Invitation to subscribe for shares in Trelleborg AB

Transcription

Invitation to subscribe for
shares in Trelleborg AB
Joint Lead Managers
Trelleborg AB (publ), Box 153, SE-231 22 Trelleborg, Sweden
Tel: +46 410-670 00 www.trelleborg.com
Co-Lead Manager
Addresses
Important information
In this prospectus “Trelleborg” or “Company” means, depending on the context,
either Trelleborg AB or the group in which Trelleborg AB is the parent company. The
“Group” means Trelleborg AB and its subsidiaries.
“Joint Lead Managers” refers to Handelsbanken Capital Markets, a business unit
within Svenska Handelsbanken AB (“Handelsbanken Capital Markets”), Nordea Bank
AB (“Nordea” or “Nordea Corporate Finance”) and SEB Enskilda, Skandinaviska Enskilda Banken AB (“SEB Enskilda”). “Co-Lead Manager” refers to DnB NOR Markets,
a unit within DnB NOR Bank ASA (“DnB NOR Markets”). The Joint Lead Managers
and the Co-Lead Managers are jointly referred to as the “Managers”.
“Euroclear Sweden” refers to Euroclear Sweden AB, formerly VPC AB. “NASDAQ
OMX” refers to NASDAQ OMX Stockholm AB. “SEK” refers to Swedish crowns,
“USD” refers to American dollars and “EUR” refers to Euro.
Forward-looking statements and market data
The prospectus contains certain forward-looking statements that reflect Trelleborg’s
current views with respect to future events and financial and operational performance. The words “intend”, “estimate”, “expect”, “may”, “plan”, “anticipate” or similar
expressions regarding indications or prognoses of future developments or trends,
which are not statements based on historical facts, constitute forward-looking information. Although Trelleborg believes that these statements are based on reasonable
assumptions and expectations, Trelleborg cannot give any assurances that such statements will materialise. Because these forward-looking statements involve known
and unknown risks and uncertainties, the outcome could differ materially from those
set out in the forward-looking statement.
Factors that could cause Trelleborg’s actual results of operations or performance
to differ from the forward-looking statements include, but are not limited to, those
described under “Risk Factors”. The forward-looking statements included in this
prospectus speak only of the date of the prospectus. Trelleborg undertakes no
obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, other than as required by law.
The prospectus contains market data and industry forecasts, including information
related to the sizes of the markets in which the Group participates. The information
has been extracted from a number of sources. Although Trelleborg regards these
sources as reliable, the information contained in them has not been independently
verified. In addition to the above, certain data in the prospectus is also derived from
estimates made by Trelleborg.
Presentation of financial information
Trelleborg’s audited consolidated financial statements for 2006, 2007 and 2008,
which have been prepared in accordance with International Financial Standards
(“IFRS”) as enacted by the EU, are incorporated through reference and constitute
a part of this prospectus. Certain financial and other information presented in this
prospectus have been rounded off for the purpose of making this prospectus more
easily accessible for the reader. The figures in certain columns thus do not correspond exactly with the declared total amount.
With the exception of the Company’s audited consolidated financial statements
for 2006, 2007 and 2008, and the lucidly reviewed interim financial statement for
the first quarter of 2009, no additional information within the prospectus has been
reviewed or audited by the Company’s auditors.
Trelleborg
Head office
Trelleborg AB
Johan Kocksgatan 10
Box 153
SE-231 22 Trelleborg
Telephone: +46 410 670 00
Financial advisors
Joint Lead Managers
Handelsbanken Capital Markets
Visiting address
Blasieholmstorg 11-12
Mailing address
SE-106 70 Stockholm
Telephone: +46 8 701 10 00
Nordea Corporate Finance
Visiting address
Smålandsgatan 17
Mailing address
H115
SE-105 71 Stockholm
SEB Enskilda
Visiting address
Kungsträdgårdsgatan 8
Mailing address
SE-106 40 Stockholm
Telephone: +46 8 522 295 00
Co-Lead Manager
DnBNor Markets
Visiting address
Stranden 22
Mailing address
N-0021 Oslo
Telephone: +47 2222 948880
Legal advisors
Mannheimer Swartling Advokatbyrå
Visiting address
Södergatan 22
Mailing address
Box 4291
SE-203 14 Malmö
Telephone: +46 40 698 58 00
Account operator
Euroclear Sweden AB
Box 7822
SE-103 97 Stockholm
Narva/Börstryck
Information to investors
This prospectus has been prepared in compliance with the standards and requirements of the Swedish Financial Instruments Trading Act of 1991 (lagen (1991:980)
om handel med finansiella instrument) (the “Trading Act”), Directive 2003/71/EC of
the European Parliament and the Council (the “Prospectus Directive”) and the Commission Regulation (EC) No. 809/2004.
The prospectus has been approved and registered by the Swedish Financial
Supervisory Authority (Finansinspektionen) (“SFSA”) pursuant to the provisions
of Chapter 2, Sections 25 and 26 of the Trading Act. Approval and registration by
SFSA do not imply that SFSA guarantees that the factual information provided in this
prospectus is correct and complete.
The prospectus and the offering pursuant to the prospectus are governed by
Swedish law. The courts of Sweden have exclusive jurisdiction to settle any dispute
arising out of or in connection with this prospectus or the offering.
This prospectus has been prepared in Swedish and English language versions.
In case of any inconsistency between the Swedish and the English versions of the
prospectus, the Swedish version shall prevail.
None of the subscription rights, paid subscription shares (betalda tecknade aktier)
(“BTAs”) or new shares have been or will be registered under the United States
Securities Act of 1933 as currently in effect (the “Securities Act”) or under any other
jurisdiction other than Sweden. None of the subscription rights, BTAs and new shares
may, without such registration, be offered or transferred within the United States or to
US persons (as defined in Regulation S under the Securities Act) except for pursuant to
an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act. Moreover, the offering in the prospectus is not directed to shareholders domiciled in Canada, Australia, Hong Kong and Japan or in any other jurisdiction
where participation would require additional prospectuses, registration or measures
other than those pursuant to Swedish law. Accordingly, the prospectus may not be distributed in any country where the distribution or the offering requires such measures or
would conflict with regulations in such country or jurisdiction. Acquisition of subscription
rights, BTAs or new shares in violation of the restrictions described above may be void.
In relation to member states of the European Economic Area (other than Sweden,
Denmark, the United Kingdom and Ireland) which have implemented the Prospectus
Directive, the offering pursuant to this prospectus can only be made where it does
not give rise to a requirement to prepare a prospectus in such countries pursuant to
Article 3 of the Prospectus Directive.
For more information regarding restrictions in relation to the offering in the prospectus, please see “Restrictions on Sale and Transfer etc”.
This prospectus has been furnished by Trelleborg based on their own information and sources Trelleborg believes to be reliable. No representation or warranty,
expressed or implied, is made by the Managers as to the accuracy or completeness
of any of the information set out in the prospectus and nothing in the prospectus
is or shall be relied upon as a promise or representation, whether as to the past
or the future, as the Managers has conducted no independent verification of the
information.
Anyone making an investment decision must rely on its own assessment of
Trelleborg and the offering under the prospectus, including the merits and risks involved, and investors must only rely on the information contained in the prospectus
and any supplements to the prospectus. No person has been authorised to give
any information or make any representations other than those contained in the
prospectus and, if nevertheless given or made, such information or representations
must not be relied upon as having been authorised by Trelleborg. The distribution of
this prospectus does neither entail that the information contained therein is correct
and up-to-date as per any other date than the date of this prospectus, nor that the
affairs of the Company have remained unchanged since this date. In the event that
the information contained in the prospectus is subject to any material change during
the period starting with the publication and ending with the first trading day, such
material change will be published in accordance with the provisions in the Trading
Act (being the relevant legislation regarding the publication of supplements to
prospectuses).
As a condition for exercising subscription rights or purchasing new shares pursuant to the offering in the prospectus, each exercising holder or purchaser will be
deemed to have made, or, in some cases, be required to make, certain representations and warranties, that will be relied upon by Trelleborg, the Managers and
others. See “Restrictions on Sale and Transfer etc”. Trelleborg reserves the right,
in its sole and absolute discretion, to reject any exercising of subscription rights
or purchase of BTAs or new shares that it or its agents believe may give rise to a
breach or violation of any law, rule or regulation.
In connection with the offering in the prospectus SEB Enskilda, or a representative or affiliate of SEB Enskilda, (in such capacity, the “Stabilizing Manager”)
may effect transactions which stabilize or maintain the market price of the shares,
subscription rights, BTAs or new shares at levels which might not otherwise prevail.
Such transactions may be effected on the exchange where the shares are listed,
in the over-the-counter market or otherwise. The Stabilizing Manager is under no
obligations to engage in any such stabilization measures, and such stabilization, if
commenced, may be discontinued at any time without prior notice. Such stabilization
measures may be carried out from the day of publication of this prospectus, up to
and including 30 days following the subscription period, which is expected to expire
on June 18, 2009. The Stabilization Manager may not stabilize (i) the subscription
rights at a price exceeding SEK 15.75 per subscription right, equal to the theoretical
value of a subscription right at the announcement of the subscription price or (ii)
the shares, BTAs or new shares at a price exceeding SEK 27.75 per share, BTA or
new share, equal to the sum of the subscription price and the theoretical value of a
subscription right at the announcement of the subscription price (SEK 12.00 plus
SEK 15.75). For a more detailed description of the stabilization activities, see
“Restrictions on Sale and Transfer etc” / “Stabilization and Other Trading Activities”.
contents
The rights issue in brief
Preferential right
For every share of series A held in Trelleborg the holder is entitled
to two (2) series A subscription rights1 and for every held share
of series B the holder is entitled to two (2) series B subscription
rights. One (1) series A or series B subscription right entitles
the holder to subscribe for one (1) new share of the corresponding series (primary preferential right). Shares not subscribed for
by primary preferential right shall be offered to all shareholders
for subscription (subsidiary preferential right). Upon sale of the
subscription right (the primary preferential right), the subsidiary
preferential right is also passed on to the new holder. In addition
to the above, investors are given the opportunity to subscribe for
shares without preferential rights.
Subscription price
SEK 12 per share
Record date for participation in the rights issue
April 28, 2009
Subscription period
April 30–May 19, 2009
Trading in subscription rights
April 30–May 14, 2009
Trading in paid subscribed shares (BTAs)
April 30–May 27, 2009
Subscription by exercising subscription rights (primary preferential right)
Subscription takes place during the subscription period through
simultaneous cash payment.
2 Summary
5 Risk factors
10 Invitation to subscribe for shares in Trelleborg AB
11 Background and reasons
12 Terms, conditions and instructions
15 How to proceed
16 Market overview
18 Description of operations
34 Financial information in summary
40 Commentary on financial development
45 Capitalization and other financial information
50 Board of Directors, Group Management and auditors
54 Corporate governance
58 Share capital and ownership structure
62 Articles of Association
64 Legal considerations and
supplementary information
69 Interim report January–March 2009
91 Certain tax considerations in Sweden
93 Restrictions on sale and transfer etc.
96 Glossary
97 Addresses
Subscription with subsidiary preferential right and without
preferential right
Registration for subscription with subsidiary preferential right or
without preferential right shall be made to Handelsbanken Capital
Markets not later than May 19, 2009 on a special application
form that can be obtained from any branch of Handelsbanken
or from www.handelsbanken.se/aktuellaerbjudanden or from
www.trelleborg.com. Payment for allotted shares shall be made
in cash in accordance with the instructions on the notice of allotment. Custody account holders with nominees shall instead register with and in accordance with instructions from the nominee.
Miscellaneous
Ticker
Shares of series B:
TREL B
ISIN-codes
Shares of series B:
Series B subscription rights:
Series B BTA:
SE0000114837
SE0002863522
SE0002863530
Financial information
Interim report April-June 2009 Interim report July-September 2009
July 24, 2009
October 29, 2009
1)
All shares of series A are held by Dunker interests.
1
Summary
This summary shall be regarded as an introduction to the prospectus. Each
decision to invest in the Trelleborg share shall be based on an assessment of
the prospectus in its entirety. Investors that file a lawsuit in a court of law on
account of information in the prospectus may be liable for costs in connection
with translation of the prospectus. A person may be held liable for information
included in or missing from the summary or a translation of the summary, only if
the summary or the translation is misleading or incorrect in relation to the other
parts of the prospectus.
The rights issue in brief
With the primary aim to strengthen Trelleborg’s financial position
and to increase the ability of the Group to take advantage of the
opportunities occurring in the current economic climate in order
to strengthen its market positions, the Board of Directors of Trelleborg resolved on March 22, 2009, subject to the approval by
the Annual General Meeting, to increase the Group’s share capital
by way of a rights issue. Such approval was given by the Annual
General Meeting on April 23, 2009.
The rights issue resolution means that those who are registered
as shareholders in Trelleborg on the record date, 28 April 2009,
are entitled to subscribe for two (2) new shares of series A or B,
respectively, for one (1) share in the Company of series A or B
held, respectively (primary preferential right). Shares which are not
subscribed for by primary preferential rights shall be offered to all
shareholders for subscription (subsidiary preferential rights). If a
subscription right (the primary preferential right) is sold the subsidiary preferential right is also passed on to the new owner. In addition
to this, investors are given the opportunity to subscribe for shares
without subscription rights.1 The rights issue, if fully subscribed
for, will increase the Company’s share capital by SEK 361,429,044.
The subscription price has been set at SEK 12 per share, which
means that the Company will raise approximately SEK 2,169 M
before issue costs. Subscription for shares with primary preferential
rights shall be made through cash payment during the period from
Thursday April 30, 2009 until Tuesday May 19, 2009. Application
for subscription for shares on the basis of subsidiary preferential
rights or without subscription rights shall be made on May 19,
2009 at the latest. Payment for allotted shares shall be made in cash
in accordance with the instructions on the notice of allotment.
Several of Trelleborg’s largest shareholders support the rights issue and have made commitments to subscribe for their respective
pro rata shares in the rights issue, corresponding to approximately
35 percent of the rights issue. These shareholders consist of Dunker interests2, AFA Försäkring3, Alecta, Unionen, Rune Andersson
through companies and Sten K Johnson through company. In
addition, Rune Andersson through companies, Donald Johansson
with family and through companies and Sten K Johnson through
company have undertaken to subscribe for additional shares in
a total amount of SEK 523 M (equivalent to approximately 25
percent of the rights issue), increasing the total commitment of
shareholders and other investors to approximately 60 percent
of the rights issue. The remainder of the rights issue is, subject
2
to certain conditions, guaranteed to be subscribed for by the
Managers (DnB NOR Markets, Handelsbanken Capital Markets,
Nordea and SEB), whereby the rights issue as a whole is covered
by subscription undertakings or guarantees. The subscription
undertakings and guarantees are, however, not secured. Hence,
there is a risk that one or a number of the shareholders, other
investors or Managers are unable to meet their respective subscription undertakings or guarantees. For further information see “Risk
Factors – Risks related to rights issue”.
In addition, a group of institutional shareholders, including
among others Didner & Gerge Funds, Swedbank Robur and
Odin Fund Management, collectively representing approximately
11 percent of the share capital and 6 percent of the votes, have
expressed their support of the rights issue.
The members of the Board of Directors and Group Management in Trelleborg intend to subscribe for their respective pro rata
shares in the rights issue.
Trelleborg in brief
Trelleborg is a global engineering group whose leading positions
are based on advanced polymer technology and in-depth applications know-how. The Group develops high-performance solutions
that seal, damp and protect in demanding industrial environments. The Trelleborg Group had annual sales of approximately
SEK 31 billion in 2008, with about 23,000 employees in 44
countries. The Trelleborg Group comprises four business areas:
Trelleborg Engineered Systems, Trelleborg Automotive, Trelleborg
Sealing Solutions and Trelleborg Wheel Systems.
• Trelleborg Engineered Systems – Engineered solutions that focus on the sealing, protection and safety of investments, processes and individuals in extremely demanding environments
• Trelleborg Automotive – Polymer-based components and systems used for noise and vibration damping for passenger cars
and light and heavy trucks.
• Trelleborg Sealing Solutions – Precision seals for the industrial,
aerospace and automotive markets.
• Trelleborg Wheel Systems – Tires and complete wheel systems
for agricultural and forest machinery, forklift trucks and other
materials-handling vehicles.
1) See further ”Terms, conditions and instructions”.
2) Henry och Gerda Dunkers Donationsfond Nr 2, Henry och Gerda Dunkers Stiftelse, Henry
Dunkers Förvaltnings AB, Förvaltningsbolaget HD and Aktiebolaget Hevea.
3) Excluding Kollektivavtalsstiftelsen Trygghetsfonden TSL, which is the owner of 183,245
shares of series B.
Summary
Market
A considerable portion of Trelleborg’s operations, approximately
90 percent of the total sales in 2008, lies within what is referred
to as the industrial rubber sector. Trelleborg is leader in this global
market, which is estimated to generate sales of approximately SEK
700 billion annually1. The industrial rubber market comprises
such product areas as antivibration, hoses and seals. The market
is partly fragmented, although a gradual process of consolidation
is under way. The market share of the ten largest companies has
increased from approximately 15 percent to roughly 30 percent
during the past five years.2
Industrial rubber is used in a variety of applications and products that are used by a large number of client categories within
different industrial segments. Trelleborg’s end customers are
thus located within a number of industrial areas. Approximately
one-third of the total sales in 2008 was derived from the automotive industry and approximately one-third from the niche areas
agriculture, offshore oil/gas, infrastructure, transportation and
aerospace. The remainder was derived from other industries.
Financial targets
Trelleborg evaluates its financial targets in connection to the annual strategy review which takes place during the third quarter.
The Group’s current long-term financial targets are the following:
Growth: The overall goal is to create value for shareholders
and other stakeholders through profitable growth. The target for
the Group’s average sales growth is 8–10 percent annually over an
economic cycle.
Return on captial employed: The target for return on capital
employed is 15 percent over the long term before tax.
Return on shareholder’s equity: The target for return on
shareholders’ equity is 15 percent after tax.
Debt/equity ratio: The target for the debt/equity ratio is that
it shall be within the interval of 75–125 percent.
Operating cash-flow: Operating cash flow is the principal
source of financing for achieving the growth target. The target for
operating cash flow is set at 80–90 percent of underlying operating profit (EBIT).
EBITDA-margin target: EBITDA margin of 12 percent or
more (earnings before interest, taxes and depreciation/amortization in relation to net sales) supplements the return targets. The
margin target remains, but considering the extremely weak economic conditions that currently prevail, the Group cannot expect
that it will be fulfilled.
intellectual property rights, health, safety and the environment,
authorities and control bodies, taxes, disputes and damage claims,
existing financing, access to future financing, exposure to foreignexchange fluctuations, changes in interest rates, financial credit
risks, changes in value of fixed assets, share-related risks, owners
with significant influence, non-secured subscription undertakings
and terms of guarantee agreements. The above mentioned risks are
merely a summary of the risks set out in the chapter “Risk factors”
on p. 5. The omission or inclusion of a risk in this summary is not
an indication of its importance.
Other information
Board of Directors, Group Management and Auditors
The Board of Directors comprises Anders Narvinger, Peter Nilsson, Heléne Bergquist, Staffan Bohman, Hans Biörck, Claes
Lindqvist, Sören Mellstig, Mikael Nilsson, Alf Fredlund, Karin
Linsjö and deputy member Birgitta Håkansson.
Group Management comprises Peter Nilsson, Bo Jacobsson,
Lennart Johansson, Roger Johansson, Claus Barsøe, Maurizio Vischi, Peter Suter, Peter Svenburg, Claes Jörwall, Ulf Gradén, Sören
Andersson and Viktoria Bergman.
Trelleborg’s auditors are PricewaterhouseCoopers AB with
Göran Tidström as auditor in charge.
For more information on the members of the Board of Directors, Group Management and the Company’s auditors see “Board
of Directors, Group Management and Auditors” on p. 50.
Financial Advisors
Trelleborg’s financial advisors in connection with the rights issue
are Handelsbanken Capital Markets, Nordea Corporate Finance
and SEB Enskilda as Joint Lead Managers and DnB NOR Markets as Co-Lead Manager.
Major shareholders and transactions with closely related parties
Trelleborg’s largest shareholder as per 31 March 2009 was
Dunker interests with an aggregate holding of 12,269,774 shares
(9,500,000 shares of series A and 2,769,774 shares of series B),
corresponding to 13.6 percent of the share capital and 55.6
percent of the votes. For further information, see “Share capital
and ownership structure” on p. 58. For information regarding
transactions with related parties, see “Legal considerations and
supplementary information” on p. 64.
Risk factors
Trelleborg’s operations and ownership of shares in Trelleborg are
associated with risks related to the economy’s effect on demand,
competition and price pressure, supply and price variations of raw
material and components, technology and market development,
suppliers, customers, production, key personnel, acquisitions
and integration, structural measures, legislation and regulation,
1) Source: Trelleborg. For further details see “Market share and industry data” on p. 17.
2) Source: Rubber & Plastics News Jul 2008; Trelleborg.
3
Summary
Financial development in brief
Below is a summary of Trelleborg’s financial development during
the years 2006-2008 and the periods January–March 2008 and
2009.
Group
Net sales, SEK M
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
2005
2004
22,912
6,877
8,067
31,263
30,971
27,284
24,170
Operating profit, SEK M
46
574
374
1,707
1,507
1,779
1,891
Profit after tax, SEK M
65
309
–258
838
766
1,177
1,386
0.70
3.35
–2.95
9.10
8.30
12.90
15.55
Net debt, SEK M
Earnings per share, SEK
12,974
10,562
12,706
10,093
9,350
7,236
6,951
Shareholders' equity, SEK M
10,610
9,908
10,238
10,052
9,687
10,113
8,603
Debt/equity ratio, %
122
107
124
100
96
72
81
Return on shareholders’ equity, %, R12
neg.
9.1
neg.
8.4
7.6
12.5
17.2
26
–698
414
518
905
930
472
–
–
–
6.50
6.00
5.50
5.00
Free cash flow, SEK M
Dividend per share, SEK
Average number of shares, million
Average number of employees*
90.4
90.4
90.4
90.4
90.4
90.2
88.3
21,106
26,330
24,347
25,158
22,506
21,694
21,675
63
622
1,798
2,274
1,820
1,729
1,778
0.9
7.7
5.7
7.3
6.7
7.3
7.9
Continuing operations, excluding
items affecting compatibility
Operating profit, SEK M
Operating margin (ROS), %
5.6
11.4
8.4
11.5
9.9
10.7
11.3
Return on capital employed (ROCE), %, R12
0.85
3.75
9.75
14.00
11.70
12.50
12.40
Operating cash flow, SEK M
478
–388
1,594
1,718
1,594
1,751
1,421
* For the periods January–March 2008 and 2009 insourced staff and temporary employees are included.
