Luxonen S.A.
Consolidated Annual Report
1 January - 31 December 2009 ______________________________
The Net Asset Value was SEK 101.01 per share as at 31 December 2009
26, rue Philippe II L-2340 Luxembourg
Reg. N°: R.C.S. Luxembourg B 30.541
Luxonen S.A.
Index to the Consolidated Annual Report
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Consolidated Annual Financial Statements
Page
Management report 3
Director’s declaration 17
Corporate Governance report 18
Independent auditor’s report 22
Consolidated balance sheet 24
Consolidated income statement 25
Consolidated statement of comprehensive income 26 Consolidated statement of changes in shareholders’ equity 26
Consolidated cash flow statement 27
Notes to the consolidated annual financial statements:
1. General information 28
2. Summary of significant accounting policies: 28
2.1 Basis of preparation 28
2.2 Consolidation 32
2.3 Segment reporting 35
2.4 Foreign currency translation 35
2.5 Financial assets at fair value through profit or loss 37
2.6 Derivative financial instruments 38
2.7 Cash and cash equivalents 38
2.8 Share capital 38
2.9 Income tax and deferred tax 39
2.10 Employee benefits 40
2.11 Revenue recognition 40
3. Financial risk management 40
3.1 Financial risk factors 40
3.2 Capital risk management 43
3.3 Fair value estimation 44
4. Critical accounting estimates and judgments 45 4.1 Fair value of derivative financial instruments 45 5. Financial assets at fair value through profit or loss 46
6. Investments in associates 47
7. Description of the investments 48
8. Derivative financial instruments 49
8.1 Total return swaps 49
8.2 Foreign exchange contracts 50
8.3 Valuation 51
8.4 Amount received and paid 51
9. Dividends income 52
10. Share capital and Legal Reserve 52
11. Related party transactions 54
12. Administrative expenses 56
13. Taxation 57
14. Earnings per share 59
15. Dividend per share 59
Facts about Luxonen S.A. 60
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The net asset value per share in SEK increased by 15.9% during 2009.
The net asset value per share increased from SEK 87.12 to SEK 101.01.
The profit for 2009 was 130.2 “Million SEK” (MSEK).
The profit per share for 2009 was SEK 12.2.
In the fourth quarter 2009 the net asset value per share in SEK increased by 7.1%.
The profit for the fourth quarter 2009 was 79.1 MSEK or SEK 7.4 per share.
Tables 3 show the total exposure at 31 December 2009.
The total assets are 1,083.9 MSEK (see table 3) and the net asset value is 1,073.7 MSEK.
The equity ratio is 1,073.7 MSEK / 1,083.9 MSEK = 99.1%.
The largest holdings were:
1) Nordic Absolute Return Fund 455.3 MSEK 2) Nordic Fund for Emerging Market Debts 222.2 MSEK 3) Carlson Swedish Small cap fund 80.7 MSEK
4) Roche Holding 44.9 MSEK
5) Unilever 43.1 MSEK
6) Nestle 43.0 MSEK
7) Novartis 42.9 MSEK
8) E.ON 42.0 MSEK
Table 2 shows the return and movements during 2009.
Foreign exchange contracts
Luxonen has since beginning of 2003 covers its currency exposure against the SEK. The foreign
exchange contracts existing at 31
stDecember 2009 were: sell EUR 23 million and sell USD 25 million
against SEK. This means that the fluctuations in the above currencies do not influence the net asset
value in SEK.
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Table 1 Analysis of portfolio over one year.
Investments are expressed according to Market/Director’s valuation
(In MSEK)
31.12.2008 31.03.2009 30.06.2009 30.09.2009 31.12.2009
Astrazeneca 0.0 0.0 0.0 0.0 20.2
Carlson Fund Equity Asian Small Cap 0.6 0.7 222.6 0.0 0.5 Carlson Fund Equity India 0.0 0.0 0.0 0.0 23.1 Carlson Sweden Micro Cap Fund 0.0 0.0 0.0 16.8 18.2 Carlson Swedish Small Cap Fund 0.0 0.0 0.0 74.1 80.7
Carrefour 0.0 0.0 0.0 0.0 22.4
E.ON 0.0 0.0 0.0 0.0 42.0
Mass Mutual CVP 13.9 14.5 8.3 8.3 7.9
Nestle 0.0 0.0 0.0 0.0 43.0
Nordic Absolute Return Fund 392.6 393.8 405.0 427.8 455.3 Nordic Fund for Emerging Market Debt 229.8 228.4 210.5 198.5 222.2
Novartis 0.0 0.0 0.0 0.0 42.9
Roche Holding 0.0 0.0 0.0 0.0 44.9
Swedish T-bill 254.2 254.4 0.0 0.0 0.0
Unilever 0.0 0.0 0.0 0.0 43.1
Forward exchange contracts 5.7 0.0 0.0 32.4 0.0 Nordic Fund Management Limited 2.4 2.4 2.3 2.2 2.7
Other assets 0.4 0.1 0.1 0.1 0.1
Cash 29.0 25.8 96.5 243.3 14.7 Total assets 928.6 920.1 945.3 1,003.5 1,083.9
Forward exchange contracts 0.0 (2.5) 0.0 0.0 (3.2) Other liabilities (2.5) (0.6) (0.5) (1.0) (1.3) Tax 0.0 0.0 0.0 0.0 (5.7)
Net asset value 926.1 917.0 944.8 1,002.5 1,073.7
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Table 2 Net worth of Luxonen analyzed between different investments.
