Annual Report • Jul 1, 2016
Annual Report
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SEK PROPOSED DIVIDEND PER SHARE OF: 5.00
B&B TOOLS AB's statutory Annual Report is presented on pages 11-58. These pages have been reviewed by the Company's auditors in accordance with the auditor's report on page 59. This Annual Report is in all respects a translation of the Swedish original Annual Report. In the event of any differences between this translation and the Swedish original, the latter shall prevail.
B&B TOOLS was founded in 1906 and is today the largest supplier of industrial consumables, industrial components and related services for the industrial and construction sectors in the Nordic region. The Group's business concept is to make customers' everyday operations easier, safer and more profitable. Its main geographic markets are Sweden, Norway and Finland. The Group has approximately 2,700 employees in 12 countries and annual revenue of approximately SEK 8 billion.
AS OF 1 APRIL 2016, B&B TOOLS COMPRISES TWO NEW OPERATING SEGMENTS –
Note: The figures stated are pro forma per new operating segment for the 2015/16 financial year (rounded).
The businesses in the segment Bergman & Beving develop competitive product and service offerings for various applications. Proprietary product brands account for approximately 60 percent of Bergman & Beving's total sales.
All Bergman & Beving products marketed under proprietary product brands are manufactured by subsuppliers, primarily in Asia, with which the companies have long-standing relationships.
TOOLS is the largest industrial reseller chain in the Nordic region specialising in industrial consumables, with branches in approximately 170 locations in Sweden, Norway and Finland. Momentum Industrial is responsible for sales and marketing of industrial components to the industrial sector, primarily in Sweden, with operations at nearly 30 locations. Gigant is the leading Nordic supplier of workplace equipment for industrial operations, warehouses and workshops. The segment includes a number of niche companies, such as Mercus, a specialist chain for workwear, and Rörick, specialising in electromechanical service workshops.
FOCUS: Market channels for consumables and components. REVENUE: MSEK 5,180 OPERATING PROFIT: MSEK 195 OPERATING MARGIN: 3.8%
Leading market channels for industrial consumables, industrial components, services and maintenance for professional end users.
TOOLS Sweden, TOOLS Norway, TOOLS Finland, Momentum Industrial and Gigant
THE SEGMENT INCLUDES BUSINESSES SUCH AS:
AND COMPONENTS The total market for industrial consumables and components in Sweden, Norway and Finland is valued at approximately SEK 40 to 45 billion. Market growth is closely related to the development of the construction sector, overall industrial production and the number of employees in the industrial sector. Sweden accounts for approximately 50 percent of the Group's total revenue, Norway for more than 25 percent of total revenue, Finland for approximately 15 percent of the revenue and other countries for the remaining 10 percent.
The Group's customers are active in all industrial segments and in such areas as the offshore, construction, civil engineering, property maintenance, public administration and defence sectors. The industrial sector accounts for approximately 55 percent of the Group's total sales, the construction sector for approximately 20 percent, the public administration sector for approximately 5 percent, the do-ityourself (DIY)/private market for approximately 5 percent and other sectors for approximately 15 percent.
READ MORE ABOUT THE GROUP'S OPERATING SEGMENTS ON PAGES 6-9.
As we summarise the 2015/16 financial year, we can look back at another year of earnings improvements in the Group. It is particularly gratifying to highlight TOOLS Sweden, which increased its profit by more than MSEK 30, as well as the fact that both Momentum and ESSVE reported operating margins of more than 10 percent. Following our recent organisational changes, we are now well equipped for the future – with two new, strong operating segments.
Despite a turbulent operating environment with currency fluctuations and a weak economic climate, particularly in Norway (which accounts for approximately 30 percent of our revenue), our operating margin increased to 6.2 percent. While this is the Group's highest margin since 2007/08, we are naturally not satisfied with this result and aim to do even better in the future. Cash flow from operating activities remained strong during the year and our profitability, defined as operating profit in relation to working capital (P/WC), increased to 27 percent.
As part of the Group's focus on its future development, the Board of Directors assigned Group management the task of investigating the possibility of splitting the Group into two separate listed companies in the future. The starting point of this work is the two new operating segments we introduced in the spring – Bergman & Beving and Momentum Group. The purpose of the split is to increase the Group's earnings growth through an even clearer focus on the development of leading brands and attractive market channels in profitable niches.
At the same time, the two new segments give every part of our operations better opportunities to focus on their own goals based on their unique circumstances – in other words: more decentralised responsibility and more independent profit units. By so doing, we can strengthen the competitiveness of our different units by always putting our customers' profitability first – and continue to develop the business relationship between our segments wherever it creates customer and/or cost advantages. We have good potential to continue improving our profitability.
The names of the segments reflect our ambitions for the future development – Bergman & Beving (the name of the Company when it was founded in 1906) provides a foundation for our product-owning businesses, while Momentum Group is an appropriate name for a busi
ness that has a leading position in its market channels (the word momentum comes from the Latin for movement and refers to the driving force for development).
In recent years, we have radically improved our basic prerequisites for growth and development. With our strong balance sheet and low debt, I also believe we have the right conditions for attractive corporate acquisitions. The review of the Group's future structure will further strengthen these conditions and creates new business opportunities.
In conclusion, I would like to take this opportunity to extend my sincere thanks to all of our dedicated employees for your many outstanding efforts during the year. I would also like to thank our customers and business partners for continuing to believe in us. I look forward to an exciting new financial year together with you all in 2016/17.
Stockholm, June 2016
Ulf Lilius PRESIDENT & CEO
B&B TOOLS focuses on understanding customer requirements and – based on the situation and special needs involved – offering an optimum solution for the customer. The Group also aims to the be the best at what it does, a reflection that the units in B&B TOOLS are premium suppliers with a high level of expertise and the ability to differentiate themselves by offering various customer value advantages.
MORE PROFITABLE"
B&B TOOLS aims to offer its customers solutions to make their operations easier and safer, and increase their profitability. The various businesses in the Group establish their offerings accordingly and gain a competitive advantage by differentiating themselves from the competition in a number of ways.
It is crucial that the Group's customers have highly profitable operations. B&B TOOLS sells quality products and related services that create customer value throughout their entire service life. For the Group's customers on the reseller level, the Group's companies assist them in boosting their sales and enhancing their customer service. By doing so, B&B TOOLS makes their everyday operations easier, while also making them safer and more profitable.
B&B TOOLS' overall objective is to create growth in combination with profitability. Accordingly, the Group aims to achieve earnings growth of at least 15 percent annually over a business cycle.
B&B TOOLS' profitability target is for each unit in the Group to achieve profitability of at least 45 percent, measured as operating profit (P) in relation to utilised working capital (WC)*. This target encourages high operating profit and low tied-up capital, which – combined with the Group's growth target of 15 percent – enables a positive cash flow and provides the conditions for profitable growth. Having a P/WC of at least 45 percent helps finance the Group's future development as well as the shareholders' return requirement.
Each unit is also responsible for establishing its own business plans based on the profitability level achieved measured in P/WC, which are then broken down into tangible action plans for the individual employee. The Group's model specifies that profitable units are to prioritise growth while maintaining their profitability, whereas less profitable areas are to prioritise activities that help them achieve their profitability targets.
the Company. * Calculated as inventories plus accounts receivable less accounts payable.
"Supported by customer value advantages and cost advantages, we aim to prove that B&B TOOLS is the best choice for customers and that we make their everyday operations easier, safer and more profitable."
To attain the Group's profitability target of P/WC > 45 percent, all units in the Group must offer their customers an optimal total economy (minimum total cost) through solutions backed by a high level of expertise (customer value advantage). To be able to offer this to customers while also maintaining their own profitability, the businesses must work on the basis of maximum efficiency and cost awareness – and continuously strengthen their competence and experience so that the Group can operate more efficiently than its competitors (cost advantage).
Sustainability is a key part of B&B TOOLS' operations and it is natural that the Group acts responsibly toward its stakeholders. The businesses in the Group always assume financial, environmental and social responsibility in order to ensure the sustainability of
Sustainable development refers to development that meets today's needs without jeopardising the ability of future generations to meet their own needs. Hence – as a proponent of sustainable development, B&B TOOLS also takes responsibility for the way in which its businesses reach their profitability goals. This responsibility spans the entire value chain – from supplier to customer.
B&B TOOLS vision is to be the best choice for customers. This means being a company that takes responsibility for people and the planet at the same time as it earns its profit. Achieving this goal will require, for example, smart product development and responsibility for the working conditions in the supplier chain, dedicated employees that enjoy working for their employer and efficient transports. Sustainability creates business benefits in the form of more loyal customers, more satisfied employees, stronger relationships with suppliers and better products. Simply put, sustainability is a prerequisite for long-term profitability.
Every year, the Parent Company's Board of Directors establishes overall policies for such areas as the environment and work environment, ethical guidelines, quality and corporate social responsibility. The Group's units adapt their goals and action plans to these policies. Most of the Group's businesses hold quality and environmental certi-
fications in accordance with ISO 9001 and 14001 as well as OHSAS 18001 occupational health and safety certification.
B&B TOOLS continuously endeavours to raise the awareness and involvement of its employees with regard to sustainability issues. Sustainability activities are
led by Group management and other members of senior management, with support from a network of environmental, quality and work environment managers in the Group. This network makes it easier to establish contact, transfer skills and share experiences.
B&B TOOLS' offering is designed and regularly updated based on customers' needs. The process of designing their offering allows the businesses to identify manufacturers and suppliers with products and services that meet the Group's standards for quality and total cost and share B&B TOOLS' view on long-term partnership and close cooperation.
The Group's suppliers are expected to take a responsible approach to production and product development, which is ensured through B&B TOOLS' Supplier Code of Conduct, self-assessments (online assessment forms filled in by the supplier) and factory audits (both internal and independent, external audits). These assessments address various areas, such as environmental risks, work environment, quality, labour law and business ethics.
Sustainability issues are becoming an increasingly important part of the sales process – influencing everything from the businesses' offerings to the arguments used to persuade the customer to choose the Group's products and services. At B&B TOOLS, selling is about having a positive influence on the customer and helping the customer to make a good decision that benefits both parties. The Group's business should serve as an instrument to help the customer achieve its goals by identifying the customer's needs before offering a profitable solution.
Ensuring that the right item is in the right place, at the right time and in the right number is part of the foundation of B&B TOOLS' business. The Group's logistics operations are closely linked to its sustainability
"Simply put, sustainability is a prerequisite for longterm profitability."
work. Optimising inventory processing enables a reduction in consumption, better availability for the customer and less lifting and handling for everyone involved. The Group's businesses continuously work to optimise the balance between in-bound and out-bound deliveries so that the right quantity is purchased. This
reduces the need for transport and the consumption of cartons and other packaging materials.
B&B TOOLS continuously works to digitise its entire financial workflow. Many areas of the Group now use machine registration and invoice interpretation, and offer its customers and suppliers PDF invoices and EDI connections, which is better for the work environment and the environment as a whole.
The Group works in a central IT environment, which makes it easier to provide support and reduces risks since the information is continuously backed up. This central environment facilitates information sharing, regardless of office location, as well as screen sharing and remote meetings. This also allows B&B TOOLS to reduce its environmental impact from travel.
SUSTAINABLE DEVELOPMENT
B&B TOOLS is to conduct its business as a responsible member of society, comply with relevant laws in the countries where the Group operates, promote health and safety, respect human rights, and take responsibility for improving the environment with the aim of achieving sustainable development.
Work in the best interests of new and existing customers by continuously developing and offering products and services that meet customer expectations in terms of function, quality, safety, environmental impact and supply reliability. A conscientious focus on service and maintenance extends the useful lives of the products and thereby reduces the customers' total costs. Follow-ups are performed on a regular basis through customer surveys.
Work in the best interests of new and existing employees by offering a healthy work environment, opportunities for skills and performance development, and offering attractive and competitive terms and conditions. The Group conducts regular employee surveys.
Develop strong offerings for all of the Group's market channels. Achieve competitive purchasing terms based on the Group's strong market position, and secure efficient purchasing and sales processes for the purpose of creating close and long-term partnerships. Act professionally, honestly and ethically in all of these pursuits, based on the Group's Code of Conduct.
Strengthening customers' profitability is always the main focus of B&B TOOLS' various businesses. The results of the Group companies' annual customer surveys form the basis for the businesses' work related to service level and availability, product development and training/ skills development. Among other activities in 2015/16, the product companies launched a number of high-quality, sustainable products, while TOOLS strengthened its market position as a leading supplier of products and services in the area of occupational health and safety (OHS). Momentum Industrial received the "Volvo Cars Quality Excellence (VQE) Award" for its work as a supplier of industrial components to Volvo Cars.
While the employee survey performed by the Group in autumn 2015 showed a predominantly positive view of B&B TOOLS' development and of the companies in the Group as employers, they also identified a number of future development areas in various parts of the Group. The ongoing skills development of the Group's employees mainly occurs at the company level through various types of targeted training programmes in such areas as successful sales and performance development. The B&B TOOLS Business School provides approximately 200 employees with training in the Group's corporate culture and business acumen every year.
B&B TOOLS' relationships with its suppliers include everything from risk mitigation (focusing, for example, on working conditions, work environmental and environmental impact) to collaborating in order to have a positive impact on the supplier's overall development – based on daily contact, the Group's Supplier Code of Conduct, self-assessment and factory audits. The percentage of suppliers that hold quality and environmental certification is gradually increasing.
Create shareholder value by focusing on growth and stable, long-term profitability, minimise major business risks through active and effective corporate governance, and provide accurate and relevant information to the stock market.
Over the past three years, B&B TOOLS has increased its earnings and profitability, generated more than SEK 1 billion in cash flow and reduced its debt through clear, decentralised profit responsibility. To create even stronger conditions for increased growth and profitability in the future, a new operational structure was introduced as of 1 April 2016. As of March 2015, B&B TOOLS is approved for Swedbank Robur's socially responsible investments.
AS OF 1 APRIL 2016
| 2015/2016 | |
|---|---|
| Revenue, MSEK | 3,650 |
| Operating profit, MSEK | 275 |
| Operating margin | 7.5% |
| Average no. of employees | 645 |
Note: The figures stated are pro forma (rounded).
Pontus Boman, Executive Vice President of B&B TOOLS
CEO of Skydda
Olof Nyberg, CEO of Grunda
Patrik Malterling, CEO of Cresto
CEO of Luna
Tomasz Olofsson Kowalski, CEO of Teng Tools
The businesses in the segment Bergman & Beving develop competitive solutions with products and services for various applications. Proprietary product brands account for approximately 60 percent of Bergman & Beving's total sales.
Bergman & Beving markets its products and services through resellers in a number of countries. Sales are conducted by the individual units and sales channels are optimised based on the specific conditions of the various brands. Based on their profitability according to the Group's P/WC* objective, several units within Bergman & Beving – such as ESSVE, FireSeal, Zekler, Cresto and Teng Tools – are currently focusing on measures to improve their growth (while retaining their profitability), while other units are primarily working to increase the profitability of their operations.
The segment is focusing on establishing more business units with decentralised profit responsibility in order to improve their growth potential. Examples include the establishment of Teng Tools and Cresto as independent subsidiaries. The aim is to convert FireSeal into an independent subsidiary in 2016/17.
* Operating profit (P) in relation to utilised working capital (WC).
ESSVE offers a broad range of professional fastening elements. Working in close cooperation with resellers, professional craftsmen and industrial customers, ESSVE develops innovative solutions that make work easier and have a lasting impact. ESSVE aims to be perceived as the most innovative supplier in the industry and invests in proprietary product development in order to quickly deliver the right products to the market.
Guide is a market leader in superior-quality work gloves for the industrial and construction sectors. The company's motto is "The right gloves for the right occasion" and Guide offers a wide range of gloves for various industries and requirements. The right gloves make the wearer's workday more efficient. Sales are conducted through industrial resellers and specialist construction retailers in the Nordic region. THE GUIDE PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 350.
Teng Tools offers hand tools and smart storage solutions for professional users. Its customers include companies in the industrial, automotive and construction sectors and its products are sold in 30 markets worldwide. Teng Tools' unique concept helps customers to improve their efficiency and create a safer workplace.
THE TENG TOOLS PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 250.
Focusing on function, fit and feel, L.Brador is an innovative rising star in the Nordic market for workwear and footwear. In 2012, the company revolutionised the industry, offering superior flexibility and comfort by adding stretch fabric to its work trousers. L.Brador offers a broad range of workwear and footwear for various industries. L.Brador stands for high quality combined with innovative features, stylish design and superior fit.
THE L.BRADOR PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 200.
FireSeal offers fire sealing systems that also protect against smoke, gas, water and strain. With distributors in a large number of countries, FireSeal's main market includes customers in the global marine and offshore sector as well as resellers in the Nordic region. Its safety features are tried and tested and its products are continuously enhanced to meet the stringent requirements of tomorrow. All FireSeal systems hold type approval from the Swedish Institute for Technical Approval in Construction, and FireSeal's technical experts regularly certify various fire seal installers. THE FIRESEAL PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 50.
Hvid Interior is a meticulously selected range of handles and fittings for professional end customers and consumers. Sales are mainly conducted through specialist construction retailers in the Nordic region. Hvid Interior combines its own unique design aesthetic with smart, social technology to create inspirational and innovative solutions for professional decorating needs and modern homes.
SINCE HVID WAS LAUNCHED AT THE END OF THE 2015/16 FINANCIAL YEAR, AN ESTIMATE OF THE PRODUCT BRAND'S ANNUAL REVENUE HAS NOT BEEN PROVIDED.
Luna focuses on product properties and their application in the development of its product range as well as individual products and attaches great importance to guiding users toward the right product to optimise the results of their work. Luna's offering includes power tool accessories, compressed air tools and compressors, chemical products as well as machinery for wood and metalworking and related services. THE LUNA PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 150.
Zekler is passionate about personal protection equipment for the eyes, ears and respiratory system. Protecting your senses is crucial while at work – and is just as important to your private life. Zekler offers eye protection, hearing protection and respiratory protection with a focus on comfort, smart features and modern design – everything it takes to ensure the most positive personal protection experience possible. THE ZEKLER PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 50.
Cresto develops and manufactures user-friendly fall protection equipment for professionals working at heights. With distributors in a large number of countries, Cresto's main market includes customers in the global energy, industrial and construction sectors as well as resellers in the Nordic region. A significant portion of its operations comprises services such as training, maintenance and installation of fixed systems. All areas of Cresto, from innovation to final product, are driven by user safety – and the desire to save lives. THE CRESTO PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 100.
Limit's range of measurement products covers several different areas of use, such as climate, workshop measurement, inspection, scales, electrical testing and lasers – with a keen focus on user needs and usability. Limit uses modern technology to facilitate the everyday operations for our different operators in the construction, industrial and public administration sectors.
THE LIMIT PRODUCT BRAND GENERATES REVENUE OF APPROXIMATELY MSEK 50.
The Struktur Scandinavia brand includes various types of fittings for a range of applications, including fittings for doors, windows and interior design. Struktur Scandinavia makes everyday life more efficient by offering order and structure with the right design for the modern home. Products are sold through specialist construction retailers to end customers in the construction sector and DIY/private market.
SINCE STRUKTUR WAS LAUNCHED AT THE END OF THE 2015/16 FINANCIAL YEAR, AN ESTIMATE OF THE PRODUCT BRAND'S ANNUAL REVENUE HAS NOT BEEN PROVIDED.
AS OF 1 APRIL 2016
| Average no. of employees | 1,602 |
|---|---|
| Operating margin | 3.8% |
| Operating profit, MSEK | 195 |
| Revenue, MSEK | 5,180 |
Note: The figures stated are pro forma (rounded).
CEO of TOOLS Sweden
2015/2016
Ulf Lilius, President & CEO of B&B TOOLS
Jens Henriksen, CEO of TOOLS Norway
CEO of TOOLS Finland
Jimmy Norlinder, CEO of Momentum Industrial
Mikael Peterson, CEO of Mercus Yrkeskläder
Lotta Rörick, CEO of Rörick
The companies in Momentum Group are leading suppliers of industrial consumables and components – as well as competitive services and maintenance – to professional end users in the Nordic region.
Momentum Group operates in a fragmented market, where its expertise, availability and local presence give competitive advantages. Sales are conducted by the individual local units and are optimised based on market conditions and customers, combined with specialist expertise in selected areas, such as occupational health and safety (OHS), sustainable production and service.
By giving each unit a high degree of freedom and responsibility for its own operations, while at the same time being part of a larger group, the best of two worlds are combined: the financial strength, experience and extensive network of a listed company along with personal commitment and local business expertise.
TOOLS is the largest industrial reseller chain in the Nordic region specialising in tools, machinery, personal protective equipment and industrial consumables for the professional market. The chain, which is currently active in Sweden, Norway and Finland, comprises both wholly owned TOOLS businesses and a number of independent partner companies. TOOLS works with the market's leading suppliers. TOOLS GENERATES REVENUE OF APPROXIMATELY MSEK 1,800 IN SWEDEN, MSEK 1,300 IN NORWAY AND MSEK 800 IN FINLAND.
Momentum Industrial is one of the Nordic region's leading suppliers of industrial components for the industrial sector. The company maintains a local stock of inventories and conducts sales in some 30 locations in Sweden, in addition to operating subsidiaries in Norway and Denmark. Momentum's local workshops also offer repairs and maintenance of various products, such as pumps, gears and engines. MOMENTUM INDUSTRIAL GENERATES REVENUE OF APPROXIMATELY MSEK 950.
Gigant is an expert in industrial workplaces and delivers workplace equipment, lifting devices, devices for securing loads and environmental assurance services. The company has been active in the Nordic market for more than 20 years and is currently the leading Nordic supplier of workplace equipment for industrial operations, warehouses and workshops. Gigant has the resources and expertise needed to create efficient, safe and, not least, attractive workplaces.
GIGANT GENERATES REVENUE OF APPROXIMATELY MSEK 350.
Mercus Yrkeskläder supplies companies with a complete range of work clothes, protective footwear, promotional clothing and personal protective equipment as well as related services. The company currently has seven stores in Sweden and is one of the largest players in the industry.
MERCUS GENERATES REVENUE OF APPROXIMATELY MSEK 150.
Rörick Elektriska Verkstad offers maintenance, repairs, service and sales of various products, including electric motors, generators, transformers, pumps and industrial gear boxes in its service workshops in Sweden. RÖRICK GENERATES REVENUE OF
APPROXIMATELY MSEK 50.
The Board of Directors and President & CEO of B&B TOOLS AB (publ), Corporate Registration Number 556034-8590, hereby submit the Annual Report and consolidated financial statements for the 1 April 2015 – 31 March 2016 financial year. The following Corporate Governance Report, income statements, balance sheets, statements of comprehensive income, statements of changes in equity, cash-flow statements and notes constitute an integrated part of the Annual Report and have been reviewed by the Company's auditors.
The B&B TOOLS Group's operating profit for the financial year rose by 8 percent to MSEK 486 (450). Operating profit was charged with depreciation and impairment losses of MSEK -24 (-25) on tangible non-current assets and amortisation and impairment losses of MSEK -4 (-3) on intangible non-current assets. Exchange-rate translation effects had a net impact of MSEK +2 (+7) on operating profit. The operating margin increased to 6.2 percent (5.7).
Profit after financial items rose by 15 percent to MSEK 468 (408). Net financial items amounted to MSEK -18 (-42). The profit margin was 6.0 percent (5.2).
Net profit totalled MSEK 362 (306). Earnings per share amounted to SEK 12.90 (10.90).
Revenue amounted to MSEK 7,821 (7,903). Exchange-rate translation effects had a negative impact of MSEK -117 (+82) on revenue.
Revenue for comparable units, measured in local currency and adjusted for the number of trading days, was essentially unchanged during the financial year.
The 2015/2016 financial year marked another year of earnings improvement in the B&B TOOLS Group. It is particularly gratifying to highlight TOOLS Sweden, which increased its profit by more than MSEK 30, as well as the fact that both Momentum and ESSVE reported operating margins of more than 10 percent. B&B TOOLS' profitability, defined as operating profit in relation to working capital (P/WC), increased to 27 percent (25) during
the year, which also contributed to a strong cash flow for the year.
The market situation for the Group's units varied during the year depending on geography and customer segment. Despite a turbulent operating environment with currency fluctuations and a weak economic climate, particularly in Norway (which accounts for approximately 30 percent of the Group's revenue), the operating margin increased to 6.2 percent. This is B&B TOOLS' highest margin since the 2007/2008 financial year.
To create even stronger conditions for increased growth and profitability across all areas of the B&B TOOLS Group, a new operational structure was introduced in the Group with two new operating segments as of 1 April 2016 – Bergman & Beving and Momentum Group. For more detailed information on the new operating segments, refer to pages 1 and 6-9.
TOOLS and Momentum are the B&B TOOLS Group's market channels for industrial consumables and industrial components for Nordic industry. Via TOOLS and Momentum, the Group has a presence in some 200 locations in Sweden, Norway and Finland.
Revenue for comparable units in TOOLS / Momentum decreased by approximately -1 percent1) during the financial year, mainly due to the declining industrial economy in Norway.
Revenue for TOOLS Sweden increased by approximately 1 percent1) during the year. The activities implemented to increase efficiency had a positive impact on earnings and the unit strengthened its market position as a leading occupational health and safety (OHS) supplier. Operating profit for the year tripled to MSEK 45.
TOOLS Norway's sales to the construction and civil engineering industry and other customer segments increased during the year, but were not sufficient to offset the decline primarily in the offshore sector in Norway. In total, revenue declined by -11 percent1) compared with the preceding year. The business continues to adapt its cost levels to the declining volumes. The operating margin was 1.3 percent.
Despite continued market uncertainty in Finland, TOOLS Finland increased its revenue by approximately 3 percent1) during the year as a result of stronger sales trends among certain major customers. A systematic focus on pricing and the business' core range strengthened the operating margin during the year. Operating profit increased to MSEK 9.
Momentum's revenue increased by slightly more than 3 percent1) during the year, with some customers in the mining and forestry industries recovering slightly during the year. The operating margin was 11.7 percent. Momentum's investments in such areas as service workshops in Sweden continued to develop favourably.
The Group's five product companies – Luna, Skydda, ESSVE, Grunda and Gigant – supply professional customers with construction and industrial consumables and related services. Revenue for comparable units for the Group's product companies increased by 2 percent1) during the financial year. The uncertain market trend in Nordic industry in general, and
1) Comparable units, measured in local currency and adjusted for the number of trading days this year compared with the preceding year.
lower demand in the offshore industry in Norway in particular, continued to have a negative impact, while growth remained strong for a number of customers, primarily in the area of construction materials.
Luna's revenue declined by -3 percent1) during the year, mainly due to the weak trend in the Norwegian market. Profit was negatively affected by the exchange rate trend for the USD and NOK during the year. Within hand tools, proprietary product brands such as Teng Tools continued to perform well.
Skydda's revenue rose by 3 percent1) during the year, with increased sales of proprietary product brands within personal protective equipment. Operating profit was largely unchanged compared with the preceding year, despite the continued negative impact of the exchange rate trend for the USD and NOK.
Revenue for ESSVE increased by 10 percent1) during the year, with continued favourable growth in the core product range for chain customers in the area of construction materials in Sweden and Norway. Thanks to the unit's strong offering of innovative and high-quality premium brands, the operating margin increased to 10.7 percent.
Revenue for Gigant and Grunda decreased by -8 percent1) and -3 percent1), respectively, during the year, mainly due to lower demand in the Norwegian market, which had a negative impact on the earnings trend. For Gigant, the proportion of products for industrial workplaces sold directly to end customers increased gradually during the year, while Grunda is continuously developing its offering of construction and industrial consumables sold through resellers. The businesses continue to implement measures to enhance efficiency and strengthen their positions in the market.
* As of 1 April 2016, the B&B TOOLS Group comprises two new operating segments – Bergman & Beving and Momentum Group. For more detailed information, refer to pages 1 and 6-9.
An operating loss of MSEK -3 (-26) was reported for "Group-wide" for the financial year. Capital gains from the sale of properties and the conveyance of a previously concluded pension obligation had a total positive impact of approximately MSEK 15 on operating profit during the year.
Eliminations for intra-Group inventory gains had a positive impact of MSEK +22 (-2) on earnings during the year.
The Parent Company's revenue amounted to MSEK 36 (39) and profit after financial items to MSEK 318 (237). These results include
Group contributions, intra-Group dividends and corresponding items totalling MSEK 472 (311).
The Parent Company's balance-sheet total amounted to MSEK 3,918 (4,044) and the share of equity was 56 percent (47) of the total assets. At year-end the cash and cash equivalents amounted to MSEK 0 (0) and interestbearing liabilities, excluding expensed pension obligations, to MSEK 342 (679), of which MSEK 60 (91) are intra-Group loans.
In early July 2015, Momentum signed an agreement to acquire all shares in Carl A Nilsson AB ("CAN"). CAN is a comprehensive service company specialising in electromechanical services and sales for the industrial sector in southern Sweden. CAN generates annual revenue of approximately MSEK 20 and has 13 employees. Closing took place on 1 September 2015, and the acquisition has had a marginally positive impact on B&B TOOLS' earnings per share during the financial year.
In mid-March 2016, TOOLS Norway entered an agreement to acquire all shares in Tønsberg Maskinforretning AS ("TM"). TM is a reseller of industrial components and consumables to the industrial and construction sectors in southern Norway. TM generates annual revenue of approximately MNOK 20 and has ten employees. Closing took place after the end of the financial year on 4 April 2016, and the acquisition is assessed to have a marginally positive impact on B&B TOOLS' earnings per share.
The Group's profitability, measured as the return on working capital, P/WC (operating profit in relation to working capital**), increased to 27 percent (25) for the financial year. The return on capital employed was 14 percent (13) and the return on equity was 15 percent (14).
** Working capital = Inventories + Accounts receivable – Accounts payable.
Cash flow from operating activities before changes in working capital for the financial year amounted to MSEK 416 (384). Funds tied up in working capital decreased by MSEK 77. Inventories increased by MSEK 3 during the year, while operating receivables decreased by MSEK 15. Operating liabilities rose by MSEK 65. Accordingly, cash flow from operating activities for the year amounted to MSEK 493 (330).
Cash flow for the financial year was also impacted in a net amount of MSEK -55 (-40) pertaining to investments and divestments of non-current assets, and a net amount of MSEK +19 (+99) pertaining to the acquisition and divestment of subsidiaries and other business units. Two Group properties were disposed of during the financial year, which generated approximately MSEK 25 in cash flow and had a marginally positive impact on earnings per share.