Trends and significant changes
The significant downturn in the market during the fourth quarter
of 2008 had a significant effect on Trelleborg’s sales and earnings.
The downturn has continued during the first quarter of 2009,
with significant volume declines, especially in the automotive sector and in the industrial capital goods sector.
There are however a number of potentially mitigating factors
present during 2009. Interest rate reductions and large scale public investment programmes are expected to have a positive impact
during the year. On the cost side, the prices of many types of raw
materials have declined significantly. The Group is also well positioned within a number of sectors which are given priority as part
of the public investment programmes, such as the infrastructure,
transport, and energy sectors.
4
Altogether, the outlook for 2009 is exceptionally difficult to
forecast, but on an overall basis a significantly lower demand is
expected across the Company’s market during 2009, compared to
2008.
The Group’s cash flow is also expected to be negatively affected
by capacity alignments and ongoing restructuring measures, as
well as by the payment of a large share of the already set, and
additionally expected, fines connected to ongoing competition
investigations.
There has been no substantial change in Trelleborg’s financial
position or market position since the interim report for the period
January-March 2009 was published.
Risk factors
Trelleborg’s operations are affected by a number of factors which in some parts not at
all and, in other parts, cannot completely be controlled by the Company. Below, factors
deemed to be of particular significance to the future prospects of Trelleborg are described. The summary of risk factors below does not claim to be complete, nor are the
risks ranked according to degree of importance. Not all factors are described in detail,
and accordingly, a complete evaluation containing all the information in this Prospectus as well as a general evaluation of external factors must be made.
Market risks and operational risks
The Group operates in a global market dependent on the general
financial and political situation in the world as well as on circumstances unique to a specific region or country.
The economy’s effect on demand
Trelleborg’s business, financial position and earnings are affected
by conditions in the global capital markets and the economy in
general in Europe, the US and the rest of the world. The turmoil
experienced in the global capital market began in the second half of
2007 and have since then continued, and substantially increased,
during 2008 and 2009. Recently, concerns over the availability and
cost of credit have contributed to increased volatility, negative development of the economy in general and negative future expectations
for the economy and the global market. These factors, along with
decreased confidence in the future among companies and consumers and increased unemployment, have precipitated the economic
slowdown and recession in many countries.
Factors such as consumer spending, business investments,
government spendings, the volatility and strength of the capital
market and the inflation, all affect the business and economic environment and, ultimately, the size and profitability of Trelleborg’s
business. In an economic downturn – characterized by higher
unemployment, lower income, lower corporate earnings, fewer
business investments and lower consumer spending – Trelleborg’s
business is adversely affected. Adverse changes in the economy
affect the earnings negatively and may have a material adverse effect on Trelleborg’s turnover, financial position and earnings.
Competition and price pressure
Trelleborg’s business is conducted in competitive industries, which
implies that increased competition may negatively affect the
Group’s operations, financial position and earnings. For example, customers may prefer products competing with Trelleborg’s
product range to a higher extent than before, and it cannot be
excluded that more intensive competition may adversely affect
Trelleborg’s current margins. Competition and price pressure are
considered to be strongest in Trelleborg’s business area Trelleborg
Automotive.
Supply and price variations of raw material and components
Risks related to raw materials are linked to supply and the structuring of prices of raw materials necessary for the production.
Trelleborg purchases large volumes of, among other things, polymer
material, additives and prefabricated metal components. The development on many raw material markets during recent years have
resulted in higher purchase prices for raw materials that are important for Trelleborg. The price levels have historically had an impact
on Trelleborg’s purchasing costs with a delay of approximately three
to six months.
In the beginning of 2008, the prices for raw material remained
high as a result of substantial global demand. The price levels culminated in mid-2008 to subsequently fall at an increasingly rapid
rate towards the end of 2008. In general, prices for polymers are
cyclical, while natural rubber prices are more volatile. Prices for
most synthetic polymers are related to the balance between supply
and demand and the price trend in nafta (refined oil products).
The markets for synthetic products are often regional and can
show differing trends due to volume imbalances. For example,
Asia has demonstrated stronger growth, with the consequence that
prices have been slightly higher than in Europe and the US.
Strategic and operational risks
Trelleborg’s operations are dependent on a number of factors,
which each may have a significant adverse effect on the Group’s
financial position and earnings.
Technology and market development
As portions of Trelleborg’s operations are conducted in industries
subject to price pressure and rapid technical and material developments, the maintaining of Trelleborg’s current operations as well
as its future development are to a certain extent dependent on the
Group succeeding in developing new and successful products,
applications and manufacturing processes. Research and development efforts are costly and it is not possible to guarantee that
developed products, applications and manufacturing processes
will be commercially successful.
Suppliers
Trelleborg’s products consist of raw materials and components
from many different suppliers. In order to be able to manufacture,
sell and deliver products, Trelleborg is dependent on external supplies meeting agreed requirements with respect to, for example,
quantity, quality and delivery time. Incorrect, delayed or missing
deliveries from suppliers may in turn mean that Trelleborg’s
deliveries are delayed or must be discontinued, become deficient
5
Risk factors
or incorrect, which could result in reduced sales and which could
have a negative impact on the Group’s earnings.
Even though it is Trelleborg’s opinion that the Group is not
significantly dependent on any single supplier, adaptation costs
and certain inefficiencies in the operations may occur if Trelleborg
is forced to exchange a single supplier.
Structural measures
Customers
Legal risks
Trelleborg’s operations are conducted in a large number of
geographical markets with many customer categories. One of
the Group’s larger customer groups is the automotive industry
with several customers competing between themselves. Within
the business area Trelleborg Automotive, which has a more
concentrated customer base than other business areas, RenaultNissan and Ford comprise some of the Group’s largest individual
customers. The current downturn and weak development of the
automotive industry have already adversely affected several of the
business area’s customers, for example GM and Chrysler. The
downturn in the automotive industry also adversely affects Trelleborg’s operations. This effect could be accentuated if any of its
larger customers went bankrupt or commenced such process. This
concentration of customers therefore entails risks for Trelleborg.
Trelleborg is, however, not dependent on any single agreement
with any of these customers. For additional information, see the
chapter “Legal considerations and supplementary information”.
If Trelleborg’s customers do not fulfill their obligations towards
Trelleborg or drastically decreases the size of, or discountinues, its
operations, the Group’s sales, financial position and earnings may
be adversely affected.
Through its global operations, Trelleborg is affected by many laws,
directives, regulations, agreements and guidelines including such
relating to the environment, health and safety, trade restrictions,
competition regulations and currency regulations.
Production
Trelleborg’s production comprises a chain of processes, in which
disruptions or disturbances in any part of the chain, for example
break downs, labor disputes, terrorist activities or natural disasters,
can have repercussions on Trelleborg’s ability to fulfill its obligations towards its customers. Such disruptions or disturbances
could therefore have a negative impact on the Group’s operations,
financial position and earnings, particularly for production where
the capacity utilization is high.
Key personnel
The ability to attract and retain qualified personnel and management is important. Key personnel have a significant impact on the
future success of the Group. If key personnel leave Trelleborg or if
Trelleborg is unable to attract qualified personnel, this may have a
negative impact on the Group’s operations, financial position and
earnings.
Acquisitions and integration
The Group has an established acquisition strategy. A successful acquisition and integration process creates value. However,
acquisitions and integration of new units always implies both risks
and opportunities in that, for example, costs relating to an acquisition are higher or lower than expected or that future earnings and
synergies do not meet expectations.
6
Trelleborg works with various structural programs to strengthen
the Group’s position and competitiveness through, for example,
rationalization measures, restructurings, outsourcing and similar
measures. However, there is always a risk that the measures taken
will not generate the anticipated outcome.
Legislation and regulation
With an emphasis on the activities carried out at local or regional
level and with group central support, Trelleborg continuously
complies with the rules and regulations that apply in each market
and works to adapt the Group to identified future changes in the
area. However, changes in rules and regulations, custom regulations and other trade restrictions, price and currency controls
and other governmental guidelines in the countries in which
Trelleborg operates may limit, increase the cost or in other ways
adversely affect the Group’s operations and future development.
Trelleborg’s strong position in various markets may entail that
companies within the Group are considered dominant in one or
several of these markets, which in turn may result in restrictions
on Trelleborg’s ability to act freely in affected markets and its ability to grow through acquisitions.
Companies within the Group are currently subject to competition investigations in certain jurisdictions due to unfair price fixing with regard to marine fenders and certain types of marine oil
hoses. In January 2009 the European Commission reached a decision in its investigation of marine oil hoses, imposing fines on the
Group amounting to EUR 24.5 M. Trelleborg has appealed the
decision to the European Court of First Instance. Various investigations and processes are currently conducted in the US in relation to the above mentioned price-fixing agreements. Settlements
have recently been made with the Department of Justice in the US
meaning that two concerned subsidiaries of the Group shall pay
a total fine of USD 11 M to the US authorities for their involvements in such unfair price-fixing agreements. The settlements
will be formalized by a court of law. In addition, less extensive but
similar investigations are conducted in Australia, Brazil and Korea.
The Group has in its annual accounts for 2007 and 2008 charged
a total of SEK 516 M against earnings in order to cover fines, damages and other costs attributable to these circumstances. The assessment of the total cost is, however, somewhat uncertain with regards
to the duration and outcome of ongoing processes. Therefore, it
cannot be ruled out that the processes may mean that Trelleborg
incurs additional costs, which may adversely affect the Group’s
earnings. Furthermore, it cannot be ruled out that the Group may
be subject to additional investigations and processes. For additional
information regarding the investigations, see the chapter “Legal
considerations and supplementary information”.
Risk factors
Intellectual property rights
Trelleborg invests significantly in product development. To
secure returns on these investments, companies within the Group
actively claim their rights and monitor competitors’ activities
closely. If required, the Group protects its intellectual property
rights through legal action. However, it cannot be guaranteed that
Trelleborg will be able to protect its granted patents, trademarks
and other intellectual property rights or that tendered registration
applications will be approved.
Furthermore, the sectors in which Trelleborg is active demonstrate, in several aspects, rapid technical development. This entails
a risk of new technologies and products being developed that
circumvent or replace Trelleborg’s intellectual property rights.
Trelleborg cannot guarantee that companies within the Group
cannot be considered to infringe upon intellectual property rights
of others. Disputes regarding infringement of intellectual property rights can, just like disputes in general, be costly and time
consuming and, accordingly, may adversely affect the Group’s
operations, financial position and earnings.
Health, safety and environment
It is the opinion of Trelleborg, that its operations are conducted
in all significant respects in compliance with applicable laws
and regulations regarding health, safety and the environment. A
number of companies within the Group conduct operations that
are subject to permits or reporting obligations according to applicable local environmental legislation. These operations are thus
under the supervision of relevant authorities.
Changes in legislation and regulation by the authorities entailing
stricter requirements and changes in terms relating to health, safety
and the environment or a trend towards more stringent application
of laws and regulations by the authorities may require further investments and result in increased costs and other obligations for the
companies within the Group that are subject to such regulations.
Such changes may also prohibit or limit Trelleborg’s operations.
Trelleborg has extensive production operations in some 30
countries. It cannot be ruled out that liability in connection with
damage to person or property and air, water, land and biological
processes may have a negative impact on the Group’s operations,
financial position and earnings.
Authorities and control bodies
Parts of Trelleborg’s product range are covered by legislation
stipulating, among other things, considerable assessments, quality
assurance and documentation. It cannot be excluded that Trelleborg’s future operations, financial position and earnings may
be adversely affected by difficulties in complying with current
regulations stipulated by authorities and control bodies or changes
of such regulations.
Tax risks
Trelleborg conducts its operations through companies in a
large number of countries. The business, including transactions
between Group companies, is conducted in accordance with Trelleborg’s interpretation of prevailing tax legislation, tax agreements
and regulations in the various concerned countries and demands
by relevant tax authorities. Trelleborg has obtained advice in these
matters from independent tax advisors. However, it cannot be
generally ruled out that Trelleborg’s interpretation of applicable
laws, tax agreements and regulations or of the interpretation or
administrative application by concerned authorities is not entirely
correct, or that such rules will be subject to change, possibly with
retroactive effect. Trelleborg’s tax situation may change through
decisions by the relevant authorities which may have a negative
impact on the Group’s financial position and earnings.
Disputes and damage claims
Companies within the Group are occasionally involved in
disputes in the ordinary course of business and risk, similar to
other industrial companies, becoming subject to claims regarding, for example, contractual matters, product liability, alleged
defects in delivery of goods and services, and patent rights. Such
disputes and claims may prove time-consuming, disrupt normal
operations, involve large amounts and result in significant costs,
especially considering that, within some of the industries that
Trelleborg is involved, far-reaching guarantees and other commitments are regularly required from suppliers. In addition, the outcome of complicated disputes may be difficult to foresee. Without
any such conditions existing today, it cannot be ruled out that a
disadvantageous outcome of a dispute may prove to have a material adverse effect on the Group’s turnover, financial position and
earnings. For additional information on the disputes and other
liability issues in which Trelleborg is currently involved, see the
chapter “Legal considerations and supplementary information”.
Financial risks
As a net borrower and due to its substantial operations outside
Sweden, the Group is exposed to various financial risks.
Existing financing
Trelleborg has access to long-term financing for its operations and
the Group’s financial position is strengthened by the rights issue.
However, it cannot be ruled out that Trelleborg in the future may
breach financial commitments in its credit and/or loan agreements
due to, for example, the economy, volatility or disruption in the
capital or credit markets, which may adversely affect the Group’s
turnover, financial position and earnings.
Access to future financing
Even though Trelleborg believes that the proceeds from the rights
issue will strengthen the Group’s financial position and increase
the financial flexibility of the Group, it cannot be ruled out that
Trelleborg may have to obtain additional financing through, for
example, taking up loans or issue new shares.
The availability of additional financing is dependent on a variety of factors, such as market conditions, the general availability of
credit, the overall availability of credit within the financial markets
and Trelleborg’s credit rating and credit capacity. Furthermore,
the availability of additional financing is dependent on custom-
7
Risk factors
ers, suppliers or lenders not developing a negative perception of
the Group’s long- or short-term financial prospects, which could
occur if Trelleborg incurs large losses or if demand further declines
due to the economic downturn. Also, Trelleborg’s access to financing may be impaired if regulatory authorities take actions that
may have a negative effect on Trelleborg. Moreover, it may prove
impossible or difficult to obtain additional financing on favorable
terms if Trelleborg’s internal sources of liquidity and available
credit facilities are insufficient.
Disruptions, uncertainty or volatility in the capital and credit
markets may also limit access to the capital required in order to
operate the business. Market conditions on the capital and credit
markets may also limit Trelleborg’s ability to repay maturing
liabilities in a timely manner. Furthermore, such disruptions, uncertainties and volatility may limit Trelleborg’s access to capital. As
such, Trelleborg may, for example, be forced to postpone raising
of capital or to bear a higher cost of capital, which could decrease
the Group’s profitability and significantly reduce its financial
flexibility.
Foreign-exchange risks
Foreign-exchange risks refer to the risk of exchange-rate fluctuations having an adverse impact on the Group’s consolidated
income statement, balance sheet and/or cash flows. Foreignexchange exposure occurs in conjunction with goods and services
being bought or sold in currencies other than the respective
subsidiary’s local currency (transaction exposure) and during
conversion of the balance sheets and income statements of foreign
subsidiaries into SEK (translation exposure).
Trelleborg’s global operations give rise to extensive cash flows
in foreign currency. The most important currencies in the Group’s
cash flows are SEK, USD, EUR and GBP. The effects of exchangerate movements have an impact on the Group’s earnings when the
income statements of foreign subsidiaries are translated to SEK.
Since the Group’s earnings to a large extent are generated outside
Sweden, the impact of exchange-rate movements on the consolidated income statement of the Group can be substantial. In
connection with translation of the Group’s investments in foreign
subsidiaries into SEK, there is a risk that changes in exchange rates
will affect the Group’s consolidated balance sheet. For additional
information on the hedging measures taken by Trelleborg in this
regard, see the chapter “Capital structure and other financial
information”. If Trelleborg’s hedging measures are not sufficient
to minimize the effects of exchange-rate movements, this may
have an adverse effect on Trelleborg’s sales, financial position and
earnings.
Interest rate risks
Interest rate risks refer to the risks of a negative impact of market
interest rate movements on the Group’s cash flow and earnings. As
most of the Group’s credits bear variable interest rates, the Group
8
focuses on interest rated cash flow risk. The impact on the Group’s
net interest income/expense depends on fixed-interest terms for
borrowing and investments. The Group seeks a balance between
the estimated current cost of borrowing and the risk of sustaining
a significant negative impact on earnings in the event of a sudden,
major movement in interest rates, by implementing interest rate
hedging when appropriate.
Even though Trelleborg’s exposures to interest rate changes and
other interest risks are reduced to some extent by guidelines in the
Group financial policy, it cannot be guaranteed that such guidelines are efficient or sufficient in order for Trelleborg’s financial
position and earnings to not be adversely affected. For additional
information, see the chapter “Capital structure and other financial
information”.
Financial credit risks
Financial credit risks are defined as the exposure to the default of
financial counterparties with which the Group has invested cash,
short-term bank investments or contracted financial instruments.
If Trelleborg does not succeed with handling its credit risks, this
may have a substantial adverse effect on Trelleborg’s sales, financial
position and earnings.
Changes in value of fixed assets
Trelleborg has substantial fixed assets, of which goodwill represents
the largest part. In the annual accounts of 2008 no write-down of
goodwill was made. In the event that future tests regarding continuing changes in the value of tangible as well as intangible assets would
lead to write-downs, this may have a substantial adverse effect on
Trelleborg’s financial position and earnings.
Risks related to the rights issue
Share-related risks
Risk and risk-taking is an inevitable part of investing in shares.
Since an investment in shares may fluctuate in value both upwards
and downwards, it can never be guaranteed that an investor is able
to regain the invested capital in full. The share price performance
depends on a number of factors, some of which are companyspecific and others that are related to the share market in general.
It is impossible for a particular company to control all the factors
that may have an impact on the share price of the company and,
accordingly, all decisions to invest in shares should be preceded by
a careful analysis.
Owners with significant influence
At the time of this prospectus, the Dunker interests, mainly consisting of the two foundations the Henry and Gerda Dunker Donation Fund and the Henry and Gerda Dunker Foundation, hold
13.6 percent of Trelleborg’s shares, corresponding to 55.6 percent
of the votes, and have undertaken to subscribe for shares in the
rights issue equivalent to their pro rata share in Trelleborg. The
Risk factors
Dunker interests can therefore, both before and after the rights
issue, exercise a significant influence over the Company regarding
matters that are subject to the shareholders’ approval.
undertakings or guarantees are not met, this could have a negative
effect on Trelleborg’s ability to obtain an amount of approximately
SEK 2.2 billion before transaction costs through the rights issue.
Non-secured subscription undertakings and guarantees
Terms of the underwriting agreement
Several of Trelleborg’s largest shareholders and other investors have
separately, not jointly, undertaken to subscribe for and guarantee a
total of approximately 60 percent of the new shares. The remainder,
approximately 40 percent, of the rights issue is, subject to certain
conditions, guaranteed to be subscribed for by the Managers (DnB
NOR Markets, Handelsbanken Capital Markets, Nordea and SEB).
Said subscription undertakings and guarantees are, however, not
secured. Therefore, there is a risk that one or a number of the shareholders, other investors or Managers are unable to meet their respective subscription undertakings. If the above mentioned subscription
Pursuant to the underwriting agreement entered into between the
Company and the Managers, the Managers have the right to terminate the agreement upon breach of the guarantees provided by
Trelleborg and the occurrence of certain adverse events that affect
the conditions (financial or otherwise) or prospects of Trelleborg
or on the financial markets in general. It cannot be ruled out that
such an event will occur, which could have a negative impact on
Trelleborg’s ability to fulfill the rights issue. For additional information, see the chapter “Legal considerations and supplementary
information”.
9
With the main purpose of strengthening Trelleborg’s financial position and to increase the ability of the Group to take advantage of the
opportunities occurring in the current economic climate in order to strengthen its market positions, the Board of Directors of Trelleborg
resolved on March 22, 2009, subject to the approval by the Annual General Meeting, to increase the Group’s share capital by way of a
rights issue. Such approval was given by the Annual General Meeting on April 23, 2009 1.
The rights issue, if fully subscribed for, will increase the Company’s share capital by SEK 361,429,044, through a rights issue
of 180,714,522 shares, of which 19,000,000 shares of series A and 161,714,522 shares of series B. The Company’s shareholders
have preferential rights to subscribe for new shares in Trelleborg in relation to the number of shares the already hold in the Company.
The record date for determining which shareholders are entitled to subscribe for new shares is Tuesday April 28, 2009. Subscription
shall take place during the period from and including Thursday April 30, 2009 up to and including Tuesday May 19, 2009, or such later
date as decided by the Board of Directors.
The rights issue resolution entitles shareholders to subscribe for two (2) new shares of series A or B, respectively, for one (1) existing
share of series A or B held, respectively (primary preferential right). Shares which are not subscribed for with primary preferential right
shall be offered to all shareholders for subscription (subsidiary preferential right).2 If a subscription right (the primary preferential right)
is sold the subsidiary preferential right is passed on to the new owner. The subscription price has been set at SEK 12 per share, which
means that the Company will raise approximately SEK 2,169 M.3 The newly issued shares will carry the same rights as the existing
shares of the same series. In addition, investors are offered the possibility to subscribe for shares without preferential rights.
Subscription undertakings and underwriting guarantees4
Several of Trelleborg’s largest shareholders support the rights issue and have made commitments to subscribe for their respective pro
rata shares in the rights issue, corresponding to approximately 35 percent of the rights issue. These shareholders consist of Dunker interests, AFA Försäkring5, Alecta, Unionen, Rune Andersson through companies and Sten K Johnson through company. In addition, Rune
Andersson6 through companies, Donald Johansson with family6 and through companies and Sten K Johnson 7 through company have
undertaken to subscribe for additional shares in a total amount of SEK 523 M (equivalent to approximately 25 percent of the rights issue), increasing the total commitment of shareholders and other investors to approximately 60 percent of the rights issue. The remainder
of the rights issue is, subject to certain conditions, guaranteed to be subscribed for by the Managers (DnB NOR Markets, Handelsbanken Capital Markets, Nordea and SEB), whereby the rights issue as a whole is covered by subscription undertakings or guarantees8.
In addition, a group of institutional shareholders, including among others Didner & Gerge Funds, Swedbank Robur and Odin Fund
Management, collectively representing approximately 11 percent of the share capital and 6 percent of the votes, have expressed their
support of the rights issue.
