Annual Report 2012

Transcription

Annual Report 2012

Annual Report 2012
Annual Report 2012 Arcus- Gruppen
Contents
Arcus-Gruppen in brief
3
Arcus-Gruppen 2012
4
About Arcus-Gruppen
6
Our vision
8
The Group CEO speaks
10
A plant for the future
13
A leading market player
15
Business areas
19
Spirits
20
Wine
26
Distribution
32
Our social responsibility
37
Corporate governance
45
46
Members of the board of
directors
48
Group management
49
Board of directors’ report 2012
50
Financial statements and notes
53
Group financial statements
and notes
54
Company financial statements
and notes
93
Auditor’s report
108
Arcus-Gruppen AS
Destilleriveien 11 • PO Box 64, NO-1483 Hagan • [email protected] • Tel +47 6067 5000
www.arcusgruppen.no
Media contact:
Group Director Communications Per Bjørkum • [email protected] • Tel +47 922 55 777
Photo: Arcus-Gruppen, Christian Hatt, Anders Henriksen, Kolonihagen, Terje Løchen, Jon Ivar Søhus, Erik Fuglseth,
Jan Thomas Espedall, Kilian Munch/Gyro AS
Design and production: signatur.no (130124)
Arcus-Gruppen
in brief
3
‘The Gjelleråsen plant was
officially opened on 15 June 2012
with HM Queen Sonja present as
the guest of honour.’
Most important events in 2012
YEAR OF CONSOLIDATION FOR ARCUSGRUPPEN
Arcus-Gruppen’s result for 2011 was published on
17 February and showed a new turnover record.
Sales income (excluding alcohol duties) increased
by 10.4% to MNOK 1,804.5, up from MNOK
1,634.4 in 2010. The group’s operating profit
(EBIT) fell to MNOK 116.8 from MNOK 132.6 in
2010. The decrease was due to extra costs in
connection with the move to Gjelleråsen. Underlying operations showed a positive trend.
START-UP PROBLEMS FOR VECTURA
Despite advance testing there were long delays in
order picking after full operation of the plant started
on Tuesday 10 April. Intensive work to solve the
problems went on throughout the spring. The
delivery situation was gradually restored to normal
during May and June.
GROUP CONCENTRATED AT GJELLERÅSEN
After progressive transfer of distribution and production to Gjelleråsen during the period January to
April, the whole group was concentrated at Gjelleråsen from Monday 7 May. The new plant is the most
modern of its kind in Northern Europe for the production and distribution of wine and spirits.
ARCUS-GRUPPEN ACQUIRES DE DANSKE
SPRITFABRIKKER
On 13 July, Arcus-Gruppen signed an agreement to purchase De Danske Spritfabrikker,
with the brands Aalborg Akvavit, Brøndums,
Gammel Dansk and Malteser, from Pernod
Ricard of France. With this acquisition ArcusGruppen becomes the world’s leading producer
of aquavit and also becomes the market leader
for spirits in Denmark and aquavit in Germany.
HM QUEEN SONJA VISITS GJELLERÅSEN
On 15 July, the Gjelleråsen plant was officially
opened with 250 specially invited guests from at
home and abroad, with HM Queen Sonja as the
guest of honour. The royal party was given a short
tour of the plant, where the highlight was the cask
warehouse. The opening was celebrated the same
evening by 300 enthusiastic employees, with
entertainment and a big gala dinner.
ARCUS-GRUPPEN JOINS THE UN’S
GLOBAL COMPACT
The group registers officially with the UN’s Global
Compact, which is the leading international
standard for social responsibility and sustainable
development. The registration is part of the group’s
CSR strategy and means among other things that
the group commits itself to annual reporting about
its social responsibility work.
THE DANISH AUTHORITIES APPROVE THE
TAKEOVER OF DE DANSKE SPRITFABRIKKER
The Danish competition authorities announce on
26 September that the takeover of De Danske Spritfabrikker from Pernod Ricard is approved. However,
Arcus-Gruppen is required to sell off the aquavit brand
Brøndums; otherwise the group would have achieved
too dominant a position in the Danish market.
NEW SUBSIDIARIES IN DENMARK
Arcus-Gruppen has established two new subsidiary
companies in Denmark. Arcus Denmark A/S is
wholly owned by Arcus-Gruppen and took over the
ownership of the brands and factory plant in Aalborg
from Pernod Ricard from January 2013. Det Danske
Spiritus Kompagni was established as our Danish
sales company for Aalborg, Brøndums and Gammel
Dansk. Arcus-Gruppen and Fleming Karberg
Familieholding each have a 50% share of ownership.
THE CHRISTMAS AQUAVIT FOR THE YEAR IS
LAUNCHED
Arcus-Gruppen launches its Christmas aquavit for the
year - the 25th in a row - at the learning centre for food
and drink ‘Kulinarisk Akademi’, in front of an extensive
press corps. The 2012 Gilde Christmas Aquavit is
described as ‘the best ever’. During 2012 ArcusGruppen’s aquavits came top in the great majority
of tests.
GERMAN AUTHORITIES APPROVE THE
TAKEOVER OF AALBORG AND
MALTESERKREUZ
The official report from the German competition
authorities concluded that Arcus-Gruppen’s takeover of the Aalborg and Malteserkreuz brands
should be approved.
4
Arcus-Gruppen
in brief
Arcus-Gruppen 2012:
Strong top line
growth, significant
non-recurring costs
In 2012, Arcus-Gruppen delivered the best business result in the group’s
history, discounting non-recurring costs in connection with moving to
Gjelleråsen and commencing operations on the new site.
2012 was a year with good top line growth
and income of MNOK 5.8 (EBIT). The decrease
from MNOK 116.8 in 2011 is due to significant
non-recurring costs in connection with
moving and starting up the group’s new
production and distribution plant at
Gjelleråsen. The underlying operations
showed good progress and income, adjusted
for non-recurring costs, was MNOK 176.6.
The group experienced growth in both the
wine and spirits areas, while the
Distribution business area delivered weak
figures after significant start-up problems
in the spring and summer of 2012.
The group’s operating income was MNOK
1,958.2, an increase of MNOK 168.7 (9.4%)
compared with 2011.
The company is in a sound financial position
where liquidity, the financial structure and
capital adequacy give it the freedom of
action that it needs. Looking forward,
Arcus-Gruppen will work purposefully to
increase its market share and profitability
in the Nordic wine market and the
international spirits market. A robust plan
has been started to bring the distribution
activity back into profitability during 2013.
5
OPERATING INCOME
MNOK
NUMBER OF
EMPLOYEES
1 958,2
441
EBIT (adjusted for extraordinary effects)
MNOK
176,6
Key figures 2012
Arcus-Gruppen Group
2012
2011
2010
2009
2008
Operating income
MNOK
1 958.2
1 789.5
1 632.4
1 504.7
1 309.4
Of which operating income outside Norway
MNOK
977.6
912.1
832.4
718.7
584.2
EBITDA
MNOK
39.9
145.9
162.4
192.3
173.8
EBIT
MNOK
5.8
116.8
132.6
163.8
144.8
176.6
170.5
132.6
96.3
85.0
0.3
6.5
8.1
10.9
11.1
441
469
452
469
460
EBIT adjusted for extraordinary effects
MNOK
Operating margin
%
Number of employees
Number
OPERATING INCOME
EBIT (ADJUSTED FOR EXTRAORDINARY
EFFECTS)
NUMBER OF EMPLOYEES
MNOK
MNOK
NUMBER
2 000
200
500
1 750
175
450
1 500
150
1 250
125
300
1 000
100
250
750
75
200
500
50
250
25
0
0
2012
2011
2010
2009
2008
400
350
150
100
50
0
2012
2011
2010
2009
2008
2012
QMen
2011
2010
QWomen
2009
2008
6
Arcus-Gruppen
in brief
About Arcus-Gruppen
Arcus-Gruppen is a leading Nordic player in the production, import,
sale and distribution of wine and spirits. The group is represented in
all the Nordic countries, with subsidiary companies in Norway,
Sweden, Denmark and Finland. Arcus-Gruppen is the market leader
for spirits in Norway and Denmark and for wine in Norway and
Sweden. The group also has significant exports of spirits to markets
outside the Nordic region, most importantly to Germany and the
USA.
Arcus-Gruppen is wholly owned by Arcus-Gruppen Holding AS.
The principal owners of Arcus-Gruppen Holding are the Swedish
investment company Ratos AB (83.5%) and Hoff SA (9.9%). The
remainder of the shares are owned by individual members of the
group’s management and board. The parent company, Arcus-Gruppen
AS, is responsible for strategy and direction of the subsidiaries.
It also carries out group functions such as accounting, financial
and property management, IT, HR and communication.
Arcus-Gruppen’s head office is at Gjelleråsen in Nittedal municipality
just north of Oslo
Business structure
Arcus-Gruppen
Holding AS
ARCUS-GRUPPEN AS
Finance, IT, HR, Communication
Business area
Spirits
Business area
Wine
Business area
Distribution
Arcus AS
Arcus Wine Brands AS
Vectura AS
Arcus Sweden AB
Vinordia AS
Arcus Finland OY
Symposium Wines AS
Arcus Denmark A/S
Excellars AS
Det Danske Spiritus
Kompagni (50 %)
Vingruppen AB
Tiffon SA (34%)
Vinum OY
7
8
Arcus-Gruppen
in brief
Our vision: Best in
wine and spirits in the
Nordics
Arcus-Gruppen’s strategic objective is to be the best in wine and spirits in the
Nordic region. This is expressed in our vision and is embodied in the group’s new
strategic plan, Strategy 2016, which was approved by the board in September 2012.
OUR VISION:
Together we will be the best in wine and spirits in the Nordics!
Our vision sets our overall direction and describes the way ahead for the group up to 2016.
It involves delivering in the following four key areas. Through commercial entrepreneurship
we shall create strong growth in the group’s EBIT. We shall create growth in our EBIT margin
by means of efficient operations. We shall increase our value share in the Nordic market by
building strong brands and we shall improve the commitment of our employees so that we
are among the best in the Nordic region in this area.
OUR MISSION:
We are passionate about creating Great Experiences - that’s why we bring the
best of Nordic spirits to the world and the world’s best wines to the Nordics.
Our mission is about what we aim to be for our customers and how we conduct ourselves in our
day-to-day business activity within the group. We are excited about our customers and our
products and we want to create good experiences - whether these involve taste, enjoyment
and having a good time or punctual deliveries and good customer relations. We are experts in
Nordic spirits and through our comprehensive network of producers of quality wine we shall
ensure that our customers have access to the world’s best wines.
OUR VALUES:
Market-focused :
We succeed because we focus on customers, consumers and competitors in every decision
we make.
Goal-oriented:
We succeed because we set our sights high, and give our all to achieve our ambitious goals
together.
United:
We succeed because we stand together, respect each other and work effectively across
organizational boundaries.
9
Strategy 2016
The work on Strategy 2016 started in the autumn of 2011
and continued throughout most of 2012. The strategy was
finally approved by the board in September 2012. The aim
of the strategy process was to define areas for profitable
and sustainable growth to ensure that the group applies its
resources properly, thereby optimising returns for our
owners. Through Strategy 2016 Arcus-Gruppen will be
developed into the leading Nordic player in wine and spirits.
• Commercial entrepreneurship
• Strong Nordic brands
• Efficient operations
• Employee commitment
Strategy 2016 identifies four main areas for further
development of the group:
• Commercial entrepreneurship
• Strong Nordic brands
• Efficient operations
• Employee commitment
Within these areas a large number of tasks and initiatives
have been set up, which will be implemented in the group’s
business areas in the period up to 2016. Among the most
important are continued organic growth in wine and spirits,
reinforced investment through acquisitions in specific
markets in the Nordic region, further development of the
brands from De Danske Spritfabrikker in Denmark, Germany
and internationally, a growth strategy for Vikingfjord in the
USA, introduction of best-practice solutions at Gjelleråsen
and management and employee development in the group.
10
The Group CEO
speaks
Otto Drakenberg, Group CEO:
2012 - Renewal and
Nordic growth
‘In many ways it is a
new Arcus-Gruppen
engaging with our
customers and
business partners in
2013.’
‘Our new Strategy
2016 is based on a
thorough analysis
and understanding
of the Nordic wine
and spirits markets.’
2012 was a year of renewal for Arcus-Gruppen. We have commissioned our
new production and distribution plant at Gjelleråsen exactly on time and on
budget. This plant is one of Europe’s most modern installations for producing
and distributing wine and spirits. On 1 July we signed an agreement with
Pernod Ricard to purchase the Danish brands Aalborg and Gammel Dansk, an
acquisition that makes Arcus-Gruppen the market leader for spirits in
Denmark and the world’s leading aquavit producer by some margin.
At the same time we have developed an
ambitious group strategy, Strategy 2016.
On the basis of this strategy we have established a new value platform for the group,
at the sharp end of which is our new vision:
Arcus-Gruppen, where we take with us the
best from our long history and project it
into the future making use of modern
equipment and the opportunities provided
by our new facilities.
TOGETHER WE WILL BE THE BEST IN WINE
AND SPIRITS IN THE NORDICS
An important part of the group’s renewal
process has been the development of our
new group strategy. This has been a comprehensive process that we started in the
autumn of 2011 and which has continued
throughout most of 2012. During the process
all the group’s business areas have conducted
thorough analyses and discussions to establish
ambitions and targets. At the same time the
main areas for further growth and development have been defined. During the process
significant organisational changes have also
been made to adapt the business areas and
the group to our new business strategy.
The financial result for 2012 shows us that
renewal can be expensive. Significant extra
costs were anticipated in connection with
moving to our new plant at Gjelleråsen and
starting operations there. But we
experienced greater start-up problems
than expected, leading to delivery failures
in the spring of 2012. At the beginning of
2013 a comprehensive plan has been
implemented, which will turn around the
profitability of the distribution activity
from minus to plus.
Both the wine and spirits areas delivered
significant volume growth and the best
results in the history of the group. The wine
area also increased its market shares, and
during 2012 Arcus-Gruppen became the
market leader for wine in Sweden. If we put
to one side the non-recurring costs resulting
from the start-up of the Gjelleråsen plant,
the group has delivered the best result in its
history.
STRATEGY 2016
In many ways I would say that it is a new
Arcus-Gruppen engaging with our
customers and business partners in 2013.
We have not just moved into a new plant.
We have started a renewal process for
Our new Strategy 2016 is based on a
thorough analysis and understanding of the
Nordic wine and spirits markets, as well as
Germany and the USA. This understanding
gives us a good basis for directing the
group’s activity towards the product
categories and customer groups that offer
the best basis for profitable growth.
The aim of the strategy work was to define
areas for profitable and sustainable growth
to ensure that the group applies its resources
properly. Through Strategy 2016 ArcusGruppen will be established at a wholly new
level in terms of competitiveness, profits
and financial strength. The strategy
provides the basis for the coming growth
and profitability.
11
‘An important part of
the group’s renewal
process has been the
development of our
new group strategy.’
Towards 2016 I can see before me an ArcusGruppen that develops into being the best
Nordic player in wine and spirits.
By that I do not necessarily mean the
largest in terms of volume, but the most
profitable and efficient, with strong
positions in wine and spirits in all Nordic
countries. We have pointed out four areas
of strategic focus that will bring us to this
position:
• Commercial entrepreneurship - where
this year’s acquisition of the Aalborg and
Gammel Dansk brands is one of many
initiatives
• Build strong Nordic brands, both in spirits
and wine
•
•
Efficient operations, primarily through
our new, ultra-modern plant at Gjelleråsen
Employee commitment, by building a
commercial and proactive group culture
Each of these four focus areas is linked to
specific objectives. During the period up to
2016 we shall create strong growth in the
group’s EBIT, we shall create growth in our
EBIT-margin and we shall increase our value
share in the Nordic market. Last but not least,
we shall work systematically at improving our
employee commitment so that we are among
the best in the Nordic region in this area.
We shall achieve these objectives through
systematic work and we shall achieve most
of the growth in EBIT in the spirits area.
Starting as soon as 2013, the purchase of
Aalborg and Gammel Dansk will contribute
to significant growth in the group’s top and
bottom lines. We also see significant growth
opportunities in Sweden and Finland. The
EBIT margin will also be improved by
working at cost-reduction measures in the
value chain at Gjelleråsen and by utilising
our resources to an even greater extent.
2013 - GROWTH AND PROFITABILITY
The wine and spirits industry in Norway and
the Nordic countries also faces many
challenges in the years ahead. We believe
that there will continue to be moderate
growth in wine consumption in Norway,
12
The Group CEO
speaks
Group CEO Otto Drakenberg speaks to the staff at the opening celebration at Gjelleråsen on 15 June 2012.
Sweden and Finland, while the volume of
spirits is expected to continue to decline.
Our growth will be created first and foremost through increased market shares,
coupled with acquiring strong brands and
taking over agencies.
In 2013 the group will create increased
earnings for Wine in the Nordic region
through organic growth and acquisitions.
We shall grow further in wine both in
Sweden and Norway, where we are already
market leaders. We shall also capture new
markets in Finland. This is an important part
of our Nordic wine strategy, where we
primarily create growth through winning
listings in the state-owned retail monopolies in these countries. We do this through
our knowledge of consumer preferences in
each individual country, where we use our
good relationships with some of the world’s
leading wine producers to tailor our wine
portfolio to the individual markets.
In Spirits we shall create increased earnings
through successful implementation of the
acquisition of the Aalborg aquavits and
Gammel Dansk, which is effective from
January 2013. With this acquisition we
establish Arcus-Gruppen as the market
leader in spirits in Denmark, whilst
simultaneously strengthening our position
for aquavit in Germany. Newly established
subsidiary companies Arcus Denmark,
which owns the brands and factory in
Aalborg, and Det Danske Spiritus Kompagni,
which is our new sales company in Denmark,
are important elements in this implementation. We shall also continue our positioning
of Vikingfjord vodka in the USA in collaboration with our partner Kobrand. Here we
expect to continue our volume growth
significantly in 2013, in line with the growth
strategy that was formed in 2011.
where there is still great potential for
development and improvement. We see an
Arcus-Gruppen with a distinct Nordic
presence, where we are already market
leaders for wine in Norway and Sweden, and
for spirits in Norway and Denmark. We can
also see a group with a clear and ambitious
growth strategy, Strategy 2016, which
illustrates our potential for increased
profitability.
As CEO I am proud of, and impressed by, my
colleagues’ commitment to the future and
to renewal. I say a big thank you to all of you
who have put in so much effort in the year
that now lies behind us. I am convinced that
the coming years in the group will be a
fantastic journey.
A NEW ARCUS-GRUPPEN
Through the renewal process that is now in
progress I can see the contours of a new
Arcus-Gruppen. We are already seeing the
first results emerging from our renewal
process. We have built a brand new and
ultra-modern plant here at Gjelleråsen
‘We are already market
leaders for wine in
Norway and Sweden,
and for spirits in Norway
and Denmark.’
Otto Drakenberg
Group Chief Executive Officer
13
Gjelleråsen
– a plant for the future
Northern Europe’s most modern production and distribution plant for wine
and spirits was taken into use by Arcus-Gruppen in May 2012. The plant had a
budget ceiling of MNOK 1,150 and was delivered precisely on time and on budget.
300 staff take part in the official
opening celebration on 15 June 2012.
‘This is a plant for the future. The new
Gjelleråsen plant will make it possible to
develop the company further and realise the
group’s ambitions for substantial growth in
the Nordic region and internationally,’ said
Group CEO Otto Drakenberg on the occasion
of the official opening of the plant on
15 June 2012.
GJELLERÅSEN – A GOOD CHOICE
The cask warehouse contains 8,500
casks. At any one time there are up to
4 million litres of aquavit maturing here.
‘From a logistic perspective Gjelleråsen is a
very good choice, right alongside Highway 4
towards Nittedal and a short distance from
the E6. Not all municipalities welcome
industrial firms, but Nittedal does. They
have been a sound and professional partner
to deal with,’ says Project Director Erik
Bern. Several industrial giants have seen
the advantages offered by Gjelleråsen in
terms of traffic, accessibility and situation.
Ringnes, Diplom-Is and Würth are neighbouring companies who are already well
established.
MORE GROWTH
The old plant at Hasle was opened in 1933,
but Arcus-Gruppen’s growth ambitions
needed a modern installation and this was
not consistent with old buildings and limited
development potential in Oslo. ‘We are
moving from around 94,000 sq m at Hasle
to about half up here. But if we take into
account expansion measured in litres and
increased operating time, we calculate that
we shall be able to achieve a 30 per cent
efficiency gain now,’ Bern points out.
14
MASS REMOVAL AND
GEOTHERMAL ENERGY
The 28-acre site was purchased readylevelled. About one million cubic metres of
rock and earth material was removed from
the steep north-facing hillside at the back
end and then laid at the front end of the
slope to level it out. 1,575,000 kilos of
reinforcement and 10,500 cubic metres of
concrete were used for the project. Under a
separate contract 91 wells were drilled down
to a depth of 300 metres. The geothermal
energy installation is used in hybrid mode in
the summer, where it provides cooling of
the building as a supplementary output.
PRODUCTION/PROCESSING,
DISTRIBUTION AND COMMON
SERVICES OFFICE BUILDING
The production section of the plant contains
a brand new processing installation, a cask
warehouse for maturing aquavit and a new
and advanced bottling plant. The total
capacity is 30 million litres of wine and
spirits per year.
The distribution section includes a brand new
high storage warehouse that includes storage
spaces for both finished goods and intermediate goods for production. In total there
is room for 34,000 pallets. An import
reception with partially automated depalletising and a picking warehouse for high
and low frequency items have also been
established. The total distribution capacity
is around 60 million litres of wine, spirits
and beer per year.
The bottling plant contains 6 bottling lines, with a total capacity of around 30 million litres per year.
common functions. Space has also been
provided for Arcus Opplevelse (the "Arcus
Experience"), with a display and sampling
room.
A PLANT FOR THE FUTURE
The new factory at Gjelleråsen is Northern
Europe’s most modern production and
distribution plant for wine and spirits. At
the same time the old, long-established
production methods for Norwegian aquavit
are being maintained. The factory is 48,000
sq m in size, with a total investment ceiling
of MNOK 1,150 million. It covers an area of
almost 40,000 sq m, or almost 6 football
pitches. Completion of the plant has been
precisely on time and on budget, as determined by the company’s board in 2009.
At the front, with a fantastic view towards
Romerikåsene, is a three-storey common
services office building. Located here are
offices, canteens, auditoriums and other
The picking warehouse supplies more
than 50 million litres of wine, spirits and
beer per year.
HM QUEEN SONJA TOOK PART IN THE OFFICIAL OPENING
After 78 years at Hasle in Økern, Oslo, Arcus-Gruppen moved all its activity to Gjelleråsen in Nittedal
municipality. The official opening of the plant took place on Friday 15 June. HM Queen Sonja was
present at the event, along with more than 250 invited guests. Here HM The Queen is being welcomed
by Kaare Frydenberg, Chairman of Arcus-Gruppen’s board.
15
Arcus-Gruppen –
a leading market player
Arcus-Gruppen is a leading Nordic player in the production, import, sale and
distribution of wine and spirits. The group is represented in all the Nordic countries,
with subsidiary companies in Norway, Sweden, Denmark and Finland.
16
Arcus-Gruppen
– a leading market player
The Gjelleråsen plant is leading to
significantly improved efficiency in the
group's operations.
Arcus-Gruppen and
the market
Arcus-Gruppen is a leading Nordic player in the production, import, sale and
distribution of wine and spirits. The group is represented in all the Nordic
countries, with subsidiary companies in Norway, Sweden, Denmark and Finland.
Arcus-Gruppen is the market leader for spirits in Norway and Denmark and for
wine in Norway and Sweden. The group also has significant exports of spirits
to markets outside the Nordic region, most importantly to Germany and the USA.
The main companies in the group comprise
Arcus-Gruppen AS and subsidiary companies
Arcus AS, Arcus Wine Brands AS, Vinordia
AS, Symposium Wines AS, Excellars AS
(51%), Vingruppen i Norden AB, Vectura AS,
Arcus Sweden AB, Arcus Finland Oy, Arcus
Denmark A/S and Det Danske Spiritus
Kompagni A/S (50%). The parent company
carries out group functions such as
economy and finance, IT, business
development, property management,
communications and HR. The group owns
parts of the French cognac producer Tiffon
SA (34%) and the Finnish company Vinum
Oy (33% owned through Vingruppen i
Norden AB).
The Spirits business area imports, produces,
bottles, markets and sells spirits to government monopoly outlets, the grocery, hotel
17
and restaurant industries, and the tax-free
and selected export markets.
The Wine business area imports, markets
and sells wine through the same sales
channels as the Spirits business area.
The Distribution business area looks after
import, storage and distribution of alcoholic
beverages in the Norwegian market. The
company is brand-neutral and sells its
services to producers, importers and
agents. The group's own products account
for around 31% of its operating income.
Arcus-Gruppen moved its activity to its
new production and distribution plant at
Gjelleråsen in Nittedal municipality in May
2012.
THE WINE AND SPIRITS MARKET IN
THE NORDIC REGION
The wine and spirits market in Sweden,
Finland and Norway is dominated by the
three large state-owned retail monopolies
Systembolaget, Alko and Vinmonopolet.
The monopolies have exclusive rights to all
sales of wine and spirits, and to a degree
beer/strong beer, to private consumers.
The individual monopolies control market
access through their own purchasing
schemes, which are intended to ensure fair
competition between all producers and
importers in their markets. The retail
monopolies are all based on social considerations, seeking to regulate and restrict
access to alcohol by means of availability,
price and responsible trading practices.
Apart from the monopolies, importers and
producers may sell direct to the licensed
hospitality trade (HORECA). In broad terms
around 90% of the volume is sold off-trade
(through the monopolies) and approximately
10% is sold on-trade (HORECA).
In Denmark wine and spirits are sold to the
consumer through the grocery trade. It is
the large grocery chains, led by Dansk
Supermarked and Coop, who are responsible
for sales to the consumer. The chains
manage market access through agreements.
Sales are subject to strong price competition and participation in campaigns under
the auspices of the chains is very important
for achieving volume. The restaurant
industry in Denmark is important, but
consists of many small, independent
players and there are few chains.
In spite of the monopoly schemes in
Sweden, Finland and Norway large volumes
of wine and spirits are sold through other
channels. Cross-border shopping is
widespread as a result of relatively large
differences in the levels of duty between
countries and especially between the
Nordic countries, Germany and the Baltic
states. There is also growing tourist trade in
all the Nordic countries through tax-free
shops at airports and on ferry routes.
THE COMPETITIVE SITUATION
The monopolies impose conditions on
market participants requiring country-wide
distribution, and in all the Nordic countries
the majority of the wholesale business in
the industry is conducted by a small number
of highly specialised logistic companies.
With a market share of more than 50%,
Arcus-Gruppen is the market leader in
Norway, through its subsidiary Vectura.
There are also smaller players such as VSD
and Cuveco. Sweden is dominated by
Lagena and Green Cargo, while in Finland
the largest participant is ME Group. These
companies are by and large product-neutral
and supply logistic and distribution services
to the monopolies and HORECA for many
competing importers and producers.
There are a steadily increasing number of
Nordic producers of wine and spirits. The
largest, Arcus-Gruppen in Norway and Altia
in Sweden and Finland, are companies that
were previously separated out from the
alcohol monopolies in the individual
countries, when the latter were also
responsible for the production stage. In
Sweden, Finland and Norway there are also
local fruit wine producers and smaller niche
producers of spirits, primarily vodka,
aquavit and whisky.
The great majority of wine sales are based
on importers, who import, market and sell
foreign producers' brands in the Nordic
countries through agency agreements.
Within Arcus-Gruppen, Vingruppen in
Norden, Vinordia, Symposium Wines and
Excellars are all examples of this type of
import company. There are also players who
import wine in bulk and develop, bottle and
market their own wine brands for the Nordic
market. Arcus Wine Brands is such a
company. Some players also develop their
own brands that are bottled at the
producer's premises or by bottling
contractors.
‘The wine and spirits
market in Sweden,
Finland and Norway
is dominated by the
three large stateowned monopolies.’
18
Arcus-Gruppen
– a leading market player
From the official opening of the Gjelleråsen plant on 15 June 2012.
ARCUS-GRUPPEN'S POSITION
Arcus-Gruppen is by far Norway's leading
producer and supplier of spirits with a
market share of 32.6% in 2012. The company's
product portfolio within aquavit, which
includes Lysholm Linie and Gammel Opland,
is the clear market leader in Norway and has
important positions in Germany, Denmark
and Sweden. Braastad cognac is the Nordic
region's most widely sold cognac brand. It
ranks second in Norway and is among the
three best-selling cognac brands in Denmark
and Sweden. The brand is also exported to
Asia. Vikingfjord vodka is the market leader
in Norway and is now being built up again in
the USA, with a new importer.
With the acquisition of De Danske
Spritfabrikker and the Aalborg Akvavit,
Gammel Dansk and Malteserkreuz brands,
Arcus-Gruppen will establish itself as the
market leader in Denmark in 2013 through
its sales company Det Danske Spiritus
Kompagni and will significantly strengthen
its position in Germany.
Arcus-Gruppen is the market leader in the
Norwegian wine market, with a market
share of 18.0%. During 2012 the group also
became the market leader in Sweden
through its subsidiary company Vingruppen
i Norden AB, whose market share is 10.5%.
Arcus-Gruppen is also established in the
market for wine in Finland, through Arcus
Finland Oy and Vingruppen i Norden AB.
Arcus-Gruppen is the market leader in
Norway within distribution and logistics
services for wine and spirits to Vinmonopolet
and the hotel and restaurant industry. Its
market share for the Vinmonopolet in 2012
was 52.1%.
INNOVATION AND BUSINESS
DEVELOPMENT
In recent years Arcus-Gruppen has invested
large resources in innovation and business
development. 2012 has been an important
year of expansion for the group, including
taking over the Gjelleråsen plant and moving
into it. The move will enable significant
improvements to be made in the efficiency
of the group's operations, in the areas of
production and distribution/logistics.
The acquisition of De Danske Spritfabrikker
from Pernod Ricard was completed with
effect from 4 January 2013. After the
takeover Arcus-Gruppen becomes the
world's largest aquavit supplier and largest
player in spirits in Denmark. Its position in
Germany is also significantly strengthened.
