Annual Report • Apr 3, 2009
Annual Report
Open in ViewerOpens in native device viewer
Interim report January-March: 23 April 2009
Interim report January-June: 14 July 2009
Interim report January-September: 22 October 2009
Annual accounts 2009: 29 January 2010
Annual Report 2009: 31 March 2010
We have just begun the second century of Elanders' history and even though we wish market prospects had been brighter, the past year has strengthened the Group's capacity to meet the future. We have expanded our base in Germany, created an important platform in the U.S.A. and the success of our packaging manufacturing in China has proven this service has a given place in the Group. Elanders has also carried out essential if painful rationalisations to improve the competitive capacity of the Group, particularly in Sweden and Hungary. At the same time we continued to prove ourselves worthy of our global undertakings. Although some of our customers are experiencing a temporary drop in demand, their interest in seamless publishing over borders has grown. Our ability to meet this interest is what sets us apart from almost all other graphic companies – we are a global partner that can deliver locally.
When you read our 100th Annual Report I hope it will provide you with a good understanding of our business, the challenges and changes on our markets and how we will meet them by building Elanders into a leading global supplier of solutions for information logistics.
Welcome to Elanders Annual Report 2008!
Mölnlycke, February 2009
Patrick Holm President and Chief Executive Offi cer
Production: Elanders AB. U Other texts: Rubrik AB U Photo: Johannes Berner, Nick Otto, Sofi a Brolin, Martin von Brömssen, Scott Gilchrist, Scanpix UÊPrint: Elanders in Mölnlycke UÊPaper: Cover MultiArt Silk 250g, insert MultiArt Silk 130g. U Finishing cover: Matte lamination and foiling Translation: Camille Forslund UÊSome copies, sent to shareholders and others, have been personalised with their name on the covers.
This document is essentially a translation of the Swedish language version. In the event of any discrepancies between this translation and the original Swedish document, the latter shall be deemed correct.
There have been tremendous developments concerning the environment in the past few years and ecolabelled printed matter has become standard. Elanders makes every effort to further this development. We do it for the environment, for our customers, for ourselves and for the future. Naturally this Annual Report is both Swan ecolabelled and FSC labelled.
| Conte nts | ||
|---|---|---|
| THE FINANCIAL REPORTS | The year in summary 4 Our offer 6 Elanders 100 years 8 Interview with the Chief Executive Offi cer 10 Ownership structure and the share 14 Five years in summary 18 Goals and strategies 24 Business model and services 30 Markets 34 Risk and sensitivity analysis 42 Structural capital 46 Sustainable development 50 Process 52 Environment and quality 54 Personnel 60 Business area Infologistics 64 Business area User Manuals 74 Board of Directors' Report 82 Group income statements 88 Group cash fl ow statements 89 Group balance sheets 90 Changes in Group equity 92 Notes to the Group's fi nancial reports93 Parent company income statements 111 Parent company balance sheets 112 |
|
|---|---|---|
| Parent company cash fl ow statements 114 | ||
| Changes in parent company equity 115 | ||
| Notes to the parent company's fi nancial reports 116 | ||
| Appropriation of profi ts 122 | ||
| Auditors' report 123 | ||
| Corporate governance report 124 | ||
| Board of Directors 130 | ||
| Executive Management, auditors and nominating committee 132 | ||
| Group companies and addresses 134 | ||
| Elanders in the world 136 | ||
| Specifi c terms 138 | ||
| Defi nitions 139 | ||
In the Annual Report 2008 the Elanders Group is called Elanders. Swedish crowns in millions are abbreviated to MSEK. Numbers in parenthesis refer to the fi scal year 2007 and are expressed as MSEK if not otherwise stipulated. The information sources on the geographic markets abroad (Markets, page 34) are Elanders. All other comments and information concerning markets, competition and future growth are Elanders' assessments based primarily on material produced within the Group. If not otherwise stipulated the comparable fi gures for 2006 are reported the same way they have been reported in previous Annual Reports, i.e. including the in 2007 disposed operations in Kungsbacka. In the fi nancial report section of the Annual Report the fi gures are presented according to IFRS.
U Continued success in Germany and China that won new orders with NEC and Sanyo among others.
U Net sales increased by 8 percent and totalled MSEK 2,191 (MSEK 2,036).
1) There was no dilution during the given periods.
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Net sales | 2,191.2 | 2,035.6 | 1,988.2 | 1,952.6 | 1,780.4 |
| Operating profi t/loss | 16.0 | 226.8 | –8.8 | 121.8 | 137.1 |
| Pre-tax profi t/loss | –34.4 | 184.1 | –31.8 | 105.3 | 113.0 |
| Average number of employees | 1,809 | 1,579 | 1,490 | 1,478 | 1,434 |
| Earnings per share, SEK | –2.62 | 18.06 | –5.85 | 9.27 | 11.49 |
| Dividend per share, SEK | 0.001) | 4.50 | 2.50 | 2.50 | 2.00 |
1) Proposed by the Board.
The strategic journey Elanders has embarked upon – from a conventional printer to an infomedia company – has led to an organisation based on customers' different business logistics. The greatest market potential exists in just-in-time deliveries of user information and in the packaging of services that Elanders calls Master Vendor®, which concerns information logistics and where we take complete responsibility for printing with customised related services that entail getting the right information to the right recipient at the right time.
BUSINESS DEVELOPMENT INFORMATION
Infologistics handles customers' outsourcing activities, i.e. tailor-made publishing solutions that cover the customer's entire value chain. Content is created and structured in services upstream and after printing or publishing in another form and various solutions for packaging and spreading
the information are offered downstream. This customised service is called Master Vendor®. Expansion will be both up and downstream in the value chain and by increasing service content. Geographically Elanders will primarily grow in Western Europe and on the American continents.
User Manuals provides manufacturers of consumer electronics with user information and packaging with very short lead times, generally regarding after sales information. Handling many language and model versions requires advanced and quick information structuring upstream.
Production takes place close to the customer. The expansion in User Manuals will come through establishments close to global customers, foremost in Eastern Europe and Asia, normally via volume growth downstream in the value chain.
The story goes that the name Elanders is an homage of love to the farmer couple from Skåne, Elna Nilsdotter and Jöns Andersson, whose son Per (1831-1920) cleverly created the name from his parents' names, El and ander.
Per was a resourceful boy who learned to read at the age of four from his older brother. He later trained his reading skills by reading old letters, auction announcements and district court protocols. Per finished school at the age of 13 and started his own small school where he accepted 20 students for two shillings a week per student. After his years at the seminary in Lund he began his 17 year long career as a high school teacher in Marieholm. He received a pittance of SEK 400 per year plus free room and board. Per augmented this income by cleaning the school, shovelling snow in the cemetery and working as a navvy the summer the railroad was built. Playing psalms at a wedding paid one Swedish crown and reading or writing letters earned him half a Swedish crown.
In 1852 Per got married. They lived in one room and a kitchen plus the attic in the schoolhouse. The couple had 13 children, of which three died early. They also took care of four nieces and nephews for shorter and longer periods of time. They had little money and chairs were expensive so until around the age of 12 the children had to stand and eat during meals.
In 1870 the Elander family left their self-subsistent household in the countryside and moved to Gothenburg where they lived in several different apartments in the city district Majorna. This was probably so that their children could get a better education and Per received a job as a teacher there. He worked on the side as deputy headmaster and was responsible for the high school's summer school until the turn of the century.
Per received a royal medal for civic duty after 50 years of teaching high school before he retired in 1900. However, he continued to take on new jobs and died in 1920. He lived the last years of his life with his youngest son Otto (1867-1944). This young Otto emigrated 20 years old, after completing his math and chemistry studies in Lund, to the U.S. to make a better life for himself. Ten years later he returns home.
2008 was a turbulent year for Elanders, one in which the Group's different markets developed in completely different directions. We had our best results ever in Germany and China while in Sweden, Hungary and Italy profits dropped significantly when the automotive and consumer goods markets slumped.
"We have taken the necessary steps to get through troubled times. We put on the brakes going into the curve and are ready to step on the gas when the economy turns around," states Patrick Holm, President and Chief Executive Officer for Elanders AB.
Text: Jan-Olof Ekelund Photo: Sofia Brolin
WE MET AT ELANDERS HEADQUARTERS in Mölnlycke to look back on the tumultuous year 2008 and what actually happens to a Group that is affected early on by a downturn in the business cycle. Patrick Holm has just spoken with a customer and can confirm that problems for the automotive industry will continue. Elanders has, however, started better in 2009 than it ended in 2008. Customers clearly appreciate the complete communication and distribution solutions that Elanders can offer. Chinese operations in particular show good results and there is a strong demand for more exclusive packaging by, among others, consumer electronic producers.
"Even if 2008 is a lost year, the heavy problems have only affected a few markets. We've had a tough time in Hungary, Italy and Sweden but we've reacted quickly to adjust our operations to the considerably lower demand."
"Other units in Elanders have performed according to our expectations and Germany and China delivered their best results ever! It's also worth noting that we charged the cost of cutbacks to 2008 but in reality our business was profitable."
"A good cash flow gives us room to manoeuvre. We grew by eight percent in 2008 and we approached net sales of SEK 2.2 billion for the first time."
ELANDERS JUBILEE YEAR BEGAN on a positive note but then the trouble started.
"After a strong 2007 we had great expectations
10 s ELANDERS ANNUAL REPORT 2008
for 2008 and it started out exactly as we'd planned. Then we saw the first signs in April/May and after the summer there was a drastic slowdown. It was nearly impossible to predict the magnitude of the drop."
"The consumer electronic market, primarily in Eastern Europe, was hit hard and we were forced to close a unit in Hungary and write down the value of ready-made product stores in several units."
"In the beginning of autumn not only did sales in automotives fall but in mobile telephones as well. This is an industry which has always had stable growth, even when the economy was slow."
"Since we are in the front line of changes in the business cycle we knew what was coming and warned for lower profits for the year already in July. Then the bottom fell out of the automotive market completely and since it represents thirty percent of Elanders' net sales we put out a new profit warning in December and were forced to announce new redundancies before year-end.
THERE WERE THREE PROFIT WARNINGS altogether in 2008 and more than 250 people were given notice of redundancy. Does Elanders have the right cost structure now?
"We have carried out cost adjustments in all our units, but above all in Hungary and Sweden where we are dependent on how the automotive industry develops. There are no signs yet that there will be a quick turnaround for this important customer segment."
"The slump in the economy we are experiencing now and the diffi culty to get credit from banks and machine suppliers will accelerate the structural changes in the industry."
"Nonetheless I feel confi dent with the measures we have taken. Volumes in almost all our units are good and in some markets our order books are full." "Now we have to show we can deliver and I'm sure we will."
NEW BUSINESS OPPORTUNITIES open up in times of structural changes. Do you see any for Elanders? "Family owned companies in which many of the owners were born in the 40s are still typical for our industry worldwide. The slump in the economy we are experiencing now and the diffi culty to get credit from banks and machine suppliers will accelerate the structural changes in the industry. Many small and middle-sized players won't survive or will be bought out and this will
undoubtedly provide Elanders with good acquisition opportunities."
"A substantial portion of Elanders' customers are multinational companies with well-known, strong brands that purchase comprehensive solutions from us without any middlemen. More and more companies need to cut their costs and we can offer solutions that are effi cient, reach the right target group and save money."
"The trend of buying from larger printing companies that offer total solutions will grow stronger as a result of the structural changes necessary in the industry."
ELANDERS HAS WORKED with sustainable development for years and is considered the leader on environmental action in the graphic industry. Why is Elanders so committed?
"We believe in the importance of being a company that contributes to a better society and we work on several levels. One example is our facility in Malmö which became the fi rst Swedish climate neutral printing plant. Another example is the global general agreement we signed with UNI (Union Network International). The agreement guarantees international work standards in our workplaces and the employees' right to organise themselves on the markets where Elanders is active."
"We are pioneers when it comes to environmental investment in the graphic industry. We want to take the same leading role and set a new standard for the working environment and trade union rights. We have already received very positive reactions from both our employees and customers. I want our all our employees and customers to feel proud about working in and with Elanders."
THE RATE OF ACQUISITIONS has been quite high since the start of the 21st century and Elanders is represented on every continent except Australia. During 2008 you bought Seiz Printing Company in the U.S. How has that turned out?
"The fact that the American car industry came to a halt at the same time the country stood still because of the Presidential election has naturally had an affect on business. In actuality we are primarily suppliers to Daimler-Benz in the U.S. and not to the domestic brands. We appointed new management in the company and we are working on selling our American operations to our existing global customers. We expect this work to be fully effective during 2009."
"It's a big challenge to transfer Elanders' collective knowledge to the American printing industry so that we can win new market shares."
WHAT DO YOU THINK about development in the near future for the segment Automotive?
"We expect it to drop substantially in 2009 which will hit the Swedish operations hard since we are the only ones in our industry supplying Volvo, Scania and Saab with manuals. On the other hand we have adjusted our operations and if the decline isn't too steep we will have an advantage. If it's severe we will have to cut back even more."
"Elanders won't have the same downturn on the German market because besides manuals, we print car manufacturers' other marketing information, for example brochures and exhibition material."
"On top of that the German government has been quick to set in measures that will keep the sales of new and used cars on respectable levels, which is good for Elanders."
INDUSTRY & TRADE is Elanders' largest customer segment. How has it developed and what lies ahead?
"Manuals and packaging for the consumer electronic industry, which is one part of it, has been affected by the economic slowdown while the other part that produces catalogues and brochures for industrial and trading companies is not as sensitive to dips in the economy. The furniture, fashion and pharmaceutical industries still need catalogues and I'm pretty sure that
the mobile phone industry will come back strong with new models and platforms during the autumn of 2009."
"We see very positive developments in Industry
& Trade and will concentrate on three product segments. One is a combination of manuals and packaging that we have begun to print in the same machines. We are printing more and more exclusive packaging on our existing equipment. We are very successful with this in China where these kinds of packaging dominate orders and we are now going to spread these skills to our other facilities, starting with Hungary in 2009. First and foremost we will serve our customers that need even more exclusive consumer packaging. Presentation is becoming more and more important to attract customers and function as display units and window-dressing."
segment allows us to better utilise capacity in our machines."
ELANDERS' PRINTING PLANT in China is only a few years old but it has developed rapidly. Do you plan on further expanding in Asia, and in particular China? "Work on winning new customers in China has accele-
"A substantial portion of Elanders' customers are multinational companies with well-known, strong brands that purchase comprehensive solutions from us without any middlemen."
rated. Sanyo and NEC are Elanders' most recent major clients. In addition, we hope we can further evolve our production of packaging in China.
"It's diffi cult for Elanders and most everyone else in business to predict what will happen in 2009. What I can say for certain is that we are well-equipped and we put on the brakes in time going into the curve in order to be quickest out of it when the economy turns up. Our industry is affected early in the business cycle and we will be among the fi rst to move ahead when the economy moves on."
"The other two product segments are personalised
Elanders' B shares were fi rst listed on the Stockholm Stock Exchange on 9 January 1989. On 31 December 2008 the company had 9,181,666 B shares listed on the OMX Nordic Exchange Small Cap list under the ELAN B symbol. The development of the number of outstanding shares is shown in the chart on page 17.
The market value of B shares fell by 82 percent during 2008 while the general index of the OMX Nordic Exchange fell by 34 percent during the same period. During 2008 a total of 2,278,722 Elanders shares (3,382,919 shares) were traded, which is equivalent to an average trading rate of approximately 0.23 times (0.36 times). The total turnover rate of the OMX Nordic Exchange was 1.32 times (1.31 times) during the same period. The lowest share price was SEK 25.30 on 30 December and the highest was SEK 147.50 on 4 January. The fi nal share price in 2008 was SEK 25.50 (SEK 139.00), which means that Elanders' stock market value at yearend was approximately MSEK 249 (approx. MSEK 1,357).
At year-end there were 583,333 A shares and 9,181,666 B shares issued. Each A share is worth ten votes and each B share one. The shares' quota value is SEK 10. All shares are entitled to the same dividend. See the tables on the following page for share capital and voting disposition. The B share is covered by a liquidity guarantee and Remium AB is the guarantor.
There were 2,492 (2,586 shareholders) Elanders shareholders at year-end and 2 511 shareholders per 28 February 2009. The allocation is analysed in the tables on the following pages.
Regarding the dividend in years to come, the Board of Directors has taken into account the Group's development potential, its fi nancial position and the adopted key ratio goals relating to debt/ equity ratio, equity ratio and net debt/EBITDA. The objective is to have dividends follow the long-term profi t trend and, on the average, represent approximately 30 percent of profi t after tax.
Elanders' fi nancial information can be found at www.elanders.com. Questions can also be asked Elanders directly via e-mail at [email protected]. Annual reports, quarterly reports and other information can be requested from Group headquarters at telephone number +46 31 750 00 00, our website or through the above e-mail address. We are also happy to provide information about the many occasions when we present Elanders at activities that are arranged by shareholder organisations, Swedish and foreign stockbrokers and banks.
An analyst continuously monitors our development and regularly publishes analyses of Elanders:
Remium AB Equity Research Johan Edberg, telephone +46 8-454 32 38
| Ownership structure 28 February 2009 | A shares | B shares | Percent of votes | Percent of share capital |
|---|---|---|---|---|
| Carl Bennet AB | 583,333 | 1,671,456 | 49.98% | 23.09% |
| Investment AB Latour | 2,210,000 | 14.72% | 22.63% | |
| HQ Funds | 829,433 | 5.52% | 8.49% | |
| Skandia Liv | 603,341 | 4.02% | 6.18% | |
| Odin Funds, Norway | 507,453 | 3.38% | 5.20% | |
| Carnegie Funds | 415,204 | 2.77% | 4.25% | |
| SEB Funds | 231,973 | 1.54% | 2.38% | |
| Radar Fund | 142,200 | 0.95% | 1.46% | |
| The AP4 Fund | 118,000 | 0.79% | 1.21% | |
| Swedbank Robur Funds | 105,777 | 0.70% | 1.08% | |
| Other shareholders | 2,346,829 | 15.63% | 24.03% | |
| Total | 583,333 | 9,181,666 | 100.00% | 100.00% |
Sources: VPC and SIS Ägarservice
| Number of shares owned | Number of shareholders | Number of A Shares | Number of B Shares | Percent of share capital | Percent of votes |
|---|---|---|---|---|---|
| 1-500 | 1,874 | 306,546 | 3.14 | 2.04 | |
| 501-1,000 | 269 | 202,620 | 2.07 | 1.35 | |
| 1,001-2,000 | 180 | 256,062 | 2.62 | 1.71 | |
| 2,001-5,000 | 107 | 332,539 | 3.41 | 2.21 | |
| 5,001-10,000 | 30 | 209,955 | 2.15 | 1.40 | |
| 10,001-20,000 | 15 | 222,421 | 2.28 | 1.48 | |
| 20,001-50,000 | 15 | 453,463 | 4.64 | 3.02 | |
| 50,001-100,000 | 6 | 480,872 | 4.92 | 3.20 | |
| 100,001- | 15 | 583,333 | 6,717,188 | 74.77 | 83.59 |
| Total | 2,511 | 583,333 | 9,181,666 | 100% | 100% |
Sources: VPC and SIS Ägarservice
| Percent of | ||
|---|---|---|
| Percent | share capital | Percent of votes |
| Swedish institutions and investment companies | 47 % | 30 % |
| Swedish companies and private persons | 41 % | 62 % |
| Foreign institutions | 12 % | 8 % |
| Foreign companies and private persons | 0 % | 0 % |
| Total | 100 % | 100 % |
Sources: VPC and SIS Ägarservice
| A shares | B shares | Total shares | Share capital, SEK | |
|---|---|---|---|---|
| At Stock Exchange introduction in 1989 | 200,000 | 1,380,000 | 1,580,000 | 15,800,000 |
| 1991 Directed share issue to acquire Fabritius A/S in Norway | 252,000 | 1,832,000 | 18,320,000 | |
| 1993 Bonus issue 1:1 | 200,000 | 1,632,000 | 3,664,000 | 36,640,000 |
| 1997 Directed share issue to acquire the Graphic Systems Group | 650,000 | 4,314,000 | 43,140,000 | |
| 1997 Directed share issue to acquire Skandinaviska Lithorex | 250,000 | 4,564,000 | 45,640,000 | |
| 1997 Directed share issue to acquire Gummessons | 350,000 | 4,914,000 | 49,140,000 | |
| 1997 Rights issue 1:4 in connection with the acquisition of the Minab Group | 100,000 | 1,128,500 | 6,142,500 | 61,425,000 |
| 1998 Directed share issue to acquire the Skogs Group | 1,287,500 | 7,430,000 | 74,300,000 | |
| 2000 Directed share issue to acquire the shares in KåPe Group | 450,000 | 7,880,000 | 78,800,000 | |
| 2000 Directed share issue to acquire the shares in Novum Group | 490,000 | 8,370,000 | 83,700,000 | |
| 2007 Rights issue 1:6 in connection with the acquisition of the Sommer Corporate Media Group |
83,333 | 1,311,666 | 9,370,000 | 97,649,990 |
| Outstanding shares and share capital on 31 December 2008 | 583,333 | 9,181,666 | 9,764,999 | 97,647,990 |
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Profi t, SEK | –2.62 | 18.06 | –5.54 | 8.77 | 10.86 |
| Share price at year-end, SEK | 25.50 | 139.00 | 135.87 | 111.06 | 101.13 |
| P/e ratio | –9.7 | 7.7 | neg. | 12.7 | 9.3 |
| P/s ratio | 0.1 | 0.7 | 0.6 | 0.5 | 0.5 |
| P/ce ratio | 2.0 | 4.3 | 5.4 | 4.5 | 3.8 |
| Dividend, SEK | 0.001) | 4.50 | 2.36 | 2.36 | 1.89 |
| Dividend yield, % | 0.0 | 2.6 | 2.0 | 2.3 | 2.0 |
| Share price/equity, times | 0.3 | 1.6 | 2.2 | 1.5 | 1.6 |
| Equity, SEK | 89.88 | 88.54 | 62.80 | 72.00 | 64.00 |
| Risk capital, SEK | 92.96 | 90.99 | 64.60 | 78.20 | 70.50 |
| EBITDA, SEK | 12.50 | 32.65 | 25.10 | 24.70 | 26.60 |
| Operating cash fl ow, SEK | 22.24 | –24.12 | 15.90 | 2.40 | 7.70 |
| Average number of outstanding shares, in thousands | 9,765 | 9,537 | 8,855 | 8,855 | 8,855 |
| Turnover rate | 0.23 | 0.36 | 0.40 | 0.44 | 0.45 |
1) Proposed by the Board.
FIVE YEARS IN SUMMARY
2008. A major source of joy during our Jubilee Year was our operations in China which surpassed all expectations through the successful development of packaging production. The Group also did well in Germany, not least thanks to the acquisition of Mairs Graphische Betriebe which gave us access to new technology and important customers. Seiz Printing Co in Atlanta, U.S. was also acquired with the aim of creating a platform on the important North American market. The year, particularly the latter half, was characterised by a general downturn in orders from consumer electronics customers, white goods and automotives. This downturn is calculated to have charged the Group's results with about MSEK 75, above all in Sweden and Hungary. Business in the U.S., Poland and Italy did not meet expectations either. Measures were taken to adjust costs in Sweden and Hungary. Costs for these measures amounted to a total of MSEK 89.
Group net sales increased by 8 percent (1 percent not including acquisitions) and operating profi t was down by 93 percent (93 percent not including acquisitions).
2007. This was a mixed year for the business area Infologistics. Results in the British operations were better than expected owing to success in the automotive segment. The German Sommer Corporate Media operations acquired in January also surpassed expectations. The Swedish section of the business area had a diffi cult year and a program was launched to adapt capacity and coordinate production, sales and administration in one legal entity. This led to costs of MSEK 20 in the fourth quarter. The Hungarian operations in User Manuals had a very good year while the Polish plant struggled with production stops. Chinese operations were very successful during the year and expanded through the manufacture and print of packaging.
In addition, 80 percent of Artcopy in São Paulo, Brazil was acquired. Tax costs were reduced by MSEK 21.1 after Elanders won a tax case in the Swedish administrative court of appeal. Operations in Kungsbacka were sold according to plan in February, which did not affect profi t/loss and in December the property in Kungsbacka was sold generating capital gains of MSEK 40.6.
In comparable units Group net sales increased by 21 percent (3.3 percent not including acquisitions) and operating profi t in comparable units rose by 30 percent (4 percent not including acquisitions).
2006. Establishment in China was completed but orders from customers were delayed due to generation exchanges and operations fi rst reached planned production levels during the third quarter. However, expectations were then surpassed and operations in Beijing came close to breaking even for the year. The other operations in User Manuals, in Poland and Hungary, were very successful and once again surpassed expectations in both Net sales and profi t. Ope-
rations in Mölnlycke in Infologistics showed the highest profi ts ever due to successes with full-service solutions for larger customers in the segments Automotive and Industry & Trade. Losses in the operations in Kungsbacka increased due to pressed prices and lower volumes in Directories as well as lingering effects from the sweeping restructuring in 2005, which, among other things, had a negative effect on the company's marketing and production. At the end of the year a decision was made to review the consequences of shutting down the company and at the same time discussions were being held with a possible buyer of the operations. This resulted in the sales of the operations in February 2007, which led to total costs for write-downs etc. of MSEK 151 in the annual accounts of 2006. Not including the effects of operations in Kungsbacka, Group net sales rose by 4.8 percent and operating profi t rose by 23.6 percent.
2005. Group net sales grew organically by 5 percent. Operations in Mölnlycke fell into place well and met
expectations. All other Swedish Infologistics units were more prosperous than during the previous year.
The English companies stood still. Poland and Hungary continued to be very successful; both had all-time-high profi ts. Net sales in Infologistics increased by 11 percent, 5 percent of which was organic and operating profi ts rose by 23 percent. A new unit was established in Beijing which charged the business area's operating profi ts with MSEK 9. The problems in Kungsbacka grew and in the middle of the year a sweeping restructuring was initiated. The decline in profi ts was due to the problems in Kungsbacka and the cost of starting up in China.
2004. Group net sales rose by 3.8 percent, half of which was organic and half through acquisitions. In July Skövde Offset was acquired to supplement the plant in Falköping in organisation and marketing. At the same time AB Volvo's document and distribution unit in Gothenburg was acquired. The purchase sums of these two acquisitions are included in investments for the amount of
MSEK 56. In addition, a joint venture was started with Hansaprint Oy in Hungary to deliver digital four-colour print and logistic services to the segment Industry & Trade. Integration of operations that moved in to the Infomedia Centre in Mölnlycke at the beginning of the year was slower than planned and profi t developments did not meet expectations. In Newcastle a temporary drop in volumes in the segment Publishing reduced anticipated profi ts for the year. Operations in Poland, Stockholm, Kungsbacka and particularly Hungary surpassed expectations, while profi t/loss in all other operations was according to plan. Profi t/loss was recompensed by MSEK 10 through reversed write-downs of equipment brought back into use and MSEK 8 through capital gains from sold equipment and property. At the same time profi t was charged by adjustments in provisions for rental costs in Trelleborg, provisions for notices given in Kungsbacka and write-downs of shares in other companies to a total of MSEK 15.
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Net sales | 2,191.2 | 2,035.6 | 1,988.2 | 1.952.6 | 1,780.4 |
| Operating expenses | –2,175.2 | –1,808.8 | –1,997.0 | –1,830.8 | –1,643.3 |
| EBIT | 16.0 | 226.8 | –8.8 | 121.8 | 137.1 |
| Net fi nancial items | –50.3 | –42.7 | –23.0 | –16.5 | –24.1 |
| Profi t/loss after fi nancial items | –34.3 | 184.1 | –31.8 | 105.3 | 113 |
| Profi t/loss for the year | –25.7 | 172.2 | –49.0 | 77.6 | 96.2 |
| EBITDA | 122.1 | 311.4 | 222.2 | 218.6 | 235.8 |
All compared years are shown as they are presented in the Annual Report each year.
| 2008 | 2007 | 2006 | 2005 | 2004 | |||
|---|---|---|---|---|---|---|---|
| Cash fl ow from operating activities | 120.6 | 89.9 | 167.1 | 45.6 | 127.7 | ||
| Paid taxes | –31.7 | –32.3 | –20.8 | –44.7 | –21.7 | ||
| Investments | 14.5 | –402.5 | –72.7 | –89.2 | –105.4 | ||
| Operating cash fl ow | 217.2 | –237.8 | 138.2 | 17.5 | 68.1 | ||
| Change in net debt | 25.8 | 222.2 | –74.1 | 65.4 | –12.5 |
All compared years are shown as they are presented in the Annual Report each year.
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Operating margin, % | 0.7 | 11.1 | –0.4 | 6.2 | 7.7 |
| Profi t margin, % | –1.6 | 9.0 | –1.6 | 5.4 | 6.3 |
| Gross profi t/loss/Added value, % | 36.7 | 46.2 | 37.9 | 34.7 | 35.5 |
| Capital turnover rate, times | 1.0 | 1.1 | 1.2 | 1.1 | 1.1 |
| Equity ratio, % | 36.8 | 38.9 | 33.9 | 35.3 | 33.7 |
| Risk capital ratio, % | 38.8 | 40.0 | 34.9 | 38.4 | 37.1 |
| Interest coverage ratio, times | 0.4 | 5.5 | –0.4 | 5.5 | 5.5 |
| Debt/equity ratio, times | 1.0 | 0.9 | 1.1 | 1.0 | 1.1 |
| Return on equity, % | –3.0 | 24.2 | –8.2 | 13.2 | 18.9 |
| Return on capital employed, % | 0.9 | 16.0 | –0.7 | 10.1 | 12.2 |
| Return on total assets, % | 1.7 | 12.0 | –0.3 | 7.5 | 8.6 |
| EBIT-multiple | 68.2 | 3.6 | –204.5 | 13.6 | 10.9 |
| Average number of employees | 1,809 | 1,563 | 1,490 | 1,478 | 1,434 |
| Net debt/EBITDA, times | 6.9 | 2.6 | 2.7 | 3.1 | 2.6 |
All compared years are shown as they are presented in the Annual Report each year.
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Goodwill | 917.7 | 844.7 | 532.4 | 557.8 | 556.5 |
| Other fi xed assets | 660.5 | 546.7 | 410.6 | 588.3 | 553.5 |
| Inventory | 120.1 | 125.7 | 92.9 | 95.3 | 93.3 |
| Accounts receivable | 470.9 | 450.6 | 456.8 | 456.7 | 373.5 |
| Other current assets | 75.9 | 191.4 | 73.9 | 83.6 | 64.6 |
| Cash and cash equivalents | 141.7 | 65.2 | 74.5 | 24.9 | 39.7 |
| Equity, not including minority share | 875.6 | 862.3 | 556.4 | 637.8 | 566.5 |
| Minority share | 2.1 | 2.3 | 0.0 | 0.0 | 0.0 |
| Interest bearing liabilities | 985.1 | 882.7 | 668.5 | 637.8 | 644 |
| Non-interest bearing liabilities | 524.0 | 477.0 | 416.2 | 397.8 | 470.6 |
| Total assets | 2,386.8 | 2.224.3 | 1,641.1 | 1,806.6 | 1,681.1 |
| Enterprise Value | 1,092.3 | 2,174.8 | 1.797.7 | 1,652.9 | 1,497.9 |
| Risk capital | 907.7 | 888.5 | 572.1 | 692 | 624.4 |
| Capital employed | 1,721.7 | 1,682.0 | 1,150.5 | 1,306.6 | 1,170.8 |
| Net debt | 843.3 | 817.5 | 594.1 | 669.4 | 602.3 |
| Average number of outstanding shares (in thousands) | 9,765 | 9,537 | 8,370 | 8,370 | 8,370 |
All compared years are shown as they are presented in the Annual Report each year.
GOALS AND STRATEGIES
"Elanders will be an international leader and the most competent partner in infomedia and thereby attract customers, personnel and shareholders."
Elanders offers qualifi ed comprehensive services in infomedia, in other words the entire process for customers' information fl ows that contains a number of independent publishing steps. A unique combination of outstanding expertise in traditional graphic production, digital information management and logistics is the basis of the key concepts in our vision: international leadership, competence and partnership. This is also found in our core values; responsibility, innovation and comprehensive view.
"By combining advanced information technology with qualifi ed graphic expertise we will provide our customers with considerable added value."
Elanders combines modern information technology with solid graphic skills to create added value for our customers. Customers can reduce the number of suppliers they need for their publishing processes, providing them with a more effi cient workfl ow and simplifi ed management of internal and external communication and publishing. Added value can be summarised as relief for customers and the energy freed for use in their core business. We summarise our products and services in the Master Vendor® concept.
Elanders' external goals are shown in the table on page 28. In order to achieve our external goals operations must be guided by a number of internal goals. Our environmental objectives are described on page 56. Some of the most important internal measurements of these goals are:
U Added value and added value ratio
Elanders' strategies to realise our goals:
More and more of the total value in the publishing chain is created at the beginning and end of the chain along with process management and coordination. Elanders' strategic journey from a printing plant to an infomedia group is based on continuous expansion upstream and downstream in the value chain. Even future expansion will require further development of our new added value services. Expansion strategies balance between upstream and downstream expansion. Expansion toward the initial steps in the value chain (upstream), such as editorial services and information structuring, secures customer relationships in the long run. Rapid and profi table growth is achieved by expansion in the middle and end (downstream) of the value chain where printing and distribution are found. Expansion in the
business area Infologistics is both upstream expansion and downstream. User Manuals works primarily with downstream expansion and volume growth.
All these strategies are aimed reducing the customer's time-to-market, which has developed into the most crucial need in a world of greater competition.
Based on a careful analysis of the business processes, communication needs and future potential in different industries Elanders has focused its resources on selected customer segments where our expertise gives us an edge on the competition. In general these are customers in which we have been able to identify needs both up and downstream in the value chain and where Elanders has a dominant position and unique products:
Although the different business areas can have different criteria that affect their assessments all these segments require quick, fl exible and precise delivery and the ability to relieve one or more publishing problems.
Elanders' expansion upward and downward in the value chain primarily takes place by moving close to our customers, either through new establishments or acquisitions.
We even follow them abroad. Certain segments require close proximity to production units, consumer electronics is one, and in others being close to the headquarters or sales company is essential. Our establishments in Italy, packaging production in China as well as our acquisitions in Germany and Brazil are examples of this.
Elanders offers customers relief, freedom from care, effi ciency and room to focus on their core business. It requires knowing a great deal about their operations and business processes. We need to understand the conditions, problems and challenges they face as well
By combining advanced information technology with qualifi ed graphic expertise we will provide our customers with considerable added value.
Elanders will be an international leader and the most competent partner in infomedia and thereby attract customers, personnel and shareholders.
as knowing what expectations, demands and requests their customers have.
This is why we continually analyse general tendencies in our prioritised segments together with leading market analysts. By maintaining a continuous dialogue with our customers on how their publishing processes function on the whole and the needs they see in the future we can identify new needs and solutions. This allows us to become long-term and vital partners with our customers. In order to continually update our knowledge and skills in the fi elds our customers operate in we prioritise experience from selected customer segments when we recruit new personnel.
Elanders is characterised by a high level of professionalism which permeates the entire Group and which is continually fanned by management through incitement as well as recruiting and appointments. Most of the senior offi cers function in many ways as entrepreneurs and are given a great deal of freedom within the framework of their prime responsibility, which is to generate new, profi table business. Long-term and close relations
provide Elanders with a platform from which to continually develop new, unique services in collaboration with customers. Customer orders and actual projects dictate almost all product and service evolution. This is both instructive and effi cient for us and at the same time we have taught our customers to be on the cutting-edge of progress in publishing.
Elanders creates innovative solutions for customers all over the world. This know-how is very valuable. Elanders works actively to take advantage of it. Customer solutions are compiled in a database that is accessed through the Group's intranet. Elanders invests a great deal in extensive leadership development where important components are sharing experience and know-how. In addition, senior offi cers are continually educated in methods for packaging, marketing and selling service solutions. Master Vendor® is an example of a concept based on knowledge from the entire Group, packaged so that customers can clearly see how it creates added value for them. At the same time it is instrumental in organising internal development effi ciently and practically.
A measure of how attractive Elanders is as a customer, an investment object, supplier and employer is our capacity to fulfil the goals we have communicated externally. The table shows what has happened with the goals established in the Annual Report 2007.
Elanders has divided the long-term, external goals into operational, financial, growth and sustainable goals.
In the Annual Report 2007 it was believed that all the external goals would more or less be met during a business cycle. Elanders works continuously with goals and strategies normally formulated on a rolling three-year basis.
The market situation for the business areas is discussed further in the
section on Market on page 34 and strategies for growth under Goals and strategies on page 24 as well as on the pages concerning the three business areas on pages 67 and 77.