Investments are expressed according to Market/Directors’ valuation
(In MSEK)
Holding at Holding at
31.12.2008 Return Movement 31.12.2009
(See 1 below)
Astrazeneca 0.0 1.3 18.9 20.2
Carlson Fund Equity Asian Small Cap 0.6 35.4 (35.5) 0.5
Carlson Fund Equity India 0.0 2.1 21.0 23.1
Carlson Sweden Micro Cap Fund 0.0 3.2 15.0 18.2 Carlson Swedish Small Cap Fund 0.0 15.7 65.0 80.7
Carrefour 0.0 1.7 20.7 22.4
E.ON 0.0 3.0 39.0 42.0
Mass Mutual CVP 13.9 1.7 (7.7) 7.9
Nestle 0.0 2.7 40.3 43.0
Nordic Absolute Return Fund 392.6 62.7 0.0 455.3
Nordic Fund for Emerging Market Debt 229.8 (7.6) 0.0 222.2
Novartis 0.0 2.8 40.1 42.9
Roche Holding 0.0 3.3 41.6 44.9
Swedish T-bill (see note 2 below) 254.2 (15.5) (238.7) 0.0
Unilever 0.0 3.9 39.2 43.1
Forward exchange contracts 5.7 0.0 (5.7) 0.0
Nordic Fund Management Limited 2.4 0.4 (0.1) 2.7
Other Assets 0.4 (0.3) 0.0 0.1
Cash 29.0 0.0 (14.3) 14.7
Total assets 928.6 116.5 38.8 1,083.9
Forward exchange contracts 0.0 35.5 (38.7) (3.2)
Other liabilities (2.5) 1.3 (0.1) (1.3)
Tax 0.0 (5.7) 0.0 (5.7)
Net asset value 926.1 147.6 0.0 1,073.7
Change in currency policy (see note 3 below) (17.4)
Profit for the year 130.2
Number of shares 10,629,760 10,629,760
N.A.V. per share SEK 87.12 SEK 101.01
1. Movements include cash variations relating to purchases of investments, expenses (positive), sales of investments and dividends (negative).
2. The negative return of 15.5 million SEK in the Swedish Treasury Bill is due to the effect of the exchange rates used in the conversion of the assets from USD to SEK resolved by the Extraordinary meeting of shareholders on 17 September 2009.
3. This difference is related to the accounting operations necessaries for the transfer of the books from USD to SEK
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Table 3 Assets by category as at 31 st of December 2009.
Investments are expressed according to Market/Directors’ valuation
(In MSEK)
Assets by Asset/
Category nav
SEK million %
Shares 381.0 36
Hedge Fund 455.3 43
Interest bearing securities 230.1 21
Other assets 2.8 0
Cash 14.7 1
Total assets 1,083.9 101
Other liabilities (4.5) 0
Tax (5.7) (1)
Net asset value 1,073.7 100
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Table 4 Quarterly assets and net asset value
Total assets Net asset value Net asset value per
MSEK MSEK share in SEK
27 January 1995 1,587.9 151.4 12.6
30 June 1995 1,619.9 200.4 16.8
30 September 1995 1,606.7 239.5 20.0
31 December 1995 1,520.0 213.0 17.8
31 March 1996 1,565.9 256.3 21.4
30 June 1996 1,645.2 340.1 28.3
30 September 1996 1,657.3 343.0 28.6
31 December 1996 1,688.7 358.3 30.2
31 March 1997 1,755.2 305.7 25.6
30 June 1997 1,914.1 414.2 34.6
30 September 1997 1,848.9 394.3 33.0
31 December 1997 1,396.1 308.7 25.8
31 March 1998 1,520.7 410.8 34.1
30 June 1998 1,423.4 320.5 26.7
30 September 1998 1,293.2 206.6 17.2
31 December 1998 1,234.0 352.5 29.4
31 March 1999 1,220.7 323.1 27.2
30 June 1999 1,351.2 442.8 36.0
30 September 1999 1,289.5 413.5 33.5
31 December 1999 1,400.2 570.6 46.2
31 March 2000 664.6 578.2 50.7
30 June 2000 580.8 580.8 51.2
30 September 2000 605.3 604.3 53.9
31 December 2000 540.5 536.7 50.0
31 March 2001 562.3 561.2 52.3
30 June 2001 585.8 584.7 55.2
30 September 2001 571.7 570.6 53.7
31 December 2001 571.2 570.2 53.7
31 March 2002 609.1 607.0 57.2
30 June 2002 576.1 575.2 54.3
30 September 2002 589.1 582.6 54.9
31 December 2002 544.9 544.0 51.3
31 March 2003 552.0 551.1 51.9
30 June 2003 568.0 567.2 53.4
30 September 2003 655.9 655.2 61.7
31 December 2003 703.1 702.4 66.1
31 March 2004 1,073.9 716.7 67.4
30 June 2004 1,090.7 733.9 69.1
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Table 4 Quarterly assets and net asset value (continued)
Total assets Net asset value Net asset value per
MSEK MSEK share in SEK
30 September 2004 1,117.4 758.3 71.3
31 December 2004 820.0 819.3 77.1
