Annual General Meeting of Serneke Group AB (publ)

4/4/2018

The shareholders of Serneke Group AB (publ) (“Serneke”) or (the “Company”), corporate identity number 556669-4153, are hereby invited to the Annual General Meeting on Thursday, May 3, 2018 at 6:00 p.m. (CET) at the Company’s premises at Kvarnbergsgatan 2 in Gothenburg, Sweden.

REGISTRATION - RIGHT TO PARTICIPATE

Shareholders wishing to take part in Serneke Group AB’s Annual General Meeting must be registered in the shareholders’ register maintained by Euroclear Sweden AB as of April 26, 2018, and have notified the Company of their attendance no later than April 27, 2018, preferably before 4:00 p.m. (CET). Registration is done by mail to Serneke Group AB, Attention: Inger Svanholm, Kvarnbergsgatan 2, SE-411 05 Gothenburg, Sweden, by telephone: +46 31 712 97 00 or by e-mail: agm@serneke.se. Upon notification, shareholders must state their name, Swedish personal identity number/corporate identity number, address, telephone number, shareholding and the names of any accompanying assistant/s (maximum of two).

In order to attend the General Meeting, shareholders with nominee-registered shares must temporarily re-register their shares in their own name with Euroclear Sweden AB. Accordingly, shareholders must inform the trustee of this request in ample time prior to April 26, 2018.

Shareholders represented by proxy shall issue a written and dated power of attorney. If the proxy is issued by a legal person, a certified copy of the registration certificate or similar papers of authorization are also required. Power of attorney, registration certificates and other authorization documents must be available for the General Meeting and, in order to facilitate entry to the General Meeting, sent to the Company at the above address no later than April 26, 2018. The power of attorney may not be older than one year unless indicated that it is valid for a longer period, not exceeding five years. Proxy forms for shareholders wishing to attend the General Meeting by proxy will be made available on the Company’s website www.serneke.group.

Number of shares and votes

As of April 4, 2018, there are a total of 23,248,452 shares in Serneke Group AB (publ), of which 5,360,000 are Class A shares and 17,888,452 are Class B shares. The total number of votes in Serneke amounts to 7,148,845.2.

Shareholders’ right to request information

The shareholders are reminded of their right to, in accordance with Chapter 7, Section 32 of the Companies Act, request information from the Board and the CEO at the Annual General Meeting.

PROPOSED AGENDA

l.        Opening of the General Meeting

2.      Election of the Chairman at the General Meeting

3.      Preparation and approval of voting list

4.      Adoption of the agenda

5.      Election of one or two persons to verify the minutes of the General Meeting

6.      Examination of whether the General Meeting was duly convened

7.       Presentation of the Annual Report and audit report, the consolidated accounts and audit report on the consolidated accounts

8.      Address by the CEO

9.      Resolution on the adoption of the income statement and balance sheet and consolidated income statement and consolidated balance sheet

10.    Decision regarding the appropriation of the Company’s profit or loss according to the adopted balance sheet

11.    Resolution on whether to discharge the Board Members and the CEO from liability

12.    Determination of the number of directors and auditors

13.    Determination of fees for the Board and auditors

14.    Election of Board Members and Chairman

15.    Election of auditor

16.    Resolution to approve an employee ownership program

17.    Decisions concerning the adoption of guidelines for remuneration to senior executives

18.    Closing of the General Meeting

NOMINATION COMMITTEE’S RESOLUTION PROPOSAL

The Nomination Committee has consisted of Carl Sandberg (Chairman of the Nomination Committee), appointed by Ola Serneke Invest AB, Ludwig Mattsson, appointed by Lommen Holding AB, Christer Larsson, appointed by Christer Larsson in Trollhättan AB, Sofia Åstenius, appointed by Ledge Ing AB, and Kent Sander, Chairman of the Board of Serneke.

Election of Chairman of the Board at Annual General Meeting (item 2)

The Nomination Committee proposes that Jörgen S. Axelsson be elected Chairman at the Annual General Meeting.

Establishment of number of Board Members and auditors (item 12)

The Nomination Committee proposes that the Board shall consist of six elected members. The Nomination Committee further proposes that the Company shall have a registered accounting firm as auditor.

