How to read a Swedish annual report — step by step

The annual report is the company's own trial — where it must speak truthfully, in a way marketing material never has to. The problem is that it is written for auditors, not for you. Here is the route through the report in 20 minutes, with exactly what to look for at each place. The same map is used in the AKM1 calculator's report guide.

Step 0: Get the right document (2 min)

Go to the company's investor relations page or the exchange's presentation page. Download the annual report (not the press release, not the presentation — those are marketing). You want the PDF with 'annual report' in the title, at least 40 pages. A dormant company with a 15-page 'summary'? Ask yourself why.

Step 1: The administration report — the CEO's letter (3 min)

Read the first paragraph and the last paragraph. Between them lies the truth: the CEO tells the year in STORY form. Note:

• Are failures written in passive form ('the market weakened') but successes active ('we launched')? A classic pattern
• Words that recur: 'transition', 'focus forward', 'one-off effects' — count them
• Compare with last year's letter: the same promises again? There lie the most honest signals

Step 2: The income statement — the year's cash flow engine (5 min)

Find 'Consolidated income statement'. Read from the top down, four rows mean everything:

1. Net revenue — this year and last year (the column beside). Calculation, per the course: (this year − last) ÷ last = growth V01 2. The operating costs — together with the revenue gives the gross margin V07 3. Operating profit — + depreciation = EBITDA → margin V08 4. The year's result — the bottom line after financials and tax → used in ROE V09

Step 3: The balance sheet — what owns what (4 min)

Three numbers to lift out:

• Cash and bank + short-term investments — the war chest V19 in the course
• Equity — both years (for the ROE average and P/B) V05
• Liabilities and other commitments — the total, for the debt-to-equity ratio V10

A warning signal to look for: if 'Recognized and other liabilities' grows much faster than the revenue, open the notes to the accounts — there hide deferred tax, guarantees and pension commitments.

Step 4: The cash flow statement — the truth behind the result (3 min)

The result can be made up. The cash flow cannot. Three rows:

• Cash flow from ongoing operations — the real operating surplus. Positive year after year = worthy of a moat
• Investments — how much goes to growth vs. maintenance?
• Financing activities — loan uptake? Dividend? Share issue? (Look closely at share issues: they dilute YOU)

Rule: companies that report profit year after year while running cash flow is negative — read the note on revenue recognition one extra time.

Step 5: The notes to the accounts — where the lawyers speak (3 min)

You do not need all the notes to the accounts. Three of them:

1. Accounting policies (note 1) — changed principles this year? Why? 2. Segment reporting — which parts of the company earn the money? The V03 course explains 3. Major customers — if one customer is > 10 % of revenue it MUST be disclosed. Concentration = risk

The route in table form

| Step | Document part | Gives variable | Time | |---|---|---|---| | 0 | IR page → PDF | — | 2 min | | 1 | Management report | story vs truth | 3 min | | 2 | Income statement | V01, V07, V08, V09 | 5 min | | 3 | Balance sheet | V05, V10, V19 | 4 min | | 4 | Cash flow statement | V19 + honesty check | 3 min | | 5 | Note 1 + segments + major customers | V03 + warnings | 3 min |

Total: 20 minutes — and you have more control over the numbers than 90 % of the market.

Practice right away

Open the annual report of any company you own or watch, follow the route, and enter the numbers in the calculator's 'Calculate with your own numbers' tab. In 30 minutes you have your first entirely self-collected AKM1 dataset. Missing the company in our analyses? Request it — frequently requested wishes are prioritized.

FAQ

What is the difference between an annual report and an interim report?

Årsredovisningen är den fullständiga rapporten för hela räkenskapsåret — förvaltningsberättelse, resultaträkning, balansräkning, kassaflödesanalys och noter — och den granskas av revisorer. Delårsrapporten är kortare och mindre detaljerad. En 20-minutersrutt genom årsredovisningen ger därför ett stabilare underlag än samma rutt genom en kvartalsrapport.

How do I find a company's annual report?

Go to the company's investor relations page or the exchange's presentation page and download the PDF with annual report in the title — not the press release or the presentation, which are marketing. A genuine annual report is often at least 40 pages; a thin 15-page summary deserves the question of why.

Vilka noter ska jag läsa först — det finns ju hundratals?

Tre noter räcker långt: redovisningsprinciperna (vanligen not 1) avslöjar ändrade regler, segmentredovisningen visar vilka delar av bolaget som tjänar pengar, och storkundenoten visar kundkoncentration — en kund över 10 procent av omsättningen måste redovisas. Noterna är där bolaget måste förklara sig, vilket är skälet till att de kallas rapportens sanningszon.

Can I trust the figures in an annual report?

Siffrorna följer tvingande regler och granskas av revisorer, men redovisningen lämnar utrymme för val — avskrivningstider, intäktsredovisning och principändringar kan påverka resultatet. Därför jämförs resultaträkningen alltid med kassaflödesanalysen: kassaflödet är svårare att sminka än resultatet. Bolag som visar vinst år efter år med negativt löpande kassaflöde förtjänar en extra läsning.

This is educational financial analysis, not investment advice.