Holmen Annual Report 2015

FY2015 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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Holmen-produced

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 fresh fibre.

2015

ANNUAL REPORT

INFORMATION

CALENDAR

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

For 2016 Holmen will publish the following financial
reports:

26/4

Interim report January–March

17/8

Interim report January–June

26/10

Interim report January–September

2017

8/2

Year-end report

The cover is printed on Invercote® Creato
260 gsm. It is matt laminated and partially
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, Cecilia Möller,
Rolf Lavergren, Lasse Hejdenberg and others.
Print: Åtta.45

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 2015 financial year.
The annual report comprises pages 4–89. The results of the
year’s operations and the financial position of the parent company
and the Group are presented in the administration report, pages
4–55, 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. The basis for the sustainability
information presented is the sustainability issues identified as key
in view of the business that Holmen conducts, which is subject to
permit requirements under environmental legislation in the countries
in which the Group operates. For more information on how the key
sustainability issues have been identified, please see the GRI index
on the Holmen website. Holmen reports on its sustainability work in
accordance with the Global Reporting Initiative’s GRI G4 guidelines
at Core level. The Sustainability Report comprises pages 10–11,
32–41 and 90–91, the GRI index on the Holmen website and the
pages on the Holmen website as set out in the GRI index. The
submitted information on sustainability work is audited by a third
party, see separate assurance report on the Holmen website.

The year in brief

CEO’s message

Business operations
Strategy
A sustainable business
Forest
Energy
Paperboard
Printing paper
Sawn timber
A sustainable future
Environment
Employees
Society and stakeholders

Risk management

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

Financial statements
Income statement

Statement of comprehensive income

Balance sheet

Changes in equity

Cash flow statement

Parent company

Notes

Proposed appropriation of profits

Audit report

Audit of Sustainability Report

Five-year review, sustainability

Ten-year review, finance

Definitions and glossary

Calendar

8
10
12
16
20
24
28
32
34
38
40

46
50
52
53

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

HOLMEN ANNUAL REPORT 2015 3

THE YEAR IN BRIEF

The year in brief

THE GROUP’S OPERATING PROFIT excluding items
affecting comparability was SEK 1 700 million.
Earnings were negatively affected by price
decreases for printing paper and sawn timber,
as well as a number of significant rebuilding
and maintenance shutdowns. This was largely
offset by a weaker Swedish krona, good produc-
tion and cost rationalisations. Investments
amounted to SEK 832 million and cash flow
after investments was SEK 1 694 million. The
dividend paid was SEK 840 million. Net finan-
cial debt decreased to SEK 4 799 million, giving

a debt/equity ratio of 0.23. The Board proposes
a dividend of SEK 10.5 per share.

OUTLOOK. The market situation for paperboard
is good, but in 2016 it will be affected by new
capacity being added to the market. In 2016,
Iggesund Paperboard will complete an invest-
ment programme to increase paperboard and
pulp capacity. In addition to driving up volumes,
this will also cut production costs. Structural
demand for printing paper is falling. Holmen
Paper is continuing its transition to a speciality

paper manufacturer by increasing sales of
magazine and book paper based on fresh fibre,
while reducing its dependence on newsprint.
Demand for sawn timber is good, but a high
level of supply is putting the market under
pressure and the trend for 2016 is uncertain.
The harvest of Holmen’s own forest is follow-
ing the harvesting plan. Production of hydro
power was high in 2015 due to an abundant
water supply, but is expected to return to nor-
mal levels in 2016.

NET SALES AND
OPERATING MARGIN
SEKm

20 000

15 000

10 000

5 000

16 014

10.6

OPERATING PROFIT/LOSS
AND RETURN
SEKm

2 000

1 500

1 000

500

1 700

6.4

2.6
0

Net sales

Operating margin*

Operating proﬁt/loss*
Return on capital employed*

* Excl. items affecting comparability.

Return on equity

* Excl. items affecting comparability.

4 HOLMEN ANNUAL REPORT 2015

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

2015

2014

16 014

15 994

769

1 700

559

6.7

10.5*

6.4

2.6

0.23

832

1 284

1 734

907

10.8

6.4

4.3

0.28

834

Average number of employees

3 315

3 359

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

Quarter 1

Quarter 3

INCREASED CAPACITY. The timber
sorting rebuild at Iggesund Saw-
mill is completed, bringing a 15
per cent increase in production
capacity.

CHANGES TO THE GROUP MANAGEMENT.
Ola Schultz-Eklund is appointed
the new Director of Technology.
Fredrik Nordqvist becomes CEO
of the Holmen Energi business area.

AWARD. At the Pro Carton/ECMA
Awards, a packaging solution
made from Invercote is named
‘Carton of the Year’.

SPRUCE AND PINE IN BRAVIKEN.
Braviken Sawmill, which produc-
es spruce sawn timber, now also
begins production of sawn timber
in pine.

Quarter 4

MORE EFFICIENT ORGANISATION.
Holmen Skog conducts a restruc-
turing and at the same time the
business and marketing focus is
strengthened.

FIRE AT HALLSTA PAPER MILL. In
November a fire breaks out in
the pulp mill. Paper production
is suspended for almost two
weeks, after which parts of the
paper mill are restarted.

PAPER APPROVED FOR FOOD. All paper
grades produced on PM 53 at
Braviken Paper Mill are approved
for use in products that come into
contact with food.

PAPERBOARD UPGRADE. Iggesund
Paperboard presents an upgrade
to Invercote G for improved print
quality.

‘CARE BY IGGESUND’ LAUNCHED.
Iggesund Paperboard broadens
and improves its service concept –
from distribution, sample deliveries
and knowledge sharing to local
technical support and transparent
raw material supply.

POPULAR SHEETED PAPER. To meet
customer demand for smaller
print runs, it is now possible to
order Holmen TRND in sheets.

Quarter 2

NEW BOARD MEMBER. The AGM
elects Henriette Zeuchner, Presi-
dent and CEO of Berling Media,
as a new member of Holmen’s
Board.

NEW PAPER GRADE. Holmen Paper
launches Holmen UNIQ, an SC
paper with high thickness in rela-
tion to the paper’s weight. This
allows the customer to reduce the
basis weight and cut their distri-
bution costs.

BIO-BASED MATERIALS OF THE FU-
TURE. A pilot plant for the devel-
opment of crystalline nanocellu-
lose in commercial applications
is planned in Örnsköldsvik. The
initiative is a joint venture involving
Holmen, SP Technical Research
Institute of Sweden, MoRe
Research and Melodea.

CODE OF CONDUCT. Holmen imple-
ments a Code of Conduct to clarify
the Group’s position in areas relat-
ing to business ethics, employees
and the surrounding community.

THE YEAR IN BRIEF

EBITDA/
Business area, %

Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi

Total: 2 673

1 346 SEKm
514 SEKm
86 SEKm

668 SEKm

198 SEKm

OPERATING
CAPITAL/
Business area, %

NET SALES/
Market, %

Total: 31 155

Total: 16 014

22%

14%

12%

17%

14%

Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi

6 622 SEKm
3 558 SEKm
924 SEKm

17 589 SEKm

3 351 SEKm

Sweden*
UK
Germany
Spain
Italy

France

Netherlands

Rest of Europe

Rest of the world

*Of which forest and power 19%.

NET SALES/
Business area, %

Total: 16 014

Iggesund Paperboard
Holmen Paper
Holmen Timber
Holmen Skog
Holmen Energi

5 472 SEKm
6 148 SEKm

268 SEKm

HOLMEN ANNUAL REPORT 2015 5

CEO’S MESSAGE

Dear shareholder

The year’s profits are on a par with 2014 and show that the company remains on the right
path. Good production and cost rationalisations across the operations have outweighed
the effects of price drops and shutdowns for rebuilds and maintenance. Against the back-
ground of this, the Board has resolved to propose a dividend of SEK 10.5 (10) per share.

On the industrial front, over the year we have
taken steps towards a smaller but more efficient
operation for printing paper, a more productive
and flexible sawmill organisation and a well
invested paperboard business with potential
for growth.
Major renewable assets in forest and energy,
and a large-scale industrial operation with a
leading position in high-performance consumer
paperboard make Holmen an interesting com-
pany for the long term.

Rooted in renewable forest and
energy assets
The climate negotiations in Paris in late 2015
led to the world’s leaders agreeing a global
climate deal. This agreement states that action
must be taken to preserve and improve the
capacity to capture and store greenhouse gases.
I find it particularly interesting that the impor-
tance of the forests is specifically underlined in
this context. On the home front, discussions
are under way about the future role of forest
raw material, not least from a climate and energy
supply perspective.
With 1.2 million hectares of forest land,
Holmen is one of Sweden’s biggest forest owners.
Of Holmen’s land, around 20 per cent is cur-
rently used for nature conservation purposes,
split between voluntary set-asides and areas
subject to legal protection. For many years
Holmen has sustainably managed the forests
with a focus on increasing growth over time, and
thus has the potential to capture carbon dioxide
in the growing forests and forest products.
There is no doubt that the forest as a raw
material has good future prospects, not least
in the transition to a bio-economy, whereby
products based on fossil raw materials are re-
placed with renewable alternatives. However,
a fundamental condition for being able to in-
crease growth in the forest over the long term,
and thus having the scope to extract more raw
material, is the right to manage the forest. This
is a crucial question for the Swedish forest

6 HOLMEN ANNUAL REPORT 2015

industry, but also ultimately a question of owner-
ship rights that Holmen and I take extremely seri-
ously and that we intend to defend in every way.
Hydro power, which accounts for 90 per
cent of the energy assets in Holmen, is similar
to the forest assets in that it is renewable and in
theory has an infinite lifetime. Like the forest,
hydro power is also at the centre of the debate
on Sweden’s future energy supply. Although
hydro power is both renewable and controlla-
ble, and is seen as critical for the future energy
system, the conditions for hydro power are
challenging. The prevailing tax burden, where
hydro power is taxed considerably more harsh-
ly than combined heat and power, for example,
makes necessary reinvestments in hydro power
unviable on today’s terms.
Despite discussions on the right to manage
the forest and the current tax burden on hydro
power, our forestry and energy assets have the
potential to deliver stable revenue that grows
over time – if only they are given reasonable
conditions. At the same time, they are key re-
sources in the transition to a sustainable future,
both today and for future generations.

Investments for
strong competitiveness
As a market leader in the highest quality seg-
ment for paperboard Iggesund Paperboard,
with its Invercote and Incada brands, holds a
strong position in a growing market. The in-
vestments of recent years, first in energy boilers
at both mills and later in increased pulp pro-
duction at Iggesund Mill, have resulted in lower
production costs and higher pulp capacity.
Including the planned investment in Workington,
there is potential to increase overall paper-
board production by around 10 per cent.
Thanks to strong brands and successful
product development, we feel there are good
conditions for selling this volume on a market
characterised by increased competition due to
new capacity.
Holmen Paper is in the middle of a wide-

ranging process of change and in 2015 took an
important step towards fulfilling its speciality
paper strategy through investment in a new
product direction for PM 53 at Braviken. An
exciting opportunity in a tough market. Hallsta
Paper Mill is a prime example of what is possi-
ble, with book and magazine paper having re-
placed newsprint. A smaller, more agile and
much more efficient operation focusing on spe-
ciality paper gives us a greater customer base,
with improved opportunities to grow in more
markets without further large-scale investment.
Holmen Timber operates in a market that,
despite relatively strong demand, is unbalanced
by high supply, which has led to downward
pressure on prices. The investments in in-
creased productivity at Iggesund Sawmill
and the ability to saw both spruce and pine at
Braviken have consolidated competitiveness
while also broadening the product range. De-
spite a tough market situation, sawn timber
has a solid future ahead of it, with building in
wood both cost- and time-efficient, while also
bringing major climate benefits.

New challenges require
continuous improvement
Large parts of the forest industry, including
Holmen, are confronted with both structural
and cyclical challenges. As such, it is good to
have a number of major investments behind us,
as we enter a quieter investment period with a
focus on extracting the potential from the in-
vestments we have made. However, the chal-
lenges of the market require aggressive action
in sales and marketing to reach out to new
markets and new customers with an advanced
service offering. We are also continuously re-
viewing our organisation and working practices.
Reduced production costs, driven by more effi-
cient processes that allow lower staffing levels,
are necessary in order to remain competitive.
In a time of change, leadership that sets out
clear expectations and targets is key in creating
the understanding and participation that is

CEO’S MESSAGE

HOLMEN ANNUAL REPORT 2015 7

required to achieve results. As a responsible
and trustworthy company, continuous improve-
ment and a willingness to develop must under-
score everything we do.
Holmen has been affiliated to the UN’s
Global Compact since 2007 and sees it as only
natural to support its ten principles, which cover
areas such as human rights and social and envi-
ronmental responsibility. These three areas
have been incorporated into the Code of Con-
duct that we presented in 2015. Over the year,
our policies have also been subject to review.
These include the business ethics policy and
its guidelines, which address matters such as
anti-corruption measures and competition
issues. This work is incredibly valuable in pro-
viding clearer guidance in our everyday work
and setting out what is expected from everyone
who works at Holmen.
Finally, I would like to thank all our employees
for their hard work. Over the past year, we have
taken steps that prove our ability to make the
necessary changes. Our capacity to adapt to
a changing world and take on new challenges
will remain crucial to our continued success.

Stockholm, 17 February 2016

Henrik Sjölund
President and CEO

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.

The substantial forest and energy assets shall deliver stable revenue that grows over time.

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 sawn
timber for the joinery and construction industries.

STRATEGIC DIRECTION: RAW MATERIALS AND PRODUCTS

FOREST
Active forestry

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.
The position in the wood market and economies of scale will contribute to the competitiveness of the
industrial operations.

ENERGY
Long-term hydro power

Holmen’s hydro power is to be managed with a focus on long-term profitability. The potential to develop
wind power on Holmen’s land will be monitored such that it can be exploited when good profitability is
assured.

PAPERBOARD
Organic growth

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

PRINTING PAPER
Specialisation with
focus on cash flow

Holmen Paper will increase its proportion of speciality paper that exploits the properties of fresh 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 developing market position.

SAWN TIMBER
Large-scale integrated
production

Holmen Timber produces sawn timber for the joinery and construction industries. Holmen’s competitiveness
is based on a strong organisation for wood procurement and cost-efficiency through large-scale production
integrated with the Group’s paper and paperboard mills.

8 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / STRATEGY

FINANCIAL TARGETS

OUTCOME 2015

COMMENT

PROFITABILITY
The aim is that forest and energy, which constitute two-thirds of the
Group’s assets, will provide a stable return on capital employed of at
least 5 per cent, while the industrial business will consistently return
more than 10 per cent. Taken together this means that the Group’s
return will exceed 7 per cent.

CAPITAL STRUCTURE
Our financial position must be strong in order to secure room for
manoeuvre when making long-term commercial decisions. The
target for debt/equity ratio is a maximum of 0.5.

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

Sawn timber and printing paper delivered weak profitability
over the year, which means that the Group did not fully
meet its target for returns.

The debt/equity ratio
was 0.23.

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

DIVIDEND
Decisions on dividends are to be based on an appraisal of the Group’s
profitability, investment plans and financial position.

The Board proposes a
dividend of SEK 10.5 per
share in 2016.

The proposed dividend corresponds to 4.2 per cent of
equity. Over the past five years the dividend has averaged
4 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

0.23

Proposal, SEK 10.5

4.2

Excl. items affecting comparability

Dividend
Dividend as percentage of equity

SUSTAINABILITY TARGETS

OUTCOME 2015

COMMENT

INCREASED GROWTH IN HOLMEN FORESTS
By 2050, annual growth in Holmen’s forests is to be 25 per cent higher
than in 2007. This will deliver both larger harvests of wood from the
Group’s forests and greater capture of carbon dioxide.

Progress will be checked
in the next inventory of
Holmen’s forests in 2021.

Silviculture measures to ensure increased growth have
been identified and implemented.

REDUCED USE OF FOSSIL FUELS
By 2020, use of fossil fuels at the Group’s mills will be down 75 per cent
compared with 2005.

The use of fossil fuels
at the mills has fallen by
62 per cent since 2005.

Investments in biofuel boilers and energy efficiencies
have led to a significant reduction in the use of fossil fuels.

INCREASED PRODUCTION OF RENEWABLE ELECTRICITY
Company-generated renewable electricity shall account for 50 per cent
of Holmen’s total electricity consumption by 2020, compared with 31 per
cent in 2005.

The proportion of company-
produced renewable
electrical energy rose to
52 per cent.

The commissioning of Varsvik wind farm and high levels
of hydro power generation increased renewable electricity
production over the year.

HOLMEN ANNUAL REPORT 2015 9

BUSINESS OPERATIONS / A SUSTAINABLE BUSINESS

A sustainable business

The growing forest is the starting point for all Holmen’s business. Using the renewable raw material
that the forest yields and power from its own energy assets, the Group’s paper mills and sawmills
currently produce paperboard, printing paper and sawn timber. A business that benefits the climate.

AT THE HEART OF HOLMEN’S STRATEGY lie its
natural, renewable raw materials from sustain-
ably managed forests and fossil-free energy
production from hydro and wind power. The
raw materials are refined into products which,
like the forest, benefit the climate. Making best
use of the forest raw material at every stage of
the value chain, so that it generates the highest
possible return, is fundamental in establishing
a sustainable business. By focusing on financial
stability and profitability, in combination with
far-reaching responsibility for the environment,
employees and the wider world, Holmen has
created the conditions for a sustainable business
that generates value for shareholders, customers
and other stakeholders.
Holmen operates sustainable forestry with
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 key to
long-term profitability in forestry is increased
productivity in both silviculture and harvest-
ing. This involves both fully exploiting current
methods and technologies, and developing new

ones. 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.

HOLMEN’S FOREST AND ENERGY ASSETS are
highly valuable to the company. They help deliver
stable revenue, while also providing advantag-
es when procuring raw material for the prod-
uct-oriented business areas. The Group’s forest
holdings amount to approximately 1.3 million
hectares, of which just over one million are
productive forest land. Holmen is a little over
60 per cent self-sufficient in wood. Electricity
production at the wholly and partly owned hy-
dro power stations and wind farms, together
with the electricity production at the larger mills,
covers half of the Group’s electricity consumption.
Production at Holmen’s mills and sawmills
is largely based on renewable electrical and
thermal energy. The extensive investments of
recent years in biofuel boilers at the paper-
board mills in Iggesund and Workington have

sought to make these mills self-sufficient in
both electrical and thermal energy. Investments
in energy efficiency at Holmen Paper’s mills in
Hallstavik and Braviken have led to a substan-
tial increase in their self-sufficiency with regard
to thermal energy. All these initiatives are grad-
ually establishing a secure energy supply,
while also significantly reducing emissions of
fossil carbon dioxide from our operations in
recent years.

THE RENEWABLE WOOD RAW MATERIAL from
Holmen’s forests makes an important contri-
bution to the vital work of promoting effective
resource management and combating climate
change. It does this in part through the stand-
ing forest which, like wooden structures and
joinery products, stores large quantities of car-
bon dioxide, and in part through the substitu-
tion effect that occurs when renewable material
and biofuels from the forest replace fossil
materials. In addition, Holmen’s paper and
paperboard products can be recycled into new
products or bioenergy.

KEY FIGURES FOR HOLMEN’S OPERATIONS FROM A CLIMATE PERSPECTIVE 2015

Holmen’s operations contribute to positive climate effects – partly through carbon dioxide being captured and stored in the forests and products,
and partly through resource-efficient production largely running on renewable energy. Thanks to investments in company-produced energy and the
development of new products based on forest raw material, the positive climate effects will be improved in the future.

Emissions of fossil carbon dioxide from the manufacture of raw materials and input goods, production facilities and transport

-465 000 tonnes

Of which emissions from: forestry machines

manufacture of input goods

production facilities

transport of raw materials and products

Carbon dioxide captured in the growing volume of wood1)

Carbon dioxide captured in sawn timber2)

30 000 tonnes

80 000 tonnes

180 000 tonnes

175 000 tonnes

495 000 tonnes

605 000 tonnes

Fossil carbon dioxide emissions potentially prevented when Holmen sawn timber replaces climate-negative construction materials

1 100 000 tonnes

Net, capture of carbon dioxide and substitution effect

1 735 000 tonnes

1) About 85 per cent of the annual growth is harvested. The volume of wood in the forest thus increases each year.
2) Carbon dioxide stored in products with a lifetime of more than 70 years.

10 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / A SUSTAINABLE BUSINESS

Paperboard
Invercote and Incada are both made using fresh
fibre sourced from sustainably managed forests. The
combination of fresh fibre and the special properties
of the paperboard make it possible to manufacture
attractive and functional packaging solutions that
offer an excellent substitute for packaging based on
fossil raw materials.

Read more on page 28

HOLMEN ANNUAL REPORT 2015 11

BUSINESS OPERATIONS / FOREST

Forest

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

Thanks to active forestry, the volume of wood in Sweden’s
forests has almost doubled in the past 100 years. The capacity
of the forest to capture carbon dioxide, combined with a
growing volume of wood, therefore helps to combat climate
change. However, it is important to remember that the forest’s
absorption of carbon dioxide changes over time and is governed

by the age of the trees. Younger and middle-aged stands, where
growth is greatest, absorb more carbon dioxide than older
stands, where growth is in decline. The rule of thumb is
therefore simple: The more the volume of wood in our forests
grows, the better it is for the climate. This is why a managed
forest is better for the climate than an unmanaged one.

12 HOLMEN ANNUAL REPORT 2015

RESULTS 2015

Holmen Skog’s earnings from operations for 2015 increased by
SEK 103 million to SEK 638 million, mainly owing to lower costs for
handling storm fellings and the effects of implemented rationalisations.
Operating profit, which includes a change in value of SEK 267 million,
totalled SEK 905 (817) million.
Holmen Skog acquired a total of 11.2 (11.4) million m3sub of wood,
of which 5.9 (6.1) million m3sub was sold to external customers.
3.2 (3.3) 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 (4.8) million m3sub of wood.

OPERATING PROFIT/LOSS
SEKm

1 000

750

500

250

HARVESTING IN HOLMEN’S FORESTS
’000 m³sub

3 213

4 000

3 000

2 000

1 000

905

5.2

Operating proﬁt/loss, excluding
items affecting comparability

Return on operating capital,
excluding items affecting comparability

BUSINESS OPERATIONS / FOREST

WHAT LONG-TERM ROLE DO YOU SEE FOR THE FOREST?
Demand for raw material from the forest for construction,
packaging, hygiene purposes and energy will be driven by a
constantly growing global population. At the same time, we face
climate change making its presence felt in many ways. For both
these reasons, we need to get our forests growing better. In other
words, we have to go even further in working our forests in an
active and sustainable manner.

WHAT DO YOU MEAN BY YOUR VISION ‘WE GROW THE FUTURE’?
For me, on the one hand it is about us preserving and developing
all the assets of the forest for generations to come. On the other
hand, the vision conveys a longstanding responsibility in our
roles as forest owner, wood buyer and supplier to sawmills and
mills. As an engaged and competent forestry business partner,
we contribute raw material to a growing bio-economy.

HOW CAN YOU BECOME MORE EFFICIENT?
One perspective is about improving productivity at every level,
for example through new technology and advanced methods.
The other perspective is about making the organisation more
efficient and tailored to the future. We worked on our processes
and roles in 2015, and in the autumn we launched a new
organisation that combines high expertise in forestry with a
stronger commercial and market focus.

WHAT VALUE DOES THE FOREST BRING?
Through our way of working, we have shown that active forestry
promotes sustainable growth, both in the forest and the economy.
The growth in our forests has long exceeded the extraction
of wood and we are working towards the target of increasing
growth by 25 per cent by 2050 compared with the base year
2007. Overall, this translates into a steady increase in the
volume of wood, making it an inspiring and important target for
Holmen and for the climate.

Sören Petersson,
CEO Holmen Skog

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

2015

2014

638

905

535

817

17 589

17 340

384

3 213

418

3 297

HOLMEN ANNUAL REPORT 2015 13

BUSINESS OPERATIONS / FOREST

Market
MARKET DEVELOPMENT. In 2015, demand for logs was
high and the supply of pulpwood was high. Selling
prices remained largely unchanged compared with
the previous year. Price levels continued to be signif-
icantly higher in southern Sweden than in the rest
of the country. Supply of forest fuel was higher than
demand.

THE VOLUME OF WOOD in Sweden amounts to around
3 billion m3 growing stock, solid over bark. Growth
is approximately 95 million m3sub per year, of which
70–80 million m3sub is harvested. Of the annual
harvest, logs and pulpwood account for 90 per cent
in an even split. The remainder is firewood.
Holmen’s volume of wood currently stands at
around 119 million m3 growing stock, solid over
bark. By 2050, the volume of wood is expected to
have grown to 160 million m3 growing stock, solid
over bark, with the harvest increasing from 3 to 4
million m3sub per year.

Value of the forest
GROWTH AND HARVEST. 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).
Annual harvesting is governed by a long-term
plan based on forest inventories that are conducted
every 10 years. The latest plan dates from 2011.
According to the present long-term harvesting plan,
around 85 per cent of annual growth is harvested
in Holmen’s forests. Up until 2020, the average
harvest will amount to 3.0 million m3sub per year.

ECONOMIC VALUE. Holmen’s forest holdings are rec-
ognised 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 long-term 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 present-day
levels and is adjusted upwardly by just over 2 per
cent per year. The cash flows are discounted using
an interest rate of 5.5 per cent. The carrying amount
as at 31 December 2015 was SEK 17 173 million.
A deferred tax liability of SEK 3 788 million is stated
in relation to that figure, which means that the grow-
ing forest, net after tax, is recognised at SEK 13 385
million. For more details, see Note 11, page 77.

SOCIAL VALUE. The world we live in is already affected
by major challenges in terms of resources and climate.
There is therefore an urgent need to transition to an
economy where resource-efficient and climate-smart
products replace those that consume the planet’s
resources. Holmen’s growing, sustainably managed
forests have a key role to play in this. By actively
managing the forest and using forest raw material
to manufacture products and generate renewable
energy, Holmen helps to benefit the climate and
promote sustainable social development.

14 HOLMEN ANNUAL REPORT 2015

DISTRIBUTION
OF COST,
Own forests, %

20 %

65 %

15 %

Silviculture
Harvesting
Fixed costs

PRICES
SEK/m³sub

600

500

400

300

200

1999 2003 2007 2011 2015 2019 2023

Real
Nominal
Price used in
valuation (nominal)

Forestry
ACTIVE AND SUSTAINABLE. Holmen operates sustain-
able 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 sowing. The forest is cleaned and
thinned in order to select trees with the best poten-
tial for continuing their growth. Around 10–30
years before the forest is harvested, it can be fertil-
ised to further boost growth. Holmen fertilises
around 8 000 hectares per year.
2015 saw the launch of the book ‘The Art of Grow-
ing Forests’. The book details the key role of the forest
in a sustainable society and Holmen’s way of con-
ducting active forestry that is enduringly sustainable.

INCREASED PRODUCTIVITY is the key to long-term
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 and innovators.

