CONCORDIA BUS

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CONCORDIA BUS
CONCORDIA BUS
^
ANNUAL REPORT 2008/2009
Contents
1
Concordia Bus – financial highlights
2
Presenting Concordia Bus
4
Statement from the CEO
^
6
Vision, mission, goals and strategies
8
Market overview
15
Concordia Bus Fleet
16
Swebus
18
Concordia Bus Finland
19
Concordia Bus Norway
20
Concordia Bus Denmark
21
Swebus Express
22
Sustainability
24
Management system and Share data
25
Corporate governance
28
Board of Directors
29
Executive Management
30
Administration report
33
Consolidated income statement
34
Consolidated balance sheet
35
Consolidated statement of changes in equity
36
Consolidated cash flow statement
37
Parent Company income statement
38
Parent Company balance sheet
39
Parent Company statement of changes in equity
40
Parent Company cash flow statement
41
Notes
63
Audit report
64
Glossary and definitions
65
Addresses
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
Concordia Bus
– financial highlights
Revenue in the Concordia Bus Group rose to SEK 6,134 million
(5,406).
Revenue from contractual bus services in Finland reached
SEK 721 million (517). Operating profit was SEK 24 million (12).
The Concordia Bus Group reported an operating profit of SEK 206
million (161) for the year.
Revenue from contractual bus services in Denmark amounted to
SEK 53 million. Operating profit was SEK –24 million.
The Concordia Bus Group won contracts for 713 buses (370) in the
year’s procurements.
Revenue from long-distance bus transports totalled SEK 341
million (351). Operating profit was SEK 23 million (19).
Revenue from contractual bus services in Sweden amounted to
SEK 4,396 million (3,990). Operating profit was SEK 232 million
(154).
During the year the Group purchased 387 buses (133) for a total
of SEK 631 million (306) under finance leases.
Revenue from contractual bus services in Norway totalled
SEK 528 million (463). Operating profit was SEK 9 million (28).
SEK M, unless otherwise stated
04/05*
05/06**
06/07**
07/08**
08/09**
Revenue
4,812
4,683
5,075
5,406
6,134
Operating profit
–312
–344
–24
161
206
Profit after net financial items
–562
–794
–246
–16
–233
Profit after tax
–560
–795
–245
–15
–239
Cash flow
–169
2
117
211
–59
175
231
351
529
558
–31.1
–0.6
6.7
5.8
–2.7
Cash and cash equivalents***
Equity/assets ratio, %
Equity
Equity/common share, SEK
–873
–17
227
210
–117
–174.6
–2.04
11.35
10.50
–5.85
*** According to Annual Accounts Act
*** According to IFRS
*** Including blocked bank accounts
revenue
operating profit
Number of buses
3,000
300
7,000
6,134
6,000
5,000
tender history
SEK M
SEK M
4,812
4,683
5,075
206
200
5,406
161
100
4,000
0
3,000
–100
2,000
–200
1,000
-300
0
04/05
05/06
06/07
07/08
08/09
-400
1,663
1,024
1,500
–24
2,000
2,063
2,500
1,279
1,221
1,000
500
–312
04/05
–344
05/06
06/07
07/08
08/09
0
762
221
04/05
713
194
05/06
06/07
370
07/08
Tenders won by others
Tenders won by Concordia Bus
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
08/09
2
presenting concordia bus
Concordia Bus – a value-driven leader
in public transport services
Concordia Bus is the Nordic
leader in scheduled public road
transport services, with a
­market share of 16%. The
company is also one of
the ten largest public
­transport companies
in Europe.
For the fiscal year 2008/2009 Concordia Bus
posted revenue of SEK 5.7 billion in the contractual bus services segment and SEK 0.3
billion in the long-distance bus transport
­segment. The Nordic market for scheduled
bus transports is worth approximately SEK
37 billion, of which around SEK 26 billion is
tendered in open competition.
In the past year, around 250 million people
travelled on one of the company’s 3,505 buses.
Modern people choose the bus for its combination of high accessibility, reasonable prices and
eco-friendliness. Buses account for 1% of total
carbon dioxide emissions in the transport sector. Measured per passenger kilometer, carbon
dioxide emissions for a diesel-powered bus are
roughly equal to those for an eco-car.
Concordia Bus is creating the bus transports of the future through a value-driven
organization with dedicated employees who
feel that their contributions make a difference.
In the past fiscal year the Group had an average of 7,606 employees.
traffic
Brief facts including the share of Group’s n revenue and n operating profit
CONTRACTUAL BUS TRANSPORT SERVICES
72%
LONG-DISTANCE TRANSPORTS
81%
12%
6%
8%
8%
Sweden
Finland
Swebus Express
Market leader. The market is worth SEK 12
­billion and is 95% deregulated. No additional
transport contracts were opened for competitive
tenders in 2008. Swebus has 110 transport contracts and 200 million passengers. Challenging
car transports.
Top three. The market is worth close to SEK
3 billion. Concordia Bus Finland has 41 transport contracts and 34 million passengers. Challenging car transports.
Market leader in Sweden. The Swedish market
is worth SEK 0.6 billion, the Nordic 4.3. Swebus Express has 2 million passengers on 30
long-distance bus lines. Challenging car, train
and air transports.
9%
1%
3%
Concordia Bus Fleet
0%
Norway
Denmark
Top three. The market is worth SEK 3.4 billion
and in 2008 the deregulated share grew by 3
percentage points to 34%. Concordia Bus Norway has 8 transport contracts and 12 million
passengers. Challenging car transports.
Start in 2008. Market share of 2%. The fully
deregulated market is worth SEK 5.5 billion.
Concordia Bus Denmark has 2 transport contracts and 9 million passengers. Challenging
car transports.
The only Nordic specialist company that leases
buses for public transport. Concordia Bus Fleet
optimizes purchasing, management and sales of
the approximately 3,500 buses in the Group’s
fleet.
Key ratios
Total number of km driven (millions)
Number of employees
Number of buses
Number of km per bus
Revenue per bus (SEK M)
04/05
05/06
06/07
07/08
258
237
237
245
08/09
253
6,949
6,299
6,814
7,021
7,606 3,730
3,400
3,503
3,376
3,505 69,199
69,852
67,572
72,571
72,182 1.29
1.38
1.45
1.60
1.75 C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
presenting concordia bus
ORGANIzATIONAL CHART
CONCORDIA BUS
CONCORDIA BUS
FLEET
CONCORDIA BUS
NORDIC
SWEBUS EXPRESS
SWEDEN
FINLAND
We keep our promises to the customers
^
We value good leadership
We have integrity
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
CONCORDIA
BUS NORWAY
NORWAY
CONCORDIA
BUS DENMARK
DENMARK
^
^^
Concordia Bus’s values
CONCORDIA
BUS FINLAND
SWEBUS
SWEDEN
We respect our employees – and earn their respect in return
We are committed to quality
Read more about the values on page 7.
3
4
Statement from the CEO
Inner strength leads to successful tenders
We achieved powerful growth in operating profit for the third consecutive
year and won more than every second
bus in the procurements we took part
in. This is a clear demonstration of
strength in a market where other
major players have been plagued by
problems and losses in recent years.
A half billion in three years
Our operating profit of SEK 206 billion is
equal to an increase of 28% over the previous
year. Above all, this represents an improvement of SEK 550 billion compared to
2005/2006, when three straight years of
losses bottomed out in an operating deficit
of SEK 344 million.
While many major players continue to
struggle with problems, we are going against
the stream. On one level our success is the
result of higher efficiency, an optimized bus
fleet and rising volumes. On another more
fundamental level, this impressive performance is attributable to a new business
model, continuous improvements through
process control and closer collaboration with
our principals.
We identified the factors that were most
important in realizing our vision that “everyone wants to travel with us”, and set out to
secure the quality and efficacy of the processes that would take us there. In our process
of change, we united around a set of simple
values that would lead us to good ethics and
high efficiency.
The presence of well developed leadership
all the way out to every depot and workshop
is becoming increasingly important and tangible in the organization. In a growing number of areas we are managing environmental
risks in a systematic and successful manner.
We remain committed to our ambition to
become climate neutral one day in the future.
But there is much that remains to be
done. In the past year it was easy to find
motivation and affirmation in our successes
in both segments, contractual bus services
and long-distance transports. In particular,
our Swedish company Swebus once again
delivered substantial earnings growth. Furthermore, our fleet management company
Concordia Bus Fleet proved what an exceptionally valuable resource it is for the operating companies.
A watershed year for long-distance
transports
In the long-distance transport segment, every
operator, bus line and departure survives on its
own merits. There is no revenue from taxes or
transport contracts with a public sector clients.
Every krona comes directly from the passengers and every departure must be sold with the
help of a strong brand, a good product and
effective distribution. The market leader Swebus Express is succeeding well at this task.
In the past year the company was first in the
industry to launch an IT-based real time control
system that optimizes the capacity to adapt traffic to demand. Our transports were approved
for the Good Environmental Choice eco-label,
another milestone for express bus services, and
the share of online sales passed 60%. The buses
reduced both their fuel consumption and emissions and the company introduced 15 new
buses of the highest environmental class.
Swebus Express is well positioned for the
future and I have every confidence in the
company and its product.
A breakthrough for fleet management
Throughout the bus procurement process, from
advice to financing and acquisition, Concordia
Bus Fleet provides critical support. The operating companies in Sweden, Norway, Finland and
Denmark can all rely on this expert organization to optimize their bus fleets, which is a key
to ensuring the right quality and profitability. In
the past year over 99% of the buses were on
lease and only 30 buses were for sale, figures that
definitely set a high standard for the future. We
are still the only public transport provider in the
Nordic region to manage its bus fleet through a
joint bus owner company.
52% of bus tenders won
Since the establishment in Denmark during
2008, Concordia bus is also the only public
transport provider to have operations in all four
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
Statement from the CEO
Nordic countries. This naturally contributed to
making this a banner year for us, but still more
important were our successful tenders.
In the past year our companies throughout
the Nordic region presented tenders that overcame fierce domestic and international competition to win more than every second bus in
the procurements we took part in. For 52% of
the buses, the clients found the tenders submitted by Concordia Bus to be the most competitive. On a net basis we increased our coverage by more than 200 buses, despite employing a selective tendering strategy based on
security in every aspect of the contract.
The ability of our companies to combine
low costs with decisive quality advantages for
our clients and passengers has never been
greater.
Cause for both satisfaction and
concern
In Sweden we have a very powerful position in
the public transport sector and operations in
Finland are expanding at a furious rate without
any appreciable growing pains. In these markets
I am more that satisfied. Norway is also showing strong growth figures, but at the moment
we are not achieving the same high efficiency
there as in the rest of the organization.
For every bus operator, a contract start-up
in a new market is challenge that is associated
with sizeable investments. The launch of services in Denmark was no exception. Half a year
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
later I am pleased to say that traffic in Denmark
got off to an excellent start for our passengers,
clients and employees, although our costs were
higher than anticipated. Over time the Danish
contracts will be profitable, but the learning
curve thus far has been costlier than necessary.
Legislative changes
The legal and regulatory conditions for public
transport in the Nordic region changed only
marginally during the year. However, both
Sweden and Finland are now awaiting farreaching changes in their regulatory regimes –
Finland through the new EU regulation of
concessionary transports and Sweden through
a government inquiry on a new public transport act that will present its proposals in the
autumn of 2009. At the time of this report, the
first part of the report had yet to be presented.
At Concordia Bus we welcome a new and
coordinated regulation of public transport,
based on full freedom to conduct bus transports, more dynamic competition under
responsibility and a stronger defence of the
individual passenger’s rights and opportunities. We hope for a better procurement model
to ensure a predictable base offering. The
model should contain an increased share of
incentive agreements.
Refinancing
I began the year’s CEO statement by expressing my satisfaction with our operating profit.
I would now also like to briefly comment on
our financial net, which is negative. This is
tied to the bond loan in Euro that has been
issued by the subsidiary Concordia Bus Nordic and will mature in the autumn of 2009.
The low exchange rate for the Swedish krona
against the euro has weakened Concordia
Bus’s balance sheet by increasing the amount
of the loan in SEK. However, this has affected
neither our cash flow nor the Parent Com­
pany’s strong financial position. The capital
structure has been distorted, but this effect is
unrealized and will be restored in the event of
a strong SEK rate. Our owners have shown
their support for the company and are hand­
ling our refinancing in a manner that reflects
the importance of this issue.
Concordia Bus operates a successful,
widely appreciated and profitable business.
Our organization has the right structure and
employees to continue its leadership for the
benefit of the passengers, principals and societies we serve. I thank each and every one of
you whose contributions have given us such
an excellent position for the future.
Stockholm, May 2009
Ragnar Norbäck
President and CEO
5
6
Vision, mission, goals and strategies
Business model intact
^
VISION:
EVERYONE WANTS
TO TRAVEL
WITH US
mission:
An appreciated, credible and
resource-efficient provider of
road transport services
Appreciated
credible
Resourceefficient
Road
transport
The customers enjoy accessibility, reliability and courteous service. The public
transport authorities recognize the value of Concordia
Bus’s advice. The drivers
represent Concordia Bus’s
approach to good customer
relations.
Concordia Bus keeps its
promises, maintains a high
level of safety and provides
transport solutions that
support society’s objectives
for development of road
transports.
Concordia Bus has low
­p roduction costs in relation
to its delivered quality and
offers effective solutions
that also contribute to
­s ustainable long-term
development.
Concordia Bus provides
scheduled transport services
under contracts, in partnership or independently.
Concordia Bus’s business model was
successful in 2008 when the Group
won half of its tendered volume. The
vision, mission and goals stand firm.
The international macroeconomic upheaval
that took place during 2008 has not yet had
any decisive impact on the need for public
transport services. In the Nordic region there
is a rising need for public transport and, with
the exception of Denmark, also a growing
demand. The greatest change in the basic
conditions for public transport is the rapidly
rising pressure on public transport authority
budgets.
Concordia Bus’s operations are divided
into two segments, contractual transport services and long-distance transports. Since the
compensation payable under these transport
contracts is largely fixed and comes directly
from financially constrained clients, Concordia Bus is working to boost the share of controllable revenue. The need for this change is
increasing in pace with diminishing scope to
finance transport services with tax revenues.
Long-term goals
Concordia Bus sets goals in three different
categories: Market goals, operating goals and
financial goals. To reach each and every one
of these goals, the company has formulated a
number of different strategies.
Market goals
• More than 80% satisfied customers.
• Market leader in selected segments of the
Nordic region and among the top three in
all four countries.
• More than one third of all scheduled road
transport services in the Nordic region.
• Highest quality rating among leading
­public transport operators in an independ­
ent standardized measurement.
• Highest credibility among the clients.
Operating goals
• Motivated Employee Index of more than
80.
• Climate-neutral.
• Less than 1 personal injury per a distance
equal to 100 times the earth’s circum­
ference.
Financial goals
• Profit margin of 3-5%.
• Return on capital employed of at least
10%.
• Return on equity of at least 15%.
• Equity/assets ratio of at least 25%.
• Cash flow that covers investment needs
and shareholder dividends.
Five strategic areas
The strategies are divided into five different
areas: growth, market efficiency, structure,
resource management and employee development.
Growth
An increased undertaking in the local transport
service contracts is a key component not only of
Concordia Bus’s growth ambition but also for
development in other prioritized strategic areas.
The company seeks greater responsibility for the
service offering, timetable and sales, as well as
compensation for both the provision of transport services and the number of passengers.
Concordia Bus aims to grow both organic­ally
and through increased penetration of existing
markets, but also via product diversification and
by playing an active role in the anticipated consolidation of the market.
Market efficiency
Market efficiency will be improved through
product development in the form of clear
product definition of the company’s offering,
new transport solutions, ongoing productification of both traditional contractual transport
services and operator services such as school
and airport buses, etc. Long-distance transports
will develop loyalty programs, guaranteed seating, flexible pricing, commuter concepts, etc.
Political forces are having a growing influence on aspects such as market efficiency.
Improved tendering practices, so-called tender excellence, careful contract management
and active communication are other strategies to enhance market efficiency.
Structure
In every geographical market, Concordia
Bus strives to promote the existence of
strong industry organizations. Strategic partnerships accelerate the company’s own pace
of ­development and assessment of the
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
Vision, mission, goals and strategies
c­ om­pany’s financial and corporate structure
­satisfies other primarily financial goals.
Resource management
Because resource management is of central
importance to Concordia Bus and is a critical
competitive strength, the related strategies
cover a number of different initiatives.
Process control to create and implement
uniform group-wide processes and instructions
for best practice is the most central factor. Quality assurance based on external and internal
audits, benchmarking of efficiency over time
and between units through the use of key performance indicators and resource optimization
are other key aspects of resource management.
Management of the bus fleet through
Concordia Bus Fleet contributed strongly to
the Group’s excellent results in the past fiscal
year and is expected to be of growing import­
ance in the future.
Financial improvement by securing the
lowest possible cost for the Group’s total
financing is increasingly vital as the financial
markets are reshaped and the economy contracts. Strategies for optimal resource management also include safety issues, contract startups and, not least, environmental issues.
Employee development
Powers and responsibilities must be absolutely
clear and the decision-making processes effect­
ive. Shared values serve as a ­foundation for the
creation of a professional culture. The com­
pany encourages employee commitment and
strives to systematically utilize this commitment and provide individual feedback on
work performance.
Managers are developed according to the
established leadership criteria and each
employee is given opportunities for personal
development through at least one yearly
evalu­ation together with his or her manager
and matching of skills to work duties. The
bus drivers are trained in a way that reflects
the company’s obligations to its customers.
Stricter requirements and better communi­
cation will create a more positive image of the
industry, its vocations and available careers.
The Group offers opportunities for job rotation and career development. Concordia Bus
strives to be perceived as the industry’s most
attractive employer.
More uniform working methods
To realize the vision “Everyone wants to
travel with us” and achieve its goals, the
­company focuses on continuous improve-
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
ment of its working methods, primarily
through benchmarking. In this context,
­customer-perceived quality is the single most
important factor and motivated employees
are vital for long-term success.
Concordia Bus has five basic shared
­values that steer development of the com­
pany’s working methods: Credibility, mutual
respect, good leadership, integrity and quality. These values provide a platform not only
for the company’s day-to-day operations, but
also its strategies, goals and even its vision.
Better solutions through process control
In 2006 Concordia Bus began establishing a
process-oriented management system (read
more in the corporate governance report on
page 25). Concordia Bus always bases its control on the customer’s situation and, through
horizontal cooperation and integration,
strives to ensure that the company lives up to
the requirements of its customers and other
stakeholders.
The company formulates goals and action
plans for its operating activities. Group-wide
process teams set development targets and
establish working methods and routines in
the form of policies and instructions that the
company applies and monitors within its
­system for quality control.
The shared values form the backbone of
the company’s process control and a rising
number of group-wide working methods in
production, accounting, finance and administration. Uniform working methods are of
major importance, above all for quality management and resource-efficiency.
Twenty-five carefully selected performance indicators make it possible to identify
the areas where the company is performing
most successfully. Seventeen interdisciplinary
process teams that involve 120 employees in
nine main processes evaluate alternative
methods for enhancing quality in everything
the company does. Each team is headed by a
senior executive in the Group, such as a function manager or president.
The group-wide working methods have
grown in number and now make up around
42% of all identified processes.
At the beginning of the 2008/2009 fiscal
year the Group’s process development
entered a new phase when the growing
­number of group-wide instructions were
effectively integrated with various action
plans for the first time.
Concordia Bus believes that successful
process development was decisive in enabling
the company to win close to half of all buses
in the procurements it took part in during the
past year. Process development is also a factor
behind other successful initiatives such as the
Green Journey environmental initiative, the
new model for employee performance
reviews, improved purchasing routines, the
proprietary customer survey model, etc.
Concordia Bus’s values:
WE KEEP OUR PROMISES TO THE
CUSTOMERS
Our customers see us as credible. The
information we provide is perceived as
timely and sufficient in scope. Our
commitments are long term.
WE RESPECT OUR EMPLOYEES –
AND EARN THEIR RESPECT IN
RETURN
Our company stands for equal treatment of all employees. Together we
­c reate a secure and congenial working
environment that stimulates initiative
and ideas for improvement. We encourage health and development, and recognize achievement. We react to a lack of
respect towards to company and its
employees.
WE VALUE GOOD LEADERSHIP
We have well defined leadership criteria. Our managers place the interests of
our customers first. We promote cooperation across borders and provide feedback on work performance. We can be
trusted with confidences.
WE HAVE INTEGRITY
At Concordia Bus we comply with the
applicable laws, rules and industry
standards. We take our responsibility
for the environment and society. Our
relationships with business partners are
characterized by mutual respect.
WE ARE COMMITTED TO QUALITY
We deliver results. Our services maintain the promised level of quality as a
minimum requirement. We use systematic follow-up and development of
operations to ensure lasting correction
of errors and deviations.
7
8
Market overview
Successful efforts in the past year
Deregulation of the Nordic market for
scheduled bus transport services has
continued in 2009. A dramatic downturn in the global economy is increasing
the pressure on client budgets at the
same time that growing environmental
concerns are creating incentives to
make public transport more attractive.
Concordia Bus is the largest bus transport
operator in the Nordic region and one of the
ten largest public transport companies in
Europe. In the 2008/2009 fiscal year the company expanded its share of the Nordic market
turnover from 15% to 16% with prices that
will further improve the underlying profitability. After the past year’s successful tenders, the
company plans to invest the equivalent of SEK
1 billion in new buses during 2009.
Condordia Bus’s operations consist of
public road transports in Sweden, Norway,
Denmark and Finland. More than 90% of the
Group’s revenue comes from contractual
transports in the form of local and regional
bus services on behalf of public transport
authorities. The contracts with these are longterm and compensation is typically based on
production in the form of kilometers or hours
driven and the number of buses in service. In
only a few cases does the company receive part
of its compensation from ticket revenues.
Long-distance transports, i.e. longer journeys by express bus, are the company’s second
segment. These transports are also scheduled,
but the revenues come from passengers rather
than public transport authorities.
Concordia Bus uses a bus fleet of 3,505
vehicles in the provision of transport services.
A total of 2,998 of these buses are used in
contractual transports and 88 are used in
long-distance transports. The remainder are
available to meet needs in connection with
service and maintenance and during fluctations in traffic and demand. In the long-distance segment, short-term leasing is an established method for meeting peak demand in
an efficient manner.
Contractual bus transports dominant
The company’s revenue in the contractual
transports segment, consisting of transport
services for various public transport authorities, comes from contracts won in full competition. This portion of the Nordic market is
worth approximately SEK 30 billion and its
share is growing.
In 2008 Nordic transport contracts for
around SEK 3 billion were exposed to com-
petition for the first time and in 2009
­contracts for another SEK 1 billion are
expected to be opened for tenders. Around
SEK 10 billion will remain thereafter within
the framework of concession agreements, i.e.
transport contracts not subject to competitive tendering. The EU’s public procurement
regulations still permit the award of concessions for an unlimited period. The total Nordic market for public bus transports is worth
around SEK 37 billion and long-distance
transports with express bus more than SEK 4
billion. These markets are expanding and
Concordia Bus expects them to continue
growing.
The public transport authorities in ­Sweden
and Denmark put nearly all their transport
contracts up for tender, while the share in Finland and Norway is below 50%. The open
market is growing rapidly in Norway, significantly faster than in Finland. New legislation
may accelerate the pace of deregul­ation.
In the autumn of 2008 the company
­successfully launched services in Denmark
for the first time. The start-up in Denmark
represents a breakthrough in a geographical
market worth approximately SEK 5,5 billion,
i.e. 15% of the Nordic market for scheduled
public bus transports.
Overview of public transports in Sweden, Norway, Finland and Denmark
All scheduled public
transports (rail and bus)
Market value
SEK bn
Scheduled public
bus transports
Number of
buses
Competitively tendered scheduled
public bus transports
Market value
SEK bn
Number of
buses
Contractual
transport
services
Long-distance
transports by
express bus
Market value
SEK bn
0.6
Sweden
29.3
7,556 12.3
7,346 11.7
Norway
19.3
7,581
12.6
2,397
3.4
0.6
Finland
12.8
4,979 6.5
1,339 2.7
2.1
Denmark
Total
9.9
3,178 5.5
3,128 5.5
0
71.3
23,304 36.9
14,210 23.3
3.3
Contractual bus transports
Concordia Bus 2008/09
Number of
buses
Revenue
SEK M
Sweden
2,198
4,396 Norway
378 528 Finland
363
Denmark
Total
Long-distance transports
Concordia Bus 2008/09
Share of competitively
tendered buses
Number of
buses
Revenue
SEK M
Share of competitively
exposed market
30% 88
341
16%
0 0
721 26%
0
0
59 53 2% 0
0 2,998
5,698
21%
88
341
>50% The market values are estimates made by Concordia Bus.
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Market overview
Public finances putting pressure on
transport operators
At the beginning of 2009, Sweden, Finland,
Norway and Denmark were all in the midst
of or headed for a recession. Despite this,
public finances in the four countries are more
robust than in many EU member states and
economic development in the region is
expected to be better than average in the EU.
The current tough economy is making it
more difficult for national, municipal and
county governments to balance their budgets,
which is reducing the scope to increase funding for public transport.
Concern about the environment and personal finances is contributing to more widespread bus usage, while rising unemployment
is inhibiting demand for work-related travel.
However, the number of passengers per bus
has a greater impact on the environment than
the bus companies, which have so far been
entitled to a share of ticket revenues only as
an exception.
Recruitment of drivers and other
employee categories was difficult in the first
half of 2008 and payroll increases were high.
The hiring situation improved successively
and has been satisfactory so far in 2009.
