Annual report 2016 - Bergvik Skog · 4. Bergvik Skog Annual report 2016 . General description of...

Annual report

2016

This report is a translation of the original annual report of Bergvik Skog AB (publ)”Årsredovisning 2016” written in Swedish.

ContentsDirectors’ Report 4

Consolidated statement of comprehensive income 14

Consolidated statement of financial position 15

Consolidated statement of changes in equity 16

Consolidated statement of cash flows 17

Parent Company income statement 18

Parent Company balance sheet 19

Parent Company statement of changes in equity 20

Parent Company cash-flow statement 21

Notes to the financial statements 24

Auditors’ report 54

4 Bergvik Skog Annual report 2016

General description of operationsBergvik Skog AB owns and manages forest, land and water in Sweden and Latvia. The main activity of the company is forestry. Bergvik Skog owns three nurseries that produce forest plants to meet the company’s own needs and for external sales.The develop-ment of wind farms and the sale of construction rights for wind turbines comprise another business area that is exhibiting growth. When land is made available for wind turbines, leasehold agreements are signed. Bergvik Skog receives payment linked to the revenue from the wind turbines. Concessions pertaining to hunting rights and quarries are stable sources of income. A 15-year timber agreement was entered into between Bergvik Skog, Stora Enso and Korsnäs when Bergvik Skog was founded in 2004, which obliges Bergvik Skog to sell and Stora Enso and Korsnäs to buy an agreed annual volume of felling rights in Sweden. Following the merger of Korsnäs with Billerud, the agreement was taken over by BillerudKorsnäs. In addition, Bergvik Skog in Sweden has entered into short-er agreements with Stora Enso and BillerudKorsnäs, whereby these companies are obligated to perform silviculture and other operational services as well as general forestry and inspections on behalf of Bergvik Skog. Both agreements are based on the principle that market prices and other market conditions apply. An independent expert group has been established which can, at short notice, mediate in any dispute that relates to the inter-pretation or application of these agreements. Bergvik Skog in Latvia has shorter agreements with a num-ber of companies, primarily for thinning. Final felling items are primarily sold as standing forest on the open market. Bergvik Skog’s management and administration are located in Falun and include functions for forestry operations, proper-ty related issues, wind power, business development, sustaina-bility and communication, finance, IT and legal issues. The Parent Company has an average of 30 employees (30), including two industry-employed doctoral students. The aver-age number of nursery employees is 71 (68), of which 34 (32) are seasonal employees. Bergvik Skog’s company in Latvia has an average number of employees of 22 (23). Bergvik Skog is funded by venture capital of SEK 28,564 M (28,225), of which SEK 24,628 M (24,289) is equity and SEK 3,936 M (3,936) is subordinated loans. The total credit facility is SEK 10,169 M (10,136). As of 31 December 2016, SEK 8,686 M (7,956) of the credit facility had been utilised. Bank loans are provided by Nordea, Handelsbanken, SEB, and Svensk Export Kredit. The loans are divided and listed by the remaining time to maturity of five, four, two or one year(s). At the end of 2016, Bergvik Skog had SEK 2,756 M (1,980) in commercial papers outstanding. A shareholder agreement has been entered into between Bergvik Skog AB (publ) and its shareholders, which regulates the composition of the Board of Bergvik Skog AB (publ).BillerudKorsnäs AB owns one of the one thousand shares in Bergvik Skog Öst AB with an option to acquire the remainder under specific circumstances. The remaining shares in Bergvik

Skog Öst AB are owned by Bergvik Skog AB (publ). Bergvik Skog AB (publ) owns all the shares in Bergvik Skog Väst AB.

Felling volumes in SwedenTotal felling was 6,028 (5,745) km3sub, of which final felling was 4,311 (3,794) km3sub, thinning was 1,564 (1,808) km3sub and other felling was 154 (142) km3sub. In addition, a further 373 (389) km³s of tops and branches was delivered as biofuel.

Annual felling, Sweden, area

Annual felling, Sweden, volume

Annual growth and felling, Sweden

Hectares

45 000

40 000

35 000

30 000

25 000

20 000

15 000

10 000

5 000

0

2011 2012 2013 2014 2015 2016 Year

Final felling Thinning

Km3fub

5 000

4 000

3 000

2 000

1 000

0

2011 2012 2013 2014 2015 2016 Year

Final felling + Other Thinning

Growth less felling

2011 2012 2013 2014 2015 2016 Year

109876543210

Felling

m3fo, millions

Directors’ ReportThe Board and CEO of Bergvik Skog AB (publ) Corp. Reg. No. 556610-2959, with registered office in Falun, Sweden, hereby submits the annual report and consolidated financial statements for the financial year 1 January 2016 to 31 December 2016. Unless otherwise specified, the information herein relates to the Group.

5Bergvik Skog Annual report 2016

Forest holdings in SwedenAt the end of the year, the total forest area was approx. 2.3 Mha, of which approx. 1.9 Mha is productive forestland. The area of forestland being utilised is approximately 1.6 Mha. The productive forest area has a total timber volume of approx. 246 million m³fo (246) or 131 m³fo/ha (130). An area of 3,856 ha (6,654) of productive forestland was bought in the course of the year and 5,112 ha (19,218) was sold.

Forestry in SwedenThe following forestry measures were carried out in 2015.

Soil scarification 22 192 ha (21 461 ha)Planting 23 743 ha (21 429 ha)Cleaning 34 535 ha (34 082 ha)Fertilization 10 551 ha (10 883 ha)

Bergvik Skog’s goal is to plant about 95 % of the relevant regeneration area using plants produced in the company’s own nurseries. Soil scarification is carried out for the planting area to the greatest extent possible. Soil scarification and planting have increased in order to reduce the amount of cleared land that is unused and waiting for regeneration. The long-term goal is to reduce the average resting of cleared land from three to one years. The area of cleaned land has stabilized at around 35,000 ha. Bergvik Skog’s goal is to fertilize all land where fertilization is both permitted and profitable. The land area fertilized dur-ing the year was on a par with the previous year.

Distribution of forestland by age, Sweden, 2016

Soil scarification and planting, Sweden, area

Cleaning, Sweden, area

30 %

25 %

20 %

15 %

10 %

5 %

0 %

0–20 21–40 41–60 61–80 81–100 101–120 121–140 141+ Age, year

20 000

15 000

10 000

5 000

0

2011 2012 2013 2014 2015 2016 Year

Soil scarification Planting

Hectares

25 000

Forest holdings in LatviaThe total area at the end of 2016 was about 110,000 ha (108,700), of which approximately 86,000 ha (85,000) is designated for forestry operations. The average volume per ha is about 110 m³fo/ha (110). An area of 202,000 m³sub (185,000) was felled during the year. Biofuel in the form of tops and branches, and chipped logging residues in an amount of 15,000 m³s (30,700) was delivered. The following forestry measures were implemented:

Soil scarification 1 795 ha (1 952 ha)Planting 1 812 ha (1 772 ha)Cleaning 2 371 ha (2 128 ha)

The annual growth in the area designated by the company for forestry operations was about 305,000 m³fo (300,000). A new harvest estimate will be prepared in 2017. The land holdings are now being developed by selling agricultural land, primarily to local farmers and to exchange land with the aim of enhanc-ing the concentration of holdings.

Wind power in SwedenBergvik Skog’s wind power business is operated in accord-ance with two business models: proprietary development of major projects and the transfer of wind-power projects. The leasing business focuses on cooperation with a small number of selected partners. Cooperation agreements have been signed with Nordisk Vindkraft, Stena Renewable, Vattenfall and wpd Scandinavia AB. Some additional leases have also been granted to other actors. The large wind farms that the company develops ordinarily comprise 30–100 wind turbines. Suitable areas are select-ed based on wind resources, inventories of restrictions and contacts with the municipality and other local stakeholders. Applications for environmental permits and power-grid con-cessions are drafted, encompassing descriptions of environmen-tal consequences and additional consultation with government authorities and local stakeholders. Permits, the wind and production calculations, and the leasehold agreements are then normally transferred in company form to another party who intends to build the wind farm. An environmental permit was obtained during the year for Ödmården wind farm in Söderhamn Municipality. The permit has been appealed by local stakeholders. Bergvik Skog has repurchased Platina Partners Ltd’s (Lingonberry Holding AB) share of Lingbo wind farm (Lingbo vindkraft AB). A partnership agreement for the realization of the wind farm has been entered into with OX2 Wind AB. The development of a new wind power project, Gustav Adolf in Hagfors Municipality, has been initiated. At the end of 2016, there were 112 (107) wind turbines in operation on Bergvik Skog’s land.

Hectares

45 000

40 000

35 000

30 000

25 000

20 000

15 000

10 000

5 000

0

2011 2012 2013 2014 2015 2016 Year


Financial outcome Revenue

Average timber revenue declined about 2% and was SEK 332 m³sub (337). Timber sales rose slightly during the year, while timber prices declined somewhat. Felled volumes rose 5% year-on-year and totalled 6,230 km³sub (5,958).

CostsTotal operational costs expressed in SEK per m³sub were 244 (264). Bergvik Skog works actively with Stora Enso Skog and BillerudKorsnäs Skog to achieve productivity and quality en-hancements in logging and silvicultural operations. Operational costs also include costs incurred in the sale of wind farms.

ResultsOperating profit for the year totalled SEK 1,891 M (12,608) and was lower than in 2015. The decline is mostly attributable to the considerably lower write-up of standing forest, corre-sponding to SEK 1,000 M (11,100). Reduced property sales had a negative impact on profit of SEK 705 M. Lower timber prices weakened profit by SEK 21 M while larger felling vol-umes benefited profit in the amount of SEK 52 M. The estimated change in the market value of standing forest was SEK 1,000 M (11,110). The annual valuation placed particular importance on evaluating the interest rate used to discount future cash flows to their present value. Consultancy firm Pöyry conducted an analysis of the discount rate, after which the Board decided to reduce it from 5.20% to 4.90% when valuing forestland in Sweden. In the case of Latvian forestland, the rate was reduced from 6.25% to 6.00%. In the market valuation of standing forest, the long-term price expectation is based on the real price trend for pulpwood and timber forecast by consultancy firm Pöyry in 2016.

Earnings summary 2016 2015

SEK M SEK/m³ fub SEK M SEK/m³ fub

Timber revenue 2 068 332 2 006 337

Other revenue 336 54 1 073 180

Operational costs (incl. amortisation and depreciation)

1 512 244 1 571 264

Profit from operations 891 143 1 508 253

Revaluation of standing forest 1 000 161 11 100 1 863

Operating profit 1 891 304 12 608 2 116

Return on capital employed was 5,1% (39,2) and return on equity was 5,0% (39,1).

Gävle

Stockholm

Falun

Västerås

Karlstad

Granberget (2)

Svegström (1)

Våsberget (5)

Säliträdberget (2)

Högberget (3)Tavelberget (3)

Jädraås (39)

Korpfjället (5)Röbergsfjället (8)

Silkomhöjden (6)

Tjurhöjden (2)

Stockholm

Wind turbines in operation on Bergvik Skog’s land as of December 2016.

Glötesvålen (20)

Mässingberget (11)

Rämsberget (5)


Invoicing

2011 2012 2013 2014 2015 2016 Year

3 500

3 000

2 500

2 000

1 500

1 000

500

0

Other Timber

SEK M

Profit before revaluation of standing forest

2011 2012 2013 2014 2015 2016 År

Mkr

300

225

150

75

0

Mkr Kr/m3

Kr/m3

1 800

1 350

900

450

0

Profit

2011 2012 2013 2014 2015 2016 Year

4 000

3 000

2 000

1 000

0

10 000

9 000

8 000

7 000

6 000

5 000

12 000

11 000

SEK M

Operating profitProfit from operations Pre-tax profit

Cash flow

2011 2012 2013 2014 2015 2016 Year

1 000

800

600

400

200

0

1 200

SEK M

Cash-flow from operations Divestments Capital expenditure

Value of standing forest and land

2011 2012 2013 2014 2015 2016 Year

SEK M SEK per hectare

35 000

30 000

25 000

20 000

15 000

10 000

5 000

0

45 000

40 000

SEK MSEK per hectare

Returns

25

10

5

0

40

35

30

20

15

2011 2012 2013 2014 2015 2016 Year

Equity Capital employed

%

Debt/equity ratio1)

2011 2012 2013 2014 2015 2016 Year

Multiple

1,00

0,75

0,50

0,25

0,00

Equity and liabilities

Equity Subordinated loan Bank loan

16 000

14 000

12 000

10 000

8 000

6 000

4 000

2 000

0

24 000

22 000

20 000

18 000

2011 2012 2013 2014 2015 2016 Year

SEK M

1) Interest-bearing liabilities including subordinated loans in relation to equity.

Bergvik Skog Annual report 2016 8


Shareholders

Information on risks and uncertaintiesBergvik Skog’s revenue is primarily impacted by the volumes felled by Stora Enso Skog and BillerudKorsnäs Skog on Bergvik Skog’s land as well as by the applicable timber-market prices. Above all, earnings are also impacted by price changes in the short term. A 1% price change for saw timber has an impact of SEK 13 M on earnings (before tax) and a corre-sponding change in the price of pulpwood has an impact of SEK 7 M on earnings. Bergvik Skog’s cash flow is only affected to a minor extent by any reductions in felling volumes. The applicable timber agreements with Stora Enso and Billerud-Korsnäs guarantee cash flow through agreed annual contracted volumes. Bergvik Skog’s single largest operational cost is logging costs, that is, costs associated with felling, delimbing and cross-cut-ting trees and transporting them to the roadside. A 1% price change in logging costs has an impact of about SEK 8 M on earnings. Another significant cost item comprises the interest expense on Bergvik Skog’s loans. Approximately 68% of the interest costs for the bank loan are hedged. These are described in more detail in Note 28 later in the Annual Report. From time to time, the primary responsibility of Bergvik Skog AB’s subsidiaries for environmental problems caused by the industrial activities of their previous owners arises as an issue. As stated below, Stora Enso and BillerudKorsnäs have issued guarantees in this respect.

Significant events during or after the financial yearRevaluation of standing forestThe Board of Directors has decided to apply a discount factor of 4,90% (5,20) for the 2016 valuation of the standing forest in Sweden. The discount factor of 6.00% (6.25) will be applied to the valuation of the standing forest in Latvia. The discount factors were arrived at in accordance with the recommendations of the consultancy firm, Pöyry. Work is under way to develop a new long-term harvest estimate for Latvian holdings. The overall value of forest holdings increased by about SEK 1 billion.

Termination of timber agreements Bergvik Skog served notice on the timber agreement with Stora Enso Skog in 2016. Notice was served on the timber agreement with BillerudKorsnäs in 2013. Negotiations are under way, but no new agreements have been entered into.

RefinancingIn 2016, bank loans corresponding to SEK 5.8 billion with times to maturity of five and four years, respectively, were extended by one year. During the first quarter of 2017, a decision was made to extend them by a further year. At the turn of the year 2016/ 2017, two of the company’s bank loans, corresponding to approximately SEK 4.3 billion, were under renegotiation. An agreement was reached in February 2017 with a consortium of banks comprised of SHB, SEB and SEK concerning the new loans.

Commercial papersIn February 2017, Bergvik Skog expanded its commercial paper programme with the option to issue a maximum of SEK 4,000 M (3,000) with a maximum term of 364 days. At 31 December 2016, SEK 2,756 M of the certificates were outstanding.

