CEDERROTH INTRESSENTER AB ANNUAL REPORT 2013

Transcription

1 CEDERROTH INTRESSENTER AB ANNUAL REPORT 2013

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3 Contents FISCAL YEAR 2013 IN BRIEF... 1 ADMINISTRATION REPORT... 2 STATEMENT OF COMPREHENSIVE INCOME FOR THE GROUP... 7 STATEMENT OF FINANCIAL POSITION - GROUP... 8 STATEMENT OF CHANGES IN EQUITY - GROUP STATEMENT OF CASH FLOW - GROUP (INDIRECT METHOD) INCOME STATEMENT - PARENT COMPANY BALANCE SHEET - PARENT COMPANY STATEMENT OF CHANGES IN EQUITY - PARENT COMPANY STATEMENT OF CASH FLOW - PARENT COMPANY (INDIRECT METHOD) NOTES TO THE FINANCIAL STATEMENTS... 16

4 FISCAL YEAR 2013 IN BRIEF The Group s net sales during the period 1 January December 2013 amounted to SEK 1,984.1 million, an increase of 2.8% compared to the previous year. Operating income before financial items and depreciation (EBITDA) amounted to SEK million (183.5). Operating income before taxes amounted to SEK 37.7 million (17.4). The distribution of Bio-Oil in Poland and Spain began during the year. Distribution of Jordan dental products in Poland began in January. The restructuring of the Group's production facilities was completed in 2013, with the number of factories being reduced from six to four. Mikael Nordin took over as CEO on 15 April An existing distribution agreement with Novartis has been renegotiated. An agreement regarding the distribution of the brand VO5 has been extended. An agreement has been entered into with a distributor of First Aid panels in the USA. An agreement was entered into after the end of the year on refinancing of the Company's interest-bearing liabilities. 1

5 ADMINISTRATION REPORT The Board of Directors and the CEO of Cederroth Intressenter AB, organisation registration number , hereby submit the annual report and consolidated financial statements for the financial year 1 January December Cederroth Intressenter AB is owned by funds managed by CapMan Oy (69.2%) and Litorina Kapital AB (20.6%) and by its management (10.2%). 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. The Group consists of the parent company and the Cederroth AB Group and its subsidiaries. The Group conducts operations primarily in the Nordic countries, Poland and Spain. Furthermore, the Company's plaster products and First Aid products are exported to several European countries and countries outside Europe. The Group's operations in Finland are carried on via Cederroth OY, which is a subsidiary of Cederroth Förvaltnings AB's branch in Finland. The Group carries on development, manufacture marketing and sales of toiletries and health, wound, household and first aid products. Most of the Group's sales consist of sales of products under its own registered brands. The Group's products are mainly sold via its own subsidiaries and are distributed to consumers mainly via grocery stores, pharmacy chains and health food stores. In a number of geographic markets in which the company has no representation of its own, the Group's products are sold through local distributors. During the year, the brands Salve, Dermika, Asan, Allévo, and LongoVital in particular performed well compared to the previous year. Furthermore, the Company is a distributor of a number of external brands. Of these, Bio-Oil performed well compared to the previous year. The Company also carries on contract manufacturing of pharmaceutical and toiletry products for a number of external customers. The bulk of the Company s products are produced at its own production facilities in Sweden, Denmark, Poland and Spain. Operations are carried out in three sales divisions, Scandinavia, Wound Care, Poland, and one joint division for production and logistics. Joint Group functions exist for management, finance, HR and IT. The products are marketed and sold in a range of channels in the markets where the company operates, through its own representatives or through distributors. Important Events during and after the Fiscal Year A new strategic plan was developed during the year and entails clearer focus on categories rather than individual brands. Priority categories are wound care, skin care, health, weight and shower & soap Cederroth has brought an action against Bringwell Hela Pharma AB for damages due to the earlier dispute with Bringwell Hela Pharma concerning trademark law in which Bringwell Hela Pharma originally sued Cederroth for trademark infringement. The dispute concerning trademark infringement was decided in Cederroth's favour and the case relating to damages with Cederroth as the claimant was settled by the District Court in Cederroth's favour during the year. Bringwell Hela Pharma has chosen to appeal the judgment before the Court of Appeal. New legislation has been passed in Sweden that states that interest expenses on amounts borrowed from lenders included in the same community of interest are no longer tax deductible from 1 January This means a risk that interest expenses relating to loans from the owners or companies closely related to the owners will not be tax deductible in Sweden from 1 January This will not have any negative effect on the liquidity of the Company in The issue of the deductibility of interest expenses at the Finnish branch, which was brought into question by the Finnish tax authorities in 2012, has not been resolved. The issue has been remitted to 3 2

