Holmen Annual Report 2014

FY2014 Annual Report · Holmen

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Holmen AB (publ)
P.O. Box 5407, SE-114 84 STOCKHOLM, SWEDEN
Tel +46 8 666 21 00
E-mail info@holmen.com • www.holmen.com
ID no. 556001-3301 • Registered office Stockholm

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100%
Holmen-produced
paper

This entire annual report is made using Holmen’s own
products. The cover is printed on Invercote Creato,
manufactured at Iggesund Mill. This is a paperboard with
high whiteness and a smooth, matt surface. Both sides are
fully coated. The paperboard is built up in several layers,
making it ideal for graphical products where the focus is
on designing and embossing the surface for first-class
results. The insert is printed on Holmen TRND, which is
manufactured at Hallsta Paper Mill. This is an uncoated,
matt magazine paper that offers a wide range of options in
terms of bulk, grammage and shade. Both Holmen TRND
and Invercote Creato are made from virgin fibre.

ANNUAL REPORT 2014

Contents

The Board of Directors and the CEO of Holmen Aktiebolag (publ.),
corporate identity number 556001-3301, submit their annual
report for the parent company and the Group for the 2014 financial
year. The annual report comprises pages 6–92. The results of
the year’s operations and the financial position of the parent com-
pany and the Group are presented in the administration report,
pages 6–57, and the accompanying financial statements, 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.

The annual report describes Holmen’s financial development as
well as the Group’s sustainability work. The management and
handling of relevant sustainability issues has a major impact on
profitability, risk and thus the opportunity to create value. Sustain-
ability is a natural and integrated part of Holmen’s business and is
therefore also a logical element of the Group’s annual report.

CEO’s message

Business operations
The year in brief
Strategy
Paperboard
Printing paper
Sawn timber
Forest
Energy
Risk management

Sustainability
Sustainability report
Sustainable products
Environment
Employees
Society & stakeholders

Corporate governance
Corporate governance report
Board of Directors
Group management
Shareholder information

6
8
12
16
20
24
28
32

36
38
40
44
46

48
52
54
55

This is a translation of the Swedish annual report of Holmen Aktie bolag (publ.). In the event of
inconsistency between the English and the Swedish versions, the Swedish version shall prevail.

Financial statements
Income statement

Statement of comprehensive income

Balance sheet

Changes in equity

Cash flow statement

Parent company

Notes

1. Accounting policies

2. Operating segment reporting

3. Other operating income
4. Employees, staff costs and

remuneration to senior management

5. Auditors’ fee and remuneration
6. Net financial items and income from financial

instruments

7. Taxes

8. Earnings per share (EPS)

9. Intangible non-current assets

10. Property, plant and equipment

11. Biological assets
12. Investments in associates, joint ventures and

other shares and participating interests

13. Financial instruments

14. Inventories

15. Operating receivables

16. Equity, parent company

17. Pension provisions

18. Other provisions

19. Operating liabilities

20. Operating leases

21. Collateral and contingent liabilities

22. Related parties

23. Investments in Group companies

24. Untaxed reserves

25. Cash flow statement

26. Critical accounting estimates and judgements

Proposed appropriation

Audit report

Assurance report

Five-year review, sustainability

Ten-year review, finance

Definitions and glossary

Calendar

INFORMATION

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.

The annual report, together with year-end
and interim reports, is published in Swedish
and English and the reports are sent
automatically to the shareholders who have
indicated their wish to receive them.
They are also available on the website
www.holmen.com

How to order printed material:
• www.holmen.com
• Holmen AB, Group Communications,

P.O. Box 5407,
SE-114 84 Stockholm, Sweden

• e-mail info@holmen.com
• telephone +46 8 666 21 00

CALENDAR

For 2015 Holmen will publish the following
financial reports:

8/5

Interim report January–March

13/8

Interim report January–June

5/11

Interim report January–September

2016

5/2

Year-end report

The cover is printed on Invercote® Creato 260 gsm. It is matt laminated and partially
UV-varnished. The insert is printed on Holmen TRND, 2.0 – 80 gsm.
Layout: BYN Kommunikationsbyrå AB. Graphic production: Gylling Produktion AB.
Photos: Ulla-Carin Ekblom, Rolf Lavergren, Liam Melton, Carl Hjelte, Viktor J Fremling,
Jan Jansson, Teknomedia, Lasse Hejdenberg and others. Print: Åtta.45

Holmen in brief

BUSINESS AREAS: PRODUCTS

IGGESUND PAPERBOARD: Paperboard

Products: Solid bleached board (SBB) and folding box board (FBB) for consumer packaging and graphical printing.
Customers: Converters of paperboard for packaging, as well as printers and wholesalers. Main market: Europe.
Production facilities: Iggesund Mill and Workington Mill. Brands: Invercote and Incada.
Production 2014: 0.5 million tonnes

HOLMEN PAPER: Printing paper

Products: Printing paper for magazines, product catalogues, direct mail, books and newspapers. Customers:
Publishers, retailers, printers and catalogue publishers. Main market: Europe. Production facilities: Braviken
Paper Mill, Hallsta Paper Mill and Holmen Paper Madrid. Brands: Holmen VIEW, Holmen TRND, Holmen UNIQ,
Holmen XLNT, Holmen BOOK, Holmen PLUS and Holmen NEWS.
Production 2014: 1.3 million tonnes

HOLMEN TIMBER: Sawn timber

Products: Pine joinery timber and spruce construction timber. Customers: Joinery and furniture industry, planing
mills, builders’ merchants, house construction firms, etc. Main market: Europe, North Africa and the Middle East.
Production facilities: Braviken Sawmill and Iggesund Sawmill.
Production 2014: 0.7 million cubic metres

BUSINESS AREAS: RAW MATERIALS

HOLMEN SKOG

Products: Wood and biofuel. Operations: Responsible for Holmen’s forests and for wood supply to the Group’s
Swedish units. Customers: Pulp and paper industry, sawmills and thermal plants. Holding: Total land acreage
1 269 000, of which 1 042 000 hectares of productive forest land with a volume of wood of 121 million m3
growing stock, solid over bark.
Harvesting 2014: 3.3 million m3sub Growth: 4.0 million m3sub/year

HOLMEN ENERGI

Products: Hydro power, wind power and peat. Operations: Responsible for the Group’s hydro and wind power
plants, as well as the electricity supply to the Group’s Swedish units. Production facilities (wholly and partly
owned): 21 hydro power stations and 4 wind farms.
Production 2014: 1.1 TWh from hydro and wind power

HOLMEN ANNUAL REPORT 2014 3

CEO’s MESSAGE

Dear shareholder

As we sum up 2014, we can report that the sweeping measures within the Group over the
past few years have had an impact. With our industrial operations seeing positive develop-
ment, Holmen’s position has been strengthened over the year – a fact that is reflected in this
year’s results. Against the background of this, the Board has resolved to propose a dividend
of SEK 10 (9) per share.

Active measures in a
challenging market
Despite the weak European economy, the mar
ket situation for paperboard is relatively good,
thanks to increased demand from outside
Europe. Our Incada paperboard is in great de
mand and last autumn’s decision to invest in
increased production at the mill in Working
ton, where Incada is produced, marks a natural
step in exploiting the market potential. Igge
sund Mill performed better in 2014, particu
larly in the second half of the year, than it did
in 2013, and the investments announced on the
pulp front present an opportunity to increase
production of both pulp and paperboard,
while also improving competitiveness through
lower production costs. This investment takes
Iggesund Mill yet another step towards becom
ing one of the world’s leading paperboard mills
in technological terms, with the lowest environ
mental impact.

Invercote from Iggesund Mill is a highper
formance consumer paperboard for customers
that demand top quality. Europe is the main
market, but there is also good potential for
profitable growth in other markets, not least by
growing together with our European custom
ers that operate globally. In order to fully ex
ploit this opportunity, the service organisation
will be overhauled.
The printing paper market is incredibly
tough, due to falling structural demand, as a
consequence of changing media habits and the
growing use of digital media to source infor
mation. The cutbacks, efficiencies and reposi
tioning towards more profitable segments that
we have implemented in recent years have,
however, substantially improved our competi
tiveness. Spring 2015 will see the launch of a
new product from Braviken in the SC segment,
as the next step in refocusing the Swedish mills
on speciality papers. Hallsta Paper Mill has re
positioned itself in product terms, and over the
winter the energy restructuring, with the clo
sure of the solid fuel boilers, has proceeded

4 HOLMEN ANNUAL REPORT 2014

according to plan. This has led to a consider
ably more efficient mill, while also enabling
us to reverse the bark streams, making us a
significant supplier of biofuel to nearby heating
plants.
The market for sawn timber improved in
early 2014, due to increased demand and a
good balance in the market. During the second
half of the year, the market situation declined,
due to high supply and the subsequent pressure
on market prices. Over the year, Holmen’s two
sawmills improved their productivity and in
creased deliveries. However, we can report that
the difference in log prices between southern
and northern Sweden continues, which poses a
challenge for sawmills in the south of the coun
try. The bio colocation of the paperboard mill
and sawmill in Iggesund is in good balance,
which bodes well for the capacity expansion of
around 15 per cent that was announced in the
autumn. At Braviken Sawmill, we will be
switching to sawing both spruce and pine in
2015, for reasons of raw material supply and
logistics.

In addition to the economy and the market,

there are other external factors that have a
major impact on our business. The most funda
mental issue is the right to work the forest.
Forest growth and sustainable management
are also the key to a future bioeconomy, since
the forest and its products store carbon dioxide
and are able to replace fossilbased alterna
tives. Efficient transport is a precondition for
working the forest, but it represents a signifi
cant cost. On many routes where rail is not an
option, trucks are used as the means of trans
port. The proposed kilometre tax for road
transport will reduce the forest industry’s com
petitiveness and risks putting a brake on the
restructuring. On the other hand, higher gross
weights for trucks would mean fewer loads
and a lower environmental impact. We moni
tor this type of issue on a constant basis and
work to lobby decisionmaking bodies and
make them aware of the consequences.

Renewable raw material provides
long-term profitability
The forest is a fantastic raw material that offers
resourceefficient and climatesmart products,
and using it in a sustainable way allows Holmen
to create value not only for shareholders but for
future generations. The silviculture improve
ments we have introduced and the age structure
of our forests will serve to enhance growth and
the facility to harvest wood from the forests
over the longer term.
Although, for the most part, forest manage
ment is about long time horizons, it is vital to
continue working on productivity in the forest
right now. Higher productivity in logging and
harvesting is the best guarantee of a good yield
in the near future and beyond.
With 21 wholly and partly owned hydro
power stations and four wind farms, as well as
electricity produced at our mills, companypro
duced renewable electrical energy accounts for
over 40 per cent of Holmen’s total electricity
use. The target is for the proportion to reach 50
per cent by 2020. Since hydro power is essen
tially fully exploited in Sweden, we are continu
ously assessing the viability of expanding wind
power on Holmen’s own land. With today’s
prices for electricity and green electricity certifi
cates, however, the conditions are incredibly
challenging. Nevertheless, we are in a position
to celebrate the successful wind farm project on
our own land next to Hallsta Paper Mill, which
was completed during the year with an installed
capacity of 50 MW.

Active sustainability work brings
benefits on many levels
Sustainability is not simply a success factor, it
lies at the heart of our competitiveness and
profitability. Lower costs and reduced risks,
motivated and committed employees and our
role in the transition to a society in harmony
with the environment are all important com
ponents and driving factors in our sustainabil
ity work. Holmen is affiliated to the UN’s

CEO’s MESSAGE

HOLMEN ANNUAL REPORT 2014 5

Global Compact and sees it as only natural to
support its ten principles, which cover areas
such as human rights and social and environ
mental responsibility.
We are also proud of the repeated recogni
tion we receive for our sustainability work.
Our inclusion, for the second year in a row, on
the UN’s Global Compact 100 stock index es
tablishes our credibility among investors, while
our placing on the A list in CDP’s Climate Per
formance Leadership Index 2014 strengthens
our brand as a sustainable business.

Solid foundation creates
confidence
Looking back on my first year as CEO, I can
see that the combination of tough restructuring
programmes in printing paper and investments
in paperboard over the past few years have
yielded results and strengthened the company.
The work has also led to a reweighting on the
balance sheet, with forest and paperboard
growing, and exposure to printing paper fall
ing. Going forward, I see good opportunities
for organic growth in paperboard, while the
printing paper side is well placed to success
fully make the switch to a profitable producer
of speciality paper, even though the market re
mains challenging.
Holmen rests on a solid foundation of forest,
energy and skilled employees. With a focus on
productivity and cash flow, combined with or
ganic growth in paperboard, Holmen is in a
strong position to meet the future.

Stockholm, 18 February 2015

Henrik Sjölund
President and CEO

BUSINESS OPERATIONS / THE YEAR IN BRIEF

The year in brief

THE GROUP’S OPERATING PROFIT excluding items
affecting comparability was SEK 1 734 million.
Earnings were positively affected by higher
prices for printing paper and sawn timber, a
weaker Swedish krona and reduced production
costs for paperboard. Investments amounted to
SEK 834 million and cash flow after invest
ments was SEK 1 342 million. The dividend
paid was SEK 756 million. Net financial debt
decreased to SEK 5 907 million, giving a debt/
equity ratio of 0.28. The Board proposes a di
vidend of SEK 10 per share.

OUTLOOK. The market situation for paperboard
is good. Over the next year, Iggesund Paper
board will be investing in increasing paper
board and pulp capacity, which will bring not
only volume increases but also lower produc
tion costs and greater competitiveness. The
market for printing paper is challenging, with
structurally declining demand. Holmen Paper
will continue its restructuring towards a higher
proportion of magazine and book paper and a
lower proportion of newsprint by converting
one of the paper machines at Braviken Paper

Mill in 2015 in order to produce a new
product in the SC segment. The market for
sawn timber weakened due to high supply, and
the market situation for 2015 is uncertain. The
harvest of Holmen’s own forest is following
the harvesting plan. Earlier storms, however,
brought higher costs and will also have an ad
verse impact in 2015. Holmen Energi is being
negatively affected by the successive impact of
lower market prices.

NET SALES AND
OPERATING MARGIN
SEKm

20 000

15 000

10 000

5 000

15 994

10.8

Net sales

Operating margin*

* Excl. items affecting comparability.

OPERATING PROFIT/LOSS
SEKm

2 000

1 500

1 000

500

Operating proﬁt/loss*
Return on capital employed*

Return on equity

* Excl. items affecting comparability.

6 HOLMEN ANNUAL REPORT 2014

1 734

6.4

4.3

FACTS

Net sales, SEKm

Operating profit/loss, SEKm

Operating profit/loss, 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

2014

2013

15 994

16 231

1 284

1 734

907

10.8

10*

6.4

4.3

0.28

834

1 069

1 209

711

8.5

4.5

3.4

0.29

869

Average number of employees

3 359

3 718

* Board proposal. ** Excl. items affecting comparability.

MAJOR LAND DEAL. Holmen reaches
an agreement to sell almost
10 000 hectares of forest with
high conservation value to the
Swedish Environmental Protec
tion Agency in order to create a
nature reserve. In exchange,
Holmen is being given the oppor
tunity to purchase around 18 000
hectares of forest land of equiva
lent value.

NEW MANAGEMENT IN TWO BUSINESS
AREAS. Johan Padel becomes the
new CEO of Holmen Timber in
February, and in March Nils
Ringborg takes up the role of
CEO of Holmen Paper.

COOP CHOOSES INVERCOTE. Coop
develops new food packaging for
frozen berries and chooses Inver
cote Bio from Iggesund Paper
board, a virgin fibre paperboard
coated with bioplastic that makes
the packaging compostable.

NEW CEO FOR HOLMEN. In April,
Henrik Sjölund becomes President
and CEO of Holmen. Henrik
Sjölund moves from his role as
CEO of Holmen Paper.

NEW PAPER GRADES. The launch of
Holmen XLNT Elite and Holmen
XLNT Light creates new oppor
tunities for cost savings for produ
cers of magazines, supplements
and direct mail.

CAPITAL MARKETS DAY. On 3 June,
a capital markets day is held in
Iggesund for analysts, lending
banks and institutional investors.

ENERGY EFFICIENCIES IN HALLSTA.
May sees the final stage of the
energy efficiency drive at Hallsta
Paper Mill. Greater heat recovery
allows the last solid fuel boiler to
be decommissioned.

BUSINESS OPERATIONS / THE YEAR IN BRIEF

EBITDA/
Business area, %

Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi

Total: 2 717

1 161 SEKm
725 SEKm
160 SEKm

563 SEKm

233 SEKm

INVESTMENTS IN THE SAWMILLS. The
decision to invest a total of SEK 55
million increases production capa
city by 15 per cent at Iggesund
Sawmill and enables Braviken
Sawmill to begin processing two
types of wood.

IGGESUND BEATS RECORD. Iggesund
Mill produces more pulp than ever
before and in October it beats the
record for paperboard production.

SAS CHOOSES INCADA. Airline SAS
introduces a new meal box made
from the virgin fibre paperboard
Incada, which is produced at the
paperboard mill in Workington,
UK.

OPERATING
CAPITAL/
Business area, %

Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi

Total: 32 354
6 790 SEKm
4 666 SEKm
901 SEKm

17 340 SEKm

3 401 SEKm

WORLD LEADER ON CLIMATE CHANGE
MEASURES. Holmen is awarded top
marks in the Climate Performance
Leadership Index 2014. Holmen
is one of a total of six Swedish
companies on the A list, and joins
Finland’s UPM as the only two
forest companies to be given the
highest rating.

INAUGURATION OF WIND POWER.
November sees the inauguration
of Holmen’s jointly owned wind
farm in Varsvik. Comprising 17
wind turbines, the facility is the
first on the Group’s own land and
also the first largescale wind farm
in the county of Stockholm.

INVESTMENTS IN THE PAPERBOARD
MILLS. A decision to invest a total
of SEK 530 million that will in
crease the capacity for paper
board production in Workington
by 20 000 tonnes and pulp capa
city at Iggesund Mill by 50 000
tonnes.

PRODUCTION RECORD. The paper
board mill in Workington and
the sawmills in Iggesund and
Braviken beat the production
record for the full year.

NET SALES/
Business area, %

NET SALES/
Market, %

Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi

Total: 15 994
5 113 SEKm
6 247 SEKm
1 352 SEKm

2 957 SEKm

320 SEKm

Total: 15 994

Sweden*
UK
Germany
Spain
Italy

The Netherlands

France

Rest of Europe

Rest of the world
* Of which forest and energy 20%.

24%

13%

17%

13%

HOLMEN ANNUAL REPORT 2014 7

BUSINESS OPERATIONS / STRATEGY

Strategy

Holmen’s strategy is to own forest and energy assets and to develop industrial operations in paperboard,
printing paper and sawn timber.

Through active management, the substantial forest assets shall deliver stable revenue and increased value over
time, while the position in the wood market shall contribute to the competitiveness of the industrial operations.

Large-scale industrial operations at efficient facilities shall provide good profitability through the refining of
forest raw material into high-performance consumer paperboard, cost-effective printing paper and high-qual-
ity sawn timber.

Energy assets shall provide revenue and the opportunity to continuously assess the profitable development
of wind power on Holmen’s own land.

STRATEGIC DIRECTION: PRODUCTS AND RAW MATERIALS

PAPERBOARD
Organic growth

Iggesund Paperboard’s position as a market leader in Europe when it comes to high-performance paperboard for
consumer packaging and graphical products is to be reinforced through product development, while exploiting oppor-
tunities for global growth. Well invested production facilities, self-sufficient in energy, ensure competitive production
costs and the opportunity to grow through complementary investment.

PRINTING PAPER
Specialisation with
focus on cash flow

Holmen Paper will increase its proportion of speciality paper that exploits the properties of virgin fibre to create a lighter
paper that offers the customer cost savings in both production and distribution. The structural downturn in the market
demands a constant focus on costs, while also continuously adapting market position. Weak profitability makes cash
flow a priority.

SAWN TIMBER
Large-scale integrated
production

Holmen Timber produces high-quality sawn timber for the joinery and construction industry in Europe, North Africa and
the Middle East. The sawn timber market features low margins, with raw materials accounting for a large proportion
of the production costs. Holmen’s strategy is based on a strong organisation for wood procurement, cost-efficiency
through large-scale production and co-location with the Group’s paper and paperboard mills.

FOREST
Active forest
management

The revenue from and future value of Holmen’s forest holdings are to increase through active and sustainable forestry,
a clear focus on costs and the further development of methods, technologies and expertise. Combined with the position
in the wood market, economies of scale will contribute to the competitiveness of the industrial operations.

ENERGY
Develop wind power

Holmen’s hydro power is to be managed with a focus on long-term profitability. Wind power will continue to be de-
veloped with partners where it is judged to provide good profitability. Holmen has so far built one wind farm on its own
land. Other projects are in various stages of development, but the conditions for erecting wind turbines in Sweden are
currently challenging.

8 HOLMEN ANNUAL REPORT 2014

Christian Carlsson, production manager at Holmen Skog, estimates
the basal area of a forest stand using a device called a relascope.

BUSINESS OPERATIONS / STRATEGY

FINANCIAL TARGETS

OUTCOME 2014

COMMENT

PROFITABILITY
Holmen’s target is a return that is consistently above the market-based cost
of capital. At Group level, the key indicator 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 continu-
ously followed up for the Group, business areas and production units.

CAPITAL STRUCTURE
Holmen is to have a strong financial position that provides financial
stability 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 debt/equity ratio is a
maximum of 0.5.

DIVIDEND
Decisions on dividends are based on a total appraisal of the Group’s
profitability, future investment plans and financial position.

The return on capital em-
ployed was 6.4 per cent.

The return increased by 2 percentage points thanks to
improvements in the industrial operations. However, profit-
ability remains low in printing paper and sawn timber, due
to a weak market and high raw material costs respectively.

Debt/equity ratio was 0.28.

The debt/equity ratio has been at levels around 0.3 in
recent years.

The Board has proposed
that the 2015 Annual
General Meeting resolves
in favour of a dividend of
SEK 10 per share.

The proposed dividend corresponds to 4.0 per cent of equity.
Over the past five years the dividend has averaged 4.0 per
cent of equity.

PROFITABILITY
Return on capital employed, %

CAPITAL STRUCTURE
Debt/equity ratio, times

DIVIDEND PER SHARE
SEK

6.4

0.4

0.3

0.2

0.1

0.0

0.28

Proposal, 10 SEK

4.0

Excl. items affecting comparability

Dividend
Dividend as per cent of equity

SUSTAINABILITY TARGETS

OUTCOME 2014

COMMENT

GROWTH IN HOLMEN’S FORESTS
The target is to increase growth in Holmen’s forests by 25 per cent by
2050 compared with 2007. The target is important from both a produc-
tion and a climate perspective.

An assessment will be
made as part of the next
harvesting review in 2021.

Measures to provide increased growth have been identified
and set in motion.

USE OF FOSSIL FUELS
The Group is working towards a goal of reducing use of fossil fuels at the
mills. The target for 2020 is a fall of 75 per cent compared with 2005.

The reduction in fossil fuels
amounted to 74 per cent.

Investments in bio-based energy solutions at several mills
have led to a significant reduction in the use of fossil fuels.

PRODUCTION OF RENEWABLE ELECTRICITY
The proportion of company-generated renewable electrical energy shall
increase as a proportion of total electricity consumption by Holmen. The pro-
portion is to be 50 per cent by 2020, compared with 31 per cent in 2005.

The proportion of com-
pany-produced renewable
electrical energy amounts
to 42 per cent.

The economic conditions for building wind power are not in
place at this time. As a consequence, the target was revised
down in 2014, from 67 per cent to 50 per cent.

10 HOLMEN ANNUAL REPORT 2014

BUSINESS OPERATIONS / STRATEGY

SELF-SUFFICIENCY WOOD

SELF-SUFFICIENCY ELECTRICITY

62%

46%

Wood harvested in company forests accounted for 62 per cent of total wood
supplies. Holmen’s self-sufficiency in electricity from wholly and partly owned
hydro and wind power and electricity production at the mills amounted to
46 per cent in 2014.

PROFITABILITY FROM NATURAL RAW MATERIALS

Holmen’s active sustainability work is a key part of its business and a driver of long-term commercial value. With wood from its own
forests and company-produced renewable energy, Holmen’s production facilities are supplied with natural raw materials, while surplus
energy and by-products from production are used to generate energy. Through this Holmen is making its own contribution to the transition
to a bio-based economy.

Wood raw
material from
Holmen’s
own forests

Energy from
Holmen’s
own hydro
and wind
power

BIOFUEL

Paperboard

Printing paper

Sawn timber

Own energy
production and
recovered
energy

Surplus
energy/
by-products for
energy production

BIOFUEL

HOLMEN ANNUAL REPORT 2014 11

BUSINESS OPERATIONS / PAPERBOARD

Steven Jardine,
Workington

Paperboard

Iggesund Paperboard is a market leader in the highest quality segments for
consumer packaging and paperboard for advanced graphical printing.

12 HOLMEN ANNUAL REPORT 2014

BUSINESS OPERATIONS / PAPERBOARD

FACTS

Net sales, SEKm

Operating profit/loss, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Share of sales in Europe, %

Deliveries, ’000 tonnes

2014

5 113

674

288

6 790

1 389

493

2013

4 618

433

660

6 863

1 473

469

OPERATING PROFIT/LOSS
SEKm

1 000

750

500

250

674

9.8

Operating proﬁt/loss
Return on operating capital

NET SALES AND
OPERATING MARGIN
SEKm

6 000

4 500

3 000

1 500

5 113

13.2

Net sales

Operating margin

HOW DID YOUR PRODUCTS FARE IN THE 2014 MARKET?
Deliveries increased and the market gave us great feedback via
Opticom’s brand survey 2014. This shows once again that our
high-performance paperboard products are meeting customer
expectations.

HOW CAN YOU DELIVER EVEN MORE CUSTOMER BENEFIT?
By making it easier to do business with Iggesund Paperboard.
In 2014, we launched our service offering, ‘Care by Iggesund’.
The sales offices in Asia and the US are being upgraded and a
new function, Global Business Development, aims to develop our
customer offering and sales work in all markets.

WHAT PRODUCT INNOVATION WAS THE MOST
IMPORTANT IN 2014?
The launch of the upgraded Invercote G. Our highly valued
premium product has thus become even better, strengthening
our position in the market.

HOW DID THE MILLS PERFORM IN 2014?
Production was excellent at both mills and Workington saw record
paperboard production. Iggesund Mill also produced more pulp
than ever. Together with marketing initiatives, this has led to us
reversing a negative trend and improving our profitability. We
brought the year to a strong conclusion, giving us a stable founda-
tion on which to build.

WHAT ARE YOUR FOCUS AREAS OVER THE COMING YEAR?
With our strong market position, our skilled staff and the
development potential we have identified in the mills, we see
good opportunities to grow organically. The decisions to invest
in increased paperboard production in Workington and greater
pulp capacity in Iggesund are highly significant. Combined with
the efforts we are putting into service and organisational devel-
opment, this will put Iggesund Paperboard in an even stronger
position for the future.

Annica Bresky,
CEO Iggesund Paperboard

OPERATIONS IN 2014

Iggesund Paperboard’s deliveries amounted to 493 000 tonnes for
the year, which was 24 000 tonnes higher than in 2013.
Operating profit for the year was SEK 674 million (433). The
improvement in profit is mainly due to reduced production costs, but
also higher deliveries and a weaker Swedish krona.

HOLMEN ANNUAL REPORT 2014 13

BUSINESS OPERATIONS / PAPERBOARD

Market
MARKET DEVELOPMENT. Demand in Europe for the
products that Iggesund Paperboard manufactures,
solid bleached board (SBB) and folding box board
(FBB), has remained stable at around 2.7 million
tonnes. The largest markets in Europe are Germany at
22 per cent and the UK at 12 per cent of consumption.
Asia, and especially China, account for the
greatest global increase in the area of packaging.
This is due to a growing middle class and urbanisa-
tion. A substantial rise in production volumes has
put prices under pressure, primarily in the lower
quality segments.
The North American economy has recovered and
demand for packaging has generally increased,
bringing minor upward adjustments to prices in the
lower quality segments.

Products
MARKET POSITION. Iggesund Paperboard is a global
market leader in the segment for high-performance
paperboard for consumer packaging and graphical
applications. The main customer categories are con-
verters, who make packaging, and wholesalers and
printers, who buy paperboard for use in graphical
applications. One of Iggesund Paperboard’s key
competitive advantages is consistent quality, giving
customers the confidence that a material will offer
the same performance in the production process
time after time.

BRANDS. Iggesund Paperboard manufactures and
markets paperboard products under two brands:
Invercote (SBB), which is produced at Iggesund
Mill, and Incada (FBB), which is made at the mill in
Workington. Both brands come out top in their re-
spective primary target groups in Opticom’s brand
survey 2014, ‘Most valuable virgin fibre carton-
board brands in Western Europe’. Invercote was
also used in the winning packaging solutions at two
international design competitions during the year.

APPLICATIONS. Invercote and Incada are used primari-
ly to make consumer packaging for confectionery,
perfumes, wine, spirits, pharmaceuticals, food
products, cosmetics and tobacco. With one of the
market’s most complete product ranges, coupled
with additional finishing options via the laminating
plant in Strömsbruk, Iggesund Paperboard is able to
offer customised products that meet the very highest
of standards – all the way from the customer’s in-
dustrial processes to the final consumer experience
and recycling.
Both Invercote and Incada are highly regarded
among designers and producers in the graphics in-
dustry, who employ the products in everything from
advertising print to cards and covers. The range for
graphical applications is being developed and adapt-
ed to the market on an ongoing basis to meet the
rapidly accelerating demand driven by advances in
digital printing, a technology that enables individu-
ally tailored end products. The pace of development
was particularly fast in 2014, with digital printing
also making inroads into packaging production.
Iggesund Paperboard will be pushing the develop-
ment of paperboard products adapted to various
types of digital printing.

14 HOLMEN ANNUAL REPORT 2014

Development
RENEWABLE. The market trends in the packaging in-
dustry focus primarily on innovative packaging
solutions, the importance of packaging in brand
building and, last but not least, sustainability. Com-
mitment to sustainability is a global trend that
manifests itself in various ways in different markets,
but generally speaking, concrete sustainability work
is a necessary door opener to new customers.

Iggesund Paperboard’s mills hold chain-of-cus-
tody certification for both PEFC™ and FSC®. All the
wood purchased for paperboard production comes
from well managed and sustainable forests. The end
product is renewable, high-performance consumer
paperboard based on virgin fibre. As well as bringing
unique properties to the products, virgin fibre is also
a necessary addition to the recovered fibre cycle. At
the end of its useful life, when the fibre is no longer
reusable in paperboard production, it becomes a
biofuel for the generation of energy.

CUSTOMER FOCUS. A new service concept was de-
veloped and launched in 2014 under the name ‘Care
by Iggesund’. The concept involves boosting the de-
livery service and the service surrounding the
products Invercote and Incada – from technical sup-
port in local markets to the process and paperboard
expertise offered by the company. The year also saw
an increase in global sales activities, in part by
growing the sales offices in Asia and the US, and
through the introduction of a new function called
Global Business Development. The task of this func-
tion is to provide internal support and to develop
sales work in all markets.

PRODUCT DEVELOPMENT. In December, Iggesund
Paperboard laid the groundwork for a successful
2015 with the development of an upgraded version
of the bestselling Invercote G. This takes the com-
pany another step forward in its strategy to be a
market leader in the premium segment. The extens-
ively upgraded Incada, which was launched in
autumn 2013, has received an excellent reception
from the market and European converters give a
top ranking to both Incada and Invercote.

PRODUCTIVITY. The mill in Workington achieved sev-
eral monthly records in paperboard production and
has established a reliably high level that also entails
record annual production. Iggesund Mill produced
more pulp than ever before and in the final part of
the year beat the monthly record for paperboard
production.
Based on Iggesund Paperboard’s strong market
position and the global growth in the packaging
segment, in December 2014 the decision was
taken to invest a total of SEK 530 million during
2015–2016 to increased paperboard capacity in
Workington and greater pulp capacity at Iggesund
Mill.

ENERGY SUPPLY. Since the extensive energy invest-
ment in a biofuel boiler in 2013, the paperboard
mill in Workington has been self-sufficient in electri-
city and thermal energy. In addition, significant
quantities of fossil-free electricity are distributed to
the local community. Incada’s carbon footprint has

PRODUCTS, %

61%

39%

SBB
FBB

END
PRODUCTS, %

Consumer packaging
Graphical printing

85%

15%

EUROPEAN
PAPERBOARD MARKET 2014

0.5

2.1

e
c
i
r
P

2.4

3.2

MILLION TONNES

SBB Premium products,
graphical products, perfume,
confectionary and cigarettes.

0.5

FBB Confectionary, pharma-
ceuticals, cigarettes, frozen goods
skin care and hygiene articles.

2.1

SUB/LPB (solid unbleached
board and liquid packaging
board) Beverages, daily products
and dry goods.

2.4

WLC (white lined chipboard)
Dry goods and
household products.

3.2

BUSINESS OPERATIONS / PAPERBOARD

ORGANISATION. Extensive changes have been imple-
mented across the business area over the year. The
organisation has been restructured at both the mills
to achieve a more flexible and fast-moving organ-
isation with short decision paths. Iggesund Mill will
also be gradually reducing its workforce up until
2017. Marketing work has been adapted to create a
more dynamic organisation that is driven to a larger
extent by customers, rather than geography. This
should allow the business to better meet require-
ments for quality, service and flexibility.

IGGESUND MILL
Raw materials: Softwood and hardwood
pulpwood.
Process: Sulphate pulp.
Products: Solid bleached board, plastic-
coated paperboard and sulphate pulp.

WORKINGTON MILL
Raw materials: Spruce pulpwood and
purchased sulphate pulp.
Process: RMP.
Products: Folding boxboard.

The mill in Workington

been significantly reduced, making it amongst the
lowest in the folding boxboard segment.

In the UK, electricity distributors have to meet a
certain quota for renewable electricity, while produ-
cers of renewable electrical energy receive green cer-
tificates. During 2014, the biofuel boiler in Work-
ington received 652 000 certificates, which were
sold to electricity distributors.
The biofuel boiler in Workington is fired primari-
ly with wood chips and roundwood, but also with
bark. In parallel with construction of the boiler, the
‘Grow your income’ concept was launched as a
means to encourage local farmers to grow energy
crops as a supplementary fuel source for the mill.
The investments in energy initiatives at Iggesund
Mill have also had positive effects on finances and
the environment. In 2014, Iggesund Mill was peri-
odically run entirely without the use of fossil fuels.
In addition, both dust emissions and sulphur emis-
sions in this part of the process decreased by around
60 per cent. An objective is to become self-sufficient
in heat and electricity.
The company’s targeted investment in energy
solutions at the mills was recognised in early Octo-
ber by the industry organisation PPI, which awarded
Iggesund Paperboard the prize for ‘Bio Strategy of
the Year’. The investments were also a major con-
tributory factor in Holmen’s placing on the A list in
CDP’s Climate Performance Leadership Index 2014.

LEADING PRODUCERS 2014
FBB and SBB, capacity in Europe, ’000 tonnes

Metsä Board

Stora Enso

HOLMEN

Mayr-Melnhof

Int. Paper

Careo

SBB
FBB

150

300

450

600

750

900

HOLMEN ANNUAL REPORT 2014 15

BUSINESS OPERATIONS / PRINTING PAPER

Printing paper

Holmen Paper is a speciality paper producer that uses the
properties of virgin fibre to provide cost-effective alternatives to
traditional paper choices.

Stefan Åhlund,
Braviken Paper Mill

16 HOLMEN ANNUAL REPORT 2014

HOLMEN PAPER HAS REPORTED A MAJOR IMPROVEMENT
IN ITS PROFITS. WHAT IS THE BACKGROUND TO THAT?
We have been proactive in adapting the business and making
it more efficient, and we intend to continue on this path. The
biggest gains have come from a change to the product mix,
favourable exchange rates and temporary price rises.

YOU ARE LAUNCHING A NEW PRODUCT. HOW DO YOU
JUSTIFY THAT IN A SHRINKING MARKET?
This is a clear step towards fulfilling our strategy to become a
speciality paper producer. With our product development based
on virgin fibre and our modern machinery, we have a winning
concept that we are confident will be difficult for our competitors
to match over the long term.

HOW CAN YOU DEVELOP WITHIN PRINTING PAPER?
The printing paper market is a mature industry, but there is
scope to develop it with innovative products and I would suggest
that we are leading that development. A high pace of innovation
and strong competitiveness are essential.

HOW IMPORTANT IS SUSTAINABILITY?
It is hugely important. The complete energy restructuring at
the mill in Hallstavik is creating climate-smart sustainability. The
Braviken bio co-location of paper mill and sawmill, and Madrid’s
water recovery, are other examples. Certifications such as the
EU Ecolabel are a natural result of our efforts.

‘PEOPLE COMMITTED TO PAPER’ IS YOUR BRAND PROMISE.
WHAT DOES THAT MEAN TO YOU?
We are leading the industry in developing innovative and efficient
solutions that provide clear customer benefit. This comes from a
passion for the product and for the opportunities we see in virgin
fibre. We share this passion for paper with our customers and
we all believe in the future potential of the product.

Nils Ringborg,
CEO Holmen Paper

BUSINESS OPERATIONS / PRINTING PAPER

FACTS

Net sales, SEKm

EBITDA, SEKm

Operating profit/loss excl. items
affecting comparability*, SEKm

Operating profit/loss*, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Share of sales in Europe, %

Deliveries, ’000 tonnes

2014

6 247

725

141

331

4 666

1 220

1 305

2013

7 148

429

-309

-449

4 810

1 501

1 574

* Items affecting comparability refers to impairment loss and restructuring costs of

SEK -140 million made in 2013.

OPERATING PROFIT/LOSS
SEKm

800

400

-400

-800

141

CAPEX AND EBITDA
SEKm

1 200

900

600

300

4
2.9
0

-4

-8

725

331

Operating proﬁt/loss,
excl. items affecting comparability

Return on operating capital,
excl. items affecting comparability

Capex
EBITDA,
excl. items affecting comparability

OPERATIONS IN 2014

Holmen Paper’s deliveries amounted to 1 305 000 tonnes for the
year, which was approximately 15 per cent lower than last year as
a result of the closure of two paper machines in autumn 2013. The
strategic product segments MF Magazine and book paper accounted
for just over half of deliveries.
Operating profit for the year was SEK 141 million (-309), excluding
items affecting comparability. The improvement in profit is due to
slightly higher selling prices, a weaker Swedish krona and reduced
costs. Depreciation has decreased following the implementation of
closures.

HOLMEN ANNUAL REPORT 2014 17

BUSINESS OPERATIONS / PRINTING PAPER

Market
THE EUROPEAN MARKET for wood-containing printing
paper amounted to 17.8 million tonnes in 2014,
down around 5 per cent on the previous year. The
market is affected by an imbalance between supply
and demand, and by shrinking price differences
between newsprint and magazine grades.