In 2015, Holmen finished trialling a new type of
forest machine, the harwarder, a combined harvest-
er and forwarder that fells and then transports the
logs out to the road. Skogforsk has evaluated the
concept and highlights advantages such as more
efficient wood handling and lower fuel consumption.

SILVICULTURE AND REGENERATION. The annual cost
of silviculture, stewardship and fertilisation is
around SEK 160 million. The measures, which fol-
low Holmen’s forest stewardship programme, are
aimed at increasing the rate of growth in the com-
pany’s own forests. Holmen quality assures the
regeneration and conducts long-term development
work that covers the entire chain from seed to new
planting. Each year, 30 million new seedlings are
produced at Holmen’s nurseries, with the majority
planted on the Group’s land.

LASER DATA. In 2015, Holmen introduced laser data
as a basis for making decisions and planning its for-
estry. The data provides updated information on the
height and density of the forest, plus the topography
of the land. The information creates better opportu-
nities to carry out the right forestry measures at the
right time, making the operation more efficient.

WILDLIFE DAMAGE AND INSECT ATTACKS are problems
that affect the forest’s growth and value. Holmen los-
es around 400 000 m3 growing stock, solid over bark,
per year due to grazing from wild animals. The shared
target for the forest industry is to adapt the wildlife
populations so that seven out of ten pines can grow to
maturity undamaged. This will be achieved through
good collaboration with the hunters.
Holmen’s trial of waxing the seedlings to combat
pine weevils proved positive in 2015, and now the
ultimate ambition is for all seedlings to be waxed.

THE FOREST AS A SOCIAL ASSET. The forest is not only
important from a socioeconomic perspective. It
also has significant environmental and recreational

BUSINESS OPERATIONS / FOREST

value, while the forest has a documented positive
effect on health and well-being.
Holmen gives particular consideration to forests
that are valuable in terms of aesthetics and experi-
ences, and that many people visit for outdoor pur-
suits, relaxation and exercise.

ECOSYSTEM SERVICES is a concept involving the bene-
fits that people and society get from the natural
world. The production of fibre raw material is one
example that already has a market value. Other ex-
amples of ecosystem services from the forest include
carbon capture, biodiversity, job opportunities, rec-
reation, meat, mushrooms and berries. Various pro-
cesses are under way in Sweden and internationally
to survey, develop and evaluate ecosystem services.
Holmen has begun studies to investigate the busi-
ness opportunities that could be developed out of
the many ecosystem services that exist in the forest.

BIODIVERSITY is rooted in a complex interplay be-
tween many different species in different natural
habitats. 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 consideration within the
managed forest.
Holmen Skog applies various measures to ensure
biodiversity. Prescribed burning is an effective way
to kickstart the forest’s natural regenerative pro-
cesses and create habitat for a wealth of species.
Other measures include selective felling, establish-
ing wetlands and damaging trees to create dead
wood. In natural environments that have been
shaped by humanity over the centuries, Holmen

HOLMEN’S FORESTS 2015

Total land acreage
Total forest land acreage*
- of which nature conservation areas
Productive forest land**

Total volume of wood, on
productive forest land***

1 269 000 ha
1 153 000 ha
202 000 ha
1 042 000 ha
119 000 000 m3
growing stock,
solid over bark

* Analysis conducted by the Swedish National Forest Inventory, accord-
ing to the international definition of forest land: Land with an area
of more than 0.5 hectares, 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).

*** Adjusted in relation to previous years due to new

measurement method.

takes responsibility for reinstating broadleaf forest
and pasture, for example.

CLIMATE CHANGE. The conifers in the Nordic land-
scape have been around for as long as 500 million
years and as such are extremely old organisms with
an incredible capacity to adapt to change. A warmer
climate may, however, affect the forest in various
ways. Growth may increase in certain areas, but
periods of ground frost may become shorter, which
makes harvesting more difficult. The seedlings from
the plant nurseries are selected to grow and thrive
in a changing climate, and Holmen’s silviculture
programme is robust in climate terms.

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

+1%/year

160

120

1948

1955

1965

1975

1988

1993

2000

2010

2020

2030

2040

2050

Assessment of tax
Forecast

MAP

Holmen’s forest holdings

Holmen’s Swedish industries

HOLMEN ANNUAL REPORT 2015 15

BUSINESS OPERATIONS / ENERGY

Energy

Holmen Energi is responsible for developing the Group’s renewable hydro and
wind power production.

Hydro power has a unique advantage over other renewable
energy sources, since it is controllable. By increasing or
decreasing the flow of water through the turbine, production
can be adapted to demand to some extent. Hydro power is
thus a vital part of the Swedish energy system and, what is

more, it is a neveraae energy system realigns itself with
renewable resources, hydro power thus offers considerable
social benefit. In contrast to fossil energy, it also emits no
carbon dioxide.

16 HOLMEN ANNUAL REPORT 2015

RESULTS 2015

The year’s operating profit amounted to SEK 176 (212) million.
Production was just over 15 per cent higher than usual, but earnings
decreased as a result of low prices.

OPERATING PROFIT/LOSS
SEKm

500

375

250

125

176

5.2

COMPANY-GENERATED
HYDRO AND WIND POWER
GWh

1 600

1 200

800

400

138

1 302

Operating proﬁt/loss
Return on operating capital

Production of hydro power
Production of wind power

FACTS

Operating profit/loss, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Company-generated hydro and wind power, GWh

2015

2014

176

3 351

1 441

212

3 401

1 113

BUSINESS OPERATIONS / ENERGY

HOLMEN’S FIRST WIND FARM ON ITS OWN LAND IS A YEAR
OLD. HOW HAS IT LIVED UP TO EXPECTATIONS?
The 17 wind turbines in Varsvik delivered beyond expectations in
the calibration stage in late autumn 2014. In 2015 we switched
to regular operation and since then the generation from the
turbines has been on a par with what was expected.

WHAT OPPORTUNITIES DO YOU SEE FOR HYDRO POWER?
Hydro power plays several key roles in the Swedish energy system.
It is renewable, and its controllability is of major importance to
a system in which other energy sources vary according to the
weather. Hydro power production could be further increased, but
under the current political conditions this is simply not a practical
option. If investments are to be made, attitudes towards hydro
power have to change. Its importance for system balance and as
an energy reserve must be better appreciated.

WHAT ARE THE KEY ADVANTAGES OF HYDRO POWER?
A hydro power station can supply climate-smart, renewable
energy for more than a hundred years, as long as it is maintained
and developed. The need for investment is relatively small.
For every kilowatt hour produced via hydro power, electricity
production from energy sources with a greater environmental
impact, such as oil and coal, can be cut back.

WHAT ARE THE MARKET CONDITIONS LIKE?
Unfortunately the conditions for hydro power have deteriorated.
The tax on power station properties has risen dramatically in
recent years, which in practice means that renewable energy of
this type is subject to punitive taxation. Under the current market
conditions, we cannot justify reinvestments in our facilities,
which is a serious issue for future energy supply. A strengthening
of capacity in the national grid between north and south is vital
for the industry from an energy and price perspective.

Fredrik Nordqvist,
CEO Holmen Energi

HOLMEN ANNUAL REPORT 2015 17

production exceeds demand in Sweden. Combined
with lower prices for coal and emission allowances,
this has led to historically low electricity prices.
Taken as a whole, these circumstances make building
wind power capacity an unprofitable option.

THE WIND FARM in Varsvik is the first large-scale wind
farm in the County of Stockholm. The facility, which
was brought on stream and calibrated in autumn
2014, comprises 17 wind turbines with a total installed
power of 51 MW. The project was completed as
planned in 2015 and has now switched to regular
operation. Production totalled 164 GWh in 2015.
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.

THE WIND POWER COMPANY VindIn AB is owned by sev-
eral electricity-intensive companies in Sweden, of
which Holmen is one. VindIn owns a total of 40
turbines distributed across three wind farms – Skutskär
and Trattberget in Sweden, and Svalskulla in Finland.
In 2015, VindIn’s overall production rose to 317
(211) GWh, with Holmen’s share amounting to
56 (37) GWh.

PERMIT PROCESSES. In autumn 2015, a permit was
obtained to establish a wind farm on the Group’s
land outside Örnsköldsvik. The conditions on site
are judged to be very good, but for the time being
the project is not considered viable due to the
prevailing market situation.
Permit processes for wind power on Holmen’s
land in Västerbotten continued in 2015.
The application for an environmental permit for
wind power at the UK paperboard mill in Workington
was rejected in October 2015.

PEAT. Holmen’s peat field outside Örnsköldsvik was
taken into use in 2009 and is harvested annually for
energy purposes. In contrast to 2014, 2015 had a
rainy summer, which led to a poorer annual harvest,
equating to 63 (93) GWh electrical energy.

In 2015, Holmen Energi continued to examine
the possibility of using peat as a raw material for
the production of soil improvers. This work was
conducted in collaboration with Holmen Skog’s
nurseries and the results over the year have shown
that peat has considerable potential in this area.

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

800

600

400

200

182

BUSINESS OPERATIONS / ENERGY

Market
A TOTAL OF 159 (150) TWh of electricity was produced
in Sweden during 2015, of which hydro power made
up 75 (64) TWh. Nuclear power produced 54 (62)
TWh and wind power production continued its
growth, reaching 16 (12) TWh. The remaining 13
(13) TWh constituted thermal energy.
The average spot price in 2015 for Sweden was
SEK 200 (290) per MWh, which was 30 per cent
lower than in the previous year. The price of electricity
forwards over the coming year fell 30 per cent to
approximately SEK 200 per MWh.

Own energy assets
HOLMEN ENERGI is responsible for the Group’s hydro
and wind power plants. Electricity production at the
25 wholly and partly owned hydro power stations
and wind farms, together with electricity production
at the larger mills, covers 56 per cent of the Group’s
electricity consumption. Holmen’s electricity
consumption at the production units amounted to
3 994 (4 067) GWh in 2015.

Development
HYDRO POWER dominates Holmen’s energy production.
It is a climate-smart, renewable energy source with
low investment needs and a long life. In addition,
controllable hydro power plays an important role in
a system in which other energy sources vary according
to the weather. The phasing out of existing nuclear
power further increases its importance.
As a consequence of abundant rainfall in spring
and summer, the water reservoirs filled up early and
annual production was up 24 per cent in 2015,
compared with the previous year. Hydro power
production is highly cost-effective, but the costs
have increased due to the substantial increase in the
property tax imposed in recent years. In 2015, the
property tax for Holmen’s wholly and partly owned
hydro power plants totalled SEK 93 (92) million.
Since the scope to expand hydro power is limited,
Holmen’s work is focused on upgrading existing
power stations and dams, and improving efficiency.
With today’s tax costs and market prices for electricity,
it is difficult to achieve profitable reinvestments.
2014 saw the Swedish Energy Agency and the
Swedish Agency for Marine and Water Management
(SwAM) present a national strategy for hydro power.
The aim of the strategy is to ensure environmental im-
provement measures that take into account the impor-
tance of hydro power for the electricity system. In 2015,
stakeholders submitted proposals for a financial solu-
tion, where hydro power owners can receive help with
the cost of environmental adaptation measures and
compensation for production losses, and for making the
environmental permit process efficient and sensible.

WIND POWER. Holmen’s strategy is to work with part-
ners to develop wind power projects on its own land
that are profitable over the long term. Wind surveys
have been conducted over several years at more than 10
sites on Holmen’s land. Work is under way on evaluat-
ing suitable technologies, infrastructure and general
efficiency, in order to push forward with the best sites.
The current challenge is that there are too many
electricity certificates on the market and electricity

18 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / ENERGY

FORWARD PRICES
SEK/MWh

350

300

250

200

150

2013

2014

2015

2016

2017

2018

HOLMEN WHOLLY
OR PARTLY OWNS

HYDRO POWER
STATIONS

21
4 WIND FARMS

HOLMEN POWER PLANTS

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

%
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

100
100

GWH*
470
97
3
1
8
9
7
7
14
115
23
70
7
22
30
17
45
29
17

112
10

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

1990
1927

Iggesunds kraftstation
Sveg
Byarforsen
Krokströmmen
Långströmmen
Ljusne Strömmar

Holmen
Bergsbron-Havet

Ljusnan

Motala
Ström

OWNER
Varsvik
VindIn

Hydro power stations

Wind farms (plus 1 in Finland)

WIND FARMS
Varsvik
Skutskär
Trattberget
Svalskulla, Finland

HOLMEN’S PRODUCTION
SHARE

%
50
17.7
17.7
17.7

GWH*
83
5
38
9

YEAR OF
CONSTRUCTION
2014
2009
2012
2014

* Refers to normal production

HOLMEN ANNUAL REPORT 2015 19

BUSINESS OPERATIONS / PAPERBOARD

Paperboard

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

The paperboard products from Iggesund Paperboard have
attracted various international awards for their standout
properties, which are appreciated by brand owners,
converters and creatives around the world. But another
important property goes beyond quality, production efficiency
and design freedom. It is about sustainability and responsible
use of the planet’s resources.

Invercote and Incada are both made using fresh fibre
sourced from sustainably managed forests. The combination
of fresh fibre and the special properties of the paperboard
make it possible to manufacture attractive and functional
packaging solutions that offer an excellent substitute for
packaging based on fossil raw materials. Our paperboard
is thus able to further the transition to a bio-economy.

20 HOLMEN ANNUAL REPORT 2015

RESULTS 2015

Iggesund Paperboard’s deliveries in 2015 amounted to 499 000
tonnes, which was 1 per cent higher than in 2014.
Operating profit for the year was SEK 847 (674) million.
The improvement was due to a weaker Swedish krona and reduced
production costs.

OPERATING PROFIT/LOSS
SEKm

1 000

750

500

250

847

12.5

NET SALES AND
OPERATING MARGIN

SEKm

6 000

4 500

3 000

1 500

5 472

15.5

Operating proﬁt/loss
Return on operating capital

Net sales

Operating margin

FACTS

Net sales, SEKm

Operating profit/loss, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Deliveries, ’000 tonnes

2015

5 472

847

324

6 622

1 432

499

2014

5 113

674

288

6 790

1 389

493

BUSINESS OPERATIONS / PAPERBOARD

HOW WOULD YOU SUM UP 2015?
We are continuing to strengthen our position in Europe, while
also building a platform for selective global growth. We know we
have the potential to grow as long as we focus on good customer
relations, cost-efficiency and productivity.

WHAT DO THE POSITIVE RESULTS MEAN FOR THE BUSINESS?
The positive trajectory of the results comes from our long-term
work on change, both on the marketing front and at the mills.
I am particularly pleased that our upgraded Invercote G was so
warmly welcomed by the market. Invercote G is a strategically
important product that works in all printing processes and is
optimised for digital printing. The upgrade makes it possible to
print on the inside of the packaging, which considerably expands
the design options for our customers. At our mills, the energy
investments have improved our competitiveness by reducing
variable costs and they have practically eradicated our dependence
on fossil fuels.

HOW DID THE MILLS PERFORM OVER THE YEAR?
Production was good in both Iggesund and Workington. In
Iggesund, we completed our capacity project at the pulp mill as
planned, giving us the opportunity for continued organic growth.
In Workington, we are gearing up for a capacity increase on the
board machine during 2016. We are in a strong position with
our committed employees, well invested machinery and our
Invercote and Incada brands.

WHAT OPPORTUNITIES DO YOU SEE TO DELIVER EVEN MORE
CUSTOMER BENEFIT?
A year ago, we launched our service offering ‘Care by Iggesund’.
Our customers are buying more than just world-class sustainable
paperboard. We also want to improve customer benefit by leading
the way in strong service concepts, customer relationship
management and partnership for innovation.

Annica Bresky,
CEO Iggesund Paperboard

HOLMEN ANNUAL REPORT 2015 21

BUSINESS OPERATIONS / PAPERBOARD

Market
EUROPE. For the products that Iggesund Paperboard
manufactures, folding box board (FBB) and solid
bleached board (SBB), the market grew by 1 per
cent in 2015 to 2.7 million tonnes. The products
remain in the higher premium segments and within
SBB, Iggesund Paperboard is the leading producer,
growing more than the market. The year saw several
fine paper mills announce switches to paperboard
production as a consequence of the structural
downturn in the paper industry. The prices largely
remained stable over the year.

GLOBAL. Asia, primarily China, accounts for the great-
est global increase in the packaging area, due in part
to an emerging middle class and ongoing urbanisa-
tion. In 2015 growth slowed somewhat, on account
of China’s generally weakening economic situation.
In the USA, supply and demand remained in balance.
Prices in Asia and the USA were unchanged over the
year.

Products
MARKET POSITION. Iggesund Paperboard is a global
market leader in the segment for high-performance
paperboard for consumer packaging and graphical
applications. The key customer categories are con-
verters, who make packaging, and wholesalers and
printers, who buy paperboard for use in graphical
applications. Customers particularly appreciate the
high and consistent quality, which contributes to
predictability in the production processes, and the
excellent print quality. Iggesund Paperboard is also
well positioned for the rapid growth in digital print-
ing technology.

STRONG BRANDS. Iggesund Paperboard manufactures
and markets paperboard products under two
brands: Invercote (SBB), which is produced at Igge-
sund Mill, and Incada (FBB), which is made at the
mill in Workington. Both have received international
industry awards and rank highly in brand surveys.
At the Pro Carton/ECMA Awards, two of the top
prizewinning packaging solutions were made from
Invercote. Invercote G also won the category of
media for digital print in the US-based newsletter
Quick Printing’s annual poll of its international
readers.

APPLICATIONS. Invercote and Incada are used primarily
to make consumer packaging for confectionery,
cosmetics, perfumes, wine, spirits, pharmaceuticals,
food products and tobacco. With one of the mar-
ket’s most complete product ranges, coupled with
additional finishing options via the laminating plant
in Strömsbruk, Iggesund Paperboard offers sustain-
able, innovative and customised products. What is
more, they meet the very highest of standards – all
the way from the customer’s industrial processes to
the final consumer experience. In addition, Invercote
and Incada meet the market’s growing demand for
packaging solutions that are suitable for digital
printing.

Invercote and Incada are also highly regarded
among designers and producers in the graphics in-
dustry, who employ the products in everything from
advertising print to cards and covers.

22 HOLMEN ANNUAL REPORT 2015

Development
RENEWABLE. The market trends in the packaging in-
dustry focus primarily on innovative packaging so-
lutions, the importance of packaging in brand build-
ing, and sustainability. Commitment 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.
Both of Iggesund Paperboard’s mills hold
chain-of-custody certification for FSC® and Iggesund
Mill also holds PEFC™ certification. All the wood
purchased for paperboard production comes from
well managed and sustainable forests. The end product
is high-performance, renewable paperboard based
on fresh fibre. As well as bringing unique properties
to the products, fresh fibre is also a necessary
addition to the recovered fibre cycle.

CUSTOMER FOCUS. 2015 saw further development
of the ‘Care by Iggesund’ service concept that was
launched in the previous year. All the elements are
now in place – greater global sales activity, improved
delivery service, enhanced knowledge and technical
support regarding the products Invercote and Incada,
expanded stocks in Asia and the USA plus a broader
service offering in Russia. The concept also includes
Iggesund Paperboard’s environmental documenta-
tion plus access to analysis facilities at its own ac-
credited laboratory for sensory and chemical analy-
sis, known as the smell and taste lab, at Iggesund
Mill. Detailed market surveys were conducted in
2015 to identify future customer needs, marketing
opportunities and potential for improvement. This
forms the basis for the continued strategic develop-
ment of Iggesund Paperboard’s product portfolio.

PRODUCT DEVELOPMENT. Iggesund Paperboard
consolidated its leading position in the premium
segment for all printing techniques with the 2015
launch of the upgraded Invercote G, whose coating
on the reverse side allows printing on the inside of
the packaging too. With custom paperboard products
like Invercote G, Iggesund Paperboard is driving
progress and has created a platform for volume
growth in Europe and globally. Just like packaging
paperboard, the graphical range has also been adap-
ted to the market so that customers can benefit fully
from digital printing – partly via the upgraded In-
vercote G, and partly through increased availability
with regard to the most common formats of digital
printing presses.
Digital printing is showing strong growth, with
the impetus coming from every direction – brand
owners, designers, converters and printing press
manufacturers. Iggesund Paperboard is developing
the products of the future in close collaboration
with leading players, customers and brand owners.

PRODUCTIVITY. Capacity utilisation at both mills is
high and overall production increased, which also
led to a reduction in variable costs. Despite the long
maintenance shutdown in the spring, the mill in
Workington delivered a similarly high level as in the
previous year. Iggesund Mill broke the record for
monthly paperboard production on a couple of
occasions over the year.

PRODUCTS, %

Solid bleached board
Folding boxboard

62%

38%

END
PRODUCTS, %

Consumer packaging
Graphical printing

84%
16%

EUROPEAN
PAPERBOARD MARKET 2015

0.5

2.2

s
e
c
i
r
P

2.4

3.6

MILLION TONNES

SBB Prestige products,
graphical products, perfumes,
confectionery and cigarettes.

0.5

FBB Confectionery, pharmaceuticals,
cigarettes, frozen goods,
skin care and hygiene articles.

2.2

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

2.4

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

3.6

BUSINESS OPERATIONS / PAPERBOARD

In November there was a stoppage at the mill in
Iggesund for maintenance and a rebuild. This inclu-
ded upgrading the recovery boiler from 18 to
24-month inspection intervals, which increases the
available capacity at the plant. Investments have
been made to optimise pulp production, so that
capacity can be increased by 50 000 tonnes per year.
The capacity increases at Iggesund Mill have been
made possible by the new recovery boiler.

Investments are under way at the mill in Workington

to increase paperboard capacity by 20 000 tonnes
per year. A rebuild of the press section will also im-
prove product quality.
The investments at the two mills, totalling
SEK 530 million, are scheduled to be completed
during the first half of 2016.

ENERGY SUPPLY. The 2013 investment in the biofuel
boiler at the mill in Workington now enables the
mill to use only fossil free electricity and thermal
energy. In 2015, the surplus energy was distributed

to the local community. The biofuel boiler is fired
primarily by wood chips, roundwood and bark.
This is supplemented by biofuel from energy crops
that local farmers grow as part of an agreement
with the mill. Energy crops are a welcome way for
farmers to diversify their operations and achieve a
steady revenue stream.
Over the year, energy management at the mill in
Workington was certified to ISO 50001.
The recovery boiler at Iggesund Mill was completed
in 2012 and has gradually been calibrated to optimise
energy yields and reduce emissions of fossil carbon
dioxide. The goal is to achieve fossil free operation,
and in 2015 the boiler ran over 99 per cent on
biofuels.

In autumn 2015, Iggesund Paperboard once again
found itself among the finalists for the ‘Bio Strategy
of the Year Award’ for the long-term work on
sustainable energy solutions at its mills. The award
is presented by the international industry
organisation PPI.

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.

LEADING PRODUCERS 2015
FBB and SBB, capacity in Europe, ’000 tonnes

Metsä Board

Stora Enso

HOLMEN

Mayr-Melnhof

Int. Paper

Careo

150

300

450

600

750

900

Solid bleached board
Folding boxboard

HOLMEN ANNUAL REPORT 2015 23

BUSINESS OPERATIONS / PRINTING PAPER

Printing paper

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

Holmen’s printing paper from its Swedish paper mills is based
entirely on fresh fibre. There is thus no recovered fibre in Holmen’s
modern magazine and book paper. But how does that sit with
the ecocycle approach and Holmen’s ambitious sustainability
work? Really well actually. It is in fact necessary for fresh
wood fibre to be added to the recovered paper system since,
while wood fibre can be re-used up to seven times, after that it

is expended. Holmen’s fresh fibre-based printing paper is also
traceable. And the trail leads back to Swedish forests, where
the forestry is conducted in a responsible manner.
With low basis weights, Holmen’s printing paper boosts
customers’ efficiency, competitiveness and sustainability work,
while in the long run contributing to a functional recovered
paper system by topping it up with fresh fibre.

24 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / PRINTING PAPER

HOLMEN PAPER CONTINUES TO CHALLENGE THE MARKET WITH
NEW PRODUCTS. WHY?
It forms a natural part of our strategy of being a speciality paper
producer that draws on all the great properties of fresh fibre. We
have now made investments to fulfil that strategy and as such
we are able to offer even more cost-effective alternatives to
traditional paper choices.

WHAT HAVE THE INVESTMENTS AT THE SWEDISH MILLS INVOLVED?
The energy restructuring at the mill in Hallstavik has proved a
success, and sales of bark to local energy producers have re-
sulted in new revenue streams. In January 2015, we carried out
an extensive rebuild of PM 53 at Braviken Paper Mill in order to
produce our new SC paper, Holmen UNIQ. We are seeing volume
growth and rising interest in the market for this innovative paper.

HOW IS THE SWITCH TO MAGAZINE AND BOOK PAPER GOING?
We are keeping to our strategy of being the leading producer of
innovative, fresh fibre-based magazine and book paper with low
basis weights that help our customers to make a greater impact
and save money without compromising on quality or feel. Fol-
lowing our investments, we now have highly efficient machines
for optimum utilisation of capacity, while also continuing our
product development.

WHAT IS HAPPENING AT THE MOMENT?
We are continuing to calibrate our plants in order to improve
efficiency and cut costs. If we are to recoup our investments, we
also need to increase our activity in the market. We are therefore
boosting our sales processes and our customer-facing work in
existing and future markets. Paper will still be needed in the
future and I am convinced that our product and market mix will
make a difference.

RESULTS 2015

Holmen Paper’s deliveries over the year amounted to 1 325 000 tonnes,
which was 2 per cent higher than in 2014, despite a rebuilding
shutdown and a fire. Magazine and book paper accounted for 60 per
cent of deliveries.
Operating profit/loss for the year was SEK -74 (141) million, excluding
items affecting comparability. The decrease in profit was due to
lower selling prices, as well as costs and production losses from a
rebuilding shutdown at Braviken Paper Mill. This was partly offset by
a weaker Swedish krona and the implemented rationalisations.

In November 2015, production at Hallsta’s two paper machines
was stopped owing to a fire at the pulp factory. Production at PM 12
was resumed after 12 days, while production at PM 11 is expected to
restart in March 2016. The loss of revenue during the shutdown and
reconstruction costs are covered by insurance, with the exception of
SEK 30 million in deductible.

OPERATING PROFIT/LOSS
SEKm

800

400

-400

-800

-74

-4

-1.7

-8

INVESTMENTS AND EBITDA
SEKm

1 200

900

600

300

514

347

Operating proﬁt/loss excl.
items affecting comparability

Return on operating capital, excl.
items affecting comparability

Investments
EBITDA excl.
items affecting comparability

Nils Ringborg,
CEO Holmen Paper

FACTS

Net sales, SEKm

EBITDA, SEKm

Operating profit/loss excl. items affecting
comparability, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Deliveries, ’000 tonnes

2015

6 148

514

-74

347

3 558

1 150

1 325

2014

6 247

725

141

331

4 666

1 220

1 305

HOLMEN ANNUAL REPORT 2015 25

BUSINESS OPERATIONS / PRINTING PAPER

Market
THE EUROPEAN MARKET for wood-containing
printing paper amounted to 16.9 million tonnes in
2015, down around 5 per cent on the previous year.
The market is affected by an imbalance between
supply and demand. Selling prices fell during the
year.