On the production side, important increases
in marketing investments are planned for
2013 and future years. These will primarily
be concentrated on the aquavit category in
the Nordic region and Germany and on the
American vodka market.
19
Our
business areas
Arcus-Gruppen conducts its activities within the three business areas of
Spirits, Wine and Distribution. The group continues to reinforce its position in
the Nordic market. Sales of wine increased by 13.3% and sales of spirits rose by 9.4%.
Start-up problems affected the results in the distribution area in 2012.
20
Business area:
Spirits
Business area: Spirits
OPERATING INCOME
MNOK
647,1
Arcus-Gruppen's sales of spirits increased by 9.4% in value and 7.1% in
volume in 2012 despite a declining Norwegian spirits market. The growth is
driven by a large increase in sales to the USA, continued growth in DFTR
(Duty-Free & Travel Retail) and good development in Sweden and Germany.
The reduction in volume in Norway pulls down the performance, but is
counterbalanced by value growth caused by increased prices. However,
significant non-recurring costs in connection with moving to the new plant at
Gjelleråsen led to a marked reduction in EBIT in comparison with 2011.
21
BUSINESS AREA SPIRITS*
2012
2011
2010
2009
9,1
8,5
8,5
8,6
8,1
647.1
591.6
611.1
614.6
493.9
Volume (million litres)
Total operating income (MNOK)
EBIT (MNOK)
Operating margin
2008
28.0
49.9
95.9
70.0
72.3
4.3 %
8.4 %
15.7 %
11.4 %
14.6 %
47.3
22.8
-3.8
0
0
Of which non-recurring costs
* See Note 5 Segment information in the group financial statements, page 73.
THE INTERNATIONAL SPIRITS MARKET
According to Euromonitor, the international spirits market grew by 3.3% in volume in 2012.
It was primarily in the new emerging growth markets in Asia (+4%) that sales of spirits
increased in 2012, followed by North America (+2%), Latin America (+1%) and Africa (+3%).
In the more mature markets in both Eastern and Western Europe the market fell by around
1% in 2012. The fall in Europe is still heavily affected by the financial debt crisis in Southern
Europe and sales of spirits dropped in most of the countries.
AALBORG TAFFEL AKVAVIT
Aalborg Taffel Akvavit is the original
Danish caraway aquavit and is the 'king'
of the Danish aquavits. It was the spirits
pioneer Isidor Henius who first put the
bottle on the Danish lunch (‘frokost’) table
in 1846 and it has stayed there ever since.
Aalborg Taffel Akvavit, or Red Aalborg as
it is also known, is still there when the
Danes lay the lunch table and when the
Royal household invites guests for a
banquet. In 2012, Aalborg Taffel had a
market share of 33% in Denmark.
Globally, volume growth is still driven by vodka, where the USA, India and Brazil are contributing
in particular to the increase. The blended Scotch whisky category shows strong growth in all the
emerging markets in Asia and Latin America, followed by cognac, which is growing vigorously in
China. The rum, tequila and brandy categories are also showing positive trends in several markets.
A feature of the international spirits market is increasing consolidation and the 10 largest
players now account for 26% of the global market, measured by volume. Diageo and Pernod
Ricard are the largest global operators and their volume growth was respectively 8.6% and 4.9%.
THE NORDIC MARKET
The Nordic spirits market is complex and there are a number of significant differences
between the individual markets. Finland, Sweden and Norway are monopoly markets with
widely differing framework conditions, regulations, advertising opportunities, pricing and
product listing mechanisms. Denmark in particular is an open market with spirits on sale in
both grocery shops and kiosks. There is also a large market for Duty Free & Travel Retail
where sales to travellers to and from Norway and on the Baltic ferries are especially
important from the volume point of view.
The Nordic spirits market fell by 1.3% in volume in 2012, a somewhat smaller reduction than
in 2011 when the market fell by nearly 3%. The decline is affected by economic uncertainty,
large duty increases in Norway and Finland in recent years and increased cross-border and
tax-free trade in the whole Nordic region. The forecast for 2013 is that the spirits market
will continue to fall slightly. The long-term forecasts from Euromonitor are that the market
will hardly have stabilised or started to rise at the Nordic level before 2016-2017.
Finland
Finland has the highest consumption of sprits in the Nordic countries and total sales of
spirits reached 24.8 million litres in 2012. This is a trend of -2.7% compared with 2011. The
Finnish consumer has a partiality for vodka and viina, which are the two dominant categories
of spirits in the country. As the economic climate is still under pressure and duties are rising,
more and more Finns are travelling to Estonia in search of cheaper products. The duty
increases in recent years have weakened sales of spirits in Finland significantly and the
trend is expected to continue in 2013.
Denmark
Denmark distinguishes itself from the other Nordic countries because sales are not regulated by a state-controlled monopoly. The consumers can buy their alcohol products both in
kiosks and normal shops. Despite there having been no duty increase on spirits in Denmark
in 2012, in contrast to what happened with wine and beer, sales of spirits weakened by
about 1%. As cross-border shopping is increasing and the economy is still weak a small
decline is also expected in 2013.
VOLUME TRENDS
Broken down by markets, 1000 litres
10 000
9 000
8 000
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
2012
2011
QSweden
QDenmark
QOther
QUSA
QTax free
QNorway
QGermany
QFinland
2010
22
Business area:
Spirits
Sweden
Sweden has emerged from the financial crisis and the currency is strong, which makes it
tempting for consumers to buy products such as spirits on the Danish/German border. The
ferry traffic to Finland and the Baltic is also increasing, largely based on the Swedes'
demand for cheap products. This led to sales of spirits through Systembolaget falling for
the third year in a row and they weakened by 0.5% in 2012. Total sales of spirits in Sweden in
2012 were 19.3 million litres. The trend that has for several years given growth in the malt
whisky and herb and spice liqueur categories continued, with 4% and 11% growth respectively,
while aquavit experienced a further weakening (down 2%). The business segment lost
ground financially in each category because of low price offers in border shops and tax-free.
Unless the Euro strengthens against the Swedish kroner in 2013, further decline is anticipated.
Norway
VIKINGFJORD
Vikingfjord is the fastest growing brand
in Arcus-Gruppen's portfolio. A new
growth strategy worked out with our
partner Kobrand in the USA is producing
results. During 2012 the sales volume
increased by 68.4% to 1.3 million litres.
Norway had total sales of spirits in the Vinmonopolet of 11.8 million litres in 2012, a
reduction in volume of 2.0%. The fall in value was somewhat lower, with a decline of 0.5%.
The decline was largely driven by cognac and other brandies, which accounted for a full 82%
of the reduction in volume and both categories suffered decreases in volume of more than
5%. Cognac and other brandies now comprise 13.9% and 5.1% respectively of the Norwegian
market. Other categories that are falling are gin and vodka, which show volume reductions of
0.6% and 3.7% respectively. At the same time aquavit showed growth of 1.4% in volume
and now comprises 10.4% of the total volume. Other categories showing positive trends
were bitters and 'other spirits under 22%' which showed volume growth of 2.1% and 4.9%
respectively and these categories now comprise 5.2% and 4.5% respectively of the total
volume. Norway's strong economy combined with lower prices on journeys abroad contributed
to a sharp rise in the number of travellers from Norway. This was also the reason for a significant
increase in sales in the tax-free market. This sales trend is expected to continue in 2013.
SPIRITS BUSINESS AREA 2012
2012 was a good year for Arcus-Gruppen in the Spirits business area, with growth in
virtually all markets. Arcus-Gruppen has established itself as an important player in the
Nordic market with a market share by volume of around 8% in 2012. The volume increased
by 7.1% and growth in sales income was 9.4% in comparison with 2011. The growth has
been especially strong in the USA, which now comprises 17% of volume sold. In the Nordic
region Arcus-Gruppen grew by 1.4% in volume, despite a decline in Norway of 4.4%.
In Germany Arcus-Gruppen grew by 17.8% in volume.
2012 was an exciting year for the Spirits team in Arcus-Gruppen. The acquisition of
De Danske Spritfabrikker and the Aalborg, Gammel Dansk and Malteserkreuz brands from
Pernod Ricard, the establishment of a new marketing organisation in Denmark, introduction
of new work processes and the move to Gjelleråsen have all been work-intensive tasks.
A number of initiatives have been taken to strengthen Arcus-Gruppen's market position,
including clarifying the positioning of Vikingfjord, further developing Braastad through
collaboration with Tiffon SA, and continuous development of preferred taste and design.
One of the key projects in 2012 has been rationalising the aquavit portfolio. Aquavit is a key
driver of profitability in Arcus-Gruppen. We have a very strong market position in Norway
and ambitions to build a significantly stronger position in Denmark and Sweden by acquisition
and putting down local roots. The overall strategy is to grow profitably through clear
positioning and innovation, as well as by investing in market communication/PR and
externally oriented activity to build up a preference and penetration in our core markets.
As an important part of our future strategy for aquavit we have rationalised the brand
structure and the roles of the different brands:
•
•
•
•
•
•
Lysholm
Løiten
Gammel Opland
Gilde
Simers
Regional aquavits
The original, which created the Norwegian aquavit legend
Norwegian dram
Refined to perfection
Steady companion to Norwegian food traditions since 953
Honest taste
Commitment to local aquavits
23
ACQUISITION OF AALBORG, GAMMEL DANSK AND MALTESERKREUZ
Our position in the Nordic region is further strengthened from January 2013 following the
purchase of the Aalborg, Gammel Dansk and Malteserkreuz brands from Pernod Ricard.
Through this acquisition Arcus-Gruppen's market share in the Nordic region is increased
from 8% to 12%. It also makes Denmark a much more important domestic market for Arcus,
which from January 2013 is the largest player in spirits with a 27% share of the market.
With Hans Just, Arcus has formed the company Det Danske Spiritus Kompagni A/S, which
will carry out sales and marketing for Aalborg and Gammel Dansk in Denmark and to the
German cross-border shops. Malteserkreuz has a strong position in North Germany and will
reinforce Arcus's position in this market.
ARCUS-GRUPPEN IN THE NORDIC MARKET
In 2012, Arcus-Gruppen increased its market share in Sweden, Finland and Denmark, while
its market share fell a little in Norway.
In the large 24.8 million-litre Finnish market Arcus is a small player with a market share of
0.6%, compared with 0.5% in 2011. The market in Finland is dominated by local brands of
clear spirits and is distinguished by fierce price pressure. The market in Finland was down by
4.3% in 2012, and the large vodka category diminished by 3.0%. Arcus's sales in the Finnish
market were MNOK 15.8 in 2012.
In the Swedish market, which comprises 19.3 million litres, Arcus has increased its market
share by 0.3% to 3.5% of the market, measured by volume. The growth can to a large extent
be attributed to a very successful launch of the agency brand Fireball, but sales of Braastad
cognac also showed good growth. Reduced sales of Lysholm Linie aquavit held back what
was otherwise good progress in the Swedish market. Arcus's sales in the Swedish market
were MNOK 53.4 in 2012.
In the Norwegian market of 12.0 million litres Arcus had a market share of 32.6% (value
32.8%) in 2012, a reduction of 0.4% from 2011. Arcus suffered a volume reduction in its
market share for aquavit of 1.3%, to 87.2%. This was mainly due to a long series of new
launches of special bottle issues and minor variants by other market participants. Arcus
also lost market share in vodka and whisky by 2.1% and 1.4% respectively in volume terms.
Arcus showed a positive trend in brandy, and especially in the category 'spirits below 22%',
where Arcus's market share is now 47.7%. Arcus's sales in the Norwegian market were
MNOK 297.0 in 2012.
The Danish market is 12.8 million litres and Arcus-Gruppen has a distribution agreement
with Hans Just A/S for selling Lysholm Linie aquavit and Braastad cognac. Lysholm Linie
continued its good development and now has a market share of 7.4%, up from 5.8% in 2011.
Braastad increased its market share to 16.3% of the cognac market. Arcus's sales to the
Danish market were MNOK 22.6 in 2012.
Growth continues for Arcus in Duty Free & Travel Retail (DFTR) and volume was up by 7.7%
in 2012. There was especially strong growth in the Cognac category, with volume growth of
17.8%. 'Spirits below 22%' grew by 13.7%. The aquavit category remained stable in
comparison with 2011.
ARCUS-GRUPPEN OUTSIDE THE NORDIC REGION
Since the middle of 2011, Arcus-Gruppen has collaborated with the importer Kobrand Wine
& Spirits to establish Vikingfjord as an important vodka brand in the USA. This collaboration
has resulted in strong growth for Vikingfjord in the USA and the volume sold in 2012 was 1.3
million litres, an increase of 68.4% from 2011. During 2012 Vikingfjord has increased its
distribution to just over 7,000 sales outlets across the whole USA. Kobrand also distributes
38,000 litres of Lysholm Linie aquavit. Arcus's total sales to the USA were MNOK 19.5 in 2012.
In the German market Arcus-Gruppen mainly sells Lysholm Linie aquavit, but also small
quantities of Vikingfjord vodka and Braastad cognac. Sales in Germany showed a positive
trend in 2012 and Arcus-Gruppen's sales to our distributor Eggers & Franke were up by
THE AQUAVIT PORTFOLIO
One of the key projects in 2012 has been
rationalising the aquavit portfolio. The
aim is to make it easier for consumers to
find their way around the assortment of
aquavits, and to give each aquavit brand a
clear role. There are 4 so-called aquavit
houses in existence, which are the original
distilleries whose heritage Arcus now
manages - Lysholm, Løiten, Oplandske
and Simers. There is also the Gilde brand,
which was established as an own brand by
Vinmonopolet in 1953. In future each of
our aquavits will be clearly linked to
specific known aquavit situations,
whilst we also wish to raise consumers'
consciousness of aquavit in new
situations and at other times of the year.
24
Business area:
Spirits
8.0% in volume, driven by strong growth in Lysholm Linie aquavit in a market that was under
pressure. Arcus's sales in the German market were MNOK 33.0 in 2012.
PRODUCTION
During 2012 Arcus-Gruppen has moved the production activity from cramped and impractical
premises at Hasle to an ultra-modern factory plant at Gjelleråsen. We have looked forward
to this with pleasure and anticipation for several years, even though we knew that there
would be a period with many problems to be solved both during the move itself and in
connection with starting up on the new site.
Efficient operations
From the new bottling plant at
Gjelleråsen.
Arcus-Gruppen now has Northern Europe's most modern production plant for alcoholic
beverages. In the coming decades the group will produce spirits here of the same high and
consistent quality that has made Arcus-Gruppen known throughout the Nordic region as a
quality producer. For production the main objective is to exploit the new plant by developing
more rational and cost-effective methods of operation.
Takeover of the new plant has been in progress from the spring of 2012 right through to
New Year. It has been a comprehensive process where all production lines have been tested
and approved. Significant skills development has been carried out among the production
employees at all levels in order to run the new plant. Formerly much of the production was
based on manual operations and it was only computer controlled to a limited extent. In the
new plant all the production is planned and documented in a new ERP system, while the
actual production equipment is controlled and monitored by a dedicated computer system.
These two systems communicate with one another so that manual registration is kept to the
minimum.
The new bottling plant consists of 6 bottling lines which have gradually been run in during
the spring and summer of 2012. Automated fork lift trucks are used to supply cardboard
packaging and plastic bottles from Vectura's high storage warehouse to the bottling lines.
The trucks then take the bottled products back with them to Vectura's finished goods
warehouse where they are stored for distribution to customers in Norway or abroad.
In the new factory the aquavit casks are stored in a 13-storey high storage warehouse for
anywhere between 6 months to more than 20 years. Our other goods produced in-house will
stay in the factory for much shorter periods than previously and in combination with new,
more efficient equipment and skilled employees this will contribute to ensuring and further
developing competitiveness and efficiency.
DE DANSKE SPRITFABRIKKER
The purchase of De Danske Spritfabrikker with the Aalborg Akvavit, Gammel Dansk and
Malteserkreuz brands from Pernod Ricard has been a major task for the Production department. In parallel with running-in the new factory at Gjelleråsen, the second half of 2012 was
used to prepare for taking over production responsibility for these long-established
products. Actual production will take place in the production plant that the group has taken
over in Aalborg, while bottling will be carried out by an external party in Denmark. The
external firm will also store the products until they are sold to the various markets and
customers.
The stock of aquavit has been increased to meet an expected future increase in demand for
especially old aquavit, corresponding to what is happening with cognac and whisky.
The work of implementing MBO and LEAN principles at all stages in the flow of goods is very
much in focus and will continue with unabated energy in 2013 as well. Training managers and
employees to work using continuous improvement and LEAN methods is therefore a high
priority.
25
THE WORLD’S COLDEST VODKA
FROM THE LAND OF GLACIAL WATERS
AND PURE SPIRIT
Vikingfjord Vodka ©2013 Kobrand Corporation, New York, NY. 40% ALC. BY VOL. Distilled from Potatoes. Please enjoy responsibly.
26
Business area:
Wine
Business area: Wine
OPERATING INCOME
MNOK
1 128,7
The growth in the wine area continued in 2012. Arcus-Gruppen became
the market leader in wine in Sweden in 2012 through its subsidiary
company Vingruppen i Norden. In Norway the group reinforced its
position as market leader and increased its market share from 16.6% to
18.0%. In Finland the group's market shares are still low, despite
positive growth. The Finnish wine market will be one of the group's
most important areas of priority in 2013.
Profitability in the wine area is evolving very positively and earnings from
the wine business area now make up the largest part of the group's profit.
27
BUSINESS AREA WINE*
Total operating income (MNOK)
EBIT (MNOK)
Operating margin
2012
2011
2010
2009
32,9
29,9
28,1
24,2
2008
18,7
1 128,7
996,5
853,0
732,3
562,6
197,1
139,1
102,4
55,6
52,2
17,5 %
14,0 %
12,0 %
7,6 %
9,3 %
0,7
7,7
-0,1
0
0
THE NORDIC WINE MARKET
The wine markets in the Nordic countries of Sweden, Norway and Finland are all dominated
by the state-owned retail monopolies for all sales of wine and spirits to consumers. In total
over 330 million litres of wine were sold through the monopolies in 2012, a modest increase
from 2011. The largest growth was in Sweden, with approximately 5%. In Norway red wine is
clearly the largest category with about 2/3 of wine sales, while in Sweden and Finland the
red wine share is significantly lower at approximately 50-60%. In these countries the white
wine category is much stronger, a trend that is also starting to appear in Norway.
VILLA CAFAGGIO
For many years the Tuscan producer Villa
Cafaggio has been one of Vinordia's most
important Italian wine suppliers in the
quality segment and is one of the market
leaders in Vinmonopolet. Through our
prioritising premium wines in bag-in-box
packaging, Cafaggio IGT Toscana was
launched with great success in 2012. The
launch received very good press reports
and the wine has been given a permanent
product listing by Vinmonopolet from
March 2013. One of the market's best
launches in 2012-2013!
The national taste preferences vary considerably and quite different brands and wine
producing countries are preferred in each of the Nordic countries. There are therefore no
'Nordic wine brands' i.e. wine brands that are best sellers across national borders in the
Nordic region.
Product development
Consumer insight, the ability to innovate and knowledge of the market are critical for
success in wine in the Nordic region. For wine - as for spirits - adaptation to local preferences is important. But innovation is also decisive. Wine brands have a shorter life cycle than
spirits brands and the winners in the market are those who manage to meet the consumers'
demands at all times. This requires in-depth knowledge of the market, as well as good
contacts with the most proficient suppliers and producers in the world of wine.
A consumer survey carried out by Norstat for Arcus Wine Brands shows that it is especially
young women with a high level of education who prefer Italian wines. Every third woman in
this group says that she prefers Italian wine above all others if price, design and type of
grape are equivalent to alternatives from other markets. Altogether 85 per cent of
respondents reply that they have a 'very good' impression of Italy as a wine producer. By
applying this type of consumer insight in 2012 Arcus-Gruppen has consolidated its position
in red wine in Norway by expanding sales of the Italian wine range Zanni. This consolidation
and several other launches have ensured that two of the group's companies, Vinordia and
Arcus Wine Brands, lead the way in generating added volume in Vinmonopolet. In total these
two companies are responsible for 16% of the new volume that has been supplied to
Vinmonopolet in the last two years.
By continuing to focus on consumer insight, quality, wine expertise and creativity ArcusGruppen will maintain its strong Nordic wine portfolio and also launch several new products
in the coming year.
VOLUME TRENDS
Broken down by markets, 1000 litres
35 000
30 000
25 000
20 000
Cross-border shopping
The decreasing growth with Vinmonopolet in Norway may be due to the strong growth in Tax
Free and cross-border shopping. Vinmonopolet's sales in 2011 in the counties of Østfold
and Akershus are, for example, 3.1 million litres lower than if the population had bought the
national average amount, while sales in Vinmonopolet in Halden were 40% lower than the
size of the town would suggest.
15 000
10 000
5 000
0
2012
Systembolaget reported sales of 14.3 million litres of wine and spirits in sales outlets near
the Swedish border in 2012. This is an increase of nearly 5% on the previous year, while the
increase for the whole of Sweden is less than 1%. The volume of sales of wine and spirits in
Systembolaget's so-called 'Norway shops' in 2012, where sales to Norwegians made up 2/3
of goods sold, thus equates to nearly 20% of Vinmonopolet's total sales volume.
QTax Free
QFinland
QSweden
QNorway
2011
2010
28
Business area:
Wine
SWEDEN
Market trends
The Swedish wine market grew by approximately 5% in 2012. Systembolaget's sales of wine
increased by 4.4%, while sales through restaurants and bars, the HORECA market, grew
considerably more.
Systembolaget is estimated to account for about 92 - 93% of the domestic sales of wine
and spirits and HORECA (hotels, restaurants and catering) approximately 7 - 8%.
In 2012, the biggest wine countries in Systembolaget were Italy, with a market share of
23.8%, (+ 2.6 percentage points), France with 15.9% (+ 0.5 percentage points) and South
Africa 13.2% (-1.7 percentage points). Australia, with a market share of 10.8%, fell by 1.2
percentage points, while the USA increased by 0.8% to 6.3% market share.
CALIFORNIA ZINFANDEL
Of the total of more than 800 importers of wine into Sweden, nearly 400 of them supply
Systembolaget. The ten largest players have a market share of around 50%, while the 30
largest have a total market share of over 88%.
Cline Cellars has had great success in
Systembolaget with its California
Zinfandel. The producer is one of
Vinunic’s most important suppliers.
Arcus-Gruppen's companies in 2012
During 2012 Arcus-Gruppen became the market leader for wine (excluding mulled wine) in
Sweden through its subsidiary company Vingruppen i Norden AB, whose market share is
over 10.5%.
Vingruppen i Norden AB consists of the Swedish subsidiary companies Vinunic AB, The
Wineagency, Bonarome Wineworld AB, Vinovum AB, Kajsa Wines AB and Opentable AB. The
business has grown every year since it started up in 1992 and in 2012 turnover was MSEK
870. Vingruppen's main strategy is to achieve organic growth in existing activities, start new
businesses and acquire other undertakings.
Vinunic AB was established in 1992 and is the largest company in Vingruppen. Vinunic's
largest supplier is Kleine Zalze from South Africa. Other important suppliers are Cline
Cellars, Mulderbosch, Guigal and Louis Jadot. In addition to these, Vinunic works with some
of the wine world's most famous quality producers, the largest of which are Domaine de la
Romanée-Conti, Gaja, Louis Roederer, Sassicaia, Ridge, Shafer, Yalumba and many others.
The Wineagency AB was started by Vingruppen in 2007 and has quickly established itself as
one of Sweden's largest suppliers. Wineagency's largest suppliers are Francois Lurton,
Allegrini and JM Fonseca.
Wineworld AB celebrated its tenth anniversary in 2012. The company markets and sells
Sweden's best-selling champagne, André Clouet Grande Reserve. The largest of Wineworld's
suppliers is Barone Ricasoli, and Vina Falernia, Cantine Paolo Leo and Orion Wines are also
of major importance.
Vinovum AB with its subsidiary company Kajsa Wines has mainly South African suppliers,
of which Origin Wines is the largest.
29
NORWAY
Market trends
Growth in the Norwegian wine market continued in 2012 and Vinmonopolet increased its
consumer sales by 2.2%. The growth was driven among other things by strong sales of
Italian red wines (+10%), which contributed to red wine increasing its volume by 1% in 2012.
Apart from modest growth for American and Portuguese red wines we see either a flat or
negative sales trend in the red wine category. Despite positive volume growth, the main
trend shows that red wine is continuing to lose market share to white wine. In 2012, red wine
comprised 65% of the total sales of wine.
White wine continued the positive trend from 2011 and grew by 3.1% in 2012. Germany and
France continue to dominate the white wine market with 31% and 28% volume shares
respectively. In total, white wine has almost 27% of light wine sales. The growth in the rosé
wine category was driven strongly by good products from France and the USA. Good product
launches contributed to France overtaking Italy as the market leader for rosé wine in 2012.
Bag-in-box maintains its share of 60% of total light wine sales, but we can see a marked
flattening out of the growth we have seen in recent years. The growth in the bag-in-box
segment stems from the over NOK 400 price segment, while price segments below NOK 300
showed the largest negative sales trend.
Figures from Norwegian Wine and Spirit Suppliers (VBF) show that in 2012 HORECA had
good growth compared with 2011. This underlines the trend that HORECA is growing faster
than Vinmonopolet. This is mainly due to the negative sales trend suffered by HORECA in
recent years having turned around. Viewed in total, HORECA accounted for less than 10% of
total wine sales in Norway.
Arcus-Gruppen's companies in 2012
Arcus-Gruppen's companies experienced very strong volume growth in 2012, which is due to
Symposium Wines taking over the J.P. Chenet brand. Arcus-Gruppen increased its market
share to 18%, up from 16.6% in 2011, and thereby strengthened its position as the market
leader for wine in Norway.
Altogether Arcus-Gruppen has 15% of the total HORECA market for wine in Norway and on
this basis is again the leading player in 2012. Continued long-term and strategic positioning
to secure sound and profitable collaboration agreements will be prioritised, to maintain our
position as market leader in HORECA in 2013 as well.
Arcus Wine Brands AS is Norway's largest single supplier of wine to Vinmonopolet. The
company's business concept is to select the best quality wines for Nordic consumers, import
the wine in tanks and tap the wine into bottles and boxes in Norway. Tapping the wine near to
the customer is economical and environmentally friendly, while at the same time it guarantees
that the wines from Arcus Wine Brands are always in good condition for our customers.
Vinordia AS imports, sells and markets products from recognised wine producers worldwide. A selection of the company's most important partners is AdVini, Allegrini, Odfjell
Vineyards, Casa Girelli, Champagne Pommery and Bodegas Julian Chivite.
Symposium Wines AS has established itself in a short time as one of Norway's leading
quality importers. The company's general manager, Sebastian Bredal, is one of about 300
Masters of Wine in the world. Therefore Symposium Wines is the only wine importer in
Norway with a Master of Wine on its staff.
Excellars AS is Norway's sixth largest wine supplier. The company was established in 2007
with a clear focus on wine products tailored to the Norwegian market. Since its establishment,
the company has gradually steered a shift towards its own controlled brands.
ZANNI
In 2012, Arcus-Gruppen consolidated its
position in red wine by expanding sales of
the Italian wine range Zanni. This
happened as a result of consumer insights
gained through a survey conducted by
Norstat for Arcus Wine Brands
30
Business area:
Wine
FINLAND
Market trends
The Finnish wine market increased by about 0.7% to 56.4 million litres in 2012 (Alko).
The red wine category showed weak growth of 1.0%, while white wine increased by 0.9%.
Sparkling wine increased by 2.0% to 4.6 million litres. Chile continues to dominate in red
wine, with a market share of 28.6% and this grew by 0.8% in 2012. Spain became the second
largest red wine country with a market share of 14.0% and increased by 6.4% in 2012. Chile
also dominates the white wine market with a market share of 21.5%. South Africa, too, is
important with 17.0%. Germany went down by -6.1% and Italy by -3.3%, while France grew
by 4.0% in the white wine category.
The group's Finnish wine companies
Vinum Oy, Vinunic Finland Oy. Arcus-Gruppen's business in Finland is run by Vingruppen i
Norden AB through subsidiary companies Vinum Oy and Vinunic Finland Oy. In 2012 turnover
increased by more than 100% to MSEK 60 in total. The companies import and sell wines
from substantially the same suppliers that Vingruppen's Swedish companies work with.
Finland will be a priority area for the group's wine business in 2013 as well.
31
From the sunny slopes of
Maremma Toscana, overlooking
the Mediterranean sea, comes
this rich, sensual and full bodied
wine. Its dark berry aroma and
balsamic savoury flavors, are
ideal companions with the
italian kitchen.
32
Business area:
Distribution
Business area: Distribution
OPERATING INCOME
MNOK
307,2
Arcus-Gruppen's distribution business had a challenging 2012 in connection with
the start-up and running-in of the new distribution plant at Gjelleråsen. The
period April to June was marked by major interruptions to operations, which
resulted in reduced ability to deliver to all customer groups. There were fewer
operational interruptions during the autumn and the Christmas traffic was
handled satisfactorily.
Arcus-Gruppen strengthened its market position in distribution in Norway in
2012. Operating income reduced somewhat to MNOK 307.2 despite volume
growth of 6.6% in comparison with 2011. The company reinforced its position
as the market leader for supplies to Vinmonopolet with a market share of
52.1%. Operations showed a negative result of MNOK 134.4, compared with
a deficit of MNOK 9 in 2011.
33
DISTRIBUTION BUSINESS AREA*
Operating income (MNOK)
EBIT (MNOK)
Operating margin
2012
2011
2010
2009
2008
50,5
47,4
44,8
45,4
44,1
307,2
313,4
299,6
282,2
261,7
-134,4
-9,0
6,8
3,3
5,5
-43,8 %
-2,9 %
2,3 %
1,2 %
2,1 %
65,3
18,5
-4,6
0
0
THE MARKET
The total market for wine and spirits in Norway in 2012 is estimated at 86 million litres. The
volume sold out from Vinmonopolet increased by 1.4 million litres in 2012 to 78.4 million
litres, a growth of 1.8% in comparison with 2011. There is uncertainty about the official
statistics for sales to HORECA (the hotel, restaurant and catering industry), but a level of
activity similar to 2011 is estimated.