31 March 2005 848.2 836.2 78.6
30 June 2005 900.5 866.2 81.5
30 September 2005 951.8 944.1 88.7
31 December 2005 1,104.3 1,080.4 101.87
31 March 2006 1,221.5 1,217.6 114.54
30 June 2006 1,140.7 1,136.3 106.97
30 September 2006 1,222.4 1,220.9 114.84
31 December 2006 1,350.5 1,347.8 126.79
31 March 2007 1,423.9 1,423.2 133.90
30 June 2007 1,523.9 1,510.2 142.09
30 September 2007 1,522.0 1,502.7 141.36
31 December 2007 1,507.6 1,485.6 139.69
31 March 2008 1,413.6 1,394.0 131.15
30 June 2008 1,228.5 1,212.8 114.10
30 September 2008 1,275.5 1,179.7 110.98
31 December 2008 928.4 926.1 87.12
31 March 2009 920.1 917.0 86.27
30 June 2009 945.3 944.7 88.88
30 September 2009 1.003.5 1,002.5 94.31
31 December 2009 1,083.9 1,073.7 101.01
Until 31 December 2004 the above figures were the result of the application of the Luxembourg GAAP.
From 1 January 2005 the IFRS accounting policies were applied to calculate the above figures.
In 2008 Luxonen has distributed a dividend amounting to SEK 10 per share.
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Table 5 Earnings trend
(Amounts in SEK/000)
3 months 3 months 12 months 12 months
Sept-Dec Sept-Dec Jan-Dec Jan-Dec
2009 2008 2009 2008
Income
Dividend income 0 1,545 1,551 13,546
Net gain / (loss) on financial assets at fair
value through profit or loss 120,185 (198,693) 126,333 (326,218) Net gain / (loss) on derivative financial instruments (3,884) (36,750) 35,588 (268,355)
Interest income 31 5,562 1,301 11,954
Share of profit / (loss) of associates 530 818 408 (3,323) Other income 1,165 88 69 1,284 Total income 118,027 (227,430) 165,250 (571,112) Expenses
Administrative expenses (1,842) (2,830) (8,085) (6,914)
Net loss on foreign exchange (30,410) (51,998) (20,314) (70,190)
Total expenses (32,252) (54,828) (28,399) (77,104)
Tax on income (6,675) 0 (6,675) 0 Net Profit (Loss) 79,100 (282,258) 130,176 (648,216)
Earnings per share 7.44 (26.55) 12.25 (60.98)
Number of shares 10,629,760 10,629,760 10,629,760 10,629,760
The amount showed as Earnings per share is calculated dividing the Profit by the number of shares.
Luxonen S.A.
Management Report
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Nordic Fund for Emerging Market Debts
2009 overall portfolio performance of 6.43% included a wide range of outcomes for individual investments. A number of corporate restructurings turned out far worse than expected. In several cases, management engaged in outright fraud. Other positions, notably exposure to high yield sovereigns, did extremely well over the course of the year.
By the end of 2009, the Fund had resolved or significantly marked down the remaining corporate positions which were either in the process of restructuring or remained illiquid. The two material legacy illiquid corporate positions are to a major Brazilian meat producer (short average life, senior to the company’s more liquid bonds) and to a Bulgarian bank (the Manager is working hard with the bank to arrange a prepayment of the loan).
By year end, most credit default swaps had been unwound, and Fund leverage had been virtually eliminated. During 2009, cash generated from restructurings and sales of assets was invested primarily in liquid instruments with an average life of less than 5 years, with a smaller portion invested in distressed instruments whose recovery potential gives the Fund significant optionality. By year end, the Fund was most of the way to holding a long only bar-bell portfolio, consisting mostly of liquid instruments with a secondary emphasis on deep distressed sovereign instruments.
The Fund’s largest position, Argentine defaulted bonds, represents a market value of roughly $7.2 million. These bonds are in litigation in New York, along with other Argentine bonds. The decisions of the courts so far have been generally favorable, and the Manager is optimistic that creditors will ultimately prevail in the courts.
