Annual Report • Feb 21, 2019
Annual Report
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ANNUAL REPORT
| Shareholder information | 3 |
|---|---|
| BUSINESS REVIEW | 4 |
| Overview | 4 |
| Industrivärden at a glance | 4 |
| Highlights 2018 | 6 |
| Chairman's message | 8 |
| CEO's message | 9 |
| Asset management | 12 |
| Business model | 12 |
| Investment process | 14 |
| Active ownership process | 15 |
| Sustainability report | 17 |
| Equities portfolio | 22 |
| Composition of equities portfolio | 22 |
| Portfolio companies | 23 |
| Handelsbanken | 23 |
| Sandvik | 24 |
| Volvo | 25 |
| Essity | 26 |
| Ericsson | 27 |
| SCA | 28 |
| ICA Gruppen | 29 |
| Skanska | 30 |
| SSAB | 31 |
| BOARD OF DIRECTORS' REPORT | 32 |
| Corporate governance report | 33 |
| Value creation | 36 |
| Net asset value | 36 |
| Industrivärden share data | 39 |
| Proposed distribution of earnings | 41 |
| FINANCIAL STATEMENTS | 42 |
| Income statements | 43 |
| Balance sheets | 43 |
| Shareholders' equity | 44 |
| Statements of cash flows | 45 |
| Financial risk management | 46 |
| Financing | 47 |
| Accounting policies | 50 |
| Tax rules for the Parent Company | 51 |
| Notes | 52 |
| AUDITOR'S REPORT | 58 |
| OTHER INFORMATION | 62 |
| Board of Directors | 63 |
| Executive Management | 64 |
| Key ratios and definitions | 65 |
| GRI Index | 66 |
Industrivärden is a long-term asset manager and active owner in listed Nordic companies.
Industrivärden is a public company (publ), and its shares are quoted on the Stockholm Stock Exchange's (Nasdaq Stockholm) large cap list.
The goal is to increase net asset value and thereby generate a total return which, over time, is higher than the average for the Stockholm Stock Exchange. Industrivärden has historically demonstrated a good ability to generate competitive shareholder value over time.
Location: Grand Hôtel, Stockholm, Vinterträdgården (entrance at the corner of Stallgatan/Blasieholmsgatan) Time: Wednesday, April 17, 2019, 2 p.m. The doors will open at 1 p.m.
Notification to attend the Annual General Meeting (AGM) must be made not later than April 11, 2019, using the electronic form on Industrivärden's website, www.industrivarden.net; by phone at +46-8-402 92 86 or by mail to AB Industrivärden, "AGM 2019," c/o Euroclear Sweden AB, Box 191, SE-101 23 Stockholm, Sweden.
In addition, shareholders who wish to participate in the AGM must be listed in the shareholder register maintained by Euroclear Sweden as per April 11, 2019. A shareholder whose shares are registered in a nominee's name, in order to have the right to participate in the AGM, must request that the nominee registers the shares in the shareholder's own name in the shareholder register maintained by Euroclear Sweden. Such registration may be temporary. The shareholder must inform the nominee well in advance of April 11, 2019, at which time such registration must be efective.
The Board of Directors proposes a dividend of SEK 5.75 per share. The last day to buy shares that carry entitlement to the dividend is April 17, 2019, entailing that Industrivärden shares will be traded ex-rights on April 18, 2019. Provided that the AGM resolves in favor of the proposal, it is expected that dividends will be sent out by Euroclear Sweden on April 26, 2019.
April 9: Interim report January–March April 17: Annual General Meeting, Stockholm July 5: Interim report January–June October 7: Interim report January–September
A detailed description of operations as well as interim reports, annual reports, press releases and more are available on Industrivärden's website: www.industrivarden.net.
Queries from shareholders and investors can be directed to Sverker Sivall, Head of Corporate Communications and Sustainability, by email at [email protected] or by phone at +46-8-666 64 00.
Financial reports can be requested specifically or by subscription through registration at www.industrivarden. net, by email at [email protected], or by phone at +46-8-666 64 00.
This publication constitutes the Annual Report for AB Industrivärden (publ), corporate identity number SE 556043-4200. Printed copies of the Annual Report will be distributed to shareholders and other stakeholders upon request. Digital copies are available on the company's website.
This Annual Report is a translation of the Swedish original.
Industrivärden is a long-term asset manager and active owner in listed Nordic companies.
Industrivärden was established by Handelsbanken in 1944 as a means of gathering shareholdings that the bank had acquired following the stock market crash in the 1930s and distributing them to the bank's shareholders. This business proved to be successful and evolved over time into an efective asset management business with diversified ownership.
Industrivärden today is a knowledgeable, responsible and financially stable owner that takes an active ownership role, and in doing so provides a competitive advantage for the value development of its portfolio companies as well as Industrivärden itself.
To conduct long-term value-creating asset management through active ownership. This mission is based on Industrivärden's relative strengths, including a long-term investment perspective, depth of knowledge and experience in active ownership, a strong position of influence, financial strength and an extensive network.
The long-term objective is to increase net asset value and thereby generate a return for Industrivärden's shareholders that exceeds the market's required rate of return. Taking into account the risk profile of the portfolio's investments, the shareholders are to be given a total return which over time is higher than the average for the Stockholm Stock Exchange (Nasdaq Stockholm).
Industrivärden's asset management is built upon a structured investment process of continuous analysis and evaluation of existing and potential alternative holdings. Taking into account continuity and long-term perspective, the assessed return potential for existing investments shall be weighed against the return potential for prospective new alternative investments. Industrivärden also strives to take a distinct and active ownership role in order to increase the value of its shareholdings.
Industrivärden invests in listed Nordic companies with good return potential, where it can exercise active influence through a strong position of trust and ownership-based positions of influence. Industrivärden's investment criteria are to invest in companies with proven business models and clear potential for profitable growth. Investments must also have an attractive valuation and provide a good balance of risk and return.
Active ownership is exercised mainly through work on nominating committees, through board representation, and through dialog with and evaluations of boards, CEOs and company managements.
A globalized and rapidly changing world puts great demands on companies to be focused, receptive and flexible. Salient trends in the operating environment such as disruptive technologies, digitalization, changing customer patterns and sustainability entail threats as well as opportunities. In this challenging reality it is a clear advantage for companies to have knowledgeable and engaged shareholders. Industrivärden monitors and carries on a dialog with its portfolio companies, and when necessary – through their boards – influences their overall development. In this way Industrivärden contributes to the portfolio companies' growth in value over time. In its role as active owner, Industrivärden provides:
During the last three-, five- and ten-year periods Industrivärden's stock has delivered a higher total return than the Stockholm Stock Exchange, which has performed well from an international perspective. In 2018 Industrivärden's Class C shares generated a total return of –9%, which is 5 percentage points lower than the Stockholm Stock Exchange's total return index (SIXRX).
The value of the equities portfolio – adjusted for purchases and sales – decreased by SEK 11.9 billion to SEK 92.2 billion (107.3). The total return was –8%.
During the year, Industrivärden exercised an active ownership role in its portfolio companies with the goal of creating value over time.
Net asset value at year-end was SEK 196 per share (221), a decrease of 12% for the year and 9% including reinvested dividend.
The total return was –11% for Industrivärden's Class A shares and –9% for the Class C shares, compared with –4% for the total return index (SIXRX).
The debt-equities ratio was 7%, a decrease of 3 percentage points during the year.
The Board of Directors proposes a dividend of SEK 5.75 (5.50) per share.
"IN 2018 WE CARRIED OUT A NUMBER OF INVESTMENT ACTIVITIES THAT HAVE FURTHER STRENGTHENED OUR ABILITY TO GENERATE GOOD FUTURE GROWTH IN VALUE"
Helena Stjernholm, CEO
During the first three quarters of 2018 the world's major economies and stock markets performed well. In the fourth quarter, uncertainty grew about trade wars – especially between the U.S. and China – the development in China, geopolitical conflicts and the efects of Brexit. This led to major uncertainty in stock markets around the world, and a sharp correction took place. Worries about a looming recession grew.
The Swedish stock market dropped more than 14% during the fourth quarter, and the export-dependent engineering and forest industries were hit hard. Order intake remained favorable for the companies, however, and activity was high.
Since Industrivärden's portfolio companies consist mainly of global, export-dependent companies, their share prices fell relatively sharply. As a result, Industrivärden's net asset value decreased by 17% during the final quarter of the year. For 2018 as a whole, Industrivärden's total return fell below that of the general stock market. However, it can be noted that the total return during the last three years taken together is considerably higher than the equity index. Owing to our strong financial position and positive cash flow, the Board of Directors proposes an increase in the dividend from SEK 5.50 to SEK 5.75 per share.
During 2018 a number of positive changes took place in our portfolio companies, and their work was characterized by greater focus on leadership, decentralization and financial position. The management teams of the portfolio companies are of high quality, and we have great confidence in them. We chose to continue concentrating our investments in our existing portfolio companies and did not add any new companies. The potential is great in many of the companies. At the same time, we can note that the alternative investments we evaluated during the year have had weak performance. Our focus in the coming year will be to concentrate on the portfolio companies we already own at the same time that we also evaluate potential alternative investments. We have chosen to reduce our exposure in SSAB and to enable a divestment of our shares in ICA Gruppen during 2019. In doing so we have further reduced our gearing, in accordance with our financial targets. This gives us great room to maneuver going forward, which we will use above all to strengthen our ownership in the portfolio companies, since our ownership stakes over time are too low. Through the active ownership strategy it is desirable to receive a greater share of the value creation taking place. As a consequence of the Board's decision in February 2016 regarding the Company's financial position, we now have a significantly positive cash flow in Industrivärden after payment of our dividend to the shareholders. This means that we can continue to invest with our own funds. This is an important change that has taken place in Industrivärden.
Several of our portfolio companies are world leaders in their respective areas, and we believe that they have great opportunities for continued favorable development and refinement. We are gradually building up additional competence surrounding these, which is necessary as an active long-term owner. This will create value for the shareholders over time.
The financial sector is currently undergoing a transformation. New niche actors are gaining a foothold in parts of the market, and digitalization is making a big impact. Despite this, we continue to believe in Handelsbanken's decentralized business model and its proven ability to meet customers' needs. It has been successful for a long time and will create value also in the future.
Skanska was a disappointment in 2018. The new CEO, Anders Danielsson, is now dealing with the company's somewhat jumbled structure and is increasing Skanska's focus on its core businesses. Skanska has a very strong company culture and talented people, which makes its prospects for success good going forward. The successful commercial property development business is gaining increased emphasis and importance.
During the past year, board work at Industrivärden has worked superbly. We held 11 board meetings plus a number of meetings of the Compensation and Audit Committees. A number of CEOs from the portfolio companies have paid visits to our board meetings. Industrivärden's CEO, Helena Stjernholm, presented her views on the macro economy as well as on our portfolio companies at every board meeting. Helena did an outstanding job in 2018 and has earned great respect in her role as CEO. She has also continued her work on refining and strengthening our organization. On behalf of the Board, I want to extend a large and warm thanks to Helena and her colleagues.
I also want to thank my colleagues on the Board for their good cooperation. Likewise, I want the thank the boards and company managements of our portfolio companies for their engaged and exceptionally thorough work during the past year.
Stockholm, February 2019
Fredrik Lundberg Chairman of the Board
The past year was characterized by continued good operational development in most of our portfolio companies. However, volatility increased in the stock market, and some of our holdings had weak share price performance. Within Industrivärden the activity level was high, with several value-creating transactions and a strong focus on active ownership in the portfolio companies.
During 2018, net asset value decreased by SEK 11.1 billion, or –9% including reinvested dividend, compared with a –4% drop for the Stockholm Stock Exchange total return index (SIXRX). At the same time, the total return for the Class A and C shares was –11% and –9%, respectively. The equities portfolio's relatively large exposure to companies that are sensitive to economic swings afected performance during the year. Looking at the equities portfolio's total return in 2018, the largest contributors were Ericsson, with an increase of SEK 2.2 billion, or 48%, and ICA Gruppen, with an increase of SEK 0.6 billion, or 10%.
Our respective portfolio companies work in diferent sectors, which naturally affects their returns during a given calendar year. However, viewed over a longer time period, it is important that our equities portfolio generates a higher total return than the average for the Stockholm Stock Exchange, which is an important prerequisite for us to be able to achieve our goal of delivering a favorable return to Industrivärden's shareholders. Against this background
it is gratifying to note that we succeeded in generating a competitive total return over the last three-year period based on the refined strategy that we presented in February 2016. During this period of time the Class C shares generated an average total return that outperformed the total return index by 6 percentage points per year. Measured against our low management costs, this is a fine performance.
During 2018 we carried out a number of investment activities that further strengthened our ability to generate good future growth in value. In April we sold just over half of our shareholding in SSAB for SEK 3.1 billion, which was a good deal in which we were able to realize part of the value increase in our SSAB holding. It is particularly gratifying that we earned a favorable return from our participation in SSAB's new issue in 2016, which strengthened the company in a challenging market situation.
In November we carried out another major transaction through the sale of slightly more than a quarter of our holding in ICA Gruppen to ICA-handlarnas Förbund, for SEK 1.7 billion. By acquiring a put option from the same counterparty, this enables us to proceed with a full divestment of our remaining holding in May 2019. The transactions ensure an annual total return of 22% during the holding period, which makes ICA Gruppen a very good investment.
On top of these divestments of approximately SEK 4.8 billion, we carried out investments worth a total of SEK 1.8 billion. We bought shares in Handelsbanken, Sandvik and Volvo – companies we know well and in which we see clear value potential. It is important to note that these purchases were made after a thorough analysis against potential alternative investments in new companies. For us this is a clear proof of the relative strength in several of our portfolio companies. Through further investments in the portfolio companies we also increase the financial leverage of our active ownership at the same time that we strengthen our ownership positions in globally attractive companies.
On the whole we have realized built-up value and laid the foundation for future growth in value. Through a decrease in borrowing we have also increased our flexibility in a more uncertain economic situation. During the year our debt-equities ratio decreased from 10% to 7%, and with a future divestment of the holding in ICA Gruppen, Industrivärden will have a low leverage.
Companies today are facing ever-tougher challenges. This applies to everything from shifting macroeconomic conditions in the companies' respective geographic markets to new threats and opportunities sprung out of tumultuous and tightly interwoven megatrends. This can involve everything from urbanization, digitalization and evolving customer behaviors to demands for sustainable business models. This is driving companies to focus their operations on areas in which they have a strength advantage, but also to be quick and adaptable in the face of constantly changing conditions. Greater demands on companies are also putting higher demands on company boards and the shareholders who elect the boards. Longterm owners that succeed in finding and attracting talented board members and continuously adapting the board's composition to the company's shifting needs will play an increasingly important role over time. Similarly, owners can provide key insights in strategic considerations. This development is creating greater opportunities for engaged and knowledgeable owners who have a keen understanding of their portfolio companies and their operating environments. Active owners who can make clear demands and raise questions, but who also buttress their portfolio companies, are therefore a distinct competitive advantage that benefits both the companies and us as asset managers. It is here that we have our position of strength with a professional organization and proven ability to generate favorable returns. It is our absolute ambition to further develop this position.
Given the conditions that today's companies have to conduct themselves in, it is not surprising that the pace of change in our portfolio companies remained high in 2018. As an active owner we engage ourselves especially in our portfolio companies' governance and strategic development, with focus on their value potential. From this perspective I would like to briefly comment on the respective portfolio companies.
With a foundation in a clear focus on customer satisfaction and decentralized decision-making, Handelsbanken continues to develop its business in all its home markets. During 2018 several initiatives were taken to improve efciency and further develop the business against the backdrop of developments taking place in the financial sector. In February 2019, it was announced that Carina Åkerström will take the position as new CEO on March 27, 2019.
Sandvik has continued to streamline and decentralize its core businesses and has established a model for continuous improvements. During the year a number of well-considered acquisitions were made to further strengthen the customer ofering. Sandvik also made a number divestments in 2018 of non-core businesses. The actions taken have improved the company's operating margin, lowered its gearing and created a solid foundation for future growth.
As a result of recent years' clear focus on the core business and concerted efciency improvement work, Volvo has increased both its sales and profitability. In parallel with greater operational flexibility, the company has also strengthened its financial position. Volvo is now working for continued organic growth through an intensified customer focus and by driving innovation in areas such as self-driving, connected and electrified vehicles.
Essity's business is based on an innovation focus and growth through strong brands. The company is working with a distinct efciency and cost focus, and has been adept at meeting challenges, such as higher raw material costs in 2018.
In recent years Ericsson has successfully executed its strategic plan aimed at focusing the core business and exploiting selected positions of strength. Ericsson has made great progress towards its financial targets for 2020 and is well-positioned in the next generation of mobile networks.
SCA continues to work on improving the efciency of its processes and growing the business in selected segments. The expanded pulp mill in Östrand, Sweden, is now in operation and will allow a doubling of production capacity over time.
ICA Gruppen is a well-managed retail company with a strong market position in which we have been an active owner since 2013. It is now our ambition to divest the remainder of our holding in May 2019, thereby enabling us to realize good growth in value for a successful investment.
During 2018 Skanska carried out extensive restructuring in order to focus its business and improve profitability under the direction of the newly installed CEO Anders Danielsson. This work is continuing with full intensity.
SSAB performed well thanks to good demand and a favorable price picture, which led to higher sales and operating income. The company's specialization strategy is creating good future opportunities.
The underlying economy developed well during the first nine months of 2018, but during the fourth quarter, uncertainty grew and the pace of growth slowed. The growth rate increased for the full year in the U.S., but it decreased in Europe and large parts of Asia. During 2018 we saw rising geopolitical tensions, growing protectionism and worries over an economic slowdown, rising interest rates and a scaling back of financial stimulus measures. Altogether this had a damping efect on the stock market, which had very negative performance during the fourth quarter.
