Expedit a/s 8370 Hadsten. Årsrapport 2007 Annual report PDF

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Expedit a/s 8370 Hadsten Årsrapport 2007 Annual report 2007 A/S-reg.nr CVR nr Contents Statement by the Executive and Supervisory Boards 1 Indenpendent auditors' report 2 The year

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Expedit a/s 8370 Hadsten Årsrapport 2007 Annual report 2007 A/S-reg.nr CVR nr Contents Statement by the Executive and Supervisory Boards 1 Indenpendent auditors' report 2 The year at a glance - highlights 3 Financial highlights for the Group 4 Company details 6 Group chart 8 Management's review 9 Income statement for Assets at 31 December Equity and liabilities at 31 December Statement of changes in equity, Group 28 Statement of changes in equity, parent company 29 Cash flow statement 30 Notes 31 Statement by the Executive and Supervisory Boards The Executive and Supervisory Boards have today discussed and adopted the annual report for Expedit a/s for The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies. We consider the accounting policies used to be appropriate. Accordingly, the annual report gives a true and fair view of the Group's and the parent company's financial position at 31 December 2007 and of the results of the Group's and the parent company's operations and cash flows for the financial year 1 January - 31 December We recommend that the annual report be approved at the annual general meeting. Hadsten, 4 March 2008 Executive Board: Uffe Færch Supervisory Board: Steen Bødtker Chairman Dr. Hans-Jürgen Sattler Peter Wetzstein Lars Karstenskov Andersen Bent Holm 1 Independent auditors' report To the shareholders of Expedit a/s We have audited the annual report of Expedit a/s for the financial year 1 January - 31 December 2007, which comprises the statement by the Executive and Supervisory Boards on the annual report, Management's review, income statement, balance sheet, statement of changes in equity, cash flow statement and notes for the group and the parent company. The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies. The Executive and Supervisory Boards' responsibility for the annual report The Executive and Supervisory Boards are responsible for the preparation and fair presentation of this annual report in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of an annual report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors' responsibility and basis of opinion Our responsibility is to express an opinion on this annual report based on our audit. We conducted our audit in accordance with Danish Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual report. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the annual report, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the company's preparation and fair presentation of the annual report 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 Executive and Supervisory Boards, as well as evaluating the overall presentation of the annual report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit did not result in any qualification. Opinion In our opinion, the annual report gives a true and fair view of the Group's and the parent company's financial position at 31 December 2007 and of the results of the Group's and the parent company's operations and cash flows for the financial year 1 January - 31 December 2007 in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies. Aalborg, 4 March 2008 KPMG C.Jespersen Statsautoriseret Revisionsinteressentskab Niels David Nielsen State Authorised Public Accountant Steffen Hansen State Authorised Public Accountant 2 The year at a glance - highlights The Group realised a major revenue increase from DKK 452 million in 2006 to DKK 521 million in 2007, equivalent to 15% growth. The revenue increase was prompted by a favourable investment climate in the retail trade and was generated by all group enterprises, but especially Expedit Retail Solutions and Expedit Finland enjoy notable progress. Profit before tax rose from DKK 10.9 million in 2006 to DKK 19.1 million in 2007, equivalent to an improvement of 75%, which was attributable to the positive revenue development. Profit after tax came in at DKK 13.6 million, which was up on forecast results and last year's results. The improvement on the forecast profit after tax of DKK 12 million was, for the most part, attributable to a higher closing activity level than forecast and the reversal of a provision of DKK 0.6 million after tax for a previous onerous sublease contract at year end. The positive operations development and the positive development in working capital substantially improved the group cash