Annual Report 2012 Investor in brief Vision To be recognized as a premier investor, supporting the development of our portfolio companies to become best-in-class. CONTENTS Portfolio overview .................................................................2 Business concept Letter from the Chairman ..................................................... 4 Investor owns significant minority and majority interests President’s comments ........................................................... 6 in high quality companies. Through our participation on Value creation ...................................................................... 8 Active ownership .................................................................. 9 the Boards of Directors, we work for continuous Business areas ..................................................................... 10 improvement of the performance of the companies. Core Investments................................................................. 12 With our industrial experience, broad network and Financial Investments ........................................................... 19 financial strength we strive to make our companies best- Financial development .........................................................22 in-class. Our cash flow allows us to support strategic Sustainable business ............................................................25 initiatives in our companies, capture investment The Investor share .............................................................. 26 Employees, network and brand .......................................... 28 opportunities and provide our shareholders with a Corporate Governance Report ............................................ 29 dividend. Board of Directors .............................................................. 40 Management Group ........................................................... 42 Objective Proposed Disposition of Earnings ....................................... 43 List of contents of Financials ............................................... 44 Our objective is to build the net asset value, operate Consolidated Income Statement ......................................... 45 efficiently and pay out a steadily rising dividend. Over Consolidated Statement of Comprehensive Income ........... 46 time, this should allow us to generate an attractive total Consolidated Balance Sheet ............................................... 47 return to our shareholders. Consolidated Statement of Changes in Equity .................... 49 Our long-term return requirement for investments Consolidated Statement of Cash Flows .............................. 50 (with normal financial gearing) is the risk-free interest rate Parent Company Income Statement ................................... 51 Parent Company Statement of Comprehensive Income ...... 51 plus an equity risk premium, i.e. 8-9 percent annually. Parent Company Balance Sheet .......................................... 52 Parent Company Statement of Changes in Equity ............... 54 Goal fulfillment Parent Company Statement of Cash Flows ......................... 55 We believe a comparison with our return target is only Notes to the Financial Statements ...................................... 56 appropriate over longer time periods. Auditor’s Report ................................................................103 Definitions .........................................................................104 Benchmarking our performance is important and we Ten-Year Summary ............................................................105 consider the Swedish stock market, as reflected by the History ...............................................................................106 total return index SIXRX, as the most relevant Shareholder information ....................................................108 benchmark considering the overall risk profile of our portfolio. As a comparison, we also provide the total return of the European market. Goal fulfillment The Annual Report for Investor AB (publ.) 556013-8298 NAV incl. STOXX consists of the Administration Report on page 10-11, 22-43 Return dividend Investor SIXRX Europe 600 requirement, added total return gross return and the financial statements on page 44-102. Years % back %1) return, %1) index, %1) index, %1) 1 8-9 15.1 38.2 16.5 19.0 5 8-9 4.7 6.7 3.5 –1.5 The Annual Report is published in Swedish and English. 10 8-9 14.0 16.6 12.6 6.9 The Swedish version is the original and has been audited 20 8-9 14.4 13.6 12.8 n.a. by Investor’s auditors. 