Determination of fees to Board Members and auditors (item 13)

The Nomination Committee proposes that fees to the Board Members shall amount to a total of SEK 2,000,000 of which SEK 750,000 shall go to the Chairman of the Board and SEK 250,000 to each of the other Board Members not employed by the Group. For work in the Audit Committee, the Nomination Committee proposes that fees of SEK 100,000 go to the Chairman and SEK50,000 to each of the other two members of the Committee. Fpr work in the Remuneration Committee the Nomination Committee proposes that no extra fees shall be paid to the Chairman (since included in the ordinary remuneration for the Chairman of the Board) and SEK 25,000 each to the other two members of the Committee. The Nomination Committee proposes that fees to the auditors be paid according to approved invoices.

Election of Board Member and Chairman of the Board (item 14)

For the period until the next Annual General Meeting, the Nomination Committee proposes
re-election of Kent Sander, Mari Broman, Ludwig Mattsson and Ola Serneke, and that Anna-Carin Celsing and Susanne Lithander are appointed as new board members. Anders Wennergren and Kristina Willgård have declined re-election. The Nomination Committee proposes re-election of Kent Sander as Chairman. A report on the nomination committee’s proposals and further information regarding the proposed Board members is available on the Company’s website, www.serneke.group.

Election of auditor (item 15)

The Nomination Committee proposes that the registered auditing company Deloitte AB be re-elected as auditor for the period until the Annual General Meeting 2019. Deloitte AB has informed the Company that authorized public accountant Harald Jagner will be appointed as chief auditor, provided Deloitte AB is re-elected as auditor.

The PROPOSALS BY THE Board OF DIRECTORS

Dividend (item 10)

The Board proposes that the Annual General Meeting resolves on a dividend of SEK 4.00 per share and that the record date for dividend shall be Monday, May 7, 2018. If the Annual General Meeting resolves in accordance with the proposal, the dividend will be paid to shareholders on Friday, May 11, 2018.

Resolution to approve an employee ownership program (item 16)

The Board of Directors proposes that the Annual General Meeting resolves to introduce an annual employee ownership program (the “Programs”) with the aim that the Programs should cover as far as possible all employees in the Group. The purpose of the Programs is to increase the ability to retain and recruit employees in the Group. The Board of Directors further believes that a personal and long-term ownership commitment by the participants will contribute to increased interest in the Company’s operations and development of earnings and provide a competitive and motivational boost for all employees in the Group.

The Board proposes that the Annual General Meeting decide to introduce a Program annually in 2018, 2019 and 2020 respectively. The proposal is divided into three parts:

Part A:          Terms and conditions for the employee ownership programs

Part B:          Hedging measures in the form of repurchase and transfer of own Class B shares

Part C:          Other issues arising from the employee ownership programs

The Annual General Meeting’s decision to introduce the Programs according to Part A below is conditional upon the Annual General Meeting resolves in accordance with the proposal by the Board of Directors as set out in Part B below.

Part A:             Terms and conditions for the employee ownership programs

The Board of Directors proposes that the Annual General Meeting resolves to approve three employee ownership programs for 2018, 2019 and 2020, respectively, on the terms and guidelines set out below.

1. The Programs shall include all full-time and permanent employees in the Serneke Group. Participation in the Programs requires that the participants acquire Class B shares in Serneke (the “Savings Shares”) at market prices on Nasdaq Stockholm during the following periods (the “Investment Periods”):

Program	Investment Periods
2018	July 1 – December 31, 2018
2019	January 1 – December 31, 2019
2020	January 1 – December 31, 2020

2. The employees are divided into three categories: (A) Group management, each of which may acquire Savings Shares for an amount equal to no more than 10 percent of the respective participants’ annual fixed gross salary; (B) Key positions, each of which may acquire Savings Shares for an amount equal to no more than 7.5 percent of the respective participants’ annual fixed gross salary; and (C) Other employees, each of which may acquire Savings Shares for an amount equal to no more than 5 percent of the respective participants’ annual fixed gross salary. The Key positions category is divided into two sub-categories; “Regional managers or equivalent” and “Construction managers or equivalent”. Acquisition of Savings Shares takes place by employees renouncing part of the monthly salary. Acquisition of Savings Shares takes place on a quarterly basis. The number of employees included in the respective category is shown below. The data on the number of employees for the respective Programs are estimates.

