CEDERROTH INTRESSENTER AB ANNUAL REPORT 2011

Transcription

1 CEDERROTH INTRESSENTER AB ANNUAL REPORT 2011

2

3 Contents FISCAL YEAR 2011 IN BRIEF...3 BOARD OF DIRECTORS REPORT...4 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME GROUP...9 STATEMENT OF FINANCIAL POSITION GROUP...10 STATEMENT OF CHANGES IN EQUITY GROUP...12 STATEMENT OF CASH FLOW GROUP (INDIRECT METHOD)...13 INCOME STATEMENT PARENT COMPANY...14 BALANCE SHEET PARENT COMPANY...15 STATEMENT OF CHANGES IN EQUITY PARENT COMPANY...16 STATEMENT OF CASH FLOW PARENT COMPANY (INDIRECT METHOD)...17 NOTES TO THE FINANCIAL STATEMENTS...18

4

5 FISCAL YEAR 2011 IN BRIEF s net sales during the period 1 January December 2011 amounted to SEK 2,066 million. In the previous period, 1 January December 2010, sales amounted to SEK 2,001 million. In local currencies, sales increased by 6.4%. Operating income before financial items and depreciation (EBITDA) amounted to SEK million (193.0). Operating income before financial items, depreciations and non-recurring items amounted to SEK million (201.3). Operating income before taxes amounted to SEK 77.9 million (64.6). A positive response from customers at the launch of a new First Aid System in January Existing distribution agreements for the TRESemmé brand ended on 31 December New distribution agreements for the Bio-Oil brand were signed in autumn New distribution agreements were signed in Spain. Several restructuring projects for the production units began during the year. 3

6 BOARD OF DIRECTORS REPORT The Board of Directors and the CEO of Cederroth Intressenter AB, registration number , hereby submit the annual report and consolidated financial statements for the fiscal year 1 January December Cederroth Intressenter AB is owned by funds managed by CapMan Oy (69.3%) and Litorina Kapital AB (21.0%) and by its management (9.7%). The terms, "Cederroth," "the Company" and "the Group" below refer to the Parent Company, Cederroth Intressenter AB, and its subsidiaries. Operations Cederroth Intressenter AB is the Parent Company of the Cederroth Group. comprises the parent company and Cederroth AB Group and its subsidiaries. conducts operations primarily in the Nordic countries, Poland and Spain. The Cederroth Group conducts operations in Finland through the Cederroth Förvaltnings AB branch. conducts research and development, marketing and sales of products within toiletries, health, wound, household, and first aid. 's registered brands are mainly sold via our subsidiaries and are distributed to consumers mainly via grocery stores, pharmacy chains and health food stores. In a number of geographic markets in which no representation exists, the Group's products are sold through distributors. The Company is a distributor of a number of external brands. also conducts contract manufacturing of pharmaceutical and toiletry products for several external customers. The bulk of the Company s products are manufactured at the Group's production facilities in Sweden, Denmark, Poland and Spain. Operations are divided into four operating segments, the Nordic region, Wound Care, Poland and Production. Each operating segment is operationally responsible for sales and marketing to clients. Common Group functions include management, finance, HR and IT. Several of the Group's own brands, such as Allévo, Dr. San, Cederroth Första Hjälpen and Asan, performed well compared to the previous year. Existing distribution agreements for the TRESemmé brand were terminated prematurely by agreement with the client on 31 December Important Events during and after the Fiscal Year Three major restructuring projects concerning the location of the Company's production facilities were initiated during the year. The projects include the concentration of plaster production at the Group's production facility in Spain, the transfer of production of Samarin from the present factory in Upplands Väsby to the production facility in Denmark and the integration of production of the Dermika brand at the existing production facility in Poland. The aim of the project is to increase efficiency in product sourcing and production. All projects are scheduled for completion in A new First Aid system was launched in January The new system has been well received by the Company's customers. An agreement for the distribution of the Bio-Oil brand in all Nordic countries was signed during the year. Furthermore, distribution agreements for the Devor-Olor and Marie-Yvonne brands have been signed for the Spanish market. 4

7 In December 2010, Cederroth acquired the LdB skincare brand. In 2011, the production of LdB was transferred to the production facility in Falun. Cederroth's legal dispute relating to a trademark infringement with Hela Pharma AB was finally settled in Cederroth's favour at the Court of Appeal in autumn Cederroth filed a claim for damages against Hela Pharma in March The Swedish Tax Agency conducted a tax audit on Cederroth AB in According to the Agency's review decision, the total amount due amounts to SEK 2.3 million. The Company will request a review of parts of this amount. Furthermore, in January 2012 a memorandum from the Finnish tax authorities questioned the deductibility of costs at the Finnish branch. The profit for the year was affected by SEK 1.8 million (cost), which is the net amount of income and expenses attributable to extraordinary items. Financial Result s net sales during the period 1 January December 2011 amounted to SEK 2,065.7 million (2,000.5 million), an increase of 3.3%. The increase in net sales for the 2011 and 2010 calendar years, excluding currency effects, amounted to 6.4%. Of the Group s turnover during the period Sweden accounted for 43.0%, other EU countries for 47.8%, and other markets for 9.2%. The Group's sales by operating segment are presented in Note 2. Operating income before financial items and depreciation (EBITDA) amounted to SEK million (193.0). Operating income before financial items, depreciation and non-recurring items amounted to SEK million (201.3). Non-recurring items affected comparability with the previous year and amounted to a total of SEK -1.8 million (-8.3). Income before taxes amounted to SEK 77.9 million (64.6) and comprehensive income for the year amounted to SEK 87.5 million (21.8). The comprehensive income for the year is affected by SEK -1.4 million (-26.8) in respect of translation differences in the translation of foreign operations. Cash Resources and Financial Position Cash flow from normal operations during the period amounted to SEK million (77.4). 's liquid assets at 31 December amounted to SEK 79.4 million (77.1). Committed credit lines amounted to SEK 100 million at year-end. The credit was entirely unused at 31 December. Loans of million relate to long-term loans drawn by the company's owners. These loans are subordinated other interest-bearing loans, amounting to million. The equity ratio in the Group was 10.6% (7.2%) and the equity amounted to SEK million (180.7). The equity ratio, calculated with the shareholder loans included in equity, amounts to 34.5% (29.2%). The Company s long-term debt at the end of the fiscal year amounted to SEK 1,542.0 million (1,556.9). SEK 59.4 million was repaid to external lenders during the year. The equity increased to SEK million (180.7). Changes in equity consisted of net income for the year of SEK 89.0 million and translation differences on foreign operations of SEK -1.4 million. Investments and depreciation Investments in tangible fixed assets amounted to SEK 28.7 million (38.0) during the period. Depreciation of tangible and intangible fixed assets amounted to SEK 40.9 million (35.3). 5

8 Environmental and social responsibility Cederroth operates on the basis of an established environmental policy. According to that policy, sustainable production and product safety are essential for Cederroth. is working continuously to ensure that the Company's products are sustainable in both environmental and ethical terms. Cederroth has chosen to work with Svanen in the Nordic region on the environmental certification of the Company's products. In 2011, we obtained certification for the Group's largest production facility in accordance with ISO We thereby guarantee environmentally sustainable production and products. Cederroth bases its internal and external actions on an established Code of Conduct that has been presented to all employees. This document governs issues related to the working environment, gender equality, harassment and corruption. In addition, a separate Code of Conduct for Suppliers has been produced. The purpose of the Code of Conduct is to ensure that Cederroth suppliers meet the requirements set out in this document. Environmental and licensable activities The subsidiary Cederroth AB conducts activities dangerous for the environment in Upplands Väsby and Falun that are subject to notification or permits under the Swedish Environmental Code. In terms of value, the Company's operations in Falun account for 95% of Swedish production activities. These activities are carried on in accordance with an applicable environmental permit issued by the Dalarna County Administrative Board. The permit in question regulates the environmental impact, focusing mainly on restrictions on production volumes and emissions to water and air. Furthermore, the subsidiaries Cederroth Paramedical A/S, Cederroth Polska SA and Cederroth Distrex SA carry on production activities that are subject to permits in accordance with environmental regulations in their respective countries. Research and development Cederroth conducts its own research and development (R&D) to further develop existing products and to develop new products within the Company's areas of activity. Around 5% of the Company's employees are engaged in R&D. The basic principle is that expenditure on research and development (R&D) is expensed in the same year as the expenditure is incurred. Development costs may under certain strict conditions be entered as assets in the balance sheet, but this requires, among other things, future economic benefits to be demonstrated when the cost arises. There are currently no development projects in the Group entered in the assets, which means that all development expenditure is expensed during the year. Expectations of future developments Operations in 2012 are expected to continue to be stable in all countries in which Cederroth operates. It is anticipated that the negative impact of the terminated TRESemmé distribution agreement on the Group's net sales can be offset by organic growth and the addition of new distribution agreements. Risk factors A number of factors affect Cederroth at present and possibly in future. There are operational risks as well as financial risks. The following description of risk factors does not purport to be complete and the risks are not listed in order of importance. Influence of the economic cycle Demand for Cederroth products is affected by the general economic situation and changes in consumption patterns. These changes are beyond the Group's control. Historically, the company's 6

