SCA Annual Report

2012

Contents

 Introduction
SCA at a glance ............................................................. flap CEO’s message .. ............................................................... 2 SCA’s value creation ........................................................ 4 –  Driving forces ................................................................ 6 –  Objectives and strategies .......................................... 8 –  Innovation and brands .............................................. 10 –  The SCA share .. ........................................................... 12 –  Information to shareholders .................................... 15 –  Stakeholder perspective .......................................... 16
B B

B

  Financial statements

Consolidated income statement ................................ 67 Consolidated statement of comprehensive income .. ............................................... 67 Consolidated statement of changes in equity .. ....... 68 Consolidated operating cash flow statement ......... 68 Consolidated cash flow statement .. ........................... 69 Consolidated balance sheet ........................................ 71 Financial statements, Parent Company .. .................. 72 Notes ................................................................................. 74 Proposed disposition of earnings ............................ 110 Audit report .................................................................... 111

Board of Directors’ Report   SCA Group

Operations and structure ............................................. 20 Acquisitions, investments and divestments ............ 21 Other Group information .. ............................................. 22 Sales and earnings . . ....................................................... 23 Operating cash flow ....................................................... 24 Financial position ........................................................... 25
B

  SCA Data
Multi-year summary ..................................................... 112 Comments on the multi-year summary .. ................. 113 Description of costs ..................................................... 114 Raw materials, energy and transport activities .. ... 114 Production capacity .................................................... 115 Definitions and key ratios ........................................... 116 Glossary .. ........................................................................ 116 Addresses ...................................................................... 117 Awards and recognition .............................................. 117

  Business areas

Personal Care .................................................................. 26 Tissue ................................................................................ 34 Forest Products .............................................................. 40
B

  Responsibility and governance
Each year, SCA publishes a separate Sustainability Report that is available in English and Swedish in a printed version and at www.sca.com

Corporate Governance ................................................. 46 Board of Directors and Auditors ................................. 52 Corporate Senior Management Team ....................... 54 Risk and risk management . . ......................................... 56 Sustainability ................................................................... 62

Key figures

Key figures
20124) SEK EUR2) 2011 SEK EUR2) 2010 SEK EUR2)

Net sales, SEKm/EURm Operating profit, SEKm/EURm Operating profit, SEKm/EURm1) Operating margin, % Operating margin, %1) Profit before tax, SEKm/EURm Profit before tax, SEKm/EURm1) Profit for the year, SEKm/EURm Profit for the year, SEKm/EURm1) Earnings per share, SEK Earnings per share, SEK1) Cash flow from current operations per share, SEK Dividend, SEK Strategic capital expenditures, incl. acquisitions, SEKm/EURm Divestments, SEKm/EURm Equity, SEKm/EURm Return on capital employed, % Return on capital employed, %1) Return on equity, % Return on equity, %1) Debt/equity ratio, multiple Debt/equity ratio, multiples, excluding pension liabilities Average number of employees Number of employees on Dec. 31
1) 2) See

85,408 6,012 8,646 7 10 4,748 7,382 5,000 7,257 7:06 10:27 10:35 4:503) –16,735 17,682 60,164 7 10 8 12 0.55 0.48 33,775 35,701

9,815 691 994

81,337 2,299 7,738 3 10

9,013 255 858

82,731 7,793 8,495 9 10

8,679 818 891

546 849 575 834

974 6,413 607 5,678 0:78 8:00 7:55 4:20

108 711 68 629

6,623 7,325 5,592 6,113 7:90 8:65 9:24 4:00

695 768 587 641

–1,923 2,032 6,989

–2,620 –15 61,291 4 9 1 9 0.60 0.52 43,6975) 43,3145)

–290 –2 6,857

–2,738 1,297 67,821 8 9 8 9 0.51 0.48 45,3415) 44,3375)

–287 136 7,538

Excluding items affecting comparability. footnote 1) on pages 68 and 71 for exchange rates. 3) Proposed dividend. 4) In conjunction with the creation of a joint venture in Australia and New Zealand, the operations were deconsolidated from 2012. 5) Of which Packaging operations that were divested in June 2012: Average number of employees 12,015; 12,960 and Number of employees on December 31 11,733; 12,551.

GROUP
Net sales and operating margin
SEKm 120,000 100,000 80,000 60,000 40,000 20,000 0 2008 2009 2010 2011 2012 % 12 10 8 6 4 2 0

SCA is a leading global hygi company that develops and ­ personal care, tissue and fo ­

Net sales
Excluding items affecting comparability. Reclassified 2010 and 2011 due to divestment of the European packaging operations.

Operating margin

Earnings, dividend and cash flow per share
SEK 20 16 12 8 4 0 2008 2009 2010 2011 2012

Earnings Cash flow from current operations
Excluding items affecting comparability. Reclassified 2010 and 2011 due to divestment of the European packaging operations. Dividend for 2012 relates to the proposed dividend.

Dividend

Operating cash flow
SEKm 12,000 10,000 8,000 6,000 4,000 2,000 0 2008 2009 2010 2011 2012

Reclassified 2010 and 2011 due to divestment of the European packaging operations.

Group’s largest markets
Sales, SEKm

Germany UK US France Sweden Spain Italy Russia Mexico Netherlands
0 3,000 6,000 9,000

36,000
Many

employees

SCA’s sales per region
Europe, 72 % North America, 12 % Latin America, 8 % Asia, 4 % Other countries, 4%

Annual sales of SEK 

SCA has sales in about

strong brands

85 100

billion countries

35 % Tissue. Production is conducted at 30 facilities in 25 countries.408m Operating profit (share of Group) Personal Care. 21 % iene and forest products d produces sustainable orest products. Capital employed (share of Group) Personal Care. kraftliner (packaging papers). 49 % Forest Products.644m Forest Products The business area comprises five product segments: publication papers. 31 % Tissue. baby diapers and feminine care. 12 % Tissue. 33 % Tissue. Total Group: SEK 85. 41 % Page 40 Total Group: SEK 93. Personal Care The business area comprises three product segments: incontinence products. 15 % Total Group: SEK 8. Page 26 Tissue The business area comprises two product segments: consumer tissue and AwayFrom-Home (AFH) tissue. pulp.646m Excluding items affecting comparability.701 . Production ­ is conducted at 20 facilities. Products are mainly sold in Europe. 30% Tissue. 47 % Forest Products. North Africa and North America. 56 % Forest Products. Operating cash flow (share of Group) Personal Care. Production is conducted at 55 facilities in 23 countries. but also in Asia. 56 % Forest Products. 13 % Total Group: 35. 50 % Forest Products. 11 % Page 34 Total Group: SEK 9.BUSINESS AREAS Net sales (share of Group) Personal Care. solid-wood products and renewable energy.091m Number of employees on December 31 (share of Group) Personal Care.

306).646m (7.50 (4. •   Earnings per share amounted to SEK 7. •   Launched cost-savings and efficiency-enhancement programs. SCA Annual Report 2012 1 .78). •   Signed an agreement for the sale of the Austrian publication paper mill Laakirchen. •   New hygiene organization.413).The year at a glance •   Divested the packaging operations. excluding the kraftliner mills.337). 1) Excluding items affecting comparability. ­ •   Acquired Georgia-Pacific’s European tissue ­ operations. ­ •   Net sales amounted to SEK 85. •   Acquired Asian hygiene company Everbeauty.408m (81.738).20) per share. •   Established a joint venture in Australia and New ­ Zealand. •   Profit before tax1) amounted to SEK 7.06 (0. •   Operating profit1) amounted to SEK 8.271m (5.382m (6. •   Cash flow from current operations amounted to SEK 7. •   Divested the 50% holding in Aylesford Newsprint. •   Proposed dividend SEK 4.

our Forest Products business area is now concentrated to our Swedish operations. The acquisition will generate annual cost synergies of EUR 125m with full effect from 2016. individual letters and a personal welcome from members of management. speaks to its advantage. 2 SCA Annual Report 2012 . which are less cyclical. the 50% holding in the newsprint mill in Aylesford. we increased our sales and profits in 2012. Austria. The sale of SCA’s packaging operations was another step on our journey of change and will lower our sensitivity to business cycles and provide financial growth opportunities in our hygiene operations.Introduction | CEO's message An eventful year marked by change The year 2012 was a fantastic and exciting time for SCA. We continued to pursue our work on the strategic priorities of efficiency. Despite a turbulent global economy. SCA carried out two historically important business transactions: the purchase of Georgia-Pacific’s European tissue operations and the sale of our packaging operations. innovation and growth. A company in transformation During 2012. We retained two kraftliner mills in Sweden since they form an integral part of our Forest Products business area. SCA’s strong exposure to ­ hygiene products. while the forest products operations were negatively affected by the economic downturn and stronger Swedish krona. In July. our new colleagues were given a warm reception in the form of general meetings. We invested a great deal of time and energy in the acquisition of Georgia-Pacific. The acquisition will strengthen our ­ competitiveness in the European tissue market and is a good complement to our market positions. UK. However. Our hygiene operations performed well in 2012. Turbulent global economy The global economy remains in a precarious situation. Some of the largest business transactions in SCA’s history transformed us into a hygiene and forest products company. At the end of 2012. was sold and we signed an agreement for the sale of the publication paper mill Laakirchen. population increases and an aging population indicate greater future demand for our products and services. Such macrofactors as a growing middle class. which are well-integrated with our forestry operations. The integration process will be assigned high priority in 2013. Accordingly.

We are working on accelerating the innovation process. Our sustainable business model allows us to capture these opportunities and address these challenges. Just as is the case in business. such as TENA. Nevertheless. Our aim is to ­ urther enhance our corporate culture and make f it more performance-oriented and innovative. we want to make these targets measureable and enable comparisons by producing key performance indicators. President and CEO SCA Annual Report 2012 3 . Libero. The purchase of the hygiene company Everbeauty and the increase in the holding in the tissue company Vinda to 21. I view our participation as a symbol of the journey of change that SCA is undergoing. To support a high level of transparency and understanding. Market assessment In 2012. Tork. to focus on innovation and to act as professionally as they always have done in the past. I can distinctly feel the inherent power in our corporate culture and how proud everyone is of working for SCA. China – one of the most important emerging markets One of the factors that is critical to SCA’s future development is our success in emerging markets. With last year’s changes of restructuring and reorganization. We have updated our logotype so that it can also be part of this journey of change. which will result in annual earnings improvements of SEK 1. During my meetings with our employees. for example. I look forward to continuing on the journey that SCA has ahead. we launched a new hygiene organization and an extensive cost-savings program. During the year. I am proud that we have given women the opportunity to enter an arena that is normally reserved for men. These targets also have an inherent value in themselves – if it’s measured. with the strategy in place and our employees. Innovation – growth engine and competitive advantage Our ability to create a culture of innovation and reward out-of-the-box thinking so that we surpass customer and consumer expectations is vital to SCA’s profitability and growth. SCA has experienced major change in recent years and today we are a leading global hygiene and forest products company. we must continuously improve and enhance the efficiency of our operations to strengthen our competitiveness. SCA was reclassified by the Stockholm Stock Exchange and MSCI (leading provider of investment decision support tools) to a personal & household goods company. Jan Johansson. Strong corporate culture SCA’s journey of change does not only involve divesting and acquiring companies. we launched a number of new sustainability targets last year (read more about these targets on page 63). about 1. A total of about 200 positions will be made redundant. are altering the conditions of our business activities. it gets done! We constantly receive confirmation that we are at the very forefront of the sustainability area. from population increases. which was bolstered with the purchase of the remaining 50% of the Chilean hygiene company PISA. I would go further than that. A symbolic journey with brand in focus SCA decided last year to participate in the Volvo Ocean Race 2014–2015 with an all-female crew. We are noticing increasing interest among new analysts and investors and our share price rose 38% during the year. We also introduced an efficiency-enhancement program for the forest products operations. This competition is one of the most demanding sporting events in the world and the purpose of our participation is to support the SCA brand and our product brands. I am convinced that we will deliver on our longterm targets. by increasing the share of open innovation with external parties. where the characteristics of teamwork and leadership and the ability to formulate a successful strategy and have clear objectives are crucial to the result. environmental and social value creation – for which all parts are equally as important in the creation of a successful com- pany. Global macrotrends.300m with full effect from 2015.500 positions will be made redundant and annual cost savings of about EUR 300m will be generated mainly in production and purchasing. Sustainability is part of SCA’s business model. with full effect from 2015.6% strengthened our presence in China. We have a unique opportunity with our products and offering in our hygiene and forest products operations to make a real difference for people and the environment. organization and business. This is positive but imposes consider­ able demands on us for the future. Our aim is to improve the standard of hygiene and minimize our environmental footprint.CEO's message  |  Introduction Focus on efficiency and profitability Since the world around us is in state of constant change. Our 2011 Sustainability Report was named the best in Sweden by FAR (the professional institute for authorized public accountants). I feel the strength of our employees’ ability to continuously keep sight of what is best for customers and consumers. Partnerships make us stronger and simultaneously enable us to use our resources wisely. we were ranked among the world’s most ethical companies by the US Ethisphere Institute and we were again included in the prestigious Dow Jones Sustainability Indexes and Carbon Disclosure Leadership Index. SCA has a strong corporate culture. in terms of its culture. We have had a strong presence in Latin America for many years. thus creating the conditions for further growth. To further raise our sustainability ambitions. Our work on sustainability is based on economic. For the fifth consecutive year. innovation and efficiency enhancements. The most important journey – and sometimes perhaps even the most difficult – is the cultural journey. global marketing platform. Under the program. Libresse and Lotus. The race is a unique. an aging global population and higher standard of living to scarcity of resources and climate change. Sustainability part of our business model Many companies claim that sustainability is an integrated part of their operations.

SCA had about 36. thus enabling the creation of long-term sustainable growth. from population increases and higher living standards. In 2012.8bn). Increased share for Hygiene business  2000 2012 Incontinence products Baby diapers Feminine care Consumer tissue SCA’s market positions 2012 North Europe America Global 1 2 3 1 1 5 2 2 – – – 3 1 4 4 2 1 46% 79% AFH tissue Publication papers Solid-wood products SCA is Europe’s largest private forest owner.Introduction  |  SCA’s value creation SCA’s value creation A leading global hygiene and forest products company SCA is a leading global hygiene and forest products company that develops and produces sustainable personal care products. page 6 4 SCA Annual Report 2012 . At the end of 2012. including TENA and Tork. The hygiene business accounts for approximately 80%. By analyzing the external environment and trends. the Group had sales of approximately SEK 85bn (EUR 9. rapidly alter the conditions for SCA’s business operations. Driving forces  1 Global macrotrends. for instance. which are globally leading brands.000 employees. to resource shortages and climate change. Sales take place in about 100 countries under many strong brands. SCA can leverage the drivers. tissue and forest products.

Over a business cycle. The value created by SCA for its shareholders relies on its ability to also generate value in relationships with its other stakeholders. SCA aims to provide long-term stable and rising dividends to its shareholders. SCA’s strategy is based on a sustainable business model where value creation for people and nature is put on a par with growth and profitability to ensure a successful company in both the short and long term. the company’s market positions and brands are strengthened. Innovation and brands  Innovation activities drive SCA’s growth and improve competitiveness and profitability. 4 page 16 SCA Annual Report 2012 5 Stakeholder perspective of value creation SCA’s strategic approach is based on a holistic perspective where sustainability is integrated into how the company’s works to create value for all of its stakeholders. Strong brands improve competitiveness and the Group’s relationships with its stakeholders. page 12 .SCA’s value creation  |  Introduction Objectives and strategy  2 SCA’s overall long-term objective is to generate increased value for shareholders. approximately one-third of cash flow from current operations (after interest expenses and tax) is normally allocated to dividends. The driving forces identified as the most important to the business demand that SCA understands its stakeholders’ needs and can translate its strengths into relevant and sustainable offerings to the market. 3 page 8 page 10 Value for stakeholders  The share SCA creates value for its shareholders through dividends and share price appreciation. By developing and differentiating products and services.

Over the coming decade.Introduction | Driving forces Driving forces – a changing world offers new opportunities Global macrotrends. hygiene products are an important part of the solution. SCA sees opportunities to generate growth and profitability with new business models and relevant offerings for consumers with limited resources. Poor or no access to hygiene and sanitation is one of the greatest global challenges to be resolved. By analyzing the external environc ment and trends. freedom to choose and the right to the same degree of well-being as those who live in countries with a more developed market. the world’s population was about 2 billion. rapidly alter the conditions for SCA’s business operations. especially in emerging markets such as Asia. it becomes even more important to improve standards and products in health and hygiene. the global population will reach 9 billion by 2050. This generates demand for incontinence products and other hygiene products. Today. we are 7 billion.   HEALTH AND HYGIENE As healthcare services struggle to meet the increasing demands from a growing and aging population. Here. SCA can leverage the drivers. We are also getting older. Those who do not have the same financial possibilities nonetheless want to have access to the same hygiene products. the number of people over the age of 65 will increase by 33%.   MORE AND OLDER When SCA was founded in 1929. According to figures from the UN. to resource shortages and ­ limate change. 6 SCA Annual Report 2012 . Latin America and Eastern Europe. thus enabling the creation of long-term sustainable growth.   HIGHER STANDARD OF LIVING Improved economic conditions around the world mean new opportunities for consumers. from population increases and higher living standards.

A great deal of focus is therefore placed on effective water consumption and purifying processes. which exceeds the emissions from SCA’s production. agriculture and food production.6 million tons of carbon dioxide. Access to water is critical for people. SCA has strengthened its presence in emerging markets where a growing share of the Group’s future expansion will take place.   WATER SHORTAGE The UN predicts that two-thirds of the world’s population may live in areas with water shortages in 2025.   CHANGED CONSUMER BEHAVIOR The planet’s limited resources. SCA’s forests have an annual net growth of 1% and are FSC and PEFC certified. the Group’s forest holdings net absorb 2.   ENERGY CONSUMPTION Access to energy has become a strategic issue in most countries in the world. it is important for the company and its competitiveness to constantly work to streamline energy use. A large proportion of SCA’s production processes are dependent on access to water. SCA conducts development in renewable energy. Authorities are setting targets to reduce carbon dioxide emissions and the private sector is expected to contribute. Since SCA is a large energy consumer. Illegal logging and timber from controversial sources threaten the forests of the world and biological diversity. In recent years. Checking the origin of the wood raw material is therefore extremely important. Growing forests also absorb carbon dioxide and counteract climate changes. seven million hectares or 0.Driving forces  |  Introduction 1   FOREST MANAGEMENT Every year.   CLIMATE CHANGES The climate issue is one of the most serious environmental and social problems facing the world. Every year. services and business models to meet the growing demand for sustainable consumption. SCA has goals for both preservation of biological diversity and responsible use of wood raw material. Sustainably managed forests are one of the world’s few renewable resources. SCA Annual Report 2012 7 .   CHANGED MARKET BALANCE Emerging markets are accounting for an increasing share of the global economy in pace with the development of the economies in these regions.2% of all forest areas globally is deforested. This drives SCA’s innovation of products. in order to secure access to sustainable energy and reduce the risk of higher costs. The Inter­ national Energy Agency (IEA) predicts that the need for energy will increase by 36% up to 2035. industries. such as wind power and biofuels. political prioritizations and more knowledgeable and aware customers and consumers increase demand ­ for sustainable products and services. SCA has the target of reducing its carbon dioxide emissions by 20% by 2020. which will probably entail higher costs and shortages in some cases. Special focus is placed on reducing water consumption in the mills that are located in waterstressed areas.

energy. hygiene solutions.5 9. The target is 30% for Personal Care. sustainable innovation and compliance with SCA’s Code of Conduct.   Financial targets Return on capital employed The Group’s overall profitability target is to achieve a return on capital employed of 13% over a business cycle.5 2008 2009 2010 2011 2012 Excluding items affecting comparability. EFFICIENCY innovation GROWTH S U S TA I N A B I L I T Y 8 SCA Annual Report 2012 . water usage. Satisfying needs through understanding of customers and consumers. fiber purchases and biological diversity. Objective SCA’s overall long-term objective is to generate increased value for shareholders.70 and a debt payment capacity of more than 35%. efficient production and innovation. SCA launched a number of new sustainability targets relating to climate. Growth SCA’s annual organic growth target for Personal Care is 5–7%. knowledge of   local and regional market conditions and superior go-to-market approaches. combined   with global experience. The people targets relate to health and safety. Capital structure A long-term debt/equity target of 0. strong brands.Introduction  |  Objectives and strategy Objectives and strategy Mission To sustainably develop.0 8. the target is to grow in line with the market.5 8. market and sell increasingly value-added products   and services within hygiene and forest products markets for customers and consumers. Return on capital employed % 10. For Forest Products. produce. while the target for Tissue is 3–4%.   Sustainability targets In 2012.0 7. 15% for Tissue and to be in the top quartile of the industry for Forest Products. See page 63 for more information.0 9.

generate cost synergies and enable efficient resource allocation. as well as production. primarily in regions where SCA already has representation. savings measures and optimization of capital employed in all parts of the Group. excluding the two kraftliner mills in Sweden. A strategic priority is also to increase the number of global brand platforms. the 50% holding in the newsprint mill in Aylesford. based on customer and consumer insight. Reducing costs and increasing capital efficiency is important to improve cash flow and value creation. In 2012. innovation. More efficient production provides lower costs and in most cases positive environmental effects. SCA has the ambition of growing in both mature and emerging markets. UK. Innovation work is an important tool for developing sustainability programs and helps ­ to satisfy the growing demand for sustainable and safe products. the aim is to advance positions in emerging markets. innovation and growth. Austria. SCA Annual Report 2012 9 . For the hygiene operations. Efficient processes are a part of SCA’s endeavor to reduce costs. product ranges and services. During the year. Three strategic priorities are in focus to deliver on the strategy: efficiency. with strong brands and raw material integration. Latin America and Asia. SCA launched an efficiency program in hygiene and forest ­ products operations. In addition to defending and reinforcing its position in mature markets. The Group divested its packaging business. In existing markets. retaining and strengthening market positions. Innovation SCA’s presence in about 100 countries combined with local innovation centers around the world. efficiency enhancement. the strategic focus is to increase the value for customers and identify new alternative fields of application for existing products. Efficiency SCA operates in an intensely competitive market and a continuous focus on cost efficiency is vital to ensure continued competitiveness. In Forest Products. North America.700 small-scale energy-saving activities carried out by the Group in recent years. New innovations enable improved resource utilization and reduced environmental footprint. Through strong global and regional market positions and brands. All operations in mature markets. SCA’s strategy is based on a sustainable business model where value creation for people and nature is put on a par with growth and profitability to ensure a successful company in both the short and long term. SCA is a leading global hygiene and forest products company. A continuous stakeholder dialog and a comprehensive risk analysis lay the foundation for the strategic priorities. In addition. while it also discontinues non­ competitive units. Increasing the hygiene business’ share of the SCA Group is a strategic direction to reduce sensitivity to economic fluctuations and thereby ensure a more long-term stable level of profitability and growth. will continue to strengthen their positions. SCA is well positioned to leverage the growth potential existing in both mature and emerging markets. such as Western Europe and North America. SCA leverages synergies between operations and improves productivity and the supply chain. form the basis for innovation activities that are founded on extensive insight into customer and consumer needs – today and in the future. efficient production and world-leading sustainability work. While growth will mainly be organic in old and new segments. SCA aims to be the leading company in the markets that it serves. so is the development of new products and services. acquisition-driven growth will also be pursued. consequently. improve capital efficiency and increase cash flow. Sustainability aspects and product safety are high on the agenda of customers and consumers and. A higher pace of innovation. Global functions in the hygiene operations relating to. among other areas. broadening the offering of product categories. SCA acquired Georgia-Pacific’s European tissue operations and the Asian hygiene business Everbeauty. capitalize on global economies of scale and ensure that all segments have a competitive and balanced portfolio of innovations. Innovation is a means of developing and differentiating SCA’s products and services. Particular focus is given to exploring the possibilities of broadening the product portfolio. improves SCA’s competitiveness and strengthens and differentiates the offering. Enhanced capital efficiency. innovation and brand activities. and attracting new customers in new markets. lower costs and strengthened cash flow are achieved through restructuring. for example. One example of this is the 1. SCA strengthened its market positions in Europe and Asia through the acquisitions of GeorgiaPacific’s European tissue operations and the Asian hygiene company Everbeauty.Objectives and strategy  |  Introduction Strategy 2 Growth SCA has strong leading positions in Europe. SCA’s competitiveness is also supported by the Group’s broad product portfolio. During the year. building strong brands. resulting in a reduction in carbon dioxide emissions and annual savings of about SEK 700m. the strategic direction is to increase the pace of innovation. Special focus is also reserved for identifying new and more costefficient and sustainable production solutions and processes. the aim is to continue growing by. was divested and an agreement was signed regarding the sale of the publication paper mill in Laakirchen. driving growth and profitability by expanding the offering to existing customers in existing markets.

Introduction  |  Innovation and brands

The importance of innovation and brands
Innovation activities drive SCA’s growth and strengthen competitiveness and profitability. By developing and differentiating products and services, the company’s market positions and brands are strengthened. Strong brands improve competitiveness and the Group’s relationships with its stakeholders.

  INNOVATION FOR PROFITABLE GROWTH SCA’s innovation process is deeply embedded in the Group’s strategy and business model. The innovation efforts are based on external trends, customer and consumer insight, new technology and business models, with sustain­ ability and product safety integrated into the process. The innovation work is supported by SCA’s innovation centers around the world and a welldeveloped innovation culture. Open innovation, or cooperation with external parties, constitutes a growing part of SCA’s innovation efforts since it is a resource-efficient way of working. For SCA, the innovation work involves the development of new products and services,

­ urther development and improvement of existf ing offerings, and the expansion of the offering. SCA’s new hygiene organization, which was implemented in 2012, has strengthened both processes and the innovation culture. Sustainability is an important element of SCA’s innovation process. Sustainability-driven innovation may involve continuous efficiency enhancements, reduced resource consumption along the value chain, replacing fossil fuels with renewable fuels or developing business models that increase the quality of life of customers and consumers.

A strong presence in emerging markets provides greater insight into trends and customer and consumer needs. This is used to develop new business models, products and services adapted to the conditions in these markets. In 2012, SCA filed applications for 89 patents. Patenting activities are pursued in a central organization that maintains a global focus. The patenting activities take the form of industry intelligence and ensuring appropriate protection for SCA innovations in order to create and maintain a valuable patent portfolio.

10

SCA Annual Report 2012

Innovation and brands  |  Introduction

3
The dark blue color stands for SCA’s extensive and professional background, brand history and its foundation. The green symbolizes the company’s sustainability activities and forest products operations. ­ The light blue represents the hygiene business and one of the natural elements, water. This infinity symbol carries the Group onward on its innovative journey into the future. ­

  SCA ON A JOURNEY OF CHANGE SCA has undergone major changes in recent years and has become a leading global hygiene and forest products company with a strong sustainability profile. Accordingly, the Group has updated its logotype to feature stronger, more distinct colors and softer lines. “Care of life” has been written out, which clarifies and strengthens the message. ­ SCA has the ambition of building a strong Group-wide brand. The SCA brand will strengthen and associate with the Group’s product brands, leverage their collective strengths and values and together form a clear link to customers and consumers. The SCA brand and the company’s values will function as a benchmark, ensuring that employees, products, processes and the entire operation develop in a sustainable and responsible manner. The SCA brand communicates the ­ company’s identity and how it wants to be perceived, meaning its values, Code of Conduct and comprehensive sustainability activities, from products and processes to the manner in which the Group makes a difference for people, nature and society. ­ The core of SCA is summarized in the concept “SCA Care of life.” SCA Care of life; Because our products make life easier for you and for millions of people around the world. ­ Because our resources and the way we work are natural parts of the global lifecycle. And because we care.

  PRODUCT BRANDS SCA has some 60 product brands, of which TENA and Tork are global brands. SCA has the ambition to own and develop between six and ten global brand platforms, each with more than SEK 10bn in annual sales.

  Team SCA in Volvo Ocean Race A part of SCA’s work to strengthen brand awareness is its participation in the Volvo Ocean Race 2014–2015. This global yacht­ ing race is a unique platform to increase awareness of SCA and its product brands. SCA will participate in the world’s toughest ocean race with an all-female crew. For SCA, the competition is about cooperation and striving towards common goals with a clear strategy. The Group also makes it possible for women to participate in an arena normally reserved for men. It is also about mastering the unexpected and facing the future as a strong team.

SCA Annual Report 2012

11

Introduction  |  The SCA share

The SCA share
SCA shares are quoted and traded primarily on NASDAQ OMX Stockholm, and as American Depository Receipts (ADR level 1) in the US through Deutsche Bank. The final 2012 closing price on NASDAQ OMX Stockholm for SCA’s B share was SEK 141.00 (102.00), corresponding to a market capitalization of SEK 99bn (72). In 2012, the share price rose 38%, while NASDAQ OMX Stockholm rose 12% during the same period. The highest closing price for SCA’s B share during the year ­ was SEK 142.50, which was noted on December 28. The lowest price was SEK 98.75 on June 5. The proposed dividend is SEK 4.50 per share, see below under the section “Dividend” on page 14.
Index On NASDAQ OMX Stockholm, SCA is included in the OMX 30 Stockholm Index and in the Personal & Household Goods sector within Consumer Goods. In addition to indexes directly linked to NASDAQ OMX Stockholm, SCA is included in other indexes, such as the FTSE Eurotop 300 and MSCI Eurotop 300. Within MSCI, SCA is included in Household Products within Consumer Staples as of September 1, 2012. SCA is also represented in sustainability indexes, including the FTSE4Good, OMX GES Sustainability Sweden PI, OMX GES Sustainability Nordic Pl and the Dow Jones Sustainability Europe Index. Liquidity In 2012, the volume of SCA shares traded on NASDAQ OMX Stockholm was 550 million (645), representing a value of approximately SEK 64bn (61). Average daily trading for SCA on NASDAQ OMX Stockholm amounted to 2.2 million shares, corresponding to a value of SEK 256m (242). Trading on Chi-X, BATS Europe, Burgundy and Turquoise amounted to approximately 480 million SCA shares during the year, corresponding to 47% of total trading in the share. Ownership Some 42% (55) of the share capital is owned by investors registered in Sweden and 58% (45) by foreign investors. The US and the UK account for the highest percentage of shareholders registered outside Sweden. ­

Total shareholder return 2012
Index 150 140 130 120 110 100 90 Thousand shares 12,000 10,000 8,000 6,000 4,000 2,000 0

Total shareholder return 2008–2012
Index 150 125 100 75 50 25 0 Million shares 300 250 200 150 100 50 0

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2012

SCA B

MSCI Europe

OMX Stockholm 30

Daily trading SCA B

SCA B

MSCI Europe

OMX Stockholm 30

Trading per quarter SCA B

MSCI Consumer Staples Household Products

MSCI Consumer Staples Household Products

Total shareholder return 2010–2012
Index 170 160 150 140 130 120 110 100 90 80 2010 2011 2012

SCA’s ten largest shareholders

According to SIS Ägarservice at December 31, 2012, the following companies, foundations and mutual funds were the ten largest registered shareholders based on voting rights (before dilution):
Shareholder No. of A Shares No. of B Shares Votes (%) Holding (%)

Industrivärden Handelsbanken* Norges Bank Investment Management ­ Skandia Swedbank Robur funds AMF – Insurance and Funds SEB Funds & SEB Trygg life insurance Capital Group funds SCA Employee Foundation Skagen funds OMX Stockholm 30

43,100,000 21,568,566 8,034,787 3,050,046

27,750,000 10,566,319 44,718,385 584,334 17,438,851 17,391,587

29.7 14.6 8.1 2.0 1.1 1.1 1.0 0.8 0.6 0.5

10.0 4.5 7.5 0.5 2.5 2.5 1.4 1.7 0.1 1.1
Source: SIS

625,100 982,845

9,221,192 12,214,016 74,406 7,626,202

SCA B index total shareholder return Competitor index total shareholder return1)
1)

Weighted index of competitors’ total shareholder return. Competitors are selected to reflect SCA’s operations. The index is used when comparing the SCA share performance over a three-year term for the longterm portion (LTI) of senior executive’s variable remuneration.

* Including mutual funds and foundations. 

12

SCA Annual Report 2012

1 722.537 193.94 84.0 18.8 0.145.094 2. SEKm Series A Series B Total 1993 1994 1995 1999 2000 2001 2002 2003 2004 2007 Conversion of debentures and new subscription through Series 1 warrants New share issue 1:10.392 9.401.6 89.203 40.822 197.088 11. % 3) Dividend yield.657 131.00 10.249.137 611.204.942 135. conversions and splits.2 329.410. of shares Increase in share capital.8 100.8 6.207 131.036.8 13 12 14 13 0.20 4 4.800.4 89.001– Total Source: Euroclear 48.825.00 Number of registered shares of which treasury shares 93.8 7.3 1. private placement New share issue through IIB warrants Conversion of debentures and subscriptions through IIB warrants Conversion of debentures Split 3:1 4.469 30.20 9.909 61. the share capital and the number of shares have increased due to issues of new shares.133.1 2.924 230.899.1 2.27 7.The SCA share  |  Introduction Data per share All earnings figures include items affecting comparability unless otherwise indicated.78 83.3 4.82 51 96 96 705.767.00 4 3.629 705.4 100.412 16. as detailed below: No.286 17.001–10.831.166.605 705. 58% capitalization plus net debt plus non-controlling interests divided by operating profit. 1) 5) Market 7.42 3. capital Sweden.605 Share issues.340 194.1 2.001–5.78 95. etc.50 6 5.84 44 95 94 705.957 2.133 45.055 168.90 8.145.202. 1993–2012 Since the beginning of 1993.399.880 62. 42% Outside Sweden. % P/E ratio 4) P/E ratio.716 14.543 235.030.475 9.701.2 34. excluding items affecting comparability 4) 7) Price/EBIT 5) 7) Price/EBIT.887 193. Shareholder structure Holding No.7 – – 4. SCA B SVCBY 4 Earnings per share after full tax: After dilution After dilution.2 20 14 22 15 0.2 12 8 11 11 0.500.36 3.631 1.854 8.77 141.626. excluding items affecting comparability 5) 7) Beta coefficient 6) Pay-out ratio (before dilution).414.110.9 14 11 13 11 0.000 20.00 7.287. 3) Rolling 10-year data.3 0.073.75 5.83 N/A 87 87 705. of shareholders No.717.3 176.1 – 62.000 5.94 7. December 31 Cash flow from current operations 1) 7) Dividend Dividend growth. of shares Holding (%) Votes (%) Share distribution Dec 31.502) 3 3.65 7.880 62.127 41.155 470.821. (EBIT = earnings before interest and taxes).706 194. 2) Board proposal.254.114.136 12. % Equity.094 > SCA Annual Report 2012 13 .633.000 10.555 232.35 4. 7) Reclassified 2010 and 2011 due to sale of the European packaging operations. issue price SEK 80 Conversion of debentures Conversion of debentures New share issue 1:6.422 186.8 7.9 1.1 1.491 13.857 112.416.78 55 96 96 705.428 190.70 5 3.24 4.285 3.06 116.78 8.1 2.775.45 16.9 1.989 101.905.80 102.5 4.3 1.278.1 – 119.55 4.027.094 1.06 10.837.804.0 18.86 64 85 85 705.579. SEKm Cash payment.880 62.362 40.0 0 28.427.94 7.170 1. 4) Share price at year-end divided by earnings per share after full tax and dilution.1 N/A 13 47 14 0.001–20.935 230.3 0.113 32.787.186 78.025 631.0 1.78 8.299.339.000 513 2.20 106.8 Percentage of foreign ownership. 2012 Series A Series B Total 1–500 501–1.00 1.841 592.983. excluding items affecting comparability 7) Before dilution Market price for B share: Average price during the year Closing price.18 95.0 0.396 40.698 705.1 2.76 66.000 1. 6) Share price volatility compared with the entire stock exchange (measured for rolling 48 months).716.2 1. before dilution Number of registered shares December 31 (millions) of which treasury shares (millions) See definitions of key ratios on page 116.145.32 6.555 232.437.767.068 235. after dilution Equity. SEK per share unless otherwise indicated 2012 2011 2010 2009 2008 Ticker names NASDAQ OMX Stockholm New York (ADR level 1) SCA A.00 0.590.90 100.015 168.967. issue price SEK 140 Conversion of debentures New share issue.4 1.201.0 15.608.110.864 782 1.9 1.

based on SCA’s share price at the end of the year. For more information about the structure of the program. Sweden.2% per share. approximately one-third of cash flow from current operations (after interest expenses and tax) is normally allocated to dividends. dividends have risen by an average of 3. Dividend and dividend policy SCA aims to provide long-term stable and rising dividends to its shareholders. in November 2012.5% -03 -04 -05 -06 -07 -08 -09 -10 -11 -12 One of the year’s major investor activities was SCA’s capital market day held in Stockholm. 14 SCA Annual Report 2012 . The 2012 dividend represents a dividend yield of 3. on pages 85–86.1% compared with 2011. Over a business cycle.50 per share for the 2012 fiscal year. Accordingly. see Note 6 (Personnel and Board costs). cash flow from current operations exceeds what the company can place in profit­ able expansion investments. The Board proposed a dividend of SEK 4. Incentive program SCA’s incentive program is designed to contribute to the creation of shareholder value. cont. the surplus shall be used to amortize loans or is returned to shareholders through higher dividends or share repurchases.Introduction  |  The SCA share The SCA share. an increase of 7.5% per year over the past decade. If. Dividend per share SEK 5 4 3 2 1 0 cu Average mulative growth: 3. The program for senior executives consists of two components of which one is tied to the development of the SCA share compared with an index consisting of SCA’s largest global competitors. in the long term.

50 per share and that the record date for the dividend be Monday. and 5 p.sca. so-called voting rights registration. shareholders with custodian registered shares must have such shares registered in their own names. weekdays between 8 a. 2013) April 29. 2013) July 18. 2013 at 3 p.The SCA share  |  Introduction Information to shareholders Annual General Meeting The Annual General Meeting of Svenska Cellulosa Aktiebolaget SCA will be held on Wednesday. listing the authorized signatories. April 4. Skandia Liv • Ramsay Brufer. 2013) October 18. 2013 Interim report (Jan 1–Jun 30. April 10. the Swedish text shall prevail) and can be downloaded from SCA’s website www.30 p. interim reports and year-end reports can be arranged by registering an e-mail address on the SCA website. not older than one year. year-end reports and interim reports are published in Swedish and English (in the event of differences between the English translation and the Swedish original.O. Chairman of the Board of SCA The Nomination Committee prepares.com. Chairman of the Nomination Committee ­ • Håkan Sandberg. should be requested from the bank or fund manager managing the shares well in advance of Thursday.m. address and telephone number.m.m. 2013. Temporary registration of ownership. or equivalent authorization document. 2013. April 4. 4 April 2013.sca. Handelsbankens Pensionsstiftelse and others • Caroline af Ugglas. in Stockholm Waterfront Congress Centre. 2013 Year-end report for 2013 Annual Report for 2013 January 29. 2014 March 2014 Annual reports. April 15.com.com • by mail to Svenska Cellulosa Aktiebolaget SCA. Nils Ericsons Plan 4. Alecta • Sverker Martin-Löf. should be stated when notification is given. 4 The Notice convening the Annual General Meeting can be found on the company website ­ www. P. among other things. Dividend The Board of Directors proposes a dividend of SEK 4. 2013 and • give notice of their intention to attend the meeting no later than Thursday. AB Industrivärden. April 18. Anyone representing a corporate entity must present a copy of the registration certificate.com. SCA Annual Report 2012 15 .sca. Notification of attendance Shareholders who wish to attend the Annual General Meeting must • be listed in the shareholders’ register maintained by Euroclear Sweden AB on Thursday. personal identity number/corporate registration number. Payment through Euroclear Sweden AB is estimated to be made on Thursday. Shareholders represented by proxy should deliver a proxy in the original to the company prior to the Annual General Meeting. proposal for election of Board members. • on Internet: www.m. Sweden Tel +46 8 788 51 00 Subscriptions to publications: Subscription to SCA’s press releases. 2013. SE-101 23 Stockholm. Sweden. and number of accompanying persons. Name. Financial information 2013–2014 Interim report (Jan 1–Mar 31. Sweden In order to attend the meeting. Proxy forms are available upon request and on the company website www. if any. Box 200. Annual Reports can also be ordered from: Svenska ­ Cellulosa Aktiebolaget SCA Corporate Communications Box 200 SE-101 23 Stockholm. Registration to the Annual ­ General Meeting will start at 1. 2013 Interim report (Jan 1–Sep 30. Notification may be given in any of the following manners: • by telephone +46 8 402 90 59.sca. Nomination Committee • Carl-Olof By. Corporate Legal Affairs.

4% EMPLOYEES SUPPLIERS SCA’s sales by business area Personal Care. SCA’s sales by region Europe. from endconsumers of SCA’s products to corporate customers that include the retail trade. 4 % Other countries. In 2012. SHAREHOLDERS   CUSTOMERS SCA has many different customers. the total shareholder return on the SCA share has exceeded that of the competition. distributors.Introduction | Stakeholder perspective Stakeholder perspective of value creation SCA’s strategic approach is based on a holistic perspective where sustain­ ability is integrated into how the company works to create value for all of its stakeholders. 21%   SHAREHOLDERS SCA creates value for its shareholders through dividends and share price appreciation. Dividends have risen by an average of 3. SCA helps corporate customers reduce their risks and increase the value of their brands. 49% Forest Products. 30% Tissue. 8 % Asia. Index 150 125 100 75 50 25 0 Million shares 300 250 200 150 100 50 0 2008 2009 2010 2011 2012 SCA B MSCI Europe OMX Stockholm 30 Trading per quarter SCA B MSCI Consumer Staples Household Products 16 SCA Annual Report 2012 .5% per year over the past decade. SCA and its customers can supply high-quality sustainable products that meet and exceed consumer needs and expectations. 72 % North America. the share price rose 38%. 12 % SOCIETY CUSTOMERS Latin America. Over a five-year period. By jointly working for greater efficiency and innovation. medical and healthcare serv­ ices. The driving forces identified as the most important to the business demand that SCA understands its stakeholders’ needs and can translate its strengths into relevant and sustainable offerings to the market. printing houses. The value created by SCA for its shareholders relies on its ability to also generate value in relationships with its other stakeholders.

4% (SEK 2. SCA is determined to develop its employees by offering a broad range of opportunities and challenges as well as a stimulating. 10%* (SEK 8. Poland and Mongolia. transportation and distribution. SCA strives to be a long-term employer. 1% (SEK 1. educating young women in Latin America about puberty and menstruation and educating Chinese nurses about incontinence.727m) Employee salaries. respect and trust. 65%** (SEK 55. SCA helps these communities develop financially. This may involve educating school children in Russia about hand hygiene. corresponding to 65% of sales. Value is created for employees through opportunities for skills development and by offering employment terms and benefits that are competitive in the markets in which SCA is active. Many of the more than 200 initiatives support improved health and hygiene. Germany.Stakeholder perspective  |  Introduction 4   SUPPLIERS The company strives for transparent and longterm relationships with its suppliers to guarantee both high quality and financial stability for both parties. there are opportunities for personal and professional development. this strengthens the Group’s position as a leading global hygiene and forest ­products company. SCA also pays property taxes. However. electricity and chemicals. At SCA.264m) Dividend to shareholders. The objective is to have skilled and motivated employees who are offered an attractive and supportive workplace. strategic capital expenditures and acquisitions. This provides a substantial financial contribution to local suppliers and the local economy. such as pulp. energy and other expenses for goods sold.540m) *  Current expenditures. SCA invested approximately SEK 45m (24) in community involvement. restructuring costs. Taxes paid. Another way of building value is to develop the suppliers’ expertise through training and cooperation. for example.446m) Remaining in the company. Many input goods. payroll taxes. Aside from income tax. 2% (SEK 1. safe and healthy work environment. SCA also conducts tree planting projects in. the Group continued to develop its open labor market through a global “Job portal” that shows current and prospective employees the range of available positions. as a major employer in many regions. energy taxes and indirect taxes. Among other efforts. In 2012. Brazil. Purchasing is the largest single expense for SCA. pension taxes. forest raw materials are almost always purchased locally. SCA Annual Report 2012 17 .   SOCIETY SCA contributes to the local economy through its community involvement and.193m) Interest paid to creditors.241m) Suppliers.   EMPLOYEES SCA’s employees are crucial to the com­ pany’s success. ** Raw materials. Together with diversity. 14% (SEK 12. 4% (SEK 3.997m) Employee social security costs. customs duties. are global commodities and are mostly purchased centrally with the objective of achieving economies of scale.

Board of Directors’ Report 18 SCA Annual Report 2012 Board of Directors’ Report .

...................................................................... Parent Company ........................ 67 Consolidated statement of comprehensive income ....................................... ................................................................... 70 Consolidated balance sheet . .............. 25   Business areas Personal Care ................. ........... 71 Financial statements............................... 54 Risk and risk management .............................................. 68 Consolidated operating cash flow statement ........ 40   Responsibility and Governance Corporate Governance ........................ ....... ............. 52 Corporate Senior Management Team ............................................................... 46 Board of Directors and auditors ................ 72 Notes .......................... ................................... ............ 24 Financial position ........................................................................................................................................... 74 Adoption of the annual accounts ................ 111 Board of Directors’ Report SCA Annual Report 2012 19 .................................................. 67 Consolidated statement of changes in equity ..................... ............................................... 110 Audit report ...................................................... .............. ...... ................ 109 Proposed disposition of earnings ... 66 Consolidated income statement ..........................................  SCA Group Operations and structure .................... ........... 22 Sales and earnings ......... 69 Correlation between consolidated cash flow statement and operating cash flow statement ...... 20 Acquisitions........................... 21 Other Group information . 62   Financial statements Contents .................................... 68 Consolidated cash flow statement . investments and divestments ... 23 Operating cash flow .. 34 Forest Products ....................... 56 Sustainability ...................... 26 Tissue ..................................

Following the transaction.6 million hectares of forest land. tissue and forest products. Taiwan and Southeast Asia. SCA divested the company’s European packaging operations. An agreement concerning divestment of the Austrian publication paper mill in Laakirchen was also signed. pulp. which strengthens the product offering and SCA’s geographic ­ presence in Europe. solid-wood products and renewable energy. The SCA Asia Pacific and SCA Americas business units focus on tissue and personal care products. In 2012. SCA signed a joint venture agreement with E. The business areas are organized into seven business units. SCA owns approximately 2. Organization SCA consists of three business areas – Personal Care. SCA consolidated its position in Asia through the acquisition of Everbeauty. technology and investments in the hygiene segment called Global Hygiene Supply (GHS) and one dedicated unit that develops and is responsible for joint support functions. known as Global Business Services (GBS). In 2012. SCA strengthened its presence in South America through acquisition ­ of the remaining 50% in the Chilean hygiene company PISA. SCA established a new organization in the hygiene business and launched a comprehensive cost-savings and efficiency-enhancement program. Tissue and Forest Products. one unit in charge of purchasing.SCA Group  |  Operations and structure Operations and structure SCA is a leading global hygiene and forest products company that develops and produces sustainable personal care products. ­ During the year. kraftliner.ON. focusing on AFH tissue. Significant events during the year During the year. SCA acquired an additional 5% of shares in the leading Chinese tissue company Vinda International. The SCA MEIA business unit includes Middle East. In the Forest Products business area. focusing on consumer products. SCA’s European hygiene business comprises: SCA AFH Professional Hygiene Europe. primarily within Personal Care and Tissue. SCA also has three global units: one for category control in the hygiene area (product brands and innovation) named Global Hygiene Category (GHC). which guarantees just under half of the Group’s timber supplies and enables efficient raw material integration and effective cost control. The joint venture includes approximately 270 wind power stations and total energy production of more than 2 TWh. India and Africa. Latin America and Asia Pacific. During the year. and SCA Incontinence Care Europe for manufacturing and sales of incontinence products. and thus owns 100% of the company. an Asian personal care company with sales in China. ­ During the year. the Group also holds strong positions in North America. excluding two kraftliner mills in Sweden. SCA acquired Georgia-Pacific’s European tissue operations. SCA conducts extensive sawmill operations as a natural complement to the forest operations. SCA’s ownership amounted to 21. SCA Consumer Goods Europe. In 2012. In Europe. production planning. SCA divested its 50% shareholding in Aylesford Newsprint in the UK. SCA acquired PLF.6% (after ­dilution effects). Organization President and CEO Vice President and CFO Vice President Corporate staffs Global Business Services (GBS) SCA Incontinence Care Europe SCA Consumer Goods Europe SCA AFH Professional Hygiene Europe SCA MEIA SCA Americas SCA Asia Pacific SCA Forest Products Global Hygiene ­ Category (GHC) Global Hygiene Supply (GHS) Global Responsibility across geographics in hygiene operations Global Responsibility across geographics in hygiene operations 20 SCA Annual Report 2012 Board of Directors’ Report . Although Europe is SCA’s main market. Expansion takes place through organic growth and acquisitions. SCA also introduced an efficiency program in its forest products operation. SCA Forest Products manufactures publication papers. the largest independent supplier of wood-based construction products ­ to the builders merchants sector in France.

the company is ranked fifth in both China and Taiwan. PLF has annual sales of about SEK 250m and 70 employees. Investments in the hygiene business During the year. The acquisition price was SEK 11. The initial purchase price was EUR 100m. generating annual cost savings of about SEK 50m and a significant reduction of fossil-fuel carbon emissions.7bn on a debt-free basis.2bn in Sovetsk. SCA divested its 50% shareholding in the UK-based newsprint facility Aylesford Newsprint. Investment in timber processing In 2012. Each of the machines has an annual capacity of 60. SCA acquired the Taiwan-based Everbeauty Corporation. including planing and surface treatment. in 2011. Spain.868m on a debt-free basis. for new tissue machines. Georgia-Pacific accepted SCA’s binding offer of EUR 1. Through this transaction. Acquisition in Asia In 2012. Increased investment in tissue in China In 2012. Divestment of UK-based newsprint facility In 2012. Board of Directors’ Report SCA Annual Report 2012 21 .1bn. The acquisition will bring SCA closer to customers and increase the company’s share of processed products in France. an agreement was signed with Heinzel Group concerning a divestment of SCA’s Austrian publication paper mill in Laakirchen. respectively. These include investments of about SEK 1. In 2012.A. excluding the two kraftliner mills in Sweden. and about SEK 1. The company manufactures and markets baby diapers and incontinence care ­ products under its strong brands Dr P. and so forth.357m on a debt-free basis. PISA also launched incontinence care products in Chile under SCA’s global brand TENA. an agreement was signed with DS Smith concerning the divestment of SCA’s packaging operations. Divestment of SCA’s packaging operations In early 2012. investments and divestments Strategic tissue operation acquisition in Europe At the end of 2011. a strong sales organization and proprietary production in China and Taiwan.Acquisitions. PISA’s sales amounted to approximately SEK 900m. SCA acquired the French timber processing company PLF. Joint venture in Australia and New Zealand for SCA’s existing hygiene business In early 2012. The agreement entails that SCA will increase its energy deliveries to Sundsvall’s district heating network. an Asian personal care company with sales in China. The purchase price amounted to EUR 1. Vinda is listed on the Hong Kong Stock Exchange and. Germany. and Sealer. The shares were divested on a debt-free basis for a symbolic amount. SCA’s total investment in the company amounted to SEK 1. SCA delivered a binding offer to acquire Georgia-Pacific’s European tissue operations.759m (EUR 316m). The lime kiln is scheduled for operation in autumn 2014. The operations have been loss-making for the past few years.6% (after dilution effects). SCA acquired the remaining 50% of shares in the Chilean hygiene company PISA (Papeles Industriales S. and to upgrade five machines for the production of new incontinence products in Hoogezand in the Netherlands.600m (GBP 150m). similar to the position already held by the company in the UK and Scandinavia. The transaction is scheduled for completion in the first quarter of 2013 pending approval by the relevant authorities. the company generated sales corresponding to approximately SEK 4bn. investments in expanded tissue capacity in Russia and Germany continued. SCA decided to invest approximately SEK 490m in a new lime kiln at the kraftliner mill in Munksund.000 tons. SCA acquires access to an extensive distribution network.983m and the investment amounted to SEK 1. for baby diapers. Total sales for 2011 were approximately SEK 1. A decision was also made in 2012 to invest in expanded diaper production capa­ city in Valls. The purchase ­ price was SEK 653m. Both products contribute to better care and save time for patients and caregivers. SCA decided to invest about SEK 380m in an expanded cooperation between SCA’s industries in the Sundsvall region and Sundsvall Energi AB. Russia. The purchase price amounted to SEK 536m. This means that oil will be replaced by biofuel. Divestment of publication paper mill in Austria In 2012. Following the transaction. Increased hygiene product investment in Chile During the year. for incontinence care products. Following consultation with the relevant employee representatives. In connection with the transaction. the largest independent supplier of wood-based construction products to the builders merchants sector in France. Total sales for 2012 amounted to SEK 2. The divestment received EU clearance in mid-2012 and was finalized soon after. PLF processes approximately 70. with a possible additional purchase price of not more than EUR 100m based on a two-year profit-sharing model. Expanded TENA range Two new products were added to TENA’s product portfolio through the acquisition of ­ two companies: Dutch JOYinCARE BV and Swiss Medical Solution AG. which account for almost 70% and 30% of sales. The joint venture enables more efficient financing and faster development of the operations. Expanded cooperation with Sundsvall Energi At the end of 2012. Commissioning is scheduled for November 2013.000 cubic meters of solid-wood products annually.32bn. Taiwan and Southeast Asia. In baby diapers. investments and divestments  |  SCA Group Acquisitions. In connection with the divestment. SCA’s ownership in Vinda amounted to 21.1bn in Kostheim. Investment in kraftliner In 2012.514m and the investment amounted to SEK 11. The acquisition received EU clearance in mid2012 and was finalized soon after. SCA increased its ownership in the Chinese tissue company Vinda. In connection with the establishment.). a joint venture was established in Australia/New Zealand by divesting 50% of SCA’s existing operations in the region to the Australian company Pacific Equity Partners (PEP). the two companies also decided to establish a sales cooperation. The operations were consolidated as of May 2012. The selling price will be adjusted following a customary reconciliation of working capital. a book impairment loss of SEK 435m (EUR 50m) was charged to profit. The company holds the number two position for incontinence care products in China and the number one position in Taiwan. The transaction involved a book loss of SEK 848m and a negative cash flow effect of SEK 158m for SCA. The acquisition price was SEK 1. The company primarily operates in the consumer tissue and AFH tissue segments. The two innovative products comprise a test for early detection of ­ urinary tract infections and impregnated wet gloves. SCA deconsolidated the operations as of 2012 and they will now be reported according to the equity method. The operations were consolidated as of March 2012.

