Annual Report • Aug 4, 2011
Annual Report
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Financial statements for the Group and Parent Company (pages 37–70)
The Board of Directors and President of Nobia AB, Corporate Registration Number 556528-2752, hereby present the Annual Report and consolidated financial statements for the 2010 fiscal year.
The Board of Directors' Report is presented on pages 6–34.
The kitchen featured on the cover is a product from the French company Hygena.
Nobia's 2010 net sales amounted to SEK 14,085 million (15,418). Operating profit before restructuring costs amounted to SEK 517 million (346), and SEK 6 million (38) after restructuring costs. Loss after tax totalled SEK 89 million (loss: 79), corresponding to a loss per share of SEK 0.53 (loss: 0.47). Operating cash flow amounted to SEK 641 million (803). The Board of Directors proposes that no dividend be paid for the 2010 fiscal year.
Restructuring costs of SEK 511 million (308) aim to improve efficiency in production, logistics and organisation, and cost-saving measures.
The year began with weak demand for kitchens. Nobia continued to strengthen its market position in the UK market, while restructuring measures in France had a substantially negative impact on the quarterly results. A strategic change was presented in February with the purpose of creating a more effective Nobia.
With increasing uncertainty in the UK, continued restructuring efforts in France and an overall weak market situation, Nobia still succeeded in strengthening its gross margin by approximately 3 percentage points during the second quarter. This was mainly the result of implemented plant closures in the Nordic region.
Demand for new-builds in several of the Nordic markets had a favourable impact on net sales and the operating margin, while the negative trend in the UK market continued. Restructuring continued in France, as well as the further development of Nobia's strategy and organisation.
Morten Falkenberg took over as President and CEO on 6 October. Demand continued to show a positive trend in the Nordic region during the fourth quarter. Overall, organic growth was 6 per cent. Net sales were negatively impacted by currency effects in the fourth quarter. The gross margin continued to improve. A cost-saving programme involving the closure of nearly 35 unprofitable stores, and the reduction of 385 personnel impacted the quarter's operating profit. During 2011, the measures will successively reduce the cost base by at least SEK 100 million.
| Key figures | 2010 | 2009 | Change, % |
|---|---|---|---|
| Net sales, SEK m | 14,085 | 15,418 | –9 |
| Gross margin, % | 39.1 | 36.7 | – |
| Operating margin before depreciation and impairment losses, % (EBITDA) |
6.9 | 5.6 | – |
| Operating profit, SEK m (EBIT) | 517 | 346 | 49 |
| Operating margin, % | 3.7 | 2,2 | – |
| Profit after financial items, SEK m | 432 | 271 | 59 |
| Loss after tax, SEK m | –89 | –79 | –13 |
| Earnings per share, after dilution, SEK | –0.53 | –0.47 | –13 |
| Operating cash flow, SEK m | 641 | 803 | –20 |
| Return on capital employed, % | 0.4 | 1.0 | – |
| Return on shareholders' equity, % | –2.4 | –1.9 | – |
All figures except "Net sales", "Profit/loss after tax", "Earnings/loss per share" and "Operating cash flow" have been adjusted for restructuring costs.
Net sales amounted to SEK 14,085 million. The operating margin totalled 0.0 per cent (0.2), and 3.7 per cent excluding restructuring costs.
Return on capital employed including restructuring costs amounted to 0.4 per cent during 2010.
Loss per share for the year including restructuring costs amounted to SEK 0.53.
Nobia is Europe's kitchen specialist. The operation consists of developing, manufacturing and selling kitchens through about twenty strong brands.
The focus on kitchens enables our various units to leverage joint competencies throughout the entire value chain, which benefits both us and our customers. The greatest economies of scale lie in product development, and the co-ordination of sourcing and production.
We operate in three geographic regions – the UK, the Nordic region and Continental Europe. Sales are conducted directly to consumers through a network of nearly 700 stores, and to professional customers in retail and new-builds. Read more on pages 14–21.
The head office is situated in Stockholm, and approximately 7,500 people are employed in eight main countries. Net sales amount to approximately SEK 14 billion. The Nobia share is listed on NASDAQ OMX Stockholm under the short name "NOBI".
The fastest way to find information about Nobia is via www.nobia.com. You can find up-to-date financial information on our website, and compare and download financial data.
You can also subscribe to reports and press releases via e-mail or SMS.
Are you interested in a career at Nobia? To find out more, visit www.nobia.com for vacant positions and interviews with some of Nobia's employees.
Our new website will be launched in spring 2011.
We will also be launching a mobile web to give you the latest news about Nobia no matter where you are.
Nobia offers attractive kitchen solutions in selected market segments through a number of strong brands.
We create value for customers by delivering superior function, design and quality and simplifying buying, delivery and installation.
In addition to attractive customer offerings, the basis for profitable growth and increased market shares is an efficient supply chain.
During 2010, the change process mainly focused on potential economies of scale more effectively and thus
Nobia's financial targets are listed on page 6, and the
Nobia was originally a division of STORA (now Stora Enso) where the operation comprised doors, windows and kitchens, and a wholesale business for building materials. The company was formed in 1996 when Industri Kapital (now IK) bought Nobia and shifted the focus to kitchens. Several strategic acquisitions then took place, of which Novart and Magnet entailed a breakthrough in the Finnish and UK markets, and Poggenpohl gave Nobia a leading position in the most exclusive segment.
Nobia was listed on the Stockholm Stock Exchange in 2002, after which several acquisitions took place, such as Gower in the UK, EWE-FM in Austria, and Hygena in France.
In 2009, the European kitchen market was severely impacted by the recession, and Nobia's profitability declined sharply.
During this period, Nobia decided to oversee the company's entire value chain and organisational structure, and to focus on reducing costs and improving cash flow. Decisions were made to introduce strategic and organisational changes, starting in 2010, to create long-term profitability and more co-ordinated growth – to create One Nobia.
For a more detailed description of Nobia's history, see www.nobia.com.
Read more in the regional sections, pages 14–21
I would like to begin by saying how proud I am to be part of this wonderful company. Nobia has many strong brands, both local and global, and a unique opportunity to become the clear market-leading kitchen specialist.
2010 was an eventful year, and some events deserve a special mention:
bution chain, but noticed a more favourable result in business-to-business channels.
• Hygena in France has suffered during recent years, and I am happy that we took some vital steps to thoroughly address the situation. With a new, strong management in place, improvements are now underway. The last four months of the year showed favourable growth in both orders received and invoicing. There is no quick-fix, but I am convinced that we will make Hygena profitable again.
To become the leading kitchen specialist that we want to be, we have produced a strategic plan encompassing all of the key stages in Nobia's value chain.
Read more about the journey that Nobia began a few years ago on page 9.
Since we are determined to maintain a rapid tempo in the change process, we introduced a flatter organisation at the beginning of 2011 and have adopted a number of cost-saving measures, which entail personnel reductions involving 385 employees in the Nordic region, France, the UK, and in Poggenpohl. When they reach their full effect, these activities will reduce our costs by more than SEK 100 million on a yearly basis.
The comprehensive change process that we are currently engaged in has many components, and as we have previously indicated, these must be joined together in the right order at the right time if we want to create One Nobia.
By following the path we have chosen, we are not only making Nobia a leading kitchen specialist, we are also creating the conditions for sustainable profitability with a doubledigit operating margin.
I know that everyone at Nobia is looking forward to being part of that journey – and taking an active part in its implementation.
Morten Falkenberg President and CEO '' By following the path we have chosen, we are not only making Nobia a leading kitchen specialist, we are also creating the conditions for sustainable profitability with a double-digit operating margin.
The aims of Nobia's financial targets are to generate favourable inancial returns for shareholders and long-term healthy value growth. The company has been steered towards three financial targets for a number of years.
Earnings per share shall increase on average by 12 per cent per year over a business cycle. Nobia will achieve this by:
The debt/equity ratio shall not exceed 100 per cent. A temporary elevation of the debt/equity ratio is acceptable in conjunction with acquisitions. A long-term, significantly lower debt/equity ratio shall be adjusted by an extra dividend to shareholders or the buy-back of own shares.
Dividends to shareholders shall on average comprise at least 30 per cent of net profit after tax. However, decisions regarding the amount of the dividend will be made in relation to the company's capital structure at the time.
An historic, deep recession began at the end of 2008. As a result, Nobia was forced to make some short-term adjustments to the financial targets. A major focus was shifted to cash flow, resulting in a favourable cash flow in both 2009 and 2010. The focus on maintaining profit margins was increased, partly by strengthening the cost focus.
Overall, these measures entailed that Nobia now stands firmly equipped for leveraging the new business opportunities that a strong economy offers. As the situation normalises, the focus is returning to the financial targets described above.
| 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|
| –0.53 | –0.47 | 3.13 | 5.50 | 4.931) |
| N/A | N/A | –44 | 12 | 34 |
| N/A | N/A | 6.2 | 17.8 | 19.1 |
1) Adjusted for split 3:1.
2) Calculated during the period 2001–2010.
| % | 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
| Organic change | 0 | –10 | 0 | 7 | 11 |
| Acquisitions, divestments and currency effects | –9 | 6 | –1 | 1 | 14 |
| Total growth | –8.6 | –3.6 | –0.9 | 7.0 | 25.3 |
| Average1) annual growth | 6.1 | 8.1 | 9.9 | 11.8 | 13.5 |
1) Calculated during the period 2001–2010.
| Group | 0.0 | 0,2 | 5.7 | 8.4 | 8.5 |
|---|---|---|---|---|---|
| Continental Europe | –6.5 | –0.4 | 4.6 | 5.9 | 6.1 |
| Nordic | 4.9 | –1.4 | 8.4 | 12.3 | 13.7 |
| UK | 4.2 | 4.2 | 5.6 | 8.6 | 7.9 |
| % | 2010 | 2009 | 2008 | 2007 | 2006 |
Comments on the trend
Earnings per share for 2010 were adversely impacted by restructuring costs of SEK 511 million (308), corresponding to SEK 3.06 per outstanding share (1.84).
Net sales for 2010 were adversely impacted by translation effects due to the successive strengthening of the Swedish krona against most of the currencies in which Nobia conducts its sales. The divestment of Pronorm also had a negative effect on net sales. Organic growth improved successively during the year and ended unchanged.
The operating margin excluding restructuring costs and other items affecting comparability developed positively in all regions during the year, mainly due to strengthened gross margins. In the Nordic region, the margin was strengthened by implemented plant closures.
The operating margin was severely impacted by restructuring costs in all regions, but mainly in Continental Europe.
A change process, which aims to make the customer offering more attractive, strengthen competitiveness and increase profitability, was introduced two years ago and now extends to the entire Group. Here are the main ingredients of the strategy, step by step:
plants more efficiently and thus reduce the number of production units.
Our future objective is to increase co-ordination within the Group, to enable increased utilisation of economies of scale. Co-ordination in range development, sourcing, production and logistics will establish an overall more efficient value chain, and enable lower costs while raising quality.
Range harmonisation constitutes the basis for the entire change process. Complexity is reduced by using identical rather than similar carcasses, which generates economies of scale along the entire value chain. The objective is to halve – at least – the total number of items, consolidate sourcing from fewer suppliers, and increase investments in innovation and new development. The objective is also to achieve this while broadening the customer offering for individual brands.
In 2010, complex and change-critical work was carried out to define the new range. A Group standard based on platform thinking enables a high degree of brand-independence in the supply chain, and greater flexibility. This also creates scope for a differentiation of our product offering to customers without increasing complexity in production and sourcing. The launch of the new range was scheduled, and efforts to prepare the physical implementation are underway in production, as well as the purchasing and sales organisations.
The closure of plants and other restructuring measures that took place in 2009 and 2010 reduced Nobia's annual costs by approximately SEK
130 million. The number of plants fell from 20 to 15.
Nobia originates from a decentralised structure with 20 plants and supply chains linked to individual brands. By eliminating brand dependency in the production units, capacity utilisation, flexibility and thus cost efficiency can increase.
A co-ordinated range and concentrated production facilities enable more efficient sourcing and logistics. By reducing the number of suppliers and increasing flexibility, costs can be minimised and the quality of sourced goods can be raised.
The organisation shall be continuously adapted to the changed work method.
Reduced cost base
The Group's sourcing was centralised during 2010, enabling further development of the co-ordination.
The proportion of sourcing from low-cost countries during the year, including China and Eastern Europe, amounted to approximately 6 per cent, a minor increase compared with 2009.
In 2010, the Group's supply chain was organised into three units – Range, Purchasing and Production & Logistics. In 2011, a central unit for the co-ordination of change projects and IT will be established.
The European kitchen market is highly competitive, which is why our objective is to ensure that the nearly 700 stores controlled by Nobia, either directly or through franchising, are well-positioned and stand out from our competitors. Inspiring stores and clearly positioned brands will also benefit our corporate customers.
Nobia shall offer clear and distinct brands, which offer added value compared with its competitors. The brands shall have a clear position in the consciousness of the target groups. Customers shall be aware of what makes each Nobia brand unique, and experience its added value.
A comprehensive branding effort began during the year. Key parameters for analysis were customer preferences, brand offerings and positions, and the growth potential of net sales and earnings. The objective for 2011 is to produce a clear brand strategy for moving forward.
Various brands in various channels contributed to Nobia's success and historic growth. Sales to end-consumers through nearly 700 kitchen stores gives good knowledge of what customers prioritise, an insight that also benefits corporate customers when delivering kitchens to construction projects, house producers, building materials stores or DIY chains.
Within the framework of Nobia's three geographic regions, the former business units will be adapted to dedicated sales channels.
During 2010, an overhaul that aimed to optimise sales channels began. In combination with a new and improved range and stronger brands, the sales channels ensure that Nobia is the first choice for both private and professional customers in Europe.
During 2010, the business unit structure was replaced by five units for customised marketing and sales in region-based sales channels. Sales to professional customers in the UK and Continental European regions, for example, were combined into a single unit. A new unit for Groupwide branding strategy and marketing will be established in 2011. Nobia Annual Report 2010 Board of Directors' Report Strategic direction Commercial units for
The Nobia share rose about 35 per cent in 2010, and the closing price of the share on the NASDAQ OMX in Stockholm was SEK 60.25 (41.90), corresponding to a market capitalisation of SEK 10.5 billion (slightly more than 7).
In 2010, the NASDAQ OMX Stockholm's index for manufacturers of consumer discretionary products and services (SX25 Consumer Discretionary) rose 14 per cent.
A total of 124,083,894 Nobia shares were traded at a value of SEK 5,306 million during the year, corresponding to a turnover rate of 71 per cent. An average of 490,450 Nobia shares were traded on a trading day, corresponding to approximately SEK 21 million. The highest and lowest prices during the year were SEK 61.50 and SEK 30.40 respectively.
On 31 December 2010, Nobia's share capital amounted to an unchanged SEK 58,430,237, divided between an unchanged number of shares, namely 175,293,458, each with a par value of SEK 0.33. Each share, except for repurchased treasury shares, entitles the holder to one vote, and carries the same entitlement to the company's capital and profits.
On 31 December 2010, the number of shareholders was 4,343 (4,876). The percentage of registered shares held by foreign owners amounted to 10.3 per cent (24) at year-end. The ten largest shareholders held 57 per cent of all shares.
Nobia's Group management had combined holdings of 76,334 shares at year-end. Nobia's Board members owned 638,450 shares at year-end.
One of Nobia's financial targets is that dividends to shareholders shall correspond to at least 30 per cent of net profit after tax. Investment requirements, acquisition opportunities, liquidity and the financial position of the company are taken into consideration when preparing dividend proposals.
The Board and President recommend that no dividend be paid for the 2010 fiscal year.
Nobia's objective is to simplify the market valuation process by providing clear information. Contact with the stock market is primarily based on quarterly financial reports, press releases and company presentations. In 2010, meetings with more than 400 investors and analysts took place in Sweden and abroad.
At year-end, the following securities brokers and banks regularly tracked Nobia's progress: ABG Sundal Collier, Carnegie, Danske Bank, Deutsche Bank, Handelsbanken, Nordea, Penser Bank, SEB Enskilda and Swedbank.
Number of shares Share of capital, %
| Summa | 99,823,429 | 57.0 |
|---|---|---|
| Didner & Gerge | 3,912,171 | 2.2 |
| National Pension Fund | 4,071,005 | 2.3 |
| The Fourth Swedish | ||
| Carlsson funds | 4,329,916 | 2.5 |
| SIX SIS AG | 4,337,940 | 2.5 |
| Skandia funds | 4,902,166 | 2.8 |
| Lannebo funds | 10,018,000 | 5.7 |
| If skadeförsäkring | 14,632,850 | 8.3 |
| Swedbank Robur | 15,719,808 | 9.0 |
| Nordstjernan | 15,899,573 | 9.1 |
| Säkl | 22,000,000 | 12.6 |
Source: Euroclear Sweden
Through buy-backs, Nobia owns 8,162,300 treasury shares corresponding to 4.7 per cent of the total number of shares issued.
| 2010 | 2009 | 2008 | |
|---|---|---|---|
| Earnings per share before | |||
| dilution, SEK | –0.53 | –0.47 | 3.13 |
| Earnings per share after | |||
| dilution, SEK | –0.53 | –0.47 | 3.13 |
| Dividend per share, SEK | 01) | 0 | 0 |
| Shareholders' equity per | |||
| outstanding share, SEK | 21 | 24 | 25 |
1) According to Board proposal.
Nobia's 2010 Annual General Meeting
9 Feb 2010
12 Feb 2010
15 Feb 2010
1 Mar 2010
Invitation to Nobia's presentation of its Year-end Report for 2009
2010 Nobia Q4, Lower profit but improved cash flow
New organisational model to strengthen Nobia 25 Feb 2010
Nobia sells Pronorm and its 50-per cent holding in Culinoma
Notice to attend the Annual General Meeting
Invitation to Nobia's presentation of its Interim Report for January-March 2010
Nobia Q1, Continued restructuring and efficiency enhancement
Morten Falkenberg appointed new President of Nobia
Kitchen production negotiations with trade unions commenced
24 Jun 2010 Change in Hygena management
14 Jul 2010 Invitation to Nobia's presentation of its Interim Report for January-June 2010
19 Jul 2010 Nobia Q2, Improved operating margin
7 Sep 2010 Kitchen production negotiations with trade unions completed
17 Sep 2010 Nick Friend leaves Nobia 6 Oct 2010
New CEO starts today
20 Oct 2010 Invitation to Nobia's presentation of its Interim Report for January-September 2010
22 Oct 2010 Nobia Q3, Continued margin improvements
15 Dec 2010 Relocation of kitchen production from Älmhult to Tidaholm
For IR-related information, contact Ingrid Yllmark, Investor Relations Officer, tel +46 8-440 16 07 or [email protected].
| Percentage of | ||||
|---|---|---|---|---|
| No. of shares | No. of shareholders | Percentage of shares, % | shareholders, % | |
| 1–500 | 431,618 | 2,025 | 0.3 | 46.6 |
| 501–1,000 | 695,643 | 839 | 0.4 | 19.3 |
| 1,001–2,000 | 833,640 | 516 | 0.5 | 11.9 |
| 2,001–5,000 | 1,606,918 | 477 | 0.9 | 11.0 |
| 5,001–10,000 | 1,257,161 | 170 | 0.7 | 3.9 |
| 10,001–20,000 | 1,443,180 | 102 | 0.8 | 2.3 |
| 20,001–50,000 | 2,442,469 | 76 | 1.4 | 1.8 |
| 50,001–100,000 | 2,622,560 | 34 | 1.5 | 0.8 |
| 100,001– | 163,960,269 | 104 | 93.5 | 2.4 |
| Total | 175,293,458 | 4,343 | 100.0 | 100.0 |
Nobia sells kitchens in several markets but is organised into three segments: the UK, Nordic and Continental Europe regions. Due to this geographic spread, Nobia's net sales are impacted by currency effects, which in 2010 had a negative impact of more than SEK 1 billion on the year's net sales, compared with a positive impact in 2009 corresponding to just over SEK 800 million.
Total organic growth remained unchanged in 2010, specified as follows: negative 1 per cent in the UK, positive 3 per cent in the Nordic region, and negative 3 per cent in Continental Europe.
The value of the European kitchen market is estimated at between EUR 11 and 12 billion. The largest single markets are Germany, Italy and the UK. In terms of price segments, the economy and middle-price segments each account for more than 40 per cent of the market, while the luxury segment represents the remaining approximately 15 per cent.
The European kitchen market is still fragmented and relatively local by nature. The five largest kitchen market players combined represent only about 35 per cent of the total sales value and in terms of value, Nobia is the top player with an estimated market share of about 10 per cent. Only a few brands have a presence in several markets. The market is instead characterised by a high number of strong local players. Source: CSIL 2010
Operating profit 2010
Magnet is certified under the TrustMark scheme, which is a partnership between the UK government, consumer organisations and industry players with the objective of helping customers find trustworthy and reputable companies to carry out repairs and maintenance to their homes and gardens. Magnet received TrustMark approval several years ago.
The uncertainty of the economic situation in the UK continued to impact the kitchen market in 2010. Nobia's net sales declined 8 per cent to SEK 5,198 million (5,623) during the year. Restructuring costs of SEK 107 million (0) impacted operating profit, resulting in operating profit amounting to SEK 219 million (236). Excluding restructuring costs, operating profit totalled SEK 326 million (236). Negative currency effects had an adverse impact of about SEK 35 million (neg: 70) on earnings. The operating margin was 4.2 per cent (4.2).
Despite the weak market, increased earnings were mainly attributable to implemented price increases, lower costs and a favourable sales mix.
Approximately one quarter of the UK kitchen market consists of kitchen specialists, which in turn comprise a large number of independent retailers and several large specialist chains, such as Magnet. The remaining market mainly comprises large DIY chains, players that focus on small local builders (Trade), and the market for large new-build and renovation projects.
The government's austerity package is deemed the primary reason for slightly weaker demand during the year.
In the UK region, Nobia is represented by the Magnet, Magnet Trade, Interior Solutions and Gower brands.
• Interior Solutions and Gower deliver flat-pack kitchens to builder's merchants and DIY chains. In addition to the actual kitchens, Nobia's offering to the retailers also includes category management: assistance with kitchen displays in stores, advertising, and training for sales and installation personnel.
Nobia's sales in the lower-price segment increased during the year. The proportion of sold complete kitchens, in which appliances and other accessories are included, also increased during 2010. Price increases in combination with the above entailed an overall higher than average order value for the region.
Overall, in 2010, Nobia continued to strengthen its market-leading position in the UK, improved the gross margin and increased the operating margin. Sales to social housing and builders' merchants increased during the year. Investments in the store network during recent years have proved a positive factor and contributed to the stronger market share.
The challenge for the future lies in meeting the continued weak market expectation with a favourable offering and continued healthy cost control.
The former local units for Purchasing, Production & Logistics were transferred to the joint organisation during the year, which was created at Nobia level.
Surveys show that Magnet Retail's customers have appreciated the methodical, step-by-step sales process. The service offering was expanded during the year with a 12-month follow-up carried out by an installer, which was well received and strengthened Magnet's position as the leading kitchen brand in the country.
A business system for improved customer care in stores was developed and tested, and will be deployed in Magnet in 2011.
The market for elderly accommodation, daycare centres and schools was expanded, which strengthened Nobia's market share.
A partnership with one of the country's leading DIY chains was strengthened during the year due to good experiences and a positive sales trend.
| Key figures | 2010 | 2009 | Change, % |
|---|---|---|---|
| Net sales, SEK m | 5,198 | 5,623 | –8 |
| Gross profit excluding restructuring costs, SEK m | 2,029 | 2,000 | 1 |
| Gross margin excluding restructuring costs, % | 39.0 | 35.6 | – |
| Operating profit excluding restructuring costs, SEK m | 326 | 236 | 38 |
| Operating margin excluding restructuring costs, % | 6.3 | 4.2 | – |
| Operating profit, SEK m | 219 | 236 | –7 |
| Operating margin, % | 4.2 | 4.2 | – |
| Operating capital, SEK m | 724 | 991 | –27 |
| Return on operating capital, % | 30 | 24 | – |
| Investments, SEK m | 132 | 57 | – |
| Average number of employees | 2,537 | 2,720 | –7 |
| Kitchen stores | Group-owned | Store trend | |
|---|---|---|---|
| UK | 222 | Refurbished or relocated | 0 |
| Total | 222 | Newly opened, net | 0 |
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter | IV | III | II | I | IV | III | II | I |
| Net sales, SEK m | 1,291 | 1,263 | 1,360 | 1,284 | 1,399 | 1,361 | 1,494 | 1,369 |
| Gross profit excluding restructuring costs, SEK m | 506 | 507 | 543 | 473 | 522 | 492 | 532 | 454 |
| Gross margin excluding restructuring costs, % | 39.2 | 40.1 | 39.9 | 36.8 | 37.3 | 36.1 | 35.6 | 33.2 |
| Operating profit excluding restructuring costs, SEK m | 86 | 101 | 98 | 41 | 114 | 65 | 26 | 31 |
| Operating margin excluding restructuring costs, % | 6.7 | 8.0 | 7.2 | 3.2 | 8.1 | 4,8 | 1.7 | 2.3 |
| Operating profit/loss, SEK m | –5 | 94 | 89 | 41 | 114 | 65 | 26 | 31 |
| Operating margin, % | –0.4 | 7.4 | 6.5 | 3.2 | 8.1 | 4.8 | 1.7 | 2.3 |
Brands
Net sales in the region declined 3 per cent to SEK 5,092 million (5,234). Restructuring costs of SEK 82 million (162) impacted operating profit, resulting in operating profit amounting to SEK 249 million (loss: 75). Excluding restructuring costs, operating profit totalled SEK 331 million (187). Currency effects had a favourable impact of about SEK 35 million (neg: 40) on earnings. The operating margin was 4.9 per cent (neg: 1.4).
Operating profit improved in 2010, primarily attributable to higher sales volumes and productivity improvements resulting from plant closures during recent years. The concentration into fewer production units rationalised the supply chain and reduced production costs.
The Nordic kitchen market is characterised by a few large players and many small, local kitchen companies. After several years of low activity in new-builds, construction companies' and prefab home manufacturers' demand started to recover. Demand for refurbishment generally remained stable.
Nobia is represented in the Nordic region by HTH, Invita and uno form, Myresjökök and Marbodal, Sigdal and Norema, Petra, Parma, A la Carte and the franchise chains Netto-keittiöt and Keittiömaailma.
Myresjökök is primarily sold to business customers in the project market in Sweden, such as construction companies and prefab home manufacturers, where demand for large volumes of rigid cabinets with superior delivery quality is high. Because of Myresjö kök's flexible offering, project customers can offer their home customers a large degree of freedom when choosing their kitchens.
Marbodal, Sweden's best-known kitchen brand, is sold in Group-owned stores and franchise stores, and to both end consumers and business customers through other retailers.
In 2010, one-third of Nobia's market value in the Nordic region comprised new-builds, mainly through construction companies and prefab home manufacturers.
At year-end, the number of specialised kitchen stores in the Nordic region amounted to 285 (291), of which 92 where Group-owned, and 193 were franchises or other retailing stores.
Nobia holds a market-leading position in sales to construction companies and house producers in the Nordic region. The recovery of this market segment, most noticeable in Finland, strengthened Nobia during the year.
The challenge for the future lies in consistently reducing costs for the supply chain, maintaining high delivery compliance and clarifying the position of the brands.
A decision was made during the year to relocate the kitchen production in Sweden from Älmhult to Tidaholm, which is now underway. Approximately 75 employees in Älmhult are affected, and the relocation is expected to be completed by spring 2011. The kitchen production is concentrated to fewer and larger production units with the purpose of strengthening Nobia's competitiveness. About 50 positions will thus be transferred to the plant in Tidaholm. The change had a negative impact of SEK 42 million (–) in restructuring costs on profit for the year.
The former local units for Purchasing, Production & Logistics were transferred to the joint organisation during the year, which was created at Nobia level.
HTH's supplementary sales of flat-pack kitchens in Denmark, Norway, and now also in Sweden, strengthened the brand's market share. Online sales also increased during the year and are gaining significance as a proportion of the brand's market channels.
Marbodal established three shop-in-shop stores in the Mio furniture chain in the Gothenburg area during the year.
Kitchen furnishings, such as cabinets and worktops, 77 Other kitchen equipment, installation and service, 21 Bathrooms, 2
| Key figures | 2010 | 2009 | Change, % |
|---|---|---|---|
| Net sales, SEK m | 5,092 | 5,234 | –3 |
| Gross profit excluding restructuring costs, SEK m | 1,945 | 1,861 | 5 |
| Gross margin excluding restructuring costs, % | 38.2 | 35.6 | – |
| Operating profit excluding restructuring costs, SEK m | 331 | 187 | 77 |
| Operating margin excluding restructuring costs, % | 6.5 | 3.6 | – |
| Operating profit, SEK m | 249 | –75 | – |
| Operating margin, % | 4.9 | –1.4 | – |
| Operating capital, SEK m | 898 | 1,117 | –20 |
| Return on operating capital, % | 28 | –7 | – |
| Investments, SEK m | 100 | 160 | –37 |
| Average number of employees | 2,758 | 2,636 | 5 |
| Total | 92 | 193 |
|---|---|---|
| Other countries | 4 | 10 |
| Finland | – | 80 |
| Norway | 19 | 39 |
| Denmark | 61 | 35 |
| Sweden | 8 | 29 |
| Kitchen stores | Group owned |
Franchised |
| Refurbished or relocated | 0 |
|---|---|
| Newly opened, net | –6 |
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter | IV | III | II | I | IV | III | II | I |
| Net sales, SEK m | 1,392 | 1,091 | 1,401 | 1,208 | 1,302 | 1,039 | 1,499 | 1,394 |
| Gross profit excluding restructuring costs, SEK m | 529 | 418 | 550 | 448 | 481 | 367 | 542 | 471 |
| Gross margin excluding restructuring costs, % | 38.0 | 38.3 | 39.3 | 37.1 | 36.9 | 35.3 | 36.2 | 33.8 |
| Operating profit excluding restructuring costs, SEK m | 136 | 63 | 115 | 17 | 64 | 15 | 91 | 17 |
| Operating margin excluding restructuring costs, % | 9.8 | 5.8 | 8.2 | 1.4 | 4.9 | 1.4 | 6.1 | 1.2 |
| Operating profit/loss, SEK m | 102 | 15 | 115 | 17 | 56 | 15 | 66 | –212 |
| Operating margin, % | 7.3 | 1.4 | 8.2 | 1.4 | 4.3 | 1.4 | 4.4 | –15.2 |
Fiscal 2010 saw a weak improvement in demand. Nobia's net sales declined 18 per cent to SEK 3,805 million (4,625). Restructuring costs of SEK 214 million (46) impacted operating loss, resulting in operating loss amounting to SEK 247 million (loss: 20). Excluding restructuring costs, operating loss totalled SEK 33 million (profit: 26). Positive currency effects had a favourable impact of about SEK 20 million (20) on earnings. The operating margin was a negative 6.5 per cent (neg: 0.4).