The Group's operational net loan liability at the end of the financial year amounted to MSEK 217 (530). Interest-bearing liabilities totalled MSEK 282 (590), excluding expensed pension obligations of MSEK 536 (628). Liabilities to credit institutions amounted to MSEK 220 (533), net. Cash and cash equivalents, including unutilised granted credit facilities, totalled MSEK 880 (667). Maturity periods and interest rates are presented in Note 25 Financial risk management on pages 50-53.
The equity/assets ratio at the end of the financial year was 51 percent, compared with 45 percent at the beginning of the year.
Equity per share totalled SEK 92.20 at the end of the financial year, compared with SEK 82.80 at the beginning of the year. Equity per share after dilution totalled SEK 92.25 at the end of the financial year, compared with SEK 82.65 at the beginning of the year.
The Swedish tax rate, which also applies to the Parent Company, was 22 percent during the financial year. The Group's normalised tax rate, with its current geographic mix, is approximately 23 percent.
At the end of the financial year, the number of employees in the Group amounted to 2,623, compared with 2,682 at the beginning of the year. The average number of employees during the year was 2,674 (2,667).
| Employees | 2015/16 2014/15 2013/14 | ||
|---|---|---|---|
| Average no. of employees | 2,674 | 2,667 | 2,724 |
| Percentage women | 23% | 23% | 22% |
| Percentage men | 77% | 77% | 78% |
| Distribution by age | |||
| 29 years or younger | 9% | 12% | 12% |
| 30-39 years | 23% | 23% | 24% |
| 40-49 years | 30% | 30% | 32% |
| 50-59 years | 27% | 25% | 23% |
| 60 years or older | 11% | 10% | 9% |
| Length of employment | |||
| Less than 2 years | 15% | 14% | 14% |
| 2-5 years | 29% | 25% | 25% |
| 6-10 years | 21% | 23% | 23% |
| 11-15 years | 12% | 13% | 13% |
| 16 years or more | 23% | 25% | 25% |
During the financial year, the Group conducted operations subject to permit and reporting requirements in one of its Swedish subsidiaries relating to the trading with certain chemical products. No Group companies are involved in any environmentally related disputes.
A summary of B&B TOOLS' commitment to environmental and social responsibility is presented on pages 4-5.
With the aim of strengthening and developing B&B TOOLS' position as one of the leading suppliers of industrial consumables and industrial components to the industrial and construction sectors in the Nordic region, the Group primarily invests its resources in the continued development of proprietary product brands and various concepts and service solutions for its customers and partners. Activities implemented during 2015/2016 include continued product development within the framework of the Company's proprietary brands, the development of various service concepts and customer solutions, the development of logistics and e-commerce solutions for resellers and end customers, and training for end users.
Efficient and systematic risk assessment of financial and business risks is important for the B&B TOOLS Group. The Group's Financial Policy establishes guidelines and goals for managing financial risks in the Group and regulates the distribution of responsibility between the Board of Directors of B&B TOOLS AB, the President & CEO and the CFO, as well as the presidents and financial officers of the subsidiaries. All foreign-currency management and granting of credit to customers are handled within the framework of the established policy. For a detailed account of financial and business risks and the B&B TOOLS Group's management thereof, refer to page 25 and Note 25 Financial risk management on pages 50-53.
Market trends in 2016/2017 will be carefully monitored by the Group's businesses. B&B TOOLS has good potential to continue improving its profitability in many areas. During the year, the focus will remain on organic volume growth in existing markets, a continued reduction in costs through increased efficiency and a reduction in funds tied up in working capital in the Group. The Group companies will continue developing services and proprietary product brands, which have accounted for an increased portion of the Group's total sales in recent years.
The Group's basic prerequisites for growth and development have improved in recent years, and the Group's strong balance sheet and lower debt have created the right conditions for attractive corporate acquisitions. The review of the Group's future structure carried out during the year, which resulted in a new organisation as of 1 April 2016, could create new business opportunities for B&B TOOLS. For more detailed information, refer to pages 1 and 6-9. The Group's goal is for its earnings growth over a business cycle to amount to at least 15 percent annually, combined with profitability.
The Board proposes a dividend of SEK 5.00 (4.00) per share. The proposed dividend corresponds to 39 percent of the Group's earnings per share for the 2015/2016 financial year.
The Board of Directors has assessed the Company's and the Group's financial position and the Company's and the Group's ability to meet their short and long-term obligations. A total of approximately MSEK 140 is required for the proposed dividend payment, which means that, all other things being equal, the Group's equity/assets ratio would decrease by 1.4 percentage points as of 31 March 2016. After payment of the proposed dividend and taking into consideration the prevailing market conditions, the Company's and the Group's equity/assets ratio is deemed to meet the demands placed on the operations conducted by the Group.
The Board's assessment is that the proposed dividend is well balanced taking into account the demands placed on the size of the Company's and the Group's equity and liquidity due to the type of business conducted, its scope and relative risks.
The Board's and President & CEO's proposed appropriation of profit is presented on page 58.
To create even stronger conditions for increased growth and profitability across all areas of the Group, B&B TOOLS introduced a new operational structure with two new operating segments as of 1 April 2016. The names of the new segments are Bergman & Beving (product companies) and Momentum Group (market companies). For more detailed information on the new operating segments, refer to pages 1 and 6-9.
The new operating segments will be reported externally for the first time in the Interim Report for the first quarter of the 2016/2017 financial year, which will be published on 19 July 2016. Pro forma financial statements for
the new operating segments for the 2015/2016 financial year will be presented in a separate press release prior to the publication of this report.
As of 1 April 2016, B&B TOOLS Group management comprises: Ulf Lilius, President & CEO, with overall responsibility for the Momentum Group operating segment; Pontus Boman, Executive Vice President, with overall responsibility for the Bergman & Beving operating segment; and Eva Hemb, Executive Vice President and CFO.
On 11 May 2016, the Board of Directors of B&B TOOLS decided to assign Group management the task of investigating the possibility of splitting the Group's new operating segments into two separate listed companies in the future. The purpose of the split would be to increase the Group's earnings growth through a clearer focus on the ongoing development of strong brands and attractive market channels. Further information on the results of the investigation will be presented by the Board during the 2016/2017 financial year.
No other significant events affecting the Group have occurred after the end of the financial year.
B&B TOOLS applies the Swedish Corporate Governance Code (the "Code"). The Code is part of the self-regulation system of Swedish trade and industry, and is based on the "comply or explain" principle. This means that a company that applies the Code may deviate from individual rules, but is required to provide an explanation for each deviation.
This Corporate Governance Report for the 2015/2016 financial year was prepared in accordance with the recommendations of the Code. The report also contains an account of the work of the Election Committee in preparation for the 2016 Annual General Meeting. B&B TOOLS deviates from the recommendations of the Code in two areas: the Chairman of the Election Committee and the auditors' review of the Company's six-month or ninemonth interim reports. These deviations from the Code are reported in further detail in the relevant sections below. The Corporate Governance Report constitutes a part of the formal annual accounts and has been reviewed by the Company's auditors.
The purpose of the Company's corporate governance structure is to establish a clear distribution of roles and responsibilities between the owners, Board of Directors, Board committees and executive management. B&B TOOLS AB primarily applies the Swedish Companies Act and the rules that apply since the Company's Class B share is listed on Nasdaq Stockholm ("Stockholm Stock Exchange") as well as best practice in the stock market. The Code is part of the regulations of the Stockholm Stock Exchange. In
the course of its operations, B&B TOOLS also complies with the regulations stipulated in B&B TOOLS' Articles of Association.
According to the Articles of Association, the registered name of the Company is B&B TOOLS Aktiebolag. The Company is a public limited liability company and the financial year is from 1 April to 31 March. The appointment of directors and amendments to the Articles of Association occur in accordance with the Swedish Companies Act.The Articles of Association are available in full on the Company's website at www.bbtools.com.
As of 31 March 2016, B&B TOOLS AB had approximately 5,400 shareholders. The share capital amounted to approximately MSEK 57.
The General Meeting of Shareholders is the Company's highest decision-making body. The Board of Directors and its Chairman, as well as the auditors, where applicable, are appointed by the Annual General Meeting.
The Election Committee drafts motions to the Annual General Meeting regarding the composition of the Board of Directors.
By order of the Annual General Meeting, it is the duty of the appointed auditors to examine the financial statements and the administration of the Board of Directors and the President & CEO during the financial year.
The Board of Directors is ultimately responsible for the Company's organisation and administration. It is also the duty of the Board to ensure that all shareholders' interests in B&B TOOLS are provided for. The Board of Directors appoints the President & CEO and the Executive Vice Presidents.
The Audit Committee examines the procedures for risk management, governance, control and financial reporting.
The Compensation Committee prepares motions concerning remuneration levels for the President & CEO, as well as general incentive programmes – subject to the approval of the Board – and decides on remuneration levels for other senior management.
The President & CEO and other members of Group management are responsible for the day-to-day management of B&B TOOLS.
The distribution by class of share is as follows:
| As of 31 March 2016 |
|---|
| 1,063,780 |
| 27,372,636 |
| 28,436,416 |
| -340,000 |
| 28,096,416 |
All shares carry equal rights to B&B TOOLS AB's assets and earnings. The Company's Class A shares entitle the holder to ten votes each and each Class B share entitles the holder to one vote. The Articles of Association contain no limitations concerning how many votes each shareholder may cast at the General Meeting of Shareholders. For repurchased shares held in treasury, all rights are waived until such time as the shares are reissued. The Board of Directors is not authorised to make decisions regarding new share issues.
According to Chapter 6, Section 2a of the Swedish Annual Accounts Act, listed companies are required to submit information concerning certain circumstances that may affect opportunities to take over the Company through a public takeover bid for the shares in the Company. The Company's lenders are entitled to cancel approved committed credit facilities if the Company's shares are delisted from the Stockholm Stock Exchange or in connection with public takeover bids if the bidder secures a shareholding of more than 50 percent of the number of shares in the Company or controls at least 50 percent of the votes in the Company. Otherwise the Company has not entered into any significant agreements with suppliers or employees that would be affected, change, expire or stipulate the payment of financial remuneration should control of the Company change as a result of a public takeover bid for the shares in the Company.
As of 31 March 2016, Anders Börjesson (with companies) held 14.7 percent and Tom Hedelius held 12.9 percent of the total number of votes in the Company. No other shareholders had direct or indirect shareholdings in the Company representing more than onetenth of the total number of votes.
Further information regarding B&B TOOLS' share and ownership structure is presented in the section on the B&B TOOLS share on pages 62-63.
As of 31 March 2015, the number of Class B shares held in treasury totalled 340,000. No changes occurred in the holding of treasury shares during the financial year. Accordingly, the number of Class B shares held in treasury
as of 31 March 2016 amounted to 340,000, corresponding to 1.2 percent of the total number of shares and 0.9 percent of the total number of votes. The quotient value of this holding amounted to SEK 680,000 as of 31 March 2016.
Of the total number of shares held in treasury, 169,000 Class B shares are reserved to cover the Company's obligations in the call option programme issued by B&B TOOLS AB in September 2013, which extends through 9 June 2017. The redemption price for the call options in this programme is SEK 101.90.
Of the total number of shares held in treasury, 169,000 Class B shares are also reserved to cover the Company's obligations in the call option programme issued by B&B TOOLS AB in September 2014, which extends through 8 June 2018. The redemption price for the call options in this programme is SEK 176.50.
The Board intends to propose that the Annual General Meeting in August 2016 resolve to authorise a repurchase of own shares. In brief, this proposal entails that the Annual General Meeting would authorise the Board, during the period until the next Annual General Meeting, to repurchase a maximum number of own shares through Nasdaq Stockholm so that the Company's holding of treasury shares at no time exceeds 10 percent of the total number of shares in the Company. This authorisation would enable the Board to use repurchased shares to pay for acquisitions or to sell the shares in a manner other than through Nasdaq Stockholm in order to finance acquisitions and to fulfil the Company's obligations in connection with any share-based incentive programmes for senior management.
The General Meeting of Shareholders is the Company's highest decision-making body where shareholders exercise their voting rights. At the Annual General Meeting, decisions are made concerning the Annual Report, dividends, the election of the directors and auditors, directors' and auditors' fees, and other matters in accordance with the Swedish Companies Act and the Articles of Association. The Company does not apply any special arrangements with respect to the function of the General Meeting of Shareholders, due to the provisions of the Articles of Association or due to any shareholders' agreement known to the Company.
The Annual General Meeting of B&B TOOLS AB was held in Stockholm on 20 August 2015. The notice of the Annual General Meeting and the supporting documentation for the Meeting were published in accordance with the Company's Articles of Association. The Meeting was held in Swedish and, based on the composition of the shareholder base, interpreters to other languages were deemed unnecessary. The notice of the Meeting and other materials were available in Swedish and English. A total of 156 shareholders participated in the Meeting, representing a combined total of 59.9 percent of the votes in the Company. All six regular directors and the Company's auditors attended the Meeting.
Among other decisions, the Annual General Meeting resolved to pay a dividend of SEK 4.00 per share. The Company's President & CEO, Ulf Lilius, commented on the Group's operations, the 2014/2015 financial year, the Group's performance in the first quarter of the new financial year and the Group's future prospects. Anders Börjesson, Roger Bergqvist, Charlotte Hansson and Gunilla Spongh were re-elected to the Board of Directors. Fredrik Börjesson and Henrik Hedelius were elected as new directors. Anders Börjesson was re-elected Chairman of the Board. At the subsequent statutory Board meeting, Roger Bergqvist was elected as Vice Chairman of the Board.
The minutes from the Annual General Meeting were made available at B&B TOOLS and on the Company's website two weeks after the Meeting. The minutes are available in Swedish and English.
The Annual General Meeting in August 2015 resolved to authorise the Chairman of the Board to contact the largest shareholders, in terms of votes, not later than 31 January 2016 and request that they appoint four members who, together with the Chairman of the Board, will constitute an Election Committee to prepare motions to the Annual General Meeting 2016. The Election Committee is to prepare motions regarding the Chairman of the Annual General Meeting, the number of directors, the election of directors, Chairman of the Board and auditors, fees to be paid to each director and the auditors, and any changes to the selection criteria and principles for appointing the next Election Committee (in accordance with a resolution passed by the 2012 Annual General Meeting).
In accordance with this authorisation, the Election Committee for the Annual General Meeting in August 2016 comprises Chairman of the Board Anders Börjesson, Marianne Flink (representing Swedbank Robur funds), Tom Hedelius, Jan Särlvik (representing Nordea Funds) and Per Trygg (representing SEB Funds). The other members appointed Anders Börjesson as Chairman of the Election Committee. Marianne Flink was appointed spokesperson for the Election Committee at the upcoming Annual General Meeting. The composition of the Election Committee was presented in the Interim Report published on 8 February 2016.
The election of the Chairman of the Election Committee deviates from the rules of the Code, which state that the Chairman of the Election Committee should not be a director of the Company. The reason for this deviation is that the other members of the Election Committee feel that it is important that the Chairman of the Election Committee has a good understanding of the work and composition of the present Board of Directors and can clearly identify any need for complementary skills. The Election Committee has also deemed it appropriate that the Chairman of the Election Committee is the member representing the largest group of shareholders.
The Election Committee's motions regarding the Board of Directors and auditors will be presented in the notice of the 2016 Annual General Meeting and on the Company's website. The Election Committee will present and motivate its motion regarding the Board of Directors and auditors on the Company's website in conjunction with the publication of the notice of the Meeting and at the Annual General Meeting itself.
No separate remuneration was paid for work in the Election Committee during the year.
In accordance with B&B TOOLS' Articles of Association, the Board of Directors is to comprise not fewer than five and not more than eight regular directors.
The Board of Directors of B&B TOOLS AB currently comprises six regular directors elected by the Annual General Meeting on 20 August 2015: Anders Börjesson (Chairman), Roger Bergqvist (Vice Chairman), Fredrik Börjesson, Charlotte Hansson, Henrik Hedelius and Gunilla Spongh. A detailed presentation of these directors, including information on other assignments and work experience, is available on page 60 and on the Company's website. All directors are independent in relation to the Company and senior management. Three directors are
dependent in relation to the Company's major shareholders. Accordingly, the Board of Directors meets the requirement that at least two of the directors who are independent in relation to the Company also be independent in relation to major shareholders.
According to the resolution of the Annual General Meeting, each director elected by the Annual General Meeting is to receive a fee of SEK 260,000. The Chairman of the Board is to receive a fee of SEK 520,000 and the Vice Chairman a fee of SEK 390,000. Accordingly, the total fee to be paid in accordance with the resolution of the Annual General Meeting amounts to SEK 1,950,000.
Refer to the table below for a summary of the members of the Board, their participation in committees, attendance at Board meetings, dependency and fees.
The Board also includes two employee representatives: Lillemor Svensson and Anette Swanemar.
The Chairman of the Board is responsible for ensuring that the work of the Board is well organised and conducted efficiently and that the Board performs its duties. In particular, the Chairman is responsible for organising and leading the work of the Board in a manner that creates the best possible conditions for the Board to conduct its work. It is the Chairman's task to ensure that new directors receive the required introductory training and any other training deemed appropriate by the Chairman and the other directors, to ensure that the Board continuously updates and deepens its knowledge about the Company, to ensure that the Board holds meetings as required and receives sufficient information and supporting data for its work, to propose an agenda for Board meetings in consultation with the President & CEO, to ensure that the decisions of the Board are carried out and to ensure that the work of the Board is evaluated annually. The Chairman is responsible for all contact with the owners regarding ownership matters and for conveying feedback from the owners to the Board.
The Board of Directors is ultimately responsible for the Company's organisation and administration. Based on its analysis of the Company's operating environment, the Board is also responsible for deciding on strategic matters.
Each year, the Board adopts written rules of procedure that regulate the work of the Board and its internal distribution of responsibility, including its committees, the procedure for resolutions within the Board, the order of Board meetings and the duties of the Chairman. The Board also issues instructions to the President & CEO, which grant the authority to make decisions regarding investments, corporate acquisitions and sales as well as financing issues. The Board has also adopted a number of policies for the Group's operations, including a Financial Policy, Environmental Policy and B&B TOOLS' Code of Conduct.
The Board of Directors oversees the work of the President & CEO through continuous monitoring of the operations during the year and is responsible for ensuring that the organisation and management as well as the guidelines for administration of the Company are appropriate and that the Company has adequate internal control and effective systems in place for monitoring and controlling the Company's operations and compliance with legislation and regulations applicable to the Company's operations. The Board is also responsible for establishing, developing and monitoring the Company's goals and strategies, decisions regarding acquisitions and divestments of operations, major investments, repurchases of own shares, and appointment and remuneration of Group management. The Board and the President & CEO present the annual accounts to the Annual General Meeting.
The work of the Board is evaluated annually under the supervision of the Chairman of the Board. The Election Committee is informed of the results of this evaluation. The Board evaluates the work of the President & CEO on an ongoing basis. This issue is also
| No. of meetings attended | Dependent in relation to1) | |||||||
|---|---|---|---|---|---|---|---|---|
| Regular directors 2) | Year of election |
Position | Board of Directors |
Audit Committee |
Compensation Committee |
B&B TOOLS | Major shareholders | Fee, SEK |
| No. of meetings | 8 | 1 | 1 | |||||
| Anders Börjesson | 1990 | Chairman | 8 | 1 | 1 | No | Yes | 520,000 |
| Roger Bergqvist | 2012 | Vice Chairman | 8 | 1 | 1 | No | No | 390,000 |
| Fredrik Börjesson | 2015 | Director | 4 (4) | – | No | Yes | 260,000 | |
| Charlotte Hansson | 2012 | Director | 8 | 1 | No | No | 260,000 | |
| Henrik Hedelius | 2015 | Director | 4 (4) | – | No | Yes | 260,000 | |
| Gunilla Spongh | 2014 | Director | 8 | 1 | No | No | 260,000 |
1) According to the definitions in the Swedish Corporate Governance Code.
2) The following changes were made to the composition of the Board of Directors during the 2015/2016 financial year:
Fredrik Börjesson and Henrik Hedelius were appointed as Directors in conjunction with the Annual General Meeting in August 2015.
Former Directors Tom Hedelius and Joakim Rubin stepped down from the Board in conjunction with the Annual General Meeting in August 2015.
especially addressed each year at a Board meeting, without the presence of any member of Group management. The Board also evaluates and comments on any significant assignments, if any, performed by the President & CEO outside the Company.
The work of the Board of Directors follows an annual plan. In addition to the statutory meeting, which is held in conjunction with the Annual General Meeting, the Board of Directors normally convenes on four occasions each year (scheduled meetings) in connection with the publication of its Interim Reports and holds an annual strategy meeting. Extraordinary meetings are convened when necessary. Each meeting follows an agenda, which is distributed to the directors prior to each Board meeting along with supporting documentation. The decisions of the Board are made after discussions led by the Chairman of the Board. The task of the committees appointed by the Board is to draft motions for decisions by the Board (see below).
The agenda for the statutory meeting of the Board includes the election of the Vice Chairman, the adoption of the rules of procedure for the Board of Directors, decisions regarding signatory powers and the approval of the minutes. The items addressed at the scheduled meeting in May include the year-end financial statements, the proposed allocation of profit and the financial report. In conjunc tion with this meeting, the Company's auditors report to the Audit Committee on their observations and assessments based on the audit performed. Each scheduled meeting also includes a number of fixed agenda items, including reports on the current financial outcome of the Company's operations.
In addition to the statutory meeting, the Board of Directors convened on seven occasions during the 2015/2016 financial year. The Board's work during the year focused on issues pertaining to the Group's strategic development and future organisation, ongoing business operations, earnings and profitability trends, corporate acquisitions and the Group's financial position.
Refer to the table on the previous page for information regarding attendance at Board and committee meetings.
The President & CEO presents reports at the Board meetings. The Group's CFO and other employees in the Group participate in Board meetings to report on specific issues or whenever deemed appropriate. Mats Karlqvist, Head of Investor Relations at B&B TOOLS AB, serves as the secretary to the Board as well as to the Election Committee.
The Compensation Committee appointed by the Board prepares the Board's motion regarding "Guidelines for determining remuneration and other terms of employment for the President & CEO and other members of Group management." The proposed guidelines are addressed by the Board and then presented to the Annual General Meeting for resolution. Based on the resolution of the Annual General Meeting, the Compensation Committee submits a motion concerning remuneration of the President & CEO to the Board for approval, decides on remuneration to the other members of Group management and draft motions for any incentive programmes. The Compensation Committee informs the Board of its decisions. The Committee is then responsible for monitoring and evaluating the application of the guidelines for determining remuneration and other terms of employment for the President & CEO and other members of Group management once they have been adopted by the Annual General Meeting (refer to Note 5 Employees and personnel costs on page 34). The Compensation Committee also monitors and evaluates any ongoing programmes for variable remuneration for Group management as well as any programmes concluded during the year.
The Compensation Committee consists of Chairman of the Board Anders Börjesson (Chairman of the Compensation Committee) and Vice Chairman of the Board Roger Bergqvist. President & CEO Ulf Lilius reports to the Committee. The President & CEO does not report on his own remuneration. The Compensation Committee convened on one occasion during the 2015/2016 financial year, during which minutes were taken.
No separate remuneration was paid for work on the Compensation Committee during the year.
The Board has appointed an Audit Committee, which – without influencing the work and duties of the Board in any other respect – is responsible for monitoring the Company's financial reporting, monitoring the efficiency of the Company's internal control and risk management with respect to its financial reporting, remaining informed about the audit of the Annual Report and consolidated financial statements, reviewing and monitor ing the impartiality and independence of the auditors and whether the auditors have provided the Company with services other than auditing services, and assisting in the preparation of motions regarding the election of auditors for resolution by the General Meeting of Shareholders.
The work of the Audit Committee has been carried out as part of the Board's work at scheduled Board meetings. In conjunction with the adoption of the annual accounts, the Board meets with and receives a report from the Company's external auditors. At the same time, the Board also meets with the auditors without the presence of the President & CEO or any other members of Group management.
The Audit Committee includes all regular directors and the Chairman of the Board also serves as the Chairman of the Committee. The Chairman possesses accounting and audit expertise. Directors Roger Bergqvist, Charlotte Hansson and Gunilla Spongh are independent in relation to the Company's major shareholders and possess accounting expertise. The Audit Committee held one meeting during the 2015/2016 financial year, during which minutes were taken.
No separate remuneration was paid for work on the Audit Committee during the year.
Ulf Lilius took office as President & CEO of B&B TOOLS on 1 November 2012. Ulf Lilius has been employed by the Group since 2004 and served as CEO of Momentum between 2010 and 2012. Ulf Lilius' previous positions include Marketing and Sales Director and Executive Vice President of Momentum (2002-2010) and SKF Multitec (1996-2002).
The President & CEO manages the operations in accordance with the Swedish Companies Act and the framework established by the Board. With respect to the authority of the President & CEO to make decisions regarding investments, corporate acquisitions, corporate sales and financing issues, the rules approved by the Board of Directors apply. In consultation with the Chairman of the Board, the President & CEO prepares the necessary information and supporting data for Board meetings, reports on various matters and explains the motivation for motions presented for resolution. The President & CEO leads the work of Group management and makes decisions in consultation with the other members of management.
In 2015/2016, B&B TOOLS' Group management included ten other individuals: the CEOs of the Group's operating areas (eight individuals), the head of the Group's logistics and IT function and the Group's CFO. Remuneration to Group management for the 2015/2016 financial year and a description of the Company's incentive programmes are presented in Note 5 Employees and personnel costs on pages 35-33.
A reorganisation took place after the end of the financial year and, as of 1 April 2016, Group management consists of President & CEO Ulf Lilius, Executive Vice President Pontus Boman and Executive Vice President & CFO Eva Hemb. For more detailed information on Group management, refer to page 61.
According to the Articles of Association, a registered accounting firm (or, alternatively one or two authorised public accountants) is to be elected as auditor. KPMG was elected as the Company's auditor at the 2015 Annual General Meeting for the period until the end of the 2016 Annual General Meeting. The Auditor in Charge is Matilda Axlind. KPMG performs the audit of B&B TOOLS AB and a majority of its subsidiaries.
The Company's auditors follow an audit plan, which includes feedback from the Board and the Audit Committee, and reports its findings to the management teams at the company and operating area levels as well as to Group management and the Board and Audit Committee of B&B TOOLS AB during the course of the audit and in conjunction with the adoption of the annual accounts. The Company's auditors also participate in the Annual General Meeting, presenting and commenting on the audit work.
The independence of the external auditors is regulated through special instructions established by the Board, which state the areas which may be addressed by the external auditors in addition to the normal audit work. KPMG continuously assesses its independence in relation to the Company and provides the Board with written assurance of the auditing firm's independence in relation to B&B TOOLS each year. During the past year, the auditors were mainly consulted on accounting and tax issues. The total fee for KPMG's services in addition to the audit assignment amounted to MSEK 0 (2) during the 2015/2016 financial year.
B&B TOOLS strives to conduct its business with high requirements imposed on integrity and ethics. The Board of Directors adopts a Code of Conduct for the Group's operations on an annual basis, which also includes ethical guidelines. For further details, refer to the pages 4-5. B&B TOOLS' Code of Conduct is available in its entirety on the Company's website at www.bbtools.com.
The Board aims to ensure that the remuneration system in place for the President & CEO and the other members of the Group's senior management team ("Group management") is competitive and in line with market conditions. Accordingly, the Board intends to propose that the Annual General Meeting to be held on 25 August 2016 pass a resolution concerning the 2016/2017 guidelines for determining remuneration and other terms of employment for the President & CEO and other members of Group management that corresponds with the guidelines for remuneration adopted by the Annual General Meeting held in August 2015 (refer to Note 5 Employees and personnel costs on page 34).
According to the Swedish Companies Act and the Swedish Corporate Governance Code, the Board of Directors is responsible for the Company's internal control. This responsibility includes an annual evaluation of the financial reporting received by the Board of Directors and specifying requirements for its content and presentation so as to ensure the quality of the reporting. These requirements stipulate that the financial reporting must be suited to its purpose, with the application of the accounting rules in force and other requirements that apply to listed companies. The following description is limited to the internal control of B&B TOOLS with respect to financial reporting.
The basis of the internal control of the Company's financial reporting comprises the control environment, including the organisation, decision paths, lines of authority and responsibilities documented and communicated in various control documents, such as policies established by the Board, and Groupwide guidelines and manuals.
B&B TOOLS bases and organises its operations on decentralised accountability for profitability, with its operating areas taking the form of companies. Accordingly, central control documents include formal rules of procedure for internal Board work and instructions for the division of responsibility between the Board and the President & CEO.
The Group's most important financial control documents are gathered on its Intranet and include a comprehensive Financial Policy, a reporting manual, a manual for the Group's internal bank, a description of accounting policies and expanded instructions preceding every closing of the books. These financial rules and regulations are updated regularly and training programmes are offered during the financial year to ensure the uniform implementation and application of the rules and regulations. On a more gen eral level, all operations in the B&B TOOLS Group are to be conducted in accordance with the Group's Code of Conduct.
B&B TOOLS has established control structures to manage the risks that the Board of Directors and corporate management consider to be significant to the Company's internal control with respect to financial reporting. Examples include transactionrelated controls, such as regulations concerning attestation and investments, as well as clear payment procedures and analytical
controls performed by the Group's controller organisation. Controllers at all levels in the Group play a key role in terms of integrity, competence and the ability to create an environment that is conducive to achieving transparency and true and fair financial reporting. The monthly earnings follow-up conducted via the internal reporting system is another important overall control activity. The earnings follow-up includes reconciliations with previously set goals and the most recent forecast, as well as follow-up of adopted key financial ratios. This follow-up of earnings also functions as an important complement to the controls and reconciliations performed in the actual financial processes.
Follow-ups to assure the quality of the Group's internal control are performed within the Group in various ways. The central financial function works proactively through its participation in various projects aimed at developing internal control. The function also continuously conducts audits to assess the efficiency of internal controls in various parts of the Group and follows up the implementation of the Group's policies and guidelines.
The Board has decided not to establish a special internal audit function. This decision was made based on the size and operations of the Group as well as the existing internal control processes as described above. When necessary, the Audit Committee commissions external advisors to assist on projects relating to internal control.
Neither B&B TOOLS' six-month report nor its nine-month report for the 2015/2016 financial year were reviewed by the Company's external auditors, which is a deviation from the rules of the Code. After consulting with the Company's external auditors and other parties, the Board of Directors has determined that the additional expense that would be incurred by the Company for an expanded review of the sixmonth report or nine-month report by the Company's auditors is not warranted.
