http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/RSS.ashxSolar Group PagesThu, 12 Mar 2009 10:43:02 +0100http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=1http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=1Annual Report 2008 STRO NGER TOGE THER2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=2http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=21. korrektur | 29. januar 2008 VISION, MISSION AND VALUES In 2006, Solar introduced both an updated vision and mission in the group subsidiaries, and in 2007, all Solar employees in the seven countries were involved in the work of defining our joint group values. Also, Solar launched the company programme New Solar 2010, highlighting Growth, Efficiency and People. Vision Solar should be known as the empathic company and the challenger within our industry. We will be our customers’ preferred business companion, their expert in logistics and their guarantee for safety of delivery. The Faroes Sweden Norway Finland Mission At Solar, we understand our customers’ needs and provide integrated workflow solutions. Strategy Growth Adding value to customers Stronger profile Increased market presence Efficiency Sharing best practice Lean management Profit management People Solar leaders make talent grow Leading edge by competences Unleash entrepreneurship Germany Denmark The Netherlands Poland Solar Values Our values - what we stand for and what shape our culture SmartFun • Glow • Courage Front page photo The black sun phenomenon occurs in spring and autumn when starlings gather in the evening in flocks so large that they almost look like black clouds dancing energetically in the sky. The majority of Solar’s daily activities takes place in the evenings. 70% of all orders to be delivered the next morning are placed and executed between 16:00 and 23:00. Solar A/S Årsrapport 2008 / Kvartalstal2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=3http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=3FINANCIAL HIGHLIGHTS Consolidated 2008 Financial and operating data of income statement (€ million) Revenue Earnings before interest, tax and amortisation (EBITA) Operating profit before special items Earnings before interest and tax (EBIT) Financials, net Earnings before tax (EBT) Net profit for the year Earningspersharein€pershareoutstanding(EPS) 2007 2006 2005 2004 1,500.3 65.0 58.3 58.3 (12.9) 45.4 31.0 4.55 1,367.2 77.3 71.2 71.2 (5.6) 65.6 47.5 6.82 1,074.5 61.7 61.4 64.2 (2.2) 62.0 43.8 6.20 910.7 42.3 42.3 42.7 (1.7) 41.0 30.6 4.19 851.6 38.1 33.8 33.8 (2.2) 31.6 20.1 2.69 Financial and operating data of balance sheet (€ million) Total assets Netinvestmentsinproperty,plantandequipment Share capital outstanding Totalequity Interest-bearing liabilities Financial and operating data for cash flow (€ million) Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Financial ratios (% unless otherwise stated) Revenue growth Organic revenue growth Earnings before interest, tax and amortisation (EBITA) Earnings before interest and tax (EBIT) Operating margin Gearing (net interest-bearing liabilities/EBITA), no. of times Returnonequity(ROE) Returnonequity(ROE)excludingamortisation Return on invested capital (ROIC) Return on invested capital (ROIC) excluding amortisation EV/EBITA Equityratio Intrinsicvaluein€pershareoutstanding Sharepricein€ Share price/intrinsic value Dividendin€pershare Dividend in % of net profit for the year (payout ratio) Price Earnings (P/E) Share price in DKK Dividend in DKK per share Employees Average number of employees (FTE) 604.1 11.2 90.1 205.0 232.3 542.8 13.8 93.3 229.0 151.7 464.7 13.8 93.4 196.4 133.8 364.5 15.4 97.6 194.9 69.5 330.3 2.3 99.7 174.7 63.0 44.3 (74.7) 11.8 54.6 (59.3) 25.5 24.5 (37.5) (30.2) 19.3 (13.6) (23.5) 23.0 (1.7) (17.9) 9.7 5.0 4.3 3.9 2.1 3.1 14.3 17.4 8.7 10.2 6.2 33.9 30.5 25.6 0.84 2.01 43.6 5.6 191 15.00 27.2 15.3 5.7 5.2 3.5 1.7 22.3 25.2 13.1 14.7 8.6 42.2 32.9 74.3 2.26 2.55 37.1 10.9 554 19.00 18.0 17.4 5.7 6.0 4.1 1.8 22.4 22.5 13.6 13.7 13.0 42.3 28.2 95.5 3.39 2.28 36.3 15.4 712 17.00 6.9 6.5 4.6 4.7 3.4 1.3 16.6 16.6 12.0 12.0 13.8 53.5 26.8 72.1 2.69 1.45 34.7 17.2 538 10.83 4.2 5.3 4.5 4.0 2.4 1.2 11.9 14.4 9.1 10.9 8.2 52.9 23.6 34.9 1.48 1.05 39.1 13.0 259 7.83 3,010 2,658 2,281 2,196 2,218 Solar A/S Annual Report 2008 / Financial highlights2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=4http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=4REVIEW Solar’s activities Solar is one of Northern Europe’s leading technical wholesalers. Its business area is electrical, HWS and ventilation components, and integrated solutions. Solar’s primary customers operate within electrical, HWS and ventilation installations, industry – MRO and OEM, utility and infrastructure. Expectations for 2009 Weexpectrevenueofbetween€1,350mand1,450m,and EBITAofbetween€25and40m.Atpresent,theduration of the financial crisis and its derived effects on construction, industry and raw material prices cannot be estimated with reasonable certainty. Expectations of revenue, gross profit and loss on debtors in 2009 are extraordinarily uncertain. Events • SolarNederlandacquiredthesharesofVegroB.V., making Solar Nederland one of only two nationwide technical wholesalers within electrical, heating and HWS components and integrated solutions. • SolarPolskaacquiredthesharesofEltomontSp.zo.o. • SolarDeutschland,SolarSverigeandSolarPolskaexpanded their branch networks. • SolarlaunchedtheBlueEnergycampaignthat highlights energy-efficient products and solutions. • SolarestablishedtheSharedServicesCentretocombine a number of finance tasks for the subsidiaries. • Solardecidedtomovepartoftheinhouse-developed ERP system to SAP. • SGSwasimplementedinSolarNederland. • SolarDanmark,SolarNorgeandSolarSverigecompleted the first implementation phase of Solar Lean Way. • Solarvaluedayswereheldforallemployeesinthegroup. • HRworkwassystematisedwiththetoolSolarSTAR (Strategy, Tasks, Actions & Results) which clarifies the links between Solar’s business strategy and the employees’ personal objectives and tasks. • Internalcommunicationwasextendedwiththeintroduction of the employee magazine Solar News. Revenue and EBITA in € million 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 80 70 60 50 40 30 20 2004 Re v e n u e 2005 E BI TA 2006 2007 2008 Solar’s shares Solar’ssharecapitalisapportionedonnominally€12.1mA sharesandnominally€85.7mBshares.Bsharesarelisted on NASDAQ OMX Copenhagen and are included in the MidCap+ index and MidCap on NASDAQ OMX Nordic. • ReturnpershareatanominalvalueofDKK100 (€13.42)was€-46.09in2008against€-18.93in2007. • Earningspershareoutstandingamountedto€4.55in 2008against€6.82in2007. Share price development (index) 100 Profit development • Organicgrowthamountedto5.0%against15%in 2007. • Revenueincreasedby9.7%to€1,500.3m. • EBITAamountedto€65.0magainst€77.3min2007, accounting for 4.3% of revenue. • EBTamountedto€45.4magainst€65.6min2007, i.e. 3.0% of revenue. 90 80 70 60 50 40 30 1/1 2008 Mi dCa p+ Solar 31/12 2008 Solar A/S Annual Report 2008 / Review2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=5http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=5SOLAR STAYS THE COURSE Judging by the media coverage, the world economy changed abruptly in mid-2008. Even if this is a simplified representation, the bleak fact is that the financial crisis has evolved into a long-term economic crisis. Solar is also affected by the international economic crisis as revenue declined in many of our subsidiaries in the second half of 2008, mostly because new construction was significantly down in these markets. But this economic slowdown has also proved the ultimate test of vital parts of our strategy. For several years we have focused on expanding the product range and clientele, thus increasing sales to customers within the installation, industry, offshore, telecommunications and energy sectors. Solar is less exposed to business trends in new construction owing to this expansion of the product range that centres on energy management, lighting, communication and security, and, most recently, a broad range of tools was added. Moreover, we have turned down the pace in some areas to meet our strategic objectives towards 2010, but it is absolutely crucial that we stay the course. Thus Solar will still implement the strategic initiatives of the company programme New Solar 2010. Solar will accelerate the establishment of standardised processes and concepts over the next years with the focus area Efficiency in New Solar 2010, which will also lead to benefits from joint group IT, finance and other support functions. Customers will still see Solar as a company of extensive knowledge, which is founded in their local markets but on the operational side, we must be even better at sharing knowledge and best practice with each other. Taking advantage of the fact that the climate is high on the agenda in all countries where Solar operates, shortly before the New Year, we launched the Blue Energy campaign that highlights our most energy-efficient products and solutions. In future, customers and legislators alike will make continuous new demands on contractors but through the Blue Energy programme, we will be both supplier and advisor, assisting contractors in meeting these future requirements. Also, we are sure that the Blue Energy programme will both contribute to a solution to the challenges faced over climate and prove profitable in the traditional financial way. Solar A/S Annual Report 2008 / Preface /12009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=6http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=6Herring shoals may consist of thousands of herrings that instinctively react as one organism, for example altering the shoal’s form and direction in a split second. At Solar, we constantly focus on integrating and strengthening cooperation across departments and countries, allowing for quick adjustment to any market changes.2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=7http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=7CONTENTS Financial targets Growth Earnings before interest, tax and amortisation (EBITA) Return on invested capital (ROIC) Equity ratio Dividend Gearing 4 4 4 4 4 4 4 Financial statements Income statement Balance sheet Cash flow statement Statement of changes in equity Notes Management’s statement Auditor’s report 38 38 39 40 41 43 65 66 Management’s review Financial review Expectations for 2009 Shareholder information Corporate governance Supervisory Board Group Management 6 12 15 18 21 22 23 Solar today Growth Efficiency People Blue Energy 10 16 24 36 Group enterprises Group structure Solar Danmark A/S Solar Sverige AB Solar Norge AS Solar Nederland B.V. Solar Deutschland GmbH Solar Suomi Oy Solar Polska Sp. z o.o. P/F Solar Føroyar Aurora Group 26 26 27 28 29 30 31 32 33 34 35 Solar A/S Annual Report 2008 / Contents /32009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=8http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=8FINANCIAL TARGETS We have assessed the group’s financial targets and have added targets for gearing as monitoring of both equity ratio and gearing (net interest-bearing liabilities relative to EBITDA) is performed on an ongoing basis to assess the financial strength of the group. Solar aims at ensuring both stability and maintenance of a high degree of flexibility through financial strength to underpin future strategic development, including growth through acquisitions. Equity ratio and gearing targets may at times be exceeded owing to acquisitions. In the period 2006-2008, we met all average annual financial targets, except the targets for EBITA margin and ROIC which deviated by 0.3 and 0.4 percentage points, respectively. ROIC applied has been adjusted for the effect of enterprises acquired during this period. As described in the expectations for 2009, Solar will not be able to achieve the financial targets this year. The company programme New Solar 2010 will be replaced by a new company programme in 2010 and, at this time, new financial targets will be identified which we expect to announce in the spring of 2010. Actual ROIC Average ROIC amounted to 13% for the period 2006-2008. If adjusted for enterprises acquired during the period, average ROIC would amount to 13.6%. In the autumn of 2008, Solar acquired the enterprises Vegro B.V. and Eltomont Sp. z o.o. If these enterprises had been acquired before the beginning of the accounting period, normalised ROIC would amount to 11%. Return on invested capital (ROIC) Target The target is return on invested capital (ROIC) before amortisation of intangible assets of 14-16%. Equity ratio Target The plan is to reduce equity ratio gradually to 35-40%. Changes to the capital structure will result in part from acquisitions and in part from organic growth. Any excess cash flow can be used for buy-back of shares. Actual equity ratio Equity ratio amounted to 34% in 2008, compared with 42% in 2007. In 2008, Solar paid out € 17.6m in dividend to shareholders and repurchased treasury shares at € 13.8m. Growth Target The target is to achieve annual organic growth averaging 6-8% in the period up to 2010. Solar will endeavour to further increase growth through acquisitions. Acquisitions should create added value in the form of geographical expansion or extension of the product portfolio while, at the same time, meeting the requirements for return on invested capital. Dividend Target The target is to pay 35-45% of net profit for the year as dividend. Actual dividend Actual organic growth Average organic growth amounted to 13% for the period 2006-2008. It is proposed that a dividend of 44% of the year’s net profit be paid in 2008 against 37% in 2007. Earnings before interest, tax and amortisation (EBITA) Target The target is earnings before interest, tax and amortisation (EBITA) of 5.5-6.5%, assuming that the implemented and planned efficiency measures continue to make a positive contribution. Actual EBITA Average return on earnings before interest, tax and amortisation (EBITA) amounted to 5.2% for the period 2006-2008. /4 Solar A/S Annual Report 2008 / Financial targets Gearing Target The target is net interest-bearing liabilities of between 1.5 and 2.5 times EBITDA. Actual gearing Net interest-bearing liabilities were 3.1 times EBITDA compared to 1.7 times EBITDA in 2007. In the autumn of 2008, Solar acquired the enterprises Vegro B.V. and Eltomont Sp. z o.o. If these enterprises had been acquired before the beginning of the accounting period, normalised gearing would be 2.7 times EBITDA.2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=9http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=9Organic growth in % EBITA in % 18 15 12 9 6 3 0 6 5 4 3 2 20 0 4 2005 2006 2007 2008 2004 2005 2006 2007 2008 ROIC in % excl. amortisation Equity ratio in % 20 15 10 50 40 30 20 5 0 10 0 20 0 4 2005 2006 2007 2008 2004 2005 2006 2007 2008 Dividend in % of net profit for the year Gearing, no. of times 50 40 30 4 3 2 20 10 0 1 0 20 0 4 2005 2006 2007 2008 2004 2005 2006 2007 2008 Solar A/S Annual Report 2008 / Financial targets /52009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=10http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=10MANAGEMENT’S REVIEW Growth: Continuing focus on broad product range and E-business In 2008, Solar continued its development towards becoming an integrated technical wholesaler with activities in new product areas, thus reducing the company’s exposure to fluctuations in business trends. E-business remains a strategic focus area. The current economic crisis has added to pressures in the European wholesale market which, in recent years, has been characterised by consolidation. The slowdown in the construction sector has further accelerated this trend. Businesses that are able to implement crisis management and business development at the same time will emerge stronger from this recession. Through a number of strategic acquisitions, Solar significantly strengthened its market position in 2008. The acquisition of Vegro in the Netherlands, for instance, underpins Solar’s future as a strong technical wholesaler with a customer base comprising electrical and HWS contractors in Denmark, Sweden and the Netherlands. This matches the trend among our customers in all markets towards an increased number of integrated electrical businesses that encompass both the electrical and HWS segments. Moreover, developments in the Dutch market provide an indication of the future direction of other European markets. In the Netherlands, the 100 largest integrated technical electrical and plumbing businesses account for approximately 65 per cent of total wholesaler revenue. While so far, one of Solar’s competitors has been the only nationwide technical wholesaler, the Vegro acquisition now enables Solar to offer electrical and HWS products to Dutch customers throughout the Netherlands. Currently, 50 per cent of Dutch customers are already integrated technical electrical and HWS contractors. NEW SOLAR 2010 EFFICIENCY PEOPLE GROWTH The strategy aimed at establishing Solar as a key integrated technical wholesaler will be maintained in a number of countries over the next few years. At the same time, we will focus on extending our product range with products for security solutions, energy management and communication. Such enhanced diversification reduces Solar’s exposure to fluctuations in economic trends in the construction and industry sectors. During the current slowdown, the benefits of this approach have already been proved within the construction sector in a number of Solar’s markets. In addition, the introduction of Solar Blue Energy has brought energy efficiency, which is less dependent on business trends, into focus. E-business solutions are another strategic focus area which adds value and enhances efficiency for Solar as well as for our customers. Solar Danmark has a clear lead within the E-busiGROWTH ness area, processing almost 60 per cent of its orders as E-business while around one third of all orders at group level are E-business. This illustrates 2010 the great potential of E-business. Solar’s IT platform will, in future, be an SAP solution, and EFFICIENCY PEOPLEchange managethe extensive work involved in introducing NEW SOLAR ment and integrating SAP into Solar Group Systems/SGS will begin in 2009. /6 Solar A/S Annual Report 2008 / Management’s review2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=11http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=11Efficiency: Solar strengthens joint support functions Joint IT and finance functions create economies of scale. While Solar maintains local market and customer focus, joint functions enhance efficiency. Solar is also pursuing an ambitious Lean programme. The “One Company” concept was one of the main drivers in 2008. A range of finance tasks was transferred from the Danish, Norwegian, Swedish and Finnish subsidiaries to the new Shared Services Centre on 1 August. In addition, Solar’s joint IT system, Solar Group Systems, has now been implemented in five subsidiaries. Solar has opted for a long-term IT solution under which the group will move from systems developed in-house to a standard SAP framework system. As a result, Solar will benefit from economies of scale and increased efficiency. This model also allows Solar to pass on, rapidly and efficiently, experiences from the subsidiaries in terms of best practice. While Solar continues to focus on individual markets and customised product ranges, joint support functions offer a number of benefits: • Reducedcostscontributetoanimprovedbottomline. • JointITandfinancesystemsofferagoodoverviewof those parts of the business that drive profitability. • Jointsystemsenablerapidintegrationofenterprises acquired by Solar. On the backdrop of increased European competition, it is crucial that acquired new group enterprises contribute to profitable revenue growth at the earliest possible stage. 