The nurseriesFollowing a decision by the Board, executive management is implementing a major investment programme for the nurseries. This encompasses the replacement of all oil-fired boilers with boilers that use renewable fuel in the shape of wood pellets. The two new boilers at Sör Amsberg are operational and the boilers at Sjögränd and Nässja will be installed in 2017. At Sör Amsberg, two new greenhouses will be commissioned in conjunction with the first sowing in March 2017 and a new cold storage plant is under construction. A facility for the mechanical treatment of plants against large pine weevil will be installed in 2017, bringing the investment programme to an end.

PoliciesThe Board performs a yearly review of the Environmental Policy, Communication Policy, Employee Policy, Harvesting Policy, Financial Policy and Community Fund Policy. Further to this, the Board has adopted a new Code of Conduct and an Anti-corruption Policy, which will be reviewed annually.

IT project and auditThe focus areas of this year’s IT audit were controls concerning change management, access rights management and computer operation. The audit confirmed well-functioning processes and procedures. No deviations were noted which, based on the IT auditors’ assessment, could have a critical impact on the financial audit. In order to ensure compliance with the EU’s new Gener-al Data Protection Regulation, internal work was begun to comprehensively analyse and document the current situation. This work resulted in a general action plan and some of the activities were implemented last year. Sales of operationsDuring the course of the year, 2 (6) wholly owned forest-owning companies were sold: Kätteboda Skog AB and Orrhögberget Skog AB. The total land area held by the companies amounted to 1,746 ha, of which 1,450 ha was productive forestland with timber stocks of about 174,000 m³fo.

Owners of Bergvik Skog AB (publ) 31 December 2016

No. of shares

%

Stora Enso AB 3 460 49,0

Länsförsäkringar 1 064 15,1

FAM AB 1 058 15,0

BillerudKorsnäs AB 353 5,0

Kåpan pensioner försäkringsförening 353 5,0

3:e Ap-fonden 347 4,9

AB Persson-Invest 117 1,7

Tham Invest AB 83 1,2

Nordea Liv Sverige 70 1,0

AB Karl Hedin 64 0,9

Proventus 26 0,4

Stora Enso Gemensamma Pensionsstiftelse 15 0,2

Smaller holdings 52 0,7

7 062 100,0


Financial instruments and risk management Finance policy Through its activities, Bergvik Skog is exposed to various types of financial risk. Financial risk pertains to fluctuations in the company’s earnings and cash flow due to changes in interest rates, refinancing and credit risks, and changes in exchange rates. The Group‘s financial policy for managing financial risk is set by the Board. The financial policy provides a framework of guidelines and rules in the form of risk mandates and limits for financial activities. The Parent Company’s treasury department is responsible for management of the Group’s financial transac-tions and risks. The overall goal for the treasury function is to provide cost-efficient funding and to minimise the negative impact of market fluctuations on the Group’s earnings.

Interest-rate riskTo reduce interest-rate risk, Bergvik Skog has entered into in-terest-rate hedging contracts, known as interest swaps, whereby loans with floating interest (STIBOR 3 month) are exchanged for fixed-interest loans as specified below:

SEK 2,000 M to 24 September 2021, interest rate 2.632%SEK 500 M to 11 April 2022, interest rate 2.54%SEK 500 M to 4 April 2022, interest rate 2.63%SEK 500 M to 28 March 2022, interest rate 2.57%SEK 500 M to 30 March 2022, interest rate 2.655%

This means that 68 % of the Group’s bank loans are hedged against a STIBOR of over 2.7%. Hedging costs are included in the Group‘s interest expense. The market valuation of the in-terest-rate hedging contract is carried out at Group and Parent Company levels. See also Note 29.

Environmental informationBergvik Skog’s sustainability and environmental activities are described in the separate publication, Bergvik Skog’s Sustain-ability Report 2016, which is a supplement to Bergvik Skog’s 2016 Annual Report. The sustainability report follows the GRI’s guidelines. The contents of the report are based on the items deemed most significant by Bergvik Skog’s stakeholders.

CertificationBergvik Skog’s Swedish and Latvian landholdings are certified in accordance with FSC®. The Swedish landholdings are also certified in accordance with PEFC and all of Bergvik Skog’s operations in Sweden are certified under ISO 14001. Bergvik Skog has held separate FSC and PEFC certificates for Bergvik Skog Väst AB and Bergvik Skog Öst AB since 2015.

To maintain Bergvik Skog’s forestry certifications in Sweden, external audits are performed in accordance with FSC by SGS and in accordance with PEFC by SP. Under 2016 har ISO 14001-certifikatet överförts till SGS. Den externa revisionen i Lettland utförs av NEPCon. As the certificates for Bergvik Skog Väst and Bergvik Skog Öst in Sweden are held separately, separate external audits are also conducted. The FSC audits for 2016 reported 1 major deviation, 5 minor deviations and 3 observations for Bergvik Skog Väst and 1 major deviation, 5 minor deviations and 4 observations for Bergvik Skog Öst. The PEFC audits reported 1 minor deviation for Bergvik Skog Väst and 2 minor deviations for Bergvik Skog Öst. The 2016 audit in Latvia reported 3 minor deviations and 3 observations. The Swedish ISO 14001 audit reported 1 minor deviation.

FSC Sweden license code for Bergvik Skog Väst (BSV): FSC-C004499FSC Sweden license code for Bergvik Skog Öst (BSÖ): FSC-C125552PEFC Sweden certificate number for Bergvik Skog Väst (BSV): 5790 PEFCPEFC Sweden certificate number for Bergvik Skog Öst (BSÖ): 5813 PEFCFSC license code for Latvia: FSC-C114153ISO 14001 certificate number: SE14/148681

OtherBergvik Skog Väst AB has had industrial operations in place since long prior to its acquisition by Bergvik Skog AB. Pol-lution has been identified or is suspected at several properties owned by the Bergvik Skog Group. The Bergvik Skog Group bears the primary environmental responsibility for Bergvik Skog Väst AB and Bergvik Skog Öst AB in many cases. How-ever, Stora Enso and Billerud Korsnäs have provided guarantees relating to costs attributable to environmental conditions due to past activities. These guarantees are partially limited in terms of time and size. A reconciliation of current issues has been performed, and claims sent to the relevant parties to contracts. These parties have made some objections. Bergvik Skog Plantor AB operates activities for which notification is required under Section 21 of the Ordinance (1998:899) concerning Environmentally Hazardous Activities and the Protection of Public Health, namely, cultivation in greenhouses > 5,000m² at the company’s three nurseries.


Report on the work of the Board of Directors during the yearDuring the year, the Board held 9 (9) board meetings, one of which was a telephone conference. At the first meeting of the Board, Lars-Eric Åström was elected Chair and the Board de-cided on written rules of procedure for the Board and instruc-tions for the Chief Executive Officer, including instructions on financial reporting. The Chief Executive Officer and the Chief Financial Officer are not members of the Board, but do provide presentations. The company lawyer serves as secretary to the Board. Further to this, the Board appointed a Remuneration Com-mittee to, among other things, prepare proposals for the Chief Executive Officer’s benefits package and the company’s short-term incentive programme. The Remuneration Committee was comprised of Lars-Eric Åström (Chair), Björn Hägglund and Per Lindberg. The Board also appointed Per Lyrvall (Chair), Gunnar Balsvik and Lars-Eric Åström as members of the Audit Com-mittee for the coming financial year. The committee’s meetings are also attended by the Chief Executive Officer and the Chief Financial Officer. The company lawyer serves as secretary to the committee and the company’s external auditor acts as deputy when necessary.

Nominations to the Board of Directors (excluding the three nominated by Stora Enso and BillerudKorsnäs) and proposals for board fees are prepared by a nominating committee com-prised of non-board members. Each year, the Board evaluates its work and reports its findings to the Nominating Committee. The Board has adopted a new Code of Conduct and an Anti-cor-ruption Policy, which will be reviewed annually. With these as a foundation, management has decided on Ethical Guidelines (previously decided by the Board) and Guidelines to Prevent Corruption and Bribes. During the year, the Board decided on a new thinning strategy, a new nature conservation strategy and a new property strategy. The Board even adopted a strategy for hill forests. Moreover, the Board has further clarified the general strategy concerning communication and lobbying, wherein the compa-ny’s efforts shall aim to secure the rights of ownership and uti-lization of the company’s landholdings and create acceptance for the Swedish forestry model and strengthen the bioeconomy. Negotiations on new timber agreements are under way and the Board discussed the issue at several meetings throughout the year. The Board has adopted management’s budget proposal. Furthermore, the Board has discussed a succession plan for management.



Board members

Lars-Eric Åström, Chairman of the boardBorn in 1946, elected in 2011, Engineer.Honorary member of the Royal Swedish Academy of Agriculture and Forestry. Board member of Hemmingssons Bygg AB.Special member of the Land and Environment Court in Växjö.

Gunnar BalsvikBorn in 1959, elected in 2008. President of Kåpan pensioner försäkringsförening.Chairman of the Board of Fastighets AB Stenvalvet.

Björn HägglundBorn in 1945, elected in 2004. Board member of AB Karl Hedin.Chairman of the Board of SweTree Technologies AB and of Wallen-berg Wood Science Center. Member of the Royal Swedish Academy of Agriculture and Forestry (KSLA) and the Royal Swedish Academy of Engineering Sciences (IVA). Member of the King Carl XVI Gustaf 50th Anniversary Fund Foundation.

Beatrice Kämpe-Nikolausson Born in 1972. CEO and board member of Länsförsäkring Kronoberg. Chair of the boards of Hjalmar Petri Holding AB, Aktiebolaget Hjalmar Petri, Hjalmar Petri KLO7 AB and Hjalmar Petri Elden AB. Board member of LF Affärsservice Sydost AB, Länsförsäkringar Bank AB, Länsförsäkringar Grupplivförsäkringsaktiebolag, AXB Education AB and Micki Leksaker Aktiebolag.

Per LindbergBorn in 1959, elected in 2013. Doctor of Philosophy in Science, Chalmers University of Technology. President and CEO of BillerudKorsnäs AB. Board member of Nord- stjernan AB, Middlepoint AB. Member of the Royal Swedish Academy of Engineering Sciences (IVA).

Johan LindmanBorn in 1958, elected in 2010. M.Sc. in Forestry.Senior Vice President, Stora Enso. Global Forestry and Sustainability division Biomaterials. Board member of the Swedish University of Agricultural Sciences (SLU) and of SweTree Technologies AB. Mem-ber of the Royal Swedish Academy of Engineering Sciences (IVA). Chair of the CEPI Forest Committee.

Per LyrvallBorn in 1959, elected in 2012.General Counsel and Country Senior Executive, Sweden, Stora Enso.Deputy Board member of the Swedish Forest Industries Federation.

Maria NorrfalkBorn in 1952, elected in 2015. M.Sc. in Forestry.Chairman of the Board of Fortifikationsverket. Board member of the Swedish University of Agricultural Sciences (SLU). Board member of B. Lothigius AB and Econova AB. Chair of the Future Forests re-search programme at the Swedish University of Agricultural Sciences. Deputy chair of WWF Sweden’s Council of Trustees. Member of the Royal Swedish Academy of Agriculture and Forestry (KSLA).

Bob PerssonBorn in 1950, elected in 2015.Chairman of the Board of AB Persson Invest and Persson Invest Skog AB. Chairman of the Board of Diös Fastigheter AB. Board member of Gällö Timber AB, Gällö Skog AB, Jämtlands Bryggeri AB and NHP Eiendom AS. Chairman of Handelsbanken’s Board for the Northern region. Board member of the Margaretagården Foundation.

Johan Trolle-LöwenBorn in 1959, elected in 2015. Msc. Engineering.CEO and board member of Sjösa Förvaltnings AB. Board member of Boo Egendom AB, Limmersvik AB, Firefly AB, Hargs Bruk AB and Landshypotek Bank AB. Deputy board member of HäradSkog i Örebro AB.

Tommy SkeiBorn in 1966, elected in 2013.

Employee representativeManagementBergvik Skog’s management consists of the CEO Elisabet Salander Björklund, CFO Anders Eriksson, Forest Director Lars-Erik Wigert, Real Estate Manager Mikael Perérs, Business Development/Wind Power Manager Björn Risby, Sustainability and Communication Manager Sofia Lilja, IT Manager Camilla Rolig Schölin and compa-ny lawyer Sofia Berg (on parental leave 2016, substituted by Menna Gilbertsson).

Corporate governanceThe Board determines the CEO’s authority through establishing an instruction for the CEO and through setting a budget for each financial year. The Board has the right to appoint committees to prepare Board issues ahead of Board meetings. The Nomination Committee presents proposals for Board members and Board fees to the Board ahead of the Annual General Meeting.

Expectations regarding future developmentsDemand for timber has been stable in 2016. Timber prices have been low and declined somewhat. Demand for timber from sawmills has been good and is expected to remain so, due in part to increased con-struction in Europe. Demand for pulpwood and profitability are very good in the pulp and packaging industry and are expected to remain so. As regards graphic paper, demand is falling. The market for biofuels remains weak and is not expected to change in the near future. Bergvik Skog’s felling volumes are expected to remain at the cur-rent level in the coming years, but can vary from year to year based on purchaser selections. While cash-flow impacting earnings may vary due to the extent of property sales, changes in timber prices and felling costs, they are also impacted by the distribution between final felling and thinning. Accordingly a high level of preparedness for relatively substantial changes in earnings and cash flow is important

Dividend policyBergvik Skog AB pursues a stable long-term dividend. The dividend policy adopted by the Board means that ordinary dividends should, across a business cycle, amount to a minimum of 50% of earnings after financial items and paid tax, excluding non-cash value adjustments of standing forest. However, the company’s cash flow and financial posi-tion is to be taken into consideration.

Proposal for the appropriation of the company‘s profitsThe Board proposes that the unappropriated earnings of SEK 1,733,153,044 are appropriated as follows:

Dividend, [7,062 * SEK 20,000,00] 141 240 000 Carried forward 1,591,913,044Total 1,733,153,044

The financial statements were approved for release by the Parent Company’s Board on 7 March 2017. With reference to the above and other items that have come to the Board’s awareness, the Board’s assessment is that a com-prehensive evaluation of the company’s and the Group’s financial position shows that the dividend is justifiable with respect to the requirements set by the company’s nature, scope and risks on the size of the company’s and the Group’s equity and the company’s and the Group’s consolidation requirements, liquidity and position otherwise. Refer to the following income statements, balance sheets and associated notes to the accounts for more information on the com-pany’s earnings and position otherwise.