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The number of competing vehicle suppliers
remains low, which is having a negative
impact on the price scenario and product
development. Increased interest rate volatility
in the financial markets during 2008 led to
higher financing costs for vehicles, but the
situation appears to be stabilizing in 2009.
This trend is also limiting the opportunities
to sell used vehicles.
Due to the past year’s price turbulence in
the oil market, the majority of diesel purchases were made at prices that were signific­
antly higher than in the previous year. Delays
in indexed compensation for these cost
increases led to a decrease in reported earnings in several markets. At the end of the
2008/2009 fiscal year, the diesel price had
fallen back to around the same level as at the
beginning of the year.
Local buses attract one in five
In Sweden, Norway and Finland, the number
of bus passengers is rising. The downward
trend noted in Denmark during 2003–2007
appears to have turned slightly upward.
Although car transports are costly, aggravate
congestion and lead to increased environmental impact, their higher convenience is
causing them to grow faster than bus transports everywhere except the metropolitan
areas. Despite efforts by politicians and transport companies, the public transport sector’s
market share has been stagnant at around
20% for decades. The situation in the past
year was the same as in the year before. However, preliminary volume growth for public
transports appears to have been lower than in
the past few years.
Without exception, bus transport services
in the capital city regions make up the largest
single market in each country and employ
around half of the total number of buses. In
many more sparsely populated regions, the
use of public transport is declining.
The majority of Concordia Bus’s customers are passengers in urban traffic. Surveys in
Sweden show that 70% of the population
uses public transport occasionally, with
women outnumbering men and young
­people the most frequent users of all. Around
15% use public transport daily and an equal
share never use it. Industry surveys on customer satisfaction among users of public bus
transports show that two of three are satisfied
or highly satisfied.
9
10 Market overview
Young people fill the express bus
With sales of approximately SEK 8.6 billion in
2008, rail transports dominate the market for
long-distance travel. Rail transports are also
growing faster than express bus transports.
The conditions for Concordia Bus’s longdistance traffic show somewhat greater differences between the Nordic countries than those
for contractual transports. Long-distance bus
transports have focused on transports within or
to and from Sweden, and currently account for
around 6% of the company’s total revenue.
Revenue in this category comes exclusively
from the passengers. Young people in particular, but also pensioners and women are key passenger categories in the long-distance segment.
School bus transports are sometimes tendered in connection with urban transports
and currently make up around 1.0% of operations in Concordia Bus, while transports to
and from airports account for 0.3%.
The Nordic model
The system for procurement and production
of public transport services is essentially the
same in the four Nordic countries.
The client, which is a politically appointed
public transport authority, has overall respons­
ibility for the provision of public transport
­services in a particular region. The client also
decides whether to provide public transport
services under an existing concession or to
invite tenders through a public procurement.
This responsibility includes decision on timetables, ticket pricing and other details. The difference between production costs and operating revenue is covered by taxes.
The operator is the bus company that
provides transport services according to the
terms of the contract. This company can be
an international group, a small or mid-sized
privately owned company or an enterprise
owned by a municipality or county council.
Model for procurement of public bus transport services
IMAGE
AG
E
CUSTOMER
›
DELIVERY
CONDITIONS
IM
›
›
POLITICIANS
›
CLIENT
e.g. Stockholm
Public Transport
›
CONTRACT 5–10 YEARS
Fee per km, hour and bus
OPERATOR
e.g. Swebus
The rules for procurement of public bus transport services are relatively
similar in all four Nordic countries and are based on the guidelines in the
EU’s public procurements directive.
The contract between the client and operator
regulates the way in which transport services are
provided based on the terms and conditions in
the tender documents. It generally runs for a
period of 5-8 years and the operator typically
receives payment on a gross cost basis. The
amount paid to the operator under a gross cost
contract is based solely on the number of kilometers or hours driven, while all ticket revenues
go to the public transport authority. A net cost
contract instead assigns the bulk of ticket revenues to the operator. An incentive contract is a
cross between a gross cost and net cost contract,
and is based on the gross cost model but allows
the operator to increase its revenue if the number of passengers rises. One thing all three contract types have in common is that the compensation is indexed over time to reflect changes
such as rising fuel or payroll costs. Insufficient
indexation in many contracts makes cost
growth a problem for operators as well.
The clients are making increasingly rigorous demands on the buses, which is leading to
higher costs and risks for the operators. When
the contract period ends, a bus that is adapted
to the specifications of a certain ­client can
prove difficult deploy in another market. The
difference between the financial and physical
life of a bus fleet affects the transport operator’s
income statement and balance sheet.
Level of compensation changes
over time
The typical pattern for contract pricing is to first
sink and then rise again. Before deregulation
begins in a certain area, the level of compensation is high. Because there is only one public
transport authority in each area, but often a
large number of bidders, an imbalance arises in
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Market overview
connection with the reform. In many cases, the
span between the highest and lowest bids is considerable, sometimes so large that the lowest is
not even sufficient to cover the bidder’s costs.
Regardless of the motives behind such tactics, a
gradual market correction takes place so that the
price increases over time. As a result, the prices
will fall relatively slowly after the first procurement, and will then rise somewhat faster after
bottoming out.
Concordia Bus believes that the market
will eventually consolidate into a small number of efficient and quality-driven players.
The degree of consolidation is also increasing
among transport authorities, mainly as a
means for achieving scale economies adapting to changing traffic streams.
At the current price levels, ticket revenues
are not adequate to cover traffic costs. The socalled self-financing ratio varies both between
countries and over time, but currently averages at around 50–60% throughout the Nordic region, albeit with large local variations.
The remainder is covered by tax revenues. In
certain regions the self-financing ration is
decreasing, and in others it is rising.
International players hesitant
In 2008 the majority of international transport operators reported low or negative
­profitability in their Nordic operations. A few
of these chose to prepare certain joint tenders
for underground and light rail transports, but
not bus services. Concordia Bus’s assessment
is that international players, in particular, are
postponing start-ups and ventures in the
Nordic region until the price scenario
improves from the transport operators’
­perspective.
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The largest operators:
Arriva
Arriva is a listed British company that is
expanding outside the UK. In the Nordic
region, the company has traffic in Sweden
and Denmark. The Nordic fleet consists of
1,875 buses and the company also conducts
rail transports.
Veolia
Veolia is a listed French company that also
provides transport services on trains, light
rail lines and ferries. The company is the only
operator that has, or has had, scheduled
traffic in all of the Nordic countries, but has
now left the Danish market. The fleet in
2008/2009 consisted of 1,353 buses.
Busslink/City-Trafik/Keolis
French Keolis is the principal owner of
Busslink, which was formerly called SL-Buss
and was at that time wholly owned by SLL.
Today SLL has a holding of 30%. In
Denmark, Keolis owns the company CityTrafik. The fleet in 2008/2009 consisted of
1,517 buses.
In the contractual bus transport segment,
Concordia Bus currently competes with international players like Arriva, Keolis and Veolia
and with local private and publicly-owned
companies. A few of the competitors are pure
bus operators while others also conduct underground, rail and boat transports. Concordia
Bus, in contrast, is actively only in scheduled
competitively tendered bus transport services
for passengers in the Nordic region.
Veolia of France is among the three largest in Sweden and Finland and is number five
Helb/City of Helsinki
The City of Helsinki’s bus company Helb is
the largest operator in the Helsinki region
and the second largest bus company in
Finland, after Koiviston Auto. The company
has no operations outside Finland. The fleet
consists of around 520 buses.
Nettbuss /NSB
The Norwegian state railway operator NSB
owns Norway’s largest bus company
Nettbuss. The company also has operations
in Sweden (Orusttrafiken, KR-trafik and
Säfflebussen) and Denmark. The fleet
consists of 2,549 buses.
Tide
Tide is a listed company with operations in
bus and boat transports in Norway. Today the
company is active mainly in Bergen and
Hordaland County. The fleet consists of
around 919 buses.
Torghattengruppen
Since November 2008, Torghattengruppen
includes the listed company Fosen with the
bus operator Norgesbuss. Torghatten has no
operations outside Norway. The fleet consists
of 800 buses.
in Norway, but sold its Danish operations to
UK-based Arriva in 2007. Last year, Arriva
and Keolis submitted a joint tender for
underground services in Stockholm. Arriva is
number five in the Swedish contractual bus
transport market and the market leader in
Denmark, but is not yet established in Norway or Finland. French-based Keolis, like
Arriva, operates in Sweden and Denmark but
not yet in Norway and Finland. In terms of
size, the company is comparable to Arriva
and Veolia.
11
12 Market overview
Sweden
In Sweden Concordia Bus conducts contractual bus transports under the Swebus brand
and long-distance transports under the Swebus Express brand. Today the former is primarily a producer brand, catering mainly to
public transport authorities, while the latter
is a consumer brand that is intended to create
recognition, positive associations and customer loyalty among the passengers.
Swebus Express
With a market share of more than 50%,
­Concordia Bus and Swebus’s sister company
Swebus Express are the leaders in that small
portion of long-distance transports carried
out by express bus rather than rail. These
transports are conducted on behalf of, and
fully financed by, the individual customers.
At Concordia Bus this segment is categorized
as long-distance transports.
Swebus
Swebus, with a market share of 30% and
2,198 contracted buses, is Sweden’s leading
provider of contractual bus transports. Swebus has a total of 2,438 buses.
The public transport authorities put
nearly all scheduled public bus transports up
for tender. This market is worth approximately SEK 12 billion. Göteborg, Luleå and
Västerås are the largest cities that do not contract out all bus transports.
Swedes are travelling more by car and by
public transport, both within and outside
Stockholm, which accounts for close to 45%
of all public transport in the country. Over
the five-year period through the end of 2007,
the number of trips by public bus transport
increased by 6%. The results of measurements for 2008 have not yet been compiled.
Volumes in the underground system rose by
7% and other rail-bound traffic by 23%. Bus
transports alone exceeded with 12% the combined volume for the underground, light rail
and local trains combined.
The profitability trend for Swebus’s international competitors was negative or
unchanged during the five-year period ending in 2007, although several smaller companies reported an operating profit. Swebus has
continuously and dramatically improved its
operating profit since 2005.
No contracts currently excepted from full
competition are expected to be opened for competitive tenders in the next three years. On the
other hand, new tenders will be invited for
around 2,100 buses, equal to roughly 29% of
the market currently exposed to competition.
A government inquiry to improve competition and freedom of choice for passengers
will present its proposals in 2009.
Norway
Norwegian public bus transports employ
some 7,500 buses and generate annual
re­venue in the range of SEK 12.6 billion,
including concessionary transports. The
share of deregulated tendered transports
rose during 2008 from 31% to 34%, meaning that the competitive share of the market
at the beginning of 2009 was worth the
equivalent of SEK 4.0 billion, of which
­contractual bus transports account for
SEK 3.4 billion.
In 2008 Concordia Bus Norway’s market share fell from 17% to 16% of competitively tendered public bus transports , since
the market grew faster than Concordia Bus
Norway. The market leader Nettbuss commands 33% of this market.
The market is relatively fragmented and
immature, with a large number of local operators and a couple of international players.
All international operators in the Nordic
region are also active in Norway. In the
­coming three years, contracts for more than
1,800 buses will be put to tender for the first
time, which will increase the competitive
market by around 75%.
Concordia Bus’s share
of the competitive bus transport market
Concordia Bus’s share
of the competitive bus transport market
30% 16%
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Market overview 13
Finland
The Finnish market for public bus transports
is worth the equivalent of approximately SEK
6.5 billion. Transports for the equivalent of
around SEK 2.7 billion are subject to procurement, above all through competitive tendering of transports in the largest cities of
Helsinki and Turku. The country’s third largest city, Tampere, has also started to procure
bus transports in open competition.
So far, growth in competitive tendering
has been slow. The industry’s assessment is
that the introduction of new EU legislation
in December 2009 will set a maximum limit
for protected concession agreements, but that
the transitional rules may extend the protected status of transport operators and public transport authorities with agreements of
this type.
In the next three years more than 200
buses will be opened for tenders on the open
Finnish market, which is equal to volume
growth of 15%.
Concordia Bus Finland operates only in
the Helsinki region, where all transports are
procured in open competition. The Helsinki
market is worth the equivalent of SEK 2.3
billion and employs around 1,200 buses.
Concordia Bus Finland is the market leader
alongside the municipally-owned Helb, while
Veolia is number three. The company has
expanded its market share for several con­
secutive years and currently has a market share
of 32% in the Helsinki area, with 423 buses.
Including the entire deregulated contractual
Finnish market, the share is 26%.
Without access to a well situated depot,
the company lacks opportunity to compete
for contracts in the Turku area where 80% of
bus transports are tendered competitively.
The situation is the same in the Tampere
region.
There are some 1,500 buses in service
outside the three major cities, but none of
these transports are tendered. A large share of
this traffic consists of express buses operating
under exclusive concessions.
Concordia Bus’s share
of the competitive bus transport market
26%
Denmark
In the spring of 2008 Concordia Bus won
its first tender in Denmark. In October the
same year, Concordia Bus Denmark began
operating 59 buses in the Copen­hagen area.
Public bus transports in Denmark were
deregulated in the early 1990s and generate
an estimated SEK 5.5 billion in annual revenue. All transports are competitively tendered and transports with around 800 buses
will come up for bids within the next three
years. This corresponds to around 25% of
the total number of buses in the market.
Over the five-year period ending in
2007, public transports decreased by
around 5%. The first statistics from 2008
indicate that the falling trend has been
­broken and that the past year saw a slight
increase in passenger streams.
UK-based Arriva acquired Veolia’s
operations in 2007 and now operates
around 1,400 buses with a market share of
45%. Keolis has acquired 30% of Busslink
(formerly SL-Bus) in Sweden and also
operates in Denmark through City-Trafik,
which has a market share of 9%. Concordia Bus Denmark’s share was 2%.
Concordia Bus’s share
of the competitive bus transport market
2%
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14 Market overview
Tenders and procurements
with a long-term perspective
In the past year Concordia Bus won
nearly half of the contract volume for
which the company submitted tenders. This success is the result of
thorough preparations with a focus on
the customer and a perspective that
always extends at least ten years into
the future.
When Concordia Bus prepares a tender for
contractual transport services, the process is
characterized by painstaking attention to
detail. The company asks for the client’s trust,
for a period of five years or more, to provide
public transport in an area where thousands
of people are dependent on reliable bus services. This is a huge responsibility.
Advance planning for customer benefit
Concordia Bus works methodically and determinedly to evaluate and prioritize among the
contracts that are offered on the market. Pre­
parations begin well ahead of time to ensure
opportunity for analysis of compensation and
risk levels and to develop solutions that offer
the highest customer benefit. The company
strives to prepare tenders that are attractive to
all parties – both clients and passengers – and
that also provide adequate profitability.
i­nvitations for tender are far too vague, which
makes the tender process more difficult.
Concordia Bus strives for dialogue with
the clients in order to develop the best possible solutions to their relevant requirements.
Better alignment of interests between clients
and operators in terms of goals and means
facilitates the tender procedure. If the client
includes an evaluation model already with the
invitation for tender, many misunderstandings can be avoided. The establishment of
general terms and conditions for the tender
procedure is a key sub-goal for predictability
and transparency, as are reasonable requirements regarding the age of the vehicles.
transport contract runs for 5–8 years, with an
option clause for an extension of another two
years or more.
The terms of a contract often lead to
investments in the bus fleet in the form of
environmental upgrades in existing vehicles
or the purchase of new ones. Today, specifications regarding fuel types and emission levels
are a standard component of invitations for
tender. Customer-specific solutions and the
start of a new contract and new transport services often require additional investments.
Cost indexation provides retroactive compensation for increased costs, for example
fuel prices.
Consequently, costs and revenue in the
individual contracts are spread unevenly over
the contract period, and the same applies to
profitability. However, a correctly calculated
contract, combined with efficient operation,
results in positive profitability over the total
term of the contract. Profitability increases
over time, since costs at the start of a new
contract frequently exceed revenue. The
­composition of the contract portfolio affects
overall profitability for the individual year.
The most profitable portfolio is made up of
ongoing contracts without retroactive compensation.
Winning tenders and increased revenue
In the past year Concordia Bus took part in 29
procurements. As a result, the company won
transport contracts for a total of 264 new buses
and defended contracts for a total of 449 buses.
Over the past five years, revenue has risen
by an average of 6% annually and in 2008/09
amounted to SEK 6.1 billion, of which contractual bus transports accounted for SEK 5.7
billion. At the beginning of the new fiscal year,
Concordia Bus had 159 transport contracts for
operation of 2,998 buses. Aside from these,
another 400 buses are used for the contractual
transport services.
If revenue continues to grow, for example
by 2% annually, contractual bus transports will
increase to SEK 6.5 billion over a period of
eight years and the contracts would include
more than 4,200 buses.
Uneven profitability
Concordia Bus has approximately 150 transport contracts of varying age and size. A typical
Common values
The team of specialists responsible for preparing tenders creates an accurate overall picture
of the conditions year by year, in each individual case. And although the specified
requirements can be far-reaching, many
TENDER HISTORY
REVENUE AND BUS CONTRACT DEVELOPMENT
No. of buses
SEK M
7,000
3,000
2,063
2,500
5,000
2,000
5,075
5,406
4,683
1,663
4,000
1,024
1,500
1,279
1,221
3,000
1,000
2,000
500
0
6,134
6,000
762
221
04/05
713
194
05/06
06/07
1,000
370
07/08
08/09
Tenders won by others
Tenders won by Concordia Bus
Over the past five-year period, transport contracts for a
total of SEK 14 billion were put to tender, equal to an
average annual tender volume of SEK 2.8 million. The
contracts included a total of 8,794 buses and
Concordia Bus defended or won new contracts for
2,260 of these, i.e. an average of 452 buses per year.
0
05/06
06/07
07/08
08/09
2017
Total revenue
Contractual bus transports
The contract portfolio extends at least 8 years into the future, or through the end of the 2016/2017
fiscal year. The current contracts obviously need to be replaced with new ones when they expire. The
grey area shows that Concordia Bus needs to win contracts equal to an average of over 500 buses per
year in order to achieve 2% annual revenue growth.
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Concordia Bus Fleet 15
Enhanced competitiveness and
reduced risk
In the past year the fleet management company Concordia Bus Fleet
lowered the average age in the
­vehicle fleet by one year and at the
same time increased its profitability.
In 2009 the company will purchase
new buses for a total of SEK 1 billion.
Concordia Bus Fleet is the only fleet management specialist in the Nordic bus transport
market. The customers are the operating
companies in the Group, but as an exception
the buses are leased out externally during
periods when they are not needed in normal
transport operations.
Continuous decrease in vehicle costs
By optimizing the bus fleet, Concordia Bus
Fleet improves the customers’ ability to win
tenders and operate transports successfully.
In many cases, the solution chosen by a
­customer includes a combination of newly
purchased vehicles and buses previously used
within Concordia Bus. This leads to optim­
ization of the bus fleet and reduces the customer’s total bus costs.
The 3,505 vehicles have a replacement
value in the range of SEK 8.5 billion. During
the fiscal year, Concordia Bus Fleet was able
to lower the average age in the bus fleet from
7.1 to 6.0 years and improve the company’s
financial performance. Over 99% of the
buses are on lease.
The company was established in 2006 for
the purpose of offering competitive fleet
­management services to the companies in the
Concordia Bus Group. The goal is to continu­
ously minimize the customers’ vehicle costs,
which normally make up around 40% of
total costs for a bus transport operator.
Record investment in buses
The choice of new vehicles is of major
import­ance for optimization of the fleet and
enhancement of resource-efficiency. The
more standardized the vehicles are, the wider
their area of use in the Group. In the past year
a total of 302 new buses (133) were purchased for a combined value of SEK 631
­million (306).
In 2009 Concordia Bus Fleet will invest
SEK 1 billion in 387 new buses, the largest
investment of all time in the Nordic bus transport market and a result of the Group’s success
in Sweden, Norway and Finland. Since the
start of the fleet management company, Concordia Bus accounts for around every fifth bus
that is purchased in the company’s markets.
Fifteen of the new buses will be used in
long-distance transports and the remainder
in contractual bus transports. As earlier, the
buses will be financed through finance leases.
Realistic environmental requirements
The clients’ are placing rising demands on the
buses in contractual bus transports, not least
from an environmental standpoint. To a
growing extent, Concordia Bus Fleet engages
in dialogue about environmental aspects
together with the operating companies’ clients. All parties gain from the assurance that
both the established environmental targets
and methods for attaining them are as
resource-efficient as possible. All newly purchased buses have engines of one of the two
highest environmental classes. In the existing
fleet, stricter emissions requirements can be
met by equipping the vehicles with exhaust
retrofit equipment.
One criteria set by many clients is that the
buses run on renewable fuels, and this
demand is being met through a transition
from diesel to Rapeseed Methyl Ester (RME).
Another alternative fuel is natural gas, for
which there is an increased demand from the
clients. The share of gas-powered buses in the
Group’s fleet is rising slowing, while ethanol
is rarely specified in new tenders.
Buses with electric hybrid engines are still at
the development stage and Concordia Bus is
playing an active role in the field tests being
carried out together with suppliers. Access to
electric hybrid buses is very limited at present
and mass production will not begin until
2010. So far, the prices are also prohibitive
and the extent to which this will be compens­
ated by lower fuel consumption is one of the
questions these tests are intended to answer.
Lower level of risk
The customers have the option of returning
buses on commercial terms, which improves
their flexibility. When a bus is no longer
needed within the framework of a transport
contract, it can be relocated, sold, leased
externally or scrapped. Concordia Bus sold
262 buses during the 2008/09 fiscal year,
which is a normal level for the company.
External leasing is used only as an exception,
and only until the buses can be relocated and
used elsewhere.
In the spring of 2008 Concordia Bus
Fleet performed a detailed assessment of risks
in the vehicle fleet over the coming three-year
period. Because the risks are identified and
managed, the outcome over the next few
years will be more positive than indicated in
the risk analysis. The company’s conclusion is
that Concordia Bus is well positioned to meet
the environmental requirements and targets
of its customers, the industry, public authorities and society in general.
BREAKDOWN OF BUSES BY TYPE OF FINANCING
Number
4,000
3,500
3,000
2,260
1,502
1,831
1,223
1,065
2,500
2,000
377
532
834
1,500
1,000
500
0
New buses are financed mainly
through finance leases. The share of
owned buses is falling steadily.
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1,470
04/05
1,624
1,569
05/06
06/07
Owned buses
Finance leases
Operating leases
1,621
1,606
07/08
08/09
16 Swebus
Increased customer benefit and efficiency
President Jan Bosaeus
Annual revenue SEK 4,396 million (3,990)
Operating profit SEK 232 million (154)
Market share 30% (30)
Number of passangers 200 million (200)
Number of employees 5,636 (5,514)
Number of buses 2,530 (2,551)
Number of km driven 188 million (185)
Competitors Busslink, Veolia, Arriva,
Orusttrafiken etc.
Website www.swebus.se
share of Concordia Bus’s
revenueoperating profit
72%
81%
Swebus doubled its operating profit
through increased efficiency and won
tenders by combining the greatest possible customer benefit with low costs.
Swebus develops, sells and produces public
transport services in more than 100 locations
in Sweden. The company is responsible for
every third bus trip in Sweden and has transport contracts with 20 of the country’s total of
22 public transport authorities. This size gives
the company strength, but it is the ability to
translate this strength into customer benefit
and efficiency in the production of every individual bus trip that determines the company’s
success over time, as clearly shown by the positive trend in the 2008/2009 fiscal year.
Operating profit doubled
Swebus’s vision is to be a world-class service
company and its success over the past four
years is bears witness to this ambition. Operating profit has improved continuously and
amounted to SEK 232 million (154) at the
end of the year. Revenue rose by 10% to SEK
4.4 billion.
The company is driving a larger volume
of traffic with fewer buses, and together with
its clients has shown that public transport can
reach new passengers and improve profitability in a way that is positive for both people
and the environment.
One of the key success factors for an operator is operating efficiency, i.e. a good ability
to meet customer promises with limited use
of resources. In the past fiscal year Swebus
drove 3,000,000 km more than in the year
before, and used fewer buses. Through
increased planning efficiency, availability for
the customers was improved.
Close to one third of traffic production
takes place in the Stockholm area, which corresponds to the region’s share of total Swedish
contractual bus transports. Dalarna, Halland,
Gävleborg, Skåne, Uppland, Värmland and
Västra Götaland are a few of the other regions
where Swebus has extensive operations.
The company’s transport contracts cover
services on 2,198 buses. Aside from these,
another 332 vehicles are used for repair work,
service and maintenance and in the event of
special traffic needs.
Tenders with the right conditions
Swebus shares the principles that apply
throughout the Concordia Bus Group. The
company seeks to safeguard its ability to
always offer secure and efficient bus transports
with consideration and respect for the customer. In keeping with this, Swebus carefully
examines the conditions in each procurement
and to a growing extent chooses to submit
tenders only in cases where the contracts allow
transports with satisfactory quality and profitability and balanced financial risk.
In the past fiscal year Swedish clients tendered transport contracts for around 2,780
buses under 48 different contracts. Swebus
won a major procurement in Umeå and
renewed its contracts with five additional clients. Together with losses in other procurements, this resulted in a net decrease of 43
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
Swebus 17
buses. With the exception of the Umeå contract, the winning contracts will start in 2009
and will not affect the company’s revenue and
costs until that time. Transport services in
Umeå started in June 2008.
In 2009 contracts will be tendered for
around 1,000 buses, of which more than a
third are driven by Swebus.
Train passengers sometimes encounter buses
from Swebus in so-called replacement traffic,
for example during traffic disruptions due
to track repairs or other obstacles. In 2008
the company collaborated with oper­ators
such as the train company Stockholmståg on
the line between Stockholm and Nynäshamn
during track repairs.
