Previous assignments (completed in the past five years): Director of Tuborg Interessantsel skab (2009–2015) and Moelven (2012– 2015) and Obton Solenergi Westerhausen KS (2015–2016). Shareholding in the Company: 150 shares of series B1)

1) The holding refer to holdings in Bonava under the assumption that the distribution of the Company’s shares occurred on a one-for-one basis with the record date of the distribution from NCC being as per 30 April 2016 and with regard to shares that subsequently been allotted to the executives in accordance with NCC’s share-based incentive programme on 3 May 2016. The holdings include affiliated holdings. The directors respective shareholding in the Company as per the first day of trading of the shares in Bonava, which is estimated to be 9 June 2016, may differ from the shareholding reported above.

78 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Board of directors, senior executives and auditor

OTHER INFORMATION ABOUT THE Chairman of the board, Carl Engström, is AUDITOR BOARD OF DIRECTORS AND SENIOR employed as Senior Investment Manager by The annual general meeting of the Company EXECUTIVES Nordstjernan AB and is a member of the resolved on 22 April 2016 to elect Ernst & All directors and all of the senior executives company’s senior management. Director Young AB as auditor until the end of the next can be contacted through the Company’s Viveca Ax:son Johnson is Chairman of the annual general meeting. The authorised postal address. In the view of the Company, board and holds shares in Nordstjernan AB. public accountant Mikael Ikonen is auditor in the board of directors of Bonava fulfils the Situations could arise were Carl Engström and charge. Mikael Ikonen was born in 1963 and is requirements of the Swedish Corporate Viveca Ax:son Johnson may represent inter- a member of FAR (professional institute for Governance Code with respect to independ- ests that diverge from those of the Company authorised public accountants). ence in relation to the Company, senior since these individuals are also active in the Ernst & Young AB (or the auditor employed by management and the Company’s major share- main shareholder, Nordstjernan AB. Nordstjer- Ernst & Young AB) has been the Group’s holders. In the past five years, none of the nan AB’s interests could diverge from or auditor since the 2015 annual general meet- directors of Bonava’s board or members of compete with the interests of the Company or ing and thus has been responsible for the senior management has been charged in the interests of other shareholders. Director audit, which comprised the historical financial fraud-related cases, been a director or Viveca Ax:son Johnson is also director of information for the 2015 financial year. For member of management of a company that NCC. Situations could arise when Viveca the remaining part of the period encompassed has been declared bankrupt, been liquidated Ax:son Johnson may represent interests that by the historical financial information, mean- (due to insolvency) or involved in any other diverge from those of the Company since ing 2013 and 2014, PricewaterhouseCoopers bankruptcy administration, been the object of NCC, at least during a transitional period after AB (or the auditor employed by Pricewater- charges and/or sanctions by authorities the separation of NCC and Bonava, could houseCoopers AB) served as the the Group’s (including authorised professional societies) constitute the Group’s largest supplier. auditor. The auditor in charge of the at the or been imposed with trading prohibition. Director Åsa Hedenberg is CEO of Special fastigheter Sverige AB. Situations could arise time dormant Bonava was Patrik Adolfson, There are no family ties between the individu- when Åsa Hedenberg may represent interests who was born in 1973 and is a member of als of Bonava’s board of directors or the that diverge from those of the Company, for FAR. The auditor in charge for the NCC group members of the senior management. Other example, if Bonava were to assume a position for these years was Håkan Malmström, who than what is stated in the following paragraph, as a potential acquirer in a sale process in was born in 1965 and is a member of FAR. there are no potential conflicts of interest in which Specialfastigheter Sverige AB is PricewaterhouseCoopers AB, with Håkan relation to any of the directors of the board or divesting land. Malmström as auditor in charge, has issued an members of the senior management, meaning audit report for the combined financial state- their private interests cannot be considered to No specific agreements have been made with ments for 2013 and 2014, which have been be in conflict with the Company’s interests. major shareholders, customers, suppliers or included in this Prospectus. Directors of the board and members of the other parties that have resulted in any director senior management own shares in Bonava, as of the board or member of the senior manage- stated in the presentation of the directors and ment having been elected to the board of the senior executives. No company in the directors or employed in the senior manage- Group has entered into any agreement that ment. Nordstjernan AB, by virtue of its owner- would entitle directors or senior executives to ship in the Company following the distribu- post-employment benefits, except for certain tion, has exercised certain influence over the members of the senior management who are appointment of directors in the Company. entitled to severance pay during a period of Remuneration to the directors of the board nine to 18 months and, under certain condi- and members of the senior management is tions, remuneration for competition restric- presented in the section “Corporate govern- tions that may be paid after employment is ance”. There are no restrictions prohibiting the terminated (60–100 per cent of basic salary). board of directors or the senior management from selling their shares in Bonava.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 79 Corporate governance

Prior to the listing on Nasdaq Stockholm, the intention to participate in the general meeting of the board will therefore contact the three corporate governance of Bonava, as a subsi not later than the date indicated in the notice largest shareholders in terms of voting rights diary of NCC, has been based on Swedish law of the general meeting, are entitled to partici- in the Company (as per the final banking day and internal rules and guidelines. Once the pate in the general meeting and vote for the during the month in which the Company’s shares in the Company are listed on Nasdaq number of shares held in the Company. In shares are admitted for trading on Nasdaq Stockholm, Bonava will also comply with addition to notifying the Company of their Stockholm), whereby each of these will be Nasdaq Stockholm’s Rule Book for Issuers and intention to participate in the general meet- entitled to appoint one member of the nomi- apply the Swedish Corporate Governance ing, shareholders whose shares are registered nation committee. According to the instruc- Code (“the Code”). The Code is based on the in the name of a nominee, through a bank or tions, the task of the nomination committee is “comply or explain” principle. This means that other nominee, must request that their shares to present proposals to the 2017 annual a company that applies the Code may choose be temporarily registered in their own names general meeting concerning the number of to deviate from certain rules, but must then in the share register maintained by Euroclear directors elected by the general meeting and describe its alternative solution and explain in order to be entitled to participate in the the composition of the board of directors, the reason for the deviation in its annual general meeting. Shareholders should inform including the Chairman of the board, as well corporate governance report. Bonava will their nominees well in advance of the record as proposals concerning the remuneration of apply the Code from the date on which the date. Shareholders may participate in general directors divided among the chairman and Company’s shares are listed on Nasdaq meetings in person or by proxy and may be other directors, plus any remuneration for Stockholm. Any deviations from the Code will accompanied by a maximum of two advisors. committee work. The nomination committee be reported in the Company’s corporate is also responsible for presenting proposals governance report, which will be prepared for Shareholder initiatives concerning the chairman of the annual the first time for the 2016 financial year. The Shareholders who wish to have a matter general meeting and the election of auditors Company does not intend to deviate from any brought before a general meeting must and their remuneration, as well as proposals of the Code’s rules. submit a request in writing to the board of concerning any new instructions for the directors. Normally, the request must reach appointment of the nomination committee GENERAL MEETING of the board of directors not later than seven and its work. All shareholders are entitled to shareholders weeks prior to the general meeting. submit proposals concerning directors to the Pursuant to the Swedish Companies Act nomination committee. The nomination (2005:551) (“the Companies Act”), the NOMINATION COMMITTEE committee’s proposal concerning the appoint- general meeting is the Company’s highest Companies that apply the Code must have a ment of directors and remuneration to direc- decision-making body, at which the share nomination committee. According to the tors and auditors is presented in the notice to holders exercise their voting rights. In addition Code, the nomination committee is to the annual general meeting. A statement from to the annual general meeting, extra general comprise at least three members and a major- the nomination committee on the composition meetings may be convened. The Company’s ity of these must be independent in relation to of the board of directors is to be published on annual general meetings are held in Solna or the Company and the senior management. In the Company’s website in connection to when Stockholm, Sweden, every calendar year terms of the number of votes, at least one of the notice to attend the annual general meet- before the end of June. Extra general meet- the nomination committee’s members must ing is issued. ings can be convened when required. Pursu- be independent in relation to the Company’s ant to the Company’s articles of association, largest shareholder or group of shareholders BOARD OF DIRECTORS notices convening general meetings are to be that cooperate in respect of the administration Work of the board of directors issued through an announcement in the Swed- of the Company. The annual general meeting The duties of the board of directors are ish Official Gazette (Sw. Post- Inrikes Tidnin- of Bonava on 22 April 2016 adopted instruc- regulated by the Swedish Companies Act, the gar) and on the Company’s website. Confirma- tions for the nomination committee’s compo- Company’s articles of association and the tion that the notice has been issued shall be sition and work within the Company. Accord- Code, the latter of which will apply to the published in Dagens Nyheter and Svenska ing to these, the nomination committee is to Company as of the date of the listing of the Dagbladet. Once Bonava has been listed, a comprise at least three members appointed by Company’s shares on Nasdaq Stockholm. In press release in Swedish and English contain- the annual general meeting. The chairman of addition, the work of the board of directors is ing the notice in its entirety will be issued prior the board is to be a co-opted member of the regulated by the rules of procedure that are to every general meeting. nomination committee, but without voting adopted annually. The rules of procedure right. Special instructions were adopted, regulate the distribution of work and responsi- Right to participate in general meetings however, for appointing members in connec- bilities between the directors, the Chairman of All shareholders who are registered in the tion with the nomination committee’s initial the board and the CEO, and contains proce- share register maintained by Euroclear five establishment after the date on which the dures for financial reporting for the CEO. The weekdays (including Saturdays) prior to the Company’s shares have been admitted for board of directors also adopts instructions for general meeting (known as the record date), trading on Nasdaq Stockholm. Prior to the the board’s committees, unless their duties and who have notified the Company of their 2017 annual general meeting, the Chairman are to be performed by the board of directors

80 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Corporate governance

as a whole. The board of director’s tasks directors shall also keep itself informed of the The current directors’ remuneration were include adopting strategies, business plans, audit of the annual accounts and the consoli- adopted at the annual general meeting on budgets, interim reports, annual accounts, dated financial statements and to review and 22 April 2016. Annual remuneration are proposals for resolution at the annual general monitor the auditor’s independence and payable in an amount of SEK 500,000 to the meeting (inter alia appropriation of profit) and objectivity, paying particular attention to Chairman of the board and SEK 260,000 to adopting policy documents and guidelines. whether the auditor provides services to the each of the other directors. The board of directors shall also monitor the Company in addition to its audit. Correspond- financial development, ensuring the quality of ingly, the board of director’s work in respect of CEO AND SENIOR MANAGEMENT financial reporting and the internal control the duties of the remuneration committee The CEO is appointed by the board of direc- and evaluate the operations based on the complies with an instruction adopted annually tors and is responsible for the daily manage- established objectives and guidelines adopted by the board of directors. The duties include ment of the Company and the Group’s activi- by the board of directors. Moreover, the board preparing issues regarding remuneration and ties in accordance with the board of director’s of directors is to appoint and continuously other terms of employment for the CEO and instructions and regulations. The distribution evaluate the Company’s CEO and, if neces- other senior executives. This work also of responsibilities between the CEO and the sary, dismiss the CEO. Finally, the board of includes preparing the board of director’s board of directors is defined in the board of directors decides on major investments and proposals on guidelines regarding, inter alia, director’s rules of procedure, and the terms of changes in the Group’s organisation and the relationship between fixed and any varia- reference for the CEO prepared by the board operations. The Chairman of the board is to ble remuneration as well as the connection of directors. The CEO serves as the head of monitor Bonava’s performance, in close between performance and remuneration, the the senior management and makes decisions collaboration with the CEO, and prepare principal terms of any bonus and incentive in consultation with other members of the board meetings. The Chairman of the board is programmes and the principal terms of senior management. The CEO is also respon- also responsible for ensuring that the direc- non-monetary benefits, pensions, termination sible for the preparation of reports and tors evaluate their work each year and contin- and severance pay. However, share-based compiling information for board meetings and uously receive the information necessary to incentive programmes for the senior manage- for presenting such material at board meet- perform their work effectively. ment are determined by the general meeting. ings. For further information about the CEO The remuneration committee’s duties also and other senior executives, see the section According to the articles of association, include monitoring and evaluating the “Board of directors, senior executives and Bonava’s board of directors is to comprise outcomes of variable remuneration auditors”. three to eight directors. The directors are to programmes, and Bonava’s compliance with be elected annually at the Company’s annual the remuneration guidelines adopted by the general meeting for the period until the end of Guidelines for remuneration of senior general meeting. the next annual general meeting. According to executives the Code, a majority of the directors elected In accordance with the Swedish Companies Remuneration of the board of directors by the meeting are to be independent in rela- Act, the board of directors of a listed company Historically, no remuneration have been paid tion to the Company and the Company’s is to present proposals for resolution regard- to directors for work on Bonava’s board of management. At least two of these are also to ing guidelines for remuneration of the CEO directors. As a group company in the NCC be independent in relation to the Company’s and other senior executives at the annual group, the Company had a board of directors major shareholders. general meeting. Such guidelines, as resolved that was only composed of employees of by the annual general meeting, are only appli- Bonava and directorship in the NCC group The board’s committees cable to new employment contracts between were a part of these individuals’ ordinary the Company and the respective senior execu- The board of directors currently has no duties. At an extra general meeting on 21 tive, which means that there may be employ- committees, instead, the board of directors as December 2015, the board of directors at that ment contracts that do not fully comply with a whole performs the duties of the audit time was replaced by the current directors. At the currently applicable guidelines. In accord- committee according to the Swedish Compa- the same general meeting, it was resolved that ance with the guidelines adopted at the nies Act and the duties of the remuneration the board of directors would receive remuner- Company’s annual general meeting on committee according to the Code. The board ation with a total of SEK 1,800,000, of which 22 April 2016, remuneration of the senior of director’s work in respect of the duties of SEK 500,000 shall be paid to the Chairman of management is to include fixed salary, the audit committee complies with an annu- the board and SEK 260,000 to each of the variable remuneration, long-term perfor- ally established instruction by the board of other directors. It was particularly noted that mance-based incentive programmes, pension directors with the aim of monitoring the the level of remuneration represented annual and other benefits. The short-term variable Company’s financial reporting and the effi- remuneration that should be paid in propor- remuneration payable to the CEO is capped at ciency of the Company’s internal control and tion to the length of the term of office. 50 per cent of the fixed salary and the amount risk management activities. The board of

Remuneration paid by the Group to the CEO and senior executives Estimated remuneration for 20161) SEK Fixed salary2) Variable salary3) Pension cost4)

CEO 4,200,000 1,050,000 1,260,000 Other members of senior management (9) 18,300,000 3,350,000 4,640,000 Total 22,500,000 4,400,000 5,900,000

1) On account of, inter alia, salary levels for the CEO and senior executives are adjusted in connection to the admission to trading on Nasdaq Stockholm, salaries are presented as if the shares of the Company has been admitted to trading on Nasdaq Stockholm as per 1 January 2016. 2) The fixed salary is recognised excluding holiday compensation. 3) Variable salary is estimated at 50 per cent of the respective individual’s maximum outcome. 4) All pension information refer to defined-contribution pensions.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 81 Corporate governance

payable to other members of the senior INTERNAL CONTROL Control activities management is capped at between 30 and 50 The board of director’s responsibility for the The design of control activities is of particular per cent of fixed salary. The Company strives internal control is governed by the Swedish importance in the Company’s work to manage for a successive transition to defined contribu- Companies Act, the Swedish Annual Accounts risks and safeguard the internal control. tion solutions, which means that the Company Act (1995:1554), and the Code. Information Control activities are linked to the Company’s pays premiums which constitute a certain per regarding Bonava’s systems for internal business processes and the particular unit cent of the salary of the employee. Members control and risk management, and the board ensures that control activities are imple- of the senior management who are active in of director’s measures to follow up that the mented in line with established requirements. Sweden and who are not covered by pension internal control is working, are to be included benefits under collective bargaining agree- in the Company’s corporate governance Information and communication ments (ITP plan) are to receive a maximum of report each year. Guidelines, instructions and manuals of signif- 30 per cent of the annual fixed salary as an icance to the financial reporting are communi- The description of Bonava’s internal control annual defined-contribution pension provi- cated to relevant employees via the Group’s process is based on the COSO framework, sion. Members of the senior management who intranet. The board of directors regularly which has been published by the Committee are active in another country are covered by receives financial reports regarding the of Sponsoring Organisations of the Treadway pension solutions in accordance with local Group’s financial position and earnings trend. Commission. The process has been designed practices. Within the Company, meetings are held at to ensure an adequate risk management management level, and then at the level found Members of the senior management whose including reliable financial reporting in appropriate by the particular unit. A communi- employment is terminated by the Company’s accordance with IFRS, applicable laws and cation policy adopted by the board of direc- initiative are normally entitled to a nine-month regulations as well as other requirements, tors is in place with respect to external disclo- period of notice combined with severance pay which are to be applied by companies listed sure of information, which has been formu- corresponding to nine months of fixed salary. on Nasdaq Stockholm. This work involves the lated with the aim of ensuring that the During the said nine months, the Company is board of directors, the senior management Company complies with the requirements for to be entitled to make deductions from the and other personnel. severance pay for remuneration received from disseminating correct information to the market. a new employer. The CEO and CFO are Control environment instead subject to a period of notice of The board of directors has adopted governing Follow-up 12 months combined with severance pay documents and instructions aimed to regulate The board of directors assesses the informa- corresponding to 12 months of fixed salary. the roles and allocation of responsibility tion provided by the senior management on a The period of notice is normally six months if between the CEO and the board of directors. continuous basis. Bonava’s financial position, employment is terminated on the initiative of The board of directors monitors and ensures investments and its ongoing operations are the employee. The guidelines may be disap- the quality of the internal control in accord- discussed at each board meeting. The board plied by the board of directors if special ance with the board of director’s rules of of directors is also responsible for monitoring conditions applies in an individual case. procedure and the related instructions for the the internal control. This work includes, inter audit committee. The board of directors has alia, ensuring that measures are taken to AUDITOR also adopted a number of fundamental guide- address any weaknesses, as well as following The external audit of the accounts of Bonava lines that govern risk management efforts and up proposals to address issues highlighted in and most of the subsidiaries, including the internal control activities. These guidelines connection with the external audit. management by the board of directors and include risk assessment, demands for control senior management, is conducted in accord- activities to manage the most material risks Each year, the Company carries out a self-as- ance with generally accepted auditing stand- and an annual plan for internal control work, sessment of the work of risk management and ards in Sweden. The external auditor attends as well as self-assessment and reporting. internal control activities. The process entails at least three board meetings a year. On one of Responsibilities, powers and governing docu- that a self-assessment of the effectiveness of these occasions, the auditor is to discuss the ments, together with laws and regulations, control activities is implemented each year for audit with the directors without the presence comprise the control environment within every operational business process in the vari- of the CEO or any other member of the senior Bonava. All employees have a responsibility ous reporting units. The Group’s CFO is management. The auditor is appointed by the for ensuring compliance with adopted govern- responsible for the self-assessment. The annual general meeting to serve until the end ing documents. board of directors receives information of the next annual general meeting. At the regarding important conclusions drawn from annual general meeting on 22 April 2016, the Risk assessment this annual assessment process, and regard- registered public accounting firm Ernst & The senior management is to annually ing any measures to be taken relating to the Young AB was elected to serve as auditor until conduct an overall risk analysis in which Company’s internal control environment. the end of the next annual general meeting. macroeconomic, strategic, operational and Authorised public accountant Mikael Ikonen financial risks, as well as compliance risks, are Internal audit was appointed auditor in charge. identified. The risks are evaluated on the basis Following an evaluation, the board of direc- In addition to the audit assignment, Ernst & of the estimated probability and impact, as tors has not found any reason, to date, to Young AB was engaged for additional services well as the efficiency of measures that are in establish an internal audit function. Instead, in 2015, primarily tax and accounting matters, place to manage the risk. The outcome of the the Company’s Group-wide controller function but also listing-related matters. Such services risk analysis is presented to the board of direc- has been adapted to also manage the internal were always, and solely, provided to the extent tors and to the CFO. control activities. The matter of establishing a consistent with the regulations in the Swedish separate internal audit function will be consid- Auditors Act and FAR’s rules of professional ered by the board of directors every year. conduct pertaining to the objectivity and independence of auditors.

82 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Shares, share capital and ownership structure

SHARE INFORMATION Voting rights kind, to only issue shares of series A or shares According to the Company’s articles of associ- At general meetings, each share of series A of series B, all holders of shares, regardless of ation, share capital shall amount to not less entitles to ten votes and each share of series B whether they hold shares of series A or shares than SEK 400,000,000 and not more than entitles to one vote. of series B, shall have preferential rights to the SEK 1,600,000,000, divided among no fewer subscription of new shares in relation to the than 100,000,000 and no more than Conversion of shares of series A to shares number of shares already held. The articles of 400,000,000 shares. As per the publication of series B association do not restrict the Company’s date of the Prospectus, the Company’s share Holders of shares of series A are, according to ability to issue new shares, warrants or capital amounted to SEK 433,743,288, repre- the Company’s article of association, entitled convertibles deviating from the shareholders’ sented by 108,435,822 shares of which to request that shares of series A be converted preferential rights as provided for in the 14,522,665 were shares of series A and to shares of series B. Requests for conversion, Swedish Companies Act (see also the section 93,913,157 were shares of series B. The which must be made in writing and specify the “Articles of association”). quotient value per share is SEK 4.0. The number of shares to be converted, are to be number of shares in Bonava and the allocation submitted to the Company. According to the Rights to dividends and surplus in the between shares of series A and shares of articles of association, the Company shall event of liquidation series B corresponds to the number of NCC without delay notify the conversion to the All shares in the Company entitle to equal shares entitled to dividends. The Company’s Companies Registration Office for registra- rights to dividends and the Company’s assets shares have been issued in accordance with tion. Conversions become effective when the and any surpluses in the event of liquidation. Swedish law, have been fully paid up and, in shares have been registered and a note of this Any decision on distribution of profit is to be connection with the listing of the shares on has been entered in the record register. made by the general meeting. All shareholders Nasdaq Stockholm, will be freely transferable. who are registered in the share register main- The Company’s shares are denominated in Preferential rights to new shares tained by Euroclear on the record date deter- SEK. The shares are not the subject of offers If the Company decides, through a new issue mined by the general meeting are entitled to submitted due to mandatory bids, redemption of shares that is not effected against payment receive dividends. The dividends are normally rights or redeem obligations. No public takeo- in the form of a non-cash issue, to issue shares paid to shareholders through Euroclear as a ver offer has been made for the shares in of series A and shares of series B, holders of cash amount per share, but may also comprise Bonava during the current or preceding finan- shares of series A and shares of series B shall forms other than cash dividends (distribution cial year. have preferential rights to the subscription of in kind). If a shareholder cannot be paid new shares of the same type in relation to the through Euroclear, the shareholder’s claim on Certain rights associated with the shares number of shares already held (primary prefer- the Company in respect of the dividend The rights associated with the shares issued ential right). Shares that are not subscribed amount remains and is subject to a statutory by the Company, including rights under the for on the basis of primary preferential right limitation period of ten years. Should the Company’s articles of association, may only be will be offered to all shareholders for subscrip- claim become barred by the limitation period, amended in accordance with the procedures tion (subsidiary preferential right). If the the dividend amount is forfeited to the set out in the Swedish Companies Act. company decides, through a new issue of Company. Subject to the existence of possible shares that is not effected against payment in restrictions imposed by banks or clearing

The Company’s share capital development Change in Change in Share capital Number of shares Date Event share capital, SEK number of shares after the change, SEK after the change

8 April 2013 New formation N/A N/A 50,000 1,000 3 February 2016 New share issue + 450,000 + 9,000 500,000 10,000 3 February 2016 Merger of shares (10,000:1) N/A –9,999 500,000 1 3 February 2016 Division of shares (1:108,435,822) N/A + 108,435,821 500,000 108,435,822 26 April 2016 Bonus issue + 409,500,000 N/A 410,000,000 108,435,822 18 May 2016 Bonus issue + 23,743,288 N/A 433,743,288 108,435,822

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 83 Shares, share capital and ownership structure

systems in the relevant jurisdiction, there are Euroclear Sweden AB, Box 191, SE-101 23 OWNERSHIP STRUCTURE no restrictions on entitlement to dividends for Stockholm, Sweden. No share certificates are The table below describes Bonava’s owner- shareholders resident outside Sweden. issued for the Company’s shares. The ISIN- ship structure assuming that the shares of However, shareholders with limited tax liability code for the Company’s shares of series A is Bonava have been distributed subject to the in Sweden are normally subject to Swedish SE0008091573 and the ISIN-code for the condition of one for one, with 30 April 2016 withholding tax. See also the section “Certain shares of series B is SE0008091581. as the record date for the distribution, based tax considerations in Sweden”. on information from Euroclear. The ownership Convertibles, warrants and other structure will initially be the same as for NCC. Central Securities Depository share-based instruments Information of the shareholdings of directors The shares of the Company are registered in a There are no outstanding warrants, conver and senior executives under the same CSD register in accordance with the Swedish tibles or other share-based financial instru- assumption as above is shown under the head- Financial Instruments Accounts Act ments issued by the Company. ings “Board of directors” and “Senior execu- (1998:1479). The register is maintained by tives” in the section “Board of directors, senior executives and auditors” of this Prospectus.

Number of shares Percentage share Shares of Shares of Total number Shareholders series A series B of shares Capital Votes

Nordstjernan AB 19,700,000 2,041,804 21,741,804 20.1 62.2 AMF & Fonder 6,875,993 6,875,993 6.3 2.1 SEB Fonder 5,768,748 5,768,748 5.3 1.8 Handelsbanken Fonder 2,914,702 2,914,702 2.7 0.9 Swedbank Robur Fonder 128,119 2,112,497 2,240,616 2.1 1.1 Lannebo Fonder 2,063,500 2,063,500 1.9 0.6 Norges Bank 4,239 2,041,261 2,045,500 1.9 0.7 Länsförsäkringar Fonder 1,302,778 1,302,778 1.2 0.4 Avanza Pension 54,281 1,070,954 1,125,235 1.0 0.5 Unionen 1,096,899 1,096,899 1.0 0.3 Other shareholders 3,636,026 57,624,021 61,260,047 56.5 29.4 Total 23,522,665 84,913,157 108,435,822 100.0 100.0

SHAREHOLDER AGREEMENTS SHARE-BASED INCENTIVE To the best of the board of director’s know programmes ledge, no shareholder agreements or other There are no share-related incentive arrangements exist between the Company’s programmes in Bonava. However, the board of shareholders pertaining to joint control over directors intends in the future to propose that the Company. Nor is the board of directors a share-related incentive programme targeted aware of any agreements or similar under at certain employees of the Group be subject takings that could lead to changes in control to resolution at a forthcoming general over the Company. meeting.