Consolidated statement of comprehensive income 1 January – 31 December

Financial review, Group

SEK M Note 2016 2015

Net sales 2,3 2 068 2 006

Changes to work in progress and finished goods −16 13

Other operating revenue 4 352 1 060

2 404 3 079

Unrealised changes in value of standing forest 2 191 12 211

Raw materials and consumables -95 -86

Other external costs 6 -1 277 -1 356

Carrying amount of sold wood -1 191 -1 111

Personnel costs 5 -83 -76

Depreciation/amortisation and impairment

of tangible and intangible assets 10,11 −58 -53

Operating profit 3 1 891 12 608

Financial income 1 1

Financial expenses -567 -577

Net financial items 7 -566 -576

Pre-tax profit 1 325 12 032

Tax 9 -84 -2 524

Profit for the year 1) 1 241 9 508

Profit for the year attributable to:

Parent Company’s shareholders 1 241 9 507

Non-controlling interests 0 1

Other comprehensive income

Items that have been or will be reclassified to net profit for the year

Changes in the fair value of cash-flow hedges for the year -78 70

Change in translation reserve for the year 6 -2

Tax attributable to components of other comprehensive income 17 -15

Other comprehensive income for the year 20 -55 53

Comprehensive income for the year 1 186 9 561

Comprehensive income attributable to:

Parent Company’s shareholders 1 186 9 560


1 186 9 5611) Earnings per share (SEK) 21 175 787 1 346 334


Consolidated statement of financial position at 31 December


Assets

Intangible non-current assets 10 168 150

Property plant and equipment 11 2 288 2 221

Biological assets 12 46 006 44 951

Financial investments 14 0 0

Derivatives 28 0 0

Deferred tax assets 9 104 87

Total non-current assets 48 566 47 409

Inventories 16 67 81

Accounts receivable 17 111 61

Financial receivables 0

Prepaid expenses and accrued income 18 93 74

Current tax assets 15 43 87

Other receivables 15 5 4

Cash and cash equivalents 19 3 138

Total current assets 322 445

Total assets 48 888 47 854

Equity 20

Share capital 706 706

Other capital contributions 2 825 2 825

Reserves -435 -380

Retained earnings, including profit for the year 21 530 21 136

Equity attributable to Parent’s Company’s shareholders 24 626 24 287


Total equity 24 628 24 289

Liabilities

Non-current interest-bearing liabilities 22,28 5 898 5 946

Other non-current interest-bearing liabilities 22 3 936 3 936

Derivatives 28 475 397

Other provisions 24 284 349

Deferred tax liabilities 9 10 214 10 189

Total non-current liabilities 27 20 807 20 817

Current interest-bearing liabilities 22,28 2 756 1 980

Accounts payable 24 48

Income tax liabilities 0

Other liabilities 25 40 26

Accrued expenses and deferred income 26 633 694

Total current liabilities 27 3 453 2 748

Total liabilities 24 260 23 565

Total equity and liabilities 48 888 47 854

Bergvik Skog Annual report 2016

Consolidated statement of changes in equity

SEK M 2015

Equity attributable to Parent Company’s shareholders

NoteShare

capital

Other capital

contribu-tions Reserves

Retained earnings

including profit for year Total

Non- controlling

interestsTotal

equity

Opening equity 706 2 825 -433 12 053 15 151 1 15 152

1 January 2015

Profit for the year 9 507 9 507 9 507

Other comprehensive income for the year

20 53 53 53

Comprehensive income for the year

53 9 507 9 560 1 9 561

Dividends -424 -424 -424

Closing equity 706 2 825 -380 21 136 24 287 2 24 289

31 December 2015

16

SEK M 2016

Equity attributable to Parent Company’s shareholders

NoteShare

capital

Other capital

contribu-tionsl Reserves

Retained earnings

including profit for year Total

Non-controlling interests

Total equity

Opening equity 706 2 825 -380 21 136 24 287 2 24 289

1 January 2016

Profit for the year 1 241 1 241 1 241


20 -55 -55 -55


-55 1 241 1 186 1 186

Dividends -847 -847 -847

Closing equity 706 2 825 -435 21 530 24 626 2 24 628

31 December 2016

17

Consolidated statement of cash flows (indirect method) 1 January – 31 December


33

Operating activities


Adjustments for items not included in cash flow -1 211 -11 952

Income tax paid -58 -12

Cash flow from operating activities before

changes in working capital 56 68

Cash flow from changes in working capital

Increase (-)/Decrease (+) in inventories 14 -14

Increase (-)/Decrease (+) in operating receivables -26 28

Increase (+)/Decrease (-) in operating liabilities -71 -68

Cash flow from operating activities -27 14

Investing activities

Acquisition of intangible assets -25 -13

Acquisition of property, plant and equipment -111 -84

Divestment of property, plant and equipment 12 29

Acquisition of biological assets -128 -148

Divestment of biological assets 299 1 259

Acquisition of financial assets -3 -3

Divestment of financial assets

Cash flow from investing activities 44 1 040

Financing activities

Loans raised/amortised 695 -976

Dividend paid to Parent Company’s shareholders -847 -424

Cash flow from financing activities -152 -1 400

Cash flow for the year -135 -346

Opening cash and cash equivalents 138 484

Closing cash and cash equivalents 19 3 138


Parent Company income statement January 1 – December 31

Parent Company statement of comprehensive income 1 January – 31 December


Net sales 2 104 118

104 118Other external costs 6 -60 -61

Personnel costs 5 -42 -41

Depreciation and amortisation of tangible and intangible assets 10,11 -3 -1

Operating profit -1 15Profit from financial items:

Other interest income and similar profit/loss items 7 1 080 1 900

Reversed write-downs of non-current financial assets 14,32

Interest expense and similar profit/loss items 7 -571 -581

Profit after financial items 508 1 334Appropriations 8 -269 -400

Pre-tax profit 239 934Tax 9 -36 -5

Profit for the year 203 929

SEK M 2016 2015

Profit for the year 203 929Other comprehensive income

Items that have been or will be reclassified to net profit for the year

Changes in the fair value of cash-flow hedges for the year -78 70

Tax attributable to components of other comprehensive income 17 -15

Change in hedging reserve for the year -33 19

Other comprehensive income for the year -94 74

Comprehensive income for the year 109 1 003


Parent Company balance sheet at 31 December

SEK M Note 2016-12-31 2015-12-31

Assets

Non-current assets

Intangible non-current assets 10 62 55

Property plant and equipment 11 0 1

Non-current financial assets

Participations in Group companies 31 3 591 3 546

Receivables from Group companies 13 15 156 15 156

Financial investments/derivatives 28 0 0

Other non-current receivables 15 0 0

Deferred tax assets 9 105 87

Total non-current financial assets 18 852 18 789

Total non-current assets 18 914 18 845 Current assets

Current receivables

Accounts receivable 27 159 987

Other receivables 15 39 68

Prepaid expenses and accrued income 18 15 16

Total current receivables 213 1 071

Cash and bank balances 19 0 124

Total current assets 213 1 195

Total assets 19 127 20 040Equity and liabilities

Equity 20

Restricted equity

Share capital (7,062 at SEK 100,000) 706 706

Statutory reserve 1 631 1 625

Non-restricted equity

Fair value reserve -470 -376

Retained earnings 2 001 1 925


Total equity 4 071 4 809 Untaxed reserves 32 244 233

Non-current liabilities

Subordinated loan 22 3 936 3 936

Liabilities to credit institutions 22 5 899 5 946

Derivatives 474 397

Total non-current liabilities 10 309 10 279 Current liabilities

Current interest-bearing liabilities 22 2 767 1 980

Accounts payable 27 6 6

Liabilities to Group companies 1 706 2 683

Current tax liabilities 5 4

Accrued expenses and deferred income 26 19 46

Total current liabilities 4 503 4 719

Total equity and liabilities 19 127 20 040


Parent Company statement of changes in equity

SEK M 2016 Restricted equity Non-restricted equity Total Equity

Share capital

Statutory reserve

Fund for dev. expen.

Fair value reserve

Retained earnings

Profit for the year

Opening equity 1 January 2016

706 1 625 -376 2 854 4 809


Provision for the year 6 -6 0


-94 -94


-94 203 109

Dividends -847 -847

Closing equity 31 December 2016

706 1 625 6 -470 2 001 203 4 071

SEK M 2015 Restricted equity Non-restricted equity Total Equity

Share capital

Statutory reserve

Fair value reserve

Retained earnings

Profit for the year

Opening equity 1 January 2015

706 1 625 -449 2 349 4 231



73 73


73 929 1 002

Dividends -424 -424

Closing equity 31 December 2015

706 1 625 -376 1 925 929 4 809


Parent Company cash-flow statement (indirect method) 1 January – 31 December


33

Operating activities

Profit after financial items 508 1 334

Adjustments for items not included in cash flow 16 5

Income tax paid -36 -5

Cash flow from operating activities before changes in working capital

488 1 334

Cash flow from changes in working capital

Increase (-)/Decrease (+) in operating receivables 858 -931

Increase (+)/Decrease (-) in operating liabilities -1 003 1 058

Cash flow from operating activities 343 1 461Investing activities

Acquisition of subsidiaries/loans to subsidiaries -45 -3

Divestment of subsidiaries 0 17

Acquisition of intangible assets -9 -6

Divestment of intangible assets 0 3

Acquisition of financial assets -4 -26

Cash flow from investing activities -58 -15Financing activities

Loans amortised/raised 696 -976

Dividends paid -847 -424

Group contributions paid −258 -385

Cash flow from financing activities -410 -1 785Cash flow for the year -124 -339

Opening cash and cash equivalents 124 463

Closing cash and cash equivalents 0 124




Notes to the financial statements

1 Significant accounting policies ............................................................................. 25 2 Distribution of revenue ........................................................................................ 32 3 Operating segments ............................................................................................ 32 4 Other operating revenue ..................................................................................... 33 5 Employees, personnel costs and remuneration to senior executives ..................... 33 6 Other external costs include auditors’ fees and expenses ..................................... 34 7 Net financial items .............................................................................................. 34 8 Appropriations .................................................................................................... 34 9 Taxes ................................................................................................................... 3410 Intangible non-current assets .............................................................................. 3711 Property, plant and equipment ............................................................................ 3812 Biological assets .................................................................................................. 3913 Receivables from Group companies ..................................................................... 3914 Financial investments .......................................................................................... 4015 Non-current receivables and other receivables ..................................................... 4016 Inventories .......................................................................................................... 4017 Accounts receivable ............................................................................................ 4018 Prepaid expenses and accrued income ................................................................. 4019 Cash and cash equivalents .................................................................................. 4020 Equity ................................................................................................................. 4121 Earnings per share............................................................................................... 4222 Interest-bearing liabilities ..................................................................................... 4223 Employee benefits ............................................................................................... 4224 Provisions ............................................................................................................ 4325 Other liabilities .................................................................................................... 4326 Accrued expenses and deferred income .............................................................. 4427 Financial assets and liabilities ............................................................................... 4528 Financial risk and policies .................................................................................... 4729 Pledged assets, contingent liabilities and contingent assets .................................. 4830 Related interests .................................................................................................. 4931 Group companies ................................................................................................ 5032 Untaxed reserves ................................................................................................. 5133 Cash-flow statement ........................................................................................... 5134 Events after the balance-sheet date ..................................................................... 5235 Important estimates and assessments .................................................................. 5236 Information about the Parent Company .............................................................. 52

Note


Note 1 Significant accounting policies(a) Accordance with standards and laws The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) as approved by the European Union (EU). In addition, the Swedish Financial Reporting Board’s recommendation RFR 1 Supplementary Accounting Regulations for Groups has been applied. The Parent Company applies the same accounting policies as the Group except in the instances stated below under Parent Company’s accounting policies. The Annual Report and consolidated financial statements were approved for issue by the Board of Directors and the CEO on 7 March 2017.

(b) Valuation-basis applied to preparation of the financial statementsAssets and liabilities are recognised at their historical acqui-sition value (cost) apart from certain financial assets, liabil-ities and biological assets, which are measured at fair value. Financial assets and liabilities measured at fair value comprise derivative instruments. Non-current assets and divestment groups held for sale are recognised, with certain exceptions, as of the classification of such assets, at the lowest of the carrying amount and the fair value at the time of reclassification less related selling costs.

(c) Functional currency and presentation currencyThe Parent Company’s functional currency is Swedish kronor (SEK), which is also the presentation currency for the Group and Parent Company. This means that the financial statements are presented in Swedish kronor (SEK). Unless indicated oth-erwise, all amounts are rounded to the closest million.

(d) Assessments and estimates in the financial statementsThe preparation of the financial statements in accordance with IFRS requires that company management make assessments, estimates and assumptions that affect the application of the accounting policies and the carrying amounts of the assets, liabilities, income and expenses. Verkliga utfallet kan avvika från dessa uppskattningar och bedömningar. Uppskattningarna och antagandena ses över regelbundet. The actual outcome may differ from these estimates and assessments. The estimates and assumptions are reviewed on a regular basis. Changes to estimates are recognised in the period in which the change is made, if the change only affected that specific period, or in the period and future periods if the change affects both the specific period and future periods. Assessments made by company management in the applica-tion of IFRS that have a significant influence on the financial statements and estimates made, and that may result in signifi-cant adjustments in the financial statements in future years are described more fully in Note 36. (e) Significant applied accounting policiesThe accounting policies presented below, apart from cer-tain exceptions described in more detail, have been applied consistently in all of the periods presented in the consolidated financial statements. Moreover, the Group’s accounting policies have been applied consistently by the Group’s subsidiaries.

(f) Amended accounting policies (i) Amended accounting policies caused by new or amended IFRSAmendments to IFRS to be applied from 2016 did not have any significant impact on Group reporting.

(g) New IFRS that have not yet been appliedA number of new or amended IFRS enter into force in the course of the next financial year and have not been applied in advance to the preparation of these financial statements. There are no plans to implement new rules or rule amendments which apply at a point in time in the future, in advance.

IFRS 9 Financial instrumentsIFRS 9 Financial Instruments will replace IAS 39 Financial instruments: Recognition and Measurement. The IASB has now completed a full “package” of amendments pertaining to the reporting of financial instruments. The package comprises a model for the classification and measurement of financial instruments, a forward looking “expected loss” impairment model and a substantially reworked approach to hedge accounting. IFRS 9 comes into effect on 1 January 2018 and advance application is permitted provided that the EU adopts the standard, which is yet to occur. The financial assets categories stipulated in IAS 39 are replaced by two categories where valuations are made at either fair value or amortised cost. Amortised cost is used for instruments which are held by a business model, whose goal is to achieve the contractual cash flows. These consist of the repayment of capital and the payment of the interest on the capital at a specified date. Other financial assets are reported at fair value and the “fair value option” stipulated in IAS 39 is retained. Changes in fair value are to be recognised in profit or loss, with the exception of change in the value of equity instru-ments which are not held for trading and where it was initially decided to recognise changes in value in other comprehensive income. The majority of the parts concerning financial liabilities are identical to the previous regulations in IAS 39, with the exception of those that relate to financial liabilities which are voluntarily measured at fair value in accordance with the fair value option. The changes in value of these liabilities are to be divided into changes that are attributable to the company’s own credit rating and those that are attributable to changes in the reference rate. The new impairment model will require more frequent im-pairment of expected credit losses and that these be recognised on initial recognition of the asset. The new rules pertaining to hedge accounting entail, among other things, simplifications of effectivity tests and a broadening of permitted hedging instruments and hedged items. The group has begun its anal-ysis work for implementing IFRS 9 and expects to be able to describe the possible effects in next year’s annual report.

IFRS 15 is the new standard for revenue recognition. IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts and all of the associated interpretations (both IFRIC and SIC). Revenue is recognised when the customer obtains control of their sold product or service, and replaces the previous princi-ple that revenue is recognised when the risks and benefits have been transferred to the purchaser.


The fundamental principle under IFRS 15 is that a company recognises revenue in a manner that best reflects the transfer of the promised product or service to the customer. This report was prepared using a five-stage model:Step 1: identify the contract with the customer, Step 2: identify the various performance undertakings in the contract, Step 3: determine the transaction price, Step 4: Allocate the transaction price to the performance undertakings, and Step 5: recognise revenue when a performance undertakings has been fulfilled. The most significant changes compared with current rules are: Distinct goods or services in integrated contracts must be reported as separate undertakings and as a general rule, any discounts are to be distributed between the separate units. If the transaction price includes variable compensation (such as incentive bonuses, discounts, royalties, etc.), revenue can be recognised earlier than under the current rules. They are to be estimated and included in the transaction price to the extent that they are highly unlikely to be reversed. The point in time when revenue is recognised may shift: some revenue that is currently reported when a contract is completed may need to be recognised by distributing it over the contract period or vice versa. There are new specific rules for licenses, guaranties, non-re-fundable advance payments and consignment contracts.The standard also entails increased disclosure requirements. A company may choose between fully retroactive or fu-ture-oriented application with additional disclosures. IFRS 15 comes into effect for the 2018 financial year and the EU plans to adopt the standard beforehand. The Group’s initial general analysis is that the standard has a limited impact on revenue recognition, but an exhaustive analysis has yet to be performed. IFRS 15 also entails the addition of a series of new disclosures for the Group’s reporting.