Operational goals are long-term and independent of business cycles while the financial and growth goals are set within the range of where Group performance should lie during a business cycle. The financial goals are based on the possibilities in the Group's current structure while growth goals consider new establishments, alliances, acquisitions, divestitures and other vital changes in Group structure. However, the long-term financial goals will not be lowered because of such changes.
| Goals in the Annual Report 2007 | Outcome | New goals |
|---|---|---|
| OPERATIONAL GOALS 1. Elanders will be an infomedia group with a balanced set of operations and a leading player in the geographical markets where the Group is active and in the prioritised customer segments the Group works with in these markets. |
The Group is a leader in Automotive in the Nordic region and Great Britain, in Industry & Trade in the Nordic region, in Publishing and the Public Sector in Sweden. In Germany the leading segments in the Group are in the Automotive and Service Sector. The segment Service Sector shows good growth, but the market shares are still relatively small. The group is a world leader in certain parts of consumer electronics sector in the Industry & Trade segment. |
Elanders will be an infomedia group with a balanced mixture of operations and a leader in the geographical markets where the Group is active and in the prioritised segments the Group works with in these markets. |
| 2. Master Vendor® will make up at least 60 % of the Group's total sales. |
Master Vendor® was 65 % (58 %) of the Group's total Net sales. |
Master Vendor® will make up at least 60 % of the Group's total sales. |
| 3. We will not grow at the expense of profit. |
Growth during 2008 stemmed from acquisitions. The acquired unit in Germany improved its profitability while the financial situation in the U.S. leads to a non-satisfactory profit for this year. Because of the situation on the market, particularly in the latter part of the year, the other units in the Group have not shown any growth, apart from China that has grown with continued profitability. |
We will not grow at the expense of profit. |
| FINANCIAL GOALS 4. The operating margin for the Group will be 8–12 % which for the business areas means: Infologistics 7-10%, User Manuals 10-15% |
Operating margin for the Group, before one-off costs, amounted to 4.8 % (11.1 %), for Infologistics to 2.5% (5.6 %) and for User Manuals to 12.6% (22.6 %). |
Operating margins for the Group will be 8–12 % and for the business areas: Infologistics 7–10 %, User Manuals 10–15 %. |
| 5. A return on capital employed of at least 14 %. |
Return on capital before one-off costs amounted to 0.9 % (16.0 %). |
A return on capital employed of at least 14%. |
| 6. An equity ratio of at least 30 %. | The equity ratio was 36.8 % (38.9 %). | An equity ratio of at least 30 %. |
| 7. SA debt/equity ratio of less than 1. | The debt/equity ratio on the balance sheet date amounted to 1.0 (1.0). |
A debt/equity ratio of less than 1. |
| 8. Over time investments will not exceed depreciation or 5 % of net sales. |
Investments in production etc. were 57% (183%) of depreciation and 2.7% (7.6%) of net sales. |
Over time investments will not exceed depreciation or 5 % of Net sales. |
| GROWTH GOALS 9. Net sales and operating profit will increase annually 8–12 % which for the business areas means: Infologistics 7-10 %, User Manuals 15-20 % |
Net sales increased by 6% (21%) and operating profit before one-off costs decreased by 44% (increased by 30%). Net sales for the business area Infologistics increased by 5 % and operating profit fell to negative. Net sales for the business area User Manuals increased by 18 % and operating profit decreased by 68 %. |
Net sales and operating profit for the Group will increase annually by 8–12 %, which for the business areas means: Infologistics 7–10 %, User Manuals 15-20 % |
| 10. At least half of our expansion will be through organic growth. |
Net sales in 2008 grew by 1.0% (3.3%) organically and operating profit decreased by 93 % (increased by 4%) organically. |
At least half of our expansion will be through organic growth. |
| SUSTAINABLE DEVELOPMENT GOALS 11. See environmental and quality goals for 2008 on page 56. |
See environmental and quality goals for 2008 on page 56. | To set goals for sustainable development and clarify Elanders' internal processes. |
1. Elanders uniquely combines graphic expertise, a broad range of services, international presence and a strong customer base. Therefore when we say Elanders will be the leader in the segments that we actively work on within a certain geographical market it is a perfectly feasible goal. In Sweden Elanders works on all the prioritised segments and Elanders is the leader in all of them except the Service Sector, which is a relatively new but nonetheless successful sector for the Group. The graphic industry is, if possible, even more fragmented outside of Scandinavia and Great Britain and it is primarily in the segments Automotive and Industry & Trade that Elanders has a reasonable chance to become leaders in during the next five years in geographical markets outside Scandinavia. Infologistics will be responsible for this in Western Europe in Automotive, Industry & Trade and the Service Sector. User Manuals is expected to develop a leading position in Industry & Trade through its presence in Eastern Europe and Asia.
2. The Master Vendor® share of net sales is vital for the Group to fulfil its profitability goals. Printing production on its own will be under a very strong price press for the foreseeable future. This is why it is necessary to integrate printing with related services, which is described in more detail under Business Model and services on page 30. We set the goal at 60 percent mainly because, especially in Publishing and the Public Sector, we will still be selling printing without very many related services for some years to come.
3. Group operations must be able to bear the cost of new establishments and acquisitions over time without endangering the fulfilment of our long-term profitability goals.
4. The operating margin goals for the business areas refer to operating profit after allocating group-wide expenses that amount to 1 percent of Group Net sales. The goals are expressed within the range operating margins are expected to vary during a three-year period and cover different points in business cycles. These goals are based on the possibilities in current Group structure and do not take into consideration any new establishments, acquisitions or other changes in Group structure. The customer segments in Infologistics do not show any particular growth, which means that Elanders' growth must come from increased market shares, which in itself can have a dampening effect on prices
and thereby margins. However, in User Manuals the Group is primarily focused on the section of Industry & Trade that manufactures consumer electronics. Rapid growth is expected in this sector in the foreseeable future. It is therefore easier to maintain our competitive capacity without any noticeable effect on margins. The operating margin for the Group before one-off costs was 4.8 percent. The goal of 8-12 percent is therefore still realistic in the long term, but the present situation in the world economy and the insecurities in the present year need to be considered in this context.
5. Return on employed capital before one off costs was 0.9 % (16.0). The goal of 14 percent is therefore still realistic in the long term, but the present situation in the world economy and the insecurities in the present year need to be considered in this context.
6. The equity ratio goal has been achieved and does not need amending.
7. The debt/equity ratio should be less than 1.
8. To keep the debt/equity ratio and the return on employed capital within the targeted framework investments cannot exceed depreciation or 5 percent of net sales over time. The goal is therefore still realistic in the long term.
9. Growth goals are based on the different business areas' various prerequisites, which have been described in the discussion on operating margins above. Not including one-off costs operating profit decreased by 44 percent. The goal is still realistic in the long term, but the present situation in the world economy and the insecurities in the present year need to be considered in this context.
10. The amount of acquisition-related growth is not relevant per se. The goal has been formulated to clearly define our level of ambition concerning organic growth which is consequently 4-6 percent.
11. 11 The environmental and quality goals are found on page 56.
Elanders creates value for customers by rationalising and relieving parts of or their entire publishing process. Customer value is increasingly created by offering services rather than the actual printed matter, although it's still the most important service. This means the focal point must lie on the customer's processes and not solely on the actual printing. We can create more value for customers and ourselves by taking over more of their processes and performing more related services. It is therefore important to form a relationship where we progressively understand the customers' business and can identify new needs.
The Group's business consists in part of services such as database solutions or printing production alone and in part a combination of services, which often includes printing. The latter contains a number of services brought together in the concept Master Vendor®. Master Vendor® is Elanders' name for taking total responsibility for printing with tailor-made related services that save customers' time and money. Master Vendor® helps customers deliver the right information to the right place at the right time. For the customer it means that through a single contact at Elanders all their printing logistics will be taken care of, no matter how extensive they are or in how many languages or in which media the information will be published in. Elanders develops Web-based order interfaces, one-to-one marketing solutions and handles all production and distribution in the most cost effective way. Besides user information, we also produce packaging in smaller, specialised series for manufacturers of consumer electronics. It saves another step in the purchasing process, in other words it's one-stop shopping. We also make sure the information is delivered to the place the customer stipulates – in the right version and at the right time. Elanders will also store the printed matter not immediately delivered for
FIGURE 1. Master Vendor® share of net sales continues to grow.
SALES IN THE SEGMENTS 2008
FIGURE 2. The Service Sector, Automotive and Industry & Trade can be considered industrial customers which represented 81 % (75 %) of Group net sales in 2008, while the remaining 19 % can be said to be other customers.
distribution at a later date. For a car-maker that needs an instruction manual we have to produce various language versions in the right amount to the right cars in the right order at the right time on the assembly line. Or maybe the manual must be sent to the local market so that the importer can equip it with locally adapted information. Master Vendor® makes things simple, trouble-free and relieves while saving money on information management. It also ensures quality by requiring fewer suppliers.
Through it Elanders becomes a strategic partner instead of a mere supplier. Master Vendor® accounted for 65 percent of Group net sales in 2008 (58 percent).
At the moment Elanders has focused on fi ve main segments; Automotive, Publishing, Industry & Trade, the Public Sector and the Service Sector. From a business point of view, and somewhat simplifi ed, these segments can be separated into two main groups; industrials and other customers. Publishing and the Public Sector make up the other customer group and the remaining three segments are industrials. Allocation of Group net sales between the segments is shown in fi gure 2 on page 31. For industrials the cost of producing printed items is usually minor in relation to the total cost of the products or services they provide. Although the tendering process is handled very professionally, purchasing printed matter is not part of their core operations but a necessary part of their publishing need.
Many industrial and service companies need to publish and distribute a great deal of information externally and internally but they have come to the conclusion that it is more effi cient to let a professional supplier handle most of the publishing process. The customer comes with their requirements, ideas and ordering competence and the rest of the value chain is taken care of
by specialised external players – as few as possible.
A large part of the Group's Master Vendor® business is done in this segment group, which also offers the greatest opportunities for growth. The other customers are characterised by the fact that the cost of printing an item is a substantial part of the total production cost. Printed matter procurement is an essential part of a publisher's core operations and they have experienced and highly specialised personnel that are very familiar with the graphic industry and printing prices.
Therefore publishers have historically only been slightly interested in purchasing publishing related services. Recently however, many different publishers have shown a growing interest in such services. Elanders' deliveries to publishers are usually printed matter production only. Elanders' goal is to continue to develop affi liated services together with publishers but also offer production in lower cost countries.
Printing production as a sole service is basically a commodity under constant price press. It is hard to motivate a higher price with graphic quality when all the players in the industry have access to the same equipment and competence. Price differentiation must therefore be built on other things that are not strictly part of the printing process such as a multinational presence, delivery precision, uniform quality, fl exibility and quality in our relationship with the customer. The price for a printed item that isn't too complicated is given based on how much prepress work is required, paper quality, bulk (number of pages), number of colours, type of binding and number of copies. The price is usually given for the entire edition. Price per piece falls as the number of copies rises. For an experienced purchaser it is a relatively uncomplicated procurement where the
bids are easy to compare with the current rates on a transparent market.
Digital printed matter usually has a price per piece based on the cost per "click" in the often rented digital presses.
The market for Master Vendor® business is a completely different story. Each job is unique in size and content. Here it is more a matter of the customer analysing all their publishing costs, including wages for their own personnel, storage and obsolescence and seeing how much they can save. In this case, quality is speediness, coordination and simplifi cation and reduction of time-to-market. Not only printing but any or all of the processes in the value chain can be included in the deal which can even include a customer outsourcing entire departments involved in publishing-related operations. The price is often given as price per piece for a publication that can be ordered as needed. In some cases the price per piece depends on different kinds of transportation and packaging.
If the product isn't stored the customer pays for each order made on the order sites on the Internet, extranet or intranet. The price per piece often refl ects the cost of constructing databases for managing and structuring
texts, images and other information along with the cost of actually producing the item. In some cases the Group provides databases or services in process management and logistics but it isn't involved in the printing process. In such cases prices are based on the amount of time spent, licenses and maintenance, storage room, pallet space or the like.
Elanders' current business is moving increasingly in the direction of Master Vendor® with a rising level of service content. Although this business generates printing jobs, prices are usually based on the added value created for customers and not cost of printing per piece.
The Group handled about 138,000 orders (approx. 167,000) in 2008. The average value of an order was SEK 16,000 (SEK 12,000) divided between around SEK 25,000 (approx. SEK 10,000) in Master Vendor® orders and all other orders approx. SEK 9,000 (approx. SEK 18,000). Around 88 percent (around 82 percent) of Group revenue in 2008 was conventional print production, either as a sole product or part of a Master Vendor® deal. Other services made up the rest.
In 2000 the world market for graphic production amounted to nearly SEK 3,000 billion. During 2008 it will reach some SEK 4,000 billion and in 2011 it will rise to around SEK 4,500 billion. This means that the average annual growth during 2000–2008 was some 4 percent while growth during 2007–2011 is calculated at approx. 3 percent. Growth is driven mainly by Asia. In Europe and North America relatively little growth is predicted except for in digital print, while offset will probably decline. Commercial printing and packaging print made up just over half respectively a third of the global market in 2008. Some of the clearest trends are:
reduce time-to-market. Companies have an increasing need to communicate actively and personally with customers (so called one-to-one marketing), which creates a greater demand for personalised digital print connected to interactive Web interfaces.
We recognise the global trends in the markets the Group is active in today and a few more in our prioritised segments:
Since the top year 2000 annual consumption of commercial printed matter in Sweden in the segments Elanders is active in has dropped by SEK 1 billion to around SEK 16 billion in 2008. Printed matter consumption is turning more and more towards four-colour and digital printing. Editions are shrinking but the bulk and publishing
frequency of an item is increasing. Demand for printed matter from industries shrunk towards the end of the year, but the public sector was stable.
We see changes in the industry due to structural trends rather than economic fl uctuations, while the present downturn in the economy will probably increase structural changes. The service content in graphic production is growing and customers more frequently seek low cost alternatives to printing. Demand for full-service solutions and logistics remained stable throughout the year. Interest in rationalising publishing processes and reducing the number of suppliers or outsourcing entire processes to an external part continued to be high.
There are a number of uncertainties in 2008 associated with the effect of developments in the economy and interest rates on employment and demand. We expect a decrease in demand from the section of industry that caters to the consumer market. Investments in the industry in Sweden have on the average MSEK 300 been per year the last three years, which is less than a third of what is was during the top years around the millennium. Elanders' average investment during the past three years has been close to MSEK 110 and on the average 84 percent of it has been abroad. In conclusion, Elanders will grow in Sweden in the coming years primarily by capturing market shares, increasing service content and being able to offer production in low cost countries. Furthermore, our global presence is particularly interesting for international companies that have their headquarters in Sweden.
The total European graphic market amounted in 2001 to SEK 1,320 billion and was expected to grow to approximately SEK 1,500 billion in 2008. This means a yearly average growth of about 2 percent. In 2011 the market forecast is for only slightly more than SEK 1,500 billion. Western Europe still represents almost 90 percent of the European market and the largest market Western European market is Germany, which in 2006 was calculated at SEK 300 billion. Other important Western European markets are Great Britain (SEK 275 billion 2006), France and Italy (SEK 190 billion each in 2006.) The total Eastern European market was calculated at SEK 76 billion in 2001 and SEK 102 billion in 2006.
It is expected to reach SEK 129 billion in 2011, which entails a much higher growth rate for offset than in Western Europe.
The future looks bright in the long run but during the
next few years political instability, low disposable incomes and other risk factors will make maintaining current growth rates in several Eastern European countries a real challenge. Russia is the single largest market, followed by Poland and Czech. A large part of this growth, which is calculated at 11 percent annually until the year 2011, will come from product and service catalogues – a product which has been a very successful area for years in Western Europe but which has not yet had a breakthrough in Eastern Europe.
Offset volumes in Eastern Europe in the foreseeable future will increase at the same rate as digital printing. A consolidation of the industry in Eastern Europe is probable, partly in the form of mergers and partly through companies being bought up by Western European players. Elanders units in Eastern Europe, in addition to being a vital low cost alternative for Western Europe, are a source of good growth through captured market shares and the fact that the markets are growing.
Digital printing is rapidly becoming the most important technology in the trade, putting pressure on conventional players and abetting the successive disappearance of offset equipment from the Western European market. The digital market in Europe was estimated at SEK 112 billion in 2005 and is expected to reach over SEK 130 billion in 2010, which is an annual growth rate of a little more than 3 percent. Offset print is expected to have an average annual growth of just below one percent during the same period. Companies have realised how vital it is to be able to communicate quickly and personally with their markets, which fans an increasing interest in digital print technology that makes quick, on-demand and personalised communication possible and therefore lessens the inconvenience of the evermore crucial factor of time-to-market. Digital technology makes it possible to use variable text and images at the same time. A quality barrier still exists but developments in digital print technology are moving forward more rapidly than in offset technology. It is, for instance, easier to control colour management in digital print. Furthermore, digital printing is the only technology that enables effi cient orders through a Web-interface for products that are created by the customer in templates, such as offi ce material, photo albums, etc.
The following trends have been noted in Europe:
Despite the low growth in population in the area, the number of households and management positions as well as the amount of disposable income for education and information is on the rise. This stimulates the demand for newspapers, magazines and books. Many graphic companies are not profi table, which opens the door to further structural measures and underlines the importance of size and fi nding a niche. The present downturn in the economy will probably increase structural changes.
In conclusion, this is also a fi ght for market shares and for Elanders, the most important competitive advantages the company has are its ability to offer global solutions through a customised combination of information structuring, digital and conventional printing production as well as distribution and the capacity to print packaging.
The total graphic market in China was calculated to be SEK 300 billion in 2008. With an annual growth of 10 percent during the next few years it is expected to reach SEK 415 billion in 2011. Almost 75 percent of the market is in south and eastern China. Although there is no clear picture of the competition it is believed that there are close to 180,000 printers in the country. In relation to the number of inhabitants it does not, however, seem like very many and it would appear that most of Chinese printing production is focused on product information and trade dressing rather than newspapers, magazines and books.
China's popularity with the Western graphic industry has grown and many are establishing companies there while the Chinese are concentrated on export. Everything suggests that China will be the world leader offshore supplier of printed matter to Western Europe and North America. The attitude towards digital print is positive in China but growth has only been around 5 percent annually. A clear trend is the development of franchise chains for digital printing. In general, the country's infrastructure and limited access to the latest technology is a barrier, which can dampen growth during the next few years. However, digital print is expected to constitute around 14 percent of the Chinese market in 2010.
Elanders' establishment in China creates good possibilities for the Group to position itself in this market as well, which is believed to be the quickest growing market in the world during the next few years.
The graphic market in the U.S.A. was an estimated SEK 1,000 billion in 2000. It has grown at a moderate average rate of some 2 percent annually since then to
DIGITAL PRODUCTION is, next to packaging print, the fastest growing segment in the European market, but it still only accounts for some 8 percent of the total market. Therefore digital printing has a great long-term growth potential. The possibility to create photo prints and photo albums from digital image material via Web sites and so called kiosks is expected to result in rapidly growing demand for digitally produced photographs and printing material.
just under SEK 1,200 billion in 2008.
The U.S. market is only expected to grow by a further percent per year to just over SEK 1,200 billion in 2011. The industry has been consolidating in this mature market for many years but it is still fragmented and the 50 largest players have no more than 30 percent of the market share together. Digital print, which makes up 10 percent of the market today, is rapidly growing and is expected to increase twice as fast as offset in the near future. Elanders' growth in the U.S. will primarily stem from deliveries to the Group's existing and potential global customers.
The Latin American market has grown from SEK 145 billion in 2000 to SEK 200 billion in 2008 and is expected to land just under SEK 300 billion in 2011. The two largest markets are Brazil and Mexico, which together are expected to represent 80 percent of the entire Latin American market in 2011. Books are 60 percent of the Latin American market but packaging print is driving the market as well. The market in Brazil was estimated at SEK 90 billion in 2008. The Brazilian market is
expected to grow by a further 40 percent per year to reach SEK 120 billion in 2011. The developments in Brazil and other Latin American countries create a growing demand for educational material and magazines and the rising living standard keeps domestic consumption thriving and stabilises the demand for vehicles and consumer electronics.
As a result of Brazil's total economic growth the graphic industry is advancing towards distributed print where content is created and structured in the big cities and then transferred electronically to be digitally printed in remote places all over the country. The Latin American market is also under consolidation and Elanders' growth is expected to come from captured market shares and market growth.
It's diffi cult to present a comprehensive picture of the competition the Group meets in its different operations. It varies between different segments, geographical markets and types of production.
It also varies with shifts in the value chain, upstream and downstream, that arise in connection with our
expansion. The graphic industry looks pretty much the same in most countries. There are thousands of small, family printers that only offer conventional printing. There are just a few groups the size of Elanders in each country. Several of them are not commercial printers. They are publishers or newspapers with in-house printing that sell their overcapacity on the market.
JMS Mediasystem and Strålfors (The Swedish Post Offi ce) are the major companies the size of Elanders in Sweden. JMS Mediasystem nowadays is primarily
involved in newspaper printing and therefore competes less and less with Elanders.
In commercial printing we meet them mostly in the segments Industry & Trade, Publishing and the Service Sector. They have also specialised in comprehensive solutions for retail, which is not one of Elanders' prioritised areas.
Sometimes we compete against Strålfors (The Swedish Post Offi ce) in bidding for big projects (segments Industry & Trade and the Service Sector) that contain, for
| THE COMPETITORS | ||||
|---|---|---|---|---|
| JMS Mediasystem | Edita (SE och FI) inkl Citat |
RR Donnelley (US) | Strålfors Svenska AB | |
| Elanders segments where we meet |
Industry & Trade Service Sector |
Industry & Trade Service Sector |
Industry & Trade | Service Sector |
| Major strengths | Full service solutions Web offset Digital print |
Offset print Digital print Distribution Communication |
Global Web offset Digital print |
Document fl ows Smart cards Logistic services |
| Concentration | Covers the retail trade with direct mail, distribution and marketing material. |
DM/DR solutions Marketing material/ communication. |
Focus on printing books, maga zines directories, ads and labels. Distribution services also. |
Covers document fl ows with as sociated logistics. Acquired by the Swedish Post Offi ce 2006. |
| Net sales MSEK | 771 | 1 100 | 78 328 | 2 108 |
| Pre-tax profi t MSEK | –10 | 351) | 615 | 60 |
| Financial fi gures for | 2007 | 2008 | 2007 | 2007 |
| Estimated market share in Sweden |
<5 % | <10 % | <5 % (Europe) | <10 % |
| Elanders Estimated market share in Sweden |
<10 % | <10 % | <5 % (Europe) | <5 % |
1) Refers to operating result
example, digital printing and document fl ows. Elanders has an advantage with its unique graphic expertise and access to effi cient offset production. We are the absolute leaders in after sales information to major industrials like car-makers (Automotive).
In Automotive abroad our competition is usually customers' internal units for publishing and local, smaller printers. Elanders has a head start through its size, capacity, technology and long experience. In educational material (Publishing) we run into a number of commercial printers but Elanders is the market leader in the Nordic region. We are leaders in Sweden in the Public Sector segment thanks to assignments from the Swedish Parliament and the government but we have competition from Edita and Intellecta. Once again capacity, technology and long experience are our greatest competitive edge. We are practically the only infomedia company in Sweden that can cross country borders to provide large companies in Automotive, Industry & Trade and the Service Sector with full-service solutions that contain both offset production and other services in the value chain. In the Nordic region we fi nd Stibo in Denmark and Hansaprint and Edita in Finland. The later also includes the marketing communication company Citat. Stibo is in the vanguard of information structuring (chiefl y Publishing, Industry & Trade). Hansaprint has a highly modern production of magazines (Publishing) and manuals (Industry & Trade). Elanders has come the farthest in internationalisation and can offer publishing in low price countries. In Great Britain we meet companies like Pindar in the segments Industry & Trade, Publishing and the Service Sector and Wyndeham Westway in Automotive. In Germany
we run into companies like Infowerk, Victor Bück and Bosch Druck in Automotive and Industry & Trade.
In our international expansion together with industrial groups, particularly in just-in-time production of manuals and other after sales information, we do compete with RR Donnelley and Xerox but our main competitors are an endless number of small printers that on their own cannot handle the needs of global customers. In our expansion upstream we meet, among others, technical informers like Semcon and Sörmans, profi le and advertising agencies, communication fi rms like Citat, translation companies, photo agencies, Web fi rms and providers of business and publishing systems. Downstream we mainly run into companies in logistics and supply chain management. All the major management consultants and several IT companies work, for example, with process management. Elanders has the advantage of its graphic expertise and with our broad customer base we cover the entire value chain. In the packaging industry we meet Stora Enso, Frontpac, SCA, Inpac and others. You will fi nd further descriptions of our competitors on pages 64 and 74, in the sections concerning our business areas.
If it was historically diffi cult to assess market shares in the graphic industry it certainly isn't any easier now that developments have moved towards differentiated products with various related services. Estimating international market shares is quite simply impossible. The structure of our competitors is far too fragmented.
The table on page 40 shows some of our major competitors in an attempt to gauge their strengths and shares in mutual segments and geographic markets.
RISK AND SENSITIVITY ANALYSIS READY FOR QUICK ADAPTATION
Printed matter will continue to grow as a bearer of information in coming decades although to a lesser degree as time passes. We believe an increase at the rate of 2–4 percent annually is plausible.
Printing capacity in the Western Europe and North America will exceed demand for some time, which will keep printing prices for printing as a sole product low. New players enter the arena to increase the content in their services from their traditional positions in the value chain. Elanders is in the vanguard of change with a broad range of services and customer steered product development. Growth in offset print will take place in Eastern Europe and Asia, while the rest of Europe and North America will decline to a certain extent. Digital print will be the source of growth in these countries. Elanders' position as a major digital player in Europe and our growing offset capacity in Eastern Europe and Asia is right in line with these developments.
The greatest business cycle sensitivity is in Group operations that supply printed matter and other services to the consumer goods industry as well as advertising fi nanced products to publishers without many supplementary services. These volumes are mainly delivered to the Automotive and Industry & Trade segments. We counteract this by broadening our service to customers in the form of Master Vendor® and by offering production in low cost countries if customers prioritise price over delivery times. Other units supply customers that are relatively unaffected by business cycles such as publishers of educational material, business-to-business and the public sector.
PERSONNEL represents the largest share of Elanders' operating costs in 2008, while the cost of electricity was less than 1 percent. (The fi gure shows how costs in the items Costs for sold products and services, Selling expenses and Administrative expenses are allocated in the different kinds of costs.)
In the segment Publishing growing competition from low cost countries is a structural threat. Increasing our ability to offer production from these countries is crucial to the future of Elanders. In the meantime, it's necessary to continually rationalise and raise effi ciency. Even if this is traditionally harder, it's possible to raise the level of service content as well. Our work to convert production to printed matter with better profi tability continued during the year. It is also a matter of having a broad range of products that include related services and assisting customers to become more effi cient in their publishing processes and reduce their time-to-market. Full-service solutions of this kind are less sensitive to volume and price deterioration. During the two year period ahead this work will be one of the Group's most prioritised areas.
A thorough account of Elanders' competitors is given on page 40 as well as for each business area on pages 71 and 79.
The greatest fi nancial risks are exchange risk, interest risk, fi nancing risk and credit risk. The fi rst three are handled centrally by the parent company's treasury and fi nance function while subsidiaries primarily deal with credit risks.
Elanders runs into an exchange risk in two ways: through export sales (transaction exposure) or when converting net profi t and net assets from foreign subsidiaries (translation exposure). Elanders' net infl ow of foreign currency consists primarily of EUR, CNY, GBP and PLN. Only contracted orders, assets and liabilities are included in transaction exposure. In accordance with the Group's fi nancial policy expected and budgeted fl ows are not normally hedged. Contracted orders are normally hedged at 80 percent if the time point of the fl ow will occur after a year. The reason for this is that there is room for certain volume deviations within the framework of the contracts. Assets and liabilities (mainly accounts receivable and payable) are hedged at 100 percent, along with contracted purchase and sales orders where delivery will take place within the year. At the moment forward exchange contracts are the only instrument used.
A change in the currency rate up or down by 5 percent in EUR (SEK 0.55) would affect pre-tax profi ts by MSEK 2 and in other currencies by MSEK 4 without forward exchange contracts. Existing forward exchange contracts per 31 December 2008 are reported in note 19 to the fi nancial reports. The translation exposure of net assets in foreign subsidiaries is sometimes hedged through a currency mix in the loan portfolio.
Interest risk is defi ned as lower profi ts caused by a change in interest rates. Most of the Group's loans are fi nanced on a fl oating interest rate, primarily in SEK. A change in the interest rate up or down of one percentage unit would affect Group profi t by MSEK 8, during a 12 month period.
Financing risk is defi ned as the risk of it being diffi cult and/or expensive to fi nance operations. Therefore the Group has made sure it has several sources of credit that have made credit commitments. In February 2009 the Group signed new fi nancing contracts that run until February 2010.
Credit risk is handled by the subsidiaries that are close to customers under the supervision of the Group's treasury function.
Credits are systematically monitored and followed-up. The majority of the Group's customers are large, wellknown companies, authorities and organisations. The Group took out credit insurance to protect against large, unforeseen credit losses. Credit losses in 2008 totalled MSEK 3.
During 2008 the Group's ten largest customers represented some 37 percent (32 percent) of net sales and the 50 largest customers stood for 64 percent of net sales (58 percent), which is shown divided into market segments on the diagram on page 31. At the beginning of 2008 the Group had around 3,800 active customers.
The risk that the Group will suffer a major stop in operations is minimal. The Group's production units are normally compatible and can help each other if there are any hitches in operations.
Elanders' most important input goods is paper. It represents approximately 18 percent of operating costs. The Group consumed some 51,000 tons of paper during 2008. The Group protects itself in part against price fl uctuations through a paper price clause in contracts with our customers.
Direct personnel costs make up around 32 percent of operating costs, which means that changes in the Group's health ratio has a direct effect on profi ts. Developments in the Group's health ratio are presented on page 62.
The Group consumes around 30 GWH of electricity annually, of which some 11 GWH in Sweden. The risk that fl uctuations in the price of electricity will have a negative effect on profi ts are minimised by active risk management where some of our future need is guaranteed at
SEASONAL VARIATIONS IN ELANDERS' MSEK sales have pretty much followed the same patterns the past few years. Close to 46 % of the Group's net sales is generated in the segment Industry & Trade where, in particular, sales in consumer electronics is highest right before summer and at Christmas, which is why the second and fourth quarters together still represent 53 % of net sales. The fourth quarter is the strongest with 28 % of the net sales.
a certain price. This takes into consideration seasonal variations and utilises the instruments available on the Electricity Exchange in Norway. The cost of electricity was under 1 percent of operating costs.
Disputes can arise in the Group's day-to-day business. Elanders believes no such dispute has or will have important consequences for the Group's fi nancial position. In order to minimise the risk of disputes Elanders normally uses the contracts prepared by our trade organisations. For example, ALG 02 is applicable to printed matter and the contract conditions for consultation services are written by the Association of the Swedish IT and Telecom Industry. The Group's insurance program contains global liability insurance that, among other things, covers general liability, product liability, crime fi delity and limited protection against environmental damage. The Group also has liability insurance for members of the Board and offi cers.
The business risk in operations is also associated with the human factor, criminal acts or catastrophes that because of fl aws in insurance protection, systems and procedures the risk for damages was not eliminated or deviations were not discovered. The size of the Group and the fact that Executive Management is composed of members that come from Group operations which they have profound insight into are the key factors counteracting business risks in Elanders. All Group operations are represented in terms of responsibility in Executive Management, which meets and communicates regularly. Executive Management systematically exchanges and evaluates operative and fi nancial information. As the
Group grows we are intensifying our efforts to establish common Group policies and procedures. The essential ones are presented in the section on Structural capital on page 46.
Below is a summary of an analysis of how some of the variables described above would have affected Group results after net fi nancial items in 2008 if no measures such as hedging or resource adjustments had been taken. Each variable has been treated individually as long as the others remain constant. It is assumed that a change in Net sales will affect the value added on the margin which thereafter will presumably fall straight through the income statement. A change in the cost of paper is multiplied with total paper costs. A change in personnel costs is multiplied with total personnel costs. Regarding sick leave costs, it is assumed that all employees contribute the same value added and that the change in sick leave affects those not present who are not substituted. A change in the price of electricity is multiplied with the total cost of electricity and a change in the interest level is calculated on the previous year's average net debt. The analysis does not pretend to be exact. It is merely indicative and aims to show the most relevant, measurable factors in this connection.
| Variable | Change | Effect on profi t/loss after fi nancial items, MSEK |
|---|---|---|
| Net sales | +/– 1 % unit | 10.0 |
| Paper cost | +/– 1 % unit | 1.5 |
| Personnel cost | +/– 1 % unit | 6.1 |
| Sick leave | +/– 1 % unit | 1.5 |
| Electricity cost | +/– 1 % unit | 0.1 |
| Interest level | +/– 1 % unit | 6.7 |
STRUCTURAL CAPITAL
Elanders' intellectual capital primarily consists of assets that are not found on the balance sheet and which can be divided into human capital and structural capital. Human capital is presented in detail on page 60 under Personnel. You could say that structural capital is what is left when everyone has gone home and encompasses, among other things, methods and processes, systems, product development and brands.
Both conventional graphic production and other services require methods, processes, procedures and policies that effectively support business in accordance with the goals and strategies set out. There are well-documented methods for product manufacturing and service production in the operating units. The Group also has general and joint policies for personnel, the environment, the treasury function and fi nance. There are uniform procedures for reporting and business analyses as well.
The main process at Elanders is handling an order that results in production and delivery of printed matter and services. There are several processes that support the main process; the most important of these are developing services, marketing and sales, purchasing, human resources, logistics, technology, quality and environment, IT, communication and fi nance.
Every operative unit has a managing director or a divisional manager that is ultimately responsible for ensuring that the main process results in complete customer satisfaction. Responsibility for making sure support processes function effi ciently lies also with the operative units but they are also supported and monitored by Executive
Management via certain members of business area management that have a special responsibility or through networks that report to Executive Management. The work of these networks is also a vital contribution to consolidation at Elanders.
Developing services, marketing and sales are supported and monitored by the different segment teams and business area management. They coordinate sales and marketing activities so that responsibility for customers is clearly assigned and marketing measures are effi cient and focused. Marketing is also supported by a sales support system used by the entire Group (CRM system) under the supervision of the Group marketing network. Elanders develops products fi rst and foremost by collaborating with our customers to produce solutions for an effi cient publishing process. This also requires concentrating and packaging supplementary services or full-service solutions so that their usefulness is made clear to the customer.
Master Vendor® is a good example of a concept that clarifi es how a number of services and products, separately or in combination, create added value while internal development can be effi ciently and appropriately organised. Almost all development of products and services comes from close collaboration with our customers, based on an order and connected to a customer project. Expenses for development activities in 2008 were slightly more than MSEK 40. The many solutions we have developed for our customers over the years have been systematically collected in Elanders Publishing Platform (EPP) under the supervision of the product councils. EPP is Elanders' instrument to ensure that the Group's development of publishing tools proceeds in a structured and professional manner. The mission of development operations is to supply the Group's customers with systems and solutions for effi cient information management and publishing in different media and reports to management in Infologistics. It is also responsible for documenting processes and tools effi ciently to guarantee a high service level and facilitate a continual exchange of knowledge in the Group as well as monitoring external factors and furnishing the necessary know-how in this area. Development operations participates on a regular basis in different company project groups in order to continuously detect customers' changing needs in new solutions. Adapting publishing tools is carried out together with customers by employees and account managers in the operative units within the framework of EPP. The Group does not
have any patents and has not applied for any. The Group does however own the source codes to a number of EPP systems that manage our customers' publishing.
Marketing is handled by the heads of marketing in each country and steered by the guidelines given by business area management and Executive Management.
Elanders is a major player and an attractive partner for the trade's global suppliers. It puts us in a position to infl uence and change – a position we take utmost advantage of. Purchasing is handled through a network of a number of purchasing groups, each one focused on a specifi c product and service area. Their work is coordinated by the head of purchasing for Infologistics who reports to Executive Management. Our ambition is to wherever appropriate successively move away from local supplier contracts with the intention of signing agreements with global players as so-called "preferred suppliers". In addition to lower prices it also entails substantial logistic advantages. Structured procurements with RFI, Request for Information and RFQ, Request for Quotation, following a model from the automotive industry, are applied.
Elanders has a HR function that acts with a cohesive expertise which provides structure and coordination in personnel matters in the Group. The purpose of the function is to handle personnel matters consistently according to Group and Executive Management directives. The function is headed by the HR manager in the Group's largest unit. The daily work with human resources, described in detail on page 60, takes place in the operative units and is supported by the HR function, which is also responsible for the Group's leadership development. Furnishing competence is also supported by the segment teams and operative supervisors that, based on business plans, identify available and relevant expertise as well as the need for development and supplements in the various segments and units. The Group's intranet is used avidly and systematically to exchange knowledge and experience.
Technology is managed by specialists in the operative units. The specialists' experiences and expertise is shared through databases connected to the Group's intranet and is regularly used by those responsible for purchasing and who manage the Group's supply of production equipment.
All larger operative units in Elanders are certifi ed according to ISO 9001 and ISO 14001. Our work with quality and environment is carried out by a joint Group council where quality and environmental coordinators from the different operative units have a well developed, documented and systematic collaboration. This is described in detail on page 54. Executive Management decides the objectives for their work. Fulfi lment of environmental objectives is measured on a regular basis in the Group environmental accounts, which can be seen in summary on page 55. We are in the process of organising a similar harmonisation of our quality work, which at the moment is primarily targeted, carried out and followed up in the operative units within the framework of the quality management systems that all operative units follow. This work is described in detail on page 57. An important activity is the evaluation of adaptation to ISO standards for commercial offset print, which includes control of colour management in order to avoid the risk of unpredictable printing results. This standard will be progressively implemented in all suitable units to guarantee even and good quality when assignments are moved between production facilities in order to be produced as close as possible to the recipient.
IT is a crucial success factor at Elanders. IT supports our main process and most of our support processes and plays a central role in the development of our business and our internal processes. The Group's general IT strategy is that the systems used in the operative units should support and be suited to the work done there. Common applications are only used for Group infrastructure, groupware, intranet and operative and consolidated fi nancial reporting. Nonetheless, as existing systems are replaced Elanders strives to install uniform applications for internal administrative routines. Work with IT matters in the operative units is supported by a Group IT council. The council consists of representatives from the Group's operative units and the Swedish IT Manager together with the Chief Financial Offi cer form the goals for this work. The council which convenes when needed at meetings where minutes are kept, works to improve and coordinate the Group's IT. The council is also responsible for, in cooperation with a member of the purchasing network, procuring hardware and applications. During 2008 the IT council worked in different constellations to prepare for the installation of a common business system for the Group. During the year the Group's direct costs in this area totalled some MSEK 12.