MAGAZINE PAPER. Demand for magazine paper fell
during the year by 4 per cent to 10.2 million tonnes.
The change was of the same magnitude in all quality
segments. Overcapacity led to historically low prices
and weak profitability in an industry that needs fur-
ther restructuring.

BOOK PAPER. The market for book paper fell by 8
per cent due to falling print runs and an absence of
runaway bestsellers. Demand for wood-containing
book paper, a product that Holmen Paper supplies,
amounted to around 400 000 tonnes.

NEWSPRINT. Demand dropped by 6 per cent to 7.3
million tonnes. Good capacity utilisation in the early
part of the year generated price rises, but these
proved temporary as demand remained low.

Products
PRODUCT MIX. Holmen Paper develops and sells virgin
fibre-based magazine and book paper that provides
retailers, printing firms and publishers around the
world with cost-effective alternatives to traditional
paper choices. However, newsprint, primarily for
sale locally, continues to make up a significant part
of the product mix

PRODUCTION is based at two paper mills in Sweden
and one in Spain. The Spanish mill almost exclu-
sively manufactures newsprint, with production
based entirely on recovered paper. At Holmen’s
Swedish mills, virgin fibre is used as the basis for
growth in uncoated magazine paper (LWU) and
book paper, where paper products with unique
properties bring financial savings for customers. As a
consequence of this strategy, the proportion of news-
print outside the local markets is being reduced.

REPOSITIONING. It is crucial for customers that paper
conveys the right feeling and image. At the same
time, the choice of paper offers significant potential
savings for suppliers of printed material. The com-
bination of good quality and potential savings cre-
ates clear customer benefit and forms the backbone
of Holmen Paper’s transition to speciality paper.
At the end of the year, the unique product solu-
tions in magazine and book paper accounted for
more than 70 per cent of Holmen’s Swedish produc-
tion. This figure is expected to increase over the next
few years, primarily due to the new SC product
Holmen UNIQ from Braviken Paper Mill, which
will be launched in spring 2015.

MAGAZINE PAPER. Holmen Paper is an industry leader
in developing new products, but it is encountering
increasing competition. The product brands Holmen
VIEW, Holmen XLNT and Holmen TRND all offer
a combination of quality and price that is challen-
ging traditional paper choices in areas where more

18 HOLMEN ANNUAL REPORT 2014

PRODUCT
AREAS, %

LWU/Book
Newsprint

57%

43%

END USER
SEGMENTS, %

Magazines, catalogues,
direct mail and books

Daily press

62%

38%

expensive papers have tended to dominate. Innova-
tive product development coupled with the proper-
ties of virgin fibre has created papers that combine
high volume and an excellent feel, which allows cus-
tomers to choose lower grammages that cut their
production and distribution costs. The main applica-
tions are magazines, product catalogues, supple-
ments and direct mail.

BOOK PAPER. Holmen BOOK has made Holmen
Paper a market leader in Europe for paperbacks
and basic hardback books, with a market share of
around 40 per cent. The bright, even surface and
high stability provide an excellent reading experi-
ence. Holmen’s production efficiency is high and
total book capacity has been further enhanced since
Braviken Paper Mill began production of book pa-
per. With its increased brightness, Holmen Paper is
also challenging traditional paper choices for hard-
back books.

NEWSPRINT. In the domestic markets of Scandinavia
and the Iberian peninsula, Holmen paper is a signi-
ficant supplier of newsprint for the daily press.
Holmen NEWS meets high standards of quality,
production economy and print results. The paper is
manufactured in several shades and is also used for
supplements and direct mail.

Development
PRODUCT LAUNCHES. 2014 saw Holmen Paper step up
its development of a new paper for the SC segment
as a natural complement to Holmen XLNT and
Holmen VIEW. Holmen UNIQ is a product with
clear cost benefits and huge potential for rapid
volume growth. The paper has been developed for
high efficiency in print production and offers a good
reading experience for the consumer. Braviken Paper
Mill will be manufacturing the product, which is set
to be launched in spring 2015.
Within the Holmen XLNT family, two new
grades were introduced in 2014: Holmen XLNT
Elite and Holmen XLNT Light.

SPECIALITY PAPER. With the launch of Holmen UNIQ,
Holmen is taking another important step in its stra-
tegic transition to a higher proportion of magazine
and book paper at its Swedish mills. These products
have successfully adopted new positions in the mar-
ket and Holmen Paper continues to develop innova-
tive printing paper products for applications where
the balance between quality and price is particularly
important. An additional benefit of this reposition-
ing is that it has reduced exposure to the fluctuations
in the recovered paper market. The sales processes
have also been gradually overhauled to support the
new paper grades. As demand in the main European
market continues to fall, sales of magazine and book
paper outside Europe will become increasingly im-
portant.

PRODUCTIVITY AND EFFICIENCY. The restructuring pro-
gramme at the paper mill in Hallsta remained on
schedule in 2014. This restructuring will make Hall-
sta Paper Mill a competitive factory and one of the
most resource-efficient in Europe in its product seg-
ment. In combination with an investment in heat re-

covery, the mill has been modernised and made more
efficient, giving it a management system for its en-
ergy balance that is unique in the industry. The mill
is also conducting extensive training and develop-
ment initiatives for personnel aimed at introducing
new, more efficient working methods.
Over the year, measures were implemented at
Braviken Paper Mill to increase productivity and
support the speciality paper strategy. The investment
in upgrading the wood line has resulted in increased
availability and scope for higher production based
entirely on virgin fibre.
Following the restructuring, the Swedish units
have the capacity to produce more than 1.1 million
tonnes of printing paper, with magazine and book
paper based on virgin fibre accounting for more than
70 per cent of that figure.
The factory in Madrid is cost-effective, as well as
a world leader among comparable mills when it
comes to efficient use of water. Madrid works con-
tinuously on making efficiencies and securing re-
covered paper streams. The mill has a capacity of
more than 0.3 million tonnes of newsprint, based on
recovered paper and recovered water.

ORGANISATION. Following the restructuring, Holmen
Paper now has a total workforce of around 1 160
people, including around 120 employees in the re-
covered paper business.

ECOCYCLE. Holmen Paper’s magazine paper and
book paper are based on spruce virgin fibre sourced
from sustainably managed forests in Sweden. The
properties of this raw material enable Holmen Paper
to develop papers with high bulk, brightness and
stiffness, which enables customers to choose lower
and more cost-effective grammages. The manufac-
ture of speciality products also constantly reintro-
duces virgin fibre into the recovered paper cycle in
Europe, which is essential for the survival of the sys-
tem.
The production is based around employing every
part of the wood raw material, either in the manu-
facture of pulp or as a biofuel. At Braviken Paper
Mill, energy and heat production is coordinated
with Braviken Sawmill in an energy-efficient bio
co-location. The sawmill’s wood chips, a by-product,
are also a key raw material for the paper mill. At
Hallsta Paper Mill, the investment in energy efficien-
cies, chiefly through increased heat recovery, means
that the bark previously used as a fuel at the mill has
become a source of revenue when sold to external
energy producers. The measures at the two Swedish
mills reduce the need for fossil fuel, while also en-
abling Holmen Paper to support bio-based heat gen-
eration by external energy producers.
The paper mill in Madrid uses 100 per cent re-
covered water in its production. This is the result of
focused work over many years to achieve a water
supply that is sustainable in the long term.

LEADING PRODUCERS 2014
Printing paper, capacity in Europe, ’000 tonnes

UPM*

Stora Enso

Norske Skog

HOLMEN

Sappi

Burgo

Palm

2 000

4 000

6 000

8 000

LWC/MWC
SC paper
LWU/Book

Newsprint

* Considering announced closures.

BUSINESS OPERATIONS / PRINTING PAPER

EUROPEAN PRINTING
PAPER MARKET 2014

5.4

2.0

3.0

e
c
i
r
P

7.3

MILLION TONNES

LWC/MWC
Magazines, product catalogues
and direct mail.

SC paper
Magazines, product catalogues
and direct mail.

5.4

3.0

LWU/Book
Magazines, supplements, catalogues,
direct mail and books.
2.0

Newsprint
Newspapers and direct mail.

7.3

BRAVIKEN PAPER MILL
Raw materials: Spruce pulpwood and
recovered paper*.
Process: TMP and DIP*.
Products: Magazine paper, book paper,
newsprint and catalogue paper.

HALLSTA PAPER MILL
Raw materials: Spruce pulpwood.
Process: TMP.
Products: Magazine paper and book paper.

HOLMEN PAPER MADRID
Raw materials: Recovered paper.
Process: DIP.
Products: Newsprint.

* In 2015, production at the recovered paper
plant (DIP) at Braviken Paper Mill will cease.

HOLMEN ANNUAL REPORT 2014 19

BUSINESS OPERATIONS / SAWN TIMBER

Patrik Hedman,
Iggesund Sawmill

Sawn timber

Holmen Timber produces high-quality base products in pine and spruce
for construction, joinery and packaging purposes.

20 HOLMEN ANNUAL REPORT 2014

BUSINESS OPERATIONS / SAWN TIMBER

FACTS

Net sales, SEKm

EBITDA, SEKm

Operating profit/loss excl. items
affecting comparability* SEKm

Operating profit/loss*, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Share of sales in Europe, %

Deliveries, ’000 m3

2014

1 352

160

-413

901

199

725

2013

1 175

-75

1 361

203

686

* Items affecting comparability refers to impairment loss of SEK -450 million made in 2014.

NET SALES
SEKm

OPERATING PROFIT/LOSS
SEKm

1 500

1 000

500

1 352

200

100

-100

-200

160

Operating proﬁt/loss,
excl. items affecting comparability

EBITDA

WHAT IS THE OUTLOOK FOR WOOD PRODUCTS?
Wood has huge potential in future construction and in other
applications. The fact that it is renewable, very light in relation
to its strength and good value makes wood perfectly placed to
capture market share from other materials and, in my view, we
are going to see a consolidation of the trend.

WHAT IS DRIVING DEMAND FOR WOOD?
Demand in North America is directly connected to new building
projects. In Europe, which uses a smaller proportion of wood
in newbuilds, repairs, extensions and remodelling account for
a significant part of the market. Other areas of use such as
furniture and flooring are also more common in Europe.

OVER THE YEAR, THE STRATEGY FOR BRAVIKEN SAWMILL HAS
CHANGED, IN WHAT WAY?
Previously we only sawed spruce, but now we have decided to
also begin sawing pine at Braviken. This provides added flexibility
in the raw material supply and an opportunity to source more raw
materials locally, which cuts transport costs.

DOES THIS REPRESENT A CHANGE IN STRATEGIC DIRECTION
FOR HOLMEN TIMBER?
No, the fundamental strategy remains – to deliver base products
of high quality for joinery and construction, produced at large-
scale plants that operate as bio co-locations.

YOU HAVE ALSO DECIDED TO MAKE INVESTMENTS IN IGGESUND
SAWMILL. WHAT WILL THIS MEAN?
Production capacity at Iggesund will rise by around 15 per cent
through a investment that will improve the flow through the
sawmill. This will boost productivity and further strengthen the
sawmill’s competitiveness. Pine sawn timber from Iggesund
Sawmill already has a great reputation and this investment will
reinforce our market position.

Johan Padel,
CEO Holmen Timber

OPERATIONS IN 2014

Holmen Timber increased productivity at both sawmills and delivered
725 000 cubic metres during the year, which was 6 per cent higher
than in 2013.
Operating profit for the year was SEK 37 million (-75), excluding
items affecting comparability. The improvement in profit is due to
higher selling prices, a weaker Swedish krona and increased deliv-
eries. The improvement was partly offset by higher raw material
prices in southern Sweden.

HOLMEN ANNUAL REPORT 2014 21

Sawn timber

BUSINESS OPERATIONS / SAWN TIMBER

Market
THE EUROPEAN MARKET improved in 2014, largely
due to a positive trend in northern Europe, while
the market in southern Europe remained weak.
Overall demand grew in Europe by 2 per cent
to just over 82 million cubic metres in 2014. Raw
material prices remained high, but rising prices for
the end products helped to improve profitability in
the industry, compared with the previous year. The
production rate rose more than consumption, and
by the end of the year there was a certain pressure
on supply.

NORTH AFRICA AND THE MIDDLE EAST showed growth
overall, with demand rising by 10 per cent to
around 10 million cubic metres. In the Middle East,
the market was cautious, affected as it was by the
political situation. The products in demand are
primarily pine joinery timber for doors, windows
and furniture, plus mouldings, architrave and skirt-
ing. There was also a demand for packaging timber
and simple spruce construction timber.

USA. Consumption of sawn timber for the construc-
tion of private housing continued to grow in 2014.
Although housebuilding is gradually rising, it still
lies well below previous normal levels. The volatility
in sawn timber prices in the US saw the gradual
price rise in spring reversed in the autumn.

ASIA. In China, the overheated housing market
cooled during the year, due to higher taxes and
rents. Demand therefore fell off to a certain extent.
China imports sawn timber primarily for furniture
and joinery. In Japan, demand for construction
timber fell as a consequence of changes to the tax
regulations.

Products
MARKET POSITION. Holmen Timber offers a successful
product mix of high-quality base products for con-
struction, joinery and packaging purposes. With its
two modern facilities, Holmen Timber’s total pro-
duction capacity amounts to 900 000 cubic metres
of sawn timber in pine and spruce.

BUILDING WITH WOOD is Holmen Timber’s product
category for spruce construction timber. Production
takes place at Braviken Sawmill, with customers in-
cluding builders’ merchants, planing mills, and
house and roof truss manufacturers. The key mar-
kets are Scandinavia, the UK, Germany and the
Netherlands.

LIVING WITH WOOD is Holmen Timber’s product cat-
egory for joinery timber, which is used in applica-
tions such as windows, doors, staircases, flooring
and furniture. The pine products are manufactured
at Iggesund Sawmill, and from summer 2015 also
Braviken Sawmill. Customers include the joinery
and furniture industries, builders’ merchants and
window and flooring manufacturers. The key mar-
kets are Scandinavia, the UK, North Africa and the
Middle East.

Development
HOLMEN TIMBER is to be the customer’s preferred
choice when it comes to high-quality base products
for joinery and construction purposes. The invest-
ment in modern and efficient sawmills with a secure
wood supply and high productivity allows for large-
scale and cost-effective production. Flexibility and
high technical standards in the processes deliver
products with the right properties for industrial fin-
ishing. Holmen Timber’s approach of maintaining

EUROPEAN
SAWN TIMBER
CONSUMPTION, %

Construction timber
Joinery timber
Packaging timber

55%

25%

20%

Hevind Hajov,
Iggesund Sawmill

22 HOLMEN ANNUAL REPORT 2014

BUSINESS OPERATIONS / SAWN TIMBER

BRAVIKEN SAWMILL
Raw materials: Spruce and pine saw
logs*.
Process: Sawmilling.
Products: Spruce and pine sawn timber*.

IGGESUND SAWMILL
Raw materials: Pine saw logs.
Process: Sawmilling.
Products: Pine sawn timber.

* In 2015, an investment will enable the
production of pine sawn timber at the
Braviken Sawmill.

SUSTAINABLE. There are various reasons for the bur-
geoning interest in building high-rise structures in
wood. Wood products are renewable and part of the
planet’s natural ecocycle. In addition, wood is bene-
ficial to the climate, since wooden structures store
carbon dioxide for the whole of their useful life. The
manufacture of wood products also requires relat-
ively little energy, and the by-products make useful
biofuels. Finally, the forest is a renewable resource
when managed from a long-term perspective. Eco-
labelled timber certified by PEFC™ and FSC® is
already an established standard in several European
markets, and demand is also growing in other parts
of the world.

EFFICIENT. Modern timber-frame construction using
new types of structural element offers opportunities
to build more quickly and more efficiently than
when using traditional methods and materials. The
path from decision to building work is shorter, as is
the time until completion. Complex structural ele-
ments can be prefabricated under protected and
controlled conditions, before being delivered to the
construction site ready for assembly. Simpler logist-
ics, time savings and a low impact on the local
environment are particular advantages in an urban
environment.

Moa Nordström,
Braviken Sawmill

close contact with customers, coupled with its sus-
tainable production, lays the foundation for long-
term and profitable customer relations.

PRODUCTION DEVELOPMENT focuses primarily on
meeting high customer standards with regard to
lengths, dimensions and quality. There is also an im-
portant emphasis on minimising waste and maxim-
ising yield from each log. Balancing the different
needs requires rational production and stock man-
agement as well as precise planning of loading and
logistics.

BRAVIKEN SAWMILL is one of the largest and most
modern sawmills in Scandinavia, designed initially
for efficient and large-scale manufacturing of spruce
construction timber. In summer 2015, however, new
investment will enable the mill to expand into pine
sawn timber – primarily for joinery purposes. This
will increase flexibility in the supply of raw materials.

IGGESUND SAWMILL manufactures pine joinery timber
that is customised at a very early stage. The logs are
x-rayed, for example, to make best possible use of
their properties. A number of minor investments in
recent years have contributed to high productivity,
minimal waste and products that are better adapted
to the next processing stage. Now centre-free
products are cut directly on the saw line, which
brings major drying benefits and contributes to the
sawmill’s high productivity, as well as saving energy.
In summer 2015, green sorting will be remodelled
and expanded. The investment is estimated to in-
crease annual production capacity by 15 per cent.
An environmental permit for increased production
was granted during the year.

ENERGY EFFICIENCY. The whole of the tree is put to
use in Holmen’s Iggesund and Braviken bio co-loca-
tions. Chips from the sawmills act as a raw material
for pulp production at the paper and paperboard
mills. By-products such as bark and wood shavings
become biofuel and are converted into energy and
district heating. The circle is closed when the sur-
plus heat from the mills is used for drying processes
at the sawmills.

Building the future in wood
HOUSEBUILDING uses over 50 per cent of the world’s
sawn timber production. Construction timber is still
used primarily for low-rise housing, and for roof
trusses, internal walls and so on. However, interest
in building truly high-rise structures in wood – 10
storeys or more – is growing at an increasing pace
and development of suitable products is therefore
progressing quickly. With the help of new technolo-
gies such as Cross Laminated Timber (CLT), strong,
multi-layered structural elements are being manu-
factured that can be used for walls and floors in
multi-storey buildings. Holmen is already present in
the markets where taller structures are becoming in-
creasingly popular, and it is entirely possible that in
the future the company will produce raw materials
for end products such as glulam and CLT.

HOLMEN ANNUAL REPORT 2014 23

BUSINESS OPERATIONS / FOREST

Maj-Lis Wikström,
Friggesund nursery

Forest

Holmen Skog is responsible for the active and sustainable management
of the Group’s forest holdings, comprising over a million hectares of land.

24 HOLMEN ANNUAL REPORT 2014

HOLMEN SKOG HAS A NEW VISION. WHAT IS IT?
Our vision is ‘We grow the future’. It serves to guide us in our work
on developing all the assets of the forest, with a view to boosting
the Group’s earnings and growing raw materials for a sustainable
society. The forest also has a key role to play in the necessary
transition to a bio-based economy. Our task is to create growth
that is sustainable in the long term.

HOW ARE YOU PROMOTING GROWTH IN THE FOREST?
Good management improves growth. The core focus is on how
the soil is prepared and the land reforested through planting
or sowing. All the subsequent links in the chain are important,
including cleaning and thinning and, to further encourage growth,
suitable stands can be fertilised. It is also crucial to protect the
forest from creatures such as pine weevils and moose, which
inhibit growth.

WHAT DOES THE LAND EXCHANGE WITH THE SWEDISH
ENVIRONMENTAL PROTECTION AGENCY ENTAIL?
Under the scheme, some of Holmen’s forest with high conser-
vation value will be sold and given nature reserve status, and
in return Holmen is able to purchase land where it can actively
work with sustainable forestry. The deal is good for all parties
and a seal of approval for our nature conservation work.

WILL DEMAND FOR WOOD INCREASE IN THE FUTURE?
Yes, the climate and environmental benefits are considerable,
and this is pushing up demand for products based on forest raw
materials. The world also needs more building in wood to house a
growing global population effectively and sustainably. In addition,
the recovered paper system constantly needs to be topped up
with virgin fibre. Production of paperboard and paper will remain
an important component moving forward.

IN YOUR FOCUS ON PRODUCTIVITY, WHAT IMPROVEMENTS
NEED TO BE MADE?
We need to constantly develop methods, technologies and expert-
ise. Holmen Skog therefore works with
innovators, companies and universit-
ies on various research projects, as
well as other initiatives. At the same
time, it is important not to forget
about perfecting the technology
that already exists. Numerous
small improvements can combine
to make a big difference.

Sören Petersson,
CEO Holmen Skog

BUSINESS OPERATIONS / FOREST

FACTS

Earnings from operations, SEKm

Operating profit/loss incl. change
in value of forests, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Harvesting in own forests, ’000 m3sub

Productive forest land, ’000 hectares

Volume of wood, million m3 growing stock,
solid over bark

2014

2013

535

817

660

924

17 340

16 813

418

3 297

1 042

422

3 465

1 034

121

120

OPERATING PROFIT/LOSS
SEKm

1 000

750

500

250

817

4.8

Operating proﬁt/loss,
excl. items affecting comparability

Return on operating capital,
excl. items affecting comparability

HARVESTING IN
HOLMEN’S FORESTS
’000 m³sub

4 000

3 000

2 000

1 000

3 297

OPERATIONS IN 2014

Holmen Skog’s earnings from operations for the year amounted to
SEK 535 million (660). The decrease in profit is due to high costs for
handling storm fellings and a decrease in harvesting volumes from a
high level. Operating profit, which includes a change in value of SEK
282 million, totalled SEK 817 million (924).
Holmen Skog acquired a total of 11.4 (11.3) million m3sub of
wood, of which 6.1 (5.9) mllion m3sub of wood was sold to external
customers. 3.3 (3.5) million m3sub of wood was harvested from its
own forests, including 0.1 (0.1) million m3sub of forest fuel. Holmen’s
Swedish production units consumed a net of 4.8 (5.0) million m3sub
of wood.

HOLMEN ANNUAL REPORT 2014 25

BUSINESS OPERATIONS / FOREST

Market
MARKET DEVELOPMENT. Demand for logs was high in
2014, while demand for pulpwood was normal. Log
prices rose, with the price level in southern Sweden
remaining significantly higher than in the rest of the
country. Supply of forest fuel was higher than con
sumption.

THE VOLUME OF WOOD in Sweden has increased by
around 80 per cent since the 1920s, amounting to 3
billion m3 growing stock, solid over bark. Approxi
mately 70 million m3sub is harvested each year,
which accounts for around 70 per cent of the annual
growth. Pulpwood and saw logs each account for
around 45 per cent of the harvest. The remaining 10
per cent is firewood for energy production. Sweden’s
forest industry consumes 80 million m3sub of wood
per year. To meet demand, 9 million m3sub is impor
ted, primarily from the Baltic states and Norway.

Value of the forest
FOREST HOLDINGS. Holmen owns a total of 1 269 000
hectares of land. Under the international definition
of forest land, the total area of forest land is
1 153 000 hectares, including 218 000 hectares or
19 per cent of formally and voluntary setaside
forest. Of that forest land, an estimated 1 042 000
hectares is productive. The total volume of wood is
121 million m3 growing stock, solid over bark, cor
responding to 118 m3 growing stock, solid over
bark, per hectare of productive forest land.

GROWTH. The growth of the forest and its value are
dependent to a large extent on how it is managed.
Holmen’s goal is to increase growth in its own
forests by 25 per cent by 2050 (base year 2007: 4.4
million m3 growing stock, solid over bark per year).
According to the present longterm harvesting plan,
around 80 per cent of annual growth is harvested in
Holmen’s forests. Overall, this means that the
volume of wood is steadily rising. By 2050 it is pro
jected to be 30 per cent larger than today.

HARVEST. Annual harvesting is governed by a long
term plan based on forest inventories that are con
ducted every 10 years. The latest plan dates from
2011. The planned annual harvest is 3.2 million
m3sub up to 2020, of which around 0.2 million
m3sub is branches and treetops for use as biofuel.
Over the next 100 years, the harvesting volume is
expected to rise to around 4 million m3sub per year.

ECONOMIC VALUE. Holmen’s forest holdings are recog
nised at fair value under international accounting
standard IAS 41. A valuation is made by calculating
the present value of expected cash flows from the
growing forests over the next 100 years. Cash flow is
made up of the net balance of sales revenues and
costs of harvesting, silviculture and administration.
The valuation is based on a longterm trend price
that is on a par with the average price over the past
10 years. This price is adjusted upwards by 2 per cent
per year. The cost forecast is based on presentday
levels and is adjusted upwards by just over 2 per cent
per year. The cash flows are discounted using an in
terest rate of 5.5 per cent.
The carrying amount as at 31 December 2014

26 HOLMEN ANNUAL REPORT 2014

was SEK 16 867 million. A deferred tax liability of
SEK 3 718 million is stated in relation to that figure,
which means that the growing forest, net after tax,
is recognised at SEK 13 149 million. For more de
tails, see Note 11, page 79.

SOCIAL VALUE. The world we live in faces widespread
challenges when it comes to resources and the cli
mate. We need to transition to an economy where re
sourceefficient and climatesmart products replace
those that consume the planet’s resources. Holmen’s
growing, sustainably managed forests have a key
role to play in this. By managing the forest and using
forest raw materials as a replacement for fossil en
ergy and energyintensive construction materials, the
forest can bring major climate benefits. Over 80 per
cent of this volume is exported, bringing global cli
mate benefit by capturing carbon in wooden struc
tures, building carcasses, furniture and joinery.
Sweden currently produces around 10 per cent of
the world’s forest products. By managing the forest
in a sustainable way, Holmen is creating value for
generations to come.

Forestry
ACTIVE AND SUSTAINABLE. Holmen operates sustainable
forestry with a focus on high growth. The volume of
wood is built up over a period of around 70–90 years
and after harvest a new growth cycle begins. The
most important silviculture measures come in the
years immediately after harvest. The soil is prepared
and the land is reforested through planting or sow
ing. The forest is cleaned and thinned in order to se
lect trees with the best potential for continuing their
growth. Around 10–30 years before the forest is har
vested, it can be fertilised to further boost growth.
Holmen fertilises around 8 000 hectares per year.
Holmen’s ‘Guidelines for Sustainable Forest Man
agement’ provide a handbook for its own forestry
and also for private forest owners who deliver wood
to Holmen. A new version will be published in 2015.
Based on Holmen’s vision ‘We grow the future’, it
also contains the latest from PEFC™ and FSC® and
the Swedish Forest Agency’s ‘Visions for Good Envi
ronmental Consideration in Forestry’.

INCREASED PRODUCTIVITY is the key to longterm
profitability in forestry. The focus lies on both fully
exploiting current methods and technologies, and
developing new ones. Holmen is actively involved in
several development collaborations with manufac
turers, researchers, innovators and the forest in
dustry. One example is the ETT project, which aims
to reduce fuel consumption and carbon emissions
per transported log with the help of timber trucks
that are longer and take heavier loads. Another ex
ample is the development of a new type of machine,
a harwarder that harvests and transports the wood
to the road.

SILVICULTURE AND REGENERATION. The annual cost of
silviculture is around SEK 160 million. The meas
ures, which follow Holmen’s forest stewardship
programme, are aimed at increasing the rate of
growth in the company’s own forests. In addition to
regeneration measures, these include cleaning, fertil
ising, draining and root rot treatment.

DISTRIBUTION
OF COSTS,
Own forests, %

Silviculture
Harvesting
Fixed costs

17%

67%

16%

Holmen quality assures the regeneration and
conducts longterm development work that covers
the entire chain from seed to new planting. Each
year, 30 million new seedlings are produced at
Holmen’s nurseries. The majority are planted on
the Group’s land.

DAMAGE FROM GRAZING MOOSE AND INSECT ATTACK can
cause considerable losses of forest growth and rev
enue. Holmen loses around 400 000 m3 growing
stock, solid over bark, per year due to grazing from
wild animals. In a positive development, this year’s
inventories of grazing damage suggest reduced dam
age from moose grazing in northern Sweden.
The pine weevil is a pest that attacks newly
planted seedlings. Holmen conducts ongoing tests
and evaluations of new solutions to combat pine
weevil attacks.

THE FOREST AS A SOCIAL ASSET is a concept that could
be translated as ‘The assets in the forest that have an
effect on people’s quality of life’. The starting point is
that the forest gives people a better life, through its
positive effect on health and wellbeing, and the way
it supports life in rural communities. Many people
also have a strong relationship with the forest.
Holmen gives particular consideration to forests that
are valuable in terms of aesthetics and experiences,
and that are regularly visited by many people for vari
ous forms of outdoor life, relaxation and exercise.
Heritage environments and ancient monuments
are very important in giving us knowledge about the
way previous generations lived and worked the land.
Holmen protects these environments and works act
ively to avoid vehicular and site damage. No trees are
allowed to grow on or right next to monuments, with
the exception of nature conservation trees.

BIODIVERSITY involves a complex interplay between
many different species in different natural habitats.
A variety of forest habitats need to be nurtured in
order to preserve biodiversity. A total of around 20

per cent of Holmen’s forest land is used for nature
conservation purposes. This includes forest land
voluntarily set aside, wooded unproductive forest
that is protected by law, and environmental consid
eration within the managed forest.
As part of measures to achieve the environmental
objective of ‘Living Forests’, the Riksdag (Swedish
Parliament) resolved in 2010 that 100 000 hectares
of stateowned forest would be used to compensate
Sweden’s major landowners for an increase in the
proportion of stateprotected forest in Sweden. In
2014, Holmen struck a deal with the Swedish Envir
onmental Protection Agency to sell around 10 000
hectares of old forest with high conservation value, in
exchange for around 18 000 hectares of forest land
with young stands of an equivalent value. The deal
was implemented in several stages over the year.
Holmen’s active nature conservation work focuses
on both managed forests and setaside areas. The core
underlying principle is that actions taken today
should not only protect the assets of the existing
forest, but also enrich the forest for future genera
tions. The work is therefore based on actively creating
environments and structures that promote biodiver
sity, for example by increasing the quantity of dead
wood, creating wetlands and implementing targeted
thinning to favour trees of particularly high conser
vation value. According to the Swedish National
Forest Inventory, the proportion of dead wood result
ing from active measures in Sweden’s forests has risen
by more than 25 per cent since the mid1990s.

CLIMATE CHANGE. A warmer climate may affect the
forest in various ways. Growth may increase in cer
tain areas, and periods of ground frost may become
shorter. Holmen’s silviculture programme is robust
in climate terms. The conifers in the Nordic land
scape are extremely old organisms (around 500 mil
lion years) and have an incredible capacity to adapt
to change. In addition, the seedlings from the plant
nurseries are selected to grow and thrive in a chang
ing climate.

HARVESTING
’000 m³sub/year

4 000

3 000

2 000

1 000

+0.2 million m3sub branches and treetops

2001–
2010

2011–
2014

2015–2020

2021–2030

2031–2040

2041–2050

2051–2060

2061–2070

2071–2080

2081–2090

2091–2100

2101–2110

Average harvesting
Harvesting plan

MAP

Holmen’s forest holdings
Holmens skogsinnehav
Holmen’s Swedish industrial sites
Holmens svenska industrier

BUSINESS OPERATIONS / FOREST

VOLUME OF WOOD
m³ growing stock, solid over bark,
per hectare productive forest land

160

120

8
4
9
1

5
5
9
1

5
6
9
1

5
7
9
1

8
8
9
1

3
9
9
1

0
0
0
2

0
1
0
2

0
2
0
2

0
3
0
2

0
4
0
2

0
5
0
2

Assessment of tax
Forecast

PRICES
SEK/m³sub

600

500

400

300

200

1998 2002 2006 2010 2014 2018 2022

Real
Nominal
Price used in valuation (nominal)

HOLMEN’S FORESTS 2014

Total land acreage
1 269 000 ha
Total forest land acreage* 1 153 000 ha
- of which nature

conservation areas

218 000 ha
Productive forest land** 1 042 000 ha
21 000 000 m3
Total volume of
growing stock,
wood, on produc-
solid over bark
tive forest land

* Analysis conducted by the Swedish
National Forest Inventory, according to
the international definition of forest land:
Land with an area of more than 0.5 hec-
tares, a tree canopy cover of more than
10 per cent and trees with a minimum
height of 5 metres at maturity.

** Forest land that on average can produce
1 m3 growing stock, solid over bark per
hectare and year (on average during the
growth period of the forest stand).

HOLMEN ANNUAL REPORT 2014 27

BUSINESS OPERATIONS / ENERGY

Energy

Holmen Energi manages the Group’s hydro and wind power plants, and is responsible
for investments in renewable energy production on the Group’s land.

Varsvik wind farm

28 HOLMEN ANNUAL REPORT 2014

BUSINESS OPERATIONS / ENERGY

FACTS

Operating profit/loss, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Company-generated hydro and wind power, GWh

2014

2013

212

3 401

1 113

371

3 357

1 041

OPERATING PROFIT/LOSS
SEKm

500

375

250

125

212

6.3

Operating proﬁt/loss
Return on operating capital

PRODUCTION, COMPANY-
GENERATED HYDRO AND
WIND POWER
GWh

1 600

1 200

800

400

1 048

Production, company-
generated hydro power

Production, company-
generated wind power

WHAT WAS THE MILESTONE FOR HOLMEN ENERGI IN 2014?
It was, of course, the commissioning of the wind farm in Varsvik
– the first so far on our own land. With its 17 wind turbines, the
farm will supply up to 165 GWh per year. This creates value not
only for Holmen but for the wider society.

HOW HAVE YOU CHOSEN TO DEVELOP THE DIFFERENT
TYPES OF ENERGY?
Hydro power is essentially fully exploited in Sweden, and our
focus is therefore on optimising production at Holmen’s existing
plants. Wind power, on the other hand, has the potential for
expansion, and here our strategy is to work with partners to
develop wind farms on the Group’s own land.

WHEN IS A WIND POWER PROJECT WORTH INVESTING IN?
The wind conditions have to be optimal, along with proximity to
infrastructure. The scope to build a large enough farm is also
essential. In addition, the overall revenue from the production,
i.e. the price of electricity and electricity certificates, has to be at
a level that makes it profitable to invest in wind power.

WHAT EXTERNAL FACTORS IMPACT MOST ON YOU?
Market conditions are naturally crucial, but we are affected at least
as much by regulations and political decisions. Property tax for
hydro power, for example, has risen sharply in recent years, which
has put our profitability under pressure. We have a very long in-
vestment horizon and it is therefore crucial to look at the conditions
over the long term.

WHAT CONCRETE CHALLENGES ARE YOU FACING AT THIS POINT
IN TIME?
The current electricity price and electricity certificate system
make it a challenge to get the figures to add up when it comes
to investment in renewable energy. Another aggravating factor is
the long and complex processing of permit applications for wind
power.

Staffan Jonsson,
acting CEO Holmen Energi

OPERATIONS IN 2014

Holmen Energi’s operating profit for the year was SEK 212 million
(371). The decrease in profit is due to the impact of lower electricity
prices and the fact that the previous year’s earnings included
SEK +102 million from the sale of a stake in the Varsvik wind farm.
Production was slightly higher than in 2013, but was 6 per cent
lower than in a normal year.

HOLMEN ANNUAL REPORT 2014 29

BUSINESS OPERATIONS / ENERGY

Market
DOWNTURN. Household demand for electricity
dropped over the year, and at the same time the in-
dustry reduced its energy use. Consumption in
Sweden amounted to 134 TWh, a fall of 3 per cent
compared with 2013.
A total of 150 (148) TWh of electricity was pro-
duced in Sweden during 2014, of which hydro power
made up 64 (61) TWh. Nuclear power produced 62
(64) TWh and wind power production continued its
growth, reaching 12 (10) TWh. The remaining 13
(14) TWh constituted thermal energy.
The average spot price in 2014 for Sweden was
SEK 290 (340) per MWh, which was 16 per cent
lower than in the previous year. The price of electri-
city forwards over the coming year rose 5 per cent to
approximately SEK 300 per MWh.

Own energy assets
HOLMEN ENERGI is responsible for the Group’s hydro
and wind power plants. Electricity production at the
21 wholly and partly owned hydro power stations,
together with wind power and the electricity produc-
tion at the larger mills, covers 46 per cent of the
Group’s electricity consumption. Holmen’s electricity
consumption at the production units amounted to
4 067 (4 416) GWh in 2014.

Development
HYDRO POWER dominates Holmen’s energy produc-
tion. With limited opportunities for expansion,
Holmen is focusing on improving the efficiency of
and upgrading the existing hydro power plants and
dams. Hydro power production is highly cost-effect-
ive, but the costs have increased due to the substan-
tial increase in the property tax as implemented in
2013. In 2014, the property tax for Holmen’s wholly
and partly owned hydro power plants totalled SEK
92 million.
A government proposal that would entail all
hydro power plants in Sweden being forced to
undergo a new environmental impact assessment
was sent out for consultation in 2014.

WIND POWER is one of the fastest growing energy
forms in the world, and the area in which Holmen
Energi has the greatest potential to expand its energy
production. The strategy is to work with partners to
develop wind power projects on Holmen’s own land
that are profitable over the long term.
The company is conducting wind surveys in sev-
eral locations (see map, page 31) and the factors are
being carefully mapped out with regard to wind con-
ditions, proximity to infrastructure, suitable techno-
logy and overall efficiency.

THE WIND FARM in Varsvik was gradually taken into
use in autumn 2014 and was officially inaugurated
on 18 November. This farm is the first on the Group’s
own land and also the largest wind farm in the
county of Stockholm. With a total installed power
capacity of 51 MW, the 17 wind turbines are expec-
ted to produce 165 GWh energy per year. The wind
farm is owned through a joint venture, Varsvik AB,
which has Holmen and the international investment
fund Eurofideme 2 as 50 per cent shareholders. Good
wind conditions, favourable infrastructure and prox-

30 HOLMEN ANNUAL REPORT 2014

ELECTRICITY SPOT PRICE,
Price area Stockholm (SE3)
SEK/MWh

800

600

400

200

301

imity to electricity consumers have laid a good
foundation for the project and have formed a key
motive for the investment.

PERMIT PROCESSES. Planning is under way to develop
wind farms on Holmen’s land in the counties of
Västernorrland and Västerbotten. This includes per-
forming in-depth wind surveys. Some permit pro-
cesses had not been completed by the end of 2014.
The basic conditions at the locations in question are
judged to be good.
The permit process progressed at the mill in Work-
ington, UK, which began with Holmen submitting a
permit application in 2014.