The members of the Board of Directors and Group management in Trelleborg intend to subscribe for their respective pro rata shares
in the rights issue.
The shareholders of Trelleborg are hereby invited to, with preferential rights, subscribe for new shares in Trelleborg in accordance with the terms
and conditions outlined in this prospectus.
Trelleborg April 24, 2009
Trelleborg AB (publ)
The Board of Directors
1) In accordance with the proposal by the Board of Directors, with the purpose to render possible and facilitate the rights issue, the Annual General Meeting on April 23, 2009 also resolved
to reduce the Company’s share capital by SEK 2,078,217,003, without redemption of shares, changing the shares’ quota value from SEK 25 to SEK 2. The Annual General Meeting also
resolved on a bonus issue of SEK 2,078,217,003, as a measure to ensure that neither the Company’s restricted equity, nor its share capital, will be reduced. For further information on
the Annual General Meeting’s resolutions, see ”Reduction of the Share Capital and Amendments to the Articles of Association” on p. 58.
2) For further information, please see ”Terms, conditions and instructions”, p. 12 onwards.
3) From the proceeds of the rights issue of approximately SEK 2,169 M, deductions for costs related to remuneration to the issuing department, the underwriters and other transaction
costs in connection with the rights issue (issue costs) are estimated to amount to approximately SEK 95 M of which approximatly SEK 52 M corresponds to underwriting fees. Net of
issue costs, the Company is estimated to raise approximately SEK 2,074 M.
4) For further information, see “Legal considerations and supplementary information”.
5) Excluding Kollektivavtalsstiftelsen Trygghetsfonden TSL, which is the owner of 183,245 shares of series B.
6) Rune Andersson’s and Donald Johansson’s (with family) subscription commitment amounts to SEK 450 M and is made up of commitments from Milano i Malmö HB (controlled by Rune
Andersson, org nr 969685-8290) of SEK 150 M, Suollovaara Invest AB (controlled by Donald Johansson with family, org nr 556584-2506) of SEK 150 M and Älvsbyhus i Bjärnum AB
(jointly controlled by Rune Andersson and Donald Johansson with family, org nr 556368-2813) of SEK 150 M.
7) Sten K Johnson’s subscription commitment, which is made through Tibia Konsult AB (org nr 556154-8008), amounts to SEK 73 M.
8) The subscription undertakings and guarantees are, however, not secured. See further under the heading “Risks related to the rights issue” in the section ”Risk Factors”.
10
Background and reasons
During recent years Trelleborg has worked actively to position itself within attractive market segments and has conducted several action programs. Through these initiatives Trelleborg expects to further improve its market positions and strengthen profitability going
forward.
The significant downturn in the global economy since the fall of 2008 has however resulted in an increased uncertain outlook and
has substantially changed the short-term market conditions for the Group. During the first quarter of 2009, Trelleborg’s sales declined
by 15 percent compared to the same period last year, even though the weak Swedish Krona affected sales positively.
Due to the market development, the Board of Directors in Trelleborg, on March 22, 2009, resolved to raise approximately SEK 2.2
billion, before issue costs, through a rights issue of shares of series A and series B. The decision by the Board of Directors in Trelleborg
was approved by the Annual General Meeting on April 23, 2009.
The rights issue proceeds will be used to strengthen the Group’s financial position, whereby the proceeds will be used to lower the
Group’s indebtedness and decrease the liquidity risk. In addition the proceeds will strengthen Trelleborg’s financial position and increase
the ability of the Group to take advantage of the opportunities occurring in the current economic climate in order to strengthen its
market positions.
Trelleborg has a financial target of maintaining a net debt corresponding to 75–125 percent of shareholders’ equity. On March 31,
2009 the net debt to equity ratio was 122 percent. Given the current market conditions, the Board of Directors in Trelleborg believes
that a strengthening of the capital base substantially improves the ability to maintain the net debt to equity ratio within the stated range
and ensures that the Group will have satisfactory financial flexibility going forward. The rights issue will strengthen the balance sheet so
that the net debt to equity ratio would, all other things equal, have been 86 percent, if the rights issue had been completed on March 31,
2009 (given full subscription in the rights issue and after issue costs).
In other respects, the Board of Directors refers to the information in this prospectus, which it has prepared on account of the rights
issue at hand.
The Board of Directors is responsible for the content of this prospectus. The Board of Directors hereby provides an assurance that all reasonable
care has been taken to ensure that the information contained in this prospectus is, as far as the Board of Directors knows, true and that nothing
has been omitted that could affect its meaning.
Trelleborg April 24, 2009
11
Terms, conditions and instructions
Preferential right and subscription rights
Those persons who, on the record date of April 28, 2009 are
registered as Trelleborg shareholders have a preferential right to
subscribe for new shares of the same series in proportion to the
number of shares already held (primary preferential right). Shares
that are not subscribed for under primary preferential right shall,
regardless of share series, be offered to all other shareholders for
subscription (subsidiary preferential right).
Persons who are registered as shareholders in Trelleborg on
the record date will therefore receive two (2) series A subscription
rights for every share of series A held in Trelleborg and two (2)
series B subscription rights for every share of series B held in Trelleborg. The subscription rights entitle the holder to, with primary
preferential right, subscribe for shares, wherein one (1) series A
and series B subscription right carry an entitlement to subscribe
for one (1) new share of series A and series B, respectively. On
sale of the subscription right (the primary preferential right), the
subsidiary preferential right also passes to the new holder.
Subscription price
The new shares in Trelleborg will be issued at a price of SEK 12
per share. No commission will be charged.
Those who are included in the special list of pledge holders and
trustees that is maintained in connection with the share register will not receive any issue statement, however, they will be
informed separately.
Nominee-registered shareholdings
Shareholders whose holdings are nominee-registered at a bank or
other nominee will not receive an issue statement.
Subscription and payment for shares subscibed for by primary as
well as subsidiary preferential right should instead be made to the
respective nominee and in accordance with instructions from this, or if
the holding is registered with several nominees, from each of these.
Trading in subscription rights of series B will be conducted at
NASDAQ OMX during the period from and including April 30
up to and including May 14, 2009. Handelsbanken Capital Markets and other securities institutions in possession of the required
licences will provide brokerage services in connection with the
purchase and sale of subscription rights. The ISIN-code for the
subscription rights of series B is SE0002863522.
Subscription pursuant to primary preferential right
Record date
The record date at Euroclear Sweden for determination of which
persons are entitled to receive subscription rights in the rights
issue is April 28, 2009. Trelleborg shares will be traded exclusive
of the right to participate in the rights issue commencing on April
24, 2009. The final day for trading inclusive of the right to participate was April 23, 2009.
Issue statements to directly registered shareholders
A prospectus and a pre-printed issue statement with attached
bank giro form will be sent to directly registered shareholders
and representatives of shareholders, who, on the record date, are
registered in the share register maintained by Euroclear Sweden
on Trelleborg’s behalf. The issue statement includes, for example,
the number of subscription rights received and the full number
of shares that may be subscribed for. No securities notification
(Sw: VP-avi) will be sent out regarding the registration of subscription rights on securities accounts.
12
Subscription will take place during the period from and including April 30 up to and including May 19, 2009. On expiry of the
subscription period, unexercised subscription rights will expire
and will be deleted from the securities accounts without notification from Euroclear Sweden.
In order not to lose out on the value of subscription rights
received, a shareholder must either:
•Exercise the subscription rights received, and subscribe for new
shares no later than on the last day of the subscription period; or
•sell subscription rights received but not exercised no later than
on May 14, 2009.
The Board of Directors in Trelleborg is entitled to extend the
subscription period. Subscription for new shares on the basis of
subscription rights is irrevocable and a shareholder may not cancel
or modify a subscription for new shares.
Shareholders resident in certain unauthorized jurisdictions
The allotment of subscription rights and the issuance of new
shares by exercise of subscription rights to persons who are resident in countries other than Sweden, may be affected by securities
legislation in such countries. See “Restrictions on sale and transfer
etc”, on p. 93. Consequently, subject to certain exceptions, shareholders whose shares in Trelleborg are registered directly in a securities account and whose registered address is in Australia, Hong
Kong, Japan, Canada or the US will not receive this prospectus.
Nor will they receive any subscription rights on their respective
securities accounts. The subscription rights that otherwise would
have been delivered to such shareholders will be sold and the sales
proceeds, less a deduction for costs, will be paid to such shareholders. Amounts of less than SEK 100 will not be paid out.
Custody account holders represented by a nominee should follow the
instructions from the nominee, or if applicable, the nominees.
Directly registered shareholders resident in Sweden and
eligible for subscription rights
Subscription for new shares on the basis of subscription rights will
be effected via payment in cash, either by use of the pre-printed
bank giro form or a special application form with simultaneous
payment in accordance with one of the options below:
• The bank giro form is used if all subscription rights designated
as “evenly subscribable“ in the issue statement from Euroclear
Sweden are to be exercised.
• The application form is used if subscription rights have been
purchased or transferred from another securities account or if,
for some other reason, the number of subscription rights to be
exercised for subscription differs from the number on the preprinted issue statement. Application forms may be obtained
from any Handelsbanken branch in Sweden.
Directly registered shareholders not resident in Sweden but
eligible for subscription rights
Shareholders eligible for subscription rights who are not resident
in Sweden and who cannot use the pre-printed bank giro form
must use the application form sent out in order to subscribe for
shares. On submission of the form to the address indicated below,
payment must be made in SEK to the Swedish bank account
indicated below.
Issue Department
SE-106 70 Stockholm, Sweden
SWIFT: HANDSESS
Bank account number: 6028-679 037 322
IBAN: SE96 6000 0000 0006 7903 7322
On payment, the subscriber’s name and address and the securities
account number (Sw: VP-konto) must be quoted. The application
form and payment must be received by Handelsbanken Capital
Markets no later than May 19, 2009. Application forms are available at Handelsbanken’s website at www.handelsbanken.se/aktuellaerbjudanden and Trelleborg’s website at www.trelleborg.com.
Paid subscribed shares (BTAs)
A few days after payment and subscription, Euroclear Sweden will
send a securities notification confirming that the paid subscribed
shares (Sw: betalda tecknade aktier, ‘BTA’) have been registered on
the securities account. The newly subscribed shares are entered as
paid subscribed shares (BTAs) on the securities account until such
time as the issue has been registered with the Swedish Companies
Registration Office. It is expected that shares subscribed for with
preferential right through payment will be registered on or around
May 28, 2009. After that, paid subscribed shares (BTAs) will be
re-registered as ordinary shares, on or around June 1, 2009. No
securities notification will be issued in connection with this reclassification. Custody account holders represented by a nominee
will receive BTA and information according to each respective
nominee’s procedures.
Trading in paid subscribed shares (BTAs)
Trading in paid subscribed shares (BTAs) on NASDAQ OMX is
expected to take place during the period from and including April
30 up to and including May 27, 2009. Handelsbanken Capital
Markets and other securities institutions will provide brokerage
services in connection with the purchase and sale of paid subscribed shares (BTAs). The ISIN-code for paid subscribed shares
(BTAs) of series B is SE0002863530.
Listing of new shares
The Company will apply for listing of new shares of series B on
NASDAQ OMX in connection with the implementation of the
rights issue. Registration with the Swedish Companies Registration Office of the new shares subscribed for on the basis of
subscription rights is expected to take place around May 28, 2009.
Trading in new shares of series B is expected to start around May
29, 2009, subject to registration. The new shares of series B subscribed for without the support of subscription rights are expected
to be registered with Swedish Companies Registration Office
around June 4, 2009 and trading is expected to start around
June 5, 2009.
Subscription for shares on the basis of subsidiary
preferential right as well as allotment
Application for subscription for shares on the basis of subsidiary preferential right must be made on a special application form. More than one application form may be submitted,
although only the most recently dated form will be considered. Application forms are available at all Handelsbanken
branches in Sweden, as well as from Handelsbanken’s website
at www.handelsbanken.se/aktuellaerbjudanden and Trelleborg’s
13
website at www.trelleborg.com. Completed forms may be sent
to Handelsbanken Capital Markets, Issue Department, SE-106
70 Stockholm, Sweden, or may be handed in at any branch of
Handelsbanken in Sweden. Application forms must be received by
Handelsbanken Capital Markets no later than on May 19, 2009.
subscription period.
Custody account holders represented by a nominee who wish to
subscribe for shares on the basis of subsidiary preferential right should
not register according to the instructions in the above section but must
register for subscription to and in accordance with instructions from
the nominee, or nominees, who will also handle notification regarding
allotment as well as other questions.
If the number of shares offered in this manner is insufficient
for subscription, based on subsidiary preferential rights, the shares
shall be distributed among the subscribers in proportion to the
number of shares subscribed for subject to primary preferential
right and, to the extent that this is not possible, by lottery.
As confirmation of the allotment of the shares subscribed for
on the basis of subsidiary preferential right, a settlement note will
be issued to the subscriber or to the nominee. Shares subscribed
for and allotted must be paid for in cash no later than three
business days after the notice of allotment has been issued to the
subscriber or to the nominee. Newly issued shares subscribed for
on the basis of subsidiary preferential right will be delivered as
soon as the required registration has taken place at the Swedish
Companies Registration Office. This is expected to take place on
or around June 4, 2009. A securities notification will be sent to
the directly registered shareholders or nominees as confirmation
that the shares have been registered on the securities account.
Subscription for shares without preferential right,
and allotment
Application for subscription for shares without preferential right must be made on a special application form. More
than one application form may be submitted, although
only the most recently dated form will be considered. Application forms are available at all Handelsbanken branches
in Sweden, as well as from Handelsbanken’s website at
www.handelsbanken.se/aktuellaerbjudanden and Trelleborg’s
website at www.trelleborg.com. Completed forms may be sent to
Handelsbanken Capital Markets, Issue Department, SE-106 70
Stockholm, Sweden, or may be handed in at any branch of
Handelsbanken in Sweden. Application forms must be received by
Handelsbanken Capital Markets no later than on May 19, 2009.
1) Please see notes 6 and 7 on p. 10.
14
subscription period.
Shares not subscribed for by the exercise of primary or subsidiary preferential right will be distributed in the following order to
subscribers that have subscribed without preferential right;
(1) certain underwriters1 in relation to their underwriting commitments,
(2) other subscribers who may reasonably be approved by
Trelleborg in consultation with the Joint Lead Managers in proportion to the number of subscribed shares, and
(3) a guarantee consortium consisting of DnB NOR Markets,
Handelsbanken Capital Markets, Nordea and SEB in proportion
to their respective guarantee commitments.
As confirmation of the allotment of shares subscribed for without
preferential right, a settlement note will be sent to the subscriber.
Shares subscribed for and allotted must be paid for in cash no later
than three business days after notice of allotment has been sent to
the subscriber. Newly issued shares will be delivered as soon as the
required registration has taken place at the Swedish Companies
Registration Office. This is expected to take place on or around
June 4, 2009. A securities notification will be sent to the directly
registered shareholders or nominees as confirmation that the
shares have been registered on the securities account.
Right to dividends
The new shares will carry right to dividends commencing from
the first record date for dividends occurring after the rights issue
has been registered at the Swedish Companies Registration Office.
Announcement of subscription take-up in the rights issue
The subscription take-up in Trelleborg’s rights issue will be announced through a press release from the Company on or around
May 22, 2009.
Other information
The Company is not entitled to discontinue the rights issue. In
the event that too large an amount of money is paid by a subscriber, Trelleborg will arrange for the excess amount to be refunded.
An incomplete or incorrectly completed application forms
may be rejected. Furthermore, if the subscription payment is made
late or is insufficient, the subscription application may be rejected.
In such a case, the subscription payment will be refunded.
How to proceed
Below instructions apply to subscription of shares on the basis of primary preferential right.
For application to subscribe for shares based on subsidiary preferential right, see p.13 and 14.
Terms and conditions
For each Trelleborg share of series B, you will receive two (2) subscription rights of series
B. One (1) subscription right of series B provides an entitlement to subscribe for one (1)
new share of series B in Trelleborg.
Subscription price
SEK 12 per share
Record date for
participation in the rights issue
April 28, 2009
Subscription period
April 30 – May 19, 2009
April 30 – May 14, 2009
1. You will be allotted subscription rights
Share
For each share of series B
in Trelleborg you hold on April 28, 2009…
…you will receive two (2) subscription rights
Subscription rights
2. How to exercise your subscription rights
One (1) subscription right
Subscrip
tion right
+ SEK 12 ➔ If you have a securities account
If your Trelleborg shares are held in a
securities account at Euroclear Sweden, the issue statement from Euro
clear Sweden will show the number of
subscription rights you will receive.
➔
Share
one (1) new share of series B in Trelleborg
If you will exercise all subscription rights
use the pre-printed bank giro form from
Euroclear Sweden.
➔
➔
If you have purchased, sold or transferred subscription rights to/from your
securities account, use the special subscription form available from branches
of Handelsbanken in Sweden, or from
Handelsbanken’s website at www.handelsbanken.se/aktuellaerbjudanden and
Trelleborg’s website at www.trelleborg.
com.
Pay at any bank so that
the payment is received
by Handelsbanken Capital Markets no later than
May 19, 2009
If you have a custody account
If your Trelleborg shares are held in a custody account at a bank or other securities
institution, your nominee will inform you of the number of subscription rights that you have
received.
➔
Follow the instructions you
receive from your nominee.
15
Market overview
Trelleborg offers high-tech solutions based on polymer technology that meet
three primary customer needs: to seal, damp and protect to secure investments, processes and people in demanding industrial environments. These
are vital functions for customers within selected segments of the global
markets for aerospace, agricultural, transportation, automotive, offshore oil/
gas, infrastructure/construction and general industry sectors.
Industrial rubber market
Competitors
A considerable portion of Trelleborg’s sales, approximately 90
percent in 2008, lies within what is referred to as the industrial
rubber market. Trelleborg is leader in this global market, which
is estimated to generate sales of approximately SEK 700 billion
annually1. The industrial rubber market comprises such product
areas as antivibration, hoses and seals. The market is partly fragmented, although a gradual process of consolidation is underway.
The market share of the ten largest companies has increased from
approximately 15 percent to roughly 30 percent in the past five
years (see table in section “Competitors”).2 Trelleborg takes an
active role in this process.
No other global company has a completely overlapping business
profile to Trelleborg. There are however several companies that
compete in different areas of Trelleborg’s product categories (a
more detailed description of competitors within each business area
can be found in the section “Description of operations”).
In 2008, Trelleborg was ranked as the world’s largest company
within the global market for industrial rubber. The 10 largest
companies in the market are listed below.2
The global industrial rubber market 2
Trelleborg’s markets
Market share
Industrial rubber is used in a variety of applications and products that are used by a large number of client categories within
different industrial segments. Trelleborg’s end customers are thus
located within a number of industrial areas. Approximately onethird of the total sales in 2008 was derived from the automotive
industry and one-third from the niche areas: Agriculture, offshore
oil/gas, infrastructure, transportation and aerospace. The remainder was derived from other industries.
Top 1–10 largest companies, 30%
Top 11–50 largest companies, 30%
Other companies, 40%
Top 10 global
industrial rubber suppliers
Country
% of sales within
industrial rubber
1.
Trelleborg
Sweden
90
2.
Continental
Germany
16
3.
Hutchinson
France
90
Offshore oil/gas, 9%
4.
Bridgestone
Japan
12
Agriculture, 9%
5.
Freudenberg
Germany
Infrastructure, 9%
6.
Cooper-Standard
USA
100
Transportation, 7%
7.
Tomkins
UK
45
8.
Tokai Rubber
Japan
95
9.
Parker Hannifin
US
21
Japan
50
Trelleborg’s net sales 2008 divided into end customers categories
General industries, 32%
Automotive, 31%
Aerospace, 3%
10. NOK
2) Source: Rubber & Plastics News Jul 2008; Trelleborg.
16
46
Market overview
Continental is through its subsidiary Contitech one of the largest
participants on the global industrial rubber market. Contitech is
an autonomous part of the Continental group and is specialized
on rubber and plastic material technology. Contitech contributed
to approximately 12 percent of Continental’s total sales in 2008.
Contitech is partly focused on the automotive industry and is
comparable in size (total sales and number of employees) to Trelleborg.1
Hutchinson is comparable in size to Trelleborg as well, both
in regards to total sales and number of employees. As is the case
for Trelleborg, a considerable portion of the total sales is generated within the industrial rubber market. The company is to a
larger extent than Trelleborg focused on the automotive market
(approximately 60 percent of the company’s sales in 2007). In
addition, approximately 15 percent of the company’s sales in 2007
was made up of consumer products.2
Bridgestone’s operations primarily consist of production and
sale of tires. Approximately 12 percent of the company’s total sales
are derived from industrial rubber.3
Market share and industry data
This prospectus contains historical financial data and information about markets and industry sectors. The data concerning
markets and industry sectors presented herein has been compiled
from external sources, using methods which Trelleborg considers adequate in order to ensure that the information is presented
correctly. However, the information has not been independently
verified and Trelleborg can thus not guarantee that the information is correct or complete. The data concerning markets and
industry sectors is inherently uncertain and does not necessarily
reflect the actual market conditions. Potential investors should
thus be aware that the market and industry sector data contained
in this prospectus does not constitute reliable indicators regarding
the past or future performance of Trelleborg.
This prospectus also contains information about the markets in which Trelleborg operates and its competitive position
within those markets, based on Trelleborg’s own assessment. The
information includes, among other things, market size and market
share for each of the countries and regions where Trelleborg
operates. Trelleborg is not aware of any exhaustive industry or
market report that covers or addresses the markets in which it
operates. Trelleborg’s assements on the size of the market and
market shares are, inter alia, based on public information from
other market participants, as well as on other information that
Trelleborg recieves from for example customers and suppliers.
Trelleborg considers that the information regarding market size
and market share contained in this prospectus is fair and accurate
and fairly reflects the competitive situation within such markets.
However, these assessments and other market information have
not been verified by an independent expert or a third party and
Trelleborg can thus not guarantee that a third party would reach
the same results.
Key facts rubber
Rubber is a group of polymeric organic materials with unique
elastic features. Commonly referred to are: natural rubber, derived
from the sap of the plant Hevea Brasiliensis, synthetic rubber,
artificially created or Latex, a diluted form of natural rubber. The
different variations of rubber are used within different industrial
areas. It is typically the hardness of the rubber, measured in IRHD
(International Rubber Hardness Degrees), that is relevant.
The majority of rubber companies today started out by producing
tires. During the years a concentration on one of the following
areas has occurred:
Industrial rubber – Comprises rubber to antivibration, hoses and
seals within the industrial market.
Tires – Production of tires to the automotive industry.