6 the local tax authority in Finland for reconsideration, but no new decision has yet been issued. In the event that interest expenses for the years from 2009 to 2013 should not be considered tax deductible, this could mean an additional tax expense of approximately SEK 20 million. The Company currently has no reserve for this item in the balance sheet. In February 2014, the Company refinanced the interest-bearing liabilities with a new lender. There are special conditions for the Company's external bank loans, referred to as "covenants", agreed with the lender bank. The European Commission implemented a new Cosmetics Directive in July. The Directive regulates health claims for foods, including food supplements. As far as Cederroth is concerned, the nonrecurring costs during implementation of the Regulation amounted to approximately SEK 2.0 million. The company has been a distributor of Jordan's dental products in Sweden, Finland and Denmark for a long time. The Company has also been a distributor of Jordan dental products in the Polish market since January An agreement with Novartis regarding distribution has been renegotiated whereby Novartis purchases services from Cederroth. For this reason, sales revenues from Novartis' products will cease (from 2014) and the compensation received for distribution services will be recognised as revenue. Sales and profit/loss The Group s net sales during the period 1 January December 2013 amounted to SEK 1,984.1 million (1,929.6 million), an increase of 2.8%. Sales in local currencies rose by 3.8%. The Group's sales for the period amounted to million in Sweden, million in the other Nordic countries, million in the rest of the EU and 29.7 million in the remaining markets. Operating income before financial items and depreciation (EBITDA) amounted to SEK million (183.5). The operating profit for 2012 has been adjusted by a SEK 2.9 million additional cost for income tax since 2012 has been restated because the so-called "corridor" is no longer applied in the valuation of the Swedish pension liability. During the year, the Nordic Region and Wound divisions experienced worse operating results than in the previous year. Poland has achieved a slightly higher operating profit than the previous year and the Production division achieved a significantly better result than in was adversely affected by non-recurring and start-up costs associated with the production rationalisation project implemented. Income before taxes amounted to SEK 37.7 million (17.4) and comprehensive income for the year amounted to SEK 34.4 million (28.6). The comprehensive income for the year is affected by SEK -1.4 million (3.4) of translation differences on translation of foreign operations, by SEK 16.8 million relating to actuarial gains on the pension liability and by SEK -3.7 from the tax effect on actuarial gains. The comprehensive income for 2012 has been adjusted for the effect of the corridor method no longer being applicable in the valuation of the Swedish pension liability. The adjustment amounts to an actuarial loss of SEK and a tax effect of SEK 2.2 thereon. Cash Resources and Financial Position Cash flow from normal operations during the period amounted to SEK million (120.0). The amount includes changes in working capital of SEK -5.3 million compared to the previous year. Cash flow from investment activities amounted to SEK million. Cash flow from financing activities amounted to SEK million and related to amortisation of borrowings by agreement. The Group's liquid assets at 31 December amounted to SEK 99.3 million (81.7). Committed credit lines amounted to SEK 100 million at year-end. The credit facility 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 (12.3%) (10.9%) and the equity amounted to SEK million (273.6). The equity ratio, including shareholder loans in equity, amounted to 41.0% (37.2%) at year end. The Company s long-term debt at the end of the fiscal year amounted to SEK 1,495.1 million (1,499.4). SEK 78.7 million was repaid to external lenders during the year. 4 3

7 The equity increased to SEK million (273.6). Changes in equity consisted of net income for the year of SEK 22.7 million and translation differences on foreign operations of SEK -1.4 million and a net actuarial profit (including the tax effect) of SEK 13.1 million. Investments and depreciation Investments in tangible fixed assets amounted to SEK 24.4 million (56.9) during the period. Depreciation of tangible and intangible fixed assets amounted to SEK 37.1 million (38.9). 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. The Group 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. The Cederroth Group's largest production plant in Falun was accredited according to the ISO standard in The company thereby guarantees environmentally sustainable production in the long term. Cederroth bases its internal and external actions on an established Code of Conduct that has been communicated to all employees. This document regulates matters in areas such as working environment, gender equality, harassment and corruption. Furthermore, there is a separate code of conduct for suppliers which aims to ensure that Cederroth suppliers meet the requirements established in this document. Environmental and licensable activities The subsidiary Cederroth AB carries on activities that are dangerous to the environment in Falun and that are therefore subject to notification or permits under the Swedish Environmental Code. Production is carried on in accordance with a valid 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 waste systems and the air. Furthermore, the subsidiaries Cederroth Paramedical A/S, Cederroth Polska SA and Cederroth Distrex SAU carry on production activities that are subject to permits in accordance with environmental regulations in their respective countries. The subsidiary Cederroth Paramedical A/S also holds a manufacturing licence for drugs issued by the Danish Läkemedelsverket [Medical Products Agency]. In principle, all the Group's production depends on environmental and/or other permits. In the coming financial year no environmental permits, manufacturing permits or similar need to be renewed or revised by the relevant authority. 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. Approximately 5% of the Company's employees work 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 expense arises. Development expenditure has been entered as a cost on a continuous basis during the year. Expectations of future developments Operations in 2014 are expected to be stable in all countries in which Cederroth operates. Risk factors A number of factors affect Cederroth's activities 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. 5 4

8 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 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 The Group'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. 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 The 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 The Group'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 trademark rights or other intangible assets. Such disputes could 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. 6 5

9 Raw materials Commodity risk refers to the impact on the Group's results from a change in the price of raw materials. As far as the Group is concerned, the company's results are mainly affected by changes in the price of vegetable oils and other oil-based raw materials. Financial risks The Group's operations are exposed to risks concerning foreign exchange, financing, and interest rates. These risks are described in more detail in Note 25. Proposed appropriation of the Company's earnings The Board of Directors and the CEO propose that retained earnings and unrestricted funds, amounting to SEK 235,148,470, be carried forward to new accounts. Carried forward: SEK 235,148,470 Of which share premium reserve: SEK 238,241,444 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. 7 6

10 Statement of comprehensive income for the Group 1 January 31 December Amounts in SEK thousand Note Net sales Cost of goods sold Gross profit Other operating income Sales expenses Administrative expenses Research and development costs Other operating expenses Operating income Financial income Financial expenses Net financial income and expenses Loss/income before tax Tax Profit/loss after tax Other comprehensive income Items that can be transferred to the profit/loss for the year Translation differences in the translation of foreign operations Items that cannot be transferred to the profit/loss for the year Revaluation of defined-benefit pension plan Tax effect revaluation of defined-benefit pension plan 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 9,43 14,64 Earnings per share based on Profit after tax (22,679/35,167) divided by the average number of shares (2, / 2, ) 8 7