The Group's internal communication takes place primarily through the intranet. Group news is published on the intranet and sent via e-mail. There is a position for internal and external communication in the parent company. Information from all of the Group's units is gathered there and distributed to all personnel in the form of printed as well as digital newsletters, personnel magazines and information via the intranet. Our external communication is handled by the parent company, where the CEO and CFO are responsible for investor relations and contacts with media. The communication function is in charge of the Group's profi le management, external website and intranet together with a network of those responsible for the Web in the operative units.
The Group's fi nancial work is carried out in the operative units where the person responsible is almost always a member of the unit's management. The Group's staff in the treasury and fi nance function is in charge of managing Group fi nances and risks, correlation and analyses of fi nancial reports, preparing fi nancial reports for Executive Management, the Board and the market as well as developing policies for fi nancial governance of the entire Group. Financial work is also conducted in a network where Group controllers meet to exchange experiences and advance common issues. The goals of our fi nancial work are decided by the Board's auditing committee, Executive Management and the Chief Financial Offi cer.
As Elanders develops the company's brand and image play a vital role as the messenger conveying the services Elanders offers. With the assistance of external specialists the Group regularly conducts surveys concerning our brand with the objective of analysing our position. We also carry out customer surveys. The brand and customer surveys have so far proven that customers believe Elanders stands for competence, strength and reliability. This means that our brand has the strength and credibility to be a successful messenger of the changes connected to our vision of Elanders being an internationally leading infomedia group.
International concern for carbon dioxide emissions and their effect on the climate puts pressure on companies to adapt their operations to upcoming emission restrictions and customers' demand for sustainability. At the same time a number of serious social problems in different countries have been spotlighted. This has contributed to why companies must motivate their presence and show that they follow certain basic humane rules, a Code of Conduct. This growing community interest concerning sustainable development puts greater demands on Elanders.
Elanders affects society in both equality and environmental issues and our employees and others are interested in knowing more about the company's ambitions in these areas. Elanders has for many years worked actively and intensively to reduce environmental impact. Certifi cation of forest products and working for positive environmental effects through lower transportation are a few examples.
An increasingly important question is how Elanders plans to progressively adapt the company to future, more stringent emission regulations and higher ethical standards. Another aspect is how this process can be advantageous from a competitive perspective for a graphic company that was certifi ed early on.
Investors have been showing a growing interest in this question lately because the stock market sees a clearer parallel between how a company handles sustainability matters and its long-term fi nancial results. There is a risk of being dragged through the mud, if for example a subcontractor runs into bad will problems, to the point of having to move production to another country and the enormous expense that entails. Therefore investors need guidance from the companies they invest in as to the most likely risks and the monetary effects of them.
In other words the need for Elanders to specify the sustainable goals established by the company and which processes and policies Elanders plans to use to achieve these goals is much greater than before.
Elanders is serious about its environmental work and continually strives to improve processes, production methods and products to reduce environmental impact. We will meet or exceed legislation and other regulation.
Elanders will be known as a serious supplier and partner with broad expertise in infomedia. This means our focus is on our customers' and other interested parties' demands and needs as well as on continuously developing our processes, products and services in order to achieve total quality – which means we perform correctly and effi ciently at each stage of the process.
Elanders is continually faced with higher demands to specify which sustainability goals it has established, and which processes and policies Elanders plans to use to achieve these goals.
Work on a structured process for sustainability, which was initiated in 2008, has unfortunately not come as far as planned. Naturally part of the reason for this is the current economic slump which began to affect Elanders early in the summer of 2008. The company was forced to prioritise and this meant that process work had to take a backseat.
However, the survey phase is expected to begin in serious in 2009 and in the coming years Elanders plans to work on risks and goal formulation concerning the environment, ethics and social issues as well as report on the goal achievement progress.
The process will begin with a survey, in which Elanders will make a general assessment of the challenges and
opportunities the company faces in different sustainable aspects. A detailed analysis will show whether or not Elanders is facing any major problems such as planned legislation in a country concerning chemical emissions or media scrutiny of certain customers regarding ethical issues.
After that the company can prioritise a number of sustainability issues that will be focused on in the coming years. When these are paired together with Elanders' general business goals, such as long-term profi tability and growth, Executive Management can make a feasible assessment of when the company can or must act.
Based on this cohesive view Executive Management can adopt sustainability goals and decide which measures and policies to use. For example, how will Elanders make sure that our Code of Conduct is actually followed in production units the world over? When, in time, must they all have complied? What reserve plan does Elanders have to meet production demands if a subcontractor does not fulfi l these requirements?
Several areas regarding sustainable development that we can infl uence were identifi ed in 2008. We will take the next step in this process in 2009.
Our ambition is in future reports to describe how far Elanders has come in the sustainability process and give an idea of the focus areas that lie ahead. It is important to mention here that although we have not yet gone through the structured sustainability process there are a number of sustainable projects in all out units in the Group. Here are a few examples:
Unfl agging environmental work requires a common focus throughout the organisation. The company's business concept and vision are the framework for our environmental and quality work and they are an integral part of the Group's strategy and operations.
Environmental and quality work go hand in hand. The overall goal is to minimise the company's environmental impact without affecting the quality of the fi nished product. Reduced paper waste, reduced greenhouse gas emissions, less use of solvents and lower energy consumption are just a few of the tools that Elanders uses to reduce its ecological footprint.
Each company in Elanders has appointed someone responsible for environmental and quality work. On Group level the work is carried out by a group consisting of the same staff. This group meets twice a year to discuss goals for the coming year, audits, legislation, ecolabels, reporting systems for deviations and costs, assessments of new chemicals, quality and environmental management systems, internal education and more. Summaries of the meetings are then sent on to Executive Management.
Expertise and experience in graphic technology and production, the environment, quality management, chemistry, the working environment, environmental legislation and business systems can all be found among the members of this group. To achieve the best results the members of the group contact each other for aid and support in their work.
Each subsidiary is responsible for its own work with environmental and quality matters and they are therefore handled in different ways in different countries. This
is due to both cultural and legal differences. For example, the limit of how much solvents can be consumed before a permit is required is considerably lower in Sweden and Great Britain than it is in Germany, 25 tons respective 200 tons. Emissions of solvents are higher, albeit decreasing, in Poland, Hungary and China than they are in the other subsidiaries. One reason for the higher emissions is older equipment.
Sommer Corporate Media was certifi ed according to ISO 14001 in 1 February 2008. Elanders Artcopy will also be certifi ed according to ISO 14001 shortly. Elanders Seiz is now certifi ed according to ISO 9001 and Elanders Artcopy is expected to be certifi ed in autumn 2009.
There is a strong tradition of environmental consideration at Elanders which was refl ected in the fact that Elanders' environmental reports won the listed companies' competition twice in the beginning of the '90s. The growing awareness in society concerning environmental matters has infl uenced Elanders' work considerably. The company is continuously setting goals and performing follow-ups in order to reduce emissions, paper waste and energy consumption.
Elanders has progressively broadened its environmental scope to where it now includes our customers' choices of printing and distribution solutions in which minimal environmental impact is becoming an increasingly common request. In order to assist in choosing the right paper the most commonly used paper types by Elanders in Sweden have been evaluated regarding the emissions generated by them.
Above all, customers' interest and demand for FSC has grown enormously. FSC is an international organisation
CLIMATE NEUTRAL Our operations in Malmö are currently classifi ed as climate neutral. The company has reduced carbon dioxide emissions by 45 percent and is currently compensating for the remaining emissions by supporting a project in India promoting small-scale production of electricity from agricultural waste. The operation has completely shifted to hydroelectric power and in 2008 all company cars and transports were changed to more environmentally friendly alternatives.
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Environmentally related expenses, SEK '000 | 5,276 | 5,037 | 3,361 | 3,885 | 3,244 |
| Waste expenses and treatment | 4,051 | 3,846 | 1,754 | 2,103 | 1,994 |
| Ecolabelling fees, net1) | 141 | 104 | 158 | 311 | 107 |
| Fees, insurance & carbon dioxide tax | 1,084 | 1,087 | 1,449 | 1,471 | 1,143 |
| Environmentally related income | |||||
| Paper waste | 5,922 | 6,614 | 10,975 | 11,081 | 9,325 |
| Environmentally related investments | |||||
| Investments for the purpose of minimising environmental impact or conserving resources |
48 | 238 | 3,605 | 301 | 1,176 |
1) Up until 2007 only fees related to the Swedish ecolabel the Swan were presented. Currently FSC and PEFC are also included, so the sums cannot be compared.
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Solvent consumption, kilos per MSEK in turnover | 115 | 107 | 95 | 85 | 90 |
| Solvent consumption per ton product | 6.3 | 6.5 | 3.8 | 2.9 | 2.7 |
| Electricity per ton product | 800 | 848 | 823 | 685 | 706 |
| Hazardous waste, tons | 473 | 383 | 339 | 313 | 310 |
| Hazardous waste, kg per ton product | 12.9 | 11.4 | 5.6 | 5.4 | 5.3 |
| Proportion of vegetable cleansers | 1.4 | 1.9 | 1.9 | 6.1 | 6.5 |
Key ratios show the use in all Elanders production units of certain factors with an environmental impact. New acquisitions or newly started companies are shown in their entirety from the year they were acquired. However, the plant in China isn't included in the figures for 2005 despite the fact that operations started on a small scale in Dec. 2005. Elanders Tryckeri which was divested in February 2007is included in the report up to and including 2006.
| 2008 | 2007 | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|
| Financial effect of the change in paper waste through lower purchase costs, (SEK '000) |
7,127 | 3,996 | –3,862 | –5,669 | –395 |
| Paper waste compared with previous years, (%) | –8.0 | –5.1 | 3.5 | 5.8 | 0.5 |
that promotes environmentally friendly and sustainable forestry. Volvo recently took the decision to FSC certify all their drivers' manuals, which Elanders produces for all their markets. Estimated paper consumption is over 250 tons annually.
Elanders is also an active environmentalist close to the ground. In 2008 the company became a Nordens Ark sponsor for the endangered fi re-bellied toad.
and certifi cation from Sustainable Forestry Initiative (SFI), among other things.
| GOALS FOR 2008 | ACHIEVEMENT OF GOALS 2008 | GOALS FOR 2009 |
|---|---|---|
| Develop measurement of inadequate quality on Group level to include the number of customer complaints and delivery precision as well as update the definition of costs due to inadequate quality. |
All customer claims are measured, but the conditions for me asuring delivery precision vary from company to company. The goal has been partly met. |
All companies will work towards reducing costs due to short comings in quality. |
| In 2008 Elanders will formulate strategies for environmental and quality work and long-term goals. |
The goal has been met. | |
| All companies will work with goals to save energy. | The goal has almost been met. All large companies except one work with energy goals. |
All companies will work with saving energy and/ or car bon dioxide reduction goals. |
| Half of Elanders' production units will calculate their carbon emissions in 2008. The rest will follow in 2009. |
The goal has not been met. | Half of companies will calculate their carbon dioxide emis sions. |
| The 5S concept will be fully implemented in Sweden in 2008. Routines and guidelines will be drawn up to imple ment 5S in the rest of Elanders in 2009. |
Implemented in Sweden and other companies have started – the goal has been met. |
All companies will work along the lines of the 5S concept. |
| Percentage of environmental company cars (according to each country's definition) shall be at least 80 % within 2 years. |
The goal is to met during the period 2008 to 2010. Pre sently true for 50% of cars. |
The goal remains, valid 2008-2010. |
| All production companies will offer FSC certified printed matter by 2010. |
||
| All companies will work with goals to increase customer satisfaction. |
| 5S TECHNOQUE FOR CONTROL AND ORDER 5S is a Japanese step-by-step technique that results in a well-organised workplace complete with visual controls and order. The 5S's are the foundation for workplace improvement. Seiri: Sort Seiton: Set in order Seiso: Shine Seiketsu: Standardise |
|
|---|---|
| Shitsuke: Sustain Purpose: Safer and more effi cient production as well as less waste in the form of: sTime spent looking for something sUnnecessary make-ready time sExcess inventory sDefects/paper waste sUnused fl oor surface sTurnaround time |
fi nancing a project in India for small-scale production of electricity from agricultural waste.
The amount of solvent consumption per ton product is decreasing in spite of an increased demand for digital printing and generally smaller editions, which results in more frequent cleaning and increased use of solvents. The reduction is a result of better routines and a shift towards less volatile alternatives.
The amount of hazardous waste increased because of equipment moves which led to extra oil changes and discards in connection with these moves and 5S work.
The International Printers Network, IPN, is a global network for graphic companies that Elanders belongs to. It was created to improve worldwide distribution of information and documentation. The purpose is to learn from each other and also help each other locally produce and distribute printed matter in order to reduce transportation and storage. Around 190 organisations are members of the network located on six continents. The regulations for membership and cooperation are rigorous in order to guarantee the quality of work methods, information transference and products.
This collaboration has given Elanders contacts which make it possible to, for instance, reduce transports. Printing assignments have been produced in, for example, U.S.A. for local delivery, instead of printing in Sweden and transporting the material. In addition to reducing transportation this drastically reduces lead times.
The Group strives to achieve positive effects for the environment through cooperation in other areas as well. For example, Elanders is the one of the companies that together with the City of Gothenburg awards the Göteborg Award - an international prize for sustainable development. In 2008 the award was divided into three equal parts between the American environmental scientist Theo Colburn, EU commissioner Margot Wallström and Jan Ahlbom together with Ulf Duus, both from Gothenburg.
Elanders also holds seminaries and fi lm showings for their customers concerning environmental issues.
No major incidents or accidents have taken place this year.
In the coming years all Swedish units will calculate their total carbon dioxide emissions. More and more fi ne-tuned tools are being developed. In cooperation with Chalmers, Elanders is developing a tool that can calculate the carbon dioxide emission for each individual product, something that will substantially improve the ability to perfect production and minimise emissions. The tool is expected to be ready for use in 2009.
Increasingly stringent quality demands are being made by Elanders' customers, above all in the automotive and manufacturing industries. Information in manuals is more and more customised to individual customers and just-in-time deliveries are becoming increasingly
important in order to avoid delays in production lines. The downturn in the economy has further increased demands on production.
In order to be an international leader and the most competent partner in infomedia Elanders must be a serious supplier with broad and solid expertise. Therefore we strive to achieve complete quality by continually developing our products, services and processes. This means that our procedures throughout the entire work process, from purchasing to production to distribution, are coordinated to create products and services of the highest quality.
Shortcomings in quality are measured in terms of complaints, the cost of internal deviations and the cost of customer credits and discounts as a result of quality defects.
Quality work well done is a competitive edge and therefore an essential part of what we offer our customers. Elanders' defi nition of quality can be found in its quality policy created in 2005.
The work to train personnel in using 5S techniques in Elanders Ltd, Great Britain and Elanders Sverige AB has continued. When sources of errors and problem areas have been identifi ed and eliminated Lean Production, in which production processes are optimised, will be initiated.
Hungary has begun to work actively with 5S in production and all employees have gone through training. Checklists for daily revisions have been developed from a PDCA (Plan-Do-Check-Act) perspective. All deviations are logged. If possible, deviations are corrected instantly, otherwise they are listed on activity plans. Weekly summaries and meetings are held with personnel and all results are visualised on 5S boards.
Elanders Ltd, Great Britain, has started working towards certifi ed graphic production according to a standard that
ensures product quality over time. At the same time they have been actively working with colour management.
Elanders' system in Sweden to regularly measure customer satisfaction with consequent follow-ups is currently fully functional. The survey is done by an external company that measures attitudes of Elanders' existing customers through a Web-based questionnaire. The choice of customers is based on those that have been invoiced for SEK 50,000 or more in the previous month. The results are presented per location and are used to decide on improvements such as system development and planning. Each divisional manager presents and follows up the results internally. Measuring takes place regularly in 6-7 weeks' intervals.
Customers' still have an overall high opinion of Elanders, albeit somewhat lower than last year. Areas that need improving are information on deliveries, handling complaints and information to customers.
Elanders will work on continuous improvement, control and follow up of our suppliers.
Greater demands from our customers concerning the environment and quality means there will always be some area we can improve. We will continue implementation of 5S at Elanders Ltd, Great Britain and Elanders Sverige AB targeting clear visualisation of our work. Elanders Sverige will also continue to coordinate a common operational system.
The Group will also work on becoming even faster at responding to deviations and complaints as well as establishing a homogeneous glossary throughout the Group. Standardised terminology will improve the dialogue between co-workers in different units and countries in matters of quality and the environment. Certifi ed graphic production can be expanded to other companies.
In order to participate in the program it is necessary to calculate CO2 emissions with a structured and limited method. It is also necessary to set goals and take action in order to reduce the company's impact on the climate.
THE EU FLOWER: EU's ecolabel for paper, paint, hotels etc. Criteria for printed matter is under development and a fi nal draft exists.
Certifi cation for responsible forestry. Forest products made, entirely or partly, from lumber from FSC certifi ed forests may be FSC labelled. This is also possible for printed matter.
An ecolabel for printers that meet criteria concerning choice of paper, ink and chemicals as well as procedures in production and waste management.
Printing Manufacturers Association in Germany has developed a "climate calculator" that calculates CO2 emissions for each individual product. Elanders invests in certifi cates that support of projects working with recycled energy. These certifi cates are later offered to our customers.
At Elanders employees are encouraged to take responsibility and their entrepreneurial skills are an important part of company culture. Our personnel's feeling for business creates a market driven organisation focused on profi tability and growth.
Elanders' company culture is well established and provides employees with good guidance in their daily work. Our common value base focuses on taking responsibility, commitment and entrepreneurship. Leadership that motivates and inspires employees' individual freedom and desire to take personal responsibility is a necessity to creating and stimulating a company culture like this. Employees are active in the company by, for instance, giving their suggestions for improvement. They always do their best and take responsibility for customer deliveries. The delegation of responsibility and authority is an important motivation and it promotes the high level of mutual trust that exists in the organisation.
Our employees' attitude often plays a vital role in why customers and suppliers choose to work with Elanders. The Group's personnel are well known for its expertise in creating new, innovative solutions that meet customers' needs and challenges. Elanders' employees strive continuously to fi nd cost effective solutions in production and logistics as well as in administration that benefi t all parties.
Understanding Elanders' culture and work methods is spread to Group units in different countries foremost by an exchange of employees. When we start operations in new countries, like in Hungary and China, personnel from existing units are there to teach and discuss things with local employees. The management in our newly established subsidiaries is normally Swedish in order to make sure that operations are run in harmony with our company culture and values.
Our company culture, values and work methods are also promoted through the intranet, the personnel magazine Inside that comes out three to four times a year and a monthly letter. These channels are vital culture bearers within Sweden and internationally and contribute to the transparency Elanders endeavours to achieve.
During 2008 negotiations with Union Network International (UNI), an international organisation for unions with a total of 20 million members, were initiated. The negotiations resulted in the signing of a general agreement on 1 January 2009, which gives the union, among other things, the right to organise all of Elanders' units worldwide and prohibits employers from using child and forced labour. This agreement makes Elanders the fi rst multinational Swedish company in the graphic
industry to have this kind of global accord.
At the same time an EWC agreement was signed, which gives employees in Elanders' companies operating in EU the right to jointly form an Elanders European Work Council. This EWC will be an inter-professional organ for all employees in Elanders' European companies. It will serve as Executive Management's link to the employees in international matters concerning communication, consultation and negotiations.
A similar inter-professional organ, Elanders Svenska Företagsråd (SFR), has also been established for Elanders' Swedish units.
On 1 January 2008 all Swedish companies in the Group, with the exception of Elanders Infomedia Systems, were merged in Elanders Sverige AB. The merger resulted in Sweden's largest and most multi-faceted infomedia company. Naturally the consolidation required hard work and many challenges, but after the fi rst six months of 2008 the new organisation is in place and fully functional. A great deal of effort has gone into uniting all the companies in a common work method and fi nding the best way to move jobs between units.
Our decentralised organisation is fl exible. The closeness created between leadership and other employees shortens decision-making and promotes direct communication.
In Sweden the merger has provided employees with greater opportunities to practice in other production units. The company is actively searching for new synergy effects; in part opportunities for personal and business development and in part more cooperation between the units. Distance project work is just one of many examples of the new possibilities.
Elanders' employees are its sharpest competitive edge. Therefore the Group strives to be an attractive employer that offers its employees substantial opportunities for personal development through internal and external education in technology and sales as well as by being able to advance at Elanders.
Both internal and external recruitment are crucial tools to attract and keep capable personnel. Internal positions are announced on the intranet and employees are encouraged by their supervisors to choose an internal career. The external recruitment is facilitated by the fact that Elanders is active in Qualifi ed Professional Education and provides apprentice training within graphic process education and fi nishing. Trainee spots are offered in administration and sales for students from, for instance, the Försäljningsakademien and the IHM Business Group.
As Elanders has branched out into more countries the
| HUMAN CAPITAL RATIOS | ||
|---|---|---|
| Percent | 2008 | 2007 | 2006 |
|---|---|---|---|
| Total sick leave | 3,3 | 3,2 | 4,9 |
| Short-term sick leave | 1,7 | 1,6 | 2,1 |
| Long-term sick leave | 1,6 | 1,6 | 2,1 |
| Sick leave, men | 2,8 | 1,9 | 4,0 |
| Sick leave, women | 4,1 | 3,7 | 6,8 |
| Sick leave, employees under 30 years | 3,8 | 3,6 | 5,7 |
| Sick leave, employees 30-49 years | 2,8 | 2,9 | 4,6 |
| Sick leave, employees 50 years and over | 3,8 | 3,9 | 5,4 |
The total sick leave is given in percent of employees' total ordinary working hours. Long-term sick leave is absence during a continuous period of 60 days or more.
| 2008 | 2007 | 2006 | |
|---|---|---|---|
| Average number of employees | 1,809 | 1,579 | 1,490 |
| Number of employees per 31 December | 1,812 | 1,723 | 1,553 |
| Average age | 39.7 | 39.2 | 42.0 |
| Personnel turnover, % | 12.6 | 11.6 | 9.6 |
| Revenues per employee, SEK | 1,211 | 1,300 | 1,334 |
| Added value per employee, SEK | 675 | 748 | 765 |
| Operating profi t/loss per employee, SEK | 9 | 144 | –6 |
| Academic education more than 2 years, % | 14.7 | 10.7 | 10.5 |
| Upper secondary education, % | 36.4 | 58.6 | 59.6 |
| Other education, % | 51.1 | 30.8 | 29.9 |
| Competence development cost per employee, SEK |
2.4 | 3.2 | 3.6 |
At the beginning of 2008 there were twenty policies and guidelines. The company works continuously to implement values, policies and guidelines among employees and different groups through education and information.
| Alcohol and drug policy | Working environment policy | Policy of Authorisation |
|---|---|---|
| Car policy | Financial policy | Health policy |
| Information policy | IT policy | Equality policy |
| Quality policy | Leadership policy | Personnel policy |
| Environment policy | Pension policy | Policy for the use of Internet and E-mail |
| Rehabilitation policy | Travel policy | Secrecy and silence policy |
| Code of Conduct | Congratulations policy |
opportunity to make an international career has increased. In 2008 a document, Elanders' International Assignment Policy, was prepared and employees are encouraged to work abroad.
The Group profi ts signifi cantly from spreading knowledge about the Elanders culture among companies. For the individual it is an excellent opportunity to develop his or her career, experiences and knowledge, something that is benefi cial for all in the end.
Low absence due to sickness is highly benefi cial for both employees and companies. Elanders began measuring health ratios in 2002 and we continue to improve them through the work we do in this area every year. The goal for the Group's health ratios is at least 95 percent and in 2008 it was 97 percent. Absence due to sickness is reported country for country.
Elanders works continuously with physical fi tness in part through a Health Group made up of representatives from different units. The Health Group arranges various activities like seminars connected to diet, health, stress and physical well-being. Interest in these seminaries is usually considerable. The Health Group also arranges physical activities like the "Can do competition", a reoccurring exercise challenge between employees. In 2008 the challenge was doing activities as many times as possible, which generatedbetter chances to win health promoting prizes in a drawing at the end of they year.
Elanders works extensively to prevent stress related illnesses, through for example, workplace adjustments that facilitate returning to work after convalescence. Elanders is also a member of the Good Graphic Company, a group of union and company representatives that, among other things, work to augment health ratios in the graphic industry.
Infologistics develops and delivers complete solutions for publishing to industrial customers, publishers and the public sector. This also includes user information to the automotive industry because the actual printed part forms only a relatively small portion of the total business in this segment. Production continues to expand in this business area upstream and downstream.
Geographical expansion will be in the fi rst place in Western Europe and the American continents. In those cases the business area's customers require print production at a lower cost and can accept longer delivery times the capacity in User Manuals in Eastern Europe and Asia is used.
The business area has its base in the Group's Infomedia Centres in Atlanta (U.S.A.), Mölnlycke (Sweden), Newcastle (UK) and Stuttgart (Waiblingen and Ostfi ldern, Germany). Elanders' Infomedia Centres offer information structuring, advanced premedia, digital printing, offset printing and fulfi lment services. There are digital printing units in Malmö, Oslo, São Paulo and Stockholm and inhouse units for publishing in digital printing in amongst others, ABB in Västerås, Volvo in Gothenburg and Tetra Pak in Lund. Furthermore there are production facilities for premedia, offset printing and fulfi lment in Falköping and Oslo.
The year contained a mixture of challenges from a decrease in demand and cost adjustments at home at the end of the year to international expansion in the U.S. and Germany. In February Seiz Printing Co in Acworth, Atlanta, Georgia, U.S. was acquired. The business has some 70 employees and offers digital and offset print and fulfi lment in its capacity as the Group's infomedia centre for the
INFOLOGISTICS, GROSS INVESTMENTS (MSEK)
INVESTMENTS DURING THE YEAR mainly concern offset equipment for better capacity and effi ciency in Sweden and Great Britain.
THE ACQUISITION in Germany increased Germany's share of the business area's net sales. U.S. The acquisition is an important platform for the Group's deliveries to existing and potential customers on the North American continent and the operations are well placed in the expansive southeast U.S.A. In May Mairs Graphische Betriebe GmbH in Ostfi ldern (Stuttgart), Germany was acquired. The business with some 60 employees had been a part of Mairs Dumont, the leading publisher of maps and travel books in Europe. The company was successfully integrated into German operations and has made Elanders more competitive through its access to large format production in sheet-fed offset, thereby providing the Group with new customers such as Siemens, BMW and Volkswagen.
Master Vendor®, Elanders' program for business
publishing solutions, continued to be successful during the year and now permeates all the work in the business area. Germany and Great Britain in particular developed positively in customised solutions for Webbased digital print for publishers and banks as well as consumers where the production of photo albums reached an all-time high. The downturn in the economy infl uenced the market in the U.S. and therefore results in 2008 did not meet expectations. Elanders is also active in the global network for distributed digital printing that it is a member of, particularly regarding solutions for the automotive industry.
All the new, large business deals are in line with the business area strategy of helping large companies and organisations to rationalise their publishing process.
| 2008 | 2007 | 2006 | |||
|---|---|---|---|---|---|
| Net sales, MSEK | 1,697 | 1,617 | 1,293 | ||
| EBITDA, MSEK | 52 | 146 | 136 | ||
| Operating profi t/loss, MSEK | –14 | 91 | 101 | ||
| Capital employed, MSEK | 1,170 | 1,100 | 700 | ||
| Return on capital employed,% | –1 | 10 | 14 | ||
| Average number of employees | 1,102 | 994 | 792 | ||
| Investments not including acquisitions, MSEK | 36 | 79 | 17 | ||
| Percent of Group net sales | 77 | 79 | 65 | ||
| Percent of Group operating profi t/loss | n.a | 40 | n.a | ||
Swedish operations have been sluggish this year due to, among other things, lower volumes than anticipated from the automotive industry and a certain transfer of volumes to units in User Manuals. The work to merge the Swedish operations was completed. One result of this is that operations in the business area's six Swedish companies are, from 1 January 2008, run in two legal entities and another is that production and marketing has been coordinated. This has strengthened Infologistics' marketing organisation and improved collaboration between units. Operations are now becoming specialised to optimise each kind of production and service. In addition, we reviewed our equipment and capacity in order to adapt it to expected developments in Sweden. This led to moving offset production from Malmö and a planned move in 2009 from Stockholm to other Swedish units as well as other cost adjustments, which led to 135 employees being given notice of redundancy at the end of the year. These latter measures led to costs of MSEK 65. From 1 January 2009 all Swedish operations are run in one subsidiary, Elanders Sverige AB.
The foundation of the business area is the conscious work to continually analyse customers' business. Based on this, current and acquired operations are coordinated to deliver total solutions that strengthen the customers' competitiveness. The work means considerable investment in new technology, marketing, expansion through acquisitions and new businesses. Infologistics' operations cover all areas of the publishing chain.
The business area delivers solutions for e-commerce and electronic document handling, digital archives and digital printing with one main purpose: to simplify and shorten the customers' internal processes and timeto-market. Elanders is a leader in digital printing in Sweden and Germany and also has digital printing units in Brazil, Great Britain and Norway. Elanders also delivers services at the start of the value chain where the content is created, for example translation and design, as well as at the end of the chain, where we help our customers with fulfi lment and logistics. In most of our outsourcing business we manage the complete chain. Elanders has experience in managing large outsourcing assignments. An important part of operations is still premedia and printing with some form of fi nishing. With these services as a base Elanders delivers bespoke systems for publishing solutions, usually involving sheetfed printing or digital printing but where the orders are larger, web offset printing as well. Even more important though is the clear trend that more and more business is being done at the beginning and end of the value
chain (interface for Web-order of photo albums and other printed matter, information structuring, databases, fulfi lment, logistics etc.) even if this later often leads to signifi cant print production.
Infologistics works in all Group customer segments: Automotive, Publishing, Industry & Trade, the Public Sector and the Service Sector. The net sales breakdown during the current year is shown in the table on page 70.
Competition comes fi rst and foremost from large Swedish and international graphic groups. Companies that previously operated in a single section of the value chain (technical writers, consulting fi rms, database specialists and systemising and programming companies) strive to increase content in their products. The major graphic groups are also trying to broaden their range.
This has brought about a somewhat new competitive arena in the past few years. In our strategy we have anticipated this development and lie on the cutting edge when it comes to helping our customers to free up resources to enable them to concentrate on their core business. The competition is described further on page 40 and also in the diagram on page 70.
The rate of growth for digital printing in Sweden and Western Europe is still good. For sheet-fed printing the rate of increase is only about one percent. Sales of services covering project management, competence in technical editing, database solutions, fulfi lment and distribution are still that part of the business area growing quickest. This is due to the fact that there is a larger content of services in everything offered (Master Vendor®). The segments that Infologistics works with are expected to have relatively little growth during the next few years in the geographical markets where the business area operates. Elanders will therefore grow primarily by winning market shares.
The business area's long term growth target is to grow by 7 to 10 percent annually over the business cycle, of which half will be organic. Several risk factors in connection with the economic slump this year must, however, be taken into account when considering these long-term goals.
Several of the business area's operations dominate their market segment in Sweden and Germany. Expansion therefore must be international and primarily in the larger industrials in the segments Automotive and Industry & Trade.
In the domestic market we will primarily grow within Industry & Trade, the Public Sector and the Service Sector. In Publishing we will endeavour to defend our market share by, apart from other things, offering production at a lower cost in Eastern Europe and we are going to take the offensive in this segment in Germany.
The trend in larger companies to reduce the number of suppliers is clear in Sweden and internationally. Elanders has both the fi nancial size and broad competence and thereby the strength to follow its large customers internationally through new units, networking and acquisitions. The geographic expansion in Infologistics will mainly take place in Western Europe and in time even on the American continents.
Well-invested production for sheet-fed and web offset together with digital printing provides good opportunities for growth and increased profi tability. IT/Media operations (database design and information structuring) are one of the basic conditions for the business area's and the Group's continued development and are integrated in the graphic operations to support other business. Elanders has, for example, developed tools for effi cient parallel publishing (WebBase) and market planning (M3) which have been used with success in hundreds of the business area's orders. Together with several others these tools form EPP, Elanders Publishing Platform, a collective name for a growing palette of services and tools that in close cooperation with the customer are adapted to their needs and are controlled through a systematic and goal-steered development process.
The global industrial groups have manufacturing and distribution in several different places. Our strategy is to be able to offer our logistic services just-in-time in document and distribution centres (DDC) close to our customer's manufacturing units and distribution centres.
Many customers, certainly in Automotive, call such a centre a hub. An example of this is our DDC in Arendal in Gothenburg that handles complex distribution of very large volumes of publications just-in-time to all the companies in AB Volvo and Volvo Car Corporation worldwide. Another is Elanders' Seiz in Atlanta that provides Daimler with user information in their North American operations, which is coordinated with Daimler's headquarters in Stuttgart by our German unit. Other examples of hubs are the units in Tetra Pak in Lund and the new unit in Luton, Great Britain for GM. Here, we assist our customers with both production and all the logistics surrounding publication – a complete supply chain management for publishing.
Elanders has a unique position through its size, customer base, competence and its ability to deliver total solutions. Those customers we target are showing clear signs that publishing is outside their core business and they will increasingly want to reduce the number of their suppliers and release capacity to enable them to concentrate on their core business. This will give us new Master Vendor® business. We also see good opportunities to grow internationally with existing and new customers and thus win more market shares. We bring together our resources in our Infomedia Centres, which have now grown to include one on the important German market, and with the increasing interest for our solutions we see positive future development for the business areas. The coordination program in Sweden is expected to strengthen its competitveness in the Swedish units in 2009.
ELANDERS REPEATS its success with last year's acquisition of Sommer Corporate Media in Stuttgart by acquiring 100 percent of the shares in Mairs Graphische Betriebe GmbH & Co KG (MGB) in Ostfi ldern, Stuttgart, Germany. MGB has 60 employees and net sales of around MEUR 15. The company was formrely owned by Mair Dumont, which is the leading publisher of maps and travel guides in Europe, with brands such as Falk, Marco Polo, Baedeker and Hallwag. MGB is a well invested business and its main production method is offset print in large format. Currently this unit produces approximately 1.8 million travel guides each year, and some of these are completely customer unique.
The acquisition of Mairs Geographische Betriebe GmbH & Co in June 2008 entailed a signifi cant strategic expansion in Germany - both technically and marketwise. Elanders' German business is now one of the top companies on the German market with net sales of nearly 50 million Euros. Mairs Geographische Betriebe, with its production site in Ostfi ldern just south of Stuttgart, is a specialised in high quality large format sheet-fed offset printing for catalogues, maps, travel guides, posters, annual reports etc. Elanders Germany (Sommer Corporate Media) was already a leading company in publishing solutions with digital printing and the acquisition brought a strategic addition to its product portfolio and substantially reinforced Elanders market presence in Germany
in general, and in the industrial region of Stuttgart in particular. Both companies work for different top class global companies, with hardly any overlap between them. During the year the operations were integrated effi ciently under the leadership of Peter Sommer, MD of Elanders Germany and Elanders U.S.A., and contributed such important customers as BMW, Siemens, Volkswagen and Mair Dumont. Elanders Germany can now offer a comprehensive range of services that very few other companies on the German market can compete with. The acquisition is an excellent example of Elanders ability to discover expansion opportunities and increase its competitive capacity in a market characterised by increasing pressure on prices and structural challenges.
| Customer segment | Percentage of net sales | Products and services | Processes |
|---|---|---|---|
| AUTOMOTIVE | |||
| 29 % (30 %) | Print Management, (outsourcing in after sales and marketing), duplicating (manuals, product information, service information, DVD/CD), premedia/prepress (image management, de sign, scanning etc.), fulfilment centre (packing, storage, order office, logistics, help-desk, project management), database solutions (image mana gements solutions, project management modu les, electronic data storage etc.), personalised marketing material, editorial tools with publishing modules |
Design and management of databases and Web-interface, premedia, sheet-fed and web offset, digital print and filing, binding, logistics with just-in-time deliveries directly to production lines |
|
| PUBLISHERS | |||
| 14 % (19 %) | Educational material, trade literature, fiction, magazines, product information, databases, production planning and management |
Premedia, web and sheet-fed offset, digital print and filing, binding, logistics |
|
| INDUSTRY & TRADE | |||
| 34 % (31 %) | System support, manuals, product information, marketing material, databases, transaction, fulfil ment, education, logistics |
Design and management of databases and Web interface, premedia, sheet-fed and web offset, digital print, e-commerce and fi ling, binding, storage and logistics with just in-time deliveries directly to production lines |
|
| PUBLIC SECTOR | |||
| 8 % (9 %) | Parliamentary printing, papers, tax tables, infor mation, reports |
Premedia, sheet-fed offset, digital print, bin ding, storage and logistics |
|
| SERVICE SECTOR | |||
| 15 % (11 %) | System support, customer information, insurance policies, fund reports, distribution, publication storage |
Premedia, design, database and Web interface management, sheet-fed offset, digital print and filing, binding, storage and logistics |
1) Refers to local markets where the Group is active.
