Svenska Spel

Corporate Governance Report

Svenska Spel is a Swedish limited liability company owned by the Swedish State. The administration of Svenska Spel is handled by the Unit for State Ownership within the Ministry of Finance.

State-owned companies are subject to the same legislation as private companies, such as the Swedish Companies Act, the Annual Accounts Act and the Bookkeeping Act. Companies active in certain industries may also be subject to special legislation. In the State ownership policy, the Government sets forth key issues of principle regarding corporate governance of all State-owned companies.

Read about the decisions regarding licences that the Government grants for Svenska Spel’s operations.

The decisions are available on the Company’s website svenskaspel.se.

Principles underlying corporate governance

In addition to what accrues from legislation or other ordinance, the following principles apply to corporate governance at ­Svenska Spel:

State ownership policy

Svenska Spel observes the State ownership policy ("ownership policy"). The ownership policy is available at the Government’s website, regeringen.se.

Corporate governance of state-owned companies is stated in the ownership policy. A key aspect of governance is that the Swedish Code of Corporate Governance ("The Code") shall be applied in State majority-owned companies. In certain issues, the Government justifies deviations from the Code, in compliance with the Code’s principle of "comply or explain". Examples of such deviations are the Code’s provisions regarding the preparation of decisions concerning the nomination of the Board and auditors.

The Code is available at the Swedish Corporate Governance Board’s website, bolagsstyrning.se.

Guidelines for remuneration of senior executives

Part of the ownership policy deals with guidelines underlying the terms and conditions of employment for senior executives in State-owned companies, which the Government set on 20 April 2009. According to the State ownership policy, the Board of Directors in State-owned companies, just as in listed companies, shall propose guidelines for the remuneration of senior executives for approval, which shall be compatible with Government guidelines.

On 24 April 2012, Svenska Spel’s AGM approved the guidelines for the remuneration of senior executives. Svenska Spel applies these guidelines, which are available at Svenska Spel’s website svenskaspel.se.

Owner’s mandate

In conjunction with the AGM on 24 April 2012, the shareholder resolved on a shareholder’s directive, which included the owner’s mandate for the Company. Information on the content of the shareholder’s mandate for Svenska Spel is available at Svenska Spel’s website svenskaspel.se.

Articles of Association

In addition to the stipulations of the Swedish Companies Act, the Articles of Association do not include any particular stipulations concerning the appointment or dismissal of Board member or amendments to the Articles of Association.

Board nomination process

The nomination of the Board members of State-owned companies is conducted in line with the principles described in the State ownership policy. These principles replace the Code’s rules and a nomination committee, as provided in the Code, does not exist.

Instead, according to the State’s ownership policy, the following principles apply:

  • The nomination process for Board members is run by and ­coordinated by the Unit for State Ownership within the ­Ministry of Finance.
  • A team analyses the competency requirement based on the composition of the Board and the Company’s operations and ­situation.
  • Subsequently, any recruitment requirement is set and the recruitment process commences.
  • The selection of directors is made from a broad-based ­recruitment base.
  • When the process is finalised, the nominations are published in line with the rules of the Code.

Annual General Meeting (AGM)

In accordance with the Articles of Association, Members of ­Parliament are entitled to attend the AGM. The ownership policy states that the public should be invited to attend the AGM and all State-owned companies should make some form of arrangement that offers the public the opportunity to ­present questions to the executive management. According to the ownership policy, the report that the Board submits at the AGM regarding the application of previously decided guidelines for the remuneration of senior executives should also encompass subsidiaries. Two Board members were unable to attend the 2012 AGM.

Board

Size and composition of the Board

The Articles of Association specify that the Board is to comprise not less than three and not more than ten directors appointed by the AGM. Also, pursuant to the Swedish Act on Board Representation (1987:1245) employees in the private sector are entitled to appoint three Board members and three deputies.

According to State ownership policy, the number of Board members should normally be six to eight persons, with a desired gender distribution of at least 40%.

The Board currently consists of eight members elected by the AGM. Of these, four are women and four are men. In addition, the Board has three members with three deputy members appointed by the employee organisations.

None of the Board members elected by the AGM work as executives in the Company or as executives in the Company’s subsidiaries. The CEO is not a Board member, but attends Board meetings. All Board members elected by the AGM are independent in relation to the Company and executive management. The Unit for State Ownership within the Ministry of Finance makes the assessment of independence.

Board members

Each Board member’s age, education, ­primary occupational experience, and other significant appointments outside the Company and when the member was elected to the Board of Svenska Spel is presented on Board of Directors.