THE WIND POWER COMPANY VindIn AB is owned by a
number of electricity-intensive companies in Sweden,
including Holmen. VindIn already generates energy
from five wind turbines in Skutskär and a further 30
in the Örnsköldsvik area. The firm’s first project in
Finland involves five turbines and was brought on
stream on 1 October 2014. VindIn’s overall produc-
tion in 2014 stood at 211 GWh, with Holmen’s share
amounting to 37 GWh.

PEAT. Holmen currently has a peat field outside
Örnsköldsvik that was taken into use in 2009.
Thanks to the warm and very dry summer, 2014 saw
a record harvest equating to 93 (84) GWh. In the
county of Västerbotten, Holmen and Skellefteå Kraft
have jointly conducted feasibility studies for another
peat field and an application for an environmental
permit was submitted in 2014.
During the year, Holmen began investigating the
future potential to deliver peat as a raw material for
the production of soil improvers.

BUSINESS OPERATIONS / ENERGY

FORWARD PRICES
SEK/MWh

450
400
350
300
250
200

2012

2013

2014

2015

2016

2017

HOLMEN WHOLLY OR PARTLY OWNS

HOLMEN POWER PLANTS

21 HYDRO POWER STATIONS
4 WIND FARMS

RIVERS
Umeälven

Gideälven

Faxälven

HYDRO POWER
STATIONS
Harrsele
Tuggen
Stennäs
Gammelbyforsen
Björna
Gideå
Gidböle
Gideåbacka
Linnvasselv
Junsterforsen
Gäddede
Bågede

Iggesundsån Pappersfallet

HOLMEN’S

PRODUCTION SHARE YEAR OF
GWh*
470
97
3
1
8
9
7
7
14
115
23
70
7
22
30
17
45
29
17

CONSTRUCTION
1957–58
1962
1985–96
–”–
–”–
–”–
–”–
–”–
1961–74
–”–
–”–
–”–
1915
2009
1949–75
–”–
–”–
–”–
–”–

%
49.4
21.5
9.9
9.9
9.9
9.9
9.9
9.9
7.2
100
30
100
100
100
20
20
8.7
11
7.4

Iggesunds kraftstation
Sveg
Byarforsen
Krokströmmen
Långströmmen
Ljusne Strömmar

Ljusnan

Motala
Ström

OWNER
Varsvik
VindIn

The permit process is under
way for wind power at the mill
in Workington, UK.

Hydro power stations

Wind farms (one in Finland)

Wind survey sites

Holmen
Bergsbron-Havet

100
100

112
10

1990
1927

HOLMEN’S

WIND FARMS
Varsvik
Skutskär
Trattberget
Svalskulla, Finland

PRODUCTION SHARE YEAR OF
GWh*
83
5
38
9

CONSTRUCTION
2014
2009
2012
2014

%
50
17.7
17.7
17.7

* Refers to normal production

HOLMEN ANNUAL REPORT 2014 31

BUSINESS OPERATIONS / RISK MANAGEMENT

Risk management

The business areas are responsible for the business operations and handle business risks
such as credit risk in relation to the Group’s customers. They make decisions on issues such
as volume and pricing, with the goal of consistently generating a good return on invested capital.
Group Finance manages the Group’s funding and financial risks, based on a financial policy that
is established by the Board and is characterised by a low level of risk. The purpose is to minimise
the Group’s cost of capital through suitable financing as well as effective management and con-
trol of the Group’s financial risks.

PRICE AND MARKET

EARNINGS SENSITIVITY
A one percentage-point change
SEKm DELIVERIES
PRODUCTS
Paperboard
Printing paper
Sawn timber

28
21
4

PRICES

49
61
14

COMPANY’S OWN RAW MATERIALS
Wood from company
forests
Company-generated
electricity

EARNINGS SENSITIVITY
A one percentage-point change
SEKm COSTS
25
Wood*
12
Electricity*
11
Chemicals
5
Recovered paper
6
Other variable costs
12
Delivery costs
23
Employees
15
Other fixed costs

* Earnings sensitivity in the table
is based on the Group’s gross
consumption of wood and electricity.
Taking account of harvesting of com-
pany forests and production of own
electricity, net earnings sensitivity for
the Group is SEK 12 million for wood
and SEK 8 million for electricity.

The Group is exposed to price fluctuations
for its products and significant input goods.
Deliveries may be affected by fluctuations
in the market.
Holmen’s income in its product-oriented business
areas is generated from the sale of paperboard,
printing paper and sawn timber. Changes in prices
and deliveries largely depend on the development of
the European market. This in turn is influenced by
several factors, such as demand, production among
European producers and changes in imports into
Europe, as well as the opportunities for exporting
profitably from Europe. Holmen has limited oppor-
tunities for making rapid changes to its range of
products, but the company adapts its product focus,
steering it towards the products and markets
deemed to have the best long-term potential. Three-
year business plans are used as a basis for this; they
are updated annually by the Group and are thor-
oughly assessed by the Board.
Holmen aims to have a broad customer base and
an offering that spans several product areas. This
aim, combined with long-term customer relation-
ships, reduces vulnerability to changes in the market.
Income from the raw materials-oriented business
areas is generated from the sale of wood and electri-
city in Sweden. Deliveries may vary from one year to
the next, but can be forecast in the long term. The
price trend depends on market balance in Sweden for
wood and electricity. Wood and electricity are the
two most costly raw materials for the product-ori-
ented business areas, which makes the Group a net
buyer of wood and electricity.

In addition, recovered paper, pulp and thermal
energy are significant input goods in the production
of printing paper and paperboard. Holmen produces
96 per cent of the pulp and mainly all thermal energy
that it requires at its own mills using a highly integ-
rated production process. The procurement of raw
materials is underpinned through backward integra-
tion along the production chain by owning forests
and hydro power production facilities. Significant

volumes of recovered paper are purchased via wholly
and partly owned recovered paper collection com-
panies. Purchases of other goods for Group units are
coordinated centrally, and purchasing work is organ-
ised within product groups with a number of selected
suppliers per group.
To reduce exposure to electricity price fluctuations,
the Group predominantly uses physical supply agree-
ments at fixed prices, supplemented with financial
hedges. In 2014, the company’s net purchases of elec-
tricity amounted to 2 213 GWh, of which 2 188
GWh was in Sweden. Prices for the estimated net con-
sumption of electricity in Sweden in 2015 are fully
hedged. For 2016–2018 prices are 60 per cent hedged
and for 2019–2021 they are 40 per cent hedged.
Gains on financial hedges are recognised in the in-
come statement when they expire; for 2014 they
totalled SEK 0 million (-5). The fair value of
outstanding financial hedges at 31 December 2014
amounted to SEK -147 million (-90), which was re-
cognised in other comprehensive income as hedge
accounting is applied. Under current hedging, a one
percentage-point increase in the price of electricity
would have a SEK 4 million impact on equity.
OTC trading in financial contracts exists for cer-
tain paper and pulp products. Holmen did not trade
in such contracts during the year. Price hedging op-
portunities for other input goods are limited.

Earnings sensitivity
A one percentage-point change in deliveries, prices
and costs is estimated to have the impact on operat-
ing profit/loss shown in the table to the left. The
table is based on income and expenses for 2014.
Earnings are relatively evenly spread over the year.
The clearest seasonal effects are lower personnel
costs in the third quarter and the fact that electricity
production at the hydro plants is normally higher in
the first and fourth quarters.

32 HOLMEN ANNUAL REPORT 2014

BUSINESS OPERATIONS / RISK MANAGEMENT

CURRENCIES

Transaction exposure. A significant proportion
of Holmen’s sales revenue is in currencies
that are different from its costs. In order to re-
duce the impact on profit/loss from changes
in exchange rates, net flows are hedged using
forward foreign exchange contracts.
Net flows in euro, US dollars and sterling for the
coming four months are always hedged. These nor-
mally correspond to trade receivables and outstand-
ing orders. The Board can decide to hedge flows for
a longer period if this is deemed suitable in light of
the products’ profitability, competitiveness and the
currency situation.
At the beginning of 2014, flows in euro, dollar
and sterling were partly hedged for 2014. Gains/
losses on currency hedges are recognised in operat-
ing profit/loss as and when the hedged item is recog-
nised. In 2014 they amounted to a loss of SEK -116
million (1). The hedging of estimated net flows is
shown in the table below.

Earnings sensitivity
Calculated on the basis of existing hedges and the
exchange rates at the turn of 2014/2015 (euro: 9.5,
US dollar: 7.8 and sterling: 12.1), exchange rate dif-
ferences are expected to have a positive impact of
roughly SEK 300 million on consolidated operating
profit for 2015 compared with 2014. A one percent-
age- point weakening in the Swedish krona com-
pared with the level at year-end would have a posi-
tive impact on operating profit for 2015 of SEK 30
million compared with 2014.
Excluding currency hedges, a one percentage-
point weakening of the Swedish krona in relation to
the currencies would have the following effects on
operating profit, as shown in the table to the right:
Currency exposure arising when investments are
paid for in a foreign currency is distinguished from
other transaction exposure. Normally, 90–100 per
cent of the currency exposure associated with major
investments is hedged.

TRANSACTION EXPOSURE
AT 31 DECEMBER 2014, SEKm*
EUR/SEK
USD/SEK
GBP/SEK
EUR/GBP

12-MONTH ESTIMATED
NET FLOWS
3 450
1 500
1 500
850

HEDGES

SEKm
3 680
440
430
260

RATE**
9.25
7.35
11.70
0.79

%
105
30
30
30

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

The fair value of outstanding transaction hedges was SEK -105 million (1) at 31 December 2014. SEK - 35 million (-12) was recognised in the
i ncome statement for 2014, and the remainder in other comprehensive income as hedge accounting is applied, of which the majority relates
to 2015. The fair value of hedges for investment purchases is recognised in other comprehensive income until expiry, at which point the gain/
loss is added to the cost of the non-current asset that was hedged. The fair value of outstanding hedges for investment purchases amounted
to SEK 3 million at 31 December 2014. During the period, the cost of hedged items increased by SEK 1million.

Translation exposure. Reported profit/loss is
affected by changes in exchange rates when
the profits/losses of foreign subsidi aries are
translated into Swedish kronor. Equity is
affected by changes in exchange rates when
assets and liabilities of foreign subsidiaries
are translated into Swedish kronor.

Exposure that arises when the profits/losses of for-
eign subsidiaries are translated into Swedish kronor
is not normally hedged. Hedging exposure that
arises when subsidiaries’ assets and liabilities are
translated into Swedish kronor (known as equity
hedging) is assessed on a case-by-case basis and is ar-
ranged based on the value of net assets upon consoli-
dation. The hedges take the form of foreign cur-
rency loans or forward foreign exchange contracts.

EARNINGS SENSITIVITY
A one percentage-point change
SEKm NET
SEK/EUR
35
15
SEK/USD
15
SEK/GBP
8
SEK/other currencies

31 DEC
2014 SEKm
EUR
GBP
Other

NET
ASSETS
1 819
2 017
23

EQUITY
HEDGE
1 150
460
-

Gains on equity hedges amounted to
SEK -101 million (-39) in 2014 and are
recognised in other comprehensive in-
come as hedge accounting is applied.
In the parent company accounts, this
gain is recognised in the income state-
ment. The translation of net foreign as-
sets had an impact of SEK 363 million
(121) on consolidated equity. The fair
value of outstanding equity hedges at
31 December 2014 was SEK -49 mil-
lion (6), of which SEK -10 million relates
to loans and SEK -39 million to finan-
cial derivatives. A one percentage-point
weakening of the Swedish krona would
have a positive impact of SEK 22 mil-
lion on equity, including the translation
of foreign subsidiaries and taking
account of currency hedges.

HOLMEN ANNUAL REPORT 2014 33

BUSINESS OPERATIONS / RISK MANAGEMENT

INTEREST RATES

Changes in the market interest rate affect
the cost of financing.
The fixed interest periods for the Group’s financial
assets and liabilities are normally short. The Board
can decide to lengthen these periods in order to limit
the effect of a rise in interest rates. Derivatives in the
form of interest rate swaps are used to manage fixed
interest periods without altering underlying loans.
Fixed interest periods for net debt and the breakdown
by currency are shown in the table, in which derivat-
ives that affect the currency distribution and fixed rate
periods of the liabilities are taken into account.
The Group’s average interest rate on borrowing
was 2.3 per cent in 2014. At the turn of 2014/2015,
the average cost of borrowing was 1.9 per cent, based
on applicable market interest rates and existing fixed
interest periods. A one percentage-point increase in
the average market interest rate from the level at
year-end would have an negative impact of about
SEK 35 million on profit/loss for 2015. As loans with
fixed interest rates mature, the exposure to changes
in market interest rates rises. Excluding the fixed rate
periods, the exposure to a one percentage-point
change in the market interest rate is SEK 59 million,
calculated according to the size of the debt at 31
December 2014. The fair value of the derivatives
used to manage the fixed interest periods amounted
to SEK -97 million (-29) at 31 December 2014,

FINANCING

Group exposure to being unable to meet
the need for future funding and refinancing
maturing loans.
Holmen’s strategy states that the company is to
have a strong financial position that provides finan-
cial stability and gives the Group the opportunity to
take correct and long-term business decisions rela-
tively independently of the state of the economy and
external financing possibilities. The target for the
debt/equity ratio is a maximum of 0.5. Holmen’s
financing mainly comprises bond loans and the
issue of commercial paper. Holmen reduces the risk
of future funding becoming difficult or expensive by
using long-term contractually agreed credit facilities
and maintaining a good spread of maturities for its
liabilities. The Group plans its financing by forecast-
ing financing needs over the coming years based on
the Group’s multi-year business plan, budget and
profit forecasts that are regularly updated.
Net financial debt declined by SEK 209 million
during the year and stood at SEK 5 907 million at 31
December 2014, consisting of financial liabilities and
interest-bearing pension provisions of SEK 6 156
million, cash and cash equivalents of SEK 187 mil-
lion and financial receivables of SEK 62 million. Dur-
ing the year, a bond loan of SEK 400 million was is-
sued. In addition, a euro-denominated bond loan for
SEK 400 million was repaid. Since year-end, an addi-
tional bond loan of SEK 300 million has been issued
with a maturity of three years. At 31 December 2014,
current borrowings were SEK 3 269 million. In June

34 HOLMEN ANNUAL REPORT 2014

FIXED INTEREST PERIODS, NET FINANCIAL
DEBT 31 DECEMBER 2014, SEKm
SEK
EUR
GBP
Other currencies
Net financial debt

TOTAL –1 YEAR 1–3 YEARS 3–5 YEARS >5 YEARS OTHER
-47
-4 005
-8
-951
-345
-1 019
0
69
-400
-5 907

-2 951
-943
-674
69
-4 500

-400
-
-
-
-400

-607
-
-
-
-607

-
-
-
-
-

The Other column refers to pension provisions; see Note 17 on page 85.

which was recognised in other comprehensive in-
come as hedge accounting is applied. This value is ex-
pected to be recognised in the income statement from
2015 onwards. Under existing interest rate hedges, a
one percentage-point increase in market interest rates
would have a SEK 37 million impact on equity.

2014, Holmen signed a new credit facility for EUR
400 million (SEK 3 788 million) with a syndicate of
nine banks, which replaces a contractually agreed
EUR 400 million credit facility which originally ma-
tured in 2016. In addition, the company has a bilat-
eral credit facility of SEK 570 million that matures in
2017. All credit facilities remained unutilised at year-
end. They are available for use provided that the
Group’s debt/equity ratio is below 1.25. At year-end,
the debt/equity ratio was 0.28. Standard & Poor’s
long-term credit rating on Holmen is BBB and the
short-term rating is A-2. In autumn 2014, the out-
look was revised from negative to stable. Holmen’s
Swedish commercial paper programme has a facility
amount of SEK 6 000 million. Commercial paper
with a time-to-maturity of up to one year can be is-
sued in both Swedish kronor and euro. Holmen’s
medium term note (MTN) programme, for issuing
bonds, has a facility amount of SEK 6 000 million.
Bonds with maturities of 1–15 years can be issued
in both Swedish kronor and euro. At year-end,
SEK 2 750 million in commercial paper and
SEK 2 731 million in bonds was outstanding.

FINANCIAL LIABILITIES
SEKm

5 000

4 000

3 000

2 000

1 000

19 –

Financial liabilities
Credit facilities

The maturity structure of financial liabilities and assets
with undiscounted amounts is shown in Note 13 on
page 81.

CREDIT

Customers who are unable to fulfil their payment obligations
give rise to credit risk.
The risk that the Group’s customers will not fulfil their payment obliga-
tions is limited by means of creditworthiness checks, internal credit lim-
its per customer and, in some cases, by insuring trade receivables against
credit losses. Credit limits are continually monitored.
At 31 December 2014 the Group’s trade receivables totalled SEK 2 328
million, of which 39 per cent (42) were insured against credit losses.
Exposure to individual customers is limited. Sales to the five largest cus-
tomers accounted for 9 per cent of the Group’s total turnover in 2014.
During the year, credit losses on trade receivables in the form of provisions
and impairment losses had a negative SEK 3 million (negative 20) impact
on earnings. At 31 December 2014, trade receivables of SEK 83 million
(39) were past due for more than 30 days. After individual assessment of
all trade receivables, a provision of SEK 33 million has been made for
expected credit losses. The credit quality of financial assets that are neither
past due nor impaired is deemed to be good.

FACILITIES

Sudden and unforeseen incidents causing damage, such as
fires and machine breakdowns, may damage facilities and
goods in transit.
The aim is to protect employees, the environment, assets and operations
well and cost-effectively, but also to constantly increase involvement in
preventive work. Risks are minimised through damage prevention meas-
ures, good maintenance, training, long-term planning in the modernisa-
tion/renewal of facilities and good administrative procedures. Risk as-
sessments are performed by risk engineers linked to insurance compan-
ies, as well as by independent consultants and via internal controls.

EXTERNAL ENVIRONMENT AND WORK ENVIRONMENT

The main environmental impact consists of emissions to air and
water and the occurrence of noise and waste. There is a risk of
conditions for operations set by the environmental authorities
being breached. Landfills and discontinued industrial sites may
lead to costs for restoring the environment. There is also a risk
of the occurrence of industrial accidents.
The organisation and management of the environmental activities are
stipulated in Holmen’s environment and energy policy. In the event of
process disturbances, the environment takes precedence over production.
In ongoing and discontinued operations, the environmental impact must
be acceptable for people and the environment.
Forestry must be undertaken with as much consideration for the
environment as possible. Health and safety remains a priority issue for
Holmen and its employees. The Group’s work environment policy sets
out the principles for achieving safe labour conditions.
The following points are examples of how Holmen continually works
on preventing and managing different types of environmental risk:
• Self-monitoring according to emissions regulations from environ-

mental authorities

• Checks of bodies of water outside mills
• Checks on the management of chemicals and waste
• Environmental risk assessments
• Checks and inspections by authorities
• Reporting to public authorities
• Group-wide climate and energy targets
• Group-wide industrial accident targets
• Follow-up of incidents

BUSINESS OPERATIONS / RISK MANAGEMENT
LOREM IPSUM / LOREM IPSUM DOLOR

Financial transactions give rise to credit risks in relation to
financial counterparties.
A maximum credit risk and settlement risk are established for each finan-
cial counterparty and are monitored continually.
At 31 December 2014, the Group had outstanding derivative con-
tracts with a nominal amount of about SEK 11 billion and a net fair
value of SEK -415 million. Holmen’s total credit risk in derivative trans-
actions amounted to SEK 630 million at year-end 2014. This calculation
is based on the maturity and historical volatility of different types of de-
rivative. The maximum credit risk for other financial assets is estimated
to correspond to their nominal amount.

Holmen insures its facilities to their replacement value against prop-
erty damage and consequential loss. The excess varies from one facility
to another, but the maximum is around SEK 30 million for any one
claim. The Group’s forest holdings are not insured. They are widely dis-
persed over large parts of the country, and the risk of large-scale simul-
taneous damage is not judged to justify the cost that insuring the forest
holdings would entail. The Group has liability insurance that also covers
sudden and unforeseen environmental damage affecting ‘third parties’.

• Checks by authorities of protection against serious chemical accidents
• Certified environmental and energy management systems incorporat-

ing environmental and energy targets

• Environmental certification and PEFC™ and FSC® chain-of-custody

certification

• Combating damage to forest caused by weather, insects, fungus and

moose

• Certified health and safety management systems
• External checks of certified management systems
• Self-monitoring according to power industry guidelines for dam safety
• Studies and remediation measures at discontinued sites in consultation

with environmental authorities.

HOLMEN ANNUAL REPORT 2014 35

SUSTAINABILITY

Sustainability report

Work on sustainability forms an integral part of Holmen’s strategy for growth and value
creation, and is a natural driver of day-to-day operations. The ambition is to improve the
Group’s competitiveness, reduce costs and risk levels, motivate and involve employees,
and meet the requirements and expectations of the wider world.

THE FUTURE IS GROWING IN THE FOREST. Holmen
conducts committed and active sustainability
work aimed at facilitating the necessary tran
sition to a more resourceefficient, biobased
economy. At the heart of the strategy lie
the natural, renewable raw materials from
Holmen’s sustainably managed forests. The raw
materials are refined into products and bioen
ergy which, like the forest, benefit the climate.
A focus on financial stability and profitabil
ity, in combination with farreaching respon
sibility for the environment, employees and the
wider world, creates the conditions for a sus
tainable business that generates value for share
holders, customers and other stakeholders.

TARGET-DRIVEN WORK. The Group has sustain
ability targets in the area of energy and the en
vironment. The longterm targets focus on in

creased growth in the forests, lower carbon di
oxide emissions and a greater proportion of
companyproduced renewable energy.
The priority for employees is to work on
improving safety awareness and minimising
industrial accidents. One key target is for all
operations to introduce certified occupational
health and safety management systems before
the end of 2015.
Over the year, the importance of working
with management by objectives and key per
formance indicators has been clarified for each
business area. The aim is for this to contribute
to attaining the Group’s profitability target.

FRAMEWORK FOR STEERING DOCUMENTS. A review
of Holmen’s policy portfolio has been conduc
ted over the year, and work has begun on up
dating the Group’s framework for steering doc

uments. The purpose is to improve communi
cation, clarify followup and ensure compli
ance with applicable policies and guidelines.

DIVISION OF RESPONSIBILITY. The Board and
Group management regularly address current
sustainability issues. Overall responsibility lies
with the CEO and the heads of the business
areas, while operational responsibility for em
ployees and the environment rests with the mill
and forest region managers. The director of
environmental and sustainable affairs coordi
nates the work, including followup of targets
and outcomes. The annual external reporting
of sustainability work and outcomes in line
with the Global Reporting Initiative (GRI) is
important in ensuring that stakeholders and
analysts have a good insight into Holmen’s
work.

36 HOLMEN ANNUAL REPORT 2014

HOW WOULD YOU SUM UP THE SUSTAINABILITY WORK?
The key point is our conviction that the sustainability work is
an important and natural part of the Group’s business strategy.
Being able to show that sustainability and profitability go hand in
hand clearly also puts us in a stronger position. The openness in
our sustainability reporting also sets us apart in a positive way.

THE WORK ON LOWERING CARBON DIOXIDE EMISSIONS HAS
BEEN RECOGNISED INTERNATIONALLY. IN WHAT WAY?
Holmen was placed on the A list in the Climate Performance
Leadership Index 2014. This is, of course, great news and
shows how well our work on cutting our climate impact stands
up to international comparison.

LAST YEAR HOLMEN DREW UP A CODE OF CONDUCT FOR
SUPPLIERS. HOW HAS THAT WORK CONTINUED?
The implementation during 2014 comprised two elements: the
Group’s purchasers received the relevant training, and the task of
familiarising our suppliers with the code of conduct began. By the
end of the year, over 1 000 suppliers had signed up to the code.

HOW IS HOLMEN BEING AFFECTED BY THE EU’S NEW EMISSION
REGULATIONS FOR THE PULP AND PAPER INDUSTRY?
We have conducted an initial assessment of the new require-
ments and the outlook appears to be good for our mills. At the
paperboard mill in Workington, we need to look at how the
treatment plant for process water can be made more efficient.

IS THERE ANYTHING IN PARTICULAR YOU WOULD LIKE TO
MENTION ABOUT THIS YEAR’S SUSTAINABILITY WORK?
We have begun work on developing the Group’s framework for
steering documents, a job that will include reviewing our policies
and guidelines for employees and for the environment. One
purpose of this is to clarify our procedures for follow-up of and
compliance with the steering documents. This is something that is
important for the Group’s employees, but it is also a valuable point
to be able to communicate in contact with external stakeholders.

Lars Strömberg,
Director of Environmental
and Sustainable Affairs

SUSTAINABILITY

HOLMEN STRENGTHENED ITS POSITION IN 2014

For the second year in a row, Holmen has
ranked among the top companies in the world
for combining sustainable business and fin-
ancial performance, in gaining a place in the
UN’s global stock index Global Compact 100.

Find out more about the Global Compact and
GC100 on page 46.

GUIDE TO THE SUSTAINABILITY INFORMATION

Holmen’s sustainability report 2014 comprises the following:
• Sustainability information in the section on business operations on

pages 12–31

• Reporting on financial management, environmental responsibility,
employees and other stakeholders on pages 36–47 and 93–95
• Holmen’s GRI register (Global Reporting Initiative) and various links

on Holmen’s website

The website also provides:
• In-depth sustainability information and tables
• Environmental work by business area
• The auditors’ assurance report

THE GROUP REPORTS at reporting level GRI A+. At Holmen’s request,
KPMG has performed a general review of the contents of the Group’s
sustainability reporting and shares Holmen’s expressed reporting level
regarding the GRI guidelines.

HOLMEN ANNUAL REPORT 2014 37

SUSTAINABILITY / SUSTAINABLE PRODUCTS

SUSTAINABLE PRODUCTS

The growing forest underpins Holmen’s entire business and all the renewable products
manufactured at the Group’s mills – paperboard, printing paper and sawn timber. Optimum
use of resources and positive effects on the climate are guiding principles all the way along
the chain from the plant nurseries to development of the renewable products of tomorrow.

PRIORITIES 2014/2015

• To develop new business opportunities

based on wood raw material and existing
industrial sites

• To meet demand for sawn timber in cli-

mate-smart and cost-effective construction
• Energy production from renewable sources

HUMANS AFFECT THE CLIMATE. The Intergovern
mental Panel on Climate Change (IPCC) pub
lished a new report in November 2014, which
confirmed that the climate change observed
around the planet and global warming are due
to human activity. A new global climate agree
ment is set to be negotiated in Paris in late 2015.

THE RENEWABLE WOOD RAW MATERIAL from
Holmen’s actively and sustainably managed
forests plays an important role in the necessary
work of promoting good resource manage
ment and combating climate change. It does
this in part through the substitution effect that
occurs when renewable material and biofuels

38 HOLMEN ANNUAL REPORT 2014

from the forest replace fossil materials, and in
part through the standing forest which, like
wooden structures and joinery products, stores
large quantities of carbon dioxide. In addition,
Holmen’s paper and paperboard products can
be recycled into new products or bioenergy.

ted in 2014. The programme contains targets
and initiatives to create an ecocycle society,
known as a circular economy. The European
Commission proposes higher target levels for
material recovery, increased support for research
and the promotion of sustainable biomass use.

VALUABLE BY-PRODUCTS. As much as 99 per cent
of the byproducts and waste that arise from
Holmen’s operations is collected and used for
various purposes. Endoflife paper and paper
board products also top up the recovered pa
per ecocycle with muchneeded virgin fibre.
Used fibre can be recycled 5–7 times before it
ends up as biofuel.

THE EU SHOWS THE WAY. One precondition for
sustainable social development is the availabil
ity of products with good climatic and environ
mental performance. The EU wishes to pro
mote the use of biobased products in Europe,
and standards are being drawn up to support
such a move.
Holmen’s ambition to contribute to a future
biobased economy is fully in line with this initi
ative and with the programme for a wastefree
Europe that the European Commission presen

INNOVATION AND R&D. The Riksdag (Swedish Par
liament) has set a target that the country will
have no net emissions of greenhouse gases by
2050. To achieve the target, the use of existing
renewable products will need to increase,
alongside the development of new materials
and products aimed at replacing their fossil
based equivalents. Holmen contributes to the
longterm achievement of the target through its
own operations.
The Group’s total investment in R&D
amounted to approximately SEK 110 million
in 2014.

NEW BUSINESS DEVELOPMENT (NBD) was launched
at Holmen in 2013 through the merger of the
Holmen Biorefinery Development Center and
parts of the business areas’ development de
partments. Based on Holmen’s renewable
wood raw material, and the byproducts that
arise in regular production, NBD is responsible
for building up knowledge and for identifying
and developing new business opportunities.
The general aim is for woodbased alternatives
to replace traditional fossilbased products in
the long term in areas such as fuel, textiles and
construction materials. An important starting
point for the work is that the new business op
portunities must be linked to Holmen’s exist
ing industrial sites.
Through NBD, Holmen will be initiating re
search, innovation and product development.
Its work includes investigating how by
products from the mills can be refined into
base chemicals for customers in the chemicals
industry, for example. Another interesting ex
ample of refinement is Holmen’s stake in an
Israeli development company that produces
nanocrystalline cellulose (NCC) from wood
raw material. In the future, paper and paper
board may gain new properties with the help
of NCC, and the crystalline parts of the mater
ial may also be put to use in foam, monitors
and medical applications.

SUSTAINABILITY / SUSTAINABLE PRODUCTS

Holmen’s operations from a climate
perspective
Holmen’s operations contribute to positive climate
effects – partly through carbon dioxide being cap
tured and stored in the forests and products, and
partly through resourceefficient production largely
running on renewable energy. Thanks to investments
in companyproduced energy and the development
of new products based on forest raw material, the
positive climate effects will be improved in the future.

THE FOREST. Holmen’s forests absorbed around
4 480 000 tonnes of carbon dioxide for their
growth in 2014. Based on growth data from the
past five years, it has been calculated that approxi
mately 80 per cent of the growth is harvested each
year and used for products. This means that around
525 000 tonnes of carbon dioxide per year is cap
tured and stored as the forest stands grow. Over the
foreseeable future, annual growth in Holmen’s
forests is expected to exceed the harvests, and the
Group’s growth target indicates that carbon dioxide
storage will increase in the future.

PRODUCTION UNITS. With Holmen’s investment in bio
fuelbased energy production over recent years,
emissions of fossil carbon dioxide from its produc
tion units decreased to just under 130 000 tonnes in
2014. Since the level of selfsufficiency in biobased
electrical and thermal energy has risen over the past

few years, the need to purchase fossilbased energy
has shrunk. Compared with the situation in 2010,
emissions of fossil carbon dioxide from the produc
tion of purchased energy were around 230 000
tonnes lower in 2014.
Based on figures for recent years, annual emis
sions of fossil carbon dioxide from forestry ma
chines, the manufacture of input raw materials and
the transport of raw materials and products are es
timated at around 325 000 tonnes. These emissions
represent the negative impact that Holmen’s oper
ations have on the climate.

PRODUCTS AND SUBSTITION EFFECTS. Sawn timber
stores carbon dioxide for its entire lifetime, only re
leasing it when the products are burned. Holmen’s
production of sawn timber in 2014 equates to
around 610 000 tonnes of carbon dioxide stored
in products that have a lifetime of over 50 years.
Holmen’s sawn timber also has a substitution effect,
in that it replaces construction materials with an im
pact on the environment. For 2014, this substitution
effect could amount to nearly 1 200 000 tonnes of
carbon dioxide.
Paper and paperboard products have too short a
lifetime for it to be meaningful to calculate carbon di
oxide storage. These products, like endoflife sawn
timber, do however make excellent biofuels. Biofuel
from Holmen’s forests and byproducts from its pro
duction also provide energy through combustion.

Research proves climate benefit

Several independent sources have shown that
carbon dioxide emissions drop when wood-based
construction materials are used instead of less
climate-friendly alternatives. Various scientific pa-
pers published in recent years acknowledge the
positive effect of forest products on the climate.
Here is a small selection.

WOOD STORES CARBON DIOXIDE. Lundmark
et al. (2014) studied how different strategies for
forestry and the use of wood-based products can
slow climate change. If Swedish forestry continued
to be run as it is today, this would avoid emissions
of carbon dioxide in the order of 60 million tonnes
per year, compared with a situation where non-re-
newable raw materials and products were used.
The researchers also state that increased use of
sawn timber outside Sweden could bring major
climate benefits in countries where fossil-based
construction materials currently dominate.

THE SUBSTITUTION EFFECT. Sathre and
O’Connor (2010) reviewed around 20 scientific
papers in order to calculate the substitution effects
of using wood as a construction material instead

of steel and cement, for example. They concluded
that every cubic metre of wood used instead of
other materials equates to an average reduction
in carbon dioxide emissions of 1.9 tonnes. The
study shows that wood products from responsibly
managed forests are positive for the climate.

LOW-ENERGY HOUSING. Dodoo et al. (2014)
have published several articles showing that
renewable products from the forest result in more
resource-efficient construction and housing.
Sealed and well insulated buildings made in wood,
coupled with biofuel-based heating systems, give
a better energy performance than today’s building
standards, and thus contribute to lower use of
primary energy and less of an impact on the
climate. Key preconditions for this are sustainable
forestry and responsible processing of by-products.

Sources: Lundmark, T. et al. Potential roles of Swedish forestry in the
context of climate change mitigation. Forests 2014, 5, 557–578.
Sathre, R. and O’Connor, J. Meta-analysis of greenhouse gas dis-
placement factors of wood product substitution. Environmental
Science Policy 2010, 13, 104–114. Dodoo, A. et al. Lifecycle primary
energy analysis of low-energy timber building systems for multi-storey
residential buildings. Energy and Buildings 2014, 81, 84–97.

DEVELOPMENT PROJECTS

PAPERBOARD
• Optimised utilisation of

fibre

• Bio-based energy

production

• Bio-based barrier materials

PRINTING PAPER
• Lower energy consumption
• Increased production

capacity

• Resource-efficient product

solutions

• Fossil-free Swedish units

SAWN TIMBER
• Production of sawn

timber for climate-smart
construction

• Improving the drying

process for better product
properties and lower
energy use

ENERGY
• Upgrading hydro power
• Wind power

WOOD
• Higher growth
• More efficient harvesting

and transport

• Less site damage in forest
• Improved regeneration

NEW BUSINESS
DEVELOPMENT
• New products from wood

raw material

• Use of the industry’s
by-products/waste

• New business opportun-
ities at Holmen’s existing
industrial sites

HOLMEN ANNUAL REPORT 2014 39

SUSTAINABILITY / ENVIRONMENT

ENVIRONMENT

Holmen takes far-reaching responsibility for ensuring that Holman’s forests, production processes
and products contribute to the development of a bio-based economy. The overarching focus of
the environmental work is on continuously reducing the Group’s impact on the environment and
the climate, and on ensuring that the Group complies with environmental rules and regulations.

PRIORITIES 2014/2015

• Increase the proportion of company-produced

renewable energy

• Continuously reduce carbon dioxide emissions
• The EU’s Industrial Emissions Directive

ENVIRONMENTAL RESPONSIBILITY. Environmental and
energy concerns play a natural role in Holmen’s plan
ning of its production and investments. The Group’s
operations are characterised by resourceefficient use
of renewable raw materials and energy. Energy,
chemicals and fibre are recovered as far as possible,
in order to minimise the environmental impact of
production. The section on risk management on page
35 outlines Holmen’s preventive work on ecorelated
risks and how they are managed.
Holmen follows the requirements laid down by
environmental legislation and the environmental
authorities. Compliance is ensured via statutory of
ficial inspections and through the improvement
work that is being implemented at the production
facilities within the framework of the environ
mental and energy management systems. The main
environmental impact from the industrial sites takes
the form of emissions to air and water and the gen
eration of waste and noise. Information on produc
tion and priority environmental parameters is
presented in the tables on pages 94 and 95.

SUSTAINABLE GROWTH IN THE EU. The EU is working
on developing a climate and energy strategy for
2030. In the energy field, there is a plan for reduced
emissions and more efficient energy consumption.
As part of this work, in late 2014 EU leaders agreed
on new targets for climate and energy. Translated to
the corporate sector, which includes Holmen, emis
sions of carbon dioxide are to be cut by 43 per cent
by 2030 (base year 2005). Furthermore, the propor
tion of energy consumption represented by renew
ables should increase to 27 per cent within the same
timeframe. Holmen is in favour of the EU’s targets
and action programmes. However, the Group’s am
bitions in the climate and energy area go further.

TARGETS FOR SUSTAINABLE DEVELOPMENT. Holmen
has been working on Groupwide environmental
targets for sustainable development for several
years. Being able to increase the production and

40 HOLMEN ANNUAL REPORT 2014

use of products made from renewable forest raw
material is important for the production itself and
for the climate. Holmen therefore has a target of
increasing growth in Holmen’s forests by 25 per
cent by 2050 compared with 2007.
The Group’s target for fossil fuels is to reduce
their use by 75 per cent by 2020 compared with
2005 level. The investments in biobased energy
production in the Iggesund Paperboard business
area and the adjusted energy strategy within Holmen
Paper had a huge impact on fossil fuel use in 2014.
The reduction up until 2014 thus already stands at
74 per cent. Work is now being focused on main
taining this reduction at a sustainable rate. Meas
ured per tonne of product (printing paper and paper
board), emissions of fossil carbon dioxide fell by 45
per cent in 2014, compared with 2013.
The third climaterelated sustainability target is to
increase companyproduced renewable electrical en
ergy as a proportion of total electricity use by Holmen.
The target for 2020 is that the proportion shall be
more than doubled, compared with the base year of
2005, from 31 per cent to 67 per cent. In 2014, com
panyproduced renewable electrical energy accounted
for 42 per cent of Holmen’s total electricity use.
Holmen owns areas of land that are suitable for
the erection of wind turbines. Due to the current
market situation for this type of electricity produc
tion, the economic preconditions for investing in
wind power are not in place to the extent that was
predicted a few years ago. As a consequence, this
sustainability target was revised down in 2014,
from 67 per cent to 50 per cent.

Environmental activities in 2014
The guiding objective of Swedish environmental
policy is enshrined in the Generational Goal. This goal
provides guidance on the assets that are to be protec
ted and the social changes that are required in order to
achieve the desired environmental quality. Achieving
the goal will require an ambitious environmental
policy in Sweden, the EU and in an international con
text. The Swedish environmental quality system com
prises 16 environmental quality objectives in areas
such as climate impact, air pollution and biodiversity.
Several environmentrelated studies and measures
were implemented within the Group over the past
year, and these have contributed in various ways to
achieving the environmental quality objectives.
Holmen’s measures and the outcomes of these in 2014
are presented on the next page in relation to a selec
tion of Sweden’s environmental quality objectives.