11 Statement of Financial Position - Group Amounts in SEK thousand Note 31/12/ /12/ /01/2012 ASSETS Intangible fixed assets The trademark Goodwill Other intangible fixed assets Tangible fixed assets Land and buildings Leasehold improvements Machinery and other technical equipment Equipment, tools, fixtures and fittings 12, 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 16 Raw materials and necessary items Work in progress Finished products and goods for resale Current receivables Trade receivables Tax assets Other receivables Prepaid expenses and accrued income Liquid assets Total current assets TOTAL ASSETS

12 Statement of Financial Position - Group Amounts in SEK thousand Note 31/12/ /12/ /01/2012 Equity Share capital Other endowment capital Translation reserve Revaluation reserve pension liabilities Retained earnings including net loss/income for the year Equity attributable to Parent Company shareholders Total equity LIABILITIES Liabilities to credit institutions Other liabilities Provisions for pensions Deferred tax liabilities Total long-term liabilities Short-term interest-bearing liabilities 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/ /12/2012 For own liabilities and provisions Floating charges Pledged shares in subsidiaries Total Contingent liabilities None None 10 9

13 Statement of Changes in Equity - Group Statement of Changes in Equity - Group Equity attributable to Parent Company shareholders Other endowment capital Translation reserve Revaluation reserve pension liability Retained earnings incl. loss/income for the year Amounts in SEK thousand Share capital Total equity Equity brought forward 01/01/ Adjustment retroactive application Adjusted opening equity 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/ New issue costs in 2012 amounted to SEK 20 thousand

14 Statement of Cash Flow - Group (indirect method) Amounts in SEK thousand Operations Loss/income 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 Disposals of intangible fixed assets Acquisition of tangible fixed assets Disposals of tangible fixed assets Cash flow from investing activities Financing activities Amortisation of borrowings New loans taken 442 New share issue 420 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 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

15 Income Statement - Parent Company 1 January - 31 December Amounts in SEK thousand Note Net sales Gross profit Administrative expenses Other operating income 4 13 Other operating expenses Operating income Interest income and similar items Interest expenses and similar items Loss/income after financial items Appropriations Group contribution Loss/income before tax Income taxes 10 Net income for the year Net income for the year Other comprehensive income for the year Comprehensive income for the year

16 Balance Sheet - Parent Company Amounts in SEK thousand Note 31/12/ /12/2012 ASSETS Financial fixed assets Investment in group companies Total fixed assets Current receivables Receivables from Group companies Tax assets 20 Other receivables Prepaid expenses and accrued income Cash and bank Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Restricted equity Share capital (2,404,461 shares) Unrestricted equity Profit or loss brought forward Share premium reserve Net income for the year Total non-restricted equity Total equity LIABILITIES Long-term liabilities Liabilities to credit institutions Other long-term liabilities Current liabilities Accounts payable Current part-interest-bearing liabilities Other liabilities Accrued expenses and deferred income Total short-term liabilities Total liabilities TOTAL EQUITY AND LIABILITIES Assets pledged as collateral for the Parent Company Amounts in SEK thousand Pledged shares in subsidiaries Guarantees Parent Company Guarantees for subsidiaries

17 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/

18 Statement of Cash Flow - Parent Company (indirect method) Amounts in SEK thousand Operations Loss/income 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 Loans raised 442 Group contribution received New share issue 420 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 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

19 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 (in Sweden - ÅRL) and in accordance with the Financial Accounting Standards Council recommendation RFR 2, Accounts of juridical persons. The Parent Company uses the same accounting policies as the Group except in the cases listed below under the section "Parent Company accounting principles". The annual accounts and consolidated accounts were approved for issue by the Board of Directors and the CEO on 23 June 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 recognised at fair value via earnings. It is only so-called interest rate swap agreements that have been revalued to fair value. 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 29. Significant accounting principles The Group's accounting principles stated below have been applied consistently to all periods presented in the financial statements, unless otherwise indicated below. The Group's accounting principles have been consistently applied in the presentation and consolidation of the Parent Company and subsidiaries. Changes in accounting principles The change to IAS 19 entered into force on 1 January The change means that the so-called "corridor method" disappears and actuarial gains and losses must be recognized in other comprehensive income. The change means an effect on other comprehensive income in 2013 of SEK 13.1 million, as opposed to SEK 10.0 in The pension liability was reduced by SEK 16.8 million due to the change. For 2012 the change means an increase in the liability of

20 The amended IAS 1 refers to how the item will be presented in other comprehensive income. The items will be divided into two categories: items that can be transferred or that have been transferred to the profit/loss and items that cannot be transferred. This means that translation differences will be presented within the category that has been transferred or that can be transferred and actuarial gains/losses within the category that cannot be transferred. For 2012 (Statement of comprehensive income and Statement of financial position) and opening balances as at 1/ have been restated to reflect the effect of the changes in IAS 19. Standards, amendments, and interpretations not yet applied In preparing the consolidated financial statements at 31 December 2013, standards and interpretations which are applicable to the Group have been published but have not yet entered into force. Changes to IFRS 12 Disclosure of interests in other companies, may mean an increase in disclosure requirements. 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 carries on business activities from which it can generate revenues and incur expenses and for which independent financial information is available. A Furthermore, the operating segment's results are reviewed by the Company's highest decision-maker in order to assess the results and in order to allocate resources to the operating segment. A change has been made in the operating segment in In accordance with the update of the strategy that took place in 2013, as of 2013 the segment consists of the main categories in which the Group's operations are carried on. See Note 2 for a 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 statement of comprehensive income