84 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ)

Articles of association

Reg. no. 556928-0380 conversion has been recorded in the CSD § 9 Board of directors and company register. auditors § 1 Company name In addition to persons who, pursuant to The company name is Bonava AB (publ). § 8 Preferential rights Swedish law, may be appointed by other In the event that the company decides to issue procedures, the board of directors shall § 2 Registered office new Series A or B shares through an issue that consist of three to eight members. The registered head office of the company is not to be paid for with non-cash considera- The company shall have not less than one and shall be in Solna, Stockholm County. tion, owners of Series A and Series B shares not more than three auditors, with not more shall have preferential rights to the subscrip- than three deputy auditors, or a registered § 3 Object of the company tion of new shares of the same type in relation auditing company. The object of the company’s operations is to – to the number of shares already held (primary preferential right). Shares not subscribed for directly or indirectly through subsidiaries – § 10 Convening of shareholders’ meeting develop and invest in residential properties on the basis of primary preferential rights shall Notice of a general meeting of shareholders and engage in real estate trading operations, be offered for subscription to all shareholders shall be published in the Swedish Official and to conduct other operations related to the (subsidiary preferential right). If the number of Gazette and on the company’s website. It shall above. The company shall also undertake shares offered in this manner is insufficient for be announced in Dagens Nyheter and Svenska certain activities common to the group as a subscription based on subsidiary preferential Dagbladet that notice of a general meeting whole, such as the provision of staff services. rights, the shares shall be distributed in relation to the number of shares already held and, has been made. § 4 Share capital to the extent that this is not possible, by lottery. § 11 Notification of attendance and right The share capital shall be not less than to attend the general meeting SEK 400,000,000 and not more than In the event that the company decides that Shareholders wishing to participate in a SEK 1,600,000,000. new shares of either Series A or Series B alone general meeting of shareholders must be shall be issued through an issue that is not to registered in the transcript of the entire share- § 5 Amount of shares be paid for with non-cash consideration, all holders’ register prevailing five weekdays prior The number of shares shall be not less than shareholders, irrespective of whether they to the meeting and must notify the company 100,000,000 and not more than own Series A or Series B shares, shall have of their intention to attend the meeting not 400,000,000. preferential rights to the subscription of new later than the day stipulated in the notice shares in relation to the number of shares convening the general meeting. This day may § 6 Series of shares already held. not be a Sunday, any other public holiday, a The shares shall be issued in two series, The stipulation above shall not constitute any Saturday, Midsummer’s Eve, Christmas Eve or designated Series A and Series B. restriction on the possibility to make a deci- New Year’s Eve and may not be earlier than Series A shares may be issued in a maximum sion regarding a cash issue or an offset issue five weekdays prior to the meeting. number of 80,000,000 and Series B shares in which the preferential rights of share may be issued in a maximum number corre- holders are disapplied. § 12 General meetings of shareholders sponding to 100 percent of the shares A general meeting of shareholders shall be The stipulation above concerning the prefer- outstanding in the company. held in the city where the board of directors ential rights of shareholders shall also be has its registered office or in Stockholm. Each Series A share entitles the holder to ten applied in a corresponding manner to the votes and each Series B share to one vote. issue of warrants and convertible debentures. The annual general meeting shall be held annually within six months after the end of the In the event of an increase in share capital § 7 Conversion financial year through a bonus issue, where new shares shall An owner of a Series A share shall be entitled be issued, new shares of each series shall be The following business shall be considered at to request that a Series A share is converted issued in relation to the number of shares of the annual general meeting into a Series B share. The request regarding the same series already held. In such cases, 1. Election of chairman of the meeting. conversion, which shall be in writing and state shares of a specific series carry entitlement to 2. Drawing up and approval of the voting list. the number of shares that shall be converted, new shares of the same series. The aforemen- 3. Approval of the agenda. shall be made to the company. The company tioned stipulation shall not constitute any 4. Election of two persons to check the shall, without delay, report the conversion to restriction on the possibility, following the minutes. the Companies Registration Office. The requisite amendment in the articles of associ- 5. Determination of whether the meeting was conversion shall become effective as soon as ation, to issue shares of a new series through a duly convened. registration has been completed and the bonus issue.

86 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Articles of association

6. Presentation of the annual report and § 13 Financial year auditors’ report and, where applicable, the The company’s financial year shall be consolidated annual report and the 1 January to 31 December. auditors’ report for the group. 7. Resolutions § 14 CSD clause a) regarding the adoption of the income The company’s shares shall be registered in a statement and balance sheet and the central securities depository register pursuant consolidated income statement and to the Swedish Financial Instruments balance sheet; Accounts Act (1998:1479). b) regarding allocation of profit or loss in accordance with the adopted balance The shareholder or nominee who on the sheet; and record date is registered in the share register c) regarding the discharge from liability of and noted in a central securities depository the board members and, where appli- register pursuant to Chapter 4 of the Financial cable, of the managing director. Instruments Accounts Act (1998:1479) or any 8. Determination of the number of members person who is registered in a central securities of the board of directors and the number depository account pursuant to Chapter 4, of auditors and, where applicable, deputy Section 18, paragraph 1, items 6–8 of the auditors. mentioned Act, shall be deemed to be author- 9. Determination of the remuneration ised to exercise the rights set out in Chapter 4, payable to the directors elected by the Section 39 of the Swedish Companies Act general meeting and, where applicable, to (2005:551). the auditors. 10. Election of the board and an auditing company or auditors and possible deputy auditors. 11. Election of members to the nomination committee and chairman of the nomination committee. 12. Determination of guidelines for salary and other remuneration to management. 13. Other matters which rest upon the meeting according to the Swedish Companies Act or the company’s articles ______of association.

Adopted at the annual general meeting on 22 April 2016.

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 87 Legal issues and supplementary information

CORPORATE INFORMATION ny’s form of association is a public limited conduct any other operations apart from AND LEGAL STRUCTURE liability company and its operations are owning and managing shares in subsidiaries, The Company’s registered name (and its trade regulated by the Swedish Companies Act as well as undertaking certain activities name) is Bonava AB (publ). Bonava’s corpo- (2005:551). The object of the Company’s common to the Group. The current articles of rate identification number is 556928-0380 operations is to – directly or indirectly through association were adopted on 22 April 2016. and the registered office of the board of subsidiaries – develop and invest in residential Bonava is parent company of the Group directors is in Solna, Stockholm County. The properties, engage in real estate trading oper- which, in addition to the Company, comprised Company was founded on 8 April 2013 and ations and to conduct other operations related a total of approximately 150 directly and registered with the Swedish Companies Regis- to the above. The Company shall also under- indirectly owned companies in eight countries tration Office on 8 April 2013. The founder take certain activities common to the Group as per 31 December 2015. The table below was Svenska Standardbolag AB (Box 292, as a whole, such as the provision of staff shows information about Bonava’s most SE-791 27 Falun). The current business name services (see § 3 in the articles of association). important Group companies. was registered on 26 April 2016. The Compa- The parent company does not currently

Subsidiaries Country Percentage of shares and votes, %

Bonava Sverige AB Sweden 100 Bonava Deutschland GmbH Germany 901) NCC Property Development B.V. Germany 100 Bonava Suomi Oy Finland 100 Bonava Danmark A/S Denmark 100 Bonava Norge AS Norway 100 OOO Bonava St Petersburg Russia 100 Bonava Eesti OÜ Estonia 100 Bonava Latvija SIA Latvia 100

1) NCC owns the remaining 10 per cent. For more information, please see the heading “The separation from NCC” below. the separation FROM NCC The Separation Agreement As a part of the separation process, the Group Background The Separation Agreement generally has changed the legal structure of the German Prior to the distribution of Bonava, the Group’s regulates (i) transfers to Bonava of assets and Housing Operations. A result of this restruc- operations have been separated from the liabilities belonging to the Housing Operations turing is that NCC AB remains as a minority remainder of the NCC group. The general (including properties), (ii) transfers to Bonava owner of Bonava Deutschland GmbH, but that starting point for the separation has been that of companies belonging to the Housing Oper- the majority owner, NCC Property Develop- Bonava is responsible for the operations that ations, (iii) transition of employees, (iv) trans- ment B.V. (a subsidiary wholly owned by were previously conducted within NCC’s busi- fer and licensing of intellectual property Bonava), holds an option for a one-year period ness area Housing (“the Housing Operations”) rights, (v) division of responsibilities between from 1 March 2021 to acquire NCC’s parti and that NCC is responsible for the remainder Bonava and NCC in relation to construction cipations in Bonava Deutschland GmbH at of the operations that the NCC group projects and (vi) provision of certain interim market price. Through an agreement between conducts. The Group’s operations were previ- services from NCC to the Group. NCC Property Development B.V. and Bonava ously conducted largely as an operationally Deutschland GmBH, NCC AB will, in accord- According to the Separation Agreement, NCC independent, but legally integrated, operation ance with German legislation, receive an will, as a main rule, indemnify the Group for in the NCC group with some exceptions annual market-based remuneration from claims and obligations attributable to NCC’s outside the Nordic region. To create a legally Bonava Deutschland GmbH instead of other operations and, correspondingly, separated unit and regulate the relationship dividends. The remuneration amounts to EUR Bonava will indemnify NCC for claims and between the Group and NCC after the separa- 1,230,000 million per year until the agree- obligations attributable to the Group’s tion, Bonava and NCC have entered into a ment is terminated, which may take place operations. separation agreement with several sub-agree- 2021 at the earliest. ments (“the Separation Agreement”). The separation agreement also stipulates, as a main rule, that previous contractual relations Service agreement between the Group and NCC will cease to Bonava and NCC have entered into a number apply and, instead, the agreements in or of service agreements, on market-based expressly referred to in the Separation terms, that constitute part of the Separation Agreement will be applicable. Agreement. These service agreements

88 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Legal issues and supplementary information

regulate the provision of various services from to a greater extent are individually negotiated provides environmental guarantees regarding NCC to the Group during a transitional period and may look different from case to case. The the obligation for the Group to be responsible until the Group has its own internal or external Group provides customary guarantees to for any post-treatment due to environmental service suppliers, although the services will customers. pollutants that are discovered in connection not generally be provided more than one year with the implementation of the development from the listing of Bonava. The transitional Supplier agreements of the area in question. services mainly relate to services pertaining to In the Nordic region, NCC has historically accounting, IT, HR, sales and marketing, travel been the largest supplier to Bonava since the Financing agreements administration and office premises. projects have normally been produced as turn- For information on Bonava’s financing agree- key contracts. After the separation, the agreements, please see the heading “Financing Intellectual property rights ments are based on standard terms applicable agreements” in the section “Capital structure Intellectual property rights belonging to the to the industry. Outside the Nordic region, the and other financial information”. Group have been transferred from NCC to Group has its own production to varying Bonava. In addition to the transfer of intellec- degrees and the supplier agreements primar- PREMISES tual property rights, Bonava and NCC have ily relate to the delivery of building material Bonava and some subsidiaries in the Nordic entered into licensing agreements regarding and subcontractor agreements. region share office premises with NCC. The intellectual property rights. NCC has trans Group and the Swedish Head Office intend to ferred a right for the Group to use the brand Development agreements move into own premises in the fourth quarter “NCC”. The use of the NCC brand is limited to The Group often enters into development of 2016. With regard to other premises shared (i) the markets where the Group currently agreements with municipalities or foreign with NCC in the Nordic region, Bonava conducts operations, (ii) only to cover the equivalents for the development of properties. intends to replace many of them with own Group and (iii) may only be used in connection The agreements are normally based on the premises in 2016. with the Group’s Housing Operations. The respective municipality’s or foreign equiva- contractual period is a total of four years, lent’s contract templates, but mainly contain PERMITS AND REGULATIONS whereby a licensing fee is to be paid to NCC if customary terms and conditions. These agree- In the Nordic region, where the Group has no the Group uses the NCC brand during the final ments are often preceded by either a land- production of its own, the main rule is that no two years. If the Group has implemented its owner agreement or a cooperation agreement permits are required from authorities to new brand in a jurisdiction, the right of use to whereby the Group and other landowners and conduct the operations (with the exception of the NCC brand cease to exist in that jurisdic- developers included in a land allocation agree temporary permits such as building permits). tion. on their respective rights and obligations In Germany, St. Petersburg and Estonia/ during the development. In addition, NCC and Bonava have entered Latvia, where the Group to varying extents has into a licensing agreement regarding specific its own production expertise, the Group holds intellectual property rights that are used both Cooperation agreements/shareholder necessary permits, mainly linked to the in the Group’s operations and in the rest of agreements production activities. NCC. NCC has granted a right for the Group to The Group carries out some projects through use these intellectual property rights as long cooperation with other business operators in DISPUTES as the rights remain. joint ventures. In connection with the forma- The Group is involved in disputes that arise tion of joint ventures, agreements are reached from time to time in the Group’s operating Special agreement regarding the division between the Group and the cooperative part- activities. The results of complicated disputes of responsibility ner containing customary contractual terms may be difficult to foresee and it cannot be regarding the collaboration and provisions In rulings passed on 19 March 2015 and ruled out that a single dispute may have a concerning the composition of the board of 22 December 2015, the Supreme Court of substantial negative impact on the earnings or directors, financing, transfer restrictions and Sweden established that a certain design financial situation of one of the Group’s decisions by majority requirements in relation involving single-step sealed façades consti- subsidiaries. However, Bonava assesses, in to the joint venture. The joint development of tuted a fault in a consumer contract carried light of circumstances now known, that none the area in question is further regulated in out by Myresjöhus AB. Historically, Bonava of the disputes that the Group is involved in or cooperation agreements and development has to some extent used the façade method in that were recently settled, will have significant agreements to which the parties and/or the question and, in light of the Supreme Court effects on the Group’s financial position or joint venture are party. rulings, it cannot be excluded that Bonava profitability. Bonava is also not aware of any may be held accountable for faults in such impending disputes. The Group makes consumer contracts where a single-step Property acquisition agreements reservations for the disputes that the Group is sealed façade design has been used. In light of As a part of the Group’s operating activities, involved in accordance with applicable this, NCC (as the building contractor) and land is acquired from both municipalities as accounting regulations. The provisions for Bonava have entered into an agreement well as private landowners through direct significant disputes and other significant regarding the division of responsibility in the property acquisitions or through property allo- claims directed toward the Group totalled to event of any future claims. cation agreements and/or property regulation SEK 87 million as per 31 December 2015. agreements. The Group often uses, mainly in SIGNIFICANT AGREEMENTS Sweden, property regulation with the aim of INSURANCE Customer agreements creating a suitable development area. The Up to the time of the planned distribution, the Group also acquires (or divests) properties The Group enters into customer agreements Group has been covered by NCC’s insurance indirectly through acquisition/divestment of with consumers and investors as part of its policy, which covers, inter alia, general liability all shares in property-owning companies. The operating activities. The terms and conditions insurance, CAR insurance, environmental share transfer agreements are entered into on of the customer agreements with the consum- damage insurance, developer insurance and market-based terms with customary guaran- ers comply with standardised contract CEO and board liability insurance. Prior to the tees provided. In some cases, the Group templates while the agreements with investors distribution, the Group has taken out its own

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 89 Legal issues and supplementary information

insurance policy and Bonava’s assessment is transactions even after the distribution of the ADVISER INTERESTS that the Group thereby has insurance protec- shares in Bonava has been carried out. For Handelsbanken has provided, and may in the tion well suited to the performance of the further information on transactions with future provide, various banking, financial, activities. However, there is no guarantee that related parties, see the section “Historical investment, commercial and other services to the Group will not incur losses that are not financial information” – Note 6 in the interim NCC and Bonava for which Handelsbanken covered by these insurance policies. report for the period 1 January 2016 – has received, or may receive, compensation. 31 March 2016 and Note 20 in the historical In addition, Handelsbanken is also lender to ENVIRONMENTAL ISSUES financial information. Transactions with Bonava. Construction and development operations are related parties are also recognised in Note 1 in subject to an extensive environmental regula- the historical financial information regarding EXPENSES tion regarding, inter alia, building material, the earlier commission relationship between Bonava will not have any costs attributable to noise and pollutants. The Group actively Bonava and NCC and in Note 3 in the histori- the admission for trading of the Company’s works with environmental issues in connec- cal financial information regarding senior shares on Nasdaq Stockholm. NCC will tion with projects and continuously monitors executives. account for the costs that arise as a result of the environmental legislation applicable to After 31 March 2016, the following transac- the listing. various construction projects. Even if the tions with related parties have taken place. Group does not conduct any activities subject Separation costs for creating an independent to permit under environmental law, a conse- Transactions with the NCC group: Bonava are borne by Bonava. Of separation quence of the Group’s operations as a prop- costs amounting to SEK 68 million, such as regarding customary project related agree- erty developer is that demands for remedia- • costs for new IT tools, new premises and new ments including agreements regarding tion measures to be able to build housing functions, SEK 57 million was charged to construction services within the scope of units or post-treatment may arise in connec- Bonava’s earnings for 2015 and SEK 11 the operating activities. tion with acquisitions of land that is polluted. million was charged to Bonava’s earnings for The risks of high environmental costs in • regarding provision of services in mainly the first quarter of 2016. Further separation connection with property acquisitions are, accounting, IT, HR, sales and marketing, costs of approximately SEK 90 million are inter alia, handled through environmental travel administration and office premises. assessed to be charged to Bonava’s earnings studies in relevant cases and with the aim that during 2016. Stamp duty is capitalised in the on 4 April 2016 a receivable on NCC the legal obligation is placed on the seller of • projects and is not charged to the earnings, relating to a shareholder contribution of the property to the furthest extent possible. but rather recognised in pace with the delivery SEK 5 billion has been settled and payment of the projects. has been received. TRANSACTIONS WITH RELATED PARTIES For information on remuneration to the board DOCUMENTS AVAILABLE FOR INSPECTION In Bonava’s historical financial information, of directors and senior management, see the transactions with the NCC group, companies headings “Board of directors” and “CEO and Unless otherwise stated, the following docu- included in the Nordstjernan group, the Axel senior management” under the section ments will be available for inspection on the Johnson group, the FastPartner group and “Corporate governance”. Company’s website, www.bonava.com, during joint ventures and joint arrangements have the validity period of the Prospectus. been categorised as related party transac- ADVISER • The Company’s articles of association; tions, whereby primarily the transactions with Financial adviser in connection with the distri- • all financial information and statements NCC have been significant. bution and listing on Nasdaq Stockholm is pertaining to the Group that in any part are Handelsbanken. At any time, this adviser (and Bonava has had multiple transactions with included, or referred to, in this Prospectus; companies related to it) will provide services, other NCC companies and the pricing has • annual reports for 2014 and 2015 for all of within the ordinary operations and in connec- 1) followed the transfer pricing policy that has the Company’s subsidiaries ; and tion with other transactions, to Bonava. been in place in the NCC group. A compilation • this Prospectus. of the transactions with NCC during the years Advokatfirman Cederquist KB is Bonava’s 2013–2015 can be found in the table below. legal adviser regarding Swedish law in Bonava assesses that transactions with the connection with the listing on Nasdaq NCC group will constitute to be related party Stockholm.

Transactions with NCC (SEK million) 2015 2014 2013

Sales 1 3 Purchases 3,690 3,742 3,312 Financial income 1 6 12 Financial expenses 269 304 293 Current receivables 187 130 113 Long-term interest-bearing liabilities 11 140 Current interest-bearing liabilities 1,676 7,775 7,447 Accounts payable 154 126 161 Other current liabilities 318 304 230 Cash and cash equivalents (NCC Treasury) 349 208 156

1) The subsidiaries’ annual reports will only be available at the Company’s office address.

90 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Certain tax issues in Sweden

The following is a summary of certain Swedish tax rules that become relevant due to NCC’s distribution and listing of shares of series A and series B in Bonava for shareholders subject to unrestricted taxation in Sweden, unless otherwise stated. The summary is based on current legislation and is only intended to provide general information. The following statement does not apply to situations where the shares of NCC or Bonava are held for business purposes, as current assets or by partnerships. Furthermore, special rules apply to certain categories of tax payers. The fiscal treatment of each individual shareholder depends partly on the individual’s particular circumstances. Each shareholder should therefore consult a tax adviser with regard to the personally applicable tax consequences that may arise from the distribution of shares, including the applicability and effect of foreign rules and tax treaties.

Summary Agency. Capital gains and capital losses, held by Euroclear or, for nominee-registered The intention is that the distribution of Bonava respectively, will be calculated by aggregating shares, by the nominee. shares will be effected in accordance with the the tax basis for all shares of the same series Lex ASEA rules, which means that no imme and type and are calculated through applica- Taxation of foreign shareholders diate taxation will arise. The tax basis of the tion of the average method. Since the shares For shareholders who have limited tax liability NCC shares that provide entitlement to the in Bonava will be listed, the standard method in Sweden, Swedish withholding tax is shares to be distributed will be divided may be used as an alternative for calculating generally payable on dividends from Swedish between these shares and the shares in the tax basis, at a rate of 20 per cent of the net limited liability companies. However, with- Bonava that are received. sales proceeds. holding tax will not be payable on the distribution of shares in Bonava, since the distribution For individuals, a capital gain is normally is being effected in accordance with the Lex Taxation in connection with distribution taxed in the capital income category at a rate ASEA rules. The distribution may, however, of shares of Bonava of 30 per cent. Capital loss on listed shares result in tax consequences in the sharehold- According to an advance tax ruling from the may be fully offset against capital losses on er’s country of domicile. Swedish Board of Advance Tax Rulings, the shares and other listed securities in the same distribution of shares in Bonava will be exempt year. A capital loss that cannot be offset in this For shareholders who have limited tax liability from taxation in Sweden under the Lex ASEA manner will be deductible from other income in Sweden, the distribution of shares in rules, on condition that Nordstjernan AB’s from capital at a rate of 70 per cent. If a deficit Bonava will normally be subject to withhold- holding of the NCC shares does not exceed arises in the capital income category, such ing tax. The tax rate is 30 per cent, but this 50 per cent of the voting rights at the date of deficit may reduce tax on income from rate is generally reduced through tax treaties distribution. Accordingly, the tax basis for the employment and business activities, as well as with other countries to avoid double taxation. NCC shares that are entitled to distribution property tax. A tax reduction of 30 per cent is In Sweden, the deduction of withholding tax is will be divided between these shares and the allowed for deficits that do not exceed SEK normally carried out by Euroclear, or in the shares in Bonava that are received. The 100,000, and of 21 per cent on the remaining case of nominee registered shares, by the allocation of the tax basis will be based on the portion. Deficits cannot be carried forward to nominee. change in value of the NCC shares that arises a later taxation year. from the distribution of Bonava shares. NCC Shareholders who have limited tax liability in will request general guidelines from the For limited liability companies, capital gains Sweden, and that do not operate a business Swedish Tax Agency on the allocation of the on shares that are not held for business from a permanent establishment in Sweden, tax basis. Information concerning the Tax purposes are taxed as income from business are normally not subject to tax in Sweden for Agency’s general guidelines will be provided operations at a rate of 22 per cent. Capital capital gains realised upon the disposal of as soon as possible on the websites of NCC, losses on such shares are only deductible shares. The shareholder may, however, be Bonava and the Tax Agency. against taxable capital gains on shares and subject to taxation in his/her country of other securities. Capital losses that have not domicile. According to a special tax provision, Taxation on divestment of shares and been utilised within a certain year may be individuals who are not fiscally resident in fractions of shares in Bonava carried forward and be offset against capital Sweden may be subject to capital gains gains on securities in subsequent taxation Divestment of received shares in Bonava will taxation in Sweden in connection with the years without any time limitations. give rise to capital gains tax. The same applies disposal of Swedish shares if such an individ- to shareholders who receive fractions of ual has been resident or lived permanently in shares in Bonava, which are sold on his/her Taxation of dividends from Bonava Sweden at any time during the calendar year behalf. Capital gains and capital losses on Dividends from Bonava will be taxed at a rate of the sale or the ten calendar years immedi- listed shares are calculated as the difference of 30 per cent in the capital income category ately preceding the year of the sale. In several between the sales proceeds, less the sales for individuals and, for limited liability compa- cases, however, this rule has been limited by costs and the tax basis. The tax basis of the nies, at a rate of 22 per cent as income from tax treaties that Sweden has concluded with Bonava shares received pursuant to the distri- business operations. For individuals resident other countries. bution will be determined on the basis of the in Sweden, a preliminary tax of 30 per cent is general advice announced by the Swedish Tax withheld. The preliminary tax is generally with-

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Historical financial information

Quarterly report for 1 January 2016 – 31 March 2016 94

Financial information for the Financial Years 2013–2015 Combined income statements 124 Combined statement of comprehensive income 125 Combined balance sheets 126 Combined statements of changes in equity 127 Combined cash flow statements 128 Notes 130 Auditors’ reports on combined financial statements 165 of historical financial information

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 93 Historical financial information

Quarterly report January–March 2016

Strong balance sheet and solid start to the year create favourable conditions for the future

1 January–31 March 2016

Net sales during the period increased by 6 per cent to SEK 1,877 (1,764) million.

Operating profit improved by SEK 110 million and amounted to SEK 184 (74) million. The operating margin was 10 (4) per cent.

Profit/loss after financial items amounted to SEK 113 (-11) million.

Profit/loss for the period after tax amounted to SEK 88 (-9) million.

Cash flow before financing amounted to SEK -576 (-454) million.

Earnings per share amounted to SEK 0.84 (-0.07).

The return on capital employed amounted to 14 (8) per cent.

The number of housing units sold during the period amounted to 788 (1,142).

The number of production starts of housing units during the period amounted to 747 (715).

2016 2015 2015 SEK million Jan-Mar Jan-Mar Jan-Dec Net sales 1,877 1,764 13,070 Operating profit 184 74 1,377 Profit/loss after financial items 113 -11 1,033 Profit/loss for the period after tax 88 -9 798 Earnings per share, SEK 0.84 -0.07 7.08 Cash flow before financing -576 -454 1,437 Net debt 4,552 10,155 4,216 Capital employed at period end 10,236 11,141 9,811 Return on capital employed 14% 8% 12% Equity/assets ratio 29% 2% 31% Number of housing units started 747 715 6,356 Number of completed housing units 549 486 5,252 Number of housing units sold 788 1,142 6,315 Number of housing units in ongoing production 8,976 7,905 8,778 Sales rate for housing units in ongoing production 70% 73% 69%

Bonava AB (publ). Address: Vallgatan 3, 170 80 Solna, Sweden. Telephone: +46 8 585 510 00. Registration number: 556928-0380.

94 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Historical financial information

Bonava ⎜Quarterly report January–March 2016

Comments from the CEO

The market are also working to create conditions for increased cost- In general, demand in the effectiveness. However, this is a long-term process and housing markets in which it will take a few years for us to reap the benefits of this Bonava operates remained work. After the end of the period, the shareholders of favourable during the first NCC AB resolved at the annual general meeting to quarter, particularly in Sweden distribute Bonava (former NCC Housing) to the and Germany. Sales to shareholders and list the company on Nasdaq consumers remained strong in Stockholm. We also presented our new brand and Sweden, Germany and in the company name, Bonava, which combines the Swedish Copenhagen region as well, words bo and nav. Bo because we develop housing units while Finland has been burdened by a relatively weak and nav because our responsibility does not end with economy. During the quarter, we sold land assets as part these housing units; we want to create homes and of our efforts to refine our portfolio. The sales neighbourhoods where people live their lives. contributed to our ability to allocate capital to growing regions in line with our strategy. Future While approximately three-quarters of our housing units Earnings outcome in ongoing production had been sold by the end of the I am pleased with our earnings for the first quarter. Sales quarter, only 12 per cent of these housing units had to consumers were slightly lower than in the been profit recognised since the housing units had not corresponding quarter last year, but the important factor yet been delivered. Not only does this more cautious is that we have started production of more housing units method of recognition differentiate us in the market, it for consumers during the quarter compared with 2015. also ensures that we do not recognise revenue before it This also means that the number of housing units in actually materialises. Combined with a strong start to ongoing production increased by nearly 1,100 to the year, I believe we have the right prerequisites to approximately 9,000 housing units, compared with the capitalise on the market potential we have identified. preceding year. No units were sold to investors during After a great deal of hard work, my colleagues and I are the quarter, which was in line with our expectations truly looking forward to starting out on a new, exciting since this market may vary between quarters. journey as an independent company.

Group performance Joachim Hallengren, CEO and President We shall increase the differentiation in our offering with focus on affordable and sustainable housing units. We

About Bonava Business concept Bonava is one of the leading housing developers in Bonava develops and sells affordable and sustainable Northern Europe. Bonava develops and sells housing housing units to consumers and investors in selected units to consumers and investors such as pension markets in Sweden, Germany, Finland, Denmark, funds, insurance companies and commercial real Norway, St. Petersburg, Estonia and Latvia. Bonava is estate owners. Bonava originates from NCC and has active through the process, from land acquisition until created homes and areas since the 1930s. Today, the housing unit has been delivered to the customer, Bonava has nearly 1,400 employees with operations in order to ensure customer focus throughout the in Sweden, Finland, Denmark, Norway, Germany, whole value chain. St. Petersburg, Estonia and Latvia. The company’s sales in 2015 amounted to SEK 13 billion. Financial objectives Return on capital employed is to amount to 10–15 Vision per cent. Our vision is to create happy neighbourhoods where Equity/assets ratio shall amount to at least 30 per people have the highest quality of life. We understand cent. that this means different things to different people and that it might vary over time. This is why we are on At least 40 per cent of consolidated profit/loss for a constant quest to find out what makes people happy the year after tax is to be distributed to where they live. shareholders.

