E8. Equity

AP Accounting principles

Transaction costs directly relating to the issue of new shares or options are recognized, net after tax, in equity as a reduction in the issue proceeds. Expenditure for the purchase of own shares reduces retained earnings in equity in the Parent Company and the portion of consolidated equity that pertains to owners of the Parent company. When these shares are sold, the sales proceeds are included in retained earnings in the equity pertaining to owners of the Parent company.

Furthermore, transactions considered to be transfers between companies that are jointly controlled are recognized as separate transactions with shareholders as shown below.

Equity totaled SEK 62,801m (54,899; 49,570) at December 31, 2019. The following tables show the distribution and profit for the period.

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SEKm

Share capital

TE8:1
Reserves

Retained earnings

Equity attributable to Essity’s shareholders

Non-controlling interests

Total equity

1)

Including payroll tax.

2)

Dividend of SEK 5.75 per share pertains to owners of the Parent company. For the 2019 fiscal year, the Board of Directors has decided to propose a divided of SEK 6.25 per share to the Annual General Meeting.

Value, January 1, 2019

2,350

5,003

39,788

47,141

7,758

54,899

IS Profit for the period

 

 

9,216

9,216

996

10,212

Other comprehensive income for the period

 

 

 

 

 

 

Items that may not be reclassified to the income statement

 

 

 

 

 

 

Actuarial gains/losses on defined benefit pension plans1)

 

 

479

479

3

482

Fair value through comprehensive income

 

6

 

6

 

6

TE8:2 Income tax attributable to components in other comprehensive income

 

–2

54

52

–

52

 

 

4

533

537

3

540

Items that have been or may be reclassified subsequently to the income statement

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

–725

 

–725

 

–725

Transferred to profit or loss for the period

 

112

 

112

 

112

Translation differences in foreign operations

 

1,869

 

1,869

226

2,095

Gains/losses from hedges of net investments in foreign operations

 

–168

 

–168

 

–168

Other comprehensive income from associated companies

 

 

–14

–14

 

–14

TE8:2 Income tax attributable to components in other comprehensive income

 

175

4

179

 

179

Other comprehensive income for the period, net of tax

 

1,267

523

1,790

229

2,019

CI Total comprehensive income for the period

 

1,267

9,739

11,006

1,225

12,231

Private placement to non-controlling interests

 

 

2

2

2

4

Divestment of non-controlling interests

 

 

 

 

27

27

Transferred to cost of hedged investments

 

14

 

14

 

14

CF OCF Dividend, SEK 5.75 per share2)

 

 

–4,038

–4,038

–336

–4,374

BS Value, December 31

2,350

6,284

45,491

54,125

8,676

62,801

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SEKm

Share capital

TE8:1
Reserves

Retained earnings

Equity attributable to Essity’s shareholders

Non-controlling interests

Total equity

1)

Including payroll tax.

2)

Dividend of SEK 5.75 per share pertains to owners of the Parent company. For the 2019 fiscal year, the Board of Directors has decided to propose a divided of SEK 6.25 per share to the Annual General Meeting.

Value, January 1, 2018

2,350

3,154

36,785

42,289

7,281

49,570

Effect of changed accounting principle IFRS 9

 

 

–7

–7

 

–7

IS Profit for the period

 

 

7,886

7,886

666

8,552

Other comprehensive income for the period

 

 

 

 

 

 

Items that may not be reclassified to the income statement

 

 

 

 

 

 

Actuarial gains/losses on defined benefit pension plans1)

 

 

–1,038

–1,038

2

–1,036

Fair value through comprehensive income

 

–5

 

–5

 

–5

TE8:2 Income tax attributable to components in other comprehensive income

 

1

175

176

 

176

 

 

–4

–863

–867

2

–865

Items that have been or may be reclassified subsequently to the income statement

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

471

 

471

 

471

Transferred to profit or loss for the period

 

–378

 

–378

 

–378

Translation differences in foreign operations

 

1,876

 

1,876

204

2,080

Gains/losses from hedges of net investments in foreign operations

 

–122

 

–122

 

–122

Other comprehensive income from associated companies

 

 

23

23

 

23

TE8:2 Income tax attributable to components in other comprehensive income

 

5

–1

4

 

4

Other comprehensive income for the period, net of tax

 

1,848

–841

1,007

206

1,213

CI Total comprehensive income for the period

 

1,848

7,045

8,893

872

9,765

Private placement to non-controlling interests

 

 

3

3

2

5

Transferred to cost of hedged investments

 

1

 

1

 

1

CF OCF Dividend, SEK 5.75 per share2)

 

 

–4,038

–4,038

–397

–4,435

BS Value, December 31

2,350

5,003

39,788

47,141

7,758

54,899

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SEKm

Share capital

TE8:1
Reserves

Retained earnings

Equity attributable to Essity’s shareholders

Non-controlling interests

Total equity

1)

Including payroll tax.