2008 was also characterised by the implementation of Solar Lean Way throughout the group. The Lean mindset will be an integral part of the entire Solar organisation in 2010. Solar Danmark, Solar Sverige and Solar Norge have already completed the first implementation of Lean, and the results show clear improvements in efficiency, quality and employee satisfaction. The Lean implementation has focused on managers as central players. With our Lean change agents acting as specialist support, it is imperative that managers take an active lead in the implementation of Lean. Consequently, 140 managers participated in a four-day course in 2008. While Denmark, Norway and Sweden spearheaded the first wave of Lean implementations, Solar Deutschland and Aurora Group will form the second phase for which a master implementation plan has already been prepared. The remaining subsidiaries will follow by 2010. People: Charting the Solar employees’ skills Solar Star provides a framework for systematic HR work. In 2008, we continued to assign high priority to management development, and internal communication was strengthened. In 2008, much of Solar’s HR work was centred on Solar STAR as we introduced employee performance appraisal interviews throughout the group. During these interviews, employees and their line managers set out specific goals for each employee based on Solar’s strategy and objectives. At group level, a combined competence catalogue has been built and the skills required for specific positions identified. Since the intention is to apply the outcome of these endeavours across the group, Solar STAR provides a useful tool in several respects: • ItallowsforaccurateidentificationofSolar’srequirements during recruitment. Solar A/S Annual Report 2008 / Management’s review /72009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=12http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=12• Itprovidesspecificinputonemployeetrainingrequirements for use at both local and group level. • Itensuresthatemployeeambitionsandpotentialareidentified, thus enabling Solar to make optimum use of its employees’ skills. People Solar’s overall business strategy relies heavily on the important work of employee commitment and development. Through Solar STAR we aim at matching the aspirations of As regards management, Solar continues its work within the field of management training in order to adjust the company’s management style. Although in general, Solar’s management possess considerable specialist skills, the New Solar 2010 strategy programme requires Solar’s managers to switch from specialist and supervisory roles to a more coaching style. This means that managers should focus on establishing frameworks and facilitating dialogue, thus encouraging employees to perform at the highest possible level. In 2008, Courage, Glow and SmartFun, Solar’s core values, were determined as a result of a dialogue with our employees. This work will continue in 2009 when employees from subsidiaries and branches will endeavour to make the values more specific. Internal communication was assigned very high priority in 2008 when the Solar Leadership Forum, which was established in 2007, continued. Following publication of the quarterly reports, 260 managers are now given the tools to enable them to discuss earnings performance and the progress of the strategic initiatives in New Solar 2010 with their employees. In addition, in 2008, the first edition of Solar’s new employee magazine, Solar News, was published in seven languages. The magazine carries a wide range of articles from Solar’s many subsidiaries and the editorial staff at corporate headquarters have established a strong partnership with the communication networks in the subsidiaries. Solar will maintain its systematic HR work in 2009 when, once again, the extensive employee survey Solar Navigator will be carried out. our employees with the needs of our company. Moreover, the system underpins our strategy by providing us with common processes and a shared tool for talent management, appraisals, leadership development, performance management as well as competence and mobility mapping. The Solar value days held and the introduction of our three values give us a solid foundation on which to build a valuebased performance culture in Solar. Now these outspoken values function as a sort of constitution throughout the group. They have been translated into measurable behaviour competences for managers and employees, which we will all be measured by from 2009 through our performance appraisals and employee survey. Seniority as a percentage of number of employees < 2 years 2 - 5 years 5 - 10 years > 10 years /8 Solar A/S Annual Report 2008 / Management’s review2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=13http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=13Solar Academy Our internal training scheme maintained focus on different strategy-driven development activities in 2008 as: • Allmanagersunderwenttraininginconductingperformance appraisals • 140employeesunderwenttraininginourLeanleadership programme • 12employeescompletedourLeanchangeagenttraining • 261employeestookEnglishlessonsinourGlobalEnglish programme Facts and figures In 2008 we recruited 398 new employees, promoted 96 employees, while 396 employees left us. This is a clear decline in both areas from 2007, when the corresponding figures were 591 recruitments and 470 resignations. Through the acquisition of new enterprises, our geographical structure changed in 2008, and Solar Nederland is now our largest entity. However, Denmark is still the country with the most employees, though employed in both two subsidiaries and at corporate headquarters. The average age of the employees is 42 years. As for years of employment, 34% of Solar’s workforce has been with their enterprises for more than 10 years, 19% for five to ten, 19% for two to five years and 28% for less than two years. This seniority dispersion is founded partly in an enhanced business offer and strong revenue growth over the last few years. Recruitments and resignations 700 600 500 400 300 200 100 0 An international company – number of employees Denmark incl. the Faroes Sweden Norway The Netherlands Germany Poland Finland 2006 2007 R e signations 2008 Re cru it men t s Solar A/S Annual Report 2008 / Management’s review /92009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=14http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=14GROWTH: Integrated contractors and wholesalers are the winners of tomorrow GROWTH NEW SOLAR 2010 EFFICIENCY PEOPLE As integrated contractors have come to dominate the GROWTH Customer requirements The launch of new technologies is coinciding with changing customer requirements. Regardless of whether the end customer is a private consumer with his/her own home or a business, customers prefer to deal with the same person. Dutch market, similar trends are becoming ever more noticeable in all Solar’s other markets. This is being PEOPLE NEW SOLAR 2010 EFFICIENCY driven by customer requirements and new technology, says Frans Soulier, CED of Solar Nederland. Contractors who work with electrical, HWS and ventilation NEW SOLAR 2010 components are destined to become tomorrow’s frontrunners. Consequently the future market leaders within the wholesale sector will be those who can offer contractors one-stop shopping facilities from a broad product range. Frans Soulier, CED of Solar Nederland, is in no doubt about where the market is heading. Currently, integrated contractors account for 50 per cent of all contractors and when measured by revenue, the figure is much higher. Advances in technology have blurred the once well-defined boundaries between electrical and HWS contractors. Frans Soulier is confident that integrated contractors are significantly more efficient. “A new hospital is being built in Rotterdam on a site employing a workforce of around 1,000. With the same company handling the installation of electricity, water, heating, sanitation and ventilation, the work is organised much more efficiently - not only in terms of the construction work itself but also with regard to hiring cranes or organising site facilities such as site huts,” he says. One-stop-shopping “Moreover, the dividing lines between electrical and heating segments are also merging, driven in part by energy-efficient technologies. Heat pumps are one example where it is difficult to specify whether they belong to the electrical or heating categories,” says Frans Soulier. One-stop shopping where one wholesaler supplies a wide range of products offers significant benefits for contractors. One such advantage is the considerable time savings to be had from using one supplier instead of five, for instance. /10 Solar A/S Annual Report 2008 / Growth2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=15http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=15When swans migrate south through Europe, they always fly in a V formation with the strongest individual at the front, charting the course and sheltering the weaker swans behind it. Solar wants to be a market leader, the one that drives innovation in all areas and markets in which we operate. “Even if the list is longer, it takes less time for one person to check the waybill once instead of five times and this is just one of many advantages,” Frans Soulier explains. Although the financial crisis may slow economic growth, the trend towards large and more professional integrated contractors will continue, believes Frans Soulier. “Despite the financial crisis, which is also affecting the He also points to the fact that large integrated contractors have become far more professional in that they make use of E-business and have more advanced logistics requirements. Typically, they want their goods delivered directly to the construction site, thus eliminating storage costs. Well aware that stock means interest expenses, major contractors also demand ontime delivery. Supporting customers According to Frans Soulier, the leading role of the Netherlands in this respect is owing to the presence of many large contractors operating in the Dutch market, with the 100 largest contractors accounting for 65 per cent of total revenues. In addition, the massive shortage of qualified labour over the past few years has accelerated this trend as contractors are constantly looking for ways to rationalise their operations and other solutions that will compensate for the labour shortage. Netherlands, there remains a housing shortage in the Netherlands,” Frans Soulier says. “In addition, climate issues are gaining importance across the board. New and stricter requirements for reducing CO2 emissions will apply internationally and innovative energy-efficient technologies are emerging in the interface between electricity, heating and ventilation. With climate issues coming increasingly to the forefront of the international debate, the trend towards more integrated contractors is set to continue. This is bound to impact on the wholesale market.” Solar A/S Annual Report 2008 / Growth /112009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=16http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=16FINANCIAL REVIEW Revenue was up 9.7% at € 1,500m in 2008. EBITA amounted to € 65.0m against € 77.3m in 2007 and earnings before tax totalled € 45.4m against € 65.6m in 2007. Unexpected inventory write-down of € 2.2m, owing to a severe decline in the price of raw materials in Q4, had a negative effect on results. For 2009, Solar expects revenue of € 1,350m to 1,450m and EBITA of € 25 to 40m. Revenue Revenue increased by € 133.1m to € 1,500.3m. Of this, organic growth amounted to 5.0%. Revenue in € million and organic growth in % Solar Danmark A/S Solar Sverige AB Solar Norge AS Solar Nederland B.V. Solar Deutschland GmbH Solar Suomi Oy Solar Polska Sp. z o.o. P/F Solar Føroyar Aurora Group Eliminations Total 1500 1200 900 600 300 0 € million 2004 R even u e 2005 2006 2007 2008 5 0 % 20 15 10 * When stating organic growth, no adjustment has been made for number of working days. 2008 revenue distribution across the enterprises was as follows: Revenue distribution Revenue in € million 2008 437.2 302.8 242.4 271.3 151.7 19.9 24.8 6.2 55.4 (11.4) 2007 421.3 268.2 218.3 218.4 143.0 21.8 21.7 6.0 60.1 (11.6) 5 15 Organic growth in %* 2008 4 7 14 0 6 (9) (3) 3 (6) 2007 12 20 36 9 6 (5) 28 35 12 Share of revenue in % 2008 29 20 16 18 10 1 2 <1 4 (1) 100 2007 31 20 16 16 10 2 2 <1 4 (1) 100 1,500.3 1,367.2 Revenue per employee totalled € 498 thousand against € 514 thousand in 2007. Adjusted for 2007 exchange rates, revenue per employee totalled € 505. Revenue was on a par with the most recently announced expectations. EBITA EBITA was down 16% to € 65.0m, equating to 4.3% of revenue. Results were affected negatively by unexpected inventory write-down of € 2.2m resulting from a severe decline in raw material prices in Q4. Adjusted for this, EBITA amounted to 4.5% of revenue. Rising freight costs also affected EBITA. Freight costs increased by 0.4 percentage points compared with 2007. Or ganic growth Organic growth was considerably below the 2007 growth level in all subsidiaries except Solar Deutschland. /12 Solar A/S Annual Report 2008 / Financial review2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=17http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=17Development in EBITA in € million and in % of revenue over the past five years is as follows: EBITA in € million and in % of revenue Balance sheet The balance sheet total increased by € 61.3m to € 604.1m, mainly as a consequence of the acquisitions of Vegro B.V. and Eltomont Sp. z o.o. Equity declined by € 24.0m to € 205.0m. Dividend distribution and purchase of treasury shares reduced equity by a total of € 31.4m. Foreign exchange differences, arising from the translation of equity in subsidiaries into euro, have affected the group’s equity negatively by € 14.5m, while the net effect of losses on financial instruments used for hedging future transactions resulted in a loss of € 9.3m As a result, equity has been reduced to 34% and is thus slightly below Solar’s equity target of 35-40%. Total interest-bearing liabilities increased by € 80.6m to € 232.3m. New non-current debt of € 54.5m was obtained. Short-term bank loans increased by € 16.6m. Gearing increased to 3.1 times EBITDA compared with 1.7 times EBITDA in 2007. If the enterprises Vegro B.V. and Eltomont Sp. z o.o. had been owned by Solar for the entire duration of 2008, normalised gearing would have been 2.7 times EBITDA. 100 80 60 40 20 0 € m i l l i on 20 0 4 E B I TA € million 2005 2006 EBITA % 2007 2008 6 5 4 3 2 1 0 % EBITA for 2008 amounted to € 65.0m and was on a par with the most recently announced expectations. Financials Financials, net declined to € -12.9m from € -5.6m in 2007. Significant falls in the exchange rates, particularly on SEK and NOK, affected financials negatively by € 4.6m. € 3.3m of this total exchange rate loss concerns the non-cash aspects of the balances in NOK between Solar Norge AS and Solar A/S as well as Aurora Group Norge AS and Aurora Group Danmark A/S. Corporation tax Corporation tax totalled € 14.4m against € 18.1m in 2007 which corresponds to an effective tax rate of 31.7%, equating to an increase of 4.1 percentage points compared with 2007. The most important part of this increase concerns a change to the tax base of non-capitalised losses in subsidiaries which total 2.3% in 2008 against 0.2% in 2007. Profit for the year Profit for the year totalled € 31.0m against € 47.5m in 2007. As stated, profit for the year was affected negatively by a severe decline in raw material prices in Q4 totalling € 2.2m, and falls in the exchange rates for SEK and NOK of € 4.6m. Amortisation of intangible assets amounted to € 6.7m against € 6.1m in 2007. Invested capital was € 459.2m by the end of the year, equating to an increase of 16% compared with 2007. Solar A/S Annual Report 2008 / Financial review /132009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=18http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=18Cash flow The year’s cash flow from operating activities declined by € 10.3m to € 44.3m as a result of weak performance that was only partly compensated for by the reduction of working capital. As at 31 December 2008, working capital accounted for 18.8% of revenue compared with 18.7% in 2007. If the enterprises Vegro B.V. and Eltomont Sp. z o.o. had been owned by Solar for the entire duration of 2008, and an adjustment for exchange rate development was made, working capital would amount to 17.7% of revenue. If discounting the effect of Vegro B.V. and Eltomont Sp. z o.o. and making adjustments for exchange rates, working capital would amount to 16.9% of revenue. As such, a working capital reduction of 1.8% of revenue was achieved in 2008. Measured per share outstanding a year-end, cash flow from operating activities amounted to € 6.60 against € 7.84 in 2007. Solar continues to plan for significant investments in central warehouse automation and other efficiency measures. Implemented and planned development activities and efficiency measures are carried out on an ongoing basis in order to adapt to trends in trading patterns and infrastructure. The aim is to ensure that Solar remains an efficient and reliable partner for customers and suppliers. Ethics and environment Solar accepts its responsibilities towards the surrounding society and is committed to conducting its business efficiently and responsibly. Solar respects international standards in terms of human rights, racism, child labour, etc. and endeavours to be a leader in respect of working and environmental conditions within the geographical areas in which the group operates. Remuneration of leading employees The acquisitions of Vegro B.V. and Eltomont Sp. z o.o. lead to payments of € 58.6m in 2008. Payment of dividend and purchase of treasury shares affected cash flow from financing activities by a total of € 31.4m. Cash flow from financing activities amounted to € 11.8m. Investments € 4.5m was invested in a new administration building in Norway in 2008. Also, Solar Danmark began the extension of the administration building in Vejen and in 2008 € 1.9m was invested in this extension which is expected to be ready for commissioning in Q3 2009. Total group net investments in property, plant and equipment amounted to € 11.2m. Solar’s IT strategy was redefined in 2008 as a decision was made to move parts of the group’s ERP system to SAP. This transition will be carried out over the next 3-4 years and the total investment is expected to total close on € 40m over a three-year period, with expenses concentrated mostly in 2009 and 2010. € 4.7m was capitalised for the SAP project in 2008. As mentioned in announcement no. 12 2008, the Supervisory Board has decided to establish an incentive scheme for leading employees. The exercise price is fixed at the average price on NASDAQ OMX Copenhagen for the first 10 business days following the publication of Annual Report 2008. The granting will take place on 26 March 2009 when the exercise price will also be calculated. The number of options cannot be determined until this time but is expected to amount to approximately 55,000 options. The Supervisory Board intends to grant options again in the coming years. /14 Solar A/S Annual Report 2008 / Financial review2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=19http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=19EXPECTATIONS FOR 2009 The long period of high organic growth recorded ended in 2008. A general slowdown worsened from spring onwards, and, combined with the financial crisis, formed the basis of the deep economic crisis that we find ourselves in now. The business development and geographical expansion of recent years will only to a limited extent dampen the negative growth expected in 2009. Solar expects to continue its line of acquisitions as stated in announcement no. 1 2009. The duration of the economic crisis and its derived effects on Further staff reductions are necessary to adjust costs to the current market development situation. In 2009, when completed, reductions will total annual savings of € 11m. They are a continuation of the measures implemented in the autumn of 2008, and total annual savings will amount to € 23m. In addition to the reduction of staff costs, focus will be on strengthening gross profit, limiting costs, reducing working capital and limiting investments in 2009. However, we will still be making investments of € 40m in a new ERP system in the period from 2009 to 2011 as outlined in announcement no. 53 2008. construction, industry and raw material prices cannot be estimated with reasonable certainty at present. As such, expectations for revenue, gross profit and loss on debtors in 2009 are more uncertain than usual. However, we have conditioned our expectations on stimulus packages in the countries, in which Solar operates, showing positive effects as from Q4. Consequently, expectations include revenue of between € 1,350m and € 1,450m with negative organic growth reaching nearly 20% at worst. The sharply declining revenue will mean expected EBITA of between € 25m and € 40m in spite of general cost savings and staff reductions implemented. Solar will continue to prioritise the reduction of debt and maintains the target of reducing working capital to 16% of revenue by the end of 2009. Solar A/S Annual Report 2008 / Expectations for 2009 /152009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=20http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=20EFFICIENCY: Finance with an ear for language GROWTH NEW SOLAR 2010 EFFICIENCY PEOPLE While placing a number of finance-related tasks from GROWTH “It has definitely been an important process for us as colleagues to see the differences in communication, language and culture. One example is our Norwegian colleagues who often write very short and concise emails that read, for instance, “please correct” followed by four exclamation marks. Our Danish staff had to get to grips with this wording as they believed the shortness to be based in crossness while the reality is that the Norwegian style is simply different from ours,” Bo Michaelsen says. Excellent cooperation Since August, Shared Services Centre has handled and combined tasks such as registering and paying invoices to suppliers, and matching customer payments to invoices issued by Solar in the Danish, Norwegian, Swedish and Finnish subsidiaries. “Combining these joint support functions has obvious ben- Solar’s enterprises in one joint support centre has resulted in major cost savings, language and culture PEOPLE NEW SOLAR 2010 EFFICIENCY have proved the major challenges, Shared Services Centre Manager Bo Michaelsen explains. Please remember the correct asiakasnro! And do note that NEW SOLAR 2010 the rahtikustannukset must be recorded separately! Confused? It makes perfect sense when you have the right dictionary and you know that the above are customer numbers and freight costs. 