Corporate Governance Report

Systembolaget AB is wholly owned by the Swedish State. The ownership is administered by the Government through the Ministry of Health and Social Affairs and the responsibility for Systembolaget’s management and control is shared between the owner, the Board of Directors and the President.

The owner

The owner’s expectations of Systembolaget are specified in the agreement between Systembolaget and the state, in the Owner’s Directive, in the State’s ownership policy, and in the guidelines for State-owned companies. The agreement and the Owner’s Directive specify the bases for the company’s operations with regard to the social mandate, the requirement for financial efficiency, and any other requirements with regard to the company’s operations. The owner determines the objectives of the company’s operations through the Articles of Association, while the ownership policy establishes the owner’s expectations of the company as one of the State-owned companies. The owner has set three mandate goals for Systembolaget, together with a number of financial goals. The mandate goals take precedence and their fulfilment is measured using the Customer Satisfaction Index, the Alcohol Index and Alcohol consumption in Sweden. The financial goals comprise the equity/assets ratio, return on shareholders’ equity, and cost-effectiveness.

Systembolaget’s mandate is, by means of its retail monopoly, to sell strong beer, wine and spirituous drinks in Sweden. Alcohol is not like other products. It can cause harm to individuals, to their nearest and dearest, and to society at large. Which is why Systembolaget is not like other companies. We exist to limit the harmful effects of alcohol. Systembolaget’s mandate is to sell responsibly via its monopoly, to offer a high quality service, and to provide information on the risks associated with alcohol. It’s objective is to help improve public health by limiting the harmful effects of alcohol.

Meetings are held on a rolling basis, approximately four to five times a year, between representatives of the owner and Systembolaget’s Chairperson of the Board. Areas discussed during these meetings include the work of the Board of Directors, operational monitoring and follow-ups, the Annual General Meeting, monitoring of key performance indicators, and other goals set by the owner and the Board. The home delivery trial, ongoing legal proceedings, and other issues of relevance for the company, have also been discussed. The owner exercises its rights as a shareholder at the Annual General Meeting.

Corporate governance principles

Systembolaget’s corporate governance is conducted principally on the basis of:

Deviations from the Code

Systembolaget applies the Swedish Corporate Governance Code with the following deviations:

Code regulation

Deviation

Explanation/comments

1.1) Publication of information on the shareholders’ right of initiation

Not published

The aim of this regulation is to give the shareholders plenty of time to prepare for the Annual General Meeting and to have issues included in the notice convening the Annual General Meeting. There is no reason to observe this regulation in a wholly State-owned company.

2) The company shall establish a Nomination Committee to represent the company’s shareholders in conjunction with the election and determination of remuneration of the Board of Directors and Auditors of the company.

No Nomination Committee has been established

The preparation of nomination committee issues in State-owned companies is carried out by the Government in the manner detailed in the State’s ownership policy.

The Annual General Meeting

The Annual General Meeting shall, under the terms of the State’s ownership policy, be held no later than 30th April every year. Members of Parliament are entitled, upon application, to attend the Annual General Meeting and the general public shall also be afforded the opportunity to attend. The Board of Directors is responsible for issuing a notice convening the Annual General Meeting to the shareholder no later than four weeks and no earlier than six weeks before the Meeting.

The 2016 Annual General Meeting

Systembolaget’s 2016 Annual General Meeting was held on 21 April in Stockholm and was open to the public. The owner was represented by the Permanent Secretary, Agneta Karlsson, from the Ministry of Health and Social Affairs. The owner was also represented by the Director General for Legal Affairs, Lars Hedengran, from the Ministry of Health and Social Affairs.

The resolutions taken by the shareholder at the Annual General Meeting included the following:

  • Re-election of Kenneth Bengtsson as the Chairperson of the Board.
  • Re-election of the following Members of the Board: Thord Andersson, Crister Fritzson, Mona Sahlin, Kerstin Wigzell, Pia Fagerström, Håkan Leifman and Viveca Bergstedt Sten.
  • Directors’ fees payable to Members of the Board elected by the Annual General Meeting, members of the company’s Board-appointed committees, and Auditors.
  • New Owner’s Directive.
  • Approval of the “Guidelines for terms of employment for senior executives of Systembolaget AB” proposed by the Board of Directors.
  • Adoption of the Income Statement and the Balance Sheet.
  • Allocation of the company’s profits.
  • Granting of discharge from liability for the Board of Directors and the President.