21 Transactions eliminated in consolidation Internal group balances, revenues and expenses and unrealized gains or losses arising from internal group 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 currency and the Group's presentation currency. 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 trade payables and trade receivables are reported in the operating profit/loss. 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 items in the statement of comprehensive income 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 sale of goods is reported in net income when significant risks and benefits associated with ownership of the goods 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 beginning of the leasing period, financial leasing is reported in the statement of financial position at the lower of the leasing asset's fair value and the 19 18

22 current value of the minimum lease payments. Each leasing payment is allocated between the repayment of debt and financial expenses. The corresponding payment obligations, minus a deduction for financial expenses, are included in the statement of financial position item "Liabilities to credit institutions". The interest element of the financial costs is recognized in the statement of comprehensive income divided over the leasing period. 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. Deferred tax assets and deferred tax liabilities are 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 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 in the statement of financial position include on the assets side cash and cash equivalents, loans receivable, trade receivables and financial investments. Trade payables and borrowings are reported on the liability side. The fair value of the Group's interest rate swaps at 31 December 2013 amounted to a total of SEK 9.6 million. The interest rate swaps are recognized as either assets or liabilities, depending on the valuation. Interest rate swaps and other derivatives are initially recognized at fair value, which means that transaction costs are charged to the profit/loss for the period. After initial recognition, derivative instruments are recognized in the manner described below. If derivatives are used for hedge accounting and to the extent this is effective, changes in value of derivative instruments are recognized on the same line as the hedged item in the income statement for the year. Even if hedge accounting is not applied, increases and decreases in the value of the derivative are recognized as 20 19

23 income or expenses in the operating profit/loss or in the net financial income or expenses based on the intended use of the derivative instrument and whether that use is related to an operating item or a financial item. In hedge accounting, the ineffective portion is recognized in the same way as changes in value of derivatives not used for hedge accounting. If hedge accounting is not applied in the use of interest rate swaps, a coupon is recognized as interest and other change in value of the interest rate swap is recognized as other financial income or other financial expenses. 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 no invoice has 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. Classification and measurement Financial instruments other than derivatives are initially recognized at the fair value of the instrument with a supplement for transaction costs. This applies to all financial instruments except for those classified as financial assets, which are recognized at fair value through the statement of comprehensive income, excluding 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 and other current receivables with a short duration are valued at accrued acquisition 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

24 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 a purchase of construction that takes a considerable time to prepare for its intended use or sale are included in the acquisition value. Accounting principles for impairments are set out 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. Otherwise, it is classified as operational leasing. 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. 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

25 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. 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 statement of comprehensive income 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. With regard to goodwill arising in acquisitions that took place before 31 July 2008, i.e. before Cederroth Intressenter AB's acquisition of Cederroth AB, the Group did not apply IFRS retroactively as of that date when transferring to IFRS and the carrying amount recognized at that date is the Group's acquisition value in future, after impairment testing. 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. The trademark 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 recorded in the statement of financial position but in the statement of comprehensive income 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 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 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 23 22

26 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 statement of comprehensive income under "Other operating income" and "Other operating expenses". Stock 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 minus the estimated costs of completion and for 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 risks regarding obsolescence. 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 item 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 recorded in the sales expenses item in the statement of comprehensive income. Impairments The Group'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, 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 minus 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. If, at the closing date, there is an indication that a non-financial asset has reduced in value, a calculation is carried out of the asset's recoverable value, 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 the asset to which the impairment relates, the relevant line is charged on the statement of comprehensive income. 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 24 23

27 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. 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. 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 annually or more frequently if there are indications of depreciation in value. Such assets are written down if the carrying amount exceeds the recoverable amount. Goodwill is a residual item that arises when the acquired values have been allocated to a definable intangible asset. 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. Employee Benefits Defined contribution pension plans For defined-contribution pension plans, 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. The Group's obligations for contributions to defined contribution plans are recorded as an expense in the statement of comprehensive income as they are earned by the employee for performing services for the Group during the period. Defined benefit pension plans The Group'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 housing bond with a maturity equal to the Group's pension obligations. When there is no functioning market for such housing bonds, the market rate of government bonds of equivalent maturity is 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 most important actuarial assumptions are presented in Note 22. Actuarial gains/losses arise either because the actual outcome differs from previous assumptions or because the assumptions are changed. Actuarial gains/losses are recorded as an item in Other comprehensive income. The net of interest on pension liabilities is reported in net financial items. Other items are reported in operating income

28 Special income tax on pensions is recognized in the operating profit/loss. Bonus plans The Group recognises liabilities and expenses for personnel bonuses. A provision is recognised for the expected cost when the Group has a legal or constructive obligation. Provisions A provision is recognised in the "Statement of financial position" 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. 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. PARENT COMPANY'S ACCOUNTING PRINCIPLES The Group'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. 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 sheets consist mainly of reporting of financial income and expenses, fixed assets and equity

29 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. The parent company recognizes financial guarantee agreements as provisions in the balance sheet when the Company has a commitment for which payment is likely to be required to settle the obligation. Leased assets The Parent Company records all leases as per the rules on operational leases. Borrowing Costs The parent company borrowing costs are charged in the period in which they are incurred. Employee Benefits Only defined contribution pension plans exist in the Parent Company. Group contribution and shareholders' contribution The Company recognizes Group contributions and shareholder contributions in accordance with the statement from the Financial Reporting Council, RFR 2, IAS 27, p 2, the alternative rule, which means that Group contributions are recognized as an appropriation