MAGAZINE PAPER. European demand for magazine
paper declined by 5 per cent to 9.7 million tonnes,
although demand rose in the segments in which
Holmen operates.

BOOK PAPER. The market for book paper was stable.
Demand for wood-containing book paper, a product
that Holmen Paper supplies, amounted to around
400 000 tonnes.

NEWSPRINT. Demand dropped by 8 per cent to 6.7
million tonnes. During the first six months of the
year, capacity cuts amounting to approximately
700 000 tonnes were made at three European mills,
which led to a temporary improvement in capacity
utilisation.

Products
MARKET POSITION. Holmen Paper develops and sells
fresh fibre-based magazine and book paper that
provides retailers, printing firms and publishers
around the world with cost-effective alternatives to
traditional paper choices. As a result of restructuring
at the mills, continued product development and
intensified sales work, the proportion of magazine
and book paper is rising at an accelerating pace.
Newsprint is thus increasingly becoming a product
for local markets, although it continues to form an
important part of the product mix.

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

INNOVATION. Holmen’s magazine and book paper
enables customers to produce printed material with
lower basis weights, but with the same thickness as
the traditional grades. The result is lower paper pur-
chasing costs and reduced distribution and postage
costs for the finished material. Holmen leads the
way in product development, but other manufacturers
have begun launching products with similar properties.
The positive point here is that this type of paper is
more quickly becoming a standard, with increased
supply and greater security for customers.

In 2015, all paper grades produced on PM 53 at

Braviken Paper Mill became approved for use in
products that come into contact with food.

MAGAZINE PAPER. As an industry leader in the
development of new products, Holmen Paper began
production on its latest addition, Holmen UNIQ,

26 HOLMEN ANNUAL REPORT 2015

PRODUCT
AREAS, %

LWU/Book
SC
Newsprint

57%

3%
40%

END
USES, %

Magazines, catalogues,
direct mail and books

Newspapers

64%

36%

EUROPEAN PRINTING
PAPER MARKET 2015

5.1

2.0

3.1

s
e
c
i
r
P

6.7

MILLION TONNES

LWC/MWC
Magazines, product
catalogues and direct mail.

SC paper
Magazines, product
catalogues and direct mail.

LWU/Book
Magazines, supplements, cata-
logues, direct mail and books.

Newsprint
Newspapers and direct mail.

5.1

3.1

2.0

6.7

in spring 2015. Holmen UNIQ is based entirely on
fresh fibre and offers a combination of bulk, brightness
and gloss that helps customers to cut their purchasing
and distribution costs, compared with traditional SC
grades. Holmen UNIQ is thus a natural complement
to the other product brands in the LWU family:
Holmen VIEW, Holmen XLNT and Holmen
TRND. All of these offer a superb combination of
quality and cost benefits in areas where more expensive
paper grades have dominated. The main applications
are magazines, product catalogues, supplements
and direct mail.

BOOK PAPER. With a market share of over 40 per cent,
Holmen BOOK is the market’s leading paper in Europe
for paperbacks and hardback books. The bright,
even surface and high stability provide an excellent
reading experience. 2015 saw the launch of Holmen
BOOK Extra which, with its higher brightness,
challenges traditional paper choices for hardback
books. The fact that Holmen BOOK is now produced
at both Hallsta and Braviken Paper Mill brings benefits
in terms of efficiency, capacity and availability.

NEWSPRINT. In the domestic markets of Scandinavia and
the Iberian peninsula, Holmen paper is a significant
supplier of fresh fibre-based and recovered fibre-based
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. Production of the new SC paper
Holmen UNIQ began at Braviken Paper Mill in
May 2015. This addition marks a clear strategic
shift towards a product mix in which fresh fibre-based
magazine and book paper provides the volume
growth and the production of newsprint in Sweden
is reduced correspondingly. The installation of a
new calender on PM 53 was the largest and most
significant measure ahead of the launch, but in order
to achieve the special brightness that characterises
Holmen UNIQ, the whole production chain has
been developed – from forest to finished product. To
maintain the brightness in the raw material, the lead
times from harvest to pulp manufacture have been
reduced. In addition, the chemical bleaching has
been adapted to meet the new standards for brightness
and volume. The product range has also been
expanded to include wider reels, in order to meet
the demand in the gravure printing market. Overall,
the new Holmen UNIQ is the first of its kind on the
market and a product with great potential for rapid
volume growth.
Also in 2015, an upgraded version of Holmen
VIEW was launched with different basis weights
plus improved surface and gloss properties. Other
new additions were Holmen BOOK Extra, with its
higher brightness for finer paperbacks and hard-
back books, and Holmen TRND in sheet form for
smaller print productions.

MARKET AND SALES. The European market, particu-
larly Germany, the UK and France, continues to set
the tone, but there is also potential to grow in other
markets. The judgement is that the product mix has

BUSINESS OPERATIONS / PRINTING PAPER

every chance of success on continents other than
Europe. Holmen Paper has established sales of
magazine and book paper in the USA, parts of Latin
and South America, and China and India.
Holmen Paper’s sales target is challenging and so
the marketing organisation has been restructured
with a focus on customer recruitment, more effective
market communication and continued strong
customer service. This ongoing work also includes
developing service and logistics solutions. The sales
team is growing in number. Sales outside Europe are
conducted via a combination of Holmen’s own sales
force and agents steeped in the local markets with
established logistical solutions.

PRODUCTIVITY AND EFFICIENCY. The successful
restructuring at the paper mill in Hallstavik continued
in autumn 2015 with the upgrading of PM 12. These
measures, which related mainly to electricity and
automation, have led to improved efficiency and
higher production volumes. The restructuring has
made Hallsta Paper Mill a competitive plant and
one of the most resource-efficient in Europe in its
product segment. The mill has been made more effi-
cient and modern, with a management of its energy
balance that is unique in the industry. A new revenue
stream has also been added, since the bark that was
previously used for thermal energy generation at the
mill is now sold as biofuel to external energy producers.
Towards the end of the year, the mill suffered a fire.
Production ceased for almost two weeks, after
which PM 12 was restarted. PM 11 is expected to
be back up and running in March 2016.
Braviken Paper Mill had a new calender installed
on PM 53, a project that affected the whole produc-

tion chain at the mill in one way or another. As a
consequence of the strategy focusing on fresh
fibre-based products, recovered paper handling
ceased in Braviken in May.
Following the restructuring, the Swedish units
have the capacity to produce over 1.1 million tonnes
of fresh fibre-based printing paper, primarily magazine
and book paper. Both the proportion and the volume
are expected to continue growing over coming
years. In parallel, productivity has risen by 40 per
cent over the past five years.
The factory in Madrid is cost-effective, as well as a
world leader among comparable mills when it comes
to efficient use of water. Production, for example,
uses 100 per cent recovered water. In 2015, issues
affecting the mill included the economic situation
and the higher cost of recovered paper and electricity.

ECOCYCLE. Holmen Paper’s magazine paper and
book paper are based on spruce fresh fibre sourced
from sustainably managed forests in Sweden. This
constantly adds fresh fibre to the recovered paper
system in Europe, which is necessary for the system
to survive and allow the manufacture of recovered
paper-based products. Production at the Swedish
mills holds chain-of-custody certification for
PEFC™ and FSC®. Braviken Paper Mill coordinates
electrical and thermal energy production with Braviken
Sawmill in an energy-efficient bio co-location, with
by-products from the sawmill providing an important
raw material source for the paper mill. The measures
of recent years at the two Swedish mills have reduced
the need for fossil fuel, while also enabling Holmen
Paper to support bio-based heat generation by
external energy producers.

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

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 ceased.

CHALLENGING TRADITIONAL PAPER CHOICES

LEADING PRODUCERS 2015
Printing paper, capacity in Europe, ’000 tonnes

PRICES

Holmen TRND

Holmen VIEW

Holmen UNIQ

Holmen XLNT

MF Magazine

MFC

LWC

MWC

PERCEIVED QUALITY

Holmen’s paper challenges traditional paper choices. The fresh fibre gives high bulk,
which means that printed material retains its overall thickness despite lower basis
weights. The end product is thus just as thick but lighter. This enables customers to buy
less paper by the tonne, and in addition it gives them lower distribution costs per copy.

UPM

Stora Enso

Norske Skog

HOLMEN

Sappi

Palm

Burgo

LWC/MWC
SC paper
LWU/Book

Newsprint

2 000

4 000

6 000

8 000

HOLMEN ANNUAL REPORT 2015 27

BUSINESS OPERATIONS / SAWN TIMBER

Sawn timber

Holmen Timber produces sawn timber for the joinery and construction industries at
large-scale sawmills that are integrated with the Group’s paper and paperboard mills.

There is a key difference between wooden buildings and those
built in other materials – wooden buildings have climate benefits
built in from the start, since the wooden structure in a building
stores the carbon dioxide that has been absorbed by the
growing trees in the forest. Another of sawn timber’s climate
benefits is the substitution effect. The manufacture of construction

materials such as concrete or steel causes emissions of fossil
carbon dioxide into the atmosphere. Choosing wood for
construction instead cuts emissions, plus less energy is required
for manufacture and transport. The renewability of the wood
raw material is naturally also helping to make the construction
of modern apartment blocks in wood increasingly common.

28 HOLMEN ANNUAL REPORT 2015

RESULTS 2015

Holmen Timber’s deliveries amounted to 730 000 cubic metres over
the year, which was slightly higher than in 2014.
Operating profit for the year was SEK 9 (37) million, excluding
items affecting comparability. The decrease was due to lower selling
prices and higher costs for logs. The decrease was offset by a weaker
Swedish krona and by depreciation being SEK 46 million lower as a
result of the impairment made in 2014.

NET SALES
SEKm

OPERATING PROFIT/LOSS
SEKm

1 500

1 000

500

1 314

200

100

-100

-200

Operating proﬁt/loss, excl.
items affecting comparability

EBITDA

FACTS

Net sales, SEKm

EBITDA, SEKm

Operating profit/loss excl. items affecting
comparability, SEKm

Investments, SEKm

Operating capital, SEKm

Average number of employees

Deliveries, ’000 m3

2015

1 314

2014

1 352

103

924

213

730

160

901

199

725

BUSINESS OPERATIONS / SAWN TIMBER

HOW HAS THE FOCUS AT BRAVIKEN SAWMILL CHANGED?
As a result of an investment in 2015, Braviken Sawmill now also
saws pine. The products are of the same type as at Iggesund
Sawmill, but with less specialisation. The start-up in autumn
2015 worked well.

WHAT HAS HAPPENED AT IGGESUND SAWMILL?
Investments were also implemented here in 2015. The timber
sorting at the end of the saw line was remodelled and calibration
began in autumn 2015. This investment strengthens Iggesund
Sawmill’s competitiveness through more efficient flows and 15
per cent higher production capacity.

HOW DOES THE FUTURE LOOK?
Demand for sawn timber is good, but oversupply has led to
pressure on prices. Over the long term, there is every indication
that the benefits of wood will lead to increased market share,
particularly for construction timber. Building in wood is environ-
mentally sound and economically advantageous.

HOW ARE THE COMPLETED INVESTMENTS AFFECTING YOUR
CUSTOMER OFFERING?
A fundamental ambition at both sawmills is to combine efficient
base production with a higher degree of finishing and a more
differentiated product range. For the sawmill in Braviken, this
means a broader product range that establishes a strong posi-
tion for the future and greater options for customisation.

Johan Padel,
CEO Holmen Timber

HOLMEN ANNUAL REPORT 2015 29

BUSINESS OPERATIONS / SAWN TIMBER

Market
The European market developed well in 2015, largely
owing to a positive trend in Germany, the Netherlands
and the UK, as well as the domestic market in
Sweden. Overall demand grew in Europe by 2 per
cent to just over 84 million cubic metres in 2015.
At the same time, supply was higher than consumption.
In the Middle East and North Africa, total demand
for sawn timber fell by 2 per cent in 2015 to around
10 million cubic metres. Selling prices gradually
decreased over the year.
The trend in the USA remained positive in 2015,
with consumption rising. Prices dropped, however,
due to a high domestic supply and a large influx of
sawn timber from Canada.
The sawn timber market in China slowed due to
the generally weakened economic situation. As in
other markets, sawn timber importers’ stocks grew,
which exerted downward pressure on prices. One
positive signal is that China has launched a state
programme to increase the use of wood in house-
building. In Japan, demand for construction timber
remained stable over the year, but supply was high
here too.

Products
MARKET POSITION. Holmen Timber is to be the
customer’s preferred choice when it comes to
high-quality base products for joinery and construction
purposes. The investment in modern and efficient
sawmills with a competitive wood supply and high
productivity allows for cost-effective production.
Adaptability, flexibility and high technical standards
in the processes deliver products with the right
properties for industrial finishing. Holmen Timber’s
focus on sustainability along the entire production

EUROPEAN SAWN
TIMBER
CONSUMPTION, %

Construction timber
Joinery timber
Packaging timber

60%

20%

30 HOLMEN ANNUAL REPORT 2015

chain combines with its approach of maintaining
close contact with customers to lay the foundation
for long-term and profitable customer relations.
With two modern sawmills, total production
capacity amounts to 900 000 cubic metres of sawn
timber in pine and spruce.

BUILDING WITH WOOD is Holmen Timber’s product
category for construction timber primarily in spruce.
Production takes place at Braviken Sawmill, with
customers including builders’ merchants, planing
mills, and house and roof truss manufacturers. The
key markets are located in Europe.

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

WOOD FOR PALLETS AND PACKAGING is a product segment
that provides a natural complement to the production
of joinery and construction timber at Holmen’s two
sawmills. The segment makes up around 10 per cent
of Holmen Timber’s total production, with the
products used for advanced packaging solutions.
Globally, pallets and packaging account for 20 per
cent of sawn timber use.

Development
PRODUCT DEVELOPMENT focuses primarily on meeting
high customer standards with regard to lengths,
dimensions and quality. There is a core focus on
minimising waste and on maximising both the yield
from each log and the value of the by-products that
arise from production. Balancing the different needs
requires rational production and stock management
as well as precise planning of loading and logistics.

BRAVIKEN SAWMILL is a modern sawmill for the efficient
manufacture of spruce construction timber. A strategic
investment was carried out in the summer of 2015,
aimed at diversifying sawn timber production to
include pine, and at enabling the production of
decking and joists for outdoor purposes. This
investment included an upgrade of the timber sorting,
saw line and drying section, plus expansions of the
timber yard and warehousing – all in order to ensure
rational production and smooth flows when handling
two types of wood. A broader product portfolio
opens up new marketing opportunities, while also
making the raw material supply more flexible,
reducing transport costs and cutting environmental
impact.

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. 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. A number of

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 enabled the pro-
duction of pine sawn timber at Braviken
Sawmill.

minor investments in recent years have contributed
to higher productivity, minimal waste and products
that are better adapted to the next processing stage.
Over the summer and autumn of 2015, the sawmill
underwent a major rebuild of the timber sorting at
the end of the saw line. This investment has increa-
sed annual production capacity by 15 per cent to
400 000 cubic metres sawn timber.

ENERGY EFFICIENCY. Holmen’s bio co-locations at
Braviken and Iggesund make full use of the whole
tree. Chips from the sawmills serve as 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 surplus
heat from the mills is used for drying processes at
the sawmills.

Building the future in wood
SUSTAINABLE. Wood makes a unique construction
material, since it is renewable and part of the natural
ecocycle. The supply is inexhaustible, as long as the
forest is managed in an active and responsible
manner and, just like the growing trees in the forest,
wooden structures store carbon dioxide. The climate
benefit increases even more when wood is able to
replace materials such as concrete and steel, whose
manufacture causes considerable emissions of carbon
dioxide. The manufacture of wood products also
requires relatively little energy, compared with
concrete and steel, and the by-products make useful
biofuels. High awareness of sustainability issues
and responsible forestry has grown around the
world, and now wood with environmental certification

from PEFC™ and FSC® is an established standard
in the leading markets.

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
elements can be prefabricated under protected and
controlled conditions, before being delivered to the
construction site ready for assembly. The simplified
logistics bring lower costs and time savings, and
allow for more efficient transport that reduces the
impact on people and the environment in urban
centres and other densely populated areas.

THE DEVELOPMENT and construction of modern,
high-rise apartment blocks in wood has long been
driven by trailblazers such as the USA, Germany,
Austria and Sweden. In 2015 China, the world’s
largest construction market, launched a state
programme to promote more building in wood.
This decision was prompted by growing
environmental awareness in China.

In Sweden, it is now possible to talk about

something of a breakthrough for high-rise wooden
buildings, an area that is developing at a rapid rate.
180 of Sweden’s municipalities are now home to
new-build high-rises in wood, and 10–15 per cent of
all the apartment blocks now being constructed have a
wooden carcass. In addition, a number of municipalities
in Sweden have adopted a strategy that makes wood
the first choice for newbuilds commissioned by the
municipality or on municipal land.

HOLMEN ANNUAL REPORT 2015 31

BUSINESS OPERATIONS / A SUSTAINABLE FUTURE

A sustainable future

At the end of 2015, the world’s leaders agreed a global climate deal. The increase in the global
average temperature must be kept well below 2°C in order to limit the impact on the climate.
Taking into account the storage of carbon dioxide in the forests and products, plus the production
of renewable energy, the forest industry is uniquely placed to help make this possible.

THE CLIMATE NEGOTIATIONS in Paris led to the
world’s leaders agreeing a global climate deal. This
agreement states that action must be taken to pre-
serve and improve the capacity to capture and store
greenhouse gases. The importance of the forests is
specifically underlined in this context. Society will
therefore increasingly be turning its attention to
the forests as one of the solutions to the problem
of climate change. Holmen has long operated sus-
tainable forestry, whereby carbon dioxide is cap-
tured in the forest and its products. All the while
that future opportunities for renewable wood fibre
are being identified, intensive work is also under
way to develop today’s products. This is expected
to lead to rising demand for forest raw material.
The growth in Holmen’s forests already outstrips
the annual harvest of wood and it is expected that
forest growth and harvesting could increase by 25
per cent over a 40-year horizon. Holmen thus has
a firm place in the sustainable society of the future.

HOLMEN’S OPERATIONS contribute to positive
climate effects in various ways – above all
through carbon dioxide being captured and
stored in the growing forests and so in the
forest products.
Around 85 per cent of the growth in Holmen’s
forests is harvested annually, to be used for pro-
ducts and for fossil-free energy production. 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 dioxi-
de storage will increase in the future. At the same
time, society will continue to be supplied with
packaging, printing paper, sawn timber, fossil-free
energy and other products made from the forest as
a raw material. The growing forest and the pro-
ducts that it generates form a crucial cornerstone
of the transition to a bio-economy in which fossil
raw materials are replaced with renewables.

THE MODERN FOREST INDUSTRY has a central
role to play in a future society that makes
increasing use of bio-based raw materials and
products. The circular economy is a concept
that shares some DNA with a bio-economy.
Being part of a circular economy means promoting
business opportunities that involve a circular
ecocycle. With a renewable raw material,
recovery of chemicals and energy in the mills,
plus products that allow material recovery or,
once expended, use in fossil-free energy
production, Holmen is already extremely well
placed in terms of the circular economy.
Very nearly 100 per cent of the by-products
and waste that arise from Holmen’s operations is
collected and used for various purposes. End-of-
life paper and paperboard products top up the

recovered paper ecocycle with much-needed
fresh fibre. Used fibre can be recycled up to seven
times before it ends up as biofuel. Fresh fibre and
recovered fibre thus complement each other, since
the paper industry in continental and central
Europe is based largely on recovered fibre. With-
out fresh fibre, there is no future recovered fibre.

THE TARGET SET OUT in the global agreement
on climate change can be achieved by increa-
sing the use of existing renewable products,
alongside the development of new materials and
products aimed at replacing their fossil-based
equivalents.
The Group is working on identifying and
developing new business opportunities, based
on Holmen’s renewable wood raw material
and the by-products that arise in production.
The main emphasis of this work is on product
development and enhancing process efficiency,
although forest growth and improving the
efficiency of forestry are also important focal
areas. Research is also being conducted into
the components that make up wood: cellulose,
hemicellulose and the binding agent lignin, which
can be used, for example, to produce light,
strong and sustainable products for structural
solutions in the construction industry. An im-
portant starting point for the work is that the

32 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / A SUSTAINABLE FUTURE

WHAT RESPONSIBILITY DO YOU TAKE FOR THE ENVIRONMENT AROUND YOUR
PRODUCTION FACILITIES?

The investments we have made in recent years with regard to bio-based energy production
have cut our emissions of fossil carbon dioxide significantly. This is good locally, regionally and
also globally. In order for us to run our business, we have to meet the emission conditions set
by the environmental authorities. New emission regulations from the EU now apply to our in-
dustry and over the coming years we will be focusing our work on ensuring that our operations
comply with these new regulations. Particular efforts are required at the mill in Workington in
order to meet the mandatory requirements concerning emissions of process water.

HOW DOES HOLMEN TAKE RESPONSIBILITY FOR ITS EMPLOYEES?

Skilled and committed employees are what drive Holmen forward and it is our respon-
sibility to give them opportunities to succeed, develop and enjoy their jobs. A safe work
environment is essential to this and the task of bringing the number of industrial accidents
down has the highest priority. This area is set to come into ever sharper focus as all the
mills gain certified management systems for work environment issues.

WHAT RESPONSIBILITY DO THE INDIVIDUAL EMPLOYEES CARRY?

As a Holmen employee, you have both great freedom and many rights, but with that comes
considerable responsibility. Drawn up in 2015, the Group’s Code of Conduct clarifies and
emphasises the requirements and expectations that apply to Holmen’s employees and
their everyday work.

HOW DO YOU ENSURE THAT YOUR SUPPLIERS OPERATE ACCORDING TO
HOLMEN’S PRINCIPLES?

In addition to the Code of Conduct for Holmen, we also have a Code of Conduct for suppli-
ers. The aim, as far as possible, is to ensure that this part of the value chain also operates
according to Holmen’s principles. The challenge with the Codes of Conduct and the other
steering documents is to find procedures that in the long run help to follow up compliance
with the steering documents.

IS IT FAIR TO SAY THAT HOLMEN TAKES RESPONSIBILITY FOR
COMING GENERATIONS?

Yes, I think it is. Holmen’s sustainably managed forests play a central role in this. Growing
forests capture and store carbon dioxide and contribute raw material for climate-smart
products, while also delivering important recreational value. For every tree harvested, at
least two new ones are planted. You could say that we are growing the future.

Lars Strömberg,
Director of Environmental
and Sustainable Affairs

HOLMEN ANNUAL REPORT 2015 33

new business opportunities must be linked to
Holmen’s existing industrial sites.

MUCH OF HOLMEN’S RESEARCH and development
work is done jointly with other players, often within
the same industry, and through collaborations with
universities, colleges and research institutes. One
example of such a collaboration is the establish-
ment of a pilot plant for crystalline nanocellulose in
Örnsköldsvik. The plant will be the first of its kind
in Europe. The material has many interesting prop-
erties and can be used for construction materials,
biocomposites and printed electronics. Operations
at the plant are based on the technology of the
Israeli startup company Melodea, with Holmen
discharging its role both as a catalyst for getting
the plant built and as a shareholder in Melodea.
While new products can form part of the solu-
tion to climate and resource issues, they also lay
the foundations for economic growth and employ-
ment. Furthermore, the sustainably managed for-
ests are important for people’s wellbeing and as a
place for recreation, hunting and fishing. The for-
ests of the future will be a major and vital natural
asset in several ways and for many generations
to come.

SUSTAINABLE DEVELOPMENT for employees, busi-
ness partners and owners depends on companies
showing good profitability and a strong financial
position. As an employer, Holmen must work to
ensure good leadership and safe working conditions,
while also motivating and developing its personnel.
It is also essential that the business follows rules on
business ethics and takes a holistic view, whereby the
environment is protected according to the precau-
tionary principle.
The Group’s CEO has ultimate responsibility for
driving progress towards sustainable develop ment.
The Group’s Director of Environmental and Sus-
tainable Affairs has a coordinating role in this area
and reports to Group management. Continuous im-
provement and regular follow-up of the business
lay the foundation for Holmen’s development in
economic, social and environmental terms. And
this also underpins Holmen’s contribution to a sus-
tainable future.

BUSINESS OPERATIONS / ENVIRONMENT

ENVIRONMENT

Holmen’s forests, production processes and products contribute to the development of a
bio-based economy. The 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.

HOLMEN’S ENVIRONMENTAL RESPONSIBILIT Y.
Environmental and energy concerns play a
natural role in Holmen’s planning of its produc-
tion and investments. The Group’s operations
are characterised by resource-efficient use of re-
newable raw materials and energy. Energy, chem-
icals and fibre are recovered as far as possible, in
order to minimise the environmental impact of
production. The section on risk management on
page 42 outlines Holmen’s preventive work on
eco-related risks and how they are managed.
Holmen follows the requirements laid down by
environmental legislation and the environmental
authorities. Compliance is ensured via statutory
official 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 indus-
trial sites takes the form of emissions to air and

water. Information on production and priority envi-
ronmental parameters is presented on pages 90–91.

ENVIRONMENTAL TARGETS FOR sustainable de-
velopment. Holmen has been working on Group-
wide environmental targets for sustainable deve-
lopment for several years. Increased production
and 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 levels. The investments in bio-based energy
production in Iggesund Paperboard and the ad-
justed energy strategy within Holmen Paper have
had a huge impact on fossil fuel use in recent
years. The reduction up until 2014 thus already
stands at 74 per cent. In 2015 there was a high-

pressure leak in the steam turbine at the mill in
Workington. As a result the mill was forced to
use natural gas as fuel for steam and heat pro-
duction. The downward trend in the Group’s use
of fossil fuels was thus interrupted. Action has
been taken and in 2016 the Group’s use of fossil
fuels is expected to be down by around 70 per
cent compared with 2005. The third climate-rela-
ted sustainability target is to increase company-
produced renewable electrical energy as a pro-
portion of total electricity use by Holmen. The
target for 2020 is for production to reach 50 per
cent, compared with 31 per cent for the base year
2005. In 2015, company-produced renewable
electrical energy accounted for 52 per cent of
Holmen’s total electricity use. Work is now being
focused on maintaining this reduction at a sustain-
able rate. Holmen owns areas of land that are
suitable for the erection of wind turbines. Due to
the current market situation for this type of elec-

SUSTAINABILITY TARGETS

OUTCOME 2015

COMMENT

INCREASED GROWTH IN HOLMEN FORESTS
By 2050, annual growth in Holmen’s forests is to be 25 per cent
higher than in 2007. This will deliver both larger harvests of wood
from the Group’s forests and greater capture of carbon dioxide.

Progress will be checked
in the next inventory of
Holmen’s forests in 2021.

Silviculture measures to ensure increased growth have been identi-
fied and implemented.

REDUCED USE OF FOSSIL FUELS
By 2020, use of fossil fuels at the Group’s mills will be down 75 per
cent compared with 2005.

The use of fossil fuels at
the mills has fallen by 62
per cent since 2005.