The Company has not breached the rulebook of the stock exchange on which its shares are listed for trading or best practice in the stock market.
| MSEK | Note | 2015/2016 | 2014/2015 |
|---|---|---|---|
| Revenue | 2, 4 | 7,821 | 7,903 |
| Shares of profit in associated companies | 12 | 0 | 0 |
| Other operating income | 3 | 34 | 48 |
| Total operating income | 7,855 | 7,951 | |
| Cost of goods sold | -4,598 | -4,660 | |
| Personnel costs | -1,682 | -1,675 | |
| Depreciation, amortisation, impairment losses and reversal of impairment losses | -28 | -28 | |
| Other operating expenses | -1,061 | -1,138 | |
| Total operating expenses | -7,369 | -7,501 | |
| Operating profit | 4, 5, 6 | 486 | 450 |
| Financial income | 7 | 7 | |
| Financial expenses | -25 | -49 | |
| Net financial items | 7 | -18 | -42 |
| Profit after financial items | 468 | 408 | |
| Taxes | 9 | -106 | -102 |
| Net profit | 362 | 306 | |
| Of which, attributable to: | |||
| Parent Company shareholders | 362 | 306 | |
| Earnings per share, SEK | |||
| – before dilution | 18 | 12.90 | 10.90 |
| – after dilution | 18 | 12.85 | 10.85 |
| Proposed/resolved dividend per share, SEK | 5.00 | 4.00 |
| MSEK | Note | 2015/2016 | 2014/2015 |
|---|---|---|---|
| Net profit | 362 | 306 | |
| Other comprehensive income | |||
| Components that will not be reclassified to net profit | |||
| Remeasurement of defined-benefit pension plans | 94 | -170 | |
| Tax attributable to components that will not be reclassified | 9 | -21 | 37 |
| Total | 73 | -133 | |
| Components that will be reclassified to net profit | |||
| Translation differences | -51 | 35 | |
| Fair value changes for the year in cash-flow hedges | -8 | 14 | |
| Tax attributable to components that will be reclassified | 9 | 1 | -3 |
| Total | -58 | 46 | |
| Other comprehensive income | 15 | -87 | |
| Comprehensive income | 377 | 219 | |
| Of which, attributable to: | |||
| Parent Company shareholders | 377 | 219 |
| MSEK | Note | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible non-current assets | 10 | 1,821 | 1,803 |
| Tangible non-current assets | 11 | 100 | 113 |
| Shares in associated companies | 12 | 11 | 11 |
| Financial investments | 25 | 1 | 1 |
| Other long-term receivables | 14 | 4 | 4 |
| Deferred tax assets | 9 | 88 | 122 |
| Total non-current assets | 2,025 | 2,054 | |
| Current assets | |||
| Inventories | 15 | 1,505 | 1,525 |
| Tax assets | 45 | 37 | |
| Accounts receivable | 25 | 1,232 | 1,296 |
| Prepaid expenses and accrued income | 16 | 122 | 110 |
| Other receivables | 14 | 49 | 50 |
| Cash and cash equivalents | 62 | 57 | |
| Total current assets | 4, 23, 24, 25 | 3,015 | 3,075 |
| Total assets | 5,040 | 5,129 | |
| EQUITY AND LIABILITIES Equity |
17 | ||
| Share capital | 57 | 57 | |
| Other contributed capital | 71 | 71 | |
| Reserves | -69 | -11 | |
| Retained earnings, including net profit | 2,532 | 2,209 | |
| Equity attributable to Parent Company shareholders | 2,591 | 2,326 | |
| Non-current liabilities | |||
| Non-current interest-bearing liabilities | 25 | 150 | 365 |
| Provisions for pensions | 19 | 536 | 628 |
| Other non-current provisions | 20 | 4 | 4 |
| Deferred tax liabilities | 9 | 84 | 69 |
| Total non-current liabilities | 774 | 1,066 | |
| Current liabilities | |||
| Current interest-bearing liabilities | 25 | 132 | 225 |
| Accounts payable | 896 | 859 | |
| Tax liabilities | 68 | 81 | |
| Other liabilities | 21 | 126 | 128 |
| Accrued expenses and deferred income | 22 | 453 | 444 |
| Total current liabilities | 1,675 | 1,737 | |
| Total liabilities | 4, 23, 24, 25 | 2,449 | 2,803 |
| Total equity and liabilities | 5,040 | 5,129 |
For information about the Group's pledged assets and contingent liabilities, refer to Note 27.
| MSEK | Share capital | Other contributed capital |
Reserves | Retained earnings, including net profit |
Total equity |
|---|---|---|---|---|---|
| Closing equity, 31 March 2014 | 57 | 71 | -57 | 2,132 | 2,203 |
| Net profit | 306 | 306 | |||
| Other comprehensive income | 46 | -133 | -87 | ||
| Dividend | -98 | -98 | |||
| Sale of call options | 2 | 2 | |||
| Closing equity, 31 March 2015 | 57 | 71 | -11 | 2,209 | 2,326 |
| Net profit | 362 | 362 | |||
| Other comprehensive income | -58 | 73 | 15 | ||
| Dividend | -112 | -112 | |||
| Closing equity, 31 March 2016 | 57 | 71 | -69 | 2,532 | 2,591 |
| MSEK Note |
2015/2016 | 2014/2015 |
|---|---|---|
| Operating activities | ||
| Profit after financial items | 468 | 408 |
| Adjustments for non-cash items 31 |
43 | 32 |
| Income taxes paid | -95 | -56 |
| Cash flow from operating activities before changes in working capital | 416 | 384 |
| Cash flow from changes in working capital | ||
| Change in inventories | -3 | -84 |
| Change in operating receivables | 15 | 21 |
| Change in operating liabilities | 65 | 9 |
| Changes in working capital | 77 | -54 |
| Cash flow from operating activities | 493 | 330 |
| Investing activities | ||
| Investments in intangible and tangible non-current assets | -57 | -41 |
| Proceeds from sale of intangible and tangible non-current assets | 2 | 1 |
| Acquisition of subsidiaries/operating segments, net effect on liquidity 31 |
-11 | -3 |
| Proceeds from sale of subsidiaries/operating segments, net effect on liquidity 31 |
30 | 102 |
| Cash flow from investing activities | -36 | 59 |
| Cash flow before financing | 457 | 389 |
| Financing activities | ||
| Sale of call options | – | 2 |
| Borrowings | 8 | 200 |
| Repayment of loans | -341 | -499 |
| Dividend paid to Parent Company shareholders | -112 | -98 |
| Cash flow from financing activities | -445 | -395 |
| Cash flow for the year | 12 | -6 |
| Cash and cash equivalents at the beginning of the year | 57 | 53 |
| Exchange-rate differences in cash and cash equivalents | -7 | 10 |
| 31 Cash and cash equivalents at year-end |
62 | 57 |
| MSEK | Note | 2015/2016 | 2014/2015 |
|---|---|---|---|
| Revenue | 2 | 36 | 39 |
| Other operating income | 0 | – | |
| Total operating income | 36 | 39 | |
| Personnel costs | -14 | -26 | |
| Depreciation, amortisation, impairment losses and reversal of impairment losses | -1 | -1 | |
| Other operating expenses | -19 | -20 | |
| Total operating expenses | 5, 6 | -34 | -47 |
| Operating profit/loss | 2 | -8 | |
| Profit from financial items: | |||
| Profit from participations in Group companies | 7 | 254 | 172 |
| Profit from other securities and receivables recognised as non-current assets | 7 | 75 | 105 |
| Other interest income and similar profit/loss items | 7 | 5 | 6 |
| Interest expense and similar profit/loss items | 7 | -18 | -38 |
| Profit after financial items | 318 | 237 | |
| Appropriations | 8 | 157 | 125 |
| Profit before taxes | 475 | 362 | |
| Taxes | 9 | -50 | -42 |
| Net profit | 425 | 320 |
| MSEK | Note | 2015/2016 | 2014/2015 |
|---|---|---|---|
| Net profit | 425 | 320 | |
| Other comprehensive income | |||
| Components that will not be reclassified to net profit | – | – | |
| Components that will be reclassified to net profit | |||
| Fair value changes for the year in cash-flow hedges | -8 | 14 | |
| Taxes attributable to other comprehensive income | 9 | 1 | -3 |
| Other comprehensive income | -7 | 11 | |
| Comprehensive income | 418 | 331 |
| MSEK | Note | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible non-current assets | 10 | 0 | 0 |
| Tangible non-current assets | 11 | 0 | 1 |
| Financial non-current assets | |||
| Participations in Group companies | 29 | 104 | 104 |
| Receivables from Group companies | 13 | 3,303 | 3,543 |
| Deferred tax asset | 9 | 1 | 6 |
| Total financial non-current assets | 3,408 | 3,653 | |
| Total non-current assets | 3,408 | 3,654 | |
| Current assets | |||
| Current receivables | |||
| Accounts receivable | 25 | 1 | 1 |
| Receivables from Group companies | 501 | 378 | |
| Other receivables | 5 | 8 | |
| Prepaid expenses and accrued income | 16 | 3 | 3 |
| Total current receivables | 510 | 390 | |
| Cash and bank | 0 | 0 | |
| Total current assets | 510 | 390 | |
| Total assets | 24 | 3,918 | 4,044 |
| EQUITY, PROVISIONS AND LIABILITIES | |||
| Equity | 17 | ||
| Restricted equity | |||
| Share capital | 57 | 57 | |
| Statutory reserve | 86 | 86 | |
| Non-restricted equity | |||
| Fair value reserve | -3 | 4 | |
| Retained earnings | 1,647 | 1,439 | |
| Net profit | 425 | 320 | |
| Total equity | 2,212 | 1,906 | |
| Untaxed reserves | 30 | 268 | 206 |
| Provisions | |||
| Provisions for pensions and similar commitments | 19 | 45 | 46 |
| Deferred tax liability | 9 | – | 1 |
| Total provisions | 45 | 47 | |
| Non-current liabilities | |||
| Liabilities to credit institutions | 25 | 150 | 365 |
| Liabilities to Group companies | 60 | 91 | |
| Total non-current liabilities | 210 | 456 | |
| Current liabilities | |||
| Liabilities to credit institutions | 25 | 132 | 224 |
| Accounts payable | 1 | 1 | |
| Liabilities to Group companies | 996 | 1,164 | |
| Tax liabilities | 27 | 17 | |
| Other liabilities | 4 | 5 | |
| Accrued expenses and deferred income | 22 | 23 | 18 |
| Total current liabilities | 1,183 | 1,429 | |
| Total equity, provisions and liabilities | 24 | 3,918 | 4,044 |
| Pledged assets and contingent liabilities | |||
| Pledged assets | None | None | |
| Contingent liabilities | See Note 27 | See Note 27 |
| Restricted equity | Non-restricted equity | ||||||
|---|---|---|---|---|---|---|---|
| MSEK | Share capital |
Statutory reserve |
Treasury shares |
Fair value reserve |
Retained earnings |
Net profit |
Total equity |
| Closing equity, 31 March 2014 | 57 | 86 | -57 | -7 | 1,100 | 492 | 1,671 |
| Reversal of earnings | 492 | -492 | 0 | ||||
| Net profit | 320 | 320 | |||||
| Other comprehensive income | 11 | 11 | |||||
| Dividend | -98 | -98 | |||||
| Sale of call options | 2 | 2 | |||||
| Closing equity, 31 March 2015 | 57 | 86 | -57 | 4 | 1,496 | 320 | 1,906 |
| Reversal of earnings | 320 | -320 | 0 | ||||
| Net profit | 425 | 425 | |||||
| Other comprehensive income | -7 | -7 | |||||
| Dividend | -112 | -112 | |||||
| Closing equity, 31 March 2016 | 57 | 86 | -57 | -3 | 1,704 | 425 | 2,212 |
| MSEK | Note | 2015/2016 | 2014/2015 |
|---|---|---|---|
| Operating activities | |||
| Profit after financial items | 318 | 237 | |
| Adjustments for non-cash items | 31 | 0 | -6 |
| Income taxes paid | -34 | -22 | |
| Cash flow from operating activities before changes in working capital | 284 | 209 | |
| Cash flow from changes in working capital | |||
| Change in current receivables and liabilities to Group companies | -211 | 42 | |
| Change in operating receivables | 4 | -7 | |
| Change in operating liabilities | -2 | 13 | |
| Changes in working capital | -209 | 48 | |
| Cash flow from operating activities | 75 | 257 | |
| Investing activities | |||
| Cash flow from investing activities | – | – | |
| Cash flow before financing | 75 | 257 | |
| Financing activities | |||
| Sale of call options | – | 2 | |
| Changes in long-term receivables and liabilities to Group companies | 209 | 91 | |
| Borrowings | 8 | 200 | |
| Repayment of loans | -319 | -479 | |
| Dividend paid | -112 | -98 | |
| Group contributions paid and received | 139 | 27 | |
| Cash flow from financing activities | -75 | -257 | |
| Cash flow for the year | 0 | 0 | |
| Cash and cash equivalents at the beginning of the year | 0 | 0 | |
| Cash and cash equivalents at year-end | 31 | 0 | 0 |
Like all businesses, the B&B TOOLS Group's operations entail risks and opportunities. The purpose of risk management in the Group is to balance opportunities and risks in a conscious and controlled manner.
The Group is convinced that a decentralised approach creates an entrepreneurial spirit, whereby risk is always a natural component in the decision-making process. To ensure support and a unified approach to how the businesses should deal with risks and opportunities, the efforts to identify and respond to the most material risks are integrated into B&B TOOLS' strategic and operative planning process. Work related to developing the Group's risk management is carried out continuously.
B&B TOOLS describes its risks from three perspectives: strategic risks associated with the industry/market in which the Group operates, operational risks related to how the Group conducts its business and financial risks linked to the types of financial transactions in which the Group is involved.
B&B TOOLS' customers mainly comprise industrial companies in Sweden, Norway and Finland. As a result of the Group's partnerships with construction material resellers, construction companies are also an important customer group. Accordingly, economic trends in the industrial and construction sectors in the Nordic region affect the Group's performance. B&B TOOLS' sales largely comprise industrial consumables and related services, which means that the Group's dependency on the industrial sector's short-term willingness to invest is low.
As the structural transformation and consolidation of the industry progresses, the competitive situation also changes. Customers are increasingly striving to limit their number of suppliers and instead initiate closer collaboration with these suppliers in order to jointly develop the value chain, thereby reducing the total cost (for example, purchasing, stocking, administration and tied-up capital). There is a risk that new players with financial strength could grow stronger during the ongoing consolidation process. B&B TOOLS has chosen to take a leading role in this consolidation and is focusing on internal efficiency throughout the value chain, which will be crucial success factors in the future.
In the area of industrial consumables, the Group's customers primarily comprise end users in the industrial sector as well as resellers in the construction sector and, to a certain extent, the DIY sector/private market. Restructuring is in progress among resellers, as a result of which chain constellations are growing stronger in relation to end customers, manufacturers and distributors. Competition among resellers has increased due to the entry of international players into the Swedish market, especially in the DIY sector. This trend indicates continued consolidation among resellers in all sectors (DIY/construction/industry). B&B TOOLS is actively participating in the consolidation process among industrial resellers through the TOOLS chain and is cultivating the construction and DIY markets mainly through partnerships.
It is becoming increasingly common for foreign manufacturers to use several distributors in a local market. This so-called multi-distribution often leads to price pressure and declining profitability among distributors. Accordingly, it is critical that distributors gain control over the brands in demand by end customers in different product niches and foster close collaboration with manufacturers with strong, well-established brands. B&B TOOLS' presence throughout the value chain provides the Group with strength in terms of meeting the actual needs of customers and as an attractive partner for global brands attempting to penetrate the Nordic market.
The Group builds strong proprietary product brands in selected product areas. B&B TOOLS' strategy is not to own its own manufacturing capacity, but to work actively to evaluate and select subsuppliers, primarily in Asia, that can offer the most cost-effective manufacturing. This minimises the Group's risk of incurring costs for overcapacity in the event that demand for a specific product were to diminish. At the same time, this increases the risk of B&B TOOLS' Code of Conduct not being observed with respect to such areas as work environment. Therefore, the Group strives to work exclusively with manufacturers that accept the Group's Code of Conduct and successfully pass the regular follow-up reviews that the Group companies conduct on location.
Steel is an important component in many of the products sold by B&B TOOLS. Accordingly, rapid and sharp raw-material price fluctuations can have a short-term impact on the Group's earnings. In the long term, the Group's companies can make the same adjustments as other players in the market, which limits the risk of changes in raw-material prices.
The Group's logistics and IT function is primarily located in two major units in Alingsås and Ulricehamn. A fire at one of these locations would have serious repercussions on the Group's capacity to make deliveries to customers. Preventive actions are being taken to avoid disasters in the form of fire and destruction. Insurance coverage has been obtained for property damage and loss of income due to disruption (consequential losses).
The Group conducts operations that give rise to normal product liability exposure. The Group has insurance coverage for product liability.
The Group is exposed to normal credit risks in its customer relationships. To minimise the risk of credit losses, the Group companies apply credit policies that limit the outstanding amounts and credit periods for each individual customer. The fact that none of the Group's customers accounts for a significant portion of the Group's revenue limits the extent of the risk.
The Group's focus is to offer customers products and services that make everyday operations easier, safer and more profitable. Its customers are also increasingly demanding an advisor and partner with the high level of competence and creative ability necessary to develop solutions that meet their defined needs. Accordingly, it is crucial that B&B TOOLS is able to recruit and develop the most competent employees. Responsibility for this rests with operational management.
Part of B&B TOOLS' strategy has and continues to be growth through acquisitions. The risks involved in acquisitions include the risk that the Group will not successfully achieve the anticipated gains associated with an acquisition and the risk that unknown contingent liabilities will not be identified during due diligence. The Group works specifically on the due diligence process, and responsibility for the integration of new companies rests with the acquiring operating area.
A major portion of the Group's purchases are made in foreign currency, while sales are normally conducted in local currency in the countries in which the Group conducts its operations. For a description of the Group's exposure to various currencies and the financial instruments used to minimise risks, refer to Note 25 Financial risk management and the section "Foreign-exchange risks" on pages 50-51.
For a description of the manner in which the Group is exposed to interest-rate fluctuations in relation to external borrowing and lending and the way this is managed to minimise risks, refer to Note 25 Financial risk management and the section "Interest-rate risks" on page 51.
Financing risk refers to the risk that meeting the Group's requirements for external capital could become more difficult or more expensive. For a description of the Group's financing and the manner in which the financing risk is managed, refer to Note 25 Financial risk management and the sections "Liquidity and refinancing risks" and "Borrowing and maturity structure" on pages 51-53.
| Notes table of contents | Page | |
|---|---|---|
| NOTE 1 | Accounting policies | 26–31 |
| NOTE 2 | Distribution of revenue | 31 |
| NOTE 3 | Other operating income | 31 |
| NOTE 4 | Segment reporting | 32 |
| NOTE 5 | Employees and personnel costs | 33–35 |
| NOTE 6 | Fees and reimbursement to auditors | 36 |
| NOTE 7 | Net financial items | 36 |
| NOTE 8 | Appropriations | 36 |
| NOTE 9 | Taxes | 37–38 |
| NOTE 10 | Intangible non-current assets | 39 |
| NOTE 11 | Tangible non-current assets | 40 |
| NOTE 12 | Shares in associated companies | 41 |
| NOTE 13 | Receivables from Group companies | 41 |
| NOTE 14 | Long-term receivables and other receivables | 41 |
| NOTE 15 | Inventories | 41 |
| NOTE 16 | Prepaid expenses and accrued income | 41 |
| NOTE 17 | Reserves and equity | 42 |
| NOTE 18 | Earnings per share | 43 |
| NOTE 19 | Provisions for pensions | 44–45 |
| NOTE 20 | Other provisions | 46 |
| NOTE 21 | Other liabilities | 46 |
| NOTE 22 | Accrued expenses and deferred income | 46 |
| NOTE 23 | Specification of interest-bearing net loan liabilities | |
| by asset and liability | 47 | |
| NOTE 24 | Expected recovery periods for assets and liabilities | 48–49 |
| NOTE 25 | Financial risk management | 50–53 |
| NOTE 26 | Operational leasing | 53 |
| NOTE 27 | Pledged assets and contingent liabilities | 54 |
| NOTE 28 | Related parties | 54 |
| NOTE 29 | Group companies | 54–55 |
| NOTE 30 | Untaxed reserves | 55 |
| NOTE 31 | Cash-flow statement | 56 |
| NOTE 32 | Acquisition of businesses | 57 |
| NOTE 33 | Events after the balance-sheet date | 57 |
| NOTE 34 | Key estimates and judgements | 57 |
| NOTE 35 | Information about the Parent Company | 57 |
The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretive statements from the IFRS Interpretations Committee as approved by the EU. Recommendation RFR 1 Supplementary Accounting Rules for Groups issued by the Swedish Financial Reporting Board has also been applied. The Parent Company applies the same accounting policies as the Group, except in the cases stated below under the section Parent Company accounting policies.
The Annual Report and consolidated financial statements were approved for publication by the Board of Directors and President & CEO on 14 June 2016. The Group's and the Parent Company's income statements and balance sheets are subject to approval by the Annual General Meeting to be held on 25 August 2016.
The Parent Company's functional currency is Swedish kronor (SEK), which also constitutes the reporting currency for the Parent Company and the Group. This means that the financial statements are presented in SEK. All amounts, unless specifically stated otherwise, are rounded to the nearest million.
Assets and liabilities are recognised at historical cost, except for certain financial assets and liabilities that are measured at fair value. Financial assets and liabilities measured at fair value consist of derivative instruments and financial assets available for sale. Preparing the financial statements in accordance with IFRS requires that management makes judgements and estimates and makes assumptions that affect the application of the accounting policies and the recognised amounts of assets, liabilities, income and expenses. The actual outcome may differ from these estimates and judgements. The estimates and assumptions are reviewed on a regular basis. Changes in estimates are recognised in the period when the change is made if the change affects this period only, or in the period when the change is made and in future periods if the change affects the current period as well as future periods. Judgements made by management when applying IFRS that have a significant effect on the financial statements and estimates made which can lead to substantial adjustments in the following year's financial statements are described in more detail in Note 34.
Events after the balance-sheet date refer to both favourable and unfavourable events that occur between the balance-sheet date and the date at the beginning of the following financial year when the financial statements are signed by the members of the Board of Directors and the President & CEO. Information is provided in the Annual Report about any significant events after the balancesheet date that were not accounted for when the financial statements were adopted. Such events that confirm the circumstances prevailing at the balance-sheet date are taken into account at the time of adoption of the financial statements.
Non-current assets and disposal groups held for sale are recognised at the lower of their recognised carrying amount at the time of classification and their fair value after a deduction for selling expenses.
Offsetting of receivables and liabilities and of income and costs occurs only when required or when expressly permitted in an accounting recommendation.
The stated accounting policies for the Group have been applied consistently for all periods presented in the Group's financial statements, unless specifically stated otherwise. The Group's accounting policies have been applied consistently in the reporting and consolidating of the Parent Company and subsidiaries.
The following new and amended standards came into effect for the financial year starting 1 April 2015: IFRIC 21 Levies and a number of annual IFRS improvements pertaining to IFRS 1, IFRS 3, IFRS 13 and IAS 40. None of these clarifications, amendments or interpretive statements have had any material impact on the Group's financial statements.
A number of new or amended IFRS and interpretive statements will come into effect in coming financial years and have not been applied in advance in the preparation of these financial statements. B&B TOOLS has no plans for advance application of any new standards or amendments in the future.
IFRS 9 Financial Instruments is intended to replace IAS 39 Financial instruments: Recognition and Measurement from 1 January 2018. B&B TOOLS has not yet evaluated the effects of this amendment.
IFRS 15 Revenue from Contracts with Customers. This standard comes into effect on 1 January 2018. The standard is not expected to have any material impact on B&B TOOLS' financial reporting, but expands its disclosure requirements.
IFRS 16 Leases. This new standard establishes principles for the recognition, measurement, classification and disclosure of leases for both parties in an agreement. The amendments pertain to the recognition of the lessee. IFRS 16 comes into effect on 1 January 2019. B&B TOOLS has not yet evaluated the effects of this amendment.
Other new or amended IFRS are not expected to have any material impact on the Group's financial statements.
An operating segment is a part of the Group that conducts operations that can generate income and incur costs, and for which independent financial information is available. The earnings of an operating segment are also monitored by the Company's chief operating decision-maker to enable them to be assessed and to allow resources to be allocated to the operating segment. Refer to Note 4 for a more detailed description of the Group's division and a presentation of operating segments.
Non-current assets and non-current liabilities in the Group and the Parent Company essentially consist only of amounts that are expected to be recovered or paid later than 12 months from the balance-sheet date. Current assets and current liabilities in the Group and the Parent Company essentially consist only of amounts that are expected to be recovered or paid within 12 months from the balance-sheet date.
Subsidiaries are entities over which B&B TOOLS AB has a controlling influence. A controlling influence exists if the Parent Company has power over the investee, is exposed to or has rights to variable returns from its involvement and has the ability to use its power over the investee to affect the amount of the investor's returns. When assessing whether or not a controlling influence exists, consideration is given to potential voting shares and whether any de facto control exists.
Subsidiaries are recognised in accordance with the purchase method of accounting. This method entails that the acquisition of a subsidiary is viewed as a transaction through which the Group indirectly acquires the assets of the subsidiary and assumes its liabilities. The acquisition analysis determines the fair value, on the date of acquisition, of the identifiable assets, assumed debts and any non-controlling interests. Transaction fees, except for transaction fees attributable to issues of equity instruments or debt instruments, that arise are recognised directly in net profit.
In the case of business acquisitions where the transferred remuneration, any non-controlling interests and the fair value of previously held participations (step acquisitions) exceed the fair value of the acquired assets and assumed liabilities that are to be recognised separately, the difference is recognised as goodwill. Should the difference be negative, which is known as a bargain purchase, it is recognised directly in net profit. Contingent considerations are measured at fair value on the date of acquisition. If the contingent consideration is classified as an equity instrument, no remeasurement is performed and the adjustment is made to equity. Other contingent considerations are remeasured for each financial statement and the difference is recognised in net profit.
If the acquisition does not pertain to 100 percent of the subsidiary, it is deemed a non-controlling interest. There are two methods for recognising non-controlling interests: (i) by recognising the non-controlling interest's share of the proportional net assets or (ii) by recognising the non-controlling interest at fair value, meaning that the non-controlling interest is part of goodwill. Which of these two alternatives is to be applied can be determined on a case-by-case basis.
For step acquisitions, goodwill is determined on the date on which controlling influence is reached. Previous holdings are measured at fair value and the change in value is recognised in net profit.
For divestments that lead to a loss of controlling influence but where a holding remains, the holding is measured at fair value and the change in value is recognised in net profit.
The financial statements of subsidiaries are consolidated from the date of acquisition until the date when the controlling influence ceases.
Associated companies are companies over which the Group has a significant, but not controlling influence in terms of operational and financial control, usually through a holding of between 20 and 50 percent of the total number of votes. From the time at which significant control is achieved, shares in associated companies are recognised in the consolidated financial statements using the equity method. According to the equity method, the carrying amount of the shares in associated companies recognised in the Group should correspond to the Group's share of the equity in the associated companies and consolidated goodwill and any other residual value for the consolidated surplus or deficit value. In the consolidated income statement, the Group's share of the associated company's profit, adjusted for any depreciation, amortisation, impairment losses or reversals of acquired surplus or deficit values, is recognised as "Shares in profit of associated companies." Dividends received from associated companies reduce the carrying amount of the investment. The Group's portion of other comprehensive income in associated companies is recognised in a separate line in the Group's other comprehensive income.
Any differences at the acquisition between the cost of the holding and the holding company's portion of the net fair value of the associated company's identifiable assets and liabilities are recognised in accordance with the same principles as in the acquisition of a subsidiary. Transaction fees, except for transaction fees attributable to issues of equity instruments or debt instruments, that arise are included in cost. When the Group's portion of the recognised losses in the associated company exceeds the carrying amount of the shares in the Group, the value of these shares is reduced to zero. Settlement of losses also occurs for long-term financial transactions without collateral, which, in financial terms, are part of the holding company's net investment in the associated company. Continued losses are not recognised, provided that the Group has not issued guarantees to cover losses arising in the associated company. The equity method is applied until the time at which the significant influence is terminated.
Intra-Group receivables and liabilities, income or expenses, and unrealised gains or losses arising in intra-Group transactions between Group companies are eliminated in their entirety when preparing the consolidated financial statements. Unrealised gains that arise in transactions with associated companies are eliminated to an extent corresponding to the Group's participating interest in the company. Unrealised losses are eliminated in the same manner as unrealised gains, but only insofar as no impairment requirement exists.
Transactions in foreign currency are translated to the functional currency using the exchange rate prevailing on the transaction date. The functional currency is the currency of the primary economic environments in which the companies conduct their operations. Monetary assets and liabilities in foreign currency are translated to the functional currency at the exchange rate prevailing on the balance-sheet date. Exchange-rate differences that arise during translation are recognised in net profit. Non-monetary assets and liabilities recognised at historical cost are translated at the exchange rate prevailing on the transaction date.
Assets and liabilities in foreign entities, including goodwill and other consolidated surplus values and deficits, are translated from the foreign entity's functional currency to the Group's reporting currency, SEK, at the exchange rate prevailing on the balance-sheet date. Income and expenses in foreign entities are translated to SEK at the average exchange rate, which constitutes an approximation of the foreign-exchange rates prevailing at each transaction date. Translation differences arising as a result of the translation of a foreign net investment are recognised directly in other comprehensive income and are accumulated in a separate equity component, referred to as the translation reserve. When a foreign entity is divested, the accumulated translation differences attributable to the entity are realised, by which they are reclassified from the translation reserve in equity to net profit.
The Group's primary income comprises the sale of goods and services.
Income from the sale of goods is recognised in net profit when the material risks and benefits associated with ownership of the goods have been transferred to the buyer, typically in connection with delivery. Income is recognised if it is probable that the financial benefits will accrue to the Group.
Income from service assignments is normally recognised when the service is performed. Income from service assignments is recognised in accordance with the principles of the percentage-ofcompletion method. The degree of completion is normally determined based on the relationship between accrued expenditure on the balance-sheet date and the estimated total expenditure. Probable losses are recognised immediately in consolidated earnings.
Rental income from real estate is recognised in net profit on a straight-line basis based on the terms of the lease. The aggregate cost of benefits provided is recognised as a reduction of rental income on a straight-line basis over the term of the lease.
Income from property sales is recognised on the day of taking possession.
Costs related to operational leases are recognised in net profit on a straight-line basis over the term of the lease. Benefits received in connection with the signing of a contract are recognised in net profit as a straight-line reduction in leasing fees over the course of the lease. Variable fees are expensed in the periods in which they arise.
Minimum leasing fees are allocated to interest expense and repayment of the outstanding liability. The interest expense is allocated over the leasing period in such a way that each accounting period is charged with an amount corresponding to a fixed interest rate for the liability reported for each period. Variable fees are expensed in the periods in which they arise.
