Holmen Annual Report 2009

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FY2009 Annual Report · Holmen

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Holmen in 90 seconds

Operations

Strategy

Holmen’s business concept is to develop and run profitable business

within three product-oriented business areas for printing paper, paper-

board and sawn timber as well as two raw-material-oriented business

areas for forests and energy. Europe is the key market.
The business area Holmen Paper manufactures printing paper for
daily newspapers, magazines, directories/manuals, advertising matter
and books at two Swedish mills and one Spanish mill. Iggesund
Paperboard produces paperboard for consumer packaging and
graphics printing at one Swedish and one UK mill. Holmen Timber
produces sawn timber in one Swedish sawmill. Annual production

capacity is 1 940 000 tonnes of printing paper, 530 000 tonnes of

paperboard and 340 000 cubic metres of sawn timber.
Holmen Skog manages the Group’s just over one million hectares
of forests. The annual volume of wood harvested in company forests is
some 2.5 million cubic metres. Holmen Energi is responsible for the
Group’s hydro power assets and for developing the Group’s business

U C T - ORIE

T E R I A L-ORIE

W- M

A
R

Printing
paper

Grow
and
develop
our ﬁve
business
areas

Forests
& wood

Electric
power &
energy

Quality, productivity
and cost focus

Key market is Europe

Proﬁtable operations and
strong ﬁnancial position

Committed in leadership
and skilled workforce

Sustainable business
activities

Share price

Paperboard

Sawn timber

Financial targets

within the energy sector. Normal yearly production amounts to about

Holmen’s profitability shall consistently exceed the market cost

1 100 GWh of electricity at wholly and partly owned hydro power sta-

of capital. The company’s financial position shall be strong with a

tions in Sweden. Holmen Skog and Holmen Energi are also responsi-

debt/equity ratio in the interval of 0.3–0.8. Decisions on dividends

ble for the Group’s wood and electricity procurement in Sweden; these

are based on an appraisal of the Group’s profitability, future invest-

are important input goods for the industrial operations.

ment plans and financial position.

2009

2008

2007

2006

2005

Proﬁtability

SEKm
Income statement
Net sales
Operating costs
Depreciation and amortisation
Interest in associates
Items affecting comparability

Operating profit
Net financial items

Profit before tax
Tax

Profit for the year

18 071 19 334 19 159 18 592 16 319
-15 175 -16 630 -15 548 -14 954 -13 205
-1 167
-1 337
20
12
-
557

-1 346
11
-

-1 320
45
-

-1 343
50
-361

1 620
-255

1 365
-360

1 006

1 051
-311

740
-98

642

2 843
-261

2 582
-1 077

2 303
-247

2 056
-597

1 967
-233

1 734
-478

1 505

1 459

1 256

Operating profit by business area
Holmen Paper
Iggesund Paperboard
Holmen Timber
Holmen Skog
Holmen Energi
Group central
Items affecting comparability

340
419
21
605
414
-178
-

280
320
13
632
327
-159
-361

623
599
146
702
272
-56
557

754
752
80
643
197
-123
-

631
626
13
537
301
-141
-

Group

1 620

1 051

2 843

2 303

1 967

Cash flow
Operating activities
Investing activities

Cash flow after investments

Key indicators
Return, %
capital employed*
equity
Debt/equity ratio, times

The share
Earnings per share, SEK
Ordinary dividend, SEK
Closing listed price, B, SEK
P/E ratio
EV/EBIT*

* Excl. items affecting comparability
** Proposal of the Board

2 873
-818

2 054

1 660
-1 124

2 476
-1 315

2 358
-947

2 471
-3 029

536

1 161

1 411

-558

7.2
6.4
0.34

12.0
7**
183
15
13

6.1
3.9
0.48

7.6
9
193.5
25
17

10.0
9.2
0.35

17.8
12
240
13
12

10.0
9.0
0.36

17.2
12
298
17
14

9.0
8.0
0.41

14.8
11
262.5
18
15

SEK

375

325

275

225

175

125

Return on capital employed
Excl. items affecting comparability
Required return (before tax)

Share price and total return, Holmen B

Share price

Total return

Source: Reuters EcoWin

n Major shareholders
L E Lundbergföretagen
Kempe Foundations
Handelsbanken incl. pension fund
Silchester International Investors
Alecta
Other

% of capital
28.0
7.0
3.1
10.9
3.2
47.8

100.0

26.8

% of votes
52.0
16.9
9.1
3.2
0.9
17.9

100.0

8.0

Holmen AB (publ.) • P.O. Box 5407 • SE-114 84 STOCKOLM • SWEDEN

Total*

Tel +46 8 666 21 00 • Fax +46 8 666 21 30 • E-mail info@holmen.com • www.holmen.com

* of which non-Swedish shareholders

Corporate identity 556001-3301 • Registered office Stockholm

A
n
n
u
a

r
e
p
o
r
t
2
0
0
9

Annual report 2009

Addresses

Holmen AB
Head office
(Strandvägen 1)
P.O. Box 5407
SE-114 84 STOCKHOLM
SWEDEN
Tel +46 8 666 21 00
Fax +46 8 666 21 30
E-mail info@holmen.com
www.holmen.com

Holmen Paper AB
(Vattengränden 2)
SE-601 88 NORRKÖPING
SWEDEN
Tel +46 11 23 50 00
Fax +46 11 23 63 04

Iggesund Paperboard AB
SE-825 80 IGGESUND
SWEDEN
Tel +46 650 280 00
Fax +46 650 288 00
E-mail info@iggesund.com

Holmen Timber AB
P.O. Box 45
SE-825 21 IGGESUND
SWEDEN
Tel +46 650 280 00
Fax +46 650 203 80
E-mail info@holmentimber.com

Holmen Skog AB
(Hörneborgsvägen 6)
SE-891 80 ÖRNSKÖLDSVIK
SWEDEN
Tel +46 660 754 00
Fax +46 660 759 85
E-mail info@holmenskog.com

Iggesunds Bruk (Mill)
SE-825 80 IGGESUND
SWEDEN
Tel +46 650 280 00
Fax +46 650 285 32
E-mail info@iggesund.com

Workington Mill
WORKINGTON Cumbria
CA14 1JX
UK
Tel +44 1900 601000
Fax +44 1900 605000
E-mail info@iggesund.com

Holmen Paper Hallsta
SE-763 81 HALLSTAVIK
SWEDEN
Tel +46 175 260 00
Fax +46 175 264 01

Holmen Paper Braviken
SE-601 88 NORRKÖPING
SWEDEN
Tel +46 11 23 50 00
Fax +46 11 23 66 30

Holmen Paper Madrid
Parque Industrial
La Cantueña
C/del Papel 1
ES-28947 FUENLABRADA
(Madrid)
SPAIN
Tel +34 91 642 0603
Fax +34 91 642 2470

Holmen Energi AB
(Hörneborgsvägen 6)
SE-891 80 ÖRNSKÖLDSVIK
SWEDEN
Tel +46 660 754 00
Fax +46 660 755 10
E-mail info@holmenenergi.com

Iggesunds Sågverk (Sawmill)
P.O. Box 45
SE-825 21 IGGESUND
SWEDEN
Tel +46 650 280 00
Fax +46 650 284 48
E-mail info@holmentimber.com

Bravikens Sågverk (Sawmill)
SE-601 88 NORRKÖPING
SWEDEN
Tel +46 11 23 50 00
Fax +46 11 23 62 19
E-mail info@holmentimber.com

The complete list of addresses is
available on Holmen’s website
www.holmen.com

The cover of the annual report is printed on Iggesund Paperboard’s solid bleached board, Invercote® Creato 280 gsm.
It is embossed and UV-varnished.

The annual report is produced by Holmen.
Graphic production: Gylling Produktion
Layout: AD Reklambyrå and Energi Reklambyrå

Photos: Rolf Andersson and others
Print: Trosa Tryckeri
Translation: Translator Scandinavia AB

Contents

CEO’s message _____________ 1

Administration report ______44

Annual General Meeting ____86

The year in brief______________ 2

Income statement __________52

Information _________________ 87

Holmen in brief ______________ 4

Business concept,
strategy and goals ___________ 6

Statement of
comprehensive income ____52

Balance sheet ______________53

Definitions and glossary _____88

Addresses

Holmen in 90 seconds

Holmen Paper ______________ 12

Changes in equity __________54

Iggesund Paperboard _______ 16

Cash flow statement ______55

Holmen Timber _____________20

Parent company ____________56

Holmen Skog _______________22

Notes ______________________58

Proposed treatment of
unappropriated earnings ____84

Audit report _________________85

Holmen Energi ______________24

Production and
raw materials _______________26

The share and shareholders 28

Corporate governance
report _____________________ 3 1

Board of directors __________36

Group management ________38

Quarterly figures ____________39

Ten-year review ____________40

CEO’s message

C E O ’ s mEs s a gE

Dear shareholder

The year 2009 is certain to go down in history.
The unprecedented slump in the global economy
had a tangible impact on Holmen’s business
areas for printing paper and consumer paper-
board. A drop of more than 10 per cent in
demand entailed considerable production cut-
backs, which put pressure on profits. However,
higher prices, lower fibre costs and more favour-
able exchange rates helped to increase profits
from printing paper and paperboard. Earnings
per share were SEK 12.0, and although we are
not satisfied with this figure, it is an improvement
on the earnings per share of SEK 7.6 achieved in
2008. Return on equity totalled 6 per cent.

Despite the improved profit, the Board pro-

poses lowering the dividend from SEK 9 to
SEK 7 per share. The reason for this proposal is
that we are facing less certainty with regards to
profitability; printing paper prices are under
intense pressure at the same time as we are
implementing major investments, such as the
new sawmill at Braviken. The Board is also
adjusting the dividend target to better reflect
our situation. The dividend is to be based on an
appraisal of the Group’s profitability, future
investment plans and the goal of having a
strong financial position.

Printing paper

Newsprint deliveries to Europe fell by 14 per
cent in 2009, corresponding to a decline of
nearly 20 per cent in the past two years. We
believe that printing paper – mainly newsprint
– is entering a phase in which structurally
intensified competition from new media will

adversely affect growth. This means that Hol-
men Paper and the entire industry will need to
modify their production structure. Holmen
Paper is pursuing its plan to improve quality,
realign operations to focus on more specialised
niche products, shut down unprofitable pro-
duction, improve efficiency and cut costs. A
comment about each mill can illustrate this. At
Hallsta Paper Mill, a paper machine and a
recovered paper line ceased production in 2008.
A major workforce reduction was implemented,
and production was reorganised to increase

n Facts

Net sales, SEKm
Operating profit, SEKm
Operating profit excl. items
affecting comparability, SEKm
Profit for the year, SEKm
Earnings per share, SEK
Dividend per share, SEK
Return on capital employed, %**
Return on equity, %
Debt/equity ratio, times
Investments, SEKm
Average number of employees

2009

2008

18 071
1 620

19 334
1 051

1 620
1 006
12.0

7 *

7.2
6.4
0.34
818
4 577

1 412
642
7.6
9
6.1
3.9
0.48
1 124
4 829

*Proposal of the Board. **Excl. items affecting comparability.

SEKm

4 000
SEKm

4 000

3 000

2 000

1 000

Operating proﬁt
Operating proﬁt

Operating proﬁt
04
Return on capital employed
Operating proﬁt
Return on equity
Return on capital employed
Return on equity

20
%

1 620

7.2
1 620
6.4
7.2
6.4

SEKm

20 000

15 000

10 000

5 000

Net sales and
operating margin

18 071

9.0

Net sales
Operating margin, %

H O L M E N A N N U A L R E P O R T 2 0 0 9

C E O ’ s m E s s a g E

book paper manufacturing. In the stagnating
market, Holmen has successfully increased vol-
umes in the MF Special niche, where several new
products have been very well received by cus-
tomers. At Braviken Paper Mill, efficiency con-
tinues to improve through measures such as staff
cuts affecting about 100 people. The new pulp
line, launched in 2008, has resulted in dramatic
energy savings per tonne. Holmen Paper Madrid
is investing in a new combined gas and steam
plant to lower electricity and steam costs – two
major cost items. In Madrid, the smaller paper
machine is also being adapted to produce coat-
ed magazine paper (LWC) rather than news-
print. Wargön Mill was closed in 2008; the
shutdown proceeded as planned, and the paper
machine was sold at the end of the year.

Consumer paperboard

The market for virgin fibre board was also
weak in the first part of 2009 but improved
during the autumn. At year-end, Iggesund
Paperboard had a strong order book.

We have continued to refine our products.
At Iggesund Mill, Invercote products were fur-
ther enhanced for various applications. Effi-
ciency improvements are also underway with
the aim of lowering costs. Fossil carbon dioxide
emissions were reduced by 65 per cent during
the year, and more than 90 per cent of the mill’s
internally generated electricity supply comes
from biofuels. A new large-scale efficient treat-
ment plant with the latest technology is now
operational.

Holmen shut down the oldest board machine

at Workington Mill in December 2009 and

upgraded the capacity of the remaining machine
at the same time. These measures add to our
competitive strength and move us towards a
higher quality segment in the market. As a result
of the restructuring process, the mill has an
annual production capacity of 200 000 tonnes
compared to its previous 250 000 tonnes. The
workforce cutbacks affect about 100 people.

sawn timber

The recession also made its mark on the con-
sumption of sawn timber. However, a shortage
of raw materials, low stock levels and produc-
tion cutbacks among many European suppliers
resulted in a relatively favourable market and
enabled Holmen Timber to increase its deliver-
ies compared to 2008. Thanks to the market
situation, price rises were implemented during
the second half of the year.

Production in the new sawmill at Braviken
will start at the turn of 2010/2011, and we hope
to see slightly stronger demand ahead.

Forest

Demand was relatively low at the start of 2009
but rose later in the year, as did wood prices.
The threat of a substantial rise in Russian
export duties subsided during the year, but the
lower import levels appear to be a lasting devel-
opment.

Holmen Skog plays a key role in obtaining
wood for our mills. During 2009, the organisa-
tion was reinforced to meet the need for saw
logs for the new sawmill, and market activities
will be stepped up even more during 2010.

The year in brief

n Demand for Holmen’s products was weak during the year. Deliveries of news-
print and virgin fibre board to Europe declined by 14 per cent and 9 per cent
respectively, compared to 2008. The consumption of sawn timber also
decreased.

n Harvesting in Holmen’s forests increased during the year. Holmen’s hydro

power production was somewhat lower than in a normal year.

n Operating profit, excluding items affecting comparability for 2008, rose

from SEK 1 412 million to SEK 1 620 million. Higher prices for newsprint and
paperboard account for the improvement. Weak demand entailed
considerable production cutbacks, which had an adverse impact on earnings.

H O L M E N A N N U A L R E P O R T 2 0 0 9

The ground-breaking ceremony for the new sawmill next to
Braviken Paper mill on 11 august attracted a great deal of
media attention and invited guests.

C E O ’ s m E s s a g E

Energy

Holmen Energi achieved very strong operating
profit, mainly thanks to good prices. Activity
levels are high at Holmen Energi. A new hydro
power station in the Iggesundsån river replaced
three old ones during the year. The first peat
deliveries left Holmen’s new extraction sites
during the autumn. Several wind power initia-
tives are also in progress. Our aim is to generate
wind power corresponding to 1 TWh on our
own forestland. The wind is being measured in
several locations, and it is increasingly clear
that we have many sites that may be suitable
for the construction of wind farms. We are also
one of the owners of the company VindIn AB,
which inaugurated its first wind farm in
autumn 2009.

The Holmen Biorefinery Development Cen-
tre is a new area of activity that will develop new
products from forest raw material as well as
from residual and bi-products from Holmen’s
other operations.

Holmen has joined forces with four compa-

nies in electricity-intensive industries to form
Industrikraft i Sverige AB, which signed an
agreement with Vattenfall in the autumn to pro-
ceed with projects to secure fossil-free baseload
power for the future.

Outlook for 2010

It appears that 2010 will be another tough year
for Holmen Paper. There are as yet no signs of an
upturn in demand, and ongoing price negotia-
tions are expected to lead to lower prices for
printing paper in Europe. Meanwhile, prices for
recovered paper, a key raw material for us, have

begun increasing. The market looks brighter for
Iggesund Paperboard and Holmen Timber.
Demand for timber is substantial and prices have
climbed, which raises costs for Holmen Timber
but creates potential for some improvement in
Holmen Skog’s earnings from wood. For Holmen
Energi 2010 may be another good year, because
prices are largely hedged at favourable levels.

The largest currency exposure, to the euro,
is hedged for 2010 and 2011, and the exchange
rates will be slightly more favourable than the
hedging contracts that applied for 2009.

The new sawmill at Braviken is one reason

why investments are estimated to exceed
SEK 1 500 million. An ongoing survey of addi-
tional energy-related investments may keep the
level of investment high.

Holmen is evolving

We have entered a period during which we must
recast part of our Group, by which I am refer-
ring to the printing paper operations at Holmen
Paper. In our 400-year history, we have under-
gone major change on numerous occasions. This
is in itself a strength in times of transformation,
but the realignment and development work is
not possible without the contribution of all
employees. I would like to thank you and say
that together we will successfully tackle the
challenges that await us.

Stockholm, 19 February 2010

Magnus Hall
President and CEO

n The oldest board machine at Workington Mill was shut down at the end of

December. Capacity was upgraded on the remaining machine at the same time.
The resulting annual production capacity of the mill is 200 000 tonnes. The
change entails reducing the workforce by up to 100 people.

n Holmen is continuing to improve efficiency at Braviken Paper Mill as part of
adapting the business area to the market. Redundancies affecting about
100 people were announced in the autumn.

n A new water treatment plant was completed at Iggesund Mill.

n A new hydro power station in the river Iggesundsån replaced three old ones.
n Holmen marked its 400th anniversary in a variety of ways, including the

publication of a newspaper supplement in three languages, a seminar on
future challenges for the industry and a book about Holmen’s history.

H O L M E N A N N U A L R E P O R T 2 0 0 9

On the actual anniversary, 18 september, the Life guards Dragoon
Trumpet Corps and the mounted Royal guards gave a concert on
the Holmen-torget square in Norrköping.

Nettoomsättning per marknad, %

26*

Sverige

Tyskland

Nettoomsättning per marknad, %

Frankrike

Övriga världen

Övriga Europa

Nederländerna

Italien

10
Spanien

26*

Storbritannien

■ Europa, 90
*Varav skog och kraft 16

Sverige

Tyskland

Storbritannien

Övriga världen

Övriga Europa

Nederländerna

Frankrike

Nettoomsättning per marknad, %

Italien

4
4

Medelantal anställda
H O L m E N i N B R i E F
13
3 511
Sverige
5
Spanien
10
Sverige

Storbritannien 511

573

Nederländerna 112

■ Europa, 90
*Varav skog och kraft 16

Frankrike

Tyskland

Holmen in brief

Estland

Spanien

26*

Medelantal anställda

Sverige

Spanien

3 511

573

Storbritannien 511

Nederländerna 112

Frankrike

Estland

Övriga Europa 45

Övriga världen 24

Övriga Europa 45
Storbritannien
Övriga världen 24
■ Europa, 90
Head ofﬁce
*Varav skog och kraft 16
Production sites

Sheeting units

Sales, forest regions and
purchasing company

Övriga världen

Övriga Europa

Nederländerna

Frankrike

Italien

Spanien

Sverige

Spanien

3 511

573

Storbritannien 511

Nederländerna 112

Frankrike

Estland

Övriga Europa 45

Övriga världen 24

Medelantal anställda

Huvudkontor

Produktionsorter

Arkning/distribution

Försäljning, skogsregioner
och inköpsbolag

Holmen Paper

Iggesund Paperboard

Holmen Timber

Holmen Skog

Holmen Energi

Head ofﬁce

Production sites

Sheeting units

Sales, forest regions and

purchasing company

Holmen Paper

Iggesund Paperboard

Holmen Timber

Holmen Skog

Holmen Energi

Operations
outside Europe

Australia

Japan

USA

Hong Kong

Singapore

USA

North Africa*

Middle East*

* Via Uni4 Marketing AB,
a sales company partly
owned by Holmen Timber

Operations
outside Europe

Australia

Japan

USA

Hong Kong

Singapore

USA

North Africa*

Middle East*

* Via Uni4 Marketing AB,
a sales company partly
owned by Holmen Timber

Holmen Paper

Iggesund Paperboard

Holmen Timber

Holmen Skog

Holmen Energi

Verksamhet
utanför Europa

Australien

Japan

USA

Hongkong

Singapore

USA

Nordafrika*

Mellanöstern*

* Via det av Holmen Timber
delägda försäljningsbolaget
Uni4 Marketing AB

among the largest in Europe
Holmen has a total capacity to
manufacture about 2.5 million tonnes
of printing paper and paperboard each
year. The company is Europe’s fifth
largest manufacturer of printing paper,
with production capacity of 1 940 000
tonnes per year. With annual capacity
for 530 000 tonnes of virgin fibre-based
board, Holmen is the third largest
producer in Europe. The company’s
production capacity for sawn timber is
340 000 cubic metres a year.

Holmen is a forest industry group that manu-
factures printing paper, paperboard and sawn
timber and runs forestry and energy produc-
tion operations. The company’s extensive
forest holdings and its high proportion of
energy production are strategically important
resources for its future growth.

PRODUCTS. Holmen focuses on printing paper,
paperboard, sawn timber, forestry and energy.
Holmen Paper and Iggesund Paperboard together
account for 80 per cent of Holmen’s net sales.

OWN FOREST PROVIDES majority of wood raw materials.
Holmen’s manufacturing operations are based on
renewable raw materials from sustainably managed
forests. The Group owns around 1.3 million hectares
of land, of which 1 million are used for forestry. The
company is about 60 per cent self-sufficient for
its wood needs.

HYDRO POWER AND BIOENERGY. Holmen’s electricity
needs are met through the Group’s wholly and partly
owned hydro power and back pressure power as well
as through purchased electricity. The company’s electric-
ity self-sufficiency is some 30 per cent. Biofuels cover
a significant part of Holmen’s thermal energy needs.

MANUFACTURING IN THREE COUNTRIES. Holmen has
four production facilities in Sweden and one each in
the UK and Spain; some finishing takes place in the
Netherlands and France. The Group runs its own sales
companies in several European countries and around
90 per cent of items produced are sold in Europe.
Holmen has a subsidiary for wood purchasing
in Estonia.

HOLMEN’S TWO CLASSES OF SHARES are listed on the
Nasdaq OMX Nordic, Large Cap.

Net sales
by market, %

Net sales
by business area, %

Operating proﬁt
by business area, %

Rest of the
world

Rest of
Europe

France

The
Netherlands
Italy

Spain

Sweden*

Germany

Europe 88 %

*Of which forest and power 18 %

Total: SEK 18 071 million

H O L M E N A N N U A L R E P O R T 2 0 0 9

Holmen
Skog

Holmen
Timber

Holmen
Energi

Holmen
Paper

Iggesund
Paperboard

Holmen
Paper

Holmen
Skog

Iggesund
Paperboard

Holmen
Timber

Holmen

Energi

Holmen

Skog

Holmen

Timber

Total: SEK 18 071 million

Total: SEK 1 620 million

Total: SEK 26 929 million

Total: SEK 4 577 million

Operating capital

by business area, %

Holmen

Paper

Employees

by business area, %

Holmen

Skog

Holmen

Timber

Holmen Energi

0.2

The Netherlands

116

Average number of employees

by country/region

Iggesund

Paperboard

Iggesund

Paperboard

Holmen

Paper

514

596

Spain

Rest of the

world

Rest of

Europe

102

Sweden

3 227

H O L m E N i N B R i E F

Raw-material-oriented
business areas
Holmen skog

Product-oriented
business areas
Holmen Paper

Products and markets

Products: White and
coloured newsprint as
well as paper for direct-
ories, books and magazines.
Customers: Daily newspa-
pers, retailers, book and magazine publishers,
directory and manual publishers and printers.
Mills: Hallsta Paper Mill, Braviken Paper Mill
and Holmen Paper Madrid.
Production capacity/year: 1 940 000 tonnes.
Number of paper machines: 8.

iggesund Paperboard

Products: Solid
bleached board and
folding boxboard for
consumer packaging and
graphic design purposes.
Customers: Converters of
paperboard for packaging as
well as printers and wholesalers.
Mills: Iggesund Mill and Workington Mill.
Production capacity/year: 530 000 tonnes.
Number of board machines: 3*.

* After the shutdown of BM1 at Workington Mill in

December 2009.
Holmen Timber

Products: Pine sawn
timber.
Customers:Joinery and furniture
industries, manufacturers of
solid flooring, planing mills
and builders’ merchants.
Sawmill:
Iggesund Sawmill.
Production capacity/year:
340 000 cubic metres.
Holmen plans to start production at Braviken
Sawmill, with an initial capacity of 550 000
cubic metres, at year-end 2010/2011.

The paper is used for newspapers, maga-
zines, directories, direct advertising and
books. Main market: Europe.

The board is used in packaging for
consumer products and for graphics ap-
plications. Main market: Europe.

Sawn timber is used to make products
such as window frames, flooring, doors and
furniture. Main market: Scandinavia, the
UK, North Africa and the Middle East.

Operations: Responsible for managing
Holmen’s forests, for wood supply to the
Group’s Swedish units and for trade in wood.

Land holding: 1 264 000 hectares, of which
1 032 000 hectares comprise productive
forestland.

Volume of wood: 119 million forest cubic
metres.

Holmen Energi

Operations: Responsible for the Group’s
hydro power stations, coordination of its
energy matters, and electricity supply to its
Swedish units.
Number of wholly and partly
owned hydro power stations: 21.
Number of partly owned wind farms: 1.
Production capacity/year
(hydro power): 1 100 GWh.

The raw-material-oriented business areas Holmen Skog and Holmen Energi provide the product-oriented business areas Holmen Paper, Iggesund Paperboard and
Holmen Timber with wood and electricity respectively. The overview shows how the products are made and how consumers come into contact with them.

Net sales

by business area, %

Operating proﬁt

by business area, %

Operating capital
by business area, %

Sweden*

Holmen

Skog

Holmen

Timber

Holmen

Energi

Holmen

Energi

Holmen

Paper

Iggesund

Paperboard

Holmen

Paper

Holmen

Skog

Iggesund

Paperboard

Holmen

Timber

Holmen
Energi

Holmen
Skog

Holmen
Timber

Net sales

by market, %

Rest of the

world

Rest of

Europe

France

Netherlands

The

Italy

Spain

Germany

Europe 88 %

*Of which forest and power 18 %

Total: SEK 18 071 million

Holmen
Paper

Employees
by business area, %

Holmen
Skog

Holmen
Timber

Holmen Energi
0.2

The Netherlands
116

Average number of employees
by country/region

514

596

Spain

Rest of the
world
22

Rest of
Europe
102

Sweden

3 227

Iggesund
Paperboard

Holmen
Paper

Total: SEK 18 071 million

Total: SEK 1 620 million

Total: SEK 26 929 million

Total: SEK 4 577 million

H O L M E N A N N U A L R E P O R T 2 0 0 9

B u s iN Es s C O N C E P T, sT Ra T Eg y aN D gOaLs

Business concept,
strategy and goals

Holmen’s business concept is to develop and run profitable business
within three product-oriented business areas for printing paper, paperboard
and sawn timber as well as two raw-material-oriented business areas for forest
and energy. Europe is the key market.

Product-oriented business areas

HOLMEN PAPER manufactures printing paper for
daily newspapers, magazines, directories, man-
uals, direct advertising and books at two mills
in Sweden and one in Spain. With its produc-
tion capacity of 1 940 000 tonnes of printing
paper per year, Holmen Paper is the fifth largest
producer in Europe. UPM and Stora Enso are
the largest, with some 7 and 6 million tonnes
respectively. In printing paper, Holmen Paper
has a strong position amongst European daily
newspaper publishers, who account for around
two-thirds of its sales. Retailers, printers and
book and directory/manual publishers are
other key customer segments. Holmen Paper
has a market share in Europe of just under 10
per cent in standard newsprint, while its share
of the market for improved newsprint, direc-
tory paper and book paper is above 30 per cent.
Holmen Paper’s sales organisation is in Sweden
and in sales companies on geographically
important markets.

IGGESUND PAPERBOARD produces virgin-fibre-
based solid bleached board and folding box-
board for consumer packaging and graphics
applications at one Swedish and one UK mill.
With its capacity of 530 000 tonnes per year,
Iggesund is the third largest manufacturer in
this segment in Europe. Its main competitors
are Stora Enso and M-real, with around 1 mil-
lion and 700 000 tonnes of virgin fibre board
respectively. Iggesund’s largest customer group
comprises converters who make consumer
packaging, but wholesalers and printers who
buy board for graphic design products are also
key customers. Iggesund has a leading market
position, mainly in solid bleached board in
Europe. It is also a significant operator in fold-
ing boxboard. Iggesund has around 20 per cent
of the market in Europe for virgin fibre board.
Euro-pean sales are coordinated via a central
sales office in the Netherlands, with sales and
technical personnel in a number of European
countries. Iggesund also has its own sales com-
panies in Hong Kong, Singapore and the USA.

H O L M E N A N N U A L R E P O R T 2 0 0 9

Business concept,

strategy and goals

B u s i n e s s c o n c e p t, s t r a t e g y a n d g o a l s

HOLMEN TIMBER is the Group’s third product-ori-
ented business area and it manufactures sawn
timber at its Swedish sawmill. Holmen Timber is
a relatively small operator in Europe and has a
market share of less than one per cent for sawn
timber. Holmen Timber mainly sells its products
to customers in Scandinavia, the UK, North
Africa and the Middle East. Sawn timber is sold
directly to customers via Holmen Timber’s own
sales companies in Sweden and the UK and via a
jointly owned marketing company. Production
at Holmen Timber’s new Braviken Sawmill is
scheduled to start at the turn of 2010/2011. The
new sawmill will produce construction timber
for the construction industry. Scandinavia, the
UK and the USA will be important markets.

raw-material-oriented
business areas

HOLMEN SKOG has responsibility for the Group’s
forest assets. Holmen has forest holdings of one
million hectares of productive forestland in
Sweden and the volume of wood amounts to
119 million forest cubic metres. Holmen is
Sweden’s fourth largest forest owner, with
around 4.5 per cent of the country’s productive
forestland. The volume of wood grows by
3.0 million cubic metres per year, and normally
annual harvesting totals 2.5 million cubic
metres. Half of the wood is sold as timber to

Strategy

a few customer products made from Holmen’s paper, board and
wood.

sawmills, around 40 per cent as pulpwood to
the pulp and paper industry and about 10 per
cent as biofuel for energy production. Holmen
Skog is also responsible for supplying wood to
the Group’s industrial operations in Sweden.

H O L M E N A N N U A L R E P O R T 2 0 0 9

Quality, productivity and cost focusKey market is EuropeProﬁtable operations and strong ﬁnancial position Committed in leadership and skilled workforce Sustainable business activitiesGrow anddevelopour ﬁve businessareasSawn timberPaperboardPrintingpaperPRODUCT-ORIENTEDElectricpower &energyForests& woodRAW-MATERIAL-ORIENTEDB u s iN Es s C O N C E P T, sT Ra T Eg y aN D gOaLs

Research and
development (R&D)
Holmen runs its own R&D
activities, as well as partici-
pating in external R&D at
industry-wide level and in
association with universities
and colleges. The main focus
is on product development
and enhancing process
efficiency, although forest
growth and improving the
efficiency of forestry are also
important focuses.
External R&D is carried out
with various partners, such as
Swedish Innventia, MoRe
Research, SweTree Technolo-
gies, the Royal Institute of
Technology, Umeå University,
Mid Sweden University, Karl-
stad University, the Swedish
University of Agricultural Sci-
ences, Skogforsk in Sweden,
the University of Manchester
in the UK, and the Com-
plutense University of Madrid,
Spain.

Self-sufficiency
raw materials, %

Wood

Company forest

HOLMEN ENERGI has responsibility for the Group’s
hydro power assets as well as for developing the
Group’s energy operations. Hydro power pro-
duction during a normal year amounts to
1.1 TWh, making Holmen the sixth largest
electricity producer in Sweden. Holmen Energi is
also responsible for supplying the Group’s Swe-
dish industrial operations with electricity.

Development

Holmen operates on large, well-established
markets, namely its product markets for paper,
paperboard and sawn timber, and its raw mate-
rials markets for wood and energy. The Group’s
goal is to expand and to remain a strong suppli-
er with efficient production. Most of the
growth is organic and takes place by improving
products and increasing production volumes in
existing product areas. Acquisitions have
accounted for a smaller proportion of the com-
pany’s growth. The latest major acquisition was
Holmen Paper Madrid in 2000. Development
also entails reorganisation and the closure of
unprofitable production – measures that have
characterised Holmen Paper in recent financial
years. Holmen has focused on developing more
advanced grades of paper to reduce the produc-
tion of standard newsprint. Iggesund Paper-
board is adapting production to prioritise top-
quality paperboard. Sawn timber is continually
enhanced in close cooperation with customers
and specialised subcontractors. When comp-
leted, Braviken Sawmill will be an efficient and

technologically advanced sawmill for construc-
tion timber.

Holmen’s own wood and energy production

will also be developed and grow. The silvicul-
ture measures taken are expected to result in
gradual increases in annual wood production
(harvesting) to achieve a rise of 20 per cent in
40 years’ time. Good potential is also expected
for increasing the growth rate in the Group’s
forests by roughly 25 per cent in 30 years’ time
by adopting new and improved silviculture
methods, which will lead to higher harvesting
levels in future. In energy operations, the com-
pany believes that there is real potential for
developing new, profitable production of wind
power and biofuel. The aim is to produce 1 TWh
of electricity each year from wind power on
Holmen’s land. In 2009, Holmen Energi
opened a development centre in Iggesund
focusing on biorefining and biofuels.

Holmen must satisfy its customers’ high
demands for the efficient printing, converting
and sawing of products to make suitable end
products with customer appeal. Holmen engag-
es in decentralised R&D in each business area
to support business demands for product devel-
opment and efficient processes.

Productivity

The overall objective of the Group’s operations
is to offer customers attractive products of high
quality and good service in a cost effective way
to maintain Holmen’s position as a competitive

The production process

This highly simplified diagram illustrates the production

means, passes along a web in the machine – firstly through

process in a paper and board machine. In reality, the ma-

a wet section, then a press section and finally the paper/

chines differ quite significantly. The raw materials consist

board is dried on the web, which at that stage runs between

mainly of wood and/or recovered paper, electricity and

numerous cylinders. It is finally rolled on reels and cut to the

chemicals. The pulp, produced by chemical or mechanical

reel or sheet sizes that the customers have ordered.

Electricity

Price hedges
for the years
2010–2015

Wholly and partly
owned hydro and
back pressure
power

PULP

PRESS SECTION

PAPER/BOARD

RAW MATERIALS

WET SECTION

Not price
hedged

Massa

DRIER

Egen mekanisk
och kemisk massa-
produktion

H O L M E N A N N U A L R E P O R T 2 0 0 9

95%

Returpapper

Retur

frakt

Egen insamling

och bolag

21%

55%

B u s i N E s s C O N C E P T, s T R a T E g y a N D g O a L s

supplier. Large-scale, efficient production facili-
ties and skilled employees yield high productiv-
ity and efficient use of input goods and capital.
Effective interaction between marketing, prod-
uct development and production increases is
essential to achieve successful long-term invest-
ments, economies of scale and development.
Basic volumes of certain products are com-
bined with selective ventures involving
improved or more advanced products for both
existing and new categories of customers.

Alongside efficient production processes, the

cost of raw materials and transport has an
important impact on competitiveness. The
main raw materials in the processes for produc-
ing printing paper, paperboard and sawn tim-
ber are fibre, in the form of wood, recovered
paper and pulp as well as energy in the form of
electricity and heat. Holmen produces more
than 90 per cent of the pulp and thermal energy
that it requires at its own mills using a highly
integrated production process. The procure-
ment of other raw materials is underpinned
through backward integration along the pro-
duction chain by owning forests, hydro power
plants and recovered paper procurement units.
The Group’s Swedish facilities are around
65 per cent self-sufficient in wood, while for the
whole Group (including the UK mill) self-
sufficiency is around 60 per cent. The Group
produces more than 30 per cent of the electrici-
ty that it requires, while more than 70 per cent
of thermal energy production is based on resi-
dual products from the Group’s production pro-
cesses. Moreover, the prices of around 55 per
cent of the electricity supplies are hedged through
long-term supply contracts. Significant volumes
of recovered paper are purchased via wholly and
partly owned paper collection companies.

Financial targets

PROFITABILITY. Holmen’s profitability target is a
return that is consistently higher than the market
cost of capital, and this target is used to govern
the business. At Group level, the key ratio used
to calculate profitability is Value Added; this is
defined as operating profit/loss less the cost of
capital and tax. It provides a simple and
sufficiently fair yardstick that is continuously
followed up for the Group, business areas and
production units. The Group’s profitability has
exceeded the cost of capital over a long period
of time, although not in 2008.

Holmen’s business is capital intensive and

much expansion is the result of investing in
additional capacity and improved production.
Investments are often combined with cost
rationalisation measures. To assess the profita-
bility of investments, a model is used to calcu-
late the present value of cash flows; that is, esti-
mated future cash flows are discounted by the
weighted cost of capital.

Computing the cost of capital involves
weighting the cost of borrowed capital and
equity and multiplying the result by the capital
invested in the business. The cost of equity is
computed as interest plus a premium based on
the level of risk for the operation, with capital
invested in industrial operations being assigned
a higher risk premium (5 per cent) than capital
invested in forest and power assets (2 per cent).
The Group’s weighted cost of capital for its
operating activities is computed on the basis of
short-term market interest rates and was near
to 8 per cent (before tax) for industrial opera-
tions in 2009. The cost of capital used for eval-
uating investment projects is based on long-
term market interest rates and was about
11 per cent (before tax) for industrial opera-
tions in 2009.

CAPITAL STRUCTURE. Holmen is to have a strong
financial position that provides financial stabili-
ty and enables the company to make correct,
long-term business decisions that are not solely
dependent on the state of the economy and
external financing possibilities. The target for the
debt/equity ratio is the interval 0.3–0.8, and
adjustment to this target is one aspect of
Holmen’s strategic planning.