During 2012, the number of Vinmonopolet retail outlets increased to 278. The trend towards
more numerous small outlets spread out across the country continues and this increases the
demand for efficient distribution solutions. Vinmonopolet had 12,739 products available
for sale through its channels. Vectura had sales and inventory of just over 8,000 products.
The trend in previous years continues, with many new launches through Vinmonopolet's 'to
order' range.
In 2012 there have been several instances of Norwegian importers changing distributor and
some new companies have been established. Vectura has had a good inflow of such transfers,
including Autentico, which came to us at the beginning of the year.
VECTURA 2012
In total, Vectura distributed 50.5 million litres in 2012, an increase of 3.1 million litres in
comparison with 2011. The company is the clear market leader in Norway and its total
market share for Vinmonopolet in 2012 was 52.1%.
Indisputably, Vectura's largest customer is Vinmonopolet. Sales to Vinmonopolet increased
by 9% in 2012, to a total volume of 41.2 million litres. In HORECA Vectura suffered a
reduction of -17.7% in 2012, compared with 2011. The main reason was start-up problems
in the new plant at Gjelleråsen where the HORECA customers were to all intents and
purposes not covered in the months of May and June, and only at the start of July did full
service recommence. The HORECA purchasing group also chose to change supplier from the
end of September, after the negotiating process for a new agreement period was completed.
Sales of wine and spirits to other wholesalers increased by 18.7%, compared with 2011.
The increase was due to a large extent to sales to other wholesalers as a result of Vectura's
failure to cover HORECA during the period when start-up problems were experienced, as
well as repercussions in the market.
Arcus-Gruppen moved the whole of its business from Hasle to Gjelleråsen in the first half of
the year. After Easter serious operational disruptions occurred in the new distribution plant,
which led to interrupted deliveries to all customer groups. It took until the beginning of July
to re-establish the ability to deliver to all customer groups across the country. Running-in of
the plant continued throughout the autumn and led to extra operating expenses.
During the autumn we succeeded in putting these problems behind us. The big test of this
was the year's Christmas traffic, which showed that we managed to deliver according to plan
at the most hectic time of the year. This should give our customers assurance that the
delivery problems in distribution are now over.
As a result of the start-up problems it was decided to conduct an exercise to compensate
customers for lost earnings during the period. This caused a large increase in operating
expenses for the year.
‘Vectura distributed
50.5 million litres in
2012. The company
is the clear market
leader in Norway.’
34
Business area:
Distribution
In 2012 the main priority was to adapt SAP and WMS to the new plant and there has therefore
been little development of customer-oriented improvements in information technology.
Some changes have been made to the computerised warehouse solution VecView, which
makes it possible for customers themselves to generate and extract reports based on sales
and stock data. Mobile solutions for ordering, stock-holding and product information
continue to be in widespread use.
FOCUS ON MARKET PROSPECTS
As a result of the start-up problems when running-in the new plant, the company needs to
win back the trust of the market. Stabilisation of operations and improvements in delivery
capability are key factors in this process.
Marginal growth in the market is anticipated in 2013. Vinmonopolet's sales trends have
been going down and show significant variation from month to month. This implies a degree
of uncertainty regarding further market development. The trend continues with many new
launches to the 'to order' range, smaller stock holdings per product and a continued short
life cycle for the products. As far as HORECA is concerned, it is expected that there will be
restricted growth in comparison with 2012, and the tendency toward sales through
centralised chains will continue.
FROM THE WHOLE WORLD TO THE WHOLE OF NORWAY
Arcus-Gruppen is Norway's largest player in wine and spirits logistics.
Through subsidiary company Vectura complete third and fourth party logistic
solutions for alcoholic beverages are supplied, based on the new plant at
Gjelleråsen.
Vectura's main customers are 70 importers, who use Vectura to manage the flow
of goods of some 8,000 products from more than 1,000 producers throughout the
world, to Vinmonopolet's 278 shops and 3,000 customers in the HORECA market.
In 2012 the company reinforced its position as Norway's largest supplier of wine
and spirits.
35
2
1
3
1. The high storage warehouse has space for about 34,000 pallets. 2. The monorail system transports pallets between import reception and
production, high storage warehouse and picking warehouse. 3. All customer orders are picked and consolidated in the picking warehouse.
Northern Europe's most modern distribution
plant for wine and spirits
FLOW OF GOODS IN TO THE WAREHOUSE
The incoming flow of goods from external suppliers goes via goods
reception. All incoming items are checked and registered here. The
weight and volume of all articles is measured and recorded in
Cubiscan. Data is then transferred via Cubiscan to the WMS and
then on to SAP to update the base data. The goods reception plant
is partly automated, with pallet tracks and a de-palletising robot.
Deviation control is built in to the system solution.
items for building quarter pallets. It also supplies Arcus with intermediate goods. Miniload is a 'high storage warehouse for bottles' that
centralises all bottle picking, and brings forward bottles for picking on
the basis of an order. The warehouse has a capacity of 13,400 locations
and is operated by 2 cranes. Replenishment is carried out from the HSW.
'A' bottles picked are collected manually from 85 locations, while BCD
bottles picked are conveyed automatically to the picking station.
ORDER PICKING AND CONSOLIDATION
TRANSPORT OF GOODS WITHIN THE WAREHOUSE
The transport systems transport the goods between goods reception,
picking warehouse, picking stations and Arcus production. The monorail
system is computer-driven and provides for transport of pallets in and
out of the high storage warehouse (HSW), from the import reception to
the HSW, from Arcus production via the I-point to the HSW, replenishing
the case picking and bottle picking work stations and all picking points.
Automated forklift trucks are used for automatic replenishment of AA
items and conveyance to the manual area, while manual trucks are
used for replenishing A items, quarter pallets and BIB.
In the picking and consolidation area order picking of boxes, quarter
pallets, casks and bottles takes place and the order is assembled
and consolidated. The picking areas are divided into AA, A, and BCD
items. The picking is controlled by the WMS in batches of orders
every 2 hours, to fit in with the time of loading up for transport
departure. The orders are split up according to picking area (e.g. AA,
BCD, bottles) so that several pickers work on the order in parallel.
The order is assembled in the consolidation area according to a load
plan compiled by the WMS.
SYSTEM SOLUTIONS
WAREHOUSE FUNCTIONS
High storage warehouse - HSW
In the main all products go direct to the HSW after goods reception.
HSW is an automated warehouse with space for 34,000 pallets. It is
operated by 8 cranes and the temperature is regulated at 14 degrees.
The HSW supplies items to all picking stations and Miniload, as well as
SAP is the main system for all business processes and is a fully
integrated system linked to the WMS. The WMS system provides
information about customers, delivery times, lead times and
products and controls picking rounds and correct distribution
solutions. The WMS will accommodate activities and services for
automating manual administrative procedures and updating routines.
36
Forretningsområde:
Distribusjon
37
Our social
responsibility
In 2012, Arcus-Gruppen has continued and further developed its work on
sustainability and social responsibility at all levels in the group.
38
Arcus-Gruppen
Arcus-Gruppen monitors its suppliers
of wine and spirits in the areas of
human rights and workers' rights.
In 2012, Arcus-Gruppen has continued and further developed its work on
sustainability and social responsibility at all levels in the group. A new CSR
policy and new ethical rules are now in place and the Nordic alcohol monopolies' Code of Conduct has been implemented and followed up in all subsidiary
companies. The group has determined its own CSR strategy and has clarified
the responsibility for following this up within the organisation. From November 2012 Arcus-Gruppen is registered with the UN Global Compact and the
group is thus committed to reporting on its social responsibility work annually.
CSR STRATEGY 2012-13
The group's new CSR strategy for the period
2012-13 was approved by the board in June
2012. The strategy defines specific
numerical targets for three main areas in
the group's work on social responsibility
and establishes goals for our societal
involvement, as we in Arcus-Gruppen
interact with the society around us.
Human rights and workers' rights are
defined as priority areas for the Wine and
Spirits business areas. This relates to the
fact that the Nordic alcohol monopolies
(NAM), Arcus-Gruppen's most important
customer group, has developed a monitoring
system for suppliers based on common
guidelines for social responsibility (the
NAM Code of Conduct). As a leading Nordic
player, Arcus-Gruppen has taken an active
role in this work since 2008.
During the period 2012-13 Arcus-Gruppen
is required to have implemented the
common Nordic Code of Conduct for all
suppliers in South Africa, South America
39
and Australia and to document this through
the common monitoring system for the
Nordic monopolies. This will be monitored by
purchasing managers throughout the whole
group and will give Arcus-Gruppen very good
oversight and control over our own value
chain. In turn, this will contribute to reassuring
our customers that our products are produced
in a responsible and sustainable way.
Environment is defined as a priority area
for the Distribution business area and the
production activity at Gjelleråsen. Numerical
targets have been established for the group's
production activity, for energy efficiency
and for the proportion of renewable energy
to be achieved by the end of 2013. Our new
and efficient production plant at Gjelleråsen
gives a very large environmental gain, a
main reason for which is that approximately
70% of the energy requirement for heating
comes from a new heating installation that
uses geothermal energy. Shorter internal
distances and a more efficient flow of
goods also contribute to a significantly
more energy-efficient production process.
Targets have been set for the Distribution
business area for a reduction of total CO2
emissions through the transition to more
energy-efficient goods carriers, more
efficient operations and Eco-driving.
Anti-corruption is defined as the third main
area in the group's CSR strategy. It applies
to the whole group. The group's CSR policy,
which was approved by the board in June
2012, sets out clear requirements for the
conduct of the group's employees. New
ethical rules were established for all
employees and these will be included in
contracts of employment. The regulations
also cover employees' behaviour on the
Internet and in social media. A whistleblower telephone has been set up, which
employees can use to report breaches of
rules and regulations and other undesirable
conduct internally - either openly, or with
full anonymity.
THE NORDIC ALCOHOL MONOPOLIES'
CODE OF CONDUCT
The alcohol monopolies in the Nordic
countries of Sweden, Finland, Norway,
Iceland and the Faeroes have prepared a
common Code of Conduct developed by the
international consultancy firm BSCI. During
2012 this has been put into force for all
suppliers and systems have been established
for monitoring the provisions in the NAM
At the Gjelleråsen plant 70% of the energy requirement is covered by geothermal energy.
Code of Conduct. In Norway Vinmonopolet
chose to implement its own reporting
system developed in collaboration with Det
Norske Veritas. Systembolaget (Sweden)
and Alko (Finland) have chosen another
model, where BSCI will follow up a selection
of producers directly, through a limited
number of annual audits.
RATOS EVALUATION MODEL FOR
SOCIAL RESPONSIBILITY
Arcus-Gruppen's principal owner, Ratos, has
prepared an evaluation model for achieving
maturity in respect of social responsibility.
The model is based on the four main areas
in which each company will be evaluated on
a number of points: human rights, labour
rights, environment and anti-corruption.
Based on the evaluation there are three
degrees of maturity: level 1 (basic); level 2
(intermediate), or level 3 (advanced).
Arcus-Gruppen satisfied the requirements
for level 1 in 2011 and during 2012
satisfied the requirements for level 2.
ALCOHOL AND SOCIETY
Advertising alcohol is forbidden in Norway,
and is severely restricted in Sweden and
Finland. In Norway all mass communication
that aims to promote alcoholic products is
forbidden. In Sweden and Finland only
advertising of wine is permitted, and the
showing of situations where alcohol is being
consumed is not allowed. The group's CSR
policy and ethical guidelines commit
Arcus-Gruppen to conducting all of its
marketing correctly and in compliance with
the applicable laws and industry standards
at all times, in the markets in which we
operate. Arcus-Gruppen shall actively work
to discourage alcohol abuse among its own
employees and carries out active work
through the workplace advisory centre for
addiction problems (AKAN). The overriding
objectives of the AKAN work are to prevent
problems with intoxicants among the
group's own employees and also to provide
an offer of help to individuals who may have
such problems. In 2012, several measures
and activities were carried out in accordance with an action plan that includes,
among other things, sending AKAN contacts
and staff representatives on courses. It is
important for Arcus-Gruppen that we have
a good understanding of alcohol and drug
abuse and good skills in handling it, and the
AKAN work plays an important part in
preventing abuse and encouraging a sound,
healthy culture around alcohol consumption
internally within the firm.
‘Arcus-Gruppen is a
member of the UN
Global Compact and
is thus committed to
reporting on its
social responsibility
work annually.’
Arcus-Gruppen
40
External environment
ARCUS-GRUPPEN'S ENVIRONMENTAL
POLICY
The group's environmental policy describes
what the firm is doing to reduce energy
consumption and emissions of greenhouse
gases and other environmentally damaging
substances, i.e. the effects of our activity
on the external environment.
In 2012, Arcus-Gruppen reduced its
CO2 emissions by 300 tonnes per year
by reducing the glass weight in bottles.
BREAKDOWN OF THE GROUP'S
CO2 EMISSIONS
5.0 %
24.0 %
66.5 %
4.5 %
QIncoming transport
QProduction
QOutgoing transport
QBusiness travel
We are working systematically at defining
and implementing specific environmentally
beneficial solutions in all central operational
processes and large projects. We work
continuously at preventing and reducing the
environmental effects of our own activity
and the products we market and sell. Our
environmental work has a strong internal
focus through defined line responsibility
and is a part of our management and
employee development.
ENVIRONMENTAL ACCOUNTING
We in Arcus-Gruppen are extremely conscious
of our social responsibility to take care of
the external environment. We therefore
attach high priority to ensuring that the
changes that have been made to the company
shall not be at the cost of our surroundings.
In accordance with our action plans we have
carried out work on packaging, pallet
utilisation and cooperation with suppliers
to reduce costs and emissions in connection
with transport.
The flow of goods through the company
increased by 5% during 2012, while our CO2
emissions reduced by 7.9% compared with
2011. This gives a reduction in CO2 per litre
of 13.8%. The trend is in the context of
targeted work to improve the utilisation of
load carriers in the transport system, as
well as a more modern and energy-efficient
building that has improved energy efficiency
in production.
EMISSIONS AND WASTE MANAGEMENT
Arcus-Gruppen discharged approximately
27,000 m3 of waste water in 2012.
Compared with 2011 the volume reduced
by around 10%.
To maintain awareness of waste management
and source separation Arcus-Gruppen has
kept its membership in the environmental
reporting system 'Grønt Ansvar'. The total
quantity of waste is the same as in 2011.
The percentage of waste separated has
regrettably gone down in 2012 (78.1%)
compared with 2011 (90.2%). This is mainly
due to the moving period with the associated
clearing up and emptying of the Hasle plant
and the establishment of new rubbish
handling procedures taking a certain
amount of time. At the end of 2012 new
procedures were established and the
objective is to get back to a level of over
90% in 2013.
ENVIRONMENTAL ACCOUNT FOR ARCUS-GRUPPEN
Trend in CO2 consumption in tonnes per 1000 litres
All figures in tonnes of CO2
2012
2 011
2010
Incoming transport
3 153
3 283
3142
Production
Outgoing transport
Business travel
Total
Flow of goods in 1000 litres
Tonnes of CO2 per 1000 litres
213
338
434
1 151
1 084
1108
230
448
327
4 747
5 153
5 011
50 500
47 400
44 800
0.094
0.109
0.112
41
Risk management
‘The responsibility
for managing risk is
split between the
business areas, who
manage the risk
associated with
business processes,
and the group,
which manages the
risks in connection
with currencies,
interest rates and
liquidity.’
Arcus-Gruppen is a company with considerable international activity and is exposed to
business risk, political risk, currency risk,
interest rate risk, liquidity risk and credit
risk. The responsibility for managing risk is
split between the business areas, who
manage the risk associated with business
processes, and the group, which manages
the risks in connection with currencies,
interest rates and liquidity.
The board and group management monitor
risk through regular reporting and meetings.
BUSINESS RISK
Arcus-Gruppen is continuously exposed to
fluctuations in demand for the group's
products. The company reports internal and
external changes on a regular basis and
takes corrective measures when considered
necessary.
Access to key raw materials for making
spirits is reviewed regularly to ensure
flexibility. For vodka, delivery agreements
have been made with foreign producers,
while there is no alternative Norwegian
supplier for potato spirit for aquavit as only
one such supplier exists. Holding a buffer
stock has been considered as a relevant
measure for aquavit. In 2012, satisfactory
quality of raw materials was also focused
upon, to reduce risk and increase efficiency.
Production is subject to the Food Act with
its associated regulations and requirements for safe production for consumers.
The company's quality system takes care of
these requirements and it has the only
accredited laboratory for alcoholic drinks in
Norway. All products that the company
itself bottles are analysed to ensure quality.
Arcus-Gruppen has taken out insurance for
key areas. The group has a fire alarm system
and physical security for the property,
emergency plans of a commercial and
administrative nature, a quality system and
internal audit.
the risk, Arcus-Gruppen is active within the
industry organisations so that it becomes
aware of possible changes at an early stage
and has the chance to influence them.
CURRENCY RISK
The Norwegian krone is the company's
presentation currency. Arcus-Gruppen is
exposed to conversion risk in connection with
the group's foreign activities. Significant
changes in EURO/USD and SEK/NOK rates
will influence purchase prices and exports
to some markets. Arcus-Gruppen seeks as
far as possible to hedge currencies on the
basis of expected activity levels in the
business areas.
INTEREST RATE RISK
Arcus-Gruppen's interest rate risk is mainly
associated with the group's debt portfolio.
Arcus-Gruppen has a group bank that as a
general rule manages all new external loans
and hedging transactions for interest rates
and currencies. At 31 December 2012 71%
of the group's financing is tied in for more
than three years. In 2012, Arcus-Gruppen
decided to re-finance and change the
group's bank. This will be implemented at
the beginning of 2013.
LIQUIDITY RISK
The group's handling of risk shall ensure
that it has the financial freedom of action
to achieve its short and long-term strategic
and operational objectives. To all intents
and purposes the cash flow from operations
is stable and is monitored in both the short
and long term through reporting.
Arcus-Gruppen's most important sources of
finance are loans from relationship banks. The
group's principal owner is financially strong.
CREDIT RISK
The group's primary exposure to credit risk is
through customers in the hotel and restaurant
market. The group monitors payment
deadlines on a continuous basis and has
agreements with credit and debt collection
companies for following up as required.
POLITICAL RISK
The level of alcohol duties in Norway and the
other Nordic countries and the monopoly
schemes in Norway, Sweden and Finland will
affect the group's development. To reduce
The group updates its risk management
practices annually. Group management and
the board are regularly informed about
changes in the risk picture.
42
Arcus-Gruppen
Organisation, personnel and
the environment
‘Despite big changes
in connection with
moving to the new
plant, the sickness
absence trend for the
group as a whole
went down in 2012.’
KEY FIGURES *

Employees
441
Permanent employees in Norway
383
Temporary employees Norway
13
Vingruppen i Norden
36
Arcus Finland OY
4
Arcus Sweden AB
5
Sickness absence**
6.5%
Turnover*** (permanent employees)
3.6 %
Gender distribution
Men
74.2 %
Women
25.8 %
* Figures as at 31 December 2012.
** Rolling twelve months, average for all months in 2012.
*** Personnel who le as a result of staff reductions are not included in the figure.
Our employees are Arcus-Gruppen's most
important resource. Therefore a good
working environment is an important
foundation stone in the group's business
strategy. Arcus-Gruppen's strategic areas
of priority in HR looking ahead towards
2016 are culture building, development of
expertise and performance management.
Together we shall develop a culture that
creates shared commitment throughout the
whole organisation, and which underpins
the objective of becoming the leading wine
and spirits company in the Nordic region.
As an important part of the work of improving
the working environment and further developing the group's managers and employees,
quarterly employee measurements (BIQ12)
were again carried out in 2012. Measurements
of commitment, enthusiasm and leadership
are included in this process. Despite changes
in the job situation for most people in the
organisation as a result of the move to
Gjelleråsen, the result of the year's four
employee measurements were stable for the
group as whole.
SICKNESS ABSENCE 2012
Despite big changes in connection with moving
to the new plant, the sickness absence trend
for the group as a whole went down in 2012.
Total absence reduced to 6.5% in December
2012 compared with 6.8% in December
2011 and 8.4% in December 2010.
In 2013 further preventative measures will
be started to reduce absence/increase
attendance.
43
HSE – Health, safety and the environment
To maintain a good, safe working
environment continuous improvement takes
place on an ongoing basis. Both management and employees participate actively.
HSE is an integrated part of ArcusGruppen's overall objectives. In addition to
day-to-day HSE activities, 5 meetings of
the Working Environment Committee were
held in 2012.
In 2012, 91 injuries and undesirable
incidents/dangerous situations were
reported, compared with 52 in 2011.
The number of injuries and undesirable
incidents has increased as a result of
increased attention being paid to reporting,
in line with the group's objectives. The
number of injuries resulting in absence
increased from 5 to 9. These include
incidents where the absence was only for
the day of injury.
Arcus-Gruppen is working on plans to
prevent discrimination on the grounds of
gender, ethnicity or disability. The group has
a separate policy that addresses this.
The total gender distribution in ArcusGruppen is 25.8% women and 74.2% men.
Of all managers in Arcus-Gruppen, 18% are
women. Group management comprises
eight people, one of whom is a woman. The
board of Arcus-Gruppen consists of 12
members, of whom two are women. Four of
the board members are elected by the
employees and eight are elected by the
shareholders. The group prioritises the
provision of equal opportunities for all
employees, regardless of gender.
WORKING ENVIRONMENT
HSE work in Arcus-Gruppen is integrated
with management at all levels. With support
from the group, every single manager works
continuously at improving HSE. Risk assessments, safety rounds, working environment
surveys and training are important tools as
we work towards our nil vision - no injuries
to people or the environment.
Employees can make appointments for
consultations and obtain help with
assessing work-related health issues.
The occupational health service also carries
out annual hearing tests for employees in
departments with high noise levels.
COMPANY SPORT
Arcus-Gruppen has many physically active
employees. At Gjelleråsen the employees
have a new, dedicated exercise room with a
variety of training apparatus. The group
provides financial support to the company
sports club, which has 230 members. The
most active groups in 2012 were the fitness
centre, cycling, fishing, football and bridge.
As well as these activities, some employees
took part in the low threshold offer 'Cycle
to work' in May and June 2012.
The group has an occupational health
service and an industrial medical officer is
regularly in attendance at the plant.
EXTRA HSE FOCUS BEFORE, DURING AND
AFTER THE MOVE TO GJELLERÅSEN
There have been big changes during 2012, for all
employees of Arcus-Gruppen. Throughout the
whole year, in parallel with daily operations, the
move of equipment and goods has involved
extensive work at both Hasle and Gjelleråsen. At
Hasle, all production and warehouse equipment
was dismantled to be moved, sold or scrapped. At
Gjelleråsen both new and old equipment was
received and installed, in addition to all the finished
goods that were moved in and registered. Prior to all
operations, risk assessments and safe job analyses
were carried out. Heavy emphasis on safety in all
departments during the move contributed to this
phase being implemented without serious injuries.
The running-in and commissioning of our operating
departments also created a requirement for extra
effort and attention to HSE. Since August 2012, in
addition to normal safety rounds in all the group's
departments, extraordinary safety rounds involving
the CEO and others have been carried out approximately every third week in the operating departments. These rounds have concentrated particularly
on safety and have been carried out in addition to
the ongoing work of updating work operations,
equipment, procedures and instructions and
adapting them to the Gjelleråsen plant. The work
of updating and adapting all procedures to the
new operational situation is continuing. It is
anticipated that this updating will be completed
during 2013. The extraordinary safety rounds are
planned to continue throughout 2013.
In October 2012 Arcus-Gruppen was visited by
NSO (the Norwegian Industrial Safety and Security
Organisation) as part of a coordinated action by
the supervisory authorities. The purpose of the
visit was to draw attention to the importance of
working systematically at surveying and assessing
risks and taking corrective measures. During the
visit a presentation was made about the plant
(including the process from the commencement of
the project to completion of building), risk assessments and the group's internal audit system.
Feedback during the visit was very positive and no
non-conformities or remarks were registered.
44
Arcus-Gruppen
45
Corporate
governance
Arcus-Gruppen's principles for good corporate governance shall contribute to value
creation for the benefit of owners, employees and society generally.
46
Arcus-Gruppen
Arcus-Gruppen's principles for good corporate governance shall contribute to value
creation for the benefit of owners, employees and society generally.
1. CORPORATE GOVERNANCE REPORT
Arcus-Gruppen's board actively monitors
the requirements for good corporate
governance and will at all times ensure that
Arcus-Gruppen adheres to the 'Norwegian
Code of Practice for Corporate Governance',
last revised on 21 October 2011. The code
is available on www.nues.no. The report
below covers the points in the code and
describes how Arcus-Gruppen complies
with it. Information that Arcus-Gruppen is
required to provide in its annual report
2012 in accordance with the Accounting Act
Section 3-3b Reporting on corporate
governance, has been taken into account in
this report wherever possible.
2. ABOUT THE BUSINESS
Arcus-Gruppen's objects clause reads:
‘Import, export, production, storage and
distribution of alcoholic drink products and
other goods, and any activity in connection
with these purposes, and to own shares in
other companies engaged in the same
activity’.
Arcus-Gruppen is engaged in the sale,
distribution, and production of alcoholic
drink products. Further information is
available on the group's website
www.arcusgruppen.no.
3. NOMINAL SHARE CAPITAL AND
DIVIDENDS
At 31.12.2011 the group's equity was
MNOK 207.3. Over time, Arcus-Gruppen's
owners will achieve a competitive return on
their investment through a combination of
dividends and increased value of the shares.
The board has proposed that no intra-group
contribution shall be distributed for 2012.
4. EQUAL TREATMENT OF
SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS
Arcus-Gruppen has one class of shares and
each share carries one vote. The shareholders are Ratos AB, Hoff Norske Potetindustrier BA and senior managers. The nominal
value per share is NOK 1,000. The company's
strategy is not to dilute existing shareholders and accordingly no increases in the
company's capital have been made in recent
years. If the board were to wish to propose
to the general meeting that existing
shareholders' preferential rights should be
waived in the event of an increase of capital,
such proposals will be based on the common
interests of the company and the shareholders and the justification will appear in
the convening notice for the general
meeting.
5. FREE TRANSFERABILITY
Arcus-Gruppen has a limited number of
shareholders and the shares are not traded
actively. The articles of association contain
no special restrictions on the transfer of
shares.
6. GENERAL MEETING
Arcus-Gruppen has a limited number of
shareholders and the shares are not traded
actively. The chairman of the board of
directors chairs the general meeting.
7. NOMINATION COMMITTEE
As an unlisted company, Arcus-Gruppen has
decided that the company will not have a
nomination committee.
8. CORPORATE ASSEMBLY AND
BOARD OF DIRECTORS - COMPOSITION
AND INDEPENDENCE
As an unlisted company, Arcus-Gruppen has
decided that the company will not have a
corporate assembly.
The board is composed with a view to
looking after the interests of shareholders
in general and the company's needs for
skills and qualifications, capacity and
diversity. The term of office for members of
the board elected by shareholders, and
alternate directors, is two years. The
composition of the board satisfies the
code's requirement for members of the
board to be independent of the company's
management, principal shareholder and
significant business connections. Two
members of the board are employees of the
principal shareholder and all directors may
be defined as independent of the company's
management or significant business
connections. There are few instances of
disqualification by reason of partiality when
matters are under consideration by the
board. Representatives of general
management are not members of the
company's board of directors.
On page 48 there is a more comprehensive
description of each director's background,
qualifications, term of office, independence,
how long he/she has been a director of
Arcus-Gruppen and any significant
assignments for other companies or
organisations. The group's employees have
the right to elect four members of the
board of Arcus-Gruppen ASA, pursuant to
Norwegian law and the workers'
participation scheme in force. The
composition of the company's governing
bodies is reported on page 48.
9. THE WORK OF THE BOARD OF
DIRECTORS
The rules of procedure for the board of
directors govern the board's tasks,
responsibilities, duties and administrative
procedures. The rules of procedure for the
board of directors also contain rules setting
out the general manager's duties to keep
the board informed, ensure that the board's
decisions are implemented, make sure that
the company's employees and other
involved parties receive sufficient
information about the board's decisions and
make certain that the guidelines for
preparing agenda items for board
consideration are followed. Other board
direction and clarification to general
management concerning duties, powers and
responsibilities takes place through routine
communication. The board decides upon an
annual plan of work and meetings that
covers strategic work, business issues and
supervisory activities. The board's plan for
its work in 2012 was based on 6 meetings.
Two meetings were held in addition to those
that were planned, thus 8 meetings were
held in 2012 and 64 agenda items were
dealt with altogether. The board's work is
47
described in more detail in the annual
directors' report. The board's agenda is
prepared by the CEO in discussion with the
Chair of the board. The board has
established two standing committees - the
remuneration committee and the audit
committee.
Remuneration committee
The remuneration committee is chaired by
the Chair of the board, Kaare Frydenberg,
and its other members are Mikael Norlander
and Henning Øglænd. The group's CFO is the
committee's secretary. The composition of
the committee satisfies the code's
requirements for independence and all
members of the committee are considered
to be independent of senior management.
The main tasks are:
• Prepare recommendations on the CEO's
terms and conditions for the board
• Prepare recommendations for board
approval, covering questions of principle
associated with salary levels, bonus
systems, pension terms, employment
contracts etc. for Arcus-Gruppen's
managers
The audit committee
The audit committee is chaired by the Chair
of the board, Kaare Frydenberg, and its other
members are Mikael Norlander and Stefan
Elving. The CFO is the secretary of the audit
committee. The composition satisfies the
code's requirements for expertise and
independence and all members of the
committee are considered to be independent
of the activity. The main task is:
• Ascertain that internal and external
financial reporting is appropriately
organised, efficiently carried out and of
good technical quality and supervise the
company's arrangements for risk
management.
exploited through safe and effective
operations, with reliable reporting within
the applicable laws and regulations,
including requirements for ethical conduct
and social responsibility. Through this work
risk factors that are critical for the group
will be revealed and followed up to ensure
that adequate risk reduction measures are
in place. In this context it will also be
ensured that instructions and guidelines for
risk management, emergency response and
business continuation are documented.
HSE
The group has an HSE function, which
ensures that this area is monitored. Further
description of the function is provided on
the Arcus-Gruppen website.