Customer-oriented transport services
The company supports the Swedish Bus and
Coach Federation’s efforts to increase the share
of contracts providing scope for customer-oriented transport services that are developed in
close dialogue between the client and operator.
In Karlstad, Swebus and the client Karlstadbuss have shown how effective a modern
incentive contract can be. The Swedish Public
Transport Association’s latest survey shows that
Karlstad residents are highly satisfied with their
public transport services. Furthermore, since
2005 when the partnership started, bus ridership has risen by 31% partly due to greater simplicity, better clarity and more frequent departures during peak demand periods. Karlstadbuss and Swebus both believe that the establishment of shared goals and a common agenda
have been critical for this success.
Environmental improvements
Every day, Swebus’s buses drive a distance
equal to 15 times the Earth’s circumference.
Players in the industry are cooperating in an
initiative to double the number of passengers
by 2020 and the government public transport inquiry to be completed in 2009 may
influence this trend. Due to the large traffic
volume, every kilometer or minute that a bus
drives without passengers has major consequences not only for the economy but also
the environment. Optimal traffic planning is
the most effective tool in reducing emissions;
a kilometer that is not driven produces zero
emissions.
The company measures its environmental
performance and has worked systematically
for many years to minimize its environmental
impact. Various clients are testing different
methods to reduce the environmental footprint of public transports and Swebus is playing an active role in this effort. There is an
increased use of renewable fuels, such as natural gas and biogas in Skåne, Rapeseed Methyl
Ester (RME) in Uppland and ethanol in
Dalarna. In the Stockholm area, the very first
electric hybrid buses in the Swedish market
Supplementary products
Regional and local transports make up more
than 95% of Swebus’s operations, which also
include school bus and chartered transports.
At the end of the fiscal year, transports to and
from airports under the Flygturen brand were
transferred to Swebus Express.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
being jointly evaluated by Swebus, a vehicle
supplier and SL (Storstockholms Lokaltrafik).
In March 2009 both the head office and the
Kallhäll traffic area were certified according to
the ISO 14001 environmental standard.
Motivated employees
Improvements in the company’s operations
and profitability depend on motivated
employees, people who strive to reach the
established goals of their own free will. The
employees have made invaluable contributions on every level in the past few years.
Relations with the trade unions remain good
and the hiring situation at the beginning of
2009 was better than at the same time last
year. The company was affected by a bus
driver walkout in Stockholm during 2008,
when all traffic in Stockholm was subject to
strike. The 14-day conflict between the Swedish Bus and Coach Employers’ Association
and the Swedish Municipal Workers’ Union
ended when the parties signed a new wage
agreement for the period through May 2011.
Concordia Bus’s advantages
Swebus has advantages in belonging to the
Concordia Bus Group, among other things
through access to cost-effective IT systems of
a high standard and the opportunities for
optimization of the bus fleet through collaboration with Concordia Bus Fleet. The valuedriven renewal effort in the Group’s process
teams includes participants from all parts of
the Group, and Swebus is both contributing
to and benefiting from this benchmarking.
18 concordia bus Finland
Fourth successful year
President Tom Ward
Annual revenue EUR 73 million (55),
equal to SEK 721 million (517)
Operating profit EUR 2 million (1),
equal to SEK 24 million (12)
Market share 26% (25)
Number of passengers 34 million (30)
Number of employees 911 (716)
Number of buses 423 (370)
Number of km driven 30.6 million km (25,1)
Competitors Helb, Veolia, Westendin Linjat,
Pohjolan Liikenne
Website www.concordiabus.fi
share of concordia bus’s
revenueoperating profit
12%
8%
Concordia Bus Finland has continued
its powerful growth in the Helsinki
region, which accounts for more than
half of all contractual bus services in
Finland. In 2008 revenue grew by
39% to SEK 721 million and a law
amendment in 2009 can open up new
markets by forcing a transition to
competitive tendering.
Transport contracts for over 300 buses were
tendered in the Helsinki region during 2008
and the two public transport authorities
chose Concordia Bus Finland for one third
of the traffic volume. The company won two
tenders, of which one is a service line for
smaller buses, which signifies a broadening
of the service offering.
Helsinki offers new opportunities
All local bus transports in the greater Helsinki
area are competitively tendered. Five different
bus operators compete in a price scenario that
under present conditions demands high efficiency in order to generate an operating
profit. The public transport authorities in
Helsinki will merge in 2010 and the trend
indicates that the region is expanding in a way
that would make it worthwhile for several
peripheral municipalities to join the organization. As a result, all public transport services
in these municipalities may be opened to
competitive tenders, possibly already in 2012.
Market share growing with rising
confidence
Concordia Bus Finland is expanding its volumes in the capital city region year by year.
With a market share of 32% in Helsinki, an
increase of nearly 2 percentage points, the
company is currently number two after the
municipal bus operator Helb. Including all
competitively tendered contractual public
bus transport services, the market share is
26%. The number of passengers in 2008 rose
by 14% and satisfaction among those who
use the company’s buses remains high.
2008/2009 was the fourth consecutive year
in which the company was shown higher
confidence from public transport authorities
through an increase in winning tenders.
Parts of the public transport services in
Turku and Tampere have also been put to
tender. However, Concordia Bus Finland has
no organization or infrastructure in these cities and has so far only made a few selected
bids when the public transport authorities
have gradually deregulated public transport.
EU directive to change playing rules
In the rest of Finland, public transport is still
completely protected from competition. This
applies not least to long-distance transports,
where a new entrant to the market is essentially forced to buy an established competitor
in order to obtain the required traffic permit.
When the new EU directive goes into effect
in December 2009, the Finnish market
will be opened to competition. The transitional provisions may delay the process and
it is uncertain to what extent the new EU
rules can accelerate deregulation already in
2010–2011.
Industry problems in 2008
At the beginning of 2008 the industry had
difficulty recruiting drivers, and this also
affected Concordia Bus to a limited extent.
The effects of high diesel prices in the first
half of the year were tangible and the situation was also affected by certain technology
and maintenance problems.
200 new buses
The entire company is environmentally certified according to ISO 14001. Of the com­
pany’s 423 buses, 200 were purchased in the
past three years and belong to one of the two
highest environmental classes. Neither the
company nor the bus suppliers were able to
fend off the buses’ running-in problems, which
lead to brief recurring interruptions in service.
Prices may rise
Prices in the Helsinki market appear to be
­rising as a result of reduced underpricing in
submitted tenders. It is also easier to recruit
drivers, and in combination with good HR
management, this is creating favourable conditions for efficient traffic with motivated
employees. There are still no incentive contracts, but it is the company’s hope that it will
be possible to introduce contracts of this type.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
concordia bus Norway 19
Rapid development in growth market
President Geir Ledsten
Annual revenue NOK 449 million (392),
equal to SEK 528 million (463)
Operating profit NOK 7 million (24),
equal to SEK 9 million (28)
Market share 16% (17)
Number of passengers 11.5 million (11.5)
Number of employees 614 (506)
Number of buses 384 (335)
Number of km driven 18.2 million km (17.4)
Competitors Veolia, Norgesbuss, Tide
Website www.concordiabus.no
share of Concordia Bus’s
revenueoperating profit
9%
3%
In 2008 new transport contracts for
around 500 buses were competitively
tendered in Norway, and in 2009
another approximately 700 buses will
be put to tender. There is a growing
confidence in Concordia Bus Norway
among public transport authorities
and the company expects to continue
growing in pace with the market or
faster.
In the 2008/2009 fiscal year Concordia Bus
Norway won two new transport contracts for
a total of 105 buses. In addition, the com­
pany’s largest transport contract to date, for
98 buses in Hedmark, was extended until
2012. The market share fell from 17% to
16%, since the market grew faster than
­Concordia Bus Norway. Revenue was up by
14%, which is equal to SEK 65 million. New
and extended contracts are expected to
increase the company’s revenue by 20% in
the 2009/2010 fiscal year.
Double-digit market growth
Deregulation of the Norwegian market is
gaining momentum and will reach a new
record level in 2009. As in 2008, transport
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
contracts for some 1,000 buses were put to
tender, and of these around 70% were new
and not previously exposed to competition.
At the beginning of 2007 the entire deregul­
ated segment of the market amounted to
around 2,400 buses and the volume increase
for the current year will be close to 30%.
Over the next three years the deregulated
­segment will grow by around 1,800 buses,
or 75%.
Hordaland a new market
In 2007 the public transport authority in
Hordaland County tendered transport contracts for a total of over 700 buses. Hordaland
has the highest bus density in Norway and all
major transport operators competed for the
contract. For two of the five contracts tendered in 2008, the client chose Concordia
Bus. The two contracts include operation of
120 buses.
The winning bids are particularly satisfying for the company in that competition was
intense and the client only evaluated the bids
not only from a price standpoint but also
took quality and environmental factors into
account.
Underfinancing of cost increases
Concordia Bus Norway incurred sizeable cost
increases in 2008 that were not matched by
compensation adjustments. These resulted
from a weakness in the Norwegian contract
model for tendered transport services, where
the index is adjusted retroactively and does
not provide full compensation. When the
company was forced to deal with both a 7.5%
wage increase for the drivers and steeply
­rising diesel prices, the annual costs rose
signific­antly. Furthermore, the decrease in
costs for claims management and vehicle
maintenance was smaller than anticipated.
The combine effect on profit was negative.
Threats and opportunities
As in Concordia Bus’s other markets, the
Norwegian clients’ tenders are mainly based
on the number of kilometers driven. A few
individual contracts contain incentives,
which in the company’s opinion benefits
everyone – the public transport authority, the
operator and the passengers.
Plans for rationalization of paratransit
­services are creating a new potential market
for bus transports. In Norway the public
transport authorities typically procure both
school bus and scheduled bus services under a
single contract and now the procurements are
also including paratransit services. Concordia
Bus sees rationalization of paratransit as a
new business opportunity.
The company’s focus in the years ahead
will be on winning tenders at least in pace
with market growth through continued high
confidence among the public transport
authorities, superior transport solutions and
competitive prices.
Better utilization of the Group’s operative
IT-based support system, expansion of vehicle maintenance and a large-scale process to
increase cost-awareness among all employees
will contribute to more favourable cost
­development.
20 concordia bus denmark
Successful launch on Zealand
President Paul Lacoppidan
Annual revenue DKK 40 million,
equal to SEK 53 million
Operating profit DKK –18 million,
equal to SEK –24 million
Market share 2%
Number of passengers 9.1 million
Number of employees 170 (2)
Number of buses 59
Number of km driven 2.3 million km
Competitors Arriva, Keolis, Bent Thykjaer,
Deutsche Bahn
Website www.concordiabus.dk
share of Concordia Bus’s
revenueoperating profit
1%
0%
New organization and new buses
Preparations for the start-up were meticulous.
The company hired primarily experienced staff
for both front line and administrative positions through a combination of active recruitment and assimilation of existing personnel in
connection with contract takeovers. Dialogue
with the trade unions has functioned superbly
from the start and both the HR policy and
management style have won respect and
appreciation. The entire bus fleet is new,
equipped engines of the EEV Euro 5 classes.
Weak market growth in 2008
In the wake of a sweeping municipal reform,
the clients have undergone a phase of extensive
consolidation. Denmark is now divided into
sex regions with responsibility for public transport services. Bus transport services are self-­
financed at a rate of between 55% and 63%.
The remainder is financed by tax revenues.
Public transport showed a falling trend
during 2003-2007. This can be explained by
price increases in 2004 and a 6% decrease in
production of public transport services
despite economic growth, which resulted in
increased automobile traffic. Public transport
once again rose somewhat in 2008.
Sizeable investments
The contracts won by Concordia Bus in 2008
represent revenue of DKK 115 million, equal
to SEK 172 million, on a full-year basis. The
start-up of bus transports in a new market
demands sizeable investments and earnings
for the five-month period were negative as
anticipated, at SEK –24 million.
Satisfied customers and rapid growth
Concordia Bus Denmark will grow from
today’s modest market share of 2%. The
­company has the same market goals as its
­sister companies in the other Nordic countries: More than 80% satisfied customers,
among the top three, more than one third of
all scheduled road transport services and the
highest quality rating and credibility in the
market. The company is off to an excellent
start and expects to quickly advance its positions. The goal is to increase revenue by
200% over the next few years.
Careful preparations led to a frictionfree contract start for Concordia Bus
Denmark. Traffic production in the company’s first two contracts is proceeding
according to plan and the conditions for
rapid expansion are favourable.
When Concordia Bus entered the Danish
market in 2008, it was a natural step in the
Nordic strategy. The Danish market is fully
deregulated and functions similarly to the
other Nordic markets.
The contracts refer to 59 buses operating
in northern and eastern Zealand. On 19
October the first of Concordia Bus Denmark’s buses rolled out from lease depots in
Hillerød and Glostrup. Ten buses operate in
purely local traffic in Hillerød just south of
Helsingør, while the other 49 vehicles are
used in intensive scheduled traffic with crossconnections that interlink the commuter
train stations along a band some 30 km outside Copenhagen. Close to nine million passengers will ride on the company’s buses in
the coming year.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
Swebus Express 21
Industry’s highest growth
in customer satisfaction
President Joakim Palmkvist
Annual revenue SEK 341 million (351)
Operating profit SEK 23 million (19)
Market share >50% of long-distance bus
transports
Number of passengers 2.0 million (2,2)
Number of employees 175 (210)
Number of buses 88 (99)
Number of km driven 14.6 million km (16.9)
Competitors SJ, Säfflebuss
Website www.swebusexpress.se
share of Concordia Bus’s
revenueoperating profit
6%
8%
Swebus Express is continuing to invest
in its product, where low price is crucial in attracting passengers. In 2008
customer satisfaction ratings showed
the highest increase in the entire public transport sector and the company’s
bus services were approved as a Good
Environmental Choice by the Swedish
Environmental Protection Agency.
Swebus Express is the market leader in scheduled express bus transports, and is well
equipped for expansion. According to the
Swedish Quality Index, customer satisfaction
rose from 66% to 70% in the past year and
the company is continuing to invest in its
vehicle fleet and service offering.
The fleet of 88 buses is by far the largest in
the industry and is continuously renewed,
which has contributed to giving Swebus
Express the best statistics of all express bus operators from the Swedish Motor Vehicle Inspection Company. All buses have safety belts and
around half are also equipped with alcho-locks.
Environmental impact is decreasing and in
2008 the company was proud to be the first bus
operator to qualify its express bus services for
the Good Environmental Choice eco-label.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
The strongest brand
The company’s customers are the passengers,
and all revenue comes directly from them.
Long-distance transports, which have given
name to the business segment in Concordia
Bus, are the Swebus Express’s largest product.
The company defines long-distance transports as those that cover a distance of at least
100 km and cross a least one county line.
Young people, students and seniors are the
three largest customer groups, and their
choices are determined by low price, availability, brand and travel time. Surveys show
that the company has the strongest brand of
all bus operators, but so far the train is the
undisputed market leader among public
transport alternatives for journeys of between
10o and 400 km. Increased deregulation of
the railways in 2010 and a growing imbalance between rail capacity and demand may
affect the situation.
The greatest challenge for Swebus Express
lies in getting more train passengers to see
buses as an alternative, not least for shorter
distances.
Simplification and rationalization
In 2008 Swebus Express simplified its booking system. The share of online sales increased
and was around 60% at the end of the year.
Punctuality remains very high and both efficiency and capacity utilization improved in
the past fiscal year.
In 2009 the company will make it easier
for customers to buy tickets through other
sales channels. Fifteen new buses of the highest environmental class have been introduced
into service, which will also contribute to
higher passenger comfort.
Effective traffic control
A few smaller and unprofitable lines were
wound up and the number of departures
could be adequately adapted to demand
through use of the new in-house developed
traffic control system. The system makes it
possible to perform analyses that improve
­traffic planning and match supply to demand.
During peak traffic periods, the company
leases vehicles to supplement its own fleet.
The company is alone in applying a dynamic
pricing model that rests on an IT system
where demand can be monitored by the
­minute. The number of passengers fell from
2.2 to 2.0 million due to traffic changes and
an unsatisfactory summer season for all bus
transports.
Expansion for airport transfer
At the start of the new 2009/2010 fiscal year,
Swebus Express took over the successful airport transfer services previously operated by
its sister company Swebus. These operations
are best suited to Swebus Express, which
caters exclusively and directly to individual
travellers and can realize synergies through
coordination of express transports. The major
airports will show the strongest growth in
travel volumes, according to the Swedish Civil
Aviation Authority, which is currently reviewing its operations and has plans to shut down
airports with unpromising future prospects.
At present, commuter traffic is deemed to
have limited potential for development since
the bulk of traffic is publicly-financed and the
current rules give public transport operators
the right to object to new market entrants.
The Swedish government’s public transport
inquiry to be completed in December 2009 is
expected to propose a change in these rules.
Specialized transports to different events are a
niche market that is starting to attract oper­
ators and passengers.
Motivated employees
Swebus Express has a strong belief in itself as
a company, its products and its employees.
The company has a low rate of employee
turnover, low short-term sickness absence
and highly motivated employees (EMI 81%).
The rate of long-term health, i.e. employees
without a single day of sickness absence in 12
months, is 53%.
The completed investments, effective
control system and motivated employees are
three advantages that will provide the com­
pany’s management with a source of strength
as it focuses on strengthening the company’s
brand, attracting new passengers and, not
least, improving operating profit.
22 sustainability
Five environmental risks in focus
In 2008 Concordia Bus identified all
known environmental risks in its
­operations and, following a thorough
risk assessment, its Executive Management chose to work with a focus
on five areas that have the greatest
impact on the environment and the
Group’s operations. The ambitious
sub-goals set by politicians and the
industry for the period through 2020
will be met or exceeded.
Concordia Bus’s long-term goal is to become
climate-neutral. This is an ambition that goes
far beyond the environmental targets for bus
transports that the Swedish industry organization and politicians have agreed to aim for
by 2012 and 2020.
As one of Europe’s ten largest public bus
transport operators, Concordia Bus is clearly
part of the solution, not the problem. In the
past fiscal year the company’s buses drove a
total of 300 million km, which was 27 million
km more than in the previous year and equal to
roughly 7,500 times the circumference of the
Earth. Even with only five passengers, and
regardless of fuel type, buses lead to a reduced
impact on the environment. The greatest envir­
onmental gains are achieved when passengers
choose the bus instead of a car. With more passengers, each bus increases the relative environmental gains quickly and cost-effectively.
Renewable fuels, particle filters, an ecofriendly driving style, etc., all make a positive
contribution, but the most important factor
the environment is the individual’s decision
to leave his or her car at home and use public
transport instead.
For the benefit of society
Concordia Bus conducts transport operations
that create tangible benefits for the environment. In Norway and Finland Concordia Bus
has been certified according to the ISO 14001
environmental standard for several years. In the
Swedish market, efforts are underway to certify
Swebus’s environmental management system
according to the same standard, while Swebus
Express with its focus on the consumer market
has instead chosen to meet the criteria for the
Swedish Environmental Protection Agency’s
Good Environmental Choice eco-label.
The group-wide environmental policy
adopted in 2007 reflects a commitment to
developing public transport’s benefits to society
through continuous measures to promote sustainable development. Concordia Bus aims to
be one of the most eco-adapted alternatives for
public transport and long-distance bus travel.
Overarching environmental objective
The UN Framework Convention on Climate
Change is aimed at stabilizing greenhouse gas
concentrations in the atmosphere at a level
that would prevent dangerous interference
with the climate system. In Sweden there is a
national environmental objective to reduce
emissions during the period 2008-2012 by
an average of 4% compared to the level in
1990. Similar targets have been set for factors
such as particulates, which are produced by
transports and are hazardous when inhaled.
Collaboration for effective resource
utilization
Concordia Bus supports the efforts of politicians and society to find a solution to urgent
environmental problems. For the company,
transport services are the natural starting
point. Transports that are optimized in
response to passenger needs also result in
­better solutions from an environmental
perspect­ive. When the client and operator
collaborate to improve utilization of already
paid for resources, public transport can
expand without major cost increases.
If politicians take the initiative and create
the right conditions in a coordinated manner,
the transport operators can contribute to further improvements for the environment.
Measures such as new fuels, new bus technology and fuel-efficient driving can contribute to increased sustainability, and transport
efficiency also has a direct influence on envir­
onmental impact. Optimized timetables with
a minimum of unproductive time help to
reduce negative environmental effects, and
pressure on the environment is further alleviated by maintaining the smallest possible distance between the bus storage yards and the
first stop. The use of energy, water, cleaning
agents and chemicals in connection with
vehicle service also affects the environment.
Responsible leadership
Many people at Concordia Bus feel a sense of
satisfaction with the contributions to a better
environment that the company is already
making through its leading position in the
public transport sector. Responsible leadership is particularly important now, since the
global trend for greenhouse gases and particulates is moving in the wrong direction and
the turning point towards lower emissions
has been delayed.
The company strives for good resource
conservation and has an ambition to conduct
its own environmental projects that go
beyond the level required by law and other
regulations.
Prioritized environmental areas
In order for bus transports to become climate-neutral in the future, energy consumption must be reduced and emissions limited.
The environmental policy emphasizes the
long-term nature of environmental efforts.
Environmental aspects must be coordinated
and integrated with the development of processes, services, quality issues, etc., in order to
create lasting value for all stakeholders. This
commitment applies to all areas of activity,
not only bus transports.
In 2008 the environmental council, which
was set up the same year, charted the environmental impact factors arising in the Group’s
own operations through a wide-ranging study
that included a series of inventories at the
Group’s depots throughout the Nordic region.
The Executive Management studied an overall
list of 157 environmental aspects, translated
these into environmental risks and decided to
prioritize five of the most significant.
Five focus areas
In 2008 Concordia Bus continued its efforts
to develop methods for measuring the
Group’s combined environmental impact.
Concordia Bus reviews its environmental targets at least once a year in connection with
revision of the company’s business plans.
Recurring audits are used to monitor envir­
onmental activities and their results.
The Group’s environmental council, consisting of the environmental directors of each
subsidiary, draws up joint guidelines for the
Group’s environmental efforts and the
affected employees attend an annual environmental course.
The five environmental risk areas selected
by the Executive Management for Concordia
Bus to focus intensively on are: energy con-
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
sustainability 23
classes 4 and 5 or EEV. The average age in the
vehicle fleet is declining and at the beginning
of 2009 was around 6 years. The share of
buses in Euro classes 2 and 3 fell during the
past fiscal year and was 67% at the end of the
year. On the same date, 21% belonged to one
of the two highest Euro classes.
sumption at the depots, environmental
requirements in connection with purchasing,
environmental expertise in operations, fuel
consumption and particulate emissions.
Unnecessary energy consumption at the
depots is also a source of financial waste, and
the results of a survey show significant potential for savings. The company in Finland has
taken the most effective steps so far, and is
followed by the Norwegian company.
Eco-adapted purchasing is matter of key
symbolic importance that is being given more
attention, often in dialogue with public
transport authorities and suppliers.
A number of measures are being taken to
raise the level of environmental expertise.
These activities cover a wide spectrum, from
training in eco-friendly driving throughout
the Group to special courses for employees in
traffic control. Environmental awareness
should be in constant focus throughout an
employee’s life cycle in the company, from
recruitment and hiring to skills assessments
and performance reviews. The results are
evaluated through regular self-assessments
and internal audits.
Unnecessary fuel usage is a serious deviation from the environmental targets. There
are both clearly defined operating goals and
financial incentives to limit fuel consumption. Today there is technology available that
makes it possible to monitor how well the
individual drivers are succeeding in their
efforts to drive fuel-efficiently and thereby
help to reduce emissions of fossil carbon
dioxide in particular.
The newly established environmental
council can contribute to formulation, communication and establishment of environmental targets in a manner that better reflects the
environmental ambitions and leads to effective
routines for activities throughout the Group.
Particulate emissions are an area where
vehicle manufacturers, transport operators
and researchers all need to increase their
knowledge. The findings and experiences are
partly contradictory, and closer cooperation
between the parties is needed to address this
problem effectively.
Empty driving and idling are two different things, but both can be dealt with more
effectively than has been the case so far.
Increased use of renewable fuels
The bus transport industry organizations in
Sweden, Norway, Denmark and Finland have
all set goals for energy consumption that are in
line with the political targets. In order to meet
these targets, the transport operators must
quickly increase the share of renewable fuels.
By 2012, 40% of transports will be driven
with vehicles using a renewable fuel and by
2020 this share will have increased to 90%.
For all bus operators and public transport
authorities, this will entail higher costs and
major adjustments. The intention is to
finance part of the cost increase through a
projected increase in the number of passengers by 30% over the period until 2020.
In the 2008/2009 fiscal year the Group
reduced its emissions of fossil carbon dioxide
per km by more than 2%. This was achieved
mainly through increased use of ethanol and
biogas as fuel, but also through upgrading to
better engine classes and installation of filters
in the buses. Alongside measures to reduce
emissions, continuous efforts are being made
to minimize fuel consumption. Driving style
has proven to have the greatest influence, and
the Group’s companies are therefore focusing
on providing their drivers and supervisors with
information about and training in eco-friendly
driving. Fuel consumption is monitored continuously, all the way down to the driver level.
Concordia Bus is intensifying its market
monitoring and knowledge development in
the area of future fuels. In various collaborative projects with vehicle manufacturers and
public transport authorities, a number of different alternative fuels are being evaluated.
Experience from numerous environmental
projects indicates that the greatest success is
achieved in projects where several com­panies
or organizations are involved. For example,
Concordia Bus will continue testing electric
hybrid buses together with vehicle manufact­
urers and public transport authorities.