Operating profit deteriorated in 2010, mainly attributable to lower sales and increased costs in the French company, Hygena. A number of measures were implemented to strengthen the Hygena operation. These included a restructuring of the logistics system, a changed and slimmed-down organisation, a commenced rationalisation of unprofitable stores, preparations for a new range and an already initiated refurbishment of stores.
Nobia's main markets in the Continental Europe region are France, Austria and Germany. There are many market players in France, including French, Italian, German and other companies. The number of kitchen stores and thus competitors has increased in recent years.
Two kitchen companies dominate in Austria, one of these is Nobia's EWE/FM. As in Germany, the major furniture stores hold a strong position in terms of kitchen distribution.
Germany is Europe's largest kitchen market. Demand remained at a stable low level, resulting in an intensification of efforts by German kitchen companies in neighbouring markets.
In the Continental Europe region, Nobia is represented by Hygena, EWE, Intuo and FM and Optifit. German Poggenpohl is Nobia's only global brand.
EWE symbolises modern design in the upper-middle-price segment. The kitchens are predominantly produced and sold to corporate customers in Austria.
Intuo means inspiration in Esperanto. The Austrian brand caters to the quality-conscious consumer in the upper-middleprice segment.
At year-end, the number of kitchen stores in the Continental Europe region totalled 191 (191), of which 190 were Group-owned stores, and one was franchised.
Nobia's market share in the Continental Europe region is modest. Nobia's strongest position is in Austria, where the assessed market position in the country is second. In France, Nobia intends to strengthen Hygena's position through a number of initiatives. Nobia is a modest player in Germany. Poggenpohl's brand awareness in the global luxury market is high.
The challenge for the future lies in consistently reducing costs for the supply chain. Special focus was placed on turning Hygena into a successful chain store in France, and continuing to improve profitability in Poggenpohl.
Hygena's logistics system was further developed during the year, in relation to depot structure, a centralised warehouse and reorganisation of IT systems.
The former local units for Purchasing, Production & Logistics were transferred to the joint organisation during the year, which was created at Nobia level.
Hygena was slimmed down to enable the offering of a new range in refurbished stores in 2011–2012. A cost-saving programme at the end of the year encompassed the closure of 15 stores in 2011, affecting just over 100 employees in the retail chain.
Kitchen furnishings, such as cabinets and worktops, 72 Other kitchen equipment, installation and service, 23 Bathrooms, 5
Sales channels, %
| Key figures | 2010 | 2009 | Change, % |
|---|---|---|---|
| Net sales, SEK m | 3,805 | 4,625 | –18 |
| Gross profit excluding restructuring costs, SEK m | 1,501 | 1,770 | –15 |
| Gross margin excluding restructuring costs, % | 39.4 | 38.3 | – |
| Operating profit/loss excluding restructuring costs, SEK m | –33 | 26 | – |
| Operating margin excluding restructuring costs, % | –0.9 | 0.6 | – |
| Operating loss, SEK m | –247 | –20 | – |
| Operating margin, % | –6.5 | –0.4 | – |
| Operating capital, SEK m | 421 | 953 | –56 |
| Return on operating capital, % | 59 | –2 | – |
| Investments, SEK m | 114 | 129 | –11 |
| Average number of employees | 2,298 | 2,544 | –10 |
| Total | 190 | 1 |
|---|---|---|
| Other countries | 30 | 0 |
| Austria | 1 | 0 |
| Germany | 9 | 1 |
| France | 150 | 0 |
| Kitchen stores | owned | Franchised |
| Group |
| Store trend | |
|---|---|
| Refurbished or relocated | 0 |
| Newly opened, net | 0 |
| 2010 | 2009 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Quarter | IV | III | II | I | IV | III | II | I | |
| Net sales, SEK m | 923 | 875 | 1,040 | 967 | 1,082 | 1,170 | 1,325 | 1,048 | |
| Gross profit excluding restructuring costs, SEK m | 380 | 363 | 400 | 358 | 419 | 466 | 521 | 364 | |
| Gross margin excluding restructuring costs, % | 41.2 | 41.5 | 38.5 | 37.0 | 38.7 | 39.8 | 39.3 | 34.7 | |
| Operating profit/loss excluding restructuring costs, SEK m | 11 | 6 | 10 | –60 | 13 | 47 | 24 | –58 | |
| Operating margin excluding restructuring costs, % | 1.2 | 0.7 | 1.0 | –6.2 | 1.2 | 4.0 | 1.8 | –5.5 | |
| Operating profit/loss, SEK m | –140 | –12 | –11 | –84 | –5 | 33 | 19 | –67 | |
| Operating margin, % | –15.2 | –1.4 | –1.1 | –8.7 | –0.5 | 2.8 | 1.4 | –6.4 |
Brands
In 2010, Nobia was characterised by an internal change process, which aimed to rationalise the entire value chain and leverage economies of scale. The comprehensive restructuring measures were intensified towards the end of the year, and the costs for these amounted to a total of SEK 511 million during the year.
| 2010 | 2009 | Change, % | |
|---|---|---|---|
| 14,085 | 15,418 | –9 | |
| 39.1 | 36.7 | – | |
| 6.9 | 5.6 | – | |
| 517 | 346 | 49 | |
| 3.7 | 2.2 | – | |
| 432 | 271 | 59 | |
| –89 | –79 | –13 | |
| –0.53 | –0.47 | –13 | |
| 641 | 803 | –20 | |
| Jan-Dec |
All figures except "Net sales", "Profit/loss after tax", "Earnings/loss per share" and "Operating cash flow" have been adjusted for restructuring costs.
In February, Nobia presented a new organisation and work method for the Group. Production and sourcing are co-ordinated with the purpose of leveraging Nobia's size, while the Group's brands are positioned to satisfy customer requirements more clearly. The new organisation in April 2010 signalled the start of a several-year change process, which will lead to a stronger Group. The objective is to increase both profitability and growth by fully capitalising on Nobia's economies of scale in the market, the supply chain and Group units for IT, HR and Finance. The change process is expected to take place between 2010 and 2014.
Later in February, Nobia announced that Pronorm and its ownership share in Culinoma in Germany had been divested to DeMandemaker Groep (DMG). The transaction was part of Nobia's strategy to focus on attractive customer offerings, clear brands and a more efficient supply chain with fewer and larger plants. The sale encompassed the Pronorm kitchen plant in Vlotho, of which the largest customers are DMG and Culinoma, and Culinoma's 87 kitchen stores in Germany, including the Plana, Marquardt, Vesta, Asmo and Küchenpohl brands.
In April, Morten Falkenberg was appointed new President and CEO. Morten Falkenberg took office in October, when Preben Bager stepped down from his position as Nobia's President and CEO.
In May 2010, the first step was taken towards the long-term refinancing of Nobia by raising a loan of SEK 800 million from the Swedish Export Credit Corporation. The loan is for five years, with an option to extend it for another two years.
In June, union negotiations began concerning the relocation of Myresjökök's production from Älmhult to Tidaholm. The relocation is expected to take place in March 2011.
In July 2010, Nobia signed an agreement concerning new long-term borrowing with a consortium of banks. The loan is for five years and can amount to a maximum of SEK 2,000 million. Nobia's long-term credit framework now totals SEK 2,800 million, including the loan granted by the Swedish Export Credit Corporation.
In December, cost-saving measures were initiated in several units throughout the Group. The programme is expected to reduce costs by SEK 100–125 million on an annual basis from the end of 2011.
Loss per share for the year after dilution amounted to SEK 0.53 (loss: 0.47). Earnings per share for the year after dilution excluding restructuring costs amounted to SEK 1.86 (0.96). Net sales totalled SEK 14,085 million (15,418).
The Group's organic growth, meaning the change in net sales for comparable units and adjusted for currency effects, was unchanged compared with 2009. Organic growth for the Nordic region increased, while organic growth for the UK and Continental Europe regions declined.
The store network decreased slightly during the year. At year-end, the total number of stores amounted to 698 (704). The total number of stores includes both Group-owned and franchised stores.
The Group's operating profit amounted to SEK 6 million (38). Lower volumes and restructuring costs of SEK 511 million (308) had an adverse impact on earnings. The operating margin amounted to 0 per cent (0.2). Operating profit excluding restructuring costs amounted to SEK 517 million (346). The operating margin excluding restructuring costs totalled 3.7 per cent (2.2).
In the UK region, net sales declined 8 per cent due to negative currency effects and lower volumes in Magnet. In the Nordic region, net sales declined 3 per cent. Net sales rose 3 per cent after adjustments for additional sales through HTH's takeover of franchise stores in Denmark and negative currency effects. In the Continental Europe region, net sales were 18 per cent lower than in 2009. Net sales declined 3 per cent after adjustments for the divestment of Pronorm and negative currency effects.
Financial items amounted to an expense of SEK 85 million (expense: 75). Net financial items also included the net of return on pension assets and interest expense on pension liabilities corresponding to a negative amount of SEK 37 million (neg: 40). Loss after financial items declined to SEK 79 million (loss: 37).
Tax revenue of SEK 25 million (35) was primarily attributable to capitalised loss carryforwards and tax refunds in the UK. Loss after tax declined to SEK 89 million (loss: 79).
Operating cash flow for the period remained favourable, but declined to SEK 641 million (803).
Investments in fixed assets totalled SEK 347 million (346), of which SEK 107 million (154) related to investments in the store network.
The Group's capital employed amounted to SEK 5,323 million (7,095) at the end of the period.
Net debt amounted to SEK 1,510 million (2,426) at year-end. This decrease was primarily due to a positive operating cash flow of SEK 641 million, currency effects and the divestments of Culinoma and Pronorm.
The debt/equity ratio amounted to 44 per cent at year-end (62 at the beginning of the year).
Provisions for pensions, which are included in net debt, amounted to SEK 587 million (656) at the end of the period. At yearend 2010, unrecognised actuarial losses amounted to a total of SEK 67 million (loss: 60).
Shareholders' equity at year-end amounted to SEK 3,446 million (3,934).
The equity/assets ratio at year-end amounted to 41 per cent (38).
Nobia's credit framework, which is valid until 2015, amounted to SEK 2.8 billion excluding overdraft facilities. At the end of December 2010, SEK 1.6 billion of this was unutilised.
With the purpose of clarifying and simplifying decision-making processes, a new organisation was introduced on 22 January 2011. The change entails that functions that previously reported to the Chief Operating Officer function, or the formerly vacant Chief Commercial Officer function, now report directly to the Chief Executive Officer, Morten Falkenberg.
Demand for kitchens normally follows the same business cycle as other consumer discretionary products. In 2010, demand increased in the Nordic region during the second half of the year, but remained weak in the UK and Continental Europe regions compared with 2009. The effect of lower volumes in Nobia was offset by reduced costs and raised prices. Various projects were started during 2010 to increase longterm efficiency, and leverage the Group's size. In addition to this, cost-saving measures were introduced at the end of the year to strengthen the Group's earnings. These measures are expected to generate annual savings of about SEK 100–125 million, and are expected to reach their full effect from the fourth quarter of 2011.
In the light of the prevailing recession, the future demand trend is expected to increase slightly in the Nordic region while demand in the UK and Continental Europe regions is more difficult to predict.
The average number of personnel in 2010 amounted to 7,627, compared with 7,930 in 2009. This decrease is primarily due to the divestment of Pronorm.
The reorganisation of Nobia with the aim of becoming a leading kitchen specialist requires innovative thinking and motivated employees. Competence sourcing at all levels is thus a key process. Another key process is to create a joint approach to how HR issues are managed throughout the Group. Nobia's Group-level HR function is responsible for ensuring a standardised approach to the management of employee-related issues, and is also responsible for developing and supporting Nobia's managers by providing recruitment tools, skills analyses and change leadership. HR is also reviewing such remuneration issues as fixed and variable salary, pensions and incentive programmes.
In Sweden, the Group conducts activities within Marbodal AB and Myresjökök AB that require a permit according to the Swedish Environmental Code. These activities impact the external environment mainly through noise levels, and emissions to air
from the surface treatment of wooden parts. The County Administrative Board administers these licensable activities.
In 2009, an application for final conditions for the Tidaholm plant was lodged with the County Administrative Board for a decision. Myresjökök's appeal in relation to one of the conditions in the licence decision concerning noise levels in the Älmhult plant was heard in 2009. The decision also remains firm for 2010, but due to Nobia's decision to relocate Myresjökök's assembly and distribution of kitchens from Älmhult to the Tidaholm plant, the County Administrative Board in Kronoberg agreed to postpone the noise inquiry until a later date. A suitable time is expected to be during the latter part of the second quarter in 2011, or until the remaining part of the operation (cabinet door manufacturing and painting) has been relocated. The licensing issue will be administered by the operation in Tidaholm.
The ISO 9001 and 14011 standards for Myresjökök AB will be refined to comprise a marketing organisation, meaning sales and installation. The Tidaholm plant's ISO accreditations and protective work will encompass the remaining production operations in Älmhult.
Emissions levels for volatile organic compounds are well within the limits stipulated by the permits for both Marbodal and Myresjökök. The licensable-activities production in Sweden corresponds to less than 10 per cent of consolidated net sales.
Nobia also responded to the Carbon Disclosure Project (CDP) questionnaire in 2010, and participated in the Sustainable Value Creation project, an initiative by Sweden's largest investors and shareholders.
The Parent Company is a limited liability company domiciled in Sweden. The address of the head office is: Klarabergsviadukten 70 A, SE-107 24, Stockholm. The Parent Company is listed on the NASDAQ OMX in Stockholm. Information regarding the Nobia share and its owners can be found on pages 12–13.
The Parent Company's operations comprise Group-wide functions and the ownership of subsidiaries. Profit after net financial items amounted to SEK 2 million (2) and primarily comprised Group contributions received, and dividends from subsidiaries.
Nobia's share capital amounts to SEK 58,430,237, divided between 175 293 458 shares with a quotient value of SEK 0.33. Each share, apart from own shares, entitles the holder to one vote and the right to a share of the company's capital and profits. Nobia has only one class of share.
In 2007 and 2008, Nobia repurchased a total of 8,162,300 own shares at a value of SEK 468,056,934 under the authorisation mandate granted by the 2007 and 2008 Annual General Meeting. The total number of shares bought back corresponds to 4.7 per cent of the total number of shares. The aim was to enable whole or partial acquisition financing through payment using treasury shares, as well as to adjust the company's capital structure to thereby contribute to higher shareholder value. The mandate enables the buy-back of a maximum of 10 per cent of the total number of registered shares in the company. No additional shares were bought back in 2010.
The ten largest owners held 57 per cent of the votes. The single largest shareholder in Nobia, SäkI AB's shareholding, represented 12.6 per cent of the number of votes for all shares.
Nobia's lenders have prepared a clause that may entail the termination of all loans if the control of the company were to be significantly altered. If any one party, or jointly with other parties (under formal or informal forms) gains control of the company, the lender is entitled to terminate all outstanding loans for payment. The term "control of the company" pertains to control of more than half of the total number of votes or capital or the acquisition of direct and decisive influence over the appointment of
the Board of Directors or members of Group management. Control of the company is also deemed to arise if a party, alone or jointly with other parties, can exercise direct and decisive influence over the company's financial and strategic position.
If such a situation were to arise whereby the control of the company were to be significantly altered, the lender and Nobia shall begin negotiations that shall last for a maximum of 30 days. The aim of these negotiations is to reach an agreement between the lender and Nobia. If an agreement is not reached, the lender is entitled to terminate all outstanding loans for immediate payment.
More information on share capital and shareholders is presented on pages 12–13.
The guidelines for 2010 correspond with the proposed guidelines for 2011 below, which are essentially based on agreements signed with each member of Group management.
The Board of Directors of Nobia AB proposes that the 2011 Annual General Meeting decide on the following motion pertaining to guidelines for determining remuneration and employment conditions for the President and other members of Group management. Group management currently comprises nine people.
The Board of Directors appoints a Remuneration Committee from within its ranks. The Committee's tasks include preparing proposals with respect to remuneration for the President, and to reach decisions on remuneration proposals for managers who report directly to the President.
The Remuneration Committee monitored and evaluated the application of the principles for remuneration and other employment conditions for Group management that were adopted at the 2010 Annual General Meeting, concerning remuneration structures and remuneration levels, and otherwise considered needs for changes. The Remuneration Committee also monitored and evaluated the Nobia Group's employee share options scheme. In the Remuneration Committee's opinion, there are reasonable grounds to continue with both the remuneration principles and incentive schemes in the forthcoming year that essentially conform to those principles and schemes applied in previous years.
Nobia's policy stipulates that total remuneration shall correspond to market levels. A continuous International Position Evaluation is performed to secure the market levels in each country. Members of Group management receive both a fixed and a variable salary portion. The fundamental principle is that the variable salary portion may amount to a maximum of 30 per cent of fixed annual salary. The exception to this principle is the President whose variable salary portion may amount to a maximum of 50 per cent of fixed annual salary. Exceptions may also be made for other senior executives following a decision by the Board.
Meals play a central role in kitchen-based operations. Nobia believes that having enough food to eat is a human right. However, this is not the case for many people today. For this reason, Nobia – since 2006 – has supported the work of The Hunger Project, which aims to eliminate hunger in the world.
The Hunger Project is a non-profit, non-political and non-religious organisation that helps people living in hunger to build sustainable development in their community, primarily through education, self-identification of problems, establishing goals and achieving change though their own efforts.
The Hunger Project conducts change programmes in 13 countries in the African continent, Central and South America, India and Bangladesh. Nobia's financial support has, for example, led to 125 women in India being trained in leadership.
Read more at www.hungerprojektet.se.
The variable salary portion is normally divided between several targets, such as the Group's earnings, earnings in the business unit for which the manager is responsible and individual/qualitative targets. The variable salary portion is based on a period of service of one year. The targets for the President are determined by the Board. The targets for other senior executives are determined by the President following recommendations from the Board's Remuneration Committee.
In the event of a maximum outcome, which presupposes that all bonus-related targets are fulfilled, the variable salary costs for Group management may be expected to amount to approximately SEK 9,944,100 (excluding social security contributions). The calculation is based on the current composition of Group management. Members of Group management are entitled to a pension under the ITP system or equivalent. The age of retirement is 65.
In addition to the ITP plan, members of Group management are entitled to an increased occupational pension premium on salary portions amounting to more than 30 basic amounts. Employment contracts for Group management include provisions regulating remuneration and termination of employment. In accordance with these agreements, employment may usually be terminated at the request of the employee with a period of notice of six months and at the request of the company with a period of notice of 12 months.
Following decisions taken at the Annual General Meeting, the Group has implemented an annual employee share option scheme since 2005. The purpose is to further strengthen the commitment of senior executives to and ownership in the company, and to attract, motivate and retain key employees in the Group. The allotment of employee share options is free of charge, but the allotment is conditional on a rising scale based on the average increase in earnings per share during the vesting period, which is three years. Accordingly, the earnings trend determines the number of employee share options that may be exercised of the total number of allotted employee share options.
The 2010 employee share option scheme encompasses a total of about 104 senior executives, including members of Group management.
In accordance with the figures reported at the 2007, 2008 and 2009 Annual General Meetings, employee share options may lead to costs for the Nobia Group in the form of social security contributions and accounting costs as stipulated in IFRS 2. The social security contributions are estimated at approximately 20 per cent of the growth in value of the employee share options. For the 2007, 2008 and 2009 programmes, the earnings trend determines the number of employee share options that may be exercised of the total number of allotted employee share options.
The employee share option scheme proposal to be presented to the 2011 Annual General Meeting proposes that the President and Group management be allotted 470,000 options free of charge. The options are calculated to have a value on allotment in accordance with IFRS 2 that amounts to SEK 11.50.
The options have a vesting period of three years and may be exercised only if the option holder is both a Nobia employee on the date of exercise and earnings per share have risen at a certain rate over a threeyear period. If the average growth in earnings per share is less than 5 per cent per year, no options may be exercised and the recognised cost over the three-year vesting period will be zero. If, instead, growth in earnings per share is at least 15 per cent per year, all options can be exercised and the maximum cost of the scheme under IFRS 2 will be attained, which is expected to total approximately SEK 5.4 million over the three-year vesting period. The level of social security costs related to the scheme will depend on the value of the options on the exercise date, should the requirements of continued employment at Nobia and growth in earnings per share be fulfilled. Social security contributions to the President and Group management are expected to amount to approximately 25 per cent, which, if the value of the options on the exercise date is the same as it was on the allotment date (SEK 11.50) will result in a cost over the three years of a total of slightly less than SEK 1.4 million, if the employment and earnings per share conditions are fully met.
The Board is entitled to deviate from the guidelines described above if the Board finds there to be reasonable grounds in a particular case.
The following profits in the Parent Company are at the disposition of the Annual General Meeting:
| Total SEK | 1,765,170,138 |
|---|---|
| Net profit for the year | 2,873,614 |
| brought forward | 1,710,071,038 |
| Unappropriated profit | |
| Share premium reserve | 52,225,486 |
The Board of Directors proposes that profits at the disposition of the Annual General Meeting be appropriated as follows: To be carried forward 1,765,170,138 Total SEK 1,765,170,138
The Board of Directors proposes that all profits at the disposition of the Annual General Meeting be carried forward and that no dividend be paid for the 2010 fiscal year.
Nobia has implemented a number of restructuring measures during recent years, aimed at reducing the cost base. The changes are planned to take place over a three-year period.
A number of cost-saving measures were also introduced to strengthen the Nobia Group's earnings. These are recognised in the 2010 income statement. The initiative entails that approximately 385 employees will leave the Group, and resulted in costs totalling SEK 275 million, of which SEK 244 million affect operating profit, and SEK 31 million affect profit from divested operations. The net effect of the Group's cash flow in 2011 is approximately SEK 100 million. This initiative shall also lead to annual cutbacks in the size of SEK 100-125 million, which will be introduced successively from the beginning of 2011 and reach their full effect from the fourth quarter of 2011.
In 2010, restructuring costs totalled SEK 511 million (308), which were recognized as operating profit. These include a loss of SEK 72 million during the first quarter from the divestments of Culinoma and Pronorm. Restructuring measures impacted the cash flow by SEK 178 million, of which SEK 37 million was derived from restructuring measures implemented in 2009.
Remaining restructuring reserves at the end of the year totalled SEK 270 million.
The savings generated by these measures will enable significant investments in product and service development, brand-enhancement measures, store development and training initiatives for Nobia's sales personnel.
Nobia is exposed to both commercial and financial risk. Commercial risks can be divided into strategic, operating and legal/political risks.
Financial risks are attributable to currencies, interest rates, liquidity, credit granting, prices of raw materials and financial instruments.
All business operations are associated with risks. Risks that are well managed can create opportunities, whereas risks that are not managed correctly may lead to damage and losses. The aim of Nobia's risk management is to create awareness of risks and consequently limit, control and manage them, whilst safeguarding business opportunities and strengthening profitability.
Identified material risks are managed on an ongoing basis at all levels in Nobia and in strategic planning. The Board of Directors is responsible to the shareholders for the company's risk management. Company management regularly reports on risk issues to the Board.
Corporate-governance and policy risks are managed by Nobia continuously developing its internal control.
The internal dissemination of appropriate information is ensured through the company's management systems and processes. A more detailed description is provided in the Group Management section of the Corporate Governance Report on page 29.
Risks associated with business development, such as company acquisitions, are managed by using a systematic process (known as due diligence) and subsequent follow-ups of acquisitions compared with original plans. More long-term risks are initially addressed by the Board during its annual Group strategy planning meeting. In conjunction with this, Nobia's business development is evaluated and discussed based on external and internal considerations.
Nobia operates in markets exposed to competition, many of which are relatively mature, meaning that underlying demand in normal market circumstances is relatively stable. However, price competition is intense.
Demand for Nobia's products is influenced by trends in the housing market, as well as housing prices, the number of property transactions and access to financing for housing. It is estimated that four fifths of the European market comprises renovation purchases and one fifth new builds. Nobia's strategy is based on large-scale product supply, product development and the utilisation of the positioning of the Group's strong brands in the various markets and sales channels. Nobia's offerings are also based on the strategy of offering added value to customers in the form of complete solutions with accessories and installation.
Market risks in 2010 declined compared with 2009. Demand for kitchens stabilised but was generally weak in 2010, with slightly higher demands for new builds in the Nordic market in the second half of 2010.
Kitchens to end-consumers are sold through almost 700 Group-owned stores and through DIY stores, furniture stores and other retailers. Having Group-owned and franchise stores is a deliberate strategy to influence the kitchen offering that will
allow for such advantages as co-ordination of the Group's supply chain. A higher percentage of Group-owned stores will entail a larger share of fixed costs, which increases risk but also provides more opportunities for Nobia to profile its concepts with greater added value. Another risk is that retailers are unable to fulfil their commitments under established contracts, which may have a negative effect on sales.
New-build kitchens, also known as project sales, are sold directly to regional and local construction companies via a specialised sales organisation. Concentrating on these large separate customers entails an elevated risk of losing sales if a large customer is lost as well as increased credit risk.
A total of about 60 per cent of Nobia's cost structure comprises variable costs (raw materials, components, accessories), about 30 per cent semi-variable costs (personnel costs, marketing and maintenance) and about 10 per cent fixed costs (rents, depreciation, insurance). The division of costs is relatively equal between the primary markets, except that the UK and France have a slightly higher percentage of fixed costs due to their extensive store networks.
Nobia's proprietary production mainly comprises the production and assembly of cabinets and doors, together with purchased components. Production has sufficient flexibility to cope with fluctuations in demand and, accordingly, has a relatively high percentage of temporary labour.
In 2010, Nobia purchased materials and components valued at approximately SEK
5.2 billion, of which about 15 per cent pertained to raw materials (such as chipboard), 60 per cent components (such as handles and hinges) and 25 per cent goods for resale (such as appliances). The underlying raw materials that the Group is primarily exposed to are wood, steel, aluminium and plastics. Cost variations can be caused by changes in the prices of raw materials in the global market or the company's suppliers' ability to deliver. Nobia's sourcing organisation works closely with its suppliers to ensure efficient flows of materials.
The Group's sourcing and production are continuously evaluated to secure low product costs.
Property risks in the form of loss of production, for example, in the event of a fire, are minimised by the business units conducting annual technical risk inspections of manufacturing units jointly with the Group's insurers. Preventive measures are continuously implemented to reduce the risk of disruptions in the operations.
Nobia's ability to increase profitability and returns for shareholders is heavily dependent on the Group's success in developing innovative products, maintaining cost-efficient manufacturing and capitalising on synergies. Managing restructuring measures is a key factor in maintaining and enhancing Nobia's competitiveness. In 2010, the Group underwent an extensive co-ordination of its product development, production, sourcing and logistics. The brand portfolio and commercial strategy were also evaluated. The
strategic direction is described in more detail on pages 9–11. The implementation of these plans entails operating risks, which are addressed every day in the ongoing change process.
A programme to reduce fixed costs throughout the Group was initiated at the end of 2010.
Nobia's products are encompassed by international and local regulations regarding environmental impact and other effects arising in the production of kitchens, for example, the release of exhaust fumes and emissions, noise and safety. Nobia works continuously with its operations to adjust to the necessary expectations and requirements. The company is well aware of the demands in these areas for the near future and, provided that they do not significantly change, the current products and ongoing development activities are deemed to be sufficient to meet such requirements.
Changes in local tax legislation in the countries in which Nobia conducts operations may affect demand for the company's products. Subsidies for new builds and/or refurbishment or changes to the taxation of residential properties may influence trends in demand. The ROT tax deduction on home renovations in many of the Nordic countries is an example of this.
Nobia endeavours to be an attractive employer, which is a key success factor. To ensure availability of and skills development for motivated employees, manager sourcing and managerial development is administered by a central unit at Nobia.
In addition to strategic and operating risks, Nobia is exposed to a variety of financial risks. The most significant financial risks are related to currencies, interest rates, liquidity, borrowing and credit granting, financial instruments and pensions. All of these risks are managed in accordance with the Finance Policy, which is adopted by the Board on an annual basis. For further information regarding financial risks, refer to Note 2 (Financial risks) and Note 25 (Provisions for pensions) on pages 51 and 64.
Nobia AB is a Swedish public limited liability company domiciled in Stockholm, Sweden. The company is the Parent Company of the Nobia Group. The basis for the control of the Group includes the Articles of Association, the Swedish Companies Act and the regulations issued by the NASDAQ OMX in Stockholm.
Nobia applies the Swedish Code of Corporate Governance (the Code). In addition, Nobia applies the Swedish Annual Accounts Act concerning the company's corporate governance reporting. Nobia monitors developments in the area of corporate governance and continuously adapts its corporate-governance principles to create value for its owners and other stakeholders. The Nobia Group has an information and IR policy adopted by the Board to ensure appropriate and standardised provision of information to all shareholders.