Latex – Includes several areas of usage, for example clothing and
paint.
1) Source: Contitech’s website; Rubber & Plastics News Jul 2008; Trelleborg.
2) Source: Hutchinson’s website; Rubber & Plastics News Jul 2008; Trelleborg.
3) Source: Bridgestone’s website; Rubber & Plastics News Jul 2008; Trelleborg.
17
Description of operations
Trelleborg is a global engineering group whose leading positions are based on
advanced polymer technology and in-depth applications know-how. The Group
develops high-performance solutions that seal, damp and protect in demanding industrial environments. The Group had annual sales of approximately SEK
31 billion in 2008, with about 23,000 employees in 44 countries. The Trelleborg
Group comprises four business areas: Trelleborg Engineered Systems, Trelleborg
Automotive, Trelleborg Sealing Solutions and Trelleborg Wheel Systems.
Trelleborg Engineered Systems – Engineered solutions that focus on the sealing, protection and safety of investments, processes
and individuals in extremely demanding environments.
Trelleborg Automotive – Polymer-based components and systems used for noise and vibration damping for passenger cars and
light and heavy trucks.
Trelleborg Sealing Solutions – Precision seals for the industrial,
aerospace and automotive markets.
Trelleborg Wheel Systems – Tires and complete wheel systems
materials-handling vehicles.
Net sales 2008, per business area
Trelleborg’s operations in the world
Trelleborg has operations in 44 countries, market offices in 36
countries, production sites in 28 countries and developments
units in 18 countries.
Trelleborg’s largest geographical market is currently Europe.
During 2008, 67 percent of the Group’s total sales was derived
from this market. 23 percent of the sales was derived from Northand South America and 10 percent from Asia and other markets.
Geographically, Trelleborg is expanding in Asia, Latin America
and Central- and Eastern Europe through increased presence and
development of the markets through proprietary product and
system development.
Net sales 2008, per geography
Trelleborg Engineered Systems, 39%
Europe, 67%
Trelleborg Automotive, 30%
North and South America, 23%
Trelleborg Sealing Solutions, 19%
Asia and other markets, 10%
Trelleborg Wheel Systems, 12%
Portfolio management for sustainable leading positions
Trelleborg strives to achieve leading positions in its carefully selected segments in global and regional markets. The Group’s market
positions and product portfolio are continuously evaluated.
Trelleborg selects and focuses on segments in which the Group
can attain leading positions and which offer long-term growth
in value. At the same time, Trelleborg identifies and withdraws
from areas and segments that are less attractive. In this manner,
resources are continuously made available to be steered toward
the Group’s selected areas. Organic growth is underpinned by
focused growth initiatives. Activities are conducted in all business
areas within the framework of Global Growth Initiatives, which
systematically drive growth in prioritized areas.
18
New segments
Develop
Segments
Analyze markets
Stategically correct
Differentation possibility
Leading positions
Sustainable growth
Favorable profitability
Define
opportunities
Exit
Choose
Business concept, goals and strategies
VISION
We shall be the customers’ first choice in our
selected market segments, creating value
trough high-performance solutions.
BUSINESS CONCEPT
We seal, damp and protect in demanding
industrial environments throughout the world.
Our customers can rely on engineered solutions based on leading polymer technology and
unique applications know-how
STATEGIES
Leading positions in selected segments
We develop leading positions in selected segments through differentation. With our focus
on excellence, growth and innovation, we are
committed to solving our customer needs.
• Excellence
We achive operational, commercial and
financial excellence through continuous
improvements.
Business
concept
• Growth
We create sustainable and profitable
growth, both organically and driven by
acquisitions, in selceted market segments.
Strategies
Leading positions in selected segments
Excellence
• Innovation
We create customer value
by applying proactive and
innovative thinking in everything we do.
Growth
Leadership
Activities
Values, code of conduct and corporate governance
LEADESHIP
We create a high-performance culture in a global
environment through shared values and targetoriented leadership. Leadership is the link between
strategy and action and ensures that we make use
of the strength of the organization, drive
developments in the right direction, ensure that
action is taken and correctly allocate our resources.
ACTION
To ensure that the strategies are implemented,
ongoing activities are defined that are continously
followed up. These can take form of, for example,
growth initiatives, portfolio development,
operational efficiency, talent management and
innovative initiatives.
VALUES, CODE OF CONDUCT AND CORPORATE GOVERNANCE
Values, code of conduct and corporate governance provide a framework for our operations and create a stable, responsible and sustainable Group that benefits all of Trelleborg Group’s stakeholders.
19
Financial targets
Trelleborg evaluates its financial targets in connection to the annual strategy review which takes place during the third quarter.
The Group’s current long-term financial targets are the following:
Financial targets
Comment
Growth: 8–10 percent
The overall goal is to create value for shareholders and other
stakeholders through profitable growth. The target for the
Group’s average sales growth is 8–10 percent annually over
an economic cycle.
Growth shall be achieved through a combination of organic growth and
acquisitions of new and complementary operations. Organic growth
will be achieved through, for example, proprietary product development
and penetration of new geographic markets.
Return on captial employed1: 15 percent
The target for return on capital employed is 15 percent over
the long term before tax.
This has been deemed a reasonable level over an economic cycle since
the bulk of the fixed assets are a mix of older assets with lower carrying
values and assets that have been acquired at market value in recent years.
Return on shareholder’s equity1: 15 percent
The target for return on shareholders’ equity is 15 percent
after tax.
This is a reasonable target in view of the targets established for return
on capital employed and the capital structure. Key factors contributing
to an ongoing positive trend include improvement in return on capital
employed and an optimal capital structure.
Debt/equity ratio: 75–125 percent
The target for the debt/equity ratio is that it shall be within
the interval of 75–125 percent.
The target for Trelleborg’s capital structure is set to achieve an optimized
balance between risk and return. Accordingly, the Group has determined that a debt/equity ratio within the interval of 75–125 percent is
reasonable considering sensitivity to fluctuations in the business cycle
and to favorable cash-generating capacity.
Operating cash-flow1: 80–90 percent of
operating profit
Operating cash flow is the principal source of financing for
achieving the growth target. The target for operating cash
flow is set at 80–90 percent of underlying operating profit
(EBIT).
To achieve the target, Trelleborg works continuously with a number of
capital-rationalization projects, which, among other benefits, enable
attractive financing solutions for suppliers.
EBITDA-margin target 1: 12 percent or above
EBITDA margin (earnings before interest, taxes and depreciation/amortization in relation to net sales) supplements
the return targets. The margin target remains, but considering the extremely weak economic conditions that currently
prevail, the Group cannot expect that it will be fulfilled.
1) For continuing operations, excluding items affecting comparability.
20
The target shall be realized through volume growth and measures to
enhance the company’s structure and efficiency. Trelleborg’s strategy to
actively advance toward profitable segments is also expected to contribute to improved margins.
Competitive advantages
Compared to many of its smaller competitors, Trelleborg has an
advantage from its wide geographical presence, both on a global as
well as regional level. Trelleborg has a more extensive application
know-how and greater ability to offer its customers assistance with
product development compared to many of its competitors. The
Four business areas
size of the Group and its product portfolio also creates the posibility for an efficient utilization of the production capacity. Trelleborg is relatively well diversified in regards to exposure towards
different client segments, for example with a lower share of sales to
the automotive industry than several of the main competitors.
Leading market positions 1
• = ranked 1–3
EU
Trelleborg Engineered Systems
Industrials hoses
Engineered solutions that focus
on the sealing, protection and
safety of investments, processes
and individuals in extremely demanding environments.
Ditching hoses
Oil hoses
Rubber sheetings
Industrial vibration damping
Polymer coated fabrics
Printing blankets
Industrial profiles
Pipe seals
Tunel seals
Marine fender systems
Polymer Solution for oil/gas
Trelleborg Automotive
Polymer based components and
systems used for noise and vibration damping for passanger cars
and light and heavy trucks.
Antivibration solutions for
the automotive industry
Brake shims
Vehicle boots
Engine-cooling hoses
Trelleborg Sealing Solutions
Precision seals for the aerospace industry
Precision seals for the industrial aerospace and automotive
markets.
Precision seals for the automotive industry
Trelleborg Wheel Systems
Tires and complete wheel systems
materials handling vehicles.
Precision seals for industrial applications
Agriculture tires
Forest tires
Solid industrial tires
•
•
•
•
•
•
•
•
•
•
•
•
NAFTA*
Global
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
EU
NAFTA*
Global
•
•
•
•
•
•
•
•
•
•
EU
NAFTA*
Global
EU
NAFTA*
Global
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
* North America Free Trade Agreement; USA, Canada and Mexico
21
Trelleborg Engineered Systems is a leading global supplier of engineered solutions that focuses on the sealing, protection and safety
of investments, processes and individuals in extremely demanding
environments.
Operations are conducted within four business segments:
•Industry
•Infrastructure Construction
•Offshore
•Building
Net sales 2008 per business segment
Industry, 40%
Offshore, 23%
Building, 19%
Infrastructure Construction, 18%
Key facts
Business Area President: Lennart Johansson
Head office: Trelleborg, Sweden
Production units: Australia, China, Czech Republic, Denmark, Estonia, Finland, France, Germany, Italy, Lithuania, the Netherlands,
Norway, Poland, Singapore, Spain, Sweden, the UK and the US.
Exemples of brands: Elastopipe, Trelline, Vulcan, Dipro, ETM,
Mataki, Phønix Tag (license dependent), Trebolit, Uraduct and
Värnamo
Key customers: Companies within infrastructure, offshore oil/gas,
food, chemicals, the graphic industry, the transport industry, major
distributors of industrial commodities, window manufacturers and
companies within the construction industry.
Strategic priorities
• Continued active portfolio management – investments in attractive segments, exit segments with low potential.
• Strengthened presence in Asia and Latin America, as well as
acquisitions supporting expansion in key markets.
• Improved overall cost structure through efficiency enhancements, outsourcing and manufacturing in low-cost countries.
• Recruit, develop and retain talented individuals.
Europe, 66%
Asia, 8%
Other, 4%
Business segments 1
Industry
Description: Precision components and systems in polymer
materials, such as hoses, elastomer laminates and polymer-coated
fabrics. Other special products include molded components for
many different industry segments, printing blankets for the graphics industry, and industrial antivibration applications.
Market position: World leading in polymer-coated fabrics and
printing blankets. Market leading in Europe within industrial
hose systems and industrial antivibration products.
Principal competitors: Continental/Contitech, Semperit, IVG,
Bridgestone, Flint/Day and Hutchinson.
bearings and bridge expansion joints. Market leader in pipe seals
in Europe.
Principal competitors: Yokohama, Continental/Contitech and
Bridgestone.
Offshore
Description: Niche-oriented products for offshore oil and gas
extraction.
Market position: World leading in a number of niches within
offshore oil and gas extraction, primarily subsea.
Principal competitors: Cuming Corp, Continental/Contitech
and Balmoral Offshore Engineering.
Infrastructure Construction
Description: Specialized solutions for infrastructure projects,
for example, fender systems for harbors, tunnel seals, dredging
systems, pipe seals, acoustic and vibration-damping solutions for
railways, bridges and buildings.
Market position: World leading within marine fender systems,
tunnel seals and dredging systems. In certain geographic markets,
the business segment also has a leading position within bridge
Building
Description: Polymer and bitumen-based construction products for sealing and waterproofing applications for industry and
consumers.
Market position: Market leader in Northern Europe.
Principal competitors: Semperit, Icopal, Schlegel and Stomil
Sanok.
1) Information regarding market positions based on Trelleborg’s assessment. For further details see “Market share and industry data” on p. 17.
22
Trends
The market for the Industry segment is mature, with a growth
that is in line with industry production. The European industry
structure is fragmented, but consolidation is underway, and Trelleborg, as a leading player in Europe, is taking an active part, for
example, within polymer-coated fabrics. For the project-oriented
Infrastructure Construction segment, investments are increasing
in many parts of the world. Urbanization, among other factors,
is driving demand for such structures as bridges and tunnels.
Modern high-speed trains require a greater degree of damping.
The demand for fender systems is increasing in pace with the
rising number of large international freight vessels requiring new
harbors. The market for Offshore is also project-oriented and is
influenced by developments in the offshore industry. Increased
ocean-based oil and gas extraction in several geographic markets
benefits this business segment. Within the Building segment, the
market is becoming increasingly international, at the same time
as the demands for local presence and rapid deliveries are essential
to achieve leading positions. A stronger focus on energy efficiency
provides the conditions for advanced sealing profile solutions,
both within the construction industry and in the consumer
market.
Market Development
Demand in the business area’s main markets remained highly variable. A substantial decline occurred within industrial segments,
while demand in project-related operations, offshore oil/gas and
infrastructure construction remained stable.
Financial overview 1
Below is a summary of the financial development within
Trelleborg Engineered Systems during the years 2006–2008 and
the periods January–March 2008 and 2009.
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
2,862
2,856
12,378
11,745
9,310
Share of Group net sales, %
41.4
35.1
39.2
37.7
34.3
EBITDA, SEK M (excluding items affecting comparability)
210
338
1,429
1,464
1,041
11.1
Trelleborg Engineered Systems – Key ratios
Net sales, SEK M
7.2
11.7
11.3
12.4
Operating profit, excluding items affecting comparability, SEK M
EBITDA-margin, %
117
266
1,087
1,168
805
Operating profit, including items affecting comparability, SEK M
112
244
1,008
1,079
769
Operating margin (ROS), % (excluding items affecting comparability)
Capital employed, SEK M
Return on capital employed (ROCE), % (excluding items affecting comparability), R12
Capital expenditures, SEK M
4.0
9.2
8.6
9.9
8.6
7,866
6,351
7,846
6,201
5,920
12.6
18.3
15.5
18.6
16.7
80
108
564
432
271
285
–82
802
1,071
815
Operating cash flow/operating profit, % (excluding items affecting comparability)
244
neg.
74
92
101
1) Trelleborg carried out minor changes in the operating structure during the first quarter of 2009. The change has affected reporting by business area for the first quarter of 2008 whereby
certain operations with group external sales for 2008 of SEK 16 M has been transferred from Trelleborg Engineered Systems to Trelleborg Automotive (SEK 13 M) and to Trelleborg Sealing Solutions (SEK 3 M). The effect on earnings is marginal.
23
Trelleborg Automotive is a world leader in the development and
production of polymer-based components and systems used for
noise and vibration damping in passenger cars and light and heavy
trucks.
Operations are conducted within five business segments:
•Antivibration Solutions
•Damping Solutions
•Insulation & Applied Solutions
•Fluid Solutions
•Gas Springs
Antivibration Solution, 62%
Fluid Solution, 18%
Insulation & Applied Solution, 12%
Damping Solution, 7%
Gas Springs, 1%
Key facts
Business Area President: Roger Johansson
Head office: Trelleborg, Sweden
Production units: Brazil, China, Czech Republic, France, Germany,
India, Italy, Mexico, Poland, Romania, Slovakia, South Korea,
Spain, Sweden, Turkey and the US.
Key customers: Audi, Benteler, BMW, Chrysler, Daimler, Delphi,
Federal Mogul, Fiat, Ford Group, GKN, GM, Hyundai, PSA, Renault
Nissan Group, Tata Group, Tenneco Monroe, Toyota, VW and ZF
Lemförder
Strategic priorities:
• Restore profitability in long-term attractive segments through a
focused action program.
• Clear positioning of Trelleborg Automotive as an innovative supplier of comprehensive and global solutions.
• Proactively capitalize on the market opportunities that arise in
the current restructuring of the global automotive industry.
• Selectively follow existing customers when they establish operations in emerging markets.
• Optimization of global production and excellence in production
processes, including enhanced utilization of synergies across
the business area.
Europe, 66%
Asia, 7%
Business segments 1
Antivibration Solutions
Description: Noise and vibration damping solutions for all vehicle segments.
Market position: World leader within systems for light vehicles.
Principal competitors: ZF Boge, Vibracoustic/Freudenberg,
Paulstra/Hutchinson, Continental/ Contitech, Cooper Standard,
Tokai and Bridgestone.
Damping Solutions
Description: Brake shims and Applied Damping Materials
(ADM).
Market position: World leader.
Principal competitors: Wolverine and MSC.
Market position: World leader within polymer boots for drive
shafts and steering applications.
Principal competitors: ABC, Keeper and Parker Hannifin.
Fluid Solutions
Description: Engine-cooling and air supply solutions.
Market position: Leading position in Europe.
Principal competitors: Hutchinson, Continental/Contitech,
Avon Automotive and Teklas.
Gas Springs
Description: Spring-based door-opening and closing solutions.
Market position: Niche player on the European market.
Principal competitors: Stabilus and Suspa.
Insulation & Applied Solutions
Description: Polymer boots for drive shafts and steering applications as well as other customized products.
24
Trends
Market Development
The market for light vehicles experienced a drastic decline during
the second half of 2008, and this trend has continued in 2009.
The traditional markets in Europe and North America were
particularly weak. Automotive manufacturers continue to move
production from west to east. Global platforms and standard
architectures continue to guide development. This results in
manufacturers applying the same type of suspension, steering
and drive shafts, brake systems and engine models in a number
of models, which enhances efficiency and reduces costs. This also
leads to greater flexibility and cuts time to market. For subcontractors, this implies a demand for global presence. Intensified competition, and increases in prices for materials and energy, result
in cost pressure remaining high. Trelleborg is tackling this via the
optimization of global production, development of research and
development in emerging markets, a stronger focus on portfolio
management and the development of synergies amongst the units,
excellence in production and globally consistent service levels.
Car production in North America declined by approximately
53 percent in the first quarter of 2009 compared with the same
period in 2008. Car production was down 40 percent in Western
Europe and 42 percent in Eastern Europe. Car production in Asia
(excluding Japan) declined by 24 percent.1 On April 23, 2009,
GM announced plans for substantially reduced production on the
North American market in the second and third quarter of 2009.
GM is, directly and indirectly, an important customer to Trelleborg Automotive and the announced plans from GM may have
certain negative impact on the business area’s results.
Financial overview2
Below is a summary of the financial development within Trelleborg Automotive during the years 2006–2008 and the periods
January–March 2008 and 2009.
Trelleborg Automotive – Key ratios
Net sales, SEK M
EBITDA-margin, %
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
1,826
2,726
9,461
10,299
9,327
26.4
33.5
30.0
33.1
34.3
–67
138
57
634
616
neg.
5.1
0.7
6.1
6.4
–175
33
–381
203
219
–183
8
–1,249
–179
–61
neg.
1.3
neg.
1.9
2.2
5,079
5,407
5,077
5,191
4,968
neg.
3.5
neg.
3.9
4.1
101
131
462
441
490
–17
–325
53
124
132
neg.
neg.
neg.
61
60
1) Source: JD Power; Trelleborg.
25
Trelleborg Sealing Solutions is a leading global supplier of precision seals for the industrial, aerospace and automotive markets.
Operations are conducted within three business segments:
•Industrial Applications
•Automotive
•Aerospace
Industrial Applications, 71%
Automotive, 16%
Aerospace, 13%
Key facts
Business Area President: Claus Barsøe
Head office: Copenhagen, Denmark
Production units: Brazil, China, Denmark, France, India, Italy,
Japan, Malta, Mexico, Poland, Sweden, the UK and the US.
Market offices: Austria, Belgium, Brazil, Bulgaria, Canada, China,
Croatia, Czech Republic, Denmark, Finland, France, Germany, Hong
Kong, Hungary, India, Italy, Japan, Malaysia, Mexico, the Netherlands, Norway, Poland, Russia, Singapore, Slovakia, South Korea,
Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the UK and
the US.
Examples of brands: Busak+Shamban, American Variseal, Forsheda, GNL, Orkot, Palmer Chenard, Polypac, Nordex, SF Medical,
Shamban, Skega, Stefa and Wills
Key customers: ABB, BOC Edwards, Bosch, Caterpillar, GEA Group,
Honda, Husky, Liebherr, Rolls Royce, Scania, Siemens, Spirit Aerosystems, Visteon, Volvo and ZF Group
• Consolidate and develop leading positions in Europe, and expand in North and South America, Asia and Eastern Europe.
Europe, 71%
Asia, 8%
• Further develop existing concepts and rapidly develop new businesses through organic growth and strategic acquisitions, for
example, within new energy sources and pharmaceuticals.
• Offer the market’s best service of high quality to prioritized
customers through a broad product range, service and innovative solutions.
• Adjust production capacity and further improve efficiency.
Business segments 1
Industrial Applications
Automotive
Description: Advanced sealing solutions in specialty materials
designed for a range of industrial applications. The largest product
groups are O-rings, rotary seals and hydraulic seals.
Market position: World leader in specific niches.
Principal competitors: Freudenberg, NOK and Parker Hannifin.
Description: Advanced and often safetycritical seals, mainly for
fuel systems, steering, air conditioning and exhaust systems.
Market position: Leader in specific niches requiring high-quality
seals.
Principal competitors: Freudenberg, NOK and Federal Mogul.
Aerospace
Description: Safety-critical aircraft seals that are used in virtually all major commercial and military aircraft programs. Key
application areas are engines, flight control actuators, landing gear,
airframes, wheels and brakes.
Market position: World leader.
Principal competitors: Parker Hannifin, Greene Tweed and
Hutchinson.
26
Trends
Sealing solutions often have safety-critical functions, and such
factors as technical development, environmental legislation and
standardization gradually increase the demands on these systems.
This relates to such applications as landing gear, vehicle fuel
systems, medical equipment and hydraulics and pneumatics.
Seals must be able to cope with extreme temperatures, pressures
and friction, and withstand aggressive media. They must also be
durable and completely reliable. Combined, these trends result in
growth for companies that are technology leaders and increased
industry consolidation.
The market for industrial seals tends to follow the levels of
industrial production and growth in the market for durable goods.
In Europe and North America, the market totals about SEK 18
billion per year. The market for polymer aircraft seals is driven by
the trends in commercial and military aviation, and amounts to
approximately SEK 3 billion per year in Europe and the US. The
global market for polymer vehicle seals amounts to about SEK
30 billion per year. The market for sealing solutions is influenced
by increasing demands imposed by customers in terms of service
levels and technology. They demand complex solutions, expect the
same level of service throughout the world and endeavor to reduce
their number of suppliers. This provides opportunities for global
groups such as Trelleborg.
Market development
The market conditions in most of the business area’s end markets
continued to weaken during the quarter, particularly in the industrial and automotive sectors.
Financial overview 1
Below is a summary of the financial development within Trelleborg Sealing Solutions during the years 2006–2008 and the
periods January–March 2008 and 2009.