Investments in biofuel boilers and energy efficiencies have led to a
significant reduction in the use of fossil fuels. The downward trend
in the use of fossil fuels was interrupted in 2015 due to a high-
pressure leak in the steam turbine at the mill in Workington. The mill
was forced to use natural gas for steam and heat production.

INCREASED PRODUCTION OF RENEWABLE ELECTRICITY
Company-generated renewable electricity shall account for 50 per
cent of Holmen’s total electricity consumption by 2020, compared
with 31 per cent in 2005.

The proportion of compa-
ny-produced renewable
electrical energy rose to
52 per cent.

The commissioning of Varsvik wind farm and high levels of hydro
power generation increased renewable electricity production over
the year.

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

-62

34 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / ENVIRONMENT

ENVIRONMENTAL PERMITS FOR THE
GROUP’S PRODUCTION FACILITIES

CERTIFICATIONS FOR MANAGEMENT SYSTEMS

Iggesund Mill1)
Workington Mill2)
Hallsta Paper Mill3)
Braviken Paper Mill4)
Holmen Paper Madrid2)
Iggesund Sawmill4)
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 per-
mit under the Environmental Code since 1999. An app-
lication for a new environmental permit is to be submit-
ted for Iggesund Mill in 2016 (production increase). The
operations at the Strömsbruk production unit and Skär-
näs Terminal are included in this application.

2) IPPC environmental permit.
3) Environmental Protection Act.
4) The Environmental Code.

PRODUCTION FACILITIES1,2,3)
Iggesund Mill4)
Workington Mill
Hallsta Paper Mill
Braviken Paper Mill
Holmen Paper Madrid
Iggesund Sawmill6)
Braviken Sawmill6)

ENVIRONMENT
2001
2003
2001
1999
2002
1999
2011

ENERGY
2005
2015
2005
2006
2009
2006
2011

QUALITY
1990
1990
1993
1996
2000
1997
2011

HEALTH AND
SAFETY
20165)
2005
2012
2015
20165)
20165)
20165)

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
in the table are the years when the certification was first issued. The certifications mean that procedures are in place for planning, imple-
mentation and follow-up, as well as measures to enable continuous improvement in the work on the various management systems.
3) Operations at Holmen Skog are certified in accordance with environmental management system ISO 14001:2004. Holmen
Skog also holds certification in accordance with the criteria issued by PEFC™ and FSC®. Holmen Skog’s chain-of-custody
certification (FSC® Controlled Wood) provides assurance that non-certified wood also comes from verified sources. In addition,
all the facilities at which wood raw material is used have chain-of-custody certification.

4) The certifications include the production unit in Strömsbruk and operations at Skärnäs Terminal.
5) The certificate will be issued in the first half of 2016.
6) Joint certification for the two sawmills from 2011.

tricity production, the economic preconditions
for investing in wind power are not in place to
the extent that was predicted a few years ago.

OPERATIONS THAT REQUIRE A PERMIT were being
conducted at seven facilities at the end of 2015.
The permits specify conditions regarding permitted
production volumes and permitted emissions to air
and water. Five of the facilities are located in Swe-
den, with sales equivalent to 60 per cent of Group
net sales. The two remaining facilities are located in
Workington, UK, and Madrid, Spain. Their combi-
ned share of Group net sales was 19 per cent in 2015.
2013 marked the entry into force of the EU’s
Industrial Emissions Directive (IED). The new le-
gislation entails more stringent requirements for
using the best available technology. Holmen has

investigated the extent to which operations at
the pulp, paper and paperboard mills need to be
adapted in order to meet the tightened emission
requirements by October 2018. The environmen-
tal status of the mills is good and all the mills
except the one in Workington already largely
meet the new requirements. Work is under way
in Workington to determine what action is
required for the mill to meet the requirements
concerning discharge of process water.
An application for a new environmental per-
mit for a production increase at Iggesund Mill
will be submitted in 2016. The unit in Ströms-
bruk and the port operations at Skärnäs Termi-
nal will be included in the application.
The production of electrical energy at
Holmen’s wholly and partly owned hydro power

stations is covered by a permit for water opera-
tions. The government commission on activities
using or impacting on water, Vattenverksamhets-
utredningen (SOU 2014:35), has proposed a
system that will facilitate the assessment of reser-
voirs and hydro power stations, with a view to
reducing the environmental impact of hydro
power and securing its central position in the
energy supply network. One proposal is that all
hydro power stations in Sweden that have not
received a water judgement should undergo an
environmental impact assessment. It is currently
impossible to tell what economic consequences
this might have for Holmen.

In 2015, Holmen Energi received the last
permit needed for the erection of 69 wind tur-
bines on Holmen’s land outside Örnsköldsvik.

HOLMEN ANNUAL REPORT 2015 35

BUSINESS OPERATIONS / ENVIRONMENT

Due to the current market situation, however,
putting up the turbines is not considered finan-
cially viable at this time.
Permit processes also continued in 2015 for
other sites on Holmen’s land in the county of
Västerbotten.

In late 2015, the environmental authorities
rejected an application to erect a wind farm at
the mill in Workington. The prospect of obtain-
ing leave to appeal was judged to be poor. At
the same time, the scope for profitability in
wind power has radically worsened due to de-
cisions by the British government. Under these
circumstances, the project has been shelved.

EMISSION ALLOWANCES and electricity certifi-
cates. Through investments in bio- based energy
production at several facilities, Holmen has
been able to significantly reduce its need for
fossil fuels. As a result of this, the Group has
been able to sell its allotted emission allow-
ances for carbon dioxide within the framework
of the EU Emissions Trading Scheme. 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 distri-
butors have to meet a certain quota for renewable
electricity, and producers of renewable electrical
energy receive green Renewables Obligation Certi-
ficates (ROCs) in proportion to the amount of elec-
tricity generated. The biofuel boiler in Workington
received such certificates in 2015 and sold them on.

EXCEEDANCES AND COMPL AINTS. The environ-
mental manager within each operation handles in-
coming complaints and any incidents that occur.
During the year there were a number of cases of

exceeded threshold values, as well as complaints
and incidents in the industrial and forestry opera-
tions. Complaints are often submitted directly to
the mills, for example by local residents. Just under
30 industrial incidents were reported by the mills
to the supervisory authorities during the year. The
nonconformities were not of a significant nature in
terms of environmental impact or impact on pro-
fits. Corrective measures were taken to deal with
these cases, in line with the environmental mana-
gement system of the operations concerned.
Towards the end of the year, Hallsta Paper Mill
suffered a fire. No environmental impact was
noted. The fire caused production to be shut down.
The loss of revenue is covered by insurance, with
the exception of SEK 30 million in excess liability.

Sustainability in the wider world
GLOBAL GROW TH. In September 2015, the
member states of the UN adopted 17 global
goals for achieving economic, social and
sustainable development around the world.
This goals have subsidiary aims focusing on
eradicating extreme poverty, creating equality
and tackling climate change. There are several
eco-related goals, for example on sustainably
managed forests, resource-efficient water
consumption, the climate and renewable
energy. Holmen is already active in these areas.

THE CLIMATE NEGOTIATIONS in Paris in Decem-
ber 2015 led to the world’s leaders agreeing a glo-
bal climate deal. The general target is to keep glo-
bal warming well below 2°C, and preferably limit
it to 1.5°C, by cutting emissions of greenhouse
gases. The agreement on climate change states
that action must be taken to preserve and improve
the capacity to capture and store greenhouse
gases. The importance of the forests is specifically

underlined in this context. Holmen operates fo-
restry with long-term sustainability, whereby car-
bon dioxide is captured in the forest and its pro-
ducts, primarily sawn timber. Over the long term,
Holmen will therefore be an important player in
ensuring that the target set out in the global agre-
ement on climate change can be achieved.

ENVIRONMENTAL TARGETS IN THE EU. Targets
have been set by the EU in order to cut emissions
of fossil carbon dioxide and save energy in Europe.
In early 2015, the European Commission launched
the Energy Union Framework Strategy, aimed at
taking a joined up approach to energy issues.
As part of this work, EU leaders agreed on new
targets for climate and energy. Translated to the
corporate sector, which includes Holmen, emissions
of carbon dioxide are to be cut by 43 per cent by
2030 (base year 2005). The proportion of energy
consumption represented by renewables is to
increase to 27 per cent within the same timeframe.
Holmen is in favour of the EU’s action programmes
and targets. However, the Group’s ambitions in
the climate and energy area go further.

NATIONAL ENVIRONMENTAL quality objec tives.
The Swedish environmental quality system com-
prises 16 environmental quality objectives in areas
such as climate impact, air pollution and biodiver-
sity. Swedish businesses are expected to contribute
measures that show how systematic environmental
work is good for society and for commerce. Several
environment-related studies and measures have
been 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 are
presented on the next page in relation to a selection
of Sweden’s environmental quality objectives.

36 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / ENVIRONMENT
LOREM IPSUM / LOREM IPSUM DOLOR

NATIONAL ENVIRONMENTAL QUALITY OBJECTIVES AND HOLMEN’S ENVIRONMENTAL WORK

REDUCED CLIMATE IMPACT
• Based on growth data from the past five years, it has been calculated that
approximately 85 per cent of the growth in Holmen’s forests is harvested
each year and used for products. For 2015, this means that almost 500
000 tonnes of carbon dioxide was captured by the growing forest stands.
• 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 fell by around 50 per cent between 2013
and 2015. 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 runs on biofuel and is self-sufficient in electricity. In addition,
fossil-free electricity is distributed to the local community.

• Major energy efficiency initiatives have been implemented at Hallsta

Paper Mill over the past two years, focusing primarily on increased heat
recovery from pulp manufacture and paper machines. The bark that
was previously used as fuel at the mill is now sold for fossil-free energy
production. Emissions of fossil carbon dioxide from the mill ceased
almost entirely in 2015.

• At Braviken Paper Mill, oil consumption has been cut through improve-
ments 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. Under these measures, emissions
of fossil carbon dioxide fell over 50 per cent between 2013 and 2015.
• 99 per cent of the by-products and waste that arose from Holmen’s opera-
tions in 2015 was collected and used for various purposes. As biofuel-based
material, over 70 per cent was used for energy production at Holmen’s
own plants or sold off for fossil-free energy production elsewhere. The
remaining amount, just under 30 per cent, was used for other purposes,
such as construction material or producing soil products.

CLEAN AIR
• With the investments made over recent years at Iggesund Mill concerning
the new recovery boiler and a system for the destruction of weak gases,
emissions to air of sulphur, nitrogen oxides and dust from the recovery
process fell by around 70, 10 and 50 per cent respectively between
2013 and 2015.

• A change in energy production at the mill in Madrid began in 2014 with
the switch to a new energy boiler. This led to a reduction in emissions

of acidifying nitrogen oxides of around 90 per cent between 2013 and
2015, from 640 tonnes to a little under 60 tonnes.

A NON-TOXIC ENVIRONMENT
• In consultation with the environmental authorities, studies are being con-
ducted at contaminated discontinued industrial sites where Holmen has
operated in the past. Studies relating to the sawmills at Stocka, Länna-
holm and Yxviken, the sulphite mills at Strömsbruk, Domsjö and Loddby,
the former mechanical pulp mill in Bureå and a surface treatment plant
in Iggesund continued in 2015. Remediation work was completed at two
landfill sites in Hälsingland during the year. Measures to decontaminate
the former industrial site of Håstaholmen Sawmill commenced during
the year and will be completed in the first half of 2016.

THRIVING WETLANDS – SUSTAINABLE FORESTS – A RICH
DIVERSITY OF PLANT AND ANIMAL LIFE
• Holmen Skog has been working with the Swedish Wetlands Fund for the
past 10 years. Since the collaboration began around 40 wetlands have
been created.

• Holmen Skog works actively on setting aside parts of its productive
forest land with a view to preserving, improving and creating natural
assets. In 2015, courses were run on Visions for Good Environmental
Consideration in Forestry for Holmen personnel and contractors.

• In 2014, Holmen reached an agreement to sell almost 10 000 hectares
of forest with high conservation value to the Swedish Environmental Pro-
tection Agency in order to create a nature reserve. In exchange, Holmen
was offered the opportunity to purchase around 18 000 hectares of fo-
rest land of equivalent value. Work on this land deal continued in 2015,
with a focus on practical matters such as field studies, examination of
usage rights and drawing up a nature conservation agreement.

FLOURISHING LAKES AND STREAMS
• Holmen’s forests contain lakes, streams and other water-rich environments,

which are all sensitive ecosystems with rich fauna. The water in the forests is a
priority area for Holmen. Over the past five years, Holmen Skog has completed
an inventory of over 1 000 road culverts in the forest road network that present
obstacles to migration for fish and other aquatic organisms. Of these, around
170 required remedial work. This remedial work was completed in 2015.

HOLMEN ANNUAL REPORT 2015 37

BUSINESS OPERATIONS / EMPLOYEES

EMPLOYEES

Holmen’s core values of courage, commitment and responsibility aim to create a culture driven
by a desire for development. Expectations concerning what the organisation and its employees
should achieve are clarified through a process of management by objectives, under which
success factors are identified and progress is monitored via key performance indicators.

HEALTH AND SAFET Y. Holmen has seen a good trend in
recent years, with the number of accidents falling. Unfor-
tunately this downward trend was broken in 2015. The
figure was thus 8.8 industrial accidents per 1 million
hours worked (2014: 6.5). An interim target of max. 4.0
has been set for the end of 2016 (base year 2012: 11.6).
The aim is to ensure injury-free operations for em-
ployees by offering a healthy, inspiring and safe work
environment in physical, psychological and social terms.
Safer work environments are always high on the agenda
and the issue is monitored constantly at management
level. As a result of the extensive work carried out in
2015, all the production facilities will have certified
management systems in place for health and safety
work in accordance with OHSAS 18001 during the first
half of 2016. The certifications mean that the Group
now runs joint, systematic health and safety work. Over
the next two years, this work will be focused on safety
behaviours, common rules and exchange of experiences.
Sickness absence was 4.2 per cent in 2015, which was
somewhat higher than in the industry as a whole. Long-
term sick leave (more than 60 days) stands at 1.8 per cent.
The good health index is a measure of the share of employ-
ees with no sick leave during the year. The figure for 2015
was 48 per cent, which is on a par with recent years.

MANAGEMENT BY OBJECTIVES. In the course of 2015,
a common management by objectives process was es-
tablished within the Group. On the basis of the business
area’s strategy, every part of the organisation has set out
its objectives, critical success factors and key perfor-
mance indicators. Use of a simple tool for continuous
follow-up ensures that the organisation is applying
appropriate priorities to attain the objectives established.
During the year, more and more of the Group’s
employees were involved in the process and conse-
quently management by objectives has become an
automatic part of day-to-day work.
Holmen’s core values of courage, commitment and
responsibility combine with the Code of Conduct to
create a framework for how employees should act and
how leadership should be structured. Holmen’s values
help to create a dynamic and development-led organi-
sation, in which the employees feel involved and proud.

CHANGE MANAGEMENT. Several business areas were
subject to an organisational review during the year.
Holmen Paper adapted its sales organisation such
that it is now aligned with the strategic focus on spe-
ciality papers. Holmen Skog completed an extensive
reorganisation to improve efficiency and cut costs.
In 2015, Iggesund Mill embarked on a three-year

38 HOLMEN ANNUAL REPORT 2015

programme of organisational development aimed at
improving the mill’s competitiveness. The programme
seeks to develop the work culture and working practices,
with a focus on leadership, employeeship, management
by objectives and effective teams. At the same time,
a new organisational structure was implemented at
the mill. This will entail a gradual reduction in the
workforce up until 2017 through natural turnover.
As a means of support for employees – both
financial and in their efforts to find new work –
during cutbacks, Holmen is affiliated to the
employment transition fund Trygghetsfonden TSL.
Productivity, defined as production per employee
per year, has increased over several years, while the
number of employees within the Group continues to
fall (see diagram). This is due to organisational changes,
investments and more efficient working practices and
processes. In 2015, productivity was lower as a result
of maintenance and rebuilding shutdowns.

SKILLS DEVELOPMENT and talent management are
crucial in tackling the changes taking place in the
industry. To ensure the development of good leadership,
Holmen runs internal leadership programmes for mana-
gers at all levels. There are also development program-
mes for specialists who do not have employees directly
under them, but who work in change management.

EQUALIT Y AND DIVERSIT Y. Development opportunities
must be fair and equal irrespective of sex, ethnicity,
religion, age, disability, sexual orientation, nationality,
political opinion, union membership, social background,
health status or family responsibilities. No discrimination
or harassment in the workplace is permitted.
The forest industry is traditionally male-dominated.
The proportion of female managers in the Group
has risen over the past few years, and now one in
five of Holmen’s managers are women. Holmen is
of the firm belief that mixed groups perform very
well and strengthen Holmen as a company.

UNION COOPERATION. A relationship with the union
organisations that is based on trust is hugely important
and helps drive Holmen forward. Collaboration with
trade unions takes place in the Holmen European
Works Council and in consultation groups at various
levels in the company. The company’s employees are
represented on the Group Board by three members and
three deputy members. In a move to make union-related
work more efficient, during the year a working group
was put together by the parties and tasked with drawing
up a new Group-wide cooperation agreement.

BUSINESS OPERATIONS / EMPLOYEES

CODE OF CONDUCT AND POLICIES

The UN Global Compact, the eight fundamental
conventions of the International Labour Organization
(ILO) and the OECD’s guidelines for multinational com-
panies form the basis for Holmen’s Code of Conduct.
The code, which has been signed by the Group’s
CEO, provides guidance on day-to-day operations and
clarifies what expectations are made of Holmen’s em-
ployees. All employees will be given training in the code.

In 2015, the Group’s policies and guidelines have
been subject to a review. These include the recently
adopted business ethics policy and its accompa-
nying guidelines, which address matters such as
anti-corruption measures and competition issues.
Employees in areas such as sales and purchasing

who face a high risk of encountering unauthorised
behaviour are receiving special training on the
business ethics policy.

Holmen employees who wish to report suspected
breaches of the Code of Conduct are able to do so
via their immediate superior. Irregularities can also
be reported by employees and external stakeholders
via the whistleblower function. This function was
backed up in 2015 by rules clarifying the types of
cases that can be reported. At the same time, the
rules on case management were made more robust,
with a corporate lawyer and the director of sustainable
and environmental affairs taking receipt of the
cases and examining them.

0.3

AVERAGE NO.
OF EMPLOYEES/
business area, %

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

Total: 3 315
1 432

1 150

213

384

11
125

INDUSTRIAL ACCIDENTS
with more than 8 hours of absence,
per million hours worked

8,8

PRODUCTIVITY
Production/employee per year

Tonnes

1 200

900

600

300

4 000

3 000

2 000

1 000

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

HOLMEN ANNUAL REPORT 2015 39

BUSINESS OPERATIONS / SOCIETY AND STAKEHOLDERS

SOCIETY AND STAKEHOLDERS

Holmen has identified its stakeholders based on what they do, and how they affect the company
and the wider world. The dialogue with stakeholders creates opportunities for Holmen to identify
strengths and weaknesses, and to develop its sustainability work.

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

SOCIAL BENEFIT. Investments in research and develop-
ment, plus collaborations and dialogues with compa-
nies, organisations, schools and public authorities, have
positive effects, both locally and in the wider society.
Holmen’s business also creates jobs for contrac-
tors, suppliers and various social functions. This is
all good for the economy.
By maintaining the Group’s forests and lakes, and
making them accessible for recreation and outdoor
pursuits, Holmen lays the foundation for people’s
improved quality of life and wellbeing. Last but not
least, Holmen’s operations as a whole bring social
benefits through a positive impact on the climate,
sustainable use of resources and biodiversity.

OUR EMPLOYEES are the key to a successful enterprise
that is sustainable in the long term. Holmen places
great emphasis on ensuring its employees’ safety,
delegating responsibility and stimulating the desire for
personal and professional development, rooted in the
company’s core values. The Group works systematically
to give employees opportunities to influence and
develop the business through ongoing feedback and
dialogue between managers and workers. Employee
representatives have seats on the Group’s Board.
The priority issues are health and safety, leadership
and management by objectives.

WHISTLEBLOWER FUNCTION. A whistleblower
function is in place to allow employees and other
stakeholders to act if they suspect improper conduct
within Holmen. The rules relating to this function
were clarified during the year. In 2015, concerns
were raised about a contractor used by Holmen
Skog. Since the case had already been dealt with, no
separate investigation was deemed necessary.

CUSTOMERS AND BUSINESS PARTNERS have high
expectations of products and services, good busi-
ness practices and clear sustainability principles.
Holmen’s production takes place in Europe and
over 85 per cent of the Group’s deliveries relate to
this market. Other exports go primarily to the USA,
North Africa, the Middle East and countries in Asia.
A new business ethics policy was drawn up in
2015, along with accompanying guidelines. This
policy gives clear guidance on how to maintain
good business practices when dealing with external
contacts in the various markets.

In dealing with us, customers want to know that
Holmen has a committed and ambitious sustainability
programme in place. 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 is expanding its presence into more and more
countries, with customer service and relationship
building increasing accordingly. Customer satisfaction
surveys are a key tool in customer dialogue.

In 2015, Iggesund Paperboard conducted an inter-
view-based survey on product development. Around
50 converters and printing firms were contacted. In
the survey, 90 per cent of the respondents stated that
sustainability issues are important or very important
in business relations, and 75 per cent of the respon-
dents felt that the significance of sustainability will
increase over the next five years. Importantly for
Iggesund Paperboard, which already has a strong
sustainability profile, 85 per cent also reported that
sustainability issues influence their choice of packa-
ging solutions. Almost all of those questioned expres-
sed a desire to replace their non-renewable packaging
components with renewables. Plastic is the material
that most respondents wanted to replace.

SUPPLIERS. 2014 saw the continued implementation of
Holmen’s Code of Conduct for suppliers. Responsibility
for the code lies with the Group’s head of strategic
purchasing and the director of environmental and
sustainable affairs. The Group’s purchasing organisation
has received training and the Supplier Code of Conduct
is now included in all new supply contracts. The code
increases the focus on human rights and working
conditions among suppliers, with a view to ensuring
good conditions for everyone who works in Holmen’s
value chain. A risk assessment is performed, with
suppliers in high-risk countries subject to stricter
requirements on proving their compliance with the
principles in the Code of Conduct. The risk assessment
is conducted using the Maplecroft tool.

In 2015, Holmen launched a Code of Conduct
aimed primarily at its own employees. In conjunction
with this, Holmen’s Supplier Code of Conduct was
updated to include self-assessment. Holmen will be
focusing resources in areas where the risks are
deemed to be greatest.
By the end of 2015, suppliers accounting for
around 25 per cent of the Group’s purchasing
volume had signed up to, and thus declared their
compliance with, the Supplier Code of Conduct.
Work is under way to verify these.
Of the assessments carried out so far, only one
minor discrepancy concerning freedom of associa-
tion has been noted. In this case, discussions led to

40 HOLMEN ANNUAL REPORT 2015

BUSINESS OPERATIONS / SOCIETY AND STAKEHOLDERS

CDP – CARBON DISCLOSURE PROJECT

CDP’s Climate Change Program is the name of
an international federation that in 2015 represented
822 institutional investors with assets totalling
around SEK 860 billion. CDP seeks to encourage
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 5 500
listed companies, CDP has built up the world’s
largest database of climate information. This
information is made available to support strategic
business and investment decisions. Holmen has
reported to the CDP Climate Change Program
since 2007.

CDP WATER PROGRAM. In 2015, CDP sent out
a questionnaire to 1 100 companies around the
world on the risks and opportunities associated
with water use. Holmen is among the third that
completed the questionnaire.

CDP FORESTS PROGRAM. In 2015, CDP sent
out a questionnaire to around 850 companies
around the world on the risks and opportunities of
silviculture from a climate perspective. Holmen is
among the one fifth of companies that completed
the questionnaire.

SUSTAINABILITY INDEXES

www.ftse.com/ftse4good

www.oekom-research.com

www.indexes.nasdaqomx.com

THE UN GLOBAL COMPACT

HOLMEN’S OPERATIONS 2015
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
Shareholders Net profit

Interest
Taxes

Board’s dividend proposal

SEKm

17 216

-14 111
-2 335
-90
-120
559
882

Holmen has been part of the UN
Global Compact and its correspond-
ing 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
anti-corruption. Holmen’s website
describes how the Group complies
with and works to the Global
Compact’s principles.
The UN Global Compact 100
is a global stock index that tracks
compliance with the ten sustainabil-
ity principles and combines this
with 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 index. Holmen has held GC100
status in the years 2013–2015.

HOLMEN ANNUAL REPORT 2015 41

the supplier changing its internal procedures. Sub-
sequent compliance will now be followed up by
the responsible purchaser.

NEW LEGISL ATION IN THE UK. The UK Modern Slavery
Act was introduced in 2015. The new legislation
contains requirements that companies operating in
the UK must report how they tackle human rights
issues, with a focus on their suppliers. These issues
appear in Holmen’s Code of Conduct for its employees,
and the corresponding code for suppliers, as key
aspects that must be assessed and followed up.

PUBLIC AUTHORITIES. The majority of Holmen’s
operations require environmental permits. Openness
and transparency allow the Group to establish the
conditions for good oversight of and trust in Holmen’s
actions. Various authorities and the general public,
particularly local residents near the mills, have
opportunities to give their views in relation to
permit applications.

SHAREHOLDERS, INVESTORS AND ANALYSTS.
Sustainability carries significant weight in the
assessments made by investors and analysts looking
to establish relationships with companies that are
sustainable in the long term.
The continuous analysis work and dialogue with
different stakeholder groups contribute valuable
insights on how work in this area can be improved
within Holmen. All this creates a need for Holmen
to provide information on the sustainability work
that it conducts.
The fact that Holmen has been included in several
sustainability indexes can be seen as a stamp of
approval that Holmen is working with sustainability
issues in a good way. The reporting to the UN Global
Compact and CDP, reporting in line with GRI and the
annual report of the Group are effective ways of pro-
viding relevant data for the analysis of Holmen.

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
control of the Group’s financial risks.

PRICE AND MARKET

EARNINGS SENSITIVITY

A one percentage-point change

SEKm DELIVERIES PRICES
PRODUCTS
Paperboard
Printing paper
Sawn timber

30
19
3

53
60
13

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
4
Recovered paper
8
Other variable costs
13
Delivery costs
23
Employees
14
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 company forests and
production of own electricity, net
earnings sensitivity for the Group is
SEK 13 million for wood and SEK 9
million for electricity.

42 HOLMEN ANNUAL REPORT 2015

Group units are coordinated centrally, and purchas-
ing work is organised within product groups with a
number of selected suppliers per group.
To reduce exposure to electricity price fluctua-
tions, the Group uses physical supply agreements at
fixed prices, supplemented with financial hedges.
In 2015, the company’s net purchases of electricity
amounted to 1 771 GWh, of which 1 755 GWh was
in Sweden. Prices for the Group’s estimated net
consumption of electricity in Sweden are 80–90 per
cent hedged for 2016–2018, 40 per cent hedged for
2019–2020 and 25 per cent hedged for 2021. Gains
on financial electricity hedges are recognised in the
income statement when they expire; for 2015 they
totalled SEK 6 million (0). The fair value of outstan-
ding financial hedges at 31 December 2015 was
SEK -365 million (-147). This is recognised in other
comprehensive income as hedge accounting is app-
lied. Under current hedging, a one percentage-point
increase in the price of electricity would have a
SEK 6 million impact on equity.
Trading in financial contracts exists for certain
paper and pulp products. Holmen did not trade in
such contracts during the year. Price hedging oppor-
tunities 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 operating
profit/loss shown in the table to the left. The table is
based on income and expenses for 2015.
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.