70 U ELANDERS ANNUAL REPORT 2008
Sweden: AB Volvo globally (Buss, Penta, Parts, Trucks, IT, CE), Scania globally, Toyota, GME (Saab Automobile, Cadillac), Ford Europe, Volvo Car Corporation, Honda Germany: Porsche, BMW, Daimler, BMW, Volkswagen, Audi, Hyundai Great Britain: Vauxhall, Land Rover, Bentley, Nissan Brazil: Scania, AB Volvo, U.S.A.: Daimler, AB Volvo
Great Britain: Xerox, Wyndeham Westway, Williams Lea, SP Group Germany: Zetweka, Infowerk, Bosch Druck Holland: Callenbach Japan: Maruboshi, U.S.A.: Smaller local printers
Sweden: Liber, Natur och Kultur, Berling Media, Bonniers, Rabén & Sjögren Great Britain: CGP, U.S.A.: Promethean, Germany: MairDumant
Sweden: Sandvik, IKEA, ABB, Flextronics, Tetra Pak, SKF, Sony Ericsson, Elektroskandia, Atlas Copco, Electrolux, Husqvarna, Kinnarps Germany: Marccain, Ritter Sport, Siemens, Hugo Boss, Bosch, EWGE Great Britain: Vaillant, Bosch
Sweden: The Cabinet Office and Ministries, Government services, SIS, VHS, municipalities and county councils, The United Nations Great Britain: Labour Party, NHS
Sweden: Fälth & Hässler, Kristianstads Boktryckeri, JMS Mediasystem Alfaprint Germany: publishing printers, and smaller local commercial printers U.S.A.: Smaller local printers
Sweden: Intellecta Denmark: Stibo Great Britain: Pindar Germany: Victor Bück , Bosch Druck, smaller local printers Finland: Edita U.S.A.: Xerox, smaller local printers
Sweden: Edita, Alfaprint, Intellecta, Taberg group
Sweden: If property and casualty insurance, KPA, Nordea, Swedbank, SEB, Folksam, Svenska Handelsbanken Germany: Fotokasten, Postbank, Lufthansa, IBM Brazil: Armo Bank, Disney Norway: IF property and casualty insurance
Sweden: Strålfors, Intellecta Finland: Itella Germany: Smaller local printers U.S.A.: Smaller local printers
The Web-to-print market is growing rapidly making presentation and userfriendliness more and more important. Currently Elanders helps its customers with order interfaces for products such as:
…Elanders distributes 3,000 personalised calendars a day to German Postbank customers?
… Elanders produces 1.8 million travel guides on a yearly basis. Some of them are customer unique?
When producing cars even small parts make for large volumes. One of the specifi cations of the new Volvo model XC60 was that at least 15 kg of the car's total weight should be made from recycled material. Now Volvo is demanding that the printed manuals for the more than 400,000 cars produced annually are made out of renewable material and FSC labelled. At Elanders we are of course happy
to see that Volvo continues our years of cooperation and will now also let us deliver their FCS labelled car manuals.
We at Elanders see environmental matters as long-term investments, not only for the environment, but also for our customers and for ourselves. Nowadays customers have higher demands on environmentally friendly printed material and we are here to offer sustainable solutions for their communication, like Volvo's manuals.
Elanders works with quality and environmental questions in many places. In Malmö we became Sweden's fi rst climate neutral printer in 2008. This means that we have made every possible effort to reduce our emissions. We have compensated for the part that we have not yet been able to fi x by investing in a project in India. We have done the same in Germany and are currently creating more and more "green solutions" for our customers who receive a "green solution certifi cate" that they can use in their PR and marketing. This is a strong proof of our ability to take initiative and our desire to create a sustainable future. Solutions that don't cost more than other print productions.
Personalised photo albums and calendars are increasing in popularity. Our customers create their albums themselves using a simple and user-friendly program where they upload their own images, backgrounds and texts. The documents are then sent for production in Elanders' units in Germany and England. In 2008 Elanders produced 340,000 photo albums and 635,000 calendars (all personalised). If, in addition, you want your customers to feel chosen and special we can do for you what we do for many of our customers, personalise your printed matter and marketing material. What better way to receive higher response frequency and more satisfi ed customers?
Elanders produces increasingly more sales, marketing and other informative material which customers in turn use in their battle to win new customers. This growing product segment at Elanders is increasing our market shares in many of our markets. The range covers sales brochures, product catalogues, annual reports, maps and other types of printed matter.
User Manuals' primary business is highly effi cient deliveries of user information for mobile telephones and other consumer electronics. This business is mainly print production with extremely high demands on fl exibility and short lead times. The geographic expansion is customersteered and will take place in countries with relatively low labour costs in Eastern Europe and Asia. Product expansion will be downstream through increased content of packaging manufacturing, print-on-demand and logistics. Our customers are mainly in the segment Industry & Trade. User Manuals has complete production units in Beijing, China, Płońsk, Poland and Zalalövő, Hungary. In addition, we have DDCs in Treviso, Italy, Komárom (50/50 joint venture with Hansaprint OY), Nyiregyháza and Jászberény, Hungary and Satu Mare, Romania. These DDCs have been started in direct proximity to larger customers such as Electrolux and Nokia. Production capacity in the business area's units is also used for customers in Scandinavia, Germany and Great Britain in other segments and business areas when low cost is prioritised before short lead times.
The unit in Beijing has been very successful and packaging currently represents half of its production volume. Polish operations did not quite meet expectations and Hungary had problems with a drop in volumes from customers in consumer electronics and white goods. The result in Hungary was further infl uenced by costs for the shutdown of the legal entity in Budapest and discarding obsolete stock.
These costs, together with other one-off costs, amounted to MSEK 32. During the year some 90 employees were made redundant in Hungary. These actions are expected
USER MANUALS PERCENT OF NET SALES
USER MANUALS, GROSS INVESTMENTS (MSEK)
INVESTMENTS were distributed evenly between China, Hungary and Poland.
EXPANSION IN CHINA and the slowdown in Hungary resulted in Chinese operations representing more than one third of business area net sales.
to increase the competitive capacity of the plant in 2009. The Italian unit did not meet expectations and structural measures have been taken in order to correct the problems in 2009. During the year the business area received important business from NEC and Sanyo for production of user information and packaging. Elanders and Electrolux continued to develop our collaboration on all user documentation (manuals, etc.) for products manufactured by Electrolux' European units. Deliveries are in progress in Sweden, Switzerland, Germany, Poland, Italy, Hungary and Romania. The process is expected to be completed in 2009. The deal is an excellent example of the Group's focus on deliveries of full-service solutions to global customers in order to reduce their time-to-market.
User Manuals is specialised in supplying on extremely short lead times manufacturers of mobile telephones and other consumer electronics with user information. Advanced and fast information structuring that comprises among other things handling an unlimited number of languages and different model versions is a signifi cant part of our main business. Print production is mainly sheet-fed and digital but larger quantities can be produced by web offset, especially in the Polish plant which also serves the local magazine and advertising market.
The business area is principally directed toward Industry & Trade but it also works with Publishing and serves the rest of the Group in all segments except the Public Sector. In Industry & Trade we work primarily with global manufacturers of consumer products in mobile telephones, consumer and home electronics and white goods. The net sales breakdown for 2008 is shown on the diagram on page 78.
Our greatest competition is usually from smaller, local printers, often many in one place, that without cooperating with each other furnish global manufacturers of consumer electronics in the places they have manufacturing units. In some cases competition comes from a few global players that attempt to follow their customers around the world and provide them with service from existing operations in the respective countries rather than through new establishments close to our customers' plants. The competition is described further on page 40 and in a diagram on page 79.
| 2008 | 2007 | 2006 | |
|---|---|---|---|
| Net sales, MSEK | 494 | 419 | 312 |
| EBITDA, MSEK | 69 | 121 | 93 |
| Operating profi t/loss, MSEK | 30 | 95 | 73 |
| Capital employed, MSEK | 492 | 433 | 314 |
| Return on capital employed, % | 6 | 25 | 26 |
| Average number of employees | 692 | 558 | 405 |
| Investments not including acquisitions, MSEK | 22 | 69 | 42 |
| Percent of Group net sales | 23 | 21 | 16 |
| Percent of Group operating profi t/loss | 188 | 42 | E/T |
| Sales | Premedia | Sheet-fed offset |
Web offset | Digital printing |
Bindery | Fulfi lment and distribution |
|
|---|---|---|---|---|---|---|---|
| Beijing, China | |||||||
| Budapest, Hungary | |||||||
| Zalalövő, Hungary | |||||||
| Komárom, Hungary | |||||||
| Płonsk, Poland | |||||||
| Treviso, Italy |
The business area's main target group is the consumer electronic sector of Industry & Trade. This is expected to have a high growth rate in the foreseeable future and Elanders also plans to capture market shares. An annual growth of 15-20 percent over a business cycle is therefore realistic for User Manuals.
The main strategy in the business area is expansion through establishing new businesses close to global customers primarily in consumer electronics. The operations in Hungary and China as well as our DDCs in Hungary, Italy, Poland and Romania are examples of this. To strengthen the partnership with our customers we will expand downstream and increase the content of, for example, packaging manufacturing and logistics. New business establishment, which is usually based on a need of a large customer, would normally only be considered where there is a probable chance to diversify the customer portfolio locally within a reasonable time; normally 1-2 years. In other cases the establishment may initially be made through a DDC with effi cient project management that secures quality and delivery precision, but purchases larger volumes from local manufacturers of printed material and packaging. Furthermore we will build business models to meet the various requirements of customer so that deliveries and information is transferred to those, often different, places the customer wishes.
To be able to utilise the business area's larger facilities effi ciently more DDCs, with digital printing and logistic services, will be set up next to customer's important manufacturing units. These DDCs will deliver locally produced digital editions whilst the larger offset volumes will be fed in from the larger units. Available production capacity is used optimally to allow other business areas the opportunity to offer their customers production at a lower cost in Eastern Europe and Asia. The facilities in User Manuals in Płońsk, Poland and Zalalövő, Hungary can offer competitive print production for most of our business area customers not only in Sweden but in other parts of Europe, which will be taken advantage of to a greater extent. Packaging manufacturing is planned to start in Hungary in 2009. A unit for digital production has been created in China in order to produce photo albums and Web-to-print solutions and production of these is expected to start up in 2009. The main production in Poland will successively move from magazine production to benefi t user information and production for publishers. The future geographic expansion in User Manuals will be in Eastern Europe and Asia but Latin America is also a possibility.
Over the years Elanders has built up a unique expertise in just-in-time deliveries of user information to global groups. We note that interest from these customers is on the rise and that production and distribution of user information is more and more extensive. At the same time there is a growing need in customers to be able to control this process without having to actually handle it themselves. Instead many concentrate on the design, marketing and production of their own products and look externally for solutions to their publishing problems. Elanders has through our establishment in Hungary and China built strong partnerships with large industrial groups and there are excellent opportunities to establish other new businesses in Eastern Europe and Asia. The future outlook for several of the business area's larger customers looks good and a stable demand can be expected during the foreseeable future at the same time the need for low cost alternatives from Infologistics customers is expected to continue to grow. We need however to be careful about the short-term prognosis as there is insecurities about the impact that the downturn in the economy will have in 2009.
| Customer segment | Percentage of net sales | Products and services | Processes |
|---|---|---|---|
| AUTOMOTIVE | |||
| <1 % (1 %) | Manuals and product information | Premedia, sheet-fed and web offset, digital print, bindings, fulfilment, storage and logistics |
|
| PUBLISHERS | |||
| 10 % (12 %) | Magazines, direct mail, educational mate rial, books |
Premedia, sheet-fed and web offset, di gital print, binding, storage and logistics |
|
| INDUSTRY & TRADE | |||
| 84 % (82 %) | Manuals, information structuring, logistics, fulfilment, product information, product cata logues, system support, databases |
Premedia, sheet-fed and web offset, digital print, binding, storage and logis tics with just-in-time deliveries directly to production lines, |
|
| PUBLIC SECTOR | |||
| 2 % (0 %) | Newspapers, magazines, catalogues | Premedia, sheet-fed and web offset, binding |
|
| SERVICE SECTOR | |||
| 4 % (5 %) | Marketing material, catalogues, customer information |
Premedia, sheet-fed and web offset, di gital print, binding storage and logistics |
1) Refers to local markets where the Group is active.
Major customers Competition Hungary: Vauxhall China: Volvo, Daimler Great Britain: Wyndeham Westway, Williams Lea, SP Group Germany: Zetweka, Infowerk, Victor Bück, BoschDruck Hungary: Glerups, Studentlitteratur Poland: Polskie Wydawnictwo Rolnicze, Wydawnictwo Naukowe PWN, Stentor, Grupa Wydawnicza Infor Poland: RR Donnelley, small local printers, Winkowski Hungary: Philips, Vaillant, Flextronics, Electrolux, SKF, Bosch, Alfa Laval, Gambro Poland: Sercom, Braun, Electrolux, Philips, Sharp, Fuji China: Sony Ericsson, NEC, Sanyo Italy: Electrolux Poland: RR Donnelley, Xerox, small local printers Hungary: RR Donnelley, Uniprint China: RR Donnelly, Inpack Poland: Krajowa Izba Lekarsko-Weterynaryjna, Okregowa Izba Hungary: EUMC (European Union Agency for Fundamental Rights) Poland: Small local printers
Poland: Polinvest, Pola Design, Lekarska, Naczelna Izba Lekarska, EiM Agencja Wydawnicza
Poland: Small local printers
A small se lection of Elanders Business unit User Manuals
Elanders has been producing manuals and packaging for the home electronics industry in China since the beginning of 2007. The production is continuously growing and currently Elanders also offers to design packaging. More and more frequently customers ask us to test different kinds of packaging. After approval we design it and produce it. Elanders also takes care of production and outsourcing of the components included in packaging, such as inlays in boxes, PET and foam. Elanders has entered the packaging industry chiefl y to produce for customers with high demands on quality,
short lead times and "customised packaging" rather than for mass production.
20,000,000 cartons and packaging are produced, packed and distributed each year by Elanders in China.
… Elanders currently produces 100,000,000 manuals for the home elec-
tronics industry each year.
1Time and money can be saved in the manufacture of customers' die cutting tools now that Elanders in Beijing has invested in a cutting board where die cutting drawings and packaging functions are tested. A sketch or a drawing is all we need in order to be able to design and create samples.
2Testing different solutions is simplifi ed since no readymade die cutting tool is necessary. Besides packaging, the machine can also cut Styrofoam and similar material for signs and other uses.
3Automated tool changes enables the machine to quickly cut and crease packaging. Shortly afterwards you can glue and fold the packaging.
4 The function of the box is tested to make sure the die cutting drawing meets specifi cations. After you can move on to artwork and order the die cutting tool for volume production.
It is very valuable, and often decisive, for our global customers to be able to handle their entire print logistics via one contact at Elanders. We are here to help you, regardless of the scope, number of languages, kinds of media and places in the world in which the information needs to be published.
…. Elanders is a world leader in delivering manuals and packaging to the home electronics business?
Electrolux, the world's largest provider of white goods, has 57,000 employees all over the world and 19 factories in Europe. In 2008 Elanders produced 999,000,000, A5 pages for their product manuals. For Electrolux it was imperative for their production to have:
Elanders developed a custom-designed Web database where Electrolux now collects all their documents. It currently contains about 35,000 print fi les for different products in different countries and in different languages. Elanders handles the production of manuals from Italy, Germany, Switzerland, Poland, Hungary, Romania and Sweden. Deliveries from France, Russia and Spain will start in 2009. With Elanders' global presence and internal processes we can guarantee delivery safety, quality and service level.
The Board of Directors and the President and Chief Executive Offi cer of Elanders AB (publ), corporate identity no 556008-1621, herewith present their annual report and the consolidated fi nancial statements for 2008, the Company's hundredth fi nancial year.
Elanders AB is the parent company of the Elanders Group which further develops, enriches and distributes information for publication in media independent solutions using modern graphic production and information structuring.
The Group has had operations in two business areas; Infologistics and User Manuals. Group operations were focused on fi ve prioritised customer segments; automotive, Publishing, Industry & Trade, the Public Sector and the Service Sector. On 31 December 2008 the Group's business areas operated in 13 companies in ten countries. The former two operative legal entities in Sweden have been merged into one legal entity as of 1 January 2009.
Group net sales increased by 8 percent to MSEK 2,191 (MSEK 2,036). The increase is a result of acquired businesses and the development in China. The year has been characterised by good demand in China, Germany, Great Britain and Poland while the Swedish, Italian, Hungarian and U.S. units have been sluggish. In these units a decrease in volumes from customers in automotives, white goods and consumer electronics resulted in unsatisfactory profi tability. During the year the operations in Sweden were radically restructured in order to adapt capacity to the market and coordinate production and marketing. Measures to adjust expenses and streamline administration were also taken in Hungary. These measures entailed total costs of MSEK 89, of which MSEK 65 in the fourth quarter. All told this resulted in a loss of Group operating profi t by MSEK 210.8 to MSEK 16.0 (MSEK 226.8). The Group's net fi nancial expenses rose as a result of acquisitions, and
repeated rises in interest rates and amounted to MSEK –50.3 (MSEK –42.7). The Group's pre-tax profi t totalled MSEK -34.3 (MSEK 184.1). Net profi t was MSEK -25.7 (MSEK172.2).
During the year investments amounted to MSEK 116 (MSEK 435), of which MSEK 57 (MSEK 248) was the acquisition of companies. Other investments, MSEK 59, were on a normal level and are chiefl y connected to production equipment in Great Britain, Sweden and Poland. Depreciation amounted to MSEK 103 (MSEK 84).
At year-end Group net debt amounted to MSEK 843 (MSEK 817). Unused credit facilities amounted to MSEK 191 (MSEK 284). Operating cash fl ow rose to MSEK 274 (MSEK 18) together with MSEK -57 (MSEK -248) attributable to the acquisition of companies. Increase in cash fl ow was due to the fact that the payment for the property in Kungsbacka, sold during 2007 for, MSEK 110, was received during the fi rst quarter of 2008 as well as a general improvement of working capital and lower investment levels. The equity ratio on the balance sheet date amounted to 36.8 percent (38.9 percent).
Group develops different products that allow us to handle more of our customers' publishing related activities within the concept of Master Vendor®. Developments usually originate from specifi c customer projects in the different segments and consist, for example, of image databases and other publishing tools.
The average number of employees in the Group during the year was 1,809 (1,579) of which 628 (706) were in Sweden. The total number of employees at yearend amounted to 1,812 (1,723). Further information concerning the number of employees, as well as salaries, remuneration and terms of employment is given in note 5 to the Group fi nancial reports.
During the year the parent provided joint Group services. No external sales took place. Investments in 2008 amounted to MSEK 98 (MSEK 128), of which MSEK 97 (MSEK 121) were investments in subsidiaries. The average number of employees during the year was 14 (11) and the number at year-end amounted to 12 (13). Other information concerning the number of employees, salaries, remuneration and conditions of employment is given in note 5 to the Group fi nancial reports.
The business area offers information structuring, advanced premedia, user-adapted digital printing, offset print, logistics and fulfi lment services. Our operations can be
found in Gothenburg, Mölnlycke, Falköping, Malmö, Uppsala, Vällingby and Västerås (Sweden) as well as in Oslo (Norway), Stuttgart (Germany), Newcastle and Harrogate (UK) and São Paulo (Brazil). We also acquired Seiz Printing Inc., Acworth, Atlanta, Georgia, (U.S.A.) (7 February) and Mairs Graphische Betriebe GmbH & Co, Ostfi ldern, Stuttgart, (Germany) (21 May). The U.S. acquisition is an important platform from which we can provide deliveries for the Group's customers in the North American market and in Germany the acquisition provided Elanders access to technology and clients that have helped increase our competitiveness in the Group's German operations.
Net sales rose by MSEK 80 or 5 percent to MSEK 1,697 (MSEK 1,617) and operating profi t for the period amounted to MSEK -14.3 (MSEK 91.3). Investments totalled MSEK 93 (MSEK 325) and depreciation MSEK 66 (MSEK 55).
The increase in net sales is completely due to the U.S. and German acquisitions made this year. The worsening in profi t is primarily due to the Swedish operations. The business area's operating profi t has been charged with MSEK 57 for the cost of merging the Swedish operations.
The Swedish section of the business area has been sluggish this year due to, among other things, lower volumes than anticipated from automotive industry and a certain transfer of volumes to units in User Manuals, but also because of a decline in volumes from catalogue customers. This was in part balanced by the good results in Great Britain and Germany.
The work to merge the Swedish operations begun in 2007 is now almost completed. One result of this is that operations in the business area's six Swedish companies are, from 1 January 2008, run in two legal entities (since January 2009 in one legal entity) and another is that production and marketing organisations have been coordinated. Operations are now becoming specialised to optimise each kind of production and service. In addition, we reviewed our equipment and capacity in order to adapt it to expected developments in Sweden. As a result of this was production in Malmö and Vällingby has been moved in 2009 to other Swedish units. In the fourth quarter the decline in demand continued, particularly from the automotive industry, leading to further cost adjustments and 135 employees were given notice of redundancy. In connection with this, business area profi t was charged with MSEK 57 in one-off costs.
Elanders did well in Great Britain, despite declining demand and in Germany the decline in orders from the automotive industry was compensated by the acquisition, a successful marketing drive and high growth in digitally printed material directed at the customer, particularly photo albums.
During the year the business area acquired new business with, among others, Audi, BMW, Siemens, Volkswagen and GE Moneybank.
The main focus of the business area is highly effi cient deliveries of user information and packaging for mobile telephones and other consumer electronics. User Manuals operates in Beijing (China), Płońsk (Poland), Treviso (Italy), Zalalövő and Komárom (Hungary), the latter is a 50/50 joint venture with Hansaprint Oy. Net sales rose by MSEK 75 or 18 percent to MSEK 494 (MSEK 419) while operating profi t decreased by 67 percent to MSEK 30.3 (MSEK 94.9). Investments totalled MSEK 22 (MSEK 104) and depreciation MSEK 36 (MSEK 26). The increase in net sales is due to developments in China and the fact that the unit in Italy operated the entire year, compared to only six months last year. The decrease in profi t is mainly due to one-off costs of MSEK 32 in Hungary in connection to the shutdown of a legal entity, a decrease in profi t by MSEK 40 in Hungary due to fewer orders from customers in consumer electronics and unsatisfactory progress in the Italian operation. The unit in Beijing was very successful and surpassed expectations. Packaging went particularly well. The Polish unit had a weaker year and did not meet expectations while the Italian unit wrestled with delivery problems and a delayed takeover of volumes from previous suppliers. The problems in Italy affected the operating profi t of the business area negatively by MSEK 15. During the year the business area made important deals with Sanyo and NEC.
The Group is responsible for direct environmental impact primarily through noise and emissions of solvents into the air as well as some small water emissions.
The Group strictly follows legal requirements concerning the environment to avoid events that can result in considerable business risks and/or fi nes. We put therefore great store in guaranteeing compliance with the law in our regular environmental audits according to ISO 14001 and in the due diligence reports carried out before an acquisition. Under the Environmental Act several printing plants are required to have permits or submit reports, depending on their total consumption of solvents. The companies in 2008 that required permits accounted for 46 percent (50 percent) of Group net sales. In 2008 the unit in Elanders Sverige AB that was obliged to submit a report was Vällingby and the three required to have permits were Falköping, Malmö and Mölnlycke. Outside of Sweden Elanders has operations that require permits, of varying scope, in Great Britain, Poland, Hungary, China, Germany and Brazil. The operations acquired in 2008 in the U.S. also requires a permit. Elanders in Malmö received an injunction in 2007 concerning a soil investigation where an oil tank previously stood. An investigation has been initiated but this matter is not expected to result in any material consequences. In 1999 a limited area of ground contamination was
discovered under a building in one of Elanders' previous locations. The ground contamination is due to leaks in the drainage system previous to 1970 and mainly consists of heavy metals such as zinc, chrome and copper. The Environmental Court has on formal grounds sent the matter back to the Environmental Authority in Gothenburg for continued processing. The Environmental Authority in Gothenburg has deemed that, because of the location of the pollution, it does not present any risk to health or the environment. An investigation has been conducted to determine the cost of various decontamination measures and discussions are being held with the property owner on how to continue the process. Judging from the circumstances concerning responsibility and the limited scope of the contamination we believe that this matter will not result in any material fi nancial risk for Elanders.
Elanders divides risks into circumstantial risks (the future of printing, business cycles, global fi nancial situation, structural and the competition), fi nancial risks (currency, interest, fi nancing and credit) as well as operational risks (customer concentration, operations, operating costs, contracts, disputes, insurance and other risk management as well as other operational risks).
Elanders believes printed matter will continue to grow as a bearer of information in coming decades although to a lesser degree as time passes. Growth will take place in Eastern Europe and Asia and in digital print where Elanders is well positioned. The greatest business cycle sensitivity is mainly connected to supplying customers concentrated on consumer markets such as vehicles and electronics. This is balanced by continued growth in Asia, access to production in low cost countries and deliveries with a high level of service. Structural sensitivity is in the section of Group operations that supply printing production as a sole offer, which makes up approximately half our Net sales. Elanders works determinedly to reduce this ratio and the new acquisitions have contributed to increase the number of comprehensive offers of a Master Vendor® nature. As far as competition is concerned Elanders is one of the few players in the world that can provide global deliveries to prioritised segments through its own organisation. This is one of the most important platforms for the Group's competitiveness in the future.
The exchange risk in the Group amounts to an effect on pre-tax profi ts of up to MSEK 6 with a fl uctuation of up to fi ve percent in the most important currencies used by the Group. The Group counteracts this through forward exchange contracts in foreign currency. The interest risk amounts to an effect on pre-tax profi ts of up to MSEK 8 during a twelve month period of a change in the interest rate up or down of one percentage unit.
The Group renegotiated most of its loan portfolio in February 2009 and renegotiations will be held at the end of 2009. The Group is insured against large credit losses. For more information please see note 19 to the Group's fi nancial reports.
None of Elanders' customers generate more than eight percent of net sales. The ten largest customers represented 37 percent of its net sales. The risk that the Group will suffer a major stop in operations is minimal since the Group has similar production capacity in several places. The most signifi cant operating cost is personnel, which makes up around 32 percent of operating costs, which is why the Group works, for instance, to continually improve healthiness among its employees. Paper costs are next and make up approximately 18 percent of operating costs. The Group protects itself as is customary against price fl uctuations through a paper price clause in contracts with our customers. Costs for other resources are not individually large enough for price fl uctuations to have a signifi cant effect on the Group. Elanders believes there are no disputes that will have any important consequences for the Group's fi nancial position. The Group's insurance program contains global liability insurance, product liability, crime fi delity and limited protection against environmental damage, which is discussed in more detail in the section on Environmental impact above. Other operational risks consist primarily of irregularities or fl aws in risk management. Elanders believes that the size of the Group and the fact that Executive Management is composed of members that have profound insight into, and close contact with, daily operations counteracts these risks.
Elanders' goal concerning its capital structure is to secure the Group's continued existence so that it can continue to generate earnings to its owners and be useful to other interested parties. To maintain or change its capital structure the Group can change its dividends, repay capital to its owners by buying back its shares, issue new shares or sell assets to reduce debts. Elanders assesses its capital on the basis of the debt/equity ratio which is calculated on net debt in relation to equity. Group capital strategy has not changed during the year, which means a debt/equity ratio of no more than one. More information on capital structure is given in note 19 to the Group's fi nancial reports.
Total number of shares, votes, dividends and new shares On 29 February 2009 there were 583,333 registered A shares and 9,181,666 registered B shares; in total 9,764,999 shares. B shares are listed under the symbol ELAN B on the OMX Nordic Exchange,
Small Cap list. Each A share represents 10 votes and each B share represents one vote. Shareholders may vote for all the shares they own or represent. All shares receive the same dividend. The Annual General Meeting has not given the Board any authority to purchase shares or issue shares. There are no bonus programs with dilution effects.
There are no restrictions in B shares transferability according to the articles of association or current legislation. The articles of association do contain a preemption clause concerning the company's A shares. The company knows of no other agreements between shareholders that limit the transferability of the shares.
Direct or indirect shareholdings exceeding a tenth of the votes in the company were per 28 February 2009 Carl Bennet AB (49.98 percent) and Investment AB Latour (14.7 percent). No shares are owned by personnel through pension foundations or the like.
The company has a number of contracts that can be terminated if there is a change in ownership. Against the background of the nature and contents of these contracts the Board believes none of them are signifi cant.
There are no contracts between the company and Board members or employees that prescribe remuneration if they terminate their contract, are made redundant without reasonable grounds or if their employment or assignment ceases to exist because of a public purchase offer.
The Board is appointed by the Annual General Meeting. The articles of association do not contain any particular stipulations regarding the appointment or dismissal of Board members.
Carl Bennet was elected Chairman of the Board at the Annual General Meeting on 21 April 2008. The Board has adopted a work program that regulates the division of responsibility between the Board, its Chairman and the Chief Executive Offi cer. It contains a general meeting plan, instruction for fi nancial reports and which matters should be presented to the Board. The work program is reviewed once a year and as needed.
The Board meets seven times a year; four meetings in conjunction with the report on the annual accounts and interim reports, one meeting especially focused on strategic analyses, one meeting for adoption of the budget for the coming year as well as the constitutional meeting directly after the Annual General Meeting.
In addition, the Board is called to further meetings as
needed. The auditors attend the meeting on the annual accounts to present the results of their audit and hold separate conversations with the Board in matters concerning Executive Management.
The Board followed the general meeting plan during the year and met an additional six times to discuss matters concerning investments and acquisitions. The Board has otherwise been involved primarily in assessing market conditions, external circumstances and business position as well as the Group's expansion strategies. Particular attention has been paid to developments in the Swedish and Italian operations. At the constitutional meeting of the Board the work program and instructions for the CEO are reviewed and the customary decisions concerning authorised signatories are taken. At the constitutional meeting of the Board after the Annual General Meeting 2008 Tore Åberg was made Vice Chairman.
The remuneration committee is chosen from Board members and deals with matters concerning remuneration to the Chief Executive Offi cer and offi cers that report directly to him. During the year the remuneration committee consisted of Carl Bennet, Chairman, Ingegerd Greén, Hans Olov Olsson and Tore Åberg. The committee's work is presented in greater detail in note 5 to the fi nancial reports.
The company's guidelines for remuneration to senior offi cers were adopted by the Annual General Meeting on 21 April 2008. They mainly stipulate that the company will offer total compensation on par with market levels so that the company can recruit and keep qualifi ed senior offi cers. Remuneration to senior offi cers will consist of a basic wage, variable remuneration, other benefi ts and a pension. The basic wage will take into consideration the individual's responsibility and experience. The division between basic wage and variable remuneration will be in proportion to the offi cer's responsibility and authority. The variable remuneration will be based on results in relationship to individual targets. Variable remuneration for the CEO may amount to, at most, 50 percent of his/ her basic wage. For other senior offi cers variable remuneration may amount to, at most, 40 percent of his/her basic wage. Pension benefi ts may be defi ned benefi ts and defi ned contribution benefi ts or a combination thereof. Pensions may be both defi ned benefi t and defi ned contribution pension plans, or a combination of both. The companies have not issued, and will not issue, any option program.
The auditing committee is chosen from Board members and has the primary task of monitoring internal control, procedures for fi nancial reporting, observance of related laws and regulations as well as the auditing in the Group. The committee also evaluates the external auditors' qualifi cations and independence. The auditing committee reports their observations on a regular basis to the Board. In addition, the committee has carried out a procurement procedure for auditing services for the period 2008-2011 and provided the nominating committee with candidates to external auditors. The members of the Group auditing committee in 2008 were Tore Åberg, Chairman, Göran Johnsson, Kerstin Paulsson and Johan Stern.
The Group is well prepared to expand in the segments Automotive, Industry & Trade and the Service Sector. The Group has a dominant position in Sweden in the segments Publishing and the Public Sector and therefore growth is expected to be lower here, but there are new opportunities opening in Great Britain, Germany and the U.S. in Publishing.
The challenges in the coming years are to keep the Group's cost structure adapted to the lower volumes that are a result of the downturn in the economy in some segments. Equally important is to develop customised and professional comprehensive solutions containing a high level of information structuring, graphic expertise and distribution for prioritised customer segments quickly enough. Demand for these kinds of services will continue to grow but competition will come from players outside the graphic industry. With our brand, our market position and our solid graphic expertise we are well equipped to increase our market shares through comprehensive solutions supplied by cooperation between the business areas. The acquisitions of Elanders Seiz and Mairs Graphische Betriebe are strategically important and strengthen Elanders in Infologistics, but are also expected to enable more effi cient use of capacity in User Manuals.
Further international expansion by establishing new units in proximity of our customers will be considered. Investments levels will not change dramatically. We have based our internal forecasts on the economy worsening this year, on business area Infologistics continuing to win market shares and on User Manuals continuing to expand internationally. Considering the numerous uncertainties related to the economic slump in 2009 we provide no forecast for this year.
No important events have taken place that affect the content of this Annual Report from 31 December 2008 until the date of the signing of this Annual Report.
| SEK '000 Note 2008 2007 Net sales 2,191,180 2,035,616 Cost of products and services sold –1,742,475 –1,493,938 Gross profi t 448,705 541,678 Selling expenses –151,412 –132,571 Administrative expenses –272,257 –240,017 Other operating income 30,620 67,703 3 Other operating expenses 3 –39,733 –10,462 Income from jointly controlled entities 4 103 489 Operating income/loss 5, 6, 7, 8 16,026 226,820 Income/loss from fi nancial items Financial income 9 22,000 5,412 Financial expenses 9 –72,392 –48,111 Income/loss after fi nancial items –34,366 184,121 Taxes 10 8,662 –11,930 Income/loss for the year from continuing operations –25,704 172,191 Income/loss for the year from discontinued operations, net after tax 11 – 0,0 Income/loss for the year –25,704 172,191 Attributable to: Parent company shareholders –25,559 172,087 Minority interests –145 104 Earnings per share incl. discontinued operations, SEK 1) –2.62 18.06 12 Earnings per share from continuing operations, SEK 1) 12 –2.62 18.06 |
||
|---|---|---|
1) There have been no dilution effects.
The Group's net sales rose by MSEK 155 or 8 % compared to the previous year, of which the acquired units Mairs Graphische Betriebe in Germany and Seiz Printing in the U.S.A. generated MSEK 136.
Operating income/loss for the year included one-off items of MSEK –89 (20) due primarily to restructuring costs in Sweden of MSEK –57 and Hungary of MSEK –24. Consolidated capital gains of MSEK 41 from the sales of Group's property were reported under Other operating income in 2007. There is no corresponding item in 2008.
CONSOLIDATED STATEMENTS OF CASH FLOW INCLUDING DISCONTINUED OPERATIONS 1)
| SEK '000 | Note | 2008 | 2007 |
|---|---|---|---|
| Operating activities | |||
| Income/loss after fi nancial items | 13 | –34,366 | 184,121 |
| Adjustments for items not incl. in cash fl ow | 13 | 134,489 | 37,234 |
| Paid taxes | –31,669 | –32,288 | |
| Cash fl ow from operating activities before changes in working capital |
68,454 | 189,067 | |
| Cash fl ow from changes in working capital | |||
| Increase (-)/decrease (+) in inventory | 25,368 | –59,530 | |
| Increase (-)/decrease (+) in operating receivables | 53,034 | –42,029 | |
| Increase (+)/decrease (-) in operating payables | –26,240 | 9,959 | |
| Cash fl ow from operating activities | 120,616 | 97,467 | |
| Investing activities | |||
| Acquisition of intangible and | |||
| tangible assets | 15, 16 | –59,213 | –187,304 |
| Divestment of tangible assets | 127,328 | 33,683 | |
| Acquisition of operations | 32 | –56,798 | –247,845 |
| Changes in long-term receivables | 3,185 | 1,086 | |
| Acquisition of shares and interests | – | –2,093 | |
| Cash fl ow from investing activities | 14,502 | –402,473 | |
| Financing activities | |||
| Changes in long-term and short-term borrowing | –34,144 | 171,208 | |
| Rights Issue | – | 146,450 | |
| Dividends paid to parent company shareholders | –43,942 | –24,412 | |
| Cash fl ow from fi nancing activities | –78,086 | 293,246 | |
| Cash fl ow for the year | 57,032 | –11,760 | |
| Cash and cash equivalents at the beginning of the year | 65,229 | 74,461 | |
| Translation difference in cash and cash equivalents | 19,480 | 2,528 | |
| Cash and cash equivalents at year-end | 141,741 | 65,229 | |
| Change in net debt | |||
| Net debt at the beginning of the year | 817,465 | 594,098 | |
| Net debt in acquired/divested operations | 48,200 | –1,899 | |
| Translation difference | 11,029 | 1,248 | |
| Change in interest bearing liabilities and cash and cash equivalents | –33,355 | 224,018 | |
| Net debt at year-end | 843,339 | 817,465 | |
| Operating cash fl ow | 14 | 217,179 | –230,019 |
1) Cash fl ow for 2007 includes cash fl ow from the discontinued operations up to the date they were discontinued. See note 11 for further information.
The cash fl ow from operating activities before changes in working capital decreased by MSEK 121 compared to 2007, primarily as a result of lower operating income.
Cash fl ow from investing activities for the current year was affected positively by MSEK 111 by the sales of property in Kungsbacka in 2007, but which was settled in February 2008.
Outfl ows attributable to acquisitions of operations totalled MSEK -57 (-248) and referred to Seiz Printing Inc. in Atlanta, U.S.A and Mairs Graphische Betriebe GmbH & Co KG in Stuttgart, Germany.
The investments in production equipment in 2008 were mainly related to the operations in Great Britain, Sweden and Poland.
| SEK '000 | Note | 2008 | 2007 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | 15 | 957,186 | 866,077 |
| Tangible assets | 16 | 513,372 | 444,984 |
| Share in joint ventures | 4 | 13,647 | 12,414 |
| Other investments held as fi xed assets | 18 | 2,221 | 2,198 |
| Other receivables | 17 | 1,998 | 3,241 |
| Deferred tax assets | 10 | 89,649 | 62,463 |
| Total fi xed assets | 1,578,073 | 1,391,377 | |
| Current assets | |||
| Inventory | 20 | 120,062 | 125,730 |
| Accounts receivable | 19 | 470,894 | 450,623 |
| Current income tax assets | 19,709 | 10,023 | |
| Other receivables | 21 | 14,278 | 131,219 |
| Prepaid expenses and accrued income | 22 | 41,980 | 50,077 |
| Cash and cash equivalents | 23 | 141,741 | 65,229 |
| Total current assets | 808,664 | 832,901 | |
| TOTAL ASSETS | 2,386,737 | 2,224,278 |
ASSETS
The Group's total assets increased by MSEK 162 to MSEK 2,387 and the capital employed on the balance sheet date amounted to MSEK 1,721 (1,594). The increase in total assets and capital employed for the most part stems from acquisitions made during the year as well as an increase in deferred tax receivables due to the tax defi cit generated in Sweden.