Nobia complies with the Code with one exception, which is the regulation that a Board member may not be the Chairman of the Nomination Committee. This deviation is explained below under the Nomination Committee heading.
The 2010 Annual General Meeting was held on 30 March 2010 at Summit, Grev Turegatan 30 in Stockholm. Board Chairman Hans Larsson was elected Chairman of the Meeting. In accordance with the Board of Directors' recommendation, the Annual General Meeting resolved that no dividends be paid to shareholders for the 2009 fiscal year. The reason for the decision was the company's negative earnings after tax and the aim was to strengthen the company's and Group's financial position given market trends, financial commitments and future restructuring measures. In addition, the Meeting adopted the proposals that the number of Board members should be eight excluding alternates, the fees to be paid to the Board and the Board Chairman, and the election of Board members. Rolf Eriksen and Johan Molin were elected new Board members. Wilhelm Laurén, Joakim Rubin and Preben Bager declined re-election. All other Board members were re-elected and Hans Larsson was re-elected Board Chairman.
Johan Molin was elected Deputy Chairman at the subsequent statutory Board meeting following election. The Annual General Meeting decided in accordance with the Board's proposal to authorise the Board of Directors to acquire and sell treasury shares.
The complete minutes from the Annual General Meeting are available on Nobia's website at www.nobia.com.
In accordance with the principles for the composition of the Nomination Committee adopted at the 2008 Annual General Meeting, the Chairman of the Board is responsible for convening the company's four largest shareholders not later than the end of the third quarter, each of whom shall appoint one member of the Nomination Committee. Should any of the four largest shareholders refrain from appointing a member, the next largest owner shall be presented with the opportunity to appoint a member. Should more than one shareholder refrain from its right to appoint a member of the Nomination Committee, only the next eight largest owners shall be asked to appoint a member, unless more than these eight largest shareholders need be asked in order for the Nomination Committee to comprise at least three members. In addition, the Chairman of the Board may be appointed as a member of the Nomination Committee. In accordance with the Code, the Nomination Committee should be chaired by an owner representative. The tasks of the Nomination Committee are to submit proposals to the Annual General Meeting on the election of the Board of Directors, the Chairman and, when applicable, auditors, on fees for the Board of Directors, the Chairman and auditors and on the Chairman of the Annual General Meeting. In addition, the Nomination Committee shall submit proposals to the Annual General Meeting on decisions
for the principles of the composition of the Nomination Committee.
The members of the Nomination Committee for 2010–2011 were: Fredrik Palmstierna from SäkI (Chairman of the Nomination Committee), Åsa Nisell from Swedbank Robur funds, Lars Bergkvist from Lannebo funds, and Tomas Billing from Nordstjernan and, following a decision by the other members of the Nomination Committee, Board Chairman Hans Larsson. The Nomination Committee's reasoning behind the election of a Board member (Fredrik Palmstierna) as the Chairman of the Committee is that the largest shareholder, in terms of the number of votes, should naturally lead the work of the Nomination Committee. No remuneration is paid to the Committee members.
The Nomination Committee held five minuted meetings prior to the 2011 Annual General Meeting. The basis of the Nomination Committee's work included the company's strategies and priorities and an evaluation of the Board, its size and composition, and the election of auditors.
The Nomination Committee's proposals prior to the 2011 Annual General Meeting are incorporated in the notice to attend the Annual General Meeting published on Nobia's website on 28 February. The principles for the composition of the Nomination Committee are also available at www.nobia.com.
The Board of Directors of Nobia AB comprises eight standard Board members elected by the Annual General Meeting and two Board members with two alternates appointed by the employees. The Code contains certain requirements regarding the composition of the Board of Directors, for example, the majority of the Board members elected by the Annual General Meeting shall be independent in relation to the company and company management. Furthermore, at least two of these Board members shall also be independent in relation to the company's largest shareholders. Nobia's Board of Directors fulfils these requirements. The President is proposed as a member of the Board proposed to the 2011 Annual General Meeting. This has been the case in earlier years, except for the preceding year when the President decided to retire. Other executives in the company participate at Board meetings to make presentations and to serve as Secretary. The Board held ten scheduled meetings and one extraordinary meeting during the 2010 fiscal year.
The work of the Board of Directors follows a fixed agenda for each Board meeting, including such matters as business status, investments, budget, interim reports and annual accounts. The Chairman leads and delegates the work of the Board and ensures that matters not included in the fixed agenda are addressed. The Board's work is also regulated by the rules of procedure adopted annually by the Board governing the distribution of duties between the Board and the President.
The rules of procedure include a calendar schedule with accompanying checklists. In 2010, the Board's work focused on issues concerning Group strategy pertaining to brands, concepts, product range, production and the supply chain, as well as issues related to the new organisational structure. Mikael Norman, Nobia's CFO, succeeded Gun Nilsson as the Secretary to the Board on 30 March 2010. Morten Falkenberg was appointed the new President by the Board on 27 April 2010. Morten Falkenberg took office on 6 October 2010, the same date on which Preben Bager stepped down as the President of Nobia. A presentation of the Board members and President is found on pages 32–34. Attendance at Board meetings during the year is shown in the table on page 31.
The Board's work in 2010 was evaluated by all Board members completing a number of questions about the Board work specifically prepared for this purpose. The members' responses were compiled and subsequently presented and discussed by the Board. The Board decided that the same evaluation method would be employed for the forthcoming year.
The Board does not have a separate audit committee. Instead, control issues to be discussed by such a committee are addressed by the Board in its entirety, except for Board members who are employed by the company. Accordingly, the Board can monitor significant issues regarding the company's financial reporting and its internal control, and risk management of financial issues. The same applies to significant issues related to the audit of the annual report and consolidated financial statements and the impartiality and independence of the auditors. Furthermore, the Board assists in the preparation of the Nomination Committee's proposals for the Annual General Meeting's decision regarding the election of auditors. To ensure that the Board's information requirements are met in this respect, the company's auditors report to the Board at least three times a year. Part of the auditors' presentation of information to the Board takes place in the absence of the company's executives. The form in which these reports are to be prepared is documented in the Board's rules of procedure.
The audit process is structured such that reports from the auditors are received in connection with the planning of the year's audit, in conjunction with internal control and hard-close audits in the autumn and finally, in conjunction with the adoption of the annual accounts. In addition, the auditors also present an annual account of the consulting assignments that have been performed by the audit firm.
In August 2010, the auditors presented and discussed the focus and scope of the audit, which also took particular consideration of the risk perspective regarding internal control and reporting of the IT audit performed. At the meeting in October, the auditors reported on the self-assessment of the internal control that the company's business units perform annually. Also at this meeting, the auditors presented their observations from the hard-close audit. The examination of the annual accounts for 2010 was presented at the Board meeting in February 2011.
The Board appoints a Remuneration Committee from within its ranks, which for the period until the 2011 Annual General Meeting comprises Hans Larsson (Chairman), Johan Molin and Fredrik Palmstierna. Bodil Eriksson and Stefan Dahlbo were members of the Committee until the 2010 Annual
General Meeting. The Committee's task is to prepare proposals to the Board relating to the company's remuneration programme (pension policy, employee share option scheme, bonus scheme, etc.) as well as the remuneration and employment terms for the President. The Committee also has the task of making decisions on the President's proposals regarding remuneration and other employment terms for the managers who report to the President. In addition, the Committee shall ensure that the company has an adequate programme to ensure the supply of managers and their development, and a model for evaluating the performance of the President. Furthermore, the Committee submits proposals to the Annual General Meeting regarding principles for remuneration and other employment terms for senior executives and monitors and evaluates the ongoing programmes for variable remuneration to senior executives, and the programmes concluded during the year, and the implementation of the Annual General Meeting's decision on guidelines for remuneration to senior executives. The Committee held five meetings during the year.
All senior executives in the management group are offered, under a main principle, a fixed annual salary supplemented by variable remuneration comprising a maximum of 30 per cent of fixed annual salary. The exception is the President whose variable salary portion may total a maximum of 50 per cent of fixed annual salary. Exceptions may also be made for senior executives following decisions by the Board.
The variable salary portion is normally divided between several targets: 1) The Group's earnings; 2) Earnings in the business unit for which the manager is responsible; and 3) Individual/qualitative targets.
The variable salary portion is based on an earnings period of one year. The targets for the President are established by the Board. The targets for the other senior executives are established by the President following recommendations by the Board's remuneration Committee.
In addition, approximately 100 senior managers have also been offered the opportunity to participate in a long-term employee share option scheme described in more detail in the "Financial Overview" of the Board of Directors' Report. The remuneration and benefits of senior executives are described in Note 4 on page 54.
Group management, refer to page 34, holds regular Group-management meetings led by the President. The President and CFO meet the management group of each business unit at local management meetings three times a year.
KPMG AB was elected as the company's auditors for a four-year mandate at the 2007 Annual General Meeting. The Auditor in Charge is Authorised Public Accountant Helene Willberg. KPMG AB with Helene Willberg as Auditor in Charge is proposed for re-election at the 2011 Annual General Meeting. In accordance with the new regulations of the Swedish Companies Act from 1 January 2011, the mandate period for auditors is one year. The interaction of the auditors with the Board is described above. Nobia's purchases of services from this firm, in addition to audit assignments, are described in Note 5, page 58.
The Board of Directors is responsible for the internal control of the company in accordance with the Swedish Companies Act and the Code. This description has been prepared in accordance with Chapter 6, Section 6, Second Paragraph, Second Point of the Swedish Annual Accounts Act, and is thereby limited to the internal control and risk management of the financial reporting. The description of the Group's internal control and risk management systems also includes the description of the company's systems.
Effective 2010, the structure of Nobia was organised by function so that the first stage of the value chain, sourcing/purchasing, production and logistics have Group-wide management functions. The main task of these operations units is to capitalise on the opportunities of economies of scale that exist in each individual area. The commercial units are responsible for developing Nobia's sales channels and brands in line with Nobia's strategy.
The basis for the internal control of financial reporting is the control environment that comprises the company's organisation, decision-making procedures, authority and responsibility, as documented and communicated in steering documents such as internal policies, guidelines, manuals and codes. Examples include the division of responsibility between the Board on the one hand and the President and other bodies established by the Board on the other, as well as instructions for attestation rights, accounting and reporting.
The documentation concerning principles and methods for reporting, internal governance, controls and monitoring are collected in Nobia's Financial & Administration Manual. This Manual is available to all relevant employees on the Nobia intranet.
Each unit manager is ultimately responsible for maintaining a high level of internal control, and the finance manager at each unit is responsible for following up and ensuring daily compliance with Nobia's accounting procedures and policies. These instructions are included in the aforementioned manual. All finance managers from the various units meet once a year to discussion various topics relevant to financial reporting.
The Group has introduced methods for risk assessment and risk management to ensure that the risks to which the Group is exposed are managed within the established frameworks. The risks identified concerning financial reporting are managed in the Group's control structure and are monitored and assessed continuously. One of the tools used for this purpose is self-assessment, a process that is performed by local management groups and evaluated annually according to established procedures. Risk assessments are described in more detail on pages 26–27.
The Group has established information and communication channels in order to support the completeness and accuracy of the financial reporting, for example, through steering documents in the form of internal policies, guidelines, manuals and codes regarding the financial reporting applied by the appropriate employees.
The Group monitors compliance with these steering documents and measures the efficiency of control structures.
In addition, the Group's information and communication channels are monitored to ensure that these channels are appropriate for the financial reporting. Furthermore, the Group has developed checklists to ensure compliance with the disclosure requirements in the financial statements.
The outcome of the Group's risk assessment and risk management processes is addressed each year by the Board, which ensures that these processes include all material areas and provide balanced guidelines for the various executives.
The Board receives monthly financial reports and each Board meeting addresses the company's and Group's financial position.
The Group's Internal Control function, which is an integrated part of the central Finance function, followed up on viewpoints that emerged during the year from the selfassessments of the internal control at some of the larger units. The results of these reviews, the measures to be taken and their status are reported to the Board.
Nobia does not currently have an internal audit function. The Board has discussed this matter and found the existing monitoring and evaluation structure of the Group to be suitable. External services may also be engaged in the context of certain special examinations. The decision on this issue is reviewed every year.
Nobia's Articles of Association regulate the focus of the operations, share capital and how and when notification of the Annual General Meeting is to take place. The full text of the Articles of Association is available from the Nobia website, www.nobia.com.
On 31 December 2010, the share capital in Nobia AB amounted to SEK 58,430,237 divided between 175,293,458 shares in one class of share. The quotient value is SEK 0.33 per share. Each share, except for bought-back treasury shares, entitles the holder to one vote and carries the same entitlement to the company's assets and profits. The Nobia share and ownership structure are described in more detail on pages 12–13.
| Board of Directors in 2010 | |||||||
|---|---|---|---|---|---|---|---|
| Board meetings, | Remuneration | Board | |||||
| 11 meetings | Committee, | Year of | member | ||||
| in total | 5 meetings in total | birth | since | Nationality | Independence | ||
| Hans Larsson | Chairman | 11 | 5 of 5 | 1942 | 1996 | Swedish | Independent |
| Johan Molin | Deputy Chairman | 8 | 3 of 3 | 1959 | 2010 | Swedish | Independent |
| Preben Bager* | President and CEO | 8 | 1948 | 2008 | Danish | Dependent1) | |
| Stefan Dahlbo | Board member | 10 | 2 of 2 | 1959 | 2004 | Swedish | Independent |
| Bodil Eriksson | Board member | 10 | 2 of 2 | 1963 | 2003 | Swedish | Independent |
| Wilhelm Laurén* | Board member | 2 | 1943 | 1996 | Swedish | Independent | |
| Rolf Eriksen | Board member | 8 | 1944 | 2010 | Danish | Independent | |
| Thore Olsson | Board member | 11 | 1943 | 2007 | Swedish | Independent | |
| Lotta Stalin | Board member | 11 | 1954 | 2007 | Swedish | Independent | |
| Fredrik Palmstierna | Board member | 11 | 3 of 3 | 1946 | 2006 | Swedish | Dependent2) |
| Joakim Rubin* | Board member | 3 | 1960 | 2009 | Swedish | Independent | |
| Per Bergström | Employee representative | 11 | 1960 | 2000 | Swedish | ||
| Olof Harrius | Employee representative | 10 | 1949 | 1998 | Swedish | ||
| Kjell Sundström | Employee representative3) | 9 | 1953 | 2007 | Swedish | ||
| Marie Nilsson | Employee representative3) | 9 | 1973 | 2007 | Swedish | ||
1) President until 5 October 2010
2) Dependent in relation to major shareholders
3) Alternate
*) Member of Board of Directors until 2010 Annual General Meeting
Born 1942. B.Sc. Business Economics. Chairman since 1998, Board member since 1996. Chairman of Remuneration Committee. Independent. Declined re-election. Other board assignments: Chairman of Handelsbanken, Attendo and Valedo Partners Fund. Board member of Holmen and Industrivärden. Previous employment: President of Swedish Match, Esselte and Nordstjernan. Previous chairmanships include NCC, Bilspedition/BTL, Sydsvenska Kemi and Althin Medical. Holding in Nobia: 365,000 shares.
Born 1959. B.Sc. Business Administration. President and CEO ASSA ABLOY. Deputy Chairman since 2010, Board member since 2010. Proposed as Chairman. Independent. Board assignments: Board member of ASSA ABLOY.
Previous employment: CEO of Nilfisk-Advance and Head of Division at Atlas Copco Group. Holding in Nobia: 19,250 shares, 400,000 call options.
Born 1959. B.Sc. Business Administration. Board member since 2004.
Independent. Declined re-election. Other board assignments: Chairman of Klövern. Previous employment: Executive Vice President and President of Investment AB Öresund. Holding in Nobia: 20,800 shares, including family and companies.
Born 1963. Berghs School of Communication. Executive Vice President of Apotek Hjärtat. Board member since 2003. Independent. Other board assignments: Board member of Attendo.
Previous employment: Senior Vice President, Communications and Investor Relations at SCA, Vice President at Axfood, Communications Director at Volvo Cars.
Holding in Nobia: 900 shares, 61,500 call options.
Born 1943. President of Elimexo. Board member since 2007. Independent. Other board assignments: Chairman of Bastec, Thomas Frick and Tretorn. Vice Chairman of Puma AG. Board member of Elite Hotels, Cobra and Kistamässan.
Previous employment: President and CEO of Aritmos with wholly owned companies ABU-Garcia, Etonic Inc., Monark-Crescent, Stiga, Tretorn and Puma AG (84%). President of Trianon, Etonic Inc. and Tretorn. CEO of Tretorn. Holding in Nobia: 30,000 shares and 250,000 call options.
Born 1954. Master of Engineering. Consultant. Board member since 2007. Independent. Other board assignments: Board member of Nederman and Partnertech. Previous employment: President of Kuusakoski Sweden, Business Area Manager of FMV Logistics, Business Area Manager and Vice President of
Poolimon, President of Överums Bruk and senior positions at Electrolux. Holding in Nobia: 1,500 shares, 60,000 call options.
Born 1946. B.Sc. Business Economics, MBA. President of SäkI since 1997. Board member since 2006. Dependent in relation to major shareholder.
Other board assignments: Chairman of Investment AB Latour. Board member of Securitas, SäkI, Hultafors, Fagerhult and Academic Work. Holding in Nobia: 201,000 shares.
Born 1946.
Board member since 2010. Board assignments: Board member of Bang & Olufsen. A/S, Boconcept Holding A/S, Bianco International A/S, Royal Copenhagen A/S, Ucly Duck Aps and H&M Hennes & Mauritz A/S. Previous employment: President and CEO of H&M Hennes & Mauritz. Holding in Nobia: 125,000 call options.
Born 1960. Employee representative since 2000. Employed at Marbodal since 1976. Holding in Nobia: 5,000 call options.
Born 1949. Employee representative since 1998. Employed at Marbodal since 1971. Holding in Nobia: 5,000 call options.
Born 1953. Alternate, employee representative since 2007. Employed at Myresjökök since 1992. Holding in Nobia: 2,000 call options.
Born 1973. Alternate, employee representative since 2007. Employed at Myresjökök since 2006. Other board assignments: Board member of Myresjökök.
Holding in Nobia: 1,500 call options.
KPMG AB
Auditor in Charge, Authorised Public Accountant: Helene Willberg Other auditing assignments:
Cloetta, Investor, Ortivus and Thule.
Born 1958. B.Sc. Business Administration. President and CEO of Nobia since 6 October 2010. Previous employment: Executive Vice President Electrolux AB and sector CEO Floor Care and Small Appliances, management positions at TDC Mobile and Coca-Cola Company. Holding in Nobia AB: 36,700 shares, 500,000 call options and 35,000 employee share options.
Born 1958. CFO. Employed by Nobia since 2010.
Previous employment: Group controller Electrolux.
Holding in Nobia AB: 10,000 shares, 100,000 call options and 50,000 employee share options.
Born 1961. EVP and Head of Production and Logistics.
Employed by Nobia since 1998. Previous employment: Management positions
within Nobia. Holding in Nobia AB: 70,000 call options and
145,000 employee share options.
Born 1967. EVP and Head of Continental European and UK Professional. Employed by Nobia since 2007.
Previous employment: Management positions at IKEA Austria.
Holding in Nobia AB: 145,000 employee share options.
Born 1963. EVP and Head of Nordic Retail and Professional. Employed by Nobia since 2008. Previous employment: Management positions at Royal Greenland A/S, KNI A/S and Salling A/S. Holding in Nobia AB: 2,107 shares, 145,000 employee share options.
Born 1965. EVP and Head of UK Retail. Employed by Magnet since 1984. Previous employment: Management positions at Magnet. Holding in Nobia AB: 15,525 shares and 105,000
employee share options.
Born 1956. EVP and Head of Continental European Retail. Employed by Nobia since 2010. Previous employment: Management positions at IKEA, Conforama and Printemps. Holding in Nobia AB: 50,000 employee share options.
Born 1963. EVP and Head of Group Marketing. Employed by Nobia since 2011. Previous employment: Management positions at International Press Institute, Dockers Europe, Reebok, Coca-Cola and L'Oréal. Holding in Nobia AB: 0.
Born 1971. EVP and Head of Change Programmes & IT. Employed by Nobia since 2010. Previous employment: Management positions at Vin & Sprit, Maxxium and Electrolux. Holding in Nobia AB: 2,000 shares, 70,000 call options and 50,000 employee share options.
| Consolidated income statement and consolidated | |
|---|---|
| statement of comprehensive income | 37 |
| Comments and analysis of income statement | 38 |
| Consolidated balance sheet | 40 |
| Comments and analysis of balance sheet | 41 |
| Change in consolidated shareholders' equity | 42 |
| Consolidated cash-flow statement and comments | 43 |
| Parent Company income statement and balance sheet | 44 |
| Note 1 Significant accounting policies | 46 |
| 2 Financial risks | 51 |
| 3 Operating segments | 53 |
| 4 Salaries, other remuneration and | |
| social security costs | 54 |
| 5 Remuneration to auditors | 58 |
| 6 Depreciation and impairment losses by activity | 58 |
| 7 Other operating income | 58 |
| 8 Other operating expenses | 58 |
| 9 Specification by type of costs | 58 |
| 10 Operational lease contracts | 58 |
| 11 Financial income and expenses | 58 |
| 12 Tax on net profit for the year | 58 |
| 13 Intangible assets | 59 |
| 14 Tangible fixed assets | 59 |
| 15 Financial fixed assets | 60 |
| 16 Participating interests in joint ventures | 60 |
| 17 Shares and participations in subsidiaries | 61 |
| 18 Derivative instruments | 63 |
| 19 Prepaid expenses and accrued income | 63 |
| 20 Cash and cash equivalents | 63 |
| 21 Share capital | 63 |
| 22 Reserves in shareholders' equity | 63 |
| 23 Earnings per share | 64 |
| 24 Dividend per share | 64 |
| 25 Provisions for pensions | 64 |
| 26 Deferred tax | 66 |
| 27 Other provisions | 67 |
| 28 Liabilities to credit institutions | 67 |
| 29 Accrued expenses and deferred income | 67 |
| 30 Financial assets and liabilities | 67 |
| 31 Pledged assets | 68 |
| 32 Contingent liabilities and commitments | 68 |
| 33 Corporate acquisitions | 68 |
| 34 Discontinued operations | 69 |
| 35 Assets held for sale | 69 |
| 36 Related-party transactions | 69 |
| 37 Average number of employees | 69 |
38 Events after closing date 70
| SEK m | Note | 2010 | 2009 |
|---|---|---|---|
| Net sales | 3 | 14,085 | 15,418 |
| Cost of goods sold | 4, 6, 9, 10, 25 | –8,740 | –9,976 |
| Gross profit | 5,345 | 5,442 | |
| Selling expenses | 4, 6, 9, 10, 25 | –4,437 | –4,592 |
| Administrative expenses | 4, 5, 6, 9, 10, 25 | –850 | –890 |
| Other operating income | 7 | 58 | 145 |
| Other operating expenses | 8 | –102 | –65 |
| Share of profit after tax of joint venture | 16 | –8 | –2 |
| Operating profit | 6 | 38 | |
| Financial income | 11 | 18 | 41 |
| Financial expenses | 11 | –103 | –116 |
| Loss after financial items | –79 | –37 | |
| Tax on net profit for the year | 12, 26 | 25 | 35 |
| Net loss for the year from continuing operations | –54 | –2 | |
| Loss from discontinued operations, net after tax | 34 | –35 | –77 |
| Net loss for the year | –89 | –79 | |
| Earnings per share, before dilution, SEK1) | 23 | –0.53 | –0.47 |
| Earnings per share, after dilution, SEK1) | 23 | –0.53 | –0.47 |
| Earnings per share for continuing operations, before dilution, SEK |
23 | –0.32 | –0.01 |
| Earnings per share for continuing operations, after dilution, SEK |
23 | –0.32 | –0.01 |
| Number of shares before dilution2) | 23 | 167,131,158 | 167,131,158 |
| Average number of shares before dilution2) | 23 | 167,131,158 | 167,131,158 |
| Number of shares after dilution2) | 23 | 167,131,158 | 167,131,158 |
| Average number of shares after dilution2) | 23 | 167,131,158 | 167,131,158 |
1) Earnings per share attributable to Parent Company shareholders.
2) Shares outstanding, less treasury shares.
| SEK m | Note | 2010 | 2009 |
|---|---|---|---|
| Net loss for the year | –89 | –79 | |
| Other comprehensive income | |||
| Exchange-rate differences attributable to translation of | |||
| foreign operations | 22 | –406 | –77 |
| Cash-flow hedges before tax | 22 | 4 | –68 |
| Tax attributable to change in hedging reserve for the period | 22 | –1 | 19 |
| Other comprehensive income for the year | –403 | –126 | |
| Comprehensive income for the year | –492 | –205 | |
| Net loss for the year attributable to: | |||
| Parent Company shareholders | –89 | –79 | |
| Non-controlling interest | 0 | 0 | |
| Net loss for the year | –89 | –79 | |
| Comprehensive income for the year attributable to: | |||
| Parent Company shareholders | –491 | –205 | |
| Non-controlling interest | –1 | 0 | |
| Comprehensive income for the year | –492 | –205 |
Net sales declined 9 per cent to SEK 14,085 million (15,418). For comparable units and adjusted for currency effects, net sales remained unchanged. The relationship is shown in the table below.
| I | II | III | IV | Jan–Dec | ||
|---|---|---|---|---|---|---|
| Analysis of net sales | % | % | % | % | % | SEK m |
| 2009 | 15,418 | |||||
| Organic growth | –1 | –3 | –1 | 6 | 0 | 21 |
| – of which, UK region1) | 1 | –1 | –1 | –1 | –1 | –46 |
| – of which, Nordic region1) | –10 | –3 | 10 | 16 | 3 | 131 |
| – of which, Continental Europe region1) | 6 | –6 | –11 | 2 | –3 | –114 |
| Currency effect | –7 | –7 | –6 | –7 | –7 | –1,078 |
| Acquired units2) | 1 | 1 | 0 | 0 | 0 | 52 |
| Divested units3) | –1 | –2 | –3 | –2 | –2 | –328 |
| 2010 | –8 | –12 | –10 | –5 | –9 | 14,085 |
1) Organic growth for each region.
2) Acquired units refers to the stores HTH took over in Denmark in 2009.