The Parent Company is otherwise a holding company with the main task of owning and managing shares in a number of business ­ group companies and performing Group-wide management and administrative functions. 2013. Business Unit Managers and equivalent. often in direct cooperation with customers. This operation affects the environment through emissions to air and water. These operations impact the environment through emissions to air and water. the senior executive will receive a paid-up pension policy from the age of 60. 3.312. These operations affect the environment through emissions to air and water. The record date for entitlement to receive dividends is proposed as April 15. Holdings of treasury shares SCA implemented a directed cash issue of a total of 1. Dividend The Board of Directors proposes that the dividend be raised by 7. Investments in property and plant totaled SEK 299m (118) during the year. The Board’s assessment is that the proposed dividend will provide the Group with the scope to fulfill its obligations and make the required investments. dividend growth in the most recent ten-year period has amounted to 3.605 treasury shares.5%.128).767. During the year. Pension benefits are to be either defined benefit or defined contribution plans. and biofuel. Cash and cash equivalents at year-end were SEK 0m (0). In the event of termination of employment. see Note 6 on pages 85–86. The program ended in 2009. and noise. the variable remuneration is to be limited and linked to the fixed remuneration. and Central Staff Managers. Matters of remuneration to senior executives are to be dealt with by the Remuneration Committee and. Severance pay should not exist. if exceptional financial circumstances prevail. Fixed and variable remuneration are to be linked to the executive’s responsibility and authority. employees and other stakeholders. The total remuneration is to correspond to market practice and be competitive in the senior executive’s field of profession. and grants felling rights for ­ standing forest to the subsidiary SCA Skog AB. Svenska Cellulosa Aktiebolaget SCA (publ). as far as possible. be resolved by the Board of Directors. Guidelines for remuneration of senior executives The Board of Directors has decided to propose to the 2013 Annual General Meeting the following unchanged guidelines for determining salaries and other remuneration for senior executives to apply for the period following the Annual General Meeting. or a combination of both. Other senior executives include the Executive Vice President. The variable remuneration is to be based on the outcome of predetermined objectives and. as well as for other senior executives. research and development costs amounted to SEK 845m (832). the company holds a total of 2. when initiated by the senior executive. The central activities are carried out in the form of R&D in the fields of materials and technology.” The Board’s proposal concurs with the guidelines adopted by the 2012 Annual General Meeting. the notice period should normally be two years should the termination be initiated by the company. the Parent Company recognized operating income of SEK 98m (174) and reported a profit before appropriations and tax of SEK 4.0% of consolidated net sales. 22 SCA Annual Report 2012 Board of Directors’ Report .50 (4. Accordingly. These shares were subsequently acquired by SCA to be used for transfer to senior executives and key individuals under the employee stock option program. In 2012. “Remuneration to the CEO and other senior executives will be a fixed amount.800. For information concerning the company’s application of these guidelines and information on the company’s expenses. while the local units work with product development. Research and development is conducted both centrally and locally in the various business units.293 Class A shares were converted into Class B shares.1% to SEK 4. additional benefits and pension. Programs for variable remuneration should be formulated so that the Board of Directors. Environmental impact in Sweden SCA conducted 16 operations for which a permit is required in Sweden. the Parent Company’s net investments and divestments in shares and participations in companies outside SCA amounted to SEK 125m (114).161m (2.SCA Group  |  Other Group information Other Group information Parent Company The Group’s Parent Company. To earn the pension benefits. The proportion of Class A shares was 13. For the CEO. Following the share split in 2007 and transfer of the shares under the concluded program. solid waste and noise. When resigning before the age providing entitlement to pension. at the earliest. The dividend is expected to total approximately SEK 3. as regards the President.000 shares in 2001. possible variable remuneration. as well as noise. and entitle the senior executive to pension from the age of 60. the period of employment must be long term.291m (2. from which the shareholders benefit.950). at present 20 years. Nine permits relate to the production of solid-wood and value-added products. Six permits relate to the manufacture of pulp and paper. Distribution of shares During the year. payment of variable remuneration if such an action is considered reasonable and in compliance with the company’s responsibility to shareholders.2% at year-end. Variable remuneration is not pensionable income.20) per share. Operations for which permits are required accounted for 17% of consolidated net sales. owns most of the forest land and other real estate relating to forestry operations. Research and development (R&D) During the year. One permit relates to the manufacture of fuel pellets. be linked to the increase of value of the SCA share. corresponding to 1. has the possibility to limit. ­ or refrain from. and one year.

an improved product mix and acquisitions.264 7. Earnings improved due to higher volumes. amounted to SEK 7. excluding items affecting comparability.936 724 6.000 2. The lower earnings level is largely attributable to lower prices and negative exchange rate effects due to a strengthening of the SEK.000 0 2008 2009 2010 2011 2012 % 10 8 6 4 2 0 Earnings per share after dilution effects SEK 12 10 8 6 4 2 0 2008 2009 2010 2011 2012 Net sales.113 items affecting comparability in 2012 amounting to an expense of SEK 2. The average tax rate for operating earnings. Excluding ­ exchange rate effects. Operating margin Excluding items affecting comparability.731 20. Reclassified 2010 and 2011 due to divestment of the European packaging operations. excluding items affecting comparability. Exchange rate movements reduced consolidated net sales by 1%. rose to SEK 10. amounting SEK 7.264m (expense: 1. Operating profit for Personal Care and Tissue increased 20% and 47%. excluding items affecting comparability after tax of SEK 2. Net sales SCA’s net sales increased.170 7.337). amounted to 24. and to SEK 7.000 4.1% in the preceding year. The interest coverage ratio rose to 4.071m after tax. For Forest Products. Sales for Personal Care and Tissue increased by 6% and 8%. mainly as a result of lower prices. which amounted to 12% (9).Sales and earnings  |  SCA Group Sales and earnings Operating profit. Financial items amounted to an expense of SEK 1. Return on capital employed. compared with 1.337 19. Board of Directors’ Report SCA Annual Report 2012 23 . excluding items affecting comparability of SEK 2.413 –1. 49 % Forest Products. the sales increase in emerging markets was 22% for Personal Care and 19% for Tissue.1%.738 –1.257 81.678 82. Forest Products reduced its profit by 44%.5% in 2011.825 8.071). 21 % Operating profit Excluding items affecting comparability. excluding items affecting comparability. Sales rose 6% in local currencies compared with the preceding year. excluding items affecting comparability. and in 2010 an expense of SEK 702m before tax and SEK 521m after tax. acquisitions in Europe and cost savings.257m after tax. excluding items affecting comparability. lower raw material costs.634m before tax and SEK 2. Profit before tax. improved by SEK 969m.7 ­ in the preceding year.257m (5.000 8. improved compared with the preceding year and amounted to SEK 8. respectively.325 –1.06 (0.959 8.00).408 20. compared with 9.27 (8.636 7.78) including items affecting comparability. Earnings Operating profit. excluding items affecting comparability.382m (6.325 6. amounting to SEK 85.439m before tax and SEK 5. Earnings per share a ­ ttributable to owners of the Parent. Key figures The Group’s gross margin.382 –628 503 7. excluding items affecting comparability.738). improved and amounted to 10% (9) as did return on equity.634m (5.646 –1.439). The decrease was attributable to lower interest rates and a lower average net debt.413). share of Group Personal Care.646m (7.000 6. respectively.8. Reclassified 2010 and 2011 due to divestment of the European packaging operations.5% compared with 24.635 900 5. Profit for the year. Operating profit and operating margin SEKm 10.257m (5. rose 17% compared with the preceding year.408m (81. was 23%. Summary income statement SEKm 2012 2011 2010 Net sales Gross profit Operating profit1) Financial items Profit before tax1) Tax1) Profit for the period from disposal group Profit for the year1) 1) Excluding 85. 30 % Tissue.678).325). exchange rate effects and divestments. net sales declined 9% compared with the preceding year. due to higher volumes.495 –1. and the operating margin was 10. in 2011 an expense of SEK 5.

000 8.000 25.090 6.000 2.306).271m ­ (5. while the debt payment capacity improved to 37% (36). 33 % Tissue.000 3. Strategic capital expenditures made to strengthen organic growth totaled SEK 1. net Restructuring costs.927m at year end.725 –1. The debt/equity ratio.000 6. Capital expenditures SEKm 10. Tax payments totaled SEK 1. 11 % Strategic capital expenditures Depreciation according to plan Current capital expenditures.60). attributable to a strengthening of the SEK.637).017 –273 8.000 20. Operating cash surplus rose 5% to SEK 12.000 –10. etc Operating cash flow Financial items Income taxes paid.325). net Reclassified 2010 and 2011 due to divestment of the European packaging operations. and Forest Products in Sweden.264 –1.000 1. The debt/equity ratio declined to 0. excluding pension liabilities.48 (0.441 5.000 15.418). The increase is primarily attributable to a higher operating cash surplus.271 947 8. was 0. The fair value measurement of pension assets. lower tied-up working capital and lower investments for the period compared with the preceding year. The Group’s cash flow SEKm 30. increased net debt by SEK 121m.000 2008 2009 2010 2011 2012 Summary operating cash flow statement SEKm 2012 2011 2010 Operating cash surplus Change in working capital Current capital expenditures.000 –15.52).325 –787 5.758 –743 –3. pension obligations and financial instruments increased net debt by SEK 1.982 –665 –3.624 1. Working capital in proportion to net sales amounted to 8% (8).55 (0.635 2.847m. Exchange rate movements.306 –2.159 –3.145 –1. amounted to SEK 3. etc Cash flow from current operations Strategic capital expenditures. Operating cash flow increased to SEK 9.000 4.000 0 2008 2009 2010 2011 2012 Operating cash flow by business area SEKm 7.000 2. Working capital declined due to lower trade receivables.418 –1. Personal Care Tissue Reclassified 2010 and 2011 due to divestment of the European packaging operations.000 5.000 0 –5.644m (7.264m (expense: 1.218 11.490 –1. Net debt declined SEK 3.306).689m. reduced inventory values and increased trade payables.161m (3.250). The year’s expense for strategic capital expenditures primarily pertained to investments in Tissue in Germany.982). Financial items declined SEK 61m to an expense of SEK 1. which declined ­ SEK 89m during the year.250 –649 7. corresponding to 4% (4) of net sales. Forest Products 24 SCA Annual Report 2012 Board of Directors’ Report .624m (11.000 6. Current capital expenditures.644 –1.193m (850).863m (1. The decrease was an effect of lower interest rates and lower average net debt.SCA Group  |  Operating cash flow Operating cash flow A high level of control of the operating cash flow is an integral part of SCA’s longterm competitiveness strategy.000 4.000 5. Net cash flow reduced net debt by SEK 5. Cash flow from current operations amounted to SEK 7.271m (5.000 10.049 Divestments Strategic capital expenditures Company acquisitions Cash flow before dividend Cash flow from current operations Reclassified 2010 and 2011 due to divestment of the European packaging operations.000 0 2008 2009 2010 2011 2012 Operating cash flow.109 7. 56 % Forest Products. Russia and North and South America.161 –978 9.721m during the year to SEK 32. Cash flow from current operations amounted to SEK 7. share of Group Personal Care.671 12. net Cash flow before dividend 12.000 –20.

Current assets rose SEK 769m to SEK 32.085 31 34 8 7 20 100 Consolidated balance sheet SEKm 2012 2011 2010 Intangible assets Property. amounted to 10% (9) and 12% (9). the Group’s interest-bearing gross debt amounted to SEK 33.893 7. Consolidated capital employed by currency.939).978 8.729 4.868 35. respectively.661m (31.091 32. Financing At year-end.091 29 41 7 6 17 100 28.939 36.531 60. net debt increased by SEK 1. The maturity period was 2.601 139.627 – 131.000 20.004). Exchange rate movements. 47% Forest Products.892 21. pension obligations and financial instruments.821 38. plant ­ and equipment increased to SEK 4.60).625m (6. Net profit for the period increased equity by SEK 5.959m and depreciation for the year to SEK 4. The visible equity/assets ratio was 45% (44). The value denominated in SEK of the Group’s foreign net assets amounted to SEK 55. of which property.978 67. plant and equipment rose SEK 4.194 82.Financial position  |  SCA Group Financial position Assets and capital employed The Group’s total assets declined 5% compared with the preceding year. Excluding pension liabilities.121 85. share of Group Personal Care.715 108.564 6.091 – 93.291) at year end.227 34.870m.164m (61. Board of Directors’ Report SCA Annual Report 2012 25 .062 42.847m due to the fair value measurement of pension assets.898).425 93.000 0 2008 2009 2010 2011 2012 % 100 80 60 40 20 0 Return on capital employed and equity % 12 11 10 9 8 7 6 2008 2009 2010 2011 2012 Capital employed. reduced equity by SEK 1.511 31.091m (97.861m. Current and strategic capital expenditures in property.164 38. Capital employed was 13% higher than in the preceding year and totaled SEK 93.870 32.381 35.291 41.000 30.899 102.141 7.3 years at the same date. attributable to a strengthening of the SEK. working capital amounted to 8% (8) of net sales. Working capital amounted to SEK 6.004 61. plant and equipment Biological assets Other non-current assets Total non-current assets Current assets Assets in disposal group held for sale Total assets Equity Non-current liabilities Current liabilities Liabilities in disposal group held for sale Total equity and liabilities Working capital Capital employed Net debt 17.984) at year end.359m. compared with the preceding year.52).93 (0.533m after tax through remeasurements of the net pension liability to fair value.629m. SEKm 2012 % 2011 % 2010 % EUR SEK USD GBP Other Total Of which disposal group Total excluding disposal group 27.958 56. 41% Net debt Debt/equity ratio Debt payment capacity Return on capital employed Return on equity Excluding items affecting comparability.069 – 142. The capital turnover rate was 0. At year-end. amounting to SEK 131.227 19.745 30 36 8 6 20 100 31. Equity Consolidated equity amounted to SEK 60.531 6. the debt/equity ratio was 0. Reclassified 2010 and 2011 due to divestment of the European packaging operations. excluding items affecting comparability.639 7.927m (36. Non-current assets rose SEK 13.816). 12% Tissue.647m. Furthermore.694 97.648) at year end.702 27.629 46.503 7.142 83.661 – 131.567m to SEK 17. debt/equity ratio and debt payment capacity SEKm 50. including the effect of hedges of net foreign investments. Exchange rate movements.000 10.625 93.322 20. Equity declined by SEK 1.80).599 26.601 139.167 19.55 (0. Key figures The debt/equity ratio was 0. Return on capital employed (ROCE) and on equity (ROE).740 32.000 40.999 – 142.069 5.128).776m (72.939 15.000m (607). The net cash flow was impacted in the amount of SEK 5.004 6.167 26.036 98.550 5.489 15.999m (2.219 28. Net debt amounted to SEK 32.744 102.648 20.816 97.004 38.531m (139.48 (0. The distribution of capital employed per currency is shown in the table on the right. while shareholder dividends reduced equity by SEK 2. to SEK 98. increased net debt by SEK 121m.103m to SEK 46.714m (37.158 36.689m.702m and intangible assets rose SEK 5. Foreign net assets declined due to divestments and changed Group structure.909 34.927 12.892).406 Net debt. The remeasurement of financial instruments to fair value increased equity by SEK 266m after tax.646 7.623 6.

Business areas | Personal Care

Personal Care
SCA is a global leader in personal care and has a portfolio of incontinence products, baby diapers and feminine care products. Within these product categories, SCA also offers such products as wet wipes, soap, baby oil, lotion and cotton pads. The products are sold under SCA’s global, regional and local brands as well as under retailers’ brands. Distribution channels for the products are the retail trade, pharmacies and care institutions. ­
In 2012, sales in the Personal Care business area amounted to just over SEK 26bn. The single largest product brand in the portfolio is TENA, a globally leading brand for incontinence products with annual sales exceeding SEK 10bn. Market The global market for personal care products is valued at approximately SEK 340bn and is growing at a rate of some 5% annually. The factors pointing to continued strong growth for personal care products include demand that is driven by global population growth – due mainly to a lower infant mortality rate, increased longevity and an aging population – greater market penetration, higher disposable incomes, more awareness of the importance of hygiene and innovation. The growth potential is greatest in emerging markets where market penetration is significantly lower than in mature markets and where urbanization, improved infrastructure and the retail trade are evolving rapidly. One example of the lower market penetration in emerging markets is that diaper consumption per capita in Asia is only about 10% of that in Western Europe. In mature markets, baby diapers and feminine care products have attained high market penetration, while market penetration for incontinence products – for which the aging population is driving demand, among other factors – remains relatively low. In emerging markets, the use of all product categories is expanding as the disposable income level grows and awareness of hygiene’s importance gains a more central role in conjunction with this development.

Share of Group

SCA’s market positions
Europe North America Global

Incontinence products Baby diapers Net sales, 30 % Operating profit, 35 % Capital employed, 12% No. of employees at Dec. 31, 31% Feminine care

1 (41%) 2 (12%) 3 (8%)

2 (17%) – –

1 (25%) 4 (5%) 4 (6%)

SEK 26,294m

SEK 3,180m

SEK 11,303m

11,074 employees

Data is based on market data and SCA’s estimate.

26

SCA Annual Report 2012

Board of Directors’ Report

Personal Care  |  Business areas

SCA’s sales by product segment
Incontinence products, 56 % Baby diapers, 30 % Feminine care, 14 %

Personal care products – global market
Western Europe, 18% Eastern Europe, 7% North America, 21% Latin America, 13% Asia, 29% Other, 12%

Personal care products – global market by product segment
Incontinence products, 20% Baby diapers, 52% Feminine care, 28%

Board of Directors’ Report

SCA Annual Report 2012

27

Business areas | Personal Care

Efficiency At the end of the year, SCA had production at 30 plants in 25 countries. Products are distributed via the retail trade, pharmacies and care institutions. Production efficiency is being improved consistently through modernization of and investment in new and existing facilities, thereby enhancing the cost structure and operational reliability. The cost-cutting and efficiency-enhancement program launched in 2012 and affecting both of SCA’s hygiene operations, meaning Personal Care and Tissue, will generate annual ­ cost savings of EUR 300m with full effect from 2015. The measures will affect about 1,500 employees. The bulk of the savings relates to production and purchasing. In terms of production, SCA is working to standardize activities by implementing the most efficient processes at all of its production facilities. For purchasing, the main focus is on achieving economies of scale by more efficiently centralizing purchasing and consolidating suppliers.

Innovations In 2010–2011 , SCA launched TENA Solutions, supporting nursing homes in delivering the best care by supplying routines, analysis tools and training in combination with innovative product ­ solutions. The advantages include improved well-being for care recipients, a better work environment and less waste and use of resources as well as a lower total cost. 2011 marked the launch in China of SCA’s TENA Belt, an incontinence product with a separate washable belt. The new product helps lower the environmental impact, reduces workloads for healthcare personnel and ensures improved skin comfort for the user. In 2012, a TENA Belt product adapted to the economy segment was launched. TENA Lady, featuring wings that provide even greater assurance of a dry and fresh feeling, was launched during the year. An upgraded and more discreet TENA Pants product with improved comfort and fit while reducing transportation costs and carbon dioxide emissions was also introduced in the market during the

year. An XXL version of TENA Slip was launched in the UK and Ireland. In 2011, thin baby diapers were launched in the Nordic region and Russia under the Libero brand and in 2012 the market introduction continued in several other European markets. In 2012, SCA launched an upgraded slim sanitary pad with improved absorption in Europe, the Middle East and South Africa. In Europe, the company also launched a pad offering a better fit and reduced material usage with maintained absorption capabilities. Growth In 2012, the Personal Care business area increased its sales in all product categories and global growth amounted to 12%, excluding exchange rate effects and divestments. Acquisitions increased sales by 5%. The sales increase in emerging markets, which accounted for 36% of the business area’s sales, amounted to 22%, excluding exchange rate effects. SCA’s target for the business area is an annual rate of organic growth of 5–7%.

FINANCIAL TARGETS: • 5–7% annual organic growth • 30% return on capital employed

Net sales and operating margin
SEKm 30,000 25,000 20,000 15,000 10,000 5,000 0 2008 2009 2010 2011 2012 % 18 15 12 9 6 3 0

Operating profit and ROCE
SEKm 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2008 2009 2010 2011 2012 % 35 30 25 20 15 10 5 0

Operating cash flow
SEKm 5,000 4,000 3,000 2,000 1,000 0 2008 2009 2010 2011 2012

Net sales

Margin

Operating profit

ROCE

28

SCA Annual Report 2012

Board of Directors’ Report

Lights by TENA – for less leakage Light incontinence is a very common condition. and export sales to the rest of Asia. Incontinence. For baby diapers.Personal Care  |  Business areas In 2012. With the acquisition of Pro Descart in 2011. the main focus is on supplying ­ high-quality products combined with qualified advisory services that simplify handling pro­ cedures and reduce costs for care providers. Institutional care and homecare account for 60% of the global market for incontinence products. SCA strengthened its position in Asia through the acquisition of Everbeauty. particularly among men. Market pene­ tration is generally low for incontinence care. is demonstrating favorable economic growth and the market there for hygiene products has consider­ able growth potential. which includes both products and services. The reason is that they view the problem as temporary “small leakages” and not as incontinence. the company holds the number two position in China and number one in Taiwan. not least for incontinence care products. For this target group. affects 5–7% of the world’s population. The acquisition provides SCA with ­ access to a comprehensive distribution network and a strong sales organization as well as its own production at two facilities in China and Taiwan. Dr P and TENA are clear market leaders in Asia (excluding Japan). SCA grew both organically and through acquisitions. The retail market accounts for approximately 40% of the global market. Many indicators point to the proportion of people affected increasing on a global scale as a result of an aging population and a higher proportion of overweight people. The company produces and markets baby diapers and incontinence products with such strong brands as Dr P for incontinence products and Sealer for baby diapers. SCA’s offering. products designed for small urine leaks. Incontinence products SCA offers a broad range of incontinence products under the TENA brand and is the clear ­ global market leader. Here. Together. at some time in life will be affected. The acquisition creates a solid platform ­ for high growth in Asia and China in particular. In 2012. improves the quality of life for consumers while also reducing costs for institutional customers. Lights by TENA is a discreet incontinence care product that quickly absorbs fluids and provides a drier and fresher feeling. an Asian personal care company with its own sales organization in China and Taiwan. Brazil. the company occupies the number five spot in both China and Taiwan. Only 20% of all men with incontinence use care products that are available in the market. SCA established a position as the second largest player in the Brazilian incontinence care market. and is growing at about 5% annually. Some 70% of women still use ­ panty liners or pads that are not adapted for the purpose. which is expected to account for 60% of future global market growth in the hygiene area. A key emerging market for SCA is Asia. The occurrence of incontinence is three times more common among women than men and calculations show that one-fourth of the world’s women aged over 35. which is the most populous country in South America. Other important emerging markets where SCA commands a strong position are Latin America and Eastern Europe. Market The global market for incontinence products is valued at some SEK 70bn. For incontinence care. which is classed as a disease by the World Health Organization (WHO). Use of incontinence products Units/per capita/per year 25 20 15 10 5 0 North Western Eastern Latin America Europe Europe America Asia Board of Directors’ Report SCA Annual Report 2012 29 . SCA has developed the Lights by TENA range. which have shown double-digit growth figures.

54 % Incontinence products – global market Western Europe. While the markets in Western Europe and North America have high penetration. These products enhance patient care and save time and resources for patients and care providers. Asia. In Europe. 25 % Kimberly-Clark. in 2012. In 2012. 25 % Latin America. the Middle East and Latin America. For the retail trade. incontinence is surrounded by a social taboo. North America and Asia (excluding Japan) were 41%. The TENA brand has large growth potential thanks to an aging population and low market penetration. the population of the world over the age of 60 is estimated to pass the one billion mark.000 managers of care institutions received training. The response has been very positive and. the Middle East and Africa. respectively. In five years.000 hospitals in a number of cities throughout the country. thus indicating considerable future potential for SCA. the majority of children worldwide still do not enjoy the practical and effective hygiene provided by disposable diapers. 5% Incontinence products – sales channels. the degree of penetration is only 37%. Over the past three years. advertising and the development of increasingly discrete. it is crucial to raise awareness and acceptance of ­ the disease. which has annual sales in excess of SEK 10bn. 7% Asia. 60 % Retail trade. Baby diapers SCA offers baby diapers and baby-care products and is the world’s fourth largest player in the segment. comfortable.000 nursing assistants and more than 1. 6 % North America. Since in many parts of the world. where birth rates are high at the same time as infant mortality rates are falling and household incomes are rising. In 2012. Russia. The most significant market growth is taking place in Asia. always with the customer and consumer benefits in mind. 28 % Eastern Europe. easy-to-use and effective products. Latin America. about 1. SCA’s global market share in incontinence products was about 25% and its market shares in Europe. The first of these is a test for early detection of urinary tract infections that is placed in the incontinence product and the second is disposable wash gloves. China is a market with low penetration and an aging population with high growth potential for incontinence products. There are about half a billion children in the world today. SCA is endeavoring to break this taboo by providing information and through marketing activities. global market Institutional and homecare. strengthened global market leadership and a continued focus on building leading positions in Eastern Europe. SCA has trained 6. while it is lower than 5% in emerging markets. 8 % Hartmann. Market The global market for baby diapers is valued at some SEK 180bn. SCA works with information. training and global forums. 17% and approximately 20%. 40 % Data is based on market data and SCA’s estimates. 8 % Unicharm. and is expected to grow at about 6% annually. The fact that the world’s elderly population has never been as large provides SCA with a sound basis on which to grow in incontinence products. 29% Other. SCA expanded its range with two innovative products in the category by acquiring two companies in Europe.500 nurses from more than 1. 30 SCA Annual Report 2012 Board of Directors’ Report .Business areas | Personal Care SCA’s business SCA is the world leader in incontinence products through its global brand TENA. Incontinence products – global market shares SCA. SCA prioritizes high growth in all segments. 5 % Others.

SCA holds the number two position in Europe. the Group uses the Sealer and Libero brands for the various market segments. Thailand and the Philippines. Board of Directors’ Report SCA Annual Report 2012 31 . SCA works to strengthen the positions of its own brands in mature markets. a range of baby-care products were launched under the Drypers brand in selected markets in Southeast Asia. further strengthening Libero’s brand and position. 16% Asia. with a market share of 5%. During the year. The collection was sold in the Nordic region and the Baltic countries. 21 % Latin America. To complement the baby diaper offering. Singapore. Young artists – Libero Art Collection In 2012.000 1. with a market share of 12%. SCA launched a new baby diaper under the Drypers brand containing four botanical extracts and featuring improved skin comfort that strengthens the product range in Malaysia. 81 % Retailers’ brands. 26% Other. Emerging markets have excellent potential for con­ tinued growth due to low market penetration of baby diapers and growing demand. SCA launched the limited edition Libero Art Collection diaper. Latin America. including the Nordic region and New Zealand. Use of baby diapers Units/per child/per year 2.Personal Care  |  Business areas SCA’s business SCA is the world’s fourth largest player in the baby diapers segment. and in fastgrowing markets in Eastern Europe. In China. Russia. 15% Baby diapers – brand categories. 15 % Eastern Europe. SCA’s strongest market is the Nordic region. In Europe. the Middle East and Asia. European market Brands. SCA markets baby diapers under its own Libero brand and under retailers’ brands.000 500 0 Baby diapers – global market Western Europe. ­ SCA also holds leading positions in Southeast Asia with the Drypers brand and South America with the Pequeñín brand. The children were allowed to experiment and paint freely and SCA’s designer ­ Karoline Lenhult then selected the details ­ that were most suitable for printing on diapers.500 1. In 2012. the Group successfully carried out two campaigns involv­ ing designer diapers. 7 % North America. where the Libero brand accounts for about 60% of the market. featuring a motif painted ­ by children. 19 % North Western Eastern Latin America Europe Europe America Asia Data is based on market data and SCA’s estimates.

SCA offers packs with fewer feminine care products and products in the economy segments in an effort to increase availability.000 likes. Nana in France and Saba and Nosotras in Latin America. 14% Feminine care – brand categories. SCA offers a broad product portfolio that includes pads.Business areas | Personal Care Feminine care SCA is the world’s fourth largest player in feminine care. Shortly thereafter. SCA’s business SCA is the world’s fourth largest player in feminine care with a 6% market share. which has quickly reached the number three position in the market. ­ Examples of regional brands supported by SCA’s global brand platform include Libresse in the Nordic region. 15 % North Western Eastern Latin America Europe Europe America Asia Data is based on market data and SCA’s estimates. As an adult. Market The global market for feminine care is valued at some SEK 100bn. Use of feminine care Units/per woman/per year 400 300 200 100 0 Feminine care – global market Western Europe. Russia and Malaysia. Several school programs are under way in Latin America and Asia that aim to educate girls about what happens to their bodies during puberty and when they have their period. His post quickly got 90. a green-tea scented feminine care product was launched under the Libresse brand in 2012. 16 % Latin America. 7 % North America. In emerging markets. panty liners and tampons. Australia and New ­ Zealand. He envied that unbridled happiness he saw in the adverts. 85 % Retailers’ brands. SCA introduced its feminine ­ care products under the Saba brand in selected stores in the Southwestern US. and is growing at about 4% annually. 12% Asia. where a large share of the population have Latin American roots. with a market share of 8%. 35% Other. 32 SCA Annual Report 2012 Board of Directors’ Report . The Guardian and The New York Times.5 million views in just a short period. European market Brands. Bodyform in the UK. he realized that he had been deceived. SCA launched feminine care products in Malaysia under the Libresse brand. Russia. 16 % Eastern Europe. During the year. A large and growing share of SCA’s sales is taking place in emerging markets such as Latin America. In 2011. The PR impact was immense for Bodyform and it was picked up on by leading newspapers such as The Daily Mirror. The YouTube clip got 3. Bodyform – a PR success It all began with a sarcastic post on Facebook in which a man in the UK described – in disappointed terms – how as a child he was misled by SCA’s cheery advertisements for ­ feminine care products that featured happy women who once a month decided to go skydiving. SCA views it as an important task to promote awareness of hygiene and menstruation. and with a girlfriend who transformed into a monster. dancing or mountain biking. Libra in Australia. In Europe. the Middle East and Asia. Since Saba is a strong brand in Mexico and Central America. In Malaysia. SCA is the third largest player. SCA produced a new advertisement as a tongue-in-cheek response to the man’s Facebook post. SCA also holds strong market positions in Latin America. SCA has chosen to launch the product in cities in the Southwestern US. Eastern Europe.

Return on capital employed amounted to 28% (24). The higher operating cash surplus and lower working capital were among the factors behind the increase. Capital expenditures amounted to SEK 636m (895). as well as acquisition in Asia. excluding exchange rate effects and divestments. excluding exchange rate effects.180m (2.645 11 11. Operating cash surplus was SEK 4.352 9. of employees at Dec.586 3. excluding exchange rate effects and divestments. Operating cash flow rose to SEK 3. lower raw material costs and cost savings.091m (3.744 10.1% (10. 27% Feminine care. Operating profit.294 4. Operating profit. Higher volumes and an improved product mix increased sales by 6% and 1%. In emerging markets.Personal Care  |  Business areas Operations in 2012 Net sales increased by 6% (12% excluding exchange rate effects and divestments) and amounted to SEK 26. 10 % Latin America. which was mainly attributable to emerging markets. Profit was positively impacted by increased volumes and prices. % Capital employed ROCE. respectively. Excluding exchange rate effects and divestments.180 12 11.091 313 –573 –245 3.294m (24.052 24 –206 –614 9. 3.914 11. Sales for baby diapers increased by 17%. an improved product mix.775). 31 1) Excluding restructuring costs.303 28 –63 –1. • Launched cost-savings and efficiencyenhancement program. Acquisitions accounted for an increase in sales of 5%.775 3. 62 % North America. 14 % SCA’s sales to retailers’ brands as a proportion of total sales: Incontinence products.586m (2. Operating margin was 12.732). 14 % Asia. • Established joint venture in Australia and New Zealand.074 24. 9 % SCA’s sales by region Europe. SEKm: Key figures1) SEKm 2012 2011 Net sales Operating cash surplus Change in working capital Current capital expenditures Other operating cash flow 26. while divestments reduced sales by 5%.7). • New hygiene organization. 3 % Operating cash flow Operating profit Operating margin.828 2.645). primarily due to new contracts in Europe and higher sales in Latin America.732 143 –689 –358 2. was 20% higher than in the preceding year (28% excluding exchange rate effects and divestments) and amounted to SEK 3. 11 % Other. excluding items affecting comparability. 1 % Baby diapers.828). sales increased by 22%. sales for incontinence products under the globally leading TENA brand rose by 9%. 30 % Feminine care. Sales for feminine care rose by 9%. % Strategic investments plant and equipment company acquisitions/divestments Average number of employees No.180 % 12  Operating margin: KEY EVENTS • Acquired the Asian hygiene company Everbeauty. Board of Directors’ Report SCA Annual Report 2012 33 .657 SCA’s sales by product segment Incontinence products. driven primarily by emerging markets. 56 % Baby diapers.

higher disposable incomes. 31. ­ Products are sold both under own and retailers’ brands. SCA develops and markets complete hygiene solutions comprising dispensers. SCA initiated a standardization project by implementing the most efficient processes at all of its production facilities. 50 % Capital employed. The manufacturing processes and logistics are optimized through continuous improvements. meaning Personal Care and Tissue. large workplaces. Efficiency SCA produces tissue at 55 plants in a total of 23 countries. In the AFH segment. In terms of production. For purchasing. The factors pointing to continued strong growth for tissue are that it is driven by global population growth – due mainly to a lower infant mortality rate and increased longevity – greater market penetration. soap. the globally leading brand Tork is the business area’s single largest brand. restaurants and hotels.823 employees 34 SCA Annual Report 2012 Board of Directors’ Report . The cost-cutting and efficiency-enhancement program launched in 2012 and affecting both of SCA’s hygiene operations. SEK 42. kitchen rolls. The integration of previous acquisitions facilitated the rationalization of the European tissue operations and production was concentrated to efficient facilities in strategic locations. service and maintenance. encompassing hospitals.Business areas | Tissue Tissue SCA is a global leading consumer tissue and Away-From-Home (AFH) tissue company.466m 19. 56% 1 (30%) 1 (31%) – 3 ( 20%) 2 (10%) 1 (19%) Data is based on market data and SCA’s estimates. facial tissues. The measures will affect about 1. In the AFH product segment. Market The global market for tissue is valued at slightly more than SEK 410bn and is growing by 5% annually. handkerchiefs and napkins. Sales in the Tissue business area in 2012 totaled slightly more than SEK 42bn.500 employees. with sales exceeding SEK 10bn annually.375m SEK 4. more awareness of the importance of hygiene and innovation. The consumer tissue product portfolio comprises toilet paper. One example of the lower market penetration in emerging markets is that tissue consumption per capita per year in Eastern Europe is only about a quarter of that in Western Europe. The bulk of the savings relates to production and purchasing. 47 % No. 49 % Operating profit. the main focus is on achieving economies of scale by more efficiently centralizing purchasing and consolidating ­suppliers. investments in more efficient plants and the discontinuation of unprofitable capacity. tissue. The growth potential is greatest in emerging markets where market penetration is significantly lower than in mature markets.640m SEK 42. Share of Group SCA’s market positions Europe North America Global Consumer tissue AFH tissue Net sales. will generate annual ­ cost savings of EUR 300m with full effect from 2015. of employees at Dec.

13% Other .Tissue | Business areas SCA’s sales by product segment Consumer tissue. 5 % Asia. 38 % Use of tissue Kg/per capita/per year 25 20 15 10 5 0 North Western Eastern Latin America Europe Europe America Asia Tissue – global market Western Europe. 21 % North America. 33% Latin America. 7% Board of Directors’ Report SCA Annual Report 2012 35 . 62 % AFH tissue. 21 % Eastern Europe.

2-in-1 Tork. The dispenser also has a larger capacity than conventional models.000 1. It also enables enhanced promotional opportunities. The product is gentle on skin and better for the environment than many other antibacterial products.000 2.000 0 2008 2009 2010 2011 2012 Net sales Margin Operating profit ROCE 36 SCA Annual Report 2012 Board of Directors’ Report .000 20. it can be customized to match a restaurant logotype or a school’s colors. more stylish design and improved function. was launched globally in 2012.000 4.000 5. One towel at a time is dispensed and the user is not required to touch anything. SCA has developed a new packaging system.000 1. SCA launched its new Tork Xpressnap Signature Family.000 0 2008 2009 2010 2011 2012 % 15 12 9 6 3 0 Operating cash flow SEKm 7. higher capacity and the possibility of cus­ tomizing dispensers to customer preferences.000 6. saving money and reducing waste. and offers a more hygienic solution.000 10. featuring improved design. a patented soap that both cleans and sanitizes.000 4. SCA launched several different dispenser models of the Tork Xpressnap Signature.000 40.000 0 2008 2009 2010 2011 2012 % 12 10 8 6 4 2 0 Operating profit and ROCE SEKm 5. SCA launched the Tork Elevation H1 Sensor touch-free hand towel roll dispenser.000 3. For example. cutting down on work and maintenance.000 2. During the year. a wider range of colors.Business areas | Tissue FINANCIAL TARGETS: • 3–4% annual organic growth • 15% return on capital employed Tork Xpressnap in an eye-catching design SCA Tork Xpressnap is a napkin dispenser that dispenses one-at-a-time.000 30. In 2012. In response to demands for intelligent hygiene solutions. providing more style options. in the AFH segment aimed at simplifying the day-to-day jobs of cleaners.000 3. Tork Easy Handling. Its one-at-a-time napkin dispensing system reduces the amount used and waste. The idea behind the Tork Easy Hand­ ling systems of boxes and plastic packs is to prevent stress injuries. Innovations SCA’s Tork Xpressnap guarantees customers in the AFH segment a significant reduction in napkin usage compared with conventional dispen­ sers. which are driven by greater awareness of hygiene and pandemic threats. raise efficiency and Net sales and operating margin SEKm 60.000 50.

Growth in mature markets is in the low single-digit figures. handkerchiefs and napkins. PISA is the second largest tissue company in Chile. 14 % Sofidel. pean markets. SCA’s target for the business area is an annual rate of organic growth of 3–4%. Vinda is the third largest tissue company in China.6% following the purchase (after dilution effects). with a market share of approximately 30% in both consumer tissue and the AFH segment. which includes toilet paper. The sales increase in emerging markets. Growth In 2012. sales of the Tissue business area rose in both product categories. which was finalized in July. in the UK. SCA launched Plenty Super Strong. 23 % Handkerchiefs. In 2012. 53 % Product breakdown for consumer tissue. with full effect from 2016. facial tissues. 6 % Others. Consumer tissue SCA is the world’s second largest supplier of consumer tissue. 8% Others. The largest acquisition completed during the year was the purchase of Georgia-Pacific’s European tissue operations. thus increasing its holding to 100% of the company. excluding exchange rate effects. making the task more comfortable. During the year. consisting of the plastic Carry Pack and the cardboard Carry Box.1bn. Emerging markets are growing at a faster rate than mature markets due to increasing disposable incomes and greater use of tissue. In April. For consumer tissue. The packaging is also easier to open and to flatten as no special tools are required. 47 % Retailers’ brands. The annual cost synergies are estimated at SEK 1. Almond milk is being used increasingly for skincare purposes in hygiene products. but has not previously been used for toilet paper. as absorbent as other high-quality kitchen towels and 100% biodegradable. SCA launched Velvet Almond Milk. The towel is as strong as a dishcloth. which is the number two tissue market globally in terms of size. Tork Easy Handling. excluding exchange rate effects and divestments. introduces several functions that improve efficiency and ergonomics compared with traditional packaging. amounted to 19%. SCA’s holding totals 21. toilet paper with almond milk lotion. The company reported sales in 2011 of about SEK 12bn. Market The global market for consumer tissue is valued at approximately SEK 310bn and is growing about 5% annually. 55 % Kitchen roll.Tissue | Business areas simplify cleaning. The acquisition strengthens SCA’s product offering and geographic presence in strategic key Euro- Launch of toilet paper in Hong Kong With the Tempo brand. In 2012. 6 % Boxed facial tissues. while it is considerably higher in emerging markets. a kitchen towel that is three times stronger in wet condition than its conventional counterpart due to its patented surface. toilet paper in the premium segment was launched. 30% Kimberly-Clark. SCA acquired a further 5% of the shares in the leading Chinese tissue company Vinda International. the acquisition entails that an increased proportion of sales will be generated from SCA’s own product brands. To leverage the strength of the brand. and is growing faster than the market. Europe SCA. kitchen rolls. European market Toilet paper. 8 % Napkins. SCA strengthened its presence in South America by acquiring the outstanding 50% interest in the Chilean hygiene company PISA. which accounted for 17% of the business area’s sales. Brand categories for consumer tissue. Acquisitions increased sales by 13%. 36 % Data is based on market data and SCA’s estimates. New ­ handles allow cleaners to carry one cardboard box in each hand. European market Manufacturers’ brands. SCA grew both organically and through acquisitions. Growth in mature markets is instead driven by an increased proportion of products with higher intrinsic value. 12 % Metsä. 2 % Market shares for consumer tissue. The acquisition affords SCA a clear market-leading position for tissue in Europe. Global growth amounted to 17%. SCA is the clear market leader in handkerchiefs and facial tissues in Hong Kong. Board of Directors’ Report SCA Annual Report 2012 37 .

7 % Others. 21% Wausau-Bay West. where SCA is the market leader. service and maintenance. SCA is the clear market leader in Europe and has increased its market share to 31% as a result of the acquisition of Georgia-Pacific’s tissue operation. 38 SCA Annual Report 2012 Board of Directors’ Report . 31 % Kimberly-Clark. 30 % Kimberly-Clark. Tempo. where it holds the number two position. SCA is the clear market leader and the acquisition of Georgia-Pacific’s tissue operation has further strengthened its market share. while the remaining 50% is sold under retailers’ brands. Velvet and Edet are strong in the UK and the Nordic region. in Australia.Business areas | Tissue SCA’s business In the market for consumer tissue. such as Russia and Colombia. such as Russia and Colombia. healthcare institutions. soap. Market shares for AFH tissue. SCA’s business For AFH tissue. while Cushelle. large workplaces. for which SCA develops and sells complete hygiene solutions comprising dispensers. Tempo is the clear market leader in handkerchiefs with a market share of about 70%. Growth in mature markets is in the low single-digit figures. In Europe. restaurants and hotels. About 50% of products are marketed under SCA’s brands. including hospitals. the aim is to further strengthen brand positions while retaining the important retailers’ brands market. while it is consider­ ably higher in emerging markets. The global market share is 19%. marketing and logistics in collaboration with some of the leading European retail chains. AFH tissue With the global Tork brand. 7 % Others. which is now about 30%. SCA’s brand portfolio comprises several strong regional and local brands. Therefore. In 2012. In Hong Kong. The Group also commands strong positions in emerging markets. and holds strong positions in emerging markets including Colombia. Chile and Ecuador. toilet paper under the Tempo brand was launched in Hong Kong. where SCA is the market leader. SCA also commands strong positions in many emerging markets. In South America. SCA is the world’s largest supplier of AFH tissue. 14 % Metsä. Zewa. 20 % Georgia-Pacific. where nearly every second napkin is supplied by SCA. product range. SCA markets products under the Familia and Favorita brands. and in Mexico. 22 % Data is based on market data and SCA’s estimates. SCA is a world leader with the global Tork brand. SCA is the second largest supplier of tissue through its joint venture. which has annual sales in excess of SEK 10bn. for a number of years now. North America SCA. The AFH segment comprises institutions and companies. The global brand Tork provides significant synergies since the difference in consumer and customer requirements is minimal in regard to tissue and dispenser systems in the various parts of the world. design. 48 % Market shares for AFH tissue. SCA’s market position is particularly strong in the fast-food restaurant sector in North America. Europe SCA. In the Mexican market. SCA occupies a strong position with the Regio brand and. The products are distributed by wholesalers and service companies. In Europe. SCA holds the global number two position with a market share of approximately 10%. SCA has been working with a fullservice offering that includes production and delivery. as well as partnerships for product development. Plenty and Lotus are market leaders in large areas of Europe. tissue. Market The global market for AFH tissue is valued at about SEK 100bn and is growing by slightly more than 3% annually. SCA is the third largest player in North America with a market share of about 20%.