9 products have had a low sensitivity to economic trends, but a general change in the economic situation affects the company's operations, performance, and financial position. Environmentally-related risks 's environmental impact resulting from manufacturing primarily involves water emissions and generation of waste. If Cederroth violates, or fails to meet the requirements imposed in any of these regulations or permits, Cederroth may be fined or made subject to other penalties. If environmental damage occurs, the costs of clean-up and other remedial actions can be imposed on Cederroth. The environmental legislation is complex and frequently amended and tends to become increasingly stringent over time. There are no guarantees that environmental legislation will not be amended or become stricter in future in a way that could have an adverse effect on the Company's operations, results and financial position. The Board considers that the Company has issued the notifications required under the Environmental Code and that no further permits under the Environmental Code are required. The subsidiary Cederroth Paramedical A/S holds a manufacturing licence for drugs from the Danish Läkemedelsverket [Medical Products Agency]. If the Company violates or fails to meet the requirements imposed in any of these regulations, this would have a negative impact on the Company's operations, results and financial position. The Board considers that the Company complies with the applicable rules and regulations and holds the permits and has issued the notifications required for the operations carried on by the Group. Legislation and administrative decisions All products sold by the Company are largely covered, directly or indirectly, by legislation. Changes in legislation or how the law is enforced can have a significant impact on the Company's production costs and thus also the ability to market and sell a single product or groups of products, which may cause the Company's operations, results or financial position to be adversely affected in a significant manner. Suppliers 's products consist of raw materials and auxiliary materials from a number of different suppliers. To ensure the Group's sales, the Group is dependent on supplies from third parties being in accordance with agreed upon volumes, quality, and delivery requirements. Incorrect or non-delivery from suppliers may entail delayed production, which in the short term may lead to reduced sales. The Group's assessment is that no single supplier is unique, therefore a disruption in supplies does not lead to long-term negative consequences for operations. Key personnel Cederroth is dependent upon the knowledge, experience, and engagement of a number of key personnel. Should any of these key people leave the Group, there could be a short term negative impact on operations. Patents and trademarks Cederroth and its subsidiaries own trademark registrations for all major brands. There is always a risk that disputes may arise concerning infringement of patents and other intangible assets. Such disputes would negatively affect the Group's earnings. Insurance policies The Cederroth Board believes that the Group has insurance coverage which is justifiable in light of the Group's size and the type of operations conducted. 7

10 Raw materials Commodity risk is the impact on the Group's earnings due to changes in input raw materials. The main commodity risk for the Group consists of changes in the price of vegetable oils and other oil-based raw materials of different types. Financial risks 's operations are exposed to risks concerning foreign exchange, financing, and interest rates. These risks are described in more detail in Note 26. Proposed appropriation of the Company's earnings The Board of Directors and the CEO propose that retained earnings and unrestricted funds, amounting to SEK 237,559,539, be carried forward to new accounts. Retained earnings: SEK 237,557,268 Of which share premium reserve: SEK 237,823,065 With regard to the Parent Company's and the consolidated results and financial position in general, please refer to the accompanying financial statements with their accompanying notes. 8

11 Consolidated statement of comprehensive income Group 1 January 31 December Amounts in SEK thousand Note Net sales 2, Cost of goods sold Gross profit Other operating income Sales expenses Administrative expenses Research and development costs Other operating expenses Operating income Financial revenues Financial expenses Net financial income and expenses Loss/income before tax Tax Net income for the year Other comprehensive income Translation differences in the translation of foreign operations Other comprehensive income for the year Comprehensive income for the year Net loss/income attributable to: Parent Company shareholders Net income for the year Other comprehensive income for the year attributable to: Parent Company shareholders Comprehensive income for the year Profit/loss per share before dilution 37,03 20,25 Profit/loss per share after dilution 35,75 19,55 9

12 Statement of Financial Position Group Amounts in SEK thousand Note 31/12/11 31/12/10 ASSETS Intangible fixed assets Trademarks Goodwill Other intangible fixed assets Tangible fixed assets Land and buildings Leasehold improvements Machinery and other technical equipment Equipment, tools, fixtures and fittings 13, Fixed assets in construction and advance payments payments for tangible fixed assets Long term receivables Deferred tax receivables Other long term receivables Total fixed assets Stock 17 Raw materials and necessary items Work in progress Finished products and goods for resale Current receivables Accounts receivable Tax assets Other receivables Prepaid expenses and accrued income Liquid assets Total current assets TOTAL ASSETS

13 Statement of Financial Position Group Amounts in SEK thousand Note 31/12/11 31/12/10 EQUITY Share capital Other endowment capital Translation reserve Retained earnings including net loss/income for the year Equity attributable to Parent Company shareholders Total equity LIABILITIES Liabilities to credit institutions 14, Other liabilities Provisions for pensions Deferred tax liabilities Total long-term liabilities Short-term interest-bearing liabilities 14, Accounts payable Tax debts Other liabilities Accrued expenses and deferred income Total short-term liabilities Total liabilities TOTAL EQUITY AND LIABILITIES Pledged assets and contingent liabilities the Group Amounts in SEK thousand Note 31/12/11 31/12/10 For own liabilities and provisions Floating charges Pledged shares in subsidiaries Total Contingent liabilities Guarantees for subsidiaries

14 Statement of Changes in Equity Group Equity attributable to Parent Company shareholders Retained earnings Amounts in SEK thousand Share capital Other endowmen t capital Translation reserve incl. loss/income for the year Total equity Equity brought forward 01/01/ Net income for the year Other net income for the year Comprehensive income for the year New share issue Closing equity 31/12/ Equity brought forward 01/01/ Net income for the year Other net income for the year Comprehensive income for the year Closing equity 31/12/

15 Statement of Cash Flow Group (indirect method) Amounts in SEK thousand Operations Profit/loss after financial items Adjustments for non-cash flow items, etc Tax paid Cash flow from operations before working capital changes Cash flow from working capital changes Increase(-)/Decrease(+) in inventories Increase(-)/Decrease(+) in current receivables Increase(+)/Decrease(-) in current liabilities Cash flow from operations Investing activities Acquisition of intangible fixed assets Acquisition of tangible fixed assets Acquisition of subsidiaries Disposals of tangible fixed assets Cash flow from investing activities Financing activities Amortisation of borrowings New share issue 330 New loans taken Cash flow from financing activities Cash flow for the year Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents Additional information on the cash flow report Interest paid Interest received The following sub-components are included in liquid assets: Amounts in SEK thousand Cash and bank The above items have been classified as cash resources based on the fact that: - They are not subject to any material risk for value fluctuations. - They can easily be converted to cash. - They have a maturity of less than 3 months from the investment date. 13

16 Income Statement Parent Company 1 January - 31 December Amounts in SEK thousand Note Net sales Gross profit Administrative expenses Other operating income 5 92 Other operating expenses Operating income Group contribution Interest income and similar items Interest expenses and similar items Loss/income after financial items Loss/income before tax Income taxes 11 Net income for the year Consolidated statement of comprehensive income - Parent Company Net income for the year Other comprehensive income for the year Comprehensive income for the year

17 Balance Sheet Parent Company Amounts in SEK thousand Note 31/12/11 31/12/10 ASSETS Financial fixed assets Investment in group companies Total fixed assets Current receivables Receivables from Group companies Other receivables Prepaid expenses and accrued income Cash and bank Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Restricted equity Share capital (2,402,253 shares) Unrestricted equity Profit or loss brought forward Share premium reserve Net income for the year Total equity LIABILITIES Long-term liabilities Liabilities to credit institutions Other long-term liabilities Current liabilities Accounts payable Current part-interest-bearing liabilities Tax debts 81 Other liabilities Accrued expenses and deferred income Total short-term liabilities Total liabilities TOTAL EQUITY AND LIABILITIES Pledged assets and contingent liabilities the Parent Company Amounts in SEK thousand Note 31/12/11 31/12/10 For own liabilities and provisions 27 Pledged shares in subsidiaries Contingent liabilities Guarantees for subsidiaries

18 Statement of Changes in Equity - Parent Company Restricted equity Unrestricted equity Share capital Share premium reserve Retained earnings incl. loss/income for the year Total equity Equity brought forward 01/01/ Net income for the year Other net income for the year - New share issue Closing equity 31/12/ Equity brought forward 01/01/ Net income for the year Other net income for the year - Closing equity 31/12/

19 Statement of Cash Flow - Parent Company (indirect method) Amounts in SEK thousand Operations Profit/loss after financial items Adjustments for non-cash flow items, etc Tax paid Cash flow from operations before working capital changes Cash flow from working capital changes Increase(-)/Decrease(+) in current receivables Increase(+)/Decrease(-) in current liabilities Cash flow from operations Financing activities Amortisation of borrowings Group contribution received New share issue 327 Cash flow from financing activities Cash flow for the year Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents Additional information on the cash flow report Interest received 2 19 Interest paid The following items comprise cash resources: Amounts in SEK thousand Cash and bank The above items have been classified as cash resources based on the fact that: - They are not subject to any material risk for value fluctuations. - They can easily be converted to cash. - They have a maturity of less than 3 months from the investment date. 17

20 NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - Accounting principles THE GROUP'S ACCOUNTING PRINCIPLES Compliance with standards and regulations The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. Furthermore, the Financial Accounting Standards Council recommendation, RFR 1 Supplementary Accounting Rules, have been applied for the Group. The Parent Company has prepared the annual report in accordance with the Annual Reports Act (ÅRL). The Parent Company uses the same accounting policies as the Group except in the cases listed below under the section "Parent Company accounting principles". Measurement basis used to prepare the financial statements of the Group Assets and liabilities are reported on an historical cost basis except for certain financial assets and liabilities that are measured at fair value or accrued historical cost. Financial assets and liabilities at fair value consist of derivative instruments and financial assets classified as financial assets at fair value via earnings. Functional currency and presentation currency The Parent Company's functional currency is Swedish kronor and kronor is also the presentation currency of the Parent Company and the Group. This means that the financial reports are presented in SEK. All figures, unless otherwise indicated, have been rounded to the nearest thousand. Assessments and estimates in the financial statements Preparation of financial statements in accordance with IFRS requires the use of a number of important accounting estimates. Furthermore, management must make certain assessments when applying the Group's accounting principles. The areas involving a high degree of assessment or complexity, or areas where assumptions and estimates are of substantial significance to the financial statements, are stated in Note 30. Significant accounting principles 's accounting principles stated below have been applied consistently to all periods presented in the financial statements, unless otherwise indicated below. 's accounting principles have been consistently applied in the presentation and consolidation of the Parent Company and subsidiaries. Standards, amendments, and interpretations not yet applied In preparing the consolidated financial statements at 31 December 2011, a number of standards and interpretations which are applicable to the Group have been published but have not yet entered into force. There is a proposal to amend IAS 19 "employee benefits" and from 1 January 2013 the current socalled "corridor method" will disappear and the actuarial gains and losses will be included in other comprehensive income. The effect of this change cannot be estimated at present. Other future changes in accounting principles are not expected to have any effect on the consolidated accounts when applied in future. 18