3) Divested units refers to Pronorm.
| UK region | Nordic region | Continental Europe region |
Other and Group adjustments |
Group | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Net sales from external | ||||||||||
| customers | 5,198 | 5,623 | 5,092 | 5,234 | 3,795 | 4,561 | – | – | 14,085 | 15,418 |
| Net sales from other regions | – | – | – | – | 10 | 64 | –10 | –64 | 0 | 0 |
| Total net sales | 5,198 | 5,623 | 5,092 | 5,234 | 3,805 | 4,625 | –10 | –64 | 14,085 | 15,418 |
| Gross profit excluding restructuring costs |
2,029 | 2,000 | 1,945 | 1,861 | 1,501 | 1,770 | 32 | 31 | 5,507 | 5,662 |
| Gross margin excluding restructuring costs, % |
39.0 | 35.6 | 38.2 | 35.6 | 39.4 | 38.3 | – | – | 39.1 | 36.7 |
| Operating profit excluding restructuring costs |
326 | 236 | 331 | 187 | –33 | 26 | –107 | –103 | 517 | 346 |
| Operating margin excluding restructuring costs, % |
6.3 | 4.2 | 6.5 | 3.6 | –0.9 | 0.6 | – | – | 3.7 | 2.2 |
| Operating profit | 219 | 236 | 249 | –75 | –247 | –20 | –215 | –103 | 6 | 38 |
| Operating margin, % | 4.2 | 4.2 | 4.9 | –1.4 | –6.5 | –0.4 | – | – | 0.0 | 0.2 |
Depreciation/amortisation of and impairment losses on fixed assets for the year amounted to SEK 544 million (602).
| SEK m | 2010 | 2009 |
|---|---|---|
| Restructuring costs by function | ||
| Cost of goods sold | –162 | –220 |
| Selling and administrative expenses | –321 | –89 |
| Other income/expenses | –28 | 1 |
| Total restructuring costs | –511 | –308 |
| UK | –107 | – |
|---|---|---|
| Nordic | –82 | –262 |
| Continental Europe | –214 | –46 |
| Other and Group adjustments | –108 | – |
| Group | –511 | –308 |
| Translation effect | Transaction effect | Total effect | ||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |
| UK region | –15 | –5 | –20 | –65 | –35 | –70 |
| Nordic region | –15 | –5 | 50 | –35 | 35 | –40 |
| Continental Europe region | 30 | –5 | –10 | 25 | 20 | 20 |
| Group | 0 | –15 | 20 | –75 | 20 | –90 |
| Quarterly data per region | 2010 | 2009 | ||||||
|---|---|---|---|---|---|---|---|---|
| SEK m | IV | III | II | I | IV | III | II | I |
| Net sales | ||||||||
| UK | 1,291 | 1,263 | 1,360 | 1,284 | 1,399 | 1,361 | 1,494 | 1,369 |
| Nordic | 1,392 | 1,091 | 1,401 | 1,208 | 1,302 | 1,039 | 1,499 | 1,394 |
| Continental Europe | 923 | 875 | 1,040 | 967 | 1,082 | 1,170 | 1,325 | 1,048 |
| Other and Group adjustments | –1 | –1 | –5 | –3 | –1 | –2 | –27 | –34 |
| Group | 3,605 | 3,228 | 3,796 | 3,456 | 3,782 | 3,568 | 4,291 | 3,777 |
| Gross profit excluding restructuring costs | ||||||||
| UK | 506 | 507 | 543 | 473 | 522 | 492 | 532 | 454 |
| Nordic Continental Europe |
529 380 |
418 363 |
550 400 |
448 358 |
481 419 |
367 466 |
542 521 |
471 364 |
| Other and Group adjustments | 3 | 12 | 9 | 8 | 40 | 10 | –18 | –1 |
| Group | 1,418 | 1,300 | 1,502 | 1,287 | 1,462 | 1,335 | 1,577 | 1,288 |
| Gross margin excluding restructuring costs, % | ||||||||
| UK | 39.2 | 40.1 | 39.9 | 36.8 | 37.3 | 36.1 | 35.6 | 33.2 |
| Nordic | 38.0 | 38.3 | 39.3 | 37.1 | 36.9 | 35.3 | 36.2 | 33.8 |
| Continental Europe | 41.2 | 41.5 | 38.5 | 37.0 | 38.7 | 39.8 | 39.3 | 34.7 |
| Group | 39.3 | 40.3 | 39.6 | 37.2 | 38.7 | 37.4 | 36.8 | 34.1 |
| Operating profit excluding restructuring costs UK |
86 | 101 | 98 | 41 | 114 | 65 | 26 | 31 |
| Nordic | 136 | 63 | 115 | 17 | 64 | 15 | 91 | 17 |
| Continental Europe | 11 | 6 | 10 | –60 | 13 | 47 | 24 | –58 |
| Other and Group adjustments | –40 | –17 | –28 | –22 | –25 | –20 | –34 | –24 |
| Group | 193 | 153 | 195 | –24 | 166 | 107 | 107 | –34 |
| Operating margin excluding restructuring costs, % | ||||||||
| UK | 6.7 | 8.0 | 7.2 | 3.2 | 8.1 | 4.8 | 1.7 | 2.3 |
| Nordic | 9.8 | 5.8 | 8.2 | 1.4 | 4.9 | 1.4 | 6.1 | 1.2 |
| Continental Europe | 1.2 | 0.7 | 1.0 | –6.2 | 1.2 | 4.0 | 1.8 | –5.5 |
| Group | 5.4 | 4.7 | 5.1 | –0.7 | 4.4 | 3.0 | 2.5 | –0.9 |
| Operating profit | ||||||||
| UK | –5 | 94 | 89 | 41 | 114 | 65 | 26 | 31 |
| Nordic | 102 | 15 | 115 | 17 | 56 | 15 | 66 | –212 |
| Continental Europe | –140 | –12 | –11 | –84 | –5 | 33 | 19 | –67 |
| Other and Group adjustments | –45 | –20 | –28 | –122 | –25 | –20 | –34 | –24 |
| Group | –88 | 77 | 165 | –148 | 140 | 93 | 77 | –272 |
| Operating margin, % UK |
–0.4 | 7.4 | 6.5 | 3.2 | 8.1 | 4.8 | 1.7 | 2.3 |
| Nordic | 7.3 | 1.4 | 8.2 | 1.4 | 4.3 | 1.4 | 4.4 | –15.2 |
| Continental Europe | –15.2 | –1.4 | –1.1 | –8.7 | –0.5 | 2.8 | 1.4 | –6.4 |
| Group | –2.4 | 2.4 | 4.3 | –4.3 | 3.7 | 2.6 | 1.8 | –7.2 |
| SEK m | Note | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | 13 | ||
| Goodwill | 2,676 | 3,037 | |
| Other intangible assets | 258 | 171 | |
| 2,934 | 3,208 | ||
| Tangible fixed assets | 14 | ||
| Land and buildings | 1,126 | 1,542 | |
| Investments in progress and | |||
| advance payments | 13 | 21 | |
| Plant and machinery | 672 | 846 | |
| Equipment, tools, fixtures and fittings |
373 | 515 | |
| 2,184 | 2,924 | ||
| Interest-bearing long-term | |||
| receivables (IB) | 15 | 10 | 350 |
| Other long-term receivables | 15 | 52 | 66 |
| Participations in joint ventures | 16 | – | 58 |
| Deferred tax assets | 26 | 406 | 293 |
| Total fixed assets | 5,586 | 6,899 | |
| Inventories | |||
| Raw materials and consumables | 258 | 348 | |
| Products in process | 80 | 96 | |
| Finished products | 477 | 533 | |
| Goods for resale | 156 | 235 | |
| 971 | 1,212 | ||
| Current receivables | |||
| Tax receivables | 43 | 43 | |
| Accounts receivable | 2 | 1,180 | 1,441 |
| Derivative instruments | 2, 18 | 8 | 7 |
| Interest-bearing current | |||
| receivables (IB) | 1 | 2 | |
| Other receivables | 2 | 87 | 125 |
| Prepaid expenses and accrued | |||
| income | 19 | 182 | 268 |
| Assets held for sale | 35 | 72 | 75 |
| 1,573 | 1,961 | ||
| Cash and cash equivalents (IB) | 20 | 356 | 384 |
| Total current assets | 2,900 | 3,557 | |
| Total assets | 8,486 | 10,456 | |
| Of which, interest-bearing items (IB) | 367 | 736 |
| SEK m | Note | 31 Dec 2010 | 31 Dec 2009 |
|---|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES |
|||
| Attributable to Parent Company | |||
| shareholders | |||
| Share capital | 21 | 58 | 58 |
| Other contributed capital | 1,453 | 1,449 | |
| Reserves | 22 | –382 | 20 |
| Profit brought forward | 2,312 | 2,401 | |
| 3,441 | 3,928 | ||
| Non-controlling interest | 5 | 6 | |
| Total shareholders' equity | 3,446 | 3,934 | |
| Provision for guarantees | 13 | 16 | |
| Provisions for pensions (IB) | 25 | 587 | 656 |
| Deferred tax liabilities | 26 | 211 | 225 |
| Other provisions | 27 | 398 | 174 |
| Liabilities to credit institutions (IB) | 2, 28 | 1,246 | 2,446 |
| Other liabilities (IB) | 2 | 1 | 10 |
| Total long-term liabilities | 2,456 | 3,527 | |
| Liabilities to credit institutions (IB) | 2 | 1 | 0 |
| Overdraft facilities (IB) | 2, 20 | 41 | 48 |
| Other liabilities (IB) | 2 | 1 | 2 |
| Advance payment from customers |
273 | 290 | |
| Accounts payable | 2 | 1,037 | 1,189 |
| Current tax liabilities | 62 | 21 | |
| Derivative instruments | 2, 18 | 11 | 12 |
| Other liabilities | 2 | 368 | 420 |
| Accrued expenses and | |||
| deferred income | 29 | 779 | 973 |
| Liabilities attributable to assets held | |||
| for sale | 35 | 11 | 40 |
| Total current liabilities | 2,584 | 2,995 | |
| Total shareholders' equity and liabilities |
8,486 | 10,456 | |
| Of which, interest-bearing items (IB) |
1,877 | 3,162 |
Information on consolidated pledged assets and contingent liabilities is provided in Notes 31 and 32 on page 68.
At the end of 2010, recognised goodwill amounted to SEK 2,676 million (3,037). The carrying amount of goodwill is specified by cash-generating units as follows:
| SEK m | 2010 | 2009 |
|---|---|---|
| Nobia UK | 1,025 | 1,116 |
| Hygena | 834 | 959 |
| Nobia DK | 315 | 355 |
| Nobia SweNo | 156 | 163 |
| Other | 346 | 444 |
| Total | 2,676 | 3,037 |
Goodwill has been allocated to cash-generating units (CGU) when these units were acquired. Nobia has eight CGUs, which in organisational terms correspond to the company's business units.
Goodwill is subject to an annual impairment test by calculating the expected cash flow discounted by a weighted average cost of capital (WACC) after tax.
The recoverable amount calculated in conjunction with this is compared with the carrying amount, including goodwill, for each CGU.
The starting point of the calculation is the estimated future cash flows based on the financial budget for the forthcoming fiscal year. A forecast for the next four years is prepared based on this budget and expectations regarding market trends in the years ahead.
Significant assumptions applied to the calculation of the expected cash flow include the growth in net sales, operating margin, investment and working capital requirements. It has been assumed that growth will increase in line with market growth in all CGUs except for Hygena for which growth is anticipated to be slightly higher. The logistics and delivery problems that led to negative growth in Hygena in 2010 have essentially been resolved, meaning that growth is expected to increase by slightly more than the market in forthcoming years. In addition, the extensive store renovation programme started in 2010 is expected to result in further growth for Hygena. In order to extrapolate the cash flows outside the first five years, a growth rate of 2 per cent is applied to all CGUs. The operating margin and working capital requirements are expected to increase and normalise compared with historic levels for each CGU, while investments are assumed to reflect a historic reinvestment level.
The weighted average cost of capital is calculated on the average debt/ equity ratio for large companies in similar industries and costs for borrowed and shareholders' equity. The cost of shareholders' equity is determined on the basis of the assumption that all investors require at least the same level of return as for risk-free government bonds, with an additional risk premium for the estimated risks assumed when they invest in cash-generating units. The risk premium has been established based on the long-term historical return on the stock market for large companies in similar industries by taking into consideration the risk profile of each business unit. The required return on debt-financed capital is also calculated on the return on risk-free government bonds and by applying a borrowing margin based on an estimated company-specific risk. The required return and tax rate for each CGU is influenced by the various interest and tax rates in different countries.
The Group's weighted cost of capital before tax amounted to 13.7 per cent (12.0) in 2010 and after tax to 9.8 per cent (8.6). In total, the utilised cost of capital after tax for 2010 is in the interval 9.5–10.2 per cent (8.3–9.2).
No impairment requirements on the amounts of goodwill found in the Group on 31 December 2010 were identified from the impairment tests performed. Calculations indicate that the value in use exceeds the carrying amount.
Assumptions for calculating recoverable amounts
| Nobia UK | 10.2 |
|---|---|
| Hygena | 9.9 |
| Nobia DK | 9.7 |
| Nobia SweNo | 10 |
| Other | 9.5–10.2 |
Net debt declined and amounted at the end of the period to SEK 1,510 million (2,426). The change in net debt primarily derived from a positive operating cash flow of SEK 641 million, the sale of Culinoma and Pronorm of SEK 160 million and positive currency translation effects of SEK 188 million, which reduced net debt. Consequently, the debt/equity ratio amounted to 44 per cent at year-end (62 per cent at the beginning of the year). The change in net debt is shown in the table below.
| Closing balance | 1,510 | 2,426 |
|---|---|---|
| Dividend | 0 | 0 |
| Change in pension liabilities | 38 | –13 |
| Divestment of subsidiaries and joint ventures | –160 | – |
| Acquisition of subsidiaries | – | 69 |
| Interest paid | 35 | 52 |
| Operating cash flow | –641 | –803 |
| Translation differences | –188 | –60 |
| Opening balance | 2,426 | 3,181 |
| SEK m | 2010 | 2009 |
The components of net debt are described in the table below. Unrealised actuarial losses on the pension liability at the end of 2010 totalled SEK 67 million (losses: 60).
| Total | 1,510 | 2,426 |
|---|---|---|
| Other financial receivables | –10 | –352 |
| Cash and cash equivalents | –356 | –384 |
| Leasing | 1 | 10 |
| Provisions for pensions | 587 | 656 |
| Bank loans, etc. | 1,288 | 2,496 |
| SEK m | 2010 | 2009 |
| differences | |||||||
|---|---|---|---|---|---|---|---|
| translation | Cash-flow | Profit | Non | Total | |||
| shareholders' | |||||||
| equity | |||||||
| 58 | 1,449 | 101 | 45 | 2,495 | 4,148 | 6 | 4,154 |
| – | – | – | – | –79 | –79 | 0 | –79 |
| – | – | –77 | –49 | – | –126 | 0 | –126 |
| – | – | –77 | –49 | –79 | –205 | 0 | –205 |
| – | – | – | – | – | – | 0 | 0 |
| – | – | – | – | –15 | –15 | – | –15 |
| 58 | 1,449 | 24 | –4 | 2,401 | 3,928 | 6 | 3,934 |
| 58 | 1,449 | 24 | –4 | 2,401 | 3,928 | 6 | 3,934 |
| – | – | – | – | –89 | –89 | 0 | –89 |
| – | – | –405 | 3 | – | –402 | –1 | –403 |
| – | – | –405 | 3 | –89 | –491 | –1 | –492 |
| – | – | – | – | – | – | 0 | 0 |
| – | 4 | – | – | – | 4 | – | 4 |
| 58 | 1,453 | –381 | –1 | 2,312 | 3,441 | 5 | 3,446 |
| Share capital |
Other con tributed capital |
Exchange-rate attributable to of foreign operations |
hedges after tax |
Attributable to Parent Company shareholders brought forward |
Total | controlling interests |
| SEK m | Note | 2010 | 2009 |
|---|---|---|---|
| Operating activities | |||
| Operating profit | 6 | 38 | |
| Depreciation/amortisation/impairment | 544 | 602 | |
| Adjustments for non-cash items | 332 | 32 | |
| Income tax paid | –51 | –84 | |
| Change in inventories | 110 | 221 | |
| Change in receivables | 176 | 79 | |
| Change in operating liabilities | –154 | 173 | |
| Cash flow from operating activities | 963 | 1,061 |
| Cash flow from investing activities | 193 | –268 | |
|---|---|---|---|
| Other items in investing activities | –5 | –13 | |
| Decrease in interest-bearing assets | 6 | 30 | |
| Increase in interest-bearing assets | – | –17 | |
| Interest received | 18 | 41 | |
| Divestment of subsidiaries | 491 | – | |
| Acquisition of subsidiaries | 33 | – | –64 |
| Sale of tangible fixed assets | 30 | 101 | |
| Investments in intangible fixed assets | –142 | –54 | |
| Investments in tangible fixed assets | –205 | –292 | |
| interest-bearing assets | 641 | 803 |
|---|---|---|
| Operating cash flow after acquisitions/divest | ||
| ments of subsidiaries, interest, increase/ | ||
| decrease in interest-bearing assets | 1,156 | 793 |
| Financing activities | ||
| Interest paid | –53 | –93 |
| Decrease in interest-bearing liabilities | –1,091 | –638 |
| New share issue | – | – |
| Dividend to Parent Company's shareholders | – | – |
| Dividend to non-controlling interests | 0 | 0 |
| Buy-back of shares | – | – |
| Cash flow from financing activities | –1,144 | –731 |
| Cash flow for the year excluding | ||
| exchange-rate differences in cash | ||
| and cash equivalents | 12 | 62 |
| Cash and cash equivalents at the | ||
| beginning of the year | 384 | 332 |
| Cash flow for the year | 12 | 62 |
| Exchange-rate differences in cash and | ||
| cash equivalents | –40 | –10 |
| Cash and cash equivalents | ||
| at year-end | 356 | 384 |
The cash flow from operating activities amounted to SEK 963 million (1,061). Working capital increased cash flow by SEK 132 million (473) and is primarily attributable to inventories and decreased current receivables. Adjustments for non-cash items amounted to SEK 332 million (32) as specified in the table below.
| SEK m | 2010 | 2009 |
|---|---|---|
| Capital gains on fixed assets | –1 | –7 |
| Capital gains attributable to divestments | ||
| of companies | 36 | – |
| Provisions | 289 | 113 |
| Gains on changes to pension conditions | – | –42 |
| Other | 8 | –32 |
| Total | 332 | 32 |
Investments in fixed assets amounted to SEK 347 million (346). Other items in investing activities, excluding acquisitions and divestments of companies, had a negative impact on the cash flow.
Operating cash flow, that is, the cash flow after investments, but excluding the acquisitions and divestment of companies, interest and increases/ decreases in interest-bearing assets, amounted to SEK 641 million (803).
| SEK m | Note | 2010 | 2009 |
|---|---|---|---|
| Net sales | 46 | 53 | |
| Administrative expenses | 4, 5, 10, 25 | –108 | –74 |
| Other operating expenses | 7, 8 | –33 | – |
| Operating loss | –95 | –21 | |
| Profit from shares in | |||
| Group companies | 11 | 100 | 22 |
| Financial income | 11 | 29 | 18 |
| Financial expenses | 11 | –32 | –17 |
| Profit after financial items | 2 | 2 | |
| Tax on net profit for the year | 12 | 1 | 4 |
| Net profit for the year | 3 | 6 | |
| SEK m | Note | 2010 | 2009 |
|---|---|---|---|
| Net profit for the year | 3 | 6 | |
| Other comprehensive income | |||
| Other comprehensive income for year |
– | – | |
| Comprehensive income for | |||
| year | 3 | 6 |
| SEK m | Note | 2010 | 2009 |
|---|---|---|---|
| Operating activities | |||
| Operating loss | –95 | –21 | |
| Adjustments for non-cash items | 33 | – | |
| Dividend received | 11 | 100 | 22 |
| Interest received | 11 | 29 | 18 |
| Interest paid | 11 | –32 | –17 |
| Tax paid | 0 | –15 | |
| Cash flow from operating | |||
| activities before changes in working capital |
35 | –13 | |
| Change in liabilities | 219 | 384 | |
| Change in receivables | –1,096 | –290 | |
| Cash flow from operating | |||
| activities | –842 | 81 | |
| Investing activities | |||
| Other long-term receivables | –1 | 1 | |
| Provision for pensions | 3 | 2 | |
| Divestment of associated companies | 36 | – | |
| Cash flow from investing activities | 38 | 3 | |
| Financing activities | |||
| Group contributions | 3 | 16 | |
| Borrowings | 800 | – | |
| Cash flow from financing activities | 803 | 16 | |
| Cash flow for the year | –1 | 100 | |
| Cash and cash equivalents | |||
| at beginning of the year | 170 | 70 | |
| Cash flow for the year | –1 | 100 | |
| Cash and cash equivalents at year-end | 169 | 170 | |
| SEK m | Note | 31 Dec 2010 |
31 Dec 2009 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Financial fixed assets | |||
| Shares and participations in Group companies |
15,17 | 1,245 | 1,379 |
| Other securities held as fixed assets | 4 | 2 | |
| Associated companies | 16 | – | 57 |
| Total fixed assets | 1,249 | 1,438 | |
| Current assets Current receivables |
|||
| Accounts receivable | 2 | 3 | |
| Receivables from Group companies | 3,680 | 2,097 | |
| Receivables from associated companies |
– | 332 | |
| Other receivables | 6 | 3 | |
| Prepaid expenses and accrued income |
19 | 6 | 26 |
| Cash and cash equivalents | 20 | 169 | 170 |
| Total current assets | 3,863 | 2,631 | |
| Total assets | 5,112 | 4,069 |
| Shareholders' equity | |||
|---|---|---|---|
| Restricted shareholders' equity | |||
| Share capital1) | 21 | 58 | 58 |
| Statutory reserve | 1,671 | 1,671 | |
| 1,729 | 1,729 | ||
| Non-restricted shareholders' equity | |||
| Share premium reserve | 52 | 52 | |
| Buy-back of shares | –468 | –468 | |
| Profit brought forward | 2,179 | 2,155 | |
| Net profit for the year | 3 | 6 | |
| 1,766 | 1,745 | ||
| Total shareholders' equity | 3,495 | 3,474 | |
| Provisions for pensions | 25 | 10 | 7 |
| Non-current liabilities | |||
| Liabilities to credit institutions | 28 | 800 | – |
| Current liabilities | |||
| Liabilities to credit institutions | 20 | 41 | |
| Accounts payable | 11 | 5 | |
| Liabilities to Group companies | 759 | 521 | |
| Other liabilities | 1 | 4 | |
| Accrued expenses and deferred | |||
| income | 29 | 16 | 17 |
| Total current liabilities | 807 | 588 | |
| Total shareholders' equity, | |||
| provisions and liabilities | 5,112 | 4,069 | |
| Pledged assets | 31 | 4 | 2 |
| Contingent liabilities | 32 | 678 | 2,698 |
1) The number of outstanding shares was 167,131,158 (167,131,158).
| SEK m | Note | Share capital | Statutory reserve1) |
Share premium reserve |
Buy-back of shares |
Profit brought forward |
Total share holders' equity |
|---|---|---|---|---|---|---|---|
| Opening balance, 1 January 2009 | 58 | 1,671 | 52 | –468 | 2,156 | 3,469 | |
| Net profit for the year | – | – | – | – | 6 | 6 | |
| Comprehensive income for the year |
– | – | – | – | 6 | 6 | |
| Group contribution received | – | – | – | – | 16 | 16 | |
| Tax effect of Group contributions | – | – | – | – | –5 | –5 | |
| Exchange-rate differences on expanded investments in associated companies |
– | – | – | – | –12 | –12 | |
| Shareholders' equity, 31 December 2009 |
58 | 1,671 | 52 | –468 | 2,161 | 3,474 | |
| Opening balance, 1 January 2010 | 58 | 1,671 | 52 | –468 | 2,161 | 3,474 | |
| Net profit for the year | – | – | – | – | 3 | 3 | |
| Comprehensive income for the year |
– | – | – | – | 3 | 3 | |
| Group contribution received | – | – | – | – | 13 | 13 | |
| Tax effect of Group contributions | – | – | – | – | –3 | –3 | |
| Group contribution paid | – | – | – | – | –10 | –10 | |
| Tax effect of Group contributions | – | – | – | – | 3 | 3 | |
| Employee share option scheme | |||||||
| – Allocation of employee share option scheme |
– | – | – | – | 3 | 3 | |
| Reinvestments in associated companies | – | – | – | – | 12 | 12 | |
| Shareholders' equity, 31 December 2010 |
58 | 1,671 | 52 | –468 | 2,182 | 3,495 |
1) Of the Parent Company's statutory reserve, SEK 1,390 million (1,390) comprises contributed shareholders' equity.
Nobia's consolidated financial statements are prepared in accordance with International Financial Reporting Standards, IFRS, as approved by the International Accounting Standards Board (IASB) as adopted by the European Union (EU). The Swedish Financial Reporting Board's recommendation RFR 1 Supplementary Accounting Rules for Groups was also applied.
The Parent Company applies the same accounting policies as the Group except in the cases described below under the section entitled "Parent Company accounting policies". The Annual Report and the consolidated financial statements were approved for issue by the Board of Directors and President on 9 March 2011.
Assets and liabilities are recognised at historic acquisition value (cost), except for certain financial assets and liabilities. Financial assets and liabilities measured at fair value comprise derivative instruments.
Receivables and liabilities and income and expenses are offset only if required or expressly permitted in an accounting recommendation.
The Parent Company's functional currency is Swedish kronor (SEK), which is also the presentation currency for the Parent Company and Group. Accordingly, the financial statements are presented in SEK. All amounts are stated in SEK million (SEK m), unless otherwise stated.
Preparing the financial statements in accordance with IFRS requires that company management make assessments, estimates and assumptions that affect the application of accounting policies and the recognised amounts of assets, liabilities, income and expenses. The actual outcome may differ from these estimates and assessments. Estimates and assumptions are regularly reviewed. Changes to estimates are recognised in the period in which the change is made if the change affects only that period, or in the period in which the change is made and future periods if the change affects both current periods and future periods. Assessments made by company management in the application of IFRS that have a significant impact on the financial statements and estimates made that may lead to significant adjustments in the financial statements of future fiscal years are primarily the following:
The Group regularly performs impairment tests of goodwill in accordance with the accounting policies described under "Intangible assets" on page 48. The assumptions and assessments made pertaining to expected cash flows and the discount rate in the form of weighted average cost of capital are described under "Comments on and analysis of the balance sheet." Forecasts of future cash flows are based on the approved budget and assumptions on the rate of growth and investment requirements.
Since the Group is liable to pay taxes in many different countries, assessments are made to determine the Group-wide provisions for income tax in each country. Liabilities for expected tax-audit issues are recognised based on assessments of whether an additional tax obligation will arise. The probability of whether tax receivables can be realised through future taxable income is assessed. Refer also to the accounting policies described under "Taxes" on page 48 and in Note 26 on page 66. There are currently no indications that the risk of such material adjustments to carrying amounts is significant in 2011.
The significant accounting principles stated below, with the exceptions stated, are applied consistently to all of the periods presented in the consolidated financial statements. Furthermore, the Group's accounting principles were consistently applied by the Group companies regarding associated companies, where necessary, by making adjustments to the Group's policies.
Fixed assets and long-term liabilities essentially comprise amounts that are expected to be recovered or paid after more than 12 months calculated from the closing date. Current assets and current liabilities comprise amounts that are expected to be recovered or paid within 12 months calculated from the closing date.
The changed accounting policies applied by the Group from 1 January 2010 are described below. Other amendments to IFRS applicable from 2010 did not have any material effect on the Group's financial statements.
The Group applies the revised IFRS 3 Business Combination and the amended IAS 27 Consolidated and Separate Financial Statements. The changes resulting from these amended accounting policies include the following: definitions of operations are changed, transaction costs attributable to business combinations are to be expensed, contingent considerations are to be determined at
fair value on the acquisition date and the effects of remeasuring liabilities related to contingent considerations are to be recognised as income or an expense in net profit for the year. Another new feature is that the introduction of two alternative methods for recognising non-controlling interests and goodwill, either at fair value, meaning that goodwill is included in the noncontrolling interest, or the non-controlling interest comprising a portion of net assets. The selection of these two methods will be made individually on an acquisition by acquisition basis. Furthermore, additional transactions occurring after a controlling influence has been obtained are considered to be a transaction with owners and should be recognised in shareholders' equity, which is a change to Nobia's currency policy which entails recognising the surplus amount as goodwill.
The relevant sections of the changes will be applied prospectively from the date of application, and since Nobia did not carry out any acquisitions during the year, the aforementioned amended policies have not, to date, impacted Nobia's reporting.
The requirements regarding the presentation of the statement of changes in shareholders' equity stipulated in IAS 1 Presentation of Financial Statements were changed in the IASB's annual improvements process published in May 2010. The company has opted to apply these changes in advance from the 2010 Annual Report. Under the changes, the reconciliation in the statement of changes in shareholders' equity regarding changes for the year for each equity component, for example, reserves for accumulated other comprehensive income, do not need to specify each individual item in other comprehensive income. As permitted by the changes, the company has decided to provide disclosures with such a detailed reconciliation of reserves and other equity components in a note rather than in the statement of changes in shareholders' equity. Such a detailed reconciliation was also presented in a note in the 2009 Annual Report, but appears to be required in the statement of changes in shareholders' equity in accordance with the version of IAS 1 that was to apply from 2010 without any such early application. However, in accordance with the wording of the amended IAS 1, the former row for comprehensive income for the year in the statement of changes in shareholders' equity has been divided into two rows, with net profit for the year and other comprehensive income for the year stated separately. The changed presentation is applied to the current year and comparative year. The changes did not led to any adjustments of amounts in the financial statements.
When the consolidated financial statements were prepared on 31 December 2010, a number of standards and interpretations had been published that had not yet come into effect. Nobia did not apply any standards or interpretations in advance in 2010. The amended standards that may affect Nobia's accounting policies when introduced are as follows.
The new IFRS 9 Financial Instruments will replace IAS 39 Financial Instruments: Recognition and Measurement by 2013. The IASB has published the first of at least three parts that will jointly form IFRS 9. The first part addresses the classification and measurement of financial assets. The categories of financial assets found in IAS 39 will be replaced by two categories: measurement at fair value or amortised cost. Amortised cost is utilised for instruments held to collect the any contractual cash flows, which comprise payments of principal and interest on the principal on the specified date. Other financial assets are recognised at fair value and the fair value option provided under IAS 39 is retained. Changes in fair value are to be recognised in earnings except for changes in the value of equity instruments that are not held for trading and for which on initial recognition changes in value are recognised in other comprehensive income. Changes in value of derivatives in hedge accounting are not affected by this part of IFRS 9, but are recognised until future notice in accordance with IAS 39. Due to the fact that Nobia's financial assets comprise accounts and loans receivable, derivatives in cashflow hedges and cash and cash equivalents, the changes introduced in this part of IFRS 9 are not expected to have any or only insignificant effects on the financial statements. Nobia has not made any decision on whether the new policies are to be applied in advance or from 2013.
Other new and changed accounting policies with future application are, preliminarily, not deemed to have an effect on accounting or lead to additional disclosure requirement.
Fixed assets and long-term liabilities essentially comprise amounts that are expected to be recovered or paid more than 12 months after the closing
date. Current assets and current liabilities essentially comprise amounts that are expected to be recovered or paid within the 12 months after the closing date.
Subsidiaries are companies subject to the controlling influence of the Parent Company. A controlling influence entails the direct or indirect right to shape a company's financial or operational strategies in a bid to receive financial benefits. An assessment of whether a controlling influence exists takes into account potential voting shares that can be immediately utilised or converted.
Subsidiaries are recognised in accordance with the purchase method of accounting. According to this method, an acquisition of a subsidiary is considered a transaction through which the Group indirectly acquires the subsidiary's assets and assumes its liabilities. The acquisition analysis determines the fair value on the acquisition date of the acquired, identifiable assets and assumed liabilities and any non-controlling interest. Transaction costs, except for transaction costs attributable to issues of equity instruments or debt instruments, that arise are recognised directly in net profit for the year.
For business combinations whereby the consideration transferred, any non-controlling interests and the fair value of previously owned participations (step acquisitions) exceed the fair value of the acquired assets and assumed liabilities recognised separately, the difference is recognised as goodwill. When the difference is negative, known as a bargain purchase, it is recognised directly in net profit for the year.
Consideration transferred in conjunction with the acquisition does not include payments for the settlement of previous business connections. Such settlement is recognised in profit and loss.
Contingent consideration is recognised at fair value on the acquisition date. If the contingent consideration is classified as an equity instrument, no remeasurement is performed and settlement takes place in equity. Other contingent considerations are remeasured on each reporting occasion and the change is recognised in net profit for the year.
A non-controlling interest arises if the acquisition does not pertain to 100 per cent ownership of the subsidiary. There are two options for recognising non-controlling interests. The non-controlling interest's proportionate share of net assets can be recognised or the non-controlling interest can be recognised at fair value, meaning that the non-controlling interest has a share of goodwill. The choice between the two options of recognising non-controlling interests may be made on an acquisition by acquisition basis.
For step acquisitions, goodwill is determined on the date on which the controlling influence arose. Previous holdings are measured at fair value and the change in value is recognised in net profit for the year.
