Annual Report • Apr 11, 2011
Annual Report
Open in ViewerOpens in native device viewer
| Page | |
|---|---|
| Directors' Report 4 | |
| Consolidated Income Statement 8 | |
| Consolidated Statement of Comprehensive Income 8 | |
| Consolidated Cash Flow Statement 9 | |
| Consolidated Balance Sheet 10 | |
| Consolidated Changes in Shareholders' Equity 12 | |
| Income Statement – Parent Company 13 | |
| Statement of Comprehensive Income – Parent Company 13 | |
| Balance Sheet – Parent Company 14 | |
| Changes in Shareholders' Equity – Parent Company 16 | |
| Cash Flow Statement – Parent Company 17 | |
| Notes 18 | |
| Financial Risk Management 25 | |
| Corporate Governance Report 47 | |
| Auditors' Report 54 | |
| Definitions 55 | |
| The AAK share 56 | |
| AarhusKarlshamn AB (publ) – Board of Directors 58 | |
| AarhusKarlshamn AB (publ) – Group Management 60 | |
| Financial Calendar, Annual General Meeting 62 | |
| Address 63 | |
All amounts are denominated in SEK million unless otherwise stated.
The Board of Directors and the CEO of AarhusKarlshamn AB (publ), corporate identity number 556669-2850, with registered office in Malmö, herewith present the Financial Statements for the financial year January-December 2010 and Consolidated Financial Statements for the financial year 1 January - 31 December 2010.
*All financial information under this heading excludes non-recurring items and IAS 39.
Operating profit for the full year amounted to SEK 824 million (827), but adjusted for disposals and at fixed exchange rates operating profit amounted to SEK 855 million (810). Earnings include negative exchange rate effects of SEK 31 million.
As a result of our strategy of specialising in the business area of Food Ingredients, which aims to increase the percentage of products with high added value, margins continued to improve. All our special product areas, such as Infant Nutrition, Bakery & Bakery Service and FoodService, continued to show positive development.
During 2010, the business area Chocolate & Confectionery Fats increased volumes and showed more stable margins for cocoa butter alternatives.
The Technical Products & Feed business area reported record-high operating profit. The market for technical products, especially environmentally friendly biological lubricants, is experiencing a recovery.
Cash flow from operating activities before investments amounted to SEK 757 million (2,265). The strong cash flow in 2009 was primarily due to the significant drop in raw material prices, which led to a reduction in working capital. The company also received insurance compensation of SEK 70 million in 2009. The ongoing internal project to reduce working capital continued to contribute to improving working capital turnover. Cash flow after net investments of SEK 331 million (313) amounted to SEK 426 million (1,952).
The Group's net investments in fixed assets totalled SEK 335 million (316), mainly comprising ongoing maintenance investments. Over a business cycle, investments, excluding acquisitions, should be in line with annual depreciation. In 2010 capital investment was below annual depreciation.
Operating profit, including non-recurring items and IAS 39 effects, amounted to SEK 882 million (1,475).
Earnings include an IAS 39 effect of SEK 39 million (578) following the introduction of hedge accounting in the fourth quarter of 2010. The Company also reported additional insurance compensation of SEK 19 million. The insurance compensation relates to business interruptions in both 2008 and 2009.
As of 1 October 2010 AAK began applying hedge accounting based on fair value hedging. The IAS 39 effect of SEK 140 million reflects previous negative IAS 39 effects that have now been reversed in the income statement in the fourth quarter.
This new accounting method does not imply any change in the current business model. Moreover, the introduction of this method will not affect the underlying profitability or level of risk within the Group. As of the first quarter of 2011 there will be no IAS 39 effect.
The Group's profit after financial items amounted to SEK 828 million (1,298). Net financial items amounted to negative SEK
54 million (negative 177). This significant improvement was due to lower interest rate
levels and substantially lower borrowing. Reported tax corresponds to an average tax rate of 24 percent (35). The Group's average underlying tax rate is approximately 27 percent (29). The low tax rate in 2010 was due to the Group receiving tax reductions in certain countries in connection with capital expenditures.
The equity/assets ratio was 34 percent as of 31 December 2010 (35 percent as of 31 December 2009). Consolidated equity as at 31 December 2010 totalled SEK 3,188 million (31 December 2009: SEK 2,949 million), and the balance sheet total was SEK 9,252 million (8,513).
The company reported additional insurance compensation of SEK 19 million (70) in 2010. The insurance compensation of SEK 19 million (70) is not included in the operating profit, above, of SEK 824 million (827).
Arne Frank took up the position as CEO of AAK on 6 April 2010.
A new company programme, AAK Acceleration, was launched. This programme is based on our specialisation strategy, but with greater focus on practical implementation, as well as growth and earnings improvement in the medium and long term.
In order to create better opportunities for both organic growth and acquisitions, and to better face future competition and strengthen the necessary internationalisation of the Group, AAK expanded and broadened its Group management.
This strengthening of Group management aims to lead to an efficient organisation that internationally utilises the advantages of our product range and creates clearer opportunities for global growth.
The business areas are: Chocolate & Confectionery Fats (including Lipids for Care), Food Ingredients, and Technical Products & Feed. Group-wide functions are included in the Group Functions segment.
Food Ingredients maintains its strong regional positions in both Europe and North America, but will gradually strengthen its positions in other regions.
Chocolate & Confectionery Fats and Lipids for Care has world-leading positions, and these will gradually be expanded on an increasingly global arena.
Technical Products & Feed has a strong local position in Northern Europe and will continue to focus its growth efforts on these geographical segments through its close links to the Karlshamn unit in Sweden, bringing significant synergy gains.
In January 2011 AAK signed two new binding loan agreements to refinance the current loans that were due in autumn 2011 and to finance current operations and possible acquisitions.
Both loan agreements have a maturity of five years and binding credit commitments. One of the loans agreements is a multicurrency revolving facility for EUR 330 million (SEK 3,000 million) signed with Nordea, Handelsbanken and Nykredit. The facility is spread equally across these three banks. The other loan agreement is a USD 180 million (SEK 1,200 million) multicurrency revolving facility, signed bilaterally with Nordea. These new loans, together with the seven-year loan for SEK 1,000 million that was signed with Nordea in summer 2010 and that is partly guaranteed by the Swedish Export Credits Guarantee Board (EKN), means that AAK is significantly extending its average debt maturity structure.
In total, the Group has binding credit commitments of SEK 6,000 million with a maturity of five years or more. The new terms of these loans also provide significantly greater flexibility with regard to increased raw material prices.
At an Extraordinary Meeting of the Shareholders on 8 November 2010 it was decided to implement an incentive programme for senior managers and key personnel by issuing up to 1,500,000 stock options, entitling holders to subscribe to a corresponding number of shares in AarhusKarlshamn AB.
The programme will have a dilutive effect of up to approximately 3.54 percent. Senior managers and key personnel have purchased stock options at market value.
The original rationalisation programme was announced in the second quarter of 2007, when the company expensed a non-recurring item of SEK 150 million referring to expected restructuring costs. The programme is progressing and is at least in line with the plan that has been previously communicated.
Cost savings of SEK 100 million (annualised) were realised in 2010 and an additional SEK 200 million (annualised) will be realised in the latter part of 2011. The business areas' earnings were affected positively by the ongoing rationalisation programme in 2010. These savings were, however, partly offset by increased investments in organic growth outside Scandinavia.
On 4 December 2007, an explosive fire occurred in AAK's factory in Aarhus, Denmark. The incident occurred in that part of the factory where vegetable oils are produced for use as components in special fats for chocolate and confectionery products, especially CBE. All facilities were back in operation during the fourth quarter of 2008.
In 2008 and 2009 AAK received compensation for interruption of business of approximately SEK 421 million. The company reported additional insurance compensation of SEK 19 million in 2010. In total, AAK has received SEK 440 million in insurance compensation.
A final settlement with the insurance companies has not yet been concluded. The outcome of this cannot be predicted with certainty.
No significant events occurred after the end of the financial year.
Operating profit for 2010 was in line with expectations. AAK now has a strong platform of programmes for the medium and long term: AAK Acceleration. This programme focuses on growth, efficiency and people. Prioritised growth areas within the AAK Acceleration project: Bakery, Dairy, CCF, Infant Nutrition, FoodService, Merger & Acquisition and fast-growing economies like China and Brazil. There will also be a major focus on productivity and efficiency, as well as human resources. Cash flow in 2011 will present a challenge since the major raw material price increases in 2010 will have an effect in 2011 owing to a time lag. AAK has been able to agree refinancing and now has binding credit commitments of SEK 6,000 million of five years or more.
AAK aims to grow faster than the underlying market and to generate strong cash flows. We also intend to continually improve the return on operating capital.
The objective of the Board of Directors, taking into account the development of Group earnings and its financial position and future development opportunities, is to propose annual distribution of profits equivalent to 30-50 percent of the profit for the year, after tax, for the Group.
AAK's Nomination Committee proposes for the Annual General Meeting of 2011 that the following members of the Board be re-elected: Melker Schörling, Carl Bek-Nielsen, Martin Bek-Nielsen, John Goodwin, Mikael Ekdahl, Märit Beckeman, Ulrik Svensson, Harald Sauthoff and Arne Frank. Member of the Board Anders Davidsson will not stand for re-election. The Nomination Committee proposes, in addition, that Melker Schörling be re-elected Chairman of the Board, and Carl Bek-Nielsen Vice-Chairman. In total, the Nomination Committee represents 57.1 percent of the shares and votes in AAK as at 31 December 2010.
The total number of shares in AAK as at 31 December 2010 was 40,898,189. There is one class of shares in AAK, and each share entitles the holder to one vote. There are no limits as regards how many votes each shareholder may cast at an Annual General Meeting. Nor are there any limitations regarding the transfer of the shares as regards provisions in law or in the Articles of Association.
Of the Company's shareholders, only BNS Holding AB has a shareholding which represents at least one-tenth of the number of votes of all shares of AAK. BNS Holding AB's shareholding as at 31 December 2010 amounted to 40.4 percent of the total number of votes.
AAK is not aware of any agreement between direct shareholders in AAK that would involve limitations in the right to transfer shares. However, there is a shareholder agreement between the owners of BNS Holding AB – Melker Schörling AB and United International Enterprises Ltd. – that may involve a limitation of the right to transfer shares of AAK.
Circumstances of ownership are described in further detail in the section AAK Shares on pages 56-57.
The full AAK Corporate Governance Report is available on pages 47-52.
The Articles of Association stipulate that appointment of Board Members shall be made by the Annual General Meeting of AAK. The Articles of Association contain no provisions regarding dismissal of Board Members or regarding amendment of the Articles of Association.
The Group's long-term financing agreement contains stipulations that, in certain cases, give the lender the right to request advance payment if control of AAK changes substantially. Such a substantial change in control can occur as a result of an official take-over bid.
AAK's assessment is that it has been necessary to accept these stipulations in order to obtain financing on terms which are otherwise acceptable.
Guidelines for the remuneration of the CEO and other senior management were established by the 2010 Annual General Meeting. No deviations from these guidelines have been made. The Board of Directors of AAK proposes that the 2011 Annual General Meeting adopt the same guidelines for 2011 as for 2010 for the remuneration of senior management, but with an adjustment so that the variable portion of salary shall comprise no more than 60 percent of the fixed salary instead of 50 percent, which was set as a cap in the guidelines adopted by the 2010 Annual General Meeting. The current guidelines are contained in Note 8. Remuneration of the Board of Directors and Senior Managers. These guidelines shall cover the persons who are in senior management positions during the period of time to which the guidelines apply. The guidelines apply to agreements entered into after they were approved by the Annual General Meeting, and to amendments that are made to existing agreements after that. The Board of Directors shall have the right to deviate from the guidelines if, in individual cases, there are special reasons for doing so.
The environmental impact from our plants includes emissions of odorous substances, solvents, smoke and gases into the atmosphere, as well as discharging fats, oxygenconsuming material, and minerals into the water, and also creating organic waste and noise. We continually review our impact on all levels to further improve environmental performance at AAK. We operate all our plants with appropriate official permits in all countries. In Sweden, the operations in Karlshamn are licensable, by Swedish law.
The recruitment of skilled and competent personnel is an important component in maintaining competitiveness for the AAK Group. The Group therefore has continuous active programmes for personnel development.
All business operations involve risk – a controlled approach to risk-taking is a prerequisite for maintaining good profitability. Risks may depend on events in the operating environment and may affect a certain sector or market. A risk may also be purely company-specific or country-specific. At AAK, effective risk management is a continual process which is conducted within the framework of operational management and forms a natural part of the day-to-day monitoring of operations.
The AAK Group is exposed to the fierce competition which characterises the industry, as well as fluctuations in raw material prices, which affect capital tied up.
The raw materials used in operations are agricultural products, and availability may therefore vary due to climatic and other external factors.
The Group's management of financial risks is described in Note 3, Financial Risk Management.
The Company is the holding company of the AAK Group, and its activities consist mainly of joint Group functions connected to the development and management of the Group. The Parent Company employs personnel with skills and competencies to execute group-wide financing, accounting, information and human resources. The Parent is also responsible for Group strategy and risk management, and provides legal and tax-related services to the Group subsidiaries.
The Parent Company's invoicing in 2010 amounted to SEK 42 million (42). Earnings after financial items for the Parent Company amounted to negative SEK 24 million (68). Interest-bearing liabilities minus cash and cash equivalents and interest-bearing assets were SEK 160 million (negative SEK 227 million at 31 December 2009). Investments in property, plant and equipment and intangible fixed assets amounted to SEK 0 million (2).
The Parent Company had a total of 14 (13) employees as of 31 December 2010.
No significant events occurred after the end of the financial year.
The Board of Directors has proposed that the 2011 Annual General Meeting approve an appropriation of profits under which the shareholders will receive a dividend of SEK 4.50 per share. The proposed dividend therefore totals SEK 184 million. The objective is for the dividend in the long term to correspond to 30 - 50 percent of consolidated profits after tax, while always considering AAK's long-term financing requirements. The Parent Company owns no financial instruments valued in accordance with Chap. 4 §14 a of the Swedish Annual Accounts Act (1995:1554). The Board of Directors hereby makes the following statement regarding the proposed dividend, in accordance with Chap. 18 §4 (2005:551) of the Swedish Companies Acts.
Retained profits from the previous year total SEK 3,776 million and profit/loss for the 2010 financial year totalled negative SEK 16 million (SEK 626 million for the Group). Provided that the 2011 Annual General Meeting approves the Board's proposed appropriation of profits, a total of SEK 3,576 million will be carried forward. The Company's restricted reserves will be fully covered after distribution of the dividend.
In our assessment, the Company and Group will retain sufficient equity after distribution of the proposed dividend in relation to the nature, scope and risks associated with the business operations. In making this statement, the Board has taken account of the historical development of the Group, budgeted performance and the economic situation.
In the view of the Board, the Parent Company and the Group are in a position and have the capacity, in both the short and the long term, to meet all their obligations. The proposed dividend represents a total of 4.4 percent of the Company's equity and 5.8 percent of the Group's equity attributable to the Parent Company's shareholders.
After payment of the dividend, the equity/
The Board of Directors and President propose that
| The disposable profit brought forward | SEK 3,776,166,564 | |
|---|---|---|
| net profit for the year | SEK | -15,759,734 |
| Total | SEK 3,760,406,830 |
shall be appropriated as follows:
| To be distributed to shareholders, a dividend of SEK 4.50 per share | SEK | 184,041,851 |
|---|---|---|
| To be carried forward | SEK 3,576,364,979 | |
| Total | SEK 3,760,406,830 |
The consolidated and Parent Companys financial statements will be presented for adoption to the Annual General Meeting of the shareholders on 17 May 2011.
assets ratio of the Company and the Group will be 51.6 percent and 32.5 percent, respectively.
These ratios are good in relation to other businesses in our industry. The Board of Director's assesses that the Company is in a good position to meet future business risk as well as withstand possible losses. Distribution of the dividend will not negatively affect the ability of the Company to make further investments as planned by the Board of Directors.
The proposed dividend distribution will have a temporary negative effect on the Company's ability to meet certain current liabilities. However, the Company and Group have sufficient access to both short and long-term credit that can be obtained at short notice.
The Board of Directors therefore considers that the Company and the Group are prepared for likely changes to liquidity, as well as unforeseen events. In addition, the Board of Directors has considered other known circumstances that may materially affect the financial position of the Company and the Group. No circumstance has arisen that makes the proposed dividend distribution appear unjustifiable.
It is proposed that the record date for the dividend shall be 20 May, and it is estimated that the dividend will be received by the shareholders on 25 May.