SUSTAINABILITY / ENVIRONMENT

HOLMEN’S TARGETS FOR SUSTAINABLE DEVELOPMENT

Increased growth in Holmen forests

Reduce use of fossil fuels within the Group

Increased production of renewable electricity relative to Holmen’s
electricity use

TARGET

2050: increase by 25%

2020: reduce by 75%

2020: 50%3)

OUTCOME 2014

COMMENT

–1)

74%2)

42%

Base year 2007: 4.4 million m3
growing stock, solid over bark

Base year 2005

Base year 2005: 31%

1) Measures to increase growth have been identified and set in motion. An assessment will be made as part of the next harvesting review in 2021.
2) Estimate based on the quantity of fossil fuel used at mills and at the CHP plant next to Holmen Paper Madrid. 3) Target revised in 2014.

USE OF FOSSIL FUELS
(base year 2005), %

PROPORTION OF OWN RENEWABLE ELECTRICITY
PRODUCTION RELATIVE TO HOLMEN’S ELECTRICITY USE
(base year 2005), %

-20

-40

-60

-80

-74

NATIONAL ENVIRONMENTAL QUALITY OBJECTIVES

1. ‘Reduced climate impact’
2. ‘Clean air’ and ‘Natural acidification only’
3. ‘A non-toxic environment’
4. ‘Sustainable forests’

HOLMEN’S MEASURES AND OUTCOMES

1. ‘Reduced climate impact’
• The investment in a new recovery boiler at the paperboard mill in Iggesund
has significantly reduced emissions of fossil carbon dioxide, which has an
impact on the climate. Emissions of fossil carbon dioxide fell by around 85
per cent between 2013 and 2014. The aim is to become self-sufficient in
heat and electricity.

• As a result of extensive energy investments in 2013, the paperboard mill in

Workington now runs on biofuel and is self-sufficient in electricity and thermal
energy. In addition, fossil-free electricity is distributed to the local community.
• Major energy efficiency initiatives are being implemented at Hallsta Paper
Mill, focusing primarily on increased heat recovery from paper machines
and pulp manufacture. The bark that was previously used as fuel at the
mill has now become a revenue source that is sold to external energy
producers. In 2014, emissions of fossil carbon dioxide were cut by 70 per
cent compared with 2013.

• At Braviken Paper Mill, oil consumption has been cut through improvements
in the operational strategy for the mill’s steam system, greater efficiency in
the solid fuel boiler and increased steam recovery from the production of
thermo-mechanical pulp. Emissions of fossil carbon dioxide fell by around
60 per cent between 2013 and 2014.

• 99 per cent of the by-products and waste that arose from Holmen’s opera-

tions in 2014 was collected and used for various purposes. As biofuel-based
material, 70 per cent was used for energy production at Holmen’s own plants
or sold off for energy production elsewhere. This avoided emissions of fossil
carbon dioxide. The remaining amount, just under 30 per cent, was used for
other purposes, such as construction material or producing soil products.

2. ‘Clean air’ and ‘Natural acidification only’
• Iggesund Mill completed calibration of its new recovery boiler during the
year, and of the system for the destruction of weak gases that was taken
into operation in 2013. As a result, emissions to air of sulphur, nitrogen
oxides and dust from this part of the process fell by 60, 30 and 60 per cent
respectively between the years 2013 and 2014.

• Energy production at the mill in Madrid was changed during the year, which

led to a reduction in emissions of acidifying nitrogen oxides.

3. ‘A non-toxic environment’
• In consultation with the environmental authorities, studies are being con-

ducted at contaminated discontinued industrial sites where Holmen has op-
erated in the past. Studies relating to the sawmills at Stocka, Håstaholmen
and Lännaholm, the sulphite mills at Strömsbruk, Domsjö and Loddby, the
former mechanical pulp mill in Bureå, a surface treatment plant in Iggesund
and two landfill sites in Hälsingland reached various stages in 2014.

4. ‘Sustainable forests’
• As part of measures to achieve the objective, the Riksdag (Swedish Parliament)
resolved in 2010 that 100 000 hectares of state-owned forest would be used
to compensate Sweden’s major landowners for an increase in the proportion of
state-protected forest in Sweden. In 2014, Holmen reached an agreement with
the Swedish Environmental Protection Agency to sell just over 10 000 hectares
of forest with high conservation value. In compensation, Holmen was able to
buy around 18 000 hectares of land suitable for active and sustainable forestry.

HOLMEN ANNUAL REPORT 2014 41

SUSTAINABILITY / ENVIRONMENT

ENVIRONMENTAL PERMITS
FOR THE GROUP’S PRODUCTION
FACILITIES

Iggesund Mill1)
The mill in Workington2)
Hallsta Paper Mill3)
Braviken Paper Mill4)
Holmen Paper Madrid2)
Iggesund Sawmill5)
Braviken Sawmill4)

2013
2002
2000
2002
2006
2014
2010

1) The Environmental Code. In addition, operations subject
to notification requirements take place at the production unit
in Strömsbruk. Port activity (at Skärnäs Terminal) alongside
Iggesund Mill has held an environmental permit under the
Environmental Code since 1999. An application for a new
environmental permit will be submitted in 2015. 2) IPPC en-
vironmental permit. 3) Environmental Protection Act. 4) The
Environmental Code. 5) In 2014, the sawmill obtained a new
environmental permit under the Environmental Code.

CERTIFICATIONS FOR MANAGEMENT SYSTEMS

CERTIFICATIONS1,2)
Iggesund Mill4)
The mill in Workington
Hallsta Paper Mill
Braviken Paper Mill
Holmen Paper Madrid
Iggesund Sawmill6)
Braviken Sawmill6)
Holmen Skog7)

ENVIRONMENT
2001
2003
2001
1999
2002
1999
2011
1998

ENERGY
2005
–5)
2005
2006
2009
2006
2011
–

QUALITY HEALTH AND SAFETY3)
2015
2005
2012
2015
2015
2015
2015
–

1990
1990
1993
1996
2000
1997
2011
–

1) Certifications can be viewed on the Holmen website – www.holmen.com/certificates
2) Environment/ISO 14001:2004, Energy/ISO 50001:2011, Quality/ISO 9001:2008, Health & Safety/OHSAS 18001:2007.

The years given are the years when the certification was first issued.

3) All production units are to be certified by the end of 2015.
4) The certifications include the production unit in Strömsbruk and Skärnäs Terminal.
5) Energy management system introduced. Certification to international standard remains to be achieved.
6) Joint certification for the two sawmills from 2011.
7) Operations at Holmen Skog are certified in accordance with the criteria issued by PEFC™ and FSC®.

Permits
At the end of 2014, Holmen was running pro
duction operations at seven facilities that re
quire environmental permits. The permits spe
cify conditions regarding permitted production
volumes and permitted emissions to air and
water. Five of the facilities are located in
Sweden, with sales equivalent to 60 per cent of
Group net sales. The two remaining facilities
are the mill in Workington in the UK and the
mill in Madrid in Spain, whose combined share
of Group sales was 18 per cent in 2014.
2013 marked the entry into force of the EU’s
Industrial Emissions Directive (IED). The new
legislation entails more stringent requirements
for using the best available technology. Work is
under way at Holmen to investigate the extent
to which operations at the pulp, paper and pa
perboard mills need to be adapted in order to

meet the tightened emission requirements by
October 2018. A preliminary analysis indicates
that the environmental status of the mills is
good and that all the mills except the one in
Workington already meet the new require
ments. A team is now considering what initia
tives will be required for the mill in Workington
to meet the requirements concerning discharge
of process water.

In 2014, Holmen Timber was granted an en
vironmental permit for increased production at
the sawmill in Iggesund.

In 2015, an application will be submitted
for a new environmental permit for the port
operations at Skärnäs Terminal.
The production of electrical energy at
Holmen’s wholly and partly owned hydro
power stations is covered by a permit for water
operations. The Governmentappointed com

mission of inquiry into activities using or im
pacting on water, Vattenverksamhetsutred
ningen, submitted its final report (SOU
2014:35) during the year. The report contains
proposals for systems that will allow permit
ting processes of dams and hydro power sta
tions that lack permits under the terms of the
Environmental Code. The purpose of this is,
in part, to adapt Swedish legislation to EU law.
Holmen is following developments and has put
its comments to the commission via the
Swedish Forest Industries Federation.

In 2014, Holmen commissioned 17 wind

turbines in Varsvik in the Municipality of
Norrtälje through a company in which it has a
50 per cent stake.
Planning is under way to develop wind
farms on Holmen’s land in the counties of
Västernorrland and Västerbotten. Environ

42 HOLMEN ANNUAL REPORT 2014

SUSTAINABILITY / ENVIRONMENT

mental permits have been granted for wind farms in
the Municipality of Örnsköldsvik. Some permit
processes had not been completed by the end of
2014. The permit process is under way for wind
power at the mill in Workington, UK.

In 2014, an environmental permit application
was submitted for a peat field in the Municipality
of Skellefteå.

EMISSION ALLOWANCES AND ELECTRICITY CERTIFICATES.
Holmen’s production facilities have participated in
the EU Emissions Trading Scheme since 2005. The
Group’s measures to reduce the use of fossil fuels, and
consequently carbon dioxide emissions, have made it
possible to sell emission allowances. Holmen has been
allocated emission allowances for the trading period
up until 2020.
The Group has produced renewable electricity
for several years and electricity certificate trading
has generated revenues.

In the UK, electricity distributors have to meet
a certain quota for renewable electricity, and produ
cers of renewable electrical energy receive green
Renewables Obligation Certificates (ROCs) in pro
portion to the amount of electricity generated. The
biofuel boiler in Workington received such certific
ates in 2014 and sold them on.

EXCEEDANCES AND COMPLAINTS. During the year there
were a number of cases of exceeded threshold val
ues, as well as complaints and incidents in the in
dustrial and forestry operations. None of these were
in any way of a material nature or had an impact on
earnings, and they were all resolved by means of
corrective measures in the operations’ management
systems. The industrial incidents were reported to
the supervisory authorities.

The mill in Workington

TOOLS FOR ENVIRONMENTAL EFFORTS

THE ENVIRONMENTAL AND ENERGY POLICY
contains general principles for the environ-
mental issues prioritised by Holmen and its
stakeholders. The focus is on the significance
to the business of energy and climate change
issues. The environmental aspects of Holmen’s
operations are regulated by laws and permits in
each country. The allocation of environmental
responsibility and the organisation and manage-
ment of environmental activities are based on
the Group’s environmental and energy policy. At
the mills, legislation and other requirements are
taken into account in the planning of production
and investments.

HOLMEN’S GUIDELINES FOR SUSTAINABLE
FORESTRY indicate how the forests are to be
managed from the points of view of production
and the environment. The guidelines contain
over 60 procedures that cover the criteria
issued by PEFC™ and FSC®.

CERTIFICATIONS. At the end of 2014, operations
at the Group’s production sites were certified
according to quality, environmental and energy
management systems. Two of the mills also
have certified management systems for health
and safety work. All these systems mean that
procedures are in place for planning, imple-

mentation and follow-up, as well as measures to
enable continuous improvement in environmental
efforts. In addition, all the facilities at which wood
raw material is used have chain-of-custody
certification. Forestry operations are certified in
accordance with environmental management
systems, as well as under criteria issued by
PEFC™ and FSC®. The proportion of certified
wood at the Group’s own sites varies according
to availability in the area. Holmen Skog’s chain-
of-custody certification (FSC® Controlled Wood)
provides assurance that non-certified wood also
comes from verified sources. All the certifications
can be viewed on the Holmen website.

HOLMEN ANNUAL REPORT 2014 43

SUSTAINABILITY / EMPLOYEES

EMPLOYEES

Holmen’s success depends on committed and skilled employees who share the company’s values
and work towards set targets. The responsibilities of the Group include supporting value-based
leadership, giving every employee opportunities to develop and ensuring a safe work environment.

PRIORITIES 2014/2015

• Talent management
• Management by objectives and value-

based leadership

• Improving the safety culture

TALENT MANAGEMENT AND DEVELOPMENT are a high
priority within Holmen. Conditions for the in
dustry and the company are changing rapidly.
Employees thus need to develop and broaden
their expertise to meet new requirements, not
least due to increasingly complex technology and
the continuous optimisation of the processes.
The Group encourages internal mobility and
strives to fill vacant management positions
through internal recruitment, so that employ
ees have clear career paths and opportunities
to grow within the organisation. The Talent
Review is an annual process in which man
agers, key personnel and employees with great
potential are identified and evaluated. Struc
tured successor planning is also carried out as
part of this process.

ATTRACTING THE RIGHT TALENT. In a labour mar
ket where key talent can be in short supply, it is
important that the employer as a brand is
known for positive values, good terms of em
ployment and interesting work. Questions of
sustainability and values are playing an in
creasingly important role in choosing an em
ployer. Against the background of this and the
shifting realities within the industry, Holmen is
constantly developing its brand as an employer.
Holmen is finding that demand remains high
for study visits, degree project positions, work
placements and summer jobs. There was also
considerable interest from students at career
events in 2014.

In the Engineers Barometer 2014, a careers
survey conducted by technology magazine Ny
Teknik and the Swedish Association of Gradu
ate Engineers, Holmen was named Sweden’s
second most attractive employer by engineers
in the forest and wood industry.

WELL EDUCATED LEADERS are a key success factor
and a vital part of Holmen’s future. During
2014, all the leadership programmes were eval
uated and improved on the basis of a manage

44 HOLMEN ANNUAL REPORT 2014

ment philosophy that includes values, Holmen’s
seven manager criteria and management by ob
jectives. Holmen’s general induction programme
was also developed along the same lines.

MANAGEMENT BY OBJECTIVES and valuebased
leadership. Work on values within Holmen
continues, and the values of Courage, Commit-
ment and Responsibility have been well re
ceived in all parts of the Group. In 2014, the
values were linked to the concrete targets at
each level and within each business area. This
work took the form of workshops, where
teams jointly agreed on what action needed to
be taken, and what behaviours and approaches
were required to achieve set targets.
The work began in the management teams
and was then rolled out across all levels of the
organisation. The result of the team’s efforts is
a team contract that is jointly agreed and
signed by the participants. The strength of the
team contract is that it ties up the work on val
ues and management by objectives with every
day behaviours in a way that creates clarity
and commitment. The team contract thus con
tributes to the development of the individual
employee and the team.
The combination of management by object
ives and valuebased leadership is a powerful
tool in the task of developing Holmen.

CHANGE MANAGEMENT. In recent years, Braviken
Paper Mill and Hallsta Paper Mill have under
gone major restructuring, which has involved
the closure of paper machines, extensive
changes to the organisational structure and a
reduction in the workforce.

Iggesund Paperboard has also introduced ex
tensive changes in the business area. One result
of this is that a new organisational structure is
being implemented at Iggesund Mill. This will
entail a gradual reduction in the workforce up
until 2017 through natural turnover.
At the same time that the number of em
ployees has fallen, productivity – in terms of
production per employee per year – has in
creased (see diagram page 45). The reason for
this is that the organisational changes have
also involved the introduction of more efficient
working procedures and processes.

HEALTH AND SAFETY remains an important issue
for Holmen. The company’s work environment
network is intensely active in introducing com

parisons within the Group and transferring
best practice in priority areas of risk. A central
tenet of the preventive health and safety work
over the past few years has been to improve the
safety culture by changing behaviours at work.
Certified management systems for health
and safety work (OHSAS 18000) have been in
troduced at the mill in Workington and Hallsta
Paper Mill. Group management has decided
that all production units within Holmen are to
be certified by the end of 2015.

INDUSTRIAL ACCIDENTS. Over recent years, the
number of industrial accidents has maintained
a downward trend. For 2014, the target was to
bring industrial accidents down to 6.0 per 1 mil
lion hours worked. The outcome was 6.5. Two
production units excelled in achieving zero indus
trial accidents over the year – the sawmill in Igge
sund and the paperboard mill in Workington.

THE RATE OF SICKNESS absence in 2014 was 3.9
per cent. Longterm sick leave (more than 60
days) remains at a low level of 1.7 per cent. The
good health index is a measure of the share of
employees with no sick leave during the year.
The index for 2014 lies at 50 per cent, the
highest figure during the past five years. The
rate of sickness absence at Holmen is on a par
with the rest of the industry.

EQUALITY AND DIVERSITY. Holmen aims to be
a company where everyone is treated with
respect and where no form of discrimination
is tolerated. Increasing the proportion of wo
men across all levels of the organisation is an
important and ongoing task. Mixed teams gen
erally perform better and strengthen Holmen
as a company. The proportion of female man
agers has risen over the past few years, and
now one in five of Holmen’s managers are
women. Of the total new employees recruited
in 2014, 31 per cent were women.

UNION COOPERATION contributes to Holmen’s
progress, and is based on close collaboration
with the union organisations in a spirit of trust.
The company’s employees are represented on
the Group Board by three members and three
deputy members. Collaboration with trade uni
ons takes place in the Holmen European Works
Council and in consultation groups at various
levels in the company.

TOOLS FOR HR WORK

HR work is governed by laws, contracts and policies,
and forms a natural part of the business plans of
the business areas. The work is coordinated by a
management team that comprises the personnel
managers of the business areas and is chaired by
the Group’s director of human resources.

THE PERSONNEL POLICY reflects the Group’s stance
on what constitutes sound human resources policy.
It highlights the joint responsibility of management
and staff for maintaining a good work and develop-
ment climate.

THE POLICY FOR GENDER EQUALITY AND DIVERSITY
expresses the Group’s view of the equal value of
all people and its endeavour to bring about a more
even gender distribution and greater diversity.

Pär Jonsson and
Jonas Ohlsson, Iggesund Mill

THE WORK ENVIRONMENT POLICY contains the
principles for how health and safety activities are to
be run in the Holmen Group.

THE ANTI-CORRUPTION POLICY makes it clear
that employees must consider very carefully the
meaning and purpose of any favours offered in their
contacts with customers and suppliers.

THE GUIDELINES FOR THE INTERNAL LABOUR
MARKET set out that all Holmen employees should
see the whole of the company as their labour mar-
ket and that internal mobility is a natural tool in the
ongoing process of skills development.

TARGETS

INDUSTRIAL ACCIDENTS
• Safe workplaces: Interim target to bring indus-
trial accidents down to 6.0 per 1 million hours
worked by the end of 2014. The outcome was
6.5. A new interim target for the end of 2016
has been set at 4.0.

Base year 2012: 11.6 industrial accidents.

ORGANISATION
• Targets concerning staffing and optimisation
of the organisation have been set for each
business area.

Charlotta Wall,
Holmen Finance Center

SUSTAINABILITY / EMPLOYEES

0.3

AVERAGE NO.
OF EMPLOYEES/
business area, %

Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi
Group common

Totalt: 3 359
1 389

1 220

199

418

10
123

PRODUCTIVITY
Production/employee and year

Tonnes

1 000

750

500

250

4 000

3 000

2 000

1 000

Iggesund Paperboard (tonnes)
Holmen Paper (tonnes)
Holmen Timber (m3)

INDUSTRIAL ACCIDENTS
More than 8 hours of absence,
per million hours worked

6.5

HOLMEN ANNUAL REPORT 2014 45

SUSTAINABILITY / SOCIETY & STAKEHOLDERS

SOCIETY & STAKEHOLDERS

Holmen values its relationships with society and its various stakeholders, from employees and
customers to the business world, public authorities and organisations. Through local commitment,
Holmen works on a broad front to create value even beyond its core business.

PRIORITIES 2014/2015

• Openness and
transparency

• Supplier appraisals
• Work on criteria under the

Global Compact

STAKEHOLDERS BY
RELATIONSHIP

EMPLOYEES

CUSTOMERS
SUPPLIERS
LOCAL RESIDENTS
OWNERS
FINANCIERS
AUTHORITIES

POTENTIAL EMPLOYEES
POTENTIAL CUSTOMERS
ANALYSTS
DECISION-MAKERS
MEDIA

Holmen

Stakeholders who are part
of day-to-day operations

Stakeholders who are important
from a long-term perspective

GREAT COMMITMENT. Investments in research and
development, and collaborations with companies,
organisations, schools and public authorities have
positive effects, both locally and in the wider society.
In addition, the economy benefits from the com
pany’s activities through jobs for subcontractors,
suppliers and local services. Holmen’s commitment
also lays the foundation for people’s quality of life
and wellbeing by maintaining the Group’s forests
and making them accessible for recreation and out
door pursuits. Last but not least, Holmen’s opera
tions as a whole bring social benefits through a sus
tainable use of resources and a positive impact on
the climate and biodiversity.

THE UN GLOBAL COMPACT. Holmen has been part of the
UN Global Compact and its corresponding Nordic
network since 2007. Each year the Group reports its
sustainability work according to the ten principles of
the Global Compact. The principles relate to human
rights, social conditions, the right to establish trade
unions, environmental responsibility and anticor
ruption.
Holmen’s production takes place in Europe and
almost 90 per cent of the Group’s deliveries relate to
this market. Other exports go primarily to the US,
North Africa, the Middle East and countries in Asia.
Holmen’s anticorruption policy gives clear guid
ance on how to maintain good business practices
when dealing with external contacts in the various
markets.
2014 saw work intensify on surveying the risks
associated with Holmen’s supply chain, as a code of
conduct for suppliers was introduced to aid the
Group’s purchasing work (read more on page 47).
Holmen’s website describes how the Group com
plies with and works to the Global Compact prin
ciples.

THE UN GLOBAL COMPACT 100 (GC100) is a global stock
index that tracks compliance with the ten sustain
ability principles and combines this with the com
panies’ financial performance. The 100 companies
around the world judged to be the best at creating
good returns through sustainable business practices
are listed on the GC100 index. Holmen has held
GC100 status since 2013.

THE CARBON DISCLOSURE PROJECT (CDP) is the name of
an international federation that in 2014 represented
767 institutional investors with assets totalling
around SEK 640 billion. CDP seeks to encourage

ECOSYSTEM SERVICES

The basic idea behind ecosystem services is to
highlight nature’s value to humanity. The forest
provides many such services. The production of
fibre raw material is one example that already has
a market value. The forest’s capacity to capture
and store carbon dioxide, improve biodiversity and
deliver social assets are examples of areas that
may offer business potential. Various processes
are under way in Sweden and internationally to
survey, develop and evaluate ecosystem services.

companies around the world to reduce their impact
on the climate and nature’s resources, and it presents
an annual report on the outcome of its work. Using
information from almost 2 000 listed companies,
CDP has built up the world’s largest database of cli
mate information and risks associated with water
and forestbased assets. The information is made
available to support strategic business and invest
ment decisions. Holmen has reported to CDP since
2007. As a result of its energy investments and the
consequent fall in carbon dioxide emissions, in 2014
Holmen qualified for the A list on the Climate Per
formance Leadership Index. The global index lists
187 companies that have been shown to have an ex
cellent strategy for reducing climate change.

CDP FORESTS PROGRAMME. In 2014, CDP sent out a
questionnaire to 780 companies around the world on
the risks and opportunities of silviculture from a cli
mate perspective. Holmen is among the one fifth of
these companies that completed the questionnaire.

Dialogue with stakeholders
OUR EMPLOYEES are the key to a successful enterprise
that is sustainable in the long term.
Holmen places great emphasis on ensuring its em
ployees’ safety, respecting their views and stimulat
ing the desire for personal and professional develop
ment, rooted in the company’s core values. The
Group works systematically to identify needs and
give employees opportunities to influence and de
velop the business through ongoing feedback and
dialogue between managers and workers, employee

46 HOLMEN ANNUAL REPORT 2014

SUSTAINABILITY / SOCIETY & STAKEHOLDERS

SUSTAINABILITY INDEXES

www.ftse.com/ftse4good

www.ethibel.org

www.oekom-research.com

www.unglobalcompact.org

www.cdp.net

In Opticom’s major brand survey of 2014, the
products Invercote and Incada from Iggesund Paper
board were ranked one and two in their class by the
most important customer group, Europe’s converters.

SUPPLIERS. 2014 saw the continued implementation
of Holmen’s code of conduct for suppliers. The
Group’s purchasing organisation received training
and now the code of conduct is included in all new
supplier contracts. The code increases the focus on so
cial responsibility among suppliers, with a view to en
suring good conditions for everyone who works in
Holmen’s value chain. A risk assessment is performed
for each supplier, with suppliers in highrisk countries
subject to stricter requirements on proving their com
pliance with the principles in the code of conduct.

In 2014, around 1 000 smallscale suppliers of
goods and services signed up to the code. In addi
tion, 70 per cent of Holmen’s Group raw material
suppliers have certified that they follow the code and
work on checking this has begun.

PUBLIC AUTHORITIES. The majority of Holmen’s oper
ations require environmental permits. Openness and
transparency allow the Group to establish the condi
tions for good oversight of and trust in Holmen’s
actions. Local residents have opportunities to give
their views in relation to permit applications. The
mills also have contact with local residents as part
of daytoday operations.

SHAREHOLDERS, INVESTORS AND ANALYSTS. In recent
years, sustainability has gained increasing weight in
the assessments made by investors and analysts look
ing to establish relationships with companies that are
sustainable in the long term. The continuous analysis
work and dialogue with stakeholders contribute
valuable insights on how work in this area can be
improved within Holmen. The fact that Holmen has
been included in several sustainability indexes can
thus be seen as a stamp of approval that Holmen is
able to manage risks and opportunities alike. The re
porting to the UN Global Compact, the Carbon Dis
closure Project (CDP), reporting in line with GRI and
the annual report of the Group are effective ways of
providing relevant data for the analysis of Holmen.

HOLMEN ANNUAL REPORT 2014 47

surveys and employee representatives on the Board.
The priority issues are health and safety, leadership
and talent management.

A WHISTLEBLOWER FUNCTION is in place to allow em
ployees and other stakeholders to act if they suspect
that improper conduct or deviations from Holmen’s
rules and policies are occurring. No incidents were
reported in 2014.

CUSTOMERS AND BUSINESS PARTNERS have high expect
ations of products and services, good business prac
tices and clear sustainability principles. Holmen
welcomes the fact that issues of sustainable forestry,
chain of custody in the wood supply and the climate
effects of products have become an integral part of
commercial discussions. Holmen’s increased focus
on customer service and relationship building fosters
a sound customer dialogue, backed up by customer
satisfaction surveys. Holmen Paper conducted a
customer survey in 2014 and received a high cus
tomer satisfaction index. The survey also showed
that Holmen Paper holds a strong market position.

HOLMEN’S OPERATIONS 2014
broken down into stakeholders based on the
Group income statement

Customers

Suppliers

Sales of paper, paperboard,
sawn timber, wood and
electricity
Purchases of products,
materials and services, along
with depreciation, etc.

Employees Wages and payroll charges
Lenders
State
Share-
holders

Interest
Taxes

Net profit
Board’s dividend proposal

SEKm

17 015

-13 463
-2 268
-148
-230

907
840

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT

Corporate
governance report

Holmen AB is a Swedish public limited company, listed on the Stockholm Stock Exchange
(Nasdaq Stockholm) since 1936. The preparation of a corporate governance report is a require-
ment under the Swedish Annual Accounts Act. This corporate governance report complies with
the rules and instructions stipulated in the Swedish Code of Corporate Governance.

Shareholders
AT YEAR-END Holmen had 27 778 shareholders.
Swedish private individuals made up the largest
category of owners, comprising 25 416 shareholders.
This corresponds to 91 per cent of the total number
of shareholders. The largest owner at year-end, with
61.6 per cent of votes and 32.9 per cent of capital,
was L E Lundbergföretagen AB, which means that
a Group relationship exists between L E Lundberg-
företagen AB (corporate ID number 556056-8817),
whose registered office is in Stockholm, and Holmen.
The Kempe Foundations’ holdings of Holmen shares
amounted to 16.9 per cent of votes and 7.0 per cent
of capital at the same date. No other individual
shareholder controlled as much as 10 per cent of the
votes. Employees have no holdings of Holmen shares
via a pension fund or similar system. There is no re-
striction on how many votes each shareholder may
cast at the AGM. See pages 55–57 for further inform-
ation on the shares and ownership structure.

General meetings of shareholders
THE NOTICE convening the annual general meeting is
sent no earlier than six and no later than four weeks
before the meeting. The notice contains: a) informa-
tion about registering intention to attend and entitle-
ment to participate in and vote at the meeting; b) a
numbered agenda of the items to be addressed,
c) information on the proposed dividend and the

KEY REGULATIONS

External rules
• Swedish Companies Act
• Swedish Code of Corporate Governance

(the Code)

• Stock exchange rules (Nasdaq)

Internal rules
• Articles of association
• The Board of Directors’ procedural rules
• Internal policies and guidelines, report manuals, etc.

48 HOLMEN ANNUAL REPORT 2014

ANNUAL GENERAL
MEETING 2014

The 2014 AGM was held in
Swedish, and the material
presented was in Swedish. The
notice convening the meeting, the
agenda, the CEO’s speech and
the minutes are available on the
company’s website. The meeting
was attended by all AGM-elected
Board members, the entire Group
management and the company’s
auditor. During the AGM, the
shareholders had the opportunity
to ask and obtain answers to
questions. The AGM adopted the
income statement and balance
sheet, decided on the appropri-
ation of profits and granted the
departing Board discharge from
liability. Ramsey Brufer of Alecta
and Martin Wallin of Lannebo
Funds checked and approved the
minutes of the meeting.

It was not possible to follow or

participate in the meeting from
other locations using communica-
tion technology. Similarly, no such
possibility is planned for the 2015
meeting.

main content of other proposals. Shareholders or
proxies are entitled to vote for the full number of
shares owned or represented and can notify the com-
pany of their intention to attend the AGM by letter,
telephone, e-mail or the company’s website. Notices
convening an Extraordinary General Meeting
(EGM) called to deal with changes to the company’s
articles of association shall be sent no earlier than six
and no later than four weeks before the meeting.

PROPOSALS FOR SUBMISSION to the meeting should be
addressed to the Board and submitted in good time
before the notice is distributed. Information about
the rights of shareholders to have matters discussed
at the meeting is provided on the website.

AGM 2015. It was announced on 9 April 2014 that
the 2015 AGM would take place in Stockholm on
16 April 2015.

Nomination committee
COMPOSITION AND MANDATE. The AGM resolved to
establish a nomination committee 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. The
composition of the nomination committee for the
2014 and 2015 AGMs is shown in the table. The
nomination committee’s mandate is to submit pro-
posals for the election of Board members and the
Board chairman, for the Board fee and auditing fees
and, where applicable, for the election of auditors.
The committee’s proposals are presented in the notice
convening the AGM.

NOMINATION COMMITTEE PROPOSALS. For the 2015
AGM the nomination committee proposes that the
Board consist of nine members elected by the AGM.
The nomination committee proposes the re-election
of the current Board members: Fredrik Lundberg
(who is also proposed for re-election as chairman of
the Board), Carl Bennet, Carl Kempe, Lars G Josefs-
son, Louise Lindh, Ulf Lundahl, Göran Lundin and
Henrik Sjölund, and that Henriette Zeuchner be
elected as a new Board member.

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT
AFFÄRSVERKSAMHET / RISKHANTERING

Shareholders

Nomination committee

General meeting of shareholders

Remuneration
committee

Six Group staffs

Board of Directors

CEO

Auditors

Group management

Five business areas

BOARD MEETINGS IN 2014

The Board held nine meetings in 2014, four of
which were in connection with the company’s
publication of its quarterly reports. A two-day
meeting was devoted to strategic business
planning. One meeting was held in Iggesund in
conjunction with a site visit to the mill and the
sawmill. One meeting dealt with the Group’s
budget for 2015. The other two meetings were
held in connection with the company’s AGM.
The Board also paid special attention to strategic,
financial and accounting issues, monitoring
business operations and major investment mat-
ters. On two occasions the company’s auditors
reported directly to the Board, presenting their
observations from their audit of the accounts and
internal control. All AGM-elected board members
attended all the meetings.

BOARD MEMBERS AS OF THE 2014 AGM

BOARD MEMBERS

POSITION

ELECTED

ATTENDANCE

FEE (SEK)

COMPANY

Fredrik Lundberg*
Carl Kempe
Carl Bennet*
Lars G Josefsson
Louise Lindh
Ulf Lundahl
Göran Lundin
Henrik Sjölund
Total
* Representatives of the remuneration committee

Chairman
Deputy chairman
Member
Member
Member
Member
Member
Member, President and CEO

1988
1983
2009
2011
2010
2004
2001
2014

9/9
9/9
9/9
9/9
9/9
9/9
9/9
9/9

650 000
325 000
325 000
325 000
325 000
325 000
325 000
–

Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
7 / 8

MAJOR
SHAREHOLDERS

No
No
No
Yes
No
Yes
Yes
Yes
4 / 8

INDEPENDENT O F THE:

EMPLOYEE REPRESENTATIVES

Steewe Björklundh, member, elected 1998
Kenneth Johansson, member, elected 2004
Karin Norin, member, elected 1999

Daniel Hägglund, deputy member, elected 2014
Martin Nyman, deputy member, elected 2010
Tommy Åsenbrygg, deputy member, elected 2009

HOLMEN ANNUAL REPORT 2014 49

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT

INTERNAL MANAGEMENT PROCESSES

Business
concept, strategy
and goals

Business plan,
budget, forecast
and action plans

Business
processes

Results,
reporting,
follow-up

Management at Holmen is based on the
business concept, strategies and goals of
the Group and the business areas. Under
the Board, CEO and Group management,
responsibility for operational activities
has been decentralised to five business
areas. The Group staffs are in charge
of coordinating certain matters, such as
business administration and finance, busi-
ness development human resources, legal
affairs, technology and public relations.

The Group uses annual rolling three-year
business plans to break down goals and
strategies into action plans and activities
that can be measured and evaluated.
These business plans are important to
the long-term strat egic control of the
Group. Annual budgets, forecasts and
action plans are used for day-to-day
management of operations.

Various business processes, such as
sales, purchasing and production, are
used to manage operational activities at
business area level with a view to achiev-
ing the business targets and implement-
ing the agreed action plans.

The results are followed up through
regular financial reports, and approved
measures are reviewed through addi-
tional follow-ups.

COMPOSITION OF THE NOMINATION CTMITEE

NAME
Mats Guldbrand
Fredrik Lundberg
Alice Kempe
Hans Hedström

REPRESENTING
L E Lundbergföretagen*
Chairman of the Board
Kempe Foundations*
Carnegie funds*

2015

BEFORE AGM:
2014
x (chairman) x (chairman)
x
x
x
x
x
x

INDEPENDENT OF THE:
COMPANY
Yes
Yes
Yes
Yes

LARGEST SHAREHOLDER (IN TERMS OF VOTES)
No
No
Yes
Yes

* At 31 August 2014, L E Lundbergföretagen controlled 61.1 per cent of the votes, the Kempe Foundations controlled 16.9 per cent and Carnegie funds (Sweden) controlled 1.7 per cent.

Composition of the Board
ANNUAL ELECTIONS. The members of the Board
are elected each year by the AGM for the period
until the end of the next AGM. According to the
company’s articles of association, the Board shall
have 7–11 members, and they are to be elected at
the AGM. The company’s articles of association
contain no other rules regarding the appoint-
ment or dismissal of Board members, or regard-
ing amendments to the articles, or restrictions on
how long members can serve on the Board.

THE 2014 AGM re-elected Fredrik Lundberg, Carl
Bennet, Lars G Josefsson, Carl Kempe, Louise
Lindh, Ulf Lundahl and Göran Lundin to the
Board and elected Henrik Sjölund as a new
Board member. Fredrik Lundberg was re-elec-
ted chairman. Magnus Hall had declined
re-election. At the statutory first meeting of the
new Board in 2014, Carl Kempe was elected
deputy chairman and Lars Ericson, the com-
pany’s general counsel, was appointed secre-
tary of the Board.
Over and above the eight members elected
by the AGM, the local labour organisations
have a statutory right to appoint three mem-
bers and three deputy members.
Of the eight AGM-elected members, seven are
deemed independent of the company as defined
by the Code. The CEO is the only Board mem-
ber with an operational position in the com-
pany. Further information about the members
of the Board is provided on pages 52–53.

50 HOLMEN ANNUAL REPORT 2014

The Board’s activities
INFORMATION AND WORKING PROCEDURES.
The activities of the Board follow a plan that,
among other things, aims to ensure that the
Board obtains all requisite information. Each
year the Board decides on written working
procedures and issues written instructions. The
latter relate to the division of responsibilities
between the Board and the CEO and the in-
formation that the Board is to receive continu-
ally regarding financial developments and other
key events. Employees of the company partici-
pate in Board meetings to submit reports.

EVALUATION. The Board evaluates its activities
each year, and the nomination committee has
been informed of the content of the 2014
evalu ation. This will serve as a basis for plan-
ning the Board’s work in the next few years.

Remuneration
ACTIVITY. The Board has appointed a remunera-
tion committee consisting of Fredrik Lundberg
and Carl Bennet. During the year, the committee
prepared matters pertaining to the remuneration
and other employment conditions of the CEO.
Remuneration and other employment condi-
tions for senior management who report dir-
ectly to the CEO are decided by the latter in
accordance with a pay policy established by
the remuneration committee. The remunera-
tion committee has evaluated the application
of both this policy and the guidelines on the

remuneration of senior management adopted
by the Annual General Meeting.
The Group applies the principle that each
manager’s manager must approve decisions on
remuneration in consultation with the relevant
personnel manager.

AT THE 2014 AGM, an account was given of the
Board’s proposed guidelines on remuneration to
the CEO and other members of senior manage-
ment. The AGM adopted the guidelines in the
proposal. The Board is proposing unchanged
guidelines to the 2015 AGM. They are presented
in Note 4 on page 72.
The 2014 AGM approved the Board fee and
payment of the auditors’ fee as invoiced.

Group management
RESPONSIBILITY AND COMPOSITION. The Board
has delegated operational responsibility for
management of the company and the Group to
the CEO. The Board annually decides on in-
structions covering the distribution of tasks
between the Board and the CEO.
Holmen’s Group management includes 12
individuals: the company’s CEO, the heads of
the five business areas and the heads of the six
Group staffs.

MEETINGS IN 2014. Group management met on
10 occasions in 2014, dealing with matters
such as earnings trends and reports before and
after Board meetings, business plans, budget-

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT

ing, investments, internal control and reviews
of market conditions, general development of
the economy and other external factors affect-
ing the business. Projects relating to business
areas and Group staffs were also discussed and
decided on. Management by objectives was in
particular focus during the year. Work on
policies and guidelines, along with a Group-
wide framework for this, has begun.

Information on the CEO and other members

of Group management is provided on page 54.

Audit
KPMG, which has been Holmen’s auditor since
1995, was re-elected by the 2014 AGM as aud-
itor for a period of one year. Authorised account-
ant George Pettersson was appointed as the prin-
cipal auditor. KPMG audits Holmen AB and
almost all of its subsidiaries.

THE AUDIT PROCESS. The examination of in-
ternal procedures and control systems begins
in the second quarter and continues thereafter
until year-end. The interim report for January–
September is subject to review by the auditors.
The examination and audit of the final annual
accounts and the annual report take place in
January–February.