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
1,276
1,587
6,022
5,844
5,389
18.5
19.5
19.1
18.8
19.8
98
295
1,079
1,019
897
7.7
18.6
17.9
17.4
16.6
41
249
888
839
726
39
249
856
839
726
3.2
15.7
14.7
14.4
13.5
8,118
6,916
8,037
6,975
6,374
9.0
12.7
12.3
12.5
10.9
22
35
257
239
198
122
124
921
751
794
298
50
104
90
109
Trelleborg Sealing Solutions – Key ratios
Net sales, SEK M
EBITDA-margin, %
certain operations with group external sales for 2008 of SEK 16 M has been transferred from Trelleborg Engineered Systems to Trelleborg Automotive (SEK 13 M) and to Trelleborg
Sealing Solutions (SEK 3 M). The effect on earnings is marginal.
27
Trelleborg Wheel Systems is a leading global supplier of tires and
complete wheel systems for farm and forest machinery, forklift
trucks and other materials-handling vehicles.
Operations are conducted within two business segments:
•Agricultural & Forest Tires
•Industrial Tires
Key facts
Business Area President: Maurizio Vischi
Head office: Tivoli, Italy
Production units: Denmark, Italy, Latvia, Sri Lanka, Sweden and
the US.
Market offices: Africa, Asia, Australia, Europe, the Middle East
and North and South America.
Examples of brands: Agricultural & Forest Tires: Trelleborg and
Pirelli (license). Industrial Tires: Trelleborg, Bergougnan, Rota,
Mastersolid and Orca
Agricultural & Forest Tires, 64%
Industrial Tires, 36%
Key customers:
• Agricultural & Forest Tires: Manufacturers of agricultural and
forest machinery, tire and machinery sales companies and end
customers.
• Industrial Tires: Original equipment manufacturers of forklift
trucks, transport companies, authorities and organizations that
are responsible for infrastructure.
• Consolidation of the strong position held in Agricultural & Forest
Tires through further development of the customer offering.
• Capitalize on implemented structural measures to proactively
expand in attractive segments and markets.
Europe, 73%
Asia, 2%
Other, 4%
• Consolidation of industrial tire production from the US to Sri
Lanka and rims from Denmark to Latvia.
• Maintain strong positions among OEM customers and further
development of aftermarket customers through continued
focused and customer-centric innovation.
• Continued effective and successful change of brand from Pirelli
to Trelleborg.
Business segments 1
Agricultural & Forest Tires
Description: Tires and wheel systems for tractors and other
vehicles used in agriculture and forestry. The business area is a
leader in the segment for extra-large tires, in which Trelleborg has
a broad range.
Market position: Leader in the agricultural market in Europe.
Global market leader within forest tires.
Principal competitors: Michelin, Goodyear/Titan, Mitas, Firestone/Bridgestone and Nokian Tyres.
Industrial Tires
Description: Wheels and complete wheel systems for materialshandling vehicles used at such facilities as airports, ports and
warehouses, including forklift trucks and other highly utilized and
high-load materials-handling vehicles.
Market position: World leader in solid industrial tires.
Principal competitors: Solideal, Continental, MITL, Aichi and
Watts.
28
Trends
Although the European agricultural and forestry markets are mature, demand for efficient equipment, vehicles and large and highgrade tires is increasing in parallel with demands for cost-effective
production. The trend is for agricultural operations to merge,
become more industrialized, and form larger farms using bigger
tractors and, consequently, larger tires. In Europe, it is essential
to also take into account how well the tires function on country
roads at high speeds, which is necessary when users move between
different workplaces.
The market for the agricultural and forest sectors is divided into
radial and cross-ply tires. Radial tires are different from cross-ply
tires in that the cords are at a 90 degree angle against the direction of
travel, compared to cross-ply ties where the cord is diagonal against
the direction of travel (approximately 60 degrees). The principal
area of growth is radial tires, a segment in which Trelleborg has
been a pioneer. The proportion of radial rear tires in Europe is now
approximately 70 percent, with an increasing market for larger
dimensions, in which Trelleborg holds a strong position. However,
the market for cross-ply tires is diminishing annually.
The market for industrial tires is mature and developing in line
with the general industrial trend. Price is becoming an increasingly important competitive factor. Companies’ efforts to reduce
the amount of tied-up capital are driving the trend to rationalize
inventories, which makes the efficient handling of materials ever
more important. This is creating a long-term growing demand for
industrial tires for various materials-handling machines.
Market development
In general, a substantial slowdown occurred in the agricultural
sector. Nonetheless, the positive trend for high-performance
agricultural tires continued during the first quarter of 2009, which
benefited Trelleborg as the Group’s products are well-positioned in
this area. Global demand for industrial tires continued to decline
sharply as a result of the weaker industrial economy.
Financial overview
Below is a summary of the financial development within Trelleborg Wheel Systems during the years 2006–2008 and the periods
January–March 2008 and 2009.
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
950
962
3,708
3,248
3,145
13.7
11.9
11.7
10.4
11.6
128
133
453
374
334
13.5
13.9
12.2
11.5
10.6
Trelleborg Wheel Systems – Key ratios
Net sales, SEK M
EBITDA-margin, %
102
109
363
288
243
100
108
348
261
222
10.8
11.4
9.8
8.9
7.7
2,182
1,764
2,145
1,679
1,418
18.0
19.0
19.5
18.5
16.3
36
43
232
171
139
122
–34
129
146
153
120
neg.
36
51
63
29
Acquisitions
The table below summarizes the acquisitions that Trelleborg has
completed during the years 2006 –2008. The acquisition process
in Trelleborg is conducted through close cooperation between the
business areas, which often individually identify potential acquisition targets, and central functions on Group level.
Acquisitions 2006–2008
Completion
date
Company
Country
Product area
Sales, fullyear prior to
acquisition,
SEK M
Number of
employees
60
100
35
2008
Dec 18
Shanghai Reeves
China
Printing blankets for the graphics
industry
Nov 11
Unit from Ruukki (Steel surface treatment)
Sweden
Brake shims
-
Jul 16
PressoNova
Sweden
Brake shims
35
30
Jun 3
MacDermid Offset Printing Blankets
US
Printing blankets for the graphics
industry
540
400
May 16
Officine Meccaniche GNL
Italy
Mechanical slide-ring seals
May 13
NPC
US
Pipe seals
Apr 10
Trelleborg Sealing Solutions India
India
Seals
Mar 26
Hetag Takdækning
Denmark
Nov 15
Sealing Solutions
Oct 29
Jul 12
90
60
110
100
80
120
Roofing contractors
300
125
US
Precision seals
100
40
Solid Service Group
Australia
Special tires
65
40
AFM
US
Precision seals
85
45
Jun 1
Hydro-Components Research & Dev.
US
Precision seals
50
80
Mar 1
Gummiteknik GTM
Sweden
Advanced rubber components
35
30
Jan 4
Epros och Epros International
Germany and UK
After-market for pipe systems
90
30
Nov 6
Hunter Diving
UK
Protective products
Nov 6
Hetag Tagmaterialer
Denmark
Construction/roofing materials
Oct 31
Reeves Brothers.
US/Italy/China
Industry/offset printing blankets
Aug 15
Mehren Rubber
Norway
Aug 2
Kawneer Rubber and Plastics
US
Jul 31
UAB Trella
Jun 30
Mar 31
2007
2006
10
-
100
20
1,400
1,000
Offshore
65
30
Construction/industrial profiles
90
40
Lithuania
Protective products
20
60
Mar-Con
Finland
Polymer components
120
90
Harbour & Marine Engineering
Australia
Infrastructure
Feb 6
EPG
US
Construction/industrial profiles
Jan 20
CRP Group
UK/US
Offshore
Jan 3
Elastomer
Czech Republic
Mixing
30
80
50
170
140
1,000
500
75
40
Organization and employees
Operational structure
Trelleborg’s operation is organized into four business areas. These
comprise of 20 business units that cover about 40 product areas.
The President and CEO leads the work of the Group Management and renders decisions in consultation with other members of
the management team, which consists of the heads of the business
areas and staff functions. At the end of 2008, Group Management
consisted of 12 persons.
Employees
Trelleborg has operations in 44 countries. About 90 percent of the
employees work outside Sweden. The average number of employees
declined during the year to 24,347 (25,158), of which 26 percent
(26) were women. The number of employees at year-end 2008,
including insourced staff and temporary employees, amounted to
23,202, (25,869). Salaries and other benefits amounted to SEK
6,437 M (6,662). Personnel turnover (not taking terminations and
retirements into consideration) varies among countries and facilities, and often reflects the local labor situation. Personnel turnover
was 8 percent during 2008 (9.5). The majority of the units indicate
a personnel turnover below 5 percent.
Employees per geography 2008
PRESIDENT AND CEO
Executive Vice
President and CFO
Trelleborg
Engineered Systems
Business
units
Product
areas
Other Group
staff functions
Trelleborg
Automotive
Trelleborg
Sealing Solutions
Trelleborg
Wheel Systems
Business
units
Business
units
Business
units
Product
areas
Product
areas
Product
areas
Women
Men
Total
Sweden
725
1,518
2,243
France
711
2,139
2,850
Italy
280
1,248
1,528
Poland
537
748
1,285
Spain
270
1,032
1,302
UK
373
1,414
1,787
Germany
343
923
1,266
Rest of Europe
1,076
2,545
3,621
Total Europe
4,315
11,567
15,882
US
1,075
2,426
3,501
Brazil
102
963
1,065
Other markets
287
326
613
1,464
3,715
5,179
277
826
1,103
Total North and South America
China
Sri Lanka
33
729
762
Other markets
205
1,216
1,421
Total Asia and other markets
515
2,771
3,286
6,294
18,053
24,347
Sum
The proportion of women in executive management was 8 percent and 14 percent on the Board of Directors.
31
Corporate responsibility
Through Trelleborg’s business concept – polymer solutions that
seal, damp and protect – the operations make a positive and innovative contribution in many ways through products and solutions
for the development of society in the environment, health and
safety areas. Trelleborg’s solutions provide protection for both the
environment and people.
Trelleborg’s annual reporting on these corporate responsibility
issues takes place in accordance with the most established international guidelines in the area: the Global Reporting Initiative
guidelines.
Since 2007, Trelleborg has participated in the UN Global
Compact network, an initiative for responsible business practices,
focusing on the environment, working conditions, human rights
and anti-corruption.
Trelleborg’s Code of Conduct is the company’s central policy
in the areas of the environment, work environment and ethics.
The Code applies to all employees without exception, and is based
on internationally recognized guidelines, such as the UN conventions on human rights, the ILO’s conventions, the OECD’s
guidelines and the UN Global Compact.
Training in the Code of Conduct is mandatory for all employees, and self-evaluation based on the guidelines is the basis for our
work with CR issues (see figure below). Within certain areas of the
Code, self-evaluation is reinforced by external audits, such as ISO
14001 environmental audits.
The Group has a whistle-blower policy, which means that every employee has the right to report suspicions of serious breaches
of laws or regulations without any repercussions whatsoever.
Environmental responsibility
Direct responsibility for issues relating to the environment, health
and safety rests with each facility. Every plant has an environmental coordinator and a person responsible for health and safety.
The central Group function, Environment, which is a part of the
Group Legal Department, is responsible for control and coordination of environmental issues based on the Group’s environmental
policy and the central environmental objectives. The Group’s
Environment Forum, a group that meets four times a year and
consists of environmental managers from the four business areas,
functions as an aid to the central Environment Group function.
At Board of Directors level, it is the Audit Committee that has the
task of monitoring follow-up and reporting of issues within the
framework of Corporate Responsibility. CR reporting is managed
by a group comprising representatives from the Group Corporate
Communications, Legal Department, Environment, HR and
Purchasing staff functions. The Corporate Communications staff
function is responsible for coordinating the reporting.
Systematic corporate responsibility work in Trelleborg
Internally
Code of conduct
Workplace and
enviroment Issues
Marketplace issues
Society and comunity issues
Governance
and reporting
International
guidelines
32
Externally
Selfevaluation
External
audits
CR Reporting
CR website
CR Report
Annual report
Policies
UN human rights
ILO conventions
OECD guidlines
UN Global compact
GRI’s guidelines
Financial performance
Enviromental performance
Social performance
History
1905
Trelleborgs Gummifabriks AB is formed by Henry Dunker. The company rapidly becomes Scandinavia’s leading rubber-production company, with bicycle
and car tires, industrial rubber goods and raincoats as its principal products.
1950
Internationalization begins.
1962
Henry Dunker dies at age 92, leaving his fortune to a number of funds
and foundations, which today control the majority of the voting rights in
the company.
1964
Trelleborg is listed on the Stockholm Stock Exchange.
1975
The manufacturing of passenger car and truck tires is discontinued.
The reasons for the close down are the costly transition to radial tires,
extreme global overproduction and intense price pressure.
1977
The Company’s name is shortened to Trelleborg AB.
1980s
Trelleborg expands within for example mining and trading, areas that were
subsequently discontinued.
1994
The brand is complemented with three open triangles, which symbolized the expansive development within the Group. Today, they are also a
reminder of the Group’s four basic values: customer focus, performance,
innovation and responsibility.
1995
Divestment of last shares in Munksjö and Falconbridge and the remaining
operations are concentrated to a number of core areas.
1998
Acquisition of Pirelli Agri.
2000
New strategic focus – The Group is organized into three sectors: Industrial, Distribution and Miscellaneous. The greater part of the Miscellaneous sector and 51 percent of the Distribution sector are divested.
The operation focuses on the Industrial sector, which expands through
acquisitions. At the end of 2000, the Group has sales of SEK 13.7 billion
and some 12,400 employees.
2003
Acquisition of Smiths Group Plc’s polymer-based precision seals business, which formed the Trelleborg Sealing Solutions business area.
2005
Trelleborg AB celevrates 100 years. The remainder of the Distribution
sector is divested.
2006
Acquisitions of CRP and Reeves.
33
Financial information in summary
Financial overview for the full years 2004–2008 and the
periods January–March 2008 and 2009
Trelleborg’s financial statements for the last three fiscal years are
incorporated into the prospectus by reference. All financial reports
are available at Trelleborg’s website www.trelleborg.com. The reports
can also be ordered through Trelleborg’s communication department, e-mail: [email protected] or phone: +46 410 670 00.
Trelleborg’s annual reports for 2004, 2005, 2006, 2007 and
2008 have been audited by Göran Tidström as auditor in charge
and Olov Karlsson as co-signing auditor, of Pricewaterhouse-
Income statements (SEK M)
Jan–Mar
2009
Coopers. The auditor’s reports for 2004, 2005, 2006, 2007, and
2008 have, respectively, been incorporated into each year’s annual
report. The auditor’s reports follow a standardised formula and are
all unqualified.
Trelleborg’s interim report as of March 31, 2009 has been
reviewed and follows a standardised formula and is unqualified.
In addition to the audit of the annual reports and the review
of the interim report that are included in the historical financial
information, Trelleborg’s auditor has not reviewed any other parts
of this prospectus.
Jan–Mar
2008
2008
2007
2006
2005
2004
Continuing operations
Net sales
Cost of goods sold
Gross profit
Selling expenses
6,877
8,067
31,263
30,810
26,875
23,307
22,136
–5,375
–6,023
–23,603
–23,151
–20,186
–17,077
–16,494
1,502
2,044
7,660
7,659
6,689
6,230
5,642
–632
–598
–2,437
–2,244
–2,062
–1,896
–1,847
Administrative expenses
–675
–740
–2,982
–3,002
–2,625
–2,422
–2,351
Research & development costs
–167
–150
–603
–550
–496
–466
–480
15
17
–1,282
–159
–45
250
217
Other operating income/expenses
Share of profit or loss in associated companies
Operating profit
Financial income and expenses
3
1
18
12
22
33
37
46
574
374
1,716
1,483
1,729
1,218
–139
–132
–540
–439
–313
–208
–283
Profit before tax
–93
442
–166
1,277
1,170
1,521
935
Tax
158
–133
–92
–430
–402
–378
–222
65
309
–258
847
768
1,143
713
Net profit
Discontinued operations
Net sales
–
–
–
161
409
863
776
Operating profit
–
–
–
–9
24
50
673
Profit before tax
–
–
–
–9
23
46
669
Net profit
–
–
–
–9
–2
34
673
6,877
8,067
31,263
30,971
27,284
24,170
22,912
Total net sales
Total operating profit
46
574
374
1,707
1,507
1,779
1,891
Total profit before tax
–93
442
–166
1,268
1,193
1,567
1,604
Total net profit
65
309
–258
838
766
1,177
1,386
- of which attributable to parent company’s shareholders
65
305
–267
821
751
1,161
1,372
0
4
9
17
15
16
14
- of which attributable to minority interest
34
Balance sheets (SEK M)
March 31,
2009
March 31,
2008
2008
2007
2006
2005
2004
Assets
7,246
6,185
7,137
6,293
6,008
5,667
5,399
Intangible assets
Property, plant and equipment
12,102
9,805
11,833
10,098
9,535
8,208
7,180
Financial assets
1,798
876
1,586
967
1,025
936
873
21,146
16,866
20,556
17,358
16,568
14,811
13,452
Inventories
4,598
4,064
4,775
4,012
3,604
3,275
2,826
Current operating receivables
5,366
Total non-current assets
6,987
7,978
7,505
7,339
6,681
6,118
Current interest bearing receivables
152
130
178
95
88
93
33
Cash and cash equivalents
501
483
749
530
616
663
475
Total current assets
12,238
12,655
13,207
11,976
10,989
10,149
8,700
Total assets
33,384
29,521
33,763
29,334
27,557
24,960
22,152
10,527
9,797
10,153
9,932
9,580
10,041
8,475
83
111
85
120
107
72
128
Total equity
10,610
9,908
10,238
10,052
9,687
10,113
8,603
Non-current interest bearing liabilities
10,897
7,883
10,834
7,276
6,859
5,891
7,150
1,197
Equity and liabilities
Shareholders’ equity, excluding minority share
Minority share
Other non-current liabilities
1,859
1,508
1,977
1,598
1,521
1,276
Interest bearing current liabilities
2,738
3,296
2,805
3,446
3,225
2,106
310
Accounts payable and other operating liabilities
7,280
6,926
7,909
6,962
6,265
5,574
4,892
Total liabilities
22,774
19,613
23,525
19,282
17,870
14,847
13,549
Total equity and liabilities
33,384
29,521
33,763
29,334
27,557
24,960
22,152
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
2005
2004
478
–388
1,594
1,718
1,594
1,751
1,421
Cash flow statements (SEK M)
Operating cash flow
Restructuring measures in acquired units
Utilization of restructuring reserves
Dividend paid to minority shareholders
Financial items
–
–
–
–
–
–63
–248
–112
–70
–447
–325
–124
–107
–30
–
–
–3
–3
–
–1
–2
–332
–154
–328
–426
–245
–257
–290
Tax paid
–8
–86
–402
–446
–320
–393
–379
Free cash flow
26
–698
414
518
905
930
472
Acquisitions
–21
–38
–802
–616
–3,095
–368
–346
Divestments
–
–
–2
127
188
20
1,161
Dividend paid to shareholders
–
–
–587
–542
–497
–452
–396
Exercise of share warrants and call options
–
–
–
–
–
78
168
Net cash flow
5
–736
–977
–513
–2,499
208
1,059
35
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
2005
2004
Shareholders’ equity
10,610
9,908
10,238
10,052
9,687
10,113
8,603
Capital employed, closing balance
22,480
20,288
22,238
19,853
18,818
16,922
15,112
Net debt
12,974
10,562
12,706
10,093
9,350
7,236
6,951
Total assets
33,384
29,521
33,763
29,334
27,557
24,960
22,152
32
34
30
34
35
41
39
122
107
124
100
96
72
81
Capital turnover rate, multiple
1.3
1.5
1.5
1.6
1.5
1.5
1.4
Investments in property, plant and equipment
219
302
1,367
1,215
980
689
841
Investments in intangible assets
20
22
159
121
132
184
170
Acquisitions
21
38
802
616
3,095
368
346
neg.
9.1
neg.
8.4
7.6
12.5
17.2
0.70
3.35
–2.95
9.10
8.30
12.90
15.55
26
–698
414
518
905
930
472
0.30
–7.70
4.60
5.75
10.00
10.30
5.35
116.50
108.40
112.35
109.90
106.00
111.15
94.45
5.00
Group key figures (SEK M unless otherwise stated)
Equity/assets ratio, %
Free cash flow
Free cash flow per share, SEK
Shareholders’ equity per share, SEK
Dividend per share, SEK
–
–
–
6.50
6.00
5.50
90.4
90.4
90.4
90.4
90.4
90.2
88.3
21,106
26,330
24,347
25,158
22,506
21,694
21,675
- of which, outside Sweden*
19,310
24,037
22,104
22,836
20,268
19,243
19,117
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
2005
2004
2,600
Average number of shares, million
Key figures continuing operations, excluding items affecting comparability (SEK M unless otherwise stated)
EBITDA
349
871
2,868
3,276
2,726
2,560
EBITDA-margin, %
5.0
10.8
9.1
10.6
10.1
10.8
11.6
Operating profit (EBIT)
63
622
1,798
2,274
1,820
1,729
1,778
0.9
7.7
5.7
7.3
6.7
7.3
7.9
Profit before tax
–76
490
1,258
1,836
1,507
1,521
1,495
Net profit
78
343
889
1,282
1,072
1,143
1,105
Return on capital employed (ROCE), %, R12
5.6
11.4
8.4
11.5
9.9
10.7
11.3
Operating cash flow
Operating cash flow per share, SEK, R12
Operating cash flow/operating profit, %, R12
6.0
12.6
8.8
13.0
10.8
12.2
13.9
0.85
3.75
9.75
14.00
11.70
12.50
12.40
478
–388
1,594
1,718
1,594
1,751
1,421
27.25
14.70
17.65
19.00
17.65
19.45
16.10
199
58
89
76
88
102
84
21,106
26,330
24,347
25,042
22,227
21,318
21,294
* For the period January–March 2008 and 2009, insourced and temporary staff is included as well.