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Bonava ⎜Quarterly report January–March 2016

Group performance, January-March 2016

All comparative figures in this report pertain to the corresponding period in the preceding year

Market development Demand remained favourable in Sweden and Net sales, operating profit and operating margin Germany with increasing prices. In Finland, the prices 2013–2015 (SEK million) increased in the beginning of the year, following a long period of weaker demand. Demand for small, 15,000 12% affordable housing units remained strong in the investor market and among consumers in Finland. 10,000 8% Demand for housing units was favourable in Copenhagen and prices increased in other parts of 5,000 4% the country. Demand in Norway improved and prices increased during the quarter. In St. Petersburg, the 0 0% market is hesitating as the purchase-decisions take 2013 2014 2015 longer time. Net sales EBIT EBIT margin

Net sales Operating profit Net sales amounted to SEK 1,877 (1,764) million. Operating profit/loss for the period amounted to SEK Higher net sales in Sweden and St. Petersburg were 184 (74) million. The increase derived mainly from only partly offset by lower sales, mainly in Finland and increased sales with improved margins in projects for Germany. The average price per housing unit for consumers in Sweden, while profit from projects for consumers amounted to SEK 2.7 (2.8) million. investors declined. The result from land divestments In Sweden, the number of housing units handed amounted to SEK 9 (13) million. over to consumers increased at the same time as the Sweden accounted for a large portion of the average price and net sales from land divestments Group’s earnings during the quarter as a result of increased. improved profit from housing units for consumers and Net sales in Germany were lower compared to the increased profit from land divestments. With respect preceding year since less housing units for consumers to housing units for consumers, both sales and were profit recognised, and as no projects for margins increased. In Germany profit declined since investors were profit recognised. Last year, one less housing units were handed over to consumers investor transaction in Germany was profit and no projects for investors were profit recognised recognised. during the quarter. In the preceding year, one project Net sales in Finland declined since less housing for investors was profit recognised in Germany. units for consumers, and no housing units for In Denmark-Norway the profit improved as a result investors, were profit recognised. The average price of increased margins on housing units for consumers, for housing units delivered to consumers increased in while profit in Finland declined since no housing units Finland. for investors were profit recognised. In St. Petersburg, Net sales in Denmark-Norway declined since less profit improved as a result of a higher number of units were handed over to consumers. The average housing units being handed over to consumers. price for housing units for consumers was lower in Due to the preparations for the listing of Bonava Norway. on Nasdaq Stockholm, expenses for the quarter In St. Petersburg, net sales for the quarter increased by SEK 11 million. Expenses of SEK -39 increased as a result of a greater number of housing million pertaining to land divestments in units for consumers being profit recognised. Estonia/Latvia were charged against profit in the Fluctuations in exchange rates, primarily with respect segment “Other and eliminations” during the period. to the rouble, had a negative impact of SEK Fluctuations in exchange rates had a negative impact -34 million on consolidated net sales compared with of SEK -4 million on profit compared to the same

the corresponding period in the preceding year. period the preceding year.

Seasonal effects Bonava recognise revenues and earnings from sales of housing units when the sold and completed housing units are transferred to the customers. Bonava’s operations are affected by seasonal variations due to cold weather and the Company’s cyclical production year, and that a large share of its

96 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Historical financial information

Bonava ⎜Quarterly report January–March 2016

annual production is completed and transferred to Net financial items, tax and net profit/loss for customers during the fourth quarter. Accordingly, the period earnings are usually stronger in the fourth quarter Net financial items amounted to SEK -71 (-85) than in other quarters. million. This improvement was attributable to lower net debt. Profit before tax for the first quarter of 2016 Operating profit and operating margin, amounted to SEK 113 (-11) million. 2014–2016 (SEK million) Tax on profit/loss for the period amounted to SEK -26 (2) million, corresponding to a tax rate of 23 (21) 1,200 16% per cent. 1,000 Net profit/loss for the period amounted to SEK 88 12% 800 (-9) million. 600 8% 400 4% 200 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 EBIT EBIT margin

Net sales and operating profit Net sales Operating profit

2016 2015 2015 2016 2015 2015

SEK million Jan-Mar Jan-Mar Jan-Dec Jan-Mar Jan-Mar Jan-Dec Sweden 1,251 740 4,639 261 66 706 Germany 157 427 3,471 -28 22 422 Finland 88 204 1,791 -13 9 187 Denmark/Norway 256 329 1,760 6 -10 -3 St. Petersburg 106 45 773 25 17 197 Other and elim. 19 20 636 -68 -28 -132 Total 1,877 1,764 13,070 184 74 1,377

Cash flow, investments and financial position, January-March 2016

Total assets Net debt, 2014-2016, SEK million The total assets amounted to SEK 16,704 (16,267) million. 12,000

Net debt 8,000 Net debt amounted to SEK 4,552 (10,155) million, of 4,000 which net debt in Swedish tenant-owner associations and Finnish housing companies accounted for SEK 0 3,542 (2,853) million. The decrease in net debt was Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 mainly due to the shareholders’ contribution received 2014 2015 2016 from NCC AB in December 2015. As per 31 December 2015, the net debt amounted to SEK Capital employed and return on capital 4,216 million. employed

Capital employed amounted to SEK 10,236 (11,141) million. Assets increased, mainly due to ongoing housing projects. The capital employed declined as a result of increased interest-free financing of ongoing housing projects and land. As per 31 December 2015, the capital employed amounted to SEK 9,811 million. The return on capital employed was 14 (8) per cent. This improvement was attributable to an improved operating profit and lower average capital employed.

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Bonava ⎜Quarterly report January–March 2016

Cash flow As per 31 March 2016, the equity/assets ratio Cash flow before financing amounted to SEK -576 amounted to 29 (2) per cent. Bonava’s equity/assets (-454) million. The improved result generated ratio is affected by seasonal effects since assets increased cash flow from the operating activities increase during the first three quarters of the year and before changes in working capital. High sales rate for then decline in the fourth quarter, when a large housing units in ongoing production enabled more number of housing units are transferred to customers production starts, which resulted in increased and profit recognised. investments in ongoing housing projects. Investments The debt/equity ratio amounted to 0.9 (34.9). The in properties held for future development also change in the equity/assets ratio and debt/equity increased, while cash flow from sales remained ratio between 31 March 2016 and the same date in unchanged. Other changes in working capital were the preceding year was mainly attributable to the impacted positively by increased interest-free shareholder contribution received from NCC AB in financing of both land investments and housing December 2015. projects in ongoing production.

Cash flow before financing, 2014–2016, SEK million

2,500 2,000 1,500 1,000 500 0 -500 -1,000 -1,500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016

Equity/assets and debt/equity ratio Housing sales, housing starts and building rights, January–March 2016

Housing sales and housing starts units in ongoing production was 70 (73) per cent, A total of 788 (1,015) housing units were sold to with a completion rate of 55 (56) per cent. At the end consumers and 0 (127) to investors during the period. of the period, 99 (241) of the completed housing units for consumers were unsold. Sales of housing units/housing units in ongoing production Building rights The number of production started units was 747 The building rights amounted to 28,900 (30,800), of (588) for consumers and 0 (127) for investors. The which 18,500 (21,500) were included in the balance number of housing units in ongoing production sheet. The decline was attributable to an active amounted to 8,976 (7,905). Strong sales in recent portfolio management, where land in non-prioritised years has enabled an increase in the number of markets has been divested and the number of production starts. The total sales rate for housing production starts have increased. 2016 2015 2015 Jan-Mar Jan-Mar Jan-Dec Housing units in ongoing production for consumers, at period end 6,767 6,171 6,432 Housing units in ongoing production for investors, at period end 2,209 1,734 2,346 TOTAL 8,976 7,905 8,778

Sales rate for housing units in ongoing production 70% 73% 69% Reservation rate for housing units in ongoing production 5% 9% 5%

Sold and reserved housing units in ongoing production 75% 82% 74% Sold housing units for consumers 788 1,015 4,542 Sold housing units for investors 0 127 1,773 TOTAL 788 1,142 6,315

Started housing units for consumers 747 588 4,452 Started housing units for investors 0 127 1,904 TOTAL 747 715 6,356

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Bonava ⎜Quarterly report January–March 2016

Number of units Estimated completions of ongoing production per quarter 3,000

2,500

Investors 2,000 Sweden Germany 1,500 Finland Denmark/Norway 1,000 St. Petersburg Baltics Sales rate 500

0 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Later

The diagram shows the estimated completion for housing units for consumers and housing units to the investor market that are not yet profit recognised. The curve shows the sales rate. Sold housing units are profit recognised on the date of transfer.

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Bonava ⎜Quarterly report January–March 2016

Key ratios by segment

Sweden Bonava focuses on cities and regions with favourable demographic and macroeconomic factors where Bonava can develop and maintain a strong market position. In Sweden, Bonava operates towards consumers in five cities, of which Stockholm is the most important market. Other cities in which Bonava operates are Gothenburg, Linköping, Uppsala and Umeå. Bonava’s investor business focuses on around 15 cities in Sweden. In Sweden, Bonava offers both consumers and investors multi-family houses and single-family houses.

2016 2015 2015 Jan-Mar Jan-Mar Jan-Dec Net sales, SEK million 1,251 740 4,639 Operating profit, SEK million 261 66 706 Operating margin, % 21 9 15 Capital employed, at period end, SEK million 4,807 4,986 4,978 Return on capital employed, % 18 7 14 Building rights, at period end, number 7,100 9,100 7,600 of which, off-balance-sheet building rights, number 2,500 2,100 2,500 Housing units sold to consumers, number 249 466 1,350 Started housing units for consumers, number 158 259 1,343 Profit-recognised housing units for consumers, number 294 184 956 Housing units in ongoing production for consumers, at period end, number 2,075 1,849 2,206 Housing units sold to investors, number 0 0 27 Started housing units for investors, number 0 0 158 Profit-recognised housing units for investors, number 0 24 156 Housing units in production for investors, at period end, number 290 264 290 Sales rate for housing units in ongoing production, % 73 83 71

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Bonava ⎜Quarterly report January–March 2016

Germany Bonava operates in the following regions: Berlin, Hamburg, Baltic Sea, Sachsen, Rhen-Ruhr, Cologne/Bonn, Rhen-Main and Rhen-Neckar/Stuttgart. In Germany, Bonava offers both consumers and investors single-family houses and multi-family houses. Bonava has developed a construction system in Germany, which enables an efficient construction process.

2016 2015 2015 Jan-Mar Jan-Mar Jan-Dec Net sales, SEK million 157 427 3,471 Operating profit, SEK million -28 22 422 Operating margin, % -18 5 12 Capital employed, at period end, SEK million 1,551 1,251 1,361 Return on capital employed, % 26 27 31 Building rights, at period end, number 6,400 4,300 5,700 of which, off-balance-sheet building rights, number 3,100 1,700 3,600 Housing units sold to consumers, number 191 187 1,154 Started housing units for consumers, number 228 152 1,284 Profit-recognised housing units for consumers, number 46 102 896 Housing units in ongoing production for consumers, at period end, number 1,571 1,037 1,386 Housing units sold to investors1), number 0 0 860 Started housing units for investors1), number 0 0 860 Profit-recognised housing units for investors1), number 0 46 726 Housing units in production for investors, at period end, number 740 560 740 Sales rate for housing units in ongoing production, % 74 76 74

1) Of which, 321 units refers to sales of part of the property portfolio in Sonnengarten, which is included in the profit under Other and eliminations.

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Bonava ⎜Quarterly report January–March 2016

Finland In Finland, Bonava operates in Helsinki and surrounding areas, Espoo, Vantaa, Turku, Tampere and Oulu. In Finland, Bonava’s offering is targeted at consumers and investors, primarily in the form of multi-family houses.

2016 2015 2015 Jan-Mar Jan-Mar Jan-Dec Net sales, SEK million 88 204 1,791 Operating profit, SEK million -13 9 187 Operating margin, % -15 4 10 Capital employed, at period end, SEK million 1,216 1,682 1,114 Return on capital employed, % 12 9 12 Building rights, at period end, number 8,400 8,600 8,400 of which, off-balance-sheet building rights, number 4,700 5,200 4,800 Housing units sold to consumers, number 111 117 672 Started housing units for consumers, number 0 76 784 Profit-recognised housing units for consumers, number 32 44 639 Housing units in ongoing production for consumers, at period end, number 698 534 698 Housing units sold to investors, number 0 127 886 Started housing units for investors, number 0 127 886 Profit-recognised housing units for investors, number 0 127 886 Housing units in production for investors, at period end, number 1,105 836 1,242 Sales rate for housing units in ongoing production, % 82 86 79

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Bonava ⎜Quarterly report January–March 2016

Denmark-Norway Bonava operates in Copenhagen in Denmark and in Bergen in Norway. In Denmark and Norway, Bonava offers primarily consumers multi-family houses and single- family houses.

2016 2015 2015 Jan-Mar Jan-Mar Jan-Dec Net sales, SEK million 256 329 1,760 Operating profit, SEK million 6 -10 -3 Operating margin, % 2 -3 0 Capital employed, at period end, SEK million 1,371 1,839 1,076 Return on capital employed, % 1 4 0 Building rights, at period end, number 1,300 2,000 1,300 of which, off-balance-sheet building rights, number 100 300 100 Housing units sold to consumers, number 64 64 300 Started housing units for consumers, number 36 5 241 Profit-recognised housing units for consumers, number 61 70 281 Housing units in ongoing production for consumers, at period end, number 424 416 450 Housing units sold to investors, number 0 0 0 Started housing units for investors, number 0 0 0 Profit-recognised housing units for investors, number 0 0 0 Housing units in production for investors, at period end, number 0 0 0 Sales rate for housing units in ongoing production, % 62 58 62

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Bonava ⎜Quarterly report January–March 2016

St. Petersburg In Russia, Bonava operates solely in St. Petersburg. In St. Petersburg, Bonava’s offering, which exclusively comprises multi-family houses, is targeted at consumers and investors.

2016 2015 2015 Jan-Mar Jan-Mar Jan-Dec Net sales, SEK million 106 45 773 Operating profit, SEK million 25 17 197 Operating margin, % 24 37 26 Capital employed, at period end, SEK million 911 935 802 Return on capital employed, % 25 13 24 Building rights, at period end, number 4,300 4,700 4,700 of which, off-balance-sheet building rights, number 0 0 0 Housing units sold to consumers, number 122 152 865 Started housing units for consumers, number 291 96 533 Profit-recognised housing units for consumers, number 172 56 1,039 Housing units in ongoing production for consumers, at period end, number 1,736 2,201 1,447 Housing units sold to investors, number 0 0 0 Started housing units for investors, number 0 0 0 Profit-recognised housing units for investors, number 0 0 0 Housing units in production for investors, at period end, number 74 74 74 Sales rate for housing units in ongoing production, % 55 59 57

Note: Estonia/Latvia is included in the reporting segment Other and eliminations, see further Note 1 Significant accounting principles in the combined financial statements. Accordingly, no key ratios are provided for Estonia/Latvia.

Significant risks and uncertainties

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Bonava ⎜Quarterly report January–March 2016

Bonava’s operations are exposed to several types of Legal structure risks, both operational and financial. The operational Bonava has amended the legal structure of the risks impact the daily operations. These may be of a German Housing operation. NCC AB remains as a purely operational nature and pertain to investments minority owner of NCC Deutschland GmbH, but in land, project development, seasonal exposure or Bonava holds an option to acquire NCC AB’s shares assessment of the earnings capacity of projects. during 2021. According to a profit sharing Operational risks are managed as part of the agreement, NCC AB will abstain from dividends and internal corporate governance established by Bonava. will instead receive annual compensation of EUR 1.3 The segments assess and manage risks through million until the agreement is terminated, which may operational systems as well as developed processes occur in five years’ time at the earliest. The agreed and procedures. profit sharing will lead to a debt of approximately SEK The group’s financial risks such as interest-rate, 57 million, corresponding to the fair value of five currency, refinancing, liquidity and credit risks are years of payment. managed centrally in order to minimise and control the risk exposure. Significant events after period end Customer credit risks are managed by each On 12 April 2016, NCC AB’s annual general meeting individual segment. A centralised insurance function resolved to approve the board of director’s proposal is responsible for group-common insurances within to distribute all shares in Bonava. property and liability insurances, primarily property On 12 April, the company also disclosed its new and contractor. This function also performs brand and company name, “Bonava”. As per 4 April, preventive risk-management work together with the the receivable on NCC AB regarding shareholder segments, thus resulting in cost-efficiency and contribution of SEK 5.0 billion had been settled and coordination of insurable risks. The risk that Bonava payment had been received. may fail to comply with the Company’s Code of On 28 April 2016, Bonava entered into a material Conduct is managed by the CSR Compliance credit agreement with Danske Bank, Skandinaviska function. Enskilda Banken (publ), Svenska Handelsbanken AB See further the Prospectus in the section Risk (publ) and Swedbank AB (publ) regarding a factors. multicurrency revolving credit facility intended for Bonava’s general corporate requirements and as Organisation and employees working capital within the group. The credit has a The average number of employees in the group term of five years and amounts to SEK 2.7 billion, during the first quarter of 2016 amounted to 1,365 provided that Bonava is listed during 2016 and that (1,263). customary terms and conditions are fulfilled. Bonava has also secured loans of EUR 30 million over a term Significant events during the quarter of four years and of EUR 30 million over a term of five Share capital years. On 25 January 2016, the extra general meeting of Bonava resolved in a new share issue, whereby the Financial calendar 2016 share capital was increased to SEK 500,000. The Bonava Capital Market Day: 31 May number of shares increased, from 1,000 to 108,435,822, through a share issuance, merger Interim report January–June: 19 July reverse share split and subsequent share split. The Interim report January–September: 8 November shares were also converted to shares of series A and shares of series B in order to reflect NCC’s share structure, divided between 25,525,097 shares of series A and 82,912,725 shares of series B. A share of series A entitles the holder to 10 votes and a share of series B entitles to 1 vote.

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Bonava ⎜Quarterly report January–March 2016

Condensed consolidated income statement

Notes 2016 2015 2015 SEK million 1 Jan-Mar Jan-Mar Jan-Dec Net sales 4 1,877 1,764 13,070 Production costs -1,550 -1,551 -11,016 Gross profit 328 213 2,054 Selling and administrative expense -144 -138 -640 Other operating expense -1 -36 Operating profit 4 184 74 1,377 Financial income 3 3 11 Financial expense -73 -88 -356 Net financial items -71 -85 -345 Profit/loss after financial items 4 113 -11 1,033 Tax on profit/loss for the period -26 2 -235 Net profit/loss for the period 88 -9 798

Attributable to: Bonava AB’s shareholders 91 -8 768 Non-controlling interests -3 -1 31 Net profit/loss for the period 88 -9 798

Per share data before and after dilution Profit after tax, SEK 0.84 -0.07 7.08 Cash flow from operating activities, SEK -4.86 -4.10 13.37 Shareholders’ equity, SEK 43.86 2.30 43.08 Number of shares in millions, average 108.4 108.4 108.4

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Bonava ⎜Quarterly report January–March 2016

Consolidated statement of comprehensive income

2016 2015 2015 SEK million Note 1 Jan-Mar Jan-Mar Jan-Dec Profit/loss for the period 88 -9 798

Items that may be reclassified to profit or loss

Translation differences during the period in translation of foreign operations 19 -27 -59 Hedging of exchange-rate risk in foreign operations -20 24 41 Cash flow hedges 3 33

Tax related to items that may be reclassified to profit or loss 4 -6 -16 4 -6 -2 Items that will not be reclassified to profit or loss Revaluation of defined-benefit pension plans -2 -8 Tax related to items that will not be reclassified to profit or loss 0 2 0 -1 -6

Other comprehensive income for the period 4 -8 -8

Comprehensive income for the period 92 -16 790

Attributable to: Bonava AB’s shareholders 94 -14 759 Non-controlling interests -2 -2 31 Total comprehensive income for the period 92 -16 790

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Bonava ⎜Quarterly report January–March 2016

Condensed consolidated balance sheet

Notes 2016 2015 2015 SEK million 1 31 Mar 31 Mar 31 Dec ASSETS Fixed assets 869 679 773

Current assets Properties held for future development 5,100 6,082 4,737 Ongoing housing projects 7,770 7,031 7,043 Completed housing units 414 702 599 Current receivables 1,910 1,238 1,769 Cash and cash equivalents 2 640 534 585 Total current assets 15,835 15,587 14,732

TOTAL ASSETS 16,704 16,267 15,506

EQUITY Shareholders’ equity attributable to the parent company’s shareholders 4,756 249 4,672

Non-controlling interests 58 42 60

Total shareholders’ equity 4,814 291 4,732

LIABILITIES Long term liabilities Long-term interest-bearing liabilities 2 2,089 1,431 2,033 Other long-term liabilities 135 223 487 Long-term provisions 740 346 357 Total long-term liabilities 2,963 1,999 2,877

Current liabilities Current interest-bearing liabilities 2 3,334 9,365 3,046 Other current liabilities 5,593 4,611 4,850 Total current liabilities 8,927 13,976 7,896

Total liabilities 11,891 15,975 10,773

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 16,704 16,267 15,506

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Bonava ⎜Quarterly report January–March 2016

Condensed consolidated statement of changes in shareholders’ equity

2016 2015

Total Total Shareholder Non- shareholder Shareholder Non- shareholder s’ controlling s’ s’ controlling s’ SEK million Note 1 equity interests equity equity interests equity Opening balance, shareholders’ equity, 1 January 4,672 60 4,732 294 44 338 Comprehensive income for the period 94 -2 92 -14 -2 -16 Transactions with shareholders -11 -11 -32 -32 Performance-based incentive programme 1 1 0 0 Closing balance, shareholders’ equity, 31 March 4,756 58 4,814 247 42 290

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Bonava ⎜Quarterly report January–March 2016

Condensed consolidated cash flow statement

Notes 2016 2015 2015 SEK million 1 Jan-Mar Jan-Mar Jan-Dec OPERATING ACTIVITIES Profit/loss after financial items 4 113 -11 1,033 Adjustments for items not included in cash flow 11 13 52 Taxes paid -48 -27 -125

Cash flow from operating activities before changes in working capital 77 -25 959

Cash flow from changes in working capital Sales of housing projects 1,489 1,503 10,075 Investments in housing projects -2,393 -1,959 -9,842 Other changes in working capital 300 36 258 Cash flow from changes in working capital -604 -420 491

Cash flow from operating activities -527 -445 1,450

Cash flow from investing activities -49 -9 -13

CASH FLOW BEFORE FINANCING -576 -454 1,437

FINANCING ACTIVITIES Dividend paid -104 Change in interest-bearing financial liabilities 569 402 -1,196 Change in long-term interest-bearing receivables -2 4 -29 Change in current interest-bearing receivables 62 120 29 Cash flow from financing activities 628 526 -1,301

CASH FLOW FOR THE PERIOD 52 72 136

Cash and cash equivalents at beginning of period 585 463 463 Exchange-rate difference in cash and cash equivalents 3 0 -14 CASH AND CASH EQUIVALENTS AT PERIOD END 640 534 585

Current investments with a maturity exceeding three months TOTAL CASH AND CASH EQUIVALENTS AT PERIOD END 640 534 585

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Bonava ⎜Quarterly report January–March 2016

Notes

NOTE 1 – Basis for preparation and accounting principles

This quarterly report has been prepared in accordance The formation of the Bonava Group comprised with IAS 34 Interim Financial Reporting, the Swedish transactions that are under common control. These Annual Accounts Act and RFR 1 from the Swedish types of transactions are not regulated by IFRS and Financial Reporting Board, Supplementary Accounting the group must instead establish a principle for this. principles for Groups. As per 31 March 2016, the The group has chosen to apply the principles establishment of the Bonava group was completed, described under the basis for preparation of the when the Finnish operations were acquired from NCC combined financial statements when preparing the AB. Accordingly, consolidated financial statements consolidated financial statements. In short, this entails have been prepared as of this date. that the assets and liabilities of the units have been As per 31 March 2016, Bonava constitutes a segment aggregated and recognised based on the carrying within the NCC AB group. No consolidated financial amounts they represent in NCC AB’s consolidated statements have been prepared for earlier periods, financial statements and that the transactions have since Bonava was not a group at the time. Since the been recognised as if they had occurred at the group has no financial history, combined financial beginning of the earliest period presented (meaning statements have been prepared for the financial years that comparative figures have been included). The 2013-2015 and for the comparative figures in this interim-information on pages 1 to 11 constitutes an quarterly report. The basis for preparation of the integrated part of this financial report. combined financial statements is presented in Note 1 Significant accounting principles in the combined The accounting principles applied in the preparation financial statements, which are available in the of this quarterly report apply to all periods and comply prospectus “Admission to trading of shares of series A with the accounting principles presented in Note 1 and shares of series B in Bonava AB (publ) on Nasdaq Significant accounting principles in the combined Stockholm” published on www.bonava.com. financial statements. These principles are also available at www.bonava.com.

NOTE 2 – Specification net debt

2016 2015 2015 SEK million 31 Mar 31 Mar 31 Dec Long-term interest-bearing receivables 134 105 131 Current interest-bearing receivables 96 55 146 Cash and cash equivalents 640 534 585 Total 870 694 863

Long-term interest-bearing liabilities 2,089 1,431 2,033 Current interest-bearing liabilities 3,334 9,365 3,046 Pension liabilities 54 Total 5,422 10,850 5,079

Net debt 4,552 10,155 4,216

of which, attributable to Swedish tenant-owner associations and Finnish housing companies

Interest-bearing liabilities 3,672 2,963 3,268 Cash and cash equivalents 130 110 90 Net debt 3,542 2,853 3,177

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Bonava ⎜Quarterly report January–March 2016

NOTE 3 – Pledged assets, contingent liabilities and guarantee obligations

2016 2015 2015 SEK million Jan-Mar Jan-Mar Jan-Dec Assets pledged For own liabilities:

Property mortgages 1,211 1,102 859 Restricted bank funds 15 3 27 Total assets pledged 1,226 1,105 886

Contingent liabilities and guarantee obligations Own contingent liabilities:

1) Deposits and concession fees 1,897 2,032 718

Held jointly with other companies:

Liabilities in consortiums, trading companies and 24 24 24 limited partnerships Total contingent liabilities and guarantee obligations 1,921 2,056 742

1) Deposit guarantees constitute collateral granted by NCC AB for investments and concession fees paid to tenant- owner associations formed by NCC Boende AB, a wholly owned subsidiary of Bonava. Such guarantee is to be restored when one year has passed after the final acquisition cost for the tenant-owner association’s building has been established. According to agreements between Bonava AB and NCC AB, NCC AB shall be indemnified for any costs attributable to these guarantees.

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Bonava ⎜Quarterly report January–March 2016

NOTE 4 – REPORTING BY OPERATING SEGMENTS

SEK million

Denmark/ St. Other and Jan-Mar 2016 Sweden Germany Finland Norway Petersburg elim. Total Net sales 1,251 157 88 256 106 19 1,877 Operating profit 261 -28 -13 6 25 -68 184 Net financial items -71 Profit after net financial items 113 Capital employed, at period end 4,807 1,551 1,216 1,371 911 380 10,236

Denmark/ St. Other and Jan-Mar 2015 Sweden Germany Finland Norway Petersburg elim. Total Net sales 740 427 204 329 45 20 1,764 Operating profit 66 22 9 -10 17 -28 74 Net financial items -85 Profit after net financial items -11 Capital employed, at period end 4,986 1,251 1,682 1,839 935 448 11,141

Denmark/ St. Other and Jan-Dec 2015 Sweden Germany Finland Norway Petersburg elim. Total Net sales 4,639 3,471 1,791 1,760 773 636 13,070 Operating profit 706 422 187 -3 197 -132 1,377 Net financial items -345 Profit after net financial items 1,033 Capital employed, at period end 4,978 1,361 1,114 1,076 802 481 9,811

SEK million Jan-Mar 2016 Jan-Mar 2015 Jan-Dec 2015

Net Operating Net Operating Net Operating Other and eliminations sales profit sales profit sales profit Bonava’s head office* 12 -30 4 -24 14 -111 Sale of German property portfolio 480 51 Sale of properties in Latvia 1 -39 Operations in Estonia and Latvia 18 1 12 -2 129 -62 Adjustments and eliminations -12 4 -2 13 -10 TOTAL 19 -68 20 -28 636 -132

*Activities to create an independent Bonava generated costs of SEK 11 (0) million during the quarter, of which the head office accounted for SEK 9 (0) million. The corresponding cost for the full-year 2015 amounted to SEK 57 million, of which SEK 12 million pertained to the head office.