The minues of the Annual General Meeting are available on Systembolaget’s website, systembolaget.se.

2016 Extraordinary General Meeting

An Extraordinary General Meeting of Systembolaget was held on 30 November 2016. During the Extraordinary General Meeting, the shareholder decided to appoint two new Members of the Board, namely Frida Johansson Metso and Robert Damberg. The minutes of the Extraordinary General Meeting are available on Systembolaget’s website, systembolaget.se.

The 2017 Annual General Meeting

The 2017 Annual General Meeting will be held on 26 April in Stockholm. Notices convening the Annual General Meeting will be sent out in March 2017.

The nomination process for the Board of Directors

The appointment of the Board complies with the nomination process described in the State’s ownership policy. The nomination process is coordinated by the Ministry of Finance. The skills requirement is analysed on the basis of the company’s operations, situation and future challenges, and the existing composition of the Board and Board Member evaluations carried out during the year. To be considered for a seat on the Board, individuals must not only possess high-level competence in the relevant commercial sphere, expertise in commercial development, industry know-how, and extensive familiarity with financial issues or other relevant areas, they must also display a strong sense of integrity and the ability to work in the best interests of the company. The selection is made from a broad recruitment base and aspects such as experience, areas of expertise, gender, ethnic and cultural background are also taken into account in order to ensure that the Board as a whole possesses a multifaceted range of skills and experience.

The Board of Directors

Systembolaget’s Board of Directors is responsible, under the provisions of the Swedish Companies Act, for the organisation of the company and the administration of the company’s affairs. According to the State’s ownership policy, the Board of Directors in companies where the State has an ownership interest shall ensure that the companies are operated in a model way within the scope of the legislation, the company’s Articles of Association, the owner’s instructions and the State’s ownership policy. Some of the work involved in ensuring public confidence in the operations entails drawing up operationally necessary policy documents and conducting annual evaluations of existing policies.

bolagsstyrningsrapport

Composition of the Board

The Articles of Association prescribe that the Board of Directors shall comprise a minimum of six and a maximum of nine Members appointed by the General Meeting. The employee organisations are also entitled to appoint Members of the Board. The State’s ownership policy states that the composition of the Board shall be such that the Board at all times possesses the industry know-how or other expertise that is directly relevant to the company. The Board must also possess the ability to work strategically with issues relating to sustainability. Systembolaget’s Board of Directors has a broad composition with industry know-how and insight into external issues that affect the company’s development.

The composition of the Board shall be such that a balance is achieved with regard to background, areas of expertise, experience and gender breakdown. The State’s ownership policy states that the goal with regard to gender breakdown shall be at least 40 per cent of both sexes.

Systembolaget’s Board of Directors has, since the Extraordinary General Meeting held in November 2016, comprised nine Members of the Board elected by the General Meeting. Four of these Members are women and five, men. The Board also includes two employee representatives with two Deputy Members appointed by the employee organisations. Three of the employee representatives are women and one, a man.

The number of Board Members elected by the General Meeting has varied as follows during the year: until the Annual General Meeting held in April 2016, the Board comprised nine Members. After the AGM, the Board comprised eight Members. One Member resigned in May 2016, and there were consequently then seven Members. Two new Members were elected at the Extraordinary General Meeting held in November 2016, since when Systembolaget’s Board of Directors has once again comprised nine Members elected by the General Meeting. None of the Members of the Board are part of the company’s management.