| Jan-Dec | Jan-Dec | ||
|---|---|---|---|
| SEK million | Note | 2010 | 2009 |
| Net sales | 28 | 14,808 | 15,884 |
| Other operating income | 10 | 46 | 98 |
| Total operating income | 14,854 | 15,982 | |
| Raw materials and consumables and changes in inventory | |||
| of finished goods and products in progress | -10,901 | -11,126 | |
| Goods for resale | -370 | -396 | |
| Other external expenses | 5, 29 | -1,169 | -1,350 |
| Employee benefits expense | 6, 7, 8, 9 | -1,146 | -1,222 |
| Depreciation, amortisation and impairment loss | 15, 16 | -376 | -403 |
| Other operating expenses | -10 | -10 | |
| Total operating expenses | -13,972 | -14,507 | |
| Operating result | 882 | 1,475 | |
| Profit from financial items | 11 | ||
| Financial income | 29 | 35 | |
| Financial expenses | -83 | -212 | |
| Net financial items | -54 | -177 | |
| Profit before tax | 828 | 1,298 | |
| Income tax | 12 | -202 | -455 |
| Profit for the year | 626 | 843 | |
| Attributable to: | |||
| Non-controlling interests | 2 | 17 | |
| Parent Company shareholders | 624 | 826 | |
| 626 | 843 | ||
| Earnings per share attributable to | |||
| Parent Company shareholders during the year | |||
| (SEK per share) – before and after dilution | 13 | 15.26 | 20.19 |
| Jan-Dec | Jan-Dec | ||
|---|---|---|---|
| SEK million | Note | 2010 | 2009 |
| Profit for the period | 626 | 843 | |
| Translation differences | -229 | -113 | |
| Total comprehensive income for the period | 397 | 730 | |
| Attributable to: | |||
| Non-controlling interests | 2 | -18 | |
| Parent Company shareholders | 395 | 748 |
| Jan-Dec | Jan-Dec | ||
|---|---|---|---|
| SEK million | Note | 2010 | 2009 |
| OPERATING ACTIVITIES | 30 | ||
| Profit after financial items | 828 | 1,298 | |
| Recoveries on amortisation and impairment losses | 376 | 403 | |
| Adjustment for items not included in cash flow | 30 | -48 | -608 |
| Income tax paid | -281 | -78 | |
| Cash flow from operations before changes to working capital | 875 | 1,015 | |
| Changes in working capital | |||
| Net change in inventories | -218 | 750 | |
| Net change in other current receivables | -864 | 1,645 | |
| Net change in other current operating liabilities | 964 | -1,145 | |
| Cash flow from operating activities | 757 | 2,265 | |
| INVESTING ACTIVITIES | |||
| Acquisition of intangible assets | -7 | 0 | |
| Acquisition of tangible fixed assets | -328 | -316 | |
| Acquisition of operations and shares, net of cash acquired | 27 | - | - |
| Proceeds from sale of tangible fixed assets | 4 | 3 | |
| Cash flow from investing activities | -331 | -313 | |
| FINANCING ACTIVITIES | |||
| Change in loans | -30 | -1,560 | |
| Sale of treasury shares | - | - | |
| Issue of stock options | 16 | - | |
| Dividends paid | -174 | -164 | |
| Cash flow from financing activities | -188 | -1,724 | |
| Cash flow for the year | 238 | 228 | |
| Cash and cash equivalents at beginning of year | 322 | 105 | |
| Exchange rate difference for cash equivalents | -20 | -11 | |
| Cash and cash equivalents at year-end | 19 | 540 | 322 |
| SEK million | Note | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | 16 | ||
| Goodwill | 580 | 652 | |
| Patents and other intangible assets | 102 | 112 | |
| 682 | 764 | ||
| Property, plant and equipment | 15 | ||
| Land and buildings | 563 | 619 | |
| Plant and machinery | 1,865 | 2,095 | |
| Equipment, tools and fixtures and fittings | 71 | 83 | |
| Fixed assets under construction | 219 | 181 | |
| 2,718 | 2,978 | ||
| Financial assets | |||
| Shares in associates | 13 | 7 | |
| Financial investments | 1 | 1 | |
| Deferred income tax assets | 12 | 107 | 114 |
| Other non-current receivables | 12 | 9 | |
| 133 | 131 | ||
| Total fixed assets | 3,533 | 3,873 | |
| Current assets | |||
| Inventories | 18 | 2,299 | 2,237 |
| Trade receivables | 3 | 1,751 | 1,458 |
| Current income tax | 12 | 88 | 42 |
| Other receivables | 3 | 654 | 217 |
| Derivative financial instruments | 3 | 281 | 287 |
| Prepaid expenses and accrued income | 106 | 77 | |
| Cash and cash equivalents | 19 | 540 | 322 |
| Total current assets | 5,719 | 4,640 | |
| TOTAL ASSETS | 9,252 | 8,513 |
| SEK million | Note | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Shareholders' equity | 20 | ||
| Share capital | 409 | 409 | |
| Reserves | -368 | -139 | |
| Retained earnings, including result for the year | 3,123 | 2,657 | |
| Equity attributable to Parent Company's shareholders | 3,164 | 2,927 | |
| Non-controlling interests | 24 | 22 | |
| Total equity | 3,188 | 2,949 | |
| Non-current liabilities | |||
| Financial liabilities | |||
| Loans to banks and credit institutions | 21 | 3,111 | 3,403 |
| Pension provisions | 9 | 4 | 0 |
| 3,115 | 3,403 | ||
| Non-financial liabilities | |||
| Deferred tax liabilities | 12 | 306 | 336 |
| Other provisions | 22 | 63 | 94 |
| Other non-current liabilities | 2 | 4 | |
| 371 | 434 | ||
| Total non-current liabilities | 3,486 | 3,837 | |
| Current liabilities | |||
| Financial liabilities | |||
| Loans to banks and credit institutions | 21 | 66 | 107 |
| Other current liabilities | 1 | 2 | |
| 67 | 109 | ||
| Non-financial liabilities | |||
| Accounts payable – trade | 3 | 838 | 568 |
| Current tax liabilities | 12 | 119 | 144 |
| Other current liabilities | 291 | 160 | |
| Other current provisions | 22 | 41 | 22 |
| Derivative financial instruments | 3 | 733 | 237 |
| Accrued expenses and prepaid income | 23 | 489 | 487 |
| 2,511 | 1,618 | ||
| Total current liabilities | 2,578 | 1,727 | |
| TOTAL EQUITY AND LIABILITIES | 9,252 | 8,513 |
| Attributable to the Parent Company's shareholders | |||||
|---|---|---|---|---|---|
| Retained | Non-controlling | Total | |||
| SEK million | Share capital | Reserves1) | earnings | interests | equity |
| Opening balance at | |||||
| 1 January 2009 | 414 | -66 | 1,995 | 40 | 2,383 |
| Profit for the year | - | - | 826 | 17 | 843 |
| Comprehensive income | - | -78 | - | -35 | -113 |
| Total comprehensive income | - | -78 | 826 | -18 | 730 |
| Transactions with shareholders | |||||
| Reduction of share capital | -5 | 5 | - | - | 0 |
| Dividend | - | - | -164 | - | -164 |
| Total transactions with shareholders | -5 | 5 | -164 | - | -164 |
| Closing balance | |||||
| at 31 December 2009 | 409 | -139 | 2,657 | 22 | 2,949 |
| Attributable to the Parent Company's shareholders | |||||
|---|---|---|---|---|---|
| Retained | Non-controlling | Total | |||
| Share capital | Reserves1) | earnings | interests | equity | |
| Opening balance at | |||||
| 1 January 2010 | 409 | -139 | 2,657 | 22 | 2,949 |
| Profit for the year | - | - | 624 | 2 | 626 |
| Comprehensive income | - | -229 | - | 0 | -229 |
| Total comprehensive income | - | -229 | 624 | 2 | 397 |
| Transactions with shareholders | |||||
| Issue of stock options | - | - | 16 | - | 16 |
| Dividend | - | - | -174 | - | -174 |
| Total transactions with shareholders | - | - | -158 | - | -158 |
| Closing balance at | |||||
| 31 December 2010 | 409 | -368 | 3,123 | 24 | 3,188 |
1) Reserves consist primarily of currency translation differences. Of the total reserve; SEK 4,856,140 refers to a statutory reserve in the Parent Company that is entirely attributable to an reduction of the share capital carried out previously.
| Jan - Dec | Jan - Dec | |||
|---|---|---|---|---|
| SEK million | Note | 2010 | 2009 | |
| Net sales | 26 | 42 | 42 | |
| Other operating income | 10 | 2 | 45 | |
| Total operating income | 44 | 87 | ||
| Other external expenses | 5 | -47 | -50 | |
| Personnel costs | 6, 7, 8, 9 | -44 | -48 | |
| Depreciation, amortisation and impairment losses | -1 | -1 | ||
| Other operating expenses | 0 | 0 | ||
| Total operating expenses | -92 | -99 | ||
| Operating loss | -48 | -12 | ||
| Profit from financial items | 11 | |||
| Interest income and similar items | 164 | 115 | ||
| Interest expenses and similar items | -140 | -35 | ||
| Net financial items | 24 | 80 | ||
| Profit/loss before tax | -24 | 68 | ||
| Income tax | 12 | 8 | 2 | |
| Net result for the year | -16 | 70 |
| Jan - Dec | Jan - Dec | ||
|---|---|---|---|
| SEK million | Note | 2010 | 2009 |
| Profit/loss for the period | -16 | 70 | |
| Other comprehensive income | - | - | |
| Total comprehensive income for the period | -16 | 70 |
| SEK million | Note | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | 1 | 1 | |
| 1 | 1 | ||
| Tangible assets | 4 | 4 | |
| 4 | 4 | ||
| Financial assets | |||
| Shares in associated companies | 17 | 3,995 | 1,495 |
| Receivables from Group companies | 3,670 | 3,743 | |
| Deferred income tax assets | 12 | 2 | 0 |
| 7,667 | 5,238 | ||
| Total fixed assets | 7,672 | 5,243 | |
| Current assets | |||
| Receivables from Group companies | 48 | 28 | |
| Other receivables | 4 | 2 | |
| Prepaid expenses and accrued income | 2 | 6 | |
| Cash and cash equivalents | 0 | 0 | |
| Total current assets | 54 | 36 | |
| TOTAL ASSETS | 7,726 | 5,279 |
| SEK million | Note | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|---|
| EQUITY | 20 | ||
| Restricted equity | |||
| Share capital | 409 | 409 | |
| Statutory reserve | 5 | 5 | |
| 414 | 414 | ||
| Non-restricted equity | |||
| Retained earnings | 3,776 | 3,830 | |
| Result for the year | -16 | 70 | |
| 3,760 | 3,900 | ||
| Total equity | 4,174 | 4,314 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Financial liabilities | |||
| Liabilities to banks and credit institutions | 21 | 902 | 906 |
| Liabilities to Group companies | 2,500 | 0 | |
| 3,402 | 906 | ||
| Current liabilities | |||
| Non-financial liabilities | |||
| Accounts payable | 11 | 6 | |
| Income tax liabilities | 12 | 0 | 0 |
| Liabilities to Group companies | 104 | 18 | |
| Other current liabilities | 4 | 2 | |
| Accrued expenses and prepaid income | 23 | 31 | 33 |
| 150 | 59 | ||
| Total liabilities | 3,552 | 965 | |
| TOTAL EQUITY AND LIABILITIES | 7,726 | 5,279 | |
| Pledged assets | 24 | - | - |
| Contingent liabilities | 25 | - | - |
| SEK million | Share capital | Statutory reserve | Retained profit | Total equity | |
|---|---|---|---|---|---|
| Opening balance at 1 January 2009 | 414 | - | 3,989 | 4,403 | |
| Profit for the year | - | - | 70 | 70 | |
| Comprehensive income | - | - | - | - | |
| Total comprehensive income | - | - | 70 | 70 | |
| Dividend | - | - | -165 | -165 | |
| Reduction of share capital | -5 | 5 | - | - | |
| Group contributions | - | - | 8 | 8 | |
| Tax effect on Group contribution | - | - | -2 | -2 | |
| Closing balance at 31 December 2009 | 409 | 5 | 3,900 | 4,314 | |
| Loss for the year | - | - | -16 | -16 | |
| Comprehensive income | - | - | - | - | |
| Total comprehensive income | - | - | -16 | -16 | |
| Dividend | - | - | -174 | -174 | |
| Reduction of share capital | - | - | - | - | |
| Issue of stock options | - | - | 32 | 32 | |
| Group contributions | - | - | 25 | 25 | |
| Tax effect on Group contribution | - | - | -7 | -7 | |
| Closing balance at 31 December 2010 | 409 | 5 | 3,760 | 4,174 |
Total shares outstanding were 40,898,189 at quota value of SEK 10 per share.
| Jan-Dec | Jan-Dec | ||
|---|---|---|---|
| SEK million | Note | 2010 | 2009 |
| OPERATING ACTIVITIES | 30 | ||
| Profit/loss after financial items | -24 | 68 | |
| Reversal on amortisation and impairment losses | 1 | 1 | |
| Adjustment for items not included in cash flow | 30 | 25 | 8 |
| Income tax paid | 0 | 0 | |
| Cash flow from operations before changes to working capital | 2 | 77 | |
| Changes in working capital | |||
| Net change in other current receivables | -18 | 34 | |
| Net change in other current operating liabilities | 91 | 15 | |
| Cash flow from operating activities | 75 | 126 | |
| INVESTING ACTIVITIES | |||
| Acquisition of tangible fixed assets | -1 | -2 | |
| Acquisition of shares in subsidiaries | - | -27 | |
| Divestment of shares in subsidiaries | 0 | 0 | |
| Cash flow from investing activities | -1 | -29 | |
| FINANCING ACTIVITIES | |||
| Changes in loans | -4 | 68 | |
| Changes in intra-Group loans | 72 | - | |
| Issue of stock options | 32 | - | |
| Dividend | -174 | -166 | |
| Cash flow from financing activities | -74 | -98 | |
| Cash flow for the year | 0 | -1 | |
| Cash and cash equivalents at beginning of year | 0 | 1 | |
| Cash and cash equivalents at year-end | 0 | 0 |
NOTE 1 – GENERAL INFORMATION
AarhusKarlshamn AB (publ), corporate identity number 556669-2850, is a Swedish registered limited liability company domiciled in Malmö, Sweden. The shares of the Parent Company are listed on the NASDAQ OMX Stockholm, on the Mid Cap list and under Consumer Commodities. The head office is located at Jungmansgatan 12, SE-211 19 Malmö, Sweden.
These consolidated financial statements for 2010 are for the Group consisting of the Parent Company and all subsidiaries. The Group includes shares of associates and joint ventures. The Board of Directors approved these consolidated financial statements for publication as of 22 March 2011.
The principal accounting policies applied in the preparation of these consolidated financial accounts are set out below.
The Group's consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the International Accounting Standard Board (IASB) and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as adopted within the EU, the Swedish Annual Accounts Act, and the Swedish Financial Reporting Board's recommendation RFR 1 'Supplementary accounting rules for groups of companies'. The Parent Company has prepared its financial reports according to the Swedish Annual Accounts Acts (Årsredovisningslagen) and the Swedish Financial Reporting Board's recommendation RFR 2 'Accounting for legal entities'.
The annual report and financial statements have been prepared in accordance with the historical cost convention for valuation except for currency, interest, and commodity derivative instruments, which are measured at fair value through profit and loss. Preparing these financial statements requires that the Board of Directors and the Company management use certain critical accounting estimates and assumptions. These estimates and assumptions can materially affect the income statement, balance sheet and other information contained herein, including contingent liabilities; see also disclosure Note 4. Actual outcome can vary from these estimates under different assumptions or circumstances.
The following new standards, changes and interpretations of existing standards have been published and are compulsory for the Group's financial statements for financial years starting 1 January 2010 or later:
The revised standard (effective as of 1 July 2010) continues to prescribe that the acquisition method be applied to business combinations, but with a few key changes. For example, all payments to purchase an operation are recognised at fair value on the acquisition date, including contingent consideration, which are classified as debt and which are subsequently revalued through the statement of comprehensive income. For every acquisition, shareholdings without a controlling influence in the acquired operation may be measured either at fair value or according to the proportional share of the acquired operation's net assets. All transaction costs relating to acquisitions must be expensed. As of 1 January 2010 the Group will apply IFRS 3 (revised) to all business acquisitions.
IFRS 3 (revised) has had no effect on the current period since no acquisitions were made during this time.
This standard requires that the effects of all transactions with shareholders without controlling influence are reported in equity, as long as the controlling influence remains, and these transactions no longer give rise to goodwill or to profit or loss. This standard also states that when a parent company lacks a controlling influence, any remaining interests should be revalued at fair value and a profit or loss should be recognised in the income statement. IAS 27 (revised) had no effect during the current period since no non-controlling interests carry a negative value; no transactions occurred in which the company lost its controlling interest while still retaining a shareholding; neither were there any transactions with shareholders with non-controlling interests. IAS 27 (revised) is effective for financial years starting 1 July 2010 or later.
The amendments clarifies that the potential regulation of a debt through a share issue is not relevant for its classification as current or non-current. Through a change in the definition of current liabilities, the revision allows a liability to be classified as non-current (provided the company has an unconditional right to postpone settlement of the liability through a transfer of cash funds or other assets for at least 12 months after the end of the financial year), despite the fact that the counterparty may demand settlement through shares at any time. The Group will apply IAS 1 (revised) from 1 January 2010. This is not expected to have any significant effect on the consolidated financial statements.
The amendments applies as of 1 January 2010 and clarifies that the largest cash-generating unit (or group of units), to which goodwill is allocated in order to test the need for impairment, is an operating segment. The Group has applied IAS 36 and provides, where appropriate, the required information on the reviewing of assets to determine whether a need for impairment exists.
The following new standards, changes and interpretations of existing standards have been published and are compulsory for the Group's financial statements for financial years starting 1 January 2011 or later:
These changes result in streamlined disclosures regarding the transfer of financial assets. IFRS 7 emphasises interaction between quantitative and qualitative disclosures with regard to the nature and scope of risks deriving from financial instruments. Effective for financial years starting 1 January 2011.
This standard is the first stage in the process of replacing IAS 39 Financial Instruments: Valuation and Classification. IFRS 9 introduces two new requirements for the valuation and classification of financial assets and is likely to have an affect on the Group's reporting of financial assets. This standard is not effective until 2013, for financial years starting 1 January 2013. This standard has not been adopted by the EU.
The Group has yet to evaluate the full impact of IFRS 9 on its financial reporting. However, initial indications are that it may affect the Group's reporting of financial assets other than shares classified as financial assets available for sale.
The revised standard clarifies and simplifies the definition of related parties and removes the requirement for state-related parties to disclose details of all transactions with the state and other state-related parties. IAS 24 (revised) is effective for financial years starting 1 January 2011 or later.
The change relates to the reporting of rights issues in a currency other than the company's functional currency. Provided that certain requirements are met, such rights issues are now classified as equity, irrespective of the currency in which the price is stated. IAS 32 (revised) effective for financial years starting 1 February 2010 or later.
Provides guidance on how the principles for disclosures under IAS 34 should be applied and makes additional disclosure requirements. Effective from 1 January 2011.
The following interpretations of and changes to existing standards have been published and are compulsory for the Group for financial years starting 1 January 2010 or later, but are not relevant to the Group.
The consolidated financial statements cover AarhusKarlshamn AB and all its subsidiaries. Such subsidiaries are all companies in which the Group exercises a controlling influence in determining financial and operation strategies to the extent usually associated with a shareholding of more than 50 percent of the voting rights. Subsidiaries are consolidated as of the date of acquisition (the date when the controlling influence is transferred to the Group) and to the date of disposal (date when the controlling influence terminates).
The acquisition of subsidiaries is reported using the purchase method of accounting. The cost of acquisition is measured as the fair value of the assets provided as compensation, liabilities incurred and shares issued by the Group. Transaction costs relating to acquisitions are expensed as they are incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the acquisition date. For each acquisition, the Group determines whether all non-controlling interests in the acquired companies are to be reported at fair value or according to the proportional share of the acquired company's net assets. The excess of the purchase price, any non-controlling interests and the fair value of previous shareholdings at the acquisition date over the fair value of the Group's stake in identifiable net assets is recorded as goodwill. If this amount is less than the fair value for the acquired subsidiary's assets, the difference is reported directly in the statement of comprehensive income.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated, unless the transaction provides evidence of impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The Group handles transactions with holders of non-controlling interests in the same ways as transactions with the Group's shareholders. In the event of acquisitions from holders of non-controlling interests, the company reports the difference between the purchase price paid and the actual acquired portion of the reported value of the subsidiary's net assets in equity. Profit and losses on disposals to holders of non-controlling interests are also reported in equity.
When the Group no longer holds a controlling or significant influence, each shareholding is revalued at fair value and the change in the reported value is recognised in the income statement. Fair value is used as the primary reported value and forms the basis for ongoing reporting of the remaining stake as an associate company, joint venture or financial asset. All amounts relating to divested units previously reported under "other comprehensive income" are reported as though the Group had directly disposed of the respective assets or liabilities. This can result in amounts previously reported under "other comprehensive income" being reclassified as earnings.
If the equity interest in an associated company is reduced but significant influence still remains, where relevant only a proportional share of the those amounts previously reported under "other comprehensive income" is reported as earnings.
Associated companies are those companies where the Group has significant influence, but not a controlling influence over operational and financial management, usually through a participation shareholding of between 20 percent and 50 percent of the voting rights. As from the time the significant influence is acquired, participations in associated companies are reported in the consolidated financial statements using the equity method of accounting. The equity method means that the value of the shares in the associated companies reported for the Group corresponds to the Group's participation in the equity of the associated companies plus Group-related goodwill and any remaining values of Group-related surplus or shortfall in value. The consolidated income statement reports participation in the profit of associated companies as the Group's "share of the profit of associated companies", adjusted for any amortisation, impairment or dissolution of acquired surplus or shortfall values. Dividends received from associated companies reduce the reported value of the investment.
The equity method is used until significant influence ceases.
Items included in the financial statement of each of the Group's subsidiaries are measured using the currency of the primary economic environment in which they operate (functional currency). The consolidated financial statements are presented in Swedish krona, which is the Parent Company's functional and presentation currency. Exchange rate differences that arise in translation of Group companies are reported as a separate item in comprehensive income.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised as of the end of the reporting period in the income statement. The Group does not use hedge accounting.
The results and financial position of all group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency other than the presentation currency are translated to the presentation currency as follows:
Goodwill and fair value adjustments arising in the acquisition of foreign operations are treated as assets and liabilities of the entity and translated at the closing day rate.
The following rates were used to translate currency.
| Currency | Average rate | Closing rate |
|---|---|---|
| EUR | 9.55 | 8.97 |
| DKK | 1.28 | 1.20 |
| GBP | 11.10 | 10.40 |
| LKR | 0.06 | 0.06 |
| MXN | 0.57 | 0.55 |
| USD | 7.19 | 6.76 |
Operating segments are accounted for in a manner corresponding to the internal accounting given to the chief operating decision maker. The chief operating decision maker is the function in charge of resource allocation and of evaluating the results of the operating segments. In the Group, this function has been identified as the Board of Directors, which makes strategic decisions.