Emissions, tonnes
2008/09
2007/08
BREAKDOWN OF BUS FLEET BY FUEL TYPE, %
BREAKDOWN OF BUS FLEET BY ENGINE CLASS, %
Carbon dioxides
268,306
211,712
Nitrogen oxides
1,702
3,054
CNG/Biogas
3.1% (1.4)
Euro 5, 9% (3)
Particulates
11
39
Hydrocarbons
18
40
New buses in better environmental
classes
Concordia Bus purchases – and sells – more
buses than any other company in the Nordic
region. In the past fiscal year the company
expanded its fleet with more than 300 new
buses, of which the majority belong to Euro
Ethanol 4.8% (2.4)
Diesel 92.1% (96.2)
Safety comes first
A high level of safety is vital in all of the company’s transports, and in all other operating
activities. The safety policy expresses the
company’s ambition to serve as a role model
in traffic. Safety-related work is conducted
systematically and as an integral part of other
operations. In 2008 a group-wide safety
council was established.
Safety and security are the top priorities
in day-to-day bus transports, and take precedence over comfort, convenience and punctuality. Concordia Bus has won an award in
Sweden for its traffic safety efforts, including
several thousand self-administered speed
checks that resulted in lower driving speeds.
The buses undergo tune-ups and service
every 20,000 km and have earned the industry’s top scores in annual vehicle inspections
for the past two years. In addition, each bus is
subject to a daily 29-point safety check that is
performed before entering service for the day.
The company’s active approach to safety
includes follow-up of threats and violence
against customers or staff and risks related to
traffic incidents. An in-house developed computer system handles data and contributes to
a safe and secure environment where traffic
flows smoothly without disruptions.
THE GREEN JOURNEY
Local practical training in
­e co-friendly driving
• Maintain an adequate distance
• Avoid unnecessary stops
• Coast more
• Brake less
• Stay within speed limits
• Drive more smoothly
• Allow speed to decrease when
­driving uphill
• Coast when driving downhill
• Avoid idling
Other*, 3%
EEV, 4% (2)
Euro 1, 6% (10)
Euro 4, 12% (10)
Euro 3, 30% (33)
Euro 2, 36% (43)
* Other = Euro O, Ethanol -98 and Etanol -97, for a value of 1% each.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
24 Management system and share data
Process control for
profitability and satisfied customers
An integrated and process-oriented
management system ensures the company’s ability to live up to the demands
of customers and other stakeholders.
The management system covers all parts of
operations through flow-oriented descriptions of aspects such as management, product
development, customer contacts, initiation
and windup of transport contracts and internal support. Its purpose is to safeguard the
company’s ability to live up to the demands
of customers and other stakeholders.
Development of group-wide working
methods
The most important processes and groupwide working methods are described in the
main process chart. For each main process,
there is a process owner and a process team
with wide-ranging composite expertise from
the Group’s companies.
The process owner and the process team
develop and propose improvements in the
group-wide working methods found in the
processes. They measure the process’s effect­
iveness and key performance indicators and
identify best practices from among the various profit centers. The process teams also
Process team
Best Practice
Continous improvement
Group-wide policies
and instructions
Proposed improvements
Companies
Use group-wide
policies and
instructions to
meet their goals
Examine and
correct
Goal attained!
deviations
Continuous improvement
define developmental goals for each process.
The companies contribute resources and
expertise to the process teams to the development process and in return are provided with
uniform working methods to apply in their
operations.
Follow-up ensures success
The group-wide working methods help the
companies to achieve their goals in areas such
as resource conservation, marketing and skill
development, and in a longer perspective also
meet their financial targets.
Three follow-up forums ensure goal
attainment:
• Business plans
• Financial targets
• Process development
The Executive Management and subsidiary
managements monitor goal attainment for
the business plan and the financial targets,
while the outcome for process development is
followed up in similar meetings between the
Executive Management and process owners.
The subsidiaries are responsible for establishing long- and short-term goals and action
plans for their operations, while the process
teams define the development object­ives,
enabling each company to monitor both
operating and developmental activities.
The management system leads to better
financial results and more satisfied customers.
Process control is also described on page 7
and in the corporate governance report on
page 27.
Share data
Concordia Bus has 20,227,650 common
shares and 5,000,000 preference shares, each
with a quota value of SEK 1. The share capital thus amounts to SEK 25,227,650. In the
past fiscal year the share capital increased by
SEK 227,650 through shares subscribed for
under the earlier option programs.
Unlike the common shares, the preference shares grant the right to an annual dividend. The Board of Directors and senior
executives hold stock options with a potential
dilutive effect of 3.7% on the share capital.
The share capital and options are described in
Notes 7 and 21.
Investment funds major shareholders
In connection with the financial reconstruction in October 2005, the bond loan in Concordia Bus AB was converted into shares. As a
result, the former creditors came to hold
97.5% of the shares in Concordia Bus AB
and the largest shareholders today are international investment funds.
The largest holders of common shares in
Concordia Bus are Bluebay Asset Management, JP Morgan, Dresdener VPV, Fidelity
Funds and Thames River Capital.
The largest holders of preference shares
are Bluebay Asset Management, Fidelity
Funds and Thames River Capital.
The Concordia Bus share is registered with
Euroclear AB and most of the approximately
30 shareholders hold their shares through the
safe custody departments of various banks.
Share trading
There is no organized trading of the com­
pany’s shares on any stock exchange or other
public trading venue. However, there is some
OTC trading of the shares in London, where
a few stock brokers make trades on their own
initiative.
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Corporate governance report 25
Corporate governance report
Concordia Bus AB (publ)) is a Swedish
registered company domiciled in
Stockholm. The Group consists of five
subsidiaries that conduct bus operations, primarily related to public
transport in the Nordic countries, and
two administrative companies. This
report pertains to the fiscal year
2008/2009 and provides an account
of activities prior to the 2009 Annual
General Meeting. The report has not
been audited by the company’s independent auditors. The Board’s report
on internal control forms a separate
section of the corporate governance
report.
Corporate governance in Concordia Bus is
regulated by Swedish law, primarily the Swedish Companies Act and loan agreements with
bond holders.
Concordia Bus has undertaken to fulfil
the fundamental requirements for corporate
governance. This report describes company’s
corporate governance, management and
administration, as well as the manner in
which the Board ensures the quality of the
financial statements and its cooperation with
the company’s independent auditors.
Corporate governance bodies
A number of different bodies in the company
are responsible for control and corporate
­governance. At the Annual General Meeting,
the shareholders exercise their voting rights,
for example in determining the composition
of the Board and election of auditors. The
Executive Management in consultation with
the major shareholders recommends can­
didates for election of Board members, the
Board Chairman and independent auditors.
The Board is responsible for the com­
pany’s long-term development and strategy
and for controlling and evaluating day-to-day
operations. The Board appoints the President
of Concordia Bus AB, who is also the CEO.
The President is responsible for ensuring
that day-to-day operations are conducted in
accordance with the Board’s guidelines and
instructions. The president of each subsidiary
reports directly to the CEO and is responsible, in turn, for complying with the established instructions and guidelines.
General meeting of shareholders
In accordance with the Swedish Companies Act
and Concordia Bus’s articles of association, the
composition of the Board and other matters to
be addressed by the Annual General Meeting
are determined by voting. Supplementary voting rules are found in the shareholder agreements signed between certain shareholders.
Resolutions by the Annual General Meeting are normally passed by a simple majority.
In certain cases, however, the Swedish Com­
panies Act requires a specific level of attendance to form a quorum or a particular voting
majority. At the Annual General Meeting, the
shareholders have the opportunity to pose
question about the company and its results for
the past year. Representatives from the Board,
Executive Management and auditors are normally present to answer these questions. Shareholders and other stakeholders can also write
to the Board or Executive Management by
email, via the website www.concordiabus.com
or by letter to: Concordia Bus AB, Armégatan
38, SE-171 71 Solna, Sweden.
2008 Annual General Meeting
At the Annual General Meeting on 28 May
2008, 48.79% of the shareholders and 42.18%
of the voting rights were represented. The Board
and management of Concordia Bus were present. The following resolutions were passed:
• The incumbent Board was re-elected
• The income statements and balance
sheets of the Parent Company and Group
were adopted
• The members of the Board of Directors
and the President were discharged from
liability for the 2007/2008 fiscal year
• The amount of Board fees was established
• The principles for remuneration and
other terms of employment for senior
executives were approved
SEK thousand
Board of Directors
The task of the Board of Directors is to promote healthy business development and adequate control of the company’s operations.
The composition of Concordia Bus’s Board of
Directors, and the fees and attendance of each
member, are presented in the table below.
Aside from the reported benefits and
remuneration, the members of the Board are
covered by a stock option program. The
Board in full also serves at the company’s
Audit Committee.
The Board of Concordia Bus is responsible for the organization and administration
of the company’s affairs. The Board shall consist of at least three and at most ten members.
From among its members the Board has
appointed a Chairman, who according to
Swedish law may not simultaneously hold the
position of President of the company.
One of the Board’s most important tasks
is to ensure good management, monitoring
and control of the company’s operations in
order to create value for the shareholders,
customers, employees and other stakeholders.
The Board’s rules of procedure and
independence
The Board has adopted rules of procedure for
its activities that describe how duties are to be
divided between the Board, its committees
and the President. The Board evaluates the
rules of procedure at least once yearly.
The incumbent Board was elected by an
Extraordinary General Meeting in 2005 as a
result of changes in the Group’s ownership
structure. All Board members but one are
deemed independent in relation to the
Regular
fees
Extra
fees
Meeting
attendance
Shareholdings
Chairman
Jan Sjökvist
650,000
100%
35,350
Jan Sundling
175,000
100%
5,900
Rolf Lydahl
175,000
100%
5,900
11%
–
100%
Members
Gina Germano
Deputy member
Thomas Naess
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
2009 Annual General Meeting
Concordia Bus has scheduled the Annual
General Meeting for 4 June 2009.
26 Corporate governance report
Shareholders
›› › ›› ››
›
Auditors
Annual General Meeting
Nomination Committee
BOARD OF DIRECTORS
Remuneration Committee
Audit Committee
Executive Management
Company managements
c­ ompany, its management and major shareholders. Gina Germano is employed by Bluebay Asset Management, which is a shareholder in Concordia Bus AB. In the event of
Gina Germano’s absence, she is represented
by Thomas Naess.
Board activities 2008/2009
Aside from the yearly recurring items of
­business, the Board handled matters related
to refinancing and the option program in the
past year.
Board committees
Nomination committee
A Nomination Committee submits proposals
to the Annual General Meeting regarding the
Chairman of the Meeting, the number of
Board members, fees to Board members,
election of Board members, appointment of
auditors and fees to auditors. Concordia Bus
has no formal Nomination Committee,
which is a deviation from the recommendations in the Swedish Code of Corporate
­Governance regarding the composition of the
Nomination Committee. Proposals for Board
members and auditors are prepared in consultation with the major shareholders.
Remuneration Committee
Concordia Bus has chosen not to appoint a
Remuneration Committee since the Board in
its entirety addresses matters relating to
remuneration in its annual evaluation of
Board performance.
Audit Committee
The Board has chosen not to appoint any separate Audit Committee, and the Board in its
entirely instead comprises the company’s
Audit Committee. The task of the Board, in
cooperation with the management and auditors, is to ensure that the Group’s financial
reporting is correct, fair, relevant, transparent, consistent and in compliance with the
applicable rules and recommendations.
The Board ensures that the management
identifies the risks associated with the com­
pany’s operations. Furthermore, the Board
stays informed about and provides views
on the organization and prioritization of
ex­ternal and internal audit activities in the
Group in order to ensure that these maintain
a high professional standard are characterized
by impartiality and integrity.
The Board follows up matters arising
from audit work, including individual matters for which auditing activities are deemed
to be justified.
The Board meets with the independent
auditors at least once a year.
Auditors
The independent auditors are elected by the
shareholders at the Annual General Meeting
to serve for a period of four years. The auditors report to the shareholders at the com­
pany’s Annual General Meeting, and:
• keep the Board informed about the planning, scope and content of the annual audit,
• examine the annual accounts to assess
their accuracy, completeness and conformity with generally accepted accounting
practices and relevant accounting prin­
ciples, and report their conclusions,
• inform the Board of work that has been
performed in addition to auditing services,
remuneration for such services and other
circumstances of significance in assessing
the independent status of the auditors.
Independent auditor
The company’s independent auditor is Ernst
& Young AB, which was elected in 2005. The
Auditor-in-Chief is Erik Åström, Authorized
Public Accountant.
The task of the independent auditor is to
examine the administration of the Board and
the President and the company’s annual
report and accounting records. Ernst &
Young reports continuously to the Board and
Executive Management and to the local
­company managements. Ernst & Young is
engaged only for consulting services decided
and approved in advance by the Board.
In 2008 Concordia Bus carried out two
group-wide internal audits and some 20
company-specific internal audits using
employees specially trained for this task. The
purpose of these internal audits is to establish
a stable control environment in the company
and to ensure that application and monitoring are carried out in key areas of operations.
The company’s principle is that every process
should have control functions that support
follow-up activities. In this respect, the internal audit serves as a complementary instrument for ensuring that operations are conducted in accordance with formal decisions.
The results of the internal audits are
reported to both the Board and the Executive
Management.
Corporate governance objectives
Concordia Bus closely monitors international
developments in the corporate governance
area. The company strives to continuously
adapt its corporate governance guidelines and
instructions in accordance with leading international standards and practices and the
Swedish Code of Corporate Governance.
Values in the company
The five fundamental values adopted by
­Concordia Bus in 2005 express the ethics
applied in all parts of the Group’s operations,
from internal activities to relations with
external parties. These also describe how
operations are to be conducted in an efficient
manner.
The values are reviewed annually through
an employee survey, internal evaluations of
operations and the planned employee
perform­ance review. In this manner, the
Executive Management can gain an idea of
how firmly established the values are among
the employees. Deviations from violations of
these values are reported to the immediate
superior. For more information about the
­values, visit www.concordiabus.com.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
Corporate governance report 27
Internal control over financial
reporting in 2008/2009
This report has been prepared in accordance
with Section 3.7.2 of the Swedish Code of
Corporate Governance, which means that
the report covers only internal control over
financial reporting.
The Board is not required to submit an
opinion on the effectiveness of internal control and the report is not required to be examined the company’s independent auditor.
Application
Concordia Bus shall steer its efforts, in an
efficient manner, to produce reliable and
accurate financial statements for external
publication.
For Concordia Bus, reliable and accurate
financial reporting means that:
• the accounting policies are appropriate
and conform to International Financial
Reporting Standards (IFRS)
• reporting on the results of operations is
informative and provides an appropriate
level of detail
• the reporting correctly shows the underlying transactions and events, and with a
reasonable degree of certainty reflects the
company’s actual results, financial position and cash flow.
Risk assessment
The primary risks arising in connection with
financial reporting include fraud, loss or
embezzlement of assets, improper favouring
of a third party at the expense of the company
and other risks related to material misstatements in the valuation of assets, liabilities,
revenue and expenses or deviations from the
disclosure requirements.
The Group uses the same type of risk
assessment for all processes. This takes place
in three stages and is initiated by a management review.
The basis for assessment is a present situation analysis of the Group and the management’s previous experience. The risks that are
deemed to have a material effect on financial
reporting are classified as high risks, and
those that are deemed to have an immaterial
effect are classified as low risks.
At the second stage, the high risks in operations are assessed in connection with a mapping
of sub-processes. Experts from the processes
perform a detailed valuation of all risks in each
process. The working process is as follows:
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
1.Identify risks and assign them to the
­relevant process stage:
•Describe the current preventive measures
•Evaluate their probability/impact/prob­
ability of detection
•Calculate risk values
2.For high risk values, propose improvement
measures
This means that the management’s assessment of a risk may be given a lower value by
the operation in question, just as a risk that is
not assessed by the management may be
given a high value by the operation.
The final stage of the process is to compile
all identified risk values and present them at a
meeting of the Executive Management. The
management then decides on a prioritization
of highly valued risks and allocates resources
to manage these. Risks with low values are
archived on a risk list for reassessment at the
latest in connection with the following year’s
risk assessment.
Risk assessment according to this method
was started in 2005 and supplemented in
2006. In the 2008 review, it was assessed
whether earlier years’ risks still apply in the
same order of priority.
Internal control
The risk assessment provides the opportunity
to take preventive action. High risks are
­prioritized and result in measures to reduce
or eliminate them. The use of controls and
control points ensures that preventive meas­
ures are taken in all Group companies.
The company has a number of controls
for approval and authorization of business
transactions. In operating activities these
controls are applied on a daily basis, and
­significant accounting policies are applied by
all Group companies in the preparation of
financial accounts and reports. Established
routines steer review and analysis of financial
reporting at all levels in the Group, which is
important in ensuring the accuracy of the
reports.
Control is exercised through established
policies and instructions that are formulated
in group-wide process teams. These teams
also decide on important control points for
ensuring the quality of financial reporting.
Control environment
The company’s control is based on a group-wide
and process-oriented management ­system. The
purpose is to ensure a corporate culture charac-
terized by integrity and that the company does
not compromise on its ethical values.
The management system includes the
employees’ experience, skills, attitudes,
­ethical values and perceptions about the division of powers and responsibilities in the
organization.
The management system illustrates how
the Group works in key areas. The control
environment is made up of each operation’s
main processes and related policies and
instructions at both the Group and local
level. The process owners propose preventive
action, development measures and improvements in the process. The managements of
the various operations are responsible for
implementing and following up this work
and addressing any shortcomings.
Communication and information
The communication plan ensures that the
control points are communicated to the
intended target groups. The information in
each control point describes the company’s
actions in the control and how deviations are
reported and followed up. The process owner
is responsible for ensuring that information
about group-wide methods is provided to the
entire organization.
The line organization holds regular meetings at the function or area level. New policies and instructions are always presented at
these meetings as part of their implementation. Written communication is distributed
primarily via the intranet, where information
is updated immediately and the management
system and group-wide policies and instructions are presented.
Monitoring
The financial risks that are deemed to be high
are monitored mainly within the respective
process. A control function is built into the
risk’s control point, allowing the operation
itself to ensure that the risk is being managed
as planned.
In addition, the company performs regular internal audits to ensure that the control
points are working effectively. In 2008 Concordia Bus carried out two group-wide internal audits and some 20 company-specific
internal audits using employees specially
trained for this task.
Changes in operations that may influence
internal control are assessed annually and
reported to the Board.
28 Board of Directors
The Board of Concordia Bus consists of four members, of whom the Chairman and two other
members have an independent status in relation to the shareholders. One member represents
the largest shareholder, Bluebay Asset Management.
Jan Sjöqvist
Rolf Lyhdal
Jan Sundling
Gina Germano
Jan Sjöqvist
Born in 1948
Board Chairman.
Chairman of ODEN Anläggningsentreprenad.
Board member of Green Cargo and Aspen.
­Former President and CEO of NCC.
M.B.A.
Jan Sundling
Born in 1947
President of Green Cargo 2001-07. Currently
active as Chairman of the Association of
­Swedish Train Operators, the Swedish Maritime
Administration, DB Schenker Rail Scandinavian
A/S and TAF/TSI Deployment Board. Board
member of Amapola Flyg, Salenia Air Cargo,
COOP Sverige and Corem Property Group.
Rolf Lydahl
Born in 1945
Chairman of Jernhusen, IndeCap, SwedCarrier,
AP fastigheter, TradeDoubler and Steneken.
­Former President of Probo, Executive Vice President of Nordstiernan and responsible for Credit
Suisses’s representation office in Stockholm.
M.B.A. (Stockholm School of Economics)
Advisor the Board of Directors
Jörgen Andersson
Born in 1946
Former cabinet member. Chairman of Nordisk
Etanolproduktion AB and ECO-Energy, Board
member of Eco-Pellets, Biogasprom and Värmeteknik AB.
Gina Germano
Born in 1966
American citizen.
Senior portfolio manager at Bluebay Asset
Management since 2002. Former portfolio
manager at Lazard Asset Management and
­a nalyst at Morgan Stanley.
Master’s degree from Lund University, degrees
from Boston University and Northwestern
­University.
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Executive Management 29
The Executive Management of Concordia Bus consists of the CEO, CFO, the Presidents of
each subsidiary and the President of Concordia Bus Fleet.
Ragnar Norbäck
Per Skärgård
Jan Bosaeus
Joakim Palmkvist
Tom Ward
Geir Ledsten
Michael Karlsson
Sjur Brenden
Ragnar Norbäck 1)
Born in 1955
CEO of Concordia Bus AB
Employed since 2004
Previously employed by Sandvik, Adidas, TNT,
Linjebuss, Volvo and American Express.
M.Sc.Eng.
Joakim Palmkvist
Born in 1964
President of Swebus Express AB
Employed since 2006
Previously employed by OnOff, ElGiganten,
Ticket resebyrå and Synoptik.
Marketing economist
Per Skärgård
Born in 1957
CFO of Concordia Bus AB
Employed since 2004
Previously employed by Warner Lambert,
­Netnet, Danzas-ASG and DHL.
B.Sc.Econ.
Tom Ward
Born in 1956
President of Concordia Bus Finland Oy
Employed since 2004
Previously employed by Huolintakeskus Oy,
Scansped Oy, MPS Management Consulting
and Oy Scan-Auto.
Business economist
Jan Bosaeus
Born in 1960
President of Swebus AB
Employed since 2002
Previously employed by SMA Maskin AB, ­Engson
Maskin AB and Kalmar LMV Sverige AB.
Marketing economist
1) Ragnar
Geir Ledsten
Born in 1962
President of Concordia Bus Norge AS
Employed since 2007
Previously employed by C.Tybring-Gjedde AS,
Narvesen AS, Coop Norge AS, AS Kellox/Loxkel
AS and Oslo Taxi BA, among others.
Economist
Norbäck has announced his intention to leave his assignment as President and CEO at year end 2009.
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Michael Karlsson
Born in 1956
President of Concordia Bus Fleet AB
Employed since 2006
Previously employed by SEB Finans, NCM
­K reditförsäkring, GE Capital Equipment
Finance and Key Equipment Finance.
M.B.A.
Sjur Brenden
Born in 1961
Marketing and Purchasing Director, Concordia
Bus AB
Chairman of Concordia Bus Danmark A/S
Employed since 2001
Previously employed by Linjebuss Sverige AB, AS
Sporveisbussene and Concordia Bus Norge AS.
M.B.A.
30
Annual report and consolidated
financial statements
Administration report
The Board of Directors and the President of
Concordia Bus AB (publ) hereby present the
annual report and consolidated financial statements for operations during the fiscal year from
1 March 2008 to 28 February 2009. The results
of the year’s operations in the Group and the
Parent Company are presented in the following
income statements, balance sheets, cash flow
statements, statements of changes in equity and
notes. All items are expressed in millions of kronor (SEK M) unless otherwise stated. The fiscal
year covered by this annual report ended on 28
February 2009 and is referred to as 2008/2009.
Ownership structure
Concordia Bus AB is a public limited company
(corporate identification number 5565764569 domiciled in Stockholm) that is owned
by some 30 shareholders and is the overall Parent Company of the Concordia Bus Group.
Nature and focus of operations
Concordia Bus AB’s operations, which are conducted through subsidiaries, consist of the provision of contractual bus transport services to
public transport authorities in Sweden, Norway, Denmark and Finland. In addition to contractual bus transports, Concordia Bus operates
a network of express bus services to consumers
in Sweden. Operations in Sweden are conducted through the wholly owned subsidiaries
Swebus AB and Swebus Express AB. In Finland,
operations are conducted through Concordia
Bus Finland Oy Ab, in Norway through
­Concordia Bus Norway AS and in Denmark
through ­Concordia Bus Danmark A/S.
The wholly owned operating subsidiaries
are owned via a subordinate holding company,
Concordia Bus Nordic Holding AB, which in
turn owns the subsidiaries’ operating parent
company, Concordia Bus Nordic AB (publ).
Concordia Bus AB also has a wholly owned
subsidiary for management of the bus fleet,
Concordia Bus Fleet AB, which leases buses to
the operating companies.
Significant events during the year
The year’s operating profit for the Concordia
Bus Group is reported at SEK 206 million,
compared to SEK 161 million the year
before. The improvement is attributable to
increased revenue, better indexation, reduced
capital costs for vehicles and more efficient
vehicle utilization.
An Extraordinary General Meeting of
Concordia Bus AB resolved to approve the
buyback of part of the options issued by the
company. Compensation for the redemption
of issued share options will be paid in cash
according to independent valuations of the
company’s common shares. A new share
option program for the Board of Directors
and senior officers in the company was
­established by decision of the Extraordinary
General Meeting on 3 November 2008.
In connection with the Extraordinary
General Meeting on 3 November 2008, a
decision was also made to reduce the com­
pany’s statutory reserve by an amount of
SEK 350 million that will be transferred to
non-restricted reserves that can be utilized by
future general shareholder meetings.
Contractual transports in Sweden
Total revenue during the fiscal year amounted
to SEK 4,396 million (3,990). Operating
profit was SEK 232 million (154). The
improvement in earnings is due to increased
revenue, enhanced operating efficiency, a
stronger contract portfolio and reduced
­vehicle costs.
Contractual transports in Norway
Revenue reached SEK 528 million (463) and
operating profit was SEK 9 million (28).
Operating profit was negatively affected by
higher costs arising from an overheated
labour market, which resulted in a shortage
of employees during the year.
Contractual transports in Finland
Revenue totalled SEK 721 million (517).
Operating profit was SEK 24 million (12).
The positive earnings trend is due to the signing of new contracts, the wind-up of old and
unprofitable contracts and higher efficiency
in transport operations.
Contractual transports in Denmark
Operations in Denmark are represented by
Concordia Bus Danmark A/S, which started
its contractual transport services in the
autumn of 2008. Revenue amounted to
SEK 53 million (–) and operating profit was
SEK –24 million (–). The company has been
burdened with costs fot the start-up of transports in a new national market.