21 Classification Financial fixed assets and long-term liabilities in the Parent Company and the Group essentially consist of amounts expected to be recovered or settled after more than twelve months from the balance sheet date. Current assets and short-term liabilities in the Parent Company and the Group essentially consist of amounts expected to be recovered or settled within twelve months from the balance sheet date. Operating segment statements An operating segment is a part of the Group that conducts operations from which it can generate revenues and incur expenses and for which separate financial information is available. An operating segment's income is reviewed by the company's chief operating decision-maker to evaluate the income and to allocate resources to operating segments. Operating segments consist of separate legal entities, as well as separate operational units. See Note 2 for further description of the division and presentation of operating segments. Consolidation principles The consolidated financial statements include Cederroth Intressenter AB and the companies over which the Group has power to govern financial and operational strategies, which usually entails one shareholding with more than 50% of the votes. Subsidiaries Subsidiaries are all companies over which the Group has power to govern financial and operational strategies, which usually entails one shareholding with more than 50% of held shares voting rights or where the Group contractually exercises sole control. Subsidiaries are included in the consolidated financial statements from the date on which control is transferred to the Group. They are excluded from the consolidated financial statements from the date on which control ceases. Acquisition accounting is used to account for the Group's acquisition of subsidiaries. The cost basis of an acquisition is determined by the fair value of assets given as remuneration, financial instruments issued, liabilities incurred or assumed at the date of transfer. Expenditures that are directly attributable to the acquisition must be recognised as expenses. Identifiable assets acquired and liabilities assumed and contingent liabilities in a business acquisition are initially measured at their fair values on the acquisition date, regardless of the extent of any holding without decision-making influence. The excess comprised of the difference between the cost basis and the fair value of the Group's share of the identifiable assets acquired, liabilities, and contingent liabilities, is reported as goodwill. If the cost basis is below the fair value of the acquired subsidiary's assets, liabilities, and contingent liabilities, then the difference is reported directly in the income statement. Transactions eliminated in consolidation Intragroup balances, revenues and expenses and unrealized gains or losses arising from intragroup transactions between group companies are eliminated in full when preparing the consolidated financial statement. Foreign currency translation Functional currency and presentation currency Items included in the financial statements of the Group's various entities are measured in the currency used in the principle economic environment in which the entity operates (functional currency). The consolidated financial statements are in Swedish kronor (SEK), which is the Parent Company's functional and presentation currency. 19

22 Transactions and balance sheet items Transactions in foreign currencies are translated into the functional currency using the exchange rates prevailing on the transaction date. Exchange gains and losses, which result from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the exchange rate on the balance sheet date, are reported in the income statement. Translation differences relating to trades payable and trade receivables are reported in operating income. Other translation differences are reported in net financial items. Consolidation of foreign subsidiaries and branches The assets and liabilities of foreign subsidiaries and branches are translated to the rate at the balance sheet date and all income statement items are translated monthly at the monthly average rate. Exchange differences arising on currency conversion for foreign operations are entered in other comprehensive income and accumulated in a separate component of equity known as the conversion reserve. Reporting of revenues Sales of goods Revenue from the sale of goods is reported in net income when significant risks and rewards of ownership have been transferred to the buyer. Revenue is not reported if it is probable that the economic benefits will not flow to the Group. If there is significant uncertainty regarding payment, associated costs, or risk of returns, then there is no reporting of revenue. Revenues are reported at fair value after reduction of VAT, discounts, and returns. Operating expenses Operating leases Leases in which the lessor retains a significant portion of the risks and benefits of ownership are classified as operating leases. Payments made over the lease term are recognised an expense in the income statement on a straight line basis over the lease term. Financial leases Leases of fixed assets, of which Cederroth essentially holds all the risks and rewards incident to ownership, are classified as finance leases. At the inception of the lease term, the financial lease is reported in the balance sheet at the lower of the leased asset's fair value and the present value of minimum lease payments. Each lease payment is allocated between amortisation of the liability and financial expenses in order to achieve a fixed interest rate for the reported liability. The corresponding payment obligations, less financial expenses, are included in the balance sheet item "loans from credit institutions". The interest portion of the financial expenses reported in the income statement is allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Fixed assets held under finance leases are depreciated over the shorter period of the asset's useful life and the lease term. 20

23 Financial revenues and expenses Financial revenues are comprised of interest income on bank balances, other receivables, debt securities, and foreign exchange gains on financial assets and liabilities. Financial expenses are comprised of interest expenses on loans and financial leasing, other liabilities, and foreign exchange losses on financial assets and liabilities. Current and deferred taxes Income tax comprises current and deferred taxes. Income taxes are reported in net profit except when the underlying transaction is reported in other comprehensive income or in equity, whereby the associated tax effect is reported in other comprehensive income or in equity. Current tax is tax to be paid or received for the current year based on tax rates that have been enacted or substantively enacted by the balance sheet date. Current tax also includes adjustments of current tax attributable to prior periods. Deferred tax is calculated using the balance sheet method, based on temporary differences between the reported and tax base value of assets and liabilities. Temporary differences are not accounted for in the Group's goodwill nor are differences arising on initial reporting of assets and liabilities that are not business acquisitions that at the time of the transaction affects neither reported nor taxable profit. Also not accounted for in the Group's goodwill are temporary differences attributable to shares in subsidiaries and associates which are not expected to be reversed in the foreseeable future. The valuation of deferred tax is based on how the underlying assets or liabilities are expected to be realised or settled. Deferred tax is calculated applying the tax rates and tax rules decided on or decided on in practice at the balance sheet date. Deferred tax receivables relating to deductible temporary differences and deductible deficiency are recognised only if it is likely that they can be used. The value of deferred tax receivables is reduced when it is no longer considered likely that they can be used. Any additional income tax arising from distributions is reported at the same time that the dividend is reported as a liability. Financial instruments Financial instruments that are reported on the asset side of the balance sheet include cash and cash equivalents, loans receivable, trade receivables, and financial investments. Trade payables and borrowings are reported on the liability side. The underlying value of the Group's interest rate swaps at 31 December 2011 amounted to a total of SEK million. Inclusion in and removal from the statement of financial position A financial asset or financial liability is reported in the statement of financial position when the Company becomes party to the instrument's contractual terms. A receivable is included when the company has produced and a contractual obligation for the defendant to pay exists, even if the invoice has not yet been sent. Trade receivables are reported in the statement of financial position when goods have been delivered. Liabilities are reported when the counterparty has delivered and there is a contractual payment obligation, even if the invoice has not yet been received, and they are classified as accounts payable when the invoice has been received. A financial asset is removed from the statement of financial position when the contractual rights are realised, expire, or the Company loses control over them. A financial liability is removed from the statement of financial position when the contractual obligations are fulfilled or otherwise extinguished. Acquisitions and disposals of financial assets are reported on the trade date. 21

24 Classification and measurement Non-derivative financial instruments are initially reported at fair value plus transaction costs for all financial instruments except those classified as financial assets reported at fair value on the statement of comprehensive income, which are reported less transaction costs. A financial instrument is classified in the initial report based on its acquisition purpose. The classification determines how the financial instrument is measured after the initial recognition, as described below. Loans receivable and trade receivables Trade receivables are initially recognised at fair value and subsequently at their accrued historical cost using the effective interest method, less any reserve for reduction in value. Liquid assets Cash and cash equivalents consist of cash and immediately available cash balances with banks and similar institutions as well as short-term liquid investments with a maturity of less than three months. Other financial liabilities Borrowings, trade payables, and other liabilities are included in this category. Borrowings are initially measured at fair value, net of transaction costs, and subsequently at their accrued historical cost. Accrued historical cost is based on the effective interest rate calculated when the liability was incurred. Long term borrowings have expected maturities of longer than one year and short term borrowings have maturities of less than one year. Trade payables and other financial liabilities have short maturities, they are therefore valued at nominal value. Tangible fixed assets Tangible fixed assets are recorded as an asset on the statement of financial position if it is probable that future economic benefits will flow to the Group and the cost basis of the asset can be measured reliably. Tangible fixed assets are recorded at the cost basis less accumulated depreciation and any accumulated impairments. The depreciations are based on the asset's cost basis and estimated useful life. If there are components in major investments, they shall always be tested to determine if their economic life differs from that of the fixed asset as a whole. The cost basis includes expenditures that are directly attributable to the acquisition of the asset and putting it in place and in the condition to be used in accordance with the acquisition purpose, e.g. purchase price, shipping and handling, installation, and consulting services. Borrowing costs directly attributable to purchase construction that takes considerable time to ready for intended use or sale are included in the cost basis. Accounting principles for impairments follow below. Leased assets Leases are classified either as financial or operational leases. A lease is financial when the economic risks and benefits associated with ownership are substantially transferred to the lessee. When this is not the case, it is an operational lease. 22