DIVIDEND. Decisions on ordinary dividends are
based on a total appraisal of the Group’s profit-
ability, future investment plans and financial
position.
The Board has proposed that the 2010
Annual General Meeting (AGM) resolves in
favour of lowering the dividend to SEK 7 per
share, corresponding to 4 per cent of equity.
During the past decade, the ordinary dividend
has averaged 5 per cent of equity. As a result,
around 60 per cent of earnings per share have
been paid out in ordinary dividends each year.
In addition to ordinary dividends, Holmen paid
extra dividends for the 1998, 2000 and 2003
financial years.

In recent years, the AGM has authorised the

Tonnes

800

600

400

200

times

0.8

0.6

0.4

0.2

0.0

SEK

Productivity
Production per employee and year

’000 m3

745

282
2.6

Holmen Paper
Iggesund Paperboard
Holmen Timber

Proﬁtability
Return on capital employed

7.2
6.5

Return on capital employed
Excl. items affecting comparability

Required return (before tax)

Capital structure
Debt/equity ratio

Dividend
per share

0.34

3.6

09
Proposal

Ordinary dividend
Ordinariy dividend as % of equity

H O L M E N A N N U A L R E P O R T 2 0 0 9

B u s i N E s s C O N C E P T, s T R a T E g y a N D g O a L s

Board to buy back up to 10 per cent of all the
shares in the company. During 2008, Holmen
bought back 760 000 class B shares, correspond-
ing to around 0.9 per cent of the total number of
shares on issue and around 0.3 per cent of the
total number of votes. These share buy-backs
were linked to the Group’s incentive scheme.
There is no specific target for share buy-backs.
Holmen has used them as a complement to divi-
dends as a means of adjusting the capital struc-
ture when conditions were deemed favourable.
Share buy-backs took place in 2000 and 2008.

sustainability

Holmen’s development is to be based on a sus-
tainable approach to profitability and use of
resources. The raw materials – wood and recov-
ered paper – and the products are recyclable and
adapted to the ecocycle.
Holmen is taking measures to make efficient
use of electricity and heat, to reduce emissions of
fossil carbon dioxide and to increase energy self-
sufficiency.
The Group is a participant in the UN’s Glo-
bal Compact and thus supports international
guidelines relating to human rights, social condi-
tions, the environment and labour rights.
Holmen’s measures to promote sustainable
development are described in detail in the sepa-
rate sustainability report Holmen and its World.
The report satisfies the conditions for Level A,
the highest of the Global Reporting Initiative’s
reporting levels.

FINANCIAL DEVELOPMENT. Healthy profitability
and a strong financial position create good con-
ditions for development that is sustainable in
the long term. Holmen has a distinct role to
play in a sustainable society by being a success-
ful and profitable company that manufactures
products from natural raw materials.

This creates employment opportunities and
makes it possible to buy input goods, pay taxes
and pay a return to Holmen’s owners and fin-
anciers. Profitability is also a prerequisite for
investments that allow the company to develop
in line with gradual changes in market condi-
tions. In this way, Holmen’s financial targets
support long-term and sustainable financial
development.

SOCIAL RESPONSIBILITY. Holmen’s HR activities
are governed by guidelines, laws and agree-

Holmen and its World
describes Holmen’s activities
towards sustainable develop-
ment. The sustainability re-
port aims to provide clear an-
swers to questions asked by
the Group’s stakeholders
about environmental and so-
cial responsibility and finan-
cial development. The 2009
edition will be published in
English and Swedish in
March 2010 and can be or-
dered on the website. The
Spanish version is expected
to be ready in May.

In 2009, as in previous years,
Holmen was included in sev-
eral corporate indices for sus-
tainable development and so-
cial responsibility. Inclusion in
such indices signifies that the
company is deemed to act re-
sponsibly in financial, envi-
ronmental and social respon-
sibility issues. Holmen is, for
instance, listed among Swed-
bank Robur’s Ethica and Ban-
co fund families, the FTSE-
4Good Index Series, Nasdaq
OMX/GES Nordic Sustaina-
bility Index, OMX GES Sus-
tainability Sweden Index,
Storebrand’s SRI Index and
SIX STARS Sustainability
Index.

Global Reporting Initia-
tive (GRI) issues globally
accepted guidelines (G3)
for sustainability reporting.
Holmen has adhered to these
guidelines for several years,
and the sustainability report
for 2009 satisfies the highest
reporting standard, Level A.
This has also been verified by
the audit firm KPMG.

1 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

Employees at Braviken Paper mill.

ments. The main emphasis is on skills supply,
leadership and organisation. Holmen has set a
number of targets for human capital, leader-
ship, performance reviews, the number of
industrial accidents and the proportion of
female managers. Our sustainability report
Holmen and its World details these targets.

The results are followed up via key indica-
tors and Holmen Inblick, the employee survey.
Employee surveys are carried out every other
year and, as of 2009, at all of Holmen’s units.
The results provide a foundation for strategic
HR activities and local action plans.

Holmen takes systematic action to identify

and develop employees with the potential to
advance to more qualified tasks. Holmen’s tar-
get is to fill at least 75 per cent of all manage-
ment vacancies in the Group through internal
recruitment. Management training pro-
grammes have been expanded, in that all new
managers now have a local mentor and under-
go an induction course.

Each year significant resources are ear-

marked for skills development. All the business
areas conduct numerous training programmes.
The average Holmen employee receives around
40 hours of training each year.

Holmen is taking long-term measures to cre-
ate a stable basis for future recruitment, includ-
ing close cooperation with universities and col-
leges and offering summer jobs to young people.
Holmen endeavours to help employees
affected by company restructuring by offering

B u s i N E s s C O N C E P T, s T R a T E g y a N D g O a L s

relocation, early retirement and financial sup-
port for training.

Holmen takes joint action with the union
organisations on issues concerning health, safe-
ty, equal opportunities, competence develop-
ment and reductions in the workforce. All poli-
cies are developed together with or have the
support of union organisations.

ENVIRONMENTAL RESPONSIBILITY. Environmental
aspects of Holmen’s business are regulated by
laws and permits in each country. The organisa-
tion and management of the Group’s environ-
mental activities are based on the Group’s envi-
ronmental policy. The policy clarifies the
importance of energy and climate issues to the
business. The environmental impact of produc-
tion is within the limits laid down by environ-
mental authorities.

The Group’s forests are managed with the
long-term goal of increasing wood production,
while also providing a habitat for the many
species living there. A new silviculture pro-
gramme has been developed which is expected
to be able to further boost growth in Holmen’s
forests and create suitable conditions for natu-
rally occurring plants and animals to flourish in
the forest habitat in the long term. The Group
also has the goal of increasing its extraction of
biofuels from the forests in response to the
growing demand from biofuel-based energy
production.

Holmen’s industrial and forestry operations
are certified in accordance with ISO 14001. The
forestry operations are also certified in accord-
ance with the Forest Stewardship Council
(FSC) and the Programme for the Endorsement
of Forest Certification schemes (PEFC).

Holmen takes a pro-active approach to meas-
ures that contribute to sustainable development
and help to reduce the impact on climate. Hol-
men is affected by the rules in the Kyoto Proto-
col regarding trading in emission rights, because
the Group’s facilities have been included in the
system since 2005. Holmen supports improve-
ment of energy efficiency and expansion of car-
bon neutral energy sources, such as hydro
power, wind power and nuclear power.

In Sweden and the UK, Holmen participates

in voluntary energy-efficiency improvement
programmes that offer energy-intensive indus-
tries an alternative to energy taxes. This focuses
internal attention on energy issues and is
expected to increase energy efficiency and
reduce climate change. The energy management
systems in place at the Group’s Swedish sites
and at Workington Mill were introduced at
Holmen Paper Madrid in 2009.

Holmen actively identifies and implements

energy saving measures. The Group’s energy
and climate targets, described in more detail in
the sustainability report Holmen and its World
2009, are to make energy use more efficient and
reduce the use of fossil fuels.

For each tree that Holmen harvests, the company plants three new ones.

Proportion of females

18.6

15.8

Managers in the Group
Employees in the Group

Industrial accidents
with sick leave,
number per 1 000 employees

31.2

20.9

Swedish entities
The Group

Sick leave

3.8
3.7

Swedish entities
The Group

Fossil carbon dioxide

kg/tonne
end product

200

150

100

109

Swedish entities
The Group

H O L M E N A N N U A L R E P O R T 2 0 0 9

1 1

H o l m e n P aPe r

Holmen Paper

Holmen Paper is the fifth largest printing paper manufacturer in Europe. Its
share of the European market is 10 per cent for standard newsprint and more
than 30 per cent for MF Magazine, book and directory paper.

operations in 2009

Global demand for printing paper was down
during the year, and European demand for
printing paper fell by about 15 per cent. Deliv-
eries of newsprint to Europe declined by 14 per
cent compared to 2008. Combined with weak
demand outside Europe, this resulted in low

capacity utilisation at European producers.
Despite this, little capacity was permanently
shut down in the market, which put supply and
demand out of balance. Demand for MF Maga-
zine in Europe was 20 per cent less in 2009
than in 2008. SC paper declined by 9 per cent
and coated grades by 22 per cent.

n Facts

2009

2008

Net sales, SEKm

9 303 10 443

Operating profit/loss, SEKm

340

-81

Operating profit excl. items
affecting comparability, SEKm

Investments, SEKm

340

287

280

679

Operating capital, SEKm

8 789 10 237

Average number of employees

2 301

2 584

Share of sales in Europe, %

Deliveries, ’000 tonnes

1 745

2 044

SEKm

1 000
SEKm

1 000

750

500

250

1 2

H O L M E N A N N U A L R E P O R T 2 0 0 9

Operating proﬁt
Operating proﬁt

340

10.0
%

10.0

7.5

5.0

3.5

2.5

0.0

SEKm

12 000

9 000

6 000

3 000

Operating proﬁt
04
Return on operating capital
Operating proﬁt
Excl. items affecting comparability
Return on operating capital
Excl. items affecting comparability

Net sales and
operating margin

9 303

3.7

Net sales
Operating margin
Excl. items affecting comparability

Holmen Paper’s operations during the year
concentrated on an extensive quality drive and
product development, in parallel with cost cuts
and efficiency improvements. At Hallsta Paper
Mill, the workforce was reduced by about
30 per cent after the closure of PM 2 and the
pulp line for recovered paper in 2008. The
workforce at Braviken Paper Mill will be
reduced by about 100 people when a new
organisation is introduced in spring 2010.
At the paper mill in Madrid, work continues
aimed at improving the efficiency of processes
as well as cutting costs.

Operating profit for 2009 was SEK 340 mil-

lion, compared to SEK 280 million for 2008
(excluding items affecting comparability). The
improvement was attributable to higher sales
prices, but the weak market entailed extensive
production cutbacks and increased sales out-
side Europe. Lower costs of wood and recov-
ered paper made a positive impact on profit,
while energy costs rose.

market

Holmen Paper’s market strategy focuses on
Europe and is to develop competitive products
and business concepts in wood-containing
printing paper for specific customer segments:
daily newspaper publishers, retailers, printers,
and book and directory/manual publishers.
Holmen Paper’s share of the market for stand-
ard newsprint is around 10 per cent in Europe.
For newsprint-related niche products, such as
MF Magazine, book and directory paper,
Holmen Paper’s overall share of the European
market is more than 30 per cent. The European

market for wood-containing printing paper
totalled more than 21 million tonnes in 2009,
which is 4 million tonnes – or about 15 per cent
– less than in 2008.

NEWSPRINT. About 9 million tonnes of the Euro-
pean market for wood-containing printing
paper consisted of newsprint. Paid-for daily
newspapers account for the majority of con-
sumption. Free newspapers, which proved
more susceptible to changes in the economy
due to heavy dependence on advertising
re venue, fell in 2009, to account for about
5 per cent of consumption.

Newsprint demand is increasingly affected
by the widening range of electronic media and
changing media habits of consumers and adver-
tisers. Investments in radio, television and the
internet are noticeable among traditional news-
paper publishers.

Global demand for newsprint was down by
15 per cent during the year. The largest declines
occurred in North America and Europe, by
around 26 and 14 per cent respectively. Growth
was mainly evident in Asia. Holmen Paper’s
newsprint deliveries decreased by 16 per cent,
somewhat more than the average, due to the
closure of capacity, reorganisation to focus on
other products, and falling demand.

Following price cuts in 2008, newsprint
prices were increased in 2009. For 2010, the
prices are falling again.

The market was weak throughout the year.
Rising exports outside Europe partially offset
weak European demand, although capacity uti-
lisation for west-European suppliers ended at
84 per cent.

H o l m e n P aPe r

Successful TmP
investment

Braviken’s new line for
thermo-mechanical pulp
(TMP) production was
brought into operation in the
latter part of 2008, following
investments of about SEK
500 million. One year on, the
effects are clear. The energy
savings, along with lower
consumption of chemicals,
correspond to more than
SEK 90 million per year.
Thanks to improved steam
recycling, oil consumption
has fallen dramatically, from
25 000 to 14 000 cubic me-
tres per year.

The pulp produced is also
stronger and has enhanced
optical properties. Braviken
has therefore been able to
produce Holmen XLNT with a
grammage of as low as
36 grams, and has won mar-
ket shares from SC paper
with a grammage of 45
grams.

The pulp production is con-
tinually studied and further
developed, and there is po-
tential for additional improve-
ments to energy consump-
tion, productivity and pulp
properties.

Products, %

End-products, %

Leading producers 2009
Printing paper, capacity in Europe

Coated

Advertising print,
magazines
and books

Daily press

MF Special

Standard newsprint

Directories/manuals

UPM

Stora Enso

Norske

Myllykoski

Holmen

SCA

Burgo

’000 tonnes

2 000

4 000

6 000

8 000

Standard newsprint
SC

MF Special
Coated

H O L M E N A N N U A L R E P O R T 2 0 0 9

1 3

H o l m e n P aPe r

european printing
paper market 2009

lWc/MWc (coated paper)
6 million tonnes

Substantial market-
related production stop-
pages were implemented at
all of Holmen Paper’s mills
in 2009.

magazine titles are two positive driving forces.
Holmen Paper has relatively small volumes in
SC and coated paper, and deliveries of both fell
by about 5 per cent in 2009 – without taking
account of the closure of Wargön Mill.

Change and development

Newsprint will continue to form the founda-
tion of Holmen Paper in future, but action has
been taken for several years now to reduce
exposure to this area and increase the focus on
more advanced and selected products in the
MF Special product area. Holmen Paper enjoys
a strong position here with products such as
Holmen Book and Holmen XLNT.

Focused further development is ongoing and

largely concentrates on projects for enhance-
ment of MF Special.

Holmen Paper constantly cuts costs and
improves efficiency to adapt to the changing
market.

A new organisation with 30 per cent fewer

employees was introduced at Hallsta Paper
Mill in 2009. In September, Holmen announced
staff cuts affecting about 100 people at Braviken
Paper Mill; this will also entail a new organi-
sation and noticeable profit impact in 2010.

Variable costs are continually reviewed. As
part of this, Holmen constantly improves the
efficiency of its machinery and its consumption
of input goods and energy.

An in-house project to boost the quality of
product characteristics, technical support and
delivery precision was stepped up in 2009 and
is making rapid progress.

MF SPEcIal. This product
area contains the product
groups MF Magazine,
book paper and telephone
directory paper. Holmen
Paper’s strength lies in the
product group MF Maga-
zine, comprising products
between standard news-
print and magazine paper
(SC and LWC paper) on the
quality scale. Holmen aims
to offer alternatives to, in
particular, SC paper that
are cost effective and have
potential for further devel-
opment. Holmen Paper’s
deliveries of MF Magazine
increased by 5 per cent, or
20 000 tonnes, to 400 000
tonnes. The general market trend for MF Maga-
zine in Europe in 2009 was a 20 per cent drop
in demand.

Book paper is a niche product that has
become more important to Holmen Paper and
is an area in which the company achieved posi-
tive results of product development during the
year. Holmen’s deliveries rose by 23 per cent in
2009. The European market for wood-contain-
ing book paper totals about 500 000 tonnes per
year.

The market for telephone directory paper is
dominated by a small number of strong buyers
in each country. Demand was down by around
20 per cent in 2009, as were Holmen Paper’s
deliveries, and the long-term market trend is
negative. Holmen Paper has a market share of
about 35 per cent.

MaGaZINE P aPER. 2009 was also a gloomy year
for magazine paper, that is, SC and coated
paper. The European market fell by 17 per cent
to 10 million tonnes. Magazine publishers,
retailers and printers are the largest customer
categories. Despite the drastic reduction in
2009, there are real hopes of some recovery
propelled by investments in advertising.
Increases in addressed direct mail and new

Sc paper
4 million tonnes

e
c
i
r
P

MF Special 2 million tonnes

Standard newsprint
9 million tonnes

lWC/mWC
Magazines
Journals
Weekly magazines
Product catalogues
Advertising print

SC paper
Journals
Weekly magazines
Product catalogues
Advertising print

mF Special
Advertising print
Supplements
Books
Telephone directories

Standard
newsprint
Daily newspapers
Advertising print
Supplements

1 4

H O L M E N A N N U A L R E P O R T 2 0 0 9

An example of product development: Holmen XLNT

H o l m e n P aPe r
n oTe r

market
Holmen Paper’s marketing
department and technical customer
service identify what the market
demands from printing paper. These
are key channels for obtaining infor-
mation about customers’ needs and
requirements for product develop-
ment. Customer surveys are also
used for this purpose.

ProDUCT CoUnCIl
Holmen Paper’s product council
identifies possible product
develop ment based on the busi-
ness area’s strategic goals and
identified market needs deemed
to have good future potential.
Holmen Paper has a high percentage of
MF Special in its product portfolio. MF Special is one of
Holmen Paper’s strategic strengths that are important to safe-
guard. SC paper, which Holmen Paper only manufactures on a small
scale, is also a significant product for certain end users. SC paper is a more
advanced product than MF Special. Holmen Paper therefore saw the
potential of developing MF Special, bringing it into a higher product
class that is close to SC paper in terms of quality. The key question
was: Is it possible to create a type of MF Special paper with the
properties of SC paper?

DeCISIonS
Profitability analyses and
technical prerequisites form
the basis of decisions.
The preliminary study showed that the
project had good prospects for success.
The market clearly signalled that the concept
was interesting, so Holmen decided to continue
the project.

laUnCH
after testing, the new product
is ready for its market launch.
Close cooperation with reference customers
led to a breakthrough, which has made
Holmen Paper the market leader in this type
of paper. The market is very positive about
this MF Special product, which has been
named Holmen XLNT.

Strategic goals
Holmen Paper’s product portfolio
must follow the strategy set by the
business area. Holmen Paper’s
strategy is to reduce exposure to
standard newsprint, which accounts
for more than half of production
volume, and increase exposure to
products with higher value added,
such as MF Special.

PrelImInary STUDy
a preliminary study is initiated to identify technical

possibilities and limitations as well as required

investments. estimates are made to calculate

the costs of the projects.
SC paper has a higher gloss than MF Special products.
The preliminary study investigated how to increase the
gloss of MF Special paper. The paper pulp, filler and
calendering process were important parameters in the
study. Discussions took place with various parties, in-
cluding machinery manufacturers and chemicals suppliers.

ProjeCT anD PIloT TeST

after a go-ahead decision, a project is started
to develop the new product. Pilot testing
is carried out. Qualification testing on key
customers’ equipment is an important step
prior to product launch.
Full-scale tests were performed to test the mixture of pa-
per pulp and filler when combined with various calender-
ing processes used to press the paper. Holmen carried out

test printing on key customers’ equipment and then made
certain requisite adjustments. Gradual development work led to

step-by-step improvements.

FInal ProDUCT

I g g eS UnD P aPe r b o a rD

Iggesund Paperboard

Iggesund Paperboard is the third largest manufacturer of virgin fibre board in
Europe, with a market share of about 20 per cent. Iggesund Paperboard has
a leading market position in solid bleached board in Europe, but is also
a significant operator in folding boxboard.

operations in 2009

The virgin fibre board market was weak, par-
ticularly in the first half of 2009. The deteriora-
tion in market conditions was caused by the
economic slowdown initiated by global finan-

cial unease with a slump in demand and subse-
quent destocking. Overall, the European mar-
ket for virgin-fibre-based board declined by
9 per cent. Deliveries from Europe to non-
European markets declined by 14 per cent.

n Facts

2009

2008

Net sales, SEKm

5 023

4 860

Operating profit, SEKm

Investments, SEKm

419

260

320

327

Operating capital, SEKm

4 114

4 254

Average number of employees

1 669

1 670

Share of sales in Europe, %

Deliveries, ’000 tonnes

477

494

SEKm

1 000
SEKm

1 000

750

500

250

Operating proﬁt
Operating proﬁt

10.0
%

7.5

5.0

340
419

3.5

9.9

2.5

0.0

SEKm

6 000

4 500

3 000

1 500

Operating proﬁt
Return on operating capital
Operating proﬁt
Excl. items affecting comparability
Return on operating capital

Net sales and
operating margin

5 023

8.3

Net sales
Operating margin

1 6

H O L M E N A N N U A L R E P O R T 2 0 0 9

Capacity shutdowns prevented capacity utilisa-
tion among European producers from falling
to the same extent as demand. Prices were
increased during the year for both solid bleached
board and folding boxboard. Iggesund Paper-
board increased prices for folding boxboard in
the UK market in the autumn and announced
price rises in the rest of Europe for 2010.

In the autumn, a decision was made to per-
manently shut down the oldest board machine
at Workington Mill and to upgrade the remain-
ing board machine to obtain higher capacity
and improved quality. The new annual capacity
of the mill is 200 000 tonnes – a volume that is
more appropriate for the market. The change
entails personnel cutbacks affecting about
100 people.

Operating profit for 2009 was SEK 419 mil-

lion (320). The improvement was thanks to
higher prices largely due to currency move-
ments with a weaker pound (sterling) and
Swedish krona but also from the price rises
implemented in the second half of 2008. How-
ever, production cutbacks and increased manu-
facturing costs had a negative effect on earn-
ings. Provisions and impairment losses result-
ing from the shutdown of the board machine
had a negative impact of SEK 75 million on
profit during the year.

market

2.6 million tonnes. For a few years, the annual
market growth rate was higher than usual,
around 5 per cent, but it declined in 2008 and
2009, owing to the economic slowdown and
financial unease. The largest European markets
for solid bleached board and folding boxboard
are Germany and the UK, with 23 per cent and
14 per cent of consumption respectively. Several
European markets are decreasing, with eastern
Europe showing a somewhat more marked
decline. In recent years Asia has overtaken
North America as the largest market for virgin
fibre board. Iggesund Paperboard’s share of the
European virgin fibre board market is about
20 per cent, and the company is the clear mar-
ket leader in Europe in the solid bleached board
segment.

Iggesund Paperboard concentrates its sales
on two product segments: packaging board –
including tobacco board as an important sub-
segment – and paperboard for graphics appli-
cations. The main customer categories are con-
verters, who make packaging, and wholesalers
and printers, who buy paperboard for use in
graphics printing.

Iggesund Paperboard’s Invercote and Incada
brands lead the European paperboard market.
Invercote solid bleached board (produced at
Iggesund Mill) is the number-one brand, and
Incada folding boxboard (produced at Work-
ington Mill) is ranked second.

Global consumption of paperboard amounts
to roughly 32 million tonnes per year. The Euro-
pean market for the grades produced by Igge-
sund – virgin-fibre-based solid bleached board
and folding boxboard – is approximately

PacKaGING BOaRD. The type of virgin-fibre-
based board manufactured by Iggesund Paper-
board has a variety of uses, including packag-
ing for confectionery, pharmaceuticals, cosmet-
ics and perfume. The trend in private consump-

I g g eS UnD P aPe r b o a rD

lower consumption
of fossil fuels

Long-term environmental work
has been conducted for dec-
ades at Iggesund Mill. The aim
is to become self-sufficient in
electricity and independent of
fossil fuels. The energy supply
is based on heat from the mill’s
own processes, and electricity,
of which nearly half is produced
at the mill.

In 2009, carbon dioxide emis-
sions from fossil fuels at Igge-
sund Mill fell by 65 per cent,
through energy savings and in-
vestments of about SEK 100
million in greater capacity for
use of biofuels. The decrease
corresponds to emissions from
17 500 cars each driven 15 000
km per year.

Even before these measures
were taken, nearly 90 per cent
of the mill’s internally generated
electricity supply came from
biofuel; this proportion is now
rising to 95 per cent and means
that manufacture of Invercote
produces virtually no fossil car-
bon dioxide emissions.

Iggesund Mill has a surplus of
thermal energy that runs the
mill’s production process, dries
sawn timber in Holmen
Timber’s sawmill and heats
more than 1 000 homes nearby.

Products, %

End-products, %

Leading producers 2009
Virgin ﬁbre board, capacity in Europe

Folding
boxboard

Graphics

Consumer packaging

Solid bleached
board

Stora Enso

M-real

Holmen

Careo

International
Paper

Mayr-Melnhof

’000 tonnes

400

800

1 200

Solid bleached board (SBB)
Folding boxboard (FBB)

H O L M E N A N N U A L R E P O R T 2 0 0 9

1 7

I g g eS UnD P aPe r b o a rD

european paperboard
market 2009

tion, which declined in 2009 from a global per-
spective, is one factor that has a major impact

on demand for packaging; as a result,

demand for board used for this purpose

Sbb
550 000
tonnes

Fbb 2 000 000 tonnes

fell during the year.

Manufacturing operations in Europe
continue to migrate eastwards, part-
ly due to rising private consump-
tion there and partly because

eastern Europe has been trans-
formed, from being a net

SUb 450 000 tonnes and
lPb 1 900 000 tonnes

WlC 3 400 000 tonnes

importer of quality pack-
aging, to a net exporter.
The largest customer
segment for packag-
ing board com-

Price

prises converters.
The demands
made on packag-
ing, and thus also on packaging materials, are
constantly growing. Convenience, quality
requirements and the need for brand-name pro-
filing are giving rise to customised functions in
packaging solutions. The appearance of pack-
ages in stores is becoming an increasingly
important factor that affects the choice of
material and design. In the chocolate and con-
fectionery segment, Iggesund Paperboard ben-
efits from the stringent demands for packaging
to be neutral in terms of odour and taste.
Tobacco packaging is the largest sub-
segment in packaging board. The market for
tobacco packaging is stable and is characterised
by a small number of large international cus-
tomers who demand outstanding quality and
service. Customers’ search for new design solu-
tions and the need to minimise initial costs in
product launches have benefitted Iggesund
Paperboard as a supplier. Invercote was former-
ly the main brand supplied to the tobacco
industry, but Incada is now also used to pack-
age tobacco products. With its two grades of
paperboard, teamed with the finishing options
created by the company’s lamination facilities
in Strömsbruk, Iggesund Paperboard offers the
market’s broadest product portfolio suited to
the needs of the tobacco industry. Geographi-
cally, the printing and conversion of cigarette
packaging are still migrating eastwards.

GRaPHIcS BOaRD. The graphics market uses
paperboard for covers of publications, cards
and advertising materials. The large number of
end customers in the market for graphics board

SBB: Solid bleached board
FBB: Folding boxboard
SUB: Solid unbleached board
LPB: Liquid packaging board
WLC: White lined chipboard
(recovered/de-inked
fibre board)

Sbb
Prestigious products
Graphics products
Confectionery
Cigarettes

Fbb
Confectionery
Pharmaceuticals
Cigarettes
Frozen goods
Skin care and
sanitary articles

SUb, lPb
Beverages
Dairy products
Dried goods

WlC
Dried goods
Household products

1 8

H O L M E N A N N U A L R E P O R T 2 0 0 9

means that the greater part of volume is sold
through a wide network of wholesalers. The
latter have been under intense financial pres-
sure for several years, which has led to a grad-
ual increase in consolidation of these players.

High and uniform quality fuels wholesalers’
interest in Invercote and Incada. The properties
of these paperboards make them very versatile.
They are particularly in demand for graphics
applications thanks to their good colour repro-
duction.

The graphics printing market, with its
dependence on marketing activity, is the area
that has been most adversely affected by the
weak global economy.

Development

Productivity at Iggesund Paperboard’s facilities
has increased. Marketing has intensified and
the product mix has gradually been modified to
match trends in market demand. Improvements
have been achieved through several major
rebuilding projects and a series of smaller
investments to enhance efficiency, as well as an
extensive product development programme.
The new version of Invercote is a result of
rebuilding board machine 2 at Iggesund Mill in
the autumn of 2007, which was successfully
brought on-line in autumn 2008. The new tech-
nology platform is the starting point for addi-
tional development towards better and more
consistent quality. Intensive development is in
progress to further refine the printing surface
and improve mechanical properties. This aims
to increase scope for new and more advanced
designs for customers’ packaging, using less
material, yet maintaining the same protective
properties.

Iggesund Paperboard has a tradition of con-
tinously developing Invercote and Incada. As of
2008, Invercote is available in a coated version
with a biologically degradable surface which is
compostable. This makes it suitable for food
packaging and beverage cartons, and sales of
the paperboard picked up in 2009.

In recent years, product support with related

service has developed into an increasingly
important part of Iggesund Paperboard’s offer-
ing. This is designed to meet customers’
demands for shorter lead times and to enable
customers to improve their return through the
assistance of Iggesund Paperboard’s organisa-
tion for market-based technical service.

An example of product development: the new Invercote

I g g eS UnD P aPe r b o a rD

Strategic goals
Iggesund Paperboard aims to offer
performance products which
justify a higher market
price than bulk goods. This is
why Iggesund Paperboard must
be at the forefront of the technical
development of paperboard.

PrelImInary STUDy
a preliminary study is initiated to identify technical pos-
sibilities and limitations as well as required investments.
The study includes quantification of market trends and

estimated shifts in demand. estimates are pre-
pared to calculate the costs of the projects.
The core of the study was to be able to recreate all of
Invercote’s properties, despite the fundamental structur-
al change, while leaving scope for future development.
Customers’ requests were key factors in the study. The
development work took place at the Paperboard Devel-
opment Centre in Iggesund. The experience and know-
how built up over a long time enabled us to examine the
results of various pulp mixtures and recipes for coatings and

pigments.

ProjeCT anD PIloT TeST

after completion of the rebuilding project, work

starts on developing the new product and
pilot tests are carried out. Test printing on
key customers’ equipment and evaluation
with these customers are important steps
prior to product launch.
Firstly, the old Invercote was recreated, but with a new
structure. In parallel a new version of Invercote was devel-
oped with modified properties and new whiteness. Some of
the tests were performed on Iggesund’s own pilot coating equip-

ment. To verify the quality of the properties, the new Invercote was tested
extensively among customers and end users.

FInal ProDUCT

market
Iggesund Paperboard’s sales team
and market technicians identify what
the market demands from paperboard.
This information often has a bearing on
product properties and the customer’s
production economics and is
conveyed to the mills by teams of
market representatives and
product managers.

ProDUCT CoUnCIl
Iggesund Paperboard’s product
council identifies potential for
product development based on
strategic goals, market require-
ments and technical possibilities.
To create opportunities for further develop-
ment of Invercote, Iggesund Paperboard saw a
need to catapult production technology 20 years
into the future. This innovation was considered possible by creating
a type of paperboard made of three layers instead of the existing five
– without lowering performance. It was also important that the new
product’s properties were at least as good as those of the older
established grade of Invercote board.

DeCISIonS
Profitability analyses and techni-
cal prerequisites form the basis
of decisions.
The preliminary study led to a project
plan, which included rebuilding work on
one of the two board machines at Iggesund
Mill. Holmen decided to invest SEK 400 million
in the rebuilding of board machine 2.

laUnCH
after completing test printing and
obtaining feedback from key cus-
tomers, the product is ready for its
market launch.
The new Invercote is not simply as good as
the previous generation of the product. The
new version is whiter, more uniform in struc-
ture and has better colour reproduction proper-
ties. In conjunction with the launch, new customer
materials and a new website for paperboard users were introduced.
The company also organised major customer events, attracting partici-
pants from all over the world, to provide information about the new
product.

H o l m e n TIm b e r

Holmen Timber

Holmen Timber produces pine sawn timber at Iggesund Sawmill. The new Braviken
Sawmill for spruce construction timber is being built, and production is scheduled
to start at the turn of 2010/2011.

operations in 2009

The market for sawn timber was weak in the
early part of 2009 but gradually grew stronger
due to short supply. The prices of sawn timber
rose as of spring 2009, following the sharp
drop from peak prices in mid-2007.

Holmen Timber’s deliveries rose by 18 per

cent, to 313 000 cubic metres, as a result of
higher production at the sawmill in Iggesund.
Building of Holmen Timber’s new sawmill
at Braviken Paper Mill near Norrköping start-
ed in August. The majority of the equipment
and construction contract have been procured,
and ground work has started.

n Facts

Net sales, SEKm

Operating profit, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Share of sales in Europe, %

Deliveries, ’000 m3

2009

2008

553

110

396

114

313

499

366

110

266

SEKm

200
SEKm

200

150

100

Operating proﬁt
Operating proﬁt

80
%

6.2

SEKm

800

600

400

200

Operating proﬁt
04
Return on operating capital
Operating proﬁt
Excl. items affecting comparability
Return on operating capital
Excl. items affecting comparability

Net sales and
operating margin

553

3.8

Net sales
Operating margin
Excl. items affecting comparability

2 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

capacity, production can be increased to
750 000 cubic metres in future. Production is
scheduled to start at the turn of 2010/2011,
and the customer base will consist of builders’
suppliers, planing mills and manufacturers of
buildings and roof trusses. Construction using
wood on a large scale is increasing in Europe
and worldwide. The main markets for products
from Braviken Sawmill will be Scandinavia and
the UK, although products will also be sold
elsewhere in Europe and in the USA.

The combination of Holmen Paper’s exist-
ing paper mill at Braviken and the new sawmill
will result in significant synergies, not only
through wood sourcing but also because the
sawmill can utilise the infrastructure already in
place at the site. It will also open the door to
efficient energy solutions, as the Group will
gain access to substantial supplies of biofuels
from the sawmill and forest fuels in connection
with harvesting. Excess heat from the paper
mill can also be used in drying the sawn spruce.

IGGESUND SAWMILL. Since 2002, production at
Iggesund Sawmill has risen by more than 50
per cent, to 291 000 cubic metres in 2009. This
growth is thanks to optimal utilisation of dry-
ing capacity and various investments, mainly in
a new grading unit and a new log infeed.

VALUE-ADDED PRODUCTS. Holmen Timber is
working on technical sales and product renewal
to increase sales of value-added products. These
products are classed as industrial wood and
account for around a third of total volume. The
product area for finger joint window compo-
nents continued to advance during the year. The
new production facilities at Braviken will make
Holmen Timber a one-stop supplier of con-
struction and joinery timber, reinforcing the
business area and providing synergies in logis-
tics and sales.

Recruitment of personnel began during the
year; the total number of employees is estimat-
ed at about 110.

Operating profit amounted to SEK 21 mil-

lion (13). Higher deliveries and lower raw
materials costs had a positive impact, although
the average price level was lower.

market

The consumption of sawn timber in Europe in
2009 amounted to just over 80 million cubic
metres, a decline from the preceding year. Sup-
ply was down more than demand, as a result of
high prices for and a shortage of raw materials,
sawmills’ difficulties in finding customers for
wood chips, and capacity cuts. As a result,
export prices – which fell in 2008 and early
2009 – rose during the second half of 2009.

The Swedish sawmill industry was not hit as

hard by the recession as its counterparts were
in other parts of Europe, such as Finland and
the Baltic countries. Although global consump-
tion decreased, export volumes from Sweden
rose in 2009, as a result of a better competitive
position thanks to the weaker Swedish krona
and the good supply of wood raw materials.
At present the European market is charac-
terised by low consumption and low stocks at
producers, importers and end customers. In the
longer term, consumption growth is expected
to continue as the economy recovers.

Holmen Timber’s share of the sawn timber
market in Europe is less than one per cent, and
the market is fragmented with numerous small
operators. Iggesund Sawmill saws pine, and its
customers are primarily in the joinery industry,
including manufacturers of window frames,
solid wooden floors and edge-glued panels, as
well as planing mills. The main markets are
Scandinavia, the UK, North Africa and the
Middle East. North Africa and the Middle East
were formerly supplementary markets but have
grown to be significant. Sales to these markets
take place via the sales company Uni4 Market-
ing, which is partly owned by Holmen Timber.

Development

BRAVIKEN SAWMILL. The plan is that the
new sawmill, which will be the largest in
Scan dinavia, will have capacity to produce
550 000 cubic metres of spruce construction
timber a year. By investing in greater drying

H o l m e n T i m b e r

breaking the ground
for braviken Sawmill

Capacity target:
750 000 cubic metres.
Product: Construction timber.
raw material required: 1.5
million cubic metres of spruce
saw timber.
main market: Europe.
employees: About 110 people.
Area: 40 hectares.
Start of production: Year-end
2010/2011.

more construction
using wood

In recent years, two thirds of
Sweden’s 290 municipalities
have started major construc-
tion projects using wood for
everything from blocks of flats
and public buildings, such as
sports halls, to entire town dis-
tricts. Nearly 120 wooden
bridges are built each year,
mainly for pedestrians and cy-
clists but also some for motor
vehicles. However, the biggest
increase is in use of wood for
extensions and additions,
where extra storeys are built
onto residential properties.
Modern wood construction is
climate smart and competes
with conventional techniques
with its rational methods, short
delivery times and better ener-
gy and climate solutions.

H O L M E N A N N U A L R E P O R T 2 0 0 9

2 1

H o l m e n S k o g

Holmen Skog

Holmen Skog manages the Group’s forests, which cover more than one million
hectares of productive forestland in Sweden. The wood volume amounts to 119 million
forest cubic metres, making Holmen Sweden’s fourth largest forest owner.

operations in 2009

The Swedish forest industry’s demand for wood
fell dramatically at the end of 2008, and the
ongoing very low demand defined the first quar-
ter of 2009. Later in the spring, the situation
improved for the sawmills with a renewed
increase in the need for saw timber. This led to a

timber shortage during the autumn, because the
supply of wood did not rise at the same rate.