019 SCA’s sales by product segment Consumer tissue. • Launched cost-savings and efficiencyenhancement program. Operating profit. 4. % Strategic investments plant and equipment company acquisitions/divestments Average number of employees No.303). Board of Directors’ Report SCA Annual Report 2012 39 . lower raw material costs and cost savings contributed to the earnings improvements.Tissue | Business areas Operations in 2012 Net sales rose by 8% (17% excluding exchange rate effects and divestments) and amounted to SEK 42.118). Return on capital employed amounted to 13% (9). improved by 47% (50% excluding exchange rate effects and divestments) to SEK 4.432 –30 6.303 –447 –1. principally attributable to acquisition in Europe. • Acquired outstanding 50% of the Chilean hygiene company PISA. of employees at Dec. 17 % Latin America. Acquisitions increased sales by 13% while divestments decreased sales by 8%.150 8 33.746 17. Operating cash surplus increased to SEK 6. 10 % Asia.162 –99 3.154 4.328). 31 1) Excluding restructuring costs. excluding items affecting comparability. excluding exchange effects. excluding exchange rate effects and divestments.181 17. • New hygiene organization.640m (3.811 19.872 744 –1. Sales of AFH tissue increased by 14%.375m (39.872m (5.595 3. an improved product mix. 1% Operating profit Operating margin.154m (3. • Established joint venture in Australia and New Zealand. SEKm: Key figures1) SEKm 2012 2011 Net sales Operating cash surplus Change in working capital Current capital expenditures Other operating cash flow Operating cash flow 42.139 –9. Higher prices.466 13 –1. Operating cash flow rose to SEK 6.761 9 –1. Operating profit.1). excluding exchange rate effects and divestments.640 11 42. 62 % AFH tissue. 72 % North America. 38 % SCA’s sales by region Europe. Sales of consumer tissue increased by 21%. % Capital employed ROCE.150). Higher volumes and an improved product mix increased sales by 3% and 1% respectively. Operating margin was 10.595). The higher operating cash surplus and lower working capital contributed to the increase.823 39. increased volumes.640 % 11  Operating margin: KEY EVENTS • Acquired Georgia-Pacific’s European ­tissue operations.571m (2. mainly as a result of acquisitions in Europe and Latin America. Sales in emerging markets grew by 19%.118 5. acquisitions.166 –10 17. • Increased ownership in the Chinese tissue company Vinda. Capital expenditures amounted to SEK 2.9% (8.375 6.

with loading and unloading terminals in Sweden and on the continent and freight transportation on vessels. Productive.6 million hectares of forest land. SCA launched a program in 2012 to enhance the efficiency of the forest operation. cost-effective production plants – and not necessarily a high market share – are essential for favorable profitability. Innovations Innovation is an integral part of the business area’s strategy to move its operations toward increasingly advanced products in high-value segments and toward more attractive customer offerings. encompassing some 2. SCA thus applies what is referred to as the strong-mill concept. kraftliner (packaging papers). of employees at Dec. In light of the prevailing economic and currency situation. 31. The program also includes a structured plan to reduce fixed and variable costs.804 employees 40 SCA Annual Report 2012 Board of Directors’ Report . 13% 4. SCA has a well-integrated supply chain in Sweden between its forest holdings and production facilities.283m SEK 1. combined with other announced rationalization actions. pulp. solid-wood products and renewable energy. SCA offers publication papers. Integration of SCA’s own wood raw material is a key aspect of the company’s strategy that contributes to stable cash flow and reliable supplies. 21 % Operating profit. solid-wood products and renew­ able energy. kraftliner (packaging papers). SCA differentiates itself from the rest of the industry. SCA’s forest assets and industries are concentrated to northern Sweden.008m No.Business areas | Forest Products Forest Products SCA is Europe’s largest private forest owner. which focuses resources on a number of large. high innovative ability and a sustainability perspective at all levels. 15 % Capital employed. while also meeting requirements of business partners and customers. 41% SEK 18. where the Group has built up an efficient supply system for its own mills and sawmills. The focus is on profitable growth through further processing and customization in segments with favorable price trends. The company’s forest holdings are managed on a very long-term basis. Share of Group Net sales. Efficiency At the end of 2012. will affect about 200 positions. and one of the region’s most profitable producers of forest products with a strong environmental profile. Publication and packaging papers are continuously developed to satisfy the needs ­ and requirements of customers in relation to profile and message. pulp. Operations are based on in-depth customer insight. high-tech paper and pulp mills and sawmills located in Sweden. The program will yield an earnings improvement of approximately SEK 1. SCA conducted manufacturing activities at 20 sites. and facilitates improved quality and cost control. improve earnings by increasing production and efficiency. and change the product and market mix.3bn with full effect from 2015.363m SEK 37. In doing this. The Forest Products business area reported sales of just over SEK 18bn in 2012 and offers publication papers. Having its own logistics is part of the company’s integration strategy. SCA’s forest holdings are becoming increasingly important as competition for timber raw material in northern Europe intensifies and demand for biomass from the energy sector grows. Efforts in this respect permit Forest Products to move up the value chain and produce products and solutions with higher value and margins. Measures include the closure of two smaller sawmills which.

2% Kraftliner. 12% Solid-wood products. 15% Newsprint. 19% Board of Directors’ Report SCA Annual Report 2012 41 .Forest Products  |  Business areas SCA’s sales by product segment LWC paper. 17% SC paper. 12% Timber. 23% Pulp.

but also on the development of business models. Growth Continuing the work on enhancing efficiency and customer-driven innovation is essential for strengthening positions and creating growth. In 2012.Business areas | Forest Products In 2012. SCA develops and further processes purpose-designed products for interiors. Development programs are not solely focused on products.000 10.ON.000 500 0 2008 2009 2010 2011 2012 % 12 10 8 6 4 2 0 Operating cash flow SEKm 3. Activities continued in the SCA Energy business unit. The project is expected to be operational by 2016–2017 at the earliest.500 3. 42 SCA Annual Report 2012 Board of Directors’ Report .500 2. catalogs and magazines. The joint venture includes approximately 270 wind power stations and total energy production of more than 2 TWh. Efforts to develop and streamline the supply chain.000 2. products are customized for the next stage in the processing ­ chain and are supported by services and warehousing integrated into the customer’s distribution and sales network. for example.000 1. ROCE Reclassified 2010 and 2011 with kraftliner due to the sale of the European packaging operations.500 1.000 1. Future investment decisions can be expected in 2014–2015 at the earliest.000 0 % 20 15 10 5 0 Operating profit and ROCE SEKm 3.500 1. carpentry and the building trade. Net sales and operating margin SEKm 20. The primary focus is on increasing the share of customized high-value products. service and distribution solutions in close collaboration with SCA’s customers. The bedding product has also demonstrated highly positive results for horses previously suffering from pressure sores.Olsen Renewables aimed at establishing two wind farms with annual output corresponding to 2 TWh. Grapho­ Invent is ideal for advertising matter.000 500 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Net sales Reclassified 2010 and 2011 with kraftliner due to the sale of the European packaging operations. The pellets are manufactured from pure sawdust and form an effective bedding product that saves both time and space and improves the finances of horse owners.500 2.000 2. This translates into reduced costs for customers as well as a paper with a lower environmental footprint. SCA’s wind-power initiative has three components: • development of partnership projects • development of proprietary projects • leasing of land In 2012. To an ever-increasing degree. which is tasked with managing and developing SCA’s renewable energy business. In 2012. SCA launched Grapho­ Invent.000 5. SCA formed a jointly venture with Fred. In solid-wood products. a lower-weight publication paper that is perceived to be as thick. SCA has set itself a target to increase wind power generation on the Group’s forest land to 5 TWh by 2020. bright and bulky as more expensive alternatives. SCA signed a joint-venture agreement with E. Margin Operating profit Reclassified 2010 and 2011 with kraftliner due to the sale of the European packaging operations. make it more sustainable. SCA BioNorr complemented its production of fuel pellets with pellets for stall bedding and horsekeeping.000 15. and develop new product areas are also important in terms of strengthening competitiveness. Timber continues to strengthen its long-term position as a material and its favorable environmental and climate-neutral properties have resulted in incentives in several countries to encourage increased wood utilization. FINANCIAL TARGET: • Return on capital employed is to be in the top quartile of the sector. The kraftliner mill in Munksund increased its production capacity of white-top kraftliner for use in packaging with high-quality print requirements.

Future growth is expected to amount to 1–2%. 5 % Moelven. 2 % Stora Enso. the construction of 13 wind turbines had been completed. The pulp market is exposed to significant movements in volume and price due to intense international competition. This focus on quality segments is supported by the company’s in-depth expertise of paper production. Following these divestments. Europe SCA. 15 % Metsä Group. 5 % Others. After these divestments. since the value of solid-wood products is four to five times greater than the value of byproducts. solid-wood products. PPPC Market shares. The industry is dominated by many small and mid-sized producers. with the proportion of the sawlog becoming a solid-wood product increasing from 43% to nearly 50%. The European market for solid-wood products is valued at some SEK 130bn. These changes entail a reduction in the exposure to the publication paper market. Sharper approach In 2012. ­ SCA’s sales of publication papers mainly take place within the Western European market. 2 % Mayr Melnhof. The lime kiln is expected to be com­ missioned in autumn 2014. Combined. SCA is Europe’s third largest supplier of the packaging paper kraftliner and commands a market share of some 13%. Europe SCA. 28 % Source: Pöyry. The European market for Kraftliner. In 2012. 33% Source: Pöyry Board of Directors’ Report SCA Annual Report 2012 43 . The result was a higher yield. 2% Others. SCA and Statkraft formed a joint ­ enture. SCA divested its 50% holding in the UK-based facility Aylesford Newsprint. FAOSTAT Market shares.6 TWh and these are expected to be fully operational by 2015. the Group also signed an agreement covering the sale of the Austrian publication paper mill in Laakirchen. During the year. 9 % Holmen. catalogs and advanced printed advertising. During the year. 13 % Smurfit Kappa. Production is carried out at two mills in Sweden. This is of major significance. as well as its capacity for innovation and ability to select the right raw materials for specific pulp and paper grades. At the end of 2012. The new biomass-powered lime kiln will replace the current oil-fired system. 6 % Burgo. Market for forest products The European market for publication papers is valued at approximately SEK 100bn. is valued at approximately SEK 30bn and growth over an economic cycle is approximately 2%. Kraftliner. thus generating annual savings of approximately SEK 50m and reducing fossil carbon emissions by 75%. Germany and the UK. 29 % Stora Enso. 18 % Norske Skog. which are relatively cyclical. the purpose of which is to establish v seven wind farms with an annual output of about 3 TWh. 87% Source: UNECE/Timber Committee. 6% Europac. SCA is the ninth largest supplier of publication papers in Europe. Publication papers. producers in Europe (capacity) SCA. SCA’s business SCA is one of the world’s largest suppliers of FSC-certified forest products. SCA took a further step in a new sawing process at the Swedish Bollsta sawmill that uses thinner saw blades. 27 % Mondi. such as sawdust. 6% Others. with demand primarily deriving from the construction and house building industries. 5 % UPM. Future demand is expected to decline as a consequence of more intense competition for public and advertising expenditures from electronic media. The single largest markets are the Nordic Region. Ortviken produces highgrade publication papers from fresh wood fiber sourced from the Group’s own forests. An investment decision has been taken on a total of 186 turbines with a combined annual production output of 1. the decision was taken to invest approximately SEK 490m in a new lime kiln in Munksund. 2% Setra Group. paper for corrugated board packaging manufactured from fresh wood fiber. SCA mainly specializes in the prime-quality segments in publication papers that are used in such products as magazines. the five leading suppliers – located in Scandinavia and Central Europe – account for only 13% of the European market. all of SCA’s publication paper production will take place at Ortviken paper mill in Sweden.Forest Products  |  Business areas In 2007.

PLF. catalogs and magazines. In 2012. which includes pellets and briquettes. generate competitive advantages. Finished-wood components for window manufacturing. Service and advanced logistics solutions are of key significance for the building materials trade. of which 57% was sold externally. has more than doubled.6 million hectares of FSC and PEFC-certified forest land. the unique Nordic long-fiber forest raw material. such as tree branches. SCA works in close cooperation with its customers in its principal markets in Scandinavia. SCA is Europe’s largest private forest owner with a holding of 2. SCA is a specialized supplier within several niche markets. SCA launched GraphoInvent. sawdust. 44 SCA Annual Report 2012 Board of Directors’ Report . SCA’s own raw materials. doors and furniture.0 million is cultivated. floors. SCA acquired France’s largest independent supplier of woodbased construction products to the builders merchants sector. peat and processed products. the standing volume in SCA’s FSC-certified forests has increased by nearly 50%. France and the UK. The strategy for solid-wood products is to move toward more value-added and customized products in markets and with customers that offer long-term growth.Business areas | Forest Products SCA’s sawmill operation is the second ­ largest in Europe. bark. GraphoInvent – new lower-weight publication paper In 2012. In the pulp market. combined with close cooperation with cus­ tomers.000 tons. Over the past 50 years. Approximately 40% of this capa­ city is utilized within SCA for production of tissue and publication papers while the remainder is sold to external customers. represent another high-growth market. production and logistics expertise. of which 2. stumps. at the same time as growth. Asia. bright and bulky as more expensive alternatives. In 2012. crowns. production of biofuel amounted to 2. North Africa and the US. and expertise in. Forest ­ Products has an annual pulp capacity of 530. GraphoInvent is ideal for advertising matter. SCA is one of Europe’s largest suppliers of forest-based biofuels. In 2012. Products for the building materials trade are delivered planed and pre-packaged. windows. GraphoInvent reduces costs for customers and has a lower environmental footprint. With the acquisition. and thus the sustainable harvesting potential. a lower-weight publication paper that is perceived to be as thick. for example. SCA is a qualified supplier of purposedesigned wood products to industry for further processing into such items as panels. In Italy. SCA’s Bogrundet nursery in Sweden produced just over 100 million seedlings. SCA has positioned itself in the high-quality segment based on its excellent access to. SCA becomes one the largest suppliers to the builders merchants sector in France – a position it also holds in the UK and Scandinavia.9 TWh.

• Signed agreement to divest the Austrian publication paper mill Laakirchen.ON concerning wind power project. 1% Key figures1) SEKm 2012 2011 Net sales of which internal Operating cash surplus Change in working capital Current capital expenditures Other operating cash flow Operating cash flow Operating profit Operating margin.223 1. Operating profit.Forest Products  |  Business areas Operations in 2012 Net sales declined by 9% (8% excluding exchange rate effects and divestments) and amounted to SEK 18. 1. The operating margin was 7.223m (1. 12% Timber. of employees at Dec. % Capital employed ROCE. For kraftliner. Return on capital employed was 4% (7).398). sales declined as a result of lower prices (including exchange rate effects).003). declined by 44% to SEK 1.301 –388 1.565). Sales of publication papers fell on account of lower volumes and prices (including exchange rate effects).5 % Operating margin: Operating profit. ­ • Acquired French wood-based product company PLF.777m (1.398 145 –1.116 –59 1. 19% SCA’s sales by region Europe. solid-wood products and pulp. excluding items affecting comparability. Capital expenditures totaled SEK 1.363 7. 31 1) 18.283m (20.263 4.050 4. 2% Kraftliner.804 20.363m (2.854 2. SEKm: SCA’s sales by product segment LWC paper. 15% Newsprint.152 Excluding restructuring costs.854). 86 % Asia. The fall in profit was largely the result of lower prices and negative exchange rate effects across all product categories as a consequence of the stronger SEK. • Launched efficiency-enhancement ­program.008 4 –661 –286 5. 2 % North America.363 7 37.313 85 –1. • Joint venture agreement with E. 10 % Africa.228 3. 23% Pulp. Board of Directors’ Report SCA Annual Report 2012 45 . KEY EVENTS • Divested the 50% holding in Aylesford Newsprint.1). 12% Solid-wood products. which were not fully offset by higher volumes. 1% Latin America. % Strategic investments plant and equipment company acquisitions/divestments Average number of employees No. Acquisitions accounted for a 1% increase in sales.5% (12.423). Operating cash surplus amounted to SEK 2.272 2. while the operating cash flow was SEK 1. Lower prices (including exchange rate effects) accounted for a decrease in sales of 9%.567 7 –264 –284 4. 17% SC paper.003 2.283 1.423 12 35. Divestments represented a 1% decrease in sales.313m (3.

At the same time. since 2006 (composition. to have a matter considered and to vote for all shares held by the shareholder. suppliers. the Board shall include three members and three deputies appointed by the employees. pages 62–65 SCA’s sustainability work is an integral part of the company’s business operations and values. In addition. minutes. the Board of Directors shall comprise nine members elected by the AGM with no deputies. The new organization was put into effect in January 2012. in certain cases.   Board of Directors The Board of Directors has overall responsibility for the company’s organization and administration through regular monitoring of the business and by ensuring the appropriateness of the organization. Information regarding remuneration and remuneration issues in SCA and internal control in the Group are also included here. Chairman of the Board The Chairman of the Board leads the work of the Board and is responsible for ensuring that it is effectively organized and that work is efficiently conducted. internal audit and risk management. In accordance with the decision of the AGM. Corporate governance.Responsibility and governance | Corporate Governance Corporate ­governance The task of corporate governance is to ensure the Group’s commitments to all of its stakeholders: shareholders. proposing procedural motions for the next Nomination Committee. including remuneration. The Chairman leads the assessment of the Board’s and the President’s work. The Chairman also represents the company in ownership matters. market presence and growth.   Nomination Committee The Nomination Committee represents the com­ pany’s shareholders and is charged with the sole task of drafting proposals for adoption at the AGM with respect to election and remuneration matters and. proposals and work) • Information ahead of the 2013 Annual General Meeting (notice. including a description of the operational organization. To contribute to greater efficiency. guidelines and internal control. Risk management. among other matters. Board’s proposal for principles for remuneration of the President and other senior executives. customers. Audit Committee The tasks of the Audit Committee include monitoring financial reporting and the efficiency of the company’s internal control. Sustainability. acquisitions and divestments of operations. society and employees. It also details the Board of Directors’ responsibilities and its work during the year. management team. The committee keeps itself informed on the audit. etc. More detailed information at www. sustainability efforts also apply this approach. SCA applies the Swedish Code of Corporate Governance without any deviations. SCA initiated a reorganization of the global hygiene business in 2011. In the same way as governance and responsibility are based on targets and strate­ gies. strengthen competitiveness and attract talent and investors. and the policies and measures that the Group applies to manage these.com • Articles of association • Swedish Code of Corporate Governance • Information from Annual General Meetings of previous years since 2004 (notices. The AGM also appoints the company’s ­auditor. Governance at SCA   Annual General Meeting The Annual General Meeting (AGM) is SCA’s ­ highest decision-making body. since 2005 46 SCA Annual Report 2012 Board of Directors’ Report .) • Earlier Corporate Governance Reports. Corporate governance must be reliable. Nomination Committee proposals. and decides on major investments. pages 46–55 This section describes the rules and regulations and the Group’s corporate governance. Information regarding SCA’s ownership structure is presented on page 13. market presence and competitiveness. governance must be structured in a way that supports the company’s long-term strategy.sca. clear. simple and business-oriented. information routines for notifying attendance at the meeting. President’s speeches and press releases) • Information from the Nomination Committee. reviews and monitors the impartiality and independence of the auditors. and contributes proposals for the AGM’s election of auditors. which all shareholders are entitled to attend. creditors. The Board approves strategies and objectives. This includes continuously monitoring the company’s operations in close dialog with the President and CEO and ensuring that other Board members receive information and decision data that will enable high-quality discussion and decisions by the Board. The section dealing with risk management describes the most significant risks. This helps the company reduce risk and costs. pages 56–61 SCA’s processes to identify and manage risks are part of the Group’s strategy work and are pursued at a local and Group-wide level. The company’s Board of Directors is elected at the AGM.

Since 2006. as well as its risk management. it is the responsibility of all employees to ensure sound internal governance and control in the operation or process for which they are responsible. The function also offers internal consultancy services in connection with internal control matters. the application of the AGM’s resolution on guidelines for remuneration of senior executives and the applicable remuneration structure and remuneration levels in the Group.Corporate Governance  |  Responsibility and governance Remuneration Committee The Remuneration Committee drafts the Board’s motions in issues relating to remuneration principles. a process that is also centrally coordinated. The internal auditors are geographically located throughout the world where SCA conducts operations. Through formal work plans and terms of reference. the work of which is led by the President. which are divided into seven business units. etc. remuneration and other terms and conditions of employment for the President and CEO and is authorized to make decisions in these matters for the company’s other senior executives. HR issues and various types of projects. In consultation with the Chairman of the Board. communications. After having divested its packaging operations in 2012. HR) and instructions (payment authorization and payment) • Code of Conduct External rules and regulations. The formal work plan for the Board of Directors and terms of reference issued by the Board of Directors to the President detail. These meetings function as a complement to the daily monitoring of operations. Internal audit At SCA. The business units are responsible for their operating result. SCA’s business units adhere to the principle of distinct decentralization of responsibility and authority. and the Corporate Senior Management Team. Sustainability. and managers for the corporate staffs Finance. the CFO and others.  President SCA’s President and CEO is responsible for and manages the day-to-day administration of the Group and follows the Board’s guidelines and instructions. business review meetings are conducted where the management of each business unit personally meets the President. purchasing and financial reporting. one of whom is Nomination Committee Annual General Meeting External auditors Remuneration Committee Board of Directors Chairman of the Board Audit Committee President and CEO Executive Vice President Internal audit Corporate Staffs Global Business Services (GBS) SCA SCA Incontinence Care Consumer Goods Europe Europe Global Hygiene ­ Category (GHC) Global Hygiene Supply (GHS) SCA AFH Professional Hygiene Europe SCA MEIA SCA Americas SCA Asia Pacific SCA Forest Products Global Responsibility across geographics in the hygiene operations Global Responsibility across geographics in the hygiene operations Internal rules and regulations. Business Unit Presidents and the equivalent. The committee monitors and assesses programs for variable remuneration. capital and cash flow.g. IT systems. The Corporate Senior Management Team consists of the President. The Group also has three separate global units: one for category control in the hygiene area (brands and innovation) called Global Hygiene Category (GHC). invoicing. for example. The function has 14 employees and the manager reports to the Audit Committee and the Board regarding internal audit matters and to the CFO with respect to other matters. the President prepares documentation and decision data for the Board’s work. The audit is performed in accordance with the Swedish Companies Act. among other aspects. elected at the Annual General Meeting. In addition. pension. internal audit has been a separate function with the task of evaluating and improving efficiency of SCA’s internal governance and control. International Standards on Auditing (ISA) and generally accepted accounting principles in Sweden. financial. The business units are fully responsible for ­ developing their respective operations through established objectives and strategies. including its Code of Conduct. Tissue and Forest Products). Strategy and Business Development. etc. technology and investments in the hygiene business called Global Hygiene Supply (GHS). production planning. compliance with SCA’s policies. examines SCA’s annual report and consolidated financial statements. The function examines. Board of Directors’ Report SCA Annual Report 2012 47 . HR and Legal Affairs. see pages 54–55. and one called Global Business Services (GBS) that develops and is responsible for Group-wide support functions. The position of the business and results are followed up by the entire Corporate Senior Management Team on a monthly basis. • Articles of association • Formal work plan of the Board of Directors • Terms of reference issued by the Board to the President • Policy documents (e. the Executive Vice Presidents. SCA has since conducted business in three business areas (Personal Care. the division of work between the Board and President. and submits an audit report.   External auditors The company’s auditor. risk management. the Board’s and President’s administration and the annual accounts of subsidiaries. Each quarter. one that is responsible for purchasing. a number of issues of material significance are placed under the control of the CEO and the Parent Company’s Board of Directors. SCA’s internal processes for ordering. The President and CEO is supported by two Executive Vice Presidents. • The Swedish Companies Act • Swedish and international accounting ­legislation • NASDAQ OMX Stockholm’s rules and ­regulations • Swedish Code of Corporate Governance also the CFO. the hygiene business has a separate management body. Communications.

com Nomination Committee The 2012 AGM decided that the Nomination Committee should comprise representatives of not fewer than four and not more than the six of the largest shareholders in terms of voting rights. the Board of Directors. 2012 ­ (share of votes) % Board of Directors and committees Committee Board member Elected Dependent1) Audit Remuneration Board meetings Attendance Audit ­Committee Remuneration Committee AB Industrivärden Handelsbanken* Skandia Liv Alecta * Including funds and trusts.4 2. Chairman of the Nomination Committee • Håkan Sandberg. the Board was convened ten times. that the majority of the members elected by the AGM are to be independent of the company and company management. Resolutions by the meeting • dividend of SEK 4. the election of the company’s auditor and remuneration for services rendered. Board activities In 2012. Sverker Martin-Löf.7 Pär Boman Rolf Börjesson Jan Johansson Leif Johansson Louise Julian Sverker Martin-Löf. • re-election of Sverker Martin-Löf as Chairman of the Board. Composition of the Nomination Committee for the 2013 AGM The composition of the Nomination Committee for the 2013 AGM is as follows: • Carl-Olof By.3 14. The Chairman of the Board presented the Board evaluation. • adoption of guidelines for determining the salary and other remuneration of the President and other senior executives. Skandia Liv • Ramsay Brufer. The Nomination Committee shall submit proposals relating to the Chairman of the Meeting. Anders Nyrén and Barbara M. Attorney-at-Law Claes Beyer was elected Chairman of the Meeting. The employees have appointed the following three representatives to the Board for the period until the 2013 AGM: Lars Jonsson. 2012. the Nomination Committee is to consider the rules that apply to the independence of Board members and that the selection for those nominated shall be based on expertise and experience relevant to SCA.0 1. in Stockholm. The Nomination Committee’s proposals for the 2013 Annual General Meeting are presented in the notification of the AGM on SCA’s website www. including the President’s speech.7% of votes in the company. Bert-Ivar Pettersson and Harriet ­ Sjöberg. Handelsbanken Pension Foundation. see page 22 and Note 6 on pages 85–86. Board of Directors SCA’s Board of Directors comprises nine members elected by the AGM. The meeting was attended by 702 shareholders.com. and provided the Nomination Committee with information regarding Board and committee work during the year. Rolf Börjesson. The Nomination Committee was convened on two occasions. March 29. 29. AB Industrivärden.Responsibility and governance | Corporate Governance Activities during the year Annual General Meeting The AGM was held on Thursday. either personally or by proxy. SCA complies with the requirements of the Swedish Code of Corporate Governance that stipulate that not more than one member elected by the AGM is to be a member of company management. the market situation. see page 14. and their deputies. Thoralfsson and the election of ­ Louise Julian and Bert Nordberg as new Board members.sca. n = Dependent in relation to company management. The 2013 AGM will be held on April 10. investments and adoption of the financial statements. Örjan Svensson and Thomas Wiklund. Rolf Börjesson. Board members Pär Boman. The Board has a fixed formal work plan that describes in detail which ordinary agenda items are to be addressed at the various Board meetings of the year. Nomination Committee at August 31. All of the Board members have experience of the requirements incumbent upon a listed company. Thoralfsson were re-elected to the Board and Louise Julian and Bert Nordberg were elected as new Board members. 48 SCA Annual Report 2012 Board of Directors’ Report . Recurring agenda items are finances. Chairman of the Board of SCA All shareholders have had an opportunity to submit proposals to the Nomination Committee. n = Dependent in relation to the company’s major shareholder. Sweden. Leif Johansson. the Chairman of the Board. On a regular basis throughout the year. AB Industrivärden. Sverker Martin-Löf. Board fees and remuneration for committee work. n = President of SCA. Alecta • Sverker Martin-Löf. Jan Johansson (SCA’s President and CEO). and that not fewer than two of these are also to be independent of the company’s major shareholders. the Board also dealt with reports from the Audit and Remuneration Committees and reports on internal control Composition of the largest shareholders. dependent in relation to the company.20 (4.00) per share to be paid for the 2011 fiscal year. which is conducted annually. • re-election of Board members Pär Boman. Jan Johansson. Leif Johansson. can be accessed at www. among others • Caroline af Ugglas. The minutes of the meeting in full and information on the 2012 AGM. Sverker Martin-Löf was elected as Chairman of the Board. corresponding to 65. Mikael Svensson. who is also the convener. Anders Nyrén and Barbara M. as well as the Chairman of the Board. The independence of Board members is presented in the table below. Chairman Bert Nordberg Anders Nyrén Barbara Milian Thoralfsson 1) 2010 2003 2008 2006 2012 1986 2012 2001 2006 n x n x n n x Chairman x Chairman 9/10 10/10 10/10 10/10 7/7 10/10 6/7 10/10 8/10 4/5 3/4 5/5 4/4 4/4 4/4 As defined in the Swedish Code of Corporate Governance. In its work.sca.

The Nomination Committee was also informed of the results of the evaluation. Barbara Milian Thoralfsson and Sverker Martin-Löf. Anders Lundin is also auditor for AarhusKarlshamn AB. The Chairman of the Board is responsible for the evaluation. The accounting firm notified the company that Anders Lundin. Internal audit The basis of the work is a risk analysis conducted in cooperation with SCA’s management team. is evaluated annually using a systematic and structured process. In 2012. Authorized Public Accountant. Remuneration Committee The Remuneration Committee consists of Chairman Sverker Martin-Löf. Board members have had an opportunity to ask the auditors questions. In its work that includes monitoring financial reporting. During the year. The Board was provided with feedback after the results were compiled. The auditor holds no shares in SCA. The Remuneration Committee held four meetings during the year. auditing work and a review of various measurement issues. the evaluation took the form of a questionnaire and discussions between the Chairman of the Board and the members. expertise and the year’s work. and current remuneration structures and remuneration levels in the Group. In accordance with its formal work plan. which is presented to the Audit Committee. follow-up and reporting on the efficiency in internal governance and control. The formal work plan specifies a number of mandatory issues that must be covered. the auditors delivered an in-depth verbal report on the audit for the year. and separate assessments of the internal control in countries where SCA has major investments and in joint ventures. These include matters of importance that have been a cause for concern or discussion during the audit. a number of issues were addressed by circular letter. Work in 2012 also involved following up the units’ progress with process-based control. like that of the President. The auditors also attended each meeting of the Audit Committee. the Audit Committee comprised Chairman Anders Nyrén. Furthermore. the purpose of which is to obtain a sound basis for the Board’s own development work and to provide the Nomination Committee with decision data for its nomination work. Certain parts of the detailed discussion on the accounts take place without representatives of company management being present. At these meetings. the function reported its observations at each meeting with the Audit Committee and on one occasion to the Board of Directors of SCA. Board and Committee meetings jan Board of Directors Audit Committee Remuneration Committee feb mar apr may jun jul aug sep oct nov dec Board of Directors’ Report SCA Annual Report 2012 49 . The auditors also provide an account of consultancy work assigned to the audit firm by SCA and the audit firm’s independence in relation to the company and its management. the auditors presented and received opinions on the focus and scope of the planned audit and delivered verbal audit and review reports. the Board met with the auditors at two scheduled Board meetings in 2012. The Business Unit Presidents present reports on their respective operations and current issues affecting them to the Board. Leif Johansson and Rolf Börjesson. Melker Schörling AB and TeliaSonera AB. internal auditors’ reviews. The company’s auditors regularly present a report on their audit work and these issues are discussed by the Board. In 2012. On each occasion. External auditors The 2012 Annual General Meeting appointed the accounting firm of PricewaterhouseCoopers AB as the company’s auditor for a mandate period of one year. Husqvarna AB. the measurement of forest assets and the preconditions for the year’s pension liability calculations. Evaluation of the Board’s work The work of the Board. The evaluation covers such areas as the Board’s method of work.Corporate Governance  |  Responsibility and governance and financial operations. In addition. The Audit Committee held five meetings during the year. the committee dealt with relevant accounting issues. would be the senior auditor. just over 100 audit projects were performed. Audit Committee In 2012. The risk analysis concludes in an audit plan. AB Electrolux. such as testing of impairment requirements for goodwill. at the Board’s third scheduled autumn meeting. business routines and transactions where differences of opinion may exist regarding the choice of accounting procedures. Activities in 2012 mainly concerned remuneration and other employment terms and conditions for senior executives.

Corporate Senior Management and Board of Directors Guidelines The 2012 Annual General Meeting adopted guidelines for remuneration of senior executives that are based on a total remuneration package comprising a fixed salary. Variable remuneration for the CEO. see page 22 and Note 6 on pages 85–86. on pages 85–86 for further information. The short-term program is individually adapted and based mainly on cash flow. while the corresponding limit for other senior executives is 90%. the fees paid to the AGM-elected Board members totaled SEK 5. For one Business Unit President. See Note 6. These unchanged guidelines are also proposed for the 2013 AGM. and a pension. variable remuneration. operating profit and growth. stationed in the US. the maximum outcome is 130%. Potential maximum remuneration. Variable remuneration and strategic targets Programs for variable remuneration are formulated to support the Group’s strategic targets. 2008–2012 SEKm 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 % 100 80 60 40 20 0 Outcome.000. variable salary and other benefits. Remuneration of the Board According to the resolution by the AGM.975. breakdown Fixed salary Short-Term Incentive Long-Term Incentive Outcome. Executive Vice Presidents and Business Unit Presidents was maximized to a total of 100% of the fixed salary for 2012.Responsibility and governance | Corporate Governance Remuneration. SEKm Outcome as a percentage of fixed salary 50 SCA Annual Report 2012 Board of Directors’ Report . The long-term program is based on the SCA share’s long-term total shareholder return. Remuneration of the President and other senior executives Remuneration of the President and other senior executives is presented in Note 6 on pages 85–86.

The President ensures that the Board receives the reports required that enable the Board to continuously assess the company’s and Group’s financial position. Before reports are issued. This preparation work includes issues relating to internal control and regulation compliance.Corporate Governance  |  Responsibility and governance Internal control of the financial reporting The Board’s responsibility for internal governance and control is regulated in the Swedish Companies Act. A Group-wide system for reporting annual accounts has also been introduced. see Internal audit on page 49. Activities in 2012 For a number of years now. SCA has enlisted external help to validate these control measures. owners and financial institutions. each unit prepares a record of the actual controls to be carried out in the unit in question. The central controller organization is responsible for ensuring compliance with instructions and guidelines. is correct and of a high quality. presentation material for meetings with the media. Process managers at various levels within SCA are responsible for carrying out the necessary control measures with respect to financial reporting. A project was initiated in 2010 and continued in 2012 aimed at reducing the number of legal entities in SCA and thereby simplifying the reporting and system structures. In some cases. Control activities and follow up Significant instructions and guidelines related to financial reporting are prepared and updated regularly by the Group’s central controller organization and are easily accessible on the ­ Group’s intranet. see Risk and risk management on pages 56–61. To provide support for this assessment. In C addition to the year-end report. which also comprises the management of the Group’s ­ office premises. SCA’s Board of Directors and management assess the financial reporting from a risk perspective on an ongoing basis. This project has developed to encompass the coordination of SCA’s global processes in finance and HR. procedures for annual accounts and follow-up of reported annual accounts. For further information. such as press releases with financial content. To minimize this risk. complete and delivered in a timely manner. Detailed instructions specifically outline the types of reports that the Board is to receive at each meeting. Accordingly. The responsibilities of the company’s auditors include reviewing accounting issues that are critical for the financial reporting and reporting their observations to the Audit ­ ommittee and the Board of Directors. An important role is played by the business unit’s controller organizations. ­ Financial reporting to the Board The Board’s formal work plan stipulates which reports and information of a financial nature are to be submitted to the Board at each scheduled meeting. each year. Financial results are reported and examined regularly within the management teams of the operating units and communicated to SCA’s management at monthly and quarterly meetings. each business unit has a Finance Manager with responsibility for each business unit’s financial statements. Control of these processes is assessed through self-evaluation followed up by an internal audit. For additional information. In recent years. results are analyzed to identify and eliminate any mistakes in the process until the year-end closing. both general and detailed. Board of Directors’ Report SCA Annual Report 2012 51 . which are responsible for ensuring that financial reporting from each unit is correct. External financial reporting The quality of external financial reporting is guaranteed via a number of actions and procedures. budgets and other planned figures. existing units in these areas were merged into a joint organizational unit. the company’s income statement and balance sheet items are compared with earlier reports. describes its system for internal control and risk management with respect to financial reporting. the Annual Accounts Act and in the Swedish Code of Corporate Governance. the risk that material errors may be made when reporting the company’s financial position and results is considered the primary risk. The Annual Accounts Act requires that the company. the auditors ­ also review the six-month report. control documents have been established pertaining to accounting. This will gradually impact and enhance the efficiency of the processes during 2013 and in the future. Control activities that are significant to financial reporting are carried out using the company’s IT system. control of recognized values. assessments and other activities that may impact the quality of financial statements. The President is responsible for ensuring that all information issued. The Board bears the overall responsibility for financial reporting and its formal work plan regulates the internal division of work between the Board and its committees. The Audit Committee has an important task to prepare the Board’s work to assure the quality of financial reporting. In 2012. Another development is the co-location of accounting and reporting of several units in Shared Service Centers. Risk management With regard to financial reporting. The controls are adapted to the operational process and system structure of each unit. the entire SCA Group has used a shared reporting system for financial statements. Reporting is thus more efficient and uniform. An increasing number of units within SCA are also introducing the same accounting system based on a common IT platform. SCA has introduced a standardized system of control measures involving processes that are significant to the company’s financial reporting. The company’s control activities are supported by the budgets ­ prepared by each business unit and updated during the year through continuous forecasts. The Committee has charged the company’s auditors with the task of specifically examining the degree of compliance in the company with the rules for internal control. In addition. In 2012. estimations. Global Business Services. the introduction of the common accounting system was begun in the companies acquired from Georgia-Pacific and other companies acquired during the year.

Responsibility and governance  |  Board of Directors and Auditors Board of Directors and Auditors 1 2 3 4 5 6 7 8 9 10 11 12 52 SCA Annual Report 2012 Board of Directors’ Report .

200 Independent of the company and corporate management. Board of Directors’ Report SCA Annual Report 2012 53 .. formerly President and CEO of SCA. Member of the Swedish Trade Union Confederation (LO). Appointed: 2005 12  Thomas Wiklund (1955) Shift Production Manager and Chairman of Ledarna (Swedish Organisation for Managers) at Munksund paper mill. Hon PhD Econ. Chairman of the Royal Swedish Academy of Engineering Sciences (IVA). Member of the Swedish Trade Union Confederation (LO). corporate management and SCA’s major shareholders.815 Bert-Ivar Pettersson (1955) Works Manager at SCA Graphic Sundsvall AB. Member of the Board of Handelsbanken and Skanska. Lilla Edet.040 Independent of the company.. Appointed: 2009 Secretary to the Board Mikael Schmidt (1960) Master of Laws Senior Vice President. Member of the Board of Ericsson. Elected: 2008 B shares: 71. corporate management and SCA’s major shareholders.823 Independent of the company and corporate management. Ernströmgruppen.350 Independent of the company. Elected: 2010 A shares: 1. B shares: 2. General Counsel.500 Information regarding individuals’ own and related ­ parties’ shareholdings pertains to the situation on December 31. SSAB. Elected: 2001 B shares: 1. 7   Bert Nordberg (1956) Engineer Chairman of the Board of Vestas Wind Systems A/S. Elected: 2012 B shares: 5. Authorized Public Accountant. Falkenberg plant. 4  Jan Johansson (1954) Master of Laws President and CEO of SCA. Appointed by the employees 10   Örjan Svensson (1963) Senior Industrial Safety Representative at SCA Hygiene Products AB. 5  Leif Johansson (1951) MSc Eng. Chairman of the European Round Table of Industrialists (ERT). BA Member of the Board of Electrolux AB. Gothenburg. Östrand pulp mill. Member of the Council for Negotiation and Cooperation (PTK).000 Independent of the company. Member of the Council for Negotiation and ­ Cooperation (PTK). Deputies Harriet Sjöberg (1946) Chairman. Orkla ASA and Telenor ASA. Chairman of the Board of Industrivärden and SSAB. 2   Pär Boman (1961) Engineering and Business/Economics degree President. Unionen. Vice Chairman of Ericsson. CEO and member of the Board of Handelsbanken. Chairman of the Board of Biolight AB. SSAB and the Confederation of Swedish Enterprise. Chairman of the Board of Sandvik and Vice Chairman of Handelsbanken. SCA Hygiene Products AB. 8   Anders Nyrén (1954) MSc Econ. Timrå. corporate management and SCA’s major shareholders. Member of the Board of Avery Dennison and Huhtamäki Oyj. 167 at SCA Graphic Sundsvall AB. Corporate Legal Affairs. Elected: 1986 A shares: 3. Appointed: 2001 B shares: 1. Appointed: 2012 Honorary Chairman Bo Rydin MSc Econ. Elected: 2006 B shares: 6. Honorary PhD Chairman of the Board since 2002.000 Independent of the company. Sundsvall. Member of the Council for Negotiation and Cooperation (PTK). Industrivärden. Hon PhD Engineering Auditor PricewaterhouseCoopers AB Senior Auditor: Anders Lundin. Elected: 2003 B shares: 25. Fleming Invest AS.000 Independent of the company and SCA’s major share­ holders. Member of the Swedish Trade Union Confederation (LO).200 Independent of corporate management and SCA’s major shareholders. Elected: 2006 Independent of the company. Ortviken paper mill.000  B shares: 77. 3   Rolf Börjesson (1942) MSc Eng. corporate management and SCA’s major shareholders. corporate management and SCA’s major shareholders. Member of the Board of Handelsbanken. MBA President of AB Industrivärden and CEO. Appointed: 2005 B shares: 75 11  Lars Jonsson (1956) Chairman Swedish Paper Workers’ Union dept. ­ Appointed: 2005 Mikael Svensson (1966) Quality control engineer and treasurer of IF Metall’s club 56 at SCA Hygiene Products AB. Volvo.Board of Directors and Auditors  |  Responsibility and governance Elected by the Annual General Meeting 1   Sverker Martin-Löf (1943) Tech Lic. 2012. Chairman of the Board of Ericsson and Astra Zeneca. Edet Bruk.. 9   Barbara Milian Thoralfsson (1959) MBA. 6  Louise Julian (1958) MSc Econ Elected: 2012 B shares: 15. Stockholm School of Economics and the Stockholm School of Economics ­ Association.

SCA Consumer Goods Europe MBA and MSc ME Employed since: 2011 B shares: 1.600 4  Joséphine Edwall-Björklund (1964) Senior Vice President.200 2  Lennart Persson (1947) CFO and Executive Vice President Head of Finance BSc BA Employed since: 1987 B shares: 46. Corporate ­Communications. Corporate Human Resources BSc Employed since: 2008 B shares: 660 7  Ulf Larsson (1962) President. SCA Forest Products BSc Forestry Employed since: 1992 B shares: 4.400 8   William Ledger (1967) President. BSc in Communications Employed since: 2012 B shares: 750 5   Magnus Groth (1963) President.550 54 SCA Annual Report 2012 Board of Directors’ Report .Responsibility and governance  |  Corporate Senior Management Team Corporate Senior ­Management Team 1 2 3 4 6 5 7 8 1  Jan Johansson (1954) President and CEO Master of Laws Employed since: 2007 B shares: 71. Industrial Chemical Engineer Employed since: 2002 B shares: 1. Global Hygiene Supply BSc.665 3   Mats Berencreutz (1954) Executive Vice President MSc ME Employed since: 1981 B shares: 7.500 6   Gordana Landén (1964) Senior Vice President.

400 Board of Directors’ Report SCA Annual Report 2012 55 .500 12   Christoph Michalski (1966) President. SCA Incontinence Care Europe BSc BA Employed since: 1983 B shares: 1. Global Business ­ Services and IT MSc Econ. SCA MEIA BSc BA Employed since: 2000 B shares: 8. 9 10 12 13 11 14 15 16 17 9   Margareta Lehmann (1958) President. Strategy and Business Development. Corporate ­Sustainability MSc Chem. Employed since: 1997 B shares: 3. MBA Employed since: 2009 B shares: 8.545 11   Sune Lundin (1951) President. 2012.000 17  Thomas Wulkan (1961) President. Employed since: 2008 B shares: 12.828 10   Don Lewis (1961) President.Corporate Senior Management Team  |  Responsibility and governance Information regarding individuals’ own and related ­ parties’ shareholdings pertains to the situation on December 31.797 16  Ulf Söderström (1964) President.400 15   Kersti Strandqvist (1963) Senior Vice President. Tech Lic. Corporate Legal Affairs. Global Hygiene Category MSc Econ. Master of Laws Employed since: 1992 B shares: 2. SCA Americas BSc BA Employed since: 2002 SCA ADR: 4. Employed since: 2007 B shares: 13. SCA AFH Professional Hygiene Europe MSc Eng..500 14   Robert Sjöström (1964) Senior Vice President.550 13   Mikael Schmidt (1960) Senior Vice President. General Counsel. SCA Asia Pacific Studies in economics. MBA Employed since: 2009 B shares: 7.

on pages 8–9. kraftliner and publication papers. and for the manufacture of tissue. SCA’s financial risk management is centralized. Forest waste from SCA’s activities is used in biofuel operations. SCA has established a corporate internal audit unit. The segment in the hygiene business that is most sensitive to economic movements is AFH tissue. In 2012. The energy generated in the production process is used internally or sold. This applies to both financial targets and targets in other areas. risk could also entail opportunities for SCA. The wood fiber is used for SCA’s production of pulp. as well as in the hotel and restaurant industry. in countries representing SCA’s main markets. Sales to the retail market. Germany. The tools for this work primarily comprise continuous reporting by the business units and the annual strategy process. together with SCA’s energy risk policy. SCA has also centralized the management of other risks. In 2012. which includes risk and risk management as part of the process. although it can be impacted by the public budget situation in certain countries. which is affected by the consumption of tissue outside the home. Forest Products are vulnerable to economic movements. and from the President to the Business Unit Presidents. The institutional care and homecare facilities segment for incontinence products is also relatively unaffected by the business cycle. The risks are grouped and followed up on a regular basis to ensure compliance with these guidelines. primarily in the Forest Products business area. comprises a framework for management activities. Processes for risk management SCA’s Board determines the Group’s strategic direction based on recommendations from Corporate Senior Management. representing 9% of SCA’s sales. SCA’s structure and value chain SCA’s structure and geographically dispersed business entails in itself a certain degree of risk reduction. Movements in the GDP trend influence demand for some of SCA’s products. customer and consumer patterns. For all businesses. The responsibility for long-term and overall management of strategic risks follows the company’s delegation scheme. Risks that impact SCA’s ability to achieve established targets Risk Policy/Action GDP trend and economic conditions SCA’s volume trend is linked to the development of GDP and related factors. Personal Care and Tissue accounted for around 80% of SCA’s sales. The financial risks are managed in accordance with the Group’s finance policy. This implies that if risk develops in a favorable manner or if risk management is successful in counteracting the risk. SCA’s targets are outlined in the section Strategy. Trend within SCA’s key customer segments (Europa. different customer segments and endusers. The relatively cyclical construction and private house industries impact SCA’s solid-wood product business. 50% of SCA’s wood raw material requirements were sourced from the Group’s own forests. it is important that SCA manages the effects of the economic movements that occur by taking actions to reduce costs and by reviewing the capacity and production structure. SCA has reduced the impact of the general economic trend by focusing on its hygiene business. The operations are influenced to varying degrees by the business cycle and general economic prosperity and their competitive situations also differ. integrated from forest land to the finished consumer products. The pulp is subsequently used in the production of mainly tissue. From this perspective. SCA’s structure also ensures that the raw material flows are. which ensures that the organization complies with the Group’s policies. France and the UK) 56 SCA Annual Report 2012 Board of Directors’ Report .Responsibility and governance  |  Risk and risk management Risk and risk management SCA is exposed to a number of risks that could exert a greater or lesser material impact on the Group. Sales of publication papers. meaning that it excludes the divested Packaging business area (excluding the two kraftliner mills in Sweden). are affected by fluctuations in business activity in the advertising sector. the cost of input goods. Sales are conducted in about 100 countries worldwide and manufacturing is pursued at about 100 production units in some 30 countries. Sales are often based on local manufacturing. These risks are generally defined as factors that impact SCA’s ability to achieve established targets for the Group. within industry and offices. which is set by SCA’s Board and. including industrial output. and movements in market prices. as is the case for the corporate internal bank for financial transactions of Group com­ panies and management of the Group’s energy risks. SCA conducts operations in three business areas that deliver to entirely. to a certain degree. which accounts for 5% of sales. This implies that most operational risks are managed by SCA’s business units at a local level. for example. Examples include the GDP trend and the economic situation. target fulfillment could exceed expectations. in sawmill operations. or par tially. which accounts for the bulk of sales of hygiene products. The description in this section pertains to the structure that the SCA Group had at year-end 2012. SCA’s products are sold through many different channels and distribution paths. Many of the risks described could have a positive or negative impact on the Group. The operation has a large geographical spread. Index in 2000 = 100) Index 120 100 80 60 40 00 01 02 03 04 05 06 07 08 09 10 11 12 Retail trade Manufacturing industry Construction industry Advertising market (newspapers and magazines. but are coordinated when deemed necessary. from the Board to the President. are more dependent on established consumption patterns and distribution than the economic climate. some 37% of the pulp requirement was satisfied by the Group’s own pulp production.

There are still a considerable number of retail companies. Most of these customers were retail companies. or completely different solutions to the needs of customers and consumers.Risk and risk management  |  Responsibility and governance Risk Policy/Action Environmental impact and climate change SCA’s operations have an impact on air. This could also present opportunities through closer cooperation. The Group’s large forest holding has an extremely positive environmental effect through the absorption of carbon dioxide. which has mainly resulted in fewer retail companies at a national and regional level. under both SCA’s brands and retailers’ brands. For example. A major driver for innovation comprises demands and requests from customers and consumers. financial and social factors. detailing guidelines for the Group’s actions in the areas of environmental and social responsibility. compared with more developed countries. Accordingly. which comprise the primary bodies for participation in current public debates. SCA is focusing its activities on the various EU institutions. Dependence on major customers and distributors The retail trade is SCA’s single largest customer group and thus exercises considerable influence. transport activities and raw materials. such as EU trade in emission rights. such as taxation and financial reporting. SCA is also impacted by more specific regulations. SCA monitors how the company utilizes energy. An increasingly important factor is greater focus on sustainability with respect to environmental. especially with regard to the development of systems for healthcare with greater patient benefit and greater cost efficiency. In many countries. environmental risk inspections in conjunction with acquisitions. These relate to general regulations. SCA can also work directly in cooperation with regulatory bodies and the public. A comprehensive description of SCA’s work and governance in this area is provided in the Group’s Sustainability Report. Risks are minimized through preventive work in the form of certified environmental management systems. SCA takes proactive steps to adapt to the existence of substitutes and take advantage of the possibilities to expand the Group’s business by viewing the substitutes as a potential market opportunity. SCA established a sustainability policy. SCA monitors developments in policy areas of major importance to the company. the forest guarantees access to renewable forest raw materials. land and biological processes. SCA focuses on matters influencing attitudes and on breaking taboos. Credit risk in accounts receivable is dealt with in the section Credit risk. and remediation projects in connection with plant closures. In the retail trade. both for customers and SCA (read more about innovation on page 10). Other demands imposed on SCA’s innovation include the desire to create profitable differentiation for SCA’s product range and create value and growth. A very large number of distributors are active in this segment and the international concentration is relatively low. which reduces the risk for SCA. including in-house research and development. air and waste. By offering competitive products. such as wind power. This increase in dependence could result in negative consequences if SCA does not fulfill the demands imposed. The single largest customer accounted for 3% of sales. Another way of being proactive is through innovation. In 2012. thus increasing dependence on individual customers. such as electric hand dryers and the spread of news by electronic media instead of on paper. the health debate is important to the company. Examples include the project to construct wind turbines on SCA’s land in Sweden. the EU Waste Directive and the issue of the use of sulfurous fuels in shipping. such as cloth diapers. SCA is also a member of national and international trade associations. The matter of the economic impact of climate change is also growing in significance. the prevailing trend is towards increased concentration. Approximately half of SCA’s sales are made to the retail trade. The ten largest customers also include some large distributors of AFH tissue. This may involve different products with a similar function. SCA works proactively to decrease its climate footprint by reducing its energy consumption and emissions of greenhouse gases. Continuous work is conducted to reduce the already low levels of oil and coal used in the Group. For issues of importance to the company. Through its extensive Resource Management System (RMS). meaning only a small proportion of the population uses SCA’s products. Impact of substitutes Other product solutions (substitutes) can replace products that are included in SCA’s offering and thereby reduce sales. and to increase the proportion of renewable energy. including amended legislation. SCA can also take market shares from the ­ substitute. mainly for AFH tissue. This also applies to Europe and North America with regard to such items as incontinence care products. SCA’s ten largest customers accounted for 22% of the Group’s sales. Impact of political decisions SCA is affected by political decisions and administrative regulations in the about 100 countries in which the Group conducts operations. Since the public sector is both a significant customer and stakeholder group for SCA. Because SCA has major operations in Europe and the EU plays a leading role in developing environmental legislation. the degree of penetration is low. SCA also uses other distributors or retailers that could impact the Group. These effects could lead to costs for restoring the environment or other kinds of negative effects. A general consolidation process is taking place in several of SCA’s sales channels. The data is used for internal control and follow-up of established targets. The issue of substitutes is also linked to changes in the patterns and attitudes of customers and consumers that affect demand for certain products and thus profitability. water. ­ Substitutes exist for virtually all SCA products. with customers in many different areas of business. A key area for SCA is global energy and environmental legislation. cloth rags for household or industrial cleaning. and identify actions that lead to improvements for all relevant stakeholder groups. SCA also works actively to disseminate knowledge regarding various national systems to decision-makers in countries where new structures are being built up. development work is often conducted in direct cooperation with customers. on page 61. A number of years ago. To increase acceptance of products. Through SCA’s Public Affairs function. Examples include the development of systems for cost-free prescription of incontinence aids in countries where such benefits were not offered in the past. the company works to monitor and evaluate changes in its surroundings. SCA also uses distributors. SCA’s customer structure is relatively dispersed. such as the granting of permits in accordance with the Environmental Code and reimbursement of expenses in the healthcare system. such as resource consumption in general and issues of water. Furthermore. water. Board of Directors’ Report SCA Annual Report 2012 57 .