36
Financial information per business area1
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
2,862
2,856
12,378
11,745
9,310
1,826
2,726
9,461
10,299
9,327
1,276
1,587
6,022
5,844
5,389
950
962
3,708
3,248
3,145
-37
–64
–306
–326
–296
6,877
8,067
31,263
30,810
26,875
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
210
338
1,429
1,464
1,041
–67
138
57
634
616
98
295
1,079
1,019
897
128
133
453
374
334
Net sales (SEK M)
Elimination
Total
EBITDA (SEK M)
Continuing operations, excluding items affecting comparability
Other companies
–3
–2
–8
–6
–8
Group items
–17
–31
–142
–209
–154
Total, excluding items affecting comparability
349
871
2,868
3,276
2,726
Items affecting comparability
0
–19
–63
–86
–31
–8
–25
–482
–315
–51
–1
–
–26
–
–
–2
–1
–15
–27
–17
Property sale
–
–
–
26
–
Legal non-recurring costs
–
–
–430
–86
–
338
826
1,852
2,788
2,627
Jan–Mar
2009
Jan–Mar
2008
2008
2007
2006
Total, including items affecting comparability
Operating profit (SEK M)
Continuing operations, excluding items affecting comparability
Other companies
117
266
1,087
1,168
805
–175
33
–381
203
219
41
249
888
839
726
102
109
363
288
243
–3
–3
–9
–8
–15
–19
–32
–150
–216
–158
63
622
1,798
2,274
1,820
–5
–22
–79
–89
–36
–8
–25
–868
–382
–280
–2
–
-32
–
–
Group items
Total, excluding items affecting comparability
–2
–1
–15
–27
–21
Property sale
–
–
–
26
–
Legal non-current costs
–
–
–430
–86
–
46
574
374
1,716
1,483
Total, including items affecting comparability
1)Trelleborg carried out minor changes in the operating structure during the first quarter of 2009. The change has affected reporting by business area for the first quarter of 2008 whereby
37
Capital employed (SEK M)
March 31
2009
March 31
2008
2008
2007
2006
7,866
6,351
7,846
6,201
5,920
5,079
5,407
5,077
5,191
4,968
8,118
6,916
8,037
6,975
6,374
2,182
1,764
2,145
1,679
1,418
21
16
19
20
129
Other companies
Group items
Provisions for restructuring measures
Total
38
4
51
-3
43
19
–790
–217
–883
–254
–95
22,480
20,288
22,238
19,855
18,733
Definitions
Group key figures
Return on shareholders’ equity
Profit for the period, attributable to equity holders of the Company as a
percentage of average shareholders’ equity, excluding minority interests.
Net debt
Interest bearing liabilities less interest bearing assets and cash and cash
equivalents.
Shareholders’ equity per share
Shareholders’ equity excluding minority interests divided by the average
number of shares outstanding.
Free cash flow
Operating cash flow and cash flow from financial items and tax and the
effect of restructuring measures on cash flow.
Free cash flow per share
Free cash flow divided by the average number of shares outstanding.
Capital turnover rate
Net sales as a percentage of average capital employed.
Average number of employees
Including temporary employees. For periods January-March 2008 and
2009 also including average number of insourced staff.
Debt/equity ratio
Net debt divided by total equity.
Equity/assets ratio
Total equity divided by total assets.
Capital employed
Total assets less interest bearing financial assets and cash and cash
equivalents and non-interest bearing operating liabilities (including pension liabilities) and excluding tax assets and tax liabilities.
Earnings per share
Profit for the period, attributable to equity holders of the Company divided
by the average number of shares outstanding.
Key figures continuing operations, excluding
items affecting comparability
Return on shareholder’s equity
Profit for the period after tax, attributable to equity holders of the Company excluding items affecting comparability net after tax, as a percentage of average shareholders’ equity, excluding minority interests.
Return on capital employed (ROCE)
EBIT divided by the average capital employed.
Operating profit (EBIT)
Operating profit according to the income statement, excluding items affecting comparability.
EBITDA
Operating profit before depreciation of tangible and intangible assets and
excluding items affecting comparability.
EBITDA-margin
EBITDA excluding profit from participation in associated companies as a
percentage of net sales.
Operating cash flow
EBITDA excluding undistributed participation in the earnings of associated companies, investments and changes in working capital but excluding
cash flow pertaining to restructuring.
Operating cash flow/operating profit
Operating cash flow as a percentage of operating profit, excluding items
affecting comparability.
Operating cash flow per share
Operating cash flow divided by the average number of shares outstanding.
Operating margin (ROS – Return on sales)
Operating profit excluding participation in the earnings of associated companies and items affecting comparability as a percentage of net sales.
Earnings per share
Profit for the period, attributable to equity holders of the Company, excluding items affecting comparability net after tax, divided by the average
number of shares outstanding.
R12 refers to key figures calculated on a 12 month rolling basis.
39
Commentary on financial development
First quarter of 2009 in comparison with
the same period 2008
The numbers within parenthesis represent the corresponding
period the previous year.
Earnings
Net sales
Trelleborg’s net sales for the first quarter of 2009 amounted to
SEK 6,877 M (8,067), down 15 percent. Organic sales declined
by 27 percent. Based on comparable exchange rates, the total
decline in sales amounted to 25 percent. Demand continued to
weaken, particularly in the automotive sector and in the industrial
capital goods sector.
Organic sales for Trelleborg Engineered Systems fell 17 percent
during the quarter. Sales in the infrastructure construction and offshore segments were in line with the year-earlier period. Including
exchange-rate effects, sales were in line with the preceding year.
In Trelleborg Automotive, organic sales fell 41 percent due to a
continued sharp decline in global demand, accentuated by inventory reductions by several manufacturers in the automotive industry.
Including exchange-rate effects, sales declined by 33 percent.
Organic sales for Trelleborg Sealing Solutions during the quarter
fell 32 percent as a result of continued lower demand for industrial
capital goods in Europe as well as the global automotive industry.
Including exchange-rate effects, sales declined by 20 percent.
In Trelleborg Wheel Systems, a 14-percent decline in organic
sales was reported during the quarter. Sales of agricultural tires varied among the different sub-segments, but remained strong within
high-performance agricultural tires. Sales of industrial tires declined
sharply. Including exchange-rate effects, total sales fell by 1 percent.
Consolidated earnings
Operating profit during the first quarter totaled SEK 46 M (574).
Operating profit was impacted negatively by a sharp decline in
volumes and the fact that it was not possible to reduce fixed costs
in pace with the rapid decline in volumes. Earnings were also affected by costs for capacity adjustments and personnel reductions
totaling approximately SEK 50 M. Items affecting comparability amounted to an expense of SEK 17 M (for a more detailed
description of items affecting comparability see page 49).
Exchange-rate fluctuations arising in the translation of the earnings of foreign Group companies had a positive impact of SEK 8
M on earnings, compared with the same period in 2008.
A net financial expense of SEK 139 M (expense: 132) was
recognized, corresponding to an average interest rate of 4.3 percent (5.0). Loss before tax amounted to SEK 93 M (profit: 442).
Net profit was SEK 65 M (309). The Group’s tax expense was
impacted positively by the capitalization of losses carried forward
in Germany and the UK totaling SEK 123 M and the successful resolution of a tax dispute in Sweden totaling SEK 18 M.
Excluding these items, the tax rate amounted to 18 percent (30).
Earnings per share totaled SEK 0.70 (3.35).
40
Operating profit
Operating profit, excluding items affecting comparability, amounted to SEK 63 M (622). Operating profit was impacted negatively
by a sharp decline in volumes and the fact that it was not possible
to reduce fixed costs in pace with the rapid decline in volumes.
Earnings were also affected by costs for capacity adjustments and
personnel reductions totaling approximately SEK 50 M. For a
more detailed description of operating profit per business area,
see the interim report for the period January-March 2009, page
10–13 (page 78–81 in this prospectus)
Adjustments made to prices of raw materials gradually impact
Trelleborg with a time lag of three to six months. Due to the sharp
decline in volumes, which resulted in low inventory turnover,
falling raw material prices had only a marginal impact during the
first quarter of 2009. Exchange-rate fluctuations arising in the
translation of the earnings of foreign Group companies and from
transaction flows had a marginal impact on the Group’s earnings.
The operating margin was 0.9 percent (7.7). Operating profit
before depreciation (EBITDA) amounted to SEK 349 M (871).
The EBITDA margin for the quarter was 5.0 percent (10.8).
The Group recognized a loss before tax of SEK 76 M (profit:
490) and net profit amounted to SEK 78 M (343). Earnings per
share totaled SEK 0.85 (3.75).
Balance sheet
The Group’s total assets amounted to SEK 33,384 M (29,521) as
of March 31, 2009, an increase of SEK 3,863 M, or 13 percent
compared to the same period in 2008.
Working capital decreased during the first quarter of 2009,
partly as a result of declining volumes and effective control over
inventory levels. Gross investments for the first quarter of 2009
totaled SEK 239 M (324), of which SEK 20 M in intangible assets
and SEK 219 M in property, plant and equipment. The investments declined mainly due to deferred investments. Depreciation
and amortization for the period amounted to SEK 287 M (249).
Return on capital employed during the most recent 12-month
period was negative (9.3 percent). For continuing operations,
excluding items affecting comparability, ROCE declined to 5.6
percent (11.4). Total equity increased during the year by SEK 372
M to a closing balance of SEK 10,610 M, mainly due to a positive
translation difference.
Net debt rose by SEK 268 M during the period to SEK 12,974
M, an increase primarily attributable to exchange-rate differences.
The debt/equity ratio improved to 122 percent, compared with
124 percent on December 31, 2008. The impact of the exchangerate effect on net loans was offset by a positive translation difference on shareholders’ equity. Trelleborg has long-term basic
financing, via a syndicated loan, that extends into 2012. Longterm credit facilities, including other long-term loans, amounted
to approximately SEK 16,600 M at the end of the quarter. The
unutilized portion amounted to approximately SEK 5,800 M.
Short-term financing totaled about SEK 2,700 M. The equity/assets ratio was 32 percent (34).
Cash flow
The operating cash flow increased compared with the preceding
year and amounted to SEK 478 M (neg: 388) in the first quarter.
The improvement in cash flow was mainly due to a reduction in
working capital, partly as a result of declining volumes and effective control over inventory levels, and lower investments. Free
cash flow amounted to SEK 26 M (neg: 698). Free cash flow was
impacted by the positive operating cash-flow trend, which was offset by the utilization of restructuring provisions amounting to an
expense of SEK 112 M (expense: 70), taxes to an expense of SEK
8 M (expense: 86) and financial items amounting to an expense of
SEK 332 M (expense: 154). Tax items were impacted positively by
such factors as the successful resolution of a tax dispute. Financial
items were affected adversely by the accrual difference between
interest received and interest paid in connection with interest-rate
swaps totaling negative SEK 168 M. Total net cash flow for the
first quarter of 2009 amounted to SEK 5 M (–736).
2008 in comparison with 2007
within project-oriented segments, particularly in Offshore Oil and
Gas and Infrastructure.
For Trelleborg Automotive, organic sales decreased by nearly
9 percent during the full-year 2008 compared with 2007. The
decline was attributable to a significant decrease in demand,
primarily in North America and Western Europe, and to extensive
capacity reductions and personnel cutbacks.
During the first half of 2008, the trend for Trelleborg Sealing
Solutions was very positive, with favourable organic growth in
prioritized industrial segments. Towards the end of 2008, demand
declined substantially, particularly within automotive-related
operations. As a result, the business area reported no organic
growth in 2008. Demand in the Aerospace segment remained very
favourable, and the trend in such segments as alternative energy
sources and life science was also positive.
Trelleborg Wheel Systems increased its total sales in 2008 and
achieved an organic growth of nearly 11 percent. The positive
global trend for larger agricultural tires was strong throughout the
year, benefiting Trelleborg, whose products are well positioned
in this area. Growth in the industrial tires segment also increased
somewhat during 2008, but with a clear decline in demand during
the fourth quarter 2008.
Earnings
Net sales
Market conditions were extremely varied in 2008, with a favourable trend in most of the Group’s market segments during the first
half of the year. The financial turbulence that prevailed towards
the end of 2008 impacted many areas, resulting in a decrease
in the Group’s net sales, particularly within automotive-related
segments, where the decline was dramatic. This led to a decline in
earnings as well. However, within such segments as the Aviation
Industry, Offshore Oil and Gas, Infrastructure and Agriculture,
the market trend remained favourable. Sales increased for all
business areas except for Trelleborg Automotive. For the full year
2008, the Trelleborg Group’s net sales amounted to SEK 31,263
M (30,971), an increase of 1 percent compared with 2007.
Organic sales declined by 1 percent. The increase in sales for comparable exchange rates amounted to 1 percent. To meet an increasing demand within selected segments, a number of investments
in new facilities were made during 2008, including within such
selected segments as Offshore and Agriculture and in such geographical markets as China, Sri Lanka, Turkey, the US, Italy and
Sweden. The Trelleborg Group’s strategy is to expand in attractive segments, with favourable growth and profitability potential,
and in which the three primary customer needs of sealing, noise
dampening and protection play a main role. This strategy led to a
number of acquisitions during 2008, with combined annual sales
of approximately SEK 1,215 M and 970 employees.
In 2008, Trelleborg Engineered Systems experienced an organic growth of 3 percent. Demand varied greatly within the business
area’s various market segments. Within the industrial segments
and construction related operations, especially towards the end
of 2008, the trend was weak, while demand remained favourable
Net sales per market
Europe remained the Trelleborg Group’s most important market,
with a 67 percent share of total sales in 2008. However, during the
year, the Group further strengthened its presence in the emerging
markets. Sales in Europe and North and South America remained
at the same level as in 2007, while sales growth in Asia and the
rest of the world amounted to 11 percent. Trelleborg continued
to invest in new growth markets. To meet rising demand in Asia,
Trelleborg Engineered Systems constructed a new facility in Wuxi,
China, which was inaugurated in April 2008. To strengthen its
position in the growing Asian graphics market, the business area
also acquired the remaining shares in Shanghai Reeves and thereby
became the sole owner of the company. Within the framework of
its joint venture, Trelleborg Kunhwa, Korea, Trelleborg Automotive opened a smaller unit in Zhangjiagang, China, to manufacture vehicle boots for Korean customers in China. Within
Trelleborg Sealing Solutions, production was moved from Canada
to Brazil and Mexico, and the business area acquired the remaining minority shares in an Indian sealing operations firm. Sales
in markets outside Western Europe, North America, Japan and
Oceania rose by 14 percent during the year.
Consolidated operating profit totalled SEK 374 M (1,707) in
2008. The Group’s financial income and expenses amounted to a
net expense of SEK –540 M (–439), corresponding to an average
interest rate of 4.75 percent (4.40). The tax expense for 2008
totalled SEK 92 M (430). For continuing operations excluding
items affecting comparability, the tax rate was 29 percent (30).
The overall tax expense was impacted by the tax effect of items
41
affecting comparability. The net loss was SEK –258 M (838) and
earnings per share amounted to SEK –2.95 (9.10). Operating
profit was adversely impacted by restructuring costs and impairment losses attributable to the action program in the amount of
SEK –994 M (–498) before tax. Non-recurring costs relating to
the ongoing competition investigations related to specific types
of marine fenders and marine oil hoses, had a negative impact on
operating profit of SEK –430 M. The items affecting comparability, which were charged to the operating profit in 2008 at a total
amount of SEK 1,424 M (558) before tax and SEK 1,148 M
(435) after tax, were excluded in the statement of the Group’s
operating key figures (for a more detailed description of items
affecting comparability, see p. 49). Exchange rate fluctuations in
connection with the translation of earnings of foreign subsidiaries
had a negative impact on operating profit at an amount of approximately SEK 69 M compared with the preceding year.
Operating profit
For continuing operations excluding items affecting comparability, operating profit in 2008 amounted to SEK 1,798 M (2,274).
Exchange rate fluctuations in connection with the translation of
earnings of foreign subsidiaries affected operating profit negatively
by approximately SEK 40 M compared with 2007. Trelleborg
Sealing Solutions and Trelleborg Wheel Systems increased their
operating profit compared with 2007, while the operating profit
for Engineered Systems declined somewhat. Profit for Trelleborg
Automotive remained negatively affected by the sharp decline in
the automotive industry. The EBITDA-margin amounted to 9.1
percent (10.6) and the operating margin was 5.7 percent (7.3).
The operating margin improved compared with the preceding year for Trelleborg Sealing Solutions and Trelleborg Wheel
Systems, primarily as a result of an improved product mix and
continued prioritization of attractive segments. The profit margin
for Trelleborg Engineered Systems decreased in 2008, mainly as a
result of a decreased demand in certain segments and to production disruptions in the Offshore Oil and Gas segment, which
impacted the 2008 operating profit by approximately SEK 110 M.
Trelleborg Automotive reported a negative operating margin as
a result of the clear decline in the automotive industry. Overall
within the Group, expenses totalling approximately SEK 200 M
were charged for adjustments to capacity and redundancies of
which the majority were within Trelleborg Automotive. Costs
for development, including capitalization of SEK 55 M (81),
amounted to SEK 513 M (520) during 2008. Depreciation
and impairment losses of capitalized expenses for development
amounted to SEK 118 M (94) in 2008.
Balance sheet
The Group’s total assets amounted to SEK 33,763 M (29,334) at
the end of 2008, an increase of SEK 4,429 M, or 15 percent
The decreased level of capital tied-up in working capital was
primarily attributable to an increase in operating liabilities and a
decrease in operating receivables, which was offset somewhat by
42
an increase in inventories. Exchange rate differences increased the
value of non-current assets by SEK 1,969 M. Gross investments
for 2008 totalled SEK 1,526 M (1,336), of which SEK 159 M
in intangible assets and SEK 1,367 M in property, plant and
equipment. Depreciation and amortization for the year amounted
to SEK 1,054 M (992). Impairment losses totalled SEK 424 M
(87), of which SEK 408 M was related to the Group’s ongoing
action programs (see p. 49 for a description of these programs).
Return on capital employed (ROCE) for the Group decreased
to 1.8 percent (8.7). For continuing operations, excluding items
affecting comparability, ROCE declined to 8.4 percent (11.5).
Total equity increased during the year by SEK 186 M to a closing
balance of SEK 10,238 M (10,052). Net exchange rate differences
amounted to SEK 1,183 M, including exchange rate differences
(net after tax) on hedging instruments. Total dividend paid in
2008 amounted to SEK 590 M (545) of which SEK 3 M (3) was
distributed to minority shareholders.
The net debt increased during 2008 to SEK 12,706 M
(10,093). The purchase consideration for acquisitions made
during the year totalled SEK 802 M, including acquisition costs.
Exchange rate differences increased net debt by SEK 1,636 M.
Trelleborg has long term based financing stretching into 2012
through a syndicated loan. Long term credit facilities and other
long term loans amounted to approximately SEK 16,300 M at the
end of 2008. At December 31, 2008 the unutilized portion was
approximately SEK 5,500 M. The short term financing amounted
to approximately SEK 2,800 M. The debt to equity ratio at year
end was 124 percent (100). The equity to assets ratio was 30
percent (34). At the end of the period, equity per share totalled
SEK 112 (110). Return on equity was negative (8.4 percent). For
continuing operations excluding items affecting comparability,
return on equity declined to 8.8 percent (13.0).
Cash flow
The Group’s operating cash flow in 2008 amounted to SEK
1,594 M (1,718). The decrease compared with 2007 was mainly
attributable to the decline in the earnings trend and a higher level
of investment than in the previous year. Enhanced efficiency in
the handling of operating capital and a lower sales rate in the
fourth quarter impacted the operating cash flow trend positively,
largely offsetting the decline in earnings. The investment level
amounted to SEK 1,526 M (1,333) excluding divested units,
representing 4.9 percent (4.3) of net sales. Operating cash flow
amounted to 89 percent of operating profit excluding items affecting comparability. After deductions for payments pertaining
to restructuring measures, dividends to minority shareholders,
financial payments and taxes paid, free cash flow amounted to
SEK 414 M (518), corresponding to SEK 4.60 per share (5.75).
Acquisitions carried out in 2008 were charged to cash flow in
the amount of SEK 802 M (616). The total dividend paid to
shareholders in 2008 amounted to SEK 587 M, corresponding to
142 percent of free cash flow for 2008. Total net cash flow in 2008
amounted to SEK –977 M (–513).
2007 in comparison with 2006
Earnings
Net sales
Market conditions during 2007 remained favourable in several of
Trelleborg’s prioritized market segments, particularly in such areas
as Aerospace, Infrastructure, Offshore Oil and Gas Industry and
General Industry. Sales increased in all business areas. In 2007, the
Group’s net sales rose by 14 percent to SEK 30,971 M (27,284).
For comparable units/exchange rates, the increase was 16 percent.
To meet increased demand in selected segments, Trelleborg made
a number of investments in new facilities during 2007. Acquisitions during the year provided combined annual sales of about
SEK 425 M and 265 employees.
In 2007, Trelleborg Engineered Systems recorded strong
organic growth of 9 percent. The project-oriented Infrastructure
Construction and Offshore segments reported a highly favourable trend. Demand in the Building segment in the Scandinavian
market remained strong. A broadening of the range to satisfy customer demand for complete solutions also had a positive impact
on growth.
For Trelleborg Automotive, there was a relatively strong
increase in volumes, with an organic growth of 12 percent. The
sales trend was good in antivibration operations, with favourable
growth in all markets. The sales improvement was a result of increased market shares and strong growth in underlying markets in
Central Europe and Asia, where Trelleborg had already expanded
its presence.
The market conditions for Trelleborg Sealing Solutions were
favourable in prioritized industrial segments during 2007. Organic growth was 9 percent and the order intake in the Industrial
Applications and Aerospace segments was highly favourable. Sales
to the Automotive sector also increased slightly, with the focus on
more safety-critical and technology-intensive products resulting in
improved positioning.
Trelleborg Wheel Systems increased its total sales during 2007.
This was achieved despite the conscious decision to discontinue
sales of coated fabrics. Both business segments, Agriculture & Forest Tires and Industrial Tires, recorded favourable growth, mainly
due to the business area’s successful product mix strategy. Organic
growth totalled 6 percent.
Net sales per market
During 2007 Europe remained the most important market for
the Trelleborg Group. However, the Group further strengthened
its presence in growth markets during the year. Sales growth was
11 percent in Europe, 22 percent in North and South America
and 30 percent in Asia and the rest of the world. Examples of
investments conducted include Trelleborg Engineered Systems’
establishment of units in China to follow its customers’ expansion. This was also the case for the new Trelleborg Automotive
unit in Dej, Romania. Another example is the acquisition of the
industrial tire manufacturer Solid Service Group, which enabled
Trelleborg Wheel Systems to expand in Australia. Sales in growth
markets increased by 28 percent during the year.
Consolidated operating profit totalled SEK 1,707 M (1,507) in
2007. The Group’s financial income and expenses amounted to
a net expense of SEK –439 M (–314), representing 4.4 percent
(3.6) of average net debt during the year. The tax expense for 2007
totalled SEK 430 M (427). The average tax rate was 34 percent.
Net profit totalled SEK 838 M (766) and earnings per share
amounted to SEK 9.10 (8.30). Operating profit was adversely impacted by restructuring costs and impairment losses attributable to
the action program in the amount of SEK –498 M (–337) before
tax. Non-recurring costs relating to the ongoing competition
investigation of subsidiaries had a negative impact on operating
profit of SEK 86 M. A capital gain recognized in the first quarter
attributable to the sale of a property in Hammarbyhamnen, Stockholm, impacted operating profit positively in the amount of SEK
26 M before tax. These items affecting comparability, which were
charged to operating profit in the total amount of SEK 558 M
(337) before tax and SEK 435 M (304) after tax, were excluded in
the statement of the Group’s operating key figures.