Equity increased net by MSEK 13 despite dividends of MSEK 44 and a negative result of MSEK –26. The increase is entirely due to the translation of the balance sheets in foreign operations, above all in Germany and Hungary.
Long-term liabilities connected to the general contracts with our banks have been classifi ed as current liabilities to credit institutes since the term of the main contract ran out at the end of the year. A new contract has been signed with the banks and it will be renegotiated at the end of 2009, which is why the debts continue to be reported as current.
| SEK '000 | Note | 2008 | 2007 |
|---|---|---|---|
| EQUITY | |||
| Equity attributable to parent company shareholders | 24 | 875,588 | 862,264 |
| Equity attributable to minority interests | 2,088 | 2,300 | |
| Total equity | 877,676 | 864,564 | |
| LIABILITIES | |||
| Long-term liabilities | |||
| Liabilities to credit institutions | 25 | 107,922 | 266,254 |
| Other liabilities | 17,884 | 27,951 | |
| Provisions for post-employment benefi ts | 26 | 14,416 | 15,099 |
| Other provisions | 27 | 4,519 | 3,501 |
| Deferred tax liabilities | 10 | 30,051 | 23,977 |
| Total long-term liabilities | 174,792 | 336,782 | |
| Current liabilities | |||
| Liabilities to credit institutions | 25 | 862,742 | 601,341 |
| Advances from customers | 7,065 | 9,830 | |
| Accounts payable | 231,832 | 211,739 | |
| Current income tax liabilities | 5,947 | 14,642 | |
| Other liabilities | 67,780 | 51,162 | |
| Accrued expenses and deferred income | 28 | 119,129 | 122,248 |
| Other provisions | 27 | 39,774 | 11,970 |
| Total current liabilities | 1,334,269 | 1,022,932 | |
| TOTAL EQUITY AND LIABILITIES | 2,386,737 | 2,224,278 | |
| Pledged assets | 29 | 306,918 | 443,020 |
| Contingent liabilities | 29 | 18,031 | 33,889 |
| Total equity | ||||||||
|---|---|---|---|---|---|---|---|---|
| Share capital | Other contributed kapital |
Hedge reserves |
Translation reserves |
Retained earnings |
of parent company shareholders |
Minority interests |
Total equity |
|
| Opening balance Jan 1, 2007 | 83,700 | 306,132 | 35 | 1,633 | 164,856 | 556,356 | – | 556,356 |
| Translation differences | – | – | – | 17,325 | – | 17,325 | – | 17,325 |
| Hedging of net investment | – | |||||||
| - Change in fair value of hedge on net investments abroad |
– | – | – | –4,944 | – | –4,944 | – | –4,944 |
| Cash fl ow hedges | ||||||||
| - Valuation changes charged to equity | – | – | –339 | – | – | –339 | – | –339 |
| - Charged to the income statment | – | – | –491 | – | – | –491 | – | –491 |
| - Tax effect on cash-fl ow hedges | – | – | 232 | – | – | 232 | – | 232 |
| Income and costs booked against equity for the period |
– | – | –598 | 12,381 | – | 11,783 | – | 11,783 |
| Income/loss for the year | – | – | – | – | 172,087 | 172,087 | 104 | 172,191 |
| Total income and costs for the period | – | – | –598 | 12,381 | 172,087 | 183,870 | 104 | 183,974 |
| Rights Issue | 13,950 | 132,500 | – | – | – | 146,450 | – | 146,450 |
| Other transactions with minority shareholders | – | – | – | – | – | – | 2,196 | 2,196 |
| Dividends | – | – | – | – | –24,412 | –24,412 | – | –24,412 |
| Closing balance Dec 31, 2007 | 97,650 | 438,632 | –563 | 14,014 | 312,531 | 862,264 | 2,300 | 864,564 |
| Translation difference | – | – | – | 91,456 | – | 91,456 | –67 | 91,389 |
| Hedging of net investment - Change in fair value of hedge on net investments abroad |
– | – | – | –8,694 | – | –8,694 | – | –8,694 |
| Cash fl ow hedges | ||||||||
| - Valuation changes charged to equity | – | – | 1,217 | – | – | 1,217 | – | 1,217 |
| - Charged to the income statment | – | – | –1,130 | – | – | –1,130 | – | –1,130 |
| - Tax effect on cash-fl ow hedges | – | – | –24 | – | – | –24 | – | –24 |
| Income and expenses booked against equity for the year |
– | – | 63 | 82,762 | – | 82,825 | –67 | 82,758 |
| Income/loss for the year | – | – | – | – | –25,559 | –25,559 | –145 | –25,704 |
| Total income and costs for the year | – | – | 63 | 82,762 | –25,559 | 57,266 | –212 | 57,054 |
| Dividends | – | – | – | – | –43 942 | –43 942 | – | –43 942 |
| Closing balance Dec 31, 2008 | 97,650 | 438,632 | –500 | 96,776 | 243,030 | 875,588 | 2,088 | 877,676 |
Elanders AB (publ.), corporate identity number 556008-1621, is a limited company registered in Sweden. The parent company is registered in Mölnlycke. Elanders is listed on the OMX Nordic Exchange Stockholm Small Cap list. The company's primary business and its subsidiaries are described in the Board of Directors' Report in this Annual Report. The annual accounts for the fi nancial year ending on 31 December 2008 were approved by the Board on 6 March 2009 and will be presented to the Annual General Meeting on 23 April 2009 for adoption.
The Group has prepared the annual accounts according to the Annual Accounts Act, the EU approved International Financial Reporting Standards (IFRSs) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) endorsed by the Europeean Union as of 31 December 2008. In addition, the Group follows the Swedish Financial Reporting Board Recommendation RFR 1.1 Supplemental Accounting Regulations for Groups, which specifi es the additions to IFRSs information that are required according to the provisions in the Annual Accounts Act.
The Group reports in Swedish crowns. All amounts are given in thousands of Swedish crowns, if not otherwise specifi ed.
In Group accounting all items are valued at acquisition value except fi nancial instruments that are valued at their fair value. The following is a description of the accounting principles considered elemental.
Subsidiaries are companies in which the parent company directly or indirectly holds more than 50 percent of the voting rights or in some other way has a controlling infl uence. Subsidiaries are included in the consolidated fi nancial statements from the point in time that controlling infl uence is transferred to the Group until the point in time that controlling infl uence ceases.
Subsidiaries are reported in accordance with the acquisition method. Acquired identifi able assets, liabilities and contingent liabilities are recorded at fair value based on the date of acquisition. The surplus arising from the difference between the cost of the shares in subsidiaries and the fair value of the acquired identifi able assets and liabilities is recorded as goodwill. The cost of the acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. If the acquisition price is lower than the fair value of the acquired subsidiary's net assets, the difference is booked directly in the income statement.
All internal transactions between subsidiaries and within the Group are eliminated in Group accounting.
Operations classifi ed as joint ventures are those in which Elanders, together with one or several joint owners, has a shared controlling infl uence. In Group annual accounts shares in joint ventures are reported according to the equity method. The equity method means that shares in a company are recorded at cost at the time of acquisition and thereafter are increased or decreased by the Group's share of the change in the company's net assets. The Group share of the joint venture company's income/loss is recognised in the Group income statement.
In transactions between the Group and a joint venture the part of unrealised profi ts and losses which are equivalent to the Group's share in the jointly controlled entity are eliminated.
Minority interest is the market value of minority shares in net assets of subsidiaries included in Group accounting at the point in time of the original acquisition and the minority owners' share of changes in equity after the acquisition. The Group applies the principle of recording transactions with minority interests as transactions with a third party.
Revenue from products and services is reported on delivery if ownership has been transferred to the buyer. Net sales represent the sales value less VAT, returns and discounts. Service contracts in progress are reported, whenever possible, when contractual partial deliveries are made or otherwise when the fi nal delivery is made. Net sales include product and service sales. Since all services are essentially integrated parts of product deliveries, a split of revenues into products and services is not meaningful.
A fi nance lease contract involves a transfer of virtually all rights and obligations that normally characterise ownership from the lessor to the lessee. The leasing contracts that are not fi nance leases are classifi ed as operating lease contracts.
An asset possessed through a fi nance lease contract is accounted for as a fi xed asset in the balance sheet and an equivalent fi nancial liability is entered as an interest bearing liability. The initial value of both of these items is the lowest of the asset's fair value or the current value of the minimum lease payments. The lease payments are divided into amortisation according to plan and accrued interest on the amount of the liability and
recognised so that each accounting period is charged with the fi xed interest on the booked liability for the respective period.
Lease payments under an operating lease are expensed systematically over the leasing term.
Items that are included in the fi nancial reports from the various units in the Group are originally recognised in the currency used in the primary economical environment where the respective unit chiefl y operates (functional currency). In the consolidated fi nancial statements all amounts are translated to Swedish crowns, which is the parent company's functional and reporting currency.
Transactions in foreign currency are reported in each unit based on the unit's functional currency according to the transaction day exchange rate. Monetary assets and liabilities in foreign currency are translated to balance sheet date rates and translation differences are reported under profi t/loss for the period.
Translation differences in operating receivables and payables are recorded under operating profi t/loss while differences in fi nancial assets and liabilities are reported under net fi nancial items.
When preparing the consolidated fi nancial statements the balance sheets of foreign operations are translated to Swedish crowns with balance sheet date rates while income statements are translated to the average exchange rate for the period. Translation differences are recognised as translation reserves under equity. The accumulated translation differences are redistributed and reported as part of capital gains/losses in the event of a divestiture of a foreign operation. Goodwill and adjustments to fair value attributable to acquisitions with another functional currency than Swedish crowns are reported as assets and liabilities in the acquired unit's currency and translated to balance sheet date rates.
The Group does not report governmental funding or grants in the income statement or balance sheet before there is a reasonable assurance that the company will meet the requirements attached to the funds. Furthermore the Group recognises the funds in the same way and over the same period as the costs they are intended to cover occur.
Remuneration to employees in the form of wages, paid vacation and sick leave, pensions and so forth is reported as it is earned. Pensions and other post-employment contributions are classifi ed as defi ned contribution plans or defi ned benefi t plans.
In the case of defi ned contribution plans the company pays a fi xed fee to a separate, independent legal entity and is not obligated to pay further fees. Group payments for defi ned contribution plans are recorded as an expense as they are earned, which is normally the same period the premium is paid.
The expenses connected to defi ned benefi t plan obligations are measured actuarially with the Projected Unit Credit Method and calculated on the balance sheet date. Actuarial profi ts and losses that exceed 10 percent of the highest of the pension obligation's market value and the fair value of plan assets are recorded in profi t/loss during the expected average remaining service period of the employees in the plan. The cost of service from prior periods is recorded immediately, as long as the compensation is already untouchable. If, however, a condition of the compensation is that the employee continues to work during a specifi c period of time, the cost is spread out over the earning period.
The liability reported in the balance sheet referring to defi ned benefi t plans is equivalent to the defi ned benefi t plan obligation on the balance sheet date less the fair value of plan assets, adjusted for unrecorded actuarial profi ts and losses for service from prior periods. Taxes on pension costs are reported according to UFR 4 Recording of special employers' contribution and tax on returns.
In the Elanders Group there are a number of employees that have defi ned benefi t ITP plans in Alecta, which are classifi ed as defi ned benefi t multi-employer pension plan. This means that a company must report their proportional share of the defi ned benefi t pension obligation and the plan assets and expenses that are connected to this pension plan. Since Alecta cannot provide the necessary information, these pension obligations are recognised as defi ned contribution pension plans according to point 30 in IAS 19.
The period's tax expense or income consists of current tax and deferred tax. Current tax is based on the fi scal result for the year. The annual fi scal result differs from the result reported for the year due to adjustments for non-taxable and non-deductible items.
Deferred tax is tax relating to taxable or tax deductible temporary differences that cause or reduce tax in the future. Deferred tax is calculated according to the balance sheet method based on temporary differences between booked and fi scal values of assets and liabilities. Calculation of the amounts is based on how the temporary differences are expected to reverse using enacted tax rates or tax rates announced on the balance
sheet date. Deferred tax liabilities that refer to tax defi cits and deductible temporary differences are only reported in cases where it is probable that tax defi cits can be recognised against tax surpluses in the future. Deferred tax is reported as an income or an expense in the income statement except in cases where it refers to a transaction that is booked against equity. Then the tax effect is booked directly against equity. Deferred tax assets and liabilities are offset against each other if they refer to income tax that is charged by the same tax authority and where the Group intends to pay a net amount in tax.
Tangible assets are reported at their acquisition value less accumulated depreciation and write-downs. Tangible assets are straight-line depreciated over the estimated useful life of the asset. Costs for reparation and maintenance are recorded as expenses. The following useful lives are used to calculate depreciation:
| Buildings | 25–30 years |
|---|---|
| Service facilities in buildings | 5–15 years |
| Land improvements | 20 years |
| Press equipment – web offset | 10 years |
| Press equipment – sheet-fed offset | 7 years |
| Other mechanical equipment | 7–10 years |
| Computer equipment and systems | 3–5 years |
| Vehicles | 5 years |
| Other equipment | 5-10 years |
The residual value and useful life of assets are tested on every closing day. Capital gains/losses from the sale of tangible assets are recorded as Other operating income respectively Other operating expenses.
Goodwill is the difference between the acquisition value and the Group's share of the fair value of the acquired subsidiary's, associated company's or joint venture's identifi able assets, liabilities or obligations on the date of acquisition.
If at acquisition the fair value of the acquired assets, liabilities or obligations exceed the acquisition price the difference is booked directly as income in the income statement. Goodwill has an undefi ned useful life and is booked at acquisition value less accumulated write-downs. When a company is sold the portion of goodwill attributable to that company which has not been written-down is calculated in capital gains/losses.
Other intangible assets are favourable contracts identifi ed at the time of an acquisition as well as the cost of purchasing and developing software.
Internally created intangible assets are reported as an asset only in cases where an identifi able asset has been created, it is fairly certain that the asset will lead to fi nancial gains and invested expenses for developments can be calculated reliably. If it is not possible to report an internally created intangible asset the costs for development are recorded as expenses in the period in which they occur.
Other intangible assets are depreciated on a straight-line basis over a useful life period of 3-5 years.
Group assets are controlled at every external reporting instance to determine whether or not there are indications that write-downs are necessary. The need to write-down goodwill and other intangible assets is, however, tested at least once a year. If so, the recoverable amount of the asset is calculated. Goodwill is allocated to the smallest cash generating unit and is subjected to an impairment test annually whether there is an indication of depreciation or not. However, impairment tests take place more frequently if there are signs of depreciation. The recoverable amount is the highest of the value in use or the net realisable value of the asset. The value in use is the current value of all in and out payments attributable to the asset during its estimated useful life together with the current net realisable value at the end of the assets useful life. If the calculated recoverable amount is lower than the book value a write-down is made equivalent to the asset's recoverable amount.
Prior write-downs are recovered when a change occurs in the premises that were the basis for deciding the assets' recoverable amount when it was written-down and which entails that the write-down is no longer considered necessary. Recoveries of prior writedowns are tested individually and are recorded in the income statement. Write-downs of goodwill are not recovered in a following period.
Inventory is valued at the lower of cost and net realisable value. Costs have been calculated in accordance with the First-in, First-out method (FIFU) or weighted average prices. Acquisition value includes the cost of materials, direct labour costs and overhead charges involved in production of the goods. Net realisable value is the calculated sales value less sales expenses.
A fi nancial asset or liability is recorded in the balance sheet when Elanders becomes a party in the instrument's contractual conditions. A fi nancial asset is derecognised from the balance sheet when the rights in the contract are realised, have matured or
the company looses control over them. A fi nancial liability is derecognised from the balance sheet when the obligation in the contract is met or resolved in some other way. Financial instruments are valued the fi rst time at fair value plus transaction costs, which applies to all fi nancial assets and liabilities not recognised at fair value through profi t or loss. Financial assets and liabilities recognised at fair value through profi t or loss are valued the fi rst time at fair value, while attributable transaction costs are valued through profi t or loss.
Acquisitions and divestitures of fi nancial assets are booked on the date of business, which is the date the company pledges to acquire or sell the asset, except in cases where the company acquires or sells listed securities, in which case settlement date accounting is applied.
Financial assets are controlled at every external reporting instance to determine whether or not there are objective indications that one or a group of fi nancial assets should be written-down.
Financial instruments are recorded at their amortised cost or fair value depending on the initial classifi cation under IAS 39 (see below).
Offi cial quotations at year-end are used to determine the fair value of long-term derivative instruments. The market value of other fi nancial assets and liabilities is determined by generally accepted methods such as discounting of future cash fl ows with the quoted interest rate corresponding to the period of the contract. The translation to Swedish crowns is based on the quoted exchange rate at year-end.
Amortised cost is calculated with the help of the compound interest method, which means that premiums or discounts together with directly related expenses or income is recorded over the period the contract is valid with the help of the calculated compound interest. The amortised cost is the value generated from a present value calculation with the compound interest rate as the discount factor.
Financial assets and liabilities are set off against each other and presented as net amount in the balance sheet where there exists a legal right to set off and where the intention is to settle the items with a net amount or realise the asset and liability at the same time.
Cash and cash equivalents are cash in fi nancial institutions and short-term liquid placements with a term of less than three months that run no real risk of fl uctuations in value. They are reported as loan payables.
Accounts receivable are categorised as "Loan receivables and receivables", which means they are recorded at amortised cost. Write-downs of accounts receivables are included in operating expenses.
The receivables above are categorised as "Loan receivables and receivables", which means they are recorded at amortised cost. In the case the term of a receivable is short it is booked at its nominal value without a discount according to the method for amortised cost.
Derivative instruments are booked at their fair value in the balance sheet. Changes in the value of derivative instruments that are not recorded as hedges and derivative instruments that are included in a fair value hedge are recorded in the income statement. Changes in the value of cash fl ow hedges are reported in particular categories under shareholders' equity until the hedged item is booked in the income statement. Any profi ts or losses on hedge instruments attributable to the effective part of the hedge are recorded as equity under hedge provisions. Any profi ts or losses on hedge instruments attributable to the ineffective part of the hedge are recorded in the income statement. Hedges of net investments in foreign subsidiaries are recorded in the same way as cash fl ow hedges, with the exception that any effects from the hedge is recorded in the translation reserve.
Accounts payable are categorised as "Other fi nancial liabilities" which means they are reported at amortised cost. Accounts payable are booked at their nominal value without a discount due to their expected short-term.
Debts to credit institutions and facilities are categorised as "Other fi nancial liabilities" which means they are reported at amortised cost and directly related expenses such as arrangement fees are distributed throughout the period of the loan with the help of the compound interest method. Long-term liabilities mature after the period of one year while current liabilities fall due within one year.
The Group has fi nancial guarantee contracts in which the Group has a commitment to reimburse the holder of a debt instrument for loss it incurs because a specifi ed debtor
fails to make payment when due in accordance with the original or modifi ed contract terms. Financial guarantee contracts are initially recognised at fair value. Financial guarantee contracts are then recognised continuously at the higher amount of the best estimate of the present value of anticipated net fees to settle the guarantee commitment, and the original amount booked as a liability.
Provisions are recorded in the balance sheet when a company has a formal or informal obligation as a result of a past event and it is likely that an outfl ow of resources will be necessary to resolve the obligation and a reliable estimation of the amount can be made. Provisions for restructuring costs are reported when the Group has an established, detailed restructuring plan that has been announced to the parties concerned. Provisions are reconsidered every time an external report is made.
The Group has been managed and organised into two lines of business during the year, Infologistics and User Manuals. These lines of business make up the Group's primary segments. Secondary segments are geographical areas. The segments' income, operating income/loss, assets and liabilities include directly related items as well as items that can be reasonably allocated to a specifi c segment. Items that are not allocated are primarily interest bearing assets and liabilities, interest income/expenses and taxes. When presenting geographical sales the customer's location has determined which geographical area sales are allocated to.
During the year the following interpretations or changes of existing standards have come into effect:
The amendment in IAS 39 allows companies in certain situations to reclassify fi nancial assets held-for-sale. The amendment has not had any effect on Group accounts.
This refers to share repurchasing and transactions between Group companies. The interpretation clarifi es how to classify share-based payments when the entity buys treasury shares to settle its share-based payment obligation as well as how to report option programs in subsidiaries that apply the IFRS. The application of IFRIC 11 has not had any effect on Group accounts since there are currently no share-based payments in the Group.
IFRIC 14, IAS 19 "Limit on a defi ned benefi t asset, minimum funding requirements and their interaction"
IFRIC 14 clarifi es limits in the value of plan assets regarding future demands on minimum funding of defi ned benefi t plans.
IFRIC 12 "Service concession arrangements" 1) is not relevant to Group operations. The interpretation deals with the arrangements in which a private company is going to construct an infrastructure to provide a public service for a specifi c amount of time. The entity is paid for this service during the contract period.
IASB has issued a number of new standards and interpretations, as well as amendments to standards and interpretations, which will be applied by Elanders from 1 January 2009 or later.
The amendment requires an entity to capitalise borrowing costs directly attributable to acquisition, construction or production of a qualifying asset that takes a substantial period of time to prepare for its intended application or sales. As a result of the revised IAS 23 it is no longer possible to choose whether or not a borrowing cost will be capitalized or not. It is now mandatory. The revised IAS 23 is applicable for annual periods beginning on or after 1 January 2009. This amendment is not relevant to Group accounts since there are no assets for which borrowing expenses can be activated.
This is an amendment in the presentation of income and expenses that were previously presented in the statement of changes in equity. The Group will apply this recommendation from 1 January 2009 and it is expected to have an effect the fi nancial reports.
The revised IFRS 2 contains certain clarifi cations and is applicable for annual periods beginning on or after 1 January 2009. However, the amendment is not expected to have any effect since there are currently no share-based payments in the Group.
IFRS 8 contains further disclosure requirements concerning fi nancial and descriptive information related to operating segments. As a result of the adoption of IFRS 8 IAS 14, "Operating segments", is no longer valid. The standard is applicable for annual periods beginning on or after 1 January 2009.
The new revised IFRS 3 contains some essential changes compared with the previous standard. One such change is that costs in connection with acquisitions, such as lawyer's and consultant's fees, must be written-off instead of, as was previously the case, having the option to add them on to the purchase price. The revised IFRS 3 is applicable for annual periods beginning on or after 1 July 2009 and will be applied in the future on all acquisitions from 1 January 2010.
Amendment to IAS 32, IAS 1 -– "Puttable fi nancial instruments and obligations arising on liquidation" Classifi cation of fi nancial instruments in connection with liquidation
The amendment concerns classifi cation of fi nancial instruments in connection with liquidation. The amendment in IAS 32 is applicable for annual periods beginning on or after 1 January 2009 and will be applied by the Group but is not expected to have any effect on Group accounts.
Amendment to IAS 39 – "Financial instruments: Recognition and measurement" – "Eligible Hedged Items" 1).
The amendment in IAS 39 is effective from 1 July 2009 and clarifi es how existing principles for hedge accounting are applied in two specifi c situations. The amendment is not expected to have any effect on Group fi nancial reports.
The amendment concerns the presentation of subsidiaries, jointly controlled entities and associates upon the transition to IFRS. The amendment is effective from 1 January 2009 and is not expected to have any effect on Group fi nancial reports.
The revised standard requires that the effects of all transactions with minority shareholders to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifi es the accounting if control is lost. The Group will apply this amendment prospectively to transactions with minority shareholders from 1 January 2010.
The amendment in IFRS 5 clarifi es that all of a subsidiary's assets and liabilities are classifi ed as held-for-sale if a partial disposal sale plan results in loss of control. The Group will apply this amendment prospectively from 1 January 2010.
The defi nition of borrowing costs has been amended so that interest expense is calculated as using the effective interest method defi ned in IAS 39. This amendment is not relevant to Group accounts since there are no assets for which borrowing expenses can be activated.
An investment in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specifi c assets included within the investment, for example, goodwill. The amendment is not expected to have any effect on Group accounts.
Where fair value less costs to sell is calculated on the basis of discounted cash fl ows, disclosures equivalent to those for value-in-use calculation should be made. The Group will provide the disclosure where applicable from 1 January 2009.
A prepayment may only be recognised in the event that payment has been made in advance of the Group obtaining right of access to goods or receipt of services. The Group will apply the amendment in IAS 38 from 1 January 2009. The amendment is not expected to have any effect on Group accounts.
The amendment in IAS 19 concerns the following:
Amendment to IAS 39 – "Financial instruments: Recognition and measurement" 1)
This amendment to IAS 39 clarifi es that it is possible for there to be movements into and out of fair value through profi t or loss category where a derivative commences or ceases to qualify as a hedging instrument in cash fl ow or net investment hedge.
Furthermore it clarifi es the defi nition of a fi nancial asset or fi nancial liability valued at fair value through profi t or loss as it relates to items held-for-trading.
The amendment also contains certain adaptations to IFRS 8 "Operating segments" in regards to hedge reporting and clarifi es that when remeasuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, revised effective interest rates are used.
The Group will apply the amendment in IAS 39 from 1 January 2009. The amendment is not expected to have any effect on Group fi nancial reports.
Amendment to IAS 1 "Presentation of fi nancial instruments" 1)
Financial assets and liabilities classifi ed as held-for-trading in accordance with IAS 39 "Financial instruments: Recognition and measurement" are examples of current assets and liabilities respectively.
The Group will apply the amendment in IAS 1 from 1 January 2009. The amendment is not expected to have any effect on Group fi nancial reports.
IFRIC 16 "Hedges of a net investment in a foreign operation" 1)
The interpretation clarifi es the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the Group. The Group will apply the interpretation from 1 January 2009 and it is not expected to have any material effect on Group fi nancial reports.
Interpretations and amendments to existing standards that are not yet effective and not relevant to Group operations
The interpretations and adjustments listed below has been published and is applicable for annual periods starting 1 January 2009 or later. However, they have not been deemed relevant for the group:
When preparing the accounts according to IFRSs and good accounting practice estimations and assumptions are made about the future that affect balance and income statement items in the annual accounts. These assessments are based on historic experience and the various assumptions that Executive Management and the Board of Directors consider plausible under existing circumstances. In cases where it is not possible to ascertain the book value of assets and liabilities through information from other sources these estimations and assumptions form the basis of the valuation. If other assumptions are made or other circumstances infl uence the matter the actual outcome can differ from these assessments. Assessments can have a particularly signifi cant effect on Elanders' profi t/loss and position in the areas of the value of goodwill and taxes.
Goodwill is subject to annual impairment test according to the described accounting principle in section 2 above. The assessment requires an estimation of parameters that affect future cash fl ow and ascertaining the discounting factor. Essential assumptions when assessing the need of write-downs for goodwill and a description of the effect of plausible, possible changes in these assumptions that are basis of the calculations are found in Note 15.
Deferred tax receivables concerning tax loss carried forward reported by the Group amount to MSEK 69 per 31 December 2008. The recorded value of these tax receivables have been tested at year-end and it is deemed probable that the deductions can be set off against a surplus in future taxation.
The tax receivables refer to Swedish tax loss carried forward that can be utilised for an unlimited amount of time. The Group's Swedish operations, with the exception of the operations in Kungsbacka disposed of in 2007, have been profi table for the past three fi nancial years and are expected to continue to generate a considerable surplus. Elanders therefore believes it is safe to say that it will be possible to set off the defi cit deduction which the tax receivables stem from, against future taxable surpluses.
Booked pension provisions for defi ned benefi t pension plans are based on actuarial calculations based on assumptions concerning discount rates, anticipated returns on plan assets, future wage increases, infl ation and demographic factors. The assessments made concerning these assumptions affect the value of the entire pension obligation and major changes in the assessments could have a signifi cant effect on the Group's profi t/loss and fi nancial position. This is also true in the case a different assessment is made in the matter of whether pension plans in Alecta shall be reported as defi ned contribution pension plans or not. See note 26 for further information.
The parent company has prepared its annual accounts according to the Annual Accounts Act and the Swedish Financial Reporting Board Recommendation RFR 2.1 Accounting for legal entities and where applicable statements made by the Swedish Financial Reporting Board. RFR 2.1 requires the parent company to, in the annual accounts for the legal entity, use all the EU approved IFRSs and interpretations as far as possible within the framework of the Annual Accounts Act and the Security Law, taking into consideration the connection between accounting and taxation.
The parent company generally follows the same previously described principles as the Group. Differences between Group and parent company accounting principles are presented below.
The parent company amortises goodwill according to plan, which is not permitted for the Group. Goodwill is amortised on a straight-line basis over a twenty-year period since it relates to acquisitions of a strategic nature.
Tax laws allow provisions for special reserves and funds that are reported separately in the parent company. This allows companies within limits to allocate and retain recorded profi ts in operations without them being immediately taxed. The untaxed reserves are not subject to taxation until they are dissolved. If companies loose money the untaxed reserves can be used to cover the losses without being taxed.
Group and shareholder contributions are recognised according to the Swedish Financial Reporting Board statement UFR 2. This requires group and shareholder contributions to be reported according to the substance of the transaction. Contributions are reported as capital movement, i.e. an increase or decrease in unrestricted equity. As a result of this method of accounting only tax attributable to revenues and expenses are reported in the income statement.
The parent company's pension obligations have been calculated and reported based on the Swedish Security Law. Application of the Swedish Security Law is a prerequisite for fi scal deductions.
1) This standard or interpretation has not yet been approved for application in the EU.
Income statement per business area
| Infologistics | User Manuals | Other items that cannot be allocated | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Revenues | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| External sales | 1,697,271 | 1,616,740 | 493,909 | 418,876 | – | – | 2,191,180 | 2,035,616 |
| Total revenues | 1,697,271 | 1,616,740 | 493,909 | 418,876 | – | – | 2,191,180 | 2,035,616 |
| Income/loss | ||||||||
| Operating income/loss | –14,300 | 91,300 | 30,326 | 94,900 | – | 40,620 | 16,026 | 226,820 |
| Financial items (not allocated) | – | – | – | – | –50,392 | –42,699 | –50,392 | –42,699 |
| Taxes (not allocated) | – | – | – | – | 8,662 | –11,930 | 8,662 | –11,930 |
| Income/loss for the year from continuing operations |
–14,300 | 91,300 | 30,326 | 94,900 | –41,730 | –14,009 | –25,704 | 172,191 |
| Infologistics | User Manuals | Other items that cannot be allocated | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Assets | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Goodwill | 823,644 | 766,830 | 94,040 | 77,826 | – | – | 917,684 | 844,656 |
| Other intangible assets | 8,649 | 10,275 | 28,133 | 8,994 | 2,720 | 2,152 | 39,502 | 21,421 |
| Tangible assets | 267,443 | 210,068 | 245,215 | 234,140 | 714 | 776 | 513,372 | 444,984 |
| Interest in joint venture | – | – | 13,647 | 12,414 | – | – | 13,647 | 12,414 |
| Other fi xed assets | 11,358 | 19,275 | 2,433 | 2,375 | 80,077 | 46,252 | 93,868 | 67,902 |
| Inventory | 79,259 | 77,397 | 40,803 | 48,333 | – | – | 120,062 | 125,730 |
| Current receivables | 382,012 | 372,563 | 158,210 | 148,137 | 6,639 | 121,242 | 546,861 | 641,942 |
| Cash and cash equivalents | 23,012 | 23,372 | 118,011 | 41,794 | 718 | 63 | 141,741 | 65,229 |
| Total assets | 1,595,377 | 1 479,780 | 700,492 | 574,013 | 90,868 | 170,485 | 2 386,737 | 2,224,278 |
| Liabilities | ||||||||
| Long-term liabilities referring to operations | 47,196 | 52,878 | 10,840 | 9,224 | 28,833 | 8,425 | 66,869 | 70,527 |
| Other long-term liabilities (not allocated) |
– | – | – | – | 107,922 | 266,254 | 107,922 | 266,254 |
| Current liabilities referring to operations | 355,114 | 304,389 | 79 447 | 89,392 | 16,967 | 27,811 | 471,528 | 421,592 |
| Other current liabilities (not allocated) | – | – | – | – | 862,742 | 601,341 | 862,742 | 601,341 |
| Total liabilities | 402,310 | 357,267 | 90,287 | 98,616 | 1,016,464 | 903,831 | 1,509,061 | 1,359,714 |
| Net investments | 93,058 | 324,970 | 21,601 | 104,235 | 1,352 | 5,944 | 116,011 | 435,149 |
| Depreciation | 66,020 | 54,539 | 35,834 | 26,235 | 846 | 2,735 | 102,700 | 83,509 |
| Write-downs on fi xed assets | 3,410 | – | – | – | – | 1,026 | 3,410 | 1,026 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Sweden | 839,347 | 939,159 |
| Germany | 453,315 | 296,654 |
| Great Britain | 248,088 | 283,109 |
| Hungary | 141,451 | 190,150 |
| Poland | 119,167 | 105,606 |
| U.S.A. | 67,845 | – |
| China | 165,533 | 97,428 |
| Other countries | 156,434 | 123,510 |
| Total | 2,191,180 | 2,035,616 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| China | 7,046 | 26,589 |
| Germany | 41,162 | 280,312 |
| Sweden | 11,550 | 18,034 |
| Great Britain | 16,577 | 23,701 |
| Poland | 7,303 | 3,988 |
| Hungary | 7,098 | 68,950 |
| U.S.A. | 23,425 | – |
| Other countries | 1,850 | 13,575 |
| Total | 116,011 | 435,149 |
| Sweden | 2008 | 2007 |
|---|---|---|
| Goodwill | 405,812 | 407,291 |
| Other intangible assets | 8,512 | 8,174 |
| Tangible assets | 63,491 | 90,770 |
| Other fi xed assets | 87,170 | 65,238 |
| Inventory | 34,302 | 46,561 |
| Current receivables | 190,602 | 351,617 |
| Cash and bank | 5,788 | 4,984 |
| Total | 795,677 | 974,635 |
| Germany | 2008 | 2007 |
| Goodwill | 350,493 | 303,019 |
| Other intangible assets | 2,822 | 4,017 |
| Tangible assets | 113,335 | 75,836 |
| Other fi xed assets | 98 | 85 |
| Inventory | 20,438 | 13,244 |
| Current receivables | 110,964 | 62,469 |
| Cash and bank | 9,066 | 16,086 |
| Total | 607,216 | 474,756 |
| Hungary | 2008 | 2007 |
| Goodwill | 94,040 | 77,826 |
| Other intangible assets | 24,354 | 8,356 |
| Tangible assets | 81,229 | 91,451 |
| Other fi xed assets | 13,647 | 12,414 |
| Inventory | 16,709 | 29,108 |
| Current receivables | 62,653 | 73,771 |
| Cash and bank | 48,204 | 18,637 |
| Total | 340,836 | 311,563 |
| 2008 | 2007 |
|---|---|
| 9,696 | 3,967 |
| – | 40,565 |
| 6,038 | 13,153 |
| 14,886 | 10,018 |
| 30,620 | 67,703 |
| 2008 | 2007 |
| –10,396 | –4,990 |
| –1,063 | –868 |
| –28,274 | –4,604 |
| –39,733 | –10,462 |
Assets per geographical area (cont.)
| Great Britain | 2008 | 2007 |
|---|---|---|
| Goodwill | 40,284 | 45,428 |
| Tangible assets | 35,227 | 35,477 |
| Inventory | 14,441 | 16,196 |
| Current receivables | 50,207 | 65,029 |
| Cash and bank | 2,013 | 1,755 |
| Total | 142,172 | 163,885 |
| China | 2008 | 2007 |
|---|---|---|
| Other intangible assets | 195 | 397 |
| Tangible assets | 122,704 | 101,368 |
| Other fi xed assets | 0 | 503 |
| Inventory | 12,813 | 10,470 |
| Current receivables | 51,401 | 37,644 |
| Cash and bank | 64,324 | 17,355 |
| Total | 251,437 | 167,737 |
| Other countries | 2008 | 2007 |
|---|---|---|
| Goodwill | 27,055 | 11,092 |
| Other intangible assets | 3,619 | 477 |
| Tangible assets | 97,386 | 50,082 |
| Other fi xed assets | 6,600 | 2,076 |
| Inventory | 21,359 | 10,151 |
| Current receivables | 81,034 | 51,412 |
| Cash and bank | 12,346 | 6,412 |
| Total | 249,399 | 131,702 |
| Group total | 2,386,737 | 2,224,278 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Opening book value | 12,414 | 11,486 |
| Investments | – | – |
| Share of profi t / loss in joint venture | 103 | 489 |
| Translation difference | 1,130 | 439 |
| Closing book value | 13,647 | 12,414 |
The Group's interest in joint ventures consists of the following companies:
| Shareholding | ||
|---|---|---|
| Company | Registered offi ce | in percent |
| Hansaprint Elanders Hungary Kft | Hungary | 50 |
Financial information in summary for joint ventures
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Share of (50 %): | ||
| - total assets | 16,776 | 14,607 |
| - total liabilities | 3,541 | 2,605 |
| - net sales | 19,126 | 13,305 |
| - income/loss after tax | 103 | 489 |
| 2008 | 2007 | |||||
|---|---|---|---|---|---|---|
| Average no. of employees | Women | Men | Total | Women | Men | Total |
| Parent company | ||||||
| Sweden | 5 | 9 | 14 | 4 | 7 | 11 |
| Total in parent company | 5 | 9 | 14 | 4 | 7 | 11 |
| Dotterbolag | ||||||
| Sweden | 211 | 403 | 614 | 228 | 450 | 678 |
| Germany | 53 | 138 | 191 | 40 | 98 | 138 |
| Poland | 44 | 92 | 136 | 37 | 89 | 126 |
| Great Britain | 42 | 134 | 176 | 33 | 123 | 156 |
| Hungary | 138 | 131 | 269 | 132 | 124 | 256 |
| China | 102 | 154 | 256 | 77 | 96 | 173 |
| Other countries | 64 | 89 | 153 | 12 | 13 | 25 |
| Total in subsidiaries | 654 | 1,141 | 1,795 | 559 | 993 | 1,552 |
| Group total | 659 | 1,150 | 1,809 | 563 | 1,000 | 1,563 |
| 2008 | 2007 | |||||
|---|---|---|---|---|---|---|
| Salaries and other remuneration | of which variable | of which variable | ||||
| Board and CEO | remuneration | Other employees | Board and CEO | remuneration | Other employees | |
| Parent company | ||||||
| Sweden | 5,588 | – | 11,299 | 6,074 | 1,050 | 8,800 |
| Total in parent company | 5,588 | – | 11,299 | 6,074 | 1,050 | 8,800 |
| Subsidiaries in Sweden | 1,701 | – | 230,274 | 4,830 | 150 | 237,065 |
| Subsidiaries abroad | ||||||
| Germany | 4,755 | 961 | 85,758 | 3,431 | 1,110 | 60,668 |
| Poland | 1,627 | – | 16,949 | 1,103 | 120 | 12,774 |
| Great Britain | 2,310 | – | 60,770 | 2,882 | 325 | 67,438 |
| Hungary | 2,027 | – | 24,974 | 2,155 | 481 | 27,245 |
| China | 1,604 | 273 | 13,537 | 1,011 | – | 8,642 |
| Other countries | 3,711 | – | 36,782 | 1,179 | – | 7,557 |
| Total in subsidiaries | 17,735 | 1,234 | 469,044 | 16,591 | 2,186 | 421,389 |
| Group total | 23,323 | 1,234 | 480,343 | 22,665 | 3,236 | 430,189 |
| 2008 | 2007 | |||||
|---|---|---|---|---|---|---|
| Salaries and other remuneration | Salaries and other remuneration |
Social security contributions |
of which pension contributions |
Salaries and other remuneration |
Social security contributions |
of which pension contributions |
| Parent company | 16,887 | 10,788 | 4,437 | 14,874 | 9,729 | 3,697 |
| Subsidiaries | 486,778 | 147,069 | 35,832 | 437,980 | 151,055 | 43,198 |
| Group total | 503,665 | 157,857 | 40,269 | 452,854 | 160,784 | 46,895 |
| Remuneration to the Board, Chief Executive Offi cer and other senior offi cers |
Basic wage/ Board remuneration |
Variable remuneration |
Other benefi ts |
Pension contributions |
Remuneration for committee work |
|---|---|---|---|---|---|
| Carl Bennet, Chairman | 500 | – | – | – | 50 |
| Tore Åberg, Vice Chairman | 250 | – | – | – | 125 |
| Ingegerd Gréen | 250 | – | – | – | 25 |
| Göran Johnsson | 250 | – | – | – | 50 |
| Hans-Olov Olsson | 250 | – | – | – | 25 |
| Kerstin Paulsson | 250 | – | – | – | 50 |
| Johan Stern | 250 | – | – | – | 50 |
| Total remuneration to the Board | 2 000 | – | – | – | 375 |
| Patrick Holm, Chief Executive Offi cer | 3,150 | – | 97 | 1,939 | – |
| Other senior offi cers (4,5) | 9,166 | 1,081 | 1,307 | 2,901 | – |
| Total remuneration to CEO and senior offi cers | 12,316 | 1,081 | 1,404 | 4,841 | – |
| Total remuneration to the Board, CEO and senior offi cers | 14,316 | 1,081 | 1,404 | 4,841 | 375 |
The Chairman of the Board and Board members receive compensation for their participation on the Board and committee work from the total remuneration sum for the Board determined by the Annual General Meeting. Board members and deputies employed in the Group did not receive any fees or benefi ts in addition to those pertaining to their employment. The Chairman of the Board has not received any compensation other than Board and committee remuneration. Remuneration to the Chief Executive Offi cer and other senior offi cers consists of a basic salary, variable remuneration, other benefi ts and pension. Senior offi cers are the 5 (4) people who, together with the Chief Executive Offi cer, comprised Executive Management in 2008.