Divestments leading to the loss of a controlling influence but where a holding remains, this holding is measured at fair value and the change in value is recognised in net profit for the year.
Acquisitions made between 1 January 2004 and 31 December 2009 where the cost exceeds the fair value of the acquired assets and assumed liabilities and contingent liabilities recognised separately, the difference is recognised as goodwill. When the difference is negative, it is recognised directly in net profit for the year.
Transaction costs, except for transaction costs attributable to issues of equity instruments or debt instruments, that arise are included in the cost.
For acquisitions that took place prior to 1 January 2004, goodwill, after an impairment test, is recognised at cost which corresponds to the carrying amount according to previously applied accounting policies. The classification and accounting treatment of business combinations that took place prior to 1 January 2004 were not reassessed in accordance with IFRS 3 when the consolidated IFRS opening balance sheet was prepared on 1 January 2004.
The subsidiaries' financial statements are included in the consolidated financial statements from the date of acquisition until the date on which the controlling influence ceased.
If the subsidiary's accounting policies are not the same as the Group's policies, adjustments were made to the Group's accounting policies.
Losses attributable to non-controlling interests are allocated to the noncontrolling interest except that the non-controlling interest is recognised as a debit item under shareholders' equity.
Acquisitions from non-controlling interests are recognised as a transaction in shareholders' equity, meaning between the Parent Company's owners (within profit brought forward) and the non-controlling interest. Accordingly, no goodwill arises in these transactions. Changes in non-controlling interest are based on their proportionate share of net assets.
Sales to non-controlling interests, whereby the controlling influence remains, are recognised as a transaction in shareholders' equity, meaning between the Parent Company's owners and the non-controlling interest. The difference between the proceeds received and the non-controlling interest's proportionate share of net assets is recognised under "Profit brought forward."
The financial statements of subsidiaries are prepared in the local currency, that is the functional currency used in the country in which the company conducts operations. Swedish kronor, SEK, is utilised in the consolidated financial statements, which is the Parent Company's functional currency and also the Group's reporting currency. This means that the earnings and financial position of all Group companies that have a functional currency that is different to the reporting currency are translated to the Group's reporting currency of SEK. Foreign subsidiaries' assets and liabilities are translated at the closing-date rate and all income-statement items are translated at the average exchange rate for the year. Translation differences are recognised in other comprehensive income and in a separate reserve in consolidated shareholders' equity.
| Closing-date rate | Average | ||||
|---|---|---|---|---|---|
| Significant exchange rates |
31 Dec 2010 |
31 Dec 2009 |
2010 | 2009 | |
| DKK | 1.21 | 1.39 | 1.28 | 1.43 | |
| EUR | 9.00 | 10.35 | 9.54 | 10.62 | |
| GBP | 10.55 | 11.49 | 11.13 | 11.93 | |
| NOK | 1.15 | 1.24 | 1.19 | 1.22 | |
| USD | 6.80 | 7.21 | 7.20 | 7.65 |
Associated companies are those companies in which the Group exercises a significant but not controlling influence over operational and financial control, usually entailing a holding of between 20 and 50 per cent of the voting rights. Investments in associated companies are recognised in the Group's accounts in accordance with the equity method. The equity method means that participations in an associated company are recognised at cost on the acquisition date and are subsequently adjusted by the Group's share of the change in the associated company's net assets as well as depreciation and impairment losses on Group goodwill, and surplus and deficit values. Participations in associated companies are recognised in accordance with the equity method from the date on which the significant influence is acquired.
The accumulated profits of associated companies that are not paid as dividends are recognised under "Profit brought forward" in the consolidated balance sheet. The Group's profit brought forward is reduced by the accumulated portion of losses in associated companies. Unrealised inter-Group profit is eliminated by the portion accruing to the Group.
Shares in profit of associated companies are recognised on separate lines in the consolidated income statement and consolidated balance sheet. Shares in profit of associated companies are recognised in operating profit in the consolidated income statement since the holdings are operations-based. Shares in profit of associated companies are recognised after tax.
When the Group's share of recognised losses in associated companies exceeds the carrying amount of the shares in the consolidated accounts, the value of the participation is reduced to zero. Recognition of losses is also affected against long-term financial transactions without collateral, whose financial implication constitutes a part of the owning company's net investment in the associated company. Continued losses are not recognised unless the Group has provided guarantees to cover losses arising in the associated company. The equity method is applied up to the date the significant influence ceases.
In terms of accounting, joint ventures are defined as companies for which the Group, through co-operative agreements with one or more parties, has a joint controlling influence over operational and financial control. Participations in joint ventures are consolidated in accordance with the equity method; see Recognition of associated companies.
An operating segment is a part of the Group that conducts business activities from which it can generate income and incur expenses and for which independent financial information is available. Furthermore, the results of an operating segment are monitored by the company's chief operating decisionmaker to evaluate them and to allocate resources to the operating segment. Nobia's operating segments are the Group's three regions: the UK, Nordic and Continental Europe regions. The division of the units by region is based on the geographic domicile of the units. Refer to Note 3 on page 53 for a more detailed description of this divisions and a presentation of the operating segments.
The company recognises revenue when the risk and benefit associated with the goods has been transferred to the customer in accordance with the terms of delivery. In cases where installation services are provided, revenue is recognised when the service has been completed. Sales are recognised net after VAT, discounts and exchange-rate differences for sales in foreign currency and returns. Inter-Group sales are eliminated in the consolidated financial statements.
Government subsidies are recognised in the balance sheet as deferred income when there is reasonable assurance that the subsidy will be received and the Group will fulfil the conditions associated with the subsidy. Subsidies are allocated systematically in the income statement in the same manner and over the same periods as the costs for which the subsidies are intended to cover.
Financial income and expenses comprise interest income on bank balances and receivables, dividend income, interest expense on loans and pension liabilities, as well as exchange-rate differences on financial items.
Interest income on receivables and interest expense on liabilities are calculated in accordance with the effective interest rate method. The effective interest rate is the interest rate that results in the present value of all future receipts and disbursements during the interest-rate maturity period becoming equal to the carrying amount of the receivable or liability. The calculation includes all fees paid or received by contractual parties that are part of the effective interest rate, meaning transaction costs and surplus and deficit values.
Tax expenses for the year comprise current tax and deferred tax. Income taxes are recognised in net profit for the year except when the underlying transaction is recognised in other comprehensive income or in shareholders' equity, whereby the associated tax effects are recognised in other comprehensive income or in shareholders' equity.
Current tax is tax that is to be paid or received regarding the current year, by applying the tax rates determined or that have been determined in principle on the closing date. This item also includes adjustments to current tax attributable to previous periods.
Deferred tax is calculated according to the balance-sheet method on all temporary differences arising between recognised and fiscal values of assets and liabilities.
The tax effect attributable to tax loss carryforwards that could be utilised against future profits is capitalised as a deferred tax asset. This applies to both accumulated loss carryforwards at the date of acquisition and losses arising thereafter.
Valuations take place at the tax rate applying on the closing date. Deferred tax is recognised in the balance sheet as a fixed asset or long-term liability. The income tax liability is recognised as a current receivable or liability.
If the actual outcome differs from the amounts first recognised, the differences will affect current tax and deferred tax in the period in which these calculations are made.
Tangible fixed assets are recognised at cost with deductions for depreciation and possible impairments. Cost includes expenses that can be directly attributed to the acquisition. Expenses for improvements to the asset's performance, exceeding the original level, increase the asset's carrying amount. The borrowing costs of the cost of any assets established from 1 January 2009 that comprise qualifying assets are expensed. Expenses for repairs, maintenance and any interest expenses are recognised as costs in profit and loss in the period in which they arise.
In the event that an asset's carrying amount exceeds its estimated recoverable amount, the asset is written down to its recoverable amount, which is charged to operating profit.
In the income statement, operating profit is charged with straight-line depreciation, which is calculated on the original cost and is based on the estimated useful lives of the assets as follows:
| Kitchen displays | 2–4 years |
|---|---|
| Office equipment and vehicles | 3–5 years |
| Buildings | 15–40 years |
| Plant and machinery | 6–12 years |
| Equipment, tools, fixtures and fittings | 6–12 years |
Land is not depreciated.
Discontinued operations comprise important operations that have been divested or comprise a divestment group held for sale as well as subsidiaries that are acquired for the purpose of subsequently being sold. Profit after tax from discontinued operations is recognised on a separate line in profit and loss.
The significance of a group of assets and liabilities being classified as held for sale is that the carrying amounts are recovered primarily by being sold and not by being used. All assets included in the group are presented on a separate line among assets and all of the group's liabilities are presented on a separate line among liabilities. The group is valued at the lower of the carrying amount and fair value, less selling expenses. Changes in value are recognised in profit.
Goodwill comprises the amount by which the cost of the acquired operation exceeds the established fair value of identifiable net assets, as recognised in the acquisition analysis. In connection with the acquisition of operations, goodwill is allocated to cash-generating units. Nobia has eight cash-generating units. Since goodwill has an indeterminable useful life, it is not amortised annually. Instead, goodwill is subject to impairment testing either annually or when an indication of an impairment requirement arises. The carrying amount comprises the cost less any accumulated impairment losses. A description of the method and assumptions applied when conducting impairment tests is found under "Goodwill" in "Comments on and analysis of the balance sheet" on page 41.
Other intangible assets are recognised at cost less accumulated amortisation and possible impairments. It also includes capitalised expenses for purchases and internal and external expenses for the development of software for the Group's IT operations, patents and licences. Amortisation takes place according to the straight-line method based on the estimated useful life of the asset (three to six years).
Costs for product development are expensed immediately as and when they arise.
Product development within the Group is mainly in the form of design development and is conducted continuously to adapt to current style trends. This development is relatively fast, which is the reason that no portion of the costs for product development is recognised as an intangible asset. The Group does not carry out research and development in the true sense of such work, or to any significant extent.
Leasing agreements concerning fixed assets in which the Group essentially carries the same risks and enjoys the same benefits that direct ownership would entail are classified as financial leasing. Financial leasing is recognised at the start of the leasing period at the lower of the leasing object's fair value and the present value of minimum leasing fees. Financial leasing agreements are recognised in the balance sheet as fixed assets and financial liabilities, respectively. Future leasing payments are divided between repayment of the liabilities and financial expenses whereby each accounting period is charged with an amount of interest corresponding to a fixed-interest rate on the liability recognised during the respective period. Leasing assets are amortised according to the same principles that apply to other assets of the same type. Costs for leasing contracts are divided between amortisation and interest in the income statement.
Leasing of assets, where the lessor essentially remains the owner of the asset, is classified as operational leasing. Leasing fees are recognised on a straight-line basis during the leasing period. Operational leasing agreements are recognised in profit and loss as an operating expense. Leasing of cars and computers is normally treated as operational leasing. The value of these leasing agreements is not considered to be significant.
Inventories comprise finished and semi-manufactured products and raw materials. Inventories are valued according to the first-in, first-out (FIFO) principle, at the lower of the cost and net sales value on the closing date. The net sales value comprises the estimated sales value in the ongoing operations less selling expenses. Finished and semi-manufactured products are valued at manufacturing cost including raw materials, direct labour, other direct expenses and production-related overheads based on normal production. Borrowing costs are not included in inventory valuations.
Deductions are made for inter-Group profits arising in conjunction with deliveries between companies in the Group.
Receivables are recognised at the amounts that are expected to be received after individual assessment.
Financial instruments recognised in the balance sheet include cash and cash equivalents, loans receivable, accounts receivable and derivative instruments on the asset side. On the liability side, there are accounts payable, loan liabilities and derivative instruments.
A financial asset or a financial liability is entered in the balance sheet when the company becomes a party in accordance with the contractual terms of the instrument. Accounts receivable are recognised in the balance sheet when an invoice has been sent. A liability is recognised when the counterparty has performed a service and a contractual payment obligation arises, even if an invoice has not been received. Accounts payable are recognised when an invoice has been received.
A financial asset is derecognised from the balance sheet when the rights resulting from the agreement have been realised, expire or the company loses control over them. The same applies to a part of a financial asset. A financial liability is derecognised from the balance sheet when the obligation resulting from the agreement has been realised or is extinguished in some other manner. The same applies to a part of a financial liability.
A financial asset and a financial liability may only be offset against each other and recognised net in the balance sheet if there is a legal right to offset the amounts and the intention is to settle the items in a net amount or to simultaneously sell the asset and settle the debt.
The acquisition or divestment of financial assets is recognised on the date of transaction for on-demand transactions, which is the date when the company undertakes to acquire or sell the asset.
Financial instruments that are not derivative instruments are initially recognised at cost corresponding to the instrument's fair value plus transaction costs. On initial recognition, a financial instrument is classified on the basis of the purpose underlying the acquisition of the instrument. This classification determines how the financial instrument is measured after initial recognition, in the manner described below. For the recognition of derivative instruments, refer to Cash-flow hedges below.
Receivables and liabilities in foreign currencies are valued at the closing-date rate. Exchange-rate fluctuations pertaining to operating receivables and liabilities are recognised in operating profit, while exchange-rate fluctuations pertaining to financial receivables and liabilities are recognised in net financial items.
Long-term loans receivable recognised as fixed assets and accounts receivable recognised as current assets comprise financial assets that are not derivatives, which has determined or determinable payments and are not listed on an active market. These assets are valued at amortised cost. Amortised cost is determined based on the effective rate calculated on the acquisition date. Loan and accounts receivable are recognised at the amounts that are expected to be received, meaning less any provisions for decreases in value.
Cash and cash equivalents are defined as cash and bank balances and shortterm investments with maturities not exceeding three months from the acquisition date.
All transactions pertaining to financial liabilities are recognised on the settlement date. Liabilities are valued at amortised cost.
The currency forward contracts and currency options used for hedging highly probable forecasted sales and material purchases in foreign currency are recognised in the balance sheet at fair value. Changes in their value are recognised in other comprehensive income and the accumulated changes in value in a separate component of shareholders' equity (the hedging reserve) until the hedged flow impacts net profit for the year, whereby the accumulated changes in value of the hedging instrument are reclassified to net profit for the year.
The carrying amounts of the Group's assets are tested annually for indications of any impairment requirement. IAS 36 is applied for the impairment testing
of assets other than financial assets, which are tested according to IAS 39, assets held for resale and disposal groups that are recognised according to IFRS 5, inventories, plan assets used for the financing of employee benefits and deferred tax assets. For the exempted assets mentioned above, the carrying amount is tested in accordance with the relevant standard.
If there is an indication of an impairment requirement, the recoverable value of the asset is tested in accordance with IAS 36 (see below). For goodwill, other intangible assets with an indefinite useful life and intangible assets that are not yet ready for use, the recoverable value is calculated annually. When testing for impairment requirements, if it is not possible to establish essentially independent cash flows for an individual asset, the assets must be grouped at the lowest level at which it is possible to identify essentially independent cash flows, known as cash-generating units.
Impairment losses are recognised when the carrying amount of an asset or a cash-generating unit (group of units) exceeds the recoverable value. Impairment losses are charged against the income statement. Impairment losses related to assets attributable to a cash-generating unit are primarily allocated to goodwill. Subsequently, a pro-portional impairment of other assets included in the unit (group of units) is effected.
The recoverable value is the higher of fair value less selling expenses and value in use. When calculating the value in use, future cash flows are discounted using a discounting factor that takes into account the risk-free interest rate and the risk associated with the specific asset.
At every reporting occasion, the company evaluates whether there is any objective evidence to suggest that a financial asset or group of assets is subject to an impairment requirement. Objective evidence comprises observable conditions that have occurred and that have had a negative impact on the ability to recover the cost. For accounts receivable, objective evidence comprises, for example, payment difficulties among customers or imminent corporate reconstructions. Accounts receivable that require impairment are recognised at the present value of expected future cash flows, Receivables with short maturities are not discounted.
An impairment loss on assets that come under the scope of IAS 36 is reversed if there is an indication that the impairment requirement is no longer pertinent and that there has been a change in the assumptions upon which the calculation of the recoverable value was based. However, an impairment loss on goodwill is never reversed. A reversal is only performed to the extent that the carrying amount of the asset after the reversal does not exceed the carrying amount that would have been recognised, less depreciation wherever applicable, if no impairment had been posted.
An impairment loss on loans receivable and accounts receivable recognised at amortised cost is reversed if the previous reasons for the impairment loss no longer exist and full payment can be expected to be received from the customer.
Provisions are recognised in the balance sheet among current and long-term liabilities, when the Group has a legal or informal obligation deriving from an occurred event and that it is probable that an outflow of resources will be required to settle the obligation and the amount concerned can be reliably estimated. A provision differs from other liabilities since the date of payment or the amount required to settle the provision is uncertain.
A provision for restructuring is recognised once a detailed and formal restructuring plan has been adopted and the restructuring process has either commenced or been publically announced. No provisions are established for future operating expenses.
A provision for guarantees is recognised when the underlying products or services are sold. The provision is based on historical data and a total appraisal of the potential outcomes in relation to the probabilities associated with the outcomes.
A contingent liability is recognised when the company has a possible obligation deriving from an occurred event whose existence will be confirmed only by one or more uncertain future events, or when there is an obligation that has not been recognised as a liability or provision because it is not probable that an outflow of resources will be required, or alternatively because it is not possible to sufficiently reliably estimate the amount concerned.
When shares are repurchased, shareholders' equity is reduced by the entire amount paid. Dividends are recognised as a liability after the Annual General Meeting has approved the dividend.
The calculation of earnings per share is based on consolidated net profit attributable to the Parent Company's shareholders and on the weighted average number of shares outstanding during the year. When calculating earnings per share after dilution, the average number of shares outstanding is adjusted to take into account the dilutive effects of potential common shares, which during the recognised periods pertain to options issued to employees. The options are dilutive if the profit targets of the share option scheme have been fulfilled on the reporting date and if the exercise price is lower than the share price. Dilution is greater, the greater the difference between the exercise price and the share price. The exercise price is adjusted by a supplement to the value of future services related to the equity-settled employee share option scheme recognised as share-based payment in accordance with IFRS 2.
Within the Group, there are a number of both defined-contribution and defined-benefit pension plans. In Sweden, Norway, the UK and in some Group companies in Germany, employees are covered by defined-benefit pension plans. In other countries and companies, employees are covered by defined-contribution pension plans. Effective 2010, all new vesting in the UK comes under defined-contribution pension plans.
Plans for which the company's obligations are limited to the fees the company has undertaken to pay are classified as defined-contribution pension plans. The company's obligations for defined-contribution pension plans are recognised as a cost in earnings at the rate at which they are vested by the employees performing services on behalf of the company for a period of time.
The Group's defined-benefit pension plans state the amount of pension benefit that an employee, or a former employee, will receive after retirement based upon their salary and the number of years of service. Pension obligations for defined-benefit plans are recognised according to common principles and calculation methods and are calculated by considering future salary increases and inflation, among other factors. The Group carries the risk that the promised benefit will be paid.
There are both funded and unfunded defined-benefit plans within the Group. Funded pension plans are mainly financed on the basis of contributions paid to pension funds.
Regarding defined-benefit plans, the pension commitment is calculated in accordance with the Projected Unit Credit method. This method allocates the cost of pensions at the rate at which the employees perform services for the company that increase their entitlement to future remuneration. This calculation is performed annually by independent actuaries. The company's obligations are valued at the present value of expected future cash flows using a discount rate. This discount rate corresponds to the interest on high-quality corporate bonds, where a market with sufficient depth exists, or government bonds if no such market exists. The rate in Sweden and Norway is determined based on government bonds, while in the UK and Germany, the rate is based on corporate bonds.
Actuarial gains and losses may arise when the present value of commitments and the fair value of plan assets are established. Such gains and losses arise either because the fair value differs from the previous assumption or because the assumption has changed. The portion of accumulated actuarial gains and losses at the end of the preceding year exceeding a corridor of plus or minus 10 per cent of the largest of the present value of the commitments or the fair value of the plan assets is recognised in profit and loss over the employees' estimated average remaining period of service.
For funded plans, the Group recognises pension obligations in the consolidated balance sheet as a liability comprising the net of the estimated present value of the commitments and the fair value of plan assets. Funded plans with net assets, that is, plans with assets exceeding the pension commitment, are recognised as financial fixed assets.
The net amount of interest on pension liabilities and the expected return on accompanying plan assets is recognised as part of net financial items. For defined-contribution plans, the company pays fixed contributions to an external legal entity.
When the pension cost established in the legal entity differs from that in the Group, a provision or a receivable is recognised pertaining to the special payroll tax based on this difference. Such a provision or receivable is not present-valued.
The Group operates schemes for remuneration in connection with anniversaries and to employees with long service. Actuarial gains and losses may arise when the present value of commitments and the fair value of plan assets are
established. Unlike the reporting of benefit-defined pension plans, actuarial gains and losses are recognised immediately and no corridor is applied.
The discount rate is established on the basis of high-quality corporate bonds or government bonds issued in the same currency as the remuneration that is to be paid and with maturities equivalent to the commitments in question.
The Group has an employee share option scheme. The fair value of allotted employee share options is recognised as a personnel cost at a corresponding amount recognised directly in shareholders' equity. The fair value is calculated on the date of allotment and allocated over the vesting period. The recognised cost corresponds to the fair value of an estimate of the number of options expected to be earned. This cost is adjusted in subsequent periods to reflect the actual number of options earned. An adjustment is made only when default is due to conditions stipulating a certain level of profit growth or continued employment, and not when default is due solely to the share price being lower than the exercise price. In countries where employee share options may give rise to costs in the form of social security contributions, a cost is recognised allocated over the vesting period. The provision for social security contributions is based on the fair value of the operations on each reporting occasion and, ultimately, when the options are exercised or expire without being exercised.
Short-term remuneration to employees is calculated without discounting and is recognised as a cost when the related services are obtained. A provision is posted for the anticipated cost of profit shares and bonus payments when the Group has a current legal or informal obligation to make such payments, due to the services being obtained from the employees and it being possible to reliably estimate the obligation.
A cost for payments arising in connection with the laying-off of employees is recognised only if the company is legally obliged to terminate employment in advance of the normal date. When such payment is made as an offering to encourage voluntary retirement, it is recognised as a cost if it is probable that the offer will be accepted and the number of employees who will accept the offering can be reliably estimated.
The Parent Company has prepared its Annual Report in accordance with the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities. The Financial Reporting Board's statements for listed companies were also applied. RFR 2 entails that the Parent Company applies all IFRSs adopted by the EU and statements to the annual report of the legal entity as far as possible under the framework of the Annual Accounts Act and the Swedish Pension Obligations Vesting Act and with respect to the connection between accounting and taxation. The Recommendation states the exceptions and additions to IFRS that are to be made. Overall, the Recommendation entails differences between the Group's and the Parent Company's accounting policies in the areas stated below. The accounting policies for the Parent Company described below were applied consistently to all periods presented in the Parent Company's financial statements.
Unless otherwise stated below, the Parent Company's accounting policies for 2010 were changed in accordance with the aforementioned changes for the Group. The changed accounting policies pertaining to transaction costs and contingent consideration under revised IFRS 3 Business Combination and amended IAS 27 Consolidated and Separate Financial Statements as applied in the Group do not give rise to the same changes in the Parent Company's accounting policies, refer below under "Subsidiaries, associated companies and joint ventures."
An income statement and statement of comprehensive income are presented for the Parent Company whereas these two statements for the Group jointly comprise a statement of comprehensive income. The Parent Company's income statement and balance sheet are presented following the format stipulated in the Annual Accounts Act, while the statement of comprehensive income, the statement of changes in shareholders' equity and cash-flow statement are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. The differences in the Parent Company's income statement and the balance sheet compared with the presentation of the consolidated financial statements primarily pertain to the recognition of financial income and expenses, fixed assets, shareholders' equity and the existence of provisions as a separate heading in the balance sheet.
Participations in subsidiaries, associated companies and joint ventures are recognised in the Parent Company in accordance with the cost method. This means that transaction costs are included in the carrying amount of the holdings in subsidiaries, associated companies and joint ventures. In the consolidated financial statements, transaction costs are recognised directly in profit and loss when they arise. Contingent considerations are valued based on the probability of the consideration being paid. Any changes to the provisions/ receivable are added to/deducted from the cost. In the consolidated financial statements, contingent considerations are measured at fair value with changes in value recognised in profit and loss.
Bargain purchases corresponding to future losses and costs are reversed during the expected periods in which the losses and costs arise. Bargain purchases arising for other reasons are recognised as a provision to the extent that the purchase does not exceed the fair value of the acquired, identifiable non-monetary assets. The portion that exceeds this fair value is recognised in profit and loss immediately. The portion that does not exceed the fair value of acquired, identifiable non-monetary assets is recognised in profit and loss systematically over a period calculated as the remaining weighted average useful life of the acquired identifiable assets that are depreciable. In the consolidated financial statements, bargain purchases are recognised directly in profit and loss.
All leasing agreements in the Parent Company are recognised in accordance with operational leasing regulations.
The Parent Company applies other principles for the calculation of definedbenefit plans than those stipulated in IAS 19. The Parent Company follows the provisions of the Pension Obligations Vesting Act and the Swedish Financial Supervisory Authority's regulations since this is a condition for eligibility for rights to tax deductions. The significant differences compared with the IAS 19 regulations pertain to how the dis-count rate is determined, the calculation of defined-benefit commitments based on current salary levels with no assumptions regarding future salary increases and that all actuarial gains and losses are recognised in profit and loss when they arise. The Parent Company recognises the fair value of employee share options issued to employees of subsidiaries as shareholders' contributions by recognition in shareholders' equity and the value of the shares in the subsidiary.
Nobia's policy is to hedge approximately 80 per cent of the forecast flows, 0–3 months in the future, 60 per cent 4–6 months in the future, 40 per cent 7–9 months in the future and 100 per cent of contracted projects. The principal currency combinations were the EUR against the GBP and the SEK against the NOK. Total exposure in 2010, expressed in SEK and after setting off counteracting flows, amounted to SEK 1,978 million, of which SEK 1,346 million was hedged. At the end of 2010, the hedged volume was SEK 693 million.
Unrealised gains and losses recognised as cash-flow hedges in shareholders' equity will be transferred to the income statement at various points in time within 12 months.
Nobia is active in many markets and in several distribution channels. Depending on the type of distribution channel, the customer base comprises both professional customers and consumers. For these reasons, credit management and payment terms must be adapted to each business unit's business logic and distribution channels within the framework of the credit policy established by the Group. The credit policy stipulates that credit ratings shall be based on at least one credit report from a reputable credit rating institute. Credit assessments are continuously performed on customers who make regular purchases. Credit insurance is utilised for certain markets and customer categories. Collateral is often required when credit is granted to customers with low buying frequencies. Counterparty risk pertaining to banks is deemed to be very minor. The total credit risk amounted to SEK 1,686 million. The credit quality of financial assets that have neither fallen due for payment or that are subject to impairment is high.
Nobia's policy for financing foreign assets involves financing capital employed with external borrowings in the corresponding currency in order to minimise the impact of exchange-rate fluctuations on the debt/ equity ratio. Group loans are handled by Nobia's head office. The head office supplies the subsidiaries with funds through an internal bank. These loans are raised in local currencies, which minimises the effects of exchange-rate fluctuations on profits. As a supplementary measure, currency contracts may be entered into to avoid exposure. Given the current debt/equity ratio and currency distribution
The Parent Company's recognises Group contributions and shareholders' contributions in accordance with the statement from the Swedish Financial Reporting Board (UFR 2). Shareholders' contributions are recognised directly against the shareholders' equity of the recipient and capitalised in the shares and participations of the donor unless impairment losses are required. Group contributions are recognised according to financial implication, meaning that Group contributions paid with the intention of minimising the Group's total tax are recognised directly against profit brought forward less current tax effects.
Anticipated dividends from subsidiaries are recognised if the Parent Company has the sole right to decide the amount of the dividend and the Parent Company has made a decision on the amount of the dividend prior to the publication of the Parent Company's financial statements.
Due to the connection between reporting and taxation, the regulations regarding financial instruments and hedge accounting provided in IAS 39 are not applied in the Parent Company.
The Parent Company's financial guarantee agreements primarily comprise guarantees on behalf of subsidiaries, joint ventures and associated companies. Under a financial guarantee, the company has an obligation to compensate the holder of a debt instrument for losses incurred by this holder due to a specific debtor not fulfilling their payment duties that are due in accordance with the terms and conditions of the agreement. In the recognition of financial guarantee agreements, the Parent Company applies a relaxation rule permitted by the Financial Reporting Board, in contrast to the provisions of IAS 39. This relaxation rule pertains to financial guarantee agreements issued on behalf of subsidiaries, associated companies and joint ventures. The Parent Company recognises financial guarantee agreements as a provision in the balance sheet when the company has a commitment for which it is probable that payment will be required to settle the commitment.
2010 2009 SEK m Capital employed per currency Interest-bearing loans and lease liabilities Capital employed per currency Interest-bearing loans and lease liabilities SEK 378 892 766 552 EUR 2,150 49 2,610 1,128 GBP 1,806 464 2,370 733 DKK 719 427 983 695 USD 82 41 102 41 NOK 157 4 229 13 Other 31 0 35 0 Total 5,323 1,877 7,095 3,162
of capital employed, approximately 20 per cent of foreign capital employed must be financed through borrowing in local currencies. In combination with this policy, other forms of capitalisation may be utilised in each country to optimise the Group's tax situation. Nobia's financial exposure policy does not involve hedging equity.
The Group's policy is not to hedge translation exposure in foreign currencies. A 10-per-cent strengthening of the Swedish krona compared with other currencies on 31 December 2010 would entail a decrease in shareholders' equity of SEK 361 million (decrease: 423) and an increase in profit of SEK 1 million (increase: 6). The sensitivity analysis is based on the assumption that all other factors (for example, interest) are unchanged. The same conditions were applied to 2009.
