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 shares 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 totaled SEK 54,899m (49,570; 39,580) at December 31, 2018. 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. For the 2018 fiscal year, the Board of Directors has decided to propose a divided of SEK 5.75 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 recognized in profit or loss

 

 

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

Measured at fair value through other 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 associates

 

 

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

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

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 recognized in profit or loss

 

 

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 associates

 

 

–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

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

TE8:1
Reserves

Retained earnings

Equity attributable to Essity’s shareholders

Non-controlling interests

Total equity

1)

Including payroll tax.

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 may not be reclassified to the income statement

 

 

 

 

 

 

Actuarial gains/losses on defined benefit pension plans1)

 

 

–1,570

–1,570

1

–1,569

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

 

 

421

421

–

421

 

 

 

–1,149

–1,149

1

–1,148

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

 

–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

Gains/losses from hedges of net investments in foreign operations

 

–437

 

–437

 

–437

Other comprehensive income from associates

 

 

12

12

 

12

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

 

–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

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

2018

2017

2016

 

2018

2017

2016

 

2018

2017

2016

 

2018

2017

2016

 

2018

2017

2016

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/losses relating to divested companies is included in the amount of SEK 0m (–19; –13).

Value, January 1

107

107

107

 

166

164

–229

 

6

6

7

 

–

 

 

 

2,875

3,784

1,616

Reclassification

 

 

 

 

 

 

 

 

–6

 

 

 

6

 

 

 

 

 

 

Measured at fair value through other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

–5

 

 

 

 

 

 

Available-for-sale financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from measurement at fair value recognized in equity

 

 

 

 

 

 

 

 

 

 

–1

 

 

 

 

 

 

 

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from remeasurement of derivatives recognized in equity

 

 

 

 

471

35

275

 

 

 

 

 

 

 

 

 

 

 

 

Transferred to profit or loss for the period

 

 

 

 

–378

–56

274

 

 

 

 

 

 

 

 

 

 

 

 

Transferred to cost of hedged investments

 

 

 

 

–

10

–19

 

 

 

 

 

 

 

 

 

 

 

 

Acquired cash flow hedges

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

Translation differences in foreign operations3)

 

 

 

 

6

2

–1

 

 

 

 

 

2

 

 

 

1,868

626

2,509

Gains/losses from hedges of net investments in foreign operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

–122

–1,968

–437

Tax on items recognized directly in/transferred from equity

 

 

 

 

–21

7

–136

 

 

 

 

 

1

 

 

 

26

433

96

Other comprehensive income for the period, net of tax

 

 

 

 

78

2

393

 

–6

 

–1

 

4

 

 

 

1,772

–909

2,168

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

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value, December 31

107

107

107

 

245

166

164

 

–

6

6

 

4

 

 

 

4,647

2,875

3,784

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

 

2018

 

2017

 

2016

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

–1,036

175

–861

 

1,061

–218

843

 

–1,569

421

–1,148

Measured at fair value through other comprehensive income

–5

1

–4

 

 

 

 

 

 

 

 

Available-for-sale financial assets

–

–

–

 

–

–

–

 

–1

–

–1

Cash flow hedges

93

–21

72

 

–11

7

–4

 

530

–136

394

Translation differences in foreign operations

2,080

–

2,080

 

320

–

320

 

2,742

–

2,742

Other comprehensive income from associates

23

–1

22

 

–22

–1

–23

 

12

–1

11

Gains/losses from hedges of net investments in foreign operations

–122

26

–96

 

–1,968

433

–1,535

 

–437

96

–341

Other comprehensive income for the period

1,033

180

1,213

 

–620

221

–399

 

1,277

380

1,657

At December 31, 2018, the debt/equity ratio amounted to 0.99 (1.06; 0.89). 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

2018

2017

2016

1)

The take over by Essity Aktiebolag (publ) on December 30, 2016 of the majority of the external financing that existed within SCA is the reason for the major change in transactions with shareholders in equity in 2016. For further information, see Note G4 Transactions with related parties.

Dividend/Group contribution

–

–255

–4,637

Contributions received

–

903

1,271

Tax effect

–

194

599

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

–

–

–11,912

Total

–

842

–14,679