The Group's operations are organically divided into business segments based on product. The marketing organisation also reflects this structure. The business areas therefore make up the Group's primary segments and the geographical markets are the secondary segments. For each segment, the results, assets and liabilities directly attributable to or items that can reliably be attributed to the segment are included in that segment. Items not attributable in this way include interest and dividend revenues, gains or losses from the sale of financial investments, interest expenses, and tax expenses. Assets and liabilities not attributed to a segment include income taxes recoverable and income tax liabilities, financial investments and financial liabilities.
Revenue comprises the fair value of goods sold excluding VAT and discounts after eliminating intra-group sales. Sales are reported on delivery of the goods, after customer acceptance and the receivable can reasonably be deemed as safe. Interest income is recorded allocated over the maturity of the security using the effective interest method. Insurance revenue is recognised as revenue when the amount can be measured in a reliable way and it is probable that the revenue will flow to the Group.
Group companies operate various pension schemes. These schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if this legal entity does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date, less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. This calculation is done annually since the obligations are negligible. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the same currency in which the benefits will be paid, and that have terms of maturity approximating the terms in the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions exceeding 10 percent of the value of the plan assets or 10 percent of the defined benefit obligation, whichever is greater, are periodised over the employees' expected average remaining working lives.
Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time. In this case, the past-service costs are amortised on a straightline basis over the vesting period.
Employees receive compensation on termination before normal retirement age or when they voluntarily accept termination in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed, formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.
Annual variable remuneration is based on the meeting of set targets determined on an annual basis. These targets are related to results obtained by the Company. The Group recognises costs as and when earnings occur.
The Group has introduced an incentive programme for senior managers and key personnel within the Group. 1,500,000 stock options entitling holders to subscribe for the corresponding number of new shares in AarhusKarlshamn AB, whereby the share capital may be increased by up to SEK 15,000,000. Stock options have been issued for a consideration of SEK 21 per option. Each stock option entitles the holder to subscribe for one (1) new share in AarhusKarlshamn AB with a quota value of SEK 10. The subscription for shares in AarhusKarlshamn AB through the use of stock options must take place during the period 1 December 2013 up to and including 1 December 2015.
If used in full, this programme could result in an overall dilution effect of up to approximately 3.54 percent in relation to share capital after full dilution, calculated on the basis of the number of additional shares in relation to the number of existing and additional shares. Senior managers and key personnel have purchased stock options at market value.
Leasing is classified as operating leasing when the risks and benefits of ownership are retained by the lessor. All leasing agreements within the Group are classified as operating leases. Operating lease payments are recognised in the income statement on a straight-line basis over the period of the lease (after deduction for any incentives from the lessor.)
Product development work is an integrated part of production relating to process-improving measures that is expensed on a continuous basis as a part of the product cost as it arises. Research and development expenses are those related to work whose purpose is primarily to optimise the attributes and function of oils and speciality fats, either for the finished product in which these oils and fats are ingredients or to add value to the finished product through greater efficiency in the production process.
Assets with indefinite useful lives are tested for impairment annually rather than being depreciated. All assets are assessed in terms of impairment whenever events or circumstances indicate that an asset's carrying cost exceeds its recoverable amount. Impairment reflects the excess of an asset's carrying cost over its recoverable amount. The recoverable amount is either the asset's fair value less any selling costs or its value in use, whichever is greater. For the purposes of assessing, assets are grouped on the basis of the lowest level at which there are separate identifiable cash flows (cash-generating units). Assets, other than financial assets and goodwill, for which impairment loss was previously recognised, are tested at every balance sheet date to ascertain whether any reversal should be made.
All borrowing costs are recognised in the period to which they can be attributed if not directly attributable to purchase, design or production of an asset that requires significant time to produce for use or sale.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill recognised separately is allocated to cash-generating units for the purpose of annual impairment testing. Goodwill is allocated to the cash-generating units that are expected to benefit from the acquisition. Goodwill is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the remaining carrying amount of goodwill relating to the entity sold.
When acquiring operations where cost is less than the net value of the acquired assets, borrowings, and any contingent liabilities, the difference is recognised directly in income.
Other intangible assets include such assets as capitalised expenditure on IT, patents and trademarks. These assets have a defined useful life and are carried at cost less accumulated amortisation and impairment losses. The cost associated with maintaining an intangible asset is recognised as part of the carrying value or as a separate asset only when it is probable that the future economic benefit associated with the asset will flow to the Group and the cost of the asset can be reliably measured. Other expenditures are recognised as they arise. Other intangible assets are amortised using the straight-line method over their estimated useful lives, normally 5 to 10 years.
Land and buildings comprise mainly factory buildings and offices. All tangible fixed assets are carried at cost, less accumulated depreciation. Acquisition cost includes expenditure that is directly attributable to the acquisition of an asset.
Subsequent costs are included in the asset's carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the assets will flow to the Group and the cost of the asset can be measured reliably. All other repairs and maintenance are charged to the income statement in the financial period in which they arise.
Land is not depreciated. Depreciation of other tangible assets is calculated using the straight-line method to allocate their cost down to their residual values over their estimated useful lives. Depreciation periods of between 3 and 15 years are used for plant and machinery, equipment, tools, fixtures and fittings. Industrial buildings and research laboratories are depreciated over 20 and 25 years, respectively, and office buildings over 50 years. When an asset's carrying amount may not be recoverable, impairment loss is recognised immediately to its recoverable amount.
Assets' residual value and useful life are reviewed at the end of every reporting period and are adjusted as required.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the income statement.
Inventories are stated at cost or net selling price, whichever is lowest. Cost is calculated using the first-in-first-out principle (FIFO) or weighted average prices. The nature and area of use of the product determines the method used. The cost of finished goods and products in progress includes direct material costs, direct labour and other direct manufacturing costs and a reasonable allocation of indirect manufacturing expenses based on normal production capacity, excluding borrowing costs. Net selling price is the estimated sale price in ordinary course of business, less costs of completion and applicable variable selling expenses.
A financial asset or financial liability is reported in the balance sheet when the Company enters a contract for the instrument (i.e., on the relevant business day).
A liability is recognised when the counterparty has performed and a contractual duty to pay arises, even if no invoice is received.
A financial asset is derecognised when the rights to cash flow in the contract mature or the rights are transferred in a transaction that transfers essentially all risks and remunerations from ownership to the assets transferred. This also applies to parts of financial assets.
A financial liability is removed from the balance sheet when the duty in the contract is performed or otherwise extinguished. This also applies to parts of financial liabilities. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. They arise when the Group provides money, goods or services directly to a debtor (usually a customer) with no intention of trading the receivable. These are recorded as current assets when the maturity is less than 12 months from the transaction date. Loans and receivables are recognised in "accounts receivable" and "other receivables" in the balance sheet.
The Company's derivative instruments consist of OTC or "over-the-counter" derivatives concluded with financial counterparties, listed standardised derivatives and sales and purchase contracts that do not meet the exemption criteria for being reported as a derivative (that is, that are not deemed to be for own use). According to IAS 39, only contracts not designed for physical delivery may be measured at market price. AAK's business model permits (enables) the net settlement of purchase and sales contracts entered into for physical delivery. In previous years, net settlement has only happened in exceptional cases and was given rise to by exceptional events, and these contracts were consequently reported under IAS 39 under the "own use" exemption rules. Net settlements in 2010, however, were not due to exceptional events. AAK has therefore made the assessment that it is no longer possible to report under the rules on own use exemption under IAS 39. The majority of purchase and sales contracts for physical delivery are, as of the fourth quarter, deemed to be derivative instruments and are valued at fair value in the income statement. This change in assessment, together with the introduction of hedge accounting of inventory in accordance with the rules on fair value hedging, means that what was previously known as the "IAS 39 effect" will no longer occur.
Derivatives that are not used as hedging instruments for which hedge accounting is applied are reported at fair value in the income statement.
Derivatives used as hedging instruments for fair value hedging are reported in the income statement. The hedged item is adjusted to reflect the change in fair value with regard to the risk that is hedged; the profit or loss relating to the hedged risk is reported in the income statement with an adjustment of the reported value of the hedged item. The change in the fair value of the hedging instrument is reported on the same line of the income statement as the change in fair value of the hedged risk.
The fair value of instruments that do not have listed prices are determined using valuation techniques such as discounted cash flow models in which all assessed and determined cash flows are discounted by a zero coupon yield curve.
The fair value of derivatives is determined using valuation techniques. The valuation is based on models that discount cash flows using forward curves for underlying variables such as raw materials and exchange rates. The assessed and determined cash flows are discounted by a zero coupon interest rate curve.
Accounts receivable are recognised initially at fair value and carried thereafter at amortised cost using the effective interest method, less provisions for impairment. Provision for impairment of accounts receivable is recognised when there is objective evidence that the Company will not receive all cash flow due according to the original amounts of the receivables. Provisions are measured as the difference between the assets' carrying amount and the present value of future cash flows discounted at the financial asset's original effective interest rate. Such provisions are stated in the income statement as "other external expenses".
Ordinary shares are classified as share capital. Transaction expenses that are directly attributable to new share issues or options are recorded, net of tax, in equity as a deduction from the proceeds.
Borrowings are initially reported at fair value, net of transaction costs. Borrowings are subsequently stated at amortised cost and any difference between proceeds (net of transaction costs) and redemption value is recognised in the income statement, allocated over the period of the borrowing using the effective interest method.
Accounts payable are initially recognised at fair value and subsequently at amortised cost using the effective interest method.
Provisions are recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of past events, and it is more likely than not that an outflow of resources will be required to settle the obligations and the amount can be reasonably estimated. No provisions are made for future operating losses. If the effect of when in time payment is made is significant, provisions are calculated through discounting of the expected future cash flow at an interest rate before tax that reflects current market assessments of the time value of money and, if applicable, the risks associated with the debt.
A provision for restructuring is recognised when the Group has adopted a comprehensive and formal restructuring plan, and the restructuring has either been started or details of the plan have been published.
Tax expenses for the period comprise both current tax due and deferred income tax. Tax is reported in the income statement, apart from when tax is attributable to items reported in other comprehensive income or directly in equity. In such cases, tax is also reported in other comprehensive income. Income tax is determined using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Tax expenses stated include both current tax due and deferred income tax.
Deferred tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the balance sheet. The principal temporary differences arise from depreciation of property, plant and equipment, provisions for pensions and other post-retirement benefits and tax losses carried forward. The tax rates enacted in each country are used in determining deferred income tax.
Deferred income tax assets relating to deductible temporary differences and loss carry-forwards are recognised only where it is probable that these can be utilised. Deferred income tax assets are reduced where it is no longer probable that these can be utilised.
Deferred income tax assets are recognised on temporary differences arising from investments in subsidiaries, except where the timing of the reversal of the temporary differences is controlled by the Group and it is probable that the difference will not be reversed in the foreseeable future.
Cash equivalents comprise balances with less than three months' maturity, including cash, bank deposits and other shortterm securities.
Payments in and out have been divided up into three categories: operational activities, investing activities and financing activities. The indirect method is used for flows from operational activities.
The changes during the year in operating assets and operating liabilities have been adjusted for the effects of changes in exchange rates. Acquisitions and disposals are reported under investing activities. The assets and liabilities that acquired and divested companies had at the time of the change are not included in the analysis of the changes in operating capital, nor in changes to balance sheet items reported under the investing and financing activities.
The calculation of earnings per share is based on Group profit for the year attributable to the Parent Company shareholders and the weighted average number of shares outstanding during the year.
When determining earnings per share after dilution, a company must base its calculations on the company's options and stock options, which could result in dilution, being used. Compensation from these instruments shall be deemed to have been received from the issuing of ordinary shares at the average market price for ordinary shares during the period. The difference between the number of issued ordinary shares and the number of ordinary shares that should have been issued at the average market price for ordinary shares during the period shall be treated as an issue of ordinary shares without remuneration. According to paragraph 47, options and stock options shall only have a dilutive effect when the average market price for ordinary shares during the period exceeds the exercise price for options or stock options. As the exercise price for options did not exceed the average market price during the period, they will not affect the calculation of earnings per share.
Pricing between Group companies is carried out using market terms.
The dividend to shareholders in the Parent Company is recognised as a liability in the Group financial statements in the period when the dividend was approved by the shareholders.
The Parent Company has prepared its annual financial statements in accordance with the Swedish Annual Accounts Acts (Årsredovisningslagen) and the Swedish Financial Reporting Board's recommendation RFR 2 'Accounting for legal entities'. No differences with the Group's accounting principles have been identified.
The AAK Group's operations expose it to various financial risks, including market prices risks (on raw materials, currencies and interest rates), liquidity risk and credit risk. Since our products are sold throughout the world, our sales revenues are exposed to market fluctuations in the exchange rates of the currencies involved. Moreover, the Group buys its raw materials on international markets, so its cost of raw materials is exposed to market fluctuations in both the price of the raw materials and the exchange rates of the currencies involved.
Exposure to such significant financial risks makes managing these risks a significant factor in successful operations. We believe that we are largely successful in managing risks owing to the policies and procedures established for the Group.
The Group's management of price risk and other risks related to the purchasing of raw materials is regulated by AAK's policy and principles on the management of market risk for raw materials, while currency risks and other financial risks are regulated by AAK's financial policies and principles. Policies and principles are established by AAK's Board of Directors, which also monitors, evaluates and updates policies and principles annually.
The Group's annual costs for raw materials amount to three-fourths of the sales value of the finished products. AAK hedges both operational raw material price risk and the underlying operational currency risk when sales agreements are signed with customers.
Raw material prices fluctuate, so the Group has assigned a high priority to raw material procurement and to managing this exposure. Raw material procurement is managed by the Group procurement organisation, which continually monitors and controls raw material market exposure for the Group. However, to maintain an effective organisation, the Group's procurement organisation is permitted to take limited price risks within the framework of the trading policy established by the Group's Board of Directors. Since these positions are managed appropriately, AAK's profitability is affected only marginally by price changes. The effect on total sales and requirements for working capital is, however, significantly larger.
Hedge contracts are used to hedge raw material price risk. We hedge inventory and sales contracts using standard commodity futures traded on commodity exchanges, or using OTC hedge contracts or physical purchase contracts.
Exotic raw materials (of which shea is by far the most important) must be sourced when they are available right after the harvest season. No efficient hedge market exists for exotic raw materials. The Group is therefore typically left with significant unhedged volumes of exotic raw materials in the months following the harvest season. The Group strives to limit this exposure by entering into new exotic raw materials-based sales contracts during the months in which they are sourced.
Since 1 October 2010 AAK has used hedge accounting in accordance with the rules on fair value hedging. The Group's operating profit includes an IAS 39 effect of SEK 39 million (578), which is reported under "Cost of goods sold".
| Raw material hedge contracts | |||||
|---|---|---|---|---|---|
| (thousand tonnes) | Stocks | Sales contracts | Bought | Sold | Net exposure |
| Oils and fats | 173 | -358 | 656 | -469 | 2 |
| (thousand tonnes) | Stocks | Sales contracts | Bought | Sold | Net exposure |
|---|---|---|---|---|---|
| Oils and fats | 143 | -548 | 831 | -404 | 22 |
With stocks and commercial contracts hedged by raw material hedge contracts, leaving a very limited net exposure, changes in raw material prices have no significant effect on the Group's profit margin. A 10 percent change in all raw material prices would therefore have a negligible effect on Group operating profit excluding IAS 39, even though the annual effect on net sales is ± SEK 1,250 million (1,000) and ± SEK 250 million (250) on working capital.
As explained above, our policies and procedures for risk management in general imply that our profit margin is not affected by changes in raw material prices. However, AAK can not eliminate its exposure to market price fluctuations in relation to rapeseed crushing. The crush margin (oil plus meal value less seed price) can therefore vary significantly over time and can thereby directly affect profitability within the Food Ingredients segment.
A significant portion of the Group's buying and selling of raw materials is denominated in foreign currency. Moreover, most of the Group's operating subsidiaries are located outside Sweden. Changes in exchange rates therefore affect AAK in several ways:
AAK hedges all its currency transaction risks. Gross contribution on all sales contracts is thereby hedged in the local currency of the subsidiaries that have entered into such contracts.
Exchange rate risk related to translating equity and profit/loss in our foreign subsidiaries to SEK is not hedged.
| Sales con | Purchase | Currency contracts | Net | ||||
|---|---|---|---|---|---|---|---|
| Million | Assets | Liabilities | tracts | contracts | Sold | Bought | exposure |
| USD | 955 | -803 | 1,123 | -750 | -1,312 | 811 | 24 |
| EUR | 431 | -108 | 1,590 | -687 | -1,397 | 167 | -4 |
| Other | 75 | -13 | 279 | -254 | -309 | 239 | 17 |
| Total in SEK | 1,461 | -924 | 2,992 | -1,691 | -3,018 | 1,217 | 37 |
With all foreign currency translation risk hedged by currency hedge contracts, leaving a very limited net exposure, changes in foreign currencies will have an insignificant effect on each subsidiary's profit margin. However, changes in exchange rates relative to SEK do affect Group profit when the profit of each foreign subsidiary is translated into SEK. A 10 percent change in the exchange rates of all foreign currencies relative to SEK would have an effect of ± SEK 75 million (75) on Group operating profit. Furthermore, a 10 percent change in the exchange rates of all foreign currencies relative to SEK would affect Group net sales by SEK 1,000 million (1,250) and Group net working capital by SEK 250 million (250).
| Sales con | Purchase | Currency contracts | Net | ||||
|---|---|---|---|---|---|---|---|
| Million | Assets | Liabilities | tracts | contracts | Sold | Bought | exposure |
| USD | 607 | -390 | 1,754 | -1,345 | -1,372 | 712 | -34 |
| EUR | 359 | -64 | 1,443 | -270 | -1,755 | 355 | 68 |
| Other | 118 | -17 | 337 | -62 | -487 | 123 | 12 |
| Total in SEK | 1,084 | -471 | 3,534 | -1,677 | -3,614 | 1,190 | 46 |
AAK's policy on interest rate risk management aims to minimise volatility in cash flow and net profit caused by fluctuations in interest rates. This is accomplished when the Group's net interest-bearing debt is floating rate. However, during abnormal market conditions – e.g. a financial crisis – short-term interest rates can rise to extreme levels. In order to protect the Group's interest costs against such abnormal scenarios, the interest rate on part of the Group's net interest-bearing debt can be fixed or capped.
At year-end 2010, the Group's interest-bearing net debt amounted to SEK 2,634 million (3,186). This includes debt of DKK 100 million, which has been swapped into a five-year fixed-rate loan by way of interest rate swaps. In addition, a zero cost collar of DKK 500 million has been entered into, capping the borrowing rate at 5 percent.
Hedge accounting according to IAS 39 is not applied.
| SEK | DKK | GBP | MXN | USD | |
|---|---|---|---|---|---|
| 2010 | 1.91 | 1.60 | 0.94 | 4.9 | 0.61 |
| 2009 | 1.06 | 2.12 | 1.01 | 5.73 | 0.94 |
Sensitivity analysis – Interest rates
At the closing date, the Group had floating rate-based net debt of SEK 2,534 million (2,986). A 1 percent change in interest rates would therefore have a full-year effect of SEK 25 million (30) on the Group's interest costs after tax.
AAK's policy on capital structure is to maximise debt-financing, though not to a level that would threaten the Company's position as an investment grade company.
| AAK's target key ratios are as follows: | |
|---|---|
| 1. Net interest-bearing debt/EBITDA | < 3.00 |
| 2. EBITDA/interest cost | > 5.00 |
The target ratios are considered to be relatively conservative and will help ensure that AAK will be able to maintain its high credit rating.
The Group's policy is to allocate total net borrowing per subsidiary relative to each subsidiary's share of the Group's total cash flow. This minimises the currency risk in relation to the Group's ability to pay interest on and amortise its borrowings, which in turn strengthens the Group's debt capacity.
| Currency | 2010 | 2009 |
|---|---|---|
| SEK | 1,018 | 904 |
| DKK | 1,192 | 1,961 |
| GBP | 347 | 178 |
| MXN | 204 | 98 |
| USD | 419 | 370 |
| Total | 3,180 | 3,511 |
Liquidity risk concerns the Group's ability to meet its financial commitments as they fall due.