Presence at Board Meetings, 2016

Board function

Presence

Part of year

Kenneth Bengtsson

Chairman

8 of 8

Thord Andersson

Member

8 of 8

Robert Damberg

Member

1 of 1

Took up post at Extraordinary General Meeting on 30 November 2016

Pia Fagerström

Member

8 of 8

Crister Fritzson

Member

6 of 8

Carl B Hamilton

Member

2 of 2

Resigned at the AGM on 21 April 2016

Håkan Leifman

Member

8 of 8

Frida Johansson Metso

Member

1 of 1

Took up post at Extraordinary General Meeting on 30 November 2016

Mona Sahlin

Member

3 of 3

Resigned on 24 May 2016

Viveca Bergstedt Sten

Member

7 of 8

Kerstin Wigzell

Deputy Chairperson

7 of 8

Berit Morén

Employee representative (Member)

7 of 8

Maria Nilsson

Employee representative (Member)

8 of 8

Karin Larsson

Employee representative (Deputy)

8 of 8

Nils Undall-Behrend

Employee representative (Deputy)

8 of 8

Presence at Audit Committee Meetings, 2016

Function

Presence

Part of year

Viveca Bergstedt Sten

Member

6 of 6

Thord Andersson

Member

6 of 6

Pia Fagerström

Member

6 of 6

Crister Fritzson

Member/Chairman

5 of 6

Resigned as Chairperson on 21 April 2016 but continues as a member

Presence at Remuneration Committee Meetings, 2016

Function

Presence

Part of year

Kenneth Bengtsson

Chairman

5 of 5

Carl B Hamilton

Member

2 of 2

Resigned on 21 April 2016

Håkan Leifman

Member

3 of 3

Took up post on 21 April 2016

Kerstin Wigzell

Member

2 of 5

Systembolaget’s President and CFO attend the Board Meetings. Systembolaget’s Senior Legal Counsel, who is a member of the company management, is the Secretary to the Board. Other members of the company’s management attend as required.

The Chairman of the Board

The Chairman shall, pursuant to the provisions of the Swedish Companies Act, lead the work of the Board and ensure that the Board carries out its duties. The Code states that the Chairman of the Board shall also be responsible for:

  • ensuring that the work of the Board is conducted efficiently and is well-organised;
  • ensuring that the Board receives sufficient information and source data on which to base its decision-making work;
  • working in consultation with the President to set the agenda for Board Meetings;
  • checking that the Board’s decisions are implemented;
  • ensuring that the work of the Board is evaluated annually.

The Chairman consults with the President on strategic issues as they arise, and represents the company on issues relating to corporate governance. The Chairman also has certain additional obligations which are specified in the rules of procedure for the Board of Directors.

The work of the Board

The Board has adopted a formal work plan which specifies how the work is to be divided between the Board, the owner, the committees and the President. The work plan is reviewed annually and was adjusted and adopted in 2016 at the Meeting held by the newly formed Board in April. The work plan states that the Board, as a rule, shall hold at least five meetings per financial year in addition to the Board Meeting that is held following elections.

The Board is responsible for the administration of the company and for ensuring that the company’s mandate is executed efficiently and that the operations are conducted in a manner conducive to sustainable development – economically, socially and environmentally. The Board is responsible for ensuring that Systembolaget is run in an exemplary manner in accordance with applicable regulations, and that the operations enjoy public confidence.

The Board is also responsible for the organisation of the company and the administration of its affairs in the best interests of the company and the owner. The Board shall, if Systembolaget is faced with particularly important decisions, such as major strategic changes to the company’s operations, coordinate its position, through the Chairman, with representatives of the owner. The coordination shall occur well in advance of any decision.

The Board is responsible for setting goals for Systembolaget’s sustainability work, for ensuring that the goals are integrated into the company’s business strategy, and for ensuring that the sustainability work is reported in accordance with the Global Reporting Initiative (GRI) international reporting standard, and otherwise in accordance with the owner’s policy. The two strategic sustainability goals approved by the Board of Directors for Systembolaget are that the Alcohol Index shall show a positive trend over time and that Systembolaget shall work to reduce the climate impact throughout the value chain. The Board is also responsible for ensuring that Systembolaget complies with relevant guidelines on environmental considerations, human rights, working conditions, anti-corruption, and business ethics.

All Board Members are responsible to an equal degree for the work of the Board unless otherwise approved at a Board Meeting or in the Board’s formal work plan.

A collection of documents (“Laws, steering documents and so on, for Systembolaget AB”) has been prepared to support the Board in its work. The collection includes certain legislative texts pertaining to the operations, documents issued by the EU, company-related documentation, owner-related documentation and agreements, investment regulations, the current strategic plan, Systembolaget’s Code of Conduct, policies, internal guidelines and regulations, and information on Systembolaget’s subsidiaries..