25 Financial leased assets are recorded as fixed assets in the statement of financial position and are initially measured at the lower of the leased asset's fair value and the present value of minimum lease payments at inception of the lease. The obligation to pay future lease payments are reported as long term and short term liabilities. The leased assets depreciate over their useful lives, while the lease payments are recorded as interest and debt amortisation. Assets leased under operational leases are generally not recorded as assets in the statement of financial position. Operational leases do not give rise to a liability. Subsequent expenditures Subsequent expenditures capitalised on the cost basis only if it is probable that future economic benefits associated with the asset will flow to the Company and the cost basis can be measured reliably. All other subsequent expenditures are recorded as expenses in the period in which they are incurred. A subsequent expenditure is capitalised to the cost basis if it relates to the replacement of identified components or parts thereof. Even where new components are created, the expenditure is added to the cost basis. Any non-depreciated carrying amounts of replaced components, or parts of components, are disposed of and expensed in conjunction with the replacement. Repairs are expensed as incurred. Borrowing costs Borrowing costs that are attributable to the establishment of so-called qualified assets are capitalised as part of the qualified asset's cost basis. A qualified asset is an asset that necessarily takes a substantial period of time to complete. Primarily, borrowing costs incurred on loans that are specific to the qualified asset are capitalised. Alternatively, borrowing costs incurred on general loans that are not specific to any other qualified asset are capitalised. At the end of 2010, the Group had no qualified assets under preparation. Depreciation principles Properties within the Group are owner-occupied properties in our own operations. Depreciation occurs over their estimated useful life. Land is assumed to have an indefinite useful life. Other tangible fixed assets are classified for the calculation of depreciation based on estimated useful life in groups as follows: Buildings years Certain components for buildings 5-10 years Machinery and technical equipment years Certain components for machinery years Other equipment, tools, fixtures and fittings 3-10 years Computers and servers 3-5 years The assets' useful lives are reviewed annually and adjusted as necessary. The assets are normally depreciated to nil with no remaining residual value. Linear depreciation occurs for all types of tangible fixed assets with limited useful life. If an asset's book value is higher than the expected recoverable amount then the asset is written down to this value. 23

26 Capital gains and losses on disposal of tangible fixed assets are determined by comparing the sales revenues and the carrying amounts of the asset. Capital gains and losses are recorded in the income statement under "Other operating income" and "Other operating expenses". Intangible fixed assets Intangible assets are classified into two groups in which assets with a finite useful life are made subject to depreciation over a specified period of use and assets with indefinite useful life are not made subject to depreciation. Goodwill Goodwill represents the difference between the cost basis of a business acquisition over the fair value of acquired assets, assumed liabilities, and contingent liabilities attributable to the acquired subsidiary. For goodwill in acquisitions that took place before 31 July 2008, the Group has not applied IFRS retroactively during the transition to IFRS and, instead, the carrying amount at that day constitutes the Group's carrying amount from then on, after impairment tests. Goodwill is valued at cost basis less any accumulated impairments. Goodwill is reviewed at least annually for impairment loss needs. Goodwill which has arisen upon acquisition of associates is included in the carrying amount of shares in associates. Trademarks Trademarks with a finite useful life are recorded at the cost basis less accumulated depreciation and any accumulated impairments. Trademarks with indefinite useful lives are tested annually to identify any impairment losses and recorded at cost basis less accumulated impairments. Accrued expenses incurred for internally generated trademarks are not reported in the statement of financial position but in the statement of financial position when the cost arises. Research and development costs The basic principle is that expenditures for research and development (R&D) are expensed as incurred. Development costs may be included in the assets in exceptional circumstances, though this presupposes that future economic benefits can be shown when the cost is incurred and, furthermore, a number of conditions must be fulfilled in accordance with IAS There are currently no projects that meet all criteria, which means that research and development costs are expensed continuously in Other intangible assets Other intangible assets acquired by the Group are recorded at cost basis less accumulated depreciation and impairments. Other intangible fixed assets consist primarily of software licenses that have been activated on the basis of the costs incurred when said software was acquired and put into operation. Depreciation principles Goodwill and trademarks with an indefinite useful life are reviewed for impairment loss annually or as soon as there are indications that the asset has lost value. Intangible assets with finite useful lives are 24

27 depreciated from the time they are available for use. Intangible fixed assets are classified for the calculation of depreciation based on estimated useful life in groups as follows: Trademarks 5-20 years Software 3-5 years The assets' useful lives are reviewed annually and adjusted as necessary. The assets are normally depreciated to nil with no remaining residual value. Linear depreciation occurs for all types of intangible fixed assets with limited useful life. If an asset's book value is higher than the expected recoverable amount then the asset is written down to this value. Capital gains and losses on disposal of intangible fixed assets are determined by comparing the sales revenues and the carrying amounts of the asset. Capital gains and losses are recorded in the income statement under "Other operating income" and "Other operating expenses". Inventories Inventories are measured at the lower of the cost basis and net realisable value. The net realisable value is normally calculated as the selling price less the estimated costs of completion and achieving a sale. The best measure of net realisable value for raw materials is the replacement value. Raw materials are not written down below cost if the finished products in which they will be incorporated are expected to be sold above the costs of production. Necessary provisions are continuously made for obsolescence risks. The cost basis of inventories includes all costs of purchase, production, and other costs incurred in bringing the inventories to their present location and condition. Trade receivables and other receivables Trade receivables and other receivables are recorded at nominal value since this post is short term in nature. A provision for depreciation of trade receivables and other receivables is established when there are indications, such as financial difficulties or an application for corporate restructuring, with individual debtors. Both losses on trade receivables as well as recovered and previously impaired trade receivables are reported under sales expenses in the income statement. Impairments 's reported assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. IAS 36 is applied to impairments of assets other than financial assets, which are recorded as per IAS 39 or stocks and deferred tax assets. For exempt assets as described above, the carrying amount is assessed according to the respective standard. Impairment test of non-financial assets If indications of impairment exist, the asset's recoverable amount is calculated (see below). For goodwill and other intangible assets with indefinite useful lives and intangible fixed assets that are not yet ready for use, the recoverable amount is calculated annually. If it is not possible to determine a significant independent cash flow for a particular asset and its fair value less sales costs cannot be used, when testing the need for impairment the assets are grouped at the lowest level where it is possible to identify essentially independent cash flows a so-called cash-generating unit. Carrying amounts for the Group s assets are reviewed at each balance sheet date to assess whether there is an indication of a need for impairment through a so-called "impairment test", which is based on anticipated future growth and margins. For goodwill and other intangible assets with indefinite useful lives and intangible fixed assets that are not yet ready for use, the recoverable amount is 25

28 calculated annually. For the remaining tangible and intangible assets, the impairment test is conducted only if there is any indication of a need for impairment. If, at the closing date, there is indication that a non-financial asset has reduced in value, then a calculation is conducted of the asset's recoverable amount, that is to say the higher of the fair value minus sales costs and value in use. In calculating value in use, future cash flows are discounted using a discount rate that reflects the risk free rate and the risk associated with the specific asset. If the estimated recoverable amount is lower than the carrying amount, then it is impaired to that recoverable amount. Where goodwill is attributable to a group of assets for which an impairment loss exists, the impairment amount is allocated first to goodwill and then to other assets in proportion to their carrying amounts. Depending on which asset the impairment relates, the relevant line is charged on the income statement. A previous impairment of an asset is reversed if there has been a change in the assumptions that at the time of impairment were the basis for determining the asset's recoverable amount. The reversed amount will increase the asset's carrying amount, up to the value that the asset would have had (less normal depreciation) if no impairments had been made. However, impairment of goodwill is never reversed. In reviewing any impairment losses of an asset, the calculation is based on the appropriate cashgenerating unit. A cash-generating unit is the smallest group of assets for which it is possible to establish continuous cash inflows that are essentially independent from other assets or groups of assets. Impairment testing financial assets At each reporting date the company assesses whether there is objective evidence that a financial asset or group of assets is an impairment loss. Objective evidence consists of observable conditions that have occurred and which have a negative impact on the ability to recover the cost basis. Earnings per share Calculation of earnings per share is based on the consolidated earnings for the year 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 earnings and the average number of shares are adjusted to take into consideration the effects of diluting potential shares which, during the reported periods, derive from options issued to funds controlled by the Company's owners. Earnings per share before dilution amount to SEK in 2011 and SEK in Earnings per share after dilution amount to SEK in 2011 and SEK in Employee Benefits Defined contribution pension plans Plans classified as defined contribution pension plans are those where the company's obligation is limited to the charges that the company undertook to pay. In such cases, the size of the employee's pension depends on the contributions paid by the company to the plan or to an insurance company and the investment returns on the contributions. In consequence, actuarial risk (that benefits will be less than expected) and investment risk (that assets invested will be insufficient to meet expected benefits) fall on the employee. 's obligations for contributions to defined contribution plans 26