The Board’s work procedures

The work of the Board is documented in the Board’s rules of ­procedure, which are reviewed and set at least once annually. The division of competencies among Board members, Board committees, Chairman of the Board, CEO and internal revision are expressed in the Board’s rules of procedure and in the Board’s instructions to the CEO and to the head of internal revision.

Board committees

The Board has set up two permanent committees among its members: an Audit Committee and a Remuneration Committee.

Audit Committee

Until 2012, the Audit Committee had consisted of three Board members. After the AGM, the Committee comprises four members who are annually elected by the Board. Since the statutory meeting in April 2012, they have been Catarina Fritz, (Chairman), Hans Bergenheim, Frank Åkerman and Cecilia Marlow. In addition, one of the employee representatives is entitled to attend and ­participate in the Committee meetings.

Without affecting the Board’s responsibility and tasks in ­general, the Audit Committee’s task includes monitoring the Company’s financial reporting, monitoring the effectiveness of the Company’s internal control, internal auditing and risk management in respect of financial reporting, and to keep itself informed of the audit of the annual report and consolidated accounting.

The complete tasks of the Audit Committee are shown in ­ Chap. 8, Section 49 of the Swedish Companies Act (2005:551).

The Board has delegated its right of decision to the Audit ­Committee for the focus of internal auditing, in part through preparation of annual internal auditing plans, including the budget, as well as guidelines for the non-auditing assignments that the Group may purchase from the Company’s auditors, and the appointment of internal auditors.

Internal and external auditors take part in meetings of the Audit Committee, thus enabling information to be shared on a regular basis and for coordination between the internal and external auditing work, and for a view of the Group’s risks. The Company’s CFO also attends the committee’s meetings to present reports, and they are also attended by the Company’s Chief Legal Counsel.

The Audit Committee reports after each meeting to the entire Board. During 2012, the Audit Committee held eight meetings. Attendance of the members at the committee’s meetings is shown on Board of Directors.

Remuneration Committee

Until 2012, the Remuneration Committee had consisted of three Board members. After the AGM, the Committee comprises four members who are annually elected by the Board. Since the statutory meeting in April 2012, they have been Anitra Steen (Chairman), Michael Thorén, Eva-Britt Gustafsson and Christer Åberg. The CEO, HR Manager and Chief Legal Counsel also attend. In addition, one of the employee representatives is entitled to be present and participate in the Committee meetings.

In line with the Board’s work procedures, the main tasks of the Remuneration Committee comply with the Code. The Board has not delegated any right of decision to the Remuneration Committee.

In 2012, the Remuneration Committee met on six occasions. Attendance of members at Committee meetings is presented on Board of Directors.

Work of the Board in 2012

In 2012, the Board held ten meetings and one strategy seminar. The Board’s work focused on such matters as the Company’s future focus, goals and strategies, responsible gaming, its brand, cost-efficiency enhancements and the Company’s overriding sustainability efforts. The Board was assisted by the Board Secretary, Bengt Palmgren, who is the Company’s Chief Legal Counsel.

Attendance at Board meetings is shown in the presentation on Board of Directors.

CEO

The presentation on Management shows the CEO’s age, main education, work experience, important commissions outside the Company and significant holdings in companies with which Svenska Spel has major business relations.

Internal control

Pursuant to the Swedish Companies Act and the Code, the Board is responsible for internal control, which means the Company shall have favourable internal control and formal routines that ensure that the set principles for financial reporting and internal control are observed. Responsibility also includes ensuring that the Company’s financial reports are drawn up in compliance with legislation, applicable accounting standards and other external requirements. According to the Code, the Board’s description of internal controls is limited to the financial reporting. Svenska Spel uses COSO’s framework in drawing up and describing the structure of internal control. The framework comprises the following components: control environment, risk assessment, control activities, information and communications, as well as follow up.

Control environment

Control environment is a collective term for the factors that impact an organisation and thus impact control awareness. Examples of this are ethics, leadership style, delegation of responsibility, commitment and governance. The control ­environment is essential in preventing the risk of the intentional and unintentional errors in the financial reporting and in the organisation as a whole. Accordingly, the control environment comprises the basis for internal control and takes the shape of the organisation, decision-making channels, authorisation and responsibility, which are documented and communicated in governance documents.

Each year, the Board sets up the following documents that combine with legislation and other external regulations to form the framework that sets the platform of the Group’s processes for good internal control in respect of financial reporting.

  • Work procedures for the Board
  • Work procedures for the Audit Committee
  • The Board’s instructions for the CEO
  • Instructions for internal auditing
  • Compliance instructions
  • Financial policy and risk-management policy.
  • Guidelines for attestation and for attestation and payment

Instructions and work routines for on-going accounting, closing accounts and financial reporting are otherwise documented at the detailed level.