Interest-rate exposure is managed centrally, meaning that the head office is responsible for identifying and managing interest-rate risks. Nobia uses short, fixed-interest terms. Nobia's approach is that times of high interest rates usually coincide with healthy demand in society at large. In 2010, the fixed-interest rate term was 1–3 months.
Nobia applies a centralised approach to the Group's financing, which means that all financing takes place in Nobia AB or Nobia Sverige AB. During the year, Nobia raised a bond loan of SEK 800 million from AB SEK Securities (Swedish Export Credit Corporation), which has a term of five years and a mutual extension period of two years. The company also raised a syndicated bank loan of SEK 2,000 million with four banks. The term is five years. The loan has three covenants: leverage (net debt to EBITDA), gearing (net debt to equity) and interest cover (EBITDA to net interest expenses). Nobia meets all covenants with a satisfactory margin. Nobia's policy is to obtain long-term lines of credit that are compatible with Nobia's long-term strategy, while simultaneously balancing the needs for low credit costs. In addition to these loans, Nobia has local overdraft facilities. The table below shows the maturity of all of Nobia's loans:
| 2010 | 2009 | ||||
|---|---|---|---|---|---|
| Year of maturity, SEK m | 2011 | 2015 | 2010 | 2011 | |
| Loans and lines of credit | – | 2,800 | – | 6,000 | |
| Of which, utilised | – | 1,246 | – | 2,446 |
The debt/equity ratio may not exceed 100 per cent. A temporary elevation of the debt/equity ratio is acceptable. A significantly lower debt/equity ratio in the long term is to be corrected by an extra dividend to shareholders or through the buy-back of treasury shares. Dividends shall on average comprise at least 30 per cent of net profit after tax. The debt/equity ratio amounted to 44 per cent (62) at year-end. The decreased debt/equity ratio is primarily due to the use of cash flow to repay loans. Nobia considered recognised shareholders' equity to be capital.
Daily liquidity is tracked with the help of carefully prepared liquidity forecasts. Liquidity is controlled centrally with the aim of using available liquidity effectively, at the same time as necessary reserves are available.
| Commercial exposure | USD | EUR | NOK | CHF | GBP | SEK | DKK |
|---|---|---|---|---|---|---|---|
| Currency contracts | |||||||
| 2010, local currencies | 1 | 40 | 203 | 2 | 1 | 68 | – |
| Total, SEK m1) | 8 | 358 | 233 | 11 | 15 | 68 | – |
| Fair value, SEK m | 0 | 1 | 0 | –1 | 0 | –2 | – |
| Net flow | |||||||
| Net flow 2010, local currencies | –10 | –853) | 414 | 4 | 3 | 249 | –37 |
| Net flow 2010, SEK m2) | –70 | –8133) | 493 | 25 | 35 | 249 | –47 |
| Hedged volume, SEK m2) | 31 | 663 | –429 | –18 | –23 | –183 | – |
1) Flows restated at closing-date rate, SEK. 2) Restated apply average rate in 2010. 3) In addition, EUR 26 million pertains to flows against DKK, corresponding to SEK 246 million.
| SEK m | SEK m | ||
|---|---|---|---|
| Currencies1) and interest rates | Change | Impact on profit before tax | Impact on shareholders' equity |
| EUR/SEK | 5% | 4.9 | 3.5 |
| NOK/SEK | 5% | 12.0 | 8.6 |
| EUR/GBP | 5% | 20.4 | 14.7 |
| NOK/DKK | 5% | 6.4 | 4.6 |
| SEK/DKK | 5% | 4.5 | 3.2 |
| Interest-rate level | 100 point | 12.0 | 8.6 |
1) Transaction effects after hedges.
| 2010 | 2009 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group, SEK m | Currency | Nominal amount, origi nal currency |
Total | Within 1 month |
1–3 months |
3 months –1 year |
1–5 years |
5 years or longer |
Total | Within 1 month |
1–3 months |
3 months –1 year |
1–5 years |
5 years or longer |
| Banklån (R) | ||||||||||||||
| Bank loans | SEK | 976 | 976 | 2 | 5 | 21 | 948 | – | 489 | – | – | – | 489 | – |
| Bank loans | EUR | – | – | – | – | – | – | – | 1,027 | – | – | – | 1,027 | – |
| Bank loans | GBP | – | – | – | – | – | – | – | 204 | – | – | – | 204 | – |
| Bank loans | DKK | 402 | 485 | 1 | 2 | 9 | 473 | – | 685 | – | – | – | 685 | – |
| Bank loans | NOK | – | – | – | – | – | – | – | 0 | – | – | – | 0 | – |
| Bank loans | USD | 7 | 47 | 0 | 0 | 1 | 46 | – | 41 | – | – | – | 41 | – |
| Other liabilities | ||||||||||||||
| Forward agreements* | SEK | 3 | 0 | 1 | 2 | – | – | 1 | 0 | 0 | 1 | – | – | |
| Forward agreements* | EUR | 4 | 2 | 1 | 1 | – | – | 3 | 0 | 1 | 2 | – | – | |
| Forward agreements* | GBP | 0 | 0 | 0 | 0 | – | – | 0 | 0 | 0 | 0 | – | – | |
| Forward agreements* | DKK | – | – | – | – | – | – | – | – | – | – | – | – | |
| Forward agreements* | NOK | 2 | 0 | 0 | 2 | – | – | 6 | 1 | 2 | 3 | – | – | |
| Forward agreements* | CHF | 1 | 0 | 1 | 0 | – | – | 1 | 0 | 0 | 1 | – | – | |
| Forward agreements* | USD | 1 | 0 | 0 | 1 | – | – | 0 | 0 | 0 | 0 | – | – | |
| Currency options* | SEK | – | – | – | – | – | – | 0 | 0 | 0 | – | – | – | |
| Currency options* | NOK | – | – | – | – | – | – | 1 | 0 | 1 | – | – | – | |
| Overdraft facilities (IB) | SEK | 41 | – | – | 41 | – | – | 48 | – | – | 48 | – | – | |
| Financial lease liabilities (IB) | SEK | 1 | – | – | – | 1 | – | 10 | – | – | – | 10 | – | |
| Other liabilities (IB) | SEK | 2 | – | 2 | – | – | – | 2 | – | 2 | – | – | – | |
| Accounts payable and other liabilities |
SEK | 1,403 | 1,092 | 262 | 45 | 4 | – | 1,609 | 1,154 | 344 | 93 | 18 | – | |
| Total | 2,966 | 1,097 | 274 | 123 1,472 | – 4,127 | 1,155 | 350 | 148 2,474 | – | |||||
| Interest-bearing liabilities (IB) | 1,290 | 2,506 |
* The value of forward agreements and currency options is included in the item "Derivatives."
| 2010 | 2009 | ||||
|---|---|---|---|---|---|
| Age analysis, accounts receivable and other receivables, SEK m | Gross | Of which, impairment losses |
Gross | Of which, impairment losses |
|
| Non-due accounts receivable | 982 | – | 1,207 | – | |
| Past-due accounts receivable 0–30 days | 213 | 12 | 274 | 18 | |
| Past-due accounts receivable > 30 days–90 days | 70 | 9 | 121 | 15 | |
| Past-due accounts receivable > 90 days–180 days | 24 | 16 | 40 | 14 | |
| Past-due accounts receivable > 180 days–360 days | 40 | 32 | 43 | 41 | |
| Past-due accounts receivable > 360 days | 60 | 53 | 19 | 50 | |
| Total receivables | 1,389 | 122 | 1,704 | 138 | |
| Deposit account for impairment losses on accounts receivable and other receivables, SEK m |
2010 | 2009 | |||
| Opening balance | 138 | 98 | |||
| Reversal of previously posted impairment losses | –15 | –12 | |||
| Impairment losses for the year | 16 | 54 | |||
| Confirmed losses | 2 | 0 | |||
| Divested operations | –5 | – | |||
| Translation differences | –14 | –2 | |||
| Closing balance | 122 | 138 |
An impairment loss is recognised when obvious reasons are deemed to exist that the company will not receive the entire or part of the amount due. Obvious reasons may, in this context, pertain to external information that establishes that a receivable is doubtful. An impairment loss is initially
recognised for each individual receivable. Group-wise impairment losses are recognised for a group of receivables with similar credit properties and characteristics.
Note 3 Operating segments
The Group's business activities are divided into operating segments based on a management approach, meaning the parts of the operations monitored by the company's chief operating decision-maker. The Group's operations are organised such that Group management monitors the earnings, returns and cash flow generated by the Group's regions. These regions comprise the Group's operating segments since Group management monitors the operations' earnings and decides on the allocation of resources
based on the regions. Accordingly, the Group's internal reporting is structured so that Group management can monitor the performance and earnings of all of the regions. The following operating segments were identified: UK region, Nordic region and Continental Europe region.
Nobia considers the Group's income from kitchens, bathrooms and storage to comprise a single product group since bathrooms and storage represent such a small percentage of the Group's total balance sheet, income statement and cash-flow statement.
| UK region | Nordic region | Continental Europe region |
Group-wide and eliminations |
Group | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |
| Net sales from external customers |
5,198 | 5,623 | 5,092 | 5,234 | 3,795 | 4,561 | – | – | 14,085 | 15,418 | |
| Net sales from other regions |
– | – | – | – | 10 | 64 | –10 | –64 | 0 | 0 | |
| Total net sales | 5,198 | 5,623 | 5,092 | 5,234 | 3,805 | 4,625 | –10 | –64 | 14,085 | 15,418 | |
| Depreciation/amortisation | –130 | –135 | –151 | –184 | –143 | –176 | –23 | –24 | –447 | –519 | |
| Shares in joint ventures | – | – | – | – | – | – | – | – | –8 | –2 | |
| Operating profit/loss | 219 | 236 | 249 | –75 | –247 | –20 | –215 | –103 | 6 | 38 | |
| Financial income | 18 | 41 | |||||||||
| Financial expenses | –103 | –116 | |||||||||
| Profit/loss before tax and divested operations |
–79 | –37 | |||||||||
| Impairment losses | – | – | –34 | –74 | –14 | –9 | –49 | – | –97 | –83 | |
| Restructuring costs | –107 | – | –82 | –262 | –214 | –46 | –108 | – | –511 | –308 | |
| Profit on changes to pension conditions |
– | 42 | – | – | – | – | – | – | – | 42 |
| SEK m | UK region | Nordic region | Continental Europe region |
Group-wide and eliminations |
Group | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||
| Total operating assets | 1,690 | 1,967 | 1,834 | 2,192 | 1,334 | 1,937 | 2,813 | 3,288 | 7,671 | 9,384 | |
| Total operating assets include: |
|||||||||||
| Proportions of equity in joint ventures |
– | – | – | – | – | 58 | – | – | – | 58 | |
| Investments in fixed assets | 132 | 57 | 100 | 160 | 114 | 129 | 1 | 0 | 347 | 346 | |
| Total operating liabilities | 966 | 976 | 936 | 1,075 | 913 | 984 | 76 | 80 | 2,891 | 3,115 |
| Geographic areas, Group | Income from external customers1) | Fixed assets2) | |||
|---|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 | |
| Sweden | 1,091 | 1,059 | 236 | 307 | |
| Denmark | 1,944 | 2,164 | 743 | 939 | |
| Norway | 1,315 | 1,250 | 173 | 199 | |
| Finland | 732 | 735 | 188 | 198 | |
| UK | 5,317 | 5,791 | 1,786 | 1,946 | |
| France | 1,707 | 2,113 | 1,201 | 1,418 | |
| Germany | 517 | 634 | 405 | 686 | |
| Austria | 533 | 536 | 317 | 360 | |
| Netherlands | 76 | 228 | 2 | 3 | |
| USA | 144 | 176 | 45 | 49 | |
| Other countries | 709 | 732 | 22 | 27 | |
| Total | 14,085 | 15,418 | 5,118 | 6,132 |
1) Net sales from external customers based on customers' geographic domicile.
2) Fixed assets that are not financial instruments, deferred tax assets, assets associated with
benefits after employment termination or rights under insurance agreements.
| Note 4 | Salaries, other remuneration and social security costs | |||||
|---|---|---|---|---|---|---|
| 2010 | 2009 | |||||
| SEK m | Salaries and other remuneration |
Social security costs (of which, pension costs) |
Salaries and other remuneration |
Social security costs (of which, pension costs) |
||
| Subsidiaries in: | ||||||
| Sweden | 224 | 141 | 222 | 96 | ||
| (25) | (23) | |||||
| Denmark | 646 | 65 | 684 | 66 | ||
| (48) | (60) | |||||
| Norway | 143 | 33 | 168 | 41 | ||
| (7) | (8) | |||||
| Finland | 98 | 57 | 100 | 59 | ||
| (27) | (29) | |||||
| Germany | 289 | 56 | 426 | 82 | ||
| (1) | (0) | |||||
| Austria | 154 | 54 | 161 | 57 | ||
| (20) | (21) | |||||
| UK | 698 | 70 | 853 | 76 | ||
| (25) | (25) | |||||
| France | 264 | 110 | 282 | 118 | ||
| USA | 36 | (18) 7 |
37 | (20) 7 |
||
| (1) | (1) | |||||
| Switzerland | 26 | 4 | 24 | 4 | ||
| (2) | (–) | |||||
| Poland | 5 | 1 | 6 | 1 | ||
| (0) | (1) | |||||
| Netherlands | 1 | 0 | 1 | 0 | ||
| (0) | (–) | |||||
| Spain | 3 | 1 | 3 | 1 | ||
| (–) | (–) | |||||
| Japan | 2 | 0 | 1 | 0 | ||
| (–) | (–) | |||||
| Total subsidiaries | 2,589 | 599 | 2,968 | 608 | ||
| (174) | (188) | |||||
| Parent Company | 37 | 20 | 26 | 15 | ||
| (8) | (7) | |||||
| Group1) | 2,626 | 619 | 2,994 | 623 | ||
| (182) | (195) |
1) Excludes costs for share-based remuneration.
| SEK m | 2010 | 2009 |
|---|---|---|
| Salaries and other remuneration | 2,626 | 2,994 |
| Social security costs | 437 | 428 |
| Pension costs – defined-contribution plans | 146 | 147 |
| Pension costs – defined-benefit plans | 12 | 24 |
| Costs for special employer's contributions and tax on returns |
24 | 24 |
| Costs for allotted employee share options 2005–2009 |
– | – |
| Costs for allotted employee share options 2006–2010 |
– | – |
| Costs for allotted employee share options 2007–2011 |
– | – |
| Costs for allotted employee share options 2008–2012 |
– | – |
| Costs for allotted employee share options 2009–2013 |
– | – |
| Costs for allotted employee share options 2010–2014 |
5 | – |
| Total costs for employees | 3,250 | 3,617 |
| Total Parent Company1) | 37 | 26 |
|---|---|---|
| Other employees | 14 | 8 |
| Senior management | 23 | 18 |
| SEK m | 2010 | 2009 |
1) Excludes costs for share-based remuneration.
| Group1) | 2,626 | 2,994 |
|---|---|---|
| Total subsidiaries | 31 2,558 2,589 |
2,968 |
| Other employees of subsidiaries | 2,933 | |
| Board and Presidents of subsidiaries | 35 | |
| SEK m | 2010 | 2009 |
1) Excludes costs for share-based remuneration.
| Remuneration and other benefits, 2010, SEK m |
Basic salary, Directors' fee |
Variable remuneration |
Other benefits |
Pension cost | Share-based remuneration |
Other remuneration |
Total | Pension commitments |
|---|---|---|---|---|---|---|---|---|
| Chairman of the Board | ||||||||
| Hans Larsson | 0.8 | – | – | – | – | – | 0.8 | – |
| Vice Chairman of the Board | ||||||||
| Johan Molin | 0.4 | – | – | – | – | – | 0.4 | – |
| Board members | ||||||||
| Stefan Dahlbo | 0.3 | – | – | – | – | – | 0.3 | – |
| Bodil Eriksson | 0.3 | – | – | – | – | – | 0.3 | – |
| Fredrik Palmstierna | 0.3 | – | – | – | – | – | 0.3 | – |
| Lotta Stalin | 0.3 | – | – | – | – | – | 0.3 | – |
| Thore Ohlsson | 0.3 | – | – | – | – | – | 0.3 | – |
| Rolf Eriksen | 0.2 | – | – | – | – | – | 0.2 | – |
| Former Board members | ||||||||
| Wilhelm Laurén | 0.1 | – | – | – | – | – | 0.1 | – |
| Joakim Rubin | 0.1 | – | – | – | – | – | 0.1 | – |
| President | ||||||||
| Morten Falkenberg | 1.6 | – | 0.0 | 0.6 | 0.1 | – | 2.3 | – |
| Former President | ||||||||
| Preben Bager | 6.6 | 1.7 | 0.1 | 1.7 | – | – | 10.1 | 3.5 |
| Other members of | ||||||||
| Group management Total |
28.8 40.1 |
4.2 5.9 |
1.3 1.4 |
4.2 6.5 |
1.1 1.2 |
– – |
39.6 55.1 |
1.1 4.6 |
| Remuneration and other benefits, 2009, SEK m |
Basic salary, Directors' fee |
Variable remuneration |
Other benefits |
Pension cost | Share-based remuneration |
Other remuneration |
Total | Pension commitments |
| Chairman of the Board | ||||||||
| Hans Larsson | 0.8 | – | – | – | – | – | 0.8 | – |
| Board members | ||||||||
| Stefan Dahlbo | 0.3 | – | – | – | – | – | 0.3 | – |
| Bodil Eriksson | 0.3 | – | – | – | – | – | 0.3 | – |
| Wilhelm Laurén | 0.3 | – | – | – | – | – | 0.3 | – |
| Joakim Rubin | 0.2 | – | – | – | – | – | 0.2 | – |
| Fredrik Palmstierna | 0.3 | – | – | – | – | – | 0.3 | – |
| Thore Ohlsson | 0.3 | – | – | – | – | – | 0.3 | – |
| Lotta Stalin | 0.3 | – | – | – | – | – | 0.3 | – |
| Former Board members | ||||||||
| Harald Mix | 0.1 | – | – | – | – | – | 0.1 | – |
| President | ||||||||
| Preben Bager | 6.7 | 0.8 | 0.1 | 2.0 | – | – | 9.6 | 2.3 |
| Other members of | ||||||||
| Group management | 26.3 | 2.0 | 1.2 | 3.5 | – | – | 33.0 | 0.9 |
| Total | 35.9 | 2.8 | 1.3 | 5.5 | – | – | 45.5 | 3.2 |
| 2010 | 2009 |
|---|---|
| 2.2 | 1.1 |
| 94.1 | 0 |
| Men | 2.8 | 1.6 |
|---|---|---|
| Women1) | n/a | n/a |
| Sickness absence by age category | ||
| 30–49 years of age | 3.5 | 0.8 |
| 50 years of age or older1) | n/a | n/a |
1) Not reported since the group contains less than ten individuals.
The average number of employees and number of men and women among Board members and senior managers are described in Note 37, see page 69.
Remuneration to the Chairman and members of the Board is determined by resolutions taken at the Annual General Meeting. No special fees are paid for committee work. Board members who are employed by Nobia do not receive a separate Directors' fee. Board members elected by the Annual General Meeting received a fixed fee of SEK 315,000 per member and the Chairman received SEK 790,000. The Vice Chairman received SEK 550,000. Accordingly, the Board received a total of SEK 3,230,000. Employee representatives receive a study and preparation fee of SEK 26,000 per person per year.
The President who took office on 6 October received SEK 1,626,121 in salary and benefits during the 2010 fiscal year, plus a variable salary portion related to results for 2010 of SEK 0. In addition to the normal pension in accordance with the Swedish National Insurance Act (ATP and AFP), the President has pension benefits corresponding to 30 per cent of pensionable salary. Pensionable salary means fixed annual salary. For 2010, the premium cost was SEK 480,000. The retirement age is 65. The President has the right to 12 months' notice if employment is terminated by Nobia. If employment is terminated by the President, six months' notice must be given.
Group management, comprised of 14 in 2010, of whom seven are employed in the Parent Company, received salaries and benefits during the fiscal year amounting to SEK 30,007,479 plus variable salary portions based on results for 2009 of SEK 4,158,936. Group management has the right to ITP pensions or an equivalent scheme. The age of retirement is 65. In addition, management has the right to an increased occupational pension premium of 20 per cent on salary portions amounting to more than 30 basic amounts, following a Board decision.
The fundamental principle for the variable salary portion for the unit managers and Group management is that such portions may amount to a maximum bonus of 30 per cent of fixed annual salary. The exception is the President whose variable salary portion may amount to a maximum bonus of 50 per cent of fixed annual salary. Exceptions may also be made for other senior managers following a decision by the Board. The variable portion is based on an earning period of one year. The outcome depends on the extent to which predetermined targets are met. The targets for the President are set by the Board of Directors. The President sets the targets for other senior managers following recommendations from the Board Remuneration Committee.
The Board of Directors appoints a Remuneration Committee from within its ranks. The Committee's tasks include preparing proposals with respect to remuneration for the President, and to reach decisions on remuneration proposals for managers that report directly to the President. For information about the Committee and its members, see page 29.
The contracts include provisions regarding remuneration and termination of employment. Under these agreements, employment may be terminated by the employee with a six-month period of notice and by the company with a 12-month period of notice.
At the 2005 Annual General Meeting, a resolution was made in accordance with the Board's proposal to implement an incentive scheme in the form of a performance-related employee share option scheme. This resolution comprised the first stage in annually recurring identical incentive schemes. It was also followed by resolutions passed at the 2006, 2007 and 2008 Annual General Meetings.
At the 2009 Annual General Meeting, a resolution was made in accordance with the Board's proposal to continue the same incentive scheme implemented in previous years in the form of a performance-based employee share option scheme. This means that approximately 130 senior executives in the Nobia Group will be allotted a total of 2,300,000 employee share options. Each employee share option carries entitlement to the acquisition of shares in Nobia AB during the period from and including 31 May 2012 up to and including 1 March 2013 at a predetermined exercise price of SEK 35.30 kronor. The right to utilise these employee share options requires that on the exercise date the holder is an employee of the Nobia Group and that during the 2009–2012 fiscal years, the Nobia Group increases its earnings per share compared with the 2008 fiscal year such that the total increase in earnings per share corresponds to an average annual increase in earnings per share of at least 5.0 per cent and a maximum of 15.0 per cent. The annual increase in earnings per share influences the number of options that can be received.
At the 2010 Annual General Meeting a resolution was made in accordance with the Board's proposal to continue the same incentive scheme implemented in previous years in the form of a performance-based employee share option scheme. This means that approximately 100 senior executives in the Nobia Group will be allotted a total of 2,300,000 employee share options. Each employee share option carries entitlement to the acquisition of shares in Nobia AB during the period from and including 31 May 2013 up to and including 31 December 2014 at a predetermined exercise price of SEK 39.50 kronor. The right to utilise these employee share options requires that on the exercise date the holder is an employee of the Nobia Group and that during the 2010–2013 fiscal years, the Nobia Group increases its earnings per share compared with the average for the 2008 and 2009 fiscal years such that the total increase in earnings per share corresponds to an average annual increase in earnings per share of at least 5.0 per cent and a maximum of 15.0 per cent. The annual increase in earnings per share influences the number of options that can be received.
The table below is a summary of key data concerning the schemes. Fair value has been established using the Black & Scholes valuation model:
| Share option scheme 2005–2014 | |||||||
|---|---|---|---|---|---|---|---|
| Scheme | Exercise period | Exercise price, SEK per share |
Share value at allotment, SEK per share |
Volatility in per cent |
Risk-free interest rate in per cent |
||
| 2005–2009 | 31 May 2008–1 March 2009 | 41.57 | 37.77 | 24 | 2.71 | ||
| 2006–2010 | 31 May 2009–1 March 2010 | 88.37 | 80.34 | 26 | 3.31 | ||
| 2007–2011 | 31 May 2010–1 March 2011 | 101.30 | 92.10 | 24 | 4.09 | ||
| 2008–2012 | 31 May 2011–1 March 2012 | 44.40 | 42.00 | 32.5 | 4.32 | ||
| 2009–2013 | 31 May 2012–1 March 2013 | 35.30 | 29.40 | 35 | 2.17 | ||
| 2010–2014 | 31 May 2013–31 December 2014 | 39.50 | 35.20 | 37 | 1.71 |
Premature exercise is expected to occur during the exercise period. This entails that exercise is expected to occur in the middle of each particular option scheme. Historical volatility is assumed to match the estimation of future volatility.
The entitlement to exercise the employee share options presupposes that the option holder remains an employee of the Nobia Group and that earnings per share increases to the extent that the total increase in earnings per share corresponds to an average annual increase in earnings per share of at least 5.0 per cent and a maximum of 15.0 per cent compared with the average for a certain defined period.
Assuming a maximum increase in earnings and full exercise, the number of employee share options from the various schemes will be as follows:
| Scheme | President | Other members of Group management |
Other employees | Total | Original allotment |
|---|---|---|---|---|---|
| 2005–2009 | – | – | – | – | 1,830,000 |
| 2006–2010 | – | – | – | – | 1,830,000 |
| 2007–20111) | – | – | 1,155,500 | 1,155,500 | 1,830,000 |
| 2008–2012 | – | 295,000 | 1,644,500 | 1,939,500 | 2,592,500 |
| 2009–2013 | – | 370,000 | 1,530,000 | 1,900,000 | 2,292,000 |
| 2010–2014 | 35,000 | 700,000 | 1,360,000 | 2,095,000 | 2,165,000 |
| Total | 35,000 | 1,365,000 | 5,690,000 | 7,090,000 | 12,539,500 |
1) Since the earnings targets were not achieved in the 2007 scheme, no options were allocated.
Future dilution effects from the four current schemes are reduced since persons included in the scheme have left Nobia. An average of 56 per cent of the original number of options issued remain.
The costs of the schemes are presented in the table below:
| Accumulated cost | 20101 | 20092 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Scheme | Acc. IFRS 2 cost |
Acc. soc. costs |
Total cost |
IFRS 2 cost |
Soc. costs |
Total cost |
IFRS 2 cost |
Soc. costs |
Total cost |
| 2005–2009 | 7 | 0 | 7 | – | – | – | – | – | – |
| 2006–2010 | – | – | – | – | – | – | – | – | – |
| 2007–2011 | – | – | – | – | – | – | – | – | – |
| 2008–2012 | – | – | – | – | – | – | – | – | – |
| 2009–2013 | – | – | – | – | – | – | – | – | – |
| 2010–2014 | 3 | 2 | 5 | 3 | 2 | 5 | – | – | – |
| 10 | 2 | 12 | 3 | 2 | 5 | – | – | – |
1) Price on 31 December 2010 = SEK 60.25 per share 2) Price on 31 December 2009 = SEK 41.90 per share
Changes in the number of outstanding share options and their weighted average exercise price were as follows:
| 2010 | 2009 | ||||
|---|---|---|---|---|---|
| Average exercise price, SEK per share |
Number of options |
Average exercise price, SEK per share |
Number of options |
||
| As per 1 January | 60.16 | 7,114,200 | 66.30 | 6,852,200 | |
| Alloted | 39.50 | 2,165,000 | 35.30 | 2,292,000 | |
| Expired | 88.37 | –1,193,700 | 41.57 | –1,321,500 | |
| Forfeited | 53.25 | –995,500 | 73.77 | –708,500 | |
| Utilised | – | 0 | – | 0 | |
| As per 31 December |
50,07 7,090,000 | 60,16 | 7,114,200 |
Of the 7,090,000 outstanding options (7,114,200), it was possible to exercise 0 options (0) since the earnings targets were not achieved.