Ethics and social responsibility
Arcus-Gruppen prepared a new CSR policy
for the group in 2012. The group's ethical
rules were revised in 2012. As part of this,
the group is in the process of establishing a
warning system for breaches of its ethical
rules ('whistle-blowing').
The financial reporting process
Arcus-Gruppen's financial statements are
submitted in accordance with the applicable
IAS/IFRS regulations. The group's finance
manual, which sets out key principles,
requirements and procedures for
submitting both periodic reports and annual
reports and financial statements, will be
unified in a common archiving system.
Reporting takes place using the group's
reporting systems Cognos and SAP.
11. BOARD REMUNERATION
Information about all board remuneration
is provided in Note 8 to the accounts of
Arcus-Gruppen AS. Some board members
have shares and options schemes. These are
accounted for on page 77 in the annual
report.
Board self-assessment
The board carries out an annual review of its
activities and competence, and discusses
improvements in the organisation and
execution of the board's work, both at an
individual level and as a group.
10. RISK MANAGEMENT AND
INTERNAL AUDIT
The management is responsible for risk
management and internal audit in the
company and shall contribute in this way to
ensuring that business opportunities are
12. SENIOR MANAGERS'
REMUNERATION
The remuneration committee develops
specific recommendations for the group
CEO's terms and conditions for the board,
and supervises the general terms and
conditions for other senior managers in the
group. The board assesses the CEO and his
terms and conditions once per year.
13. INFORMATION AND
COMMUNICATION
Arcus-Gruppen's financial statements and
financial reporting shall be transparent and
confidence-inspiring. The financial statements shall be in accordance with International Financial Reporting Standards (IFRS).
Annual reports are available on Arcus-Gruppen's website.
14. TAKEOVER OF THE COMPANY
As an unlisted company with a single
principal owner, Arcus-Gruppen has decided
not to comment on this point.
15. AUDITOR
The external auditor shall report regularly
to the board. The external auditor submits
an assessment of risk, internal audit and the
quality of financial reporting in Arcus-Gruppen to the board every autumn. At the same
time the audit plan for the coming year is
put forward. The external auditor also
attends the board meeting where the annual
report and financial statements are
discussed. Current issues may be discussed
with the external auditor without the
administration being present. The external
auditor and group CEO attend all meetings
of the board's audit committee.
48
Members of the Board of Directors
Arcus-Gruppen
Members of the Board of Directors
Kaare Frydenberg (62)
Eilif Due (58)
Hanne Refsholt (52)
Erik Hagen (58)
Chair of the Board
Board member
Board member
Board member
Master of Business
Administration
Business economist, civil
engineer
MSc Agric, MBA
Chair of the Board of Arcus-Gruppen
since 2005. Partner Saga Management
AS since 2005. Group CEO Posten
Norge AS 2000-05, Vice president
Pripps Ringnes AB 1996-2000,
Managing director Aftenposten AS
1990-96. Chair of the Board of
Dinamo Forlag AS, Asker og Bærum
Budstikke ASA, Industriverktøy AS,
Steenberg & Plahte AS. Board
member Workshop Bemanning AS.
Board member of Arcus-Gruppen
since 2010. Central Norway
Regional Health Authority, Development director St. Olav Hospital
phase 1 2002-07, Aker AS, project
director and shipyard director
1988-2001, farmer/forester/civil
engineer since 1986. Chair of the
Board Hoff SA, Allskog BA, Board
member Federation of Norwegian
Agricultural Co-operatives.
Board member of Arcus since 2012.
Group CEO TINE SA since 2005,
Deputy Group CEO TINE SA 20012005, Director of KLF (the Norwegian
Meat and Poultry Association) from
1996-98, various positions in TINE SA
from 1988-96 and 1998-2001. Chair
of the board of Røde Kors Sentrene
(the Red Cross Centres), Board
member of Norsk Landbrukssamvirke
(the Federation of Norwegian Agricultural Co-operatives) and DLF (the
Grocery Manufacturers of Norway).
Higher secondary certificate,
various courses, qualified
through experience.
Stefan Elving (71)
Henning Øglænd (55)
Leif Johansson (63)
Kjell Arne Greni (58)
Board member
Board member
Board member
Board member
Master of Political Sciences
Master of Law
since 2005. Various board appointments since 1999. Deputy CEO ICA
Sverige 1991-98, CEO Elida-Robert
Group (Unilever) 1988-91, CEO
Falcon (Unilever) 1984-88. Board
Member BioGaia AB, Cervera AB,
Store Support AB.
since 2006. Advocate DLA Piper
Chair of the Board, Ratos Advisory
Board Norway, Board member
Møller Gruppen, Centra Gruppen,
Katalysator, Armadillo.
Combined engineering and
business education
Secondary school, Safety
representative, Working
environment and Safety
manager courses
Birgitta Stymne
Göransson (55)
Mikael Norlander (34)
Lasse Hansen (39)
Bjørn Erik Olsen (61)
Board member
Board member
Board member
Board member
Master of Business
Administration
Master of Marketing
Higher secondary certificate
since 2008. Staff representative,
Chair of Arcus Clerical Staff
Association Assistant operations
coordinator, Vectura since 2005
Semi-skilled worker Vectura
2002-05.
Chairman - Senior clerical staff
association IT Operations coordinator since 1997. IT Operations
manager O. Mustad & søn 1989-97.
Civil engineer, MBA
Board member of Arcus-Gruppen since
2005. Group CEO Memira Holding
since 2010. CEO Semantix AB
2005-09, Deputy CEO Telefos AB
2001-05. Board member Elekta AB,
Wavin NV.
since 2012. Senior Investment
Manager Ratos AB since 2008,
Manager Bain & Co 2003-2008.
since 2005. COO/Assistant CEO
Ratos AB since 2004. Own consultancy 1994-2004, management
positions in Procuritas AB 19892004. CEO LB-Invest 1985-1993.
Board member of Arcus-Gruppen since
1996. Staff representative, Leader of
NNN (Norwegian Food and Allied
Workers Union) Arcus since 1989.
Bottlery worker/bottlery machine
operator 1976-89. Member of the
Association Board NNN, Board
member Confederation of Trades
Unions Norway in Oslo, Chair of the TU
Confederation's Industrial policy
committee Oslo, Chair NNN Oslo and
Akershus, Board member MIA and
DeFacto.
chief safety representative. Driver
in Vectura since 1979. Staff member
Luxor Radio & TV 1974-79.
Group management
Arcus-Gruppen
49
Group management
Otto Drakenberg (46)
Jon Andreas Elde (43)
Jan Oluf Skarpnes (56)
Erlend Stefansson (44)
Group Chief Executive
Officer Arcus-Gruppen
Group finance director
and CFO
Managing director Arcus AS
Group Director Spirits
Master of Business
Administration
BSc, MBA
Master of Science Major in
chemistry
Master of Business
Administration
Group CEO of Arcus-Gruppen since
2011. CEO Carlsberg Sweden
2007-10, General manager
Goodyear Dunlop Nordic 2004-07,
Export manager House of Prince
2002-03.
Member of Group management
since 2011. Previous financial
management experience from GTB,
EDB ErgoGroup, Ringnes/Carlsberg,
group development in Orkla and Corporate Finance i KPMG. Board
member of Vinordia AS, Vingruppen
i Norden AB and Vinunic AB.
since 2003. MD of Arcus AS since
2006, formerly Procurement
director of Arcus AS. Previously
employed by Mills/Delikat for 10
years, latterly as Production and
procurement director.
since 2012. Sales director Ringnes
from 2008-12, CEO Spits ASA
2006-2008, CEO Virtual Garden/
Staal 2003-2006, between 1993
and 2003 various roles in sales,
marketing and consulting (inc.
McKinsey 1993-1996).
Thomas Patay (45)
Ann-Christin Gussiås (45)
Per Bjørkum (48)
Erik Bern (51)
Group Director Wine
Group Director Human
Resources
Group Director Corporate
Communications and Public
Affairs
MD of Vectura AS and Group
Director Property, Projects
and Best Practice
Master of Business
Administration
Engineer
Bachelor of Arts, Major in
Marketing
since 2008. MD of Bibendum from
2003-08. Former management
positions in sales and marketing for
FMCG in Norway and internationally,
including having been Marketing
director of Steen & Strøm ASA.
Master of Business
Administration
since 2012. HR Director Coor
Service Management 2006-12, HR
Manager Ringnes 1999-2006.
since January 2013. Partner in First
House 2009-12, Director of
Trolltind Kommunikasjon 2003-09,
GCI Monsen 2000-03, Information
director NetCom 1996-00,
journalist and editor Reuters Norge
1992-96.
since 2012. Project director with
total responsibility for relocating
Arcus-Gruppen to Gjelleråsen
(2008-2012), Factory manager
(2000-2003) and Technical director
of Ringnes (1999-2008), Sales
manager Landteknikk (1986-99).
50
Arcus-Gruppen
Arcus-Gruppen AS is a leading Nordic player in wine and spirits. The company
is the largest supplier of wine in Sweden and Norway and is the Nordic market
leader for cognac and aquavit. Arcus-Gruppen is established in all the Nordic
countries and it exports considerable quantities to both Germany and the USA.
Arcus-Gruppen continues to reinforce its position in the Nordic market. Sales
of wine increased by 13% and sales of spirits rose by 9%. To ensure long-term
competitiveness and value creation the group moved during the summer of
2012 to a new distribution and production plant in Nittedal outside Oslo. The
plant is the most modern of its type in Europe. The move and commissioning
of the new plant made their mark on 2012, with high non-recurring costs and
distribution problems in the second quarter.
A comprehensive programme has been started to achieve satisfactory profitability
in the distribution area.
On 12 July Arcus-Gruppen Holding signed an agreement with Pernod Ricard for
the takeover of De Danske Spritfabrikker and the Aalborg Akvavit, Gammel Dansk,
Brøndums and Malteserkreuz brands. The transactions were finally completed on
4 January 2013 and will be transferred to the Arcus-Gruppen group during 2013.
FINANCIAL DEVELOPMENTS
Results
The group’s operating income was MNOK
1,958 in 2012. This is an increase of MNOK
169 (9%) compared with 2011. The increase
is mainly attributable to growth in the wine
business area. The wine area increased its
operating income by MNOK 132 and showed
growth in the Swedish and Norwegian
markets. Operating income for the spirits
business area increased by MNOK 56, which
is mainly due to positive further development
of the product portfolio.
Operating expenses rose by MNOK 280
(17%) in comparison with 2011. In 2012,
the cost of goods sold increased by MNOK
86, while indirect costs rose by MNOK 194.
Moving costs and non-recurring costs in
connection with restructuring accounted
for MNOK 108 of the increase in costs for
the year. Total non-recurring costs in 2012
were MNOK 171.
The profit before tax, financial items,
depreciation and amortisation (EBITDA)
was MNOK 40, which is MNOK 106 lower
than the year before.
The group’s operating profit (EBIT) in 2012
was MNOK 6, which is MNOK 111 less than
the year before. The change is mainly due to
non-recurring costs associated with the
new plant at Gjelleråsen. Corrected for total
non-recurring costs, EBIT was MNOK 177.
Net financial items comprised MNOK -35 in
2012, against MNOK -10 in 2011 and this is
due to increased interest costs. The group’s
foreign currency contracts led to an
unrealised gain in 2012 of MNOK 1.
The group’s profit before tax was MNOK -29
in comparison with MNOK 107 in 2011.
The profit before tax in the parent company
Arcus-Gruppen AS was MNOK -27 against
MNOK 32 the year before. The difference
in profit is due to lower intra-group
contributions from the subsidiary
companies. The company has received
intra-group contributions and dividends of
MNOK 81, compared with MNOK 109 in
2011.
Pursuant to Section 3-3a of the Norwegian
Accounting Act it is confirmed that the
going concern assumption is present.
Financial risk is continually monitored in
accordance with defined targets and
strategy. The currency risk is secured
through the futures market. There is good
correlation between net currency exposure
in the consolidated statement of financial
position as at 31 December 2012 and the
expiry date structure of the corresponding
forward contracts.
The group’s total equity at the end of the
year was MNOK 207. No intra-group
contribution is proposed. The equity ratio at
31 December 2012 was 8.5%. At the end of
2012 the group had lower equity than the
parent company, Arcus-Gruppen AS. This is
because according to international accounting
standards (IFRS) the group can no longer
recognise goodwill arising from step-by-step
acquisitions after the date of establishment
of the group. This meant that the whole cost
price associated with the increased ownership interest in Vingruppen i Norden AB in
2011 was recognised against group equity,
whilst it is recognised as an asset (shares in
subsidiary) in the parent company.
From 2009 the group has gone over to a
defined contribution pension scheme and
stable pension costs are expected in future
years. The capitalised obligation in connection
with the early retirement pension scheme
AFP, and other schemes, comprises MNOK
30, compared with MNOK 38 in 2011.
The group lies within the requirements
imposed by external lenders for key
financial figures.
The board considers the group’s capital
adequacy and liquidity situation to be
satisfactory.
ORGANISATION, ENVIRONMENT AND
SOCIAL RESPONSIBILITY
Organisation
Arcus-Gruppen works systematically to
develop its employees and its organisation
to support its business strategies.
Financial matters and capital structure
The group’s total assets was MNOK 2,414
on 31 December 2012, compared with
MNOK 2,339 on 31December 2011. Cash
flow from operations was MNOK 44
compared with MNOK 100 the year before,
due to weaker results.
At 31 December2012, the group had 441
employees.
Total sickness absence in the group has
been reduced from 6.8% in 2011 to 6.5% in
2012. Arcus-Gruppen is an Inclusive Working
51
Life (‘IA’) company and in 2012 it carried out
training and introduced monitoring systems
directed at the ongoing prevention of
sickness absence.
In total, 91 injuries and undesirable
incidents were reported in 2012. In 2011,
52 injuries and undesirable incidents were
reported. The number of injuries and
undesirable incidents has increased and is a
result of increased attention being paid to
reporting. The number of injuries resulting
in absence increased from 5 to 9. These
include incidents where the absence was
only for the day of injury.
The total gender distribution in ArcusGruppen is 25.8% women and 74.2% men.
The board of Arcus-Gruppen consists of 12
members, of whom 8 are elected by shareholders. Two of the members elected by
shareholders are women. The group prioritises the provision of equal opportunities
for all employees, regardless of gender.
Arcus-Gruppen works actively and purposefully to promote the aims of the Antidiscrimination Act within the business.
Among other matters, the activities covered
include recruitment, wage conditions,
working conditions, development
opportunities and protection against
harassment, regardless of ethnicity, skin
colour, language, and religion or life stance.
The group’s aim is to be a workplace where
there is no discrimination on the grounds of
disability. The group works actively and
purposefully to design and adapt its main
physical facilities in such a way that the
firm’s operational areas are accessible to as
many people as possible. Workplaces and
tasks are individually adapted for disabled
employees or job applicants.
Environment
Arcus-Gruppen works systematically to
reduce the environmental impact of the
business, in accordance with the group’s
environmental strategy. The main focus is
naturally directed towards reducing CO2
emissions, by optimising the flow of goods
and other activities. Based on this, a range
of specific measures has been developed
with a view to reducing negative environmental effects in all parts of the group’s
value chain.
Social responsibility
The group’s CSR policy and ethical rules
describe the principles underlying social
responsibility and the general responsibility
that lies with the group’s management and
employees. The guidelines are based on the
UN’s Global Compact and they set the
framework for the business in the areas of
human rights, labour rights, the environment,
anti-corruption and the approach to alcohol.
Arcus-Gruppen became a member of the UN
Global Compact in 2012 and reports annually
on the group’s social responsibility work. In
2012, the group implemented the Nordic
alcohol monopolies’ Code of Conduct for all
suppliers from South Africa and Mexico. The
group’s new production plant at Gjelleråsen
gives a major environmental gain and, towards
the end of 2012, 62% of the energy
requirement for heating was coming from a
new geothermal installation. New ethical
regulations were established for all employees
and these will be included in contracts of
employment. The regulations also cover
employees’ behaviour on the Internet and in
social media. A whistle-blower telephone
has also been set up, which employees can
use to report conduct worthy of criticism either openly, or with full anonymity.
CORPORATE GOVERNANCE
Arcus-Gruppen seeks to follow the Norwegian
Code of Practice for Corporate Governance
(‘NUES’) wherever relevant. A report on the
group’s approach to the individual points in
the NUES guidelines may be found on page
46 of the annual report.
FUTURE PROSPECTS
The wine market is growing slowly. The
spirits market is falling back slightly. In the
light of these factors, the group has set in
train measures to make better use of its
product portfolio and to reduce its costs.
2013 will feature further development of
the acquisition in Denmark and development
of the export markets, as well as exploitation
of the group’s new production and distribution
plant. The new plant at Gjelleråsen will provide
the basis for increased growth and profits
for the group’s business areas in future years.
ALLOCATION OF PROFIT
The board recommends that the surplus for the year in the parent company Arcus-Gruppen AS of MNOK 6 be
allocated as follows:
Transferred from retained earnings
-6 MNOK
Total transferred
-6 MNOK
Unrestricted equity aer the above allocations
0 MNOK
Oslo, 15 February 2013
Kaare Frydenberg
Chair of the Board
Leif Johansson
Hanne Refsholt
Mikael Norlander
Eilif Due
Stefan Elving
Henning Øglænd
Birgitta Stymne
Göransson
Bjørn Erik Olsen
Kjell Arne Greni
Erik Hagen
Lasse Hansen
Otto Drakenberg
Group CEO
52
Financial statements and Notes
53
Financial statements
and notes
COMPANY FINANCIAL STATEMENTS  PARENT COMPANY
GROUP FINANCIAL STATEMENTS
54
Statement of comprehensive income
55
Statement of financial position
94
Statement of financial position
56
Statement of cash flows
96
58
Notes
Statement of changes in equity
59
Note 1
Accounting principles
The Group’s history in brief
60
Note 2
61
Cost of salaries, number of employees,
remuneration, loans to employees etc.
98
Note 3
Tangible fixed assets
99
Note 4
Intangible assets
100
Note 5
Subsidiaries and associated companies
100
Note 6
Other operating income and expenses/
related parties
101
68
Note 7
Share capital and shareholder information
101
73
Note 8
Bank deposits
102
Note 9
Liabilities to credit institutions, mortgages
and guarantees
102
Note 10
Intragroup receivables and liabilities
103
Note 11
Tax
103
Note 12
Equity
104
Note 13
Pension costs, assets and obligations
105
Note 14
Other provisions for obligations
107
Key figures 2008–2012
Statement of comprehensive income
Notes
Note 1
Companies in the Group
Note 2
Investments in associated companies and
jointly controlled entities
67
Other investments
68
Note 3
Note 4
Financial risk management
66
Note 5
Segment information
Note 6
Transactions with related parties
74
Note 7
Other operating expenses
75
Note 8
Salary and other personnel costs
76
Note 9
Pension costs, assets and obligations
77
Note 10
Financial income and costs
80
Note 11
Tax
80
Note 12
82
Note 13
Intangible assets
83
Note 14
Leasing agreements
84
Note 15
Other receivables
84
Note 16
Inventory
85
Note 17
Prepayments to suppliers
85
Note 18
Cash and cash equivalents
86
Note 19
Share capital and shareholder information
86
Note 20
Liabilities to credit institutions
87
Note 21
Liabilities at fair value through profit/loss
87
Note 22
Other provisions for liabilities
88
Note 23
Current liabilities
89
Note 24
Large individual transactions
90
Note 25
Mortgages and guarantees
90
Note 26
Events aer the end of the reporting period
91
AUDITOR’S REPORT
93
97
108
54
Arcus-Gruppen
Group
GROUP FINANCIAL STATEMENTS
Key figures 2008–2012
Def
2012
2011
2010
2009
2008
1 309.4
INCOME
Operating income
MNOK
1 958.2
1 789.5
1 632.4
1 504.7
Of which operating income outside Norway
MNOK
977.6
912.1
832.4
718.7
584.2
EBITDA
MNOK
39.9
145.9
162.4
192.3
173.8
EBIT
MNOK
5.8
116.8
132.6
163.8
144.8
EBIT adjusted for extraordinary effects
MNOK
176.6
170.5
132.6
96.3
85.0
Net financial profit
MNOK
-52.1
-9.5
-0.8
-3.8
16.8
Pre-tax profit
MNOK
-28.9
107.3
131.8
160.1
161.7
Profit for the year
MNOK
-22.2
80.0
98.1
105.4
120.0
Operating margin
1
%
0.3 %
6.5 %
8.1 %
10.9 %
11.1 %
Profit per share
2
TNOK
-0.08
0.29
0.36
0.38
0.43
Total capital
MNOK
2 413.7
2 339.7
1 947.3
1 951.8
1 948.8
Total equity
MNOK
207.3
269.4
504.8
467.9
446.8
8.6 %
11.5 %
25.9 %
24.0 %
22.9 %
CAPITAL POSITION
Equity ratio
3
%
Net interest-bearing debt
4
MNOK
121.9
-241.0
-425.7
-365.6
-445.9
Interest coverage ratio
5
%
-1.2 %
22.4 %
-65.4 %
-40.4 %
-4.9 %
Proportion of variable interest-bearing debt
6
%
66,.5 %
38.0 %
-
-
-
Remaining duration of debt
7
Year
3.8
4.8
-
-
-
Capital turnover
8
Per yr
0.8
0.8
0.8
0.8
0.6
Return on equity
9
%
-9.3 %
20.7 %
19.4 %
22.5 %
26.9 %
10
%
-0.9 %
3.7 %
5.0 %
5.4 %
5.5 %
Return on total capital
CASH FLOWS
Net cash flows from operational activities
MNOK
43.6
99.8
-10.6
168.7
184.8
Net cash flows from investment activities
MNOK
-107.9
-200.8
146.3
-187.2
375.7
Net cash flows from financing activities
MNOK
14.5
82.7
-79.3
-67.1
-738.0
Net cash flows
MNOK
-49.8
-18.7
60.1
-80.3
-172.6
TNOK
-0.2
-0.07
0.22
-0.29
-0.63
276000
276000
276000
276000
276000
Cash flow per share
11
SHARES
Average no. of shares outstanding in parent company
Number
PERSONNEL
Number of employees as at 31 Dec
Number
441
469
452
469
460
Average number of FTEs
Number
450
454
460
469
460
Definitions:
1. EBIT / Operating income
2. Profit for the year / Average number of shares
3. Equity / Total capital
4. Interest-bearing debt - cash and cash equivalents
5. (Pre-tax profit + net cost of interest) / Net cost of interest
6. Interest-bearing debt with variable interest / Interest-bearing debt
7. Remaining duration of interest-bearing debt
8. Operating income / Average total capital
9. Profit for the year / Average equity
10. Profit for the year / Average total capital
11. Net cash flow / Average number of shares
55
Statement of comprehensive income 01.01. – 31.12.
Figures in NOK 1 000
Note
2012
2011
1 915 384
1 755 124
OPERATING INCOME AND EXPENSES
Net sales
Net gain on sale of fixed assets
Other operating income
5
12, 27
6
Total operating income
464
316
42 399
34 106
1 958 247
1 789 546
Cost of goods
16
-972 526
-886 331
Salaries and other personnel costs
8,9
-377 241
-330 801
12,13
-34 014
-29 082
7,14
-403 834
-378 702
Oher income and expenses
7
Depreciation
Total operating expenses
Share of profit from associated companies and jointly controlled entities
2
-170 729
-53 736
-1 958 344
-1 678 652
5 937
5 914
Total share of profit from AC & JCE
5 937
5 914
Operating profit
5 840
116 808
14 167
FINANCIAL INCOME AND COSTS
Interest income
10
7 223
Other financial income
10
2 667
6 901
Interest costs
10
-28 651
-19 176
Other financial costs
10
-16 016
-11 426
-34 777
-9 534
PRE-TAX PROFIT
-28 937
107 274
6 706
-27 296
-22 231
79 978
30 702
20 828
Tax
PROFIT FOR THE YEAR
11
The profit for the year is aributable to
Non-controlling interests
Parent company shareholders
-52 933
59 150
-22 231
79 978
-22 231
79 978
OTHER COMPREHENSIVE INCOME
Profit for the year
Foreign currency translation differences
-3 931
-342
Total other comprehensive income
-3 931
-342
-26 162
79 636
30 469
20 696
TOTAL PROFIT FOR THE YEAR
The total profit for the year is aributable to
Parent company shareholders
-56 631
58 940
-26 162
79 636
56
Arcus-Gruppen
Group
Statement of financial position 31 December
Note
2012
2011
ASSETS
Fixed assets
Intangible assets
Goodwill
13
220 923
221 952
Brands
13
8 787
9 084
Soware
13
890
1 497
230 600
232 533
Total intangible assets
Land, buildings and other real estate
12
1 626
387
Machinery and equipment
12
357 983
53 440
Fixtures and fiings, tools, office equipment etc
12
38 902
16 317
Assets under construction
12
Total tangible fixed assets
5 708
54 843
404 219
124 987
Long-term financial assets
Deferred tax asset
11
95 424
45 005
Investments in associated companies and jointly controlled entities
2
36 443
31 117
Other investments
3
225
225
15
262
263
Total financial assets
132 354
76 610
Total fixed assets
767 173
434 130
16
248 721
251 988
Accounts receivable
4
890 806
1 124 294
17
95 579
76 975
Other receivables
15
24 579
28 473
Receivables from group companies
15
31 392
16 410
1 042 356
1 246 152
355 463
407 021
Total current assets
1 646 540
1 905 161
TOTAL ASSETS
2 413 713
2 339 291
Other long-term receivables
Current assets
Inventories
Receivables
Total receivables
4,18
57
Note
2012
2011
276 000
276 000
EQUITY AND LIABILITIES
Equity
Paid-in equity
Share capital
19
Share premium fund
23 545
23 545
Total paid-in equity
299 545
299 545
Retained earnings
Retained earnings
-115 526
-47 481
Total retained earnings
-115 526
-47 481
23 266
17 295
207 285
269 359
Total equity
Liabilities
Provision for obligations
Pension obligations
9
29 493
38 143
4,21,24
171 831
216 016
22
Total provision for obligations
4 197
5 448
205 521
259 607
Other long-term liabilities
4,20
Total other long-term liabilities
464 610
166 029
464 610
166 029
12 726
0
456 557
500 952
Current liabilities
20
Accounts payable
Tax payable
11
24 195
23 471
Public taxes
23
808 844
896 301
Other current liabilities
233 975
223 572
Total current liabilities
22,23
1 536 297
1 644 296
Total liabilities
2 206 428
2 069 932
TOTAL EQUITY AND LIABILITIES
2 413 713
2 339 291
Kaare Frydenberg
Chair of the Board
Leif Johansson
Hanne Refsholt
Mikael Norlander
Eilif Due
Stefan Elving
Henning Øglænd
Birgitta Stymne
Göransson
Bjørn Erik Olsen
Kjell Arne Greni
Erik Hagen
Lasse Hansen
Otto Drakenberg
Group CEO
58
Arcus-Gruppen
Group
Statement of cash flows 01.01. – 31.12.
Note
2012
2011
CASH FLOWS FROM OPERATIONS
Pre-tax profit
-28 937
107 274
12,13
34 014
29 082
2
-5 937
-5 914
-42 913
-35 796
Pension costs without cash effect
-9 901
4 583
Interest costs without cash effect
2 986
2 976
Value changes without cash effect
6 669
3 169
-464
-9 316
0
527
Ordinary depreciation
Share of profit from associated company and jointly controlled entities
Tax payable
Loss/gain on sale of shares/fixed assets
Change in other long-term receivables
Other financial items without cash effect
20
Unrealised agio
Change in inventories
16
Change in accounts receivable
Change in accounts payable
Change in other current assets and other liability items
4 971
0
-1 181
395
3 267
-19 643
233 488
-153 716
-44 395
145 184
-108 096
30 956
43 571
99 761
CASH FLOWS FROM INVESTMENT ACTIVITIES
Payment on purchase of fixed assets
13
-143
0
Proceeds from sale of tangible fixed assets
12,13
709
9 362
Payments on acquisition of tangible fixed assets
12,13
-54 717
-53 930
24
-52 480
-155 367
Payments on acquisition of business
Payments on acquisition of other financial investments
3
-1 241
-895
-107 872
-200 830
3
1 839
1 469
4,20
54 000
166 027
Net cash flow from investment activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from dividends received from associated companies
New long-term debt
Repayment of long term interest-bearing debt
-5 421
0
Payments of dividends/group contributions
-35 883
-84 821
Net cash flow from financing activities
14 535
82 675
Effect of exchange rate changes on cash and cash equivalents
-1 792
-265
Effect of exchange rate changes on cash and cash equivalents
-1 792
-265
Net change in cash and cash equivalents
-51 558
-18 659
Holdings of cash and cash equivalents on 01.01.
407 021
425 680
355 463
407 021
Holdings of cash and cash equivalents on 31.12.
18
59
Statement of changes in equity
Equity 31 December 2010
Share
capital
Share
Premium
Fund
276 000
23 545
Translation
differences
Other
retained
earnings
Total equity
for owners
of the parent
company
Noncontrolling
interests
Total
equity for
the Group
-1 103
145 252
443 694
61 083
504 777
79 978
Profit for the year 2011
0
0
0
59 150
59 150
20 828
Total other comprehensive income 2011
0
0
-210
0
-210
-132
-342
Total profit for the year 2011
0
0
-210
59 150
58 940
20 696
79 636
Dividend paid to non-controlling interests
0
0
0
0
0
-8 821
-8 821
Group contributions paid to parent company
0
0
0
-69 142
-69 142
0
-69 142
Transfer profit for the year from minority to majority1
0
0
0
-3 728
-3 728
3 728
0
Total transactions with the owners 2011
0
0
0
-72 870
-72 870
-5 093
-77 963
Changes in equity resulting from increased holding
in Vingruppen2
0
0
0
-177 700
-177 700
-59 391
-237 091
Total other changes in equity 2011
0
0
0
-177 700
-177 700
-59 391
-237 091
276 000
23 545
-1 313
-46 168
252 064
17 295
269 359
Profit for the year 2012
0
0
0
-52 933
-52 933
30 702
-22 231
Total other comprehensive income 2012
0
0
-3 698
0
-3 698
-233
-3 931
Total profit for the year 2012
0
0
-3 698
-52 933
-56 631
30 469
-26 162
Transactions with owners 2011
Other changes in equity 2011
Transactions with owners 2012
Dividend paid to non-controlling interests
0
0
0
0
0
-20 912
-20 912
Group contributions paid to parent company
0
0
0
-15 000
-15 000
0
-15 000
Transfer profit for the year from minority to majority1
0
0
0
3 586
3 586
-3 586
0
Total transactions with the owners 2012
0
0
0
-11 414
-11 414
-24 498
-35 912
276 000
23 545
-5 011
-110 515
184 019
23 266
207 285
1. The subsidiaries Vingruppen i Norden AB and Excellars AS are owned 90.7% and 51% respectively by the group. In addition put and call options exist associated with the non-controlling
interests, although the Group was not considered to have control of the shares at the end of the reporting period. These companies have been recognised as though they had been wholly (100%)
owned, but with partial presentation of the non-controlling interests. Partial presentation of non-controlling interests means that the non-controlling interest's share of the profit for the year is
shown in the statement of comprehensive income, but not in the equity. The transfer refers to the non-controlling interests' share of the profit for the year, adjusted for the dividend distributed
for the period.