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Bonava ⎜Quarterly report January–March 2016

NOTE 5 – Fair value of financial instruments In the table below, disclosures are made concerning how fair value has been determined for the financial instruments that are continuously measured at fair value in Bonava’s balance sheet. When determining fair value, assets must be divided into three levels. No transfers have been made between the levels during the period. Bonava has no financial instruments in level 1 or 3. Derivatives in level 2 comprise of currency forward contracts used for hedging purposes. The measurement of fair value for currency forward contracts is based on published forward rates in an active market. As per 31 March 2015, the Company had one interest-rate swap used for hedging purposes. This was closed in 2015. The measurement of interest-rate swaps is based on forward interest rates prepared on the basis of observable yield curves.

SEK million 31 Mar 2016 31 Mar 2015 31 Dec 2015 Level 2 Total Level 2 Total Level 2 Total

Derivative instruments used for hedging purposes 16 16 6 6 15 15 Total assets 16 16 6 6 15 15 Derivative instruments used for hedging purposes 15 15 32 32 0 0 Total liabilities 15 15 32 32 0 0

It has been deemed that the fair value of long term and current interest-bearing liabilities does not materially deviate from the carrying amount. For financial instruments recognised at amortised cost, accounts receivables, other receivables, cash and cash equivalents, accounts payable and other interest-free liabilities, the fair value is deemed to match the carrying amount.

NOTE 6 – Transactions with related parties Bonava originates from the operating segment Housing of NCC AB. Bonava has had multiple transactions with other NCC companies and the pricing has followed the transfer pricing policy established by the NCC group. Joint ventures and joint arrangements are categorised as related parties. The Nordstjernan group, companies in the Axel Johnson group and the FastPartner group are also categorised as related parties. Transactions with these parties are not significant and not specifically specified below.

2016 2015 2015 Transactions with NCC Jan-Mar Jan-Mar Jan-Dec Sales 0 0 1 Purchases 875 867 3,690 Financial income 0 1 1 Financial expenses 50 69 269 Current receivables 136 50 187 Long-term interest-bearing liabilities 11 0 11 Current interest-bearing liabilities 1,613 7,718 1,676 Accounts payable 394 97 154 Other current liabilities 51 295 318 Cash and cash equivalents (NCC Treasury) 375 285 349

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Bonava ⎜Quarterly report January–March 2016

Parent company January–March 2016 The parent company comprises of the operations in Bonava AB. The Company’s net sales amounted to SEK 12 (0) million. Profit/loss after financial items amounted to SEK -56 (0) million.

Parent company’s condensed income statement

2016 2015 2015 SEK million Jan-Mar Jan-Mar Jan-Dec Net sales 12 14 Selling and administrative expenses -42 -39 Operating profit -30 -25 Result from participations in group companies -205 Financial income 1 0 Financial expenses -27 13 Profit/loss after financial items -56 -217 Appropriations 88 Profit before tax -56 -129 Tax on profit/loss for the period 12 -17 Profit/loss for the period -44 -145

Parent company’s condensed balance sheet

SEK million Note 1 2016 2015 2015 ASSETS 31 Mar 31 Mar 31 Dec Fixed assets 1,491 0 1,173 Current assets 5,532 5,306 Total assets 7,024 0 6,478

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity 5,116 0 4,858 Provisions 3 5

Long-term liabilities 39 37

Current liabilities 1,865 1,579 Total shareholders’ equity and liabilities 7,024 0 6,478

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Bonava ⎜Quarterly report January–March 2016

Notes to the parent company’s income statement and balance sheet

NOTE 1 – Accounting principles Acquisitions and divestments The Company has prepared the quarterly report The company received all of the shares of NCC pursuant to the Annual Accounts Act (1995:1554) and Asuminen Oy from NCC AB through a shareholders’ the Swedish Financial Reporting Board’s contribution. After this transaction, Bonava and its recommendation RFR 2 Accounting for Legal Entities. subsidiaries comprise a legal group. As of 1 January 2016, the company applies RFR 2 Accounting for Legal Entities. The company previously Pledged assets, contingent liabilities and applied the general advice on annual accounts and guarantee obligations consolidated financial statements issued by the As per 31 March 2016, the parent company had no Swedish Accounting Standards Board (K3). The significant pledged assets, contingent liabilities or transition from K3 to RFR 2 took place at the guarantee obligations. beginning of 2015 and has not had any impact on the company’s earnings and financial position in this Significant events after the period end report. On 12 April 2016, NCC AB’s annual general meeting resolved to approve the board of director’s proposal to

Transactions with related parties distribute all shares of Bonava AB. Apart from transactions with the NCC group, no On 22 April 2016, the annual general meeting of transactions with a significant impact on the Bonava resolved of a bonus issue without issuing company’s financial position and earnings have taken shares, whereby the company’s share capital place between Bonava and related parties. increased by SEK 409,500,000 to a total of SEK 410,000,000, meaning that the nominal value increased from approximately SEK 0.0046 to approximately SEK 3.78.

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Bonava ⎜Quarterly report January–March 2016

Quarterly overview

2016 2015 2015 2015 2015 2014 2014 2014 2014 SEK million Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar Net sales 1,877 7,314 2,128 1,864 1,764 4,564 2,257 2,051 1,353 Operating profit 184 1,015 180 108 74 491 241 158 51 Profit/loss after financial items 113 939 93 12 -11 388 144 57 -37 Profit/loss for the period 88 723 75 9 -9 345 112 44 -28 Cash flow from operating activities before changes in working capital 77 976 7 2 -25 410 178 -19 -59 Cash flow from changes in working capital -604 1,124 164 -377 -420 681 -466 199 -1,017 Cash flow from investing activities -49 31 -19 -17 -9 -5 -16 -18 -15 Cash flow from financing activities 628 -2,106 45 234 526 -1,084 134 38 1,144 Cash flow for the period 52 26 197 -158 72 2 -171 200 53

Net debt 4,552 4,216 10,355 10,620 10,155 9,600 10,412 10,030 9,922

Average number of employees 1,365 1,332 1,280 1,299 1,263 1,266 1,258 1,254 1,181

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Bonava ⎜Quarterly report January–March 2016

Housing development

2016 2015 2015 The group Jan-Mar Jan-Mar Jan-Dec Building rights, at period end 28,900 30,800 29,100 Of which, off-balance-sheet building rights 10,400 9,300 11,000 Housing development for consumers Housing units profit recognised during the period 629 471 3,968 Housing units started during the period 747 588 4,452 Housing units sold during the period 788 1,015 4,542 Housing units in ongoing production, at period end 6,767 6,171 6,432 Sales rate in ongoing production 62% 65% 60% Reservation rate in ongoing production 6% 11% 6% Completion rate in ongoing production 53% 51% 46% Completed housing units not profit recognised, at period end 212 325 429 Housing units for sale (ongoing and completed), at period end 2,669 2,374 2,713 Housing development for investors Housing units profit recognised during the period 0 197 1,768 Housing units started during the period 0 127 1,904 Housing units sold during the period 0 127 1,773 Housing units in ongoing production, at period end 2,209 1,734 2,346 Sales rate in ongoing production 94% 100% 94% Completion rate in ongoing production 64% 72% 69% Completed housing units not profit recognised, at period end 0 0 0 Housing units for sale (ongoing and completed), at period end 131 0 131

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Bonava ⎜Quarterly report January–March 2016

Overview of selected key ratios

2016 2015 2015 Amounts in SEK million, unless otherwise stated Jan-Mar Jan-Mar Jan-Dec Profitability ratios Return on capital employed, % 1) 14 8 12

Financial ratios at period end Interest coverage ratio, times 4.4 2.4 3.9 Equity/assets ratio, % 29 2 31 Interest bearing liabilities/total assets, % 32 67 33 Net debt 4,552 10,155 4,216 Debt/equity ratio, times 0.9 34.9 0.9 Capital employed, at period end 10,236 11,141 9,811 Capital employed, average 10,791 11,118 10,882 Capital turnover rate, times 1.2 1.0 1.2 Share of risk-bearing capital, % 29 2 31 Average interest rate, at period end, % 2) 3.07 3.84 3.06 Average period of fixed interest, year 2) 0.1 0.2 0.2 Average interest rate, at period end, % 3) 1.16 1.49 1.26 Average period of fixed interest, year 3) 0.1 0.1 0.1

Financial objectives Return on capital employed, % 10-15 at least Equity/assets ratio, % 30 Dividend as a percentage of consolidated profit/loss for the period at least after tax, % 40

1) Calculation are made on the basis of a 12-month average. 2) Excluding loans in Swedish tenant-owner associations and Finnish housing companies. 3) Pertains to loans in Swedish tenant-owner associations and Finnish housing companies.

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Bonava ⎜Quarterly report January–March 2016

Definitions

Industry-related definitions Housing units in ongoing production housing unit has been sold but not yet occupied by Refers to the period from production start to the buyer. completion of a building. A housing unit is considered complete on receipt of the inspection documentation. Completion rate Worked up expenses in relation to the estimated total Building right expenses of ongoing housing projects. Estimated possibility to develop a site. With respect to housing units, a building right corresponds to an Sales rate apartment or a semi-detached or detached house. Number of sold housing units in production in relation Either ownership of a site or an option of ownership of to total number of housing units in production. the site concerned is a prerequisite for being granted access to a building right. Profit-recognised housing units Number of sold housing units taken possession of by Production start the buyer. Once the buyer takes possession, the The time at which Bonava starts production of a purchase price is recognised as net sales and worked building. At this time, capitalised expenditure for the up expenses are recognised as production costs. site and development expenses recognised as housing units in production. Reservation rate Number of reserved housing units in production in Properties held for future development relation to the total number of housing units in Refers to Bonava’s holding of land and building rights production. for future housing development and capitalised project development of properties. Housing units sold Number of housing units for which a binding sales Completed housing units contract has been signed with the customer and Refers to housing units for which inspection production of the housing unit has started. documentation has been received but the unit has not yet been sold; alternatively, where the finished

Key financial ratios Share of risk-bearing capital Average period of fixed interest Sum total of shareholders’ equity and deferred tax The remaining period of fixed interest weighted by liabilities as a percentage of total assets. interest-bearing liabilities outstanding.

Return on capital employed Average shareholders’ equity Profit/loss after financial items including results from Average of the shareholders’ equity balances at 1 participations in associated companies following the January, 31 March, 30 June, 30 September and 31 reversal of interest expense in relation to average December. capital employed. Average capital employed Balance sheet total Calculated as the average of the capital employed Sum total of assets, liabilities and shareholders’ balances at 1 January, 31 March, 30 June, 30 equity respectively. September and 31 December.

Dividend yield Capital turnover rate The dividend as a percentage of the share price at Net sales divided by average capital employed. year-end. Net debt Average interest rate Interest-bearing liabilities and provisions less financial Nominal interest rate weighted by interest-bearing assets including cash and cash equivalents. liabilities outstanding on the balance-sheet date.

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Bonava ⎜Quarterly report January–March 2016

Net sales Operating margin Net sales are recognised when the housing unit is Operating profit as a percentage of net sales. transferred to the end customer. Property sales are recognised on the date when significant risks and Debt/equity ratio benefits are transferred to the buyer, which normally Net debt divided by shareholders’ equity. coincides with transfer of the ownership. The same definition applies for net revenues. Equity/assets ratio Shareholders’ equity as a percentage of total assets. Earnings per share Net profit/loss for the period attributable to Bonava’s Capital employed shareholders divided by the weighted number of Total assets less interest-free liabilities including shares during the period in question. deferred tax liabilities.

Interest-coverage ratio Profit/loss after financial items plus financial expense divided by financial expense.

Stockholm on 29 April 2016

For the board of directors of Bonava

Joachim Hallengren, CEO

For more information: Ann-Sofi Danielsson CFO and Head of IR

[email protected] Tel: +46 8 585 510 00 Mob: +46 706 740 720

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Bonava ⎜Quarterly report January–March 2016

Bonava is one of the leading housing developers in Northern Europe. Bonava originates from NCC and has created homes and housing areas since the 1930s. Today, Bonava has 1,400 employees with operations in Sweden, Finland, Denmark, Norway, Germany, St. Petersburg, Estonia and Latvia, and generates sales of SEK 13 billion.

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Bonava ⎜Quarterly report January–March 2016

THIS IS A TRANSLATION FROM THE SWEDISH ORIGINAL

Auditors’ review report

To the Board of Directors of Bonava AB (publ), reg. no. 556928-0380

Introduction We have reviewed the condensed interim report for Bonava AB (publ) as at March 31, 2016 and for the three months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of review We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.

Matter of emphasis The condensed interim report for the three months period ending 31 March, 2015 has not been reviewed and the comparative figures in the condensed interim report for the three months period ending 31 March, 2016 is therefore not reviewed.

Stockholm, May 18, 2016 Ernst & Young AB

Mikael Ikonen Authorized Public Accountant

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Financial information for the financial years 2013–2015

COMBINED INCOME STATEMENTS

Jan–Dec Jan–Dec Jan–Dec SEK million Note 2015 2014 2013

1, 10, 20 Net sales 2 13,070 10,226 9,196 Production costs 3, 4, 8, 9, 13, 19 –11,016 –8,717 –8,032 Gross profit 2,054 1,508 1,165

Selling and administrative expense 3, 4, 5, 8, 9 –640 –564 –541 Other operating expense –36 –2 0 Operating profit 6 1,377 942 623

Financial income 11 18 22 Financial expense –356 –407 –378 Net financial items 7 –345 –389 –356

Profit/loss after financial items 1,033 553 267 Tax on net profit/loss for the year 12 –235 –81 –56 Net profit/loss for the year 798 472 211

Attributable to: Bonava AB’s shareholders 767 450 194 Non-controlling interests 31 22 17 Net profit/loss for the year 798 472 211

Earnings per share Profit after tax, SEK 7.08 4.15 1.78

No. of shares Total number of issued shares 108,435,822 108,435,822 108,435,822

No dilution effect will arise.

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COMBINED STATEMENTS OF COMPREHENSIVE INCOME

Jan–Dec Jan–Dec Jan–Dec SEK million Note 2015 2014 2013

Profit/loss for the year 798 472 211

Items that may be reclassified to profit or loss Translation differences during the year in translation of foreign operations –59 75 24 Hedging of exchange-rate risk in foreign operations 41 –56 –15 Cash flow hedges 33 2 11 Tax related to items that may be reclassified to profit or loss 12 –16 12 1 –2 33 21 Items that will not be reclassified to profit or loss Revaluation of defined-benefit pension plans –8 –23 10 Tax related to items that will not be reclassified to profit or loss 12 2 5 –2 –6 –18 8

Other comprehensive income during the year –8 15 29

Comprehensive income for the year 790 487 240

Attributable to: Bonava AB’s shareholders 759 462 222 Non-controlling interests 31 25 18 Total comprehensive income during the year 790 487 240

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COMBINED BALANCE SHEETS

31 Dec 31 Dec 31 Dec 1 Jan SEK million Note 2015 2014 2013 2013

Assets 1, 10, 20 Fixed assets Goodwill 8 22 22 22 22 Other intangible assets 8 62 53 27 14 Owner-occupied properties 9 50 52 50 49 Machinery and equipment 9 61 53 48 45 Other long-term shareholdings 4 8 0 0 Long-term receivables 11 236 176 186 171 Deferred tax assets 12 338 289 177 232 Total fixed assets 23 773 654 510 533

Current assets Properties held for future development 13 4,737 6,092 6,333 6,883 Ongoing housing projects 13 7,043 6,361 5,426 4,377 Completed housing units 13 599 867 1,074 877 Housing projects 12,378 13,320 12,832 12,136

Materials and inventories 5 6 0 0 Tax receivables 20 47 34 11 Accounts receivable 623 477 394 714 Prepaid expenses and accrued income 326 303 239 306 Other receivables 11 793 469 427 459 Cash and cash equivalents 20, 22 585 463 391 404 Total current assets 14,732 15,085 14,319 14,031 TOTAL ASSETS 23 15,506 15,739 14,829 14,564

SHAREHOLDERS’ EQUITY Share capital 14 0 0 0 0 Other capital contributions 5,003 Reserves 15 17 –16 –37 Earnings/loss brought forward including profit/loss for the year –346 277 533 482 Shareholders’ equity 4,672 294 517 445 Non-controlling interests 60 44 28 19 Total shareholders’ equity 4,732 338 545 464

LIABILITIES Long-term liabilities Long-term interest-bearing liabilities 15 2,033 1,281 872 1,057 Other long-term liabilities 17 487 297 133 710 Provisions for pensions 16 50 22 28 Other provisions 16 357 314 308 278 Total long-term liabilities 23 2,877 1,942 1,335 2,073

Current liabilities Current interest-bearing liabilities 15 3,046 9,020 8,539 8,559 Accounts payable 677 368 374 402 Tax liabilities 152 123 78 95 Accrued expenses and deferred income 18 840 646 626 488 Other current liabilities 17 3,180 3,302 3,331 2,482 Total current liabilities 23 7,896 13,459 12,949 12,027 Total liabilities 10,773 15,400 14,283 14,100 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 15,506 15,739 14,829 14,564

Assets pledged 21 886 1,145 1,121 1,031 Contingent liabilities 21 742 1,909 2,121 1,182

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COMBINED STATEMENTS OF CHANGES IN EQUITY

Changes in shareholders’ equity Shareholders’ equity attributable to Bonava Earnings Total Other capital brought Non-controlling shareholders’ SEK million Share capital contributions Reserves forward Total interests equity

Opening balance 1 January 2013 0 0 –37 482 445 19 464 Net profit/loss for the year 194 194 17 211 Other comprehensive income 21 7 28 1 29 Total comprehensive income 0 0 21 201 222 18 240

Transactions with shareholders 121 121 121 Transactions with shareholders regarding tax –70 –70 –70 Performance-based incentive program 1 1 1 Dividend –202 –202 –9 –211 Total transactions with shareholders 0 0 0 –150 –150 –9 –159 Shareholders’ equity 31 December 2013 0 0 –16 533 517 28 545 Net profit/loss for the year 450 450 22 472 Other comprehensive income 33 –21 12 3 15 Total comprehensive income 0 0 33 429 462 25 487

Transactions with shareholders –635 –635 –635 Transactions with shareholders regarding tax 72 72 72 Performance-based incentive program 2 2 2 Dividend –124 –124 –9 –133 Total transactions with shareholders 0 0 0 –685 –685 –9 –694 Shareholders’ equity 31 December 2014 0 0 17 277 294 44 338

Net profit/loss for the year 767 767 31 798 Other comprehensive income –2 –6 –8 –8 Total comprehensive income 0 0 –2 761 759 31 790

Shareholders’ contributions 5,003 5,003 5,003 Transactions with shareholders –1,393 –1,393 –3 –1,396 Transactions with shareholders regarding tax 112 112 112 Performance-based incentive program 1 1 1 Dividend –104 –104 –12 –116 Total transactions with shareholders 0 5,003 0 –1,384 3,619 –15 3,604 Shareholders’ equity 31 December 2015 0 5,003 15 –346 4,672 60 4,732

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COMBINED CASH FLOW STATEMENTS

Jan–Dec Jan–Dec Jan–Dec SEK million Note 2015 2014 2013

OPERATING ACTIVITIES Profit/loss after financial items 1,033 553 267 Adjustments for items not included in cash flow: – Depreciation/amortisation 4 42 22 16 – Impairment losses and reversal of impairment losses 13 23 – Exchange-rate differences 65 22 –39 – Changes in provisions –53 5 29 – Other –2 –2 –2 Total items not included in cash flow 52 48 27

Tax paid –125 –91 –127 Cash flow from operating activities before changes in working capital 959 510 167

Cash flow from changes in working capital Sales of housing projects 10,075 8,840 7,210 Investments in housing projects –9,842 –9,694 –7,959 Other changes in working capital 258 250 911 Cash flow from changes in working capital 491 –603 162 CASH FLOW FROM OPERATING ACTIVITIES 1,450 –94 328

INVESTING ACTIVITIES Acquisition of buildings and land –4 –5 –3 Sale of buildings and land 1 1 Acquisition of financial fixed assets –4 –3 Sale of financial fixed assets 44 2 2 Acquisition of tangible and intangible fixed assets –52 –48 –31 Sale of tangible and intangible fixed assets 2 1 Cash flow from investing activities –13 –53 –34 Cash flow before financing 1,437 –147 295

FINANCING ACTIVITIES Dividend paid –104 –124 –202 Increase(+)/Decrease(–) in interest-bearing financial liabilities –1,196 414 –33 Increase(–)/Decrease(+) in long-term interest-bearing receivables –29 –1 27 Increase(–)/Decrease(+) in current interest-bearing receivables 29 –58 –100 Cash flow from financing activities –1,301 231 –308 Cash flow for the year 136 84 –13

Cash and cash equivalents, 1 January 22 463 391 404 Exchange-rate difference in cash and cash equivalents –14 –12 Cash and cash equivalents, 31 December 585 463 391

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Specification of the item reserves in shareholders’ equity 31 Dec 31 Dec 31 Dec 2015 2014 2013

Translation reserve Translation reserve, 1 January 44 13 Translation differences during the year in translation of foreign operations –59 75 24 Gain/loss on hedging of exchange-rate risk in foreign operations 41 –56 –15 Tax attributable to hedging of exchange-rate risk in foreign operations –10 12 4 Translation reserve, 31 December 16 44 13

Hedging reserve Hedging reserve, 1 January –27 –29 –37 Fair value changes for the year in cash flow hedges 33 3 11 Tax attributable to cash flow hedges –7 –1 –3 Hedging reserve, 31 December –1 –27 –29

Total reserves Reserves, 1 January 17 –16 –37 Change in reserves during the year Translation reserve –28 31 13 Hedging reserve 26 2 8 Reserves, 31 December 15 17 –16

Change in shareholders’ equity Hedging reserve The change in shareholders’ equity derives primarily from compre- The hedging reserve includes the effective portion of the accumu- hensive income for the year, transactions attributable to the majority lated net change in the fair value of cash flow hedging instruments shareholder as a feature of presenting combined financial statements attributable to hedging transactions that have not yet occurred. for Bonava and dividends to shareholders. Earnings brought forward including profit/loss for the year Other contributed capital This item includes earnings accrued in Bonava, and transactions with Pertains to shareholders’ equity contributed by the owners. the majority shareholder and dividends are also included here.

Translation reserve The translation reserve includes all exchange-rate differences as of 1 January 2013 arising from the translation of the financial statements of foreign operations that have compiled their statements in a currency other than that in which Bonava’s financial statements are presented, in Bonava’s case SEK. The translation reserve also includes exchange-rate differences that arise from the revaluation of liabilities and currency forward contracts entered into as instruments intended to hedge net investments in foreign operations.

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Notes

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES Bonava’s combined financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC’s interpre- GENERAL tations as adopted by the EU, as well as RFR 1 Supplementary Accounting In view of NCC AB’s board of directors resolution on 28 January 2016, to principles for Groups and its associated interpretations, which were propose that the annual general meeting resolve to distribute NCC Housing published by the Swedish Financial Reporting Board. The basis for this by a so-called Lex Asea, these combined financial statements have been report and the accounting policies applied in the preparation of the prepared for the purpose of compiling a prospectus, since Bonava AB’s combined financial statements apply to all of the periods presented. shares are to be listed on a regulated market. The preparation of combined financial statements is a way of illustrating Basis for preparation financial information for a group of entities that are not a legal group but are IFRS does not specifically address the preparation of combined financial ultimately owned by the same party. These combined financial statements statements. The term “combined financial statements” refers to financial represent the group of entities that will constitute the future Bonava AB information prepared by aggregating financial information for entities that Group. Since the entities did not constitute a group in the legal sense of the do not meet the definition of a group according to IFRS 10. The combined term at the end of the financial year, these combined financial statements financial statements are intended to present Bonava’s historical financial are prepared at the end of financial year for this group, which below is information, and thus do not encompass all of the entities that constitue defined as Bonava. this group. One important requirement for the preparation of these combined financial statements is that all entities must be under common Bonava is fundamentally the operating segment Housing of NCC AB. Some control via NCC AB’s ownership. of the entities that were part of the segment will, however, not be part of the future Bonava AB Group and have therefore been excluded, in addition, a The following considerations were taken into account in the preparation of number of entities have been added. the combined financial statements and in the policies used to determine which assets, liabilities, income and expenses as well as cash flows that The following entities have been excluded compared with the Housing must be included. segment: – Ekängens Handelsträdgård AB Allocation of costs – Kungsplattan AB One condition for the preparation of combined financial statements is that – Tipton Ylva AB income and expenses as well as assets and liabilities are based on entries – NCC Beckomberga nummer 1 AB that can be identified. NCC AB has performed a internal cost allocation whereby central costs, inter alia the IT and HR functions as well as other During the fourth quarter of 2015, the aforementioned four Swedish staff costs, have been charged to each entity. As a result, related costs for entities were also excluded from the operating segment Housing. Bonava have been included in the combined financial statements. The following entities have been added compared with the Housing segment: Financial expenses and capital structure Financial expenses charged to Bonava entities are based on the actual – NCC Property Development SIA borrowing and interest expenses owed to NCC’s central treasury function. – Dalton Auto Centrs SIA There are derivatives that were dedicated to Bonava entities, which have – Januki SIA now been allocated to Bonava and are included in the combined financial During the fourth quarter of 2015, the aforementioned three entities were statements. legally acquired by SIAB Investment AB, which in turn was acquired by Bonava’s historic capital structure has not reflected the structure for a sepa- Bonava AB. These three entities are also included in the Housing operating rate, listed entity. Accordingly, a shareholders’ contribution of approximately segment as of the fourth quarter of 2015. SEK 5 billion was contributed at the end of 2015 as a receivable from NCC At the beginning of 2015, the housing segment acquired NCC Construc- AB. This transaction is presented as other capital contributions to Bonava. tion Finland’s Russian and Baltic contracting operations. In the combined financial statements, these operations have been included since 2013. The Income tax excluded and additional entities have been recognised as transactions with Due to both the above mentioned commission relationship and the fact that the owner. the NCC AB Group was able to use group contributions to even the tax A significant part of the operation in Sweden was conducted on a commis- consequences between the entities, the Housing segment has not histori- sion basis for NCC AB until the end of 2015. The commission relationship cally been charged the full amount for taxes. In the combined financial ceased as per 30 November 2015 and the operation has been transferred statements, tax is recognised based on the taxable earnings generated by to Bonava via an asset transfer acquisition. At the end of 2015, most of the the entities. As with group contributions received and granted, this tax has other entities that finally will be included in Bonava were owned by Bonava been recognised as a transaction with the owners. AB and had been acquired against promissory notes. The only entity not owned at the end of 2015 is the Housing operation in the Finnish company, Earnings per share NCC Rakkenus Oy, which was transferred during the first quarter of 2016 The calculation of earnings per share in these combined financial state- via a demerger. Accordingly, these financial statements are an aggregation ments is based on Bonava’s net profit/loss for the year attributable to the of these entities’ accounts in accordance with the principles described parent company’s shareholders, divided by the average number of shares below. A complete register of the entities that constitute the Group is outstanding. Taking into consideration the increase in the number of shares presented in the combined financial statements, see Note 25. to 108,435,822 after the end of the financial year without payment, such number of shares was used in all periods presented. These financial statements are Bonava’s first financial reports prepared according to IFRS. In accordance with IFRS 1, Bonava chose to prepare its Segment combined financial statements based on the financial information reported Bonava’s management monitors its operations from a geographic perspec- by the entities described above for the purpose of compiling NCC AB’s tive. Thus the following operating segments are presented in the combined consolidated accounts. The voluntary exemption provided in IFRS 1, to set financial statements: Sweden, Germany, Finland, Denmark/Norway and translation differences to zero when making a transition to IFRS, was St. Petersburg, which reflects with the internal management. The financial applied when preparing these combined financial statements. information is based on the reports provided internally for each segment. Thus the accounting policies conform with the accounting policies described in NCC AB’s 2015 annual report. These policies will also be applicable in 2016, except in the case of segment reporting, which is described below.