The Fund’s second largest position, a Brazilian telecommunications company recently acquired by Vivendi, called its bonds for redemption in February 2010. Other large positions include Mexican telecommunications and Gazprom.
Forecasts for economic performance during 2010 are widely dispersed. Faced with significant
uncertainty regarding the economic scenario for 2010, the Fund will continue to follow this
conservative “bar-bell” investment policy. At the same time, it is worth noting that a number of Fund
investments have done well in recent months and that the portfolio includes a great deal of untapped
value.
Luxonen S.A.
Management Report
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Nordic Absolute Return Fund
Return in a longer perspective – absolute return strategy a winner in a multiyear perspective
Over the last ten years the Swedish SBX Index has given a total return of 13%. Looking at the MSCI Europe Index during the same time period the total return is 7% when converted to SEK and negative, - 11%, in € terms. Both the SBX and the MSCI Europe Index include reinvested dividends. The markets have merely moved sideways during this decade, but with huge fluctuations. We believe that there is a high probability that the stock market show a weak upwards trend with big fluctuations during the coming years. In this kind of environment it is very important to avoid the big downturns. A well- known fact is that a drop in the index of 50% requires an increase of 100% to return to the starting point.
In a longer perspective and against the background of big fluctuations in the markets we are very satisfied with Nordic Funds performance. The table below shows the fund’s performance during the last three and five years compared to the Swedish and European reinvested indices. During both of these time periods the fund has shown a higher return at a substantially lower risk, the standard deviation is just half that of the Swedish market.
NORDIC MSCI EUROPE SBX **
FUND INDEX (SEK) INDEX RETURN
36 months % 6,0 -11,8 -11,4
60 months % 58,7 34,1 51,9
STANDARD DEVIATION *
36 months % 10,4 17,2 24,2
60 months % 10,2 14,6 20,5
* Annualised rate based on monthy observations ** Stockholm Benchmark Index
The chart below shows a comparison of the return between Nordic Fund, the SBX Index and the MSCI Europe Index during the last three years. This is a time period that includes the whole of the downturn and the recovery last year. The chart shows that we preserved the capital well during downturn.
Unfortunately, there was an exception in the summer of 2008 when we incorrectly thought that the
economic cycle had troughed. When we realized our mistake we liquidated our positions and invested
in treasury bills until the spring of 2009 when the situation became clearer. With hindsight one might
say that we should have invested more during the winter when the downturn was at its worst. What
then is ignored to be taken into consideration is that the situation during the winter of 2009 was
extremely
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Nordic Absolute Return Fund (continued)
serious and it could very well have escalated into an even worse financial meltdown with further big falls in share prices. We will not risk the funds capital and invest during such uncertain circumstances.
Portfolio strategy
In last year’s outlook we wrote “for the start of 2009, we are rather confused with regards to equity markets”. This characterized our portfolio strategy for the beginning of the year. We are well aware of the catastrophically consequences for the world economy and the capital markets if the stimulus packages hadn’t given the desired effect. As a consequence of this almost all of the funds capital was invested in treasury bills during the beginning of the year. The exception was a number of short positions which resulted in a positive return in January. In February we had short positions in Swedish shares which amounted to 15% of the fund. Even though major stock markets around the world declined around 10% the Swedish stock market rose 3.7% which gave the fund a small negative performance.
We once again began to invest in equities in April and we were fully invested in the beginning of May.
With the exception of a brief period in August and September we have been fully invested for the remainder of the year.
Nordic Fund had a performance of 16% in 2009, MSCI Europe Index rose 24,6% in SEK and the SBX
Index rose by 48.7%
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Nordic Absolute Return Fund (continued) Outlook 2010
Our portfolio strategy and our choice of companies to invest in has been, and still is, heavily influenced by our lack of conviction of how the economic recovery will progress. Under normal circumstances deep recessions will be followed by strong economic recoveries. In 2009 the world GDP fell by about 1%, this is the first time that this has happened according to available statistics dating back to the early seventies. The economic recovery should according to this be very strong and the portfolio should consequently be positioned in cyclical companies who benefit the most from this. We, on the other hand, are very doubtful that this recovery pattern will be repeated this time. It is our belief that large global imbalances between savings, private consumption and investments have to be adjusted, which will affect the economic growth negatively. Other factors that will hamper the economic recovery are the large budget deficits and large public debt that many countries have accumulated during the crisis.
Because of this we have concentrated the investments in companies that are less dependent of the strength in the recovery. We have also focused the portfolio on large companies with stable cash flows, strong balance sheets and a high dividend yield.
The defensive focus of the portfolio also comes from our belief that many of the cyclical companies are highly valued and that the analysts estimates for these companies have incorporated a very strong recovery. In many cases these estimates show profit margins for 2011 that are in line with those in 2005-2007 which was the most prosperous time period for the world economy for several decades.
Taken together we believe that there is a high risk that we currently are in a period of some years where we will see a fairly weak upwards trend for the stock market but with big fluctuations.