The proportion between basic salary and variable remuneration corresponds to the offi cer's responsibility and authority. For the Chief Executive Offi cer and the Chief Financial Offi cer variable remuneration may not exceed 50 percent of their annual salary respectively. For the other senior offi cers variable remuneration may not exceed 40 percent of their annual salary. Variable remuneration is based on results in relation to individually targeted goals.
Pension benefi ts as well as other benefi ts to the Chief Executive Offi cer and senior offi cers are part of the total remuneration. Variable remuneration is carried as an expense for the fi nancial year 2008 and paid out in 2009.
Bonus for the Chief Executive Offi cer is based on goals established by the Board. For other senior offi cers variable remuneration was based on goals established by the President together with the remuneration committee. There was no variable remuneration or any other kind of remuneration with a dilution effect.
Other benefi ts are mainly company cars.
The Group has both defi ned benefi t and defi ned contribution pension plans. Pension cost is the cost that affects income/loss for the year. The Chief Executive Offi cer and one person in Executive Management have both defi ned benefi t and defi ned contribution pension plans. The present value of the defi ned benefi t obligation under those plans was MSEK 9.5 (6.7) on the balance sheet date.
Defi ned contribution pension: The retirement age for the Chief Executive Offi cer is 65 years. The pension premium must correspond with the cost of ITP. The salary pension is based on is basic wage and an average of the last three years' variable remuneration. The retirement age for other senior offi cers is 65 years. The pension contract stipulates that pension premiums must correspond with the cost of ITP.
Defi ned benefi t pension: The retirement age for the Chief Executive Offi cer is 60 years. Between the ages 60 to 65 the pension level is 70% of the salary pension is based on and from the age of 65 for life it is 32.5%. Basic wage is the only salary pension is based on. Survivor pension is approximately 16.25% of basic wage. The retirement age for one of the other offi cers is 60 years. Between the ages 60 to
65 the pension level for this person is 70% of the salary pension is based on and from the age of 65 for life it is 32.5%. Basic wage is the only salary pension is based on. Survivor pension is approximately 16.25% of basic wage.
For the other senior offi cers the retirement age is 65 years. The pension premium must correspond with the cost of ITP.
All pensions are fully vested, i.e. there is no dependency on future employment.
There is no compensation or benefi ts in the form of fi nancial instruments.
No other remunerations have been distributed.
The period of notice for termination of the Chief Executive Offi cer by the company is 18 months.
The period of notice from the Chief Executive Offi cer is 6 months. The period of notice for termination of other senior offi cers by the company varies between 3 to 18 months. No severance pay is paid no matter which party gives notice. Normal wages are paid during the period of notice.
The remuneration committee has during the year presented the Board with recommendations concerning principles for the remuneration of senior offi cers. The recommendations have included proportions between fi xed and variable remuneration as well as the size of possible raises. In addition, the remuneration committee has proposed criteria for deciding on variable remuneration as well as pension terms and severance pay. The Board has discussed the remuneration committee's proposals and made its decisions guided by their recommendations.
The Board has determined the remuneration for the Chief Executive Offi cer for the fi nancial year of 2008 based on the remuneration committee's proposals. The Chief Executive Offi cer has determined the remuneration for other senior offi cers after consultation with the chairman of the remuneration committee.
Members of the remuneration committee during the year were Carl Bennet, Chairman, Ingegerd Gréen, Hans-Olov Olsson and Tore Åberg. The remuneration committee meets when necessary but at least once a year to prepare proposals for the remuneration of the Chief Executive
Offi cer and approve or deny his proposals for remuneration of and terms for the offi cers that report directly to him. In addition, the remuneration committee draws up principles for salary levels and employment terms for Executive Management. The remuneration committee proposes remuneration, terms and principles to the Board that then decides on these matters. The remuneration committee has met twice in 2008. The committee has been supported by external expertise in matters concerning compensation levels and structures.
| Absence due to illness in the Group (Swedish companies), percent |
2008 | 2007 |
|---|---|---|
| Total absence due to illness | 3.3 | 3.2 |
| Short time absence due to illness | 1.7 | 1.6 |
| Long time absence due to illness | 1.6 | 1.6 |
| Absence due to illness, men | 2.8 | 1.9 |
| Absence due to illness, women | 4.1 | 3.7 |
| Absence due to illness, employees under 30 years | 3.8 | 3.6 |
| Absence due to illness, employees between 30-49 years | 2.8 | 2.8 |
| Absence due to illness, employees 50 years and over | 3.8 | 3.5 |
The total absence due to illness is given in percent of the employees' combined ordinary working hours.
Long time absence due to illness means absence during a continuous period of 60 days or more.
| Women 2008 | Men 2008 | Women 2007 | Men 2007 | |||||
|---|---|---|---|---|---|---|---|---|
| Position | Number | % | Number | % | Number | % | Number | % |
| Board member | 2 | 25 | 6 | 75 | 2 | 25 | 6 | 75 |
| Executive Management | – | – | 5 | 100 | – | – | 5 | 100 |
| Supervisors | 32 | 24 | 99 | 76 | 33 | 28 | 85 | 72 |
NOTE 6 Fees to the auditors
| SEK '000 | 2008 | 2007 |
|---|---|---|
| PricewaterhouseCoopers AB | ||
| Audit fees | 2,168 | – |
| Fees for other consultations | 150 | – |
| Other 2) | ||
| Audit fees | 325 | 2,129 |
| Fees for other consultations 1) | 426 | 816 |
| Total | 3,069 | 2,945 |
1) Included in the consulting fees in 2007 is a fee of SEK 625,000 for a certifi cate requiring an auditor's signature and other work connected to the Rights Issue. These fees have not been expensed, but have instead been booked as a reduction in the capital contributed by the Rights Issue..
2) These fees were paid primarily to the accounting fi rm Deloitte AB.
Audit fees are defi ned as fees for auditing the annual accounts, the book-keeping, the administration of the Board and other tasks that company accountants are responsible for as well as consultation or other assistance stemming from observations made during the audit or when carrying out other such activities. Anything else is other consultation.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Depreciation and write-downs | 106,110 | 84,535 |
| Cost for remuneration to employees | 689,880 | 622,608 |
| Changes in work-in-progress and fi nished products | 1,584 | –25,408 |
| Cost of paper | 392,572 | 337,531 |
| Other material | 223,694 | 193,040 |
| Cost of sub-contracted work | 286,374 | 280,833 |
| Other production costs | 212,349 | 168,394 |
| Freight costs | 66,704 | 64,017 |
| Cost of sales and marketing | 50,745 | 43,676 |
| Other costs | 136,112 | 97,300 |
| Total cost for products and services sold, sales costs and administration costs |
2,166,124 | 1,866,526 |
| Annual cost | ||
|---|---|---|
| SEK '000 | 2008 | 2007 |
| Computer equipment | 6,791 | 3,627 |
| Machinery and other equipment | 60,702 | 42,657 |
| Rental contracts, premises | 71,839 | 62,764 |
| Total | 139,332 | 109,048 |
| Future leasing fees and rental costs | ||||
|---|---|---|---|---|
| SEK '000 | 2009 | 2010–2013 | thereafter | |
| Computer equipment | 4,407 | 3,643 | 7 | |
| Machinery and other equipment | 52,781 | 99,040 | 591 | |
| Rental contracts, premises | 67,312 | 190,436 | 50,571 | |
| Total | 124,500 | 293,119 | 51,169 |
The information above is for the Group. Lease agreements normally run between 1-8 years. No signifi cant lease agreement for machinery or equipment were signed during the year. Normally leasing agreements for machines are based on the number of impressions made. Future leasing costs are based on the number of impressions made at normal capacity.
| Financial income | ||
|---|---|---|
| SEK '000 | 2008 | 2007 |
| Interest income | 2,054 | 2,120 |
| Exchange rate income | 19,946 | 3,292 |
| Total | 22,000 | 5,412 |
| Financial expenses | ||
| Interest expenses | –51,119 | –41,656 |
| Exchange rate losses | –20,252 | –4,284 |
| Other | –1,021 | –2,171 |
| Total | –72,392 | –48,111 |
| Tax on income/loss for the year | |
|---|---|
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Current tax on income/loss for the year | –14,950 | –27,447 |
| Correction of previous years' current tax expense | – | –4,210 |
| Deferred tax | 23,612 | 19,727 |
| Recorded tax | 8,662 | –11,930 |
The company won a tax case in 2007, which resulted in a reduction of deferred tax cost for 2007 of MSEK 21.1.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Tax loss carry forwards | 80,409 | 56,076 |
| Restructuring reserves | 13,406 | 468 |
| Untaxed reserves | – | –6,189 |
| Fixed assets | –23,881 | –12,273 |
| Other | –1,907 | 2,336 |
| 68,027 | 40,418 | |
| Less: Deferred tax assets not valued | –8,429 | –1,932 |
| Deferred tax assets and liabilities, net | 59,598 | 38,486 |
Deferred tax assets not valued mainly relates to tax loss carry forwards in our subsidiary in Italy.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Deferred tax assets | 89,649 | 62,463 |
| Deferred tax liabilities | –30,051 | –23,977 |
| Total | 59,598 | 38,486 |
| Reconciliation of recorded tax | ||
| SEK '000 | 2008 | 2007 |
| Income/loss before taxes | –34,366 | 184,121 |
| Tax according to Swedish tax rate of 28% (28%) | 9,622 | –51,554 |
| Tax effect of: | ||
| Differences in tax rates for foreign subsidiaries | 15,611 | 13,057 |
| Non-taxable capital gains | – | 10,658 |
| Non-deductible costs | –4,568 | –682 |
| Change in unrecorded deferred tax assets | – | 18,837 |
| Change in legal tax rate | –5,599 | – |
| Tax losses carried forward not valued | –7,680 | – |
| Correction of previous years' tax expense | –1 | –3,929 |
| Other | 1,277 | 1,683 |
| Recorded tax on income/loss for the year | 8,662 | –11,930 |
| Change in deferred tax | ||
| SEK '000 | 2008 | 2007 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Opening value, net | 38,319 | 19,979 |
| Divestiture/acquisition of subsidiaries | –2,932 | –1,243 |
| Recorded deferred tax on income/loss for the year | 23,612 | 19,727 |
| Tax items booked directly against equity 1) | 3,381 | 167 |
| Translation differences | –2,765 | –144 |
| Deferred tax on income/loss for the year attributable | –17 | – |
| to disposed operations | ||
| Closing value, net | 59,598 | 38,486 |
1) Tax items booked directly against equity refer to the Group's hedge reserve and hedging of net investments.
No operations were disposed of in 2008. Disposed operations in the Annual Report refer to the directories operations Elanders Tryckeri AB (now Kungsbacka Graphic AB) in Kungsbacka that were sold to the MD of the company in 2007. This meant Elanders no longer produced directories; segment Directories. Operations were consolidated into Group accounts until the end of January 2007. All fi gures below regarding discontinued operations are attributable to the disposed Kungsbacka operations.
| MSEK | 2008 | 2007 |
|---|---|---|
| Net sales1) | 23,2 | |
| Cost of products and services sold1) | – | –21,1 |
| Gross profi t | – | 2,1 |
| Selling and administrative costs | – | –1,9 |
| Other operating income | – | – |
| Other operating costs | – | – |
| Operating income/loss | – | 0,2 |
| Net fi nancial items | – | –0,2 |
| Income/loss after net fi nancial items | – | 0,0 |
| Taxes | – | – |
| Income/loss from discontinued operations for the period |
– | 0,0 |
| Income from disposal of operations | – | – |
| Tax on income from disposal of operations | – | – |
| Income/loss for the period | – | 0,0 |
| Earnings per share from discontinued operations, SEK 3) 4) | – | – |
| Average number of shares (in thousands) | – | 9 537 2) |
| Outstanding shares at the end of period (in thousands) | – | 9 765 |
1) Figures include transactions with remaining units.
2) Average number of outstanding shares after adjustment for the bonus issue element of the
Rights issue. 3) Earnings per share before and after dilution.
4) Earnings per share calculated by dividing income/loss by the average number of outstanding shares during the period.
| MSEK | 2008 | 2007 |
|---|---|---|
| Cash fl ow from operating activities | – | 7,5 |
| Cash fl ow from investing activities | – | 0,0 |
| Cash fl ow from fi nancing activities | – | –7,5 |
| Operating cash fl ow | – | 7,7 |
There were no assets or liabilities attributable to disposed operations on per 31 December 2008 or 31 December 2007.
Earnings per share is calculated by dividing the income/loss attributable to the parent company's shareholders with the average number of outstanding shares during the year.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Income/loss for the year attributable to shareholders |
–25 559 | 172 087 |
| Average number of outstanding shares (in thousands) 1) |
9 765 | 9 537 |
| Earnings per share, SEK 2) | –2,62 | 18,06 |
1) The average number of outstanding shares after adjustment for the bonus issue element from the Rights Issue.
2) Earnings per share before and after dilution.
Cash and cash equivalents consist primarily of cash and bank transactions. Short-term placements are classifi ed as cash and cash equivalents when:
the risk of changes in their fair value is insignifi cant
they are easily converted
they mature in less than three months from the date they were acquired.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Depreciation and write-downs of intangible and tangible assets |
106,107 | 84,535 |
| Income/loss in jointly controlled entities | –103 | –489 |
| Changes in provisions that do not affect cash fl ow Unrealised exchange rate gains (–) / |
39,510 | 1,985 |
| exchange rate losses (+) | –4,987 | 4,053 |
| Capital gain/loss from the sale/disposal of operations |
– | –49 |
| Capital gain/loss from the disposal of tangible assets |
–6,038 | –52,801 |
| Total | 134 489 | 37,234 |
| Paid and received interest | ||
| SEK '000 | 2008 | 2007 |
| Paid interest | –51,044 | –43,929 |
| Interest received | 1,992 | 2,120 |
| Total | –49,052 | –41,809 |
Operating cash fl ow is defi ned as cash fl ow from current operations, excluding fi nancial items and paid taxes, and cash fl ow from investing activities.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Cash fl ow from operating activities | 120,616 | 97,467 |
| Adjustment for fi nancial items | 50,392 | 42,699 |
| Adjustment for paid taxes | 31,669 | 32,288 |
| Acquisitions and sales of operations | –56,798 | –247,845 |
| Other items included in cash-fl ow from investing | ||
| activities | 71,300 | –154,628 |
| Operating cash fl ow | 217,179 | –230,019 |
| Goodwill Other intangible assets |
Total | |||||
|---|---|---|---|---|---|---|
| SEK '000 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Opening acquisition value | 844,656 | 557,056 | 33,775 | 16,976 | 878,431 | 574,032 |
| Acquisitions, incl. acquisition of operations | 14,608 | 300,775 | 8,765 | 18,406 | 23,373 | 319,181 |
| Adjustment of additional purchase price | –1,480 | – | – | – | –1,480 | – |
| Disposals incl. disposal of operations/discards | – | –24,705 | –413 | –2,463 | –413 | –27,168 |
| Reclassifi cation | – | – | 21,869 | – | 21,869 | – |
| Translation difference | 59,900 | 11,530 | 5,572 | 856 | 65,472 | 12,386 |
| Closing acquisition values | 917,684 | 844,656 | 69,568 | 33,775 | 987,252 | 878,431 |
| Opening accumulated depreciation | – | – | –10,026 | –6,016 | –10,026 | –6,016 |
| Accumulated depreciation in acquired operations | – | – | –364 | – | –364 | – |
| Disposals incl. disposal of operations/discards | – | – | 413 | 1,437 | 413 | 1,437 |
| Depreciation for the year | – | – | –10,174 | –5,020 | –10,174 | –5,020 |
| Reclassifi cation | – | – | –2,509 | – | –2,509 | – |
| Translation difference | – | – | –1,668 | –427 | –1,668 | –427 |
| Closing accumulated depreciation | – | – | –24 328 | –10,026 | –24,328 | –10,026 |
| Opening balance - write-downs | – | –24,705 | –2,328 | –1,302 | –2,328 | –26,007 |
| Write-downs during the year | – | – | –3,410 | –1,026 | –3,410 | –1,026 |
| Disposals, incl. disposal of operations/discard | – | 24,705 | – | – | – | 24,705 |
| Closing balance - write-downs | – | – | –5,738 | –2,328 | –5,738 | –2,328 |
| Closing net book value | 917,684 | 844,656 | 39,502 | 21,421 | 957,186 | 866,077 |
All depreciation for 2008 of intangible assets has been recognised in its entirety under Cost of products and services sold. Expenditures for of internally generated software Elanders is capitalized when it is clear that the investments can lead to fi nancial advantages for the company. The capitalized expenditure is depreciated on a straight-line basis over the period of use. Fixed assets for the sum of 19,362 have been reclassifi ed in 2008 from under construction to other intangible assets.
As of December 31, 2008, the net book value for internally generated capitalized software expenditures amounted to 2,822 (6,110).
Goodwill specifi cation per country and business area:
| 2008 | 2007 | |||
|---|---|---|---|---|
| SEK '000 | Infologistics | User Manuals | Infologistics | User Manuals |
| Sweden | 405,811 | – | 407,291 | – |
| Germany | 350,493 | – | 303,019 | – |
| Hungary | – | 94,040 | – | 77,826 |
| Other countries | 67,340 | – | 56,520 | – |
| Book value | 823,644 | 94,040 | 766,830 | 77,826 |
Goodwill is subjected to impairment tests annually and when there are indications that a write-down may be necessary. The recoverable amount for cash generating units is based on a calculation of useful value. Impairment tests are performed on the lowest identifi ed cash generating level.
Useful value of goodwill attributable to Elanders' cash generating units is based on discounted endless cash fl ows. Cash fl ows for the fi rst 2 years (which amount to some 14 % of endless cash fl ows) are based on each cash generating unit's budget or forecast. In the following period cash fl ows are assumed to have a growth rate corresponding to infl ation of 2 %, which is less than the company's targets. The discount rate 9.3 % before taxes has been used in all calculations, which was calculated based on the weighted average capital cost (WACC).
Budgeted operating margins have been based on previous profi t levels, rationalisations and each company's assessment of expected developments in the market in the future. Exchange rate forecasts are based on actual exchange rates at the beginning of the year.
Impairment tests have not shown any need to write-down goodwill for any of the cash generating units. Based on the assumptions shown above, the useful value is higher than the book value for all the cash generating units per 31 December 2008. On the date this Annual Report was signed the Board of Directors had not discovered any new circumstances that affected this assessment.
An increase in the discount rate by one point or a reduction of endless cash fl ows for all cash generating units by 10 % would on their own or together indicate the need to writedown goodwill in the interval MSEK 10-67, based on the above conditions.
| Buildings and land1) | Plant and machinery | Equipment, tools, fi xtures and fi tting |
Fixed assets under construction2) |
Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK '000 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Opening acquisition value | 82,892 | 192,132 | 680,642 | 1 052,447 | 68,593 | 117,142 | 18,440 | 8,546 | 850,567 | 1,370,267 |
| Purchases/investments | 24 | 44,823 | 168,746 | 142,881 | 22,184 | 15,693 | 16,456 | 56,946 | 207,410 | 260,343 |
| Sales/discards, incl. disposal of | ||||||||||
| companies | – | –160,115 | –75,000 | –571,153 | –9,525 | –66,378 | – | – | –84,525 | –797,646 |
| Reclassifi cations | –11,678 | 3,655 | 13,987 | 43,453 | 9,815 | 494 | –31,934 | –47,602 | –19,810 | – |
| Translation difference | 8,160 | 2,397 | 76,059 | 13,014 | 8,332 | 1,642 | 154 | 550 | 92,705 | 17,603 |
| Closing acquisition value | 79,398 | 82,892 | 864,434 | 680,642 | 99,399 | 68,593 | 3,116 | 18,440 | 1,046,347 | 850,567 |
| Opening accumulated depreciation and write-downs |
–11,852 | –97,399 | –356,634 | –835,464 | –37,097 | –92,009 | – | – | –405,583 –1,024,872 | |
| Depreciation for the year | –3,597 | –6,808 | –76,231 | –61,911 | –12,695 | –9,770 | – | – | –92,523 | –78,489 |
| Write-downs for the year | – | – | –61,267 | – | –13,466 | – | – | – | –74,733 | – |
| Sales/discards, incl. disposal of companies |
– | 92,852 | 67,802 | 548,111 | 7,994 | 65,738 | – | – | 75,796 | 706,701 |
| Reclassifi cations | 3,053 | – | 2,492 | – | –5,097 | – | – | – | 448 | – |
| Translation difference | –1,473 | –497 | –29,395 | –7,370 | –5,512 | –1,056 | – | – | –36,380 | –8,923 |
| Closing accumulated depreciation and write-downs |
–13,869 | –11,852 | –453,233 | –356,634 | –65,873 | –37,097 | – | – | –532,975 | –405,583 |
| Closing net book value | 65,529 | 71,040 | 411,201 | 324,008 | 33,526 | 31,496 | 3,116 | 18,440 | 513,372 | 444,984 |
NOTE 16 Tangible assets
1) Buildings and land include land with a book value of 566 (508).
2) Fixed assets under construction include advances related to tangible assets of 0 (568).
Depreciation during the year amounting to 92,523 (78,489) has charged the cost of products and services sold in the income statement by 79,591 (68,579), selling expenses by 1,401 (1,269) and administrative expenses by 11,534 (8,641). Fixed assets of 19,362 have been reclassifi ed in 2008 from under construction to intangible assets. In addition, the net sum of MSEK 8.6 has been reclassifi ed from buildings and land to plant and machinery.
The total tax assessment value of Group property in Sweden is MSEK 8.3 (6.5), of which MSEK 1.8 (1.8) is the tax assessment value of the land.
The book value of tangible assets that are possessed through fi nance lease contracts amounts to 38,326 (19,107). All tangible assets fi nanced under fi nance leases are reported as plant and property.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Within 1 year | 15,706 | 6,674 |
| Between 1 and 5 years | 27,681 | 27,085 |
| More than 5 years | – | – |
| Total | 43,387 | 33,759 |
| Future interest expenses for fi nance leases | –4,659 | –3,941 |
| Current fi nance lease liability | 38,728 | 29,818 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Opening acquisition value | 3,241 | 8,319 |
| Acquisition/disposal of subsidiary | 1,868 | –4,000 |
| Reduction for the year | –3,208 | –1,086 |
| Translation difference | 97 | 8 |
| Closing book value | 1,998 | 3,241 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Opening book value | 2,198 | 70 |
| Sales | – | –50 |
| Investments | 23 | 2,178 |
| Closing book value | 2,221 | 2,198 |
Included in investments during the year was the paid purchase price of 2,083 for Other securities are primarily the shares in Webtop Solutions AS in Norway where Elanders holds 7 % of the shares. Webtop Solutions AS is not a listed company.
The major purpose of Group fi nancial risk management is to identify and control the Group's fi nancial risks. Risk management is centralised to the parent company treasury and fi nance function. All current or future fi nancial risks in the Group's subsidiaries are managed by the central treasury and fi nance function that acts as an internal bank. The exception is commercial credit risks, which are handled by each subsidiary.
The greatest fi nancial risks the Group is exposed to are exchange risk, interest risk, fi nancing risk, capital risk, and credit risk.
Elanders runs into an exchange risk primarily through export sales (transaction exposure), in the conversion translation of balance sheet items in foreign currency or when converting net profi t and net assets from foreign subsidiaries (translation exposure).
In accordance with the Group's fi nancial policy normally contracted payment fl ows are hedged but expected and budgeted fl ows are not. Contracted net infl ows within a twelve month period are hedged at 100 percent while contracted net infl ows for longer periods are normally hedged at 80 percent.
The Group uses forward exchange contracts to handle exchange risk exposure and hedge accounting for contracted future payment fl ows as well as translation of fi nancial assets and liabilities. The hedge reserve per 2008-12-31 amounted to -500 (-563) and will be returned to the income statements in 2008.
Elanders' net infl ow of foreign currency consists primarily of EUR, CNY, PLN and GBP. A change in the currency rate up or down by 5 percent in of these currencies would affect profi t by MSEK 6 without taking existing forward exchange contracts into consideration.
Translation differences on operating receivables and payables as well as forward exchange contracts that are held for hedging purposes are reported as other operating income or expenses. Translation differences on fi nancial liabilities and assets are reported under net fi nancial items.
In accordance with our established policy fi nancial assets and liabilities are hedged at 100 percent while translation differences connected to net profi t are not hedged. In regards to net assets in foreign subsidiaries, the German operations have been hedged. If the exchange rate in EUR changed by 10 percent this hedge would affect equity by MSEK 3, not considering translation differences from subsidiaries.
Interest risk is defi ned as the risk of lower profi ts caused by a change in interest rates. The Group's fi nancial policy provides the guidelines for interest duration. The objective of interest management is to minimise the negative effects of changes in interest rates. The Group strives to achieve a balance between cost effi cient borrowing and the risk exposure of a negative infl uence on profi ts if a sudden, substantial interest rate change should occur.
A change in the interest rate up or down of 1 point would have an estimated affect on Group profi t by MSEK 8.
| Interest bearingxxx | |||||
|---|---|---|---|---|---|
| MSEK | Fixed interest |
Floating interest |
Non-interest bearing |
||
| Current receivables | – | – | 591 | ||
| Long-term receivables | – | – | 4 | ||
| Cash and bank | – | 142 | – | ||
| Current liabilities | – | –863 | –280 | ||
| Long-term liabilities | – | –122 | –18 | ||
| Total | – | –843 | 297 |
In the previous table provisions for pensions are included in interest bearing liabilities. In the table regarding categorisation of fi nancial instruments on the next page they are included in non-fi nancial liabilities.
The company's goals regarding its capital structure are in part to secure its ability to continue operations in order to be able to generate returns to shareholders and be useful to other interested parties and in part that its capital structure is optimal in relationship to the cost of the capital. Dividends to shareholders, redemption of shares, issues of new shares or the sales of assets are examples of steps the Group can take to adjust its capital structure. The debt/equity ration on 31 December 2008 amounted to 96% (95). The debt/equity ratio is defi ned as interest-bearing liabilities reduced by cash and cash equivalents in relation to recorded equity, including minority shares. The Group's goal is a debt/equity ratio under 100%. At the end of the year employed capital (equity and interest-bearing net debt) amoun-
ted to MSEK 1,721 (MSEK 1,682). Elanders' goal is a return on employed capital exceeding 14%. In 2008 it amounted to 0.9% (16).
Financing risk is defi ned as the risk of not being able to meet payment obligations as a result of insuffi cient liquid funds or diffi culties in fi nding fi nancing. The Group aims to always have several sources of credit that are willing to offer fi nancing on market terms. The Group's policy specifi es a liquidity buffer of around MSEK 50. See note 25 concerning due date structure for liabilities to credit facilities. The Group holds a very close dialogue with its main banks in order to mutually ensure our long-term relationship and thereby reduce fi nancing risks.
Credit risk or counterparty risk is defi ned as the risk of a counterparty not meeting their obligations. The most crucial credit risk arises when trading exchange derivative instruments and investing surplus liquidity.
The fi nancial policy stipulates that fi nancial credit risks must be limited and controlled through the sole usage of well-known fi nancial institutions with high credit ratings. The policy lists counterparty limits and approved counterparties. On 31 December 2008 the total counterparty exposure in derivative instruments (calculated as net receivables per counterparty) was MSEK 67, taking the ISDA contracts into consideration. The commercial credit risk consists of the payment ability of customers and is handled by the subsidiaries through careful monitoring of payment ethics, follow up of customers' fi nancial reports and good communication. The Group's total credit risk is spread out over many different companies. However, in actuality a few customers represent a large part of the Group's accounts receivable. These customers are for the most part large, listed companies that have been thoroughly investigated. The total commercial credit exposure is equivalent to the book value of long-term receivables, accounts receivable and other current receivables. The Group has also taken out a credit insurance that covers bad customer debts up to MSEK 50 with an excess of MSEK 2.5.
If the fair value differs from book value the fair value is noted in the note concerned.
Hedge reserves are forward exchange contracts as well as hedging of net investments abroad, specifi cally the German subsidiary.
In the table below is a summary of how some variables, such as a change in the price of paper or wages, would affect Group profi t.
| Variable | Change | Effect on income/loss after fi nancial items, MSEK |
|---|---|---|
| Net sales | +/– 1 % unit | 12.3 |
| Paper cost | +/– 1 % unit | 3.9 |
| Personnel cost | +/– 1 % unit | 6.9 |
| Sick leave | +/– 1 % unit | 12.3 |
| Electricity cost | +/– 1 % unit | 0.2 |
| Interest level | +/– 1 % unit | 8.4 |
To handle the Group's transaction exposure future contracted payment fl ows in foreign currency are hedged with forward exchange contracts. The duration of a contract corresponds to the underlying contracted orders and payment fl ows. The table below shows a compilation over the Group's outstanding forward exchange contracts per 31 December 2008 and 2007.
| 2008 | 2007 | |||||
|---|---|---|---|---|---|---|
| MSEK | Nominal amount | Book value | Fair value | Nominal amount | Book value | Fair value |
| Forward exchange contracts | 67 | –1 | –1 | 19 | –1 | –1 |
Calculated fair value is based on market quotations and generally accepted valuation methods.
| MSEK | Nominal amount |
Average hedging rate |
Due within a year |
Due between 1-2 years |
Due between 3-5 years |
Due after 5 years or more |
|---|---|---|---|---|---|---|
| EUR/SEK | 2 | 9.00 | 2 | – | – | – |
| GBP/SEK | 2 | 11.59 | 3 | – | – | – |
| USD/SEK | 29 | 7.78 | 29 | – | – | – |
| PLN/SEK | 17 | 2.63 | 17 | – | – | – |
| EUR/PLN | 15 | 3.90 | 13 | 2 | – | – |
| EUR/GBP | 2 | 0.83 | 1 | – | – | – |
| Total | 67 | 65 | 2 | – | – |
Categorisation of fi nancial instruments
The allocation of fi nancial instruments in the balance sheets for 2008 and 2007 is presented in the tables below.
| 2008 Assets |
Fair value | Derivative instruments in de signated hedge accounting |
Held-to-maturity | Loans and | Available-for-sale | Other fi nancial |
Non-fi nancial | |
|---|---|---|---|---|---|---|---|---|
| SEK '000 | through P&L | relationships | investments | receivables | fi nancial assets | assets | assets | Total |
| Intangible assets | – | – | – | – | – | – | 957,186 | 957,186 |
| Tangible assets | – | – | – | – | – | – | 513,372 | 513,372 |
| Financial assets | – | – | – | – | 128 | 4,091 | 103,296 | 107,515 |
| Current assets | ||||||||
| Inventory | – | – | – | – | – | – | 120,062 | 120,062 |
| Accounts receivable | – | – | – | 470,894 | 470,894 | |||
| Tax receivables | – | – | – | – | – | – | 19,709 | 19,709 |
| Other receivables | – | – | – | 9,515 | – | – | 4,763 | 14,278 |
| Prepaid expenses and deferred income | – | – | – | – | – | – | 41,980 | 41,980 |
| Cash and cash equivalents | – | – | – | 141,741 | – | – | – | 141,741 |
| Total current assets | – | – | – | 622,150 | – | – | 186,514 | 808,664 |
| Total assets | – | – | – | 622,150 | 128 | 4,091 | 1,760,368 | 2,386,737 |
| 2008 | Derivative instruments in |
|||||
|---|---|---|---|---|---|---|
| Liabilities | designated hed | Other | ||||
| SEK '000 | Fair value through P&L |
ge accounting relationships |
Available-for-sale fi nancial assets |
fi nancial assets |
Non-fi nancial assets |
Total |
| Long-term liabilities and provisions | – | – | – | 140,222 | 34,570 | 174,792 |
| Current liabilities and provisions | ||||||
| Liabilities to credit institutions | – | – | – | 862,742 | – | 862,742 |
| Advances from customers | – | – | – | 7,065 | – | 7,065 |
| Accounts payable | – | – | – | 231,832 | – | 231,832 |
| Current tax liabilities | – | – | – | – | 5,947 | 5,947 |
| Other liabilities | – | 679 | – | 41,001 | 26,100 | 67,780 |
| Accrued expenses and prepaid income | – | – | – | – | 119,129 | 119,129 |
| Provisions | – | – | – | – | 39,774 | 39,774 |
| Total current liabilities and provisions | – | 679 | – | 1,142,640 | 190,950 | 1,334,269 |
| Total liabilities and provisions | – | 679 | – | 1,282,862 | 225,520 | 1,509,061 |
| 2007 Assets |
Fair value | Derivative instruments in de signated hedge accounting |
Held-to-maturity | Loans and | Available-for-sale | Other fi nancial |
Non-fi nancial | |
|---|---|---|---|---|---|---|---|---|
| SEK '000 | through P&L | relationships | investments | receivables | fi nancial assets | assets | assets | Total |
| Intangible assets | – | – | – | – | – | – | 866,077 | 866,077 |
| Tangible assets | – | – | – | – | – | – | 444,984 | 444,984 |
| Financial assets | – | – | – | – | 20 | 5,419 | 74,877 | 80,316 |
| Current assets | ||||||||
| Inventory | – | – | – | – | – | – | 125,730 | 125,730 |
| Accounts receivable | – | – | – | 450,623 | – | – | – | 450,623 |
| Tax receivables | – | – | – | – | – | – | 10,023 | 10,023 |
| Other receivables | – | – | – | 125,195 | – | – | 6,024 | 131,219 |
| Prepaid expenses and deferred income | – | – | – | – | – | – | 50,077 | 50,077 |
| Cash and cash equivalents | – | – | – | 65,229 | – | – | – | 65,229 |
| Total current assets | – | – | – | 641,047 | – | – | 191,854 | 832,901 |
| Total assets | – | – | – | 641,047 | 20 | 5,419 | 1,577,792 | 2,224,278 |
| 2007 | Derivative instruments in |
|||||
|---|---|---|---|---|---|---|
| Liabilities | designated hed | Other | ||||
| SEK '000 | Fair value through P&L |
ge accounting relationships |
Available-for-sale fi nancial assets |
fi nancial assets |
Non-fi nancial assets |
Total |
| Long-term liabilities and provisions | – | – | – | 294,205 | 42,577 | 336,782 |
| Current liabilities and provisions | ||||||
| Liabilities to credit institutions | – | – | – | 601,341 | – | 601,341 |
| Advances from customers | – | – | – | 9,830 | – | 9,830 |
| Accounts payable | – | – | – | 211,739 | – | 211,739 |
| Current tax liabilities | – | – | – | – | 14,642 | 14,642 |
| Other liabilities | – | 782 | – | 19,577 | 30,803 | 51,162 |
| Accrued expenses and prepaid income | – | – | – | – | 122,248 | 122,248 |
| Provisions | – | – | – | – | 11,970 | 11,970 |
| Total current liabilities and provisions | – | 782 | – | 842,487 | 179,663 | 1,022,932 |
| Total liabilities and provisions | – | 782 | – | 1,136,692 | 222,240 | 1,359,714 |
Financial instruments are valued the fi rst time at fair value plus transaction costs, which applies to all fi nancial assets and liabilities not recognised at fair value through profi t or loss. Financial assets and liabilities recognised at fair value through profi t or loss are valued the fi rst time at fair value, while attributable transaction costs are valued through profi t or loss.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Less than 30 days overdue | 62,087 | 65,213 |
| 30-60 days overdue | 18,705 | 18,864 |
| 61-90 days overdue | 9,023 | 4,194 |
| 91-120 days overdue | 3,778 | 1,679 |
| More than 120 days overdue | 9,792 | 10,357 |
| Total | 103,385 | 100,307 |
Only accounts receivable are included in the table above. No other overdue receivables existed per 31 December 2008 or in 2007.