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Cash and cash equivalents duction of the new standard is expected to have no or only a minor impact Cash and cash equivalents comprise cash funds and immediately available on Bonava’s financial reporting. balances at banks and equivalent institutions, as well as current investments IFRS 15 “Revenue from Contracts with Customers” regulates how to recog- with a maturity of less than three months at the date of acquisition and that nise revenues. The principles that IFRS 15 is based on should provide users are exposed to only a minor risk of value fluctuation. Bonava also classifies of financial statements with more usable information on the company’s its account in NCC AB’s central cash pool as cash and cash equivalents (see revenues. The expanded disclosure obligation means that information on also Notes 20 and 22). types of revenues, settlement dates, uncertainties concerning revenue recognition and cash flow attributable to the company’s contracts with Cash flow statement customers must be provided. According to IFRS 15, revenue should be The cash flow statement is prepared using the indirect method, in accord- recognised when the customer gains control over the good or service sold ance with IAS 7, Statement of Cash Flows. As Bonava’s business is develop- and has the ability to use and receive the benefit from the good or service. ment and sale of housing projects and this is considered to be the most IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts, as significant part of the cash flow, sales and investments in housing projects well as their associated SIC and IFRIC interpretations. IFRS 15 comes into are broken out from changes in working capital. The recognised cash flow force for financial years that begin on 1 January 2018 or later (not yet includes only transactions that involve cash payments and disbursements. adopted by the EU). Early adoption is permitted. Bonava is currently investi- In 2013–2015, financing was obtained from the internal bank, as well as in gating the effects, apart from expanded disclosure requirements, that this Finnish housing companies and Swedish tenant owner associations. This standard could have on Bonava’s financial reporting. has meant short maturities and a continuous turnover of financing, whereby cash flow from financing activities has been recognised in net amounts as IFRS 16 “Leases” is a new leasing standard that replaces IAS 17 Leases and far as changes in financial liabilities are concerned. When Bonava becomes its associated interpretations IFRIC 4, SIC-15 and SIC-27. The standard an independent entity, the internal loans will be refinanced with longer requires assets and liabilities attributable to all leases to be recognised in maturities and then the cash flows will be recognised in gross amounts. The the balance sheet with a few exceptions. This recognition is based on the Company intends to continue recognising the financing of Swedish tenant view that the lessee has a right to use an asset during a specific period and owner associations and Finnish housing companies in net amounts. an obligation to pay for this right at the same time. The lessor’s reporting will be essentially unchanged. The standard is applicable for financial years Elimination of transactions within Bonava that begin on 1 January 2019 or later. Early adoption is permitted provided Receivables, liabilities, revenues and costs, as well as unrealised gains and that IFRS 15 “Revenue from Contracts with Customers” is applied. Bonava losses, that arise when a entity in Bonava sells goods or services to another has yet to evaluated the effects of IFRS 16. group company are eliminated in their entirety. Unrealised losses are elimi- No other IFRS or IFRIC interpretations that have not yet come into effect are nated in the same way as unrealised gains, but only to the extent as there expected to have any material impact on Bonava. are no impairment requirements. This also applies to joint arrangements, in an amount corresponding to Bonava’s holding. For more detailed informa- Consolidated Financial Statements tion, see Note 20, Transactions with related parties. Purchase method Business combinations deriving from parties who are not under joint Significant accounting policies control are recognised by applying the acquisition method. This method The preparation of financial statements in agreement with IFRS requires the entails that the acquisition of a subsidiary is regarded as a transaction use of a number of important accounting estimates. The management is whereby Bonava indirectly acquires the subsidiary’s assets and takes over its also required to make certain assessments when applying Bonava’s liabilities. The fair value on the date of acquisition of the acquired identifia- accounting policies. The areas requiring a high degree of assessment, that ble assets and assumed liabilities, as well as any non-controlling interests, is are complex or are areas in which assumptions and estimations are of mate- determined in the acquisition analysis. rial importance to the consolidated financial statements are described below. The significant accounting principles applied when preparing the In the event of a business combination in which transferred compensation, combined financial statements are also presented below. These principles any non-controlling interests and the fair value of previously owned interests have been applied consistently for all years presented, unless otherwise (in connection with gradual acquisitions) exceed the fair value of the stated. acquired assets and assumed liabilities that are recognised separately, the difference is recognised as goodwill. When the difference is negative, what New standards and interpretations that have not yet been applied by is known as a bargain acquisition, this is recognised directly in profit or loss. Bonava Acquired and divested companies are included in Bonava’s income state- A number of new standards and interpretations enter into force for financial ment, balance sheet and cash flow statement during the holding period. No years beginning after 31 December 2015 and have not been applied in the business combinations were executed during the financial year encom- preparation of these combined financial statements. A preliminary assess- passed by these combined financial statements. ment of the effects of those standards regarded as relevant for Bonava is presented below: Subsidiaries Companies in which Bonava has control, in practice through a direct or indi- IFRS 9 “Financial instruments” addresses the classification, measurement rect holding carrying more than 50 per cent of the voting rights, are consoli- and recognition of financial assets and liabilities. IFRS 9 replaces IAS 39, dated in their entirety. Control is defined as power over the investee, the which addresses classification and measurement of financial instruments. right to variable returns from its involvement with the investee and the abil- IFRS 9 retains a mixed measurement approach, but simplifies measurement ity to exercise its power over the investee to affect the investor’s returns. in certain respects. There will be three measurement categories for financial assets: accrued cost, fair value through other comprehensive income Joint arrangements and fair value through profit or loss. How an instrument should be classified Joint arrangements are defined as projects conducted in Bonava in forms depends on the company’s business model and the nature of the instru- similar to those of a consortium, meaning subject to joint control. This ment. Investments in own equity instruments must be recognised at fair could take the form of, for example, jointly owned companies that are value through profit or loss, but it is also possible to recognise the instru- governed jointly. Joint arrangements are divided into joint ventures, which ment at fair value through other comprehensive income the first time it is are recognised according to the equity method, or joint operations, which recognised. In that case there will be no reclassification to the income state- are consolidated according to the proportional method. For further infor- ment when the instrument is sold. The classification and measurement of mation, see Note 10 “Participations in joint ventures”. Bonava has joint financial liabilities do not change, except in cases where a liability is recog- ventures, however, these are not of material importance to the periods and nised at fair value through profit or loss based on the fair value option. The are not presented separately in the combined financial statements. standard must be applied for financial years that begin on 1 January 2018 or later (not yet adopted by the EU). Early adoption is permitted. The intro-

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Non-controlling interests Housing projects for investors In companies that are not wholly owned subsidiaries, non-controlling Sales of housing entities to investors is recognised at the time when mate- interests are recognised as the share of the subsidiaries’ equity held by rial risks and benefits are transferred to the buyer. Depending on the word- external shareholders. This item is recognised as part of Bonava’s share- ing of the contract and local laws and regulations, this may occur on the holders’ equity. Non-controlling interests are profit recognised or loss. Infor- signing date, continuously during the production, or when the buyer take mation about the share of profit attributable to non-controlling interests is possession of the housing entity. disclosed in conjunction with the income statement. The effects of transac- Housing projects sold prior to completion of construction may, if certain tions with non-controlling interests are recognised in shareholders’ equity if conditions have been met, be recognised as profit in two separate transac- they do not give rise to a change in controlling influence. tions: one for the development of land and housing within Bonava, on condition that the risks and benefits have been transferred on the date of Foreign subsidiaries and joint arrangements occupancy, and the second one for the construction contract, which is Foreign subsidiaries/entities are recognised using the functional currency recognised gradually as it is completed, since these transactions meet IFRIC and are translated to the reporting currency. For Bonava, the functional 15’s requirements for recognition on a percentage-of-completion basis. currency is defined as the local currency used in the reporting entity’s accounts. The reporting currency is defined as the currency in which the In Sweden and Germany, transactions with investors are usually recognised combined financial statements are reported, in Bonava’s case SEK. as income on the date of occupancy. In Finland, the profit recognition of land and development costs are ordinarily on the date of occupancy if risks Revenue and benefits are then transferred to the buyer, while the profit from Bonava recognises revenues in profit or loss when significant risks and construction of buildings is recognised on a percentage-of-completion benefits associated with the ownership of the housing entity have been basis. In Denmark/Norway and St. Petersburg, the extent of investor transferred to the buyer. Bonava’s net revenues primarily comprise three transactions is extremely limited. income streams: housing entities sold to consumers, profit/loss from sales of housing projects to investors and, to a lesser extent, divestment of land. Sale of land Bonava’s net sales include revenues from sales of land. Sales of land are IFRIC 15 Agreements for the Construction of Real Estate is applied for the recognised on the date when significant risks and rewards are transferred to recognition of revenues and costs when a company undertakes to build the buyer, which normally coincides when possession of the property is properties. IFRIC 15 addresses both whether an agreement to construct a taken. property should be recognised according to IAS 11 “Construction Contracts “using the percentage-of-completion method or according to IAS 18 Divestment of land that has not undergone project development is normally “Revenue”, as well as when to recognise income from construction. profit recognised or loss on the customer’s date of taking possession of the According to IFRIC 15, IAS 11 should be applied when a buyer is able to land. For all revenue flows, estimated losses are recognised in their entirety specify structural elements of the design of the property before construc- in the income statement for the period. tion begins, or specify major changes during construction. In other cases, IAS 18 must be applied. Depreciation/amortisation Straight-line depreciation according to plan is applied in accordance with If IAS 18 is applied, it must be determined first whether the agreement is an the estimated useful life, with due consideration for any residual values at agreement for the provision of service or an agreement on the sale of the close of the period, or after confirmed depletion of net asset value in goods. If it is a service, the percentage-of-completion model may be those cases when the asset does not have an indefinite life. Goodwill that applied. If the Company must provide both services and building materials, has an indefinite life is not amortised but subject to systematic impairment this is an agreement for the sale of goods. testing. Bonava applies component depreciation, whereby each asset with a considerable value is divided into a number of components that are amor- Housing projects for consumers tised on the basis of their particular useful life. The fundamental principle for all Bonava entities is that revenues from housing projects for consumers are recognised on the transfer date, in Periods of depreciation/amortisation vary in accordance with the table other words when the end customer begins occupancy of the housing below: entity. Software 1–5 years Bonava’s business model in Germany, Denmark, Norway and St. Petersburg, as well as for single-family houses in Sweden, is that Bonava enters into an Other intangible assets 10–33 per cent agreement to build a housing entity with each respective owner. During the Tangible fixed assets construction of the housing entity, accrued costs are recognised in the Owner-occupied properties 1.4–10 per cent asset class “housing projects”. Income is recognised when the housing enti- Machinery and equipment 5–33 per cent ties are completed and the customer has begun occupancy of the home. Impairment losses In Sweden and Finland, Bonava also develops housing projects by entering Bonava tests whether there is an indication that the carrying amount of into construction contracts with a tenant owner association as the client in fixed assets has declined. Impairment requirement arises when the recover- Sweden or a housing company in Finland. In Sweden, the end customer able amount is less than the carrying amount. The term impairment is also purchases a share in the association corresponding to an individual used in connection with a reduced valuation of properties classed as apartment. In Finland, the customer purchases shares in the company current assets. Valuations of these properties are based on the lower of cost corresponding to an individual apartment. Bonava’s business model entails or market principle, meaning the lower of cost and net realisable value. that material risks and benefits are transferred to the customer who acquires the housing entity when the customer fake possession of the Leasing housing entity. Since Bonava exercises control over both the tenant owner In the consolidated financial statements, leasing is classified as either finan- association and the housing company during construction up until the sale cial or operational. Financial leasing exists if the financial risks and rewards to the end customer, these entities are consolidated. As a result, there is no associated with ownership are essentially transferred to the lessee. All other contract with an external party to Bonava until the end customer signs an cases are recognised as operational leasing. agreement. Revenue is based on the actual revenues for the housing project sold. Recognised revenue per housing entity is offset by a share of Finance leases the housing entity’s estimated cost when the project is completed. Assets leased under financial leasing agreements are capitalised in Bonava’s balance sheet as of the date on which the agreement was concluded and the asset delivered. Corresponding obligations are entered as long-term and current liabilities.

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Operating leases For a distribution of amounts, see to Note 13 Housing projects. The reclas- Operational leasing is profit or loss recognised. Leasing fees are allocated sification from properties held for future development to ongoing projects straight line over the leasing term, which could differ from the leasing fee occurs when construction on a project has started. paid during the year in question. For further information on leasing, see Note 19. Properties held for future development Properties held for future development are Bonava’s holdings of land and Taxes building rights for future housing development and capitalised project Income taxes comprise current tax and deferred tax. Tax is profit or loss development properties. Property with leased buildings is classified as recognised, except when the underlying transaction is recognised in other property held for future development if the intention is to demolish or comprehensive income or in equity, in which case the associated tax is refurbish the property. recognised in other comprehensive income or in equity. Current tax is tax Properties held for future development are valued taking into consideration that is to be paid or received during the current financial year. This also whether the properties will be developed or sold. The valuation of land and includes adjustments of current tax attributable to prior periods. building rights for future development is based on a capital investment Deferred tax is recognised on the basis of temporary differences between appraisal. This appraisal is updated with regard to the established sales recognised and taxable values of assets and liabilities. For information on price and cost trend when the market and other circumstances so require. tax on current-year profit and deferred tax assets and liabilities, refer to In those cases when a positive contribution margin from the development Note 12. cannot be obtained taking into consideration normal contract profit, an impairment loss is recognised. Development expenditure is capitalised Deferred tax assets and liabilities are calculated on the basis of the tax rate when it pertains to land or properties owned by Bonava or over which it has determined for the following year in each particular country. When changes control. occur in tax rates, the change is profit or loss recognised in Bonava’s financial statements. Ongoing housing projects In connection with the production start, the value of land and capitalised Reporting of operating segments development expenses is reclassified to ongoing projects, together with An operating segment is a part of Bonava that conducts business opera- costs incurred after the production start. tions from which it generates revenues and incurs costs and for which independent financial information is available. Furthermore, the earnings of Completed housing entities an operating segment are continuously monitored by the chief operating Project costs for completed housing entities are reclassified from ongoing decision maker, who in Bonava’s case is the CEO, in order to evaluate results housing projects to completed housing entities at the date of final inspec- and allocate resources to the operating segment. The reporting of operat- tion. Completed housing entities are measured at the lowest of acquisition ing segments concurs with the reports presented to the CEO, in Bonava’s value and net realisable value. case on the basis of the countries in which Bonava conducts operations. See further Note 2 Reporting of operating segments. Financial instruments Acquisitions and divestments of financial instruments are recognised on the Intangible assets date of transaction, meaning the date on which the company undertakes to Intangible assets are recognised at acquisition costs less accumulated acquire or divest the asset. Financial instruments recognised on the asset impairment losses and amortisation. Goodwill arises from acquisitions of side of the balance sheet, include cash and cash equivalents, loan receiva- companies and operations. Goodwill is not amortised but is instead impair- bles, accounts receivable, financial investments and derivatives. Accounts ment tested on an annual basis. Goodwill in foreign operations is measured payable, loan payables and derivatives are recognised under liabilities. in the particular functional currency and is converted from this functional Financial guarantees such as sureties are also included in financial instru- currency to Bonava’s reporting currency at the exchange rates prevailing on ments. the balance-sheet date. A financial asset or financial liability is recognised in the balance sheet when Tangible fixed assets the company becomes a party to the instrument’s contractual terms and Owner-occupied properties conditions. Accounts receivable are recognised in the balance sheet when Owner-occupied properties are held for use in the Company’s own opera- invoices have been sent. Accounts payable are recognised when invoices tions for the purpose of production, the provision of services or administra- have been received. tion. See further Note 9 Tangible fixed assets. Properties are recognised at A financial asset is derecognised from the balance sheet when the contrac- acquisition value less accumulated depreciation and any impairment losses. tual rights have been realised or extinguished. The same applies to portions of financial assets. A financial liability is derecognised from the balance Machinery and equipment sheet when the contractual obligation has been fulfilled or otherwise Machinery and equipment is recognised at acquisition value less terminated. This also applies to part of the financial liability. accumulated depreciation and any impairment losses. Financial instruments are classified in the following categories for measure- Financial fixed assets ment: financial assets measured at fair value through profit or loss, loan Financial fixed assets are recognised at fair value or accrued acquisition receivables and accounts receivable, financial liabilities measured at fair value. Impairment losses are posted if the fair value is less than the acquisi- value through profit or loss (pertains to derivatives) and other financial tion cost. Further see the section “Financial instruments” below. liabilities. When entered for the first time, a financial instrument is classified on the basis of the purpose for which the instrument was acquired. This Current assets classification determines how the financial instrument is measured following the first reporting occasion, as described below. Housing projects Bonava’s property holdings that are designated as housing projects are Cash and cash equivalents comprise cash funds and immediately available measured as current assets as the intention is to sell the properties and balances at banks and equivalent institutions, as well as current investments transfer them to the customer after completion. Property projects are with a maturity of less than three months at the date of acquisition and that measured at the lower of acquisition value (cost) and net realisable value. are exposed to only a minor risk of value fluctuation. Bonava also classifies Housing projects are defined as completed housing entities, ongoing hous- its account in NCC AB’s central cash pool as cash and cash equivalents. ing projects, undeveloped land and land held for future development. Financial assets valued to fair value through profit or loss Housing projects in Bonava are divided between: This category includes Bonava’s derivative instruments with a positive fair – Properties held for future development value. Changes in fair value are recognised among net financial items in – Ongoing housing projects profit or loss statement. All instruments included in this category are – Completed housing entities

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intended for trading. A derivative instrument that functions as an identified pension plans are based on the so-called Projected Unit Credit Method. and effective hedging instrument is not included in this category. For an The method means that each term of employment is considered to create account of hedging instruments, see Hedge accounting below. an additional unit of the final obligation. Each unit is computed separately and, combined, represent the total obligation on the balance-sheet date. Loans and accounts receivables The principle is intended to provide linear expensing of pension payments Loans and accounts receivables are measured at amortised cost, meaning during the term of employment. The calculation is made annually by inde- the amount expected to be received less an amount for doubtful receiva- pendent actuaries. When there is a difference between how pension costs bles, which is assessed on an individual basis. Since the expected maturity are established in the legal entity and in Bonava, a provision or receivable of an account receivable is short, a nominal value without discounting is for Swedish pension plans is recognised for the payroll tax based on this recognised. Accounts receivable are measured on an ongoing basis. As difference. Accordingly, the value of the defined-benefit liability is the soon as it is doubtful that an invoice will be paid, a provision is made for the present value of anticipated future disbursements using a discount rate. For amount. Although each invoice is measured individually, provisions are the Swedish pension plan, the interest rate on first-class housing bonds has noted for invoices that are more than 60 days overdue unless special been used as the basis for calculating the discount interest rate. circumstances apply. Provisions are made for all invoices that are more than The defined-benefit pension plan in Sweden was secured in NCC’s pension 150 days overdue if payment is not secured. foundation until November 2015, when the pension liability was reinsured with Alecta. Following this measure, Bonava has no defined-benefit pension Financial liabilities measured at fair value through profit and loss obligations. statement This category includes Bonava’s derivative instruments with a negative fair Bonava’s disbursements relating to defined-contribution pension plans are value, with the exception of derivative instruments that function as identi- recognised as expensed during the period in which the employees perform fied and effective hedging instruments. Changes in fair value are recog- the services covered by the fee. nised among net financial items. For white-collar employees in Sweden, the ITP 2 plan’s defined-benefit pension obligations for retirement and family pensions are secured through Other financial liabilities insurance in Alecta. According to a statement from the Swedish Financial Loans and other financial liabilities, such as accounts payable, are included Reporting Board, UFR 10 Recognition of ITP2 Pension Plan financed in this category. Liabilities are recognised at amortised cost. through insurance in Alecta, this constitutes a multi-employer defined- benefit plan. For the 2015 financial year, the company did not have access Hedging of net investments to information required for reporting its proportional share of the plan’s Hedge accounting is applied regarding net investments in foreign subsidiar- commitment, plan assets and costs, which made it impossible to report the ies of Bonava. In the combined financial statements, exchange-rate differ- plan as a defined-benefit plan. The ITP2 Pension Plan that is secured ences on these hedging positions, after taking tax effects into account, are through insurance in Alecta is therefore recognised as a defined contribu- moved directly to other comprehensive income, to the extent they are tion plan. The premium for the defined-benefit retirement and family matched by the year’s translation differences within other comprehensive pension is calculated on an individual basis and depends on factors such as income. Any surplus amount, so-called ineffectiveness, is recognised in net salary, previously vested pension and anticipated remaining term of employ- financial items. Bonava uses currency forward contracts to hedge net ment. Anticipated fees during the next accounting period for ITP 2 insur- investments. ance taken out with Alecta amount to SEK 17.5 million.

Cash flow hedges The collective solvency rate consists of the market value of Alecta’s assets as a percentage of its insurance obligations, calculated in accordance with Hedge accounting is used to manage the interest-rate risk associated with Alecta’s actuarial accounting methods and assumptions, which do not one lease. However, this lease was terminated during 2015 and the hedge comply with IAS 19. The collective solvency rate is normally allowed to vary was closed. During previous and current periods, in which hedge account- between 125 and 155 per cent. If Alecta’s collective solvency rate falls ing was used and when effectiveness was proven, value changes were below 125 per cent or exceeds 155 per cent, measures must be taken to recognised in other comprehensive income after taking tax effects into create conditions for returning the solvency rate to the normal interval. In account. Any ineffectiveness has been recognised in net financial items. By the event of low solvency, one measure can be to raise the agreed price for hedging interest rates, Bonava was able to transform variable interest new subscriptions and increase existing benefits. In the event of high increments in leases to fixed interest rates. Since the lease was terminated solvency, one measure can be to introduce premium reductions. At the end and the hedging instrument was settled, all changes in value in other of 2015, Alecta’s surplus in the form of its collective solvency rate was 153 comprehensive income have been reversed to profit or loss, since no future per cent (2014: 143, 2013: 148 per cent). rent payments prevail. Payments connected to employment termination Receivables and liabilities in foreign currencies In conjunction with notice of employment termination, a provision is recog- Receivables and liabilities in foreign currency are revalued at the exchange nised only if the Company is contractually obliged to terminate an employ- rates prevailing on the balance-sheet date. Exchange differences arising ment before the normal time, or when payments are made as an offering to from the translation of operational receivables and liabilities are recognised encourage voluntary termination. For cases in which the Company imple- in operating profit, while exchange differences arising from the translation ments personnel cutbacks, a detailed plan is prepared that covers at least of financial assets and liabilities are recognised in net financial items. the workplace concerned, positions, and the approximate number of affected employees and disbursements for every personnel category or Remuneration to employees position, as the time schedule for the plan’s implementation. If severance Post-employment remuneration payment requirements arising from personnel cutbacks extend beyond Bonava differentiates between defined-contribution pension plans and twelve months after financial year-end, such payments are discounted. defined-benefit pension plans. Defined-contribution plans are defined as pension plans for which the Company pays fixed fees to a separate legal Provisions entity and does not assume any obligations for payments of additional fees, Provisions differ from other liabilities in that there is a degree of uncertainty even if the legal entity lacks sufficient assets to pay benefits accrued for concerning when payment will occur or concerning the size of the amount employment up to and including the balance-sheet date. Other pension required to settle the provision. Provisions are recognised in the balance plans are defined-benefit plans. sheet when a legal or informal commitment exists due to an event that has Bonava primarily has defined-contribution pension plans and, until occurred, and it is probable that an outflow of economic resources will be November 2015, it had a defined-benefit pension plan in Sweden, includ- required to settle the commitment and the amount can be estimated ing certain pensions with assets secured in dedicated foundations or similar reliably. funds. The pension plans are financed through payments made by the various entities. Calculations of the provision for the defined-benefit

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Guarantee commitments In some cases, the difference between the carrying amount and the Provisions for future costs arising due to guarantee commitments are estimated net realisable value is of a minor value. A change in the assump- recognised at the estimated amounts required to settle the commitment on tions made could give rise to an additional impairment requirement. the balance-sheet date. The estimation is based primarily on historical experience of comparable projects and calculations, as well as on senior Carrying amount management’s assessment and experience of similar transactions. at year-end properties held for future Impairment losses SEK million development 1) during the year Borrowing costs 2015 4,737 Borrowing costs attributable to so-called qualifying assets are capitalised as 2014 6,092 a portion of the capitalised asset’s acquisition value when the borrowing costs amounts to total a significant amount. A qualifying asset is an asset 2013 6,332 23 that with necessity takes a substantial period of time to get ready for its 1) See Note 13 Housing projects. intended use, which in Bonava’s case is more than a year. For Bonava, the capitalisation of borrowing costs is most relevant in the construction of Guarantee commitments housing projects. Other borrowing costs are expensed on current account At year-end, guarantee provisions amounted to SEK 242 million (194; 239), in the period in which they are incurred. see Note 16 Provisions. Provisions for future expenditure arising due to guarantee commitments are recognised at the estimated amounts required Pledged assets to settle the commitment on the balance-sheet date. This estimate is based Bonava recognises collateral provided by the company or the group as on calculations, assessments by company management and experiences pledged assets for liabilities and/or obligations. These may be liabilities, gained from past transactions. provisions included in the balance sheet or obligations not recognised in the balance sheet. The collaterals may be tied to assets in the balance sheet Surety and guarantee obligations, legal disputes, etc. or mortgages. Assets are recognised at the carrying amount and mortgages Within the framework of Bonava’s regular business operations, Bonava at nominal value. For type of collateral, see Note 21 Pledged assets, contin- occasionally becomes a party in legal disputes. In such cases, an assess- gent liabilities, sureties and guarantee obligations. ment is made of Bonava’s obligations and the probability of a negative Parent company guarantees issued by NCC AB on behalf of Bonava have outcome for Bonava. Bonava’s assessment is made on the basis of the been entered under pledged assets, contingent liabilities, surety and information and knowledge currently possessed by Bonava. In a number of guarantee obligations since NCC AB, according to an agreement with cases, these are difficult assessments and the final outcome could differ Bonava, is to be indemnified for any costs attributable to these guarantees. from the estimation made. See also Note 16. Deposit guarantees constitute collateral for investments and concession fees paid to tenant-owner associations formed by NCC AB. Such guarantees Significant events after the balance sheet date are to be relinquished as soon as one year has passed after the final acquisi- In view of any impact that significant events after the balance sheet date tion cost for the tenant-owner association’s building has been established. may have in accordance with IAS 10, the principle has been decided that only any such events in the most recently reported period, meaning the Critical estimates and assessments 2015 financial year, are to be taken into account in the combined financial The combined financial statements include certain assessments and statements. Accordingly, the 2014 and 2013 financial years are closed. assumptions about the future. These are based in part on historical experience and in part on expectations concerning future events and thus may, at a later date, be changed because of, for example, changes in factors in the business environment. Particular attention must be paid to this at times of economic conditions characterised by major uncertainty in terms of both the construction market and the global financial market, which has been the case during recent years. The assessments that are most critical to Bonava are described below.

Valuation of properties classified as current assets Bonava’s properties classified as current assets are recognised at the lower of acquisition value and net realisable value. The assessment of net realisable value is based on a series of assumptions such as sales prices, production costs, the price of land, rent levels and yield requirements as well as the possible timing of production start and/or sale. Bonava continuously monitors the development in the market and tests the assumptions made on an ongoing basis.