Development during December 2009
Nordic Absolute Return Fund had a positive performance of 5.1% in December. Each unit had at the end of the year a value of SEK 163.51, net of fixed and variable fees.
Historical information about the development of the Fund and other facts can be found on our website
on the Internet, www.nordicfund.com.
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New investments
During 2009 the Group has invested in 7 European stocks which are Astrazeneca, Carrefour, E.ON, Nestle, Novartis, Roche Holding and Unilever. At 31 December 2009 the return on these investments is 19 MSEK. The Group has also invested in 3 new investment funds, Carlson Fund India, Carlson Sweden micro cap fund and Carlson Swedish small cap fund with a return of 21 MSEK at 31 December 2009.
Board meetings during 2009
There were three ordinary board meetings during 2009. The first meeting was held in February when the financial statements for the year ending 2008 were approved. The other two meetings were in April and September. Telephone board meetings were held between the main board meetings as necessary.
All major changes in the assets of the Company are decided by the Board of Directors. All investments made by Luxonen Malta Holdco Limited are also approved by the Board of Luxonen S.A.
Nomination committee
The nomination committee's task is to prepare the election of members to the board of directors and its chairman, to put forward propositions for remuneration of the board of directors and other related matters in advance of the annual general meeting. Furthermore, before the general meetings where election of auditors will take place the nomination committee shall, together with the board and, if existing, the audit committee, prepare this election and the auditor's fees.
At the annual general meeting on April 17th 2009 the shareholders decided that the nomination
committee will consist of three members: Märtha Josefsson, Eva Fahlman and Elisabeth Skog. Märtha
Josefsson was appointed to chairman of the committee. According to the corporate governance code,
the chairman of the board of directors or other board members shall not be chairman of the nominating
committee. However, Märtha Josefsson has been deemed most suitable to lead the committee's work in
an efficient and constructive way. This motivates the appointment of Mrs Josefsson as chairman of the
committee.
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Material events that have occurred during the second 6 months of the year
The big movements in share prices reflect the development of the global financial crisis and the following recession. During the beginning of the year the global credit markets had almost completely ceased to function which among other things led to a dramatic fall in global GDP. When the extensive stimulus packages from the world’s central banks and governments began to give affect and the situation on the credit markets began to stabilize this triggered the sharp increase in share prices seen across the world’s equity markets. Throughout the spring and summer of 2009 more and more indicators showed that the economy had troughed and that a recovery was to come. This further fueled the increases in share prices during the second half of the year.
There were not costs for research and development in 2009 and actually no costs for research and development are forecast for 2010. The Company does not own its own shares. The Company has no branch.
Principal risks and uncertainties for the first 6 months of the next financial year
The Stocks markets fluctuate a lot and the environment of the employment is still uncertaincy.
In this economical situation we can’t forecast future development, just to follow carefully the actual portfolio of investments.
Company events
A) According to the law of 22 December 2006, the benefits from the holding 1929 regime will cease by the end of 2010. For this reasons the Extraordinary General Meeting of the shareholders decides on 17 April 2009, to transfer Luxonen S.A. from the legal status of holding 1929 to the legal status of Ordinary Commercial Company. This operation was effective as of 17 April 2009. Before this date Luxonen S.A. took the following actions:
1) Incorporate a new company in Malta with name Luxonen Malta Topco Limited. This company is held by Luxonen at 99.99%.
2) Transfer Exotica Management Limited from the B.V.I. to Malta, change it name into Luxonen Malta Holdco Limited and in same time incorporate the company under the Malta Law. This company is held by Luxonen Malta Topco Limited at 99.99%. As soon as Luxonen Malta Holdco Limited was incorporated in Malta, Luxonen S.A. transferred to Luxonen Malta Holdco Limited its investments in The Nordic Absolute Return Fund and in the Nordic Fund for Emerging Market Debt as contribution to the share capital.
B) On 17 September 2009 the Extraordinary General Meeting of the shareholders has resolved to
change the functional and presentation currency from USD to SEK effectively 1
stJuly 2009.
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Other
- The appointment and replacement of the Board member are decided by the annual meeting of the shareholders
- The amendment of the Articles of Associations are resolved by the extraordinary meeting of the shareholders
- The company can proceed to the repurchase of its own shares within the bounds laid down by the law.
- On the 10,629,760 shares category A representing the subscribed capital, 1,000 shares are unlisted. The above 1,000 unlisted shares have the same rights of the listed shares and they are owned by one shareholder.
18 February 2010
Björn Carlson Rickard Björklund Eric Hermann Michael Horsburgh
Chairman Director Director Director
Märtha Josefsson Johan Kuylenstierna Bo Lehander Claude Niedner
Director Managing Director Director Director
Luxonen S.A.