Express, long distance transports
Revenue is reported at SEK 341 million
(351) and operating profit at SEK 23 million
(19). Swebus Express once again successfully
defended its market share. Changes in operations through more efficient traffic management led to an improvement in earnings
compared to the previous year.
TWO-YEAR KEY FIGURES FOR OPERATIONS:
Revenue, SEK M Operating profit/loss, SEK M
1 March 2008–
28 Feb 2009,
in accordance
with IFRS
1 March 2007–
29 Feb 2008,
in accordance
with IFRS
6,134
5,406
206
161
Profit/loss for the year, SEK M
–239
–15
Number of employees 7,606
7,021
Number of buses 3,505
3,376
Investments excl. finance leases, SEK M 89
33
Cash flow from operating activities, SEK M
322
251
–2.7%
5.8%
Equity/assets ratio
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
Administration report 31
Fleet Management and central functions
The Group’s bus fleet is controlled and managed by the two companies Concordia Bus
Fleet AB and Swebus Busco AB, which provide buses to the Group’s operating bus companies through lease contracts. Concordia
Bus Fleet is responsible for procurement and
financing of the Group’s buses. In the past
year a total of 302 buses (133) were acquired
and financed for a total of SEK 631 million
(306) through finance leases.
Aside from management functions, the
head office contains service functions such as
IT, financial administration, legal affairs and
purchasing, which are debited to the various
Group companies based on market prices.
The cost of non-debited management functions and other items amounted to SEK 58
million (52).
Market
The Concordia Bus Group is active in public
bus transports, most of which consists of
publicly tendered transport services that are
operated by subsidiaries in the different
countries. In addition, a separate subsidiary
operates express bus transports in open competition mainly within Sweden.
Concordia Bus is the largest bus transport
operator in the Nordic region and one of the
ten largest public transport companies in
Europe. In the fiscal year 2008/2009 the
company increased its share of the Nordic
market from 15% to 16% with prices that are
expected to improve the underlying profitability. After the past year’s successful tenders,
in 2009 the company plans to invest the
equivalent of SEK 1 billion in new buses.
All operations require permits for operation of passenger transports. All subsidiaries
hold the necessary permits.
Financing, liquidity and cash flow
The Group’s financial expenses increased by
SEK 262 million (24) during the year. The
Group recorded foreign exchange losses of
SEK 230 million (8), of which SEK 270
­million (15) consists of an unrealized foreign
exchange loss on Concordia Bus Nordic AB’s
bond loan amounting to EUR 130 million.
Concordia Bus AB’s sole assets are the
shares in Concordia Bus Nordic Holding AB
and Concordia Bus Fleet AB. Concordia Bus
Nordic Holding AB in turn owns Concordia
Bus Nordic AB, which is the parent company
for all of the Group’s operating companies.
Concordia Bus Nordic AB has interest-bearing liabilities of SEK 1,489 million, exclud-
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
ing obligations under operating leases. The
opportunities for Concordia Bus Nordic AB’s
to pay interest on and amortize outstanding
bond loans and other obligations depend on
the ability of the underlying subsidiaries to
generate sufficient distributable profits and
cash surpluses to create scope for payment of
interest and amortization.
The Concordia Bus Group has historic­
ally accumulated significant loss carryforwards. Due to this and the unrealized foreign
exchange loss that arose during the fiscal year
on Concordia Bus Nordic AB’s bond loan,
equity in the consolidated balance sheet is
negative.
Concordia Bus Nordic AB’s bond loan
matures for payment on 1 August 2009 and
the company must succeed in obtaining a
new financing arrangement in order to repay
the full amount.
Concordia Bus AB intends to refinance
the current preference shares with common
shares, in an amount equal to SEK 639 million, according to the decision of an Extra­
ordinary Annual General Meeting on 7 May
2009. Furthermore, shares for a total value of
up to SEK 261 million may be issued in order
to raise additional liquidity. At the same time,
Concordia Bus Nordic AB intends to issue a
new bond loan for EUR 130 million to
replace the bond loan for EUR 130 million
that will mature for payment on 1 August
2009. Shareholders represented by three fund
managers, Bluebay Asset Management plc,
Fidelity Investment Ltd and Thames River
Capital LLP, have guaranteed subscription
for new common shares in an amount of
SEK 614 million and new bond capital equal
to EUR 92.4 million on the condition that
additional bond capital equal to at least EUR
21.35 million is provided by other investors.
The opportunities to obtain new financing are deemed favourable against the background of internal and external valuations
and in view of the fact that the current bond
loan is held primarily by the shareholders.
Investments and depreciation
The Group’s investments during the year consisted primarily of bus acquisitions, which
were financed through leases. Cash-financed
investments amounted to SEK 89 million
(33). Via its subsidiary Concordia Bus Fleet
AB, the Group has entered into finance lease
contracts with a historical cost of SEK 631
million (306) and these have been classified
as non-current assets in the balance sheet.
The lease commitment has been reported as a
liability in the balance sheet. Depreciation
and interest expenses are recognized in the
income statement.
During the year, the Group sold 262
buses (260) for a value equal to SEK 73 million (58). The sale resulted in a capital gain of
SEK 4 million (0).
Employees
The average number of employees in the
Group during the period was 7,606 (7,021).
In all countries where Concordia Bus AB has
operations, collective agreements are applied
in accordance with the trade union that represents employees in the industry where each
company is active. Between the employee
representatives and the company, there are
well established practices and traditions for
the way in which working hours, compensatory terms, information and cooperation are
negotiated and applied.
The Concordia Bus Group uses programs
focusing on values and employee relations in
order to boost the employees’ motivation at
work and thereby improve the quality of
­services to the customers.
Suppliers
The Concordia Bus Group’s subsidiaries are
dependent on certain suppliers, primarily in
the vehicle and energy sectors, to conduct
their operations. Purchasing agreements are
signed mainly at the Group level, and the
individual subsidiaries enter into agreements
with specific manufacturers only for the supply of diesel. These agreements exist because
no functioning retail trade for fuels exist and
the subsidiaries are extremely dependent on
regular fuel deliveries in order to conduct
transports in a reliable manner.
Environmental impact of operations
New buses are equipped with engines of the
­latest engine class that produce lower emissions
during combustion. These are equipped with
filters for exhaust emission control and are
therefore compliant with future emissions standards well before these go into effect. In its permanent facilities, the Group invests in environmental ienhancements such as new and
improved cleaning facilities in the bus washes.
Total emissions are minimized through upgrading of engine classes and ­control of tyre pressure
and wheel alignment. The Group is working to
reduce fuel consumption and continuously
evaluates new and improved fuel products.
The Group conducts operations subject
to reporting requirements under the Swedish
32
Administration report
Environmental Code (SFS 1998:808) for the
depots that operate bus washes and workshops under their own management. The
environmental impact of these operations
consists mainly of water emissions from the
bus washes.
In connection with the takeover and
transfer of operations, the facilities in question undergo environmental inspection to
determine the company’s environmental liability and impact. These operating companies
carry out minor decontamination measures
as needed. So far, no significant decontamination liability has been found with respect
to the Group’s own operations.
Disputes
The Concordia Bus Group has not been
involved in any significant disputes during
the fiscal year. After the end of the fiscal year,
the Concordia Bus Group has appealed a procurement carried out by Skånetrafiken.
Trading of the company’s shares
The share is not listed on any exchange or
other public trading venue.
Risk management
The Group is primarily exposed to interest rate
risk as a consequence of the company’s finance
and operating leases and the company’s loans.
Among other things, the lease charges and
loans are based on variable market interest
rates. Interest rate risk is hedged from time to
time through the use of interest derivatives.
The Concordia Bus Group is exposed to
exchange rate fluctuations in its bond loan,
which is denominated in EUR. As a result of
the steep drop in the SEK rate that began in
the autumn of 2008, the Group’s profit has
been charged with unrealized foreign exchange
losses of SEK 270 million. The bond loan for
EUR 130 million matures for payment on 1
August 2009, which means that the Group
must be able to raise new share or credit capital
in order to replace the bond loan.
The Group is also exposed to exchange
rate fluctuations through its purchasing of
diesel, which is traded on the international
commodities market in US dollars. Through
revenue indexation clauses in its contracts
with public transport authorities, the Group
receives ­partial compensation for changes in
the diesel price. According to internal calcu-
lations, this index compensation reduces
exposure to diesel price movements by
around 80%. Concordia Bus has used diesel
derivatives during the fiscal year to cover diesel price risk in excess of indexation in the
transport contracts. Based on the budgeted
diesel consumption and estim­ated index
compensation, an increase in the diesel price
by USD 10 per tonne would raise the net diesel cost by SEK 1.2 million for the following
fiscal year. For other financial and operating
risks, see Note 29.
Significant events after the end of the
fiscal year
The Extraordinary General Meeting of Concordia Bus AB on 7 May 2009 resolved to
carry out a new share issue for between SEK
600 million and SEK 900 million.The proceeds will be used to redeem preference shares
amounting to SEK 510 million that were
issued in January 2007 and to provide additional liquidity for reduction of net debt in
the company.
Parallel to the new share issue, Concordia
Bus Nordic AB will present an offer to subscribe for a new bond loan to replace the existing bond loan for EUR 130 million that
matures for payment on 1 August 2009. The
maximum amount of the new bond loan may
not exceed the amount of the earlier bond loan.
IFRS and the company’s accounting
policies
The consolidated financial statements have
been prepared in accordance with the International Financial Reporting Standards (IFRS)
issued by the International Accounting Stand­
ards Board (IASB). The Parent Company
applies the same accounting stand­ards as the
Group, except for in those cases described
under the heading “Accounting policies of the
Parent Company”. Any deviations that that
exist are a result of the Swedish Annual
Accounts Act’s limitations on the scope for
IFRS conformity in the Parent Company and
in certain cases also tax considerations.
The company’s accounting policies are
­presented in Note 1.
The Board’s statement regarding the
proposed dividend
The proposed dividend on the company’s
preference share amounts to SEK 94.5 million, see Note 21. Consolidated equity attributable to equity holders of the Parent Company at 28 February 2009 amounted to SEK
–117 million, and non-restricted equity in the
Parent Company totalled SEK 663 million.
The proposed dividend is conditional on
not implementing the Board’s decision to
redeem all outstanding preference shares as
announced in a press release dated 8 April
2009, and that the Board finds the dividend
to be justifiable at the time of payment with
­consideration to the cautionary princple.
In view of the above and other information that has come to the knowledge of the
Board of Directors, it is the Board’s assessment that the proposed dividend is warranted
with respect to the amount of shareholders’
equity required by the nature, scope and risks
associated with the Company’s business, as
well as its consolidation requirements, liquidity and overall financial position.
Allocation of profits (SEK)
Funds available for allocation by the Annual General Meeting:
Share premium reserve 507,222,662
Retained profit 131,324,953
Profit for the year Total
24,593,852
663,141,467
The Board of Directors proposes that the
company’s profits be allocated as follows:
To be paid to the shareholders1)
94,500,000
To be carried forward to new account 568,641,467
Total
663,141,467
1) Conditional
on not implementing the Board’s decision to
redeem all outstanding preference shares as announced
in a press release dated 8 April 2009, and that the Board
finds the ­dividend to be justifiable at the time of payment
with consideration to the cautionary princple.
For more information about the results and
financial position of the Group and the
­Parent Company, see the following income
statements, balance sheets and notes.
Parent Company
The Parent Company reported a pretax profit
of SEK 12 million (14). The Parent company
had 8 (9) employees during the year.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
33
Consolidated income statement
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
6,039
5,320
SEK M
Note
Revenue
1, 2, 3
Other operating income
95 86
TOTAL REVENUE
6,134 5,406
Operating expenses
Fuel, tires and other consumables
4
–1,423 Other external expenses
4, 5, 6
–1,164
–1,118
Personnel costs
4, 7
–3,042 –2,701
–1,162
Capital gains/losses on the sale of non-current assets
4
–
Depreciation/amortization and impairment of tangible assets
8
–303 –264
OPERATING PROFIT
1, 2
206 161
Investment gains/losses
Interest income and similar profit/loss items
9
18 15
Interest expense and similar profit/loss items
10
–457 –192
PROFIT/LOSS AFTER FINANCIAL INVESTMENTS
–233
–16
Income tax expense
11
–6 1
PROFIT/LOSS FOR THE YEAR
–239 –15
Of which, attributable to equity holders of the Parent Company
–239 –15
Basic earnings per share (SEK)
22
–17 –5
Diluted earnings per share (SEK)
22
–17 –5
Average number of common shares before dilution
22
20,019 20,000
Average number of common shares after dilution
22
20,019 20,000
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34
Consolidated balance sheet
SEK M
Note
28 Feb 2009
29 Feb 2008
ASSETS
Non-current assets
Goodwill
12
704 683
Other intangible assets
12 4
–
Costs for improvements on third-party properties
13
8 4
Equipment, tools, fixtures and fittings
13
39
30
Vehicles
13
2,092 1,647
Deferred tax assets
11 8
–
Non-current receivables
16
32 1
2,887
2,365
Total non-current assets
Current assets
Inventories
17
41 36
Trade receivables
18
612 539
Other current receivables
Deferred expenses and accrued income
19
76
48
174
103
Blocked bank accounts
20
141 74
Cash and cash equivalents
20
417 455
Total current assets
1,461
1,255
TOTAL ASSETS
1, 2
4,348 3,620
21
–117 210
EQUITY AND LIABILITIES
Equity attributable to equity holders of the Parent Company
Non-current liabilities
Bond loan
25
–
1,206
Other liabilities
25
1,501
1,008
Provisions for pensions and similar commitments
23
71
43
Other provisions
24
66 45
1,638
2,302
Total non-current liabilities
Current liabilities
Bond loan
25
1,485 –
Liabilities to credit institutions
25
167 107
Trade payables
264 199
Other current liabilities
26
154
134
Accrued expenses and prepaid income
27
757 668
2,827
1,108
Total current liabilities
Total liabilities
4,465
3,410
TOTAL EQUITY AND LIABILITIES
1, 2
4,348
3,620
PLEDGED ASSETS AND CONTINGENT LIABILITIES
28
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35
Consolidated statement of changes in equity
Share
capital
Other
contributed
capital
25
2,164
24
– –
11
Net income recognized directly in equity
25
2,164
Retained profit/accumulated deficit
SEK M
Equity according to the adopted balance sheet at 30 May 2007
Translation difference
Retained profit
Translation incl. profit/loss
difference
for the year
Profit/loss
for the year
Total equity
–1,741
–245
227
–
–
11
35
–1,741
–245
238
–
–
–
–245
245
–
Profit/loss for the year
– –
–
–
–15
–15
Total recognized income and expense for the period
–
–
–
–245
230
–15
Distribution of preference shares
– –
–
–13
–
–13
Total transactions with owners
–
–
2,164
–
35
–13
–
–13
–1,999
–15
210
Equity at 29 February 2008
Translation difference
25
– –
38
–
–
38
Net income recognized directly in equity
25
2,164
73
–1,999
–15
248
Retained profit/accumulated deficit
–
–
–
–15
15
–
Profit/loss for the year
–
–
–
–
–239
–239
Total recognized income and expense for the period
– –
–
–15
–224
–239
Exercise of previously issued share options
–
–
–
–52
–
–52
Proceeds from issue of share options
–
9
–
–
–
9
Proceeds from issue of shares
–
6
–
–
–
6
Distribution of preference shares
–
–
–
–89
–
–89
Total transactions with owners
Equity at 28 February 2009
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
–
15
–
–141
–
–126
25
2,179
73
–2,155
–239
–117
36
Consolidated cash flow statement
SEK M
Note
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
–233 –16
Cash flow from operating activities
Profit/loss after financial items
Adjustments for non-cash items
– Depreciation/amortization and impairment losses
8
303 264
10
– Allocation of capitalized borrowing costs
10 – Capital gains/losses
–4
–
– Unrealized foreign exchange gains/losses
244 15
–15
– Other items
49 Income taxes paid
11
–1
1
368
259
Cash flow from operating activities before changes in working capital
Cash flow from changes in working capital
Change in inventories
17
–2 –8
Change in operating receivables
–216
–1
Change in operating liabilities
172
1
322
251
Cash flow from operating activities
Cash flow from investing activities
Change in blocked bank accounts
20
–61 38
Investments in buildings and land, vehicles, equipment, tools,
fixtures and fittings, excl. finance leases
12, 13
–89
–33
Sale of buildings and land, vehicles, equipment, tools, fixtures and fittings
12, 13
39
58
–111
63
Cash flow from investing activities
Cash flow from financing activities
Proceeds from issue of shares
7
6
–
Dividends paid
–89
–13
Exercise of previously issued share options
7
–52
–
Proceeds from issue of share options
7
9
–
Amortization of finance lease liability
–144 –90
–270
–103
–59
211
Cash flow from financing activities
Cash flow for the year
Cash and cash equivalents at beginning of year
455 242
Cash flow for the year
–59
211
Foreign exchange gains/losses
21 2
Cash and cash equivalents at end of year
20
417 455
The cash flow statement is presented in accordance with the indirect method. The reported cash flow includes transactions that result in incoming and outgoing payments.
The Concordia Group received interest income of SEK 21 million (14) and paid interest expenses of SEK 205 million (–167) during the year.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
37
Parent Company income statement
SEK M
Note
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
Other operating income
33 33
TOTAL REVENUE
1, 3
33
33
Operating expenses
Other external expenses
5
–13
–16
Personnel costs
7
–26 –18
OPERATING PROFIT/LOSS
1, 2
–6
–1
Interest income from group companies
14 15
Interest expense and similar profit/loss items
10
Investment gains/losses
PROFIT AFTER FINANCIAL ITEMS
4 –
12
14
Income tax expense
11
12 6
PROFIT FOR THE YEAR
24 20
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38
Parent Company balance sheet
SEK M
Note
28 Feb 2009
29 Feb 2008
ASSETS
Financial assets
Shares in group companies
14
1,772 Receivables from group companies
15
125 1,772
221
Total financial assets
1,897 1,993
Total non-current assets
1,897 1,993
Current assets
Receivables from group companies
58 39
Other current receivables
10
2
Deferred expenses and accrued income
19
Total current receivables
1 1
69
42
53
Cash and cash equivalents
20
11
Blocked bank accounts
20
41 1
Total current assets
52 96
TOTAL ASSETS
1
2,018 2,089
25 25
EQUITY AND LIABILITIES
Equity
21
Share capital
Statutory reserve
Total restricted equity
1,322 1,672
1,347
1,697
Non-restricted equity
21
Share premium reserve
507 492
Retained profit/accumulated deficit
132
–128
Profit/loss for the year
24 20
Total non-restricted equity
663
384
2,010
2,081
Total equity
Non-current liabilities
Provisions for pensions and similar profit/loss items
23
Total non-current liabilities
1
–
1
–
Current liabilities
Trade payables
1 1
Liabilities to group companies
1 3
1
–
4
Other current liabilities
Accrued expenses and prepaid income
27
4 Total current liabilities
7 8
TOTAL EQUITY AND LIABILITIES
1
2,018 2,089
1,824 1,242
PLEDGED ASSETS AND CONTINGENT LIABILITIES
28
Pledged assets
Contingent liabilities
– –
Total pledged assets and contingent liabilities
1,824 1,242
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39
Parent Company statement of changes in equity
SEK M
Equity according to adopted balance sheet at 30 May 2007
Share
capital
Statutory
reserve
Share
premium
reserve
Retained
profit/
accumulated
deficit
Profit/loss
for the year
Total equity
25 1,672
492
–70
–61
2,058
Group contributions received
–
–
–
22 –
22 Tax effect of group contributions received
– –
–
–6 –
–6 25
1,672
492
–54
–61
2,074
Retained profit/accumulated deficit
–
–
–
–61
61
–
Profit/loss for the year
–
–
–
–
20
20 Total recognized income and expense for the period
–
–
–
–61
81
20
Distribution of preference shares
–
–
–
–13 –
–13 Total transactions with owners
–
25
–
–
–13 –
1,672
492
–128
20
–13 2,081 Reduction of statutory reserve
–
–350
–
350
–
–
Group contributions received
–
–
–
43
–
43
Net income recognized directly in equity
Equity at 29 February 2008
Tax effect of group contributions received
–
–
–
–12
–
–12
Net income recognized directly in equity
25
1,322
492
253
20
2,112
Retained profit/accumulated deficit
–
–
–
20
–20
–
Profit/loss for the year
–
–
–
–
24
24
Total recognized income and expense for the period
–
–
–
20
4
24
Exercise of previously issued share options
–
–
–
–52
–
–52
Proceeds from issue of share options
–
–
9
–
–
9
Proceeds from issue of shares
–
–
6
–
–
6
Distribution of preference shares
–
–
–
–89
–
–89
Total transactions with owners
Equity at 28 February 2009
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
–
–
15
–141
–
–126
25
1,322
507
132
24
2,010
40
Parent Company cash flow statement
SEK M
Note
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
12 14
Cash flow from operating activities
Profit/loss after financial items
Adjustments for non-cash items;
– Change in interest receivable
9
– Change in interest payable
1 –
22
3
–14
Cash flow from operating activities before changes in working capital
–11
Cash flow from changes in working capital
Change in operating receivables
60 Change in operating liabilities
–1
6
81
–5
Cash flow from operating activities
Cash flow from investing activities
Change in blocked bank accounts
Cash flow from investing activities
–40 –1
–40
–1
–13
Cash flow from financing activities
22
Dividends paid
–89 Change in issued share options
21 –37
–
Group contributions received
43 22
–83
9
–42 3
53
50
Cash flow for the year
–42 3
Cash and cash equivalents at end of year
20
11 53
Cash flow from financing activities
Cash flow for the year
Cash and cash equivalents at beginning of year
The cash flow statement is presented in accordance with the indirect method. The reported cash flow includes transactions that result in incoming and outgoing payments.
The Parent Company paid interest expenses of SEK 1 million (0) in 2008. The Parent Company paid no tax during the year.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
41
Notes
Note 1 Company information and accounting policies
Company information
Concordia Bus AB is a public limited company (corporate identification number
556576-4569, domiciled in Stockholm) that is owned by some 30 shareholders and
is the overall Parent Company of the Concordia Bus Group (Concordia). The
address of the head office is Armégatan 38, SE-171 71 Solna, Sweden.
Concordia Bus AB’s operations, which are conducted through subsidiaries, consist of the provision of scheduled contractual bus transport services to public transport authorities in Sweden, Norway, Denmark and Finland. Aside from contractual
bus transports, Concordia Bus AB also offers extensive express bus services throughout large parts of Sweden.
Concordia Bus AB is a holding company whose primary asset consists of the
investment in Concordia Bus Nordic Holding AB (with subsidiaries). This means
that the company’s ability to pay interest and amortize its debts is conditional on the
transfer of profits from the underlying operations.
The consolidated financial statements were approved for publication by decision
of the Board of Directors on 8 May 2009.
The consolidated income statement and balance sheet will be subject to adoption by the Annual General Meeting on 4 June 2009, in Stockholm.
Compliance with norms and laws
The consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) established by the International
Accounting Standards Board (IASB) which have been endorsed by the European
Commission for application in the EU. The Parent Company applies the same
accounting standards as the Group except for in those cases specified below under
“Accounting policies of the Parent Company”. Any deviations that that exist are a
result of the Swedish Annual Accounts Act’s limitations on the scope for IFRS conformity in the Parent Company and in certain cases also tax considerations. Furthermore, the Swedish Financial Reporting Board’s recommendation RFR 1.1, Supplementary Accounting Rules for Groups, has been applied.
Basis for valuation in the Parent Company and consolidated financial
statements
Assets and liabilities are recognized at historical cost, except for certain financial
assets and liabilities which are stated at fair value or amortized cost. The income
statement is presented by cost type.
Scope of consolidation
The consolidated financial statements include all companies in which Concordia Bus
AB directly or indirectly holds more than 50% of the votes or otherwise has a controlling influence.
The consolidated financial statements are prepared in accordance with the purchase method of accounting, whereby the subsidiaries’ assets and liabilities, including deferred tax liabilities, are recognized at fair value according to a purchase price
allocation (PPA) prepared on the acquisition date. If the cost of acquisition for the
shares in the subsidiary exceeds the fair value of the company’s identifiable net assets
according to the purchase price allocation, the difference is recorded as goodwill and
is tested for impairment at least annually. Only profits arising after the acquisition
date are included in consolidated equity. Subsidiaries are consolidated from the date
on which control is transferred to the Group and cease to be consolidated from the
date on which control is transferred out of the Group.
Transactions to be eliminated on consolidation
All intra-group receivables and liabilities, income or expenses, and unrealized gains
or losses arising on transactions between group companies are eliminated in full in
presentation of the consolidated financial statements.
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Transactions in foreign currency
Transactions in foreign currencies are translated to the functional currency at the rate
of exchange ruling on the transaction date. The functional currency is the currency
of the primary economic environment in which the group company operates. Monetary assets and liabilities in foreign currency are translated to the functional currency at the closing day rate. Foreign exchange gains/losses arising on translation are
recognized in the income statement. For the financial statements of subsidiaries with
a functional currency other than SEK, all balance sheet items are translated at the
closing day rate of exchange while income statement items are transacted at the average rate during the year.
Functional currency and presentation currency
The functional currency of the Parent Company is Swedish kronor (SEK), which is
also the presentation currency of the Parent Company and the Group. The consolid­
ated financial statements are thus presented in SEK. All amounts are rounded off to
the nearest million, unless otherwise stated.
Critical accounting estimates and assumptions
The preparation of financial statements in conformity with IFRS requires the use of
certain critical accounting estimates and assumptions that affect the reported
amounts of assets, liabilities, pledged assets and contingent liabilities, as well as
income and expenses, during the reporting period.
