Hufvudstaden

Quarterly Report • May 21, 2013

HUFVUDSTADEN Interim Report January — March 2013

Interim Report January–March 2013

• Gross profit from property management remained unchanged and amounted to SEK 264 million (264).
• Profit after tax for the period was SEK 266 million (341), equivalent to SEK 1.29 per share (1.65). The fall in profit can be attributed to a lower unrealized change in the value of the property holdings compared to the previous year.
• The fair value of the property holdings was set at SEK 24.5 billion (23.1 at the turn of the year). On March 7, acquisition of the property Nordstaden 8:26 in Gothenburg was completed. The purchase sum was SEK 1.3 billion.
• The net asset value, following a deduction for a dividend of SEK 2.60 per share, amounted to SEK 83 per share (84 at the turn of the year).
• The equity ratio was 54 per cent (54), the net loan-to-value ratio was 22 per cent (20) and the interest coverage ratio multiple was 7.8 (6.5).
• Consolidated net revenue amounted to SEK 390 million (381), an increase of 2 per cent.

________________________

The rental vacancy level at the period-end was 5.0 per cent (3.9).

GROUP

RESULTS

Property management1)

Net rents from property management during the period amounted to SEK 372.9 million (363.2), an increase of 3 per cent, and the gross profit was SEK 263.5 million (263.5). The increase in net revenue can be attributed to higher rents following renegotiations and revenue from the newly acquired property Nordstaden 8:26 in Gothenburg. The profit has also been affected by higher costs for snow clearance and energy due to a harsh winter.

The turnover-based rent supplement at the NK properties is reported during the fourth quarter. The turnover-based rent supplement the previous year was SEK 8.8 million. Apart from this, there are no material seasonal variations in rents.

The property management results for each business area are reported on page 5.

Parking operations

Operations comprise parking operations at Parkaden AB in Stockholm. Net revenue amounted to SEK 16.9 million (17.4), expenses amounted to SEK 12.2 million (12.2) and gross profit amounted to SEK 4.7 million (5.2).

Other profit and loss items

Central administration totalled SEK -8.4 million (-7.8). Changes in the value of investment properties totalled SEK 73.2 million (194.7) and changes in interest derivatives totalled SEK 39.0 million (47.9).

Financial income and expense

Net financial income and expense amounted to SEK -29.8 million (-39.7). Despite an increase in lending in conjunction with property acquisitions, net costs decreased due to a lower average rate of interest following rearrangement of the derivative portfolio at the end of 2012.

Tax

The Group's tax (actual and deferred tax) for the period was SEK -76.3 million (-123.2), of which

¹⁾ The acquired property Nordstaden 8:26 is included from March 7, 2013.

SEK -36.6 million was actual tax (-44.8) and SEK -39.7 million was deferred tax (-78.4).

Profit for the period

The consolidated profit after tax amounted to SEK 265.9 million (340.6). The fall is due to a lower unrealized increase in the value of the property holdings compared to the previous year.

ACQUISITIONS AND INVESTMENTS

Acquisition of the property Nordstaden 8:26 in Gothenburg was completed in March. The purchase sum was SEK 1,265.0 million. The total investment in properties and equipment during the period was SEK 1,321.6 million (33.0).

PROPERTY HOLDINGS

The fair value of the Hufvudstaden property holdings as of March 31, 2013 is estimated at SEK 24,452 million (23,058 at the turn of the year). The increase can be attributed to property acquisitions, investments in the property holdings and unrealized changes in value. Rentable floor space totalled 388,000 square metres, of which 20,700 square metres refers to the newly acquired property.

The rental vacancy level as of March 31, 2013 was 5.0 per cent (3.7 at the turn of the year) and the floor space vacancy level was 6.4 per cent (5.4 at the turn of the year). The increase can be explained mainly by a major retailing tenant leaving Nordstan in Gothenburg and vacation of a small amount of office space in Stockholm.