During the beginning of 2019, the stock market has turned in a positive direction. The underlying areas of concern remain, however. In January 2019 the IMF lowered its forecast for global GDP growth in 2019 by 0.2 percentage points, to 3.5%. We are thus entering 2019 in a more uncertain situation.
Industrivärden's portfolio companies have very good market positions and clear value potential. In recent years several of the companies have put great energy into strengthening both their operational and financial flexibility. Today they have room to maneuver and a greater ability to deal with a changed market situation. With this as a foundation and the extensive changes that have taken place in Industrivärden and several of
the portfolio companies, I can assert that we have a strong position ahead of the future. We therefore begin Industrivärden's 75th operational year with great confidence.
Stockholm, February 2019
Helena Stjernholm CEO
Industrivärden creates shareholder value through long-term asset management based on active ownership. The chosen management strategy – active ownership – requires significant positions of influence and entails a long-term involvement.
Asset management is conducted in two main processes – the investment process and the active ownership process. These two main processes are tightly interwoven.
The investment process aims to maximize Industrivärden's long-term return and is based on internal analysis, analysis of external documentation, and business intelligence. Based on these analyses, decisions are made on margin transactions in existing investments – the so-called portfolio companies – divestments of entire holdings, or alternative investments. The estimated return potential for existing investments is to be compared with the return potential for alternative investments under evaluation, taking into account continuity and long-term objectives.
The active ownership process is focused on creating value in existing investments. Through active ownership, Industrivärden aims to gain depth of knowledge about its portfolio companies and their business environments, and where necessary to influence their strategic development. The chosen business model entails a natural concentration in a limited number of portfolio companies with sizable ownership positions. Active ownership is exercised mainly through work on nominating committees, through board representation, and through dialogs with and evaluations of boards, CEOs and company managements. Industrivärden
monitors and – where necessary – influences the portfolio companies' overall development.
A key success factor is Industrivärden's contribution of high-quality and value-creating analyses, for which Industrivärden can gain a listening ear from the portfolio companies' nominating committees and boards.
A globalized and rapidly changing world puts great demands on companies to be focused, receptive and flexible. Salient trends in the operating environment such as disruptive technologies, digitalization, changing customer patterns and sustainability entail threats as well as opportunities. In this challenging reality it is a clear advantage for companies to have knowledgeable and engaged shareholders who have a clear understanding of the long-term value potential.
Asset management is based on Industrivärden's relative strengths, which include a long-term investment perspective, depth of knowledge and experience in active ownership, a strong position of influence, financial strength and an extensive network.
Industrivärden has a professional and cost-efcient organization that is characterized by high flexibility and short decision-making channels. Operations, which are conducted at the head ofces in Stockholm, involve slightly less than
20 employees, eight board members and an extensive network. Internal work is project-oriented, and most employees are involved in both the investment and active ownership processes.
Professional and successful asset management requires competent and committed employees as well as an attractive and dynamic workplace. Major emphasis is therefore put on recruiting processes, competence development and a good company culture. Industrivärden's ethical values and ambitions as an employer are set out in the Company's Code of Conduct. This Code, which is available on Industrivärden's website, addresses areas such as the work climate, diversity and business ethics. The employees' total compensation shall be competitive and in line with the going rate in the market.
Apart from its customary duties, the Board of Directors makes decisions on major investments, continuously monitors the portfolio companies' performance and decides on matters related to the exercise of active ownership in the portfolio companies. Individual directors represent Industrivärden on portfolio companies' boards and participate actively in their board nomination processes.
The Executive Management handles the Company's dayto-day administration, which includes strategic, organizational and finance matters as well as control and follow-up, among other things. Members of the Executive Management participate in the asset management activities and can provide specialist expertise. Certain members of the Executive Management also serve on portfolio companies' nominating committees and boards.
The members of the Executive Management, together with representatives from the investment and analysis organization, form Industrivärden's investment committee. The committee monitors activities on a continuing basis, makes investment decisions and adopts Industrivärden's action plans for the portfolio companies.
The investment and analysis organization performs investment analyses, continuously reviews Industrivärden's fundamental analysis of existing and potentially alternative investments, and regularly updates the Company's action plans in support of its active ownership.
Operations are organized into teams, which monitor and evaluate developments in the portfolio companies. Each investment team is led by a team manager. The teams continuously perform investment and company analyses that culminate in a so-called fundamental analysis. In this way the investment and analysis organization builds up deep, fact-based knowledge about the respective portfolio companies and their operating environments. Important external factors include market conditions, competitors, customers and megatrends.
Based on this fundamental analysis, an action plan is continuously updated and forms the foundation for the design and execution of Industrivärden's active ownership. The aim is primarily to identify and describe various opportunities for value growth as well as strategic measures for creating this value. The fundamental analysis is a key component in the overall assessment that forms the basis of Industrivärden's day-to-day investment decisions. All action plans are set by Industrivärden's investment committee, and the respective, adopted action plans are presented to Industrivärden's board. In this way the board members are provided with a current and in-depth picture of identified opportunities and measures. When necessary, Industrivärden communicates its views first with the chairman of the respective portfolio company's board. An open dialog is also held with the respective company's CEO and other senior executives.
Operations are distinctively trust-based and therefore require that Industrivärden works with a professional and transparent corporate governance model in collaboration with other major shareholders.
| Portfolio company | Nominating committee representative | Role |
|---|---|---|
| Handelsbanken | Helena Stjernholm | Chair |
| Sandvik | Fredrik Lundberg | Chair |
| Volvo | Bengt Kjell | Chair |
| Essity | Helena Stjernholm | Chair |
| Ericsson | Bengt Kjell | Member |
| SCA | Karl Åberg | Chair |
| ICA Gruppen | Annika Lundius | Member |
| Skanska | Helena Stjernholm | Chair |
| SSAB | Lars Pettersson | Chair |
Active ownership is also exercised through board representation. Industrivärden's board members and executives, who also serve as AGM-elected directors for Industrivärden's portfolio companies, must have a current and clear picture of Industrivärden's views of the respective companies.
Industrivärden continuously evaluates the portfolio companies' operations and development. When necessary, Industrivärden communicates its views of the company and its management first with the chairman of the respective portfolio company's board. An open dialog is also conducted with the respectively companies' CEOs and other senior executives.
The capital market has undergone major changes during the past two decades. Diversity has increased with respect to investment strategies and investment horizons. At the same time, polarization has also increased, where active owners have intensified their activity level at the same time that the share of passive investing, such as through algorithm and index trading, has increased significantly. This development has further highlighted the need for responsible and long-term owners.
Another trend is that many companies today are facing rapid changes in their external business environments along with revolutionary megatrends such as urbanization, digitalization and sustainability challenges. This has put higher demands on speed and flexibility among companies, but also a need for knowledgeable and engaged owners that can contribute and set clear demands. For investors that have the ability to successfully exercise responsibility and value creation in their ownership role, these development trends present potential business opportunities with distinct societal benefits.
As an active owner Industrivärden therefore contributes to the development of responsible companies that capitalize on sustainability-related opportunities. This creates competitive companies, enables growth in value and benefits sustainable societal development.
Against this background Industrivärden puts strong emphasis on ensuring that its portfolio companies have a sustainable approach to all aspects of their operations. Particular emphasis is put on material risks and opportunities – from influence and risk perspectives – since the companies are active in widely diverse industries and therefore face diferent challenges and opportunities. From an overall perspective it is Industrivärden's expectation that they:
Active ownership is exercised primarily through representation on companies' nominating committees and boards, and by engaging in an ongoing dialog with the portfolio companies. Through extensive knowledge about the portfolio companies, their industries and important factors in their operating environments, Industrivärden has a good understanding of the portfolio companies' sustainability work, to the benefit of its active ownership. The analysis process is conducted from an overarching
ownership perspective and is built upon Industrivärden's sustainability analysis framework, which encompasses the portfolio companies' organizations, structures, risk management, utilization of value-creating opportunities and communication. Industrivärden's portfolio companies shall have the boards, management, organizations and resources needed to integrate sustainable business and thereby long-term value creation in their business models, processes and product oferings. Industrivärden shall be a well-informed and demanding owner with a clear sustainability perspective that contributes to sustainable development of its portfolio companies.
Industrivärden's portfolio companies have generally made great progress in capitalizing on the value created by longterm sustainable business and measure up well in various comparisons with their industry peers. Following are a few examples of sustainability work currently being conducted by the portfolio companies.
In conjunction with the World Economic Forum 2018, for the first time Sandvik was included on the list of the 100 most sustainable companies and was ranked 65th overall. Among other initiatives, Sandvik is working together with Goldcorp to convert the Borden Lake project in Ontario, Canada, to the world's first fully electric mine by developing battery operated vehicles. Production is planned to start in 2019.
Handelsbanken is included in the analysis company RobecoSAM's "Sustainability Yearbook 2018" as a "Sustainability Yearbook Member". As such, Handelsbanken is among the top 15% of the world's banks in sustainability. During 2018 a framework was launched for projects that meet special sustainability criteria, and in June Handelsbanken issued its first green bond according to the set criteria.
In 2018 Volvo Trucks unveiled several electric transport solutions. In May the FL Electric truck was launched, which can be driven in indoor terminals and in the most demanding environmental zones. The truck is virtually noise-free, which makes it suitable to drive in cities even at night. In September Vera was presented, a future transport system with self-driving electric vehicles that are monitored via a control center.
In May 2018, Essity, together with WSSCC, published a report with the goal to further promote the global dialog on hygiene and health issues, increase cooperation between organizations, industries and countries, and promote solutions for some of the challenges we face. In January 2018, Essity was named as one of the world's most sustainable companies by Corporate Knights.
Ericsson has halved its carbon emissions and during 2018 continued its ambitious work on reducing its carbon footprint. In September 2018 the "Exponential Climate Action Roadmap" report was presented at the Global Climate Action Summit in California by, among others, Ericsson, Professor Johan Rockström, Stockholm Resilience Center, Future Earth and WWF. The report lays out 33 solutions for reducing carbon emissions by 50% in a number of industries through strong industry collaboration and partnership.
For 2017 SCA's Ortviken paper mill reported the lowest fossil fuel emissions ever. This was made possible by a new combustion plant that has allowed the mill to replace oil and gasol with wood fiber. SCA's goal is to be entirely fossil-free over time.
In April 2018 ICA launched "My climate target," a tool that enables customers to see the carbon footprint of their purchases with the help of modern technology and scientific calculations. In September ICA was the first grocery retailer in Sweden to have its climate targets approved by the Science Based Targets Initiative, based on a scientific method that ensures that ICA's targets are in line with the Paris agreement.
It is Skanska's ambition to be an industry leader in sustainability; as an example, the company has made green building an integral and commercially successful part of operations. During 2018 the company's new, so-called circular asphalt was sold in the first projects.
In February 2018 the HYBRIT pilot project received the green light to proceed. HYBRIT is a company jointly owned by SSAB, LKAB and Vattenfall with the goal to develop the world's first fossil-free steelmaking process with zero carbon emissions. Construction has begun of a pilot plant in Luleå and the ore fields in northern Sweden.
| Goal | • Be an active, responsible owner that contributes to long-term successful portfolio companies for the benefit of sustainable development in society • Be a long-term and sustainable investment that ofers a competitive total return which over time is higher than the average for the Stockholm Stock Exchange (Nasdaq Stockholm) |
|---|---|
| Activities | • Analyze and continuously monitor all portfolio companies in accordance with Industrivärden's integrated sustainability analysis • Formulate action plans for the respective portfolio companies and exercise influ ence in accordance with Industrivärden's business model • Engage in dialogs with prioritized stakeholders in order to solicit views for further development of Industrivärden's sustainability work |
| Agenda 2030 | • SDG 8: Sustainable economic growth is a central pillar in the work on contributing to the development of responsible and successful companies that can create com petitive value over time • SDG 9: Promotion of sustainable industrialization and innovation is a clear focus of the portfolio companies and is encouraged within the framework of active ow nership. By taking advantage of sustainability-related development opportunities the companies can stay at the forefront in their respective business areas • SDG 12: Sustainable consumption and production is a strategic perspective that is integrated in the portfolio companies' business models. The companies ofer long-term sustainable and efciently manufactured products and services that contribute to sustainable production and consumption. As a long-term owner Industrivärden views this as a prerequisite for being able to compete over time |
Industrivärden shall serve as a model and work with a clear sustainability focus both in its own operations and in the portfolio companies.
Proactive sustainability work shall be an integral part of the daily activities that are conducted by slightly less than 20 employees at the head ofces in Stockholm. The CEO has overarching responsibility for Industrivärden's sustainability work, and the Head of Sustainability has functional responsibility for internal collaboration and external communication on sustainability issues. Team managers are responsible for the integrated sustainability analyses in the respective portfolio companies.
Industrivärden shall be a workplace in which the employees enjoy their work, feel good and can develop. Toward this end, evaluations are continuously conducted of performance and development opportunities for all employees. In addition, a continuous dialog is conducted on matters related to the workplace, ways of working and personal development. Industrivärden believes that better results are achieved at a workplace characterized by gender equality and diversity.
Even though Industrivärden's organization is small, the Company shall serve as a good example by minimizing its own environmental impact and carbon footprint. This
is being achieved, for example, by prioritizing environment-friendly travel alternatives, using renewable energy in ofces, and by continuously evaluating purchases from a sustainability perspective. Industrivärden has an ambition to reduce its own footprint over time and compensates for its actual greenhouse gas emissions through ofsets. To be able to monitor and compare the Company's carbon footprint, Industrivärden has been conducting carbon footprint reporting since 2010 within the CDP framework. Current greenhouse gas emissions for 2018 have been calculated using the market-based method of the GHG Protocol (Greenhouse Gas Protocol), and are shown in the GRI Index on page 68.
Favorable financial performance and financial strength are necessary prerequisites for Industrivärden to be able to create long-term value for its shareholders and pursue its strategy of supporting the portfolio companies over time. During the last three-, five- and ten-year periods, Industrivärden's stock has generated a higher total return than the Stockholm Stock Exchange. During 2018 Industrivärden's net asset value decreased from
SEK 96.3 billion to SEK 85.2 billion at year-end. Industrivärden's Class A and C shares generated total returns including reinvested dividend of –11% and –9%, respectively. A dividend of SEK 5.50 per share was paid to the shareholders, for SEK 2.4 billion in total. Industrivärden has a stable financial position with good credit ratings, and at year-end the debt-equities ratio was 7%.
Integration of strengthened sustainability analysis In 2016 a development work was initiated to build up knowledge and strengthen analysis and the Company's ability to influence sustainability-related matters. This resulted in a new sustainability analysis framework, which was further developed in 2017 and fully integrated in Industrivärden's operational activities in 2018. Today Industrivärden has a solid foundation for value-creating sustainability analysis. The framework and work processes are being continuously developed as an integral part of Industrivärden's business model. See pages 12–16 for further information.
In 2018 work was conducted to more clearly explain how Industrivärden's prioritized sustainability issues are coupled to the global Sustainable Development Goals (SDGs) set out by the Agenda 2030 framework. This clarifies how Industrivärden is contributing to achievement of the global SDGs.
Industrivärden is interested in and receptive to expectations on its operations by actors in its operating environment. Against this background a continuous dialog is conducted with the Company's stakeholders to learn about their perspectives and share knowledge.
Sverker Sivall, Head of Corporate Communication and Sustainability
The stakeholder dialog provides important support in the development of sustainability work, and in 2018 it was broadened with respect to target groups and levels. Further, Industrivärden participates in various public forums and presentations conducted under the sustainability theme – in part to emphasize the importance of active owners for sustainable societal development and in part to further conduct a dialog, gather views and learn from others.
| Goal | • Measure and follow up Industrivärden's environmental impacts and carbon footprint • Be an attractive employer with competence development, openness and diversity in focus, and attract, recruit and retain competent employees |
|---|---|
| Activities | • Report Industrivärden's carbon footprint to CDP and compensate for the Company's footprint through ofsets • Implement processes for broadened competence and diversity • Further train all employees on the sustainability strategy, Code of Conduct and policy documents • Conduct employee performance reviews with special attention paid to the work environment and competence development |
| Agenda 2030 | • SDG 5: Diversity and gender equality is an important issue both in Industrivärden's own operations and in the portfolio companies since it strengthens the organizations' capabilities • SDG 13: Having a high ambition with respect to climate issues is an important issue both in Industrivärden's own operations and in the portfolio companies since it is a prerequisite for sustainable value creation |
With a foundation in Industrivärden's refined sustainability work, all employees have received training in the Company's view of value creation and how the set goals are to be implemented. This includes adopted policies for the environment and carbon footprinting, diversity and gender equality, anti-corruption and the Code of Conduct. Industrivärden makes a concerted efort to ensure that all employees feel involved in its operations.
It is the board of directors who are responsible for the statutory sustainability report on pages 17–21 and for ensuring that it has been prepared in accordance with the Annual Accounts Act. Our examination has been conducted in accordance with FAR's auditing standard RevR 12 – auditor's opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is substantially diferent and less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufcient basis for our opinion. A statutory sustainability report has been prepared.
