SÃ¶dra annual report 2012

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Contents 1 Directors’ Report 5 Consolidated statement of comprehensive income 6 Consolidated statement of financial position 8 Consolidated statement of changes in equity 9 Consolidated statement of cash flows 10 Parent Company income statement 11 Parent Company balance sheet 13 Parent Company statement of changes in equity 14 Parent Company statement of cash flows Notes 15 Note 1 Accounting policies 22 Note 2 Segment reporting 23 Note 3 Net revenue 23 Note 4 Other revenue 23 Note 5 Operational leasing 24 Note 6 Employee expenses 25 Note 7 Other expenses 25 Note 8 Depreciation, amortisation and impairment of assets 25 Note 9 Payment to auditors 26 Note 10 Shares in associates 27 Note 11 Income from financial items 27 Note 12 Appropriations 27 Note 13 Taxes 28 Note 14 Other comprehensive income 29 Note 15 Business combinations 30 Note 16 Intangible assets 31 Note 17 Buildings and land 32 Note 18 Machinery and equipment 33 Note 19 Construction in progress 33 Note 20 Biological assets 33 Note 21 Financial investments 34 Note 22 Financial risk management 38 Note 23 Other non-current investments 38 Note 24 Non-current financial receivables 38 Note 25 Non-current operating receivables 38 Note 26 Deferred tax assets/liabilities 39 Note 27 Inventories 39 Note 28 Receivables from Group companies 39 Note 29 Current operating receivables 40 Note 30 Cash and cash equivalents 40 Note 31 Equity 40 Note 32 Untaxed reserves 41 Note 33 Interest-bearing liabilities with Group companies 41 Note 34 Interest-bearing liabilities 42 Note 35 Pensions 44 Note 36 Provisions 44 Note 37 Non-current operating liabilities 44 Note 38 Current operating liabilities 45 Note 39 Group companies 46 Note 40 Pledged assets 46 Note 41 Contingent liabilities 47 Note 42 Statement of cash flows 47 Note 43 Critical accounting estimates and judgements 47 Note 44 Investment commitments 48 Note 45 Financial instruments 50 Note 46 Events after the reporting period 50 Note 47 Related parties 50 Note 48 Parent Company information 51 Proposed appropriation of profits 52 Audit report This is a translation of the annual report. This translation does not replace the original annual report. In the event of any lack of clarity or disparity between this translation and the annual report, the annual report will always take precedence.
Directors’ Report The Board of Directors and President of Södra Skogsägarna Economic Association (corporate identity number 729500-3789) hereby submit the Annual Report and Consolidated Financial Statements for the 2012 financial year. The Group’s and Parent Company’s development, profit and financial position are presented in the following consolidated statement of comprehensive income and consolidated statement of financial position and in the Parent Company’s income statement and balance sheet and notes and comments. Purpose of the organisation The purpose of Södra Skogsägarna Economic Association is to promote the economic interests of its members through trading in and processing forest products; securing a market for its members’ forest products at market prices; promoting high-value, advanced forest production while respecting cultural and natural values; supporting and developing individual forestry; monitoring and promoting the economic policy interests of members; and conducting operations otherwise compatible with the above. The Group has four business areas: Södra Skog, Södra Cell, Södra Timber and Södra Interiör, which purchase and process the members’ forest raw materials into pulp, timber products and interior wood products. Market The global economy was characterised by predominantly negative signals. The year commenced on a steep incline after the crisis in Europe had deteriorated in the latter part of 2011. During the spring and summer, weak development and falling indexes were forecast from several economic indicators. The trends in the financial markets were negative with declining stock exchanges and rising interest rates for the countries in crisis in Europe. However, several indicators gave the impression that the US would not be encumbered by the European recession. In the autumn, the slowdown continued in large parts of the global economy. The activity in the emerging markets of Asia was dampened, but stabilised at the end of the year. The economic indicators pointed downwards for large parts of Europe and many countries were more distinctly affected by the crisis in Southern Europe. However, the financial crisis in the euro zone eased once the European Central Bank (ECB) introduced support programmes and stimulus packages. At the end of the year, there were positive indications of increased home building and decreased indebtedness in the US, which contributed to somewhat more positive confidence in the future. The Swedish economy was relatively strong at the beginning of the year as a result of low national debt, stable government finances and somewhat higher interest rates than the surrounding world. However, the trend worsened at the end of the year owing to lower orders received, resulting in lower production and a deteriorating employment index. At year-end, the exchange rate against the USD was SEK 6.49 (6.89). Against the EUR, the SEK strengthened slightly from SEK 8.91 at the beginning of the year to SEK 8.56 at year-end. In 