Property value and net asset value

At the end of each quarter, Hufvudstaden makes an internal valuation of each individual property. The purpose of the valuation is to assess the fair value of the property holdings. The assessment took place based on a valuation made according to a variation on the location price method, known as the net capitalization method, where the market yield requirement is put in relation to the net operating income of the properties. To assure the valuations, external valuations for part of the property holdings are obtained at least once a year.

There is a continuous update made during the year of the internal valuation of the properties in order to take into account purchases, sales and investments. Hufvudstaden also examines on a continuous basis whether there are other indications of changes in the fair value of the properties. This could, for example, take the form of major lettings, terminations and material changes in the yield requirements.

In the light of the above, the unrealized change in value of the property holdings for the first quarter of 2013 was SEK 73.2 million (194.7). The total value of property holdings as of March 31, 2013 was SEK 24.5 billion, including acquisitions and investments made during the period. The unrealized increase in value can be attributed to the effect of new and renegotiated leases.

The average yield requirement at the above valuation point was 4.8 per cent (4.8 at the turn of the year).

Net asset value

Based on the valuation of the property holdings, the net asset value, following a deduction for a decided

dividend of SEK 536 million, was SEK 17.1 billion or SEK 83 per share after tax. When calculating the net asset value, calculated deferred tax has been used. This has been set at 5 per cent of the difference between the assessed fair value of the properties and the residual value for tax purposes. The assessment is made in the light of current tax legislation, which means that properties can be sold via a limited company without tax implications. The purchaser, however, loses the basis for depreciation, which could justify some compensation, which has been set at 5 per cent. If the tax rate according to the Statement of Financial Position (22 per cent) had been used in the calculation, the net asset value would have been SEK 13.6 billion or SEK 66 per share. If the tax rate was assumed to be 0 per cent, the net asset value would have been SEK 18.1 billion or SEK 88 per share.

RENTAL MARKET

Interest in modern, flexible office space in prime locations in central Stockholm continued to be good during the period. Vacant space in this category has continued to remain low and rents stable. In conjunction with renegotiations and new leases for office space in Stockholm's most attractive locations in Bibliotekstan, at Norrmalmstorg/Hamngatan and in the Hötorget area, rents were noted of between SEK 4,200 and SEK 5,000 per square metre per year, excluding the property tax supplement. Interest in prime-location retail premises in the same submarkets has also been high with rents ranging from SEK 13,000 to SEK 19,000 per square metre per year, excluding the property tax supplement.

Demand for modern office premises in the central sub-markets of Gothenburg has been good. Market rents for modern, well-planned office premises in prime locations have risen slightly and were between SEK 2,000 and SEK 2,600 per square metre per year, excluding the property tax supplement. For retail premises, the market rents were between SEK 6,000 and SEK 13,000 per square metre per year, excluding the property tax supplement.

The Group's renegotiations of retail and office leases have proceeded in line with our expectations. In total, 10,900 square metres were renegotiated during the period at a rental value of SEK 49 million.

FINANCING STRUCTURE

Hufvudstaden's borrowing as of March 31, 2013 amounted to SEK 5,950 million (4,700 at the turn of the year). During the period, bonds were issued totalling SEK 1,000 million and the total outstanding amount is SEK 1,500 million. Outstanding commercial paper amounted to SEK 1,100 million. Hufvudstaden ensures that at any given point in time there are unutilized loan assurances to cover all outstanding commercial paper. The average fixed interest period was 47 months (47 at the turn of the year), the average capital tie-up period was 50 months (47 at the turn of the year) and the average annual equivalent rate was 2.2 per cent (2.1 at the turn of the year). The net interest-bearing debt was SEK 5,282 million (4,202 at the turn of the year).

The fair value of interest swaps as of March 31, 2013 was SEK 16.1 million (-23.0 at the turn of the year).