Outstanding share options at year-end had the following expiry dates and exercise prices:
| Shares | |||||
|---|---|---|---|---|---|
| Expiry date | Exercise price, SEK per share |
2010 | 2009 | ||
| 1 March 2010 | 88.37 | – | 1,193,700 | ||
| 1 March 2011 | 101.30 | 1,155,500 | 1,371,000 | ||
| 1 March 2012 | 44.40 | 1,939,500 | 2,307,500 | ||
| 1 March 2013 | 35.30 | 1,900,000 | 2,242,000 | ||
| 31 December 2014 | 39.50 | 2,095,000 | – | ||
| 7,090,000 | 7,114,200 |
| Note 5 Remuneration to auditors |
|||||
|---|---|---|---|---|---|
| Group Parent Company |
|||||
| SEK m | 2010 | 2009 | 2010 | 2009 | |
| KPMG | |||||
| Audit assignment | 11 | 12 | 3 | 2 | |
| Audit activities other than audit assignment |
0 | 1 | 0 | 0 | |
| Tax advice | 0 | 2 | 0 | 0 | |
| Other assignments | 1 | 1 | 0 | 1 | |
| Other auditors | |||||
| Audit assignment | 0 | 0 | – | – | |
| Audit activities other than audit assignment |
– | – | – | – | |
| Tax advice | 0 | 0 | – | – | |
| Other assignments | – | – | – | – |
| Note 6 | Depreciation and impairment losses by activity | ||||
|---|---|---|---|---|---|
| Depreciation | Impairment losses |
||||
| SEK m | 2010 | 2009 | 2010 | 2009 | |
| Cost of goods sold | –142 | –168 | –27 | –69 | |
| Selling expenses | –254 | –299 | –24 | –13 | |
| Administrative expenses | –51 | –52 | –46 | –1 | |
| impairment losses | Total depreciation and | –447 | –519 | –97 | –83 |
| Note 7 | Other operating income | ||||
|---|---|---|---|---|---|
| Group | Parent Company | ||||
| SEK m | 2010 | 2009 | 2010 | 2009 | |
| assets | Gains attributable to sale of fixed | 1 | 7 | – | – |
| Exchange-rate gains from operating receivables/liabilities |
41 | 59 | – | – | |
| pension conditions | Profit attributable to changes to | – | 42 | – | – |
| Other | 16 | 37 | – | – | |
| Total other operating income |
58 | 145 | – | – |
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 |
| Exchange-rate losses from operating receivables/liabilities |
–67 | –47 | – | – |
| Capital loss attributable to divestment of subsidiaries |
–26 | – | –33 | – |
| Other | –9 | –18 | – | – |
| Total other operating expenses |
–102 | –65 | –33 | – |
| Total operating expenses | –14,129 | –15,523 |
|---|---|---|
| Other operating expenses | –2,856 | –3,007 |
| Operational leasing costs, primarily stores (Note 10) | –640 | –641 |
| Freight costs | –697 | –751 |
| Depreciation and impairment losses (Note 6) | –544 | –602 |
The nominal values of contracted future leasing fees where the remaining term exceeds one year, are specified as follows (pertains mainly to rental contracts for premises):
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 |
| Expensed during the year | 640 | 641 | 0 | 0 |
| Falling due for payment within one year |
667 | 726 | 0 | 0 |
| Falling due for payment between one and five years |
1,844 | 2,211 | 0 | 0 |
| Falling due for payment later | 1,065 | 1,335 | 0 | 0 |
| Total | 3,576 | 4,272 | 0 | 0 |
The nominal values of rental contracts that are re-let, where the remaining term exceeds one year, are specified as follows:
| Koncernen | Parent Company | ||||||
|---|---|---|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 | |||
| Falling due for payment within one year |
59 | 67 | – | – | |||
| Falling due for payment between one and five years |
166 | 186 | – | – | |||
| Falling due for payment later | 11 | 43 | – | – | |||
| Total | 236 | 296 | – | – |
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 |
| Profit from participations in Group companies |
||||
| Dividends | – | – | 100 | 22 |
| Financial income | ||||
| Interest income, current | 18 | 28 | 6 | 16 |
| Exchange-rate differences | 0 | 13 | 23 | 2 |
| Financial expenses | ||||
| Interest expense | –53 | –76 | –32 | –17 |
| Interest expense pertaining to pension liability |
–37 | –40 | – | – |
| Divestment of shares in associ ated companies |
– | – | – | – |
| Exchange-rate differences | –13 | 0 | 0 | 0 |
| Total | –85 | –75 | 97 | 23 |
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 |
| Current tax expenses for the period |
–951) | –331) | 1 | 4 |
| Deferred tax | 120 | 68 | – | – |
| Tax on net profit for the year | 25 | 35 | 1 | 4 |
1) This amount includes tax revenue attributable to the earlier period of SEK 38 million (59) that primarily pertain to the repayment of tax in the UK.
Tax revenue on net profit for the year comprised 28.4 per cent of profit before tax. In 2009, the tax revenue accounted for 41.4 per cent of profit before tax. The difference between the recognised tax (28.4 per cent) and the anticipated tax on the Group's profits before tax calculated at the local tax rate for Sweden (26.3 per cent) is explained in the table below.
In the Parent Company, Group contributions and associated tax effects are recognised directly against shareholders' equity at a tax effect of a loss of less than SEK 1 million (income: 4). Accordingly, the remaining recognised current tax refers to tax accrued on earnings recognised before Group contributions. Group contributions are recognised directly against shareholders' equity. The difference between the nominal and effective tax rate primarily pertains to dividends from subsidiaries.
| % | 2010 | 2009 |
|---|---|---|
| Local tax rate in Sweden | 26,3 | 26,3 |
| Different local tax rates | 19,9 | 1,8 |
| Tax relating to earlier periods | 33,4 | 41,3 |
| Non-tax deductible income | 25,7 | 24,7 |
| Non-deductible costs | –71,0 | –49,2 |
| Changed corporate tax rate in the UK | –3,3 | – |
| Other | –2,6 | –3,5 |
| Recognised effective tax | 28,4 | 41,4 |
Note 26 on page 66 explains the calculation of deferred tax liabilities and assets.
| Note 13 | Intangible assets | ||
|---|---|---|---|
| Goodwill, SEK m | 2010 | 2009 | |
| Opening carrying amount | 3,037 | 3,056 | |
| Corporate acquisitions (Note 33) | 1 | 23 | |
| Goodwill arising from acquisition of net assets | 7 | 14 | |
| Reclassifications | – | 4 | |
| Impairment losses | –46 | – | |
| Translation differences | –323 | –60 | |
| Closing carrying amount | 2,676 | 3,037 |
Impairment testing of goodwill, refer to "comments on and analysis of the balance sheet" on page 38.
| Opening cost | 417 | 347 |
|---|---|---|
| Investments for the year | 135 | 40 |
| Sales and scrapping | –17 | –2 |
| Corporate acquisitions | – | 10 |
| Company sales | –27 | – |
| Reclassifications | 13 | 39 |
| Translation differences | –59 | –17 |
| Closing accumulated cost | 462 | 417 |
| Opening amortisation | 246 | 220 |
| Sales and scrapping | –16 | –1 |
| Amortisation for the year | 30 | 37 |
| Corporate acquisitions | – | 3 |
| Company sales | –25 | – |
| Reclassifications | – | 0 |
| Translation differences | –31 | –13 |
| Closing accumulated amortisation | 204 | 246 |
| Closing carrying amount | 258 | 171 |
| Of which | ||
| Software | 176 | 74 |
| Brands | 20 | 23 |
| Other | 62 | 74 |
| Closing carrying amount | 258 | 171 |
No interest was capitalised in the closing cost. Assets totalling SEK 13 million were reclassified from tangible to intangible fixed assets. Impairment for the year of SEK 46 million pertains to the goodwill for Pronorm recognised under "Group-wide" in the segment reporting. The impairment was part of the established restructuring programme and was recognised as a restructuring cost.
| 2010 | 2009 |
|---|---|
| 3,040 | 3,241 |
| 38 | 56 |
| –18 | –53 |
| –146 | – |
| –47 | –102 |
| –329 | –102 |
| 2,538 | 3,040 |
| 1,729 | 1,664 |
| –17 | –28 |
| –61 | – |
| –31 | –64 |
| 142 | 172 |
| 29 | 51 |
| –200 | –66 |
| 1,591 | 1,729 |
| 947 | 1,311 |
| 1,540 | 1,646 |
| 2010 | 2009 |
|---|---|
| 267 | 289 |
| 0 | 2 |
| – | –13 |
| –26 | – |
| –8 | 0 |
| –30 | –11 |
| 203 | 267 |
| 36 | 32 |
| – | 5 |
| –9 | – |
| –4 | – |
| 1 | 1 |
| 4 | – |
| –4 | –2 |
| 24 | 36 |
| 179 | 231 |
| 22 | 36 |
| 88 | 110 |
| 39 | 85 |
| 2010 | 2009 |
| 20 | 96 |
| 11 | 30 |
| –18 | –103 |
| –1 | –3 |
| 12 | 20 |
1) Assets reclassified as other tangible assets.
| Plant and machinery, SEK m | 2010 | 2009 |
|---|---|---|
| Opening cost | 2,738 | 2,804 |
| Investments for the year | 66 | 67 |
| Sales and scrapping | –160 | –194 |
| Company sales | –138 | – |
| Reclassifications | 5 | 101 |
| Translation differences | –249 | –40 |
| Closing cost including | ||
| written-up amount | 2,262 | 2,738 |
| Opening depreciation and impairment losses | 1,892 | 1,904 |
| Sales and scrapping | –158 | –168 |
| Company sales | –116 | – |
| Reclassifications | –3 | – |
| Depreciation for the year | 141 | 162 |
| Impairment losses | 6 | 24 |
| Translation differences | –172 | –30 |
| Closing depreciation and impairment losses | 1,590 | 1,892 |
| Closing carrying amount | 672 | 846 |
| Closing accumulated depreciation | 1,565 | 1,853 |
| Equipment, tools, fixtures and fittings, SEK m | 2010 | 2009 |
|---|---|---|
| Opening cost | 1,323 | 1,282 |
| Investments for the year | 88 | 136 |
| Sales and scrapping | –63 | –102 |
| Corporate acquisitions | – | 26 |
| Company sales | –20 | – |
| Reclassifications | –11 | 17 |
| Translation differences | –135 | –36 |
| Closing cost | 1,182 | 1,323 |
| Opening depreciation and impairment losses | 808 | 738 |
| Sales and scrapping | –38 | –65 |
| Corporate acquisitions | – | 1 |
| Company sales | –17 | – |
| Reclassifications | –3 | –2 |
| Depreciation for the year | 133 | 147 |
| Impairment losses | 12 | 8 |
| Translation differences | –86 | –19 |
| Closing depreciation and impairment losses | 809 | 808 |
| Closing carrying amount | 373 | 515 |
| Closing accumulated depreciation | 785 | 788 |
| Advance payments for tangible fixed assets, SEK m |
2010 | 2009 |
|---|---|---|
| Opening balance | 1 | 52 |
| Expenses during the year | 1 | 1 |
| Reclassifications | –1 | –52 |
| Closing carrying amount | 1 | 1 |
No interest was capitalised in the closing cost.
Reclassifications for the year totalled SEK 26 million, of which SEK 18 million pertains to buildings, SEK 4 million to land and land improvements and SEK 4 million to Equipment, tools, fixtures and fittings. These assets were reclassified as assets held for sale (refer to Note 35). Assets of SEK 13 million were reclassified from tangible to intangible fixed assets.
Impairment losses for the year amounted to SEK 51 million (83), of which SEK 48 million (76) were included in recognised restructuring costs. The most significant impairment losses pertain to Myresjökök in the Nordic region where buildings and land were impaired in the amount of SEK 19 million, and plant and machinery as well as equipment, tools, fixtures and fittings were impaired in the amount of SEK 6 million. The impairment losses were recognised at fair value less selling expenses based on the estimated price in the location in question. The impairment was part of the established restructuring programme and was recognised as a restructuring cost.
| Group | ||
|---|---|---|
| Other long-term receivables, SEK m | 2010 | 2009 |
| Deposits | 51 | 59 |
| Long-term loans to retailers | 0 | 8 |
| Financial leasing receivable | 1 | 8 |
| Other interest-bearing receivables | 2 | 338 |
| Other | 8 | 3 |
| Total | 62 | 416 |
Parent Company
| Shares and participations in Group companies, SEK m |
2010 | 2009 |
|---|---|---|
| Opening cost | 1,379 | 1,379 |
| Inter-Group sales | –150 | – |
| Shareholders' contribution | 14 | – |
| Other changes | 2 | 0 |
| Closing cost | 1,245 | 1,379 |
During the year, the Group sold its 50-per cent shareholding in Culinoma AG, which is jointly owned with De Mandemakers Groep Holding B.V. Joint ventures are recognised in accordance with the equity method.
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 |
| Carrying amount, 1 January | 58 | 76 | 57 | 57 |
| Acquisition of joint ventures | – | – | – | – |
| Divestment of joint ventures | –50 | – | –57 | – |
| Participation in profit/loss | –8 | –21) | – | – |
| Translation differences | 0 | –1 | – | – |
| Other changes in the joint venture's shareholders' equity |
– | –15 | – | – |
| Carrying amount, 31 December |
– | 58 | – | 57 |
1) The participation in profit/loss for the year includes an earnings adjustment pertaining to Nobia's share of Culinoma's profit/loss of negative SEK 3 million.
The figures presented below refer to Culinoma Group AG.
| SEK m | 2010 | 2009 |
|---|---|---|
| Income | 242 | 1,866 |
| Expenses | –258 | –1,864 |
| Profit/loss after tax | –16 | 2 |
| Fixed assets | – | 907 |
| Current assets | – | 336 |
| Total assets | – | 1,243 |
| Current liabilities | – | 255 |
| Long-term liabilities | – | 885 |
| Total liabilities | – | 1,140 |
| Net assets/net liabilities | – | 103 |
| Nobia's share of net assets/net liabilities | – | 51 |
| Equity/assets ratio, % | – | 8.2 |
| Net debt, SEK m | – | 686 |
| Capital employed, SEK m | – | 884 |
| Number of stores | – | 87 |
Nobia AB's holdings of shares and participations in operating Group companies, %.
| Corporate | ||||||
|---|---|---|---|---|---|---|
| Registration Number | Domicile | Share of equity, % | No. of shares | 2010 | 2009 | |
| Nobia Sverige AB | 556060-1006 | Stockholm | 100 | 100 | 456 | 456 |
| Sigdal Kjøkken AS | Kolbotn | 100 | ||||
| Marbodal AB | 556038-0072 | Tidaholm | 100 | |||
| Marbodal OY* | Helsinki | 100 | ||||
| Nobia Denmark A/S | Ølgod | 100 | ||||
| HTH Kök Svenska AB | 556187-3190 | Helsingborg | 100 | |||
| Nobia Denmark Retail A/S | Ølgod | 100 | ||||
| HTH Kuchni Ekspert w. Kuchni S.p.z.o.o. | Warsaw | 83,8 | ||||
| Novart OY | Nastola | 100 | ||||
| Nobia Holding (UK) Limited | Darlington | 100 | ||||
| Magnet Ltd | Darlington | 100 | ||||
| Hiveserve Ltd | Darlington | 100 | ||||
| Larkflame Ltd | Darlington | 100 | ||||
| Magnet (Retail) Ltd | Dublin | 100 | ||||
| Magnet (Isle of Man ) Limited | Man | 100 | ||||
| Aqua Ware Ltd* | Darlington | 100 | ||||
| Magnet Group Trustees Ltd* | Darlington | 100 | ||||
| Magnet Group Ltd* | Darlington | 100 | ||||
| Flint Properties Ltd* | Darlington | 100 | ||||
| Eastham Ltd* | Darlington | 100 | ||||
| Hyphen Fitted Furniture Ltd* | Darlington | 100 | ||||
| Magnet Distribution Ltd* | Darlington | 100 | ||||
| The Penrith Joinery Company Ltd* | Darlington | 100 | ||||
| Magnet & Southerns Ltd* | Darlington | 100 | ||||
| Magnet Furniture Ltd* | Darlington | 100 | ||||
| Magnet Joinery Ltd* | Darlington | 100 | ||||
| Magnet Manufacturing Ltd* | Darlington | 100 | ||||
| Magnet Retail Ltd* | Darlington | 100 | ||||
| Magnet Supplies Ltd* | Darlington | 100 | ||||
| Magnet Industries Ltd* | Darlington | 100 | ||||
| Magnet Kitchens Ltd* | Darlington | 100 | ||||
| Firenzi Kitchens Ltd* | Darlington | 100 | ||||
| Gower Group Ltd | Halifax | 100 | ||||
| Gower Furniture Ltd | Halifax | 100 | ||||
| Charco Ninety-Nine Ltd | Halifax | 100 | ||||
| WOR Ltd* | Halifax | 100 | ||||
| Gower Windows Ltd* | Halifax | 100 | ||||
| Eurostyle Furniture Ltd* | Halifax | 100 | ||||
| Beverly Doors Ltd* | Halifax | 100 | ||||
| Working Systems Ltd* | Halifax | 100 | ||||
| Perfectshot Ltd* | Halifax | 100 | ||||
| Addspace Products Ltd* | Halifax | 100 | ||||
| Gower Garden Furniture Ltd* | Halifax | 100 |
| Corporate Regis | Carrying amount | |||||
|---|---|---|---|---|---|---|
| tration Number | Domicile | Share of equity, % | No. of shares | 2010 | 2009 | |
| Lovene Dörr AB* | 556038-1724 | Gothenburg | 100 | |||
| Star Möbelwerk GmbH* | Herford | 99,95 | ||||
| Nobia Interiör AB** | 556039-2440 | Tidaholm | 100 | |||
| Swedoor Bauelementevertrieb Gmbh* | Herford | 100 | ||||
| Nobia Köksinvest AB** | 556062-9502 | Värnamo | 100 | |||
| Myresjökök AB | 556048-3256 | Älmhult | 100 | 30,000 | 92 | 77 |
| Poggenpohl Möbelwerke GmbH | Herford | 98,57 | 532 | 532 | ||
| Poggenpohl Group UK Ltd | London | 100 | ||||
| Norman Glen Kitchens & Interiors Ltd | London | 100 | ||||
| Wigmore Street Kitchens Ltd | London | 100 | ||||
| Ultimate Kitchens (Pimlico) Ltd | London | 100 | ||||
| Poggenpohl Austria Gmbh | Vienna | 100 | ||||
| Poggenpohl France SARL Montesson | Montesson Cedex | 100 | ||||
| Poggenpohl Nederland BV | Veldhoven | 100 | ||||
| SA Poggenpohl Belgium NV* | Ghent | 100 | ||||
| Poggenpohl US Inc. Fairfield | Fairfield NJ | 100 | ||||
| Poggenpohl Group Schweiz AG | Littau | 100 | ||||
| Poggenpohl AB | 556323-2551 | Stockholm | 100 | |||
| Poggenpohl A/S | Copenhagen | 100 | ||||
| Poggenpohl Japan Co Ltd | Tokyo | 100 | ||||
| Möbelwerkstätten Josef Ritter GmbH | Herford | 100 | ||||
| Poggenpohl Forum Gmbh | Herford | 100 | ||||
| Goldreif Möbelfabrik GmbH* | Herford | 100 | ||||
| WKF Wehdemer Komponentfertigung Gmbh* | Stemwede | 100 | ||||
| Optifit Jaka-Möbel GmbH | Stemwede | 100 | ||||
| Marlin Bad-Möbel GmbH | Stemwede | 100 | ||||
| Nobia Holding France SAS | Seclin | 100 | ||||
| Hygena Cuisines SAS | Seclin | 100 | ||||
| Hygena Cuisines Spain SAU | Barcelona | 100 | ||||
| Norema ASA Jevnaker | Jevnaker | 100 | 20,000 | 154 | 154 | |
| Invita Køkkener A/S*** | Bording | 100 | 6,000,000 | – | 151 | |
| Invita Retail A/S | Ølgod | 100 | ||||
| Invita Köksstudio Malmö | 556634-7497 | Malmö | 100 | |||
| Norema Försäljnings AB** | 556236-4280 | Stockholm | 100 | 1,000 | 0 | 0 |
| Nobia Beteiligungs-GmbH | Wels | 100 | 21) | 21) | ||
| Nobia Liegenschafts- und Anlagenverwaltungs-GmbH |
Wels | 100 | 11) | 11) | ||
| EWE Küchen GmbH | Wels | 100 | ||||
| FM Küchen GmbH | Linz | 100 | ||||
| Other | 8 | 6 | ||||
| Total | 1,245 | 1,379 |
1) The company is 1-per cent-owned by Nobia AB and 99-per cent-owned by the subsidiary, Nobia Sverige AB. The details concern the 1-per cent holding. * The company is dormant.
** The company is being liquidated.
*** The company was merged with Nobia Denmark A/S.
| Note 18 Derivative instruments |
||||
|---|---|---|---|---|
| Group | Parent Company | |||
| Carrying | Carrying | |||
| amount | Fair value | amount | Fair value | |
| SEK m | 2010 | 2010 | 2010 | 2010 |
| Forward agreements, transaction exposure – assets | 8 | 8 | – | – |
| Forward agreements, transaction exposure – liabilities | 11 | 11 | – | – |
| Total | –3 | –3 | – | – |
Unrealised gains and losses totalling a net loss of SEK 1 million in shareholders' equity for forward agreements as per 31 December 2010 will be recognised in the income statement at different times within 12 months of the closing date. For information about forward agreements, see Note 2 Financial risks on page 51. Unrealised gains and losses totalling a net loss of SEK 4 million were reversed in the income statement in their entirety in 2010.
| Note 19 Prepaid expenses and accrued income |
||||||
|---|---|---|---|---|---|---|
| Group | Parent Company | |||||
| SEK m | 2010 | 2009 | 2010 | 2009 | ||
| Prepaid rent | 35 | 47 | – | – | ||
| Bonus from supplier | 55 | 66 | 4 | 9 | ||
| Prepaid bank charges | 17 | 2 | – | – | ||
| Insurance policies | 7 | 12 | 1 | 1 | ||
| Accrued income from property | ||||||
| sales and rental contracts | 1 | 8 | – | – | ||
| Other | 67 | 133 | 1 | 15 | ||
| Total | 182 | 268 | 6 | 25 |
| Note 20 | Cash and cash equivalents | ||||
|---|---|---|---|---|---|
| Group | Parent Company | ||||
| SEK m | 2010 | 2009 | 2010 | 2009 | |
| Cash and bank balances | 356 | 384 | 169 | 170 |
Unutilised credit facilities, which are not included in cash and cash equivalents, totalled SEK 391 million (512) in the Group, and SEK 312 million (412) in the Parent Company at year-end. In addition to the overdraft facilities, the company has unutilised credit commitments of SEK 1,554 million (3,554).
| No. of registered shares |
No. of shares outstanding |
|
|---|---|---|
| As per 1 January 2009 As per 31 December 2009 |
175,293,458 175,293,458 |
167,131,158 167,131,158 |
The share capital amounts to SEK 58,430,237. The par value per share is SEK 0.33. All of the registered shares are fully paid. All shares are ordinary shares of the same type. Nobia owns 8,162,300 bought-back shares (8,162,300). Bought-back shares are not reserved for issue according to the option agreement or other sale.
A specification of changes in shareholders' equity is provided on pages 42 and 45.
| Translation | Hedging | ||
|---|---|---|---|
| SEK m | reserve | reserve | Total |
| Opening balance, 1 January 2009 |
101 | 45 | 146 |
| Exchange-rate differences attributable to translation of foreign operations |
–77 | – | –77 |
| Cash-flow hedges, before tax | – | –68 | –68 |
| Tax attributable to change in hedging reserve for the year |
– | 19 | 19 |
| Closing balance, 31 December 2009 |
24 | –4 | 20 |
| Opening balance, 1 January 2010 |
24 | –4 | 20 |
| Exchange-rate differences attributable to translation of foreign operations |
–405 | – | –405 |
| Cash-flow hedges, before tax | – | 4 | 4 |
| Tax attributable to change in hedging reserve for the year |
– | –1 | –1 |
| Closing balance, 31 December 2010 |
–381 | –1 | –382 |
The translation reserve includes all exchange-rate differences arising in conjunction with the translation of financial statements from foreign operations that have prepared their financial statements in a different currency to the currency in which the consolidated financial statements are prepared. The Parent Company and Group present their financial statements in SEK.
The hedging reserve includes the effective portion of the accumulated net change in fair value of a cash-flow hedging instrument attributable to hedging transactions that have not yet occurred.
Earnings per share before dilution are calculated by dividing profit attributable to the Parent Company's shareholders by the weighted average number of outstanding ordinary shares during the period.
| 2010 | 2009 | |
|---|---|---|
| Profit attributable to Parent Company's shareholders, SEK m |
–89 | –79 |
| Profit from continuing operations, SEK m | –54 | –2 |
| Profit from discontinued operations, SEK m | –35 | –77 |
| Weighted average number of outstanding ordinary shares before dilution |
167,131,158 | 167,131,158 |
| Earnings per share before dilution, SEK | –0.53 | –0.47 |
| Earnings per share before dilution, for continuing operations, SEK |
–0.32 | –0.01 |
| Earnings per share before dilution, for discontinued operations, SEK |
–0.21 | –0.46 |
To calculate earnings per share after dilution, the weighted average number of outstanding ordinary shares is adjusted for the dilution effect of all potential ordinary shares. These potential ordinary shares are attributable to the employee share options that were allotted to senior executives in 2007, 2008, 2009 and 2010. Refer also to Notes 4 and 21 on pages 54 and 63.
A dilution effect arises if the issue price is lower than the fair value of the ordinary shares. The dilution effect appears as the difference between the number of shares that option holders are entitled to subscribe for, and the number of shares valued at fair value and to which the subscription payment corresponds. The difference is treated as an issue of shares for which the company does not receive any payment.
At present, the options from the four share option schemes are not dilutive, but they may be in future. Three circumstances may prevail for the options not to result in any dilutive effect. The first circumstance is that the
| Provisions for pensions, SEK m | 2010 | 2009 |
|---|---|---|
| Defined-benefit pension plans | 587 | 656 |
There are several defined-benefit pension plans within the Group, whereby the employee's right to remuneration after termination of employment is based upon final salary and period of service. These plans are primarily found in the UK, Sweden, Norway and Germany.
Commitments for old-age pensions and family pensions for salaried employees in Sweden are secured on the basis of the FPG/PRI system and insurance primarily with Alecta. According to statement UFR 3 from the Swedish Financial Reporting Board, the insurance with Alecta is a multiemployer defined-benefit plan. Since the Group did not have access to information in the 2010 fiscal year that would make it possible to recognise this plan as a defined-benefit plan, ITP pension plans secured on the basis of insurance with Alecta have been recognised as defined-contribution plans. Fees for pension insurance with Alecta for the year amounted to SEK 2.0 million (2.1). On 31 December 2010, Alecta's surplus, which can be distributed between the policy holder and/or the persons insured in the form of the collective consolidation rate, amounted to 143 per cent (141 per cent in December 2009). The collective consolidation rate com-prises the market value of Alecta's assets as a percentage of the insurance commitments calculated in accordance with Alecta's actuarial calculation assumptions, which are not in agreement with IAS 19.
exercise price for the options exceeds the average share price during the part of the year when the options were outstanding. The second is that the earnings per share that have been achieved to date fail to fulfil the earnings conditions without the contribution of future profits. The third is that during an unprofitable year (earnings from continuing operations), Nobia will not be able to calculate dilution from options; the company will have to turn a profit before dilution can occur. If the effect of these circumstances ceases, the said schemes will become dilutive. At least one of these circumstances prevailed between 2008 and 2010, which is why no dilutive effect arose. The earnings targets for the 2007 scheme were not achieved and, accordingly, did not give rise to any dilutive effect.
| 2010 | 2009 | |
|---|---|---|
| Weighted average number of outstanding ordinary shares |
167,131,158 | 167,131,158 |
| Employee share option scheme 2006, 2007, 2008, 2009, 2010 |
– | – |
| Weighted average number of outstanding ordinary shares after dilution |
167,131,158 | 167,131,158 |
| Earnings per share after dilution, SEK | –0.53 | –0.47 |
| Earnings per share after dilution, from continuing operations, SEK |
–0.32 | –0.01 |
| Earnings per share after dilution, from discontinued operations, SEK |
–0.21 | –0.46 |
At the Annual General Meeting on 30 March 2011, the Board of Directors proposes that no dividend be paid for the 2010 fiscal year. During 2010, no dividend was paid for the 2009 fiscal year. SEK 0.4 million was paid to noncontrolling interests in subsidiaries. No dividend was paid in 2009 for the 2008 fiscal year. SEK 0.3 million was paid to non-controlling interests in subsidiaries.
The amounts recognised in the consolidated balance sheet have been calculated as follows:
| Net liability in balance sheet | 587 | 656 |
|---|---|---|
| Unrecognised actuarial gains (+)/losses (–) | –67 | –60 |
| Present value of unfunded obligations | 127 | 118 |
| 527 | 598 | |
| Fair value of plan assets | –1,451 | –1,462 |
| Present value of funded obligations | 1,978 | 2,060 |
| SEK m | 2010 | 2009 |
The net liability for defined-benefit plans amounting to SEK 587 million (656) is recognised in its entirety in the "Provisions for pensions" item in the consolidated balance sheet. The breakdown of the net liability at yearend was as follows: UK 79 per cent, Sweden 11 per cent, Germany 8 per cent and Norway 2 per cent.
Changes in the defined-benefit pension commitments during the year were as follows:
| Amount at year-end | 2,105 | 2,178 |
|---|---|---|
| Benefits paid | –96 | –88 |
| Reclassification from defined-benefit to defined-contribution pension plans |
– | –45 |
| Exchange-rate differences | –179 | 26 |
| Actuarial losses (+)/gains (–) | 80 | 354 |
| Contributions from plan participants | – | 3 |
| Interest expense | 113 | 112 |
| Costs for service during current year | 9 | 25 |
| At beginning of the year | 2,178 | 1,791 |
| SEK m | 2010 | 2009 |
The change in fair value of plan assets during the year was as follows:
| SEK m | 2010 | 2009 |
|---|---|---|
| At beginning of the year | 1,462 | 1,273 |
| Expected return on plan assets | 76 | 72 |
| Actuarial losses (–)/gains (+) | 68 | 81 |
| Exchange-rate differences | –125 | 25 |
| Employer contributions | 59 | 89 |
| Employee contributions | – | 3 |
| Benefits paid | –89 | –81 |
| Amount at year-end | 1,451 | 1,462 |
The amounts recognised in the consolidated income statement are as follows:
| SEK m | 2010 | 2009 |
|---|---|---|
| Costs for service during current year | 12 | 24 |
| Interest expense | 113 | 112 |
| Expected return on plan assets | –76 | –72 |
| Actuarial net losses recognised during the year | –1 | –3 |
| Gains at change in pension conditions1) | – | –42 |
| Total pension costs | 48 | 19 |
1) Pertains to change in pension conditions for defined-benefit to defined-contribution for new vesting in 2010 and onward in the British company Magnet.
Costs in the consolidated income statement are divided between the following items:
| SEK m | 2010 | 2009 |
|---|---|---|
| Cost of goods sold | 3 | 3 |
| Selling expenses | 3 | 4 |
| Administrative expenses | 5 | –28 |
| Net financial items | 37 | 40 |
| Total pension costs | 48 | 19 |
The actual return on the plan assets of the pension plans amounted to SEK 155 million (167).
Principal actuarial assumptions on the closing date:
| % | 2010 | 2009 |
|---|---|---|
| Discount rate | 3.2–5.3 | 5.4–5.8 |
| Expected return on plan assets | 5.6–5.9 | 5.8–6.3 |
| Future annual salary increases | 2.9 | 4.5 |
| Future annual pension increases | 3.4 | 3.5 |
The expected average number of years of life remaining after retirement at 65 years of age is as follows:
| 2010 | 2009 | |
|---|---|---|
| On closing date | ||
| Men | 21.3 | 20.9 |
| Women | 24.4 | 23.7 |
| Women | 26.8 | 25 |
|---|---|---|
| Men | 22.6 | 21.3 |
Plan assets comprise the following:
| % | 2010 | 2009 |
|---|---|---|
| Shares | 46 | 46 |
| Interest-bearing securities | 21 | 22 |
| Other | 33 | 32 |
| 100 | 100 |
The expected return on plan assets was determined by taking into consideration the current level of expected return on risk-free investments, the historic estimated risk premium on the other assets encompassed by the investment policy in question and the estimate of expected future return for each type of asset. The expected return for each type of asset was weighted on the distribution of assets in the applicable investment policy.