DUTIES OF THE BOARD. Holmen allows the Board
to perform duties that would otherwise be per-
formed by an audit committee. The Board’s re-
porting instructions include requirements that
the members of the Board shall receive a report
each year from the auditors confirming that the
company’s organisation is structured to enable
satisfactory supervision of accounting, manage-
ment of funds and other aspects of the com-
pany’s financial circumstances. In 2014 the aud-
itors reported to the entire Board at two meet-
ings. Over and above this, the auditors reported
to the Board chairman and the CEO on two oc-
casions and to the CEO at one further meeting.
In addition to the audit assignment, Holmen
has consulted KPMG on matters pertaining to
taxation, accounting and for various investiga-
tions. The remuneration paid to KPMG for 2014
is stated in Note 5 on page 73. KPMG is required
to assess its independence before making de-
cisions on whether to provide Holmen with in-
dependent advice alongside its audit assignment.

Internal control
The Board of Directors does not believe that
particular circumstances in the business or
other conditions exist to justify an internal
audit function. The internal control managed
by the Group, together with the activities car-
ried out by the external auditors, are deemed to
be sufficient.

PURPOSE AND STRUCTURE. Holmen’s internal
control activities have two purposes: to ensure
that the Group lives up to its objectives for fin-
ancial reporting (see box) and to minimise risks
of fraud to which the Group may be subject.
The structure adheres to guidelines issued by

the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in respect
of internal control over financial reporting. This
framework contains 17 principles divided into
five areas: control environment, risk assess-
ment, control activities, monitoring and evalu-
ation, as well as information and communica-
tion. They have been modified to suit the esti-
mated needs of Holmen’s various operations.
Group Finance ensures that internal control is
maintained and carries out compliance checks.
The framework for internal control was
evaluated and further developed in 2014. The
self-assessments that are completed each year
by all Group units have been revised. Training
courses and workshops have been conducted
at several of the Group’s units.

CONTROL ENVIRONMENT. The basis for Holmen’s
framework for internal control is the control
environment, which is defined through policies,
procedures, manuals and instructions. The con-
trol environment is maintained by means of an
organisational structure with clearly defined
roles and areas of responsibility and individuals’
awareness of their role in maintaining adequate
internal control. The Board of Directors is ulti-
mately responsible for internal control, in ac-
cordance with the Swedish Companies Act.
Day-to-day responsibility for these matters is
delegated to the CEO. Holmen’s financial re-
porting complies with the laws and rules that
apply to companies listed on the Stockholm
Stock Exchange and the local rules in each
country where the company operates. In addi-
tion to external rules and recommendations,
financial reporting is also covered by internal
instructions, directions and systems.
A review of Holmen’s policy portfolio has
been conducted over the year, and work has
begun on updating the Group’s framework for
steering documents.

RISK ASSESSMENT. Risk assessment activities
are based on identifying and evaluating the risks
that can result in the Group’s financial reporting
objectives not being met. The results of these
risk-related activities are compiled and devel-
oped under the guidance of Group Finance.
Holmen’s greatest risks regarding financial
reporting are linked to the valuation of biolo-
gical assets and property, plant and equipment
as well as to financial transactions (see the sec-
tion on risk management on pages 32–35).
Where risks are identified, control require-
ments are developed that must then be adhered to.

CONTROL ACTIVITIES. To ensure that Holmen’s
financial reporting objectives are met, control
requirements are incorporated into the pro-
cesses that are deemed relevant to Holmen’s
business: sales, purchasing, investments, per-
sonnel, financial statements, payments and IT.
These control activities aim to prevent, identify
and rectify errors and discrepancies.
The self-assessments that are completed by
all Group units set out what control require-

GOALS

HOLMEN’S FINANCIAL REPORTING

Holmen’s external financial reporting shall:

• be correct and complete, and
comply with appli cable laws,
regulations and recommendations

• provide a true and fair description

of the company’s business

• support a reasoned and informed

valuation of the business.

Internal financial reporting shall, over and
above these three goals, support correct
business decisions at all levels in the Group.

ments apply for each respective process. These
need to state whether the respective control
requirements have been met and what proof of
verification exists. As Holmen’s different units
vary widely in nature, these self-assessments
have been tailored to each unit’s operations.

FOLLOW-UP AND EVALUATION. Follow-up and test-
ing of control activities are performed continu-
ally to ensure that risks have been satisfactorily
considered and addressed. The self-assessments
contain integrated action plans for those control
requirements that are not met. The self-assess-
ments are followed up on a continual basis and
discrepancies are reported to the steering group
for internal control each quarter. Reporting to
Group management takes place once a year.
Follow-ups are an important tool for under-
standing what deficiencies may exist in the
Group, and how these can be minimised by
putting in place new control requirements.

INFORMATION AND COMMUNICATION. The provi-
sion of financial information for Holmen’s
shareholders and stakeholders must be correct,
comprehensive, transparent and consistent, and
information must be provided on equal terms.
The provision of information by Holmen com-
plies with an information policy established by
the Board. Events that are considered to have an
impact on the share price are made public via
press releases. Information to exter nal stake-
holders is provided in the annual report, the
year-end and interim reports, press releases and
presentations broadcast online in connection
with the quarterly reports. All material is avail-
able on the company’s website. The website also
contains presentation material for recent years
and information on corporate governance.
Guidelines on financial reporting are com-
municated to staff via manuals, policies and
codes published on the company’s intranet. A
whistle-blower function is available so that em-
ployees and other stakeholders can highlight
any deficiencies in Holmen’s financial reporting
or possible areas of concern at the company.

HOLMEN ANNUAL REPORT 2014 51

CORPORATE GOVERNANCE / BOARD OF DIRECTORS

Board of Directors

From the left: Daniel Hägglund, Steewe Björklundh, Karin Norin, Göran Lundin, Lars G Josefsson, Henrik Sjölund and Ulf Lundahl.

Daniel Hägglund Örnsköldsvik. Born in 1982.
Deputy member since 2014. Employee representative,
PTK.

Steewe Björklundh Hudiksvall. Born in 1958.
Member since 1998. Employee representative, LO.

Karin Norin Forsa. Born in 1950.
Member since 2009. Employee representative, PTK.
Chairman of Unionen Holmen-Iggesund.

This information refers to 31 December 2014.

52 HOLMEN ANNUAL REPORT 2014

Göran Lundin Norrköping. Born in 1940.
Member since 2004. Engineer. D. Tech. h.c.
Other significant appointments: Chairman of Norr köpings
Tidningar AB and Printed Electronics Arena at Linköping
University. Board member of Fastighets AB L E Lundberg.
Shareholding: 1 000 shares.

Henrik Sjölund Norrköping. Born in 1966.
Member since 2014. M.Sc. in International Economics.
President and CEO.
Other significant appointments: Board member of
Swedish Forest Industries Federation.
Own and related parties’ shareholdings: 2 000 shares.

Lars G Josefsson Stockholm. Born in 1950.
Member since 2011. M.Sc. in Engineering. Former
President and CEO of Vattenfall.
Other significant appointments: Chairman of Burntis-
land Fabrication Ltd and Green Circle Bio Energy Inc*.
Board member of Robert Bosch GmbH, Robert Bosch
Industrietreuhand KG and Brookfield Renewable Energy
and Hand in Hand International. Member of The Royal
Swedish Academy of Engineering Sciences, IVA.
* Until January 2015
Shareholding: 5 000 shares.

Ulf Lundahl Lidingö. Born in 1952.
Member since 2004. B.A. in Legal Science and
B.Sc. in Economics.
Other significant appointments: Chairman of Fidelio
Capital. Board member of Indutrade AB, Attendo, Eltel,
Ramirent Plc and SHB Regionbank Stockholm.
Shareholding: 4 000 shares.

CORPORATE GOVERNANCE / BOARD OF DIRECTORS

Fredrik Lundberg, Carl Kempe, Carl Bennet, Louise Lindh, Kenneth Johansson, Tommy Åsenbrygg and Martin Nyman.

Fredrik Lundberg Chairman. Djursholm. Born in 1951.
Member since 1988. Master of Engineering and B.Sc. in
Economics. D. Eng. h.c. and D. Econ. h.c. President and
CEO of L E Lundbergföretagen AB.
Other significant appointments: Chairman of Hufvud-
staden AB and Indutrade AB. Deputy chairman of
Svenska Handelsbanken AB. Board member of L E Lund-
bergföretagen AB, AB Industrivärden and Skanska AB.
Own and related parties’ shareholdings: 834 724 shares
Shareholding of L E Lundbergsföretagen: 27 622 000
shares.

Carl Kempe Deputy Chairman. Örnsköldsvik.
Born in 1939. Member since 1983.
Licentiate in Engineering. Dr. h.c. mult.
Other significant appointments: Chairman of Kempe
Foundations, MoRe Research AB, UPSC Berzelii Centre for
Forest Biotechnology and Elforest AB.
Own and related parties’ shareholdings: 386 000 shares.

Carl Bennet Gothenburg. Born in 1951.
Member since 2009. B.Sc. in Economics. D. Econ. h.c.
CEO Carl Bennet AB. Former President and CEO of
Getinge AB. Chairman of Getinge AB, Elanders AB and
Lifco AB.
Other significant appointments: Board member of
L E Lundbergföretagen AB.
Shareholding: 100 000 shares.

Louise Lindh Stockholm. Born in 1979.
Member since 2010. B.Sc. in Economics.
Executive vice president Fastighets AB L E Lundberg.
Other significant appointments: Board member of
Hufvudstaden AB and L E Lundbergföretagen AB.
Shareholding: 100 000 shares.

Kenneth Johansson Söderköping. Born in 1958.
Member since 2004. Employee representative, LO. Sec-
tion chairman of the Swedish Paper Workers Union branch
53, Holmen Paper Braviken.

Tommy Åsenbrygg Hallstavik. Born in 1968.
Deputy member since 2009. Employee representative,
PTK. Deputy chairman of Ledarna, Hallsta Paper Mill.
Shareholding: 100 shares.

Martin Nyman Iggesund. Born in 1978.
Deputy member since 2010. Employee representative,
LO. Chairman of Swedish Paper Workers branch 15,
Iggesund.

Auditors: KPMG AB
Principle auditor: George Pettersson Authorised public
accountant

HOLMEN ANNUAL REPORT 2014 53

CORPORATE GOVERNANCE / GROUP MANAGEMENT

Group management

Top row: Henrik Sjölund, Anders Jernhall, Staffan Jonsson and Nils Ringborg. Centre: Annica Bresky and Johan Padel. Bottom row: Mats Nilsson, Lars Ericson, Sören Petersson, Ola Schultz-Eklund and Ingela Carlsson.

Nils Ringborg CEO Holmen Paper.
Born in 1958. Joined Holmen in 1988.
Shareholding: 1 000 shares.

Annica Bresky CEO Iggesund Paperboard.
Born in 1975. Joined Holmen in 2013.

Johan Padel CEO Holmen Timber.
Born in 1966. Joined Holmen in 2014.

Mats Nilsson acting Director of Human Resources as of
15 March 2015.
Born in 1972. Joined Holmen in 1998.
Shareholding: 200 shares.

Lars Ericson Director of Legal Affairs.
Company secretary.
Born in 1959. Joined Holmen in 1988.

Sören Petersson CEO Holmen Skog.
Born in 1969. Joined Holmen in 1994.
Shareholding: 3 400 shares.

Ola Schultz-Eklund Director of Business
Development and Innovation.
Born in 1961. Joined Holmen in 1994.

Ingela Carlsson Director of Communications.
Born in 1962. Joined Holmen in 2008.
Shareholding: 400 shares.

Henrik Sjölund President and CEO.
Born in 1966. Joined Holmen in 1993.
Own and related parties’ shareholdings: 2 000 shares.
Henrik Sjölund has no significant shareholdings and
no ownership in companies with which the Group has
important business relations. For further information
about the CEO see page 52.

Anders Jernhall Executive Vice President. CFO.
Born in 1970. Joined Holmen in 1997.
Shareholding: 3 500 shares.

Staffan Jonsson Director of Technology and acting
CEO Holmen Energi as of 15 January 2015.
Born in 1958. Joined Holmen in 1997.
Shareholding: 275 shares.

This information refers to 31 December 2014, unless otherwise stated.

54 HOLMEN ANNUAL REPORT 2014

CORPORATE GOVERNANCE / SHAREHOLDER INFORMATION

Shareholder
information

In 2014, the price of Holmen’s class B shares rose by SEK 32 or 14 per cent.
Earnings per share excluding items affecting comparability was SEK 15.0.
A dividend of SEK 10 (9) is proposed.

Stock exchange trading
Holmen was listed on the Stockholm Stock Ex-
change in 1936, but was called Mo och Domsjö AB
at that time. Holmen’s two series of shares are listed
on Nasdaq Stockholm, Large Cap. During the year,
the price of Holmen’s class B shares rose by SEK 32
or 14 per cent, to SEK 266. The Stockholm Stock
Exchange rose by 12 per cent over the same period.
Holmen’s market capitalisation of SEK 22.3 billion
(19.7) represents some 0.4 per cent of the total value
of the Stockholm Stock Exchange. Holmen’s class B
shares reached their highest closing price for the
year, SEK 272, on 29 December and the lowest clos-
ing price, SEK 209, was recorded on 7 October. The
daily average number of class B shares traded was
181 000, which corresponds to a value of SEK 42.5
million. The daily average number of class A shares
traded was 650. Some 70 per cent of trading took
place on Nasdaq OMX Nordic. The Holmen shares
have also been traded on other trading platforms,
such as BATS Europe, Burgundy, Chi-X and Tur-
quoise.

Earnings per share
Earnings per share excluding items affecting com-
parability was SEK 15.0. Earnings per share includ-
ing items affecting comparability was SEK 10.8
(8.5). Holmen’s earnings per share have averaged
SEK 19.4 over the past five years.

Dividends
Decisions on dividends are based on an appraisal of
the Group’s profitability, future investment plans and
financial position. The Board proposes that the
AGM, to be held on 16 April 2015, approve a div-
idend of SEK 10 (9) per share. The proposed div-
idend corresponds to 4.0 per cent of equity. Over the
past five years the dividend has averaged 4 per cent
of equity.
• The final date for trading in Holmen shares
including right to dividend: 16 April 2015.

• Record date for dividend: 20 April 2015.
• Payment date for dividend: 23 April 2015.

SHAREHOLDER
CATEGORIES,
Percentage
of capital, %

Swedish institutions

Swedish equity funds

Swedish private individuals

Foreign shareholders

53%

15%

14%

19%

3 2 3

SHAREHOLDERS
PER COUNTRY,
percentage of
capital, %

Sweden

Luxembourg

Norway

Other countries

81%

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. The company also
has 760 000 repurchased class B shares held in
treasury. Each class A share carries 10 votes, and
each B share one vote. In other respects, the shares
carry the same rights. Neither laws nor the com-
pany’s articles of association place any restrictions
on the transferability of the shares.

Ownership structure
Holmen had a total of 27 788 shareholders at year-
end 2014. In absolute numbers, Swedish private in-
dividuals made up the largest category of owners:
25 416 shareholders. This corresponds to 91 per
cent of the total number of shareholders. Sharehold-
ers registered in Sweden own 81 per cent (79) of the
share capital. Among foreign shareholders, the
largest proportion of shares are held in the US and
Luxembourg, accounting for 8 per cent and 4 per
cent of the capital, respectively. The largest owner at
year-end 2014/2015, with 61.6 per cent of votes
and 32.9 per cent of capital, was L E Lundberg-
företagen AB.

Share buy-backs
The company has no specific target for share buy-
backs. There is a mandate to repurchase up to 10
per cent of all the company’s shares. Any buy-backs
are regarded as a complement to dividend payments
to adjust the capital structure when circumstances
are deemed favourable. The 2014 Annual General
Meeting renewed the Board’s mandate to decide on
the acquisition of up to 10 per cent of the com-
pany’s shares through the acquisition of class B
shares. No shares were repurchased during the year.
As previously, the company holds 0.9 per cent of all
shares. The Board proposes that the 2015 AGM
also authorise the Board to repurchase and transfer
up to 10 per cent of all shares in the company
through the acquisition of class B shares.

HOLMEN ANNUAL REPORT 2014 55

CORPORATE GOVERNANCE / SHAREHOLDER INFORMATION

DATA PER SHARE

Diluted earnings per share, SEK1)
Dividend, SEK
Dividend as % of:

Equity
Closing listed price
Profit for the year

2014
10.8
10 5)

2013
8.5
9

2012
22.1
9

2011
47.1
8

2010
8.4
7

2009
12.0
7

2008
7.6
9

2007
17.8
12

2006
17.2
12

2005
14.8
11

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 ratio2)
EV/EBITDA3) 6)
Closing beta value (48 months), B4)
Number of shareholders at year-end
1) See page 100: Definitions and glossary. 2) Closing listed price divided by earnings per share. 3) Market capitalisation plus net financial debt at year-end (EV) divided by EBITDA. 4) Measures the
sensitivity of the yield on class B shares 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.

3
4
17
23
9
235
198
201
251
156
16.6
4
7
0.8
28 899

3
3
83
4
6
201
221
195
226
173
18.5
26
10
0.8
28 339

4
4
58
6
7
196
183
180
206
135
15.4
15
7
0.7
30 425

5
5
118
4
6
186
194
203
242
170
16.2
25
9
0.5
29 745

4
4
93
4
6
250
266
236
272
209
22.3
25
10
0.7
27 788

4
4
106
3
5
248
234
198
235
173
19.7
28
11
0.7
27 692

4
5
41
9
7
248
192
186
204
169
16.2
9
9
0.9
28 440

6
5
67
9
10
200
240
277
316
228
20.6
13
8
0.9
30 499

6
4
70
9
10
196
298
302
336
255
25.3
17
9
1.0
32 189

6
4
74
8
9
189
263
227
266
190
22.6
18
10
0.7
33 320

Votes

No. of shares

No. of votes

Quotient value

10
1

22 623 234
62 132 928
84 756 162
-760 000
83 996 162

226 232 340
62 132 928
288 365 268
-760 000
287 605 268

50
50

SEKm

1 131
3 107
4 238

SHARE STRUCTURE
Share

Class A
Class B
Total number of shares
Holding of own class B shares repurchased
Total number of shares outstanding

Shareholder communication
Holmen regularly provides information to the stock
market via press conferences in connection with the
publication of quarterly reports and on the occasion
of the AGM. It also delivers information that is im-
portant to the stock market by publishing press
releases. Holmen’s website www.holmen.com offers
financial information in the form of reports, pre-
sentations and compiled financial data. The website
also has a recording of the latest press conference,
together with information on the company’s shares,
owners, insider trading and more.

Analysts
Analysts at 13 brokerage firms and banks moni tor
Holmen’s development. This means that they pub-
lish analyses of Holmen on an ongoing basis. A list
of these analysts is available on Holmen’s website.

56 HOLMEN ANNUAL REPORT 2014

CORPORATE GOVERNANCE / SHAREHOLDER INFORMATION

Share price performance for Holmen class A and B and General Index
SEK

No. of shares (’000s)

Total return on Holmen class B shares and General Index
Incl. reinvested dividends, excluding tax

300

200

100

Holmen A
Holmen B

Affärsvärlden General Index

Number of class B shares traded (’000s)

15 000

10 000

5 000

Index

200

150

100

Holmen B

General Index (SIX Return Index)

Source: Macrobond

CHANGES IN SHARE CAPITAL 2000–2014

2001 Cancellation of shares repurchased
2004 Conversion and subscription

Change in
no. of shares

-8 885 827
4 783 711

Total
no. of shares

79 972 451
84 756 162

Change in share
capital, SEKm

Total share capital,
SEKm

-444
239

3 999
4 238

SHAREHOLDER STRUCTURE AT 31 DECEMBER 2014

% of capital

% of votes

L E Lundbergföretagen
Kempe Foundations
Carnegie funds (Sweden)
Alecta
Lannebo funds
DFA funds (USA)
SHB funds
Norges Bank Investment Management
Nordea funds
Fredrik Lundberg
Total

Other
Total*
* Of which non-Swedish shareholders.

32.9
7.0
5.8
3.6
3.4
2.2
1.8
1.7
1.4
1.0
60.8

39.2
100.0
18.9

61.6
16.9
1.7
1.0
1.0
0.6
0.5
0.5
0.4
0.9
85.2

14.8
100.0
5.7

The 10 identified shareholders with the largest holdings in terms of capital. Some large shareholders may
have their holdings registered under nominee names, in which case they are included among ‘Other’.

OWNERSHIP STRUCTURE

No. of shares

1–1 000
1 001–100 000
100 001–
Total

Share holders

Percentage
of shares

25 624
2 081
82
27 787

6
16
79
100

Jennie Löjdström, Iggesund Sawmill

HOLMEN ANNUAL REPORT 2014 57

FINANCIAL STATEMENTS / INCOME STATEMENT

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
Profit/loss from investments in associates and joint ventures
Operating profit/loss

Finance income
Finance costs
Profit/loss before tax

Tax
Profit/loss for the year

Attributable to:
Owners of the parent company

Earnings per share (SEK)
Average number of shares (million)

NOTE
2
3

4
5, 20
9, 10
9, 10
11
12

6
6

8
8

2014
15 994
1 021
83
-8 713
-2 268
-3 393
-1 265
-450
282
-7
1 284

1
-149
1 137

-230
907

907

10.8
84.0

2013

16 231
984
54
-9 150
-2 350
-3 512
-1 370
-86
264
3
1 069

8
-205
871

-160
711

711

8.5
84.0

Operating profit amounted to SEK 1 284 million (1 069). Operating profit includes an impairment
loss of SEK -450 million on property, plant and equipment within Holmen Timber. Operating
profit in 2013 included an impairment loss on non-current assets and restructuring costs within
Holmen Paper (SEK -140 million).

Net financial items for 2014 totalled SEK -147 million (-198). During the year, interest costs of
SEK 1 million (8) were capitalised in conjunction with major investment projects, reducing the
recognised interest expense. The average cost of borrowing declined to 2.3 per cent (3.1), and
average net debt was lower than in the preceding year.

Operating profit, excluding the above-mentioned items, improved by SEK 525 million to SEK
1 734 million. The increase is due to higher prices for printing paper and sawn timber, a weaker
Swedish krona and reduced production costs for paperboard.

Tax recognised totalled SEK -230 million (-160) in 2014, which corresponds to 20 per cent of
profit before tax.

58 HOLMEN ANNUAL REPORT 2014

FINANCIAL STATEMENTS / STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF COMPREHENSIVE INCOME

GROUP, SEKm

Profit/loss for the year

OTHER COMPREHENSIVE INCOME
Revaluations of defined benefit pension plans
Tax attributable to items that will not be reclassified to profit/loss for the year
Total items that will not be reclassified to profit/loss for the year
Cash flow hedging

Revaluation
Transferred from equity to the income statement
Transferred from equity to non-current assets

Translation difference on foreign operations
Hedging of currency risk in foreign operations
Tax attributable to items that will be reclassified to profit/loss for the year
Total items that will be reclassified to profit/loss for the year after tax
Total other comprehensive income
Total comprehensive income

Attributable to:
Owners of the parent company

NOTE

17
7

2014

907

-170
34
-137

-343
116
1
355
-101
72
100
-37
870

870

2013

711

72
-15
58

-69
5
0
109
-39
23
28
86
797

797

HOLMEN ANNUAL REPORT 2014 59

FINANCIAL STATEMENTS / BALANCE SHEET

BALANCE SHEET

GROUP AT 31 DECEMBER, SEKm

NOTE

2014

2013

9
10
11
12
12
13
7

14
15
7
15
13
13

13
17
7, 18
7

13
19
7
18
19

114
11 265
16 867
1 970
4
40
1
30 261

3 198
2 328
44
394
22
187
6 172
36 434

4 238
281
-210
16 660
20 969

2 488
400
533
5 480
8 901

3 269
1 882
248
69
1 096
6 564
15 465
36 434

59
12 104
16 517
1 961
9
28
2
30 680

3 140
2 103
106
425
24
275
6 074
36 753

4 238
281
-309
16 645
20 854

2 734
238
552
5 804
9 328

3 470
2 007
28
64
1 002
6 571
15 899
36 753

NON-CURRENT ASSETS
Intangible non-current assets
Property, plant and equipment
Biological assets
Investments in associates and joint ventures
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/loss 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

For information on the Group’s collateral and contingent liabilities, see Note 21.

60 HOLMEN ANNUAL REPORT 2014

FINANCIAL STATEMENTS / CHANGES IN EQUITY

CHANGES IN EQUITY

GROUP, SEKm

Opening equity balance 1 Jan 2013
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Closing equity balance 31 Dec 2013
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Closing equity balance 31 Dec 2014

RESERVES

SHARE CAPITAL

OTHER
CONTRI B UTED
CAPITAL

TRANSLATION
RESERVE

HEDGE
RESERVE

RETAINED
EARN INGS INCL.
PROFIT/LOSS
FOR THE YEAR

4 238
-
-
-
-
4 238
-
-
0
-
4 238

281
-
-
-
-
281
-
-
0
-
281

-303
-
78
78
-
-224
-
276
276
-
51

-35
-
-50
-50
-
-85
-
-177
-177
-
-261

16 632
711
57
769
-756
16 645
907
-137
771
-756
16 660

TOTAL
EQUITY

20 813
711
86
797
-756
20 854
907
-37
870
-756
20 969

HOLMEN ANNUAL REPORT 2014 61

FINANCIAL STATEMENTS / CASH FLOW STATEMENT

CASH FLOW STATEMENT

GROUP, SEKm

OPERATING ACTIVITIES
Profit/loss before tax
Adjustments for non-cash items

Depreciation and amortisation according to plan
Impairment losses
Change in value of biological assets
Change in provisions
Other*

Income tax paid
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 borrowings
Repayments of long-term borrowings
Change in current financial liabilities
Change in current financial receivables
Dividend paid to owners of the parent company
Cash flow from financing activities

CASH FLOW FOR THE YEAR
Cash and cash equivalents at beginning of year
Exchange gains/losses on cash and cash equivalents
Cash and cash equivalents at end of year

NOTE

2014

2013

1 137

1 265
450
-282
4
11
-191
2 394

-24
-111
-82
2 176

-691
10
-73
-49
4
-17
-2
-17
0
-834

400
-421
-655
-3
-756
-1 434

-92
275
4
187

871

1 370
86
-264
-16
-119
210
2 138

93
173
-394
2 011

-983
137
-7
-26
3
0
3
-83
86
-869

1 700
-2 092
-36
9
-756
-1 175

-33
308
1
275

* Other adjustments primarily consist of currency effects and the marking to market of financial instruments, profit/loss from associates, as well as gains/losses on the sale of non-current assets.

The Group’s cash flow from operating activities amounted to SEK 2 176 million. Cash flow from
investing activities amounted to SEK -834 million. Dividends of SEK 756 million were paid to
shareholders during the year.

During the year a bond loan of SEK 400 million was issued and a euro-denominated bond loan for
SEK 400 million was repaid early.

62 HOLMEN ANNUAL REPORT 2014

FINANCIAL STATEMENTS / CASH FLOW STATEMENT

2014

2013

-6 116

2 176
-816
-756
-173
-223
-5 907

-6 590

2 011
-872
-756
70
21
-6 116

CHANGE IN NET FINANCIAL DEBT
Opening net financial debt
Cash flow

Operating activities
Investing activities (excl. non-current financial receivables)
Dividend paid

Revaluations of defined benefit pension plans
Foreign exchange currency effects and changes in fair value
Closing net financial debt

HOLMEN ANNUAL REPORT 2014 63

FINANCIAL STATEMENTS / PARENT COMPANY

PARENT COMPANY

INCOME STATEMENT, SEKm NOTE

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/loss

Profit/loss from investments in Group
companies
Profit/loss from investments in associates
Interest income and similar income
Impairment losses on value of shares and
participating interests
Interest expense and similar costs
Profit/loss after financial items

Appropriations
Profit/loss before tax

Tax
Profit/loss for the year

2
3

4
5, 20

9, 10

6, 23
6
6

6
6

2014

14 077
1 013
29
-8 182
-1 753
-3 996

-27
1 161

195
0
19

0
-240
1 135

1 219
2 353

-483
1 870

2013

14 443
720
32
-8 703
-1 893
-4 148

-35
417

15
0
15

-5
-238
204

824
1 028

-201
828

STATEMENT OF COM-
PREHENSIVE INCOME, SEKm

NOTE

2014

2013

1 870

828

CASH FLOW STATEMENT,
SEKm

OPERATING ACTIVITIES
Profit/loss after financial items
Adjustments for non-cash items
Depreciation and amortisation
according to plan
Change in provisions
Other*

Income tax paid
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
Increase in external non-current
financial receivables
Repayment of external non-current
financial receivables
Acquisition of shares and participating
interests
Disposal of shares and
participating interests
Cash flow from investing activities

Profit/loss for the year
Other comprehensive income
Cash flow hedges
Revaluation
Transferred from equity to
the income statement
Transferred from equity to
non-current assets
Tax attributable to other
comprehensive income
Total items that will be reclassified
to profit/loss for the year
Total comprehensive income

-307

151

-121
1 749

FINANCING ACTIVITIES
Raised external long-term borrowings
Repayments of external long-term borrowings
Change in other financial liabilities
Change in other financial receivables
Dividends paid to owners
of the parent company
Group contributions received
Group contributions paid
Cash flow from financing activities

-32

-18
810

The parent company includes Holmen’s Swedish operations with the exception of the majority of
the non-current assets, which are recognised in Holmens Bruk AB.

The item ‘Appropriations’ includes Group contributions of SEK 1 777 million (530). The item
‘Interest expense and similar costs’ in the income statement includes result of SEK -101 million
(-39) on hedging equity in foreign subsidiaries.

CASH FLOW FOR THE YEAR
Cash and cash equivalents at
beginning of year
Cash and cash equivalents
at end of year

* Other adjustments primarily consist of impairment losses on the value of shares in Group compa-
nies, currency effects and the marking to market of financial instruments as well as gains/losses
on the sale of non-current assets. As of 2013 Group contributions are recognised as appropria-
tions.

64 HOLMEN ANNUAL REPORT 2014

NOTE

2014

2013

1 135

27
-22
131
-186

204

35
-10
591
221

1 085

1 041

-19
-98
-4
963

4
-41
8
0

-17

0
-47

400
-421
-616
-1 399

-756
1 777
0
-1 015

-99

213

115

148
273
-341
1 122

-37
-11
7
-3

-56

86
-16

1 700
-2 091
-10
-480

-756
531
-1
-1 105

213

FINANCIAL STATEMENTS / PARENT COMPANY

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
Non-current financial receivables

Total non-current assets

Current assets
Inventories
Operating receivables
Current tax receivable
Current investments
Cash and cash equivalents
Total current assets
Total assets

NOTE

2014

2013

BALANCE SHEET
at 31 December, SEKm

NOTE

2014

2013

9
10

12, 23
13

14
15
7
13
13

9
2 912

12 145
3 329
18 396

2 494
2 162
-
22
115
4 793
23 188

10
2 589

12 499
2 715
17 814

2 477
2 050
-
24
213
4 764
22 578

EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital
Statutory reserve
Revaluation reserve
Non-restricted equity

Retained earnings incl. hedge reserve
Profit/loss for the year

Total equity

4 238
1 577
100

2 691
1 870
10 476

4 238
1 577
100

2 740
828
9 483

Untaxed reserves

2 330

1 771

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

COLLATERAL AND CONTINGENT
LIABILITIES
Collateral
Contingent liabilities

17
7, 18
18
7

13
13
7
19

21
21

11
45
630
585
1 271

2 898
3 263
221
2 730
9 111
23 188

39
45
651
538
1 274

3 948
3 464
4
2 635
10 051
22 578

149
95

142
93

CHANGES IN EQUITY, SEKm

Opening equity balance 1 Jan 2013

Appropriation of profits
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Closing equity balance 31 Dec 2013

Appropriation of profits
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Closing equity balance 31 Dec 2014

RESTRICTED EQUITY

NON-RESTRICTED EQUITY

SHARE CAPITAL

STATUTORY
RESERVE

RE VALUATION
RESERVE

HEDGE
RESERVE

RETAINED
EARNINGS

PROFIT/LOSS
FOR THE YEAR

TOTAL EQUITY

4 238

-
-
-
-
-
4 238

-
-
-
0
-
4 238

1 577

-
-
-
-
-
1 577

-
-
-
0
-
1 577

100

-
-
-
-
-
100

-
-
-
0
-
100

-125

-
-
-18
-18
-
-143

-
-
-121
-121
-
-264

4 633

-994
-
-
-994
-756
2 883

828
-
-
828
-756
2 954

-994

994
828
-
1 822
-
828

-828
1 870
-
1 042
-
1 870

9 428

-
828
-18
810
-756
9 483

-
1 870
-121
1 749
-756
10 476

HOLMEN ANNUAL REPORT 2014 65

NOTES / NOTE 1

NOTES TO THE FINANCIAL STATEMENTS

Amounts in SEKm, unless otherwise stated

NOTE 1. ACCOUNTING POLICIES

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

corresponds to the Group’s operating structure and the internal reporting to the CEO and the Board.
The items in the profit, assets and liabilities of the operating segment are recognised in accordance
with the profit (operating profit), assets and liabilities that are monitored by the company’s highest
executive decision-maker. See Note 2 for more details of the classification and presentation of
operating segments.

COMPLIANCE WITH STANDARDS AND STATUTORY
REQUIREMENTS
The consolidated accounts are prepared in accordance with International Financial Reporting
Standards (IFRSs) issued by the International Accounting Standards Board (IASB), as adopted
by the EU. The Swedish Financial Reporting Board’s recommendation (RFR 1 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 Accounting for Legal Entities. The differences between the policies applied
by the parent company and those applied by the Group are due to restrictions in the parent compa-
ny’s ability to apply IFRS as a consequence of the Swedish Annual Accounts Act, the Swedish
Pension Obligations Vesting Act, and in some cases due to tax reasons.

VALUATION PRINCIPLES APPLIED
IN PREPARING THE FINANCIAL STATEMENTS OF
THE PARENT COMPANY AND THE GROUP
Assets and liabilities are stated at cost, except for biological assets and certain financial assets and
liabilities, which are valued at fair value. In the parent company, biological assets are not valued at
fair value.

FUNCTIONAL CURRENCY AND REPORTING CURRENCY
The functional currency is the currency used in the primary financial environments in which the
companies conduct their business. The parent company’s functional currency is the Swedish krona,
(SEK), which is also the reporting currency of the parent company and the Group. This means that the
financial statements are presented in Swedish kronor.

ESTIMATES AND JUDGEMENTS IN THE
FINANCIAL STATEMENTS
Preparing the financial statements in accordance with IFRSs requires the company’s management
to make estimates and judgements, as well as to make assumptions that affect the application of
the accounting policies and the recognised amounts for assets, liabilities, income and costs. The
actual outcome may deviate from these assessments and estimates.

These estimates and judgements are reviewed regularly. Changes in estimates are recog nised 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 future periods.
See also Note 26 ‘Critical accounting estimates and judgements’.

CHANGES IN ACCOUNTING POLICIES
Amended IFRSs applied by the Group from January 1, 2014 are described below.

Consolidated accounts, joint arrangements and disclosure of interests in
other entities
The new reporting standards IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Ar-
rangements have not had any impact on amounts or classification. IFRS 12 Disclosure of Interests
in Other Entities means increased disclosures in the annual accounts, chiefly in Note 12 ‘Invest-
ments in associates, joint ventures and other shares and participating interests’.

New and amended accounting policies applicable as of 2015
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 is no plan to apply new or
amended standards effective as of financial years after 2015 in advance. New or amended IFRSs
effective as of 2015 and 2016, such as changes to IFRIC 21 Levies, are not expected to have any
material impact on the Group’s accounting. IFRIC 21 means that property tax levies will be booked
in full on January 1 of each year instead of the debt being booked as the cost is recognised in the
income statement. This change will not have any effect on the income statement.

SEGMENT REPORTING
The Group’s operations are divided into operating segments, based on which parts of the opera-
tions are monitored by the company’s highest executive decision-maker, known as the manage-
ment approach. The segmentation criterion is based on the Group’s business areas. This

66 HOLMEN ANNUAL REPORT 2014

CLASSIFICATION
Essentially, non-current assets, non-current liabilities and provisions consist solely of amounts that
are expected to be recovered or paid more than 12 months after the balance sheet date. Current
assets, current liabilities and provisions essentially 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, exercises a controlling in-
fluence. Controlling influence exists if Holmen AB has control over an investment object, is exposed
or entitled to variable returns on its involvement and can exercise its control of the investment to in-
fluence the size of return. In determining whether one company has control over another, potential
shares with an entitlement to vote and whether de facto control exists are taken into account.

The consolidated accounts are prepared using the acquisition method, whereby the parent compa-
ny indirectly acquires the assets and assumes the liabilities of the subsidiary, valued at fair value.
The difference between the cost of the shares and the fair value of the acquired identifiable net
assets is treated as goodwill. The subsidiary companies’ income and expenses, and their assets
and liabilities, are stated in the consolidated accounts as of the date when the Group gains control
(acquisition date) until such time as the Group no longer has control. Intra-Group receivables and
liabilities, transactions between companies in the Group and related unrealised gains are eliminat-
ed in their entirety.

Holdings recognised in accordance with the equity method
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 significant influence, are stated in the consoli-
dated accounts in accordance with the equity method.

Jointly owned companies/joint ventures
In accounting, joint ventures are those companies for which the Group, through cooperation agree-
ments with one or more parties, has joint control whereby the Group has rights to the net assets in-
stead of direct rights to assets and commitments in liabilities. Holdings in joint ventures are consoli-
dated in the consolidated accounts using the equity method. Holmen’s jointly owned companies are
such that the holding has previously been recognised using the equity method and financial report-
ing consequently complies with IFRS 11 Joint Arrangements.

The equity method
The equity method means that the carrying amount of the shares in the associates stated in the
consolidated accounts corresponds to the Group’s interest in the associates’ equity and any con-
solidated surplus and deficit values. The Group’s share of the net earnings of associates after tax
attributable to parent company owners adjusted for any amortisation or reversal of acquired fair
value adjustments, respectively, is stated in the consolidated income statement as ‘Share of profits
of associates and joint ventures’. Dividends received from an associate reduce the carrying amount
of the investment. Unrealised gains arising as a consequence of transactions with associates are
eliminated in relation to the owned proportion of equity. Dividends received from an associate or
joint venture reduce the carrying amount of the investment. Unrealised gains arising as a conse-
quence of transactions with associates and joint ventures are eliminated in relation to the owned
proportion of equity.

When the Group’s share of the recognised losses of an associate and joint venture exceeds the car-
rying amount of the investments stated in the consolidated accounts, the value of the investments
is written down to zero. Losses are also offset against unsecured long-term financial balances that,
in financial terms, comprise part of the owning company’s net investment in the associate and joint
venture. Any further losses are not recognised unless the Group has provided guarantees to cover
losses incurred by the associate or joint venture. The equity method is applied until such time as the
significant influence no longer exists or the jointly owned company ceases to be jointly owned.