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, print-
ing 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 Euro-
pean producers and changes in imports into Europe,
as well as the opportunities for exporting profitably
from Europe. Holmen has limited opportunities for
making rapid significant changes to its range of pro-
ducts, 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 thoroughly
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 relationships,
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 forecasted in the long term.
The price trend depends on the market balance in
Sweden for wood and electricity. Wood and electri-
city are the two most costly raw materials for the
product-oriented business areas, which makes the
Group a net buyer of wood and electricity.

In addition, pulp and thermal energy are signifi-
cant input goods in the production of printing paper
and paperboard. Holmen produces 96 per cent of the
pulp and virtually all thermal energy that it requires
at its own mills using a highly integrated production
process. The procurement of raw materials is under-
pinned through backward integration along the pro-
duction chain by owning forests and hydro power
production facilities. Purchases of other goods for

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 reduce the impact on
profit/loss from changes in exchange
rates, net flows are hedged using for-
ward foreign exchange contracts.
Net flows in euros, US dollars and sterling for
the coming four months are always hedged.
These normally correspond to trade receivables
and outstanding orders. The Board can decide
to hedge flows for a longer period if this is deemed
suitable in light of the products’ profitability,

competitiveness and the currency situation.
At the beginning of 2015, flows in euros were fully
hedged for 2015, while flows in dollars and sterling
were hedged for 4 months. Gains/losses on currency
hedges are recognised in operating profit/loss as
and when the hedged item is recognised. In 2015
they amounted to a loss of SEK -73 million (-116).
The hedging of estimated net flows for future
periods is shown in the table below.

Earnings sensitivity
Calculated on the basis of existing hedges and
the exchange rates at the turn of 2015/2016
(euro: 9.20, US dollar: 8.4 and sterling: 12.5),
exchange rate differences are not expected to

have any effect on consolidated operating
profit for 2016 compared with 2015. A one
percentage-point weakening in the Swedish krona
compared with the level at year-end would have a
posi tive impact on operating profit for 2016 of
SEK 35 million compared with 2015.
Excluding currency hedges, a one percent-
age-point weakening of the Swedish krona in re-
lation to other currencies would have the effects
on operating profit shown in the table below.
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 2015, SEKm*
EUR/SEK
USD/SEK
GBP/SEK
EUR/GBP
* The figures in the table have been rounded off. ** This rate refers to the average hedging rate.

12-MONTH ESTIMATED NET FLOWS
3 500
1 450
1 350
630

HEDGES
SEKm
3 830
420
360
190

RATE**
9.35
8.46
12.87
0.74

The fair value of outstanding transaction hedges at 31 December 2015 was SEK 82 million (-105). SEK 9 million (-35) was recognised in
the i ncome statement for 2015, and the remainder in other comprehensive income as hedge accounting is applied, of which the majority
relates to 2016. 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 5 million at 31 December 2015. During the period, the cost of hedged items increased by SEK 10 million.

Translation exposure. Reported profit/
loss is affected by changes in ex-
change rates when the profits/losses of
foreign subsidiaries 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
foreign subsidiaries are translated into Swedish
kronor is not normally hedged. Hedging expo-
sure 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 arranged based on the
value of net assets upon consoli dation. The
hedges take the form of foreign currency loans
or forward foreign exchange contracts.

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

31 DEC 2015 SEKm
EUR
GBP
Other

NET ASSETS EQUITY HEDGE
1 019
473
-

1 298
2 406
25

Gains on equity hedges amounted to SEK 14 million (-101) in
2015 and are recognised in other comprehensive income as
hedge accounting is applied. In the parent company accounts,
this gain is recognised in the income statement. The translation
of net foreign assets had an impact of SEK -8 million (363)
on consolidated equity. The fair value of outstanding equity
hedges at 31 December 2015 was SEK 25 million (-49),
of which SEK 1 million relates to loans and SEK 24 million to
financial derivatives. A one percentage-point weakening of the
Swedish krona would have a positive impact of SEK 22 million
on equity, including the translation of foreign subsidiaries’
earnings and taking account of currency hedges.

INTEREST RATES

Changes in the market interest rate
affect the cost of financing.

The fixed interest periods for the Group’s finan-
cial 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 derivatives that affect
the currency distribution and fixed rate periods
of the liabilities are taken into account.
The Group’s average interest rate on bor-
rowing was 1.5 per cent in 2015. At the turn of
2015/2016, the average cost of borrowing was
1.3 per cent, based on applicable market interest
rates and existing fixed interest periods. A one
percentage-point increase in the average market

FIXED INTEREST PERIODS, NET FINANCIAL
DEBT 31 DECEMBER 2015, SEKm
SEK
EUR
GBP
Other currencies
Net financial debt

TOTAL
-3 737
-527
-584
49
-4 799

–1 YEAR 1–3 YEARS 3–5 YEARS >5 YEARS
-
-2 710
-
-519
-
-488
-
49
-
-3 669

-600
-
-
-
-600

-400
-
-
-
-400

OTHER
-27
-8
-95
-
-130

The Other column refers to pension provisions; see Note 17 on page 83.

interest rate from the level at year-end would
have a negative impact of about SEK 31 million
on profit/loss for 2016. 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
48 million, calculated according to the size of the
debt at 31 December 2015. The fair value of the

derivatives used to manage the fixed interest
periods amounted to SEK -82 million (-97) at 31
December 2015, which was recognised in other
comprehensive income as hedge accounting is
applied. This value is expected to be recognised
in the income statement from 2016 onwards.
Under existing interest rate hedges, a one percent-
age-point increase in market interest rates would
have a SEK 28 million impact on equity.

HOLMEN ANNUAL REPORT 2015 43

RISK MANAGEMENT

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 limits
per customer and, in some cases, by insuring trade receivables against
credit losses. Credit limits are continually monitored.
At 31 December 2015 the Group’s trade receivables totalled
SEK 1 987 million, of which 42 per cent (39) were insured against credit
losses. Exposure to individual customers is limited. Sales to the five
largest customers accounted for 13 per cent of the Group’s total sales
in 2015. During the year, credit losses on trade receivables in the form
of provisions and impairment losses had a negative SEK 27 million
(negative 3) impact on earnings. At 31 December 2015, trade receivables
of SEK 87 million (83) were past due for more than 30 days. After individual
assessment of all trade receivables, a provision of SEK 38 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.

Financial transactions give rise to credit risks in relation to
financial counterparties.
A maximum credit risk and settlement risk are established for each
financial counterparty and are monitored continually.
At 31 December 2015, the Group had outstanding derivative contracts with a
nominal amount of about SEK 10 billion and a net fair value of SEK -340 million.
Holmen’s total credit risk in derivative transactions amounted to SEK 640 million
at year-end 2015. This calculation is based on the maturity and historical
volatility of different types of derivative. The maximum credit risk for other
financial assets is estimated to correspond to their nominal amount.

FINANCING

Group exposure to being unable to meet
the need for future funding and
refinancing maturing loans.
Holmen’s strategy specifies that its financial position should be strong to
ensure that it has the freedom to take long-term business decisions. The tar-
get for 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 forecasting
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 1 108 million during the year and stood
at SEK 4 799 million at 31 December 2015, consisting of financial liabilities
and interest-bearing pension provisions of SEK 5 124 million, cash and cash
equivalents of SEK 221 million and financial receivables of SEK 104 million.
During the year, a bond loan of SEK 300 million was issued with a 3-year
maturity. In addition, a euro-denominated bond loan for approximately
SEK 300 million was repaid. At 31 December 2015, current borrowings
were SEK 2 698 million. The Group has contracted a credit facility of
EUR 400 million (SEK 3 680 million) with a syndicate of nine banks.
In June 2015, this credit facility was extended by one year and expires in
June 2020. In addition, the company has a bilateral credit facility of SEK
200 million that matures in 2017. All credit facilities remained un utilised
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 0.23.
Standard & Poor’s long-term credit rating on Holmen is BBB and the
short-term rating is A-2. Holmen’s Swedish commercial paper program-
me has a facility amount of SEK 6 000 million. Commercial paper with a
time-to-maturity of up to one year can be issued in both Swedish kronor

44 HOLMEN ANNUAL REPORT 2015

and euros. 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 2 144 million in commercial paper and SEK 2 700 million in
bonds were outstanding.

FINANCIAL LIABILITIES
SEKm

5 000

4 000

3 000

2 000

1 000

20-

Financial liabilities
Credit facilities

The maturity structure of financial liabilities and assets with
undiscounted amounts is shown in Note 13 on page 79.

RISK MANAGEMENT

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 mea-
sures, 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 companies,
as well as by independent consultants and via internal controls.
Holmen insures its facilities to their replacement value against property

damage and consequential loss. The excess varies from one facility to
another, but the maximum is SEK 30 million for any one claim. In Novem-
ber 2015, production at Hallsta’s two paper machines was stopped owing
to a fire at the pulp factory. Production at PM12 was resumed after 12
days, while production at PM11 is expected to restart in March 2016. The
loss of revenue during the shutdown and reconstruction costs is covered by
insurance, with the exception of SEK 30 million in excess liability.
The Group’s forest holdings are not insured. They are widely dispersed
over large parts of the country, and the risk of large-scale simultaneous
damage is 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’.

ENVIRONMENT

HEALTH AND SAFETY

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 points below are examples of how
Holmen continually works on preventing and managing health and
safety risks:
• Certified health and safety management systems
• Group-wide industrial accident targets
• External checks of certified management systems
• Checks by authorities of protection against serious

chemical accidents

• Reporting to public authorities
• Reporting and follow-up of incidents and accidents
• Risk assessment of contractor work.

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 opera-
tions set by the environmental authorities being breached. Landfills and
discontinued industrial sites may lead to costs for restoring the environme-
nt. The organisation and management of the environmental activities are
stipulated in Holmen’s environment and energy policy. In the event of pro-
cess 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. The points
below are examples of how Holmen continually works on preventing and
managing different types of environmental risk:
• Self-monitoring according to emissions regulations determined by

environmental authorities

• Self-monitoring of bodies of water outside mills
• Self-monitoring of the management of chemicals and waste
• Checks by authorities of protection against serious chemical accidents
• Environmental risk assessments
• Checks and inspections by authorities
• Reporting to public authorities
• Group-wide climate and energy targets
• Certified environmental and energy management systems incorporating

environmental and energy targets

• Environmental certification and chain-of-custody certification accor-

ding to PEFC™ and FSC® respectively

• Combating damage to forest caused by weather, insects, fungus and moose
• 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 2015 45

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT

Corporate governance

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 requirement
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 28 176 shareholders. Swedish
private individuals made up the largest category of own
ers, comprising 25 768 shareholders. This corresponds
to 91.2 per cent of the total number of shareholders.
The largest owner at yearend, with 61.6 per cent of
votes and 32.9 per cent of capital, was L E Lundbergföre
tagen AB, which means that a Group relationship exists
between L E Lundberg företagen AB (corporate ID
number 5560568817), whose registered office is in
Stockholm, and Holmen. The Kempe Foundations’
holdings of Holmen shares amounted to 17.0 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 restriction on how many votes each share
holder may cast at the AGM. See pages 53–55 for fur
ther information on the shares and ownership structure.

General meeting 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) information
about registering intention to attend and entitlement 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 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 company of their intention to attend the
AGM by letter, telephone, email or the company’s web
site. Notices convening an Extraordinary General
Meeting (EGM) called to deal with changes to the comp
any’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 AGM 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 2016. It was announced on 20 April 2015 that
the 2016 AGM would take place in Stockholm on
13 April 2016.

Nomination committee
COMPOSITION AND MANDATE. The AGM resolved to esta
blish a nomination committee to consist of the chair
man of the Board and one representative from each of

46 HOLMEN ANNUAL REPORT 2015

ANNUAL GENERAL
MEETING 2015

The 2015 AGM 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-elec-
ted Board members, Group
management and the company’s
auditors. 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. The minutes of the
meeting were checked and
approved by Eva Axelsson of
KPA Pension and Martin Wallin
of Lannebo Fonder.

It was not possible to follow or
participate in the meeting from
other locations using communi-
cation technology. Similarly, no
such possibility is planned for
the 2016 meeting.

the three shareholders in the company that control the
most votes at 31 August each year. The composition of
the nomination committee for the 2015 and 2016
AGMs is shown in the table. The nomination commit
tee’s mandate is to submit proposals 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.

PROPOSAL TO THE BOARD. For the 2016 AGM the nomi
nation committee proposes that the Board consist of
nine members elected by the AGM. The nomination
committee proposes the reelection of the current
Board members: Fredrik Lundberg (who is also
proposed for reelection as chairman of the Board),
Carl Bennet, Carl Kempe, Lars G Josefsson, Louise
Lindh, Ulf Lundahl, Henriette Zeuchner and Henrik
Sjölund, and that Lars Josefsson be elected as a new
Board member. Göran Lundin has declined reelection.

Composition of the Board
ANNUAL ELECTION. 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 appointment or dismissal of Board members,
or regarding amendments to the articles, or restrictions
on how long members can serve on the Board.

THE 2015 AGM reelected Fredrik Lundberg, Carl Bennet,
Lars G Josefsson, Carl Kempe, Louise Lindh,
Ulf Lundahl, Göran Lundin and Henrik Sjölund to
the Board and elected Henriette Zeuchner as a new
Board member. Fredrik Lundberg was reelected
chairman. At the statutory first meeting of the new
Board in 2015, Carl Kempe was elected deputy
chairman and Lars Ericson, the company’s general
counsel, was appointed secre tary of the Board.
Over and above the nine members elected by the
AGM, the local labour organisations have a statutory
right to appoint three members and three deputy
members.
Of the nine Board members elected by the AGM,
eight are deemed independent of the company as
defined by the Code. The CEO is the only Board
member with an operational position in the company.
Further information about the members of the Board
is provided on pages 50–51.

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT

Nomination
committee
Remuneration
committee

Shareholders

General meeting of shareholders

Board of Directors

CEO

Auditors

Group management

Five Group staffs

Five business areas

The Board’s activities
INFORMATION AND WORKING PROCEDURES. The acti
vities 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 re
sponsibilities between the Board and the CEO and
the information that the Board is to receive contin
ually regarding financial developments and other
key events. Employees of the company participate
in Board meetings to submit reports.

EVALUATION. An assessment is conducted each year
to develop the activities of the Board. Each Board
member responded to a questionnaire with rele
vant questions relating to the work of the Board
and the members were also able to make propo
sals on how the work of the Board could be fur
ther developed. Their responses were presented
and discussed at a Board meeting. The chairman
of the Board prepared a report on the results of
the 2015 assessment for the nomination commit

tee, which will form the basis for the planning of
the Board’s activities for the coming year.

BOARD MEETINGS IN 2015

Remuneration
PREPARATION. The Board has appointed a remu
neration committee consisting of Fredrik Lund
berg and Carl Bennet. During the year, the com
mittee prepared matters pertaining to the remu
neration and other employment conditions of
the CEO, as well as a share savings programme.
Remuneration and other employment condi
tions for senior management who report direct
ly to the CEO are decided by the latter in
accordance with a pay policy established by the
remuneration committee. The remuneration
committee has evaluated the application of
both this policy and the guidelines on the remu
neration 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.

The Board held nine meetings in 2015, four of
which were in connection with the company’s
publication of its quarterly reports. A two-day
meeting was dedicated to strategic operational
planning. A meeting was held in conjunction
with a study visit to Hallsta Paper Mill and the
Varsvik wind farm. One meeting dealt with the
Group’s budget for 2016. Two meetings were
held in connection with the company’s AGM.
The Board also paid special attention to strate-
gic, 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-elect ed board
members attended all the meetings.

BOARD MEMBERS AS OF THE 2015 AGM

BOARD MEMBERS

POSITION

ELECTED

ATTENDENCE

FEE (SEK)

INDEPENDENT OF THE:
COMPANY

MAJOR SHAREHOLDERS

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

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

1988
1983
2009
2011
2010
2004
2001
2015
2014

EMPLOYEE REPRESENTATIVES

9/9
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
325 000
–

Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
8/9

No
No
No
Yes
No
Yes
Yes
Yes
Yes
5/9

Steewe Björklundh, member, elected 1998
Per-Arne Berg, deputy member, elected 2015

Kenneth Johansson, member, elected 2004
Daniel Hägglund, deputy member, elected 2014

Tommy Åsenbrygg, member, elected 2009
Martin Nyman, deputy member, elected 2010

HOLMEN ANNUAL REPORT 2015 47

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT

COMPOSITION OF THE NOMINATION COMMITTEE

NAME
Mats Guldbrand
Fredrik Lundberg
Alice Kempe
Hans Hedström

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

INDEPENDENT OF THE:
COMPANY

BEFORE AGM:
2016
2015
x (chairman) x (chairman) Yes
Yes
x
x
Yes
x
x
Yes
x
x

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

* At 31 August 2015, L E Lundbergföretagen controlled 61.6 per cent of the votes, the Kempe Foundations controlled 17.0 per cent and Carnegie funds (Sweden) controlled 1.7 per cent.

AT THE 2015 AGM the Board set out its proposals
regarding guidelines for remuneration of the
CEO and other senior management, i.e. heads
of business areas and heads of Group staffs
who report directly to the CEO. The AGM
adopted the guidelines in the proposal.

FOR THE 2016 AGM the Board is proposing the fol
lowing guidelines. The guidelines apply to agree
ments entered into after the AGM’s resolution:
The remuneration of the CEO and the senior
management shall consist of a fixed marketbased
salary. Other benefits, mainly car and accom
modation, shall, insofar as they are provided,
represent a limited part of the remuneration.
No variable remuneration shall be paid other
than possible sharerelated incentive programmes
determined by the AGM.
The retirement age is normally 65. Pension ben
efits should be based on defined contributions
and comply with the ITP plan. Additional de
finedcontribution pension solutions may occur.
The period of notice shall be six months,
regardless of whether notice is given by the
company or the member of senior management.
In the event of notice being given by the company,
severance pay can be paid corresponding to no
more than 18 months’ salary.
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 mana
gement shall be laid down in a pay policy adopted
by the remuneration committee.
The Board is entitled to depart from these
guidelines in individual cases should special
reasons exist. In the event of such a deviation,
information about this and the reasons for such
deviation shall be submitted to the next AGM.

THESE GUIDELINES and information about remu
neration are presented in Note 4 on page 70.
The 2015 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

48 HOLMEN ANNUAL REPORT 2015

between the Board and the CEO.
Holmen’s Group management includes nine in
dividuals: the company’s CEO, the heads of four
business areas and the heads of four Group staffs.

MEETINGS IN 2015. Group management met on 10
occasions in 2015, dealing with matters such as
earnings trends and reports before and after Board
meetings, business plans, budgeting, investments,
internal control and reviews of market conditions,
general development of the economy and other
external factors affecting the business. Projects re
lating to business areas and Group staffs were also
discussed and decided on. Work on updating poli
cies and guidelines is ongoing and a code of con
duct was established during the year.

Information on the CEO and other members

of Group management is provided on page52.

Audit
KPMG, which has been Holmen’s auditor since
1995, was reelected by the 2015 AGM as auditor
for a period of one year. Authorised accountant
Joakim Thilsted was appointed as the principal
auditor. KPMG audits Holmen AB and almost
all of its subsidiaries.

AUDIT PROCESS. The examination of internal pro
cedures and control systems begins in the second
quarter and continues thereafter until yearend.
The interim report for January–September is sub
ject 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 company’s
financial circumstances. In 2015 the auditors
reported to the entire Board at two meetings.
Over and above this, the auditors reported to
the Board chairman and the CEO on two occa
sions 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 2015
is stated in Note 5 on page 71. KPMG is required

to assess its independence before making decisions
on whether to provide Holmen with independent
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 carried out by
the external auditors, is deemed to be sufficient.

PURPOSE AND STRUCTURE. Holmen’s internal con
trol activities have two purposes: to ensure that
the Group lives up to its objectives for financial
reporting (see box on page 49) 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 assessment,
control activities, monitoring and evaluation, as
well as information and communication. They
have been modified to suit the estimated 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 2015. Webbased systems
support for selfevaluations has been introduced
and has made monitoring and feedback easier.

CONTROL ENVIRONMENT. The basis for Holmen’s
framework for internal control is the control
environment, which is defined through policies,
guidelines, procedures, instructions and manuals.
The control 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
ultimately responsible for internal control, in
accordance with the Swedish Companies Act and
the Swedish Corporate Governance Code. Under
this code, the Board is also responsible for en
suring that the company is managed in a sustain
able and responsible manner. Daytoday respon
sibility for all these matters is delegated to the
CEO. Holmen’s financial reporting complies with
the laws and rules that apply to companies listed
on the Stockholm Stock Exchange and the local
rules in each country where the company ope

CORPORATE GOVERNANCE / CORPORATE GOVERNANCE REPORT

INTERNAL MANAGEMENT PROCESSES

Strategy and targets

Business plan, budget and management by objectives

Business processes

Earnings, reporting and monitoring

Code of conduct

Policies

Guidelines

Authority

Values

Central and local instructions

Authorisation rules

The Group’s strategy provides guidance for Holmen’s business operations. Below the Board, the President
and CEO and Group management, the business is organised into five business areas with responsibility
for the relevant operating activity. The Group staffs are in charge of coordinating certain matters, such as
business administration and finance, human resources, legal affairs, technology and public relations.

The Group establishes an annual business plan that addresses strategic issues.

Targets for the coming year are based on a specific process of management by objectives. These targets
form the basis for budgeting and specific action plans.

The business areas manage operating activities according to these targets. Sales, purchasing and

production processes are in place to support this.

Earnings are monitored by means of continual financial reporting. Measures to be implemented are

monitored through additional follow-up procedures.

Holmen’s code of conduct provides guidance on day-to-day operations and clarifies what expecta-
tions are made of employees. Policies, guidelines and instructions set the frame of reference by clarifying
authorisation and rules.

rates. In addition to external rules and recom
mendations, financial reporting is also covered
by internal instructions, directions and systems.
During the year, a code of conduct was esta
blished by the CEO. The code provides guid
ance on daytoday operations and clarifies
what expectations are made of Holmen’s
employees. Training about the code began in
the autumn for all employees. No breaches of
the code were detected during the year.
Work is underway to review policies and guide
lines, and in 2015 a business ethics policy was
adopted, along with related guidelines. The policy
addresses matters such as anticorruption meas
ures and competition issues. Employees in areas
such as sales and purchasing that face a high risk
of encountering unauthorised behaviour will re
ceive special training in these issues. No cases of
corruption were detected during the year. Holmen’s
Spanish subsidiary is one of many companies
that were investigated by the Spanish competition
authority (see Note 21 for further details).

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
riskrelated 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 biologi
cal assets and property, plant and equipment as
well as to financial transactions (see the section
on risk management on pages 42–45).
Where risks are identified, control requirements
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 processes
that are deemed relevant to Holmen’s business:
sales, purchasing, investments, personnel,
financial statements, payments and IT. These
control activities aim to prevent, identify and
rectify errors and discrepancies.
The selfassessments that are completed by
all Group units set out what control require
ments apply for each respective process. These
need to state whether the respective control re
quirements have been met and what proof of

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.

verification exists. As Holmen’s various units
differ, the selfassessments have been adapted
to their various activities.

FOLLOW-UP AND EVALUATION. Followup and testing
of control activities are performed continually to
ensure that risks have been satisfactorily conside
red and addressed. The selfassessments contain
integrated action plans for those control require
ments that are not met. The selfassessments are
followed up on a continual basis and discrepan
cies are reported to the steering group for inter
nal control each quarter. Reporting to Group ma
nagement takes place once a year. The company’s
auditors report their observations from the re
view of internal control to the Board during the
year. Followups 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 provision 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 in
formation by Holmen complies with an informa
tion 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
external stakeholders is provided in the annual re
port, the yearend and interim reports, press releas
es and presentations broadcast online in connec
tion 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.
Financial reporting requirements are commu
nicated to employees via the code of conduct,
policies, guidelines and manuals published on
the company’s intranet. A whistleblower func
tion is available so that employees and other
stakeholders can highlight any deficiencies in
Holmen’s financial reporting or possible areas
of concern at the company. Regulations relating
to this function were clarified during the year.

HOLMEN ANNUAL REPORT 2015 49

CORPORATE GOVERNANCE / BOARD OF DIRECTORS

Board of Directors

FREDRIK LUNDBERG

CARL KEMPE

LARS G JOSEFSSON

ULF LUNDAHL

STEEWE BJÖRKLUNDH

HENRIK SJÖLUND

LOUISE LINDH

Fredrik Lundberg Chairman. Djursholm. Born in 1951.
Member since 1988. M.Sc. in Engineering and M.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 Hufvudstaden
AB, AB Industrivärden and Indutrade AB. Deputy chairman
of Svenska Handelsbanken AB. Board member of
L E Lundbergföretagen AB and Skanska AB.
Own and related parties’ shareholdings: 839 724 shares.
Shareholding of L E Lundbergföretagen:
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 and UPSC Berzelii Centre
for Forest Biotechnology.
Own and related parties’ shareholdings: 386 000 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 Burntisland
Fabrication Ltd. 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.
Shareholding: 5 000 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.
Shareholding: 2 000 shares.

Louise Lindh Stockholm. Born in 1979.
Member since 2010. M.Sc. in Economics. Executive vice
president Fastighets AB L E Lundberg.
Other significant appointments: Chairman of J2L Holding
AB. Board member of Hufvudstaden AB and
L E Lundbergföretagen AB.
Shareholding: 100 000 shares.

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

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

This information refers to 31 December 2015.

50 HOLMEN ANNUAL REPORT 2015

CORPORATE GOVERNANCE / BOARD OF DIRECTORS

PER-ARNE BERG

GÖRAN LUNDIN

DANIEL HÄGGLUND

MARTIN NYMAN

CARL BENNET

KENNETH JOHANSSON

TOMMY ÅSENBRYGG

HENRIETTE ZEUCHNER

Per-Arne Berg Forsa. Born in 1955.
Deputy member since 2015. Employee representative,
PTK. Chairman of the Holmen-Iggesund Trade Union Club.

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

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

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

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

Tommy Åsenbrygg Skebobruk. Born in 1968.
Member since 2015. Employee representative, PTK.
Deputy chairman of Ledarna, Hallsta Paper Mill.
Shareholding: 100 shares.

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

Henriette Zeuchner Stockholm. Born in 1972.
Member since 2015. M.Sc. in Economics and Bachelor
of Laws. President and CEO of Berling Media AB.
Other significant appointments: Board member of the
NTM Group.
Shareholding: 400 shares.