Financial income and expenses consist of interest income on bank funds and receivables, and of interest-bearing securities, interest expenses on loans, dividend income, exchange-rate differences and unrealised and realised gains on financial investments. Refer also to the section below under Financial assets available for sale.
Interest income on receivables and interest expenses on liabilities are calculated using the effective interest method. The effective interest rate is the rate that discounts the estimated future receipts and disbursements during the financial instrument's expected term to the recognised net value of the financial receivable or the liability.
Interest expense includes the accrued amount of issuance costs and similar direct transaction costs in connection with borrowing.
Dividend income is recognised when the right to receive payment has been determined. Borrowing costs are recognised in profit or loss applying the effective interest method, except to the extent that they are directly attributable to the purchase, design or production of assets that require a significant amount of time to prepare for their intended use or sale. However, no such assets are normally recognised by B&B TOOLS, which is why no interest has been capitalised.
Exchange gains and losses are recognised in a net amount.
Financial instruments are measured and recognised in the Group in accordance with the rules of IAS 39. Financial instruments recognised as assets in the balance sheet include cash and cash equivalents, accounts receivable, financial investments and derivatives. Liabilities include accounts payable, loan liabilities and derivatives.
A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party under the contractual terms of the instrument in question. A financial asset, or a portion of a financial asset, is derecognised from the balance sheet when the contractual rights are realised, fall due or the Group loses control over them. A financial liability, or a portion of a financial liability, is derecognised from the balance sheet when the obligation in the contract is fulfilled or ceases to apply in some other way.
Financial assets and financial liabilities are offset and recognised as a net amount in the balance sheet only when there is a legal right to offset the amounts and when there is an intention to settle the items in a net amount or to realise the asset and settle the liability simultaneously.
Acquisitions and disposals of financial assets are recognised on the transaction date, which is the date when the Group undertakes to acquire or dispose of assets.
All financial instruments that are not derivatives are initially recognised at cost, corresponding to the fair value of the instrument plus transaction costs, with the exception of those items classified as financial assets measured at fair value in profit or loss, which are measured at fair value, excluding transaction costs. A financial instrument's classification determines how it is measured after the initial reporting occasion. The Group classifies its financial instruments based on the purpose for which the instrument was acquired. Management determines the classification on the initial reporting occasion. The Group's holdings of financial instruments are classified as follows:
The category Financial assets available for sale includes financial assets that are not classified in any other category, or financial assets that the Company initially opted to classify in this category. Shares and participations among financial non-current assets not recognised as subsidiaries, associated companies or joint ventures are recognised in this category. According to the main rule, these assets are measured at fair value after the acquisition date, with changes in value recognised in other comprehensive income and the accumulated changes in value recognised as a separate component under equity, although this does not include changes in value due to impairment losses or interest on receivable instruments and dividend income, or exchange-rate differences on monetary items in net profit. If the asset is sold, the accumulated gain/loss that was previously recognised in other comprehensive income is recognised in net profit. Holdings that are not listed, and whose fair value cannot be calculated in a reliable manner, are recognised at cost, but with a possible adjustment if an impairment charge is warranted.
Long-term receivables among non-current assets and accounts receivable and other receivables among current assets are non-derivative financial assets with fixed payments, or payments that can be determined and that are not listed on an active market. After the acquisition date, such assets are recognised at amortised cost using the effective interest method, less any provisions for loss of value. Accounts receivable are recognised at the amount expected to be received, meaning after deductions for doubtful accounts receivable. Any impairment requirement for the receivables is determined based on individual testing, taking into consideration earlier experience of customer losses on similar receivables.
Loans and other financial liabilities, such as accounts payable, are included in this category. Financial liabilities are initially measured at fair value after deductions for transaction costs. Borrowing is then recognised at amortised cost and any differences between the loan amount (net after transaction costs) and the repayable amount are recognised in net profit distributed over the term of the loan and by applying the effective interest method. Borrowing is classified as a current liability if the Company does not hold an unconditional right to defer payment for a minimum of 12 months after the balance-sheet date.
The Group has not initially classified any assets or liabilities as financial assets or liabilities measured at fair value in profit or loss, and does not have any financial assets or liabilities held for trading. Nor did the Group have any financial held-to-maturity investments during the financial year.
Derivative instruments are initially measured at fair value. After the acquisition date, derivative instruments held for hedging purposes, meaning interest swap agreements, interest caps and foreign-exchange forward contracts, are measured at fair value. To fulfil the requirements for hedge accounting according to IAS 39, there must be a clear link to the hedged item, the hedge must effectively protect the hedged item, hedging documentation must have been drawn up and the effectiveness must be measurable.
After the initial recognition, derivative instruments are measured at fair value and the method of recognising a change in value depends on the character of the hedged item. The Group identifies certain derivatives as either (1) a hedge of a highly probable anticipated interest income (cash-flow hedging), or (2) a hedge of a highly probable forecast transaction in foreign currency (cash-flow hedging).
The effective portion of changes in the fair value of derivative instruments identified as cashflow hedges are recognised in other comprehensive income and the accumulated changes in value are recognised in a separate component under equity (the hedging reserve).
Any gains or losses attributable to the ineffective portion are recognised immediately in profit or loss. Accumulated amounts in equity are reversed to net profit in the periods in which the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). If the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventories or a tangible non-current asset), or a non-financial liability, the hedging reserve is dissolved in other comprehensive income and included in the initial carrying amount of the asset or liability.
Investments in foreign subsidiaries (net assets including goodwill) have been protected to a certain extent through financial hedging in the form of borrowing in the corresponding currency. Such investments are recognised at the exchange rate prevailing on the balance-sheet date.
Tangible non-current assets are recognised as assets in the balance sheet if it is probable that future financial benefits will accrue to the Group and the cost of the asset can be calculated in a reliable manner.
Tangible non-current assets are recognised in the Group at cost, less accumulated depreciation and any impairment losses. The cost includes the purchase price and costs directly attributable to the asset to bring it to location and make it usable for the purpose intended with its procurement. Examples of directly attributable costs included in the cost are expenses for shipping and handling, installation, legal ratification, consulting services and legal services. Borrowing costs that are directly attributable to the purchase, design or production of assets that require a significant amount of time to prepare for their intended use or sale are included in the cost.
Tangible non-current assets that consist of parts with different useful lives are treated as separate components of tangible non-current assets.
The carrying amount of a tangible non-current asset is derecognised from the balance sheet upon disposal or sale, or when no future financial benefits are expected to be derived from the use
or disposal/sale of the asset. Gains or losses that arise upon the sale or disposal of an asset are defined as the difference between the selling price and the carrying amount of the asset, less direct selling expenses. Gains and losses are recognised as other operating income/expenses.
Leases are classified in the consolidated financial statements as either financial or operational leases. Leases where essentially all of the financial risks and benefits associated with ownership have been transferred to the lessee are classified as financial leases. Where this is not the case, the lease is an operational lease.
Assets that are leased in accordance with financial leases are recognised as non-current assets in the balance sheet and are initially measured at the lower of the leased asset's fair value and the present value of the minimum leasing fees at the time the contract is entered into. Obligations to pay future leasing fees are recognised as non-current and current liabilities. The leased assets are depreciated over the useful life of the asset in question, while the leasing fees are recognised as interest and amortisation of the liabilities.
Assets that are leased in accordance with operational leases are generally not recognised as an asset in the balance sheet. Nor do operational leases result in a liability.
A sale and leaseback transaction (SLB) comprises the sale of an asset according to a purchase agreement and a subsequent lease of the same asset with the original owner as the lessee. Recognition of such transactions depends on the classification of the leasing transaction, which is assessed based on customary principles for classifying leases (also refer to the section Leased assets above). In the event that an SLB transaction results in a financial lease, the amount by which the sale amount exceeds the carrying amount (capital gain) is not recognised directly in the profit or loss of the seller, but rather is allocated on a straight-basis over the term of the lease.
In the event that an SLB transaction results in an operational lease, the amount by which the sale amount exceeds the carrying amount (capital gain) is recognised in the period when the sale occurs, provided the transaction is based on the fair value. According to the Group's assessment, all SLB transactions have been or will be conducted as arm's length transactions at a price that corresponds to fair value. Income attributable to SLB transactions that fulfil the requirements for income recognition are recognised according to the prevailing principles for income recognition (refer to the section Income). In the case of SLB transactions pertaining to property, income is normally recognised on the date on which possession is taken, unless the risks and benefits have been transferred to the buyer on an earlier date. Control of the asset may have been transferred prior to the date on which possession is taken and, in such cases, the sale of the property is recognised as income from this earlier date.
Additional expenditures are added to the cost only to the extent that it is probable that the future financial benefits associated with the asset will accrue to the Group and the cost can be calculated in a reliable manner. All other additional expenditures are recognised as an expense in the period in which they arise.
Assets are depreciated on a straight-line basis over their estimated period of use. Land is not depreciated. The Group applies component depreciation, which means that depreciation is based on the estimated useful life of individual components.
| Buildings, property used in operations | 5–100 years |
|---|---|
| Land improvements | 20 years |
| Leasehold improvements | 3–15 years |
| Machinery | 3–10 years |
| Equipment | 3–5 years |
Property used in operations consists of a number of components with varying useful lives. The main classification is buildings and land. The land component is not depreciated since its useful life is considered to be unlimited. Buildings, however, consist of a number of components for which the useful life varies. The useful lives of these components have been deemed to vary between five and 100 years.
| Core | 100 years |
|---|---|
| Core improvements, inner walls, etc. | 50 years |
| Installations: heating, electricity, water, and sanitation, ventilation, etc. | 10–50 years |
| Outer surfaces: facing, roofing, etc. | 10–50 years |
| Inner surfaces: machinery equipment, etc. | 10–15 years |
|---|---|
| Building equipment | 5–10 years |
An assessment of the depreciation methods applied and the residual value and useful life of assets is carried out on an annual basis.
Goodwill represents the difference between the consideration transferred for a corporate acquisition and the fair value of the acquired assets and assumed debt. Goodwill is measured at cost, less any accumulated impairment losses. Goodwill is distributed to cash-generating units and is not amortised continuously. Instead, impairment testing is conducted on an annual basis. For corporate acquisitions for which the consideration transferred is less than the fair value of the acquired assets and assumed debt, known as a bargain purchase, the difference is recognised directly in net profit.
Other intangible assets acquired by the Group are recognised at cost less accumulated amortisation and impairment losses and comprise brands, capitalised IT expenditure for development and purchases of software. Accrued expenses for internally generated goodwill and internally generated brands are recognised in net profit when the cost is incurred.
Additional expenditures for capitalised intangible assets are recognised as an asset in the balance sheet only to the extent that they increase the future financial benefits of the specific asset to which they are attributable. All other expenditures are expensed as incurred.
Amortisation is recognised in net profit on a straight-line basis over the estimated useful life of the intangible asset, unless the useful life is indefinable. Goodwill and intangible assets with an indefinable useful life, such as certain brands, are tested on an annual basis for any indications of an impairment requirement, or as soon as there are indications that the asset in question has declined in value. Intangible assets that are subject to amortisation are amortised from the date on which they are available for use.
| Brands, supplier contracts, customer relations | 3–10 years |
|---|---|
| Software, IT investments | 3–5 years |
An assessment of the amortisation methods and useful lives applied is carried out on an annual basis.
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is primarily calculated using a method based on weighted averages and includes expenditures arising during the acquisition of the inventory assets and transportation thereof to their current location and state or by applying the "first-in, first-out" (FIFO) method. Net realisable value is the estimated selling price in the operating activities, after deduction of the estimated costs for completion and for accomplishing a sale.
The carrying amount of the Group's assets is tested on at least each balance-sheet date to determine whether there are any indications of an impairment requirement. IAS 36 is applied for impairment testing of assets other than financial assets, which are tested in accordance with IAS 39, assets available for sale and disposal groups recognised in accordance with IFRS 5, inventories, plan assets used for financing remuneration to employees and deferred tax assets. If there is any indication of impairment, the recoverable amount of the asset is calculated. The carrying amount of exempted assets in accordance with the above is tested in compliance with each standard.
The recoverable amount of goodwill, other intangible assets with an indefinable useful life and intangible assets not yet ready for use is calculated at least annually. Where it is not possible to allocate essentially independent cash flows to an individual asset, net assets are grouped at the lowest level at which essentially independent cash flows can be determined (cash-generating unit).
An impairment loss is recognised when an asset's or a cash-generating unit's carrying amount exceeds the recoverable amount. An impairment loss is recognised as a cost in net profit. When impairment losses are identified for a cash-generating unit, the impairment loss is primarily allocated to goodwill. Proportional impairment charges are then made against other assets included in the unit.
The recoverable amount of assets belonging to the categories of loan receivables and accounts receivable recognised at amortised cost is calculated as the present value of future cash flows discounted using the effective interest rate prevailing when the asset was initially recognised. Assets with short remaining terms are not discounted.
The recoverable amount of other assets is the higher of fair value less selling expenses and value in use. For the purpose of calculating the value in use, future cash flows are discounted using a discount factor that reflects risk-free interest and the risk associated with the specific asset. For an asset that does not generate cash flows and is essentially independent of other assets, the recoverable amount is calculated for the cash-generating unit to which the asset belongs.
Impairment losses on loan receivables and accounts receivable recognised at amortised cost are reversed if a later increase in the recoverable amount can objectively be attributed to an event that occurred after the impairment loss was charged. Impairment losses on goodwill are not reversed. Impairment losses on other assets are reversed if there has been a change in the assumptions on which the calculation of the recoverable amount was based. An impairment loss is reversed only to the extent that the carrying amount of the asset after the reversal does not exceed the carrying amount of the asset if no impairment loss had been charged, taking into account the amortisation that would then have been made.
The Group's equity can be divided into share capital, other contributed capital, reserves, retained earnings including net profit and non-controlling interest.
Holdings of treasury shares and other equity instruments are recognised as a reduction of equity. Acquisitions of such instruments are recognised as a deduction item against equity. Proceeds from the disposal of equity instruments are recognised as an increase in equity. Any transaction costs are recognised directly against equity.
Dividends are recognised as a liability after the Annual General Meeting has approved the dividend.
The calculation of earnings per share is based on consolidated net profit attributable to the Parent Company shareholders and on the weighted average number of shares outstanding during the year. When calculating earnings per share on a fully diluted basis, the average number of shares outstanding is adjusted by taking into account the theoretical dilution of the number of shares outstanding, which during reported periods is attributable to personnel options and call options issued to employees.
Obligations pertaining to fees for defined-contribution pension plans are recognised as an expense in net profit at the rate they are accrued as the employees perform services for the Company during a specific period.
The Group's net obligations pertaining to defined-benefit pension plans are calculated separately for each plan in the form of an estimate of the future remuneration that the employee has earned as a result of his/her employment in both the current and prior periods. These calculations are performed by a qualified actuary using the projected unit credit method. The obligations are measured at the present value of expected future payments, with due consideration for future salary increases. The discount rate used is the interest rate on the balance-sheet date for an investment grade corporate bond or housing bonds with a term equivalent to the Group's pension obligations. When there is no functioning market for such bonds, the market rate for government bonds with an equivalent term is used. In the case of funded plans, the fair value of the plan assets reduces the calculated value.
When the calculation leads to an asset for the Group, the carrying amount of the asset is limited to the lowest of the surplus on the plan and the asset limitation calculated utilising the discount rate. The asset limitation comprises the present value of the future financial benefits in the form of lower future contributions or cash repayment. Any minimum funding requirements are taken into consideration when calculating the present value of future repayments or payments.
Obligations for retirement pensions to salaried employees in Sweden in accordance with the ITP plan are handled mainly within the so-called FPG/PRI system. However, obligations for family pensions are secured by insurance with Alecta. These obligations are also defined-benefit obligations, although the Group has not had access to the information necessary to recognise these obligations
as a defined-benefit plan. Therefore, these pensions secured by insurance with Alecta are recognised as defined-contribution plans. As of 31 December 2015, Alecta's surplus in the form of its collective solvency margin was 153 percent (2014: 143 percent). The collective solvency margin is defined as the market value of Alecta's assets as a percentage of the insurance obligations calculated in accordance with Alecta's actuarial calculation assumptions, which do not correspond with IAS 19. Alecta's surplus can be distributed to the policy holders and/or the insured.
When the benefits under a plan are improved, the proportion of the increase in benefits pertaining to the employees' service during prior periods is recognised as an expense in net profit. The carrying amount for pensions and similar commitments in the balance sheet corresponds to the present value of the commitments at year-end, less the fair value of the plan assets.
Interest expense/income net on the defined-benefit commitment/asset is recognised in net profit under net financial items. Net interest income is based on the interest rate arising on the discounting of the net obligation, meaning the interest on the obligation, plan assets and the interest on the effect of any asset limitations. Other components are recognised in operating profit/loss. Remeasurement effects comprise actuarial gains and losses, the difference between actual returns on plan assets and the total included in net interest income, and any changes to the effects of asset limitations (excluding interest included in net financial items). Remeasurement effects are recognised in other comprehensive income The special payroll tax comprises a portion of the actuarial assumptions and, accordingly, is recognised as a portion of the net obligation/net asset. The portion of the special payroll tax calculated based on the Swedish Pension Obligations Vesting Act in legal entities is recognised, for reasons of simplification, as accrued expenses instead of as a portion of the net obligation.
Yield tax is recognised continuously in profit or loss for the period to which the tax pertains and thus is not included in the liability calculation. For funded plans, the tax is charged to the return on plan assets and is recognised in other comprehensive income. For unfunded or partly unfunded plans, tax is charged to net profit.
In connection with the termination of employment, a provision is recognised only in cases when the company is obligated either to terminate an employee's or a group of employees' employment before the normal point in time, or when benefits are given as an offer to encourage voluntary employment termination. In the latter case, a liability and expense are recognised if it is probable that the offer will be accepted and the number of employees who will accept the offer can be reliably estimated.
The 2014 and 2013 Annual General Meetings resolved that call option programmes would be offered to members of senior management of the Group. Since a market premium was paid for the options, no personnel costs were incurred at the time of issuance. However, the terms stipulate that the employee may receive a certain subsidy for the premiums paid to the employee, provided that certain terms and conditions are fulfilled. The cost for this subsidy is distributed over the vesting period.
A provision is recognised in the balance sheet when the Group has a current legal or informal obligation resulting from a transpired event and when it is probable that an outflow of financial resources will be required to settle the obligation, and an accurate assessment of the amount can be made. When the effect of the timing of the payment is significant, provisions are calculated based on a discount of the expected future cash flow at an interest rate before taxes that reflects current market assessments of the time value of money and, where applicable, the risks associated with the liability.
A provision for guarantees is recognised when the underlying products or services are sold. The provision is based on historical data on guarantees and a total assessment of the possible outcomes in relation to the probabilities associated therewith.
A provision for restructuring is recognised when the Group has adopted a comprehensive and formal restructuring plan, and the restructuring has either begun or been publicly announced. No provisions are set aside for future operating expenses.
A provision for onerous contracts is recognised when the benefits that the Group expects to receive from a contract are lower than the inevitable costs to fulfil the obligations in accordance with the contract.
Income taxes consist of current taxes and deferred taxes. Income taxes are recognised in net profit, except when the underlying transaction is recognised in other comprehensive income or in equity, in which case the associated tax effect is also recognised in other comprehensive income or in equity.
Current taxes are taxes to be paid or refunded relating to the current year, with the application of the tax rates resolved, or in practice resolved, as of the balance-sheet date. Current taxes also include adjustments of current taxes attributable to earlier periods.
Deferred taxes are calculated in accordance with the balance-sheet method based on temporary differences between the carrying amount of assets and liabilities and the value of assets and liabilities for tax purposes. Temporary differences arising from the recognition of consolidated goodwill are not taken into account. Nor are temporary differences attributable to participations in subsidiaries and associated companies that are not expected to be reversed within the foreseeable future. The measurement of deferred taxes is based on how the carrying amount of assets or liabilities is expected to be realised or settled. Deferred taxes are calculated using the tax rates and tax rules resolved, or in practice resolved, as of the balance-sheet date.
Deferred tax assets pertaining to deductible temporary differences and loss carryforwards are recognised only to the extent that it is probable that it will be possible to utilise them. The value of deferred tax assets is reduced when it is no longer deemed probable that it will be possible to utilise them.
A contingent liability is recognised when there is a possible undertaking arising from events that have occurred and the existence of which are confirmed only by the occurrence of one or more future uncertain events, or when an undertaking is not recognised as a liability or provision because it is unlikely that an outflow of resources will be required.
When a non-current asset (or a disposal group) is classified as held for sale, this means that its carrying amount will essentially be recovered through a sale and not through use. A discontinued operation is a part of a company's operations that represents an independent operating segment, or a significant business in a geographic area, or is a subsidiary acquired solely for the purpose of being resold. Classification as a discontinued operation occurs upon sale or at an earlier point in time when the operation fulfils the criteria of being classified as held for sale. A disposal group that is to be closed can also qualify for classification as a discontinued operation, provided that it fulfils the size criteria outlined above.
Receipts and disbursements have been divided into the following categories: operating activities, investing activities and financing activities. The indirect method is applied for flows from operating activities.
The changes in operating assets and operating liabilities for the year have been adjusted for effects of changes in exchange rates. Acquisitions and disposals are recognised in investing activities.
The assets and liabilities held by the entities acquired and sold on the date of acquisition are not included in the analysis of changes in working capital, nor in the changes of balance-sheet items recognised in investing and financing activities.
Cash and cash equivalents include cash and bank flows, as well as current investments whose conversion to bank funds may occur at an amount that is usually known in advance. Cash and cash equivalents include current investments with a term of less than three months.
The Parent Company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act (1995:1554) and recommendation RFR 2 Accounting for Legal Entities issued by the Swedish Financial Reporting Board. The Swedish Financial Reporting Board's statements concerning listed companies have also been applied. RFR 2 stipulates that the Parent Company, in the
annual accounts for the legal entity, shall apply all IFRS and statements adopted by the EU to the greatest extent possible within the framework of the Swedish Annual Accounts Act, the Swedish Pension Obligations Vesting Act and with due consideration given to the relationship between accounting and taxation. The recommendation states the exceptions from and additions to be made to IFRS. Combined, this results in differences between the Group's and the Parent Company's accounting policies in the areas indicated below.
Unless otherwise stated below, the same changes as detailed above for the Group applied to the Parent Company's accounting policies during the financial year.
Participations in subsidiaries are recognised in the Parent Company in accordance with the cost method. This means that transaction fees are included in the carrying amount for holdings in subsidiaries. In the consolidated financial statements, transaction fees are recognised directly in earnings when incurred. Contingent considerations are valued on the basis of the probability that a consideration will be paid. Any changes to provisions/receivables are added to/ deducted from the cost. In the consolidated financial statements contingent considerations are measured at fair value, including changes in value, in profit or loss.
Leased assets
All leasing agreements in the Parent Company are recognised in accordance with the rules for operational leasing.
Other bases for the calculation of defined-benefit pension plans are used in the Parent Company than those set out in IAS 19. The Parent Company complies with the provisions of the Swedish Pension Obligations Vesting Act and the directives of the Swedish Financial Supervisory Authority, since this is a condition for tax deductibility. The most important differences compared with the rules in IAS 19 are how the discount interest rate is determined, that the calculation of the defined-benefit obligation takes place based on the current salary level without assumption of future salary increases, and that all actuarial gains and losses are recognised in net profit as they arise.
In the Parent Company, untaxed reserves are recognised including deferred tax liabilities. However, in the consolidated financial statements, untaxed reserves are divided into deferred tax liabilities and equity. Correspondingly, the Parent Company, appropriations are not distributed to deferred tax expense in profit or loss.
In accordance with RFR 2, the Parent Company has elected not to apply the provisions in IAS 39 concerning financial guarantee agreements on behalf of subsidiaries.
Shareholders' contributions are recognised directly in equity of the recipient and are capitalised in shares and participations of the donor. Group contributions, both received and paid, are recognised in profit or loss as appropriations.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | ||
| Revenue | |||||
| Sale of goods | 7,655 | 7,732 | – | – | |
| Service assignments | 143 | 146 | 33 | 36 | |
| Rental income | 8 | 8 | 3 | 3 | |
| Commissions, bonuses and similar income |
15 | 17 | – | – | |
| Total | 7,821 | 7,903 | 36 | 39 |
Income in the Parent Company pertains to intra-Group services totalling MSEK 33 (36).
| Group | ||
|---|---|---|
| 2015/2016 | 2014/2015 | |
| Exchange-rate gains on operating receivables/liabilities | 22 | 13 |
| Grants from EU, central and local government | 3 | 4 |
| Other grants | – | 0 |
| Insurance indemnification | 7 | 24 |
| Capital gain, sale of tangible non-current assets | 0 | 1 |
| Capital gain, sale of subsidiaries and other business units | 2 | – |
| Other | 0 | 6 |
| Total | 34 | 48 |
During the 2015/2016 financial year, the Group's operating segments comprised TOOLS/ Momentum (with four operating areas) and the Group's Product Companies (with five operating areas). The operating segments are consolidations of the operational organisation, as used by Group management and the Board of Directors to monitor operations.
TOOLS/Momentum comprises the Group's reseller operations in Sweden, Norway and Finland (which operate within the framework of TOOLS) and Momentum, which together form the Group's market channels for industrial consumables and industrial components for Nordic industry. The Group's Product Companies conduct operations in various product and application areas (tools and machinery, personal protective equipment, fastening elements, consumables and work environment) and provide TOOLS and other market channels with industrial consumables and related services. Group-wide includes the Group's management, finance functions, support functions, infrastructure operations and property management. The support functions include HR, internal communications, IR and legal affairs. The infrastructure operations comprise IT and supply chain.
Intra-Group pricing between the operating segments occurs on market terms. There are no assets in the operating segments that are affected by material changes compared with the most recent Annual Report. No single customer in the Group accounts for more than 3 percent of the Group's revenue.
| 2015/2016 | 2014/2015 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | TOOLS / Momentum |
Product Companies |
Group | wide Eliminations | Group Total |
TOOLS / Momentum |
Product Companies |
Group | wide Eliminations | Group Total |
| From external customers | 4,963 | 2,849 | 9 | – | 7,821 | 5,113 | 2,776 | 14 | – | 7,903 |
| From other segments | 7 | 1,162 | 535 | -1,704 | – | 7 | 1,249 | 604 | -1,860 | – |
| Total revenue | 4,970 | 4,011 | 544 | -1,704 | 7,821 | 5,120 | 4,025 | 618 | -1,860 | 7,903 |
| Operating profit/loss Net financial items |
188 – |
279 – |
-3 -18 |
22 – |
486 -18 |
187 – |
291 – |
-26 -42 |
-2 – |
450 -42 |
| Profit/loss after net financial items |
188 | 279 | -21 | 22 | 468 | 187 | 291 | -68 | -2 | 408 |
| Goodwill | 412 | 1,338 | – | – | 1,750 | 407 | 1,338 | – | – | 1,745 |
| Other assets | 2,093 | 2,211 | 1,886 | -2,900 | 3,290 | 2,130 | 2,265 | 1,934 | -2,945 | 3,384 |
| Total assets | 2,505 | 3,549 | 1,886 | -2,900 | 5,040 | 2,537 | 3,603 | 1,934 | -2,945 | 5,129 |
| Liabilities | 1,628 | 2,227 | 1,431 | -2,837 | 2,449 | 1,609 | 2,242 | 1,818 | -2,866 | 2,803 |
| Other disclosures | ||||||||||
| Investments | 23 | 8 | 26 | – | 57 | 19 | 9 | 13 | – | 41 |
| Depreciation and amortisation | -15 | -6 | -7 | – | -28 | -16 | -6 | -6 | – | -28 |
| Impairment losses | – | – | – | – | – | – | – | – | – | – |
In addition to depreciation, amortisation and impairment losses in the table above, other non-cash items included in operating profit/loss pertain to changes to pension obligations totalling MSEK -27 (-27), of which MSEK 0 (-1) in TOOLS/Momentum, MSEK -23 (-20) in the Product Companies and MSEK -4 (-6) in Group-wide.
The Group primarily conducts operations in Sweden, Norway and Finland. Revenue presented for the geographic markets is based on the domicile of the customers, while non-current assets are based on the geographic location of the operations.
| 2015/2016 | 2014/2015 | |||
|---|---|---|---|---|
| External revenue |
Non-current assets |
External revenue |
Non-current assets |
|
| Sweden | 3,980 | 1,730 | 3,841 | 1,725 |
| Finland | 946 | 157 | 913 | 160 |
| Norway | 2,076 | 27 | 2,365 | 24 |
| Other countries | 819 | 7 | 784 | 7 |
| Group total | 7,821 | 1,921 | 7,903 | 1,916 |
| 2015/2016 | 2014/2015 | |||
|---|---|---|---|---|
| Average no. of employees by country | No. Of whom, women % | No. Of whom, women % | ||
| Sweden, Parent Company | 7 | 28% | 7 | 14% |
| Sweden, other Swedish companies | 1,650 | 25% | 1,641 | 24% |
| Denmark | 26 | 23% | 24 | 25% |
| Finland | 305 | 15% | 306 | 15% |
| Norway | 488 | 18% | 491 | 18% |
| Estonia | 50 | 28% | 49 | 27% |
| Poland | 51 | 27% | 56 | 25% |
| Other countries | 97 | 35% | 93 | 38% |
| Total | 2,674 | 23% | 2,667 | 23% |
The number of full-time employees at year-end was 2,623 (2,682).
| Parent Company | 2015/2016 | 2014/2015 |
|---|---|---|
| Board of Directors | 33% | 33% |
| Group management | 9% | 9% |
| Group total | ||
| Boards of Directors | 17% | 15% |
| Senior management | 13% | 13% |
The category Senior management includes individuals in management groups of Group companies totalling 137 persons (128).
| Group | |||||
|---|---|---|---|---|---|
| Remuneration and other benefits | 2015/2016 | 2014/2015 | |||
| Salaries and other remuneration | 1,257 | 1,239 | |||
| Share-based benefits, call option programmes | 2 | - | |||
| Pension costs, defined-benefit plans | 13 | 12 | |||
| Pension costs, defined-contribution plans | 90 | 94 | |||
| Social security contributions | 314 | 303 | |||
| Total | 1,676 | 1,648 |
| 2015/2016 | 2014/2015 | |||||||
|---|---|---|---|---|---|---|---|---|
| Parent Company Remuneration and other benefits |
Senior management |
Other employees | Total | Senior management |
Other employees | Total | ||
| Salaries and other remuneration | 10 | 8 | 18 | 8 | 8 | 16 | ||
| of which, variable remuneration | 2 | 2 | 4 | 2 | 2 | 4 | ||
| Social security contributions | 6 | -7 | -1 | 5 | 6 | 11 | ||
| of which, pension costs | 3 | -11 | -8 | 2 | 0 | 2 |
The category designated above as Senior management includes members of Group management employed by the Parent Company.
