Objective and operating priorities
We are committed to generating an attractive long-term total return, exceeding the market cost of capital. Our long-term return requirement is the risk free interest rate plus an equity risk premium, in total 8-9 percent annually. Our operating priorities are to grow our net asset value, operate efficiently and pay a steadily rising dividend.
Grow our net asset value
To achieve attractive net asset value growth, we must own high-quality companies and be a good owner, supporting our companies to achieve profitable growth. We also need to allocate our capital successfully.
2017: Our reported net asset value amounted to SEK 336.3 bn. at year-end 2017 (300.1), an increase, with dividend added back, of 15 percent (13). The SIXRX total return index rose by 9 percent (10). The average annualized return on net asset value including dividends added back has been 10 percent over the past ten years and 9 percent over the past 20 years. During 2017, 85 percent of our portfolio companies contributed positively to the reported net asset value.
We maintain cost discipline to remain efficient and in order to maximize our operating cash flow.
2017: Management costs were SEK 455 m. (465), corresponding to 0.14 percent of our reported net asset value (0.15).
Pay a steadily rising dividend
Our dividend policy is to distribute a large percentage of the dividends received from the listed core investments, as well as to make a distribution from other net assets corresponding to a yield in line with the equity market. The goal is to pay a steadily rising dividend.
2017: The Board of Directors proposes a SEK 12.00 dividend per share (11.00), to be paid in two installments, SEK 8.00 per share in May, 2018, and SEK 4.00 per share in November, 2018. Based on this proposal, our dividend has increased by 11 percent annually over the past five years and 10 percent over the past ten years.