Information brochure to SCA’s shareholders regarding the proposed distribution of SCA Hygiene AB

SCA was founded in 1929 as a forest products company operating in Sweden. Over the years, the company expanded into other business activities (paper products production, personal care, consumer tissue, AfH tissue and packaging) and expanded geographically. SCA has developed and is today a leading global hygiene and forest products company, with the hygiene business accounted for approximately 86% of the SCA Group’s 2016 net sales and the forest products business for approximately 14%.

In August 2016, SCA announced that the company would initiate work in order to be able to propose to the 2017 Annual General Meeting to decide on a split of the SCA Group into two listed companies; one for the hygiene business and one for the forest products business. A split of the Group and a distribution and listing of the shares in the subsidiary which today operates the hygiene business, is expected to increase focus, customer value, development opportunities and enables each company to successfully realize its strategies under the leadership of separate and dedicated management teams, two different boards of directors and independent access to capital. This is considered to increase value for SCA’s shareholders in the long term. In addition, the synergies between the operations have diminished over time and are currently limited. An evaluation of various methods and structural alternatives to carry out a complete split of the business into two separate companies has been carried out.

In the light of the above, the Board of Directors of SCA has proposed that the Annual General Meeting on April 5, 2017 decides on, in addition to a cash dividend of SEK 6.00 per share, the distribution of all shares in the wholly owned subsidiary SCA Hygiene AB to shareholders of SCA. The company plans to execute the decision to distribute the shares at a suitable time after the Annual General Meeting’s decision and following completion of the listing process, but no later than in the second half of 2017. Following the distribution, the former SCA Group will be divided into two independent, listed companies. One will be a leading global hygiene and health company and include the current SCA business areas of Personal Care and Tissue. The other will be an efficient and well-invested forest products company that will include all forest land currently owned by the SCA Group and the forest products operations.

Summary of financial information for SCA Hygiene AB (“Hygiene”)
The tables below display selected financial information for Hygiene for the financial years 2014–2016. The basis for the selected financial information is the Annual Report that has been prepared for SCA Hygiene AB for 2016, which will be published on March 10, 2017. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, RFR 1 “Supplementary Accounting Rules for Groups” and the Annual Accounts Act.

Condensed balance sheet after reallocation of net debt
In order to enable external credit rating of Hygiene ahead of the transfer of loans and bonds from SCA excluding Hygiene to Hygiene during the fourth quarter of 2016, an allocation of SCA Group’s net debt between the companies was made as of September 30, 2016. Corresponding allocation based on the SCA Group’s net debt per December 31, 2016 of in total SEK 35,361m implies an allocation of SEK 30,361m to Hygiene and of SEK 5,000m to SCA forest products. The decisive factor in the allocation has been to give both companies adequately strong balance sheets. Furthermore, it was decided that SCA’s proposed cash dividend in April 2017 of SEK 6.00 per share will be financed by Hygiene and therefore increase Hygiene’s net debt by SEK 4,214m. The effect of SCA’s proposed dividend has not been included in the condensed balance sheet below, which shows the decided debt allocation as if implemented by December 31, 2016.

Summary of financial information for SCA excluding SCA Hygiene AB (“Hygiene”)
The tables below present selected financial information for the financial year 2016 for SCA, Hygiene and SCA excluding Hygiene, which constitute the remaining operations (SCA forest products) in SCA after the distribution. The basis for the selected financial information is partly SCA’s Annual Report for 2016 and partly the Annual Report that has been prepared for SCA Hygiene AB for 2016 and which will be published on March 10, 2017. SCA excluding Hygiene is the difference between SCA's and Hygiene’s financial information adjusted for internal transactions and balances. Adjustments are described in further detail in the footnotes below.

As of the first quarterly report for 2017, SCA intends to report its entire operations as Forest Products and Hygiene in accordance with IFRS 5, as “non-current assets held for sale and discontinued operations”.

The information presented in the tables below has not been prepared in accordance with IFRS as adopted by the European Union. This information may thus not necessarily be comparable with similar calculations in other companies and has some limitations as an analysis tool.

Condensed balance sheet after reallocation of net debt
In order to enable external credit rating of Hygiene ahead of the transfer of loans and bonds from SCA excluding Hygiene to Hygiene during the fourth quarter of 2016, an allocation of SCA Group’s net debt between the companies was made as of September 30, 2016. Corresponding allocation based on the SCA Group’s net debt per December 31, 2016 of in total SEK 35,361m implies an allocation of SEK 30,361m to Hygiene and of SEK 5,000m to SCA forest products. The decisive factor in the allocation has been to give both companies adequately strong balance sheets. Furthermore, it was decided that SCA’s proposed cash dividend in April 2017 of SEK 6.00 per share will be financed by Hygiene and therefore increase Hygiene’s net debt by SEK 4,214m. The effect of SCA’s proposed dividend has not been included in the condensed balance sheets below, which shows the decided debt allocation as if implemented by December 31, 2016.

SCA HYGIENE AB (HYGIENE)

SCA FOREST PRODUCTS OPERATIONS

For additional information please contact:
Johan Karlsson, Vice President Investor Relations, 46 (0)8 788 51 30
Karl Stoltz, Media Relations Manager, 46 (0)8 788 51 55