2. In regard to IFRS 3, the group may not further capitalise goodwill associated with an existing subsidiary in the statement of financial position aer the date of the establishment of the group.
Because of this the whole of the purchase sum associated with the staged acquisition of Vingruppen i Norden AB has been recognised in the group’s equity. At the same time both a put and a call
option associated with the non-controlling interest were set up in the staged acquisition, where the option obligation was recognised as a liability in the financial position statement in accordance
with IAS 32. This option obligation has also been recognised in the group equity. Of the total sum, TNOK 59,391 is aributed to the non-controlling interests, while TNOK 177,700 is aributed to
shareholders' equity in the parent company. For further details, see Note 24 in the annual financial statements for 2011.
60
Arcus-Gruppen
Group
The Group's history in brief
Arcus-Gruppen AS is registered and domiciled in Norway, and located at
Gjelleråsen in Niedal Municipality. The Group financial statements
include the parent company and subsidiaries (together referred to as
"the group" and individually as "the group companies") as well as the
group's holdings in associated companies. The group's principal business
is the import, production, marketing, sale and distribution of wine and
spirits.
Historic development
In recent years the Group has carried out the following important
transactions:
2002
• Established Vinordia AS
• Established Arcus Finland OY
• Arcus-Gruppen AS bought the properties in the subsidiaries in
Arcus AS and Vectura AS
2003
• Acquired W. Nagel AS
• Acquired Halden Kjemi Holding AS, Halden Kjemi AS, Markosal AS and
Tendex OY
2004
• Acquired Condor AS
• Converted other receivables from 2003 TNOK 3502 to 81,227 shares
in the company SAS de l’Ile Madame representing a holding of 34%
2005
• Arcus AS demerged from TMS AS (Technical Medical Alcohol Division)
which in turn merged with Arcus Kjemi AS with accounting effect from
1 January 2005
• Demerged the property companies Arcus Eiendom Hamar AS, Arcus
Eiendom AS and Arcus Eiendom Anders Winsvoldsvei AS with accounting
effect from 1 January 2005 and with accounting and tax continuity
• Established Arcus Danmark A/S
2006
• Acquired 62.5% of the Swedish Vingruppen i Norden AB
• Sold the group's chemical operation
2007
• Sold Arcus Eiendom AS, Arcus Eiendom Anders Winsvoldsvei AS,
Hjemmel Haslevangen AS and Hjemmel Anders Winsvolds vei AS
• Sold Tendex OY
• Liquidated Arcus Danmark A/S
2008
• Acquired Gjelleråsen Prosjekt 1 AS which contains the site of the new
operating location at Gjelleråsen
2009
• Acquired the brands Star Gin, Red Port and Dry Anis from Pernod
Ricard
• Acquired 80% of the company Symposium Wines AS
• Entered into an agreement on the sale of Gjelleråsen prosjekt 1 AS
with takeover on 1 February 2010
2010
• Implemented agreement on sale of Gjelleråsen prosjekt 1 AS
• Started construction of new production, distribution building and head
office at Gjelleråsen
2011
• Acquired 28.2% of the shares in Vingruppen i Norden AB and increased
holding from 62.5% to 90.7%. Entered into an option agreement on
the remaining 9.3%
• Acquired 51% of the shares in Excellars AS, with option for the
remaining 49%
• Swapped 34% of the shares in SAS de l’Ile Madame for 32.6% of the
shares in Tiffon SA. Acquired a further 106 shares and increased
holding in Tiffon SA to 34%
• Continued construction of new production, distribution building and
head office at Gjelleråsen
2012
• Completed new production, distribution building and head office at
Gjelleråsen north of Oslo.
• Moved from Hasle in Oslo to Gjelleråsen in Niedal Kommune
• Signed agreement with Pernod Ricard on acquisition of the aquavit
brands Aalborg Aquavit, Brøndums and Malteserkreuz, as well as the
biers brand, Gammel Dansk
61
The group financial statements are presented in accordance with the
Norwegian Accounting Act Section 3-9 and the Regulations on simplified
IFRS made by the Norwegian Ministry of Finance on 21 January 2008.
Generally this means that recognition and measurement follow international accounting standards (IFRS) and presentation and information
in the notes are in accordance with Norwegian accounting legislation and
generally accepted accounting principles. The annual financial statement
was adopted by the Company’s Board of Directors on 15 February 2013.
Change in presentation in 2012
In 2012 the group has chosen to present non-recurring revenue and
costs on a separate line in the income statement, on the line ”Other
income and costs”. The figures in the the income statement for 2011
have been reworked so that they are comparable with 2012.
From 2012 the group has chosen to present the share of profit from
associated companies and jointly controlled entities on a separate line
before operating profit/loss. In previous annual financial statements this
has been presented under operating income. All comparable figures for
2011 or earlier referred to in the annual financial statements for 2012
have been changed so that the figures are comparable.
Simplified IFRS
The group has adopted the following simplifications from the
incorporation and valuation rules in IFRS:
• IFRS 1 No. 7 on the carrying on of acquisition costs on investments in
subsidiaries, associated companies and jointly controlled entities.
• Full retrospective application of IAS 19 would be difficult, and ArcusGruppen is utilising the exception that states that on transition to
IFRS the enterprise may choose to book all non-amortised estimate
deviations against equity. In accordance with IAS 19 No. 24 a) ArcusGruppen may zero the estimate deviations on the date when the
parent company went over to IFRS, i.e. as at 31 December 2005.
Consolidation principles
The group financial statements cover Arcus-Gruppen AS and subsidiaries
in which Arcus-Gruppen AS has a controlling influence. Normally these
will be companies in which Arcus-Gruppen AS, either directly or indirectly
via subsidiaries, owns more than 50% of the shares with voting rights.
The group financial statements cover Arcus-Gruppen AS and the wholly
owned subsidiaries Arcus AS, Arcus Wine Brands AS and Vectura AS, the
90.66% owned company Vingruppen i Norden AB as well as Excellars AS
where ownership is 51%. The companies Arcus Sweden AB and Arcus
Finland OY are wholly owned by Arcus AS. Vinordia AS, which is owned
70% by Arcus AS, is also covered by the group financial statements, as
well as the companies Vingruppen i Norge AS and Symposium Wines AS
which are owned 100% and 80% respectively by Vinordia AS. In addition
the following general partnerships are included: De Lysholmske Brenneri
- og Destillasjonsfabrikker ANS, Siemers & Cos Destillasjon ANS, Løiten
Brændris Destillation ANS and Oplandske Spritfabrik ANS which are
owned 99% by Arcus AS and 1% by Arcus-Gruppen AS respectively.
The group financial statements have been prepared on the basis of
historical cost and present the group as though it were an entity. In the
group financial statements all internal receivables and internal
transactions between companies within the group have been eliminated.
The cost price of shares in subsidiaries is eliminated against equity at the
time of acquisition. Added value beyond the underlying equity in subsidiaries
is aributed to those assets with which the added value may be associated.
That part of the cost price that cannot be aributed to identifiable
assets and liabilities represents goodwill. Accounting value including
goodwill and added value belonging to foreign subsidiaries is converted
from the functional currency to NOK according to the exchange rate at
the end of the period. With staged acquisition of subsidiaries, the value
of the assets and liabilities at the time of the formation of the group is
used. Subsequent acquisition of holdings in existing subsidiaries in
excess of the majority will not affect the valuation of assets or liabilities.
Goodwill is included in the consolidated financial statements as an
intangible asset.
On acquisition and sale of subsidiaries this is included in the group financial
statements for that part of the year they have formed part of the group.
Currency
The functional currency of the subsidiaries is the local currency in the
country in which they are domiciled. All transactions in foreign currency
are converted to functional currency on the date of the transaction.
Money items in foreign currency are converted at the end of the period to
functional currency by using the exchange rate at the end of the period.
The group’s presentation currency is NOK, which is also the parent
company’s functional currency.
On consolidation of subsidiaries that have functional currency other than
NOK, income items are converted to the group’s presentation currency in
accordance with average conversion rates for the year. For the statement of
financial position, including added value and goodwill, the closing conversion
rate at the end of the period is used. Currency differences arising on consolidation of units with other functional currency are taken to equity and
presented in other comprehensive income in the income statement for the
group. On disposal of subsidiaries, accumulated conversion differences
associated with the subsidiary are charged to the income statement.
As at 31 December 2012 the following exchange rates have been used in
conversion of income and financial position figures from subsidiaries
with functional currencies other than NOK:
EUR average rate 7.4805 / EUR closing rate 7.3756
SEK average rate 0.8590 / SEK closing rate 0.8570
DKK average rate 1.0050 / DKK closing rate 0.9886
Investments in associated companies and jointly controlled entities
Associated companies are companies in which the group has significant
influence, normally between a 20 and a 50 per cent holding. The equity
method is used for associated companies in the group financial statements. Added value analysis has been carried out in regard to associated
companies. The share of income is based on income aer tax in the
company in which investment has been made with deduction for depreciation of added value resulting from the cost price of the shares being
higher than the acquired holding of capitalised equity. The share of profit
Arcus-Gruppen
Group
62
is shown in the income statement on a separate line before operating
profit and the investment is shown as a line under financial fixed assets.
Jointly controlled companies are those in which the group has an agreement
on joint control over an entity together with one or more other parties,
when none has decisive influence and all strategic, financial and operational
decisions concerning the entity require unanimity between the parties.
The share of income is based on income aer tax in the company in which
investment has been made with deduction for depreciation of added
value resulting from the cost price of the shares being higher than the
acquired holding of capitalised equity. The share of profit is shown in the
income statement on a separate line before operating profit and the
investment is shown as a line under financial fixed assets.
Non-controlling interests’ share of profit aer tax is shown on a separate
line aer the group’s profit for the year. Non-controlling interests’ share
of equity is shown on a separate line as a part of the group’s equity.
Future events and changes in the regulatory framework may mean that
estimates and assumptions must be changed, whilst new opinions and
interpretations of standards may mean that choice of principles and
presentation will be changed. Estimates and underlying assumptions are
examined and evaluated continuously, and changes in accounting
estimates are recognised in the period the estimates are changed.
Present value estimates of future cash flows are affected by correct
assumptions and estimates of future cash flows and estimates of return
requirements. Return requirements are determined using the capital
value model and assumptions in using the Capital Asset Pricing Model
(CAPM) are risk-free interest, market risk premium and beta.
The areas with greatest risk of substantial changes are capitalised goodwill and liabilities at fair value through profit/loss, on the basis that the
capitalised sums are substantial. The estimates are based on assumptions
on future cash flows that are discounted by a selected discount rate.
Estimates and assumptions are described in the different notes.
In instances where there are put and/or call options associated with the
non-controlling interests, but in which the group does not have control, the
subsidiary is presented as if it were wholly owned, but with partial presentation of non-controlling interests. Partial presentation of non-controlling
interests means that for each reporting period the non-controlling interests
will receive their part of the profit for the year, which is shown under the
profit allocation in the group’s income statement and in the statement of
changes in equity. At the end of each period the non-controlling minority
interests’ share of profit, adjusted for the distribution of dividend for the
period to the non-controlling interests, will be transferred as an equity
transaction from the non-controlling interests’ share of equity to the
majority’s equity. The option liabilities will be recognised in the statement of
financial position at fair value through profit or loss.
Fair value on acquisitions
On acquisitions, the cost price of the acquired entity is aributed, so that
the group opening balance reflects estimated fair value of assets and
liabilities acquired. To determine fair value on acquisition for those assets for which there is no active market, alternative methods must be
used to assess fair value. Added value beyond that which can be aributed to identifiable assets and liabilities is capitalised as goodwill. If fair
value of the equity in an acquired company exceeds the consideration,
the excess is taken immediately to profit and loss. Allocation of cost
price on business merger is changed if new information emerges on fair
value, applicable on the date of takeover of control, no later than 12
months aer the acquisition has been made.
Important accounting estimates and discretionary assessments
Preparation of the annual financial statements requires management to
make estimates and assumptions that affect the value of assets, liabilities
and conditional liabilities in the statement of financial position, and income
and expenses for the accounting year.
Income recognition principles
Income associated with sales of goods and services is recognised when
the group has transferred risk and rights to the purchaser. This is normally on delivery of the goods and services. Other income is recognised
when it is probable that transactions will involve future financial gains
Areas in which estimates have major significance will be:
Figures in NOK 1000
Accounting line in Balance sheet
Note
Assumptions
Book value
Goodwill
13
Present value of future cash flows
220 923
Brands
13
8 787
Other intangible assets
13
Recoverable amounts and correct utilisable life
890
12
Recoverable amounts and correct utilisable life
404 219
Deferred tax asset
11
Assessment of the ability to exploit tax assets in the future
Pension liabilities
9
Economic and demographic assumptions
21
Provisions
22
Correct basis for estimate calculations
95 424
29 493
171 831
52 237
63
that will accrue to the company and the size of the sum can be estimated
reliably.
Sales revenues are presented net aer deduction of discounts, VAT,
alcohol and packaging tax.
Inventories
Inventories are valued at the lower of acquisition cost/production cost
and net selling value. Purchased inventories are valued at acquisition
cost and inventories produced in-house are valued at production cost
with deduction for obsolescence.
Receivables
Accounts receivable and other receivables are shown at nominal value
aer deduction for provisions for expected losses. Provision for losses is
made on the basis of an individual assessment of the individual receivables.
In addition, for other trade debtors, a provision is made to cover estimated
losses.
Prepayments to suppliers applies to financing the purchase of inventory
for individual collaborative partners. The prepayment is shown at nominal
value aer deduction for provisions for expected losses. Provision for
losses is made on the basis of an individual assessment of the individual
materials.
Cash and cash equivalents include cash, bank deposits and other means
of payment with due date of less than three months from acquisition.
Arcus-Gruppen AS, Arcus AS, Vectura AS, Arcus Wine Brands AS,
Vingruppen i Norge AS, Symposium Wines AS, Vinordia AS, De Lysholmske
Brenneri- og Destillasjonsfabrikker ANS, Siemers & Cos Destillasjon
ANS, Løiten Brændris Destillation ANS and Oplandske Spritfabrik ANS
are included in the Arcus-Gruppen’s group cash pool system.
Tangible fixed assets are capitalised at cost price with deduction for
accumulated depreciation and accumulated write-downs in the event of
non-transitory fall in value. Depreciation is calculated and taken to profit
and loss from the date the fixed asset is taken into use, and is calculated
on the basis of expected useful life, taking account of estimated residual
value.
Different rates of depreciation are used for a fixed asset’s components if
these have different economic life. Assets under construction are not
depreciated. Depreciation is taken to expenses only when the plant is
ready for use. Gains and losses on sales of fixed assets are set at the
difference between the sales price and the capitalised value at the time
of sale. Gains on sale of fixed assets are recognised as operating income
and losses as operating costs. If there are indications of a fall in value, the
amount recoverable is estimated in order to assess any loss through the
fall in value. If the capitalised value exceeds the amount recoverable, the
asset is wrien down to recoverable value. Depreciation methods,
residual values and estimated life are continuously assessed.
Intangible assets
Intangible assets comprise brands, soware and goodwill. Intangible
assets are capitalised at cost price with deduction for accumulated
depreciation and accumulated write-downs in the event of non-transitory
fall in value.
Intangible assets with limited usable life are depreciated by the straightline method over the expected usable life.
The capitalised value of goodwill and intangible assets with indeterminate
life is tested for fall in value at least once per year or more oen if there
are indications that the asset has fallen in value. This requires estimate
of the amount recoverable by the cash-generating entity to which goodwill and other intangible assets are aributed. To determine recoverable
amount the group estimates expected future cash flows from the cash
generating unit (CGU) as well as applying suitable discounted interest rates
to calculate present value of future cash flows. Expectations regarding
future cash flows will vary over time. Changes in the market conditions and
expected cash flows may cause losses through fall in value in the future. The
most important assumptions with significance for the present value of the
cash flows associated with the investments are the discounting interest
rate used, estimated prices in the group’s markets as well as the maintenance of levels of demand for the goods and services offered.
Pensions
Net pension costs for defined benefit plans comprise the period’s service
cost, including future growth in salary and interest rates on the estimated
obligation, less contributions and expected returns on the pension
assets. Prepaid pension is shown as a long-term asset in the statement
of financial position where it is probable that the over-financing can be
used or repaid. Correspondingly a long-term liability is shown in the
accounts when the pension obligation is greater than the pension assets.
Net pension costs are classified as payroll costs in the income statement.
Changes in the obligation resulting from changes in pensions plans are
distributed over the expected average remaining accumulation period
with the exception of rights accumulated at the amendment date which
are taken to expenses immediately. Changes in the pensions liability and
the pensions assets resulting from changes in and deviation against the
estimating assumptions (estimate deviations) are distributed over the
expected average accumulation time for that part of the deviations that
exceeds 10% of the higher of pensions liability or pensions assets at the
start of the year (”the corridor solution”). On transition to IFRS from 31
December 2005, planned changes and estimate deviations not taken to
profit or loss were taken directly to equity in accordance with IFRS 1.
Restructuring
Provisions for restructuring are taken to expenses when the programme
is decided and announced and the costs are identifiable, quantifiable and
are not covered by associated income. Provisions linked to restructuring
are included as other provisions for liabilities calculated at present value.
Agreements securing future work input are taken to expenses over the
period the work input is delivered.
64
Arcus-Gruppen
Group
Borrowing
Financial liabilities on borrowing from credit institutions are recognised
at amount received net aer transaction costs. Transaction costs
(arrangement charges) are capitalised in the financial position statement
and depreciated over the period of the loan.
Borrowing in currency other than functional currency is translated at the
exchange rate at the end of the period.
trading purposes” if it is primarily acquired with a view to producing
profit from short-term price fluctuations. Derivatives are classified as
held for trading purposes unless they form part of a hedge. Derivatives
that are included in hedging transactions, but that are not brought to
book in accordance with the rules for hedge accounting, are classified in
the category ”held to maturity”. Assets in this category are classified as
current assets if it is expected that they will be seled within 12 months:
otherwise they are classified as fixed assets.
Taxes
The tax expense comprises both tax payable and change in deferred tax.
Tax payable is based on taxable income for the year. Taxable income is
different from the pre-tax profit as presented in the income statement
because of income and expenditure items that are not taxable/deductible.
Tax payable is calculated based on tax rates that are adopted at the end
of the period.
Loans and receivables
Loans and receivables are financial assets that are not derivatives and
that have fixed or determinable payments and that are not traded in an
active market. They are classified as current assets unless they fall due
more than 12 months aer the end of the period. Loans and receivables
comprise accounts receivable and other receivables, as well as cash and
cash equivalents in the financial position statement.
Deferred tax is capitalised on the basis of the temporary differences and
any deficit to be carried forward existing at the end of the accounting
year and that involve increased or reduced future tax payable when these
differences are reversed in future periods. Temporary differences are
differences between accounting and taxable result arising during a
period and are reversed during a later period. Deferred tax is calculated
based on nominal tax rates (rates adopted at the end of the period in the
individual country) multiplied by temporary differences and deficit to be
carried forward. Deferred tax assets are capitalised when the probability
exists that future taxable income will enable utilisation of the asset.
Financial assets available for sale
Financial assets available for sale are financial assets that are not
derivatives and that have been placed in this category or that do not
belong to any other category. They are classified as fixed assets provided
the investment does not fall due or the management does not intend to
sell the investment within 12 months from the end of the period.
Classification principles
Cash and cash equivalents means cash, bank deposits and other liquid
investments that can be converted to cash within three months. The group’s
group cash pool system is linked to cash and credit facilities within the
same cash pool system and is presented net. Other assets included in the
operating cycle or falling due within 12 months are classified as current
assets. Remaining assets are classified as fixed assets.
Financial derivatives and hedging
The group uses financial derivatives to reduce the financial loss in the
event of unfavourable movements in currency or interest rates. Derivatives
not qualifying for hedge accounting are on first recognition brought to
book as financial instruments at fair value and value changes are taken to
profit or loss. As at 31 December there are no companies in the group
that have financial instruments being treated for accounting purposes in
accordance with the rules on hedge accounting. All financial derivatives
are capitalised at fair value. Financial derivatives are capitalised when
the contract is signed. Financial derivatives are removed from the
financial position statement when the contract expires or when gain or
loss is to all intents and purposes completed. At the end of the period fair
value of currency hedge instruments is calculated on the basis of the
market prices for contracts with similar due date profiles.
Liabilities included in the operating cycle or falling due within 12 months
are classified as current liabilities. Remaining liabilities are classified as
long term.
Proposed dividend/group contribution is recognised in the financial
position statement as a liability when the group has an irreversible
obligation to make dividend payments/group contribution, normally aer
adoption by the annual general meeting.
Financial liabilities
Financial liabilities not falling into the category ”financial instruments at
fair value through profit or loss” are classified as other financial liabilities.
Financial derivatives are classified as current assets or short-term
liabilities in the financial position statement.
Classification of financial instruments
The group classifies financial instruments in the following categories:
financial instruments at fair value through profit or loss, loans and
receivables, financial assets available for sale and financial liabilities.
The classification depends on the purpose of the asset. Management
classifies financial assets on acquisition.
The indirect method is used in preparation of the statement of cash
flows. Cash and cash equivalents in the financial position statement are
defined as holdings of cash and cash equivalents in the statement of cash
flows.
Financial instruments at fair value through profit or loss
Financial instruments at fair value through profit or loss are either
financial instruments held for trading purposes or financial assets held to
maturity. A financial instrument is classified in the category ”held for
Segment information
Operating segments are reported in the same way as for internal reporting
to the group management. The group’s business areas comprise Spirits,
Wine and Distribution.
65
The Spirits business area comprises the following companies: Arcus AS,
Arcus Sweden AB, Arcus Finland Oy, De Lysholmske Brenneri- og
Destillasjonsfabrikker ANS, Siemers & Cos Destillasjon ANS, Løiten
Brænderis Destillation ANS and Oplandske Spritfabrik ANS.
The definition of the group’s segmentation is based on the areas’ external
sales. The Spirits business area also procures and refines the group’s own
brands of wine. All of this is sold on to its sister company, Arcus Wine
Brands AS, which markets and sells Arcus-Gruppen’s own brands of wine.
The Wine business area comprises the following companies: Vingruppen
i Norden AB, Arcus Wine Brands AS, Vinordia AS, Symposium Wines AS,
Vingruppen i Norge AS and Excellars AS.
For further information about the group operating segments, see Note 5.
The Distribution business area comprises the company Vectura AS.
In addition there are the remaining group income and expenses that
comprise Arcus-Gruppen AS.
Related parties
The group’s related parties, in addition to subsidiaries, associated
companies and jointly controlled companies, are defined as the owners,
all members of the Board of Directors and Group Management, as well as
companies in which some of these parties either have controlling
interests, Board appointments or are senior employees.
Arcus-Gruppen
Group
66
Notes
NOTE 1 COMPANIES IN THE GROUP
The group financial statements for 2012 cover the following subsidiaries and associated companies:
Figures in 1 000 (local currency)
Company name
Registered office
Currency
Nominal
share capital
Niedal
NOK
276 000
Arcus AS
Niedal
NOK
63 563
100 %
Vectura AS
Niedal
NOK
14 000
100 %
Stockholm
SEK
4 192
91 %
Niedal
NOK
100
100 %
Oslo
NOK
181
51 %
Arcus-Gruppen AS (parent company)
Group holding
and voting share
Subsidiaries
Vingruppen i Norden AB
Excellars AS
Shares owned by Arcus AS
Arcus Sweden AB
Stockholm
SEK
100
100 %
Arcus Finland OY
Helsingfors
EUR
311
100 %
Vinordia AS*
Niedal
NOK
2 100
97 %
De Lysholmske Brenneri- og Destillasjonsfabrikker ANS
Niedal
NOK
0
100 %
Siemers & Cos Destillasjon ANS
Niedal
NOK
0
100 %
Løiten Brænderis Destillation ANS
Niedal
NOK
0
100 %
Oplandske Spritfabrik ANS
Niedal
NOK
0
100 %
Vingruppen i Norge AS
Niedal
NOK
100
100 %
Symposium Wines AS
Niedal
NOK
500
80 %
Shares owned by Vinordia AS
Associated companies
Tiffon SA
Jarnac
EUR
34 %
Espoo-Helsinki
EUR
30 %
Copenhagen
DKK
2 500
50 %
Cost price
Book value
31.12
Equity according to
last annual financial
statements
Profit for
the year
2012
275 705
275 104
210 114
14 472
79 230
79 059
31 170
-84 326
281 831
281 831
206 516
96 676
125
125
7 961
15 622
74 239
74 239
27 075
20 322
Arcus Sweden AB (NOK)
18 221
3 341
8 002
20 263
Arcus Finland OY (NOK)
4 861
500
778
5 974
Vinordia AS *
1 470
1 470
6 530
14 093
De Lysholmske Brenneri- og Destillasjonsfabrikker ANS
0
0
-141
3
Siemers & Cos Destillasjon ANS
0
0
179
92
Vinunic OY
Jointly controlled entities
Det Danske Spiritus Kompani A/S
Company name
Arcus AS
Vectura AS
Vingruppen i Norden AB (NOK)
Excellars AS
Shares owned by Arcus AS
Løiten Brænderis Destillation ANS
0
0
375
195
Oplandske Spritfabrik ANS
0
0
385
307
Shares owned by Vinordia AS
Vingruppen i Norge AS
Symposium Wines AS
*
The remaining shares are owned by Vingruppen i Norden AB.
125
125
96
2
1 000
1 000
2 251
4 523
67
Key figures for significant companies in the group
Arcus AS
Vectura AS
Arcus Wine
Brands AS
Vinordia AS
Excellars AS
Vingruppen i
Norden AB
Net sales revenues
582 714
279 459
122 122
131 361
88 446
709 498
4 062
27 699
1 144
2 625
1 046
23 836
-555 172
-430 393
-100 801
-118 147
-61 484
-607 760
Other income
Operating costs excluding depreciation
Depreciation
-19 242
-11 163
-57
0
-548
-790
Operating profit
12 362
-134 398
22 408
15 839
27 460
124 784
Tax
Profit for the year
4 647
771
-524
2 863
801
5 419
-2 537
37 301
-6 262
-4 609
-7 939
-33 527
14 472
-96 326
15 622
14 093
20 322
96 676
Fixed assets
283 345
194 075
2 276
2 567
4 514
7 176
Current assets
304 894
1 203 402
75 593
52 675
58 607
370 748
Total assets
588 239
1 397 477
77 869
55 242
63 121
377 924
Equity
210 114
31 170
7 961
6 530
27 075
206 516
Liabilities
378 125
1 366 307
69 908
48 712
36 046
171 407
Equity and liabilities
588 239
1 397 477
77 869
55 242
63 121
377 923
The profit for the year of Excellars AS and Vingruppen i Norden AB is before non-controlling interests.
NOTE 2 INVESTMENTS IN ASSOCIATED COMPANIES AND JOINTLY CONTROLLED ENTITIES
2012
Share of
profit for
the year
Dividend
0
5 519
0
685
0
1 241
31 117
1 241
Company
type
Ownership
interest
Tiffon SA
AC
34 %
30 354
Vinunic OY
AC
30 %
763
JCE
50 %
Det Danske Spiritus Kompani A/S *
Total investments in associated
companies and jointly controlled entities
*
Book value Buy/sell
01.01.2012 holdings
Translation
differences
Book value
12.31.2012
-1 562
0
34 311
-277
-9
1 162
-267
0
-4
970
5 937
-1 839
-13
36 443
Det Danske Spiritus Kompani A/S was established in 2012. The company was established to handle sales of Arcus-Gruppen's products in Denmark, and is owned jointly with Flemming Karberg
Familieholding ApS, which also owns Hans Just, Arcus-Gruppen's collaborative partner for distribution in the Danish market. The company has had no sales in 2012, but start-up costs have accrued.
2011
Company
type
Ownership
interest
Book value Buy/sell
01.01.2011 holdings
Share of
profit for
the year
Dividend
Translation
differences
Book value
31.12.2011
SAS de l’Ile Madame**
AC
0%
24 972
-24 972
0
0
0
0
Tiffon SA *
AC
34 %
0
25 665
5 914
-1 225
0
30 354
Vinunic OY
AC
30 %
Total investments in associated companies
1 010
0
0
-244
-3
763
25 982
693
5 914
-1 469
-3
31 117
** As at 31 December 2010 the group owned 34% of the SAS de l'ile Madame company in France, which in turn owned Tiffon AS, the manufacturer of Braastad Cognac. As a step in becoming more
closely engaged in the running of Tiffon, the holding of 34% in SAS de l’Ile Madame was realised in 2011 against selement in a direct holding of 32.6% in Tiffon SA. This was presented in the
financial statements as an exchange of assets, without accounting effect in Arcus-Gruppen group. In addition the group bought 106 shares in Tiffon from SAS de l'ile Madame, so that the holding
in Tiffon stands at 34%, corresponding to the holding Arcus-Gruppen had in SAS de l'ile Madame before the transaction.
68
Arcus-Gruppen
Group
None of the associated companies has listed share prices. The group's share of profit from associated companies, aer tax, is presented on a separate
line before operating profit in the income statement.
The group buys inventory from Tiffon SA, see Note 6.