Operating profit
Operating profit for 2007 totalled SEK 2,274 M (1,820) for
continuing operations, excluding items affecting comparability.
Exchange rate fluctuations in connection with the translation of
earnings of foreign subsidiaries affected the operating profit negatively by approximately SEK 48 M compared with the preceding
year. The operating profit improved for three of the four business
areas, mainly due to such developments as favourable volumes and
a focus on profitable segments. Trelleborg Automotive reported
slightly poorer earnings compared with the preceding year, mainly
as a result of certain efficiency problems in parts of the operation
and higher raw material costs. The Group’s EBITDA-margin
amounted to 10.6 percent (10.1) and the operating margin
totalled 7.3 percent (6.7). The operating margin improved compared with the preceding year for Trelleborg Engineered Systems,
Trelleborg Sealing Solutions and Trelleborg Wheel Systems
and this is primarily attributable to an improved product mix,
continued prioritization towards attractive segments and positive development in completed acquisitions as well as efficiency
enhancements. Trelleborg Automotive reported a lower operating
margin. Costs for research and development, including capitalization of SEK 81 M (104), amounted to SEK 520 M (522) during
the year. Depreciation and impairment loss of capitalized expenses
for research and development in 2007, amounted to SEK 94 M
(57) in 2007.
Balance sheet
The Group’s total assets amounted to SEK 29,334 M (27,557) at
the end of 2007, an increase of SEK 1,777 M, or 6.4 percent.
The increased level of tied-up capital in working capital
was primarily attributable to a rise in inventories and operating
receivables, which was offset somewhat by increased operating
43
Invitation to subscribe for shares in Trelleborg AB (publ)
liabilities. In addition to exchange rate effects, the increase in
non-current assets was a combination of gross investments for the
year totalling SEK 1,336 M (1,112), of which SEK 121 M was intangible assets, SEK 1,215 M was property, plant and equipment
and depreciation for the year amounted to SEK 992 M (917).
Total impairment losses in 2007 amounted to SEK 87 M (238), of
which SEK 70 M was related to the Group’s ongoing restructuring
program. Return on capital employed (ROCE) for the Group increased to 8.7 percent (8.1). For continuing operations, excluding
items affecting comparability, ROCE rose to 11.5 percent (9.9).
Total equity increased during the year by SEK 365 M to a closing
balance of SEK 10,052 M (9,687). Exchange rate differences
amounted to a profit of SEK 84 M, including exchange rate differences (net after tax) on hedging instruments. Total dividend paid
in 2007 amounted to SEK 545 M (498).
Net debt
The net debt increased during 2007 to SEK 10,093 M (9,350).
The purchase consideration for acquisitions made during 2007
totalled SEK 616 M, including acquisition costs. Exchange
rate differences increased net debt by SEK 232 M. The Group’s
granted long term credit facilities amounted to SEK 12,947 M at
the 2007 year-end. The debt to equity ratio at the end of 2007 was
100 percent (96). The equity to assets ratio was 34 percent (35).
At the end of the period, shareholders’ equity per share amounted
to SEK 110 (106). Return on shareholders’ equity amounted to
8.4 percent (7.6). For continuing operations, excluding items affecting comparability, return on shareholders’ equity rose to 13.0
percent (10.8).
44
Cash flow
The Group’s operating cash flow during 2007 amounted to SEK
1,718 M (1,594). The improvement compared with 2006 was
mainly associated with the favourable earnings trend in three of
four business areas. The increase in the level of tied-up capital in
working capital impacted the operating cash flow as a result of
the good sales growth. The capital expenditure level excluding
divested entities amounted to SEK 1,333 M (1,107), representing
4.3 percent (4.1) of sales. The cash flow amounted to 76 percent
of operating profit, excluding items affecting comparability. After
deductions for payments made relating to restructuring measures,
dividend to minority shareholders, financial payments and taxes
paid, free cash flow amounted to SEK 518 M (905), corresponding to SEK 5.75 per share (10.00). Acquisitions during the year
were charged to cash flow in the amount of SEK 616 M. Discontinued operations generated a positive cash flow totalling SEK
127 M, attributable to the sale of a property in Hammarbyhamnen, Sweden, and the divestment of the vehicle component plant
in Coventry, in the UK. Total dividend paid to shareholders in
2007 amounted to SEK 542 M, corresponding to 105 percent of
free cash flow in 2007. Total net cash flow in 2007 amounted to
SEK –513 M (–2,499).
Capitalization and other financial information
Shareholders’ equity and liabilities
Trelleborg’s capitalization as of March 31, 2009 is presented below.
SEK M
March 31,
2009
Total current interest bearing debt
2,738
Guaranteed
0
Secured
0
Unguaranteed/unsecured
2,738
Total non-current interest bearing debt
10,897
Guaranteed
0
Secured
0
Unguaranteed/unsecured
10,897
Total equity
10,610
Share capital
2,259
Other capital provided
226
Other reserves
1,343
Profit brought forward
6,699
Minority interest
83
Net financial indebtedness
Trelleborg’s net financial indebtedness as of March 31, 2009 is
presented below.
SEK M
March 31,
2009
(A) Cash
(B) Cash equivalents
(C) Trading securities
501
0
0
(D) Liquidity (A)+(B)+(C)
501
(E) Current financial receivables
152
(F) Current bank debt
(G) Current portion of non-current debt
(H) Other current financial debt
1,181
600
957
(I) Current financial debt (F)+(G)+(H)
2,738
(J) Net current financial indebtedness (I)-(E)-(D)
2,085
Trelleborg has long term based financing that stretches into 2012
through a syndicated loan, consisting of two tranches; EUR 750
M (SEK 8,239 M1) and USD 600 M (SEK 4,972 M2), of which
SEK 7,460 M was utilized and SEK 5,751 M was unutilized as of
March 31, 2009. Further, Trelleborg had fully utilized long term
committed and confirmed bilateral credit lines amounting to SEK
1,379 M. The reminder of Trelleborg’s long term debt consisted, as
of March 31, 2009, of SEK 709 M bilateral bank debt and other
non-current debt, and SEK 1,349 M in issued bonds.
As of March 31, 2009 Trelleborg’s current financial debt
amounted to SEK 2,738 M, mainly consisting of current bilateral
bank debt, commercial paper and the current portion of long
term debt. These short term maturities are supported by long term
committed and confirmed credit lines in the form of the unused
portion of the Group’s syndicated loan.
As of March 31, 2009 Trelleborg’s financial net debt amounted
to SEK 12,974 M and the debt to equity ratio amounted to 122
percent.
Trelleborg’s debt financing terms and conditions will not change
as long as the net debt to equity ratio is 150 percent or lower. The
basis for calculation differs from the net debt to equity ratio published in the Company’s interim reports as net pension liabilities are
included in the net debt calculations in the debt financing terms.
As of March 31, 2009 the net debt to equity ratio, according to the
debt financing terms, was 130 percent. Adjusted for the proceeds
from the rights issue of SEK 2.2 billion, the net debt to equity ratio
according to the financing terms, as of March 31, 2009 would have
amounted to 92 percent provided that the proceeds from the rights
issue had been rendered at March 31, 2009 (given full subscription
of the right issue and after issue costs).
For further information regarding the Group’s financial debt,
see note 27 and p. 80–82 in the 2008 annual report as well as on p.
64 in this prospectus.
Cost structure
Sales weakened significantly during the fourth quarter of 2008. The
decrease in sales has continued during the first quarter of 2009.
Significant measures have been taken to adapt the cost and capacity levels to a lower sales level. The chart below illustrates the cost
distribution in Trelleborg during 2008.
Costs in the income statement 2008
(K) Non-current financial receivables
8
(L) Non-current bank debt
9,540
(M) Bond issue
1,349
(N) Other non-current loans
8
Costs for raw materials and other
costs of goods sold, 58%
Remuneration to employees, 26%
(O) Non-current financial debt (L)+(M)+(N)
10,897
Depreciation/amortization and
impairment losses, 5%
(P) Non-current financial indebtedness (O)-(K)
10,889
Other external costs, 8%
Other operating income/
expenses, 3%
(Q) Net financial indebtedness (J)+(P)
12,974
1) Converted into SEK using the exchange rate 10.9858, as of March 31, 2009.
2) Converted into SEK using the exchange rate 8.2863, as of March 31, 2009.
45
Description of working capital and capital needs
Working capital (SEK M)
March 31, March 31,
2009
2008
2008
2007
2006
Jan-Mar
2009
Jan-Mar
2008
2008
2007
2006
Inventories
4,598
4,064
4,775
4,012
3,604
Accounts receivable
5,149
6,080
5,471
5,703
5,327
Other operating
receivables
1,201
1,193
1,325
1,128
1,009
Accounts payable
–3,237
–3,560 –3,586 –3,745
–3,480
Other operating liabilities
–4,670
–3,546 –4,813 –3,711
–3,282
Net working capital
3,041
4,231
3,172
3,387
3,178
The net working capital has decreased by SEK 131 M during the
first quarter of 2009 compared to the end of 2008. The development reflects the effect of the lower sales volumes during the latter
part of 2008 and the first quarter of 2009. Normally Trelleborg
experiences seasonal fluctuation in sales to some extent, as sales
tend to be slightly higher during the first half of the year.
Considering the current credit lines, Trelleborg considers the
Group’s resources to be sufficient to manage the working capital
need to an extent that the payment undertakings for the forthcoming twelve months can be fulfilled. Thus, Trelleborg considers the
working capital to be sufficent for the forthcoming twelve months.
Trelleborg Engineered Systems and Trelleborg Automotive. The
primary geographical markets invested in are Europe, North and
South America, and Asia.
Large investments within Trelleborg Engineered Systems during
recent years have, among other, included an expansion of the
capacity within Offshore in both Europe and in North America.
The purpose of the investments within Trelleborg Automotive
has mainly been to expand capacity in growth markets and to adapt
production to existing and future orders within Antivibration Solutions and Damping Solutions.
The investments within Trelleborg Sealing Solutions have, among
other, included capacity expansion in China, India and Brazil.
Trelleborg Wheel Systems has during recent years invested in
capacity expansion in Sri Lanka and Lithuania in order to be able to
move factories and has also expanded the capacity within Agricultural Tires in Italy.
Gross investments
(SEK M)1
108
564
432
271
101
131
462
441
490
Trelleborg Sealing
Solutions
22
35
257
239
198
36
43
232
171
139
Group items
Charged costs,
excluding amortization
Capitalized
Total
2008
2007
2006
144
130
458
439
418
11
15
55
81
104
155
145
513
520
522
2006
80
Total
Jan–Mar Jan–Mar
2009
2008
2007
Trelleborg Engineered
Systems
Trelleborg allocates considerable resources to maintain its leading
position within research and development. The work is performed
at three levels:
• The first level comprises fundamental physical and chemical
materials know-how concerning polymers and other materials.
• The second level involves applications expertise within the
Group’s global market segments.
• The third level is the specific design of products and solutions.
Research and development, expenses (SEK M)
2008
Research and development
Development takes place in some 40 development units throughout the world. The Group’s research and development costs during
the full years 2006–2008 and the periods January-March 2008 and
2009 are presented in the table below.
Jan–Mar Jan–Mar
2009
2008
0
7
11
50
9
239
324
1,526
1,333
1,107
Ongoing investments primarily consist of replacement investments
in existing units and in existing markets, with the exception of the
finalization of a capacity expansion in Trelleborg Engineered Systems
where the capacity within Offshore is increased in France, as well
as capacity expansion within Infrastructure Construction in China.
Within Trelleborg Wheel Systems, the capacity expansion within Industrial Tires in Sri Lanka is nearing completion. These investments
have all been financed through the use of existing credit facilities.
The investment level was lower during the first quarter of 2009,
compared with the same period previous year, and the level is,
during the full year of 2009, expected to remain at a lower level on
an annual basis compared to 2008 and 2007. The investments are
primarily expected to take place in the form of replacement investments of existing units and on existing markets and are intended to
be financed within the framework of existing credit facilities.
Intangible assets
The Group’s total intangible assets amounted to SEK 12,102 M as
of March 31, 2009 of which goodwill amounted to SEK 11,182 M.
Investments
The table below summarizes Trelleborg’s investments during the
full years 2006–2008 and for the periods January–March 2008 and
2009. The largest share of the investments has taken place within
Goodwill
Goodwill and other assets are annually tested for impairment or
more frequently if there are indications of a decline in value. The
1)Gross investments are presented in the table according to the new operating structure for the periods January-March in 2008 and 2009. For the full years 2006, 2007 and 2008 gross
investments are presented according to the operating structure in effect at the date of the respective report. For a more detailed explanation regarding the differences between the new
and the old operating structure, see p. 37.
46
testing is based on defined cash-generating units coinciding with
the business areas applied in the segment reporting. The goodwill is
divided per business area according to the table below.
Goodwill1
March
March
31, 2009 31, 2008
2008
2007
2006
2,649
3,194
2,728
2,777
1,709
1,347
1,653
1,405
1,441
5,795
4,796
5,698
4,923
4,525
319
356
325
225
9,111 10,901
9,381
8,968
Trelleborg Engineered
Systems
3,317
Total
361
11,182
and additionally expected, fines connected to ongoing competition
investigations.
There has been no substantial change in Trelleborg’s financial
position or market position since the interim report for the period
January-March 2009 was announced.
Financial exposure and risk management
The situation described below was applicable at the specified point
in time and may vary in the future depending on, among other,
price development, exchange rate movements, indebtedness, interest rate development and continuous changes in interest rate and
exchange rate positions.
Raw material
During 2008, total impairment losses on intangible assets and
capitalized expenditure for development of SEK 386 M were recognized within the Trelleborg Automotive business area.
Property, plant and equipment primarily encompasses factories and
office buildings. For information on pledges related to these assets,
see note 34 in Trelleborg’s 2008 annual report. For additional
information regarding Trelleborg’s property, plant and equipment,
see note 14 in Trelleborg’s 2008 annual report.
Dividend policy
The Group’s dividend policy is that, over the long term, the dividend should amount to between 30 and 50 percent of net profit
for the year. Adaptation is made to the Group’s result, financial
position and future development possibilities.
Trends and significant changes
The significant downturn in the market during the fourth quarter
of 2008 had a significant effect on Trelleborg’s sales and earnings.
The downturn has continued during the first quarter of 2009, with
significant volume declines, especially in the automotive sector and
in the industrial capital goods sector.
There are however a number of potentially mitigating factors
present during 2009. Interest rate reductions and large scale public
investment programmes are expected to have a positive impact
during the year. On the cost side, the prices of many types of raw
materials have declined significantly. The Group is also well positioned within a number of sectors which are given priority as part
of the public investment programmes, such as the infrastructure,
transport, and energy sectors.
Altogether, the outlook for 2009 is exceptionally difficult to forecast, but on an overall basis a significantly lower demand is expected
across the Company’s market during 2009, compared to 2008.
The Group’s cash flow in 2009 is also expected to be negatively
affected by capacity alignments and ongoing restructuring measures, as well as by the payment of a large share of the already set,
Raw material risk
Raw material risks are linked to supply and the structuring of prices
of raw materials necessary for production. Trelleborg purchases
large volumes of polymer material, additives and prefabricated
metal components.
Management
Trelleborg manages the fluctuations in raw material prices through,
among others, measures taken by local purchasers through a groupwide purchasing organization, to a limited extent hedging under
forward contracts of natural rubber supplies, and through close
relationships with world-leading suppliers, altogether aiming to
result in competitive prices and alternative suppliers of important
raw materials. Further, Trelleborg is to some extent, through its
global presence, able to balance regional price and exchange rate
differences. In light of the competitive situation on several of Trelleborg’s markets it is a continuous risk that Trelleborg can not fully
compensate for increasing costs, resulting in decreasing margins.
Indicative raw material exposure 2008
Natural rubber, 10%
Synthetic polymers and additive
materials, 70%
Metal content in components, 20%
During 2008 Trelleborg’s raw material exposure amounted to
approximately SEK 8,300 M, distributed according to the chart
above. For 2009 a decrease in volumes and prices for raw material is
expected, having a positive effect on the Group’s earnings. The absolute effect will however depend on the price development for raw
materials, the development of sales volumes and Trelleborg’s ability
to resist possible demands of cost reduction from customers.
1)Goodwill is presented in the table according to the new operating structure for the periods January-March in 2008 and 2009. For the full years 2006, 2007 and 2008 goodwill is presented according to the operating structure in effect at the date of the respective report. For a more detailed explanation regarding the differences between the new and the old operating
structure, see p. 37.
47
Interest rates
Currencies
Interest rate risk
Interest rate risks imply the risk of negative effects on the Group’s
cash flows and earnings due to changes in market interest rates. As
most of the Group’s debt bears variable interest, the Group focuses
on interest-rated cash flow risk. The impact on the Group’s interest
income/expense depends on fixed-interest terms for borrowing and
investments. The Group seeks a balance between the estimated current cost of borrowing and the risk of sustaining a significant negative impact on earnings in the event of a sudden, major movement
in interest rates, implementing interest rate hedging as appropriate.
Foreign exchange risk
Foreign exchange risk is the risk of exchange rate fluctuations
having an adverse impact on the consolidated income statement,
balance sheet and/or cash flows. Foreign exchange risk occurs in the
form of both transaction and translation risk.
Transaction risk: Currency flows arising when goods and services are
bought or sold in currencies other than the subsidiary’s local currency give rise to transaction exposure.
Trelleborg’s global operation gives rise to extensive cash flows in
foreign currencies.
The Group’s net exposure 2008 amounted to an annual value
of approximately SEK 2,400 M. The table below illustrates the currencies with the greatest net flows and how much of these flows that
were hedged as of December 31, 2008. A positive net flow implies
that in-flows are larger than out-flows.
Sensitivity
As per December 31, 2008, the Group’s interest bearing net debt
totalled SEK 12,706 M and the average remaining fixed-interest
term was approximately 6.5 months. The table below illustrates the
impact on the Group’s earnings before tax as a result of a 1 percentage point increase in the interest rate in a currency that Trelleborg
has loans or financial investments in.
Interest rate risk – impact on 2009 earnings of an increase of the interest
rate by 1 percentage point, (SEK M)*
Currency
Gross
debt
EUR
7,216
Impact on
Impact on
earnings
before tax of a earnings before
tax of a 1 per1 percentage
centage point
point increase
of the interest increase of the
interest rate
rate before
Percent of
after hedging
hedging
Net debt
net debt
7,076
56%
–71
–41
USD
2,793
2,713
21%
–27
–1
GBP
945
929
7%
–9
–6
SEK
1,563
1,280
10%
–13
–13
Other
1,122
708
6%
–1
–5
Total
13,639
12,706
100%
–121
–66
* Based on closing net debt and fixed-interest terms as of December 31, 2008.
Management
• The Group’s treasury activities are centralized in Group Treasury,
which functions as both an operating unit and a staff service
body. Group Treasury is responsible for the group companies’ external bank relations, liquidity management, net financial items,
interest bearing liabilities and assets, as well as for the common
payment systems, in the capacity of internal bank. The centralization aims to achieve substantial economies of scale, a lower cost
of financing and better internal control and management of the
Group’s financial risks. Within the framework of the Group’s
Treasury Policy, there is also an opportunity to conduct certain
proprietary trading in currency and interest rate instruments.
• Borrowing: The average fixed-interest term for the Group’s gross
borrowings, including effects of derivative instruments, may be a
maximum of four years.
• Financial investments: The average fixed-interest term for interest
bearing investments, including effects of derivative instruments,
may be no longer than two years on a maximum amount of SEK
2,000 M, or its equivalent in other currencies.
48
Currency (SEK M)
Net flow
EUR*
Of which hedged
1,088
368
SEK
–687
–239
USD**
–425
132
* EUR includes flows in currencies that covary with EUR, such as DKK and MLT.
** USD includes flows in currencies that covary with USD, such as LKR, CNY and HKD.
Currency pairs with largest net flows over 12 months
Currency pair
SEK M
Currency pair
SEK M
EUR/LKR
372
EUR/PLN
192
EUR/SEK
352
GBP/SEK
159
EUR/DKK
344
EUR/NOK
–165
EUR/GBP
302
EUR/BRL
–114
Translation risk – income statement: Exchange rate movements
impact the Group’s earnings when the income statements of foreign
subsidiaries are translated to SEK. Since the Group’s earnings are to
a large extent generated outside Sweden, the impact from exchange
rate movements on the consolidated income statement can be
substantial.
The table below illustrates translation effects in regards to currency effects on the income statement 2008.
Currency (SEK M)
Net sales
EBIT
Exchange
rate change
%*
Net profit
EUR
470
–30
–14
3.8%
GBP
–306
–29
–14
–10.6%
USD
–187
–2
–9
2.7%
Other
67
–8
–24
–
Total
44
–69
–61
–
* Actual exchange rate change against SEK during 2008.
Translation risk – balance sheet: In connection with the translation
of the Group’s investments in foreign subsidiaries to SEK, there
is a risk that changes in exchange rates will affect the consolidated
balance sheet.
percent of forecasted net exposure per currency pair over a period
of 12 months and up to 100 percent of invoiced net flows per
currency pair. Projects with an order value exceeding an amount
of EUR 1 M shall always be hedged.
• Translation risk – income statement: The Group normally does not
hedge this risk.
• Translation risk – balance sheet: Investments in foreign subsidiaries
and associated companies may be hedged to between 0 and 100
percent of the investment’s value (which, because of the tax effect,
implies a maximum hedge of approximately 70 percent). A decision to hedge follows an overall evaluation of foreign-exchange
levels and the effects on costs, liquidity and taxes, as well as on the
Group’s net debt to equity ratio.
During 2006–2008, action programs at a total cost of approximately SEK 2,300 M have been carried out. The majority of these
programs, at a cost of SEK 1,530 M, have been carried out within
the business area Trelleborg Automotive, in which Trelleborg has,
for a number of years, not been able to fully extract synergies and
has a non-optimal structure of previously acquired units. The
restructuring efforts, initiated in 2006 and expanded in 2008, were
estimated to yield annual savings of approximately SEK 285 M,
with full effect as of 2010/2011. These savings are at this point in
time still expected to be significant, but are, among other factors,
dependent on the underlying volumes in the market as well as on
exchange rate movements.
The table below summarizes the costs for action programs with
Trelleborg as well as costs related to other items affecting comparability during the years 2006–2008 and the periods January–March
2008 and 2009. The table also shows the aggregate cash flow relating to these action programs until and including March 2009.