Conflicts of interest within the Board are avoided in accordance with the requirements specified in the Swedish Companies Act (ABL 8:23).

All Members of Systembolaget’s Board of Directors work actively with the issues that it is incumbent upon the Board to address and otherwise with issues referred to it for consideration. The Board meets annually with the company’s auditors.

The structure of the Board’s work is laid down in the Board’s work plan, which is adopted annually. The work plan forms the basis for the planning of the Board’s work and stipulates the point during the financial year when special areas of responsibility shall be addressed by the Board.

Strategic plan, key performance ratios and indicators

The Board of Directors draws up the strategic plan which establishes the way in which Systembolaget prioritises its investments, resources and activities during the strategic period. The strategic plan extends four years forward in time and is revised every third year. The strategic plan in force in 2016 was adopted at the Board Meeting in June 2013 and refers to the years from 2014 to 2016.

The strategic plan for the period from 2014 to 2016 contains four factors for success that describe the areas on which Systembolaget must focus in order to ensure popularity and success during the strategic period. The factors for success were:

  • Develop Systembolaget’s offering in a sustainable way.
  • Help bring about more informed alcohol consumption.
  • Explain and take responsibility for the benefits offered by Systembolaget.
  • Develop our methodology, leadership and partnerships, internally and externally.

A number of strategic key performance indicators linked to our four factors for success constitute quantitative goals for the four-year period in question and are also broken down by year in the business plan. There are also a number of indicators where trends are monitored. The Board of Directors receives regular feedback on these key performance indicators and other indicators.

In June 2016, the Board adopted a new strategic plan for the years from 2017 to 2020. The four factors for success from the strategic plan for the years from 2014 to 2016 have been retained in the new strategic plan for 2017 to 2020, but have been reformulated as follows:

  • Impressed customers.
  • Informed alcohol consumption.
  • The benefits of Systembolaget.
  • Resource-smart operations and personal leadership.

Beginning in 2017, when the new strategic plan comes into force, Systembolaget will have twelve strategic key performance indicators and other indicators that will be continuously monitored by the Board within the framework of the regular operational monitoring. These key performance indicators and other indicators are presented in the table below. As is apparent from the footnote to the table, measurement of one of the key performance indicators will cease in 2017, while the others remain the same as in the previous strategic plan.

Ten of these key performance indicators are the same as in the current strategic period. A new key performance indicator has, however, been introduced in addition to these ten, namely the consideration index. There will also, in addition to the key performance indicators, be four strategic indicators that the Board will monitor during the strategic period.

The new strategic plan has also identified three strategic shifts on which Systembolaget will focus during the coming strategic period and which will, in their different ways, contribute to Systembolaget’s four factors for success. The three strategic shifts are:

  1. Continue impressing the customers.
  2. Increased awareness of the risks associated with alcohol and Systembolaget’s purpose.
  3. Best preconditions.

The need to focus on “Kraften I 5 000” [The strength of 5,000] has also been identified in the strategic plan to ensure success with these shifts. What this means is taking the skills, abilities and commitment of all of Systembolaget’s 5,000 employees to the next level.

Strategic key performance indicators

Owner’s goal

Board’s goal

Customer Satisfaction Index (CSI)

X

X1

Reduced climate impact (throughout the value chain)

 

X

Opinion Index (OPI)

 

X

Proof of age checks

 

X

Sick leave

 

X

Performance culture

 

X

Quality Supplier Index2

 

X

Equity/assets ratio

X

 

Return on shareholders’ equity

X

 

Cost-effectiveness1

X

 
     

Strategic indicators

Owner’s goal

Board’s goal

Alcohol Index

X

X1

Total consumption3

X

 

Systembolaget’s share of alcohol consumption

X

 

1The Board adds additional detail to the goal level on the basis of the Owner’s Directive
2Measurement of this key performance indicator will cease in 2017 in accordance with the 2017-2020 strategic plan
3The number of litres of pure alcohol per head of population aged 15 and above