30 NOTE 2 - Operating segment Operations are carried out in three sales divisions, Scandinavia, Wound Care, Poland, and one joint division for production and logistics. Joint Group functions exist for management, finance, HR and IT. The products are marketed and sold in a range of channels in the markets where the company operates, through its own representatives or through distributors. The Group's operations are divided into four segments: Wound care: operations of development, product supply and sales of first aid products to distributors, sales of plasters through Group subsidiaries in the Nordic region, Poland and Spain and export sales of plasters. Personal care: the business consists of development, supply and marketing of personal care products such as skin lotions, facial products, shower and soap products and similar products in personal care. Sales of the Company's own products and distributed products as well as contract manufacturing take place to grocery stores, pharmacies, health food stores in the Group's main markets and to industrial customers Health & Weight Management: the business consists of development, supply and sale of products for health and weight control, such as vitamins, Omega-3, antacid/fruit salt, a concept for weight loss and similar products in the segment. Sales of the Company's own products and distributed products as well as contract manufacturing take place to grocery stores, pharmacies, health food stores in the Group's main markets and to industrial customers Household and other product categories: the business consists of development, supply and sale of household products and other complementary product categories. Sales of the Company's own products and distributed products take place to grocery stores, pharmacies, health food stores in the Group's main markets and to industrial customers The segment's income includes directly attributable items and items that can be allocated to the segment on a reasonable and reliable basis. Wound Care Personal Care Health/ Household/ Weight Other TOTAL Million SEK Net sales 331,2 337,9 784,4 750,1 484,5 468,6 384,2 344, , ,7 Operating expense 273,0 294,0 725,5 711,5 457,2 436,0 371,4 314, , ,1 Operating income 58,2 43,9 58,9 38,6 27,4 32,6 12,8 29,5 157,2 144,6 Information on larger customers The Group's largest customer in 2013 generated revenues totalling SEK 218,133 thousand (219,672). These revenues are recognized in and included in all the above segments

31 NOTE 3 - Net sales and fixed assets by geographic market The following distribution of net sales is based on a sum for each country to which a sale takes place from group companies. Net realisable The Parent The Company Parent Company Sweden Other Nordic countries Other EU countries Euurope Europe outside EU 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 geographical market 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. Unallocated assets mean intangible assets that it is not considered possible to allocate to a geographical area in a meaningful way. Note 4 Other operating income The group The Parent The Parent Company Company Capital gains, tangible fixed assets Foreign exchange gains on operating receivables Expenses charged Other Total The Other (2012) item includes agreed payment in sales of brands. Note 5 - Other operating expenses The Parent Company Capital losses, tangible fixed assets Foreign exchange losses on operating receivables Royalties Other Total

32 Note 6 - 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 7 Number of employees, personnel costs and benefits Average number of employees of which 2013 men 2012 men Parent company Sweden 2 100% 2 100% Total in Parent Company 2 100% 2 100% Subsidiaries Sweden % % Norway 35 40% 36 39% Denmark 73 42% 65 46% Finland 43 44% 46 41% Spain & Portugal 96 52% 97 5% Poland % % Total in subsidiaries 877 0% % Group total % % 30 29

33 Accounting for salaries, benefits and social costs The Parent Company Salaries and other remuneration of which bonuses Social security costs Total The Parent Company Board and CEO salaries and remunerations of which bonuses Board and CEO social security costs Salaries and remunerations management team of which bonuses Management team social security costs Salaries and remunerations other employees of which bonuses Social security costs other employees Total In social insurance costs, the parent company includes SEK 1,396 (4,623) for pension costs, of which SEK 597 (3,853) relate to the Board of Directors and the CEO. Presentation of the proportion of male/female executives Proportion of male/female executives Proportion women roportion 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

34 Note 8 - Financial revenues The Parent Company External interest income Change in value of interest rate derivatives Foreign exchange gains on financial Other 1 33 Total Note 9 - Financial expenses The Parent Company External interest expenses Change in value of interest rate derivatives Foreign exchange losses Other Total NOTE 10 Taxes The Parent Company Tax expenses Tax expenses for the period Deferred costs of temporary differences Tax recognized in the profit/loss for the year Tax cost recognized in Other comprehensive income 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 22,00% ,30% Non-deductible costs 28,7% ,5% Non-taxable income -20,7% ,6% 131 Change tax rate deferred tax 0,0% -137,9% Other tax rate subsidiaries 2,0% ,7% Tax effect revaluation pension liability 7,4% ,9% Other 7,4% ,9% Total 49,6% ,9%

35 The Parent Company Percent Amount Percent Amount Loss/income before tax Tax at current tax rates 22,0% 9 26,3% 733 Non-deductible costs -22,0% -9-26,3% -733 Total 0,5% 0 0,0% 0 The applicable tax rate in the Group in Sweden is 22.0% for the tax for the period and 22.0% for deferred taxes and the local tax rate applies with regard to foreign subsidiaries. NOTE 11 - Intangible fixed assets The trademark Accumulated acquisition value At beginning of year 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 Exchange differences for the year At end of year Carrying amount at the end of the period Value of trademarks with an indefinite useful life Goodwill Accumulated acquisition value At beginning of year Exchange differences for the year At end of year Carrying amount at the end of the period Other intangible assets Accumulated acquisition value At beginning of year Additions Translation differences At end of year Accumulated depreciation according to plan At beginning of year Depreciation for the year according to plan Translation differences At end of year Carrying amount at the end of the period