flows and thereby reduced interest-bearing debt. The cash flows from operating activities for the year were positive at DKK 51 million as against negative cash flows from operating activities of DKK 19 million in To further strengthen its competitive power, Expedit maintained a high investment level in Investments for the year reached DKK 15.6 million, which was primarily in machinery. Group equity represented DKK million at 31 December 2007, equivalent to an equity ratio of 44%. The distribution of dividends of DKK 1.5 million is proposed to the company in general meeting. Expedit focuses on strengthening and developing the organisation in its entirety and the individual employees. Employee welfare failed to be at the desired level at the beginning of 2007, but through a number of measures Expedit managed to restore job satisfaction at a satisfactory level, which has most recently been confirmed in an employee satisfaction survey. With the substantial order volume at the beginning of 2008, revenue is forecast to rise to DKK approx. 550 million in 2008 and profit before tax to amount to approx. DKK 22 million. 3 Financial highlights for the Group Hovedtal Key figures Enhed Unit 2003* Omsætning mio. DKK Revenue Bruttoresultat mio. DKK Gross profit Resultat af primær drift mio. DKK Operating profit Resultat af finansielle poster mio. DKK Profit/loss from financial income and expenses Resultat før skat mio. DKK Profit before tax Årets resultat mio. DKK Profit/loss for the year Balancesum mio. DKK Balance sheet total Egenkapital mio. DKK Equity Pengestrøm fra driften mio. DKK Cash flows from operating activities Pengestrøm til investering mio. DKK Cash flows from investing activities Heraf til investering i materielle anlægsaktiver mio. DKK Portion relating to investment in property, plant and equipment Pengestrøm fra finansiering mio. DKK Cash flows from financing activities Pengestrøm i alt mio. DKK Total cash flows from operating, investing and financing activities 4 Financial highlights for the Group Nøgletal Financial ratios: Enhed Unit 2003* Bruttomargin % Gross margin Overskudsgrad % Operating margin Afkastningsgrad (afkast af investeret kapital inkl. goodwill) % Return on investment (Return on invested capital including goodwill) Egenkapitalandel % Equity ratio Egenkapitalforrentning % Return on equity Finansiel gearing % Financial gearing Resultat pr. aktie (EPS) kr Earnings per share (EPS) Gennemsnitligt antal medarbejdere Average number of employees * The comparative figures for 2003 have not been prepared in accordance with IFRS. Earnings per share have been calculated in accordance with IAS 33. Other financial ratios are calculated in accordance with the Danish Society of Financial Analysts guidelines on the calculation of financial ratios Recommendations and Financial Ratios 2005 . For terms and definitions, please see the accounting policies. 5 Company details Expedit a/s Toftegårdsvej 4 DK-8370 Hadsten Telephone: Telefax: Web site: Registration No.: Established: 1964 Registered office: Hadsten, Denmark Supervisory Board Steen Bødtker, Denmark CEO (Chairman) Age of 50, has served on the Supervisory Board of Expedit since 2002 CEO of Elmer Print A/S Other directorships: Dafa A/S NOPA A/S Eriksen Randers A/S ElmerPrint A/S Steva Holding ApS Dr. Hans-Jürgen Sattler, Germany General Manager (Vice-Chairman) Age of 58, has served on the Supervisory Board of Expedit since 2001 General Manager of the following companies: Wanzl GmbH & Co. Holding KG Wanzl GmbH Wanzl Metallwarenfabrik GmbH Wanzl Beteiligungsgesellschaft GmbH Wanzl Commercial Equipment (Shanghai) Co. Ltd. Wanzl Korea Ltd. SieWa Metallwarenfabrik Peter Wetzstein, Germany Chief Sales Officer, age of 44, has served on the Supervisory Board of Expedit since 2006 Lars Karstenskov Andersen, Denmark Product Developer, elected by the employees Age of 42, has served on the Supervisory Board of Expedit since Company details Bent Holm, Denmark Semi-skilled worker, elected by the employees Age of 45, has served on the Supervisory Board of Expedit since 2008 Executive Board Uffe Færch, Denmark CEO Helle Wulff Chief Financial Officer Birger Gottlieb Thomsen Chief Sales Officer Anders Topp Daugaard Production and Logistics Officer Auditors KPMG C.Jespersen Statsautoriseret Revisionsinteressentskab Vestre Havnepromenade 1A, DK-9000 Aalborg 7 Group chart Ownership Expedit carries on business through the parent company, Expedit a/s, in Denmark, from the branch in Finland and from the wholly-owned subsidiaries, Expedit Norge AS, Nässjö Inredningar AB and Expedit Sverige AB as well as from the 90%-owned Expedit Retail Solutions AB. The latter is owned by Expedit