The work of the Board in 2016

The Board held a total of eight Board Meetings in 2016. The usual follow-up work, both on the company’s economic performance and on the social and environmental aspects that arose during the course of the operations has been carried out on an ongoing basis by the Board. This follow-up work is reported by means of strategic key performance indicators, the equity/assets ratio, and the return on shareholders’ equity, as well as Board memoranda on topical issues. In March, the Board met with the company’s auditors, without the presence of the management, as prescribed by the Code. Collectively, this information has afforded the Board the opportunity to monitor the operations’ results on an ongoing basis, as well as its results in the field of sustainability. Aside from the ongoing monitoring of strategic key performance indicators, the issues addressed by the Board included:

  • the Responsibility Report;
  • real estate issues (strategic decisions on opening or closing stores);
  • strategic issues and sustainability-related issues, including issues relating to compliance with the Code of Conduct in the supply chain;
  • the home delivery trial;
  • ongoing legal proceedings;
  • the new strategic plan for 2017-2020;
  • issues relating to the review of Systembolaget’s pricing model;
  • issues relating to the Alcohol Research Council;
  • the management talent pool and succession planning;
  • skill development for managers and employees.

Directors’ fees and fees for committee members

Directors’ fees and fees for work in committees specially established by the Board are approved by the Annual General Meeting. The fees shall, under the terms of the State’s ownership policy, be competitive but not market-leading.

Evaluation of the work of the Board

The Code, the State’s ownership policy and the formal work instructions for the Board of Directors all mandate that the Board shall, by means of a systematic and structured process, carry out an annual evaluation of the work of the Board. It shall be incumbent upon the Chairperson of the Board to ensure that such evaluation work is carried out. The evaluation addresses both the processes employed in the Board’s work and the performance of the Board itself, including the way in which the Board handles relevant economic, environmental, and social issues.

This year’s evaluation was carried out by means of questionnaires answered by the Members of the Board and including questions on such issues as working climate and cooperation, skills, the work of the Board, and the role of the Chairperson. The results of the evaluation of the work of the Board have been presented to the Board at a Board Meeting and in the form of a Board memorandum.

In December 2016, the Chairperson of the Board notified the Government Offices of Sweden of the results of the evaluation, in accordance with the State’s ownership policy. In addition to the Board’s own evaluation, evaluations of the Boards in State-owned companies are conducted on an ongoing basis as part of the Government Offices of Sweden’s internal work on the nomination process.

The Audit Committee

Composition

Systembolaget’s Audit Committee in 2016 comprised Members of the Board Viveca Bergstedt Sten (Chairperson of the Committee since the Board Meeting following election April 2016, previous a member), Crister Fritzson of the Committee until the Board meeting following election in April 2016, now a member), Thord Andersson and Pia Fagerström. None of the members of the Audit Committee are part of the company’s management. Systembolaget’s CFO and its Senior Legal Counsel, who is also the Secretary to the Committee, and the auditors participate in the Audit Committee meetings, as when necessary, does Systembolaget’s President.

Responsibilities

The Board has delegated to the Audit Committee the right to address certain issues, and to take decisions on the same, and has, furthermore, tasked the Committee with otherwise preparing issues relating to Systembolaget’s financial reporting and the efficiency of the company’s internal controls, internal and external audits, and risk management.

The Audit Committee is also tasked with familiarising itself with the auditing of the annual accounts, and with reviewing and monitoring the impartiality and independence of the Auditors and with paying particular attention, in this context, to whether the Auditors perform any other services for the company, over and above auditing engagements.

The work of the Committee in 2016

The Audit Committee has held six meetings during the year. The committee carries out ongoing follow-up work on the company’s financial performance and a number of strategic key performance indicators of its operations. Systembolaget’s auditors have also presented significant accounting and audit issues, as well as internal control and process issues. Issues in connection with such subjects as internal and external audits, risk analysis, investment regulations, compliance, monitoring and status of projects in relation to the new business system, procurement of external auditors, policies and the Responsibility Report. The Chairperson of the committee provided the Board of Directors with regular information on the Committee’s work.

The Remuneration Committee

Composition

Systembolaget’s Remuneration Committee comprised three members in 2016: the chairperson of the Board, Kenneth Bengtsson, and Members of the Board Kerstin Wigzell and Håkan Leifman. Carl B Hamilton was a member of the Committee until the meeting following election in April 2016 when he resigned and Håkan Leifman was elected as a new member of the Remuneration Committee. None of the members of the Remuneration Committee are part of the company’s management. Systembolaget’s President attends the Committee’s meetings and the HR Director attends, as necessary.