The Parent Company's PRI pension obligations to the President & CEO and the Chairman of the Board amount to SEK 1,374 thousand (1,211), of which SEK 593 thousand (400) pertains to the President & CEO and SEK 781 thousand (818) pertains to the Chairman of the Board.
The Election Committee submits proposals for resolution by the Annual General Meeting concerning Directors' fees to be allocated to the Chairman of the Board and other Directors. The process of preparing and passing resolutions concerning remuneration to the B&B TOOLS Group's President & CEO and other members of Group management is based on the guidelines proposed by the Board of Directors and adopted by the Annual General Meeting.
The Compensation Committee prepares and submits proposals to the Board of Directors concerning the formulation of a remuneration structure for Group management in line with the guidelines of the Annual General Meeting and prepare proposals regarding any share-based incentive programmes. The Compensation Committee also submits proposals to the Board regarding remuneration and other terms of employment for the President & CEO. Decisions concerning remuneration to other members of Group management are made by the Compensation Committee.
A more detailed presentation of the composition and work of the Compensation Committee is found in the Corporate Governance Report.
| Group | |||
|---|---|---|---|
| Remuneration to directors, SEK thousand | 2015/2016 | 2014/2015 | |
| Chairman of the Board | 520 | 500 | |
| Vice Chairman of the Board | 390 | 380 | |
| Other directors | 1,040 | 1,000 | |
| Total | 1,950 | 1,880 |
In accordance with the resolution passed by the Annual General Meeting in August 2015, the Board of Directors received a total of SEK 1,950 thousand (1,880) in directors' fees during the 2015/2016 financial year. No fees were paid for committee work and no director received any remuneration in addition to directors' fees during the financial year. Refer also to the summary of Board composition and fees in the Corporate Governance Report.
Provided that the necessary tax prerequisites for invoicing exist and that doing so would not entail a cost for B&B TOOLS AB, directors are to be offered the opportunity to invoice their directors' fees through a wholly owned Swedish company or private business. If a director invoices his/her directors' fee through a wholly owned company or private business, the fee is to be increased by an amount corresponding to the social security contributions and value added tax stipulated by law. Of the six directors elected by the Annual General Meeting, five directors invoiced their directors' fees through a wholly owned company in 2015/2016.
| Variable | Long-term | Other | Pension | Total remuneration | Call options | ||
|---|---|---|---|---|---|---|---|
| SEK thousand | Fixed salary | salary | incentive (LTI) | benefits | costs | and other benefits | outstanding (no.) |
| Ulf Lilius, President & CEO | 3,679 | 767 | – | 78 | 1,080 | 5,604 | 26,300 |
| Other members of Group management (10 individuals) | 16,192 | 2,679 | – | 857 | 4,652 | 24,380 | 221,700 |
| Total | 19,871 | 3,446 | – | 935 | 5,732 | 29,984 | 248,000 |
| SEK thousand | Fixed salary | Variable salary |
Long-term incentive (LTI) |
Other benefits |
Pension costs |
Total remuneration and other benefits |
Call options out standing (no.) |
|---|---|---|---|---|---|---|---|
| Ulf Lilius, President & CEO | 2,943 | 760 | 686 | 89 | 900 | 5,378 | 26,300 |
| Other members of Group management (10 individuals) | 15,855 | 2,984 | 886 | 826 | 4,229 | 24,780 | 244,700 |
| Total | 18,798 | 3,744 | 1,572 | 915 | 5,129 | 30,158 | 271,000 |
Remuneration to the President & CEO of B&B TOOLS AB comprises fixed salary, variable salary, participation in the call option programmes 2013/2017 and 2014/2018 (see below for a more detailed description), other benefits and pension. For the Company's President & CEO, variable salary can amount to a maximum of 30 percent of fixed salary, based on the Group's earnings. In addition, a premium of 20 percent of the variable salary can be paid as a consideration for the entire variable portion being used to acquire shares in B&B TOOLS AB. On 31 March 2016, the President & CEO held 26,300 call options according to the programmes described below.
From the age of 65, the President & CEO is covered by a defined-contribution pension, whose size depends on the outcome of the pension insurance policies taken out. Pension premiums paid include premiums for health insurance.
In the event of termination of employment at the initiative of the Company, the period of notice is 12 months. Aside from salary and other benefits during the period of notice, no severance pay will be issued to the President & CEO in the event of termination of employment at the initiative of the Company.
The other members of Group management during the period from 1 April 2015 to 31 March 2016 were as follows:
| Carl Johan Lundberg | Eva Hemb | Pontus Boman |
|---|---|---|
| Ulf Carlsson | Torbjörn Eriksson | Jens Henriksen |
| Mika Kärki | Jimmy Norlinder | Olof Nyberg |
| Mikael Malmgren* |
Remuneration to other members of Group management comprises fixed salary, variable salary, any participation in the call option programmes 2013/2017 and 2014/2018 (see below for a more detailed description), other benefits and pension. Members of Group management employed by subsidiaries receive their remuneration from their respective companies. Variable salary, based on the Group's earnings and, in certain cases, on the respective operating area's earnings may constitute a maximum of 25-30 percent of the fixed salary. In addition, a premium of 20 percent of the variable salary can be paid as a consideration for the entire variable portion being used to acquire shares in B&B TOOLS AB. On 31 March 2016, other members of Group management held 221,700 call options according to the programmes described below.
From the age of 65, the other members of Group management are covered by pension entitlements based on individual agreements. The existing pension solutions are mainly defined-contribution pensions, whose size depends on the outcome of the pension insurance policies taken out. Pension premiums paid include premiums for health insurance. The respective Group companies' outstanding defined-benefit pension obligations according to the ITP plan total SEK 10,402 thousand (7,904).
In the event of termination of employment at the initiative of the respective company, the period of notice is a maximum of 6-12 months. In addition to salary and other benefits during the notice period, a severance payment of not more than 3-12 months' salary is payable by the respective company.
As of 1 April 2016, B&B TOOLS Group management comprises: Ulf Lilius, President & CEO and overall responsibility for the Momentum Group operating segment; Pontus Boman, Executive Vice President and overall responsibility for the Bergman & Beving operating segment; and Eva Hemb, Executive Vice President and CFO.
* Employed up to and including March 2016
For the Board of Directors, it is crucial that the Company is able to recruit, provide long-term motivation for and retain competent employees who create long and short-term shareholder value. To achieve this goal, it is important that the Company is able to offer competitive terms. The Company's remuneration levels and remuneration structure for Group management are to be in line with market conditions. The total remuneration package for the individuals in question is to comprise a balanced combination of fixed salary, variable salary, long-term incentive programmes, pension benefits and other benefits. Variable salary and long-term incentive programmes should primarily be linked to the Group's earnings and value performance.
Pension benefits are to comprise either a defined-benefit pension plan or a defined-contribution plan, whose annual premium is determined as a function of fixed salary, variable salary and age. Certain individual adjustments occur. The retirement age for executive management is currently 65.
Other benefits are to be in line with market conditions and enable the members of Group management to perform their duties.
The Board is entitled to deviate from the above guidelines in individual cases if special reasons exist.
Guidelines established at the Annual General Meeting of B&B TOOLS AB held on 20 August 2015. These guidelines have been applied to all agreements entered into with the President & CEO and other members of Group management during 2015/2016.
During the 2008/2009 financial year, the Board of B&B TOOLS AB decided to introduce a longterm incentive programme (LTI 2008) for senior management and other key individuals in the Group, excluding the Group management at that time, with the intention of establishing long-term participation in the Group and its value performance. The original term of the LTI programme was five years and the programme was extended in 2010/2011 to a total term of seven years until 2015. The goal of the LTI programme was achieved for the 2014/2015 financial year and a total of SEK 2,135 thousand (0) was expensed in 2014/2015 and paid in 2015/2016. This incentive programme was concluded in 2014/2015.
In October 2012, the Board of B&B TOOLS AB resolved to offer a long-term incentive programme (LTI 2012) to the new President & CEO involving an annual cash-based gross remuneration amount of SEK 600 thousand over a three-year period. Payment of the cash-based gross remuneration amount was conditional on an initial investment in B&B TOOLS shares by the President & CEO of approximately MSEK 5 and on his continued employment by the Company. Gross compensation for the 2014/2015 financial year amounted to SEK 600 thousand, which was expensed and paid in 2014/2015. This incentive programme was concluded in 2014/2015.
In August 2013, the Annual General Meeting of B&B TOOLS AB decided to offer a number of members of senior management in the B&B TOOLS Group the opportunity to purchase call options for shares in B&B TOOLS AB on market terms. The price per call option was SEK 10.00, equivalent to the market value according to the external valuation performed by Nordea Bank in accordance with the Black & Scholes model. The following main assumptions were applied to the valuation in August-September 2013: current share price SEK 84.27 per share; term up to and including 9 June 2017; redemption price SEK 101.90 per share; risk-free interest rate (based on government bonds) 1.70 percent and expected volatility 30 percent.
The programme included the issuance of a maximum of 169,000 call options for repurchased shares in the Company and the conveyance of not more than 169,000 Class B shares in the Company in connection with any redemption of the call options. Each option entitles its holder to purchase one class B share in B&B TOOLS AB at a redemption price of SEK 101.90. The programme was secured in its entirety through repurchase of treasury shares. This offering was linked to a subsidy corresponding to the paid option price, which meant that an amount of SEK 10.00 per acquired call option could be paid by the holder's employer in September 2015 on the condition that all originally acquired call options in this programme remained and that the individual was still
The table below shows the options issued and options outstanding as of 31 March 2016:
an employee of the B&B TOOLS Group. A total subsidy of SEK 1,690 thousand was paid in accordance with this programme in September 2015.
In August 2014, the Annual General Meeting of B&B TOOLS AB decided to offer a number of members of senior management in the B&B TOOLS Group the opportunity to purchase call options for shares in B&B TOOLS AB on market terms. The price per call option was SEK 14.30, equivalent to the market value according to the external valuation performed by Nordea Bank in accordance with the Black & Scholes model. The following main assumptions were applied to the valuation in August-September 2014: current share price SEK 143.87 per share; term up to and including 8 June 2018; redemption price SEK 176.50 per share; risk-free interest rate (based on government bonds) 0.44 percent and expected volatility 28 percent.
The programme included the issuance of a maximum of 169,000 call options for repurchased shares in the Company and the conveyance of not more than 169,000 Class B shares in the Company in connection with any redemption of the call options. Each option entitles its holder to purchase one Class B share in B&B TOOLS AB at a redemption price of SEK 176.50. The programme was secured in its entirety through repurchase of treasury shares. This offering is linked to a subsidy corresponding to the paid option price. This means that an amount of SEK 14.30 per acquired call option can be paid to the holder. The subsidy is to be paid by the holder's employer in September 2016 on the condition that all originally acquired call options in this programme remain at that time and that the individual is still an employee of the B&B TOOLS Group.
| Date of issue | Redemption period | Redemption price, SEK |
No. of options issued |
No. of options outstanding |
Settlement method | |
|---|---|---|---|---|---|---|
| Group | ||||||
| Call option programme 2013/2017 | September 2013 | 12 September 2016 – 9 June 2017 | 101.90 | 169,000 | 169,000 | Physical delivery |
| Call option programme 2014/2018 | September 2014 | 11 September 2017 – 8 June 2018 | 176.50 | 169,000 | 169,000 | Physical delivery |
| Parent Company | ||||||
| Call option programme 2013/2017 | September 2013 | 12 September 2016 – 9 June 2017 | 101.90 | 52,900 | 52,900 | Physical delivery |
| Call option programme 2014/2018 | September 2014 | 11 September 2017 – 8 June 2018 | 176.50 | 60,800 | 60,800 | Physical delivery |
No call options were redeemed in 2015/2016.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2015/2016 | 2014/2015 | 2015/2016 2014/2015 | ||
| Audit assignment | ||||
| KPMG | 5 | 5 | 1 | 1 |
| Other auditors | 0 | 0 | – | – |
| Fees for audit assignment | 5 | 5 | 1 | 1 |
| Audit activities in addition to audit assignment |
||||
| KPMG | 0 | 0 | – | – |
| Other auditors | – | – | – | – |
| Fees for audit activities in addition to audit assignment |
0 | 0 | – | – |
| Tax advisory services | ||||
| KPMG | 0 | 1 | 0 | 0 |
| Other auditors | – | – | – | – |
| Fees for tax advisory services | 0 | 1 | 0 | 0 |
| Other assignments | ||||
| KPMG | 0 | 1 | 0 | 0 |
| Fees for other assignments | 0 | 1 | 0 | 0 |
| Total fees to auditors | 5 | 7 | 1 | 1 |
Audit assignment refers to statutory auditing of the Annual Report and accounting as well as the administration of the Board of Directors and the President & CEO, and auditing and other reviews carried out in accordance with the law, agreements or contracts. This includes other work assignments that are incumbent upon the Company's auditors as well as advisory services or other assistance occasioned through the findings of such reviews or the performance of such other work assignments. Other assignments comprise advisory services concerning accounting issues.
| Group | 2015/2016 | 2014/2015 |
|---|---|---|
| Interest income | 7 | 7 |
| Dividends | 0 | 0 |
| Net exchange-rate changes | – | 0 |
| Other financial income | 0 | 0 |
| Financial income | 7 | 7 |
| Interest expenses | -14 | -32 |
| Net interest income on defined-benefit pensions | -11 | -16 |
| Net exchange-rate changes | 0 | – |
| Other financial expenses | 0 | -1 |
| Financial expenses | -25 | -49 |
| Net financial items | -18 | -42 |
| Profit from participations in Group companies |
||
|---|---|---|
| Parent Company | 2015/2016 | 2014/2015 |
| Dividend | 254 | 172 |
| Total | 254 | 172 |
| Interest income and similar profit/loss items |
|||
|---|---|---|---|
| Parent Company | 2015/2016 | 2014/2015 | |
| Interest income, Group companies | 75 | 105 | |
| Interest income, other | 5 | 4 | |
| Net exchange-rate changes | – | 2 | |
| Total | 80 | 111 |
| Interest expenses and similar profit/loss items |
||||
|---|---|---|---|---|
| Parent Company | 2015/2016 | 2014/2015 | ||
| Interest expenses, Group companies | -2 | -5 | ||
| Interest expenses, other | -16 | -33 | ||
| Net exchange-rate changes | 0 | – | ||
| Other financial expenses | 0 | 0 | ||
| Total | -18 | -38 |
| Parent Company | |||
|---|---|---|---|
| 2015/2016 | 2014/2015 | ||
| Difference between recognised depreciation and depreciation according to plan of equipment |
– | 0 | |
| Tax allocation reserve, provision for the year | -67 | -63 | |
| Tax allocation reserve, reversal for the year | 5 | 49 | |
| Group contributions received | 334 | 284 | |
| Group contributions paid | -115 | -145 | |
| Total | 157 | 125 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | |
| Current tax | ||||
| Tax expense for the period | -77 | -99 | -45 | -42 |
| Deduction of foreign taxes | 1 | – | – | – |
| Adjustment of taxes attributable to earlier years | -1 | 2 | 0 | 1 |
| Total current tax | -77 | -97 | -45 | -41 |
| Deferred tax | ||||
| Deferred tax attributable to temporary differences | -23 | 5 | 1 | -1 |
| Effect of other tax rates and changed tax legislation | -1 | – | – | – |
| Remeasurement of deferred tax assets | -6 | -4 | -6 | – |
| Remeasurement of deferred tax liabilities | 1 | – | – | – |
| Utilisation of previously capitalised tax loss carryforwards | 0 | -6 | – | – |
| Total deferred tax | -29 | -5 | -5 | -1 |
| Total tax | -106 | -102 | -50 | -42 |
The Group's average tax rate is estimated at 23 percent (24). The relationship between taxes at the average tax rate and recognised taxes for the Group is illustrated in the following table:
| Reconciliation of effective taxes | 2015/2016 | 2014/2015 |
|---|---|---|
| Profit before taxes | 468 | 408 |
| Taxes at an average tax rate of 23 percent (24) | -108 | -98 |
| Tax effect of: | ||
| Changed tax rate | -1 | – |
| Standard rate on tax allocation reserve | 0 | 0 |
| Taxes attributable to earlier years | -1 | 2 |
| Remeasurement of the carrying amount of deferred tax liabilities |
1 | – |
| Remeasurement of the carrying amount of deferred tax assets |
-6 | -4 |
| Non-deductible expenses | -3 | -3 |
| Non-taxable income | 6 | – |
| Other items | 6 | 1 |
| Total tax | -106 | -102 |
The relationship between the Swedish tax rate of 22 percent (22) and recognised taxes for the Parent Company is illustrated in the following table:
| Reconciliation of effective taxes | 2015/2016 | 2014/2015 |
|---|---|---|
| Profit after financial items and Group contributions | 537 | 376 |
| Tax at a tax rate of 22 percent (22) | -118 | -83 |
| Tax effect of: | ||
| Appropriations | 14 | 3 |
| Dividends from subsidiaries | 56 | 38 |
| Standard rate on tax allocation reserve | 0 | 0 |
| Taxes attributable to earlier years | 0 | 0 |
| Remeasurement of the carrying amount | ||
| of deferred tax assets | -6 | – |
| Non-deductible expenses | -2 | 0 |
| Non-taxable income | 6 | 0 |
| Total tax | -50 | -42 |
Tax items recognised in comprehensive income in the Group and the Parent company or directly against equity in the Parent Company
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | ||
| Deferred tax on defined-benefit pension plans | -21 | 37 | – | – | |
| Deferred tax on hedge accounting of financial instruments | 1 | -3 | 1 | -3 | |
| Total | -20 | 34 | 1 | -3 |
Deferred tax assets and liabilities in the balance sheet are attributable as follows:
| 31 Mar 2016 | 31 Mar 2015 | ||||||
|---|---|---|---|---|---|---|---|
| Group | Receivables | Liabilities | Net | Receivables | Liabilities | Net | |
| Intangible assets | 0 | -11 | -11 | 0 | -11 | -11 | |
| Land and buildings | – | -1 | -1 | – | -1 | -1 | |
| Machinery and equipment | 1 | – | 1 | 2 | – | 2 | |
| Financial non-current assets | 1 | – | 1 | – | 0 | 0 | |
| Inventories | 36 | – | 36 | 42 | – | 42 | |
| Accounts receivable | 4 | – | 4 | 5 | – | 5 | |
| Untaxed reserves | – | -62 | -62 | – | -47 | -47 | |
| Pension provisions | 42 | -4 | 38 | 66 | -4 | 62 | |
| Other provisions | 2 | 0 | 2 | 3 | 0 | 3 | |
| Other | – | -6 | -6 | 2 | -6 | -4 | |
| Tax loss carryforwards | 2 | – | 2 | 2 | – | 2 | |
| Total | 88 | -84 | 4 | 122 | -69 | 53 | |
| 31 Mar 2016 | 31 Mar 2015 | |||||
|---|---|---|---|---|---|---|
| Parent Company | Receivables | Liabilities | Net | Receivables | Liabilities | Net |
| Financial non-current assets | 1 | – | 1 | – | -1 | -1 |
| Pension provisions | – | – | – | 6 | – | 6 |
| Total | 1 | – | 1 | 6 | -1 | 5 |
A reconciliation of deferred net receivables (net liability) from the beginning of the year until year-end is shown in the tables below:
| Group | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Opening balance at the beginning of the year, net | 53 | 23 |
| Disposal of subsidiaries | 0 | 0 |
| Taxes charged against net profit | -29 | -5 |
| Taxes on items recognised in consolidated comprehensive income |
-20 | 34 |
| Translation differences | 0 | 1 |
| Closing balance at year-end, net | 4 | 53 |
| Parent Company | 31 Mar 2016 | 31 Mar 2015 |
| Opening balance at the beginning of the year, net | 5 | 9 |
| Taxes charged against net profit | -5 | -1 |
| Taxes on items recognised in the Parent Company's comprehensive income |
1 | -3 |
| Closing balance at year-end, net | 1 | 5 |
Changes in temporary differences during the year recognised in profit or loss are attributable as follows:
| Group | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Intangible assets | 0 | 0 |
| Land and buildings | 0 | 5 |
| Machinery and equipment | -1 | -1 |
| Financial non-current assets | -1 | 0 |
| Inventories | -5 | -1 |
| Accounts receivable | -1 | -2 |
| Untaxed reserves | -15 | -2 |
| Pension provisions | -4 | 0 |
| Other provisions | 0 | 0 |
| Interest-bearing liabilities | 0 | 2 |
| Other | -2 | 5 |
| Tax loss carryforwards | 0 | -11 |
| Total | -29 | -5 |
| Parent Company | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Financial non-current assets | 1 | 0 |
| Pension provisions | -6 | -1 |
| Total | -5 | -1 |
| 2015/2016 | 2014/2015 | |||||||
|---|---|---|---|---|---|---|---|---|
| Group | Goodwill | Brands | Other | Total | Goodwill | Brands | Other | Total |
| Accumulated cost | ||||||||
| At the beginning of the year | 1,745 | 58 | 184 | 1,987 | 1,736 | 58 | 183 | 1,977 |
| Investments | – | – | 17 | 17 | 2 | – | 4 | 6 |
| Acquisition of subsidiaries | 6 | – | – | 6 | – | – | – | – |
| Sales and disposals | – | 0 | -7 | -7 | – | – | -4 | -4 |
| Reclassifications | – | – | 1 | 1 | – | – | 1 | 1 |
| Translation differences | -1 | – | -1 | -2 | 7 | – | 0 | 7 |
| At year-end | 1,750 | 58 | 194 | 2,002 | 1,745 | 58 | 184 | 1,987 |
| Accumulated amortisation | ||||||||
| At the beginning of the year | – | -8 | -176 | -184 | – | -8 | -177 | -185 |
| Amortisation for the year | – | – | -4 | -4 | – | 0 | -3 | -3 |
| Sales and disposals | – | 0 | 7 | 7 | – | – | 4 | 4 |
| Translation differences | – | – | 0 | 0 | – | – | 0 | 0 |
| At year-end | – | -8 | -173 | -181 | – | -8 | -176 | -184 |
| Impairment losses on cost | ||||||||
| At the beginning of the year | – | 0 | 0 | 0 | – | 0 | 0 | 0 |
| Impairment losses for the year | – | – | – | – | – | – | – | – |
| Sales and disposals | – | – | 0 | 0 | – | – | – | – |
| At year-end | – | 0 | 0 | 0 | – | 0 | 0 | 0 |
| Carrying amount at the beginning of the year | 1,745 | 50 | 8 | 1,803 | 1,736 | 50 | 6 | 1,792 |
| Carrying amount at year-end | 1,750 | 50 | 21 | 1,821 | 1,745 | 50 | 8 | 1,803 |
| 2015/2016 | 2014/2015 | |
|---|---|---|
| Parent Company | Software | Software |
| Accumulated cost | ||
| At the beginning of the year | 4 | 4 |
| At year-end | 4 | 4 |
| Accumulated amortisation | ||
| At the beginning of the year | -4 | -4 |
| Amortisation for the year | – | 0 |
| At year-end | -4 | -4 |
| Carrying amount at the beginning of the year | 0 | 0 |
| Carrying amount at year-end | 0 | 0 |
Recognised goodwill values were tested prior to the balance-sheet date on 31 March 2016, using the balance sheet on 31 December 2015 as a base. The Group's total goodwill value of MSEK 1,750 (1,745) has been allocated by operating segment according to the table below:
| 31 Mar 2016 | 31 Mar 2015 | |
|---|---|---|
| Product Companies | 1,338 | 1,338 |
| TOOLS / Momentum | 412 | 407 |
| Total goodwill | 1,750 | 1,745 |
The Group's goodwill has been allocated to the above cash-generating units. Given that acquired businesses constitute an integrated part of the value chain that the Group provides to end customers, acquired goodwill is allocated to the operating areas of each operating segment that receive synergies and economic benefits as a result of the acquisitions. Accordingly, portions of goodwill that arise in connection with the acquisition of reseller businesses in TOOLS / Momentum have been allocated to the Group's Product Companies, which are part of the Product Companies operating segment. Goodwill values are tested at the operating segment level. The basis of this testing and the assessment of future cash flows is the target scenario for each operating segment for the forthcoming financial year, with forecasts of earnings and cash flows for subsequent years.
The recoverable amount was calculated on the basis of value in use and is based on the assessment of cash flows for the coming five-year period. Assumptions have been made concerning future revenue, gross margins, cost level, working capital requirements and investment requirements. Normally, parameters are set to correspond to forecast earnings for the forthcoming financial year. During the remainder of the five-year period, growth of 2 percent (2) per annum has been assumed. Adjustments have been made where major changes are expected in order to better reflect these changes. For cash flows beyond the five-year period, growth has been assumed to correspond to growth during the fifth year. Cash flows have been discounted by a weighted capital cost for borrowed capital and equity corresponding to 10 percent (8) before taxes. The aforementioned assumptions apply for both cash-generating units.
The testing of goodwill values did not indicate any impairment requirement. The sensitivity of the calculation means that the goodwill value would remain warranted even if the discount rate were to be raised by 1 percentage point or if the long-term growth rate were to be reduced by 1 percentage point.
The Group's carrying amount for brands amounted to MSEK 50 (50) and pertained entirely to the Teng Tools brand, which has an unlimited lifetime. Each year, a test is conducted to determine the impairment requirement for brands based on the same principles as in the determination of goodwill. The testing of brands did not indicate any impairment requirement. No other events or changed circumstances were identified that would warrant an impairment loss on brands.
TANGIBLE NON-CURRENT ASSETS
| 2015/2016 | 2014/2015 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Group | Land and buildings |
Leasehold improve ments |
Machinery and equipment |
Construction in progress |
Total | Land and buildings |
Leasehold improve ments |
Machinery and equipment |
Construction in progress |
Total |
| Accumulated cost | ||||||||||
| At the beginning of the year | 59 | 45 | 351 | 5 | 460 | 228 | 32 | 337 | 7 | 604 |
| Investments | 0 | 3 | 25 | 12 | 40 | 2 | 4 | 19 | 10 | 35 |
| Acquisition of subsidiaries | – | – | 2 | – | 2 | – | – | – | – | – |
| Sales and disposals1) | -4 | -1 | -6 | -1 | -12 | -61 | -1 | -9 | 0 | -71 |
| Divested businesses | -21 | – | – | -4 | -25 | -114 | – | – | – | -114 |
| Reclassifications | 0 | 4 | 0 | -5 | -1 | 0 | 10 | 1 | -12 | -1 |
| Translation differences | 0 | -2 | -8 | 0 | -10 | 4 | 0 | 3 | 0 | 7 |
| At year-end | 34 | 49 | 364 | 7 | 454 | 59 | 45 | 351 | 5 | 460 |
| Accumulated depreciation | ||||||||||
| At the beginning of the year | -32 | -17 | -297 | -346 | -97 | -14 | -281 | -392 | ||
| Depreciation for the year | -1 | -4 | -19 | -24 | -2 | -4 | -19 | -25 | ||
| Acquisition of subsidiaries | – | – | -2 | -2 | – | – | – | – | ||
| Sales and disposals1) | 1 | – | 5 | 6 | 29 | 1 | 6 | 36 | ||
| Divested businesses | 5 | – | – | 5 | 40 | – | – | 40 | ||
| Translation differences | 0 | 1 | 7 | 8 | -2 | 0 | -3 | -5 | ||
| At year-end | -27 | -20 | -306 | – | -353 | -32 | -17 | -297 | – | -346 |
| Impairment losses on cost | ||||||||||
| At the beginning of the year | – | -1 | 0 | -1 | -3 | -1 | 0 | -4 | ||
| Impairment losses for the year | – | – | – | – | 3 | – | – | 3 | ||
| Translation differences | – | – | – | – | – | – | 0 | 0 | ||
| At year-end | – | -1 | 0 | – | -1 | – | -1 | 0 | – | -1 |
| Carrying amount at the beginning of the year | 27 | 27 | 54 | 5 | 113 | 128 | 17 | 56 | 7 | 208 |
| Carrying amount at year-end | 7 | 28 | 58 | 7 | 100 | 27 | 27 | 54 | 5 | 113 |
| 2015/2016 | 2014/2015 | ||||||
|---|---|---|---|---|---|---|---|
| Parent Company | Leasehold improvements |
Equipment | Total | Leasehold improvements |
Equipment | Total | |
| Accumulated cost | |||||||
| At the beginning of the year | 3 | 5 | 8 | 3 | 5 | 8 | |
| At year-end | 3 | 5 | 8 | 3 | 5 | 8 | |
| Accumulated depreciation according to plan | |||||||
| At the beginning of the year | -2 | -4 | -6 | -1 | -4 | -5 | |
| Depreciation for the year according to plan | 0 | -1 | -1 | -1 | 0 | -1 | |
| At year-end | -2 | -5 | -7 | -2 | -4 | -6 | |
| Impairment losses on cost | |||||||
| At the beginning of the year | -1 | – | -1 | -1 | – | -1 | |
| At year-end | -1 | – | -1 | -1 | – | -1 | |
| Carrying amount at the beginning of the year | 0 | 1 | 1 | 1 | 1 | 2 | |
| Carrying amount at year-end | 0 | 0 | 0 | 0 | 1 | 1 |
1) Gain/loss on the disposal of tangible non-current assets amounted to MSEK 0 (-2).
| Group | |||
|---|---|---|---|
| Carrying amount | 31 Mar 2016 | 31 Mar 2015 | |
| At the beginning of the year | 11 | 11 | |
| Share of profit | 0 | 0 | |
| At year-end | 11 | 11 | |
| Share of | Share of | Carrying amount in Group | Carrying amount in Group | |||
|---|---|---|---|---|---|---|
| Associated companies | No. of shares | equity, % | votes, % | 31 Mar 2016 | 31 Mar 2015 | |
| Group holding | ||||||
| Workplaces for Industries WFI AB | 2,667 | 40% | 40% | 6 | 6 | |
| AB Knut Sehlins Industrivaruhus | 3,000 | 30% | 30% | 5 | 5 | |
| Total | 11 | 11 |
| Associated companies | Country | Income | Profit | Assets | Liabilities | Equity |
|---|---|---|---|---|---|---|
| 2015/2016 | ||||||
| Workplaces for Industries WFI AB | Sweden | 26 | 0 | 12 | 6 | 6 |
| AB Knut Sehlins Industrivaruhus | Sweden | 12 | 0 | 4 | 1 | 3 |
| Total | 38 | 0 | 16 | 7 | 9 | |
| 2014/2015 | ||||||
| Workplaces for Industries WFI AB | Sweden | 26 | 0 | 11 | 5 | 6 |
| AB Knut Sehlins Industrivaruhus | Sweden | 13 | 0 | 5 | 2 | 3 |
| Total | 39 | 0 | 16 | 7 | 9 | |
| Associated companies' corporate registration numbers and registered offices | Corp. Reg. No. | Reg. office | ||||
| Workplaces for Industries WFI AB | 556663-2567 | Jönköping |
AB Knut Sehlins Industrivaruhus 556588-5158 Örnsköldsvik
| Parent Company | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Carrying amount at the beginning of the year | 3,543 | 3,743 |
| Additional assets | 0 | 101 |
| Deducted assets | -240 | -301 |
| Carrying amount at year-end | 3,303 | 3,543 |
| Group | |||
|---|---|---|---|
| 31 Mar 2016 31 Mar 2015 | |||
| Long-term receivables classified as non-current assets | |||
| Pension funds | 2 | 2 | |
| Other receivables | 2 | 2 | |
| Total | 4 | 4 |
| Group | |||
|---|---|---|---|
| 31 Mar 2016 31 Mar 2015 | |||
| Other receivables classified as current assets | |||
| Advance payments | 3 | 3 | |
| Derivatives | 3 | 1 | |
| VAT receivable | 22 | 11 | |
| Receivable from pension foundations | 5 | 5 | |
| Other receivables | 16 | 30 | |
| Total | 49 | 50 |
| Group | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Finished goods and goods for resale | 1,505 | 1,525 |
| Total | 1,505 | 1,525 |
The cost of goods sold includes impairment of inventories in the amount of MSEK -13 (-33) and the reversal of previous impairment of MSEK +39 (+12), yielding a net amount of MSEK +26 (-21).
| Group | Parent Company | |||
|---|---|---|---|---|
| 31 Mar 2016 31 Mar 2015 | 31 Mar 2016 31 Mar 2015 | |||
| Prepaid expenses | ||||
| Rent | 33 | 30 | 2 | 2 |
| Insurance premiums | 7 | 6 | – | – |
| Marketing costs | 0 | 1 | – | – |
| Leasing | 5 | 5 | – | – |
| Computer costs | 7 | 6 | – | – |
| Packaging | 3 | 3 | – | – |
| Other prepaid expenses | 12 | 10 | 1 | 1 |
| Accrued income | ||||
| Delivery of goods | 25 | 18 | – | – |
| Commission and bonus income |
22 | 23 | – | – |
| Marketing income | 3 | 3 | – | – |
| Other accrued income | 5 | 5 | – | – |
| Total | 122 | 110 | 3 | 3 |
| Group | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Translation reserve | ||
| Opening translation reserve | -16 | -51 |
| Translation differences for the year | -51 | 35 |
| Tax attributable to change for the year | – | – |
| Closing translation reserve | -67 | -16 |
| Hedging reserve | ||
| Opening hedging reserve | 5 | -6 |
| Cash-flow hedges recognised in other comprehensive income: |
||
| Hedging for the year | -3 | 13 |
| Transferred to profit or loss | -5 | 1 |
| Tax attributable to hedges for the year | 1 | -3 |
| Closing hedging reserve | -2 | 5 |
| Total reserves | ||
| Opening reserves | -11 | -57 |
| Change in reserves for the year: | ||
| Translation reserve | -51 | 35 |
| Hedging reserve | -8 | 14 |
| Tax attributable to changes in reserves for the year | 1 | -3 |
| Closing reserves | -69 | -11 |
| 31 Mar 2016 | 31 Mar 2015 | |
|---|---|---|
| Opening repurchased Class B shares | 340,000 | 340,000 |
| Closing repurchased own shares | 340,000 | 340,000 |
| Stated in thousands of shares | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Issued as of 1 April | 28,436 | 28,436 |
| Issued as of 31 March – paid in full | 28,436 | 28,436 |
As of 31 March 2016, the registered share capital comprised 1,063,780 Class A shares and 27,372,636 Class B shares. All shares have a quotient value of SEK 2.00. All shares entitle their holders to the same rights to the Company's remaining net assets. For shares held in treasury (see below), all rights are rescinded until these shares have been reissued.