Summarised financial information about the individual associated companies, based on 100 per cent:
2012
Total assets
31.12.2012
Total liabilities
31.12.2012
Total equity
31.12.2012
Operating income
2012
Profit 2012
220 079
126 432
93 647
130 994
16 232
Vinunic OY
2 514
555
1 958
1 429
1 370
2 590
612
1 978
0
526
Total assets
31.12.2011
Total liabilities
31.12.2011
Total equity
31.12.2011
Operating income
2011
Profit 2011
226 371
141 330
85 041
160 425
17 394
1 287
321
966
1 251
899
Tiffon SA
2011
SAS de l’Ile Madame
Vinunic OY
NOTE 3 OTHER INVESTMENTS
2012
Atlungstad Brenneri AS
Registered
office
Ownership
interest
Currency
Cost price
Currency
Cost price
NOK
Book value
NOK
200
Stange
18.2 %
NOK
200
200
Norwegian Ice-Water Company AS
Olden
13.5 %
NOK
440
440
0
AS Vinunic Estland
Tallinn
12.0 %
SEK
125
109
25
749
225
Other investments in shares
The Atlungstad Brenneri property is a historic distillery at Stange in Hedmark. In 2011 the property was taken over by the newly formed company,
Atlungstad Brenneri AS, which will run the plant as a museum and national experience centre. Arcus Gruppen group owns 18% of this company.
Norwegian Ice-Water Company is the supplier of glacial water to Vikingord.
NOTE 4 FINANCIAL RISK MANAGEMENT
Financial risk
Procedures for risk management are decided by the board of directors and implemented by the management in cooperation with the individual business
areas. Arcus-Gruppen's principal source of income is the operating profits from the core business, and the group's main strategy in regard to risk is not
to speculate, but to minimise the economic risk the core business creates.
The most important financial risks to which the group is exposed are associated with interest rate risk, liquidity risk, foreign currency risk and credit
risk. The group continuously assesses how these should be handled.
For hedging purposes associated with interest-rate and currency risk, the group uses financial derivatives to reduce the risks. This is in accordance
with the group's strategy for interest-rate and currency exposure. The group does not fulfil the accounting requirements for hedge accounting and
therefore does not consider these as hedging from the accounting point of view. The treatment of financial derivatives is described under Accounting
principles.
69
Credit risk
The group is only trading with approved creditworthy counterparties. All counterparties receiving credit from the group, for example customers, are to
be approved and subject to a credit-worthiness assessment. The group has no significant credit risk associated with an individual counterparty or multiple
counterparties that can be seen as a group because of similarities in the credit risk.
The group has guidelines for ensuring that sales are only undertaken to customers who have not had significant problems with paying previously, and
that outstanding amounts do not exceed set credit limits.
Counterparties for pension assets are Norwegian insurance companies and the risk associated with this is considered minimal. The group therefore
considers its maximum risk exposure to be the capitalised value of long-term receivables, accounts receivable and short-term receivables other than
the capitalised value of futures contracts.
Overview of bad debts and age analysis of accounts receivable
Accounts receivable
2012
2011
890 806
1 124 294
Provision for bad debt at 31 December 2012 was TNOK 2,191 (2011: 2,839 Bad debt is classified as other operating costs in the statement of
comprehensive income.
The change in provision for bad debt is as follows:
2012
2011
-2 839
-3 719
Provision for losses for the year
-18
-2 260
Confirmed losses for the period
-652
-1 639
Opening Balance
Received on previously wrien-off receivables during the period
Reversed previous provisions
Closing Balance
0
182
14
1 319
-2 191
-2 839
At 31 December the group had the following accounts receivable that had fallen due but not been paid
Total
Not due
0-60 days
60-365 days
More than 1 year
2012
892 997
824 257
37 942
30 348
401
2011
1 127 085
933 028
182 207
11 290
560
Interest rate risk
The group is exposed to interest-rate risk through investments (bank deposits) and financing activities (long-term borrowing and financial leasing
debt). As at 31 December 2012 the group had floating interest on its short-term financing through bank deposits and credit facilities, as well as for
long-term obligations associated with financial leasing. Of the long-term borrowing, 71% is hedged with an interest rate swap agreement with the
same duration as the full duration of the loan up to 2016. Including financing of capitalised leasing agreements (financial leasing debt), 34% of the
group's liabilities to credit institutions is hedged with fixed interest.
It is the group's aim that the debt portfolio's average fixed interest period should be five years.. At the end of 2012 the group's remaining fixed interest
agreement is 3.5 years which is also the long-term liability's due date horizon.
The group has concluded the following interest-rate swaps that are current as of 31 December 2012 (linked to the group refinancing its secured loan
from Nordea to SEB at the beginning of January 2013, these interest rate swap agreements were seled):
Outstanding interest-rate swaps NOK 1 000
Nordea Bank
Currency
Principal
Receive
Pay
Due date
Fair value in NOK
NOK
160 000
3 mth. NIBOR
Fixed 4.26%
April 2016
-12 109
Arcus-Gruppen
Group
70
Average effective interest rate on financial instruments in % was as follows:
Financial instruments:
2012
2011
Average credit balance in the group cash pool system
0.6 %
1.4 %
Average debit balance in the group cash pool system
4.0 %
9.6 %
Long-term financing from credit institutions - fixed interest
6.3 %
6.3 %
Long-term financing from credit institutions - floating interest
4.5 %
5.1 %
Financing from credit institutions (financial leasing) - floating interest
3.5 %
0.0 %
Interest-rate sensitivity
The following table shows the total impact on pre-tax profit for the Arcus-Gruppen group during 2013 if the interest rate level increases by 100 bps
(1 per cent). Correspondingly the effects will be the opposite if the interest rate level is reduced by 100 bps (1 per cent). The effect on equity will be
28% lower than the effects before tax.
Whole year effect during 2013 with 1% rate increase
Currency
Principal
Interest
Cost of interest
Value change
interest rate swap
Total effect on
income 2013
Liabilities to credit institutions (fixed)
NOK
160 000
6.26 %
0
5 446
5 446
Liabilities to credit institutions (floating)
NOK
65 000
3 mth. NIBOR
Total liabilities to credit institutions
225 000
-650
0
-650
-650
5 446
4 796
Liquidity risk
Liquidity risk is the risk that the group will not be in a position to service its financial liabilities as they fall due. The group's strategy for handling liquidity
risk is to have adequate liquid assets at all times to be able to meet its financial liabilities when they fall due, both in normal and extraordinary
circumstances, without risking unacceptable losses or at the cost of the group's good name. Unused credit opportunities are described in Note 18.
The following table shows an overview of the maturity structure for the group's financial liabilities, based on non-discounted contractual payments. In
instances where the counterparty can demand earlier redemption the sum is recorded in the earliest period in which the payment can be demanded by
the counterparty.
2012
Debt to credit institutions*
Liabilities at fair value
Accounts payable
Remaining period
0-1 years
1-5 years
More than 5 years
12 726
464 610
0
0
171 831
0
1 318
2 450
429
0
456 557
0
Other short-term liabilities
1 067 014
0
0
Total
1 537 615
638 891
429
*
Read more about the financial lease maturity profile in Note 14 leasing agreements.
2011
Debt to credit institutions
Accounts payable
Remaining period
0-1 years
1-5 years
More than 5 years
0
166 029
0
51 451
164 565
0
1 675
3 046
727
500 952
0
0
1 143 344
0
0
Total
1 697 422
333 640
727
71
Currency risk
The group is exposed to currency risk since it has production, purchase and sales in several different countries. The group's currency exposure can
mainly be divided into two groups: cash flow risk and currency translation risk. The group's principal objective is to minimise the effect of exchange rate
fluctuations on the company's profits and competitiveness. Arcus Gruppen has different ways of compensating for negative exchange-rate movements in
regard to its customers and suppliers. Generally, but not in all cases, the competition situation means that Arcus-Gruppen cannot use foreign exchange
trends as arguments in price negotiations.
The group companies' revenues are largely in the subsidiaries' functional currency, but is also in foreign currency. Purchasing is carried out extensively both in
functional and foreign currency. The most significant currencies are EUR, GBP, USD, AUD, SEK and NOK. The risk horizon, i.e. the time it takes to compensate
for negative foreign exchange movements, is expected to be largely controlled by price-changing opportunities in the wines and spirits monopolies. ArcusGruppen’s customers' prices cover a period of about 3-4 months, in addition to the period between the purchase order to the manufacturer and the due date
of the customer accounts receivable, which is between 6-8 months. Because of this the hedging horizon should not be longer than 12 months. Throughout
the year procurement of goods is hedged in foreign currency and forward rates achieved in the market are used as transaction rates. As a rule the currency
exposure in Norway is revealed three times a year with 4-month time periods, whereas in Sweden it is revealed twice a year with 6-month time periods.
Receivables and debt, as well as money items in foreign currency, are translated at the rate of exchange at the end of the reporting period into the
companies' functional currency for reporting.
The group's presentation currency is NOK. The group is therefore further exposed to curency risk in translation of foreign subsidiaries from their
functional currency to the group's presentation currency. This translation risk is not hedged. As at 31 December 2012 the net translation difference
associated with the majority's equity was negative by MNOK 5.0, corresponding to a negative change in 2012 of MNOK 3.9.
The table below shows the group's purchase of non-functional foreign exchange during 2012.
Purchase of currency 2012
Spot
Term
Total
Proportion hedged
through forwards
AUD
462
1 765
2 227
79.3 %
DKK
6 925
700
7 625
9.2 %
EUR
33 535
81 473
115 008
70.8 %
GBP
548
354
902
39.2 %
SEK
3 025
350
3 375
10.4 %
USD
5 272
4 130
9 402
43.9 %
As at 31 December 2011 the group had the following forward contracts (hedging of cash flows) that hedged financial position statement items and
orders already entered into (firm commitments), which were recognised at fair value through profit or loss:
Currency
Currency
amounts
Value on balance
sheet date
Forward value
in NOK
Fair value in
NOK
Buy contracts
USD
2 380
13 297
13 897
-600
2013
Buy contracts
EUR
12 130
89 505
91 149
-1 644
2013
Due date
Buy contracts
GBP
120
1 085
1 140
-55
2013
Buy contracts
AUD
280
1 626
1 708
-82
2013
Total
-2 381
All forward contracts are recognised in the accounts at fair value at the end of the reporting period.
Sensitivity to currency changes linked to translation differences (not hedged)
Change in exchange rate
Currency
5%
-5 %
Effect on other comprehensive income and equity
SEK
15 142
-15 142
Effect on other comprehensive income and equity
EUR
Total effect on other comprehensive income and equity
299
-299
15 441
-15 441
72
Arcus-Gruppen
Group
Categorisation of financial assets and liabilities:
Financial
instruments at fair
value with value
changes through
profit or loss
Loans and
receivables
Financial
assets
available
for sale
Financial
liability
Total book
value 31.12.
Fair value
Assets
Other investments
0
0
225
0
225
225
Accounts receivable
0
890 806
0
0
890 806
890 806
Other accounts receivable1
0
133 035
0
0
133 035
133 035
0
355 463
0
0
355 463
355 463
Total financial assets 2012
0
1 379 304
225
0
1 379 529
1 379 529
Total financial assets 2011
0
1 554 751
225
0
1 554 976
1 554 976
Liabilities
Liabilities at fair value3
Interest rate derivatives3
Forward exchange contracts3
Accounts payable
Other current liabilities2
0
0
0
477 336
477 336
477 336
171 831
0
0
0
171 831
171 831
12 109
0
0
0
12 109
12 109
2 381
0
0
0
2 381
2 381
0
0
0
456 557
456 557
456 557
0
0
0
14 194
14 194
14 194
Total financial liabilities 2012
186 321
0
0
948 087
1 134 408
1 134 408
Total financial liabilities 2011
229 151
0
0
679 964
909 115
909 115
1. Prepayments are excluded from the overview since they are not defined as financial assets in accordance with IAS 39.
2. Accrued costs and public taxes owed are excluded from the overview since these are not defined as financial liabilities in accordance with IAS 39.
3. These are all earmarked for measurement at fair value through profit or loss on first recognition.
Fair value hierarchy
The group uses the following hierarchy to determine and report fair value of the financial instruments:
Level 1: Listed (unadjusted) prices in active markets
Level 2: Direct or indirect inputs other than listed prices that are included in Level 1 that are observable for the asset or the liability
Level 3: Techniques for calculation of fair value based on other than observable market data
As at 31 December 2012 the Arcus-Gruppen group had the following financial liabilities at fair value in the financial position statement:
2012
Interest rate derivatives
Forward exchange contracts
Level 1
Level 2
Level 3
Book value
31.12.2012
0
0
171 831
171 831
12 109
0
0
12 109
2 381
0
0
2 381
Total liabilities
14 490
0
171 831
186 321
2011
Level 1
Level 2
Level 3
Book value
31.12.2011
0
0
216 016
216 016
Interest rate derivatives
9 611
0
0
9 611
3 524
0
0
3 524
13 135
0
216 016
229 151
Total liabilities
There have been no reclassifications between Level 1 and Level 2 during the period. Nor have there been transfers out of Level 3 during the period.
73
Reconciliation of liabilities (Level 3):
Book value
31.12.2011
Used
2012
Provision
made 2012
Value changes
2012
Interest 2012
Book value
31.12.2012
216 016
-52 480
0
5 309
2 986
171 831
Total
216 016
-52 480
0
5 309
2 986
171 831
Further information on earmarked liabilities measured at fair value through profit or loss is provided in Note 21.
Capital control and covenants
The group wishes as far as possible to have flexibility in its liquid assets that are associated with day-to-day operation. The group achieves this largely
through a group cash pool system with a drawing facility in the Norwegian part of the business.
When there is an investment requirement in-house liquidity is used as far as possible, but in larger investments external financing is also used. During
2012 the group has concluded agreements on financial leasing for new production and distribution equipment..
The agreement on the secured loan facility contains 4 loan covenants which the group monitors continuously. For 2012 these covenants apply:
• Net interest-bearing debt/adjusted EBITDA for the last 12 months. Net interest-bearing debt is calculated as total interest-bearing loans minus
holdings of cash and cash equivalents. EBITDA is adjusted for certain defined maers.
• Adjusted EBITDA for the last 12 months/total of net interest costs for the last 12 months.
• Net interest costs and repayments for the last 12 months compared with net cash flows for the last 12 months.
• Maximum limit for total CapEx investments (investments associated with the move to Gjelleråsen are not to be included).
Throughout 2012 Arcus-Gruppen has met the loan conditions.
The group refinanced its loan from Nordea to SEB on 4 January 2013. Linked to this change are new loan covenants that apply from this date. The new
loan covenants are mainly linked to the same ratios as before.
NOTE 5 SEGMENT INFORMATION
2012
External operating income
Spirits
Wine
Distribution
Other
Eliminations
Group
547 117
1 095 012
315 258
70
790
1 958 247
Sales between the segments
100 005
33 673
-8 100
171 670
-297 248
0
647 122
1 128 685
307 158
171 740
-296 458
1 958 247
Cost of goods
-278 543
-784 592
0
0
90 609
-972 526
-108 584
-57 606
-173 625
-37 426
0
-377 241
Depreciation
Oher income and expenses1
-19 490
-1 395
-11 163
-1 966
0
-34 014
-170 424
-87 959
-191 478
-159 823
205 850
-403 834
-47 320
-684
-65 290
-57 435
0
-170 729
-624 361
-932 236
-441 556
-256 650
296 458
-1 958 344
Share of profit from AC & JCE
5 252
685
0
0
0
5 937
5 252
685
0
0
0
5 937
28 013
197 134
-134 398
-84 910
0
5 840
Operating profit
1. This is associated with non-recurring effects that are specified in more detail in Note 7.
74
Arcus-Gruppen
Group
2011
External operating income
Spirits
Wine
Distribution
Other
Eliminations
Group
493 359
971 381
321 226
1 007
2 573
1 789 546
Sales between the segments
98 260
25 097
-7 788
107 917
-223 486
0
591 619
996 478
313 438
108 924
-220 913
1 789 546
Cost of goods
-260 078
-716 417
0
0
90 164
-886 331
-108 249
-50 353
-133 533
-38 666
0
-330 801
Depreciation
-15 755
-916
-9 774
-2 637
0
-29 082
-140 763
-82 090
-160 635
-122 753
127 539
-378 702
Oher income and expenses1
-22 837
-7 653
-18 456
-4 790
0
-53 736
-547 682
-857 429
-322 398
-168 846
217 703
-1 678 652
Share of profit from AC & JCE
5 914
0
0
0
0
5 914
5 914
0
0
0
0
5 914
49 851
139 049
-8 960
-59 922
-3 210
116 808
2012
2011
Norway
960 851
854 724
Sweden
764 897
733 992
Finland
22 516
21 186
Denmark
25 040
26 412
Germany
22 969
22 490
USA
21 891
14 356
Other international
97 220
81 964
1 915 384
1 755 124
Operating profit
1. This is associated with non-recurring effects that are specified in more detail in Note 7.
Net sales by geographic market:
Total net sales
NOTE 6 TRANSACTIONS WITH RELATED PARTIES
In addition to subsidiaries and associated companies, the group's related parties are defined as the owners, all members of the board of directors and
group senior management, as well as companies in which any of these parties have either controlling interests, board appointments or are senior staff.
The group's transactions with related parties:
Purchase of goods and services:
Relationship
Deliverable
2012
2011
Hoff SA
Owner (10%)
Raw materials
20 335
20 527
Tiffon SA
Associated company (34%)
Finished goods
77 735
77 334
Steenberg & Plathe AS
K. Frydenberg is chair of the Arcus-Gruppen AS
and Steenberg & Plathe AS boards of directors
Consultancy services
87
591
Saga Management AS
K. Frydenberg is chair of the Arcus-Gruppen AS
and Saga Management AS boards of directors
Consultancy services
Total purchase of goods and services
0
493
98 157
98 945
75
Sale of goods and services:
Relationship
Deliverable
2012
2011
Tiffon SA
Marketing support
5 120
3 774
Tiffon SA
Sale of production tanks
Total sale of goods and services
0
227
5 120
4 001
Transactions between group companies:
Agreements have been reached between the companies in the group on costs distribution for internal services. Principally this applies to rent,
maintenance and property service functions, as well as common functions such as IT, payroll etc. The services are recognised in the various companies
as other income and other operating costs respectively.
All buying and selling of goods and services between the companies is carried out on market terms and is eliminated in the group financial statements.
NOTE 7 OTHER OPERATING EXPENSES
Sales and advertising costs
Logistics costs from warehouse to customer
Other logistic costs
2012
2011
-118 902
-113 054
-66 968
-51 182
-6 539
-5 263
-102 579
-55 478
Other costs associated with premises
-29 659
-18 288
Maintenance costs
-22 640
-15 103
Office materials and administrative costs
-7 810
-7 413
Insurance
-3 000
-3 282
-40 610
-22 127
Rent
Consultants
Other costs
-138 977
-100 499
Total other operating costs
-537 684
-391 689
Of which non-recurring effects and restructuring costs, which are included in the financial statements line Other
income and expenses
Total other operating costs as presented in the financial statements line Other operating expenses
133 850
12 987
-403 834
-378 702
Oher income and expenses:
Other income and expenses comprise significant positive and negative non-recurring effects and restructuring costs. The main aim of this line is to
show these significant non-recurring and non-periodic items that are perceived to lie outside the ordinary operation, so that the development and
comparability of the ordinary profit or loss lines presented in the income statement should be more relevant to the business.
2012
2011
0
9 000
Personnel policy and other organisational measures
-19 340
-33 969
Moving costs
-41 534
-7 173
Costs associated with double operating
-53 953
-6 440
6 475
-9 659
Supplementary consideration associated with sale of land at Hamar
Extraordinary pensions effects
Acquisition costs (M&A)
-12 722
0
Other non-recurring effects
-49 655
-5 495
-170 729
-53 736
Total other income and expenses
76
Arcus-Gruppen
Group
Supplementary consideration associated with sale of land at Hamar:
Until 2006 the Arcus-Gruppen group owned a property at Hamar. When the property was sold in 2006 a gain of MNOK 32 was taken to income. The
agreement meant that Arcus-Gruppen AS would additionally receive a supplementary fee of up to MNOK 9 when planning regulation was complete on
the property. This MNOK 9 was taken to income in 2011 when planning regulation of the property was completed.
Personnel policy and other organisational measures:
In connection with the move to Gjelleråsen, an organisational and staffing adjustment has been necessary in order to accommodate new surroundings,
new work processes and new technology. During this change process the group has offered a range of personnel policy measures to its employees in
order to meet the new circumstances without compulsory redundancy. In addition there are individual key personnel in the process who have received
loyalty bonuses on the completion of the move project.
Moving costs and costs associated with double operating:
This is associated with costs directly related to the move from Hasle to Gjelleråsen, as well as costs for operating both at Hasle and Gjelleråsen for a
period in advance of an subsequent to the move, such as for example double rent, electricity, water and other operating costs.
Pensions effects:
In 2011 pension provisions were made associated with 3 maers:
• an insurance excess for certain employees who had inadequate seniority claims in the new AFP scheme to be able to retire with AFP. For these
employees Arcus-Gruppen had to cover the excess in full.
• additional provision for the disabled or sick who were le behind in the Storebrand defined benefit scheme when the rest of the group transferred
to a defined contribution scheme in 2009.
• extra provision for the promise of indexation to the National Insurance base amount (G) for employees who have or may become disabled aer the
transition to the defined contribution scheme in 2009.
During 2012 the group has had gains as a result of the group having chosen to change the discounting interest rate from government bonds to covered
bonds interest rates in accordance with the recommendations of NASB.
See the more detailed discussion of this in Note 9 on pensions.
Acquisition costs:
During 2012 the group has used resources on the acquisition of De Danske Spritfabrikker and the Aalborg aquavit, Maltezerkreutz and Gammel Dansk
brands. The transaction was finally completed on 4 January 2013. Temporarily the shares are owned by Arcus-Gruppen Holding AS, but will be transferred
to Arcus-Gruppen AS and included in the group’s segment reporting. It is anticipated that this will be done during 2013.
Other non-recurring effects:
Other non-recurring effects are associated with other extraordinary costs in connection with the opening celebration at Gjelleråsen in June 2012, as well
is extraordinary personnel costs and compensation to customers as a result of delivery problems at Vectura during the months directly aer the move.
During 2012 it has become known that environmental pollution has been found on the land sold at Hamar. According to the sale contract entered into,
Arcus-Gruppen is responsible for part of the clean-up. Negotiations in regard to this are in hand.
NOTE 8 SALARY AND OTHER PERSONNEL COSTS
2012
2011
-278 995
-272 589
Social security costs
-46 088
-43 818
Pension costs including social security costs
-15 442
-41 846
Other personnel costs
-73 595
-22 297
-414 120
-380 550
Salary including holiday pay
Total salaries and other personnel costs
Of which non-recurring effects and restructuring costs, which are included in the financial statements
line Other income and costs (see Note 7)
Total other salaries and other personnel costs as presented in the financial statements line Salaries
and other personnel costs
Average FTEs employed during the year
36 879
49 749
-377 241
-330 801
450
454
77
Benefits for leading individuals
Salary
Pension costs
Other remuneration
Group CEO
Board of Directors
3 197
1 449
963
9
In addition to salary the Group CEO has a bonus agreement that on certain conditions will provide payment of up to 5 months' salary. The Group CEO
is a member of the Swedish National Insurance and so the group pays Swedish social security costs associated with his benefits. The Group CEO's
pension agreement is in two parts. 4/5 of the pension basis is linked to an unfunded defined benefit pension scheme in Norway, which is capitalised
annually in the group financial position statement and in which the return is based on the return in the Storebrand Balansert pension fund. He also has
a Swedish pension agreement (1/5 of the pension basis) in accordance with the collectively agreed pension scheme through the ITP plan.
Neither loans nor security have been provided for the Group CEO or other members of the board of directors beyond general schemes for all group employees.
The other senior managers in the group participate in the bonus scheme and have personal agreements that on certain conditions may produce
payments with an upper limit of 4 months' salary. In addition one senior group manager has a personal bonus agreement.
Agreements have been entered into on a shares programme in Arcus-Gruppen Holding AS for 6 employees in the senior management group and one
board member. The Group CEO has 2,470 synthetic shares and 22,230 synthetic options in this programme.
Seing of salary and other benefits for senior employees
The main principle for the group's management salary policy is that its managers' salaries should be competitive, motivational and comprehensible.
Benefits are provided in the form of bonus, pension, severance payments and other natural benefits customary in such positions.
The terms and conditions for the Group CEO are set by the board of directors. For other members of the group senior management, terms and
conditions are set by the Group CEO.
Auditor’s remuneration
Auditor's fees are specified below. The fees cover the group auditor, Ernst & Young, as well as other auditors of group subsidiaries.
2012
2011
Statutory financial audit
1 528
1 510
5
30
Other financial audit
Other certification services
Tax advisory services
72
36
124
16
Non-audit services
1 067
8
Total auditor's fee
2 796
1 600
All sums exclude VAT.
Total fees to auditors for the group include fees to entities other than the group auditor of TNOK 623 for 2012 and TNOK 599 for 2011.
NOTE 9 PENSION COSTS, ASSETS AND OBLIGATIONS
Defined benefits pension scheme
Until 31 December 2008 Arcus-Gruppen and its subsidiaries had a group defined benefits scheme for their employees in Statens Pensjonskasse (the
Norwegian Public Service Pension Fund - SPK) and Storebrand. The SPK pension scheme also incorporated a contractual early retirement scheme
(AFP) with financing from the date of commencement of employment. From 31 December 2008 the Arcus-Gruppen board of directors terminated the
SPK group pension scheme for the whole group, which resulted in non-recurring income in 2009 of MNOK 96.2 and a final selement in 2010 resulting in a
further income recognition of MNOK 3.0.
With the transition to the new pension scheme all those who were sick or disabled remained in the respective defined benefit schemes. Statens
Pensjonskasse has confirmed that Arcus-Gruppen has no obligations associated with the pensioners who remain linked to the SPK defined benefit
scheme, so they are no longer included in any pension obligation in the group, but the group takes current invoices from SPK to expenses in the same
way as for the defined contribution scheme. Within the company's pension obligation as at 31 December 2012, a provision of MNOK 3.3 is linked to
5 individuals in the Storebrand defined benefit scheme.
78
Arcus-Gruppen
Group
In addition 2 individuals, one of whom is no longer employed in the company, have a defined benefit scheme for salary income above 12 G (National Insurance
base amount). This scheme has been recognised with the obligation totalling MNOK 4.3 at the end of 2012. During 2012 a former manager chose to
terminate her pension agreement above 12G, resulting in selement income for the group of MNOK 0.5.
On the transition to the defined contribution scheme in 2009, there were some employees who had previously been with SPK who would be worse off in
the event of early retirement at age 65-67. To compensate for this an agreement was reached on a gi pension to all employees who were with SPK before
the transition. As at 31 December 2012 this gi pension is linked to 332 employees spread over the Norwegian business, whilst the total obligation has
been recognised at MNOK 8.3.
The group CEO has an unfunded defined benefit pension based on the accumulation principles in the Swedish pension agreement for collectively agreed
pension schemes through the ITP plan. This obligation is recognised in the financial statements at MNOK 1.3 as at 31 December 2012.
Contractual early retirement scheme pension (AFP)
Starting on 1 January 2011 a new contractual early retirement scheme (AFP) pension act was introduced in Norway, in which the Norwegian companies in
the group participate. At the same time the old scheme was terminated. The old AFP scheme was a joint Norwegian Confederation of Trade Unions (LO)/
Confederation of Norwegian Enterprise (NHO) scheme which meant that all employees could choose to retire with a premature pension on reaching the
age of 62. The group has a continuing reserve applicable to the company's contribution for individuals who are prematurely retired under the old scheme.
On cessation of the old AFP scheme it became apparent there was substantial underfunding in the scheme. The member companies have to redress this
underfunding by continuing payment of premiums for the coming five years. The company's share of this underfunding has been estimated and provision
made in the financial statements.
As a replacement for the old AFP scheme, from 1 January 2011 a new AFP scheme was established. The new AFP scheme is, unlike the old one, not a
premature early retirement scheme, but a scheme that provides a lifelong supplement to the ordinary pension. The employees may choose to take out the
new AFP scheme on reaching the age of 62, in parallel with continuing working, and it provides further accumulation on working up to aged 67. This new
AFP scheme is a defined benefit based multi-enterprise pension scheme, and is financed through premiums that are set as a percentage of salary. So far
no reliable measurement and allocation of obligations and assets in the scheme is available. In accounting terms the scheme is treated as a defined contribution based pension scheme in which premium payments are charged as current costs and no provisions are made in the financial statements. In 2011
the current premium payments were set at 1.4% of total payments between 1 G and 7.1 G to the company's employees, whereas in 2012 this figure has
been 1.75%. There is no build up of funds in the scheme and it is expected that the premium level will increase for the coming years.
There are some seniority requirements associated with the new AFP scheme in regard to accumulated length of service in the scheme. This means that the
individual employee on reaching the age of 62 must have been employed for 7 of the previous 9 years to meet the seniority requirements to be able to take
out AFP in accordance with the new scheme. For the Arcus-Gruppen group there were 17 individuals who did not fulfil the seniority requirements on the
introduction of the new AFP scheme. In 2011 for these individuals Arcus-Gruppen applied for them to be allowed to count their accumulated period of service
in the old SPK AFP scheme, before transition to the LO/NHO scheme from 1 January 2009. The Fellesordningen (Joint Pension Sceme) gave its agreement to
this, in return for Arcus-Gruppen paying the whole excess above and beyond the state supplement of 1/3 of the AFP pension. This resulted in costs for
Arcus-Gruppen of MNOK 3.6 in 2011, whilst the costs in 2012 amounted to MNOK 0.2. 6 of these individuals have retired with AFP during 2012, which has
meant a disbursement and reduction of the obligation for the group by MNOK 3.1. The liability at 31 December 2012 amounts to MNOK 6.3.
Defined contribution pensions
The Arcus-Gruppen group's ordinary pension scheme for all other employees is a defined contribution pension scheme with Storebrand. The contribution
rate is 5% of salary in the bracket 2-6 times the National Insurance base amount (G) and 8% of salary in the bracket 6 to 12 times the National Insurance
base amount (G). In addition there is a private invalidity scheme with 66% benefits level, without free standing policy accumulation. Child and carer
supplement to Arcus-Gruppen’s group life scheme comes as a replacement for the previous spouse and child pension.