IFRS 16 LeasingIn January 2016, IASB published a new leasing standard that will replace IAS 17 Leases and the associated interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires that assets and liabilities attributable to all leasing agreements, with some exceptions, are recognised in the balance sheet. This reporting is based on the approach that the lessee has a right to use an asset during a specific time period and, at the same time, has an obligation to pay for this right. The reporting for the lessor will essentially be unchanged. The standard is applicable for financial years beginning 1 January 2019 or later. Advance application is permitted. The standard is yet to be adopted by the EU. The Group has yet to evaluate the effects of IFRS 16. Other new and amended IFRS with future application are not considered to have any effect on the Group’s reporting.

(h) Classification, etc.Non-current assets and non-current liabilities essentially comprise amounts expected to be recovered or paid more than 12 months after the balance-sheet date. Current assets and current liabilities essentially comprise amounts expected to be recovered or paid within 12 months of the balance-sheet date.

(i) Operating segment reportingAn operating segment is a part of the Group that carries out activities from which it can generate revenue and incur costs, and for which independent financial information is availa-ble. An operating segment’s results are followed-up by the company’s chief operating decision-maker in order to perform evaluations and be able to allocate resources to the operating segment. A more detailed description of the classification and presentation of operating segments is set forth in Note 3.

(j) Consolidation principles and business combinations(i) SubsidiariesSubsidiaries are all the companies (including structured com-panies) over which the Group has controlling influence. The Group has controlling influence over a company when it is exposed to or is entitled to variable returns from its holdings in the company and can affect the returns through its controlling influence in the company. Subsidiaries are included in the consolidated accounts as of the date when control passes to the Group. They are excluded from the consolidated accounts as of the date when this control no longer exists. Subsidiaries are recognised in accordance with the purchase method. This method means the acquisition of a subsidiary is regarded as a transaction through which the Group indirectly acquires the subsidiary’s assets and assumes its liabilities. The related acquisition analysis determines the fair value on the acquisition date of acquired identifiable assets and assumed liabilities, as well as any non-controlling interests. Related transaction costs, with the exception of transaction costs that pertain to the issue of equity instruments or debt instruments, are recognised directly in the year’s profit or loss. For business combinations where the consideration transferred, any non-controlling interests, and the fair value of previously owned shares (for step acquisitions) exceed the fair value of acquired assets and assumed liabilities that are recognised separately, the difference is recognised as goodwill. When the difference is negative, known as bargain purchases, it is recognised directly in profit or loss. Considerations transferred in conjunction with the acqui-sition do not include payments that concern the settlement of previous business relations. This type of settlement is recog-nised in profit or loss. Earnout payments are measured at fair value at the acqui-sition date. Should the earnout payment be classified as an equity instrument, no revaluation is performed and settlement takes place in equity. Other earnout payments are revalued on each reporting date and changes are recognised in profit or loss. If the acquisition does not involve 100% of the subsidiary, a non-controlling interest arises. There are two alternatives for recognising non-controlling interests: recognise the propor-tionate share of net assets of the non-controlling interest, or measure the non-controlling interest at fair value, which means that a non-controlling interest has a share of goodwill. The choice between these two alternatives for reporting non-con-trolling interests may be made from one acquisition to another. For step acquisitions, goodwill is determined on the day that the controlling interest arises. Previous holdings are measured at fair value and the change in value is recognised in profit or loss for the year. For divestments leading to the loss of controlling influence, but where a holding nonetheless remains, such holding is measured at fair value and the change in value is recognised in profit or loss for the year.


(ii) Transactions eliminated on consolidationIntra-Group receivables and liabilities, income and expenses and unrealised gains or losses arising as a result of intra-Group company transactions are eliminated in their entirety when preparing the consolidated accounts. Unrealised gains that arise from transactions with associated companies and joint ventures are eliminated in proportion to the size of the Group’s shareholding in the company. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no impairment requirement.

(k) Foreign currencies(i) Transactions in foreign currenciesTransactions in foreign currencies are translated to the functional currency at the exchange rate prevailing on the transaction date. The functional currency is the currency of the primary financial environment where each respective company has its operations. Monetary assets and liabilities in foreign currencies are translated to the functional curren-cy at the exchange rate prevailing on the balance-sheet date. Exchange-rate differences that arise are recognised in profit or loss. Non-monetary assets and liabilities that are recognised at historical cost are translated using the exchange rate prevailing on the transaction date. Non-monetary assets and liabilities that are recognised at fair value are translated to the functional currency at the exchange rate prevailing on the date of fair value measurement.

(ii) Financial statements of foreign subsidiariesAssets and liabilities in foreign operations, including goodwill and other consolidated surpluses and deficits, are translated from the foreign operation’s functional currency to the Group’s presentation currency, Swedish kronor (SEK), at the exchange rate prevailing on the balance-sheet date. Income and expenses in foreign operations are translated to SEK at an average rate of exchange composed of an approximation of the exchange rates prevailing on each respective transaction date. Translation differences that arise within foreign operations are recognised in other comprehensive income and are accumulated in a separate component in equity known as the translation reserve. When foreign operations are divested, the accumulated trans-lation differences pertaining to the operations are recognised, whereby they are reclassified from the translation reserve in equity to profit or loss. Should a partial divestment be made, but controlling influence remains, the proportionate share of accumulated translation differences will be re-attributed from other comprehensive income to non-controlling interests. Translation differences have been recognised in the transla-tion reserve since 1 January 2004, that is to say, the transition date for reporting in accordance with IFRS.

(l) Revenue(i) Sales of goods and performance of servicesRevenue for the sale of goods are recognised in profit or loss when the significant risks and benefits associated with ownership of the goods have been transferred to the purchaser. Revenue is not recognised if any probability exists that the financial benefits will not accrue to the Group. If any significant doubts exist with regard to payment, related costs or the risk of goods being returned, and if the seller retains a holding in the ongoing administration normally associated with ownership, revenue is not recognised. For Bergvik Skog, these policies mean that revenue is not rec-ognised until timber is felled from previously sold felling rights.

(ii) Revenue from the sale of propertyNormally, revenue from the sale of property is recognised on the possession date, unless risks and benefits have been trans-ferred to the purchaser at an earlier date. Control of the asset may have been transferred at a date that is earlier than the pos-session date and, if this has occurred, the revenue from the sale of property is recognised at the earlier date. When assessing the date of revenue recognition, the agreement reached between the parties in regard to risks, and benefits and holdings in the ongoing administration associated with ownership is taken into consideration. Consideration is also given to circumstances that can affect the outcome of the transaction, but which are beyond the control of both the seller and the purchaser. Bergvik Skog recognises revenue from the sale of property among other revenue. This revenue relates to net revenue, meaning the consideration received less the carrying amount.

(iii) Government assistance Government assistance is recognized in the balance sheet as deferred income when there is reasonable certainty that the contribution will be received and that the Group will meet the conditions associated with the contribution. The contribution is to be distributed systematically in the profit or loss in the same way and over the same period as the costs the contribu-tion is intended to offset.

(m) Financial income and expensesFinancial income consists of interest income on invested funds, dividend income, as well as gains on hedging instruments that are recognised in profit or loss. Interest income on financial instruments is recognised in accordance with the effective interest method (see below). Dividend income is recognised when the right to receive a div-idend is established. Gains or losses from divesting a financial instrument are recognised when the risks and benefits associat-ed with holding the instrument are transferred to the purchaser and the Group no longer has any control over the instrument. Financial expenses consist of interest expense on loans, impairment of financial assets, and losses on hedging instru-ments that are recognised in profit or loss. Borrowing costs are recognised in profit or loss with application of the effective interest method, apart from items that pertain directly to the purchase, construction or production of assets that require a significant period of time to complete for the intended use or sale, in which case they are included in the assets’ cost. Exchange-rate gains and exchange-rate losses are recognised as a net amount. The effective interest is the interest that discounts the estimated future incoming and outgoing payments during a financial instru-ment’s expected term at the financial asset or liability’s net carrying amount. The calculation includes all fees and charges that are part of the effective interest, transaction costs and all other premiums or discounts paid or received by the contractual parties.

(n) TaxesIncome tax comprises current tax and deferred tax. Income tax is recognised in profit or loss except when the underlying transaction is recognised in other comprehensive income or in equity, whereupon the associated tax effect is recognised in other comprehensive income or in equity. Current tax is tax to be paid or received for the current finan-cial year by applying tax rates that have been decided or which are in practice as per the balance-sheet date. Current tax also includes adjustments to current tax pertaining to prior periods.


Deferred tax is calculated in accordance with the balance-sheet method based on temporary differences between carrying and tax amounts of assets and liabilities. Temporary differences are not heeded in consolidated goodwill, or for differences that may arise on the initial recognition of assets and liabilities that are not business combinations and that at the time of the transaction do not affect the recognised or taxable earnings. Furthermore, temporary differences are not taken into con-sideration when they pertain to participations in subsidiaries and associated companies that are expected to be reversed in the foreseeable future. The valuation of deferred tax is based on how the underlying assets or liabilities are expected to be disposed of or settled. Deferred tax is determined by applying the tax rates that have been decided or that in practice have been decided on the balance-sheet date. The fiscal costs for forestland and standing forest in Bergvik Skog Väst AB and Bergvik Skog Öst AB date far back in time and are thus low. A taxable capital gain would arise if the forestland were to be sold per hectare at market value. This tax consequence is recognised as a provision for deferred tax. Deferred tax assets regarding deductible temporary differ-ences and loss carry-forwards are only recognised to the extent that it is probable they will be able to be utilised. The value of deferred tax assets is reduced when it is no longer deemed probable that they can be utilised. Any future income tax that may arise related to dividends is rec-ognised at the same time as the dividend is recognised as a liability.

(o) Financial instruments Financial instruments recognised in the balance sheet as assets in-clude cash and cash equivalents, loan receivables, accounts receiv-able, financial investments and derivative instruments. Liabilities include accounts payable, borrowings and derivative instruments.

Recognition and derecognition from the statement of financial position A financial asset or financial liability is recognised in the state-ment of financial position when the company becomes party to the contractual terms and conditions of the instrument. A receivable is recognised when the company has performed its commitments and the counterparty has a contractual obliga-tion to pay, even if an invoice has not yet been sent. A receivable is recognised in the statement of financial position when the invoice has been sent. Liabilities are recognised when the counterparty has performed its commitments and has a contractual obligation to pay, even if an invoice has not yet been received. Accounts payable are recognised when an invoice has been received. A financial asset is derecognised from the statement of finan-cial position when the rights in the contract have been realised or have matured, or if the company loses control over such rights. The same applies to components of a financial asset. A financial liability is eliminated from the statement of financial position when the commitment in a contract has been fulfilled or terminated in another manner. The same applies to compo-nents of a financial liability. A financial asset and financial liability are offset and recog-nised as a net amount in the statement of financial position only when a legal right exists to offset the amount, and there is reason to settle the items at a net amount or to simultaneously dispose of the asset and settle the liability.Acquisitions and divestments of financial assets are recognised on the trade date, which is the day on which the company undertakes to acquire or divest the asset.

Loan receivables and accounts receivablesLoan receivables and accounts receivable are financial assets that are not derivatives that have fixed determinable payments, and that are not listed on an active market. Assets in this cate-gory are valued at amortised cost. Amortised cost is determined based on the effective interest rate calculated on the acquisition date. Receivables are recognised at the amount anticipated to be received, meaning after deductions for doubtful receivables.

Other financial liabilitiesLoans and other financial liabilities, such as trade accounts payable, are included in this category. Liabilities are valued at amortised cost.

Financial guaranteesThe Group’s financial guarantee contracts mean the Group has an obligation to compensate bearers of debt instruments for losses incurred by them resulting from a specified debtor not completing payment upon falling due in accordance with the original or revised contract terms. Financial guarantee contracts are initially measured at fair value, that is to say, normally the amount that the issuer re ceived as compensation for the issued guarantee. When a sub-sequent valuation is performed, the liability for the financial guarantee is recognised at the higher of the amount recognised in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount originally recognised after deductions, where applicable, for accumulated allocations recognised in accordance with IAS 18 Revenues.

(p) Derivatives and hedge accountingThe Group’s derivative instruments have been acquired to finan-cially hedge interest-rate risks to which the Group is exposed. Derivative instruments are initially measured at fair value, meaning transaction costs are charged to profit or loss for the period. Following the initial recognition, the derivative instrument is recognised in the manner described below. If the derivative instrument is used for hedge accounting, to the extent that it is effective, the change in value of the derivative instrument is recognised on the same line in profit or loss as the hedged item. Even if hedge accounting is not applied, the increase or decrease in value of the derivative is recognised as income or as expense, respectively, in profit or loss, or net financial items, depending on the intended use of the derivative instrument and the extent to which that use is related to an operating item or a financial item. For hedge accounting, the ineffective portion is recognised in the same manner as changes in value of derivatives that are not used for hedge accounting. If hedge accounting is not applied when using interest swaps, the interest coupon is recognised as interest and other changes in the value of interest swaps are recognised as other financial income or other financial expense. An unequivocal link to the hedged item is required to fulfil hedge accounting requirements in accordance with IAS 39. In addition, the hedge must effectively protect the hedged item, hedge documentation must be created and its effectiveness must be measurable. Gains and losses relating to hedging are recognised in profit or loss at the same time as gains and losses are recognised for the items that are hedged.

Bergvik Skog Annual report 2016 29Bergvik Skog årsredovisning 2016


(i) Cash-flow hedging of interest-rate riskInterest swaps are used for hedging the risk in very probable forecasted interest flows with respect to borrowing at floating interest rates, where the company obtains variable interest and pays fixed interest. Interest swaps are measured at fair value in the statement of financial position. The interest coupon portion is recognised continuously in profit or loss as part of interest expense. Unrealised changes in the fair value of interest swaps are recognised in other comprehensive income and are included as part of the hedging reserve until such time as the hedged item affects the year’s profit or loss, and as long as the criteria for hedge accounting and effectiveness are fulfilled.

(ii) Hedging of net investments in foreign operationsThe company owns forest property in Latvia through six wholly owned Latvian subsidiaries. The companies are wholly financed by equity. To minimise the impact of exchange-rate fluctuations on the Group’s equity, the Parent Company has raised loans in EUR corresponding to the net assets in Latvia. The impact of exchange-rate fluctuations on the EUR loan is recognised in other comprehensive income, for both the Group and the Parent Company.

(q) Property, plant and equipment(i) Owned assets Property, plant and equipment are recognised as assets when it is probable that future financial benefits will accrue to the Group and the cost of the asset can be determined in a reliable manner. Property, plant and equipment are recognised at cost, less ac-cumulated depreciation and any impairment. Cost includes the purchase price and expenses directly attributable to bringing the asset to its location and in the condition required for it to be used as intended. Borrowing costs are capitalised in the cost of qualifying assets that have a starting date on or later than 1 January 2009. The carrying amount of property, plant and equipment is derecognised from the balance sheet when scrapped or divest-ed, or when no future financial benefits are expected from the use or scrapping/divestment of the asset. Gains or losses arising as a result of the divestment or scrapping of an asset are comprised of the difference between the selling price and the carrying amount, less direct selling costs. Gains and losses are recognised as operating income/expense.

(ii) Depreciation policiesStraight-line depreciation is applied over the estimated useful life of the asset. Land is not depreciated. The Group applies component depreciation, which means that the estimated useful life period is used as a basis for depreciation.