50 of the most common terms in the Nordic languages are listed in the quick translation glossary that inhabits all desks at the Shared Services Centre in Vejen. But it is when working with the Finnish invoices that the word lists are really called for. Bo Michaelsen plainly admits that the major challenges faced by the Shared Services Centre for finance when it opened on 1 August 2008 were language and culture. Yet he is also positively surprised by the general ease with which the transfer of tasks has been made: efits as we are now 14 employees where there used to be two to six employees in each subsidiary. Other economics of scale include the build-up of common expertise, making us less vulnerable to colleagues becoming ill or leaving Solar,” Bo Michaelsen explains. /16 Solar A/S Annual Report 2008 / Efficiency2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=21http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=21Anthills are inhabited by millions of ants that have always proved fascinating because of their ability to communicate, solve problems and organise work between them with each individual ant knowing its role and working for the good of the colony. During 2008 Solar has worked dedicatedly on creating transparent work processes and combining select functions in efficient central units such as our Shared Services Centre. The setting up of the joint support functions has exceeded expectations, and the centre has reached the same levels of efficiency and quality in five months as when the subsidiaries carried out these tasks. “We have had to recruit new employees, possibly replacing some with many years of experience. Some setback is expected before long-term gains are seen and it is therefore positive that we have reached the desired level after only five months,” says Bo Michaelsen who believes that the positive results are founded in good cooperation with the individual managements in the subsidiaries that ceded the tasks. “I have found management to be very committed and no one has found it to be unfair that these tasks were transferred away from them. Clearly, the high priority assigned to communication has aided the process. Together with our internal customers, the subsidiary managements, we have set a number of targets, such as the time it takes to register invoices received and identify the Solar invoice that a customer’s payment covers, and we measure our results continuously,” Bo Michaelsen relates. Improved IT system In 2008, Shared Services Centre was established and customers include Solar’s Nordic subsidiaries. In 2009, Solar will focus on expanding this concept, transferring more subsidiaries to the joint support functions, but this process is limited by the fact that only subsidiaries that use the joint IT system SGS, Solar Group Systems, can be connected to the centre. Thus, the new internal customers in 2009 for Bo Michaelsen and his team will be parts of Solar Nederland while some of the subsidiaries will not be transferred until the Solar Group implements an SAP solution. In Bo Michaelsen’s opinion, major long-term cost savings are involved. Today, our staff of 10 in the creditor division handles approximately half a million invoices annually. “Solar is already planning to include all subsidiaries in this joint support function scheme but our staff numbers will not continue to increase as drastically as during start-up. While benefiting from these economics of scale, Solar will also move large sections of both received and outgoing invoicing to electronic invoicing which will also really produce considerable efficiency improvements,” he says. Solar A/S Annual Report 2008 / Efficiency /172009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=22http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=22SHAREHOLDER INFORMATION Solar’s shares Solar’s share capital is composed of nominally € 12.1m A shares and nominally € 85.7m B shares. The A shares are not listed. The B shares are listed on NASDAQ OMX Copenhagen under the ID code DK0010274844 with the short designation SOLAR B. They form part of the MidCap+ index and MidCap on NASDAQ OMX Nordic. A shares have 10 votes per share amount of DKK 100 while B shares have 1 vote for each share amount of DKK 100. To be entitled to vote, shareholders must register their shares in Solar’s register of shareholders no later than the day prior to the publication of the notice of the Annual General Meeting in the Danish Official Gazette (Statstidende). Share price development (index) 100 90 80 70 60 50 40 30 The Fund of 20th December 17.0% ATP 13.2% Supervisory and executive boards incl. related parties 3.7% Other Danish shareholders 33.7% Foreign shareholders 2.9% Non-registered shareholders 21.7% Treasury shares 7.8% Distribution of share capital as at 31 January 2009 Distribution of votes as at 31 January 2009 The Fund of 20th December 59.9% ATP 6.3% Supervisory and executive boards incl. related parties 2.5% Other Danish shareholders 15.9% Foreign shareholders 1.4% Non-registered shareholders 10.3% Treasury shares 3.7% Treasury shares Since December 2007 Solar has purchased treasury shares for 1/1 2008 31/12 2008 Solar € 6.3m through three share buy-back programmes. The latest share buy-back programme was closed on 22 May 2008. Independent of these share buy-back programmes, Solar purchased treasury shares for € 7.9m in April and September 2008. As at 31 January 2009, Solar’s portfolio of treasury shares totalled 568,220 B shares or 7.8% of the share capital. MidCap+ Between year end 2007 and year end 2008, the share price of Solar’s shares decreased from DKK 554 to DKK 191, i.e. a decrease of 66%. Shareholders As at 31 January 2009, a total of 78% of the share capital was registered, distributed on 3,977 shareholders. Treasury shares No. 2008 323,420 244,800 0 568,220 2007 318,420 5,000 0 323,420 As at 31 January 2009, the following shareholders had registered ownership shares or voting rights of 5% or more of the total share capital: Shares and votes Shares The Fund of 20th December, Kolding Arbejdsmarkedets Tillægspension, Hillerød Solar A/S, Kolding 17.0% 13.2% 7.8% Votes 59.9% 6.3% 3.7% 1/1 Purchase Capital reduction 31/12 Dividend and return per share At the Annual General Meeting, the Supervisory Board will propose that a dividend of DKK 15.00 per share be paid. This equates to € 2.01 per share and a distribution percentage of 44. /18 Solar A/S Annual Report 2008 / Shareholder information2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=23http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=23Annual dividend paid out per share rose from € 0.69 in 2004 to € 2.55 in 2008. Overall return per share of a nominal value of DKK 100 (€ 13.42) can be determined as follows: Return per share Total 2004-08 Increase in share price in € Distributed dividend in € Return in € (0.73) 8.03 7.30 Average 2004-08 (0.15) 1.61 1.46 Year 2008 (48.64) 2.55 (46.09) Year 2007 (21.21) 2.28 (18.93) The Supervisory Board will submit the following proposals at the Annual General Meeting: • thatDKK15.00,equatingto€2.01ispaidoutindividend per outstanding share of DKK 100 • thattheSupervisoryBoardisauthorisedtoacquire treasury shares • thattheSupervisoryBoardisauthorisedtoraiseshare capital by up to DKK 63,820,000 one or more times. • thattheSupervisoryBoardapprovesoverallguidelines for incentive programmes. • thatdistributionofdividend(onaccountdividend)under section 109a of the Danish Public Companies Act be Investor Relations policy It should be possible for all shareholders to receive information which could affect the share price in good time and in compliance with the Stock Exchange’s rules of conduct. This is assured by the publication of relevant information via NASDAQ OMX Copenhagen, updates to the website www.solar.eu, and meetings with investors and financial analysts. Investor meetings or similar meetings cannot be held for a period of four weeks prior to the publication of financial statements. The IR quiet periods are indicated in the financial calendar. Investor relations activities Solar organises online webcasts in connection with the publication of its annual report and the quarterly report for Q2. In connection with the acquisition of Vegro B.V., Solar held an investor meeting that was also webcast online. Solar is also available for individual meetings with investors and analysts in Denmark and abroad. In 2008, Solar attended road shows in New York, London, Paris and Amsterdam and took part in The Financial Analysts’ Corporate Day, SEB Enskilda Nordic Seminar, Danske Equities Small/MidCap Seminar and other events. In 2008, Solar hosted its capital market day at Solar Danmark A/S in Vejen. Annual General Meeting Solar A/S will hold its Annual General Meeting on Friday 17 April 2009 at 11:00 am at Solar Danmark A/S, Industrivej Vest 43, Vejen. allowed In accordance with the company’s articles of association, members of the Supervisory Board are elected for one year. A presentation of the members of the Supervisory Board is given on page 22. Financial calendar 2009 17 April 22 April – 20 May 23 April 20 May 24 July – 21 August 21 August 21 October – 18 November 18 November Annual General Meeting IR quiet period Dividend distribution Quarterly report for Q1 IR quiet period Quarterly report for Q2 IR quiet period Quarterly report for Q3 The presentation of Annual Report 2008 will be transmitted online from NASDAQ OMX Copenhagen on 12 March 2009 at 11:00 CET and is available at www.solar.eu. Analysts The following analysts cover the Solar share Danske Bank A/S Carnegie Bank A/S Nordea Bank Danmark A/S SEB A/S Sydbank A/S Investor contact Jane Hamann Juel Investor Relations Manager Phone: +45 76 30 42 44 E-mail: jju@solar.dk Solar A/S Annual Report 2008 / Shareholder information /192009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=24http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=24Announcements 2008 excl. insider announcements Date 18.11 15.10 06.10 30.09 No. 53 52 51 50 Announcement Quarterly report Q3 2008 Solar Nederland B.V. acquires the Dutch HWS wholesaler Vegro B.V. Solar Polska Sp. z o.o. acquires the Polish electrical wholesaler Eltomont Sp. z o.o. Solar Nederland B.V. now expects clarification of the acquisition of the Dutch HWS wholesaler Vegro B.V. by mid-October Date 16.04 11.04 11.04 11.04 07.04 31.03 31.03 25.03 25.03 17.03 11.03 11.03 05.03 05.03 03.03 25.02 25.02 25.02 18.02 11.02 04.02 28.01 24.01 21.01 14.01 07.01 07.01 No. 29 28 27 26 25 24 23 22 20 19 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Announcement Purchase of treasury shares Applicable articles of association Course of the general meeting of Solar A/S Share buy-back in Solar A/S Share buy-back in Solar A/S Issue of options to leading employees in Solar A/S Share buy-back in Solar A/S Notice of general meeting Share buy-back in Solar A/S Share buy-back in Solar A/S Launch of new share buy-back programme Annual Report 2007 Share buy-back in Solar A/S Change of finance calendar 2008 Share buy-back in Solar A/S Establishment of option plan for leading employees in Solar A/S Results for 2007 and new expectations for 2008 Share buy-back in Solar A/S Share buy-back in Solar A/S Share buy-back in Solar A/S Share buy-back in Solar A/S Share buy-back in Solar A/S New Chief Executive Officer in Aurora Group Share buy-back in Solar A/S Share buy-back in Solar A/S New Corporate IT-Director in Solar A/S Share buy-back in Solar A/S 15.09 10.09 26.08 20.08 05.08 30.07 23.05 23.05 19.05 13.05 05.05 28.04 48 47 45 44 43 42 41 40 39 38 37 36 Purchase of treasury shares Purchase of treasury shares Financial calendar 2009 Quarterly report Q2 2008 New CED appointed in Solar Sverige AB Solar Nederland B.V. has entered into negotiations concerning the acquisition of Vegro B.V. Quarterly report Q1 2008 Share buy-back in Solar A/S Share buy-back in Solar A/S Share buy-back in Solar A/S Share buy-back in Solar A/S Solar A/S’ Polish subsidiary Solar Polska Sp. z o.o., has started negotiations concerning the acquisition of an electrical wholesaler 25.04 24.04 23.04 22.04 17.04 35 34 33 31 30 Launch of new share buy-back programme Purchase of treasury shares Purchase of treasury shares Purchase of treasury shares Purchase of treasury shares /20 Solar A/S Annual Report 2008 / Shareholder information2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=25http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=25CORPORATE GOVERNANCE Solar considers the stock exchange’s recommendations for corporate governance a valuable tool for exercising sound management, efficient risk management and transparency for shareholders and other stakeholders. Solar, therefore, complies with the recommendations to the extent that they pertain to the company. Solar’s Supervisory Board comprises six members elected by the Annual General Meeting and three members elected by the employees. As the composition of the Supervisory Board is in keeping with the recommendations for corporate governance, at least half its members are independent. When new individuals are nominated to the Supervisory Board, their dependence is announced. Ordinary board meetings are held six times a year and, in addition, the Supervisory Board meets when the need arises. In 2007, Solar set up an audit committee consisting of Kent Arentoft, Peter Falkenham and Jens Borum. The audit committee meets three times a year. Its main tasks are to: • Overseethefinancialinformationgivenintheannualand quarterly reports and review the overall information published • ReviewandassessSolar’sinternalcontrols • Recommendthenominationofanexternalauditortothe Supervisory Board before the Annual General Meeting The Supervisory Board’s and the Executive Board’s remuneration appears in note 6 on page 51. Should Solar terminate the employment of the company’s CEO, the CEO will be paid one year’s remuneration and an additional one year’s salary. As stated above, Solar, in general, complies with the recommendations for corporate governance, thus, divergence only exists in few areas: Shareholders’ role and interaction with company management Solar does not deem it important that proxies for the Annual General Meeting enable shareholders to consider each item on the agenda. A full description of Solar’s stand on the individual items in the corporate governance recommendations is available from Solar’s website www.solar.eu. Auditing There is no divergence. Remuneration of the Supervisory Board and the Executive Board There is no significant divergence. Risk management There is no significant divergence. Beyond this, there is no significant divergence. The composition of the Supervisory Board As the Fund of 20th December is the majority shareholder and submits proposals for the composition of the Supervisory Board, Solar does not publish recruitment criteria or an annual supervisory board profile. Solar considers competency and work capacity on an individual basis and does not operate age limits or restrictions with regard to other directorships held by board members. The Supervisory Board’s tasks and responsibilities There is no significant divergence. Openness and transparency There is no significant divergence. Stakeholders’ role and significance for the company There is no significant divergence. Apart from this, there is no significant divergence. Solar A/S Annual Report 2008 / Corporate governance /212009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=26http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=26SUPERVISORY BOARD Jens Borum Aase Kofoed Carsten H. Ørssleff Bent H. Frisk Remy Cramer Preben Jessen Kent Arentoft Peter Falkenham Niels Borum Jens Borum (born 1953, joined 2006) Chairman Associate Professor, University of Copenhagen. M.Sc. 1980, PhD 1985. Member of the Supervisory Board of Aktieselskabet Nordisk Solar Compagni from 1982 to 2006, Vice Chairman from 1989 to1991 and Chairman from 1991 to 2006. Chairman of the supervisory board of Unisense A/S. Member of the supervisory boards of the Fund of 20th December and Unisense Fertilitech A/S. Remy Cramer (born 1945, joined 2006) CEO, Inter Primo A/S Electronics Engineer 1972. Chairman of the supervisory boards of seven subsidiaries of Inter Primo A/S. Member of the supervisory boards of two subsidiaries of Inter Primo A/S. Bent H. Frisk (born 1961, joined 2006)* Head of Department Peter Falkenham (born 1958, joined 2003) Vice Chairman Group Director, COO, TrygVesta (TrygVesta Forsikring A/S). M.Sc. in engineering 1982, B. Com. in International Trade 1984. Member of the Supervisory Board of Aktieselskabet Nordisk Solar Compagni from 2004 to 2006. Member of the supervisory boards of Glunz & Jensen A/S and three subsidiaries of TrygVesta Forsikring A/S. Preben Jessen (born 1956, joined 2006)* Area Manager Member of the Supervisory Board of Aktieselskabet Nordisk Solar Compagni from 2002 to 2006. Aase Kofoed (born 1948, joined 2006)* Purchaser Member of the Supervisory Board of Aktieselskabet Nordisk Solar Compagni from 1990 to 2006. Kent Arentoft (born 1962, joined 2007) CEO and President, DISA A/S. B. Com. Management Accounting 1989. Executive Management, London Business School 1995. Chairman of the supervisory boards of DISA Industries A/S and other subsidiaries of DISA Gruppen. Member of the supervisory boards of Eksport Kredit Fonden and Eksport Kredit Finansiering A/S. Carsten H. Ørssleff (born 1943, joined 2006) Managing Director, G&C Holding A/S CEO of Aktieselskabet Nordisk Solar Compagni from 1987 to 2006. Chairman of the supervisory boards of Riegens A/S and Sapa A/S. Member of the supervisory boards of G&C Holding A/S, Jørgen Schou Holding A/S, Schou Holding A/S, Trade Wind A/S, Schou Company A/S, H.P. Værktøj A/S, Riegens Investment A/S, Paranova Group A/S, Paranova Pack A/S and Lact Innovation Aps. Niels Borum (born 1948, joined 1975) Consultant M.Sc. in engineering 1973. Member of the Supervisory Board of Aktieselskabet Nordisk Solar Compagni from 1991 to 2006, Vice Chairman from 2004 to 2006. Chairman of the Supervisory Board of the Fund of 20th December. * Elected by employees /22 Solar A/S Annual Report 2008 / Supervisory Board2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=27http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=27GROUP MANAGEMENT Executive Board Flemming H. Tomdrup (born 1952, joined Solar in 2006) Chief Executive Officer Chairman of the supervisory boards of 10 subsidiaries in the Solar Group. Member of the supervisory boards of Alectia A/S and Thomas B. Thriges Fond. Solar Management Team Per Andersen (born 1956) Corporate Market Director Flemming Koch (born 1961) Corporate IT Director Hilmar Bartels (born 1952) Chief Executive Director, Solar Deutschland GmbH Søren Larsen (born 1948) Chief Executive Director, Solar Danmark A/S Magnus Dahlmann (born 1953) Corporate Marketing Director Jyrki Lignell (born 1950) Chief Executive Director, Solar Suomi Oy Jan Willy Fjellvær (born 1961) Chief Executive Director, Solar Norge AS Heidrun Marstein (born 1973) Corporate HR Director Lars Goth (born 1961) Corporate Supply Chain Director Frans Soulier (born 1958) Chief Executive Director, Solar Nederland B.V. Anders Gärdström (born 1966) Chief Executive Director, Solar Sverige AB Dariusz Targosz (born 1969) Chief Executive Director, Solar Polska Sp. z o.o. Michael H. Jeppesen (born 1966) Corporate Finance Director Jan Vestergaard (born 1955) Corporate Business Development Director Pauli Joensen (born 1951) Chief Executive Director, Aurora Group Solar A/S Annual Report 2008 / Group management /232009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=28http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=28PEOPLE: Yellow post-its highlighted Solar’s competence needs GROWTH NEW SOLAR 2010 EFFICIENCY PEOPLE What are we able to do now - what do we want to do GROWTH “We emphasised equal participation in the process of employees and managers because the employees know all the details. This allowed us to uncover needs very precisely while at the same time ensuring high work motivation in future as this is a common side effect of a high level of employee involvement.” As from 2009, uncovering competence needs will form part of the system of annual performance