Equity for the Group has been calculated in accordance with IFRS standards as approved by the EU, as well as in accordance with Swedish law through applying Swedish Financial Reporting Board recommendation RFR 1, Supplementary Accounting Rules for Corporate Groups. Equity for the Parent Company has been calculated in accordance with Swedish law and by application of the recommendation RFR 2 (Accounting for Legal Entities) of the Swedish Financial Reporting Board.
The proposed distribution of profits constitutes 57% of the Group’s income from property management, which is in line with the expressed objective of distributing at least 50% of the Group’s income from property management after taking investment plans, consolidation needs, liquidity and overall position into account. The Group’s net income after tax amounted to MSEK 5,615. The distribution policy is based on the Group’s income from property management, and as a result non-cash items pertaining to increases or decreases in value of the Group’s properties and interest and currency derivatives, do not normally affect the dividend. Nor were any such non-cash gains or losses taken into account in previous year’s resolutions regarding the distribution of profits.
The Board of Directors concludes that the company’s restricted equity is fully covered after the proposed distribution of profits.
The Board of Directors also concludes that the proposed distribution to the shareholders is justified considering the parameters in Chapter 17, Section 3, second and third paragraphs of the Swedish Companies Act (the nature, scope and risks of the business as well as consolidation needs, liquidity and overall position). Accordingly, the Board of Directors would like to emphasise the following.
The nature, scope and risks of operations
The Board of Directors estimates that the equity for the company as well as the Group will, after the proposed distribution of profits, be sufficient in relation to the nature, scope and risks of the business. The Board of Directors has in this context considered, inter alia, the historical development of the company and the Group, budgeted development, investment plans and the economic situation.
Consolidation needs, liquidity and overall position
The Board of Directors has carried out a general assessment of the financial position of the company and the Group, and their prospects for fulfilling their obligations. The proposed dividend constitutes 10% of the shareholders’ equity for the company and 4% of the equity for the Group. The Group’s loan-to-value ratio and interest coverage ratio for 2020 totalled 44% and 530% respectively.
The express objective for the Group’s capital structure, with a loan-to-value ratio not exceeding 50% over the long term and an interest coverage ratio of at least 200%, will be maintained after the proposed dividend. The capital structure of the company and the Group is sound considering the prevailing conditions of the property business. In light of the above, the Board of Directors concludes that the company and the Group have all the necessary requirements to manage future business risks and also to carry potential losses. Planned investments have been considered when deciding on the proposed distribution of profits.
The proposed distribution of profits will not affect the company’s or the Group’s ability to meet their payment obligations in a timely manner. The company and the Group have good access to liquidity reserves through short-term as well as long-term credits. The credits may be utilised at short notice, implying that the company and the Group are prepared to manage liquidity fluctuations as well as possible unexpected events.
The Board of Directors has considered all other known conditions, which might affect the financial position of the company and the Group, which have not been considered within the scope of the considerations above. In this respect, no circumstances have been found that indicate that the proposed dividend would not be justified.
Fair value measurement
Derivatives instruments and other financial instruments have been measured at fair value in accordance with Chapter 4, Section 14 a of the Swedish Annual Accounts Act. In that connection, a deficit of MSEK 899 after tax has become apparent, which had a corresponding impact on equity.
Gothenburg, February 2021
The Board of Directors