Stockholm, February 15, 2019 PricewaterhouseCoopers AB
Magnus Svensson Henryson Authorized Public Accountant
| Average annual total return | |||||||
|---|---|---|---|---|---|---|---|
| Stock | 2018 | 3 years | 5 years | 7 years | 10 years | ||
| Handelsbanken | –6% | 1% | 4% | 13% | 14% | ||
| Sandvik | –10% | 22% | 10% | 9% | 13% | ||
| Volvo | –22% | 16% | 10% | 10% | 13% | ||
| Essity1 | –3% | 6% | 10% | 19% | 19% | ||
| Ericsson | 48% | 2% | 4% | 5% | 6% | ||
| SCA1 | –23% | 14% | 14% | 22% | 21% | ||
| ICA Gruppen | 10% | 5% | 13% | 24% | 19% | ||
| Skanska | –13% | –1% | 6% | 8% | 12% | ||
| SSAB | –31% | 22% | –4% | –5% | –4% | ||
| Total return index (SIXRX) | –4% | 5% | 8% | 12% | 14% |
Shares: 202,900,000 Class A shares Market value: SEK 19,945 M Share of votes: 10.6% Share of capital: 10.4% Share of equities portfolio: 22% Total return 2018: SEK –1.4 billion
Handelsbanken is a full-service bank that ofers private and corporate customers in the Nordic countries, the UK and the Netherlands a comprehensive range of high-quality financial services. The bank has a local presence and nationwide branch networks in its respective home markets.
Handelsbanken has a decentralized work approach based on the core principle that responsibility for each customer rests with the local branch where the customer lives or does business. This enables close and enduring customer relationships that are characterized by availability, simplicity and a high standard of service. The branches set locally adapted priorities with respect to their customer categories and product areas. Handelsbanken's service ofering is being developed to accommodate digital platforms as well as local customer interfaces, which complement each other. Through consistent application of this highly efective
business model, Handelsbanken has achieved competitive profitability, a strong financial position, high customer satisfaction and leading market positions. The business is growing internationally in pace with establishment and development of the business model in selected markets.
The bank is run with long-term stable finances, low risk tolerance, low costs and focus on achieving the highest level of capital efciency possible. A sustainable, keen ability to create value for customers, shareholders, employees and other stakeholders is a central component in Handelsbanken's work on running a modern and sustainable bank. For many years Handelsbanken has had more satisfied customers (according to EPSI Rating), lower loan losses and higher cost efectiveness and profitability than the average for its competitors.
Handelsbanken works consciously on continuously adapting its operations and product ofering to changing market conditions.
CEO: Anders Bouvin (Carina Åkerström as from March 27, 2019) Chairman: Pär Boman
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | 8.93 | 8.28 |
| Dividend per share, SEK | 5.501 | 7.502 |
| Share price on December 31, SEK | ||
| Class A shares | 98.30 | 112.20 |
| Class B shares | 101.20 | 113.00 |
1) Proposed by the board of directors.
2) Of which, SEK 2.00 in extra dividend.
Shares: 152,300,000 shares Market value: SEK 19,243 M Share of votes: 12.1% Share of capital: 12.1% Share of equities portfolio: 21% Total return 2018: SEK –2.2 billion
Sandvik is a high-tech global engineering group with sales in more than 150 countries, ofering products and services that enhance customer productivity, profitability and sustainability. The company has leading positions in tools and tooling systems for industrial metal cutting; equipment, tools, service and technical solutions for the mining and construction industries; and advanced stainless steels and special alloys.
Operations are organized into three business areas and are conducted in 19 product areas that have their own strategies and are entirely responsible for their own operations. The product areas deliver solutions mainly to six customer segments: mining, engineering, automotive, energy, construction and aerospace. The Sandvik Machining Solutions (SMS) business area specializes in manufacturing tools and tooling systems for advanced
metal cutting. Products are manufactured in cemented carbide and other hard materials. Sandvik Mining & Rock Technology (SMRT) supplies equipment, tools, service and technical solutions for the mining and construction industries. Application areas include rock drilling, rock cutting, crushing and screening. Sandvik Materials Technology (SMT) manufactures advanced stainless steels, special alloys, titanium and other high performance materials. The product ofering includes pipe, metal powders, strip steel and products for industrial heating.
Sandvik has a long history of successful, value-based sales with a focus on customers' processes and efciency improvement opportunities. The company's strengths include unique expertise in materials technology, extensive knowledge about industrial processes, close customer cooperation and high capacity for innovation.
Key data 2018 2017 Earnings per share, SEK 10.141 10.50 Dividend per share, SEK 4.252 3.50 Share price on December 31, SEK 126.35 143.70
1) Adjusted for dilutive effect 9.98 (7.99).
Shares: 142,600,000 Class A shares, 3,600,000 Class B shares Market value: SEK 16,988 M Share of votes: 22.2% Share of capital: 6.9% Share of equities portfolio: 18% Total return 2018: SEK –4.9 billion
The Volvo Group is one of the world's leading manufacturers of trucks, construction equipment, buses and marine and industrial engines. The Group also provides complete solutions for financing and service. Operations are global, with sales in 190 countries. The vision is to be the most desired and successful transport solution provider in the world. The business model builds upon the company's strong brands, leading innovative ability and first-class service network aimed at providing competitive, reliable and efective products and services that create value for customers. During the past decade the company has grown to become a global player in heavy trucks and construction equipment.
Business is conducted under several leading brands, which enables the Group to penetrate many diferent customer and market segments in mature as well as
emerging markets. Trucks are sold under the Volvo, Renault Trucks, Mack and UD brands, under the Eicher brand by an Indian joint-venture company, and under the Dongfeng brand by a Chinese joint-venture company. The Volvo Group also sells construction equipment under the Volvo, SDLG and Terex brands. In addition, the Group manufactures and sells buses and, through Volvo Penta, engines for marine and industrial applications.
In recent years the Volvo Group has undergone an extensive transformation through reorganization, product renewal and greater customer focus while taking measures to improve internal efciency. The company conducts concerted innovation work in the areas of electrification, automation and connectivity to meet future needs for transport solutions.
CEO: Martin Lundstedt Chairman: Carl-Henric Svanberg
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | 12.24 | 10.07 |
| Dividend per share, SEK | 10.001 | 4.25 |
| Share price on December 31, SEK | ||
| Class A shares | 116.20 | 153.10 |
| Class B shares | 115.95 | 152.70 |
1) Proposed by the board of directors. Of which, SEK 5.00 in extra dividend.
Shares: 35,000,000 Class A shares, 31,800,000 Class B shares Market value: SEK 14,550 M Share of votes: 29.9% Share of capital: 9.5% Share of equities portfolio: 16% Total return 2018: SEK –0.6 billion
Essity is a leading global hygiene and health company that develops, produces and sells products and services in Personal Care (Baby Care, Feminine Care, Incontinence Products and Medical Solutions), Consumer Tissue and Professional Hygiene. Value is created by focusing on customers' and consumers' needs to develop products and solutions that enhance customer and consumer benefit. Essity works with continuous efciency improvement and by growing profitable market positions and improving or leaving low-performing positions to achieve profitable growth.
The innovation process plays a central role in Essity's strategy. It is based on current trends, customer and consumer insight, new technology and new business models. In this process Essity also takes sustainability aspects and product safety into account. Essity's presence in both
Pro forma for 2016.
EARNINGS AND KEY RATIOS
mature and emerging markets gives it keen insight into trends and needs.
Operations are global, with sales in some 150 countries. The product ofering is designed to improve customers' well-being and covers a wide range of areas including incontinence products, feminine care products, baby diapers, wound care, compression therapy and orthopedics, professional hygiene, wet wipes, toilet paper and paper towels. Sales are made under own brands as well as under retailers' private labels. Essity has a strong brand portfolio with globally leading brands, such as TENA and Tork, and other brands such as Leukoplast, Libero, Libresse, Lotus, Regio, Nosotras, Saba, Tempo, Vinda and Zewa.
The company has a strong position in many emerging markets, including China, Latin America and Russia. Since 2013 Essity is the majority owner of Vinda, one of China's largest hygiene products companies.
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | 11.23 | 11.56 |
| Dividend per share, SEK | 5.751 | 5.75 |
| Share price on December 31, SEK | ||
| Class A shares | 218.00 | 231.70 |
| Class B shares | 217.60 | 233.00 |
Shares: 86,052,615 Class A shares, 1,000,000 Class B shares Market value: SEK 6,738 M Share of votes: 15.1% Share of capital: 2.6% Share of equities portfolio: 7% Total return 2018: SEK 2.2 billion
Ericsson is a global telecommunications company that provides infrastructure, services and software to customers in the telecom industry and other sectors in more than 180 countries.
The company delivers customer value by continuously developing its ofering with focus on customers' priorities in the key areas of efciency, the digital experience and new revenue streams. This work is based on Ericsson's strengths: technology leadership, product-led solutions, and global scale and skill. These factors have enabled a strong position in technology and services, which is illustrated by substantial investments in research and development and the world's strongest patent portfolio containing some 45,000 granted patents.
Ericsson's business is conducted in four segments: Networks, Digital Services, Managed Services and Emerging Business & Other. Networks develops hardware and software for operators of radio and transport networks as well as solutions for the next generation of mobile networks (5G).
Customers' needs to be able to handle a growing volume of data with maintained quality and unchanged costs are creating momentum for the next generation of mobile networks, and Ericsson has a leading position within 5G. Digital Services provides IT systems, core networks and infrastructure that help telecom operators meet the challenges they are facing in the ongoing digital transformation, including cloudbased virtual networks. Managed Services ofers operational and optimization services for communications networks and IT systems for operators. The Emerging Business & Other segment invests in strategic growth opportunities based on 5G and IoT. Initiatives are driven as startup projects.
Ericsson continues to carry out the focused business strategy that was decided on in 2017 and has made good progress towards the goal of reaching an operating margin of at least 10% by 2020.
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | –1.98 | –9.94 |
| Dividend per share, SEK | 1.001 | 1.00 |
| Share price on December 31, SEK | ||
| Class A shares | 77.40 | 53.25 |
| Class B shares | 77.92 | 53.85 |
Shares: 35,000,000 Class A shares, 31,800,000 Class B shares Market value: SEK 4,688 M Share of votes: 29.7% Share of capital: 9.5% Share of equities portfolio: 5% Total return 2018: SEK –1.2 billion
SCA is a leading forest products company that owns 2.6 million hectares of environmentally certified forestland in northern Sweden, which is the largest private forest holding in Europe. Based on this unique resource, SCA has developed a well-invested and resource-efcient industry designed to create the highest possible value from the forest, where the entire tree is used to create value. The company's products include solid-wood products, pulp, kraftliner, publication papers and renewable energy.
SCA creates value and contributes to a circular economy by providing customers sustainable products based on raw material from responsibly managed forests and an efcient value chain. The strategy is to focus on selected markets and product categories, use innovation to develop new business opportunities, and continuously improve efciency.
EARNINGS AND KEY RATIOS
Pro forma for 2016.
Operations are organized in four segments. The Forest segment manages SCA's forestland, of which 2 million hectares are used for timber production for SCA's forest industries. Roughly an equal amount of timber that is harvested from its own forests is purchased from other forest owners. The Timber segment includes five sawmills in Sweden, wood processing units with planing mills in Sweden, the UK and France, and distribution and wholesale operations. The Pulp segment produces sulfate pulp and chemi-thermomechanical pulp (CTMP), which is made at the Östrand pulp mill. The expansion project that was concluded in Östrand in 2018 will double the mill's capacity and create one of the most cost-efcient pulp mills in the world for manufacturing long-fiber sulfate pulp. The Paper segment produces containerboard in Obbola and Munksund, and publishing papers in Ortviken, which are used for magazines, catalogs and advertising brochures.
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | 5.21 | 2.67 |
| Dividend per share, SEK | 1.751 | 1.50 |
| Share price on December 31, SEK | ||
| Class A shares | 71.50 | 95.00 |
| Class B shares | 68.72 | 84.55 |
Shares: 14,016,262 shares Market value: SEK 4,440 M Share of votes: 7.0% Share of capital: 7.0% Share of equities portfolio: 5% Total return 2018: SEK 0.6 billion
Historical share price data for ICA Gruppen pertains to Hakon Invest's share price up until ICA Gruppen's stock market introduction in May 2013.
ICA Gruppen is a leading retail group with a focus on food and health. The Group includes ICA Sweden and Rimi Baltic, which conduct primarily grocery retail business; Apotek Hjärtat, which conducts pharmacy operations; ICA Real Estate, which owners and manages properties; and ICA Bank, which ofers financial services. ICA Gruppen has approximately 1,900 Group- or retailer-owned stores and pharmacies.
ICA Gruppen's business model is based on extensive consumer and market insight that is combined with economies of scale to enable coordination gains, strong customer oferings, high customer loyalty, efcient processes, the right mix of channels and physical store networks. ICA Gruppen's core business is grocery retail. Surrounding this
EARNINGS AND KEY RATIOS
Net sales and earnings for 2009–11 are based on ICA, for 2012–13 on ICA Gruppen pro forma, and as from 2014 excluding ICA Norway.
Net sales Income after net financial items
In November 2018 Industrivärden communicated its intention to divest its entire shareholding in ICA Gruppen. Against this background, in November 2018 approximately a quarter of the holding was sold to ICA-handlarnas Förbund for approximately SEK 1.7 billion, and in connection with this a put option was acquired from the same counterparty that enables a divestment of the remainder of the holding in May 2019. Industrivärden acquired its stake in ICA Gruppen in 2013 in connection with the company's formation followed by a new issue, and as an active owner Industrivärden contributed both to the original financing and ICA Gruppen's strategic development. ICA Gruppen's stock has been a good investment, delivering an annual total return of approximately 22%, compared with 11% for the Stockholm Stock Exchange's total return index (SIXRX) during the time Industrivärden owned the stock.
a number of businesses have been built up which individually and in cooperation contribute to an attractive customer ofering and stable market position. All of the businesses are to be profitable and support the core business.
A clear trend in retailing is the ongoing digitalization, which afects all of ICA Gruppen's businesses. A central part of this is the rapid growth of e-commerce. Physical and digital channels will complement each other in entirely new ways, and having a strong position will be a critical success factor going forward. At year-end more than 250 stores in ICA Gruppen ofered e-commerce (online shopping), and more than 600 stores ofer ICA Matkassen, a meal kit concept marketed as ready-packed grocery bags complete with recipes.
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | 18.05 | 20.53 |
| Dividend per share, SEK | 11.501 | 11.00 |
| Share price on December 31, SEK | 316.80 | 297.90 |
Index Skanska's stock
Shares: 12,667,500 Class A shares, 16,343,995 Class B shares Market value: SEK 4,091 M Share of votes: 23.9% Share of capital: 6.9% Share of equities portfolio: 4% Total return 2018: SEK –0.6 billion
GROWTH IN VALUE
Skanska is one of the world's leading construction and project development companies, focused on selected home markets of the Nordic countries, other European countries and the U.S. Supported by global trends in urbanization and demographics, and by being at the forefront in sustainability, Skanska ofers competitive solutions for both simple and the most complex assignments.
Total return, Class B Total return index (SIXRX)
08 09 10 11 12 13 14 15 16 17 18
Operations are conducted through four business streams: Construction, Residential Development, Commercial Property Development and Infrastructure Development. Construction is Skanska's largest business stream and involves construction of buildings, industrial facilities, infrastructure and residences. The Construction operations generate cash flow that can be invested in value-creating project development. Residential Development develops housing for sale
primarily to private home buyers. Commercial Property Development initiates, invests in, develops, leases out and sells commercial property projects. Infrastructure Development develops, invests in, operates and sells infrastructure projects, such as highways, hospitals and schools. A central focus is to enhance value creation through operational and financial synergies between Skanska's various business units.
Skanska's operations are based on the premise that value is created in the thousands of projects carried out every year. The company's overarching aspiration is to create industry-leading shareholder value by being the customers' preferred partner and the industry's most attractive employer, by taking a value-driven approach to sustainable solutions, by continuing to develop internal collaboration, and by continuously improving operational efficiency.
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | 9.55 | 12.01 |
| Dividend per share, SEK | 6.001 | 8.25 |
| Share price on December 31, SEK | 141.00 | 170.00 |
Shares: 44,334,933 Class A shares Market value: SEK 1,352 M Share of votes: 11.8% Share of capital: 4.3% Share of equities portfolio: 1% Total return 2018: SEK –0.4 billion
SSAB is a highly specialized global steel company driven by close customer relationships. SSAB develops high strength steels and provides services to enhance the performance of customers' products, which enables sustainable products with clear competitive advantages. The overall goal is to attain industry-leading profitability and generate stable cash flows. This is achieved by ensuring that SSAB has a leading position in high strength steels and value-added services on a global scale, and by being a market leader in its home markets.
SSAB is a leading producer in the global market for Advanced High-Strength Steels and Quenched & Tempered Steels. SSAB's steels and services enables to make end products lighter and increase their strength and lifespan. In the Nordic market SSAB is the market leader in strip, plate and
tubular products as well as in construction solutions. In North America SSAB is the leading producer of plate.
SSAB has a cost-efcient and flexible production system. The company's production plants in Sweden, Finland and the U.S. have annual steel production capacity of 8.8 million tons. The company also has capacity to process and finish various steel products in China and a number of other countries. In Sweden and Finland, production is integrated into a blast furnace process. In the U.S., electric arc furnaces are used for a scrap-based production process.
SSAB is structured across three steel divisions: SSAB Special Steels, SSAB Europe, and SSAB Americas, and two subsidiaries: Tibnor and Ruukki Construction.
CEO: Martin Lindqvist Chairman: Bengt Kjell
| Key data | 2018 | 2017 |
|---|---|---|
| Earnings per share, SEK | 3.45 | 2.23 |
| Dividend per share, SEK | 1.501 | 1.00 |
| Share price on December 31, SEK | ||
| Class A shares | 30.49 | 44.90 |
| Class B shares | 24.92 | 36.61 |
1) Proposed by the board of directors.
The Board of Directors and CEO of AB Industrivärden (publ), corporate identity number 556043-4200, herewith submit the annual report and consolidated financial statements for the 2018 fiscal year (January 1–December 31, 2018), which has been audited by the Company's auditor.
The Board of Directors' registered office is in Stockholm, Sweden.