Other contributed capital refers to equity contributed by the owners. This includes share premium reserves transferred to the statutory reserve on 31 March 2006. Provisions to the share premium reserve from 1 April 2006 and onwards are recognised as contributed capital.
The translation reserve includes all exchange-rate differences arising from the translation of financial statements from foreign businesses that have prepared their financial statements in a currency other than the currency in which the Group's financial statements are presented. The Parent Company and the Group present their financial statements in SEK.
The fair value reserve comprises the effective portion of the accumulated net change in the fair value of a cash-flow hedging instrument for hedging transactions that have not yet occurred.
Retained earnings, including net profit, include profit earned in the Parent Company, its subsidiaries and associated companies. Earlier allocations to the statutory reserve, not including share premium reserves, are included in this capital item.
Repurchased shares include the acquisition cost of treasury shares held by the Parent Company, its subsidiaries and associated companies. As of 31 March 2016, the Group held 340,000 own shares (340,000) in treasury.
Following a resolution passed by the Annual General Meeting in August 2013, 13 senior executives were offered an opportunity to acquire a maximum of 169,000 call options on repurchased Class B shares. The programme was fully subscribed. When fully exercised, the number of outstanding Class B shares will increase by 169,000, corresponding to 0.6 percent of the total number of shares and 0.4 percent of the votes. The call options have been conveyed at a price of SEK 10.00 per call option, equivalent to the market value of the options according to an external valuation performed by Nordea Bank. The redemption price for the call options is SEK 101.90 and the redemption period is from 12 September 2016 until 9 June 2017, inclusive.
Following a resolution passed by the Annual General Meeting in August 2014, 13 senior executives were offered an opportunity to acquire a maximum of 169,000 call options on repurchased Class B shares. The programme was fully subscribed. When fully exercised, the number of outstanding Class B shares will increase by 169,000, corresponding to 0.6 percent of the total number of shares and 0.4 percent of the votes. The call options have been conveyed at a price of SEK 14.30 per call option, equivalent to the market value of the options according to an external valuation performed by Nordea Bank. The redemption price for the call options is SEK 176.50 and the redemption period is from 11 September 2017 until 8 June 2018, inclusive.
B&B TOOLS has an internal profitability target for the Group as a whole and all of its profit units. The measure that is used is called P/WC, which refers to operating profit in relation to utilised working capital for the profit unit being measured. The Group's goal is for P/WC to amount to at least 45 percent per year for the Group as a whole and for each individual operating area. In other words: The working capital that is utilised for each individual operating unit should generate a return of at least 45 percent annually. The working capital that is required for the Group's various units is simplified into inventories plus accounts receivable less accounts payable.
Each Group company develops its own business plans and priorities based on its performance in relation to a P/WC of at least 45 percent.
After the balance-sheet date, the Board of Directors proposed the following dividend. The dividend is subject to approval by the Annual General Meeting to be held on 25 August 2016.
| MSEK | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| SEK 5.00 (4.00) per share | 140 | 112 |
During the past ten years, the ordinary dividend has amounted to approximately 37 percent of earnings per share. No changes were made to the Group's capital management during the year.
| Year | Earnings per share | Dividend | Pay-out ratio, % |
|---|---|---|---|
| 2015/2016 | 12.90 | 5.00 | 39% |
| 2014/2015 | 10.90 | 4.00 | 37% |
| 2013/2014 | 7.60 | 3.50 | 46% |
| 2012/2013 | 7.90 | 3.00 | 38% |
| 2011/2012 | 8.10 | 3.00 | 37% |
| 2010/2011 | 6.90 | 3.00 | 43% |
| 2009/2010 | 4.80 | 2.50 | 52% |
| 2008/2009 | 10.20 | 2.50 | 25% |
| 2007/2008 | 15.10 | 5.00 | 33% |
| 2006/2007 | 10.35 | 4.00 | 39% |
| Total | 94.75 | 35.5 | 37% |
EARNINGS PER SHARE FOR THE GROUP AS A WHOLE
| Before dilution | After dilution | |||
|---|---|---|---|---|
| 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | |
| Earnings per share, SEK | 12.90 | 10.90 | 12.85 | 10.85 |
The calculation of the numerators and denominators used in the above calculations of earnings per share is specified below.
The calculation of earnings per share for 2015/2016 was based on net profit attributable to the ordinary shareholders in the Parent Company amounting to MSEK 362 (306) and a weighted average number of shares outstanding during 2015/2016 amounting to 28,096,000 (28,096,000). The two components have been calculated in the following manner:
| 2015/2016 | 2014/2015 | |
|---|---|---|
| Net profit attributable to Parent Company shareholders |
362 | 306 |
| Profit attributable to Parent Company shareholders, before dilution |
362 | 306 |
| Stated in thousands of shares | 2015/2016 | 2014/2015 |
|---|---|---|
| Total number of shares, 1 April | 28,436 | 28,436 |
| Effect of holding of treasury shares | -340 | -340 |
| Number of shares for calculation of earnings | ||
| per share | 28,096 | 28,096 |
The calculation of earnings per share after dilution for 2015/2016 was based on profit attributable to the ordinary shareholders in the Parent Company amounting to MSEK 362 (306) and a weighted average number of shares outstanding during 2015/2016 amounting to 28,127,000 (28,144,000). The two components have been calculated in the following manner:
| 2015/2016 | 2014/2015 | |
|---|---|---|
| Net profit attributable to Parent Company shareholders |
362 | 306 |
| Profit attributable to Parent Company shareholders, after dilution |
362 | 306 |
| Stated in thousands of shares | 2015/2016 | 2014/2015 |
|---|---|---|
| Total number of shares, 1 April | 28,436 | 28,436 |
| Effect of holding of treasury shares | -340 | -340 |
| Effects of share-option programmes | 31 | 48 |
| Number of shares for calculation of earnings per share |
28,127 | 28,144 |
As of 31 March 2016, B&B TOOLS AB had two outstanding call option programmes for which the share price for one of them exceeded the redemption price for the programme. Details about these call option programmes are provided in Note 5 Employees and personnel costs.
B&B TOOLS offers pension solutions through a number of defined-contribution and defined-benefit plans. The plans are structured in accordance with local regulations and practices. In recent years, the Group has attempted to switch to pension solutions that are defined contribution and the cost of such plans comprises an increasingly significant portion of the total pension cost. The plans cover essentially all Group employees. Defined-benefit plans are only available in Sweden, Norway and Taiwan. In other countries in which the Group is active, defined-contribution plans are offered.
These plans mainly cover retirement pensions and family pensions. Premiums are paid on an ongoing basis during the year by each Group company to separate legal entities, such as insurance companies, with the premium level based on salary. The pension cost for the period is included in profit or loss.
These plans mainly cover retirement pensions. Vesting is based on the number of years of service. For each year of service, the employee earns an increased right to pension, which is recognised as benefits earned during the year and as an increase in pension obligations.
The defined-benefit plans are exposed to actuarial risks, such as length of life, currency, interest-rate and investment risks. Approximately 92 percent of the pension obligations' gross present value pertains to Swedish PRI pensions, which are unfunded pension plans.
The following provisions for pension obligations have been made in the balance sheet:
| Group | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Pension obligations unfunded plans, present value | 533 | 622 |
| Pension obligations funded plans, present value | 44 | 53 |
| Plan assets, fair value | -43 | -49 |
| Net pension obligations | 534 | 626 |
The Group has a number of defined-benefit pension plans that are all managed individually. Most of the funded plans are recognised on a net basis in the balance sheet. Accordingly, obligations are recognised in the balance sheet in the following net amounts:
| 31 Mar 2016 31 Mar 2015 | ||
|---|---|---|
| Plan assets for pension obligations | -2 | -2 |
| Provisions for pensions and similar commitments | 536 | 628 |
| Net liabilities according to the balance sheet | 534 | 626 |
| Of which, credit insured through PRI Pensionsgaranti | 353 | 354 |
Pension obligations, plan assets and provisions for pension obligations for the defined-benefit pension plans have developed as follows:
| Pension obligations unfunded plans | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Opening balance | 622 | 446 |
| Benefits earned during the year | 12 | 11 |
| Interest expense recognised in profit or loss | 11 | 15 |
| Benefits paid | -18 | -19 |
| Remeasurement recognised in other comprehensive income | -94 | 169 |
| Translation differences | 0 | 0 |
| Pension obligations unfunded plans, present value | 533 | 622 |
| Pension obligations funded plans | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Opening balance | 53 | 52 |
| Benefits earned during the year | 1 | 1 |
| Interest expense recognised in profit or loss | 1 | 2 |
| Benefits paid | -3 | -3 |
| Remeasurement recognised in other comprehensive income, see separate specification |
0 | 2 |
| Redemption of pension obligations | -4 | 0 |
| Translation differences | -4 | -1 |
| Pension obligations funded plans, present value | 44 | 53 |
| Present value of pension obligation specified |
| Plan assets | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Opening balance | 49 | 49 |
| Interest income recognised in profit or loss | 1 | 1 |
| Funds contributed by employers | 2 | 2 |
| Funds paid to employers | -3 | -3 |
| Remeasurement recognised in other comprehensive income, see separate specification |
0 | 1 |
| Redemption of pension obligations | -3 | -1 |
| Other | – | 0 |
| Translation differences | -3 | 0 |
| Plan assets, fair value | 43 | 49 |
Plan assets comprise funds paid to and managed by insurance companies and are distributed between the following classes of assets:
| Plan assets | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Cash and cash equivalents | 2 | 1 |
| Equity instruments | 4 | 6 |
| Debt instruments | 30 | 33 |
| Properties | 5 | 7 |
| Other assets | 2 | 2 |
| Plan assets, fair value | 43 | 49 |
No plan assets have a listed price on an active market
| Net change in defined-benefit obligations during the year | 31 Mar 2016 31 Mar 2015 | |
|---|---|---|
| Opening balance | 626 | 449 |
| Pension costs, defined-benefit plans | 24 | 28 |
| Benefits paid | -21 | -22 |
| Funds contributed by employer | -2 | -2 |
| Funds paid to employer | 3 | 3 |
| Remeasurement recognised in other comprehensive income, see separate specification |
-94 | 170 |
| Redemption of pension obligations | -1 | 0 |
| Other | 0 | 1 |
| Translation differences | -1 | -1 |
| Closing balance | 534 | 626 |
| Costs recognised in net profit | 2015/2016 | 2014/2015 |
|---|---|---|
| Pensions earned during the period | 13 | 12 |
| Net interest expense | 11 | 16 |
| Pension costs, defined-benefit plans | 24 | 28 |
| Pension costs, defined-contribution plans | 90 | 94 |
| Pension costs in net profit | 114 | 122 |
Pension costs are distributed in profit or loss between Personnel costs and Net financial items, with the latter comprising the net amount of interest on the obligations and interest on the plan assets.
| other comprehensive income | 2015/2016 | 2014/2015 |
|---|---|---|
| Actuarial gains and losses attributable to demographic assumptions |
0 | -1 |
| Actuarial gains and losses attributable to financial assumptions |
102 | -174 |
| Actuarial gains and losses attributable to experience-based adjustments |
-8 | 4 |
| Other | – | 0 |
| Total remeasurement, pension obligations | 94 | -171 |
| Difference between actual return and return according to discount rate on plan assets |
0 | 1 |
| Total remeasurement included in other comprehensive income |
94 | -170 |
| 2015/2016 | Sweden | Norway | Taiwan |
|---|---|---|---|
| Discount rate, 31 March, % | 2.75 | 2.25 | 1.25 |
| Expected salary increase, % | 2.75 | 2.25 | 2.75 |
| Expected inflation, %1) | 1.50 | 0.00 | 0.00 |
| Expected remaining period of service, years | 12.2 | 3.6 | 18.3 |
| 2014/2015 | Sweden | Norway | Taiwan |
| Discount rate, 31 March, % | 1.80 | 2.30 | 2.00 |
| Expected salary increase, % | 2.75 | 2.50 | 2.75 |
| Expected inflation, %1) | 1.50 | 0.00 | 0.00 |
| Expected remaining period of service, years | 12.4 | 3.7 | 18.0 |
1) Inflation assumption is equivalent to pension indexation, which applies in both Sweden and Norway.
Length of life assumptions are based on published statistics and mortality figures. Remaining lengths of lives are presented in the table below.
| Sweden | Norway | Taiwan |
|---|---|---|
| 20.6 | 21.2 | 18.3 |
| 23.2 | 24.4 | 21.5 |
| 23.4 | 23.5 | 18.3 |
| 25.2 | 26.8 | 21.5 |
The discount rate is the parameter that is of the greatest significance to the calculation of the present value of outstanding pension obligations. A 0.50-percent increase in the discount rate would reduce the total pension obligation by approximately MSEK 39, while a 0.50-percent decrease in the discount rate would increase the total pension obligation by approximately MSEK 44.
As of 31 March 2016, the average weighted term of the total pension obligation was 16.2 years (17.1), of which unfunded PRI pensions in Sweden had an average weighted term of 16.3 years (17.7).
B&B TOOLS estimates that approximately MSEK 20 (22) will be paid in 2016/2017 to existing defined-benefit pension plans.
A discount rate of 3.84 percent (3.84) was applied to the calculation of the amount of the pension obligation for the Parent Company. As of 31 March 2016, the Parent Company has one definedbenefit plan pertaining to PRI Pensionsgaranti. These obligations are recognised in the balance sheet in the following amounts:
| 31 Mar 2016 | 31 Mar 2015 | |
|---|---|---|
| Pension obligations unfunded plan, present value | 45 | 46 |
| Net pension obligations and net liability according to the balance sheet |
45 | 46 |
| Of which, credit insured through PRI Pensionsgaranti | 45 | 46 |
Pension obligations for the defined-benefit pension plan have developed as follows:
| Pension obligations unfunded plans | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Opening balance | 46 | 48 |
| Benefits earned during the year | 1 | 0 |
| Interest expense recognised in profit or loss | 2 | 2 |
| Benefits paid | -4 | -4 |
| Closing balance | 45 | 46 |
| Pension costs | 2015/2016 | 2014/2015 |
|---|---|---|
| Benefits earned during the year, personnel costs | 1 | 0 |
| Interest expense | 2 | 2 |
| Pension costs, defined-benefit plans | 3 | 2 |
| Pension costs, defined-contribution plans | -9 | 2 |
| Pension costs in net profit | -6 | 4 |
During the first quarter of 2015/2016, a previously concluded pension obligation for the benefit of a former CEO, who is now Chairman of the Board of B&B TOOLS AB, was conveyed to one of the Chairman's related companies. The conveyance was made on market terms and has reduced the pension cost for defined-contribution plans by approximately MSEK 12 in the Group and in the Parent Company.
| Group | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Provisions classified as non-current liabilities | ||
| Guarantee commitments | 2 | 1 |
| Other | 2 | 3 |
| Total | 4 | 4 |
| Specification | 31 Mar 2016 | 31 Mar 2015 |
| Carrying amount at the beginning of the period | 4 | 3 |
| Provisions made during the period | 0 | 1 |
| Divested businesses | 0 | 0 |
| Reclassifications | 0 | 0 |
| Group | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| Other current liabilities | ||
| Derivatives | 3 | 1 |
| Advance payments from customers | 1 | 1 |
| Employee withholding taxes | 30 | 31 |
| VAT liability | 89 | 92 |
| Other operating liabilities | 3 | 3 |
| Total | 126 | 128 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 31 Mar 2016 31 Mar 2015 | 31 Mar 2016 31 Mar 2015 | |||
| Accrued expenses | ||||
| Salaries and remuneration to employees |
219 | 222 | 5 | 6 |
| Pension costs | 0 | 1 | – | 0 |
| Social security contributions | 113 | 102 | 16 | 7 |
| Bonuses, refunds to customers/ suppliers |
64 | 51 | – | – |
| Car and travel expenses | 3 | 3 | – | – |
| Directors' and auditors' fees | 3 | 4 | 0 | 0 |
| Other consulting fees | 1 | 3 | – | – |
| Marketing costs | 5 | 5 | – | – |
| Guarantee costs | 0 | 0 | – | – |
| Shipping costs | 18 | 8 | – | – |
| Operating and leasing costs | 16 | 36 | 1 | 2 |
| Interest expense | 0 | 2 | 0 | 2 |
| Other accrued expenses | 7 | 3 | – | – |
| Deferred income | ||||
| Rent | 1 | 1 | 1 | 1 |
| Marketing income | 1 | 1 | – | – |
| Other deferred income | 2 | 2 | – | – |
| Total | 453 | 444 | 23 | 18 |
| 31 Mar 2016 | 31 Mar 2015 | |||||
|---|---|---|---|---|---|---|
| Non-interest | Non-interest | |||||
| Group | Interest-bearing | bearing | Total | Interest-bearing | bearing | Total |
| ASSETS | ||||||
| Intangible non-current assets | – | 1,821 | 1,821 | – | 1,803 | 1,803 |
| Tangible non-current assets | – | 100 | 100 | – | 113 | 113 |
| Financial non-current assets | 5 | 11 | 16 | 5 | 11 | 16 |
| Deferred tax assets | – | 88 | 88 | – | 122 | 122 |
| Total non-current assets | 5 | 2,020 | 2,025 | 5 | 2,049 | 2,054 |
| Current assets | ||||||
| Inventories | – | 1,505 | 1,505 | – | 1,525 | 1,525 |
| Tax assets | – | 45 | 45 | – | 37 | 37 |
| Accounts receivable | – | 1,232 | 1,232 | – | 1,296 | 1,296 |
| Prepaid expenses and accrued income | – | 122 | 122 | – | 110 | 110 |
| Other receivables | – | 49 | 49 | – | 50 | 50 |
| Cash and bank | 62 | – | 62 | 57 | – | 57 |
| Total current assets | 62 | 2,953 | 3,015 | 57 | 3,018 | 3,075 |
| Total assets | 67 | 4,973 | 5,040 | 62 | 5,067 | 5,129 |
| LIABILITIES | ||||||
| Non-current liabilities | ||||||
| Non-current interest-bearing liabilities | 150 | – | 150 | 365 | – | 365 |
| Provisions for pensions | 536 | – | 536 | 628 | – | 628 |
| Other provisions | – | 4 | 4 | – | 4 | 4 |
| Deferred tax liabilities | – | 84 | 84 | – | 69 | 69 |
| Total non-current liabilities | 686 | 88 | 774 | 993 | 73 | 1,066 |
| Current liabilities | ||||||
| Current interest-bearing liabilities | 132 | – | 132 | 225 | – | 225 |
| Accounts payable | – | 896 | 896 | – | 859 | 859 |
| Tax liabilities | – | 68 | 68 | – | 81 | 81 |
| Other liabilities | – | 126 | 126 | – | 128 | 128 |
| Accrued expenses and deferred income | – | 453 | 453 | – | 444 | 444 |
| Total current liabilities | 132 | 1,543 | 1,675 | 225 | 1,512 | 1,737 |
| Total liabilities | 818 | 1,631 | 2,449 | 1,218 | 1,585 | 2,803 |
| Interest-bearing net liabilities | -751 | -1,156 |
EXPECTED RECOVERY PERIODS FOR ASSETS AND LIABILITIES
| Group Amounts expected to be recovered |
Within 12 months | After 12 months | Total | |
|---|---|---|---|---|
| ASSETS | ||||
| Intangible non-current assets1) | 4 | 1,816 | 1,821 | |
| Tangible non-current assets1) | 34 | 66 | 100 | |
| Financial non-current assets | ||||
| Shares in associated companies | – | 11 | 11 | |
| Other securities held as non-current assets | – | 1 | 1 | |
| Other long-term receivables | 0 | 4 | 4 | |
| Deferred tax assets | – | 88 | 88 | |
| Total non-current assets | 38 | 1,987 | 2,025 | |
| Current assets | ||||
| Inventories | 1,505 | 1,505 | ||
| Tax assets | 45 | 45 | ||
| Accounts receivable | 1,232 | 1,232 | ||
| Prepaid expenses and accrued income | 122 | 122 | ||
| Other receivables | 49 | 49 | ||
| Cash and bank | 62 | 62 | ||
| Total current assets | 3,015 | 3,015 | ||
| Total assets | 3,053 | 1,987 | 5,040 | |
| Group | ||||
| Amounts expected to be paid | Within 12 months | After 12 months | After 5 years | Total |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Non-current interest-bearing liabilities | – | 150 | – | 150 |
| Provisions for pensions Other provisions |
20 – |
84 4 |
432 – |
536 4 |
| Deferred tax liabilities | 12 | 59 | 13 | 84 |
| Total non-current liabilities | 32 | 297 | 445 | 774 |
| Current liabilities | ||||
| Current interest-bearing liabilities | 132 | 132 | ||
| Accounts payable | 896 | 896 | ||
| Tax liabilities | 68 | 68 | ||
| Other liabilities | 126 | 126 | ||
| Accrued expenses and deferred income | 453 | 453 | ||
| Total current liabilities | 1,675 | 1,675 | ||
| Total liabilities | 1,707 | 297 | 445 | 2,449 |
1) Expected annual depreciation and amortisation are recognised in the amounts expected to be recovered within 12 months.
| Parent Company | ||||
|---|---|---|---|---|
| Amounts expected to be recovered | Within 12 months | After 12 months | Total | |
| ASSETS | ||||
| Intangible non-current assets1) | 0 | 0 | 0 | |
| Tangible non-current assets1) | 0 | 0 | 0 | |
| Financial non-current assets | ||||
| Participations in Group companies | – | 104 | 104 | |
| Receivables from Group companies | – | 3,303 | 3,303 | |
| Deferred tax assets | – | 1 | 1 | |
| Total non-current assets | 0 | 3,408 | 3,408 | |
| Current assets | ||||
| Accounts receivable | 1 | 1 | ||
| Receivables from Group companies | 501 | 501 | ||
| Other receivables | 5 | 5 | ||
| Prepaid expenses and accrued income | 3 | 3 | ||
| Cash and bank | 0 | 0 | ||
| Total current assets | 510 | 510 | ||
| Total assets | 510 | 3,408 | 3,918 | |
| Parent Company Amounts expected to be paid |
Within 12 months | After 12 months | After 5 years | Total |
| PROVISIONS | ||||
| Provisions for pensions and similar commitments | 4 | 15 | 26 | 45 |
| Total provisions | 4 | 15 | 26 | 45 |
| LIABILITIES Non-current liabilities |
||||
| Liabilities to credit institutions | 150 | 150 | ||
| Liabilities to Group companies | 60 | 60 | ||
| Total non-current liabilities | 210 | 210 | ||
| Current liabilities | ||||
| Liabilities to credit institutions | 132 | 132 | ||
| Accounts payable | 1 | 1 | ||
| Liabilities to Group companies | 996 | 996 | ||
| Tax liabilities | 27 | 27 | ||
| Other liabilities | 4 | 4 | ||
| Accrued expenses and deferred income | 23 | 23 | ||
| Total current liabilities | 1,183 | 1,183 | ||
| Total provisions and liabilities | 1,187 | 225 | 26 | 1,438 |
1) Expected annual depreciation and amortisation are recognised in the amounts expected to be recovered within 12 months.
The operations of the B&B TOOLS Group entail exposure to a number of financial risks. Changes, particularly in foreign-exchange rates and interest-rate levels, affect the Group's earnings and cash flow. Financing risks also arise and are managed within the framework of the Group's adopted policies.
The goal of the Group's financial operations is to ensure high efficiency in the areas of investments, liquidity flows, borrowing, foreign-currency management and granting of credit. The Board of Directors of B&B TOOLS AB determines the Financial Policy each year, including the guidelines, goals and framework for treasury management and for managing the financial risks in the Group. The Financial Policy defines and identifies the financial risks that can arise, and regulates the distribution of responsibility between the Board of Directors, the President & CEO, the CFO, the Treasury function as well as subsidiary presidents and CFOs.
The Group's central financial operations comprise securing the Group's long-term supply of liquidity for investments and working capital in an efficient manner, as well as ensuring that systems are available for efficient cash management in the Group companies. All foreign-currency management and granting of credit to customers are handled within the framework of the established policy. The Parent Company has a central Treasury function whose task is to manage the Group's external borrowing, investments of surplus liquidity, agreements and conditions governing cash pooling, pledging of the Group's assets and issuance of contingent liabilities.
The Group uses financial derivative instruments to manage foreign-exchange risks and interest-rate risks that arise during operations. Derivative instruments held for hedging comprise interest caps and foreign-exchange forward contracts.
The Group identifies certain derivatives as a hedge on a highly probable forecast transaction (cash-flow hedging). These derivative instruments are hedged, which means that the instruments are recognised in the balance sheet at fair value and that any change in value of these instruments is recognised as equity in other comprehensive income until its underlying cash flow is reflected in profit or loss. Also refer to Note 1 Accounting policies.
For B&B TOOLS, foreign-exchange risk arises in the subsidiaries as follows: as a result of future payment flows in foreign currencies, referred to as a transaction exposure, through portions of the Group's equity comprising net assets of foreign subsidiaries and the Group's profit compromising profit from foreign subsidiaries, referred to as a translation exposure.
Transaction exposure comprises future contracted and forecast receipts and disbursements in foreign currencies for subsidiaries, which, in the Group's case, mainly involves purchases and sales of goods. The total transaction exposure for key currencies is shown in the table below.
| Currency | 2015/2016 | 2014/2015 |
|---|---|---|
| NOK | 878 | 893 |
| EUR | -61 | -5 |
| USD | -260 | -359 |
| TWD | -117 | -134 |
| DKK | 64 | 43 |
| PLN | 35 | 36 |
| CNY | -31 | -60 |
| GBP | -23 | -15 |
| JPY | -5 | -18 |
The Group has its primary customer markets in Sweden, Norway and Finland, with sales in SEK, NOK and EUR, respectively. A large portion of purchasing takes place outside the Nordic region and is mainly paid in EUR, USD and TWD.
The effects of exchange-rate changes are reduced on the basis of purchases and sales in the same currency, currency clauses and foreign-exchange forward contracts. Risk exposure is limited by the Group's sales largely comprising products that are sold at a fixed price in the local currency according to a price list valid over a period of approximately six months.
Group companies hedge parts of their future currency outflows in foreign currency using foreign-exchange forward contracts, in accordance with the Financial Policy. Most of the hedging of exchange-rate changes is conducted for the period deemed necessary to allow sales prices to be
adjusted to the new foreign-exchange rates. A smaller proportion of foreign-exchange forward contracts have terms of six to 12 months and are based on forecasts. Corresponding foreignexchange forward hedging takes place for sales in foreign currencies when the costs are in local currency. The nominal amounts of outstanding foreign-exchange forward contracts as of 31 March 2016 were as follows:
| Foreign-exchange contract | Nominal value as of 31 Mar 2016 |
Nominal value as of 31 Mar 2015 |
|---|---|---|
| NOK/SEK | 189 | 426 |
| USD/SEK1) | 163 | 88 |
| EUR/SEK | 6 | 21 |
| TWD/USD | – | 22 |
| DKK/SEK | – | 1 |
| USD/CNY | – | 2 |
| JPY/SEK | – | 1 |
| PLN/SEK | – | 0 |
1) Foreign-exchange forward contracts for purchase of currency.