36 Depreciation of intangible fixed assets in the statement of comprehensive income Cost of goods sold Sales expenses Administrative expenses Total Remaining period for trademarks subject to depreciation : 14.8 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 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. The value in use is calculated based on the cash flow calculated at current values on the basis of the so-called royalty method. The value in use is calculated on the basis of an approved budget for the next year and the valid business plan for the next five-year period. Furthermore, estimates include assumptions and assessments of organic sales growth, current expenditure levels and assumptions concerning the development of the operating margin and the estimated average weighted average cost of capital (WACC). A WACC of 7% after tax has been used when discounting the cash flows. This WACC is calculated on the basis of a 10-year government bond rate with a 5% risk premium. For cash flows beyond the five year period, these are extrapolated from an estimated average 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. As a consequence of the Company's and the Group's updated strategy (see Note 2 Segment), which focuses on categories instead of divisions, the identification of cash-generating units has been revised and goodwill is allocated to the following cash generating units as from 2013: 2013 Thousand SEK 2012 Thousand SEK Wound care Nordic Countries First Aid Wound care Toiletries Poland Health Weight Total Based on the tests for the need for impairment as described above, there was no need for impairment at 31 December 2013 and no impairments have affected the year's income

37 Impairment testing of trademarks In addition to goodwill, the Group has a number of brands that are considered to have an indefinite useful life. These brands are assignable to the cash generating units Nordic Region, Wound Care and Poland. The cost basis of these brands 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 a relevant market. The Group'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 7% 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 made 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 796 million (793) at the end of the year. In the impairment test at 31 December 2013, 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. NOT 12 Tangible fixed assets Land and buildings Accumulated acquisition value At beginning of year Additions Disposals Translation differences At end of year Accumulated depreciation according to plan At beginning of year Depreciation for the year according to plan Disposals 258 Translation differences At end of year Carrying amount at end of year

38 Leasehold improvements Accumulated acquisition value At beginning of year Additions Disposals Translation differences At end of year Accumulated depreciation according to plan At beginning of year Disposals Depreciation according to plan for the year on a cost basis Translation differences At end of year Carrying amount at the end of the period Machinery and other technical equipment Accumulated acquisition value At beginning of year Additions Disposals Translation differences At end of year Accumulated depreciation according to plan At beginning of year Disposals Depreciation according to plan for the year on a cost basis Translation differences At end of year Carrying amount at the end of the period

39 Equipment, tools, fixtures and fittings Accumulated acquisition value At beginning of year Additions Disposals Translation differences At end of year Accumulated depreciation according to plan At beginning of year Disposals Depreciation according to plan for the year on a cost basis Translation differences At end of year Carrying amount at the end of the period Construction in progress and advance payments for tangible fixed assets At beginning of year Additions Reclassifications Translation differences Carrying amount at the end of the period Depreciation on tangible fixed assets in the statement of comprehensive income Cost of goods sold Sales expenses Administrative expenses FOU Total Tangible fixed assets contain no impairments in either the Group or the Parent Company

40 NOTE 13 - Leases Financial leasing The Group's financial leasing derives mainly from saloon cars. The carrying value on the balance sheet date amounted to: Cost basis Accumulated depreciations Total Distribution of remaining payments Leasing liability as at 31/12/2013 Current value 31/12/2012 Current value 1 year year year year year >5 years Total Future payment obligations for financial leasing are set out in Note 25 Operating leasing The Group rents warehouses, office space, and vehicles under operational leases Expensed fees for operational leasing Distribution of remaining payments leasing at 31/12/2013 Current value 31/12/2012 Current value 1 year years > 5 years Total

41 NOTE 14 - Shares in subsidiaries 31/12/ /12/2012 Number Proportion Reported Reported Subsidiary/org. reg. no./headquarters Org. reg. no. participations in %) value value Cederroth AB Cederroth A/S, Norway Cederroth Holding Aps Cederroth Denmark A/S Paramedical A/S Cederroth Förvaltning AB Cederroth OY, Finland Cederroth Ibérica S.A., Spain Cederroth Portuguesa SA, Portugal Cederroth Inter S.A., Switzerland Cederroth Polska S.A., Poland, 3) Cederroth Sweden 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 ) = Gothenburg, Sweden 3) = Change of name in 2011, previously Soraya SA Investment in group companies 31/12/ /12/2012 Accumulated acquisition value At beginning of year Total Carrying amount at the end of the period No net investment in shares and participations was made in

42 NOTE 15 - Deferred tax assets and liabilities Recognized IB 2012 Recognized in in UB 2012 statement of statement comprehensiv of financial e income position Deferred tax liabilities Intangible fixed assets Tangible fixed assets Accrued / prepaid Untaxed reserves Other Total Deferred tax receivables Provisions Tangible fixed assets Deficit deductions Accrued / prepaid Other Total Net tax liabilities Recognized Recognized in in IB 2013 statement of statement UB 2013 comprehensiv of financial e income position Deferred tax liabilities Intangible fixed assets Tangible fixed assets Accrued / prepaid Untaxed reserves Other Total Deferred tax receivables Provisions Tangible fixed assets Deficit deductions Accrued / prepaid Other Total Net tax liabilities Unrecognised deferred tax assets The tax values entered in the assets relating to deficit deductions in the Group as at 31/12/2013 are shown in Note 15. Tax values are reported only for Cederroth AB. Deficit deductions in the other subsidiaries amount to a total of SEK 150,426 thousand. These deficit deductions can be utilised against future earnings within the period shown in the table below from the year when a deficit deduction arose. These deficit deductions have not been included in the assets

43 Maturity structure deductible deficiency not entered in assets Tax assessment year Amount Tax assessment year Amount trpt unrestricted trpt Total NOTE 16 - 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 17 - Trade receivables The Group has more than 4,000 active customers, of which the 10 largest account for approximately 46% of the Group's total turnover. The customers are primarily chains of grocery stores, pharmacy chains and health food businesses. A number of customers are credit insured to reduce the customer credit risk. Furthermore, no further deliveries are made to customers with overdue debts without the approval of an authorised person in accordance with the Company's procedures applicable at any given time Trade receivables Allowance doubtful trade receivables Total Age analysis of trade receivables at 31/12/ /12/2012 Not overdue > Total

