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Annual Report 2017

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Annual Report 2017 Annual report 2017 2017 was a strong year for Investor. Our adjusted net asset value grew by 16 percent and our total shareholder return amounted to 13 percent, which exceeded our return requirement and the general market. Our focus on generating a competitive total return remains firm. Highlights 2017 • Total Shareholder Return (TSR) amounted to 13 percent. During the past 20 years, average annual TSR has been 11 percent. • Our adjusted net asset value grew by 16 percent. • Within Listed Core Investments, we invested in Ericsson. Atlas Copco proceeded with the proposed split of the company and several com- CONTENTS panies made strategic acquistions. A number of Investor in brief ............................................................ 1 new board members were nominated or elected, Letter from the Chairman ............................................ 2 Letter from the CEO ..................................................... 3 including the chairs in Ericsson and Electrolux. Financial development ................................................. 4 • Within Patricia Industries several companies Objective and operating priorities ............................. 7 made add-on acquisitions. Patricia Industries Value creation by active ownership ............................ 8 received SEK 6.0 bn. in distributions, mainly Sustainable business................................................... 10 from Mölnlycke. Listed Core Investments ..............................................14 Patricia Industries ....................................................... 18 • In constant currency, our investments in EQT EQT ............................................................................... 23 increased by 21 percent. Net cash flow to The Investor share ...................................................... 24 Investor amounted to SEK 1 bn. Investor’s employees .................................................. 26 Corporate Governance Report .................................. 27 • As supplementary information, we started to Board of Directors ...................................................... 34 provide estimated market values for the major Management Group................................................... 36 wholly-owned subsidiaries and partner-owned Proposed Disposition of Earnings ............................. 38 investments within Patricia Industries. List of contents of Financials ..................................... 39 Statements for the Group .......................................... 40 • The board proposes a dividend per share of Notes for the Group ................................................... 44 SEK 12.00 (11.00), to be paid in two installments, Statements for the Parent Company ........................ 80 SEK 8.00 per share in May, 2018, and SEK 4.00 Notes for the Parent Company ................................. 84 per share in November, 2018. Auditor’s Report ......................................................... 91 Five-Year Summary ..................................................... 94 Definitions ................................................................... 95 Our history .................................................................. 96 The Annual Report for Investor AB (publ.) 556013-8298 Shareholder information ........................................... 97 consists of the Administration Report on pages 4-6, 10-13, 24-38 and the financial statements on pages 39-90. The Annual Report is published in Swedish and English. Production: Investor and Addira. Photos: Jeanette Hägglund, Johan Lind Sustainability information can be found on pages 8-13, 19-22, and photos from Investor’s portfolio companies. 26, 28 and 48, bearing a green mark. Definitions of applied Print: Åtta.45 Tryckeri AB, Sweden, 2018. Paper: Profimatt, 250 g/115 g. sustainability KPIs can be found on Investor’s website. NORDIC ECOLABEL 3041 0001 Investor in brief Investor, founded by the Wallenberg family in 1916, is an engaged owner of high-quality, international companies. We have a long-term investment perspective and through board participation, as well as industrial experience, our network and financial strength, we strive to make our companies best-in-class. Vision Objective and operating priorities As a long-term owner, we actively support the building and We are committed to generating an attractive long-term total development of best-in-class companies. return, exceeding the market cost of capital. Our long-term return requirement is the risk free interest rate plus an equity Business concept risk premium, in total 8-9 percent annually. Investor owns significant stakes in leading, high-quality, global Our operating priorities are to grow our net asset value, companies. Through board participation, we work for continu- operate efficiently and pay a steadily rising dividend. ous improvement of the performance of our companies. With our industrial experience, broad network and financial strength, we strive to make and keep our companies best-in-class. Total adjusted assets, SEK bn.1) Adjusted net asset value, SEK bn.1) We always look at the opportunities and challenges facing each individual company. Our cash flow allows us to support stra- tegic initiatives in our companies, capture investment opportuni- 397 385 ties and provide our share holders with a steadily rising dividend. 