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. When these are sold, the sales proceeds are included in retained earnings in the equity pertaining to owners of the Parent.

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

Equity totalled SEK 49,570m (39,580; 48,275) at December 31, 2017. The following tables show the distribution and profit for the period.

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SEKm

Share capital

Reserves1)

Retained earnings

Equity attributable to Essity’s shareholders

Non-controlling interests

Total equity

 

 

 

 

 

 

 

Value, January 1, 2017

0

4,061

29,143

33,204

6,376

39,580

IS Profit for the period recognized in profit or loss

 

 

8,116

8,116

669

8,785

Other comprehensive income for the period

 

 

 

 

 

 

Items that cannot be transferred to profit for the period

 

 

 

 

 

 

Actuarial gains and losses relating to defined benefit pension plans2)

 

 

1,065

1,065

–4

1,061

Income tax attributable to components in other comprehensive income

 

 

–218

–218

–

–218

 

 

 

847

847

–4

843

Items that have been or can be transferred to profit for the period

 

 

 

 

 

 

Available-for-sale financial assets:

 

 

 

 

 

 

Result from measurement at fair value recognized in equity

 

 

 

–

 

–

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

Result from hedging of net investments in foreign operations

 

–1,968

 

–1,968

 

–1,968

Other comprehensive income from associates

 

 

–22

–22

 

–22

Tax on items recognized directly in/transferred from equity3)

 

440

–1

439

 

439

Other comprehensive income for the period, net of tax

 

–907

820

–87

–312

–399

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

Dividend to non-controlling interests

 

 

 

–

–285

–285

BS Value, December 31

2,350

3,154

36,785

42,289

7,281

49,570

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SEKm

Share capital

Reserves1)

Retained earnings

Equity attributable to Essity’s shareholders

Non-controlling interests

Total equity

Value, January 1, 2016

0

1,501

41,485

42,986

5,289

48,275

IS Profit for the period recognized in profit or loss

 

 

3,800

3,800

442

4,242

Other comprehensive income for the period

 

 

 

 

 

 

Items that cannot be transferred to profit for the period

 

 

 

 

 

 

Actuarial gains and losses relating to defined benefit pension plans2)

 

 

–1,570

–1,570

1

–1,569

Income tax attributable to components in other comprehensive income

 

 

421

421

–

421

 

 

 

–1,149

–1,149

1

–1,148

Items that have been or can be transferred to profit for the period

 

 

 

 

 

 

Available-for-sale financial assets:

 

 

 

 

 

 

Result from measurement at fair value recognized in equity

 

–1

 

–1

 

–1

Cash flow hedges:

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

275

 

275

 

275

Transferred to profit or loss for the period

 

274

 

274

 

274

Transferred to cost of hedged investments

 

–19

 

–19

 

–19

Translation differences in foreign operations

 

2,508

 

2,508

234

2,742

Result from hedging of net investments in foreign operations

 

–437

 

–437

 

–437

Other comprehensive income from associates

 

 

12

12

 

12

Tax on items recognized directly in/transferred from equity3)

 

–40

–1

–41

 

–41

Other comprehensive income for the period, net of tax

 

2,560

–1,138

1,422

235

1,657

Comprehensive income for the period

 

2,560

2,662

5,222

677

5,899

Private placement to non-controlling interests

 

 

240

240

199

439

Private placement to non-controlling interests, dilution

 

 

–110

–110

110

–

Issue expenses, private placement

 

 

–4

–4

–4

–8

Acquisition of non-controlling interests

 

 

–799

–799

643

–156

Acquisition of non-controlling interests, dilution

 

 

348

348

–348

–

Transactions with shareholders

 

 

–14,679

–14,679

–

–14,679

Dividend to non-controlling interests

 

 

 

–

–190

–190

BS Value, December 31

0

4,061

29,143

33,204

6,376

39,580

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SEKm

Share capital

Reserves1)

Retained earnings

Equity attributable to Essity’s shareholders

Non-controlling interests

Total equity

1)

Revaluation reserve, Hedge reserve, Available-for-sale assets and Translation reserve are included in the Reserves line in the balance sheet.

2)

Including payroll tax.

3)

For a specification of income tax attributable to components in other comprehensive income.