Industrivärden is a long-term asset manager and active owner in listed Nordic companies.
development and conditions in general, distinguished by a diversity and breadth of expertise, experience and backgrounds, and that an even gender balance shall be strived for. The 2018 AGM resolved to elect board members in accordance with the Nominating Committee's recommendation, entailing that eight directors were elected, of whom three are women and five are men.
Ahead of the 2019 AGM the following Nominating Committee has been appointed: Mats Guldbrand (committee chair – L E Lundbergföretagen), Håkan Sandberg (Handelsbanken Pension Foundation and others), Mikael Schmidt (SCA Pension Foundations and others), Bo Damberg (the Jan Wallander and Tom Hedelius Foundation, and others), and Fredrik Lundberg (Chairman of the Board of Industrivärden).
The Board of Directors has a central role in Industrivärden's business model for long-term asset management and active ownership. It is responsible for, among other things, the Company's strategy, issues related to major purchases and sales of listed stocks, the design and execution of active ownership, and overarching ownership matters concerning the portfolio companies. The Board has ultimate responsibility for Industrivärden's organization and administration. The members of the Board of Directors and information about their independence conditions are shown in the table below, and a presentation of the board members is provided on page 63.
The Board's duties are laid out in the Board's Rules of Procedure and follow a yearly plan. Every board meeting follows an agenda that has been distributed to the board members supported by relevant background documentation.
In addition to the statutory board meeting, which is held in conjunction with the AGM, the Board normally meets eight times per year (regular meetings, including meetings in connection with the publication of interim and year-end reports). Extra board meetings are convened when necessary. In 2018 the Board held a total of 11 meetings.
The statutory meeting deals with, among other things, adoption of the Board's Rules of Procedure, designation of the Company's signatories, appointment of persons to check the minutes of board meetings, and appointment of committee members.
Each year the Board evaluates Industrivärden's financial reporting and makes demands on its content and structure to ensure it maintains a high level of quality. In connection with the board meeting that deals with the annual financial statements, the Board of Directors' Report, the proposed distribution of earnings and the year-end report, the Company's auditor submits a report on the auditors' observations and assessments from its audit.
The regular board meetings cover a number of set items of business. These include, among other things, a report on the financial result of operations, the development of net asset value and performance of the equities portfolio, and on equity transactions that have been carried out. Reporting also includes a description of the portfolio companies' performance and macroeconomic conditions. In addition, a special review is normally conducted of one or more of the portfolio companies and of potential investments or divestments. At several board meetings during the year, the CEO of a portfolio company gives a presentation on the company's development.
All board decisions are based on extensive documentation and are made following a discussion that is led by the Chairman. The Board's work is evaluated yearly in a structured process conducted under the direction of the Chairman of the Board. The 2018 evaluation was conducted by means of a questionnaire that each board member was requested to complete, in the aim of gaining an idea about the directors' views on, among other things, how the board work has been conducted and which measures could be taken to improve the board work as well as which matters the directors feel should be given more
| The table pertains to the board members elected at the 2018 Annual General Meeting. | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Attendance at meetings | |||||||||
| Name | Born | Year elected |
Role on Board | Audit Committee |
Compensation Committee |
Board | Audit Committee |
Compensation Committee |
Decided fee 2018 SEK 000s |
| Fredrik Lundberg | 1951 | 2004 | Chairman | Member | Chair | 10 | 3 | 2 | 2,000 |
| Pär Boman | 1961 | 2013 | Vice Chairman | Chair | – | 11 | 4 | 1 | 1,200 |
| Christian Caspar | 1951 | 2011 | Director | Member | – | 11 | 4 | – | 600 |
| Bengt Kjell | 1954 | 2015 | Director | – | – | 8 | – | – | 600 |
| Nina Linander | 1959 | 2014 | Director | Member | – | 11 | 4 | – | 600 |
| Annika Lundius | 1951 | 2014 | Director | – | Member | 10 | – | 3 | 600 |
| Lars Pettersson | 1954 | 2015 | Director | – | Member | 11 | – | 3 | 600 |
| Helena Stjernholm | 1970 | 2016 | Director | – | – | 11 | – | – | – |
| Total | 6,200 |
Prior to the 2018 AGM the Nominating Committee made the following determination regarding directors' independence: Pär Boman has not been found to be independent in relation the Company and the Executive Management, nor in relation to major shareholders. Fredrik Lundberg and Lars Pettersson have been found to be independent in relation to the Company and Executive Management, but not in relation to major shareholders. Helena Stjernholm has been found to be independent in relation to major shareholders but not in relation to the Company and Executive Management. Other board members have been found to be independent in relation to the Company and Executive Management as well as in relation to major shareholders.The Board's composition meets the Code's requirements for independent directors.
attention and in which areas it could possibly be suitable to have additional expertise on the Board. The results of this evaluation were reported and discussed by the Board. In addition, the Chairman's work on the Board was evaluated with him not being present. The conclusions of these evaluations and discussions were reported orally to the Nominating Committee.
The Board has appointed an audit committee and a compensation committee tasked with preparing work for audit and compensation issues, respectively, for decision by the Board. The composition of the committees and attendance at committee meetings are shown in the table on page 34.
The Audit Committee serves in an oversight role with respect to the Company's risk management, governance and control, and financial reporting. The committee shall also keep itself informed about the Swedish Inspectorate of Auditors' quality control, inform the Board about the audit's contribution to the reliability of the financial reporting, maintain regular contact with the auditor to ensure that the Company's internal and external reporting meet the requirements placed on a listed company and to discuss the scope and focus of the audit work. The auditor reports his observations to the Audit Committee on a regular basis and attended three board meetings during the year. The Audit Committee held four meetings in 2018. No fees have been paid to the board members for their work on the committee.
The Compensation Committee deals with matters concerning principles for compensation and other terms of employment for the CEO and members of the Executive Management, monitors variable compensation programs for senior executives, and monitors and evaluates application of the compensation guidelines that have been set by the AGM. The Compensation Committee held three meetings in 2018. No fees have been paid to the board members for their work on the committee.
The CEO is responsible for Industrivärden's operative activities in accordance with the adopted strategy and the CEO's instructions set by the Board. The instructions cover, among other things, investment rules for equities which indicate the maximum amounts for the CEO's authority between board meetings to decide on purchases and sales of stocks. The CEO makes regular presentations to the Board of Directors on the performance of operations.
The 2018 AGM resolved in favor of the Board's recommendation to adopt the following guidelines for compensation of senior executives: Compensation paid to the CEO and other members of the Executive Management shall consist of a base salary, a variable salary, other benefits and pension. The total compensation should be competitive and in line with the going rate in the market, and shall be commensurate with the
executive's responsibilities and authority. The variable salary portion consists of a short-term variable salary component (yearly) and a long-term variable salary component. The shortterm variable salary component is based on individual performance, shall have a cap, and never exceed 50% of base salary. The long-term variable salary component is based on the long-term performance of the Company's stock and shall have a cap. None of the variable components shall be pensionable. Upon termination of an executive's employment contract by the Company, a maximum two-year notice period applies. No severance pay should be payable. Pension benefits shall be defined-contribution solutions in all essential respects and give the members of the Executive Management the right to receive benefits from 60 or 65 years of age, depending on their position. The Board may depart from these guidelines if there are special reasons for doing so in individual cases.
The Board of Directors recommends that the 2019 AGM resolve in favor of guidelines that are unchanged compared with those approved by the 2018 AGM.
The auditor audits the annual report, the bookkeeping and the Board's and CEO's administration, and reports to the Annual General Meeting. At the 2018 AGM, PricewaterhouseCoopers AB was elected as auditor for a term lasting through the 2019 AGM. The chief auditor is Magnus Svensson Henryson (b. 1969), Authorized Public Accountant. In 2018 he was also chief auditor of the listed company SSAB. In 2018 the half-year interim report and year-end report were reviewed by the Company's auditor.
Industrivärden has transparent operations and established control systems. Each year the Board adopts governance documents in the form of the CEO's instructions, the investment policy and the finance policy. The CEO's instructions lay out central guidelines and clarify which decisions are to be made by the Board and which are made by the CEO. The investment policy specifies and sets the framework for investments in financial instruments, and the finance policy sets the framework for financing and management of financial risks.
Against the background of Industrivärden's operations, organizational structure and how the financial reporting has been organized in general, the Board finds no need for a dedicated review function in the form of an internal audit unit. The Board regularly evaluates the financial reporting that is received in connection with board meetings and which pertains to the equities portfolio, the Company's gearing and other important conditions. The Audit Committee carries on a continuous dialog with the Company's auditor about the scope and quality of the Company's financial reporting.
Internal control over financial reporting is described in more detail on pages 46–47. Further information about corporate governance at Industrivärden can be found on the Company's website.
Industrivärden's long-term goal is to increase net asset value and thereby generate a return for Industrivärden's shareholders that exceeds the market's required rate of return. Taking into account the risk profile of portfolio investments, the shareholders will be given a total return which over time is higher than the average for the Stockholm Stock Exchange's total return index (SIXRX).
Net asset value is a measure of the shareholders' total net worth in the Company, defined as the market value of the equities portfolio less interest-bearing net debt. Net asset value at year-end 2018 was SEK 85.2 billion (96.3), or SEK 196 per share (221).
| Ownership, % | Market value | Net purchases (+) / | Total return | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Holding | No. shares | Capital | Votes | Share of value, % |
SEK M SEK/share | Total return SEK M |
net sales (–) per holding, SEK M |
for the stock, % |
|
| Handelsbanken A | 202,900,000 | 10.4 | 10.6 | 22 | 19,945 | 46 | –1,356 | 680 | –6 |
| Sandvik | 152,300,000 | 12.1 | 12.1 | 21 | 19,243 | 44 | –2,182 | 653 | –10 |
| Volvo A | 142,600,000 | 6.9 | 22.2 | 18 | 16,570 | 39 | –4,857 | 70 | –22 |
| Volvo B | 3,600,000 | 417 | 489 | –24 | |||||
| Essity A | 35,000,000 | 9.5 | 29.9 | 16 | 7,630 | 33 | –584 | – | –3 |
| Essity B | 31,800,000 | 6,920 | – | –4 | |||||
| Ericsson A | 86,052,615 | 2.6 | 15.1 | 7 | 6,660 | 15 | 2,227 | – | 48 |
| Ericsson B | 1,000,000 | 78 | – | 47 | |||||
| SCA A | 35,000,000 | 9.5 | 29.7 | 5 | 2,503 | 11 | –1,243 | – | –23 |
| SCA B | 31,800,000 | 2,185 | – | –17 | |||||
| ICA Gruppen | 14,016,262 | 7.0 | 7.0 | 5 | 4,440 | 10 | 603 | –2,060 | 10 |
| Skanska A | 12,667,500 | 6.9 | 23.9 | 4 | 1,786 | 9 | –629 | – | –13 |
| Skanska B | 16,343,995 | 2,305 | – | –13 | |||||
| SSAB A | 44,334,933 | 4.3 | 11.8 | 1 | 1,352 | 3 | –359 | –903 | –31 |
| SSAB B | – | – | –2,122 | –14 | |||||
| Other | 0 | 136 | 0 | –4 | –59 | ||||
| Equities portfolio | 100 | 92,1701 | 212 | –8,384 | –3,252 | –8 | |||
| Interest-bearing net debt | –6,601 | –15 | |||||||
| Adjustment pertaining to exchangeable | –368 | –1 | |||||||
| Net asset value | 85,201 | 196 | |||||||
| Debt-equities ratio | 7% |
1) The Group's total cost as per 12/31/2018 was SEK 45,233 M.
Net asset value decreased by –9% in 2018, including reinvested dividend, compared with a decline of –4% for the Stockholm Stock Exchange's total return index (SIXRX). During the last five- and ten-year periods, net asset value including reinvested dividends grew by an average of 8% and 16% per year, respectively, compared with 8% and 14%, respectively, for the Stockholm Stock Exchange's total return index (SIXRX).
| SEK billion | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 |
|---|---|---|---|---|---|
| Equities portfolio | 92.2 | 107.3 | 94.2 | 81.8 | 83.1 |
| Interest-bearing net debt | –6.6 | –10.9 | –11.5 | –12.6 | –14.6 |
| of which, convertible bond | – | – | –5.3 | –4.9 | –5.0 |
| Adjustment pertaining to exchangeable bond | –0.4 | –0.1 | – | –0.1 | –0.1 |
| Net asset value | 85.2 | 96.3 | 82.8 | 69.1 | 68.3 |
| Net asset value per share, SEK | 196 | 221 | 191 | 160 | 158 |
| Yearly growth incl. reinvested dividend, %1 | –9 | 18 | 23 | 5 | 92 |
| Debt-equities ratio, % | 7.2 | 10.2 | 12.2 | 15.5 | 17.6 |
1) The value assumes reinvestment of the dividend to enable a comparison with the Stockholm Stock Exchange's total return index (SIXRX). 2) Adjusted for conversions.
The equities portfolio is made up of large shareholdings in Handelsbanken, Sandvik, Volvo, Essity, Ericsson, SCA, ICA Gruppen, Skanska and SSAB, all of in which Industrivärden serves as a long-term active owner.
The equities portfolio, which is valued at the companies' market prices as per December 31, 2018, had a market value of SEK 92,170 M (107,289). The market value of the equities portfolio corresponded to SEK 212 (247) per Industrivärden share.
Adjusted for purchases and sales, the value of the equities portfolio decreased by 11% during the year, compared with the Stockholm Stock Exchange's market index (OMXSPI), which decreased by 4%.
Dividends received from portfolio companies during the year amounted to a combined total of SEK 3,764 M (2,786). Industrivärden distributed SEK 2,394 M (2,285) in dividends to the shareholders during the year.
The contributions of the respective portfolio holdings to the portfolio's total performance in 2018 are shown in the chart below. A total return for longer periods of time is shown in the table on page 22.
During 2018 Industrivärden conducted a number of investment activities.
In November a put option was acquired from ICAhandlarnas Förbund for Industrivärden's remaining holding of 15,138,385 shares in ICA Gruppen, corresponding to 7.5% of the capital and votes. The put option, which was acquired for a total of SEK 106 M, gives Industrivärden the right to sell the remainder of its shareholding to ICAhandlarnas Förbund for SEK 290.52 per share on May 17, 2019. The strike price under the put option is the same as under the exchangeable bonds for ICA Gruppen shares issued by Industrivärden in 2014, due on May 15, 2019.
Through borrowing, Industrivärden enhances its flexibility over time.
Industrivärden's gearing policy is that the debt-equities ratio shall be in the range of 0%–10%, but may periodically exceed or fall below this interval.
The debt portfolio consists primarily of an exchangeable bond, an MTN program and commercial paper. Interestbearing net debt amounted to SEK 6.6 billion at year-end 2018 (10.9), corresponding to SEK 15 per Industrivärden share.
The debt-equities ratio at year-end 2018 was 7% (10%). Interest-bearing liabilities had an average capital duration of approximately 1 year and carried an average interest rate of 0.2%.
In 2014 an exchangeable bond of SEK 4.4 billion was issued as part of the continuous refinancing of the equities portfolio. The bond matures on May 15, 2019, and was issued at a premium of approximately 38% to ICA Gruppen's share price at the time of issue and carries no interest. In 2018 the bondholder demanded redemption corresponding to SEK 0.3 billion, whereby shares in ICA Gruppen were delivered. See Note 16 for further information.
In May 2018, S&P Global Ratings upgraded Industrivärden's credit rating to A+/Stable/A-1 from A/Stable/A-1.
Industrivärden's management cost in 2018 amounted to SEK 121 M (111). The management cost corresponded to 0.13% (0.10%) of the equities portfolio's value on December 31, 2018.
A sustainability report that describes Industrivärden's work with sustainable value creation is provided on pages 17–21 and also on the company's website at www.industrivarden.net
Industrivärden's Class A and Class C shares are listed on the Stockholm Stock Exchange. Industrivärden's stock is listed in the large cap segment, consisting of companies with a market capitalization higher than EUR 1 billion. Industrivärden has approximately 80,000 (75,000) shareholders. Foreign shareholders' share of the capital amounts to 20% (19%). Each A-share carries entitlement to one vote, and each C-share carries entitlement to 1/10 of a vote. All shares carry equal entitlement to the Company's assets, earnings and dividends.
Trading volume of Industrivärden shares in 2018 totaled SEK 36 billion (55), of which the Stockholm Stock Exchange accounted for 54%, Cboe APA for 17%, Cboe BXE for 12%, Cboe CXE for 6%, LSE MTF for 5%, Turquoise for 2%, and other marketplaces for 5%. Industrivärden shares were traded for a total value of SEK 36 billion (55), corresponding to a turnover rate of 19% (27%) for the Class A shares and 82% (120%) for the Class C shares. Average daily trading volume was approximately 200,000 Class A shares and approximately 550,000 Class C shares.
Industrivärden's Class A and Class C shares had standard deviations of 20.3% and 20.2%, respectively, and beta values of 1.19% and 1.16%, respectively, for the full year 2018.
| Share class | No. shares | No. votes | Capital % | Votes % |
|---|---|---|---|---|
| A (1 vote) | 268,183,457 | 268,183,457 | 61.6 | 94.1 |
| C (1/10 vote) | 167,026,420 | 16,702,642 | 38.4 | 5.9 |
| Total | 435,209,877 | 284,886,099 | 100.0 | 100.0 |
During the last ten-year period the average annual total return for Industrivärden's Class A and C shares was 16% and 18%, respectively, compared with 14% for the total return index (SIXRX). During the same period, the MSCI World Index generated an annualized total return of 11%.
In 2018 the price of Industrivärden's Class A shares decreased by –13%, from SEK 211.60 to SEK 183.20, and the price of Industrivärden's Class C shares decreased by –12%, from SEK 202.50 to SEK 179.20. The total return for the Class A shares was –11%, and the total return for the Class C shares was –9%, compared with –4% for the total return index (SIXRX).