Highest/lowest market prices (annual average) 2002–2012 per product Index 130 120 110 100 90 80 Solid-wood products (Pine) Publication papers (LWC) Kraftliner Tissue Average price for the period Risks at plants SCA has a large number of production facilities in some 30 countries and many of these conduct continuous production. and documentation. If the conditions differ from those in already established markets. this expansion could involve new risks for SCA. Movements in the market price for SCA’s products Movements in the market price of SCA’s products could create large fluctuations in the profitability of the product in question when these movements are not linked to changes in costs for SCA. SCA’s activities in this area are governed by its Risk Management Policy. with external reinsurance for major damages. staff training. Outside the EU. including its Code of Conduct and Sustainability Policy. new facilities are fitted with sprinkler systems as standard. All wholly owned plants are insured to replacement cost and for the loss of contribution margin. the product’s content can be adapted to the new market price level. For example. this may be carried out through a joint venture in cooperation with other owners or by SCA acquiring or forming a wholly owned company. The recruitment of personnel with the appropriate values is crucial. SCA cooperates with market-leading insurance companies. The sale of SCA’s products in new markets can be managed by agents or by the Group’s own sales company. The diagram specifies the average price per year (Index 100) and movements around this value over the past ten years. the aim of risk management is to effectively and cost efficiently protect employees. 58 SCA Annual Report 2012 Board of Directors’ Report . Fires. Latin America. insurance is carried out by one of the Group’s own companies. SCA conducts a feasibility study. including environmental legislation. as is maintaining contact with the market in question through communication. the environment. within and outside SCA. From this perspective. Several methods can be applied to address this risk. When it has been decided to conduct manufacturing in the local market. A joint venture. for example. the company assets and the business. SCA has often improved its knowledge of the market and can thus adapt the organization. and assessments of the business climate and common business practices in the market in question. machinery breakdowns and other types of harmful incidents could damage the plant in question and also cause delivery ­problems. In other cases. Asia (excluding Japan) and Africa. varying methods are used in the feasibility study. reduces the risk for SCA. When the business is operational. SCA invests in loss-prevention measures and production plants continuously work to reduce their risks. by renegotiating purchasing agreements. which controls how SCA shall manage insurable risks. Prior to initiating operations. SCA can expand its business in various ways. due diligence of existing companies. Depending on how the business will be operated. Long-term contracts at fixed prices and price hedging only occur in exceptional cases. The loss-prevention work is conducted in accordance with established guidelines that include inspections by risk engineers and benchmarking with other plants. including market studies. through collaboration with a partner with solid local knowledge.Responsibility and governance  |  Risk and risk management Risk Policy/Action Expansion into new markets In recent years. Sales in emerging markets 8% 23 % 2002 2012 Emerging markets Mature markets Emerging markets include the countries in Eastern Europe. To reduce the impact of price movements on SCA. A risk analysis of issues related to the environment and business ethics is also performed. and to minimize SCA’s risk management costs. Every year. SCA has expanded the operation into emerging markets outside Western Europe and North America. This can be achieved by creating and retaining a balance between loss prevention and insurance coverage. good orderliness. Other important elements of loss-prevention activities include maintenance of plants. apply to all markets in which SCA conducts operations. SCA’s Group policies. implementing personnel and capacity reductions. and reviewing the business structure. actions are taken to adapt the cost scenario to lower market prices. and a review of the legal requirements. Within the EU. Movements in the market price in a number of SCA’s product segments are detailed in the figure to the right.

including the issue of the origin of the input goods • Use of chemicals • Compliance with SCA’s Code of Conduct Cost of input goods The market price of many of the input goods used in the manufacture of SCA’s products fluctuates over time and this could influence SCA’s earnings. SCA monitors the development of legislation through its internal corporate legal staff and external advisors. The majority of SCA’s system landscape is based on wellproven products. such as transportation. Under normal circumstances. In the approximately 100 countries in which SCA conducts operations. SCA has established a management system for information security. The Group also has more intensive cooperation with selected suppliers that covers the development of materials and processes. SCA has also begun building up its own energy operations based on the utilization of the Group’s own holdings of forest land. SCA continuously assesses all key suppliers to ensure that they fully comply with the Group requirements in all respects. and internal recruitment and job rotation are facilitated by a “Job portal”. price movements have a smaller impact on earnings. these and other costs are managed principally through compensation in the form of raised prices for SCA’s products. SCA strives to maintain good relationships with union organizations. More detailed information on the energy price risk and management activities related to this is presented on page 60. that govern IT operations. The loss of key suppliers could result in costs for SCA and problems in manufacturing. SCA’s relative costs for various key input goods are described on page 114. Disruptions or faults in critical systems have a direct impact on production. SCA is an energy-intensive company and hedges the energy price risk for electricity and natural gas. Legal risks New legislation in various countries could negatively impact SCA. Errors in the handling of financial systems can affect the company’s reporting of results.). an on-site visit or the use of independent auditors. SCA has supply contracts with several suppliers and continuously enters into agreements with various durations. More information on these operations is provided in the Group’s Sustainability Report. Salaries and other conditions are to be adapted to the market and linked to SCA’s business priorities. etc. 50% of SCA’s wood raw material requirements were sourced from its own forests and 37% of its pulp requirements were satisfied by the Group’s own pulp production. USD) Recovered paper (ONP/OMG) Electricity (Nordpool) Average price for the period Employee-related risks SCA must have access to skilled and motivated employees and safeguard the availability of competent managers to achieve established strategic and operational objectives. SCA’s structure means that a significant share of raw materials is produced within the Group and. The impact of price movements on input goods can be delayed through purchasing agreements. changes to existing systems and daily operations. local legal issues and disputes are handled through an extensive network of local legal advisors. SCA assesses the following factors at current and potential suppliers: • Quality • Product safety • Impact on the environment. These contracts ensure deliveries of a significant proportion of input goods at the same time as the effects of sudden cost increases are limited. A significant cost item comprises oil-based materials and other oil-related costs. For essentially all important input goods. Another method used to manage the price risk is by availing of financial hedges and long-term contracts. To reduce this risk. Another important issue is the management of SCA’s intellectual property rights (patents. Board of Directors’ Report SCA Annual Report 2012 59 . IT risks SCA relies on IT systems in its day-to-day operations. Standardized processes are in place for the implementation of new systems. trademarks. Highest/lowest market prices (annual average) 2002–2012 per product Index 175 150 125 100 75 50 25 0 Pulp (NBSK. such as SAP. Legal processes can be protracted and costly. The oil-based materials are principally used in Personal Care and generally as packaging material. The price trend for a number of the input goods is presented by the diagram to the left. SCA’s strategic manpower planning secures access to people with the right expertise at the right time. The risk of price movements related to input goods and the impact of these on earnings can be managed in several ways. Information security is monitored through continuous reviews. which is largely centralized. An established succession planning program protects operations. Recruitment can take place both externally and internally. including quality assurance procedures. In 2012. by adjusting product specifications or through streamlining of the Group’s own operation.Risk and risk management  |  Responsibility and governance Risk Policy/Action Suppliers SCA is dependent on a large number of suppliers. consequently. where available positions are advertised both internally and externally. Suppliers could also cause problems for SCA through non-compliance with applicable legislation and regulations or by other­wise acting in an unethical manner. The assessment may take the form of a questionnaire. The Group has a number of suppliers for essentially all important input goods. although this could be carried out in exceptional cases. no other price risks related to input goods are hedged. When possible.

351 5. The optimal degree of matching in connection with hedging depends on the current consolidated debt/ equity ratio. GBP and USD. The graph includes financial hedges and hedging effected via supply agreements. Some of the Swedish electricity exposure is hedged for a longer period through supply agreements maturing in 2019.339 –1. ­ Transaction exposure Transaction exposure. In 2012.565 1.801 88 573 496 1. The forecast and hedges of the 2013 flows are shown in the table to the right.7014 6. 33). The portfolio of supply agreements shall be effectively diversified to minimize SCA’s counterparty risk. Hedging takes place by financing a certain portion of capital employed in foreign currencies with loans and derivatives in corresponding currencies.550 5. Contracted future payments for non-current assets in foreign currencies can be hedged up to the full cost.623 93.4761 0.275 Currency EUR USD GBP SEK MXN RUB COP NOK Other Total 1) Operating 45 13 10 6 4 4 2 2 14 100 41 17 6 19 4 3 2 0 8 100 7. Energy price hedges in relation to forecast consumption.024m (10.447 1.085 718 668 505 484 2.1640 profit.5149 0.572.005 1. 9) of natural gas.4 months of the forecast flow for 2013 was hedged.646 8.6084 6.1673 8.5015 0. these price risks can be hedged for a period of up to 36 months. but the price of other energy commodities also directly and indirectly impacts SCA’s operating profit. Translation exposure Translation exposure is the risk to which SCA is exposed when translating foreign subsidiaries’ balance sheets and income statements to SEK. 2012.378 1. Energy price hedging is effected through financial instruments and fixed pricing in existing supply ­agreements.468 38. Forecast and hedges relating to flows in 2013 Net Currency flows inflows SEKm SEKm Currency outflows SEKm Hedged Hedged inflows outflows % % Currency GBP EUR RUB NOK CHF DKK JPY HUF Other USD SEK 3. EUR.Responsibility and governance  |  Risk and risk management Risk Policy/Action Energy price risk Energy price risk is the risk that increased energy prices could adversely impact SCA’s operating profit. The forecast net flow of currency against SEK amounts to SEK 9.0037 1.7686 10. see Note 18 Derivatives on page 96.293.769 –12. Financing of capital employed Capital employed SEKm Matching financing Net debt SEKm 2012 % 2011 % Currency EUR USD GBP MXN RUB COP PLN Other Total currency SEK Total 27.430) on an annual basis. which provides an overview of the Group’s long-term currency sensitivity. Distribution by currency is shown in the table to the right.275 –3. which is equivalent to a total matching ratio ­ of 30% (38.372 8. see Note 18 Derivatives on page 96.319 1. see Note 18 Derivatives on page 96.2144 0. 7) of electricity and about 8 TWh (9. The majority of hedges mature during the first and second quarters of 2013.004 6. Translation exposure in the income statements of foreign subsidiaries is not currency-hedged. At year-end.339 1. Sales % Expenses % Operating Closing rate profit1) December SEKm 31. capital employed was financed in the amount of SEK 16.129 –8.326 –531 –60 –131 –1 –68 –1 –19 –4. SCA safeguards the supply of electricity and natural gas through centrally negotiated supply agreements with well-established suppliers. Translation exposure The policy relating to translation exposure for foreign net assets is to hedge a sufficient proportion in relation to SEK so that the Group’s debt/equity ratio is unaffected by exchange rate movements.404 5.442 2. The forecast flows are expected to occur evenly over time.544.7255 0.024 3.259 1.343 –9. capital employed in foreign currency amounted to SEK 54. 22. 67. For further information relating to hedging of transaction exposure. At December 31.933 –8. a net flow against SEK corresponding to 3. SCA is exposed to price movements of electricity and natural gas.852 1.086). At year-end.927 33 28 26 41 47 26 44 3 30 35 29 59 47 56 30 60 28 38 60 SCA Annual Report 2012 Board of Directors’ Report .125 381 464 166 16. For further information relating to hedging of translation exposure. 2012 % 50 40 30 20 10 0 2013 2014 2015 Electricity Natural gas Currency risk Transaction exposure Transaction exposure is the risk that exchange rate movements in export revenues and import expenses could negatively impact the Group’s operating profit and the cost of non-current assets.091 9.430 Long-term currency sensitivity The table below presents a breakdown of the Group net sales and operating expenses by currency. The imbalance between sales and expenses in SEK is because the Swedish operations have a high proportion of exports that are invoiced in foreign currencies.486 16.251 –16.034 2. The largest exposures are denominated in SEK. For further information concerning financial price hedges.586 54.441 32.141) in foreign currency.486m (23.960 2. SCA purchased about 7 TWh (7. 10.051 1. excluding items affecting comparability.054 5. resulting from exports and imports.0038 1. The graph to the right displays SCA’s price hedges in relation to forecast consumption of electricity and natural gas for the next three years.489 4.2181 0. According to SCA’s policy.216 719 736 506 503 6. SCA centrally manages the energy price risk related to electricity and natural gas.5077 10. December 31.705 3. 2012 Average rate 2012 7. can be hedged for a period of up to 18 months.468m (62.669 14 5 3 14 12 42 24 0 3 0 0 0 2 0 0 0 0 0 9 0 4 10 14.

5) at year-end. SCA’s net financial items decreased as a result of lower interest rates and a lower net debt.10% (4. 2012. Credit risk in accounts receivable Credit risk in accounts receivable is managed through credit checks of customers using credit rating companies.from at least two of the rating institutes Moody’s. At year-end. In addition.548 21.5 months (6. As of 2011.531m at year-end. To achieve the desired fixed interest period and currency balance. The interest rate risk and interest period are measured by currency and the average interest term is to be within the interval 3–15 months. cash and cash equivalents totaled SEK 2.866 30. credit exposure in derivative instruments is determined as the fair value of the instrument. 8.128). 3.5 years. SCA is to maintain financial flexibility in the form of a liquidity reserve consisting of cash and cash equivalents and unutilized credit facilities totaling at least 10% of the Group’s forecasted annual sales. SCA’s policy is to raise loans with floating rates.016 2. Gross debt distributed by currency SEKm 20. Accounts receivable are recognized at the amount that is expected to be paid based on an individual assessment of each customer. SCA seeks to achieve a good spread of its interest due dates to avoid large volumes of renewals occurring at the same time. The credit limit is set and regularly monitored. 13. 4.9). The gross debt must have an average maturity in excess of three years. and Note 25 Financial liabilities. SCA’s financing is mainly secured by bank loans. the total credit exposure was SEK 9. In 2010. SCA’s net debt was reduced by SEK 3. including derivatives.Risk and risk management  |  Responsibility and governance Risk Policy/Action Credit risk Credit risk refers to the risk of losses due to failure to meet payment obligations by SCA’s counterparties in financial agreements or by customers. 6.000 0 SEK EUR GBP MXN USD RUB PLN COP CLP Other Gross debt Board of Directors’ Report SCA Annual Report 2012 61 . the average maturity of gross debt was 2.739. If short-term loans were replaced with drawings under long-term unutilized credit facilities.017 19.3 years (2. In 2012.36) at year-end. SCA strives to enter into agreements that allow net calculation of receivables and liabilities.296) of which SEK 6. SCA’s policy is to not agree to terms that entitle the lender to withdraw loans or adjust interest rates as a direct consequence of movements in SCA’s financial key figures or credit rating. Credit exposure in derivative instruments amounted to SEK 945m (820.000 5.376m (7.393 1. SCA obtained a new syndicated credit facility of EUR 1. Unutilized credit facilities amounted to SEK 17. 2. At year-end.354m (6. the maturity would amount to 3.259 Interest rate risk Interest rate risk relates to the risk that movements in the interest rates could have a negative impact on SCA. Surplus liquidity should primarily be used to amortize external liabilities. For further information.167.531 2. cash and cash equivalents. In December 2012. since it is SCA’s understanding that this leads to lower interest expense over time. considering unutilized credit facilities that are not liquidity reserves. refer to the graph. SCA limits its refinancing risk by having a good distribution for the maturity profile of its gross debt. Liquidity reserve SEKm 2012 2011 2010 Unutilized credit facilities Cash and cash equivalents Total 17.487. SCA uses financial derivatives.321m (9.752 23. The refinancing risk in short-term borrowing is limited through medium-term credit facilities from bank syndicates and individual banks with favorable credit-worthiness. see Note 22 Current financial assets. Financial credit risk The objective is that counterparties must have a minimum credit rating of A.431) was attribut­ able to leasing transactions (see Note 32 Contingent liabilities). SCA is affected by interest rate movements through its net financial income and expense. The average interest rate for the total outstanding net debt.832) at December 31. bond issues and through issuance of commercial papers. there was an additional risk amount and the year has not been restated.768 28. Fitch and Standard & Poor’s.000 10.608m) with final maturity in 2018.2. was 5.017m.9.14.000m (SEK 8. The credit facility became effective in January 2013 when the previous credit facility in the same amount with final maturity in 2014 was annulled.721m in 2012. SCA’s largest funding currencies are denominated in SEK and EUR. This exposure also includes credit risk for financial investments in the amount of SEK 8. The average interest period for the gross debt. Ten largest customers’ share of outstanding accounts receivable by business area % 25 20 15 10 5 0 Personal Care and Tissue Forest Products Liquidity and refinancing risk Liquidity and refinancing risk is the risk that SCA is unable to meet its payment obligations as a result of insufficient liquidity or difficulty in raising new loans. 6. amounted to 3. including derivatives.000 15.

delivering sustainable growth and value for our stakeholders. a document required of all Global Compact ­signatories.sca. innovative capacity and the efficient use of resources. efficiency gains and wise and longterm management.com.” SCA’s people and nature ambitions People ambitions • We build our position as one of the most trusted companies in the world. SCA’s Sustainability Report is available in English and Swedish in a printed version and at www. meet stakeholder expectations and to drive the sustainability program forward. drive innovation and further integrate sustainability into business operations.Responsibility and governance | Sustainability Sustainability as part of the business model SCA’s business is based on economic. educationally and professionally – across the world by giving them access to and education about hygiene solutions. • We combat climate change and minimize our impact on the environment through a combination of new innovations and technologies. Global macro trends – from an aging population and growing middle class to scarcity of resources and climate change – impact SCA’s business operations. We aim to maximize the benefits our forest have on our ecosystem. Measurability is prioritized at SCA to promote transparency. The Sustainability Report was reviewed in its entirety by PwC. • We improve hygiene standards worldwide with our hygiene solutions. and for the billions of people in emerging markets. Read more at www. where appropriate. we develop innovative solutions that make it easier to live healthy. climate. through a combination of innovation. ­ ­excellence and ­responsibility. efficiency gains. • We support women’s empowerment and their freedom to participate fully in society – socially. production. resource-efficient and environmentally sound sourcing. level A+. sustainable lives. About the Sustainability Report SCA publishes a separate Sustainability Report each year. Managing the opportunities and challenges brought about by a changing world and understanding the link to financial return is vital for ensuring the future relevance of the company and creating the conditions for growth.com or in SCA’s 2012 ­ Sustainability Report. 62 SCA Annual Report 2012 Board of Directors’ Report . the targets are specific and measurable and represent the milestones. This approach will create value. And we have found that it is amazing what you can achieve when living our values of respect. testing a new innovation or designing a new diaper. SCA launched a number of new ambitions and targets in the sustainability sphere. customers and society. making SCA an attractive investment and employer and strengthening the brand. consumer initiatives and carbon sequestering in our ­forests. The Global Reporting Initiative (GRI) guidelines. While the ambitions describe the longterm vision. in both. In 2012. The SCA Sustainability Effect “Care and respect for people and nature are absolutely central to SCA’s way of working. The Sustainability Report is also SCA’s Communication on Progress. For the millions of existing users of our products and services. while other targets that have already been achieved will be finalized. A business model based on sustainability enhances competitiveness and reduces costs and risks. • We care for the forests with all of their bio diversity and we are committed to managing and utilizing them responsibly. and research and development.com.sca.sca. environmental and social value creation. The sustainability strategy is continuously developed – new targets and KPIs will be added. “It means we constantly challenge ourselves to deliver solutions that make a difference to everyday life. Understanding the link between financial return and value creation for people and nature is decisive for the company’s future success. Nature ambitions • We deliver sustainable solutions with added value for our customers based on safe. The Sustainability Report and the Annual Report should be viewed as a single unit in which information may be provided in either report or. are applied in the report and a detailed GRI index table can be viewed at www. “This is the lens we use to look at the world – from the big picture right down to the finer points of harvesting a forest.

with 2005 as reference year. at 39 facilities. CO2 emission had been reduced by 10. Outcome: 87% of employees received training in the Code of Conduct. Outcome: Of the Group’s 40 pulp and paper mills. Code of Conduct Our SCA supplier standard will be used to drive shared values and priorities through our supply chain. All SCA pulp and paper mills will employ mechanical and biological wastewater treatment plants by 2015. Outcome: 0. 12% of forest area planned for harvesting was set aside for preservation. sustainable hygiene solutions to help them lead a healthy and dignified life. with 2010 as reference year. with 2010 as reference year. Outcome: At year-end 2012. • We launched several sustainable innovations. Outcome: All deliveries of pulp to SCA’s facilities meet the requirements of the Group target. The first turbines in the partnership with Statkraft were installed. and we will decrease our accident frequency rate by 25% between 2011–2016. Our 14 TENA online stores were examples of how we work to make our ­ products more accessible. from controversial sources*.4% in relation to output. safe and environmentally sound solutions to our customers. Outcome: SCA’s production of biofuel from its own forests amounted to 890 GWh. All major facilities will have introduced OHSAS 18001 by 2016. such as TENA Solutions. All of SCA’s wood-consuming units were reviewed by independent auditors and meet the requirements of the Group target. All our employees will receive regular training in the Code. (870 in the reference year 2010). A minimum of 5% of our productive land will be set aside from forestry in our ecological landscape plans and a further 5% will be set aside as part of our consideration for nature in our managed forests.4 TWh of wind energy was delivered to the grid. We will use it in all our supply chain contracts by 2015. Outcome: At year-end 2012. Water We aim to achieve water sustainability and we will reduce our water consumption in waterstressed regions by 10% by 2015. In addition. Board of Directors’ Report SCA Annual Report 2012 63 . Outcome: Nearly 7% of SCA’s productive forested area was excluded from harvesting. Outcome: By the end of 2012. Fiber sourcing & biodiversity We will achieve and maintain our target of zero fresh fiber-based material. We strive to continuously improve resource efficiency and environmental performance considering the whole lifecycle for new innovations.4%.5% (7. – Timber from forests with a high conservation value. 28% of SCA’s main sites were certified according to OHSAS 18001. We will preserve the biodiversity of our forests.1). Employee Health & Safety Our aim is zero work place accidents. Outcome: • SCA held the number one or two position in at least one hygiene product category in nearly 80 countries.Sustainability | Responsibility and governance People targets Hygiene solutions We will make our knowledge about hygiene available to customers and consumers and ensure access to affordable. programs in • We conducted hygiene training ­ continents. *  Controversial sources are defined as: – Illegally logged timber. Outcome: 73% of the hygiene operations and 65% of forest industry operations have committed to comply with the SCA supplier standard. We will triple our production of biofuels from the forests by 2020. Nature targets Climate & energy We will reduce CO2 emissions from fossil fuels and from purchased electricity and heating by 20% by 2020. The production of wind power on SCA forest land will increase to 5 TWh by 2020. all product categories on all ­ • SCA offered a broad portfolio of products ranging from the premium segment to the ­ economy segment. including pulp and containerboard. –T  imber from areas where human rights or traditional rights of indigenous people are being violated. • A number of innovations were evaluated in accordance with these criteria. • Our products were distributed to both major corporate customers and to small local stores. We will maintain compliance with our SCA Code of Conduct. Outcome: The accident frequency rate was 8. ­ Sustainable innovation We will deliver better. or is in the process of being installed. mechanical and biological wastewater treatment is installed. Tork Easy Handling and GraphoInvent. water consumption in water-stressed regions had fallen by 3. Outcome: • We defined criteria for sustainable product and service innovations.

reduce energy use and cut CO2 emissions compared with other technologies.000 tons. E. SCA is involved in wind power projects with the companies Statkraft. In Kostheim. The emphasis of environmental work is on climate and energy. Growing proportion of investors with sustainability requirements An increasing number of investors judge SCA on its sustainability performance. The SCA share is a part of the investment portfolios of 96 European sustainability funds. the world’s first wood-pellet-fuelled lime kiln was inaugurated at Östrand pulp mill. ESAVE is the Group’s energy-efficiency ­ rogram.7% in energy use per ton produced. 64 SCA Annual Report 2012 Board of Directors’ Report . The Carbon Disclosure Leadership Index. but also to corporate social and financial responsibility.ON and Fred. SCA helps to generate economic development in society and economic development among its stakeholders – both directly and indirectly. 225 projects were executed leading to a reduction of 1. about 1. From a shareholder perspective. SCA’s operations in emerging markets help these regions to develop economically through the business relationships SCA has with local stakeholders. projects that will have a combined annual output of about 7 TWh when fully built. Since its launch in 2003. which will generate annual cost savings of about SEK 50m and a reduction in fossil CO2 emissions of 25. Global Challenges Index. replacing two oil-fired kilns that consumed 17. ­ The machine will be installed in the first quarter of 2013 and will increase production capacity. SCA is investing SEK 1.000 m3 of fuel oil. ­ sustainability initiatives help to maximize the value of the company. SCA has been listed on FTSE4Good. which corresponds to a decrease in fossil CO2 emissions of about 47. In 2012. In 2012. one of the world’s most prestigious sustainability indexes. Another way of reducing carbon dioxide emissions is to seek alternative energy sources. interest from SRI (Socially Responsible Investment) players remained considerable. The crucial importance of sustainability for business was confirmed in a survey carried out on 400 SCA employees who deal with customers. Since 2001. who in turn contribute to society through taxes and purchasing power. Germany. SCA provides its customers with products and it purchases materials and services from suppliers. yielding approximately SEK 700m in annual savings. customer and consumer interest in sustainability has grown strongly. employees and investors. Environmental responsibility SCA endeavors to minimize its environmental footprint to the greatest possible extent. biodiversity and water management. an index measuring earnings and performance among companies that meet globally recognized norms for corporate responsibility. SCA is also carrying out project planning work for its own wind power projects and leases land for the establishment of wind turbines. SCA’s community involvement contributes positively to local communities. SCA decided to invest SEK 490m in another lime kiln for the kraftliner mill in Munksund. it is increasingly common for customers to both ask questions and set requirements. In contract negotiations.Olsen Renewables. SCA works systematically to replace oil and coal with natural gas and biofuel. At the end of 2011. Vigeo and OMX GES Nordic Sustainability Index are examples of other indexes and funds in which SCA is included. or 75%. Wages are paid to employees. SCA participated in two SRI ­ ­conferences. The investment reduces fossil CO2 emissions by 50. A full 41% stated that sustainability activities had played a decisive role in the outcome of contract negotiations. In 2012.1bn in a paper machine that uses new drying methods for premium-quality tissue. fiber sourcing.Responsibility and governance | Sustainability Economic responsibility Sustainability programs are of key importance to SCA’s ability to attract customers.000 tons. Sustainable business important to long-term competitiveness In recent years. SCA frequently featured in sustainability indexes SCA is listed on the Dow Jones Sustainability index.700 p projects have been carried out. ­ Creating value for stakeholders Through its business operations. Economic value is also generated by SCA helping its customers to fulfill their own sustainability objectives. which means that SCA is among the companies most frequently included in these funds. Climate and energy SCA is an energy-intensive company and improved energy efficiency and investments are required to achieve the Group’s carbon dioxide target. such as employees and local suppliers. Shareholders receive dividends and society receives income in the form of taxes. mainly relating to the area of the environment.000 tons or 80% and cuts energy costs by SEK 50m on an annual basis.

which means that they absorb a net amount of 2. Health and safety The provision of a safe working environment is paramount at SCA. Systematic work to enhance water usage SCA uses large volumes of water in the production of pulp. Supplier reviews In 2012. Mexico and the US. SCA is the largest private forest owner in Europe. Poland.3 1. Australia. Forests as a carbon sink SCA’s forests have a net growth of 1%.3 1 564 15.Sustainability | Responsibility and governance Social responsibility SCA activities in the field of corporate social responsibility are based on the Code of Conduct. With its holding of 2. In order to ensure that no fresh fiber-based material originating from controversial sources is used in the Group’s production. SCA evaluates its existing and potential suppliers. The number of suppliers registered in the Sedex database rose to 238 (125). Business Practice Reviews are carried out at regular intervals by the SCA internal audit unit and. Former Georgia-Pacific facilities will be evaluated in 2013.7 1. Regrettably. Safety statistics 2012 2011 2010 2009 2008 Lost Time Accidents Days Lost due to Accidents Accident Severity Rate Incident Rate (incidents/100 employees) Accident Frequency Rate Fatalities 477 8.6 million hectares of forest. Among the hygiene operation’s global suppliers.5%. In 2012.539 17. SCA reported one fatality at SCA Transforest’s facility in Rotterdam. Regular reviews are performed to monitor deviations from the Code.5 8. publication papers and tissue.6 8.5 8. Board of Directors’ Report SCA Annual Report 2012 65 . Hungary and ­ Malaysia.5 0 Responsible use of wood raw material SCA makes extensive efforts to verify its own forest management and that conducted by external suppliers. All of the timber supplied to SCA’s pulp and paper mills and sawmills is FSC certified or meets the FSC criteria for controlled wood. Spain. SCA has been conducting these reviews using the SA 8000 standard as a basis. which is particularly reflected in the health and safety sustainability targets.1 1 569 13. since 2005. In 2012.6 million tons of carbon dioxide on an annual basis. reviews were carried out in Russia. the US. a total of 14 cases of non-compliance with the Code of Conduct were reported.9 1.181 23. SCA’s Code of Conduct SCA is committed to ensuring compliance with the Code of Conduct and policies by all employees throughout the world. This exceeds the total amount of carbon emissions generated by the Group’s production activities. During the year. The Group has chosen to concentrate its water management efforts on areas experiencing water shortages. 73% had committed to complying with the standard while the corresponding figure in forest industry operations was 65%. employee relations. the accident frequency rate was 8. SCA’s own forest holding is certified in accordance with the requirements of the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC). such as pulp. implementation of SCA’s global supplier standard from 2010 continued among suppliers.5 1.3 7. respect for human rights.947 28. Colombia. business ethics and community involvement. The increase compared with the preceding year is the result of acquired units and adaptations in production. SCA purchases large quantities of raw materials in the form of wood or raw materials that originate from wood.810 24. which provides the basis for the company’s approach to such issues as health and safety. SCA’s manufacturing sites were also recorded in Sedex (a leading ethical database) to evaluate the operations’ ­ compliance with the Code of Conduct.3 1.070 22.4 7. The company has identified nine facilities located in water-stressed regions in Italy.5 1 492 11. SCA is one of the world’s largest suppliers of FSC-certified products. In 2012. Sweden.3 2 685 16.

.............................................................................................................. 108 Note 44 Other current receivables ........................................................................................................ ............................... ..................... 110 Audit report .............................................................. 92 Note 15 Joint ventures ....................................... 108 Note 46 Provisions for pensions ................................................. 78 Acquisitions and divestments ............................................................................................................................................. 105 Note 33 Pledged assets ............................... 109 Note 48 Other current liabilities .... 68 Consolidated cash flow statement ..................................... ...................................................... 70 Consolidated balance sheet .... Parent Company .......................... 103 Note 31 Financial instruments by category ...... ...................................................... ............................... 106 Note 37 Financial items ................. .......................................................................................... 109 Note 49 Contingent liabilities ....... 106 Note 36  Depreciation/amortization of property............... ................................ ................. 92 Note 14 Shares and participations ............................................... 67 Consolidated statement of comprehensive income ....................................... 97 Note 23  Non-current assets held for sale ................. ....................................... 87 Note 8 Note 9 Financial income and expenses ............. 104 Note 32 Contingent liabilities .......... 103 Note 30 Liquidity risk ............. 90 Note 12 Biological assets ..................... 94 Note 17 Non-current financial assets .................................................... plant and equipment....................................... 91 Note 13 Holdings in associates .............................................................................. ................. .......... ....................................................................... 106 Note 35 Personnel and Board costs ........................... 107 Note 39 Income taxes ......................................................................................... ........ 109 Note 50 Pledged assets ........................................................ 69 Correlation between consolidated cash flow statement and operating cash flow statement.............................................. 87 Income taxes ....................... .............. 96 Note 19 Inventories ................................Financial statements Contents Consolidated income statement .... ............... ......................................................................................................................................... 82 Personnel and Board costs .......... 100 Note 26 Provisions for pensions ...... ................................ ................ 109 Note 47 Non-current interest-bearing liabilities ............................................. 111 Note 7  Depreciation/amortization and impairment of property.... ............ 108 Note 45 Equity ........ ........................................................................................... plant and equipment and intangible assets ....................... 67 Consolidated statement of changes in equity . 72 Notes Note 1 Group Note 2 Note 3 Note 4 Note 5 Note 6 Key assessments and assumptions ......................................... 108 Note 43 Receivables from and liabilities to subsidiaries ... 97 Note 21 Other current receivables ....... ................................................................................ .............................................. ........... and intangible assets ........................................................................ 109 Note 51 Financial instruments by category ................. 105 .............................................. .................. 98 Note 25 Financial liabilities ................................ .................. plant and equipment ..... 109 Proposed disposition of earnings ... supplementary disclosure ......................................................................................... 89 Note 11 Property....................................................................................... 95 Note 18 Derivatives .... 79 Operating expenses by type of costs ........................................................ 71 Financial statements........ cash and cash equivalents ........................................... 107 Note 38 Appropriations and untaxed reserves ...................................................................................... .................. 97 Note 20 Trade receivables ............................ 68 Consolidated operating cash flow statement................................................... 109 Note 52 Adoption of the annual accounts . 103 Note 29 Other current liabilities ...... ............................... joint ventures and associates .................................................................. .... ............................................................................................. 101 Note 27 Other provisions ... 107 Note 40 Intangible fixed assets ............. 74 Parent Company Note 34 Operating loss ................................... 103 Note 28 Other non-current liabilities ................................................................................................................... .......................................................... 97 Note 24 Equity .................................................................. .... 88 Note 10 Intangible assets ........... supplementary disclosure ............................................................. ..................................................... 81 Segment reporting .......... ......... .................. 107 Note 41 Tangible fixed assets ..... ............................................................................................................... 86 Accounting principles ..................... ............................ 107 Note 42 Participations .................. .................................................................................... 97 Note 22 Current financial assets.... ........... 93 Note 16  List of major subsidiaries..............................................................

299 129 –1.640 1.440 81.337 25.011 286 – –33 –2 13 –2.908 –25 607 –3.494 2. proposal.355 4.636 –11.512 –352 – –172 –308 19 –684 –252 1.883 1.613 –292 –2.922 3.185 –1.961 2.815 –7.906 20.013 –6.375 18.294 42.027 39.471 –4. SEK – owners of the Parent excluding divested operations before dilution effects after dilution effects Dividend per share.775 39.117 1.812 85.000 4.981 –5.406 2.423 –480 – 7.426 –702 96 7.180 4.3 702.150 2.118 20.915 –383 – 8.748 –251 4.646 2.041 2.868 724 5.328 –603 10 255 14 –161 108 –140 –32 100 68 61 7 82.467 82.408 24.000 –2.634 159 6.268 –2.472 –2.870 19.837 2.3 702.699 –68 By business area SEKm 2012 Net sales 3) 2011 2010 Operating profit/loss3).631 –3.337 –61.793 57 –1.495 Average exchange rate of 8.956 44 7:06 7:06 0:78 0:78 7:90 7:90 6:34 6:34 4:502) 4.3 61 6:87 6:87 4:00 5.3 702.023 –4.02.409 –1. net after tax Total comprehensive income for the year Total comprehensive income attributable to: Owners of the Parent Non-controlling interests 5. million Average number of shares after dilution. 4) Excluding items affecting comparability.552 702.408 –64.631 2.701 19.283 1. million 5 4 4 4 85.53) was applied in translation to EUR.592 523 328 8 711 –234 15 –8.439 83 2.433 –303 18 691 10 –155 546 –29 517 58 575 570 5 81.984 1.003 1.176 –1.012 9.731 3.956 702.3 570 –0:50 –0:50 4:20 548 702.830 2.552 40 8.238 –3.454 974 –1.690 59 5.267 –293 900 607 548 59 9.70 (9. SEK Earnings attributable to owners of the Parent Average number of shares before dilution.134 480 –3. 9. SEK – owners of the Parent before dilution effects after dilution effects Earnings per share.645 3.679 –6.825 –12.755 4.592 5.623 –1.959 –12.Group | Financial statements Consolidated income statement 2012 Group Note SEKm EURm1) SEKm 2011 EURm1) SEKm 2010 EURm1) Net sales Cost of goods sold Gross profit Sales and administration expenses Items affecting comparability Share of profits of associates Operating profit Financial income Financial expenses Profit before tax Tax Net profit for the year from continuing operations Profit from disposal group held for sale* Net profit for the year Earnings attributable to: Owners of the Parent Non-controlling interests Earnings per share Earnings per share.227 6.633 4. adjustment for Forest Products due to the inclusion of two kraftliner mills after the divestment of the packaging operations.363 –537 – 8.731 –61. 3) Retroactive Board of Directors’ Report SCA Annual Report 2012 67 .738 2.881 –4. Consolidated statement of comprehensive income SEKm 2012 2011 2010 Profit for the year Other comprehensive income for the year Actuarial gains/losses on defined-benefit pension plans Available-for-sale financial assets: Gains/losses from fair-value measurement recognized in equity Transferred to profit or loss upon sale Cash flow hedges: Gains/losses from remeasurement of derivatives recognized in equity Transferred to profit or loss for the period Transferred to cost of hedged investments Exchange differences on translating foreign operations Gains/losses from hedges of net investments in foreign operations Income tax relating to components of other comprehensive income Other comprehensive income for the year.449 20. 4) 2012 2011 2010 Personal Care Tissue Forest Products Other Intra-Group deliveries Total 1) 2) Board 26.304 –73 10 818 6 –129 695 –184 511 76 587 583 4 8 8 9 3 91 –1.497 503 5.3 583 * Packaging operations divested in June 2012 are recognized net on the line Profit from disposal group held for sale.

supplementary disclosure 2012 Group SEKm EURm1) SEKm 2011 EURm1) SEKm 2010 EURm1) Net sales Operating expenses Operating surplus Adjustment for significant non-cash items Operating cash surplus Change in Inventories Operating receivables Operating liabilities Change in working capital Current capital expenditures. Operating cash flow Financial items Income taxes paid Other Cash flow from current operations Strategic capital expenditures and divestments Acquisitions Strategic capital expenditures.325 –850 63 5.273 13.542 –91 1. 9.648 –3.451 64 162 –93 133 –363 –113 1.218 –2.923 2.413 –789 12.328 –55 –63 44 –74 –360 –72 822 –147 –94 7 588 82.620 –15 –2.635 2.393 726 3.620 1.109 884 –109 –181 –290 –2 –292 296 –321 –25 123 98 –484 –2.825 98 –388 15 –4100 –40.306 9.273 1.896 2.815 –8. see Note 24 Equity.418 –1.671 –2.821 60.393 –65 1.706 67.049 –2.637 –2.735 17.689 –1. January 1 Total comprehensive income for the year Remeasurement effect upon acquisition of non-controlling interest Dividend Closing balance Non-controlling interests Opening balance.02.032 109 944 –344 600 54 654 –983 –1.752 1.505 379 –36. 68 SCA Annual Report 2012 Board of Directors’ Report .108 –145 –137 9 835 81.689 –1.430 3.406 –3.599 67.406 884 –3.156 2.825 –34.896 –225 1.264 –1. December 31 1) –36.679 –7.017 –273 8.731 –69.725 –1.847 –121 –32. Consolidated operating cash flow statement.411 –813 1.458 –700 12.221 468 5.255 –3.863 –16.338 –152 –199 273 –78 –316 –29 915 –120 –125 11 681 –14.997 5.297 –1.752 67.Financial statements | Group Consolidated statement of changes in equity SEKm 2012 2011 2010 Attributable to owners of the Parent Opening balance. January 1 Total comprehensive income for the year Dividend Change in Group composition Closing balance Total equity.908 –4 –2.441 5.644 –1.254 –2.412 –74 1.013 –7.770 12.119 695 2.995 13.709 –214 –1.271 9.738 1. January 1 Net cash flow Remeasurements to equity Exchange rate effects Net debt.250 –649 7.758 –1.53) was applied in translation to EUR.699 –1 –2.872 –1.656 2.70 (9.916 327 73 –309 –3.337 –68.690 –4 –2. net Restructuring costs.825 Average exchange rate of 8.159 –3.408 –71.161 –978 9.927 –4.950 59.145 –1.119 –51 –236 –287 136 –151 530 –279 251 76 327 Net cash flow Net debt 2012 SEKm EURm SEKm2) 2011 EURm2) SEKm2) 2010 EURm2) Net debt.567 –585 11.255 For further information.982 –500 –567 402 –665 –3.809 60. closing balance 539 –25 –49 –7 458 60.267 1.449 –1.624 561 1.193 84 7. non-current assets Total strategic capital expenditures Divestments Cash flow from capital expenditures and divestments Cash flow before dividend Dividend to shareholders Cash flow after dividend Net cash flow from disposal group3) 85.291 750 –68 –58 –58 566 67. 2) Including net debt from the packaging operations divested in 2012.602 –743 –3.100 654 –212 –167 –3.682 947 8.164 566 59 –89 3 539 61.189 99 6. 3) Operating cash flow in Disposal group divested in June 2012 is recognized on one line as of 2012.490 8.648 5. with retroactive adjustment for 2011 and 2010. etc.210 –34.

145 –932 109 –5. Gain/loss *)  on sale is included in items affecting comparability in profit or loss.751 13.197 4.328 –150 1.340 Less: Unpaid purchase consideration in disposal group – –109 – Cash and cash equivalents in divested companies –153 0 –135 Cash and cash equivalents in disposal group –200 –22 – Cash and cash equivalents in disposal group upon reclassification of joint ventures to associates – –11 – Effects on the Group’s cash and cash equivalents.751 2010 – 415 116 3 –112 –35 –31 – – 356 83 – – 439 –439 – –22 3 –458 4) 2) Adjustment for non-cash items.657 –9.016.752 250 1. 3.201 –14. Of total investments of SEK 5.144 2011 1.673m (5. 2.393).417 – 853 Non-current assets held for sale 3. acquisition of operations 3) Divested operations.377) including finance leases.085 – 15.338 2010 –1.118 1.130 2012 3.922.096 580 – Cash and cash equivalents 153 – 135 Cash and cash equivalents in disposal group 200 22 – Net debt excl.262 Operating assets 1.235 –623 25 15 –408 –151 10. Investments in intangible assets and property.370 303 – 934 –4.427) relates to expansion investments and SEK 3.673 359 –1.207 5.017 2011 1.898 –2.987m (1.057 –1.284 981 2.287 –1. 6. cash and cash equivalents –617 –56 – Provisions –583 – –19 Operating liabilities –767 –48 –742 Operating liabilities in disposal group –6. Divested operations (Consolidated cash flow statement) 17. plant and equipment Payments due to investments in intangible assets.017 624 704 1.471 – –5.353 –88 –15 15.255 12.604 893 1.121 1.093 12. plant and equipment.561 5.911.447 –728 –3.264 –196 –335 422 1.752 –45 2.866 –7 2.987 941 –1.068 –5. and biological assets totaled SEK 5.866 793 603 1.368 –106 1.631 2.904 –66 1.768.386 – –7. Interest paid.015 –458 1. plant and equipment Loans granted to external parties Repayment of loans to external parties Cash flow from investing activities Financing activities Loans raised Amortization of debt Dividend paid** Cash flow from financing activities Cash flow for the year Cash and cash equivalents at the beginning of the year Exchange differences in cash and cash equivalents Cash and cash equivalents at the end of the year 6) ** Average exchange rate of 8.53) was applied in translation to EUR.442 –629 – 577 –482 –157 5.626 1.148 –75 1.012.077 7.390 –562 –894 211 10.155 –48 126 –668 32 – 98 –460 – –753 –279 –1. SEKm Depreciation/amortization and impairment of non-current assets Fair-value measurement of forest assets Gain on divestments Unpaid relating to efficiency program Payments relating to efficiency program already recognized Other Total Acquisition of operations.673m (5.910.328 43 –1.032 –337 499 45 207 Of which packaging operations divested in June 2012. maturity < 3 months Total 2012 1.421 251 1.303 10. 1) 5.285 Board of Directors’ Report SCA Annual Report 2012 69 .396 –132 1.124 –103 12 –655 29 –20 – –737 33 – –321 –288 99 207 2 308 7.437 84 –1.178 57 –70 122 1.262 –62 –99 23 1.254 495 –607 1.068 109 1.950) to current expenditures. SEKm Interest paid Interest received Total 2012 –1.999 –8.259).312 –1.420 –690 2.70 (9.093 2011 – 819 125 11 –27 –51 –90 –3 – 784 314 – – 1.378 – – Operating assets in disposal group 21.144 17.205 Excluding reversal of realized translation differences in divested companies to profit or loss. SEKm Intangible assets Non-current assets Operating assets Cash and cash equivalents Provisions and other non-current liabilities Net debt excl.370).539 –754 –1 –313 –314 471 2010 6. including unutilized lines of credit of SEK 17.752 2010 1. 28.Group | Financial statements Consolidated cash flow statement including the packaging operations divested in June 2012 2012 Group SEKm EURm* SEKm 2011 EURm* SEKm 2010 1) EURm* Operating activities Profit before tax Adjustment for non-cash items 2) Paid tax 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 Acquisition of operations 3) Divested operations 4) Investments in property. SEKm Operating activities Profit before tax Adjustment for non-cash items Paid tax Cash flow from operating activities before changes in working capital Change in working capital Cash flow from operating activities Cash flow from investing activities Dividend Other cash flow from financing activities Cash flow from financing activities Cash flow for the year 2012 679 408 1. SEKm 2012 2011 2010 Non-current assets 384 47 1.548m (23. cash and cash equivalents Operating liabilities Non-controlling interests Non-current assets held for sale Fair value of net assets Goodwill Consolidated value of share in associates Revaluation of previously owned share Acquisition price Acquisition price Unpaid purchase price related to acquisition Settled debt pertaining to acquisitions in earlier years Cash and cash equivalents in acquired companies Effect on Group’s cash and cash equivalents.258 10.531m (21.383 45 –1. SEK 1.427 6.098 155 – 11 –932 2010 938 966 1.557 –1.179 –2.291 575 1.205 –6.717 300 2.686m (4.962 –652 41 –124 – –399 – –623 –344 –967 –79 308 5 234 2.098 – 1. ** Including dividend to non-controlling interests. 6.648 294 – –2. In addition.377 –261 – Non-controlling interests – – –58 –866 –14 1 Gain/loss on sale*) –5 –19 – Loss in disposal group on sale*) Purchase price received after divestment costs 17.353 2011 –1.835 3.021 11. Cash and cash equivalents.059 11.838 –299 1.911 265 –179 – –6.154 –580 1.574 –678 –2 –521 –523 373 2011 11. cash and cash equivalents 8 – –92 Net debt in disposal group excl.265 –111 2.421 –2.866 5) 6) The Group’s total liquidity reserve at year-end amounted to SEK 19.02.836 –3.087 –110 977 –213 764 –321 –2 –39 –41 402 2012 6. 7) were financed through finance leases.058 –643 851 479 –382 –233 6.263 – 911 11.351 –961 11.130 11.085 – – 941 –14. SEKm Cash and bank balances Short-term investments.357 4.081 – –3. property. 30.866 –3. 9. plant and equipment and intangible assets 5) Sale of property. investments amounting to SEK 0m (11.

119 2012 2011 2010 Cash flow from investing activities Less Cash flow from investing activities in disposal group Current capital expenditures Loans granted to external parties Less cash flow from loans granted to external parties in disposal group Repayment of loans from external parties Less repayment of loans from external parties in ­disposal group Add Net debt in acquired and divested operations Less net debt in acquired and divested operations in disposal group Investments financed by leasing Cash flow from strategic capital expenditures and divestments according to the operating cash flow statement –3.250 179 –17 – – 132 –198 –11 –4.161 1.490 Cash flow for the year Less Loans granted to external parties Repayment of loans from external parties Amortization of debt Loans raised Add Net debt in acquired and divested operations Accrued interest Investments through finance leases Net cash flow according to Consolidated operating cash flow statement –690 1.250 –15 – 5.017 31 – 6.161 –4 –1 7.689 893 179 – – –294 132 –15 –11 884 –3.386 754 3. supplementary disclosures Cash flow from operating activities SEKm 2012 2011 2010 Cash flow for the year SEKm 2012 2011 2010 Cash flow from operating activities Less Cash flow from operating activities in disposal group Add Current capital expenditures Accrued interest Less accrued interest in disposal group Cash flow from current operations as shown in the operating cash flow statement Cash flow from investing activities SEKm 11.574 –3.421 – –119 –4 – 5.081 – 5.539 –3.271 10.015 –1.017 – – –934 58 57 – –7 947 –2.648 678 3.Financial statements | Group Correlation between consolidated cash flow statement and operating cash flow statement.471 321 3.201 –764 –3.179 – 57 31 –7 3.635 –1.306 11.145 –1.081 –26 – – –119 – – –6.207 – –934 7.441 70 SCA Annual Report 2012 Board of Directors’ Report .