Estimated useful lives: Group - buildings 20–66 years - land improvements/forestry truck roads 10 years - plant and machinery 5 years - equipment, tools, fixtures and fittings 5–20 years

The residual value and useful life of the assets are assessed on an annual basis.

(r) Intangible assetsIntangible assets acquired by the Group are recognized at cost less accumulated amortisation and impairment. Borrowing costs are capitalised in the cost of qualifying assets that have a starting date on or later than 1 January 2009.

(i) Amortisation policiesAmortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of each respective intangible asset, unless such useful life is indeterminable. The useful life is assessed at least once a year. Goodwill and other intangible as-sets with an indeterminable useful life or that are not yet ready for use are assessed for impairment each year, and also as soon as indications arise that the asset in question has decreased in value. Intangible assets with a determinable useful life are amortised from when they are available for use. The intangible assets held by Bergvik Skog concern several wind-power projects. Ongoing projects are not amortised. Projects are expensed in their entirety if requisite permits are not obtained or if a project is deemed to be unrealisable.

(s) Biological assetsBiological assets in the Group are measured at fair value less estimated selling costs. A gain or loss that arises when a biologi-cal asset is initially recognised at fair value less estimated selling costs, or when a change occurs in the fair value of the biological asset less estimated selling costs, is included in the Group’s earn-ings for the period in which it arises. Selling costs comprise all costs required to sell the assets. Refer also to Note 35.

Standing forestThe fair value of standing forest is based on the present value of expected future cash flows from the assets. Refer also to Note 35.

(t) Inventories Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price of current operations, less estimated costs for completion and for bringing about a sale. The cost of inventories is calculated by applying the first-in, fist-out method (FIFO) and includes expenses that arose in conjunction with the acquisition of inventory items and the transportation of them to their current location and condition. For goods produced and work-in-progress, the cost includes a reasonable share of indirect costs based on normal capacity. The cost of proprietary semi-finished and finished goods consists of direct production costs and a reasonable proportion of indirect production costs. Valuations include due considera-tion for normal capacity utilisation.

(u) Impairment With the exception of biological assets, the carrying amounts of the Group’s assets, inventories and deferred tax assets are tested on every balance-sheet date to determine if there are any indications of impairment requirements. The asset’s recoverable amount is calculated if such an indication is found to exist. The value of assets excluded in accordance with the above is tested in accordance with individual standards. Impairment is recognised when the carrying amount of an asset or cash-generating unit exceeds its recoverable amount. Impairment is charged against profit or loss for the year.

Impairment testing of financial assetsAt every reporting occasion, the company evaluates whether there is objective evidence for a financial asset or group of assets to be impaired. Objective evidence consists partly of observable conditions that have occurred and which have had a negative impact on the ability to recover the cost. The recoverable amount for assets belonging to the cate-gory of loan receivables and accounts receivable, which are


recognised at amortised cost, is calculated as the present value of future cash flows, discounted by the effective interest rate prevailing when the asset was initially recognised. Assets with a short duration are not discounted. Impairment is charged against profit or loss.

Reversal of impairmentAn impairment loss is reversed if there is both an indication that the impairment requirement no longer exists and that a change has occurred in the assumptions that served as the basis for the calculation of the recoverable amount. However, impairment of goodwill is never reversed. Reversals are made only to the extent that an asset’s carrying amount, after rever-sal, does not exceed the carrying amount that would have been recognised, with deductions for amortisation where applicable, if no impairment loss had been recognised. Impairment of loan receivables and accounts receivable recog-nised at amortised cost are reversed if a subsequent increase the recoverable amount can be objectively attributed to an event that occurred subsequent to impairment being recognised.

(v) Payment of dividends to shareholdersDividends Dividends are recognised as a liability when the Annual Gener-al Meeting of Shareholders has voted to approve the dividend.

(w) Earnings per shareThe calculation of earnings per share is based on net profit for the year in the Group attributable to the Parent Company’s shareholders and on the weighted average number of shares outstanding during the year.

(x) Remuneration of employees (i) Defined-contribution plansCommitments with regard to contributions for defined-contri-bution pension plans are recognised as a cost in profit or loss as they arise. See also, Note 23.

(ii) Current benefitsCurrent benefits to employees are calculated without discounting and are recognised as a cost when the related services are received. A provision is recognised for the anticipated cost for profit sharing and bonus payments when the Group has an applicable legal or informal obligation to make such payments as a result of services being received from employees and the obligation can be reliably calculated.

(y) ProvisionsA provision is recognised in the balance sheet when the Group has an existing legal or informal obligation as a result of past events, and it is probable that an outflow of financial resources will be required to settle the obligation and a reliable esti-mate of the amount can be made. Where the effect of when a payment is made is significant, provisions are calculated by discounting the anticipated future cash flow at an interest rate before tax that reflects current market assessments of the time value of money and, if applicable, the risks associated with the liability. Annual provisions are made for statutory silviculture meas-ures related to the replanting of forest for Bergvik Skog Väst AB and Bergvik Skog Öst AB. The provisions are utilised at the time of each year’s replanting and new provisions are made for the future replanting of the respective years’ final felling areas. Refer also to Note 24.

Parent Company’s accounting policiesThe Parent Company has prepared its annual report in accord-ance with the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board recommendation RFR 2 Accounting for Legal Entities. The recommendations of the Swedish Financial Reporting Board regarding listed companies have also been applied. RFR 2 entails that, in its annual report for the legal entity, the Parent Company applies all of the International Financial Reporting Standards and statements as approved by the EU to the extent this is possible within the framework of the Swedish Annual Accounts Act and with consideration given to the relationship between accounting and taxation. The recommendation specifies the exceptions and additions that should be made in relation to IFRS. The differences between the Group’s and the Parent Company’s accounting policies are presented below.

Classification and presentation formatThe Parent Company presents an income statement and a state-ment of comprehensive income, where for the Group these two statements constitute one statement of comprehensive income. Furthermore, the Parent Company uses the designations balance sheet and cash-flow statement, where in the Group these are designated statement of financial position and statement of cash flows. The Parent Company’s income statement and balance sheet have been prepared in accordance with the format stipulat-ed in the Swedish Annual Accounts Act, whereas the statement of comprehensive income, the summary of changes in equity and the statement of cash flows are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. Differences compared with the Group’s financial statements that are significant in the Parent Company’s income statement and balance sheet primarily comprise the recognition of financial income and expenses, non-current assets, equity and the occur-rence of provisions as a separate item in the balance sheet.

Borrowing costsIn the Parent Company, loan costs are charged to profit or loss during the period to which they relate. No borrowing costs are capitalised as assets.

Research and developmentIn the Parent Company, all research and development expenses are recognised as costs in the income statement.

Taxes In the Parent Company, untaxed reserves are recognised in-cluding deferred tax liabilities. However, in the consolidated financial statements, untaxed reserves are divided into deferred tax liabilities and equity.

Group contributions Group contributions are recognised according to the alterna-tive rule in RFR 2 Accounting for Legal Entities, meaning as appropriations.

Hedges of net investments in subsidiaries The Parent Company has two wholly owned Latvian subsid-iaries. The Latvian companies are wholly financed by equity. To minimise the impact of exchange-rate fluctuations on the Group’s equity, the Parent Company has raised loans in EUR corresponding to the net assets in Latvia. The impact of exchange-rate fluctuations on the EUR loan is recognised in other comprehensive income, for the Parent Company.


Forestry in Sweden

Forestry in Latvia

Plant production

Wind powerOther operating

segments 1) Eliminations Group

SEK M 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

Felling rights 2 031 1 966 37 40 0 2 068 2 006

Other revenue 20 30 7 20 101 117 19 14 368 1 061 -179 -169 336 1 073

Total revenue 2 051 1 996 44 60 101 117 19 14 368 1 061 -179 -169 2 404 3 079

Operating profit 1 608 11 593 1 21 6 24 2 -1 274 971 0 0 1 891 12 608

Net financial items -566 -576

Tax expense for the year

-84 -2 524

Profit for the year 1 241 9 508

Assets 48 061 47 256 1 658 1 592 210 244 145 150 17 803 18 655 -18 989 -20 043 48 888 47 854

Liabilities 26 153 26 085 104 98 87 122 83 90 13 436 12 802 -15 603 -15 632 24 260 23 565

Investments 159 190 33 27 48 15 24 13 0 0 0 0 264 242

Amortisation and depreciation

-36 -34 -1 -1 -15 -13 -4 -5 -2 0 0 0 -58 -53

Group

1) Primarily pertains to property-related revenue such as capital gains and usufructs.

Group Parent Company

SEK M 2016 2015 2016 2015

Sale of goods 2 124 2 075

Services 102 100

Assets, etc. 280 1 004 2 18

Total 2 404 3 079 104 118

Geographic areas

Revenue from external customers Non-current assets

SEK M 2016 2015 2016 2015

Sweden 2 360 3 025 47 440 46 451

Latvia 44 54 1 022 958

Total 2 404 3 079 48 462 47 409

By country where the sales have taken place.

Note 3 Operating segmentsThe Group’s operations are divided into operating segments based on the parts of the operation followed up by the company’s chief operating decision maker (CODM), known as the management approach. The Group’s operations are organised in a manner whereby the Group management follows up the results, returns and cash flows generated by the Group’s various products/services. Each operating segment has a manager who is responsible for daily operations and who regularly submits reports to the Group management on the operating segment’s results and any resources needed. Since the Group management follows up operational results and makes decisions on resource allocation based on the products that the Group manufactures and sells, these product segments constitute the Group’s operating segments. The segment’s profit, assets and liabilities includes directly attributable items, as well as items that can be distributed to this segment in a reasonable and reliable manner.All items are included in the segments’ investments in property, plant and equipment and intangible non-current assets.

The following operating segments have been identified:

• Forestry in Sweden: Operations are based on the production and sale of forest raw material.

• Forestry in Latvia: Operations are based on the production and sale of forest raw material.

• Plant production: Operations are based on the production and sale of forest plants.

• Wind power: Operations include planning of wind farms and the leasing of land for wind power production.

In 2015, the Group generated net revenue from its largest customer Stora Enso Skog AB of SEK 955 M (892). This revenue is reported under the Forestry and Plant production operating segments.

Note 2 Distribution of revenue


Group

SEK M 20152016

Revenue from the sale of property, plant and equipment 210 915

Forest plants 39 35

Logging residues 9 9

Usufructs 69 69

Subsidies 10 14

Other 15 18

352 1 060

Employee payroll costs

Group

Mkr 2016 2015

Wages and salaries, etc 54 51

of which variable portion 3 3

Pension costs, defined-contribution plans 6 7

Social security contributions 19 19

78 77

Sickness absenteeism in the Parent Company

2016 2015

Total sickness absenteeism as a percentage of normal working hours 2,6% 3,1%Percentage of total sickness absenteeism relating to absences of 60 consecutive days or more 50,1% 59,4%

Sickness absenteeism as a percentage of each group’s normal working hours

Sickness absenteeism by gender

2016 2015

Men 2,9% 1,4% (Total sickness absenteeism for men) *100/total normal working hours for men

Women 2,1% 5,5% (Total sickness absenteeism for women) *100/total normal working hours for women)

Sickness absenteeism by age group

29 or younger 0,0% 0,0%

30–49 2,4% 4,8%

50 or older 3,6% 2,0%

Wages, salaries, other remuneration and social security expenses

SEK M 2016 2015

Salaries and remuneration

Social security

expensesSalaries and

remuneration

Social security

expenses

Parent Company 27 15 25 15

of which, variable 2 3

portion of which pension costs1) 5 5

Salaries, wages and other remuneration distrib-uted between the CEO and senior executives, and other employees

SEK M 2016 2015

Parent Com-

pany

CEO and senior

executives Other

employees

CEO and senior

executives Other

employees

Sweden 12,9 14,0 13,2 11,4

of which vari-able portion

1,7 0,8 2,0 0,7

Parent Com-pany, total

12,9 14,0 13,2 11,4

of which variable portion 1,7 0,8 2,0 0,7

Group, total 12,9 48,9 13,2 38,3

of which variable portion 1,7 1,4 2,0 0,7

Gender distribution in corporate management

Parent Company2016

% women2015

% women

Board of Directors 18% 18%

Other senior executives

50% 50%

Total, Group

Board of Directors 18% 18%


50% 50%

Note 4 Other operating revenue

Note 5 Employees, personnel costs and remuneration to senior executives

Average number of employees

Parent Company

2016 of which

men

2015 of which

men

Sweden 30 60% 30 60%

Parent Company, total 30 60% 30 60%

Subsidiaries

Sweden 71 60% 68 52%

Latvia 22 57% 23 54%

Total in subsidiaries 93 91

Total, Group 123 58% 121 54%

Of which, seasonally employed

34 32

1) Of the Parent Company’s pension costs, SEK 3 285 (3 720) pertains to the company’s management (8 persons). The company has no related unfinanced pension commitments in this regard.

Of the salaries, wages and other remuneration paid to the CEO and senior executives in the Group, SEK 7,9 M (7,9) pertains to senior executives other than the Board of Directors and the CEO. See also, Note 23.



SEK M 2016 2015 2016 2015

KPMG

Audit engagement 0,1 0,5 0,5

PWC

Audit engagement 1,0 0,2 0,8 0,2

Tax consultancy 0,2 0,1 0,2 0,1

Other assignments 0,1 0,1

Note 6 Other external costs include auditors’ fees and expense

Audit engagements are defined as the examination of annual accounts and the accounting records, the administration of the Board of Directors and the CEO, other duties incumbent upon a company’s auditors and advisory or other services arising from observations made during the above examination or through the performance of such other duties. Everything else is defined as other assignments.

Note 7 Net financial items

Group

SEK M 2016 2015

Interest income on bank balances 1 1

Financial income 1 1Impairment of financial assets -3 -3

Interest expense on financial liabilities -440 -496

Interest expense attributable to derivatives -124 -78


Net financial items -566 -576

Parent Company

SEK M 2016 2015

Difference between recognised depreciation and planned depreciation -8 -7

Allocation to the accrual fund for the year -3 -8

Group contributions paid -258 -385

Total -269 -400

Group

SEK M 2016 2015

Current tax expense (-)

Tax expense for the period -36 -13

Tax attributable to earlier years -18

Total -54 -13

Deferred tax expense (-)/ tax income (+)

Deferred tax related to tax allocation reserve

-1 -3

Deferred tax related to excess depreciation

-2 -2

Deferred tax related to temporary differences

-24 -16

Deferred tax expense due to utilisation of previously capitalised tax loss carry-forwards

62

Change in deferred tax due to divestment of forest assets

62 49

Deferred tax on standing forest -220 -2 538

Correction, deferred tax 2015 97

Other -4 -1

Total tax expense/income recognised in Group

-30 -2 511

Totalt redovisad skattekostnad/ -intäkt i koncernen

-84 -2 524

Parent Company

SEK M 2016 2015

Current tax expense (-)

Tax expense for the period -36 -5

Tax attributable to earlier years 0 0

Total tax expense/income recognised in the Parent Company

-36 -5

Parent Company Interest income and similar profit/loss items

SEK M 2016 2015

Interest income, Group companies 999 999

Interest income, other 1 1

Dividends from subsidiaries 80 900

Financial income 1 080 1 900

Parent Company Interest expense and similar profit/loss items

SEK M 2016 2015

Impairment of financial assets -7 -7

Interest expense on financial liabilities, external -440 -496

Interest expense attributable to derivatives -124 -78


Net interest income 509 1 319

Note 8 Appropriations

Note 9 Taxes


Parent Company

SEK M 2016 2015 2016 2015 2016 2015

Interest-rate hedging 104 87 104 87

Tax assets/liabilities, net 104 87 0 0 104 87

Group

SEK M 2016 2015 2016 2015 2016 2015

Property, plant and equipment -210 -215 -210 -215

Biological assets -9 548 -9 544 -9 548 -9 544


Untaxed reserves -86 -84 -86 -84

Temporary differences -370 -346 -370 -346

Tax assets/liabilities, net 104 87 -10 214 -10 189 -10 110 -10 102

Reconciliation of effective tax

Parent Company

SEK M 2016 (%)

2016 2015 (%)

2015

Pre-tax profit 239 934

Tax based on current tax rate for the Parent Company

22% -53 22,0% -206

Non-deductible expenses 0,2% -2 1,4% -1

Non-taxable dividend -7,5% 18 -21,2% 198

Non deductible impairment of shares

0,4% 1 -0,4% 4

Other -0,0% 0

Effective tax recognised 15,1% -36 1,8% -5

Recognised in the balance sheet

Deferred tax assets and liabilities Deferred tax assets and liabilities relate to the following

Deferred tax assets

Net

Deferred tax liabilities

Deferred tax assets

Net

Deferred tax liabilities

Tax items attributable to other comprehensive income

SEK M 2016 2015

GroupInterest-rate hedging 17 -16

Parent CompanyInterest-rate hedging 17 -16

Reconciliation of effective tax

Group

SEK M 2016 (%)

2016 2015 (%)

2015


Tax based on current tax rate for the Parent Company

22% -292 22,0% -2 647

Non-deductible expenses 0% -1 0,0% -1

Non-taxable revenue 0% 1 0,0% 0

Difference between taxable and recognised- gains/losses.