Director’s Declaration
The Directors of Luxonen S.A. declare that, to the best of their knowledge, the consolidated financial statements as of December 31, 2009 and for the year then ended have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union. These consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of Luxonen S.A. and its undertakings included in the consolidation taken as a whole and that the management report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
The Directors of Luxonen S.A.:
Björn Carlson, Chairman (1935), Board member since 1989
Managing Director of Carlson Investment Management (1990-2000) Managing Director of Activ Placering AB (1974 – 1989)
Shares in Luxonen S.A.:
81,100 directly
Royal Skandia Life Insurance Limited own 3,078,780 shares. Beneficiaries of these shares are Björn Carlson’s family.
Rickard Björklund (1961), Board member since 2005 Owner of several small companies in Sweden Shares in Luxonen S.A.: 0
Eric Hermann, (1953), Board member since 2007 President of FH International Asset Management, LLC Shares in Luxonen S.A.: 100,000
Michael Horsburgh (1945), Board member since 2007 Alternative Investment Manager
Shares in Luxonen S.A.: 0
Märtha Josefsson (1947), Board member since 2001 Independent investment consultant
Other Board membership: Fabege,Opus Prodox AB, Investment AB Öresund, Ticket Travel Group AB, AP2, Skandia fonder, Svenska Lärarfonder
Shares in Luxonen S.A.: 458,772
Johan Kuylenstierna (1959), Board member since 2007 Partner in Kuylenstierna & Skog SA.
Shares in Luxonen S.A.:2,000
Bo Lehander (1959), Board member since 2007 Chairman of Alsback Förvaltning AB
Shares in Luxonen S.A.: 1,167,895 (including family)
Claude Niedner (1966), Board member since 2008 Partner at Arendt & Medernach
Shares in Luxonen S.A.: 0
Corporate Governance Report
Corporate governance practices define the decision making system through which owners, directly or indirectly, control a company.
Luxonen is a Luxemburg company with shares listed on the Stockholm Stock Exchange. The Corporate Governance Report describes how the work of corporate governance has been conducted in Luxonen during the 2009 financial year. The report has not been reviewed by the auditors.
For Luxonen´s Article of Association, see www.luxonen.com
Structure and Business idea
The business idea of Luxonen is to maximize return with a controlled risk and without any other limitation then what the board of directors decided. Investments can be made in a wide range of financial products. Some of the investments could have a high risk profile but the overall risk should be limited.
Annual General Meeting
Luxonen’s AGM is held in Luxemburg the third Friday of April. The AGM 2010 will take place on April 16 at the place indicated by the invitation published on the Web site of the company.
All shareholders wishing to have business taken up at the meeting shall send a written proposal to the chairman of the board, or alternatively, to the Nomination Committee.
There were three ordinary board meetings and one telephone board meeting during 2009. The first meeting was held in February when the financial statements for the year ending 2008 were approved. The other two meetings were in April and September.
Nomination Committee
Mrs. Märtha Josefsson Director Luxonen Chairman Mrs. Eva Fahlman
Ms. Elisabeth Skog
The role of the Nomination Committee is to prepare and present proposals for submission to the Annual General Meeting of the Shareholders:
AGM Chairman
Board Chairman
Board of Directors
Board remuneration
Audit company
Audit fees
The Nomination Committee is elected each year by the annual meeting of the shareholders
Board of Directors
Board member Position Born Nationality Independent Shares
Mr. Björn Carlson Chairman 1935 Swedish No 81,100 Mr. Rickard Björklund Director 1961 Swedish Yes 0 Mr. Eric Hermann Director 1953 U.S. Citizen Yes 100,000 Mr. Michael Horsburgh Director 1945 British Yes 0 Mrs. Märtha Josefsson Director 1947 Swedish Yes 458,772 Mr. Johan Kuylenstierna Man. Director 1959 Swedish No 2,000 Mr. Bo Lehander Director 1959 Swedish No 1,167,895 Mr. Claude Niedner Director 1966 Luxembourg Yes 0
Royal Skandia Life Insurance Limited own 3,078,780 shares. Beneficiaries of these shares are Björn Carlson’s family.
Facts about the Board of Directors
Björn Carlson, Chairman (1935), Board member since 1989
Managing Director of Carlson Investment Management (1990-2000) Managing Director of Aktiv Placering AB (1974 – 1989)
MBA Stockholm School of Economics 1958 Ekon Lic. Stockholm school of Economics 1964 Attended 4 out of 4 board meetings 2009 Shares in Luxonen S.A.:
81,100 directly
Royal Skandia Life Insurance Limited own 3,078,780 shares. Beneficiaries of these shares are Björn Carlson’s family.