Capital tie-up structure, March 31, 2013

Maturity	Volume,	Share,
Date	SEK m	%
2013	600.0	10
2016	1,100.0	18
2017	2,750.0	46
2018	1,000.0	17
2019	500.0	9
Total	5,950.0	100

Fixed interest structure, March 31, 2013

Maturity	Volume,	Share,	Average
Date	SEK m	%	AER, %
2013	1,300.0	22	1.7
2014	100.0	2	2.1
2016	500.0	8	2.3
2017	1,500.0	25	1.8
2018	1,800.0	30	2.6
2019	750.0	13	2.9
Total	5,950.0	100	2.2

SHARES AND SHAREHOLDERS

Hufvudstaden, whose shares are listed on NASDAQ OMX Stockholm, had 17,619 shareholders at the end of the period. The proportion of foreign ownership as of March 31, 2013 was 28.9 per cent of the total number of outstanding shares (29.9 at the turn of the year). The series A share price as of March 31, 2013 was SEK 81.80 and market capitalization was SEK 17.7 billion.

Shares bought back

The total number of shares held by Hufvudstaden as of March 31, 2013 was 5,006,000 series A shares, equivalent to 2.4 per cent of the total number of issued shares. No buy-backs were made during the period or after the end of the reporting period. At the 2013 Annual General Meeting, the Board was granted renewed authorization to acquire up to 10 per cent of all the issued shares and to assign company shares.

Buy-back of shares as of March 31, 2013, million shares

	Total		Held by
	number	Company	other share
	of shares	holdings	holders
As of January 1, 2013	211.3	5.0	206.3
Buy-back	-	-	-
As of March 31, 2013	211.3	5.0	206.3

MATERIAL RISKS AND UNCERTAINTY FACTORS

The Group is mainly exposed to financing, interest and credit risks and changes in the value of the property holdings. The Company has not identified any material risks and uncertainties other than those described in the 2012 Annual Report.

MATERIAL TRANSACTIONS WITH ASSOCIATED PARTIES

There were no material transactions with associated parties during the period.

ACCOUNTING PRINCIPLES

Hufvudstaden applies the EU-endorsed IFRS standards and interpretations thereof (IFRIC). This Interim Report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting. Accounting principles and computation methods are the same as those applied in the most recent Annual Report. Derivatives are valued at fair value in the Statement of Financial Position. All derivatives are classified as Level 2 according to IFRS 13. Offsetting of financial assets and liabilities is not applied. Other financial assets and liabilities are recorded at their accrued acquisition value, which is essentially in line with fair value.

FORTHCOMING INFORMATION

Interim Report, January-June 2013	August 22, 2013
Interim Report, January-September 2013	November 7, 2013
Year-End Report 2013	February 13, 2014
Annual Report 2013	March 2014
Annual General Meeting in Stockholm 2014	March 20, 2014

The information in this Interim Report is information that Hufvudstaden AB (publ) is obliged to publish according to the Securities Market Act and/or the Financial Instruments Trading Act. The information was published on May 21, 2013.

This information is also published on Hufvudstaden's website, www.hufvudstaden.se

Questions can be answered by Ivo Stopner, President, or Magnus Jacobson, Head of Finance, telephone +46 8-762 90 00.

INCOME STATEMENTS – SUMMARY

	January March	January – March	January –
GROUP, SEK m	2013	2012	December 2012
Net revenue
Property management	372.9	363.2	1,472.0
Parking operations	16.9	17.4	69.7
	389.8	380.6	1,541.7
Property management expenses
Maintenance	-8.5	-5.8	-35.5
Operation and administration	-64.3	-58.0	-227.1
Ground rents	-4.1	-3.9	-16.3
Property tax	-32.5	-32.0	-128.2
Property management expenses	-109.4	-99.7	-407.1
Parking operations, expenses	-12.2	-12.2	-49.4
Operating expenses	-121.6	-111.9	-456.5
Gross profit	268.2	268.7	1,085.2
- of which Property management	263.5	263.5	1,064.9
- of which Parking operations	4.7	5.2	20.3
Central administration	-8.4	-7.8	-34.1
Operating profit before changes in value	259.8	260.9	1,051.1
Changes in value
Properties	73.2	194.7	620.6
Interest derivatives	39.0	47.9	-25.4
Operating profit	372.0	503.5	1,646.3
Financial income and expense	-29.8	-39.7	-160.7
Profit before tax	342.2	463.8	1,485.6
Tax	-76.3	-123.2	453.8
Profit after tax	265.9	340.6	1,939.4
Other comprehensive income	-	-	-
Total comprehensive income for the period	265.9	340.6	1,939.4
Average number of outstanding shares following buy-backs during
the period	206,265,933	206,265,933	206,265,933
Profit for the period after tax per share before and
after dilution, SEK	1.29	1.65	9.40
BALANCE SHEETS – SUMMARY
	March 31,	March 31,	December 31,
GROUP, SEK m	2013	2012	2012