The situation for pulp and paper manufac-
turers gradually improved during the second
half of 2009, and demand for pulpwood
returned to normal levels. Stocks were relative-
ly low at year-end.

n Facts

Operating profit, SEKm

Investments, SEKm

2009

2008

605

632

Operating capital, SEKm

11 384 11 415

Average number of employees

446

413

Harvesting in company forests,
million m3

2.9

2.6

Productive forestland,
’000 hectares

1 032

1 033

Wood volume, million m3

119

118

SEKm

800

600

400

200

Operating proﬁt

Harvesting

605

5.3

’000 m3

4 000

3 000

2 000

1 000

2 897

Operating proﬁt
Return on operating capital
Excl. items affecting comparability

Harvesting in company forests

2 2

H O L M E N A N N U A L R E P O R T 2 0 0 9

The access to forest fuel – mainly branches,

treetops and bark – generally remained good
throughout Sweden. Buyers were well supplied
in the second half of the year.

The prices of pulpwood and timber fell at

the start of the year. Pulpwood prices then
remained virtually unchanged, while timber
prices rose during the second half of the year as
a result of strong demand.

The prices of imported wood have varied
over time in the same way as prices in Sweden.
Exports of roundwood from Sweden were mar-
ginal.

Holmen Skog’s operating profit reached
SEK 605 million (632). The deterioration was
due to lower wood prices.

market

The Swedish forest industry consumes about
75 million cubic metres (m3sub – solid volume
under bark) of wood per year. Most of the wood
comes from forests in Sweden. Of the wood har-
vested in Sweden, saw timber accounts for
about 50 per cent, pulpwood about 40 per cent
and forest fuels roughly 10 per cent.

Competition for Swedish wood as a raw
material is increasing, partly because of rising
demand for biofuels used at thermal power
stations.

Wood supply

The Holmen Group’s Swedish facilities con-
sumed 4.1 million cubic metres of wood in
2009 (4.4 million in 2008).

Holmen Skog obtained 9.9 million (10.4)

cubic metres of wood, of which 5.6 million
(5.7) was sold to external customers.

The Group harvested 2.9 million cubic

metres (2.6) in its own forests.

Most of Holmen’s forests are located in
northern Sweden where the Group does not
have any industrial sites. Formerly, wood from
these forests was largely sold to local buyers.
Through logistical and swap arrangements,
Holmen is using more of this wood than previ-
ously in its own facilities, making it possible to
reduce the proportion of expensive imported
wood.

Braviken Sawmill, currently under construc-

tion, will use around 1.5 million cubic metres
of spruce saw timber once it has reached full
capacity. In preparation for this, Holmen Skog

has widened the area from which it obtains
wood for the Norrköping region and rein-
forced its organisation.

Development

INcREaSED HaRVESTING OPTIONS. A significant
proportion of the growth in Holmen’s forests
takes place in young forests that are not ready
for harvesting, so Holmen only harvests slightly
more than 80 per cent of annual growth. As
these young forests age, the extraction of wood
can be increased to the same level as growth.
The effects of the new silviculture pro-
gramme, first introduced in 2006, are also not-
able. It is estimated that the programme has the
potential to raise the growth rate in the Group’s
forests by about 25 per cent in 30 years’ time.
This also means that Holmen will be able to
increase harvesting by the same amount in
future.

The most important measures in the pro-

gramme are greater use of lodgepole pine,
forestland fertilisation, better seedlings and use
of spruce and pine seeds from seed orchards
where seed has been selected from trees with
exceptionally good properties.

NaTURE cONSERVaTION METHODS. Holmen is
working with researchers at the Swedish
University of Agricultural Sciences to develop
methods of nature conservation in forests. Vari-
ous ways of helping to increase the biological
values of forestland are being tested as part of
this collaboration.

GREaTER TRaNSPORT EFFIcIENcY. Holmen
expects to be able to reduce its energy con-
sumption in harvesting and transport of wood
by approximately 15 per cent in the next few
years. This is to be achieved through various
measures, including investment in harwarders –
a combined machine that uses less fuel than tra-
ditional forwarders and harvesters. To reduce
the number of transports, a project is being run
in which trucks are being modified to accom-
modate an extra stack of timber on the trailer.

MORE FOREST FUEl. Holmen Skog is helping to
develop technology for harvesting forest fuel in
response to the growing demand for this fuel.
Holmen has also reinforced its own organisa-
tion for extraction of and obtaining energy
assortment.

H o l m e n S k o g

Holmen’s
forest holdings

Holmen production facilities

H O L M E N A N N U A L R E P O R T 2 0 0 9

2 3

H o l m e n en e r gI

Holmen Energi

Holmen Energi is responsible for the Group’s energy assets and energy supply.
Normal yearly hydro power production amounts to about 1 100 GWh of electricity
and con tributes to Holmen being one-third self-sufficient in electricity.

operations in 2009

Holmen Energi’s hydro power production
amounted to 1 090 GWh (1 128) during the
year, which was 2 per cent lower than during a
normal year. Operating profit amounted to
SEK 414 million (327), and the improvement

mainly stemmed from higher prices. During
the year, construction of the new hydro power
station on the Iggesundsån river was com-
pleted. The new power station replaces three
old ones and has been in operation since
November 2009.

n Facts

Operating profit, SEKm

Investments, SEKm

2009

2008

414

327

Operating capital, SEKm

3 207

3 006

Average number of employees

Company-generated
hydro power, GWh

1 090

1 128

SEKm

500

375

250

125

Operating proﬁt

Production

414

13.3

GWh

1 600

1 200

800

400

1 090

Operating proﬁt
Return on operating capital

Company-generated hydro power

2 4

H O L M E N A N N U A L R E P O R T 2 0 0 9

market

A total of 134 TWh of electricity was generated
in Sweden during the year, 66 TWh of which
came from hydro power. The hydrological bal-
ance, that is, the quantity of water stored in the
Nordic countryside, was somewhat lower at
year-end 2009 than at year-end 2008. The spot
price fluctuated during the year, from
SEK 350/MWh in May, to SEK 500/MWh in
December. The average spot price in Sweden
for 2009 was SEK 393/MWh.

energy supply

Holmen Energi is in charge of supplying
Holmen’s Swedish mills with electricity. The
Group’s total consumption amounted to
4 680 GWh in 2009 (5 156) – mostly used by
its Swedish paper mills. Holmen’s own produc-
tion, at its 21 wholly and partly owned hydro
power stations and back pressure power pro-
duction at the company’s large mills, corre-
sponds to more than 30 per cent of the Group’s
electricity consumption in Sweden; the remain-
der is purchased.

The Group’s exposure to fluctuations in
electricity prices is limited through long-term,
fixed-price supply agreements, complemented
with financial price hedges (see page 64). The
company’s own electricity production is priced
at market prices and reduces the Group’s need
to buy electricity externally.

Development

New sources of eNergy. Holmen Energi also
has responsibility for energy development in a
broader sense. As part of this mandate, in 2009
Holmen set up a unit for competence and
development in biorefining and biofuels for
vehicles and other applications: the Holmen
Biorefinery Development Centre. It has three
employees and is located in Iggesund.

Wind power and peat harvesting are other

key development areas, as is investigation of
possible pellets production. The aim is to pro-
duce 1 TWh of electricity from wind power in
future. Unlike existing wind power stations,
which are often located in coastal or mountain-
ous areas, the sites that Holmen Energi is explor-
ing are situated in forested areas on Holmen’s
own land. Forestry operations within wind
farms will continue more or less as normal.

In 2009, wind power studies were conduct-

ed on Holmen’s land in the area around
Örnsköldsvik and near the mill in Hallstavik.
The measuring activities are expected to be
completed in the spring of 2010. With the help
of a partner, preliminary wind power studies
were conducted on Holmen’s land in the prov-
ince of Östergötland.

eNergy cooPerATIoN. In association with a
number of electricity-intensive companies,
Holmen runs a company called BasEl i Sverige
AB, whose purpose is to improve basic industries’
access to electricity at competitive prices. In 2006
some of these companies, including Holmen, set
up VindIn AB, a company that aims to develop,
construct and operate wind power stations in
Scandinavia. VindIn’s goal is to generate 1 TWh
of electricity from wind power stations each year.
The first wind farm is located at Skutskär and has
been in use since October 2009. Further invest-
ments via VindIn are being investigated.

In collaboration with four other BasEl com-
panies, Holmen has founded a company called
Industrikraft i Sverige AB to enable construc-
tion of its own nuclear power facilities. To this
end, a letter of intent was signed with the
power utility Vattenfall during the autumn to
proceed with projects to secure future baseload
power that does not use fossil fuels.

PeAT hArvesTINg. During the autumn, the first
deliveries of peat were made from Holmen’s
site at Stormyran, north of Örnsköldsvik. Peat
consists of plant material that, owing to a lack
of oxygen, has only partly decomposed into
moss and marsh. The incomplete breakdown
means that much of the energy content of the
biological material is retained, enabling peat to
be used as fuel. Peat harvesting provides a way
of utilising several of the value-creating
resources that the Group has at its disposal.
Stormyran’s annual future production is esti-
mated at 70 GWh.

eNergy sAvINgs. Responsibility for improving
energy efficiency is decentralised to the mills
but coordinated centrally. The new thermo-
mechanical pulp (TMP) line at Braviken,
launched at the end of 2008, has already led
to significant energy savings. At Iggesund Mill,
investments have considerably reduced oil
consumption, and bioenergy now accounts for
95 per cent of the mill’s internally generated
electricity supply.

H o l m e n e n e r g i

Faxälven

Umeälven

Gideälven

Iggesundsån

Ljusnan

Motala Ström

Hydro power stations

H O L M E N A N N U A L R E P O R T 2 0 0 9

2 5

P r oD U C T Io n a nD r a W m a Te rIa lS

Production and raw materials

Holmen manufactures its printing paper, paperboard and sawn timber products in
Sweden, the UK and Spain. The Group’s forest holdings and wholly and partly owned
hydro power stations are located in Sweden. The figures shown here relate to 2009.

Self-sufficiency – energy and fibre

About 60 per cent of the wood required
an nually by the Group is harvested in the
company’s forests.
The Group’s self-sufficiency in electricity is
just over 30 per cent, including the power gen-
erated at the major mills. More than 70 per
cent of the thermal energy used in applications
such as the drying processes when making

paper and paperboard as well as sawn wood is
based on residual products from the company’s
production processes. At Hallsta Paper Mill,
virgin fibre is the only raw material used in pro-
duction, while Braviken Mill uses both virgin
fibre and recovered paper. Production at
Holmen Paper Madrid is based solely on re -
covered paper.
The paperboard mills only use virgin fibre.

n Hallsta Paper mill

n braviken Paper mill

n Holmen Paper madrid

Holmen Paper
raw material: Sprucewood.
Process: TMP and groundwood pulp.
Products: Newsprint, MF Magazine, SC paper and
book paper.
Production capacity: 680 000 tonnes/year.
average no. of employees: 783.

Holmen Paper
raw material: Sprucewood, recovered paper.
Process: TMP and DIP.
Products: Newsprint, coloured newsprint,
directory paper and MF Magazine.
Production capacity: 790 000 tonnes/year.
average no. of employees: 652.

Holmen Paper
raw material: Recovered paper.
Process: DIP.
Products: Newsprint, MF Magazine and LWC
Recycled.
Production capacity: 470 000 tonnes/year.
average no. of employees: 38.

2 6

H O L M E N A N N U A L R E P O R T 2 0 0 9

P r oD U C T Io n a nD r a W m a Te rIa lS

Internal supply
of raw materials

Harvesting in company forests

Timber, ’000 m3 sub
Pulpwood, ’000 m3 sub

Hydro power production, GWh

Holmen Holmen
energi

Skog

group

1 406
1 491
1 090

1 406
1 491
-

-
-
1 090

Production, ’000 tonnes

group Hallsta braviken madrid Wargön

Iggesund

Iggesund
mill Workington Sawmill

Newsprint, standard
MF Special
SC paper
Coated printing paper
Paperboard
Market pulp
Sawn timber, ’000 m3

Consumption
of important input goods*

Wood, ’000 m3 sub
Recycled fibre, ’000 tonnes
Market pulp, ’000 tonnes
Chemicals, fillers and
pigment, ’000 tonnes
Electric energy, GWh
Thermal energy, GWh

823
679
137
75
471
48
291

4 480
813
128

320
4 296
884

62
433
137
-
-
-
-

1 265
-
41

92
1 849
-

479
229
-
-
-
-
-

1 024
340
2

57
1 589
-

282
17
-
75
-
-
-

-
473
-

50
246
360

-
-
-
-
-
-
-

-
-
-

-
11
13

-
-
-
-
254
48
-

1 378
-
-

72
256
-

-
-
-
-
217
-
-

400
-
85

49
326
511

-
-
-
-
-
-
291

656
-
-

0
19
-

* Purchased from outside the production unit. Energy calculated in Madrid’s case takes account of 50 per cent interest in the
Cogeneración unit for the production of electricity and thermal energy. The Group’s consumption of wood is computed net,
taking account of internal deliveries of chips from Iggesund Sawmill to Iggesund Mill.

energy balance, gWh

electric energy

Consumption at mills
Production at mills*
Company-generated hydro power
Net

Thermal energy

Consumption at mills
Production at mills from
recovered liquors, bark and wood residues
purchased fossil fuels*
recovered in the TMP process
External deliveries
Net

-4 680
384
1 090
-3 206

-5 634

2 916
1 097
1 093
115
-413

* Incl. Holmen’s 50 per cent interest in Cogeneración, Spain

Fibre balance

Wood, ’000 m3 sub

Consumption in Sweden
Consumption in the UK
Harvesting in company forests
Net

recovered paper, ’000 tonnes

Consumption in Sweden
Consumption in Spain

Pulp, ’000 tonnes

Consumption at mills
Production at mills
External deliveries
Net

-4 080
-400
2 897
-1 583

-340
-473

-2 134
2 006
48
-80

Sensitivity analysis of
raw materials
Wood, recovered paper, en-
ergy and chemicals account
for Holmen’s principal pro-
duction costs.

Cost trends are mainly
determined by trends in the
prices of input goods and
how well the Group increas-
es production efficiency.

A one percentage point

change in raw materials
costs is estimated to have
the following impact on con-
solidated operating profit:

raw material
costs

Wood, net
Recovered paper
Pulp
Electric energy, net
Other energy
Chemicals

Sekm
Impact on
the result

9
8
1
11
4
14

A one percentage point re-
duction in the cost of wood
would thus raise operating
profit by roughly SEK 9 mil-
lion, after taking account of
the company’s own wood
production.

This estimate does not
consider existing electricity
price hedges.

For a more detailed sensi-
tivity analysis, see the admin-
istration report on page 47.

n Iggesund mill

n Workington mill

n Iggesund Sawmill

Iggesund Paperboard
raw material: Softwood and hardwood pulpwood.
Process: Sulphate pulp.
Products: Solid bleached board, plastic coated.
paperboard and sulphate pulp.
Production capacity: 330 000 tonnes/year (Paperboard).
average no. of employees: 935.

Iggesund Paperboard
raw material: Sprucewood and purchased
sulphate pulp.
Process: RMP.
Product: Folding boxboard.
Production capacity: 200 000 tonnes/year.
average no. of employees: 483.

Holmen Timber
raw material: Pine saw logs.
Process: Sawmilling.
Products: Redwood sawn timber.
Production capacity: 340 000 m3/year.
average no. of employees: 99.

H O L M E N A N N U A L R E P O R T 2 0 0 9

2 7

T He S Ha r e a nD S Ha r eHo lDe rS

The share and shareholders

Holmen was listed on the Stockholm Stock Exchange in 1936, but was called
Mo och Domsjö AB at that time. The class A and B shares are listed on Nasdaq
OMX Nordic, Large Cap, Stockholm.

Stock exchange trading

Holmen’s two series of shares are listed on Nas-
daq OMX Nordic, Large Cap. During the year,
the price of Holmen’s class B shares fell by
SEK 10.5 (5 per cent), to SEK 183. During the
same period the Stockholm stock exchange
rose by 50 per cent. Holmen’s market capitali-
sation of SEK 15 billion (16) represents some
0.4 per cent of the Stockholm stock exchange’s
total value. Holmen’s class B shares reached their
highest closing price for the year, SEK 205.5,
on 28 August and the lowest closing price,
SEK 135, was recorded on 1 April. The daily
average number of class B shares traded was
361 000, which corresponds to a value of

SEK 65 million. The daily average number of
class A shares traded was 400. Some 90 per cent
of the trade took place on Nasdaq OMX Nor-
dic. For the past year or two, the Holmen share
has also been traded on other trading platforms
besides the Nasdaq OMX Nordic exchange,
such as BATS, Burgundy, Chi-X and Turquoise.

return

During the past decade, the Holmen share has
yielded a total return, including reinvested divi-
dends, of around 3 per cent per year. During
that same period, the Affärsvärlden General
Index returned 2 per cent per year.

SEK

450

400

350

300

250

200

150

100

Share price performance for
Holmen class A and B and General index

No of
shares
(000s)

30 000

25 000

20 000

15 000

10 000

5 000

Holmen class A

Holmen class B

Affärsvärlden General index

Number of class B shares traded (000s)

2 8

H O L M E N A N N U A L R E P O R T 2 0 0 9

Total return of Holmen class B and General index
Incl. reinvested dividends, no tax taken into account

Index
225

200

175

150

125

100

n
W
o
c
E
s
r
e
t
u
e
R

:
e
c
r
u
o
S

c
d
r
o
N
X
M
O
q
a
d
s
a
N
d
n
a

Holmen class B

General index (SIX Return Index)

T He S Ha r e a nD S Ha r eHo lDe rS

Share structure
Share

A
B
Total number of shares
Holding of own B shares bought back

Votes

10
1

no. of
shares

no. of Quota
value
votes

22 623 234
62 132 928
84 756 162
-760 000

226 232 340
62 132 928
288 365 268
-760 000

50
50

Sekm

1 131.2
3 106.6
4 237.8

Total number of shares outstanding

83 996 162

287 605 268

Issued call options b shares

758 300

Changes in share capital
2000–2009
2001 Withdrawal of shares bought back

Change in
no. of shares

Total no. Change in share
of shares

Total share
capital, Sekm capital, Sekm

-8 885 827 79 972 451

2004 Conversion and subscription

4 783 711 84 756 162

Shareholder structure at 31 December 2009
L E Lundbergföretagen
Kempe Foundations
Handelsbanken incl. pension fund
Silchester International Investors
Alecta
Swedbank Robur funds
Second Swedish National Pension fund
SHB funds
Lannebo funds
SEB funds
Other

-444.3

239.2

3 998.6

4 237.8

% of capital

% of votes

28.0
7.0
3.1
10.9
3.2
1.7
1.2
1.1
1.1
1.1
41.6

52.0
16.9
9.1
3.2
0.9
0.5
0.4
0.3
0.3
0.3
16.1

Total*

100.0

* of which non-Swedish shareholders
The ten identified shareholders with the largest holdings ranked by the number of votes they control.
Some large shareholders may have their holdings registered under nominee names, in which case they are
included among “Other”.

26.8

8.0

earnings per share (ePS)

Diluted earnings per share equalled SEK 12.0
(7.6). Holmen’s diluted earnings per share aver-
aged SEK 13.9 over the past five years.

Dividend

The Board proposes that the AGM, to be held
on 24 March 2010, resolves to lower the divi-
dend to SEK 7 (9) per share. The proposed divi-
dend corresponds to 4 per cent of equity. The
proposal to reduce the dividend is due to the
lower profitability in the industry, chiefly for
paper products. The Group is also implement-
ing investments, such as building a new saw-
mill. Decisions on dividends are based on an
appraisal of the Group’s profitability, future
investment plans and financial position.

The final date for trading in Holmen shares
including right to dividend: 24 March 2010

Record date for dividend: 29 March 2010

Payment date for dividend: 1 April 2010

Share structure

Holmen has 83 996 162 shares outstanding, of
which 22 623 234 are class A shares and
61 372 928 are class B shares. Each class A
share carries ten votes, and each B share one
vote. In other respects, the shares carry the
same rights.

ownership structure

Holmen had a total of 30 425 shareholders at
year-end 2009. In absolute numbers, Swedish
private individuals made up the largest category
of owners: 27 497 shareholders. This corre-
sponds to 90 per cent of the total number of

n ownership structure

Shareholder categories
Percentage of capital

Shareholders per country
Percentage of capital

no. of shares

1 – 1 000
1 001 – 100 000

100 001 –

Total

no. of Percentage
of shares

shareholders

27 988
2 356
81

30 425

7
18
75

100

Foreign shareholders

Swedish institutions

Luxembourg

Norway

USA

Sweden

Other countries

Swedish
equity funds

Swedish
private individuals

H O L M E N A N N U A L R E P O R T 2 0 0 9

2 9

T H E S H A R E A N D S H A R E H O L D E R S

the company’s shares. Shares were bought back
in 2008 to secure the company’s commitments
under the terms of the incentive scheme (see
below). In total, 760 000 of the company’s class
B shares were repurchased, corresponding to
some 0.9 per cent of the total number of shares
on issue and to some 0.3 per cent of the total
number of votes. The Board proposes that the
2010 AGM also authorises the Board to buy
back and transfer up to 10 per cent of all shares
in the company.

Incentive scheme

In 2008, the Group’s employees were invited to
acquire call options on class B shares in Holmen
at market price. As a result, 1 492 of the Group’s
approximately 4 800 employees bought a total
of 758 300 call options at a price of SEK 20 per
option; their exercise price is SEK 224.50 per
share. Each option entitles the holder to pur-
chase one share during the exercise period in
May/June 2013. Holmen has secured its com-
mitments in the scheme by buying back shares.

Analysts

Analysts at 15 brokerage firms and banks
moni tor Holmen’s development. This means
that they publish reports containing analyses
of Holmen on an ongoing basis. A list of these
analysts is available on Holmen’s website.

About 350 shareholders, represent-
ing 87 per cent of the votes, attend-
ed Holmen’s 2009 AGM.

shareholders. L E Lundbergföretagen AB is the
largest shareholder, with 52 per cent of the votes.
Shareholders registered in Sweden own 73 per
cent (72) of the share capital. Among foreign
shareholders, the largest proportion of shares are
held in the UK and the USA, accounting for 14
per cent and 6 per cent of the capital, respectively.

Share buy-back

The 2009 Annual General Meeting renewed the
Board’s mandate to acquire up to 10 per cent of

Data per share

Diluted earnings per share, SEK 1)
Dividend, ordinary, SEK
Dividend, extra, SEK
Ordinary dividend as % of:
Equity
Closing listed price
Profit for the year
Return, equity, % 1)
Return, capital employed, % 6)
Equity per share, SEK
Closing listed price, B, SEK
Average listed price, B, SEK
Highest listed price, B, SEK
Lowest listed price, B, SEK
Total closing market capitalisation, SEK ’000 million
P/E-ratio 2)
EV/EBIT 3) 6)
Closing beta value (48 months), B 4)
Number of shareholders at year-end

2009

12.0

2008

7.6

2007

17.8

7 5)
-

9
-

12
-

2006

2005

2004

2003

2002

2001

2000

17.2
12
-

14.8
11
-

15.1
10
-

17.5
10
30

23.6
11
-

26.4
10
-

44.7
9
60

4
4
58
6
7
196
183
180
205.5
135
15.4
15
13
0.7

4
3
20
24
15
213
280
241
320
191.5
22.7
6
10
0.8
30 425 29 745 30 499 32 189 33 320 36 899 30 902 28 544 27 279 26 355

5
5
118
4
6
186
193.5
203
242
169.5
16.2
25
17
0.5

5
4
55
10
12
192
255.5
230
271
187.5
20.4
14
10
0.7

6
5
45
14
16
188
211.5
231
266.5
192
16.9
9
8
0.6

6
4
70
9
10
196
298
302
335.5
255
25.3
17
14
1.0

6
4
37
16
18
176
238.5
226
297.5
171
19
9
7
0.7

6
4
74
8
9
189
262.5
227
266
190
22.6
18
15
0.7

6
5
67
9
10
200
240
277
316
228
20.6
13
12
0.9

6
4
66
8
10
184
230
228
264
210
19.5
15
12
0.6

1) See page 88: Definitions and glossary. 2) Closing listed price divided by earnings per share. 3) Closing market capitalisation plus financial net debt (EV) divided by operat-
ing profit (EBIT). 4) Measures the sensitivity of the yield on the B share in relation to the yield on the Affärsvärlden General Index over a period of 48 months. 5) Proposal of
the Board. 6) Excl. items affecting comparability and divested activities.

3 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

Corporate governance report

C o rPo r a Te goVe r n a nCe rePo r T

Holmen AB is a Swedish public limited company, listed on the Stockholm Stock Exchange
(Nasdaq OMX Nordic) since 1936. The stock exchange incorporated the Swedish Code of
Corporate Governance (the Code) into its rules for listed companies in 2005. This corpo-
rate governance report complies with the rules of the Code and the directions for its appli-
cation. The corporate governance report has not been examined by the company’s auditor.

Swedish Code of Corporate
governance

The Code’s rules from 2005 were revised in
2008 and cover general meetings of sharehold-
ers, appointment of the Board and auditors,
other aspects of the Board, company manage-
ment and information on corporate governance.
The Code is part of self-regulation in Swe-
dish business and is based on the “comply or
explain” principle. This means that a company
complying with the Code may deviate from
individual rules but must report the reasons for
each deviation.

laws and articles of association

First, Holmen AB is obliged to comply with the
Swedish Companies Act, the rules accompany-
ing its listing on Nasdaq OMX Nordic, Stock-
holm, and good stock market practice. The
Code is an integral part of the stock exchange’s
regulations. Holmen shall also comply with the
company’s articles of association.

Shareholders

At year-end, Holmen AB had 30 425 sharehold-
ers. See pages 28–30 for information on the
share, ownership structure and other details.

general meetings of shareholders

The notice convening the Annual General Meet-
ing (AGM) is sent no earlier than six and no later
than four weeks before the meeting. The notice
contains information about registering intention
to attend and entitlement to participate in and
vote at the meeting, a numbered agenda of the
items to be addressed, information on the pro-
posed dividend and the basic content of other
proposals. Shareholders or proxies are entitled
to vote for the full number of shares owned or
represented and can notify the company of their
intention to attend the AGM via the company’s
website and other means.

Notices convening an Extraordinary Gener-
al Meeting (EGM) called to deal with the com-
pany’s articles of association shall be sent no
earlier than six and no later than four weeks
before the meeting. Notices convening other
EGMs shall be sent no earlier than six and no
later than two weeks before the meeting.

Proposals for submission to the meeting
should be addressed to the Board and submit-
ted in good time before the notice is distributed.
Information about the rights of shareholders to
have matters discussed at the meeting is provid-
ed on the website.

The 2009 AGM was held in Swedish, and the

material presented was in Swedish. The notice

H O L M E N A N N U A L R E P O R T 2 0 0 9

3 1

C o r P o r a T e g o V e r n a n C e r e P o r T

Composition of the nomination committee

representing

2009

2010

company

major
shareholders

before agm:

Independent of the:

name

Per Welin

L E Lundbergföretagen*

x (Chairman)

Mats Guldbrand

L E Lundbergföretagen*

x (Chairman)

Alice Kempe

Kempe Foundations*

Fredrik Lundberg

Håkan Sandberg

L E Lundbergföretagen*
(Board Chaiman)

Handelsbanken incl.
pension fund*

Yes

* At 31 August 2009, L E Lundbergföretagen controlled 52.0 per cent of the votes, the Kempe Foundations

controlled 16.9 per cent and Handelsbanken including the pension fund controlled 9.1 per cent.

convening the meeting, the agenda, the CEO’s
speech and the minutes are available on the web-
site. The entire Board, the Group management
and the company’s auditor were present. At the
meeting, shareholders had the opportunity to
ask and receive answers to questions on issues
such as Holmen’s environmental work, the pro-
posed dividend, the plans to take part in possible
future nuclear power expansion, market trends
in 2009, Holmen Paper’s efficiency improvement
programme and the new Braviken Sawmill.
Ossian Ekdahl from Första AP-fonden and Åsa
Nisell from Swedbank Robur Fonder checked
and approved the minutes of the meeting. It was
not possible to follow or participate in the meet-
ing from other locations using communication
technology. No such possibility is planned for
the 2010 meeting either.

It was announced on 11 May 2009 that the
2010 AGM would take place in Stockholm on
24 March 2010.

Shareholders’
general meeting

Shareholders

nomination
committee

board of
Directors*

remuneration com-
mittee

Ceo

Five group
staff units

group
management

Five business areas

* The audit committee comprises all Board members except for members

employed in the company.

s
r
o
t
i
d
u
a

3 2

H O L M E N A N N U A L R E P O R T 2 0 0 9

nomination committee

The AGM decided to set up a nomination com-
mittee to consist of the chairman of the Board
and one representative from each of the three
shareholders in the company that control the
most votes at 31 August each year. Prior to the
2009 AGM, the nomination committee consist-
ed of Per Welin (L E Lundbergföretagen), Alice
Kempe (Kempe Foundations), Håkan Sandberg
(Handelsbanken incl. pension fund) and
Fredrik Lundberg (Board chairman). Member-
ship of the committee prior to the 2010 AGM is
unchanged, except Mats Guldbrand has
replaced Per Welin as the representative of L E
Lundbergföretagen. Mats Guldbrand is chair-
man of the nomination committee in the run-
up to the 2010 AGM. The majority of the com-
mittee members are independent of the compa-
ny and its management. Two are independent
of the shareholder controlling the most votes,
namely L E Lundbergföretagen. One member is
a Board member.

The nomination committee’s mandate is to

submit proposals for election of Board mem-
bers and the Board chairman, for the Board fee
and auditing fees and, where applicable, for
election of auditors. The committee’s proposals
are presented in the notice convening the AGM.
For the 2010 AGM, the nomination com-

mittee proposes the re-election of Fredrik
Lundberg (also proposed for re-election as
Board chairman), Carl Bennet, Magnus Hall,
Carl Kempe, Curt Källströmer, Hans Larsson,
Ulf Lundahl and Göran Lundin. Lilian Fossum
has declined re-election. The nomination com-
mittee also proposes to the AGM that Louise
Lindh be elected to the Board as a new member.
The proposed Board fee is SEK 2 475 000,
including SEK 550 000 for the chairman and
SEK 275 000 for each of the other members.
These are the same fees as in the preceding year.
The CEO does not receive a Board fee.

Composition of the board

The members of the Board are elected each year
by the AGM for the period until the end of the
next AGM. There is no rule regarding the maxi-
mum period a Board member may serve.

The 2009 AGM re-elected Fredrik Lund-
berg, Lilian Fossum, Magnus Hall, Carl Kempe,
Curt Källströmer, Hans Larsson, Ulf Lundahl
and Göran Lundin to the Board. Carl Bennet
was elected to the Board to replace Bengt

As defined by the Code, seven AGM-elected

Hans Larsson

Member

Pettersson, who declined re-election. Fredrik
Lundberg was elected chairman. At the statu-
tory first meeting of the new Board in 2009,
Carl Kempe was elected deputy chairman and
Lars Ericson, the company’s general counsel
was appointed secretary of the Board. Over and
above the nine members elected by the AGM,
the local labour organisations have a statutory
right to appoint three members and three depu-
ty members.

members are deemed independent of the com-
pany. Of these, five are also deemed independ-
ent of the company’s major shareholders and
satisfy all the criteria for experience. The largest
shareholders, each controlling more than 10
per cent of the votes, are L E Lundbergföreta-
gen and the Kempe Foundations. The CEO is
the only Board member with an executive posi-
tion in the company.

Information about the members of the

Board is provided on pages 36–37.

The board’s activities

The Board held nine meetings in 2009, four in
connection with the company’s publication of its
quarterly reports. At one of these meetings the
Board visited Iggesund Mill and Iggesund Saw-
mill. A two-day meeting was devoted to strategic
business planning, and one meeting to the
Group’s budget for 2010. The other two meet-
ings were held in conjunction with the AGM.
During the year the Board paid special attention
to strategic, financial and accounting issues,
follow-up of business operations and major
investment matters. On two occasions the com-
pany’s auditors reported directly to the Board,
presenting their observations from their audit of
the final accounts and the company’s internal
control system. Attendance levels were very
high; two members were not able to come to one
Board meeting each. The activities of the Board
follow a plan that intends to ensure that the
Board obtains all requisite information. Each
year the Board decides on written working pro-
cedures and issues written instructions relating
to the division of responsibilities between the
Board and the CEO and the information that the
Board is to receive continually on financial
developments and other key events.

Employees of the company participate in
Board meetings to submit reports. The secretary
of the Board is the company’s general counsel.

C o rPo r a Te goVe r n a nCe rePo r T

board members as from the 2009 agm

name

Function

elected

Committees*

Independent of the: attendance

company

major
shareholders

at board
meetings

board members

Fredrik Lundberg Chairman

1988

Remuneration
committee

9/9

Dep. Chairman 1983

Carl Kempe

Carl Bennet

Lilian Fossum

Member

Curt Källströmer

Member

Ulf Lundahl

Göran Lundin

Magnus Hall

Total

Member

Member,
president
and CEO

2009

2004

2006

1990

2004

2001

2004

Remuneration
committee

Yes

7/9

9/9

8/9

9/9

Yes

6/9

representatives of the employees

Steewe Björklundh Member

Kenneth Johansson Member

Karin Norin

Member

1998

2004

1999

Stig Jacobsson

Dep. member 2004

Andreas Rastbäck Dep. member 2008

Tommy Åsenbrygg Dep. member 2009

* The entire Board, except for members employed in the company, form the audit committee.

The Board evaluates its activities each year,
and the nomination committee has been
informed of the content of the 2009 evaluation.
This will serve as a basis for planning the
Board’s work in the next few years.

group management

The Board has delegated operative responsibility
for management of the company and the Group to
the CEO. The Board annually decides on instruc-
tions covering the distribution of responsibilities
between the Board and the CEO.
Holmen’s Group management consists of 11 indi-
viduals: the CEO, the heads of the five business
areas and the heads of the five Group staffs units.
Group management met on 11 occasions in
2009, dealing with matters such as earnings
trends and reports before and after Board meet-
ings, business plans, budget, investments, inter-
nal control, policies and reviews of market con-
ditions, general development of the economy
and other external factors affecting the business.
Projects relating to business areas and Group
staff units were also discussed and decided on.
Information on the CEO and other members

H O L M E N A N N U A L R E P O R T 2 0 0 9

3 3

C o rPo r a Te goVe r n a nCe rePo r T

results,
reporting,
follow-up

of Group management is provided on

page 38.

business processes

business plan, budget,
forecasts and action plans

Internal manage-
ment processes

Management at

business concept, strategy and goals

Internal management processes

Holmen is based on
the business con-
cept, strategies
and goals of
the Group
and the
business
areas. The CEO and Group management are
accountable to the Board and are responsible
for the operational activities, which are decen-
tralised to five business areas. The Group staff
units are in charge of coordinating certain mat-
ters, such as business administration and
finance, human resources, legal affairs, techno-
logy and public relations.
The Group uses annual, rolling, three-year
business plans to break down goals and strat-
egies into action plans and activities that can be
measured and evaluated. These business plans
are important to the long-term strategic control
of the Group. The Group also uses annual budg-
ets, forecasts and action plans for its day-to-day
management of operations.
Various business processes, such as sales, pur-
chasing and production, are used to manage
operational activities at business area level with a
view to achieving the business targets and imple-
menting the agreed action plans.
The results are followed up through regular
financial reports, and approved measures are
reviewed through additional follow-ups.

remuneration

The Board has appointed a remuneration com-
mittee consisting of Fredrik Lundberg and
Hans Larsson. The committee held several
informal meetings during the year at which it
prepared matters pertaining to the remunera-
tion and other employment conditions of the
CEO and submitted proposals to the Board.
Remuneration and other employment condi-
tions of senior management who report directly
to the CEO are decided by the latter in accord-
ance with a pay policy established by the remu-
neration committee.
The Group applies the principle that each

3 4

H O L M E N A N N U A L R E P O R T 2 0 0 9

manager’s manager must approve decisions on
remuneration in consultation with the relevant
personnel manager.
At the 2009 AGM, the Board chairman gave
an account of the Board’s proposed guidelines
on remuneration to the CEO and other members
of senior management. The AGM adopted the
guidelines in the proposal. Information on the
Board’s proposal to the 2010 AGM for guide-
lines on remuneration to the CEO and other
members of senior management is presented in
the administration report on page 49.
The 2009 AGM approved the Board fee and
payment of the auditors’ fee as invoiced.

In 2008, the Group’s employees were invited

to acquire call options on class B shares in
Holmen at market price. One third of all
employees then bought a total of 758 300 call
options. Holmen’s commitments pursuant to
this scheme were secured by buying back some
of the company’s own shares. See the section on
the share and shareholders on pages 28–30 for
more details. The 2009 AGM renewed the
Board’s authorisation to decide on buying back
up to 10 per cent of the company’s total shares.
No buy-backs took place in 2009.

Information about remuneration is provided

in note 5 on pages 66–67.

audit
KPMG, which has been Holmen’s auditor since
1995, was elected by the 2008 AGM as auditor
for a period of four years. KPMG has since
appointed George Pettersson, authorised public
accountant, as the principal auditor for Holmen.
KPMG audits Holmen AB and almost all of its
subsidiaries.
The interim accounts are examined for the
January–September period. The examination of
internal procedures and control systems begins
in the second quarter and is thereafter ongoing
to year-end. The examination and audit of the
final annual accounts and the annual report
take place in January–February. The interim
report for January–September is subject to
review by the auditors.

Holmen’s audit committee comprises all
Board members except for members employed
in the company, that is, the CEO and employee
representatives.

The Board’s reporting instructions include a

requirement that the members of the Board
shall receive a report each year from the audi-

tors on whether the company’s organisation is
structured to enable satisfactory supervision of
accounting, management of funds and other
aspects of the company’s financial circum-
stances. In 2009 the auditors reported to the
entire Board at two meetings. Over and above
this, the auditors reported to the Board chair-
man and the CEO on two occasions and to the
CEO at another meeting.