The provision for bad debts was 9,109 (7,079) per 31 December 2008.
INTEREST INCOME AND EXPENSES STEMMING FROM FINANCIAL ASSETS AND FINANCIAL LIABILITIES The table below shows interest income and expenses for all fi nancial assets and liabilities.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Interest income from fi nancial assets | 2,054 | 2,120 |
| Interest expenses due to fi nancial liabilities | –50,362 | –40,761 |
| Total | –48,308 | –38,641 |
The reason the profi t/loss is not the same as the interest profi t/loss recorded under net fi nancial items is mainly due to the fact that net fi nancial items stemming from pensions have been excluded.
NET PROFITS AND LOSSES FOR FINANCIAL INSTRUMENTS REPORTED IN THE INCOME STATEMENT The tale below contains the following items that have been reported in the income statement:
Profi ts and losses stemming from exchange rate differences, including profi ts and losses attributable to hedge accounting
Profi ts and losses stemming from fi nancial instruments where hedge accounting is applied
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Loans and receivables | 2,738 | 8,568 |
| Other fi nancial liabilities | –4,065 | –12,228 |
| Total | –1,327 | –3,660 |
INEFECTIVITY IN HEDGE ACCOUNTING
Elanders has no infectivity in cash fl ow hedging or net investment hedging abroad. See the statement on changes in equity for further information.
DUE DATE STRUCTURE REGARDING FINANCIAL LIABILITIES
The due date structure regarding interest-bearing liabilities is presented in note 25, Liabilities to credit facilities. Other fi nancial liabilities, such as accounts payable and advance payments to customers, are due according to contract within 1-60 days.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Raw materials and consumables | 49,881 | 53,733 |
| Work in process | 40,472 | 38,922 |
| Finished goods | 29,709 | 33,075 |
| Total | 120,062 | 125,730 |
Costs relating to obsolescence are included in the entry costs of products and services sold and amounted to –512 (–122).
In 2007 other current receivables contained a receivable regarding the purchase price of MSEK 111 (MSEK 0) for the sold property in Kungsbacka which was sold at
the end of 2007. The receivable was settled in February 2008.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Machine rent paid in advance | 3,497 | 1,993 |
| Premise rent paid in advance | 13,738 | 9,397 |
| Other prepaid expenses | 24,745 | 38,687 |
| Total | 41,980 | 50,077 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Cash and bank | 141,741 | 65,229 |
| Cash and cash equivalents | 141,741 | 65,229 |
Translation differences in cash and cash equivalents were 19,480 (2,528).
| Number of registered shares in the parent company |
2008 | 2007 | |
|---|---|---|---|
| Issued per 1 January | 9,764,999 | 8,370 000 | |
| Rights Issue | – | 1,394 999 | |
| Issued per 31 December | 9,764,999 | 9,764 999 | |
| Number of votes |
Number of shares |
Share capital, MSEK |
|
| A shares | 10 | 583,333 | 5,833,333 |
| B shares | 1 | 9 181,666 | 91,816,666 |
All shares are completely paid for.
No shares are reserved for transfer according to option agreements or other contracts.
9 764,999 97,649,999
In the beginning of 2009 new credit contracts were signed with the banks. Renegotiations will be held at the end of 2009. The credit contracts contain so-called negative clauses that allow creditors to cancel loans or adjust interest as a result of Elanders' fi nancial key ratios.
The Group had a total of MSEK 1,093 (MSEK 1,182) per 31 December 2008 in credit facilities that are primarily used for fi nancing operations in the form of bank overdraft facilities. The fi nancing cost is priced according to a fi xed interest term and an agreed margin. The Group's average effective interest during the year was 6.1 % (5.0 %).
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Long-term portion of fi nance lease liabilities | 29,831 | 24,177 |
| Long-term loans | 78,091 | 242,077 |
| Total | 107,922 | 266,254 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Bank overdraft facilities, utilised | 575,644 | 421,256 |
| Current portion of long-term loans | 278,188 | 174,443 |
| Current portion of fi nance lease liabilities | 5,642 | |
| Total | 862,741 | 601,341 |
Due date structure for interest-bearing liabilities to credit facilities (not including interest expenses), not including utilised bank overdraft facilities, is as follows:
| Year | 2008 | 2007 |
|---|---|---|
| Within 1 month | 2,677 | 3,309 |
| Within 1-3 months | 28,364 | 6,894 |
| Within 3-12 months | 256,056 | 169,882 |
| Within 2-5 years | 96,932 | 251,741 |
| After 5 years | 10,990 | 14,513 |
| Total | 395,019 | 446,339 |
For more than 75% of the liabilities to credit institutions interest expenses are charged to Elanders quarterly in arrears.
Utilised amounts and available credit in bank overdraft facilities:
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Bank overdraft facilities, utilised amount | 575,644 | 421,256 |
| Bank overdraft facilities, granted amount | 766,304 | 705,316 |
| Unutilised amount | 190,660 | 284,060 |
See note 29 for information on pledged assets.
Defi ned benefi t pension plans mainly cover retirement pensions and widow pensions where the employer has an obligation to pay a lifelong pension corresponding to a certain guaranteed percentage of wages or a certain annual sum. Retirement pensions are based on the number of years a person is employed. The employee must be registered in the plan for a certain number of years in order to receive full retirement pension. For each year at work the employee earns an increasing right to pension, which is recorded as pension earned during the period as well as an increase in pension obligations. These plans are fi nanced through payments made regularly by the employer.
The actuarial measurement of pension obligations and costs for defi ned benefi t plans are based on the following actuarial assumptions:
| Percent | 2008 | 2007 |
|---|---|---|
| Discount rate | 4.0 | 4.5 |
| Anticipated future annual raises in wages | 3.0 | 3.0 |
| Anticipated infl ation | 2.0 | 2.0 |
| Anticipated personnel turnover | 5.0 | 5.0 |
| Anticipated return on plan assets | 3.5 | 5.0 |
The following provisions for pension obligations have been recognised in the consolidated balance sheet:
| Funded | Unfunded | ||
|---|---|---|---|
| SEK '000 | plans | plans | Total |
| Present value of pension obligations | 9,467 | 13,715 | 23,182 |
| Less: The fair value of plan assets | –9,676 | – | –9,676 |
| Unrecognised actuarial gains (+) losses (–) | 1,151 | –241 | 910 |
| Provisions for pensions recognised in the | 942 | 13,474 | 14,416 |
| balance sheet |
The actuarial profi ts and losses are not recorded in the income statement or balance sheet for 2008 since the Group applies the rules for the "corridor". These rules stipulate that actuarial profi ts and losses are entered in the income statement or balance sheet for future periods if they exceed 10% of the current value of pension obligations or 10% of the plan asset's fair value.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Net pension obligation at the beginning of the year | 15,099 | 15,654 |
| Net cost recorded in the income statement | 1,150 | 3,851 |
| Disposal of operations | – | –2,395 |
| Pensions paid out | –135 | –372 |
| Contributions paid | –1,698 | –1,639 |
| Net pension obligation at year-end | 14,416 | 15,099 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Current year service cost | 980 | 2,802 |
| Interest on the obligation | 757 | 895 |
| Actuarial profi ts (–)/losses (+) | –417 | 483 |
| Anticipated return on plan assets | –170 | –329 |
| Pension costs for defi ned benefi t plans | 1,150 | 3,851 |
These plans mainly cover retirement, sick and family pensions. The premiums are paid regularly during the year by individual Group companies to different insurance companies. The size of the premiums is based on wages. Pension costs for the period are included in the income statement and amount to 40,188 (43,745).
The obligations for retirement and sick pensions for white-collar workers for several of the Swedish companies have been safeguarded through insurance in Alecta. According to an opinion from the Swedish Financial Reporting Board , UFR 3, this is a defi ned benefi t multi-employer plan. The Group has not had access to the information necessary to report these plans as defi ned benefi t pension plans for the fi nancial year 2008. Pension plans that are safeguarded through insurance in Alecta according to ITP are therefore reported as a defi ned contribution plan. Fees for 2008 for pension insurance from Alecta totalled 4,488 (7,849). Alecta's surplus can be passed on to the insurance-takers and/or the insured. At the end of 2008 Alecta's surplus in the form of the collective consolidation level was 112 % (152%). The collective consolidation level is the market value of Alecta's assets as a percentage of insurance obligations measured according to Alecta's actuarial assumptions, which are not in agreement with IAS 19.
| Percent | 2008 | 2007 |
|---|---|---|
| Cost of products and services sold | 52 | 59 |
| Administrative expenses | 33 | 28 |
| Selling expenses | 15 | 13 |
| 2008 | Provided for during the year |
Utilized during the year |
Reversal of | Translation effects |
2007 |
|---|---|---|---|---|---|
| 36,091 | 35,938 | –4,211 | – | 553 | 3 811 |
| 2,920 | 2,920 | –2,763 | – | – | 2 763 |
| 1,800 | 1,800 | – | – | – | – |
| 3,482 | 298 | –5,360 | –400 | 47 | 8 897 |
| 44,293 | 40,956 | –12,334 | –400 | 600 | 15 471 |
| unutilized amounts |
Provisions for personnel costs are primarily due to structural measures. The provisions are expected to be used in 2009 and 2010. Provisions for premise costs are primarily due to structural measures. The provisions are expected to be used in 2009 and 2010.
Provisions for other costs are primarily due to restoration of premises. The closing provisions are expected to be used in 2009. Other provisions are, to a large extent, expected to be used in 2009-2011 and are provisions, among other things, for environmental measures of MSEK 1.5 (MSEK 1.5).
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Holiday pay liability | 37,818 | 37,935 |
| Social security contributions | 29,041 | 24,329 |
| Accrued salaries and remuneration | 4,592 | 9,539 |
| Other accrued expenses and deferred income | 47,678 | 50,445 |
| Total | 119,129 | 122,248 |
| Pledged assets | ||
|---|---|---|
| SEK '000 | 2008 | 2007 |
| Real estate mortgages | 62,586 | 175,935 |
| Floating charges | 159,043 | 232,585 |
| Other pledged assets | 85,289 | 34,500 |
| Total | 306,918 | 443,020 |
| Given to: | ||
| - Credit institutions | 306,918 | 443,020 |
| Total | 306,918 | 443,020 |
| Contingent liabilities | ||
| Other contingent liabilities | 18,031 | 33,889 |
| Total | 18,031 | 33,889 |
Other pledged assets refer to assets with ownership reservations, such as fi nancial leasing. For further information see note 16..
Elanders continues to have guarantee commitments of MSEK 26.5 per 31 December 2008 from the sales of the operations in Kungsbacka, primarily for production equipment in Kungsbacka that is also the collateral for the commitments.
Contracted investments on the balance sheet date which have not yet been recorded in the fi nancial reports are shown in the amounts below:
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Tangible assets | – | 1,607 |
| Total | – | 1,607 |
Group obligations relating to operating lease contracts are reported in note 8.
Internal Group transactions and dealings have been eliminated in Group accounts and are therefore not included in the fi gures below concerning the Group.
During the year the following transactions with related parties have taken place:
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Sales of products and services | ||
| Carl Bennet with associated company | 185 | 199 |
| Joint ventures | 3,218 | 2,025 |
| Total | 3,403 | 2,224 |
| SEK '000 | ||
| Purchase of products and services | ||
| Carl Bennet with associated company | 559 | 329 |
| Joint ventures | 4,620 | 2,035 |
| Total | 5,179 | 2,364 |
The transactions between subsidiaries have taken place with normal business terms and at market prices. During the year Group internal sales amounted to MSEK 94 (MSEK 158) and in 2007 a subsidiary was sold to the subsidiary's MD, please see the section on disposal of operations in Kungsbacka below. The transactions with Carl Bennet primarily concern costs stemming from his role as Chairman of the Board in Elanders AB.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Receivables from related parties | ||
| Carl Bennet with associated company | 34 | 17 |
| Joint ventures | 2,104 | 1,213 |
| Total | 2,138 | 1,230 |
| SEK '000 | ||
| Liabilities to related parties | ||
| Carl Bennet with associated company | 252 | 144 |
| Joint ventures | 340 | 474 |
| Total | 592 | 618 |
No reserve has been required during 2008 or 2007 for the loans granted to joint ventures.
No Board member or senior offi cer has or has had direct or indirect participation in any business transactions, between themselves or the Group that are or were of an unusual nature concerning the terms. Remuneration to Board members and management is reported in note 5 to Group fi nancial reports.
On 26 January 2007 Elanders signed a contract to divest its shares in Elanders Tryckeri AB in Kungsbacka. The buyer was Leif Axelsson, MD of the company. The purchase sum amounted to MSEK 46 including overtaken net debt. Profi t from the sales was SEK 0. The Board requisitioned an opinion from Nordea Corporate Finance and according to it the terms were fair.
Infologistics
Infologistics
User Manuals
U All the shares in San Marco Hungary Kft, Hungary, a real estate company that owned the property where some of our Hungarian operations are located. During the latter part of the year the company merged with the Hungarian subsidiary.
| MSEK | 2008 | 2007 |
|---|---|---|
| Intangible assets | 0.2 | 18.3 |
| Tangible assets | 82.3 | 86.3 |
| Other fi xed assets | 1.9 | 0.1 |
| Inventory | 12.6 | 11.5 |
| Accounts receivable | 36.4 | 36.8 |
| Other current assets | 4.4 | 1.9 |
| Cash and cash equivalents | 2.0 | 51.5 |
| Minority interests | – | –2.2 |
| Non- interest bearing long-term liabilities | –2.9 | – |
| Interest bearing long-term liabilities | –41.3 | –43.1 |
| Non-interest bearing current liabilities | –29.0 | –91.9 |
| Interest bearing current liabilities | –22.4 | –23.2 |
| Identifi able net assets | 44.2 | 46.0 |
| Goodwill | 14.6 | 287.6 |
| Purchase sum | 58.8 | 333.6 |
| Deducted: | ||
| Unpaid purchases sums | – | –34.3 |
| Cash and cash equivalents in acquired opera tions |
–2.0 | –51.5 |
| Negative effect on Group cash and cash equivalents |
56.8 | 247.8 |
In February 2008 Elanders acquired all the shares in the American company Seiz Printing Inc. ("Seiz") in Acworth, Atlanta, Georgia, U.S.A. The company is specialised in high quality offset print, fulfi lment and logistic services. Seiz has been handling deliveries to the Group's automotive customers in the U.S. The purchase price was MUSD 3 together with the assumption of net debt in the company of some MUSD 8. A group surplus value of MUSD 2.2 which was generated in connection with the acquisition, is related to future market shares and synergies. Seiz has generated MSEK 59 in sales and MSEK -2 in losses between the acquisition date and 31 December.
On 21 May 2008 Elanders acquired all the shares in Mairs Graphische Betriebe GmbH & Co (Mairs) in Stuttgart, Germany. The purchase price amounted to MEUR 3.8, including a fi nancial leasing contract of MEUR 1.6. A group surplus value of MEUR 0.1, which was generated in connection with the acquisition, is related to future market shares and synergies. The company was consolidated from June 2008. Mairs has contributed an estimated MSEK 100 in sales between the acquisition date and 31 December. It is diffi cult to ascertain to what extent the company has contributed to the Group's profi ts as it was immediately integrated into the existing operations in Germany. Acquisition expenses of around MSEK 2.8 related primarily to lawyers' and consultation fees are included in the purchase sum below.
It is our belief that if the operations had belonged to the Group from 1 January 2008 net sales would have increased by approximately MSEK 62 and lowered operating profi t by MSEK 10.
| Recorded values in acquired |
Adjustment to | Recorded value | |
|---|---|---|---|
| MSEK | operations | fair value | in the Group |
| Intangible assets | 0.2 | – | 0.2 |
| Tangible assets | 84.3 | –2.0 | 82.3 |
| Other fi xed assets | 1.9 | – | 1.9 |
| Inventory | 12.6 | – | 12.6 |
| Accounts receivable | 36.4 | – | 36.4 |
| Other current assets | 4.4 | – | 4.4 |
| Cash and cash equivalents | 2.0 | – | 2.0 |
| Non-interest bearing long-term liabilities | –4.5 | 1.6 | –2.9 |
| Interest bearing long-term liabilities | –41.3 | – | –41.3 |
| Non-interest bearing current liabilities | –29.0 | – | –29.0 |
| Interest bearing current liabilities | –22.4 | – | –22.4 |
| Identifi able net assets | 44.6 | –0.4 | 44.2 |
| Goodwill | 14.6 | ||
| Total purchase sums | 58.8 | ||
| Deducted: | |||
| Unpaid purchase sums | – | ||
| Cash and cash equivalents in acquired operations |
–2.0 | ||
| Negative effect on Group cash and cash equivalents |
56.8 |
No important events have taken place from the end of the fi scal year until the date of the signing of this Annual Report.
| PARENT COMPANY – INCOME STATEMENTS | Note | ||
|---|---|---|---|
| SEK '000 | 2008 | 2007 | |
| Net sales | – | 3,735 | |
| Cost of products and services sold | – | –2,756 | |
| Gross profi t | – | 979 | |
| Administrative expenses | 1 | –30,313 | –26,751 |
| Other operating income | 2 | 9,948 | 7,753 |
| Other operating expenses | 2 | –6,686 | –6,342 |
| Operating income/loss | 3 | –27,051 | –24,361 |
| Income/loss from fi nancial investments | 4 | ||
| Result from participations in group companies | –34,607 | 76,058 | |
| Interest income | 14,808 | 9,422 | |
| Other fi nancial income | 39,078 | 8,348 | |
| Interest expenses | –38,422 | –30,663 | |
| Other fi nancial expenses | –74,444 | –13,497 | |
| Income/loss after fi nancial items | –120,638 | 25,307 | |
| Taxes | 5 | 18,473 | 34,813 |
| Income/loss for the year | –102,165 | 60,120 | |
| Dividend per share (SEK) | 0.001) | 4.50 |
1) Proposed dividend by the Board
| SEK '000 | Note | 2008 | 2007 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | 6 | 4,189 | 3,719 |
| Tangible assets | 7 | 714 | 776 |
| Shares in subsidiaries | 8 | 1,008,427 | 1,082,857 |
| Interest in joint ventures | 9 | 9,641 | 9,641 |
| Other investments held as fi xed assets | 10 | 2,093 | 2,093 |
| Receivables from Group companies | 199,096 | 195,152 | |
| Other receivables | 1,306 | 1,396 | |
| Deferred tax assets | 5 | 75,938 | 41,914 |
| Total fi xed assets | 1,301,404 | 1,337,548 | |
| Current assets | |||
| Accounts receivable | 50 | 133 | |
| Receivables from Group companies | 127,010 | 130,070 | |
| Current tax assets | 245 | 992 | |
| Other receivables | 11 | 3,081 | 113,107 |
| Prepaid expenses and accrued income | 3,263 | 6,965 | |
| Cash and cash equivalents | 836 | 63 | |
| Total current assets | 134,485 | 251,330 | |
| TOTAL ASSETS | 1,435,889 | 1,588,878 |
| SEK '000 | Note | 2008 | 2007 |
|---|---|---|---|
| EQUITY, PROVISIONS AND LIABILITIES | |||
| Equity Restricted equity |
|||
| Share capital | 97,650 | 97,650 | |
| Statutory reserve | 332,383 | 332,383 | |
| 430,033 | 430,033 | ||
| Unrestricted equity | |||
| Retained earnings | 215,313 | 239,122 | |
| Income/loss for the year | –102,165 | 60,120 | |
| 113,148 | 299,242 | ||
| Total equity | 543,181 | 729,275 | |
| Provisions | |||
| Provisions for pensions and similar obligations | 1,497 | 1,833 | |
| Other provisions | 12 | 4,256 | 3,282 |
| Total provisions | 5,753 | 5,115 | |
| Long-term liabilities | |||
| Debts to credit institutions | 13 | – | 159,155 |
| Other liabilities | 103 | 103 | |
| Total long-term liabilities | 103 | 159,258 | |
| Current liabilities | |||
| Debts to credit institutions | 13 | 751,334 | 458,584 |
| Accounts payable | 3,658 | 10,380 | |
| Liabilities to Group companies | 99,949 | 211,756 | |
| Other liabilities | 22,443 | 502 | |
| Accrued expenses and deferred income | 14 | 9,468 | 14,008 |
| Total current liabilities | 886,852 | 695,230 | |
| TOTAL EQUITY, PROVISIONS AND LIABILITIES | 1,435,889 | 1,588,878 | |
| Pledged assets | 15 | 29,800 | 237,750 |
| Contingent liabilities | 15 | 146,216 | 110,740 |
PARENT COMPANY – CASH FLOW STATEMENTS
| SEK '000 | Note | 2008 | 2007 |
|---|---|---|---|
| Operating activities | |||
| Income/loss after fi nancial items | 16 | –120,638 | 25,307 |
| Adjustments for items not incl. in cash fl ow | 16 | 68,264 | –36,112 |
| Paid taxes | – | 273 | |
| Cash fl ow from operating activities before | –52,374 | –10,532 | |
| changes in working capital | |||
| Cash fl ow from changes in working capital | |||
| Increase (–)/Decrease (+) in operating receivables | 4,169 | 71,946 | |
| Increase (+)/Decrease (–) in operating liabilities | –9,321 | 23,271 | |
| Cash fl ow from operating activities | –57,526 | 84,685 | |
| Investing activities | |||
| Acquisition of tangible assets and intangible assets | 6, 7 | –1,352 | –6,970 |
| Sales of tangible assets | 7 | 110,388 | 56 |
| Investment in subsidiaries | 8 | –21,767 | –120,328 |
| Paid shareholders' contribution | –10,886 | – | |
| Received (+)/ – paid shareholders' contribution | –55,537 | 60,505 | |
| Investments in other shares | – | –2,093 | |
| Change in long-term receivables | 90 | 210 | |
| Lending to and from subsidiaries | –19,382 | –174,964 | |
| Cash fl ow from investing activities | 1,554 | –243,584 | |
| Financing activities | |||
| Changes in long and short-term borrowing | 100,687 | 36,889 | |
| Dividends paid to shareholders | –43,942 | –24,412 | |
| Rights Issue | – | 146,450 | |
| Cash fl ow from fi nancing activities | 56,745 | 158,927 | |
| Cash fl ow for the year | 773 | 28 | |
| Cash and cash equivalents at the beginning of the year | 63 | 35 | |
| Cash and cash equivalents at year-end | 836 | 63 | |
| Change in net debt | |||
| Net debt at the beginning of the year | 619,509 | 582,741 | |
| Change in interest-bearing liabilities and cash and cash equivalents | 132,486 | 36,768 | |
| Net debt at year-end | 751,995 | 619,509 | |
| Operating cash fl ow | |||
| Cash fl ow from current operations, excl. | |||
| fi nancial items and paid taxes | –33,912 | 34,744 | |
| Net investments | 1,554 | –243,584 | |
| Operating cash fl ow | –32,358 | –208,840 |
| SEK '000 | Share capital1) | Statutory reserve | Share premium reserve |
Retained earnings and income/ loss for the year |
Total |
|---|---|---|---|---|---|
| Opening balance January 1, 2007 | 83 700 | 332 383 | – | 87 470 | 503 553 |
| Income/loss for the year | – | – | – | 60 120 | 60 120 |
| Rights Issue | 13 950 | – | 132 500 | – | 146 450 |
| Dividends | – | – | – | –24 412 | –24 412 |
| Group contribution received | – | – | – | 60 505 | 60 505 |
| Tax effect on group contribution received | – | – | – | –16 941 | –16 941 |
| Closing balance December 31, 2007 | 97 650 | 332 383 | 132 500 | 166 742 | 729 275 |
| Income/loss for the year | – | – | – | –102 165 | –102 165 |
| Dividends | – | – | – | –43 942 | –43 942 |
| Group contribution received | – | – | – | –55 537 | –55 537 |
| Tax effect on group contribution received | – | – | – | 15 550 | 15 550 |
| Closing balance December 31, 2008 | 97 650 | 332 383 | 132 500 | –19 352 | 543 181 |
1) Number of shares is presented in note 24 to Group fi nancial reports.
Please see note 1 to Group fi nancial reports for the accounting principles of the parent company.
NOTE 1 Fees to auditors
| SEK '000 | 2008 | 2007 |
|---|---|---|
| PricewaterhouseCoopers AB | ||
| Audit fees | 650 | – |
| Consulting fees | 150 | – |
| Other 2) | ||
| Audit fees | – | 359 |
| Consulting fees 1) | 426 | 661 |
| Total | 1,226 | 1,020 |
1) Included in the consulting fees in 2007 is a fee of 625 for a certifi cate requiring an auditor's signature and other work connected to the Rights Issue. These fees have not been expensed, but have instead been booked as a reduction in the capital contributed by the Rights Issue.
2) The above fees were paid primarily to the accounting fi rm Deloitte AB.
Audit fees are defi ned as fees for auditing the annual accounts, the book-keeping and the administration of the Board, other tasks that company accountants are responsible for as well as consultation or other assistance stemming from observations made during the audit or when carrying out other such activities. Anything else is other consultation.
| Other operating income | ||
|---|---|---|
| SEK '000 | 2008 | 2007 |
| Exchange rate gains | 9,396 | 6,925 |
| Other | 552 | 828 |
| Total | 9,948 | 7,753 |
| Other operating expenses | ||
| SEK '000 | 2008 | 2007 |
| Exchange rate losses | –6,686 | –6,342 |
| Total | –6,686 | –6,342 |
The total absence due to illness in the parent company is 0.0 % of ordinary work
hours. No other information concerning absence due to illness is provided since this can be traced to specifi c individuals.
Please see note 5 to Group fi nancial reports for personnel related information.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Income/loss from shares in subsidiaries | ||
| Dividends from subsidiaries | 136,919 | 38,311 |
| Capital gains/loss from sales of shares in subsidiaries | – | 38,063 |
| Write-downs of shares in subsidiaries | –171,526 | –316 |
| Total | –34,607 | 76,058 |
| Interest income | ||
| Interest income, external | 908 | 126 |
| Interest income, subsidiaries | 13,900 | 9,296 |
| Total | 14,808 | 9,422 |
| Other fi nancial income | ||
| Exchange rate profi ts | 39,078 | 8 348 |
| Other | – | – |
| Total | 39,078 | 8,348 |
| Interest expenses | ||
| Interest expenses, external | –34,789 | –28,145 |
| Interest expenses, subsidiaries | –3,633 | –2,518 |
| Total | –38,422 | –30,663 |
| Other fi nancial expenses | ||
| Exchange rate losses | –54,151 | –13,224 |
| Other | –20,293 | –273 |
| Total | –74,444 | –13,497 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Tax effect on group contribution | –15,550 | 16,941 |
| Deferred tax | 34,023 | 17,872 |
| Recorded tax | 18,473 | 34,813 |
In 2007 the company won disputes with the Swedish Tax Authority, making a tax loss carried forward of MSEK 74.6 available for offset against future taxable profi ts.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Tax loss carried forward | 66,326 | 36,899 |
| Other items | 9,612 | 5,015 |
| Less: Unrecorded deferred tax receivables | – | – |
| Total booked deferred tax receivables | 75,938 | 41,914 |
| Reconciliation of recorded parent company tax | ||
| SEK '000 | ||
| Pre-tax income/loss | –120,638 | 25,306 |
| Tax according to average tax rate 28% in Sweden (28%) | 33,779 | –7,086 |
| Tax effect of: | ||
| Change in assessment of deferred tax receivables | – | 20,879 |
| Effect of change in company tax rate | –4,909 | – |
| Non-taxable dividends from subsidiaries | 38,337 | 10,727 |
| Non-taxable capital gains from the sales of shares | – | 10,658 |
| Non-deductible write-downs of shares in subsidiaries | –48,027 | –88 |
| Contribution, representation and association costs | –109 | –227 |
| Other | –598 | –50 |
| Recorded tax | 18,473 | 34,813 |
| Goodwill | Other intangible assets | Total | ||||
|---|---|---|---|---|---|---|
| SEK '000 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Opening acquisition value | 1,959 | 1,959 | 4,153 | 935 | 6,112 | 2,894 |
| Purchases | – | – | 1,159 | 3,218 | 1,159 | 3,218 |
| Sales incl. disposals/discards | – | – | – | – | – | – |
| Closing acquisition value | 1,959 | 1,959 | 5,312 | 4,153 | 7,271 | 6,112 |
| Opening accumulated depreciation | –392 | –294 | –975 | –769 | –1,367 | –1,063 |
| Sales incl. disposals/discards | – | – | – | – | – | – |
| Depreciation for the year | –98 | –98 | –591 | –206 | –689 | –304 |
| Closing accumulated depreciation | –490 | –392 | –1,566 | –975 | –2,056 | –1,367 |
| Opening accumulated write-downs | – | – | –1,026 | – | – | – |
| Write-downs for the year | – | –1,026 | – | –1,026 | ||
| Closing accumulated write-downs | – | – | –1,026 | –1,026 | –1,026 | –1,026 |
| Closing net book value according to plan | 1,469 | 1,567 | 2,720 | 2,152 | 4,189 | 3,719 |
Depreciation of intangible assets for the year has been charged entirely to administrative expenses in the income statement. Other intangible assets refer to software.
| Buildings and land | Equipment, tools, fi xtures and fi ttings |
Total | ||||
|---|---|---|---|---|---|---|
| SEK '000 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| Opening acquisition value | – | 153,636 | 1,540 | 14,610 | 1,540 | 168,246 |
| Purchases/investments | – | 3,582 | 193 | 170 | 193 | 3,752 |
| Sales/discards | – | –157,218 | – | –13,240 | – | –170,458 |
| Closing acquisition value | – | – | 1,733 | 1 540 | 1,733 | 1,540 |
| Opening accumulated depreciation and write-downs | – | –87,978 | –764 | –13,208 | –764 | –101,186 |
| Depreciation for the year | – | –1,856 | –255 | –366 | –255 | –2,222 |
| Write-downs for the year | – | – | – | – | – | – |
| Sales/discards | – | 89,834 | – | 12,810 | – | 102,644 |
| Closing accumulated depreciation and write-downs | – | – | –1,019 | –764 | –1,019 | –764 |
| Closing acquisition value | – | – | 714 | 776 | 714 | 776 |
Depreciation totalling –255 (–2,222) during the year has been charged to cost of products and services sold in the income statement by 0 (–1,969) and administrative expenses by –255 (–253). There has been no fi nancial leasing.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Opening book value | 1,082,857 | 962,595 |
| Investments in subsidiaries | 21,767 | 120,328 |
| Shareholders' contribution | 75,328 | 350 |
| Write-downs of shares in subsidiaries | –171,526 | –316 |
| Sale of subsidiaries | – | –100 |
| Closing book value | 1,008,426 | 1,082,857 |
During the year the following subsidiaries have received shareholders' contributions:
| Company: | SEK '000 |
|---|---|
| Elanders Italy S.r.l. | 18,221 |
| Elanders Infoprint AB | 200 |
| Elanders Seiz Inc. | 40,521 |
| Elanders Infomedia Systems AB | 5,500 |
| Elanders Digital Hungary Kft | 10,886 |
| 75,328 |
Write-downs during the year refers to Elanders Infoprint AB (136,919), Elanders Digital Hungary Kft (10,886), Elanders Italy s.r.l. (18,221) and Elanders Infomedia Systems AB (5,500).
| Name | Identity no. | Registered offi ce | Number of shares |
Owned share in percent |
Book value of holding |
|---|---|---|---|---|---|
| Elanders Anymedia AB | 556559-5922 | Stockholm, Sweden | 6,000 | 100 | 13,614 |
| Elanders Beijing Printing co | 77765103X | Beijing, China | – | 100 | 66,564 |
| Elanders do Brasil Ltda | 08.789.936/0001-55 | São Paolo, Brazil | – | 100 | 11,559 |
| Elanders Artcopy Ltda | 51.959.310/0001-79 | São Paolo, Brazil | – | 80 | – |
| Elanders Digital Hungary Kft | 20-09-065926 | Budapest, Hungary | – | 100 | 0 |
| Elanders Germany GmbH | HRB722349 | Waiblingen, Germany | – | 100 | 108,576 |
| Mairs Graphische Betriebe GmbH & Co. KG | HRB211285 | Ostfi ldern, Germany | – | 100 | – |
| Elanders Hindson Ltd | GB 3788582 | Newcastle, Great Britain | – | 100 | 31,403 |
| Elanders Hungary Kft | 20-09-065426 | Zalalövö, Hungary | – | 100 | 86,112 |
| Elanders Infologistics AB | 556121-8891 | Kungsbacka, Sweden | 314,330 | 100 | 536,765 |
| Elanders Sverige AB | 556262-1689 | Gothenburg, Sweden | – | 100 | – |
| Elanders Infomedia Systems AB | 556229-6938 | Kungsbacka, Sweden | 1,000 | 100 | 100 |
| Elanders Infoprint AB | 556099-5663 | Kungsbacka, Sweden | 30,000 | 100 | 50,342 |
| Elanders International AB | 556058-0622 | Kungsbacka, Sweden | 1,000 | 100 | 155 |
| Elanders Italy S.r.l. | 5686620963 | Ponzano Veneto, Italy | – | 100 | 93 |
| Elanders Polska Sp.zo.o | KRS 0000101815 | Plonsk, Poland | – | 100 | 39,869 |
| Elanders Seiz Inc. | 58-1448183 | Atlanta, U.S.A. | – | 100 | 62,288 |
| Elanders UK Ltd. | GB 2209256 | Harrogate, Great Britain | – | 100 | 923 |
| Novum Grafi ska A/S | 980849910 | Oslo, Norway | – | 52 | 63 |
| Total | 1 008 426 |
No book value is given for the companies not directly owned by the parent company.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Opening book value | 9,641 | 9,641 |
| Investments | – | – |
| Closing book value | 9,641 | 9,641 |
Holdings in joint ventures consist of the following:
| Share of | ||
|---|---|---|
| Company | Registered offi ce | capital, % |
| Hansaprint Elanders Hungary Kft | Hungary | 50 |
Financial information in summary for joint ventures
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Share (50 %) of: | ||
| - total assets | 16,776 | 14,607 |
| - total liabilities | 3,541 | 2,605 |
| - net sales | 19,126 | 13,305 |
| - pre-tax income/loss | 103 | 489 |
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Opening book value | 2,093 | – |
| Investments | – | 2,093 |
| Closing book value | 2,093 | 2,093 |
Other securities are primarily shares in Webtop Solution A/S in Norway, where Elanders' holding is 7 %. Webtop Solution A/S is not listed.
Included in other current receivables in 2007 is the receivable for the purchase price of MSEK 111 for the property in Kungsbacka that was sold at the end of 2007. The receivable was settled in February 2008.
| SEK '000 | 2008 | Provisions for the year | Requisitioned during the year |
Return of unused amount |
Translation differences |
2007 |
|---|---|---|---|---|---|---|
| Environmental obligations | 1,500 | – | – | – | – | 1,500 |
| Structural measures | 1,450 | 1,900 | –450 | – | – | – |
| Other | 1,306 | – | –476 | – | – | 1,782 |
| Total | 4,256 | 1,900 | –926 | – | – | 3,282 |
Environmental obligations relates to measures that at the accounting year-end were not yet completed.