509 43 99 1.167 26.325 378 937 9.736 61 357 24 10 207 3.574 388 894 9.643 292 3.350 6.067 69 2 2.069 1.011 4.909 1.009 11.290 15.367 131.299 6.291 263 764 –243 6.548 377 2.058 94 23 4.460 46.049 3.055 294 4.898 113 9 118 244 130 21 12.618 67.567 17.108 10.406 3) 11.433 2.216 220 93 1.241 2.279 9.279 11.432 44 109 1.713 139.932 818 87 98.830 –2.081 715 187 85.688 3.270 56.021 77 1.936 53 6.538 24 3 19 20 9 21 22 23 22 11.759 4.105 517 2.056 2.861 9.046 72 24 4.661 – 131.937 2.531 1. see Notes 32 and 33.94.616 547 3.017 32.475 63 7.170 53.157 142.216 28 70 882 3.790 – 8.601 139.511 15.957 2) 4.760 565 1.292 42 295 33 378 296 3.702 27.531 1.800 553 238 38.201 61 26 4.825 97.457 60 682 2.219 3.978 1. 2010 SEKm EURm1) ASSETS Non-current assets Goodwill Other intangible assets Buildings.891 25 26 9 27 28 23.264 14.597 7.966 363 6.870 1.091 32.552 13.511 1. 1) 93.169 194 108.991 119 8 0 233 80 21 9.989 2.004 1.450 1.013 6.198 1.752 539 61.459 3. Capital employed Net debt Closing exchange rate of 8.955 12. 2) Including capital employed in the packaging operations divested in June 2012.503 2.786 – 15.266 10.711 3.629 42.61 (8. machinery and equipment Biological assets Participations in associates Shares and participations Surplus in funded pension plans Non-current financial assets Deferred tax assets Other non-current assets Total non-current assets Current assets Inventories Trade receivables Current tax assets Other current receivables Current financial assets Non-current assets held for sale Cash and cash equivalents Total current assets Assets in disposal group held for sale Total assets EQUITY AND LIABILITIES Equity Owners of the Parent Share capital Other capital provided Reserves Retained earnings Non-controlling interests Total equity Non-current liabilities Non-current financial liabilities Provisions for pensions Deferred tax liabilities Other non-current provisions Other non-current liabilities Total non-current liabilities Current liabilities Current financial liabilities Trade payables Current tax liabilities Current provisions Other current liabilities Total current liabilities Liabilities in disposal group held for sale Total liabilities Total equity and liabilities 3 9 27 29 25 9.363 2) 3.195 285 7 79 341 95 10 11.047 13.866 247 629 7.766 2.100 3) 102.648 3) 10.892 21.599 26.156 1.500 27.742 60.112 – 8.601 77.821 261 677 –60 6.232 1.978 1.00) was applied in translation to EUR.037 1. 9.608 345 1.866 34.227 2) 34.301 9.797 60 6.706 458 60.379 2.627 – 71.350 6.885 28.653 168 1.814 3.105 Contingent liabilities and pledged assets.096 36.243 2.233 850 8.217 59.857 2.939 2) 36.740 2.032 32.830 –543 58.350 6.164 273 793 –429 6.417 15.069 – 142.485 9.644 31.729 1.255 566 67.169 5. 3) Including net debt in the packaging operations divested in June 2012.639 60 308 20 225 234 3.Group | Financial statements Consolidated balance sheet 31 Dec.999 – 75.158 2.350 640 217 41.353 15.552 12.425 3.612 23.568 2.794 – 15.308 1.691 54. land.695 15.004 1.830 –3.414 634 5.825 3) Board of Directors’ Report SCA Annual Report 2012 71 .391 1.107 814 199 38. 2011 SEKm EURm1) 31 Dec.100 370 1.893 7.891 10 10 11 12 13 14 26 17 9 12.927 10. 2012 Group Note SEKm EURm1) 31 Dec.

643 2.517 43 939 –3.748 0 0 0 2012 2.684 –3.999 –370 – –212 25 –557 367 –2.949 –1.718 4.978 –359 1.053 2. respectively.201 –2.641 3.809 –2.305 2.128 150 2.436 –5 629 –3.781 4. 36 37 7.692 –2.364 –623 –3.442 0 0 0 2011 5.288 – 2.288 Cash flow from operating activities before changes in working capital Cash flow from changes in working capital Change in operating receivables 2) Change in operating liabilities 2) Cash flow from operating activities Investing activities Acquisition of subsidiaries Repayment of equity from subsidiaries Acquisition of non-current assets Sale of property.946 0 3.755 2.291 –345 3.609 –474 860 –299 52 139 1. Parent Company Income statement SEKm Note 2012 2011 Cash flow statement SEKm 2012 2011 Administrative expenses Other operating income Other operating expenses Operating loss Financial items Result from participations in Group companies Result from participations in other companies Interest income and similar profit items Interest expenses and similar loss items Total financial items Profit after financial items Appropriations Tax on profit for the year Net profit for the year Statement of comprehensive income SEKm –493 98 –95 34.288 Adjustment for non-cash items Depreciation/amortization of non-current assets Change in accrued items Other Total 2) 3) 58 –290 –113 –345 53 83 14 150 Dealings of the Parent Company with the Swedish subsidiaries relating to tax are recognized as Change in operating receivables and operating liabilities.278 4. Supplementary disclosures Interest and dividends paid and received 2012 2011 Dividends received Group contribution received Group contribution paid Interest paid Interest received Total 3.278 0 2.215 472 2.Financial statements | Parent Company Financial statements.053 –490 –630 174 –171 –627 Operating activities Profit after financial items Adjustment for non-cash items 1) Income taxes paid 4. plant and equipment Cash flow from investing activities Financing activities Loans raised Dividend paid Cash flow from financing activities Cash flow for the year Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 3) 1) 2012 2011 Net profit for the year Other comprehensive income Total comprehensive income 4. The company’s current account is a subsidiary account and is recognized in the balance sheet as Liabilities to subsidiaries.291 38 39 –12 –226 4.839 6.053 – 4.946 –1.128 –13 173 2.963 2.527 72 SCA Annual Report 2012 Board of Directors’ Report .795 265 3. 35.910 –4.

053 –2. 2010 Profit for the year Dividend.493 0 15. SEK 4.363 7.350 1.342 Board of Directors’ Report SCA Annual Report 2012 73 .053 39.504 124.283 38.363 7.391 135.503 134.935 87 369 69. provisions and liabilities Contingent liabilities Pledged assets 49 50 48 43 67.811 46 39 536 649 9 1.234 4.480 135.283 38.181 13. 2011 SEKm Note 31 Dec. 2012 31 Dec.804 131.809 49.338 2.00 per share Equity at December 31.283 10.350 1.194 491 423 1 915 38 45 2.724 124.303 24 376 67.238 4.350 1.703 135. PROVISIONS AND LIABILITIES Equity Share capital Revaluation reserve Statutory reserve Total restricted equity Retained earnings Net profit for the year Total non-restricted equity Total equity Untaxed reserves Provisions Provisions for pensions Provisions for taxes Other provisions Total provisions Non-current liabilities Liabilities to subsidiaries Non-current interest-bearing liabilities Other non-current liabilities Total non-current liabilities Current liabilities Liabilities to subsidiaries Accounts payables Other current liabilities Total current liabilities Total equity.288 38.759 2.394 18 100 0 1. SEK 4.520 22.286 156 43 47 2.972 156 68.711 13 6.809 49.234 169 Change in equity (Refer also to Note 45) SEKm Share capital Revaluation reserve Statutory reserve Retained earnings and net profit for the year Total equity Equity at December 31.283 39.520 41 42 43 40 1 1 6. 2011 ASSETS Fixed assets Capitalized development costs Intangible fixed assets Land and buildings Machinery and equipment Tangible fixed assets Participations Receivables from subsidiaries Other long-term receivables Financial fixed assets Total fixed assets Current assets Receivables from subsidiaries Current income taxes Other current receivables Cash and cash equivalents Total current assets Total assets 43 39 44 3.484 2.350 1.490 14 6.008 EQUITY.238 49.755 2.288 –2.342 50.009 19.996 35.20 per share Equity at December 31.949 2.350 1.894 125 127.529 1 1 6. 2012 2.363 7.949 50.100 13.950 2.Parent Company  |  Financial statements Balance sheet SEKm Note 31 Dec.512 135.009 1.630 0 15.053 –2. 2011 Profit for the year Dividend.593 2.338 181 2. 2012 31 Dec.283 10.253 427 124 124.363 7.363 7.996 35.297 18 165 0 3.289 4.288 –2.

and the Swedish Financial Report­ ing Board. The standard has not yet been adopted by the EU. which are measured at fair value either in profit/loss or in other comprehensive income. The Parent Company’s financial statements are prepared in accordance with the Swedish Financial Reporting Board’s recommendation RFR 2. • IFRS 13 Fair Value Measurement aims to improve consistency and reduce complexity in the application of fair value measurement by providing a precise definition and a shared source in IFRS for fair value measurements and the associated disclosures. which already applies immediate recognition of actuarial gains and losses. In the Parent Company. BASIS FOR PREPARATION The SCA Group’s financial statements are prepared in accordance with the Annual Accounts Act and International Financial Reporting Standards (IFRS)/International ­ Accounting Standards (IAS). meaning that the operator must account for its share of the assets. are consolidated as subsidiaries. measured at fair value through profit or loss. The standard provides further guidance should it not be clear whether there is a controlling influence. most of the company’s joint ventures will be recognized in accordance with the equity method. Based on the current Group structure. based on the net surplus or deficit in the defined-benefit plan. • IFRS 11 Joint Arrangements is a new standard for classification of joint arrangements as joint ventures or joint operations. 2014.Financial statements  |  Notes – Accounting principles Notes 1 Accounting principles liabilities. Recommendation RFR 1 Supplementary Accounting Rules for Groups. In business combinations. joint ventures will be recognized in accordance with the equity method. • IFRS 9 Financial Instruments relates to the classification. and the Annual Accounts Act. and measured at fair value on the date of acquisition (also known as a purchase price allocation). The Group intends to apply IFRS 10 for the fiscal year commencing January 1. joint arrangements. associates and unconsolidated structured entities. USE OF ASSESSMENTS The preparation of financial statements in conformity with IFRS and generally accepted Swedish accounting principles requires assessments and assumptions to be made that affect recognized asset and liability items and income and expense items. these principles are specified under a separate heading. For these. Measurement of acquired assets and liabilities is carried out in the same way as for subsidiaries. • IAS 12 Income Taxes – Deferred Tax: Recovery of Underlying Assets • IFRS 7 Financial Instruments: Disclosures relating to new disclosure requirements for transfer of financial assets New standards. but provide guidance on how it should be applied when other IFRSs already require or permit fair value measurement. For SCA. the Parent Company applies principles other than those used by the Group and. The requirements do not expand the area of application for when fair value is required to be used. Group companies are consolidated from the date the Group exercises control or influence over the company according to the definitions provided under the respective category of Group company below. through agreement or in another manner. None of these had any material impact on SCA’s financial reporting. • IAS 1 Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income • IFRS 1 Government loans – amendments to IAS 1 • IAS 27 Separate Financial Statements • IAS 28 Investments in Associates and Joint Ventures The most important accounting principles applied in the preparation of this annual report are set out below. Divested Group companies are included in the consolidated accounts until the date the Group ceases to control or exercise influence over the companies. The Group intends to apply IFRS 12 for the fiscal year commencing January 1. 2013. as well as other information disclosed. The Group intends to apply the revised standard for the fiscal year commencing on January 1. IFRS 9 states that financial assets must be classified in two categories: Fair value and measurement at amortized cost. parties to the agreement have rights to the assets and obligations for the liabilities associated with the investment. SCA applies the historical cost method for measurement of assets and liabilities except for biological assets (standing timber). The actual results may differ from these assessments. In some cases. 2013. The standard is not expected to have a material impact on the Group. • IFRS 10 Consolidated Financial Statements is based on already existing principles defining control as the decisive factor in determining whether a company is to be included in the consolidated accounts. The standard will increase the number of disclosures in the Group’s 2014 Annual Report. The change mainly comprises the removal of the corridor approach and that interest expenses and expected return on plan assets will be replaced by a net interest figure calculated using the discounting rate. any net assets acquired earlier in the acquired units are remeasured at fair value and the result of the remeasurement is recognized in profit or loss. exercises control. is entitled to a return and has the power to influence the activities that impact return. Associates Associates are companies in which the Group exercises a significant influence without the partly owned company being a subsidiary or a joint venture. the revision imposes a restriction insofar as the return on plan assets in profit or loss is limited to a predetermined discounting rate instead of the company’s long-term expectation of the actual return on plan assets. Decisive for the classification is how the rights and obligations are shared by the parties in a joint arrangement. but rather expensed directly. In joint operations. biological assets or the aforementioned financial assets and liabilities are not measured at fair value. in such cases. Normally. 2012. The definition of control is based upon the premise that the owner has the ability to control the company. Subsidiaries All companies in which the Group holds or controls more than 50% of the votes or where the Group alone. If the controlling influence is lost upon divestment. CONSOLIDATED ACCOUNTS The consolidated accounts are prepared in accordance with the Group’s accounting principles and include the accounts of the Parent Company and all Group companies in accordance with the definitions below. The same principles are usually applied in both the Parent Company and the Group. 2014. Joint ventures Joint ventures are defined as companies in which SCA together with other parties through an agreement. although it may influence future acquisitions. respectively. A joint venture entitles the joint owners to the net assets of the investment. The accounts for both the Group and the Parent Company pertain to the fiscal year that ended on December 31. IFRS 9 was issued in November 2009 for financial assets and October 2010 for financial liabilities and replaces those parts of IAS 39 related to classification and measurement of financial instruments. The most signif­ icant change relates to liabilities identified at fair value. None of the below IFRS or IFRIC interpretations that have not yet come into effect are expected to have any material impact on the Group. • IFRS 12 Disclosures of Interests in Other Entities includes the disclosure requirements for subsidiaries. In the future. the amended interest calculation would have reduced profit for the year by SEK 205m. revenues and costs according to the proportional method. Intra-Group transactions have been eliminated. The effects of the remeasurement upon payment of the liability related to a contingent consideration are recognized in profit for the period. Transaction costs in conjunction with acquisitions are not included in cost. but either not yet effective or not yet adopted by the EU: • IAS 19 Employees Benefits was revised in June 2011. as is currently applied. amendments and interpretations published by IASB. measurement and recognition of financial liabilities and assets. The Group intends to implement the new standard not later than the fiscal year commencing January 1. 2014. has shared control over operations. which will mainly entail lower sales of approximately 5%. 2015 and has not yet evaluated its impact. Reporting by Legal Entities. the portion of the fair value change arising from own credit risk is to be recognized in other comprehensive income instead of profit or loss provided that this does not give rise to an accounting mismatch. The Group intends to apply the new standard for the fiscal year commencing January 1. acquired assets and assumed liabilities are identified and classified. the result is recognized in profit or loss. as adopted within the EU. The consolidated financial statements are prepared in accordance with the purchase method. For 2012. The classification is determined at initial recognition based on the company’s business model and the characteristic conditions in the contractual cash flows. In step acquisitions when a controlling interest is achieved. including derivative instruments. IFRS 10 is not expected to have a material impact. no major changes take place compared with IAS 39. The Group intends to apply IFRS 11 for the fiscal year commencing January 1. For financial liabilities. Parent Company: The Parent Company recognizes all holdings in Group companies at cost after deduction for any accumulated impairment losses. this means that the 74 SCA Annual Report 2012 Board of Directors’ Report . As of 2014. any residual holding in the divested business is then measured at fair value on the date of divestment and the effect is also recognized in profit or loss. INTRODUCTION OF NEW AND REVISED IAS/IFRS New IAS/IFRS standards and amendments (IAS/IFRS) and interpretations (IFRIC) that came into effect in 2012 and were adopted by the EU: The below amendments of standards (IAS/IFRS) and new and amended interpretations (IFRIC) came into effect in 2012 and were adopted by the EU. available-for-sale financial assets and financial assets and liabilities. Joint ventures are recognized according to the proportional consolidation method.

non-controlling interests are determined either as a proportional share of the fair value of identifiable net assets excluding goodwill or at fair value. Monetary receivables and liabilities in foreign currency are remeasured at closing date rates at each balance sheet date. who is responsible for and manages the day-to-day administration of the Group in accordance with the Board’s guidelines and terms of reference. TRANSLATION OF FOREIGN CURRENCY Functional currency and presentation currency The companies in the Group prepare their financial statements in the currency used in the primary economic environment in which they operate. Change in the fair value of monetary securities issued in foreign currency and classified as available-for-sale financial assets is analyzed and the change attributable to changed exchange rates is recognized in profit or loss. Exchange gains or losses that arise from such remeasurement and on payment of the transaction are recognized in profit or loss. SEGMENT REPORTING Operating segments are recognized in a manner that complies with the internal reporting submitted to the highest authority in the decision-making base. which is the Parent Company’s functional currency and therefore the presentation currency. if the reasons for the earlier impairment no longer exist. Deferred taxes are measured at their nominal amount and based on the tax rates enacted or substantively enacted on the balance sheet date. period­covered by the rental contract. which is recognized in the Board of Directors’ Report SCA Annual Report 2012 75 . Future lease payments are divided between amortization of the liability and financial expenses. Gains and losses on operating receivables and liabilities are recognized net and reported within operating profit. Interest items attributable to income tax and withholding taxes deducted at source on intra-Group transactions are also recognized as income tax. Non-controlling interests Non-controlling interests are recognized as a separate item in the Group’s equity. so that each reporting period is charged with an interest amount that corresponds to a fixed interest rate on the recognized liability for the respective period. • all translation differences that arise are recognized as a separate item directly in consolidated equity under other comprehensive income. The value of depreciated assets is tested for impairment whenever there are indications that the carrying amount might not be recoverable. the assets are grouped in cash-generating units and assessments are made on the basis of these units’ future cash flows. Parent Company: The Parent Company reports all leases as operating leases. For items recognized in profit or loss. Valuation of acquired assets and liabilities is performed in the same manner as for subsidiaries and the carrying amount for associates includes any goodwill and other Group adjustments. royalties and similar items. which are recognized in accordance with the implied financial effect of the contract. comprises the fair value of the consideration received or receivable for sold goods and services within the Group’s ordinary activities. related tax effects are also recognized in equity under other comprehensive income. Corporate governance on pages 46–47. an impairment loss is recognized on the asset down to the recoverable amount. The consolidated financial statements are prepared in Swedish kronor (SEK). For items recognized in equity under other comprehensive income. this function has been identified as the company’s President. but are annually tested for impairment. IMPAIRMENT LOSSES Assets that have an indefinite useful life are not depreciated. The Group’s share of profit after tax arising in the associate after the acquisition is recognized on one line in the consolidated income statement. However. The leased asset is depreciated according to the same principles that apply to other assets of the same nature. These reports provide the basis for the consolidated financial statements. Personal Care. the deferred tax liability on untaxed reserves in the Parent Company is recognized in the Parent Company’s annual accounts as a component of untaxed reserves. When a foreign operation is divested. Exchange differences arising on the financial instruments held to hedge these net assets are also taken directly to consolidated equity under other comprehensive income. Deferred tax assets relating to deductible temporary differences. Parent Company: Due to the links between accounting and taxation. while other unrealized change is recognized in equity under other comprehensive income. REVENUE RECOGNITION Sales revenue. Tissue and Forest Products. The financial statements of a subsidiary in a hyperinflationary country are adjusted for inflation using the price index for the country in question before these statements are included in the consolidated financial statements. except for – as stated in IAS 39 – approved hedging transactions relating to cash flows or net investments where the gain or loss is recognized in equity under other comprehensive income.Notes – Accounting principles  |  Financial statements Group owns between 20% and 50% of the votes. The highest authority in the decision-making base is the function that is responsible for allocating resources and assessing the result of the operating segments. Translation of foreign Group companies Balance sheets and income statements for all Group companies whose functional currency is not the presentation currency are translated into the Group’s presentation currency using the following procedures: • assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet. If it is uncertain whether the asset will be taken over at the end of the leasing period. a reversal is not higher than the carrying amount would have been if an impairment loss had not been recognized in previous years. Impairment losses on goodwill are never reversed. An impairment loss recognized earlier is reversed. Deferred tax is calculated and recognized on all temporary differences between the tax base and the carrying amount. Interest income is recognized in accordance with the effective interest method. in all cases. and which are not attributable to a business combination and do not affect either recognized profit or taxable profit. The Executive Vice President and Corporate Senior Management support him in his work. Leases for assets in which the risks and rewards incidental to ownership are essentially carried by the lessor are classified as operating leases. Revenue is recognized when delivery to the customer has taken place according to the terms of the sale. synonymous with net sales. classified as available-for-sale assets are taken directly to equity under other comprehensive income. the asset is depreciated over the lease term if this is shorter than the useful life that applies to other assets of the same nature. In cases in which the carrying amount of an asset exceeds its estimated recoverable amount. Translation differences for non-monetary financial assets and liabilities valued at fair value through profit or loss are recognized as part of the fair value gain or loss. • income and expenses for each income statement presented are translated at the average exchange rate for the respective year. both translation differences and exchange differences in financial instruments held for the currency hedging of net assets in the income statement are recognized as part of the gain or loss on disposal. loss carryforwards and tax credits are recognized to the extent it is probable that deductions can be made against future profits. TAXES The Group’s tax expense comprises deferred tax and current tax on Group companies’ recognized profits during the accounting period. Subsequent acquisitions up to 100% and divestments of participations in a subsidiary that do not lead to a loss of controlling influence are recognized as an equity transaction. LEASING Leases for non-current assets in which the Group essentially carries all the risks and rewards incidental to ownership of an asset are classified as finance leases. When testing for impairment of goodwill. In connection with acquisitions of less than 100% when a controlling influence is achieved. or for temporary differen­ ces that arise on initial recognition of an asset or liability. TRANSACTIONS AND BALANCE SHEET ITEMS IN FOREIGN CURRENCY Transactions in foreign currency are translated to a functional currency using the exchange rate prevailing on the transaction date. The initial value of both these items comprises the lower of the fair value of the assets or the present value of the minimum lease payments. The lease payments are recognized as an expense on a straight-line basis over the lease term. Dividends received are recognized when the right to receive a dividend has been established. The leased asset is recognized as a non-current asset and a corresponding financial liability is recognized among interest-bearing liabilities. Non-monetary assets and liabilities recognized at historical cost are translated at the exchange rate prevailing on the transaction date. Translation differences for non-monetary financial assets. This is known as the functional currency. Deferred tax is not recognized for non-deductible goodwill. see the section Responsibility and governance. Accounting for associates is carried out according to the equity method and they are initially measured at cost. can control the time of reversal of the temporary differences and it is not considered probable that such reversal will occur in the near future. Goodwill and fair value adjustments that arise on acquisition are treated as assets and liabilities of the operation and translated according to the same principles as the foreign operation. Losses attributable to non-controlling interests are recognized even if this results in a negative balance for the interest. related tax effects are also recognized in profit or loss. Gains and losses on borrowing and financial investments are recognized as other financial items. Deferred taxes relating to temporary differences attributable to investments in subsidiaries and participations in joint ventures are not recognized in SCA’s consolidated financial statements since SCA AB. adjustments relating to tax for prior periods as well as other changes in deferred taxes for the period. Other income includes compensation for sales that are not included in the Group’s ordinary activities and includes rental revenue. Profit or loss and every component of other comprehensive income are attributable to the owners of the Parent and to non-controlling interests. SCA’s three business areas. Share in profits is calculated on the basis of SCA’s share of equity in the respective associate. comprise the operating segments. At SCA.

Net gains or losses from the sale of Group companies include the remaining carrying amount of the goodwill attributable to the divested unit. In conjunction with this. the initial liability for emission allowances received is dissolved over profit or loss as income in pace with carbon dioxide emissions made. Impairment losses on goodwill are not reversed. Goodwill is tested annually for any impairment requirement. Measurement The fair value of financial instruments is calculated on the basis of prevailing market listings on the balance sheet date. Sales of surplus emission allowances are recognized as income on the settlement date. trade payables. the entire project is treated as research and expensed immediately. During the year. SCA makes a provision for the deficit valued at the market value on the balance sheet date. The cost of properties and production facilities included in major projects includes. the recognized cost and provisions for emissions amount to the market value as of the date to which the allocation pertains. In cases in which it is difficult to separate the research phase from the development phase in a project. development costs are expensed as incurred. Emission allowances and costs for carbon dioxide emissions Emission allowances relating to carbon dioxide emissions are recognized as an intangible asset and as deferred income (liability) when they are received. sustainable felling plans and assessments regarding growth. any non­ controlling interests and the fair value of previous shares of equity (for step acquisitions) exceeds the fair value of the acquired net assets. PLANT AND EQUIPMENT Property. all of which are recorded on the settlement date. loans and derivatives. plant and equipment are recognized at cost after deduction for accumulated depreciation and any accumulated impairment. Impairment of financial assets takes place when there is objective proof of impairment. the cost of the acquisition is recognized as an asset and amortized on a straight-line basis over the anticipated useful life. If the market price of emission allowances on the balance sheet date is less than recognized cost. The change in value is recognized in profit or loss. other financial receivables. Financial instruments are initially recognized at cost. FINANCIAL INSTRUMENTS Financial instruments recognized in the balance sheet include cash and cash equivalents. such as discounting of future cash flows to listed market rates for each duration. plant and equipment at historical cost. plant and equipment is performed on a straight-line basis down to the estimated residual value of the asset and during the anticipated useful life of the asset. which corresponds to the fair value of the instrument including transaction costs. Parent Company: The Parent Company’s property. Trademarks that are found to have an indefinite useful life are not amortized. which means that goodwill is also recognized on non-controlling interests (full goodwill). Trademarks Trademarks are recognized at cost after any accumulated amortization and accumulated impairments. The fair value of the Group’s standing timber is calculated as the present value of anticipated future cash flow from the assets before tax. Allowances are received free of charge and measured and recognized at market value as of the date to which the allocation pertains. Cash-generating units identified for these trademarks comprise the geographical market where the trademark exists. The depreciation period is between five and ten years. any surplus emission allowances that are not required to cover emissions made are impaired to the market price applying on the balance sheet date. licenses and other rights. Goodwill is recognized at cost reduced by accumulated impairment losses. No systematic depreciation or changes in value in conjunction with felling is carried out in the Parent Company. Other intangible assets Intangible assets also include patents. PROPERTY. Identifiable expenditure for development of new products and processes is capitalized to the extent it is expected to provide future economic benefits. Recognition takes place on the basis of the categories specified below. expenditure for running-in and start-up. In the absence of market listings. Depreciation of other property. railways Land improvements. Capitalized expenditure is depreciated in a straight line from the date when the asset starts to be used or produces commercially and during the estimated useful life of the asset. either as a proportional share of the fair value of identifiable net assets excluding goodwill (partial goodwill) or at fair value. The calculation is based on existing. ­ When this difference is negative. timber prices. The fair value of short-term loans and investments is considered to correspond to the carrying amount. which varies between 3 and 20 years. Financial assets are derecognized from the balance sheet when the risk and the right to receive cash flows from the instrument have ceased or been transferred to another counterparty. plant and equipment. All expenditure for new investments in progress is capitalized. Recognition in and derecognition from the balance sheet Purchases and sales of financial instruments are recognized in the financial statements on the trade date. Forest land and forest roads are classified as land and land improvements. BIOLOGICAL ASSETS The Group’s standing timber is defined and recognized as a biological asset. Land is regarded as having an indefinite useful life and is therefore not depreciated. current market interest rates and an estimate of SCA’s risk premium are taken into account in fair value calculations. The revaluation amount was placed in a revaluation reserve in equity. trade receivables. felling costs and silviculture costs. the amount is recognized in profit or loss. For allocated emission allowances. Goodwill that arises in acquisitions of associates is included in the carrying amount of the associate. cont. which in the Group is classified as a biological asset. Expenditure for interest during the construction and assembly period is included in cost for qualifying investment projects. Collective revaluation of forest assets has occurred. plant and equipment. the difference is recognized as goodwill. with the exception of loan receivables. other machinery Tools Vehicles Buildings Energy plants Computers Office equipment Harbors. All other forms of repair and maintenance are recognized as expenses in profit or loss in the period in which they are incurred. Acquisitions of non-controlling interests are measured on an acquisition-by-acquisition basis. Environmental restrictions and other limitations are taken into account and the calculation is performed for a production cycle that SCA estimates at an average of 100 years. available-for-sale financial assets and other financial liabilities. include standing timber. Number of years INTANGIBLE ASSETS Goodwill The compensation transferred in a business combination is measured at fair value. In connection with a business combination when the consideration transferred. the actual prices on the balance sheet date are used. Financial liabilities are derecognized from the balance sheet when SCA has met its commitments or they have been otherwise extinguished. In other cases. 76 SCA Annual Report 2012 Board of Directors’ Report . the recognized cost and provisions for emissions amount to the purchase price. SCA reports financial instruments with a remaining maturity of less than 12 months as current assets and liabilities and those that exceed 12 months as non-current assets and liabilities. unlike costs for other investments.Financial statements  |  Notes – Accounting principles 1 Accounting principles. Useful lives are assessed as: Pulp and paper mills. If the emission allowances received do not cover emissions made. The biological assets are measured and recognized at fair value after deduction for estimated selling costs. the remaining part of the deferred income is recognized as income by a corresponding amount and therefore no net effect occurs in profit or loss. which varies between three and seven years. For financial assets and listed securities. securities. These calculated cash flows are established based on available market information. since a change in market interest rates does not have a significant effect on market value. The discount factor is based on a normal forest company’s weighted average cost of capital (WACC). sawmills Converting machines. Parent Company: The Parent Company reports standing timber as property. forest roads 10–25 7–18 3–10 4–5 15–50 15–30 3–5 5–10 20–30 10–20 The residual values and useful lives of assets are tested on a continuous basis and adjusted when required. The emission allowances are used as payment in the settlement with the state regarding liabilities for emissions. For disclosures in a note relating to noncurrent loans. including costs for statutory replanting. SCA determines fair values with the aid of common valuation models. For purchased emission allowances. Cost includes expenditure that can be directly attributed to the acquisition of the asset as well as transfer from equity of the gains and losses from approved cash flow hedges relating to purchases in foreign currency of property. Trademarks with a limited useful life are amortized on a straight-line basis during their anticipated useful life. Goodwill is distributed to the cash-generating units within each operating segment that is expected to benefit from the business combination for which the goodwill arose. At acquisition of such assets. The duration of utilized loans under syndicated lines of credit are recognized with the same duration as the line of credit. but instead tested annually for impairment in the same manner as goodwill. such as cessation of an active market or where it is probable that the debtors cannot meet their commitments. Research and development Research expenditure is recognized as an expense as incurred. which are recognized in accordance with the Group’s accounting principles.

the relationship between the hedge instrument and the hedged item is documented.Notes – Accounting principles  |  Financial statements Cash and cash equivalents Cash and cash equivalents are defined as cash and bank balances as well as short-term investments with a maturity of less than three months from the acquisition date. Only derivatives were classified in this category during the year. For SCA. Trade receivables are recognized in the amount at which they are expected to be paid. the sales proceeds are included in retained earnings in the equity pertaining to owners of the Parent. Assets in this category are measured continuously at fair value. Fair value hedges The gain or loss from remeasurement of a derivative relating to fair value hedges is recognized in profit or loss with changes in fair value of the asset or liability exposed to the hedged risk. are recognized as a financial asset. Changes in value are recognized in equity under other comprehensive income. Both gains and losses on subsequent value changes are recognized in profit or loss for the year. In hedge accounting. EQUITY Transaction costs directly relating to the issue of new shares or options are recognized. part of these are funded with plan assets. The total cost relating to defined-benefit plans is divided Board of Directors’ Report SCA Annual Report 2012 77 . Instead. EMPLOYEE BENEFITS Pensions There are many defined-contribution and defined-benefit pension plans within the Group. any ineffectiveness is recognized on an ongoing basis in profit or loss. Since the entire change in value from the derivative is recognized directly in profit or loss. changes in fair value of the hedging instrument are recognized directly in profit or loss. Financial hedges When SCA conducts hedges and the transactions do not meet requirements for hedge accounting according to IAS 39. and subsequently at amortized cost according to the effective interest method. However. The defined-benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit Method. or the point in time when the operation fulfils the criteria for classification as held for sale. the cost of goods produced and segregated for specific projects is assigned by using specific identification of their individual costs. the assets and liabilities are measured at the lower of fair value minus selling costs and the carrying amount. Cash flow hedges relating to energy affect the energy costs. On the reclassification date. In cases in which the forecast cash flow that forms the basis of the hedging transaction is no longer assessed as probable. in equity as a reduction in the issue proceeds. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED ­OPERATIONS Non-current assets (and disposal groups) are classified as Non-current assets held for sale if their value. Assessment of the effectiveness of the hedge is also documented. Net realizable value is the estimated selling price in the ordinary course of business. if such assets exist. a gain is recognized. Comparative figures in the income statement are adjusted as though the discontinued operation had been disposed of at the start of the comparative year. Restricted deposits are not included in cash and cash equivalents. based on an individual assessment of bad debts. The holding of felling rights for standing timber is valued at contract prices. with fixed or determinable payments. Financial assets at fair value through profit or loss Assets are classified in this category when the intention is to sell in the short term. Classification as a discontinued operation occurs either when an independent business segment or a significant operation within a geographic area is divested. Actuarial gains and losses are recognized directly in equity under other comprehensive income in the period in which they arise. the cumulative gain or loss that was recognized in equity is recognized in profit or loss. Only financial derivatives were classified in this category during the year. Any impairment of trade receivables affects SCA’s operating profit. Assets in this category are measured at amortized cost less a potential provision for impairment. These are recognized initially at fair value. is recognized in profit or loss. Financial liabilities at fair value through profit or loss This category includes derivatives with negative fair values that are not used for hedge accounting and financial liabilities held for trading. Loans and trade receivables Loans and trade receivables are financial assets. that is. A change attributable to exchange rate movements. The obligation is valued at the present value of anticipated future cash flows using a discount rate that corresponds to the interest on first-class corporate bonds or. Following reclassification. Assets in this category are recognized continuously at fair value and changes in value are recognized in profit or loss. The divestment date. this means that non-current loans that are subject to hedge accounting are discounted without a credit spread to market interest rates and meet inherent interest rate derivatives’ discounted cash flows at the same rate. Interest expenses are not included in measurement of inventories. If the hedge pertains to a balance sheet item. Any ineffective part of the change in value is recognized directly in profit or loss. Transaction exposure’s cash flow hedges affect consolidated net sales and expenses. If a hedge relationship is interrupted and cash flow is still expected. which means they are accrued so that a constant return is obtained. When these are sold. Hedge effectiveness is the extent to which the hedging instrument offsets changes in value in a hedged item’s fair value or cash flow. based on a normal production level. government bonds issued in the currency in which the benefits will be paid and with a remaining maturity that is comparable to the actual pension liability. If there is an increase of the fair value less a deduction for selling expenses. The liability recognized in the balance sheet for defined-benefit pension plans is the present value of the obligation on the balance sheet date minus the fair value of the plan assets. The cumulative gain or loss in equity is recognized in profit or loss in the event of divestment of the foreign operation. Expenditure for the purchase of SCA’s treasury shares reduces retained earnings in equity in the Parent Company and the portion of consolidated equity that pertains to owners of the Parent. no depreciation is carried out on these assets. direct labor. The cost of finished goods and work in progress includes raw materials. other direct expenses and production-related overheads. Assets in this category are measured at amortized cost applying the effective interest method. first-out (FIFO) or weighted average cost formula. the result is transferred from equity to the asset or liability to which the hedge relates when the value of the asset or liability is determined for the first time. Available-for-sale financial assets This category includes financial assets that are not derivatives and that are designated in this category at initial recognition or that have not been classified in any other category. Receivables arise when SCA provides money. Cash flow hedges relating to interest expenses affect net financial items. Held-to-maturity investments Held-to-maturity investments are defined as financial assets that are not derivatives and that have fixed or determinable payments and that SCA intends and is able to hold to maturity. Parent Company: Non-current assets held for sale are not reclassified and depreciation does not cease. the information is disclosed. Cost is calculated using the first-in. less the estimated cost of completion and sale of the item. both when the transaction is initially executed and on an ongoing basis. SCA classifies its financial instruments in the categories below. Profit/loss after tax from discontinued operations is recognized on a separate line in the income statement. which on average do not exceed the lower of net realizable value and cost. determines when the operation should be classified as a discontinued operation. The gain is limited to the amount equivalent to previously made impairment charges. the result is recognized in equity under other comprehensive income until the cash flow affects the result. goods or services directly to another party without any intention of conducting trading in the receivables. Derivatives with a positive market value are classified in this category if they are not identified as hedges and meet the requirements for hedge accounting. which are not derivatives. INVENTORIES Inventories are recognized at the lower of cost and net realizable value on the balance sheet date. and the purpose of the transaction determines the choice of category. that is. net after transaction costs. When the asset is sold. net after tax. however. Cash flow hedges Gains and losses on remeasurement of derivatives intended for cash flow hedging are recognized in equity under other comprehensive income and reversed to profit or loss at the rate at which the hedged cash flow affects profit or loss. the cumulative gain or loss that is recognized in equity under other comprehensive income is transferred directly to profit or loss. Liabilities in this category are continuously measured at fair value and changes in value are recognized in profit or loss. Funded plans with net assets. Gains and losses on remeasurement of derivatives used for hedging purposes are recognized as described below. Accounting for derivatives used for hedging purposes All derivatives are initially and continuously recognized at fair value in the balance sheet. plans with assets exceeding obligations. Financial liabilities measured at amortized cost This category includes financial liabilities that are not held for trading. within one year. Classification and subsequent recognition Classification of financial instruments is determined on the original acquisition date. that are not quoted in an active market. will be recovered through a sale and not through continued utilization in operations. cost of goods sold. Hedges of net investments in foreign operations Gains and losses on remeasurement of derivatives intended to hedge SCA’s net investments in foreign operations are recognized in equity under other comprehensive income. where these do not exist.

as well as the value of pension obligations for defined-benefit pension plans. The consolidated value of biological assets at December 31. which is a prerequisite for felling. are measured at the value of anticipated future cash flows. an obligation as the result of events that have occurred and it is probable that payments will be required to fulfill the obligation. This calculation is based on the Group’s existing strategic plans. Other post-retirement benefits Some Group companies provide post-retirement healthcare benefits. but also on other factors. If the government grant or assistance is neither related to the acquisition of assets nor to compensation for costs. One is assumptions and assessments used to determine the carrying amounts of the different assets and liabilities. Both defined-contribution and defined-benefit plans exist in the Parent Company. it must be possible to make a reliable estimate of the amount to be paid. stated period. The calculation is also based on assumptions with regard to growth. If the impact of time is material. In such cases.179m at December 31. The other is assumptions and assessments related to future taxable profits. where future utilization of deferred tax assets depends on this. a special reserve for future payments of pension supplements indexed for inflation. Financial expenses are calculated from the net value of each plan at the beginning of the year and the discount factor decided for each country. as well as assets and liabilities. For further information see Note 10. however. Increases in provisions due to time are recognized on an ongoing basis as an interest expense in profit or loss. discounting is applied with an interest rate before taxes. Past service costs are recognized directly in profit or loss unless changes in the pension plan are subject to employees remaining in service for a specific. This present value includes. are based on actuarial calculations that are based on assumptions on discount rate. Prepaid contributions are only recognized as an asset to the extent the Group is entitled to a repayment or reduction of future payments. The discount factor used is the weighted average cost of capital (WACC) that is normally used in valuations of similar assets. the result may be different and the actual result will. The Group’s net defined-benefit obligations and the fair value of plan assets amounted to SEK 4. seldom concur with the estimated result. The discount rate assumption is based on high-quality fixed-income investments with maturities corresponding to the Group’s existing pension obligations. For further information see note 9. the cost is allocated on a straight-line basis over this period. Forest surveys are updated every ten years. For further information see note 27 and 32. This multiple concurs with current market multiples for similar operations. Impairment testing for the year did not indicate any impairment requirement. VALUATION OF BIOLOGICAL ASSETS Since a market price or other comparable value does not exist for assets the size of SCA’s. ­ Calculation of these cash flows is based on the felling plan from the most recent forest survey that is available. Payroll tax is recognized as an expense in profit or loss except with regard to actuarial gains and losses where the payroll tax. The Group’s payments relating to defined-contribution plans are recognized as an expense during the period the employees carry out the service to which the payment relates. or can be considered to have. anticipated return on plan assets. The discount factors used in the present value calculation of the anticipated future cash flows is the current weighted average cost of capital (WACC) established within the Group for the markets in which the cash-generating units conduct operations. inflation and demographic conditions. Severance pay Severance pay is paid when the Group issues notice to an employee prior to the retirement date or when an employee voluntarily accepts retirement in exchange for such compensation. These plans rest on market-based assumptions and include anticipated future cash flows for the existing operations during the next ten-year period. The provision is valued at the present value of the anticipated future expenditure to settle the obligation. including expectations of future events. For further information see Note 26. that is.653m was recognized as deferred tax assets based on such assumptions and assessments. There are primarily two areas where assumptions and assessments affect recognized deferred tax. restructuring or legal disputes are recognized when the Group has. the Group examines whether there is any impairment requirement relating to goodwill. The obligation and anticipated costs for these benefits has been calculated and recognized in a similar manner to that applying to defined-benefit pension plans. With other assumptions and estimates. Accounting complies with FAR SRS’s (the institute for the accountancy profession in Sweden) accounting recommendation No. are discussed below. 4. Goodwill for the Group at December 31. Government grants received as compensation for costs are accrued and recognized in profit or loss during the same period as the costs. The recoverable amount for the cash-generating units is determined by calculating value in use. 78 SCA Annual Report 2012 Board of Directors’ Report . In addition. Parent Company: The Parent Company applies the regulations in the Pension Obligations Vesting Act (Trygg­ ande­ lagen). The cash flow covers a production cycle which SCA estimates to amount to an average of 100 years. the biological assets. For further information see Note 12. Severance pay is recognized as an expense when the Group has an obligation to compensate employees whose employment was terminated early. the grant is recognized as other income. A special payroll tax (corresponding to contributions) is calculated on the difference between the pension cost determined according to IAS 19 and the pension cost determined according to the rules applied in the legal entity. PROVISIONS Provisions for clean-up costs. 2012. like the actuarial gains and losses. Preparation of annual accounts and application of different accounting standards are often based on management assessments or on assumptions and estimates that are regarded as reasonable under the prevailing circumstances. standing forest. 2012 amounted to SEK 27. Accounting for pension liabilities and pension costs. GOVERNMENT GRANTS Government grants are recognized at fair value when there is reasonable assurance the grants will be received and that the Group will comply with the conditions attached to them. The expected return on these is calculated on the basis of the assumption that the return on bonds equals the interest on a 10-year government bond and that the return on equities amounts to the same rate but with an addition for risk premium. 2012. 2012 amounted to SEK 12. The funded assets include equities and bonds.503m. selling prices. is recognized directly in equity under other comprehensive income.Financial statements  |  Notes – Group 1 Accounting principles. Government grants related to acquisition of assets are recognized in the balance sheet by the grant reducing the carrying amount of the asset. Significant assessments and assumptions are also made regarding recognition of provisions and contingent liabilities relating to tax risks. The main difference compared with IAS 19 is that Swedish ­ practice disregards future increases in salaries and pensions when calculating the present value of the pension obligation. Cash flows beyond the ten-year period are taken into account by applying an operating surplus multiple to sustained cash flow. future salary increases. SEK 1. These assumptions are mainly based on experience and are only changed when a change in price and cost levels is assessed as being long term. GOODWILL Each year. PENSIONS Costs. 2 Key assessments and assumptions between personnel costs and financial expenses. Goodwill is divided among cash-generating units and these concur with the Group’s operating segments. costs for felling and silviculture as well as costs for replanting. As at December 31. TAXES Deferred tax is calculated on temporary differences between the carrying amounts and the tax values of assets and liabilities. cont. by definition.169m. The assumptions and estimates that SCA considers to have the greatest impact on earnings. These assumptions and estimates are often based on historical experience.

The acquisitions mainly relate to: Company Operations Acquisition date Acquisition price1). investments and divestments. The goodwill recognized for the Everbeauty acquisition matches the company’s access to an extensive distribution network and a strong sales organization in China and Taiwan. Acquisition of operations ­ (Consolidated cash flow statement) Acquired net debt excl.987 941 –1.357 4.868 –1.588 –1.” Acquisition balance sheet SEKm 20121) 2011 2010 Intangible assets Non-current assets Operating assets Cash and cash equivalents Provisions and other non-current liabilities Net debt excl. SEK 14.960 – – 11.588 54 3.881 –476 –1. 2012 June.872 –983 –484 Acquisition balance sheets 2012.447 –728 –3.348m and the impact on net profit for the period was SEK 186m. China PLF.983 254 65 1.077 7. France Other Total 1) Tissue Personal Care Tissue Tissue Forest Products July.872 Board of Directors’ Report SCA Annual Report 2012 79 .205m. Acquisition of operations (Consolidated cash flow ­ statement) Less: Cash flow from acquisitions within disposal group Acquired net debt excl. 2012. In addition to these acquisitions.085 –15. 2012 11. Of acquisitions for the year totaling SEK 14.729 –139 –1.098 155 – 11 – 415* 116 3 –112 –35 –31 – – 356* 83 – – 439* –439 – –22 3 Effect on sales and earnings of acquisitions for the year The acquisition of Georgia Pacific’s European tissue operations increased SCA’s net sales in 2012. will be divested in compliance with a ruling by the EU competition authority.ON will develop a number of wind power projects together with SCA.085 –15.357 1. no major changes are expected to occur in 2013. Taiwan PISA (Papeles Industriales S. Previously reported preliminary acquisition balances for Everbeauty and Georgia Pacific in the interim reports for the second and third quarters of 2012 have been changed.647 –14. while also strengthening market positions and the geographic footprint for diapers in Asia.085 941 –10. The fair value of acquired receivables amounts to SEK 3.144 –728 –11.514 633 519 431 351 254 –212 –139 –295 161 1.187m and net profit to about SEK 38m. Europe Everbeauty. net debt assumed (Consolidated operating cash flow statement) * Of which 9 relate to acquisitions within the disposal group.868 536 653 127 331 14. The partnership agreement covers about 270 wind turbines and the project is expected to commence in 2014 and be operational not earlier than 2016–2017. the acquired operation’s net sales would have amounted to about SEK 11. Refer to the separate table for changes to acquisition balances for 2011. the acquired net sales would have amounted to about SEK 1.447 –728 –3. The acquisitions above are reported in the Board of Directors’ Report on page 21 under the section Acquisitions. These values justify the acquired goodwill. Acquisition costs of approximately SEK 200m relating to acquisitions in 2012 are included in operating profit.357 –1. net debt assumed (Consolidated operating cash flow statement) ­ 2.775 750 9.Notes – Group  |  Financial statements 3 Acquisitions and divestments ACQUISITIONS Acquisitions made during the year totaled SEK 14.353 –88 –15 15. by SEK 4. the acquired operations’ net sales would have amounted to approximately SEK 1.292 633 –1.353 –88 –15 15.085 – – 941 – 819 125 11 –27 –51 –90 –3 – 784 314 – – 1. 2012 March.070 913 – – 1. 2012. recognized goodwill and the effect on the Group’s cash flow statements of all acquisitions. particularly in the area of incontinence care.983 –1. 2012 May 2012 April.835 3.144m was paid in cash including assumed cash and cash equivalents. Chile Vinda. Georgia Pacific’s consumer tissue operation.835 3.096 344 54 –42 –113 –193 – 1. Acquired goodwill is not deductible in income taxation in Europe or Asia. The acquisition of Georgia Pacific will strengthen competitiveness by broadening the product range through the addition of well-known brands and by improving the geographic footprint in Europe. Had the operations in Asia been consolidated as of January 1.493 5. The acquisition will provide favorable growth opportunities in a strategic emerging market. These assets were recognized as “Non-current assets held for sale.193 –476 –2. plant and equipment and intangible assets is still ongoing.6 100 Acquisition price pertains to purchase price including assumed net debt.200m and net profit to approximately SEK 335m. Had the other acquisitions been consolidated as of January 1.722m and net profit to SEK 240m.098 –1. Acquired operations The table to the right shows the fair value of acquired net assets recognized on the acquisition date.077 7. cash and cash equivalents Operating liabilities Non-controlling interests Non-current assets held for sale Fair value of net assets Goodwill Consolidated value of share in associates Revaluation of previously owned share Consideration transferred Consideration transferred Unpaid purchase price related to acquisition Settled debt pertaining to acquisitions in earlier years Cash and cash equivalents in acquired companies Effect on Group’s cash and cash equivalents.). including production capacity in the UK and brands in the Benelux countries.353 100 100 50 5 100 100 100 100 21. The consideration transferred for the Georgia Pacific acquisition amounted to SEK 11. cash and cash equivalents Acquisition of operations during the year incl. and the remaining SEK 728m comprises assumed net debt.872m. SCA signed an agreement in December with E.554 1. which concurs with the contractual gross amount.872 1.A.144 – –728 –932 – –51 –458 9 –35 –14.830 4. The impact on consolidated net sales of other acquisitions since the dates of acquisition was SEK 1. including assumed net debt.976m and net profit for the period by SEK 145m. 2012. preliminary Georgia Pacific Everbeauty Other Total SEKm Intangible assets Non-current assets Operating assets Cash and cash equivalents Provisions and other non-current liabilities Net debt excl.960 913 163 – 9 308 3. The following acquisition balances are also preliminary since the measurement of property.872m.514 –11.534 –113 –14.ON under which E. 1) Specification: 3. from the date of acquisition. –14. however. cash and cash equivalents Operating liabilities Non-current assets held for sale Fair value of net assets Goodwill Consolidated value of share in associates Revaluation of previously owned share Consideration transferred Consideration transferred Cash and cash equivalents in acquired ­companies Effect on Group’s cash and cash equivalents.514m and the final installment will be paid in 2013.263 – 911 11. The impact on consolidated net sales since the acquisition of the Taiwan-based hygiene group Everbeauty was SEK 628m and the impact on net profit for the period was SEK 16m. SEKm Acquired % Total holding after acquisition % Georgia-Pacific. Had the European operations been consolidated as of January 1.211 480 –88 –15 1.987 941 –1.357 4. cash and cash ­equivalents Acquisition of operations during the year incl. SEKm Goodwill.263 911 11.