The Group's earnings are affected by the translation of the income statements of foreign subsidiaries, for which translation is carried out at the average exchange rate for the financial year. In cases when the local currency of the foreign subsidiary changes in relation to SEK, the Group's recognised revenue and earnings that were translated to SEK also change. Currency translation for the financial year generated an impact on operating profit of approximately MSEK 2 (7) compared with the preceding year's average rates. The table below shows how much the currency translation impacted the Group's revenue.
| Group | Revenue |
|---|---|
| Revenue in 2015/2016 translated to the average rate for 2014/2015 | 7,938 |
| Currency translation | |
| NOK | -138 |
| EUR | 10 |
| Other currencies | 11 |
| Total currency translation | -117 |
| Revenue in 2015/2016 | 7,821 |
The Group has net exposures in several foreign currencies. If the prices of the exposure currencies would change by 5 percent based on the 2015/2016 income statement, the effect on revenue would amount to approximately MSEK 172 (184) and on operating profit to approximately MSEK 7 (11) over a 12-month period, all other things being equal.
The following rates were applied in the year-end accounts:
| Average rate | Balance-sheet rate | |||
|---|---|---|---|---|
| Currency | 2015/2016 | 2014/2015 | 31 Mar 2016 | 31 Mar 2015 |
| DKK | 1.248 | 1.238 | 1.239 | 1.247 |
| EUR | 9.310 | 9.226 | 9.233 | 9.312 |
| GBP | 12.709 | 11.783 | 11.636 | 12.764 |
| NOK | 1.022 | 1.091 | 0.976 | 1.072 |
| PLN | 2.207 | 2.205 | 2.170 | 2.276 |
| TWD | 0.265 | 0.239 | 0.253 | 0.275 |
| USD | 8.471 | 7.344 | 8.101 | 8.639 |
The value of the net assets of foreign subsidiaries is translated to SEK at year-end at the exchange rate in effect on the balance-sheet date. The exchange-rate difference between the years is recognised against equity under other comprehensive income. Translation of the balance sheets of foreign subsidiaries caused equity to decrease by approximately MSEK -51 (35) during the year.
| Currency | 31 Mar 2016 | 31 Mar 2015 |
|---|---|---|
| NOK | 362 | 420 |
| EUR | 315 | 301 |
| TWD | 60 | 51 |
| CNY | 30 | 41 |
| PLN | 13 | 12 |
| DKK | 14 | -5 |
Interest-rate risk refers to the risk that changes in the market interest rate will have a negative impact on the Group's net interest income. The speed at which an interest-rate change has an effect depends on the length of the period of fixed interest on the loans and the type of hedging instruments used.
At times, the Group uses different forms of interest derivatives for the purpose of managing the risk of higher market interest rates in the future. These are managed by the Parent Company. Using various interest derivative instruments, the Group converts its borrowing to the desired fixed-interest structure, according to which the current derivatives expired on 30 June 2015 in accordance with the table below.
| Parent Company | ||||
|---|---|---|---|---|
| Exercised during the year Derivative instruments |
Hedged item | Guaranteed interest rate1) |
Starting date | Expiration date |
| Interest cap | MSEK 300 | 6.00% | 30 Mar 2012 | 30 Jun 2015 |
| Interest cap | MSEK 300 | 6.00% | 28 Sep 2012 | 30 Jun 2015 |
1) Excluding bank margin.
If market interest rates would increase by 1 percent, the impact on net interest income on an annual basis would be MSEK 3, based on the loan structure as of 1 April 2016.
Liquidity and refinancing risk pertains to the risk that the Group is unable to fulfil its payment obligation due to insufficient liquidity and that the possibility of financing is limited when loans are due for rescheduling.
Borrowing and trading in financial instruments is conducted with one of the large Nordic commercial banks and the management of loans is handled by the Parent Company's Treasury function. At financial year-end, the Parent Company had access to a committed credit facility of MSEK 400 (400), of which MSEK 268 was unutilised. The credit facility is renewed on an annual basis with a maturity date of 31 December. In addition to this committed credit facility, the Group has an unutilised loan commitment totalling MSEK 550. Current investments of any surplus liquidity are made on terms of one to three months at current market interest rates. The counterparty for deposits is always one of the large Nordic commercial banks.
The Group's net loan liability, comprising interest-bearing liabilities and provisions less interestbearing assets, is presented in Note 23.
| Group | 2015/2016 | 2014/2015 |
|---|---|---|
| Financial assets | ||
| Financial assets measured at fair value | ||
| Shares and participations available for sale | 1 | 1 |
| Financial assets not measured at fair value | ||
| Loan receivables and accounts receivable | ||
| Long-term receivables | 2 | 2 |
| Accounts receivable | 1,232 | 1,296 |
| Other receivables | 46 | 49 |
| Cash and cash equivalents | 62 | 57 |
| Total financial assets | 1,343 | 1,405 |
| Financial liabilities measured at fair value | ||
| Derivative hedging instruments | 0 | 0 |
| Financial liabilities not measured at fair value | ||
| Other liabilities | ||
| Bank loans | 282 | 590 |
| Accounts payable | 896 | 859 |
| Other liabilities | 125 | 128 |
| Total financial liabilities | 1,303 | 1,577 |
| Parent Company | 2015/2016 | 2014/2015 |
| Financial assets not measured at fair value | ||
| Loan receivables and accounts receivable | ||
| Receivables from Group companies | 3,804 | 3,921 |
| Accounts receivable | 1 | 1 |
| Other receivables | 2 | 7 |
| Total financial assets | 3,807 | 3,929 |
| Financial liabilities measured at fair value | ||
| Derivative hedging instruments | 0 | 0 |
| Financial liabilities not measured at fair value | ||
| Other liabilities | ||
| Bank loans | 282 | 589 |
| Liabilities to Group companies | 1,057 | 1,255 |
| Accounts payable | 1 | 1 |
| Other liabilities | 1 | 4 |
Total financial liabilities 1,341 1,849 The carrying amounts for financial assets and financial liabilities above are equivalent to fair value in all material respects.
Derivatives belong to Level 2 of the fair value hierarchy. The fair value of derivatives comprising foreign-exchange forward contracts and interest swap agreements is based on listings with banks. Similar contracts are traded on an active market and the prices reflect the actual transactions of comparable instruments. Other than derivatives, there are essentially no financial instruments that are continuously measured at fair value in the balance sheet and no assets or liabilities that are classified according to Levels 1 or 3 in the fair value hierarchy.
The Group has no bank loans that are measured at fair value in profit or loss. For accounts receivables, accounts payable and other items the carrying amount has been stated as the fair value, which is deemed to favourably reflect the fair value.
The Group's borrowing amounted to MSEK 282 (590). Overall, the average remaining maturity for both the Group's and the Parent Company's interest-bearing financial liabilities is 1.3 years (2.0 years).
| Group | 31 Mar 2016 | Matures | |||
|---|---|---|---|---|---|
| Maturity structure | Carrying amount |
Future payment amount |
within 3 months | after 3 months within 1 year |
after 1 year within 5 years |
| Interest-bearing financial liabilities | 282 | 292 | 1 | 135 | 156 |
| Accounts payable and other non-interest-bearing financial liabilities | 1,021 | 1,021 | 1,021 | ||
| Total financial liabilities | 1,303 | 1,313 | 1,022 | 135 | 156 |
| 31 Mar 2015 | Matures | ||||
|---|---|---|---|---|---|
| Maturity structure | Carrying amount |
Future payment amount |
within 3 months | after 3 months within 1 year |
after 1 year within 5 years |
| Interest-bearing financial liabilities | 590 | 614 | 3 | 232 | 379 |
| Accounts payable and other non-interest-bearing financial liabilities | 986 | 986 | 986 | – | 0 |
| Total financial liabilities | 1,576 | 1,600 | 989 | 232 | 379 |
| Parent Company | 31 Mar 2016 | Matures | |||
|---|---|---|---|---|---|
| Maturity structure | Carrying amount |
Future payment amount |
within 3 months | after 3 months within 1 year |
after 1 year within 5 years |
| Interest-bearing financial liabilities | 282 | 292 | 1 | 135 | 156 |
| Liabilities to Group companies (excluding interest)1) | 1,057 | 1,057 | 997 | 60 | |
| Accounts payable and other non-interest-bearing financial liabilities | 4 | 4 | 4 | ||
| Total financial liabilities | 1,343 | 1,353 | 1,002 | 135 | 216 |
| 31 Mar 2015 | Matures | |||||
|---|---|---|---|---|---|---|
| Maturity structure | Carrying amount |
Future payment amount |
within 3 months | after 3 months within 1 year |
after 1 year within 5 years |
|
| Interest-bearing financial liabilities | 589 | 613 | 3 | 231 | 379 | |
| Liabilities to Group companies (excluding interest)1) | 1,255 | 1,255 | 1,164 | 0 | 91 | |
| Accounts payable and other non-interest-bearing financial liabilities | 6 | 6 | 6 | – | – | |
| Total financial liabilities | 1,850 | 1,874 | 1,173 | 231 | 470 |
1) Interest on liabilities to Group companies is not capitalised, but is instead regulated every quarter via the Parent Company's Group account structure.
The contractual terms and conditions for interest-bearing liabilities are presented in the tables below.
| Group | 2015/2016 | 2014/2015 |
|---|---|---|
| Non-current liabilities | ||
| Bank loans | 150 | 365 |
| Total non-current liabilities | 150 | 365 |
| Current liabilities | ||
| Committed credit facility | 132 | 125 |
| Current portion of bank loans | – | 100 |
| Other current interest-bearing liabilities | – | 0 |
| Total current liabilities | 132 | 225 |
| Total interest-bearing liabilities | 282 | 590 |
| Group | Parent Company | |||||||
|---|---|---|---|---|---|---|---|---|
| Bank loans | 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | ||||
| Nominal | Nominal | Carrying | Carrying | Carrying | Carrying | |||
| Currency | interest | Maturity | value | amount | amount | amount | amount | |
| Non-current liabilities | ||||||||
| Utilised portion of revolver | SEK | 1.00% | 20 Dec 2017 | 150 | 150 | 165 | 150 | 165 |
| Interest-only bank loan | SEK | – | 200 | – | 200 | |||
| Total non-current liabilities | 150 | 365 | 150 | 365 | ||||
| Current liabilities | ||||||||
| Interest-only bank loan | SEK | – | – | 100 | – | 100 | ||
| Committed credit facility | ||||||||
| Approved credit limit | 400 | 402 | 0 | 400 | ||||
| Unutilised portion | -268 | -277 | 0 | -276 | ||||
| Utilised credit amount | 0.50% | 132 | 125 | 0 | 124 | |||
| Total, loans from credit institutions | 282 | 590 | 150 | 589 |
Cash and cash equivalents, including unutilised granted credit facilities, totalled MSEK 880 (667).
Pension liabilities within the framework of the PRI system constitute a significant portion of the Group's total non-current interest-bearing liabilities. These pension liabilities are calculated by PRI based on the employees' benefit plan for retirement pension and survivors' pension under the ITP plan and are recognised in the consolidated balance sheet as a provision, with an addition for adjustments in accordance with IAS 19.
In its commercial and financial transactions, the Group is exposed to credit risks in relation to B&B TOOLS' counterparties. Credit risk or counterparty risk pertains to the risk of loss if the counterparty does not fulfil its obligations. The Group is exposed to credit risk through its financial transactions, through the investment of surplus liquidity and implementation of foreign-exchange forward con tracts and in connection with accounts receivable and advance payments to suppliers in the commercial operation. The Financial Policy stipulates that only the major Nordic commercial banks are suitable for the investment of surplus liquidity and foreign-exchange forward contract subscriptions. In order to capitalise on the operating activities' knowledge of customers and suppliers, the credit risk assessments are managed in the commercial transactions by each company. The credit risk is spread over a wide range of customers and is a good reflection of the Group's trading where the total revenue is built up of many business transactions and a favourable risk spread of sales across varying industries and companies. No individual customer accounts for more than 3 percent of the total credit exposure over a one-year period. To minimise the risk of credit losses, the Group companies apply credit policies that limit outstanding amounts and credit periods for individual customers. The size of each customer's credit is assessed individually. A credit rating is performed for all new customers. The intention is that credit limits will reflect the customer's payment capacity. Historically, B&B TOOLS' credit losses have been low. The credit quality of the receivables that have neither matured for payment nor been impaired is deemed favourable.
Reserves for doubtful accounts receivable and maturity structure are presented in the table below.
| ACCOUNTS RECEIVABLE | Group | Parent Company | ||
|---|---|---|---|---|
| 31 Mar 2016 | 31 Mar 2015 | 31 Mar 2016 | 31 Mar 2015 | |
| Accounts receivable | 1,266 | 1,335 | 1 | 1 |
| Accumulated reserve for doubtful accounts receivable | -34 | -39 | – | – |
| Accounts receivable, net | 1,232 | 1,296 | 1 | 1 |
| A maturity analysis is presented below: | ||||
| Maturity analysis | ||||
| – not past due | 1,122 | 1,165 | 1 | 1 |
| – receivables past due by 1-30 days | 100 | 125 | – | – |
| – receivables past due by 31-60 days | 14 | 8 | – | – |
| – receivables past due by 61-90 days | 6 | 3 | – | – |
| – receivables past due by >90 days | 24 | 34 | – | – |
| Total receivables | 1,266 | 1,335 | 1 | 1 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | ||
| Leases in which the Group/the Company is the lessee1) | |||||
| Non-terminable leasing fees amount to: | |||||
| Within 1 year | 256 | 277 | 6 | 9 | |
| Between 1 and 5 years | 635 | 700 | 8 | 4 | |
| Later than 5 years | 205 | 249 | – | – | |
| Total | 1,096 | 1,226 | 14 | 13 | |
| Expensed leasing fees for the period | |||||
| Assets held through operational leases | |||||
| Minimum leasing fees2) | 284 | 268 | 9 | 9 | |
| Total leasing costs | 284 | 268 | 9 | 9 |
1) Refer to Note 27 Pledged assets and contingent liabilities.
2) New leases were signed in conjunction with the property sales in 2013/2014 and 2014/2015.
Commitments under signed leases and leasing costs are included in the table above since after testing they were classified as operational leases.
Refers to costs for assets held through operational leases, such as rented premises, vehicles, other machinery and equipment.
| PLEDGED ASSETS AND CONTINGENT LIABILITIES | Group | Parent Company | ||
|---|---|---|---|---|
| 31 Mar 2016 | 31 Mar 2015 | 31 Mar 2016 | 31 Mar 2015 | |
| Pledged assets | ||||
| In the form of pledged assets for own liabilities and provisions | ||||
| Corporate mortgages | – | – | – | – |
| Total pledged assets | – | – | – | – |
| Contingent liabilities | ||||
| Guarantees for subsidiaries1) | 307 | 308 | ||
| Guarantees, other | 18 | 16 | 1 | 1 |
| Total contingent liabilities | 18 | 16 | 308 | 309 |
1) Parent Company guarantees for subsidiaries essentially pertain to PRI obligations.
In conjunction with the sale of the logistics properties in Alingsås and Ulricehamn in December 2012, one of the Group's companies entered into leases that expire at the end of 2027. The Parent Company, B&B TOOLS AB, has entered into an agreement guaranteeing the Group company's fulfilment of these leases with a total annual leasing cost of approximately MSEK 35.
During the first quarter of 2015/2016, a previously concluded pension obligation for the benefit of a former CEO, who is now Chairman of the Board of B&B TOOLS AB, was conveyed to one of the Chairman's related companies. The conveyance was made on market terms. The conveyance had a positive impact of approximately MSEK 12 on the Group's and the Parent Company's profit before taxes and of approximately MSEK 8 on profit after taxes.
The B&B TOOLS Group's related parties are primarily members of senior management. Disclosures concerning the Group's transactions with these related parties are available in Note 5 Employees and personnel costs. The Parent Company also has transactions with subsidiaries that are priced based on market terms.
SPECIFICATION OF THE PARENT COMPANY'S DIRECT HOLDINGS OF PARTICIPATIONS IN SUBSIDIARIES
| Corp. Reg. No. | Reg. office | No. of participations |
Holding % | Carrying amount as of 31 Mar 2016 |
Carrying amount as of 31 Mar 2015 |
|
|---|---|---|---|---|---|---|
| B&B TOOLS International AB | 556616-0353 | Stockholm | 1,000 | 100 | 1 | 1 |
| B&B TOOLS Invest AB | 556706-2699 | Stockholm | 1,000 | 100 | 93 | 93 |
| B&B TOOLS Fastigheter AB | 556787-7559 | Stockholm | 1,000 | 100 | 10 | 10 |
| Total | 104 | 104 | ||||
| Carrying amount at the beginning of the year | 104 | 104 | ||||
| Accumulated cost | ||||||
| At the beginning of the year | 104 | 104 | ||||
| Carrying amount at year-end | 104 | 104 |
| Holding % | Holding % | ||||||
|---|---|---|---|---|---|---|---|
| Reg. office, country |
31 Mar 2016 | 31 Mar 2015 | Reg. office, country |
31 Mar 2016 | 31 Mar 2015 | ||
| B&B TOOLS International AB | Sweden | 100 | 100 | Grunda Sverige AB | Sweden | 100 | 100 |
| B&B TOOLS Invest AB | Sweden | 100 | 100 | Luna Verktyg & Maskin AB | Sweden | 100 | 100 |
| B&B TOOLS Fastigheter AB | Sweden | 100 | 100 | Luna Sverige AB | Sweden | 100 | 100 |
| B&B TOOLS Business Infrastructure AB Sweden | 100 | 100 | Tengtools International Sweden AB | Sweden | 100 | 100 | |
| B&B TOOLS Operations AB | Sweden | 100 | 100 | Luna International AB | Sweden | 100 | 100 |
| Essve Produkter AB | Sweden | 100 | 100 | G & P Lidén Weighing AB | Sweden | 100 | 100 |
| ESSVE Sverige AB | Sweden | 100 | 100 | Skydda Protecting People Europe AB | Sweden | 100 | 100 |
| Gigant Arbetsplats AB | Sweden | 100 | 100 | Cresto AB | Sweden | 100 | 100 |
| Gigant Sverige AB | Sweden | 100 | 100 | Skydda i Sverige AB | Sweden | 100 | 100 |
| Gigant Produktion AB | Sweden | 100 | 100 | TOOLS Sverige AB | Sweden | 100 | 100 |
| Grunda AB | Sweden | 100 | 100 | Momentum Industrial AB | Sweden | 100 | 100 |
| Holding % | Holding % | ||||||
|---|---|---|---|---|---|---|---|
| Reg. office, country |
31 Mar 2016 | 31 Mar 2015 | Reg. office, country |
31 Mar 2016 | 31 Mar 2015 | ||
| Rörick Elektriska Verkstad AB | Sweden | 100 | 100 | B&B Products Oy | Finland | 100 | 100 |
| Mercus Yrkeskläder AB | Sweden | 100 | 100 | Essve Tech Oy | Finland | 100 | 100 |
| TOOLS Sverige Holding AB 1) | Sweden | – | 100 | Gigant Työpisteet OY | Finland | 100 | 100 |
| Kristineholms Intressenter AB | Sweden | 100 | 100 | B&B TOOLS Holding FI Oy | Finland | 100 | 100 |
| B&B TOOLS Development AB | Sweden | 100 | 100 | TOOLS Finland Oy | Finland | 100 | 100 |
| B&B TOOLS Artikel AB 1) | Sweden | – | 100 | B&B TOOLS Fastigheter Holding Oy | Finland | 100 | 100 |
| B&B TOOLS Fastigheter | B&B TOOLS Fastigheter Oy | Finland | 100 | 100 | |||
| i Helsingborg 1 AB 1) | Sweden | – | 100 | JNF Momentum Køge A/S | Denmark | 100 | 100 |
| B&B TOOLS Fastigheter i Hjo AB 1) | Sweden | – | 100 | Skydda Danmark AS | Denmark | 100 | 100 |
| B&B TOOLS Fastigheter i Köping 1 AB 2) Sweden | – | 100 | ESSVE Poland Sp.z o.o. | Poland | 100 | 100 | |
| B&B TOOLS Carolix AB | Sweden | 100 | 100 | Luna Polska Sp.z o.o. | Poland | 100 | 100 |
| AB Carl A. Nilssons | B&B TOOLS Estonia AS | Estonia | 100 | 100 | |||
| Elektriska Reparationsverkstad 3) | Sweden | 100 | – | B&B TOOLS Latvia SIA | Latvia | 100 | 100 |
| Luna Norge AS | Norway | 100 | 100 | B&B Tools Lietuva, UAB | Lithuania | 100 | 100 |
| ESSVE Norge AS | Norway | 100 | 100 | ESSVE Ukraine Ltd | Ukraine | 100 | 100 |
| TOOLS AS | Norway | 100 | 100 | B&B TOOLS (Shanghai) Co., Ltd | China | 100 | 100 |
| SKYDDA Norge AS 4) | Norway | 100 | – |
1) Intra-Group merger carried out in 2015/2016.
2) Company divested in 2015/2016.
3) Company acquired in 2015/2016. 4) Company formed in 2015/2016.
The distribution of untaxed reserves recognised in the Parent Company's balance sheet is shown below. For the Group, these reserves are eliminated in their entirety. Refer to Accounting Policies in Note 1. Of the Parent Company's total untaxed reserves amounting to MSEK 268 (206), MSEK 59 (45) comprises deferred taxes included in the Group's recognised deferred tax liability.
| Parent Company | ||
|---|---|---|
| 31 Mar 2016 | 31 Mar 2015 | |
| Accumulated accelerated depreciation | ||
| Non-current assets | ||
| Opening balance 1 April | – 0 |
|
| Change in accelerated depreciation for the year | – 0 |
|
| Closing balance 31 March | – – |
|
| Tax allocation reserve | ||
| Allocation 2009/2010 | – 5 |
|
| Allocation 2010/2011 | 44 44 |
|
| Allocation 2011/2012 | 49 49 |
|
| Allocation 2012/2013 | 0 0 |
|
| Allocation 2013/2014 | 45 45 |
|
| Allocation 2014/2015 | 63 63 |
|
| Allocation 2015/2016 | 67 – |
|
| Total | 268 | 206 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Cash and cash equivalents | 31 Mar 2016 | 31 Mar 2015 | 31 Mar 2016 | 31 Mar 2015 |
| The following subcomponents are included in cash and cash equivalents: | ||||
| Cash and bank | 62 | 57 | 0 | 0 |
| Total according to the balance sheet | 62 | 57 | 0 | 0 |
| Total according to the cash-flow statement | 62 | 57 | 0 | 0 |
| Group | Parent Company | |||
| Interest paid and dividends received | 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 |
| Dividends/Group contributions received | – | – | 393 | 199 |
| Interest received | 7 | 7 | 81 | 109 |
| Interest paid | -16 | -37 | -18 | -35 |
| Total | -9 | -30 | 456 | 273 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Adjustments for non-cash items | 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | |
| Depreciation and amortisation | 28 | 28 | 1 | 1 | |
| Impairment losses/Reversal of impairment losses | – | 0 | – | 0 | |
| Profit from the sale of companies and facilities | -1 | 1 | – | – | |
| Change in reserve for non-recurring costs | -7 | -21 | -1 | -5 | |
| Change in other provisions | 0 | 2 | – | – | |
| Change in pension obligations | 27 | 27 | 2 | 2 | |
| Hedge accounting | 0 | 0 | 0 | 0 | |
| Adjustment for interest paid/received | -2 | -4 | -2 | -4 | |
| Other | -2 | -1 | – | – | |
| Total | 43 | 32 | 0 | -6 |
| Group | |||||
|---|---|---|---|---|---|
| Acquisition of subsidiaries and other business units | 2015/2016 | 2014/2015 | |||
| Acquired assets: | |||||
| Intangible non-current assets | 6 | 2 | |||
| Inventories | 5 | 1 | |||
| Total assets | 11 | 3 | |||
| Acquired non-controlling interest, provisions and liabilities: | |||||
| Current operating liabilities | -3 | 0 | |||
| Total non-controlling interest, provisions and liabilities | -3 | 0 | |||
| Purchase consideration | -11 | -3 | |||
| Purchase consideration paid | -11 | -3 | |||
| Less: Cash and cash equivalents in acquired businesses | 0 | – | |||
| Effect on cash and cash equivalents | -11 | -3 | |||
| Group | |||||
| Disposal of subsidiaries and other business units | 2015/2016 | 2014/2015 | |||
| Divested assets: | |||||
| Tangible non-current assets | 25 | 103 | |||
| Inventories | 5 | – | |||
| Operating receivables | 1 | 1 | |||
| Total assets | 31 | 104 | |||
| Divested provisions and liabilities: | |||||
| Non-current liabilities | – | -1 | |||
| Current liabilities | 0 | -2 | |||
| Total provisions and liabilities | 0 | -3 | |||
| Capital gain/loss | -1 | 1 | |||
| Total | 30 | 102 | |||
| Purchase consideration received | 30 | 102 | |||
| Effect on cash and cash equivalents | 30 | 102 |
In early July 2015, an agreement was entered into to acquire all shares in Carl A Nilsson AB
("CAN"). CAN is a comprehensive service company specialising in electromechanical services and sales for the industrial sector in southern Sweden. CAN generated annual revenue of approximately MSEK 20 and had 13 employees at the time of the acquisition. Closing took place on 1 September 2015, and the acquisition has had a marginally positive impact on B&B TOOLS' earnings per share during the financial year.
In mid-March 2016, an agreement was entered into to acquire all shares in Tønsberg Maskinforretning AS ("TM"). TM is a reseller of industrial components and consumables to the industrial and construction sectors in southern Norway. TM generated annual revenue of approximately MNOK 20 and had 10 employees at the time of the acquisition. Closing took place after the end of the financial year on 4 April 2016.
A minor acquisition of assets and liabilities also took place in Norway during the 2015/2016 financial year. Details on all acquisitions are presented in Note 31 Cash-flow statement and the table Acquisition of subsidiaries and other business units.
A minor acquisition of assets and liabilities took place in Sweden during the 2014/2015 financial year. Details on this acquisition are presented in Note 31 Cash-flow statement and the table Acquisition of subsidiaries and other business units.
To create even stronger conditions for increased growth and profitability across all areas of the Group, B&B TOOLS introduced a new operational structure with two new operating segments as of 1 April 2016. The names of the new segments are Bergman & Beving (product companies) and Momentum Group (market companies).
The new operating segments will be reported externally for the first time in the Interim Report for the first quarter of the 2016/2017 financial year, which will be published on 19 July 2016.
As of 1 April 2016, B&B TOOLS Group management comprises: Ulf Lilius, President & CEO, with overall responsibility for the Momentum Group operating segment; Pontus Boman, Executive Vice President, with overall responsibility for the Bergman & Beving operating segment; and Eva Hemb, Executive Vice President and CFO.
On 11 May 2016, the Board of Directors of B&B TOOLS decided to assign Group management the task of investigating the possibility of splitting the Group's new operating segments into two separate listed companies in the future. The purpose of the split would be to increase the Group's earnings growth through a clearer focus on the ongoing development of strong brands and attractive market channels. Further information on the results of the investigation will be presented by the Board during the 2016/2017 financial year.
No other significant events affecting the Group have occurred after the end of the financial year.
Estimates and judgements have been made based on the information available at the time this report was submitted. These estimates and judgements may be subject to change at a later date, for example due to changes in factors in the operating environment.
Below is an account of the most significant judgements, which is subject to a risk that future events and new information may change the basis for current estimates and judgements applied.
In accordance with IFRS, goodwill and certain brands are not amortised. Instead, annual tests for indications of impairment are performed. Other intangible and tangible non-current assets are amortised and depreciated, respectively, over the period the asset is deemed to generate income. All intangible and tangible non-current assets are subject to annual testing for indications of impairment. Impairment tests are based on a review of forecast future cash flows. The assumptions used when conducting impairment testing are described in Note 11.
Since B&B TOOLS conducts trading operations, inventories constitute a large asset item in the consolidated balance sheet. The Group measures inventories at the lower of cost and net realisable value. The cost of inventories is primarily calculated using a method based on a weighted average and includes expenditures arising during the acquisition of the inventory assets and transportation thereof to their current location and state or by applying the "first-in, first-out" (FIFO) method. When calculating net realisable value, articles with redundancy and a low turnover rate, discontinued and damaged articles, and handling costs and other selling expenses are taken into consideration. If general demand for the Group's product range changes significantly and assumptions of the net realisable value of articles differ from the actual outcome, earnings in the financial statements may be affected.
The Group recognises a liability when a legal obligation exists and it is likely that an outflow of financial resources will be required to settle the obligation and a reliable estimate of the amount can be made. Outstanding legal issues are reviewed on a continuous basis to determine the need to set aside provisions in the financial statements. During these reviews, all cases are taken into consideration using the Group's internal legal competence and, when necessary, external legal counsel is also consulted. Insofar as the judgements concerning the factors considered do not correspond to the actual outcome, the financial statements may be affected.
Changes in tax legislation in Sweden and other countries where B&B TOOLS conducts business may change the amount of recognised tax liabilities and tax assets. Interpretations of current tax legislation may also affect the recognised tax liability/tax asset.
Judgements are made to determine both current and deferred tax liabilities/tax assets, particularly with respect to the value of deferred tax assets. Judgements are made as to whether the deferred tax assets will be utilised to offset future taxable income. The actual result may differ from these judgements, partly due to changes in business climate, changed tax legislation and the outcome of not yet completed examinations of tax returns by tax courts.
In determining B&B TOOLS' pension obligations under defined-benefit pension plans, certain assumptions have been made with respect to discount rates, inflation, salary increases, long-term returns on plan assets, mortality rates, retirement rates and other factors that may be of importance. These actuarial assumptions are reviewed on an annual basis and are changed when appropriate. Should these actuarial assumptions differ significantly from the actual future outcome, the Group's actuarial gains or losses will change, which may impact other comprehensive income.
B&B TOOLS AB, Corporate Registration Number 556034-8590, is a Swedish limited liability company with its registered office in Stockholm, Sweden. The Parent Company's Class B shares are registered on the Mid Cap list of Nasdaq Stockholm, Sweden. The address of the head office is: Box 10024, SE-100 55 Stockholm, Sweden.
The consolidated financial statements for the 2015/2016 financial year comprise the Parent Company and its subsidiaries, together termed the Group.