Rickard Björklund (1961), Board member since 2005 Managing Director of Skebo Estates
Managing Director of Matteus Fondkommission (1990 – 2000) Attended 2 out of 3 meetings 2009
Shares in Luxonen S.A.: 0
Eric Hermann, (1953), Board member since 2007 President of FH International Asset Management, LLC Bear Stearns (1981 -1986)
Chase Manhattan Bank (1981 – 1986)
Masters of Arts in Law and Diplomacy Flethcer School of Law and Diplomacy Attended 3 out of 3 meetings 2009
Shares in Luxonen S.A.: 100,000
Michael Horsburgh (1945), Board member since 2007 Executive Director Arden Asset Management
Managing Director ABN Amro New York (1999 – 2007)
Executive Vice President Hannuri Investment & Securities Co Ltd (1997 – 1999) Managing Director Carlson Investment Management New York (1991 -1997) Royal Military Academy Sandhurst 1965
Attended 2 meetings 2009 Shares in Luxonen S.A.: 0
Märtha Josefsson (1947), Board member since 2001 Independent investment consultant
CIO DnB Asset Management (2002)
CIO Skandia Asset Management (2000 – 2002)
CIO Carlson Investment Management (1990 – 2000)
Other Board membership: Fabege, Opus Prodox AB, Investment AB Öresund, Ticket Travel Group AB, AP2, Skandia fonder, Svenska Lärarfonder
B.A. – Economics University of Uppsala 1971 Attended 4 out of 4 meetings 2009
Shares in Luxonen S.A.: 458,772
Johan Kuylenstierna (1959), Board member since 2007 Partner in Kuylenstierna & Skog S.A.
Head of Private Banking Skandinviska Enskilda Banken Luxembourg S.A.(1994 – 2000) B.A. – Economics University of Lund (1981)
Attended 4 out of 4 meetings 2009 Shares in Luxonen S.A.:2,000
Bo Lehander (1959), Board member since 2007 Chairman of Alsback Förvaltning AB
Skandia Asset Management (2000 – 2001) Carlson Investment Management (1990 – 2000) B.A. – Economics University of Uppsala Attended 4 out of 4 meetings 2009
Shares in Luxonen S.A.: 1,167,895 (including family)
Claude Niedner (1966), Board member since 2008 Partner at Arendt & Medernach
Member of the Luxembourg Bar since 1993
Master in law Univesity of Robert Schuman Strasbourg Master in B.A Hautes Etudes Commerciales Paris Attended 1 out of 3 meetings 2009
Shares in Luxonen S.A.: 0
Managing Director
Johan Kuylenstierna (1959)
Partner in Kuylenstierna & Skog SA
Head of Private Banking Skandinviska Enskilda Banken Luxembourg S.A.(1994 – 2000) B.A. – Economics University of Lund (1981)
Attended 4 out of 4 meetings 2009 Shares in Luxonen S.A.: 2,000
Remuneration Committee
The Remuneration Committee consists of the board, except the managing director.
Audit Committee
The Audit Committee consists of the board.
Report on internal control in respect of financial reporting
Internal control is the process that is run by the Board of Directors, company management and other staff for the purpose of building confidence that the company
• has an appropriate and efficient organization for its business operations
• produces reliable financial reports, and
• complies with applicable laws and regulations
This report has been prepared in accordance with the Swedish Corporate Governance Code (Sections 3.7.2 and 3.7.3). The report, which is limited to internal control in respect of financial reporting, does not constitute a part of the formal annual report and has not been examined by the company’s auditors.
Control environment
Luxonen is a holding company with two major investments. Business and the legal structure is very straight forward.
The Managing Director is in charge of the daily management but all major changes in the assets of the Company are decided by the Board of Directors. The Board of Directors evaluate all investments during the board meetings.
The NAV are published on a monthly basis and are controlled by the Managing Director and by one of the Directors from the Board. Overall responsibility for ensuring good internal control and efficient risk management rests with the Board of Directors.
Risk assessment
Luxonen conducts annual reviews and evaluations of risk areas for the purpose of identifying and managing risks through consultation between management, the Audit Committee and other parties.
Information and communication
Company management consists of the Managing Director Follow-up
The company’s management reports regularly to the Board in accordance with the instructions for financial reporting, which are designed to ensure that the information provided is relevant, sufficient, up-to-date and appropriate.
Internal auditing
In view of that Luxonen is a holding company and has a simple structure and organization, the Board has not found it necessary to set up an internal audit unit, based on the view that the monitoring and examination described above are sufficient to maintain, in accord with the external auditors, effective internal controls in respect of financial reporting.
AUDITING
The company’s auditors are appointed by the AGM.
Luxonen’s auditor:
PriceWaterhouseCoopers Auditor in Charge:
Mr. Philippe Duren, born in 1960, he his auditor of Luxonen since 2005
DIFFERENCES IN RELATION TO THE CODE
The Code is based on the principle of ‘comply or explain’, which means that it is not always necessary to follow all rules and that departures from one or several individual
rules do not constitute a breach of the Code if there are reasons for and explanations are provided for the departures.
.
Luxonen S.A.