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NOTE 2 reportinG BY OPERATING SEGMENTS

The business operations are divided into five operating segments based on the parts of the organisation monitored by the CEO, who is the chief operating decision maker. Each operating segment has a manager who is responsible for the daily operations and who regularly reports the results of the operating segment’s performance to the CEO. The following segments were identified based on this internal reporting procedure: Sweden, Germany, Finland, Denmark/Norway and St. Petersburg. The head office, Estonia/Latvia and adjustments and eliminations are included in “Other and eliminations”. All segments develop and sell housing units. Sales between the segments are not material.

Denmark/ Other and 2015 Sweden Germany Finland Norway St. Petersburg eliminations Total Net sales 4,639 3,471 1,791 1,760 773 636 13,070 Depreciation/amortisation –4 –15 –1 –2 –20 –42 Impairment losses and reversal of impairment losses 0 0 0 Impairment of receivables from joint ventures 0 –35 –35 Operating profit 706 422 187 –3 197 –132 1,377 Net financial items –345 Profit/loss after financial items 1,033 Capital employed1) 4,978 1,361 1,114 1,076 802 481 9,811

Denmark/ Other and 2014 Sweden Germany Finland Norway St. Petersburg eliminations Total Net sales 2,409 3,170 1,816 1,825 743 262 10,226 Depreciation/amortisation –4 –13 –1 0 –2 –3 –22 Impairment losses and reversal of impairment losses 0 0 Share in profit of joint ventures 0 –2 –2 Operating profit 331 328 146 84 142 –89 942 Net financial items –389 Profit/loss after financial items 553 Capital employed1) 4,632 1,268 1,596 1,896 761 535 10,688

Denmark/ Other and 2013 Sweden Germany Finland Norway St. Petersburg eliminations Total Net sales 3,018 2,508 2,323 676 376 296 9,196 Depreciation/amortisation –3 –10 –1 0 –2 0 –16 Impairment losses and reversal of impairment losses –23 –23 Share in profit of joint ventures 0 Operating profit 229 229 181 –25 93 –82 623 Net financial items –356 Profit/loss after financial items 267 Capital employed1) 4,385 877 1,303 2,281 650 482 9,978

2015 2014 2013 Operating Operating Operating Other and eliminations Net sales profit Net sales profit Net sales profit Bonava’s Head Office2) 14 –111 –88 –73 Sales of German property portfolio 480 51 Operation in Estonia and Latvia 129 –62 266 12 344 5 Adjustments and eliminations 13 –10 –4 –13 –48 –14 Total 636 –132 262 –89 296 –82

1) Capital employed is defined on page 62. 2) The establishment of an independent Bonava generated costs of SEK 57 million in 2015, of which the Head office accounted for SEK 12 million.

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NOTE 3 NUMBER OF EMPLOYEES, PERSONNEL EXPENSES AND REMUNERATION OF SENIOR EXECUTIVES

Average number of employees 2015 2014 2013 Number of Number of Number of employees of whom men employees of whom men employees of whom men Sweden 153 74 126 58 149 69 Germany 745 562 715 550 686 533 Finland 76 23 78 29 70 30 Denmark 30 18 19 9 20 14 Norway 18 11 20 13 20 13 St. Petersburg 254 152 232 147 187 109 Estonia 17 12 28 20 35 28 Latvia 38 30 48 38 47 38 Total 1,331 882 1,266 864 1,214 834

Percentage of women, % 2015 2014 2013 Distribution of company management by gender Total – Boards of directors 16 19 20 – Other senior executives 18 15 9

The term other senior executives refer to the individuals who, together with the CEO, constitute the senior management, as well as those senior executives who are not members of the senior management but who report directly to the CEO.

Salaries and other remuneration allocated between the board of directors and senior executives as well as other employees 2015 2014 2013 Board of Board of Board of directors and directors and directors and senior Other senior Other senior Other executives employees Total executives employees Total executives employees Total Bonava 35 572 607 33 499 532 26 445 471

Social security expenses 240 157 148 – of which pension costs 5 84 3 33 3 38

Conditions for and remuneration of senior executives Pension conditions for the CEO The Chairman of the board and the other directors elected by the annual The CEO Joachim Hallengren has a defined-contribution pension plan with general meeting receive remuneration only in an amount resolved by the a premium amounting to 30 per cent of his fixed salary. Joachim Hallen- annual general meeting. No pensions are paid to the board of directors. gren’s retirement age is 65 years. Remuneration of the CEO is proposed by the Chairman of the board and Pension conditions for other senior executives decided by the board of directors. Remuneration of other senior executives Other senior executives employed in Sweden are covered by a defined- in Bonava’s senior management is proposed by the CEO and approved by benefit ITP plan with a retirement age of 65 years and, in accordance with the Chairman of the board. the current policy, of a supplementary defined-contribution pension Remuneration for the CEO and other senior executives consists of a fixed obligation of 30 per cent of pensionable salary exceeding 30 income base salary, variable remuneration, share-based remuneration, other benefits and amounts. pensions. The term other senior executives pertains to those individuals For other senior executives employed in other countries, defined-contribu- who, together with the CEO, constitute senior management, as well as those tion supplementary pension terms apply ranging from 0 to 30 per cent of senior executives who are not members of the senior management, but who pensionable salary depending on the country of employment. report to the CEO. At the end of 2015, the number was eleven. Of these, seven were employed by the parent company and four by subsidiaries.

Variable remuneration The variable remuneration payable to CEO Joachim Hallengren was in 2015 capped at 40 per cent of his fixed salary. The variable remuneration was based on financial targets established by the board of directors. Remuneration regarding operations in 2015 was SEK 0.8 million.

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Remuneration, provisions and other benefits in 2015 Total salary, of which of which, remuneration of which variable share-based Pension SEK 000s and benefits1) benefits remuneration2) remuneration cost CEO Joachim Hallengren 6,718 750 718 1,198 Chairman of the board Carl Engström Director Åsa Hedenberg Director Magnus Rosén Director Anna Wallenberg Director Viveca Ax:son Johnson Director Samir Kamal Other senior executives group (ten individuals) 28,586 273 4,778 1,800 3,693 Total senior executives (eleven individuals) 35,304 273 5,528 2,518 4,891

Salary and other remuneration to the CEO amounting to SEK 1.2 million (of which variable remuneration of SEK 0.8 million) refers to the period as CEO of Bonava AB. Prior to that time, remuneration to the CEO was paid by the NCC group amounting to SEK 5.5 million.

Remuneration, provisions and other benefits in 2014 Total salary, of which of which, remuneration of which variable share-based Pension SEK 000s and benefits1) benefits remuneration2) remuneration cost Total senior executives (current CEO and twelve individuals) 33,160 392 5,439 3,174 3,237

Remuneration, provisions and other benefits in 2013 Total salary, of which of which, remuneration of which variable share-based Pension SEK 000s and benefits1) benefits remuneration2) remuneration cost Total senior executives (current CEO and ten individuals) 25,917 435 3,891 1,379 2,799

The historical board of directors for 2013–2015 was represented by directors employed in the NCC group. During this period, no remuneration was paid to the historical board of directors. As per 21 December 2015, new directors were elected at an extra general meeting. The directors are presented in the above table for 2015.

1) Remuneration and benefits pertain to vacation compensation, reduced working hours, company vehicles and, when appropriate, severance pay. 2) Variable remuneration pertains to the amounts expensed for each financial year.

Severance pay The period of notice for Joachim Hallengren is six months. The period of from a new employer or own business. During the period of notice, senior notice from the company’s perspective is twelve months. Severance pay executives may not take up a new position with another employer or amounts to twelve months. Other senior executives are subject to nine conduct their own business activities without the company’s written months notice from the company, or six months notice if the senior execu- consent. Should the senior executive resign on his/her own accord, tive resigns of his/her own accord. Severance pay for nine months is severance pay are not payable. When employment ends, the senior payable if employment is terminated by the company. The severence pay executive becomes subject to a prohibition on competing against or will be reduced by an amount corresponding to any remuneration received recruiting employees for a period of twelve and nine months, respectively.

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NOTE 4 DEPRECIATION/AMORTISATION NOTE 6 operatin G EXPENSES DISTRIBUTED BY COST TYPE 2015 2014 2013 Intangible assets –20 –3 –1 2015 2014 2013 Owner-occupied properties –4 –2 –2 Production-related goods and Machinery and equipment –18 –16 –13 services, plus raw materials Total depreciation/ and supplies 10,784 8,575 7,916 amortisation –42 –22 –16 Change in inventories 0 –6 0 Personnel costs 830 689 619 Depreciation/amortisation 42 22 16 Impairment losses 0 0 23 NOTE 5 re MUNERATION AND FEES Total cost of production, TO AUDIT FIRMS and selling and administration costs 11,656 9,281 8,573

2015 2014 2013 Audit firms EY NOTE 7 net FINANCIAL ITEMS Auditing assignments 3 Audit in addition to the audit 2015 2014 2013 assignment 0 Financial income 11 18 22 Tax consultations 0 PWC Interest expense on financial Auditing assignments 4 4 liabilities measured at amortised cost –327 –367 –354 Audit in addition to the audit assignment 0 0 Net exchange-rate changes 3 –7 –2 Tax consultations 0 Other financial expenses –32 –32 –22 Other assignments 0 0 Financial expenses –356 –407 –378 Net financial items –345 –389 –356 Other auditors Auditing assignments 1 1 Tax consultations 0 0 0 Total remuneration and cost compensation to auditors and audit firms 4 5 5

Auditing assignments are defined as the statutory audit of the annual accounts and the consolidated financial statements and of the bookkeeping as well as of the administration of the board of directors and the CEO, and also audit and other examinations conducted pursuant to agreement or contract. This includes other duties that the company’s auditors are obliged to conduct and advice or other assistance required due to observations made during such examinations or during the performance of such other duties. All other work is defined as other assignments.

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NOTE 8 intan GIBLE ASSETS

Acquired intangible Acquired intangible assets assets 2015 Goodwill Other 2013 Goodwill Other Recognised cost on 1 January 67 58 Recognised cost on 1 January 67 16 Investments 27 Investments 14 Divestment and scrappage 3 Divestment and scrappage Reclassifications Reclassifications 0 Translation differences during the year –2 Translation differences during the year 0 Recognised cost on 31 December 67 86 Recognised cost on 31 December 67 29

Accumulated amortisation on 1 January –5 Accumulated amortisation on 1 January –1 Amortisation according to plan during the year –20 Amortisation according to plan during the year –1 Accumulated amortisation on 31 December 0 –24 Accumulated amortisation on 31 December 0 –2

Accumulated impairment losses on 1 January –45 Accumulated impairment losses on 1 January –45 Accumulated impairment losses Accumulated impairment losses on 31 December –45 0 on 31 December –45 0

Residual value on 1 January 22 53 Residual value on 1 January 22 14 Residual value on 31 December 22 62 Residual value on 31 December 22 27

Impairment testing of goodwill has not been included for reasons of Amortisation is included in the following lines in the income statement materiality.

2015 2014 2013 Acquired intangible assets Production costs 3 –3 –1 2014 Goodwill Other Selling and administrative expenses –23 Recognised cost on 1 January 67 29 Total –20 –3 –1 Investments 30 Divestment and scrappage The item “Other” refers mainly to capitalised development expenses for IT Reclassifications systems. Translation differences during the year –1 Recognised cost on 31 December 67 58

Accumulated amortisation on 1 January –2 Amortisation according to plan during the year –3 Accumulated amortisation on 31 December 0 –5

Accumulated impairment losses on 1 January –45 Accumulated impairment losses on 31 December –45 0

Residual value on 1 January 22 27 Residual value on 31 December 22 53

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NOTE 9 tanGIBLE FIXED ASSETS NOTE 10 participations IN JOINT ARRANGEMENTS Owner- Machinery occupied and The financial statements for Bonava include the items below that constitute 2015 properties equipment Total interests in the associated companies’ net sales, costs, assets and liabilities. Recognised cost on 1 January 68 166 234 Investments 1 26 26 2015 2014 2013 Increase through acquisitions 4 4 8 Revenue 35 1 44 Divestment and scrappage –9 –9 Expenses –43 –7 –43 Reclassifications 2 2 Profit –8 –6 1 Translation differences during the year –3 –6 –9 Fixed assets 28 15 31 Recognised cost on 31 December 70 182 252 Current assets 287 334 362 Accumulated impairment losses Total assets 315 349 393 and depreciation on 1 January –16 –113 –128 Long-term liabilities 204 195 256 Divestment and scrappage 7 7 Current liabilities 32 75 90 Reclassifications –2 –2 Total liabilities 236 270 346 Translation differences during the year 0 4 4 Net assets 79 79 47 Depreciation during the year –4 –18 –22 Accumulated impairment losses The joint arrangement category also includes partly owned contracts, for and depreciation on 31 December –19 –121 –140 which Bonava has a contractual joint influence together with the other Residual value on 1 January 52 53 106 partners. Residual value on 31 December 50 61 111 Specification of joint operations Owner- Machinery Shareholding, % occupied and 2014 properties equipment Total Tipton Brown AB 33 Recognised cost on 1 January 62 142 204 NVB Beckomberga KB 25 Investments 5 23 28 Stora Ursvik KB 50 Increase through acquisitions 5 5 KB Öhusen 50 Divestment and scrappage –4 –4 Sigtuna Stadsängar Exploaterings AB 53 Translation differences during Elinegårds Utvecklings AB 50 the year 1 2 2 NVB Sköndalsbyggarna II AB 33 Recognised cost on 31 December 68 167 234 NVB Sköndalsbyggarna AB 33 Accumulated impairment losses NVB Sköndalsbyggarna II KB 33 and depreciation on 1 January –12 –94 –106 NVB Sköndalsbyggarna KB 33 Increase through acquisitions –2 –2 Divestment and scrappage –1 1 0 Translation differences during the year 0 –2 –1 NOTE 11 lon G-TERM RECEIVABLES Depreciation during the year –2 –16 –19 AND OTHER RECEIVABLES Accumulated impairment losses and depreciation on 31 December –16 –113 –128 2015 2014 2013 Residual value on 1 January 50 48 98 Long-term receivables classified as fixed assets Residual value on 31 December 52 53 106 Receivables from joint ventures 94 94 91 Receivables from sold housing Owner- Machinery projects 74 17 occupied and 2013 properties equipment Total Other long-term receivables 68 82 78 Recognised cost on 1 January 57 126 185 Long-term receivables classified as fixed assets 236 176 186 Investments 3 21 24 Increase through acquisitions –5 –5 Other receivables classified as current assets Divestment and scrappage –4 –4 Receivables from NCC 129 98 91 Reclassifications 1 0 0 Receivables from joint ventures 5 49 25 Translation differences during Receivables from sold housing the year 1 3 4 projects 54 29 16 Recognised cost on 31 December 62 142 204 Advance payments to suppliers 1 3 2 Accumulated impairment losses Other long-term receivables 605 290 293 and depreciation on 1 January –9 –81 –91 Other receivables classified Increase through acquisitions 2 2 as current assets 793 469 427 Divestment and scrappage –1 1 0 Translation differences during the year 0 –3 –3 Depreciation during the year –2 –13 –15 Accumulated impairment losses and depreciation on 31 December –12 –94 –106 Residual value on 1 January 48 45 94 Residual value on 31 December 50 48 98

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NOTE 12 ta X ON PROFIT/LOSS FOR THE YEAR, DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES

2015 2014 2013 Tax on profit/loss for the year Current tax cost –188 –123 –87 Deferred tax revenue/cost –46 42 30 Total recognised tax on profit/loss for the year –235 –81 –56

2015 2014 2013 Effective tax Tax, % Results Tax, % Results Tax, % Results Pretax profit 1,033 553 267 Tax according to company’s current tax rate –22 –227 –22 –120 –22 –58 Effect of other tax rates for non-Swedish companies –3 –27 –3 –19 –10 –26 Amended tax rates in Finland, Denmark, Norway 0 –4 0 1 1 4 Non-tax-deductible costs –1 –6 –1 –6 –2 –5 Non-taxable revenues 8 78 6 34 0 1 Tax effect resulting from non-capitalised tax loss carryforwards –5 –51 Tax effect resulting from previous non-capitalised tax loss carryforwards 3 35 5 26 13 36 Tax attributable to prior years –2 –17 0 2 –1 –3 Other –1 –15 0 1 –2 –5 Average tax rate/recognised tax –23 –235 –15 –81 –21 –56

Current tax has been calculated based on the nominal tax prevailing in the country concerned. When the tax rate for future years has been amended, that rate is used for calculating deferred tax.

Tax items recognised directly in other comprehensive income

2015 2014 2013 Current tax in hedging instruments –9 12 4 Deferred tax on cash flow hedging –7 –1 –3 Deferred tax attributable to the revaluation of defined-benefit pension plans 2 5 –2 Total –14 17 –1

CHANGE IN DEFERRED TAX IN TEMPORARY DIFFERENCES AND TAX LOSS CARRYFORWARDS

2015 2014 2013 Opening carrying amount, 1 Jan 289 177 232 Acquisition of subsidiaries 1 –10 Recognised tax on profit/loss for the year –46 42 30 Amended tax rates in Finland, Denmark, Norway –4 1 4 Tax items recognised in other comprehensive income –5 5 –5 Transactions with shareholders regarding taxation 112 72 –70 Translation differences –7 –10 –4 Closing carrying amount 338 289 177

Assets Liabilities Net 2015 2014 2013 2015 2014 2013 2015 2014 2013 Ongoing housing projects 286 153 150 286 153 150 Properties held for future development –25 –58 –25 –58 Untaxed reserves –24 –1 –1 –24 –1 –1 Provisions 12 19 9 12 19 9 Tax loss carryforwards 124 63 45 124 63 45 Other 55 33 –35 –1 –35 55 32 Deferred tax asset/tax liability 422 290 237 –84 –1 –60 338 289 177

Bonava has loss carryforwards corresponding to approximately SEK 430 million (450; 480) that have not been measured in the balance sheet. These are mainly attributable to the operations in Germany and expire in the event of a future change in control of Bonava.

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NOTE 13 HOUSING PROJects

Properties held Ongoing Completed for future housing housing 20151) development projects units Total Recognised cost on 1 January 6,367 6,374 875 13,616 Investments2) 1,339 8,573 9,912 Increase through acquisitions3) 0 Divestments –878 –7,733 –1,372 –9,983 Decrease through divestments –427 –427 Reclassifications –1,214 62 1,152 0 Translation differences during the year –234 –217 –48 –499 Recognised cost on 31 December 4,953 7,059 607 12,619

Accumulated impairment losses on 1 January –275 –13 –8 –296 Divestments 41 10 51 Reclassifications 14 –14 0 Translation differences during the year 4 1 5 Impairment losses for the year4) 0 Accumulated impairment losses on 31 December –216 –16 –8 –240

Residual value on 1 January 6,092 6,361 867 13,320 Residual value on 31 December 4,737 7,043 599 12,378

1) No borrowing costs have been capitalised. 2) Investments pertain to investments in land held for future development, ongoing housing production and acquisitions of housing units that have been completed but that have not yet been taken over or sold. 3) Increase through acquisitions pertains to acquisition of land held for future development via companies. 4) Impairment losses are included in “Production costs” in the income statement.

Properties held Ongoing Completed for future housing housing 20141) development projects units Total Recognised cost on 1 January 6,713 5,438 1,082 13,233 Investments 2) 2,117 7,397 91 9,605 Increase through acquisitions3) 95 95 Divestments –257 –6,867 –1,462 –8,586 Decrease through divestments –375 –375 Reclassifications –1,694 505 1,189 0 Translation differences during the year –232 –99 –25 –356 Recognised cost on 31 December 6,367 6,374 875 13,616

Accumulated impairment losses on 1 January –381 –12 –8 –401 Divestments 116 116 Reclassifications 0 Translation differences during the year –10 –1 –11 Impairment losses for the year4) 0 Accumulated impairment losses on 31 December –275 –13 –8 –296

Residual value on 1 January 6,333 5,426 1,074 12,832 Residual value on 31 December 6,092 6,361 867 13,320

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Note 13, Housing projects, continued

Properties held Ongoing Completed for future housing housing 20131) development projects units Total Recognised cost on 1 January 7,287 4,380 887 12,554 Investments 2) 1,289 6,499 84 7,872 Increase through acquisitions3) 270 270 Divestments –464 –5,671 –1,045 –7,180 Decrease through divestments –232 –232 Reclassifications –1,404 247 1,157 0 Translation differences during the year –33 –17 –1 –51 Recognised cost on 31 December 6,713 5,438 1,082 13,233

Accumulated impairment losses on 1 January –404 –3 –11 –418 Divestments 45 2 47 Reclassifications 9 –9 0 Translation differences during the year –8 1 –7 Impairment losses for the year4) –23 –23 Accumulated impairment losses on 31 December –381 –12 –8 –401

Residual value on 1 January 6,883 4,377 877 12,136 Residual value on 31 December 6,333 5,426 1,074 12,832

NOTE 14 SHARE CAPITAL

Changes in share capital Number of shares Share capital, SEK 000s Number of shares 1 January 2015 1,000 50 Number of shares, 31 December 2015 1,000 50

After the end of the financial year, the share capital had been increased to SEK 500,000 and the number of shares, via a share split, increased to 108,435,822. The shares are divided between 25,523,097 shares of series A and 82,912,725 shares of series B. Shares of series A entitle to ten votes and shares of series B entitle to one vote each. The nominal value per share is SEK 0.0046.

NOTE 15 INTEREST-BEARING LIABILITIES

2015 2014 2013 Long-term liabilities Liabilities to credit institutions and investors 23 16 14 Financial lease liabilities 9 8 5 Liabilities pertaining to Swedish tenant-owner associations and Finnish housing companies 1,905 1,032 745 Liabilities to joint ventures 89 85 85 Other long-term loans 8 140 22 Total 2,033 1,281 872

Current liabilities Current portion of liabilities to credit institutions and investors 16 14 41 Liabilities pertaining to Swedish tenant-owner associations and Finnish housing companies 1,363 1,239 1,089 Financial leasing, current portion 5 4 3 Other current liabilities 1,663 7,763 7,406 Total 3,046 9,020 8,539 Total interest-bearing liabilities 5,079 10,301 9,411

For repayment schedules and terms and conditions, see Note 23 Financial instruments and financial risk management.

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NOTE 16 PROVISIONS

2015 Pensions Guarantees Other Total On 1 January 50 194 120 364 Provisions during the year1) –50 90 83 123 Reclassification 2 –4 –2 Amount utilised during the year –29 –85 –114 Reversed, unutilised provisions –1 –2 –3 Reclassifications –7 6 –1 Translation differences –7 –4 –11 On 31 December 0 242 115 357

2014 Pensions Guarantees Other Total On 1 January 22 239 69 330 Provisions during the year1) 28 58 41 127 Reclassification –9 –9 Amount utilised during the year –73 –13 –86 Reversed, unutilised provisions –5 –5 Reclassifications –30 30 0 Translation differences 5 1 7 On 31 December 50 194 120 364

2013 Pensions Guarantees Other Total On 1 January 28 236 43 307 Provisions during the year1) –6 104 28 126 Reclassification 1 –1 0 Amount utilised during the year –103 –1 –104 Reversed, unutilised provisions –2 –2 Translation differences 4 0 4 On 31 December 22 239 69 330

1) All changes in the pension liability have been net reported in the item “Provisions during the year”.

Pensions Until November 2015, Bonava had a defined-benefit pension plan in Sweden. The Swedish defined-benefit pension obligation was secured in NCC-Bonava’s Pension Foundation until November 2015, when the pension liability was reinsured with Alecta. Following this, Bonava has no defined-benefit pension obligations.

Guarantees Guarantee provisions pertain to assessed future costs. To estimate a future guarantee cost, individual assessments are made per project. Standard percentage rates are used for the calculation of the size of the future cost, whereby the standard percentage is varied depending on the nature of the project. The guarantee cost is posted individually for each project. The longest maturity for a guarantee provision is ten years, while most of them have maturities of approximately two to three years.

Other Bonava is also involved in other disputes, legal processes and tax audits that have arisen as part of the regular business operations. The assessment is that any liability to pay damages and others expenses in connection with such legal proceedings will not have a material impact on Bonava’s business operations or financial position.

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NOTE 17 OTHER LIABILITIES

2015 2014 2013 Other long-term liabilities Liabilities to joint ventures 5 7 5 Derivative instruments held for hedging 33 36 Liabilities, property acquisitions 90 163 90 Other long-term liabilities1) 392 94 2 Total 487 297 133

Other current liabilities Advances from customers 2,262 2,088 1,884 Liabilities to joint ventures 1 Liabilities, property acquisitions 267 494 821 Current liabilities, NCC 318 304 230 Current liabilities, other 332 415 396 Total 3,180 3,302 3,331

1) Most of the long-term liabilities (2015) pertain to development undertakings on land that has been divested in Sweden.

NOTE 18 ACCRUED EXPENSES AND PREPAID INCOME

2015 2014 2013 Payroll-related costs 139 115 81 Project-related costs 614 471 489 Administrative costs 78 14 15 Other expenses 9 46 41 Total 840 646 626

NOTE 19 LEASING

The company has framework agreements for the operational leasing of vehicles, equipment and premises. The agreements are based on variable interest rates. A separate agreement is required for the acquisition of leased objects and the extension of leasing agreements. In 2006, a sale-leaseback agreement was signed with the German finance group HSH Nordbank and its associated company AGV pertaining to properties in the Sonnengarten area of Berlin. The agreement was recognised as operational leasing up to December 2015, when the property portfolio was sold and the agreement terminated.

OPERATIONAL LEASING

2015 2014 2013 Operational lessee Future minimum leasing fees – lessee Leasing contracts that expire: Within one year 6 12 14 Later than one year but earlier than five years 21 15 18 Later than five years 246 257 The year’s cost for operational leasing amounts to 38 43 42

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NOTE 20 TRANSACTIONS WITH RELATED PARTIES

Bonava is fundamentally the operating segment Housing of NCC AB. A commission relationship previously existed, which was terminated as per 30 November 2015, for more information, see Note 1. Bonava has had multiple transactions with other NCC companies and the pricing has followed the transfer pricing policy that has been in place in the NCC group. Transactions with NCC and other NCC companies are shown in the table below. Ahead of 2016, Bonava entered into agreements with NCC AB regarding certain administrative and IT-related services. All of the agreements that were entered were prepared at arm’s length and are based on normal market terms. Transactions with related parties also include services performed within ongoing housing production (construction contracts) and transactions related to the financing operations. The Nordstjernan group, companies in the Axel Johnson group and the FastPartner group, as well as joint ventures and joint arrangements are also categorised as related parties. The transactions with the aforementioned parties were not material and are not specified below. For Bonava’s senior executives, see Note 3 Number of employees, personnel expenses and remuneration of senior executives. For fundamental policies concerning the preparation of combined financial statements, see Note 1.

Transactions with NCC 2015 2014 2013 Sales 1 3 Purchases 3,690 3,742 3,312 Financial income 1 6 12 Financial expenses 269 304 293 Current receivables 187 130 113 Long-term interest-bearing liabilities 11 140 Current interest-bearing liabilities 1,676 7,775 7,447 Accounts payable 154 126 161 Other current liabilities 318 304 230 Cash and cash equivalents (NCC Tresury) 349 208 156

Transactions with joint ventures and joint operations 2015 2014 2013 Long-term receivables 94 94 91 Current receivables 5 49 25 Interest-bearing liabilities to joint ventures and joint operations 89 86 85 Operating liabilities to joint ventures and joint operations 478 438 396

NOTE 21 PLEDGED ASSETS, CONTINGENT LIABILITIES AND GUARANTEE OBLIGATIONS

2015 2014 2013 Assets pledged For own liabilities: Property mortgages 859 1,112 1,091 Restricted bank funds 27 32 30 Total assets pledged 886 1,145 1,121

Contingent liabilities Own contingent liabilities: Deposits and concession fees1) 718 1,839 2,081 Other guarantees and contingent liabilities 46 40

Held jointly with other companies: Liabilities in consortiums, trading companies and limited partnerships 24 24 Total guarantees and guarantee obligations 742 1,909 2,121

1) Deposit guarantees constitute collateral provided by NCC AB for investments and concession fees paid to tenant-owner associations formed by NCC Boende AB, a wholly owned subsidiary of Bonava. Such guarantees are to be relinquished as soon as one year has passed after the final acquisition cost for the tenant-owner association’s building has been established. According to agreements between Bonava and NCC AB, NCC AB is to be indemnified for any costs attributable to these guarantees.