1) Adjusted value based on estimated market values for the major wholly-owned subsidiaries and partner-owned investments within Patricia Industries. For a detailed description of the valuation overview, see page 5. Our business areas Fully invested funds 60% LISTED CORE INVESTMENTS 284 72% 97 24% 16 4% SEK bn. of total SEK bn. of total SEK bn. of total adjusted assets adjusted assets adjusted assets Grand Group 1% Ventures 1% Real Estate funds 1% Husqvarna 3% Vectura 3% BraunAbility 3% Credit funds 3% New funds 1% Ericsson 4% EQT AB 1% Sobi 4% Atlas Copco Aleris 4% Midmarket 6% Nasdaq 4% 26% Laborie 5% Electrolux 4% Financial Infrastructure Fully Investments 7% Mölnlycke funds 11% Saab 5% 60% invested funds W 3 Scandinavia 60% 8% Equity funds 15% ABB 18% AstraZeneca Permobil 9% 10% SEB 15% Ventures 1% Real Estate 1% Credit 3% Nya fonder 1% BOAT 4% EQT AB 1% Vectura 3% Grand Group 1% Midmarket 6% INVESTORTurquoise 2017 7% BraunAbility 3% 1 Aleris 4% Infrastructure Fullt Nasdaq 11% Bats BXE 9% Laborie 5% investerade Stockholm fonder 41% Finansiella Investeringar 7% Mölnlycke 60% 60% Bats OTC Equity 15% 10% 3 Scandinavia 8% LSE 10% Bats CXE 13% Permobil 9% Letter from the Chairman Dear fellow Shareholders, Stability and consistency are hallmarks of Investor AB. In 2017, our total shareholder return of 13 percent beat the Swedish market. More importantly, we have continued to outperform the market over 20 years. While this makes us proud, we are strongly committed to ensuring that the Investor share remains an attractive investment. Disruption – a positive challenge and innovation. Our ultimate goal remains The rebound of the global economy has for each of them to become or stay best- brought new optimism and higher in-class. ing field on all markets whether it is the demand in many of our companies. While Companies and their headquarters are U.S., China or even the EU, be it techno- this is encouraging, one must never for- sometimes taken for granted. However, logical standards or hidden rules which get that it is in good times that we need for Swedish companies to continue to impact trade and investments. to build strength and stamina to handle develop, and to recruit the best talent, longer-term challenges. we need to work to make Sweden more Long-term commitment and focus This is why we support several initia- attractive, with better education, infra- I am very pleased that Investor continued tives to remain at the forefront of eco- structure and a positive spirit toward to generate a strong cash flow during nomic and societal change. We need to entrepreneurship. 2017. Supported by a strong balance be prepared for disruptive technologies sheet, the Board proposes a dividend of that offer opportunities and challenges Free trade under threat SEK 12, the eighth consecutive increase to our portfolio companies. Together with Innovation and competitiveness remain of SEK 1 per share. companies in and outside our network, at the core of the Swedish export success, On behalf of the board, I would like we have supported the creation of and this is why I am deeply concerned to thank our CEO Johan Forssell for his Combient, a company that, among other about some threats to our companies’ consistent professional leadership and things, analyzes the effects of digitaliza- ability to trade freely. relentless focus on operational excellence. tion on business models, all in order to be The threat to global free trade, the I would also like to thank his management at the front of the development curve. single-most important condition for the team and everyone at Investor and Patricia In addition, we are engaged in a study free flow of goods and services, remains Industries for their hard work and commit- on the long-term effects of new technol- my key concern. Every year I have ment. ogies on jobs, as well as the consequent repeated this message. This time I am Finally, I would particularly like to thank need for skills development. In my view, more concerned than ever. Gradually, the you, dear fellow shareholders, for your this is of great importance as our compa- vision of a global multilateral order of continuous support. With a clearly defined nies
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