GROUP, SEK m	2013	2012	2012
Properties	24,451.7	22,478.5	23,057.5
Other non-current assets	11.0	11.7	11.0
Total non-current assets	24,462.7	22,490.2	23,068.5
Current assets	727.7	276.4	584.6
Total assets	25,190.4	22,766.6	23,653.1
Equity	13,650.5	12,322.1	13,920.9
Non-current interest-bearing liabilities	4,150.0	3,700.0	3,150.0
Deferred tax liabilities	4,581.1	5,249.8	4,541.3
Other non-current liabilities	12.4	136.8	34.5
Pension provisions	8.4	8.0	8.4
Total non-current liabilities	8,751.9	9,094.6	7,734.2
Current, interest-bearing liabilities	1,800.0	951.0	1,550.0
Other liabilities	988.0	398.9	448.0
Total current liabilities	2,788.0	1,349.9	1,998.0
Total equity and liabilities	25,190.4	22,766.6	23,653.1

CHANGES IN EQUITY – SUMMARY

	January-	January-	January
	March	March	December
GROUP, SEK m	2013	2012	2012
Equity, opening balance	13,920.9	12,486.9	12,486.9
Total comprehensive income for the period	265.9	340.6	1,939.4
Dividends	-536.3	-505.4	-505.4
Equity, closing balance	13,650.5	12,322.1	13,920.9

STATEMENTS OF CASH FLOWS – SUMMARY

	January-	January-	January
GROUP, SEK m	March 2013	March 2012	March 2012
	342.2	463.8
Result before tax			1,485.6
Depreciation/impairments	1.7	2.6	7.3
Unrealized change in value, properties	-73.2	-194.7	-620.6
Unrealized change in value, interest derivatives	-39.0	-47.9	-160.6
Other changes	-	0.3	0.7
Tax paid	17.7	-50.1	-203.5
Cash flow from current operations
before changes in working capital	249.4	174.0	508.9
Increase/decrease in operating receivables	-7.6	18.8	20.1
Increase/decrease in operating liabilities	0.2	-70.3	-10.8
Cash flow from current operations	242.0	122.5	518.2
Investments in properties	-1,321.0	-32.6	-185.7
Investments in equipment	-0.6	-0.4	-1.3
Cash flow from investments	-1,321.6	-33.0	-187.0
Loan raised	1,600.0	276.0	1,100.0
Amortization of loan debt	-350.0	-	-775.0
Dividend paid	-	-505.4	-505.4
Cash flow from financing	1,250.0	-229.4	-180.4
Cash flow for the period	170.4	-139.9	150.8
Cash and cash equivalents at the beginning of the
period	497.5	346.7	346.7
Cash and cash equivalents at the period-end	667.9	206.8	497.5
Cash flow for the period per share, SEK	0.83	-0.68	0.73