Risk assessment

Taking a structured approach to risks and risk management ­enables Svenska Spel to ensure strong internal control. The ­process facilitates the operation’s ability to identify areas with a high risk of significant errors in the financial reporting.

The Group’s overriding processes for risk assessment and risk management, as well as the current risk status, are addressed each year by the Board. The Board assesses and monitors risks and the quality of financial reporting via the Audit Committee. The Audit Committee annually performs risk analyses for its ­financial reporting, which are also compared with the internal and external audits performed. Based on the risk assessment, decisions are made concerning what actions must be taken to ensure strong internal control.

The Group’s risks are compiled and measured on at least a ­quarterly basis and, effective 2011, the on-going risk assessment is integrated into the Group’s internal financial monitoring. The aim of reporting is to raise the focus on on-going risk analysis and capture significant changes in the risk profile in time.

Control activities

Control actions are identified and designed to address the identified risks and to take action in the areas that have the greatest risk of significant errors. Control actions are defined as activities to reduce the probability and/or consequences of a certain risk. This involves general and more overriding activities, such as process descriptions, the delegation of roles and responsibility, attestation procedures, briefings and follow-ups, and area-specific controls and/or system controls.

Svenska Spel’s processes related to the financial reporting encompass risk assessment, process description, roles and responsibility and the controls that are established to manage identified risks. The processes are continuously evaluated and adapted in the aim of corresponding to the applicable regulatory framework in the form of generally accepted accounting principles, the applicable laws and regulations, as well as other external requirements.

The joint group accounting function draws up consolidated accounting and financial reporting. The work includes built-in control activities to manage the risk of incorrect accounting of income statement and balance sheet items.

Compliance with the Code of Conduct, policies and guidelines that affect financial reporting are ensured through regular control and any deviations are reported to the manager in charge. The Code of Conduct, policies and guidelines for attestation and payment are adopted annually by the Board.

Information and communications

Well-functioning channels for communicating the management’s view on the governance of financial reporting and internal controls are a prerequisite for informing all employees how to behave and act on various matters. Governing documents in the form of policies, guidelines and instructions, which are of significance in the financial reporting are available on Svenska Spel’s intranet. Each employee is responsible for seeking information and continuously staying up-to-date on relevant governing documents. In addition, in conjunction with annual performance reviews, each manager is responsible for ensuring the employees possess a sufficient level of knowledge and understanding.

Training courses are held a few times a year as needed with new managers to ensure that information has been disseminated and received correctly. Essential financial information is only handled by authorised personnel and clear rules are in place for what to publish and when.

Follow-up

All information about the organisation’s various operations must regularly be evaluated and followed up, part of which includes following up control activities in the financial reporting. The Group’s Controller function is organised in an overriding staff function, although each controller works in close cooperation with the operation and is a member of the management teams in each result area or staff function. The function is responsible for follow-ups being conducted in terms of goals, forecasts and previous reporting periods. Key figures are reviewed and calculations are followed up. In-depth analyses are performed on recognised figures and results and delivered in the form of a compiled monthly report divided by unit and including comments. The report is delivered to management and supervisors, and selected sections are delivered to the Board. The Board is given financial information during each Board meeting. The Board also has access to monthly financial reporting through a special Board portal.

The application of the Group’s policies is followed up annually and reported to the Board. The unit that is responsible for a policy is also responsible for ensuring compliance with it. The report must indicate whether there have been any significant deviations.

At Svenska Spel’s Board meeting in December, the CEO must, in writing, present the reviews that were conducted on the Group’s policies in the past year.

Svenska Spel has an internal audit function that reports directly to the Board’s Audit Committee. The internal audit assists the Board and CEO with independent and objective surveys aimed at proposing actions and improvement programmes. The function supports the Group’s other units in achieving their goals by evaluating process effectiveness for control and risk identification.

Deviations from the Code

Svenska Spel applies the Code with the deviations listed below.

Code regulation  Deviation Explanation/comment
Section 2.1–2.7 The Company shall have a Nomination Committee that represents the Company’s shareholders. A Nomination Committee per section 2.1–2.7 of the Code has not been established. The Board nomination process is run and coordinated by the Unit for State Ownership within the Ministry of Finance.
Section 10.2 The corporate governance report must include information on whether or not the Board members are independent in their relationship with major shareholders. The dependency relationship to major shareholders is not reported. The ownership policy of the State specifies that the relevant provisions in the Code primarily aim to protect minority shareholders in companies with broad-based ownership. It is not necessary for companies that are wholly owned by the State to declare independence in this manner.

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