44 NOTE 18 Prepaid expenses and accrued income The Parent Company Rental costs Insurance costs Marketing costs Accrued revenues ADP expenses Payments on account Other Total NOTE 19 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. PARENT COMPANY The summary of changes in equity derives from the Statement of changes in equity in the parent company and exists in direct connection with the balance sheet for the parent company. The shares have a par value of SEK 1.00 per share (SEK 1.00 per share) Each share carries one vote. When shares are issued at a premium, in other words when the price for the shares is higher than the quota value of the shares, an amount corresponding to the amount received in excess of the quota value of the shares is paid into a share premium reserve. The amount paid to the share premium reserve from and including 1 January 2006 is included in equity. The translation reserve contains all exchange differences arising from the translation of financial statements from foreign operations that have prepared financial statements in a currency other than that of the Group's financial reports. The Parent Company and the Group present their financial statements in Swedish kronor

45 NOTE 20 - Liabilities to credit institutions Long-term liabilities The Parent Company Bank loans Financial leasing liabilities Total Current liabilities Bank loans Financial leasing liabilities Total Total Committed credit line The maturity structure of bank loans and financial leasing liabilities are reported in note 25. There are special commitments for external bank loans, so called "covenants", meaning that the lending bank has special rights, including the right to require early repayment of the credit if these commitments are not met. Note 21 - Other long-term liabilities The Parent Company Loans from shareholders and holding companies Mezzanine loans Interest rate derivatives 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

46 NOTE 22 - Provisions for pensions The information note refers only to Sweden / 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 in the statement of financial position Overview of defined benefit plans The Group 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 Actuarial gain/loss 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 Pension expense reported in the statement of comprehensive income Service costs in current period Interest costs for obligations Actuarial gain/loss Total net cost in statement of comprehensive income

47 The cost of pensions is recognised in the following rows in the statement of comprehensive income Cost of goods sold Sales expenses Administrative expenses Research and development Financial expenses Other comprehensive income Total Assumptions for defined benefit plans obligations The most significant actuarial assumptions at the balance sheet date Discount rate at 31 December ,0% Descriptions of defined benefit and defined contribution pension plans are shown above in note 1. Actuarial gains in 2013 consist of SEK 0.5 million due to changes in demographic assumptions. The remaining profit of SEK 16.2 million is due to financial assumptions. In 2012, there were no effects due to demographic assumptions and the entire loss is therefore due to financial assumptions. 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 is ongoing under the rules of each respective plan. Anticipated payments in 2014 (thousand SEK) Costs of defined contribution plans Expense reported in the statement of comprehensive income The information regarding the pension liability in 2012 has been updated on the basis of the fact that the corridor method no longer applies. NOTE 23 Accrued expenses and deferred income The Parent Company Accrued salary costs, incl. social security fees Sales expenses Audit fees Interest expenses Other items Total

48 NOTE 24 Valuation of financial assets and liabilities at fair value The Company's capital management The Group's capital management aims to guarantee the Group financial stability, manage financial risks and meet the Group's short-and long-term need for capital. The Group's equity is shown in the "Statement of Financial Position for the Group". Since loans from shareholders are subordinated to other interest-bearing liabilities, the adjusted equity ratio is calculated including these shareholder loans, which thus strengthens the Group's adjusted equity. The Group monitors its use of capital with the aid of various key indicators such as net debt, return on capital employed and equity ratio. Neither the parent company nor the subsidiaries have regulating external capital requirements. Fair value The total carrying amounts and fair value are reported in the table below. The fair value is consistent in all material respects with the carrying amount in the balance sheet/statement of financial position 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 25. 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 and other receivables, the carrying amount reflects the fair value when the outstanding term is mainly less than 1 year. Accounts payable and other liabilities For accounts payable trade and other debts, the carrying amount reflects the fair value when the outstanding term is mainly less than 1 year. Derivative Instruments The fair value for interest rate swaps is based on the brokering credit institution's valuation, the reasonableness of which is tested by discounting estimated future cash flows under the terms and maturities of the contracts and based on the market rates for similar instruments at the balance sheet date

49 GROUP 2013 GROUP 2012 Thousand SEK Loans and accounts receivable Financial liabilities valued at accrued acquisition value Financial liabilities valued at fair value via the net income Total recognised net 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 recognise d net income Fair value Other long-term receivables Trade receivables Other receivables Accrued revenues Liquid assets TOTAL Long term interest-bearing liabilities Short-term interest-bearing liabilities Interest rate derivatives Accounts payable Accrued expenses TOTAL PARENT COMPANY 2013 PARENT COMPANY 2012 Thousand SEK Loans and accounts receivable Financial liabilities valued at accrued acquisition value Financial liabilities valued at fair value via the net income Total recognised net 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 recognise d net income Fair value Liquid assets TOTAL Long term interest-bearing liabilities Short-term interest-bearing liabilities Accounts payable Accrued expenses TOTAL NOTE 25 Financial risk management The Group's operations expose it to various financial risks, market risk (which includes currency risk, interest risk), credit risk, and liquidity risk. The Group'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 the 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 cannot 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

50 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. All existing interest rate swaps mature in 2016 and are linked to repayment of existing external loans. Interest rate swaps are settled twice a year. 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 The Group's interest rate risk arises primarily through long-term borrowing. The Group'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 just over 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 2013 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 +/-1.6 million SEK. Existing interest rate swaps mature in 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, e.g. the flow of payments in the form of supplier 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 +/- 0.3 million SEK. The Group'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