Holding AB. Expedit a/s, Denmark 100% 100% 100% 100% 90% Expedit Sverige AB Expedit Norge AS Expedit Finland Nässjö Inredningar AB, Sweden Expedit Retail Solutions AB, Sweden 8 Management's review Strategy and objectives In the autumn of 2006, Expedit developed a group strategy for 2007, 2008 and Under the headline Profitable growth up to 2010 , the Group has defined its mission and vision as follows: Mission Vision Expedit's mission is to develop unique, functional, customeroriented shopfitting solutions and thereby to develop sustainable business while allowing each individual employee to thrive Expedit's customer orientation generates major growth As a tool to execute its strategy, the Group has defined the following values: Proactivity - We are constantly evolving Flexibility - We adjust to variable conditions in the market place Value creation - We offer valuable business potential to all our stakeholders Consistency - We put action behind our word Credibility - We always stand by our word. Throughout 2007, Expedit held employee meetings focusing on the importance of the values. Together with the daily managerial focus on the values, this has had the effect that these gradually become instrumental in the interaction between the company's processes. Long-term objective In order to maintain its focus on customer requirements in a sustainable business, the Group's objective is to ensure a persistently high degree of customer satisfaction throughout the entire value chain. In addition, reliability of delivery is deemed a prerequisite for maintaining a high degree of customer satisfaction. Accordingly, the Group targets reliability of delivery at a minimum of 95%. To maintain and strengthen its market position, Expedit continues to follow its customers in their internationalisation by means of local representation on the Nordic markets. Consequently, Expedit intends to support its subsidiaries' attendance to individual, national customers by developing the competencies of the subsidiaries. The ability to develop the best concepts and the will to complete projects are two qualities characterising both the individual employee and the entire company. It is Expedit's standing objective to develop functional solutions in co-operation with the individual customer that provide the customer with a competitive edge in the form of a well-defined profile, improved sales and a higher degree of flexibility at the lowest possible cost. 9 Management's review In an employee-driven labour market, employee retention and the ability to attract new staff continue to be important parameters. Expedit is aware that employee satisfaction promotes customer satisfaction. As a consequence, Expedit has defined targets for employee satisfaction as a natural part of its operations. Prompted by the above-mentioned objectives, Expedit has laid down the following, annual, financial objectives: The existing business is to generate annual revenue growth of a minimum of 10%, measured as a weighted average during the strategy period. Profit before tax is to represent at least 5% of revenue The equity ratio is targeted at a minimum of 35%. Results for the year, balance sheet and cash flows In 2007, the Expedit Group posted revenue of DKK million, equivalent to an increase of 15% on revenue in 2006 of DKK million. Profit before tax came in at DKK 19.1 million in 2007, accounting for an improvement of DKK 8.2 million or 75% on the results before tax for For the first time in a number of years, no group entities reported losses in Despite the positive development, the profit before tax failed to meet the targeted 5% of revenue. Profit after tax totalled DKK 13.6 million as against a profit after tax of DKK 11.9 million for Group results after tax were slightly up on the forecast in the most recent Stock Exchange Notice from November 2007, announcing forecast results after tax in line with 2006, equivalent to approx. DKK 12 million. The improvement was mainly triggered by a significantly higher closing activity level than forecast and the conclusion of a sublease by the Norwegian subsidiary - with the outcome that the previous provision for onerous subleases could be reduced by DKK 0.6 million after tax. Revenue Group revenue amounted to DKK million for 2007 as against DKK million for 2006, accounting for a 15% increase as against a forecast increase of approx. 