-5% 62 0,5% -61

Non-taxable gains on properties divested

-0,6% 8 -1,8% 213

Tax related to previous years

1,4% -18 0,0% 0

Adjustment, forestry properties historical OB

-4,7% 62

Difference in tax rate in

subsidiaries in Latvia0% 0 0,0% 1

Other, incl. amended 0,2% -3

tax rate 26.3% to 22% -7,3% 97 0,3% -29

Effective tax recognised 6,3% -84 21,0% -2 524


Change in deferred tax related to temporary differences and loss carry-forwards

Group

SEK MBalance at 1 Jan 2015

Recognised in profit

or loss

Recognised in other comprehen-

sive incomeBalance at

31 Dec 2015

Property, plant and equipment -214 -1 -215

Biological assets -7 055 -2 489 -9 544

Untaxed reserves -79 -5 -84

Interest-rate hedging 103 -16 87

Temporary differences -330 -16 -346

-7 575 -2 511 -16 -10 102

Parent Company

SEK MBalance at

31 Dec 2015


or loss



31 Dec 2015

Interest-rate hedging 103 0 -16 87

103 0 -16 87



or loss



31 Dec 2016


87 0 17 104



or loss



31 Dec 2016

Property, plant and equipment −215 5 -210

Biological assets −9 544 -4 -9 548

Untaxed reserves −84 -2 -86

Interest-rate hedging 87 17 104


−10 102 -25 17 -10 110


The assets pertain to costs for the planning of wind farms and to an IT system for the sales administration of felling rights. The system was acquired and put into operation in 2004

The assets pertain to costs for the planning of wind farms and to an IT system for the sales administration of felling rights. The system was acquired and put into operation in 2004.

Group

SEK M Wind-power projects IT system Total

Ackumulerade anskaffningsvärdenOpening balance, 1 Jan 2015 177 3 180

Investments 13 13

Closing balance, 31 Dec 2015 190 3 193

Opening balance, 1 Jan 2016 190 3 193

Investments 25 25


Accumulated amortisationOpening balance, 1 Jan 2015 -35 -3 -38

Amortisation for the year -5 0 -5

Closing balance, 31 Dec 2015 -40 -3 -43

Opening balance, 1 Jan 2016 -40 -3 -43

Amortisation for the year -7 -7


Carrying amountsAt 1 January 2015 142 0 142

At 31 December 2015 150 0 150

At 1 January 2016 150 0 150

At 31 December 2016 168 0 168

Parent Company

SEK M Wind-power projects IT system Total

Accumulated costOpening balance, 1 Jan 2015 90 3 93

Investments 6 6

Divestments -3 -3


Opening balance, 1 Jan 2016 93 3 96

Investments 9 9

Utgående balans 2016-12-31 102 3 105

Accumulated Depreciation and impairmentOpening balance, 1 Jan 2015 -37 -3 -40

Amortisation for the year -1 -0 -1


Opening balance, 1 Jan 2016 -38 -3 -41

Amortisation for the year -2 -2


Carrying amountsAt 1 January 2015 53 0 53

At 31 December 2015 55 0 55

At 1 January 2016 55 0 55

At 31 December 2016 62 0 62



or loss



31 Dec 2016

Property, plant and equipment −215 5 -210

Biological assets −9 544 -4 -9 548

Untaxed reserves −84 -2 -86

Interest-rate hedging 87 17 104


−10 102 -25 17 -10 110

Note 10 Intangible non-current assets


Note 11 Property, plant and equipment

Group

Land and build-ings

Plant and machinery

Equipment, tools, fixtures and fittings Total

SEK M

CostOpening balance, 1 Jan 2015 2 560 172 56 2 788

Other acquisitions 81 3 84

Exchange-rate differences -10 -10

Divestments -29 -29

Closing balance, 31 Dec 2015 2 602 175 56 2 833Opening balance, 1 Jan 2016 2 602 175 56 2 833

Other acquisitions 64 47 111

Exchange-rate differences 19 19

Divestments -12 -12

Closing balance, 31 Dec 2016 2 673 222 56 2 951

Depreciation and impairment

Opening balance, 1 Jan 2015 -413 -95 -56 -564

Depreciation for the year -36 -12 -48

Closing balance, 31 Dec 2015 -449 -107 -56 -612Opening balance, 1 Jan 2016 -449 -107 -56 -612

Depreciation for the year -39 -12 -51

Closing balance, 31 Dec 2016 -488 -119 -56 -663Carrying amountsAt 1 January 2015 2 147 77 0 2 224

At 31 December 2015 2 153 68 0 2 221

At 1 January 2016 2 153 68 0 2 221

At 31 December 2016 2 185 103 0 2 288


The receivables relate to long-term loans to subsidiaries: SEK 12,481 M to Bergvik Skog Väst AB, SEK 2,600 M to Bergvik Skog Öst AB and SEK 75 M to Bergvik Skog Plantor AB

The year’s change in fair value was attributable to price changes for timber, pulp, felling costs and forest manage-ment. The measurement of biological assets is based on input data which is not observable in markets (level 3 data). For more information, pleases refer to the valuation princi-ples in Note 27 and 35.

Parent CompanyEquipment, tools,

fixtures and fit-tings Total

SEK M

Cost

Opening balance, 1 January 2015 6 6

Acquisitions 0 0

Divestments 0 0

Closing balance, 31 December 2015

6 6

Opening balance, 1 January 2016 6 6

Acquisitions 0 0

Divestments


6 6

Depreciation

Opening balance, 1 January 2015 -5 -5

Depreciation for the year

0 0


-5 -5

Opening balance, 1 January 2016 -5 -5

Depreciation for the year

-1 -1


-6 -6

Carrying amounts1 January 2015 1 1

31 December 2015 1 1

1 Januari 2016 0 0

31 December 2016 0 0

Group Standing forest

SEK M 2016 2015

Opening balance, 1 January 44 951 34 065

Acquisitions/purchases 128 148

Reclassification 16 -9

Divestments -89 -353

Carrying amount of sold wood −1 191 -1 111

Change in fair value less selling costs 2 191 12 211Closing balance, 31 December

46 006 44 951

Non-current assets 46 006 44 951

Current assets 0 0

46 006 44 951

Parent Company Receivables from Group companies

SEK M 2016-12-31 2015-12-31

Accumulated cost At beginning of year 15 156 15 156

Changes in receivables 0 0

Closing balance, 31 December

15 156 15 156

Note 12 Biological assets

Note 13 Receivables from Group companies


Cost of goods sold for the Group includes impairment of inventories in an amount of SEK 12 M (0).

Group

SEK M 31 Dec 2016 31 Dec 2015

Work in progress 67 81

Finished goods and goods for resale

67 81

Group

SEK M 31 Dec 2016 31 Dec 2015Revenue, recognised but not invoiced 78 60

Prepaid expenses and accrued income 2

Allocation of insurance premiums 13 14

93 74

Group

SEK M 31 Dec 2016 31 Dec 2015

The following components are included in cash and cash equivalents:

Cash and bank balances 14 14

Balances in Group accounts and the Parent Company’s bank balances -11 124

Total as per balance sheet

3 138

Total as per cash-flow statement

3 138

Parent Company

SEK M 31 Dec 2016 31 Dec 2015

Prepaid expenses 2

Prepaid expenses and accrued income 2

Allocation of insurance premiums 13 14

15 16

Note 16 Inventories

Note 17 Accounts receivableAccounts receivable are recognised after taking into account bad-debt losses arising during the year, which amounted to SEK 0.0 M (0.0) in the Group. See also Note 27. The asset is classified under accounts receivable and loan receivables.

Note 18 Prepaid expenses and accrued income

Note 19 Cash and cash equivalents1) This item is primarily attributable to preliminary tax payments.

Group

SEK M 31 Dec 2016 31 Dec 2015

Other receivables that are current assetsTax assets 43 87

Other 5 4

48 91

Note 15 Non-current receivables and other receivables

Parent Company

SEK M 31 Dec 2016 31 Dec 2015

Other receivables (current)Tax assets 39 68

39 68

Group and Parent Company

SEK M 31 Dec 2016 31 Dec 2015

Accumulated costAt beginning of year 40 37

Purchases 3 3

Total 43 40

Accumulated impairment

At beginning of year -40 -37

Impairment for the year -3 -3

Total -43 -40

Closing balance, 31 December

0 0

Note 14 Financial investments


Not 20 Equity

Group

Specification of equity item reserves

SEK M 2016 2015

Opening hedging reserve -308 -363

Cash-flow hedges

Recognised directly in other

comprehensive income -78 70

Tax pertaining to hedges for the year 17 -15

Other

Closing hedging reserve -369 -308

Opening translation reserve -72 -70

Recognised directly in other

comprehensive income 6 -2

Other

Closing translation reserve -66 -72Total reserves -435 -380

Share capital and share premium

SEK M 2016 2015

Number of shares Issued at 1 January 7 062 7 062

Issued at 31 December – paid-up

7 062 7 062

SEK M 2016 2015

Proposed/approved dividend 141 847

Dividend SEK per share 20 000,00 120 000,00

At 31 December 2016, the registered share capital was 7 062 shares (7 062) Shareholders are entitled to receive dividends, which are determined in arrears, and shares entitle the holders to vote at the Annual General Meeting of Shareholders on the basis of one vote per share. All shares carry the same rights to the company’s remaining net assets.

Other capital contributionsThis item relates to equity contributed by shareholders. It includes the share premium reserve that was transferred to the statutory reserve on 31 December 2005. Transfers to the share premium reserve as of 1 January 2006 and thereafter are also recognised as capital contributions.

Hedging reserveThe hedging reserve consists of the effective portion of the accumulated net changes in fair value of cash-flow hedging instruments attributable to hedging transactions that have not yet occurred.

Translation reserveThe translation reserve consists of all exchange-rate differences arising from the translation of financial statements from foreign operations prepared in another currency than the Group’s reporting currency. The Parent Company and the Group present their financial statements in Swedish kronor (SEK). The transla-tion reserve also includes exchange-rate differences arising from the conversion of liabilities that have been taken up as hedging instruments of a net investment in foreign operations.

Retained earnings, including profit for the yearRetained earnings including profit for the year consists of ear-nings in both the Parent Company and its subsidiaries. Previous allocations to the statutory reserve, excluding transferred share premium reserves, are included in this equity item. The share of the Group’s earnings after tax for non-control-ling interests amounted to SEK 61,000 (1,165,000) and its share of equity recognised in the balance sheet amounted to SEK 2,787,000 (2,681,000).

DividendAfter the balance-sheet date, the Board of Directors proposed thefollowing dividend. The dividend for 2016 has not yet been adopted.

Equity managementThe Bergvik Skog AB Group’s equity amounted to SEK 24 628 M at 31 December 2016. The objective of equity management is to achieve a long-term appreciation in value of the Group’s assets and a consistent annual return to the shareholders of Bergvik Skog AB

Parent Company

Restricted reservesStatutory reservesThe purpose of a statutory reserve is to set aside part of the net profit so that it is not used to cover any losses brought-forward. Amounts that were transferred to the share premium reserve prior to 1 January 2006 have been re-attributed to the statutory reserve

Non-restricted equityFair value reserveThe company applies the stipulations of Chapter 4, sections 14a-e of the Swedish Annual Accounts Act regarding the valuation of financial instruments at fair value. Recognition takes place directly against the fair value reserve when the value change pertains to hedging instruments and the applied principles for hedge accounting allow a portion of or the entire value change to be recognised against equity. Value changes that are not hedged against a rate-change of a monetary item that comprises a portion of the company’s net investment in a foreign unit are recognised in equity pursuant to Chapter 4, section 14f of the Swedish Annual Accounts Act.

Retained earningsNon-restricted equity comprises non-restricted equity for the preceding year, after payment of the dividend, plus earnings for the current year, that is, the amount available for distribution to shareholders.


Group

SEK M 2016 2015


Bank loans 5 899 5 946

Subordinated loans 3 936 3 936

9 835 9 882

Current liabilities

Bank overdraft facilities - -

Commercial paper 2 756 1 980

2 756 1 980

Parent Company

SEK M 2016 2015


Bank loans 5 899 5 946

Subordinated loans 3 936 3 936

9 835 9 882

Current liabilities

Bank overdraft facilities 11 -

Commercial paper 2 756 1 980

2 767 1 980

SEK 2016 2015

Earnings per share, SEK 175 787 1 346 334

Note 21 Earnings per share

Earnings per share The calculation of earnings per share for 2016 was based on the profit for the year attributable to the Parent Company’s shareholders of SEK 1 241 M (9 507) and on the weighted average number of shares outstanding in 2016, which was 7 062 (7 062).

Note 22 Interest-bearing liabilitiesThis note covers the company’s contractual terms and conditions with regard to interest-bearing liabilities. Further information about the company’s exposure to interest risk is set forth in Note 28.

Conditions and repayment termsBergvik Skog AB (publ) has a credit facility of SEK 10 169 M, of which SEK 8 686 M had been utilised as at 31 December 2016. The loans carry floating-rate interest. The Parent Com-pany has provided security of SEK 2 125 M (2 125) i andelar i koncernföretag. In the event of the company entering receiver-ship, creditors can claim the right to the shares. In the consoli-dated statement of financial position, one-time costs associated with the arrangement of loans have been offset against the loan’s outstanding amount. Bergvik Skog has a loan of EUR 91 M (SEK 869 M) as a provision against translation exposure for Bergvik Skog’s assets in Latvia. In 2013, Bergvik Skog issued a commercial paper program-me with an authorised ceiling of SEK 3,000 M for a maximum term of 364 days. At 31 December 2016, SEK 2 756 M of the certificates were outstanding. A SEK 2,800 M credit facility is in place as a back-up.

Bergvik Skog AB (publ) issued a subordinated loan of SEK 3,531 M when the Bergvik Skog Group was founded. The loan matures on 24 March 2034 and the annual interest is 8.5%. 7.0% of this has been paid in cash on a six-monthly basis and 1.5% was capi-talised until July 2011. Bergvik Skog AB (publ) has the right to pay in cash the interest which can be capitalised on each interest payment due date and this right has been exercised since 30 December 2011. The due dates for annual interest payments are 30 June and 30 December, respectively. Bergvik Skog AB (publ) has the right to terminate the loan on 24 March 2021.