695 –229 15 884 54 938 –214 724 Non-current assets Operating assets Non-current assets held for sale Operating assets in disposal group Cash and cash equivalents Cash and cash equivalents in disposal group Net debt excl. SCA received SEK 3. Gain/loss on sale is included in items affecting comparability in profit or loss. SEKm In early 2012.611 –9. The sales price will be adjusted according to customary reconciliation of working capital.644 1.444 19 6 702 –23 679 –176 503 24.518 –237 1 1.413 –20. the packaging operations were divested. an agreement was reached with Heinzel Group concerning the divestment of SCA’s Austrian publication paper mill in Laakirchen. cash and cash equivalents Net debt in disposal group excluding cash and cash equivalents Provisions Operating liabilities Operating liabilities in disposal group Non-controlling interests Gain/loss on sale1) Loss in disposal group on sale1) Cash flow statement for disposal group divested in June 2012 SEKm 2012 2011 2010 Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash flow for the year from disposal group held for sale Assets and liabilities in disposal group divested in June 2012 SEKm 764 –321 –41 402 1.951 7.Financial statements  |  Notes – Group 3 SEKm Acquisitions and divestments.368 887 –959 –570 –3. 2012. On December 19.673 6. 2012. the newsprint mill in Aylesford. The mill was sold for a symbolic amount on a debt-free basis and gave rise to an accounting loss of SEK 848m and a negative cash flow effect of SEK 158m on a debt-free basis.682 –15 1. cash and cash equivalents Operating liabilities Non-current assets held for sale Fair value of net assets 1.574 –678 –521 375 1. Accordingly. cash and cash equivalents Unpaid purchase consideration in disposal group Divestment of operations during the year incl. UK. Acquisition of Georgia Pacific and Everbeauty.624 ADJUSTMENT OF THE PRELIMINARY purchase price allocation 2011 In 2012. Summaries of the assets and liabilities of the packaging operations that were reclassified to Disposal group as of December 31.205 92 – – – – – Current liabilities Total liabilities 17.186 4.234 –20.928 21.262 853 – – 135 – –92 – –19 –742 – –58 1 – 1.421 – –153 –200 – 47 – – 580 – 22 – –56 – –48 –261 – –14 –19 251 –109 0 –22 –11 1.297 Excluding reversal of realized translation differences in divested companies to profit or loss. net debt transferred (Consolidated operating cash flow statement) 1) 2012 2011 2010 Assets Non-current assets Current assets Total assets Non-current liabilities – – – – – – 14. On June 30. 2011 are also presented below.601 – – – – – – 17. Annual sales in Australasia amounted to approximately SEK 4.793 –2.261 4.650 4. 2012.249 35 1.150m in 2011. Turkey.138 911 9.068 –8 5 – – 617 – 109 – –322 22 11 56 109 1.643 887 –1.070 911 10.012 6.410 4.539 –754 –314 471 Purchase price received after divestment costs Less: Unpaid purchase consideration in disposal group Cash and cash equivalents in divested companies Cash and cash equivalents in disposal group Cash and cash equivalents in disposal group upon reclassification of joint venture to associates ­ Effect on the Group’s cash and cash equivalents. 80 SCA Annual Report 2012 Board of Directors’ Report .121m on a debt-free basis. The transaction is expected to be concluded in the first quarter of 2013 following approval by the relevant authorities. specification of fair value Carrying amount Adjusted fair value Fair value Intangible assets Non-current assets Operating assets Cash and cash equivalents Provisions and other non-current liabilities Net debt excl. In conjunction with the refinancing of the operation and the sale of 50% of the shares.003 –2.441 3.719m on a debt-free basis. In conjunction with the transaction. cont. and the compensation received amounted to SEK 14.490 2. Divested operations (Consolidated cash flow ­statement) Less: Divested net debt excl. in accordance with IFRS 5.121 –1. Goodwill Brands Deferred tax Total –66 –60 126 0 Information concerning disposal group divested in June 2012 The following summaries present the revenues and expenses as well as the cash flow statement for the packaging operations for the financial year and for each comparative year. cash and cash equivalents Cash flow from divestments in disposal group Add: Cash and cash equivalents in disposal group Cash and cash equivalents in disposal group upon reclassification of joint venture to associates ­ Divested net debt in disposal group excl. SCA established a joint venture for its existing hygiene operation in Australasia together with Pacific Equity Partners (PEP).096 153 200 8 –617 –583 –767 –6. the operation in Australasia was deconsolidated and recognized in accordance with the equity method. The part of the operation that was divested has been classified and recognized as a disposal group held for sale.284 –384 900 24. following final measurement of acquired assets and liabilities. Income statement for disposal group divested in June 2012 SEKm 2012 2011 2010 DIVESTMENTS Assets and liabilities included in divestments SEKm 2012 2011 2010 Net sales Cost of goods sold Gross profit Sales and administration expenses Items affecting comparability Share of profits of associates Operating profit Financial items Profit before tax Tax Profit from disposal group held for sale 384 1. was divested to the private equity company Martland Holdings.959 6. an impairment of SEK 435m in the accounts was charged to earnings for 2012.405 –615 –3. In October.377 – –866 –5 17. Brazil. the following changes were made to the preliminary acquisition balance sheets relating to the acquisition in 2011 of Pro Descart.340 – –135 – – 11.601 2. and San Saglik. The initial purchase consideration amounts to EUR 100m with a possible additional purchase price amounting to a maximum of EUR 100m based on a two-year profit-sharing model.417 3. excluding the two kraftliner mills in Sweden.378 21. etc.053 75 275 – –446 –45 68 – 980 3.

FINANCE LEASES Future payment obligations in the Group of minimum leasing fees for finance leases are distributed as follows: SEKm 2012 2011 2010 Within 1 year Between 2 and 5 years Later than 5 years Total Future expenses for financial leasing Present value of liabilities relating to finance leases Disposal group Within 1 year Between 2 and 5 years Later than 5 years Total Future financial expenses for financial leasing Present value of liabilities relating to finance leases.121 –23.396 –30. For information about significant leasing contracts. 713).926 –623 24 –846 –79. other buildings. SEK 179m (88. telephony and lease of premises Other operating expenses.). 873) relating to machinery. pertaining to the disposal group. Board of Directors’ Report SCA Annual Report 2012 81 . of which SEK 205m (396. office fixtures and various transport vehicles. SEK 332m (291.250 –21.513 629 63 –37.365 –98. 622) related to the Personal Care business. sales and ­administration Other Total Disposal group Total excluding disposal group 1)  After deduction for revenues from energy in the amount of SEK 913m (929. Chile. SEK 683m (595. The income can be of a recurring or occasional nature. machinery and equipment. 93) as amortization of debt.A.053 –4.052 –3.684 –5. respectively.696 –3.184 1.614 –6. Impairment includes impairment of goodwill in the amount of SEK 89m.571 –4.908 6.104). of which SEK 179m pertains to gains from the sale of non-current assets.399 Within 1 year Between 2 and 5 years Later than 5 years Total Disposal group Total excluding disposal group 570 1.452 2. UK and 50% of the hygiene operations in Australasia. 26) to impairment of working capital. 903).250 419 2.523 –38.143 5.472 –2.046 Including items affecting comparability. 787) pertains to restructuring costs being paid. SEK 12m (–.286 4.558 –1.245 3. refer to Note 32 Contingent liabilities.426 –702 –75. revenue from SCA’s transport business amounted to SEK 755m and rental income amounted to SEK 44m. it is possible to terminate contracts early.239 – 2.211 –2.324 –118 – – –98. Of total items affecting comparability.214. During 2012.775 7.308 – – –102. ITEMS AFFECTING COMPARABILITY Items affecting comparability in 2012 totaled SEK 2. The assessment for a number of the objects is that. including energy plants.154 –5. 603) and other operating expenses of SEK 155m (78. 152) relating to buildings/land and SEK 5m (9.449 –12.086 –40 1.509 –31.555 – –79.022 –31. of previous equity portion at fair value in conjunction with acquisition of remaining 50% of PISA (Papeles Industriales S. 63) to the Forest Products business and SEK 75m to other operations.160 –2. OTHER OPERATING EXPENSES SEKm 2012 2011 2010 – – – – – – 116 –25 –30 – –55 7 –48 97 –7 –37 –10 –54 7 –47 999 Total payments for finance leases during the year amounted to SEK 35m (35.137 –38.431 –3. –) to the Tissue business.046 –37. distribution. 1. 232) are included in operating profit.Notes – Group  |  Financial statements 4 SEKm Operating expenses by type of costs Operating expenses by function 2012 2011 2010 OTHER DISCLOSURES Exchange rate differences totaling SEK 95m (252.490 1.925 –3. 931). sales of goods and services outside SCA’s core business amounted to SEK 732m.555 –61. 3) Loss on divestment of newsprint mill in Aylesford.289 –4.266 Transport expenses Energy expenses1) Purchased finished goods for onward sale Marketing costs Repairs and maintenance IT.054 2. IT equipment. disposal group Total present value of liabilities relating to finance leases. Restructuring costs being paid comprise personnel costs in the amount of SEK 528m (517.688 See also page 114 for description of costs.207 –1.591 –4. SEK 624m pertains to impairment and SEK 2. 184).239 1.687 –31. 19) was recognized as an interest expense and SEK 24m (18.025 –3. in reality. Items affecting comparability include restructuring costs totaling SEK 791m (955. –) to impairment of goodwill and SEK 13m (36.981 –5.010m to other expenses.349 –8.933 –1.711 12 19 19  6  7  7  3 643 –192 –28.555 5. warehouses. OPERATING LEASES Future payment obligations in the Group of minimum leasing fees for non-cancellable operating leases are distributed as follows: SEKm 2012 2011 2010 Cost of goods sold Sales and administration expenses Items affecting comparability Total Disposal group Total including disposal group –64.153 –3. mainly inventory. SEK 4m (7. The carrying amount of finance lease assets at year-end amounted to SEK 165m (120. 112).775 –6. Leasing objects comprise a large number of items.634 –79.439 –79.497 –1. During the year.034 –3. excluding disposal group 54 57 26 137 –21 116 49 118 – 167 –22 145 920 112 54 1. SEK 83m (324.228 –37.310 –15.034 –23.701 –11. production Other operating expenses.906 –12.349 – –31.828 –3.165 –102. Government grants received reduced operating expenses by SEK 38m (78.349 –4. offices.327 –1.245 –1. AUDITING EXPENSES Remuneration to auditors can be specified as follows: SEKm 2012 2011 2010 PwC Audit assignments Auditing activities other than the audit assignment Tax consultancy services Other assignments Total PwC Other auditors Audit assignments Tax consultancy services Other assignments Total other auditors Total Disposal group Total excluding disposal group 4 2 9 15 145 – 145 1 8 5 14 153 –28 125 2 2 3 7 98 –27 71 57 2 19 52 130 80 3 20 36 139 71 2 8 10 91 –7.807 –2.797 –4.327 –20.967 1. Of restructuring costs.634m. 89).288 –8. Income of a more occasional nature amounted to SEK 180m. Operating expenses by type of cost SEKm Note 2012 2011 2010 Other income Change in net value of biological assets Change in inventory of finished products and products in progress1) Raw materials and consumables1) Personnel expenses1) Other operating expenses1) Depreciation Impairments1) Revaluation of acquisitions 2) Loss on divestment 3) Total 1) 2) Remeasurement 1. 118) to impairment of non-current assets. 52).286 –61.989 –6. Costs for research and development amounted to SEK 845m (832.399 Cost for the year related to operating leasing of assets amounted to SEK 633m (1.389 4.330 –3.053 623 512 –39. Depreciation of finance lease assets during the year amounted to SEK 12m (16.684 7.927 –5. OTHER INCOME Other income includes income from activities or sales of goods and services outside SCA’s core business. Restructuring costs for 2011 and 2010 include SEK 180m and SEK 246m.

067 5.927 –601 Including the packaging operations divested in June 2012.975 4.462 –99 –537 –289 –826 – – – 8. 82 SCA Annual Report 2012 Board of Directors’ Report .940 – 108 8.651 –1.268 –2.4251) –1.011 1.775 2.408 SEKm Personal Care Tissue Forest Products Other ­operations Eliminations Total Group 2011 financial year REVENUES External sales Internal sales Total revenues RESULT Segment result Items affecting comparability Operating profit/loss Financial income Financial expenses Tax expense for the year Profit from disposal group Net profit/loss for the year OTHER DISCLOSURES Assets Allocated to disposal group Holdings in associates Unallocated assets Total assets Investments Depreciation Expenses.Financial statements  |  Notes – Group 5 SEKm Segment reporting Forest Products Other ­operations Personal Care Tissue Eliminations Total Group 2012 financial year REVENUES External sales Internal sales Total revenues RESULT Segment result Items affecting comparability Operating profit/loss Financial income Financial expenses Tax expense for the year Profit from disposal group Net profit for the year OTHER DISCLOSURES Assets Holdings in associates Unallocated assets Total assets Investments/acquisitions Depreciation Expenses.775 38.601 1.337 0 81.268 – –2.054 21.926 –789 3.358 48.294 42.584 –1.238 –4.272 18.101 –14 45.640 1.565 – 123.004 –6.228 20.022 –15.640 –678 3.003 241 1.267 900 607 17.423 –4.366 –2.881 – –4.885 233 39.812 –2.048 –1.112 –1. not matched by payments 1) 24.440 –4.634 6.880 – 653 46.012 1.439 2.003 –1.530 –1.355 –251 503 5.357 74 48.445 – – – 111.180 –205 2.680 –983 –67 59.812 85.905 –5.012 91 –1.440 81.632 –2. not matched by payments 17.363 –1.901 3.531 –20.580 –480 –95 –575 – – – 7.645 –744 1.799 131.210 91 49.408 0 85.283 256 1.375 17.526 –572 4.553 2.416 56 3.436 339 24.299 129 –1.375 257 57.738 –5.955 339 26.399 – 252 17.533 –2.565 – – – 17.280 – 54 49.000 25.664 1.118 17.150 –597 2.186 189 42.282 139.385 786 –3.275 2.334 –1.292 –585 7. in addition to depreciation.646 –2. in addition to depreciation.445 – – –9.457 5.454 –1.3241) –931) –9.171 –178 –60 –224 –3.472 –2.962 1.337 2.

615 2.300 3.189 –28 47. solid-wood products and renewable energy.915 –80 2.870 –6.041 2. kitchen paper.495 –702 7.634 –107 51 –66 –93 –215 –637 –648 –3. not matched by payments 1) 24. Internal prices are market-based.265 23 43. tissue and forest products. facial tissues. These product groups are the primary lines of business. IntraGroup deliveries are eliminated when preparing the consolidated financial statements.697 –2.467 –4.027 39.793 57 –1. Items affecting comparability 2012 SEKm Expenses Impairments 2011 Expenses Impairments 2010 Expenses Impairments Personal Care Tissue Forest Products Other Total Net –168 –570 –990 –283 –2. Board of Directors’ Report SCA Annual Report 2012 83 . tissue. SCA has a well integrated value chain in Sweden between its forest assets and production facilities.102 595 47.922 –622 2. Forest Products sells publication papers.061 –1.439 –527 – –80 – –607 –95 – – – –95 –702 Business Segments: SCA is a global leading hygiene and forest products company that develops and produces sustainable personal care.870 17.041 – 3. service and maintenance. restaurants and hotels.558 –2.592 – – – 136. handkerchiefs.471 – –4.873 –1. some assets that are common to two or more business segments are allocated among the business segments.374 –605 38. which also. expenses and results for the various business segments were affected by intra-Group deliveries. In AFH tissue. Intra-Group deliveries: Revenues. pulp. Personal Care comprises three product segments and offers incontinence care products. Consumer tissue comprises toilet paper.937 1) –1. Assets and liabilities: The assets included in each business segment comprise all operating assets used in the business segment. Pulp production contributes to the Group’s raw material integration.835 –383 – –383 – – – 8.467 82.592 16.224 –5.367 1) –1.227 –1.592 – –9.873 – 16.830 856 1.755 724 5.672 198 39.022 5.538 41 43.484 142. Most of the assets are directly attributable to each business segment. the Group’s pulp is mainly produced from timber from the Group’s own forests.Notes – Group  |  Financial statements SEKm Personal Care Tissue Forest Products Other ­operations Eliminations Total Group 2010 financial year REVENUES External sales Internal sales Total revenues RESULT Segment result Items affecting comparability Operating profit/loss Financial income Financial expenses Tax expense for the year Profit from disposal group Net profit for the year OTHER DISCLOSURES Assets Holdings in associates Unallocated assets Total assets Investments Depreciation Expenses.324 –723 Including the packaging operations divested in June 2012. primarily trade receivables. since the Group’s pulp is mainly delivered internally.472 1. napkins and cotton pads. soap. in addition to depreciation. In addition. baby diapers and feminine care products. large workplaces. to a large extent. SCA develops and sells complete hygiene solutions comprising dispensers.729 298 25.551 1) 386 1) 38.731 0 82.496 1) –113 1) –9. inventories and non-current assets after deduction for operating liabilities and provisions.011 –37 –108 –472 –6 –623 –2.731 2.978 –6.884 –1. supply the sawmills.474 2. Tissue comprises consumer tissue and Away-From-Home (AFH) tissue encompassing hospitals.579 –1. In addition.356 19. packaging papers.937 –2 –5.

202 276 270 436 6.389 256 248 73 65 11 2.279 81.867 7.421 8 231 16.573 2.430 2.469 7.239 839 2.401 1.097 1.640 1.478 807 327 826 918 158 595 623 18 37 147 755 196 97 23.653 1.444 14.742 8. Rest of world Sub-total Allocated to disposal group Total Group 1) Non-current assets include Goodwill.497 1.976 1.098 8.272 5.849 43.408 7 12 11 8 6 4 3 2 2 1 1 1 1 1 1 1 1 0 0 0 1 57 3 2 1 1 0 1 8 10 4 2 2 1 1 1 1 1 1 1 0 0 0 0 0 0 3 28 100 – 100 7.042 2. Rest of Europe Rest of world US Mexico Colombia Japan Canada Malaysia Chile Ecuador Brazil China Costa Rica Hong Kong Morocco South Africa Philippines Taiwan Singapore Other Total.347 2.330 475 481 468 614 81 20 – 95 37 227 34 1.605 1.150 2.388 57 301 1.188 811 780 657 560 411 409 260 243 161 608 48.742 1.298 58 338 1.197 33.716 91.673 2.560 2.438 9.591 6.057 94.825 1. machinery and equipment and Biological assets.758 4.549 2.729 5.646 26 19 22 27 29 19 6 15 25 37 28 27 24 37 45 44 57 39 31 32 35 22 44 48 37 49 5 45 42 26 24 40 72 46 57 78 32 41 53 38 74 – 56 46 79 68 42 35 27 – 42.880 278 313 506 7.775 26 18 19 26 25 22 16 14 23 35 65 25 32 56 61 25 58 72 32 37 85 22 45 50 50 53 26 38 45 25 27 35 74 39 58 13 35 43 59 46 75 – 58 51 68 68 46 36 29 – 29 6.084 7.390 EU excl.668 6. land.817 3.307 11.370 1.570 1.085 4.122 3 390 959 411 87 398 8 2 17 – 27 8 – 8 3.051 31.325 731 2 813 232 3 1 64 65 2 580 0 1 30.602 2.834 38.038 890 400 387 202 133 359 245 236 260 122 69 182 6.894 24.669 –13.442 4.537 1.515 8.332 379 223 87 591 117 145 69 25 31 25 759 19 13 14.775 – 33.864 4.846 2.436 1.710 1.848 2.444 6.762 1. cont. Group by country Net sales 2012 SEKm % 2011 SEKm % 2012 Average number of employees Of whom women. 84 SCA Annual Report 2012 Board of Directors’ Report .013 1.890 9.616 2.271 3 330 877 939 83 242 372 2 14 – 43 8 1.410 968 2.804 1.066 1.268 1.776 1.683 2.413 81.455 1.138 1.697 –12.214 1.568 12.651 2.479 25.166 220 24 72 62 8 1.983 1.273 1.812 3.868 3.684 2.974 168 241 6 80 0 2.586 776 640 1.011 1.193 85.185 18.080 27 167 238 78 69 98 526 77 69 35. Sweden Germany United Kingdom France Spain Italy Netherlands Austria Belgium Finland Denmark Poland Greece Hungary Czech Republic Ireland Portugal Romania Slovakia Lithuania Rest of EU Total EU excl. Other intangible assets.361 105.068 327 385 387 353 335 730 65.042 775 1.232 888 1.746 2.811 1.530 4. % 2011 Of whom women.587 10.286 224 472 105 187 85 19 – 88 39 24 31 2.552 2. Buildings.402 2. % Non-current assets1) 2012 SEKm 2011 SEKm 5.547 2.944 8.150 1.408 – 85.592 2.889 2.Financial statements  |  Notes – Group 5 Sweden Segment reporting.343 4.886 1.834 – 91.935 1.337 7 14 9 8 5 7 4 2 2 1 3 1 1 1 1 0 1 1 0 0 1 62 3 2 2 0 0 0 7 8 3 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 4 24 100 – 5.178 84 83 5 94 0 2.449 3.013 762 477 441 399 392 309 284 247 244 224 183 2.166 3.008 1.750 –24. Sweden Rest of Europe Russia Norway Switzerland Ukraine Turkey Other Total.

stationed in the US. The total remuneration is to correspond to market practice and be competitive in the senior executive’s field of profession. The average number of employees rose by about 2. 3. the maximum outcome is 80%.000 525.000 525.000 650. the notice period should normally be two years if termination is initiated by the company.000 525.000 625. Severance pay should not exist. and entitle the senior executive to pension from the age of 60.137 –5. In addition. measured as the TSR (Total Shareholder Return) index.000 525.250.697 27% 58 45.000 5.000). The long-term portion (Long-Term Incentive. and one year. Business Unit Presidents and equivalents. or a combination of both.341 26% 61 Women comprised 21% (18. “Remuneration of the CEO and other senior executives will be a fixed amount. The program for variable remuneration is divided into a short and long-term portion. from which the shareholders benefit.000 400.200) per employee in skills-enhancement activities. while the goal for the CEO and others reporting directly to him is based primarily on the Group’s profit before tax and operating cash flow. In return.000 125. During 2012. These figures include both voluntary retirement and the effects of rationalization activities and retirements. a non-financial goal also applies accounting for 20% of the vari­ able remuneration. at present 20 years.382 1. The structure of the LTI was approved by the Board in 2003. The added value per employee in 2012 amounted to SEK 617. 3. For the CEO. SCA invested approximately SEK 100m (151. Other senior executives include the Executive Vice Presidents. be resolved by the Board of Directors. Programs for variable remuneration should be formulated so that the Board. in SCA shares.000 525. the maximum outcome is 130%. In the event of termination of employment.000 325. % 2012 21–30 yrs 31–40 yrs 41–50 yrs 51–60 yrs 17 28 30 21 2% (2. For the composition of this group.200 people on the basis of the acquisition of Georgia-Pacific’s European tissue operations in July 2012 and by 635 people through the acquisition of Asian company Everbeauty in June 2012. The shares may then not be sold before the end of the third calendar year after entry into the relevant LTI program.344 (4. who is also the CEO.114 1. 3) are over the age of 60.476 876 15. The proportion of university graduates amounts to about 18% (16.993 (5.000 525. or refrain from. 603) attributable to costs for implemented efficiencyenhancement measures. compared with a weighted index of competitors’ and consumer companies’ shares performance (TSR) over a three-year period. Executive Vice Presidents and Business Unit Presidents and equivalents is maximized to a total of 100% of the fixed salary. or LTI) may amount to a maximum of 50% of the fixed salary.000 525.775 29% 62 43. 147) or SEK 3. Pension benefits are to be either defined-benefit or defined-contribution plans.186 21. if exceptional circumstances prevail.000 125. as far as possible. payment of variable remuneration if such an action is considered reasonable and in compliance with the company’s responsibility to shareholders.000 675. In 2012.228 –5.Notes – Group  |  Financial statements 6 SEKm Personnel and Board costs REMUNERATION OF SENIOR EXECUTIVES Senior executives refer to the President. possible variable remuneration.000 5. after tax withholdings.809.000 – 525.000 – 625.110 20.000 1. Breakdown of employees by age groups. while the corresponding limit for other senior executives is 90%.461 Total personnel costs include SEK 528m (517. a significant portion relates to summer jobs for students and seasonal work.000 100. In addition. has the possibility to limit. the average number of employees was reduced by about 12. Business Unit Presidents and equivalents.365 134 6 970 257 713 2. or STI) for the CEO. at the earliest.000. and 2% (3. the period of employment must be long-term.575.000 125. as well as for other senior executives.825. For one Business Unit President. The short-term portion (Short-term Incentive. Furthermore. 4.207.000 (3. SEK Board fee Audit Committee fee Remuneration Committee fee Total Sverker Martin-Löf (Chairman) 1. the senior executive must invest half of the variable LTI compensation. 633. When resigning before the age providing entitlement to pension.546 15.000 Pär Boman Rolf Börjesson Jan Johansson Leif Johansson Louise Julian Bert Nordberg Anders Nyrén Barbara Milian Thoralfsson Total 525. when initiated by the senior executive. Personnel costs 2012 2011 2010 Salaries and remuneration of which Group management of which Board Pension costs of which defined-benefit pension plans of which defined-contribution pension plans Other social security costs Other personnel costs Total1) Disposal group Total excluding disposal group 1) 11. and the Central Staff Managers.676 15.687 – 15. combined with other remuneration. 16).000 Board of Directors’ Report SCA Annual Report 2012 85 .000 150. as regards the President.” Company’s application of guidelines The company applied the guidelines approved by the AGM in the following manner. Variable remuneration Variable remuneration of the CEO. 17) of the total number of Board members and senior executives. Executive Vice Presidents and Business Unit Presidents and equivalents may amount to a maximum of 50% of fixed salary.269) people left SCA while 6.000 people due to the divestment of the packaging operations in June 2012 and by 740 people due to the sale of 50% of the operations in Australia/New Zealand at the start of 2012. Variable remuneration is not pensionable income.000 (519. is assessed as a market rate and competitive in the labor market in which the executive works. To earn the pension benefits. Matters of remuneration of the senior management are to be dealt with by the Remuneration Committee and. The variable remuneration is to be based on the outcome of predetermined objectives and. employees and other stakeholders. The STI goals set for the Business Unit Presidents are mainly based on operating cash flow. It is set individually at a level that.000 525.500. additional benefits and pension.000 100. For one Business Unit President.975. the variable remuneration is to be limited and linked to the fixed remuneration. The established LTI goal is based on the performance of the company’s B share. the Executive Vice Presidents. 2) of the employees are under the age of 20. cost control. operating profit and growth for each business unit. Average number of employees 2012 2011 2010 Average number of employees of whom women Number of countries 33.262) joined the Group.682 14. the senior executive will receive a paid-up pension policy from the age of 60. stationed in the US. Fixed and variable remuneration are to be linked to the manager’s responsibility and authority. FEES TO BOARD MEMBERS IN THE PARENT COMPANY DURING THE YEAR Members of the Board elected by the AGM who are not employees in the company received the following remuneration in 2012 in accordance with the AGM resolution. AGM guidelines for remuneration of senior executives The 2012 Annual General Meeting adopted the following guidelines for remuneration of senior executives. and the Central Staff Managers. 4. see pages 54–55. while the corresponding limit for other senior executives is 40%. Fixed salary The fixed salary is to be in proportion to the individual’s position and the authority and responsibilities this entails.687 15.046 101 5 958 261 697 3.654 107 5 915 162 753 3. be linked to the increase of value of the SCA share.

921 Pension costs 8.521 CEO Jan Johansson Other senior executives (16 people) Total 6. a pension is paid based on premiums paid by the company.Financial statements  |  Notes – Group 6 Personnel and Board costs. full pension requires the executive to have been employed in the Group for 20 years. to receive a retirement pension (including national pension benefits) of up to 45% of the average salary (excluding variable remuneration) for three years prior to retirement age. see page 49. However.529 19.253. has been employed in the Group for at least three years.031 23. excluding special payroll tax. In addition.665 9. which is invested in funds or traditional insurance. a paidup policy is received for pension payments from age 60. a paid-up policy is received for pension payments from age 65 or 60. resulting in maximum outcome for the CEO and other senior executives. Upon termination of employment prior to reaching retirement age.894. One executive is encompassed by the defined-benefit pension plan that applies to employees in Belgium. on condition that the executive. Upon termination of employment prior to reaching retirement age. The agreements have no stipulations with regard to severance pay. Some senior executives have a pension plan. after reaching the age of 40.423. 86 SCA Annual Report 2012 Board of Directors’ Report .435. Executive Vice Presidents and Central Staff Managers.300.240.757 133.356. if such notice is given by the company. which is closed to new entrants.991.875 29. excluding social security costs. on reaching the age of 60. with regard to the CEO. who is entitled to retire at the age of 60. Two senior executives have a defined-contribution pension plan (in addition to national pension benefits) into which the company pays 30–40% of the executives’ fixed salary.388. One executive is encompassed by the defined-contribution pension plan that applies to employees in the US. Preparation and decision process for remuneration During the year. has been employed in the Group for at least three years. Remuneration and other benefits during the year SEK Fixed salary Variable remuneration Other benefits Total salary and remuneration CEO Jan Johansson Other senior executives (16 people) Total SEK 10. When it was deemed appropriate. Notice period and severance pay The agreement with the CEO stipulates a period of notice of termination of two years if such notice is given by the company. variable remuneration For the CEO. In addition to the defined-benefit pension. STI resulted in 28–37% of fixed salary for 2012. The Board discussed the Remuneration Committee’s proposal and decided on the basis of the Committee’s recommendations. Upon termination of employment prior to retirement age. STI resulted in variable remuneration corresponding to 19–77% of fixed salary for the Business Unit Presidents. • Pension costs pertain to the costs that affected profit for the year. the individual must have been employed for at least 20 years calculated from 40 years of age. For information about the composition of the Remuneration Committee. For full pension. If notice is given by the company.372. housing and school fees. The executive has a corresponding right with a period of notice of termination of six months to one year. which grants the executive the right at the age of 65 to receive a pension (including national pension benefits) at up to 70% of the salary (excluding variable salary). The remuneration of senior executives for the 2012 financial year was based on the Remuneration Committee’s recommendation and. beneficiaries’ pension amounts to about 50% of retirement pension.071 131. the Remuneration Committee submitted recommendations to the Board regarding the principles for remuneration of senior executives.900 49. the pension agreement provides a retirement pension (excluding national pension benefits and previously earned paid-up policies) between the age of 60 and 65 of approximately 40% of final salary (excluding variable remuneration) and thereafter of approximately 20% of final salary (excluding variable remuneration) for life. In addition.194. The LTI target was achieved for 2010–2012. The Board’s proposal for new guidelines The Board has decided to propose to the 2013 Annual General Meeting the unchanged guidelines for determining salaries and other remuneration for senior executives.812. after reaching the age of 40. The agreement does not contain any stipulations with regard to severance pay. the Remuneration Committee proposed criteria for assessing vari­ able remuneration and pension terms. cont. Between the company and other senior executives. With the salary situation prevailing in 2013 and an unchanged number of senior executives. decided by the Board. Pension For the CEO.764 114. the CEO is not obligated to serve during the notice period. The executive is normally expected to be available to the company during the notice period.906 Comments to the tables: • Variable remuneration covers the 2012 financial year but is paid in 2013. Other benefits Other benefits pertain. Most of the other senior executives in the Group have a combination of defined-benefit and defined-contribution pension plans that entitle the executives. In addition. The CEO has a corresponding right with a period of termination of one year. beneficiaries’ pension amounts to approximately 50% of retirement pension in the case of death before the age of 65 and thereafter to 30% of the retirement pension (including previously earned paid-up policies). the maximum outcome of variable remuneration could entail a cost for the Group. that is a defined-benefit pension plan.171 58. Outcome. The premiums paid for each year of service amount to 10% of the executive’s base salary and are invested in a fund or traditional insurance chosen by the executive. Normally. to a company car.921 66. in some cases. between 60 and 65 and subsequently with 50% of the salary at retirement (excluding variable remuneration).079. a paid-up policy is received for pension payments from age 60. In addition. a period of notice of termination of one to two years normally applies.245. the work of the Remuneration Committee was carried out with the support of external expertise. on condition that the executive.000 55. of approximately SEK 75m. they are entitled to retire at 60 with 70% of the final salary at retirement (excluding variable remuneration). The executives concerned did not participate in remuneration matters pertaining to themselves.864 9. Two senior executives are employed in companies outside Sweden. The recommendations encompassed the ratio between fixed and variable remuneration and the size of any salary increases. beneficiaries’ pension amounts to about 50% of retirement pension.

264 – –1.549 – 5. trademarks and similar rights Capitalized development costs Sub-total Total Impairment losses Buildings Land Machinery and equipment1) Construction in progress Sub-total Goodwill Patents.421 0 5.325 –1. borrowing Interest expenses.675 5.290 –35 –1.927 53 40 225 6 324 4. –). Board of Directors’ Report SCA Annual Report 2012 87 .065 – 6. Depreciation/amortization is based on the costs and estimated useful lives of the assets outlined in the accounting principle section on page 76.170 39 4 91 72 20 136 27 7 64 48 – 44 – 32 –2 Other financial income and expenses include exchange gains of SEK 4m (20. trademarks and similar rights Capitalized development costs Sub-total Total Disposal group Total excluding disposal group 1) 608 119 3. derivatives Fair value hedges.984 5.320 836 109 5.Notes – Group  |  Financial statements 7 SEKm Depreciation/amortization and impairment of property. and intangible assets 2012 2011 2010 8 SEKm Financial income and expenses 2012 2011 2010 Depreciation Buildings Land Machinery and equipment Sub-total Patents.370 14 –8 –62 –1. plant and equipment.549 835 114 4. interest expenses for the year would have been SEK 178m (177.426 –1.900 6 5.180 –1.324 94 13 11 – 118 – 0 0 118 930 122 5.355 –1. trademarks and similar rights Sub-total Total1) Total Buildings Land Machinery and equipment Construction in progress Sub-total Goodwill Patents.910 346 31 5.117 – 292 33 325 6.130 5.442 –1. For a description of how SCA manages its interest rate risk. with unchanged fixedinterest terms and volumes in the net debt.920 4. unrealized Other financial expenses Total financial expenses Total Disposal group Total excluding disposal group –1.948 4.910 74 4.926 24 9 501 0 534 89 – 89 623 632 128 4.312 Results from shares and participations in other companies Dividend Capital gains/losses.181 89 259 20 368 5. The total includes reversal of impairment for machinery and equipment of SEK –m (62.308 888 154 4. investments Other financial income Total financial income Interest expenses and similar profit/loss items Interest expenses.287 11. refer to page 61 of the Board of Directors’ Report.264 –1. 2012 using assumptions on market movements that are regarded as reasonably possible in one year’s time.054 5. 7). If interest rate levels had been 1 percentage point higher/lower.116 –54 –1. impairment losses Interest income and similar profit/loss items Interest income.342 37 6 –56 –1.647 259 20 279 4.237 78 8 –29 –1.235 –915 10. 158) higher/lower.624 272 31 303 5. Sensitivity analysis calculations have been performed on the risk to which SCA was exposed at December 31.999 292 33 325 6.

SEK 103m have an indefinite life.908 61 26.8 SEKm Intangible assets Land and buildings Machinery and equipment –82 – 437 –188 246 34 –1.8 –135 – – 159 3 34 – 61 –1.969 –214 1. The changed tax rates in 2011 primarily relate to the effect of a corporate tax rate decrease in the UK. 5) Income taxes related to prior years recognized in 2012 primarily pertain to a provision for tax risk in Denmark.177 –23 1.898) at December 31.651 435 1. 1.142 –961 –3 –3 –146 –130 53 1.038 931 1. 0).350. –26).331 –884 –1.331m (–20. tax asset (–) The change during the year to the deferred tax liability is explained below: Opening balance Deferred tax expense Other changes Exchange differences Closing balance Tax expense including disposal group Expected tax expense Difference The difference is explained by: Permanent effects1) Effects of other subsidiary ­financing Goodwill impairment and currency impact 2) Effects of divestments 3) Other permanent effects 4) Taxes related to prior years 5) Changes in unrecognized deferred tax assets 6) Changed tax rates 7) Total 1) 2) The 251 1. 10.8 3.142 509 1.1. ­ 3) The effects of divestments for the year pertain to the capital loss on shares attributable to the newsprint mill in Aylesford.9 –18.216 –6.1 19.7 – – 2.0) of the Group’s profit before tax. tax income (–) SEKm 2012 2011 2010 Total Income tax for the year Adjustments for prior years Total including disposal group Disposal group Total 1.255 –5 10 – –159 OTHER SCA recognized no deferred tax relating to temporary differences attributable to investments in subsidiaries. Any future effects (tax deducted at source and other deferred tax on profit-taking within the Group) are recognized when SCA can no longer control reversal of such differences or when. revaluation of deferred tax assets of SEK 0m (7.3% (73. the reversal of a previous provision for tax risks decreased the tax expense by SEK –33m.890 –164 –61 –501 –25 –335 –2.169) and deferred tax liabilities of SEK 9.0 25. The closing deferred tax liability comprises deferred tax assets of SEK 818m (715.651 –384 1.0 5.193 31 –1 – –139 –159 1.635 –125 –922 –1. 6) The changes in unrecognized deferred tax assets in 2011 include SEK 43m concerning the operations in the UK. The difference between recognized tax expense and expected tax expense is explained below. 2011 primarily pertain to the impairment of tax ­ assets belonging to the operation in Australia. 2011 includes SEK 35m and 2010 includes SEK 34m in tax expenses for corresponding profit-taking.142 –271 871 1.107m (9.6 –139 1. it is no longer improbable that reversal can take place in the foreseeable future. tax asset (–) The change during the year to the current tax asset is explained below: SEKm 2012 2011 2010 Value at January 1 Current tax expense Paid tax Other changes Exchange differences Allocated to disposal group Value at December 31 –130 1. Current tax liability (+).0 –18.154 –1. uncapitalized loss carryforwards amounting to SEK 79m expired and SEK 19m was either utilized or capitalized. effects of goodwill impairment and currency impact in 2011 pertain to the divestments of the Packaging operations and sale of 50% of the operation in Australasia.216 73.231 – –18 86 76 –20 1.2 –4. LOSS CARRYFORWARDS Loss carryforwards for which no deferred tax assets were recognized amounted to SEK 3.8 Financial assets Current assets Provisions for pensions Other provisions Liabilities Tax credits and tax loss carryforwards Other Total 741 7.699.8 1. Other changes include deferred tax recognized directly in equity according to IAS 19 of SEK –251m. The expected tax expense is calculated according to the current Group structure and current profit levels in each country. for other reasons. In 2010.5 – –0. 26.038 –1.6 1. IAS 39 of SEK –2m. The tax value of uncapitalized loss carryforwards amounted to SEK 1.7 – 9. 388).800).289 Permanent effects are attributable to permanent differences between the accounting and fiscal result. effects of acquisitions and divestments SEK 1. 88 SCA Annual Report 2012 Board of Directors’ Report . 2012 SEKm % 2011 SEKm % 2010 SEKm % Other changes include the effects of changed tax rates amounting to SEK –1. –5).154 –903 251 – 251 1.216 3.4 –0.625 –45 8. 547) and tax liabilities of SEK 378m (247.7 –28.2 0.038 –168 870 During 2012.3 23. Of these.098m and changes in provisions for tax risks of SEK –236m.760 3. 1. UK and effects relating to the divestment of 50% of the operation in Australasia.0 0.8 3.378m (1. Deferred tax liability (+).2 0.421 –186 189 –943 –139 –541 –1.755 Deferred tax expense (+).125 17 1.9 53. associates and joint ventures. which increased tax expense by SEK 236m.1 0. 7) The changed tax rates in 2012 primarily relate to the revaluation of deferred taxes due to a corporate tax rate decrease in Sweden.275 CURRENT TAX Current tax expense (+).653 –71 8.142 –104 1.3 53.267 1.243 3.2 54.Financial statements  |  Notes – Group 9 SEKm Income taxes DEFERRED TAX 2012 2011 2010 Tax expense Current tax expense Deferred tax expense Total including disposal group Disposal group Total 1.969 1. The remainder expire as follows: Year SEKm 2013 2014 2015 2016 2017 and later 12 9 6 32 3. 0) and capitalization of tax assets related to the right to future tax deductions of SEK –27m (0. 4) The effects of the year include tax expenses of SEK 28m related to profit-taking within the Group. Other changes relate to acquisitions and divestments in the amount of SEK 31m (–3.048m.185 –97 100 234 312 –160 771 169 –903 374 436 825 68 151 –692 –426 –51 157 –233 609 –21 –31 –109 7 –1 16 0 5 44 38 –52 969 7. The closing current tax liability comprises tax assets of SEK 517m (377.4 – 0.154 1. tax income (–) SEKm 2012 2011 2010 Changes in temporary differences Adjustments for prior years Other changes Total including disposal group Disposal group Total 186 269 –1.154 – 1.135 –884 5. 2012.358 –903 – –903 453 69 –13 509 –113 396 849 108 –26 931 –46 885 Tax expense amounted to 5.

Discounted cash flows are compared with the carrying amount of capital employed per cash-generating unit and an impairment requirement may exist if the discounted cash flow is less than the carrying amount of capital employed.688 – – 17. patents and similar rights 2012 2011 2010 Capitalized development costs 2012 2011 2010 Accumulated costs Accumulated amortization Accumulated impairment Total Allocated to disposal group Total excluding disposal group Value at January 1 Investments Sales and disposals Business combinations Company divestments Reclassifications Amortization for the year Impairment for the year Translation differences Value at December 31 Allocated to disposal group Value at December 31 excluding disposal group 12. Goodwill is distributed among business segments as follows: Goodwill by business segment Average WACC 2012.316 –124 –200 1.433 – – 3. SCA divested its 50% shareholding in the British newsprint mill Aylesford Newsprint. In addition to goodwill. The trademarks identified and measured relate to the 2012 acquisition of Georgia-Pacific´s European tissue operations.353 –168 –81 – –89 –279 12.688 – – 314 –53 –1.806 –20 –56 1.730 – 1.519 –2.992 – 1.992 2. Anticipated future cash flows.431 17.433 17.481 – –3.8 4. 1. The completion of the acquisition of Georgia-Pacific’s tissue operations in Europe entailed a requirement from the EU to divest operations in the UK and Scandinavia. Testing for impairment is carried out in the fourth quarter and testing for 2012 showed that no impairment of remaining goodwill was needed. Since the calculation of the recoverable amount is based on Group Management’s strategic plans for the next ten years. according to strategic plans. Sustained growth of 2% has been used in the calculation.688 The recoverable amount for each cash-generating unit is determined based on a calculation of value in use. In a present value calculation of anticipated future cash flows. The sensitivity analysis shows that reasonable changes to key parameters do not give rise to any impairment.106 –9 894 – 894 1. Assumptions in strategic plans are based on current market prices and costs with an addition for real price reductions and cost inflation as well as assumed productivity development.688 19. Effects of expansion investments are excluded when goodwill is tested for impairment.600 38 727 12.433 17.170 142 –3 – –107 17 –282 – –43 894 – 894 268 –171 –1 96 – 96 63 10 – – – 42 –20 – 1 96 – 96 473 –327 –21 125 –62 63 164 11 0 – – –20 –31 – 1 125 –62 63 497 –312 –21 164 – 164 218 5 –8 – –9 2 –33 – –11 164 – 164 Business combinations for the year primarily comprise the acquisitions of Georgia-Pacific’s European tissue operations. The need for impairment is tested every year.730 – 1. Australia and Malaysia. Everbeauty.688 4.258 – –89 12.688 – 17.408 – –4. depending on business segment and geographic market.5 4.084 –2. a leading Asian hygiene company and the remaining 50% in the Chilean hygiene products company PISA (Papeles Industriales S. the value of SCA’s trademarks with an indefinite useful life amounted to SEK 4.910 –112 11. 2012 acquisition of the remaining 50% shareholding in the Chilean hygiene company PISA.730 – – 2.992 1.6 5. form the basis of the calculation of the recoverable amount.688 – 17.125 205 595 9.804 8.A) (see Note 3). there are acquired trademarks in the Group that are judged to have an indefinite useful life.695 – –52 –20 – –5 4.992 – – 100 – –218 –10 –74 –60 1.962 11.774 – – 203 – 24 –10 – 1 1.169 15.433 2. IMPAIRMENT TESTING Goodwill is tested for impairment every year. the 2007 acquisition of the European tissue operations and the 2004 acquisitions in Mexico.098 –13 877 – 877 712 75 –1 365 0 –27 –239 – –8 877 – 877 3. the current weighted cost of capital (WACC) decided for each area within the Group at that time is applied. Cash flows for the period beyond ten years are calculated by an operating surplus multiple being applied to estimated sustained cash flow. The cost of the trademarks was established at the time of acquisition according to the so-called relief from royalty method.730 1. This led to a SEK 77m impairment of goodwill. An evaluation is made of the royalty rate determined at the time of acquisition as well as assessed future sales development over ten years.169 9. The useful life is judged as indefinite when it relates to wellestablished trademarks within their respective markets which the Group intends to retain and further develop. During the year.725.992 – 1. A multiple is used for time beyond ten years. % SEKm 2012 2011 2010 Personal Care Tissue Forest Products Other operations Total 6.274m (1.977). the calculated amount may deviate from the amount received if immediately divested.440 –35 –57 4. This is discounted with the current weighted cost of capital (WACC) for each market.169 – 12. Board of Directors’ Report SCA Annual Report 2012 89 . 2012 acquisition of the Asian hygiene company Everbeauty. 2010 acquisition of Personal Care in South America.147 – – 83 –75 –36 – – –1. The divestment led to a SEK 168m impairment of goodwill.8 2.519 –2.348 – 4.546 8.348 1.086 9.Notes – Group  |  Financial statements 10 SEKm Intangible assets Goodwill 2012 2011 2010 2012 Trademarks 2011 2010 Licenses.232 202 6.348 – 4.988 –2.708 17.086 9. Volume assumptions follow the Group’s target of an average annual growth of 3 to 4%. 2011 acquisition of the personal care operations in Brazil. At year-end. Testing for the year of the carrying amount of trademarks in the 2012 accounts showed no impairment need for trademarks.348 1.730 2.169 – 12. Testing is carried out during the fourth quarter and is performed for each trademark or group of trademarks.252 –8 824 –112 712 894 115 – – –1 84 –263 – –5 824 –112 712 3.169 508 8. These impairments of goodwill are recognized in 2012 as items affecting comparability in the consolidated income statement.009 –2. These calculations are based on the strategic plans adopted by Group management for the next ten years.