appraisals (EPAs), managed through the group’s joint HR programme, Solar STAR. Management competences in future? Solar focuses on further training and recruitment. In addition, employees and managers ask for PEOPLE NEW SOLAR 2010 EFFICIENCY emphasis on soft values and strong leadership. In 2008, yellow post-its proved a vital tool when some 200 employees and managers determined Solar’s competence NEW SOLAR 2010 needs at 25 workshops. All the various competences relating to various functions were written down and then grouped which provided both a systematic outline of existing competences as well as an overview of competences needed in future. This process has given Solar very specific input about where to pinpoint further training and what to focus on when recruiting new employees. “The input is priceless as it allows us to close the gap between existing competences and future needs,” says HR Director Heidrun Marstein In future, managers and employees want Solar to put more emphasis on soft values as the workshops held throughout the group clearly showed that we are technically strong but that we must improve our interpersonal and conflict management skills as well as our abilities to motivate and coach. “This corresponds to the challenges we face in terms of management as Solar has very qualified managers who know their fields in every detail but their management competences need a boost,” says Heidrun Marstein. /24 Solar A/S Annual Report 2008 / People2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=29http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=29Ladybirds are easily recognised by their distinctive red wing-cases with black spots. But if you take a closer look, there are actually numerous ladybird species, varying in size, colour, number of spots and behavioural patterns. At Solar we value the diversity among our employees and always seek to utilise the strengths represented by these differences. One company Solar’s HR director also states that the ‘one company’ concept will be one of the major challenges in the years ahead. “Our subsidiaries will have less room for manoeuvring and we will definitely have to overcome some mental barriers to ensure harmonisation and knowledge sharing while maintaining motivation. Fortunately, the process has shown Solar to be an organisation in which all employees are very willing to get involved and share their experiences,” says Heidrun Marstein. Working together across the group In the coming years, all departments and subsidiaries must become better at working together across the group. “Solar has a strong foundation but faces a number of problems, for example how to communicate in a group with enterprises in several countries with different native languages,” states Heidrun Marstein. Yet another challenge is to ensure the implementation of core projects in a busy working day. “On the one hand, the CEDs in the subsidiaries have asked for the outline of competences, helping to drive the process, but on the other, it is obvious that the resistance towards the project was basically founded in their unwillingness to prioritise it. Admittedly, it has been a challenge to convince the subsidiaries to prioritise this competence outlining project in their very busy working days where the customer is always the first priority, but I do not see it as resistance toward this particular project but as the classic dilemma facing all development projects,” says Heidrun Marstein. Solar A/S Annual Report 2008 / People /252009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=30http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=30GROUP ENTERPRISES Solar A/S Reg. no. 15908416 Share capital DKK 728,240,700 Solar Danmark A/S, Denmark Reg. no. 15908416 Part of Solar A/S P/F Solar Føroyar, the Faroes Reg. no. P/F 104 Share capital DKK 12,000,000 Solar Norge AS, Norway Reg. no. 980672891 Share capital NOK 70,000,000 Solar Sverige AB, Sweden Reg. no. 5562410406 Share capital SEK 100,000,000 Solar Nederland B.V., the Netherlands Reg. no. 09013687 Share capital € 7,000,000 Solar Deutschland GmbH, Germany Reg. no. HRB 516 NM Share capital € 51,400,000 Vegro B.V., the Netherlands Reg. no. 37029757 Share capital € 400,000 Aurora Group Danmark A/S, Denmark Reg. no. 56827013 Share capital DKK 25,000,000 Solar Suomi Oy, Finland Reg. no. 242634 Share capital € 2,995,642 Aurora Group Norge AS, Norway Reg. no. 945585781 Share capital NOK 401,000 Solar Polska Sp. z o.o., Poland Reg. no. 0000003924 Share capital PLN 65,020,000 Aurora Group Sverige AB, Sweden Reg. no. 5564945961 Share capital SEK 100,000 Eltomont Sp. z o.o., Poland Reg. no. 0000113763 Share capital PLN 800,000 Aurora Group Finland Oy, Finland Reg. no. 328656 Share capital € 85,776 All group enterprises are wholly owned. Some enterprises without operations have not been included in the above outline. /26 Solar A/S Annual Report 2008 / Group enterprises2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=31http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=31SOLAR DANMARK A/S Strong position in a declining market Solar’s strategy of offering a broad product range affected performance positively and left it less vulnerable to economic trends in construction as a sharp slowdown in this sector characterised the Danish market in 2008. A high level of activity characterised the Danish market until mid-Q3 2008 when weak growth finally affected Solar’s sales caused by the financial crisis, now an economic crisis. Sales to a number of large industrial customers continued at an almost unchanged level despite the crisis, showing only a small slowdown at the end of the year. Focus on performance impacted earnings positively, while still rising freight costs had the opposite effect. Solar Danmark strengthened its market position in an overall pressured wholesale market. A contributory factor has been the introduction of a number of new and updated products within HWS and ventilation and, most recently, of the Solar Tools concept. Solar’s sales to the energy sector improved, especially through the sale of cables, optical fibre cables and street lighting products, and the net control systems division also showed positive growth. The general economic slowdown at the end of 2008, and the serious effects of the financial crisisis are also expected to characterise 2009 and therefore, revenue is expected to be at a lower level in 2009. The current upgrading of the headquarters in Vejen will provide Solar Danmark with a show room displaying the many possibilities within IP technology net control, using its headquarters as a case story. Being one of the subsidiaries at the forefront of Solar’s Lean implementation, the enterprise saw noticeable effects of this project in 2008, including improved efficiency, quality and employee satisfaction. Solar A/S, parent company Revenue in € million 500 450 400 350 300 250 200 150 100 50 0 Solar A/S, parent company EBITA % 9 Amount in € million Revenue EBITA Equity Balance sheet total 8 Organic growth EBITA in % Return on invested capital (ROIC) before amortisation 7 Employees (FTE) Number of branches 16.7% 680 16 17.9% 708 16 21.6% 779 16 15.7% 847 16 2005 311.9 24.0 232.5 319.5 7.0% 7.7% 2006 377.3 31.5 222.2 349.2 20.6% 8.3% 2007 421.3 36.6 254.1 364.9 11.7% 8.7% 2008 437.2 36.4 250.5 417.2 3.9% 8.3% 2005 2006 E B ITA in % 2007 2008 Revenue Solar A/S Annual Report 2008 / Group enterprises /272009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=32http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=32SOLAR SVERIGE AB Integration and expansion Integration and expansion were key words for Solar Sverige in 2008, as Alvesta V.V.S. – Material, acquired in 2007, was integrated into the enterprise, expanding Solar’s presence in the Swedish market. The new combined electrical and HWS branches in Malmö, Karlstad and Stockholm have strengthened our position as a technical wholesaler with a broad product range within both electrical and HWS components further. Although 2008 was characterised by a high level of activity, growth declined at the end of the year with the emergence of the financial crisis and its significant impact on sales to the Swedish installation and industry segments. Rising freight costs also influenced earnings negatively. Declining growth in the latter half of 2008 and uncertainty about the general economic trends mean that the beginning of 2009 is marked by considerable uncertainty. Thus, negative organic growth is expected for the enterprise in 2009. Solar Sverige experienced a management change at the beginning of 2009 when Kjell Svensson of own will transferred to a new part-time position, focusing mainly on development of the HWS division, and Anders Gärdström joined Solar as CED. Being at the forefront of Solar’s Lean implementation, Solar Sverige has already observed improved efficiency, quality and employee satisfaction. Focus has been on increasing earnings in the electrical division and expanding geographical coverage within HWS. Solar Sverige AB Revenue in € million 350 300 250 200 150 100 50 0 Solar Sverige AB EBITA % 7 6 5 4 3 2 1 0 Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation Employees (FTE) Number of branches 15.0% 366 29 17.4% 390 31 12.3% 484 40 12.3% 555 46 2005 151.2 6.6 26.6 47.6 12.0% 4.4% 2006 180.9 12.0 32.1 73.1 19.1% 6.6% 2007 268.2 14.9 30.0 125.9 19.6% 5.6% 2008 302.8 11.9 23.5 105.7 7.1% 3.9% 20 0 5 R e v en u e 2006 E B ITA in % 2007 2008 /28 Solar A/S Annual Report 2008 / Group enterprises2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=33http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=33SOLAR NORGE AS Solar Norge launches restructuring plan Solar Norge’s revenue has more than doubled over the past three years measured in NOK, and revenue growth was also considerable in 2008. By mid-2008, however, it was clear that this growth had resulted at the expense of earnings, and a major restructuring plan was launched, feauring a sizeable reduction of staff, replacements in management and strengthening of gross profit. The expansion within a number of industry sectors, such as telecommunications, the energy sector and offshore, continued. Overall, results for 2008 failed to live up to expectations, however, the targets in the restructuring plan were met. The high level of activity and long distances to cover in Norway mean that the high freight costs proved particularly challenging to Solar Norge. The financial crisis also resulted in declining activity in Norway with less new housing and commercial construction. However, this trend is weaker than in other countries, and Norway has managed to maintain positive growth. The full effect of the continued restructuring of Solar Norge will be clear in 2009. The enterprise will continue focusing on earnings rather than revenue growth. We expect negative organic growth for the subsidiary in 2009. A new headquarters was commissioned, located adjacent to the central warehouse and close to Oslo’s international airport Gardermoen, resulting in considerable efficiency improvements by combining all central functions in Solar Norge. Solar Norge AS Revenue in € million 300 250 200 150 100 50 0 Solar Norge AS EBITA % 7 6 5 4 3 2 1 0 Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation Employees (FTE) Number of branches 12.9% 273 23 14.4% 296 25 18.8% 353 25 18.8% 369 25 2005 125.6 6.0 31.3 54.4 21.3% 4.7% 2006 158.7 9.0 35.2 67.0 27.6% 5.7% 2007 218.3 13.3 36.3 89.7 36.2% 6.1% 2008 242.4 9.1 29.0 75.8 13.8% 3.8% 2005 2 006 E BITA in % 2007 2008 Revenue Solar A/S Annual Report 2008 / Group enterprises /292009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=34http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=34SOLAR NEDERLAND B.V. Solar’s new big brother Not only was the acquisition of the Dutch HWS wholesaler Vegro B.V. the largest in Solar’s history, it also means that Solar Nederland is expected to be the largest group subsidiary in 2009. In 2007, Vegro’s revenue matched Solar Nederland’s, and the subsidiary is now one of just two nationwide technical wholesalers. Solar expects total restructuring costs of €5-6m in 2009 and 2010 and annual synergy savings of €3-4m from the completion of the merger. As a consequence of the acquisition, plans for expanding Solar Nederland’s HWS activities and for a new central warehouse and headquarters in Zevenaar have been discontinued. Solar Nederland successfully completed the extensive project of implementing the group IT system, SGS, in 2008. 2009 will prove challenging for Solar Nederland as the great task of integrating the two enterprises coincides with forecasts of weak economic trends in the Netherlands, resulting in expectations of negative organic growth in 2009. Before the acquisition of Vegro, revenue from Solar Nederland’s HWS division was significantly weaker than expected, in part because the enterprise had difficulties finding qualified staff. Solar Nederland B.V. (incl. Vegro B.V. for the period 15/10-31/12 2008) Revenue in € million 300 250 200 150 100 50 0 Solar Nederland B.V. (incl. Vegro B.V. for the period 15/10-31/12 2008) Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation Employees (FTE) Number of branches 37.8% 306 18 14.8% 309 24 25.9% 404 24 17.0%* 529 37 2005 136.9 5.3 15.1 44.2 5.7% 3.8% 2006 150.1 8.3 16.4 75.6 9.6% 5.5% 2007 218.4 11.0 18.7 74.0 8.5% 5.0% 2008 271.3 10.5 19.9 176.7 (0.1%) 3.9% EBITA % 6 5 4 3 2 1 0 2005 2 006 E B ITA i % 2007 2008 * Annualisation has been applied in the ROIC calculation to show the full-year effect of Vegro B.V. Revenue /30 Solar A/S Annual Report 2008 / Group enterprises2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=35http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=35SOLAR DEUTSCHLAND GMBH New employees to strengthen market position Germany has also seen a dampening of private investments which influenced Solar Deutschland’s results negatively. Earnings were also affected by activities being centred in the northern part of Germany, generally characterised by a weaker economy than the western and southern regions. Unrest in the market, resulting from many acquisitions and changes of ownership, has added 55 employees, from three branches of a company acquired by a competitor, to our staff. Although this had a negative impact on short-term earnings, the 55 employees may prove valuable to Solar Deutschland over time, owing to their considerable experience and market knowledge. Main focus is on earnings improvement while new branches are expected to produce revenue growth in 2009 in a German wholesale market characterised by reduced investment levels and less industrial export. The enterprise is continuously looking at the possibilities of expanding its geographical coverage in future to include more of the German market, currently through the establishment of 3 new branches, as the resulting growth will allow for better utilisation of the storage capacity at the central warehouse in Lanken near Hamburg. Solar Deutschland GmbH Revenue in € million 160 140 120 100 80 60 40 20 0 -2 -1 0 1 Solar Deutschland GmbH EBITA % 2 Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation Employees (FTE) Number of branches 2.2% 328 16 2.7% 329 16 2.5% 348 21 (2.8%) 389 24 2005 124.5 1.2 46.6 59.2 1.5% 1.0% 2006 134.8 1.6 48.1 59.8 8.3% 1.2% 2007 143.0 1.3 49.3 58.9 6.1% 0.9% 2008 151.7 (1.5) 47.9 59.8 6.1% (1.0%) 20 0 5 R e v en u e 2006 E BITA in % 2007 2008 Solar A/S Annual Report 2008 / Group enterprises /312009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=36http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=36SOLAR SUOMI OY Major challenge in Finland Solar Suomi ended 2008 with its second annual negative result and finds itself in a difficult situation aggravated by the financial crisis that resulted in further slowdown in both housing and commercial construction while large Finnish export businesses were marked by weak growth. In 2007, Solar Suomi discontinued sales to the industry sector to focus on profitable activities. Focus on achieving positive earnings was maintained in 2008 with many staff replacements and the initiation of a training programme for both new and existing employees. The enterprise’s ability to and quality of supply strengthened noticeably over the year and now fully meet the group target. Solar Suomi begins 2009 with a reduced cost level owing to extensive restructuring measures, but the enterprise still faces major challenges as it has not yet managed to achieve adequate profitable growth. Solar Suomi Oy Revenue in € million 25 20 15 10 5 0 Solar Suomi Oy EBITA % 0 -2 -4 -6 -8 -10 -12 Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation (26.7%) Employees (FTE) Number of branches 56 7 (38.8%) 60 7 (30.3%) 59 8 (50.8%) 53 7 2005 17.3 (1.7) 5.6 8.6 16.9% (10.0%) 2006 23.0 (1.8) 3.7 10.5 32.6% (8.0%) 2007 21.8 (1.9) 5.1 8.1 (5.1%) (8.7%) 2008 19.9 (2.0) 3.1 6.8 (8.8%) (10.1%) 20 0 5 R e v en u e 2006 E B ITA in % 2007 2008 /32 Solar A/S Annual Report 2008 / Group enterprises2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=37http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=37SOLAR POLSKA SP. Z O.O. Acquisition equals growth The Polish market was characterised by a high activity level in the beginning of 2008 and slowdown in the second half-year with revenue decline, mainly caused by decreased sales to commercial building projects, while the industry segment revenue remained more stable. Counting the newly established branches, the enterprise had Solar Polska completed the acquisition of the Polish electrical wholesaler Eltomont in October 2008, which, when fully effective, is expected to result in 40% revenue growth. As Eltomont does not have a central warehouse, increased revenue will mean higher capacity utilisation at Solar Polska’s, and synergies in procurement and working capital also results from the convergence of suppliers. Revenue growth will be negatively affected by economic trends in 2009, while the increased volume resulting from the Eltomont acquisition is expected to result in improved efficiency and the achievement of anticipated synergies. a total of 8 at the end of the year while Eltomont had 11. Solar Polska will continue to focus on organic growth as well as acquisitions to obtain sufficient critical mass. The acquisition of Eltomont, previously headquartered in Rybnik west of Krakow, also strengthens Solar Polska’s presence in south-west Poland. The integration of Eltomont into Solar Polska should be complete by the end of 2009. Solar Polska Sp. z o.o. (incl. Eltomont Sp. z o.o. for the period 6/10-31/12 2008) Revenue in € million 30 25 20 15 10 5 0 Solar Polska Sp. z o.o. (incl. Eltomont Sp. z o.o. for the period 6/10-31/12 2008) EBITA % 2 1 0 -1 -2 -3 Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation Employees (FTE) Number of branches (4.7%) 82 6 1.6% 82 6 2.0% 92 6 (5.9%)* 119 19 2005 13.6 (0.3) 9.2 12.0 1.4% (2.4%) 2006 16.3 0.1 9.5 12.3 16.8% 0.7% 2007 21.7 0.2 10.4 13.8 28.4% 0.9% 2008 24.8 (0.7) 8.4 15.4 (3.4%) (2.8%) 2005 R e v en u e 2 006 E B ITA in % 2007 2008 * Annualisation has been applied in the ROIC calculation to show the full-year effect of Eltomont Sp. z o.o. Solar A/S Annual Report 2008 / Group enterprises /332009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=38http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=38P/F SOLAR FØROYAR Revenue under pressure – but satisfactory results In the second half year of 2008, the positive development characterising the Faroese market for several years, was replaced by a slowdown which resulted in declined revenue. However, Solar Føroyar maintains a sound development in results based on sales to the construction and industry segments. Solar Føroyar has an ambition to expand its current business from electrical wholesaler to integrated technical wholesaler but is in a stalemate as it has problems finding employees with technical HWS competences. P/F Solar Føroyar Revenue in € million 7 6 5 4 3 2 1 0 P/F Solar Føroyar EBITA % 25 20 15 10 5 0 Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation Employees (FTE) Number of branches 32.7% 10 1 120.7% 10 1 138.5% 11 1 72.9% 11 1 2005 3.8 0.4 1.6 2.9 2.0% 11.0% 2006 4.4 0.7 1.6 3.4 18.0% 15.5% 2007 6.0 1.2 1.6 4.4 35.0% 19.8% 2008 6.2 1.1 1.6 3.8 3.2% 17.1% 2005 2 006 E B I TA in % 2007 2008 Revenue /34 Solar A/S Annual Report 2008 / Group enterprises2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=39http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=39AURORA GROUP Aurora Group affected by weakened retail sector The Aurora Group is a wholesaler within consumer electronics components in Denmark, Sweden, Norway and Finland. The enterprise was affected by the general downturn in the retail sector in 2008 which in part resulted in reduced sales, in part in the reduction of stock of a number of retail partners due to the decline in demand. The fact that a large customer, established in the Norwegian market in 2007, has yet failed to meet the desired and expected revenue levels also had a negative impact on 2008 revenue. Aurora Group