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NOTE 22 CASH FLOW STATEMENT AND CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS 2015 2014 2013 Cash and bank balances 544 404 371 – of which funds pertaining to transactions with NCC Treasury 308 149 136 Current investments 41 59 20 – of which funds pertaining to transactions with NCC Treasury 41 59 20 Total according to balance sheet and cash flow statement 585 463 391

The current investments have been classified as cash and cash equivalents INFORMATION ABOUT INTEREST PAID/RECEIVED based on the following considerations: Interest received during the year amounted to SEK 11 million (18; 22). • They are subject to an insignificant risk of value fluctuation. Interest paid during the year amounted to SEK 327 million (368; 366). • They can easily be converted into cash funds. • They have a maturity of not more than three months from the date of acquisition.

NOTE 23 financial INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

FINANCE POLICY (PRINCIPLES FOR RISK MANAGEMENT) The capital maturity of the company’s debt portfolio during the financial Bonava is exposed to financial risks through its business operations. These years does not represent Bonava’s capital maturity in the future. The matur- financial risks are defined as refinancing, liquidity, interest-rate, exchange- ities of future financing will correlate with the financial policy adopted by rate, credit, counterparty and guarantee capacity risks. During 2013– the board of directors during 2016, with an average remaining maturity of 2015, NCC Treasury AB has been responsible for the compliance with the at least 18 months. The capital maturity of the financing of construction by finance policy. During 2013–2015, Bonava, as part of the NCC group, Finnish housing companies and Swedish tenant-owner associations managed its financial risks according to NCC’s financial policy and through reflects Bonava’s finance policy in that maturities must be linked to every NCC Treasury AB. NCC’s finance policy for managing financial risks has single housing project and reflect the projects’ completion dates. been decided by NCC’s board of directors and constitutes a framework of guidelines and rules in the form of risk mandates and limits for finance Maturity structure of capital maturities 20151) in SEK million activities. Interest-bearing liabilities Within the NCC group’s decentralised organisation, finance activities are Matures Amount Proportion, % centralised to the NCC group’s Finance Department, partly in order to 2016 8,049 80 monitor the group’s overall financial risk positions and partly to achieve 2017 1,658 17 cost-effectiveness and economies of scale and to accumulate expertise, while protecting group-wide interests. Within NCC, risks associated with 2018 136 1 the group’s interest and exchange rates, credit, refinancing, counterparty 2019 33 and liquidity are managed by NCC’s internal bank, NCC Treasury AB. 2020 85 Customer-credit risks are handled within each business area. The board of 2021 2 directors of Bonava have decided on a finance policy for managing finan- 2022- 119 1 cial risks, effective from 1 January 2016. In all significant respects, this Total 10,082 100 policy matches NCC’s financial policy. Compliance with the current finan- Capital contributions –5,003 cial policy is managed by Bonava’s own treasury department. Total 5,079

Refinancing risk 1) The maturity structure pertains to interest-bearing liabilities outstanding as per The refinancing risk is defined as the risk that Bonava will not be able to 31 December 2015, of which liabilities to companies within the NCC group accounted for SEK 6,690 million (excluding capital contributions). obtain financing at a given time or that creditors will have difficulty in fulfilling their commitments. According to its financial policy, Bonava will strive LIQUIDITY RISKS to spread its risks among various sources of financing to secure its long- To achieve adequate flexibility and cost-effectiveness, while ensuring that term access to borrowed capital. future financing requirements are satisfied, Bonava’s financial policy states Bonava’s policy for refinancing risk is that the company’s debt portfolio has that access to funds must correspond to at least 10 per cent of annual a maturity structure that minimises exposure from the perspective of the sales, and that unutilised committed lines of credit must amount to at least refinancing risk. The maturity periods of the debt portfolio must be well-di- SEK 800 million. Access to funds is defined as cash and cash equivalents, versified over time and the weighted average remaining maturity must be short-term investments and unutilised committed lines of credit. Available at least 18 months. Financing in respect of construction by Finnish hous- cash and cash equivalents are to be invested in banks or in interest-bearing ing companies and Swedish tenant-owner associations must be linked to instruments with good credit ratings, and a liquid secondary market. every single housing project and reflect the projects’ completion dates. At 31 December 2015, Bonavas cash and cash equivalents, including As preparation for the future capital structure, the group has received an short-term investments, amounted to SEK 585 (463; 391) million. unconditional shareholders’ contribution of SEK 5,003 million. The contri- Access to funds for the financial years 2013–2015 does not reflect bution takes the form of a receivable from NCC AB. This can be used to pay Bonava’s access to funds on the stock exchange listing date. The intention the remaining outstanding liabilities that the company has to NCC AB and is that access to funds will correlate with the adopted financial policy. it will thus be recognised net against the liabilities. At 31 December 2015, the maturity of loans in the company’s debt portfolio was 3 months (3; 4), excluding capital contributions in 2015. Financing of SEK 3,268 million (2,271; 1,834) pertaining to construction by Finnish housing companies and Swedish tenant-owners’ associations is linked to each particular housing project and the capital was tied up for 18 (22; 19) months. The capital tied up for total interest-bearing liabilities amounted to 8 (7; 7) eight months.

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Note 23 Financial instruments and financial risk management, continued

The table below shows Bonava’s financial liabilities (including interest payments) and net settled derivative instruments classified as financial liabilities. For financial instruments carrying variable interest rates, the interest rate pertaining on the balance-sheet date has been used. The amounts in the tables are the contractual undiscounted cash flows.

Analysis of maturities (amounts including interest)1) in SEK million

3 months– 2015 Total <3 months 1 year 1–3 years 3–5 years >5 years Interest-bearing liabilities2) 6,922 5,339 1,425 34 37 87 Interest-bearing liabilities in Finnish housing companies and Swedish tenant-owner associations3) 3,329 10 1,027 2,159 4 129

Accounts payable 677 677 Total 10,928 6,026 2,452 2,193 41 216 Capital contributions –5,003 –5,003 Total 5,925 1,023 2,452 2,193 41 216

3 months– 2014 Total <3 months 1 year 1–3 years 3–5 years >5 years Interest-bearing liabilities 8,180 5,917 1,999 153 24 87 Interest-bearing liabilities in Finnish housing companies and Swedish tenant-owner associations3) 2,344 96 1,177 832 8 231 Interest-rate swaps 35 3 11 21 Accounts payable 368 368 Total 10,927 6,384 3,187 1,006 32 318

3 months– 2013 Total <3 months 1 year 1–3 years 3–5 years >5 years Interest-bearing liabilities 7,735 4,762 2,831 48 6 88 Interest-bearing liabilities in Finnish housing companies and Swedish tenant-owner associations3) 1,905 194 933 600 6 172 Interest-rate swaps 45 3 9 26 7 Accounts payable 374 374 Total 10,059 5,333 3,773 674 19 260

1) Excluding pension debt according to IAS 19. As per 31 December 2015, there was no pension debt in Bonava. 2) The maturity analysis pertains to interest-bearing liabilities outstanding (including interest payment), of which liabilities to companies within the NCC group accounted for SEK 6,798 million (excluding capital contributions), which will be replaced by external financing on the date of the listing. 3) The due date for interest-bearing liabilities in unsold completed projects in Finnish housing companies is defined as the due date for the long-term loan agreements. However, the loans will be redeemed in pace with sales of the housing units.

The table below shows Bonava’s gross settled derivatives. The amounts in the table are the contractual undiscounted cash flows. The currency forward contracts expire within three (3; 3) months.

SEK million 2015 2014 2013 Currency forward contracts – outflow –1,421 –1,132 –1,062 – inflow 1,407 1,159 1,068 Net flow from gross settled derivatives –14 27 6

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Note 23 Financial instruments and financial risk management, continued

Interest-rate risks Exchange-rate risks The interest-rate risk is the risk that changes in market rates will adversely The exchange-rate risk is the risk that changes in exchange rates will affect Bonava’s cash flow or the fair value of financial assets and liabilities. adversely affect the consolidated income statement, balance sheet or cash Bonava’s main financing sources are shareholders’ equity, cash flow from flow statement. operating activities and borrowing. Interest-bearing borrowing exposes Bonava to interest-rate risk. Transaction exposure In accordance with NCC’s financial policy, which is identical to Bonava’s According to Bonava’s financial policy for managing the interest-rate risk, financial policy, transaction exposure must be eliminated as soon as it the weighted average remaining fixed-rate period for the company’s debt becomes known. Contractual and probable forecast flows are to be portfolio is to range from six to 18 months, and for liabilities concerning hedged, mainly by using currency forward contracts. Contractual net construction by Finnish housing companies and Swedish tenant-owner exposure in each currency is to be hedged at 100 per cent. In the financial associations, the fixed-rate period is not to exceed the scheduled comple- statements, hedge accounting is applied when the requirements for hedge tion date for the project. accounting are fulfilled. The interest-bearing debt regarding the company’s debt portfolio, exclud- Bonava’s net outflows during 2015 amounted to SEK 39 (36; –18) million. ing capital contributions in 2015, amounted to SEK 6,814 (8,029; 7,577) No part was hedged. million and the average fixed-rate period was two (3; 3) months. The fixed- rate period for liabilities concerning construction by Finnish housing Should the SEK depreciate by 5 per cent in relation to the currencies to companies and Swedish tenant-owner associations, which amounts to SEK which Bonava is exposed, with all other variables remaining constant, the 3,268 (2,271; 1,834) million, was one (2; 2) month. As per 31 December result would be a change of SEK –2 (–1; 1) million in net profit/loss for the 2015, Bonava’s total interest-bearing gross debt, excluding capital contri- year, due to losses/gains arising when translating accounts payable/ butions in 2015, amounted to SEK 10,082 (10,300; 9,411) million and accounts receivable in the various currencies. the average fixed-rate period was two (3; 3) months. According to Bonava’s financial policy, assets are to be financed in local The fixed-rate period for the company’s debt portfolio does not represent currency. the future fixed-rate period. The fixed-rate period for the company’s debt The following table shows Bonava’s financing in various currencies. portfolio for future financing will comply with Bonava’s financial policy, with a fixed-rate period ranging from six to 18 months. The fixed-rate period for Interest-bearing liabilities 20151) in SEK million financing construction by Finnish housing companies and Swedish tenant- owner associations complies with the adopted financial policy of a maxi- Counter-value in mum fixed-rate period corresponding to the scheduled completion date of SEK million Amount Proportion, % the project. EUR 1,748 17 Interest-rate swaps, intended for the hedging of the interest-rate risk asso- NOK 644 6 ciated with a leasing contract, were terminated during 2015 and had a RUB 684 7 nominal value of SEK 0 (332; 312) million. The interest-rate swaps had a SEK 7,006 69 fair value of SEK 0 (–33; –36) million net, comprising liabilities of SEK 0 Total 10,082 100 (33; 36) million, and the maturity period is 0 (2.5; 3.5) years. Capital An increase in interest rates by one percentage point would result in a contributions –5,003 change of SEK –21 (–57; –49) million in net profit/loss for the year, assum- Total 5,079 ing the interest-bearing assets and liabilities that existed on the balance- 1) The maturity structure pertains to interest-bearing liabilities outstanding as per sheet date, excluding the pension debt according to IAS 19. 31 December 2015, of which liabilities to companies within the NCC group accounted for SEK 6,690 million (excluding capital contributions). Maturity structure interest term 20151) in SEK million

Interest-bearing liabilities, incl. interest-rate swaps Matures Amount Proportion, % 2016 10,062 100 2017 2018 2019 20 Total 10,082 100 Capital contributions –5,003 Total 5,079

1) The maturity structure pertains to interest-bearing liabilities outstanding as per 31 December 2015, of which liabilities to companies within the NCC group accounted for SEK 6,690 million (excluding capital contributions).

150 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Historical financial information

Note 23 Financial instruments and financial risk management, continued

Translation exposure In accordance with Bonava’s financial policy, not more than 90 per cent of translation exposure to foreign net assets may be hedged, without taking the tax effect into account. The table below shows Bonava’s net investments and hedging positions per currency, plus the hedged portion both with and without taking tax effects into account.

Counter-value in SEK million 31 December 2015 Hedge position Hedged portion Hedge position Hedged portion Currency Net investment before tax before tax % after tax after tax % DKK 396 314 79 245 62 EUR 1,142 1,085 95 846 74 NOK 36 28 78 22 61 RUB 118 49 42 38 32 Total 1,692 1,476 87 1,151 68

Counter-value in SEK million 31 December 2014 Hedge position Hedged portion Hedge position Hedged portion Currency Net investment before tax before tax % after tax after tax % DKK 330 287 87 224 68 EUR 997 839 84 654 66 NOK 5 5 100 4 78 RUB 35 24 69 19 54 Total 1,367 1,155 85 901 66

Counter-value in SEK million 31 December 2013 Hedge position Hedged portion Hedge position Hedged portion Currency Net investment before tax before tax % after tax after tax % DKK 267 251 94 196 73 EUR 791 672 85 524 66 NOK 27 23 85 18 66 RUB 8 LVL 44 41 93 32 73 Total 1,137 987 87 770 68

Net assets are hedged through both the raising of loans and through The total counterparty exposure to derivative trading, calculated as the net currency forward contracts. The carrying amount of loans and currency receivable per counterparty, amounted to SEK 28 (5; 7) million at the end forward contracts (including underlying capital amounts) used as hedging of 2015. The net receivable per counterparty (only in relation to NCC instruments as per 31 December was SEK 1,476 (1,155; 987) million, of Treasury AB) is calculated in accordance with the market valuation method, which SEK 115 (0; 0) million for loans and SEK 1,361 (1,155; 987) million i.e. the market value of the derivative plus a supplement for the change in for currency forward contracts. Hedge accounting is applied when the risk (1% of the nominal amount). Calculated gross exposure to counter- criterias for hedge accounting are met. An exchange-rate difference of SEK party risks pertaining to cash and cash equivalents and short-term invest- 41 (–56; –15) million before tax has been recognised in other comprehen- ments amounted to SEK 585 (463; 391) million. sive income. The hedges fulfill effectiveness requirements, meaning that all changes resulting from changed exchange rates are recognised in other Credit risks in accounts receivable comprehensive income. As per 31 December, 2015, a 5 per cent depreci- The risk that Bonava’s customers will not fulfil their obligations, meaning ation of the SEK in relation to other currencies would result in a change of that payment is not received from the customers, is a credit risk. A credit SEK 11 (11; 8) million in shareholders’ equity. rating of the group’s customers is checked, whereby information on the customers’ financial position is obtained from various credit information Credit risks companies. For major accounts receivable, the risk of credit losses is Credit and counterparty risks in financial operations limited through various types of collateral, such as bank guarantees, Bonava’s investment regulations for financial credit risks are revised contin- blocks on building loans, parent company guarantees and other payment uously and characterised by caution. Transactions are only entered into guarantees. with creditworthy counterparties with credit ratings of at least A– (Standard & Poor’s) or the equivalent international rating, as well as local banks with a minimum rating equal to the creditworthiness of the country in which Bonava conduct operations. ISDA’s (International Swaps and Derivatives Association) framework agreement on netting is used with all external counterparties with respect to derivative trading. The investment regulations specify maximum credit exposures and maturities for various counterparties.

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Note 23 Financial instruments and financial risk management, continued

AGE ANALYSIS OF ACCOUNTS RECEIVABLE INCLUDING RECEIVABLES FOR DIVESTED HOUSING PROJECTS

31 December 2015 31 December 2014 31 December 2013 Provision for Provision for Provision for doubtful doubtful doubtful Gross receivables Gross receivables Gross receivables Not due accounts receivable 646 415 330 Past-due accounts receivable 1–30 days 46 71 38 Past-due accounts receivable 31–60 days 40 3 17 Past-due accounts receivable 61–180 days 3 37 13 Past-due accounts receivable > 180 days 43 33 18 45 62 35 Total 779 33 544 45 460 35

Collateral for accounts receivable was received in an amount of SEK 0 (0; 0) million.

PROVISION FOR DOUBTFUL RECEIVABLES

2015 2014 2013 On 1 January 45 35 33 Provision for the year 3 11 1 Reversal of previously posted impairment losses –14 –1 Translation differences –1 1 1 On 31 December 33 45 35

CARRYING AMOUNT AND FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount and the fair value of financial instruments are presented in the following table. The measurement at fair value of currency-forward contracts is based on published forward rates in an active market. For financial instruments recognised at amortised cost, accounts receivables, other receivables and cash and cash equivalents, accounts payable and other interest-free liabilities, the fair value are deemed to agree with the carrying amount. It has been deemed that the fair value of long-term and current interest-bearing liabilities does not materially deviate from the carrying amount. The classification categories Financial assets measured at fair value through profit and loss, Investments held to maturity and Financial liabilities measured at fair value through profit and loss are not applicable for Bonava. No reclassification of financial assets and liabilities among the categories below was effected during the year.

CLASSIFICATION OF FINANCIAL INSTRUMENTS

Derivatives used in Accounts Available-for-sale Other Total carrying 31 December 2015 hedge accounting receivables and loan financial assets liabilities amount Shareholdings 4 4 Long-term receivables 211 211 Accounts receivable 623 623 Other receivables 15 198 213 Cash and cash equivalents 585 585 Total assets 15 1,618 4 1,637

Long-term interest-bearing liabilities 2,033 2,033 Other long-term liabilities 487 487 Provisions for pensions and similar obligations Current interest-bearing liabilities 3,046 3,046 Accounts payable 677 677 Accrued expenses 1 1 Other current liabilities 268 268 Total liabilities 6,512 6,512

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Note 23 Financial instruments and financial risk management, continued

CLASSIFICATION OF FINANCIAL INSTRUMENTS, continued

Derivatives used in Accounts Available-for-sale Other Total carrying 31 December 2014 hedge accounting receivables and loan financial assets liabilities amount Shareholdings 0 Long-term receivables 113 113 Accounts receivable 477 477 Other receivables 4 223 227 Cash and cash equivalents 463 463 Total assets 4 1,276 1,280

Long-term interest-bearing liabilities 1,281 1,281 Other long-term liabilities 33 264 297 Provisions for pensions and similar obligations 50 50 Current interest-bearing liabilities 9,020 9,020 Accounts payable 368 368 Accrued expenses 1 1 Other current liabilities 31 494 525 Total liabilities 64 11,478 11,542

Derivatives used in Accounts Available-for-sale Other Total carrying 31 December 2013 hedge accounting receivables and loan financial assets liabilities amount Shareholdings 0 Long-term receivables 125 125 Accounts receivable 394 394 Other receivables 3 135 138 Cash and cash equivalents 391 391 Total assets 3 1,045 1,048

Long-term interest-bearing liabilities 872 872 Other long-term liabilities 36 97 133 Provisions for pensions and similar obligations 22 22 Current interest-bearing liabilities 8,539 8,539 Accounts payable 374 374 Accrued expenses 1 1 Other current liabilities 9 821 830 Total liabilities 45 10,726 10,771

In the following tables, disclosures are made concerning how fair value has been determined for the financial instruments that are continuously measured at fair value and the financial instruments not recognised at fair value in Bonava’s balance sheet. When determining fair value, a division shall be made in three levels. No transfers have been made between the levels during the period and no significant changes were made with respect to measurement methods, used data or assumptions. Level 1: in accordance with prices quoted on an active market for the same instruments. This category does not apply for Bonava. Level 2: on the basis of directly or indirectly observable market data that is not included in level 1. Level 3: on the basis of input data that is not observable in the market. This category is not relevant for Bonava.

31 December 2015 31 December 2014 31 December 2013 Bonava Level 2 Total Level 2 Total Level 2 Total Financial assets measured at fair value Derivative instruments used for hedging purposes 15 15 4 4 3 3 Available-for-sale financial assets 4 4 Total financial assets 19 19 4 4 3 3

Financial liabilities measured at fair value Derivative instruments used for hedging purposes 64 64 45 45 Financial liabilities not recognised at fair value Other liabilities (interest-bearing liabilities) 5,079 5,079 10,301 10,301 9,411 9,411 Total financial liabilities 5,079 5,079 10,365 10,365 9,456 9,456

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Note 23 Financial instruments and financial risk management, continued

OFFSETTING FINANCIAL INSTRUMENTS Bonava’s derivatives pertain to holdings in the NCC group’s internal bank, NCC Treasury AB, which are offsettable.

31 December 2015 31 December 2014 31 December 2013 Financial Financial Financial Financial Financial Financial Bonava assets liabilities assets liabilities assets liabilities Recognised gross amount1) 15 4 64 3 45 Amount included in the netting agreement –4 –4 –3 –3 Net amount after netting agreement 15 60 42

1) In the recognised gross amount of financial assets includes SEK 15 (4; 3) million for derivatives used in hedge accounting of other receivables.

In the recognised gross amount of financial liabilities includes SEK 0 (33; 36) million for derivatives used in hedge accounting and SEK 0 (31; 9) million for other current liabilities.

NOTE 24 SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

Financing Legal structure Bonava has entered into a material credit agreement with Danske Bank As a feature of the formation of the Bonava group, the Finnish company A/S, Skandinaviska Enskilda Banken AB (publ), Svenska Handelsbanken NCC Rakkennus Oy has been demerged. The part of the company that AB (publ) and Swedbank AB (publ) regarding a multicurrency revolving within the NCC AB group corresponded to the operations of the segment credit facility intended for Bonava’s general corporate requirements and for NCC Housing has been transferred to the newly formed company NCC working capital in the group. The credit facility has a term of five years and Asuminen Oy. Subsequently, Bonava AB acquired all of the shares of NCC amounts to SEK 2.7 billion, on condition that a listing of Bonava takes Asuminen Oy from NCC AB. After this transaction, Bonava AB and its place during 2016 and that customary terms and conditions are met. The subsidiaries comprise a legal group. credit agreement contains customary conditions, guarantees and under- Bonava has changed the legal structure of the German housing operations. takings that, subject to certain exceptions, include restrictions on divest- A result of this restructuring is that NCC AB remains as a minority owner of ments and acquisitions, lending and guarantees, the raising of financial NCC Deutschland GmbH, but that the majority owner, NCC Property debt and the provision of collateral on behalf of the borrower’s subsidiar- Development B.V. (a subsidiary wholly owned by Bonava), holds an option ies, as well as certain so-called “change of control clauses” (defined as a for a one-year period from 1 March 2021 to acquire NCC AB’s participa- change of more than 30 per cent of the shares and/or voting rights in the tions in NCC Deutschland GmbH at market price. As per 29 March 2016, borrower or should Bonova be delisted). an agreement on profit sharing was entered into with the minority share- Bonava has also entered into a material credit agreement with AB Svensk holder in the German subsidiary NCC Deutschland GmbH, meaning NCC Exportkredit regarding fixed-term loans of EUR 30 million over a term of AB. The earliest time for terminating the agreement is in five years. As a four years and of EUR 30 million over a term of five years. result of this profit sharing, the minority shareholder will abstain from dividends and will instead receive annual compensation of EUR 1.3 million As per 4 April 2016, a receivable on NCC AB regarding received share- until the agreement is terminated. The agreed profit sharing will lead to a holder contribution for 2015 has been regulated and payment has been debt of SEK 57 million, corresponding to the fair value of five years of received. payments. When the agreement has become legally binding during the second quarter of 2016, this will be recognised in shareholders’ equity as a Share capital transaction with non-controlling interests. Accordingly, the transaction will On 25 January 2016, an extra general meeting of Bonava resolved to issue have no impact on Bonava’s earnings, except for interest expense attributa- 9,000 shares, whereby the share capital increased from SEK 50,000 to ble to the debt for forthcoming periods. SEK 500,000 and the number of shares was increased from 1,000 shares to 10,000 shares. The same extra general meeting resolved in a reversed New trademark share split of the company’s shares (10,000: 1), whereby the number of The company’s new name and trademark Bonava was disclosed on 12 shares was reduced from 10,000 shares to 1 share. The general meeting April 2016 and is a combination of the two Swedish words bo and nav. The also resolved to split the Company’s shares (1: 108,435,822) whereby the Swedish bo means living an nav means hub, as our responsibility does not number of shares increased from 1 share to 108,435,822 shares. The end with just building houses. We create homes and neighbourhoods shares were also converted to shares of series A and shares of series B to where people live thier lives. reflect NCC’s share structure. All of the resolutions passed by the general meeting on 25 January 2016 were registered with the Swedish Companies Resolution on dividend Registration Office on 3 February 2016. On 22 April 2016, the annual At NCC AB’s annual general meeting on 12 April 2016, it was resolved to general meeting of Bonava resolved of a bonus issue without issuing approve the board of directors proposal to distribute all of the shares in shares, whereby the company’s share capital increased by SEK Bonava AB. 409,500,000 to a total of SEK 410,000,000. The annual general meeting’s resolution was registered with the Swedish Companies Registration Sale of rental units Office on 26 April 2016. On 18 May 2016, an extra general meeting On 17 May 2016 NCC announced that Bonava is selling a total of 352 resolved of a bonus issue without issuing new shares, whereby the newly developed Nordic Swan ecolabelled rental units in Linköping and company’s share capital increased by SEK 23,743,288, to a total of SEK Karlstad to the housing company Willhem. The sale, which corresponds to 433,743,288. The extra general meeting’s resolution were registered with a value of SEK 595 million, will be profit recognised during the first quarter the Swedish Companies Registration Office on 18 May 2016. of 2017 and the fourth quarter of 2018. Bonava is responsible for leasing and provides customary rental guarantees to the buyer.