Categories	2018	2019	2020
Group management (A)	10	10	10
Regional managers or equivalent (B1)	10	12	14
Construction managers or equivalent (B2)	50	60	70
Other employees (C)	1,000	1,150	1,400

3. The term of the respective Program is proposed to be 3 years from the end of the quarter during which the participant waived part of the monthly salary for the acquisition of Savings Shares. For example, the Savings Period for shares acquired through savings during July, August and September 2018 expires on September 30, 2021.

4. Participants who retain the Savings Shares during the Savings Period and, in addition, are employed by the Group throughout the Savings Period, will receive, after the expiration of the respective Savings Period, 0.5 shares of Class B in Serneke (the “Matching Shares”) for each Savings Share attributable to such Savings Period at no cost. If the number of Matching Shares is not an integer, rounding is done downwards. Delivery of Matching Shares occurs quarterly immediately following the expiry of the respective Savings Period.

5. In addition to Matching Shares, participants will be able to obtain additional shares of Class B in Serneke (the “Performance Shares”), provided that the participant is employed in the Group throughout the Savings Period and that certain performance conditions are met. If the number of Performance Shares is not an integer, rounding down will occur. Delivery of Performance Shares occurs quarterly immediately following the expiry of the respective Savings Period. The allocation of Performance Shares is based on the degree of achievement in respect of the following performance conditions: (i) Net sales growth, (ii) EBIT margin and (iii) Return on equity. Performance conditions shall be measured during the following performance periods:

Program	Performance periods
2018	January 1 – December 31, 2018
2019	January 1 – December 31, 2018
2020	January 1 – December 31, 2018

6. Target levels (minimum and maximum) have been set for the performance period 2018 as shown in the table below. Corresponding target levels for the performance periods 2019 and 2020 will be determined by the Board of Directors in connection with the start of each period. The relative weighting of each of the performance conditions is one third. Within the target levels of the respective performance conditions, a linear calculation of the outcome is determined. If the minimum level of performance conditions is not met, no Performance Shares will be delivered for such performance condition. After each performance period, the Company will provide information to the shareholders regarding applicable target levels for the respective performance conditions and to what extent the performance conditions have been met.

Performance conditions 2018	Minimum level	Maximum level
Net sales growth	10%	25%
EBIT margin	4%	10%
Return on equity	10%	20%

7. For each Savings Share, participants have the opportunity to receive the number of Performance Shares as shown below.

Categories	Number of Performance Shares
Group management (A)	up to 7.5
Regional managers or equivalent (B1)	up to 3.5
Construction managers or equivalent (B2)	up to 1.5
Other employees (C)	up to 0.5

8. The number of Matching Shares and Performance Shares may be recalculated as a result of a bonus issue, share split, combination of shares and / or other similar measures.

9. The Board of Directors or the Company’s Remuneration Committee shall be responsible for the determination of the detailed terms and conditions of the Programs, within the terms and guidelines set out herein. The Board of Directors shall have the right to make adjustments and amendments to the Programs if there are significant changes in the Group or its environment which means that the Programs no longer meet the overall objectives of the Programs.

10. The maximum number of shares under included in the Programs amounts to 1,353,120 Class B shares, corresponding to approximately 5.5 percent of the number of issued shares after dilution and approximately 1.9 percent of the votes after dilution. The maximum number of shares per Program is set out below.

Program	Number of Class B shares	Dilution, number of shares	Dilution, number of votes
2018	437,850	1.8%	0.6%
2019	458,014	1.9%	0.6%
2020	457,256	1.9%	0.6%
Total	1,353,120	5.5%	1.9%

If the number of employees participating in each Program is large and this means that the maximum number of shares for such Program is exceeded, the number of Savings Shares in the Program will be reduced proportionally among the participants.

Part B:             Hedging measures in the form of repurchase and transfer of own Class B shares

Overview

The Board of Directors proposes that the Company’s obligations to deliver Matching Shares and Performance Shares under the Programs shall be secured by the Company repurchasing own Class B shares, which may subsequently be transferred free of charge to participants in the Programs. Furthermore, the Board of Directors proposes that the authorization to repurchase shares should also include the number of Class B shares necessary to hedge certain costs attributable to the Programs, mainly social security contributions. The maximum number of Class B shares that (i) may be transferred free of charge to participants in the Programs and (ii) can be sold on Nasdaq Stockholm to generate cash flow for payment of costs, mainly social security contributions, are set out below:

Program	Maximum number of Matching Shares and Performance Shares	Maximum number of shares to hedge costs, social security contributions	Dilution, number of shares	Dilution, number of votes
2018	437,850	137,573	2.4%	0.8%
2019	458,014	143,908	2.5%	0.8%
2020	457,256	143,670	2.5%	0.8%
Total	1,353,120	425,151	7.1%	2.4%

Resolution to authorize the Board of Directors to resolve to repurchase of own Class B shares

The Board of Directors proposes that the Annual General Meeting authorize the Board of Directors, on one or more occasions until the next Annual General Meeting, to resolve to repurchase a total of 1,778,271 own Class B shares. Acquisitions shall take place at Nasdaq Stockholm and only at a price within the price range registered at any given time, i.e. the range between the highest bid price and the lowest offer price. Payment for repurchased shares shall be paid in cash.

The purpose of the authorization is to ensure the delivery of Matching Shares and Performance Shares to participants pursuant to the Programs, as well as to hedged costs of the Company, mainly social security contributions, attributable to these programs through repurchase of Class B shares.

The Board of Directors’s reasoned opinion, according to Chapter 19, section 22 of the Swedish Companies Act, on the proposal to authorize the Board of Directors to resolve on repurchase of Class B shares, is available under the section “Documents” below.

Resolution on transfer of own Class B shares

The Board of Directors proposes that, with deviation from the shareholders’ preferential rights, the Annual General Meeting resolves to transfer a maximum of 1,353,120 own Class B shares to participants under the Programs. Transfers of Class B shares shall be made free of charge to the participants and at such time and on the other terms set forth in the terms and conditions of the Programs. Transfers will occur quarterly in arrears beginning in the second half of 2021. The number of Class B shares that may be transferred under the Programs shall be recalculated according to the customary re-calculation principles as a result of a bonus issue, share split, combination of shares and / or other similar events.

The Board of Directors intends to present proposals at future Annual General Meetings to authorize the Board of Directors to resolve on the transfer of own Class B shares in order to cover costs related to the Programs, mainly social security contributions. Transfers of shares to cover such costs are not expected to occur until the second half of 2021 in connection with the transfer of Matching Shares and Performance Shares to participants of the 2018 Program.

Part C:              Other issues arising from the employee ownership programs

Conditions for the resolutions

The Annual General Meeting’s resolution to establish the Programs according to part A above is conditional upon the Annual General Meeting resolving in accordance with the Board of Directors’ proposal under part B above.

Majority requirements

A valid resolution under part A above, requires approval of shareholders representing at least half of the votes cast at the Meeting. A valid resolution under part B above, requires approval of shareholders representing at least two thirds of both the votes cast and the shares represented at the Meeting, except as regards the resolution to transfer Class B shares to the participants under the Programs, which, according to Chapter 16 of the Swedish Companies Act, requires approval of shareholders representing at least nine tenths of both the votes cast and the shares represented at the Meeting.

Costs

The Programs will be reported in accordance with “IFRS 2 – Share based payments”. According to IFRS 2, the allocation of shares shall be recorded as personnel costs during the qualifying period and shall be recognized directly against equity. Personnel costs in accordance with IFRS 2 do not affect the Company’s cash flow. Social security contributions will be accounted for as cost in the income statement by regular provisions in accordance with generally accepted accounting principles. The size of these provisions is revalued based on the value development of the right to Matching Shares and Performance Shares, and the social security contributions that may be paid for the allotments of Matching Shares and Performance Shares. Based on the assumption of a share price of SEK 95 at the time of the introduction of the Program for 2018, an annual increase in the share price of 15 percent from the introduction of the program until shares are obtained approximately 3 years later, a participation rate of 50 percent and no staff turnover among the participants, the total cost, including social security contributions, amounts to approximately SEK 27.8 million, provided that the performance conditions are met in full. Based on the same assumptions as above, but with the fulfillment of the performance conditions corresponding to 50 percent, the total cost, including social security contributions, is estimated to amount to approximately SEK 18.3 million, equivalent to an average annual cost of approximately SEK 6.1 million.

In respect of the 2019 Program and based on the same assumptions as above, and that performance conditions are met in full, the total cost, including social security contributions, is estimated to approximately SEK 30.2 million. Under the same conditions, but with the fulfillment of the performance conditions corresponding to 50 percent, the total cost, including social security contributions, is estimated to amount to approximately SEK 20.0 million, which corresponds to an average annual cost of approximately SEK 6.7 million.