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 liabilities in foreign currencies are trans-
lated into the functional currency at the exchange rate prevailing on the balance sheet date. Ex-
change differences arising on such translations are stated in the income statement. Non-monetary
assets and liabilities that are stated at historical cost are translated at the exchange rate prevailing
on the transaction date.

NOTES / NOTE 1

Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and other consolidated surplus
and deficit values, are translated in the consolidated accounts, from the foreign operation’s func-
tional currency, to the Group’s reporting currency (Swedish kronor) at the balance sheet date. The
income and expenses of foreign operations are translated into Swedish kronor at an average rate
that is an approximation of the exchange rates prevailing at the date of each transaction. Differ-
ences arising during the currency translation of foreign operations and the related effects of hedg-
ing net investments are recognised in other comprehensive income and are accumulated in a sepa-
rate component of equity called the translation reserve. In the disposal of a foreign operation, the
accumulated translation differences attributable to the business are realised, less any currency
hedging, in the consolidated income statement.

COMPANIES OPERATING ON BEHALF
OF THE PARENT COMPANY
The parent company’s business is largely conducted through companies operating 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 companies. All income,
expenses, assets and liabilities, which arise in the operations conducted by the companies, are
recognised in Holmen AB’s accounts, except for the majority of investments made as well as some
sales of forest properties, which are instead 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 reductions in income, and also includes
exchange differences related to the sales. Sales are recognised after the critical risks and benefits
associated with ownership of the sold goods have been transferred to the buyer, and there is no
remaining right of disposal 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 by-products, rent and land lease income, income from
allotted electricity certificates, income earned from emission allowances and gains/losses on sales
of non-current assets.

State grants
State grants are recognised in the balance sheet as accrued 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 revalua-
tions of financial instruments valued at fair value, as well as unrealised and realised currency gains
and losses. In the case of the parent company, Group contributions received and paid are also recog-
nised as financial income and expense, respectively.

Interest income on receivables and interest costs on liabilities are calculated by using the effective in-
terest method. Interest costs include transaction costs for loans, which have been distributed 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 pay-
ment is judged to be certain.

Interest costs normally affect profit/loss in the period to which they relate. Borrowing costs attribut-
able to the purchase, construction or production of qualifying assets are capitalised in the consolidat-
ed accounts as part of the asset’s cost. A qualifying asset is an asset that takes a substantial period of
time to get ready for its intended use and that is relevant for the Group in connection with major invest-
ment projects.

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 attributable to previous
periods. Deferred tax is calculated using the balance sheet method on the basis of temporary dif-
ferences between carrying amounts and values for tax purposes of assets and liabil ities, applying
the tax rates and rules that have been approved or announced at the balance sheet date. Tempo-
rary differ ences are not taken into account in goodwill arising upon consolidation, nor in tempo rary
differences attribut able to investments 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 tax-deductible temporary differences and loss carry-forwards are
recognised only to the extent that it is likely they will be utilised and entail lower tax payments in the
future. Deferred tax assets and deferred tax liabilities in the same country are recognised net to the
extent that a right of set-off applies.

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.

FINANCIAL INSTRUMENTS
Financial instruments are measured and recognised according to IAS 39.

Recognition in and derecognition from the balance sheet
A financial asset or liability is stated in the balance sheet when the company becomes 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 trade date principle. Trade receivables are recognised in the bal-
ance sheet when an invoice has been sent. Liabilities are recognised when the counterparty has
provided a product or service and there is a contractual obligation to pay, even if an invoice has not
yet been received. A financial asset and a financial liability are only offset and recognised at a net
amount where a legal right to offset the amounts exists and there is an intention to settle the items
at a net amount or simultaneously realise the asset and settle the liability. Financial assets, exclud-
ing shares, and financial liabilities have been classified as current if the amounts are expected to be
recovered or paid within 12 months of the balance sheet date. Shares have been classified as non-
current if they are intended to be held in the operation permanently.

Measurement of financial instruments
Financial assets at fair value through profit/loss. This category consists of financial assets held for
trading. Financial instruments in this category are measured on a current basis at fair value, with
changes of value recognised in profit/loss.

Loan receivables and trade receivables. Bank balances, loan receivables and trade receivables are
measured at amortised cost. Impairment testing is performed continually, using objective criteria
for these assets. If impairment is established, the receivable is derecognised. However, a provision
for doubtful trade receivables is made if the impairment is anticipated.

Available-for-sale financial assets. The category of available-for-sale financial assets includes
financial assets not classified in any other category or financial assets that the company initially
chose to classify in this category. The assets are valued on a current basis at fair value with the
changes in value for the period recognised in other comprehensive income, and the accumulated
changes in value in a separate component of equity, although not such value changes that are
attributable to impairment losses (see below), nor interest on financial instruments receivable and
dividend income as well as exchange differences on monetary items, which are recognised in
profit/loss for the year. When the asset is disposed of, accumulated profit/loss – which was previ-
ously recognised in other comprehensive income – is recognised in profit/loss for the year. Shares
and interests not related to Group companies or associates are measured at cost. Measurement at
fair value could not be applied, because reliable fair values could not be established.

Financial liabilities at fair value through profit/loss. Financial liabilities are measured initially at the
value of funds received after deduction of any transaction costs. Normally, the liabilities are meas-
ured on a current basis at amortised cost using the effective interest method. In those cases where
funds received fall short of the repayment amount, the difference is allocated over the duration of
the loan using the effective interest method. Profit/loss from financial instruments is recognised in
net financial items or operating profit/loss, depending on the purpose of the holding.

Other financial liabilities. These liabilities are measured at amortised cost. Amortised cost is deter-
mined on the basis of the effective interest that was calculated at the time of acquisition. Trade pay-
ables and loan liabilities are recognised in this category. Loans hedged against changes in value are
initially recognised including any transaction costs and on a current basis at fair value.

Derivatives and hedge accounting. All derivatives are measured at fair value and are recognised
in the balance sheet. More or less all derivatives are held for hedging purposes. Where hedge ac-
counting is applied, the changes in value are recognised as stated below. In the case of derivatives
that do not fulfil the criteria for hedge accounting, the changes in value are recognised within oper-
ating profit/loss or within net financial items, depending on the purpose of the holding.

Cash flow hedges. The effective portion of changes in value is recognised in other comprehensive
income and accumulated in equity until such time as the hedged item influences the income state-
ment, when the accumulated changes in value are transferred from equity via other comprehensive
income to the income statement to meet and match the hedged transaction. In the hedging of invest-
ments, the cost of the hedged item is instead adjusted when it occurs. The ineffective portion of hedg-
es is recognised directly in the income statement. Forward foreign exchange contracts and foreign ex-
change swaps are used as cash flow hedges to safeguard against fluctuations in exchange rates. In-
terest rate swaps are used as a cash flow hedge to safeguard against changes in interest rates.

HOLMEN ANNUAL REPORT 2014 67

NOTES / NOTE 1

Net investments. Changes in the value of hedges relating to net investments in foreign businesses
are recognised in other comprehensive income for the Group. Accumulated changes in value are
recognised as a component in the Group’s equity until the business is disposed of, at which point
the accumulated changes in value are recognised in the income statement. In the parent company,
changes in value are recognised in the income statement, as hedge accounting is not applied.

Fair value estimation. The fair value of financial instruments traded on an active market is based on
listed market prices and belongs to measurement level 1 as per IFRS 7. Where there are no listed
market prices, fair value has been calculated using discounted cash flows. In calculating discount-
ed cash flows, all variables used for the calculations, such as discount rates and exchange rates,
are taken from market listings where possible. In calculating discounted cash flows, the mean of
exchange rates and discount rates is used. These valuations belong to measurement level 2. Other
valuations, for which a variable is based on own assessments, belong to measurement level 3.
Holmen’s measurement of financial instruments belongs exclusively to measurement level 2.
Currency options are valued using the Black & Scholes formula, when appropriate.

INTANGIBLE NON-CURRENT ASSETS
Goodwill represents the difference between the cost of business combinations and the fair value of
the acquired assets, assumed liabilities and contingent liabilities. It is valued at cost less any accu-
mulated impairment losses. Goodwill arising in connection with the acquisition of associates is in-
cluded in the carrying amount of the participating 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 financial benefits can be reliably assessed.
The recognised value includes all directly attributable expenses, for example in connection with
materials and services, wages/salaries to employees, registration of a legal right, amortisation of
patents and licences and borrowing costs in accordance with IAS 23. Other development expendi-
ture is recognised in the income statement as costs when incurred. Development expenditures rec-
ognised in the balance sheet are stated at cost less accumulated amortisation and impairment
losses.

Intangible non-current assets also include patents, licences and IT systems, which are recognised
at cost after deduction of accumulated depreciation and any impairment losses. The Group’s intan-
gible non-current assets are amortised over periods of between 5 and 20 years, except for good-
will. Any goodwill is allotted to cash-generating units. Both goodwill and other intangible non-
current assets are tested for impairment annually. Any impairment losses may be reversed via
exceptions from goodwill. The Group does not currently recognise any goodwill. Intangible non-
current assets in the parent company are amortised over five years.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost after deduction of accumulated depreciation and any
impairment losses. Property, plant and equipment that consist of parts with different useful lives are
treated as separate components of property, plant and equipment. Additional expenditure is capi-
talised only if it is estimated to generate financial benefits for the company. The key factor determin-
ing 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 capital-
ised in cases where a new component is created. Any undepreciated carrying amounts for replaced
components 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 expect-
ed from the use of the asset. The gain or loss arising on the retirement or disposal of an asset consists
of the difference between any selling price and the carrying amount of the asset, less any direct selling
costs. Gains and losses are recognised in the accounts as other operating income/costs.

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

The following useful lives (years) are used:
Machinery for hydro power production

10–40

Administrative and warehouse buildings, residential properties 10–33

Production buildings, land installations, and
machinery for pulp, paper and paperboard production

Machinery for sawmills

Other machinery

Forest roads

Equipment

10–20

10–12

If there is any indication that the carrying amount is too high, an analysis is made in which the re-
coverable value of single or inherently related assets is determined at the higher of the net selling
price and the utility value. The net realisable value is the estimated selling price after deduction of
the estimated cost of selling the asset. The utility value is measured as expected future discounted
cash flow. The discount rate applied takes account of the risk-free rate and the risk associated with
the asset. An impairment loss consists of the amount by which the recoverable amount falls short
of the carrying amount. Impairment loss is reversed if there has been any positive change in the cir-
cumstances upon which the determination of the recoverable amount is based. A reversal may be

68 HOLMEN ANNUAL REPORT 2014

made up to, but not exceeding, the carrying amount that would have been recognised, less depre-
ciation, if there had been no impairment.

Borrowing costs attributable to the purchase or construction of qualifying assets are to be capital-
ised in the consolidated accounts as part of the asset’s cost. A qualifying asset is an asset that
takes a substantial period of time to get ready for its intended use and is relevant for the Group in
connection with major investment projects.

LEASING
In the consolidated accounts, lease agreements are classified as finance leases or operating leases.
The leasing of non-current 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. Costs
relating to operating leases are recognised in profit/loss for the year on a straight-line basis spread
over the term of the lease. Variable charges are expensed in the periods in which they are incurred.
Within the Group, all lease agreements are classified as operating leases.

BIOLOGICAL ASSETS
The Group divides all its forest assets for accounting purposes into growing forests, which are rec-
ognised as biological assets at fair value, and land, which is stated at 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 available that can be used to value forest holdings as extensive
as Holmen’s. Valuation is therefore carried out by estimating the present value of expected future
cash flows (after deduction of selling costs) from the growing forests. See Note 11.

In the parent company, biological assets are valued in accordance with RFR 2. This means that
biological assets classified as non-current assets are recognised at 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 securing Holmen’s raw
material requirements through harvesting. No measurable biological change occurs between the
acquisition date and harvesting.

INVENTORIES
Inventories are valued at the lower of cost and production cost after deduction for necessary obso-
lescence, or net realisable value. The 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
deduction of the estimated costs of completion and effecting the sale. The cost of finished products
manufactured by the company comprises direct production costs and a reasonable share of indi-
rect costs.

Emission allowances received are initially recognised at market price when allotted among inven-
tories and as deferred income. During the year the allocation is recognised as income at the same
time as an interim liability, corresponding to emissions made, is expensed.

EMPLOYEE BENEFITS
Pension costs and pension obligations
Obligations to pay premiums to defined contribution plans are recognised as a cost in the income
statement as and when they are earned.

The Group’s net obligation 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 unrecog-
nised costs in respect of employment during earlier periods and the fair value of any plan assets are
deducted. The discount rate is the interest rate at the balance sheet date for a high-quality corpo-
rate bond with a duration corresponding to the Group’s pension obligations. If there is no active
market for such corporate bonds, the market interest rate for government bonds with a corre-
sponding duration is used instead. The calculation is performed by a qualified actuary using the
projected unit credit method for the portion of the pension obligations that is defined benefit.

When the present value of the obligations 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 comprehensive income.

If the benefits provided by a plan are improved, the proportion of the improvement in the benefit
that is attributable to the employees’ employment during earlier periods is recognised as a cost in
the income statement and is distributed on a straight-line 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. If any changes occur to a defined benefit plan, these are recognised when
the change to the plan occurs. If the change occurs in conjunction with restructuring, this is recog-
nised when the company recognises the associated restructuring costs. The changes are recog-
nised directly in profit/loss for the year.

The interest cost on defined benefit obligations is recognised in profit/loss for the year under financial
items. This is calculated as the net total of the upward adjustment of interest on the pension obligation
and expected income on plan assets calculated according to the same interest factor (discount rate).

Other components are recognised in operating profit/loss. The revaluation effects consist of acturial
gains and losses and the difference between the actual return on plan assets and the amount included
in net interest. Revaluation effects are recognised in other comprehensive income.

Payroll tax constitutes part of the acturial assumptions and is therefore recognised as part of net
obligations.

Policyholder tax is recognised as it is incurred in profit/loss for the period to which the tax relates
and is consequently not included in the calculation of liabilities. In the case of funded plans, this tax
is levied on the return on plan assets and is recognised in other comprehenisve income. In the case
of unfunded plans or partially unfunded plans, this tax is levied on profit for the year.

In the parent company’s accounts, different grounds are used for computation of defined benefit
pension plans from those referred to in IAS 19. The parent company complies with the provisions
of the Swedish Pension Obligations Vesting Act 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 calculation of the defined benefit obligation on the basis of the current pay level without any as-
sumption regarding pay increments in the future, and the recognition of all actuarial gains and
losses in the income 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 consolidated accounts in respect of payroll
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 recognised in
the accounts if it is shown that the Group has an obligation, without any reasonable possibility of
withdrawing, 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 redundancy, a
cost is recognised if it is likely that the offer will be accepted and the number of employees who will
accept the offer can be reliably estimated.

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

EQUITY
Consolidated equity comprises share capital, other contributed capital, translation and hedge re-
serves 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. It also includes exchange differences arising in connection
with the revaluation of liabilities and derivatives that are classified as instruments for hedging a net
investment in a foreign operation, including tax. The hedge reserve comprises the effective propor-
tion 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 proceeds from the disposal of the company’s
own shares are stated as an increase. Transaction costs are charged directly to retained earnings.

The parent company’s equity comprises share capital, statutory reserves, re valuation reserves,
retained earnings and profit/loss for the year. The parent company’s statutory reserve consists of
previous compulsory provisions 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 non-current financial
assets. Retained earnings comprise all other parts of equity, such as hedge reserves and trans-
actions 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 informal 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 restructuring 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 esti-
mated reliably.

Reserves to cover future silvicultural fees are calculated on the basis of interpretations of the appli-
cable forestry laws and regulations whenever it is likely that a payment obligation will arise and
once the amount can be assessed to a reasonable extent.

NOTES / NOTE 1

CONTINGENT LIABILITIES
A contingent liability is recognised when there is a potential commitment that originates from 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 recognised as a liability or provision because it is not likely
that an outflow of re sources will be required.

GROUP CONTRIBUTIONS AND SHAREHOLDER
CONTRIBUTIONS FOR LEGAL ENTITIES
Group contributions are recognised in the parent company in accordance with RFR 2’s alternative
rule, i.e. Group contributions paid or received are recognised as appropriations.

Shareholder contributions are recognised as an increase in the item ‘Investments in Group compa-
nies’. In addition, a review is conducted as to whether an impairment loss on the value of the shares
is necessary. This review complies with standard rules on the valuation of this asset item. Share-
holder contributions received are recognised directly in non-restricted equity.

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

HOLMEN ANNUAL REPORT 2014 69

NOTES / NOTE 2

NOTE 2. OPERATING SEGMENT REPORTING

2014

Net sales
External
Internal
Other operating income
Operating costs
Depreciation and amortisation according to plan
Impairment losses
Change in value of biological assets
Share of profits of associates
Operating profit/loss

5 113
-
697
-4 648
-487
-
-
-
674

6 247
-
166
-5 677
-584
-
-
-12
141

Operating profit/loss excluding items
affecting comparability*

674

141

Operating margin excluding items
affecting comparability,%
Return on operating capital excluding items
affecting comparability, %
Operating assets
Operating liabilities
Operating capital

10
7 521
731
6 790

3
5 634
968
4 666

IGGESUND
PAPERBOARD

HOLMEN
PAPER

HOLMEN
TIMBER

HOLMEN
SKOG

HOLMEN
ENERGI

GROUP-WIDE
AND OTHER

ELIMINA -
TIONS

TOTAL
GROUP

1 352
-
265
-1 457
-123
-450
-
-
-413

3
1 040
138
901

2 957
2 683
150
-5 228
-29
-
282
-
817

817

5
18 580
1 240
17 340

320
1 088
17
-1 197
-21
-
-
5
212

4
-
147
-276
-21
-
-
-1
-146

-
-3 771
-421
4 192
-
-
-
-
-

15 994
-
1 021
-14 291
-1 265
-450
282
-7
1 284

212

-146

1 734

6
3 493
91
3 401

294
1 038
-744

-379
-379
-

5
36 183
3 829
32 354

Investments

288

331

849

* Items affecting comparability refer to an impairment loss on Braviken Sawmill of SEK -450 million.

NON-CURRENT ASSETS
PER COUNTRY
Sweden
UK
Spain
Other
Total

NET SALES BY
PRODUCT AREA
Paperboard
Printing paper
Pulp
Sawn timber
Wood
Energy
Other
Total

NET SALES
BY MARKET
Sweden
UK
Germany
Spain
Italy
France
The Netherlands
Rest of Europe
Rest of the world
Total

GROUP

PARENT COMPANY

2014
26 779
2 021
1 410
6
30 216

2013
27 336
1 835
1 464
6
30 641

2014
15 066
-
-
-
15 066

2013
15 098
-
-
-
15 098

GROUP

PARENT COMPANY

2014
4 890
6 079
212
1 352
2 957
320
184
15 994

2013
4 521
6 952
87
1 175
2 901
382
213
16 231

2014
3 076
6 053
325
1 352
2 940
320
11
14 077

2013
2 959
6 914
182
1 175
2 831
382
0
14 443

GROUP

PARENT COMPANY

2014
3 822
2 110
2 066
979
898
648
642
2 765
2 063
15 994

2013
3 873
1 996
2 168
1 042
786
746
755
2 949
1 917
16 231

2014
3 802
1 474
1 756
806
851
572
556
2 316
1 944
14 077

2013
3 854
1 488
1 866
836
752
676
694
2 497
1 780
14 443

70 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 2

IGGESUND
PAPERBOARD

HOLMEN
PAPER

HOLMEN
TIMBER

HOLMEN
SKOG

HOLMEN
ENERGI

GROUP-WIDE
AND OTHER

ELIMINA -
TIONS

TOTAL
GROUP

2013

4 618
-
581
-4 321
-445
-
-
-
433

7 148
-
156
-6 931
-738
-86
-
1
-449

Operating profit/loss excluding items
affecting comparability*

433

-309

Operating margin excluding items
affecting comparability,%
Return on operating capital excluding items
affecting comparability, %
Operating assets
Operating liabilities
Operating capital

7
7 639
776
6 863

-4

-6
5 838
1 028
4 810

1 175
-
268
-1 401
-119
-
-
3
-75

-75

-6

-5
1 486
125
1 361

2 901
2 793
149
-5 149
-34
-
264
-
924

924

6
18 055
1 243
16 813

382
1 265
123
-1 380
-20
-
-
1
371

7
-
145
-272
-15
-
-
-2
-136

-
-4 059
-438
4 497
-
-
-
-
-

16 231
-
984
-14 958
-1 370
-86
264
3
1 069

371

-136

1 209

11
3 507
150
3 357

4
36 424
3 653
32 772

-360
-360
-

874

259
692
-433

Investments

660

85**

* Items affecting comparability refer to an impairment loss and restructuring costs in Holmen Paper.

** Including proceeds from the sale of the PM61 paper machine in Spain.

The Iggesund Paperboard business area produces paperboard for consumer packaging and graphi-
cal printing at one Swedish and one UK mill. The Holmen Paper business area manufactures print-
ing paper for magazines, product catalogues, direct mail, books and daily newspapers at two mills
in Sweden and one in Spain. Holmen Timber produces sawn timber at two Swedish sawmills. In
2014, the Group produced 0.5 million tonnes of paperboard, 1.3 million tonnes of printing paper
and 0.7 million m3 of sawn timber.

Holmen Skog manages the Group’s forests, which cover just over one million hectares. The normal
annual volume of wood harvested in company forests is about 3.2 million m3sub. Holmen Energi is
responsible for the Group’s hydro and wind power assets and for developing the Group’s operations
in the energy sector. Production in 2014 amounted to 1.1 TWh of electricity. Holmen Skog and
Holmen Energi are also responsible for supplying the Group with wood and electricity, respectively,
in Sweden.

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

Intra-Group sales between segments are founded on an internal market-based price. The ‘Group-
wide and other’ segment comprises Group staffs and Group-wide functions that are not allocated
to other segments. No profit items after 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.

HOLMEN ANNUAL REPORT 2014 71

Deviations 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 deviation, information thereon and the reasons therefor shall
be submitted to the next AGM.

REMUNERATION OF BOARD AND SENIOR MANAGEMENT
Board
A fixed Board fee shall be paid to the members of the Board elected by the AGM. The CEO,
however, does not receive any Board fee. For 2014, fees to the Board amounted to SEK 2 600 000
(2 400 000). The chairman received a fee of SEK 650 000 (600 000), and each of the other mem-
bers received SEK 325 000 (300 000).

Senior management
The CEO’s salary and other benefits for 2014, when a new CEO was appointed, amounted to SEK
9 925 651 (7 874 220), of which SEK 5 063 149 was nine months’ remuneration to the newly
appointed CEO. The new CEO has agreed annual remuneration of SEK 6 780 000, as well as an
accommodation and car allowance equivalent to SEK 408 900 in 2014’s value.

The total pension cost attributable to the outgoing and incoming CEOs (ITP occupational pension
cost and the cost of benefits over and above ITP, including vesting in the senior management pen-
sion plan in 2014), calculated in accordance with IAS 19, amounted to SEK 4 449 375 (4 246 531),
SEK 2 110 560 of which relates to the newly appointed CEO. No variable remuneration was paid.

In 2014, the salaries and other benefits of other senior management, i.e. the heads of the five
business areas and the heads of the six Group staffs who report directly to the CEO, totalled SEK
26 947 050 (22 224 504).

In 2014, the total pension cost (ITP cost and the cost of benefits over and above ITP, including vest-
ing in the senior management pension plan in 2014) for this group, calculated in accordance with
IAS 19, amounted to SEK 12 821 925 (10 995 369). No variable remuneration was paid.

For senior management, employed from 2011, a mutual notice period of six months applies. In the
event of notice being given by the company, deductible severance pay corresponding to 18 months’
salary is paid. These terms apply to seven people. For five senior management employment con-
tracts, signed before 2011, the employee is required to give six months’ notice and the company
must give 12 months’ notice. In the event of notice being given by the company, severance pay cor-
responding to between one and two years’ salary is paid, depending on age.

All members of senior management are employed by the parent company.

Pension obligations in respect of the Board and senior management
Holmen’s pension obligations over and above the ITP plan for the CEO amounted to SEK 8 million
(23) at 31 December 2014 and for other members of senior manage ment to SEK 45 million (37),
calculated in accordance with IAS 19. The Group also has a SEK 7 million (7) obligation for one
Board member, Göran Lundin, former CEO of Holmen. The pension obligations are secured using
plan assets managed by an independent pension fund.

NOTES / NOTE 3–4

NOTE 3. OTHER OPERATING INCOME

Sales of by-products
Certificates, renewable energy
Emission allowances
Sales of non-current assets
Rent and land lease income
Silviculture contracts
Other
Total

GROUP

2014
394
323
53
13
31
71
137
1 021

PARENT COMPANY
2013
226
129
28
5
21
70
241
720

2014
262
144
44
317
25
71
151
1 013

2013
324
285
32
9
24
70
241
984

Of the sales of by-products in the Group, SEK 161 million (111) relates to rejects from production,
SEK 77 million (88) to sawdust, bark, chips etc., and SEK 156 million (126) to external sales of
energy.

Income from renewable energy certificates received from the production of renewable energy at
the Group’s mills amounted to SEK 323 million (285). The increase is due to the biofuel boiler that
entered service at Workington in the first quarter of 2013 being in service for the whole of 2014.

The Group has been allotted emission allowances that have been used partly within its own produc-
tion. The surplus resulted in a gain of SEK 53 million (32).

NOTE 4. EMPLOYEES, STAFF COSTS AND

REMUNERATION TO SENIOR MANAGEMENT

WAGES, SALARIES AND
SOCIAL SECURITY COSTS
Wages, salaries and other remuneration
Social security costs

GROUP

PARENT COMPANY

2014
1 600
596

2013
1 642
635

2014
1 221
482

2013
1 287
554

AGM’S GUIDELINES FOR DETERMINING SALARIES AND
OTHER REMUNERATION FOR SENIOR MANAGEMENT
The 2014 AGM decided on the following guidelines for determining the salaries and other remunera-
tion of the CEO and other senior management, namely the heads of the business areas and heads
of Group staffs who report directly to the CEO.

Salary and other benefits
The remuneration of the CEO and the senior management shall consist of a fixed market-based
salary. Other benefits, mainly car and accommodation, shall, insofar as they are provided, repre-
sent 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 from 65 years
of age shall be either defined benefit or defined contribution. Pension drawn from 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 pension. In this case, there shall be a gradual transition from the former
existing arrangement with a defined benefit pension to one in which the pension is defined con-
tribution.

Notice and severance pay
Notice of employment termination 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. For new contracts, salary during the
period of notice and severance pay shall not exceed a total amount equivalent to two years’ salary.

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

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

72 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 4–5

AVERAGE
NUMBER OF
FULL-TIME
EQUIVA-
LENTS

OF WHICH
WOMEN

NOTE 5. AUDITORS’ FEE AND REMUNERATION

OF WHICH
WOMEN

The audit firm KPMG was elected by the 2014 Annual General Meeting as Holmen’s auditors for a
period of one year. KPMG audits Holmen AB and almost all of its subsidiaries.

REMUNERATION TO KPMG
Audit assignments
Tax advice
Other services
Total

Other auditors
Total

GROUP

2014
7
1
0
8

0
9

PARENT COMPANY
2013
4
1
-
5

2014
4
1
0
5

-
5

2013
6
3
0
9

0
9

‘Audit assignments’ refers to the statutory examination of the annual report and accounting re-
cords, the administration by the Board and the CEO, and auditing and other assessment performed
as agreed or in accordance with contracts. This includes other duties that are incumbent on the
company’s auditors and the provision of advice or other assistance resulting from observations in
connection with such assessment or the performance of such other duties. ‘Tax advice’ refers to
all consultation in the field of taxation. ‘Other services’ refers to advice on accounting issues, on
disposals and acquisitions of operations and on processes and internal control.

Parent company
Sweden
Spain

Group companies
Estonia
France
Germany
Hong Kong
Italy
The Netherlands
Poland
Portugal
Singapore
Spain
Switzerland
UK
USA
Total
Group companies
Total Group

2014

2013

2 487
11

486
7

2 770
12

536
7

9
11
20
5
7
94
7
1
5
278
5
412
7

3
5
8
1
3
32
5
-
3
50
1
41
2

14
17
22
5
7
96
7
1
5
310
5
440
7

4
7
8
1
3
33
4
-
3
64
1
44
3

861
3 359

153
645

936
3 718

173
716

The decrease in the number of employees during the year is primarily due to restructurings.

PROPORTION OF WOMEN, %
Board (excl. deputy members)
Senior management
Total

GROUP

2014
18
25
19

PARENT COMPANY
2013
18
25
19

2014
18
25
19

2013
18
25
19

HOLMEN ANNUAL REPORT 2014 73

NOTES / NOTE 6

NOTE 6. NET FINANCIAL ITEMS AND INCOME FROM FINANCIAL INSTRUMENTS

Exchange gains/losses on trade
receivables and trade payables
Net gain/loss on derivatives stated
in working capital

Interest income on trade receivables
Interest costs on trade payables

GROUP

2014

2013

PARENT COMPANY
2013

2014

191

-116

1
-4

-5

1
-10

164

-81

1
-4

-8

1
-10

The derivatives included in operating profit/loss relate to hedging of trade receiv ables and trade
payables as well as financial electricity derivatives.

FINANCE INCOME
Dividend income from Group companies
Net profit/loss
Assets and liabilities measured at fair
value through profit/loss for the year
- Held for financial risk management*

Cash and cash equivalents
Other financial receivables
Interest income
Total finance income

FINANCE COSTS
Impairment losses on value of
shares in Group companies
Impairment losses on other shares and
participating interests
Net profit/loss
Assets and liabilities measured at fair
value through profit/loss for the year
- Held for financial risk management*

Other financial liabilities
Total net profit/loss

Interest costs**
Finance costs
Net financial items

GROUP

2014
-

2013
-

PARENT COMPANY
2013
671

2014
546

-33
-5
38
1
1

-5

-
0
-6

-11
-5
21
4
8

-5

-
-
-5

-143
-149
-147

-200
-205
-197

-33
-5
41
15
565

-11
-5
20
12
686

-351

-656

-5

-67
-34
-452

-139
-591
-26

-12
-27
-700

-199
-899
-213

** Refers to the held-for-trading category in accordance with IAS 39.

** SEK -27 million (-27) in the Group refers to interest costs on derivatives measured at fair value

t hrough profit/loss for the year. Those in the parent company amounted to SEK -27 million (-27).
Other interest income and interest costs are related to financial items not measured at fair value.

The net gains and losses stated in net financial items mainly relate to currency revalua tions 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 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 consolidated accounts in other comprehensive
income. The fair value of the interest component in forward foreign exchange contracts as well as
value changes in accrued interest and realised interest in fixed-interest-rate swaps is recognised
on an ongoing basis in net interest items.

There were no changes in value for loans in the parent company.

Information on financial risks is stated in the administration report on pages 32–35.

The income from financial instruments included in operating profit/loss is shown in the following
table:

74 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 7

NOTE 7. TAXES

TAXES STATED IN INCOME STATEMENT
Current tax
Deferred tax
Total

GROUP

2014
-485
255
-230

PARENT COMPANY
2013
-188
-13
-201

2014
-403
-80
-483

2013
134
-294
-160

Tax recognised totalled SEK -230 million, corresponding to 20 per cent of profit before tax.

Recognised profit/loss 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 unstated loss carry-forwards and temporary differences
Tax attributable to previous periods
Change to tax rate on deferred tax assets/liabilities
Other
Effective tax

GROUP

PARENT COMPANY

2014

SEKm
1 137

-250
4
4
-6
22
-4
0
0
-230

22.0
-0.4
-0.3
0.5
-2.0
0.3
0.0
0.0
20.2

2013

SEKm
871

-192
-3
8
-5
14
2
16
1
-160

22.0
0.4
-0.9
0.6
-1.6
-0.2
-1.8
-0.1
18.4

2014

SEKm
2 353

-518
0
38
-5
0
2
0
0
-484

22.0
0.0
-1.6
0.2
0.0
-0.1
0.0
0.0
20.6

2013

SEKm
1 028

-226
0
28
-5
0
1
0
1
-201

22.0
0.0
-2.7
0.5
0.0
-0.1
0.0
-0.1
19.5

TAX ATTRIBUTABLE TO OTHER
COMPREHENSIVE INCOME

Cash flow hedges
Translation differences on foreign operations
Hedging of currency risk in foreign operations
Revaluations of defined benefit pension plans
Other comprehensive income

BEFORE
TAX

-226
355
-101
-170
-143

TAX

2014

50
-
22
34
106

GROUP

AFTER
TAX

BEFORE
TAX

-177
355
-79
-137
-37

-64
109
-39
72
78

TAX

2013

14
-
9
-15
8

AFTER
TAX

BEFORE
TAX

TAX

2014

PARENT COMPANY
BEFORE
TAX

AFTER
TAX

-50
109
-30
58
86

-155
-
-
-
-155

34
-
-
-
34

-121
-
-
-
-121

-23
-
-
-
-23

AFTER
TAX

TAX

2013

5
-
-
-
5

-18
-
-
-
-18

TAXES AS STATED IN BALANCE SHEET

GROUP

Deferred tax asset
Current tax receivable
Total tax receivables

2014
1
44
46

PARENT COMPANY
2013
-
-
-

2014
-
-
-

2013
2
106
108

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

* For the parent company this relates to forest land.

GROUP

2014

2013

PARENT COMPANY
2013

2014

3 718
1 361
512
-74

-38
5 480

140
248
5 868

3 654
1 760
389
-24

24
5 804

155
28
5 987

632
-2
-
-74

29
585

45
221
851

542
-2
-
-40

39
538

45
4
587

HOLMEN ANNUAL REPORT 2014 75

NOTES / NOTE 7

NOTE 7. TAXES, CONT.

CHANGE IN THE NET OF DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES

GROUP

STATED
IN OTHER
COMPRE-
HENSIVE
INCOME
-
-
34
-
50
84

GROUP

STATED
IN OTHER
COMPRE-
HENSIVE
INCOME
-
-
-15
-
14
-1

OPENING
BALANCE
-3 654
-1 760
40
-389
-38
-5 802

STATED IN
THE INCOME
STATEMENT
-64
421
-2
-123
23
255

OPENING
BALANCE
-3 587
-1 397
68
-552
-34
-5 502

STATED IN
THE INCOME
STATEMENT
-67
-358
-14
163
-18
-294

PARENT COMPANY

TRANSLATION
DIFFERENCES
AND OTHER
-
-22
7
-
0
-15

CLOSING
BALANCE
-3 718
-1 361
77
-512
35
-5 479

OPENING
BALANCE
-542
2
-
-
1
-538

STATED IN
THE INCOME
STATEMENT
-90
0
-
-
10
-80

STATED
IN OTHER
COMPRE-
HENSIVE
INCOME
-
-
-
-
34
34

PARENT COMPANY

TRANSLATION
DIFFERENCES
AND OTHER
-
-5
0
-
0
-5

CLOSING
BALANCE
-3 654
-1 760
40
-389
-38
-5 802

OPENING
BALANCE
-542
2
-
-
8
-531

STATED IN
THE INCOME
STATEMENT
0
0
-
-
-12
-13

STATED
IN OTHER
COMPRE-
HENSIVE
INCOME
-
-
-
-
5
5

CLOSING
BALANCE
-632
2
-
-
45
-585

CLOSING
BALANCE
-542
2
-
-
1
-538

2014
Biological assets*
Property, plant and equipment
Pension provisions
Tax allocation reserve
Other
Deferred net tax liability

2013
Biological assets*
Property, plant and equipment
Pension provisions
Tax allocation reserve
Other
Deferred net tax liability

* For the parent company this relates to forest land.

For information on biological assets see Note 11. 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 26.

The deferred tax income recognised in the consolidated income statement relates primarily to a
change in temporary differences. The amount recognised in other comprehensive income includes
deferred tax related to changes of SEK 50 million in hedging reserves (14) and an impact of SEK 34
million from the revaluation of defined benefit pension plans (-15).

At year-end there were tax loss carry-forwards and temporary differences corresponding to ap-
proximately SEK 700 million in tax for which deferred tax liabil ities have not been recognised in
the income statement and balance sheet. Of this amount, SEK 500 million relates to loss carry-
forwards. There is no time limit on the use of these. 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.

76 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 8– 9

NOTE 8. EARNINGS PER SHARE (EPS)

NOTE 9. INTANGIBLE NON-CURRENT ASSETS

Total number of shares outstanding, 1 January
Buy-back of company’s own shares
during the year
Total number of shares
outstanding, 31 December

GROUP

2014
83 996 162

2013
83 996 162

83 996 162

Shareholders’ share of profit for the year, SEKm
Average number of shares
EPS for the year, SEK

907
83 996 162
10.8

711
83 996 162
8.5

Shares in the company were repurchased in 2008 to secure the company’s commitments as part
of the options programme for the Holmen Group’s employees as decided by the 2008 AGM. A total
of 760 000 class B shares were repurchased, 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.

ACCUMULATED ACQUISITION COST
Opening balance
Investments
Disposal and retirement of assets
Translation differences
Total

AMORTISATION AND IMPAIRMENT
LOSSES, ACCUMULATED
Opening balance
Amortisation for the year
Impairment losses for the year
Disposal and retirement of assets
Translation differences
Total
Residual value according
to plan at end of year

GROUP

2014
151
73
-12
3
215

92
18
-
-12
3
101

114

PARENT COMPANY
2013
23
3
-
-
26

2014
26
-
-
-
26

2013
140
10
0
1
151

82
8
-
-
1
92

16
1
-
-
-
17

13
3
-
-
-
16

Intangible non-current assets mostly consist of IT systems of SEK 91 million (39). These assets
were largely acquired from external sources. They have determinable useful lives and are amor-
tised over 5–20 years. No goodwill applies for the Group.