SEGMENT REPORT – SUMMARY¹

	East Business Area	Stockholm City	Stockholm City	West Business Area	Gothenburg Business Area		Total
GROUP, SEK m	January - March 2013	January - March 2012	January - March 2013	January - March 2012	January - March 2013	January - March 2012	January - March 2013	January - March 2012
Net revenue	169.6	168.8	150.2	148.1	53.1	46.3	372.9	363.2
Property costs	-46.2	-39.1	-47.8	-47.3	-15.4	-13.3	-109.4	-99.7
Gross profit, property management	123.4	129.7	102.4	100.8	37.7	33.0	263.5	263.5
Parking operations			4.7	5.2			4.7	5.2
Central administration							-8.4	-7.8
Changes in value
Properties							73.2	194.7
Interest derivatives							39.0	47.9
Operating profit Financial income and							372.0	503.5
expense							-29.8	-39.7
Profit before tax							342.2	463.8

1) For comparable holdings, net revenue for the Gothenburg Business Area and the Group and gross profit from property management should be increased by SEK 4.6 million and SEK 3.3 million respectively for 2012.

PLEDGED ASSETS AND CONTINGENT LIABILITIES

	March 31,	March 31,	December 31,
GROUP, SEK m	2013	2012	2012
Pledged assets
Mortgages	1,956.2	2,407.1	1,956.2
Endowment insurance	6.6	6.2	6.6
Total pledged assets	1,962.8	2,413.3	1,962.8
Contingent liabilities	None	None	None

KEY RATIOS

	March 31,	March 31,	Full Year	Full Year	Full Year	Full Year
GROUP	2013	2012	2012	2011	2010	2009
Property-related
Rentable floor space, 1,000 m2	388	366	367	365	358	354
Rental vacancy level, %	5.0	3.9	3.7	3.9	5.1	6.2
Floor space vacancy level, %	6.4	6.1	5.4	5.9	6.8	7.4
Fair value, SEK bn	24.5	22.5	23.1	22.3	20.1	18.1
Surplus ratio, %	68.8	70.6	70.4	67.1	67.8	68.8
Financial
Return on equity, %	5.7	6.5	14.7	12.0	15.9	-3.4
Return on capital employed, %	6.0	7.4	9.3	13.1	17.2	-2.5
Equity ratio, %	54.2	54.1	58.9	55.0	56.1	55.0
Interest coverage ratio, multiple	7.8	6.5	6.4	7.0	7.7	7.0
Debt/equity ratio, multiple	0.4	0.4	0.3	0.3	0.3	0.3
Net loan-to-value ratio, properties, %	21.6	19.8	18.2	18.1	16.1	16.4
Data per share
Profit/loss for the period, SEK	1.29	1.65	9.40	6.96	8.40	-1.73
Equity, SEK	66.18	59.74	67.49	60.54	55.88	49.58
Properties, fair value, SEK	118.54	108.98	111.79	107.88	97.68	87.87
Net asset value, SEK	83.00	75.00	84.00	76.00	70.00	62.00
Number of outstanding shares, 1,000	206,266	206,266	206,266	206,266	206,266	206,266
Number of issued shares, 1,000	211,272	211,272	211,272	211,272	211,272	211,272

KEY RATIOS PER QUARTER

	Jan	Oct	July	April	Jan	Oct	July	April
	March	Dec	Sept	June	March	Dec	Sept	June
GROUP	2013	2012	2012	2012	2012	2011	2011	2011
Net revenue, SEK m	390	398	381	382	381	380	350	356
Return on equity, %	5.7	31.0	7.7	7.6	6.5	12.4	9.6	10.3
Return on equity, adjusted, %	5.1	28.0	5.3	5.0	5.1	5.4	4.7	5.0
Equity ratio, %	54.2	58.9	55.0	54.7	54.1	55.0	55.6	55.7
Profit/share for the period, SEK	1.29	5.56	0.68	1.52	1.65	2.06	0.45	3.19
Equity per share, SEK	66.18	67.49	61.93	61.26	59.74	60.54	58.47	58.02
Net asset value per share, SEK 1)	83.00	84.00	77.00	77.00	75.00	76.00	73.00	73.00
Cash flow from current operations
per share, SEK	1.17	0.27	0.79	0.85	0.59	0.53	0.69	0.64

1) The estimated deferred tax used for costing purposes as of December 31, 2012 was assumed to be 5 per cent. The figure for previous periods was 10 per cent.