In addition to the audit assignment, Holmen

has consulted KPMG on matters pertaining to
taxation, accounting and investigations, and in
some countries also on matters of business law.
The remuneration paid to KPMG for 2009 is
stated in note 6 on page 67. KPMG is required
to assess its independence before making deci-
sions on whether to provide Holmen with inde-
pendent advice alongside its audit assignment.

Internal control

This section contains the Board’s annual pres-
entation of how the internal control system is
organised insofar as it relates to financial
reporting. The presentation is based on the
rules in the Code and the guidelines drawn up
by working groups in the Confederation of
Swedish Enterprise and FAR SRS (the organisa-
tion for highly qualified professionals in the
accountancy sector in Sweden).

The Board’s responsibility for internal con-
trol is laid out in the Swedish Companies Act,
and internal control related to financial report-
ing is covered by the Board’s reporting instruc-
tions to the CEO. Holmen’s financial reporting
complies with the laws and rules that apply to
companies listed on the Stockholm stock
exchange and the local rules in each country
where it operates. In addition to external rules
and recommendations, financial reporting is also
covered by internal instructions, directions and
systems, as well as internal delegation of roles
and responsibilities with the object of ensuring
sound internal control over financial reporting.
Financial reports are prepared quarterly and
monthly in the Group and its business areas,
units and subsidiaries. Forecasts and extensive
analyses, along with comments, are provided in
connection with the reports to help ensure the
accuracy of the financial reports. Financial func-
tions and controllers with functional responsi-
bility for accounting, reporting and analysis of
financial developments operate at Group level,
at business area level and at all major units.

The audit includes the annual statutory
audit of Holmen AB’s annual report, the statu-
tory audit of the parent company and all sub-
sidiaries (where so required), the audit of inter-
nal reporting packages, an audit of the final
accounts and a review of one interim report.
The audit process also includes reviews of the
internal control system.

Holmen’s internal control activities aim to
ensure that the Group lives up to its objectives
for financial reporting (see box). These activi-
ties are based on a common set of instructions
and common checklists for key procedures and
processes for the Group’s financial reporting.
The structure adheres to guidelines issued by
the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) for small
listed companies in respect of internal control
over financial reporting. COSO’s guidelines
contain 20 principles in five areas: control envi-
ronment, risk assessment, control activities,
information and communication, and follow-
up. They have been modified to suit the
assessed needs of Holmen’s various operations.
Holmen’s greatest risks regarding financial
reporting are linked to the measurement (valu-
ation) of biological assets and property, plant
and equipment, as well as being linked to finan-
cial transactions.

Holmen has no separate internal auditing
function. The Board does not consider that spe-
cific circumstances in the business or other condi-
tions exist that justify setting up such a function.
In 2008 the company introduced a type of audit
procedure whereby experienced accountants and
controllers in the Group visit other Group units
and examine their internal control procedures.
These activities were successful and were there-
fore also conducted in 2009.

Investor relations

Holmen’s information to shareholders and
other stakeholders is provided in the annual
report, the year-end and interim reports, press
releases, the sustainability report Holmen and
its World, and the shareholders’ magazine
Holmen Business Report, all of which are avail-
able on the company’s website. The website
also contains presentation materials for recent
years and information on corporate govern-
ance. The provision of information by the com-
pany complies with an information policy
established by the Board.

C o rPo r a Te goVe r n a nCe rePo r T

objectives of Holmen’s
financial reporting

Holmen’s external financial
reporting shall:
• be correct and complete,

and comply with appli cable
laws, regulations and
recommendations

• providea true and fair de-

scription of the company’s
business

• support a reasoned and
informed valuation of the
business.

Internal financial reporting
shall, over and above these
three objectives, support cor-
rect business decisions at all
levels in the Group.

H O L M E N A N N U A L R E P O R T 2 0 0 9

3 5

b o a r D o F D I r e C T o r S

Board of directors

Ulf Lundahl

Curt Källströmer

Hans Larsson

Carl Bennet

Carl Kempe

Fredrik Lundberg

Magnus Hall

Fredrik lundberg
Chairman. Djursholm. Born in 1951.
Member since 1988. Master of Engineering and Bachelor of
Science (Econ.). D. Econ h.c. and D. Eng. H.c.
President and CEO of L E Lundberg företagen AB.
Other significant appointments:
Chairman of the Board: Cardo AB and Hufvudstaden AB.
Deputy chairman of: Svenska Handelsbanken AB and NCC AB.
Board member: L E Lundbergföretagen AB, AB Industrivärden
and Sandvik AB.
Shareholding in Holmen: 734 724 shares.
Shareholding of L E Lundbergföretagen
in Holmen: 23 511 000 shares.

Carl kempe
Deputy Chairman. Örnsköldsvik.
Born in 1939. Member since 1983.
Licentiate in Engineering. DDr. h.c.
Other significant appointments:
Chairman of the Board: Kempe Foundations, MoRe
Research AB and UPSC Berzelii Centre for Forest
Biotechnology.
Member of the Swedish IIASA committee.
Own and related parties’ shareholding
in Holmen: 385 125 shares.

Carl bennet
Gothenburg. Born in 1951. Member since 2009. MBA. D. Eng.
h.c. Former President and CEO of Getinge. Chairman of the
Board: Getinge, Elanders and Lifco.
Other significant appointments:
Chairman of the Board: University of Gothenburg.
Board member: L E Lundbergföretagen and SSAB.
Shareholding in Holmen: 100 000 shares.

magnus Hall
Stockholm. Born in 1959. Member since 2004. MSc (Industrial
Engineering). President and CEO.
Other significant appointments: Chairman of the Board of BasEl
i Sverige AB and Industrikraft i Sverige AB. Deputy chairman of
the Swedish Forest Industries Federation.
Own and related parties’ shareholding
in Holmen: 12 698 shares, 14 450 call options.

Steewe björklundh
Hudiksvall. Born in 1958. Member since 1998.
Representative of the employees, LO. Chairman of the GS
Union at Iggesund Sawmill. Chairman of Hudiksvalls Sparbank
and of Bomäklarna i Hudiksvall AB.
Shareholding in Holmen: 200 call options.

kenneth johansson
Söderköping. Born in 1958. Member since 2004.
Representative of the employees, LO. Section Chairman of
Paperbranch 53, Holmen Paper Braviken.
Shareholding in Holmen: 500 call options.
Related parties’ shareholding: 500 call options.

lilian Fossum
Lidingö. Born in 1962. Member since 2004. MBA. CFO and
Executive Vice President Axel Johnson AB.
Other significant appointments:
Board member: Åhléns AB, Axel Johnson International AB,
Novax AB, Servera AB, Svensk Bevakningstjänst AB, Oriflame
Cosmetics S.A. and Retail and Brands AB.
Shareholding in Holmen: 500 shares.

Curt källströmer
Stockholm. Born in 1941. Member since 2006. Banking degree.
Other significant appointments:
Chairman of the Board: Umeå School of Economics.
Board member: Handelsbanken International,
Stockholmsmässan AB, SBC AB,
Wåhlin Fastigheter AB and AB Skrindan.
Shareholding in Holmen: 600 shares.

3 6

H O L M E N A N N U A L R E P O R T 2 0 0 9

bo a rD oF D Ir eC To rS

Lilian Fossum

Göran Lundin

Andreas Rastbäck

Stig Jacobsson

Steewe Björklundh

Tommy Åsenbrygg

Kenneth Johansson

Hans larsson
Stockholm. Born in 1942. Member since 1990. Bachelor of Arts.
Other significant appointments:
Chairman of the Board: Svenska Handelsbanken AB, Nobia AB,
Attendo AB and Valedo Partners Fund 1 AB.
Shareholding in Holmen: 1 000 shares.

Ulf lundahl
Lidingö. Born in 1952. Member since 2004. Bachelor of Arts in
Legal Science and Bachelor of Science (Econ). Executive VP and
Deputy CEO of L E Lundbergföretagen AB.
Other significant appointments:
Board member: Brandkontoret, Indutrade AB, Ramirent OYJ,
Cardo AB, Husqvarna AB and SHB Regionbank Stockholm.
Shareholding in Holmen: 4 000 shares.

göran lundin
Norrköping. Born in 1940. Member since 2001. Engineer.
Other significant appointments:
Chairman of the Board: Norrköpings Tidningar AB.
Board member: Lorentzen & Wettre AB and
Fastighets AB L E Lundberg.
Shareholding in Holmen: 1 000 shares.

karin norin
Forsa. Born in 1950. Member since 2009 . Representative of
the employees, PTK. Chairman: Unionen Gävleborg, Unionen
Holmen-Iggesund and member in Unionen’s delegation
‘‘Industry 1’’.
Shareholding in Holmen: 200 call options.
Related parties’ shareholding: 200 call options.
Karin Norin was not present for the photograph.

Auditors
KPMG AB.
Principal auditor:

george Pettersson
Authorised public accountant

Deputy members
Stig jacobsson
Iggesund. Born in 1948. Deputy member since 2004.
Representative of the employees, LO. Chairman of
Paperbranch 15 Iggesund.
Shareholding in Holmen: 500 call options.

andreas rastbäck
Örnsköldsvik. Born in 1975. Deputy member since 2008.
Representative of the employees, PTK. Chairman of the univer-
sity graduate association at Holmen Skog.
Shareholding in Holmen: 500 call options.

Tommy Åsenbrygg
Hallstavik. Born in 1968. Deputy member since 2009.
Representative of the employees, PTK. Deputy chairman in
Ledarna, Hallstavik.
Shareholding in Holmen: 100 shares.

H O L M E N A N N U A L R E P O R T 2 0 0 9

3 7

g r o u p m a n a g e m e n t

Group management

President and CEO
magnus Hall
Born in 1959. Joined Holmen in 1985.
Own and related parties’ shareholding in
Holmen: 12 698 shares, 14 450 call options.

Magnus Hall has no significant shareholdings
and no ownership in companies with whom the
Group has important business relations.

Ingela Carlsson
Head of Group Public Relations.
Born in 1962. Joined Holmen in 2008.
Shareholding in Holmen: 4 000 call options.

Lars ericson
Head of Group Legal Affairs.
Company secretary.
Born in 1959. Joined Holmen in 1988.
Shareholding in Holmen: 4 000 call options.

For further information about the CEO,
see page 36.

Group staff units
anders almgren
Executive Vice President.
CFO, Group Finance until 15 April 2010.
Born in 1965. Joined Holmen in 1990.
Shareholding in Holmen: 4 600 shares,
4 000 call options.

thommy Haglund
Head of Group Human Resources.
Born in 1950. Joined Holmen in 2001.
Shareholding in Holmen: 500 shares,
4 000 call options.

Sven Wird
Head of Group Technology.
Born in 1951. Joined Holmen in 1995.
Shareholding in Holmen: 50 shares,
4 000 call options.

Magnus Hall

Sören Petersson will take up the position of head of Holmen Skog on 1 February 2010.

Anders Jernhall will take up the position of head of Group Finance on 15 April 2010.

Business areas
Brynolf alexandersson
Head of Holmen Energi.
Born in 1957. Joined Holmen in 2007.
Shareholding in Holmen: 4 000 call options.

Björn andrén
Head of Holmen Skog until
31 January 2010, when he retired.
Born in 1946. Joined Holmen in 1971.
Shareholding in Holmen: 4 000 call options.

Björn Kvick
Head of Iggesund Paperboard.
Born in 1950. Joined Holmen in 1983.
Shareholding in Holmen: 4 000 call options.

Håkan Lindh
Head of Holmen Timber.
Born in 1964. Joined Holmen in 1994.
Shareholding in Holmen: 2 000 call options.

arne Wallin
Head of Holmen Paper.
Born in 1954. Joined Holmen in 1988.
Shareholding in Holmen: 4 000 call options.

Anders Almgren

Ingela Carlsson

Lars Ericson

Thommy Haglund

Sven Wird

Brynolf Alexandersson

Björn Andrén

Björn Kvick

Håkan Lindh

Arne Wallin

3 8

H O L M E N A N N U A L R E P O R T 2 0 0 9

Q u a r t e r ly f i g u r e s

Quarterly figures

seKm

full year

income statement
Net sales
Operating costs
Depreciation and amortisation according to plan
Interest in earnings of associates
Items affecting comparability *
Operating profit
Net financial items
Profit/loss before tax
Tax
Profit/loss for the period

18 071
-15 175
-1 320
45
-
1 620
-255
1 366
-360
1 006

4 659
-3 943
-334
10
-
392
-60
332
-107
225

2009
iii

4 387
-3 636
-322
13
-
442
-55
386
-106
280

i full year

4 496
4 529
-3 806 -3 789
-332
7
-
415
-74
341
-96
245

-333
15
-
372
-66
306
-51
256

19 334
-16 630
-1 343
50
-361
1 051
-311
740
-98
642

5 043
-4 437
-333
10
-
284
-89
195
76
271

2008
iii

4 591
-3 909
-337
16
-298
64
-85
-22
-2
-24

4 826
-4 178
-339
12
-63
257
-73
185
-61
124

4 875
-4 107
-334
12
-
446
-64
383
-111
271

Diluted earnings per share, SEK

12.0

2.7

3.3

3.0

2.9

7.6

3.2

-0.3

1.5

3.2

Net sales
Holmen Paper
Iggesund Paperboard
Holmen Timber
Holmen Skog
Holmen Energi
Elimination of intra-group net sales
group

Operating profit/loss
Holmen Paper
Iggesund Paperboard
Holmen Timber
Holmen Skog
Holmen Energi
Group-wide costs

Elimination of internal operating profit/loss

Items affecting comparability *
group

Operating margin, % **
Holmen Paper
Iggesund Paperboard
Holmen Timber
Group

return on operating capital, % **
Holmen Paper
Iggesund Paperboard
Holmen Timber
Holmen Skog
Holmen Energi
Group

Key indicators
Return on capital employed, % **
Return on equity, %

Deliveries
Newsprint and magazine paper, ’000 tonnes
Paperboard, ’000 tonnes
Sawn timber, ’000 m3
Harvesting own forests, ’000 m3
Own production of hydro power, GWh

9 303
5 023
553
4 799
1 628
-3 236
18 071

2 310
1 260
155
1 306
465
-837
4 659

2 348
1 223
142
1 048
363
-737
4 387

2 361
1 274
130
1 163
359
-791
4 496

2 284
1 266
127
1 283
442
-872
4 529

10 443
4 860
499
5 443
1 834
-3 745
19 334

2 854
1 194
109
1 365
501
-980
5 043

2 517
1 210
116
1 208
442
-902
4 591

2 547
1 219
124
1 433
392
-890
4 826

2 525
1 237
149
1 436
499
-972
4 875

340
419
21
605
414
-191

-
1 620

3.7
8.3
3.8
9.0

3.5
9.9
6.2
5.3
13.3
5.9

7.2
6.4

1 745
477
313
2 897
1 090

-34
140
19
179
138
-50

-
392

-1.5
11.1
12.2
8.4

-1.5
13.6
21.0
6.3
17.3
5.8

7.0
5.5

456
123
76
859
355

107
128
13
147
72
-43

-
442

4.6
10.5
9.5
10.1

4.5
12.1
16.7
5.1
9.1
6.4

7.8
7.0

455
118
76
704
229

150
77
5
144
59
-51

-11

-
372

6.3
6.1
3.5
8.3

6.0
7.2
5.6
5.0
7.7
5.5

6.6
6.6

437
119
80
753
203

117
73
-16
134
144
-47

-
415

5.1
5.8
-12.4
9.2

4.6
6.9
-17.7
4.7
19.1
6.1

7.3
6.4

397
117
81
580
304

280
320
13
632
327
-149

-10

-361
1 051

2.7
6.6
2.5
7.3

2.8
7.5
3.5
5.6
11.1
5.0

6.1
3.9

2 044
494
266
2 649
1 128

20
16
-7
179
110
-30

-4

-
284

0.7
1.4
-6.8
5.6

0.8
1.5
-7.9
6.3
14.8
4.1

4.9
6.9

539
115
63
770
311

80
127
-1
150
33
- 21

-6

-298
64

3.2
10.5
-1.1
7.9

3.2
12.1
-1.3
5.3
4.5
5.1

6.3
-0.6

493
124
66
631
176

100
61
-2
152
58
-50

-63
257

3.9
5.0
-1.5
6.6

4.0
5.8
-2.1
5.4
7.9
4.5

5.6
3.0

508
127
66
714
254

80
116
23
151
125
-48

-
446

3.2
9.3
15.3
9.2

3.2
11.1
26.2
5.3
16.9
6.4

7.8
6.4

503
127
72
534
388

* Item affecting comparability in the third quarter of 2008 relating to a provision of SEK -298 million for the closure of Wargön Mill. The second quarter of 2008

includes SEK -63 million for the closure of PM 2 at Hallsta Paper Mill and an impact on profit due to the fire at Braviken Paper Mill.

** Excl. items affecting comparability.

H O L M E N A N N U A L R E P O R T 2 0 0 9

3 9

teN- y e a r r eVi e w

Ten-year review

seKm

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

iNCOMe stateMeNt

Net sales

Operating costs

18 071

19 334 19 159 18 592 16 319 15 653 15 816 16 081 16 655 15 155

-15 175 -16 630 -15 548 -14 954 -13 205 -12 570 -12 306 -12 205 -12 460 -11 843

Depreciation and amortisation according to plan

-1 320

-1 343

-1 337

-1 346

-1 167

-1 156

-1 166

-1 153

-1 126

-1 045

Interest in earnings of associates

Items affecting comparability *

-361

557

-6

-10

-3

-620

Operating profit

Net financial items

Profit before tax

Tax

Profit for the year

1 620

-255

1 366

-360

1 006

1 051

2 843

2 303

1 967

1 952

2 338

2 713

2 446

-311

-261

-247

-233

-206

-212

-149

-152

740

-98

642

2 582

2 056

1 734

1 746

2 126

2 564

2 294

4 741

-1 077

-597

-478

-471

-675

-605

-108

-769

1 505

1 459

1 256

1 275

1 451

1 959

2 186

3 972

552

2 023

4 842

-101

Diluted earnings per share, SEK

12.0

7.6

17.8

17.2

14.8

15.1

17.5

23.6

26.4

44.7

Net sales

Holmen Paper

Iggesund Paperboard

Holmen Timber

Holmen Skog

Holmen Energi

9 303

10 443 10 345 10 140

5 023

4 860

5 100

5 240

553

4 799

1 628

499

5 443

1 834

589

4 775

1 590

465

4 042

1 691

8 442

4 860

460

3 858

1 480

7 814

4 877

492

3 780

1 258

7 788

4 920

510

3 613

1 337

8 164

4 850

572

3 538

1 120

8 757

4 467

712

3 982

1 108

7 618

4 186

762

4 117

1 110

Elimination of intra-group net sales

-3 236

-3 745

-3 239

-2 986

-2 781

-2 568

-2 352

-2 163

-2 371

-2 638

group

18 071

19 334 19 159 18 592 16 319 15 653 15 816 16 081 16 655 15 155

569

-116

466

-112

2 295

2 023

524

Operating profit/loss

Holmen Paper

Iggesund Paperboard

Holmen Timber

Holmen Skog

Holmen Energi

Group-wide costs and eliminations

340

419

605

414

-178

1 620

280

320

632

327

-159

623

599

146

702

272

-56

747

1 664

2 410

1 389

754

752

643

197

631

626

537

301

487

809

586

178

1 001

516

193

818

-6

450

-26

455

-79

455

-123

-141

-113

-137

-187

-224

1 412

2 286

2 303

1 967

1 952

2 338

2 713

3 066

Items affecting comparability *

Transferred operations

-361

557

-620

group

CasH flOw

Profit before tax

Adjustment items

Paid income tax

Changes in working capital

1 620

1 051

2 843

2 303

1 967

1 952

2 338

2 713

2 446

4 842

1 366

1 163

-334

678

740

2 582

1 797

-192

-686

629

-390

-345

2 056

1 225

-664

-259

1 734

914

-516

339

1 746

1 031

-378

-68

2 126

1 169

-727

-125

2 564

1 050

-472

356

2 294

4 741

1 679

-1 486

-248

-942

-388

Cash flow from operating activities

2 873

1 660

2 476

2 358

2 471

2 331

2 443

3 498

3 786

1 925

Cash flow from investing activities

-818

-1 124

-1 315

-947

-3 029

-1 195

-726

-1 810

-1 669

-2 019

Cash flow after investments

2 054

536

1 161

1 411

-558

1 136

1 717

1 688

2 117

-94

Share buy-back

New share issue through conversion
and subscription

-138

474

-2 025

Dividend paid

-756

-1 017

-932

-848

-3 199

-880

-800

-5 518

-977

* Items affecting comparability:
Year 2000: Mainly the disposal within the Group of Modo Paper AB, an associate, for SEK 1 848 million, and the repayment of SPP funds of SEK 175 million.
Year 2001: Impairment losses of SEK 620 million on non-current assets.
Year 2007: Impairment losses of SEK 569 million on goodwill and of SEK 1 034 million on property, plant and equipment within Holmen Paper, a reversed impair-
ment losses of SEK 60 million on non-current assets within Holmen Timber, and a positive revaluation of forests of SEK 2 100 million within Holmen Skog.
Year 2008: Closure of Wargön Mill SEK accounted for 298 million and a cost of SEK 115 million was for the closure of PM 2 at Hallsta Paper Mill. Income of SEK
52 million corresponds to the effects on the result of the fire at Braviken Paper Mill.

4 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

teN- y e a r r eVi e w

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

For a ten-year review of data per share, see page 30.

23 610

24 329 24 099 23 258 23 702 21 354 18 878 19 442 18 661 18 534

304

1 780

6 075

225

182

32 176

16 504

5 045

6 091

4 536

32 176

342

1 836

7 268

175

301

1 753

6 549

147

354

1 742

6 138

165

352

1 739

5 709

132

273

1 754

5 149

295

1 767

4 743

105

194

1 721

4 922

203

286

191

230

5 366

5 330

653

2 000
34 602 33 243 32 141 32 214 28 989 26 358 26 967 24 948 26 300

570

367

634

580

394

484

399

15 641 16 932 16 636 16 007 15 635 15 366 15 185 14 072 17 014
5 177

4 557

5 030

5 482

4 819

4 014

4 370

5 143

4 264

8 332

6 518

6 634

7 351

5 335

4 044

4 496

3 593

1 721

4 311

5 809

3 301
34 602 33 243 32 141 32 214 28 989 26 358 26 967 24 948 26 300

2 916

3 841

2 391

2 842

3 269

3 713

8 789

10 237

9 971 11 541 11 452

4 114

4 254

4 180

3 935

3 965

396

366

345

11 384

11 415 11 264

3 006

2 960

208

9 001

2 965

230

8 919

2 958

9 659

3 871

231

8 842

2 930

9 461

3 885

277

6 383

2 926

9 884

3 963

258

6 429

2 877

9 584

4 330

232

8 564

4 877

411

6 517

6 527

805

826

3 207

-963

26 929

-4 741

22 188

-87

-354

-630

-1 654

-412
27 623 28 090 27 297 27 437 25 415 22 997 23 169 21 044 20 793
-4 904
-4 477

-4 073
23 146 22 909 22 621 22 646 20 511 18 735 18 993 17 233 16 720

-5 181

-4 262

-4 791

-3 811

-4 676

-4 176

-242

-424

-118

-1

-11

neg

-7

neg

0.34

0.48

0.35

0.36

0.41

0.31

0.22

0.25

0.22

-0.02

seKm

BalaNCe sHeet
Non-current assets

Deferred tax assets

Shares and participating interests

Current assets

Financial receivables

Cash and cash equivalents

total assets

Equity

Deferred tax liability

Financial liabilities and interest-bearing provisions

Operating liabilities

total equity and liabilities

Operating capital

Holmen Paper

Iggesund Paperboard

Holmen Timber

Holmen Skog

Holmen Energi

Group-wide and other

Operating capital

Deferred tax liability, net

Capital employed

Key ratiOs

Operating margin, %*

Holmen Paper

Iggesund Paperboard

Holmen Timber

Group

return on operating capital, %*

Holmen Paper

Iggesund Paperboard

Holmen Timber

Holmen Skog

Holmen Energi

Group

Key indicators

Return on capital employed, % *

Return on equity, %

Debt/equity ratio

Deliveries

Newsprint and magazine paper, ’000 tonnes

1 745

2 044

2 025

2 021

1 764

1 731

1 655

1 528

1 525

1 560

Paperboard, ’000 tonnes

Sawn timber, ’000 m3

Harvesting own forests, million m3

477

313

2.9

494

266

2.6

516

262

2.6

Own production of hydro power, GWh

1 090

1 128

1 193

536

248

2.6

934

492

229

2.3

501

195

2.6

1 236

1 054

481

189

2.7

867

453

220

2.5

410

322

2.4

415

360

2.3

1 048

1 362

1 308

Stated in accordance with IFRS from 2004. As far as Holmen is concerned, the principal difference between IFRS and previous accounting policies is that
forest assets are valued and stated in the accounts at fair value, that goodwill is no longer amortised according to plan, and that the fair value of financial
assets and liabilities where hedge accounting is applied is entered into the balance sheet.
* Excl. items affecting comparability.

H O L M E N A N N U A L R E P O R T 2 0 0 9

4 1

Annual report

The Board of Directors and the CEO of Holmen Aktiebolag (publ.), corporate
identity number 556001–3301, submit their annual report for the parent com-
pany and the Group for the 2009 financial year. The annual report, including
the audit report, comprises pages 42-85. The results of the year’s operations
and the financial position of the parent company and the Group are present-
ed in the administration report and the accompanying income statements
and balance sheets, together with the notes and supplementary information.
The Group’s income statement and balance sheet and the parent company’s
income statement and balance sheet will be submitted
to the Annual General Meeting for adoption.

This is a translation of the Swedish Annual Report of Holmen Aktiebolag (publ). In the event of
inconsistency between the English and the Swedish versions, the Swedish version shall prevail.

A 123-metre long wooden bridge has been built at Iggesund Mill, partly using wood from Holmen’s forests.

ContentsAdministration report 44Income statement 52Statement of comprehensive income 52Balance sheet 53Changes in equity 54Cash flow statement 55Parent company 56Notes to the financial statements 58 1. Accounting policies 58 2. Financial risk management 62 3. Operating segment reporting 64 4. Other operating income 66 5. Employees, staff costs and remuneration to senior management 66 6. Auditors’ fees and remuneration 67 7. Income from financial instruments 68 8. Taxes 68 9. Earnings per share (EPS) 70 10. Intangible non-current assets 70 11. Property, plant and equipment 71 12. Biological assets 72 13. Interests in associates and other shares and participating interests 73 14. Financial instruments 7415. Inventories 7816. Operating receivables 7817. Equity 7818. Pension provisions 7919. Other provisions 80 20. Operating liabilities 8021. Operating leases 8022. Pledged collateral and contingent liabilities 8123. Related parties 8124. Interests in Group companies 8225. Untaxed reserves 8326. Cash flow statement 8327. Key assessments and estimates 83 Proposed treatment of unappropriated earnings 84Audit report 85A dM InIs t rA tIo n r e p o r t

Administration report

Business overview

Holmen’s operations consist of three product-oriented and
two raw-material-oriented business areas, which are to be
developed through organic growth and selective acquisi-
tions. Europe is by far the largest market, accounting for
some 90 per cent of sales. The Holmen Paper business area
manufactures printing paper for newspapers, magazines,
directories/manuals, advertising materials and books. The
paper is manufactured at two mills in Sweden and one in
Spain. Iggesund Paperboard produces paperboard for pack-
aging and graphics printing at one mill in Sweden and one in
the UK. Holmen Timber produces sawn timber at one saw-
mill in Sweden. Annual production capacity is 1 940 000
tonnes of printing paper, 530 000 tonnes of paperboard
(after structural change at Workington Mill) and 340 000
cubic metres of sawn timber. Holmen Skog manages the
Group’s forests, which cover just over one million hectares;
each year some 2.5 million cubic metres of wood are harvest-
ed in the company’s forests. Holmen’s annual consumption
amounts to about 4.5 million cubic metres. Holmen Energi’s
normal yearly production amounts to some 1 100 GWh of
electricity at wholly and partly owned hydro power stations
in Sweden. In addition, about 400 GWh of electricity is pro-
duced at the mills. Holmen consumes a total of some 4 700
GWh of electricity per year.

The main part of operations in Sweden is run by the par-
ent company. In turn, the latter’s operations are run by five
companies acting on behalf of the parent company – one for
each business area. The parent company is liable for all com-
mitments entered into by these companies. Abroad, opera-
tions are chiefly run by wholly owned subsidiaries.

Holmen in 2009

Market. The weak economy meant that demand for news-
print in Europe fell considerably in 2009 and was 14 per cent
lower than in 2008. Along with weak demand outside
Europe, this entailed low capacity utilisation for European
producers in 2009. Deliveries of MF Magazine to Europe
were 20 per cent lower in 2009 than in 2008, while deliveries
of SC paper to Europe were down 9 per cent and of coated
paper down 22 per cent.

The long-term trend in demand for virgin fibre board in

Europe has been positive. The market in Europe however
was weak in 2009, and deliveries from European producers
to Europe thus fell by 9 per cent compared to 2008. The
situa tion improved somewhat towards the end of the year.
Demand for sawn timber in Europe was substantially
lower in 2009 compared to 2008, which led to considerable
production cutbacks among European producers. In the

When Iggesund paperboard launched its new grades of Invercote and Incada paperboard, new cover paper was also introduced for the paper-
board rolls.

4 4

H O L M E N A N N U A L R E P O R T 2 0 0 9

A dM InIs t rA tIo n r e p o r t

se cond half of the year, the market improved, and stock lev-
els were low. The prices of sawn timber fell from the second
half of 2007 until the start of 2009, but the price trend
reversed during the second half of 2009.

Demand for pulpwood and timber were low at the start

of the year and prices fell. Sawmills’ demand for timber
climbed to a high level during the year, which led to price
rises. Demand for pulpwood increased to a normal level and
prices were stable.

In 2009, hydro power production in Sweden was slightly
below the normal level. The spot price fluctuated during the
year, from SEK 350/MWh in May, to SEK 500/MWh in
December. The average price was SEK 393/MWh, which was
20 per cent lower than in 2008.

the average price level was lower.

Operating profit for Holmen Skog amounted to

SEK 605 million (632). The figure includes a SEK 16 million
(-16) change in the value of the company’s forests, calculated
in accordance with IAS 41. Operating profit before the
change in value of forests fell by SEK 59 million, to
SEK 589 million, as a result of lower wood prices, while
increased harvesting in the company’s own forests had a
positive impact. The extent of silviculture rose, entailing
higher costs.

Holmen Energi’s operating profit increased by
SEK 87 million, to SEK 414 million. The rise is largely
thanks to higher prices, though production was lower than
in 2008 and 2 per cent below that of a normal year.

Net financial items amounted to a loss of SEK 255 million

reSULtS. In 2009, the Group’s sales decreased by SEK 1 263
million, to SEK 18 071 million. Operating profit amounted
to SEK 1 620 million (2008: 1 051). Operating profit for
2008 included a net amount of SEK -361 million comprising
items affecting comparability in the Holmen Paper business
area.

The improved operating profit is primarily attributable to

(loss of 311). Lower market interest rates reduced the aver-
age borrowing cost to 3.5 per cent (4.5), and net debt was
somewhat higher on average than in the preceding year.

The Group’s tax expense amounted to SEK 360 million
(98), which corresponds to 26 per cent of profit before tax.
Tax expense includes SEK 30 million from a successful tax
dispute.

higher prices of newsprint and paperboard, while weak
demand led to extensive production cutbacks , which had a
negative impact on earnings.

Profit after tax was SEK 1 006 million (642). Earnings per
share amounted to SEK 12.0 (7.6). The return on equity was
6.4 percent (3.9).

Holmen Paper’s deliveries declined to 1 745 000 tonnes,
compared to 2 044 000 tonnes in 2008, as a consequence of
low demand and the closure of capacity. The decline mainly
affected standard newsprint and coated paper, while deliv-
eries of MF Magazine were higher. Holmen Paper’s operat-
ing profit for 2009, was SEK 340 million (280 excluding
items affecting comparability in 2008). The improvement is
thanks to higher selling prices, but considerable production
cutbacks and a less favourable market mix had an adverse
effect on results. Lower costs of wood and recovered paper
made an impact on profit, but energy costs rose.

Iggesund Paperboard’s deliveries were down by 3 per cent

in relation to 2008 due to lower demand. Iggesund Paper-
board implemented price rises for folding boxboard in the UK
market during the second half of 2009. Operating profit for
2009 amounted to SEK 419 million, which was SEK 99 mil-
lion higher than in the preceding year. The price increases,
along with a weaker pound (sterling) and Swedish krona, had
a positive impact on results. Production cutbacks and high
manufacturing costs adversely affected profit, particularly in
the first half of 2009.

Holmen permanently shut down a board machine (BM 1)
at Workington Mill in December. Provisions and impairment
losses resulting from the shutdown had a negative impact of
SEK 75 million on costs.

ChangeS in WOrkingtOn. In September 2009 Holmen decided
to shut down one of the two board machines at Workington
Mill in the UK. The machine, dating from 1967, has an annual
production capacity of 70 000 tonnes of folding boxboard in
the lower quality segment. Capacity was upgraded on the
remaining machine at the same time. The new annual capacity
of the mill is 200 000 tonnes (previously 250 000) – a volume
that is more tailored to the market. The number of employees
is expected to decrease by 99. The shutdown entailed costs as
a result of provisions and impairment losses totalling
SEK 75 million.

inveStMentS. The Group’s acquisitions of non-current assets
amounted to SEK 759 million (1 160). Cash flow from
investing activities totalled SEK -818 million (-1 124). Sched-
uled depreciation and amortisation amounted to SEK 1 320
million (1 343). The year’s investments include investment
projects such as a new sawmill at Braviken, a new hydro
power station in Iggesund, improved water treatment at
Iggesund Mill and a new power production plant at the mill
in Madrid. Production in the new sawmill at Braviken Paper
Mill in Norrköping is scheduled to start at the turn of
2010/2011.

Holmen Timber’s deliveries rose to 313 000 cubic metres,
compared to 266 000 cubic metres in 2008. Operating profit
amounted to SEK 21 million (13). Higher deliveries and
lower raw materials costs had a positive impact, although

CaSh fLOW. The Group’s cash flow from operating activities
totalled SEK 2 873 million, of which a reduction in tied up
working capital accounted for SEK 678 million. Cash flow
from investing activities amounted to SEK -818 million.

H O L M E N A N N U A L R E P O R T 2 0 0 9

4 5

A dM InIs t rA tIo n r e p o r t

ly via the Group’s commercial paper programme, short-term
bank loans and utilisation of the contractually agreed EUR
600 million credit facility. Certain other non-current liabilities
were paid down. Cash and cash equivalents were deposited
with banks. Standard & Poor’s lowered its long-term credit
rating for Holmen from BBB+ to BBB, with a negative out-
look. The short-term rating was lowered to A-3/K-2.

The Group hedges parts of future estimated net flows in
foreign currencies. Gains and losses on currency hedges to
cover sales in foreign currencies netted a loss of SEK 408 mil-
lion (loss of 336) during the year, recognised in operating prof-
it. The result was primarily due to the average hedging rate for
euro being SEK 9.4 during the year, compared to the average
spot exchange rate of SEK 10.6. Taking account of currency
hedges, the average exchange rates for the Group’s net flows
were SEK 9.5 for euro and SEK 7.8 for US dollars. At year-
end, some 90 per cent of the Group’s estimated net flows in
euro for 2010 were hedged at an average exchange rate of
SEK 9.7, for 2011 about 85 per cent were hedged at an aver-
age of SEK 10.6 and for 2012 about 25 per cent at an average
of SEK 10.5. Four months’ estimated flows in dollars were
hedged at an average exchange rate of SEK 6.9. The fair value
of currency hedges not yet recognised in the income statement
amounted to a loss of SEK 45 million at the end of 2009.

Prices for the Group’s estimated net consumption of elec-

tricity in Sweden during the 2010–2012 period are fully
hedged. For 2013–2015, prices for some 85 per cent have
been hedged. The Group’s financial risk management is
described in note 2.

eQUitY. In 2009 the Group’s equity increased by
SEK 863 million, to SEK 16 504 million. Profit for the year
amounted to SEK 1 006 million, and the dividend paid was
SEK 756 million. Equity has also been affected by other com-
prehensive income which consists of items such as revalua-
tion of pension liability, currency revaluation of loans,
revaluation of transaction hedges and restatement of assets
in foreign entities as well as tax on these items. In 2009 other
comprehensive income amounted to SEK 613 million, which
is mainly attributable to currency hedges that have expired
and been recognised in the income statement, and to the fact
that the strengthened Swedish krona reduced the negative
fair value of transaction hedges. As of 2009 other compre-
hensive income is presented in a separate “Statement of com-
prehensive income” following the ‘‘income statement’’.

reSearCh and deveLOpMent (r&d). The Group conducts
R&D in-house at business area level and externally. The
external activities are co-run with other players – often at
industry-wide level – and in collaboration with universities
and colleges. In 2009 Holmen opened a development centre
in Iggesund, focusing on biorefining and biofuels. The
Group’s total investments in R&D amounted to around
SEK 100 million in 2009.

the Middle east and north Africa are increasingly important
markets for Holmen timber. Consignments of wood from
Iggesund sawmill are unloaded in Alexandria.

A dividend of SEK 756 million was paid to shareholders
during the year.

finanCing and finanCiaL riSk ManageMent. Holmen shall
have a strong financial position that provides financial stabil-
ity and enables the Group to make correct and long-term busi-
ness decisions relatively independently of the state of the
econo my and external financing possibilities. The target for
the debt/equity ratio is an interval of 0.3–0.8, and strategic
planning includes adjustment to this target.

The Group’s net financial debt decreased by

SEK 1 821 million, to SEK 5 683 million, during the year.
The year-end debt/equity ratio was 0.34 (31 December 2008:
0.48). The equity/assets ratio was 51 per cent (45).