The table below shows all of the Group's financial commitments, listed by the earliest contractual maturity date at the balance sheet date. All liabilities to banks and credit institutions are based on variable interest rates, which means the year-end carrying value accurately reflects the present value of these liabilities. All liabilities in foreign currency are translated into SEK at year-end closing rates.
| Total amount |
Less than 1 year |
Between 1 and 2 years |
Between 2 and 5 years |
Over 5 years | |
|---|---|---|---|---|---|
| Non-current liabilities | |||||
| Financial liabilities | |||||
| Loans to banks and credit institutions | 3,111 | - | 655 | 1,883 | 573 |
| Other non-current liabilities | 2 | - | - | - | 2 |
| Total non-current liabilities | 3,113 | - | 655 | 1,883 | 575 |
| Interest on liabilities to banks and | 680 | - | 158 | 435 | 87 |
| credit institutions | |||||
| Total non-currency liabilities and interest | 3,793 | - | 813 | 2,318 | 662 |
| Current liabilities | |||||
| Financial liabilities | |||||
| Loans to banks and credit institutions | 66 | 66 | - | - | - |
| Accounts payable | 838 | 838 | - | - | - |
| Derivative financial instruments | 733 | 733 | - | - | - |
| Accrued expenses | 291 | 291 | - | - | - |
| Other current liabilities | 487 | 487 | - | - | - |
| Total current liabilities | 2,415 | 2,415 | - | - | - |
| Interest on liabilities to banks and | 117 | 117 | - | - | - |
| credit institutions | |||||
| Total currency liabilities and interest | 2,532 | 2,532 | - | - | - |
Future payments for derivative instruments amount to SEK 7,041 million and future receipts amount to SEK 6,835 million.
| Less than | Between | Between | More than | ||
|---|---|---|---|---|---|
| Total amount | 1 year | 1 and 2 years | 2 and 5 years | 5 years | |
| Unused credit facilities | 3,530 | 135 | - | 3,395 | - |
The Group's cash and cash equivalents of SEK 540 million, available credit facilities and cash and cash equivalents generated by the business are together deemed sufficient for the Group to meet its financial commitments.
| Between | Between | ||||
|---|---|---|---|---|---|
| Total | Less than 1 | 1 and 2 | 2 and 5 | ||
| amount | year | years | years | Over 5 years | |
| Non-current liabilities | |||||
| Financial liabilities | |||||
| Loans to banks and credit institutions | 3,403 | - | 2,651 | 170 | 582 |
| Other non-current liabilities | 4 | - | - | - | 4 |
| Total non-current liabilities | 3,407 | - | 2,651 | 170 | 586 |
| Interest on liabilities to banks and | 169 | - | 29 | 40 | 100 |
| credit institutions | |||||
| Total non-current liabilities and interest | 3,576 | - | 2,680 | 210 | 686 |
| Current liabilities | |||||
| Financial liabilities | |||||
| Loans to banks and credit institutions | 107 | 107 | - | - | - |
| Other current liabilities | 22 | 22 | - | - | - |
| Accounts payable | 574 | 574 | - | - | - |
| Derivative financial instruments | 237 | 237 | - | - | - |
| Accrued expenses | 154 | 154 | - | - | - |
| Other current liabilities | 487 | 487 | - | - | - |
| Total current liabilities | 1,581 | 1,581 | - | - | - |
| Interest on liabilities to banks and | 61 | 61 | - | - | - |
| credit institutions | |||||
| Total current liabilities and interest | 1,642 | 1,642 | - | - | - |
| Less than | Between | Between | More than | ||
|---|---|---|---|---|---|
| Total amount | 1 year | 1 and 2 years | 2 and 5 years | 5 years | |
| Unused credit facilities | 2,434 | 150 | - | 2,284 | - |
The Company is exposed to credit risk primarily in relation to accounts receivable and customer contracts. Risk in the latter case is represented by customers' failure to meet their commitments due to changes in market prices.
Generally, AAK's credit risks are significantly limited due to the stable, long-term business relationships we have with our customers and suppliers.
The customer structure for the Group is such that its single largest customer is responsible for less than 5 percent of total sales, and the average customer corresponds to less than 1 percent.
Nearly one-fourth of the Group's sales occur in countries where the political and commercial risks are deemed to be higher than in Western economies. However, we experience only a limited need for impairments in these countries. This is largely due to the fact that a significant portion of our business in these countries is with large multi-national companies that also do business worldwide. The partners with whom we do business are also primarily companies with which we have stable, long-term relationships.
Each business segment is responsible for managing its customer credit risks, while our large production facilities are responsible for managing their counter-party risk in relation to raw material procurement.
| 2010 | 2009 | |||
|---|---|---|---|---|
| Gross amount | Gross amount | |||
| SEK million | underlying rec. | Provisions | underlying rec. | Provisions |
| Provisions at 1 January | 34 | 26 | 48 | 40 |
| Provisions for potential losses | 14 | 4 | 16 | 16 |
| Unused amount reversed | -14 | -9 | -8 | -8 |
| Actual credit losses | -6 | -6 | -22 | -22 |
| Exchange differences | 0 | 1 | 0 | 0 |
| Provisions at 31 December | 28 | 16 | 34 | 26 |
Provisions for impairments are entirely related to accounts receivable. Total accounts receivable excluding provisions were SEK 1,767 million (1,484).
| SEK million | 2010 | 2009 |
|---|---|---|
| 1-30 days | 299 | 249 |
| 31-120 days | 51 | 60 |
| 121-360 days | 1 | 10 |
| Over 360 days | 0 | 6 |
| 351 | 325 |
The Group has three classes of financial instruments (hedging instruments): raw material hedge contracts, currency hedge contracts and interest rate hedge swaps. In December 2010 the Group had only derivative instruments that were assessed at fair value. The fair value of financial derivative instruments is calculated using valuation methods and observable market data (methodology: level 2). The valuation methods applied are described in the accounting policy.
| SEK million | 2010 2009 |
|||
|---|---|---|---|---|
| Financial instruments | Assets | Liabilities | Assets | Liabilities |
| Raw material hedge con tracts |
207 | 638 | 213 | 161 |
| Currency hedge contracts | 62 | 81 | 74 | 67 |
| Interest rate hedge swaps | 12 | 14 | - | 9 |
| Total | 281 | 733 | 287 | 237 |
As stated above, the AAK Group hedges raw material and currency prices. For hedging, future contracts, purchase and sales contracts not deemed to be assets for own use are used, which means that they can not be exempted from derivative accounting.
Since the quality of the underlying raw materials used for hedging differs from the quality of the hedged raw materials, some inefficiency is likely. The Group minimises this inefficiency by reducing the basis risk between hedged raw material risks and the underlying raw materials used as hedging contracts.
Risk management and net exposure to raw materials and currencies are described in more detail in the Raw Material Price Risks and Foreign Currency Exposure sections.
The change in the unrealised value of hedged risk amounts to SEK 466 million. AAK's hedging strategy is based on a combination of numerous hedging instruments cancelling out the effect of changes in market prices on inventory. This combination of hedging instruments means that the change in value of the hedged risk is counterbalanced by both realised and unrealised profit/loss on derivative instruments.
The change in the fair value of the derivative instruments and the fair value attributable to the hedged risk is reported under "Raw materials and consumables and changes in inventory of finished goods and products in progress."
The hedged item has been reported as an "other receivable".
The AAK Group began using fair value-based hedge accounting on 1 October 2010. This new accounting method has not required any changes to the business model or risk management. The introduction of fair value-based hedge accounting will therefore not affect the underlying profitability or level of risk in the Group.
The AAK Group did not previously apply hedge accounting in accordance with IAS 39 in its external accounts. Only hedging contracts were measured at fair value in the income statement. However, all sales contracts, raw material purchases (including inventory) and hedging contracts are measured at fair value in the internal accounts, in accordance with AAK Group procedures for risk management. This means that a difference previously occurred between the internal and external accounts owing to the fair value of sales contracts and raw material purchases (including inventory) being treated differently. This difference was previously reported as an "IAS 39 effect". The IAS 39 effect in 2010 was SEK 39 million (2009: SEK 578 million).
In preparing these financial statements, the Group management and Board of Directors must make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and other information, especially regarding contingent liabilities. The estimates and assumptions for accounting purposes dealt with in this section are deemed the most critical for a proper understanding of the financial statements, in view of their degree of significance in judgements and uncertainty. Our estimates and assumptions in this regard change as the circumstances for AAK's operations change.
The Group tests if any goodwill impairment is suffered on an annual basis or whenever events or changes in circumstances indicate that the fair value of acquisition-related goodwill may have declined – for example, because of changes in the business climate or decisions to dispose of or discontinue certain operations. To determine whether the value of goodwill has decreased, the cash-generating unit to which the goodwill is attributable must be valued and this is done by discounting the cash flow of the unit. In applying this method, the Company relies on several factors, such as profit/loss, business plans, financial forecasts and market data.
AAK's tangible and intangible fixed assets, excluding goodwill, are recognised at cost less accumulated amortisation/depreciation and any impairment. Besides goodwill, AAK reports no intangible fixed assets with unlimited useful life. Amortisation is carried out over the estimated useful life at an estimated residual value. Both the useful life and residual value are reviewed at least once at the end of each financial period.
The carrying value of the Group's fixed assets is tested whenever events or changes in circumstances indicate that the carrying value cannot be recovered. The carrying value of intangible assets not yet finished for use is tested each year. If such an analysis indicates that the carrying value is too high, the recovery value of the asset is established, which is either the net sales value or the value in use, whichever is greatest. Value in use is measured as the expected future discounted cash flow from the assets or the cash-generating unit to which the asset belongs.
The carrying value is also tested if a fixed asset is classified as being held for sale; in such event, it is recognised at the carrying value or at the fair value after deduction for sales costs – whichever of these two is lowest.
The Group is liable to pay taxes in many countries. Extensive assessments and testing are necessary to establish worldwide provisions for income tax liabilities. There are many transactions and calculations for which the final tax is uncertain. The Group records a liability for anticipated tax audit issues based on assessment of whether an additional tax liability will arise. In cases where the final tax for these matters differs from the amounts first recorded, these difference will impact current and deferred tax receivables and tax liabilities in the period when these determinations are made.
AAK is involved in a number of disputes and legal processes relating to current operations. Senior management provides legal expertise in matters relating to legal disputes along with other experts both inside and outside the Company in matters relating to current business operations. According to our best assessment, neither the Parent Company nor any subsidiary are currently involved in any legal procedure or arbitration proceedings that are deemed to have any significant impact on the business, its financial position or the business' earnings.
Future contracts or fixed price contracts are used to hedge raw material price risk. Moreover, the Group employs currency hedging on all of its transaction risks. This means that the gross contribution of every sales contract is hedged. As part of internal monitoring, the market value of all sales contracts and raw material purchases (including inventory) is valued with respect to both raw material prices and currency prices, which is not possible under IAS 39 without applying hedge accounting based on fair value hedging.
As of 1 October 2010 AAK had begun applying hedge accounting based on fair value hedging. This new accounting method does not imply any change in the current business model. Moreover, the introduction of this method will not affect the underlying profitability or level of risk within the Group.
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Audit | ||||
| PwC | 4,836 | 4,669 | 1,044 | 753 |
| Other | 42 | 191 | - | - |
| Subtotal, audit | 4,878 | 4,860 | 1,044 | 753 |
| Other audit assignments | ||||
| PwC | 248 | 97 | - | - |
| Other | - | - | - | - |
| Subtotal, other audit assignments | 248 | 97 | - | - |
| Tax consulting | ||||
| PwC | 789 | 451 | 50 | - |
| Other | - | - | - | - |
| Subtotal, tax consulting | 789 | 451 | 50 | - |
| Other assignments | ||||
| PwC | 336 | 1,121 | - | 425 |
| Other | 110 | 69 | - | - |
| Subtotal, other assignments | 446 | 1,190 | - | 425 |
| Total | 6,361 | 6,598 | 1,094 | 1,178 |
The audit assignment refers to fees for the statutory audit, i.e. work that has been necessary in order to publish the Auditors' Report, and what is referred to as audit consulting, which is submitted in conjunction with the audit assignment.
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Wages and salaries | 855,578 | 950,868 | 24,143 | 31,142 |
| Social security costs | 257,584 | 248,656 | 17,846 | 18,467 |
| (of which pension costs) | (105,772) | (96,755) | (6,961) | (8,577) |
SEK 3 million (7) of the Group pension costs relates to the Board of Directors, the CEO and other senior managers.
| 2010 | 2010 | 2009 | ||||
|---|---|---|---|---|---|---|
| Board of Directors, CEO and other senior managers |
Other employees |
Board of Directors, CEO and other senior managers |
Other employees |
|||
| Wages and salaries |
Of which vari able salaries |
Wages and salaries |
Wages and salaries |
Of which vari able salaries |
Wages and salaries |
|
| Parent Company, Sweden | 11,804 | 3,191 | 12,339 | 21,763 | 3,294 | 9,379 |
| Subsidiaries, Sweden | 2,415 | 472 | 254,496 | 2,911 | 574 | 260,106 |
| 14,219 | 3,663 | 266,835 | 24,674 | 3,868 | 269,485 | |
| Foreign subsidiaries | 29,419 | 5,161 | 545,105 | 31,601 | 4,732 | 625,108 |
| Group total | 43,638 | 8,824 | 811,940 | 56,275 | 8,600 | 894,593 |
| 2010 | 2010 | 2009 | 2009 | |||
|---|---|---|---|---|---|---|
| Average number of employees |
Number of employees |
Of which men | Of which women |
Number of employees |
Of which men | Of which women |
| Parent Company, | 14 | 8 | 6 | 13 | 6 | 7 |
| Sweden | ||||||
| Subsidiaries in | 623 | 470 | 153 | 650 | 497 | 153 |
| Sweden | ||||||
| 637 | 478 | 159 | 663 | 503 | 160 | |
| Foreign subsidiaries: | ||||||
| Benin | - | - | - | - | - | - |
| Brazil | 5 | 4 | 1 | 5 | 3 | 2 |
| Sri Lanka | - | - | - | 1 | 1 | - |
| Denmark | 363 | 273 | 90 | 395 | 296 | 99 |
| Finland | 2 | 2 | - | 6 | 3 | 3 |
| Ghana | 2 | 2 | - | 2 | 2 | - |
| Lithuania | 3 | 2 | 1 | 3 | 2 | 1 |
| Malaysia | 17 | 9 | 8 | 19 | 9 | 10 |
| Mexico | 374 | 312 | 62 | 359 | 296 | 63 |
| The Netherlands | 63 | 53 | 10 | 63 | 52 | 11 |
| Norway | 1 | 1 | - | 1 | 1 | - |
| Poland | 5 | 2 | 3 | 5 | 2 | 3 |
| Russia | 13 | 4 | 9 | 18 | 5 | 13 |
| United Kingdom | 512 | 406 | 106 | 486 | 383 | 103 |
| Czech Republic | 2 | 1 | 1 | 3 | 2 | 1 |
| Uruguay | 12 | 6 | 6 | 11 | 6 | 5 |
| USA | 90 | 75 | 15 | 91 | 75 | 16 |
| 1,464 | 1,152 | 312 | 1,468 | 1,138 | 330 | |
| Group total | 2,101 | 1,630 | 471 | 2,131 | 1,641 | 490 |
| 2010 | 2009 | |||
|---|---|---|---|---|
| Board members | Total on | Total on | ||
| and senior managers | reporting date | Of which men (%) | reporting date | Of which men (%) |
| Group (incl. subsidiaries) | ||||
| Board members | 134 | 95 | 150 | 95 |
| CEO and other senior managers | 70 | 96 | 73 | 97 |
| Parent Company | ||||
| Board members1) | 10 | 90 | 10 | 90 |
| CEO and other senior managers | 3 | 67 | 2 | 100 |
1) and 2 employee representatives, of whom 1 male.
The principles for the remuneration of senior managers at AarhusKarlshamn, in both the Parent Company and the Group, are designed to ensure that AAK can offer internationally competitive remuneration that can attract and retain qualified managers.
Compensation of the CEO and other senior managers is considered by the Remuneration Committee of the Board of Directors and all decisions are made by the Board as a whole.
Total remuneration includes salary, annual variable compensation, pension, car allowance, and termination benefit. Senior managers have had the possibility of investing in stock options at market price.
Fixed salary, individually determined and differentiated according to responsibility and performance, is determined according to competitive principles and reviewed annually. The applicable date for the annual performance review is 1 January.
Annual variable remuneration is based on the meeting of set targets determined on an annual basis. These targets are related to the Company's results and working capital. Senior management is entitled to up to 50 percent of their annual fixed salary in variable compensation.
Pensions for senior management are in line with the Swedish KTP plan (corresponding to ITP).
The Company has separate agreements with the CEO and senior managers for termination compensation of one year's salary (fixed cash amount per month x 12 months) on termination by the Company. Neither the CEO nor any senior manager can independently assert the right to termination compensation.
Termination notice by the CEO and senior managers is agreed as 6 months. Termination notice by the Company is agreed as 12 months.
Fees are paid to the elected members of the Board in accordance with the determination of the Shareholder's Annual General Meeting of Shareholders.
No other compensation or benefits have been paid to members of the Board, except travel expenses. The CEO, the secretary to the Board and employee representatives to the Board do not receive any compensation other than for costs in connection with their participation in Board activities.
The Annual General Meeting has resolved that the compensation of elected external members of the Board shall total SEK 2,750,000, including compensation for committee work. Of this amount, the Chairman receives SEK 400,000, the Vice-Chairman SEK 300,000 and external members SEK 200,000. Compensation for committee work is allocated in accordance with a decision of the Annual General Meeting, with SEK 200,000 paid to the Chairman of the Audit Committee, SEK 100,000 to other members of the Audit Committee, SEK 100,000 to the Chairman of the Remuneration Committee, and SEK 50,000 to other members of the Remuneration Committee.
| SEK | Salary/Board of Directors |
Annual variable salary |
Other benefits 2) |
Pension cost | Change in reserve |
Total |
|---|---|---|---|---|---|---|
| Board of Directors | ||||||
| Melker Schörling, | ||||||
| Chairman | 400,000 | - | - | - | - | 400,000 |
| Carl Bek-Nielsen, | ||||||
| Vice-Chairman | 300,000 | - | - | - | - | 300,000 |
| Martin Bek-Nielsen | 300,000 | - | - | - | - | 300,000 |
| John Goodwin | 250,000 | - | - | - | - | 250,000 |
| Mikael Ekdahl | 400,000 | - | - | - | - | 400,000 |
| Anders Davidsson | 200,000 | - | - | - | - | 200,000 |
| Ulrik Svensson | 400,000 | - | - | - | - | 400,000 |
| Harald Sauthoff | 300,000 | - | - | - | - | 300,000 |
| Märit Beckeman | 200,000 | - | - | - | - | 200,000 |
| Subtotal for Board | 2,750,000 | - | - | - | - | 2,750,000 |
| Senior Managers | ||||||
| Arne Frank, | ||||||
| CEO 3) | 4,954,487 | 1,779,167 5) | 22,416 | 1,625,806 | - | 8,381,876 |
| Jerker Hartwall, | ||||||
| former CEO 3) | 6,688,841 4) | - 5) | 108,804 | 1,500,000 | -3,576,922 6) | 4,720,723 |
| Other senior | ||||||
| managers 7) | 9,843,922 | 3,219,020 5) | 613,946 | 2,575,784 | - | 16,252,672 |
| Subtotal, | ||||||
| senior managers | 21,487,250 | 4,998,187 | 745,166 | 5,701,590 | -3,576,922 | 29,355,271 |
| Total | 24,237,250 | 4,998,187 | 745,166 | 5,701,590 | -3,576,922 | 8) 32,105,271 |
1) Refers to items carried as an expense in 2010.