Certain assumptions about the future and certain estimates and judgments on
the closing date are of special significance for the valuation of assets and liabilities in
the balance sheet. The risk for changes in carrying amounts during the coming year
due to a possible need for changes in estimates and assumptions is deemed to lie primarily in the following areas.
Impairment of goodwill
Goodwill is tested for impairment at least annually and whenever circumstances or
events indicate that the carrying amount of an asset may not be recoverable. In determining the recoverable value of cash-generating units for assessment of whether goodwill is impaired, several assumptions about future conditions and estimates of variables
have been made for projection of future cash flows according to the discounted cash
flow (DCF) model. The cash flow projections are based on the best possible estimates
of future revenues and operating expenses, which in turn are based on historical development, general market conditions and other available information. These assumptions also include an assessment of the total enterprise value in relation to consolidated
equity and the opportunities to obtain loan financing in the short and long term.
The projected future cash flows are discounted at a reasonable rate for the
weighted average cost of capital plus a reasonable risk premium at the valuation date.
Provisions for onerous contracts
In the Group’s provisions for onerous contracts, under which the contractual revenues are not sufficient to cover the direct and allocable costs necessary for fulfilment
of the contractual obligations, several assumptions have been made about future
conditions and estimates of variables.
Excess vehicles (buses)
In assessing whether to measure excess vehicles (not used in traffic) at fair value,
management has made a number of assumptions about future conditions and alternatives for relocation and estimates about future resale values.
Classification of preference shares
The preparation of financial statements also requires judgments in the application of
accounting policies and classification of items. On the issuance of preference shares,
the issued amount has been classified as equity based on an assessment of the conditions for these shares in relation to the criteria in IAS 32 that define what is a liability
and what is equity.
42
NOTES
Note 1 cont’d.
Changes in published standards effective during the fiscal year
The following revisions and interpretations of accounting standards effective for
periods starting on or after 1 March 2008 have not had any effect on the Group’s
profit or financial position.
IFRS 2, Share-Based Payment. Changes in and guidance for fair value measurement and cancellation of share-based payments.
IFRIC 11, IFRS 2: Group and Treasury Share Transactions.
IFRIC 12, Service Concession Agreements, addresses how operators should
report service concession arrangements where a government or other public sector
body contracts with a private operator.
IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction, provides general guidance on the interaction
between a statutory or contractual minimum funding requirement and the limit in
IAS 19 Employee Benefits on the amount of the surplus that can be recognized as an
asset.
New accounting standards
The following new standards and amendments effective for periods beginning on or
after 1 January 2009 have not been applied for 2008. These are not expected to have
any impact on the consolidated financial statements other than increased disclosure
requirements.
IFRS 8, Operating Segments (effective for periods beginning on or after 1 January 2009; earlier application permitted), requires an entity to report on its operating
segments according to the segmentation and accounting policies applied by its management.
IAS 27, Consolidated and Separate Financial Statements and IFRS 1, FirstTime Adoption of IFRS.
IFRIC 15, Agreements for the Construction of Real Estate, standardizes
accounting practice across jurisdictions for the recognition of revenue for sales of
units, such as apartments or houses.
IFRIC 16, Hedges of a Net Investment in a Foreign Operation, clarifies what
can be designated as a hedged risk in hedges of a net investment in a foreign operation and which entity within a group can hold a hedging instrument.
Amended IFRS 2, Share-based Payment (effective for periods beginning on or
after 1 January 2009; earlier application permitted). The amendment clarifies that
vesting conditions are service conditions and performance conditions only, and that
all cancellations, whether by the entity or by other parties, should receive the same
accounting treatment.
Revised IFRS 3, Business Combinations, and revised IAS 27, Consolidated and
Separate Financial Statements (effective for periods beginning on or after 1 July
2008; earlier application permitted).
Revised IAS 1, Presentation of Financial Statements (effective for periods beginning on or after 1 January 2009; earlier application permitted). The revised IAS 1
requires the presentation of all non-owner changes in equity (comprehensive
income) either in one statement of comprehensive income or in two statements (a
separate income statement and a statement of comprehensive income).
Amended IAS 23, Borrowing Costs (effective for periods beginning on or after
1 January 2009; earlier application permitted). The amendment removes the option
of immediately recognizing as an expense borrowing costs that relate to assets that
take a substantial period of time to get ready for use or sale.
IAS 32, Financial Instruments, contains amendments with respect to puttable
financial instruments and obligations arising on liquidation.
IAS 1, Presentation of Financial Statements (effective for periods beginning on
or after 1 January 2009; earlier application permitted).
IFRIC 13, Customer Loyalty Programs (effective for periods beginning on or
after 1 July 2008; earlier application permitted). IFRIC 13 addresses accounting by
entities that provide free or discounted goods or services (loyalty award credits) to
customers who redeem award credits.
Segment reporting
Concordia Bus is active in two business areas; contractual transports and long-distance transports between selected cities (express transports). Contractual transports
are operated in large parts of Sweden and in metropolitan areas of Finland, Denmark
and Norway. The bulk of revenue is derived from contracts with public transport
authorities (PTAs) that represent the various counties. In nearly all cases, the PTAs
receive ticket revenues and the operator receives a fixed amount of compensation in
payment for the contracted services. Swebus Express traffics certain predetermined
routes throughout Sweden. Revenue is generated by the sale of tickets to the passengers. Some of the companies also conduct chartered transports mainly by using vehicles and personnel during periods when these are not occupied in regular transport
operations.
The Group’s operations are steered and reported by operating segment. The
accounting policies used by the reporting segments are the same as those applied in
the consolidated financial statements. Concordia Bus evaluates operations in each
operating segment based on operating profit for each reporting operating segment,
and normally reports sales and transfers between operating segments on a third-party
basis, i.e. valued at market prices.
Group-wide functions
Costs for group-wide support functions such as IT, systems administration and legal
affairs, etc., are allocated to the operating segments and countries according to the
degree of utilization. General administrative expenses, costs for the head office and
other costs that arise at the central level and are attributable to the entire company
are not included in the profit or loss of the operating segments. The operating assets
included in each operating segment include all operating assets that are used in operating activities, primarily intangible assets, tangible assets, inventories and trade
receivables. Most of these assets are directly attributable to the respective operating
segment. The operating liabilities included in each operating segment include all
operating liabilities that are used in operating activities, accrued expenses and prepaid income. Most of these liabilities are directly attributable to the respective operating segment. Estimated deferred tax and external and internal loans are not
included in the operating segments’ capital employed.
Revenue recognition
Most of Concordia’s revenue is attributable to contracts with public transport
authorities (PTAs) that run for a term of 5-10 years. The PTA contracts are generally
designed so that Concordia receives a fixed fee in return for services performed.
Ticket revenues do not accrue to Concordia, but are forwarded to the PTAs. Most of
the PTA contracts are of the gross cost contract type, in which compensation is based
exclusively on the number of kilometres or hours driven and is entirely unrelated to
the number of passengers. Under certain contracts, Concordia receives compensation based on the services performed, while other contracts provide Concordia with
remuneration in advance. Regardless of the payment flows in the contractual operations and the basis for compensation, Concordia recognizes the revenue evenly over
the term of the contract, before indexation. The amount of compensation is often
tied to certain cost indices in order to compensate the operators for cost increases
during the term of the contract. The compensation is adjusted during the term of the
contract due to changes in these indices. Concordia adjusts its revenues during the
contract period according to the agreed indexation formula. Certain of Concordia’s
PTA contracts are designed so that all or part of the compensation is based on the
number of passengers, so-called net cost contracts. Revenue from these contracts is
recognized on the date when the passenger travels with Concordia.
Revenues from express transports consist of ticket revenues from the passengers.
For express transports, revenue is recognized on the date when the passenger travels
with Concordia.
The revenues also include revenues for rents, fuel sales and maintenance services.
Revenues from these activities are recognized when the goods are delivered and the
services performed or, in cases where revenues are obtained through operating leases,
they are distributed evenly over the term of the lease.
All revenues are reported excluding value added tax.
Leases
In the consolidated financial statements, leases are classified as either finance or operating leases. A lease is classified as a finance lease if it transfers substantially all the
risks and rewards incident to ownership to the lessee. All other leases are classified as
operating leases. Assets held under finance leases are recorded as fixed assets in the
consolidated balance sheet. The obligation to pay future lease charges is recognized
as a liability. At commencement of the lease term, all assets and liabilities are measured at the lower of fair value and the present value of minimum lease payments.
Assets held under finance leases are depreciated on a straight-line basis over their esti-
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NOTES
43
Note 1 cont’d.
mated useful lives according to the same valuation principles used for similar asset
groups, which do not follow the payment periods in the lease contracts. In the company’s assessment, the benefits earned from the leased vehicles extend for longer than
the related financial obligation.
The finance lease payments are apportioned between the finance charge and
reduction of outstanding liability to produce a constant periodic rate of interest on
the remaining balance of the liability for each period. In the income statement, the
finance charge is recognized as amortization and interest expenses. For operating
leases, no assets or liabilities are recognized in the balance sheet. In the income statement, the lease payments are recognized as an expense on a straight-line basis over
the term of the lease.
Depreciation of tangible assets
Depreciation of tangible assets is based on the historical costs and estimated useful
lives of different groups of non-current assets. Depreciation is charge out on a
straight-line basis over the useful life of the assets down to an estimated residual
value. For assets acquired during the year, depreciation is calculated from the acquisition date.
Applied useful lives
Other intangible assets, max. 3 years
Computers 3 years
Office equipment and furniture
5 years
Vehicles Standard buses, 14 years
Long-distance buses, 10 years
Special buses, according to individual
valuation
Remodelling of leased premises5 years, but not exceeding the term of the
lease
Financial income and expenses
Financial income and expenses consist of interest income on bank deposits and
receivables, interest expense on loans and realized and unrealized gains and losses
attributable to financing. Interest income and expense is recognized in the period in
which it arises.
Income taxes
The Group’s income taxes consist of current tax and deferred tax. Current tax refers
to tax payable or receivable with respect to the year’s profit or loss. Deferred tax is calculated according to the balance sheet method on the basis of temporary differences
between the carrying amount of an asset or liability and its tax base and tax on the
Group’s tax loss carryforwards. Deferred tax is computed according to the applicable
tax rate in each country. Deferred tax assets are recognized only to the extent that it is
probable that these can be utilized against future taxable profits.
Tax laws in Sweden and Finland permit provisions to special reserves and funds
which constitute temporary differences. Within specified limits, this enables companies to retain reported profits in the company without immediate taxation of these
profits. The untaxed reserves are not subject to taxation until they are dissolved. During years when the operations make a loss, however, the untaxed reserves can be utilized to cover losses without giving rise to any taxation. In the Group’s balance sheet,
untaxed reserves are divided between equity and deferred tax liabilities. In the
income statement, deferred tax is reported among other things as tax attributable to
the year’s change in untaxed reserves.
Intangible assets
In cases where the fair value of purchase consideration given for operations or shares
in subsidiaries exceed the fair value of net assets acquired, the difference is recorded
as goodwill. Goodwill is no longer amortized but is instead tested for impairment at
least annually.
Other intangible and tangible assets
The carrying amounts of the Group’s non-current assets are reviewed regularly to
look for any indication that an asset may be impaired. If there is an indication of
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impairment, the asset’s net selling price and value in use are calculated. Net selling
price consists of the amount recoverable on the sale of the asset less costs to sell.
A non-current asset is considered to be impaired when its carrying amount
exceeds the present value of future cash flows from the asset. The impairment loss
consists of the difference between the asset’s present value and carrying amount. For
fixed assets held for sale, the impairment loss is calculated as the difference between
the estimated selling price less costs for disposal and the carrying amount of the
asset.
Inventories
Inventories are stated at the lower of cost and fair value on a First-In, First-Out
(FIFO) basis. The necessary provisions are made for obsolescence, partly on a caseby- case basis and partly through collective assessment.
Financial assets and liabilities and other financial instruments
Financial instruments are initially measured at cost, corresponding to fair value
including transaction costs for all financial instruments aside from those in the category of financial assets and liabilities measured at fair value through profit or loss.
Subsequent to initial recognition, the accounting treatment of financial liabilities
depends on how they are classified, as described below.
A financial asset or liability is recognized in the balance sheet when the company
initially becomes party to the contractual provisions of the instrument. Trade receivables are recorded in the balance sheet when an invoice has been issued. Financial liabilities are recognized when the counterparty has performed and there s contractual
obligation to pay, even if no invoice has been received. Trade payables re recorded
when an invoice has been received.
A financial asset is derecognized from the balance sheet when the company’s
rights under the agreement are realized, expire or the company has relinquished control of the asset. The same applies to a part of a financial asset. A financial liability s
derecognized from the balance sheet when the obligation specified in the agreement
is discharged or otherwise extinguished. The same applies to a part of a financial liability.
At each reporting date, the Group assesses whether there is objective evidence of
impairment for a financial asset or group of financial assets.
Financial assets and liabilities at fair value through profit or loss
Assets and liabilities in this category consist of derivatives measured at fair value with
fair value changes through profit or loss.
Currency derivatives (forward exchange contracts and currency swaps) entered
into in order to hedge currency exposure in interest payments on bond loans are
reported according to hedge accounting, i.e. the profit/loss effects attributable to the
derivative instruments are recognized on the same date as the foreign exchange
effects on the underlying commercial flow are realized. Outstanding currency derivatives that do not meet the criteria for hedge accounting are measured at fair value
with fair value changes through other financial items in the income statement.
Interest derivatives (interest rate caps) entered into in order to achieve the
desired fixed interest period in lease liabilities are reported according to hedge
accounting, i.e. the profit/loss effects attributable to the derivative instruments are
recognized on the same date as the underlying item. Interest derivatives that do not
meet the criteria for hedge accounting are measured at fair value with fair value
changes through other financial items in the income statement.
Loans and receivables
After individual assessment, trade receivables are reported in the amount in which
they are expected to be received after deduction of doubtful debts, which are assessed
on a case-by-case basis. When the expected maturity is short, the receivable is recognized at face value without discounting. Impairment losses on loans and receivables
are recognized in operating expenses.
Blocked bank accounts
Blocked bank accounts consist of deposits to secure bank guarantees and lease contracts. Among other things, bank guarantees have been furnished as security for
Concordia Bus Nordic AB’s pension liability, Concordia Bus Norge AS´s obligations
in respect of transport contracts in Oslo, Swebus AB and Swebus Express AB’s obligations pursuant to the Travel Guarantee Act and Swebus’ obligations in respect of
44
NOTES
Note 1 cont’d.
electricity purchases. Swebus and Concordia Bus Danmark have deposited funds
under lease contracts for buses.
Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and at bank.
Other financial liabilities
Liabilities are classified as other financial liabilities, which means that these are initially measured at the amount received less transaction costs and are subsequently
measured at amortized cost according to the effective interest rate method.
Trade payables are classified as other financial liabilities. Trade payables have a
short expected maturity and are measured at face value without discounting.
Determining recoverable amount
The recoverable amounts of financial assets in the categories of held-to-maturity
investments and loans and receivables measured at amortized cost are calculated as
the present value of future cash flows discounted at the effective rate in force on initial recognition of the asset. Assets with a time to maturity of less than one year are
not discounted.
Impairment losses on held-to-maturity investments and loans and receivables
measured at amortized cost are reversed if a later increase in the recoverable amount
can be objectively attributed to an event occurring after the date of the impairment
loss.
Provisions
A provision is recognized in the balance sheet when the Group has a present obligation (legal or constructive) that has arisen as a result of a past event, it is probable
that an outflow of resources will be required to settle the obligation and the amount
can be estimated reliably. When the timing effect of payment is significant, provisions are measured at discounted present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific
to the liability.
Termination benefits
A provision is recognized on the termination of employees only if the company is
demonstrably committed to terminate an employee or group of employees before
the normal retirement date. In the event of termination, the company draws up a
detailed plan including at least the place of work, positions and approximate number
of persons affected, as well as the amount of compensation for each employee cat­
egory or position and the time of the plan’s implementation.
Onerous contracts
A large share of the Group’s revenue relates to contracts with public transport
authorities that run for a period of 5-8 years. The terms of these contracts normally
stipulate that the amount of revenue shall be adjusted upwards according to an
established index, either the consumer price index or various other producer price
indices. As a result of changed conditions and when costs increase more than revenues, these contracts can become onerous contracts in which the contractual revenues are not sufficient to cover the direct and allocable costs necessary for fulfilment
of the contractual obligations. A provision for future losses is then made in the
period when the management has identified the contract as an onerous contract. The
loss is calculated by including direct and indirect costs attributable to the contract
including depreciation of buses used to fulfil the contractual obligations. Provisions
are made at the public transport authority level in cases where there is a natural connection between the various contracts. Many contracts make use of joint resources
which are often difficult to allocate between the contracts. The contracts can also be
related for other reasons, for example in tenders for packages of contracts where certain are profitable and others loss-making but the transaction as such generates a surplus.
Future third-party obligations
Provisions are made for damages that of occurred, but have not been settled, to the
Group’s own vehicles or vehicles owned by third parties. The provision shall cover
future obligations to third parties.
Future environmental obligations
Provisions are made for future environmental obligations on leased land and facilities that are, or have been, used in operations.
Pensions
The Group has both defined contribution and defined benefit pension plans. In the
defined contribution pension plans, Concordia pays a pays a fixed contribution
according to plan and has no further obligation to pay post-employment contributions. Under the defined contribution plans for Concordia Bus Norge AS and Concordia Bus Nordic AB, benefits are paid to former employees on the basis of final salary and years of service. The Group bears the risk for ensuring that the contractual
benefits are paid.
Pension obligations for most of the Swedish operations are covered by a defined
benefit pension plan of the multi-employer type. The plan is insured in the mutual
insurance company Alecta. The Group has not had access to sufficient information
to report its proportional share of the defined benefit obligation and of the plan
assets and expenses. The plan is therefore reported as a defined contribution plan,
which means that benefits paid are recognized as an expense. In the Swedish operations, there is also a defined benefit pension plan that is funded.
The Group’s net obligation under defined benefit plans is determined separately
for each plan according to the Projected Unit Credit Method. This means that the
obligation is calculated as the present value of expected future pension payments.
This obligation is compared to the fair value of plan assets and the difference is recognized as a liability/asset with respect to accrued actuarial gains/losses. The calculation
of future payments is based on actuarial assumptions that include life expectancy,
future salary increases, employee turnover and factors of significance for the choice
of discount rate.
Changes in and deviations from the actuarial assumptions normally lead to
actuarial gains or losses. Actuarial gains and losses are recognized only when the
accumulated gain or loss exceeds 10% of the higher of the present value of plan obligations and the fair value of plan assets. If the accumulated gain or loss falls below
the above-mentioned limit, the excess portion is recognized in income or expense
over the expected average remaining working lives of the participating employees.
When valuation leads to an asset for the Group, the recognized value of the asset
is limited to the net total of unrealized actuarial losses and past service costs and the
present value of any benefits available in the form of refunds or reductions in future
employer contributions to the plan.
Share options
Option premiums received are recognized in equity and are offset against premiums
paid in the event of a buyback. If an issued share option expires without being exercised, the premium is recognized in profit or loss. When an issued share option is
exercised, the premium increases the exercise price on the sale of shares and decreases
the exercise price on the purchase of shares.
Cash flow
The cash flow statement has been prepared med based on the income statement and
other changes between the opening and closing balances in the balance sheet, taking
into account translation differences. Cash and cash equivalents in the cash flow statement include cash in hand, driver receipts and bank deposits.
Accounting policies of the Parent Company
The Parent Company applies the same accounting policies as the Group aside from
those exceptions and additional stated in the Swedish Financial Reporting Board’s
recommendation RFR 2.1, Accounting for Legal Entities. Any deviations that that
exist are a result of the Swedish Annual Accounts Act’s limitations on the scope for
IFRS conformity in the Parent Company.
Group contributions for legal entities
The Parent Company reports Group contributions in accordance with statement
URA 7 from the Swedish Financial Accounting Standards Council’s Emerging Issues
Task Force. Group contributions are reported in accordance with their financial significance, which means that Group contributions paid to minimize the Group’s
overall tax burden are reported directly in retained earnings less the current tax effect.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
NOTES
Liabilities by operating segment
Note 2 Segment reporting
SEK M
Revenue by operating segment
SEK M
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
Contractual transport services – Sweden
4,396 3,990
Contractual transport services – Norway
528 463
Contractual transport services – Finland
721
517
53 –
5,698 4,970
Express, long-distance transports
341 351
Total other transports
341 351
95 85
6,134 5,406
Contractual transport services – Denmark
Total contractual transport services
Other revenue and group eliminations
Total revenue
1 March 2008–
28 Feb 2009
Contractual transport services – Sweden
232
1,615
Contractual transport services – Norway
282 152
Contractual transport services – Finland
391
217
Contractual transport services – Denmark
18
–
2,727
1,984
Express, long-distance transports
129
84
Total other transports
129 84
Total bus operations
2,856
2,068
Parent Company and intra-group eliminations
1,609 1,342
Total liabilities
4,465 3,410
Total contractual transport services
Investments in tangible and financial
assets by operating segment
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
Contractual transport services – Sweden
422
84
154
Contractual transport services – Norway
111
57
96
141
1 March 2007–
29 Feb 2008
SEK M
Contractual transport services – Norway
9 28
Contractual transport services – Finland
24
12
Contractual transport services – Denmark
Contractual transport services – Denmark
–24 –
Total contractual transport services
241
194
23 Total contractual transport services
Express, long-distance transports
38
Total bus operations
687 320
23 19
213
Central functions and other items
–58 –52
Total operating profit
206 161
Parent Company and intra-group
eliminations
Total investments
28 Feb 2009
29 Feb 2008
2,706 2,279
Contractual transport services – Norway
766 577
Contractual transport services – Finland
512
332
28
–
4,012
3,188
Express, long-distance transports
206 170
Contractual transport services – Denmark
Total other transports
206 170
4,218 3,358
Total assets
130
262
4,348
3,620
SEK M
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
Contractual transport services – Sweden
224 210
Contractual transport services – Norway
23 17
Contractual transport services – Finland
35
23
0 –
Total contractual transport services
282 250
Express, long-distance transports
10 8
Total other transports
10 8
Total bus operations
292 258
Parent Company and intra-group
eliminations
Total depreciation/amortization
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
19
339
Depreciation/amortization by business segment
Contractual transport services – Sweden
Parent Company and intra-group
eliminations
34
721
Investments in tangible and financial assets consist of finance leases for SEK 631 million (SEK 306 million) which have no effect in liquidity in the operating segment.
Assets by operating segment
Total bus operations
38
19
264 Total contractual transport services
–
282
55
Total bus operations
Contractual transport services – Denmark
3 632
55
Total other transports
Total other transports
SEK M
29 Feb 2008
2,036 Contractual transport services – Finland
Express, long-distance transports
28 Feb 2009
Contractual transport services – Sweden
Operating profit/loss by operating segment
SEK M
45
11 6
303 264
46
NOTES
Note 2 cont’d.
Revenue by country
SEK M
Investments in tangible and financial assets by country
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
SEK M
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
141
Sweden
4,807 4,408
Sweden
511
Norway
543 476
Norway
111
57
Finland
727
522
Finland
96
141
Denmark
Total revenue
57 –
6,134 5,406
Assets by country
SEK M
28 Feb 2009
29 Feb 2008
Sweden
3,042
2,711
Norway
766 577
Finland
512
332
Denmark
Total assets
28 –
4,348 3,620
Denmark
Total investments
3 –
721 339
Investments in tangible and financial assets consist of finance leases for SEK 631 million (306) which have no effect in liquidity in the operating segment.
Note 3 Revenue
Revenue includes other operating income, which consists primarily of revenue from leasing, the sale of fuel and diesel and revenue from workshop services to external customers. Sales to one major customer represent 29% (29%) of the Group’s total revenue.
Group
Breakdown of revenue, SEK M
Revenue from bus operations
1 March 2008–
28 Feb 2009
Parent Company
1 March 2007–
1 March 2008–
29 Feb 2008 28 Feb 2009
1 March 2007–
29 Feb 2008
6,012 5,299 –
Leasing, external workshop services and diesel sales
27 21 – –
Other revenue
95 86 33
33
6,134 5,406 33 33
Total
–
Sales to Group companies
Revenue in the Parent Company includes sales of SEK 33 million (33) to group companies.
Note 4 Cost of services sold
The cost of services sold consists of personnel expenses, depreciation of buses and other direct costs.
Group
SEK M
Compensation to drivers
1 March 2008–
28 Feb 2009
Parent Company
1 March 2007–
1 March 2008–
29 Feb 2008 28 Feb 2009
1 March 2007–
29 Feb 2008
2,732 2,394 – –
625 638 – –
Other direct costs
1,830 1,514 – –
Total
5,187 4,546 – –
Depreciation and lease charges on buses
Note 5 Other external expenses
Group
Fees and compensation to auditors (SEK thousand)
Ernst & Young
Auditing services
Non-auditing services
Total
1 March 2008–
28 Feb 2009
3,039 Parent Company
1 March 2007–
1 March 2008–
29 Feb 2008 28 Feb 2009
2,290 1 March 2007–
29 Feb 2008
904 401
153 351 53 186
3,193 2,641 958 587
Auditing services refer to examination of the consolidated financial statements, the accounts and the administration of the Board of Directors and the President of the company, other tasks incumbent on the company’s auditor, and advice or other assistance prompted by observations from such audits or the performance of other such tasks. All
other work is classified as non-auditing services.