must continue to provide innovative business The enterprise acquired a number of new customers, one of which includes the build-up of shops for a new large Swedish customer, and strengthened its position as a leading supplier of consumer electronics components to the Nordic market. solutions to the retail sector to achieve the necessary results improvements. In the beginning of 2009, the decision was made internally to establish a new central warehouse, as a third party logistics solution, in Jönköping, Sweden, at a central location for the group’s Nordic activities. When the warehouse is fully established in Q2 2009, the resulting reduction of group logistics costs will be considerable. As from 1 February 2008, Pauli Joensen is the new CED of Aurora Group. Aurora Group Revenue in € million 70 60 50 40 30 20 10 0 0 1 2 Aurora Group EBITA % 3 Amount in € million Revenue EBITA Equity Balance sheet total Organic growth EBITA in % Return on invested capital (ROIC) before amortisation Employees (FTE) 8.4% 97 15.9% 97 2.4% 128 0.8% 138 2005 33.7 0.8 4.1 14.9 (30.4%) 2.5% 2006 38.8 0.3 5.4 31.0 (2.9%) 0.9% 2007 60.1 0.7 4.6 33.8 11.8% 1.2% 2008 55.4 0.1 4.6 31.8 (6.1%) 0.2% 20 0 5 R e v en u e 2006 E B I TA in % 2007 2008 Solar A/S Annual Report 2008 / Group enterprises /352009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=40http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=40BLUE ENERGY: Solar helping climate Solar now teams up with a group of strategic suppliers to focus on energy-efficient products and solutions as these to an increasing extent become pivotal competitive parameters. Energy-efficient products will increasingly impact Solar’s market position, necessitating an ability to supply and train our customers efficiently. As Solar has now established itself as a market leader with the Blue Energy programme, it will not relinquish that position. “Previous studies indicate that customers see Solar as the innovative wholesaler and with the climate and environment gaining importance across the board, it is only inevitable that we must become experts in this field as well. Both end customers and legislation make increasing demands on Solar’s customers,” says Corporate Marketing Manager Mette Bredkjær. Unity thinking Blue energy is a combined programme in which Solar has teamed up with some 30 strategic suppliers to find the most energy-efficient products while also providing training and instruction to contractors. Today, an energy-efficient solution requires not only the best components but also intelligent controls that ensure that components interact as planned. “Moreover, both Solar and its customers must learn to think outside of the box and use their always detailed product knowledge for unity thinking with lighting, HWS and ventilation working together perfectly,” says Mette Bredkjær. /36 Solar A/S Annual Report 2008 / Blue Energy2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=41http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=41When a bear goes into hibernation in winter, when the lack of food calls for a minimum level of activity, its body consumes far less energy than in summer. In 2008, Solar launched Blue Energy, a campaign featuring products and services that are climate friendly, for example, through low energy consumption. Solar is a first mover 112,000 copies of the Blue Energy catalogue of energyefficient products will be distributed in countries where Solar operates and the campaign will be very visible when Solar participates at exhibitions, while a special website and training programme have also been created for customers and employees alike. The first phase of the Blue Energy campaign was launched on 1 November and is active until June 2009. “We are certainly first movers in this area today but this is only the first step as we want to remain the wholesaler with the strongest energy-efficient products and best training. To succeed, we must develop constantly, or we will not be able to hold on to this position,” says Mette Bredkjær. Blue Energy is a part of the Solar Integrated Workflow System, IWS, a tool designed to ensure that Solar’s total know-how is made available to the individual customer. Thus, the IWS Blue Energy concept reaches all customers, including those who do not specifically ask for it by applying a systematic approach that pinpoints the Solar services relevant to any specific contractor. Customer training While there are slight differences in the rate of implementation and focus areas, issues of climate and energy are topping agendas everywhere. In Denmark, attention is centred on wind power because a number of market leaders in this field are Danish while other countries focus on other fields. Yet potential cost saving from upgrading buildings is possible worldwide and with the economic crisis leading to low activity in new construction, efforts to improve energy efficiency in existing buildings are the obvious measure. “It is important to emphasise that adopting energy-efficient solutions is a sound financial decision for both private consumers and businesses. This will increase the degree of energy-efficient solutions and thus we must train contractors to be able to advice customers well. As new studies show that three of four private consumers base their choices on the contractors’ guidance, it is important that these give the correct advice and document the offered solutions. We expect a lot from Solar’s Blue Energy campaign as it includes all aspects of the business process,” says Mette Bredkjær. “Blue Energy is our contribution to solving global climate issues while also being commercially sound for both Solar, our customers and our main suppliers.” Solar A/S Annual Report 2008 / Blue Energy /372009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=42http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=42Income statement 1 January - 31 December Note € million 2008 4 Revenue Cost of sales Gross profit External operating costs Staff costs Loss on trade receivables Earnings before interest, tax, depreciation and amortisation (EBITDA) Depreciation on property, plant and equipment Earnings before interest, tax and amortisation (EBITA) Amortisation of intangible assets Earnings before interest and tax (EBIT) Dividend from subsidiaries Financial income Financial costs Earnings before tax (EBT) Corporation tax Net profit for the year Earnings per share in € per share outstanding (EPS) Diluted earnings per share in € per share outstanding (EPS-D) 1,500.3 (1,188.4) 311.9 (64.4) (170.5) (2.8) 74.2 (9.2) 65.0 (6.7) 58.3 5.5 (18.4) 45.4 (14.4) 31.0 4.55 4.55 Group 2007 1,367.2 (1,072.7) 294.5 (55.2) (152.2) (1.7) 85.4 (8.1) 77.3 (6.1) 71.2 4.9 (10.5) 65.6 (18.1) 47.5 6.82 6.82 Parent company 2008 437.2 (324.7) 112.5 (13.6) (57.8) (1.1) 40.0 (3.6) 36.4 0.0 36.4 6.6 5.4 (7.3) 41.1 (8.5) 32.6 2007 421.3 (313.8) 107.5 (12.9) (53.9) (0.6) 40.1 (3.5) 36.6 0.0 36.6 19.7 3.0 (3.5) 55.8 (8.6) 47.2 5 6 7 8 14 9 10 11 12 13 13 /38 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=43http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=43Balance sheet as at 31 December Note € million 2008 ASSETS 14 Intangible assets 15 Property, plant and equipment 16 Investments Non-current assets 17 Inventories 18 Trade receivables Receivables from subsidiaries Corporation tax receivable Other receivables 19 Prepayments Cash at bank and in hand Current assets Total assets EQUITY AND LIABILITIES 20 Share capital Reserves Retained earnings Proposed dividend for the year Equity 21 Interest-bearing liabilities Other liabilities 22 Provision for pension obligations 23 Provision for deferred tax 24 Other provisions Non-current liabilities 21 Interest-bearing liabilities Trade payables Amounts owed to subsidiaries Corporation tax payable 25 Other payables 26 Prepayments 24 Other provisions Current liabilities Liabilities Total equity and liabilities 97.8 (23.9) 117.6 13.5 205.0 141.4 0.2 3.7 20.7 1.5 167.5 90.9 82.4 1.4 56.4 0.5 0.0 231.6 399.1 604.1 97.7 (0.1) 113.8 17.6 229.0 77.4 0.0 3.9 15.2 0.0 96.5 74.3 95.7 4.3 42.5 0.3 0.2 217.3 313.8 542.8 97.8 (4.0) 143.2 13.5 250.5 68.2 0.0 0.5 6.5 0.0 75.2 33.6 33.8 2.2 0.0 21.6 0.3 0.0 91.5 166.7 417.2 97.7 0.9 137.9 17.6 254.1 21.0 0.0 0.6 5.2 0.0 26.8 29.7 31.5 2.1 0.3 20.4 0.0 0.0 84.0 110.8 364.9 45.7 174.4 0.9 221.0 162.0 202.6 6.8 5.5 2.9 3.3 383.1 604.1 50.5 125.7 0.7 176.9 154.7 196.9 2.2 4.6 2.8 4.7 365.9 542.8 4.7 39.0 184.0 227.7 42.5 43.5 98.4 2.4 2.3 0.3 0.1 189.5 417.2 0.0 38.8 181.9 220.7 47.8 52.1 41.4 0.0 2.2 0.5 0.2 144.2 364.9 Group 2007 Parent company 2008 2007 Solar A/S Annual Report 2008 / Financial statements /392009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=44http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=44cash flow statement 1 January - 31 December Note € million 2008 Net profit for the year Depreciation and amortisation Change in provisions and other adjustments 9,10 Financials, net Corporation tax 9,10 Financials, net, paid Corporation tax paid Cash flow before change in working capital Change in inventories Change in receivables Change in non-interest bearing liabilities Cash flow from operating activities 14 Net investments in intangible assets 27 Net investments in property, plant and equipment Net investments in other investments 28 Acquisition of subsidiaries Cash flow from investing activities Raising of non-current interest-bearing liabilities Repayment of non-current interest-bearing liabilities Loans to subsidiaries Dividends paid 20 Purchase and sale of treasury shares Other items Cash flow from financing activities Total cash flow Cash as at 1 January 28 Taken over in connection with acquisition of subsidiaries Foreign currency translation adjustment Cash as at 31 December Cash as at 31 December Cash at bank and in hand Current interest-bearing liabilities Cash as at 31 December 31.0 15.9 0.8 12.9 14.4 (8.3) (21.4) 45.3 8.0 11.6 (20.6) 44.3 (4.7) (11.2) (0.2) (58.6) (74.7) 54.5 (11.3) (17.6) (13.8) 0.0 11.8 (18.6) (69.6) (1.0) 1.6 (87.6) Group 2007 47.5 14.2 (1.1) 5.6 18.1 (6.0) (20.0) 58.3 (4.2) (15.5) 16.0 54.6 0.0 (13.8) 0.9 (46.4) (59.3) 51.5 (10.7) (15.9) (0.4) 1.0 25.5 20.8 (91.4) 0.0 1.0 (69.6) Parent company 2008 32.6 3.6 0.8 1.9 8.5 (0.4) (8.8) 38.2 4.5 21.5 (2.3) 61.9 (4.7) (3.8) (2.1) 0.0 (10.6) 54.5 (7.3) (71.1) (17.6) (13.8) 0.0 (55.3) (4.0) (29.5) 0.0 0.0 (33.5) 2007 47.2 3.5 (0.3) 0.5 8.6 (0.5) (7.2) 51.8 (0.3) (16.5)* 5.1 40.1 0.0 (3.5) (3.5) 0.0 (7.0) 0.0 (5.0) 1.1* (15.9) (0.4) 1.1 (19.1) 14.0 (43.5) 0.0 0.0 (29.5) 3.3 (90.9) (87.6) 4.7 (74.3) (69.6) 0.1 (33.6) (33.5) 0.2 (29.7) (29.5) * In the parent company, reclassification of loans to subsidiaries of € 1.1m has been made in the comparative figures for 2007. /40 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=45http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=45statement of changes In equIty 1 January - 31 December Group Reserves for foreign currency translation adjustment (1.0) € million 2008 Equity as at 1 January 2008 Foreign currency translation adjustment at beginning of year Foreign currency translation adjustment of foreign subsidiaries Value adjustment of hedging instruments before tax Tax on value adjustments Net income recognised directly in equity Net profit for the year Comprehensive income Distribution of dividend Purchase of treasury shares Other movements Equity as at 31 December 2008 2007 Equity as at 1 January 2007 Foreign currency translation adjustment at beginning of year Foreign currency translation adjustment of foreign subsidiaries Value adjustment of hedging instruments before tax Tax on value adjustment Net income recognised directly in equity Net profit for the year Comprehensive income Distribution of dividend Purchase of treasury shares Other movements Equity as at 31 December 2007 Share capital 97.7 0.1 Reserves for hedging transactions 0.9 Retained earnings 113.8 0.1 Proposed dividend 17.6 Total 229.0 0.2 (14.5) (10.9) 1.6 (14.5) (10.9) 1.6 0.1 0.1 (9.3) (9.3) (14.5) (14.5) 0.1 17.5 17.6 (13.8) 0.0 97.8 0.0 (8.4) 0.0 (15.5) (13.8) 117.6 (17.6) 13.5 0.0 13.5 13.5 (17.6) (23.6) 31.0 7.4 (17.6) (13.8) (31.4) 205.0 97.7 (0.1) (1.4) 84.3 15.9 196.4 0.0 0.4 1.1 (0.1) 0.0 0.0 1.0 1.0 0.4 0.4 0.0 29.9 29.9 (0.4) 0.0 97.7 0.0 0.9 0.0 (1.0) (0.4) 113.8 (15.9) 17.6 0.0 17.6 17.6 (15.9) 0.4 1.1 (0.1) 1.4 47.5 48.9 (15.9) (0.4) (16.3) 229.0 Solar A/S Annual Report 2008 / Financial statements /412009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=46http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=46statement of changes In equIty 1 January - 31 December Parent company Reserves for foreign currency translation adjustment € million 2008 Equity as at 1 January 2008 Foreign currency translation adjustment at beginning of year Value adjustment of hedging instruments before tax Tax on value adjustment Net income recognised directly in equity Net profit for the year Comprehensive income Distribution of dividend Purchase of treasury shares Other movements Equity as at 31 December 2008 2007 Equity as at 1 January 2007 Foreign currency translation adjustment at beginning of year Value adjustment of hedging instruments before tax Tax on value adjustment Net income recognised directly in equity Net profit for the year Comprehensive income Distribution of dividend Purchase of treasury shares Other movements Equity as at 31 December 2007 Share capital Reserves for hedging transactions Retained earnings Proposed dividend Total 97.7 0.1 0.9 0.0 137.9 17.6 254.1 0.1 (6.2) 1.3 (6.2) 1.3 0.1 0.1 (4.9) (4.9) 0.0 0.0 0.0 19.1 19.1 (13.8) 0.0 97.8 0.0 (4.0) 0.0 0.0 (13.8) 143.2 (17.6) 13.5 0.0 13.5 13.5 (17.6) (4.8) 32.6 27.8 (17.6) (13.8) (31.4) 250.5 97.7 (0.1) 0.0 108.7 15.9 222.2 0.0 1.1 (0.1) 1.1 (0.1) 0.0 0.0 1.0 1.0 0.0 0.0 0.0 29.6 29.6 (0.4) 0.0 97.7 0.0 0.9 0.0 0.0 (0.4) 137.9 (15.9) 17.6 0.0 17.6 17.6 (15.9) 1.0 47.2 48.2 (15.9) (0.4) (16.3) 254.1 /42 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=47http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=471 Accounting policies The annual report of Solar A/S for 2008 is presented in accordance with the International Financial Reporting Standard (IFRS) as approved by the EU and additional Danish disclosure requirements for annual reports of listed companies, cf. NASDAQ OMX Copenhagen’s disclosure requirements for annual reports of listed companies and the IFRS executive order issued in accordance with the Danish Financial Statements Act. Furthermore, the annual report is presented in accordance with the International Financial Reporting Standards (IFRS) as issued by IASB. The accounting policies remain unchanged compared to last year. The annual report is presented in € which is the company’s presentation currency. For business combinations, positive balances (goodwill) between the cost of the enterprise and the fair value of the acquired identifiable assets and liabilities are recognised as goodwill under intangible assets. Goodwill is not written off but tested annually for impairment. The first impairment test is carried out before the end of the acquisition year. Upon acquisition, goodwill is allocated to the cash-generating units which, subsequently, constitute the basis of an impairment test. Profit or loss in connection with the sale or winding up of enterprises is determined as the difference between the purchase price or disposal consideration and the carrying amount of net assets at the date of sale and costs of sale or winding up. Profit or loss is recognised at the date of sale in the income statement. Translation of amounts in foreign currency A functional currency is determined for each of the group’s enterprises. The functional currency is the currency used in the primary financial environment in which the individual reporting enterprise operates. Transactions in other currencies than the functional currency are considered transactions in foreign currency. Transactions in foreign currency are translated at first recognition to the functional currency at the exchange rate prevailing at the date of the transaction. Differences between the exchange rate prevailing at the date of the transaction and the exchange rate at the payment date are recognised in the income statement as items under financial income and expenses. All monetary items in foreign currency that have not been settled on the balance sheet date are translated into the functional currency using the exchange rate of the balance sheet date. Any differences between the exchange rate prevailing at the date of the transaction and the balance sheet date exchange rate are recognised in the income statement as items under financial income and expenses. When recognising enterprises with a different functional currency than € in the consolidated financial statements, the income statements are translated at the exchange rate prevailing at the date of the transaction and balance sheet items are translated at the balance sheet date exchange rate. The average rate of exchange for the individual months is used as exchange rate prevailing at the date of the transaction to the extent that this does not result in a considerably different presentation. Exchange rate differences, arisen in connection with translation of these enterprises’ equity at the beginning of the year at the balance sheet date exchange rates and in connection with the translation of income statements from the exchange rate prevailing at the date of transaction to the balance sheet date exchange rates, are recognised directly in equity as a separate reserve for foreign currency translation adjustments. Description of accounting policies Consolidated financial statements The consolidated financial statements include the financial statements of the parent company Solar A/S and subsidiaries of which Solar A/S has direct or indirect control. The consolidated financial statements have been prepared as a summary of the parent company’s and the individual subsidiaries’ financial statements determined in accor2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=48http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=48notes 1 Accounting policies (continued) Translation adjustments of balances regarded as part of the total net investment in enterprises with a different functional currency than € is recognised in the consolidated financial statements directly in equity under a separate reserve for translation adjustments. Similarly, foreign exchange gains and losses on loans that have been raised as currency hedging of the net investment in these enterprises and which efficiently safeguard against corresponding foreign exchange gains/losses on net investments in the enterprise are recognised in the consolidated financial statements directly in equity under a separate reserve for foreign currency translation adjustments. Derivatives Derivatives are only used to limit financial risks in the form of interest rate and currency risks. Derivative financial risks are initially recognised at cost and at fair value subsequently. Both realised and unrealised gains and losses are recognised in the income statement unless the derivatives are part of hedging of future transactions. Value adjustments of derivatives for hedging of future transactions are recognised directly in equity. As the hedged transactions are realised, gains or losses are recognised in the hedging instrument from equity to the same item as the hedged items. Any non-effective part of the financial instrument in question is recognised in the income statement. Derivatives are recognised under other receivables or other payables. Special items Special items include large incomes and costs of a one-time nature. These items are presented separately to ensure the comparability in the income statement and to give a good presentation of earnings before interest, tax, depreciation and amortisation. Financial income and costs Financial income and costs include interest and capital gains and losses, etc. Corporation tax Solar A/S is taxed jointly with all its Danish subsidiaries. The current Danish corporation tax is allocated to the jointly taxed enterprises relative to their taxable income. Enterprises that use tax loss in other enterprises pay a joint taxation contribution to the parent, corresponding to the tax base of the loss used, while enterprises whose tax loss is used by other enterprises receive joint tax contribution from the parent company, corresponding to the tax base of the loss used (full distribution). The jointly taxed enterprises are part of the tax prepayment scheme. Tax for the year is recognised with the part that can be attributed to net profit for the year and directly in equity with the part that can be attributed to entries directly in equity. Tax consists of current tax and changes to deferred tax. Balance sheet Customer-related intangible assets Customer-related intangible assets acquired in connection with business combinations are measured at cost less accumulated amortisation and impairment loss. Customer-related intangible assets acquired before 1 January 2005 are amortised on a straight-line basis over 3 years, corresponding to the expected financial useful life. Determination of the amortisation period has been made on the basis of management’s experience. Customer-related intangible assets acquired after 1 January 2005 are amortised using the straight-line principle over the expected useful life. Typically, the amortisation period is 5-7 years. Goodwill At the first recognition in the balance sheet, goodwill is recognised at cost. Subsequently, goodwill is measured at cost less accumulated impairment loss. No amortisation of goodwill is performed. The carrying amount of goodwill is allocated to the group’s cash-generating units at the date of acquisition. The determination of cash-generating units follows the managerial structure and internal management control. Income statement Revenue Revenue includes goods for resale recognised in the income statement if the passing of the risk to the buyer takes place before the end of the year and if revenue can be determi2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=49http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=491 Accounting policies (continued) Software Software is measured at cost less accumulated amortisation and writedown. Cost includes both direct internal and external costs. Software is amortised using the straight-line principle over 8 years. The basis of amortisation is reduced by any write-down. Property, plant and equipment Land and buildings as well as other plant, operating equipment, and tools and equipment are measured at cost less accumulated depreciation and write-down. Cost includes the purchase price and costs directly attributable to the acquisition until the time when the asset is ready for use. Cost of a combined asset is disaggregated into separate components which are depreciated separately if the useful lives of the individual components differ. Borrowing costs are not recognised in the purchase price. Subsequent expenditure, for example in connection with the replacement of components of property, plant or equipment, is recognised in the carrying amount of the relevant asset when it is probable that the incurrence will result in future economic benefits for the group. The replaced components cease to be recognised in the balance sheet and the carrying amount is transferred to the income statement. All other general repair and maintenance costs are recognised in the income statement when the expenses are incurred. Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives which are: Buildings Technical installations Plant, operating equipment, and tools and equipment 40 years 20 years 2-5 years The carrying amount of goodwill is tested for impairment together with the other non-current assets of the cash-generating unit to which goodwill is allocated, and is written down at recoverable amount via the income statement, provided that the carrying amount is larger. Most often, the recoverable amount is determined as the present value of the expected future net cash flows from the company or activity (cash-generating unit) that the goodwill is affiliated to. Write-down of goodwill is recognised on a separate line in the income statement. The carrying amount of non-current assets is assessed annually to determine whether there is any indication of impairment. When such an indication is present, the asset’s recoverable amount is calculated, which is the highest of the asset’s fair value less expected costs of disposal or value in use. Value in use is calculated as the present value of expected cash flows from the smallest cash flow-generating unit to which the asset belongs. Impairment loss is recognised when the carrying amount of an asset exceeds the asset’s recoverable amount. Impairment loss is recognised in the income statement. Write-down on goodwill is not reversed. Write-down on other assets is reversed to the extend that changes have been made to the assumptions and estimates that led to the write-down. Securities and equity investments Securities and equity investments are recognised on the trade date at fair value with addition of transaction costs directly related to the acquisition. After initial recognition, held-to-maturity securities are measured at amortised cost using the effective interest method. Securities measured at amortised cost are written down to a lower present value of the future cash flows. The write-down is recognised in the income statement. Securities and equity investments available for sale are measured at fair value after initial recognition. Fair value changes are recognised directly in equity. However, this does not apply to changes attributable to write-down or exchange rate translations. Interest income calculated using the effective interest method and dividends received are recognised in the income statement on a regular basis. When securities and equity investments available for sale are disposed of, accumulated losses and gains are recognised in the income statement. When objective proof exists that a financial asset available f2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=50http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=50notes 1 Accounting policies (continued) Financial assets are no longer recognised when the right to receive cash flows from the asset has expired or been transferred to another party and the group, in general, has transferred risks and benefits related to ownership. Inventories Inventories are measured at cost according to the FIFO method or at net realisable value, if this is lower. Cost of inventories includes purchase price with addition of delivery costs. The net realisable value of inventories is determined as selling price less costs incurred to make the sale and is determined in consideration of marketability, obsolescence and development of expected selling price. Trade receivables Trade receivables are measured at fair value at acquisition and at amortised cost subsequently. Based on an individual assessment of the loss risk, write-down to net realisable value is made, if this is lower. Prepayments under assets Prepayments recognised under assets include paid costs relating to subsequent financial years and are measured at cost. Cash at bank and in hand Cash at bank and in hand which is recognised as current asset includes bank deposits and operating cash and is measured at fair value. Deferred tax assets are assessed annually and only recognised to the extent that it is probable that they will be utilised. Deferred tax is also recognised for the covering of the re-taxation of losses in former foreign subsidiaries participating in joint taxation assessed as becoming current. Pension obligations Pension agreements have been made with the majority of the employees. Obligations concerning the defined contribution plans are recognised in the income statement in the period that these are earned and any payments due are included under other payables. Obligations related to defined benefit plans for present and former employees are determined systematically by an actuarial discount to net present value of the pension obligation. Value in use is calculated on the basis of presumptions about future developments in, for example, interest, inflation, pay level and life expectancy. The actuarially calculated value in use less fair value of assets attached to the plan is recognised in the balance sheet under pension provisions. If the net amount is an asset, this is recognised under pension assets in the balance sheet. If the total actuarial gains and losses exceed 10% of the highest numerical value of the pension obligation or of the fair value of the pension assets, the excess amount is recognised in the income statement for the remaining number of years that the affected employees are expected to work for the group. A change in value in use as a consequence of the pension agreements made is recognised in the income statement if the affected employees have become unconditionally entitled to the changed benefits. Otherwise, the change is recognised and amortised in the value in use in the income statement over the period of time in which the employees become entitled to this right. Provisions Provisions are measured in accordance with management’s best estimate of the amount required to settle a liability. Restructuring expenses are recognised as liabilities when a detailed official plan for the restructuring has been published to the parties affected by the plan at latest on the balance sheet date. Financial liabilities Debt to credit institutions is recognised initially at the proceeds received net of transaction costs incurred. In subsequent periods, the financial liabilities are measured at amortised cost using the effective interest method, meaning that the difference between the proceeds and the nominal value is recognised in the income statement under financials for the term of the loan. Equity Treasury shares Acquisition and disposal sums related to treasury shares are recognised directly in equity. Dividend Proposed dividend is recognised as a liability at the time of adoption of the general meeting. Dividend expected to2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=51http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=511 Accounting policies (continued) Debt to suppliers and other current liabilities Debt to suppliers and other current liabilities are measured at fair value at initial recognition and at amortised cost subsequently. Prepayments under liabilities Prepayments under liabilities include payments made on the balance sheet date at the latest but which relate to income in subsequent years. Leasing Leasing agreements in which the most important aspects of the asset’s risks and benefits remain with the lessor are classified as operational leasing agreements. Leasing agreements in which the most important aspects of the asset’s risks and benefits are transferred to enterprises in the Solar Group are classified as financial leases. As at the balance sheet date, no leasing agreement is classified as a financial lease. Leasing payments concerning operational leasing are recognised in the income statement on a straight-line basis throughout the leasing period. Share option plan Share options are measured at fair value at the grant date and are recognised in the income statement under staff costs over the period when the final right to the options is vested. The set-off to this is recognised under other payables, as cash payment can be applied. The fair value of the granted share options is estimated using the BlackScholes model. Allowance is made for the conditions and terms related to the granted share options when performing the calculation. Financial ratios Earnings per share (EPS) and diluted earnings per share (EPS-D) are determined in accordance with IAS 33. All other financial ratios are calculated in accordance with the “Recommendations and Financial Ratios 2005” of the Danish Society of Financial Analysts. Cash flow statement The cash flow statement shows cash flows distributed on operating, investing and financing activities for the year, changes in cash and cash equivalents, and cash at bank and in hand at the beginning and end of the year. The effect of cash flow on the acquisition and sale of enterprises is shown separately under cash flows from investing activities. Cash flows from acquired enterprises are recognised in the cash flow statement from the date of acquisition and cash flows from sold enterprises are recognised until the time of sale. Cash flow from operating activities is determined using the indirect method as profit before tax adjusted for on-cash operating items, changes in working capital, interest received and paid, and company tax paid. Cash flow from investing activities includes payments in connection with acquisition and sale of intangibles, property, plant and equipment and investments, and acquisition and sale of enterprises. Cash flow from financing activities includes acquisition and sale of treasury shares, dividend distribution and incurrence or repayment of non-current interest-bearing liabilities. Cash at bank and in hand includes cash holdings, deposits with banks and current interest-bearing liabilities. Segment information Solar has one business segment and one geographical segment. Solar A/S Annual Report 2008 / Financial statements /472009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=52http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=52notes 2 Commercial and financial risks Due to the nature of Solar’s business, results and equity can be affected by a range of commercial and financial risks. The company’s activities are largely focused on Northern Europe which is characterised by economic and political stability. The section below describes a number of known risk factors that are considered to have a potential impact on result and balance sheet. Solar seeks to minimise any financial impact from unpredictable events on the group’s results through insurance schemes and has taken out policies considered relevant and customary in the sector and for groups of Solar’s size. Continuous assessments of insurance-related matters in respect of e.g. buildings, moveables, operating loss, transport, commercial and product liability are carried out to ensure that current policies are in keeping with Solar’s policies. Own risk is not considered to exceed usual practice for the sector or for groups of Solar’s size. However, there is no guarantee that all risks have been assessed correctly or that there is sufficient insurance cover for all potential risks that Solar may be exposed to. Commercial risks Solar’s business is wholesale and distribution of electrical, HWS and ventilation components, etc. for buildings, plants and production. The group has many years of experience in assessing and handling risks relating to this business area. No resources are channelled into other business areas or speculative or opportunistic measures. Sensitivity to economic trends As is the case with other international operators, Solar is affected by global as well as local economic trends in its markets. In recent years, however, the group’s business foundation has been expanded significantly. A substantial proportion of recent growth can, therefore, be attributed to an extension of the product range within, for instance, Offshore/Marine, Telecommunications and Security as well as Industry. Consequently, exposure to changes in trends within the construction industry has been reduced and, therefore, the group’s development increasingly follows general economic trends. Customers The composition of the customer portfolio means that Solar can withstand any loss of individual customers, thus, revenue from the largest customer accounts for less than 2% of total revenue. Suppliers As many of Solar’s suppliers are complementary, the group only depends on individual suppliers to a limited extent. IT Activities are based on extensive application of advanced IT solutions. Most hardware is located at the corporate IT department and at another location which offers a complete operational mirror of the installation. Most of the applied software has been developed in-house and substantial resources are expended on quality assurance of software. Solar’s IT strategy has been redefined to promote sustained positive development of group business activities Over the next 3-4 years, part of the group’s in-house developed ERP system will be replaced by SAP. Insurance With regard to risks that cannot be hedged through ongoing operations, hedging is undertaken through insurance. Financial instruments Results and equity are affected by a range of financial risks. Financial instruments must solely be used for hedging of commercial and financial risks. All financial transactions are founded in commercial activity and no speculative transactions are made. The main banker of Solar A/S is Nordea Bank Danmark A/S. Currency risks As other international companies, Solar is exposed to currency risks in the form of conversion risks since a substantial proportion of revenue derives from enterprises outside the euro zone. The currencies used are euro, Danish kroner, Swedish kroner, Norwegian kroner and, to a lesser extent, Polish zloty. Distribution of revenue on currencies EUR DKK NOK SEK PLN 2008 30% 30% 18% 21% 1% 2007 28% 32% 18% 20% 2% The individual subsidiaries are not significantly affected by exchange rate fluctuations 2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=53http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=532 Commercial and financial risks (continued) Distribution of net assets on currencies EUR DKK NOK SEK PLN 2008 30% 27% 23% 16% 4% 2007 32% 21% 25% 17% 5% Non-current interest-bearing liabilities Distribution on currencies Group € million EUR DKK NOK SEK Total Effect on recognition of subsidiary of any exchange rate change of 10% Net profit for the year 2008 2007 1.4 0.6 0.0 2.0 1.2 0.9 0.0 2.1 Equity 2008 2007 4.0 2.9 0.8 7.7 4.7 3.7 0.9 9.3 Interest rate in % 4.3-5.8 3.8-5.7 4.8-5.8 3.8-5.7 2008 97.5 0.6 5.5 37.8 141.4 2007 23.2 0.0 7.3 46.9 77.4 Parent company 2008 67.6 0.6 0.0 0.0 68.2 2007 21.0 0.0 0.0 0.0 21.0 Management has assessed that the isolated effects of probable changes of 10% in exchange rates as at 31 December against EUR can be specified as follows: € million NOK SEK PLN Total Interest rate swaps outstanding for hedging of floating-rate loans amounts to: Fair value (10.0) 1.1 (5.3) 1.1 Costs of interest rate swaps recognised in the income statement Total 1.0 0.3 0.2 Current interest-bearing liabilities Distribution on currencies Group € million EUR DKK NOK SEK PLN Total Interest rate in % 2008 46.3 20.5 10.6 12.4 1.1 90.9 2007 38.8 23.2 7.7 4.6 0.0 74.3 Parent company 2008 13.0 13.5 5.3 1.8 0.0 33.6 2007 15.0 14.7 0.0 0.0 0.0 29.7 0.3 The above currencies influence equity and income statement significantly. The analysis presupposes that all other variables, especially the interest rate, remain constant factors. The effect of equivalent falls in the exchange rates of the above currencies will be the same, only with opposite signs for the net profit and equity for the year. Interest rate risk Ongoing monitoring and adjustment of interest-bearing liabilities are performed. Loans are only taken out in the currencies of the countries in which Solar operates. Of the total interest-bearing liabilities, Solar endeavours to ensure that a maximum of half are based on variable interest payments fixed in accordance with current money market rates. The remaining interest-bearing liabilities are fixed-rate. Solar Group has no significant non-current interest-bearing assets. Solar’s main banker has made no covenant requirement in relation to interest-bearing liabilities. As a result of Solar’s policies, a certain interest rate risk exists, which means that any change to the interest rates will affect the results. Interest-bearing liabilities Distribution on floating-rate and fixed-rate liabilities Group € million Floating-rate Fixed-rate Total Earnings impact of any interest rate increase of 1% 2008 80.4 151.9 232.3 2007 65.3 86.4 151.7 Parent company 2008 27.6 74.2 101.8 2007 24.7 26.0 50.7 3.2-5.7 4.0-6.6 3.2-5.7 4.2-5.2 Liquidity risks Solar has a target of substantial self-financing to ensure independence from lenders and thus greater freedom of action. The majority of financing is controlled centrally based on the individual subsidiary’s operating and investment cash requirements. It is ensured that there is always a sufficient and flexible cash reserve and diversification of maturities of both long-term as well as short-term credit facilities. 