29 are expensed in the income statement as they are earned by the employee for performing services for the Group during the period. Defined benefit pension plans 's net obligation for defined benefit plans is calculated separately for each plan by estimating the future benefits that employees have earned through their employment in both the current and prior periods, these benefits are discounted to present value. The discount rate is the interest on the balance sheet date of a high-quality corporate bond with a maturity equal to the Group's pension obligations. When there is no active market for such corporate bonds, the market rate of government bonds of equivalent maturity are used instead. The calculation is performed by a qualified actuary using the Projected Unit Credit Method. The method allocates the cost of pensions as the employees perform services for the company which increase their entitlement to future benefits. This only refers to pension costs in Sweden. The Company applies the corridor method and the most important actuarial assumptions are presented in Note 23. In determining the obligations' current and fair value of plan assets, actuarial gains and losses may arise. These arise either because the actual outcome differs from previous assumptions or because the assumptions are changed. The net of interest on pension liabilities is reported in net financial items. Other items are reported in operating income. Bonus plans recognises liabilities and expenses for personnel bonuses. A provision is recognised for the expected cost when the Group has a legal or constructive obligation. A provision is recognised when there is a legal or constructive commitment as a result of a past event for which it is probable that an outflow of resources is required to settle the obligation and a reliable estimate of the amount can be made. 's provisions consist primarily of pension obligations and deferred tax. Contingent liabilities A contingent liability is recognised when there is a possible commitment that arises from past events and whose existence will be confirmed only by one or more uncertain future events, or when there is a commitment that is not recognised as a liability or provision on the grounds that it is unlikely that an outflow of resources will be required. Cash flow statements The cash flow statements are prepared using the indirect method. The reported cash flow only comprises transactions involving deposits and disbursements. 27

30 PARENT COMPANY'S ACCOUNTING PRINCIPLES 's accounting principles for the Parent Company stated below have been applied consistently to all periods presented in the financial statements of the Parent Company. Compliance with standards and regulations The Parent Company has prepared its annual report in accordance with the Annual Reports Act (in Sweden - ÅRL) and the Financial Accounting Standards Council recommendation RFR 2, Accounts of juridical persons. Differences between the accounting principles of the Group and the Parent Company The differences between the accounting principles of the Group and the Parent Company are stated below. 's accounting principles for the Parent Company stated below have been applied consistently to all periods presented in the financial statements of the Parent Company. Classification and presentation An income statement and a statement of comprehensive income is drawn up for the Parent Company and these two statements make up a statement of comprehensive income for the Group. Furthermore, the name "balance sheet" is used for the Parent Company whereas the name "statement of financial position" is used for the Group. The Parent Company's income statement and balance sheet are drawn up in accordance with the schedule provided in the Swedish Annual Accounts Act, whereas the statement of comprehensive income, the changes in equity and the cash flow statements are based on IAS 1, Presentation of Financial Statements, and IAS 7, Statement of Cash Flows. Differences from the consolidated statements in the Parent Company's income statement and balance sheet consist mainly of reporting of financial income and expenses, fixed assets and equity. Subsidiaries Participations in subsidiaries are recognised in the Parent Company using the cost method. This means that transaction costs are included in the carrying amount for holdings in subsidiaries. In the consolidated accounts, transaction costs related to subsidiaries are recognised directly in earnings when they arise. Contingent considerations are valued based on the probability that the purchase price will be payable. Any changes to the provision/claim increases/decreases the cost. In the consolidated accounts, contingent considerations are recognised at fair value with changes in value via earnings. Financial guarantees The Parent Company's financial guarantees consist solely of guarantees on behalf of subsidiaries. Financial guarantees mean that the company has a commitment to compensate the owner of a debt instrument for losses incurred due to a specified debtor failing to make payment when due under the contract terms. Tangible fixed assets Tangible fixed assets of the Parent Company are recorded at cost basis less accumulated depreciation and any impairments in the same way as for the Group. Leased assets The Parent Company records all leases as per the rules on operational leases 28

31 Borrowing Costs The parent company borrowing costs are charged in the period in which they are incurred. Employee Benefits Only defined contribution plans exist in the Parent Company. Group contribution and shareholders' contribution The company reports Group contributions and shareholder contributions in accordance with the statement from the Financial Accounting Standards Council (UFR 2). Shareholder contributions are posted directly in equity of the recipient and capitalised in shares of the provider, to the extent that impairment is not required. Group contributions are recognised according to their financial content. This means that Group contributions paid and received in order to minimize the Group's total tax are charged directly to retained earnings net of the actual tax effect. Group contributions that are equivalent to dividends are reported as dividends. This means that received Group contributions and their actual tax effect are charged to equity. Paid group contributions and their actual tax effect are charged directly to retained earnings. Group contributions that are equivalent to shareholders contributions are charged, with regard to the current tax effect, to the recipient directly to retained earnings. The provider reports the Group contribution and its actual tax effect as an investment in shares in the Group company, to the extent that impairment is not required. NOTE 2 - Operating segment 's operations are managed and reported per operating segment, which internally are called divisions. Each segment has a senior executive responsible for business development and for regularly reporting the outcome of the segment income to the CEO. Each operating segment has one or more assistant managers who are responsible for daily operations and who regularly report of the outcome of the operating segment's performance and need for resources to the manager of each operating segment, who in turn reports the segment's progress to Group management. Based on developments within the different segments, Group management continuously follows the segment's income and decides on resource allocation. 's internal reporting is designed so that Group management can monitor the development and income of both the segments and products. has identified four segments, two of which are geographic segments, one product segment, and one production segment. 's operations are divided into four segments Nordic Countries: operations are conducted through its own companies in the Nordic countries, excluding Iceland. This is done through marketing and sales of own products and distributed products to grocery stores, pharmacies, and health food stores. Wound care: operations are conducted through the sale of the first aid panel to distributors, the sale of plasters through Group subsidiaries in the Nordic region, and export sales of plasters. Also included are sales of Company wound care products in Spain. Poland: operations are primarily conducted through sales of own products in the domestic Polish market. This is done through marketing and sales of Company products to grocery stores, pharmacies, and health food stores. Production: operations are conducted through production of the Group's own products at a number of factories. Sales take place here only internally to the Group's other segments. 29

32 Net sales and operating profit/loss by segment Nordic Countries Wound care Poland Production Group Functions Million SEK Net sales 1 484, ,7 294,2 275,8 280,3 266,4 0,0 0,0 6,6 0, , ,5 Operating expense 1 319, ,7 264,3 263,2 262,3 264,5 38,9-1,8-24,0 9, , ,2 Operating income 165,6 150,0 29,9 12,6 18,1 1,9-38,9 1,8 30,5-8,7 205,1 157,7 The segment's income includes directly attributable items and items that can be allocated to the segment on a reasonable and reliable basis. Information on larger customers 's largest customer in 2011 generated revenues totalling SEK 237,135 thousand (241,499). These revenues are recorded in full in the operating segments Nordic and Wound care. Inter-segment pricing within the group is done in all cases on commercial terms. NOTE 3 - Net sales and fixed assets by geographic market Net realiseable The Parent Company Sweden Other Nordic countries Other EU countries Europe outside EU Rest of the world Total Fixed assets Sweden Other Nordic countries Other EU countries Non-allocated fixed assets Total Distribution of fixed assets by segment has been produced from the Group's financial reporting system and has been allocated in a reasonable and reliable way. In cases where no information on a reasonable distribution exists and the cost to produce such a distribution is considered unreasonably high, no distribution has been carried out. 30

33 NOTE 4 - Acquisitions of businesses On 6 October 2010, the Group acquired a 100% stake in Dermika S.A. for 98,900,000 SEK. The purchase price was paid through cash payment. The company manufactures and sells skin care products on the Polish market. The main reason for this acquisition was to strengthen The Company's market position in Poland. In addition, the acquisition is expected to provide substantial synergies in both production and sales which will positively affect the company's profitability. Effects of acquisitions in 2010 The acquisition has the following effects on the Group's assets and liabilities. The acquired company's net assets at the acquisition date (SEK thousands) Carrying amount at Dermika before the acquisition Value in the Group Intangible assets Tangible fixed assets Stock Trade receivables and other receivables Liquid assets Interest bearing liabilities Accounts payable Deferred tax liabilities Net identifiable assets & liabilities The trademark Purchase price paid in cash Cash and cash equivalents (acquired) 439 Net effect on cash and cash equivalents NOTE 5 Other operating income The Parent Company Capital gains, tangible fixed assets Foreign exchange gains on operating receivables/ Reversal of contingent payable Expenses charged Other Total Contingent considerations reversed in 2010 when the stipulated requirements under a purchase agreement were not met, whereupon the seller's right to a contingent consideration elapsed. The Other item includes agreed compensation for premature termination of distribution agreements relating to the TRESemmé brand. 31

34 NOTE 6 Other operating expenses The Parent Company Capital losses, tangible fixed assets Foreign exchange losses on operating receivables Royalties Other Total NOTE 7 Audit fees The Parent Company KPMG Audit work Work in addition to audit work Tax consultancy services Other work BDO Audit work Work in addition to audit work Tax consultancy services Other work Total Financial audits involve examination of the annual accounts the consolidated accounts and accounting records, the Board's and the CEO's management, and other tasks that fall to the Company's auditors or other assistants as a result of observations during the examination or the implementation of other such tasks. NOTE 8 - Number of employees, personnel costs and benefits Average number of employees of which of which 2011 men 2010 men Parent company Sweden 2 100% 2 100% Total in Parent Company 2 100% 2 100% Subsidiaries Sweden % % Norway 38 37% 35 43% Denmark 22 41% 67 46% Finland 48 44% 45 47% Holland 1 100% 1 100% Spain & Portugal 77 48% 87 48% Poland % % Total in subsidiaries % % Group total % % 32

35 Accounting for salaries, benefits and social costs The Parent Company Salaries and other remuneration of which bonuses Pension costs Social security costs Total The Parent Company Board and CEO salaries and remunerations of which bonuses Board and CEO pension costs Board and CEO social security costs Salaries and remunerations management team of which bonuses Management team pension costs Management team social security costs Salaries and remunerations other employees of which bonuses Pension costs other employees Social security costs other employees Total Of the pension costs for the year, a cost of SEK 8,698 thousand relates to changes in the pension institution's lifespan assumptions. Presentation of the proportion of male/female executives Proportion of male/female executives percentage women Parent company Board of Directors 17% 17% Other senior executives 0% 0% Board of Directors 25% 25% Other senior executives 33% 33% Termination and severance pay The contract with the CEO requires 6 months notice from the company and 6 months notice from the employee. The notice period is mandatory unless the company decides otherwise. There is severance pay of 12 monthly salaries in addition to notice-period pay if the termination id from the Company's side. 33