51 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 lenders. NOTE 26 - 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 975 NOTE 27 - Related party transactions Related party relationships The Parent Company has a close relationship with its subsidiaries, see Note 14 Shares in subsidiaries and persons belonging to senior executives in the Group, see Note 7. Related party transactions 100% (100%) of the Parent Company's sales, SEK 8,000 thousand (8,445), 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 7, 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 28 - Events after the balance sheet date In February 2014, the Company refinanced the interest-bearing liabilities with a new lender. There are special conditions for the Company's external bank loans referred to as "covenants" agreed with the lender bank. NOTE 29 - Significant estimates and assessments The Group 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 49 48

52 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 2013 are not expected to significantly affect the results and position for the next fiscal year. 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 address of the head office is Kanalvägen 10A and the mailing address is PO Box 715, Upplands Väsby. Consolidated financial statements for the year 2013 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 income statement/statement of comprehensive income, balance sheet/statement of financial position will be presented to the Annual General Meeting on 27 June 2014 for adoption. Upplands Väsby, 23 June 2014 Conny Karlsson Chairperson Mikael Nordin Chief Executive Officer Göran Barsby Thomas Thomsen Jacqueline Hoogerbrugge Lars Verneholt Mikael Hellberg Our auditors' report was issued on 23 June KPMG AB Anders Skeppstedt Authorised Public Accountant 50 49

53 ABCD Translation from the Swedish original 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 in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the 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 opinions. 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 2013 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2013 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and 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 also audited 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 opinions. 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 be discharged from liability for the financial year. Upplands Väsby 23 June 2014 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 the statement of comprehensive income and statement of financial position for the group. 50

54 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 MIKAEL NORDIN, born 1958 HANS-CHRISTIAN BØE, born 1954 Chief Executive Officer Man. Dir. of Cederroth A/S, Norway Employed since 2013 Employed since 1985 SARA BRANDT, born 1963 RAFAL SZCZEPKOWSKI, born 1968 Exec. Vice President, Head of Man. Dir. of Cederroth Polska S.A., Poland Nordic Division Employed since 2014 Employed since 2004 MARIA LUNDMAN HEDBERG, born 1965 CHRISTIAN HOLST, born 1962 Exec. Vice President, Head of Wound Man. Dir. of Cederroth A/S and Care Division Employed since 1995 Cederroth Paramedical A/S, Denmark Employed since 1995 RAFAL SZCZEPKOWSKI, born 1968 JOSÉ MIGUEL TORRES, born 1974 Head of Eastern European Division Man. Dir. of Cederroth Distrex S.A., Spain Employed since 2014 Employed since 2008 CAMILLA HEDENFELT, born 1968 ULLA SAVÉN, born 1955 Director of Personnel Man. Dir. of Cederroth OY, Finland Employed since 2014 Employed since 2002 OLA CARLSTEIN, born 1965 Directors of Operations Employed since 2004 ULF SPOLANDER, born 1964 Chief Financial Officer Employed since

55 ADDRESSES CEDERROTH INTRESSENTER AB Box 715 (visiting address: Kanalvägen 10A) SE Upplands Väsby Sweden Telephone info@cederroth.com Website: SUBSIDIARIES CEDERROTH AB Box 715 (visiting address: Kanalvägen 10A) SE Upplands Väsby Sweden Telephone info@cederroth.com Website: PHARBIO MEDICAL INTERNATIONAL AB Box 715 (visiting address: Kanalvägen 10A) SE Upplands Väsby Sweden Telephone: info@cederroth.com CEDERROTH DANMARK A/S Vassingerødvej 7 DK-3540 Lynge Denmark Telephone: danmark@cederroth.com Website: CEDERROTH A/S Postboks 23 (visiting address: Industriveien 3) N-3164 Revetal Norway Telephone: firmapost@cederroth.com Website: CEDERROTH OY PL 95 (visiting address: Piispansilta 9B) FI Espoo Finland Telephone: info.fi@cederroth.com Website CEDERROTH POLSKA S.A. Ul. Polna 21 PL Radzymin Poland Telephone: soraya@cederroth.com Website: CEDERROTH PARAMEDICAL A/S Vassingerødvej 7 DK-3540 Lynge Denmark Telephone: danmark@cederroth.com Website: CEDERROTH DISTREX S.A.U. Pol. Ind. Can Barri, Calle D, naves E Bigues i Riells, Barcelona Spain Telephone: atencionalcliente@cederroth.com Website: 52

56 TOILETRIES A selection of trademarkes: 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 L300 - face and body skin care LdB body skin care, shower and deodorant Savett wet wipes Soraya face and body skin care HEALTH A selection of trademarkes: Allévo weight control LongoVital herbs and vitamins Multiplex/Vitaplex vitamins and minerals Pharbio: D3-Vitamin vitamin supplements Hemofer iron supplement Omega 3 Forte fish oil Omega 3 Cassis fish oil Omega 3 Barn fish oil Valerina insomnia Samarin antacid Seltin mineral salt

57 HOUSEHOLD A selection of trademarkes: Grumme dishwashing liquid, dishwasher detergent, laudry detergent and soft soap, Blomstra - fertilizer, Svinto steel whool, US622/Djungelolja mosquito repellent, WC Kukka toilet cleaner WOUND CARE A selection of trademarkes: Salvequick, Salvelox, Dr. San, Dr. SOS adhesive bandages, Salvemed pharmacy assortment FIRST AID PRODUCTS A selection of our trademarks: Cederroth First Aid Station HORECA Cederroth Eye Wash Station Salvequick Adhesive Bandage Dispenser Cederroth Burn Gel spray and dressing Cederroth Eye Rinse Cederroth Soft Foam Bandage Cederroth Eye and Wound Cleansing Spray

58 MAP Subsidiaries

59 Box 715, Upplands Väsby