Continued strong growth in profit and equity in second quarter

D. Carnegie & Co AB (publ) reports for the second quarter of 2016 a sharp
increase in profit before tax of SEK 504 million - up 141 percent compared with
the same quarter last year. Also income from property management was
considerably higher, SEK 72 million, compared with SEK 45 million for the second
quarter of previous year.

Earnings per share after tax were SEK 5.02 (2.34). The adjusted equity (EPRA
NAV) increased 51 percent compared to the same quarter 2015 and at 30 of June
2016 amounted to SEK 85.05 per share (56.38).
JANUARY – JUNE 2016

  · Rental income increased to SEK 630 million (592)
  · Net operating income of SEK 287 million (257)
  · Income from property management increased to SEK 109 million (47)
  · Changes in the value of investment properties of SEK 845 million (259),
increased 5.9 percent compared to December 31, 2015
  · Changes in the value of derivatives of SEK -121 million (1)
  · Profit before tax increased to SEK 766 million (267)
  · Profit after tax increased to SEK 634 million (213)
  · Earnings per share increased to SEK 8.20 (3.01) before dilution and
increased to SEK 8.12 (2.38) after dilution

Q2, APRIL – JUNE 2016

  · Rental income increased to SEK 321 million (295)
  · Net operating income of SEK 169 million (136)
  · Income from property management increased to SEK 72 million (45)
  · Changes in the value of investment properties of SEK 488 million (126),
increased 3.3 percent compared to March 31, 2016
  · Changes in the value of derivatives of SEK -45 million (76)
  · Profit before tax increased to SEK 504 million (209)
  · Profit after tax increased to SEK 388 million (166)
  · Earnings per share increased to SEK 5.02 (2.34) before dilution and
increased to SEK 4.98 (1.85) after dilution

Significant events during the second quarter

  · D. Carnegie & Co has carried out a private placement of 6,539,900 class B
shares, providing SEK 474 million in shareholders’ equity prior to issue
expenses
  · D. Carnegie & Co has acquired a property portfolio in Katrineholm with an
agreed property value of SEK 619 million
  · D. Carnegie & Co has acquired a property portfolio in Eskilstuna with an
agreed property value of SEK 116 million
  · D. Carnegie & Co has issued an unsecured bond amounting to SEK 1,000 million
  · D. Carnegie & Co’s share has been included in three new indices: the Morgan
Stanley MSCI Global Small Cap Index, the Nasdaq Nordic VINX Benchmark Index and
the EPRA European Index
  · D. Carnegie & Co has recruited Pär Westin as commercial lessor of the
commercial premises
  · D. Carnegie & Co has entered into an agreement to divest a property to
tenants with an agreed property value of SEK 43 million, corresponding to 16,850
SEK per square meter
  · D. Carnegie & Co has acquired 10 million ordinary shares in Amasten Holding
AB (publ) corresponding to 6.7 percent of the share capital
  · D. Carnegie & Co has disclosed a five-year investment plan of SEK 900
million relating to energy improvements
  · D. Carnegie & Co has repurchased the convertible debentures and prevented a
significant share dilution

Significant events after the second quarter

  · D. Carnegie & Co has acceded the property portfolio in Eskilstuna with an
agreed property value of SEK 116 million

Statement from the CEO

During the second quarter we have further increased the pace in our
refurbishment work and during the period approximately 340 apartments have been
refurbished and several buildings have been fitted with new facades, windows and
roofs. The property refinements provide improved net operating income,
contributing significantly to the period’s value increases that exceed SEK 700
million. The profit before tax increased by over 140 percent compared to the
corresponding period the previous year. We have also prematurely repurchased all
outstanding convertible subordinated loans, financed through a directed share
issue and a senior unsecured bond issue, and we have thus prevented a
significant share dilution.

The significant increases in value have been achieved through investments
amounting to SEK 260 million during the quarter, which have strengthened the net
operating income, together with lower return requirements, both through stronger
market conditions and through increased quality in the properties. The increases
in value are reflected in a six percent quarterly increase in the equity (EPRA
NAV) to SEK 85 per share. In addition the earnings capacity for the comparable
portfolio has increased – up SEK 98 million or 45 percent to SEK 317 million on
a 12-month basis compared to June 30 2015. For the complete property portfolio
the earnings capacity has now reached SEK 375 million.

The rental income for the second quarter has increased by nine percent compared
to the same period the previous year, primarily a result of refurbishments. It
is also gratifying to see that maintenance costs during the quarter have
decreased resulting in a 23 percent increase in the net operating income
compared to the second quarter of 2015. During the period, a record number of
apartments have been refurbished which have increased the refurbishment vacancy
and negatively impacted the short-term net operating income. This disadvantage
is offset by rental income in the long term significantly increasing.

Overall, the improvements have resulted in a strong increase in reported net
profit. The profit for the quarter before tax amounts to SEK 504 million,
compared to SEK 209 million the same quarter the previous year, an increase by
141 percent. Broken down to earnings per share after taxes, the figure is SEK
5.02, compared to SEK 2.34 for the same period in 2015.

In order to simplify the capital structure, clarify ownership and reduce
financing costs, we have during the quarter prematurely repurchased all three
outstanding convertible subordinated loans totalling SEK 1 020 million. To
ensure an improved capital structure, a proportion is financed through a
directed share issue which was completed in early April. The remainder is
financed by a new unsecured three-year bond that was issued in the middle of
April. Both issues were well received and oversubscribed.

During the period, agreements have been entered into regarding the acquisition
of a total of 853 apartments in two transactions out of which 717 have been
taken into possession. Another measure to increase our profitability is to
further the development of building rights so that we can begin construction
next year. We have also completed the first co-op conversion in Rinkeby when we
sold to a private housing cooperative at a price 88 percent above book value. We
intend to continue with co-op conversions to highlight the value potential and
because of the possibility to free up capital.

Stockholm, July 14, 2016
ULF NILSSON
CEO, D. Carnegie & Co
This information is information that D.Carnegie & Co is obliged to make public
pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The
information was submitted for publication, through the agency of the contact
person set out above, at 7 AM on July 15 2016.
About D. Carnegie & Co
D. Carnegie & Co is a property company focusing on residential properties in the
Greater Stockholm region and other growth areas. The company’s business concept
is to own property portfolios slated for a gradual renovation of apartments in
conjunction with the natural turnover of tenants. This can take place quickly
and cost-efficiently thanks to extensive experience from the Bosystem renovation
method which, among other things, means that no evacuation needs to take place.
In addition to this, the company creates value through the development of
building rights in existing portfolios. The market value of the company’s
properties amounted to MSEK 1,360 on 1 December 2015. The total rental value
amounted to MSEK 1,292 on 30 September 2015 annually. The economic occupancy
rate is high – vacancies are virtually non-existent. D. Carnegie & Co is listed
on Nasdaq Stockholm.