Note 23 Employee benefitsCommitments for retirement pensions and family pensions for salaried employees in Sweden are guaranteed through an insuran-ce with Alecta. According to a statement by the Swedish Financial Reporting Board, UFR 3, this is a defined-benefit plan that includes several employers. For 2016 financial year, the company did not have access to such information that would have made it possible to recognise this plan as a defined-benefit plan. Ac-cordingly, under ITP, which is guaranteed through insurance in Alecta, the pension plan is recognised as a defined-contribution plan. Contributions paid during the year for pension insurance coverage with Alecta amounted to SEK 0,8 M (0,7) and for the Parent Company SEK 0,7 M (0,6). Expected contributions for 2017 are SEK 0,9 M for the Group and SEK 0.8 M for the Parent Company. Alecta’s surplus can be distributed to the policy holders and/or the insured. At year-end 2016, Alecta’s surplus in the form of the collective consolidation level1) amounted to 148.0% (153.0). The collective consolidation level1) comprises the market value of Alecta’s assets, expressed as a percentage of the insurance commitments calculated pursuant to Alecta’s actuarial assumptions, which does not comply with IAS 19.

1) Alecta publishes information about its consolidation level on its website every month.

Severance payThe period of notice for the CEO is 12 months, if notice is served by the company, and six months if notice is given by the CEO. There are no agreements concerning any other severance pay.

BenefitsThe Chairman of the Board and Board members receive fees in line with the resolution passed by the Annual General Meeting of Shareholders. Remuneration paid to the CEO comprises a cash salary and a company car. The retirement age is 60.


Group

SEK M 31 Dec 2016 31 Dec 2015

Provisions that are non-current liabilities

Silviculture measures 284 349

Total 284 349

Of which current portion 184 186

SilvicultureCarrying amount at beginning of period 349 344Provisions made during period 118 176Amounts utilised during period -183 -171Carrying amount at end of period 284 349

Of which, total non-current portion of provisions 100 163Of which, total current portion of provisions 184 186

Payments

Amount of provision expected to be paid after more than 12 months with the predominant propor-tion within 36 months 100 163

Remuneration and other benefits during 2016

SEK MBasic salary,

Board feeVariable

remunerationOther

benefitsPension

cost Total

Chairman of the Board 0,5 0,5

Board members 1,3 1,3

CEO 4,3 0,7 0,1 1,4 6,5


(7 persons) 7,0 0,9 0,3 1,9 10,1

Total 13,1 1,6 0,4 3,3 18,4

Benefits to senior executives Remuneration and other benefits during 2015

SEK MGrundlön

styrelsearvodeVariable

remunerationOther

benefitsPension

cost Total

Chairman of the Board 0,5 0,5

Board members1 1,0 1,0

CEO 4,3 1,0 0,1 1,4 6,8


(7 persons) 6,9 1,0 0,3 2,3 10,5

Total 12,7 2,0 0,4 3,7 18,8

Note 24 Provisions

Group

SEK M 31 Dec 2016 31 Dec 2015

Other current liabilities

Liability related to real-estate purchases 23 11

Other operational liabilities 17 15

40 26

Note 25 Other liabilities

1) Six paid Board members. Per Lindberg, Johan Lindman and Per Lyrvall declined the fee. No fee was paid to the employee representative.

1) Six paid Board members. Per Lindberg, Johan Lindman and Per Lyrvall declined the fee. No fee was paid to the employee representative.



SEK M 31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015

Payroll-related costs 13 12 9 7

Advances from customers 607 631 - -

Interest 6 37 6 37

Project planning costs - 10 - -

Other 7 4 4 2

633 694 19 46

Note 26 Accrued expenses and deferred income


Fair values and carrying amounts

Fair values and carrying amounts

Group 2016 2015

Assets

Accounts receivable

and loan receivables

Total carrying amount

Total fair value

Accounts receivable



Total fair value

Derivatives

Current assets

Accounts receivable 111 111 111 61 61 61

Financial receivables

Bank balances 3 3 3 138 138 138

Parent Company 2016 2015

Assets

Accounts receivable



Total fair value

Accounts receivable



Total fair value

Non-current assets

Financial receivables 15 156 15 156 15 156 15 156 15 156 15 156

Current assets

Bank balances 124 124 124

Liabilities

Derivatives used in hedge

accountingOther

liabilities


Total

fair value


accountingOther

liabilities


Total

fair value

Non-current

Interest-bearing liabilities 5 898 5 898 5 898 5 946 5 946 5 946

Subordinated loans 3 936 3 936 4 474 3 936 3 936 4 486

Derivatives 475 475 475 397 397 397

Current


Accounts payable 24 24 24 48 48 48

Accrued interest 2 4 6 6 32 5 37 37

Other liabilities 40 40 40 26 26 26

Liabilities


accountingOther

liabilities


Total

fair value


accountingOther

liabilities


Total

fair value

Non-current


Subordinated loans 3 936 3 936 4 474 3 936 3 936 4 486

Derivatives 475 475 475 397 397 397

Current


Accounts payable 6 6 6 6 6 6

Accrued interest 2 4 6 6 32 5 37 37

Note 27 Financial assets and liabilities


Fair value measurementThe following tables provide information on how fair value is determined for the financial instruments measured at fair value in the statement of financial position. The determination of fair value is classified based on the following three levels.

Level 1: in accordance with prices quoted on an active market for the same instrument

Level 2: based on directly or indirectly observable market data which is not included in level 1

Level 3: based on input data which is not observable in the market

Interest-bearing liabilitiesThe fair value of financial liabilities that are not derivative instruments is calculated based on future cash flows of capital amounts and interest discounted to the market interest rates on the balance-sheet date. For liabilities with a remaining term of less than 12 months, the carrying amount is deemed to reflect the fair value. The interest is adjusted quarterly and the margins used are at market rates and, therefore, the carrying amounts are assessed as corresponding with market values.

Accounts receivable and accounts payableThe carrying amount is assessed as reflecting the fair value for ac-counts receivable and accounts payable with a remaining term of less than 12 months. Accounts receivable and accounts payable with a remaining term of more than 12 months are discounted in conjunction with the determination of the fair value.

Derivative instrumentsThe valuation model for discounted cash flow is used to establish the value of interest swaps and interest-rate caps. The discount rate used is the market interest rate for similar instruments at the balance-sheet date. Measurements are based on directly or indirectly observable market data (level 2).

Other liabilities (subordinated loans)The fair value of financial liabilities that are not derivative instruments is calculated based on future cash flows of capital amounts and interest discounted to the market interest rates on the balance-sheet date. For liabilities with a remaining term of less than 12 months, the carrying amount is deemed to reflect the fair value. Measurements are based on directly or indirectly observable market data (level 2).

Valuation of standing forestIn accordance with IAS 41, standing forest is to be valued and reported at fair value. Where market prices or other compara-ble values are not available or are difficult to asses, fair value is to be able to be calculated in a reliable manner. The assessment of Bergvik Skog’s company management is that no relevant market prices are available for forest holdings of the size Bergvik Skog has. The management has there-fore chosen to apply the discounted cash flow when valuing standing forest. The calculation of expected cash flow has been carried out for the upcoming 90 years (in Latvia 100 years) which is equivalent to the average felling cycle for Bergvik Skog’s forests. These cash-flow estimates are based on the current long-term felling plan which is derived from the latest forest inventory (evaluation of growth and potential timber withdrawal). Furthermore, the long term development of actual sales prices for timber and pulpwood have been assessed and for actual costs for felling and various silviculture measures. The costs for replanting felled areas is included in the cash-flow estimate. As reforestation is a legal requirement, these costs are considered to be a part of felling costs. The estimated cash flow, after in-come tax, is discounted to a net present value which represents the estimated real value, after tax, of the standing forest. The deferred tax liability has been calculated based on the value of the standing forest, which reflects the income tax fu-ture felling gives rise to or the tax any sale of assets gives rise to. The valuation is based on input data which is not observable in the market (level 3).

47

Note 28 Financial risk and policies The Bergvik Skog Group is exposed to various financial risks through its operations. Financial risks are defined as fluctuations in the company’s profit and cash flow as a result of changes in interest rates, refinancing risk and credit risk. The Group’s financial policy for financial risk management was formulated by the Board of Directors and provides a framework of guidelines and regu-lations in the form of risk mandates and limits for financial activities. Responsibility for the Group’s financial transactions and risks are managed by the Parent Company’s treasury de-partment. The overall goal of the finance function is to provide cost-effective financing and to minimise the negative impact of market fluctuations on consolidated earnings.

Liquidity riskThe liquidity risk (also called the financing risk) is defined as the risk that financing cannot be arranged, or only at a significantly higher cost. Bergvik Skog AB (publ) has a credit facility of SEK 10,069 M (10,036) arranged with four Nordic banks. The company has an additional short-term credit facility of SEK 100 M. The credit facility is subdivided into four loans with remaining terms of five years, four years, two years and one year respectively. At the end of 2016, negotiations were under way concerning two of the company’s bank loans equivalent to SEK 4,300 M. At year end, the company’s financial liabilities amounted to SEK 8,686 M (7,956) with a maturity structure as shown in the Maturity Structure table. The short term liquidity requirement is met through the utilisation of the existing credit line which at the end of the year was SEK 1,383 M (2,080).

CovenantsLoan covenants from credit institutions contain certain condi-tions that must be met during the term of the loan agreement. If these conditions are not met, the loans fall due for repay-ment. The conditions pertain to the debt/equity ratio in rela-tion to venture capital and the company’s value as well as the interest-coverage ratio measured as the interest expense on bank loans relative to EBIT. The current covenants were surpassed by a large margin.

Interest-rate riskManagement of the Group’s interest-rate exposure is centrali-sed, which means the central treasury function is responsible for identifying and managing this exposure. Derivative instruments, such as interest swaps and interest-rate hedges with interest-rate caps are used to manage interest-rate risk. Hedge accounting is applied when an actual relations-hip exists between hedged loans and interest swaps, see also Note 1 Accounting policies, Derivatives and hedge accounting. At 31 December 2016, the company had entered into interest-rate hedging agreements corresponding to SEK 4,000 M (4,000). As of 31 December 2016, the net fair value of the swaps amounted to SEK -475 M (-397) Mkr. For more information, please see the table under financial risk exposure. The net of interest swaps is paid quarterly and is expensed to consolidated earnings on an ongoing basis. SEK -124 M (-78) was recognised in financial expenses for the year. Market value changes of interest-rate derivatives after tax, SEK -61 M (+55), are reported in other comprehensive income, refer to Note 20. The company’s exposure to interest-rate risk is about SEK 4,000 M. A one percentage-point change in the interest rate would have an impact on the company’s earnings of SEK 40 M. Bergvik Skog’s current policy is to pay a floating interest rate on a portion of its bank loans. However, a cap must be in place for interest expense. A significant amount of Bergvik Skog’s interest expense arises from the banks’ interest-rate margins, which are paid in addition to the applicable STIBOR. The interest-rate margins, which Bergvik Skog pays under current loan agreements, are at market rates.


Group 2016 2015

SEK M 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019

Liabilities to credit institutions

Falls due 3 400 869 3 400 836

Interest -83 -61 -49 -39 -32 -137 -73 -66 -41 -30

Subordinated loans

Falls due

Interest -335 -335 -335 -335 -335 -335 -335 -335 -335 -335

Interest swaps -124 -128 -128 -128 -128 -78 -121 -121 -121 -121

Accounts payable 24 48

SEK M Group Parent Company

Pledged assets 2016-12-31 2015-12-31 2016-12-31 2015-12-31

In the form of pledged assets for own liabilities and provisions Participations in Group companies

22 103 21 262 2 125 2 125

Total pledged assets

22 103 21 262 2 125 2 125

SEK M Group Parent Company

Contingent liabilities 2016-12-31 2015-12-31 2016-12-31 2015-12-31

Guarantees 4 4 4 4

Total 4 4 4 4

Maturity structureInterest-bearing financial assets and liabilities. The following table shows the effective interest rate on the balance-sheet date and the maturity structure of the financial liabilities.

Credit risksCredit risks in accounts receivableThe risk that the Group’s customers will be unable to meet their obligations, meaning that payment is not received for accounts receivable, constitutes a customer credit risk. The creditworthiness of the Group’s customers is normally checked by obtaining information about the customers’ financial posi-tions from credit rating companies. The Group’s outstanding accounts receivable of SEK 111 M (61) are mainly due from Stora Enso and BillerudKorsnäs. The terms of payment are less than one month. The payment history and credit rating of the companies concerned are taken into account when assessing the need for any impairment. SEK 1,6 M (1,6) of accounts receivable outstanding had passed its due date; SEK 0,3 M by a period of less than one month, SEK 1,3 M by a period of less than one year.

The maximum exposure for credit risk is shown by the carrying amount for each financial asset in the balance sheet. The credit quality of receivables that have neither fallen due for payment nor been impaired is deemed to be high.

Translation exposureBergvik Skog has foreign net assets in EUR and they primarily comprise forests and forestland held by the Latvian companies Bergvik Skog Sia and Sia Ruda. Net assets expressed in SEK total SEK 1 033 M (976). Bergvik Skog has a loan of EUR 91 M (about SEK 836 M) as protection against translation exposure. An exchange-rate gain of SEK 6 M (loss: 2) was recognized in other comprehensive income in con-junction with the translation of net assets to SEK.

Note 29 Pledged assets, contingent liabilities and contingent assets


SEK M

Year

Sale of goods to related

parties

Purchase of services from

related parties

Liabilities to related parties

at 31 December

Receivables from related

parties at 31 DecemberNärståenderelation

Bergvik Skog Väst AB 2016 84 1 230 12 4812015 82 924 12 481

Bergvik Skog Öst AB 2016 17 398 2 6012015 17 376 2 601

Bergvik Skog Plantor AB 2016 1 - 852015 1 47 109

Lingbo Vindkraft AB 2016 342015 7

Svartnäs Vindkraft AB 2016 332015 33

Flottsjön Vindkraft AB 2016 42015 4

Skaftåsen Vindkraft AB 2016 82015 8

Ungskog 1 AB 2016 33 302015

Ungskog 2 AB 2016 55 502015

Ungskog 3 AB 2016 0 02015

Summary of related-party transactions Group

SEK M

Year

Sale of goods to

related parties

Purchase of services from

related parties

Liabilities to related parties

at 31 December

Receivables from related parties at

31 DecemberRelated party

Stora Enso Skog AB1) 2016 955 341 511 151

2015 891 328 523 81

Länsförsäkringar 2016 - 1 - -

2015 - 1 - -

BillerudKorsnäs AB1) 2016 219 68 128 14

2015 245 69 111 2

Summary of related-party transactions Parent Company

Transactions with related parties are valued under market terms. Members of the Board of Directors and senior executives received Board fees in accordance with Note 23. No other transactions with Board members have taken place.

Note 30 Related interestsRelated-party disclosuresStora Enso AB owns 49,0%, Länsförsäkringar owns 15,1 % and BillerudKorsnäs AB owns 5.0% of the shares in Bergvik Skog AB (publ). A related-party relationship exists between the Parent Company and its subsidiaries, see Note 31.

1) Sales pertain to net sales of felling rights after deductions for logging and logging-related planning costs.