Purchases from group companies
The Group’s operating expenses include purchases of SEK 0 million (0) from other companies in the corporate group to which Concordia Bus AB belongs. The Parent Company’s operating expenses include purchases of SEK 6 million (5) from group companies.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
NOTES
47
Note 6 Leases
Finance leases
SEK M
Group
1 March 2008–
28 Feb 2009
Historical cost
Opening cost
The year’s new finance leases
Reclassification
Foreign exchange gains/losses
Closing cost
Accumulated depreciation
1 March 2007–
29 Feb 2008
1,248
942
631
306
7
–
65
–
1,951 1,248
Opening accumulated depreciation
–123
–37
The year’s depreciation
–124
–86
Reclassification
–4
–
Foreign exchange gains/losses
–5
–
Closing accumulated depreciation
–256
–123
Planned residual value
1,695
1,125
During the year, the Group entered into finance lease contracts for SEK 631 million (306) via the subsidiary Concordia Bus Fleet AB. All lease contracts are valued according
to the same depreciation rules as the corresponding asset groups.
The following table summarizes the present value of the Concordia Bus Group’s finance lease obligations and their expected maturities at 28 Feb 2009. The Parent Company
has no direct finance lease commitments.
SEK M
Vehicles (buses)
Total
Within 1 year
1–3 years
4–5 years
Longer than 5 years
1,472 166
337
355
614
Operating leases
Group
1 March 2008–
28 Feb 2009
Lease charges, SEK M
The year’s lease charges (operating leases)
Parent Company
1 March 2007–
1 March 2008–
29 Feb 2008 28 Feb 2009
339 390 1 March 2007–
29 Feb 2008
– –
The Concordia Bus group holds 1,606 buses (1,621) under operating leases, which corresponds to a nominal lease liability of SEK 1,470 million (1,458).
Group
Present value of future lease payments, SEK M
28 Feb 2009
Parent Company
29 Feb 2008 28 Feb 2009
29 Feb 2008
Vehicles (buses)
896 939 – –
Total
896 939 – –
The following table shows the depreciation component of the lease charge based on the assumption that the contracts will be renewed on expiry of the initial lease period. The
Parent Company has no direct lease commitments.
SEK M
1–3 years
4–5 years
Longer than 5 years
Vehicles (buses)
Within 1 year
243 417
331
272
Total
243 417
331
272
The following table shows future lease payments (nominal amounts) for operating leases
on buses at 28 Feb 2009, assuming that all buses are held until the end of the contract term;
SEK M
28 February 2010
268
28 February 2011
228
28 February 2012
245
28 February 2013
207
28 February 2014
139
Later
383
Total
1,470
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
48
NOTES
Note 7 Personal
Group
1 March 2008–
28 Feb 2009
Parent Company
1 March 2007–
1 March 2008–
29 Feb 2008 28 Feb 2009
1 March 2007–
29 Feb 2008
Average number of employees
7,606 7,021 8 9
Of whom, men
6,610
6,108 6 7
Of whom, women
996 913 2 2
Finland
911
717 – –
Of whom, men
864 673 – –
47 44 – –
Norway
614
506 – –
Of whom, men
565 465 – –
49 41 – –
Denmark
170
2 – –
Of whom, men
153 2 – –
17 – –
–
Sweden
5,911 5,796 8
9
Of whom, men
5,028 4,968 6 7
883 828 2 2
8 (4)
Of whom, women
Of whom, women
Of whom, women
Of whom, women
Salaries and other remuneration (of which, bonus), SEK M
Sweden, boards and senior executives1)
Other employees in Sweden
18 (7) 13 (5) 6 (1)
1,602 (7)
1,508 (9) 5 (0)
3 (0)
1,620 (14) 1,521 (14) 11 (1) 11 (4)
Foreign subsidiaries
Finland, board and president
2 2 – –
331 235 – –
2 2 – –
243 208 – –
0 – – –
37 1 – –
2,235 1,969 – –
Payroll overheads
749 679 8 6
Of which, pension costs for other employees
131
131 1 1
4 2 2 1
Finland, other employees
Norway, board and president
Norway, other employees
Denmark, board and president
Denmark, other employees
TOTAL
Of which, pension costs for boards and presidents
1) The
figures for the Group refer to the boards and presidents of all Swedish group companies.
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
NOTES
49
Note 7 cont’d.
Board members and senior executives
Remuneration and other benefits during the year
28 Feb 2009
Group
Number
Board of Directors
Presidents and other senior
executives
29 Feb 2008
Of whom,
men Number
Group
Of whom,
men
22 91% 21
95%
9
100% 8
100%
SEK M
28 Feb 2009
Number
29 Feb 2008
Of whom,
men Number
Of whom,
men
Board of Directors
4 75% 4
75%
Presidents and other senior
executives
2
100% 2
100%
Parent Company
No disclosures about sickness absence are provided since the number of employees is
fewer than 10.
Remuneration to senior executives
In the event of termination of employment, senior executives in the Concordia Bus
Group are entitled to a maximum of 12 monthly salaries. As a rule, there is a
6-month mutual term of notice between the company and the senior executive. Furthermore, additional compensation in a maximum amount of 6 monthly salaries is
payable in the event of termination on the part of the company. Senior executives
include the President and CFO of the Parent Company and the presidents of the
Group’s subsidiaries. During the year, an agreement was signed with the president of
one subsidiary.
Pension benefits of the President
The retirement age for the President of the Parent Company is 62 years. Pension
expenses for the company are reduced to 90% of salary on retirement at the age of
62–63 years, 80% of salary on retirement at the age of 63–64 years and 70% of salary on retirement at the age of 64–65 years. Concordia Bus AB’s obligations to its
presidents cease on retirement, 65 years of age. Pension expenses consist of defined
benefit pensions, for which the premium is equal to 30% of pensionable salary. Pensionable salary consists of basic salary as long as the president remains in the company’s employment. Termination benefits are pensionable.
1 March 2007–
29 Feb 2008
Board Chairman
Jan Sjöqvist
Board members and senior executives
Parent Company
1 March 2008–
28 Feb 2009
0.6 0.6
Gina Germano
0.0 0.0
Jan Sundling
0.2 0.2
Rolf Lydahl
0.2 0.2
Board members
President
Ragnar Norbäck (of which, bonus)
3.7 (0.4)
3.6 (0.7)
4.7 4.6
Total
During the year, Concordia Bus AB paid pension benefits to former Board members
in an amount of SEK 0.1 million. Former Board members are entitled to lifelong
compensation from the company.
Share option programs
Concordia Bus AB has issued two share option programs. Program 1, issued on
24 June 2005, consisted of 1,052,000 share options, and Program 2, issued on
8 November 2005, consisted of 304,569 share options.
An Extraordinary General Meeting of Concordia Bus AB on 3 November 2008
resolved to approve the buyback of issued share options by the company. Compensation for the redemption of issued share options will be paid in cash according to an
independent valuation of the company’s common shares.
The fundamental motive for the buyback of share options is that there is currently no organized trading of the company’s shares. At the redemption date, holders
of the issued share options have also bound themselves to reinvest part of the proceeds in a new incentive system.
Concordia Bus AB has thus issued a new share option program, Program 3, for
key members of the executive managements of the various group companies and to
the members of the Board of Concordia Bus AB.
Program 3
Number of share options
Subscription period
1,640,925
Subscription by 19 January 2009 at the latest
Share price
SEK 102.13
Option price
SEK 10.28
Vacation for the President
Exercise period
The President is entitled to 30 vacation days per year.
Maturity
Sick pay for the President
The share options correspond to an increase of 8.2% in the number of common
shares. The share options grant the right to subscribe for new common shares in the
company.
No dividends have been assumed in valuation of the share options. The share
arising from subscription will grant the right to dividends for the first time on the
record date for dividends falling most closely after subscription is carried out.
The assessment has been based on theoretical calculations of the share option’s
value. Th e future volatility of the share has been assessed with consideration to historical volatility in comparable companies.
The President is insured up to 90% of salary for a maximum of 365 days per calendar
year, with no qualifying days.
Other employment benefits of the President
Aside from the described taxable benefits, there is also healthcare insurance. The
President is covered by the issued share option programs, which are reported under
the heading “Share option programs”.
Remuneration to the Board Chairman and other Board members
Remuneration to the Chairman and other members of the Board is paid according
to the decision of the Annual General Meeting. No remuneration in excess of that
decided by the Annual General Meeting is paid. The President receives no Board
fees. The members of the Board are covered by the issued share option programs,
which are reported under the heading “Share option programs”.
3 years
Share option programs
SEK M
Buyback of issued options,
programs 1 and 2
Senior
executives
Board of
Other
Directors employees
702,070
223,578
–
41,345
10,573
–
Subscription for new shares
180,500
47,150 –
Subscription for share options,
program 3
661,151
241,875 737,899
Exercise price, SEK M
C O N C O R D I A B U S | annua l r e p or t 2 0 0 8 / 2 0 0 9
1 January 2012–13 February 2012
50 notes
Note 8 The year’s depreciation/impairment losses on
tangible assets
Note 9 Other interest income and similar profit/loss
items
Group
Group
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
Other intangible assets
2
–
Other financial income
1 1
Buildings and land
2
2
Other financial expenses
17 14
Total
18
15
SEK M Equipment, tools, fixtures and fittings
12 13
Vehicles
287 249
Total
303 264
SEK M
The Group earns interest on its bank deposits according to an interest rate based on
the banks’ daily investment interest rates. Of the above interest income and similar
profit/loss items, SEK 21 million (14) was paid during the year.
Note 10 Interest expense and similar profit/loss items
Group
SEK M
Interest expenses – liabilities to credit institutions
Interest expenses – bond loans
Interest expenses till group companies
1 March 2008–
28 Feb 2009
Parent Company
1 March 2007–
1 March 2008–
29 Feb 2008 28 Feb 2009
1 March 2007–
29 Feb 2008
–87
–58 – –
–120
–111 – –
–1
–
–
–
Allocation of capitalized borrowing costs
–10
–10 – –
Other financial expenses
–10
–5 –1 –
Realized and unrealized exchange gains/losses, net
–230 –8 6 –
Total
–457 –192 4 –
Paid interest expenses amounted to SEK 205 million (167).
Note 11 Income tax
Group
SEK M
Tax attributable to prior years
1 March 2008–
28 Feb 2009
Parent Company
1 March 2007–
1 March 2008–
29 Feb 2008 28 Feb 2009
–1
1 March 2007–
29 Feb 2008
–
–
–
Current tax
–
– –
–
Deferred tax
–5
1 12
6
Total tax reported in the income statement
–6
1 12
6
Group
The difference between the Group’s reported income tax expense and computed income
tax expense is based on the applicable tax rates and is explained below: SEK M
Parent Company
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008 1 March 2008–
28 Feb 2009
Reported income tax expense in the income statement
–6
1 12
6
28% tax on profit before tax
67
4 –3
–4
15
10
Difference
1 March 2007–
29 Feb 2008
–73
–3
Tax attributable to prior years
–1
–
–
–
Non-taxable income and non-deductible expenses
–1
1
–
–
–
–1
–
–
–5
–
–
–
Differing tax rates in other countries
–
1
–
–
Group contributions received/rendered
–
–
12
6
The different consists of the following items:
Tax effect arising on reporting of finance leases
Prior years’ capitalized loss carryforwards that are not expected to be utilized
Loss carryforwards for which no deferred tax is recognized
–66
–4 3
4
Total
–73 –3 15
10
C O N C O R D I A B U S | A nnua l R e p or t 2 0 0 8 / 2 0 0 9
notes 51
Note 11 cont’d.
The corporate tax rate is 28% in Sweden and Norway, 25% in Denmark and 26% in Finland. Tax is computed on based on profit/loss for the year plus non-deductible
expenses and other tax adjustments.
Group
Tax assets and liabilities, SEK M
Parent Company
28 Feb 2009
29 Feb 2008 28 Feb 2009
29 Feb 2008
Deferred tax assets
Opening carrying amount
–
– –
–
–5
– –
–
–
– –
–
13
– –
–
Foreign exchange gains/losses
–
– –
–
Total deferred tax assets
8
– –
–
Deferred tax liabilities
–
– –
–
Net deferred tax assets and liabilities
8
– –
–
Change over the income statement
Recognized directly in equity
Reclassifications from prior years
Group
Unrecognized deferred loss carryforwards, SEK M
Opening carrying amount
Uncapitalized loss carryforwards for the current year
1 March 2008–
28 Feb 2009
1 March 2007–
29 Feb 2008
492
485
68
4
Reclassification of prior years’ loss carryforwards
8
5
Change in applicable tax rate
0
–2
Foreign exchange gains/losses
Total
11
–
579
492
Group
Expected expiry of tax loss carryforwards, SEK M
28 Feb 2009
29 Feb 2008
2011
–
10
2012
3
4
2013
18
14
2014
28
23
2015
25
20
2016
22
18
2017
22
17
Unlimited
1,966
1,662
Total
2,084
1,768
C O N C O R D I A B U S | A nnua l R e p or t 2 0 0 8 / 2 0 0 9
52 notes
Note 12 Intangible assets
Group
Goodwill, SEK M
Opening balance
28 Feb 2009
683 Foreign exchange gains/losses
Closing balance
29 Feb 2008
674
21
9
704 683
The Group’s management has carried out impairment tests and found no indication
of impairment for consolidated goodwill.
In determining the recoverable value of cash-generating units for assessment of
whether goodwill is impaired, several assumptions about future conditions and estimates of variables have been made for projection of future cash flows according to
the discounted cash flow (DCF) model. The cash flow projections are based on the
best possible estimates of future revenues and operating expenses, which in turn are
based on historical development, general market conditions and other available
information. These assumptions also include an assessment of the total enterprise
value in relation to consolidated equity and the opportunities to obtain loan financing in the short and long term.
The forecasts are performed with respect to each operating unit and are based on
the respective company’s profit/loss before amortization/depreciation, return multiples, discounted cash flows, 11.5% return, future 3-year forecasts and the companies’ existing and future market shares.
The growth rate has been estimated at 2-4% per year and business segment. In
the management’s assessment, reasonable and possible changes in the above variables
would not have such significant effects that they would individually reduce the
recoverable amount to a level lower than the carrying amount.
The cash flow forecasts are discounted to by a rate of 11.5% for the average
weighted cost of capital.
Group
Other intangible assets, SEK M
28 Feb 2009
29 Feb 2008
Opening cost
–
–
Purchases
3
–
Reclassification
10
–
Closing cost
13
–
Historical cost
Accumulated amortization
Opening accumulated amortization
–
–
The year’s amortization
–2
–
Reclassification
–7
–
Closing accumulated amortization
–9
–
4
–
Closing carrying amount
Note 13 Tangible assets
Group
Costs for improvements on third-party properties, SEK M
Parent Company
28 Feb 2009
29 Feb 2008 28 Feb 2009
29 Feb 2008
Opening cost
8
8 –
–
Purchases
7 – –
–
Sales/disposals
–1 – –
–
Closing cost
14 8 – –
–4 –3 – –
–
– – –
The year’s depreciation
–2 –1 – –
Closing accumulated depreciation
–6 8 –4 4 – – –
Historical cost
Accumulated depreciation
Opening accumulated depreciation
Sales/disposals
Closing carrying amount
–
C O N C O R D I A B U S | A nnua l R e p or t 2 0 0 8 / 2 0 0 9
notes 53
Note 13 cont’d.
Group
Equipment, tools, fixtures and fittings, SEK M
28 Feb 2009
Parent Company
29 Feb 2008 28 Feb 2009
29 Feb 2008
139 157 –
–
26
11 – –
Sales/disposals
–22 –29 – –
Reclassification
–11
– –
–
4
– – –
136
139 – –
–109 –126 – –
22 29 – –
–12
–12 – –
7
– –
–
–5 – – –
–97
–109 – –
39 30 – –
Historical cost
Opening cost
Purchases
Foreign exchange gains/losses
Closing cost
Accumulated depreciation
Opening accumulated depreciation
Sales/disposals
The year’s depreciation
Reclassification
Foreign exchange gains/losses
Closing accumulated depreciation
Closing carrying amount
Group
Vehicles, SEK M
Parent Company
28 Feb 2009
29 Feb 2008 28 Feb 2009
29 Feb 2008
3,194
3,219 – –
685
328 – –
Sales/disposals
–394
–358 – –
Reclassification
–5
–
–
–
139
5 – –
3,619
3,194 – –
–1,499
–1,510 – –
324
252 – –
–258
–240 – –
–
–
–
–56
–1 – –
–1,485
–1,499 – –
–48
–85 – –
36
48 – –
The year’s impairment losses
–30
–11 – –
Closing accumulated impairment losses
–42
–48 – –
2,092
1,647 – –
Historical cost
Opening cost
Purchases
Foreign exchange gains/losses
Closing cost
Accumulated depreciation
Opening accumulated depreciation
Sales/disposals
The year’s depreciation
Reclassification
4
Foreign exchange gains/losses
Closing accumulated depreciation
Accumulated impairment losses
Opening accumulated impairment losses
Sales/disposals
Closing carrying amount
Note 14 Shares in group companies (Parent Company)
Parent Company
SEK M
28 Feb 2009
Parent Company
29 Feb 2008
Historical cost
SEK M
28 Feb 2009
29 Feb 2008
Accumulated impairment losses
Opening balance
2,176 2,176
Opening balance
–404 Closing balance
2,176 2,176
Closing balance
–404 –404
Closing carrying amount
1,772 1,772
C O N C O R D I A B U S | A nnua l R e p or t 2 0 0 8 / 2 0 0 9
–404
54 notes
Note 14 cont’d.
SEK M
Concordia Bus Fleet AB (Stockholm)
Corporate ID
number
Equity
No. of
shares
Profit/loss
for the year
Holding,
%
Share
capital
Book value
28 Feb 2009
556031-1812
17
70,000 35 100 7
16 Subsidiaries of Concordia Bus Fleet AB:
Concordia Bus Fleet Danmark ApS (Glostrup)
31586429
0
1,250
0
100
0
556028-1122
787
300 –55 100 0
556031-8569
149
160,000 –132 100 16 Swebus Busco AB (Stockholm)
556583-0527
27
1,000 –215 100 0 Swebus Express AB (Stockholm)
556358-3276
11
5,000 7 100 5 Swebus AB (Stockholm)
556057-0128
268
3,000 97 100 0 556416-2419
1 1,000 –2 100 0 0505988-8
49 2,000 7 100 38 Concordia Bus Finland West Oy Ab (Helsinki)
2175179-4
1
2,500 –2 100 0
Concordia Bus Finland South Oy Ab (Helsinki)
2175178-6
0 2,500 –1 100 0
Concordia Bus Finland East Oy Ab (Helsinki)
2175186-6
1 2,500 0 100 0
Concordia Bus Norge AS (Oslo)
915768237
104 750 –27 100 10
992097353
0 100 0 100 0 29513376
10 1,250 –24 100 1 556031-3354
21 10,000
1 100 1 Alpus AB (Stockholm)
556011-8571
1 10,000 0 100 1 Malmfältens Omnibus AB (Stockholm)
556032-0359
1 960 0 100 0 Enköping-Bålsta Fastighets AB (Stockholm)
556012-9388
0 1,500 0 100 0 Arlanda buss AB (Stockholm) (Undergoing fusion)
556030-5335
0 1,000 0 100 0 Billingens Trafik AB (Stockholm) (Undergoing fusion)
556027-3137
2 14,000 0 100 1 Enköping-Bålsta Trafik AB (Stockholm)
(Undergoing fusion)
556410-2894
0 1,000 0 100 0 Hälsinge Wasatrafik AB (Stockholm)
(Undergoing fusion)
556039-2622
0 1,550 0 100 0 AB Härnösandsbuss (Stockholm) (Undergoing fusion)
556029-8258
0 3,000 0 100 0 Karlstadsbuss AB (Stockholm) (Undergoing fusion)
556051-2039
4 3,000 0 100 3 AB Kristinehamns Omnibusstrafik (Stockholm)
(Undergoing fusion)
556043-6445
1 9,000 0
100 1 Saltsjöbuss AB (Stockholm)
556210-1500
1 2,500 1 100 0 Swebus Service AB (Stockholm) (Undergoing fusion)
556041-6736
1 1,000 0 100 0 Swebus Västerås AB (Stockholm) (Undergoing fusion)
556115-9988
1 5,100 0 100 1 Tumlare Buss AB (Stockholm) (Undergoing fusion)
556068-5975
0 1,010 0 100 0 Wasatrafik AB (Stockholm) (Undergoing fusion)
556048-9188
0 2,400 0 100 0 Concordia Bus Nordic Holding AB (Stockholm)
1,756 Subsidiaries of Concordia Bus Nordic Holding AB:
Operating companies
Concordia Bus Nordic AB (Stockholm)
Subsidiaries of Concordia Bus Nordic AB:
Subsidiaries of Swebus AB:
Swebus Serviceresor AB (Stockholm)
Foreign subsidiaries
Concordia Bus Finland Oy Ab (Helsinki)
Subsidiaries of Concordia Bus Finland Oy Ab:
Subsidiaries of Concordia Bus Norge AS:
Concordia Bus (Norge) AS (Oslo)
Concordia Bus Danmark A/S (Copenhagen)
Property companies
Swebus fastigheter AB (Stockholm)
Subsidiaries of Swebus Fastigheter AB:
Dormant companies
Total
1,772 C O N C O R D I A B U S | A nnua l R e p or t 2 0 0 8 / 2 0 0 9
notes 55
Note 15 Receivables from group companies
Group
SEK M
28 Feb 2009
Parent Company
29 Feb 2008 28 Feb 2009
29 Feb 2008
Historical cost
Opening cost
– – 221 The year’s change
– – –96
211
10
Closing cost
– – 125 221
Note 16 Other non-current receivables
Group
Other financial receivables, SEK M
Parent Company
28 Feb 2009
29 Feb 2008 28 Feb 2009
Other non-current receivables
32
1 – 29 Feb 2008
–
Total
32 1 – –
Note 17 Inventories
Group
SEK M
28 Feb 2009
Parent Company
29 Feb 2008 28 Feb 2009
29 Feb 2008
Finished goods
41 36 – –
Total
41 36 – –
29 Feb 2008 28 Feb 2009
The Group’s inventories consist primarily of fuel, representing 53 % (65 %) of the total value inventories and spare parts.
Note 18 Trade receivables
Group
SEK M
28 Feb 2009
Trade receivables
Provisions for doubtful debts
Total
Parent Company
29 Feb 2008
617 548 – –
–5 –9 – –
612 539 – –
Age structure of trade receivables
Trade
receivables
28 Feb 2009
Due during
the reporting
period
Due within
<30 days
Due within
31–60 days
Trade receivables
617 109
475
33
Total
617
109
475
33
SEK M
Provisions for doubtful debts
Group
SEK M
Opening balance
The year’s reversals
Credit losses
The year’s provisions
Total
28 Feb 2009
29 Feb 2008
–9 –8
5 3
–1 –
– –4
–5 –9
Provisions for doubtful debts are based on individual assessment of the risk of loss
per contract or country.
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56
Notes
Note 19 Deferred expenses and accrued income
Group
SEK M
Parent Company
28 Feb 2009
29 Feb 2008 Accrued transport revenues – transport contracts
75
35 – –
Other deferred expenses
99 68 1 1
174 103 1 1
Total
28 Feb 2009
29 Feb 2008
Accrued transport revenues refer mainly to earned but not yet invoiced compensation for transport services performed.
Note 20 Cash and cash equivalents and blocked bank accounts
Group
SEK M
28 Feb 2009
Parent Company
29 Feb 2008 28 Feb 2009
29 Feb 2008
Cash and cash equivalents
417 455 11
53
Blocked bank accounts
141 74 41 1
The item cash and cash equivalents consist of the company’s checking accounts tied to the Group account, in which Concordia Bus Nordic AB is the principal account holder.
Blocked bank accounts consist of deposits to secure bank guarantees and lease contracts. Among other things, bank guarantees have been furnished as security for Concordia Bus Nordic’s pension liability, Concordia Bus Norge AS’s obligations under transport contracts in Oslo, Swebus and Swebus Express’s obligations pursuant to the Transport Guarantee Act and Swebus AB’s obligations regarding electricity purchases.
Swebus AB and Concordia Bus Danmark AS have deposited funds under lease contracts for buses.
Note 21 Changes in equity
Share capital
According to the articles of association for Concordia Bus AB, the share capital shall
amount to not less than SEK 15,000,000 and not more than SEK 60,000,000. The
company’s shares are issued in two classes, common shares and preference shares.
The common shares grant the right to one vote and the preference shares to onetenth of one vote each.
All preference shares, 5,000,000 with a quota value of SEK 1 each, were issued
at a price of SEK 102, and the common shares, 20,000,000 with a quota value of
SEK 1 each, are fully paid up. There are share option programs for senior executives
which can have a dilutive effect on the share capital. No treasury shares are held by
the company or its subsidiaries.
Each preference share entitles the holder to an annual dividend in an amount
equal to 16.5% of SEK 102 plus accrued and capitalized but unpaid dividends at 5
January and 5 July. No dividends are paid on the common shares until those on the
preference shares have been paid. In the event of the company’s dissolution or liquidation, amounts available for distribution to the company’s shareholders should be
allocated as follows:
• Firstly, to the holders of preference shares in an amount corresponding to
accrued and capitalized but unpaid dividends on the preference shares for the
period until the date of the decision to dissolve or liquidate the company.
• Secondly, to the holders of preference shares in an amount corresponding to
SEK 102 per preference share.
• Thirdly, to the holders of preference shares in an amount corresponding to the
premium that may be paid, whereby the date of the decision to dissolve or liquidate the company shall be the same as the date of the Board’s decision to redeem
the shares.
•
•
SEK 102 plus a premium corresponding to 1.0% of SEK 102, plus such accrued
and capitalized but unpaid dividends, if the Board or Annual General Meeting
decides on redemption during the period from 5 January 2009 to 4 January
2010.