In respect of the 2020 Program and based on the same assumptions as above, and that performance conditions are met in full, the total cost, including social security contributions, is estimated to approximately SEK 34.7 million. Under the same conditions, but with the fulfillment of the performance conditions corresponding to 50 percent, the total cost, including social security contributions, is estimated to approximately SEK 23.2 million, which corresponds to an average annual cost of approximately SEK 7.7 million.

Rational for the Programs

The Programs have been designed to reward the participants for increased shareholder value through the allotment of shares based on the fulfillment of established performance based terms. In addition, allotment of shares also requires that an investment is made by each participant by acquiring shares in the Company at market prices. By associating employee compensation to the Company’s development of earnings and value, long-term value growth in the Company is rewarded. Against this background, the Board of Directors believes that the introduction of the Programs will have a positive impact on the continued development of the Serneke Group, thus benefiting both shareholders and the Company.

Preparation of the proposal

The proposal for the employee ownership program has been prepared by the Remuneration Committee in consultation with external advisors. The proposal has been approved by the Board of Directors. The CEO has not participated in the Board of Directors’ preparation of the matter.

Outstanding share-related incentive programs

The Company’s current share-based incentive programs are described in the Company’s Annual Report for 2017, note 27.

Decisions concerning the adoption of guidelines for remuneration to senior executives (item 17)

The Board proposes that the Annual General Meeting approve the following guidelines for remuneration and other employment terms for senior executives. In this context, “senior executives” refers to the CEO and other senior managers in the Serneke Group. These remuneration guidelines also apply to Board Members to the extent these receive compensation for services rendered to the Serneke Group beyond their roles as Board Member.

Serneke shall apply remuneration levels and other terms of employment necessary to be able to recruit and retain senior executives with the expertise and capacity to achieve the established targets, and that are designed to promote long-term generation of value by the Company. Remuneration shall be paid in the form of fixed salary, other benefits and pension. No variable remuneration shall be paid. Pension benefits shall be contribution-based, with retirement age set individually, albeit not lower than at 60 years of age.

The period of notice shall normally be six months if the executive resigns. On termination by the Company, the notice period and the period during which severance pay applies should not exceed 12 months.

In special cases, it shall be possible for Board Members elected by the General Meeting to receive fees for services rendered in their respective areas of expertise that do not constitute Board work. For these services, a market-based fee shall be paid, which must be approved by the Board.

The Board of Directors is entitled to deviate from these guidelines in individual cases should special reasons prevail. In the event of such a deviation, the information thereon and the reasons for the deviation will be reported in the proposal regarding guidelines for remuneration to senior executives presented at the next Annual General Meeting.

The Compensation Committee appointed by the Board of Directors prepares and submits proposals to the Board for a decision of the Board regarding remuneration to the CEO. On the proposal of the CEO, the Remuneration Committee sets the remuneration of other members of Group Management. The Board is informed of the Remuneration Committee’s decision.

DOCUMENTS

The Annual Report and the audit report, as well as other documents under the Swedish Companies Act will be available to shareholders at the Company’s headquarters at Kvarnbergsgatan 2 in Gothenburg, Sweden, and on the Company’s website www.serneke.group at least three weeks before the Annual General Meeting. The documents are sent free of charge to shareholders who request and state their address.

Gothenburg in April 2018

Serneke Group AB (publ)

Board of Directors

For additional information, please contact:

Michael Berglin, deputy CEO
michael.berglin@serneke.se 

Anders Düring, CFO
anders.during@serneke.se

Serneke is a rapidly growing corporate group active in construction, civil engineering, project development and property management. The Group was founded in 2002 and today has income of nearly SEK 5.6 billion and over 1,000 employees. Through novel thinking, the Company drives development and creates more effective and more innovative solutions for responsible construction. The Company builds and develops housing, commercial buildings, industrial facilities, public buildings, roads and civil engineering projects, and other infrastructure. The Company’s customers are public and commercial clients, and operations are focused on the three metropolitan regions in Sweden, Gothenburg (Region West), Stockholm (Region East) and Malmö (Region South). Serneke’s headquarters are located in Gothenburg and the Company also has offices in Stockholm, Malmö, Alingsås, Borås, Halmstad, Helsingborg, Skövde, Strömstad, Trollhättan, Uppsala, Varberg och Växjö. The Company’s Series B shares (SRNKE) have been listed on the Nasdaq Stockholm exchange since November 2016.

Further information about Serneke is available at www.serneke.group