TOTAL RETURN, INDUSTRIVÄRDEN
| Average annual change | ||
|---|---|---|
| Industrivärden C | Index (SIXRX) | |
| 1 year | –9% | –4% |
| 3 years | 11% | 5% |
| 5 years | 12% | 8% |
| 7 years | 16% | 12% |
| 10 years | 18% | 14% |
Industrivärden's dividend policy is that the Company shall generate a positive cash flow before portfolio changes and after dividends paid, in order to build investment capacity over time and be able to support portfolio companies when needed. The dividend is to be well-balanced with respect to the goals, scope and risk of operations.
The Board of Directors has proposed that the 2019 Annual General Meeting declare a dividend of SEK 5.75 (5.50) per share.
Industrivärden encourages its employees to make personal investments in Industrivärden shares, as this aligns the interests of the Company's employees with other shareholders. The long-term incentive program that was adopted by the Annual General Meeting makes up part of the employees' total compensation and also aims to increase employees' ownership of stock in the Company. Information on the incentive program and on shareholdings of board members and members of the Executive Management is provided on pages 51 and 63–64.
| 2018 | 2017 | 2016 | 2015 | 2014 | |
|---|---|---|---|---|---|
| Dividend, SEK | 5.751 | 5.50 | 5.25 | 5.00 | 6.25 |
| Annual growth in dividend, % | 5 | 5 | 5 | neg | 14 |
At the 2011 Annual General Meeting a share conversion clause was added to Industrivärden's Articles of Association in the aim of giving shareholders greater flexibility. Shareholders have the right at any time to
request conversion of Class A shares to Class C shares. Conversion forms are available on Industrivärden's website under the "Share data" menu. A total of 869 Class A shares were converted to Class C shares in 2018.
| Number of | Percentage of | ||||
|---|---|---|---|---|---|
| Largest shareholders | Registration country | shares, million | Capital stock | Votes | |
| L E Lundbergsföretagen | Sweden | 71.6 | 16.5 | 23.7 | |
| Handelsbanken Pension Foundation | Sweden | 30.9 | 7.1 | 10.8 | |
| Jan Wallander and Tom Hedelius Foundation | Sweden | 27.5 | 6.3 | 9.7 | |
| Swedbank Robur funds | Sweden | 13.6 | 3.1 | 1.4 | |
| State Street Bank and Trust | USA | 10.6 | 2.4 | 1.0 | |
| Fredrik Lundberg incl. companies | Sweden | 10.2 | 2.3 | 3.1 | |
| Spiltan funds | Sweden | 9.6 | 2.2 | 0.5 | |
| SCA Pension Foundation | Sweden | 9.1 | 2.1 | 3.2 | |
| SCA Vorsorge–Treuhand | Germany | 9.0 | 2.1 | 3.2 | |
| Norges Bank Investment Management | USA | 8.9 | 2.0 | 1.6 | |
| Handelsbanken Pension Fund | Sweden | 8.7 | 2.0 | 3.0 | |
| Essity Pension Foundation for salaried employees and foremen | Sweden | 8.5 | 1.9 | 3.0 | |
| J P Morgan Chase Bank | UK | 8.0 | 1.8 | 1.2 | |
| Alecta Pensionsförsäkring | Sweden | 6.6 | 1.5 | 1.2 | |
| AFA Sjukförsäkring | Sweden | 5.4 | 1.2 | 0.2 | |
| Total above | 238.0 | 54.6 | 66.8 | ||
| Other shareholders | 197.2 | 45.4 | 33.2 | ||
| Total Industrivärden | 435.2 | 100.0 | 100.0 |
1) Source: Euroclear Sweden.
The Board of Directors proposes a dividend of SEK 5.75 per share (5.50). The proposed dividend corresponds to 5.4% of the Parent Company's equity and 2.9% of the Group's equity. Of shareholders' equity, 41%, or SEK 18.7 billion in the Parent Company, and 55%, or SEK 46.9 billion in the Group, is attributable to market valuation of assets and liabilities. The Board is of the opinion that the proposed dividend is well balanced in view of the objectives, scope and risks of the business as well as with respect to the ability to meet the Company's future obligations. The total amount to be paid out according to the proposed dividend, based on the number of shares outstanding after conversion of the convertible bond, is SEK 2,502 M (2,394).
According to the Parent Company balance sheet, profits totaling SEK 44,083 M are at the disposal of the Annual General Meeting.
The Board of Directors and CEO propose that the earnings be disposed of as follows:
To the shareholders, a dividend of SEK 5.75 per share,
| totaling | SEK 2,502 M |
|---|---|
| Balance carried forward | SEK 41,581 M |
| SEK 44,083 M |
The Board of Directors and CEO certify that the Annual Report has been prepared in accordance with generally accepted accounting principles, that the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards referred to in European Parliament and Council of Europe Regulation (EC) No. 1606/2002 of July 19, 2002, on application of International Financial Reporting Standards, that disclosures herein give a true and fair view of the Parent Company's and Group's financial position and results of operations, and that the statutory Administration Report provides a fair review of the Parent Company's and Group's operations, financial position and results of operations and describes material risks and uncertainties facing the Parent Company and the companies included in the Group.
The Group's and Parent Company's earnings and position in general are shown in the income statements, balance sheets, statements of changes in shareholders' equity, statements of cash flows and notes to the financial statements. Adoption of the Consolidated and Parent Company Income Statements and Balance Sheets will take place at the Annual General Meeting on April 17, 2019.
Stockholm, February 8, 2019
Fredrik Lundberg Pär Boman Christian Caspar Chairman Vice Chairman Director
Director Director Director
Lars Pettersson Director
Helena Stjernholm CEO and Director
Our Audit Report was submitted on February 15, 2019
PricewaterhouseCoopers AB
Authorized Public Accountant
Bengt Kjell Nina Linander Annika Lundius
| Income statements | 43 |
|---|---|
| Balance sheets | 43 |
| Shareholders' equity | 44 |
| Statements of cash flows | 45 |
| Financial risk management | 46 |
| Financing | 47 |
| Accounting policies | 50 |
| Tax rules for the Parent Company | 51 |
| Notes | 52 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| SEK M | Note | 2018 | 2017 | 2018 | 2017 |
| Dividend income from stocks | 1 | 3,764 | 2,786 | 1,753 | 1,387 |
| Change in value of stocks, etc. | 2 | –11,954 | 12,957 | –6,623 | 10,869 |
| Management cost | 5, 6, 7 | –121 | –111 | –121 | –111 |
| Operating income | –8,311 | 15,632 | –4,991 | 12,145 | |
| Financial income | 4 | 3 | 12 | 3 | 12 |
| Financial expenses | 4 | –22 | –89 | –19 | –36 |
| Income after financial items | –8,330 | 15,555 | –5,007 | 12,121 | |
| Tax | 8 | – | – | – | – |
| Net income for the year | –8,330 | 15,555 | –5,007 | 12,121 | |
| Earnings per share, SEK | 9 | –19.14 | 35.76 |
| Net income for the year | –8,330 | 15,555 | –5,007 | 12,121 |
|---|---|---|---|---|
| Items that are not to be reclassified in the income statement | ||||
| Actuarial gains and losses pertaining to pensions | –14 | –6 | –14 | –6 |
| Comprehensive income for the year | –8,344 | 15,549 | –5,021 | 12,115 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| SEK M | Note | Dec 31 2018 |
Dec 31 2017 |
Dec 31 2018 |
Dec 31 2017 |
| ASSETS | |||||
| Property, plant and equipment | 10 | 11 | 12 | 11 | 12 |
| Equities | 11, 14 | 92,170 | 107,289 | 31,483 | 36,288 |
| Shares in associated companies | 11, 12, 14 | – | – | 20,371 | 25,831 |
| Shares in subsidiaries | 13, 14 | – | – | 1,735 | 1,752 |
| Total non-current assets | 92,181 | 107,301 | 53,600 | 63,883 | |
| Other current receivables | 15 | 273 | 446 | 778 | 1,171 |
| Cash and cash equivalents | 786 | 613 | 10 | 850 | |
| Total current assets | 1,059 | 1,059 | 788 | 2,021 | |
| TOTAL ASSETS | 93,240 | 108,360 | 54,388 | 65,904 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||||
| Capital stock | 1,088 | 1,088 | 1,088 | 1,088 | |
| Statutory reserve/ Share premium reserve | 7,233 | 7,233 | 7,233 | 7,233 | |
| Retained earnings | 85,151 | 72,004 | 42,919 | 33,205 | |
| Net income for the year | –8,330 | 15,555 | –5,007 | 12,121 | |
| Total shareholders' equity | 85,142 | 95,880 | 46,233 | 53,647 | |
| Exchangeable bond | 16, 18 | – | 4,355 | – | 4,355 |
| Other non-current interest-bearing liabilities | 17, 18 | 2,170 | 2,937 | 2,170 | 2,937 |
| Non-current noninterest-bearing liabilities | 19 | 36 | 368 | 36 | 368 |
| Total non-current liabilities | 2,206 | 7,660 | 2,206 | 7,660 | |
| Exchangeable bond | 16, 20 | 4,069 | – | 4,069 | – |
| Current interest-bearing liabilities | 20 | 1,325 | 4,523 | 1,250 | 4,501 |
| Other current liabilities | 21 | 498 | 297 | 630 | 96 |
| Total current liabilities | 5,892 | 4,820 | 5,949 | 4,597 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 93,240 | 108,360 | 54,388 | 65,904 |
Information about the Group's pledged assets and contingent liabilities can be found in Note 22.
| Group | |||||
|---|---|---|---|---|---|
| Capital stock1 |
Statutory reserve share premium reserve |
Retained earnings |
Net income for the year |
Total share holders' equity |
|
| Shareholders' equity as per adopted balance sheet at December 31, 2016 |
1,081 | 6,754 | 57,843 | 16,451 | 82,129 |
| Net income for the year | – | – | – | 15,555 | 15,555 |
| Actuarial gains and losses on pensions | – | – | –6 | – | –6 |
| Total comprehensive income | – | – | –6 | 15,555 | 15,549 |
| Transfer of previous year's net income | – | – | 16,451 | –16,451 | – |
| Conversion of convertible bond and other | 7 | 479 | – | – | 486 |
| Dividend to shareholders | – | – | –2,285 | – | –2,285 |
| SHAREHOLDERS' EQUITY AS PER DECEMBER 31, 2017 | 1,088 | 7,233 | 72,004 | 15,555 | 95,880 |
| Net income for the year | – | – | – | –8,330 | –8,330 |
| Actuarial gains and losses pertaining to pensions | – | – | –14 | – | –14 |
| Total comprehensive income | – | – | –14 | –8,330 | –8,344 |
| Transfer of previous year's net income | – | – | 15,555 | –15,555 | – |
| Dividend to shareholders2 | – | – | –2,394 | – | –2,394 |
| SHAREHOLDERS' EQUITY AS PER DECEMBER 31, 2018 | 1,088 | 7,233 | 85,151 | –8,330 | 85,142 |
| Statutory reserve/ | Total share | |||||
|---|---|---|---|---|---|---|
| Capital | share premium | Retained | Net income | holders' | ||
| stock1 | reserve | earnings | for the year | equity | ||
| Shareholders' equity as per adopted balance sheet | ||||||
| at December 31, 2016 | 1,081 | 6,754 | 24,236 | 11,259 | 43,330 | |
| Net income for the year | – | – | – | 12,121 | 12,121 | |
| Actuarial gains and losses pertaining to pensions | – | – | –6 | – | –6 | |
| Total comprehensive income | – | – | –6 | 12,121 | 12,115 | |
| Transfer of previous year's net income | – | – | 11,259 | –11,259 | – | |
| Conversion of convertible bond and other | 7 | 479 | – | – | 486 | |
| Dividend to shareholders | – | – | –2,285 | – | –2,285 | |
| SHAREHOLDERS' EQUITY AS PER DECEMBER 31, 2017 | 1,088 | 7,233 | 33,205 | 12,121 | 53,647 | |
| Net income for the year | – | – | – | –5,007 | –5,007 | |
| Actuarial gains and losses pertaining to pensions | – | – | –14 | – | –14 | |
| Total comprehensive income | – | – | –14 | –5,007 | –5,021 | |
| Transfer of previous year's net income | – | – | 12,121 | –12,121 | – | |
| Dividend to shareholders2 | – | – | –2,394 | – | –2,394 | |
| SHAREHOLDERS' EQUITY AS PER DECEMBER 31, 2018 | 1,088 | 7,233 | –42,919 | –5,007 | 46,2333 |
1) As per December 31, 2019, there were 435,209,877 shares outstanding, of which 268,183,457 were Class A shares and 167,026,420 were Class C shares. The capital stock amounted to SEK 670.5 M for the Class A shares and SEK 417.6 M for the Class C shares. The share quota value is SEK 2.50. 2) The dividend in 2018 was SEK 5.50 per share.
3) Unrestricted equity in the Parent Company amounts to SEK 44,083 M.
| Group | Parent Company | |||||
|---|---|---|---|---|---|---|
| SEK M | Note | 2018 | 2017 | 2018 | 2017 | |
| OPERATING ACTIVITIES | ||||||
| Dividend income from stocks | 1 | 3,764 | 2,786 | 1,753 | 1,387 | |
| Management cost paid | –137 | –125 | –138 | –125 | ||
| Other items afecting cash flow | –106 | 10 | –106 | 10 | ||
| Cash flow from operating activities before financial items | 3,521 | 2,671 | 1,509 | 1,272 | ||
| Interest received | 1 | 18 | 0 | 16 | ||
| Interest paid | –19 | –94 | –20 | –41 | ||
| Other financial items | –11 | –1 | –11 | –1 | ||
| CASH FLOW FROM OPERATING ACTIVITIES | 3,492 | 2,594 | 1,478 | 1,246 | ||
| INVESTING ACTIVITIES | ||||||
| Purchases/ sales of stocks | 3, 14 | 3,252 | –103 | 3,819 | 28 | |
| CASH FLOW FROM INVESTING ACTIVITIES | 3,252 | –103 | 3,819 | 28 | ||
| FINANCING ACTIVITIES | ||||||
| Loans raised and amortization of debt | –4,043 | –654 | –4,322 | 1,497 | ||
| Investments | –134 | 238 | –134 | 238 | ||
| Change in financing of subsidiaries | – | – | 713 | 126 | ||
| Dividend paid | –2,394 | –2,285 | –2,394 | –2,285 | ||
| CASH FLOW FROM FINANCING ACTIVITIES | –6,571 | –2,701 | –6,137 | –424 | ||
| NET CASH FLOW FOR THE YEAR | 173 | –210 | –840 | 850 | ||
| Cash and cash equivalents at start of year | 613 | 823 | 850 | 0 | ||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 786 | 613 | 10 | 850 |
Information on changes in the Group's interest-bearing net debt can be found in the table on page 48.
The types of financial risks that the Industrivärden Group encounters in its business consist primarily of equities risk and – to a limited extent – other financial risks in the form of e.g., interest rate risk and liquidity risk.
Equities risk pertains mainly to share price risk, which is the entirely dominant risk in Industrivärden's operations. By share price risk is meant the risk of a decline in value caused by changes in prices in the stock market. Industrivärden's active ownership should reduce the relative equities risk in the portfolio companies and thus also in Industrivärden's portfolio. Moreover, the active ownership role provides good insight into the portfolio companies' operations, external operating environment and continuing development. Having a diversification of equities in the portfolio reduces volatility and contributes to a more stable return over time. Share price risk can be illustrated as such that a 1% change in the price of all listed shareholdings in Industrivärden's equities portfolio as per December 31, 2018, would have affected the market value by +/– SEK 900 M.
Interest rate risk is the risk that the value of a financial instrument will vary due to changes in market interest rates. The financial instruments that are exposed to interest rate risk consist of loans with variable interest rates. Swap agreements may be used to limit interest expenses and to adjust maturities. Industrivärden's interest rate risk and its efect on earnings are judged to be low. At year-end 2018, one interest rate swap agreement was in efect under which a variable interest rate was swapped against a fixed interest rate. The agreement pertains to borrowings of SEK 750 M with a remaining term of 8 months. At year-end 2018 the market value of the swap agreement was SEK –4 M. A parallel shift up or down in the interest rate curve by 1 percentage point would afect income after financial items in 2018 by approximately +/– SEK 20 M.
Liquidity risk is the risk of encountering difculties in accessing liquid assets in order to meet obligations associated with financial instruments. In accordance with Industrivärden's finance policy, at any given time the Group has a minimum of SEK 2 billion in committed credit facilities at its disposal. Refinancing risk is the risk of a company being unable to obtain financing or that financing can only be obtained at a considerably higher cost. In the aim of minimizing refinancing risk, loan maturities are distributed evenly over time to lower the likelihood of a large portion of loans being refinanced at the same date. Industrivärden's liquidity risk and refinancing risk are judged to be low. With an equity ratio of 91% (88%) and an A+ rating (S&P), Industrivärden has considerable financial flexibility.
Currency risk is the risk that the value of assets and liabilities will vary due to changes in exchange rates. Industrivärden's currency risk is mainly coupled to the currency exposures of its respective portfolio companies.
Counterparty risk is the risk of a party in a transaction with a financial instrument not being able to meet its obligations and thereby causing loss to the other party. Internal rules set by Industrivärden prescribe that approved counterparties have high credit ratings with respect to investments, derivative transactions, etc., which is why counterparty risk is considered to be low. Where applicable, ISDA master agreements are used.
Operational risk is the risk of incurring a loss due to defects in internal routines and systems. Industrivärden's risk management rests on a foundation of internally adopted guidelines and rules, and of policies adopted by the Board of Directors. Important rules include investment rules, the risk policy, the insider policy and the finance policy. Matters pertaining to confidentiality and information security are of major importance for Industrivärden and are regulated by internal guidelines.