SEK 102 plus such accrued and capitalized but unpaid dividends, if the Board
or Annual General Meeting decides on redemption during the period from 4
January 2010.
Consequently, if redemption takes place on 1 February 2010 the redemption
amount per preference share shall be SEK 102 plus accrued and capitalized but
unpaid dividends.
Concordia Bus’s total capital consists of equity and borrowed capital. The company’s objective is to generate profits for the shareholders by increasing the value of
managed equity. Changes in the managed equity are shown below. There are no
external capital requirements other than those set out in the Swedish Companies
Act. Concordia Bus currently has no dividend policy. The conditions for borrowed
capital are described in Note 25.
Reconciliation of share capital, SEK M
Opening balance
Common shares Preference shares
20,000,000
Subscription for new shares
Closing balance
5,000,000
227,650
–
20,227,650
5,000,000
See Note 7 for information about Option Program 3.
The available amount then remaining for distribution is divided equally between the
common shares.
The preference share does not entail the right to redemption. If the company
decides on the redemption of preference shares after 4 January 2010, redemption
will take place at a price equal to the issue price of SEK 102 each. If redemption takes
place prior to this date, it will take place at a higher predetermined price. The
redemption about per preference share shall be;
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Notes
57
Note 21 cont’d.
Reserves
The reserves reported in the Group consist of exchange rate differences arising on the
translation of subsidiaries with a financial currency other than SEK. The Group’s
accumulated foreign exchange gains/losses amount to SEK 73 million (35). The
year’s change, SEK 38 million, is the combined effect of the Swedish krona’s change
in value against EUR, DKK and NOK, on the translation of equity in foreign operations.
The key actuarial assumptions used in calculation of the pension liability were
as follows:
SEK M
The dividend is proposed by the Board in accordance with the Swedish Companies
Act and is approved by the Annual General Meeting. The dividend is recognized by
the Parent Company as a decrease in non-restricted equity only when the payment
has been made to the shareholders.
4.2–4.5%
Expected return on plan assets
3.77% 5.5%
2.6% 4.1%
3.14%
2.0%
Expected annual rate of salary increase
Pension expenses are included in personnel expenses, and consist of the
following:
Group
SEK M
Note 22 Earnings per share
Average number of common shares during
the period
Reported profit/loss (SEK M)
The year’s dividend
Cumulative right to dividends on preference
shares (SEK M)
1 March 2007–
29 Feb 2008
20,019 20,000
–239 –15
–
–
–94 –89
Adjusted profit/loss (SEK M)
–333 –104
Earnings per share (SEK)
–17
–5
Earnings per share are calculated by dividing profit/loss for the year adjusted for
cumulative rights to dividends by the average number of common shares.
Note 23 Provisions for pensions and similar
commitments
Group
28 Feb 2009
29 Feb 2008 28 Feb 2009
Opening balance
43
52 –
–
The year’s change
28
–9 1 –
Closing balance
71 43 1 –
The discount rate is based on the estimated discount rate on the yield produced by
domestic government bonds.
The annual rate of salary increase reflects expected future salary increases as a
combined effect of inflation and years of service. The future pension increase rate
reflects the expected percentage of employees, by age group, who will leave the company through natural attrition.
The expected average remaining term of service is estimated based on the
employees’ current age distribution and the expected employee turnover rate.
Indexation of pension benefits reflects the inflationary rate in each country,
Norway and Sweden.
The Concordia Bus Group’s pension expenses amounted to SEK 134 million
(133), of which SEK 0 million (–1) refers to defined benefit plans.
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Interest expense
6 7
–9 –7
Actuarial gains/losses, net
– –3
Prior service costs
1 –
Social security contributions
– –
Net pension expense
– –1
2
Specification of how the assets and liabilities recognized in the balance sheet
are calculated:
Group
SEK M
28 Feb 2009
29 Feb 2008
Present value of defined benefit obligations
that are fully or partly funded
166
138
Present value on balance sheet date of
defined benefit obligations that are fully
unfunded and secured through credit
insurance
104 34
–2 15
Fair value of plan assets on the balance
sheet date
29 Feb 2008
29 Feb 2008
2 Unrecognized actuarial gains/losses, net
Parent Company
28 Feb 2009
Current service costs
Expected return on plan assets
Group
1 March 2008–
28 Feb 2009
29 Feb 2008
2.94% Expected rate of pension increase
Dividend
28 Feb 2009
Discount rate
–197
–145
Social security contributions
– 1
Other
– –
71 43
Net liability at end of year
The year’s change in the pension liability:
Group
SEK M
Net liability at beginning of year
28 Feb 2009
43 29 Feb 2008
52
Exchange rate difference
–
–
Net pension expense for the period
1 –9
Expected pension expenses
–13 –
Social security contributions
– –
Other
40 –
Net liability at end of year
71 43
58
Notes
Note 23 cont’d.
Breakdown of plan assets
Note 24 Other provisions
Actual market value of plan assets on the balance sheet date:
Group
SEK M
28 Feb 2009
Fixed-income securities,
cash and cash equivalents
Shares and other
investments
Total
%
Group
29 Feb 2008
%
Other provisions, SEK M
28 Feb 2009
29 8
29 30
112 67 78
54
Provisions for damage to vehicles
and third parties
54 33
67
46
Provisions for environmental obligations
166 100 145
100
Total
The pension liabilities are secured partly through blocked bank accounts and partly
through credit insurance.
Given the applied actuarial assumptions, Concordia expects the following paid
benefits over the coming five-year period.
Group
Expected paid benefits
8 7
66
45
Group
Future payments
Future payments, SEK M
29 Feb 2008
Provisions for onerous contracts
2009
2010
2011
2012
2013
32
31
27
27
27
Provisions for onerous contracts, SEK M
28 Feb 2009
29 Feb 2008
Opening balance
8
6
Reversal/payment
–3
–
The year’s provisions
24 2
Closing balance
29 8
Group
Provisions for damage to vehicles
and third parties, SEK M
28 Feb 2009
29 Feb 2008
Opening balance
30 40
Reversal/payment
–2
–10
The year’s provisions
Closing balance
1 –
29 30
Group
Provisions for environmental obligations
for leased land and facilities, SEK M
28 Feb 2009
29 Feb 2008
Opening balance
7 6
Reversal
–
–
The year’s provisions
1 1
Closing balance
8 7
Note 25 Interest-bearing non-current liabilities
Group
SEK M
Parent Company
28 Feb 2009
29 Feb 2008 –
1,220 – –
1,668
1,115 – –
– –14 – –
Total
1,668
2,321 – –
Less, current portion
–167 –107 – –
Total
1,501
2,214 – –
Bond loan “Senior Secured Notes”
Finance lease liabilities
Capitalized borrowing costs
28 Feb 2009
29 Feb 2008
Non-current liabilities include corporate bonds issued by Concordia Bus Nordic AB in an amount of EUR 130 million. The corporate bonds carry fixed interest at a rate of
9.125% that is paid semi-annually (on 1 February and 1 August). The corporate bonds mature in full for payment in August 2009.
In connection with the issuance of corporate bonds for a total of EUR 130 million, Concordia Bus Nordic AB and its subsidiaries have undertaken to fulfil a number of
financial covenants. Among other things, these financial covenants mean that Concordia Bus Nordic AB and its subsidiaries have limited opportunities to raise additional
loans, enter into finance lease or sale and leaseback contracts, carry out certain types of investments and divest assets. Furthermore, these covenants create certain restrictions
on payment of dividends by Concordia Bus Nordic AB and its subsidiaries. See also Note 31 regarding the company’s financing. All of these covenants were fulfilled at 28 February 2009 and during the financial year.
Capitalized borrowing costs refer to expenses arising in connection with raising of loans. These are expensed on a straight-line basis over the term of a loan, unless the loan
is redeemed in advance, in which case the capitalized charge is expensed in full.
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Notes
59
Note 25 cont’d.
Non-current liabilities will be repaid according to the following:
Group
28 Feb 2009
Within 1 year
Parent Company
29 Feb 2008 28 Feb 2009
29 Feb 2008
1,652 107 – –
Within 1–3 years
335
1,430 – –
Within 3–5 years
350 229 – –
Within 5–6 years
353 235 – –
After 6 years
463
320 – –
3,153 2,321 – –
–1,652 –107 – –
1,501 2,214 – –
Total borrowings
Less, current portion
Non-current portion of borrowings
Interest rate and currency composition of borrowings
Loan currency
Nominal
amount
Amount in
SEK M
Interest, weighted
average value
Corporate bonds, EUR
Finance lease liabilities, SEK
Total loan liability
130
1,489
9.125
1,668
1,668
4.58 3,157 Note 26 Other current liabilities
Group
SEK M
28 Feb 2009
Parent Company
29 Feb 2008 28 Feb 2009
29 Feb 2008
Employee withholding tax
58 54 1 –
Other current liabilities
96 80 –
–
154
134 1 –
Total
Note 27 Accrued expenses and prepaid income
Group
SEK M
Parent Company
28 Feb 2009
29 Feb 2008 Prepaid income – transport contracts
126
165 – –
Accrued payroll costs
252 242 2 3
Other accrued personnel expenses
158
106 1 1
11 9 – –
Other accrued expenses
210 146 1
–
Total
757 668 4
4
29 Feb 2008 28 Feb 2009
Accrued interest expenses
28 Feb 2009
29 Feb 2008
Note 28 Pledged assets and contingent liabilities
Group
SEK M
28 Feb 2009
Parent Company
29 Feb 2008
Pledged assets for bond loans
Pledged assets pertaining to shares/net assets in subsidiaries
727 830 – –
Other pledged assets
634
687 – –
Floating charges
119 117 – –
– – 1,824
1,242
1,480 1,634 1,824
1,242
Other pledged assets and contingent liabilities
Lease obligations
Total
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60
Notes
Note 28 cont’d.
Aside from the above, Concordia Bus AB is guarantor for Swebus AB’s transport
obligations to Storstockholms Lokaltrafik. Concordia Bus Nordic AB is guarantor
for Concordia Bus Finland Oy Ab’s transport obligations to YTV.
As collateral for the corporate bonds of EUR 130 million, Concordia Bus Nordic AB has pledged the shares in the operating subsidiaries, foreign subsidiaries and
property companies, the buses owned by Swebus Busco AB and Concordia Bus
Norge AS and Concordia Bus Norge’s operating receivables and equipment. Furthermore, the subsidiaries have granted chattel mortgages in an amount of SEK 119
million as collateral, and have furnished guarantees for the Parent Company’s obligations under the corporate bonds.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
The following shares in subsidiaries had been furnished as security at
28 February 2009:
Concordia Bus Nordic AB,
Swebus Fastigheter AB,
Swebus AB,
Concordia Bus Finland Oy Ab,
Swebus Busco AB,
Concordia Bus Norge AS,
Swebus Express AB,
Alpus AB,
Enköping-Bålsta Fastighets AB,
Malmfältens Omnibus AB;
Derivatives contracts
Currency derivatives (forward exchange contracts and currency swaps) entered into in
order to hedge currency exposure in interest payments on the bond loan are reported
according to hedge accounting, i.e. the profit/loss effects attributable to the derivative
instruments are recognized on the same date as the foreign exchange effects on the
underlying commercial flow are realized. Outstanding currency derivatives that do not
meet the criteria for hedge accounting are measured at fair value with fair value changes
through other financial items in the income statement.
Interest rate derivatives (interest rate caps) entered into in order to achieve the
desired fixed interest period in lease liabilities are reported according to hedge
accounting, i.e. the profit/loss effects attributable to the derivative instruments are
recognized on the same date as the underlying item. Interest derivatives that do not
meet the criteria for hedge accounting are measured at fair value with fair value
changes through other financial items in the income statement.
In connection with issuance of the corporate bonds, the following shares in
subsidiaries have been pledged:
Shares in Swebus
Fastigheter AB
Shares in
Swebus AB
28 Feb 2009
Parent Company
29 Feb 2008 28 Feb 2009
The Concordia Bus Group is mainly exposed to the following risks:
• Interest rate risk
• Refinancing risk
• Credit and counterparty risk
• Currency risk
• Raw material risk
• Inflation
• Operating risks
Hedging policy
The company’s hedging policy is designed to ensure predictability and reduce volatility
in liquidity and operating expenses in a cost-effective manner. The hedging policy
states that the company shall enter into hedge contracts for fuel, currency and interest
rate exposure.
The following assets were pledged at 28 February 2009:
Alpus AB has pledged floating charges in an amount of SEK 600,000;
Enköping-Bålsta Fastighets AB has pledged floating charges in an amount of
SEK 2,400,000;
Malmfältens Omnibus AB has pledged floating charges in an amount of SEK
2,500,000;
Concordia Bus Finland Oy Ab has pledged floating charges in an amount of
EUR 1,194,134;
Swebus AB has pledged floating charges in an amount of SEK 100,000,000;
Swebus Busco AB has pledged its buses in a total amount of SEK 378,569,479;
Concordia Bus Norge AS has pledged its assets in a total amount of SEK
192,633,508.
Group
Note 29 Financing and financial risk management
All risk management is handled centrally in accordance with a finance policy established by the Board of Directors. Th e Concordia Bus Group uses derivative instruments as part of its financial risk management to limit currency, interest rate and diesel
price exposure. At 28 February 2009 the company had no derivative instruments pertaining to currency and raw material risks, since the company had not received the necessary credits to enter into derivative contracts.
29 Feb 2008
21 21 – –
268 245 – –
Shares in Swebus
Express AB
11 13 – –
Shares in Concordia
Bus Finland Oy Ab
49
36 –
–
Shares in Swebus
Busco AB
27
171 –
–
Shares in Concordia
Bus Norge AS
351 344 –
–
Total
727 830 –
–
Interest rate risk
Interest rate risk refers the risk that movements in market interest rates will negatively
affect the Group’s net interest income. The rate at which interest rate fluctuations affect
net interest income depends on the fixed interest period of the loans. The Group is primarily exposed to interest rate risk through the company’s finance and operating leases.
The lease charges are based, among other things, on a variable market rate of interest.
An increase in the variable interest rate by 1 percentage point would increase the
Group’s interest expenses by approximately SEK 31 million. In order to reduce interest
rate exposure, Concordia Bus AB has entered into interest rate derivatives which fixed
the interest rate for a portion of the interest liability. At 28 February 2009 there were
not outstanding interest rate derivatives.
Refinancing risk
Refinancing risk refers the risk that the Group will be unable to obtain new financing
when the existing financing matures. The Group is exposed to significant refinancing
risk at 1 August 2009 when the Group’s EUR 130 million bond loan matures. According to the company’s assessment, this risk is substantially limited in that the Group’s
bond holders and shareholders are largely the same, and therefore have a strong incentive to provide new financing.
Credit and counterparty risk
The Group’s financial transactions give rise to credit risks in relation to financial counterparties. Concordia Bus’s finance policy states that credit risk shall be limited by only
accepting counterparties with high credit ratings and through established limits. Commercial credit risks are limited in that the Group has a diversified customer base with
high credit ratings. Provisions have been made for trade receivables deemed as doubtful, and have affected operating profit/loss.
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Notes
61
Note 29 cont’d.
Currency risk
Currency exposure arises in connection with payment flows in foreign currency (transaction exposure) and on the translation of foreign subsidiaries’ income statements and
balance sheets to SEK (translation exposure).
Transaction exposure – Th e Concordia Bus Group is exposed to exchange rate
movements on its bond loan, which was raised in an amount of EUR 130 million.
The Group’s finance policy states that all currency exposure for the coming 12
months shall be hedged. At 28 February 2009 there were no such currency hedges
outstanding. A decrease of 10% in the value of the Swedish krona against the euro
would increase the Group’s interest expense by SEK 11.9 million per year (EUR 5.9
million twice a year), and would affect profit through an increase of SEK 130 in the
face value in Swedish kronor, to be recognized as an unrealized foreign exchange loss
until actual repayment of the bond loan takes place.
The Group is also exposed to exchange rate movements through its purchases of
diesel. Diesel is traded in the international commodities markets in US dollars. See
also under “Raw material risk”.
Translation exposure – Concordia Bus’s currency exposure on translation of foreign subsidiaries is normally not hedged.
Raw material risk
The Group is exposed to movements in raw materials through its purchases of diesel.
Diesel is traded in the international commodities market. Through revenue indices in
its contracts with public transport authorities, the Group is partly compensated for
fluctuations in diesel prices. According to internal calculations, this index compensation reduces exposure to diesel price fluctuations by close to 80%. The Concordia
Group has hedged the non-indexed portion of the diesel cost during the financial year
with diesel caps, but had no outstanding diesel derivatives at 28 February 2009. Based
on the budgeted diesel consumption and the estimated index compensation, an
increased of USD 10 in the diesel price per tonne would increase the net diesel cost by
approximately SEK 1.2 million for the following financial year.
Inflation
Inflation had no significant impact on operations during the year. Since the terms of
the contracts include compensation for costs through the agreed indices (which
include inflation), which do not exactly follow the cost trend in the industry, full compensation is currently not received for cost increases since the industry’s costs are rising
faster than the amount of compensation received through indexation from the public
transport authorities.
Operating risks
Operating risk is the risk for a loss due to shortcomings in internal routines and systems. Concordia Bus’s risk management is based on a number of internally established
rules and guidelines, as well as policies adopted by the Board. Key normative documents include the finance policy, instructions for authorization and other instructions.
The company carries out continuous controls to regulate and secure powers and
responsibilities in day-to-day operations. The subsidiaries have their own instructions
which are based on the rules applied by the Parent Company.
Note 30 Financial instruments
Group
Financial assets, SEK M
Carrying amount
28 Feb 2009
29 Feb 2008
Loans and receivables
Non-current receivables
32 1
Trade receivables
612 539
Other receivables
77 48
Financial assets and liabilities at fair value
through profit or loss
Total Group
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–
–
721 588
Group
Financial liabilities, SEK M
Other financial liabilities
Interest-bearing liabilities, pensions
Carrying amount
28 Feb 2009
29 Feb 2008
71 43
3,153
2,311
Trade payables
264 199
Other liabilities
155 134
Interest-bearing liabilities, loans
Financial assets and liabilities at fair value
through profit or loss
Total Group
Parent Company
Financial assets, SEK M
–
–
3,643
2,687
Carrying amount
28 Feb 2009
29 Feb 2008
Loans and receivables
Receivables from group companies, ­
interest-bearing
Other receivables
Financial assets and liabilities at fair value
through profit or loss
Total Group
Parent Company
Financial liabilities, SEK M
183 260
10 2
–
–
193
262
Carrying amount
28 Feb 2009
29 Feb 2008
Other financial liabilities
Liabilities to group companies,
interest-bearing
1 3
Other liabilities
1 1
Financial assets and liabilities at fair value
through profit or loss
–
–
Total Group
2 4
Fair value
The carrying amounts of financial assets and liabilities essentially correspond to their
fair values.
Fair value is determined on the basis of official market quotes on the balance
sheet date. If none such exist, fair value is determined through discounting of future
cash flow by the listed market interest rate for the respective maturities or through
some other method which is deemed to provide the best estimated of fair value in
each individual case. Financial assets and liabilities are translated to SEK at the
exchange rate prevailing on the balance sheet date.
In the spring of 2003 the subsidiary Concordia Bus Nordic AB issued a bond
loan in a nominal amount of EUR 130 million. The interest yield on the bond capital is 9.125% per year. Since the time of issue, organized trading of the bonds has
been conducted. Th e traded fair value of the bonds indicates a value at least equal to
the nominal amount.
62
Notes
Note 31 Related party transactions
One member of Concordia Bus AB’s Board of Directors has been appointed by Blue
Bay Asset Management, which holds approximately 27% of the shares in Concordia
Bus AB. This individual has not received any fees in her capacity as Board ­member.
Concordia Bus Nordic AB has a debt to Concordia Bus AB amounting to SEK
121 million. Interest of SEK 22 million (4) was capitalized during the year.
The Group has share option programs (3) that cover the Parent Company’s
Board of Directors, 241,875 options, and senior executives, 661,151 options. The
senior executives are the Parent Company’s President and CFO and the presidents of
the subsidiaries. All share options have been valued according to the Black & Scholes
method, and each share option grants the right to subscribe for one new share in the
company. e share options correspond to an increase of 3.7% in the share capital.
With regard to other remuneration to the Board of Directors and senior executives, see Note 7.
Note 32 Exchange rates
Average
1 March 2008–
28 Feb 2009
Exchange rates
Balance sheet date
1 March 2007–
29 Feb 2008 28 Feb 2009
29 Feb 2008
EUR
9.8508 9.3664 11.458 9.3825
NOK
1.1736 1.1782 1.2990
1.1895
DKK
1.3213 1.2566 1.5380 1.2590
Stockholm, 8 May 2009
Jan Sjöqvist
Board Chairman
Gina Germano
Rolf Lydahl
Jan Sundling
Ragnar Norbäck
President and CEO
Our audit report was submitted on 11 May 2009
Ernst & Young AB
Erik Åström
Authorized Public Accountant
C O N C O R D I A B U S | A nnua l R e p or t 2 0 0 8 / 2 0 0 9
63
Audit report
To the annual meeting of the shareholders of Concordia Bus AB
Corporate identity number 556576-4569
We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the
managing director of Concordia Bus AB for the year 1 March 2008 – 28 February 2009. The annual accounts and the consolidated accounts of the
company are included in the printed version of this document on pages 30–62. The board of directors and the managing director are responsible for
these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts
and the application of international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the
­consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform
the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting
­principles used and their application by the board of directors and the managing director and significant estimates made by the board of directors and
the managing director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in
the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions,
actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the
managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention of the
Companies Act, the Annual Accounts Act or the Articles of Association. We believe that my our audit provides a reasonable basis for our opinion set
out below.
The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company’s financial
position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been
­prepared in accordance with the international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true
and fair view of the group´s financial position and results of operations. The statutory administration report is consistent with the other parts of the
annual accounts and the consolidated accounts.
We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be
adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of
the board of directors and the managing director be discharged from liability for the financial year.
Stockholm, 11 May 2009
Ernst & Young AB
Erik Åström
Authorized Public Accountant
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Glossary
Client/Public transport authority
A public sector authority that has been given responsibility for organizing procurement of public transport
services in a certain area, normally a county. Awards
transport contracts after evaluation of submitted bids.
Concession
Transport contract awarded to a certain operator by a
public transport authority without competitive tendering. Not possible after deregulation of the public transport market.
Customers
Passengers, i.e. those who use our services regardless of
whether they pay for the trip directly or via a public
transport authority.
Euro0-Euro5, EEV
Different generations of emissions classes for diesel
engines.
Express bus
Scheduled long-distance transports that cross at least
one county line. In connection with permitting, the
affected public transport authorities have an objectionary right. An independent operator’s revenue comes
exclusively from the passengers.
Gross cost contracts
A transport contract in which the client compensates
the operator only for the number of kilometers or hours
driven. Ticket revenues go to the client.
Definitions
Incentive contract
A transport contract in which the client provides the
operator with a certain share of variable compensation.
Based on mutual trust and aimed at achieving better
results through higher quality and efficiency. The
amount of compensation to the operator increases in
proportion to the number of passengers.
Average number of employees
The number of hours paid divided by normal working
hours for a full-time employee.
Indexation
Recalculation of fixed compensation per kilometer or
hour for a new period under a transport contract based
on a weighted index for inflation in cost categories that
are significant for the operation in question.
Equity/assets ratio
Shareholders’ equity as a percentage of total assets at the
end of the fiscal year.
Net cost contract
A transport contract in which the client compensates
the operator primarily through ticket revenues.
Operator
A provider of public transport services.
Earnings per share
Profit for the year adjusted for dividends on preference
shares divided by the average number of common shares.
Fully diluted earnings per share
Profit for the year adjusted for dividends on preference
shares divided by the average weighted number of common shares.
Net investments
Acquisition cost of investments in fixed assets less sales
value of divested fixed assets.
Other operating revenue
Sales of primarily fuel and workshop services to external
customers.
Transport contract
An agreement between a client and a contractor to perform a specific service at a pre-agreed price. At Concordia Bus a contract with a public transport authority,
normally for a period of 5–8 years, to produce public
transports at a fixed price with agreed indexation conditions.
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Addresses
Concordia Bus AB
Armégatan 38
SE-171 71 SOLNA
Sweden
Swebus AB
Armégatan 38
SE-171 71 SOLNA
Sweden
Concordia Bus Nordic Holding AB
Armégatan 38
SE-171 71 SOLNA
Sweden
Concordia Bus Danmark A/S
Malervangen 9
DK-2600 GLOSTRUP
Denmark
Concordia Bus Norge AS
Lysaker Torg 12
Postboks 54
N-1324 LYSAKER
Norway
Concordia Bus Finland OY
Klovinpellontie 5
FIN-02180 ESPOO
Finland
Swebus Express AB
Armégatan 38
SE-171 71 SOLNA
Sweden
Concordia Bus Fleet AB
Armégatan 38
SE-171 71 SOLNA
Sweden
Concordia Bus Nordic AB
Armégatan 38
SE-171 71 SOLNA
Sweden
Production: Concordia Bus in assocation with n3 Kommunikation. Printing: Strokirk-Landströms, 2009. Translation: GH Language Solutions.
The annual report is printed on environmentally friendly FSC-labelled paper.
The Forest Stewardship Council (FSC) promotes environmentally appropriate,socially beneficial and economically viable management of the world’s forests
BV-COC-070410
C O N C O R D I A B U S | A nnua l R e p or t 2 0 0 8 / 2 0 0 9
EVERYONE WANTS TO
TRAVEL WITH US
Concordia Bus AB
Armégatan 38
SE-171 71 Solna
Sweden
Telephone +46 8 410 650 00
Fax +46 8 27 23 03
www.concordiabus.com