2) Other benefits primarily involve company car.
3) Arne Frank started as CEO on 6 April 2010. Jerker Hartwall was CEO up to and including 5 April 2010.
Arne Frank, President and CEO, is currently paid an annual fixed salary of SEK 6,000,000 plus the value of a company car. In addition, variable salary may be paid up to a maximum of 50 percent of the fixed salary. In 2010, SEK 1,779,167 was carried as an expense for variable salary. Arne Frank's retirement age is 65. To fund the pension obligation, the Company pays annual premiums to a selected insurance company. This premium is set in the Company's agreement with Arne Frank at 30 percent of his annual fixed salary. Retirement age for other senior managers is either 62 years or 65 years.
The Group maintains defined benefit retirement plans in which employees earn the right to payment of benefits after completing their employment, based on their final salary and period of service. These defined benefit retirement plans exist primarily in Sweden and the Netherlands. There are further commitments for retirement and survivors' pensions for managers and officers in Sweden that are ensured through the KP Pensionskassa.
The obligations for retirement and survivors' pensions for professional employees in Sweden are secured through policies with Alecta or correspondingly in KP Pensionskassa. According to a statement by Rådet för finansiell rapportering (the Emerging Issues Task Force of the Financial Accounting Standards Council), UFR 3, this is a defined benefit plan that involves several different employers. For the period from 1 January to 31 December 2010 AarhusKarlshamn AB (publ) and AarhusKarlshamn Sweden AB have not had access to sufficient information to enable the Company to recognise this plan as such. The pension plan according to ITP that is secured through KP Pensionskassa is therefore recognised as a defined contribution plan. Alecta's excess can be allocated to the insured individual or their beneficiaries. Corresponding provisions also apply to insurance policies with KP Pensionskassa. Charges for pensions ensured through KP Pensionskassa in the current year are SEK 20 million (20).
| Defined benefit plans |
||
|---|---|---|
| 2010 | 2009 | |
| The amounts recognised in the consolidated balance sheet are determined as follows: | ||
| Present value of funded obligations | 512 | 514 |
| Fair value of plan assets | -420 | -429 |
| 92 | 85 | |
| Present value of unfunded obligations | - | - |
| Unrecognised actuarial gains (-) and losses (+) | -88 | -85 |
| Net liability in the balance sheet | 4 | 0 |
| Pension provisions | 4 | 0 |
|---|---|---|
| Net liability in the balance sheet | 4 | 0 |
| Defined benefit | |||
|---|---|---|---|
| plans | |||
| 2010 | 2009 | ||
| The amounts recognised in the consolidated income statement are as follows: | |||
| Costs pertaining to service during the current year | 10 | 10 | |
| Interest expense | 21 | 22 | |
| Expected return on plan assets | -18 | -17 | |
| Actuarial gains (+) and losses (-) | 1 | 4 | |
| Past service cost | - | - | |
| Employees' contributions paid | -1 | - | |
| Total, included in employee costs (Note 6) | 13 | 19 |
| Pension costs | ||
|---|---|---|
| 2010 | 2009 | |
| Total pension costs recognised in the consolidated income statement are as follows: | ||
| Total costs for defined benefit plans including employer's contribution | 13 | 12 |
| Total costs for defined contribution plans including employers' contribution | 93 | 85 |
| Total | 106 | 97 |
| Defined benefit plans |
||
|---|---|---|
| 2010 | 2009 | |
| Movement in the net liability recognised in the consolidated balance sheet: | ||
| Net liability at beginning of the year | 0 | 5 |
| Net cost recognised in the income statement | 13 | 19 |
| Benefits paid | -9 | -24 |
| Contributions by employer to funded obligations | - | - |
| Exchange rate difference on foreign plans | - | - |
| Net liability at year-end | 4 | 0 |
| Defined benefit plans |
|||
|---|---|---|---|
| 2010 2010 |
|||
| The Netherlands | Sweden | ||
| The principal actuarial assumptions used at end of reporting date (%): | |||
| Discount rate | 4.7 | 4.25 | |
| Expected return on plan assets | 4.0 | 4.25 | |
| Future annual salary increases | 2.0 | 3.0 | |
| Future annual pension increases | 2.5 | 3.0 | |
| Employee turnover | 5.0 | 5.0 |
| Defined benefit | |||
|---|---|---|---|
| plans | |||
| 2009 | 2009 | ||
| The Netherlands | Sweden | ||
| The principal actuarial assumptions used at the end of the reporting date (%): | |||
| Discount rate | 5.2 | 3.75 | |
| Expected return on plan assets | 4.6 | 4.0 | |
| Future annual salary increases | 2.5 | 3.0 | |
| Future annual pension increases | 2.0 | 3.0 | |
| Employee turnover | 5.0 | 5.0 |
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Insurance compensation | 19 | 70 | - | 45 |
| Other operating income | 27 | 28 | 2 | - |
| Total | 46 | 98 | 2 | 45 |
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Interest income | 8 | 6 | 0 | 0 |
| Interest income, Group companies | - | - | 164 | 28 |
| Other financial income | 21 | 29 | 0 | - |
| Intra-Group dividends | - | - | - | 87 |
| Financial income | 29 | 35 | 164 | 115 |
| Interest expense | -59 | -164 | -136 | -31 |
| Changes in exchange rates | -2 | -18 | - | - |
| Changes in fair value – derivative instruments | -10 | -23 | - | - |
| Other financial expenses | -12 | -7 | -4 | -4 |
| Financial expenses | -83 | -212 | -140 | -35 |
| Net financial income/expense | -54 | -177 | 24 | 80 |
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Current tax | -214 | -253 | 6 | 2 |
| Deferred tax | 12 | -202 | 2 | 0 |
| Total | -202 | -455 | 8 | 2 |
The Group's weighted average underlying tax rate, excluding deferred tax on the IAS 39 effect, is approximately 27 percent. The Group's weighted average tax rate for 2010, based on the tax rates in each of the various countries involved, was 24 percent. The tax rate in Sweden is 26.3 percent (26.3). The Parent Company's actual tax rate for 2010 is lower than the nominal tax rate, which is primarily an effect of tax-free dividends.
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Profit/loss before taxes | 828 | 1,298 | -24 | 68 |
| Weighted average tax rate | ||||
| based on the tax rates in each country | -218 | -367 | 6 | -18 |
| Tax effect of various tax rates in other countries | -1 | 0 | - | - |
| Tax effect of non-deductible expenses | -2 | -3 | -1 | -3 |
| Tax effect of tax exempt income | 20 | 8 | 3 | 23 |
| Net effect of loss carry-forwards | 0 | 2 | - | - |
| Effect of tax rate changes | -1 | -40 | - | - |
| Adjustment for current tax for previous years | 0 | -55 | - | - |
| Tax expense | -202 | -455 | 8 | 2 |
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Current tax in Group contribution received | - | - | 7 | 2 |
| Total | - | - | 7 | 2 |
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset the recognised tax assets and liabilities and when the deferred taxes refer to the same tax authority. The offset amounts are as follows:
| Group | Parent | |||
|---|---|---|---|---|
| Deferred tax assets | 2010 | 2009 | 2010 | 2009 |
| Tax loss carry-forwards | 0 | 0 | - | - |
| Tangible assets | 42 | 32 | - | - |
| Inventory | 19 | 3 | - | - |
| Current assets | -2 | 3 | - | - |
| Provisions | 21 | 21 | - | - |
| Non-current liabilities | 8 | 5 | - | - |
| Current liabilities | 19 | 50 | - | - |
| Other temporary differences | - | - | 2 | 0 |
| At year-end | 107 | 114 | 2 | 0 |
| Group | Parent | |||
|---|---|---|---|---|
| Deferred tax liabilities | 2010 | 2009 | 2010 | 2009 |
| Intangible assets | 4 | 19 | - | - |
| Tangible assets | 253 | 254 | - | - |
| Inventory | 7 | 8 | - | - |
| Current assets | 27 | 33 | - | - |
| Provisions | 6 | - | - | - |
| Untaxed reserves | 10 | 10 | - | - |
| Current liabilities | -1 | 12 | - | - |
| At year-end | 306 | 336 | - | - |
The Company has no loss carry-forwards not reflected in deferred tax assets.
In addition to deferred tax assets and liabilities, AarhusKarlshamn has the following current tax liabilities and income tax recoverable:
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Current income tax liabilities | -119 | -144 | 0 | 0 |
| Current income tax receivables | 88 | 42 | - | - |
| Income tax liability/tax assets | -31 | -102 | 0 | 0 |
| Group | ||
|---|---|---|
| 2010 | 2009 | |
| Earnings attributable to equity holders of the Parent Company (SEK million) | 624 | 826 |
| Weighted average number of ordinary shares in issue | 40,898,189 | 40,898,189 |
| Earnings per share, SEK | 15.26 | 20.19 |
Earnings per share are calculated for 2010 based on net profit for the year attributable to equity holders in the Parent Company – SEK 624 million (826) – and on a weighted average number of ordinary shares in issue of 40,898,189 (40,898,189). No dilution has occurred as a result of outstanding stock options during 2010.
For the 2010 financial year, the Board of Directors and CEO propose the distribution of a dividend in the amount of SEK 4.50 per share. A decision will be made at the Annual General Meeting on 17 May 2011. It is proposed that the record date for the dividend will be 20 May and the dividend is expected to be distributed to shareholders on 25 May.
| Land | Plant and | Equipment, tools and fixtures and |
Fixed assets under con |
||
|---|---|---|---|---|---|
| Group | and buildings | machinery | fittings | struction | Total |
| Beginning of the year | |||||
| 1 January 2009 | 1,117 | 5,033 | 336 | 201 | 6,687 |
| Acquisitions | 12 | 110 | 28 | 164 | 314 |
| Disposals | -42 | -5 | -14 | - | -61 |
| Re-classifications | 18 | 147 | 8 | -173 | 0 |
| Exchange differences | -30 | -82 | -15 | -11 | -138 |
| Accumulated cost at 31 December 2009 | 1,075 | 5,203 | 343 | 181 | 6,802 |
| Beginning of the year | |||||
| 1 January 2010 | 1,075 | 5,203 | 343 | 181 | 6,802 |
| Acquisitions | 14 | 115 | 14 | 185 | 328 |
| Disposals | -2 | -46 | -51 | - | -99 |
| Re-classifications | 16 | 110 | 7 | -133 | 0 |
| Exchange differences | -110 | -353 | -29 | -14 | -506 |
| Accumulated cost at 31 December 2010 | 993 | 5,029 | 284 | 219 | 6,525 |
| Depreciation at 1 January 2009 | 423 | 2,778 | 247 | - | 3,448 |
| Disposals | -5 | -2 | -5 | - | -12 |
| Depreciation charge | 44 | 313 | 25 | - | 382 |
| Exchange differences | -14 | -23 | -7 | - | -44 |
| Accumulated depreciation | |||||
| at 31 December 2009 | 448 | 3,066 | 260 | - | 3,774 |
| Depreciation at 1 January 2010 | 448 | 3,066 | 260 | - | 3,774 |
| Disposals | 0 | -4 | -50 | - | -54 |
| Depreciation charge | 39 | 288 | 29 | - | 356 |
| Exchange differences | -65 | -248 | -26 | - | -339 |
| Accumulated depreciation at | |||||
| 31 December 2010 | 422 | 3,122 | 213 | - | 3,757 |
| Impairment losses at 1 January 2009 | - | 50 | - | - | 50 |
| Impairment loss during the year | - | - | - | - | - |
| Re-classification | 8 | -8 | - | - | - |
| Exchange differences | - | - | - | - | - |
| Accumulated impairment loss at | |||||
| 31 December 2009 | 8 | 42 | - | - | 50 |
| Impairment losses at 1 January 2010 | 8 | 42 | - | - | 50 |
| Impairment loss during the year | - | - | - | - | - |
| Re-classification | - | - | - | - | - |
| Exchange differences | - | - | - | - | - |
| Accumulated impairment loss at | |||||
| 31 December 2010 | 8 | 42 | - | - | 50 |
| Residual value according to plan | |||||
| at 31 December 2009 | 619 | 2,095 | 83 | 181 | 2,978 |
| of which land | 106 | ||||
| Tax assessment value | |||||
| Swedish companies | |||||
| Land and buildings | 148 | ||||
| Net residual value for corresponding | |||||
| assets | 99 |
| Land and buildings |
Plant and machinery |
Equipment, tools and fixtures and fittings |
Fixed assets under construction |
Total | |
|---|---|---|---|---|---|
| Residual value according to plan | |||||
| at 31 December 2010 | 563 | 1,865 | 71 | 219 | 2,718 |
| of which land | 111 | ||||
| Tax assessment value | |||||
| Swedish companies | |||||
| Land and buildings | 158 | ||||
| Net residual value for corresponding as sets |
100 |
| Patents and other intangible |
|||
|---|---|---|---|
| Group | Goodwill | assets | Total |
| Cost at 1 January 2009 | 682 | 214 | 896 |
| Investments | - | 2 | 2 |
| Exchange differences | -30 | 2 | -28 |
| Accumulated cost at 31 December 2009 | 652 | 218 | 870 |
| Cost at 1 January 2010 | 652 | 218 | 870 |
| Investments | - | 7 | 7 |
| Exchange differences | -72 | -6 | -78 |
| Accumulated costs at 31 December 2010 | 580 | 219 | 799 |
| Amortisation and impairment loss at 1 January 2009 | 0 | 80 | 80 |
| Impairment losses for the year | - | 21 | 21 |
| Exchange differences | 0 | 5 | 5 |
| Accumulated amortisation and impairment loss | |||
| at 31 December 2009 | 0 | 106 | 106 |
| Amortisation and impairment loss at 1 January 2010 | 0 | 106 | 106 |
| Impairment losses for the year | - | 20 | 20 |
| Exchange differences | 0 | -9 | -9 |
| Accumulated amortisation and impairment loss | |||
| at 31 December 2010 | 0 | 117 | 117 |
| Residual value at 31 December 2009 | 652 | 112 | 764 |
| Residual value at 31 December 2010 | 580 | 102 | 682 |
In preparing the financial statements for 2010, the Group has reviewed impairment of goodwill.
Goodwill is allocated to cash-generating units. The recoverable amount for a cash-generating unit is determined by calculating its value in use. These calculations are based on estimated future cash flow as stated in budgets and forecasts covering a five-year period. Cash flow beyond this period has been extrapolated by no more than 3 percent (3) in any case. Working capital beyond the five-year period is estimated at the same level as year five. Discount rates are assumed to be 9 percent (9) after tax and 12.8 percent (12.8) before tax. Since production, sales, etc. in acquired operations are usually integrated into the existing operations of the AarhusKarlshamn Group to such an extent that it is no longer possible to separate cash flows for the originally acquired operation, goodwill testing is done to a great degree at a higher level in the Company structure. Goodwill testing of the Swedish, Danish, and Dutch units was therefore done at an aggregate level, whereby the three production units were considered as a single cash-generating unit. Other goodwill testing considered cash-generating units at country level.
The sensitivity in these calculations indicates that recognised goodwill is still intact, even if the discount rate increases by 1 percent or if long-term growth is one percent less.
| Parent Company | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Beginning of the year | 1,495 | 5,671 | |
| Repayment of capital contribution | - | -1,151 | |
| Capital contributions provided | 2,500 | - | |
| Formation of subsidiaries | - | 27 | |
| Intra-Group sales of subsidiaries | - | -3,052 | |
| Accumulated cost | 3,995 | 1,495 |
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Corporate identity | Book | Book | ||||||
| number | Domicile | No. of shares Capital % | value | No. of shares Capital % | value | |||
| AarhusKarlshamn Invest AB, Sweden | 556747-6931 | Malmö | 1,000 | 100 | 0 | 1,000 | 100 | 0 |
| AarhusKarlshamn Holding Malta Ltd, Malta | C48134 | Gzira | 25,274,999 | 100 | 2,527 | 274,999 | 100 | 27 |
| Advanced Lipids AB, Sweden | 556728-5837 | Karlshamn | 100 | 50 | 0 | 100 | 50 | 0 |
| AarhusKarshamn Holding AB, Sweden | 556759-7918 | Malmö | 1,000 | 100 | 0 | 1,000 | 100 | 0 |
| AarhusKarlshamn Sweden AB, Sweden | 556478-1796 | Karlshamn | 21,864,928 | 100 | 21,864,928 | 100 | ||
| Tefac AB, Sweden | 556283-5214 | Karlshamn | 1,000 | 100 | 1,000 | 100 | ||
| Binol AB, Sweden | 556111-3472 | Karlshamn | 20,000 | 100 | 20,000 | 100 | ||
| BioSafe Oy, Finland | 1877093-5 | Raisio | 100 | 100 | 100 | 100 | ||
| Belico Holding AB, Sweden | 556537-0904 | Karlshamn | 9,000 | 100 | 9,000 | 100 | ||
| AarhusKarlshamn Baltic Holding AB, Sweden | 556381-8664 | Karlshamn | 1,000 | 100 | 1,000 | 100 | ||
| AarhusKarlshamn Baltic Ltd, Lithuania | 110478793 | Vilnius | 254 | 100 | 254 | 100 | ||
| AarhusKarlshamn Czech Republic Spol.s.r.o, Czech | ||||||||
| Republic | 15268853 | Prague | - | 100 | - | 100 | ||
| AarhusKarlshamn Poland Sp.z o.o., Poland | 0000124135 | Warsaw | 100 | 100 | 100 | 100 | ||
| AarhusKarlshamn Netherlands BV, The Netherlands | 35012547 | Zaandijk | 500 | 100 | 500 | 100 | ||
| AarhusKarlshamn Norway AS, Norway | 988369403 | Oslo | 1,000 | 100 | 1,000 | 100 | ||
| Karlshamns UK Holdings Plc., United Kingdom | 83553 | Hull | 4,848,499 | 100 | 4,848,499 | 100 | ||
| Karlshamns International Plc., United Kingdom | 2366565 | Hull | 50,000 | 100 | 50,000 | 100 | ||
| Chamber & Fargus Ltd, United Kingdom | 2352279 | Hull | 1,642,461 | 100 | 1,642,461 | 100 | ||
| AarhusKarlshamn Hull Ltd, United Kingdom | 2193829 | Hull | 1,500,000 | 100 | 1,500,000 | 100 | ||
| AarhusKarlshamn (Malaysia) Sdn. Bhd., Malaysia | 185577-P | Kuala Lumpur | 1,500,000 | 100 | 1,500,000 | 100 | ||
| Rapsona AB, Sweden | 556759-4600 | Järfälla | 1,000 | 100 | 1,000 | 100 | ||
| Aarhus United A/S, Denmark | 45954919 | Aarhus | 400,000,000 | 100 | 1,468 | 400,000,000 | 100 | 1,468 |
| AarhusKarlshamn Denmark A/S, Denmark | 15672099 | Aarhus | 100,000,000 | 100 | 100,000,000 | 100 | ||
| AarhusKarlshamn Germany GmbH, Germany | HRB89102 | Darmstadt | 25,000 | 100 | - | - | ||
| AarhusKarlshamn Ghana Ltd, Ghana | 80539/0671 | Accra | 500,000 | 100 | 500,000 | 100 | ||
| KNAR Benin Sarl, Benin | 19 269B | Cotonou | 200 | 100 | 200 | 100 | ||
| Kassardijan Industries Ghana Ltd, Ghana | C-933 | Tamale | 10,000,000 | 100 | 10,000,000 | 100 | ||
| AarhusKarlshamn Burkina Faso, Burkina Faso | BFBBD2007 B465 | Bobo | 200 | 100 | 200 | 100 | ||
| AarhusKarlshamn Asia Pacific Sdn.Bhd, Malaysia | 516423-P | Kuala Lumpur | 500,000 | 100 | 500,000 | 100 | ||
| AarhusKarlshamn Australia Pty Ltd, Australia | 094486361 | South Wales | 167,858 | 100 | 167,858 | 100 | ||
| AarhusKarlshamn RU OOO, Russia | 7709734935 | Moscow | - | - | 1 | 100 | ||
| AarhusKarlshamn OOO, Russia | 7709851438 | Moscow | 0 | 100 | - | - | ||
| AarhusKarlshamn Havnen A/S, Denmark | 13919232 | Aarhus | 1 | 100 | 1 | 100 | ||
| Aarhus 1 A/S, Denmark | 10112265 | Aarhus | 5,000 | 100 | 5,000 | 100 | ||
| Aarhus 3 A/S, Denmark | 16335770 | Aarhus | 5,000 | 100 | 5,000 | 100 | ||
| Hydrogen I/S, Denmark | 21839639 | Aarhus | - | 65,5 | - | 65,5 | ||
| AarhusKarlshamn Latin America S.A., Uruguay | 214947990014 | Cousa | 150,000,000 | 100 | 150,000,000 | 100 | ||
| AarhusKarlshamn do Brasil desenvolvimento | ||||||||
| de Negosios Ltda, Brazil | 07.830.192/0001-02 Sao Paulo | 24,000 | 100 | 24,000 | 100 | |||
| AarhusKarlshamn UK Ltd, United Kingdom | 1585686 | Hull | 23,600,000 | 100 | 23,600,000 | 100 | ||
| Book & Claim Ltd, United Kingdom | 5997462 | Hull | 100,000 | 100 | 100,000 | 100 | ||
| AarhusKarlshamn USA Inc., USA | 13-3445572 | New Jersey | 20,300,000 | 100 | 20,300,000 | 100 | ||
| AarhusKarlshamn Canada Ltd, Canada | 2040468 | Toronto | 100 | 100 | 100 | 100 | ||
| AarhusKarlshamn Mexico, S.A. de C.V., Mexico | AUM8302244G2 | Morelia | 201,006,799 | 94.34 | 201,006,799 | 94.34 | ||
| AarhusKarlshamn Byejendomme A/S, Denmark | 14750576 | Aarhus | 1,000,000 | 100 | 1,000,000 | 100 | ||
| Aarhus Malaysia Sdn. Bhd., Malaysia | 203033-P | Teluk Intan | 1,072,860 | 100 | 1,072,860 | 100 | ||
| Ceylon Trading Co. Ltd., Sri Lanka | J 333 | Colombo | 955,000 | 100 | 955,000 | 100 | ||
| Total | 3,995 | 1,495 |
The above list includes certain shares and participations owned by the Parent Company, either directly or indirectly, as of 31 December 2010. A complete listing of all holdings of shares and participations prepared in accordance with the rules of the Swedish Annual Accounts Act and which is included in the annual accounts filed with the Swedish Companies Registration Office investor can be requested at [email protected]
| Group | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Raw materials and consumables | 1,286 | 1,221 | |
| Goods in transit | 371 | 384 | |
| Products in progress | 290 | 308 | |
| Finished products and goods for resale | 352 | 324 | |
| Total | 2,299 | 2,237 |
"Raw materials and consumables and changes in inventory of finished products and products in progress" for the Group includes impairment loss of stock of SEK 23 million (16).