Against the background of the share price risk described above, the most important control process in Industrivärden's business consists of the continuous monitoring of value exposure in the equities portfolio. Industrivärden's internal control is therefore primarily focused on ensuring the reliability of valuations of outstanding equity and derivative positions and of the reporting of purchases and sales of stocks and other securities.
According to the Swedish Companies Act, the Board is responsible for internal control. The instructions regulating the division of duties between the Board and the CEO lay out investment rules for equities and derivative instruments as well as a finance policy. Decision-making channels, authority and responsibility are defined by a set of investment rules and by a risk policy. Industrivärden has a specially appointed investment committee that makes regular decisions on investment matters within the framework of the CEO's mandate. Other processes with a bearing on the financial reporting are regulated by Industrivärden's insider rules, the information policy and the confidentiality policy. Industrivärden's greatest risk consists of value exposure in the equities portfolio. The predominant risk in work processes pertains to potential errors in the accounting and reporting of equity transactions. Industrivärden continuously assesses the risks in the handling of equity transactions, which are discussed with the auditor and afect the structure of internal risk control.
Control activities pertaining to the equities portfolio include, among other things, approval of all business transactions, daily registration in internal systems, follow-up of equity transactions to ensure that they are in accordance with decisions made by the Investment Committee, and checks to make sure that the value of purchases and sales of stocks and of underlying stocks in derivative transactions is within the scope of established exposure
limits. The Investment Committee, which is made up of the Executive Management together with representatives from the investment and analysis organization and equities market function, continuously follows up investment decisions that have been made and checks to ensure that they have been executed correctly. Minutes are recorded of Investment Committee meetings.
Industrivärden's financing and management of financial risks are conducted in accordance with guidelines set by the Board of Directors. Industrivärden's finance function works primarily with financing and investment of temporary surplus liquidity.
Industrivärden's financing is arranged through both short- and long-term borrowing. The credit facilities give Industrivärden the ability to act on attractive investment opportunities at short notice. No part of the financing is conditional upon any covenants. In addition, Industrivärden has unutilized committed bank loans totaling SEK 3,000 M.
| Amount, SEK M | Nominal amount, SEK M | Term | |
|---|---|---|---|
| MTN-program | 8,000 | 2,050 | 2020–2021 |
| Total long-term borrowing | 2,050 | ||
| MTN-program | – | 750 | |
| Exchangeable bond | 4,069 | 4,069 | |
| Commercial paper | 3,000 | 500 | |
| Bank overdraft facility | 500 | – | |
| Total short-term borrowing | 5,319 |
.
The average interest rate for Industrivärden's debt portfolio as per December 31, 2018, was 0.2% (0,1.%). The average capital duration was 12 months (29).
Maturity structure for undiscounted, contracted interest-bearing liabilities along with future interest payments accruing therewith and derivative instruments with negative market values:
| SEK M | 2019 | 2020–2021 | After 2021 | Total |
|---|---|---|---|---|
| Interest-bearing liabilities | 5,398 | 2,050 | 111 | 7,559 |
| Derivative instruments | 4 | 24 | 12 | 40 |
| Total as per December 31, 2018 | 5,402 | 2,074 | 123 | 7,599 |
| SEK M | 2018 | 2019–2020 | After 2020 | Total |
| Interest-bearing liabilities | 4,522 | 5,950 | 1,372 | 11,844 |
| Derivative instruments | 10 | 40 | 3 | 53 |
| Total as per December 31, 2017 | 4,532 | 5,990 | 1,375 | 11,897 |
| Net debt as per December 31, 2017 | 10,930 |
|---|---|
| Dividends received and paid, net | –1,370 |
| Purchases and sales of stocks, net | –3,252 |
| Management and interest expenses | 140 |
| Other | 153 |
| Net debt as per December 31, 2018 | 6,601 |
Industrivärden has been assigned an international corporate credit rating of A+/Stable/A–1 by S&P Global Ratings, which has also assigned the commercial paper program a credit rating of K–1.
| December 31, 2018 | December 31, 2017 | |||||
|---|---|---|---|---|---|---|
| SEK M | Assets at fair value through profit and loss |
Amortized cost | Total | Assets at fair value through profit and loss |
Amortized cost | Total |
| ASSETS | ||||||
| - Equities | 92,170 | – | 92,170 | 107,289 | – | 107,289 |
| - Derivatives, etc. | 88 | – | 88 | – | – | – |
| - Current receivables | – | 177 | 177 | – | 272 | 272 |
| - Cash and cash equivalents | – | 786 | 786 | – | 613 | 613 |
| Total assets | 92,258 | 963 | 93,221 | 107,289 | 885 | 108,174 |
| December 31, 2018 | December 31, 2017 | ||||||
|---|---|---|---|---|---|---|---|
| SEK M | Liabilities at fair value through profit and loss |
Amortized cost | Total | Liabilities at fair value through profit and loss |
Amortized cost | Total | |
| LIABILITIES | |||||||
| - Non-current interest-bearing liabilities | – | 2,170 | 2,170 | – | 7,292 | 7,292 | |
| - Other non-current liabilities | 36 | – | 36 | 368 | – | 368 | |
| - Current interest-bearing liabilities | – | 5,394 | 5,394 | – | 4,501 | 4,501 | |
| - Other current liabilities | 375 | – | 375 | 3 | – | 3 | |
| Total liabilities | 411 | 7,564 | 7,975 | 371 | 11,793 | 12,164 |
| December 31, 2018 | December 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK M | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| ASSETS | |||||||||
| - Equities | 92,034 | – | 136 | 92,170 | 107,089 | – | 200 | 107,289 | |
| - Derivatives, etc. | – | 88 | – | 88 | – | – | – | – | |
| Total assets | 92,034 | 88 | 136 | 92,258 | 107,089 | – | 200 | 107,289 | |
| December 31, 2018 | December 31, 2017 | ||||||||
| SEK M | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| LIABILITIES | |||||||||
| Non-current liabilities | |||||||||
| - Option portion of exchangeable bond | – | – | – | – | – | 318 | – | 318 | |
| - Derivatives, etc. | – | 36 | – | 36 | – | 50 | – | 50 | |
| Current liabilities | |||||||||
| - Option portion of exchangeable bond | – | 371 | – | 371 | – | – | – | – | |
| - Derivatives, etc. | – | 4 | – | 4 | – | 3 | – | 3 | |
| Total liabilities | – | 411 | – | 411 | – | 371 | – | 371 |
In accordance with IFRS 13, financial instruments are carried at fair value based on a 3-level hierarchy. The classification is based on the input data used in the valuation of the instruments.
Instruments in Level 1 are valued at quoted prices for identical instruments in an active market. Instruments in
Level 2 are valued in a valuation model which uses input data that are directly or indirectly observable in the market. Input data used in the valuation models include interest rates, volatility and dividend estimates. Instruments in Level 3 are valued using a valuation technique based on input data which are not observable in a market.
The consolidated financial statements have been prepared in conformity with International Financial Reporting Standards (IFRS) as adopted by the EU and with application of RFR 1 – Supplementary Accounting Rules for Groups. The annual report for the Parent Company has been prepared in accordance with the Swedish Annual Accounts Act (Årsredovisningslagen (1995:1554)) and with application of RFR 2 – Accounting for Legal Entities. The most important accounting policies applied are specified below. Unless stated otherwise, these are unchanged compared with preceding years. New or revised IFRSs and IFRIC interpretations have not had any efect on the Group's or Parent Company's result of operations or position. Similarly, the assessment has been made that decided, forthcoming rules will not have any efect on the Group's or Parent Company's result of operations or position.
Industrivärden is classified as an Investment Entity and as such does not consolidate certain subsidiaries. Subsidiaries that serve in a supporting function for the Parent Company are consolidated in accordance with the acquisition method, while subsidiaries and associated companies that are investments (portfolio companies) are not consolidated, but are stated on a continuing basis at fair value.
The Parent Company reports shares in subsidiaries at cost, while associated companies and other holdings are carried at market value. The capital gain or loss generated upon the sale of shares is calculated accordingly.
The Group's and Parent Company's functional currency is Swedish kronor (SEK), which is also the reporting currency. Transactions in foreign currency are translated to the functional currency using the exchange rates in efect on the transaction date. Assets and liabilities in foreign currency are translated to the functional currency using the exchange rate in efect on the balance sheet date.
Dividend income is recognized when the right to receive the dividend has been determined.
In 2017, shares were received in Essity, which are reported as revenue of SEK 16,120 M in the income statement on the line Change in value of stocks, etc. The corresponding expense corresponding to the negative change in the value of SCA shares is reported on the same line.
Financial assets and liabilities are classified in the following measurement categories: financial assets and liabilities at amortized cost, and financial assets and liabilities at fair value through profit and loss. The classification of financial assets is based on the Company's business model for asset management and the assets' contractual terms. Industrivärden reports all holdings of listed equities in the income statement. Purchases and sales of financial instruments are reported as per the transaction date.
The exchangeable bond, which is issued in SEK, consists of a host contract in the form of a bond and an issued option to either repay the loan with shares in ICA Gruppen or in cash.
The host contract was initially measured at fair value and thereafter at amortized cost using the efective interest method. This means that the loan is indexed over its term at nominal value. This indexing is recognized as a change in value in the income statement. The option component is measured on a continuing basis at fair value in the income statement in the item Change in value of stocks, etc. Transaction costs are allocated over the term of the bond and are included in the change in value recognized in the income statement.
Option premiums received are booked as a liability and are deducted from premiums paid upon repurchase. If an issued option expires without being exercised, the premium is recognized as income. Upon exercise of an issued option, the premium increases the exercise price upon the sale of shares or reduces the exercise price upon the purchase of shares. On the balance sheet date, the market value of issued options is determined, and the diference between the market value and provisioned premiums is recognized in income. The outstanding options are carried on the balance sheet as other current liabilities.
Cash and cash equivalents include – in addition to cash and bank balances – short-term financial investments with remaining terms of less than three months.
Property, plant and equipment is reported at cost less accumulated depreciation and any impairment losses. Depreciation is recognized on a straight-line basis over the asset's estimated useful life, which estimated to be three to five years. Estimation of an asset's residual value and useful life is done yearly.
The Group has both defined contribution and defined benefit pension plans. Costs for defined contribution pension plans are expensed in pace with payment of premiums. Defined benefit pension plans with Alecta are reported as defined contribution plans, since insufcient information is available to report these as defined benefit plans. No current employees have defined benefit plans. The pension liability refers to defined benefit pension obligations, calculated annually for the Group in accordance with IAS 19 with the assistance of an independent actuary. All changes in the pension liability are recognized immediately when they arise. Service and interest costs are recognized in the income statement, while remeasurements such as of actuarial gains and losses are recognized in other comprehensive income.
Industrivärden's long-term incentive programs are cashsettled programs in which the employees can invest a certain portion of their base salary in Industrivärden stock, and after three years receive performance and matching shares, provided that they are still employed. For more information about the programs, see Note 6. The cost of the programs is allocated over their respective terms and is reported under the item Management cost. The liability for the programs is remeasured at fair value in connection with each book-closing. Industrivärden has entered into a share swap to limit the cost. The share swap is remeasured on a continuing basis at fair value, and the change in value is reported under the item Management cost.
Pursuant to the Income Tax Act, the Parent Company is classified as an investment company, for which special tax rules apply. To be defined as an investment company for tax purposes, the requirements are that the company is engaged exclusively or almost exclusively in the management of securities, that the company's stock is spread among a large number of shareholders, and that the portfolio of securities is well distributed.
Investment companies, along with mutual funds, are usually classified as intermediaries. The principles of legislation in this area are;
The main principles concerning taxation of investment companies are that dividends received and interest income are taxable, while dividends paid, interest expenses and management costs are tax deductible. In addition, capital gains on sales of stocks are tax exempt, but in return, a standardized level of income, which amounts to 1.5% of the market value of the equities portfolio at the start of the fiscal year, is taxed. The basis for calculating
the standardized level of income does not include business-related shares, by which is meant unlisted shares as well as listed shares in which the holding corresponds to at least 10% of the number of votes. In order for listed business-related shares to be excluded from the standardized income calculation, they must have been held for at least one year.
The tax rules for investment companies entail that the Parent Company, as an intermediary, has the opportunity to avoid a taxable surplus by paying a dividend. Tax-loss carryforwards are deductible and may be accumulated in order to be deducted from future taxable surpluses.
The Parent Company does not report deferred tax assets for tax-loss carryforwards, since the purpose of taxation of investment companies is that the intermediary will not be taxed.
See Note 8 on page 54.
Amounts in millions of Swedish kronor (SEK M) unless stated otherwise.
| Group | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Handelsbanken | 1,488 | 975 | |
| Sandvik | 517 | 406 | |
| Volvo | 604 | 462 | |
| Essity | 384 | – | |
| Ericsson | 87 | 87 | |
| SCA | 100 | 401 | |
| ICA Gruppen | 227 | 217 | |
| Skanska | 239 | 239 | |
| SSAB | 118 | – | |
| Total | 3,764 | 2,786 |
| Group | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Handelsbanken | 680 | 169 | ||
| Sandvik | 653 | – | ||
| ICA Gruppen | –2,060 | – | ||
| SSAB | –3,025 | – | ||
| Volvo | 560 | – | ||
| Other | –60 | –66 | ||
| Total | –3,252 | 103 |
| Group | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Handelsbanken | –2,774 | –2,807 | ||
| Sandvik | –2,618 | 4,575 | ||
| Volvo | –5,336 | 6,525 | ||
| Essity1 | –969 | 1,932 | ||
| Ericsson | 2,102 | 22 | ||
| SCA1 | –1,326 | 2,447 | ||
| ICA Gruppen | 356 | 413 | ||
| Skanska | –841 | –1,308 | ||
| SSAB | –457 | 1,078 | ||
| Other | –4 | 59 | ||
| Stocks | –11,867 | 12,936 | ||
| Exchangeable bond | ||||
| Option portion's change in value | –53 | 50 | ||
| Indexing | –33 | –94 | ||
| Transaction costs | –9 | –10 | ||
| Other, net | 8 | 75 | ||
| Total | –11,954 | 12,957 |
1) Adjusted for the received dividend of shares in Essity, totaling SEK 16,120 M. The total returns for Essity and SCA have been calculated as the respective companies' shares of the original company SCA's total return before the split (based on the share of value at the time of the split) and thereafter based on the value performance for the respective companies. The split was carried out on June 9, and the first day for trading in Essity shares was June 15, 2017.
| Group | Parent Company | |||
|---|---|---|---|---|
| Financial income | 2018 | 2017 | 2018 | 2017 |
| Interest income – other |
3 | 12 | 3 | 12 |
| Total | 3 | 12 | 3 | 12 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Financial expenses | 2018 | 2017 | 2018 | 2017 | |
| Interest expenses – subsidiaries |
– | – | –1 | –7 | |
| Interest expenses – other |
–20 | –87 | –16 | –27 | |
| Other financial items |
–2 | –2 | –2 | –2 | |
| Total | –22 | –89 | –19 | –36 |
| 2018 | 2017 | |||
|---|---|---|---|---|
| Age group | Number of employees |
Of whom, women |
Number of employees |
Of whom, women |
| –30 | 2 | 0 | 2 | 1 |
| 30–50 | 9 | 5 | 11 | 5 |
| 50– | 4 | 2 | 4 | 2 |
| Total | 15 | 7 | 17 | 8 |
| 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Directors' fees |
Wages, salaries and other remuneration |
Social security costs |
Of which, pension costs |
Directors' fees |
Wages, salaries and other remuneration |
Social security costs |
Of which, pension costs |
|
| Parent Company | 6 | 45 | 34 | 14 | 6 | 42 | 30 | 10 |
| Base salary |
Variable salary |
Share savings program |
Other benefits |
Pension costs |
|
|---|---|---|---|---|---|
| CEO Helena Stjernholm | 10.41 | 4.2 | 1.9 | 0.1 | 4.2 |
| Other members of the Executive Management (3 persons) | 7.0 | 2.8 | 0.6 | 0.2 | 2.2 |
| Total | 17.4 | 7.0 | 2.5 | 0.3 | 6.4 |
1) The Company's cost amounts to SEK 7.1 M after deducting SEK 3.3 M for directors' fees paid by the portfolio companies, which have been delivered to Industrivärden.
The Nominating Committee, which has been appointed in the manner decided by the Annual General Meeting (AGM), submits recommendations for directors' fees to the AGM. Fees have been issued to the Chairman of the Board and other directors in accordance with an AGM resolution. A fee of SEK 2.0 M was issued to the Chairman of the Board, and a fee of SEK 1.2 M was issued to the Vice Chairman. A fee of SEK 0.6 M was issued to each of the other directors. Total fees paid to the members of the Board of Directors in 2018 amounted to SEK 5.6 M. No fees are paid for committee work. Directors' fees were unchanged compared with the preceding year.
Compensation of the CEO and other members of the Executive Management is based on the guidelines adopted by the 2018 AGM. The Compensation Committee submits a recommendation to the Board on the CEO's compensation and draws up, in consultation with the CEO, criteria for compensation for the other members of the Executive Management. The members of the Executive Management receive a base salary, long-term and short-term variable salary, customary employment benefits and pension benefits.
The CEO was paid a base salary of SEK 10.4 M (10.0). The Company's cost is reduced by SEK 3.3 M for directors' fees paid by portfolio companies for 2018. Her variable salary for 2018, which is based on the Board's annual evaluation, amounted to SEK 4.2 M (4.0), which will be paid out in 2019. Her vested portion of the ongoing share savings program was SEK 1.9 M for 2018 (2.3). The share savings program that expired in 2018 resulted in grants of 17,196 (0) Industrivärden Class C shares to the CEO, which corresponded to a value of SEK 3.2 M (0). The cost of defined contribution pension premiums was SEK 4.2 M for 2018 (4.0). Other benefits pertain to a company car. In the event the Company serves notice of her employment contract, a two-year notice period applies. For notice given by the CEO, a six-month notice period applies.