Significant holdings in subsidiaries

Subsidiary’s registered office,

countryShareholding in %

Specification of Parent Company’s direct holdings of participations in subsidiaries

Parent CompanySEK M

Accumulated cost 31 Dec 2016 31 Dec 2015

At the start of the year 3 546 3 544

Acquisitions during the year

45 2

Write-ups/impairments for the year

0 0

Closing balance, 31 December 3 591 3 546

2016 2015Bergvik Skog Väst AB Sweden 100 100Bergvik Skog Öst AB Sweden 99,9 99,9Ungskog1 AB Sweden 100 100Ungskog 2 AB Sweden 100 100Ungskog 3 AB Sweden 100 0Bergvik Skog Plantor AB Sweden 100 100Flottsjön Vindkraft AB Sweden 100 100Lingbo Vindkraft AB Sweden 100 75Svartnäs Vindkraft AB Sweden 100 100Skaftåsen Vindkraft AB Sweden 100 100Ny Skog 17 AB Sweden 100 100Bergvik Skog Sia Latvia 100 100Sia Ruda Latvia 100 100

Subsidiary/Corporate Registration Number/Registered Office

Number of shares

Shareholding in % 1)

2016-12-31 Carrying amount,

SEK Mr

2015-12-31 Carrying amount,

SEK M

Bergvik Skog Väst AB, 556610-5358, Falun 1 000 000 100 1 763 1 763Bergvik Skog Öst AB, 556644-5473, Falun 2) 999 99,9 344 344Ungskog1 AB, 559014-1239, Falun 500 100 0 00000 0Ungskog2 AB, 559014-1106, Falun 500 100 0 0Ungskog3 AB, 559083-6242, Falun 500 100 0 0Bergvik Skog Plantor AB, 556627-8866, Falun 10 000 100 18 18Flottsjön Vindkraft AB, 556740-9254, Falun 1 000 100 0 0Lingbo Vindkraft AB, 556775-9021, Falun 1 000 100 24 3Svartnäs Vindkraft AB, 556775-9039, Falun 1 000 100 0 0Skaftåsen Vindkraft AB, 556897-9164 Falun 500 100 0 0Ny Skog 17 AB, 556819-8419, Falun 1 000 100 0 0Bergvik Skog Sia (f.d. Sia Fraxinus), 120301972, Riga Lettland

12 600 100 1 286 1 262

Sia Ruda, 40003383543, Riga Lettland 10 000 100 155 155Flera vilande bolag 100 1 1

3 591 3 546

Note 31 Group companies

1) The percentage pertains to both capital and votes2) BillerudKorsnäs AB owns one of 1,000 shares in Bergvik Skog Öst AB with an option to acquire the remainder under specific circumstances.


Divestment of subsidiaries and other business units – Group

Parent CompanySEK M 31 Dec 2016 31 Dec 2015

Accumulated accelerated depreciation:

Machinery and equipment

Opening balance, 1 January 40 33

Reversals/accelerated depreciation for the year 8 7

Closing balance, 31 December 48 40

Tax allocation reserve

Opening balance, 1 January 193 185

Change in tax allocation reserve for the year

3 8

Closing balance, 31 December 196 193

Total untaxed reserves 244 233

Cash and cash equivalents – GroupSEK M 31 Dec 2016 31 Dec 2015

The following components are included in cash and cash equivalents:

Cash and bank balances 14 15

Balance in Group account at Parent Company -11 123

Total as per balance sheet 3 138

Total as per cash-flow statement 3 138

SEK M 2016 2015

Divested assets and liabilities

Property, plant and equipment -12 -29

Biological assets -89 -344

Total assets -101 -373Non-current interest-bearing liabilities

Total provisions and liabilities 0 0Sales price: Consideration received 311 1 288Less: Cash and cash equivalents in the divested operations

Effect on cash and cash equivalents 311 1 288Cash and cash equivalents - Parent Company

SEK M 31 Dec 2016 31 Dec 2015

Cash and cash equivalents include the following components:

Cash and bank balances - -

Balance in Group account at Parent Company 0 124

Total as per balance sheet 0 124

Total as per cash-flow statement 0 124

Interest paid and dividends receivedGroup Parent Company

SEK M 2016 2015 2016 2015

Interest received 1 1 1 079 1900

Interest paid -564 -574 -564 -574

-563 -573 515 1 326

Adjustment for non-cash items Group Parent Company

SEK M 2016 2015 2016 2015Amortisation and depreciation 58 53 3 1Write-ups/impair-ment of financial assets 3 3 3 3

Change in value of biological assets -1 000 - 11 100

Capital loss on sale of property, plant and equipment -210 -915 0 -17Expensing of capitalised financial expenses 9 17 10 17Capital loss on sale of sharesChange in silvicul-tural liability -65 6Other -6 -16 1

-1 211 -11 952 16 5

InvestmentsGroup Parent Company

SEK M 2016 2015 2016 2015Investments made to maintain capacity levels -24 -17Investments assessed as having raised operational capacity -240 -228 -9 -6

Total investments -264 -245 -9 -6

Unutilised bank overdraft facilitiesGroup Parent Company

SEK M 2016 2015 2016 2015Unutilised credit facilities amount to 89 100 89 100

Note 32 Untaxed reserves

Note 33 Cash-flow statement


Note 34 Events after the balance-sheet date In February 2017, an agreement on the extension of bank loans corresponding to SEK 5,800 M was signed between Bergvik Skog AB and a bank group comprising SHB, SEB and Nordea. The time to maturity is now 4 and 5 years, respectively. In February 2017, an agreement was entered into between Bergvik Skog AB and a consortium of banks comprised of SHB, SEB and SEK on the refinancing of bank loans corresponding to SEK 4,300 M with two new loans. The times to maturity are 5 and 8 years, respectively, with an option to extend.

Note 35 Important estimates and assessmentsThe corporate management has discussed the development, selection and disclosures pertaining to the Group‘s important accounting policies and estimates, and the application of these policies and estimates.

Important assessments and uncertainties in the application of the Group‘s accounting policiesSome important reporting estimates and uncertainties associated with these are described below.

Valuation of standing forestAs stated in Note 27, the standing forest is valued based on an estimate of future cash flows from forestry for a period of 90 – 100 years, and on the discounting of these cash flows to a present value. The fundamental parameters of this measurement are the long-term felling plan, price expectations for pulpwood and timber, cost trends for felling and silviculture, as well as the discounting factor (WACC), which is used to calculate the present value. The long-term harvest estimate is based on forest inven-tories. The most recent inventory was taken in 2015 and the year’s valuation is based on the results of the inventory. In the market valuation of standing forest, the long-term price expectation is based on the real price trend for pulpwood and timber forecast by consultancy firm Pöyry in 2016. The timber prices received by Bergvik Skog are less than Pöyry’s forecast, but are expected to reach Pöyry’s assessed level over a three-year period. If the long-term price level is assumed to increase/decrease by 1%, the value of the standing forest is affected in the amount of approximately SEK 800 M. The cost assumptions are based on currently prevailing costs. The most burdening operational cost is the felling cost. If we assume a long-term increase/decrease of 1%, the value is affected in the amount of approximately SEK 250 M. Inflation in both costs and revenues is estimated at 2%. The discount rate used in the calculation is of great significance. This year’s valuation placed particular emphasis on the analysis of which discount rate ought to be used. Consultancy firm Pöyry was engaged to perform the analysis. The company has applied a discount rate of 4.90% (5.20%) to forests in Sweden and a discount rate of 6.00% (6.25%) to forests in Latvia in this year’s valuation. A change in the discount rate of 0.25 percentage points affects the value of the standing forest in the amount of approximate-ly SEK 3,000 M before deductions for latent tax. A WACC of 4.90% is based on the assumption of financing using 50% borrowed capital and 50% equity. The cost of borrowed capital is estimated at 3.0% and the owners’ required rate of return is estimated at 7.5%. Inflation is assumed to be 2%.

Valuation of silvicultural liabilitiesAt the end of each year, estimates are made of the areas that must be replanted in accordance with the prevailing Swedish Forestry Act. The costs for future measures, including ground preparation, replanting, sowing and re-growth control are calculated and pro-visions made. The costs for replanting during the year are booked against earlier provisions made. Valuations apply experience-based costs for the various measures on a per hectare basis in line with the average ground conditions for the company. The costs included were for soil scarification, sowing and planting.

Note 36 Information about the Parent CompanyBergvik Skog AB (publ), Corp. Reg. No. 556610-2959, is a Swedish-registered limited-liability company domiciled in Falun, Sweden. The address of the company’s head office is Trotzgatan 25, SE-791 71 Falun, Sweden. The consolidated financial statements for 2016 comprised the Parent Company and its subsidiaries as defined in Note 31.


The Annual Report and consolidated financial statements were approved for issue by the Board of Directors and the CEO on 7 March 2017. The consolidated statement of comprehensive income and statement of financial position and the Parent Company’s income statement and balance sheet will be subject to adoption by the Annual General Meeting of Shareholders on 3 May 2017.

Stockholm 7 March 2017

Our Auditors’ Report was submitted on 7 March 2017Öhrlings PricewaterhouseCoopers AB

Martin JohanssonAuthorised Public Accountant

Gunnar Balsvik

Per Lindberg

Elisabet Salander BjörklundCEO

Maria Norrfalk

Johan Lindman

Lars-Eric Åström Chairman

Beatrice Kämpe-Nikolausson

Bob Persson

Per Lyrvall

Björn Hägglund

Tommy SkeiEmployee representative

Johan Trolle-Löwen


Auditors’ reportTo the Annual General Meeting of Bergvik Skog AB (publ)Corporate registration number 556610-2959

Report on annual accounts and the consolidated financial statementsWe have audited of the annual accounts and the consolidated financial statements for Bergvik Skog AB (publ) for the year 2016. 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 at 31 December 2016 and its financial performance and cash flow 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 at 31 December 2016 and its financial performance and cash flow for the year then ended in accordance with Inter-national Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The Directors’ Report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the Annual General Meeting adopts the income statement and balance sheet for the Parent Company and the Group.

Basis for opinions We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditors’ responsibilities section. We are independent of the Parent Company and the Group in ac-cordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is suffi-cient and appropriate to provide a basis for our opinions.

Responsibilities of the Board of Directors and the Chief Executive Officer The Board of Directors and the Chief Executive Officer are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Chief Executive Officer are also responsible for such internal control as they 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. In preparing the annual accounts and consolidated accounts, the Board of Directors and the Chief Executive Officer are responsible for the assessment of the Company’s and the Group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is, however, not applied if the Board of Directors and the Chief Executive Officer intend to liquidate the Com-pany, to cease operations or have no realistic alternative but to do so.

Auditors’ responsibilityOur objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to

fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstate-ments can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts. An additional description of our responsibility for the auditing of the annual accounts and the consolidated accounts can be found on the website of Sweden’s Supervisory Board of Public Accountants. This description is part of the auditors’ report

Report on other legal and regulatory requirementOpinionsIn addition to our audit of the annual accounts and consoli-dated accounts, we have also audited the administration of the Board of Directors and the Chief Executive Officer of Bergvik Skog AB (publ) for the year 2016 and the proposed appropria-tions of the Company’s profit or loss. We recommend to the Annual General Meeting that the profit be appropriated in accordance with the proposal in the Directors’ Report and that the members of the Board of Directors and the Chief Executive Officer be discharged from liability for the financial year.

Basis for opinionsWe conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditors’ responsibilities section. We are independent of the Parent Company and the Group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibili-ties in accordance with these requirements. We believe that the audit evidence we have obtained is suffi-cient and appropriate to provide a basis for our opinions. Responsibilities of the Board of Directors and the Chief Executive Officer The Board of Directors is responsible for the proposal for ap-propriations of the Company’s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the Compa-ny’s and the Group’s type of operations, size and risks place on the size of the Parent Company’s and the Group’s equity, consolidation requirements, liquidity and position in general The Board of Directors is responsible for the Company’s organization and the administration of the Company’s affairs. This includes, among other things, continuous assessment of the Company’s and the Group’s financial situation and ensur-ing that the Company’s organization is designed so that the accounting, management of assets and the Company’s financial affairs otherwise are controlled in a reassuring manner. The Chief Executive Officer shall manage the ongoing adminis-tration according to the Board of Directors’ guidelines and instructions and, among other matters, take measures that are necessary to fulfil the Company’s accounting in accordance with law and handle the management of assets in a reassuring manner.


Auditors’ responsibilityOur objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Chief Executive Officer in any material respect: • has undertaken any action or been guilty of any omission

which can give rise to liability to the Company.• in any other way has acted in contravention of the Companies

Act, the Annual Accounts Act or the Articles of Association.Our objective concerning the audit of the proposed appropria-tions of the Company’s profit or loss, and thereby our opinion about this, is to assess with a reasonable degree of assurance whether the proposal is in accordance with the Companies Act. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the Com-pany, or that the proposed appropriations of the Company’s profit or loss are not in accordance with the Companies Act.

An additional description of our responsibility for the auditing of the administration can be found on the website of Sweden’s Supervisory Board of Public Accountants: www.revisorsinspektionen.se/rn/showdocument/documents/rev_dok/revisors_ansvar.pdf. This description is part of the auditors’ report.

Stockholm den 7 mars 2017PricewaterhouseCoopers AB

Martin JohanssonAuktoriserad revisor

Bergvik Skog Lettland

Sia Bergvik Skog

Kronvalda Boulevard 10-31

Riga LV-1010

Latvia

www.bergvikskog.lv

Nurseries

Nässja

Berreksvägen 45

SE-810 20 Österfärnebo

Sweden

Tel +46(0)291-445 51

Fax +46(0)291-510 31

Sjögränd

Sjögränd 10

SE-683 40 Uddeholm

Sweden

Tel +46(0)563-233 29

Fax +46(0)563-233 24

Sör Amsberg

SE-784 68 Borlänge

Sweden

Tel +46(0)243-23 70 91

Fax +46(0)243-23 70 94

Bergvik Skog AB

Trotzgatan 25

SE-791 71 Falun

Sweden

Tel +46(0)23-583 00

Fax +46(0)23-583 01

Bergvik Skog Väst AB

Trotzgatan 25

SE-791 71 Falun

Sweden

Tel +46(0)23-583 00

Fax +46(0)23-583 01

Bergvik Skog Öst AB

Trotzgatan 25

SE-791 71 Falun

Sweden

Tel +46(0)23-583 00

Fax +46(0)23-583 01

Bergvik Skog Plantor AB

Trotzgatan 25

SE-791 71 Falun

Sweden

Tel +46(0)23-583 00

Fax +46(0)23-583 01

www.bergvikskog.se

Plantskolor

Nässja

Berreksvägen 45

810 20 Österfärnebo

Tel 0291-445 51

Fax 0291-510 31

Sjögränd

Sjögränd 10

683 40 Uddeholm

Tel 0563-233 29

Fax 0563-233 24

Sör Amsberg

784 68 Borlänge

Tel 0243-23 70 91

Fax 0243-23 70 94

Bergvik Skog AB

Trotzgatan 25

791 71 Falun

Tel 023-583 00

Fax 023-583 01

Bergvik Skog Väst AB

Trotzgatan 25

791 71 Falun

Tel 023-583 00

Fax 023-583 01

Bergvik Skog Öst AB

Trotzgatan 25

791 71 Falun

Tel 023-583 00

Fax 023-583 01

Bergvik Skog Plantor AB

Trotzgatan 25

791 71 Falun

Tel 023-583 00

Fax 023-583 01

www.bergvikskog.se

Bergvik Skog Lettland

Sia Bergvik Skog

Kronvalda Bolevard 10-3

Riga LV-1010

Lettland

www.bergvikskog.lv

Gävle

Stockholm

Stockholm

Falun

Västerås

Karlstad

Bergvik Skog ABs markinnehav

• Plantskolor

Sör Amsberg

Sjögränd

Nässja

Riga

Bergvik Skog AB’s landholdings

• Nurseries

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