| Group | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Cash equivalents | 522 | 293 | |
| Current investments | 18 | 29 | |
| Total | 540 | 322 |
As of 31 December 2010 the Group's registered share capital was 40,898,189 shares (SEK 408,981,890).
Reserves are mainly translation reserves. Of the total reserve, SEK 4,856,140 refers to a statutory reserve in the Parent Company that is entirely attributable to an impairment of the share capital carried out previously.
Translation reserves include all foreign exchange differences that arise when translating financial accounts and reports from foreign operations whose financial reports are stated in currencies other than that used in the consolidated statements and accounts. The Parent Company and consolidated financial reports are stated in Swedish krona (SEK).
Retained profits and net profit for the year include profits earned and retained by the Parent Company, subsidiaries, and associated companies, the purchase price paid for stock options issues and profit for the year.
The Group owned a total of 0 (0) treasury shares as of 31 December 2010.
| Translation reserve | 2010 | 2009 |
|---|---|---|
| Translation reserve at 1 January | -144 | -66 |
| Translation differences for the year | -229 | -78 |
| Translation reserve at 31 December | -373 | -144 |
| Statutory reserve | 2010 | 2009 |
| Statutory reserve at 1 January | 5 | - |
| Changes for the year | - | 5 |
| Statutory reserve at 31 December | 5 | 5 |
| Total reserves | 2010 | 2009 |
| Translation reserve at 1 January | -139 | -66 |
| Total changes in reserves during the year: | ||
| Translation reserve | -229 | -78 |
| Statutory reserve | - | 5 |
| Total reserves at 31 December | -368 | -139 |
In accordance with the articles of association for AarhusKarlshamn AB (publ), share capital shall be at least SEK 300 million and at most SEK 1.2 billion. All shares are fully paid and entitle the holder to equal voting rights and shares in Company assets. Share capital includes 40,898,189 (40,898,189) shares at quota value of SEK 10 per share, and shareholder equity of SEK 408,981,890 (408,981,890).
The statutory reserve refers to a reduction of the share capital carried out previously.
Include non-restricted equity from the previous year and after any dividend distribution. Comprise, together with profit/loss for the year, the purchase price paid for issued stock options and any funded fair value non-restricted equity – that is, the total amount available for distribution of dividends to shareholders.
In accordance with the Swedish Companies Act, the Board of Directors proposes payment of a dividend, for the consideration and approval of the Annual General Meeting of the Shareholders. The proposed dividend for payment in 2010 is SEK 184 million (SEK 4.50 per share), which has not yet been considered by the Annual General Meeting. This amount is not reported as a liability.
| Group | Parent | |||
|---|---|---|---|---|
| Non-current | 2010 | 2009 | 2010 | 2009 |
| Loans to banks and credit institutions | 3,111 | 3,403 | 902 | 906 |
| Total | 3,111 | 3,403 | 902 | 906 |
| Group | Parent | |||
|---|---|---|---|---|
| Current | 2010 | 2009 | 2010 | 2009 |
| Loans to banks and credit institutions | 66 | 107 | - | - |
| Total | 66 | 107 | - | - |
Maturity for non-current borrowing is as follows:
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Between 1 and 5 years | 2,538 | 2,821 | 902 | 906 |
| More than 5 years | 573 | 582 | - | - |
| Total | 3,111 | 3,403 | 902 | 906 |
| Group | Restructuring | restoration | Other | Total |
|---|---|---|---|---|
| Opening balance at 1 January 2009 | 102 | 30 | 13 | 145 |
| Provisions for the year | 7 | - | 3 | 10 |
| Provisions claimed for the year | -36 | - | -1 | -37 |
| Exchange differences | - | -2 | - | -2 |
| Closing balance 31 December 2009 | 73 | 28 | 15 | 116 |
| Environmental | ||||
|---|---|---|---|---|
| Group | Restructuring | restoration | Other | Total |
| Opening balance at 1 January 2010 | 73 | 28 | 15 | 116 |
| Provisions for the year | 21 | - | 18 | 39 |
| Provisions claimed for the year | -44 | - | -1 | -45 |
| Re-classification | -8 | 8 | - | - |
| Exchange differences | -3 | -3 | 0 | -6 |
| Closing balance 31 December 2010 | 39 | 33 | 32 | 104 |
Provisions include
| 2010 | 2009 | |
|---|---|---|
| Non-current | 63 | 94 |
| Current | 41 | 22 |
| Total | 104 | 116 |
A provision for restructuring is reported when the Group has adopted a comprehensive and formal restructuring plan, and the restructuring has either been started or published. No provisions are made for future operating expenses.
These provisions are primarily related to restoring contaminated land.
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Employee-related expenses | 238 | 242 | 27 | 26 |
| Other | 251 | 245 | 4 | 7 |
| Total | 489 | 487 | 31 | 33 |
NOTE 24 – ASSETS PLEDGED
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Collateral for provisions and liabilities | ||||
| Property mortgage | 750 | 960 | - | - |
| Total | 750 | 960 | - | - |
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Other contingent liabilities | 3 | 124 | - | - |
| Total | 3 | 124 | - | - |
Contingent liabilities 31 December 2009 refered primarily to counter-guarantees issued for Group companies' commitments to financial institutions to cover local borrowings.
Over and above the contingent liabilities stated above, guarantees for the completion of various contractual undertakings are sometimes involved as part of the Group's normal business activities. There was no indication at year-end that any contractual guarantees provided will require any payment to be made.
For the Parent Company, SEK 42 million (42) of total sales was to related parties, equalling 100 percent (100) of sales to Group companies. The Parent Company's purchasing from Group companies is related to administrative services of limited scope. All transactions were carried out at market value.
Besides those transactions stated in Note 8 Remuneration of Board Members and Senior Managers and in the description of the Board of Directors on pages 58-59, the following transactions with key management personnel have taken place: During the year, the Group had transactions with Unitata Berhard in Malaysia, which through Carl Bek-Nielsen and Martin Bek-Nielsen many be considered to be a related party.
Outstanding accounts receivable amounted to SEK 10 million (3). Outstanding accounts payable amounted to SEK 54 million (28). Purchasing during the year amounted to SEK 964 million (545) and sales amounted to SEK 213 million (152).
All transactions were carried out at market value.
The CEO subscribed for 246,500 share options at market price with BNS Holding AB.
No business combinations were carried out during the year.
The Group's operations are organically divided into business segments based on product. The marketing organisation also reflects this structure. The business areas therefore make up the Group's primary segments and the geographical markets are the secondary segments.
| Chocolate & Confectionery |
Food | Technical Products & |
Group | |||
|---|---|---|---|---|---|---|
| 2010 | Fats | Ingredients | Feed | Functions | Eliminations | Group 2010 |
| Net sales | ||||||
| External sales | 4,475 | 8,926 | 1,407 | - | - | 14,808 |
| Internal sales | 811 | 292 | 41 | 83 | -1,227 | - |
| Group total | 5,286 | 9,218 | 1,448 | 83 | -1,227 | 14,808 |
| Chocolate & | Technical | |||||
|---|---|---|---|---|---|---|
| Confectionery | Food | Products & | Group | |||
| 2010 | Fats | Ingredients | Feed | Functions | Eliminations | Group 2010 |
| Operating profit/loss | 341 | 475 | 97 | -89 | - | 824 |
| IAS 39 | - | - | - | 39 | - | 39 |
| Insurance compen | ||||||
| sation | 19 | - | - | - | - | 19 |
| Total | 360 | 475 | 97 | -50 | - | 882 |
| Other | ||||||
| Assets | 3,351 | 4,244 | 476 | 429 | - | 8,500 |
| Unallocated assets | - | - | - | - | - | 752 |
| Group total | 3,351 | 4,244 | 476 | 429 | - | 9,252 |
| Liabilities | 747 | 1,549 | 93 | 73 | - | 2,462 |
| Unallocated liabilities | - | - | - | - | - | 3,602 |
| Group total | 747 | 1,549 | 93 | 73 | - | 6,064 |
| Investments Depreciation, amorti sation and impair |
118 | 208 | 8 | 1 | - | 335 |
| ment loss | 173 | 169 | 27 | 7 | - | 376 |
All transactions between business areas are recorded at market value. Assets and liabilities not attributed to a segment include income taxes recoverable and income tax liabilities, financial investments and financial liabilities.
| Other Nordic |
Central and Eastern |
Western | Other | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Sweden | Denmark | countries | Europe | Europe | America | countries | Total | ||
| External sales | 1,956 | 341 | 1,069 | 1,662 | 5,003 | 4,117 | 660 | 14,808 | |
| Total assets | 2,446 | 2,992 | 53 | 55 | 1,615 | 1,927 | 164 | 9,252 | |
| Investments | 140 | 68 | - | - | 60 | 67 | 0 | 335 |
External sales are based on where customers are located. The reported values of assets and the direct investment in plant for the period are determined by the location of the assets. The IAS 39 effect is not allocated to particular segments, because the IAS 39 adjustment is made at Group level and is not monitored for individual segments. Internal monitoring measures all sales contracts and raw material purchases (including inventory) at market value, with reference to both raw material prices and exchange rates. During the year, the Group began applying hedge accounting based on fair value hedging. The IAS 39 effect reflects previous negative IAS 39 effects that have now been reversed in the income statement.
| 2009 | Chocolate & Confectionery Fats |
Food Ingredients |
Technical Products & Feed |
Group Functions |
Eliminations | Group 2009 |
|---|---|---|---|---|---|---|
| Net sales | ||||||
| External sales | 4,564 | 9,702 | 1,295 | 323 | - | 15,884 |
| Internal sales | 794 | 159 | 33 | 79 | -1,065 | - |
| Group total | 5,358 | 9,861 | 1,328 | 402 | -1,065 | 15,884 |
| Chocolate & | Technical | |||||
|---|---|---|---|---|---|---|
| Confectionery | Food | Products & | Group | |||
| 2009 | Fats | Ingredients | Feed | Functions | Eliminations | Group 2009 |
| Operating profit/loss | 394 | 427 | 82 | -76 | - | 827 |
| IAS 39 | - | - | - | 578 | - | 578 |
| Insurance compen | ||||||
| sation | 70 | - | - | - | - | 70 |
| Total | 464 | 427 | 82 | 502 | - | 1,475 |
| Other | ||||||
| Assets | 3,656 | 3,650 | 470 | 250 | - | 8,026 |
| Unallocated assets | - | - | - | - | - | 487 |
| Group total | 8,513 | |||||
| Liabilities | 468 | 778 | 44 | 48 | - | 1,338 |
| Unallocated liabilities | - | - | - | - | - | 4,226 |
| Group total | 5,564 | |||||
| Investments | 143 | 158 | 7 | 8 | - | 316 |
| Depreciation, amorti | ||||||
| sation and impair | ||||||
| ment loss | 198 | 167 | 26 | 12 | - | 403 |
All transactions between business areas are recorded at market value. Assets and liabilities not attributed to a segment include income taxes recoverable and income tax liabilities, financial investments and financial liabilities.
| Other Nordic |
Central and Eastern |
Western | Other | |||||
|---|---|---|---|---|---|---|---|---|
| Sweden | Denmark | countries | Europe | Europe | America | countries | Total | |
| External sales | 1,973 | 452 | 1,066 | 1,958 | 5,343 | 4,010 | 1,082 | 15,884 |
| Total assets | 2,039 | 3,033 | 55 | 55 | 1,633 | 1,524 | 174 | 8,513 |
| Investments | 109 | 94 | - | - | 39 | 70 | 4 | 316 |
External sales are based on where customers are located. The reported values of assets and the direct investment in plant for the period are determined by the location of the assets. The IAS 39 effect is not allocated to particular segments, because the IAS 39 adjustment is made at Group level and is not monitored for individual segments. Internal monitoring measures all sales contracts and raw material purchases (including inventory) at market value, with reference to both raw material prices and exchange rates. According to IAS 39, only contracts not designed for physical delivery are subject to market valuation, which results in differences between internal and external accounting.
Future minimum leasing fees under non-cancellable operating lease agreements are distributed as follows:
| Group | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Within 1 year | 38 | 33 | |
| 1 to 5 years | 76 | 66 | |
| More than 5 years | 158 | 3 | |
| Total | 272 | 102 |
Operating leasing expenses of SEK 30 million (20) are reported in the profit/loss for the period.
| Group | Parent | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Interest paid and dividends received | ||||
| Interest received | 7 | 6 | - | - |
| Interest received from Group companies | - | - | 160 | 24 |
| Interest paid | -59 | -165 | -20 | -31 |
| Interest paid to Group companies | - | - | -116 | - |
| Dividends received from associated companies | 7 | 6 | - | - |
| Dividends received from Group companies | - | - | - | 87 |
| Total | -45 | -153 | 24 | 80 |
| Group | Parent | |||
| 2010 | 2009 | 2010 | 2009 | |
| Adjustment for items not included in cash flow | ||||
| Provisions | -6 | -29 | - | - |
| Group contribution | - | - | 25 | 8 |
| Sale of fixed assets | 1 | 1 | - | - |
| IAS 39 effect | -39 | -578 | - | - |
| Other | -4 | -2 | 0 | 0 |
| Total | -48 | -608 | 25 | 8 |
The financial statements will be submitted for resolution to the Annual General Meeting of the shareholders to be held on 17 May, 2011.
This Corporate Governance Report has been drawn up in accordance with the rules of the Annual Accounts Act and the Swedish Corporate Governance Code ("the Code"). The Corporate Governance Report has been reviewed by the company's auditor in accordance with the provisions of the Annual Accounts Act.
Effective and clear corporate governance contributes to the safeguarding of trust among AAK's stakeholder groups and also increases the focus on business benefit and shareholder value in the company. AAK's Board of Directors and management team strive, through a high level of openness, to make it easy for individual shareholders to understand the company's decision-making process and to clarify where in the organisation responsibilities and authorities reside.
AAK's corporate governance is based on applicable legislation, the Code, NASDAQ OMX Stockholm's regulatory framework for issuers, generally accepted practice in the stock market and various internal guidelines. Where AAK has chosen to diverge from the rules in the Code, the reason why is provided under each heading in this Corporate Governance Report.
AAK is a Swedish public limited company, whose shares are traded on NASDAQ OMX Stockholm within the Mid Cap segment, Consumer Commodities sector. AAK has around 8,000 shareholders. The operation is global with a presence in almost 100 countries. As at 31 December 2010, the number of employees was 2,101.
Responsibility for management and control of AAK is divided between the shareholders at the Annual General Meeting, the Board of Directors, its elected committees and the President in accordance with the Swedish Companies Act, other legislation and ordinances, applicable rules for companies traded on a regulated market, the Articles of Association and the Board's internal control instruments.
AAK's goal is to be the obvious first choice for its customers, and to create the best possible value for the company's various stakeholder groups – in particular customers, suppliers, shareholders and employees. At the same time, AAK shall be a good member of society and take long-term responsibility.
The aim of corporate governance is to define a clear allocation of responsibility and roles between the owners, the Board, the executive management team and various control bodies. In line with this, corporate governance covers the Group's management and control systems.
Information about shareholders and shareholdings can be found on pages 56-57.
AAK's current Articles of Association were adopted at the Annual General Meeting on 19 May 2009. The Articles of Association state that the company is to operate manufacturing and trading business, primarily within the food industry, to own and manage shares and securities and other associated business. The Articles of Association also state the shareholders' rights, the number of Board members and auditors, that the Annual General Meeting shall be held yearly within six months of the end of the financial year, how notification of the Annual General Meeting shall be effected and that the registered office of the Board of Directors shall be in Malmö, Sweden. The company's financial year is the calendar year. The Annual General Meeting shall be held in Malmö or Karlshamn, Sweden. The Articles of Association contain no restrictions on the number of votes each shareholder may cast at a general meeting. Furthermore, the Articles of Association contain no special provisions on the appointment and removal of Members of the Board of Directors and on amendments to the Articles of Association. For the current Articles of Association, please see www.aak.com.
The Annual General Meeting of AAK is the highest decision-making body and the forum through which the shareholders exercise their influence over the company. The tasks of the Annual General Meeting are regulated in the Swedish Companies Act and the Articles of Association. The Annual General Meeting makes decisions on a number of central issues, such as adoption of income statement and balance sheet, discharge from liability for the Board members and President, dividend to shareholders and the composition of the Board. Further information about the Annual General Meeting and complete minutes from previous Annual General Meetings and Extraordinary General Meetings are published on www.aak.com
The Annual General Meeting held on 21 May 2010 was attended by shareholders representing around 55 percent of the share capital and votes in the company. The Chairman of the Board, Melker Schörling, was elected Chairman of the Annual General Meeting. The Annual General Meeting adopted the income statement and balance sheet, as well as the consolidated income statement and consolidated balance sheet. In association with this, the Annual General Meeting approved the Board's proposal for a dividend for the financial year 2009 of SEK 4.25 per share. Melker Schörling, Carl Bek-Nielsen, Martin Bek-Nielsen, John Goodwin, Mikael Ekdahl, Märit Beckeman, Ulrik Svensson and Anders Davidsson were re-elected as Members of the Board. Arne Frank and Harald Sauthoff were elected as new Members of the Board. Melker Schörling was elected Chairman of the Board, and Carl Bek-Nielsen was elected Vice Chairman of the Board. The employee organisations had appointed Annika Westerlund (PTK-L) and Leif Håkansson (IF-Metall) as employee representative members of the Board, and Christer Svantesson (IF-Metall) and Ulf Friberg (PTK-L) as deputy members of the Board. The Annual General Meeting did not authorise the Board to resolve on the issue of new shares by the company or the acquisition of the company's own shares.