Contributions to remuneration plans after employment has been completed are expected to amount to SEK 65 million (63) for the 2011 fiscal year.
| SEK m | 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
| Present value of defined-benefit commitments |
2,105 | 2,178 | 1,791 2,250 | 2,442 | |
| Fair value of plan assets | 1,451 | 1,462 | 1,273 | 1,668 | 1,704 |
| Deficit/surplus | 654 | 716 | 518 | 582 | 738 |
| Experience-based adjustments of defined-benefit commitments |
23 | –89 | 0 | 0 | 233 |
| Experience-based adjustments of plan assets |
64 | 95 | –280 | –54 | 54 |
Total pension costs recognised in the consolidated income statement are as follows:
| Pension costs, SEK m | 2010 | 2009 |
|---|---|---|
| Total costs for defined-benefit plans | 12 | 24 |
| Total costs for defined-contribution plans | 146 | 147 |
| Costs for special employer's contribution and tax | ||
| on returns from pension | 24 | 24 |
| Total pension costs | 182 | 195 |
| Provisions for pensions, SEK m | 2010 | 2009 |
|---|---|---|
| Provisions in accordance with Pension Obligations | ||
| Vesting Act, FPG/PRI pensions | 8 | 7 |
The costs are recognised in the Parent Company's income statement as follows:
| 2 |
|---|
The total pension cost recognised in the Parent Company's income statement is as follows:
| Pension costs, SEK m | 2010 | 2009 |
|---|---|---|
| Total costs for defined-benefit plans | 3 | 1 |
| Total costs for defined-contribution plans | 4 | 5 |
| Costs for special employer's contribution and tax | ||
| on returns from pension funds | 1 | 1 |
| Total pension costs | 8 | 7 |
The Parent Company's pension liabilities are calculated at a discount rate of 3.8 per cent (3.8).
The assumptions are calculated based on the salary levels applicable on the closing date. No payment of defined-benefit pension plans in the Parent Company is expected in 2011.
| 2010 | 2009 | ||||||
|---|---|---|---|---|---|---|---|
| SEK m | Deferred tax assets |
Deferred tax liabilities |
Net | Deferred tax assets |
Deferred tax liabilities |
Net | |
| Opening balance | 293 | 225 | 68 | 258 | 291 | –33 | |
| Recognised in profit and loss | 133 | 13 | 120 | 31 | –37 | 68 | |
| Changes in forward agreements | 0 | – | 0 | 2 | –17 | 19 | |
| Reclassifications | 13 | 13 | 0 | – | – | – | |
| Corporate acquisitions | – | – | – | – | 1 | –1 | |
| Divestment of companies | – | –8 | 8 | – | – | – | |
| Other changes1) | – | –7 | 7 | 0 | –4 | 4 | |
| Translation differences | –33 | –25 | –8 | 2 | –9 | 11 | |
| Closing balance | 406 | 211 | 195 | 293 | 225 | 68 |
| Defined-benefit | Other temporary | Loss | ||
|---|---|---|---|---|
| pension plans | differences | carryforwards | Total | |
| As per 1 January 2009 | 174 | 66 | 18 | 258 |
| Recognised in profit for the year | –23 | –8 | 62 | 31 |
| Recognised in other comprehensive income | – | 2 | – | 2 |
| Reclassification | 4 | –4 | – | 0 |
| Translation differences | 4 | –1 | –1 | 2 |
| As per 31 December 2009 | 159 | 55 | 79 | 293 |
| Recognised in profit for the year | –11 | 27 | 117 | 133 |
| Recognised in other comprehensive income | 0 | – | – | 0 |
| Reclassification | – | 13 | – | 13 |
| Other changes1) | – | 0 | – | 0 |
| Translation differences | –12 | –8 | –13 | –33 |
| As per 31 December 2010 | 136 | 87 | 183 | 406 |
| Deferred tax liabilities | Temporary differences in fixed assets |
Other | Total | |
| As per 1 January 2009 | 235 | 56 | 291 | |
| Recognised in profit for the year | 4 | –41 | –37 | |
| Recognised in other comprehensive income | – | –17 | –17 | |
| Reclassification | –6 | 6 | 0 | |
| Corporate acquisitions | 1 | – | 1 | |
| Other changes1) | 1 | –5 | –4 | |
| Translation differences | –11 | 2 | –9 | |
| As per 31 December 2009 | 224 | 1 | 225 | |
| Recognised in profit for the year | 12 | 1 | 13 | |
| Recognised in other comprehensive income | 0 | – | 0 | |
| Reclassification | 3 | 10 | 13 | |
| Corporate acquisitions | –8 | – | –8 | |
| Other changes1) | –5 | –2 | –7 | |
| Translation differences | –27 | 2 | –25 | |
| As per 31 December 2010 | 199 | 12 | 211 |
1) Other changes in 2010 pertain to items that were included in "Liabilities attributable to assets held for sales" in the preceding year but that have now been reclassified.
The change in loss carryforwards pertains primarily to France. Deferred tax assets at year-end were primarily attributable to France, Sweden and the US. The loss carryforward attributable to the US will expire in 2011 or later. The value of the loss carryforward for which a deferred tax asset is not recognised amounts to SEK 50 million (36) and is primarily attributable to Spain, Germany and the US. Of the loss carryforwards that have not been recognised, approximately SEK 7 million will expire in 2011, SEK 4 million in 2012, SEK 20 million in 2017 or later and SEK 19 million of the unrecognised loss carryforwards have no date of expiry.
Nobia does not recognise any deferred tax attributable to temporary differences relating to investments in subsidiaries or associated companies. Any future effects (withholding tax and other deferred tax for profit taking within the Group) are recognised when Nobia is no longer able to govern the reversal of such differences or when, for other reasons, it is no longer improbable that reversals will be made in the foreseeable future. These possible future effects are not deemed to have any relation to the overall amount of the temporary differences.
| Note 27 Other provisions |
||||||
|---|---|---|---|---|---|---|
| SEK m | Unutilised tenancy rights |
Dilapidations | Other long-term employee benefits |
Structural costs | Other | Total |
| As per 1 January 2010 | 57 | 15 | 60 | 39 | 3 | 174 |
| Expensed in the consolidated income statement | ||||||
| – Additional provisions | 34 | 8 | 7 | 264 | 6 | 319 |
| – Reversed unutilised amounts | – | – | – | – | – | – |
| Reclassification | –2 | –2 | ||||
| Utilised during the year | –24 | –1 | –2 | –45 | –1 | –73 |
| Translation differences | –5 | –1 | –8 | –5 | –1 | –20 |
| As per 31 December 2010 | 60 | 21 | 57 | 253 | 7 | 398 |
The additional provisions for restructuring costs primarily comprise personnel-related expenses of SEK 105 million and rent for premises of SEK 115 million. At year-end, provisions for personnel-related expenses totalled SEK 95 million and these will be charged to cash flow during 2011. The provision for rent for premises will impact cash flow between 2011 and 2015.
| 2010 | 2009 | 2010 | 2009 |
|---|---|---|---|
| – | – | – | – |
| 1,246 | 2,446 | 800 | – |
| – | – | – | – |
| 1,246 | 2,446 | 800 | – |
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 |
| Bonuses to customers | 110 | 110 | – | – |
| Accrued salary-related costs | 260 | 339 | 6 | 8 |
| Accrued interest | 5 | 1 | 3 | – |
| Rents | 43 | 48 | – | – |
| Other | 361 | 475 | 7 | 9 |
| Total | 779 | 973 | 16 | 17 |
| Group 2010 | Derivatives used in | Accounts and | Total | ||
|---|---|---|---|---|---|
| SEK m | hedge accounting | loans receivable | Other liabilities | carrying amount | Fair value |
| Long-term interest-bearing receivables | – | 10 | – | 10 | 10* |
| Other long-term receivables | – | 52 | – | 52 | 52* |
| Accounts receivable | – | 1,180 | – | 1,180 | 1,180* |
| Current interest-bearing receivables | – | 1 | – | 1 | 1* |
| Other receivables | 8 | 87 | – | 95 | 95* |
| Total | 8 | 1,330 | – | 1,338 | 1,338 |
| Long-term interest-bearing liabilities | – | – | 1,247 | 1,247 | 1,241 |
| Current interest-bearing liabilities | – | – | 43 | 43 | 43* |
| Accounts payable | – | – | 1,037 | 1,037 | 1,037* |
| Other liabilities | 11 | – | 368 | 379 | 379* |
| Total | 11 | – | 2,695 | 2,706 | 2,700 |
| Unrecognised gains/losses | – | – | – | – | – |
| Group 2009 | Derivatives used in | Accounts and | Total | ||
| SEK m | hedge accounting | loans receivable | Other liabilities | carrying amount | Fair value |
| Long-term interest-bearing receivables | – | 350 | – | 350 | 350* |
| Other long-term receivables | – | 66 | – | 66 | 66* |
| Accounts receivable | – | 1,441 | – | 1,441 | 1,441* |
| Current interest-bearing receivables | – | 2 | – | 2 | 2* |
| Other receivables | 7 | 125 | – | 132 | 132* |
| Total | 7 | 1,984 | – | 1,991 | 1,991 |
|---|---|---|---|---|---|
| Long-term interest-bearing liabilities | – | – | 2,456 | 2,456 | 2,420 |
| Current interest-bearing liabilities | – | – | 50 | 50 | 50* |
| Accounts payable | – | – | 1,189 | 1,189 | 1,189* |
| Other liabilities | 12 | – | 420 | 432 | 432* |
| Total | 12 | – | 4,115 | 4,127 | 4,091 |
| Unrecognised gains/losses | – | – | – | – | – |
* The carrying amount is considered to be an acceptable approximation of fair value. The effective interest rate of the receivables was very close to the market-based interest rate of the loans.
Exchange-rate gains and losses pertaining to the operations are recognised in operating income and operating expense in the net amount of negative SEK 26 million (pos: 12). Financial exchange-rate gains and losses are recognised in net financial items in the amount of negative SEK 13 million (pos: 13).
| Accounts and | Total | |||
|---|---|---|---|---|
| SEK m | loans receivable | Other liabilities | carrying amount | Fair value |
| Accounts receivable | 2 | – | 2 | 2* |
| Other receivables | 3,686 | – | 3,686 | 3,686* |
| Total | 3,688 | – | 3,688 | 3,688 |
| Current interest-bearing liabilities | – | 779 | 779 | 779* |
| Accounts payable | – | 11 | 11 | 11* |
| Other liabilities | – | 1 | 1 | 1* |
| Total | – | 791 | 791 | 791 |
| Unrecognised gains/losses | – | – | – | – |
| Parent Company 2009 | ||||
|---|---|---|---|---|
| Accounts and | Total | |||
| SEK m | loans receivable | Other liabilities | carrying amount | Fair value |
| Accounts receivable | 3 | – | 3 | 3* |
| Other receivables | 2,432 | – | 2,432 | 2,432* |
| Total | 2,435 | – | 2,435 | 2,435 |
| Current interest-bearing liabilities | – | 562 | 562 | 562* |
| Accounts payable | – | 5 | 5 | 5* |
| Other liabilities | – | 4 | 4 | 4* |
| Total | – | 571 | 571 | 571 |
| Unrecognised gains/losses | – | – | – | – |
* The carrying amount is deemed to be an acceptable approximation of the fair value. The effective interest rate of the receivables was every close to the market-based interest rate of the loans.
Level 1 according to prices listed in an active market for the same instrument.
Level 2 based directly or indirectly on observable market information not included in Level 1.
Level 3 based on input that is not observable in the market.
Nobia has only financial instruments that are measured at fair value in accordance with level 2, meaning based directly or indirectly on observable market information. These instruments comprise derivative instruments amounting to SEK 8 million (7) in assets and SEK 11 million (12) in liabilities.
| Note 31 Pledged assets |
||||||
|---|---|---|---|---|---|---|
| Group | Parent Company | |||||
| SEK m | 2010 | 2009 | 2010 | 2009 | ||
| For liabilities to credit institutions | ||||||
| Floating charges | – | – | – | – | ||
| Endowment insurance | 4 | 2 | 4 | 2 | ||
| Property mortgage | – | – | – | – | ||
| Total pledged assets | 4 | 2 | 4 | 2 |
The Group has contingent liabilities pertaining to sub-contractor guarantees, pension liabilities, bank guarantees for loans and other guarantees and other considerations that arise in normal commercial operations. No significant liabilities are expected to arise through these contingent liabilities. Based on the company's assessment, no provision has been posted for ongoing tax cases. The amounts involved are not considered to have any significant effect on the company's results or financial position.
In their normal business activities, the Group and the Parent Company have posted the following guarantees and contingent liabilities:
| Group | Parent Company | |||
|---|---|---|---|---|
| SEK m | 2010 | 2009 | 2010 | 2009 |
| Securities for pension commitments |
1 | 1 | 12 | 11 |
| Other contingent liabilities | 187 | 258 | 666 | 2,687 |
| Total | 188 | 259 | 678 | 2,698 |
No acquisitions took place in 2010. The acquisition analysis for 2009 pertains to the seven companies with eight stores that were acquired in Denmark. In 2010, the fair-value costs were finally determined, which meant that goodwill rose by SEK 1 million.
| Acquired net assets and goodwill, SEK m | 2010 | 2009 |
|---|---|---|
| Purchase consideration, including costs | – | 63 |
| Fair value of acquired net assets | – | –39 |
| Goodwill | – | 24 |
Goodwill is attributable to synergies expected to be achieved through additional co-ordination of the product offering, in the customer-service organisation and in distribution.
| 2009 | |||
|---|---|---|---|
| Acquired | |||
| Fair | carrying | Fair | carrying |
| value | amount | value | amount |
| – | – | –1 | –1 |
| – | – | 25 | 25 |
| – | – | 7 | 3 |
| – | – | 7 | 7 |
| – | – | 43 | 43 |
| – | – | –34 | –34 |
| – | – | –5 | –5 |
| – | – | –2 | –2 |
| – | – | –1 | 1 |
| – | – | 39 | 36 |
| 2009 | |||
| 2010 Acquired |
2010 |
| Change in the Group's cash and cash equivalents in con junction with acquisitions |
– | 64 |
|---|---|---|
| acquired subsidiaries | – | 1 |
| Cash and cash equivalents in | ||
| Additional purchase consideration | – | – |
| cash | – | 63 |
| Purchase consideration settled in |
In 2008 and 2009, Nobia acquired a total of ten stores from franchise holders in Denmark with the intention of subsequently selling on. Two of these stores were subsequently sold on in 2009. An additional five stores were acquired in 2010 and four were sold on. At year-end 2010, Nobia owned a total of nine stores that are recognised as discontinued operations and disposal groups held for sale in accordance with IFRS 5. These stores are recognised in the Nordic region operating segment.
In 2009, Nobia divested its window production in the UK. The earnings from operations and earnings from divestment of discontinued operations are recognised in the UK region operating segment.
| Profit from discontinued operations | Group | |
|---|---|---|
| SEK m | 2010 | 2009 |
| Loss from business activities of discontinued operations |
||
| Income | 98 | 183 |
| Expenses | –137 | –227 |
| Loss before tax | –39 | –44 |
| Tax | 6 | 12 |
Loss after tax –33 –32
| –17 | –6 |
|---|---|
| 4 | 0 |
| –13 | –6 |
| 11 | –47 |
| 0 | 8 |
| 11 | –39 |
| –35 | –77 |
| –0.21 | –0.46 |
| –0.21 | –0.46 |
The loss from discontinued operations of SEK 35 million (loss: 77) is attributable to the Parent Company's owners. Of the loss of SEK 54 million (loss: 2) from continuing operations, the loss of SEK 54 million (loss: 2) is attributable to the Parent Company's owners.
| Net cash flow from discontinued operations | 2010 |
|---|---|
| Cash flow from operating activities | 15 |
| Cash flow from investing activities | –8 |
| Cash flow from financing activities | 0 |
| Net cash flow from discontinued operations | 7 |
Nobia intends to divest a production property in Denmark and a production property in Sweden in 2011. These properties are recognised in accordance with IFRS 5 under "Assets held for sale," which is also where the assets and liabilities of the nine stores that Nobia acquired in 2008– 2010 with the intention of selling on are recognised, refer also to Note 34.
| Group | |
|---|---|
| SEK m | 2010 |
| Assets held for sale | |
| Divestment group for sale: | |
| Tangible fixed assets | 64 |
| Inventories | 1 |
| Accounts receivable and other receivables | 7 |
| 72 |
| Liabilities classified as led for sale | 2010 |
|---|---|
| Divestment group for sale: | |
| Accounts payable and other liabilities | 11 |
| 11 |
No sales of goods were made to and no purchases of goods were made from the Parent Company to other Group companies during the year. Group-wide services are invoiced to subsidiaries. A specification of subsidiaries is presented in Note 17 on page 61.
Following the divestment of the 50-per-cent holding in the joint venture Culinoma AG, the Group no longer has any associated companies. Accordingly, sales of goods during the year amounted to SEK 0 million (106). The closing balance at year-end amounted to SEK 0 million (10), refer also to Note 16 on page 60.
Remuneration was paid to senior executives during the year; refer also to Note 4, on page 54.
| 2010 | 2009 | |||
|---|---|---|---|---|
| Average no. | Of whom, | Average no. | Of whom, | |
| Subsidiaries in: | of employees | men | of employees | men |
| Sweden | 790 | 615 | 702 | 631 |
| Denmark | 1,271 | 902 | 1,263 | 833 |
| Norway | 286 | 121 | 311 | 142 |
| Finland | 428 | 303 | 368 | 260 |
| Germany | 623 | 468 | 942 | 750 |
| Austria | 478 | 392 | 442 | 363 |
| UK | 2,573 | 1,997 | 2,769 | 2,173 |
| France | 1,049 | 512 | 990 | 523 |
| US | 59 | 26 | 62 | 28 |
| Switzerland | 32 | 25 | 33 | 26 |
| Poland | 24 | 24 | 31 | 31 |
| The Netherlands | 2 | 2 | 2 | 2 |
| Spain | 9 | 2 | 12 | 5 |
| Japan | 3 | 1 | 3 | 3 |
| Group | 7,627 | 5,390 | 7,930 | 5,770 |
| Of which, Parent Company |
16 | 11 | 13 | 8 |
| 2010 | 2009 | |||
|---|---|---|---|---|
| Number on closing date |
Of whom, men, % |
Number on closing date |
Of whom, men, % |
|
| Board members | 68 | 84 | 81 | 77 |
| President and other senior executives |
80 | 86 | 98 | 85 |
| Group | 148 | 85 | 179 | 80 |
Several people are members of more than one of the subsidiaries' Boards of Directors or management groups.
| 2010 | 2009 | |||
|---|---|---|---|---|
| Number on closing date |
Of whom, men, % |
Number on closing date |
Of whom, men, % |
|
| Board members | 13 | 77 | 13 | 77 |
| President and other senior executives |
15 | 93 | 11 | 82 |
| Parent Company | 28 | 86 | 24 | 83 |
With the aim of clarifying and simplifying its lines of decision-making, a new organisation was introduced on 22 January 2011.
The reorganisation implies that the employees who previously reported to the then vacant position of Chief Commercial Officer, CCO, and Chief Operations Officer, COO, will instead report directly to the Chief Executive Officer.
A revised Group management team was appointed, effective from 1 March 2011, refer to page 34.
The organisational changes are in line with the geographic regions and the divisions between the operations and commercial units.
The Board of Directors and President verify that the Annual Report has been compiled in compliance with generally accepted accounting policies in Sweden, and the consolidated financial statements with the international accounting standards, referred to in the European Parliament's and Council of Europe's Regulation (EC) No.1606/2002 dated 19 July 2002 regarding the application of international accounting standards. The Annual Report and the consolidated financial statements provide a true and fair view of the Parent Company's and the Group's financial position and earnings. The Reports of the Board of Directors for both the Group and the Parent Company provide a fair overview of the Group's and the Parent Company's operations, financial positions and earnings and describe the significant risks and uncertainties facing the Parent Company and the companies included in the Group.
The consolidated income statement and balance sheet will be presented to the Annual General Meeting for adoption on 30 March 2011.
Stockholm, 9 March 2011
Hans Larsson Johan Molin Chairman Vice Chairman
Stefan Dahlbo Bodil Eriksson Thore Ohlsson
Fredrik Palmstierna Rolf Eriksen Lotta Stalin
Morten Falkenberg President
Per Bergström Olof Harrius
Employee representative Employee representative
Our Audit Report was submitted on 9 March 2011
KPMG AB
Helene Willberg Authorised Public Accountant
We have audited the annual accounts, the consolidated financial statements, the accounting records and the administration of the Board of Directors and the President of Nobia AB (publ) for the year 2010. The company's annual accounts are included in the printed version of this document on pages 6–70. The Board of Directors and the President 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 IFRS as adopted by the EU and the Annual Accounts Act when preparing the consolidated financial statements. Our responsibility is to express an opinion on the annual accounts, the consolidated financial statements 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 financial statements 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 policies used and their application by the Board of Directors and the President and significant estimates made by the Board of Directors and the President when preparing the annual accounts and consolidated financial statements as well as evaluating the overall presentation of information in the annual accounts and the consolidated financial statements. 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 President 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 policies in Sweden. The consolidated financial statements have been prepared in accordance with international financial reporting standards IFRS 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 Report has been prepared. The Board of Directors' Report and the Corporate Governance Report are consistent with the other parts of the annual accounts and the consolidated accounts.
We recommend to the annual meeting of shareholders that the income statement 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 Board of Directors' Report and that the members of the Board of Directors and the President be discharged from liability for the fiscal year.
Stockholm, 9 March 2011 KPMG AB
Helene Willberg Authorised Public Accountant
| SEK m | 2010 | 2009 | 20083) | 20072) | 2006 |
|---|---|---|---|---|---|
| Income statement | |||||
| Net sales | 14,085 | 15,418 | 15,991 | 16,134 | 15,590 |
| Change in per cent | –9 | –4 | –1 | 3 | 25 |
| Gross profit | 5,345 | 5,442 | 5,830 | 5,889 | 6,065 |
| Operating profit | 6 | 38 | 915 | 1,353 | 1,327 |
| Financial income | 18 | 41 | 50 | 23 | 17 |
| Financial expenses | –103 | –116 | –213 | –129 | –134 |
| Profit/loss after financial items | –79 | –37 | 752 | 1,247 | 1,210 |
| Tax on net profit for the year | 25 | 35 | –216 | –289 | –345 |
| Profit/loss from continuing operations | –54 | –2 | 536 | 958 | 865 |
| Loss from discontinued operations, net after tax | –35 | –77 | –7 | – | – |
| Net profit/loss for the year | –89 | –79 | 529 | 958 | 865 |
| Net profit/loss for the year attributable to: | |||||
| Parent Company shareholders Minority interests |
–89 0 |
–79 0 |
529 0 |
958 0 |
864 1 |
| Net profit/loss for the year | –89 | –79 | 529 | 958 | 865 |
| Balance sheet | |||||
| Fixed assets | 5,586 | 6,899 | 7,356 | 6,527 | 6,011 |
| Inventories | 971 | 1,212 | 1,465 | 1,480 | 1,356 |
| Current receivables | 1,501 | 1,886 | 2,101 | 2,013 | 2,028 |
| Cash and cash equivalents | 356 | 384 | 332 | 270 | 229 |
| Assets held for sale | 72 | 75 | 43 | – | – |
| Total assets | 8,486 | 10,456 | 11,297 | 10,290 | 9,624 |
| Shareholders' equity | 3,441 | 3,928 | 4,148 | 4,150 | 3,727 |
| Non-controlling interest | 5 | 6 | 6 | 6 | 7 |
| Non-interest-bearing liabilities | 3,152 | 3,320 | 3,221 | 3,424 | 3,160 |
| Interest-bearing liabilities | 1,877 | 3,162 | 3,887 | 2,710 | 2,730 |
| Liabilities attributable to assets held for sale | 11 | 40 | 35 | – | – |
| Total shareholders' equity and liabilities | 8,486 | 10,456 | 11,297 | 10,290 | 9,624 |
| Net debt including pensions | 1,510 | 2,426 | 3,181 | 2,224 | 2,460 |
| Capital employed | 5,323 | 7,095 | 8,042 | 6,866 | 6,464 |
| Key figures | |||||
| Gross margin | 37.9 | 35.3 | 36.5 | 36.5 | 38.9 |
| Operating margin, % | 0 | 0.2 | 5.7 | 8.4 | 8.5 |
| Operating profit before depreciation/amortisation (EBITDA) | 550 | 640 | 1,394 | 1,790 | 1,745 |
| Operating margin before depreciation/amortisation, % | 3.9 | 4.2 | 8.7 | 11.1 | 11.2 |
| Profit/loss after financial items as a percentage of net sales | –0.6 | –0.2 | 4.7 | 7.7 | 7.8 |
| Turnover rate of capital employed, multiple | 2.6 | 2.2 | 2.0 | 2.3 | 2.4 |
| Return on capital employed, % | 0.4 | 1.0 | 12.6 | 20.6 | 20.9 |
| Return on shareholders' equity, % | –2.4 | –1.9 | 13.2 | 25.0 | 25.4 |
| Debt/equity ratio, % | 44 | 62 | 77 | 54 | 66 |
| Equity/assets ratio, % | 41 | 38 | 37 | 40 | 39 |
| Cash flow from operating activities | 963 | 1,061 | 804 | 1,410 | 1,300 |
| Investments | 347 | 346 | 733 | 678 | 532 |
| Earnings per share after dilution | –0.53 | –0.47 | 3.13 | 5.50 | 4.931) |
| Dividend per share, SEK | 04) | 0 | 0 | 2.50 | 2.00 |
| Personnel | |||||
| Average no. of employees | 7,627 | 7,930 | 8,682 | 8,526 | 7,968 |
| Net sales per employee, SEK 000s | 1,741 | 1,858 | 1,803 | 1,849 | 1,957 |
| Salaries and other remuneration | 2,626 | 2,994 | 3,024 | 2,783 | 2,591 |
1) 2006 was adjusted for the 3:1 split approved at the 2007 Annual General Meeting.
2) 2007 was adjusted for changed accounting policy of conditional discounts.
3) The full-year 2008 was adjusted for changed accounting policy regarding recognition of expenses.
4) In accordance with the Board's proposal.
The shareholders of Nobia AB (publ) are invited to the Annual General Meeting on Wednesday, 30 March 2011 at 5:00 p.m. at Summit, Grev Turegatan 30, Stockholm.
Shareholders who wish to participate in the Annual General Meeting must:
Notification of attendance at the Annual General Meeting may be made:
• by mail to Nobia AB, Box 70376, SE-107 24 Stockholm, Sweden
When applicable, complete authorisation documents, such as registration certificates, shall be appended.
Shareholders represented by proxy shall issue a written power of attorney for the proxy. If the power of attorney is issued on behalf of a legal entity, a certified copy of a registration certificate or corresponding document ("certificate") for the legal entity shall be appended to the notification of attendance. The power of attorney and certificate may not be more than one year old. However, the power of attorney may have a maximum period of validity of five years if this is specifically stated. The power of attorney in original and, where applicable, the certificate, should be sent by post to the company at the address stated above in good time prior to the Annual General Meeting. Power of attorney forms are available from the company's website, www.nobia.com, and are sent to shareholders who have submitted a request for such a form and provided their postal address.
Shareholders whose shares have been registered with a nominee must, through the bank or securities broker administering the shares, temporarily re-register their shares in their own names with Euroclear Sweden AB in order to be entitled to participate in the Annual General Meeting. Such re-registration must have been completed not later than Thursday, 24 March 2011. A request for reregistration must be made well in advance of this date.
The Board of Directors proposes that no dividend be paid for the 2010 fiscal year.
The Nobia Annual Report is published in English and Swedish, and both versions are available for download from the Group's website, www.nobia.com.
Printed versions of the Annual Report are sent to shareholders and other stakeholders who have expressly requested such a version.
Balance-sheet total less non-interest-bearing provisions and liabilities.
"Translation effects" refers to the currency effects arising when foreign results and balance sheets are translated to SEK.
"Transaction effects" refers to the currency effects arsing when purchases or sales are made in currency other than the currency of the producing country (functional currency).
Net debt as a percentage of shareholders' equity.
Net profit for the year divided by a weighted average number of shares during the year.
Earnings before depreciation/amortisation and impairment losses.
Gross profit as a percentage of net sales.
Interest-bearing liabilities less interest-bearing assets. Interest-bearing provisions includes pension liabilities.
Cash flow from operating activities including cash flow from investing activities, excluding cash flow from acquisitions/divestments of subsidiaries.
Operating profit as a percentage of net sales.
A region comprises an operating segment in accordance with IFRS 8.
Profit after financial income as a percentage of average capital employed. The calculation of average capital employed has been adjusted for acquisitions and divestments.
Net profit for the year as a percentage of average shareholders' equity. The calculation of average shareholders' equity has been adjusted for capital increases and reductions.
| 30 March | Annual General Meeting |
|---|---|
| 28 April | Interim Report January–March |
| 26 May | Capital Market Day |
| 19 July | Interim Report January–June |
| 27 October | Interim Report January–September |
Street address: Klarabergsviadukten 70 A5 Postal address: Box 70376 SE-107 24 Stockholm Sweden Tel. +46 8 440 16 00 Fax +46 8 503 826 49 [email protected] www.nobia.com
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