At the end of 2009 financial liabilities amounted to
SEK 6 091 million, of which SEK 2 298 million was short
term. Cash, cash equivalents and financial receivables totalled
SEK 407 million. The Group has a contractually agreed credit
facility with a syndicate of banks that amounts to EUR 600
million and expires in 2012. Since 2009 the company has also
had a bilateral credit facility of SEK 1 300 million that expires
in 2016. Neither of the facilities had been used at year-end.
During the year, new long-term financing was raised
through an MTN loan of SEK 1 500 million with a four-year
maturity. Other financing during the year was arranged main-

4 6

H O L M E N A N N U A L R E P O R T 2 0 0 9

A dM InIs t rA tIo n r e p o r t

tax diSpUteS. In the dispute concerning Holmen’s French
subsidiary, the county administrative court decided in the
company’s favour in December 2008. This has now come
into force but had no impact on earnings.

On 15 January 2010, Stockholm County Administrative

Court announced its judgment on the tax case involving
Holmen’s subsidiary MoDo Capital AB. Under the Court’s
judgment, MoDo Capital’s depreciation deduction for the
1997 tax year is disallowed, which results in tax expense
estimated at a total of SEK 640 million. Holmen has previ-
ously made provision for the tax expense; it is thus not
antici pated that the judgment will have any impact on the
Group’s earnings. Holmen will appeal against the judgment
to the Administrative Court of Appeal.

Business outlook

In Holmen’s product markets 2009 was a difficult year.
Demand for printing paper and paperboard declined by more
than 10 per cent and demand for sawn timber fell substantial-
ly. This entailed major production cutbacks, which for
Holmen primarily took place in Holmen Paper. Meanwhile,
prices remained relatively stable and were even increased for
printing paper in Europe. Costs were lower than in the preced-
ing year, primarily thanks to lower fibre costs.

The outlook for 2010 is less favourable, in particular for
Holmen Paper; there are as yet no signs of an improvement
in demand. In addition, ongoing price negotiations are
expected to entail lower printing paper prices in Europe.
However, the prices for recovered paper, a key raw material,
have started to rise during the winter. The market for Igge-
sund Paperboard and Holmen Timber improved in the sec-
ond half of 2009, which may create better conditions for
2010. In the wood market, demand for timber is consider-
able and prices have risen, which increases costs for Holmen
Timber, but creates potential for some improvement in
Holmen Skog’s earnings from wood.

For Holmen Energi, 2010 may be another good year,
because prices are largely hedged at favourable levels. Hydro
power production depends on precipitation during the year.
Exchange rates have a major impact on profits. The larg-

est currency exposure, which is to the euro, is hedged for
2010 and 2011, and the exchange rates will be slightly more
favourable than the hedging contracts that applied for 2009.
However, the US dollar has weakened compared to one year
ago, which is a negative development.

Investments are estimated to exceed SEK 1 500 million

for 2010. One reason is the ongoing sawmill project at
Braviken. A survey of energy-related investments is in
progress, which may keep the level of investment high to
the extent and at the rate that these investments are decided
on and implemented.

Information on risks and uncertainties

inCOMe. Holmen’s income is mainly generated from the sale
of printing paper, paperboard and sawn timber in Europe.
Changes in prices and deliveries largely depend on market
equilibrium in Europe. This in turn is influenced by demand
patterns there, trends in production among European pro-
ducers and changes in imports into Europe, as well as by the
opportunities of exporting profitably from Europe. The
Group also has sizeable sales of wood from its own forests
and electricity from its own power generation. However,
wood and electricity are also major costs for the Group’s
industrial operations.

COStS. Holmen’s principal production costs are those of
wood, recovered paper, energy and chemicals. In addition,
the costs of deliveries, employees, maintenance and capital
are significant. Cost trends are primarily determined by
changes in the prices of input goods and employees, and by
how successfully the Group improves the efficiency of pro-
duction and administration.

A one percentage point change in deliveries, prices and
costs is estimated to have the following impact on operating
profit:*

seKm

products

Printing paper
Paperboard
Sawn timber

Company’s own raw materials

Wood from company forests**
Company-generated electricity**

seKm

Wood**
Recovered paper
Pulp
Electricity**
Other energy
Chemicals
Distribution costs
Other variable costs
Staff
Other fixed costs

deliveries

price

33
24
2

8
5

91
49
6

12
5

Costs

21
8
1
16
4
14
15
9
27
17

Based on income and costs for 2009.

** Sensitivity regarding the Group’s net purchases – taking account

of the company’s own production of raw materials – is
SEK 9 million for wood and SEK 11 million for electricity. The
price of the Group’s net consumption of electricity in Sweden,
which corresponds to some 80 per cent of the Group’s total net
consumption, is fully hedged for coming years (see note 2).

CUrrenCieS. Holmen’s earnings are affected by exchange rate
fluctuations, mainly because a significant proportion of the
Group’s sales are invoiced in currencies other than its costs
are. Currency hedging is used to reduce this exposure. Taking

H O L M E N A N N U A L R E P O R T 2 0 0 9

4 7

A dM InIs t rA tIo n r e p o r t

account of estimated currency flows, a one percentage point
weakening of the Swedish krona in relation to the currencies
below would have the following effects, without considering
currency hedges:

seKm

SEK / EUR
SEK / USD
SEK / GBP
SEK / other currencies

net

47
11
2
7

Taking account of currency hedges, a one percentage point weak-
ening of the Swedish krona would have a positive impact of about
SEK 20 million on the Group’s earnings for 2010. See also note 2.

intereSt rateS. Based on the duration of the fixed interest
rate period and net debt at 31 December 2009, a one per-
centage point change in the average market interest rate
would have an impact of about SEK 20 million on earnings
for 2010. As loans at fixed rates of interest mature, the expo-
sure to changes in market interest rates will increase. Disre-
garding the fixed interest rate period, the exposure to a one
percentage point change in the market interest rate is
SEK 57 million. See also note 2.

keY aSSeSSMentS and eStiMateS. Note 27 provides an
account of key assessments and estimates that, were they to
change, could affect earnings in 2010.

SeaSOnaL effeCtS. Holmen’s earnings are spread relatively
evenly over the year. The main seasonal effects are that staff
and maintenance costs are lower during the third quarter,
maintenance costs are usually higher in the fourth quarter
and that a large part of electricity production at the hydro
power plants takes place during the first and fourth quarters.

share information

the Share. Holmen has 83 996 162 shares outstanding, of
which 22 623 234 are class A shares and 61 372 928 are
class B shares. The company also has 760 000 bought-back
class B shares held in treasury. Each A share carries 10 votes
and each B share carries one vote; in other respects, the
shares carry the same rights. Neither laws nor the company’s
articles of association place any restrictions on the transfer-
ability of the shares.

dividend. The Board proposes that the AGM, to be held on
24 March 2010, approves a lower dividend of SEK 7 (9) per
share, which corresponds to 4 per cent of the Group’s closing
equity. The proposal to reduce the dividend is due to the
lower profitability in the industry, chiefly for paper products.
The Group is also making investments, such as building a
new sawmill.

Holmen is reformulating its dividend target, which used to

be 5–7 per cent of the Group’s equity. Instead, decisions on

share dividends will be based on an appraisal of the Group’s
profitability, future investment plans and financial position.
Over the past ten years the ordinary dividend has aver-
aged 5 per cent of equity. This means that half of earnings
per share per year have been paid out by way of ordinary
dividends.

SharehOLderS. At the end of the year, the Holmen shares
held by L E Lundbergföretagen AB (corporate identity
number 556056-8817) accounted for 52.0 per cent of the
total number of votes and 28.0 per cent of the capital, which
means that a Group relationship exists between L E Lund-
bergföretagen, whose registered office is in Stockholm, and
Holmen. The Kempe Foundations’ holdings of Holmen
shares amounted to 16.9 per cent of the votes and 7.0 per
cent of the capital at year-end. No other individual share-
holder controlled as much as 10 per cent of the votes. A list
of major owners’ shareholdings is provided in the section on
the Holmen share and shareholders on pages 28–30. The
employees have no holdings of Holmen shares via a pension
fund or similar system. There is no restriction on how many
votes each shareholder may cast at the AGM.

According to the company’s articles of association, the
Board shall have 7–11 members, and they are elected at the
AGM. The company’s articles contain no other rules regard-
ing the appointment or dismissal of board members or
regarding amendments to the articles.

Share bUY-baCkS. The company has no specific target for
share buy-backs. A mandate to buy back up to 10 per cent of
the company’s shares has applied in recent years. Any buy-
backs are regarded as a complement to dividend payments to
adjust the capital structure when circumstances have been
deemed favourable. The AGM on 24 March 2009 renewed
the Board’s authorisation to make decisions to buy back up
to 10 per cent of the company’s total shares. No buy-backs
took place in 2009, but 760 000 B shares were repurchased
in 2008 to secure the company’s commitments as part of the
incentive scheme (see below).

The Board proposes that the 2010 AGM authorises the
Board to buy back and transfer up to 10 per cent of all shares
in the company.

inCentive SCheMe. In 2008 the Group’s employees were
invited to acquire call options on class B shares in Holmen at
market price (calculated by an independent bank). As a result,
1 492 people (one third of all employees) bought a total of
758 300 call options. The price of each option was SEK 20,
and their exercise price is SEK 224.50 per share. Each option
entitles the holder to purchase one share during the exercise
period in May/June 2013. Holmen’s commitments in the
scheme have been secured through buy-backs of own shares.

4 8

H O L M E N A N N U A L R E P O R T 2 0 0 9

A dM InIs t rA tIo n r e p o r t

Guidelines for determining salaries and other
remuneration to members of senior management

The Board proposes that the 2010 AGM resolves in favour
of the following guidelines for determining salaries and other
remuneration for senior management. See note 5 on page 66
for the guidelines adopted by the AGM in 2009.

These guidelines refer to terms and conditions of employ-

ment for the CEO and other members of senior manage-
ment, namely the business area managers and heads of
Group staff functions who report directly to the CEO.

SaLar Y and Other reMUneratiOnS. The remuneration for the
CEO and the senior management shall consist of a fixed,
market-based salary. Other benefits, mainly car and accomo-
dation, shall, insofar as they are provided, represent a limited
part of the remuneration. No variable remuneration shall be
paid.

penSiOn. The normal retirement age shall be 65 years. The
company and the employee shall be mutually entitled to
request that pension be drawn from 60 years of age. Any pen-
sion drawn before 65 years of age shall be either defined benefit
or defined premium. Pension drawn after 65 years of age shall
be in accordance with the ITP plan. Over and above this, the
employee may also be entitled to a supplementary old age pen-
sion. In this case, there shall be a gradual transition from the
existing arrangement with a defined benefit pension to one in
which the pension is defined premium.

nOtiCe and SeveranCe paY. Discontinuation notice should nor-
mally be one year if it is given by the company, and six months
if it is given by the employee. In the event of notice being given

by the company, severance pay can be paid corresponding to
no more than 24 months’ salary. For new contracts, salary
during the period of notice and severance pay shall not exceed
a total of an amount equivalent to two years’ salary.

inCentive SCheMe. Any decision on a share and share price
based incentive scheme for senior company personnel shall
be made by the AGM.

reMUneratiOn COMMittee. A remuneration committee
appointed from among the members of the Board shall pre-
pare business pertaining to the CEO’s salary and other con-
ditions of employment and submit proposals on such issues
to the Board for decision. Detailed principles for determining
the salaries, pension rights and other remuneration to senior
management shall be laid down in a pay policy adopted by
the remuneration committee.

departUreS in individUaL CaSeS. The Board shall be entitled
to depart from these guidelines in individual cases should spe-
cial reasons exist. In the event of such a departure, informa-
tion thereon and the reasons therefore shall be submitted to
the next Annual General Meeting.

employees

hOLMen’S hr pOLiCY focuses on developing leadership, the
organisation and employees. HR work is governed by laws,
contracts and internal policies. Holmen’s combined HR poli-
cies constitute the Group’s approach to staff policy, and the
company has worked with strategic goals for its HR activ-
ities for several years.

the chief safety representative at Iggesund Mill talks to one of the operators.

H O L M E N A N N U A L R E P O R T 2 0 0 9

4 9

A dM InIs t rA tIo n r e p o r t

The Group’s average number of employees in terms of
full-time equivalents was 4 577 (4 829) in 2009. The change
is due to staff cuts at Hallsta Paper Mill and the closure of
Wargön Mill.

the nUMber Of indUStriaL aCCidentS per 1 000 employees
resulting in more than eight hours of absence fell to 31 (38)
in the Group. Holmen aims to reduce the number of acci-
dents to fewer than 10 per 1 000 employees by 2011. No
fatal accidents have occurred involving any of the company’s
employees for a very long time.

tOtaL SiCkneSS abSenCe continued to decrease at Holmen’s
units as a result of various measures; it fell to 3.7 per cent
(4.3) in the Group in 2009.

the prOpOrtiOn Of feMaLe ManagerS at Holmen’s units is
increasing year after year and equalled 16 per cent (13) in
2009. The proportion of women employed in the Group was
19 per cent. The aim is for the proportion of female manag-
ers to correspond to the proportion of women employed.

Fourteen women are members of the management teams

of the Group, business areas and mills. Two of Holmen’s
Board members are women, one of whom was elected by the
AGM and the other is an employee representative. See note 5
and pages 36-38 for more details.

eMpLOYee SUrveY. The Holmen Inblick employee survey was
conducted in 2009. It showed that Holmen has become a
better workplace since the previous survey in 2007. Com-
pared to process industries in Europe, Holmen is well above
average. Many employees are committed to their work situa-
tion, which is illustrated by the response rate of 78 per cent.
Holmen earmarks significant resources each year to
develop employees’ skills. This mainly comprises increasing
professional competence and giving employees the opportu-
nity of advancing to more qualified positions.

WOrkfOrCe redUCtiOnS. In September Holmen decided to
shut down the older board machine at Workington Mill in
December 2009. As a result, Holmen reached an agreement
with the trade union organisations to reduce the number of
employees by 99.

The organisation in Braviken is undergoing an overhaul
to improve efficiency. Following trade union negotiations,
Holmen decided to make staff cuts that affect 95 employees.
By February 2010 a total of 35 people had accepted the offer
of a company pension or retirement pension, and 17 were
offered employment at Holmen’s new sawmill at Braviken.
Negotiations with the other employees had not yet been con-
cluded at that point.

environmental information

The environmental aspects of Holmen’s business are regulated
by laws and permits in each country. The allocation of environ-
mental responsibility and the organisation and management of
environmental activities are based on the Group’s environmen-
tal policy. At the production sites, various types of rules are
integrated as key elements in the planning of production and
investments. Holmen’s environmental policy focuses on the sig-
nificance to the business of energy and climate change issues.
The environmental standards at Holmen’s facilities are

high. This is a result of investments made in process and
treatment equipment, continuous improvements implement-
ed within the framework of the environmental and energy
management systems at the facilities and statutory supervi-
sion conducted by authorities.

The environmental activities largely comprise the plan-
ning of issues relating to environmental conditions set by rel-
evant government authorities. The main environmental
impact of Holmen’s facilities consists of emissions to air and
water and the occurrence of noise and waste. As considerable
attention is currently being given to energy and climate
change, fossil fuels and biofuels are of great interest.

Holmen actively aims to use electricity and heating efficient-

ly, reduce emissions of fossil carbon dioxide and increase its
self-sufficiency in terms of energy.

Several projects, studies and corrective measures related to
the environment were carried out in 2009. The following are a
sample.

•

A line for energy-efficient manufacture of thermo-
mechanical pulp (TMP) was inaugurated at Braviken
Paper Mill in 2008. Compared to the previous line, the
electricity required fell by 15–20 per cent in 2009. The
target is a 30 per cent reduction.
A new plant for chemical flotation has been in operation
since the end of the year next to the existing plant (from
1977) for wastewater treatment at Iggesund Mill. This will
ensure good conditions in the aquatic environment outside
the mill for a long time to come.
The Group’s total fossil carbon dioxide emissions fell by
about 35 per cent from 2008 levels. Emissions were halved
at the Swedish units. This was the result of gradually
replacing oil with biofuels and improving energy efficiency.
Since 2005, fossil carbon dioxide emissions have dropped
by almost 65 per cent in the Swedish operations.
Several studies were conducted in consultation with the
environmental authorities at industrial sites which have
been contaminated by business activities that have been
discontinued and where Holmen has run operations. In
2009, studies relating to the sawmills in Stocka, Håsta-
holmen and Lännaholm and the sulphite mills in
Strömsbruk, Domsjö and Loddby had reached various
stages. A survey concerning the mechanical pulp mill in
Bureå was initiated during the year.

5 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

•

Operations at Wargön Mill were closed down at the end of
2008. During 2009, work was carried out to assess the
presence of pollutants on the factory site and in buildings.
This work will be concluded in 2010.

aCtivitieS in SWeden. At the turn of 2009/2010 Holmen was
engaged in environmentally hazardous activities at five facili-
ties that require environmental permits pursuant to the
Swedish Environmental Protection Act or the Swedish Envi-
ronmental Code. The permits include conditions on emis-
sions allowed to air and water. The permits per facility are
shown below:

Hallsta Paper Mill
Braviken Paper Mill
Iggesund Mill
Skärnäs Terminal
Iggesund Sawmill

permits according to:

environmental
protection Act

environmental
Code

in 2000

in 2003

in 1994

in 2002

in 1999

Holmen also has a production unit in Strömsbruk with
operations that the company is obligated to report to author-
ities. The sales from these units accounted for 58 per cent of
the Group’s net sales.

In 2009, the first steps were taken to apply for a new envi-
ronmental permit pursuant to the Environmental Code at the
paperboard mill in Iggesund. Corresponding work was
launched during the year for Iggesund Sawmill. No other per-
mits of significance need to be renewed or revised in 2010.

Holmen is building a sawmill adjacent to Braviken Paper
Mill. The county administrative board granted a permit under
the Environmental Code in 2009 and issued related conditions
for the construction of the sawmill and the operations that
will be run there.

Holmen Energi produces electricity at Holmen’s wholly
and partly owned hydro power plants. The permits, held by all
the units, for water operations (regulations in the Environ-
mental Code) include environmental conditions. In 2006 a
decision by the Environmental Court gave the go-ahead to
construct a new power station on the River Iggesundsån. This
power plant has been in use since the end of 2009 and replaces
three old power stations on the site.

Reviews of past water rights decisions may be requested
under the Environmental Code. In the case of the river Ljusnan,
on which Holmen Energi co-owns a few hydro power plants,
such a review is now underway for expansion of production
capacity. In river Faxälven’s mountain lakes, of which Holmen
also has partial ownership, a review has started for regulation
of lake Limningen. The storage reservoir is on both Swedish
and Norwegian ground.

The Group’s mills are participating in the EU trade in car-
bon dioxide emission rights. The Swedish mills are also active
in the trading of electricity certificates.

The operations at the company’s facilities in Sweden were

A dM InIs t rA tIo n r e p o r t

certified at the turn of 2009/2010 in accordance with ISO
14001 (environmental management system) and SS 627750
(energy management system). The forestry operations were
certified in accordance with ISO 14001, Forest Stewardship
Council (FSC) and the Programme for the Endorsement of
Forest Certification schemes (PEFC).

During the year there were a number of cases of exceeded

threshold values, complaints and incidents in the industrial
and forestry operations. None of them had any environmental
impact or effect on earnings, and they were all resolved by
means of corrective measures in accordance with the opera-
tions’ environmental management systems.

aCtivitieS OUtSide SWeden. Of the Group’s operations out-
side Sweden, the facilities in Workington, the UK, and in
Madrid, Spain, have some kind of environmental impact.
The sales from these facilities accounted for 21 per cent of
the Group’s net sales.

In 2002, Workington Mill received an environmental per-
mit for its activities pursuant to the EU’s IPPC Directive. In
2006, Holmen Paper Madrid received an environmental per-
mit pursuant to the same Directive.

The mills in Workington and Madrid are certified in
accordance with ISO 14001. An energy management system
was introduced and certified at the mill in Madrid in 2009.
Workington Mill has been running its business in accordance
with a certifiable energy management system since the begin-
ning of 2008.

sustainability report

Holmen’s HR and environmental activities in 2009 are
described in the sustainability report titled Holmen and its
World 2009, which will be published at the end of March
2010. It will also be published on the website, where links to
supplementary environmental information will be available.
Together, these constitute Holmen’s complete sustainability
report for 2009.

the majority of seedlings planted in Holmen’s forests come
from the company’s own nurseries.

H O L M E N A N N U A L R E P O R T 2 0 0 9

5 1

A d m i n i s t rA t i o n r e p o r t

Income statement

GroUp, seKm

Net sales

Other operating income

Change in inventories

Raw materials and consumables

Staff costs

Other operating costs

Depreciation and amortisation according to plan

Impairment losses

Change in value of biological assets

Interest in earnings of associates

operating profit

Finance income

Finance costs

profit before tax

Tax

profit for the year

Attributable to:
owners of the parent company

Earnings per share (SEK)

basic

diluted

Average number of shares (million)

basic

diluted

note

6, 21

10, 11

2009

18 071

600

-381

-9 017

-2 662

-3 709

-1 320

-22

1 620

-267

1 366

-360

1 006

12.0

84.0

2008

19 334

755

106

-10 929

-2 965

-3 885

-1 343

-57

-16

1 051

-328

740

-98

642

7.6

7,6

84.3

Statement of comprehensive income

note

GroUp, seKm

profit for the year

other comprehensive income

Cash flow hedging

Revaluation of derivatives recognised in equity

Transferred from equity to the income statement

Transferred from equity to non-current assets

Actuarial gains and losses in respect of pensions,
incl. special employer’s contributions

Translation difference on foreign operation

Hedging of currency risk in foreign operation

Tax attributable to other comprehensive income

total other comprehensive income

total comprehensive income

Attributable to:
owners of the parent company

2009

1 006

567

343

-1

-256

254

-310

613

1 619

2008

642

-1 272

309

-1

-169

445

-541

452

-778

-135

5 2

H O L M E N A N N U A L R E P O R T 2 0 0 9

Balance sheet

GroUp at 31 december, seKm

non-current assets

Intangible non-current assets

Property, plant and equipment

Biological assets

Interests in associates

Other shares and participating interests

Non-current financial receivables

Deferred tax assets

total non-current assets

Current assets

Inventories

Trade receivables

Current tax receivable

Other operating receivables

Current financial receivables

Cash and cash equivalents

total current assets

total assets

equity

Share capital

Other contributed capital

Reserves

Retained earnings incl. profit for the year

total equity attributable to the owners of the parent company

non-current liabilities

Non-current financial liabilities

Pension provisions

Other provisions

Deferred tax liabilities

total non-current liabilities

Current liabilities

Current financial liabilities

Trade payables

Current tax liability

Provisions

Other operating liabilities

total current liabilities

total liabilities

total equity and liabilities

note

8, 19

For information on the Group’s pledged collateral and contingent liabilities see note 22.

A d m i n i s t rA t i o n r e p o r t

2009

12 473

11 109

1 770

151

304

25 845

2 850

2 712

490

182

6 331

32 176

4 238

281

-70

12 056

16 504

3 472

320

1 102

5 045

9 939

2 298

1 911

102

274

1 149

5 733

15 672

32 176

2008

106

13 142

11 080

1 824

342

26 593

3 434

3 144

141

548

653

8 009

34 602

4 238

281

-672

11 795

15 641

3 223

354

1 080

4 819

9 475

4 756

2 282

277

2 157

9 486

18 960

34 602

H O L M E N A N N U A L R E P O R T 2 0 0 9

5 3

A d m i n i s t rA t i o n r e p o r t

Changes in equity

GroUp, seKm

opening equity 1 Jan 2008

Comprehensive income

Dividends paid

Buy-backs of company’s own shares

Premiums received for issued call options

Closing equity 31 dec 2008

Comprehensive income

Dividends paid

Closing equity 31 dec 2009

reserves

Share capital

Other contri b
uted capital

Translation
reserve

4 238

281

-68

Hedge
reserve

-55

-712

-767

670

-96

Retaind earn
ings incl. profit
for the year

12 429

521

-1 017

-153

11 795

1 017

-756

12 056

Total
equity

16 932

-135

-1 017

-153

15 641

1 619

-756

16 504

5 4

H O L M E N A N N U A L R E P O R T 2 0 0 9

Cash flow statement

A d m i n i s t rA t i o n r e p o r t

note

GroUp, seKm

operating activities
Profit before tax
Adjustments for non-cash items
Depreciation and amortisation according to plan
Change in value of biological assets
Change in provisions
Other*
Paid income taxes
Cash flow from operating activities
before changes in working capital

Cash flow from changes in working capital
Change in inventories
Change in trade receivables and other operating receivables
Change in trade payables and other operating liabilities
Cash flow from operating activities

investing activities
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Acquisition of intangible non-current assets
Acquisition of biological assets
Disposal of biological assets
Increase in non-current financial receivables
Repayment of non-current financial receivables
Acquisition of shares and participating interests
Disposal of shares and participating interests
Cash flow from investing activities

Financing activities
Raised long-term loans
Repayments of long-term loans
Change in current financial liabilities
Change in current financial receivables
Buy-back of company’s own shares
Premiums received for issued call options
Dividends paid to the owners of the parent company
Cash flow from financing activities

Cash flow for the year
Opening cash and cash equivalents
Exchange difference in cash and cash equivalents
Closing cash and cash equivalents

2009

1 366

1 320
-16
15
-157
-334

2 195

621
445
-389
2 873

-747
28
0
-5
5
-107
3
-6
12
-818

1 492
-584
-2 672
-1
-
-
-756
-2 522

-467
653
-4
182

2008

740

1 343
16
310
128
-192

2 345

-373
-40
-273
1 660

-1 135
23
-8
-12
12
0
0
-5
2
-1 124

927
-109
31
17
-153
15
-1 017
-289

247
394
12
653

* Other adjustments primarily consist of currency effects and the marking to market of financial instruments, profit/loss from associates,

impairment losses and reversals of impairment losses on non-current assets as well as gains/losses on sale of non-current assets.

Change in net financial debt

Opening net financial debt
Cash flow

Operating activities
Investing activities (excl. non-current financial receivables)
Buy-back of company’s own shares
Premiums received for issued call options
Dividends paid

Actuarial revaluation of pension liability
Foreign exchange effects and changes in fair value
Closing net financial debt

2009

-7 504

2 873
-714
-
-
- 756
13
405
-5 683

2008

-5 977

1 660
-1 124
-153
15
-1 017
-162
-746
-7 504

H O L M E N A N N U A L R E P O R T 2 0 0 9

5 5

A d m i n i s t rA t i o n r e p o r t

Parent company

inCome stAtement, seKm

note

2009

2008

CAsH FLoW stAtement, seKm

note

2009

2008

13 436

14 382

447

-368

-6 791

-1 929

-3 907

-27

861

1 156

-436

1 607

388

1 995

-331

1 664

596

101

-8 252

-2 320

-4 296

-24

186

-867

-575

-56

-630

195

-436

2009

1 664

2008

-436

operating activities

Profit/Loss after financial items

Adjustments for non-cash items

Depreciation and amortisation
according to plan

Change in provisions

Other *

Paid income taxes

Cash flow from operating activities
before changes in working capital

Cash flow from changes in working capital

Change in inventories

Change in operating receivables

Change in operating liabilities

Cash flow from operating activities

investing activities

Shareholders’ contribution paid

Acquisition of property, plant and equipment

Disposal of property, plant and equipment

Acquisition of intangible non-current assets

Disposal of intangible non-current assets

Increase in external non-current
financial receivables

Repayment of external non-current
financial receivables

Acquisition of subsidiaries

-1 470

Disposal of subsidiaries

516

403

-1

-242

677

323

-1

302

-845

2 341

-1 281

1 607

-575

-98

-323

451

624

-167

1 244

357

523

392

-298

1 861

-329

-40

-1

-2

-299

-128

-228

-49

-8

-208

-5

Acquisition of shares and participating interests

Disposal of shares and participating interests

Cash flow from investing activities

-363

-482

Financing activities

Raised external long-term loans

Repayments of external long-term loans

Change in other financial liabilities

Change in other financial receivables

Buyback of company’s own shares

Premiums received for issued call options

Dividends paid to the owners
of the parent company

Group contributions received

Group contributions paid

Cash flow from financing activities

Cash flow for the year

Opening cash and cash equivalents

Closing cash and cash equivalents

1 492

-563

-4 124

1 132

927

-106

386

-153

-756

-1 017

866

-1 952

-454

542

656

-4

703

239

303

542

* Other adjustments primarily consist of currency effects and the marking to

market of financial instruments, impairment losses on non-current assets as
well as gains/losses on sale of non-current assets.

Net sales

Other operating income

Change in inventories

Raw materials and consumables

Staff costs

Other external costs

Depreciation and amortisation
according to plan

operating profit

Income from interests in Group companies

Income from interests in associates

Interest income and similar income

Impairment losses on financial
non-current assets

Interest costs and similar costs

profit/Loss after financial items

Appropriations

profit/Loss before tax

Tax

profit/Loss for the year

6, 21

10,11

7, 24

stAtement oF CompreHensiVe inCome, seKm

profit/Loss for the year

other comprehensive income

Cash flow hedges

Revaluation of derivatives recognised in equity

Transferred from equity to the income statement

Transferred from equity to non-current assets

Tax attributable to other comprehensive income

total other comprehensive income

total comprehensive income

5 6

H O L M E N A N N U A L R E P O R T 2 0 0 9

BALAnCe sHeet,
at 31 december, seKm

Assets

non-current assets

Intangible non-current assets

Property, plant and equipment

Financial non-current assets

Shares and participations

note

2009

2008

BALAnCe sHeet,
at 31 december, seKm

equity and liabilities

equity

Restricted equity

2 590

2 575

Share capital

Statutory reserve

13, 24

14 411

15 591

Revaluation reserve

Non-current financial receivables

2 629

2 722

Non-restricted equity

total non-current assets

19 645

20 963

Retained earnings incl. hedge reserve

Current assets

Inventories

Operating receivables

Current tax receivable

Current investments

Cash and cash equivalents

total current assets

total assets

2 142

2 371

2 629

2 764

117

542

4 675

6 140

24 320

27 103

Profit/Loss for the year

total equity

Untaxed reserves

provisions

Pension provisions

Tax provisions

Other provisions

Deferred tax liability

total provisions

Liabilities

Non-current financial liabilities

Current financial liabilities

Current tax liabilities

Operating liabilities

total liabilities

total equity and liabilities

pledged collateral and contingent liabilities

Pledged collateral

Contingent liabilities

A d m i n i s t rA t i o n r e p o r t

note

2009

2008

4 238

1 577

100

4 238

1 577

100

3 112

1 664

2 989

-436

10 691

8 468

2 363

2 751

8, 19

559

538

650

272

1 185

1 031

5 652

1 916

6 464

4 713

2 419

3 676

10 081

14 853

24 320

27 103

2009

2008

688

766

CHAnGes in eqUity, seKm

Share capital

Statutory
reserve

Revaluation
reserve

Hedge
reserve

Retained
earnings

Profit/Loss
for the year

Total equity

restricted equity

non-restricted equity

opening equity 1 Jan 2008

Appropriation of profits

Total comprehensive income

Group contributions received

Dividends paid

Buy-backs of company’s own shares

Premiums received for issued call options

4 238

1 577

100

-845

Closing equity 31 dec 2008

4 238

1 577

100

-826

Appropriation of profits

Total comprehensive income

Group contributions received

Dividends paid

Closing equity 31 dec 2009

677

4 238

1 577

100

-149

5 049

-548

472

-1 017

-153

3 815

-436

638

-756

3 261

-548

548

-436

436

1 664

10 435

-1 281

472

-1 017

-153

8 468

2 341

638

-756

1 664

10 691

H O L M E N A N N U A L R E P O R T 2 0 0 9

5 7

n o t e s

Notes to the financial statements

Amounts in SEKm, except where otherwise stated

note 1 Accounting policies

The accounting policies for the Group presented below have been applied con
sistently to all periods included in the Group’s financial statements except where
otherwise stated below. The Group’s accounting policies have been applied con
sistently to the reporting by and the consolidation of the parent company, sub
sidiaries and associates.

Compliance with standards and statutory
requirements

The consolidated financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB) and the interpretative recommendations issued by the
International Financial Reporting Interpretations Committee (IFRIC), which have
been approved by the EU. The Swedish Financial Reporting Board’s recommenda
tion (RFR 1.2 Supplementary Accounting Rules for Groups) has also been applied.

The parent company applies the same accounting policies as the Group except
in the cases that are commented on separately under each section. The parent
company’s accounts are prepared in accordance with RFR 2.2 Accounting for
Legal Entities. The differences between the policies applied by the parent com
pany and those applied by the Group are due to restrictions in the possibilities of
the parent company to apply IFRS as a consequence of the Swedish Annual
Accounts Act, Tryggandelagen (a Swedish act safeguarding pension obligations),
and in some cases due to tax reasons.

Valuation principles applied in preparing of the
financial statements of the parent company and
the Group

Assets and liabilities are stated at acquisition cost, except for biological assets and
certain financial assets and liabilities, which are valued at fair value. In the parent
company biological assets and financial liabilities are not valued at fair value.

Functional currency and reporting currency

The functional currency is the currency used in the primary financial environ
ments in which the companies conduct their business. The parent company’s
functional currency is the Swedish krona, (SEK), which is also the reporting cur
rency of the parent company and the Group. This means that the financial reports
are presented in Swedish kronor.

Assessments and estimates in the financial
statements

Preparing the financial statements in accordance with IFRS requires the compa
ny’s management to make assessments and estimates, as well as to make as
sumptions that affect the application of the accounting policies and the recog
nised amounts for assets, liabilities, income and costs. The actual outcome may
deviate from these assessments and estimates.

The estimates and assumptions are reviewed regularly. Changes in estimates are
recognised in the accounts for the period in which the change is made if the
change only affects that period, or in the period the change is made and in later
periods if the change affects current and coming periods. See also note 27 Key
assessments and estimates.

Changes in accounting policies

The following section describes the amended accounting policies that the Group
has applied since 1 January 2009. Other IFRS amendments effective as of 2009
have had no material impact on the Group’s accounts.

Presentation of the financial statements
The Group has applied the amended IAS 1 Presentation of Financial Statements

since 1 January 2009. As a result of the amendment, income and costs previous
ly recognised directly in equity are instead now recognised in other comprehen
sive income, which Holmen presents in a separate statement titled statement of
comprehensive income, directly following the income statement. Another result
of the amendment is that Holmen has added a statement of changes in equity.
Comparative periods have been adapted throughout the annual report to follow
the new presentation. The changes only affect presentation, so no amounts have
been restated – neither regarding earnings per share nor other line items in the fi
nancial statements.

segment reporting
The Group has applied the new IFRS 8 Operating Segments since 1 January
2009; this replaces IAS 14 Segment Reporting. IFRS 8 introduces a management
perspective on how to define and present operating segments. The standard has
been applied in accordance with its transitional provisions, by adapting the data
for the comparative year to the requirements in IFRS 8. Application of IFRS 8 has
not entailed any change to segmentation at Holmen, because the segments
identified according to IAS 14 are those that Holmen’s president and CEO follows
up. The company continues to apply the same accounting policies in its operat
ing segments as in the consolidated accounts, i.e. IFRSs, so none of the recog
nised amounts have changed from those previously recognised.

Disclosures about financial instruments
As a result of amendments to IFRS 7 Financial Instruments, disclosures applicable
as of 1 January 2009 affect Holmen’s financial reporting, starting with the annual re
port for 2009. The amendments mainly comprise new requirements on disclosures
about financial instruments measured at fair value on the balance sheet. Each in
strument is classified as belonging to one of three levels depending on the quality of
the input data in the measurement. The classification determines which disclosures
to state about the instruments and how to disclose them; level 3, with the lowest in
put data quality, is subject to more disclosure requirements than the other levels.
These disclosure requirements primarily affected notes 7 and 14. The IFRS 7
amendments also entail certain changes to liquidity risk disclosures. Pursuant to the
transitional provisions in IFRS 7, comparative data have not been stated during the
first year of application for the disclosures required by the amendments.

Borrowing costs
The Group has applied the amended IAS 23 Borrowing Costs since 1 January
2009. As a result of the amendment, the Group capitalises borrowing costs in the
acquisition cost of qualifying assets with a commencement date of 1 January
2009 or later. Previously, borrowing costs affected profit/loss in the period to
which they were attributable instead of being capitalised. The amendment is be
ing applied prospectively, in accordance with the transitional provisions in IAS 23.
For a more detailed description of this accounting policy, see the section titled
Finance income and costs further on in this note.

new and amended accounting policies applicable as of 2010
A number of new or amended IFRSs are not effective until the coming financial
year, and Holmen has opted not to apply any of these standards in advance.
Similarly, there are no plans to apply any of the new or amended standards in ad
vance that come into effect in financial years after 2010. New or amended IFRSs
applicable as of 2010 are not estimated to have any material impact on the finan
cial statements.

Parent company
In addition to the amended accounting policies stated above for the Group, the
following changes affected the parent company in 2009.

Recommendation RFR 2.2. Accounting for Legal Entities, issued by the Swedish
Financial Reporting Board, states that the amended version of IAS 1 Presentation
of Financial Statements shall be applied with certain exceptions. One effect for
the parent company compared to previous reporting is that a statement of com
prehensive income has been added after the income statement. Another effect is
that Holmen has added a statement of changes in equity.

segment reporting

The Group’s operations are divided into operating segments, based on which

5 8

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e s

parts of the operation the company’s highest executive decisionmaker follows
up, known as the management approach. The segmentation criterion is based on
the Group’s business areas. This agrees with the Group’s operating structure and
the internal reporting to the CEO and the Board. The items recognised in the in
come, assets and liabilities of the operating segment are measured in accord
ance with the income, assets and liabilities that the company’s highest executive
decisionmaker follows up. See note 3 for more details of the classification and
presentation of operating segments.

Classification etc

Substantially, noncurrent assets, noncurrent liabilities and provisions consist
solely of amounts that are expected to be recovered or paid more than 12
months after the balance sheet date. Substantially, current assets and current
liabilities consist of amounts that are expected to be recovered or paid within
12 months of the balance sheet date.