Responsibilities

The Remuneration Committee is tasked with preparing issues relating to remuneration and other terms of employment for senior executives. The Committee may, within the framework of the guidelines adopted by the Annual General Meeting, independently negotiate with the President and the Vice Presidents with regard to remuneration and other conditions of employment. Decisions on remuneration and other terms of employment for the President and the two Vice Presidents are, however, the preserve of the Board of Directors.

The Remuneration Committee is also entitled, in cooperation with the President, to independently recruit and negotiate remuneration and other terms of employment for senior executives. Decisions on contracts of employment for senior executives (with the exception of the President and the Vice Presidents) shall ultimately be taken by the Remuneration Committee.

The work of the Committee in 2016

The Remuneration Committee has held five meetings during the year. The Committee has, in customary fashion, drawn up proposed guidelines for terms of employment for senior executives of Systembolaget. The Committee has, furthermore, addressed issues relating to pay reviews, pensions, the company management’s salary trend, evaluation of the work of the President of the company, succession planning and the talent pool, and the annual evaluation and updating of certain policies.

The President and senior executives

The President is responsible for the ongoing administration of the company’s operations and leads the operations pursuant to the provisions of the Swedish Companies Act, other legislation and regulations, Government guidelines and the Owner’s Directive, the Code, the Articles of Association and within the framework laid down by the Board of Directors, in particular in the instructions for the President. The President, in consultation with the Chairperson, prepares information and documentation to support the work by the Board and to enable the Board to take well-founded decisions. The President also reports to the Board on the company’s performance.

Systembolaget’s management and steering structure

Systembolaget’s company management comprises, in addition to the President, six persons. The company management meets every other week and the work is headed up by the President who, in consultation with the management, takes decisions in relation to the operating activities.

The decisions by the President and the management are based on the guidelines and instructions adopted by the Board of Directors and it is on this basis that the President and management compile, amongst other things, source data for the various managers within Systembolaget. These source data delimit the scope of the operating activities and take the form of internal steering documents, such as internal regulations and process and information models, and so on.

Guidelines for senior executives’ terms of employment

Systembolaget follows, in every significant respect, the Government’s guidelines on terms of employment for senior executives in State-owned companies. Systembolaget also complies with the normative provisions in the Code on remuneration for senior executives, which stipulate that the company shall have formalised and transparent processes for deciding on the remuneration payable to senior executives. See Note 6 of the financial reports for full details of guidelines and remuneration.

Assessment of the President

The Board shall, under the provisions of the Code, carry out a continual assessment of the President’s performance. The assessment of the President’s performance took place during the autumn with the help of an external consultancy firm, and examined the following components of the President’s performance, amongst others: the President’s goal fulfilment, media analysis, the President’s relationships with the Board and at managerial level, the President’s methodology and personal characteristics, and interviews with the Members of the Board and company management. The results of the assessment were very good across the board and revealed that the President is strongly supported by both the Board and the company management.

Sustainable enterprise

The State’s ownership policy states that the corporate governance of the state-owned companies shall act as a role model in the field of sustainable enterprise. This sphere includes areas such as human rights, labour conditions, the environment, anti-corruption and business ethics, and equal opportunities and diversity. Acting as a role model in the sphere of sustainable enterprise means, amongst other things, acting transparently on issues relating to significant risks and opportunities, engaging in an active dialogue with the company’s stakeholders in society, working in partnership with other companies and relevant organisations, and complying with international guidelines in the area. State-owned companies, such as Systembolaget, shall also have a well thought out and well rooted policy and strategy and shall adopt strategic goals in the area of corporate social responsibility, and Systembolaget has, therefore, adopted policies, strategies and strategic goals for its sustainability work. The strategic sustainability goals adopted by the Board of Directors for Systembolaget refer to the Alcohol Index and a reduction in climate impact throughout the value chain.

External audit

The auditor shall, under the provisions of the Swedish Companies Act, audit Systembolaget’s annual accounts and bookkeeping, and the administration by the Board of Directors and the President. The auditor is engaged by and reports to the General Meeting and may not allow him or herself to be guided by the management or the Board.