HOLMEN ANNUAL REPORT 2014 77

NOTES / NOTE 10

NOTE 10. PROPERTY, PLANT AND EQUIPMENT

GROUP
Accumulated acquisition cost
Opening balance
Investments
Reclassifications
Disposal and retirement of assets
Translation differences
Total

Accumulated depreciation and
impairment losses
Opening balance
Depreciation for the year according
to plan
Impairment losses for the year
Disposal and retirement of assets
Translation differences
Total
Residual value according to plan
at end of year

BUILDINGS, OTHER
LAND AND LAND
INSTALLATIONS

2013

2014

2013

FOREST LAND
2014

137
22
-
-
7
165

-
-
-
-
-

117
17
3
-
1
137

-
-
-
-
-

6 758
61
-
-5
156
6 970

3 454

140
148
-4
84
3 822

MACHINERY AND
EQUIPMENT
2014

2013

29 918
417
17
-93
705
30 964

28 181
952
835
-239
189
29 918

6 455
95
161
-11
58
6 758

3 286

21 363

19 999

142
1
-7
31
3 454

1 106
302
-90
484
23 166

1 219
85
-86
148
21 363

WORK IN PROGRESS
AND ADVANCE PAYMENTS
TO SUPPLIERS

TOTAL

2014

2013

2014

2013

108
62
-17
-
1
153

-
-
-
-
-

1 075
27
-999
-11
16
108

36 921
561
0
-98
868
38 252

35 828
1 091
-
-261
264
36 922

-
-
-
-
-

24 817

23 285

1 246
450
-94
569
26 988

1 362
86
-94
179
24 817

165

137

3 148

3 304

7 798

8 555

153

108

11 265

12 104

PARENT COMPANY
Accumulated acquisition cost
Opening balance
Investments
Reclassifications
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
Residual value according to plan at end of year

BUILDINGS, OTHER
LAND AND LAND
INSTALLATIONS

2013

2014

2013

FOREST LAND
2014

MACHINERY AND
EQUIPMENT
2014

2013

TOTAL

2014

2013

90
344
-
0
434

-
-
-
-

90
0
-
0
90

-
-
-
-

2 415
-14
2 401
2 835

2 415
0
2 415
2 506

140
0
-
-1
139

127
1
0
128

1
-
1
12

141
0
-
-1
140

128
1
-1
127

1
0
1
13

245
21
-
-18
248

175
25
-16
184

-
-
-
65

262
11
-
-28
245

170
30
-25
175

-
-
-
70

475
365
-
-19
822

302
26
-17
312

493
11
-
-29
475

297
31
-26
302

2 416
-14
2 402
2 912

2 416
0
2 416
2 589

78 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 10–11

The Group’s impairment losses on property, plant and equipment are stated in the income state-
ment in the line item ‘Impairment losses’. The estimated recoverable amount for Braviken Sawmill
decreased in 2014 owing to continued high raw material costs in southern Sweden and was less
than the carrying amounts at year-end. This resulted in an impairment loss of SEK -450 million on
property, plant and equipment. The recoverable amount is a utility value and has been calculated
based on assumptions regarding future changes in prices, volumes and costs, as well as an esti-
mated market cost of capital of 8 per cent before tax. In 2013, impairment losses of SEK 86 million
were applied to property, plant and equipment as a result of the closure of capacity within Holmen
Paper.

The Group’s investment commitments for approved and ongoing projects amounted to SEK 710
million (670) at 31 December 2014. In 2014, the company’s capitalised borrowing costs totalled
SEK 1 million (8). An interest rate of 2.5 per cent (3.5) was used to determine the amount.

NOTE 11. BIOLOGICAL ASSETS

Forest assets are recognised in the consolidated accounts as growing forest, which is stated as a
biological asset at fair value, and land, which is stated at cost. Holmen’s assessment is that no rele-
vant 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. Fair value measurement is based on measurement level 3. This calculation of
cash flows is made for the coming 100 years, which is regarded as the harvesting cycle of the for-
ests. The cash flows are calculated on the basis of harvesting volumes according to Holmen’s cur-
rent harvesting 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. The cash
flows are discounted using an interest rate of 5.5 per cent.

In total, Holmen owns 1 042 000 hectares of productive forest land, with a volume of standing
forest totalling 121 million m3 growing stock, solid over bark. According to the harvesting plan,
valid from 2011, harvesting will amount to 3.2 million m3sub per year, of which 0.2 million m3sub
will be biofuel in the form of branches and treetops. It is believed that this level will remain largely
unchanged until 2030. Thereafter, harvesting is expected to increase gradually to over 4 million
m3sub per year by 2110. Around 40 per cent of the wood harvested consists of pulpwood that is
sold to the pulp and paper industry, 50 per cent is timber sold to sawmills and the remainder mainly
consists of branches and treetops, which are used primarily as forest fuel.

The valuation is based on a long-term trend price that is on a par with the average price over the
past 10 years but slightly higher than current market prices. The trend price is adjusted upwards
annually by an inflation rate of 2 per cent. The cost forecast is based on present-day levels and is
adjusted upwardly by just over 2 per cent per year.

Holmen’s forest holdings are reported at SEK 16 867 million (16 517) before tax. A deferred tax lia-
bility of SEK 3 718 million (3 654) is stated in relation to that figure. This represents the tax that is
expected to be charged against the earnings from harvesting in the future. On that basis, the grow-
ing forest, net after tax, is stated at SEK 13 149 million (12 863).

The change in the value of the growing forests can be broken down as follows:

GROUP
Carrying amount at start of year
Acquisition of growing forest
Sales of growing forest
Change due to harvesting
Change in fair value
Other changes
Carrying amount at end of year

2014
16 517
690
-641
-471
753
20
16 867

2013
16 227
25
0
-601
865
-
16 517

The net effect of the change in fair value and the change as a result of harvesting is stated in the in-
come statement as a change in value of biological assets. In 2014, this amounted to SEK 282 mil-
lion (264). The purchase and sale of forest mainly relates to a property exchange with the Swedish
Environmental Protection Agency.

The table below shows how the value of forest assets would be affected by changes in the most
significant valuation assumptions.

Change in value (SEKm)
GROUP
Annual change, +0.1% per year
Harvesting rate
Price inflation
Cost inflation

Change in level, +1%
Harvesting
Prices
Costs

Discount rate, +0.1%

BEFORE TAX

AFTER TAX

730
1 120
-640

250
370
-270

-450

570
870
-500

190
290
-210

-350

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 2.0 per cent to 2.1 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 in the calculations are raised by 1 per cent for all years (change of level).

HARVESTING
’000 m³sub/year

4 000

3 000

2 000

1 000

+0.2 million m3sub branches and treetops

2001–
2010

2011–
2014

2015–2020

2021–2030

2031–2040

2041–2050

2051–2060

2061–2070

2071–2080

2081–2090

2091–2100

2101–2110

Average harvesting
Harvesting plan

PRICES
SEK/m³sub

600

500

400

300

200

1998

2002

2006

2010

2014

2018

2022

Real
Nominal
Price used in valuation (nominal)

The Nominal price series shows the average selling price for Holmen. The Real series shows
nominal prices recalculated at 2014 monetary value using historical Swedish CPI.

HOLMEN ANNUAL REPORT 2014 79

NOTES / NOTE 12

NOTE 12. INVESTMENTS IN ASSOCIATES, JOINT VENTURES AND OTHER SHARES AND PARTICIPATING INTERESTS

ASSOCIATES
Carrying amount at start of year
Investments
Share of earnings
Dividends received
Translation difference
Impairment losses
Carrying amount at end of year

GROUP

2014
1 825
17
-17
-2
10
-5
1 828

PARENT COMPANY
2013
125
-
-
-
-
-
125

2014
125
-
-
-
-
-
125

2013
1 821
-
5
-
6
-7
1 825

The parent company’s opening balance includes accumulated impairment losses of SEK 34 million.

JOINT VENTURES
Carrying amount at start of year
Investments
Share of earnings
Other
Carrying amount at end of year

OTHER SHARES AND
PARTICIPATING INTERESTS
Carrying amount at start of year
Investments
Disposals
Translation difference
Impairment losses
Carrying amount at end of year

GROUP

2014
136
-
10
-3
142

PARENT COMPANY
2013
-
82
-
-
82

2014
82
-
-
-
82

2013
-
139
-2
-1
136

GROUP

PARENT COMPANY

2014
9
-
-
-
-5
4

2013
13
1
-
0
-5
9

2014
1
-
-
-
-
1

2013
6
-
-
-
-5
1

PARENT COMPANY AND GROUP HOLDINGS OF SHARES AND INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

CORPORATE
ID NO.

REGISTERED
OFFICE

NO. OF
SHARES

INTEREST
%*

CARRYING
AMOUNT AT
PARENT
COMP.
SEK
THOUSANDS
2014

VALUE OF
HOLDING IN
CONSOLI-
DATED AC-
COUNTS, SEK
THOUSANDS

CARRYING
AMOUNT AT
PARENT
COMP.
SEK
THOUSANDS
2013

VALUE OF
HOLDING IN
CONSOLI-
DATED AC-
COUNTS, SEK
THOUSANDS

INTEREST
%*

556017-6678
556016-0953
556036-9398
556594-6984
556193-9470
556188-2712
556142-5116
556504-2826
556713-5172
556253-1474

ASSOCIATES
Brännälvens Kraft AB
Gidekraft AB
Harrsele AB
Uni4 Marketing AB
Industriskog AB
Pressretur AB
PÅAB, Pappersåtervinning AB
Vattenfall Tuggen AB
VindIn AB
ScandFibre Logistics AB
Melodea Ltd, Israel
Baluarte Sociedade de Recolha
e Recuperação de Desperdicios,
Lda, Portugal
SAS Saica Natur sud, France
Peninsular Cogeneración S.A., Spain

Arbrå
Örnsköldsvik
Vännäs
Stockholm
Falun
Stockholm
Norrköping
Lycksele
Stockholm
Stockholm
Tel Aviv

Alcochete
Lorp-Sentaraille
Madrid

5 556
990
9 886
1 800
-
334
500
683
200
2 000
119

2
678
4 500

13.9
9.9
49.4
36.0
-
33.4
50.0
6.8
17.7
20.0
37.6

50.0
24.0
50.0

-
99
-
1 856
-
-
109
74 755
46 260
2 115
-

-
-
-
125 194

36 400
99
1 468 927
21 423
-
0
109
74 755
51 103
2 115
11 705

37 255
18 883
104 975
1 827 749

JOINT VENTURES
Varsvik AB
Total

556914-9833

Stockholm

250

50.0

82 470
207 664

142 482
1 970 231

* The percentage of ownership corresponds to the percentage of votes for the total number of shares.

13.9
9.9
49.4
36.0
33.3
33.4
50.0
6.8
17.7
20.0
21.1

50.0
24.0
50.0

50.0

-
99
-
1 856
37
-
109
74 755
46 260
2 115
-

-
-
-
125 232

36 400
99
1 472 724
20 993
37
0
109
74 755
52 322
2 115
345

37 939
17 669
109 629
1 825 137

82 470
207 702

135 807
1 960 944

80 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 12–13

PARENT COMPANY AND GROUP HOLDINGS OF SHARES AND INVESTMENTS IN OTHER COMPANIES

CORPORATE
ID NO.

REGISTERED
OFFICE

NO. OF
SHARES

INTEREST
%*

556761-5371

Stockholm

100 000

20.0

556573-9587

Umeå

79 391

2.6

Parent company
Industrikraft i Sverige AB
Miscellaneous shares owned
by the parent company
Total

Group
SweTree Technologies AB
Miscellaneous shares
Total

CARRYING
AMOUNT AT
PARENT
COMP.
SEK
THOUSANDS
2014

VALUE OF
HOLDING IN
CONSOLI-
DATED AC-
COUNTS, SEK
THOUSANDS

CARRYING
AMOUNT AT
PARENT
COMP.
SEK
THOUSANDS
2013

VALUE OF
HOLDING IN
CONSOLI-
DATED AC-
COUNTS, SEK
THOUSANDS

INTEREST
%*

107

647
754

-
-
754

107

647
754

2 427
384
3 565

20.0

2.6

107

647
754

754

107

647
754

7 627
340
8 720

* The percentage of ownership corresponds to the percentage of votes for the total number of shares.

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 associate only earns a limited
profit. Purchased electricity is sold to external customers at market price, and the earnings are
stated in the consolidated accounts within the Holmen Energi business area. Ownership in remain-
ing associates relates to activities in the areas of logistics, sales, research and development, and
recycling and management of recovered paper.

The interests in Brännälvens Kraft AB, Gidekraft AB, Vattenfall Tuggen AB and VindIn AB are clas-
sified as associates even though the holdings are less than 20 per cent, since shareholder agree-
ments provide significant influence over each company’s activities.

No individual investment in associates and joint ventures is deemed to be of such material signifi-
cance or associated with particular or significant risk for the Group that more extensive disclosures
must be made in accordance with IFRS 12 Disclosure of Interests in Other Entities.

Ownership in Varsvik AB relates to wind power assets.

The combined value of Holmen’s share in the profits of associates amounted to SEK -13 million (4)
for the Group and to SEK 2 million (1) for the parent company.

The combined value of Holmen’s share in the profits joint ventures amounted to SEK 3 million (-3)
for the Group and to SEK 3 million (-3) for the parent company.

NOTE 13. FINANCIAL INSTRUMENTS

Non-current financial receivables consist of long-term interest-bearing deposits with credit in-
stitutions, financial receivables from other companies, which, substantially, are interest-bearing as
well as prepayments relating to committed credit facilities. The fair values of long-term derivatives
are also included. The parent company’s receivables from Group companies include a significant
share of interest-free 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 exchange gains. Current financial receiv-
ables essentially have fixed interest periods of under 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 convert-
ed 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 in bank accounts or as current deposits at banks.

Loan liabilities, accrued interest costs, unrealised exchange losses and fair values of derivatives are
stated as financial liabilities.

Financial liabilities are largely interest-bearing. The parent company’s liabilities to Group compa-
nies include a significant amount of interest-free liabilities between Swedish wholly owned Group
companies.

The maturity structure and average interest for the Group’s liabilities are stated in the administra-
tion report on page 34. SEK 3 219 million of the parent company’s liabilities are due for payment
within one year. In addition to the financial assets and liabilities identified above, the pension liabil-
ity (see Note 17) is also included in net financial debt.

All of the Group’s derivatives are covered by ISDA or FEMA agreements, which entails a right for
Holmen to offset assets and liabilities in relation to the same counterparty in the case of a credit
event. Assets and liabilities are not offset in the report. Recognised derivatives totalled SEK 18
million (32) on the asset side and SEK -433 million (-156) on the liabilities side.

Items measured at fair value belong to measurement level 2 pursuant to IFRS 7. Fair value in the
tables is calculated on the basis of discounted cash flows and all variables, such as discount rates
and exchange rates, are taken from market listings for calculations. The difference between fair
value and carrying amount arises because certain liabilities are not measured at fair value in the
balance sheet, and are instead stated at their amortised cost. For loans recognised at amortised
cost, fair value is calculated on the basis of discounted cash flows and belongs to measurement
level 2. All variables are taken from market listings for calculations. The Group has no loans that are
recognised at fair value in profit/loss. In the case of trade receivables, trade payables and other
items not affected above, the carrying amount is stated as the fair value, as this is judged to be a
good reflection of the fair value. Since it has not been possible to determine a reliable fair value for
shares and interests, they have been excluded from the tables. For further information on financing,
see the section on Risk, on page 34.

MATURITY STRUCTURE, UNDISCOUNTED AMOUNTS*

FINANCIAL LIABILITIES
Derivatives
Other financial liabilities

FINANCIAL RECEIVABLES
Derivatives
Other financial liabilities

2015

2016

2017

2018

2019-

-89
-3 224

-23
-530

-21
-1 420

-14
-311

-17
-506

5
199

-
4

-
3

-
6

* Refers to financial instruments included in net financial debt above, excluding provisions

for pensions.

HOLMEN ANNUAL REPORT 2014 81

NOTES / NOTE 13

NOTE 13. FINANCIAL INSTRUMENTS, CONT.

Group

FINANCIAL INSTRUMENTS IN
CLUDED IN NET FINANCIAL DEBT

NONCURRENT RECEIVABLES
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

NONCURRENT LIABILITIES
MTN loans
Loans from banks and other credit
institutions
Derivatives
Other non-current liabilities

CURRENT LIABILITIES
Commercial paper programme
Bank account liabilities
Derivatives
Accrued interest
MTN loans
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 receivables)

DERIVATIVES
RECOGNISED
AT FAIR VALUE
THROUGH
PROFIT/LOSS
2014

2013

DERIVATIVES
WITH HEDGE
ACCOUNTING
2014

2013

TRADE
RECEIV ABLES
AND LOAN
RECEIVABLES
2014

2013

AVAILABLE-
FOR-SALE
ASSETS

2014

2013

OTHER
LIABILITIES
2014

2013

TOTAL
CARRYING
AMOUNT
2014

2013

FAIR VALUE
2014

2013

-
-
-

-
5
-
5

-
-
-

-
-
-
-

-
-
-11
-
-
-
-11

-
-

-
-
-

-
5
-
5

-
-
-

-
-
-
-

-
-
-6
-
-
-
-6

-
-

-
-
-

-
-
-
-

-
-
-

-
-80
-
-80

-
-
-56
-
-
-
-56

-
-

5
-
5

-
1
-
1

-
-
-

-
-19
-
-19

-
-
-18
-
-
-
-18

-
-

-38

-15

-247

-98

-
40
40

0
-
17
17

-
23
23

1
-
17
18

11
176
187

12
263
275

-
-
-
-

-
-
-
-
-
-
-

-
-
-
-

-
-
-
-
-
-
-

-
2 328

-
2 103

-
-
-

-
-
-
-

-
-
-

-
-
-
-

-
-
-
-
-
-
-

4
-

-
-
-

-
-
-
-

-
-
-

-
-
-
-

-
-
-
-
-
-
-

9
-

-
-
-

-
-
-
-

-
-
-

-
-
-
-

-
-
-

-
40
40

0
5
17
22

5
23
28

1
6
17
24

-
40
40

0
5
17
22

5
23
28

1
6
17
24

11
176
187

12
263
275

11
176
187

12
263
275

-1 200

-1 512

-1 200

-1 512

-1 200

-1 529

-1 200
-
-8
-2 408

-2 747
-94
-
-18
-331
-11
-3 201

-1 203
-
-
-2 715

-3 383
-26
-
-25
-
-11
-3 445

-1 200
-80
-8
-2 488

-2 747
-94
-67
-18
-331
-11
-3 269

-1 203
-19
-
-2 734

-3 383
-26
-25
-25
-
-11
-3 470

-1 200
-80
-8
-2 488

-2 747
-94
-67
-18
-338
-11
-3 275

-1 221
-19
-
-2 769

-3 383
-26
-25
-25
-
-11
-3 470

-
-

4
2 328

9
2 103

-
2 328

-
2 103

-1 882

-2 007

-1 882

-2 007

-1 882

-2 007

-286

-112

-286

-112

-7 491

-8 167

-5 330

-5 863

-5 340

-5 907

Total financial instruments

-41

-14

-374

-111

2 572

2 420

82 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 13

DERIVATIVES
RECOGNISED
AT FAIR VALUE
THROUGH
PROFIT/LOSS
2014

2013

DERIVATIVES
WITH HEDGE
ACCOUNTING
2014

2013

TRADE
RECEIV ABLES
AND LOAN
RECEIVABLES
2014

2013

AVAILABLE-
FOR-SALE
ASSETS

2014

2013

OTHER
LIABILITIES
2014

2013

TOTAL
CARRYING
AMOUNT
2014

2013

FAIR VALUE
2014

2013

Parent company

FINANCIAL INSTRUMENTS IN
CLUDED IN NET FINANCIAL DEBT

NONCURRENT RECEIVABLES
Derivatives
Receivables from Group companies
Other financial receivables

CURRENT FINANCIAL RECEIVABLES
Accrued interest
Derivatives
Other financial receivables

CASH AND CASH EQUIVALENTS
Bank balances

NONCURRENT LIABILITIES
MTN loans
Loans from banks and other
credit institutions
Liabilities to Group companies
Derivatives

CURRENT LIABILITIES
Commercial paper programme
Bank account liabilities
Derivatives
Accrued interest
MTN loans
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 receivables)

-
-
-
-

-
5
-
5

-
-

-
-
-
-

-
-
-11
-
-
-
-11

-
-

-
-
-
-

-
5
-
5

-
-

-
-
-6
-
-
-
-6

-
-

-
-
-
-

-
-

-
-
-80
-80

-
-
-56
-
-
-
-56

-
-

5
-
-
5

-
1
-
1

-
-

-
-
-19
-19

-
-
-18
-
-
-
-18

-
-

-41

-16

-251

-174

-
3 234
96
3 329

-
2 632
79
2 711

0
-
17
17

115
115

1
-
17
18

213
213

-
-
-
-

-
-
-
-
-
-
-

-
-
-
-

-
-
-
-
-
-
-

-
1 921

-
1 790

Total financial instruments

-44

-15

-377

-185

5 382

4 733

-
-
-
-

-
-

-
-
-
-

-
-
-
-
-
-
-

1
-

-
-
-
-

-
-

-
-
-
-

-
-
-
-
-
-
-

1
-

-
-
-
-

-
-

-
-
-
-

-
-

-
3 234
96
3 329

5
2 632
79
2 715

-
3 234
96
3 329

5
2 632
79
2 715

0
5
17
22

115
115

1
6
17
24

213
213

0
5
17
22

115
115

1
6
17
24

213
213

-1 200

-1 512

-1 200

-1 512

-1 200

-1 529

-1 200
-418
-
-2 818

-2 747
-93
-
-18
-331
-6
-3 196

-1 201
-1 215
-
-3 928

-3 383
-25
-
-25
-
-6
-3 440

-1 200
-418
-80
-2 898

-2 747
-93
-67
-18
-331
-6
-3 263

-1 201
-1 215
-19
-3 948

-3 383
-25
-25
-25
-
-6
-3 464

-1 200
-418
-80
-2 898

-2 747
-93
-67
-18
-338
-6
-3 269

-1 218
-1 215
-19
-3 982

-3 383
-25
-25
-25
-
-6
-3 464

-
-

1
1 921

1
1 790

-
1 921

-
1 790

-1 855

-1 738

-1 855

-1 738

-1 855

-1 738

-292

-190

-292

-190

-7 868

-9 106

-2 906

-4 573

-2 913

-4 608

HOLMEN ANNUAL REPORT 2014 83

NOTES / NOTE 14–16

NOTE 14. INVENTORIES

NOTE 16. EQUITY, PARENT COMPANY

Raw materials and consumables
Timber and pulpwood
Finished products and work in progress
Felling rights
Electricity certificates and
emission allowances
Total

GROUP

2014
906
277
1 405
530

79
3 198

PARENT COMPANY
2013
644
260
996
434

2014
613
259
1 037
516

69
2 494

144
2 477

2013
966
277
1 295
448

155
3 140

During the year, impairment losses on inventories had a positive impact on earnings as a result of
a reversal of previous years’ impairment losses and amounted to SEK 2 million (60) for the Group
and SEK 4 million (50) for the parent company.

NOTE 15. OPERATING RECEIVABLES

Trade receivables
Group companies
Associates
Other
Total trade receivables
Current receivables
Group companies
Associates
Other
Derivatives
Prepayments and accrued income
Total other operating receivables
Total operating receivables

GROUP

2014

2013

PARENT COMPANY
2013

2014

-
65
2 263
2 328

-
15
167
13
199
394
2 721

-
43
2 060
2 103

-
16
168
21
219
425
2 528

80
61
1 780
1 921

-
5
126
13
97
241
2 162

59
39
1 692
1 790

-
7
124
23
105
259
2 050

Trade receivables are recognised at the amount expected to be received, based on an individual
assessment of each customer. The Group’s trade receivables mainly relate to European customers.
Trade receivables denominated in foreign currencies were valued at the balance sheet date. The
provision for anticipated credit losses on trade receivables stood at SEK 33 million (47) at 31 Decem-
ber 2014 and it has been recognised, net, together with trade receivables. During the year, the pro-
vision was changed by SEK -7 million (-1) as a result of actual credit losses, and by SEK -8 million
(15) as a result of changes in the provision for anticipated credit losses.

The fair values of derivatives relate to hedges of future cash flows.

Customer credit risks related to the Group’s customers are managed by the relevant business areas
and are described in the administration report on page 35.

SHARE CAPITAL
Registrered share capital
Class A
Class B
Total number of shares
Repurchased class B shares
Total number of shares
outstanding

31 DEC 2014

NUMBER QUOTIENT VALUE

SEKm

50
50

1 131.2
3 106.6
4 237.8

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

83 996 162

31 DEC 2013

NUMBER QUOTIENT VALUE

SEKm

50
50

1 131.2
3 106.6
4 237.8

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

83 996 162

The company’s share capital consists of shares issued in two classes: class A, each of which
carries 10 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 2014 the Group’s own shareholding was 760 000 shares (760 000). None of the
Group’s own shares were sold during the year.

Assets and liabilities measured at fair value according to Chapter 4 Section 14a of the Swedish
Annual Accounts Act had an impact of SEK -421 million (-200) on parent company equity. In the
consolidated accounts, valuation of derivatives and other financial instruments had an impact of
SEK -415 million (-125) on equity.

Holmen’s profitability target is a return that is consistently above the market-based cost of capital.
Decisions on ordinary dividends are based on an appraisal of the Group’s profitability, future invest-
ment plans and financial position. The aim is to have a robust financial position with a debt/equity
ratio at a maximum of 0.5.

The Board proposes that the AGM, to be held on 16 April 2015, approve a dividend of SEK 10 per
share. The proposed dividend totals SEK 840 million.

For the previous year, the dividend paid was SEK 9 per share (SEK 756 million).

The debt/equity ratio was 0.28 (0.29).

Neither the parent company nor the subsidiaries are subject to external capital requirements, ex-
cept for Holmen Försäkring AB, the Group’s insurance company, 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 and risk management, see the administration report on
pages 32–35.

84 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 17

GROUP

2014
1 777
84

84
-
-4
62
5
-75
232
2 165
-400

2013
1 608
66

73
-
-5
53
5
-53
31
1 777
-238

PARENT COMPANY
2013
133
-

2014
144
-

-
14
-
-
-
-10
-
148
-11

-
11
-
-
-
-
-
144
-39

GROUP

2014
1 075
1 080
10
2 165

2013
903
856
19
1 777

PARENT COMPANY
2013
50
94
0
144

2014
58
86
4
148

NOTE 17. PENSION PROVISIONS

Holmen has defined benefit occupational pension plans for its salaried employees 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 2004.
Since then, new employees have been offered a defined contribution pension scheme. Occupation-
al pension plans for ‘blue-collar’ employees in Sweden are defined contribution plans. The obliga-
tions arising out of the pension schemes in the UK are placed in trusts. The defined benefit obliga-
tions over and above the ITP plan for Group management in Sweden are secured by means of a
pension fund. These obligations are recognised in the consolidated accounts as defined benefit
plans in accordance with IAS 19. Most of the defined benefit pension obligations on behalf of sala-
ried employees in Sweden are secured by means of insurance policies with Alecta. As Alecta can-
not provide sufficient information to permit the ITP plan to be stated in the accounts as
a defined benefit plan, it is stated in accordance with statement UFR 6 of the Swedish Financial
Reporting Board as a de fined contribution plan.

PLAN ASSETS
Fair value of assets at 1 January
Interest income
Expected return excl. recognized interest
income
Real return (parent company)
Administration fees
Contribution by employer
Contribution by plan participants
Benefits paid
Exchange differences
Fair value of assets at 31 December
Pension provisions, net

Plan assets by type are as shown below:

COST RECOGNISED IN PROFIT/LOSS
FOR THE YEAR
Defined benefit plans
Staff cost
Finance costs
Total defined benefit plans stated
in profit/loss for the year
Defined contribution plans
Staff cost
Total recognised in profit/loss
for the year

GROUP

PARENT COMPANY

2014

2013

2014

2013

-24
-5

-29

-27
-13

-39

9
3

-15
-2

-16

PLAN ASSETS
Equity
Bonds
Current fixed income investments

-119

-124

-107

-115

-148

-163

-96

-131

COST RECOGNISED IN OTHER
COMPREHENSIVE INCOME
Return on plan assets excl. recognized interest income
Actuarial gains and losses from changes in
demographic assumptions
Actuarial gains and losses from changes in
financial assumptions
Payroll tax
Total recognised in other comprehensive income

2014
84

-260
3
-170

2013
73

-3
2
72

The change in the defined benefit obligations and the change in plan assets are specified in the
table below. Some 90 per cent of the obligations relate to the pension plans in the UK. The obliga-
tions arising out of the pension schemes in the UK are placed in trusts. These are governed by
a board consisting of representatives from Holmen and the beneficiaries. Holmen’s UK subsidiary
has a commitment to cover the deficit that exists over a period of time as agreed between the trust
and the company in consultation with its actuary. This period is currently 7 years and is subject to
review every 3 years.

OBLIGATIONS
Obligations at 1 January
Current service cost
Payroll tax
Interest costs
Actuarial gains/losses
Contribution by plan participants
Benefits paid
Transferred from provisions
Settlements
Exchange differences
Obligations at 31 December

GROUP

2014
-2 016
-24
-2
-89
-258
-5
93
-1
0
-265
-2 565

2013
-1 963
-22
-5
-78
-3
-5
95
-4
0
-32
-2 016

PARENT COMPANY
2013
-193
-26
-
-2
-
-
41
-4
-
-
-183

2014
-183
-5
-
3
-
-
27
-1
-
-
-159

Of the Group’s total obligations, SEK 22 million (42) refers to those that are not funded, while the
rest are wholly or partially funded obligations. Of the parent company’s obligations, SEK 11 million
(39) are secured under the act on safe guarding pension obligations, Tryggandelagen.

The weighted average duration is 18 years.

The plan assets do not include any financial instruments issued by Group companies or assets used
by the Group. Of shares, 52 per cent relate to the UK, 44 per cent to the rest of Europe and the US
and 4 per cent to the rest of the world. Of bonds, 41 per cent relate to government bonds and 59
per cent to corporate bonds.

KEY ACTUARIAL ASSUMPTIONS, GROUP
(WEIGHTED AVERAGE), %
Discount rate
Rate of salary increase
Rate of price inflation

31 Dec 2014
3.6
3.7
2.9

31 Dec 2013
4.5
4.0
3.2

The discount rate for pension obligations was established on the basis of high-quality corporate
bonds. A discount rate of 2.6 per cent (2.6) and salary levels at the balance sheet date were used
for calculating the amount of the parent company’s pension obligation.

The table below shows how the obligation would be affected in the event of a change in key
actuarial assumptions (- reduces debt, + increases debt).

SENSITIVITY ANALYSIS
Discount rate (+ 0.5%)
Rate of salary increase (+ 0.5%)
Rate of price inflation (+ 0.5%)
Mortality (+1 year in life expectancy)

31 Dec 2014
-221
38
195
77

31 Dec 2013
-160
33
136
55

The Group’s payments into the funded defined benefit plans in 2015 are expected to amount to
SEK 61 million.

Multi-employer plans
The year’s premiums for pension insurance policies taken out with Alecta amounted to SEK 30
million (31) and 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 2014, Alecta’s collective
consolidation level was 144 per cent (148).

HOLMEN ANNUAL REPORT 2014 85

NOTES / NOTE 18–20

NOTE 18. OTHER PROVISIONS

GROUP
Carrying amount at start of the year
Provisions during the year
Utilised during the year
Translation differences
Carrying amount at end of the year
Of which non-current portion of the provisions
Of which current portion of the provisions

PARENT COMPANY
Carrying amount at start of the year
Provisions during the year
Utilised during the year
Carrying amount at end of the year
Of which non-current portion of the provisions
Of which current portion of the provisions

PROVISIONS FOR TAXES

OTHER PROVISIONS

TOTAL

2014
155
0
-15
0
140
140
0

45
0
0
45
45
0

2013
86
70
-1
0
155
155
0

45
0
0
45
45
0

2014
461
30
-29
0
463
393
69

651
127
-148
630
466
164

2013
479
82
-101
0
461
397
64

626
214
-189
651
470
181

2014
616
30
-44
0
603
533
69

696
127
-148
676
511
164

2013
566
152
-102
0
616
552
64

671
214
-189
696
515
181

Other provisions primarily relate to obligations to restore the environment, as well as staff costs and
restructuring costs. The parent company figures also include a provision to cover future reforesta-
tion measures to be taken after completion of final harvesting (SEK 221 million); the measures are
normally carried out within three years of harvesting.

At the end of 2014, provisions of around SEK 55 million had been made to cover restructuring
costs. These are mainly expected to be paid out in 2015.

NOTE 19. OPERATING LIABILITIES

NOTE 20. OPERATING LEASES

Trade payables
Group companies
Associates
Other
Total trade payables

Current liabilities
Group companies
Associates
Other
Derivatives
Accruals and deferred income
Total other operating liabilities
Total operating liabilities

GROUP

2014

2013

PARENT COMPANY
2013

2014

-
32
1 850
1 882

-
9
136
286
665
1 096
2 978

-
17
1 990
2 007

-
14
172
112
704
1 002
3 009

320
-
1 535
1 855

0
9
109
292
466
875
2 730

135
-
1 603
1 738

0
14
139
190
554
897
2 635

All trade payables are due for payment within one year.

Accruals and deferred income in the parent company principally consist of staff costs of SEK 200
million (195), goods delivered but not yet invoiced of SEK 76 million (171) and discounts of SEK 36
million (40). Of these amounts, SEK 0 million relates to associates.

Fair values of derivatives essentially relate to hedging future cash flows; see Note 13.

In 2014, the Group’s lease payments amounted to SEK 67 million (70), and the parent company’s
to SEK 37 million (24). The Group’s lease agreements mainly relate to trucks, cars and rental agree-
ments. No new lease agreements of any significance for the business were entered into during the
2014 financial year. No leased equipment was subleased.

The breakdown of future lease payments is as follows:

GROUP
2016
–2020
76

2015
58

PARENT COMPANY

2021–
3

2015
30

2016
–2020
47

2021–
-

Future lease payments
Present value of
future lease payments

The contracts have remaining durations ranging from 1 to 10 years. The Group’s future lease pay-
ments for existing lease agreements amounted to SEK 132 million at the end of the previous year.
Those in the parent company amounted to SEK 57 million.

Apart from lease agreements, Holmen has time charter contracts in respect of ships that are used
to distribute the company’s products. Two contracts were entered into on 1 January 2014 and
these contracts have a remaining term of 1 year.

86 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 21–22

NOTE 21. COLLATERAL AND CONTINGENT LIABILITIES

GROUP
For own liabilities
Financial liabilities
Total

PARENT COMPANY
For own liabilities
Financial liabilities
Total

PROPERTY
MORTGAGES

OTHER
COLLATERAL

-
6
6

-
142
142

TOTAL
COLLATERAL
2014
-
149
149

TOTAL
COLLATERAL
2013
-
142
142

-
149
149

-
142
142

NOTE 22. RELATED PARTIES

Of the parent company’s net sales of SEK 14 077 million (14 443), 0.8 (0.7) per cent relates to
deliveries to Group companies. The parent company’s purchases from Group companies amounted
to SEK 1 604 million (1 448).

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 23).

Holmen Paper AB has contractually committed to purchase products on a continuous basis from
Holmen Paper Madrid SL at a price calculated at production cost plus tied-up capital, for onward
sale to end-customers. The aim is to optimise the newsprint business. Holmen Paper AB’s pur-
chases from Holmen Paper Madrid SL in 2014 amounted to SEK 1 355 million (1 353). As Holmen
Paper AB is acting on a commissioned basis for Holmen AB, these transactions are accounted for
via Holmen AB.

Transactions with related parties

CONTINGENT LIABILITIES
Surety on behalf of Group companies
Other contingent liabilities
Total

GROUP

2014
-
118
118

PARENT COMPANY
2013
32
61
93

2014
29
65
95

2013
-
113
113

On the basis of the Swedish Environmental Code, the Swedish environmental author ities 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 liabil ities that cannot at present be quantified, but that
could involve costs in the future.

The holding in a jointly owned company, Varsvik AB, is pledged and amounted to SEK 142 million
(136) at the end of the year.

The Spanish competition authority has carried out an extensive investigation into the country’s
waste and recycling industry, and in January 2015 ordered a very large number of companies to
pay an administrative fine. Holmen’s Spanish subsidiary is among these companies and has been
ordered to pay EUR 4.8 million. This is because the competition authority claims that there was
anti-competitive cooperation over the collection of paper and paperboard in Madrid. Holmen’s
Spanish subsidiary will appeal the decision.

L E Lundbergföretagen AB is a large shareholder in Holmen (see page 57). 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 2014, Fredrik Lundberg, who is CEO and principal shareholder in
L E Lundbergföretagen, received a fee of SEK 650 000 as Board chairman of Holmen.

Transactions with related parties are priced on market terms. The equity holdings in associates that
produce hydro and wind power entitle the Group to buy the electricity produced at cost price in rela-
tion to the shareholding, which means that the associate only earns a limited profit. Purchased
electricity is sold to external customers at market price, and the earnings are stated in the consoli-
dated accounts within the Holmen Energi business area.

In Spain, energy and recovered paper are purchased from associates.

GROUP
Associates
Joint ventures

PARENT COMPANY
Subsidiaries
Associates
Joint ventures

SALE OF PRODUCTS
TO RELATED PARTIES

2014
283
4

113
283
4

2013
242
-

95
242
-

PURCHASE OF PRODUCTS
FROM RELATED PARTIES
2013
272
-

2014
200
-

1 604
115
-

1 488
153
-

OTHER (E.G.
INTEREST, DIVIDEND)

LIABILITY TO
RELATED PARTIES

RECEIVABLE FROM
RELATED PARTIES

2014
3
0

555
0
4

2013
0
-

676
1
1

2014
118
-

744
79
-

2013
70
-

1 519
53
-

2014
119
8

3 314
98
63

2013
93
-

2 691
80
57

For fees and remuneration paid to members of the Board, see Note 4.

HOLMEN ANNUAL REPORT 2014 87

NOTES / NOTE 23

NOTE 23. INVESTMENTS IN GROUP COMPANIES

PARENT COMPANY

ACCUMULATED ACQUISITION COST
Carrying amount at start of year
Purchase
Shareholder’s contribution
Sales
Transferred to ‘Associates’ and ‘Joint ventures’
Transfers
Closing balance at 31 December

ACCUMULATED REVALUATIONS
Carrying amount at start of year
Transfers
Closing balance at 31 December

2014
17 144
-
-4
0
-
-
17 141

-
-
-

2013
16 682
0
11
-10
-5
466
17 144

2 299
-2 299
-

ACCUMULATED IMPAIRMENT LOSSES
Carrying amount at start of year
Impairment losses for the year
Transfers
Closing balance at 31 December
Carrying amount at end of year

2014
4 853
351
-
5 204
11 936

2013
6 030
656
-1 833
4 853
12 291

The parent company’s impairment losses on investments in Group companies are stated in the
income statement in the line item for ‘Profit/loss from investments in Group companies’ and relate
in 2014 to holdings in the business operations in Spain.

Parent company’s direct holdings of investments in subsidiaries

CORPORATE ID NO.