Auditors: KPMG AB
Principle Auditor: Joakim Thilstedt Authorised public
accountant

HOLMEN ANNUAL REPORT 2015 51

CORPORATE GOVERNANCE / GROUP MANAGEMENT

Group management

HENRIK SJÖLUND

NILS RINGBORG

SÖREN PETERSSON

JOHAN PADEL

ANNICA BRESKY

ANDERS JERNHALL

OLA SCHULTZ-EKLUND

INGELA CARLSSON

LARS ERICSON

Henrik Sjölund President and CEO.
Born in 1966. Joined Holmen in 1993.
Shareholding: 2 000 shares.
Henrik Sjölund has no significant shareholdings and
no ownership in companies with which the Group has
important business relations. Further information about
the CEO is provided on page 50.

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

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

Ola Schultz-Eklund Director of Technology.
Born in 1961. Joined Holmen in 1994.

Nils Ringborg CEO Holmen Paper.
Born in 1958. Joined Holmen in 1988.
Shareholding: 1 500 shares.

Sören Petersson CEO Holmen Skog.
Born in 1969. Joined Holmen in 1994.
Shareholding: 3 600 shares.

This information refers to 31 December 2015.

52 HOLMEN ANNUAL REPORT 2015

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

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

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

CORPORATE GOVERNANCE / SHAREHOLDER INFORMATION

Shareholder information

In 2015, the price of Holmen’s class B shares decreased by SEK 5 or 2 per cent. Earnings per
share excluding items affecting comparability was SEK 15.8. It is proposed that the dividend be
raised to SEK 10.5 (10).

Stock exchange trading
Holmen was listed on the Stockholm Stock Exchange
in 1936, but was called Mo och Domsjö AB at that
time. Holmen’s two series of shares are listed on Nas
daq Stockholm, Large Cap. During the year, the price of
Holmen’s class B shares decreased by SEK 5 or 2 per
cent, to SEK 262. The Stockholm Stock Exchange rose
by 7 per cent over the same period. Holmen’s market
capitalisation of SEK 22.3 billion (22.3) 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 306, on 6 Febru
ary, and the lowest closing price, SEK 219, was record
ed on 24 August. The daily average number of class B
shares traded was 196 000, which corresponds to a
value of SEK 51.4 million. The daily average number of
class A shares traded was 1 000. Some 70 per cent of
trading took place on Nasdaq Stockholm. The Holmen
shares have also been traded on other trading plat
forms, such as BATS Europe, ChiX and Turquoise.

Earnings per share
Earnings per share excluding items affecting compar
ability was SEK 15.8. Earnings per share including
items affecting comparability was SEK 6.7 (10.8).

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 13 April 2016, approve a dividend of SEK
10.5 (10) per share. The proposed dividend corre
sponds to 4.2 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: 13 April 2016.

• Record date for dividend: 15 April 2016.
• Payment date for dividend: 20 April 2016.

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 company’s
articles of association place any restrictions on the
transferability of the shares.

SHAREHOLDER
CATEGORIES,
percentage of capital

Swedish institutions

Swedish equity funds

Swedish private individuals

Foreign shareholders

56 %

15 %

10 %

19 %

SHAREHOLDERS
PER COUNTRY,
percentage
of capital

Sweden

Luxembourg

Norway

Other countries

81%

6 %

4 %

3 %

2 %

4 %

Ownership structure
Holmen had a total of 28 176 shareholders at year
end 2015. In absolute numbers, Swedish private
individuals made up the largest category of owners:
25 768 shareholders. This corresponds to 91 per cent
of the total number of shareholders. Shareholders re
gistered in Sweden own 81 per cent (81) of the share
capital. Among foreign shareholders, the largest pro
portion of shares are held in the US and Luxembourg,
accounting for 6 per cent and 4 per cent of the
capital, respectively. The largest owner at the turn of
2015/2016, with 61.6 per cent of votes and 32.9 per
cent of capital, was L E Lundbergföretagen 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 buybacks
are regarded as a complement to dividend payments
to adjust the capital structure when circumstances
are deemed favourable. The 2015 Annual General
Meeting renewed the Board’s mandate to decide on
the acquisition of up to 10 per cent of the company’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 2016 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.

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
important to the stock market by publishing press
releases. Holmen’s website www.holmen.com offers
financial information in the form of reports, presen
tations 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 monitor
Holmen’s development. This means that they publish
analyses of Holmen on an ongoing basis. A list of
these analysts is available on Holmen’s website.

HOLMEN ANNUAL REPORT 2015 53

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
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

2015
6.7
10.55)

4
4
158
3
6
248
262
264
306
219
22.3
39
10
0.7
28 176

2014
10.8
10

4
4
93
4
6
250
266
236
272
209
22.3
25
10
0.8
27 788

2013
8.5
9

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

2012
22.1
9

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

2011
47.1
8

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

2010
8.4
7

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

2009
12.0
7

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

2008
7.6
9

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

2007
17.8
12

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

2006
17.2
12

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

1) See page 94: 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.

SHARE STRUCTURE
Share

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

Votes

10
1

No. of shares

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

No. of votes

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

Quotient value

50
50

SEKm

1 131
3 107
4 238

54 HOLMEN ANNUAL REPORT 2015

CORPORATE GOVERNANCE / SHAREHOLDER INFORMATION

Share price performance for Holmen class A and B and General Index
No. of shares (thousands)
SEK

Total return for Holmen B and General Index
Incl. reinvested dividend without tax

400

300

200

100

12 000

9 000

6 000

3 000

Index

200

150

100

Holmen A
Holmen B

Affärsvärlden General Index

Total number of class B shares traded (thousands)

Holmen B

General Index (SIX Return Index)

Source: Macrobond

CHANGES IN SHARE CAPITAL 2000–2015

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 2015

% of capital

% of votes

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

Other
Total*
* Of which non-Swedish shareholders.

32.9
7.0
5.7
3.2
2.9
2.3
1.9
1.7
1.5
1.0
60.1

39.9
100.0
18.9

61.6
17.0
1.7
0.9
0.9
0.7
0.6
0.5
0.4
0.9
85.1

14.9
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

26 000
2 106
70
28 176

6
14
80
100

HOLMEN ANNUAL REPORT 2015 55

FINANCIAL STATEMENTS / INCOME STATEMENT

INCOME STATEMENT

GROUP, SEKm
Net sales
Other operating income
Change in inventories
Raw materials and consumables
Personnel 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
10
11
12

6
6

8
8

2015
16 014
1 203
-187
-8 661
-2 335
-3 689
-1 240
-555
267
-46
769

1
-91
679

-120
559

559

6.7
84.0

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

Operating profit amounted to SEK 769 million (1 284). Operating profit was negatively affected by
SEK 931 million in items affecting comparability relating to impairment losses on property, plant
and equipment, provisions for fixed-price electricity supply agreement costs and the effects of a
fire. Operating profit for 2014 included an impairment loss on property, plant and equipment of
SEK -450 million.

Operating profit excluding items affecting comparability amounted to SEK 1 700 million (1 734).
Earnings were negatively affected by price decreases for printing paper and sawn timber, as well
as a number of significant rebuilding and maintenance shutdowns. This was largely offset by a
weaker Swedish krona, good production and cost rationalisations.

Net financial items for 2015 totalled SEK -90 million (-147). During the year, interest costs of
SEK 2 million (1) were capitalised in conjunction with major investment projects, reducing the
recognised interest expense. The average cost of borrowing declined to 1.5 per cent (2.3),
and average net debt was lower than in the preceding year.

Tax recognised totalled SEK -120 million (-230) in 2015, which corresponds to 18 per cent
of profit before tax.

56 HOLMEN ANNUAL REPORT 2015

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
Share in joint ventures’ other comprehensive income
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
Total other comprehensive income
Total comprehensive income

Attributable to:
Owners of the parent company

NOTE

2015

2014

17
7

559

208
-44
165

-111
67
10
8
22
3
3
1
166
724

724

907

-170
34
-137

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

870

HOLMEN ANNUAL REPORT 2015 57

FINANCIAL STATEMENTS / BALANCE SHEET

BALANCE SHEET

GROUP AT 31 DECEMBER, SEKm

NOTE

2015

2014

9
10
11
12
12
13
7

14
15
7
15
13
13

13
17
18
7

13
19
7
18
19

107
10 321
17 173
1 914
4
43
6
29 567

3 089
1 987
12
519
61
221
5 889
35 456

4 238
281
-209
16 543
20 853

2 295
130
585
5 508
8 519

2 698
1 916
53
157
1 259
6 085
14 603
35 456

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

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.

58 HOLMEN ANNUAL REPORT 2015

FINANCIAL STATEMENTS / CHANGES IN EQUITY

CHANGES IN EQUITY

GROUP, SEKm

Opening equity balance 1 Jan 2014
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Closing equity balance 31 Dec 2014
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Closing equity balance 31 Dec 2015

RESERVES

SHARE CAPITAL

OTHER
CONTRIBUTED
CAPITAL

TRANSLATION
RESERVE

HEDGE
RESERVE

RETAINED
EARNINGS INCL.
PROFIT/LOSS
FOR THE YEAR

TOTAL EQUITY

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

281
-
-
0
-
281
-
-
0
-
281

-224
-
276
276
-
51
-
25
25
-
76

-85
-
-177
-177
-
-261
-
-24
-24
-
-284

16 645
907
-137
771
-756
16 660
559
165
723
-840
16 453

20 854
907
-37
870
-756
20 969
559
166
724
-840
20 853

HOLMEN ANNUAL REPORT 2015 59

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

2015

2014

679

1 240
555
-267
236
37
-398
2 083

123
275
45
2 526

-826
24
-12
-36
26
-8
0
0
0
-832

300
-326
-792
0
-840
-1 659

35
187
0
221

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

* 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.

60 HOLMEN ANNUAL REPORT 2015

FINANCIAL STATEMENTS / CASH FLOW STATEMENT

2015

2014

-5 907

2 526
-824
-840
206
40
-4 799

-6 116

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

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 effects and changes in fair value
Closing net financial debt

HOLMEN ANNUAL REPORT 2015 61

FINANCIAL STATEMENTS / PARENT COMPANY

PARENT COMPANY

INCOME STATEMENT, SEKm

NOTE

2
3

Net sales
Other operating income
Change in inventories
Raw materials and consumables
4
Personnel costs
Other external costs
5, 20
Depreciation and amortisation according to plan 9, 10
Operating profit/loss

Profit/loss from investments in Group companies 6, 23
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

6
6

Appropriations
Profit/loss before tax

Tax
Profit/loss for the year

2015

13 989
696
-186
-8 057
-1 814
-4 278
-26
324

-118
0
38

-
-83
161

821
982

-244
738

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

NOTE

2015

2014

CASH FLOW STATEMENT, SEKm NOTE

2015

2014

161

1 135

26
258
107
-420

27
-22
131
-186

133

1 085

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

159
178
19
490

0
-48
11

-9

0
0
-46

300
-326
-732
709
-840
493
-7
-404

40
115
155

-19
-98
-4
963

4
-41
8

-17

0
0
-47

400
-421
-616
-1 399
-756
1 777
0
-1 015

-99
213
115

STATEMENT OF
COMPREHENSIVE INCOME,
SEKm

Profit/loss for the year
Other comprehensive income
Cash flow hedging

Revaluation
Transferred from equity to the income
statement
Transferred from equity to non-current assets
Tax attributable to other comprehensive income 7
Total items that will be reclassified to
profit/loss for the year
Total comprehensive income

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

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

738

1 870

-134

-307

94
10
7

-23
715

151
1
34

-121
1 749

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 486 million (1 777). The item
‘Interest expense and similar costs’ in the income statement includes the result of SEK 22 million
(-101) from hedging equity in foreign subsidiaries.

* Other adjustments primarily consist of impairment losses on the value of shares in Group companies,
currency effects and the marking to market of financial instruments as well as gains/losses on the
sale of non-current assets.

62 HOLMEN ANNUAL REPORT 2015

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

2015

2014

BALANCE SHEET
at 31 December, SEKm

NOTE

2015

2014

9
10

12, 23
13

14
15
7
13
13

8
2 922

12 018
3 214
18 163

2 336
2 026
-
61
155
4 578
22 741

9
2 912

12 145
3 329
18 396

2 494
2 162
-
22
115
4 793
23 188

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

Untaxed reserves

Provisions
Pension provisions
Tax provisions
Other provisions
Deferred tax liability
Total provisions

Liabilities
Non-current financial liabilities
Current financial liabilities
Current tax liability
Operating liabilities
Total liabilities
Total equity and liabilities

COLLATERAL AND
CONTINGENT LIABILITIES
Collateral
Contingent liabilities

17
18
18
7

13
13
7
19

21
21

4 238
1 577
100

3 698
738
10 351

4 238
1 577
100

2 691
1 870
10 476

1 994

2 330

5
45
892
569
1 512

3 295
2 698
53
2 837
8 884
22 741

11
45
630
585
1 271

2 898
3 263
221
2 730
9 111
23 188

148
89

149
95

CHANGES IN EQUITY, SEKm

Opening equity balance 1 Jan 2014

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

Appropriation of profits
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Closing equity balance 31 Dec 2015

RESTRICTED EQUITY

NON-RESTRICTED EQUITY

SHARE CAPITAL

STATUTORY
RESERVE

REVALUATION

RESERVE HEDGE RESERVE

RETAINED
EARNINGS

PROFIT/LOSS
FOR THE YEAR

TOTAL EQUITY

4 238

-
-
-
0
-
4 238

1 577

-
-
-
0
-
1 577

100

-
-
-
0
-
100

-143

-
-
-121
-121
-
-264

-
-
-23
-23
-
-287

2 883

828
-
-
828
-756
2 954

1 870
-
-
1 870
-840
3 985

828

-828
1 870
-
1 042
-
1 870

-1 870
738
-
-1 132
-
738

9 483

-
1 870
-121
1 749
-756
10 476

-
738
-23
715
-840
10 351

HOLMEN ANNUAL REPORT 2015 63

NOTES / NOTE 1

NOTES TO THE FINANCIAL STATEMENTS

Amounts in SEKm, unless otherwise stated

1. Accounting policies

2. Operating segment reporting

3. Other operating income

4. Employees, personnel costs and remuneration to senior management

5. Auditors’ fee and remuneration

6. Net financial items and income from financial instruments

7. Tax

8. Earnings per share

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

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, subsidiaries, associates and joint ventures.

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 ac-
cordance 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 company’s
ability to apply IFRS as a consequence of the Swedish Annual Accounts Act, the Swedish Pension
Obligations Vesting Act, and in some cases for 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 kro-
na, (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’.

64 HOLMEN ANNUAL REPORT 2015

CHANGES IN ACCOUNTING POLICIES
Amended IFRSs applied by the Group from January 1, 2015 are described below.

Fees to public authorities
The application of IFRIC 21 has not had any material effect on the Group’s accounting. The amend-
ment means that property tax levies are booked in full on January 1 instead of the debt being
booked as the cost is recognised in the income statement.

New and amended accounting policies applicable as of 2016
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. Additions or amendments applicable
from the 2016, such as changes to the Swedish Annual Accounts Act and IAS 1, are expected to
have a limited effect on the Group’s accounting and the preparation of financial reports. New or
amended IFRSs effective as of 2017 are not expected to have any material impact on the Group’s
accounting.

SEGMENT REPORTING
The Group’s operations are divided into operating segments, based on which parts of the operations
are monitored by the company’s highest executive decision-maker, known as the management ap-
proach. The segmentation criterion is based on the Group’s business areas. This corresponds to the
Group’s operating structure and the internal reporting to the CEO and the Board. The items in the pro-
fit, assets and liabilities of the operating segment are recognised in accordance with the profit (opera-
ting profit), assets and liabilities that are monitored by the company’s highest executive decision-ma-
ker. See Note 2 for more details of the classification and presentation of operating segments.

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 re-
covered 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
influence. Controlling influence exists if Holmen AB has control over an investment object, is expo-
sed or entitled to variable returns on its involvement and can exercise its control of the investment
to influence the size of return. In determining whether one company has control over another, po-
tential shares with an entitlement to vote and whether de facto control exists are taken into ac-
count.

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 as-
sets 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

NOTES / NOTE 1

(acquisition date) until such time as the Group no longer has control. Intra-Group receivables and li-
abilities, transactions between companies in the Group and related unrealised gains are eliminated
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 re-
porting consequently complies with IFRS 11 Joint Arrangements.

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

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 hedging
net investments are recognised in other comprehensive income and are accumulated in a separate
component of equity called the translation reserve. In the disposal of a foreign operation, the
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.

Exchange transactions
In some cases, forest land is exchanged for other forest land of similar type and value. Such
exchange is recognised in the consolidated accounts as an exchange of one asset for another, i.e.
without any form of revenue recognition as the exchange does not constitute a revenue-generating
transaction. In the parent company, however, this type of transaction is recognised as a sale of fo-
rest land, with recognition of revenue as other operating income and an acquisition of a new asset.

FINANCE INCOME AND COSTS
Finance income and costs consist of interest income and interest costs, dividend income and revalu-
ations of financial instruments valued at fair value, as well as unrealised and realised currency gains
and losses.

Interest income on receivables and interest costs on liabilities are calculated by using the effective
interest 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 payment is judged to be certain.

Interest costs normally affect profit/loss in the period to which they relate. Borrowing costs attribu-
table to the purchase, construction or production of qualifying assets are capitalised in the consoli-
dated 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 investment 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 differ-
ences between carrying amounts and values for tax purposes of assets and liabilities, applying the
tax rates and rules that have been approved or announced at the balance sheet date. Temporary
differences are not taken into account in goodwill arising upon consolidation, nor in tempo rary
differences attributable to investments in subsidiaries and associates that are not expected to be-
come liable to taxation in the foreseeable future. In the parent company’s accounts, untaxed reser-
ves 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

HOLMEN ANNUAL REPORT 2015 65

NOTES / NOTE 1

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 pro-
fit/loss for the year. When the asset is disposed of, accumulated profit/loss – which was previously
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 measu-
red 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, such as currency forward contracts, electricity
derivatives and interest rate swaps, are measured at fair value and recognised in the balance sheet.
More or less all derivatives are held for hedging purposes. Where hedge accounting 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 operating profit/loss or
within net financial items, depending on the purpose of the holding.

Cash flow hedging 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 in-
vestments, 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 exchange swaps are used as cash flow hedges to safeguard against fluctuations in
ex change rates. Interest rate swaps are used as a cash flow hedge to safeguard against changes
in interest rates.

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 13. Where there are no listed
market prices, fair value has been calculated using discounted cash flows. In calculating discoun-
ted 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. Goodwill is valued at cost less any
accumulated impairment losses. Goodwill arising in connection with the acquisition of associates is
included 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 expenditure

66 HOLMEN ANNUAL REPORT 2015

is recognised in the income statement as costs when incurred. Development expenditures recognised
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-cur-
rent assets are tested for impairment annually. Any impairment losses may be reversed via excep-
tions 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 capital ised only if it is estimated to generate financial benefits for the company. The key factor
determining whether or not additional expenditure is capitalised is if it relates to the replacement
of identified components or parts thereof, in which case the expenditure is capitalised. The cost is
also capitalised in cases where a new component is created. Any undepreciated carrying amounts
for replaced 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 as-
set 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

4–10

If there is any indication that the carrying amount is too high, an analysis is made in which the
recoverable value of single or inherently related assets is determined at the higher of the net selling
price and the utility value. The net 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 circumstances upon
which the determination of the recoverable amount is based. A reversal may be made up to, but not
exceeding, the carrying amount that would have been recognised, less depreciation, if there had been
no impairment.

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 that 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 re-
cognised 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.

NOTES / NOTE 1

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.

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.

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
meth od (FIFO). The net realisable value is the estimated selling price in operating activities after deduc-
tion of the estimated costs of completion and effecting the sale. The cost of finished products manufact-
ured by the company comprises direct production costs and a reasonable share of indirect costs.

Emission allowances received are initially recognised at market price when allotted among inventories
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 employees will have earned by virtue of their employment in
current and earlier periods; these benefits are discounted to their present value and any unrecognised
costs in respect of employment during earlier periods and the fair value of any plan assets are
deducted. The discount rate is the interest rate at the balance sheet date for a high-quality corp orate
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 corresponding
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 recognised
when the company recognises the associated restructuring costs. The changes are recognised
directly in profit/loss for the year.

The interest cost on defined benefit obligations is recognised in profit/loss for the year under finan-
cial 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 actuarial 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 actuarial 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 comprehensive 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
assumption 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

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
estimated reliably.

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

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
companies’. 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.
Shareholder contributions received are recognised directly in non-restricted equity.

OTHER
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 2015 67

NOTES / NOTE 2

NOTE 2. OPERATING SEGMENT REPORTING

2015

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

Operating profit/loss excluding items affecting
comparability*

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

IGGESUND
PAPERBOARD

HOLMEN
PAPER

HOLMEN
TIMBER

HOLMEN
SKOG

HOLMEN
ENERGI

GROUP-WIDE

AND OTHER ELIMINATIONS TOTAL GROUP

5 472
-
739
-4 866
-499
-
-
-
847

847

12
7 409
787
6 622

6 148
-
238
-6 312
-588
-555
-
-45
-1 115

-74

-1

-2
4 459
901
3 558

1 314
-
251
-1 479
-77
-
-
-1
9

1
1 081
157
924

2 814
2 667
179
-4 992
-29
-
267
-
905

268
91
32
-196
-22
-
-
2
176

-3
-
196
-219
-25
-
-
-3
-53

905

176

-163

5
18 790
1 202
17 589

5
3 462
111
3 351

-
254
1 142
-888

-
-2 757
-434
3 191
-
-
-
-
-

-
-330
-330
-

16 014
-
1 203
-14 872
-1 240
-555
267
-46
769

1 700

5
35 126
3 971
31 155

Investments

324

347

103

832

* Items affecting comparability relate to impairment loss on non-current assets, a provision for costs and the effects of a fire totalling SEK -931 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

GROUP

2015
26 817
2 044
648
6
29 515

2014
26 779
2 021
1 410
6
30 216

PARENT COMPANY
2014
15 066
-
-
-
15 066

2015
14 948
-
-
-
14 948

GROUP

2015
5 248
5 956
211
1 311
2 812
268
206
16 014

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

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

2015
3 340
5 925
326
1 313
2 806
268
12
13 989

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

GROUP

2015
3 598
2 223
1 981
1 109
846
710
626
2 753
2 167
16 014

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

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

2015
3 575
1 431
1 774
911
795
621
542
2 264
2 076
13 989

68 HOLMEN ANNUAL REPORT 2015

NOTES / NOTE 2

NOTE 2. OPERATING SEGMENT REPORTING

IGGESUND
PAPERBOARD

HOLMEN
PAPER

HOLMEN
TIMBER

HOLMEN
SKOG

HOLMEN
ENERGI

GROUP-WIDE

AND OTHER ELIMINATIONS TOTAL GROUP

2014

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

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

3
1 040
138
901

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

320
69
17
-178
-21
-
-
5
212

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

817

212

-146

5
18 580
1 240
17 340

6
3 493
91
3 401

-
294
1 038
-744

-
-2 752
-421
3 173
-
-
-
-
-

-
-379
-379
-

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

1 734

5
36 183
3 829
32 354

Investments

288

331

849

* Items affecting comparability refer to an impairment loss on non-current assets of SEK -450 million.

The Iggesund Paperboard business area produces paperboard for consumer packaging and graphical
printing at one Swedish and one UK mill. The Holmen Paper business area manufactures printing
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 2015,
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 3.1 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 amounted to 1.4 TWh in 2015. 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
operating liabilities. Financing and tax issues are managed at Group level, so financial assets and
liabilities – including pension liabilities – and current and deferred tax assets and tax liabilities are
not allocated to the business areas.

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/loss 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 2015 69

NOTES / NOTES 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

2015
358
435
48
37
42
67
215
1 203

PARENT COMPANY
2014
262
144
44
317
25
71
151
1 013

2015
194
130
44
28
25
67
208
696

2014
394
323
53
13
31
71
137
1 021

Of the sales of by-products in the Group, SEK 123 million (161) relates to rejects from production,
SEK 104 million (77) to sawdust, bark, chips etc., and SEK 130 million (156) 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 435 million (323).

The Group has been allotted emission allowances that have been used partly within its own
production. The surplus resulted in a gain of SEK 48 million (53).

NOTE 4. EMPLOYEES, PERSONNEL COSTS AND

REMUNERATION TO SENIOR MANAGEMENT

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 2015, fees to the Board amounted to SEK 2 925 000 (2 600 000).
The chairman received a fee of SEK 650 000 (650 000), and each of the other seven (six) members
received SEK 325 000 (325 000).

Senior management
Salary and other benefits for the CEO in 2015 amounted to SEK 7 198 063 (9 925 651). The total pension
cost for the CEO, calculated in accordance with IAS 19, amounted to SEK 3 616 009 (4 449 375).
No variable remuneration was paid.

In 2015, the salaries and other benefits of other senior management, i.e. the heads of the four (five)
business areas and the heads of the four (six) Group staffs who report directly to the CEO, totalled
SEK 18 883 727 (26 947 050).

The total pension cost for this group, calculated in accordance with IAS 19, amounted to
SEK 9 856 250 (12 821 925) in 2015. 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 five people. For four senior management employment contracts,
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 corresponding
to between one and two years’ salary is paid, depending on age.

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

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

GROUP

PARENT COMPANY

2015
1 665
633

2014
1 600
596

2015
1 233
534

2014
1 221
482

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 9 million
(8) at 31 December 2015 and for other members of senior management to SEK 24 million (45),
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.

AGM’S GUIDELINES FOR DETERMINING SALARIES AND
OTHER REMUNERATION FOR SENIOR MANAGEMENT
The 2015 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, represent a
limited part of the remuneration. No variable remuneration shall be paid.

Pension
The normal retirement age shall be 65 years. The company and the employee shall be mutually entit-
led 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 contribution.

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
remuneration committee.

70 HOLMEN ANNUAL REPORT 2015

NOTES / NOTES 4–5

AVERAGE
NUMBER OF
FULL-TIME
EQUIVALENTS

OF WHICH
WOMEN

2015

2014

NOTE 5. AUDITORS’ FEE AND REMUNERATION

The audit firm KPMG was elected by the 2015 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

2015
6
3
0
10

1
11

PARENT COMPANY
2014
4
1
0
5

2015
4
1
-
5

2014
7
1
0
8

0
9

-
5

‘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 dis-
posals 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
Russia
Singapore
Spain
Switzerland
UK
US
Total Group companies
Total Group

2 422
11

8
13
20
6
7
104
7
1
1
6
268
3
429
9
882
3 315

467
6

2
5
10
1
3
37
4
-
1
3
50
1
50
3
170
643

2 487
11

9
11
20
5
7
94
7
1
-
5
278
5
412
7
861
3 359

486
7

3
5
8
1
3
32
5
-
-
3
50
1
41
2
153
645

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

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

GROUP

2015
17
22
19
19

PARENT COMPANY
2014
18
25
19
19

2015
17
22
19
19

2014
18
25
19
19

HOLMEN ANNUAL REPORT 2015 71

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

2015

2014

PARENT COMPANY
2014

2015

191

-67

-116

1
-1

1
-4

-82

1
-1

164

-81

1
-4

The derivatives included in operating profit/loss relate to hedging of trade receivables 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*

Cash and cash equivalents
Other financial liabilities
Total net profit/loss

Interest costs**
Finance costs
Net financial items

GROUP

2015
-

2014
-

PARENT COMPANY
2014
546

2015
8

-
-
-
1
1

-10
5
3
-2

-89
-91
-90

-33
-5
38
1
1

-5

-
-
0
-6

-143
-149
-147

15
-
7
16
46

-33
-5
41
15
565

-126

-351

-12
5
3
-130

-79
-209
-163

-67
-
-34
-452

-139
-591
-26

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

** SEK -38 million (-27) in the Group refers to interest costs on derivatives measured at fair value

through profit/loss for the year. Those in the parent company amounted to SEK -38 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 revaluations of inter-
nal loans, hedging of internal lending, currency revaluations of cash and cash equivalents, and hed-
ging 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 curren-
cy revaluation of external loans and forward contracts that hedge net investment in foreign opera-
tions. 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 42–45.