The due date structure for parent company long-term interest bearing liabilities is as follows:
| SEK '000 | 2008 | 2007 |
|---|---|---|
| 2008 | – | 53,052 |
| 2009 | – | 53,052 |
| 2010 | – | 53,051 |
| 2011 | – | – |
| Total | – | 159,155 |
Current interest-bearing liabilities:
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Current loans | 183,716 | 53,052 |
| Utilised bank overdraft facilities | 567,618 | 405,532 |
| Total | 751,334 | 458,584 |
Granted bank overdraft facilities amounted to MSEK 653 (581).
The interest rate on the loans was between 3,623 – 3,670 % per 31 December 2008.
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Holiday pay liability | 2,029 | 3,966 |
| Social security contributions | 3,626 | 4,349 |
| Other accrued expenses and deferred income | 3,813 | 5,693 |
| Total | 9,468 | 14,008 |
| Pledged assets | ||
|---|---|---|
| SEK '000 | 2008 | 2007 |
| Real estate mortgages | – | 132,300 |
| Floating charges | 3,300 | 70,950 |
| Other pledged assets | 26,500 | 34,500 |
| Total | 29,800 | 237,750 |
| Given to: | ||
| Credit institutions | 29,800 | 237,750 |
| Total | 29,800 | 237,750 |
| Contingent liabilities | ||
| SEK '000 | 2008 | 2007 |
| Surety and contingent liabilities given for | ||
| subsidiaries | 146,216 | 110,740 |
| Total | 146,216 | 110,740 |
Other pledged assets refer to assets with ownership reservations.
Elanders continues to have guarantee commitments of MSEK 26.5 per 31 December 2008 from the sales of the operations in Kungsbacka, primarily for production equipment in Kungsbacka that is also the collateral for the commitments.
Cash and cash equivalents consist primarily of cash and bank transactions. Short-term placements are classifi ed as cash and cash equivalents when:
the risk for changes in their fair value is insignifi cant
they are easily converted
they mature in less than three months from the date they were acquired.
| SEK '000 | 2008 | 2007 | |
|---|---|---|---|
| Depreciation and write-downs of intangible and | |||
| tangible assets | 944 | 3,552 | |
| Write-downs on shares in subsidiaries | 171,526 | 316 | |
| Dividends that do not affect cash fl ow | –136,919 | – | |
| Income/loss from selling shares and interests | – | –38,063 | |
| Other items | 32,713 | –1,917 | |
| Total | 68,264 | –36,112 | |
| Paid interest | |||
| SEK '000 | 2008 | 2007 | |
| Paid interest | –38,492 | –30,584 | |
| Interest received | 14,808 | 9,422 | |
| Total | –23,684 | –21,162 | |
| Dividends received | 136,919 | 38,311 |
In 2008 dividends of 136,919 were received from Elanders Infoprint AB.
During the year the following transactions with related parties have taken place:
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Sales of products and services 1) | ||
| Subsidiaries | – | 305 |
| Carl Bennet with associated company | 185 | 158 |
| Total | 185 | 463 |
| Purchase of products and services 2) | ||
| Subsidiaries | 4,619 | 3,553 |
| Carl Bennet with associated company | 559 | 329 |
| Total | 5,178 | 3,882 |
1) Included in Other operating income
2) Included in Other operating expenses
Parent company sales to subsidiaries amounts to MSEK 0 (MSEK 0.3) and consists of rental income. The parent company also invoices subsidiaries for outlays for services for the entire Group such as auditing and insurance. Invoicing for such outlays and the costs they stem from was booked net. During 2008 parent company invoicing for outlays was MSEK 45.9 (MSEK 28.3).
The transactions with Carl Bennet with associated company primarily concern costs stemming from his role as Chairman of the Board in Elanders AB. The associated company is Carl Bennet AB.
The following transactions existed at year-end:
| SEK '000 | 2008 | 2007 |
|---|---|---|
| Receivables from associated companies | ||
| Joint ventures | 1,640 | – |
| Carl Bennet with associated company | 34 | 17 |
| Subsidiaries | 326,106 | 325,222 |
| Total | 327,780 | 325,239 |
| Liabilities to associated companies | ||
| Carl Bennet with associated company | 252 | 144 |
| Subsidiaries | 99,949 | 211,756 |
| Total | 100,201 | 211,900 |
Per 31 December 2008 the parent company had issued loans to subsidiaries and joint ventures for the following amounts:
| Currency | Amount | Interest rate per 31 Dec 2008 |
|
|---|---|---|---|
| Elanders Germany GmbH | EUR | 14,250 | 4.44 % |
| Elanders Seiz Inc. | USD | 3,492 | 2.87 % |
| Elanders Italy s.r.l. | EUR | 250 | 3.50 % |
| Hansaprint Elanders Hungary Kft | EUR | 150 | 6.00 % |
| Elanders Artcopy Ltda | USD | 240 | 3.22 % |
No reserve has been required during 2008 or 2007 for the loans granted to subsidiaries. Moreover Elanders AB has a loan from Elanders Polska Sp.z.o. o of MPLN 6.5 and 6.6% interest.
No Board member or senior offi cer has or has had direct or indirect participation in any business transactions, between themselves or the Group that are or were of an unusual nature concerning the terms.
Remuneration to Board members and Executive Management is reported in note 5 to Group fi nancial reports
During 2008 Elanders AB paid group contributions to the following companies:
| SEK '000 | 2008 |
|---|---|
| Elanders Anymedia AB | 9,887 |
| Elanders Infomedia Systems AB | 10,500 |
| Elanders International AB | 150 |
| Elanders Infologistics AB | 19,000 |
| Elanders Sweden AB | 16,000 |
| Total | 55,537 |
The Board of Directors and Chief Executive Offi cer hereby certify that the Annual Report has been prepared in accordance with the Annual Accounts Act and RFR 2.1 and gives a true and fair view of the company's fi nancial position and profi t/loss, and that the Board of Directors' Report gives true and fair view of the development of Group operations, fi nancial position and profi t/loss as well as describes signifi cant risks and uncertainties that the company faces.
The Board of Directors and the Chief Executive Offi cer hereby certify that the consolidated fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), as adopted by the European Community, and that they give a true and fair view of the Group's fi nancial position and profi t/loss, and that the Board of Directors' Report gives a true and fair view of the development of Group operations,
fi nancial position and profi t/loss and describes signifi cant risks and uncertainties that the companies within the Group face.
No amount in the parent company's equity on the balance sheet date stemmed from assets and liabilities valued at fair value according to 4 Capital 14 § of the Annual Accounts Act.
Group equity includes unrealised changes in the value of fi nancial instruments amounting to the net sum of MSEK –0.5.
The Board of Directors and Chief Executive Offi cer propose that the profi ts at the disposition of the General Annual Meeting of SEK 113,147,800 from the parent company should be dealt with accordingly:
t balance to be carried forward, SEK 113,147,800.
This Annual Report will be presented at the Annual General Meeting 23 April 2009 for adoption.
Mölnlycke 6 March 2009
Carl Bennet Chairman of the Board
Tore Åberg
Vice Chairman of the Board
Göran Johnsson Hans-Olov Olsson
Johan Stern Per Hansson Tomas Svensson
Patrick Holm Chief Executive Offi cer
Our auditor's report was presented on 6 March 2009 PricewaterhouseCoopers AB
Mikael Eriksson Authorised Public Accountant Head Accountant
Johan Rippe Authorised Public Accountant
Ingegerd Gréen
Kerstin Paulsson
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of Elanders AB (publ) for the fi nancial year 2008. The company's annual accounts and the consolidated accounts are included in the printed version on pages 82-122. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international fi nancial reporting standards IFRS as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the managing director and signifi cant estimates made by the board of directors and the managing director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated
accounts. As a basis for our opinion concerning discharge from liability, we examined signifi cant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company's fi nancial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international fi nancial reporting standards IFRS as adopted by the EU and the Annual Accounts Act and give a true and fair view of the group's fi nancial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the profi t of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the board of directors and the managing director be discharged from liability for the fi nancial year.
Göteborg 6 March 2009 PricewaterhouseCoopers AB
Mikael Eriksson Authorised Public Accountant Head Accountant
Johan Rippe Authorised Public Accountant
Elanders is a public, Swedish limited liability company whose shares are registered under the symbol ELAN B on the OMX Nordic Exchange, Small Cap list.
Elanders follows the Swedish Code of Corporate Governance (the Code) and prepares this corporate governance report for 2008 in accordance with it. It describes Elanders' corporate governance comprising Executive Management and administration, as well as the internal control regarding fi nancial reporting. This report is not a part of the formal Annual Report and has not been examined by the company's auditors. The following is Elanders deviations from the Code.
The code is based on the principle "follow or explain", meaning that a company following the code can deviate from certain rules, but then needs to explain the reason
U The Chairman of the Board is the Chairman of the nominating committee
This deviation is further explained in the section on the nominating committee
The corporate governance in Elanders is based on laws, agreements with the stock exchange, guidelines and good practice.
The Elanders Group's corporate governance, management and control is shared by the shareholders at the Annual General Meeting, the Board of Directors and the Chief Executive Offi cer, in accordance with the Companies Act and the articles of association. Shareholders appoint the company's nominating committee, Board of Directors and external auditors at the Annual General Meeting. The General Meeting is the company's the highest decision-making body. See fi gure page 127.
At the 2008 Annual General Meeting the shareholders appointed members of the Board and approved remuneration to them in accordance with a proposal from the nominating committee as well as the auditors' fee. It also elected the nominating committee, Chairman of the Board and auditors. The following decisions were also taken:
Carl Bennet (re-elected) Ingegerd Gréen (re-elected) Patrick Holm (CEO) (re-elected) Göran Johnsson (re-elected) Hans-Olov Olsson (re-elected) Kerstin Paulsson (re-elected) Johan Stern (re-elected) Tore Åberg (re-elected)
No further Annual General Meeting was held during the year. Protocol from Annual General Meetings can be found on the company's website www.elanders.com, under Investor Relations, Corporate Governance.
The nominating committee prepares proposals for the Annual General Meeting concerning the election of and remuneration to the Chairman of the Board, Board members, committee members and external auditors, the latter having been proposed by the auditing committee. The nominating committee met twice last year and discussed the work of the Board, the independence of Board members, Board members' evaluation of the work of the Board, the work of the committees, auditing and the composition of the nominating committee. This year the committee has consisted of Carl Bennet, Chairman
(Carl Bennet AB), Göran Erlandsson (representative for the smaller shareholders), Hans Hedström (HQ Funds), Nils Petter Hollekim (Odin Funds), Stefan Roos (SEB Funds) and Caroline af Ugglas (Investment AB Latour and Skandia Liv). All members, except Stefan Roos are active in preparing for the Annual Meeting 2009. No remunerations have been paid to the nominating committee. The Chairman of the Board is also the Chairman of the nominating committee, something that is a deviation from the Code. However, it seems reasonable that the largest shareholder, counted in number of votes, be the Chairman of the nominating committee since he would have a great infl uence on the nominating committee composition because he has the majority of the votes in the Annual General Meeting. The nominating committee meets as needed and at least once a year. The nominating committee is elected by the Annual General Meeting and is proposed by the nominating committee based on consideration of the current ownership structure and with the objective of the broadest possible owner representation. The members' contact information is found in the Annual Report and in the company's homepage www.elanders.com under Investor Relations, Corporate Governance..
The Board is elected by the Annual General Meeting on proposal from the nominating committee. The Board is ultimately responsible for the management of the company, monitoring the Chief Executive Offi cer and continuously following developments in operations. The Board also decides on signifi cant changes in the organisation, investments and divestitures, adopts the budget and approves the annual accounts. The Board is ultimately responsible for ensuring that the Group has adequate systems for internal control, that the accounts are prepared and that they are reliable when published. However, no control system can completely eliminate the risk of larger deviations. The Group and its Executive Management have several other methods to control the risks connected to operations. The Board supports Executive Management in continually monitoring and identifying business risks in a structured manner as well as steering the work in the Group towards handling the most signifi cant risks. In conclusion this constitutes the Board's responsibility for corporate governance.
In 2008 the Board consisted of Carl Bennet, Chairman, Tore Åberg, Vice Chairman, Ingegerd Gréen, Patrick Holm, Göran Johnsson, Hans-Olov Olsson, Kerstin Paulsson and Johan Stern. In addition, employees were represented by Carianne Röjerås, later replaced by Per Hansson, and Marie Trollius, later replaced by Tomas Svensson. Their deputies were Per Hansson, later permanent member, Tomas Svensson, later permanent member and Lena Hassini. All the members of the Board elected by the Annual General Meeting have an independent relationship to the company with the exception of Patrick
Holm. Ingegerd Gréen, Patrick Holm, Göran Johnsson, Hans-Olov Olsson and Kerstin Paulsson are independent in relationship to the company's largest owners (>10 percent of shares or votes).
The Board has a work program that regulates the division of responsibility between the Board, its Chairman and the Chief Executive Offi cer. It also includes a general meeting plan and instructions on fi nancial reports as well as the other matters that must be put before the Board. The work program is revised once a year or as needed.
The Board has seven ordinary meetings per year; four of them in conjunction with the annual accounts and interim reports, a meeting dedicated to strategic matters, a meeting to adopt the coming year's budget and a constitutional meeting following the Annual General Meeting. In addition, the Board is called to further meetings as needed. The Group's external auditors participate in the meeting that deals with the report for the fi rst nine months of the year and the annual accounts to report the result of their audits.
The Board followed the meeting plan for the year. The Board also met six times to handle matters concerning investments, acquisitions and structural measures and the related communication with the stock market. Otherwise the Board has been involved primarily in assessing market conditions, external circumstances that affect business and the state of business as well as the Group's expansion strategies, particularly the acquisitions in Germany and the U.S.A. The Board has also followed in detail the developments in the Swedish and Hungarian operations. At the constitutional meeting of the Board the work program and instructions for the Chief Executive Offi cer are reviewed and the customary decisions concerning authorised signatories are taken. In addition, the work programs for the remuneration and
auditing committees are adopted and their members appointed.
At the constitutional meeting of the Board after the Annual General Meeting 2008 Tore Åberg was made Vice Chairman. The Board is authorised to sign for the company as well as two of the following persons together: the Chairman of the Board, the Chief Executive Offi cer and the Chief Financial Offi cer. At the meeting concerning the annual accounts the Board met the auditors without the presence of the CEO or any other member from the Executive Management. The Board travels as often as possible to visit and hold its meetings in one of the Group's subsidiaries in Sweden or abroad. In 2008 the Board visited operations in China. The Board Members' remuneration and presence is presented in detail in the table on page 129.
The Chairman leads and organises the Board and is responsible for making sure the Board meets its responsibilities and that the members receive the information necessary to ensure the work done by the Board is of high quality and performed according to legal stipulations and the contract with the stock exchange. The Chairman of the Board has also made sure that during the year an evaluation of the Board's work was carried out and that the nominating committee was informed of the results. The evaluation is carried out annually in the form of a questionnaire and encompasses the Board's composition, remuneration, materials, administration, work methods, meeting content, reports from the committees and education. The evaluation is on a scale of 1-5, where the highest grade is 5. The average score in 2008 was 4.46 (4.46). In addition, the Chairman of the Board represents the company in ownership matters and communicates
viewpoints from the owners to the Board. The Chairman of the Board is elected by the Annual General Meeting.
The remuneration committee is composed of Board members with the highest competence in this fi eld. It deals with matters concerning remuneration to the Chief Executive Offi cer and offi cers that report directly to him. Decisions concerning remuneration to other employees in management positions in the Group are made by each individual's closest superior in consultation with their closest superior.During the year the remuneration committee held two meetings during which they adopted their work plan and prepared a proposal for remuneration. During the year the remuneration committee consisted of Carl Bennet, Chairman, Ingegerd Greén, Hans-Olov Olsson and Tore Åberg. The Group's guidelines for remunerations to senior offi cers can be found in note 5 in the formal Annual Report and on the company's website, www.elanders.com under Investor Relations, Corporate Governance. The companies have not issued, and will not issue, any option programs.
The auditing committee is appointed from within the Board based on members' experience of and expertise in reporting, accounting and internal control. Its primary task is monitoring internal control, procedures for fi nancial reporting, observance of related laws and regulations as well as the auditing in the Group.
The auditing committee is appointed from within the Board based on members' experience of and expertise in reporting, accounting and internal control. Its primary task is monitoring internal control, procedures for fi nancial reporting, observance of related laws and regulations as well as the auditing in the Group.
The committee also evaluates the external auditors' qualifi cations and independence. The auditing committee reports their observations on a regular basis to the Board and provides, as needed, external auditor candidates to the nominating committee. The committee meets at least twice a year and as needed. The external auditors normally participate in committee meetings. The committee met four times in 2008. The choice of auditors, the auditor's report on the audit of the ninemonth report, the annual accounts, the company in relation to the Swedish Code of Corporate Governance and internal control questions in the subsidiaries were discussed. The members of the Group auditing committee in 2008 were Tore Åberg, Chairman, Göran Johnsson, Kerstin Paulsson and Johan Stern.
The Chief Executive Offi cer is the President, a member of the Board and leads the Group within the framework established by the Board. This framework is formalised in instructions to the Chief Executive Offi cer, which are formed by the Board. The Chief Executive Offi cer is authorised to sign for the company in daily management in accordance with the Companies Act as well as sign for all Group subsidiaries. The Chief Executive Offi cer is responsible for providing the Board with continual reports on Group results and standing as well as the information the Board needs to make qualifi ed decisions. The Chief Executive Offi cer also keeps the Chairman of the Board apprised of developments in operations and provides the Board with monthly fi nancial reports. All the managing directors in the Group's subsidiaries receive MD instructions. These instructions contain a division of responsibility between the Board and the managing director and guidelines the managing director must observe in running operations.
The President leads the work performed by Executive Management and makes decisions in consultation with members of Executive Management. Executive Management is responsible for day-to-day fi nancial and commercial management and follow-up in the Group. It also strives to continually achieve synergies, identify acquisition and structural opportunities as well as adapt Group operations to market demands and short and long-term developments. Elanders' Executive Management makes sure that the competence and capacity of the business areas is coordinated and adjusted to be as useful as possible for customers and profi tability in the short and longterm. Elanders' Executive Management consists of Patrick Holm, President and Chief Executive Offi cer and Business Area Infologistics Manager, Mats Almgren, CFO, Jimmy Lundbeck, Manager for operations in Poland, Great Britain and Italy, Magnus Nilsson, Business Area User Manuals Manager, Lars-Gunnar Skötte, Manager for Swedish and Norwegian operations and Peter Sommer, Manager for German and North American operations. Executive Management meets once a month, often in conjunction with a visit to a Group unit and minutes are kept.
The purpose of internal control regarding fi nancial reporting is to insure that it is reliable and that the fi nancial reports follow generally accepted accounting principles and otherwise follow applicable laws and regulations concerning listed companies. The Board ultimately has responsibility for an effective, functioning internal control in the Group and the CEO is responsible for an organisation and processes that ensure the quality of fi nancial reports to the Board and the market.
The control environment at Elanders is characterised by the proximity between Executive Management and
the operating units. Executive Management or representatives from the treasury function regularly visit these units and evaluate internal control and fi nancial reporting. All subsidiaries use a uniform system to report in all fi nancial information. Executive Management has a continuous dialogue with the operating units and has issued a number of steer documents and policies concerning internal control which have been dispersed to all concerned personnel. To regularly monitor that these documents are followed and that internal control functions effectively, subsidiaries make an evaluation of their internal control in relation to the Group's established goals.The result of the evaluation is then followed up by the Group's treasury function in collaboration with the external auditors. During the year all the subsidiaries made an evaluation of their internal control which led to some improvements that are now being followed up, and which mainly have to do with the documentation of existing control routines
The results of the work with internal controls are presented to the Board's auditing committee, which also provides Executive Management with guidance regarding improvements in internal control. All the members of Executive Management, except the CEO and CFO, are also managers in one of the Group's larger operating units. These units generate70 % of Group net sales.
Elanders does not have a special internal audit function. This function is performed by Executive Management
and the Group treasury function, supported by the auditing committee and the external auditors. Because of the size of the Group and Executive Management's operative character a special audit function, internal audit, would not have any signifi cant benefi cial effect. A continuous dialogue between the company and its external auditors as well as the controls carried out by Executive Management are considered suffi cient to ensure that internal controls maintain an acceptable level. This assessment is continuously evaluated and will be tested once again in 2009.
Auditing is regulated by the Companies Act which requires that auditors must review the company's annual accounts and the Board's and the CEO's administration.
The Annual General Meeting 2008 chose for a period of four years the authorised public accounting company PricewaterhouseCoopers AB with authorised accountant Mikael Eriksson as head auditor, assisted by authorised accountant Johan Rippe. Mikael Eriksson is the auditor for, among others, G&L Beijer, Midway, Sveaskog, Readsoft, Beijer Electronics and Seco Tools. Johan Rippe is the auditor for, among others, Academedia, Getinge, West Siberian and AB Volvo.
Once a year the auditors meet the Board in its entirety without the CEO or any other member of Executive Management present, normally at the meeting that deals with the annual accounts.
| Member | Board, presence (number of meetings) |
Remuneration Committee, presence (num ber of meetings) |
Audit Committee, presence (num ber of meetings) |
Remuneration (SEK '000) Board + Committee Work |
Total presence, % |
Shareholding, including related parties |
Independent |
|---|---|---|---|---|---|---|---|
| Members chosen by the Annual Meeting | |||||||
| Carl Bennet | 13 (13) | 2 (2) | Not member | 500+50 | 100 | 583,333 A 1,691,048 B |
No, owner |
| Tore Åberg | 13 (13) | 2 (2) | 4 (4) | 250+125 | 100 | 6,000 B | No, owner |
| Ingegerd Gréen | 12 (13) | 2 (2) | Not member | 250+25 | 93 | 466 B | Yes |
| Patrick Holm | 13 (13) | Not member | Not member | Employee | 100 | 18,700 B | No, company |
| Göran Johnsson | 12 (13) | Not member | 4 (4) | 250+50 | 94 | 1,033 B | Yes |
| Hans-Olov Olsson | 12 (13) | 2 (2) | Not member | 250+25 | 93 | 850 B | Yes |
| Kerstin Paulsson | 13 (13) | Not member | 4 (4) | 250+50 | 100 | 500 B | Yes |
| Johan Stern | 13 (13) | Not member | 4 (4) | 250+50 | 100 | 30,000 B | No, owner |
| Employee representatives | |||||||
| Per Hansson | 12 (12) | Not member | Not member | Employee | 100 | No, company | |
| Lena Hassini | 9 (9) | Not member | Not member | Employee | 100 | No, company | |
| Carianne Röjerås | 13 (13) | Not member | Not member | Employee | 100 | No, company | |
| Tomas Svensson | 12 (12) | Not member | Not member | Employee | 100 | No, company | |
| Marie Trollius | 4 (4) | Not member | Not member | Employee | 100 | No, company |
CARL BENNET b. 1951
Education: Education: Bachelor of Science (Econ.) Dr. Technol. h.c.
Appointments on the Elanders' Board: Chairman of the nominating committee. Chairman of the remuneration committee
Chairman of Getinge AB, the University of Gothenburg and Lifco AB. Vice Chairman of Boliden AB. Board member of SSAB and member of the Swedish Government's Research Advisory Board.
Shareholding: 583,333 A shares and 1,671,456 B shares.
TORE ÅBERG b. 1942
GÖRAN JOHNSSON b. 1945
Elected in: 2006.
Other appointments: First vice chairman of EKN.
Member of the Board of the IQ Initiative AB, Swedish Foundation Strategic Research, SVT (Swedish Television), Swedbank AB and the University of Umeå, adviser in Vinnova.
Shareholding: 1,033 B shares.
INGEGERD GRÉEN b. 1960
CEO and partner in Askengren & Co
Elected in: 2003.
Education: Master of Arts in Literature and Language, including teaching credentials.
Appointments on the Elanders' Board:
Member of the remuneration committee. Other appointments:
Member of the boards of Team Lexö AB, Askengren & Co., The Swedish Institute for Growth Policy Studies.
Shareholding: 466 B shares.
HANS-OLOV OLSSON b. 1941
Elected in: 2007.
Education: Master of Science (Political Science) at the University of Gothenburg. Made an Honorary Doctor of Economics in 2006 by the School of Business, Economics and Law at the University of Gothenburg.
Appointments on the Elanders' Board: Member of the remuneration committee.
Other appointments: Vice Chairman of the Confederation of Swedish Enterprises, member of the board of Vattenfall AB, Lindab Interna-
tional AB, SKF AB and the Anna Lindh Memorial Fund. Shareholding: 850 B shares.
PATRICK HOLM b. 1962
President and Chief Executive Offi cer at Elanders AB
JOHAN STERN b. 1951
Chairman of Healthinvest Partners AB. Member of the board of Carl Bennet AB, Getinge AB, Lifco AB, Rolling Optics AB and RP Ventures AB. Shareholding: 30,000 B shares.
KERSTIN PAULSSON b. 1963
CEO and partner in Netsoft Lund AB
Appointments on the Elanders' Board: Member of the auditing committee.
Member of the boards of the Swedish Defence Materiel Administration, NUTEK. Member of the board of education at the University of Lund, Faculty of Engineering.
Shareholding: 500 B shares.
Sales support in system solutions at Elanders Sverige AB Elected in: 2005.
Education: Typographer. Graphic college education. Shareholding: 0.
EMPLOYEE REPRESENTATIVE
Printer operator at Elanders Sverige AB
Deputy Members
LENA HASSINI b. 1961
Works at Premedia/Prepare in Elanders Sverige
PATRICK HOLM b. 1962
Graphic Engineer (DGI). Active in the graphic industry since 1982, holding management positions since 1989. Came to Elanders via the acquisition of the Graphic Systems Group in 1997. Other appointments: Board Member in Bong Ljungdahl AB. Shareholding: 18,700 B shares.
MATS ALMGREN b. 1956
Bachelor of Science (Econ.). Accountant 1980 – 1997. Authorised Public Accountant in 1986 and partner in an accounting fi rm in 1990. Employed since 1997.
Shareholding: 5,850 B shares.
Sommer Corporate Media. Came to Elanders via the acquisition of Sommer Corporate Media in 2007. Shareholding: 0.
Master of Science in Engineering from Chalmers University of Technology, Gothenburg. CEO for the Swedish and German units in Autoliv. Employed since 2007.
Shareholding: 1,400 B shares.
JIMMY LUNDBECK b. 1959
Business School Economist, Active in the Graphics Industry since 1981, specialised in digital documentation. Came to Elanders via the acquisition in 1999 of Pennon.
Other appointments: Member of the board of The Graphic Industry. Shareholding: 3,166 B Shares.
MAGNUS NILSSON b. 1966
Active in the graphical industry since 1987, started as a business developer at Elanders in 1999. Education in Graphic Technology, Design, Business Economics and Marketing.
Shareholding: 1,900 B Shares.
Head Off ice
President and Chief Executive Offi cer: Patrick Holm [email protected]
Chief Financial Offi cer: Mats Almgren [email protected]
Designvägen 2 Box 137, SE-435 23 Mölnlycke Sweden Telephone: + 46 31-750 00 00, Fax: +46 31-750 07 25 www.elanders.com [email protected]
Busi ne ss Area Inf ol og is tics
Business Area Manager: Patrick Holm [email protected]
Designvägen 2 Box 137, SE-435 23 Mölnlycke, Sweden Telephone: + 46 31-750 00 00 Fax: + 46 31-750 00 10 MD: Lars-Gunnar Skötte [email protected]
Källvattengatan 9, SE-212 23 Malmö, Sweden (from 20 April) Telephone: +46 40-38 57 00 Fax: + 46 40-93 18 68 Divisional Manager: Stefan Ljung [email protected]
Ruben Rausings Gata, SE-221 86 Lund, Sweden Telephone: +46 46-36 28 80, Fax: +46 46-36 28 66 Production Manager: Christian Sokolski [email protected]
Designvägen 2 Box 137, SE-435 23 Mölnlycke, Sweden Telephone: + 46 31-750 00 00 Fax: + 46 31-750 00 10 Divisional Manager: Lars Bååth [email protected]
Arendal Skans 6, SE-418 79 Gothenburg, Sweden Telephone: + 46 31-750 00 00 Fax: + 46-31 54 14 32 Divisional Manager: Joakim Sund [email protected]
Box 807, Lovenegatan 4, SE-521 23 Falköping, Sweden Telephone: + 46 515-72 32 00 Fax: + 46 515-164 64 Divisional Manager: Ambjörn Wermelin [email protected]
Box 518, Krossgatan 18, SE-162 15 Vällingby, Sweden Telephone: + 46 8-454 68 00 Fax: + 46 8-454 68 16 Divisional Manager: Kristina Forsman [email protected]
Vallhallavägen 2, SE-771 31 Ludvika, Sweden Telephone: + 46 31-750 00 00, Fax: +46 240-172 87 Production Manager: Yvonne Asp-Sjöholm [email protected]
Råsundavägen 20, SE-169 67 Solna, Sweden Telephone: + 46 8-506 420 00 Divisional Manager: Kristina Forsman [email protected]
Knivstagatan 12, Box 1043 SE-751 40 Uppsala, Sweden Telephone: + 46 18-480 10 00, Fax: + 46 18-480 10 39 Divisional Manager: Kristina Forsman [email protected]
Mäster Ahls gata 8, port T10, SE-722 12 Västerås, Sweden Telephone: + 46 31-750 09 91, Fax: +46 21-13 05 70 Production Manager: Yvonne Asp-Sjöholm [email protected]
Rua Cipriano Barata, 1645 São Paulo 04205-001 Brazil Telephone: + 55 11 2128-2999, Fax: + 55 11 3434-0400 MD: Todor Pedrasolli de Mello [email protected]
Merlin Way, New York Business Park, North Tyneside NE27 0YT, England Telephone: +44 1912-80 04 00, Fax: +44 1912-80 04 01 MD: Roy Hamilton [email protected]
32 Kings Road, Harrogate, North Yorkshire HG1 5JW England Telephone: + 44 1423-53 03 62, Fax: + 44 1423-53 06 10 Divisional Manager: Kevin Rogers [email protected]
Brobekkveien 80, N-0582 Oslo Norway Telephone: + 47 23-37 13 00, Fax: + 47 23-37 13 01 MD: Knut Johannessen [email protected]
Sommer Corporate Media GmbH & Co KG Anton-Schmidt-Strasse 15, 713 32 Waiblingen Germany Telephone + 49 71-51 95 63-0, Fax +49 71-51 95 63-109 [email protected] www.sommer-corporate-media.de MD: Peter Sommer [email protected]
Mairs Graphische Betriebe GmbH & Co. KG Marco-Polo-straße 1 73760 Ostfi ldern, Germany Telefon: +49 711 450 20. Fax: +49 711 4502 355 Divisional Manager: Philipp Kühnel [email protected]
4525 Acworth Industrial Drive Acworth, Georgia 30101 U.S.A. Telephone: + 1 770-917 70 00, Fax: + 1 770-917 70 20 www.seiz.com MD: Phil Warren [email protected]
Busi ne ss Area Use r Manuals
Business Area Manager: Magnus Nilsson [email protected]
No. 2 Anxiang Street, District B. Beijing Tianzhu Airport Industrial Zone, Shunyi District, Beijing 101318 P.R. China Telephone: + 86 10-80 48 33 00 Fax: + 86 10-80 48 31 18 MD: Magnus Nilsson [email protected]
Via Delle Industrie 8 310 50 Ponzano Veneto (TV) Italy Telephone: + 39 422-44 22 53, Fax: + 39 422-44 12 03 MD: Nicola Scabbia [email protected]
Ul. Mazowiecka 2, 09-100 Pło´nsk Poland Telephone: + 48 23-662 23 16, Fax: + 48 23-662 31 46 MD: Jimmy Lundbeck [email protected]
Újmajor u. 2, 8999 Zalalövő, Hungary Telephone: + 36 92-57 25 00, Fax: + 36 92-57 10 78
2045 Törökbálint, Tó Park utca, Hungary Telephone: + 36 23-88 79 00, Fax: +36 23-88 79 01 MD: Per Brodin [email protected]
Puskás Tidavar u. 6, Ipari Park, 2900 Komárom, Hungary Telephone: + 36 34-88 91 00, Fax: +36 34-88 91 01 MD: Seppo Mero [email protected]
COMMERCIAL PRINTING Printing production provided by printers that only produce for external customers as opposed to publishing and newspaper printers that produce their own material.
DIGITAL PRINT AND DIGITAL PRINT TECHNIQUE The transfer of information to paper via a digital fi le that is then printed out with the help of a high-speed printer. This technique is a prerequisite for Print-on-Demand and makes quick deliveries in small editions possible. Offset technique is still more effi cient for larger editions and colour production.
DIRECT MAIL, DM, is a marketing method that targets a group, which is paves the way for a good response frequency and measurable follow up.
DOCUMENTS AND DISTRIBUTION CENTRE, DDC Unit that stores, distributes just-in-time and provides digital printing (see Print-on-Demand) for customers.
FULFILMENT This term is increasingly used, particularly in the automotive industry, to describe a number of steps in the process between printing and distribution. They can include packaging for end customers, bar-coding, adding other objects such as plastic cards etc.
INFOMEDIA A concept that encompasses all the products and activities found in the customer's information fl ow. These are outlined on page 6. Infomedia is information solutions for every need, independent of publishing form. Our customers generate the information itself and the infomedia company designs, structures, enriches, maintains, diversifi es, completes and distributes it.
JUST-IN-TIME Delivery precision – delivery exactly when the need arises. The concept also entails that customers do not need to store their publications. Often includes digital printing, see Print-on-Demand.
MASTER VENDOR® Elanders' concept for a combination of services that cover the entire value chain in the publishing process, from idea/content to distribution. Customers can order their own special combination of services that includes all, some or just a few segments of the value chain.
MEDIA INDEPENDENT PUBLISHING This entails publishing information in several media at the same time without reworking it. It's possible, for example, to publish an encyclopaedia as a CD, via the Internet and as printed
matter. This is also called parallel publishing.
OFFSET TECHNIQUE A printing method in which ink and water are spread out on a printing plate that is then pressed against a rubber blanket. This absorbs the ink and transfers it to the paper. The expression offset comes from the fact that the printing plate never touches the paper. For smaller editions (1,000 – 30,000) sheet-fed offset is used. In this process the paper is fed into the press page by page. Web offset is usually more effi cient for larger editions (over 30,000). The press is fed from a roll of paper and the printed paper is then cut into sheets.
ONE-TO-ONE MARKETING is a marketing method in which each customer is approached individually through a sales offer tailor-made for the customer.
OUTSOURCING Companies or organisations choose to let an external part handle an activity or a process. This activity or process is then said to be outsourced.
PARALLEL PUBLISHING See Media independent publishing.
PREMEDIA, PREPRESS This is the work done before printing or other types of publishing. It includes registration, fi lmsetting (ripping), fi lm development, montage, and printing plate production. Premedia also includes the production of images, illustrations and text as well as layout and design.
PRINT-ON-DEMAND, POD With the help of high-speed printers printed matter can be produced as needed and in very small editions.
SUPPLY CHAIN MANAGEMENT The term is used to describe managing and coordinating the activities in an entire supply chain of services and products that includes procurement, purchasing and logistics.
TIME-TO-MARKET Normally the time it takes between the moment a product or service is conceived until it reaches its recipient on the market. It can be expressed in time, in an exact schedule, in minimising resources needed or in the fl exibility to adapt to sudden fl uctuations in the market.
WEB-TO-PRINT comprises a web-based order interface as well as production and distribution of, among other things, information and marketing material based on predefi ned templates, available for editing via Internet. ADDED VALUE Net turnover minus forward invoiced disbursements for outwork and material.
ADDED VALUE RATIO Added value in relation to net turnover.
AVERAGE NUMBER OF EMPLOYEES The number of employees at the end of each month divided by twelve.
AVERAGE NUMBER OF SHARES The number of shares at the end of each month divided by twelve.
CAPITAL EMPLOYED Total assets less liquid funds and noninterest bearing liabilities.
CAPITAL TURNOVER RATE Net turnover in relation to average total assets.
DEBT/EQUITY RATIO Interest bearing liabilities less liquid funds in relation to recorded equity, including minority interests.
DIVIDEND YIELD Dividends in relation to average share price.
EARNINGS PER SHARE Profi t/loss for the year divided by the average number of shares.
EBIT Earnings before interest and taxes; operating profi t/loss.
EBITDA Earnings before interest, taxes, depreciation and amortisation; operating profi t/loss plus depreciation and write-downs of intangible assets and tangible assets.
EBIT-MULTIPLE Enterprise value divided by operating profi t/loss.
ENTERPRISE VALUE Market value at year-end plus net debt and minority shares.
EQUITY RATIO Equity (including minority shares) in relation to total assets.
INTEREST COVERAGE RATIO Operating profi t/loss plus interest income divided by interest costs.
NET DEBT Interest bearing liabilities less liquid funds.
OPERATING CASH FLOW Cash fl ow from operating activities and investing activities, adjusted for paid taxes and fi nancial items.
OPERATING MARGIN Operating profi t/loss in relation to net turnover.
OPERATING PROFIT/LOSS Earnings before fi nancial items; EBIT.
P/CE RATIO Share price at year-end in relation to EBITDA per share.
P/E RATIO Share price at year-end in relation to earnings per share.
PROFIT MARGIN Profi t/loss after fi nancial items in relation to net turnover.
PROPORTION OF RISK CAPITAL Risk capital in relation to total assets.
P/S RATIO Share price at year-end in relation to net turnover per share.
RETURN ON CAPITAL EMPLOYED Profi t/loss in relation to average capital employed.
RETURN ON EQUITY Profi t/loss for the year in relation to average equity.
RETURN ON TOTAL ASSETS Operating profi t/loss plus fi nancial income in relation to total assets.
RISK CAPITAL Equity plus deferred tax debt.
ELANDERS AB - " \$#! PHONE: E-MAIL: WEBSITE:!!!
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.