Value, January 1, 2015

0

4,015

35,660

39,675

5,250

44,925

IS Profit for the period recognized in profit or loss

 

 

6,129

6,129

449

6,578

Other comprehensive income for the period

 

 

 

 

 

 

Items that cannot be transferred to profit for the period

 

 

 

 

 

 

Actuarial gains and losses relating to defined benefit pension plans2)

 

 

1,933

1,933

 

1,933

Income tax attributable to components in other comprehensive income

 

 

–418

–418

 

–418

 

 

 

1,515

1,515

–

1,515

Items that have been or can be transferred to profit for the period

 

 

 

 

 

 

Available-for-sale financial assets:

 

 

 

 

 

 

Result from measurement at fair value recognized in equity

 

318

 

318

 

318

Transferred to profit or loss upon sale

 

–970

 

–970

 

–970

Cash flow hedges:

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

–450

 

–450

 

–450

Transferred to profit or loss for the period

 

342

 

342

 

342

Translation differences in foreign operations

 

–1,729

 

–1,729

–215

–1,944

Result from hedging of net investments in foreign operations

 

–58

 

–58

 

–58

Other comprehensive income from associates

 

 

–17

–17

 

–17

Tax on items recognized directly in/transferred from equity3)

 

33

 

33

 

33

Other comprehensive income for the period, net of tax

 

–2,514

1,498

–1,016

–215

–1,231

Comprehensive income for the period

 

–2,514

7,627

5,113

234

5,347

Acquisition of non-controlling interests

 

 

–40

–40

21

–19

Transactions with shareholders

 

 

–1,762

–1,762

 

–1,762

Dividend to non-controlling interests

 

 

 

–

–216

–216

BS Value, December 31

0

1,501

41,485

42,986

5,289

48,275

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Equity, specification of reserves

 

Revaluation reserve1)

 

Hedge reserve2)

 

Available-for-sale assets

 

Translation reserve

SEKm

2017

2016

2015

 

2017

2016

2015

 

2017

2016

2015

 

2017

2016

2015

1)

Revaluation reserve includes effect on equity of step acquisitions.

2)

See also Note E6 Derivatives and hedge accounting for details of when profit or loss is expected to be recognized.

3)

Transfer to profit or loss of realized exchange gains relating to divested companies is included in the amount of SEK –19m (–13; –).

Value, January 1

107

107

107

 

164

–229

–145

 

6

7

659

 

3,784

1,616

3,394

Available-for-sale financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from measurement at fair value recognized in equity

 

 

 

 

 

 

 

 

 

–1

318

 

 

 

 

Transferred to profit or loss upon sale

 

 

 

 

 

 

 

 

 

 

–970

 

 

 

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

 

 

 

35

275

–450

 

 

 

 

 

 

 

 

Transferred to profit or loss for the period

 

 

 

 

–56

274

342

 

 

 

 

 

 

 

 

Transferred to cost of hedged investments

 

 

 

 

10

–19

–

 

 

 

 

 

 

 

 

Acquired cash flow hedges

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

Translation differences in foreign operations3)

 

 

 

 

2

–1

5

 

 

 

 

 

626

2,509

–1,734

Result from hedging of net investments in foreign operations

 

 

 

 

 

 

 

 

 

 

 

 

–1,968

–437

–58

Tax on items recognized directly in/transferred from equity

 

 

 

 

7

–136

19

 

 

 

 

 

433

96

14

Other comprehensive income/loss for the period, net of tax

 

 

 

 

2

393

–84

 

 

–1

–652

 

–909

2,168

–1,778

Value, December 31

107

107

107

 

166

164

–229

 

6

6

7

 

2,875

3,784

1,616

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Specification of income tax attributable to other comprehensive income for the period

 

2017

 

2016

 

2015

SEKm

Before tax

Tax effect

After tax

 

Before tax

Tax effect

After tax

 

Before tax

Tax effect

After tax

Actuarial gains and losses relating to defined benefit pension plans

1,061

–218

843

 

–1,569

421

–1,148

 

1,933

–418

1,515

Available-for-sale financial assets

–

–

–

 

–1

–

–1

 

–652

–

–652

Cash flow hedges

–11

7

–4

 

530

–136

394

 

–108

19

–89

Translation differences in foreign operations

320

–

320

 

2,742

–

2,742

 

–1,944

–

–1,944

Other comprehensive income/loss from associates

–22

–1

–23

 

12

–1

11

 

–17

–

–17

Result from hedging of net investments in foreign operations

–1,968

433

–1,535

 

–437

96

–341

 

–58

14

–44

Other comprehensive income/loss for the period

–620

221

–399

 

1,277

380

1,657

 

–846

–385

–1,231

At December 31, 2017, the debt/equity ratio amounted to 1.06 (0.89; 0.39). 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 Targets and outcomes section.

Transactions with shareholders

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Specification of transactions with shareholders

SEKm

2017

2016

2015

1)

For further information, see Note G4 Transactions with related parties.

Dividend/Group contribution

–255

–4,637

–3,443

Contributions received

903

1,271

1,375

Tax effect

194

599

306

Transfer of net assets till SCA’s forest products business1)

–

–11,912

–

Total

842

–14,679

–1,762