Consolidated balance sheet as at 31 December 2009
(Expressed in SEK)
Note 31.12.2009 31.12.2008 31.12.2007
Assets 1 1 - 2
Current assets
Financial assets at fair value through profit or loss 5 381,002,322 254,898,576 483,952,478
Derivative financial instruments 8 0 5,659,978 0
Income tax receivables 13 11,389,608 0 0
Other assets 96,243 390,355 132,354
Cash and cash equivalents 14,708,620 29,009,459 199,536,428 407,196,793 289,958,368 683,621,260 Non-Current assets
Investments in associate 6 2,723,568 2,361,976 6,206,133 Financial assets at fair value through profit or loss 5 685,365,149 636,275,223 815,900,039 688,088,717 638,637,199 822,106,172
Total assets 1,095,285,510 928,595,567 1,505,727,432
=========== ========== ===========
Equity attributable to owners of the parent
Ordinary shares 10 160,262,388 163,058,859 134,480,332
Legal reserve 10 16,026,239 16,305,886 13,448,032
Share premium 3,975,481 4,044,850 3,335,929
Other reserves (96,665,377) (117,287,030) (8,680,122)
Retained earnings 990,120,342 859,944,428 1,341,148,849 Total equity 1,073,719,073 926,066,993 1,483,733,020
Current liabilities
Derivative financial instruments 8 3,176,326 0 21,191,295
Income tax payables 13 18,064,285 0 0
Other liabilities 325,826 2,528,574 803,117 Total liabilities 21,566,437 2,528,574 21,994,412
Total equity and liabilities 1,095,285,510 928,595,567 1,505,727,432
=========== =========== ===========
1. The 2008 and 2007 figures have been converted into SEK since the functional currency was changed to SEK in 2009.
The comparative information have been translated in accordance with IAS 21 (see note 2.4 for details).
2. The change in the functional currency is a change in accounting policy. In accordance with IAS 1, the earliest comparative period has been disclosed.
The accompanying notes on pages 28 to 59 form an integral part of these consolidated financial statements
Luxonen S.A.
Consolidated income statement for the year ended 31 December 2009
(Expressed in SEK)
Note 31.12.2009 31.12.2008
Income 1
Dividend income 9 1,550,857 13,545,502
Net gain / (loss) on financial assets at
fair value through profit or loss 5 126,333,414 (326,218,387) Net gain / (loss) on derivative financial instruments 8.3-8.4 35,588,196 (268,354,896)
Interest income 1,300,966 11,954,446
Share of profit /(loss) of associate 6 407,572 (3,322,913)
Other income 68,825 1,284,012
Total income 165,249,830 (571,112,236) Expenses
Administrative expenses 12 8,085,509 6,913,703
Net foreign exchange losses 20,313,730 70,190,153 Total expenses 28,399,239 77,103,856 Profit /(loss) for the year before tax 136,850,591 (648,216,092) Income tax expense 13 (6,674,677) 0
Profit /(loss) for the year 130,175,914 (648,216,092)
========== ===========
Earnings per share before and after dilution 14 12.25 (60.98)
Number of shares 10,629,760 10,629,760
1. The 2008 and 2007 figures have been converted into SEK since the functional currency was change to SEK in 2009.
The comparative information have been translated in accordance with IAS 21 (see note 2.4 for details).
The accompanying notes on pages 28 to 59 form an integral part of these consolidated financial statements
Luxonen S.A.
Consolidated statement of comprehensive income
(Expressed in SEK)
31.12.2009 31.12.2008 Profit /(loss) for the year 130,175,914 (648,216,092)
Other comprehensive income:
Currency translation differences 20,621,653 (108,606,908)
Other comprehensive income/(loss) for the year, net of tax 0 0 Total comprehensive income /(loss) for the year 150,797,567 (756,823,000)
Consolidated statement of changes in shareholders’ equity
Note Share Legal Share Retained Other Total Capital Reserve Premium Earnings Reserves Equity
SEK SEK SEK SEK SEK SEK
Balance at 31 December 2007 134,480,332 13,448,032 3,335,929 1,341,148,849 (8,680,122) 1,483,733,020 Comprehensive income
Loss of the period 0 0 0 (648,216,092) 0 (648,216,092)
Other comprehensive income
Change in functional currency 2.4 28,578,527 2,857,854 708,921 273,309,271 (108,606,908) 196,847,665 Total comprehensive income 28,578,527 2,857,854 708,921 (374,906,821) (108,606,908) (451,368,427) Transactions with owners
Interim dividend declared 0 0 0 (106,297,600) 0 (106,297,600) Balance at 31 December 2008 163,058,859 16,305,886 4,044,850 859,944,428 (117,287,030) 926,066,993
Balance at 31 December 2008 163,058,859 16,305,886 4,044,850 859,944,428 (117,287,030) 926,066,993 Comprehensive income
Profit of the period 0 0 0 130,175,914 0 130,175,914
Other comprehensive income
Currency translation adjustment 2.4 (2,796,471) (279,647) (69,369) 0 20,621,653 17,476,166 Balance at 31 December 2009 160,262,388 16,026,239 3,975,481 990,120,342, (96,665,377) 1,073,719,073