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

72 HOLMEN ANNUAL REPORT 2015

NOTES / NOTE 7

NOTE 7. TAX

TAXES STATED IN INCOME STATEMENT
Current tax
Deferred tax
Total

GROUP

2015
-134
14
-120

PARENT COMPANY
2014
-403
-80
-483

2015
-252
9
-244

2014
-485
255
-230

Tax recognised totalled SEK -120 million, corresponding to 18 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

2015

SEKm
679

-149
4
-16
-3
4
19
21
0
-120

22.0
-0.5
2.3
0.4
-0.6
-2.8
-3.1
0.0
17.7

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

2015

SEKm
982

-216
0
-25
-3
0
0
0
0
-244

22.0
0.0
2.5
0.3
0.0
0.0
0.0
0.0
24.8

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

TAX ATTRIBUTABLE TO OTHER
COMPREHENSIVE INCOME

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

BEFORE
TAX

-31
8
22
208
207

TAX

2015

7
-
-5
-43
-41

GROUP

AFTER
TAX

BEFORE
TAX

-24
8
17
165
166

-226
355
-101
-170
-143

TAX

2014

50
-
22
34
106

AFTER
TAX

BEFORE
TAX

TAX

2015

PARENT COMPANY
BEFORE
TAX

AFTER
TAX

-177
355
-79
-137
-37

-30
-
-
-
-30

7
-
-
-
7

-23
-
-
-
-23

-155
-
-
-
-155

TAX

2014

34
-
-
-
34

AFTER
TAX

-121
-
-
-
-121

TAXES AS STATED IN BALANCE SHEET

GROUP

Deferred tax asset
Current tax receivable
Total tax receivables

2015
6
12
18

PARENT COMPANY
2014
-
-
-

2015
-
-
-

2014
1
44
46

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

Current tax liability
Total tax liabilities

* For the parent company this relates to forest land.

GROUP

2015

2014

PARENT COMPANY
2014

2015

3 788
1 363
438
-81

0
5 508

53
5 561

3 718
1 361
512
-74

-38
5 480

248
5 728

634
-1
-
-81

17
569

53
622

632
-2
-
-74

29
585

221
806

HOLMEN ANNUAL REPORT 2015 73

NOTES / NOTE 7

NOTE 7. TAXES, CONT.

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

2015
Biological assets*
Property, plant and equipment
Pension provisions
Tax allocation reserve
Other
Deferred net tax liability

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

GROUP

STATED
IN OTHER
COMPRE-
HENSIVE
INCOME
-
-
-43
-
7
-36

GROUP

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

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

STATED IN
THE INCOME
STATEMENT
-69
8
-15
74
16
14

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

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

PARENT COMPANY

TRANSLATION
DIFFERENCES
AND OTHER
-
-10
4
-
5
-1

CLOSING
BALANCE
-3 788
-1 363
22
-438
64
-5 502

OPENING
BALANCE
-632
2
-
-
45
-585

STATED IN
THE INCOME
STATEMENT
-2
-1
-
-
12
9

STATED
IN OTHER
COMPRE-
HENSIVE
INCOME
-
-
-
-
7
7

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

CLOSING
BALANCE
-634
1
-
-
64
-569

CLOSING
BALANCE
-632
2
-
-
45
-585

* 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 18.

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 7 million (50) in hedging reserves and an impact of
SEK -43 million (34) from the revaluation of defined benefit pension plans.

At year-end there were tax loss carry-forwards and temporary differences corresponding to approxi-
mately SEK 790 million in tax for which deferred tax assets have not been recognised in the income
statement and balance sheet. Of these, SEK 460 million relate to loss carry-forwards, attributable to
operations in Spain. There is no time limit on the use of these. The Group’s assessment is that it is
unlikely that these tax loss carry-forwards, for which a deferred tax receivable is not recognised,
will be able to be used in respect of future profit within the foreseeable future.

74 HOLMEN ANNUAL REPORT 2015

NOTES / NOTES 8–9

NOTE 8. EARNINGS PER SHARE

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

2015
83 996 162
-

2014
83 996 162
-

83 996 162

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

559
83 996 162
6.7

907
83 996 162
10.8

In previous years 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.

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

2015
215
12
-1
-1
225

101
19
-
-1
-1
118

107

PARENT COMPANY
2014
26
-
-
-
26

2015
26
-
-
-
26

2014
151
73
-12
3
215

92
18
-
-12
3
101

114

17
1
-
-
-
18

16
1
-
-
-
17

Intangible non-current assets mostly consist of IT systems of SEK 80 million (91). These assets
were largely acquired from external sources. They have determinable useful lives and are amortised
over 5–20 years. No goodwill applies for the Group.

HOLMEN ANNUAL REPORT 2015 75

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

Amortisation and impairment
losses, accumulated
Opening balance
Depreciation and amortisation
according to plan 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

PARENT COMPANY
Accumulated acquisition cost
Opening balance
Investments
Reclassifications
Disposal and retirement of assets
Total

BUILDINGS,
OTHER LAND AND LAND
INSTALLATIONS

2014

2015

2014

MACHINERY AND
EQUIPMENT
2015

2014

WORK IN PROGRESS AND
ADVANCE PAYMENTS TO
SUPPLIERS
2015

2014

FOREST LAND
2015

165
-
-
-
2
167

-
-
-
-
-

137
22
-
-
7
165

-
-
-
-
-

6 970
60
-
-5
-22
7 003

3 822

142
306
-4
-19
4 247

6 758
61
-
-5
156
6 970

30 964
811
4
-526
8
31 260

29 918
417
17
-93
705
30 964

3 454

23 166

21 363

140
148
-4
84
3 822

1 080
249
-477
-25
23 992

1 106
302
-90
484
23 166

153
-17
-4
-3
0
130

-
-
-
-
-

108
62
-17
-
1
153

-
-
-
-
-

TOTAL

2015

2014

38 252
854
-
-533
-13
38 560

36 921
561
0
-98
868
38 252

26 988

24 817

1 222
555
-481
-45
28 239

1 246
450
-94
569
26 988

167

165

2 756

3 148

7 268

7 798

130

153

10 321

11 265

BUILDINGS,
OTHER LAND AND LAND
INSTALLATIONS

2014

2015

2014

FOREST LAND
2015

MACHINERY AND
EQUIPMENT
2015

2014

TOTAL

2015

2014

434
26
-
0
461

-
-
-
-

90
344
-
0
434

-
-
-
-

2 401
-12
2 390
2 850

2 415
-14
2 401
2 835

139
-
-
0
139

128
1
0
129

1
-
1
11

140
0
-
-1
139

127
1
0
128

1
-
1
12

248
23
-
-39
232

184
24
-36
172

-
-
-
60

245
21
-
-18
248

175
25
-16
184

-
-
-
65

822
49
-
-39
832

312
25
-36
301

475
365
-
-19
822

302
26
-17
312

2 402
-12
2 391
2 922

2 416
-14
2 402
2 912

Accumulated depreciation and amortisation according to plan
Opening balance
Depreciation and amortisation according to plan for the year
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

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 the Group’s print-
ing paper assets decreased in 2015 as a result of weak profitability in the production of standard
newsprint, and at year-end it was less than the carrying amounts. This resulted in an impairment
loss of SEK -555 million on property, plant and equipment. In 2014, impairment losses on property,
plant and equipment of SEK -450 million were made in respect of the Group’s sawmill assets.

The Group’s investment commitments for approved and ongoing projects amounted to SEK 776
million (710) at 31 December 2015. In 2015, the company’s capitalised borrowing costs totalled
SEK 3 million (1). An interest rate of 1.8 per cent (2.5) was used to determine the amount.

In November 2015 a fire occurred at the pulp factory at Hallsta Paper Mill, causing a shutdown of
production at the mill’s two paper machines. One of the mill’s paper machines, PM12, was able to
be restarted after 12 days. The other paper machine, PM11, is expected to be restarted in March
2016 after reconstruction of those parts of the pulp factory that suffered fire damage. Those parts
that suffered fire damage have been retired. The residual value according to plan for these assets
was SEK 41 million. The cost of the reconstruction is being covered by insurance. Accumulated
costs for reconstruction at year-end of SEK 50 million have been capitalised and the expected
insurance compensation for this has been recognised as revenue. Most of the reconstruction work
is expected to take place in 2016.

76 HOLMEN ANNUAL REPORT 2015

NOTES / NOTE 11

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 2015, this amounted to SEK 267 million
(282). Forest assets received and provided for the comparative year relates to a property exchange
with the Swedish Environmental Protection Agency. The exchange resulted in Holmen providing
10 000 hectares of land and receiving 18 000 hectares of land of equivalent value, based on exter-
nal independent valuations.

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

Change in value
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

750
1 150
-650

250
380
-230

-460

590
900
-510

200
300
-180

-360

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 in level).

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 relevant
market prices are available that can be used to value forest holdings as extensive as Holmen’s.
The valuation is therefore made by calculating the present value of future expected cash flows from
the growing forests. 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 forests.
The cash flows are calculated on the basis of harvesting volumes according to Holmen’s current
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 119 million m3 growing stock, solid over bark. According to the harvesting plan, valid from
2011, harvesting will amount to 3.1 million m3sub per year, of which 0.1 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 45 per cent of the wood harvested consists of pulpwood that is sold to the pulp and
paper industry, 50 per cent is logs sold to sawmills and the remainder mainly consists of forest fuel.

The valuation is based on a long-term trend price that is adjusted upwards annually by 2 per cent
inflation. The trend price for 2015 was SEK 435/m3sub, which is in line with the average for the
past 10 years but slightly higher than prevailing market prices. 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 17 173 million (16 867) before tax. A deferred tax
liability of SEK 3 788 million (3 718) 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 growing
forest, net after tax, is stated at SEK 13 385 million (13 149).

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
Growing forest assets received in exchange
transactions
Growing forest assets provided in exchange
transactions
Change due to harvesting
Unrealised change in fair value
Other changes
Carrying amount at end of year

2015
16 867
36
-2

-
-540
807
5
17 173

2014
16 517
49
0

640

-641
-471
753
20
16 867

HARVESTING
'000 m³sub/year

4 000

3 000

2 000

1 000

+0.1 million m³sub in branches and treetops

PRICES
SEK/m³sub

600

500

400

300

200

2001-
2010

2011-
2015

2016-2020

2021-2030

2031-2040

2041-2050

2051-2060

2061-2070

2071-2080

2081-2090

2091-2100

2101-2110

1999

2003

2007

2011

2015

2019

2023

Average harvesting
Harvesting plan

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 2015 monetary value using historical Swedish CPI.

HOLMEN ANNUAL REPORT 2015 77

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

2015
1 828
-
-46
-
-3
-7
1 772

PARENT COMPANY
2014
125
-
-
-
-
-
125

2015
125
-
-
-
-
-
125

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

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 electricity produced at cost price, so the associate only earns a very 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.

The holding in associate Harrsele AB is recognised in the Group at SEK 1 467 million. Holmen
purchased 564 (426) GWh of electrical power from Harrsele AB in 2015, giving Holmen an operating
profit of SEK 95 million (98) from market sale. Harrsele AB owns power assets that generate 950
GWh of electrical power in a normal year. These assets were originally constructed in 1957-58 and
the carrying amount of the non-current assets in Harrsele AB amounts to SEK 115 million (119).
The company has non-current liabilities to its owner of SEK 25 million (25).

Ownership in remaining associates relates to activities in the areas of logistics, sales, research and
development, and recycling and management of recovered paper.

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

2015
142
-
-1
-
141

PARENT COMPANY
2014
82
-
-
-
82

2015
82
-
-
-
82

2014
136
-
10
-3
142

GROUP

PARENT COMPANY

2015
4
-
0
0
-
4

2014
9
-
-
-
-5
4

2015
1
-
0
-
-
1

2014
1
-
-
-
-
1

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.

Ownership in the joint venture, Varsvik AB, relates to wind power operations.

The combined value of Holmen’s share in the profits of associates amounted to SEK 10 million (-13)
for the Group and to SEK 4 million (2) 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.

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

CORPORATE
ID NO.

REGISTERED
OFFICE

NO. OF
INVEST-
MENTS INTEREST %*

VALUE OF
HOLDING
IN CONSO-
LIDATED
ACCOUNTS
2015

CARRYING
AMOUNT
AT PARENT
COMPANY

INTEREST %*

VALUE OF
HOLDING
IN CONSO-
LIDATED
ACCOUNTS
2014

CARRYING
AMOUNT
AT PARENT
COMPANY

556017-6678
556016-0953
556036-9398
556594-6984
556504-2826
556713-5172

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

Arbrå
Örnsköldsvik
Vännäs
Stockholm
Lycksele
Stockholm
Tel Aviv

Alcochete
Lorp-Sentaraille
Madrid

5 556
990
9 886
1 800
683
200
119

2
678
4 500

13.9
9.9
49.4
36.0
6.8
17.7
42.4

50.0
24.0
50.0

JOINT VENTURES
Varsvik AB
Total

556914-9833

Stockholm

250

50.0

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

36
0
1 467
21
75
57
2

37
20
55
2
1 772

141
1 914

78 HOLMEN ANNUAL REPORT 2015

-
0
-
2
75
46
-

-
-
-
2
125

82
208

13.9
9.9
49.4
36.0
6.8
17.7
37.6

50.0
24.0
50.0

50.0

36
0
1 469
21
75
51
12

37
19
105
3
1 828

142
1 970

-
0
-
2
75
46
-

-
-
-
2
125

82
208

NOTES / NOTES 12–13

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

CORPORATE
ID NO.

REGISTERED
OFFICE

NO. OF
INVEST-
MENTS INTEREST %*

556761-5371

Stockholm

100 000

20.0

556573-9587

Umeå

79 391

2.6

VALUE OF
HOLDING
IN CONSO-
LIDATED
ACCOUNTS
2015

CARRYING
AMOUNT
AT PARENT
COMPANY

INTEREST %*

VALUE OF
HOLDING
IN CONSO-
LIDATED
ACCOUNTS
2014

CARRYING
AMOUNT
AT PARENT
COMPANY

1
1

2
0
4

20.0

2.6

1
1

-
-
1

1
1

2
0
4

1
1

-
-
1

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

Group
SweTree Technologies AB
Other shares
Total

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

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
inter est 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 companies in-
clude 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 43. SEK 2 703 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 138
million (18) on the asset side and SEK -466 million (-433) on the liabilities side.

Items measured at fair value belong to measurement level 2 pursuant to IFRS 13. 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 44.

MATURITY STRUCTURE, UNDISCOUNTED AMOUNTS*
2017

2016

2018

2019

2020-

FINANCIAL LIABILITIES
Derivatives
Other financial liabilities

FINANCIAL RECEIVABLES
Derivatives
Other financial receivables

-45
-2 703

-27
-1 421

-17
-304

-11
-502

-12
-

37
233

-
4

-
3

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

HOLMEN ANNUAL REPORT 2015 79

NOTES / NOTE 13

NOTE 13. FINANCIAL INSTRUMENTS, CONT.

Group

FINANCIAL INSTRUMENTS
INCLUDED IN NET FINANCIAL DEBT

NON-CURRENT 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

NON-CURRENT 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 liabilities)

Total financial instruments

DERIVATIVES
RECOGNISED AT
FAIR VALUE
THROUGH
PROFIT/LOSS
2015

2014

DERIVATIVES
WITH HEDGE
ACCOUNTING
2015

2014

TRADE
RECEIVABLES
AND LOAN
RECEIVABLES
2015

2014

AVAILABLE-FOR-
SALE ASSETS
2015

2014

OTHER LIABILITIES
2014

2015

TOTAL CARRYING
AMOUNT
2015

2014

FAIR VALUE
2015

2014

0
-
0

-
37
-
37

-
-
-

-
-
-
-

-
-
-8
-
-
-
-8

-
-

-2

-
-
-

-
5
-
5

-
-
-

-
-
-
-

-
-
-11
-
-
-
-11

-
-

-
-
-

-
-
-
-

-
-
-

-
-83
-
-83

-
-
-
-
-
-
-

-
-

-
-
-

-
-
-
-

-
-
-

-
-80
-
-80

-
-
-56
-
-
-
-56

-
-

-38

-375

-247

-
43
43

0
-
24
24

-
40
40

0
-
17
17

0
221
221

11
176
187

-
-
-
-

-
-
-
-
-
-
-

-
-
-
-

-
-
-
-
-
-
-

-
1 987

-
2 328

-41

-368

-374

2 275

2 572

-
-
-

-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-

4
-

-
-
-

-
-
-
-

-
-
-

-
-
-
-

-
-
-
-
-
-
-

4
-

-
-
-

-
-
-
-

-
-
-

-
-
-
-

-
-
-

0
43
43

0
37
24
61

-
40
40

0
5
17
22

0
43
43

-
37
24
61

-
40
40

0
5
17
22

0
221
221

11
176
187

0
221
221

11
176
187

-700

-1 200

-700

-1 200

-700

-1 200

-1 500
-
-13
-2 213

-2 144
-27
-
-13
-500
-7
-2 691

-1 200
-
-8
-2 408

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

-1 500
-83
-13
-2 295

-2 144
-27
-8
-13
-500
-7
-2 698

-1 200
-80
-8
-2 488

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

-1 500
-83
-13
-2 295

-2 144
-27
-8
-13
-500
-7
-2 698

-1 200
-80
-8
-2 488

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

-
-

4
1 987

4
2 328

-
1 987

-
2 328

100

-1 916

-1 882

-1 916

-1 882

-1 916

-1 882

-377

-286

-377

-286

-6 820

-7 491

-4 871

-5 330

-4 875

-5 340

80 HOLMEN ANNUAL REPORT 2015

NOTES / NOTE 13

Parent company

FINANCIAL INSTRUMENTS INCLUDED
IN NET FINANCIAL DEBT

NON-CURRENT FINANCIAL RECEIV-
ABLES
Derivatives
Receivables from Group companies
Other financial receivables

CURRENT FINANCIAL RECEIVABLES
Accrued interest
Derivatives
Other financial receivables

CASH AND CASH EQUIVALENTS
Bank balances

NON-CURRENT LIABILITIES
MTN loans
Loans from banks and other credit
institutions
Liabilities to Group companies
Derivatives

CURRENT LIABILITIES
Commercial paper programme
Bank account liabilities
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 liabilities)

Total financial instruments

DERIVATIVES
RECOGNISED
AT FAIR VALUE
THROUGH
PROFIT/LOSS
2015

2014

DERIVATIVES
WITH HEDGE
ACCOUNTING
2015

2014

TRADE
RECEIVABLES
AND LOAN
RECEIVABLES
2015

2014

AVAILABLE-FOR-
SALE ASSETS
2015

2014

OTHER LIABILITIES
2014

2015

TOTAL CARRYING
AMOUNT
2015

2014

FAIR VALUE
2015

2014

0
-
-
0

-
37
-
37

-
-

-
-
-
-

-
-
-8
-
-
-
-8

-
-

-3

-
-
-
-

-
5
-
5

-
-

-
-
-
-

-
-
-11
-
-
-
-11

-
-

-
-
-
-

-
-

-
-
-83
-83

-
-
-
-
-
-
-

-
-

-
-
-
-

-
-

-
-
-80
-80

-
-
-56
-
-
-
-56

-
-

-41

-376

-251

-
3 119
95
3 214

-
3 234
96
3 329

0
-
24
24

155
155

0
-
17
17

115
115

-
-
-
-

-
-
-
-
-
-
-

-
-
-
-

-
-
-
-
-
-
-

-
1 645

-
1 921

-44

-368

-377

5 039

5 382

-
-
-
-

-
-

-
-
-
-

-
-
-
-
-
-
-

1
-

-
-
-
-

-
-

-
-
-
-

-
-
-
-
-
-
-

1
-

-
-
-
-

-
-

-
-
-
-

-
-

0
3 119
95
3 214

-
3 234
96
3 329

0
3 119
95
3 214

-
3 234
96
3 329

0
37
24
61

155
155

0
5
17
22

115
115

0
37
24
61

155
155

0
5
17
22

115
115

-700

-1 200

-700

-1 200

-700

-1 200

- 1 500
-1 013
-
-3 213

-2 144
-27
-
-13
-500
-6
-2 690

-
-

-1 200
-418
-
-2 818

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

-1 500
-1 013
-83
-3 295

-2 144
-27
-8
-13
-500
-6
-2 698

-1 200
-418
-80
-2 898

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

-1 500
-1 013
-83
-3 295

-2 144
-27
-8
-13
-500
-6
-2 698

-1 200
-418
-80
-2 898

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

-
-

1
1 645

1
1 921

-
1 645

-
1 921

102

-1 845

-1 855

-1 845

-1 855

-1 845

-1 855

-379

-292

-379

-292

-7 748

-7 868

-3 038

-2 906

-3 039

-2 913

HOLMEN ANNUAL REPORT 2015 81

NOTES / NOTES 14–16

NOTE 14. INVENTORIES

NOTE 16. EQUITY, PARENT COMPANY

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

GROUP

2015
971
299
1 237
526

56
3 089

PARENT COMPANY
2014
613
259
1 037
516

2015
645
272
858
508

52
2 336

69
2 494

2014
906
277
1 405
530

79
3 198

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 18 million (2) for the Group and
SEK 9 million (4) 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

2015

2014

PARENT COMPANY
2014

2015

-
52
1 935
1 987

-
4
219
100
196
519
2 505

-
65
2 263
2 328

-
15
167
13
199
394
2 721

83
51
1 511
1 645

-
4
191
102
84
381
2 026

80
61
1 780
1 921

-
5
126
13
97
241
2 162

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 38 million (33) at 31 December 2015
and it has been recognised, net, together with trade receivables. During the year, the provision was
changed by SEK -6 million (-7) as a result of actual credit losses, and by SEK 12 million (-8) 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 44.

SHARE CAPITAL
Registered share capital
Class A
Class B
Total no. of shares
Repurchased class B shares
Total number of shares
outstanding

31 DEC 2015

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 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

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 2015 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 -330 million (-421) on parent company equity. In the
consolidated accounts, valuation of derivatives and other financial instruments had an impact of
SEK -330 million (-415) 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 investment
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 13 April 2016, approve a dividend of SEK 10.5 per
share. The proposed dividend totals SEK 882 million.

For the previous year, the dividend paid was SEK 10 per share (SEK 840 million).

The debt/equity ratio was 0.23 (0.28).

Neither the parent company nor any of the subsidiaries are subject to external capital requirements.
For further details about the Group’s capital management and risk management, see the administration
report on pages 42–45.

82 HOLMEN ANNUAL REPORT 2015

NOTE 17. PENSION PROVISIONS

Holmen has a defined benefit pension plan for some salaried employees in Sweden that provides
benefits based on final salary and period of employment. Most of these commitments are secured
by means of insurance policies with Alecta. As Alecta cannot provide sufficient information to per-
mit the ITP plan to be stated in the accounts as a defined benefit plan, it is stated in accordance
with statement UFR 10 of the Swedish Financial Reporting Board as a defined contribution plan.
The defined benefit obligations over and above the ITP plan for Group management are secured by
means of a pen sion fund. Occupational pensions for collective agreement workers in Sweden are
defined contrib ution plans. Defined benefit plans in the UK have been closed to new pension accru-
als since 2015. These obligations are recognised in the consolidated accounts as defined benefit
plans in accordance with IAS 19.

COST RECOGNISED IN PROFIT/LOSS FOR
THE YEAR
Defined benefit plans
Personnel costs
Finance costs
Curtailment gain
Total defined benefit plans stated in
profit/loss for the year
Defined contribution plans
Personnel costs
Total recognised in profit/loss for the year

GROUP

PARENT COMPANY

2015

2014

2015

2014

-23
-12
36

-24
-5
-

-29

-12
1
-

-10

9
3
-

-129
-127

-119
-148

-110
-120

-107
-96

COST RECOGNISED IN OTHER COMPREHENSIVE INCOME
Return on plan assets excl. recognised interest income
Actuarial gains and losses from changes in demographic
assumptions
Actuarial gains and losses from changes in financial
assumptions
Actuarial gains and losses from experiential adjustments
Payroll tax
Total recognised in other comprehensive income

2015
-43

47
157
2
208

2014
84

-272
12
3
-170

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 established between the trust
and the company in consultation with its actuary. This period is currently 4 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

2015
-2 565
-23
3
-93
249
-3
101
-1
36
-79
-2 374

2014
-2 016
-24
-2
-89
-258
-5
93
-1
-
-265
-2 565

PARENT COMPANY
2014
-183
-5
-
3
-
-
27
-1
-
-
-159

2015
-159
-9
-
-1
-
-
17
-1
-
-
-153

Of the Group’s total obligations, SEK 14 million (22) refers to those that are not funded, while the
rest are wholly or partially funded obligations. Of the parent company’s obligations, SEK 5 million
(11) are secured under the Swedish Pension Obligations Vesting Act.

The weighted average duration is 18 years.

NOTES / NOTE 17

GROUP

2015
2 165
82

-43
-
-4
65
3
-84
59
2 244
-130

2014
1 777
84

84
-
-4
62
5
-75
232
2 165
-400

PARENT COMPANY
2014
144
-

2015
148
-

-
3
-
-
-
-3
-
148
-5

-
14
-
-
-
-10
-
148
-11

GROUP

2015
1 127
1 101
17
2 244

PARENT COMPANY
2014
58
86
4
148

2015
57
90
1
148

2014
1 075
1 080
10
2 165

PLAN ASSETS
Fair value of assets at 1 January
Interest income
Expected return excl. recognised
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:

PLAN ASSETS
Share
Bonds
Current fixed income investments

The plan assets do not include any financial instruments issued by Group companies or assets used
by the Group. Of shares, 51 per cent relate to the UK, 46 per cent to the rest of Europe and the US
and 4 per cent to the rest of the world. Of bonds, 42 per cent relate to government bonds and 58
per cent to corporate bonds.

KEY ACTUARIAL ASSUMPTIONS, GROUP
(WEIGHTED AVERAGE), %
Discount rate
Rate of salary increase
Rate of price inflation

31 Dec 2015
3.7
3.0
2.9

31 Dec 2014
3.6
3.7
2.9

The discount rate for pension obligations was established on the basis of high-quality corporate
bonds. A discount rate of 1.9 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 actuar-
ial 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 2015
-188
2
164
72

31 Dec 2014
-221
38
195
77

The Group’s payments into the funded defined benefit plans in 2016 are expected to amount to SEK
58 million.