36 NOTE 9 Financial revenues The Parent Company External interest income Change in value of interest rate derivatives Foreign exchange gains on financial items Other 6 50 Total NOTE 10 Financial expenses The Parent Company External interest expenses Change in value of interest rate derivatives Foreign exchange losses Other Total NOTE 11 Taxes The Parent Company Tax expenses Tax expenses for the period Deferred costs of temporary differences Total reported tax income/expenses Reconciliation of effective tax Percent Amount Percent Amount Loss/income before tax Tax as per current rate for parent company 26,30% ,30% Deferred taxes due to temporary differences -20,4% ,0% Other (different tax rate, etc.) -20,1% ,4% Total -14,2% ,6% The Parent Company Percent Amount Percent Amount Loss/income before tax Tax as per current rate for parent company 26,3% ,3% 102 Other -26,3% ,4% -102 Total 0,0% 0,0% The applied tax rate for the Group in Sweden is 26.3% and the local tax rate is applied to foreign subsidiaries. 34

37 NOTE 12 Intangible fixed assets Trademarks Accumulated acquisition value At beginning of year Acquisitions Exchange differences for the year At end of year Accumulated depreciation according to plan At beginning of year Depreciation for the year according to plan Additional depreciation Exchange differences for the year At end of year Net book value at end of year Goodwill Accumulated acquisition value At beginning of year Merger of acquired company At end of year Net book value at end of year Other intangible assets Accumulated acquisition value At beginning of year Acquisition of subsidiaries Additions Disposals Translation differences At end of year Accumulated depreciation according to plan At beginning of year Acquisition of subsidiaries Disposals Depreciation for the year according to plan Translation differences At end of year Net book value at end of year

38 Depreciation of intangible fixed assets in the statement of comprehensive income Cost of goods sold Sales expenses Administrative expenses Total Remaining depreciation period for trademarks subject to depreciation: 16,8 years Intangible fixed assets contain no impairments in either the Group or the Parent Company. Apart from goodwill, there are brands with indefinite useful lives and trademarks with finite useful lives. At the end of the period there were no internally generated intangible fixed assets, only acquired intangible fixed assets. For information on depreciations, refer to accounting policies in Note 1. Impairment testing of goodwill and trademarks IFRS requires that trademarks, goodwill, and other intangible assets with indefinite useful lives are no longer made subject to depreciation but are rather impairment tested, partly during the transition to IFRS and annually or more frequently if there are indications of depreciation. Such assets are written down if the carrying amount exceeds the recoverable amount. Goodwill is a residual that arises when the acquired values have been allocated to a definable intangible asset. Impairment tests for goodwill in cash-generating units The recoverable amount of a cash-generating unit (CGU) is determined based on estimates of value in use. These calculations are based on estimated future cash flows before taxation based on the approved budget and business plan covering a five year period. Value in use estimates are calculated from the current business plan and based on assumptions and assessments of organic sales growth, current cost levels, the assumption of operating margin development, and the estimated weighted average cost of capital (WACC). A WACC of 9% after tax has been used when discounting the cash flows. For cash flows beyond the five year period, these are extrapolated from an estimated growth rate of 2%. Where relevant, impairments are made for the amount by which the book value exceeds the established value in use. For impairment assessments goodwill is allocated to the lowest level for which there are identifiable cash flows of cash generating units. Identified CGU and cash flows result from the Group's operating segments. Goodwill is allocated to the following cash-generating units: Thousand SEK The Nordic region Wound Care Poland Total

39 Based on the tests for the need for impairment as described above, there was no need for impairment at 31 December 2011 and no impairments have affected the year's income. Impairment testing of trademarks In addition to goodwill, the Group has a number of trademarks that are considered to have an indefinite useful life. The cost basis of these trademarks is determined by the external evaluation conducted in accordance with the "royalty cash flow method". The useful life is considered to be indefinite when it is a question of very well-established brands in their respective markets. 's strategy is to invest in and develop these brands for the foreseeable future. These brands are tested annually to determine any need for impairment. Impairments are done with the amount by which the book value exceeds the estimated recoverable amount. The recoverable amount consists of value in use where the value in use is the present value of estimated future cash flows. Cash flows are based on the business plan assumptions that normally cover five years and cash flows beyond the plan period are extrapolated. A WACC of 9% after tax is used when discounting the cash flows. For cash flows beyond the five year period, these are extrapolated from an estimated growth rate of 2%. Where relevant, impairments are carried out for the amount by which the book value exceeds the established value in use. The value of the brands with indefinite useful lives amounted to SEK 789 million (786) at the end of the year. In the impairment test at 31 December 2011, no need for impairment was identified and thus no impairments affect the profit/loss for the year. Trademarks and other intangible fixed assets Trademarks with definite useful lives and other intangible fixed assets are made subject to depreciation over their estimated useful life. NOTE 13 Tangible fixed assets Land and buildings Accumulated acquisition value At beginning of year Additions Disposals -692 Translation differences At end of year Accumulated depreciation according to plan At beginning of year Disposals 692 Depreciation for the year according to plan Regrading 340 Translation differences At end of year Net book value at end of year

40 Leasehold improvements Accumulated acquisition value At beginning of year Acquisition of subsidiaries Additions Disposals -305 Regrading -525 Translation differences At end of year Accumulated depreciation according to plan At beginning of year Acquisition of subsidiaries -873 Disposals 239 Depreciation according to plan for the year on a cost basis Translation differences At end of year Net book value at end of year Machinery and other technical equipment Accumulated acquisition value At beginning of year Acquisition of subsidiaries Additions Disposals Regrading 451 Translation differences At end of year Accumulated depreciation according to plan At beginning of year Acquisition of subsidiaries Disposals Regrading -415 Depreciation according to plan for the year on a cost basis Translation differences At end of year Net book value at end of year

41 Equipment, tools, fixtures and fittings Accumulated acquisition value At beginning of year Acquisition of subsidiaries Additions Disposals Regrading 912 Translation differences At end of year Accumulated depreciation according to plan At beginning of year Acquisition of subsidiaries Disposals Regrading -180 Depreciation according to plan for the year on a cost basis Translation differences At end of year Net book value at end of year Construction in progress and advance payments for tangible fixed assets At beginning of year Additions Reclassifications Translation differences Net book value at end of year Depreciation on tangible fixed assets in the statement of comprehensive income Cost of goods sold Sales expenses Administrative expenses Research and development Total Tangible fixed assets contain no impairments in either the Group or the Parent Company. 39

42 NOTE 14 Leases Financial leasing 's financial leasing consists mainly of passenger cars. The carrying value on the balance sheet date amounted to: Cost basis Accumulated depreciations Total Total leasing payments during the year amounted to SEK 4,358 thousand and the depreciation amount was SEK 4,584 thousand. Distribution of remaining payments leasing at 31/12/2011 Current value 31/12/2010 Current value 1 year years years years years >5 years Total The current value of future lease rentals is calculated on an estimated market rate of 6.0% for this type of contact. Operating leasing rents warehouses, office space, and vehicles under operational leases Expensed fees for operational leasing Distribution of remaining payments leasing at 31/12/2011 Current value 31/12/2010 Current value 1 year years > 5 years Total

43 NOTE 15 Shares in subsidiaries 31/12/ /12/2010 Number Proportion Reported Reported Subsidiary/org. reg. no./headquarters Org. reg. no. participations in %) value value Cederroth AB Cederroth Holding B.V., Holland Cederroth A/S, Norge Cederroth Holding Aps Cederroth Danmark A/S Paramedical A/S Cederroth Förvaltning AB Cederroth OY, Finland Cederroth Ibérica S.A., Spanien Cederroth Portuguesa S.A, Portugal Cederroth Inter S.A., Schweiz Cederroth Polska S.A., Polen, 3) Cederroth Sverige AB, U.V. 1) Date Dofter AB, U.V. 1) Famaco AB, U.V. 1) Cederroth Ind. Prod. AB, U.V. 1) Wallco AB, U.V. 1) Aktiva Pharmaceut. AB, U.V. 1) Grumme AB, U.V. 1) Pharbio Medical Int. AB, Gbg 2) ) = Upplands Väsby, Sweden 2) = Göteborg, Sweden 3) = Change of name 2011, former Soraya S.A Investment in group companies Accumulated acquisition value At beginning of year Total Net book value end of year No net investments in stocks and shares was made in 2011 (last year it was SEK 98,900 thousand, which mainly consisted of the purchase prices for acquisitions during the year). 41

44 NOTE 16 Deferred tax assets and liabilities OB 2010 Reported Reported CB 2010 P&L BS Deferred tax liabilities Intangible fixed assets Tangible fixed assets Accrued / prepaid Untaxed reserves Total Deferred tax receivables Provisions Tangible fixed assets Deficit deductions Accrued / prepaid Other Total Net tax liabilities OB 2011 Reported Reported CB 2011 P&L BS Deferred tax liabilities Intangible fixed assets Tangible fixed assets Accrued / prepaid Untaxed reserves Total Deferred tax receivables Provisions Tangible fixed assets Deficit deductions Accrued / prepaid Other Total Net tax liabilities Deferred tax assets and deferred tax liabilities have been valued based on the nominal tax rate. Deferred tax assets and liabilities are offset when there is a legal right to offset current tax assets and tax liabilities and when deferred taxes relate to the same taxation authority. The company has not offset any tax liabilities this year or last year. Unrecognised deferred tax assets The tax values entered in the assets relating to deficit deductions in the Group as at 31/12/2011 are shown in Note 16. Tax values are reported only for Cederroth AB. Deficit deductions in the other subsidiaries amount to a total of SEK 132,882 thousand. These deficit deductions can be used against future earnings within 15 years from the year in which the deficit deduction arose. These deficit deductions have not been included in the assets. 42