2 Commercial and financial risks (continued) (0.8) (0.8) (0.3) (0.3) Solar A/S Annual Report 2008 / Financial statements /492009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=54http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=54notes Maturity statement as at 31 December 2008, group € million Mortgage credit institutions Credit institutions Employee bonds Bank debt Trade payables Other payables Financial liabilities Cash at bank and in hand Trade receivables Other receivables Financial assets Net, total < 1 year1-5 years> 5 years Total 0.3 10.2 0.0 80.4 82.4 58.3 231.6 3.3 202.6 15.2 221.1 10.5 1.5 41.9 0.6 0.0 0.0 0.0 44.0 0.0 0.0 0.0 0.0 44.0 Fair value 34.7 116.6 0.6 80.4 82.4 58.3 373.0 3.3 202.6 15.2 221.1 151.9 32.9 64.5 0.0 0.0 0.0 0.0 97.4 0.0 0.0 0.0 0.0 97.4 34.7 116.6 0.6 80.4 82.4 58.3 373.0 3.3 202.6 15.2 221.1 151.9 Carrying amount 34.7 116.6 0.6 80.4 82.4 58.3 373.0 3.3 202.6 15.2 221.1 151.9 Maturity statement as at 31 December 2007, group (continued) € million Mortgage credit institutions Credit institutions Employee bonds Bank debt Trade payables Other payables Financial liabilities Cash at bank and in hand Trade receivables Other receivables Financial assets Net, total Undrawn credit facilities Group € million 31/12 2008 116.7 2007 94.0 Parent company 2008 37.5 2007 40.6 Fair value 0.0 86.4 0.0 65.3 95.7 47.1 294.5 4.7 196.9 9.6 211.2 83.3 Carrying amount 0.0 86.4 0.0 65.3 95.7 47.1 294.5 4.7 196.9 9.6 211.2 83.3 € million Mortgage credit institutions Credit institutions Employee bonds Bank debt Trade payables Other payables Financial liabilities Cash at bank and in hand Trade receivables Other receivables Financial assets Net, total Maturity statement as at 31 December 2007, group € million Mortgage credit institutions Credit institutions Employee bonds Bank debt Trade payables Other payables Financial liabilities Cash at bank and in hand Trade receivables Other receivables Financial assets Net, total < 1 year1-5 years> 5 years Total 0.0 9.0 0.0 65.3 95.7 47.1 217.1 4.7 196.9 9.6 211.2 5.9 0.0 31.9 0.0 0.0 0.0 0.0 31.9 0.0 0.0 0.0 0.0 31.9 0.0 45.5 0.0 0.0 0.0 0.0 45.5 0.0 0.0 0.0 0.0 45.5 0.0 86.4 0.0 65.3 95.7 47.1 294.5 4.7 196.9 9.6 211.2 83.3 Credit risk Solar is subject to credit risk in respect of trade receivables and cash at bank. The maximum credit risk equates to the book value. No credit risk is deemed to exist in respect of cash at bank and in hand as the counterparts are banks with good credit ratings. As a result of customer diversification, trade receivables are distributed so that the risk is not assessed as being unusual. Credit granting to customers is regarded as a natural and important element in Solar’s business operations. With very few exceptions, insurance is taken out to hedge against losses on customers with credit limits exceeding € 150,000, however, with deductibles of € 100,000. Solar Polska Sp. z o.o. and Vegro B.V. generally take out insurance to hedge against loss to the extent possible. Loss from credit granting is a normal businesss risk. Loss on trade receivables, therefore, will occur. Maturity statement, trade receivables Group € million Not due Past due for 1-30 days Past due for 31-90 days Past due for more than 91 days Write-down Total 2008 157.0 31.5 12.0 10.8 211.3 (8.7) 202.6 2007 151.3 34.2 10.3 7.6 203.4 (6.5) 196.9 Parent company 2008 40.4 2.4 1.0 0.4 44.2 (0.7) 43.5 2007 45.2 4.6 2.1 1.0 52.9 (0.8) 52.1 /50 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=55http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=553 Accounting estimates and assessments When preparing the annual report in accordance with generally applicable principles, management makes estimates and assumptions that affect the reported assets and liabilities. Management base their estimates on historic experience and expectations for future events. Therefore, the actual result may differ from these estimates. The following estimates and accompanying assessments are deemed material for the preparation of the financial statements: Impairment test of goodwill When carrying out the annual impairment test of goodwill, or when an impairment need is indicated, an estimate is made of how those divisions of the enterprise (the cash-generating units), that goodwill is related to, will be able to generate sufficient positive net cash flow in future to support the value of goodwill and other net assets in the relevant part of the enterprise. Due to the nature of Solar’s business, estimates of expected cash flow must be made for many years ahead which will inevitably result in some uncertainty. This uncertainty is reflected in the discount rate set. The impairment test and any related particular sensitive matters are described in detail in note 14 of the financial statements. Write-down of inventories Write-down of inventories is made due to the obsolescence of the product. Management specifically assess inventories, including the product’s rate of turnover, current economic trends and product development when deciding whether the write-down is sufficient. Write-down for meeting of loss on doubtful trade receivables Write-down is made to meet loss on doubtful trade receivables. Management specifically analyses trade receivables, including the customers’ credit rating and current economic trends to ensure that the write-down is sufficient. Provision for deferred tax Deferred tax assets are not recognised if it is not deemed sufficiently safe that these can reduce the future taxable income. In this connection, management assess the expected future taxable income. 4 Segment information Solar has one primary industry segment which consists of wholesale and one secondary geographical segment and the risk and return do not differ considerably between the countries where the group operates. In accordance with Solar’s information policy, supplementary information is provided about the individual group enterprises. 5 Auditors’ fee Group € million PricewaterhouseCoopers Auditing Other services Total Other auditors Auditing Other services Total 6 Staff costs Group € million Salaries and wages, etc. Pensions - defined contribution Pensions - defined benefit Costs related to social security Share-based payment Total Average number of employees Remuneration of the Supervisory Board Remuneration of the Supervisory Board Remuneration of the Executive Board Remuneration and commission on profit Share-based payment Total 2008 144.3 12.0 1.5 12.7 0.0 170.5 3,010 2007 129.7 10.4 0.8 11.4 (0.1) 152.2 2,658 Parent company 2008 53.8 3.1 (0.1) 1.0 0.0 57.8 847 2007 50.9 2.7 (0.5) 0.9 (0.1) 53.9 779 2008 0.2 0.1 0.3 2007 0.3 0.1 0.4 Parent company 2008 0.1 0.0 0.1 2007 0.1 0.1 0.2 0.1 0.0 0.1 0.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.2 0.3 0.2 0.6 0.0 0.6 0.7 (0.1) 0.6 0.6 0.0 0.6 0.7 (0.1) 0.6 Share option plans In 2006, an agreement was made with the company Executive Board concerning a share-based incentive programme. In 2006-2008, 4,830, 2,047 and 3,535 share options were granted, respectively. These options entitle the CEO to acquire one Solar B share at a price of DKK 559.00, DKK 732.89 and DKK 424.33, respectively, per share for 6 weeks from publication of the company’s annual reports in 2009, 2010 and 2011. In 2008, an agreement was made with the company’s management employees concerning a share-based incentive programme. In 2008, 35,592 share options were granted, each of which entitles the management employees to acquire one Solar B share at a price of DKK 424.33 per share for 10 banking days from2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=56http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=56notes 6 Staff costs (continued) Both programmes make it possible to make payment as a cash settlement. Management Executive employboard ees € million Buildings Plant, operating equipment, and tools and equipment Leasehold improvements Profit / loss on sale of operating equipment, etc. Total 9 Financial income Management Executive employboard ees 4,830 2,047 0 0 0 6,877 0 0 0 0 0 0 2008 Market values estimated using the Black-Scholes model Conditions applying to the statement of market value using the Black-Scholes model: 2008 Expected volatility Expected dividend in proportion to market value Risk-free interest rate 7 Loss on trade receivables Group € million Ascertained losses Included in previously written-off trade receivables Change of write-down for bad and doubtful debts Total 2008 2.4 (0.3) 2.1 0.7 2.8 2007 3.2 (0.1) 3.1 (1.4) 1.7 Parent company 2008 1.4 (0.2) 1.2 (0.1) 1.1 2007 0.5 (0.1) 0.4 0.2 0.6 32% 6% 5% 2007 22% 2% 4% 0.0 Group Total 4,830 2,047 0 0 0 6,877 Financial income, received 2007 10 Financial costs 0.0 € million Interest expenses Foreign exchange loss Other financial costs Total Financial expenses, paid Group 2008 10.1 8.0 0.3 18.4 10.4 2007 8.5 1.7 0.3 10.5 8.8 Parent company 2008 3.5 3.8 0.0 7.3 3.5 2007 3.1 0.4 0.0 3.5 3.1 2.1 2.8 3.1 2.6 € million Interest income Foreign exchange gains Other financial income Total 2008 2.0 3.4 0.1 5.5 2007 2.0 2.1 0.8 4.9 Parent company 2008 3.0 2.3 0.1 5.4 2007 1.9 0.4 0.7 3.0 2008 3.5 5.4 0.5 (0.2) 9.2 2007 3.0 5.2 0.3 (0.4) 8.1 8 Depreciation on property, plant and equipment Group Parent company 2008 1.0 2.6 0.1 (0.1) 3.6 2007 1.0 2.7 0.0 (0.2) 3.5 Number of shares at the end of 2008 Outstanding at the beginning of 2008 Granted in 2008 Exercised Forfeited Expired Outstanding at the end of 2008 Total 6,877 0 6,877 3,535 35,592 39,127 0 0 0 0 0 0 0 0 0 10,412 35,592 46,004 Number of shares at the end of 2007 Outstanding at the beginning of 2007 Granted in 2007 Exercised Forfeited Expired Outstanding at the end of 2007 /52 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=57http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=5711 Corporation tax Group € million Current tax Deferred tax Tax on net profit for the year Reduction of Danish corporation tax rate Other adjustments concerning previous years Total Statement of effective tax rate: Danish corporation tax rate Non-taxable value of profit from subsidiaries Taxable value of jointly taxed Danish subsidiaries Reduction of Danish corporation tax rate Non-deductible amortisation of intangible assets Change in tax-base of non-capitalised losses in subsidiaries Non-taxable / deductible items in parent company Non-taxable / deductible items and differing tax rates compared to Danish tax rate in foreign subsidiaries Tax concerning previous years Effective tax rate 2008 12.9 1.3 14.2 0.0 0.2 14.4 2007 18.0 1.4 19.4 (0.5) (0.8) 18.1 Parent company 2008 2007 7.3 1.3 8.6 0.0 (0.1) 8.5 8.7 0.6 9.3 (0.5) (0.2) 8.6 25.0% 0.0% 3.7% 2.3% 0.7% (0.4%) 0.4% 31.7% 25.0% (0.8%) 2.3% 0.2% 0.5% 1.7% (1.3%) 27.6% 25.0% (4.0%) (0.7%) 0.0% 0.0% 0.7% (0.3%) 20.7% 25.0% (8.8%) 0.0% (0.9%) 0.0% 0.5% (0.4%) 15.4% 12 Net profit for the year Group € million Proposal for distribution of net profit for the year: Proposed dividend in parent company Retained earnings Net profit for the year Dividend in € per share at DKK 100 Dividend in DKK per share at DKK 100 2008 2007 Parent company 2008 2007 13 Earnings per share in € per share outstanding Group 2008 Net profit for the year in € million Average number of shares Average number of treasury shares Average number of shares outstanding Diluted effect of share options Diluted number of shares outstanding Earnings per share in € per share outstanding Diluted earnings per share in € per share outstanding 31.0 7,282,407 (463,502) 6,818,905 (9,999) 6,808,906 2007 47.5 7,282,407 (318,502) 6,963,905 (1,006) 6,962,899 13.5 17.5 31.0 2.01 15.00 17.6 29.9 47.5 2.55 19.00 13.5 19.1 32.6 2.01 15.00 17.6 29.6 47.2 2.55 19.00 4.55 6.82 4.55 6.82 A shares have been included in the calculation in units of DKK 100. Solar A/S Annual Report 2008 / Financial statements /532009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=58http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=58notes 14 Intangible assets Group Software Goodbeing will developed Parent company SoftCustomerware related being assets developed € million 2008 Cost as at 1/1 2008 Foreign currency translation adjustment Additions in the year Disposals in the year Cost as at 31/12 2008 Amortisation as at 1/1 2008 Foreign currency translation adjustment Amortisation in the year Amortisation of disposals in the year Amortisation as at 31/12 2008 Carrying amount as at 31/12 2008 Remaining amortisation period in number of years 2007 Cost as at 1/1 2007 Foreign currency translation adjustment Additions in the year Disposals in the year Cost as at 31/12 2007 Amortisation 1/1 2007 Foreign currency translation adjustment Amortisation in the year Amortisation of disposals in the year Amortisation 31/12 2007 Carrying amount as at 31/12 2007 Remaining amortisation period in number of years Customerrelated assets Total Total 134.3 (12.4) 0.8 0.0 122.7 103.0 (10.2) 6.7 0.0 99.5 23.2 19.2 (2.6) 1.2 0.0 17.8 0.0 0.0 0.0 0.0 0.0 17.8 0.0 0.0 4.7 0.0 4.7 0.0 0.0 0.0 0.0 0.0 4.7 153.5 (15.0) 6.7 0.0 145.2 103.0 (10.2) 6.7 0.0 99.5 45.7 0.5 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 0.5 0.0 0.0 0.0 4.7 0.0 4.7 0.0 0.0 0.0 0.0 0.0 4.7 0.5 0.0 4.7 0.0 5.2 0.5 0.0 0.0 0.0 0.5 4.7 6 - - - - - - 118.5 0.9 14.9 0.0 134.3 95.6 1.3 6.1 0.0 103.0 31.3 0.0 0.0 19.2 0.0 19.2 0.0 0.0 0.0 0.0 0.0 19.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 118.5 0.9 34.1 0.0 153.5 95.6 1.3 6.1 0.0 103.0 50.5 0.5 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 0.5 0.0 6 - - - - - - /54 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=59http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=5914 Intangible assets (continued) Goodwill As at 31 December 2008, management has completed an impairment test of the carrying amount of goodwill. The impairment test was performed in the fourth quarter and is based on estimates and business plans as well as other assumptions with the necessary adjustments under IAS 36 approved by the executive and supervisory boards. Most of the carrying amount of goodwill results from the acquisition of the Swedish enterprise Alvesta V.V.S.- Material AB in 2007. In the impairment test of cash-generating units, the recoverable amount (value in use), determined as the discounted value of expected future cash flows, is compared with the carrying amount of the individual cash-generating units. Expected future cash flow is based on budgets and business plans for the coming two years. Revenue growth in 2007-2008 totalled 18%. The growth rate used in the impairment test for 2009 is 7.5% as a result of the start-up of 3 new branches, while the growth rate used in impairment tests for the years succeeding 2009 is 2-4% which, however, out of considerations of prudence has been set considerably lower than the expected growth rate. As at 31 December 2008, working capital accounted for 26% of revenue for the year. Solar estimates that working capital will not exceed the average of the other group enterprises. Out of considerations of prudence, working capital of 25% has been assumed in the impairment test. Budgets and business plans for the next two years is based on Solar’s current, ongoing and contract investments in which risks of the material parameters have been assessed and recognised in future expected cash flows. The first two years are based on the New Solar 2010 strategy approved by management. Projections for year three and onwards are based on general expectations for the market and risks. The terminal value after 5 years is determined while taking into consideration general expectations for growth which have been determined at 4% out of considerations of prudence. The applied discount rate of 8.5% used for calculation of the recoverable amount is stated before tax and reflects the risk-free interest rate. The cash flows used include any effect of related future risks, and therefore, such risks have not been added to the applied discount rates. Management estimates that probable changes to the basic assumptions will not result in the carrying amount of goodwill exceeding the recoverable amount. Solar A/S Annual Report 2008 / Financial statements /552009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=60http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=60notes 15 Property, plant and equipment Group Plant, operating equipment, Land and and tools and Leasehold buildings equipment improvements Assets under construction € million 2008 Cost as at 1/1 2008 Foreign currency translation adjustment Acquired enterprises Additions in the year Disposals in the year Cost as at 31/12 2008 Depreciation and write-down as at 1/1 2008 Foreign currency translation adjustment Acquired enterprises Depreciation for the year Depreciation and write-down on disposals Depreciation and write-down as at 31/12 2008 Carrying amount as at 31/12 2008 2007 Cost as at 1/1 2007 Foreign currency translation adjustment Acquired enterprises Additions in the year Disposals in the year Cost as at 31/12 2007 Depreciation and write-down as at 1/1 2007 Foreign currency translation adjustment Acquired enterprises Depreciation for the year Depreciation and write-down on disposals Depreciation and write-down as at 31/12 2007 Carrying amount as at 31/12 2007 Total 140.4 (7.5) 61.6 5.4 (1.0) 198.9 31.6 (0.5) 9.9 3.5 (0.8) 43.7 155.2 56.3 (2.1) 14.7 4.3 (1.4) 71.8 42.3 (1.3) 12.5 5.4 (1.1) 57.8 14.0 3.4 (0.3) 2.1 1.6 0.0 6.8 2.8 (0.4) 1.2 0.5 0.0 4.1 2.7 2.3 (0.4) 0.0 2.2 (1.6) 2.5 0.0 0.0 0.0 0.0 0.0 0.0 2.5 202.4 (10.3) 78.4 13.5 (4.0) 280.0 76.7 (2.2) 23.6 9.4 (1.9) 105.6 174.4 124.1 0.0 6.8 9.5 0.0 140.4 28.6 0.0 0.0 3.0 0.0 31.6 108.8 54.0 (0.2) 2.7 3.6 (3.8) 56.3 38.4 0.0 1.9 5.2 (3.2) 42.3 14.0 3.1 0.0 0.0 0.4 (0.1) 3.4 2.5 0.0 0.0 0.3 0.0 2.8 0.6 0.9 0.0 0.0 3.1 (1.7) 2.3 0.0 0.0 0.0 0.0 0.0 0.0 2.3 182.1 (0.2) 9.5 16.6 (5.6) 202.4 69.5 0.0 1.9 8.5 (3.2) 76.7 125.7 /56 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=61http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=6115 Property, plant and equipment (continued) Parent company Plant, operating equipment, Land and and tools and Leasehold buildings equipment improvements Assets under construction € million 2008 Cost as at 1/1 2008 Foreign currency translation adjustment Additions in the year Disposals in the year Cost as at 31/12 2008 Depreciation and write-down as at 1/1 2008 Foreign currency translation adjustment Depreciation for the year Depreciation and write-down on disposals Depreciation and write-down as at 31/12 2008 Carrying amount as at 31/12 2008 2007 Cost as at 1/1 2007 Foreign currency translation adjustment Additions in the year Disposals in the year Cost as at 31/12 2007 Depreciation and write-down as at 1/1 2007 Foreign currency translation adjustment Depreciation for the year Depreciation and write-down on disposals Depreciation and write-down as at 31/12 2007 Carrying amount as at 31/12 2007 Total 43.7 0.0 0.7 0.0 44.4 11.3 0.0 1.0 0.0 12.3 32.1 21.7 0.0 1.1 (0.3) 22.5 15.4 0.0 2.6 (0.3) 17.7 4.8 0.7 0.0 0.1 0.0 0.8 0.6 0.0 0.1 0.0 0.7 0.1 0.0 0.0 2.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 2.0 66.1 0.0 3.9 (0.3) 69.7 27.3 0.0 3.7 (0.3) 30.7 39.0 41.1 0.0 2.6 0.0 43.7 10.3 0.0 1.0 0.0 11.3 32.4 21.5 0.0 1.2 (1.0) 21.7 13.5 0.1 2.7 (0.9) 15.4 6.3 0.7 0.0 0.0 0.0 0.7 0.6 0.0 0.0 0.0 0.6 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 63.3 0.0 3.8 (1.0) 66.1 24.4 0.1 3.7 (0.9) 27.3 38.8 Solar A/S Annual Report 2008 / Financial statements /572009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=62http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=62notes 16 Investments Group € million 2008 Cost as at 1/1 2008 Foreign currency translation adjustment Additions in the year Distributed dividend exceeding accumulated earnings Cost as at 31/12 2008 Write-down as at 1/1 2008 Foreign currency translation adjustment Write-down in the year Write-down as at 31/12 2008 Carrying amount as at 31/12 2008 2007 Cost as at 1/1 2007 Foreign currency translation adjustment Additions in the year Disposals in the year Distributed dividend exceeding accumulated earnings Cost as at 31/12 2007 Write-down as at 1/1 2007 Foreign currency translation adjustment Write-down in the year Write-down as at 31/12 2007 Carrying amount as at 31/12 2007 Other receivables Equity investments Parent company Other receivables Total 0.7 0.0 0.2 0.9 0.0 0.0 0.0 0.0 0.9 235.2 0.2 2.0 0.0 237.4 53.7 0.1 0.0 53.8 183.6 0.4 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.4 235.6 0.2 2.0 0.0 237.8 53.7 0.1 0.0 53.8 184.0 1.6 0.0 0.0 (0.9) 0.7 0.0 0.0 0.0 0.0 0.7 231.7 0.0 3.5 0.0 0.0 235.2 53.7 0.0 0.0 53.7 181.5 0.4 0.0 0.0 0.0 0.4 0.0 0.0 0.0 0.0 0.4 232.1 0.0 3.5 0.0 0.0 235.6 53.7 0.0 0.0 53.7 181.9 /58 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=63http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=6317 Inventories Group € million Goods for resale Recognised write-down 18 Write-down of trade receivables Group € million Write-down based on: Age distribution Individual assessment Total Write-down as at 1/1 Foreign currency translation adjustment Acquired enterprises Write-down for the year Realised losses in the year Reversed for the year Write-down as at 31/12 20 Share capital (continued) B shares outstanding 2008 2007 Parent company 2008 2007 2008 162.0 0.1 2007 154.7 (0.6) Parent company 2008 42.5 0.3 2007 47.8 (0.4) 19 Prepayments Group € million Prepaid: Rent Insurance and subscriptions Other costs Total 20 Share capital Parent company € million 2.2 6.5 8.7 6.5 (0.3) 1.8 2.0 (1.0) (0.3) 8.7 1.7 4.8 6.5 7.7 0.0 0.2 2.2 (1.7) (1.9) 6.5 0.4 0.3 0.7 0.8 0.0 0.0 0.5 (0.6) 0.0 0.7 0.4 0.4 0.8 0.6 0.0 0.0 0.2 0.0 0.0 0.8 Share capital as at 1/1 Foreign currency translation adjustments Share capital as at 31/12 2008 97.7 0.1 97.8 2007 97.7 0.0 97.7 2008 2007 Parent company 2008 2007 0.2 0.5 2.2 2.9 0.8 0.2 1.8 2.8 0.1 0.0 0.2 0.3 0.0 0.0 0.5 0.5 Share capital is fully paid in and divided into the following classes: A shares 40 shares at DKK 10,000 0.1 A shares 2,240 shares at DKK 40,000 12.0 A shares, total B shares 6,382,407 shares at DKK 100 Total 12.1 85.7 97.8 0.1 12.0 12.1 85.6 97.7 No. of shares 2008 2007 6,063,987 (5,000) 6,058,987 Nominal value 2008 81.2 0.1 (3.3) 78.0 2007 81.3 0.0 (0.1) 81.2 Outstanding as at 1/1 Foreign currency translation adjustment Purchase of treasury shares Outstanding as at 31/12 Treasury shares (B shares) No. of shares 2008 Holding as at 1/1 323,420 Purchase 244,800 Foreign currency translation adjustment Holding as at 31/12 568,220 2007 318,420 5,000 323,420 Nominal value 2008 4.4 