Multi-employer plans
The year’s premiums for pension insurance policies taken out with Alecta’s ITP 2 plan amounted to
SEK 33 million (30) and are included among personnel costs in the income statement. Holmen’s
share of the total number of active members in the plan amounted to 0.16 per cent, which cor-
responds to 815 active members. Premiums to Alecta are expected to amount to SEK 32 million in
2016. Alecta’s surplus can be allocated to policyholders and/or the persons insured. At the end of
2015, Alecta’s collective consolidation level was 153 per cent (144).

HOLMEN ANNUAL REPORT 2015 83

NOTES / NOTES 18–20

NOTE 18. OTHER PROVISIONS

GROUP
Carrying amount at start of year
Provisions during the year
Utilised during the year
Unutilised amount reversed during the year
Translation differences
Carrying amount at end of year
Of which non-current portion of the provisions
Of which current portion of the provisions

PARENT COMPANY
Carrying amount at start of year
Provisions during the year
Utilised during the year
Unutilised amount reversed during the year
Carrying amount at end of year
Of which non-current portion of the provisions
Of which current portion of the provisions

PROVISIONS FOR TAXES

OTHER PROVISIONS

TOTAL

2015
140
-
-
-95
0
45
45
-

45
-
-
-
45
45
-

2014
155
-
-
-15
0
140
140
-

45
-
-
-
45
45
-

2015
463
410
-59
-117
0
697
540
157

630
524
-147
-115
892
608
284

2014
461
30
-29
-
0
463
393
69

651
127
-148
-
630
466
164

2015
603
410
-59
-212
0
742
585
157

676
524
-147
-115
937
653
284

2014
616
30
-29
-15
0
603
533
69

696
127
-148
-
676
511
164

Other provisions relate to obligations to restore the environment, corporate tax risks and onerous
contracts, as well as personnel and restructuring costs.

The change for the year mainly relates to a provision for electricity supply agreements at fixed
prices that make the production of standard newsprint unprofitable.

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

2015

2014

PARENT COMPANY
2014

2015

-
14
1 903
1 916

-
7
199
377
676
1 259
3 176

-
32
1 850
1 882

-
9
136
286
665
1 096
2 978

265
-
1 579
1 845

0
7
165
379
441
993
2 837

320
-
1 535
1 855

0
9
109
292
466
875
2 730

In 2015, the Group’s lease payments amounted to SEK 70 million (67), and the parent company’s
to SEK 37 million (37). The Group’s leases mainly relate to trucks, cars and rental agreements.
No new leases of any significance for the business were entered into during the 2015 financial year.
No leased equipment was subleased.

The breakdown of future lease payments is as follows:

GROUP

2017
–2021
64

2016
51

PARENT COMPANY

2022–
4

2016
29

2017
–2021
35

2022–
1

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 137 million at the end of the previous year.
Those in the parent company amounted to SEK 77 million.

Apart from lease agreements, Holmen has two time charter contracts in respect of ships that are
used to distribute the company’s products. These two agreements were extended in 2015 and
have a remaining duration of two years from 1 January 2016.

All trade payables are due for payment within one year.

Accruals and deferred income in the parent company principally consist of personnel costs of SEK
195 million (200), discounts of SEK 48 million (36) and goods delivered but not yet invoiced of SEK
38 million (76). Of these amounts, SEK 1 million relates to associates.

Fair values of derivatives essentially relate to the hedging of future cash flows. See Note 13.

84 HOLMEN ANNUAL REPORT 2015

NOTES / NOTES 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

TOTAL
COLLATERAL
2015

TOTAL
COLLATERAL
2014

-
6
6

-
141
141

-
148
148

-
149
149

The holding in a jointly owned company, Varsvik AB, is pledged and amounted to SEK 141 million
(142) at the end of the year.

CONTINGENT LIABILITIES
Surety on behalf of Group companies
Other contingent liabilities
Total

GROUP

2015
-
122
122

PARENT COMPANY
2014
29
65
95

2015
34
55
89

2014
-
118
118

On the basis of the Swedish Environmental Code, the Swedish environmental authorities may
raise the issue of soil tests and site restoration at discontinued units. Responsibility for remediation
measures is determined case by case, often using a reasonableness assessment. Holmen has en-
vironmentally related contingent liabilities that cannot currently be quantified but that could result
in future costs. Other contingent liabilities for the Group largely comprise ongoing legal processes
and guarantee undertakings for third parties. 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 anticompetitive practice penalty. Holmen’s
Spanish subsidiary is among these companies and has been ordered to pay EUR 4.8 million.
Holmen’s Spanish subsidiary has appealed the decision. This event is recognised as a contingent
liability as it is deemed highly likely that the appeal will be upheld.

NOTE 22. RELATED PARTIES

Of the parent company’s net sales of SEK 13 989 million (14 077), 0.8 (0.8) per cent relates to deliv-
eries to Group companies. The parent company’s purchases from Group companies amounted to SEK
1 630 million (1 604).

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 purchases from
Holmen Paper Madrid SL in 2015 amounted to SEK 1 510 million (1 355). As Holmen Paper AB is act-
ing on a commissioned basis for Holmen AB, these transactions are accounted for via Holmen AB.

L E Lundbergföretagen AB is a large shareholder in Holmen (see page 55). 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 2015, 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.

Transactions with related parties

GROUP
Associates
Joint ventures

PARENT COMPANY
Subsidiaries
Associates
Joint ventures

SALE OF PRODUCTS TO
RELATED PARTIES

2015
208
-

115
208
-

2014
283
4

113
283
4

PURCHASE OF PRODUCTS
FROM RELATED PARTIES
2014
200
-

2015
242
-

OTHER (E.G. INTEREST,
DIVIDEND)
2015
0
0

2014
3
0

1 630
112
-

1 604
115
-

18
0
0

555
0
4

LIABILITY TO RELATED
PARTIES

RECEIVABLE FROM
RELATED PARTIES

2015
91
-

1 280
77
-

2014
118
-

744
79
-

2015
89
12

3 203
88
68

2014
119
8

3 314
98
63

For fees and remuneration paid to members of the Board, see Note 4.

HOLMEN ANNUAL REPORT 2015 85

NOTES / NOTE 23

NOTE 23. INVESTMENTS IN GROUP COMPANIES

ACCUMULATED ACQUISITION COST
Carrying amount at start of year
Shareholder’s contribution
Sales
Closing balance at 31 December

PARENT COMPANY

2015
17 141
0
-
17 141

2014
17 144
-4
0
17 141

ACCUMULATED IMPAIRMENT LOSSES
Carrying amount at start of year
Impairment losses for the year
Closing balance at 31 December
Carrying amount at end of year

PARENT COMPANY

2015
5 204
126
5 330
11 810

2014
4 853
351
5 204
11 936

The parent company’s impairment losses on investments in Group companies are stated in the in-
come statement in the line item for ‘Profit/loss from investments in Group companies’ and relate in
2015 to holdings in Spain and the Netherlands.

Parent company’s direct holdings of investments in subsidiaries

CORPORATE ID NO.

REGISTERED
OFFICE

Iggesund Paperboard AB
Holmen Paper AB
Holmen Timber AB
Holmen Skog AB
Holmen Energi AB
Holmens Bruk AB
Holmen Holding 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 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., Netherlands
AS Holmen Mets, Estonia
Iggesund Paperboard Inc, US
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

NO. OF
INVEST-
MENTS

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

CARRYING
AMOUNT IN
THE PARENT
COMPANY

INTEREST %*

2014

INTEREST %*

2015

100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100
100
100
100
100
100
100
100

0
0
0
0
0
8 868
45
72
0
7
1
8 993

0
1 519
-
-
1
1 270
-
-
4
9
-
7
5
2
2 817
11 810

100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100
100
100
100
100
100
100
100

0
0
0
0
0
8 868
45
72
0
7
1
8 993

0
1 519
-
-
1
1 381
-
-
4
24
-
7
5
1
2 943
11 936

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

86 HOLMEN ANNUAL REPORT 2015

NOTES / NOTES 24–26

NOTE 24. UNTAXED RESERVES

PARENT COMPANY

NOTE 26. CRITICAL ACCOUNTING

ESTIMATES AND JUDGEMENTS

ACCUMULATED DEPRECIATION
AND AMORTISATION IN EXCESS
OF PLAN
Intangible non-current assets
Property, plant and equipment
Total

TAX ALLOCATION RESERVE
Assessment of tax 2010
Assessment of tax 2011
Assessment of tax 2012
Assessment of tax 2013
Assessment of tax 2014
Assessment of tax 2015
Assessment of tax 2016

Total

31 Dec 2015 APPROPRIATIONS 31 Dec 2014
1
2
3

0
2
2

1
4
4

-
170
560
0
280
610
370
1 990
1 994

-707

370
-337
-335

707
170
560
0
280
610
-
2 327
2 330

Group contributions received amounted to SEK 493 million (1 777) and Group contributions paid
amounted to SEK 7 million (0). Total appropriations of profit amounted to SEK 821 million.

NOTE 25. CASH FLOW STATEMENT

INTEREST PAID AND
DIVIDENDS RECEIVED
Dividends received
Interest received
Interest paid
Total

GROUP

PARENT COMPANY

2015
0
1
-70
-70

2014
0
1
-130
-129

2015
8
35
-72
-30

2014
546
15
-127
433

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 fo-
rest 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 log 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 biologi-
cal assets at 31 December 2015 was SEK 17 173 million and the attributable deferred tax liability
was SEK 3 788 million, giving a net value of SEK 13 385 million.

TAX
At year-end the Group had tax-related loss carry-forwards and temporary differences of some SEK
790 million not stated in the consolidated accounts based on the premise that utilisation must be
like ly. The Group’s assessment is that it is unlikely that these tax loss carry-forwards, for which a
deferred tax receivable is not recognised, will be able to be used in respect of future profit within
the foreseeable future.

PENSIONS
The Group’s provision for pensions amounts to SEK 130 million on the basis of defined benefit
pension obligations valued at SEK 2 374 million and plan assets of SEK 2 244 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 associated with former activities have been made
based on estimated future site restoration costs and the proportion that Holmen is required to cover.
See Note 18. Moreover it is judged that the company has a responsibility for environmental measures
that cannot at present be quantified but that could involve costs in the future. See Note 21.

CHANGE IN CURRENT LIABILITIES
The change in current liabilities mostly relates to borrowing within the Group’s commercial paper
programme. In 2015, a number of different short-term loans totalling SEK 8 737 million (9 435)
were raised within the Group’s commercial paper programme, and SEK 9 339 million (10 071) was
repaid. For a specification of cash and cash equivalents, see Note 13.

IMPAIRMENT TESTING
Impairment testing is performed annually. This resulted in an impairment loss of SEK 555 million on
property, plant and equipment in 2015. The impairment loss relates to the Group’s printing paper
business and is based on an assessment of the recoverable amount in line with applicable market
conditions. Changes in conditions may have an effect on the estimated recoverable amount ap-
plied in connection with future impairment tests.

HOLMEN ANNUAL REPORT 2015 87

PROPOSED APPROPRIATION OF PROFITS

The following earnings of the parent company are at the disposal of the Annual General Meeting:
Net profit for the 2015 financial year
Retained earnings

The Board of Directors proposes that a dividend of SEK 10.5 per share (83 996 162 shares) be paid to the shareholders

and that the remaining amount be carried forward

SEK

738 283 128
3 697 626 034
4 435 909 162

881 959 701

3 553 949 461

The Board of Holmen AB has proposed that the 2016 Annual General Meeting resolve in favour
of paying a dividend of SEK 10.5 per share – SEK 0.5 per share higher than the preceding year
– totalling SEK 882 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.

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 proposed dividend corresponds to 158 per cent of net profit for 2015 for the Group and means
that 4.2 per cent of equity in the Group at 31 December 2015 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 2015 was 0.23. Payment of the proposed dividend would raise the
debt/equity ratio by around 0.05.

Holmen AB’s equity at 31 December 2015 amounted to SEK 10 351 million, of which non-
restricted equity was SEK 4 436 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 -330 million on
equity. The Group’s equity at 31 December 2015 amounted to SEK 20 853 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

The Board and CEO declare that the annual accounts were prepared in accordance with gene-
rally 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
Parliament’s and Council’s regulation (EG) No. 1606/2002 of 19 July 2002 concerning the
application of international accounting standards. The annual report and the Group’s consolidated
accounts provide a true and fair view of the performance and financial position of the parent com-
pany 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 accounts and the Group’s consolidated accounts were approved for publication by
the Board in its decision of 22 February 2016. 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 13 April 2016.

Fredrik Lundberg

Chairman

Carl Bennet

Board member

Steewe Björklundh

Board member

Kenneth Johansson

Board member

Stockholm, 22 February 2016

Lars G Josefsson

Board member

Carl Kempe

Deputy chairman

Louise Lindh

Board member

Tommy Åsenbrygg

Board member

Our audit report was submitted on 24 February 2016.

KPMG AB

Joakim Thilstedt

Authorised public accountant

Ulf Lundahl

Board member

Göran Lundin

Board member

Henriette Zeuchner

Board member

Henrik Sjölund

Board member and
Chief executive officer

88 HOLMEN ANNUAL REPORT 2015

AUDIT REPORT / AUDIT OF SUSTAINABILITY REPORT

AUDIT REPORT

To the annual meeting of the shareholders of Holmen Aktiebolag (publ), corp. ID no. 556001-3301

Report on the annual accounts and consolidated accounts
We have audited the annual accounts and consolidated accounts of Holmen Aktiebolag
(publ) for the year 2015. The annual accounts and consolidated accounts of the company
are included in the printed version of this document on pages 4–88.

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 pre-
sentation 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 consoli-
dated 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 ac-
counts 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 Annual
Accounts Act and present fairly, in all material respects, the financial position of the
parent company as of 31 December 2015 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 2015 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 administra-
tion of the Board of Directors and the CEO of Holmen Aktiebolag (publ) for the year 2015.

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 administration 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
selection 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 examined whether any
member of the Board of Directors or the CEO 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 audit 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, 24 February 2016

KPMG AB

Joakim Thilstedt

Authorised public accountant

AUDIT OF SUSTAINABILITY REPORT

Holmen’s Sustainability Report, as defined on page 3 of Holmen’s Annual Report
2015, has been subject to a limited review in accordance with RevR 6 Assurance of
Sustainability Reports, issued by FAR.

A complete assurance report on the Sustainability Report is available on 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 is not prepared,
in all material respects, in accordance with the criteria defined by the Board of Directors
and Group Management.

Stockholm, 24 February 2016

KPMG AB

Joakim Thilstedt
Authorised public accountant

Jenny Fransson
Expert member of FAR

HOLMEN ANNUAL REPORT 2015 89

FIVE-YEAR REVIEW, SUSTAINABILITY

The environmental and employee data provided is the most relevant information with regard to
regulatory requirements and internal monitoring. The key performance indicators provided are
widely used in the industry.

Data from all parts of the Group is collected, quality-assured and evaluated. No material changes
have been made to the principles of reporting in comparison with 2014.

Holmen reports its environmental data to the supervisory authorities monthly and annually.
Reporting to Swedish authorities is made available to the public under the principle of public
access to documents. Data from all the mills is reported to the EU annually. Expenditure on
environmental protection is reported in accordance with guidelines from Statistics Sweden.

As some of the details provided in this report had already been collected by the end of the year
they refer to, they might differ slightly from the information finally reported to the authorities.

PRODUCTION AND ENVIRONMENT

2015

2014

2013

2012

2011

INTERNAL SUPPLY OF RAW MATERIALS
Harvesting in own forests, ’000 m3sub

3 213

3 297

3 465

3 211

2 988

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
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
Purchased, (net)6)

EMISSIONS TO AIR, TONNES
Sulphur dioxide (counted as sulphur, S)
Nitrogen oxides
Particulates
Fossil carbon dioxide, ‘000 tonnes
Biogenic carbon dioxide, ‘000 tonnes

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
Tall oil7)

WASTE, ’000 TONNES
Utilised or for recovering8)
Hazardous9)
Sent to landfill (wet)

ENERGY SUPPLIES
Branches, treetops and peat, GWh10)
Electrical and thermal energy, GWh11)

90 HOLMEN ANNUAL REPORT 2015

502
56
1 287
734

5.10
394
79
6 288
3 994
69
2.5
138
146

4 289
1 083
916

1 302
138
781
1 773

52
891
48
180
1 441

21.0
3.3
56.7
226
19.0

823
11.9

303
1.8
13

230
348

500
67
1 325
742

5.16
439
75
6 2302)
4 067
74
2.1
146
147

4 532
1 068
6302)

1 048
65
740
2 214

57
1 181
29
126
1 551

20.4
3.6
54.3
203
19.0

8242)
13.2

296
1.6
5.6

275
305

478
50
1 545
710

5.25
543
99
6 451
4 420
77
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
13.0

367
2.4
12

294
199

492
35
1 658
651

5.19
630
108
5 833
4 603
77
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
12.3

380
2.4
16

297
202

480
42
1 673
560

4.94
683
118
5 602
4 588
82
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
8.4

398
2.0
18

305
182

1) At Group level, wood consumption is computed
net, taking into account internal deliveries of
chips from the sawmills to the nearby mills.

2) Figure adjusted.

3) 100 per cent active substance. Total quantity of
commodities was 213 000 tonnes for chemicals
and 204 000 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.

5) 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 data also includes natural gas and
oil used at the mills.

6) In 2015, emissions of fossil carbon dioxide from
production of purchased electrical energy (net)
totalled around 60 tonnes. Calculated for emissions
from the operation of Vattenfall’s power plant for
electricity production during the year. Corresponding
emissions for the operation of Holmen’s power
plants totalled around 120 tonnes.

7) For delivery to the chemical industry.

8) By-products used, for example, as filling material,
construction material or for the production of soil
products.

9) Hazardous waste is dealt with by authorised

collection and recovery contractors. Certain frac-
tions of the waste are recovered. Oil-containing
waste from docking ships is dealt with at port faci-
lities at three Holmen mills. Such waste is included
in the figures for hazardous waste. The volume of
this waste in 2015 totalled 631 tonnes.

10) Branches, treetops and peat delivered from
Holmen’s land to external energy producers.

11) For 2015; 125 GWh electrical energy, supplied

from the mill in Workington to the local community,
5 GWh electrical energy from Holmen Paper
Madrid to the COGEN cogeneration plant.
201 GWh thermal energy from Iggesund Mill and
Braviken Paper Mill to Iggesund Sawmill and
Braviken Sawmill, 17 GWh thermal energy from
Hallsta Paper Mill and Iggesund Mill to the district
heating network of the local communities.

FIVE-YEAR REVIEW, SUSTAINABILITY

THERMAL ENERGY
Share of Holmen's
production/
consumption, %

Biofuel
Recovered thermal energy
Natural gas
Oil, LPG
Purchased thermal energy

68%

17%

12%

<1%

1) The high costs stated for 2011–2014 mainly

consist of environmentally related elements of
the implementation of biofuel boilers within
Iggesund Paperboard and the wind farm at Varsvik,
Norrtälje, Sweden.

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, opera-
tion of treatment equipment, waste manage ment,
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 11 per cent of its productive forest for
environmental reasons and thus refrains from
harvesting around 11 per cent of the potential
volume. The annual loss of income is estimated
at around SEK 101 million.

5) Relates to permanent employees.

6) Relates to permanent and temporary employees.

ELECTRICAL ENERGY

2015

2014

2013

2012

2011

HOLMEN’S PRODUCTION RELATIVE TO TOTAL CONSUMPTION, %
Company hydro power/wind power
Electricity production at the mills
Purchased electricity (net)

36
20
44

27
18
55

24
17
59

30
12
58

27
10
63

THERMAL ENERGY

2015

2014

2013

2012

2011

SHARE OF HOLMEN'S PRODUCTION/CONSUMPTION, %
Biofuel
Recovered thermal energy
Natural gas
Oil, LPG
Purchased thermal energy

ENVIRONMENTAL PROTECTION
EXPENDITURE

SEKm
Investments (remedial and preventive)
Electricity and heat-saving investments
Environmental taxes and charges2)
Internal and external environmental costs3)
Environmental cost of forestry4)

PERSONNEL

EMPLOYEES
Average number
of whom women, %
of whom temporary employees, %
Average age5)

SICKNESS ABSENCE 6), %
Total
of which longer than 60 days
Good health index (proportion of employees with no sick leave
during the year)

GENDER EQUALITY 5), %
Women managers out of total number of managers
Women joining the company out of total new employees

PERSONNEL TURNOVER 5), %
Personnel 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 6), %
Percentage of units covered by collective bargaining agreements
Rate of union membership

68
17
12
2
<1

73
17
8
2
<1

64
17
12
6
<1

49
20
18
9
4

51
21
12
8
8

2015

2014

2013

2012

2011

12
181)
12
208
101

26
320
10
169
70

122
300
14
178
84

60
576
22
196
93

91
211
23
202
90

2015

2014

2013

2012

2011

3 315
19.4
9.0
46.8

4.2
1.8

20.5
24

7.6
2.8
2.4
2.5
5.3

8.8

97
68

3 359
19.2
7.9
46.8

3.9
1.7

20.9
31

7.2
2.0
2.2
3.0
5.1

6.5

97
70

3 718
19.3
7.7
46.8

3 945
19.3
6.9
45.9

4 041
19.2
6.6
46.1

3.6
1.3

20.3
37

11.5
6.2
1.7
3.6
3.4

3.4
1.1

20.3
24

8.5
2.7
2.6
2.9
3.6

3.5
1.2

19.1
26

8.9
3.5
1.9
3.5
4.4

8.4

11.6

11.3

98
72

95
72

96
71

HOLMEN ANNUAL REPORT 2015 91

TEN-YEAR REVIEW, FINANCE

SEKm

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

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-backs
Dividend paid

* Excl. items affecting comparability:

16 014
-13 294
7
-1 240
267

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

1 700
-931
769

-90
679

-120
559

6.7

5 472
6 148
1 314
5 481
359
-2 760
16 014

847
-74
9
905
176
-163
1 700
-931
769

679
1 802
-398
443
2 526
-832
1 694

-
-840

1 734
-450
1 284

-147
1 137

-230
907

10.8

5 113
6 247
1 352
5 641
389
-2 748
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
450
-2 853
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
522
-2 972
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
552
-2 858
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
626
-2 207
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
527
-2 135
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
434
-2 345
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
377
-2 026
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
289
-1 584
18 592

752
754
80
643
197
-123
2 303
-
2 303

2 056
1 225
-664
-259
2 358
-947
1 411

-
-932

Year 2015: Impairment loss on non-current assets, provision for costs and the effects of a fire totalling SEK -931 million.

2014: Impairment loss on non-current assets of SEK -450 million.

2013: Impairment loss on non-current assets and restructuring costs of SEK -140 million.

2012: Impairment loss on non-current assets and restructuring costs of SEK -193 million.

2011: Revaluation of forest of SEK 3 593 million.

2010: Impairment losses on non-current assets and restructuring costs of SEK -786 million and revaluation of forest amounting to SEK 1 050 million.

2008: Impairment loss on non-current assets, restructuring costs and the effects of a fire totalling SEK -361 million.

2007: Impairment of goodwill and non-current assets of SEK -1 543 million and revaluation of forest amounting to SEK 2 100 million.

92 HOLMEN ANNUAL REPORT 2015

TEN-YEAR REVIEW, FINANCE

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

For a ten-year review of data per share, see page 54.

29 524
5 607
104
221
35 456

20 853
5 508
5 124
3 971
35 456

6 622
3 558
924
17 589
3 351
-888
31 155
-5 502
25 653

15
-1
1
11

12
neg
1
5
5
5

6
3
0.23

499
1 325
730
3 213
1 441

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

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 in own forests, ’000 m3
Own production of hydro and wind power, GWh

HOLMEN ANNUAL REPORT 2015 93

Fossil fuels
Fuels based on carbon and hydrogen compounds from sediment
or sedimentary bedrock – mainly coal, oil and natural gas.

Particulates
Particles of ash formed in incineration of bark or liquor, for
example.

DEFINITIONS AND GLOSSARY

DEFINITIONS
Capital employed
Total assets, less financial receivables, cash and cash equiva-
lents, the net amount of deferred tax assets and tax liabilities,
operating liabilities, tax provision and other provisions. Average
values are calculated on the basis of quarterly data.

Cash flow after investments
Cash flow from operating activities less cash flow from
invest ing activities.

Debt/equity ratio
Net financial debt divided by total equity.

Earnings per share
Profit/loss 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.

Bulk
Bulk is a measure of the volume of the paper. Paper with the
same basis weight 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.

EBITDA
Earnings before interest, taxes, depreciation, amortisation and
change in value of forests, excl. items affecting comparability.

FBB
Folding Box Board. Multi-layered paperboard made from
mechanical and chemical pulp.

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
provisions, less financial assets.

Operating capital
Total assets, less financial receivables, cash and cash equiv-
alents, 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/loss
Profit before net financial items and tax.

Return on capital employed
Operating profit/loss (excl. items affecting comparability)
expressed as a percentage of average capital employed.

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.

FSC®
Forest Stewardship Council®. FSC® promotes management of
the world’s forests in a way that is acceptable from three
perspectives: 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 grindstone.

IPPC
Integrated Pollution Prevention and Control. EU environmental
legislation about integrated, individual testing and supervision
of major industrial companies.

Return on equity
Profit for the year expressed as a percentage of average equity,
calculated on the basis of quarterly data.

ISO 50001
An international energy management systems standard that
provides a framework for energy efficiency measures.

Return on operating capital
Operating profit/loss (excl. items affecting comparability)
expressed as a percentage of average operating capital.

GLOSSARY
Bio co-location
A co-location of different operations for more efficient use of raw
materials and energy, amongst other benefits.

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 form-
ed during combustion is part of the carbon cycle.

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.
Important 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.

LWU
Lightweight uncoated, wood-containing magazine paper. Used
primarily for magazines, supplements, catalogues and direct mail.

94 HOLMEN ANNUAL REPORT 2015

m3 growing stock, solid over bark
Cubic metre 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 metre 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 contained 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 18001
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.

PEFC™
The Programme for the Endorsement of Forest Certification is
an international forest standard.

Phosphorus (P)
An element contained in wood. Excessive phosphorus in the
water may cause over-fertilisation (eutrophication) and oxygen
consumption.

RMP
Refiner mechanical pulp. Pulp produced through refining wood
chips, with or without chemical or thermal treatment.

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.

Suspended solids
Waterborne substances consisting of fibres and particles that
can largely be removed using a fine mesh filter.

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
combustion of sulphur-containing fuels, such as oil. In contact
with moist air, sulphur dioxide is converted into nitric acid,
which creates acid rain.

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.

INFORMATION

CALENDAR

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

For 2016 Holmen will publish the following financial
reports:

26/4

Interim report January–March

17/8

Interim report January–June

26/10

Interim report January–September

2017

8/2

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

A
N
N
U
A
L
R
E
P
O
R
T

2
0
1
5

100%

Holmen-produced

2015

ANNUAL REPORT