The Annual General Meeting decides on the election of the Board, among other items. The task of the Nomination Committee is to make proposals to the Annual General Meeting regarding the election of the Chairman and other members of the Board, and of the Chairman of the Meeting, remuneration issues and issues relating to this.
The Annual General Meeting in 2010 decided that the Nomination Committee should have five members, whereby Mikael Ekdahl (BNS Holding AB), Carl Bek-Nielsen (BNS Holding AB), Henrik Didner (Didner & Gerge Fond) and KG Lindvall (Swedbank Robur Fonder) were re-elected and Claus Wiinblad (ATP) was elected as a new member of the Nomination Committee for the Annual General Meeting in 2011. Mikael Ekdahl was also appointed Chairman of the Nomination Committee. The members of the Nomination Committee represent around 52 percent of the votes in AAK. The decision also included the opportunity to change the composition of the Nomination Committee in the event of a change in ownership. As AAK's main shareholder, BNS Holding AB, is in turn owned by two different shareholders, it is natural that one representative from each shareholder is represented on the Nomination Committee. The shareholders in question also consider it natural that a representative of the largest shareholder in voting terms is the Chairman of the Nomination Committee. This is the reason why a Board member is the Chairman of the Nomination Committee.
During the year, the Nomination Commit-
tee held two minuted meetings. At these, the Chairman reported on the evaluation work, whereafter the Nomination Committee discussed any changes and new recruitment. The Nomination Committee has been contactable by letter with proposals from shareholders. The members of the Nomination Committee have not received any remuneration from AAK for their work. Shareholders, who wish to contact the Nomination Committee can send letters addressed to AarhusKarlshamn AB (publ), Valberedningen, Jungmansgatan 12, SE-211 19 Malmö, Sweden.
The tasks of the Board are regulated in the Swedish Companies Act and the Articles of Association. In addition to this, the work of the Board is regulated by the working practices adopted by the Board each year. The working practices of the Board also regulate the distribution of work and responsibilities between the Board, the Chairman of the Board and the President and also include procedures for financial reporting by the President to the Board. According to the current working practices, the Board shall meet at least six times each year, including a statutory meeting following election held immediately after the Annual General Meeting. The tasks of the Board shall include setting strategies, business plans, budgets, interim reports and year-end reports for AAK. The Board shall also monitor the work of the President, appoint and dismiss the President and decide on important changes to AAK's organisation and operation. The most important tasks of the Board are to set the overriding goals for the company's operation and to decide on the company's strategy for achieving the goals, to ensure the company has an effective executive management team and appropriate remuneration terms, to ensure the openness and accuracy of the company's external reporting, and that the external reporting provides a fair presentation of the company's performance, profitability and financial position and exposure to risk, to monitor the financial reporting, including instructions to the President and establishment of requirements for the content of the financial reporting to be submitted to the Board on a continuous basis, to ensure the company's insider policy and logging procedures are adhered to in accordance with legislation and the guidelines of the Swedish Financial Supervisory Authority, to ensure there are effective systems for follow-up and control of the company's operation and financial position against set goals, to follow up and evaluate the company's development
and to recognise and support the work of the President in carrying out the required measures, to ensure there is sufficient control of the company's compliance with legislation and other rules applicable to the company's operation, to ensure the required ethical guidelines are set for the company's behaviour and to propose to the Annual General Meeting any dividend, repurchase of shares, redemption or other proposals falling within the competence of the Annual General Meeting.
Under the Articles of Association, AAK's Board shall consist of at least three and at most ten members. The current Board consists of ten members elected by the Annual General Meeting. Under Swedish law, the employee organisations have a right to be represented on the Board, and have appointed two ordinary members and two deputies. In accordance with the proposal of the Nomination Committee, eight members were re-elected and two new members elected at the Annual General Meeting in 2010. Melker Schörling was appointed Chairman of the Board. At the statutory Board meeting following the Annual General Meeting, the Board chose to appoint an Audit Committee and a Remuneration Committee. Ulrik Svensson was appointed Chairman of the Audit Committee and Mikael Ekdahl, Martin Bek-Nielsen and Harald Sauthoff were appointed members. Mikael Ekdahl was appointed Chairman of the Remuneration Committee and John Goodwin was appointed member. Melker Schörling is also Chairman of the Board of BNS Holding AB, which owns around 40 percent of the votes in AAK. Carl Bek-Nielsen, Martin Bek-Nielsen, John Goodwin and Mikael Ekdahl are also members of the Board of BNS Holding AB. These members and the Chairman cannot, therefore, be considered as independent in relation to major shareholders in the company in accordance with the Code.
The largest shareholder in BNS Holding AB is Melker Schörling AB, which owns 58.5 percent of the shares and votes.
Ulrik Svensson, who is the President and CEO of Melker Schörling AB, cannot, therefore, be regarded as independent in relation to the company's major shareholders. Anders Davidsson is the President and CEO of Bong AB, in which Melker Schörling AB
| Member | Board of Direc tors |
Audit Committee |
Remu neration Commit tee |
|---|---|---|---|
| Number of meetings | 10 | 4 | 2 |
| Märit Beckeman | 10 | ||
| Carl Bek-Nielsen | 9 | ||
| Martin Bek-Nielsen | 10 | 4 | |
| Anders Davidsson | 8 | ||
| Mikael Ekdahl | 10 | 4 | 2 |
| Arne Frank | 10 | ||
| John Goodwin | 10 | 2 | |
| Leif Håkansson | 10 | ||
| Harald Sauthoff | 10 | 2 | |
| Melker Schörling | 10 | ||
| Ulrik Svensson | 10 | 4 | |
| Annika Westerlund | 10 | ||
| Information about the members of the Board can be found on pages 58-59. |
owns 21.9 percent of the shares and votes, and cannot, therefore, be regarded as independent in relation to the company's major shareholders either.
The President and Chief Executive Officer Arne Frank is, in his capacity as President of and an employee of the company, not independent in relation to the company management. The other two members elected by the Annual General Meeting, Märit Beckeman and Harald Sauthoff, are independent in relation to AAK, the company management and the company's major shareholders in accordance with the Code.
The Board therefore fulfils the requirement in the Code that at least two Board members, who are independent of the company and the company management shall also be independent of the company's major shareholders. Bo Svensson acts as secretary to the Board. AAK's Finance Director and CFO (Chief Financial Officer), Anders Byström, acts as secretary to the Remuneration Committee and Audit Committee.
The Board's working practices, containing instructions for the division of work between the Board and the President and for financial reporting, are updated and adopted annually. Board meetings consider the financial reporting and follow-up of the day-to-day business operation and profitability trend as well as goals, strategies for the business operation, acquisitions and significant investments and matters relating to capital structure. Business area managers and other senior executives account for business plans and strategic issues on a continuous basis.
Remuneration and audit issues are prepared within each committee. The Board holds a statutory meeting immediately after the Annual General Meeting. At this meeting, the Board's working practices are also adopted, as are the instructions to the President and the Committees and other internal management instruments. The current Board held its statutory meeting on 21 May 2010, at which meeting all members were in attendance.
At the Annual General Meeting held on 21 May 2010, Melker Schörling was elected Chairman of the Board. The role of the Chairman of the Board is to lead the work of the Board and ensure the Board fulfils its tasks. The Chairman shall monitor the progress of the business in dialogue with the President, and is responsible for ensuring that the other members continuously receive the information required to carry out the work on the Board, maintaining the required quality and in accordance with the Swedish Companies Act and other applicable laws and ordinances, the Articles of Association and the working practices of the Board. The Chairman is responsible for ensuring the Board develops its knowledge about the company, that an evaluation of the Board's work is carried out and that the Nomination Committee is provided with this evaluation. The Chairman shall also participate in evaluation and development issues relating to senior executives in the Group.
The Board held ten meetings during the year. All business area managers accounted for the goals and business strategies of the business areas at a special budget and strategy meeting. The Board has handled issues relating to staffing and organisation, and has investigated and followed up a joint operational location organisation for the operations in Denmark, Sweden and the Netherlands. The Board has also paid particular attention to the progress of the specialisation projects within the operations in Denmark, Sweden and the Netherlands. Decisions have been made relating to acquisitions, divestments and investments. Other areas handled are the Group's work with raw materials supply, risk management and the company's strategies for capital structure and borrowing.
According to the decision of the Annual General Meeting, the total fees to the Board amount to SEK 2,750,000, to be allocated between the members as follows: SEK 400,000 to the Chairman, SEK 300,000 to the Vice Chairman and SEK 200,000 to each of the other members elected at the Annual General Meeting who are not employed by the company. The Chairman of the Audit Committee received SEK 200,000 and the members SEK 100,000 each. The Chairman of the Remuneration Committee received SEK 100,000 and the member SEK 50,000. The President, the secretary to the Board and employees representatives on the Board do not receive any compensation other than for costs in connection with their participation in Board activities. For further information about remuneration to members of the Board, please see page 33.
The Board continuously evaluates the work and competence of the President and the company management team. This is discussed at least once a year without representatives of the company management being present.
The Annual General Meeting approved the principles for the remuneration of senior executives. The principles for the remuneration of AAK's senior executives are designed to ensure that AAK can offer compensation that is competitive and at the prevailing market level to attract and keep qualified people. The total remuneration package paid to senior executives shall consist of fixed basic salary, annual variable salary, pension, company car and severance payment.
The fixed salary shall be individually differentiated on the basis of responsibility and performance, and shall be set on market principles and be revised annually. In addition to annual salary, senior executives shall also receive a variable salary, which shall have a pre-set ceiling and be based on the outcome in relation to goals set annually. The goals shall be related to the company's result and shall also be able to be linked to the individual areas of responsibility. The annual variable portion shall amount to a maximum of 60 percent of the fixed salary.
In addition to the variable salary mentioned, share or share-price related incentive programmes may be added as determined from time to time.
The right to a pension for senior executives shall apply from the age of 60 at the earliest. Pension plans for senior executives shall be either defined benefit or defined contribution plans, or a combination of the two.
In the event of termination by the company, the notice period for the President and other senior executives shall be twelve months, and they shall be entitled to receive severance pay with a pre-determined ceiling corresponding to twelve months' salary. For termination by the employee, a notice period of six months shall normally apply and no severance pay shall be payable.
These guidelines shall cover the persons, wich are part of the Group management team during the period in which the guidelines apply. The guidelines apply to agreements entered into after the resolution of the Annual General Meeting, and in the event that changes are made to existing agreements after this point in time.
The Board shall be entitled to diverge from the guidelines if there are particular reasons do so in an individual case.
An incentive programme has been introduced for senior executives and key personnel in the Group, in accordance with the resolution of the extraordinary general meeting of 8 November 2010. Within the framework of the programme, 1,500,000 stock options, carrying an entitlement to subscribe for an equivalent number of shares in AAK, have been issued to the wholly-owned subsidiary, AarhusKarlshamn Invest AB, and offered for sale to participants in the programme. Around 60 senior executives and key personnel within the Group have so far acquired 1,100,000 stock options. The remaining stock options, which have not been assigned, are reserved
for the future recruitment of senior executives and key personnel to the Group. The incentive programme, which gives senior executives and key personnel the opportunity to participate in the growth in value of the company, are expected to stimulate interest in the growth of the company. The incentive programme is also expected to assist in the recruitment and retention of top-class people. Our market-based valuation has set the subscription price for subscribing to shares through the exercise of the stock options at SEK 188. The stock options are assigned to participants in the programme at market price. The stock options will be eligible for the purchase of shares during the period 1 December 2013 –1 December 2015.
Audit and remuneration issues within the Board are handled in committees, which are to prepare issues arising and submit proposals for decisions to the Board. The tasks and working practices of the committees are determined by the Board in written instructions, which constitute part of the Board's working practices.
In accordance with the Board's working practices, issues of remuneration to the President and senior executives shall be prepared by the Remuneration Committee. The Remuneration Committee prepares and presents proposals to the Board relating to remuneration to the CEO and other senior executives. The final task of the Remuneration Committee is to monitor and evaluate the ongoing programmes for variable remuneration of the company management team, and programmes terminated during the year, as well the application of the guidelines for the remuneration of senior executives and the current remuneration structure and remuneration levels in the company. During 2010, the members of the Remuneration Committee were Mikael Ekdahl (Chairman) and John Goodwin.
The recommendations of the Remuneration Committee to the Board includes principles for remuneration, the relationship between fixed and variable salary, conditions for pensions and severance pay and other benefits payable to the management.
Remuneration to the CEO of the Group has been decided by the Board on the basis of the recommendations of the Remuneration Committee. Remuneration to other senior executives has been decided by the CEO in consultation with the Remuneration Committee. For further information, please see page 33. During 2010, the Remuneration Committee met on two occasions, at which both members attended. The Board's proposal for guidelines for remuneration to senior executives can be found in Note 8 on page 32, and will be put to the Annual General Meeting in 2011 for a decision.
During 2010, members of the Audit Committee were Ulrik Svensson (Chairman), Martin Bek-Nielsen, Mikael Ekdahl and Harald Sauthoff. The Committee held four ordinary meetings during the year, at which the company's external auditors and representatives of the management team have attended. Areas dealt with by the Audit Committee have primarily related to planning, scope and follow-up of the audit for the year. Other issues dealt with include risk management, integration and systematics of Group procedures, coordination of insurance issues, corporate governance, internal control, accounting rules, development of the global finance function, financing operations and other issues the Board has requested the Committee to prepare.
Under the provisions of Chapter 8 § 49 a of the Companies Act (2005:551), at least one member of the Audit Committee must be independent in relation to major shareholders in the company, and have expertise in accounting or auditing.
AAK's auditors are appointed by the Annual General Meeting. At the Annual General Meeting in 2009, the audit company PricewaterhouseCoopers AB was appointed auditors up to and including the Annual General Meeting in 2013. Anders Lundin, Authorised Public Accountant, was appointed auditor in charge. Anders Lundin also holds the position of auditor to a number of companies, including Electrolux AB, Husqvarna AB, AB Industrivärden, Melker Schörling AB, Loomis AB and Svenska Cellulosa AB SCA. All services requested in addition to the statutory audit are tested separately, to ensure there is no conflict arising involving independence or disqualification. No agreements with closely related parties exist.
It is the task of the President to lead the operation in accordance with the guidelines and instructions of the Board. In conjunction with this, the President shall use the required control systems to ensure the company complies with applicable laws and ordinances. The President reports to the Board meetings and shall ensure the Board gets as much factual, detailed and relevant information as is required for the Board to reach well-informed decisions. The President also maintains a continuous dialogue with the Chairman of the Board and keeps him informed of the development and financial position of the Company and the Group.
AAK's Group management team consists of eleven persons from seven countries: CEO, CFO, HR/CSR and internal communication, Global Technical Manager and President European Supply Chain, as well as six persons in charge of business areas/countries.
The Group management team meets on a monthly basis and deals with the Group's financial development, investments, synergy and productivity projects, acquisitions, Groupwide development projects, leadership and competence supply and other strategic issues. The meetings are chaired by the President, who reaches decisions in consultation with the other members of the Group management team. The Group has a small number of Group employees, who are responsible for Groupwide activities, such as financial performance, tax, IT, internal audit, strategy, investor relations, information and legal issues.
The President and Group management team are presented on pages 60-61. For remuneration principles and salaries and other fees paid to the President and Group management team, please see Note 8 on page 33.
AAK's business areas are Chocolate & Confectionery Fats, Food Ingredients and Technical Products & Feed. The heads of each business area/country are responsible for goals, strategies, product development and day-to-day business issues, as well as for profit, cash flow and balance sheets for the unit in question. The business areas in turn are organised into different sectors with responsibility for day-to-day business issues. Direction is exercised through internal boards, which meet four times per year. At these meetings, AAK's President/CEO acts as chairman of the board, and the Group CFO also participates. Other executives, such as the Group Controller and Strategist are coopted as necessary. In all countries where AAK has subsidiaries, a Country Manager has legal charge of the operation. The Country Manager's task is to represent AAK vis-à-vis public authorities in the country, to coordinate operations on the ground, organisation and Group-wide procedures/projects and to ensure that Group-wide guidelines are complied with. For each such country, one member of the Group management team has been appointed to have overriding responsibility for the operation. This person is the superior of the Country Manager, and in most cases acts as chairman of the local legal board.
The Board is responsible for AAK's internal control, the overall purpose of which is to protect the owners' investments and the company's assets. The Board shall provide a description of how internal control and risk management relating to financial reporting is organised in a separate section of this Corporate Governance Report. Internal control relating to financial reporting is a process involving the Board, the company management team and personnel. The process has been designed to constitute a guarantee of the reliability of the external reporting. According to the commonly accepted framework (COSO) established for this purpose, the internal control is usually described from five different aspects, which are described below.
The control environment is the basis for internal management and control. Risk assessment and risk management mean that the management is aware of and has itself assessed and analysed risks and threats to the operation. Control activities are the measures and procedures designed by the management to prevent errors from arising and for discovering and correcting errors that do arise.
In order for individual tasks to be carried out in a satisfactory manner, the personnel in an organisation need to have access to current and relevant information. The final module of the model relates to follow-up of the internal management and the design and effectiveness of controls.
AAK's organisation is designed to facilitate rapid decision-making. Operational decisions are therefore made at business area or subsidiary level, while decisions about strategies, acquisitions and overriding financial issues are taken by the company's Board and Group management team. The organisation is characterised by clear division of responsibilities and effective and established management and control systems, covering all units within AAK. The basis for the internal control relating to financial reporting consists of an overall control environment, where the organisation, decision-making routes, authorities and responsibilities have been documented and communicated in management documents, such as AAK's financial policy, raw material purchasing policy, the manual for financial reporting and the authorisation order set by the President. AAK's finance functions are integrated through a joint consolidation system and a joint accounting instruction.
The Group's finance unit works closely and effectively with the controllers of subsidiaries in relation to year-end financial statements and reporting. AAK does not have an internal audit function, as the functions mentioned above fulfil this task well. All of AAK's subsidiaries report on a monthly basis. These reports form the basis for the Group's consolidated financial reporting. Each legal unit has a controller who is responsible for the financial management of each business area, and for ensuring the financial reports are correct, complete and delivered in time for the consolidated reporting.
Through its international presence, the AAK Group is exposed to a number of different risks. Risk management within the Group is run in accordance with fixed policies and procedures, which are reviewed annually by AAK's Board. Risks relating to commodities are managed using the Group's raw material purchasing policy. Risks relating to currency, interest and liquidity are mainly directed by AAK's finance policy. The Group's credit policy directs the management of credit and contract risks. Effective risk management unites operational business development with the requirements of owners and other stakeholders for improvements in control and long-term value.
Risk management aims to minimise risks, but also to ensure that opportunities are utilised in the best possible way. Risk management covers the following risk areas: strategic risks relating to the market and sector, commercial, operational and financial risks, compliance with external and internal regulatory frameworks and financial reporting. The main components of risk assessment and management are identification, evaluation, management, reporting, follow-up and control. For further information about AAK's risk management, please see Note 3 on pages 25-29.
The risks identified relating to financial reporting are handled via the company's control activities. The control activities aim to prevent, discover and correct errors and discrepancies. Control activities take the form of manual controls, such as reconciliation and stocktaking, automatic controls via the IT systems and general controls of the underlying IT environment. Detailed financial analyses of the result and follow-up against budgets and forecasts supplement the operation-specific controls and provide overall confirmation of the quality of the reporting.