According to the consolidated balance sheet, retained earnings including net profit amounted to MSEK 2,532 at 31 March 2016, of which MSEK 362 comprised net profit.
The following amounts are at the disposal of the Annual General Meeting of the Parent Company B&B TOOLS AB:
| Retained earnings | SEK 1,643,565 thousand |
|---|---|
| Net profit | SEK 424,785 thousand |
| SEK 2,068,350 thousand |
The Board of Directors and the President & CEO propose that the available funds be allocated as follows:
| SEK 2,068,350 thousand | |
|---|---|
| To be brought forward | SEK 1,927,868 thousand |
| Dividend to shareholders, SEK 5.00 per share | SEK 140,482 thousand1) |
According to the Board's assessment, the proposed dividend is justifiable in relation to the demands placed on the Group's equity due to the Group's operations, scope and risks, and in relation to the Group's consolidation requirements, liquidity and position in other respects.
The income statements and balance sheets of the Group and the Parent Company are subject to adoption by the Annual General Meeting to be held on 25 August 2016.
The Board of Directors and President & CEO regard this Annual Report to be prepared in accordance with generally accepted accounting policies and the consolidated financial statements to be prepared in accordance with IFRS as adopted by the EU, and that they are deemed to provide a true and fair view of the Company's and the Group's position and earnings. The Administration Report for the Parent Company and the Group gives a true and fair overview of the development of the Company's and the Group's operations, position and earnings and describes the material risks and uncertainties faced by the Parent Company and the companies included in the Group. The earnings and position in other respects of the Parent Company and the Group are presented in the income statements, balance sheets, cash-flow statements and notes included in the Annual Report.
Stockholm, 14 June 2016
Anders Börjesson Chairman
Roger Bergqvist Vice Chairman
Fredrik Börjesson Director
Charlotte Hansson Director
Henrik Hedelius Director
Gunilla Spongh Director
Lillemor Svensson Director – employee representative
Anette Swanemar Director – employee representative
Ulf Lilius President & CEO
Our auditor's report was submitted on 15 June 2016
Authorised Public Accountant Auditor in Charge
1) Calculated based on the number of shares as of 31 March 2016, and with due consideration for the 340,000 repurchased Class B shares held in treasury.
To the Annual General Meeting of the Shareholders of B&B TOOLS AB (publ), Corp. Id. No. 556034-8590
We have audited the annual accounts and consolidated accounts of B&B TOOLS AB (publ) for the financial year 1 April 2015–31 March 2016. The annual accounts and consolidated accounts of the Company are included in the printed version of this document on pages 11-58.
The Board of Directors and the Chief Executive Officer are responsible for the preparation and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Chief Executive Officer determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Chief Executive Officer, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act, and present fairly, in all material respects, the financial position of the Parent Company as of 31 March 2016 and of their financial performance and cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Group as of 31 March 2016 and of their
financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and in accordance with the Annual Accounts Act. A Corporate Governance Report has been prepared. The statutory Administration Report and the Corporate Governance Report are consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the Annual General Meeting of Shareholders adopt the income statement and balance sheet for the Parent Company and the Group.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the Company's profit or loss and the administration of the Board of Directors and the Chief Executive Officer of B&B TOOLS AB (publ) for the financial year 1 April 2015–31 March 2016.
The Board of Directors is responsible for the proposal for appropriations of the Company's profit or loss, and the Board of Directors and the Chief Executive Officer are responsible for administration under the Companies Act.
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the Company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.
As basis for our opinion on the Board of Directors proposed appropriations of the Company's profit or loss we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.
As basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the Company in order to determine whether any member of the Board of Directors or the Chief Executive Officer is liable to the Company. We also examined whether any member of the Board of Directors or the Chief Executive Officer has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory Administration Report and that the members of the Board of Directors and the Chief Executive Officer be discharged from liability for the financial year.
Stockholm 15 June 2016 KPMG AB
Matilda Axlind Authorised Public Accountant
B&B TOOLS ANNUAL REPORT 2015/16 59
Chairman of the Board since 2012. Director since 1990. Born: 1948. Education: M.Sc. Econ.
Other board assignments: Chairman of Addtech AB, Lagercrantz Group AB and Tisenhult-gruppen AB. Director of Bostad Direkt Stockholm AB, Futuraskolan AB, Inomec AB, Swedish Cable Trolleys AB and Ventilationsgrossisten Nordic AB.
Work experience: President & CEO of Bergman & Beving.
Dependency conditions: Independent in relation to the Company and senior management. Dependent in relation to the Company's major shareholders.
Shares owned: 484,386 Class A shares and 6,443 Class B shares (with family) and 700,000 Class B shares (through companies).
Roger Bergqvist Vice Chairman of the Board since 2015. Director since 2012. Born: 1948. Education: Degree in market economy. Other board assignments: Director of Corroventa AB, Lagercrantz Group AB and Ventilationsgrossisten Nordic AB. Work experience: President & CEO of Addtech. Senior positions at Bergman & Beving. Dependency conditions: Independent in relation to the Company and senior management. Independent in relation to the Company's major shareholders. Shares owned: 30,000 Class B shares (own holding) and 10,000 Class B shares (through companies).
Fredrik Börjesson Director since 2015. Born: 1978. Education: M.Sc. Econ. CEO and Director of Tisenhult-gruppen AB and Tisenhult Förvaltning AB. Other board assignments: Chairman of Bostad Direkt Stockholm AB, Inomec AB, Swedish Cable Trolleys AB and Ventilationsgrossisten Nordic AB. Director of AddLife AB, Futuraskolan AB and Tisenhult Invest AB. Work experience: Senior positions at Tisenhult-gruppen AB and CFO of AB Cibenon. Dependency conditions: Independent in relation to the Company and senior management. Dependent in relation to the Company's
Shares owned: 12,600 Class B shares (with family) and 702,000 Class B shares (through companies).
major shareholders.
Charlotte Hansson Director since 2012. Born: 1962. Education: M.Sc. CEO of MTD KB.
Other board assignments: Director of BE Group AB, DistIT AB, Formpipe Software AB, Orio AB and RenoNorden ASA.
Work experience: CEO of Jetpak Sweden. Senior positions at Jetpak, ASG/Danzas, Carl Zeiss and Beckman Coulter.
Dependency conditions: Independent in relation to the Company and senior management. Independent in relation to the
Company's major shareholders. Shares owned: 3,800 Class B shares (own holding) and 1,200 Class B shares (through companies).
Henrik Hedelius Director since 2015. Born: 1966. Education: M.Sc. Econ. Head of Strategy at Remium Nordic AB. Other board assignments: Director of Mannerheim Invest Holding AB and Mind Industrial Group AB. Work experience: Senior positions at ABN Amro, Kaupthing Bank, Storebrand Asset Management, Swedbank and other companies. Dependency conditions: Independent in relation to the Company and senior management. Dependent in relation to the Company's major shareholders. Shares owned: 7,790 Class B shares (with
family).
Gunilla Spongh
Director since 2014. Born: 1966. Education: M.Sc. Eng. CFO of Preem AB. Other board assignments: Director of AQ Group AB and Infranord AB. Work experience: International Business Director and CFO of Mekonomen Group. Senior positions at Cashguard, Enea and Electrolux. Dependency conditions: Independent in relation to the Company and senior management. Independent in relation to the Company's major shareholders. Shares owned: 350 Class B shares (own holding).
Lillemor Svensson Director since 2006. Employee representative. Born: 1954. Receptionist, B&B TOOLS Infrastructure AB. Shares owned: –
Anette Swanemar Director since 2010. Employee representative. Born: 1959. Production Planner, Skydda PPE AB. Shares owned: –
President & CEO, with overall responsibility for the Momentum Group operating segment. Employee of the Group since 2002. Born: 1972. Education: B.Sc. Econ. Work experience: CEO of Momentum Industrial. Senior positions at Momentum Industrial and SKF.
Shares owned: 1,344 Class A shares and 158,227 Class B shares (with family) and 35,000 Class B shares (through companies). Call options: 26,300.
Executive Vice President, with overall responsibility for the Bergman & Beving operating segment. Employee of the Group since 2007. Born: 1971. Education: M.Sc. Eng. Work experience: CEO of ESSVE Produkter. Senior positions at B&B TOOLS, Accenture and Boston Consulting Group (BCG). Shares owned: 23,945 Class B shares (own holding).
Call options: 23,300.
holding). Call options: 26,000.
Authorised Public Accountant. Stockholm, born 1976. Matilda Axlind has been B&B TOOLS AB's auditor since 2011 and Auditor in Charge since 2016.
During 2015/2016, KPMG AB conducted audit assignments for approximately 20 percent of the companies listed on Nasdaq Stockholm.
The Class B share of B&B TOOLS is listed on Nasdaq Stockholm ("Stockholm Stock Exchange"). During the financial year, the total trading volume was MSEK 1,407. The share price rose 6 percent during the year, and at the end of the financial year, B&B TOOLS had a market capitalisation of MSEK 4,251.
The Class B share of B&B TOOLS was floated on the Stockholm Stock Exchange in 1976, and listed on the A-list in 1984. The share is currently listed on the Mid Cap list of the Nasdaq Stockholm in the Industrials sector. The share is traded under the symbol BBTO-B.
During the period from 1 April 2015 to 31 March 2016, the market price of the B&B TOOLS share increased 6 percent to SEK 149.50, which was the final price paid on 31 March 2016. During the same period, OMX Stockholm decreased -11 percent. The highest and lowest prices paid during the financial year were SEK 150.50 (quoted on 30 March 2016) and SEK 106.00 (quoted on 2 February 2016), respectively.
The total return on the B&B TOOLS share, including reinvested dividends, amounted to 10 percent during 2015/2016. The SIX Return Index of the Stockholm Stock Exchange (SIXRX) was -8 percent during the same period.
As of 31 March 2016, B&B TOOLS' total market capitalisation amounted to MSEK 4,251 (4,010). During the year, 11.3 million shares (10.2) in B&B TOOLS AB were traded, at a total value of MSEK 1,407 (1,447), Calculated on the total number of Class B shares outstanding, this corresponds to a turnover rate of 42 percent (38). Broken down by trading day, an average of approximately 45,400 B&B TOOLS shares (41,100) were traded each day, at an average value of MSEK 5.6 (5.8).
As of 31 March 2015, the share capital amounted to MSEK 57. The total number of shares was 28,436,416, of which 1,063,780 were Class A shares and 27,372,636 were Class B shares. The quotient value is SEK 2.00 per share.
Each Class A share entitles the holder to ten votes and each Class B share to one vote. All shares carry equal rights to the Company's assets, earnings and dividends. Only the Class B share is listed on the Stockholm Stock Exchange. A conversion provision in the Articles of Association allows for conversion of class A shares into class B shares.
During the 2015/2016 financial year, there were no changes in the total number of shares.
Accordingly, the number of Class B shares held in treasury as of 31 March 2016 amounted to 340,000 (340,000), corresponding to 1.2 percent of the total number of shares and 0.9 percent of the total number of votes. After a deduction for the shares repurchased by the Company, the number of shares outstanding as of 31 March 2016 totalled a net amount of 28,096,416.
Of the total number of shares held in treasury, 338,000 Class B shares are reserved to cover the Company's obligations to the holders of B&B TOOLS' call options for repurchased Class B shares.
B&B TOOLS has two outstanding call option programmes totalling 338,000 Class B shares. The programmes are targeted at some 15 senior managers in the Group. The redemption price for call options issued in connection with the share-based incentive programme for 2013 is SEK 101.90 and the redemption period is from 12 September 2016 until 9 June 2017, inclusive. The redemption price for call options issued in connection with the share-based incentive programme for 2014 is SEK 176.50 and the redemption period is from 11 September 2017 until 8 June 2018, inclusive. For further information regarding the terms of the share-based incentive programmes, refer to Note 5 on pages 33-35.
| 2015/2016 | 2014/2015 | 2013/2014 | 2012/2013 | 2011/2012 | |
|---|---|---|---|---|---|
| Share price as of 31 March, SEK | 149.50 | 141.00 | 119.00 | 85.00 | 59.25 |
| Market capitalisation as of 31 March, MSEK | 4,251 | 4,010 | 3,384 | 2,417 | 1,685 |
| Dividend, SEK | 5.001) | 4.00 | 3.50 | 3.00 | 3.00 |
| Shares outstanding, thousands | 28,436 | 28,436 | 28,436 | 28,436 | 28,436 |
| Number of shareholders as of 31 March | 5,372 | 5,386 | 4,118 | 4,161 | 4,705 |
| Highest share price during the financial year, SEK | 150.50 | 168.00 | 133.00 | 93.00 | 123.50 |
| Lowest share price during the financial year, SEK | 106.00 | 110.75 | 71.50 | 43.90 | 49.30 |
| Dividend yield2), % | 3.31) | 2.8 | 2.9 | 3.5 | 5.1 |
1) As proposed by the Board of Directors.
2) Dividend per share divided by the share price on 31 March for each financial year.
The dividend proposed by the Board of Directors for the 2015/2016 financial year is SEK 5.00 (4.00) per share, corresponding to a total of MSEK 140 (112). The pay-out ratio is 39 percent (37) of earnings per share.
Over the past ten years (since 2006/2007), the average pay-out ratio, including the proposed dividend for the year, has amounted to approximately 37 percent of earnings per share.
As of 31 March 2016, B&B TOOLS AB had 5,372 shareholders (5,386). Institutional investors, such as mutual funds, insurance companies and pension funds in Sweden and abroad, own approximately 78 percent (78) of the total number of shares. The proportion of foreign ownership is approximately 31 percent (31) of the total number of shares. The table below shows the ownership structure on 31 March 2016.
B&B TOOLS' website (www.bbtools.com) is regularly updated with information concerning the share price, ownership changes and the shareholdings and participation in share-based incentive programmes of the Board and Group management. The website also provides information about the analysts monitoring B&B TOOLS.
| No. of shares | Capital | Votes |
|---|---|---|
| 1,063,780 | 3.8% | 28.2% |
| 27,032,636 | 96.2% | 71.8% |
| 28,096,416 | 100.0% | 100.0% |
| 340,000 | ||
| 28,436,416 | ||
| Proportion of |
1) Source: Euroclear Sweden.
| Owners | Shares | |||||
|---|---|---|---|---|---|---|
| Size class, no. of shares |
Number | % of total | Number | % of total | ||
| 1– 500 | 3,818 | 71.1% | 564,768 | 2.0% | ||
| 501–1,000 | 653 | 12.1% | 540,152 | 1.9% | ||
| 1,001–5,000 | 592 | 11.0% | 1,366,530 | 4.9% | ||
| 5,001–10,000 | 106 | 2.0% | 773,021 | 2.7% | ||
| 10,001–50,000 | 130 | 2.4% | 2,837,942 | 10.1% | ||
| 50,001–100,000 | 27 | 0.5% | 1,984,908 | 7.1% | ||
| 100,001– | 46 | 0.9% | 20,029,095 | 71.3% | ||
| Total | 5,372 | 100.0% | 28,096,416 | 100.0% |
1) Source: Euroclear Sweden.
| No. of | ||||
|---|---|---|---|---|
| Class A shares | Class B shares | Capital | Votes | |
| Anders Börjesson (with companies) | 484,386 | 701,443 | 4.2% | 14.7% |
| Tom Hedelius | 484,386 | 1.7% | 12.9% | |
| Swedbank Robur funds | 2,971,496 | 10.6% | 7.9% | |
| SEB Funds | 2,448,390 | 8.7% | 6.5% | |
| Nordea Funds | 2,176,747 | 7.7% | 5.8% | |
| SHB Pension Fund Insurance Association | 1,390,000 | 4.9% | 3.7% | |
| Fourth AP Fund | 1,251,290 | 4.5% | 3.3% | |
| Sandrew Aktiebolag | 800,000 | 2.8% | 2.1% | |
| Handelsbanken Funds | 759,622 | 2.7% | 2.0% | |
| Fidelity Puritan Trust | 525,000 | 1.9% | 1.4% | |
| Third AP Fund | 519,730 | 1.9% | 1.4% | |
| Avanza Pension Försäkringsaktiebolaget | 454,089 | 1.6% | 1.2% | |
| Christina Mörner | 10,000 | 346,411 | 1.3% | 1.2% |
| CBNY-DFA International Small Cap | 337,447 | 1.2% | 0.9% | |
| Other | 85,008 | 12,350,971 | 44.3% | 35.0% |
| 1,063,780 | 27,032,636 | 100.0% | 100.0% | |
| Additional: Repurchased Class B shares | 340,000 | |||
| Total | 1,063,780 | 27,372,636 | 100.0% | 100.0% |
1) Source: Euroclear Sweden.
| MSEK | 2015/2016 | 14/15 | 13/14 | 12/131) | 11/121) | 10/111) | 09/10 | 08/09 | 07/08 | 06/07 |
|---|---|---|---|---|---|---|---|---|---|---|
| Earnings information | ||||||||||
| Revenue | 7,821 | 7,903 | 7,648 | 7,666 | 8,201 | 7,885 | 7,648 | 9,325 | 9,133 | 6,823 |
| Shares of profit in associated companies | 0 | 0 | 0 | 0 | 1 | 1 | 1 | 1 | 1 | – |
| Other operating income | 34 | 48 | 15 | 83) | 64) | 8 | 5 | 39 | 12 | 6 |
| Total operating income | 7,855 | 7,951 | 7,663 | 7,674 | 8,208 | 7,894 | 7,654 | 9,365 | 9,146 | 6,829 |
| Operating expenses, excluding non-recurring items |
-7,369 | -7,501 | -7,323 | -7,436 | -7,791 | -7,547 | -7,393 | -8,743 | -8,472 | -6,386 |
| of which, depreciation/amortisation and impairment losses |
-28 | -28 | -45 | -66 | -67 | -65 | -69 | -63 | -67 | -66 |
| Operating profit, excluding non-recurring items | 486 | 450 | 340 | 238 | 417 | 347 | 261 | 622 | 674 | 443 |
| Non-recurring items | – | – | – | 513) | -84) | – | – | -111 | – | – |
| Operating profit, including non-recurring items | 486 | 450 | 340 | 289 | 409 | 347 | 261 | 511 | 674 | 443 |
| Financial income and expenses | -18 | -42 | -54 | -73 | -91 | -67 | -68 | -108 | -74 | -36 |
| Profit after financial items | 468 | 408 | 286 | 216 | 318 | 280 | 193 | 403 | 600 | 407 |
| Taxes | -106 | -102 | -72 | 6 | -91 | -86 | -59 | -112 | -168 | -117 |
| Net profit | 362 | 306 | 214 | 222 | 227 | 194 | 134 | 291 | 432 | 290 |
| Of which, attributable to: | ||||||||||
| Parent Company shareholders | 362 | 306 | 214 | 222 | 227 | 194 | 134 | 285 | 421 | 288 |
| Non-controlling interest | – | – | – | – | 0 | 0 | 0 | 6 | 11 | 2 |
| Balance information | ||||||||||
| Intangible non-current assets | 1,821 | 1,803 | 1,792 | 1,781 | 1,815 | 1,813 | 1,857 | 1,913 | 1,755 | 1,033 |
| Tangible non-current assets | 100 | 113 | 208 | 252 | 407 | 472 | 505 | 545 | 529 | 500 |
| Financial non-current assets | 104 | 138 | 118 | 139 | 158 | 149 | 124 | 146 | 110 | 81 |
| Inventories | 1,505 | 1,525 | 1,414 | 1,443 | 1,684 | 1,523 | 1,458 | 1,768 | 1,667 | 1,268 |
| Current receivables | 1,448 | 1,493 | 1,509 | 1,410 | 1,471 | 1,389 | 1,340 | 1,439 | 1,570 | 1,369 |
| Cash and cash equivalents | 62 | 57 | 53 | 214 | 85 | 92 | 209 | 209 | 226 | 170 |
| Total assets | 5,040 | 5,129 | 5,094 | 5,239 | 5,620 | 5,438 | 5,493 | 6,020 | 5,857 | 4,421 |
| Equity attributable to Parent Company shareholders | 2,591 | 2,326 | 2,203 | 2,065 | 1,950 | 1,840 | 1,769 | 1,739 | 1,551 | 1,239 |
| Non-controlling interest | – | – | – | – | 0 | 0 | 0 | 18 | 20 | 12 |
| Total equity | 2,591 | 2,326 | 2,203 | 2,065 | 1,950 | 1,840 | 1,769 | 1,757 | 1,571 | 1,251 |
| Interest-bearing liabilities | 818 | 1,218 | 1,326 | 1,597 | 1,962 | 1,911 | 1,952 | 2,179 | 2,008 | 1,202 |
| Non-interest-bearing liabilities and provisions | 1,631 | 1,585 | 1,565 | 1,577 | 1,708 | 1,687 | 1,772 | 2,084 | 2,278 | 1,968 |
| Total equity and liabilities | 5,040 | 5,129 | 5,094 | 5,239 | 5,620 | 5,438 | 5,493 | 6,020 | 5,857 | 4,421 |
| Capital employed | 3,409 | 3,544 | 3,529 | 3,662 | 3,912 | 3,751 | 3,721 | 3,936 | 3,579 | 2,453 |
| Operational net loan liability2) | -217 | -530 | -819 | -914 | -1,414 | -1,407 | -1,734 | -1,959 | -1,769 | -1,018 |
1) As of 2010/2011, comparative figures were adjusted due to changes in accounting policies.
2) As of 2010/2011, comparative figures were adjusted due to a changed definition (previously, financial net loan liability).
3) Non-recurring items include MSEK +245 relating to capital gains from property sales, which are recognised as "Other operating income" in the consolidated income statement.
4) Non-recurring items include MSEK +31 relating to capital gains from property sales, which are recognised as "Other operating income" in the consolidated income statement.
| 2015/2016 | 14/15 | 13/14 | 12/13 | 11/12 | 10/11 | 09/10 | 08/09 | 07/08 | 06/07 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Key financial ratios | ||||||||||
| Operating margin, % | 6.2 | 5.7 | 4.4 | 3.8 | 5.0 | 4.4 | 3.4 | 5.5 | 7.4 | 6.5 |
| Profit margin, % | 6.0 | 5.2 | 3.7 | 2.8 | 3.9 | 3.6 | 2.5 | 4.3 | 6.6 | 6.0 |
| Return on total capital, % | 10 | 9 | 7 | 5 | 7 | 6 | 5 | 9 | 14 | 12 |
| Return on capital employed, % | 14 | 13 | 10 | 8 | 11 | 9 | 7 | 14 | 23 | 22 |
| Return on equity, % | 15 | 14 | 10 | 11 | 12 | 11 | 8 | 17 | 31 | 25 |
| Ditto, excluding non-recurring items, % | 15 | 14 | 10 | 6 | 12 | 11 | 8 | 22 | 31 | 25 |
| Return on equity after dilution, % | 15 | 14 | 10 | 11 | 12 | 11 | 8 | 17 | 31 | 25 |
| Equity/assets ratio, % | 51 | 45 | 43 | 39 | 35 | 34 | 32 | 29 | 27 | 28 |
| Other data | ||||||||||
| Number of employees at the end of the period | 2,623 | 2,682 | 2,655 | 2,780 | 2,880 | 2,840 | 2,844 | 3,183 | 3,315 | 2,697 |
| Average number of employees | 2,673 | 2,667 | 2,724 | 2,827 | 2,861 | 2,837 | 2,980 | 3,333 | 2,987 | 2,289 |
| Cash flow from operating activities, MSEK | 493 | 330 | 210 | 262 | 114 | 103 | 368 | 377 | 360 | 420 |
| Per-share data | ||||||||||
| Earnings, SEK | 12.90 | 10.90 | 7.60 | 7.90 | 8.10 | 6.90 | 4.80 | 10.20 | 15.10 | 10.35 |
| Earnings after dilution, SEK | 12.85 | 10.85 | 7.60 | 7.90 | 8.10 | 6.90 | 4.80 | 10.20 | 15.00 | 10.25 |
| Cash flow from operating activities, SEK | 17.55 | 11.75 | 7.45 | 9.30 | 4.05 | 3.65 | 13.20 | 13.50 | 12.90 | 15.10 |
| Ditto, after dilution, SEK | 17.55 | 11.75 | 7.45 | 9.30 | 4.05 | 3.65 | 13.15 | 13.45 | 12.80 | 15.00 |
| Equity, SEK | 92.20 | 82.80 | 78.40 | 73.50 | 69.40 | 65.50 | 63.05 | 62.35 | 55.60 | 44.60 |
| Equity after dilution, SEK | 92.25 | 82.65 | 78.40 | 73.50 | 69.40 | 65.50 | 63.00 | 62.10 | 55.20 | 44.15 |
| Share price at 31 March, SEK | 149.50 | 141.00 | 119.00 | 85.00 | 59.25 | 113.50 | 105.75 | 44.20 | 173.50 | 214.00 |
| Dividend, SEK | 5.005) | 4.00 | 3.50 | 3.00 | 3.00 | 3.00 | 2.50 | 2.50 | 5.00 | 4.00 |
| Other share-related data | ||||||||||
| Share price/equity, % | 162 | 170 | 152 | 116 | 85 | 173 | 168 | 71 | 312 | 480 |
| Share price/equity after dilution, % | 162 | 171 | 152 | 116 | 85 | 173 | 168 | 71 | 314 | 485 |
| Price/earnings ratio, multiple | 12 | 13 | 16 | 11 | 7 | 16 | 22 | 4 | 11 | 21 |
| Price/earnings ratio after dilution, multiple | 12 | 13 | 16 | 11 | 7 | 16 | 22 | 4 | 12 | 21 |
| Dividend yield, % | 3.35) | 2.8 | 2.9 | 3.5 | 5.1 | 2.6 | 2.4 | 5.7 | 2.9 | 1.9 |
5) As proposed by the Board of Directors.
Key ratios after dilution are calculated in accordance with IAS 33. The number of shares after dilution has been calculated as the weighted average during the financial year for the earnings and cash-flow-based key ratios.
Balance-sheet total less non-interestbearing liabilities.
Cash flow for the year from operating activities divided by the weighted number of shares.
Dividend per share relative to share price at 31 March
Net profit/loss for the year attributable to the Parent Company shareholders divided by the weighted number of shares.
Equity as a percentage of the balance-sheet total.
Equity attributable to Parent Company shareholders divided by the number of shares at the end of the financial year.
Significant earnings items attributable to capital gains or losses on the sale of businesses or significant non-current assets, impairment losses and restructuring expenses.
Number of shares as of 31 March, net, after deduction for shares repurchased by the Company.
Operating profit/loss relative to revenue.
Interest-bearing liabilities excluding net pension provisions less cash and cash equivalents and interest-bearing financial non-current assets.
The share price at 31 March divided by earnings per share.
Profit/loss after net financial items relative to revenue.
Operating profit relative to average working capital defined as inventories plus accounts receivable less accounts payable.
Profit/loss after net financial items, including reversed financial expenses, relative to average capital employed.
Net profit/loss for the period relative to average equity.
Profit/loss after net financial items, including reversed financial expenses, relative to average total capital (balance-sheet total).
Own invoicing, commission income from commission sales and side revenues.
The share price relative to equity per share at the end of the financial year.
Average number of shares during the financial year, adjusted for repurchased shares.
The amounts stated in the Notes refer to MSEK (SEK million) unless otherwise stated.
For the 2016/2017 financial year, reports will be published as follows:
Interim Report (3 months) 1 April-30 June 2016 Published: 19 July 2016
Interim Report (6 months) 1 April-30 September 2016 Published: 28 October 2016
Interim Report (9 months) 1 April-31 December 2016 Published: 8 February 2017
Financial Report 2016/2017 1 April 2016-31 March 2017 Published: 9 May 2017
Annual Report 2016/2017 1 April 2016-31 March 2017 Published: July 2017
Interim reports, financial reports, annual reports and press information can be ordered digitally through the subscription service on B&B TOOLS' website at www.bbtools.com The printed Annual Report is distributed to those shareholders who have requested a copy.
All reports are published in Swedish and English.
Mats Karlqvist, Head of Investor Relations, [email protected] +46 70 660 31 32.
Notice for B&B TOOLS' Annual General Meeting 2016 will be published on Wednesday, 20 July 2016. The notice includes proposal for agenda and the proposals by the Election Committee and the Board for resolutions at the Meeting.
Shareholders who wish to participate in the proceedings of the Annual General Meeting must: a) be recorded in the share register maintained by Euroclear Sweden AB
not later than Friday, 19 August 2016, and
b) notify the Company of their intention to attend not later than 3:00 p.m. on Friday, 19 August 2016.
Notices must contain information about the shareholders' name, personal or corporate registration number, telephone number (daytime), registered shareholding and the names of any assisting counsel (maximum of two). All information submitted in the notice of participation will be processed and used for the 2016 Annual General Meeting.
Shares are registered in the share register maintained by Euroclear Sweden AB in the name of either the owner or the owner's nominee. Shareholders whose shares are managed by a third party may have chosen to have their shares registered in the name of a nominee. To exercise their voting rights at the Meeting, shareholders whose shares are registered in the name of a nominee must temporarily re-register their shares in their own name via their nominee. Such re-registration must be completed not later than Friday, 19 August 2016.
The rights of shareholders at the Annual General Meeting may be exercised by proxy. A power of attorney for legal entities must be signed by an authorised signatory and a copy of a current certificate of incorporation naming the authorised signatories must be attached. A copy of the power of attorney must be submitted together with the notice and shall be presented in its original prior to the start of the Meeting.
The Company will provide shareholders with a power of attorney form, which will be available from the Company's head office or online (www.bbtools.com) not later than 20 July 2016.
The resolution of the Annual General Meeting regarding the dividend will include the date by which shareholders must be recorded in the share register maintained by Euroclear Sweden AB in order to be entitled to receive a dividend. The Board of Directors has proposed Monday, 29 August 2016 as the record date for receiving dividends. On condition that the Annual General Meeting adopts this proposal, dividends are expected to be disbursed through Euroclear Sweden AB on Thursday, 1 September 2016 to the shareholders recorded in the share register as of the record date.
Shareholders who have changed their name, address or bank account number must notify their nominee or account-keeping institute (bank) of the change as soon as possible. Special notification forms can be obtained from the bank in question.
PRODUCTION: BYN KOMMUNIKATIONSBYRÅ IN COLLABORATION WITH B&B TOOLS. TRANSLATION: THE BUGLI COMPANY. PRINT: NORRKÖPINGS TRYCKERI. PHOTOS: JANN LIPKA, JOHNÉR, FOLIO AND OTHERS.
Address: Box 10024, Linnégatan 18, SE-100 55 Stockholm, Sweden Telephone: +46 10 454 77 00 Fax: +46 10 454 77 01 E-mail: [email protected] Corp. Reg. No. 556034-8590
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