The other three (four) members of the Executive Management together received base salaries of SEK 7.0 M (7.2). The other members of the Executive Management are entitled to long-term and short-term variable salary. The outcome is based on the achievement of individually set goals as well as on joint targets for growth in net asset value. Variable salary for 2018 amounted to SEK 2.8 M (3.0) and will be paid out in 2019. The vested portion of the ongoing share savings program amounted to SEK 0.6 M for 2018 (2.0). The share savings program that expired in 2018 resulted in grants of 3,696 (12,228) Industrivärden Class C shares to the other members of the Executive Management, for a value of SEK 0.7 M (2.5). The combined cost of defined contribution pension premiums in 2018 was SEK 2.2 M (2.4). Other benefits pertain to company cars. In the event of the Company service notice of an executive's employment contract, a one or two-year notice period applies. For notice given by the executive, a six-month notice period applies.
A former member of the Executive Management received base salary of SEK 1.5 M for employment in 2018 and the subsequent notice period, corresponding to a cost of SEK 7.0 M. The former member of the Executive Management is covered by a defined contribution pension plan. The pension cost for 2018 up until the end of employment was SEK 3.0 M.
The incentive programs are part of a competitive total compensation package in which the employee has the opportunity to receive matching shares and performance shares after three years, subject to investment of part of the employee's base salary in Industrivärden shares. The program aims to encourage Industrivärden's employees to increase their ownership of stock in the Company and thereby further emphasize long-term shareholder value. The Share Savings Program is expected to increase Industrivärden's opportunities to recruit and retain competent employees as well as the participants' interest in and commitment to Industrivärden's business and development. Against this background, the program is judged to have a positive impact on Industrivärden's continued development and thereby be beneficial for both the shareholders and Industrivärden's employees. In the outstanding programs, a maximum of 16,802 matching shares and 55,171 performance shares may be granted. Grants of matching shares require continued employment at the time of the match. Grants of performance shares are conditional upon an average annual total return for Industrivärden's Class C shares during the three-year lock-in period that is equal to or higher than the SIXRX index, and full grants of performance shares require an average annual total return for Industrivärden's Class C shares during the three-year lock-in period that exceeds the SIXRX index by 2 percentage points per year. The cost of incentive programs in 2018 was SEK 0.8 M (5.3). The total liability for the programs is SEK 4.2 M (11.3).
The 2018 AGM resolved to ofer a long-term share savings program for a maximum of 20 employees in the Industrivärden Group. During 2018, 12,096 shares were bought within the program, which can qualify for a maximum grant of 6,048 matching shares and 21,332 performance shares.
The 2016 and 2017 incentive programs include a total of 21,508 purchased shares, which can qualify for grants of a maximum of 10,754 matching shares and 33,839 performance shares.
The 2015 incentive program expired in October 2018. In connection with this, a total of 25,991 Industrivärden Class C shares were granted for a value of SEK 4.8 M. The value was calculated based on the price of Industrivärden Class C shares on the grant date.
In 2016 the CEO purchased 75,000 call options for the same number of Industrivärden Class C shares from L E Lundbergföretagen at a premium of SEK 12 per share. The options expire on February 26, 2021, with an exercise price of SEK 151 per share. The transaction was carried out at market terms based on the Black & Scholes pricing model for call options.
| Group1 | Parent Company1 | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| PWC | ||||
| Audit assignment | 0.7 | 0.7 | 0.7 | 0.7 |
| Auditing activities in addition to audit |
||||
| assignment | 0.1 | 0.1 | 0.0 | 0.1 |
| Tax consulting | 0.0 | 0.4 | – | 0.4 |
| Total | 0.8 | 1.2 | 0.7 | 1.2 |
1) Including value-added tax (since investment companies are not subject to value-added tax and thereby cannot deduct value-added tax).
| 2018 | 2017 | |
|---|---|---|
| Market value of equities portfolio on January 1 | 62,119 | 51,170 |
| Less: business-related shares | –62,119 | –49,578 |
| Basis for standardized income | 0 | 1,592 |
| Standardized income 1.5% | 0 | 24 |
| Dividends received during the respective years | 1,753 | 1,387 |
| Management cost, net financial items, etc. | –147 | –150 |
| Dividend paid out1 | –2,5022 | –2,394 |
| Taxable income | –896 | –1,133 |
| Tax-loss carryforwards from previous years | –9,152 | –8,019 |
| Accumulated tax-loss carryforward | –10,048 | –9,152 |
1) Payment is made during the following year, in accordance with an AGM decision.
2) Proposed by the Board of Directors.
The calculation of earnings per share is based on reported income attributable to equity holders of the Parent Company, amounting to SEK –8,330 M (15,555), and a weighted average number of shares outstanding, amounting to 435,209,877 (434,974,101).
Calculation of earnings per share after dilution is based on reported income attributable to equity holders of the Parent Company after dilution, amounting to SEK –8,330 M (15,555), and a weighted average number of shares outstanding after the effect of the convertible bond, amounting to 435,209,877 (434,974,101). For the periods during which the convertible bond gives rise to a dilutive effect, it is assumed to have been converted to common shares, and earnings are adjusted to eliminate the earnings that the convertibles have generated. For calculation of earnings per share after dilution, the weighted average number of common shares outstanding is adjusted for the dilutive effect of all potential common shares with a dilutive effect – in Industrivärden's case the convertible bond.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | ||
| Accumulated cost, equipment | |||||
| Opening cost | 14 | 14 | 14 | 14 | |
| Acquisitions during the year | – | – | – | – | |
| Closing cost | 14 | 14 | 14 | 14 | |
| Accumulated depreciation, equipment |
|||||
| Opening depreciation | –2 | –1 | –2 | –1 | |
| Depreciation for the year | –1 | –1 | –1 | –1 | |
| Closing depreciation | –3 | –2 | –3 | –2 | |
| Carrying amount, equipment | 11 | 12 | 11 | 12 |
| 2017 | |||||
|---|---|---|---|---|---|
| Number of shares | Share of capital, % | Share of votes, % | Market value1 | Market value1 | |
| Handelsbanken A | 202,900,000 | 10.4 | 10.6 | 19,945 | 22,039 |
| Sandvik | 152,300,000 | 12.1 | 12.1 | 19,243 | 21,208 |
| Volvo A | 142,600,000 | 6.9 | 22.2 | 16,570 | 21,764 |
| Volvo B | 3,600,000 | 417 | – | ||
| Essity A | 35,000,000 | 9.5 | 29.9 | 7,630 | 8,110 |
| Essity B | 31,800,000 | 6,920 | 7,409 | ||
| Ericsson A | 86,052,615 | 2.6 | 15.1 | 6,660 | 4,582 |
| Ericsson B | 1,000,000 | 78 | 54 | ||
| SCA A | 35,000,000 | 9.5 | 29.7 | 2,503 | 3,325 |
| SCA B | 31,800,000 | 2,185 | 2,689 | ||
| ICA Gruppen | 14,016,262 | 7.0 | 7.0 | 4,440 | 6,144 |
| Skanska A | 12,667,500 | 6.9 | 23.9 | 1,786 | 2,153 |
| Skanska B | 16,343,995 | 2,305 | 2,778 | ||
| SSAB A | 44,334,933 | 4.3 | 11.8 | 1,352 | 2,833 |
| SSAB B | – | – | 2,000 | ||
| Total, portfolio companies | 92,034 | 107,089 | |||
| Other | 136 | 200 | |||
| Group's holdings of equities | 92,1702 | 107,289 | |||
| Less: associated companies | –20,371 | –25,831 | |||
| Less: non-consolidated companies | –136 | –200 | |||
| Less: holdings owned via subsidiaries | –40,180 | –44,970 | |||
| Parent Company's holdings of equities, excluding shares in associated companies and subsidiaries | 31,483 | 36,288 |
1) The market value corresponds to the book value.
2) The Group's total cost as per December 31, 2018, was SEK 45,233 M.
| Parent Company | ||||||||
|---|---|---|---|---|---|---|---|---|
| Reg. no. | Domicile | Shareholders' equity |
Income after tax |
Share of capital, % |
Share of votes, % |
No. shares million |
Market value | |
| Volvo | 556012-5790 | Gothenburg | 125,831 | 25,363 | 6.6 | 21.3 | 140 | 16,280 |
| Skanska | 556000-4615 | Stockholm | 29,347 | 4,594 | 6.9 | 23.9 | 29 | 4,091 |
| Total | 20,371 |
| Parent Company | ||||||
|---|---|---|---|---|---|---|
| Reg. no. | Domicile | Share of capital, % |
No. shares | Shareholders' equity |
Book value | |
| Industrivärden Invest AB (publ)1 | 556775-6126 | Stockholm | 100 | 1,000 | 19,610 | 330 |
| Industrivärden Förvaltning AB1 | 556777-8260 | Stockholm | 100 | 1,000 | 20,157 | 1,010 |
| Investment AB Promotion1 | 556833-0525 | Stockholm | 100 | 100,000 | 748 | 395 |
| Floras Kulle AB | 556364-8137 | Stockholm | 100 | 10,000 | 16 | 0 |
| Total | 1,735 |
1) The subsidiaries serve in a supporting function for the Parent Company and are consolidated in the Group in accordance with the acquisition method.
| Group Equities |
|||
|---|---|---|---|
| 2018 | 2017 | ||
| Opening value | 107,289 | 94,250 | |
| Disposals at sales value | –5,144 | –66 | |
| Purchases | 1,892 | 169 | |
| Change in value | –11,867 | 12,936 | |
| Closing value | 92,170 | 107,289 |
| Parent Company | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Equities | Shares in associated companies |
Shares in subsidiaries | Total | |||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||
| Opening value | 36,288 | 30,296 | 25,831 | 20,874 | 1,752 | 1,949 | 63,871 | 53,119 | ||
| Disposals at sales value | –4,914 | – | – | – | – | –41 | –4,914 | –41 | ||
| Purchases | 656 | – | 489 | – | – | – | 1,145 | – | ||
| Change in value | –547 | 5,992 | –5,949 | 4,957 | – | – | –6,496 | 10,949 | ||
| Shareholder contribution | – | – | – | – | – | –2 | – | –2 | ||
| Other | – | – | – | – | –17 | –154 | –17 | –154 | ||
| Closing value | 31,483 | 36,288 | 20,371 | 25,831 | 1,735 | 1,752 | 53,589 | 63,871 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| Interest-bearing receivables | 177 | 272 | 133 | – |
| Receivables from subsidiaries | – | – | 551 | 1,168 |
| Prepaid expenses and accrued income | 6 | 4 | 6 | 3 |
| Other current receivables | 90 | 170 | 88 | – |
| Total | 273 | 446 | 778 | 1,171 |
In 2014 an exchangeable bond of SEK 4.4 billion was issued as part of the continuous refinancing of the equities portfolio. The bond matures on May 15, 2019 and was issued at a premium of approximately 38% to ICA Gruppen's share price at the time and carries no interest. During 2018 the conversion price was adjusted from SEK 293.86 to SEK 290.52 to
compensate the exchangeable bondholders for dividends exceeding a stated dividend level at issuance. In the event of a potential future conversion there is a possibility to pay either with shares or with cash. The redemption period runs until May 15, 2019.
The Group's total reported pension costs amount to SEK 14 M (10). Interest on pension obligations of SEK 2 M (3) is reported in the income statement as Financial items. For 2019, the Group's pension costs are estimated to be approximately SEK 10 M.
Defined contribution plans include retirement pensions, disability pensions and family pensions, and entail payment of premiums on a regular basis during the year to independent legal entities.
Industrivärden's defined benefit plans include retirement pensions, disability pensions and family pensions, and ordinarily entail an obligation to pay lifetime benefits. No current employees have defined benefit plans.
The pension obligation as per December 31, 2018, was SEK 170 M (186), the value of plan assets was SEK 59 M (64), and the net pension liability was SEK 111 M (122).
| Group | |||
|---|---|---|---|
| Actuarial assumptions | 2018 | 2017 | |
| Discount rate1, % | 1.6 | 1.7 | |
| Future salary increases, % | – | – | |
| Anticipated inflation, % | 1.9 | 1.6 |
1) Swedish home mortgage bonds are used as a benchmark for the discount rate with a duration corresponding to the pension obligation.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| Exchangeable bond | – | 4,355 | – | 4,355 |
| MTN program | 2,059 | 2,815 | 2,059 | 2,815 |
| Pension liability | 111 | 122 | 111 | 122 |
| Total | 2,170 | 7,292 | 2,170 | 7,292 |
Market valuation of interest-bearing liabilities as per December 31, 2018 would increase noncurrent interest-bearing liabilities by SEK 9 M (63).
| Maturity dates | Group | Parent Company | ||
|---|---|---|---|---|
| for loans | 2018 | 2017 | 2018 | 2017 |
| – 2019 | – | 5,107 | – | 5,107 |
| – 2020 | 800 | 801 | 800 | 801 |
| – 2021 | 1,259 | 1,262 | 1,259 | 1,262 |
| – 2022 or later1 | 111 | 122 | 111 | 122 |
| Total | 2,170 | 7,292 | 2,170 | 7,292 |
| 1) Of which, pension liability |
111 | 122 | 111 | 122 |
| 2018 | 2017 | |
|---|---|---|
| Option portion of exchangeable bond | – | 318 |
| Other | 36 | 50 |
| Total | 36 | 368 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| Commercial paper | 500 | 3,000 | 500 | 3,000 |
| MTN program | 750 | 500 | 750 | 500 |
| Exchangeable bond | 4,069 | – | 4,069 | – |
| Bank loans | – | 1,000 | – | 1,000 |
| Other | 75 | 23 | – | 1 |
| Total | 5,394 | 4,523 | 5,319 | 4,501 |
Market valuation of interest-bearing liabilities as per December 31, 2018 would increase current interest-bearing liabilities by SEK 3 M (0).
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | ||
| Option portion of exchangeable bond |
371 | – | 371 | – | |
| Equities derivatives etc. |
– | 1 | – | 1 | |
| Other derivatives | 4 | 2 | 4 | 2 | |
| Other current liabilities |
4 | 171 | 4 | 4 | |
| Other accrued expenses |
116 | 119 | 102 | 85 | |
| Payable to subsidiaries |
– | – | 146 | – | |
| Accounts payable, trade |
3 | 4 | 3 | 4 | |
| Total | 498 | 297 | 630 | 96 |
| Group 2018 2017 |
Parent Company | |||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Shares | 16 | 1,242 | 16 | 1,242 |
| Other | – | 1 | – | 0 |
| Total | 16 | 1,243 | 16 | 1,242 |
Contingent liabilities in the Group amount to SEK 0 M (0). Contingent liabilities in the Parent Company pertaining to bank loans in subsidiaries amount to SEK 0 M (0).
The Group's non-current interest-bearing liabilities include SEK 110 M (111) in pension obligations and similar benefits for former CEOs. The corresponding amount for the Parent Company is SEK 110 M (111), as included in the item Pension liability in Notes 17 and 18.
Certain transactions have been made with wholly owned subsidiaries, such as rents for premises at market terms.
Dividends have been received from listed associated companies.
To the general meeting of the shareholders of AB Industrivärden (publ), corporate identity number 556043-4200
58 INDUSTRIVÄRDEN 2018 AUDITOR'S REPORT
We have audited the annual accounts and consolidated accounts of AB Industrivärden (publ) for the year 2018. The annual accounts and consolidated accounts of the company are included on pages 32–57 in this document.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of parent company as of 31 December 2018 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2018 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. A corporate governance statement has been prepared. The statutory administration report and the corporate governance statement are consistent with the other parts of the annual accounts and consolidated accounts and the corporate governance statement is consistent with the Annual Accounts Act.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.
Our opinions in this report regarding the annual accounts and the consolidated accounts are consistent with the contents of the additional report that has been submitted to the parent company's audit committee of AB Industrivärden (publ) in accordance with the Audit Regulation No 537/2014 Article 11.
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our opinions.
We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where the CEO and the Board of Directors made subjective judgments; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufcient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the group, the accounting processes and controls, and the industry in which the group operates.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are fee from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgment, we determined quantitative thresholds for materiality in the audit of the financial statements as a whole. These, together with qualitative considerations, helped us determine the scope of our audit and the nature, timing and extent of our audit procedures. Quantitative thresholds for materiality are also used to evaluate the efect of any misstatement, both individually and in aggregate, on the financial statements as a whole.
Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.
Industrivärden's investments consist in all material respects of listed shares. To a limited degree, derivatives are used to increase the performance of the portfolio and to manage exposure to financial risks such as currency risk, interest rate risk and price risk.
There are active markets with quoted prices for most of the financial instruments in which Industrivärden is a counterparty. To a lesser degree, there are holdings where the valuation is based on other market data than quoted prices in the same instrument.
In a portfolio of financial instruments such as the one held by Industrivärden, there normally are several considerations regarding the valuation that require conclusion in order to ensure a fair valuation in accordance with IFRS.
We have tested and evaluated the design and efectiveness of Industrivärden's controls for pricing and monitoring of pricing of its financial instruments.
For listed instruments, we evaluated Industrivärden's controls for obtaining prices from external sources and we have performed our own tests though comparing prices used to external sources.
For unlisted instruments, we have evaluated the models used and the market data that Industrivärden has used for valuation purposes. We have also performed our own tests of fair values of unlisted instruments by comparing data used to independent sources.