The costs associated with the defined contribution pension are linked to the routine premium invoices from the insurance company with which ArcusGruppen has contracted a defined contribution pension agreement. The current defined contribution pensions and invalidity pensions for employees in
the defined contribution scheme are adjusted annually with the pension fund's profits. Employees in the defined contribution scheme who have become
disabled are entitled to receive their disability obligations indexed with the same adjustment as the base amount is (G) each year. This resulted in an
extra provision for Arcus-Gruppen of MNOK 1.7 in 2011, whilst the costs in 2012 have been modest. This obligation is recognised in the financial
statements at MNOK 1.0 as at 31 December 2012.
Summary and general assumptions
From 2012 the Group has chosen to change the discounting interest rate for its pension obligations from the government bond interest rate to the covered bond interest rate. This is in line with the NASB recommendations. The pension obligations as at 31 December 2012 are generally linked to former
employees who have retired with AFP in accordance with the old AFP scheme, obligations associated with employees who need to have their period of
service from SPK taken into account in the new AFP scheme and provision of reserves in connection with transition to the defined contribution scheme.
The pension liabilities recognised are otherwise based on financial assumptions that are generally in accordance with the recommendations of the NASB.
79
Pension costs
2012
2011
Present value of pension earnings for the year (service cost)
1 745
1 029
Interest cost on pension obligations
1 060
1 750
-496
-434
Return on pension assets
Estimating loss/(gain) taken to profit/loss
Plan change taken to profit/loss
-5 915
25
0
-2 937
Accrued social security contributions
323
220
Extraordinary provisions
424
12 580
Effect of curtailment or selement
Net pension cost aer social security contributions
-552
0
-3 412
12 233
18 854
29 513
Defined contribution pension scheme
Contribution including social security contributions
Net pension obligations:
2012
2011
-12 993
-15 890
Estimated value of pension assets
10 811
10 343
Net estimated pension obligations (-)/assets (+), funded pension plans
-2 181
-5 547
Estimated accrued obligations, funded pension plans
Estimated accrued obligations, non-funded pension plans
-27 206
-31 804
Net estimated pension obligations (-)/assets (+)
-29 387
-37 351
Non-amortised estimate changes and differences
Net pension assets/(obligations) recognised in the financial position statement
-107
-790
-29 493
-38 143
Changes in the obligations:
Net pension obligation 01.01
Pension costs
Premium payments including SSC
-38 143
-31 873
3 412
-12 233
5 238
5 963
-29 493
-38 143
Discounting interest rate
3.90 %
2.60 %
Expected salary growth
3.25 %
3.25 %
Expected pension growth
2.50 %
2.50 %
Expected growth of National Insurance base amount (G)
3.25 %
3.25 %
Expected return on pension assets
3.90 %
4.80 %
Financial assumptions:
Actuarial assumptions
Expected withdrawal frequency AFP*
0%
0%
Mortality
K2005
K2005
Disability
K1963
K1963
Voluntary cessation (under aged 50)
50 %
50 %
Voluntary cessation (over aged 50)
0%
0%
The actuarial assumptions are based on ordinarily used assumptions in insurance in regard to demographic factors.
The group's pension schemes satisfy the statutory requirements on obligatory occupational pension.
*
From 1 January 2011 it was no longer possible to retire with AFP under the old AFP scheme.
80
Arcus-Gruppen
Group
NOTE 10 FINANCIAL INCOME AND COSTS
2012
2011
6 283
13 511
Financial income
External interest income
Interest income from companies in the same group
Total interest income
Value change liabilities at fair value
940
656
7 223
14 167
0
1 420
Value change foreign exchange forwards at fair value
1 139
5 022
Other agio gains
1 528
459
Total other financial income
2 667
6 901
Total financial income
9 890
21 068
-25 438
-15 534
Financial costs
Interest costs to credit institutions
Interest costs to companies in the same group
-227
-666
-2 986
-2 976
-28 651
-19 176
-5 309
0
Value changes interest swap contracts at fair value
-2 498
-9 611
Other financial expenses
-8 209
-1 815
Other financial expenses
-16 016
-11 426
Total financial expenses
-44 667
-30 602
-34 777
-9 534
Interest costs on liabilities at fair value
Total interest costs
Value change liabilities at fair value
NOTE 11 TAX
The tax cost for the year has been calculated as follows:
Tax payable
Change in deferred tax
Inadequate provision earlier years
Cost of taxes
Tax shown by country:
2012
2011
-43 765
-39 787
50 469
12 372
2
119
6 706
-27 296
2012
2011
Tax to Norway
41 352
3 346
Tax to Sweden
-34 377
-30 595
Tax to Finland
-269
-47
6 706
-27 296
Total cost of taxes
81
Reconciliation from nominal to actual tax rates:
Pre-tax profit
Expected income tax i.a.w. nominal tax rate (28%)
2012
2011
-28 937
107 274
8 102
-30 037
-6 421
-3 407
Tax effect of the following items:
Non-deductible costs
2
693
Change in non-capitalised tax asset
1 528
1 759
Differences in tax rates
2 318
2 040
Profit share associated companies
1 152
1 656
Other
25
0
Tax
6 706
-27 296
Effective tax rate
23 %
25 %
Specification of the tax effect of temporary differences and deficit to be carried forward:
2012
2011
Asset
Liability
Asset
Liability
16 707
0
21 018
0
Financial assets
17 696
0
12 646
0
Inventories
6 396
0
4 361
0
Accounts receivable
7 818
0
8 536
0
Pension obligations
28 779
0
37 896
0
50 286
0
55 354
0
0
31 592
0
1 596
Profit and loss account and other foreign tax accrual funds
Deficit to be carried forward
244 710
0
28 636
0
Total temporary differences
372 392
31 592
168 447
1 596
Gross deferred tax
104 270
-8 846
47 165
-447
Deferred tax asset not recognised in financial position statement
Net deferred tax in the financial position statement:
0
0
-1 713
0
95 424
0
45 005
0
At the end of the year the group had MNOK 95.4 in capitalised deferred tax assets, of which MNOK 68.5 was associated with the deficit to be carried
forwardthat arose principally in the Norwegian part of the business during 2012. Over the last 18 months the group's board of directors and senior
management team have worked on strategy plans for the business up to 2016, and based on these plans it is anticipated that the deferred tax assets
can be utilised.
82
Arcus-Gruppen
Group
NOTE 12 TANGIBLE FIXED ASSETS
Land,
buildings
and other
real estate
Investments in
leased
premises
Purchase cost 01.01
Transferred from assets under construction
Additions tangible fixed assets
Assets under
construction
Machinery
and
equipment
Fixtures and
fiings, tools,
office equipment
etc
Total tangible
fixed assets
464 897
0
6 921
54 843
298 612
104 521
1 626
0
-73 330
53 630
18 074
0
0
0
24 195
17 409
13 113
54 717
257 757
Additions tangible fixed assets via financial lease
0
0
0
257 757
0
Reclassifications
0
-327
0
-474
801
0
Disposals purchase price
0
-6 594
0
-96 623
-25 992
-129 209
Translation differences
0
0
0
-57
-169
-226
1 626
0
5 708
530 254
110 348
647 936
Accumulated depreciation 01.01
0
-6 534
0
-245 171
-88 204
-339 909
Ordinary depreciation for the year
0
-321
0
-24 153
-8 510
-32 984
Disposals accumulated depreciation
0
6 594
0
96 624
25 762
128 980
Purchase cost 31.12
Reclassifications
0
261
0
382
-643
0
0
0
0
47
149
196
0
0
0
-172 271
-71 446
-243 717
1 626
0
5 708
357 983
38 902
404 219
Book value 31.12.
Of which book value of capitalised leases
0
0
0
248 922
0
248 922
Ordinary depreciation for the year - capitalised leases
0
0
0
-8 835
0
-8 835
Book value of capitalised interest costs
0
0
0
5 170
0
5 170
662
74 408
0
3 492
585
78 485
Annual leasing amount on non-capitalised tangible
fixed assets
Both the parent company and the group use straight-line depreciation for all tangible fixed assets.
The economic life for tangible fixed assets is estimated at:
• Machinery and equipment
3-15 years
• Office machinery and accessories
4-10 years
• Land, buildings and other real estate
0 years
• Investments in leased premises
4 years
83
NOTE 13 INTANGIBLE ASSETS
Brands
Goodwill
Soware
Total
Purchase cost 01.01
9 084
221 952
50 407
281 443
143
Addition intangible assets
143
0
0
Acquisition of business
0
0
0
0
Disposals purchase price
0
0
-4 837
-4 837
Reclassification
0
0
0
0
0
-1 029
0
-1 029
9 227
220 923
45 570
275 720
Purchase cost 31.12
0
0
-48 910
-48 910
-440
0
-590
-1 030
0
0
4 820
4 820
Reclassification
0
0
0
0
0
0
0
0
-440
0
-44 680
-45 120
Book value 31.12
8 787
220 923
890
230 600
Of which book value of assets with indeterminate utilisable life
4 827
220 923
0
225 750
Economic life
Depreciation method
0-10 years
5-7 years
Straight line
Straight line
Impairment testing
Goodwill is allocated to the group's cash generating units and is tested for impairment annually, or more oen if there are indicators that the values may
have been subject to impairment. Testing for impairment involves determining the recoverable amount for the cash generating unit. The recoverable amount
is determined through discounting expected cash flows, based on the cash generating entity's board-approved business plans. The group's cash generating
units are defined as the operational companies in the group. The same is carried out for brands with indeterminate utilisable life.
The table below shows the group's intangible assets with indeterminate utilisable life (goodwill and brands) by cash generating entity.
Segment
Brands
Goodwill
Total
Cash generating unit
Arcus AS
Spirits
4 827
0
4 827
Wine
0
83 005
83 005
Excellars AS
Wine
Total
3 960
137 918
141 878
8 787
220 923
229 710
The recoverable amount for the cash generating entity is calculated based on the present value estimate of the expected cash flows before tax. The
cash flows on which the impairment test is based are based on expectations of future sales volume, sales prices, purchase prices for input factors,
salary developments, as well as other direct costs set out in board-approved budgets and long-term plans. The terminal value is based on the cash flow
in the last prognosis year (2017), assuming annual growth of 2.0 per cent, which corresponds to a measure of inflation. The terminal value includes
assumptions on reinvestments corresponding to expected depreciation of the entities' fixed assets.
Cash flows estimates used are discounted with discounting interest rate. The discounting rate used on the future cash flows is based on the group's
weighted average cost of capital (WACC). The discounting interest rate used is 12.4 per cent before tax, and reflects estimated risk and capital costs
for the group, based on a capital structure considered representative for the business in which the Arcus-Gruppen group is engaged.
Based on impairment tests carried out, write-downs have not been carried out in 2012.
Sensitivity
A downward adjustment of the estimated cash flows by 20% or an increase in the discounting interest rate of 2% would not have resulted in write-downs.
84
Arcus-Gruppen
Group
NOTE 14 LEASING AGREEMENTS
Operational leasing
On 31 December 2012 the group had the following leases which are defined and recognised as operational leases. There were no significant terms and
conditions covering subleing, purchase, escalation or restrictions in the operational leases as at 31 December 2012.
Annual lease
amount
Due date within
1 year
Due date
2-5 years
Due date aer
more than 5 years
Total
75 070
74 408
291 145
1 358 500
1 724 053
3 463
2 692
1 458
640
4 790
614
614
493
112
1 219
79 147
77 714
293 096
1 359 252
1 730 062
Leased premises
Vehicles
Machines and office equipment
Total
This overview includes the contract concluded with Gjelleråsen Prosjekt 1 AS on the lease of production, distribution and administration buildings at
Gjelleråsen with the duration of 25 years starting 1 January 2012. The annual rental for this lease is TNOK 71,500.
Financial leasing
As at 31 December 2012 the group had entered into four contracts to lease equipment to be used at Gjelleråsen. These contracts both are from
1 June 2012, and have a duration of 15 years. This equipment has been recognised in the Arcus-Gruppen financial position statement as at 31 December
2012.
Annual lease
amount
Due date within
1 year
Due date
2-5 years
Due date aer
more than 5 years
Total
21 610
21 610
263 026
0
284 636
Total
21 610
21 610
263 026
0
284 636
The contract partner for the financial leases is Nordea, and the contract is run on variable interest rates at three months' NIBOR (Norwegian InterBank
Offered Rate) + a margin of 1.85%. The average interest charged in 2012 has been 3.5%.
The leases are in principle drawn up with a 15-year profile, but with the contracts running for five years at a time. Repayments and interest are based
on a 15-year lease profile for the 4 first years of the 5-year period, but the residual amount falls due over 12 months in year 5. The group is entitled to
extend the agreements by another 5 years before the end of the 5-year period so that the total maturity profile is 15 years. Both the group and Nordea
intend to extend the agreements to a total maturity profile of 15 years.
The present value of future lease payments is MNOK 249.2 on 31 December 2012, based on a discounting interest rate equal to the effective interest
rate on the financing in 2012.
Arcus-Gruppen AS has pledged a 100% ordinary guarantee for the fixed assets leased. The fixed assets are included in pledged assets as security for
the group's long-term bank financing.
NOTE 15 OTHER RECEIVABLES
2012
2011
Long-term receivables
Accounts receivable from associated companies
96
97
Other long-term receivables
166
166
Total other long-term receivables
262
263
The group has no receivables with a due date of more than 5 years.
85
2012
2011
Short-term receivables
Short-term receivables from companies in same group*
Prepaid expenses
Other short-term receivables
Total other short-term receivables
*
940
656
18 777
21 710
4 862
6 107
24 579
28 473
2012
2011
Receivables from companies in the same group relates to interest receivables from Arcus-Gruppen Holding AS.
Other receivables from group companies
Loan receivables from Arcus-Gruppen Holding AS
31 392
16 410
Total other short-term receivables from companies in same group
31 392
16 410
NOTE 16 INVENTORY
Raw materials
Goods in progress
Finished goods/goods for resale
2012
2011
15 390
26 093
55 924
49 471
191 855
188 471
Obsolescence provision
(14 448)
(12 047)
Total inventories
248 721
251 988
Cost of goods in the income statement comprise input costs for finished goods/goods for resale. The total cost of inventories was NOK 973 million in
2012 (2011: NOK 886 million).
The group has its inventories pledged as security for obligations, see Note 25 Mortgages and guarantees.
NOTE 17 PREPAYMENTS TO SUPPLIERS
Loss provisions
Capitalised prepayments to suppliers
2012
2011
101 598
82 794
-6 019
-5 819
95 579
76 975
The change in provision for losses is as follows:
Provisions for loss 01.01.
Provisions for loss for the period
Confirmed losses for the period
Provisions for loss 31.12.
2012
2011
-5 819
-6 044
-200
-1 204
0
-1 429
-6 019
-5 819
86
Arcus-Gruppen
Group
NOTE 18 CASH AND CASH EQUIVALENTS
2012
2011
Cash and cash equivalents in the group cash pool system
171 822
224 175
Other bank deposits
183 503
182 731
Cash holding
Total cash and cash equivalents
138
115
355 463
407 021
Credit facilities
497 640
497 905
Available liquidity
853 103
904 926
Cash and cash equivalents as at 31 December 2012 include TNOK 2,122 (2011: TNOK 2,199) in restricted tax deduction funds.
The group's exposure to interest rate risk is described in Note 4.
The Norwegian companies in the group participate in a group cash pool system administered by Arcus-Gruppen AS. Balances in this scheme for the
individual companies included in the scheme are shown as inter-company receivables with Arcus-Gruppen AS in the respective company financial
statements.
The companies in the group have joint responsibility for the bank debt. The joint overdra limit in the group cash pool system is TNOK 477,500.
The total balance in the group cash pool system on 31 December 2012 was TNOK 171,822 (2011: TNOK 224,175).
Overview of bank guarantees 31 December 2012:
2012
2011
Bank guarantees for tax deduction funds
23 900
22 000
Bank guarantees for customs and duty credit
13 357
10 871
Other bank guarantees
1 217
1 730
Total bank guarantees
38 474
34 601
Nominal value
Book value
(NOK 1 000)
NOTE 19 SHARE CAPITAL AND SHAREHOLDER INFORMATION
The share capital comprises:
Number of shares
Shares
276 000
1 000
276 000
Total
276 000
1 000
276 000
Nationality
Number of shares
Ownership and
voting %
NOR
276 000
100 %
Shareholder
Arcus-Gruppen Holding AS
Dividends and group contribution
The board of directors has proposed no distribution of group contribution for 2012 (2011: NOK 54.35 per share).
87
Earnings per share
Basic earnings per share
Basic earnings per share are based on profit for the year aributed to the shareholders in the company and a weighted average of the number of
outstanding ordinary shares for the year, reduced for ordinary shares bought by the company and held as own shares.
2012
2011
Profit for the year aributed to the owners of the parent company
(52 933)
59 150
Number of outstanding shares
276 000
276 000
(0.19)
0.21
Earnings per share (basic)
At the end of 2012 the group had lower equity than the parent company, Arcus-Gruppen AS. This was because in accordance with international
financial reporting standards (IFRS) the group can no longer recognise goodwill on staged acquisition aer the date of group establishment.This meant
that the cost price associated with the increased ownership interest in Vingruppen i Norden AB in 2011 was recognised against group equity, whilst it
is recognised as an asset (shares in subsidiary) in the parent company.
NOTE 20 LIABILITIES TO CREDIT INSTITUTIONS
Type of
financing
Nordea
Loan
Nordea
Loan
Nordea
Financial leasing
liability
Currency
Interest
profile
Weighted
average
interest rate
Amount of
loan in foreign
currency
NOK
variable
4.50 %
65 000
65 000
65 000
NOK
fixed
6.26 %
160 000
160 000
106 000
NOK
variable
3.50 %
252 336
Capitalised loan arrangement costs 1
Capitalised value 31.122
Maturity structure
Nordea
Loan
Nordea
Financial leasing
liability3
Amount of
loan in NOK
2012
Amount of
loan in NOK
2011
252 336
0
477 336
171 000
0
-4 971
477 336
166 029
Matures
2013
Matures
2014
Matures
2015
Matures
2016
Matures
2017
Total
0
0
0
225 000
0
225 000
12 726
13 218
13 729
103 463
109 200
252 336
12 726
13 218
13 729
328 463
109 200
477 336
1 The group's long-term secured loan was refinanced with Skandinaviske Enskildabanken on 4 January 2013, and capitalised loan arrangement costs associated with the Nordea financing were
therefore recognised as expenses in 2012.
2 Of this, TNOK 12,726 is presented as short-term debt to credit institutions.
3 See Note 14 on for information on the maturity structure of annual leasing amounts.
88
Arcus-Gruppen
Group
NOTE 21 LIABILITIES AT FAIR VALUE THROUGH PROFIT/LOSS
Earmarked liabilities, measured at fair value through profit/loss are related to 3 maers:
1. Estimated liability associated with the deferred purchase consideration for 28.19% of the shares in the subsidiary Vingruppen i Norden AB in
2011, with due dates in 2014.
2. Estimated liability for buying out minority shareholders (9.34%) in the subsidiary Vingruppen i Norden AB, based on management's best estimate
of the expected due date.
3. Estimated liability for buying out minority shareholders (49%) in the subsidiary Excellars AS, based on management's best estimate of the
expected due date.
The liabilities are estimated on the basis of the pricing mechanisms used on the purchase agreement (1) and the shareholder agreements (2 and 3),
discounted to the end of the reporting period. The most important parameters in the pricing mechanisms are the development of the share values
measured through earnings before interest and tax (EBIT) up to the estimated due date. As a basis for EBIT the group's budgets and long-term plans up to
the expected due date have been used. The discount rate used is NIBOR with duration matched to the expected due date (1.44% on 31 December 2012).
Reconciliation of earmarked liabilities, measured at fair value through profit/loss:
Deferred purchase
consideration,
shares in Vingruppen
i Norden AB
Options obligations
minority shares
in Vingruppen i
Norden AB
Options
obligations
minority shares in
Excellars AS
Currency
SEK
SEK
NOK
Nominal value of the liability in currency at the first time of
recognition
82 511
76 900
83 900
Nominal value of the liability in currency 31.12
25 243
84 700
84 300
72 181
63 742
80 093
216 016
-52 480
Recognised value of liability 01.01
Paid during the period
Changes in value during the period
Interest during the period
Book value of obligation 31.12
Total
-52 480
0
0
1 016
4 795
-502
5 309
813
1 003
1 170
2 986
21 530
69 540
80 761
171 831
NOTE 22 OTHER PROVISIONS FOR LIABILITIES
Severance pay (long-term)
Provisions for obligations are associated with severance pay on cessation of employment. The scheme covers initially 70 group employees who have
received severance packages in connection with restructuring of the companies. The obligations are paid monthly up to 2019 and are presented under
other long-term provision for obligations. The provision is calculated by discounting the future payments including social security contributions at a
discounting rate dependent on the duration of the obligation. On 31 December 2012 the provision was linked to 34 remaining individuals.
Clear-up at Hasle (short-term)
The group had an obligation to the purchasers of the Hasle property to clear up before final departure in 2012. The provision has been credited in its
entirety during 2012 to cover actual clear-up expenses on departure from Hasle.
Severance pay (short-term)
In connection with the group's move from Hasle in Oslo to Gjelleråsen, an organisational and staffing adjustment has been necessary for the group in order
to accommodate new surroundings, new work processes and new technology. During this change process the group has offered a range of personnel policy
measures to its employees in order to meet the new circumstances without compulsory redundancy. The obligations associated with these personnel
policy measures are estimated at MNOK 30.6 of which MNOK 18.0 was recognised as expenses during 2011 and MNOK 12.6 has been recognised as
expenses during 2012. Of these obligations MNOK 5.5 has been paid out during 2012 and credited. This obligation is recognised in the financial statements
at MNOK 25.1 at 31 December 2012.
89
In addition there is 1 person who was previously in the senior management group whose employment ended in 2011 and who received severance pay in
April 2012. At the end of 2012 there were no further obligations in the group linked to this.
Compensation from Vectura (short-term)
The group moved at the end of the first quarter from Hasle in Oslo to Gjelleråsen. Despite comprehensive testing before moving, during the second
quarter the company had problems with the logistics in the plant which resulted in delivery problems. As a result of this, Vectura has a responsibility to
compensate its customers. All compensation claims have been examined and assessed by Arcus-Gruppen's senior management in cooperation with
the group's legal advisers. Some of the claims have already been accepted and paid, but remaining provisions for claims not paid result in estimate
uncertainty because they are subject to discretionary appraisal.
All the short-term obligations have been recognised in the financial position statement on the line other current liabilities.
Recognised
31.12.2011
Used 2012
Provision made
2012
Recognised
31.12.2012
Severance pay
5 448
-1 251
0
4 197
Long-term provision for obligations
5 448
-1 251
0
4 197
Clear-up at Hasle
13 000
-13 000
0
0
Severance pay
20 432
-7 941
12 600
25 091
0
-10 851
33 800
22 949
33 432
-31 792
46 400
48 040
2012
2011
Other obligations
Other short-term obligations
NOTE 23 CURRENT LIABILITIES
Unpaid public charges
Special duties, alcohol
507 336
579 361
Value-added tax
276 445
294 769
25 063
22 171
808 844
896 301
2012
2011
Other public charges
Total unpaid public charges
Short-term interest-bearing debt
Short-term non-interest-bearing debt
Current liabilities to companies in the same group
260
273
10 508
11 959
227
666
Prepayments from customers
67
194
Interest rate swap derivatives
12 109
9 611
2 381
3 524
Accrued interest costs
3 132
1 843
48 040
33 432
Provision for obligations, see Note 22
Other accrued costs
157 251
162 070
Total other short-term liabilities
233 975
223 572
All short-term liabilities are due within 12 months.
90
Arcus-Gruppen
Group
NOTE 24 LARGE INDIVIDUAL TRANSACTIONS
Acquisition Arcus Denmark A/S
On 1 July 2012 Arcus-Gruppen concluded an agreement for the purchase of De Danske Spritfabrikker through acquiring 100% of the shares in Pernod
Ricard Denmark A/S and V&S Deutschland GmbH. Through this acquisition the group obtained ownership of the aquavit brands Aalborg, Brøndums
and Malteserkreuz, Gammel Dansk, which is a biers, as well as the production plant in Aalborg. The acquisition has a total value of about MNOK 792,
and was completed on 4 January 2013. The acquisition is not presented in the group's financial position statement for 31 December 2012.
Temporarily the shares are owned in Arcus Gruppen Holding AS, but the intention is that the operation will be moved down to Arcus-Gruppen AS and be
included in the group's segment reporting. This is expected to be completed during 2013.
Observable assets and liabilities in the acquired business on 4 January 2013
Book value in the
acquired business
86 670
Inventories
26 843
Receivables
1 985
110 939
Deferred tax liability
-2 607
-11 178
Public taxes
-20 998
-5 181
Tax payable
-7 943
Fair value observable net assets
178 530
Acquisition value
791 864
Added value for allocation
613 334
The final disposition of the added values associated with the acquisition is something the group is working on and will use the first quarter of 2013 to
determine. Brands with associated tax liabilities, as well as goodwill are expected to be the most important holdings.
Net cash expenses in connection with the acquisition
The group had acquisition costs of MNOK 12.7 during 2012 associated with this. These costs are included in the line "Other income and expenses"
in the income statement. Additional comments on these are shown in Note 7.
NOTE 25 MORTGAGES AND GUARANTEES
For present and future obligations the Arcus-Gruppen group has/will have to our bank, Nordea, it is a condition that all companies in the group provide
security to the Nordea Group. The amount has an upward limit of TNOK 1,000,000 and covers the group's credit facilities up to TNOK 477,500 and
limits for guarantees of TNOK 38,474.
The pledged assets below stand as security both for the long-term loan that Arcus-Gruppen AS has with Nordea, and for the long-term loan the parent
company company, Arcus-Gruppen Holding AS has with Nordea.
2012
2011
595 210
Pledged assets:
Pledges in shares
515 604
Fixed assets
366 178
75 015
Accounts receivable
747 862
997 563
Inventories
Total
162 209
148 692
1 791 853
1 816 480
91
The loan with Nordea was refinanced in Svenske Enskildabanken (SEB) on 4 January 2013. In connection with this these pledges have been dissolved
and corresponding pledges have been established with SEB.
Guarantees Gjelleråsen Prosjekt AS
The bank has provided two guarantees on behalf of Gjelleråsen Project AS, which could affect the Arcus-Gruppen group if they were called on. Any
guarantees would not involve direct claims against Arcus-Gruppen, but they would be included as a part of the project's construction costs, which in
turn form the basis for annual lease costs for Arcus-Gruppen.
The guarantees are formulated on commercial terms. Arcus-Gruppen does not expect the guarantees to be called on.
NOTE 26 EVENTS AFTER THE END OF THE REPORTING PERIOD
Refinancing of long-term loan financing and credit facilities
In connection with the acquisition of De Danske Spritfabrikker (see Note 24), the group has refinanced its long-term loan financing from 4 January
2013. In this connection the long-term secured loan with Nordea was repaid and a new secured loan was taken up with Svenske Enskildabanken (SEB).
This change means that additional group companies are included in the group's group cash pool system.
The change of bank also meant that the group had to buy itself out of the fixed interest rate agreements concluded in connection with the secured loan
from Nordea. Fair value of the fixed interest rate agreements was recognised in the group's financial position statement at the end of 2012.
New managing director of Vectura
The Managing Director of Vectura resigned at the end of January 2013. Erik Bern has been appointed as the new managing director. A substantial
operational and strategic process has been initiated to ensure long-term profitability in the Distribution business area.
Other
Apart from the above-mentioned maers, no significant events have occurred between the end of the reporting period and the date on which ArcusGruppen's group financial statements and company financial statements were approved for publication. This applies in regard to events that would
have provided knowledge of factors present at the end of the reporting period or events that affect maers that have occurred aer the end of the
reporting period. The corporate financial statements were approved for publication by resolution of the board of directors on 15 February 2013.
92
Arcus-Gruppen AS
93
COMPANY FINANCIAL STATEMENTS – PARENT COMPANY
Statement of comprehensive income 01.01. – 31.12.
Note
2012
2011
OPERATING INCOME AND EXPENSES
Other operating income
Other operating income from group companies
Net gain on sale of fixed assets
6
15
89
1 007
171 670
107 917
37
9 000
171 796
117 924
2
-48 990
-46 992
3,4
-1 966
-2 639
-205 786
-128 471
-256 742
-178 102
-84 946
-60 178
Interest income
1 682
2 601
Interest income from companies in the same group
2 647
656
Depreciation
Operating profit
FINANCIAL INCOME AND COSTS
Other financial income
Dividend/group contribution from companies in the same group
Interest costs
238
61
81 038
108 469
-21 240
-15 175
Interest costs to companies in same group
-1 214
-4 057
Other financial costs
-5 287
-776
57 864
91 779
-27 082
31 601
21 020
4 878
Ordinary profit aer tax
-6 062
36 479
PROFIT FOR THE YEAR
-6 062
36 479
Transferred from/to other equity
-6 062
21 479
PRE-TAX PROFIT
Tax
Proposed group contribution aer tax
Total allocations
11
0
15 000
-6 062
36 479
94
Arcus-Gruppen AS
Note
2012
2011
11
31 025
10 005
4
890
1 496
31 915
11 501
ASSETS
Fixed assets
Intangible assets
Deferred tax assets
Soware
Total intangible assets
Land, buildings and other real estate
1 626
0
3
12 226
73
Fixtures and fiings, tools, office equipment etc
3
17 849
1 591
Assets under construction
3
5 323
46 111
37 024
47 775
641 358
Total tangible fixed assets
Long-term financial assets
Investments in subsidiaries
5
693 839
Investments in assoc. companies & jointly controlled entities
5
5 633
4 393
Total financial assets
699 472
645 751
Total fixed assets
768 411
705 027
Current assets
Receivables
Accounts receivable
Accounts receivable from companies in the same group
10
15
335
18 035
15 192
Group contribution/dividend from subsidiaries
10
23 500
72 701
Other receivables from companies in same group
10
84 690
30 201
Other receivables
6 310
12 130
Total receivables
132 550
130 559
173 170
255 531
305 720
386 090
1 074 131
1 091 117
Total current assets
TOTAL ASSETS
8
95
Note
2012
2011
276 000
276 000
EQUITY AND LIABILITIES
Equity
Paid-in equity
Share capital
12
Share premium fund
23 545
23 545
Total paid-in equity
299 545
299 545
Retained earnings
Retained earnings
12
Total retained earnings
Total equity
21 094
27 156
21 094
27 156
320 639
326 701
5 529
Liabilities
Pension obligations
13
6 198
Other provision for obligations
14
384
730
6 582
6 259
166 029
Total provision for obligations
Other long-term liabilities
9
234 205
Liabilities to companies in the same group
10
24 676
24 676
258 881
190 705
Total other long-term liabilities
Current liabilities
Accounts payable
14 984
14 706
Liabilities to companies in the same group
10
262
237
Tax payable
11
0
0
Public taxes
2 494
2 188
Proposed group contribution
10
0
15 000
Other current liabilities to group companies
10
438 210
504 517
32 079
30 804
Total current liabilities
488 029
567 452
Total liabilities
753 492
764 416
1 074 131
1 091 117
TOTAL EQUITY AND LIABILITIES
Kaare Frydenberg
Chair of the Board
Leif Johansson
Hanne Refsholt
Mikael Norlander
Eilif Due
Stefan Elving
Henning Øglænd
Birgitta Stymne
Göransson
Bjørn Erik Olsen
Kjell Arne Greni
Erik Hagen
Lasse Hansen
Otto Drakenberg
Group CEO
96
Arcus-Gruppen AS
Statement of cash flows 01.01. – 31.12.