2012, total demand in the world for bleached chemical market pulp rose by 3 per cent. However, the strength of the demand varied in the geographic sub-markets. Asia, and primarily China, accounted for the entire growth in demand. The total deliveries to Asia increased by 8 per cent. In Europe, development was weak as the result of both structural and cyclical factors, and demand for bleached chemical pulp was largely unchanged compared with the preceding year. North America exhibited a decline of 1 per cent. The market for pulp in China grew rapidly and is now almost as large as the market in Western Europe. The Chinese investments in paper capacity are continuing, and with a limited domestic supply of wood raw materials, the need for imported market pulp is strongly increasing. The expansion of capacity for printing paper has slowed somewhat, but the growth of tissue and packaging material is continuing. The market for textile pulp also showed strong growth in volume during the year although the balance between supply and demand weakened when the supply of speciality pulp grew at an even faster rate. In Europe, the structural decline in consumption of printing paper continued, which together with the weak economy meant lower supply volumes. The economic development also dampened the demand for packaging paper and board. The only segment that displayed an increase in production was tissue. The structural changes have forced the Finnish forest industry, which has a high level of production of printing paper, to shutdown paper machines. This resulted in previously integrated pulp becoming market pulp, which substantially increased the competition for customers in Europe. Capacity growth in the global pulp industry was low during the year, but is assessed to increase somewhat in 2013, especially for hardwood pulp. At the beginning of 2012, the price of northern softwood sulphate was USD 825 per tonne to increase to USD 850 in March–April. The price then dropped to USD 760 in September to again increase and was USD 810 per tonne at year-end. The price difference between softwood and hardwood sulphate narrowed during the year from USD 185 per tonne at the beginning of the year to USD 35 at year-end. At the beginning of the year, the price for one tonne of birch sulphate was USD 640 and USD 775 at the end of the year. The price of textile pulp dropped from USD 1,120 per tonne at the beginning of the year to USD 850 at year-end. The market for sawn timber products began positively with small price increases during the spring, but it weakened in the summer. The strengthening of the SEK against all key trading currencies worsened the situation. The autumn was characterised by gradually declining demand, lower sales prices and only marginally decreased production. New construction continued to decrease throughout Europe while activity in the renovation sector was relatively favourable. The general economic decline and the financial unrest contributed to increased uncertainty. The Swedish sawmill industry was under pressure during the year by the strengthening of the SEK. The situation for Finnish, Austrian and German sawmills was unsatisfactory due to high raw material prices. The sawmills in Canada managed better due to substantial exports to China and the positive trend break in the US, where consumption and home sales are again on the rise, although from a low level. The price of saw logs in Södra’s area remained high, despite the low prices of sawn timber products. The profitability of the sawmills was generally unsatisfactory and the structural change is continuing among sawmill companies, mainly in southern Sweden. A weakened building market, somewhat lower rate of renovation and higher price pressure from low-price imports entailed a weak market for interior wood products in Sweden in terms of demand. The Danish market for interior wood products, which has been weak for several years, remained at a low level with no signs of improvement. Meanwhile, the Norwegian market continued to develop positively with a high level of activity in the renovation sector and an increase in new construction. The wood market was characterised in the first half of the year by high demand for saw logs, but somewhat lower demand for soft pulpwood. At the same time, the supply of mainly soft pulpwood was very strong. The storm Dagmar contributed to a large supply in central Sweden and Norrland. Changed production, primarily at Södra Cell Mönsterås and Södra Cell Mörrum, entailed a shift in demand from soft pulpwood to hard pulpwood. Inventory levels were high during the summer. In the second half of the year, demand for pulpwood increased. After a weak beginning of the autumn, pulp production was at a favourable level. Demand for saw logs was high, but the weak profitability in the sawmill Södra 2012 1
Page 1: Södra 2012 Annual Report
Page 5 and 6: - At the closed Hjortsberga sawmill
Page 7 and 8: Consolidated statement of comprehen
Page 9 and 10: 31 December, SEK million Note 2012
Page 11 and 12: Consolidated statement of cash flow
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Proposed appropriation of profits T
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Solberg This is Södra Södra is ba
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SÃ¶dra annual report 2012

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