634 –9.651 –29 1 –18 –2.842 139 –41 5 0 146 –109 –13 –436 5.945 –1. Government grants reduced investments for the year in buildings by SEK –m (1.675 –225 –233 32. 13).001 –7 110 –7 –2.421 5.596 –6. SEK 19m (18.760 –389 11.801 –3 1 0 –3.360 –52 5.533 5.940 –269 1. 8) pertaining to interest during the construction period was capitalized in Buildings.332 –911 4. to Intangible assets in the negative amount of SEK 42m and Inventory of SEK 129m.941 8.698 8.445 –49 5.698 21. –) and machinery and equipment by SEK 2m (13.217 3.160 – –6 4.544 22.941 8.552 3.421 6. plant and equipment Buildings 2012 2011 2010 2012 Land 2011 2010 Machinery and equipment 2012 2011 2010 Construction in progress 2012 2011 2010 Accumulated costs Accumulated depreciation Accumulated impairment Total Allocated to disposal group Total excluding disposal group Value at January 1 Investments Sales and disposals Business combinations Company divestments Reclassifications 1) Depreciation for the year Impairment for the year Translation difference Value at December 31 Allocated to disposal group Value at December 31 excluding disposal group 1) 17.544 126 –4 1.341 26.594 –62 361 –16 1.552 37.920 –501 –585 28. SEKm 2012 2011 2010 EMISSION ALLOWANCES The SCA Group participates in the European system for emission allowances.698 – 9.871 – 3.168 32.533 – 5.023 – 28.552 2.738 –60 180 –608 –24 –194 9. 1) was capitalized in Machinery and equipment and SEK 8m (28.336 2.023 – 28.110 – 5.406 –7.866 – – 4.533 – 5.332 –911 4.533 70.379 4.216 6.255 1.146 –91 142 –452 2. Accumulated costs Accumulated revaluation of surplus Total Allocated to disposal group Total excluding disposal group Value at January 1 Emission allowances received Purchases Sales Business combinations Company divestments Reclassifications Settlement with the government Revaluation of surplus Translation differences Value at December 31 Allocated to disposal group Value at December 31 excluding disposal group 146 –7 139 – 139 124 93 29 –5 17 –14 –1 –102 1 –3 139 – 139 195 –19 176 –52 124 220 237 – –91 – – – –170 –20 0 176 –52 124 222 –2 220 – 220 242 221 – –3 – – 0 –212 –2 –26 220 – 220 11 SEKm Property. 35) was capitalized in Construction in progress.596 –6.583 – 0 –22 3.054 –11 –2.290 –9.009 318 –59 10 –443 535 –836 –94 –1. SCA receives a permit from each country in which operations requiring a permit are conducted.866 4.304 33.023 26. Settlement with each government regarding 2012 emissions will take place in April 2013.871 4. In conjunction with this.300 –4.866 2.255 85. the deferred income was also reversed by a corresponding amount so that the net cost for the revaluation is zero.402 – –6 –103 4.154 –775 3. 4).578 –496 12.544 12.485 –2.379 4.494 –214 9.930 –51. During the year.110 4.564 –3.110 6.574 –35 3.604 –1.216 – 12. At year-end 2012.201 –1.124 –40.224 12. 90 SCA Annual Report 2012 Board of Directors’ Report .766 – – –190 4.418 –76 5.110 – 5.533 141 –88 0 –9 –68 –114 –40 –23 5.379 3.216 14.870 –1.552 – 33.255 33. to emit a specific volume of carbon dioxide during a calendar year.421 258 –7 896 –149 –106 –119 –9 –75 5.087 –5.551 33. SEK –m (9. at an average interest rate of 4% (4.866 In 2012.166 –1.Financial statements  |  Notes – Group 10 Intangible assets.216 286 –13 0 –68 75 –835 –53 –123 11.871 3.866 – 4.879 – –8 3.231 28.057 –50. property. plant and equipment was changed due to reclassification to Non-current assets held for sale in the negative amount of SEK 1.034m.216 – 12. cont.826 –1.698 – 9.154 –775 3. surplus emission allowances not required to cover the provision for emissions were adjusted downward by SEK 7m to the current market price on the balance sheet date.341 26.866 – 4.023 84.485 –2.871 – 3.552 – 33.

that is.652. 2012 2011 2010 SCA’s forest assets are divided up and reported as biological assets.503 6. real Felling. 26. SCA’s forest holdings comprise approximately 2. The difference of SEK 923m (923.500 26.616 –993 26. 629). The same valuation method used in 2010 and 2011 was applied in 2012.000 m3sub 2014–2035 +/– +/– +/– +/– 1. No change was made in the WACC. 60% 1 Forest portfolio Pine. Approximately 50% of the holdings comprise forest less than 40 years old. spruce 39%.500 27.50% per year 2013–2022 0.0 million is productive forestland. 5 % Board of Directors’ Report SCA Annual Report 2012 91 .177 128 13.729 154 –23 1.692 –1.426m (27. Standing forest is recognized at fair value according to IAS 41 and amounted at December 31. Standing forest SEKm 2012 2011 2010 Value at January 1 Purchases Sales Change due to growth Change due to felling Value at December 31 Deferred tax related to standing forest 26. 26. The valuation was based on the felling plan which was based on forest tax assessments performed in 2006–2007. while about 60% of timber volume is in forests that are more than 80 years old.000 27. 914) comprises of forestland reported under non-current assets Land. Average growth amounts to approximately 3. SEK 13.047 125 Value trend.069). deciduous 13% and contorta 5%.25% after tax.Notes – Group  |  Financial statements 12 Biological assets In income statement. in the 2012 valuation and the valuation in the fourth quarter did not result in any adjustment to the planned change in fair value of forest assets recognized on an ongoing basis during the year.030 25.234 530 742 es les th 1 g llin fe to e at De ce m gr ow as Sa ar Ja Pu rc h nu to e du Va lu ge an an Värde vid årets början Inköp Försäljning Förändring Förändring till följdtill av följd tillväxt Värde av avverkning vid årets slut Forest area Proportion younger than 40 yrs.069 40 –3 1. The annual valuation of standing forest was carried out during the fourth quarter of the year.685 2.729.000 26.50% per year 2013–2022 150.063 26. SEK 643m (623.051 26. amounted to 6. 43 % Spruce. 39 % Deciduous.856 Value/hectare productive forestland.069 6. real cost Volume (felling and thinning) +/– +/– +/– +/– 0.6 million hectares of forestland primarily in northern Sweden.000 Value timber supplies SEK/m3fo Sensitivity analysis Change assumption Change in value before tax.500 28. The total value of SCA’s forest assets was SEK 28. Felling in 2012 amounted to approximately 4.0 million m3sub.357 –714 27. of which approximately 2. 50% Ch Va lu Ch ge du at e e be r3 y Timber volume Proportion older than 80 yrs. 13 % Contorta. The forest portfolio amounts to 211 million cubic meters of forest (m3fo) and is divided into pine ­ 43%. 2012 to SEK 27. and land assets. changes due to growth and felling are recognized as a net value. SEKm WACC Wood price.397 47 –4 1. standing forest.503m (26.25% 0. standing forest 2012 SEKm 28.729 7.765 130 13.983).9 m3fo per hectare and year.

The Group’s total receivables from associates at December 31. 34).067 979 12 96 –4 – –62 1. joint ventures or associates and assets which are also not classified as available-for-sale financial assets since the holding is of an operating nature. 2) was interest-bearing.021 358 64 239 –20 7 1.457 1. 2012 amounted to SEK 42m (40. The Group’s total liability to associates at December 31. joint ventures and associates are specified in Note 16. 2012 amounted to SEK 6m (4. Carrying ­ amounts concur with fair value. an additional 5% of the shares in a Chinese tissue company was acquired.395 133 –88 – –50 2. 7) of which SEK 0m (0. 92 SCA Annual Report 2012 Board of Directors’ Report . The Group’s holdings in major subsidiaries. Shares and participations pertain to holdings in other companies that are not classified as subsidiaries. Investments refer mainly to the establishment of the joint venture in Australia/New Zealand at the start of 2012 through the sale of 50% of SCA’s existing operation to the Australian company Pacific Equity Partners (PEP). The operation is recognized as an associate in accordance with the equity method.669 –602 1.457 – 2.Financial statements  |  Notes – Group 13 SEKm Holdings in associates 2012 2011 2010 14 SEKm Shares and participations 2012 2011 2010 Value at January 1 Investments Net increase in associates for the year 1) Reclassifications. Also. The Group’s holdings in major subsidiaries. joint ventures and associates are specified in Note 16.021 – 1. of which SEK 0m (2.021 Value at January 1 Increase through acquisition of subsidiaries Divestments Other reclassifications Impairment Translation differences Value at December 31 Allocated to disposal group Value at December 31 excluding disposal group 69 1 –5 – –4 –1 60 – 60 77 7 –1 –6 –3 –1 73 –4 69 80 – –1 – – –2 77 – 77 Net increase for the year includes the Group’s share of associates’ profit after tax and any non-controlling interests as well as adjustment for dividends received during the year. joint ventures or subsidiaries Impairment for the year Translation differences Value at December 31 Allocated to disposal group Value at December 31 excluding disposal group 1) 1.067 1. 0) was interest-bearing.

incl. % Disposal group Average number of employees excluding disposal group of whom women.860 – 316 – 2.923 – 2. For more information.935 2.300 480 172 338 207 284 3.969 –3. companies that SCA owns together with other parties and in which the parties by agreement exercise joint control.075 2011 2.105 –87 3. pension liability of which disposal group Personnel costs SEKm 1.388 481 80 366 – 264 2.235 –160 4.830 449 889 3.147 544 1. Average number of employees of whom women.642 1. Average number of employees by country 2012 Of whom women..327 –902 425 –48 377 –129 248 – 248 248 2012 5.935 – 4.018 27 3. Presidents and Executive Vice Presidents of which variable remuneration Other employees Salaries and remuneration Pension costs1) Other social security costs1) Total Disposal group Total excluding disposal group 1) 18 0 277 295 7 133 435 – 435 22 1 329 352 12 119 483 –17 466 25 0 260 285 12 89 386 –47 339 Income statement Net sales Cost of goods sold Gross profit Sales and administration expenses Operating profit/loss Financial items Profit/loss before tax Tax Net profit/loss for the year Disposal group Net profit/loss for the year excluding disposal group Profit attributable to: Owners of the Parent SEKm 4.967 4.168 – 3. refer to Note 3.434 –4.935 – 4. of which pension costs are 7 (12.168 2012 2.105 27 –87 3.713 1. Most of the joint ventures operate within the hygiene area. In October 2012.991 14 63 8 29 33 13 13 6 60 26 8 28 Balance sheet Non-current assets Current assets Total Allocated to disposal group Total excluding disposal group Equity Non-current liabilities Current liabilities Total equity and liabilities Allocated to disposal group Total excluding disposal group 1. % 2010 Of whom women.396 51 510 21 3.485 4. UK.923 32 3.033 – 498 – 2012 2011 2010 Boards.856 –4.298 472 169 358 52 295 3.026 –1.231 27 –240 2.075 2. % Algeria Argentina Chile Colombia Ecuador United Kingdom Tunisia Turkey Other countries Total Disposal group Total excluding disposal group 109 122 113 1. 12).955 4.235 –160 4. SCA acquired the remaining 50% in SCA Chile S. In May 2012. SCA’s share of income statement and balance sheet items as well as the average number of employees in joint ventures that are part of the SCA Group are set out below: SEKm 2012 2011 2010 Capital employed of which disposal group Net debt. joint ventures and associates are specified in Note 16.Notes – Group  |  Financial statements 15 Joint ventures SEKm 2012 2011 2010 Joint ventures.143 –940 203 –39 164 –59 105 –16 89 105 2010 Social security costs amount to SEK 140m (131. which was subsequently consolidated as a wholly owned subsidiary.346 3.968 1.824 626 1.991 28 Board of Directors’ Report SCA Annual Report 2012 93 .168 1. % 2011 Of whom women.408 1. 101).175 –149 –76 –225 –40 –265 –2 –267 –265 2011 5. % 2. mainly in Latin America.923 32 – 2.544 4.935 2010 The Group’s holdings in major subsidiaries.018 4 46 11 29 32 13 13 6 52 27 6 27 90 121 239 1. SCA divested its holding in the newsprint mill in Aylesford. are consolidated according to the proportional method.280 1.231 –240 2.822 1.A.168 – 3.923 6 42 13 35 35 13 14 – 59 32 – 32 114 123 224 1. that is.

. Wiesbaden SCA Tissue France SAS SCA Hygiene Products GmbH.000008615 421987 556147-1003 BE405.000-3 2541468 283601000 D31235260 33137904 01-09-716945 B35089242 0733538-0 556302-0667 556801-1786 Sundsvall Delaware Zeist Sundsvall Dunstable Mannheim Gothenburg Linselles. SCA Timber Supply Ltd SCA Hygiene Products SA SCA Hygiene Spain S. joint ventures and associates Group holdings of shares and participations in major companies at December 31. 2012.r.V. Norway SCA Hygiene Products GmbH Neuss SCA HP Supply SAS SCA Hygiene Products Tissue Ltd SCA Hygiene Malaysia Sdn Bhd SCA Hygiene Marketing (M) Sdn Bhd SCA Hygiene Products AG OY SCA Hygiene Products AB Bunzl & Biach Ges.b.p.Financial statements  |  Notes – Group 16 List of major subsidiaries.o.A SCA Graphic Paper Netherlands SCA Hygiene Products Kft Manufacturas Papeleras Canarias S.A. Bobigny Madrid Mannheim Mexico City Lucca Sundsvall Moscow Laakirchen Wiesbaden Bois-Colombes Vienna Olawa Ontario Umeå Stembert Delaware Piteå Mannheim Hoogezand Gemerskâ Hôrka Brønnøysund Neuss Roissy. Mannheim Copamex Comercial SA de CV SCA Hygiene Products S.3..z. Company name Corporate registration number Domicile Share of capital % Subsidiaries SCA Skog AB SCA Tissue North America LLC SCA Hygiene Products Nederland B.A.992-8 F101650275 FN79555v 4119442 20638613 RUT: 97.681. SCA Hygiene Products Vertriebs GmbH SCA Hygiene Products AB SCA Hygiene Products S.o SCA Hygiene Products A/S.p. Denmark SCA Chile S.A. (50% – option 2016–2021) 556048-2852 58-2494137 135724 556093-6733 577116 HRB713332 556007-2356 509395109 B28451383 HRB3248 SCM-931101-3S5 3318780966 556047-8512 4704031845 FN171841h HRB5301 702 055 187 FN49537z KRS No. Kifissia (Athens) Allo Amsterdam Budapest Telde (Gran Canaria) Nokia Sundsvall Bräcke 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 40 100 100 100 100 100 100 100 99 100 100 100 100 100 100 100 100 100 100 100 100 100 100 94 SCA Annual Report 2012 Board of Directors’ Report . SCA Hygiene Products Sloviakia s. Bobigny Dunstable Kuala Lumpur Kuala Lumpur Zug Espoo Vienna UK/ Dunstable Allerod Santiago de Chile Stoke on Trent N.917.o.282.COM.a SCA Timber AB OOO SCA Hygiene Products Russia SCA Graphic Laakirchen AG SCA Hygiene Products GmbH.m. SCA Graphic Sundsvall AB SCA Hygiene Products (Fluff) Ltd.H SCA Hygiene Products Manchester Ltd SCA Hygiene Products A/S. Belgium SCA Personal Care.516 23-3036384 556237-4859 HRB 710 878 330631 36590941 915620019 HRB 14343 509599619 8033620 320704-U 313228-T CH-020. Inc SCA Packaging Munksund AB SCA Hygiene Products AFH Sales GmbH Uni-Charm Mölnlycke B. Vienna SCA Hygiene Products Sp.L SCA Tissue Finland OY SCA Timber BM Scandinavien AB Gällö Timber AB.V. Spain SCA Hygiene Products GmbH. France SCA Hygiene Products S. SCA Hygiene Products Inc SCA Packaging Obbola AB SCA Hygiene Products SA-NV. The selection of subsidiaries and joint ventures includes companies with sales in excess of SEK 500m in 2012.

085 –4 2.431. Associated comp PEPSCA Pty Limited SCA Yildiz Kagit ve Kisisel Bakim üretim A.042 325 –324 336 –13 1.643 shares (10. 10.081 1. all other variables being unchanged.932 – 2.897 105. 2011 or 2010.457 Sharecertif.448 1.655). Sensitivity analysis calculations have been performed on the risk to which SCA was exposed at December 31.000 28.192 – 292 2.a. 204).198 1.448 1. associates Loan receivables.000 3. equity would have increased/decreased by SEK 216m (154. These obligations are not included in the normal pension calculations. Guamo.341 99 8 1. Cartographica S. Lucca. Board of Directors’ Report SCA Annual Report 2012 95 .S..034 132 – 286 –4 1.366 750 2 80 2.332 761 235 23 22 20 64 2.932 1. as set out in Note 26 Provisions for pensions. other Value at December 31 Allocated to disposal group Value at December 31 excluding disposal group Available-for-sale financial assets Value at January 1 Investments Divestments Remeasurement for the year taken to equity. Available-for-sale financial assets. IL Recycling AB Komili Teknik Hizmetler ve Sanayi A.A.000.262 96 8 1.366 In addition to shares in AB Industrivärden.366 The holding in AB Industrivärden amounted to 12. SEKm Joint ventures Productos Familia S.679. 2012 using assumptions on market movements that are regarded as reasonably possible in one year’s time.034 1.093.448 931 95 8 1. and the Group’s shareholdings changed in accordance with the stock market. No impairment provisions were made for available-for-sale financial assets in 2012. net Translation differences Value at December 31 1. If the stock market had risen/fallen by 15%.667 22 50 50 33 48 33 1.034 1. fair value SEKm 2012 2011 2010 Shares – AB Industrivärden Pension assets not included in IAS 19 calculation Other Total 1.682.034 986 2 63 2.p. pension assets attributable to some pension obligations are classified as available-for-sale financial assets. 33% Associated Other Value at December 31 92035 154461300 12559 556056-2687 166673 1333330464 Hong Kong Victoria Kocaeli Solna Istanbul Lucca 216.S. Colombia Associates Vinda Hong Kong.080.525.198 – 2.Notes – Group  |  Financial statements Company name Corporate registration number Domicile Number of shares Share of capital % Carrying amount at year-end.366 20 – –351 –1 1.000 1 16. 1260 Medellin 50 17 SEKm Non-current financial assets 2012 2011 2010 Available-for-sale financial assets Derivatives Loan receivables.

563 44 118 – – – 42. If the Swedish krona had unilaterally weakened/strengthened by 5% against all currencies. SCA has hedged the net investments in a number of selected legal entities.236 327 228 224 –771 217 18.266 56 644 130 Outstanding derivatives with hedge accounting are included in the table Outstanding derivatives. Derivatives positively impacted net interest items in the amount of SEK 43m (positive 6. profit after tax will be affected positively by SEK 17m (5. 2012. At year-end. refer to pages 60–61 of the Board of Directors’ Report. interest rate and energy price risks.098 1. Hedging of net investments In order to achieve the desired hedging level for foreign capital employed. The net market value on outstanding interest rate derivatives amounted to SEK 836m (749. all other things being equal. the Group’s profit after tax will be affected negatively by SEK 60m (negative: 46.024 188 2. negative: 98).789 332 178 14. would have decreased/ increased energy costs for the year by SEK 250m (236. if the Swedish krona had unilaterally weakened/strengthened by 5%. 4.652 1. All derivatives in the hedging reserve at year-end 2012 will be realized before January 31. SCA’s total foreign net investments at year-end amounted to SEK 55. For further information relating to net financial items. Hedging of net investments in foreign operations. With unchanged interest rates. SEKm Currency 2012 2011 2010 EUR USD GBP CAD CLP TWD MXN Other Total 14. increased: 26).400 484 24.758) is outstanding before the right of set-off.776m. 99. Outstanding derivatives Of which SEKm Total Currency1) Interest rate Energy Allocated to disposal group 2012 Nominal Asset Liability 2011 Nominal Asset Liability 2010 Nominal Asset Liability 1) 41. 2012 using assumptions on market movements that are regarded as reasonably possible in one year’s time. Derivatives pertaining to hedging of interest expenses mature in December 2015 and August 2017.210).024 128 1. In total. would have increased/decreased equity by SEK 4m (7.637 74 1.325 1. outstanding financial hedges as well as trade payables and trade receivables would have increased/decreased profit for the year before tax by SEK 51m (31. This result is largely due to hedges of net investments in EUR. 1. to derivatives before right of set-off. positive: 86). the net market value amounted to negative SEK 14m (negative: 4. In 2012. see Note 8 Financial income and expenses. Hedging reserve in equity Currency derivatives relating to hedging of transaction exposure mostly mature during the first half year of 2013. With unchanged exchange rates. The table below shows the derivatives that impacted the Group’s balance sheet on December 31. The derivatives intended to hedge energy costs in the Group mature during 2013 and 2014.448 204 142 – –147 –805 32.284 107 171 –8 – –1 43. 2014. negative: 40).053 676 173 1.Financial statements  |  Notes – Group 18 Derivatives INCOME STATEMENT During the year. SCA hedged net investments outside Sweden amounting to negative SEK 18.669 920 172 2. energy derivatives had a negative impact on operating profit for the year of SEK 46m (0. the net market value amounted to SEK 46m (18.613).134m (13.673 1.517 1.684 96 SCA Annual Report 2012 Board of Directors’ Report .051 532 314 16. For a description of how SCA manages these risks. In addition to the earnings impact. increase: 14) after tax. Currency hedges increased the cost of non-current assets by SEK 13m (increased: 19.971 2.466 339 130 – –728 1. 235).377 35. net financial items would be impacted negatively by SEK 34m (negative: 26. outstanding financial hedges relating to natural gas and electricity.571 1. 503) at year-end.354 646 29. hedging positions affected equity in 2012 by SEK 1. Derivatives with hedge accounting1) Of which Cash flow Transaction exposure SEKm Total Export and import flows Investments Interest Energy Net investments in foreign entities2) Fair value of interest rate risk in financing 2012 Asset Liability Hedge reserve after tax 2011 Asset Liability Hedge reserve after tax 2010 Asset Liability Hedge reserve after tax 1) 2) Pertains 2. 144). 427). transaction exposure hedges had an impact on operating profit for the year of SEK 125m (260. Currency derivatives relating to hedging of the cost of noncurrent assets have a maturity spread until the first quarter of 2014. 10).228 30. Currency hedges relating to the cost of non-current assets. 2012. For more information relating to derivatives in the balance sheet.609.234 2.390 290 275 210 11 147 19 34 –14 32 – 24 219 59 118 1. In total at year-end. 278). Sensitivity analysis Sensitivity analysis calculations have been performed on the financial instruments’ risk to which SCA was exposed at December 31. would have been affected differently if the price risk related to supply contracts was taken into account. The total energy cost for the Group. Energy derivatives have an outstanding market value of negative SEK 74m (negative: 64. The total market value of outstanding hedging transactions at yearend was SEK 1. the cost of non-current assets will increase by SEK 11m (increase: 3. If energy prices had increased/decreased by 20%. 147). 95). At year-end.626 327 304 10.917 1.714 375 –88 27 5 17 – 14 –11 – 44 –34 26 110 –60 1.297m (112.563m (630.612 29. BALANCE SHEET SCA uses financial derivatives to manage currency. positive: 188) at year-end. OUTSTANDING DERIVATIVES WITH HEDGE ACCOUNTING The table below presents outstanding derivatives with hedge accounting at December 31.462 553 25. With unchanged exchange rates. however.612m.300 1. positive: 118).976 637 –70 19 12 5 3 7 –3 – 35 –26 91 149 –46 942 312 921 122 2. equity would have increased/decreased by SEK 137m (129.994 254 66 – – – Nominal SEK 116. see Note 31 Financial instruments by category. positive: 24) after tax. With unchanged prices.

913 1.047 18 12.752 –108 2.937 – 1.186m (1.009 3.614 1.733 851 254 169 48 770 2. cash and cash equivalents Current financial assets 2012 2011 2010 Financial assets Derivatives Loan receivables. Provision to reserves for doubtful receivables SEKm 2012 2011 2010 2012 2011 2010 Cash and bank balances Short-term investments < 3 months Total Allocated to disposal group Total excluding disposal group 1.866 – 1866 Value at January 1 Provision for possible loan losses Confirmed losses Increase due to acquisitions Decrease due to divestments Decrease due to reversal of reserve for possible loan losses Translation differences Value at December 31 Allocated to disposal group Value at December 31 excluding disposal group –167 –21 21 –42 0 5 7 –197 – –197 –453 –50 2 – 21 27 8 –445 278 –167 –539 –67 47 – 15 42 49 –453 – –453 For a description of how SCA manages its credit and liquidity risks.888 –1. gross Provision to reserves for doubtful receivables Total Allocated to disposal group Total excluding disposal group Analysis of credit risk exposure in trade receivables SEKm 14.811 1.879 11.379 – – – 50 43 – 93 – 93 Total expense for the year for doubtful receivables amounted to SEK 16m (expense: 26. refer to page 61 of the Board of Directors’ Report.697 14. other Total Allocated to disposal group Total excluding disposal group Cash and cash equivalents SEKm 6 77 85 168 – 168 5 193 97 295 –3 292 12 108 100 220 – 220 In total. SCA has divested the Austrian newsprint mill in Laakirchen to Heinzel Group. Board of Directors’ Report SCA Annual Report 2012 97 .616 22 SEKm Current financial assets. Of this amount.408 1.616 2012 2011 2010 Trade receivables neither overdue nor impaired Trade receivables overdue but not impaired < 30 days 30–90 days > 90 days Trade receivables overdue but not impaired Total Allocated to disposal group Total excluding disposal group 12.264 3. 213) relates to the category Trade receivables overdue but not impaired. The completion of the acquisition of Georgia-Pacific´s tissue operations in Europe led to a requirement to divest tissue operations in the UK and Scandinavia.002 Trade receivables.616 – 15.511 – 12. SEK 192m (331. 23 SEKm Non-current assets held for sale 2012 2011 2010 Goodwill Other intangible assets Buildings Land Machinery and equipment Construction in progress Total Allocated to disposal group Total excluding disposal group – 29 244 231 1.002 3.016 –4.092 –236 1.461 –445 16.983 –340 2.434.468 11.291 575 1.017 1.216 20 SEKm SEKm 2012 2011 2010 Trade receivables 2012 2011 2010 VAT receivables Suppliers with debit balance Receivables for electricity and gas Receivables from authorities Other receivables Total Allocated to disposal group Total excluding disposal group 766 112 183 40 632 1. 1.105 16.303 1.875 1.856 859 145 115 43 840 2.034 5.840 1.603).548 13.016 –4.302 –197 14.089 14 12.105 – 14.092 2.002 – 2.937 1.281 248 168 1.017 – 2.367 265 109 1.042m.216 – 3.644 1.069 –453 15.Notes – Group  |  Financial statements 19 SEKm Inventories 2012 2011 2010 21 SEKm Other current receivables 2012 2011 2010 Raw materials and consumables Spare parts and supplies Products in progress Finished products Felling rights Advance payments to suppliers Total Allocated to disposal group Total excluding disposal group 2.775 788 9 11.468 11.643 32 2 539 641 2.264 – 11. These operations are valued at SEK 860m.289 5.712 304 189 2.741 15.357 76 1.105 – 14.121 1. expense: 43).616 – 15.385 241 283 216 921 382 3.010 4.045 1.297 1.809 1.428 –49 3.733 2.205 16.769 1.105 13.548 16.653 38 29 144 680 2.718 299 2.733 – 1.631 2.511 Receivables from associates Accrued financial income Derivatives Prepaid expenses and accrued income Other current receivables Total Allocated to disposal group Total excluding disposal group Other current receivables 42 0 115 763 1.653 – 2. leading to non-current assets held for sale of SEK 1. the Group has collateral mainly in the form of credit insurance taken out amounting to SEK 1.

916 1.134 1 –1.631 –58 –1 –2.049 1.916 1.830 – – – – – – – – – – – – – – – 6.809 53.809 60.611 –2.011 – – – – – – – 479 –1.425 – – –2. SEK 4.350 – – – – – – – – – – – – – – – 2.633 4.517 –352 – –172 –308 19 –680 –252 1.517 – – – – – – – 906 –2.255 548 –3.023 –4. 4) For a specification of income tax attributable to components in other comprehensive income.924 – –1 –2.011 286 – –33 –2 13 –2.011 286 – –33 –2 13 –2.512 –352 – –172 –308 19 –684 –252 1.20 (4.00.217 67.291 5.613 –292 –2.170 – – 286 – –33 –2 13 –2.164 Revaluation reserve.853 2. SEK 4.350 – – – – – – – – – – – – – – – 2.742 4.752 4.599 58.350 – – – – – – – – – – – – – – – 2.350 6.024 –4.238 –3. net after tax Total comprehensive income Change in Group composition Remeasurement effect upon acquisition of non-controlling interests Dividend. see specification on next page.830 – – – – – – – – – – – – – – – 6. see Parent Company Note 45. SEK 3.999 60.294 5. 2010 Profit for the year recognized in profit or loss Other comprehensive income Actuarial gains and losses relating to defined-benefit pension plans2) Available-for-sale financial assets: Result from measurement at fair value recognized in equity Transferred to profit or loss upon sale Cash flow hedges: Result from remeasurement of derivatives recognized in equity Transferred to profit or loss for the period Transferred to cost of hedged investments Translation differences in foreign operations Result from hedging of net investments in foreign operations Tax on items recognized directly in/transferred from equity4) Other comprehensive income.592 523 328 8 711 –234 15 –8.517 –1.063 – –4 –2. SEK 4. Hedging reserve.691 55.238 –3.552 528 – – – – – – – –156 372 5.957 –2. 3.134 480 –3. 2012 1) 2) Including 3) Dividend 2.950 54.Financial statements  |  Notes – Group 24 SEKm Equity Other capital provided Retained ­earnings Equity attribut­able to SCA’s ­shareholders Noncontrolling ­interests Share capital Reserves1) Total equity 2010 Value at January 1.599 67.631 3 –4 –2.821 607 –3.70 per share 3) Value at December 31. 2011 2012 Profit for the year recognized in profit or loss Other comprehensive income Actuarial gains and losses relating to defined-benefit pension plans2) Available-for-sale financial assets: Result from measurement at fair value recognized in equity Transferred to profit or loss at sale Cash flow hedges: Result from remeasurement of derivatives recognized in equity Transferred to profit or loss for the period Transferred to cost of hedged investments Translation differences in foreign operations Result from hedging of net investments in foreign operations Tax on items recognized directly in/transferred from equity4) Other comprehensive income.957 –2.950 59.618 548 –3.225 –3.613 –293 –2.00 per share3) Value at December 31.225 – – – –543 – – –352 – –172 –308 19 –680 –252 118 –1.117 1.613 –137 –3.50 per share to the Annual General Meeting.156 5. the Board has decided to propose a divided of SEK 4.529 4.529 4.699 – –1 –2.830 – – – – – – – – – – – – – – – 6. 2010 2011 Profit for the year recognized in profit or loss Other comprehensive income Actuarial gains and losses relating to defined-benefit pension plans2) Available-for-sale financial assets: Result from measurement at fair value recognized in equity Transferred to profit or loss upon sale Cash flow hedges: Result from remeasurement of derivatives recognized in equity Transferred to profit or loss for the period Transferred to cost of hedged investments Translation differences in foreign operations Result from hedging of net investments in foreign operations Tax on items recognized directly in/transferred from equity4) Other comprehensive income.517 – –4 – –3.690 – –4 –2.627 –1.706 750 40 –5 – – – – – –104 – 1 –108 –68 –58 – –58 566 59 5 – – – – – –4 –1 0 59 3 – –89 539 43 0 – – – – – –68 – 0 –68 –25 –7 – –49 458 67.552 528 328 8 711 –234 15 –8. For further information regarding equity.627 – – – –2.532 3.908 – –4 –2. net after tax Total comprehensive income Change in Group composition Remeasurement effect upon acquisition of non-controlling interests Dividend.70) per share pertains to Parent Company shareholders.906 5. Available-for-sale assets and Translation reserve are included in the Provisions line in the balance sheet.000 –2.134 480 –3.682 – – 328 8 711 –234 15 – 8.657 67. For fiscal year 2012.20 per share3) Value at December 31.883 –7 –4 –2. payroll tax.830 2.984 1.961 2. net after tax Total comprehensive income Change in Group composition Remeasurement effect upon acquisition of non-controlling interests Dividend. 98 SCA Annual Report 2012 Board of Directors’ Report . refer to the next page.898 61.

has varied between 0.134 – –1. net after tax Value at December 31 1) 2) See 107 – – – – – – – – 0 107 107 – – – – – – – – 0 107 107 – – – – – – – – 0 107 –68 – – –33 –2 13 0 – 3 –19 –87 275 – – –172 –308 19 0 – 118 –343 –68 –89 – – 711 –234 15 8 – –136 364 275 –14 286 – – – – – – –2 284 270 338 –352 – – – – – – – –352 –14 3 328 8 – – – – – –1 335 338 –2. SCA’s dividend policy is described on page 14. also Note 18 for details of when profit or loss is expected to be recognized.984 1. loss: 87). 2012. Specification of income tax attributable to components in other comprehensive income 2012 SEKm Before tax Tax effect After tax Before tax 2011 Tax effect After tax Before tax 2010 Tax effect After tax Actuarial gains and losses relating to defined-benefit pension plans Available-for-sale financial assets Cash flow hedges Translation differences in foreign operations Result from hedging of net investments in foreign operations Other comprehensive income –2.195 – – – – – –2.597 479 –2 3 – – 480 –1.920 1. 4) Of which transfer to income statement of prior years result from hedging positions relating to divested companies is included in the amount of SEK –m (loss: 265. over the past ten-year period. Board of Directors’ Report SCA Annual Report 2012 99 . SCA’s financial risk management is described in the Risk and risk management section on pages 60–61. Financial position.263 – – – – – –680 –252 – –932 –2.661 – – – – – –8.633 4.011 286 –22 –2. Change in liabilities and equity is described on page 25.134 –3. The debt/equity ratio excluding pension liabilities was 0.512 –352 –461 –684 –252 –5.117 –3.70.537 4.55.961 At December 31.261 905 0 118 – – 1. SCA has a credit rating for long-term debt of Baa1 from Moody’s and BBB+ from Standard & Poor’s.613 –2.786 –3.613 – –3. specification of reserves Revaluation reserve1) SEKm 2012 2011 2010 Hedging reserve2) 2012 2011 2010 Available-for-sale assets 2012 2011 2010 Translation reserve 2012 2011 2010 Value at January 1 Available-for-sale financial assets: Result from measurement at fair value recognized in equity Transferred to profit or loss upon sale Cash flow hedges: Result from remeasurement of derivatives recognized in equity Transferred to profit or loss for the period Transferred to cost of hedged investments Translation differences in foreign operations3) Result from hedging of net investments in foreign operations4) Tax on items recognized directly in/transferred from equity Other comprehensive income for the year. which is below SCA’s long-term target of 0.263 Revaluation reserve includes effect on equity of step acquisitions.981 –1.532 284 –19 –2.633 4.48 at December 31.195 2.613 –2.984 1.Notes – Group  |  Financial statements Equity.023 –2.134 –3.238 523 336 492 –8. –). 3) Of which transfer to income statement of realized exchange losses relating to divested companies is included in the amount of SEK 20m (loss: 228.607 –352 –343 –684 –252 –4.669 –155 –1 –136 – – –292 368 335 356 –8. The debt/equity ratio deviates from this target at times and.924 –1. the debt/equity ratio amounted to 0. 2012.44 and 0.70.

930 3.2). SCA has contracted bilateral credit facilities with banks.Financial statements  |  Notes – Group 25 SEKm Financial liabilities Borrowing For issuing bonds in the European capital market.918 200 5. 36.024 – 3.343 Included in Loans with maturities of less than one year in the Financial liabilities table.3.088 – – – 2.047 – 13.000m (SEK 25.506 36.928m).979 – 33.266 13. 34.592 10.206 158 10. interest-bearing receivables and capital investment shares.459 – 23.714 33.711 37. a nominal EUR 1.531 The table below shows the maturity profile of the gross debt: Maturity profile of gross debt SEKm Total 2013 2014 2015 2016 2017 2018+ Commercial paper Bond issues Utilization of credit facilities Other loans Total1) 1) 7.759 – 23.977 36.927m (36.913 –159 36.897 516 516 3.150 8.128 –151 36.459 36.754 399 5.897 – 13.418 Notes SEK 500m Notes SEK 500m Notes USD 450m Index Linked Interest Note SEK 300m Index Linked Interest Note SEK 500m Notes SEK 1.914 205 5.343 – – 2.024 2.955 12.343 12.800m Floating Rate Note SEK 200m Notes EUR 600m Total 2014 2014 2015 2015 2015 2016 2016 2016 500 536 3.865 7.008 Gross debt includes accrued interest in the amount of SEK 151m. 100 SCA Annual Report 2012 Board of Directors’ Report .642 701 7. SEKm At December 31.795 23.793 SCA has a Swedish and a Belgian commercial paper program that can be utilized for current borrowing.559 – – – 1.648.187 319 532 1.128. 3. 2012.372 9.608 8.967 – 2.626 12.604 12. To limit the refinancing risk and maintain a liquidity reserve.307 –41 9.966 204 6.008 2. For a description of the methods used by SCA to manage its refinancing risk.506). As of December 31.418 – 36.608 315 17. The specification of financial liabilities is shown in the table below: Financial liabilities Carrying amount 2012 2011 2010 Current financial liabilities Amortization within one year Bond issues Derivatives Loans with maturities of less than one year Total1) Allocated to disposal group Total excluding disposal group Non-current financial liabilities Bond issues Derivatives Other long-term loans with maturities > 1 year < 5 years Other long-term loans with maturities > 5 years Total Allocated to disposal group Total excluding disposal group Total Allocated to disposal group Total excluding disposal group Fair value of financial liabilities Allocated to disposal group Fair value of financial liabilities excluding disposal group 1) 462 – 121 9.897 176 8.506 – 36. SEKm Fair value.652m (1.088 1.478 13.106 – 1. interest-bearing gross debt amounted to SEK 33.086 2.631. SCA has syndicated bank facilities.233 5.000 – 1.930 – 4. Credit facilities Nominal Maturity Total SEKm Utilized SEKm Unutilized SEKm Syndicated credit facilities Bilateral credit facilities Total EUR 1.714 – 33. 1.625 33.080 – 7.242 328 547 1.000m SEK 315m 2016 2018 2013 8.714m (37.600 23.955 – 9.763 10.000m EUR 1. Fair value of short-term loans is estimated to be the same as the carrying amount. In addition. After additions for net pension provisions and deductions for cash and cash equivalents. the net debt was SEK 32.825m).047 7.607 9. 2012. Commercial paper program1) Program size Issued SEKm Commercial paper SEK 15.801) was outstanding with a remaining maturity of 3.608 8.406).531 – – – 8. refer to page 61 of the Board of Directors’ Report.258 173 10.2 years (4.608 315 17. SCA has a Euro Medium Term Note (EMTN) program with a program amount of EUR 3.979 442 – 258 8. SCA also utilizes bond markets outside Europe and has issued a bond in the US for USD 450m (SEK 2.759 33. Bond issues Issued Maturity Carrying amount.000m Commercial paper EUR 400m Total 1) 6.821 –110 27.527 27.

025 355 –35 0 320 –4 324 Of the pension costs for defined-benefit plans. which in balance sheet terms are not fully funded or unfunded.179 4. etc. Pension plans with balance sheet surpluses are recognized as an asset in the balance sheet. In addition to what is recognized in the net value as plan assets for existing obligations. net 1) 2010 21.152. With regard to plan assets.Notes – Group  |  Financial statements 26 SEKm Provisions for pensions Actuarial gains and losses for the year are negative and amount to SEK 1. which means that the return on the plan assets was higher than expected in 2012. The most substantial defined-benefit plans are based on period of service and the remuneration received by employees on or close to retirement. Other pension plans. as well as deviation from expected rate of return on plan assets. 39% (44. The summary below specifies the net value of the defined-benefit pension obligations.505 –1. 2012. net Interest expense Expected return on plan assets Pension costs before effects of curtailments and settlements Curtailments Settlements Net pension costs after effects of curtailments and settlements Disposal group Net pension costs excluding disposal group 444 1 38 706 –740 449 –17 –4 428 – 428 443 0 0 1.505 19. Premiums during the year for disability and family pension insurance with Alecta amounted to SEK 18m (17. pos: 2.845 – 4. since the net after deduction for assets with the insurance provider is only a minor amount and since SCA did not have access to sufficient information to report this obligation as a defined-benefit plan. 0) comprised property.057 2. which can be used for possible future undertakings for early retirement for certain categories of employees. such as change of discount rate. which is calculated on the net value of each plan at the beginning of the year.861 –682 – –682 4. are recognized as Provisions for pensions.474m (neg: 3.087 16 2.988 –17. SCA has obligations for disability and family pensions for salaried employees in Sweden. The total pension costs for the defined-benefit plans are shown below.051 As in the preceding year. SEKm 2012 20111) 20101) Funded plans Defined-benefit obligations Fair value of plan assets Net value funded plans Unrecognized past service costs Provision for pensions. there are assets in two Swedish foundations amounting to SEK 780m (616.103 4.179 20. The interest decided for each country is weighted on the basis of how large a proportion comprises equities and bonds.009 –1.179 – 4.051 – 2. cost 158) is recognized as a financial expense.193m (pos: 3. net.076m (neg: 606. SEK 171m (cost: 96. 61) of the total fair value of the plan assets was invested in equities.997 4. 886).953 –17. actuarial gains and losses arose as a result of deviation from initial assumptions based on experience.930. mortality or salary increases. respectively. Including translation differences. SEKm 2012 20111) 20101) SCA has both defined-contribution and defined-benefit pension plans.691 –1. secured through insurance with the insurance company Alecta.845 2. 2012 2011 2010 Current service cost. 2). early retirement.471 2. The funding level varies depending on the plan.542 –34 2.108 – 3. as shown below.013 –17.017 19.889 168 –42 126 1. Experience-based deviations include unexpectedly high or low figures for employee turnover.517 –12 4.533).172 –7 –4. At year-end.505 18.057 – –1. Provisions for pensions Allocated to disposal group Provisions for pensions excluding disposal group Surplus in funded pension plans Allocated to disposal group Surplus in funded pension plans excluding disposal group Provision for pensions. The value of all pension plans is distributed among surplus in funded pension plans and provisions for pensions. pos: 8). 54% (53. 27).057 –17. unfunded plans Provision for pensions. Expected return on plan assets is determined on the basis of the assumption that the return on bonds will be the same as the interest on a 10-year government bond and that return on equities will reach the same interest with the addition of a risk premium.471 4. These benefits are reported as a defined-contribution plan.206 3.390 3. The following table shows the net value of provisions for pensions divided between funded and unfunded pension plans.108 –1. SEKm 2012 2011 2010 Defined-benefit obligations Fair value of plan assets Net value Unrecognized past service costs Provision for pensions.179 21. pos: 358). In addition to the effect of changes in actuarial assumptions.889 2. 39) comprised interest-bearing investments and 7% (3.508 1. net –24.930 –19.299 3.064 –13 2.896 29 1. no financial instruments issued by the company are included in the fair value of plan assets at December 31.051 and 2011 include the packaging operations that were divested in June 2012. funded plans Unfunded plans Defined-benefit obligations Unrecognized past service costs Provision for pensions. Surplus in funded pension plans. respectively..085 –9 2. the deviation is positive 7% (neg: 10. The percentage effect of such adjustments when it applies to defined-benefit obligations amounts to about 1% (0.925 2. the accumulated gains and losses recognized in this manner thus amount to a negative SEK 3.051 Board of Directors’ Report SCA Annual Report 2012 101 . net Allocated to disposal group Provision for pensions. SCA’s budgeted contributions for the defined-benefit obligations amount to SEK 638m for 2013. excluding contributions participants by plan ­ Past service cost Actuarial gains and losses. neg: 740).069 383 –25 0 358 43 315 393 –9 0 996 –1.301 –186 184 –2 4.861 – 4.076 2. excluding disposal group 4. The actual return on the plan assets in 2012 was SEK 2.975 22 1.

25 2.098 –1.017 – 24.00 3.37 4.25 2.25 percentage points would affect the total value of obligations by approximately SEK 1. as well as a different return than expected.53 4. Taking into account that 54% of plan assets are invested in equities.336 414 –19.471 –2.71 2. a 10% upturn/decline in the total shareholding would lead to a change in value of approximately SEK 1.513 –17.146 –1.147 –8.58–6.80 2.711 7.017 3.41 4.03 3.045m.069 – – – –46 –1.10 3.80–8.510 9.73 3.07 3.953 489 1.953 – 19.902 728 –1.00 7.148 –16. 2012 Defined-benefit ­obligations Plan assets 2011 Defined-benefit ­obligations Plan assets 2010 Defined-benefit ­obligations Plan assets Value at January 1 Current service cost Interest expense Expected return on plan assets Past service cost Acquisitions and disposals Curtailments.00 6.Financial statements  |  Notes – Group 26 SEKm Provisions for pensions. cont.50–6.25 2.508 1.775 20.471 – – –739 – 465 – –4 –1.867 9.098 1.54–6.25 2.63 4.221 –17.00 3.009 – –1 –25 –17 – – –994 1.75 3.556 –5.25 2.00 4.332 451 996 – –63 3 –19 – – –1.66 3.568 –297 24.025 – – – –58 –988 1.00 7.845 – –19.60 6. 102 SCA Annual Report 2012 Board of Directors’ Report .426 9.00 5.953 2.735 7.857 Principal actuarial assumptions Sweden United Kingdom Eurozone 2012 Discount rate Expected salary increase rate Expected inflation Expected return on plan assets 2011 Discount rate Expected salary increase rate Expected inflation Expected return on plan assets 2010 Discount rate Expected salary increase rate Expected inflation Expected return on plan assets 5.63 4.373 19.988 –1. net Value at December 31. These gains and losses are recognized directly in equity in the period in which they arise.472 –10.057 994 1.00 4.845 –2.80 5.00 6.00 3.889 – –17.239 –17. The following table shows the development of the net pension liability.45–5.710 –8.10 3.795 19.675 –79 –17.749 448 706 – 15 561 –5 – – –728 2.345 –5.239 20.87 4.25 2.584 8.19–6.921 – – –1.889 –2. settlements and transfers Contributions by plan participants Contributions by the employer Benefits paid Actuarial gains and losses Translation effects Value at December 31 Allocated to disposal group.84 The actuarial assumptions comprise the most significant assumptions applied when calculating defined-benefit obligations at the balance sheet date.151 –6.477 97 21. A change in the discount rate of 0.044m.80 3. Actuarial gains and losses arise as a result of deviations from actuarial and experiencebased assumptions.69 3.471 – –17. excluding disposal group of which: Sweden United Kingdom Eurozone 20.889 – – –1.749 3.20–7.

456 22. During the year. of which SEK 683m relates to provisions for the restructuring programs.375 –1.221 134 2.873 – 6.139 20.490 7.269 1.105 –589 11 –5 –29 –11 1.994 9.435 26.441 7. refer to page 61 of the Board of Directors’ Report. net settled derivatives that constitute financial liabilities and negative cash flows from gross settled derivatives.927 24 7 1.885 7 169 7. corresponding positive cash flows and therefore in SCA’s opinion do not constitute any real liquidity risk. largely.751 937 814 Other provisions amount to SEK 1. 2010 Loans including interest Net settled derivatives Energy derivatives Trade payables Total Gross settled derivatives 1) 1) 10.075 – – – 2.774 –4 89 11.097 125 7. 28 SEKm Other non-current liabilities 2012 2011 2010 30 28 171 199 – 199 39 180 219 –2 217 7 231 238 – 238 Liquidity risk Derivatives Other non-current liabilities Total Allocated to disposal group Total excluding disposal group The table below shows the Group’s liquidity risk regarding financial liabilities (including interest payments). ­ Board of Directors’ Report SCA Annual Report 2012 103 .334 2.105m.258 22.Notes – Group  |  Financial statements 27 SEKm Other provisions Efficiency ­programs Current ­operations Tax risks Environment Legal disputes Other Total Value at January 1 Provisions during the year Utilization during the year Acquisition of operations Reclassifications Dissolved during the year Translation differences Value at December 31 Provisions comprise: Short-term component Long-term component 494 683 –449 – 3 – –14 717 5 23 –3 – – – – 25 248 240 – – – – – 488 143 71 –102 11 – –30 –1 92 61 62 –3 – – – –1 119 318 26 –32 – –8 1 5 310 1. 2011 Loans including interest Net settled derivatives Energy derivatives Trade payables Total Allocated to disposal group Total excluding disposal group Gross settled derivatives1) December 31.731 9. Liquidity risk SEKm Less than 1 year Between 1 and 5 years More than 5 years Of other non-current liabilities.309 23.622 9. SEK 129m in 2014.075 – 29 SEKm Other current liabilities Other current liabilities 2012 2011 2010 Liabilities to associates Derivatives Accrued expenses and prepaid income Other operating liabilities Total Allocated to disposal group Total excluding disposal group Accrued expenses and prepaid income SEKm 6 159 6.054 – 3.873 1.096 10.032 4 191 7.001 23. For a description of how SCA manages its liquidity risk.067 24.067 6.117 – 22.415 2.117 24. Provisions for efficiency programs were changed in 2012 due to reclassifications of SEK 3m from other operating liabilities.420 – 24. SEK 41m in  2015 and the remaining SEK 136m in 2016.873 431 885 1.075 – 2.122 6.449 1.382 397 813 1.298 13.793 2.054 – 2012 2011 2010 Accrued social security costs Accrued vacation pay liability Other liabilities to personnel Accrued financial expenses Bonus and discounts to customers Other items Total Allocated to disposal group Total excluding disposal group 322 514 971 151 2.449 –1.420 2.758 –2.829 2. SEK 449m was paid out in 2012.328 2.856 19. Of provisions for the year for Environment.096 – 9. SEK 71m pertains to a liability for carbon dioxide emissions.751m (1. Of the efficiency programs’ provisions.270 28.122 203 28 1.405 7. new provisions were made totaling SEK 1.313 –20 – – 7.293 – The gross settled derivatives have. December 31.531 –24 59 12.054 0 – – 3. This item will not be paid out.902 27.447).834 –5 28. 1.175 –5 132 12. SEK 13m (27.101 176 2. SEK 411m is anticipated to be paid out in 2013. 2012 Loans including interest Net settled derivatives Energy derivatives Trade payables Total Allocated to disposal group Total excluding disposal group Gross settled derivatives1) December 31. The predominant proportion in “Other” pertains to payroll tax on actuarial gains and losses recognized against equity in accordance with IAS 19.298 – 7.298 1.372 3.600.497 27.032 – 9.691 18. 136) falls due for payment later than within five years.350 175 39 1.

640 – 9.016 – 102 2. excluding derivatives Total assets Derivatives Total liabilities 387 – 387 272 272 967 – 967 374 374 – 1.676 16.279 10.362 646 646 – – – – 397 – 397 156 156 1.198 – 6. 2010 Non-current financial assets Other non-current assets Trade receivables Other current receivables Current financial assets Cash and cash equivalents Total assets Non-current financial liabilities Other non-current liabilities Current financial liabilities Trade payables Other current liabilities Total liabilities 2.366 2.325 159 46.325 – 32.Financial statements  |  Notes – Group 31 SEKm Financial instruments by category The following categorization has been conducted for financial instruments: Of which Carrying amount in the balance sheet Loans and ­ eceivables r Financial liabilities measured at amortized cost Measured at fair value through profit or loss Derivatives used for hedge ­accounting Available-forsale financial assets Held-to-­ maturity i­nvestments Allocated to disposal group December 31.866 17.003 328 328 – 1.105 – 91 2.448 1.309 74 1 – 144 96 – 315 7.353 23.726 – 37.574 – 36.099 894 16 – 55 38 – 1.616 – 112 1.034 –4 – –4.248 810 31 – 98 28 – 967 158 39 27 – 150 374 1.943 – 105 – 51 13.740 27.026 1.047 13.092 – 6. 2011 Non-current financial assets Other non-current assets Trade receivables Other current receivables Current financial assets Cash and cash equivalents Total assets Non-current financial liabilities Other non-current liabilities Current financial liabilities Trade payables Other current liabilities Total liabilities December 31.256 82 – 15.266 10.011 2.366 – – – – – 1.644 16.891 – 316 – 41 13. 2011 Derivatives Non-current financial assets.799 298 – – 60 39 – 397 12.448 – 1.616 539 220 1.017 16.537 13.866 20.400 8 1.955 12.468 – –3 –108 –4.752 18.440 1.461 176 – – 46 165 – 387 12.034 – 1.963 13.574 169 50.017 19.711 39 9.759 28 9.548 144 292 2. 2012 Non-current financial assets Other non-current assets Trade receivables Other current receivables Current financial assets Cash and cash equivalents Total assets Non-current financial liabilities Other non-current liabilities Current financial liabilities Trade payables Other current liabilities Total liabilities December 31. excluding derivatives Total assets Derivatives Total liabilities December 31.026 – – 1.408 484 484 – – – – – 104 SCA Annual Report 2012 Board of Directors’ Report .459 7 13. 2012 Derivatives Non-current financial assets.932 16 14.081 31 11.147 169 7 6 – 111 293 1.583 –110 – –40 –2.003 – 1.504 – 58 13.654 676 64 – 395 12 – 1.034 1.448 226 – – – – – 226 – – – – – – – – – – – – – Distribution by level when measured at fair value Carrying amount December 31 SEKm Measured at fair value through profit or loss Derivatives used for hedge accounting Available-for-sale ­financial assets Of which fair value by Level 1 2 3 December 31.198 65 15.003 176 28 16 – 108 328 1.034 – – – – – 1.105 115 168 2.866 190 48.226 66 – 14.448 – – – – – 1.504 23.354 8 1.440 – – 1.834 12.072 65 – 16.860 –1 –3.935 14.772 – 8.