1) Average annual return. INVESTOR 2012 Building net asset value Paying a steadily rising dividend The net asset value amounted to SEK 174.7 bn. at the Cash flow during 2012 was strong. We received SEK end of the year (156.1), an increase, with dividend added 4.8 bn. in dividends from our listed core investments. back, of 15 percent during 2012 (–6). Over the past 10 EQT generated SEK 2.2 bn. in net cash flow, while and 20 years respectively, our net asset value, including Investor Growth Capital distributed SEK 0.6 bn. We also dividend added back, has grown by 14 percent annually. received our first ever distribution, SEK 80 m. from 3 Scandinavia. SEK bn. The Board of Directors has proposed a SEK 7.00 250 dividend per share, up from SEK 6.00 in 2011. Over the past ten years, the average annual dividend increase 200 amounts to 12 percent. 150 SEK/share % 100 7 7 6 6 50 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 5 5 Net asset value, including Net asset value 4 4 dividends added back 3 3 Operating efficiently 2 2 During 2012, our management costs amounted to SEK 1 1 0 0 377 m. We expect a SEK 90-95 m. quarterly run-rate 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1) 1) Proposed dividend going forward, subject only to general inflationary Ordinary dividend, SEK/share adjustments. Yield, %, based on share price at year end 2012 in figures SEK 18.6 bn. SEK 90-95 m. SEK 7.00 Positive net asset value impact Quaterly run-rate of management Dividend per share proposed ahead cost expected going forward of the 2013 Annual General Meeting 17 percent SEK 4.8 bn. SEK 6.1 bn. Net asset value growth, with Dividends received from listed Invested in Core Investments dividend added back (with Gambro core investments valued at agreed divestment price) 14 percent 38 percent 33 percent Annual total shareholder return Total shareholder return on the Share of foreign ownership during the past 20 years Investor share in Investor INVESTOR 2012 INVESTOR IN BRIEF 1 Portfolio overview We are an industrial holding company, with investments classified either as core investments (82 www.atlascopco.com Share of total assets: 18 % percent of assets) or financial investments (18 A global leader in compressors, Key figures construction and mining equipment, power Net Sales, SEK m. 90,533 percent of assets). In our core investments, we are tools and assembly systems. The group Value of holding, SEK m. 36,645 a significant owner with a long-term investment operates in more than 170 countries. Share of capital/votes, % 16.8/22.3 perspective. Financial Investments includes our investments in EQT and Investor Growth Capital as www.seb.se Share of total assets: 13 % well as partner-owned investments. Through A leading Nordic financial services group. Key figures substantial ownership and Board representation, SEB is present in some 20 countries, with Total operating income, SEK m. 38,823 main focus on the Nordic countries, Value of holding, SEK m. 25,194 we take an active part in the development of all Germany and the Baltics. Share of capital/votes, % 20.8/20.9 holdings. Our business teams develop value creation plans and benchmark our investments to support them to maintain or achieve best-in-class www.abb.com Share of total assets: 12 % positions in their respective industries. Our portfolio A global leader in power and automation Key figures companies are active within Industrials, Financial technologies that enable utility and industry Net Sales, USD m. 39,336 customers to improve performance while Value of holding, SEK m. 24,371 Services, Healthcare and Technology, industries in lowering environmental impact. Share of capital/votes, % 7.9/7.9 which we have long experience and deep knowledge. Our total assets amounted to SEK www.molnlycke.com Share of total assets: 8 % 197.5 bn. and our net asset value to SEK 174.7 bn. at year-end 2012. A world-leading manufacturer of single-use Key figures surgical and wound care products and Net Sales, EUR m. 1,119 services for the professional health care Value of holding, SEK m. 16,058 sector. Share of capital/votes, % 98/96 Impact on net asset value, SEK m., 2012 SEB www.astrazeneca.com Share of total assets: 8 % Atlas Copco Electrolux A global, innovation-driven, integrated Key figures Sobi biopharmaceutical company. Net Sales, USD m. 27,973 ABB Value of holding, SEK m. 15,807 Share of capital/votes, % 4.1/4.1 Husqvarna AstraZeneca Wärtsilä Investor Growth Capital www.ericsson.com Share of total assets: 6 % Lindorff The world’s leading provider of Mölnlycke Health Care Key figures communications technology and services. Net Sales, SEK m. 227,779 3 Scandinavia Ericsson operates in 180 countries and Value of holding, SEK m. 11,120 EQT employs more than 100,000 people. Share of capital/votes, % 5.3/21.4 Saab NASDAQ OMX Grand Hôtel/Vectura www.electrolux.com Share of total assets: 4 % Gambro Aleris A global leader in household appliances and Key figures Ericsson appliances for