The current firm of auditors – Ernst & Young AB – was appointed as the auditors of Systembolaget at the Annual General Meeting, with Authorised Public Accountant, Åsa Lundvall, as the auditor in charge for the period up to and including the 2017 Annual General Meeting. The Annual General Meeting also approved the payment of auditors’ fees to the current firm of auditors, Ernst & Young, in accordance with a separate agreement.

It was also announced at the Annual General Meeting that the Riksdag Board has, in accordance with a resolution dated 16 March 2016, appointed three Lay Auditors, namely Maria Plass, Jörgen Hellman and Lennart Axelsson, together with three Deputy Lay Auditors, namely Niklas Karlsson, Andrea Völkler and Amir Adan, for the period up to and including the next Annual General Meeting.

Internal control

The Board of Directors is responsible for the company’s internal controls, pursuant to the provisions of the Swedish Companies Act and the Swedish Code of Corporate Governance. The most important features of the company’s systems for internal control and risk management in conjunction with the financial reporting are described below.

Systembolaget has established formalised processes for internal and external reporting. The external financial reporting of Systembolaget comprises interim reports, financial statements and the annual Responsibility Report.

Control environment

The basis for Systembolaget’s internal control comprises the control environment, together with the organisation, decision-making paths, authority and responsibility. The control environment is documented and communicated in steering documents, such as policies, internal regulations and guidelines, work routines and manuals, and the fundamental values communicated and operated upon by the Board and the company management. Systembolaget has internal functions for risk control, security and compliance. Internal audits are carried out by an external company.

Steering documents include the formal work plans for the Board, including the Board-appointed committees, the Instructions for the President, and the Financial authorisations for the company’s employees.

One example of an important control structure is the strict application of the duality principle, whereby no one person alone shall administer the entire processing chain and two mutually independent institutions shall be used in conjunction with the valuation of financial assets.

Risk assessment

Systembolaget conducts an annual, company-wide risk analysis. The stages of the risk analysis are as follows: Identify, evaluate, prioritise, manage and monitor. The risks are identified and evaluate by managers and key persons within the organisation, and by the company management. The risk analysis is prepared and approved by the company management and the Audit Committee. Management of the highest priority risks is then assigned to operations managers and are followed up annually by the company’s management and the Audit Committee.

A financial risk analysis was carried out in 2016, assessing every item in the Balance Sheet and Income Statement on the basis of specific criteria, namely materiality, the complexity of the valuation, previous errors, and the potential for fraud.

The assessment of the risk of errors in the financial reporting is also carried out on an ongoing basis as part of the day-to-day operations through the various control activities carried out.

Control activities

The control activities are structured to prevent, identify and rectify errors in the financial reporting. Systembolaget’s substantial liquid transactions and those that could potentially impact the results are, for example analysed daily. Business Control works in partnership with operations managers to monitor the way in which Systembolaget’s operations are developing in relation to the business plan, budget and set goals. Other members of the Accounts & Administration Department monitor the administrative processes within the organisation, including processes relating to VAT and tax accounting, internal and external entertainment, and compliance with authorisation and delegation regulations.

The Board receives the results of the financial results and key performance indicator monitoring on a rolling basis throughout the year. Some areas are also presented to the Board in greater depth, such as indicators, key performance indicators, and projects. A dialogue is held with the Owner on Systembolaget’s fulfilment of its mandate on a twice-yearly basis.

The prioritised, company-wide risks form the basis for the internal audit plan. The internal audit is independent and is conducted by an external company. Systembolaget’s external auditors not only audit the annual report, but conduct ongoing reviews.

Information and communication

Systembolaget’s internal communication process ensures that information is disseminated in a structured way throughout the organisation. Steering documents, such as policies, internal regulations and guidelines, work routines and manuals are, for example, available via Systembolaget’s intranet. Work routines are also communicated via employee training programmes.

Our external reporting – interim reports, financial statements, and the annual Responsibility Report – is published on the systembolaget.se website.

Monitoring

The company management and the Board of Directors receive ongoing reports on the way in which the operations have developed in relation to the business plan, budget and established goals.

The Audit Committee also receives regular reports on the results of internal audits carried out and on the operations’ risk management activities.