358 1. SCA has the possibility to transfer the deposit to another bank with a better rating. an amount corresponding to SEK 3. The claim is related to restructuring measures that the sellers of a Spanish company carried out prior to SCA’s acquisition of the company in 1997. Compensation varies during the term and can amount to a maximum of 12% of the transaction amount.6m. which resulted in SCA exchanging these securities for bank-guaranteed securities and US government bonds. which at the time of the agreement had an AA and AAA rating. unquoted shares. which subsequent to the above-mentioned premature termination. partly in US securities.6bn was partly invested in accounts in banks. as the result of extraordinary events (of a force majeure nature). Sweden. SCA entered into lease-out/lease-in transactions during 1996 with US banks as counterparties pertaining to the two LWC plants in Ortviken.366 1. SCA has the use of the facility without operational restrictions. Sweden. but is challenging the claim and assesses that the claim will not be upheld in court.462 8 1. as the result of extraordinary events (of a force majeure nature).72bn at December 31.66bn at December 31. the net present value of the leasing amount which SCA has undertaken to pay totaled about SEK 4bn or USD 611m. In 2009. as the result of extraordinary events (of a force majeure nature). elect not to fulfill. However. in accordance with the agreement. including interest. SCA signed an eight-year fixed-price agreement with a Swedish electricity supplier for electricity deliveries to the company’s Swedish plants. in accordance with the agreements. SCA has the possibility to transfer the de- posit to another bank with a better rating. SCA carries the credit risk against the depositary banks. At the time the transactions were entered into. Of this amount. The agreement covers approximately 45% of estimated consumption at these plants.147 – 1.470 553 553 – – – – The table above specifies how financial instruments. However. elect not to fulfill. 2010 Derivatives Non-current financial assets. such as shares or bonds quoted on the stock exchange. Should the counterparty’s rating fall below BBB–. SCA has the opportunity to cancel the transactions in 2014 and 2015.366 – 1. or cannot fulfill the leasing contract. Compensation varies during the duration and can amount to a maximum of about 6% of the present value of the leasing amount. Moreover. the current value of the leasing amount that SCA has undertaken to pay amounted to about SEK 4bn or USD 442m. SCA is liable to compensate the counterparties for financial losses. Should SCA. The value of outstanding deposits and US securities amounted to SEK 3. excluding derivatives Total assets Derivatives Total liabilities 315 – 315 260 260 1. The counterparties have accepted that the deposited funds are applied for the leasing undertakings. SCA is liable to take such action if the depositary bank’s rating falls below A–. SCA is liable to compensate the counterparty for any economic loss that may be incurred as a result. Sweden. were measured at fair value in accordance with the fair value hierarchy with the following three levels: Level 1:  Quoted prices on an active market for identical assets or liabilities. SCA signed a ten-year fixed-price agreement with a Norwegian electricity supplier comprising electricity deliveries corresponding to approximately 17% of the estimated consumption. SCA entered into a sale and leaseback transaction with a European bank relating to the new soda recovery boiler at the liner plant in Obbola. SCA also entered into a leasing transaction with US banks as counterparties pertaining to the Östrand pulp mill in Timrå. price quotations) or indirectly (that is. SCA is entitled. is partly deposited in accounts in banks with at least A– rating. 2012. were composed and examined by legal experts in Sweden and the US and are considered to follow the standard practice for this type of transaction.Notes – Group  |  Financial statements Distribution by level when measured at fair value Carrying amount December 31 SEKm Measured at fair value through profit or loss Derivatives used for hedge accounting Available-for-sale ­financial assets Of which fair value by Level 1 2 3 December 31. This amount. SCA has provided a security for payment of the tax. 0). or cannot fulfill the leasing contracts. Should SCA. The lease and depositary arrangement were recognized net in SCA’s balance sheet in 2007. but containing the assumptions and estimates of management. Consequently. excluding financial liabilities. The agreement with the Norwegian supplier became effective in 2009. or cannot fulfill the leasing contracts. SCA bears the credit risk against the depositary banks. SCA is liable to compensate the counterparties for financial losses. At the time the transactions were entered into.358 – – 1. Level 2:  Other observable inputs for the asset or liability than quoted prices included in Level 1. no provision has been made in the accounts for this claim. 33 SEKm Pledged assets Pledged assets related to financial ­ liabilities Total Other 2012 2011 2010 Real estate mortgages Chattel mortgages Other Total Allocated to disposal group Total excluding disposal group 7 15 226 248 – 248 – 20 140 160 – 160 7 35 366 408 – 408 7 36 140 183 –1 182 6 31 139 176 – 176 Liabilities for which some of these assets were pledged as collateral amounted to SEK 5m (0. The terms of the contracts were originally 32 and 36 years. The agreements were composed and examined by legal experts in Sweden and the US and are considered to follow the standard practice for lease-out/ lease-in transactions. respectively. Should SCA. Should the rating of a depositary bank decline in the future. such as forward contracts or interest rate swaps. The present value of SCA’s future rental amounts was SEK 671m. and partly in US securities with an AA+ rating. The advance payments and deposits were netted during 2000 in the balance sheet. obtained from price quotations). The agreements. In 2007. without incurring any financial consequences. Should the rating of a depositary bank decline in the future. which may be incurred as a result. either directly (that is. In 2005. During 2000.147 293 293 – 1. Level 3:  Inputs for the asset or liability not based on observable market data. The counterparties have accepted that the deposited funds are applied for the leasing undertakings. respectively. Compensation varies during the duration and can amount to a maximum of about 9% of the present value of the leasing amount. amounts to USD 227m. which may be incurred as a result. The original term of the contract is 25 years and SCA has a right to terminate the transaction in 2023 without any financial consequences. 32 SEKm Contingent liabilities 2012 2011 2010 Guarantees for employees associates customers and others Tax disputes Other contingent liabilities Total Allocated to disposal group Total excluding disposal group – 20 46 349 179 594 – 594 9 23 45 507 114 698 –111 587 3 25 42 270 44 384 – 384 Contingent liabilities for tax disputes mainly relate to claims for additional taxes in Spain. The term of the transaction was originally 30 years. as in the 1996 transactions. The value of outstanding deposits and US securities subsequently amounted to SEK 1. The claim by the Spanish tax authorities amounts to EUR 28. SCA also has an obligation to exchange the US securities if their rating falls below AA– or A. The rating of the original securities declined in 2008. without incurring any financial consequences. to terminate the transaction in advance. The advance payments and deposits were netted during 1996 in the balance sheet. elect not to fulfill. SCA has the opportunity to cancel the transactions in 2017 without incurring any financial consequences. 2012. respectively. the leasing transaction with one of the US banks was terminated prematurely. which was invested in a security with an A rating issued by the counterparty and deposited in a Swedish bank assigned to handle rental payments during the term of the contract. for example. Board of Directors’ Report SCA Annual Report 2012 105 .

President.0m (5. see Note 6. travel expenses. Former Presidents and Executive Vice Presidents and their survivors are also included. % Breakdown of employees by age groups. For further information. The item “Other external costs” includes consultancy fees. and intangible assets 2012 2011 Buildings Land improvements Machinery and equipment Sub-total Capitalized development costs Total 5 50 3 58 0 58 5 45 3 53 0 53 106 SCA Annual Report 2012 Board of Directors’ Report . etc. Personnel costs also include other personnel costs in the amount of SEK 15m (12). Social security costs SEKm 2012 2011 AUDITING EXPENSES Remuneration to auditors can be specified as follows: SEKm 2012 2011 Total social security costs of which. 36 SEKm Depreciation/amortization of property plant and equipment. respectively. office premises and technical equipment. Average number of employees 2012 2011 Sweden of whom women. Premiums during the year for disability and family pension insurance with Alecta amounted to SEK 3m (3).Financial statements  |  Notes – Parent Company 34 SEKm Operating loss 35 2012 2011 SEKm Personnel and Board costs Operating loss by type of cost Other operating income Other external costs Personnel and Board costs Depreciation/amortization Other operating expenses excluding depreciation/amortization Total 98 –156 –331 –58 –43 –490 174 –303 –321 –53 –124 –627 Salaries and remuneration 2012 2011 Board of Directors1). interest expense Interest expense (recognized in personnel costs) 36 17 53 Retirement through insurance 46 16 62 18 –1 79 0 17 0 96 LEASING Future payment commitments for non-cancellable operating leases are as follows: SEKm 2012 2011 Insurance premiums Other Policyholder tax Special payroll tax on pension costs Cost of credit insurance. President. pension costs 2) 2) 143 89 148 96 PwC Audit assignments Auditing activities other than the audit assignment Tax consultancy services Other assignments Total 9 1 7 12 29 9 1 2 44 56 Of the Parent Company’s pension costs. (See also Note 26 Pension provisions. In reality. SEK 38m (26) pertain to the Board. Executive Vice Presidents and Central Staff Managers (5 (5)) ­ of which variable remuneration Other employees Total 1) 70 30 99 169 60 21 101 161 Board fees decided by the Annual General Meeting amounted to SEK 6.2). 17% (9) and 24% (22). and so forth. such contracts can be terminated early. Executive Vice Presidents and senior executives. leasing expenses. % 2012 21–30 yrs 31–40 yrs 41–50 yrs 108 50 105 51 51–60 yrs 61– yrs 4 31 38 19 8 Of the total number of Board members and senior executives. Pension costs SEKm 2012 2011 Self-administered pension plans Costs excl. The company’s outstanding pension obligations to these individuals amount to SEK 291m (304). Leased assets comprise means of transportation. are women. management costs. page 101). Pension costs for the year 20 –1 72 0 15 2 89 Within 1 year Between 2 and 5 years Later than 5 years Total 45 147 47 239 45 171 66 282 Cost for the year for leasing of assets amounted to SEK 46m (44).

426 6.7 –4.125 –899 5.654 2.754 2.093 –219 2 41 389 550 –524 –3.3 26. TAX ASSETS (–) The change to the current tax asset during the period is explained below: SEKm 2012 2011 Value at January 1 Current tax income Income taxes paid Tax expense for other Group companies Value at December 31 –18 – 0 – –18 –18 – 0 – –18 Board of Directors’ Report SCA Annual Report 2012 107 .194 4.839 1. external Interest income.010 –100 352 – 28 –729 0. subsidiaries Total PROVISIONS FOR TAXES The change to the provisions for tax is explained below: SEKm Value at January 1 Deferred tax expense Value at December 31 Land and buildings Provisions for pensions Tax loss carryforwards Other Total 1.5 –21.4 –3. These are now recognized in profit and loss as Group contributions paid and received.3 –34.9 –1.0 –173 556 –729 –8.426 22 –9 – 13 14 2 0 –3 13 23 –9 – 14 16 1 – –3 14 0 –958 –162 412 –127 –64 –899 0. Income taxes Tax on profit for the year 2012 2011 Deferred tax income (–) expense (+) Total 2012 Reconciliation SEKm % 226 226 2011 SEKm –173 –173 41 SEKm Tangible fixed assets Buildings Land 2012 2011 Machinery and equipment 2012 2011 % 2012 2011 Tax income/expense Expected tax Difference Difference is due to: Taxes related to prior periods Non-taxable dividends from subsidiaries Non-taxable Group contributions from subsidiaries Non-deductible Group contributions to subsidiaries Changed tax rate Other non-taxable/non-deductible items Total 226 1.3 –34.873).6 –2.6 – 1.397 –115 –812 –47 423 –222 8 432 8 226 1.0 1 –1.175 –107 –380 –39 649 40 SEKm Intangible fixed assets 38 39 SEKm Capitalized development costs Appropriations and untaxed reserves 2012 2011 Accumulated costs Accumulated amortization Residual value according to plan Value at January 1 Investments Amortization for the year Value at December 31 20 –19 1 1 0 0 1 35 –34 1 1 – 0 1 Of the Parent Company’s untaxed reserves.2 26.066 6.079 6. TAX INCOME (–) Financial items 2012 2011 SEKm 2012 2011 Changes in temporary differences Adjustments for prior periods Total 3.781 3. CURRENT TAX LIABILITY (+).643 4.Notes – Parent Company  |  Financial statements 37 SEKm DEFERRED TAX EXPENSE (+).5 Land includes forest land in the amount of SEK 6.7 16.654 6.0 –22.8 9.3 –21.426 299 –21 –50 6.5 Accumulated cost Accumulated depreciation Accumulated write-ups Planned residual value Value at January 1 Investments Sales and disposals Depreciation for the year Value at December 31 148 –91 – 57 64 0 –2 –5 57 152 –88 – 64 68 1 0 –5 64 2. external Interest expenses. The Parent Company participates in the Group’s tax pooling arrangement and pays the majority of the Group’s total Swedish taxes.0 –47. subsidiaries Interest expenses and similar loss items Interest expenses.330 –742 5.733 –136 – –5 32 597 –551 –2.755 226 0 226 –174 1 –173 Result from participations in Group companies Dividends from subsidiaries Group contributions received from subsidiaries Group contributions paid to subsidiaries Result from participations in other companies Dividend from other companies Capital gains/losses Interest income and similar profit items Interest income.013m (5.039 –692 5.357 117 –3 –45 6. SEK 181m (169) pertains to accumulated depreciation in excess of plan.

496 807 67.396 705.410.894 108 SCA Annual Report 2012 Board of Directors’ Report .110.633.1 – 119.792 1. issue price SEK 80 Conversion of debentures Conversion of debentures New issue 1:6. Financial fixed assets Interest-bearing receivables Total Current assets Interest-bearing receivables Other receivables Total Non-current liabilities Interest-bearing liabilities Total Current liabilities Interest-bearing liabilities Other liabilities Total 66.137 611.Financial statements  |  Notes – Parent Company 42 SEKm Participations Subsidiaries 2012 2011 Associates 2012 2011 Other companies 2012 2011 44 SEKm Other current receivables 2012 2011 Prepaid expenses and accrued income Other receivables Total Prepaid expenses and accrued income SEKm 67 98 165 16 84 100 Accumulated costs Accumulated write-ups Accumulated write-downs Planned residual value Value at January 1 Investments Increase through acquisition of subsidiaries Reclassifications Repayment of equity Divestments Impairments for the year Value at December 31 124. of shares 1993 1993 Number of shares.2 329.7 – – 4.631 1.0 18.p.100 2.394 1.p.999 1 125. and purchased shares in AB Industrivärden from a pension foundation.066 124. SEKm A shares B shares Total 10 1 93.935 2. No.000 100 100 0 25 94.364 140 –140 124.113 32.000 1.831. Shares were held as part of the employee stock option programs that expired in 2008 and 2009.0 0.394 427 427 2.127.155 470.605 shares. the company received shares as compensation for pension payments.285 3.000 1.412 16. conversions and splits as set out below: Increase in share capital Cash ­payment. 2012 No. Reg.066 556047-8520 516401-8540 556449-7237 556146-6300 556666-8553 Stockholm Stockholm Stockholm Stockholm Stockholm 1.1 288.767.039 2.000 100 100 100 100 100 0 14 0 0 0 SCA’s share capital.181 3 3.683 9. issue price SEK 140 Conversion of debentures New issue.0 0 11. SEKm The change in equity is shown in the financial report relating to Equity presented on page 73.294 3.416. % Carrying amount.094 40. In addition. December 31.1 – Company name Corp.346 03665635 03318780966 Amsterdam Diegem Dunstable Capannori 246.989 101.3 17.3 0.347 999. The company also sold shares in a tenant-owner association.0 15. and part repayment of equity in the Belgian company SCA Capital NV.5 1. December 31.297 – 1. 1993 Conversion of debentures and new subscription through warrants 1 ­ New issue 1:10. Total carrying amount of subsidiaries 33181970 0810.303 67. Treasury shares at the beginning and at the end of the year amounted to 2.110.och Bostadsaktiebolaget FOBOF SCA Försäkrings­ aktiebolag SCA Kraftfastigheter AB SCA Research AB SCA Hedging AB Foreign subsidiaries: SCA Group Holding BV SCA Capital NV SCA UK Holdings Ltd SCA Hygiene Products S.0 0.094 311 2.33.000 140.0 1. December 31.1 1.109 68.4 434.899.957 705.A.0 18.141 0 344 124.2 34.697.066 124. 2012 172.364 – 344 218 –860 – – 124.983. SEKm Year Event No.030.567 29.3 176.994 370 – – – – – 124.839 4.364 123.100 2.350 43 SEKm Receivables from and liabilities to subsidiaries 2012 2011 The quotient value of the Parent Company’s shares amounts to SEK 3.A.000 shares in the Italian subsidiary SCA Hygiene Products S. of shares Share of equity..826 1. January 1.303.800. The shares in AB Industrivärden are recognized at fair value.073. The share capital and number of shares have increased since 1993 with new issues.278. private placement New subscription through warrants IIB Conversion of debentures New subscription through warrants IIB Conversion of debentures Split 3:1 Number of shares. Domicile 1994 1995 1999 2000 2001 2002 2003 2004 2007 2012 Swedish subsidiaries: Fastighets.181 2.579.066 140 –140 124.000 513 1. Parent Company’s holdings of shares and participations in subsidiaries.894 2. 2012 Number of votes Number of shares Share capital.286 17.364 – – – 0 88 – – –88 – – – 0 88 – – 88 – 88 – – – – – 88 157 30 – 187 32 130 – – – –5 30 187 37 – –5 32 11 26 – – – – –5 32 2012 2011 Prepaid lease of premises Prepaid financial expenses Prepaid pension premiums Other items Total 6 46 1 14 67 6 – 1 9 16 45 Equity The 2012 events pertain to the intra-Group purchase of 125. Shares in three companies belonging to the packaging operations were provided as a shareholders’ contribution to the subsidiary SCA Group Holding BV.000 1.

634 5. 50 SEKm Pledged assets Other Total 2012 Total 2011 Chattel mortgages Other Total 20 136 156 20 136 156 20 136 156 Value at January 1 Compensation received from assumed pension obligations Costs excl. Capital value of pension obligations relating to self-administered pension plans SEKm 2012 2011 The Parent Company has issued a guarantee in relation to the Group’s UK pension plan in the event of the plan being dissolved or one of the companies covered by the plan becoming insolvent. interest expense Interest expense (recognized in personnel costs) Payment of pensions Value at December 31 491 27 36 17 –35 536 453 – 45 16 –23 491 51 Financial instruments by category External actuaries have carried out capital value calculations pursuant to the provisions of the Swedish Act on Safeguarding of Pension Obligations.083 24 172 82. The market value of the Parent Company’s portion of the foundation’s assets at December 31. The financial instruments in the Parent Company are classified as loans and receivables for assets. Pension payments of SEK 5m (3) were made in 2012.Notes – Parent Company  |  Financial statements 46 Provisions for pensions 49 SEKm Contingent liabilities 2012 2011 The Parent Company has both defined-contribution and defined-benefit pension plans.649 1. 2012 amounted to SEK 73m (57).399 934 13.630 Notes SEK 1.723 5.492 2. The accounting principles for financial instruments are applied for the items below.6).358 5.160 7. SEKm Fair value. Guarantees for: subsidiaries 19.723 48 SEKm Other current liabilities Other current liabilities Total Other current liabilities 2012 2011 Accrued expenses and prepaid income Other operating liabilities Total Accrued expenses and prepaid income SEKm 367 9 376 363 6 369 52 Adoption of the annual accounts The annual accounts are subject to adoption by SCA’s Annual General Meeting and will be presented for approval at the Annual General Meeting on April 10. In the past two years.311 87 190 84. Below is a description of the Parent Company’s defined-benefit plans. 2012 2011 Accrued interest expenses Accrued social security costs Accrued vacation pay liability Other liabilities to personnel Other items Total 172 26 12 59 98 367 190 21 11 46 95 363 Board of Directors’ Report SCA Annual Report 2012 109 . The Parent Company is also a guarantor for all the subsidiary SCA Graphic Sundsvall AB’s obligations according to contracts regarding physical deliveries of electric power between 2005 and 2013.160 1.972 22.604 7.630 7.181 13.004 14. and other financial liabilities measured at amortized cost for liabilities. Since the value of the assets in 2012 is below that of the pension obligations in the amount of SEK 29m (39). Loans and receivables SEKm 2012 2011 47 SEKm Assets in the balance sheet Non-current interest-bearing liabilities Carrying amount 2012 2011 Fair value 2012 2011 Financial fixed assets Interest-bearing receivables Interest-bearing receivables from subsidiaries Current assets Receivables from subsidiaries Other current receivables Cash and bank balances Total Financial liabilities measured at amortized cost 268 40 0 859 199 46 0 3. this is recognized as a provision in the balance sheet.711 831 14. No other categories have been utilized over the past two years.399 Trade payables 2. 2013.894 Bond issues Other non-current loans with a term > 1 year < 5 yrs Other non-current loans with a term > 5 yrs Total Bond issues Issued 7. The provision is included below.871 68. The discount rate is 3. 2012 amounted to SEK 102m (96). The capital value of the pension obligations at December 31.265 124 427 126 2. Next year’s expected disbursements regarding defined-benefit pension plans amount to SEK 38m. The defined-benefit obligations are calculated based on salary levels valid on the respective balance sheet dates. These balance sheet items are not fully reconcilable since they may include items that are not financial instruments. OTHER PENSION OBLIGATIONS Note 6 Personnel and Board costs in the Group’s notes describes the other defined-benefit pension plans of the Parent Company.800 200 5.100 13. no compensation has been received.5% (3.266 20 22.950 22 19.176 Maturity Carrying amount.800m Floating Rate Note SEK 200m Notes EUR 600m Total 2016 2016 2016 1.376 7.914 205 5.493 7. SEKm SEKm 2012 2011 Liabilities in the balance sheet Non-current liabilities Liabilities to subsidiaries Interest-bearing liabilities Current liabilities Liabilities to subsidiaries 67.160 5. The table below shows the change between the years.286 Other contingent liabilities Total PRI PENSIONS Pension liabilities pertaining to PRI pensions have been secured through a common Swedish SCA pension fund.493 779 13.

341.943 higher if assets and liabilities had not been measured at fair value in accordance with Chapter 4.498.726 on the number of outstanding shares at December 31.2011) 36. Section 14 of the Swedish Annual Accounts Act.50 per share to be carried forward Total 1) Based 35.957.525 39.053. The statutory Board of Directors’ Report provides a fair review of the Parent Company’s and Group’s operations.160. February 21. Parent Company Non-restricted equity in the Parent Company: retained earnings net profit for the year Total The Board of Directors and the President proposes: to be distributed to shareholders. 2013. a dividend of SEK 4.287.955. The amount of the dividend may change if any treasury share transactions are executed before the record date. The company’s equity would have been SEK 323.180.541. Sverker Martin-Löf Chairman of the Board Pär Boman Board member Rolf Börjesson Board member Leif Johansson Board member Lars Jonsson Board member Louise Julian Board member Bert Nordberg Board member Anders Nyrén Board member Örjan Svensson Board member Barbara Milian Thoralfsson Board member Thomas Wiklund Board member Jan Johansson President and CEO Our audit report was submitted on February 28. 2012. 2013 PricewaterhouseCoopers AB Anders Lundin Authorized Public Accountant 110 SCA Annual Report 2012 Board of Directors’ Report .Financial statements  |  Proposed disposition of earnings Proposed disposition of earnings Annual accounts 2012 Disposition of earnings. Stockholm.997 4. The Parent Company’s financial statements have been prepared in accordance with generally accepted accounting principles in Sweden and give a true and fair view of the Parent Company’s financial position and results of operations. 2013 The Board of Directors and President declare that the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards adopted by the EU and that disclosures herein give a true and fair view of the Group’s financial position and results of operations.726 3.729 39.498.542. financial position and results of operations and describes material risks and uncertainties facing the Parent Company and the companies included in the Group.341. April 15.

Auditor’s report  |  Financial statements

Auditor’s report
To the annual meeting of the shareholders of Svenska Cellulosa Aktiebolaget SCA, corporate identity number 556012-6293
Report on the annual accounts and consolidated accounts We have audited the annual accounts and consolidated accounts of Svenska Cellulosa Aktiebolaget SCA for the year 2012. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 18–110. Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts and 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 Managing Director 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 consolidated accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall 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 opinion. 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 2012 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 2012 and of their financial performance and cash flows for the year then ended 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 consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group. Report on other legal and regulatory requirements In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company’s profit or loss and the administration of the Board of Directors and the Managing Director of Svenska Cellulosa Aktiebolaget SCA for the year 2012. Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss, and the Board of Directors and the Managing Director 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 or loss 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 or loss, 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 Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions. Opinions We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Stockholm 28 February 2013 PricewaterhouseCoopers AB

Anders Lundin Authorized Public Accountant Auditor-in-charge

Independent assurance report relating to Sustainability Report
Pages 62–65 of this document contain an extract of the Sustainability Report. A complete Sustainability Report has been prepared by the company, which contains our full assurance report. Based on our review, nothing has come to our attention that causes us to believe that the sustainability report has not, in all material respects, been prepared in accordance with the criteria stipulated in the full version of the assurance report. Stockholm, 28 February 2013 PricewaterhouseCoopers AB

Anders Lundin Authorised Public Accountant

Fredrik Ljungdahl Expert member, Far

Board of Directors’ Report

SCA Annual Report 2012

111

SCA Data

Multi-year summary1)
SEKm 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

INCOME STATEMENT Net sales 2) Operating profit Personal Care Tissue Packaging Forest Products Other operations 3) Goodwill amortization Financial income Financial expenses Profit before tax Tax Profit for the period from disposal group Non-controlling interests Profit for the year BALANCE SHEET Non-current assets (excl. financial receivables) Receivables and inventories Non-current assets held for sale Financial receivables Non-current financial assets Cash and cash equivalents Assets in disposal group held for sale Total assets Equity Non-controlling interests Provisions Interest-bearing debt Operating and other non-interest bearing liabilities Liabilities in disposal group held for sale Total liabilities and equity Capital employed 4) Net debt, incl. pension liabilities CASH FLOW STATEMENT Operating cash flow Cash flow from current operations Cash flow before dividend Current capital expenditures, net Strategic capital expenditures, non-current assets Business combinations Divestments KEY RATIOS5) Equity/assets ratio, % Interest coverage, multiple Debt payment capacity incl. pension liabilities, % Debt/equity ratio, incl. pension liabilities Debt/equity ratio, excl. pension liabilities Return on capital employed, % Return on capital employed, excluding items affecting comparability, % Return on equity, % Operating margin, % Operating margin, excluding items affecting comparability, % Net margin, % Capital turnover rate, multiple 2) Operating cash flow per share, SEK Earnings per share, SEK Dividend per share, SEK 6)
1) Up

85,408 6,012 3,180 4,640 – 1,363 –3,171 – 91 –1,355 4,748 –251 503 – 5,000 95,256 28,539 1,937 3,614 168 2,017 – 131,531 59,706 458 13,968 34,727 22,672 – 131,531 85,458 –32,927 9,644 7,271 8,218 –3,161 –1,863 –14,872 17,682 45 4.8 37 0.55 0.48 7 10 8 7 10 5 1.00 10:35 7:06 4:50

81,337 2,299 2,645 3,150 – 2,423 –5,919 – 129 –1,454 974 –1,267 900 – 607 83,428 25,577 3,379 2,083 292 2,644 21,601 139,004 60,752 539 12,651 37,834 19,627 7,601 139,004 83,374 –36,648 7,418 5,306 2,671 –3,250 –1,637 –983 –15 44 1.7 36 0.60 0.52 4 9 1 3 10 0 0.98 7:55 0:78 4:20

82,731 7,793 2,922 3,041 – 2,915 –1,085 – 57 –1,227 6,623 –1,755 724 – 5,592 105,655 31,890 93 3,254 220 1,866 – 142,978 67,255 566 13,908 37,297 23,952 – 142,978 84,664 –34,406 8,725 6,490 5,049 –3,017 –2,254 –484 1,297 47 6.7 35 0.51 0.48 8 9 8 9 10 6 0.98 9:24 7:90 4:00

109,358 8,190 3,235 3,946 413 2,503 –1,907 – 158 –1,802 6,546 –1,716 – – 4,830 111,745 30,605 105 2,062 194 5,148 – 149,859 67,156 750 13,351 44,766 23,836 – 149,859 112,264 –40,430 14,133 11,490 8,483 –4,037 –3,031 –51 75 45 5.0 31 0.60 0.55 7 9 7 7 9 4 0.97 16:36 6:78 3:70

110,449 8,554 2,912 2,375 1,493 2,207 –433 – 246 –2,563 6,237 –639 – – 5,598 113,866 36,121 102 2,499 642 5,738 – 158,968 66,450 802 13,292 52,886 25,538 – 158,968 105,955 –47,002 7,813 3,810 77 –5,353 –3,109 –1,764 1,140 42 3.7 26 0.70 0.66 8 8 9 8 8 5 1.04 5:42 7:94 3:50

105,913 10,147 2,960 1,724 2,651 2,870 –58 – 193 –2,103 8,237 –1,076 – – 7,161 104,150 33,793 55 3,663 366 3,023 – 145,050 63,590 689 14,199 42,323 24,249 – 145,050 96,368 –37,368 8,127 4,508 1,473 –5,165 –1,342 –4,545 2,852 44 5.3 35 0.58 0.58 11 10 12 10 9 7 1.10 6:42 10:16 4:40

101,439 8,505 2,799 1,490 2,072 2,475 –331 – 179 –1,851 6,833 –1,366 – – 5,467 95,994 29,907 2,665 2,970 409 1,599 – 133,544 58,299 664 14,240 38,601 21,740 – 133,544 96,192 –36,399 6,304 2,772 1,538 –5,672 –935 –323 48 44 5.1 29 0.62 0.59 9 9 9 8 8 6 1.05 3:95 7:75 4:00

96,385 1,928 2,474 1,577 1,775 1,886 –5,784 – 156 –1,651 433 21 – – 454 101,840 29,356 68 2,035 237 1,684 – 135,220 56,343 767 17,035 39,036 22,039 – 135,220 95,341 –39,826 7,471 4,362 1,768 –4,859 –2,086 –428 1 42 1.3 27 0.70 0.62 2 8 1 2 8 0 1.01 6:22 0:61 3:67

89,967 7,669 2,429 2,026 2,604 1,777 –1,167 – 453 –1,537 6,585 –1,393 – – 5,192 96,162 25,681 – 682 128 3,498 – 126,151 54,350 768 16,962 35,021 19,050 – 126,151 87,208 –34,745 8,837 5,688 –6,276 –4,270 –2,398 –9,340 0 44 7.1 35 0.63 0.56 9 10 10 9 9 6 1.03 8:12 7:37 3:50

85,338 7,757 2,403 2,418 2,482 1,559 25 –1,130 544 –1,334 6,967 –1,861 – –31 5,075 77,885 22,880 – 4,146 749 1,696 – 107,356 49,754 751 13,620 25,429 17,802 – 107,356 71,687 –22,306 10,102 8,134 901 –3,902 –2,949 –4,808 961 47 9.8 54 0.44 0.44 11 10 10 9 9 6 1.19 11:66 7:28 3:50

to 2009 including packaging operations, which was divested in June 2012. 2) Net sales for SCA’s recycling business were reclassified to other income, with retroactive adjustment for 2009. 3) 2012, 2011, 2010, 2009, 2007, 2005 and 2004 include items affecting comparability of SEK –2,634m, SEK –5,439m, SEK –702m, SEK –1,458m, SEK 300m, SEK –5,365m and SEK –770m, respectively. 4) Calculation of average capital employed is based on five measurements. 5) Key ratios are defined on page 116. 6) Dividend for 2012 relates to the proposed dividend.

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SCA Annual Report 2012

SCA Data

Comments to the multi-year summary
Income statement Sales In 2003 and 2004, SCA continued to expand by acquiring companies, which contributed to an increase in sales of 13% up to the end of 2005. In 2006, the Group launched more new products than ever before and as a result of the growth in volume, SCA’s net sales exceeded SEK 100bn for the first time. In 2008, sales increased by 4% to slightly more than SEK 110bn. Sales in Personal Care and Tissue rose, while Packaging and Forest Products declined. In 2009, sales fell 1% due to lower sales in Packaging. SCA’s European packaging operations were reclassified to Disposal group held for sale with retroactive adjustment from 2010. Sales declined 24% in 2010 mainly due to the divestment of the European packaging operations, but also to negative exchange rate effects and the divestment of the Asian packaging operations. Net sales in 2011 fell 2% since both Personal Care and Tissue reported lower sales, while sales for Forest Products remained unchanged. All business areas were impacted by negative exchange rate effects. A number of strategic acquisitions and divestments were made in 2012, for example, SCA’s European packaging operations were divested and Georgia-Pacific’s European tissue operations were acquired. Net sales for 2012 rose 5% (11% excluding exchange rate effects and divestments). Sales for both Personal Care and Tissue increased sharply, whereas sales for Forest Products declined. During the ten-year period, the Group’s sales have remained unchanged (CAGR = 0%). Operating profit For the period up to 2006, Personal Care had been under pressure from rising raw material costs and intense competition, although growth was favorable in both established and new markets. The profit level improved further in 2007. In 2008, operating profit was stable, while it increased 11% in 2009 as a result of an improved product mix, higher prices and lower raw material costs. Profit declined in 2010. Higher volumes and lower costs failed to offset higher costs of raw materials, marketing activities and exchange rate effects. Operating profit for 2011 declined 5% excluding exchange rate effects compared with the preceding year. Higher volumes, prices and cost savings did not offset higher costs for raw materials. In 2012, operating profit rose 20% compared with the preceding year (28% excluding exchange rate effects and divestments). The earnings improvement was attributable to higher volumes and prices, an improved product mix, lower raw material costs and cost savings. The Tissue business area experienced a number of years (2003–2006) of lower prices, higher raw material and energy costs and the negative effects of currency movements. In 2007, this negative trend was reversed and operating profit increased once again. With effect from the fourth quarter of 2007, the acquisition of Procter & Gamble’s European tissue unit is included in SCA’s Tissue operations, which had a positive impact on profit. In 2008, the profit level increased mainly as a result of acquisitions and higher prices and volumes, which were offset by higher costs for raw materials. Up to that point, 2009 was the strongest year for Tissue. Prices rose at the same time as raw material prices declined. SCA invested in emerging markets, including Russia, which also made a positive contribution to the earnings trend. In 2010, profit declined for Tissue compared with the preceding year due to a sharp increase in raw material costs. Operating profit for 2011 rose 4% (10% excluding exchange rate effects) compared with the preceding year. Higher prices, a changed product mix and increased volumes had a positive impact, while higher raw material and distribution costs combined with negative exchange rate effects had an adverse impact on profit. In 2012, operating profit increased 47% to the highest ever level (50% excluding exchange rate effects and divestments). Higher prices, an improved product mix, increased volumes, acquisitions, lower raw materials costs and cost savings contributed to the improvement in ­earnings. Packaging’s operating profit declined in 2003 but improved again in 2004, before price reductions caused lower profit levels in 2005. In 2006, prices improved gradually, first for containerboard, which led to increases in the price of corrugated board, and thus an improvement in profits. Packaging also implemented successive price increases in 2007. SCA sold its North American packaging operations in the first quarter of 2007. Operating profit declined sharply in 2008 due to the financial crisis and the ensuing recession. Production cutbacks in liner operations and lower demand for corrugated board caused a deterioration in profit. The recession continued in 2009 and the result from Packaging declined 72% compared with 2008. The Asian packaging operations were divested in 2010. In 2012, the European packaging operations were divested and reclassified to Disposal group held for sale with retroactive adjustment from 2010. For Forest Products, profit declined in 2003 as a result of lower prices and negative exchange rate movements. The profit level subsequently improved at a gradual pace and the business area reported its highest profit up to that date in 2007. The earnings improvement was mainly an effect of higher prices. Deliveries of publishing papers and solid-wood products were stable in 2008, but profit declined due to increased costs for raw materials, energy and timber. In 2009, profit improved, primarily for publishing papers, where higher prices, lower raw material costs and productivity enhancements made a positive contribution. In 2010, profit rose 16%. Productivity improvements and implemented price increases in pulp and solidwood products had a positive effect on profit. In 2011, profit declined 17% due mainly to higher costs for raw materials and negative exchange rate effects in the pulp and sawmill operations. Operating profit in 2012 fell 44%. The lower earnings were largely attributable to lower prices and negative exchange rate effects in all product categories due to the stronger SEK. Cash flow statement A total of SEK 59bn has been invested in expansion during the reported ten-year period, of which SEK 38bn is attributable to company acquisitions. Maintenance investments amounted to SEK 43bn and have remained at a steady level of about 4% in relation to sales. Key ratios During the reporting period, the Group’s dividend rose from SEK 3.50 to the proposed SEK 4.50, corresponding to an annual increase of approximately 3.5%. The proposed dividend of SEK 4.50 per share corresponds to an increase of 7.1% compared with the preceding year.

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113

75% Forest Products. 3 % Energy.921m Sales and administration expenses2). 17 % Energy. 40 % Excluding items affecting comparability.1 million cubic meters of which. 25 % Raw materials and consumables. 34 % Raw materials and consumables. 1) 2) Sales 3) The Of which Timber/chips Other Total Raw materials and consumables 19 % 21 % 40 % Raw materials. 5 % Recovered paper Personal Care. 50% from own forest and 50% purchased externally Total of 2 million tons of which. 25% Total of 10. 17 % Other costs of goods sold. 18 % Raw materials and consumables. 37% from own pulp mills and 63% purchased externally Total of 2. 37 % Personal Care Total operating expenses1): SEK 23. 0 % Tissue. 76 % Forest Products. packaging material and plastic material. and administration expenses include costs for marketing (5 percentage points). 27 % Energy. 10 % Forest Products. 13 % Energy. 33 % Biofuels. energy and transport activities Timber/chips Personal Care. 6 % Transport and distribution expenses. 12 % Other costs of goods sold. 0 % Tissue. 45 % Tissue Total operating expenses1): SEK 37.859m Sales and administration expenses. 29 % Fossil fuels.6 million tons of which. 28 % Raw materials and consumables. 9 % Transport and distribution expenses. 30% from own collection and 70% purchased externally Energy Electricity. 1% Transport and distribution expenses. two largest items of Other costs of goods sold comprise personnel (12 percentage points) and depreciation/amortization (6 percentage points). 19% Tissue. 90% Pulp Personal Care.7 TWh Total of 31 billion ton kilometers 114 SCA Annual Report 2012 .302m Sales and administration expenses. 12 % Other costs of goods sold3). 28% Total of 22. 9 % Other costs of goods sold.SCA Data Description of costs SCA Group Total operating expenses1): SEK 76. 6 % Transport and distribution expenses. 4) The item Other in Raw materials and consumables includes costs for chemicals. 38 % Transport activities By sea.924m Sales and administration expenses. 41 % Of which Of which Of which Pulp Recovered paper Timber/chips Super absorbents Non-woven Other 4) Total Raw materials and consumables 9 % 4 % 5 % 3 % 2 % 14 % 37 % Pulp Super absorbents Non-woven Other Total Raw materials and consumables 10 % 9 % 8 % 18 % 45 % Pulp Recovered paper Other Total Raw materials and consumables 12 % 7 % 22 % 41 % Forest Products Total operating expenses1): SEK 16. 72 % Other means of transport.

unless otherwise indicated.SCA Data Production capacity Personal Care Production plant Country (Capacity is stated in thousands of tons.200 815 1) 2) Non-woven Joint venture companies. and per year) Tissue Mill Country Capacity Mill Country Capacity Annaba Buenos Aires Springvale Sao Paolo Drummondville Song Jiang Caloto Rio Negro San Cristobal Lasso Cairo Amman Shah Alam Ecatepec Guadalajara Gennep Hoogezand Te Rapa Olawa Veniov Jeddah Gemerská Hôrka Kliprivier Falkenberg Mölnlycke Kao Hsiung Ksibet el Mediouni Istanbul Istanbul Bowling Green Algeria1) Argentina1) Australia Brazil Canada China Colombia1) Colombia1) Dominican Republic1) Ecuador1) Egypt1) Jordan1) Malaysia Mexico Mexico Netherlands Netherlands New Zealand Poland Russia Saudi Arabia1) Slovakia South Africa1) Sweden Sweden Taiwan Tunisia1) Turkey Turkey1) US Box Hill Stembert Santiago Bogota Medellin Lasso Nokia Le Theil Orleans Kunheim Gien Houndouville Patras Altopascio Collodi Lucca Monterrey Uruapan Sahagun Cuijk Suameer Kawerau Drammen Sovetsk Svetogorsk La Riba Mediona Valls Allo Total Australia1) Belgium Chile1) Colombia1) Colombia1) Ecuador1) Finland France France France France France Greece Italy Italy Italy Mexico Mexico Mexico Netherlands Netherlands2) New Zealand1) Norway Russia Russia Spain Spain Spain Spain 53 75 61 35 39 24 67 62 35 50 145 78 18 25 42 140 57 36 60 51 8 61 22 30 55 26 45 120 160 Chesterfield Manchester Oakenholt Prudhoe Stubbins Lilla Edet Kostheim Mannheim Neuss Witzenhausen Barton Flagstaff Menasha South Glens Falls Ortmann United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Sweden Germany Germany Germany Germany US US US US Austria 31 50 68 87 105 100 106 279 105 30 180 53 211 75 124 3. SCA Annual Report 2012 115 .284 Forest Products Mill Country Uncoated paper SC and LWC paper CTMP pulp Kraft pulp Total pulp and paper Solid-wood products 1. production.960 2.000 m3 ­ Kraftliner Ortviken Östrand Munksund Obbola Bollsta Tunadal Rundvik Vilhelmina Holmsund Gällö Timber1) Laakirchen Total Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Austria 390 510 100 430 900 530 400 500 500 260 120 100 320 365 450 530 390 1.040 100 430 530 1.

FSC – Forest Stewardship Council  An international organization working to ensure responsible forest management. Cash earnings  Calculated as profit before tax. Averages are calculated based on five metrics. plant and equipment and intangible assets. Debt payment capacity  Expressed as cash earnings in relation to average net debt. M3s or m3sub  Solid cubic meter under bark. restaurants. M3fo Forest cubic meter  Volume of timber including tops and bark. such as maintenance. PEFC – Programme for the Endorsement of Forest Certification  An international forest certification system. Debt/equity ratio  Expressed as net debt in relation to equity. capital expenditures to expand facilities. 116 SCA Annual Report 2012 . SC paper  Supercalendered publication paper with a highgloss surface and with a high content of mechanical and/or recycled pulp. rationalization and replacement measures or investments of an environmental nature. Financial measurements Equity/assets ratio  Equity expressed as a percentage of total assets. Dispenser  A device to dispense tissue or soap in public places. share of profits of associates. for example. Margins. Used for high-quality magazines and advertising materials with demanding colorprinting requirements. Used to describe the forest portfolio of standing forest. Operating margin  Operating profit as a percentage of net sales for the year. Operating cash flow  The sum of operating cash surplus and change in working capital. LWC paper  Light Weight Coated paper is a coated paper with a high mechanical pulp content.0% rate for Swedish companies and at the applicable tax rate for foreign companies in each country outside Sweden). Equity  The equity reported in the consolidated balance sheet consists of taxed equity increased by the equity portion of the Group’s untaxed reserves and non-controlling interests. magazines and advertising materials. Return on equity  Return on equity is calculated for the Group as profit for the year as a percentage of average equity. less total liabilities. Available in various grades. 1) Calculations of key ratios are mainly based on guidelines issued by the Swedish Society of Financial Analysts. plant and equipment and restructuring costs. ­ Liner  The surface layer of corrugated board. Capital turnover  Net sales for the year divided by average capital employed. excluding interest-bearing liabilities and pension liabilities. excluding interest-bearing assets and pension assets. wages and payroll expenses divided by the average number of employees. but excluding branches. CTMP  (Chemical thermo mechanical pulp) A high-yield pulp produced through the mechanical defibration in a refiner of preheated. and nonrecurring items. plant and equipment and intangible assets and share of profits of associates. Net debt  The sum of consolidated interest-bearing liabilities. Strategic capital expenditure  Strategic investments increase the company’s future cash flow through acquisitions of companies. etc. with a reversal of depreciation and impairment of property. Consumer tissue  Includes toilet and kitchen paper. FSC has developed principles for responsible forestry that can be applied for certifying forest management and that facilitate FSC labeling of wood products from FSC-certified forests. chemically pre-treated softwood. Important material in personal care products such as diapers and pads. reduced by tax payments. such as kraftliner (based on fresh wood fiber) and testliner (based on recovered fiber). Operating surplus margin  Operating surplus as a percentage of net sales for the year. facial tissues and handkerchiefs. Operating surplus  Expressed as operating profit before depreciation/impairment of property. Glossary AFH (Away-From-Home)  Tissue sold to bulk consumers such as hospitals. offices and industrial premises. Net margin  Profit for the year as a percentage of net sales for the year. or new technologies that boost SCA’s competitiveness. Growth is also specified in forest cubic meters. Profitability ratios Return on capital employed  Return on capital employed is calculated for the Group as operating profit as a percentage of average capital employed. baby diapers and feminine care products. with deductions for current capital expenditures in property. Personal care products  Here defined as incontinence care products. including pension liabilities and accrued interest less cash and cash equivalents and interest-bearing current and non-current receivables and capital investment shares. Super absorbents  Collective name of a number of synthetic absorbent materials based on polymers. (Deferred tax liability in untaxed reserves has been calculated at a 22. Solid-wood products  Wood sawn into various sizes used in. hotels. Kraft pulp  Pulp from wood fiber that is chemically treated usually by boiling. Used in felling and the timber trade. Current capital expenditure  Investments to maintain competitiveness.SCA Data Definitions and key ratios1) Capital definitions Capital employed  The Group’s and business area’s capital employed is calculated as an average of the balance sheet’s total assets. Cash flow from current operations  Operating cash flow less net financial items and tax payments and taking into account other financial cash flow. Productive forest land  Land with a productive capacity that exceeds one cubic meter of forest per hectare annually. Other measurements Value added per employee  Operating profit plus salaries. Mainly used for catalogues. Specifies the volume of timber excluding bark and tops. Interest coverage ratio  Calculated according to the net method where operating profit is divided by financial items. Kraftliner  surface layer of corrugated board based on fresh wood fiber. furniture manufacturing and the joinery industry or as construction timber.

SCA is included in the Dow Jones Sustainability Index.: 556012-6293  www. Sweden. Baglarici Cad.3 Fenyang Road Xuhui District SHANGHAI 200031 China Tel +86 21 2426 0000 SCA AFH Professional HYGIENE EUROPE Postfach 1208 DE-85730 ISMANING Germany Visiting address: Adalperostrasse 31 Tel +49 89 970 06 0 Fax +49 89 970 06 644 SCA Forest Products SE-851 88 SUNDSVALL Sweden Visiting address: Skepparplatsen 1 Tel +46 60 19 30 00. SCA is included in the Carbon Disclosure Leadership Index. The Annual Report was produced by SCA in collaboration with Hallvarsson & Halvarsson. Translation: The Bugli Company AB. Håkan Lindgren and SCA. 19 40 00 Fax +46 60 19 34 97 SCA MEIA 34820 AVCILAR ISTANBUL Turkey Visiting address: Universite Mah.SCA Data Addresses Svenska Cellulosa Aktiebolaget SCA (publ) PO Box 200. Photos: Juliana Fälldin. Visiting address: Klarabergsviadukten 63 Tel +46 8 788 51 00. PA 19104 US Tel +1 610 499 3700 Fax +1 610 499 3402 GHC (gLOBAL HYGIENE CATEGORY) SE-405 03 GÖTEBORG Sweden Visiting address: Bäckstensgatan 5. Mölndal Tel +46 31 746 00 00 Fax +46 31 746 19 00 SCA Americas Cira Centre Suite 2600 2929 Arch Street Philadelphia. Peter Hoelstad. Printing: Elanders in Falköping 2013. No. ranked third in the Forestry ­ and Paper class. Greenhouse gases emitted though the production of this printed matter. SCA is a member of the World ­ Business Council for Sustainable Development (wbcsd). SCA is on the Fortune Most Admired Companies list. other materials and transport. In WWF’s Environmental Paper ­ Company Index 2011 SCA had the highest score in both in the tissue and packaging categories. Mölndal Tel +46 31 746 00 00 Fax +46 31 746 19 00 SCA consumer goods europe Postfach 1208 DE-85730 ISMANING Germany Visiting address: Adalperostrasse 31 Tel +49 89 970 06 0 Fax +49 89 970 06 644 SCA Asia Pacific 5th Floor.sca.com Business units SCA INCONTINENCE CARE EUROPE SE-405 03 GÖTEBORG Sweden Visiting address: Bäckstensgatan 5. and number one in this class for social responsibility. Building 1 No. SE-101 23 Stockholm. No:29 Kat:6 Tel + 90 212 509 38 22 Fax + 90 212 676 01 06 GHS (Global HYGIENE SUPPLY) Postfach 1208 DE-85730 ISMANING Germany Visiting address: Adalperostrasse 31 Tel +49 89 970 06 0 Fax +49 89 970 06 644 GBS SERVICEs) (GLOBAL BUSINESS ­ Box 200 SE-101 23 Stockholm Sweden Visiting address: Klarabergsviadukten 63 Tel +46 8 788 51 00 Fax +46 8 788 53 80 Awards and recognition SCA was named one of the world’s most ethical com­ panies by the Ethisphere ­Institute. one of the world’s ­ most prestigious sustainability indexes. Reg. including paper. were offset through investments in the equivalent amount of certified reduction units in the Kikonda Forest Reserve Forestation project in Uganda. SCA has been listed on the FTSE4Good global sustain­ ­ ability index since 2001. fax +46 8 788 53 80 Corp. SCA became a UN Global Compact member in 2008. SCA Annual Report 2012 117 .

No.sca. SE-101 23 Stockholm.com . Sweden.: 556012-6293  www.Svenska Cellulosa Aktiebolaget SCA (publ) PO Box 200. Fax +46 8 788 53 80 Corp. Visiting address: Klarabergsviadukten 63 Tel +46 8 788 51 00. Reg.