REGISTERED
OFFICE

NO. OF
SHARES

INTEREST, %*

2014

CARRYING
AMOUNT SEK
THOUSANDS

INTEREST, %*

2013

Iggesund Paperboard AB
Holmen Paper AB
Holmen Timber AB
Holmen Skog AB
Holmen Energi AB
Holmens Bruk AB
Holmen Försäkring AB
MoDo Capital AB
Holmen Energi Elnät AB
Stavro Vind AB
Other Swedish Group companies
Total Swedish holdings

556088-5294
556005-6383
556099-0672
556220-0658
556524-8456
556537-4286
516406-0062
556499-1668
556878-3905
556953-6153

Holmen France S.A.S., 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**
Iggesund Paperboard Asia Pte Ltd, Singapore
Holmen B.V., The Netherlands
AS Holmen Mets, Estonia
Iggesund Paperboard Inc, USA
Iggesund Paperboard Asia (HK) Ltd, China
Other non-Swedish Group companies
Total non-Swedish holdings
Total

Hudiksvall
Norrköping
Hudiksvall
Örnsköldsvik
Örnsköldsvik
Stockholm
Stockholm
Stockholm
Örnsköldsvik
Stockholm

Paris
Workington
London
Workington
Hamburg
Madrid
Madrid
Madrid
Singapore
Amsterdam
Tallinn
Lyndhurst
Hong Kong

1 000
100
1 000
1 000
1 000
1 000
10 000
1 000
500
500

10 000
1 197 100
-
-
-
9 448 557
-
-
800 000
35
500
1 000
4 000 000

* The percentage of ownership corresponds to the percentage of votes for the total number of shares. ** Indirect holdings.

100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100
100
100
100
100
100
100
100

100
100
100
83
100
8 867 852
45 304
71 552
50
7 050
874
8 993 165

51
1 518 959
-
-
655
1 381 433
-
-
4 273
24 498
-
6 899
4 812
1 433
2 943 013
11 936 178

100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100
100
100
100
100
100
100
100

100
100
100
83
100
8 867 852
45 304
71 552
50
7 050
874
8 993 165

3 593
1 518 959
-
-
655
1 732 340
-
-
4 273
24 498
-
6 899
4 812
1 433
3 297 462
12 290 627

88 HOLMEN ANNUAL REPORT 2014

NOTES / NOTE 24–26

NOTE 24. UNTAXED RESERVES

PARENT COMPANY

ACCUMULATED DEPRECIATION AND
AMORTISATION IN EXCESS OF PLAN 31 Dec 2014
1
Intangible non-current assets
2
Property, plant and equipment
3
Total

APPRO-

PRIATIONS 31 Dec 2013
1
0
1

0
2
1

TAX ALLOCATION RESERVE
Assessment of tax 2009
Assessment of tax 2010
Assessment of tax 2011
Assessment of tax 2012
Assessment of tax 2013
Assessment of tax 2014
Assessment of tax 2015

Total

-
707
170
560
0
280
610
2 327
2 330

-53

610
557
559

53
707
170
560
0
280
-
1 770
1 771

Group contributions received amounted to SEK 1 777 million (531) and Group contributions paid
amounted to SEK 0 million (-1). Total appropriations of profit amounted to SEK 219 million.

NOTE 25. CASH FLOW STATEMENT

INTEREST RECEIVED PAID AND
DIVIDENDS RECEIVED
Dividend received
Interest received
Interest paid
Total

GROUP

PARENT COMPANY

2014
0
1
-130
-129

2013
-
4
-201
-197

2014
546
15
-127
433

2013
671
5
-195
481

CHANGE IN CURRENT LIABILITIES
The change in current liabilities mostly relates to borrowing within the Group’s commercial paper
programme. In 2014, a number of different short-term loans totalling SEK 9 435 million (8 121)
were raised within the Group’s commercial paper programme, and SEK 10 071 million (8 120)
was repaid. For a specification of cash and cash equivalents, see Note 13.

NOTE 26. CRITICAL ACCOUNTING

ESTIMATES AND JUDGEMENTS

When preparing financial reports the company’s management is required to make estimates and
judgements that have an effect on the stated amounts. The estimates and judgements that, in the
view of the company’s management, are of importance for the amounts stated in the annual report,
and that are at significant risk of being altered by future events and new information, mainly include
the following.

BIOLOGICAL ASSETS
Holmen’s assessment is that no relevant market prices are available that can be used to value for-
est 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 harvesting can be increased in the future, what changes there will be in pulp-
wood and timber prices, how high inflation will be, and what discount rate is used. Note 11 provides
a sensitivity analysis for the valuation of changes in these estimates. The carrying amount of bio-
logical assets at 31 December 2014 was SEK 16 867 million and the attributable deferred tax
liability was SEK 3 718 million, giving a net value of SEK 13 149 million.

TAX
At year-end the Group had tax-related loss carry-forwards and temporary differences of some
SEK 700 million not stated in the consolidated accounts based on the premise that utilisation must
be likely. See Note 7.

PENSIONS
The Group’s provision for pensions amounts to SEK 400 million on the basis of defined benefit
pension obligations valued at SEK 2 565 million and plan assets of SEK 2 165 million provided to
cover them. The value of pension obligations 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 as well as the coming year’s recognised pension cost. See Note 17.

ENVIRONMENT
Provisions to cover environment-related measures associ ated with former activities have been
made 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 in-
volve costs in the future. See Note 21.

IMPAIRMENT TESTING
Impairment testing is performed annually. In 2014, an impairment loss of SEK -450 million was
made on property, plant and equipment within the Holmen Timber business area. This impairment
loss is 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. See Note 10. Changes in
conditions may have an effect on the estimated recoverable amount applied in connection with fu-
ture impairment tests.

HOLMEN ANNUAL REPORT 2014 89

PROPOSED APPROPRIATION OF PROFITS

The following earnings of the parent company are at the disposal of the Annual General Meeting:
Net profit for the 2014 financial year
Retained earnings

The Board of Directors proposes that a dividend of SEK 10 per share (83 996 162 shares) be paid to the shareholders

and that the remaining amount be carried forward

SEK

1 870 035 055
2 690 922 750
4 560 957 805

839 961 620

3 720 996 185

The Board of Holmen AB has proposed that the 2015 Annual General Meeting resolve in favour
of paying a dividend of SEK 10 per share – SEK 1 per share higher than the preceding year –
totalling SEK 840 million. The proposal complies with the Board’s policy, in that decisions on
dividends are to be based on an appraisal of the Group’s profitability, future investment plans and
financial position.

The proposed dividend corresponds to 93 per cent of net profit for 2014 for the Group and means
that 4 per cent of equity in the Group at 31 December 2014 will be paid out by way of dividend.

The Board has established that the Group should have a strong financial position with a debt/
equity ratio – defined as net financial debt in relation to equity – at a maximum of 0.5. The debt/
equity ratio at 31 December 2014 was 0.28. Payment of the proposed dividend would raise the
debt/equity ratio by around 0.05.

Holmen AB’s equity at 31 December 2014 amounted to SEK 10 476 million, of which non-
restricted equity was SEK 4 561 million. Assets and liabilities measured at fair value according to
Chapter 4 Section 14a of the Swedish Annual Accounts Act had an impact of SEK -421 million on
equity. The Group’s equity at 31 December 2014 amounted to SEK 20 969 million. In accordance
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 nature, 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 consolidated accounts were prepared
in accordance with the international accounting standards referred to in the European Parlia-
ment’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 consolidated accounts
provide a true and fair view of the performance and financial position of the parent company and
the Group. The administration report for the parent company and the Group provides a true and
fair view of the development of the operations, financial position and performance of the Group
and the parent company 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 consolidated accounts were approved for publication by the
Board in its decision of 20 February 2015. The Group’s consolidated 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 to be held on 16 April 2015.

Fredrik Lundberg

Chairman

Carl Bennet

Board member

Steewe Björklundh

Board member

Kenneth Johansson

Board member

Stockholm, 20 February 2015

Lars G Josefsson

Board member

Carl Kempe

Deputy chairman

Louise Lindh

Board member

Our audit report was submitted on 23 February 2015.

KPMG AB

George Pettersson

Authorised public accountant

Ulf Lundahl

Board member

Göran Lundin

Board member

Karin Norin

Board member

Henrik Sjölund

Board member and
Chief executive officer

90 HOLMEN ANNUAL REPORT 2014

AUDIT REPORT / ASSURANCE REPORT

AUDIT REPORT

To the annual meeting of the shareholders of Holmen Aktiebolag (publ), corp. id. 556001-3301

Report on the annual accounts and consolidated accounts
We have audited the annual accounts and consolidated accounts of Holmen Aktie-
bolag (publ) for the year 2014. The annual accounts and consolidated accounts of the
company are included in the printed version of this document on pages 6–90.

Responsibilities of the Board of Directors and the CEO for the annual accounts and
consolidated accounts
The Board of Directors and the CEO are responsible for the preparation and fair
presentation of these annual accounts in accordance with the Annual Accounts Act
and of the consolidated accounts in accordance with International Financial Reporting
Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal
control as the Board of Directors and the CEO determine is necessary to enable the
preparation of annual accounts and consolidated accounts that are free from material
misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these annual accounts and consolidated
accounts based on our audit. We conducted our audit in accordance with International
Standards on Auditing and generally accepted auditing standards in Sweden. Those
standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the annual accounts and con-
solidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the annual accounts and consolidated accounts. The procedures
selected depend on the auditor’s judgement, including the assessment of the risks
of material misstatement of the annual accounts and consolidated accounts, whether
due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the company’s preparation and fair presentation of the annual
accounts and consolidated accounts in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the company’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Board of Directors and the CEO, as well as evaluating the over-
all presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinions.

Opinions
In our opinion, the annual accounts have been prepared in accordance with the An-
nual Accounts Act and present fairly, in all material respects, the financial position of
the parent company as of 31 December 2014 and of its financial performance and its
cash flows for the year then ended in accordance with the Annual Accounts Act. The
consolidated accounts have been prepared in accordance with the Annual Accounts
Act and present fairly, in all material respects, the financial position of the group as of

31 December 2014 and of their financial performance and cash flows for the year in
accordance with International Financial Reporting Standards, as adopted by the EU,
and the Annual Accounts Act. A corporate governance statement has been prepared.
The statutory administration report and the corporate governance statement are con-
sistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders adopt the income
statement and balance sheet for the parent company and the group.

Report on other legal and regulatory requirements
In addition to our audit of the annual accounts and consolidated accounts, we have
also audited the proposed appropriations of the company’s profit or loss and the
administration of the Board of Directors and the CEO of Holmen Aktiebolag (publ) for
the year 2014.

Responsibilities of the Board of Directors and the CEO
The Board of Directors is responsible for the proposal for appropriations of the
company’s profit, and the Board of Directors and the CEO are responsible for adminis-
tration under the Companies Act.

Auditor’s responsibility
Our responsibility is to express an opinion with reasonable assurance on the proposed
appropriations of the company’s profit and on the administration based on our audit.
We conducted the audit in accordance with generally accepted auditing standards in
Sweden.

As a basis for our opinion on the Board of Directors’ proposed appropriations of the
company’s profit we examined the Board of Directors’ reasoned statement and a se-
lection of supporting evidence in order to be able to assess whether the proposal is in
accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in addition to our audit
of the annual accounts and consolidated accounts, we examined significant decisions,
actions taken and circumstances of the company in order to determine whether any
member of the Board of Directors or the CEO is liable to the company. We also exam-
ined whether any member of the Board of Directors or the Managing Director has, in
any other way, acted in contravention of the Companies Act, the Annual Accounts Act
or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinions.

Opinions
We recommend to the annual meeting of shareholders that the profit be appropriated
in accordance with the proposal in the statutory administration report and that the
members of the Board of Directors and the CEO be discharged from liability for the
financial year.

Stockholm, 23 February 2015

KPMG AB

George Pettersson

Authorised public accountant

ASSURANCE REPORT

Holmen’s Sustainability Report, as defined on page 37 of Holmen’s Annual Report
2014, has been subject to a limited review in accordance with RevR 6 Assurance of
Sustainability Reports, issued by FAR.

For a complete assurance report on the Sustainability Report, please see the Holmen
website. The assurance report contains the following conclusion:

Based on the limited assurance procedures we have performed, nothing has come
to our attention that causes us to believe that the Sustainability Report has not, in all
material respects, been prepared in accordance with the criteria defined by the Board
of Directors and Group management.

Stockholm, 23 February 2015

KPMG AB

George Pettersson
Authorized public accountant

Jenny Fransson
Expert member of FAR

HOLMEN ANNUAL REPORT 2014 91

Skärnäs Terminal, Iggesund

FIVE-YEAR REVIEW, SUSTAINABILITY

Data from all parts of the Group is collected,
collated, quality-assured and evaluated. The
key indicators for HR and environmental data
are those in common use in the industry. No
material changes have been made to the prin-
ciples of reporting in comparison with previ-
ous years.
As some of the details provided in this report
had already been collected by the end of the

year it refers to, it might differ slightly from the
information finally reported to the authorities.
The licensing authorities’ conditions relating
to emissions to air and water stipulate regular
sampling in accordance with specific rules.
Holmen reports its environmental data to
the supervisory authorities monthly and annu-
ally. All reporting to Swedish authorities is
made available to the public under the prin-

FIVE-YEAR REVIEW, SUSTAINABILITY

ciple of public access to documents. Data from
all the mills is reported to the EU annually.
Holmen reports its expenditure on environ-
mental protection in accordance with
guidelines from Statistics Sweden (SCB).

PERSONNEL

EMPLOYEES
Average number
of whom women, %
of whom temporary employees, %
Average age1)

SICKNESS ABSENCE 2), %
Total
of which longer than 60 days
Good health index (proportion of employees with no sick leave during the year)

GENDER EQUALITY 1), %
Women managers out of total number of managers
Women joining the company out of total new employees

EDUCATION 1), %
Compulsory education
Upper-secondary school
Higher education, at least 2 years
Graduates, proportion of new employees
Women as proportion of recruited graduates

STAFF TURNOVER 1), %
Staff turnover
of which given notice
of which retiring
of which leaving at own request
New employees

NUMBER OF INDUSTRIAL ACCIDENTS
Industrial accidents, more than 8 hours of absence, per million hours worked

UNION COOPERATION 2), %
Employees covered by collective bargaining agreements
Rate of union membership

1) Relates to permanent employees.
2) Relates to permanent and temporary employees.
3) Figure adjusted since 2013.

2014

2013

2012

2011

2010

3 359
19.2
7.9
46.8

3.9
1.7
50

20.9
31

14
59
27
27
49

7.2
2.0
2.2
3.0
5.1

6.5

97
70

3 718
19.3
7.7
46.8

3.6
1.3
47

20.33)
37

18
58
25
26
53

11.5
6.2
1.7
3.6
3.4

8.4

98
72

3 945
19.3
6.9
45.9

3.4
1.1
48

20.3
24

17
60
23
26
67

8.5
2.7
2.6
2.9
3.6

11.6

95
72

4 041
19.2
6.6
46.1

3.5
1.2
48

19.1
26

18
60
22
19
68

8.9
3.5
1.9
3.5
4.4

11.3

96
71

4 241
19.0
6.7
45.8

3.5
1.1
47

16.5
18

19
60
21
15
68

9.3
3.7
3.9
1.7
3.3

14.6

97
70

HOLMEN ANNUAL REPORT 2014 93

FIVE-YEAR REVIEW, SUSTAINABILITY

PRODUCTION AND ENVIRONMENT

2014

2013

2012

2011

2010

INTERNAL SUPPLY OF RAW MATERIALS
Harvesting in company forests, ’000 m3sub
Electricity production, hydro and wind power, GWh

PRODUCTION, ’000 TONNES
Paperboard
Market pulp
Printing paper
Sawn timber, ’000 m3

RAW MATERIALS, ’000 TONNES
Wood, million m3sub1)
Recovered fibre
Purchased pulp
Thermal energy, GWh
Electrical energy, GWh
Water use, million m3
Process wastewater, cooling and seal water2), million m3
Plastic granules/foiling material
Chemicals3)
Filler, pigment3)

THERMAL ENERGY, GWh
Production at mills from recovered liquors, bark and wood residues
Recovered in the TMP process4)
Natural gas, oil and purchased5)

ELECTRICAL ENERGY, GWh
Company hydro power
Company wind power
Production at mills
Purchased6)

EMISSIONS TO AIR, TONNES
Sulphur dioxide (counted as sulphur, S)
Nitrogen oxides
Particulates
Carbon dioxide, ’000 tonnes
-Fossil
-Biogenic

EMISSIONS TO WATER, TONNES
COD (organic matter), ’000 tonnes
Suspended solids, ’000 tonnes
AOX (chlorinated organic matter)
Nitrogen
Phosphorus

BY-PRODUCTS, ’000 TONNES
To energy production, internally/externally

WASTE, ’000 TONNES
Utilised or for recovering7)
Hazardous8)
Sent to landfill (wet)

DELIVERIES
Branches, treetops and peat, GWh9)
Electrical and thermal energy, GWh10)
Tall oil, ’000 tonnes11)

94 HOLMEN ANNUAL REPORT 2014

3 297
1 113

500
67
1 325
742

5.16
439
75
6 224
4 067
74
73
2.1
146
147

4 532
1 068
619

1 048
65
740
2 214

57
1 181
29

126
1 551

20.4
3.6
54.3
203
19.0

767

296
1.6
5.6

275
315
13.2

3 465
1 041

478
50
1 545
710

5.25
543
99
6 451
4 420
77
75
2.6
146
178

4 156
1 117
1 178

1 008
33
769
2 610

91
1 557
52

254
1 449

20.4
4.3
46.5
215
15.0

885

367
2.4
12

294
199
13.0

3 211
1 353

492
35
1 658
651

5.19
630
108
5 833
4 603
77
74
2.3
145
175

2 880
1 171
1 783

1 343
10
563
2 687

116
1 664
84

330
1 064

18.9
3.2
47.7
242
15.7

865

380
2.4
16

297
202
12.3

2 988
1 235

480
42
1 673
560

4.94
683
118
5 602
4 588
82
80
2.1
140
177

2 874
1 201
1 527

1 230
5
440
2 913

132
1 468
120

259
1 073

19.8
3.7
54.3
250
15.7

747

398
2.0
18

305
182
8.4

2 999
1 149

474
40
1 713
285

4.44
790
118
5 839
4 625
82
55
2.3
153
204

2 942
1 152
1 744

1 145
4
481
2 995

176
1 465
98

302
1 082

19.2
3.5
53.6
243
14.7

553

432
2.1
24

328
123
4.4

FIVE-YEAR REVIEW, SUSTAINABILITY

ELECTRICAL
ENERGY Share of
Holmen’s production/
consumption, %

Purchased
Company hydro power,
wind power

55%

27%

Electricity production at mills

18%

THERMAL
ENERGY Share of
Holmen’s production/
consumption, %

Biofuel
Recovered thermal energy
Natural gas
Oil, LPG
Purchased thermal energy

73%

17%

<1%

ELECTRICAL ENERGY

2014

2013

2012

2011

2010

SHARE OF HOLMEN’S PRODUCTION/ CONSUMPTION, %
Company hydro power/wind power
Electricity production at the mills
Purchased electricity

27
18
55

24
17
59

30
12
58

27
10
63

25
10
65

THERMAL ENERGY

2014

2013

2012

2011

2010

SHARE OF HOLMEN’S PRODUCTION/CONSUMPTION, %
Biofuel
Recovered thermal energy
Natural gas
Oil, LPG
Purchased thermal energy

73
17
8
2
<1

64
17
12
6
<1

49
20
18
9
4

51
21
12
8
8

50
20
15
8
7

ENVIRONMENTAL PROTECTION

2014

2013

2012

2011

2010

COSTS/INCOME, SEKm
Investments (remedial and preventive)
Electricity and heat-saving investments
Environmental taxes and charges2)
Internal and external environmental costs3)
Environmental cost of forestry4)
Emission allowances – income5)
Certificates renewable energy – income6)

26
3201)
10
169
70
53
323

122
300
14
178
84
32
285

60
576
22
196
93
20
54

91
211
23
202
90
40
31

50
52
35
188
70
26
56

1) The majority of the stated amount derives from environment-related costs for the construction of the wind farm in Varsvik, in the Municipality
of Norrtälje. The amount also includes costs for measures to improve heat recovery at Hallsta Paper Mill, which have led to reduced electricity
consumption in the boilers.

2) The stated amount includes costs for waste management, energy tax charged in Sweden on the use of fossil fuels, nitrogen oxide tax and

inspection charges.

3) Includes costs of environmental personnel, operation of treatment equipment, waste management, management systems, environmental training,

applications for permits, environmental consultants and the costs of inquiries and measures in connection with discontinued operations.

4) The environmental cost of forestry is calculated as the value of the wood that is not harvested for environmental reasons. Holmen sets aside
10 per cent of its productive forest for environmental reasons and thus refrains from harvesting around 10 per cent of the potential volume.
The annual loss of income is estimated at around SEK 70 million.

5) The Group has been allotted emission allowances which, for the most part, have been used for its own production. The surplus allowances

have been sold.

6) Income from renewable energy certificates received from the production of renewable energy at the Group’s mills. The higher income reported

for 2013 and 2014 is due to the commissioning of the biofuel boiler at the mill in Workington in early 2013.

Comments on the table on page 94
1) At Group level, wood consumption is computed net, taking into account internal deliveries of chips from the sawmills to the nearby mills.

2) Process wastewater 55 million m3. Cooling and seal water 18 million m3.

3) 100 per cent active substance. Total quantity of commodities was 221 000 tonnes for chemicals and 206 000 tonnes for filler and pigment.

4) Thermal energy is produced from the electricity used in the production of thermo-mechanical pulp at Braviken Paper Mill and Hallsta Paper Mill; this is recovered and used in production.

The reporting includes data for gas consumption and associated emissions linked to Holmen’s share of electricity production at the half-owned cogeneration (COGEN) plant at Holmen Paper Madrid.
The mill’s energy supply was changed in 2014. The current energy plant has led to reduced emissions of nitrogen oxides. The data also includes natural gas and oil used at the mills.

In 2014, emissions of fossil carbon dioxide from production of purchased electrical energy totalled to just over 12 400 tonnes.

7) By-products used, for example, as filling material, construction material or for the production of soil products.

Hazardous waste is dealt with by an authorised collection and recovery contractor. Certain fractions of the waste are recovered. Oil-containing waste from docking ships is dealt with at port facilities
at three Holmen mills. Such waste is included in the figures for hazardous waste. In 2014 the amount of this waste was almost 910 tonnes.

9) Branches, treetops and peat delivered from Holmen’s land to external energy producers.

10) For 2014: 94 GWh electrical energy, delivered from the mill in Workington to the local community, 194 GWh thermal energy, from Iggesund Mill and Braviken Paper Mill to Iggesund Sawmill and

Braviken Sawmill, 19 GWh thermal energy from Hallsta Paper Mill and Iggesund Mill to the district heating network of the local communities.

11) For delivery to the chemical industry.

HOLMEN ANNUAL REPORT 2014 95

TEN-YEAR REVIEW, FINANCE

SEKm

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

INCOME STATEMENT
Net sales
Operating costs
Profit from investments in associates and joint ventures
Depreciation and amortisation according to plan
Change in value of forests
Operating profit/loss excl. items affecting
comparability
Items affecting comparability*
Operating profit/loss

Net financial items
Profit/loss before tax

Tax
Profit/loss for the year

Diluted earnings per share, SEK

NET SALES
Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi
Elimination of intra-group net sales
Group

OPERATING PROFIT/LOSS
Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi
Group-wide costs and eliminations

Items affecting comparability*
Group

CASH FLOW
Profit/loss before tax
Adjustment items
Income tax paid
Changes in working capital
Cash flow from operating activities
Cash flow from investing activities
Cash flow after investments

Share buy-back
Dividend paid

* Items affecting comparability:

15 994
-13 270
-7
-1 265
282

16 231
-13 919
3
-1 370
264

17 852
-15 224
47
-1 313
350

18 656
-15 501
84
-1 260
-

17 581
-15 077
28
-1 251
52

18 071
-15 191
45
-1 320
16

19 334
-16 614
50
-1 343
-16

19 159
-15 637
12
-1 337
89

18 592
-15 069
11
-1 346
115

16 319
-13 287
20
-1 167
82

1 734
-450
1 284

-147
1 137

-230
907

10.8

5 113
6 247
1 352
5 641
1 408
-3 767
15 994

674
141
37
817
212
-146
1 734
-450
1 284

1 137
1 448
-191
-217
2 176
-834
1 342

-
-756

1 209
-140
1 069

-198
871

-160
711

8.5

4 618
7 148
1 175
5 694
1 648
-4 051
16 231

433
-309
-75
924
371
-136
1 209
-140
1 069

871
1 056
210
-127
2 011
-869
1 142

-
-756

1 713
-193
1 520

-227
1 294

559
1 853

22.1

4 967
8 144
1 129
6 061
1 728
-4 178
17 852

596
94
-130
931
355
-132
1 713
-193
1 520

1 294
1 057
-434
338
2 254
-1 920
334

-
-672

1 980
3 593
5 573

-244
5 328

-1 374
3 955

47.1

5 109
8 631
875
6 348
1 807
-4 113
18 656

863
228
-136
739
406
-120
1 980
3 593
5 573

5 328
-2 561
-557
-109
2 101
-1 733
368

-
-588

1 332
264
1 596

-208
1 388

-684
704

8.4

4 849
8 142
586
5 585
1 932
-3 513
17 581

817
-618
20
818
495
-200
1 332
264
1 596

1 388
811
-704
28
1 523
-1 597
-74

-
-588

1 620
-
1 620

-255
1 366

-360
1 006

12.0

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

419
340
21
605
414
-178
1 620
-
1 620

1 366
1 163
-334
678
2 873
-818
2 054

-
-756

1 412
-361
1 051

-311
740

-98
642

7.6

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

320
280
13
632
327
-159
1 412
-361
1 051

740
1 797
-192
-686
1 660
-1 124
536

-138
-1 017

2 286
557
2 843

-261
2 582

-1 077
1 505

17.8

5 100
10 345
589
4 775
1 590
-3 239
19 159

599
623
146
702
272
-56
2 286
557
2 843

2 582
629
-390
-345
2 476
-1 315
1 161

-
-1 017

2 303
-
2 303

-247
2 056

-597
1 459

17.2

5 240
10 140
465
4 042
1 691
-2 986
18 592

752
754
80
643
197
-123
2 303
-
2 303

2 056
1 225
-664
-259
2 358
-947
1 411

-
-932

1 967
-
1 967

-233
1 734

-478
1 256

14.8

4 860
8 442
460
3 858
1 480
-2 781
16 319

626
631
13
537
301
-141
1 967
-
1 967

1 734
914
-516
339
2 471
-3 029
-558

-
-848

2007: Impairment losses of SEK -569 million on goodwill and of SEK -1 034 million on property, plant and equipment within Holmen Paper, reversed impairment 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.

2008: Closure of Wargön Mill accounted for a cost of SEK -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 earnings of the fire at Braviken Paper Mill.

2010: Impairment losses on fixed assets of SEK -555 million, restructing costs of SEK -231 million and revaluation of forest amounting to an increase of SEK 1 050 million.

2011: Revaluation of forest of SEK 3 593 million.

2012: Impairment loss on non-current assets of SEK -153 million and restructuring costs of SEK -40 million.

2013: Impairment loss on non-current assets and restructing costs of SEK -140 million.

2014: Impairment loss on non-current assets of SEK -450 million.

96 HOLMEN ANNUAL REPORT 2014

TEN-YEAR REVIEW, FINANCE

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

For a ten-year review of data per share, see page 56.

30 221
5 964
62
187
36 434

20 969
5 480
6 156
3 829
36 434

6 790
4 666
901
17 340
3 401
-744
32 354
-5 478
26 876

13
2
3
11

10
3
3
5
6
5

6
4
0.28

493
1 305
725
3 297
1 113

30 652
5 774
52
275
36 753

20 854
5 804
6 443
3 653
36 753

6 863
4 810
1 361
16 813
3 357
-433
32 772
-5 802
26 970

9
-4
-6
7

7
neg
neg
6
11
4

4
3
0.29

469
1 574
686
3 465
1 041

30 664
6 005
69
308
37 046

20 813
5 504
6 967
3 762
37 046

6 177
5 608
1 416
16 663
3 261
-220
32 905
-5 502
27 403

12
1
-12
10

10
2
neg
6
11
5

7
9
0.32

485
1 651
660
3 211
1 353

30 335
6 642
128
112
37 217

19 773
6 630
6 499
4 313
37 217

5 041
6 606
1 507
16 278
3 253
-217
32 469
-6 436
26 032

17
3
-16
11

19
3
neg
6
13
7

9
23
0.32

474
1 668
487
2 988
1 235

26 028
6 950
262
193
33 432

16 913
5 910
6 227
4 383
33 432

4 313
6 954
1 192
12 597
3 235
93
28 385
-5 700
22 684

17
-8
4
8

20
neg
3
7
15
5

6
4
0.34

464
1 732
285
2 999
1 149

25 694
6 075
225
182
32 176

16 504
5 045
6 091
4 536
32 176

4 114
8 789
396
11 384
3 207
-963
26 929
-4 741
22 188

8
4
4
9

10
4
6
5
13
6

7
6
0.34

477
1 745
313
2 897
1 090

26 507
7 268
175
653
34 602

15 641
4 819
8 332
5 809
34 602

4 254
10 237
366
11 415
3 006
-1 654
27 623
-4 477
23 146

7
3
3
7

8
3
4
6
11
5

6
4
0.48

494
2 044
266
2 649
1 128

26 153
6 549
147
394
33 243

16 932
5 482
6 518
4 311
33 243

4 180
9 971
345
11 264
2 960
-630
28 090
-5 181
22 909

12
6
24
12

15
5
64
8
9
8

10
9
0.35

516
2 025
262
2 575
1 193

25 354
6 138
165
484
32 141

16 636
5 030
6 634
3 841
32 141

3 935
11 541
208
9 001
2 965
-354
27 297
-4 676
22 621

14
7
17
12

19
6
38
7
7
8

10
9
0.36

536
2 021
248
2 618
934

25 793
5 709
132
580
32 214

16 007
5 143
7 351
3 713
32 214

3 965
11 452
230
8 919
2 958
-87
27 437
-4 791
22 646

13
7
3
12

16
6
6
6
10
7

9
8
0.41

492
1 764
229
2 334
1 236

SEKm

BALANCE SHEET
Non-current assets
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
Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi
Group-wide and other
Operating capital
Deferred tax liability, net
Capital employed

KEY FIGURES
OPERATING MARGIN, %*
Iggesund Paperboard
Holmen Paper
Holmen Timber
Group

RETURN ON OPERATING CAPITAL, %*
Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi
Group

KEY FIGURES
Return on capital employed, %*
Return on equity, %
Debt/equity ratio

DELIVERIES
Paperboard, ’000 tonnes
Printing paper, ’000 tonnes
Sawn timber, ’000 m3
Harvesting own forests, ’000 m3
Own production of hydro and wind power, GWh

* Excl. items affecting comparability.

HOLMEN ANNUAL REPORT 2014 97

DEFINITIONS AND GLOSSARY

DEFINITIONS
Capital employed
Operating capital less the net sum of deferred tax assets and
deferred tax liabilities. Average values are calculated on the
basis of quarterly data.

Cash flow after investments
Cash flow from operating activities less cash flow from
investing activities.

Debt/equity ratio
Net financial debt divided by the sum of equity and any
non-controlling interests.

Earnings per share (EPS)
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.

EBITDA
Earnings before interest, taxes, depreciation, amortisation and
change in value of forests, excl. items affecting comparability.

Equity/assets ratio
Equity expressed as a percentage of total assets.

Financial assets
Non-current and current financial receivables and cash and
cash equivalents.

Net financial debt
Non-current and current financial liabilities and pension provi-
sions, less financial assets.

Operating capital
Total assets, less financial receivables, cash and cash equiva-
lents, deferred tax assets, operating liabilities, tax provision and
other provisions. Average values are calculated on the basis of
quarterly data.

Operating margin
Operating profit/loss (excl. items affecting comparability)
expressed as a percentage of net sales.

Operating profit
Profit before net financial items and tax.

Return on capital employed
Operating profit/loss (excl. items affecting comparability and
transferred operations) expressed as a percentage of average
capital employed.

Return on equity
Profit for the year expressed as a percentage of average equity,
calculated on the basis of quarterly data.

Return on operating capital
Operating profit/loss (excl. items affecting comparability and
transferred operations) expressed as a percentage of average
operating capital.

98 HOLMEN ANNUAL REPORT 2014

GLOSSARY
Biofuel
Renewable fuels (such as wood, black liquor, bark and tall oil).
Fuels that do not generate any net emission of carbon dioxide
into the atmosphere, since the quantity of carbon dioxide
formed during combustion is part of the carbon cycle.

Bio co-location
A co-location of different operations for more efficient use of
raw materials and energy, amongst other benefits.

Bulk
Bulk is a measure of the volume of the paper. Paper with the
same grammage may have a different thickness, depending on
the bulk of the paper. A high bulk indicates a thick but relatively
lightweight paper.

Carbon dioxide (CO2)
Carbon is the building block of life and is part of all living
things. Biogenic carbon dioxide is released when biological
material decays or wood is burned. Fossil carbon dioxide is
released when coal, oil or natural gas is burned.

COD
Chemical Oxygen Demand. A measure of the amount of oxygen
needed for the complete decomposition of organic material
in water.

DIP
De-inked pulp. Pulp manufactured from de-inked recovered
paper.

LWU
Lightweight uncoated, wood-containing magazine paper. Used
primarily for magazines, supplements, catalogues and direct
mail.

m3 growing stock, solid over bark
The volume of tree stems, incl. bark, from stump to top.
Generally used as a measure for growing forest.

m3sub
Cubic metres solid volume under bark. The actual volume (no
gaps between the logs) of whole stems or stemwood excl. bark
and treetops. Generally used as a measure for harvested wood.

MWC
Medium-weight coated wood-containing paper. Used for
magazines, catalogues and direct mail.

Nitrogen (N)
An element included in wood. Nitrogen emissions to water may
cause eutrophication.

Nitrogen oxides (NOx)
Gases that consist of nitrogen and oxygen that are formed in
combustion. In moist air, nitrogen oxides are converted into
nitric acid, which creates acid rain. Nitrogen oxides also have
a fertilising effect.

OHSAS 18000
A series of international standards regarding a management
system for health and safety. The management system includes
monitoring, evaluating and reporting on health and safety work.

FBB Folding Box Board
Multi-layered paperboard made from mechanical and chemical
pulp.

Particulates
Particles of ash formed in incineration of bark or liquor, for
example.

Fillers
Fillers, such as ground marble and kaolin clay, are used to give
the paper bulk and make it more uniform in structure and brighter.

PEFC™
The Programme for the Endorsement of Forest Certification
is an international forest standard.

Fossil fuels
Fuels based on carbon and hydrogen compounds from sediment
or sedimentary bedrock – mainly coal, oil and natural gas.

FSC®
Forest Stewardship Council®. FSC® promotes management of
the world’s forests in a way that is acceptable from three per-
spectives: environmentally, socially and economically.

GRI
Global Reporting Initiative. International cooperation body, in
which many different groups of stakeholders in society have
drawn up global guidelines for how companies are to report
on activities encompassed by the umbrella term of sustainable
development.

Groundwood pulp
Mechanical pulp produced by grinding wood against a grind-
stone.

IPPC
Integrated Pollution Prevention and Control. EU environmental
legislation about integrated, individual testing and supervision
of major industrial companies.

ISO 9001
An international standard for quality management systems.
Primarily aimed at companies and organisations that wish to
improve two aspects of their operations, i.e. to ensure more
satisfied customers and lower costs.

ISO 14001
An international standard for environmental management. Im-
portant principles in ISO 14001 include regular environmental
audits and a gradual increase in the requirements.

LWC
Lightweight coated wood-containing paper. Mainly used for
magazines and catalogues.

Phosphorus (P)
An element contained in wood. Excessive phosphorus in the
water may cause over-fertilisation (eutrophication) and oxygen
consumption.

SBB Solid Bleached Board
Multi-layer paperboard made from bleached chemical pulp.

SC paper
Uncoated, super calendered paper with high gloss surface.
Used for magazines, catalogues and direct mail.

Sulphate pulp
Chemical pulp that is produced by boiling wood under high
pressure and at a high temperature together with white liquor
(sodium hydroxide and sodium sulphide).

Sulphur dioxide (SO2)
A gas consisting of sulphur and oxygen that is formed in com-
bustion of sulphur-containing fuels, such as oil. In contact with
moist air, sulphur dioxide is converted into nitric acid, which
creates acid rain.

Suspended solids
Waterborne substances consisting of fibres and particles that
can largely be removed using a fine mesh filter.

Tall oil
By-product of the sulphate pulp process used for making soft
soap, paints, biodiesel and other products.

TMP
Thermo-mechanical pulp. Obtained by heating spruce chips
and then grinding them in refiners.

Contents

CEO’s message

Business operations
The year in brief
Strategy
Paperboard
Printing paper
Sawn timber
Forest
Energy
Risk management

Sustainability
Sustainability report
Sustainable products
Environment
Employees
Society & stakeholders

Corporate governance
Corporate governance report
Board of Directors
Group management
Shareholder information

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8
12
16
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32

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54
55

This is a translation of the Swedish annual report of Holmen Aktie bolag (publ.). In the event of
inconsistency between the English and the Swedish versions, the Swedish version shall prevail.

Financial statements
Income statement

Statement of comprehensive income

Balance sheet

Changes in equity

Cash flow statement

Parent company

Notes

1. Accounting policies

2. Operating segment reporting

3. Other operating income
4. Employees, staff costs and

remuneration to senior management

5. Auditors’ fee and remuneration
6. Net financial items and income from financial

instruments

7. Taxes

8. Earnings per share (EPS)

9. Intangible non-current assets

10. Property, plant and equipment

11. Biological assets
12. Investments in associates, joint ventures and

other shares and participating interests

13. Financial instruments

14. Inventories

15. Operating receivables

16. Equity, parent company

17. Pension provisions

18. Other provisions

19. Operating liabilities

20. Operating leases

21. Collateral and contingent liabilities

22. Related parties

23. Investments in Group companies

24. Untaxed reserves

25. Cash flow statement

26. Critical accounting estimates and judgements

Proposed appropriation

Audit report

Assurance report

Five-year review, sustainability

Ten-year review, finance

Definitions and glossary

Calendar

INFORMATION

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.

How to order printed material:
• www.holmen.com
• Holmen AB, Group Communications,

P.O. Box 5407,
SE-114 84 Stockholm, Sweden

• e-mail info@holmen.com
• telephone +46 8 666 21 00

CALENDAR

For 2015 Holmen will publish the following
financial reports:

8/5

Interim report January–March

13/8

Interim report January–June

5/11

Interim report January–September

2016

5/2

Year-end report

Holmen AB (publ)
P.O. Box 5407, SE-114 84 STOCKHOLM, SWEDEN
Tel +46 8 666 21 00
E-mail info@holmen.com • www.holmen.com
ID no. 556001-3301 • Registered office Stockholm

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100%
Holmen-produced
paper

ANNUAL REPORT 2014