This document also contains other information than the annual accounts and the consolidated accounts. Other information consists of pages 1–31 and 62–70 of this document and does not include the annual accounts, the consolidated accounts or our auditors' opinion. The Board of Directors and the CEO are responsible for the other information.
Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The Board of Directors and the CEO are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the CEO
are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, The Board of Directors and the CEO are responsible for the assessment of the company's and the group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the CEO intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.
The audit committee shall, without prejudice to the Board of Directors' responsibilities and tasks in general, among other things monitor the company's financial reporting.
Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.
A further description of our responsibility for the audit of the annual accounts and consolidated accounts is available on Revisorsinspektionen's website: https://www. revisorsinspektionen.se/rn/showdocument/documents/ rev_dok/revisors_ansvar.pdf. This description is part of the auditor's report.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the CEO of AB Industrivärden (publ) for the year 2018 and the proposed appropriations of the company's profit or loss.
We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the CEO be discharged from liability for the financial year.
We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our opinions.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group's equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company's organization and the administration of the company's afairs. This includes among other things continuous assessment of the company's and the group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial afairs otherwise are controlled in a reassuring manner. The CEO shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfill the company's accounting in accordance with law and handle the management of assets in a reassuring manner.
Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the CEO in any material respect;
Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.
A further description of our responsibility for the audit of the administration is available on Revisorsinspektionen's website: https://www.revisorsinspektionen.se/rn/showdocument/documents/rev_dok/revisors_ansvar.pdf. This description is part of the auditor´s report.
PricewaterhouseCoopers AB, 113 97 Stockholm, was appointed auditor of AB Industrivärden (publ) by the general meeting of the shareholders on April 17, 2018 and has been the company's auditor since before 1994. According to the transition rules of the Audit Regulation (537/2014), PricewaterhouseCoopers AB can therefore not be reappointed after June 17, 2020.
Stockholm, February 15, 2019 PricewaterhouseCoopers AB
Magnus Svensson Henryson Authorized Public Accountant
Lars Pettersson, Annika Lundius, Christian Caspar, Fredrik Lundberg, Helena Stjernholm, Pär Boman, Nina Linander, Bengt Kjell
B.Sc. Eng., B.Sc. Econ., Honorary Ph.D. in Economics, Honorary Ph.D. in Technology. Born 1951. Chairman of the Board since 2015. Director since 2004. President and CEO of L E Lundbergföretagen. Chairman of Holmen and Hufvudstaden. Vice Chairman of Handelsbanken. Director of L E Lundbergföretagen and Skanska. Active in L E Lundbergföretagen since 1977. Shareholding: Own 8,190,000, closely related natural persons 20,000 and closely related legal entities 73,600,000*
Engineering and Business/Economics degree. Honorary Ph.D. in Economics. Born 1961. Vice Chairman since 2015. Director since 2013. Chairman of Handelsbanken, Essity and SCA. Director of Skanska. Former President and Group Chief Executive of Handelsbanken. Shareholding: Shareholding: Closely related legal entities 10,000
B.Sc. Econ. Born 1951. Director since 2011. Director of Stena, Benteler International AG and Goodgrower SA. More than 30 years of experience from leading positions at McKinsey & Company. Shareholding: Own 1,000
B.Sc. Econ. Born 1954. Director since 2015. Chairman of SSAB, Hemfosa Fastigheter and Nyfosa. Vice Chairman of Indutrade and Pandox. Director of ICA Gruppen. Former acting President and former Executive Vice President of Industrivärden. President of AB Handel och Industri, partner of Navet. Shareholding: Own 25,000
B.Sc. Econ., MBA. Born 1959. Director since 2014. Chairman of Awa Holding. Director of Skanska, Telia Company, Castellum and OneMed. Co-founder and former partner of Stanton Chase International. Prior to this she served in executive positions at Vattenfall and Electrolux. Shareholding: Own 23,950, closely related natural person 8,000
LL.M. Born 1951. Director since 2014. Director of SSAB. Former Deputy Director General of the Confederation of Swedish Enterprise, Legal Director and Financial Counselor in the Swedish Ministry of Finance, and CEO of Insurance Sweden. Shareholding: Own 2,554, closely related legal entities 1,500
M.Sc. Eng., Hon. Ph.D. Born 1954. Director since 2015. Chairman of KP Komponenter A/S. Director of L E Lundbergföretagen, Indutrade, Husqvarna and Festo A.G. Former President and CEO of Sandvik, and previously held executive positions in the Sandvik Group. Shareholding: Own 5,000
M.Sc. Econ., Born 1970. Director since 2016. President and CEO of Industivärden. Vice Chairman of Ericsson. Director of Sandvik and Volvo. Former partner and Chief Investment Ofcer at IK Investment Partners. Prior to this she served as a strategic consultant at Bain & Company. Shareholding: Own 46,000, closely related natural person 1,000 and 75,000 call options
Holdings as per February 8, 2019. The information is published annually in conjunction with the publication of the Company's corporate governance report/annual report and notice of Annual General Meeting, and at other times in the event of major changes. *Pertains to holdings in L E Lundbergföretagen (71,600,000) and Förvaltnings AB Lunden (2,000,000).
Industrivärden employee since 2019 Economics degree, born 1960
2018 CFO of IPCO; 2014–2018 CFO of Indutrade; prior to this, several leading positions with Sandvik and Boliden. Shareholding: Closely related natural person 1,000
cations and Sustainability Industrivärden employee since 1997. M.Sc. Business Administration, born 1970
1997–2010 Head of Investor Relations for Industrivärden; 1994–1997 Investment Controller at AstraZeneca. Shareholding: Own 13,900
Chief Executive Ofcer Industrivärden employee since 2015. M.Sc. Business Administration, born 1970
1998–2015 employed by IK Investment Partners, as partner (2008–2015), and Chief Investment Ofcer (1998–2008); 1997–1998 strategic consultant at Bain & Company. For directorships, see page 63. Shareholding: Own 46,000,
closely related natural person 1,000 and 75,000 call options
Industrivärden employee since 2017. M.Sc. Business Administration, born 1979
2013–2017 employed by Zeres Capital as partner and company head; 2009–2013 partner at CapMan; 2002–2008 various roles in Handelsbanken Capital Markets.
Shareholding: Own 3,500
Industrivärden employee since 2015. LL.M., born 1976
2015–2017 Legal Counsel, Industrivärden; 2006–2015 Legal Associate, Mannheimer Swartling Advokatbyrå. Shareholding: Own 2,163
| Value on December 31 | 2018 | 2017 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|
| Industrivärden shares | |||||
| Industrivärden's market cap, (SEK M) | 79,062 | 90,570 | 76,201 | 66,434 | 60,638 |
| Number of shares outstanding | |||||
| Class A shares (thousands) | 268,183 | 268,184 | 268,185 | 268,185 | 268,186 |
| Class C shares (thousands) | 167,026 | 167,026 | 164,156 | 164,156 | 164,155 |
| Total return | |||||
| A-share (%) | –11 | 20 | 17 | 15 | 13 |
| C-share (%) | –9 | 22 | 21 | 11 | 16 |
| Total return indexes | |||||
| SIXRX (%) | –4 | 9 | 10 | 10 | 16 |
| MSCI World (%) | –9 | 23 | 8 | 0 | 7 |
| Net asset value | |||||
| Equities portfolio | |||||
| market value (SEK M) | 92,170 | 107,289 | 94,250 | 81,835 | 83,062 |
| total return (%) | –8 | 17 | 20 | 4 | 8 |
| Interest-bearing net debt | |||||
| value (SEK M) | –6,601 | –10,930 | –11,481 | –12,648 | –14,632 |
| debt-equities ratio (%) | 7 | 10 | 12 | 15 | 18 |
| Net asset value | |||||
| value (SEK M) | 85,201 | 96,299 | 82,769 | 69,056 | 68,345 |
| NAV per share (SEK) | 196 | 221 | 191 | 160 | 158 |
| Equity ratio (%) | 91 | 88 | 86 | 82 | 80 |
Change in value of stocks – For stocks held at both the start and end of the year, the change in market value consists of the diference in value between these two points in time. For stocks sold during the year, the change in market value consists of the diference between the sales price of the shares and their value at the start of the year. For stocks acquired during the year, the change in market value consists of the diference between the cost of the shares and their value at the end of the year.
Debt-equities ratio – Interest-bearing net debt in relation to the market value of the equities portfolio.
Earnings per share – Net income for the year divided by the total number of shares outstanding.
Equity ratio – Shareholders' equity as a share of total assets.
Interest-bearing net debt – Interest-bearing liabilities and pension liabilities less cash and cash equivalents and interest-bearing receivables.
Market value of equities portfolio – The value of the equities portfolio based on market prices on the balance sheet date.
Net asset value – The market value of the equities portfolio less interest-bearing net debt.
Net asset value including reinvested dividend – To calculate the development of net asset value before dividends paid out, the dividends paid out by the Company are recalculated to take into account the performance of the listed portfolio. This gives a measure of how net asset value would have developed if Industrivärden had not paid any dividend.
Total return – Change in the share price taking into account reinvested dividends. The total return is compared against the return index (SIXRX), which indicates the price trend including reinvested dividends for stocks listed on the Stockholm Stock Exchange.
Industrivärden's sustainability report follows the most recent version of the Global Reporting Initiative Standard (GRI), core level, with Financial Services sector supplement. This is Industrivärden's second sustainability report produced in accordance with the GRI framework and draws from the GRI principles regarding content and quality. The report pertains to Industrivärden's own operations in 2018 (January 1–December 31, 2018). The Group's ambition is to report yearly.
Industrivärden's operations are conducted by slightly less than 20 employees at the Company's head ofces in Stockholm. During 2017 stakeholder dialogs were conducted with a subsequent materiality analysis to identify the highest priority issues in the area of sustainability.
These dialogs were continued in 2018 on a regular basis, and the updated analysis forms the basis of our disclosures and is reported in this sustainability report. Industrivärden adheres to sustainable business practices by adopting a clear sustainability perspective in its asset management decisions and exercise of active ownership. The portfolio companies' sustainability reports are available from the respective companies' websites.
The GRI report and Index describes Industrivärden's sustainability work based on the GRI Standards. The report consists of the information below including the references provided as well as the information reported in the 2018 Annual and Sustainability Report, on Industrivärden's website, and on cdp.net according to the respective GRI Index.
| General disclosures | In Industrivärden's Sustainability Report (page) |
In Industrivärden's Annual Report (page) |
Comments | |
|---|---|---|---|---|
| 1. Organizational Profile | ||||
| 102-1 | Name of the organization | Back cover | ||
| 102-2 | Activities, brands, products and services |
4, 12–16 | ||
| 102-3 | Location of headquarters | 12, Back cover | ||
| 102-4 | Location of operations | 12, Back cover | ||
| 102-5 | Ownership and legal form | 2, 39–40 | ||
| 102-6 | Markets served | 22–31, 39 | ||
| 102-7 | Scale of the organization | 12–16, 52 | ||
| 102-8 | Information on employees and other workers |
12–13, 52 | All employees are active at the head ofces in Stockholm. Data does not include any consultants and advisors. Industrivärden is a small company with slightly less than 20 employees. Apart from regula tory requirements, we therefore do not disclose in formation that can be coupled to individual persons. |
|
| 102-9 | Supply chain | Purchases of goods and services are made for the ofce activities in Stockholm. Suppliers are primarily active in the Nordic countries. |
||
| 102-10 | Significant changes to the organization and its supply chain |
No major changes during the year. | ||
| 102-11 | Precautionary principle or approach |
The precautionary principle is adhered to with respect to assessments and management of sus tainability risks in the portfolio companies and new investments. Industrivärden has signed the UN Global Compact, whose environmental risks cover the pre cautionary principle. |
||
| 102-12 | External initiatives | 17, 20–21 | UN Global Compact, CDP and Global Reporting Initiative. The Company's Code of Conduct is based on the UN Global Compact, the OECD Guidelines for Multinational Enterprises and the ILO Fundamental Conventions. |
|
| 102-13 | Membership of associations | 19 | Confederation of Swedish Enterprise, Centre for Business and Policy Studies (SNS), Royal Swedish Academy of Engineering Sciences (IVA), Swedish Investors for Sustainable Development (SISD). |
| 2. Strategy | ||||
|---|---|---|---|---|
| 102-14 | Statement from senior decision-maker |
8–11 | ||
| 3. Ethics and integrity | ||||
| 102-16 | Values, principles, standards, and norms of behavior |
17–21 | ||
| 4. Governance | ||||
| 102-18 | Governance and Board of Directors |
21 | 33–35, 63–64 | The CEO has overarching responsibility for sustaina bility work, which is an integral part of the Company's operations. Team managers are responsible for sustainability analyses of the respective portfolio companies. The Head of Sustainability has functional responsibility for sustainability-related issues and pro cesses. The Board of Directors is responsible for the Company's sustainability report. |
| 5. Stakeholder engagement | ||||
| 102-40 | List of stakeholder groups | A compilation of our most important stakeholder categories is presented on www.industrivarden.se |
||
| 102-41 | Collective bargaining agreements |
All employees are covered by collective bargaining agreements. |
||
| 102-42 | Identifying and selecting stakeholders |
The process for identifying and defining the most important stakeholder categories is presented on www.industrivarden.se |
||
| 102-43 | Approach to stakeholder engagement |
19–21 | ||
| 102-44 | Key topics and concerns raised | A materiality analysis and compilation of priority issues is presented on www.industrivarden.se |
||
| 6. Reporting practice | ||||
| 102-45 | Entities included in the consolidated financial statements |
55 | The report covers the Parent Company and all subsidiaries. |
|
| 102-46 | Defining report content and topic Boundaries |
50–51 | ||
| 102-47 | List of material topics | 19–21 | 46–47 | |
| 102-48 | Restatements of information | This is Industrivärden's second sustainability report in accordance with GRI. |
||
| 102-49 | Changes in reporting | No significant changes have taken place since the preceding report. |
||
| 102-50 | Reporting period | 32 | ||
| 102-51 | Date of most recent report | This is Industrivärden's second sustainability report in accordance with GRI. The most recent annual report with sustainability information was published on February 22, 2018. |
||
| 102-52 | Reporting cycle | 66 | ||
| 102-53 | Contact point for questions regarding the report |
3 | Head of Corporate Communication and Sustain ability, Sverker Sivall, [email protected] |
|
| 102-54 | Claims of reporting in accordance with the GRI Standards |
66 | ||
| 102-55 | GRI content index | 66–68 | ||
| 102-56 | External assurance | 21 | The auditor has given a statement on the statutory sustainability report. Significant information is also included in the Company's Board of Directors' report, which is reviewed by Industrivärden's auditor. |
| Material issues | ||||
|---|---|---|---|---|
| GRI 200: Economic | ||||
| GRI 201: Economic performance | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 201-1 | Direct economic value generated and distributed |
21 | ||
| GRI 205: Anti-corruption | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 205-1 | Operations assessed for risks related to corruption |
17–21 | The Company's own operations including all portfolio companies have been analyzed with respect to the risk for corruption. |
|
| GRI 300: Environment | ||||
| GRI 305: Emissions | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 305-1 | Direct GHG emissions (Scope 1) | 20 | No Scope 1 emissions. www.cdp.net: Industrivärden, CC 6.1 |
|
| 305-2 | Energy indirect GHG emissions (Scope 2) |
20 | Carbon footprint in 2018 was 17.8 tonnes CO2e (17.5) in Scope 2 (energy consumption and district heating) www.cdp.net: Industrivärden, CC 6.3 |
|
| 305-3 | Other indirect GHG emissions (Scope 3) |
20 | Carbon footprint in 2018 was 30.2 tonnes CO2e (49.6) in Scope 3 (business travel, publications and ofce material) www.cdp.net: Industrivärden, CC 6.5 |
|
| GRI 400: Social | ||||
| GRI 401: Employment | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 401-1 | New employee hires and employee turnover |
The Company has 15 employees. Employee turnover for new hires is 13% (12%), and 33% departures (0%). One man and one woman in age group up to 30 years were newly hired. |
||
| 401-3 | Parental leave | During the period one man and one woman were on parental leave. One man returned to work after paren tal leave during the reporting period. One woman was on parental leave at the end of the reporting period. |
||
| Health and safety | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 403-2 | Types of injury and rates of injury, and absenteeism |
No occupational injuries during the period. Average absenteeism relative to total working time was 1%. |
||
| GRI 400: Training and education | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 404-1 | Average hours of training per year per employee |
The average number of hours per employee was 14. | ||
| 404-3 | Percentage of employees receiv ing regular performance and career development reviews |
All employees receive regular evaluations about their performance and career development. |
||
| GRI 405: Diversity and equal opportunity | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 405-1 | Diversity of governance bodies and employees |
34, 52, 63–64 | ||
| GRI 419: Socioeconomic compliance | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| 419-1 | Non-compliance with laws and regulations in the social and economic area |
Industrivärden has not been assessed any fines or other sanctions. |
||
| Sector-specific standards, Financial Services | ||||
| 103-1 – 103-3 Sustainability governance | 17–21 | |||
| FS 6 | Percentage of the portfolio for business lines by region, size and industry. |
22 | ||
| FS 10 | Percentage and number of companies held in the institution's portfolio with which the reporting organization has interacted on environmental or social issues |
Sustainability issues are addressed in all portfolio companies within the framework of Industrivärden's analysis and influence activities. |
OTHER INFORMATION INDUSTRIVÄRDEN 2018 69
Layout and production: Grepp Kommunikation AB – 1499. Photos: Christian Roosvall, Thomas Kjellberg and others. English translation: Joseph Brennan, NewStart Communications LLC. Tryck: Larsson Ofset – February 2019.
AB Industrivärden (publ) | Reg. no. 556043-4200 | Box 5403 | SE-114 84 Stockholm, Sweden Phone +46-8-666 64 00 | www.industrivarden.net | [email protected]
2016
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