45 NOTE 17 Inventories Raw materials and necessary items Provision for obsolescence raw materials Work in progress Provision for obsolescence work in progress Finished products and goods for resale Provision for obsolescence finished products and goods for resale Total NOTE 18 Trade receivables has more than 4,000 active customers, of which the 10 largest account for approximately 47% of the Group's total turnover. The customers are primarily chains of grocery stores, pharmacy chains and health food businesses and pharmacy businesses. To reduce the customer credit risk, a number of customers are credit insured and no further deliveries are made to customers with debts due without specific approval from an authorised person Trade receivables Allowance doubtful trade receivables Total The fair value of the Group's trade receivables are consistent with the reported value Age analysis of trade receivables at Not overdue > Total NOTE 19 Prepaid expenses and accrued income The Parent Company Rental costs Insurance costs Marketing costs Accrued revenues ADP expenses Payments on account Other Total

46 NOTE 20 Equity THE GROUP The summary of changes in equity derives from the statement of changes in equity in the group and exists in direct connection with the statement of financial position for the group. Number of shares (thousands) Share capital Other endowment capital Per 31 December New share issue Per 31 December Total At 31 December Specification of changes in equity are contained in the report "Changes in equity", which follows immediately after the balance sheet. The shares have a par value of SEK 1.00 per share (SEK 1.00 per share) Each share carries one vote. NOTE 21 Liabilities to credit institutions Long-term liabilities The Parent Company Bank loans Financial leasing liabilities Interest rate derivatives Total Current liabilities The Parent Company Bank loans Financial leasing liabilities Total Total Committed credit line The maturity structure of bank loans and financial leasing liabilities are reported in note 26. There are special commitments for external bank loans, covenants, meaning that the lending bank has the right to require early repayment of the credit if these commitments are not met. 44

47 NOTE 22 Other long-term liabilities The Parent Company Loans from shareholders and holding compa Mezzanine loans Other long-term liabilities Total The above loans for a total of SEK million are subordinate to the external bank loans, which means that repayment of these loans can only be made after the Group's bank loans are repaid. NOTE 23 Provisions for pensions The information note refers only to Sweden Koncernen Present value of unfunded obligations Unrecognised actuarial gains (+) and losses (-) Net commitment to employee benefits Net amount recognised in the following items in the statement of financial position Provisions for pensions in Sweden Net amount on the balance sheet Overview of defined benefit plans has defined benefit plans in Sweden Changes in the items reported in the statement of financial position obligations for defined benefit plans Obligations for defined benefit plans at 1 January Change due to changed calculation method Benefits paid Net expense reported in the statement of comprehensive income ITPK - transferred Net amount in the statement of financial position Changes in obligations for defined benefit plans Obligations for defined benefit plans at 1 January Benefits paid Cost of services in current period Interest costs Actuarial gain / loss ITP transferred Obligations for defined benefit plans at 31 December 45

48 Pension expense reported in the statement of comprehensive income Koncernen Service costs in current period Interest costs for obligations Total net expense in the income statement The cost of pensions is recognised in the following rows in the statement of comprehensive income Koncernen Cost of goods sold Sales expenses Administrative expenses Research and development Financial expenses Total Assumptions for defined benefit plans obligations The most significant actuarial assumptions at the balance sheet date Discount rate at 31 December 4,0% Future salary increases 3,5% Descriptions of defined benefit and defined contribution pension plans and shown above in note 1. Defined contribution pension plans In Sweden, the Group has defined contribution pension plans for workers and individual pension plans for salaried employees which are paid for by the company. In foreign countries there are defined contribution plans which are paid for by the respective subsidiaries. Payments to these plans are ongoing under the rules of each respective plan. Cost of defined contribution plans Expense reported in the statement of comprehensive income NOTE 24 Accrued expenses and deferred income The Parent Company Accrued salary costs, incl. social security fees Sales expenses Audit fees Interest expenses Other items Total

49 NOTE 25 Valuation of financial assets and liabilities at fair value Fair value The total carrying amounts and fair value are reported in the table below. The fair value is consistent in all material respects to the carrying amount in the balance sheet for financial assets and liabilities. Interest bearing liabilities Fair value for financial liabilities is calculated on the basis of future cash flows of principal and interest discounted at the current market rate at the balance sheet date. No significant differences are found between fair value and carrying amount. For a maturity analysis, see Note 26. Financial leasing liabilities Fair value is based on the current value of future cash flows discounted at the market rate for similar leases. Trade receivables and other receivables For trade receivables and other receivables, the carrying amount is considered to reflect fair value. Accounts payable and other liabilities For accounts payable and other receivables, the carrying amount is considered to reflect fair value.. GROUP 2011 GROUP 2010 Thousand SEK Loans and accounts receivable Financial liabilities valued at accrued acquisition value Financial liabilities valued at fair value via the net income Total recognisedn et income Fair value Loans and accounts receivable Financial liabilities valued at accrued acquisition value Financial liabilities valued at fair value via the net income Total recognisedn et income Fair value Other long-term receivables Trade receivables Other receivables Liquid assets TOTAL Long term interest-bearing liabilities Other long-term liabilities Short-term interest-bearing liabilities Accounts payable Other current liabilities TOTAL

50 PARENT COMPANY 2011 PARENT COMPANY 2010 Thousand SEK Loans and accounts receivable Financial liabilities valued at accrued acquisition value Financial liabilities valued at fair value via the net income Total recognisedn et income Fair value Loans and accounts receivable Financial liabilities valued at fair value via the net income Financial liabilities valued at fair value via the net income Total recognisedn et income Fair value Other long-term receivables Trade receivables Other receivables Liquid assets TOTAL Long term interest-bearing liabilities Other long-term liabilities Short-term interest-bearing liabilities Accounts payable Other current liabilities TOTAL NOTE 26 Financial risk management 's operations expose it to various financial risks, market risk (which includes currency risk, interest risk), credit risk, and liquidity risk. 's overall financial policy is aimed at identifying and minimising the impact of financial risk. The practical risk management is handled by the central finance department as per the finance policy. The economic hedging relationships which the Group has established as part of its risk management does not qualify for hedge accounting under the rules of IAS 39. The Board receives regular reports including cash flow, debt levels, and the fulfilment of financial terms, along with comparisons against budget and forecast. The Parent Company has a limited risk exposure which means that the descriptions below are primarily attributable to the Group as a whole. The described risks could thus affect the Parent Company indirectly through asset item "Shares in subsidiaries" being affected positively or negatively by how the risks described below are managed. Financing risk and liquidity risk Financing risk is the risk that future capital procurement and refinancing of maturing loans will be difficult or costly. Liquidity risk is defined as the risk that the Group can not fulfil contractual payment obligations due to a lack of cash and cash equivalents. Cederroth's policy is to ensure that there is enough cash and cash equivalents to finance the ongoing operations. The needs are determined by continuously monitoring forecast and actual cash flows with regard to the maturities of financial assets and liabilities on the balance sheet. As the Group is currently a net borrower, excess liquidity shall mainly be used to reduce loan liabilities. Subsidiaries invest surplus cash in bank accounts belonging to the Group's consolidated account system or in bank accounts in banks approved by the finance function.. 48

51 Maturity structure of the Group's financial liabilities: 0-12 months months over 60 months Total Million SEK Bank loans Financial leasing Total Interest rate risk and loan risk 's interest rate risk arises primarily through long-term borrowing. 's borrowings are at variable interest rates which results in an exposure. Borrowing at variable interest rates exposes the Group to interest rate risk regarding cash flow. To reduce the interest rate risk, the Group has chosen to bind interest on 50% of total bank loan volume for at least two years. This is done by using interest rate derivatives (interest rate swaps) for interest rate hedging and there is an exposure to changes in fair value. If the interest rates on the Group's borrowings in Swedish kronor in 2011 were 1.0% higher or lower, with all other variables constant and interest rate swaps taken into account, the Group's profit before taxation for the fiscal year would have been affected by +/-3.8 million SEK. There are special commitments for external bank loans, covenants, meaning that the lending bank has the right to require early repayment of the credit if these commitments are not met. Currency risk The Cederroth Group's accounts are in Swedish kronor, but the Group has operations in Sweden, Norway, Denmark, Finland, Poland, and Spain and purchases are also made in currencies other than Swedish kronor. This means that the Group is exposed to currency risk due to unfavourable changes in exchange rates which may negatively affect earnings, equity, and cash flow. Transaction exposure in the commercial flow of payments in the form of vendor payments in foreign currency causes foreign exchange exposure for the Group. Cederroth has transaction exposure in NOK and exposure as a result of purchases of goods in EUR (EUR has a natural hedge with sales in EUR and DKK in the Finnish and Danish markets). Cederroth currently has no hedged currency positions. Transaction exposure with a change in exchange rates against SEK for the company's main currencies of +/-1% is calculated to affect earnings before tax by +/- 1.2 million SEK. 's earnings are also affected by currency effects caused by price movements in the various foreign subsidiaries and branches and local currencies against the Swedish krona. Translation effects also arise for the Group's net assets during consolidation of the foreign companies' and branches' balance sheets. There is no hedging for this risk. Furthermore, translation effects arise due to loans drawn in EUR from the company's owners. Credit risk Cederroth carries credit risk of the Group's customers because the majority of sales are made with the normal trade credits of each market. To minimise the credit risk as much as possible of individual customers, the majority of customers are credit tested and some of the Company's customers are also credit insured.. Management of financing risk and capital risk Cederroth works continually to reduce the capital and financing risk by ensuring that credit facilities are available if necessary, optimising working capital needs of the Group, and meeting covenants as per financing agreements with external creditors.. 49