3.3 0.0 7.7 2007 4.3 0.1 0.0 4.4 6,058,987 (244,800) 5,814,187 Cost 2008 16.2 13.8 0.1 30.1 14.6 2007 15.9 0.4 (0.1) 16.2 24.0 Percentage of share capital 2008 4.5% 3.3% 7.8% 2007 4.4% 0.1% 4.5% Market value as at 31/12 The holding of treasury shares is maintained as a cash reserve for sale or payment in connection with any future acquisition of enterprises, for hedging of a share option plan and reduction of share capital. In compliance with authority granted by the general meeting, the company can acquire treasury shares until the Annual General Meeting in 2009. All treasury shares are held by the parent company. Solar A/S Annual Report 2008 / Financial statements /592009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=64http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=64notes 21 Interest-bearing liabilities Parent company 2008 2007 € million 22 Provision for pension obligations (contimued) Parent company 2008 2007 Group € million Non-current interest-bearing liabilities Debt to mortgage credit institutions Debt to credit institutions Employee bonds Total Maturity of hedged bank loans >1 year < 5 years > 5 years Total Current interest-bearing liabilities Bank loans and bank overdrafts Debt to mortgage credit institutions Debt to credit institutions Total 80.4 0.3 10.2 90.9 65.3 0.0 9.0 74.3 34.4 106.4 0.6 141.4 0.0 77.4 0.0 77.4 2008 2007 Group 2008 2007 Movements in net assets / liabilities recognised in the balance sheet: 34.4 33.2 0.6 68.2 0.0 21.0 0.0 21.0 As at 1/1 Foreign currency translation adjustment Additions Staff costs Contributions paid to the plan Total as at 31/12 3.9 (0.4) 0.0 1.5 (1.3) 3.7 5.0 0.1 0.0 0.8 (2.0) 3.9 0.6 0.0 0.0 (0.1) 0.0 0.5 1.2 0.0 0.0 (0.5) (0.1) 0.6 2011-37 2008-18 2012-37 2008-16 44.0 97.4 141.4 31.9 45.5 77.4 21.4 46.8 68.2 14.9 6.1 21.0 27.6 0.3 5.7 33.6 24.7 0.0 5.0 29.7 Benefits recognised in the balance sheet: Present value of unfunded pension obligations 42.4 Fair value of the pension plan assets (41.5) Non-recognised actuarial gains / losses 2.8 Total Distribution of pension obligations: Pension assets Pension obligations Total as at 31/12 Average actuarial assumptions: Discount rate Expected return on the plan’s assets Pay increase rate Pension increase rate 4.0-5.6% 4.5-5.6% 2.0-4.5% 2.0-4.3% 3.7 41.3 (34.4) (3.0) 3.9 0.5 0.0 0.0 0.5 0.6 0.0 0.0 0.6 For more detail, reference is made to note 2: Commercial and financial risks The carrying amount of financial liabilities corresponds to fair value. Other payables included in current liabilities must be paid within 1 year. 22 Provision for pension obligations Pension obligations mainly consist of defined contribution pension plans and to a smaller degree of defined benefit pension plans. Pension obligations that are not covered via insurance (defined benefit plans) are determined at the actuarial value at the balance sheet date. Group € million Defined benefit pension plans Amounts recognised in the income statement: Pension costs 1.2 2.2 Interest expenses Expected return on the plan’s assets (1.9) Total 1.5 2008 2007 Parent company 2008 2007 0.0 3.7 3.7 0.0 3.9 3.9 0.0 0.5 0.5 0.0 0.6 0.6 4.0-5.3% 4.0% 4.5-5.8% 2.5-4.5% 2.0-4.3% - 4.0% - For all major defined benefit plans, actuarial calculations and measurements are made annually. 1.2 2.1 (2.5) 0.8 (0.1) 0.0 0.0 (0.1) (0.5) 0.0 0.0 (0.5) /60 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=65http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=6523 Provisions for deferred tax Parent company 2008 5.2 0.0 0.0 0.0 0.0 0.0 1.3 6.5 2007 5.1 0.0 0.0 0.0 (0.5) 0.0 0.6 5.2 € million that can be further specified as follows: Expected used within 1 year Expected used after 1 year Total, net Not recognised in balance sheet: Deferred tax assets Parent company 2008 2007 Group € million As at 1/1 Correction concerning previous years Foreign currency translation adjustment Acquired enterprises Adjustment, change in tax rate Recognised in equity Recognised in income statement Total as at 31/12 specified as follows: Deferred tax Deferred tax assets Total deferred tax, net 2008 15.2 0.0 (1.4) 5.8 0.0 (0.2) 1.3 20.7 2007 8.3 0.0 (0.2) 6.2 (0.5) 0.0 1.4 15.2 Group 2008 2007 (0.4) 21.1 20.7 (0.3) 15.5 15.2 (0.2) 6.7 6.5 (0.2) 5.4 5.2 6.5 7.7 0.0 0.0 20.7 0.0 20.7 15.2 0.0 15.2 6.5 0.0 6.5 5.2 0.0 5.2 Deferred tax assets consist of tax losses in Germany, Poland and Finland. The assets are not recognised as it is not considered sufficiently certain that the tax losses can be realised. Specification by balance sheet items: Group Foreign currency translation As at adjust1/1 ments Property, plant and equipment Write-down to meet loss on receivables Pension obligations Other items Net, total 2.6 (0.3) (0.1) 13.0 15.2 (0.1) 0.0 0.0 (1.3) (1.4) Parent company Acquired enterprises 6.5 (0.1) 0.0 (0.5) 5.9 Other adjustments (0.1) 0.1 0.2 0.8 1.0 2008 8.9 (0.3) 0.1 12.0 20.7 2007 2.6 (0.3) (0.1) 13.0 15.2 2008 2.0 (0.2) (0.2) 4.9 6.5 2007 2.1 (0.2) (0.4) 3.7 5.2 Solar A/S Annual Report 2008 / Financial statements /612009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=66http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=66notes 24 Other provisions Group € million Non-current Sundry Specification, non-current provisions: As at 1/1 Foreign currency translation adjustment Acquired enterprises Reversed in the year Provision for the year Total as at 31/12 Current Restructuring expenses 25 Other payables Group € million Staff costs Taxes and charges Hegding instruments Other debt and amounts payable Total 26 Prepayments Group € million Prepaid cost reimbursement Other prepaid income Total 2008 0.1 0.4 0.5 2007 0.1 0.2 0.3 Parent company 2008 0.0 0.3 0.3 2007 0.0 0.0 0.0 Non-current assets Current assets Non-current liabilities Current liabilities Acquired net assets Acquired intangible assets Acquisition cost Of this, cash and cash equivalents (net debt) Cash flow effect, net 2008 27.3 7.2 10.0 11.9 56.4 2007 29.0 7.6 0.0 5.9 42.5 Parent company 2008 14.3 0.2 5.3 1.8 21.6 2007 14.7 3.5 0.0 2.2 20.4 28 Acquisition of subsidiaries Group 2008 Eltomont Sp. z o.o. Fair value at date of acquisition 0.5 4.0 (0.3) (3.2) 1.0 1.6 2.6 0.1 2.7 Carrying amount before the acquisition 0.4 4.0 (0.3) (3.2) 0.9 0.0 Vegro B.V. Fair value at date of acquisition 54.3 56.7 (35.6) (19.8) 55.6 0.4 56.0 0.9 56.9 Carrying amount before the acquisition 36.1 57.6 (32.5) (17.0) 44.2 0.0 2008 2007 Parent company 2008 2007 € million Purchase of land and buildings Purchase of plant, operating equipment, and tools and equipment Leasehold improvements Assets under construction Total additions Sale of land and buildings Sale of plant, operating equipment, and tools and equipment Leasehold improvements Assets under construction Total disposals Total 27 Net investment in property, plant and equipment Group 2008 5.4 4.3 1.6 2.2 13.5 (0.2) (0.5) 0.0 (1.6) (2.3) 11.2 2007 9.5 3.6 0.4 3.1 16.6 0.0 (1.0) (0.1) (1.7) (2.8) 13.8 Parent company 2008 0.7 1.1 0.1 2.0 3.9 0.0 (0.1) 0.0 0.0 (0.1) 3.8 2007 2.6 1.2 0.0 0.0 3.8 0.0 (0.3) 0.0 0.0 (0.3) 3.5 1.5 0.0 0.0 0.0 0.0 0.0 1.5 (0.3) 0.3 1.5 0.1 0.0 0.0 (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 /62 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=67http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=6728 Acquisition of subsidiaries (continued) As at 6 October 2008, Solar Polska Sp. z o.o. acquired 100% of the share capital and voting rights in the Polish enterprise Eltomont Sp. z o.o. The price of the acquisition of 100% of the shares was € 2.6m. Enterprise value was € 2.8m at normalised working capital. The acquired enterprise is included in Solar’s accounts with revenue of € 2.4m and EBITA of € 0.1m. If the enterprise had been owned throughout the financial year, the enterprise would have been included in Solar’s accounts with revenue of € 8.2m and EBITA of € 0.3m. As at 15 October 2008, Solar Nederland B.V. acquired 100% of the share capital and voting rights in the Dutch enterprise Vegro B.V. The price of the acquisition of 100% of the shares was € 56.0m. Enterprise value was € 93.0m at normalised working capital. The acquired enterprise is included in Solar’s accounts with revenue of € 53.1m and EBITA of € 2.8m. If the enterprise had been owned throughout the financial year, the enterprise would have been included in Solar’s accounts with revenue of € 224.3m and normalised EBITA, adjusted for sales costs, of € 8.1m. 2007 Alvesta V.V.S - Material AB Fair value at date of acquisition Non-current assets Current assets Non-current liabilities Current liabilities Acquired net assets Acquired intangible assets Acquisition cost Of this, cash and cash equivalents (net debt) Cash flow effect, net 7.6 20.7 (8.3) (7.7) 12.3 34.1 46.4 0.0 46.4 Carrying amount before the acquisition 4.2 20.7 (6.6) (7.7) 10.6 0.0 29 Contingent liabilities Group € million 2008 2007 Parent company 2008 2007 Contractual liabilities Contractual liabilities entered into regarding construction, apart from those recognised in the balance sheet: Total 2.7 4.3 2.7 0.6 Operating leases and rent contracts Non-cancellable minimum lease payments are to be paid within the following periods from the balance sheet day: < 1 year >1 year < 5 years > 5 years Total 3.5 4.3 0.0 7.8 2.1 3.3 0.0 5.4 0.8 1.4 0.0 2.2 0.4 0.7 0.0 1.1 Operating leasing costs recognised in the income statement amount to: Total 3.6 2.3 0.6 0.4 Company cars, and office furniture and equipment are leased under operating leases. The lease period is typically a period of: No. of years 3-6 3-6 3-6 Rent obligations with non-cancellation periods of up to 6 years: Total 36.7 24.8 1.7 3-6 2.1 Collateral Assets have been pledged as collateral for bank commitments at carrying amount of: Total 217.1 146.4 31.4 0.0 Mortgaging and guarantees As security for subsidiaries’ bank exposures, guarantees have been issued at: Total 94.3 110.3 As security for subsidiaries debt, guarantees have been issued at: Total 35.4 As at 1 May 2007, Solar Sverige AB acquired 100% of the share capital and voting rights in the Swedish enterprise Alvesta V.V.S.- Material AB. The revenue of the acquired enterprise amounted to € 52.2m in 2007 35.8 Solar A/S Annual Report 2008 / Financial statements /632009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=68http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=68notes 30 Related parties Group and parent company Solar A/S is subject to control by the Fund of 20th December (registered as a commercial foundation in Denmark) which owns 17.0% of the shares and holds 59.9% of the voting rights. The remaining shares are owned by a widely combined group of shareholders. Other related parties include the company’s Supervisory and Executive Board. There have been no other transactions in the financial year with members of the supervisory and executive boards than those which appear from note 6. Parent company € million The parent company has had the following essential transactions with related parties: Sale of services to related parties Sale of goods to related parties 6.2 9.3 4.9 9.7 2008 2007 31 New financial reporting standards The following standards and changes to existing standards and interpretations applicable for the financial year 2009 or later, which the group has not implemented, have been issued: Adopted by the EU • Change in IAS 1 concerning presentation of the annual report in terms of, for example, required presentation of a statement of comprehensive income. • Change in IAS 23 concerning capitalisation of borrowing costs after which borrowing costs must be recognised in the cost of self-constructed assets with long production times. • Change in IFRS 2 concerning share-based payment in terms of the distinction between vesting conditions and restrictions and accounting treatment of cancellations. Not yet adopted by the EU • Changes in IFRS 3 and IAS 27 concerning business combinations and consolidated financial statements. This change entails, for example, that transaction costs must be charged to the income statement, an option to recognise full goodwill in partial acquisitions and the treatment of purchase and sale of minority interests as equity transactions. • Change in AS 39, specifying that it is not possible to let the time value of one option reflect the hedged risk, and that it is only possible to hedge the inflation element of a financial item to the extent contractually established. • IFRIC 15 concerning the classification and accounting treatment of agreements for the construction of real property. • IFRIC 16 concerning foreign currency hedging of net investments in foreign entities. The above standards which become effective as from the financial year 2009 or later are expected to affect Annual Report 2009 to a limited extent. /64 Solar A/S Annual Report 2008 / Financial statements2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=69http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=69management’s statement The group’s executive and supervisory boards have today discussed and approved Annual Report 2008 for Solar A/S. The annual report has been prepared in accordance with International Financial Reporting Standards and additional Danish disclosure requirements of annual reports of listed companies. In our opinion, the selected accounting policies The annual report is recommended for approval by the General Meeting. are appropriate and the annual report gives a fair presentation of the group and parent company’s assets, liabilities and equity, financial position, cash flow and results. Kolding, 12 March 2009 In the Executive Board Flemming H. Tomdrup In the Supervisory Board Jens Borum (Chairman) Peter Falkenham (Vice Chairman) Kent Arentoft Niels Borum Remy Cramer Bent H. Frisk Preben Jessen Aase Kofoed Carsten H. Ørssleff Solar A/S Annual Report 2008 / Management’s statement /652009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=70http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=70auditor’s report To the shareholders of Solar A/S We have audited the annual report of Solar A/S for the financial year 2008, which comprises management’s statement, management’s review, financial targets, financial highlights, income statement, balance sheet, statement of changes in equity, cash flow statement and notes for the group as well as for the parent company. The annual report is 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 section “Quarterly figures, Consolidated“ has not been audited. Management’s responsibility for the annual report Management is responsible for the preparation and fair presentation of the 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. Auditor’s responsibility Our responsibility is to express an opinion on the annual report based on our audit. We conducted our audit in accordance with Danish Auditing Standards. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the annual report is free from material misstatement. Opinion In our opinion, the annual report gives a true and fair view of the financial position at 31 December 2008 of the group and the parent company and of the results of the group and parent company operations and cash flows for the financial year 2008 in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies. Our audit has not resulted in any qualification. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual report. The procedures selected depend on the auditor’s 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 auditor considers internal control relevant to the entity’s preparation and fair presentation of the annual report in order to design audit procedures that are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the annual report. Kolding, 12 March 2009 PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab Lars Almskou Ohmeyer State Authorised Public Accountant Flemming Petersen State Authorised Public Accountant /66 Solar A/S Annual report 2008 / Auditor’s report2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=71http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=71ADDRESSES Solar A/S Haderslevvej 25 DK - 6000 Kolding Phone: +45 76 30 42 00 www.solar.eu Solar Deutschland GmbH Leineweberring 15 DE - 21493 Elmenhorst Phone: +49 51 89 94 510 www.solar-elektro.de Aurora Group Norge AS Bromstadveien 57 NO - 7047 Trondheim Phone: +47 73 82 94 30 www.auroragroup.eu Solar Danmark A/S Industrivej Vest 43 DK - 6600 Vejen Phone: +45 76 96 12 00 www.solar.dk Solar Polska Sp. z o.o. ul. Rokicinska 162 PL - 92-412 Lódz Phone: +48 42 677 58 00 www.solar.pl Aurora Group Sverige AB Risneleden 67 Box 703 SE - 174 27 Sundbyberg Phone: +46 8 564 90 850 www.auroragroup.eu Solar Sverige AB Box 311 Gullbergs Strandgatan 34 SE - 401 25 Göteborg Phone: +46 31 328 5000 www.solar.se Eltomont Sp. z o.o. ul. Podmiejska 81A PL - 44-207 Rybnik Phone: 48 32 739 18 68 www.eltomont.pl Aurora Group Finland Oy Toiviontie 1 FI - 33920 Pirkkala Phone: +358 (0) 20 7438060 www.auroragroup.eu Solar Norge AS Valhallavegen 8 NO - 2050 Jessheim Phone: +47 63 94 64 00 www.solarnorge.no Solar Suomi Oy Sierakiventie 8-10 FI - 02780 Espoo Phone: +358 10 2141 200 www.solarsuomi.fi Solar Nederland B.V. Effect 5 NL - 6921 RG Duiven Phone: +31 26 365 29 11 www.solarnederland.nl P/F Solar Føroyar Brekkutún 2, Hoyvik P.O. Box 105 FO - 110 Tórshavn Phone: +298 35 79 33 Vegro B.V. Korte Vondelstraat 2-10 NL - 1811 AE Alkmaar Phone: +31 72 519 26 26 www.vegro.nl Aurora Group Danmark A/S Lyskær 7 DK - 2730 Herlev Phone: +45 44 85 82 00 www.auroragroup.eu Solar A/S Annual Report 2008 / Addresses2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=72http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=72QUARTERLY FIGURES Consolidated Q1 2008 Financial and operating data for the income statement (€ million) Revenue Earnings before interest, tax and amortisation (EBITA) Earnings before interest and tax (EBIT) Financials, net Earnings before tax (EBT) Netprofitforthequarter Earningspersharein€pershare outstanding(EPS)forthequarter Earningspersharein€pershare outstanding excluding amortisation Financial and operating data for the balance sheet (€ million) Total assets Netinvestmentsinproperty,plantandequipment Share capital outstanding Equity Interest-bearing liabilities Financial and operating data for cash flow (€ million) Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Financial ratios (% unless otherwise stated) Revenue growth Organic growth Earnings before interest, tax and amortisation (EBITA) Earnings before interest and tax (EBIT) Operating margin Returnonequity(ROE) Returnonequity(ROE)beforeamortisation Return on invested capital (ROIC) Return on invested capital (ROIC) before amortisation Corrected market capitalisation/Earnings before interest, tax and amortisation (EV/EBITA) Equityratio Intrinsicvaluein€pershareoutstanding Sharepricein€ Share price/intrinsic value Share price in DKK Employees Average number of employees (FTE) 2007 2008 Q2 2007 2008 Q3 2007 2008 Q4 2007 360.8 15.3 13.6 (1.8) 11.8 8.3 1.20 1.44 319.4 17.5 16.3 (0.5) 15.8 11.1 1.59 1.77 377.5 14.9 13.2 (1.7) 11.5 8.2 1.20 1.45 333.6 15.9 14.4 (1.4) 13.0 9.6 1.38 1.59 349.4 18.4 16.7 (2.4) 14.3 10.0 1.48 1.73 335.9 20.7 19.0 (1.3) 17.7 12.7 1.82 2.07 412.6 16.4 14.8 (7.0) 7.8 4.5 0.67 0.91 378.3 23.2 21.5 (2.4) 19.1 14.1 2.03 2.27 562.2 3.0 92.4 231.9 150.1 483.7 5.2 93.5 206.9 124.8 573.6 3.0 91.1 219.5 170.0 564.5 4.4 93.6 202.7 196.0 564.1 0.4 90.0 221.2 161.6 580.5 0.4 93.4 216.8 184.7 604.1 4.8 90.1 205.0 232.3 542.8 3.8 93.3 229.0 151.7 11.3 (3.0) (6.6) 14.8 (5.2) (1.7) 1.0 (3.0) (23.2) (8.4) (50.8) 34.9 19.1 (0.6) (9.0) 13.1 0.5 (2.4) 12.9 (68.1) 50.6 35.1 (3.8) (5.3) 13.0 6.7 4.2 3.8 2.3 14.4 17.4 9.7 11.5 9.1 41.2 33.6 59.7 1.77 445 25.8 18.1 5.5 5.1 3.5 22.0 24.4 13.7 15.2 11.3 42.8 29.7 97.2 3.27 725 13.2 10.4 3.9 3.5 2.2 14.5 17.5 9.3 11.0 8.5 38.3 32.3 49.8 1.54 372 29.7 17.9 4.8 4.3 2.9 18.8 21.7 10.3 11.8 14.0 35.3 29.1 100.3 3.44 746 4.0 4.7 5.3 4.8 2.9 18.2 21.2 11.8 13.6 6.4 39.2 32.9 46.4 1.41 346 31.2 16.3 6.2 5.7 3.8 24.2 27.5 13.2 14.8 9.3 37.3 31.1 85.1 2.73 634 9.1 (1.3) 4.0 3.6 1.1 8.4 11.5 7.4 9.3 6.1 33.9 30.5 25.6 0.84 191 23.1 10.2 6.1 5.7 3.7 25.3 28.4 16.1 17.8 7.2 42.2 32.9 74.3 2.26 554 2,786 2,515 2,861 2,646 2,942 2,712 3,461 2,764 Solar A/S Annul Report 2008 / Quarterly figures2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=73http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=73This annual report is published by: Solar A/S, Haderslevvej 25, DK - 6000 Kolding CVR no. 15 90 84 16 Copyright: Solar, March 2009 Design and layout: Bysted A/S Text: Solar A/S Photo: Scanpix Printing: Arco Grafisk Annual Report 2008 of Solar A/S, CVR no. 15 90 84 16, was published in Danish and English on 12 March 2009 via NASDAQ OMX Copenhagen. In the event of any discrepancy between the Danish and English versions, the Danish version shall prevail.2009-03-12T10:43:02+01:00http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=74http://ipaper.ipapercms.dk/solargroup/solar/AnnualReport2008/AnnualReport2008/?Page=74Solar A/S Haderslevvej 25 DK - 6000 Kolding Phone: +45 76 30 42 00 www.solar.eu2009-03-12T10:43:02+01:00