PARENT COMPANY

RESULT AND POSITION

Net revenue amounted to SEK 229.6 million (220.7). The gross profit was SEK 117.5 million (125.6). The increase in net revenue can be attributed to higher rents following renegotiations as well as revenue from the newly acquired property Nordstaden 8:26 in Gothenburg. Profit has also been affected by higher costs for snow clearance and energy due to a harsh winter as well as increased maintenance costs. Net financial income and expense was SEK -29.7 million (-39.8).

Cash and cash equivalents at the period-end amounted to SEK 667.7 million (206.5). Investments in properties and equipment during the period totalled SEK 1,286.0 million (10.9).

MATERIAL RISKS AND UNCERTAINTY FACTORS

The Company is exposed mainly to financing, interest and credit risks. The Company has not identified any material risks and uncertainties other than those described in the 2012 Annual Report.

MATERIAL TRANSACTIONS WITH ASSOCIATED PARTIES

There were no material transactions with associated parties during the period.

ACCOUNTING PRINCIPLES

The Parent Company applies the same accounting principles as in the most recent annual report.

INCOME STATEMENTS – SUMMARY

	January–	January –	January –
	March	March	December
PARENT COMPANY, SEK m	2013	2012	2012
Net revenue	229.6	220.7	890.9
Operating expenses	-112.1	-95.1	-415.5
Gross profit	117.5	125.6	475.4
Central administration	-8.4	-7.7	-34.1
Changes in value, interest derivatives	39.0	47.9	-25.4
Operating profit	148.1	165.8	415.9
Group contribution	-	-	373.1
Financial income and expense	-29.7	-39.8	-157.8
Profit after financial items	118.4	126.0	631.2
Appropriations	-	-	-24.9
Profit before tax	118.4	126.0	606.3
Tax	-26.9	-34.1	-17.8
Profit for the period	91.5	91.9	588.5
Statement of comprehensive income, SEK m
Profit for the period	91.5	91.9	588.5
Other comprehensive income	-	-	-
Comprehensive income for the period	91.5	91.9	588.5

BALANCE SHEETS – SUMMARY

	March 31,	March 31,	December 31,
PARENT COMPANY, SEK m	2013	2012	2012
Properties	7,617.8	6,361.6	6,352.4
Other non-current assets	3,117.0	3,101.6	3,100.8
Total non-current assets	10,734.8	9,463.2	9,453.2
Current assets	1,338.5	908.3	1,250.4
Total assets	12,073.3	10,371.5	10,703.6
Restricted equity	1,978.7	1,978.7	1,978.7
Non-restricted equity	1,727.9	1,676.1	2,172.7
Total equity	3,706.6	3,654.8	4,151.4
Untaxed reserves	609.4	584.5	609.4
Appropriations	954.6	1,099.6	945.6
Non-current liabilities	4,162.7	3,837.3	3,185.0
Current liabilities	2,640.0	1,195.3	1,812.2
Total liabilities	8,366.7	6,716.7	6,552.2
Total equity and liabilities	12,073.3	10,371.5	10,703.6

Stockholm, May 21, 2013

Ivo Stopner President

This Interim Report has not been the subject of examination by the Company's auditors.

DEFINITIONS AND GLOSSARY

Annual rent. Gross rent at the period-end, calculated on an annual basis, excluding the turnover-based rent supplement. Vacant premises are reported at the market rent.

Bibliotekstan. The area between Norrmalmstorg, Birger Jarlsgatan, Stureplan and Norrlandsgatan and which contains stores with high-class brands.

Capital employed. Total assets reduced by non-interestbearing liabilities and deferred tax liabilities.

Central administration. Costs for Group management and Group staff functions, costs for maintaining the Company's stock exchange listing and other costs common to the Company.

Equity per share. Equity in relation to the number of outstanding shares at the period-end.