154 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Historical financial information

NOTE 25 PARTICIPATIONS IN COMPANIES INCLUDED IN THE COMBINED FINANCIAL STATEMENTS

All directly and indirectly owned companies within the Bonava group are presented below. Swedish tenant owner associations and Finnish housing companies have also been consolidated. A complete list of these units is available at Bonava. 2015 Head office Bonava AB 556928-0380 Solna part of NCC AB, Housing Head Office 556034-5174 Solna Siab Investment AB 556495-9079 Solna SIAB AB 556044-3177 Solna KB Sonnengarten 969711-9783 Solna

SWEDEN NCC Boende AB 556726-4121 Solna NCC Aktivt Boende AB 556889-1393 Solna Alsike Utvecklings AB 556245-9452 Uppsala AB Broutsikten (50%) 556650-8551 Malmö Fågelbro Mark AB 556234-0868 Stockholm NCC Hyresboende AB 556889-1401 Solna Kallax Cargo AB 556565-1147 Solna NCC Boende Holding 1 AB 556761-3459 Stockholm Elinegård Utvecklings AB (50%) 556781-7258 Stockholm Elinegård Holding kv DGHK AB 559021-1404 Stockholm Ikano Bostad Limhamn kv D AB 559021-1446 Stockholm Ikano Bostad Limhamn kv G AB 559021-1438 Stockholm Ikano Bostad Limhamn kv H AB 559021-1453 Stockholm Ikano Bostad Limhamn kv K AB 559023-2731 Stockholm Elinegård Holding kv SS2TQ AB 559021-1396 Stockholm Ikano Bostad Limhamn kv S AB 559023-2905 Stockholm Ikano Bostad Limhamn kv S2 AB 559023-2897 Stockholm Ikano Bostad Limhamn kv T AB 559023-2889 Stockholm Ikano Bostad Limhamn kv Q AB 559023-2871 Stockholm Elinegård Holding kv UXY Södra VY2 AB 559021-1420 Stockholm NCC Bostad Limhamn kv U AB 559023-2921 Stockholm NCC Bostad Limhamn kv X AB 559023-2913 Stockholm NCC Bostad Limhamn kv Södra VY2 AB 559024-4280 Stockholm NCC Bostad Limhamn kv Y AB 559024-4272 Stockholm Elinegård Holding kv WZM1M2Ö Norra VY2 AB 559021-1412 Stockholm NCC Bostad Limhamn kv W AB 559024-4215 Stockholm NCC Bostad Limhamn kv Z AB 559024-4207 Stockholm NCC Bostad Limhamn kv Ö AB 559024-4264 Stockholm NCC Bostad Limhamn kv M1M2 AB 559024-4199 Stockholm NCC Bostad Limhamn kv Norra VY2 AB 559024-4223 Stockholm Elinegård Holding AB 556953-0024 Stockholm NCC Boende Tre AB 556781-7209 Stockholm NCC Boende Fyra AB 556781-7217 Stockholm NVB Sköndalsbyggarna KB (33.3%) 969712-1615 Stockholm NVB Sköndalsbyggarna Två KB (33.3%) 969715-4442 Stockholm NCC Property Ä AB 556740-3653 Stockholm NVB Sköndalsbyggarna AB (33.3%) 556779-2527 Stockholm NVB Sköndalsbyggarna II AB (33.3%) 556814-3449 Stockholm NCC Boende Holding 2 AB 556795-2089 Solna NCC Boende Sex AB 556795-2097 Solna NCC Boende Sju AB 556795-2105 Solna NCC Boende Åtta AB 556795-2113 Solna NCC Boende Holding 3 AB 556795-2287 Stockholm Boende Albert ett AB 556824-8255 Stockholm Boende Albert två AB 556824-8263 Stockholm Bro Linaberg 15 AB 556821-1931 Stockholm NCC Boende Holding 4 AB 556824-7901 Stockholm Boende Botel fyra AB 556824-8172 Stockholm NCC Boende Holding 5 AB 556824-7919 Stockholm NCC Boende Holding 6 AB 556824-7927 Stockholm

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Note 25, Participations in companies included in the combined financial statements, continued

2015 Boende Daniel ett AB 556824-8222 Stockholm NCC Boende Holding 7 AB 556824-8230 Stockholm Boende Kalkbrottet Ett AB 556953-9025 Stockholm NCC Boende Holding 8 AB 556824-8248 Stockholm Boende Fredrik fyra AB 556825-4188 Stockholm Boende Kalkbrottet Två AB 556953-9041 Stockholm NCC Boende Holding 9 AB 556845-8797 Stockholm Byggmarken AB 556831-3257 Lund Byggmarken 3 AB 556848-4348 Lund Tipton Rudolf AB 556617-6250 Stockholm NCC Boende Holding 10 AB 556845-8821 Stockholm Tipton Grön AB 556617-6319 Solna Byggmarken 2 AB 556848-4355 Lund NCC Boende Holding 11 AB 556866-8692 Stockholm Kristineberg 1:10 Exploatering AB 556471-5752 Stockholm Sollentuna Centrum Exploaterings AB 556393-1046 Stockholm Boende Jackie AB 556971-2994 Solna NCC Boende Holding 12 AB 556887-7079 Stockholm Sjökvarteret AB 556968-9333 Solna Bryggvägen Fastighets AB 556839-1956 Stockholm NCC Boende Holding 13 AB 556966-2835 Stockholm Boende Hyra två AB 556966-2819 Stockholm NCC Boende Holding 14 AB 556973-2273 Stockholm Boende Karly ett AB 556984-3765 Stockholm Boende Karly tre AB 556987-3762 Stockholm NCC Boende Holding 15 AB 556987-3770 Stockholm Allemanshem AB 556987-3648 Stockholm NCC Boende Holding 16 AB 556990-2371 Solna Boende Jackie tre AB 556990-2553 Solna Boende Jackie fyra AB 556990-2546 Solna Boende Jackie fem AB 556990-2579 Solna Boende Jackie sex AB 556990-2561 Solna NCC Boende Holding 17 AB 559015-0065 Solna NCC Boende Holding 18 AB 559015-0065 Solna Boende Lotta två AB 559021-7468 Solna Boende Lotta fem AB 559021-7492 Solna NCC Boende Holding 19 AB 559022-3268 Solna Boende Magda två AB 559022-3243 Solna Boende Magda fyra AB 559022-3292 Solna NCC Boende Holding 20 AB 559022-3193 Solna Boende Natta tre AB 559022-3169 Solna Tipton Fastighet IV AB 556990-2454 Solna NCC Boende Holding 21 AB 559034-8776 Solna Boende Olle ett AB 559034-8701 Solna Boende Olle två AB 559034-8693 Solna Nils P Lundh AB 556062-7795 Solna NCC Boende Södermalm AB 556740-1764 Solna NCC Boende Ursvik AB 556739-6584 Solna NCC Boende Kvarntorget AB 556743-5226 Solna Tipton Magnus AB 556617-6201 Solna Tipton Svart AB 556617-6375 Solna Storaområdet Åby AB 556688-1768 Solna NCC Boende Ringvägen AB 556740-1772 Solna NCC Förseglet Västerås KB 969684-6931 Västerås NVB Beckomberga KB (25%) 969676-7772 Stockholm Sintrabergen Holding AB 556498-1248 Stockholm Svenska Industribyggen AB 556087-2508 Stockholm NCC Projektutveckling i Uppsala AB 556713-4423 Solna Stora Ursvik KB (50%) 969679-3182 Stockholm

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Note 25, Participations in companies included in the combined financial statements, continued

2015 Söderby Park Fastigheter HB 916630-4817 Stockholm Tipton Brown AB (33%) 556615-8159 Stockholm Ursvik Exploaterings AB (50%) 556611-6892 Stockholm Öhusen, KB (50%) 969697-7793 Malmö NCC Kaninen Projekt AB (30%) 556740-3638 Solna Sigtuna Stadsängar Exploaterings AB (53%) 559015-0503 Sigtuna

GERMANY NCC Property Development BV 33.213.877 The Netherlands1) NCC Deutschland GmbH (90%) HRB8906 FF Germany CJP Wohnpark Annafliess GBR II (79.39%) Germany GBS GmbH HRB 9276 Germany NCC Wohnimmobilien GmbH (93%) HRB 5291 Germany NCC Housing GmbH Germany

FINLAND part of NCC Rakennus Oy 1765514-2 Finland Holding Big Apple Housing Oy (50%) 2544101-3 Finland Asunto Oy Espoon Big Apple Housing 2550211-1 Finland NCC Koti LKV Oy 0977627-8 Finland

DENMARK NCC Bolig A/S 32655505 Denmark NCC Boligshop A/S 28893094 Denmark

NORWAY NCC Utvikling AS 980390020 Norway Åsane Nord AS 990400571 Norway NCC Bolig AS 997671783 Norway

ST. PETERSBURG LLC NCC Village INN7842398917 Russia LLC NCC Real Estate INN7841322136 Russia LLC NCC Apartments Shop INN7841018263 Russia LLC NCC Petrocenter INN7841457408 Russia

ESTONIA OU NCC Kalaranna 12006976 Estonia OU NCC Rabaküla 12007059 Estonia OU NCC Rannaoue 12007220 Estonia OU NCC Ehitus 10036766 Estonia OU NCC Elamuarendus 11398856 Estonia

LATVIA NCC Housing SIA 40003941615 Latvia Januki SIA 40003835266 Latvia Dalton Auto Centrs SIA 40003739888 Latvia NCC Property Development SIA 40003863151 Latvia NCC Bikernieku SIA 40103303370 Latvia NCC Spilve Development SIA 50003853691 Latvia NCC Konstrukcija SIA 50003451131 Latvia Kalati SIA (50%) 40003783689 Latvia

1) The company constitutes a holding company in the German corporate structure and the intention is to convert the company to a German company during 2016.

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Note 25, Participations in companies included in the combined financial statements, continued

2014 Head office part of NCC AB, Housing Head Office 556034-5174 Solna Siab Investment AB 556495-9079 Stockholm SIAB AB 556044-3177 Solna KB Sonnengarten 969711-9783 Solna NCC Property Development BV 33.213.877 The Netherlands

SWEDEN part of NCC AB Housing SE 556034-5174 Solna NCC Boende AB 556726-4121 Solna Aktivt Boende AB 556889-1393 Solna Alsike Utvecklings AB 556245-9452 Uppsala AB Broutsikten (50%) 556650-8551 Malmö Frösunda Exploaterings AB 556430-1876 Stockholm Fågelbro Mark AB 556234-0868 Stockholm Hyresboende AB 556889-1401 Solna Kallax Cargo AB 556565-1147 Solna Kvarntorget Bostad AB 556729-8541 Uppsala NCC Boende Holding 1 AB 556761-3459 Stockholm Elinegård Utvecklings AB (50%) 556781-7258 Stockholm Elinegård Holding AB (50%) 556953-0024 Stockholm Elinegård Fastighets två AB (50%) 556953-9025 Stockholm Elinegård Fastighets fyra AB (50%) 556953-9041 Stockholm NCC Boende Tre AB 556781-7209 Stockholm NCC Boende Fyra AB 556781-7217 Stockholm NVB Sköndalsbyggarna KB (33.3%) 969712-1615 Stockholm NVB Sköndalbyggarna II KB (33.3%) 969715-4442 Stockholm NCC Property Ä AB 556740-3653 Stockholm NVB Sköndalsbyggarna AB (33.3%) 556779-2527 Stockholm NVB Sköndalsbyggarna II AB (33.3%) 556814-3449 Stockholm NCC Boende Holding 2 AB 556795-2089 Solna NCC Boende sex AB 556795-2097 Solna NCC Boende sju AB 556795-2105 Solna NCC Boende åtta AB 556795-2113 Solna NCC Boende Holding 3 AB 556795-2287 Stockholm Boende Albert ett AB 556824-8255 Stockholm Boende Albert två AB 556824-8263 Stockholm Bro Linaberg 15 AB 556821-1931 Stockholm NCC Boende Holding 4 AB 556824-7901 Stockholm Boende Botel fyra AB 556824-8172 Stockholm NCC Boende Holding 5 AB 556824-7919 Stockholm NCC Boende Holding 6 AB 556824-7927 Stockholm Boende Daniel ett AB 556824-8222 Stockholm NCC Boende Holding 7 AB 556824-8230 Stockholm Boende Eric ett AB 556824-8321 Stockholm NCC Boende Holding 8 AB 556824-8248 Stockholm Boende Fredrik fyra AB 556825-4188 Stockholm NCC Boende Holding 9 AB 556845-8797 Stockholm Byggmarken AB 556831-3257 Lund Byggmarken 3 AB 556848-4348 Lund NCC Boende Holding 10 AB 556845-8821 Stockholm Tipton Grön AB 556617-6319 Solna Byggmarken 2 AB 556848-4355 Lund NCC Boende Holding 11 AB 556866-8692 Stockholm Kristineberg 1:10 Exploatering AB 556471-5752 Stockholm Sollentuna Centrum Exploaterings AB 556393-1046 Stockholm Boende Jackie AB 556971-2994 Solna NCC Boende Holding 12 AB 556887-7079 Stockholm Gröndal Sjöhusen AB 556970-6053 Solna Sjökvarteret AB 556968-9333 Solna

158 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Historical financial information

Note 25, Participations in companies included in the combined financial statements, continued

2014 NCC Boende Holding 13 AB 556966-2835 Stockholm Boende Hyra Ett AB 556966-2827 Stockholm Boende Hyra Två AB 556966-2819 Stockholm Boende Hyra Tre AB 556966-2801 Stockholm Boende Hyra Fyra AB 556966-2793 Stockholm NCC Boende Ringvägen AB 556740-1772 Solna NCC Förseglet Västerås KB 969684-6931 Västerås NCC Södra Ekkällan AB 556679-8780 Solna Nils P Lundh AB 556062-7795 Solna NCC Boende Södermalm AB 556740-1764 Solna NCC Boende Ursvik AB 556739-6584 Solna NCC Boende Kvarntorget AB 556743-5226 Solna Tipton Magnus AB 556617-6201 Solna Tipton Svart AB 556617-6375 Solna Storaområdet Åby AB 556688-1768 Solna NVB Beckomberga KB (25%) 969676-7772 Stockholm Sintrabergen Holding AB 556498-1248 Stockholm Svenska Industribyggen AB 556087-2508 Stockholm NCC Projektutveckling i Uppsala AB 556713-4423 Solna Stora Ursvik KB (50%) 969679-3182 Stockholm Söderby Park Fastigheter HB 916630-4817 Stockholm Tipton Brown AB (33%) 556615-8159 Stockholm Ursvik Exploaterings AB (50%) 556611-6892 Stockholm Öhusen, KB (50%) 969697-7793 Malmö NCC Kaninen Projekt AB (30%) 556740-3638 Solna NCC Boende Holding 14 AB 556973-2273 Solna NCC Boende Holding 15 AB 556987-3770 Stockholm Tipton Rudolf AB 556617-6250 Stockholm Boende Karly fyra AB 556987-3663 Stockholm Allemanshem AB 556987-3648 Stockholm Bryggvägen Fastighets AB 556839-1956 Stockholm

GERMANY NCC Deutschland GmbH (90%) HRB8906 FF Germany CJP Wohnpark Annafliess GBR II (70.7%) Germany GBS GmbH HRB 9276 Germany Algon GmbH (50%) HRB 4932 Germany NCC Wohnimmobilien GmbH HRB 5291 Germany

FINLAND part of NCC Rakennus Oy 1765514-2 Finland

DENMARK Boligintressentselskabet Tuborg (50%) 25628470 Denmark NCC Boligshop A/S 28893094 Denmark NCC Bolig A/S 32655505 Denmark Islands Brygge - Syd ApS 33367988 Denmark Islands Brygge – Tårn 3 Aps 33368208 Denmark Islands Brygge – Tårn 4 Aps 33368135 Denmark Islands Brygge Strandhusene ApS 33368224 Denmark Islands Brygge – Hollaenderhusene ApS 33368119 Denmark Islands Brygge – Koncepthusene ApS 33368194 Denmark NCC Teglholmen ApS 28100043 Denmark NCC Bolig 1 ApS 35484965 Denmark NCC Bolig 2 ApS 35484973 Denmark NCC Teglholmen 3 ApS 35474617 Denmark

NORWAY NCC Utvikling AS 980,390,020 Norway NCC Bolig AS 997,671,783 Norway Åsane Nord AS 990,400,571 Norway

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 159 Historical financial information

Note 25, Participations in companies included in the combined financial statements, continued

2014 ST. PETERSBURG LLC NCC Village INN7842398917 Russia LLC NCC Real Estate INN7841322136 Russia LLC NCC Center INN7841457408 Russia LLC Petrogradskaya storona INN7813510307 Russia LLC Ostland INN7802379530 Russia

ESTONIA OU NCC Elamuarendus 11398856 Estonia OU NCC Kalaranna 12006976 Estonia OU NCC Pärnaoue 12006963 Estonia OU NCC Rabaküla 12007059 Estonia OU NCC Rannaoue 12007220 Estonia OU NCC Sarapuu 12007071 Estonia OU NCC Tammeoue 12007065 Estonia OU NCC Vana-Kuuli 12007131 Estonia

LATVIA Januki SIA 40003835266 Latvia Dalton Auto Centrs SIA 40003739888 Latvia NCC Property Development SIA 40003863151 Latvia SIA NCC Housing 40003941615 Latvia SIA NCC Bikernieku 40103303370 Latvia NCC Spilve Development SIA 50003853691 Latvia Kalati SIA (50%) 40003783689 Latvia

160 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Historical financial information

Note 25, Participations in companies included in the combined financial statements, continued

2013 Head office part of NCC AB, Housing Head Office 556034-5174 Solna Siab Investment AB 556495-9079 Stockholm SIAB AB 556044-3177 Solna KB Sonnengarten 969711-9783 Solna NCC Property Development BV 33.213.877 The Netherlands

SWEDEN part of NCC AB Housing SE 556034-5174 Solna NCC Boende AB 556726-4121 Solna Aktivt Boende AB 556889-1393 Solna Alsike Utvecklings AB 556245-9452 Uppsala AB Broutsikten (50%) 556650-8551 Malmö Fastighets AB Strömstaden (32%) 556051-7202 Norrköping Frösunda Exploaterings AB 556430-1876 Stockholm Frösunda Exploaterings KB 916636-6451 Stockholm Fågelbro Mark AB 556234-0868 Stockholm Granitsoppen AB (50%) 556462-4194 Norrköping Granitsoppen, KB (50%) 916681-5663 Norrköping Hyresboende AB 556889-1401 Solna Kallax Cargo AB 556565-1147 Solna Kvarntorget Bostad AB 556729-8541 Uppsala NCC Boende Holding 1 AB 556761-3459 Stockholm Elinegård Utvecklings AB (50%) 556781-7258 Stockholm NCC Boende Tre AB 556781-7209 Stockholm NCC Boende Fyra AB 556781-7217 Stockholm NVB Sköndalsbyggarna KB (33.3%) 969712-1615 Stockholm NVB Sköndalbyggarna II KB (33.3%) 969715-4442 Stockholm NCC Property Ä AB 556740-3653 Stockholm NVB Sköndalsbyggarna AB (33.3%) 556779-2527 Stockholm NVB Sköndalsbyggarna II AB (33.3%) 556814-3449 Stockholm NCC Boende Holding 2 AB 556795-2089 Solna NCC Boende sex AB 556795-2097 Solna NCC Boende sju AB 556795-2105 Solna NCC Boende åtta AB 556795-2113 Solna NCC Boende Holding 3 AB 556795-2287 Stockholm Boende Albert ett AB 556824-8255 Stockholm Boende Albert två AB 556824-8263 Stockholm Bro Linaberg 15 AB 556821-1931 Stockholm NCC Boende Holding 4 AB 556824-7901 Stockholm Boende Botel fyra AB 556824-8172 Stockholm Boende Ursvik 32 AB 556912-1386 Stockholm NCC Boende Holding 5 AB 556824-7919 Stockholm Boende Ceasar ett AB 556824-8180 Stockholm Boende Ceasar två AB 556824-8198 Stockholm NCC Boende Holding 6 AB 556824-7927 Stockholm Boende Daniel ett AB 556824-8222 Stockholm Boende Daniel tre AB 556824-8347 Stockholm Boende Daniel fyra AB 556824-8339 Stockholm NCC Boende Holding 7 AB 556824-8230 Stockholm Boende Eric ett AB 556824-8321 Stockholm NCC Boende Holding 8 AB 556824-8248 Stockholm Boende Fredrik tre AB 556825-4196 Stockholm Boende Fredrik fyra AB 556825-4188 Stockholm NCC Boende Holding 9 AB 556845-8797 Stockholm Byggmarken AB 556831-3257 Lund Byggmarken 3 AB 556848-4348 Lund NCC Boende Holding 10 AB 556845-8821 Stockholm Tipton Grön AB 556617-6319 Solna Byggmarken 2 AB 556848-4355 Lund

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 161 Historical financial information

Note 25, Participations in companies included in the combined financial statements, continued

2013 NCC Boende Holding 11 AB 556866-8692 Stockholm Kristineberg 1:10 Exploatering AB 556471-5752 Stockholm Sollentuna Centrum Exploaterings AB 556393-1046 Stockholm Ytterby Stad AB 556832-4874 Stockholm NCC Boende Holding 12 AB 556887-7079 Stockholm NCC Boende Ringvägen AB 556740-1772 Solna NCC Förseglet Västerås KB 969684-6931 Västerås NCC Södra Ekkällan AB 556679-8780 Solna Nils P Lundh AB 556062-7795 Solna NCC Boende Södermalm AB 556740-1764 Solna NCC Boende Ursvik AB 556739-6584 Solna NCC Boende Kvarntorget AB 556743-5226 Solna Tipton Magnus AB 556617-6201 Solna Tipton Svart AB 556617-6375 Solna Storaområdet Åby AB 556688-1768 Solna NVB Beckomberga KB (25%) 969676-7772 Stockholm Sintrabergen Holding AB 556498-1248 Stockholm Skattkärrs Byggnads AB (50%) 556334-8316 Norrköping Svenska Industribyggen AB 556087-2508 Stockholm NCC Projektutveckling i Uppsala AB 556713-4423 Solna Stora Ursvik KB (50%) 969679-3182 Stockholm Söderby Park Fastigheter HB 916630-4817 Stockholm Tipton Brown AB (33%) 556615-8159 Stockholm Ursvik Exploaterings AB (50%) 556611-6892 Stockholm Vänerbyggen Skattkärrs Byggnads AB & Co KB (50%) 916574-3239 Karlstad Öhusen, KB (50%) 969697-7793 Malmö NCC Kaninen Projekt AB (30%) 556740-3638 Solna Elinegård Holding AB 556953-0024 Stockholm

FINLAND part of NCC Rakennus Oy 1765514-2 Finland

DENMARK Boligintressentselskabet Tuborg (50%) 25628470 Denmark NCC Boligshop A/S 28893094 Denmark NCC Bolig A/S 32655505 Denmark Islands Brygge - Syd ApS 33367988 Denmark Islands Brygge – Tårn 1 Aps 33368143 Denmark Islands Brygge – Tårn 2 Aps 33368186 Denmark Islands Brygge – Tårn 3 Aps 33368208 Denmark Islands Brygge – Tårn 4 Aps 33368135 Denmark Islands Brygge Strandhusene ApS 33368224 Denmark Islands Brygge – Hollaenderhusene ApS 33368119 Denmark Islands Brygge – Koncepthusene ApS 33368194 Denmark NCC Teglholmen ApS 28100043 Denmark Conveyance ApS 30077180 Denmark

NORWAY NCC Utvikling AS 980390020 Norway NCC Bolig AS 997671783 Norway Åsane Nord AS 990400571 Norway

162 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Historical financial information

Note 25, Participations in companies included in the combined financial statements, continued

2013 ST. PETERSBURG LLC NCC Village INN7842398917 Russia LLC NCC Real Estate INN7841322136 Russia LLC NCC Center INN7841457408 Russia LLC Petrogradskaya storona INN7813510307 Russia LLC Ostland INN7802379530 Russia

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 163 Historical financial information

Solna, Sweden, 24 May 2016

Carl Engström Viveca Ax:son Johnson Chairman of the board Board member

Åsa Hedenberg Samir Kamal Board member Board member

Magnus Rosén Anna Wallenberg Board member Board member

Our audit reports were submitted on 24 May 2016

Ernst & Young AB PricewaterhouseCoopers AB

Mikael Ikonen Håkan Malmström Authorised Public Accountant Authorised Public Accountant

164 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Auditors’ reports on combined financial statements of historical financial information

To the Board of Directors of Bonava AB (publ), reg. no. 556928-0380

We have audited the combined financial statements for Bonava AB (publ) on pages 124–164, which comprise the combined statement of financial position as of December 31, 2015 and the combined statements of income, comprehensive income, cash flows and changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes.

The Board of Directors’ responsibility for the combined financial statements The Board of Directors are responsible for the preparation and the fair presentation of the combined financial position, financial performance, statement of changes in equity and cash flows in accordance with International Financial Reporting Standards as adopted by the EU and additional applicable framework. This responsibility includes designing, implementing and maintaining internal control relevant to preparing and appropriately presenting combined financial statements that are free from material misstatement, whether due to fraud or error. The Board is also responsible for the preparation and fair presentation of the combined financial statements in accordance with the requirements in the Commission Regulation (EC) No 809/2004.

The auditor’s responsibility Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with FAR’s Recommendation RevR 5 Examination of Financial Information in Prospectuses. This recommendation requires that we comply with ethical requirements and have planned and performed the audit to obtain reasonable assurance that the combined financial statements are free from material misstatements. The firm applies ISQC 1 (International Standard on Quality Control) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

An audit in accordance with FAR’s Recommendation RevR 5 Examination of Financial Information in Prospec- tuses involves performing procedures to obtain audit evidence corroborating the amounts and disclosures in the combined financial statements. The audit procedures selected are based on our assessment of the risks of material misstatements in the combined financial statements, whether due to fraud or error. In making those risk assessments, we consider the internal control relevant to the company’s preparation and fair presentation of the combined financial statements as a basis for designing audit procedures that are applicable under those circumstances but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also involves evaluating the accounting policies applied and the reasonableness of the significant accounting estimates made by the Board of Directors and the Managing Director and evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion In our opinion, the combined financial statements give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and additional applicable framework, of the combined financial position of the group as of December 31, 2015 and its combined financial performance, statement of changes in equity and cash flow for the year.

Stockholm, May 24, 2016

Ernst & Young AB

Mikael Ikonen Authorized Public Accountant

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 165 Auditors’ reports on combined financial statements of historical financial information

To NCC AB (publ) reg. no. 556034-5174

We have audited the combined financial statements on page 124–164 for Bonava AB AB (publ), which consist of the combined balance sheets as of 31 December 2014, 2013 and 2012 and the combined income statements, statements of comprehensive income, cash flow statements and statements of changes in equity for 2014 and 2013, and a summary of significant accounting policies and other explanatory notes.

The Board of Directors’ and the Managing Director’s responsibility for the combined financial statements The Board of Directors and the Managing Direct0r are responsible for the preparation of the combined financial statements so as to present fairly the financial position, results, changes in equity and cash flows in accordance with International Financial Reporting Standards as adopted by the EU, RFR 1 Supplementary accounting rules for groups and additional applicable standards. This responsibility includes designing, implementing and maintaining internal control relevant to prepare and present fairly combined financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is also responsible for the preparation and presentation of the combined financial statements in accordance with the requirements of the Commis- sion Regulation (EC) No. 809/2004.

Auditor’s responsibility Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with FAR’s Recommendation RevR 5 Examination of Financial Information in Prospectuses. This recommendation requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement. The audit firm applies ISQC1 (International Standard on Quality Control) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

An audit in accordance with FAR’s recommendation RevR 5 Examination of Financial Information in Prospec- tuses involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The audit procedures selected depend on our assessment of the risks of material misstatement in the combined financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the company’s preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also involves evaluating the appropriateness of the accounting policies applied and the reasonableness of significant accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion In our opinion, the combined financial statements present fairly Bonava AB’s combined financial position as of 31 December 2014, 2013 and 2012 and of its combined results and cash flows for 2014 and 2013 in accordance with International Financial Reporting Standards as adopted by the EU, RFR 1 Supplementary accounting rules for groups and additional applicable standards.

Stockholm 24 May 2016

PricewaterhouseCoopers AB

Håkan Malmström Authorised Public Accountant

166 Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) Addresses

THE COMPANY Bonava AB (publ) Postal and street address Vallgatan 3 SE-170 80 Solna Sweden Phone number: +46 8 585 510 00 Website: www.bonava.com

AUDITORS Auditor for 2015 financial year Auditor for the 2013 and 2014 financial years and the first quarter of 2016 PricewaterhouseCoopers AB Ernst & Young AB Torsgatan 21 Box 7850 SE-113 97 Stockholm SE-103 99 Stockholm Sweden Sweden

FINANCIAL ADVISOR Handelsbanken Capital Markets Blasieholmstorg 11 SE-106 70 Stockholm Sweden

LEGAL ADVISOR TO THE COMPANY Advokatfirman Cederquist KB Box 1670 SE-111 96 Stockholm Sweden

CENTRAL SECURITIES DEPOSITORY Euroclear Sweden AB Box 191 SE-106 23 Stockholm Sweden

Admission to trading on Nasdaq Stockholm for shares of series A and series B in Bonava AB (publ) 167

Photographer/Photo agency: Casper Hedberg: pages 22 and 51. Mattias Vogel: pages 85 and 92. Diakrit: front page, pages 26, 29, 32, 38, 47, 48, 49, 50, 92 and back page. MiR: page 49. Ebbe Forup: page 48. Nina Broberg: page 27. Erik Mårtensson: pages 19, 22, 24, 28, 32, 37, 38, 50, 53, 77, 78, 92 and 95. Oh Oliver Hecke Photography: page 48 Eve Images: page 49. Optiplan Oy: page 32. Hannes Söderlund: page 24. Shutterstock: page 25. Heidi van der Westhuizen: page 25. Sillman Arkkitehtitoimisto Oy: page 29. Hinterhaus Productions: front page. Steffen Höft: page 34. Johan Alp: page 92. Sten Jansin: front page and pages 27, 72, 74 and 75. Jeppe Tuomainen: page 48. Thorsten Henn: page 31. Johner Bildbyrå AB: front page and page 20. Todor Tsvetkov: page 26. Masterbox: pages 22 and 46. Vismo: page 49. Vallgatan 3,17080Solna www.bonava.com Bonava AB(publ)

Ineko Finanstryck 2016 / 257571