Value, January 1, 2017

0

4,061

29,143

33,204

6,376

39,580

IS Profit for the period

 

 

8,116

8,116

669

8,785

Other comprehensive income for the period

 

 

 

 

 

 

Items that may not be reclassified to the income statement

 

 

 

 

 

 

Actuarial gains/losses on defined benefit pension plans1)

 

 

1,065

1,065

–4

1,061

TE8:2 Income tax attributable to components in other comprehensive income

 

 

–218

–218

–

–218

 

 

 

847

847

–4

843

Items that have been or may be reclassified subsequently to the income statement

 

 

 

 

 

 

Available-for-sale financial assets:

 

 

 

 

 

 

Result from measurement at fair value recognized in equity

 

 

 

0

 

0

Cash flow hedges:

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

35

 

35

 

35

Transferred to profit or loss for the period

 

–56

 

–56

 

–56

Transferred to cost of hedged investments

 

10

 

10

 

10

Acquired cash flow hedges

 

4

–4

–

 

–

Translation differences in foreign operations

 

628

 

628

–308

320

Gains/losses from hedges of net investments in foreign operations

 

–1,968

 

–1,968

 

–1,968

Other comprehensive income from associated companies

 

 

–22

–22

 

–22

TE8:2 Income tax attributable to components in other comprehensive income

 

440

–1

439

 

439

Other comprehensive income for the period, net of tax

 

–907

820

–87

–312

–399

CI Total comprehensive income for the period

 

–907

8,936

8,029

357

8,386

Bonus issue

2,350

 

–2,350

–

 

–

Private placement to non-controlling interests

 

 

504

504

465

969

Private placement to non-controlling interests, dilution

 

 

–290

–290

290

–

Acquisition of non-controlling interests

 

 

 

–

78

78

Transactions with shareholders

 

 

842

842

–

842

CF OCF Dividend to non-controlling interests

 

 

 

–

–285

–285

BS Value, December 31

2,350

3,154

36,785

42,289

7,281

49,570

Enlarge table

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TE8:1 Equity, specification of reserves

 

Revaluation reserve1)

 

Hedge reserve2)

 

Available-for-sale assets

 

Fair value through comprehensive income

 

Translation reserve

SEKm

2019

2018

2017

 

2019

2018

2017

 

2019

2018

2017

 

2019

2018

2017

 

2019

2018

2017

1)

Revaluation reserve includes effect on equity of step acquisitions.

2)

See also Note E6 Derivatives and hedge accounting for details of when gains or losses are expected to be recognized.

3)

Transfer to profit or loss of realized translation difference relating to divested and liquidated companies is included in the amount of SEK –178m (0; –19).

Value, January 1

107

107

107

 

245

166

164

 

–

6

6

 

4

–

 

 

4,647

2,875

3,784

Reclassification

 

 

 

 

 

 

 

 

 

–6

 

 

 

6

 

 

 

 

 

Measured at fair value through other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

6

–5

 

 

 

 

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

 

 

 

–725

471

35

 

 

 

 

 

 

 

 

 

 

 

 

Transferred to profit or loss for the period

 

 

 

 

112

–378

–56

 

 

 

 

 

 

 

 

 

 

 

 

Transferred to cost of hedged investments

 

 

 

 

–

–

10

 

 

 

 

 

 

 

 

 

 

 

 

Acquired cash flow hedges

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

Translation differences in foreign operations3)

 

 

 

 

10

6

2

 

 

 

 

 

–

2

 

 

1,859

1,868

626

Gains/losses from hedges of net investments in foreign operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

–168

–122

–1,968

Tax on items recognized directly in/transferred from equity

 

 

 

 

138

–21

7

 

 

 

 

 

–2

1

 

 

37

26

433

Other comprehensive income for the period, net of tax

–

–

–

 

–465

78

2

 

–

–6

–

 

4

4

 

 

1,728

1,772

–909

Transfer from equity to cost of hedged investments, net of tax

 

 

 

 

14

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Value, December 31

107

107

107

 

–206

245

166

 

–

–

6

 

8

4

 

 

6,375

4,647

2,875

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TE8:2 Specification of income tax attributable to components in other comprehensive

 

2019

 

2018

 

2017

SEKm

Before tax

Tax effect

After tax

 

Before tax

Tax effect

After tax

 

Before tax

Tax effect

After tax

Actuarial gains/losses on defined benefit pension plans

482

54

536

 

–1,036

175

–861

 

1,061

–218

843

Fair value through comprehensive income

6

–2

4

 

–5

1

–4

 

 

 

 

Cash flow hedges

–613

138

–475

 

93

–21

72

 

–11

7

–4

Translation differences in foreign operations

2,095

–

2,095

 

2,080

–

2,080

 

320

–

320

Other comprehensive income from associated companies

–14

4

–10

 

23

–1

22

 

–22

–1

–23

Gains/losses from hedges of net investments in foreign operations

–168

37

–131

 

–122

26

–96

 

–1,968

433

–1,535

Other comprehensive income for the period

1,788

231

2,019

 

1,033

180

1,213

 

–620

221

–399

At December 31, 2019, the debt/equity ratio amounted to 0.81 (0.99; 1.06). Changes in liabilities and equity are described in the Financial position section. Essity’s target for capital structure is to establish an effective capital structure, while at the same time ensuring long-term access to loan financing. Cash flow in relation to net debt is to be taken into consideration with the aim of maintaining a solid investment grade rating.

Essity has a credit rating for long-term debt of Baa1 from Moody’s and BBB+ from Standard & Poor’s. Essity’s financial risk management is described in the Risk and risk management section. The Essity share section outlines Essity’s dividend policy, while its capital structure is described in the Objectives, targets and outcomes section.

Transactions with shareholders

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Specification of transactions with shareholders

SEKm

2019

2018

2017

Dividend/Group contribution

–

–

–255

Contributions received

–

–

903

Tax effect

–

–

194

Total

–

–

842