Equity ratio. Equity at the period-end in relation to total assets.

Fair value. The estimated market value of the properties.

Floor space vacancy level. Vacant floor space in square metres in relation to the total lettable floor space.

Interest coverage ratio. Profit after financial items, excluding unrealized changes in value plus interest expense minus interest contributions in relation to the interest expense minus interest contributions.

Investments. Expenses related to value-enhancing improvements that entail future financial benefits are capitalized. Rebuilding costs of an ongoing maintenance nature are charged to profit.

Market value, properties. The amount at which the properties could be transferred on condition that the transaction takes place between parties that are independent of each other and which have an interest in the transaction being completed. In accounting terms, this is known as fair value.

MTN programme. Medium Term Note is a bond programme with a term of 1-15 years.

Net liabilities. Interest-bearing liabilities, including decided dividend less current investments and cash and bank holdings.

Net loan-to-value ratio, properties. Net liabilities in relation to the carrying value of properties.

Profit per share. Profit for the period after tax in relation to the average number of outstanding shares during the period.

Property tax supplement. Property tax payments received from tenants.

Rental losses. Loss of revenue as a result of unlet space.

Rental vacancy level. Vacant floor space at an estimated market rent in relation to the total annual rent.

Return on capital employed. Profit before tax plus interest expense minus interest contributions in relation to the average capital employed. In the interim accounts, the return has been recalculated on a full-year basis without account being taken of seasonal variations that normally arise in operations and with the exception of changes in value.

Return on equity. Profit after tax in relation to the average equity. In the interim accounts, the return has been recalculated on a full-year basis without account being taken of seasonal variations that normally arise in operations and with the exception of changes in value.

Return on equity, adjusted. Profit after tax, excluding changes in value, in relation to the average equity. In the interim accounts, the return has been recalculated on a full-year basis without account being taken of seasonal variations that normally arise in operations.

Surplus ratio. Gross profit in relation to net revenue.

Tax. Total tax for the Group comprises both actual tax and deferred tax.

In some cases there has been rounding off, which means the tables and calculations do not always tally.

This document is in all respects a translation of the original Interim Report in Swedish. In the event of any differences between this translation and the Swedish original, the latter shall prevail.

Hufvudstaden, which was founded in 1915, rapidly became one of the leading property companies in Sweden and is today one of the country's strongest brands in the property sector. The brand is well known and represents high quality, good service and long-term thinking in the management and development of the Company's commercial properties in the most attractive business locations in Stockholm and Gothenburg.

Vision

Hufvudstaden shall be consistently perceived as, and prove to be, the most attractive property company in Sweden.

Business concept

Through its properties in central Stockholm and central Gothenburg, Hufvudstaden shall offer successful companies high-quality office and retailing premises in attractive marketplaces.

Financial objectives

• Hufvudstaden shares shall have good dividend growth over time and the dividend shall account for more than half the net profit from current operations.
• The equity ratio shall be at least 40 per cent over time.

Hufvudstaden Operating objectives

• Hufvudstaden will:
• gradually increase profit from current operations.
• have the most satisfied customers in the industry.
• have the most developed property holdings in the industry.
• have the most professional personnel in the industry, with firm commitment to the customer, good business acumen and professional knowhow.

Strategies to achieve the objectives

Customer focus. Hufvudstaden shall work in close co-operation with its customers and contribute continuously to improving their business potential and competitiveness.

Quality. Quality and environmental systems shall ensure the highest possible level of quality in all the Company's products and services.

Skills development. Systematic development of the knowledge and skills of the personnel shall be ensured with a focus on professional know-how and values.

Business development. Active business development shall create added value in the property holdings.

Hufvudstaden AB (publ) NK 100, SE-111 77 Stockholm Visiting address: Regeringsgatan 38 Telephone: +46 8-762 90 00 Fax: +46 8-762 90 01 E-mail: info@hufvudstaden.se Website: www.hufvudstaden.se Company registration number: 556012-8240 Registered office: Stockholm