Consolidation principles

subsidiaries
A subsidiary is a company over which the parent company, Holmen AB, exer
cises control. Control means the right directly or indirectly, to formulate a com
pany’s financial and operative strategies with the object of obtaining economic
benefits. In the determination of whether one company has control over another,
potential shares with an entitlement to vote and that can be exercised or convert
ed at short notice are taken into account.

The consolidated financial statements are prepared using the acquisition meth
od, whereby the parent company indirectly acquires the assets and assumes the
liabilities of the subsidiary, valued at fair value. The difference between the acqui
sition cost of the shares and the fair value of the acquired identifiable net assets
is treated as goodwill. The subsidiary companies’ income and costs, and their
assets and liabilities, are stated in the consolidated financial statements as of the
date when the Group gains control (acquisition date) until such time as the Group
no longer has control. IntraGroup receivables and liabilities, transactions be
tween companies in the Group and therewith related unrealised gains are elimi
nated in their entirety.

Associates
Shareholdings in associates, in which the Group controls a minimum of 20 per
cent and a maximum of 50 per cent of the votes, or otherwise exercises a signifi
cant influence, are stated in accordance with the equity method.

The equity method means that the carrying amount of the shares in the associ
ates stated in the consolidated accounts corresponds to the Group’s interest in
the associates’ equity and any fair value adjustments arising upon consolidation.
The Group’s interest in the net earnings of associates after tax attributable to par
ent company owners adjusted for any amortisation or reversal of acquired fair
value adjustments. respectively is stated in the consolidated income statement
as “Interest in earnings of associates”. Dividends received from the associates
reduce the carrying amount of the investment. Unrealised gains arising as a con
sequence of transactions with associates are eliminated in relation to the owned
share of capital.

When the Group’s interest in the recognised losses of the associates exceeds the
carrying amount of the interests stated in the consolidated accounts’ the value of
the interests is written down to zero. Losses are also offset against unsecured
longterm financial balances that, in financial terms, consist of part of the owning
company’s net investment in the associates. Any further losses are not recog
nised unless the Group has provided guarantees to cover losses incurred by the
associates. The equity method is applied until such time as the significant influ
ence no longer exists.

Foreign currency

transactions denominated in foreign currencies
Transactions in foreign currencies are translated into the functional currency at
the exchange rates prevailing on the transaction dates. Monetary assets and lia
bilities in foreign currencies are translated into the functional currency at closing
rates. Exchange differences arising on such translations are stated in the income

statement. Nonmonetary assets and liabilities that are stated at historical acqui
sition cost are translated at the exchange rates prevailing on the transaction date.

Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and other fair
value adjustments arising on consolidation, are translated in the consolidated fi
nancial statements, from the foreign operation’s functional currency, to the
Group’s reporting currency (Swedish kronor) at closing rates. The income and
costs of foreign operations are translated into Swedish kronor at an average rate
that is an approximation of the exchange rates prevailing on the date of each
transaction. Differences arising during the currency translation of foreign opera
tions and the related effects of hedging net investments are recognised in other
comprehensive income and are accumulated in a separate component of equity
called the translation reserve. In the disposal of a foreign operation, the accumu
lated translation differences attributable to the business are realised, less any
currency hedging, in the consolidated income statement. The company opted to
value the accumulated translation differences attributable to foreign operations
at zero at the time of the changeover to IFRS.

Companies operating on behalf of the parent
company

The parent company’s business is largely conducted through companies operat
ing on its behalf: Holmen Paper AB, Iggesund Paperboard AB, Holmen Timber
AB, Holmen Skog AB and Holmen Energi AB.

The parent company is liable for all commitments entered into by these compa
nies. All income, costs, assets and liabilities, which arise in the operations con
ducted by the companies, are recognised in Holmen AB’s accounts except most
parts of investments made as well as some sale of forest properties, that are in
stead recognised in some of the Group’s subsidiaries.

Income

net sales
Net sales refers to invoiced sales (excluding value added tax) of products, wood
and energy. The amount recognised is reduced by discounts, and similar reduc
tions in income, and also includes exchange differences related to the sales.
Sales are recognised after the critical risks and benefits associated with owner
ship of the sold goods have been transferred to the buyer, and there is no remain
ing right or possibility to retain actual control over the sold goods.

other operating income
Income from activities not forming part of the company’s main business is stated
as other operating income. This item mainly comprises sales of biproducts, rent
and land lease income, income from allotted electricity certificates, income
earned from emission rights and gains/losses on sales of noncurrent assets.

State grants are recognised in the balance sheet as deferred income when it is
reasonably certain that the grant will be received and that the Group will satisfy
the conditions associated with the grant. Grants are distributed systematically in
the income statement in the same way and over the same periods as the costs
the grants are intended to cover. State grants related to assets are recognised in
the balance sheet as a reduction in the carrying amount of the asset.

Finance income and costs

Finance income and costs consist of interest income and interest costs, dividend
income and revaluations of financial instruments valued at fair value, as well as
unrealised and realised currency gains and losses. Interest income on receiva
bles and interest costs on liabilities are calculated by using the effective interest
method. Interest costs include transaction costs for loans, which have been dis
tributed over the duration of the loan; this also applies to any difference between
the funds received and the repayment amount. Dividend income is recognised
when the dividend is established and the right to receive payment is judged to be
certain.

Interest costs normally affect profit/loss in the period to which they relate.
Borrowing costs attributable to the purchase, construction or production of qual
ifying assets are to be capitalised as part of the asset’s cost. A qualifying asset is

H O L M E N A N N U A L R E P O R T 2 0 0 9

5 9

n o t e s

an asset that takes a substantial period of time to get ready for intended use.
Borrowing costs for significant investment projects are capitalised in the Group.
Note 11 describes the method applied.

taxes

Income taxes comprise current tax and deferred tax. Income taxes are recognised
in the income statement except when underlying transactions are recognised in
other comprehensive income or directly in equity, in which case the associated tax
effect is also recognised in other comprehensive income or directly in equity.
Current tax is the tax to be paid or received for the year in question, using the tax
rates that have been decided on, or to all intents and purposes have been decided
on at the balance sheet date. This also includes any adjustment to current tax at
tributable to previous periods. Deferred tax is calculated using the balance sheet
method on the basis of temporary differences between carrying amounts and
values for tax purposes of assets and liabilities, applying the tax rates and rules
that have been approved or announced at the balance sheet date. Temporary differ
ences are not taken into account in goodwill arising upon consolidation, nor in
tempo rary differences attribut able to interests in subsidiaries and associates that
are not expected to become liable to taxation in the foreseeable future. In the
parent company’s accounts, untaxed reserves are recognised inclusive of deferred
tax liability.

Deferred tax assets in respect of taxdeductible temporary differences and loss
carryforwards are recognised only to the extent that it is likely they will be uti
lised and entail lower tax payments in the future. Deferred tax assets and
deferred tax liabilities in the same country are recognised net.

earnings per share

The calculation of earnings per share (EPS) is based on the Group’s profit for the
year attributable to the parent company’s owners and the weighted average
number of shares outstanding during the year. In calculating diluted EPS, the
earnings and the average number of shares are adjusted to take account of the
effects of any potential ordinary shares having a diluting effect, which during
reported periods stem from call options acquired by employees within the frame
work of the incentive scheme. The dilution effect of options affects the number of
shares and only arises when the exercise price is lower than the listed price, and
is larger the wider the spread between the exercise price and the listed price.

Financial instruments

Financial instruments are valued and recognised in the consolidated financial state
ments in accordance with IAS 39. The parent company applies the same policies,
subject to the restrictions referred to in Chapter 4 Section 14 of the Swedish Annual
Accounts Act.

A financial asset or liability is stated in the balance sheet when the company be
comes a party in accordance with the contractual conditions of the instrument. A
financial asset is removed from the balance sheet when the rights referred to in
the contract have been realised or mature, or when the company no longer has
control over them. A financial liability is removed from the balance sheet when the
undertaking in the contract is performed or expires in some other way. Spot
transactions are stated in accordance with the settlement date principle.

Bank balances, loan receivables and trade receivables are measured at amor
tised cost. Impairment testing is performed continually, using objective criteria
for such assets. Impairment losses are recognised for the asset if impairment is
established. However, a provision is made if a loss is anticipated. Criteria taken
into account when making a provision may include nonpayment of invoices or
other indications that the debtor is experiencing financial difficulties. Shares and
participating interests not related to Group companies or associates are meas
ured at cost. Measurement at fair value could not be applied, because reliable
market values could not be established.

Financial liabilities are valued initially at the value of funds received after deduction
of any transaction costs. Normally, the liabilities are valued regularly at their amor
tised cost using the effective interest method. In those cases where funds received
fall short of the amount to be repaid, the difference is allocated over the duration of
the loan using the effective interest method. Loans hedged against changes in
value and loans recognised on the basis of the fair value option are initially recog
nised excluding any transaction costs and on an ongoing basis at their fair value.

The fair value option has been applied to one loan with the object of arriving at a
fairer presentation of results and thereby reflecting changes in the value of the in
terest rate swap that belongs to the loan. In the parent company, no loans were
measured at fair value. Profit/loss from financial instruments is recognised in net
financial items or operating profit/loss, depending on the purpose of the holding.

Derivatives and hedge accounting

All derivatives are valued at fair value and are recognised in the balance sheet.
More or less all derivatives are held for hedging purposes.

Cash flow hedges’ effective share of changes in value is recognised in other
comprehensive income until the time when the hedged item influences the in
come statement, when the accumulated changes in value are transferred from
other comprehensive income to the income statement to meet and match the
hedged transaction. In the case of hedging investments, the acquisition cost of
the hedged item is instead adjusted when it occurs. The ineffective part of the
hedge is recognised directly in the income statement.

For the hedging of fair value, the change in the value of the derivative is recog
nised directly in the income statement. Changes in the value of the hedged item
are recognised in a corresponding way.

Changes in the value of hedges relating to net investments in foreign businesses
are recognised in the income statement for the parent company and in the other
comprehensive income for the Group. Accumulated changes in value are re
tained in Group equity until the business is disposed of, when the accumulated
changes in value are recognised in the income statement. In the case of deriva
tives that do not fulfil the criteria for hedge accounting, the changes in value are
recognised within operating profit/loss or within net financial items, depending on
the purpose of the holding.

Computation of fair value

The fair value of financial instruments traded on an active market is based on list
ed market prices and belongs to measurement level 1 as per IFRS 7. Where there
are no listed market prices, fair value has been computed using discounted cash
flows. In calculating discounted cash flows, all variables used in the calculation –
such as discount rates and exchange rates – are taken from market listings where
possible. These measurements belong to level 2. Other measurements, for which
a variable is based on the company’s own assessments, belong to level 3.
Holmen’s transactions mainly belong to level 2, except for one transaction classi
fied as level 3. Currency options were measured using the Black & Scholes
formula.

Intangible non-current assets

Goodwill represents the difference between the acquisition cost of business
combinations and the fair value of the acquired assets, assumed liabilities and
contingent liabilities. Goodwill is valued at acquisition cost less any accumulated
impairment losses. Goodwill arising in connection with the acquisition of associ
ates is included in the carrying amount of the interest in such companies.

Research costs are expensed when they are incurred. Development costs are
only capitalised in the case of major projects to the extent that their future finan
cial benefits can be reliably assessed. Other development expenditure is recog
nised in the income statement as costs when incurred. Development costs rec
ognised in the balance sheet are stated at their acquisition cost less accumulated
amortisation and impairment losses.

Intangible noncurrent assets also include patents, licences and IT systems.
Intangible noncurrent assets are amortised over periods of between five and ten
years, except for goodwill. Any goodwill is allotted to cashgenerating units and
is tested for impairment annually. The Group does not currently recognise any
goodwill.

Property, plant and equipment

Property, plant and equipment are stated at acquisition cost after deduction of
accumulated depreciation and any impairment losses. Property, plant and equip
ment that consist of parts with different useful lives are treated as separate com

6 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e s

ponents of property, plant and equipment. Additional expenditure is capitalised
only if it is estimated to generate financial benefits for the company. The key fac
tor determining whether or not additional expenditure is capitalised is if it relates
to the replacement of identified components or parts thereof, in which case the
expenditure is capitalised. The cost is also capitalised in cases where a new
component is created. Any undepreciated carrying amounts for replaced compo
nents or parts of components are retired and expensed in connection with the
replacement.

The carrying amount of an item of property, plant or equipment is removed from
the balance sheet in connection with retirement or disposal of the asset or when
no future financial benefits can be expected from the use of the asset. The gain or
loss arising on the retirement or disposal of an asset consists of the difference
between the selling price and the carrying amount of the asset, less any direct
selling costs. Gain and losses are recognised in the accounts as other operating
income/costs.

Inventories

Inventories are valued at the lower of acquisition cost or production cost after de
duction for necessary obsolescence, or net realisable value. The acquisition cost
of inventories is calculated by using the First in, First out method (FIFO). The net
realisable value is the estimated selling price in operating activities after deduc
tion of the estimated costs of completion and effecting the sale. The acquisition
cost of finished products manufactured by the company comprises direct pro
duction costs and a reasonable share of indirect costs.

Emission rights received are initially recognised at market price when allotted
among inventories and as deferred income. During the year the allocation is rec
ognised as income at the same time as an interim liability, corresponding to emis
sions made, is expensed.

employee benefits

Depreciation according to plan is based on original acquisition cost less any
impairment losses. Depreciation takes place on a straightline basis over the
estimated useful life of the asset. Land is not depreciated.

Pension costs and pension commitments
Commitments to pay premiums to defined contribution plans are recognised as a
cost in the income statement as and when they are earned.

the following useful lives (years) are used:

Machinery for hydro power production
Administrative and warehouse buildings, residential properties
Production buildings, land installations, and
machinery for pulp, paper and paperboard production
Machinery for sawmills
Other machinery
Forest roads
Equipment

20–40
20–33

20
12
10
10
4

The Group’s net commitment in respect of defined benefit plans is calculated
separately for each plan by estimating the future benefits the em ployees will have
earned by virtue of their employment in current and earlier periods; these benefits
are discounted to their present value and any unrecognised costs in respect of
employment during earlier periods and the fair value of any plan assets are de
ducted. The discount rate is the interest rate at the balance sheet date for a first
class corporate bond with a duration corresponding to the Group’s pension com
mitments. If there is no active market for such corporate bonds the market inter
est rate for government bonds with a corresponding duration is used instead.
The calculation is performed by a qualified actuary using the projected unit credit
method for the part of the pension commitments that is defined benefit.

If there is any indication that the carrying amount is too high, an analysis is made in
which the recoverable value of single or inherently related assets is determined at
the higher of the net selling price and the utility value. The net selling price is the es
timated selling price after deduction of the estimated cost of selling the asset. The
utility value is measured as expected future discounted cash flow. An impairment
loss consists of the amount by which the recoverable amount falls short of the car
rying amount. Impairment loss is reversed if there has been any positive change in
the circumstances upon which the determination of the recoverable amount is
based. A reversal may be made up to, but not exceeding, the carrying amount that
would have been recognised, less depreciation, if there had been no impairment.

Leasing

In the consolidated accounts lease agreements are classified as finance leases
or operating leases. The leasing of noncurrent assets for which the Group is
substantially exposed to the same risks and benefits as if the asset were directly
owned is classified as finance leases. The leasing of assets over which the lessor
substantially retains ownership is classified as operating leases and the leasing
charge is expensed. Within the Group all lease agreements are classified as oper
ating leases.

Biological assets

The Group divides all its forest assets for accounting purposes into growing for
ests, which are recognised as biological assets at fair value, and land, which is
stated at acquisition cost. Any changes in the fair value of the growing forests are
recognised in the income statement. Holmen’s assessment is that there are no
relevant market prices availiable that can be used to value forest holdings as ex
tensive as Holmen’s. They are therefore valued by estimating the present value of
expected future cash flows from the growing forests. See note 12.

In the parent company, biological assets are valued in accordance with RFR 2.2.
This means that biological assets classified as noncurrent assets are recognised
at acquisition cost adjusted for revaluations taking into account the need, if any,
for impairment in value.

Felling rights are stated as inventories. They are acquired with a view to secure
Holmen’s raw material requirements through harvesting. Any measurable biologi
cal change does not occur between the acquisition date and harvesting.

When the present value of the commitments and the fair value of plan assets are
being determined, actuarial gains and losses may arise, either as a result of the
actual outcome deviating from earlier assumptions or because the assumptions
are changed. Actuarial gains and losses are recognised directly in other compre
hensive income.

When the benefits provided by a plan are improved, the proportion of the im
provement in the benefit that is attributable to the employees’ employment dur
ing earlier periods is recognised as a cost in the income statement and is distrib
uted on a straightline basis over the average period until the benefits have been
fully earned. If the benefit has been earned in full, a cost is recognised directly in
the income statement.

In the parent company’s accounts, different grounds are used for computation of
defined benefit pension plans than those referred to in IAS 19. The parent com
pany complies with the provisions of the Swedish pension security law
(Tryggandelagen) and the Swedish Financial Supervisory Authority’s regulations,
because this is a condition for the right to make deductions for tax purposes. The
main differences in relation to the rules in IAS 19 relate to how the discount rate of
interest is established, the computation of the defined benefit commitment on
the basis of the current pay level without any assumption regarding pay incre
ments in the future, and the recognition of all actuarial gains and losses in the in
come statement when they arise.

When there is a difference between how the pension cost is arrived at in the legal
entity and in the Group, a provision or a receivable is recognised in the consoli
dated accounts in respect of special employer’s contribution tax based on this
difference. The present value of the provision or receivable is not calculated.

termination benefits
Termination benefits in connection with the termination of employment contracts
are only recognised in the accounts if it is shown that the Group has an obliga
tion, without any reasonable possibility of withdrawing it, as a result of a formal,
detailed plan to terminate an employment contract before the normal date. When
benefits are paid in the form of an offer to encourage voluntary departure, a cost
is recognised if it is likely that the offer will be accepted and the number of em
ployees who will accept the offer can be reliably estimated.

H O L M E N A N N U A L R E P O R T 2 0 0 9

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n o t e s

short-term benefits
Shortterm benefits to employees are calculated without being discounted and
are recognised as a cost when the related services are provided.

Incentive scheme
The Holmen Group’s incentive scheme that runs from 2008 until 2013 is not sub
ject to the rules in IFRS 2 Sharebased Payment, because the employees were
invited to acquire call options at their market price.

equity

Consolidated equity comprises share capital, other contributed capital, translation
and hedge reserves and retained earnings, including profit/loss for the year. Other
contributed capital refers to premiums paid in conjunction with share issues. The
translation reserve consists of all exchange differences that arise in the translation
of foreign operations’ financial statements that are prepared in a currency other
than Swedish kronor. The translation reserve also includes exchange differences
arising in connection with the revaluation of liabilities and derivatives that are clas
sified as instruments for hedging a net investment in a foreign operation, including
tax. The hedge reserve comprises the effective proportion of the accumulated net
change in the fair value of a cash flow hedging instrument attributable to underlying
transactions that have not yet occurred, including tax. Retained earnings comprise
all other parts of equity, including profit/loss for the year.

Holdings of shares bought back are stated as a reduction in retained earnings.
Acquisitions of the company’s own shares are stated as a deduction, and pro
ceeds from the disposal of the company’s own shares are stated as an increase.
Transaction costs are charged directly to retained earnings.

Group contributions and shareholder
contributions for legal entities

Group contributions and shareholder contributions are recognised in the parent
company in accordance with statement UFR 2 of the Swedish Financial
Reporting Board. Shareholder contributions are recognised directly in equity of
the recipient and capitalised under shares and participating interests of the donor
to the extent that no impairment in value applies. Group contributions are recog
nised on the basis of their financial implications. For example, this means that
Group contributions paid or received in order to minimise the Group’s total tax
are recognised directly in retained earnings after deduction of their current tax
effect.

Miscellaneous

The figures presented are rounded off to the nearest integer or equivalent.
The absence of a value is indicated by a dash ().

note 2 Financial risk management

The Group’s and the parent company’s financial activities and financial risk man
agement are centralised within Group Finance. The activities are based on a finan
cial policy established by the Board and are characterised by a low level of risk. The
purpose is to minimise the Group’s capital costs by using suitable means of financ
ing and to manage and control the Group’s financial risks effectively. The most im
portant aspects of this management are described below. Credit risks related to
the Group’s customers are managed by the relevant business areas and are de
scribed in Note 16 Operating receivables.

The parent company’s equity comprises share capital, statutory reserves, re
valuation reserves, retained earnings and profit/loss for the year.

Currency risk

The parent company’s statutory reserve consists of previous compulsory provi
sions to the statutory reserve plus amounts added to the share premium reserve
before 1 January 2006. The parent company’s revaluation reserve contains
amounts set aside in connection with the revaluation of property, plant and
equipment or noncurrent financial assets. Retained earnings comprise all other
parts of equity, such as hedge reserves and transactions as a result of share buy
backs. The parent company applies the same accounting policies as the Group
for these items; see above.

Provisions

A provision is recognised in the balance sheet when the Group has a legal or in
formal commitment as a consequence of a past event and it is likely there will be
an outflow of financial resources to settle the commitment and a reliable estimate
of the amount can be made. A provision to cover restructuring is recognised once
the Group has established a detailed and formal restructuring plan and the re
structuring process has either begun or been publicly announced.

Provisions are made for environmental measures that relate to earlier activities
when contamination arises or is discovered, it is likely that a payment obligation
will arise, and the amount can be estimated reliably.

Reserves to cover future silvicultural fees are calculated on the basis of interpre
tations of the applicable forestry laws and regulations whenever it is likely that a
payment obligation will arise and once the amount can be assessed to a reason
able extent.

Contingent liabilities

A contingent liability is recognised when there is a potential commitment that
originates in past events, the existence of which will be confirmed only by one or
more uncertain future events, or when there is a commitment that is not recog
nised as a liability or provision because it is not likely that an outflow of re
sources will be required.

transaction exposure
A significant proportion of Holmen’s sales revenue is in currencies different from
its costs. To reduce the effect of exchange rate fluctuations on earnings, Holmen
hedges its net flows, mainly using currency forward contracts, sometimes sup
plemented by currency options. The net flows in euro, sterling and US dollars for
the coming four months are always hedged. These normally correspond to trade
receivables and outstanding orders. The Board can decide to hedge flows for a
longer period if this is deemed suitable in light of the products’ profitability, com
petitive position and the currency situation.

At the beginning of 2009, the Group had currency hedges for the majority of estimat
ed payment flows in euro for 2009 and some of the flows in sterling and US dollars.
Gains/losses on currency hedges are recognised in operating profit/loss as and
when the hedged items are recognised and in 2009 they amounted to a loss of
SEK 408 million (loss of 336). At yearend 2009 about 70 per cent of the estimated
net currency flows for 2010 were hedged, some 60 per cent of those for 2011 and
roughly 20 per cent of estimated flows for 2012; see the table.

transaction exposure at 31 December 2009, seKm*

12 months
estimated
net flows

4 700

1 100

250

650

2010
Hedges

2011
Hedges

2012
Hedges

seKm rate** % seKm rate** % seKm rate** %

4 200

9.70 90 3 600 10.63 85 1 100 10.45 25

350

6.94 30

50 11.44 20

6 700

4 650

3 600

1 100

EUR

USD

GBP

Other

total

* The figures in the table have been rounded off.
** This rate equals the average hedging rate.

The fair value of outstanding transaction hedges at 31 December 2009 amounted
to SEK 93 million (1 123); SEK 48 million (123) was recognised in the income
statement for 2009, and the remainder in other comprehensive income as hedge
accounting is applied, of which SEK 162 million for 2010, SEK 108 million for
2011 and SEK 10 million for 2012.

Currency exposure arising when investments are paid for in a foreign currency is

6 2

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e s

distinguished from other transaction exposure. Normally, 90–100 per cent of the
currency exposure associated with major investments is hedged. The fair value
of hedges for investment purchases is recognised in other comprehensive in-
come until the hedge expires. Then, the gain/loss is added to the cost of the non-
current asset that was hedged. At 31 December 2009 there were no outstanding
hedges for investment purchases. During the period SEK 1 million affected the
acquisition cost of hedged items.

translation exposure
The Group’s reported profit/loss is affected by changes in exchange rates when
the profits/losses of foreign subsidiaries are translated into Swedish kronor. This
exposure is normally not hedged. The Group’s equity is affected by changes in
exchange rates when assets and liabilities of foreign subsidiaries are translated
into Swedish kronor. The need to hedge this exposure (known as equity hedging)
is judged from case to case and is arranged on the basis of the value of net as-
sets upon consolidation. The hedges take the form of currency forward contracts
or foreign currency loans.

net assets and equity hedges at 31 December 2009, seKm

EUR

GBP

Other

net assets

equity hedge

4 314

4 148

1 382

456

Gains on equity hedges amounted to SEK 254 million (loss of 541) in 2009 and are
recognised in other comprehensive income as hedge accounting is applied (after
deduction of tax SEK 187 million). In the parent company accounts, this gain is rec-
ognised in the income statement. The translation of net foreign assets had a nega-
tive impact of SEK 255 million (positive: 445) on consolidated equity. The fair value
of outstanding equity hedges at 31 December 2009 was SEK -159 million (-456), of
which SEK -193 million relates to loans and SEK 34 million to financial derivatives.
The accumulated change in value resulting from an equity hedge is recognised in
the consolidated income statement if the hedged foreign operation is disposed of.

The effect of changes in exchange rates on consolidated operating profit is de-
scribed in the administration report on page 48. A one percentage point depre-
ciation in the Swedish kronor exchange rate would have a negative impact of
SEK 82 million on equity, including translation of foreign subsidiaries’ accounts.

Interest rate risk

The Group’s financing costs are influenced by changes in market interest rates. The
fixed interest period for the Group’s financial assets and liabilities is normally short.
The Board can decide to lengthen the period in order to limit the effect of a rise in in-
terest rates. During the year, the average fixed interest rate period varied between 19
and 22 months and was 22 months at the end of 2009. Derivatives in the form of in-
terest rate swaps and FRAs are used to manage the fixed interest period without al-
tering the underlying loans. At 31 December 2009 the fair value of these instruments
was a negative amount of SEK 60 million (negative: 132), which is recognised in oth-
er comprehensive income as hedge accounting is applied. This value is expected to
be recognised in the income statement during 2010 and later. The fixed interest peri-
od of the net debt, the breakdown by currency and the average interest rate for vari-
ous fixed rate periods are shown in the table below, in which derivatives that affect
the currency distribution and fixed interest period of the liabilities are taken into
account.

Fixed interest period, net financial debt, at 31 December 2009, seKm

SEK

EUR

GBP

Other currencies

total

-1 yr 1-3 yrs 3-5 yrs

>5 yrs other

-1 525

-1 533

-3 944

-2 787

-736

-55

-361

-280

-9

-43

-6

-271

-1

net financial debt

-5 683 -2 679 -736 -1 588 -361 -320

Average interest rate, %

2.7

4.5

3.9

7.0

The Other column refers to pension provisions; see note 18.

The effect of a change in market interest rates on consolidated operating profit is

explained in the administration report (page 48); a one percentage point increase
in market interest rates would have a SEK 19 million impact on equity.

Financing risk

Holmen’s net financial debt at 31 December 2009 amounted to SEK 5 683 mil-
lion, of which financial liabilities and interest-bearing pension provisions equalled
SEK 6 091 million, cash and cash equivalents SEK 182 million and financial
receivables SEK 225 million.

As part of Holmen’s strategy, the company is to have a strong financial position
that provides financial stability and enables the Group to make correct and long-
term business decisions relatively independently of the state of the economy and
external financing possibilities. The target for the debt/equity ratio is the interval
of 0.3–0.8, and strategic planning includes harmonisation with this target. At the
end of the year the debt/equity ratio was 0.34. Standard & Poor’s lowered its
long-term credit rating for Holmen from BBB+ to BBB with a negative outlook.
The short-term rating was lowered to A-3/K-2 at the same time.

Holmen’s financing mainly comprises bank loans, bond loans and the issue of
commercial paper. Holmen’s Swedish commercial paper programme has a frame-
work amount of SEK 6 000 million. Commercial paper with a time-to-maturity of up
to one year can be issued in both Swedish kronor and euro. At 31 December 2009
a negative amount of SEK 945 million was outstanding. Holmen’s medium term
note (MTN) programme, for issuing bonds, has a framework amount of SEK 4 000
million. Bonds with maturities of 1–15 years can be issued in both Swedish kronor
and euro. At 31 December 2009 a negative amount of SEK 2 693 million was out-
standing. During the year new long-term financing was raised through MTN loans
of SEK 1 500 million and an agreement for a new credit facility of SEK 1 300 million
was signed. Other financing during the year was arranged mainly via Holmen’s
commercial paper programme, utilisation of the contractually agreed EUR 600 mil-
lion credit facility and short-term bank loans. At 31 December 2009 Holmen had
not used any of its credit facilities.

The maturity structure of financial liabilities and assets included in net financial
debt and sources of financing are shown in the table below. The table displays
carrying amounts where expected interest payments are not included.

2010

2011

2012

2013 2014-

total

Financial assets

Deposits with credit institutions

Cash and cash equivalents

Derivatives

Other financial receivables

total financial receivables

Financial liabilities

MTN loans

Loans from banks and other
credit institutions

Commercial paper programme

Bank account liabilities

Derivatives

182

256

128

137

182

154

407

510

330

1 493

361

2 693

551

945

251

115

113

1 021

1 802

945

251

total financial liabilities

2 298 143

448 2 517 363 5 770

Contracted credit facilities

6 180

1 300 7 480

Financing risk refers to the risk that future funding and refinancing of maturing
loans may become difficult or expensive. Holmen reduces the risk by maintaining
a good spread of maturities for the liabilities and by using contractually agreed
credit facilities. Holmen has a contractually agreed credit facility from a syndicate
of banks that amounts to EUR 600 million and expires in 2012. Since 2009 the
company has also had a bilateral credit facility of SEK 1 300 million that expires in
2016. Both facilities are available for use, provided that the Group’s debt/equity
ratio is less than 1.5.

The Group plans its financing by forecasting financing needs over the coming
years based on the Group’s multi-year business plan, budget and forecasts that
are regularly updated.

H O L M E N A N N U A L R E P O R T 2 0 0 9

6 3

n o t e s

Raw materials

Credit risk

The Group is exposed to price fluctuations for its products and significant input
goods; see page 47 in the administration report. OTC trade in financial contracts
exists for certain paper and pulp products. Holmen did not trade in such contracts
during the year. The price risk for energy can be hedged, but hedging opportunities
for other input goods are limited.The Group mainly hedges the risk of fluctuations
in electricity prices.

To reduce exposure to electricity price changes, the Group uses physical supply
agreements at fixed prices as well as financial hedges. Decisions on hedging elec-
tricity prices are made by the Board. In 2009, Holmen’s net purchases of electricity
amounted to 3 200 GWh, of which about 2 600 GWh in Sweden.
The prices for the Group’s estimated net consumption of electricity in Sweden dur-
ing the 2010–2012 period are fully hedged. For 2013– 2015 the price of about 85
per cent has been hedged. The hedges predominantly consist of physical fixed
price contracts. Gains on financial hedges are recognised in the income statement
upon maturity and totalled SEK 64 million (27) for 2009. The fair value of outstand-
ing financial hedges totalled SEK 57 million (88) at 31 December 2009. This amount
has been recognised in other comprehensive income as hedge accounting is ap-
plied, of which SEK 22 million for 2010, SEK 25 million for 2011 and SEK 10 million
for 2012. See page 47 for how changes in raw material prices affect the Group’s
profit. A one percentage point increase in the price of electricity would have a
negative impact of SEK 2 million on equity.

note 3 operating segment reporting

The Group’s financial transactions give rise to credit risks in relation to financial
counterparties. The risk of a counterparty not meeting its commitments is limited
by selecting creditworthy counterparties, by limiting the exposure to each coun-
terparty and by using ISDA and FEMA agreements.

At 31 December 2009, the Group had outstanding derivative contracts with a
notional amount of about SEK 16 billion and a fair value of SEK -61 million net.
Calculated in accordance with the Swedish Financial Supervisory Authority’s regu-
lations for financial institutions (FFFS 2007:1), Holmen’s total counterparty risk on
derivative contracts would amount to SEK 263 million at 31 December 2009. The
maximum credit risk for other financial assets is estimated to correspond to their
notional amount. Credit risks in relation to the Group’s customers are managed by
each business area and are described in note 16 Operating receivables.

Insurance

Holmen insures its facilities against property damage and consequential loss. The
excess varies from one facility to another, but the maximum is some
SEK 30 million for any one claim. The Group’s forest holdings are not insured. They
are widely dispersed over large parts of the country, and the risk of large-scale
simultaneous damage is judged not to justify the cost of insuring the holdings.

2009

Net sales

External

Internal

Other operating income

Operating costs

Depreciation and amortisation according to plan

Impairment losses

Change in value of biological assets

Interest in earnings of associates

operating profit/loss

Operating profit/loss excluding items affecting comparability

Operating margin excluding items affecting comparability,%

Return on operating capital excluding items
affecting comparability, %

Operating assets

Operating liabilities

Operating capital

Investments

Holmen
Paper

Iggesund
Paperboard

Holmen
timber

Holmen
skog

Holmen
energi

Group-
wide
and other

elimina-
tions

total
Group

9 303

238

-8 363

-878

340

10 186

1 397

8 789

287

5 023

262

-4 484

-361

-22

419

4 781

666

4 114

260

553

127

-632

-31

483

396

110

2 745

2 054

119

447

1 182

-4 303

-1 208

-27

605

12 646

1 262

11 384

-21

414

3 342

135

3 207

-225

-3

-191

419

1 382

-963

18 071

-3 236

-197

3 446

-392

600

-15 769

-1 320

-22

1 620

31 465

4 536

26 929

818

6 4

H O L M E N A N N U A L R E P O R T 2 0 0 9

Sweden

Spain

Other

total

net sales by product area

Newsprint and magazine paper

Paperboard

Pulp

Sawn timber

Wood

Power

Other

total

2008

Net sales

External

Internal

n o t e s

Group

Parent company

Group

Parent company

non-current assets per country

2009

2008

2009

2008

net sales by market

21 415

21 619

17 006

18 231

Sweden

550

598

3 364

3 877

Germany

Spain

25 380

26 153

17 006

18 231

The Netherlands

Group

Parent company

Italy

France

Rest of Europe

Rest of the world

total

2009

2008

9 144

10 177

4 865

4 677

137

548

128

499

2009

7 043

2 879

240

548

2008

7 966

2 699

224

496

2 745

3 064

2 695

2 997

447

185

550

241

18 071

19 334

13 436

14 382

2009

4 211

2 083

2 676

1 427

771

728

848

2008

4 940

1 943

2 597

1 909

771

786

953

2009

3 749

1 328

2 296

288

675

449

555

2008

4 308

1 189

2 237

390

661

531

612

3 011

2 316

3 411

2 024

2 313

1 784

2 829

1 624

18 071

19 334

13 436

14 382

Other operating income

Operating costs

Depreciation and amortisation according to plan

Impairment losses

Change in value of biological assets

Interest in earnings of associates

operating profit/loss

Operating profit/loss excluding items affecting comparability*

280

Operating margin excluding items affecting comparability, %*

Return on operating capital excluding items
affecting comparability, %*

Operating assets

Operating liabilities

Operating capital

Investments

12 123

1 886

10 237

679

Holmen
Paper

Iggesund
Paperboard

Holmen
timber

Holmen
skog

Holmen
energi

Group-
wide
and other

elimina-
tions

total
Group

10 443

350

-9 970

-896

-57

-81

4 845

260

-4 433

-368

320

4 914

661

4 254

327

499

138

-593

-34

439

366

2 997

2 446

129

550

1 284

-4 898

-1 500

-26

-16

632

12 796

1 382

11 415

-19

327

3 149

142

3 006

-196

-149

568

2 222

-1 654

19 334

-3 745

-172

3 916

-10

-557

755

-17 673

-1 343

-57

-16

1 051

1 412

33 432

5 809

27 623

1 123

* Items affecting comparability relate to a SEK 298 million cost of closing down Wargön Mill, SEK 115 million to cover costs associated with the closure of PM 2 at the

mill in Hallsta, and a SEK 52 million positive effect on profit of the fire at Braviken.

The business area Holmen Paper manufactures printing paper for daily news-
papers, magazines, directories/manuals, advertising material and books at two
Swedish mills and one Spanish mill. Iggesund Paperboard produces paperboard
for consumer packaging and graphics printing at one Swedish and one UK mill.
Holmen Timber produces sawn timber at one Swedish sawmill. Annual produc-
tion capacity is 1 940 000 tonnes of printing paper, 530 000 tonnes of paperboard
and 340 000 cubic metres of sawn timber.

In the Holmen Group, the business areas are responsible for management of
operational assets and liabilities. Operating capital in each segment includes all
assets and liabilities used by the business area, such as non-current assets,
inventories, operating receivables and operating liabilities. Financing and tax
issues are managed at Group level, so financial assets and liabilities – including
pension liabilities – and current and deferred tax assets and tax liabilities are not
allocated to the business areas.

Holmen Skog manages the Group’s forests, which cover just over one million
hectares. The annual volume of wood harvested in company forests is about 2.5
million cubic metres. Holmen Energi is responsible for the Group’s hydro power
assets and for developing the Group’s operations in the energy sector. Normal
yearly production amounts to some 1 100 GWh of electricity at wholly and partly
owned hydro power stations in Sweden. Holmen Skog and Holmen Energi are
also responsible for supplying the Group with wood and electricity in Sweden,
which are important raw materials for the industrial operations.

Intra-Group sales between segments are founded on an internal market-based
price. The “Group-wide and other” segment comprises Group staff units and
Group-wide functions that are not allocated to other segments. No profit items
below operating profit are allotted to the business areas.

Income from external customers is allocated to individual countries according to
the country in which the customer is based.