2012
2011
-27 082
31 601
CASH FLOWS FROM OPERATIONS
Pre-tax profit
Ordinary depreciation
Dividend/group contribution
Pension costs without cash effect
Changes other provisions without cash effect
Tax payable
Loss/gain on sale of shares/fixed assets
Change in accounts receivable
Change in accounts payable
Change in other current assets and other liability items
1 966
2 639
-23 500
-72 701
669
372
-346
-407
0
0
-37
-9 000
-2 523
-2 295
303
7 092
2 010
-18 059
-48 540
-60 758
CASH FLOWS FROM INVESTMENT ACTIVITIES
Proceeds from sale of tangible fixed assets
0
9 000
Payments on purchase of tangible fixed assets
-30 304
-21 643
Payment on acquisition of subsidiaries
-52 480
-180 716
Payment on acquisition of associated companies
Net cash flow from investment activities
-1 241
-693
-84 025
-194 052
CASH FLOWS FROM FINANCING ACTIVITIES
Change in other long-term receivables
0
693
Repayment of debts to group companies
0
-60 103
54 000
171 000
New long-term debt
Instalments paid on leasing liabilities
Loan arrangement costs paid, not recognised in profit or loss
Loan arrangement costs recognised as expenses, without profit/loss effect
Change in inter-company balances in the group cash pool system
-118
0
0
-4 971
4 971
0
-66 350
12 206
129 000
Receipts of dividends/group contributions
72 701
Payments of dividends/group contributions
-15 000
-76 000
Net cash flow from financing activities
50 204
171 825
Net change in cash and cash equivalents
-82 361
-82 985
Holdings of cash and cash equivalents 01.01.
255 531
338 516
Holdings of cash and cash equivalents 31.12.
173 170
255 531
97
Notes
NOTE 1 ACCOUNTING PRINCIPLES
The annual accounts have been prepared in accordance with the Norwegian Accounting Act of 1998 and generally accepted accounting principles.
Income recognition principles
Sales revenues are presented net aer deduction of any value added tax. Income on sales of goods and services is accrued on the delivery date.
Currency
Receivables and liabilities, as well as money items in foreign currency are translated at the exchange-rate rate at the end of the reporting period.
Main rule for valuation and classification of assets and liabilities
Assets intended for continuing ownership or use are classified as fixed assets. Other assets are classified as current assets. Receivables due within one
year are classified as current assets, whereas receivables due aer more than one year are classified as fixed assets. In classifying current liabilities and
long-term liabilities similar criteria are applied.
Fixed assets are valued at purchase cost but are wrien down to fair value if the fall in value is not expected to be transient. Fixed assets with limited
economic life are depreciated evenly.
Current assets are valued at the lower of the cost of purchase and fair value. Current and long-term liabilities are capitalised at nominal sum received
at the time of seing up.
Certain items are valued according to other principles and are reported below.
Shares in subsidiaries
Shares in subsidiaries are valued by the cost method. The shares are wrien down to fair value if the fall in value is not transient. Dividend and other
distributions are recognised in the income statement in the same year as they are allocated in the subsidiary. If dividend exceeds the proportion of
retained income aer the acquisition, the surplus represents repayment of capital invested and the distribution is deducted from the value of the
investment in the financial position statement.
Other shares
Other shares in which the company does not have substantial influence are capitalised at cost of acquisition. The investments are wrien down to fair
value if the fall in value is not transient.
Receivables
Accounts receivable and other receivables are shown at nominal value aer deduction for provisions for expected losses. Provision for bad debt is
made on the basis of an individual assessment of the individual receivable. In addition, for other trade debtors, an unspecified provision is made to
cover estimated losses.
Cash and cash equivalents includes cash, bank deposits and other means of payment with due date of less than three months from purchase.
Arcus-Gruppen AS administers the group’s group cash pool system. The companies in the group are jointly and severally liable for the bank debt.
Financial instruments
Financial instruments that are not used as hedging are recognised at the end of the reporting period at fair value with value changes through profit or
loss. Financial instruments used in hedging strategies are recognised through profit or loss in the same period as the effects of the objects hedged are
reflected in the income statement.
Pensions
Net pension costs for defined benefit plans comprise the period's service cost, including future growth in salary and interest rates on the estimated
obligation, less contributions and expected returns on the pension assets. Prepaid pension is shown as a long-term asset in the statement of financial
position where it is probable that the over-financing can be used or repaid. Correspondingly a long-term liability is shown in the accounts when the
pension obligation is greater than the pension assets. Net pension costs are classified as salary costs in the income statement. Changes in the obligation
resulting from changes in pensions plans are distributed over the expected average remaining accumulation period with the exception of rights
accumulated at the amendment date which are recognised as expenses immediately. Changes in the obligation and the pensions assets resulting from
changes in and deviation against the estimating assumptions (estimate deviations) are distributed over the expected average accumulation time for
that part of the deviations that exceeds 10% of the higher of pensions liability or pensions assets at the start of the year ("the corridor solution").
98
Arcus-Gruppen AS
Borrowing
Financial liabilities on borrowing from credit institutions are recognised at amount received net aer transaction costs. Transaction costs (arrangement
charges) are capitalised in the financial position statement and depreciated over the period of the loan.
Borrowing in currency other than functional currency is translated at the exchange rate at the end of the period.
Options for employees
Options for employees are measured at fair value on the allocation date and accrued by straight-line over the accumulation period up until the first
time the option is exercised. Social security costs associated with options earned accrue correspondingly over the life of the option.
Restructuring
Provisions for restructuring are recognised as expenses when the programme is decided and announced and the costs are identifiable, quantifiable
and are not covered by associated income. Provisions linked to restructuring are included as other provisions for liabilities calculated at present value.
Agreements securing future work input are recognised as expenses over the period the work input is delivered.
Taxes
Tax expenses are matched with accounting profit/loss before tax. Tax costs comprise tax payable (tax on the year's directly taxable income) and change
in net deferred tax. The tax cost is allocated to the ordinary profit/loss and profit/loss from extraordinary items in accordance with the taxation basis.
Deferred tax and deferred tax assets are presented net in the balance sheet. Tax assets are only capitalised if it can be shown to be probable they will
be utilisable through future taxable income.
The indirect method has been used in preparation of the statement of cash flows. Cash and cash equivalents in the financial position statement are
defined as holdings of cash and cash equivalents in the cash flows statement.
NOTE 2 COST OF SALARIES, NUMBER OF EMPLOYEES, REMUNERATION,
LOANS TO EMPLOYEES ETC.
Salaries
2012
2011
-38 006
-33 928
Social security costs
-5 672
-5 261
Pension costs including social security costs
-1 921
-3 401
Other benefits
-3 391
-4 402
-48 990
-46 992
31
33
Total
Average FTEs employed during the year
Benefits for leading individuals
Salary
Pension costs
Other remuneration
Group CEO
Board of Directors
3 197
1 449
963
9
In addition to salary the Group CEO has a bonus agreement that on certain conditions will provide payment of up to 5 months' salary. The Group CEO is
a member of the Swedish National Insurance and so the group pays Swedish social security costs associated with his benefits. The Group CEO's pension agreement is in two parts. 4/5 of the pension basis is linked to an unfunded defined benefit pension scheme in Norway, which is capitalised annually in the group financial position statement and in which the return is based on the return in the Storebrand Balansert pension fund. He also has a
Swedish pension agreement (1/5 of the pension basis) in accordance with the collectively agreed pension scheme through the ITP plan.
Neither loans nor sureties have been provided for the Group CEO or other members of the board of directors beyond general schemes for all group employees.
The other senior managers in the group participate in the bonus scheme and have personal agreements that on certain conditions may produce
payments with an upper limit of 4 months' salary. In addition one senior group manager has a personal bonus agreement.
99
Agreements have been entered into on a shares programme in Arcus-Gruppen Holding AS for 6 employees in the senior management group and one
board member. The Group CEO has 2,470 synthetic shares and 22,230 synthetic options in this programme.
Seing of salary and other benefits for senior employees
The main principle for the group's management salary policy is that its managers' salaries should be competitive, motivational and comprehensible.
Benefits are provided in the form of bonus, pension, severance payments and other natural benefits customary in such positions.
The terms and conditions for the Group CEO are set by the board of directors. For other members of the group senior management, terms and conditions are set by the Group CEO.
Auditor's remuneration
Auditor's fees are specified below. The fees cover the group auditor, Ernst & Young, as well as other auditors of group subsidiaries.
2012
2011
260
250
5
10
124
7
Non-audit services
1 067
4
Total auditor's remuneration
1 456
271
Statutory financial audit
Other financial audit
Tax advisory services
All amounts exclude VAT.
NOTE 3 TANGIBLE FIXED ASSETS
Land, buildings
and other real
estate
Assets under
construction
Machinery and
equipment
Operating assets,
inventory and
office machinery
Total tangible
fixed assets
Purchase cost 01.01
0
46 111
645
21 354
68 110
Addition fixed assets purchased
0
23 810
85
7 784
31 679
Addition financial leasing
0
0
9 323
0
9 323
1 626
-14 254
3 286
9 342
0
0
-50 344
-526
-19 180
-70 050
1 626
5 323
12 813
19 300
39 062
-20 334
Transferred from assets under construction
Deletion tangible fixed assets sold
Purchase cost 31.12
0
0
-572
-19 762
0
0
-487
-889
-1 376
Accumulated depreciations, tangible fixed assets sold
0
0
472
19 200
19 672
0
0
-587
-1 451
-2 038
1 626
5 323
12 226
17 849
37 024
Of which book value of leases
0
0
8 966
0
8 966
Ordinary depreciation for the year - capitalised leases
0
0
-357
0
-357
Book value of capitalised interest costs
0
0
85
0
85
72 531
0
313
558
73 402
Book value 31.12.
Annual leasing sum on non-capitalised tangible fixed assets
The company uses straight-line depreciation for all tangible fixed assets.
The economic life for tangible fixed assets is estimated at:
• Machinery and equipment
3-15 years
• Fixtures and office machinery
4-10 years
100
Arcus-Gruppen AS
NOTE 4 INTANGIBLE ASSETS
Soware
Total intangible
assets
Purchase cost 01.01
50 407
50 407
Disposals at purchase cost
-4 836
-4 836
Purchase cost 31.12
45 571
45 571
-48 911
-48 911
-590
-590
Accumulated depreciation
Book value 31.12.
Economic life
Depreciation method
4 820
4 820
-44 681
-44 681
890
890
5 years
5 years
Straight line
Straight line
NOTE 5 SUBSIDIARIES AND ASSOCIATED COMPANIES
Registered
office
Currency
Nominal
share capital
Holding and
voting share
Oslo
NOK
63 563
100 %
100 %
Subsidiaries
Arcus AS
Vectura AS
Oslo
NOK
14 000
Stockholm
SEK
4 192
91 %
Oslo
NOK
100
100 %
Excellars AS
Oslo
NOK
181
51 %
Jarnac
EUR
1 131
34 %
Copenhagen
DKK
2 500
50 %
Cost price
Book value
31.12.
Equity according to
last annual financial
statements
Profit for
the year
2012
275 705
275 104
210 114
14 472
79 230
79 060
31 170
-84 326
265 311
265 311
206 516
96 676
125
125
7 961
15 622
Associated company
Tiffon SA
Jointly controlled entities
Company name
Arcus AS
Vectura AS
Vingruppen i Norden AB (NOK)
Excellars AS
Total
74 239
74 239
27 075
20 322
694 610
693 839
482 836
62 766
101
NOTE 6 OTHER OPERATING INCOME AND EXPENSES/RELATED PARTIES
Other operating expenses comprise mainly marketing, freight and transport costs, repair and maintenance and shared group costs.
Rent and internal services are invoiced between group companies based on agreed and signed agreements between the companies.
Principally this applies to pure maintenance and service tasks, as well as common functions such as IT, payroll and group administration.
The services are reported under other operating income and other operating costs respectively.
From
To
Arcus-Gruppen AS
2012
Arcus-Gruppen AS
2011
600
600
Arcus AS
94 294
58 373
Arcus-Gruppen AS
Vectura AS
67 319
39 173
Arcus-Gruppen AS
Vinordia AS
2 654
2 024
Arcus-Gruppen AS
5 938
7 018
Arcus-Gruppen AS
Arcus Finland OY
143
278
Arcus-Gruppen AS
Arcus Sweden AB
217
302
Arcus-Gruppen AS
Symposium Wines AS
503
149
Arcus AS
Arcus-Gruppen AS
31
0
Vectura AS
Arcus-Gruppen AS
260
302
Arcus Sweden AB
Arcus-Gruppen AS
1 358
649
Ratos AB owns 83.5% of the equity in Arcus-Gruppen Holding AS, Hoff SA owns 9.9%, whilst the Board of Directors and the management of ArcusGruppen AS and Arcus-Gruppen Holding AS have a holding of 6.6%. Arcus-Gruppen Holding AS owns 100% of the equity of Arcus-Gruppen AS.
Arcus-Gruppen AS has established a loan arrangement with Vectura AS. The loan is not subject to repayment instalments and fell due for full repayment
no later than 31.12.12. The interest rate was 4% paid monthly.
All purchases and sales of goods and services between the companies take place on market terms and are eliminated in the group financial statements.
NOTE 7 SHARE CAPITAL AND SHAREHOLDER INFORMATION
The share capital comprises:
Number
Nominal
Shares
276 000
1 000
Book value TNOK
276 000
Total
276 000
1 000
276 000
Shareholders as at 31.12:
Shares
Ownership interest
Voting share
276 000
100.0 %
100.0 %
102
Arcus-Gruppen AS
NOTE 8 BANK DEPOSITS
Arcus-Gruppen AS has a bank guarantee for tax withholding funds and other guarantee obligations of up to TNOK 4,000.
The bank deposits of Arcus-Gruppen AS, Arcus AS, Vectura AS, Vinordia AS, Arcus Wine Brands AS, Symposium Wines AS, Vingruppen i Norge AS,
De Lysholmske Brenneri- og Destillasjonsfabrikker ANS, Løiten Brænderis Destillation ANS, Oplandske Spritfabrik ANS and Siemers & COs Destillasjon
ANS are included in a group cash pool system administered by Arcus-Gruppen AS, which has the account-holder relationship with the bank. Subsidiaries'
balances are thus inter-company balances with Arcus-Gruppen AS.
The companies in the group are jointly and severally liable for the bank debt. The joint overdra limit in the group cash pool system is TNOK 477,500.
The overdra limit depends on certain key financial figures. The group lies within these requirements.
The inter-company balances in the group cash pool system on 31 December 2012 are presented on the line Other current liabilities to companies in
the same group. The total balance on the group cash pool system on 31 December 2012 was TNOK 171,822.
NOTE 9 LIABILITIES TO CREDIT INSTITUTIONS, MORTGAGES AND GUARANTEES
For present and future liabilities the Arcus-Gruppen Holding group has/incurs to our bank, Nordea, it is a condition that all companies in the group
provide security to the Nordea Group. The amount has an upward limit of TNOK 1,000,000 and covers the group's credit facilities up to TNOK 477,500
and limits for guarantees of TNOK 38,474.
Long-term liabilities falling due aer more than 5 years
2012
2011
Borrowing in
NOK
Currency
Nordea Bank
NOK
5.11 %
65 000
65 000
65 000
Nordea Bank
NOK
6.26 %
106 000
160 000
106 000
225 000
171 000
Capitalised loan arrangement costs
Book value 31.12.
Borrowing in
foreign currency
Borrowing in
NOK
Weighted average
interest rate
0
-4 971
225 000
166 029
The loan would normally fall due in 2016, but is being paid on 4 January 2013 in connection with the group refinancing its overall borrowing position. As a
result of the refinancing, the remaining capitalised loan arrangement costs associated with the existing secured loan were recognised as expenses in 2012.
The company has no long-term liabilities falling due aer more than 5 years.
Book value of pledged assets
2012
2011
Pledges in shares
693 839
641 358
Total
693 839
641 358
Arcus-Gruppen's shares in subsidiaries are pledged as security for the long-term loan from Nordea, as well as security for the long-term loan taken up
from the parent company Arcus-Gruppen Holding AS.
103
In addition accounts receivable, inventories and fixed assets in the subsidiaries are pledged as security for the loans. Total book value of pledged
assets in other group companies is:
Fixed assets
2021
2011
366 178
75 015
Accounts receivable
747 862
997 563
Inventories
162 209
148 692
1 276 249
1 221 270
Total
NOTE 10 INTRAGROUP RECEIVABLES AND LIABILITIES
Receivables
Accounts receivable from companies in the same group
Group contribution from Arcus AS
Group contribution from Arcus Wine Brands AS
Dividend from Excellars AS
Loan to Arcus-Gruppen Holding AS
Other receivables from companies in same group
Total
2012
2011
18 035
15 192
5 000
63 000
18 500
1 000
0
8 701
31 392
16 410
53 298
13 791
126 225
118 094
2012
2011
Liabilities
Accounts payable to companies in the same group
Inter-company balances in the group cash pool system
Other current liabilities to companies in the same group
Provision for group contribution to Arcus Gruppen Holding AS
Other long-term liabilities to companies in the same group
Total
262
237
436 535
502 885
1 675
1 632
0
15 000
24 676
24 676
463 148
544 430
The company has no inter-company receivables or liabilities that fall due more than one year aer the end of the reporting period.
Arcus-Gruppen AS has established a long-term loan from Vectura AS of TNOK 24,676 as at 31 December 2012. The loan is subject to interest
and annual interest in 2012 was 4%.
NOTE 11 TAX
The tax cost for the year has been calculated as follows:
Tax payable
2012
2011
0
0
-21 020
-4 878
0
0
28% of group companies' group contribution
0
0
-21 020
-4 878
Changes in deferred tax assets
Tax
104
Arcus-Gruppen AS
Reconciliation from nominal to actual tax rates:
Pre-tax profit
Anticipated income tax at nominal tax rate (28%)
2012
2011
-27 082
31 601
-7 583
8 848
Tax effect of the following items:
Non-deductible costs
Dividends received
Group contribution received without tax effect
3 033
644
-15 627
-12 077
-845
-2 293
Share of profit from ANS (general partnerships)
2
0
0
0
Accounting losses/write-down of shares
0
0
-21 020
-4 878
78 %
-15 %
Tax
Effective tax rate
Specification of the tax effect of temporary differences and deficit to be carried forward:
2012
Arcus-Gruppen AS
2011
Asset
Liability
Asset
Liability
0
769
2 598
0
Tangible fixed assets - financial leasing
0
8 966
0
0
9 205
0
0
0
0
4
0
1
6 198
0
5 529
0
15 081
0
20 351
0
0
12 241
0
15 301
Liability - financial leasing
Pension assets
Pension obligations
Other provision for obligations
Profit and loss account
Deficit to be carried forward
102 301
0
22 556
0
Total
132 785
21 980
51 034
15 302
Gross deferred tax/tax assets
37 180
6 154
14 290
4 285
Deferred tax asset not recognised in financial position statement
0
0
0
0
Net deferred tax/tax asset in the financial position statement
31 025
10 005
Deferred tax assets resulting from a deficit to be carried forward are recognised on the expectation of future surplus.
NOTE 12 EQUITY
Equity 01.01
Profit for the year
Equity 31.12
Share capital
Share premium
fund
Retained
earnings
Total equity
276 000
23 545
27 156
326 701
0
0
-6 062
-6 062
276 000
23 545
21 094
320 639
At the end of 2012 the parent company, Arcus-Gruppen AS, had higher equity than the group. This was because in accordance with international financial
statement rules (IFRS) the group can no longer recognise goodwill through staged acquisition aer the date of group establishment. This meant that
the whole cost price associated with the increased ownership interest in Vingruppen i Norden AB in 2011 was recognised against group equity, whilst
it is recognised as an asset (shares in subsidiary) in the parent company.
There is no indication of a need to write down the shares in the parent company financial statements.
105
NOTE 13 PENSION COSTS, ASSETS AND OBLIGATIONS
The company is required to have an occupational pension scheme in accordance with the Norwegian Act on Mandatory Occupational Pensions and has
a pension scheme that meets these statutory requirements.
Defined benefits pension scheme
Until 31 December 2008 Arcus-Gruppen and its subsidiaries had a collective defined benefits scheme for their employees in Statens Pensjonskasse (the
Norwegian Public Service Pension Fund - SPK) and Storebrand. The SPK pension scheme also incorporated a contractual early retirement scheme (AFP)
with financing from the date of commencement of employment. From 31 December 2008 the Arcus-Gruppen board of directors terminated the SPK group
pension scheme for the whole group, which resulted in a lump sum income in 2009 of MNOK 94.8 and a final selement in 2010 resulting in an income
recognition of MNOK 3.0. During 2012 Arcus-Gruppen AS has received an additional selement on the final selement, resulting in income of MNOK 0.35.
With the transition to the new pension scheme all those who were sick or disabled remained in the respective defined benefit schemes. Within the
company's pension obligation as at 31 December 2012, a provision of MNOK 2.1 is linked to 2 individuals in the Storebrand defined benefit scheme.
In addition 1 individual who is no longer employed in the company has a defined benefit scheme for salary income above 12 G ("G" - "grunnbeløpet", the
Norwegian National Insurance "base amount"). This scheme has been recognised with the obligation totalling MNOK 1.7 at the end of 2012. During
2012 a former manager chose to terminate their pension agreement above 12G, resulting in selement income for the company of MNOK 0.5.
The group CEO has an unfunded defined benefit pension based on the accumulation principles in the Swedish pension agreement for collectively
agreed pension schemes through the ITP plan. This obligation is recognised in the financial statements at MNOK 1.3 as at 31 December 2012.
Contractual early retirement scheme pension (AFP)
Starting on 1 January 2011 a new contractual early retirement scheme (AFP) pension act was introduced in Norway, in which the Norwegian companies
in the group participate. At the same time the old scheme was terminated. The old AFP scheme was a joint Norwegian Confederation of Trade Unions
(LO)/Confederation of Norwegian Enterprise (NHO) scheme which meant that all employees could choose to retire with a premature pension on
reaching the age of 62. The group has a continuing reserve applicable to the company's contribution for individuals who are prematurely retired under
the old scheme. On cessation of the old AFP scheme it became apparent there was substantial underfunding in the scheme. The member companies
have to redress this underfunding by continuing payment of premiums for the coming five years. The company's share of this underfunding has been
estimated and provision made in the financial statements.
As a replacement for the old AFP scheme, from 1 January 2011 a new AFP scheme was established. The new AFP scheme is, unlike the old one, not a
premature early retirement scheme, but a scheme that provides a lifelong supplement to the ordinary pension. The employees may choose to take out
the new AFP scheme on reaching the age of 62, in parallel with continuing working, and it provides further accumulation on working up to aged 67. This
new AFP scheme is a defined benefit based multi-enterprise pension scheme, and is financed through premiums that are set as a percentage of salary.
So far no reliable measurement and allocation of obligations and assets in the scheme is available. In accounting terms the scheme is treated as a defined
contribution based pension scheme in which premium payments are charged as current costs and no provisions are made in the financial statements. In
2011 the current premium payments were set at 1.4% of total payments between 1 G and 7.1 G to the company's employees, whereas in 2012 this figure
has been 1.75%. There is no build up of funds in the scheme and it is expected that the premium level will increase for the coming years.
Defined contribution pensions
The Arcus-Gruppen group's ordinary pension scheme for all other employees is a defined contribution pension scheme with Storebrand. The contribution
rate is 5% of salary in the bracket 2-6 times the National Insurance base amount (G) and 8% of salary in the bracket 6 to 12 times the National
Insurance base amount(G). In addition there is a private invalidity scheme with 66% benefits level, without free standing policy accumulation. Child and
carer supplement to Arcus-Gruppen’s group life scheme comes as a replacement for the previous spouse and child pension.
The costs associated with the defined contribution pension are linked to the routine premium invoices from the insurance company with which ArcusGruppen has contracted a defined contribution pension agreement. The current defined contribution pensions and invalidity pensions for employees in
the defined contribution scheme are adjusted annually with the pension fund's profits. Employees in the defined contribution scheme who have
become disabled are entitled to receive their disability obligations indexed with the same adjustment as the base amount is (G) each year.
Summary and general assumptions
The pension obligations as at 31 December 2012 are generally linked to former employees who have retired with AFP in accordance with the old AFP
scheme, obligations associated with employees who need to have their period of service from SPK taken into account in the new AFP scheme and
provision of reserves in connection with transition to the defined contribution scheme. The pension liabilities recognised are based on financial
assumptions that are generally in accordance with the recommendations of The Norwegian Accounting Standards Board (NASB).
106
Arcus-Gruppen AS
Pension costs
2012
2011
Present value of pension earnings for the year (service cost)
684
404
Interest cost on pension obligations
237
343
Return on pension assets
-190
-164
0
-1 725
Estimating loss/(gain) taken to profit/loss
42
31
Accrued social security contributions
12
26
-552
2 315
Plan change taken to profit/loss
Effect of curtailment or selement
Net pension cost aer social security contributions
Income (-)/Cost (+) on transition to new pension scheme
233
1 230
-353
0
2 041
2 171
-5 146
-6 282
Defined contribution pension scheme
Contribution including social security contributions recognised as expenses
Net pension obligations
Estimated accrued obligations, funded pension plans
Estimated value of pension assets
Net estimated pension obligations (-)/assets (+), funded pension plans
4 144
3 959
-1 002
-2 323
Estimated accrued obligations, non-funded pension plans
-3 660
-4 079
Net estimated pension obligations (-)/assets (+)
-4 662
-6 402
Non-amortised estimate changes and differences
-1 536
873
Net pension obligations recognised in the financial position statement
-6 198
-5 529
-5 529
-5 157
-233
-1 230
266
858
Changes in the obligation
Pension costs
Premium payments including SSC
Reclassification from previous year
-702
0
-6 198
-5 529
Discounting interest rate
3.90 %
2.60 %
Expected salary growth
3.25 %
3.25 %
Expected pension growth
2.50 %
2.50 %
Expected growth of National Insurance base amount (G)
3.25 %
3.25 %
Expected return on pension assets.
3.90 %
4.80 %
Financial assumptions
Actuarial assumptions
Expected withdrawal frequency AFP*
0%
0%
Mortality
K2005
K2005
Disability
K1963
K1963
50 %
50 %
0%
0%
Voluntary cessation (under aged 50)
Voluntary cessation (over aged 50)
The actuarial assumptions are based on ordinarily used assumptions in insurance in regard to demographic factors.
*
From 1 January 2011 it was no longer possible to retire with AFP under the old AFP scheme.
107
NOTE 14 OTHER PROVISIONS FOR OBLIGATIONS
Severance pay (long term)
Provision for obligations is linked to severance pay on cessation of employment in connection with restructuring of the company. The scheme covers
5 employees as at 31 December 2012 and is paid monthly up until 2019. The obligations are presented under Other long-term provision for
obligations. The provision is calculated by discounting the future payments including social security contributions by a discounting rate dependent on
the length of the obligation.
Clear-up at Hasle
The provision for clear-up at Hasle is a provision for the group's obligation to the purchasers of the Hasle property to be carried out before final
departure in 2012. The provision has been credited in its entirety during 2012 to cover actual clear-up expenses on departure from Hasle.
Severance pay (short-term)
In connection with the group's move from Hasle in Oslo to Gjelleråsen, an organisational and staffing adjustment has been necessary for the group in
order to accommodate new surroundings, new work processes and new technology. During this change process the group has offered a range of
personnel policy measures to its employees in order to meet the new circumstances without compulsory redundancy. The obligations associated with
these personnel policy measures are estimated as a total for the company at MNOK 8.4 of which MNOK 0.9 was recognised as expenses during 2011
and MNOK 7.5 has been recognised as expenses during 2012. Of these obligations MNOK 0.7 has been paid out during 2012 and credited. This
obligation is recognised in the financial statements at MNOK 7.7 as at 31 December 2012.
In addition there is 1 person who was previously in the senior management group whose employment ended in 2011 and who received severance pay
in April 2012. At the end of 2012 there were no further obligations in the group linked to this.
The obligations are recognised as other current liabilities.
Capitalised
31.12.2011
Used 2012
Provisions made
2012
Capitalised
31.12.2012
Severance pay
730
-346
0
384
Long-term provision for obligations
730
-346
0
384
13 000
-13 000
0
0
3 339
-3 173
7 531
7 697
Clear up at Hasle
Severance pay
Other obligations
0
0
7 000
7 000
16 339
-16 173
14 531
14 697
108
Auditor’s report
109
ARCUS-GRUPPEN AS
Destilleriveien 11
PO Box 64
NO-1483 Hagan
www.arcusgruppen.no

Annual Report 2012

Transcription

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