To ensure the completeness and accuracy of its financial reporting, the Group has adopted guidelines for information and communication aimed at ensuring relevant and significant information exchange within the operation, both within each unit and from and to the management and Board. Policies, handbooks and working practices relating to the financial process are communicated between the management and employees, and are available in electronic format and/or printed format. The Board receives regular feedback on internal control from the Audit Committee. To ensure that external information is correct and complete, AAK has an information policy adopted by the Board, which states what is to be communicated, by whom and in what way.
The effectiveness of the process for risk assessment and execution of control activities is followed up continuously. The follow-up covers both formal and informal procedures, which are used by those responsible at each level.
The procedures include follow-up of results against budgets and plans, analyses and key figures. The Board receives monthly reports about the Group's financial position and development. The company's financial situation is discussed at each Board meeting, and the management team analyses the financial reporting at detailed level on a monthly basis. At Audit Committee meetings, the Committee follows up the financial reporting and receives reports from the auditors about their observations.
AAK has a number of policies for the operation of the Group and its employees. These include:
Ethical guidelines for the Group have been drawn up with the aim of clarifying the Group's fundamental attitude on ethical issues, both within the Group and externally towards customers and suppliers.
The Group's finance function works in accordance with an instruction adopted by the Board, which provides a framework for how the Group's operation shall be financed, and for how e.g. currency and interest risks are to be handled.
The Group's information policy is a document describing the Group's general principles for releasing information.
The Group's environment policy provides guidelines for environmental work within the Group.
The Board of Directors and the President and CEO declare that the consolidated financial statements have been drawn up in accordance with the IFRS International Accounting Standards, as adopted by the EU, and give a fair presentation of the performance and position of the Group. The annual report has been drawn up in accordance with generally accepted accounting principles, and give a fair presentation of the performance and position of the Parent Company.
The Directors Report for the Group and the Parent Company gives a fair presentation of the development of the operations of the Group and the Parent Company, their performance and position, and describes significant risks and uncertainty factors faced by the Parent Company and the companies belonging to the Group.
Malmö, 22 March 2011
Melker Schörling Carl Bek-Nielsen John Goodwin Martin Bek-Nielsen Chairman of the Board Vice-Chairman of the Board Member Member
Anders Davidsson Ulrik Svensson Leif Håkansson Arne Frank Member Member Employee Representative President and CEO
Our auditors'report was submitted on 22 March 2011 PricewaterhouseCoopers AB
Anders Lundin Authorised Public Accountant, Auditor in Charge
Mikael Ekdahl Märit Beckeman Harald Sauthoff Annika Westerlund Member Member Member Employee Representative
We have audited the annual accounts, the consolidated accounts, the accounting records and the adminstration of the board of directors and the managing director of AarhusKarlshamn AB (publ) for the year 2010. The company's annual accounts and the consolidated accounts of the company are included in the printed version of this document on pages 4–53. 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 financial reporting standards IFRSs, as adopted by the EU, and the Annual Accounts Act when preparing the consolidate 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, 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 significant 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 financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with the IFRS International Accounting Standards, as adopted by the EU, and the Annual Accounts Act and give a true and fair view of the group's financial position and results of operations. A corporate governance statement has been prepared. The administration report and the corporate governance statements are consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the Annual General Meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the profit 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 financial year.
Malmö, 22 March 2011 PricewaterhouseCoopers AB
Anders Lundin Authorised Public Accountant
Equity, non-controlling share of equity and deferred tax liability divided by balance sheet total.
Profit for the year as a percentage of average equity.
Operating profit divided by average operating capital.
Operating income minus cost of goods.
Share price divided by equity per share.
Dividend per share as a percentage of the share price.
Equity divided by average number of shares at the balance sheet date.
Net sales divided by average operating capital.
Cash and bank balances plus short-term investments with a life of less than three months.
Profit for the year divided by the average number of shares on the balance sheet date.
The total of interest-bearing liabilities minus interest-bearing assets.
Share price divided by earnings per share.
Operating profit on the balance sheet date plus financial income divided by financial expenses.
Non-interest-bearing current assets minus non-interest-bearing liabilities excluding deferred tax.
Net borrowings divided by equity including non-controlling interests.
Equity including non-controlling interests as a percentage of balance sheet total.
Total assets minus cash and cash equivalents, interest-bearing receivables and non-interest-bearing operating liabilities, but excluding deferred tax.
Dividend per share as a percentage of earnings per share.
The AAK share has been traded since 2 October 2006 on the NASDAQ OMX, Stockholm, the Nordic List, within the Mid Cap segment, Consumer Commodities sector. A trading lot is 100 shares. The abbreviation is AAK and the ISIN code is SE0001493776.
During 2010, 16.3 (19.5) million shares were traded at a total value of SEK 2,715 million (2,295), which corresponds to a turnover rate of 40 percent (47.6). The average trade per trading day was 64,363 (77,500) shares, or SEK 10,732,000 (9,142,000). At year-end, the price was SEK 188.50 (157) and AAK's market value was SEK 7,709 million (6,421). The highest price during the year was SEK 205 (3 March 2010) and the lowest price was SEK 138 (25 May 2010).
On 31 December 2010, the share capital of AAK amounted to SEK 408,981,890 (408,981,890). The number of shares was 40,898,189 (40,898,189). The quota value per share was SEK 10. Each share gives entitlement to one vote. All shares have equal rights to participate in the profits and assets of the Company.
The number of shareholders on 31 December 2010 was 8,111 (8,600).
The Board of Directors has adopted a dividend policy. According to the policy, the Board's goal, after considering earnings trends for the Group, its financial position and future growth potential, is to propose annual dividends corresponding to at least 30 to 50 percent of annual earnings after tax for the Group.
The Board of AAK proposes a dividend for financial year 2010 of SEK 4.50 (4.25) per share, a total of SEK 184 million (174).
AAK's management has an expressed goal of conducting a strong dialogue with the media and capital markets. In conjunction with the publication of financial reports, AAK has held press and analyst conferences, where the company meets analysts and other professional participants in Stockholm, Copenhagen, London and Zürich. Interested parties can also download presentation materials and listen to audio recordings from the conferences from www.aak.com, which makes the conferences available to all shareholders.
Danske Markets Equities, Danske Bank – Bile Daar Nordea Bank A/S – Patrik Setterberg Carnegie Investment Bank AB – Marcus Bellander Swedbank – Sergej Kazatchenko SEB Enskilda – Daniel Schmidt Handelsbanken – Peter Wallin
Financial information about AAK is available on www.aak.com. Financial reports, press releases and presentations can be downloaded from this site. The Company's press releases are distributed via Euroclear and are also available on the Company's website.
The Company management can be contacted via Telephone: +46 40 627 83 00 Fax: +46 40 627 83 11 E-mail: [email protected]
Arne Frank President and CEO Telephone: +46 40 627 83 00
Anders Byström Finance Director and CFO Telephone: +46 40 627 83 00
Head of Investor Relations Telephone: +46 40 627 83 34
| Number of | Proportions of share capital and |
|
|---|---|---|
| shares | votes, % | |
| BNS Holding | 16,511,756 | 40.37 |
| Swedbank Robur fonder | 2,524,824 | 6.17 |
| Arbejdsmarkedets Tillægspension | 2,218,554 | 5.42 |
| Didner & Gerge Aktiefond | 2,069,000 | 5.06 |
| Alecta Pensionsförsäkring | 1,092,000 | 2.67 |
| Handelsbanken fonder | 846,377 | 2.07 |
| JPM Chase NA | 690,885 | 1.69 |
| Fondita Nordic Micro Cap SR | 466,000 | 1.14 |
| Other shareholders | 14,478,793 | 35.41 |
| Total | 40,898,189 | 100.00 |
The AAK share 29 September 2005 to 28 February 2011
Number of shares traded, thousand
| Distribution of shareholdings, 31-12-2010 | ||
|---|---|---|
| -- | ------------------------------------------- | -- |
| Number of shares | Number of shareholders |
Proportion of all shareholders, % |
Proportion of share capital and votes, % |
|---|---|---|---|
| 1 - 500 | 5,973 | 73.64 | 2.62 |
| 501 - 1,000 | 1,060 | 13.1 | 2.13 |
| 1,001 - 5,000 | 805 | 9.9 | 4.25 |
| 5,001 - 10,000 | 106 | 1.4 | 1.99 |
| 10,001 - 15,000 | 28 | 0.3 | 0.76 |
| 15,001 - 20,000 | 13 | 0.2 | 0.66 |
| 20,001 - | 126 | 1.6 | 87.59 |
| Total | 8,111 | 100.00 | 100.00 |
| Information per share | ||||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | |||||
| Share price, reporting date, SEK |
188.50 | 157 | ||||
| Dividend, SEK | 4.50 | 4.25 | ||||
| Direct yield, % | 2.39 | 2.70 | ||||
| Earnings per share, SEK |
15.26 | 20.19 | ||||
| Equity per share, SEK | 77.38 | 71.56 | ||||
| Share price/Equity | 2.44 | 2.19 | ||||
| Definitions, see page 55. |
Chairman of the Board of Directors.
Elected in: AAK 2005 (Karlshamns AB 2001). Born: 1947. Nationality: Swedish. Main occupation: Founder and owner of Melker Schörling AB (MSAB). Qualifications: MBA. Professional background: CEO of a number of companies, including Securitas AB 1987-1992 and Skanska
1993-1997. Other directorships: Chairman of the Board of Directors of MSAB, Hexagon AB, Securitas AB and HEXPOL AB and member of the Board of Directors of Hennes & Mauritz AB. Number of shares: Via MSAB, Melker Schörling holds 58.5 % of the shares in BNS Holding AB. In turn, BNS Holding AB holds 16,511,756 shares (40.4 %) in AAK.
Vice Chairman. Elected in: 2005. Born: 1973. Nationality: Danish. Main occupation: Executive Director (Corporate Affairs), United Plantations Berhad.
Qualifications: Bachelor of Science. Professional background: Executive director, director-in-charge. Other directorships: Chairman of the Board of Directors of United International Enterprises Ltd. Vice Chairman of the Board of Directors of United Plantations Berhad. Member of the Board of Directors of Danfoss A/S (Bitten and Mads Clausens Fond). Number of shares: Via UIE Ltd, Carl Bek-Nielsen holds 41.5 % of the shares in BNS Holding AB. In turn, BNS Holding AB holds 16,511,756 shares (40.4 %) in AAK.
Elected in: 2005. Born: 1975. Nationality: Danish. Main occupation: Executive Director (Finance & Marketing) United Plantations Berhad. Qualifications: Agricultural Economics. Professional background: Executive Director (Finance & Marketing). Other directorships: Member of the Board of Directors of United Plantations Berhad, Vice Chairman of the Board of Directors of United International Enterprises Ltd. Number of shares: Via UIE Ltd, Martin Bek-Nielsen holds 41.5 % of the shares in BNS Holding AB. In turn, BNS Holding AB holds 16,511,756 shares (40.4 %) in AAK.
Elected in: 2006. Born: 1943. Nationality: Swedish. Main occupation: PhD Candidate and research. Qualifications: Master of Science and Licentiate in Engineering. Professional background: Project Manager, consultant, business development and product/packaging development. Other directorships: Member of the Board of Directors of Beckeman Consulting AB. Number of shares: 0.
Elected in: 2007. Born: 1970. Nationality: Swedish. Main occupation: President and CEO, Bong AB. Professional background: Management Consultant with McKinsey & Co. Other directorships: Member of the Board of Directors of Bong AB. Number of shares: 1,200.
Elected in: 2005. Born: 1951. Nationality: Swedish. Main occupation: Lawyer and partner in Mannheimer Swartling Advokatbyrå. Qualifications: Swedish equivalents of MBA and LLB. Kand.
Professional background: Lawyer and partner.
Other directorships: Chairman of the Board of Directors of Bong AB, Marco AB, Absolent AB and EM Holding AB. Vice Chairman of the Board of Directors of Melker Schörling AB, Member of the Board of Directors of KonstruktionsBakelit AB. Number of shares: 8,000.
Elected in: 2010. Born: 1958. Nationality: Swedish. Main occupation: President and CEO, AAK AB. Qualifications: MSc. Industrial Engineering and Management.
Other directorships: Chairman of the Board of Contex Holding A/S and Member of the Board of Directors of Alfa Laval AB (publ.). Number of shares: 2,000. Share options: 264,500. Stock options: 80,000.
Elected in: 2005. Born: 1944. Nationality: British. Main occupation: Financial Consultant. Qualifications: Chartered Accountant; Bachelor of Commerce. Professional background: Chief Executive, Managing Director, Administrative Director and President. Other directorships: Member of the Board of Directors of United International Enterprises Ltd. Number of shares: 0.
Standing: Mikael Ekdahl, Leif Håkansson, Märit Beckeman, Martin Bek-Nielsen, Annika Westerlund and Ulrik Svensson. Seated: Melker Schörling, Carl Bek-Nielsen, Anders Davidsson, Harald Sauthoff, John Goodwin and Arne Frank.
Elected in: 2010. Born: 1955. Nationality: German. Main occupation: Vice President, Cognis GmbH – now part of BASF, The Chemical Company. Qualifications: Industrial Business Management. Professional background: Risk Management Agricultural Commodities, General Business Management in the Chemical Industry. Number of shares: 0.
Elected in: 2007. Born: 1961. Nationality: Swedish. Main occupation: President and CEO Melker Schörling AB. Qualifications: MBA. Professional background: CFO of several listed companies, including Swiss International Airlines and Esselte. Other directorships: Member of the Board of Directors of Assa Abloy AB, HEXPOL AB, Niscayah Group AB, Loomis AB, Hexagon and Flughafen Zürich AG. Number of shares: 0.
AarhusKarlshamn Sweden AB. Appointed by IF-Metall. Elected in: 2005. Born: 1957. Nationality: Swedish. Main occupation: Senior positions in trade unions and local and regional government and Board work. Qualifications: Electrical engineering. Number of shares: 0.
AarhusKarlshamn Sweden AB. Appointed by PTK-L. Elected in: 2005. Born: 1956. Nationality: Swedish. Main occupation: Laboratory Assistant. Qualifications: Technical College. Number of shares: 0.
AarhusKarlshamn Sweden AB. Appointed by PTK-L. Elected in: 2008. Born: 1954. Nationality: Swedish. Main occupation: Maintenance engineer. Responsible for preventive maintenance. Qualifications: Automation engineer. Number of shares: 0.
AarhusKarlshamn Sweden AB. Appointed by IF-Metall. Elected in: 2006. Born: 1951. Nationality: Swedish. Main occupation: Repairer. Qualifications: Engineering. Number of shares: 679.
PricewaterhouseCoopers AB
Born in 1956. Authorised public accountant. Principle auditor. The company's auditor since 2005.
Employed: 2010. Born: 1958. Nationality: Swedish. Main occupation: President and CEO, AAK AB. Qualifications: MSc. Industrial Engineering and Management. Directorships: Chairman of the Board of Contex Holding A/S and member of the Board of Directors of Alfa Laval AB (publ.). Number of shares: 2,000. Share options: 264,500. Stock options: 80,000.
Employed: 2006. Born: 1951. Nationality: Swedish. Main occupation: CFO (Chief Financial Officer) and Vice President, AAK AB. Qualifications: MBA. Number of shares: 0. Stock options: 70,000.
Employed: 2002. Born: 1951. Nationality: Dutch. Main occupation: Vice President, AAK AB, President Business Area Food Ingredients Continental Europe. Qualifications: MSc Food Technology. Number of shares: 300. Stock options: 40,000.
Employed: 2010. Born: 1963. Nationality: Danish. Main occupation: Vice President, AAK AB and President, Business Area Chocolate & Confectionery Fats. Qualifications: BSc. Dairy Technology, Graduate Diploma in Business Administration. Number of shares: 0. Stock options: 100,000.
Employed: 1974. Born: 1951. Nationality: Swedish. Main occupation: Vice President, AAK AB, President, Business Area Technical Products & Feed. Qualifications: Graduate Diploma in Food Engineering. Number of shares: 210. Stock options: 10,000.
Employed: 2009. Born: 1969. Nationality: American. Main occupation: Vice President, AAK AB and President, AAK USA. Qualifications: MSc. Electrical Engineering. Number of shares: 0. Stock options: 65,000.
Octavio Díaz de León, David Smith, Torben Friis Lange, Anne Mette Olesen, Renald Mackintosh, Anders Byström, Arne Frank, Karsten Nielsen, Bo Svensson, Edmond Borit and Jean-Marc Rotsaert.
Employed: 2007. Born: 1967. Nationality: Mexican. Main occupation: Vice President, AAK AB and Managing Director, AarhusKarlshamn Mexico. Qualifications: MBA, BSc. Mechanical & Electrical Engineering. Number of shares: 0. Stock options: 40,000.
Employed: 2001. Born: 1969. Nationality: Peruvian and French. Main occupation: Vice President, AAK AB and Managing Director, AAK Latin America. Qualifications: MBA, BSc. Food Engineering. Number of shares: 0. Stock options: 50,000.
Employed: 2001. Born: 1960. Nationality: British. Main occupation: Vice President, AAK AB and President, European Supply Chain. Qualifications: MBA, Graduate Diploma in Business Management. Number of shares: 0. Stock options: 40,000.
Employed: 1988. Born: 1963. Nationality: Danish. Main occupation: Vice President, AAK AB, CTO. Qualifications: Graduate Diploma in Food Technology. Number of shares: 264. Stock options: 15,000.
Employed: 2010. Born: 1964. Nationality: Danish. Main occupation: Vice President, Human Resources and Communications. Qualifications: MBA, BSc. Chemical Engineering. Number of shares: 0. Stock options: 60,000.
AarhusKarlshamn AB (publ) will provide financial information for the 2011 financial year on the following occasions.
Reports and press releases are available in English and Swedish and can be ordered from AarhusKarlshamn AB (publ), Corporate Communication, Jungmansgatan 12, SE-211 19 Malmö, Sweden Phone +46 40 627 83 00, Fax +46 40 627 83 11. E-mail: [email protected].
More information about AarhusKarlshamn AB (publ) is available on the company's website: www.aak.com
AarhusKarlshamn AB (publ)'s ordinary Annual General Meeting will take place on Tuesday 17 May 2011 at 14.00 in Europaporten in Malmö, Sweden. Doors to the Annual General Meeting open at 13.00 and registration must be completed before 14.00, at which time the voting list will be adopted.
Shareholders are entitled to attend the Annual General Meeting if they are registered in the printout of the shareholders' register kept by Euroclear Sweden AB created on Wednesday 11 May 2011, and if they have given notice that they will attend the Annual General Meeting by 16.00 on Wednesday 11 May.
The company is a reconciliation company. This means that shareholders, to be entitled to attend the Annual General Meeting, must be entered in the share register held by Euroclear Sweden AB no later than 11 May 2011. Anyone who has shares registered through a nominee must temporarily register the shares in his/her own name to be able to attend the Annual General Meeting. This should be done in good time before this date.
Shareholders who want to attend the Annual General Meeting must notify the company by post to: AarhusKarlshamn AB (publ), Kerstin Wemby, SE-374 82 Karlshamn Sweden by telephone: +46 454 823 12, by e-mail: [email protected] or through the website: www.aak.com as soon as possible, and no later than 16.00 on Wednesday 11 May 2011, when the notification period expires.
In the notification, the shareholder must specify his or her name, address, phone number, personal or corporate identity number and shareholding.
Notice of the Annual General Meeting is published in Post- och Inrikes Tidningar and Svenska Dagbladet, including a full agenda.
Jungmansgatan 12 SE-211 19 Malmö, Sweden Phone: +46 40 627 83 00 Fax: +46 40 627 83 11 E-mail: [email protected] www.aak.com Corporate identity no. 556669-2850
For more information, please visit our website www.aak.com.
This document is a translation of the Swedish language version. In the event of any discrepancies between the translation and the original Swedish annual report, the latter shall prevail.
– The vision consists of three important elements, which govern what we want to achieve:
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.