10% in the Q Interim Report and in the annual report for All companies contributed to the revenue increase, see the section Market Position apart from the Norwegian company where revenue was in line with last year. Especially the newly established company, Expedit Retail Solutions AB, enjoyed a marked revenue increase in Also the Finnish branch recorded a rising activity level. Gross profit Following the revenue increase, gross profit was up from DKK 88.6 million in 2006 to DKK million in Gross margin accounted for 19.7% and was at level with last year despite significantly higher capacity utilisation. This development was attributable to declining contribution ratios prompted by more extensive use of subsuppliers and a change 10 Management's review in revenue towards more project-oriented activities and thereby lower contribution ratios. In addition, the market prices were persistently under pressure. Selling and distribution costs and administrative expenses These items were up by approx. 8% to DKK 80.4 million in The increase was, for the most part, derived from the activity development, including in particular the structuring of the organisation of Expedit Retail Solutions. Financial items Financial items represented a net expense of DKK 3.3 million, which was in line with last year. Despite the considerably reduced interest-bearing debt, interest expense was in line with last year. The reason for this was that the reduction in interest-bearing debt was mainly realised during the last part of the financial year and that the effective floating rate interest rate was slightly on the increase. Tax on profit for the year Tax on profit for the year was DKK 5.5 million, equivalent to an effective tax rate of 28.7%. The high effective tax rate was, see note 6, motivated by the facts that the tax rate in the foreign entities and the reduction in the Danish corporation tax rate from 28% to 25% necessitated the recognition of an additional provision for deferred tax of DKK 0.3 million. Balance sheet The group balance sheet total reached DKK million at 31 December 2007 as against DKK million at 31 December The optimisation of the balance sheet development, including in particular the funds tied up in inventories and trade receivables, is a managerial focus area. This focus produced a positive balance sheet development as 2007 saw a major reduction in both net working capital and net interest-bearing debt. The reduced net working capital was predominantly ascribable to a reduced number of funds tied up in trade receivables, which were down by DKK 13.3 million. Receivables at 31 December 2006 were at an exceptionally high level, and the 2007 closing level is deemed to represent the future level, however, with allowance being made for changes in the activity level. Group equity totalled DKK million at 31 December 2007, equivalent to an equity ratio of 43.7%. 11 Management's review Cash flow statement Group cash flows enjoyed a positive development compared with 2006, with cash flows from operating activities accounting for DKK 50.9 million in 2007 as against negative cash flows of DKK 18.7 million in This development was, to a high degree, the result of the positive operations development and reduced net working capital. The positive cash flows from operating activities reduced by net investments in non-current assets of DKK 14.9 million and ordinary repayment of long-term debt of DKK 7.2 million have enabled the Group to reduce drawing on business credits by DKK 17.7 million and at the same increase cash at bank and in hand by DKK 9.5 million, allowing liquidity to be up by DKK 27.3 million. The Group's cash resources including undrawn drawing rights came in at DKK 42 million at year end as against DKK 16 million at the 2006 year end. Investments In order to further strengthen its competitive power, Expedit maintained a high investment level in 2007, coming at DKK 15.6 million. The vast part of the investments was made in Denmark and comprises the upgrading of two spraying facilities on the factories in Hadsten and Ulstrup and the acquisition of a fully automatic bending machine, which was being installed in the factory in Ulstrup at the turn of the year. The machine is expected to be put into service in March In addition, two new welding robots were put into operation immediately after the New Year. Furthermore, also in 2007 Expedit invested heavily in the maintenance and development of the Group's IT, and during the first six months of 2007 Nässjö Inredningar implemented the Group's management system, meaning that the entire Group now relies on the same IT platform. Market conditions Overall considerations 2007 proved a prosperous year for the retail trade in the Nordic countries. A lot of money has been available for consumption across all countries. The retail trade has benefited from this development, which has promoted a favourable investment climate. During the
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