H O L M E N A N N U A L R E P O R T 2 0 0 9

6 5

n o t e s

note 4 other operating income

Sales of by-products

Emission rights

Electricity certificates

Sales of non-current assets

Rental and tenancy income

Silviculture contracts

Other

total

Group

Parent company

2009

186

2008

253

2009

111

2008

181

215

600

320

755

169

447

257

596

Of the sales of by-products in the Group, SEK 124 million (160) relate to rejects
from production, SEK 34 million (53) to sawdust, bark, chips etc, and SEK 28 mil-
lion (40) to external sales of energy.

The Group has been allotted emission rights which, for the most part, have been
used for its own production. The surplus resulted in a recognised profit of
SEK 24 million (18).

Income from electricity certificates received from the production of renewable
energy at the Group’s Swedish mills amounted to SEK 71 million (72).

note 5 employees, staff costs and

remuneration to senior management

Incentive scheme
Any decision on a share and share price based incentive scheme for senior com-
pany personnel shall be made by the AGM.

Remuneration committee
A remuneration committee appointed from among the members of the Board
shall prepare business pertaining to the CEO’s salary and other conditions of em-
ployment and submit proposals on such issues to the Board for decision.
Detailed principles for determining the salaries, pension rights and other remu-
neration to senior management shall be laid down in a pay policy adopted by the
remuneration committee.

Departures in individual cases
The Board shall be entitled to depart from these guidelines in individual cases
should special reasons exist. In the event of such a departure, information there-
on and the reasons therefore shall be submitted to the next Annual General
Meeting.

Incentive scheme

The 2008 AGM approved the Board’s proposal to introduce an incentive scheme
for the Holmen Group’s employees; it has applied in the Group since May 2008. In
the scheme, the employees were invited to acquire call options on class B shares
in Holmen at market price (calculated by an independent bank). As a result, 1 492
of the Group’s approximately 5 000 employees bought a total of 758 300 call
options at a price of SEK 20 per option. The exercise price of the options is SEK
224.50 per share. Each option entitles the owner to acquire one share during the
exercise period in May/June 2013. Holmen’s commitment within the scheme has
been secured by means of a buyback of shares in the company.

Group

Parent company

2009

2008

2009

2008

IFRS 2 Share-based Payment is not applicable, because the employees acquired
the options at market-based price.

Wages, salaries and
social security costs

Wages, salaries and other remuneration

1 866

2 054

1 292

Social security costs

720

807

583

1 546

693

AGM’s guidelines for determining salaries and
other remuneration to senior management

The 2008 AGM decided on the following unchanged guidelines for determining
the salaries and other remuneration of the CEO and other senior management,
namely the business area managers and heads of Group staff functions who
report directly to the CEO.

salary and other remuneration
The remuneration of the CEO and the senior management shall consist of a fixed
market-based salary. Other benefits, mainly car and accommodation, shall, inso-
far as they are provided, represent a limited part of the remuneration. No variable
remuneration shall be paid.

Pension
The normal retirement age shall be 65 years. The company and the employee
shall be mutually entitled to request that pension be drawn from 60 years of age.
Any pension drawn before 65 years of age shall be either defined benefit or de-
fined premium. Pension drawn after 65 years of age shall be in accordance with
the ITP plan. Over and above this, the employee may also be entitled to a supple-
mentary old age pension. In this case, there shall be a gradual transition from the
existing arrangement with a defined benefit pension to one in which the pension
is defined premium (contribution).

notice and severance pay
Discontinuation notice should normally be one year if it is given by the company,
and six months if it is given by the employee. In the event of notice being given by
the company, severance pay can be paid corresponding to no more than
24 months’ salary.

6 6

H O L M E N A N N U A L R E P O R T 2 0 0 9

Remuneration of Board and senior management

Board
A fixed Board fee shall be paid to the members of the Board elected by the AGM,
except for the CEO, who does not receive any Board fee. For 2009, the fee
amounted to SEK 2 475 000 (2 475 000). The chairman received a fee of SEK
550 000 (550 000), and each of the other members (except for the CEO) received
SEK 275 000 (275 000).

senior management
The CEO’s salary and other benefits for 2009 amounted to SEK 6 768 603 (6 769
821). In 2009, the total pension cost attributable to the CEO (ITP cost and the
cost of benefits over and above ITP), calculated in accordance with IAS 19,
amounted to SEK 3 263 711 (3 050 305). No variable remuneration was paid.

In 2009, the salaries and other benefits of the other senior management, i.e. the
five business area managers and the heads of the five Group staff units who re-
port directly to the CEO, amounted to a total of SEK 18 206 318 (17 768 644).
The total pension cost (ITP cost and the cost of benefits over and above ITP),
calculated in accordance with IAS 19, for this group amounted to
SEK 10 897 672 (8 570 257) in 2009. No variable remuneration was paid.

For senior management the company is required to give 12 months’ notice and
the employee six months. In the event of notice being given by the company, ter-
mination benefits corresponding to between one and two years’ salary are paid,
depending on age. For the CEO, a termination benefit of two years’ salary is paid.

All members of senior management are employed by the parent company.

Pension commitments in respect of the Board and senior
management
Holmen’s pension commitments over and above the ITP plan for the CEO
amounted to SEK 15 million (13) at 31 December 2009 and for other members of
senior management to SEK 63 million (54), calculated in accordance with IAS 19.
The Group also has a SEK 7 million (7) commitment for one Board member,
Göran Lundin, former CEO of Holmen. The pension commitments are secured
using plan assets managed by an independent pension fund.

n o t e s

2009

2008

note 6 Auditors’ fee and remuneration

Average
number of
full-time
equivalents

Of whom
women

The audit firm KPMG was elected by the 2008 Annual General Meeting as
Holmen’s auditors for a period of four years (2008–2011). KPMG audits the books
of Holmen AB and almost all of its subsidiaries.

3 227

589

3 465

608

Remuneration to KPMG

2009

2008

2009

2008

Group

Parent company

Audit assignments

Other assignments

total

Other auditors

total

Audit assignments refers to the examination of the annual report and accounting
records, the administration by the Board and the CEO, other duties that are
incumbent on the company’s auditors, the provision of advice or other support
resulting from observations in connection with the audit or the performance of
such other duties. All other activities are defined as other assignments. Over
and above the audit assignment, Holmen has consulted KPMG on tax and
accounting issues and for various investigations.

514

116

596

119

1 350

4 577

261

850

511

112

573

1 364

4 829

106

238

846

Parent company

Sweden

Group companies

Sweden

Australia

Belgium

Denmark

Estonia

France

Germany

Hong Kong

Italy

The Netherlands

Poland

Portugal

Singapore

Spain

Switzerland

USA

total Group companies

total Group

The year’s decrease in the number of parent company employees is mainly an
effect of redundancies in connection with the closure of Wargön Mill, and staff cuts
in connection with the restructuring programme at Hallsta Paper Mill.

Proportion of women, %

2009

2008

2009

2008

Board (excl. deputy members)

Senior management

Group

Parent company

Group

Parent company

sickness absence in sweden, %

2009

2008

2009

2008

Total sickness absence

Long-term sick leave (>60 days)

Sickness absence, men

Sickness absence, women

Employees below 29 years of age

Employees between 30 and 49 years of age

Employees aged 50 years and above

3.8

1.7

3.8

3.7

2.4

3.1

4.7

4.6

2.7

4.5

5.3

2.5

4.0

5.7

3.8

1.7

3.8

3.7

2.4

3.1

4.7

4.6

2.7

4.5

5.3

2.5

4.0

5.7

H O L M E N A N N U A L R E P O R T 2 0 0 9

6 7

n o t e S

note 7 Income from financial instruments

Finance income

Dividend income from Group companies

Gains on sales of Group companies

Gains on sales of shares and participating
interests

Net profit/loss

Assets and liabilities measured at
fair value via profit/loss for the year
- Held for financial risk
management*

- Other

Interest income

total finance income

Finance costs

Impairment losses on value of shares in
Group companies

Net profit/loss

Assets and liabilities measured at
fair value via profit/loss for the year
- Held for financial risk
management*

- Other

Cash and cash equivalents

Other financial liabilities

total net profit/loss

Interest costs **

Finance costs

net financial items

Group

Parent company

2009

2008

2009

2008

1 156

1 174

106

-436

-38

-284

-267

-255

-19

-2

-15

-345

-328

-311

114

-176

102

247

-239

-428

746

-15

-322

-513

-354

-867

-761

* Refers to the held-for-trading category in accordance with IAS 39.
** SEK -63 million (21) in the Group refers to interest costs on liabilities measured
at fair value via profit/loss for the year. Those in the parent company amounted
to SEK -63 million (21).

The net gains and losses stated in net financial items mainly relate to currency re-
valuations of internal loans, hedging of internal lending, currency revaluations of
cash and cash equivalents, and hedging of cash and cash equivalents. They also
include the revaluation of loans measured at fair value via the income statement
and interest rate swaps used to hedge loans at fixed rates of interest. The parent

company’s net financial items also include currency revaluation of external loans
and forward contracts that hedge net investment in foreign operations. These
items are recognised in the Group in other comprehensive income. The fair value
of the interest component in currency forward contracts and value changes in
accrued interest and realised interest in fixed-interest-rate swaps are recognised
on an ongoing basis in net interest items.

Changes in the value of the loan that is measured at fair value in accordance with
the fair value option affected earnings by SEK 23 million (-2), of which changes in
market interest rates accounted for a decrease in value of SEK 8 million (de-
crease of 19). The accumulated change in value of SEK 73 million (50) is recog-
nised in the income statement. Changes in the value of the swap that belongs to
the loan measured at fair value using the fair value option had a negative impact
of SEK 5 million on earnings. The change in the value of the loan that has been
hedged in respect of its fair value had a SEK 3 million impact on profit (decrease
of 8) while related interest rate swaps lowered profit by SEK 3 million (increase of
8). There were no changes in value for loans in the parent company.

The income from financial instruments included in operating profit is shown in the
table below:

Exchange gains/losses on
trade receivables and trade payables

Net loss on derivatives
stated in working capital

Group

Parent company

2009

2008

2009

2008

-26

232

-7

223

-343

-309

-403

-243

Interest income on trade receivables

Interest costs on trade payables

The derivatives included in operating profit relate to hedging of trade receiv-
ables and trade payables as well as financial electricity derivatives.

note 8 taxes

taxes stated in income statement

Current tax

Deferred tax

total

Group

Parent company

2009

-474

114

-360

2008

-488

390

-98

2009

-307

-24

-331

2008

137

195

The 2009 tax rate for the Group was 26.4 per cent and was mainly affected by the
company winning a tax dispute and through loss carry-forwards not recorded.
See the table below.

Recognised profit before tax

Tax at applicable rate

Difference in tax rate in foreign operations

Non-taxable income and non-deductible costs

Standard interest on tax allocation reserve

Effect of not stated loss carry-forwards and temporary differences

Tax attributable to previous periods

Change in tax rate on deferred tax asset/liability

Provision to cover uncertain tax disputes

Other

effective tax

6 8

H O L M E N A N N U A L R E P O R T 2 0 0 9

SeKm

1 366

-359

-2

-15

-30

-360

2009
%

SeKm

740

26.3

-0.1

0.1

1.1

2.2

-2.3

0.0

-1.0

26.4

-207

-2

-23

-4

331

-225

-98

Group

2008
%

28.0

-0.2

0.2

3.0

-2.1

0.6

-44.7

30.4

-2.0

13.2

Parent company

SeKm

1 995

2009
%

SeKm

-630

2008
%

-525

188

-15

-8

26.3

0.0

-9.4

0.8

0.4

-1.4

0.0

177

-23

28.0

0.0

0.3

-3.6

0.0

0.2

5.9

0.1

-331

16.6

195

30.9

n o t e S

tax attributable to other comprehensive income

Group

2009

Cash flow hedges

910

-240

670

-964

Before tax

Tax

After tax Before tax

Parent company

2009

After tax Before tax

Tax

After tax Before tax

-712

919

-242

677

-1 148

2008

Tax

253

2008

Tax

302

After tax

-845

Translation differences
on foreign operations

Hedging of currency risk
in foreign operations

Actuarial revaluations

other comprehensive
income

-256

445

254

-66

-4

188

-541

-169

151

-389

-121

923

-310

613

-1 230

452

-778

919

-242

677

-1 148

302

-845

taxes as stated in balance sheet

Deferred tax assets

Loss carry-forwards

Pension provisions

Deferred tax liabilities stated net
among deferred tax assets

Other

total deferred tax assets

Current tax receivable

total tax receivables

Group

Parent company

2009

2008

2009

2008

307

-72

304

326

347

-85

342

141

483

117

Deferred tax liabilities

Non-current assets

Biological assets*

Property, plant and equipment

Tax allocation reserve

Transactions subject to hedge accounting

Other, including deferred tax assets
stated net among deferred tax liabilities

total deferred tax liabilities

Provisions for taxes

Current tax liability

total tax liabilities

Group

Parent company

2009

2008

2009

2008

2 922

1 600

618

-34

2 914

1 512

721

-268

-61

5 045

4 819

692

102

692

644

-4

-53

-49

538

5 839

5 525

678

635

-4

-295

-64

272

317

* For parent company this relates to forestland.

Change in the net of deferred tax assets and deferred tax liabilities

2009

Biological assets*

Property, plant and equipment

Pension provisions

Loss carry-forwards

Tax allocation reserve

Other

Deferred net tax liability

Opening
balance

-2 914

-1 597

347

-721

328

-4 477

* For parent company this relates to forestland.

Stated in
the income
statement

Stated in
other com-
prehensive
income

Translation
differences
and other

-8

-31

103

-3

114

-4

-240

-244

-126

-10

Group

Closing
balance

-2 922

-1 672

307

-618

-135

-4 741

Parent company

Stated in
the income
statement

Stated in
other com-
prehensive
income

-9

-15

-24

-242

Opening
balance

-635

359

-272

Closing
balance

-644

102

-538

H O L M E N A N N U A L R E P O R T 2 0 0 9

6 9

n o t e S

2008

Biological assets*

Property, plant and equipment

Pension provisions

Loss carry-forwards

Tax allocation reserve

Other

Deferred net tax liability

Stated in
the income
statement

Stated in
other com-
prehensive
income

Translation
differences
and other

186

189

-15

-13

390

250

301

-9

-1

Opening
balance

-3 100

-1 796

348

-753

-5 181

Group

Closing
balance

-2 914

-1 597

347

-721

328

-4 477

Parent company

Stated in
the income
statement

Stated in
other com-
prehensive
income

-1

302

Opening
balance

-677

-632

Closing
balance

-635

359

-272

* For parent company this relates to forestland.

For information on biological assets see Note 12. Deferred tax liability in respect
of property, plant and equipment is primarily attributable to depreciation in
excess of plan.

For information concerning provisions for taxes see Note 27.

The deferred tax income recognised in the Group’s income statement relates pri-
marily to a change in temporary differences and utilisation of loss carry-forwards.
The amount recognised in Other comprehensive income includes deferred tax re-
lated to negative changes of SEK 239 million in hedging reserves (positive 253)
and negative impact of SEK 4 million from actuarial revaluations (postitive 48).

Of the deferred tax asset in respect of the carry-forwards of unused tax losses,
a sum of SEK 94 million relates to loss carry-forwards with no time limitations
regarding when they may be utilised. Other loss carry-forwards expire if they are
not utilised 2015–2022. The carry-forwards of unused tax losses and temporary
differences for which deferred tax assets have not been recognised in the income
statement or balance sheet amount to SEK 1 950 million, of which SEK 200 mil-
lion expire in 2011 and SEK 330 million expire 2022–2024. Whether a deferred
tax asset is recognised or not depends on an assessment of how likely it is that
the Group will be able to utilise it by offsetting it against future taxable profits.

note 9 earnings per share (ePS)

note 10 Intangible non-current assets

Group

2009

2008

Total number of shares outstanding, 1 January

83 996 162

84 756 162

Accumulated acquisition cost

Buy-back of company’s own shares
during the year

total number of shares
outstanding, 31 December

-760 000

83 996 162

Opening balance

Investments

Change in emission rights

Re-classification

Average number of shares, before dilution

83 996 162

84 298 573

Disposal and retirement of assets

Effect of options

Translation differences

Average number of shares, after dilution

83 996 162

84 298 573

total

Profit for the year attributable
to shareholders, SEKm

1 006

642

Accumulated amortisation
according to plan

Average number of shares before dilution

83 996 162

84 298 573

Opening balance

Basic ePS for the year, SeK

12.0

7.6

Amortisation for the year

Profit for the year attributable
to shareholders, SEKm

1 006

642

total

Translation differences

Average number of shares after dilution

83 996 162

84 298 573

Diluted ePS for the year, SeK

12.0

7.6

Closing residual value
according to plan

Group

Parent company

2009

2008

2009

2008

170

-69

-3

-2

-1

170

-58

106

Intangible non-current assets mostly consist of rights to use electricity grids of
SEK 6 million (8) and IT systems of SEK 17 million (24). These assets were largely
acquired from external sources. They have determinable useful lives and are
amortised over 5–10 years. No goodwill applies.

In 2009, emission rights were reclassified from intangible non-current
assets to inventories.

Shares in the company were bought back in 2008 to secure the company’s com-
mitments as part of the incentive scheme for the Holmen Group’s employees as
decided by the 2008 AGM. A total of 760 000 class B shares were bought back,
which corresponds to approximately 0.9 per cent of the total number of shares
outstanding, and to approximately 0.3 per cent of the total number of votes. The
average price paid for these shares was SEK 201.70 per share.

In all, 758 300 call options were issued at a price of SEK 20 per option. The
exercise price of the options is SEK 224.50 per share. Each option entitles the
owner to acquire one share during the exercise period, May/June 2013.

The exercise price of SEK 224.50 exceeds the average share price for 2009
(SEK 180 per share). The options will therefore have no dilution effect as defined
in IAS 33, and were excluded from the calculation of diluted EPS. If the average
listed price in the future exceeds the exercise price, these options will give rise to
an estimated dilution effect, which is calculated in accordance with IAS 33.

7 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e S

Total

2008

31 796

1 134

-87

474

Total

2008

414

-25

438

279

-23

280

2 417

note 11 Property, plant and equipment

Group

2009

2008

2009

2008

2009

2008

2009

2008

2009

Forestland

Buildings, other land
and land installations

Machinery and
equipment

Work in progress and
advance payments to
suppliers

Accumulated acquisition cost

Opening balance

Investments

Re-classifications

Disposal and retirement of assets

Translation differences

100

5 906

181

-19

-93

total

100

6 071

5 561

127

-5

175

5 906

27 092

25 865

546

-708

-239

867

147

-82

294

26 763

27 092

221

107

-128

-1

199

270

140

-195

33 319

748

126

-726

-333

221

33 134

33 319

20 176

18 813

1 311

1 329

-716

-133

-79

20 661

20 176

2 775

2 618

17 401

16 194

141

-31

-15

-22

137

1 170

1 193

-3

-701

-112

-76

2 849

2 775

17 812

17 401

100

3 222

3 131

8 952

9 690

199

221

12 473

13 142

Forestland

Buildings, other land
and land installations

Machinery and
equipment

2009

2008

2009

2008

2009

2008

2009

Accumulated depreciation and
impairment losses

Opening balance

Depreciation for the year
according to plan

Impairment losses for the year

Reversal of previous impairment losses

Re-classifications

Disposal and retirement of assets

Translation differences

total

Closing residual value according
to plan

Parent company

Accumulated acquisition cost

Opening balance

Investments

Re-classifications

Disposal and retirement of assets

total

Accumulated depreciation according to plan

Opening balance

Depreciation for the year according to plan

Disposal and retirement of assets

total

Accumulated revaluations

Opening balance

Disposal and retirement of assets

total

2 416

2 417

2 416

137

143

125

126

138

-3

137

125

-1

125

222

-24

231

155

-24

155

203

-22

222

154

-21

155

438

-24

454

280

-24

281

2 417

Closing residual value according to plan

2 496

2 495

Assessed tax values

Assessed tax values relate to assets in Sweden

Forest and agricultural properties

Buildings, other land and land installations

total

2 590

2 575

2009

14 517

3 056

17 573

Group

2008

14 520

3 049

17 569

Parent company

2009

2008

6 795

6 823

6 798

6 826

The Group’s impairment losses regarding property, plant and equipment are stated
in the income statement in the line item Impairment losses. Holmen closed a board
machine at Workington Mill in 2009 that belongs to the Iggesund Paperboard busi-
ness area. This resulted in impairment losses on property, plant and equipment of
SEK 22 million. For 2008, impairment losses on non-current assets referred to the
closure of operations at Wargön Mill in the Holmen Paper business area.

The year’s investments were reduced by SEK 2 million (23) as a result of the sup-
port received from the Swedish Energy Agency of SEK 40 million in total for the
construction of a new pulp line at Braviken Paper Mill.

The Group’s investment commitments for approved and ongoing projects
amounted to SEK 1 581 million (452) at 31 December 2009. The company’s capi-
talised borrowing costs were SEK 1 million in 2009 and are recognised as Work in
progress and advance payments to suppliers. An interest rate of 3 per cent was
used to determine the amount.

The assessed tax values are determined by the Swedish Tax Agency by means of
a property assessment and are then used for determining the property tax
charge. No property tax is charged on forestland.

H O L M E N A N N U A L R E P O R T 2 0 0 9

7 1

n o t e S

note 12 Biological assets

Forest assets are recognised in the Group as growing forest, which is stated as a
biological asset at fair value, and land, which is stated at acquisition cost.
Holmen’s assessment is that no relevant market prices are available that can be
used to value forest holdings as extensive as Holmen’s. The valuation is therefore
made by calculating the present value of future expected cash flows from the
growing forests. This calculation of cash flows is made for the coming 100 years,
which is regarded as the harvesting cycle of the forests. The cash flows are cal-
culated on the basis of harvesting volumes according to Holmen’s current har-
vesting plan and assessments of future price and cost changes. The cost of re-
planting has been taken into account, because re-planting after harvesting is a
statutory obligation.

In total, Holmen owns 1 032 000 hectares of productive forestland, with a volume
of 119 million forest cubic metres (m3 total volume over bark) of standing timber,
of which 67 000 hectares with 12 million forest cubic metres of standing timber
have been set aside as nature reserves. According to the current harvesting plan,
which came into effect in 2000, harvesting during the 2000–2009 period is to
amount to an average of 2.5 million m3 of timber and pulpwood per year. The
same plan states that the annual harvesting for the 2010–2019 period will be
more than 1 per cent higher. The harvesting volume is then planned to increase
gradually and then stabilise at about 3.0 million m3 per year in about 40 years’
time. This corresponds to an average increase in harvesting of 0.4 per cent per
year. Just over 50 per cent of the wood harvested consists of timber that is sold
to sawmills, and the remainder mainly consists of pulpwood, which is sold to the
pulp and paper industry. A new harvesting plan is estimated to be complete in
2011 and may entail different harvesting rates.

In 2009, the cash flow from the growing forests decreased to SEK 522 million
(622), mainly as a result of lower prices. On average, the cash flows in 2001–2009
amounted to approximately SEK 491 million per year. Holmen based its valuation
of 31 December 2009 on the prices prevailing at the end of the year. An assump-
tion has been made that prices will fall somewhat in 2011, see the graph below.
From 2011 and thereafter, long-term price assumptions have been used, with an
annual increase of 1 per cent until 2035 and thereafter a rise of 2 per cent a year.
The cash flow forecast for 2010–2016 is shown in the figure below. Costs are es-
timated to increase from present-day levels by about 2 per cent per year. The
price and cash flows for the period 2017–2035 are estimated to increase by 0.5
per cent per year, after which they are expected to increase broadly in line with
the assumed level of inflation of 2 per cent.

Average price
Historical and forecast
Index 2004 = 100

Cash ﬂow
Historical and forecast
SEKm

140

120

100

-04

-06

-08

-10

-12

-14

-16

700

600

500

400

300

200

100

Not 11 Biologiska tillgångar

-04

-06

-08

-10

-12

-14

-16

The cash flows are discounted using an interest rate of 5.5 per cent (2008: 5.5)
after tax. The discount rate was calculated on the basis of the Group’s target for
its debt/equity ratio (on average 0.55), an assumed long-term, nominal risk-free
interest rate of 4.5 per cent, a risk premium of 1 per cent for borrowed capital and
of 2 per cent for equity. Tax is taken into account at a rate of 26.3 per cent.

Deferred tax, i.e. the tax that is expected to be charged against the earnings from
harvesting in the future, has been calculated on the total value of growing forests.

The value of the forest assets was estimated at the end of 2009 at
SEK 11 109 million, i.e. the value of the estimated cash flows before tax. The
attribut able deferred tax liability was estimated at SEK 2 922 million. The net
carrying amount after tax of the growing forests was thus SEK 8 187 milliion.
The change in the value of the growing forests can be divided into:

Group

Opening balance

Acquisition of growing forest

Sales of growing forest

Change due to harvesting

Change in fair value

Other changes

Closing carrying amount

2009

2008

11 080

11 073

-552

568

-2

-622

606

11 109

11 080

The net effect of the change in fair value and the change as a result of harvesting
is stated in the income statement as Change in value of biological assets. In 2009
this item amounted to SEK 16 million (-16).

The table below shows how the value of forest assets would be affected by
changes in the most significant valuation assumptions:

Group

Annual change, + 0.1% per year

Harvesting rate

Price inflation

Cost inflation

Change in level, +1%

Harvesting

Prices

Costs

Discount rate, +0.1%

Change in value (SEKm)

Before tax

After tax

420

-250

160

280

-150

-250

310

-190

120

200

-110

-180

Annual change refers to the annual rate of change used in the valuation of each
parameter. For example, an increase of 0.1 per cent means that the annual price
inflation will be increased from 1.0 per cent to 1.1 per cent in the calculations.
Change in level means that the level for each parameter and year changes. For
example, a 1 per cent price increase means that the wood prices which the calcu-
lations are based on are raised by 1 per cent for all years (change of level).

7 2

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e S

note 13 Interests in associates and other shares and participating interests

Group

Parent company

Group

Parent company

Associates

Carrying amount at start of year

Investments

Disposals

Re-classifications

Interest in associates’ earnings

Dividends received

Translation difference

Impairment losses

2009

1 824

-15

-80

-12

2008

1 745

-2

2009

2008

other shares and participating interests

2009

2008

2009

2008

-1

Carrying amount at start of year

Investments

Disposals

Re-classifications

Translation difference

Impairment losses

Carrying amount at 31 December

-3

Carrying amount at 31 December

1 770

1 824

The parent company’s opening balance includes accumulated impairment
losses of SEK 34 million. There was no impairment during the year. Dividends
received refers to the associate Peninsular Cogeneración S.A.

Parent company and Group holdings of shares and interests in associates

There were no material impairment losses on the value of other shares and
participating interests during the year.

2009
Carrying
amount at
parent comp.
SEK thousands

Value of
holding in
Group accounts,
SEK thousands

2008
Carrying
amount at
parent comp.
SEK thousands

Value of
holding in
Group accounts,
SEK thousands

Interest
%*

Corporate
ID No.

Registered
office

No. of
shares

Interest
%*

Brännälvens Kraft AB

556017-6678

Arbrå

Gidekraft AB

Harrsele AB

556016-0953 Örnsköldsvik

556036-9398

Sundsvall

Uni4 Marketing AB

556594-6984

Stockholm

Industriskog AB

Pressretur AB

556193-9470

Falun

556188-2712

Stockholm

PÅAB, Pappersåtervinning AB

556142-5116 Norrköping

Vattenfall Tuggen AB

556504-2826

Lycksele

VindIn AB

556713-5172

Stockholm

Baluarte Sociedade de Recolha e
Recuperação de Desperdicios,
Lda, Portugal

Ets Emilie Llau S.A., France

Alcochete

Lorp-Sentaraille

Peninsular Cogeneración S.A., Spain

Madrid

Other shares owned by the parent company

5 556

990

9 886

1 800

25 000

334

500

683

200

13.9

9.9

49.4

36.0

33.3

33.4

50.0

6.83

14.28

678

4 500

50.0

24.0

50.0

1 856

109

74 755

6 910

36 400

1 481 898

11 596

109

74 755

7 224

41 736

24 257

92 031

13.9

9.9

49.4

36.0

33.3

33.4

50.0

6.83

50.0

38.0

50.0

total
* Percentage of shares and percentage of votes for total number of shares are the same.

83 767

1 770 143

Parent company and Group holdings of shares and participating interests in other companies

Corporate
ID No.

Registered
office

No. of
shares

Interest
%*

Parent company

Industrikraft i Sverige AB

556761-5371 Stockholm

SweTree Technologies AB

556573-9587 Umeå

VindIn AB

556713-5172 Stockholm

100 000

73 500

20.0

2.7

Miscellaneous shares owned by the parent company

total

Group

Miscellaneous shares

total
* Percentage of shares and percentage of votes for total number of shares are the same.

2009
Carrying
amount at
parent comp.
SEK thousands

Value of
holding in
Group accounts,
SEK thousands

2 800

6 280

389

9 469

2 800

6 280

389

9 469

348

9 816

Interest
%*

20.0

2.7

7.1

The holdings in Brännälvens Kraft AB, Gidekraft AB, Harrsele AB and Vattenfall Tuggen AB refer to hydro power assets
and the holdings in VindIn AB refer to wind power assets. The holdings entitle the Group to buy some of the electricity
produced at cost price, so the associates only earn a limited profit. Purchased electricity is sold to external customers
at market price, and the earnings are stated in the Group accounts in the Holmen Energi business area.

Brännälvens Kraft AB, Gidekraft AB, Vattenfall Tuggen AB and VindIn AB are classified as associates even
though the holdings are less than 20 per cent, since shareholder agreements provide significant influence over each
company’s activities. The holding in VindIn AB was reclassified in 2009, from shares and participating interests in
other companies, to associates.

Summarised financial information on associates owned by the Group and parent company respectively is

Income

Profit/loss

Assets

Liabilities

Equity

specified on the right. The table shows the owned interest in each associate.

1 856

109

74 755

76 895

36 400

1 481 898

7 725

109

74 755

42 049

41 019

140 270

1 824 399

2008
Carrying
amount at
parent comp.
SEK thousands

Value of
holding in
Group accounts,
SEK thousands

1 200

5 640

3 410

587

1 200

5 640

3 410

587

10 837

372

11 209

Group Parent company

2009

2008

2009

814

763

447

315

861

728

362

366

378

-2

209

156

2008

320

200

156

H O L M E N A N N U A L R E P O R T 2 0 0 9

7 3

n o t e S

note 14 Financial instruments

Group 2009

Financial instruments included
in net financial debt

non-current financial receivables

Deposits with credit institutions

Derivatives

Other financial receivables

Current financial receivables

Accrued interest

Derivatives

Other financial receivables

Cash and cash equivalents

Current deposit of cash and cash equivalents

Bank balances

non-current liabilities

MTN loans

Loans from banks and other
credit institutions

Derivatives

Current liabilities

Commercial paper programme

Bank account liabilities

Current portion of longterm loans

Derivatives

Accrued interest

Other current liabilities

Financial instruments not included
in net financial debt

Other shares and participating interests

Trade receivables

Derivatives (recognised among
operating receivables)

Trade payables

Derivatives (recognised among operating liabilities)

Items recognised at fair
value via profit of the year

Loans valued
at fair value

Derivatives

Derivatives
with hedge
accounting

Trade receiv
ables and loan
receivables

Available
forsale
assets

Other
liabilities

Total
carrying
amount

Fair value

371

223

208

131

151

165

182

2 712

131

151

165

182

131

151

165

182

2 183

2 205

1 252

3 435

945

251

623

1 252

3 472

945

251

994

1 252

3 495

945

251

994

1 886

2 298

2 712

225

1 911

258

1 911

258

non-current financial receivables consist of noncurrent interestbearing
deposits with credit institutions, financial receivables from other companies,
which, substantially, are interestbearing, and prepayments relating to committed
credit facilities. Over and above this, the figure includes the fair values of non
current derivatives. The parent company’s receivables from Group companies
include a significant share of interestfree receivables between Swedish, wholly
owned Group companies.

Current financial receivables consist of fixed income investments and lending
for durations of up to one year, accrued interest income and unrealised transla
tion gains. Current financial receivables substantially have fixed interest periods
of less than three months, and thus involve a very limited interest rate risk.

Cash and cash equivalents refers to bank balances and investments that can
be readily converted into cash for a known amount and with a duration of no
more than three months from the date of acquisition, which also means that the
interest rate risk is negligible. Cash and cash equivalents are placed on deposit
with banks or in current deposit accounts at banks. The average rate of interest
on the Group’s financial assets in 2009 was around 1.5 per cent (3.3).

Loan liabilities, accrued interest costs, unrealised translation losses and fair
values of derivatives are stated as financial liabilities.

7 4

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e S

Items recognised at fair
value via profit of the year

Loans valued
at fair value

Derivatives

Derivatives
with hedge
accounting

Trade receiv
ables and loan
receivables

Available
forsale
assets

Other
liabilities

Total
carrying
amount

Fair value

394

135

243

410

653

126

144

1 056

243

410

653

1 266

1 282

1 423

2 689

1 467

146

567

161

2 260

4 602

1 817

139

3 223

1 825

139

3 247

1 467

146

567

155

161

2 260

4 756

146

567

155

161

2 260

4 756

3 144

157

2 282

1 191

2 282

1 191

Group 2008

Financial instruments included
in net financial debt

non-current financial receivables

Deposits with credit institutions

Derivatives

Other financial receivables

Current financial receivables

Accrued interest

Derivatives

Other financial receivables

Cash and cash equivalents

Current deposit of cash and cash equivalents

Bank balances

non-current liabilities

MTN loans

Loans from banks and other
credit institutions

Derivatives

Current liabilities

Commercial paper programme

Bank account liabilities

Current portion of longterm loans

Derivatives

Accrued interest

Other current liabilities

Financial instruments not included
in net financial debt

Other shares and participating interests

Trade receivables

Derivatives (recognised among
operating receivables)

Trade payables

Derivatives (recognised among operating liabilities)

Substantially, financial liabilities are interest bearing. The parent company’s liabi
lities to Group companies include a significant amount of interestfree liabilities
between Swedish whollyowned Group companies.

Note 7 states the impact on profit from revaluation of these items; the effect of
changed assumptions was immaterial. Other items measured at fair value belong
to measurement level 2 as per IFRS 7.

Liabilities valued at fair value amount to SEK 573 million (598). The amount
repayable in respect of these liabilities is SEK 538 million. The maturity structure
and average rate of interest for the Group’s liabilities are shown in note 2. A total
of SEK 1 916 million of the parent company’s liabilities mature within one year. In
addition to the financial assets and liabilities identified above, pension liabilities
(see note 18) are also included in net financial debt.

The loan measured at fair value using the fair value option and its related swaps
comes under measurement level 3 as per IFRS 7, because interest payments and
loan repayments partly depend on inflation assumptions for the current year.

The fair value in the tables above has either been taken directly from listed market
prices or by calculating the discounted cash flows. In cases where the latter met
hod is used, all variables used in the calculation, such as discount rates and ex
change rates, are taken from market listings. The difference between fair value
and carrying amount arises because certain liabilities are not valued at fair value
in the balance sheet, but are stated at their amortised cost. In the case of trade
receivables and trade payables the carrying amount is used as the fair value, as
this is judged to be an accurate reflection of the fair value. When it has not been
possible to determine a reliable fair value for shares and participating interests,
they have been excluded from the tables.

H O L M E N A N N U A L R E P O R T 2 0 0 9

7 5

Items recognised at fair
value via profit of the year

Loans valued
at fair value

Derivatives

Derivatives
with hedge
accounting

Trade receiv
ables and loan
receivables

Available
forsale
assets

Other
liabilities

Total
carrying
amount

Fair value

190

248

2 602

2 629

1 988

2 602

2 629

2 602

2 629

2 183

2 205

1 240

2 193

5 615

945

249

619

1 240

2 193

5 652

945

249

619

1 240

2 193

5 675

945

249

619

1 875

1 916

1 988

192

1 489

298

n o t e S

Parent company 2009

Financial instruments included
in net financial debt

non-current financial receivables

Deposits with credit institutions

Derivatives

Receivables from Group companies

Other financial receivables

Current financial receivables

Accrued interest

Derivatives

Receivables from Group companies

Other financial receivables

Cash and cash equivalents

Current deposit of cash and cash
equivalents

Bank balances

non-current liabilities

MTN loans

Loans from banks and other
credit institutions

Liabilities to Group companies

Derivatives

Current liabilities

Commercial paper programme

Bank account liabilities

Current portion of longterm loans

Derivatives

Accrued interest

Liabilities to Group companies

Other current liabilities

Financial instruments not included
in net financial debt

Other shares and participating interests

Trade receivables

Derivatives (recognised among
operating receivables)

Trade payables

Derivatives (recognised among
operating liabilities)

7 6

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e S

Items recognised at fair
value via profit of the year

Loans valued
at fair value

Derivatives

Derivatives
with hedge
accounting

Trade receiv
ables and loan
receivables

Available
forsale
assets

Other
liabilities

Total
carrying
amount

Fair value

Parent company 2008

Financial instruments included
in net financial debt

non-current financial receivables

Deposits with credit institutions

Derivatives

Receivables from Group companies

Other financial receivables

Current financial receivables

Accrued interest

Derivatives

Receivables from Group companies

Other financial receivables

Cash and cash equivalents

Current deposit of cash and cash
equivalents

Bank balances

non-current liabilities

MTN loans

Loans from banks and other
credit institutions

Liabilities to Group companies

Derivatives

Current liabilities

Commercial paper programme

Bank account liabilities

Current portion of longterm loans

Derivatives

Accrued interest

Liabilities to Group companies

Other current liabilities

Financial instruments not included
in net financial debt

Other shares and participating interests

Trade receivables

Derivatives (recognised among
operating receivables)

Trade payables

Derivatives (recognised among
operating liabilities)

154

126

105

137

1 098

2 663

2 690

226

316

542

2 343

2 663

2 722

2 663

2 722

226

316

542

1 262

1 282

1 404

3 660

6 325

1 404

3 660

139

6 464

1 412

3 660

139

6 493

1 467

143

567

125

2 255

4 558

143

567

155

125

2 255

4 713

143

567

155

125

2 255

4 713

2 343

138

1 738

1 235

H O L M E N A N N U A L R E P O R T 2 0 0 9

7 7

n o t e S

note 15 Inventories

Group, SeKm

Total trade receivables

Group

Parent company

Of which overdue > 15 days *

2009

2008

2009

2008

Of which overdue > 30 days **

2009

2 712

120

2008

3 144

144

Raw materials and consumables

Timber and pulpwood

830

211

885

297

Finished products and work in progress

1 081

1 454

577

737

534

182

756

541

534

237

1 118

684

* incl. overdue > 30 days.
** excl. bad debts/provisions recognised in profit/loss.

note 17 equity

Felling rights

Electricity certificates and
emission rights

total

152

129

2 850

3 434

2 142

2 629

Share capital

The year’s impairment losses on inventories adversely affecting profit for the year
amount to SEK 70 million (26) for the Group and to SEK 40 million (28) for the
parent company. In 2009, emission rights were reclassified from intangible non
current assets to inventories.

note 16 operating receivables

Parent company

Registrered share capital

Class A

Class B

total number of shares

Bought back class B shares

31 Dec 2009
Quotient
value

Number

22 623 234

62 132 928

84 756 162

760 000

SEKm

1 131.2

3 106.6

4 237.8

Trade receivables

Group companies

Associates

Other

total trade receivables

Current receivables

Group companies

Associates

Other

Derivatives

Prepayments and
accrued income

total other operating receivables

Group

Parent company

2009

2008

2009

2008

2 666

2 712

3 080

3 144

114

1 828

1 988

162

2 118

2 343

160

225

490

220

157

166

548

113

192

383

143

138

135

421

total operating receivables

3 202

3 692

2 371

2 764

Trade receivables are stated after deduction of anticipated and actual credit
losses. The Holmen Paper business area’s trade receivables correspond to
58 per cent of the Group’s total trade receivables, while those of Iggesund
Paperboard account for 27 per cent. The Group’s trade receivables mainly relate
to European customers. Trade receivables denominated in foreign currencies are
valued at closing rates. The fair values of derivatives relate to hedges for future
cash flows.