52 NOTE 27 Pledged assets and contingent liabilities Shares in subsidiaries have been pledged as collateral for bank loans. Liabilities to credit institutions are shown in note 21. Pledged assets regarding shares in subsidiaries are at amounts equivalent to the Group's consolidated net assets. Pledged assets The Parent Company For own liabilities and provisions Pledged shares in subsidiaries Floating charges Total Contingent liabilities Guarantees for subsidiaries NOTE 28 Related party transactions Related party relationships The Parent Company has a close relationship with its subsidiaries, see Note 15 Shares in subsidiaries and persons belonging to senior executives in the Group, see Note 8. Related party transactions 100% (100%) of the Parent Company's sales, SEK 8,962 thousand (9,752), relate to sales to subsidiaries within the Cederroth Group. Sales to subsidiaries refer to administrative services such as management functions and financial and economic services. All pricing takes place on market terms. The Parent Company has receivables from subsidiaries, see the balance sheet of the Parent Company, Receivables from Group companies. A full account of payments to the Board, the CEO and other senior executives is set out in Note 8, Number of employees, personnel costs and benefits. In addition to the above, there have been no loans, purchases or sales or other transactions between the Group and the Board of Directors or between the Company and senior executives. NOTE 29 Events after the balance sheet date No significant events have occurred after the balance sheet date. NOTE 30 Significant estimates and assessments makes estimates and assumptions about the future in order to prepare accounts according to generally accepted accounting principles. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are considered reasonable under the circumstances. Actual results may differ from these estimates and assumptions. The estimates and assumptions made in the financial statements of 31 December 2011 are not expected to significantly affect the results and position for the next fiscal year. 50

53 The management team has identified difficulties in assessing the carrying amount of the company's pension obligations. Deviations and changes in assumptions used in calculating pension liabilities can have significant effects on the carrying amount of the obligation. Several assumptions concerning future conditions and estimates of parameters have been made when calculating cash-generating units' recoverable amount for an assessment of a possible need for impairment of goodwill. If changes are made in the assessments, this can mean that the total recoverable amount is lower than their combined book value, which would then have an adverse effect on the Group's results through impairment of goodwill and brands. NOTE 31 Information on the Parent Company Cederroth Intressenter AB, registration number , is a Swedish-registered limited liability company based in Stockholm. The head office street address is Kanalvägen 10A and the mailing address is PO Box 715, Upplands Väsby. Consolidated financial statements for the year 2011 consists of the Parent Company and its subsidiaries, together with named Group. The Board and the CEO certify that the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and give a true and fair view of the Group's financial position and earnings. The annual report has been prepared in accordance with generally accepted accounting principles and gives a true and fair view of the Group's and Parent Company's financial position and earnings. The Board of Directors report for the Group and the Parent Company gives a fair overview of the progress of the Group's and the Parent Company's operations, financial position and earnings and describes significant risks and uncertainties faced by the Parent Company and the companies included in the Group. The Parent Company's and the Group's consolidated financial statements and balance sheets will be presented for adoption at the Annual General Meeting held on 27 April. Upplands Väsby April 23, 2012 Conny Karlsson Chairman of the Board Leif Wahlgren CEO Göran Barsby Mats Gullbrandsson Jacqueline Hoogerbrugge Lars Verneholt Mikael Hellberg Our audit report was submitted on April 23, 2012 KPMG AB Anders Skeppstedt Authorised Public Accountant 51

54 52

55 Auditor s report To the annual meeting of the shareholders of Cederroth Intressenter AB, corp. id Report on the annual accounts and consolidated accounts We have audited the annual accounts and consolidated accounts of Cederroth Intressenter AB for the year Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts and consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company s preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinions In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2011 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act, and the consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2011 and of their financial performance and cash flows in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. Report on other legal and regulatory requirements In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the company s profit or loss and the administration of the Board of Directors and the Managing Director of Cederroth Intressenter AB for the year Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company s profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act. Auditor's responsibility Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company s profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden. As basis for our opinion on the Board of Directors proposed appropriations of the company s profit or loss, we examined whether the proposal is in accordance with the Companies Act. As basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinions We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director are discharged from liability for the financial year. Upplands Väsby KPMG AB Anders Skeppstedt Authorized Public Accountant We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and statement of comprehensive income and statement of financial position for the group. 53

56 54

57 BOARD OF DIRECTORS AND AUDITORS Board of Directors Auditors CONNY KARLSSON, born 1955 Chairman KPMG AB ANDERS SKEPPSTEDT, born 1948 Authorized Public Accountant GÖRAN BARSBY, born 1951 Board Member MIKAEL HELLBERG, born 1954 Board Member JACQUELINE HOOGERBRUGGE, born 1963 Board Member THOMAS THOMSEN, born 1969 Board Member LARS VERNEHOLT, born 1968 Board Member EXECUTIVE MANAGEMENT Group Management Operating Units LEIF WAHLGREN, born 1951 HANS-CHRISTIAN BØE, born 1954 Group Chief Executive Man. Dir. of Cederroth A/S, Norway Employed since 1993 Employed since 1985 SARA BRANDT, born 1963 JAROSLAW CYBULSKI, born 1969 Exec. Vice President, Head of Nordic Division Man. Dir. of Cederroth Polska S.A., Poland Employed since 2004 Employed since 1999 MARIA LUNDMAN HEDBERG, born 1965 FINN ESBECH, born 1947 Exec. Vice President, Head of Wound Care Division Man. Dir. of Cederroth Paramedical A/S Employed since 1995 Employed since 1995 JAROSLAW CYBULSKI, born 1969 CHRISTIAN HOLST, born 1962 Head of Eastern European Division Man. Dir. of Cederroth A/S, Denmark Employed since 1999 Employed since 1995 JAN-ERIC CARLSSON, born 1949 JOSÉ MIGUEL TORRES, born 1974 Director of Personnel Man. Dir. of Cederroth Distrex S.A., Spain Employed since 1996 Employed since 2008 OLA CARLSTEIN, born 1965 ULLA SAVÉN, born 1955 Directors of Operations Man. Dir. of Cederroth OY, Finland Employed since 2004 Employed since 2002 LARS INGMAN, born 1960 Chief Financial Officer Employed since

58 ADDRESSES CEDERROTH INTRESSENTER AB Box 715 (street address: Kanalvägen 10A) SE Upplands Väsby Sweden Telephone: info@cederroth.com Home page: Subsidiaries CEDERROTH INDUSTRIAL PRODUCTS AB Box 715 (street address: Kanalvägen 10A) SE Upplands Väsby Sweden Telephone: firstaid@cederroth.com Homepage: CEDERROTH DISTREX S.A.U. Pol.Ind.Can Barri, Calle D E Bigues i Riells, Barcelona España Telephone: atencionalcliente@cederroth.com PHARBIO MEDICAL INTERNATIONAL AB C/o Cederroth AB Box 715 (street address: Kanalvägen 10A) SE Upplands Väsby Sweden Telephone: danmark@cederroth.com CEDERROTH DANMARK A/S Vassingerødvej 7 DK-3540 Lynge Denmark Telephone: danmark@cederroth.com CEDERROTH POLSKA S.A. Ul. Polna 21 PL Radzymin Poland Telephone: soraya@cederroth.com CEDERROTH PARAMEDICAL A/S Vassingerødvej 7 DK-3540 Lynge Denmark Telephone: danmark@cederroth.com CEDERROTH A/S Postboks 23 (street adress:industriveien 3) N-3164 Revetal Norway Telephone: firmapost@cederroth.com CEDERROTH OY PL 95 (street address: Piispansilta 9B) FI Espoo Finland Telephone: +358 (0) info.fi@cederroth.com 56

59 TOILETRIES A selection of trademarks: Acta toothpaste Asan/Sana intimate cleansing Bats deodorant Bio-Oil skin care oil Blistex lip balm Bliw liquid soap Dermika face and body skin care EHS hair care Family Fresh shower HTH body skin care Idomin lip and body skin care Jordan toothbrushes and interdental products LdB body skin care, shower and deodorant L300 face and body skin care Savett wet wipes and alcogel Soraya face and body skin care Stomatol toothpaste Topz cotton products HEALTH A selection of trademarks: Pharbio: Curbisal prostate problems Hemofer iron supplement Multitotal vitamins Omega 3 Forte fish oil Omega 3 Cassis fish oil Omega 3 Barn fish oil Valerina insomnia Allévo weight control LongoVital herbs and vitamins Multiplex/Vitaplex vitamins and minerals Samarin antacid Seltin mineral salt Voltaren pain relief Zyrtec anti-allergy

60 HOUSEHOLD A selection of trademarks: Grumme dishwashing liquid, dishwasher detergent, laundry detergent and soft soap Blomstra fertilizer Svinto steel wool US622/Djungelolja mosquito repellent WC Kukka toilet cleaner WOUnD CARE A selection of trademarks: Dr. San adhesive bandages Dr. SOS adhesive bandages Salvemed pharmacy assortment Salvequick adhesive bandages Sanitan adhesive bandages

61 InDUSTRIAL PRODUCTS A selection of our products Cederroth First Aid Station HORECA Cederroth Eye Wash Station Salvequick Plaster Dispenser Cederroth Burn Gel spray and dressing Cederroth Eye Rinse Cederroth Soft Foam Bandage Cederroth Eye and Wound Cleansing Spray MAP Subsidiaries

62 Box 715, SE Upplands Väsby, Sweden