Customer credit risk. The risk that the Group’s customers will not fulfil their pay
ment obligations is limited by means of credit worthiness checks, internal credit
limits per customer and, in some cases, by insuring trade receivables against
credit losses. At 31 December 2009 some 50 per cent (54) of the Group’s trade
receivables were insured against credit losses. Holmen’s exposure to individual
customers is limited and in 2009 sales to the five largest customers accounted
for just under 11 per cent of the Group’s total turnover.

During the year, losses on trade receivables had a negative SEK 14 million (nega
tive: 1) impact on earnings.The provision for anticipated credit losses on trade re
ceivables amounted to SEK 21 million (13) at 31 December 2009 and it has been
recognised net together with trade receivables. During the year the provision was
reduced by SEK 0 million (22) as a result of actual credit losses, and was in
creased by SEK 8 million (2) as a result of changes in the provision for anticipated
credit losses.

At 31 December 2009 trade receivables of SEK 120 million (144) had been due
for payment for more than 15 days, excluding trade receivables for which provi
sions had been made. The maturity structure of these items is shown in the next
table:

total number of shares outstanding

83 996 162

Issued call options, B shares

758 300

Share capital

Parent company

Registrered share capital

Class A

Class B

total number of shares

Bought back class B shares

31 Dec 2008
Quotient
value

Number

22 623 234

62 132 928

84 756 162

760 000

SEKm

1 131.2

3 106.6

4 327.8

total number of shares outstanding

83 996 162

Issued call options, B shares

758 300

The company’s share capital consists of shares issued in two classes, class A,
each of which carries ten votes, and class B, each of which carries one vote, but
there are no other differences in rights between the two share classes.

At 31 December 2009 the Group’s own shareholding was 760 000 shares
(760 000). None of the Group’s own shares were sold during the year.

The Board proposes that the AGM, to be held on 24 March 2010, approves a
dividend of SEK 7 per share. The proposed dividend totals SEK 588 million. The
preceding year, the dividend paid was SEK 9 per share (SEK 756 million).

Assets and liabilities measured at fair value according to Chapter 4 Section 14a of
the Swedish Annual Accounts Act had a negative impact of SEK 132 million (1 294)
on parent company equity. In the Group, valuation of derivatives and other financial
instruments had a negative impact of SEK 96 million (1 291) on equity.

Holmen’s profitability target is a return that is consistently above the market
based cost of capital. Decisions on ordinary dividend are based on an appraisal
of the Group’s profitability, future investment plans and financial position. The aim
is to have a robust financial position with a debt/equity ratio in the interval of 0.3–
0.8. Neither the parent company nor the subsidiaries are subject to external capi
tal requirements, except for Holmen Försäkring AB, the Group’s insurance com
pany that insures Group companies internally, which complies with the Swedish
Financial Supervisory Authority’s regulations on the ratio between equity and
risk. For more details about the Group’s capital management, see the administra
tion report on pages 46 and 48.

7 8

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e S

note 18 Pension provisions

Holmen has defined benefit occupational pension plans for its salaried employ-
ees in Sweden (ITP plan) and for most of its employees in the UK. These plans
provide benefits based on final salary and period of employment. The scheme in
the UK has been closed for new entrants since the end of June 2004. Since then,
new employees have been offered a defined contribution pension scheme.
Occupational pension plans for “blue-collar” employees in Sweden are defined
contribution plans.

The commitments arising out of the pension schemes in the UK are placed in
trusts. The defined benefit commitments over and above the ITP plan for Group
management in Sweden are secured by means of a pension fund. These commit-
ments are recognised in the consolidated accounts as defined benefit plans in
accordance with IAS 19. Most of the defined benefit pension commitments on
behalf of salaried employees in Sweden are secured by means of insurance poli-
cies with Alecta. As Alecta cannot provide sufficient information to permit the ITP
plan to be stated in the accounts as a defined benefit plan it is stated in accor-
dance with statement UFR 6 of the Swedish Financial Reporting Board as a de-
fined contribution plan. The year’s premiums for pension insurance policies taken
out with Alecta amounted to SEK 37 million (24), of which SEK 35 million (22)
relates to old age and family pensions. These are included among staff costs in
the income statement. Alecta’s surplus can be allocated to policyholders and/or
the persons insured. At the end of 2009, Alecta’s collective consolidation level
was 141 per cent (112).

Of the Group’s total commitments, SEK 53 million (68) refers to those that are not
funded, while the rest are wholly or partially funded commitments. Of the parent
company’s commitments, SEK 43 million (58) are secured under the act on safe-
guarding pension obligations, Tryggandelagen.

Plan assets by type are as shown below:

Plan assets

Equity

Bonds

Current fixed income investments

Group

Parent company

2009

2008

2009

2008

611

691

457

617

125

1 385

1 199

137

125

The plan assets do not include any financial instruments issued by Group
companies or assets used by the Group.

Key actuarial assumptions, Group
(weighted average), %

Discount rate

Expected return on plan assets

Pay increases in the future

Inflation in the future

2009
31 Dec

2008
31 Dec

5.5

4.2

3.4

5.4

4.9

3.9

2.9

Pension costs

Defined benefit plans

Staff cost

Finance income

Finance costs

Total defined benefit plans
stated in income statement

Defined contribution plans

Staff cost

total recognised in income statement

Group

Parent company

2009

2008

2009

2008

The expected return on fixed income securities was estimated on the basis of
highly rated long-term bonds; in the case of shares, a risk premium was added.

-17

-28

-20

-7

-45

-25

-3

-10

-1

-11

-145

-190

-104

-129

-132

-128

-92

-103

A discount rate of 4.2 per cent (4.0) and salary levels at the balance sheet date
were used for calculating the amount of the parent company’s pension
commitment.

Five-year figures, Group

2009

2008

2007

2006

2005

Present value of commitments

-1 706

-1 553

-1 769

-1 866

-1 818

Fair value of plan assets

Net

1 385

-320

1 199

1 521

1 510

1 400

-354

-247

-356

-418

Adjustments based
on experience

Defined benefit commitments

Plan assets

-11

131

-3

-237

-6

The Group’s payments into the funded defined benefit plans in 2010 are
expected to amount to SEK 51 million.

The year’s actuarial adjustment for the Group was SEK 15 million (-169), in-
cluding the cost of associated special employer’s contribution of SEK 2 million
(7), which was recognised in other comprehensive income. The accumulated
actuarial revaluation amounts to a cost of SEK 113 million (128).

The change in the defined benefit commitments and the change in plan assets
are specified in the table below. Most of the commitments relate to the pension
plans in the UK.

Group

Parent company

2009

2008

2009

2008

Commitments

Commitments at 1 January

-1 553

-1 769

-189

-183

Cost of employment during current period

Interest costs

Actuarial gains/losses

Premiums paid by employees

Pensions paid

Transferred from provisions

Settlements

Exchange differences

-21

-87

-118

-7

105

-13

-16

-20

-88

-7

-36

198

-6

-3

-13

-1

-36

Commitments at 31 December

-1 706

-1 553

-180

-189

Plan assets

Fair value of assets at 1 January

1 199

1 521

125

135

Expected return

Actuarial gains/losses

Real return (parent company)

Premiums paid by employer

Premiums paid by employees

Pensions paid

Exchange differences

Fair value of assets at 31 December

Pension provisions, net

131

-74

1 385

-320

-237

-63

-167

1 199

-354

-8

137

-43

125

-64

H O L M E N A N N U A L R E P O R T 2 0 0 9

7 9

n o t e S

note 19 other provisions

Group

Carrying amount at start of year

Provisions during the period

Utilised during the period

Translation differences

Closing carrying amount

Of which non-current part of the provisions

Of which current part of the provisions

Parent company

Carrying amount at start of year

Provisions during the period

Utilised during the period

Closing carrying amount

Of which non-current part of the provisions

Of which current part of the provisions

Provisions
for taxes

Silviculture
provision

Other
provisions

2009

2008

2009

2008

2009

2008

2009

692

426

267

692

153

100

-93

161

153

100

-93

161

141

101

-88

153

141

101

-88

153

511

145

-132

-3

522

338

184

496

-128

398

269

129

193

391

-74

511

333

178

522

-72

496

320

177

1 357

246

-224

-3

1 375

1 102

274

695

130

-221

604

386

218

Total

2008

759

-162

1 357

1 080

277

231

623

-160

695

419

275

Holmen has made a provision of SEK 692 million to cover disputes and uncer-
tainties relating to taxes. Holmen has one large tax case still in progress, affecting
MoDo Capital, a Holmen subsidiary. In January 2010, the County Administrative
Court did not rule in favour of the company, resulting in tax expense estimated at
a total of about SEK 640 million. The provision for taxes covers this expense; it is
thus not anticipated that the expense will affect the Group’s earnings. Holmen
will appeal against the judgment to the Administrative Court of Appeal.

The silviculture provision relates to a provision to cover coming reforestation
measures to be taken after completion of final harvesting. The measures are
normally carried out within three years after harvesting.

Other provisions primarily relate to obligations to restore the environment, as well
as staff costs and restructuring costs. In 2009 production ceased on
Workington’s BM1 board machine, and major staff cuts were initiated at Braviken
Paper Mill. In 2008, operations ceased at Wargön Mill, and production was dis-
continued on the PM 2 machine and the line for recovered paper at Hallsta Paper
Mill. By the end of 2009, provisions of SEK 254 million had been made to cover
the costs of these restructuring measures.

note 20 operating liabilities

note 21 operating leases

Group

Parent company

2009

2008

2009

2008

In 2009, the Group’s lease payments amounted to SEK 25 million (23), and the
parent company’s to SEK 9 million (12). The Group’s lease agreements relate to
forklift trucks. No new lease agreements of any significance for the business were
entered into during the 2009 financial year. No leased equipment was rented out.

The breakdown of future lease payments is as follows:

Group

Parent company

2011
–2015

2010

2016–

2010

2011
–2015

2016–

Future lease payments

Present value of future lease
payments

The contracts have remaining durations ranging from 1 to 5 years. The Group’s
future lease payments for existing lease agreements amounted to SEK 33 million
at the end of 2008. Those in the parent company amounted to SEK 6 million.

Apart from lease agreements, Holmen has time charter contracts in respect of
five ships that are used to distribute the company’s products. The contracts were
entered into in 2006 and 2008 and run for a remaining 1 to 7 years.

Trade payables

Group companies

Associates

Other

total trade payables

Current liabilities

Associates

Other

Derivatives

Accruals and deferred income

1 872

1 911

2 220

2 282

129

1 360

1 489

253

258

637

237

1 191

727

203

298

429

930

136

1 602

1 738

193

1 235

509

1 938

total other operating liabilities

1 149

2 157

total operating liabilities

3 060

4 439

2 419

3 676

All trade payables are due for payment within one year.

Accruals and deferred income in the parent company mainly consists of staff
costs of SEK 207 million (225) and discounts of SEK 46 million (60).

Fair values of derivatives relate substantially to hedging of future cash flows; see
notes 2 and 14.

8 0

H O L M E N A N N U A L R E P O R T 2 0 0 9

n o t e S

note 22 Pledged collateral and contingent liabilities

Pledged collateral value

Contingent liabilities

2009

2008

2009

2008

Property
mortgages

Other
collateral

Total
pledged
collateral

2009

2008

Surety on behalf of Group companies

Other contingent liabilities

total

140

671

602

688

444

321

766

Group

Parent company

Group

For own liabilities

Financial liabilities

total

Parent company

For own liabilities

Financial liabilities

total

The parent company’s surety on behalf of Group companies relates mainly to
surety for loans in the subsidiary Holmen Energi Elhandel AB.

On the basis of the Swedish Environmental Code, the Swedish environmental
authorities may raise the issue of soil tests and site restoration at discontinued
units. Responsibility for restoring the environment is determined from case to
case, often with the aid of a reasonability assessment. Holmen has environment-
related contingent liabilities that cannot at present be quantified, but that could
involve costs in the future.

note 23 Related parties

Of the parent company’s net sales of SEK 13 436 million (14 382), 0.8 (0.9) per cent
relates to deliveries to Group companies. The parent company’s purchases from
Group companies amounted to SEK 143 million.

There are significant financial receivables and liabilities between the parent
company and its Swedish subsidiaries, which do not carry interest.

The parent company has a related party relationship with its subsidiaries
(see note 24).

L E Lundbergföretagen AB is a large shareholder in Holmen (see page 29). Holmen
rents office premises for SEK 7 million (7) from Fastighets AB L E Lundberg, which
is a group company within L E Lundbergföretagen AB. In 2009, Fredrik Lundberg,
who is CEO and principal shareholder in L E Lundbergföretagen, received a fee of
SEK 550 000 as Board chairman of Holmen.

Transactions with related parties are priced at market-based conditions. The equity
holdings in associates that produce hydro and wind power entitle the Group to buy
the electricity produced at cost price in relation to the shareholding, which means
that the associate only earns a limited profit. Purchased electricity is sold to exter-
nal customers at market price, and the earnings are stated in the consolidated
accounts within the Holmen Energi business area.

In Spain, energy and recovered paper are purchased from associates.

transactions with related parties

Group

Associates

Parent company

Subsidiaries

Associates

Sale of products
to related parties

Purchase of products
from related parties

Other (e.g.
interest, dividend)

Liability to
related parties

Receivable from
related parties

2009

220

103

220

2008

190

134

190

2009

273

143

2008

384

291

2009

1 146

2008

2009

2008

2 322

3 813

2009

194

2 716

2008

104

2 842

104

For fees and remuneration paid to members of the Board see note 5.

H O L M E N A N N U A L R E P O R T 2 0 0 9

8 1

n o t e S

note 24 Interests in Group companies

Parent company

Accumulated acquisition cost

Carrying amount at start of year

Purchases

Shareholder contribution

Sales

Closing balance at 31 December

Accumulated revaluations

Carrying amount at start of year

Closing balance at 31 December

Accumulated impairment losses

Carrying amount at start of year

Impairment losses for the year

Closing balance at 31 December

Closing carrying amount

2009

2008

17 426

17 397

323

-1 073

208

228

-407

16 676

17 426

2 299

4 222

436

4 658

4 222

14 318

15 503

The parent company’s impairment losses on participating interests in Group
companies are recognised in the income statement in the line item Impairment
losses on financial non-current assets, and refer to holdings in Swedish
subsidiaries.

Several mergers took place within the Group during the year, aiming to simplify
the company’s structure in Sweden; Iggesund Kraft AB, Junkaravan AB and
MoDo Holding AB were merged with Holmen Energi Elhandel AB.
In conjunction with the mergers, Holmen AB transferred its shares in the
relevant subsidiaries to Holmen Energi Elhandel AB, reported in the line item
Sales (negative: SEK 1 073 million). The transfer took place at the carrying
amount.

Parent company’s direct holdings of interests in subsidiaries

Corporate
ID No.

Registered
office

No. of shares

Interest, %*

Carrying amount
SEK thousands

Interest, %*

Carrying amount
SEK thousands

2009

2008

Holmen Paper AB

556005-6383

Norrköping

Iggesund Paperboard AB

556088-5294

Hudiksvall

Holmen Timber AB

Holmen Skog AB

Holmen Energi AB

Fiskeby AB

556099-0672

Hudiksvall

556220-0658

Örnsköldsvik

556524-8456

Örnsköldsvik

556000-9218

Norrköping

Holmen Energi Elhandel AB

556537-4286

Stockholm

Holmens Bruk AB

556002-0264

Norrköping

Holmen Försäkring AB

516406-0062

Stockholm

AB Iggesunds Bruk

Iggesund Kraft AB

Junkaravan AB

MoDo Capital AB

MoDo Holding AB

556000-8053

Hudiksvall

556422-0902

Örnsköldsvik

556227-3630

Örnsköldsvik

556499-1668

Stockholm

556537-6281

Örnsköldsvik

Skärnäs Terminal AB

556008-3171

Hudiksvall

Other Swedish Group companies

total Swedish holdings

Holmen France Holding S.A.S., France

Iggesund Decoupe France, S.A., France **

Holmen UK Ltd, UK

Holmen Paper UK Ltd **

Iggesund Paperboard (Workington) Ltd **

Holmen GmbH, Germany

Holmen Suecia Holding S.L., Spain

Holmen Paper Madrid S.L. **

Cartón y Papel Reciclado S.A. (Carpa), Spain **

Paris

Valence

Workington

London

Workington

Hamburg

Madrid

100

1 000

2 000 000

1 000

49 514 201

10 000

6 002 500

1 000

4 800

40 000

1 197 100

9 448 557

Iggesund Paperboard Asia Pte Ltd, Singapore

Singapore

800 000

Iggesund Paperboard Europe B.V., the Netherlands

Amsterdam

Iggesund (Paper & Board) Services B.V. **

AS Holmen Mets, Estonia

Other non-Swedish Group companies

total non-Swedish holdings

total

Utrecht

Tallinn

500

* Percentage of shares and percentage of votes for the total number of shares are the same.
** Indirect holding.

8 2

H O L M E N A N N U A L R E P O R T 2 0 0 9

100

646 160

100

4 286 121

45 304

3 932 558

71 552

2 913

3 211

8 988 402

5 192

1 518 959

655

3 577 265

4 273

207 733

15 029

5 329 106

14 317 508

100

646 160

100

4 286 121

45 175

3 932 558

61 361

549 125

96 588

462 372

2 913

90 836

10 173 793

5 192

1 518 959

655

3 577 265

4 273

207 733

15 122

5 329 199

15 502 992

note 25 Untaxed reserves

Parent company

2009 Appropriations

31 Dec

Accumulated depreciation and
amortisation in excess of plan

Intangible non-current assets

Property, plant and equipment

total

tax allocation reserve

Assessment of tax 2004

Assessment of tax 2005

Assessment of tax 2006

Assessment of tax 2007

Assessment of tax 2008

Assessment of tax 2009

Assessment of tax 2010

total

520

490

570

715

2 350

2 363

-518

-590

715

-393

-388

31 Dec
2008

518

590

520

490

570

2 743

2 751

note 26 Cash flow statement

Group

Parent company

Interest paid and dividends received

2009

2008

Dividends received

Interest received

Interest paid

total

-287

-280

-335

-320

2009

1 156

-272

903

2008

-331

-229

Change in current liabilities
The change in current liabilities mostly relates to borrowing within the Group’s
commercial paper programme and to utilisation of the Group’s long-term
committed credit facility. In 2009, a number of different short-term loans amount-
ing in total to SEK 8 760 million (9 327) were raised within the Group’s commer-
cial paper programme, and SEK 9 295 million (11 398) was repaid. Several dif-
ferent short-term loans amounting in total to SEK 1 880 million (2 702) were
raised in 2009 within the Group’s long-term credit facility, and SEK 4 131 million
(516) were repaid.

For a specification of cash and cash equivalents see Note 14.

note 27 Key assessments and estimates

When preparing financial reports the company’s management is required to
make assessments and estimates that have an effect on the stated amounts. The
assessments and estimates that, in the view of the company’s management, are
of importance for the amounts stated in the annual report, and for which there is a
significant risk that future events and new information could alter these assess-
ments and estimates, mainly include:

Biological assets
Holmen’s assessment is that no relevant market prices are available that can be
used to value forest holdings as extensive as Holmen’s. The valuation is therefore
made by calculating the present value of future expected cash flows from the
growing forests. The most material estimates made relate to how much harvest-
ing can be increased in the future, what changes there will be in pulpwood and
timber prices, how high inflation will be, and what discount rate is used. Note 12
provides a sensitivity analysis for the valuation of changes in these estimates.
The carrying amount of biological assets at 31 December 2009 was
SEK 11 109 million and the attributable deferred tax liability SEK 2 922 million,
to give a net value of SEK 8 187 million.

n o t e S

tax
Holmen has one large tax case still in progress, affecting MoDo Capital, a Holmen
subsidiary. In January 2010, the County Administrative Court did not rule in
favour of the company, resulting in tax expense estimated to total SEK 640 million.
The provision for taxes covers this expense; it is thus not anticipated that it will
have any impact on the Group’s earnings. Holmen will appeal against the judg-
ment to the Administrative Court of Appeal. See notes 8, 19 and 22.

Net deferred tax assets of SEK 307 million are recgonised in the consolidated
accounts on the basis of the assessment that it will probably be possible to utilise
them to reduce tax payments in the future. Over and above this , at year-end the
Group had loss carry-forwards and fiscal temporary differences corresponding to
tax of some SEK 570 million not stated in the consolidated accounts on the
grounds for assessment that utilisation must be likely. See note 8.

Pensions
The Group’s provision for pensions amounts to SEK 320 million on the basis of
defined benefit pension commitments valued at SEK 1 706 million and plan
assets of SEK 1 385 million provided to cover them. The value of pension com-
mitments is estimated on the basis of assumptions regarding discount rates,
inflation, future pay increases, and demographic factors. These assumptions are
normally updated each year, which has an effect on the size of the recognised
pension liability and equity. Together with assumptions regarding the expected
return on plan assets, these assumptions will have an influence on the coming
year’s recognised pension cost. See note 18.

environment
Provisions have been made to cover environmentally-related measures associ-
ated with former activities based on estimated future site-restoration costs.
Moreover it is judged that the company has a responsbility for environ mental
measures that cannot at present be quantified but that could involve costs in the
future. See note 22.

Restructuring
In 2009 production ceased on Workington’s BM 1 board machine, and major staff
cuts were initiated at Braviken Paper Mill. In 2008, operations ceased at Wargön
Mill, and production was discontinued on the PM 2 paper machine and the line
for recovered paper at Hallsta Paper Mill. By the end of 2009, provisions of
SEK 254 million had been made to cover the costs of these restructuring meas-
ures. The uncertainty regarding the amount of the provision relates primarily to
the cost of restoring the mill site and how much income will be received from the
sale of machinery. Restructuring costs normally arise as a consequence of
changes in the business. The Group makes minor changes on an ongoing basis,
and costs associated with these are not normally specified separately. No major
changes have been announced, but, should the situation alter, further provisions
may become necessary.

Impairment testing
Holmen has an obligation to carry out regular impairment testing to determine
the need to state new impairment losses and/or reversals. In 2007 impairment
losses of SEK 1 603 million were recognised on goodwill and property, plant and
equipment within the Holmen Paper business area. This impairment was based
on estimates of recoverable amounts using assumptions regarding future
changes in prices, volumes and costs, as well as the estimated market cost of
capital. Changes in conditions may have an effect on the estimated recoverable
amount applied in connection with future impairment tests. Uncertainty about
trends in the demand for and price of newsprint is greater than usual.

H O L M E N A N N U A L R E P O R T 2 0 0 9

8 3

P r oPo s e d t r e a t m e n t o f u n aP Pr oPr i a t e d e a r n i n g s

Proposed treatment
of unappropriated earnings

The following unappropriated earnings of the parent company are at
the disposal of the Annual General Meeting:
Net profit for the 2009 financial year
Retained earnings brought forward

The Board of Directors propose that
an ordinary dividend of SEK 7 per share (83 996 162 shares) be paid to shareholders
and that the remaining amount be carried forward

SEK
1 664 178 896
3 112 287 430
4 776 466 326

587 973 134
4 188 493 192
4 776 466 326

The Board of Holmen AB has proposed that the 2010 Annual General Meeting resolves in favour of paying a dividend of SEK 7 per share, a total of
SEK 588 million, which is a reduction of SEK 2 per share compared to the previous year.

The proposed dividend means that 4 per cent of the Group’s equity at 31 December 2009 will be paid out by way of dividend. The proposal complies with the
Board’s policy, in that decisions on dividend are to be based on an appraisal of the Group’s profitability, future investment plans and financial position. The
proposed dividend corresponds to 58 per cent of the net profit for 2009.

The Board has established that the Group shall have a strong financial position with a debt/equity ratio – defined as net financial debt in relation to equity – in
the interval between 0.3 and 0.8. The debt/equity ratio at 31 December 2009 was 0.34. Payment of the proposed dividend would raise the debt/equity ratio by
around 0.05.

Holmen AB’s equity at 31 December 2009 amounted to SEK 10 691 million, of which non-restricted equity was SEK 4 776 million. The Group’s equity on the
same date amounted to SEK 16 504 million. Complying with IFRS, no distinction is made at Group level between restricted and non-restricted equity.

The Board considers that payment of a dividend of the amount proposed is justifiable in view of the demands made on the company and the Group by the na-
ture, extent and risks associated with the business in terms of the amount of equity required, and taking into account the need for consolidation, liquidity and
financial position in other respects. The financial position will remain strong after payment of the proposed dividend and is considered to be fully adequate to
enable the company to fulfil its obligations in both the short and the long term, as well as to finance such investments as may be necessary.

The Board and CEO declare that the annual report was prepared in accordance with generally accepted accounting principles in Sweden and the Group’s fi-
nancial statements were prepared in accordance with the international accounting standards referred to in the European Parliament’s and Council’s regulation
(EG) No. 1606/2002 of 19 July 2002 concerning the application of international accounting standards. The annual report and the Group’s financial statements
provide a true and fair picture of the performance and financial position of the parent company and the Group. The administration report for the parent compa-
ny and the Group provides a true and fair picture of the development of the operations, financial position and performance of the Group and the parent com-
pany and also describes material risks and uncertainties to which the parent company and the other companies in the Group are exposed.

The annual report and the Group’s financial statements were approved for publication by the Board in its decision of 22 February 2010. The Group’s income
statement and balance sheet and the parent company’s income statement and balance sheet will be presented for adoption at the Annual General Meeting
that will be held on 24 March 2010.

Stockholm, 22 February 2010

fredrik Lundberg
Chairman

Kenneth Johansson
Board member

Carl Bennet

Board member

Carl Kempe

Deputy chairman

steewe Björklundh

Curt Källströmer

Board member

ulf Lundahl
Board member

göran Lundin

Board member

Karin norin

Board member

Lilian fossum
Board member

Hans Larsson
Board member

magnus Hall
Board member and
Chief Executive Officer

Our audit report was submitted on 24 February 2010.

KPMG AB

george Pettersson
Authorised public accountant

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H O L M E N A N N U A L R E P O R T 2 0 0 9

au d i t rePo r t

Audit report

To the Annual General Meeting of the shareholders in Holmen Aktiebolag.
Corporate identity No. 556001-3301

We have audited the annual report, the Group’s financial statements, the accounting records and the administration of the Board of Directors and the CEO of
Holmen AB for the year 2009. The annual report and the Group’s financial statements are included in the printed version of this document on pages 42–84.
The Board of Directors and the CEO have responsibility for these accounts and the administration of the company as well as for the application of the Swedish
Annual Accounts Act when preparing the annual report and the application of international financial reporting standards IFRS as adopted by the EU and the
Swedish Annual Accounts Act when preparing the Group’s financial statements. Our responsibility is to express our opinion on the annual report, the Group’s
financial statements and the administration on the basis of our audit.

We carried out our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to
obtain reasonable but not absolute assurance that the annual report and the Group’s financial statements are free from material misstatement. An audit inclu-
des examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles
used and their application by the Board of Directors and the CEO and significant estimates made by the Board of Directors and the CEO when preparing the
annual report and the Group’s financial statements as well as evaluating the overall presentation of the information in the annual report and the Group’s finan-
cial statements. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the
company in order to be able to determine the liability, if any, to the company of any Board member or the CEO. We also examined whether any board member
or the CEO in any other way acted in contravention of the Swedish Companies Act, the Swedish Annual Accounts Act or the Articles of Association. We
believe that our audit provides a reasonable basis for our opinion set out below.

The annual report were prepared in accordance with the Swedish Annual Accounts Act and gives a true and fair view of the company’s financial position and
the result of its operations in accordance with generally accepted accounting principles in Sweden. The Group’s financial statements were prepared in accor-
dance with international financial reporting standards IFRS as adopted by the EU and the Swedish Annual Accounts Act and give a true and fair view of the
Group’s financial position and the result of its operations. The administration report is consistent with the other parts of the annual report and the Group’s
financial statements.

We recommend to the Annual General Meeting of shareholders that the income statements and balance sheets of the parent company and the Group be
adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the Board
of Directors and the CEO be discharged from liability for the financial year.

Stockholm, 24 February 2010

KPMG AB

george Pettersson
Authorised public accountant

H O L M E N A N N U A L R E P O R T 2 0 0 9

8 5

an n u aL ge n e r aL me e t i n g

Annual General Meeting

dividend

The Board has proposed that a dividend of
SEK 7 (9) per share be paid to shareholders. The
Board has proposed Monday 29 March 2010
as the record date for entitlement to dividend.
Provided the Annual General Meeting resolves
in favour of the proposal, the dividend is
expected to be distributed by Euroclear Sweden
on Thursday 1 April 2010. Shareholders are
requested to inform their account operator of
any change of name and/or address.

annual report

The Annual Report for 2009 will be posted in
the week starting 8 March to shareholders who
have indicated their wish to receive it in this
way. New shareholders will be informed in
connection with the distribution of the share-
holder magazine Holmen Business Report,
how to order and cancel printed and electroni-
cally transmitted financial information via the
website under Shareholder service.

sustainability report

Holmen and its World 2009 will be published
at the same time as the Annual Report and will
describe Holmen’s holistic approach to the
environment, social responsibility and financial
development. The complete sustainability
report for 2009 is available on the website.
The report will be posted in the week starting
15 March to shareholders who have indicated
their wish to receive it in this way.

availability and languages

The financial information and Holmen and its
World 2009 are available on the website in
both English and Swedish. Holmen and its
World is also available in Spanish.

All material is available on the website,
where you can also place orders and start
subscriptions. You can also do this via:

The 2010 Annual General Meeting of
Holmen AB will be held at “Vinterträdgården”,
Grand Hôtel (the Royal entrance), Stockholm,
at 4.00 p.m. CET on Wednesday 24 March.

Participation in
annual general meeting

Shareholders who wish to participate in the
Annual General Meeting shall be entered in the
register of shareholders maintained by Euro-
clear Sweden AB no later than Thursday 18
March 2010, and shall notify the company by
no later than Thursday 18 March 2010 at:

Holmen AB
Group Legal Affairs
P.O. Box 5407
SE-114 84 Stockholm
Sweden

Notification may also be made via the compa-
ny’s website www.holmen.com or by telephone
+46 8 666 21 11 or by fax +46 660 759 78.

Shareholders whose shares are registered in
a nominee name should temporarily re-register
their shares in their own name with Euroclear
Sweden so that this takes effect no later than
Thursday 18 March 2010 to be entitled to
participate in the Annual General Meeting.

Holmen AB
Group Public Relations
P.O.Box 5407
SE- 114 84 Stockholm
Sweden
Phone +46 8 666 21 00
Fax +46 8 666 21 30
e-mail: info@holmen.com

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H O L M E N A N N U A L R E P O R T 2 0 0 9

Information

two reports for 2009

Holmen’s shareholders are the main target reader-
ship for the annual report, which is published in
both English and Swedish. It is posted in the week
starting 8 March to shareholders who have indi-
cated their wish to receive it in this way. In addition
to its annual report Holmen also publishes a sepa-
rate sustainability report entitled Holmen and its
World. This is written for a broad readership,
including customers, employees, school pupils and
local residents where Holmen has large facilities.
The sustainability report is published in Swe-
dish and English in connection with the Annual
General Meeting. A Spanish version is published in
May. The annual report and the sustainability
report are avaliable at and can be ordered from
Holmen’s website.

i n f o r m a t i o n

online press
conferences

The interim and year-end
reports are presented at
press and teleconferences
in English. The conferences
can also be accessed live on
Holmen’s website.

Holmen Business
report

The interim reports are presen-
ted in our shareholder maga-
zine Holmen Business Report,
which is published along with
the quarterly reports.
The magazine also includes
the CEO’s comments, news
and articles on current Holmen
events. Holmen Business
Report can be ordered via
Holmen’s website
www.holmen.com and it is
published in Swedish and
English.

Website

You can follow Holmen’s progress throughout
the year by visiting the company’s website:
www.holmen.com

New information was added during 2009,
primarily based on the needs and interests of
shareholders and investors. Extensive historic
data, such as the price trend of the Holmen share
over the years and dividend history, are available
under the headings Investors and share holders,

The share. Shareholders can also easily calculate
the return that they have received on their own
shareholding. The website gives visitors access
to analysis tools for the income statements of the
Group and its business areas. The cash flow
statement and key indicators are also presented.
Additionally, you can read about the Group’s
financing, ratings and maturity structure of
loans and get access to press releases, printed
matter and other published information.

reporting schedule

For 2010 Holmen will publish the following financial reports:
Interim report, January–March
Interim report, January–June
Interim report, January–September
Year-end report for 2010

6 may
11 august
26 october
2 february 2011

For 2011 Holmen will publish the following financial reports:
Interim report, January–March
Interim report, January–June
Interim report, January–September

6 may
17 august
26 october

Annual General Meeting 2011

30 march

H O L M E N A N N U A L R E P O R T 2 0 0 9

8 7

de f i n i t i o n s a n d gLo s s a r y

Definitions and glossary

definitions

Capital employed

Cash flow after
investments

debt/equity ratio

earnings per share (ePs)

equity/assets ratio

financial assets

net financial debt

Operating capital reduced by the net
sum of deferred tax assets and deferred
tax liabilities. Average values are calcu-
lated on the basis of quarterly data.

glossary

Biofuel/biorefining

diP/de-inked Pulp

Cash flow from operating activities, less
cash flow from investing activities.

fBB/folding Box Board

Net financial debt divided by the sum
of equity and minority interests, if any.

fsC

Profit for the year divided by the
weighted average number of shares
outstanding, adjusted for buy-back of
shares, if any, during the year. Diluted
EPS means that any diluting effect from
outstanding call options has been taken
into account.

Equity plus minority interests, if any,
expressed as a percentage of total
assets.

Non-current and current financial
receivables and cash and cash
equivalents.

Non-current and current financial
liabil ities and pension provisions, less
financial assets.

items affecting comparability

See the ten-year review on page 40.

operating capital

operating margin

return on capital employed

return on equity

return on operating capital

Total assets, less financial receiv ables,
cash and cash equivalents, deferred
tax assets, operating liabilities, tax
provision and other provisions. Average
values are calculated on the basis of
quarterly data.

Operating profit/loss (excl. items
affecting comparability) expressed as
a percentage of net sales.

Operating profit/loss (excl. items
affecting comparability and transferred
operations) expressed as a percentage
of the average capital employed.

Profit for the year, expressed as a
percentage of the average equity
calculated on the basis of quarterly
data.

Operating profit/loss (excl. items
affecting comparability and transferred
operations) expressed as a percentage
of the average operating capital.

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H O L M E N A N N U A L R E P O R T 2 0 0 9

Renewable fuels, such as wood (including
liquors, bark and crude tall oil).

Pulp manufactured from de-inked
recovered paper.

Multi-layered paperboard made from
mechanical and chemical pulp.

Forest Stewardship Council. An inter-
national forest certification system to
promote use of the world’s forests in ways
that are acceptable according to three
sets of criteria: environmental, social and
economic.

Mechanical pulp produced by grinding
wood against a grindstone.

Lightweight coated wood-containing
paper. Mainly used for magazines,
manuals and directories.

groundwood pulp

LWC/Light Weight Coated

mf special/machine finished

Includes standard and coloured
newsprint.

mWC/medium Weight Coated Medium weight coated wood-containing

PefC

paper. Used for magazines, manuals,
directories and advertising print.

Programme of the Endorsement of Forest
Certification schemes. An international
forest certification system. In Sweden
the PEFC and FSC standards are broadly
identical.

rmP/refiner mechanical Pulp Pulp produced from the refining of chips

sBB/solid bleached board

sC/super Calender

sulphate pulp

with or without chemical or thermal
treatment.

Multi-layer paperboard made from
bleached chemical pulp.

Super calendered paper. Uncoated,
glazed magazine paper.

Chemical pulp that is produced by
cooking wood under high pressure and
at a high temperature together with white
liquor (sodium hydroxide and sodium
sulphide).

tmP/thermo-mechanical

Obtained by heating spruce chips and
then grinding them in refiners.

Virgin fibre board

Paperboard produced from fibre that has
not previously been used to make paper-
board or paper, in contrast to recycled
fibre/recovered fibre.