Based on today’s market situation, Trelleborg expects additional
costs related to action programs during 2009, but at a significantly
lower level compared to the level in 2008. The remaining cash flow
effect after the first quarter of 2009 from items affecting comparability already charged is estimated at approximately SEK 800 M,
of which approximately SEK 400 M is related to legal costs and
approximately SEK 350 M is related to action programs within
Trelleborg Automotive.
For more detailed descriptions of the action programs per business area, reference is made to the 2006–2008 annual reports.
Legal expenses
Trelleborg defines items affecting comparability as non-recurring
specified events which make comparison over time more difficult.
In the case of termination of certain business lines or similar restructuring activities, a lower limit of SEK 20 M has been set. The
term “items affecting comparability” is only used in the operative
reporting.
During 2007 and 2008, a total expense of SEK 516 M has been
charged against earnings as a consequence of legal proceedings
related to anti-trust investigations involving certain types of marine
fenders and marine oil hoses. For further information, see p. 66.
The table below presents a sensitivity analysis on translation exposure in the balance sheet, before consideration of possible tax effects
at December 31, 2008:
Net
investment
Of which
hedged %
Impact on equity
if SEK increases 1
percentage point
EUR
10,354
58%
–44
GBP
1,868
62%
–7
USD
2,829
37%
–18
Currency (SEK M)
Other
4,441
25%
–33
Total
19,492
48%
–102
Management
• Transaction risk: Group companies may hedge a maximum of 100
Action programs
Trelleborg’s strategy is to grow by focusing on achieving leading
market positions within profitable segments with good underlying growth. Trelleborg accomplishes this with a strong focus on
structured portfolio management, in order to continuously, and
on a long term basis, ensure that the Group is positioned towards
attractive customers and markets.
As part of this strategy, the Group has, during the last years,
launched and implemented a number of action programs. The
main purpose of these programs is to generate cost savings, but also
to adapt Trelleborg to markets which are deemed to be attractive,
both geographically and product wise.
SEK M
Area
Sale of real estate
In January 2007, Trelleborg entered into an agreement with Skanska regarding the sale of real estate assets in Södra Hammarbyhamnen in Stockholm. Upon access to the site, an amount of SEK 100
M was paid. In addition, an agreement was made that upon legal
approval of a local plan an additional payment, dependent on the
level of development and timing, shall be made. The first payment
of SEK 100 M related to the access to the site resulted in a gain
before tax of SEK 26 M.
Cost
Jan–Mar 2009
Jan–Mar 2008
2008
2007
2006
Total cost
–5
–22
–79
–89
–36
–209
Total cash flow*
–211
–8
–25
–868
–382
–280
–1,538
–537
–2
–
–32
–
–
–34
–9
–67
–2
–1
–15
–27
–21
–65
Real estate
–
–
–
26
–
26
–
Legal costs and other
–
–
–430
–86
–
–516
–134
–17
–48
–1,424
–558
–337
–2,336
–958
Total
* Including cash flow from provisions made before 2006.
49
Board of Directors, Group Management
and Auditors
Board of Directors
Composition of the Board of Directors 2009/2010
Name
Audit
Committee
Finance
Committee
Remuneration
Committee
Holdings
shares
of series B
Born
Position
Elected
Independent
Anders Narvinger
1948
Chairman
1999
Yes
Member
Member
Chairman
10,000
Heléne Bergquist
1958
Member
2004
Yes
Chairman
Chairman
–
1,500
Staffan Bohman
1949
Member
2000
Yes
–
–
Member
25,000
Hans Biörck
1951
Member
2009
No1
–
–
–
–
Claes Lindqvist
1950
Member
2004
No1
Member
Member
Member
10,000
Sören Mellstig
1951
Member
2008
Peter Nilsson
1966
Member
2006
Mikael Nilsson 2
1967
Member
2009
–
Alf Fredlund
2
1946
Member
2001
7,600
Karin Linsjö 2
1954
Member
2000
167
Birgitta Håkansson 2
1950
Deputy
2008
527
Yes
No1
–
–
–
20,000
–
–
–
26,500 3
Claes Lindqvist and Hans Biörck are deemed not independent in relation to the Company’s major shareholders since they both have assignments for Trelleborg’s main shareholder Dunker
interests. Peter Nilsson is deemed not independent in relation to the Company as a result of his position as Trelleborg’s President.
Employee representative.
3
Peter Nilsson also holds 100,000 call options regarding 100,000 shares of series B.
1
2
Anders Narvinger, born 1948
Board of Directors member since 1999 and chairman of the
Board of Directors since 2002
Education: Master of Science degree in Engineering and Graduate
in Business Administration.
Other assignments: President of Teknikföretagen. Chairman of
Alfa Laval AB, Coor Service Management AB and Vin & Sprit
AB. Board of Directors member of Volvo Car Corporation and
proposed to be elected in JM AB.
Previous assignments in the past five years: Chairman of the
Swedish Trade Council, Ireco Holding AB, Institute of Technology
in Lund, Invest in Sweden Agency and Lund University Development AB.
Holdings: 10,000 shares of series B.
Peter Nilsson, born 1966
President and CEO, Board of Directors member since 2006
Education: Master of Science degree in Engineering.
Other assignments: Board of Directors member of Beijer Alma
50
AB, the Chamber of Commerce and Industry of Southern Sweden
and Trioplast Industrier AB.
Previous assignments in the past five years: –
Holdings: 26,500 shares of series B and 100,000 call options
regarding 100,000 shares of series B.
Heléne Bergquist, born 1958
Board of Directors member since 2004
Education: Graduate in Business Administration.
Other assignments: Chairman of INVISIO Headsets AB. Board
of Directors member of Nordic Growth Market NGM AB and
Pertendo AB.
Previous assignments in the past five years: Chairman of NGM
Holding AB. Board of Directors member of the Swedish Accounting Standards Board and Redovisningsrådets Service AB.
Senior Vice President, head of Management Assurance & Special
Assignments and Senior Vice President and Group Controller of
Electrolux AB.
Hans Biörck, born 1951
Members appointed by employees
Other assignments: Vice president and CFO of Skanska AB.
Member of Henry and Gerda Dunkers Foundation and Foundation No 2 and member of the Swedish Financial Reporting Board.
Previous assignments in the past five years: Chairman of Ahlströmska Skolan Fastighets AB.
Holdings: –
Mikael Nilsson, born 1967
Employee representative since 2009, appointed by the Unions
of the Trelleborg Group (LO)
Staffan Bohman, born 1949
Education: Stockholm school of Economics and Stanford Business
School in the US.
Other assignments: Chairman of Staffan Bohman AB. Vice chairman of Scania AB. Board of Directors member of Atlas Copco AB,
Boliden AB, Inter IKEA Holding SA, OSM AB, Ramundberget
Alpina AB and Ratos AB. EDB Business Partner of ASA, Oslo.
Previous assignments in the past five years: President and Board
of Directors member of Sapa AB. Vice chairman of Swedfund
International AB.
Claes Lindqvist, born 1950
Education: Graduate in Business Administration and Master of
Science degree in Engineering.
Other assignments: President of Henry Dunkers förvaltnings
AB. Chairman of DHF Airport Systems AB. Board of Directors
member of Air to Air AB, Bioactive Polymers AB, Connect Skåne
AB, the Dunkerska Foundations, Emstone AB, Living Plant Nordic AB, Novotek AB, Reosense AB and Svenska Handelsbanken
(southern region).
Previous assignments in the past five years: President of Höganäs
AB and Öresundskraft AB. Board of Directors member of Höganäs
AB, Klippan AB, Konstruktionsbakelit AB and Öresundskraft
Produktion AB.
Sören Mellstig, born 1951
Other assignments: Chairman of Aleris AB, Textilia AB and Vatus
Medical AB. Board of Directors member of Dako A/S, Ferrosan
A/S, Munters AB, PaloDex Oy and Rindi Energi AB.
Previous assignments in the past five years: President of
Gambro AB.
Engineering employee
Education: Tool maker, training in labor law and personnel policy.
Other assignments: Chairman of the Rubber Association at
Trelleborg Industri AB. Vice chairman of the Industrial Labor
Union (LO). Member of Trelleborg European Work Council.
Holdings: –
Alf Fredlund, born 1946
of the Trelleborg Group (PTK)
Engineer
Education: Engineering education.
Other assignments: Chairman of Unionen Trelleborg AB. Member
of the Industrial Labor Union (PTK). Member of Trelleborg European Work Council.
Holdings: 7,600 shares of series B (own and family members’).
Karin Linsjö, born 1954
of the Trelleborg Group (LO)
Education: Plant training.
Other assignments: Member of the Social Services Board of Directors, Municipality of Trelleborg.
Holdings: 167 shares of series B.
Birgitta Håkansson, born 1950
Deputy employee representative since 2008, appointed by the
Unions of the Trelleborg Group (PTK)
Salaried employee
Education: Secretarial education and training in IT and accounting.
Other assignments: Vice chairman of Unionen Trelleborg AB.
Group Management
Peter Nilsson, born 1966
President and CEO, Board of Directors member
Employed since 1995 and in current position since 2005.
Other assignments: Board of Directors member of Beijer Alma
AB, the Chamber of Commerce and Industry of Southern Sweden
and Trioplast Industrier AB.
Holdings: 26,500 shares of series B and 100,000 call options
regarding 100,000 shares of series B.
51
Bo Jacobsson, born 1951
CFO and Vice President
Active within the Group 1975–1997. CFO since 2002 and Vice
President since 2005.
Education: University studies in Business Administration.
Other assignments: Previous assignments in the past five years: –
Holdings: 10,000 shares of series B (own and family members’)
and 25,000 call options regarding 25,000 shares of series B.
Lennart Johansson, born 1960
Business Area President, Trelleborg Engineered Systems
Employed and in current position since 2005.
Other assignments: Previous assignments in the past five years: Business unit Manager of Kemira Oy.
Holdings: 25,000 call options regarding 25,000 shares of series B.
Roger Johansson, born 1965
Business Area President, Trelleborg Automotive
Education: Master of Business and Economic Science.
Other assignments: Previous assignments in the past five years: Responsible for
General Motors Powertrain Europe and General Motors Purchasing Europe.
Holdings: 5,000 shares of series B and 25,000 call options regarding 25,000 shares of series B.
Claus Barsøe, born 1949
Business Area President, Trelleborg Sealing Solutions
Education: Bachelor of Science in Economics
Other assignments: –
Maurizio Vischi, born 1955
Business Area President, Trelleborg Wheel Systems
Education: Master of Business Administration.
Peter Suter, born 1943
Senior Vice President, Procurement and Strategic Projects
Education: Master of Business Administration.
Previous assignments in the past five years: Chairman and Board
of Directors member of BLIC (European Association of the Rubber Industry). Board of Directors member of ETRMA (European
52
Tyre and Rubber Manufacturers Association). Board of Directors
member of Rosengård Invest AB.
Holdings: 10,185 shares of series B (own and family members’).
Peter Svenburg, born 1949
Senior Vice President, IT
Education: Master of Laws.
Other assignments: President of Exekvens Consulting AB.
Previous assignments in the past five years: Board of Directors
member of Scancem Kapitalfond AB.
Claes Jörwall, born 1953
Senior Vice President, Taxes and Group Structures
Ulf Gradén, born 1954
Senior Vice President, General Counsel and Secretary
Education: Master of Laws and reporting clerk at the court of
appeal.
Other assignments: Member of Advisory Board Europe of FM
Global.
Sören Andersson, born 1956
Senior Vice President, Human Resources
Education: University studies in economics, sociology and education.
Previous assignments in the past five years: Board of Directors
member of the Swedish Industrial and Chemical Employers Association.
Holdings: 2,000 shares of series B and 10,000 call options regarding 10,000 shares of series B.
Viktoria Bergman, born 1965
Senior Vice President, Corporate Communications
Education: Studies in marketing, communications and PR.
Other assignments: Board of Directors member of the Swedish
Public Relations Association. Board of Directors deputy of Rosengård Invest AB.
Holdings: 500 shares of series B (own and family members’) and
10,000 call options regarding 10,000 shares of series B.
Auditor
PricewaterhouseCoopers AB, firm of authorized public auditors,
SE-113 97 Stockholm, was re-elected as the Company’s auditor by
the 2008 Annual General Meeting until the 2012 Annual General
Meeting, with authorized public accountant Göran Tidström as
Auditor in charge and authorized public accountant Olov Karlsson
as Assistant auditor.
Göran Tidström, born 1946
Authorized public accountant (member of FAR SRS), Auditor in
charge
Ordinary auditor of the Group since 2004. Partner of PricewaterhouseCoopers since 1976.
Education: Graduate in Business Administration, Authorized
public accountant since 1973.
Other assignments: Chairman of EFRAG (European Financial
Reporting Group). Auditor of AB Volvo, the Royal Opera, Meda
AB and Telia Sonera AB. Deputy president of IFAC (International
Federation of Accountants).
Holdings: –
Olov Karlsson, born 1949
Authorized public accountant (member of FAR SRS), Assistant
auditor
Auditor in the Group since 2004. Partner of PricewaterhouseCoopers since 1987.
Education: Economist program Umeå University, authorized
public accountant since 1980.
Other assignments: Auditor of AB Volvo.
Holdings: –
Other information regarding the Board of Directors and
Group Management
All members of the Board of Directors and individuals in the
Group Management have an office address at Trelleborg AB, Johan
Kocksgatan 10, SE-231 22, Trelleborg. No board assignments are
temporal in ways differing from what is set forth in the Swedish
Companies Act (2005:551). There are no family ties between the
members of the Board of Directors or the Group Management. No
Board of Directors member or individual in the Group Management has been convicted in any fraud-related lawsuit during the
past five years. Neither is there any information from the past five
years regarding these persons’ involvement in any bankruptcy, liquidation or bankruptcy administration, except for Claes Lindqvist
who left his assignment as Board of Directors member of Klippan
AB some time before the company entered into bankruptcy in
2006. Nor is there any allegation and/or sanction on the part of any
authority against any of these persons and none of them has during
the past five years been prohibited by a court of law from becoming
a member in a company’s administrative, management or control
function, nor to have a leading or overall function in a company.
There is no potential conflict of interest for any of the members of
the Board or person in the Group management, hence no member of the Board of Directors or person who is part of the Group
Management has any private interests that could conflict with the
interests of the Company. That some members of the Board of
Directors and the Group Management have economic interests in
the Company by holding shares or options is apparent through the
enumeration above.
53
Corporate Governance
Corporate Governance in Trelleborg emanates from Swedish legislation, primarily the Swedish Companies Act (Aktiebolagslagen),
its Articles of Association, NASDAQ OMX rules and regulations
for issuers (the “Rules”) and rules and recommendations published
by relevant organisations. The Company applies the Swedish Code
of Corporate Governance (the “Code”). The Code builds on the
principle of “comply or explain”. This implies that a Company
which applies the Code may deviate from individual provisions,
but, if so doing, has to provide an explanation through which the
grounds for the deviation is disclosed. The Company complies with
the Code and had no deviations to report during 2008.
General Meeting of Shareholders
The right of shareholders to make decisions in the affairs of
Trelleborg is exercised by the Annual General Meeting or, where
appropriate, an Extraordinary General Meeting, which is Trelleborg’s highest decision-making body. The Annual General Meeting
is usually held in Trelleborg, Sweden, in the month of April. The
Meeting, appoints the members and Chairman of the Board of
Directors, elects the auditor, resolves on the adoption of the income
statement and balance sheet, resolves on the allocation of the Company’s profit and the discharge from liability to the Company for
the Board of Directors members and the CEO, makes resolutions
regarding the appointment of the Nominations Committee and its
work, the principles for the remuneration and employment terms
for the CEO and other senior executives and changes to the Articles
of Association etc.
who ought not to be a member of the Board of Directors, to the
Nominations Committee. In addition, the Nominations Committee may decide that the Chairman of the Board of Directors be a
part of the Committee, but not be appointed its chairman.
The Nomination Committee for the Annual General Meeting
of 2009 comprised of Didrik Normark (Henry och Gerda Dunkers
Stiftelse), Ramsay Brufer (Alecta), Lars Öhrstedt (AFA Försäkring),
Henrik Didner (Didner & Gerge Aktiefond) and KG Lindvall
(Swedbank Robur).
Composition of the Board of Directors
In accordance with the Articles of Association, the Board of Directors of Trelleborg AB shall consist of three to ten members, elected
annually by the Annual General Meeting for the period until the
end of the next Annual General Meeting. Although the Articles of
Association allow for the election of deputies, there are currently no
deputies elected by the Annual General Meeting. In recent years,
the Annual General Meeting has elected seven members, including
the Chief Executive Officer, who is also the Group Chief Executive.
In accordance with legislation, employees elect three Board of Directors members and a deputy. Trelleborg’s CFO participates in the
Board of Directors meetings as does the General Counsel, who also
serves as the Board of Directors’s Secretary. The Board of Directors
has, within itself, established three committees, the Audit Committee, the Remunerations Committee and the Finance Committee.
Responsibilities and work of the Board of Directors
The Nomination Committee
Pursuant to the Code Trelleborg’s Annual General Meeting makes
resolutions regarding procedures for the appointment and work of
the Nominations Committee. The 2009 Annual General Meeting
resolved that a Nominations Committee shall operate in order to
prepare and present proposals to the shareholders at the Annual
General Meeting regarding the election of Board of Directors
members, the Chairman and, where applicable, present proposals
regarding auditors and remuneration to the Board of Directors,
Board committees and the auditors. The Nominations Committee
shall consist of five members, who are to be representatives of the
five largest shareholders at the close of the third quarter. Accordingly, the Chairman of the Board of Directors shall, at the close of the
third quarter, contact the five largest shareholders in the Company,
who shall each be given the opportunity to appoint one member,
54
The responsibilities of the Board of Directors include monitoring
the work of the President through ongoing reviews of the operation
over the year, ensuring that Trelleborg’s organization, management
and guidelines for the administration of the Company’s interests
are structured appropriately and that there is satisfactory internal
control. In addition, the responsibilities of the Board of Directors
include setting strategies and targets, establishing internal control
instruments, deciding on major acquisitions and divestments of
operations, deciding on other major investments, deciding on
financial investments and loans in accordance with Trelleborg’s
Treasury Policy and issuing financial reports, as well as evaluating
the management of operations and planning managerial succession.
The Board of Directors must convene at least seven times a year
and otherwise as necessary.
For information on the composition of the Board Committees,
please see “Board of Directors, senior executives and auditors”.
Internal control
The responsibility of the Board of Directors for internal control is
regulated in the Swedish Companies Act and in the Swedish Code
of Corporate Governance, which also includes requirements on
annual external information disclosure concerning how internal
control is organized insofar as it affects financial reporting. The
Board of Directors bears the overall responsibility for internal
control of the financial reporting. The Board of Directors has
established a written formal work plan that clarifies the Board of
Directors’s responsibilities and regulates the Board of Directors’s
and its committees’ internal distribution of work. The responsibility for maintaining an effective control environment and the
ongoing work on internal control as regards the financial reporting
is delegated to the CEO.
Independence of the Board of Directors
The Board of Directors’s assessment, which is shared by the Nominations Committee, regarding the members’ position of dependence in relation to the Company and the shareholders is presented
in the table “Composition of the Board 2009/2010” under the section “Board of Directors, senior executives and auditors”. According to the requirements set out in the Rules and the Swedish Code
of Corporate Governance, the majority of the Board of Directors
members elected by the General Meeting must be independent in
relation to the Company and the Company management, and at
least two of such Board of Directors members shall also be independent in relation to the Company’s major shareholders. As evident
from the table, Trelleborg complies with such requirements.
Board Committees
The Audit Committee usually meets in connection with the Board
of Directors meetings and has the primary task of ensuring compliance with established principles for financial reporting and internal
control and that appropriate relationships with the Company’s
auditor are maintained in accordance with the “Instruction for the
Audit Committee established by the Board of Directors of Trelleborg AB”. The results of the Audit Committee’s work in the form
of observations, recommendations and proposed decisions and
measures are continuously reported to the Board of Directors.
The Finance Committee has the primary task of supporting and
monitoring financial operations, annually assessing and proposing
changes to the Finance Policy, evaluating and preparing matters for
decision by the Board of Directors and, after each meeting, reporting on its work at the subsequent Board of Directors meeting.
The Remunerations Committee has the primary task of representing the Board of Directors in matters concerning remuneration
and terms of employment for the CEO and executives reporting
directly to him based on the principles for remuneration and terms
of employment for the CEO and other senior executives as adopted
by the Annual General Meeting. The Committee continuously
reports its work to the Board of Directors.
Remuneration to the Board of Directors and the members of
the Board Committees
The fees paid to the members of the Board of Directors elected by
the Annual General Meeting are established by the Annual General
Meeting based on the proposals of the Nominations Committee. The Annual General Meeting of 2009 decided that the upon
a remuneration to the present Board of Directors, for the period
immediately following the Annual General Meeting of 2009 up to
and including the Annual General meeting of 2010, exclusive of
travel expenses compensation, shall be paid in the amount of SEK
2,750,000 to be distributed amongst the members of the Board of
Directors, the chairman to receive SEK 950,000 and the remaining Board of Directors members elected by the Annual General
Meeting and not being employed within the Group to receive
SEK 360,000. In excess of this remuneration, the Annual General
Meeting decided that remuneration is to be paid to the members
of the Audit Committee, in the amount of SEK 150,000 to the
chairman and SEK 100,000 to the remaining members, and to the
Remuneration Committee, in the amount of SEK 50,000 to each
of its members.
Remuneration to the Board of Directors during the period 2008–2009 1
No remuneration is made to the members of the Finance Committee. Consultancy fees have not been paid to the Board of Directors members.
Office
Remuneration to the
Board of Directors 2008
Audit Committee
Remuneration
2008
Remunerations
Committee
2008
Total amount
2008
Anders Narvinger
Chairman
950,000
100,000
50,000
1,100,000
Heléne Bergquist
Member
360,000
100,000
–
460,000
Staffan Bohman
Member
360,000
–
50,000
410,000
Rolf Kjellman2
Member
360,000
150,000
–
510,000
Claes Lindqvist
Member
360,000
–
50,000
410,000
Sören Mellstig
Member
360,000
–
–
360,000
Hans Biörck 3
Member
–
–
–
–
Peter Nilsson
CEO
SEK
Name
Totalt
–
–
–
–
2,750,000
350,000
150,000
3,250,000
For a specifikation of the renumeration to the Board of Directors in 2008, see note 3 in Trelleborg’s 2008 annual report.
Rolf Kjellman declined re-election by the Annual General Meeting and is no longer a member of the Board of Directors.
3
Hans Biörck was appointed a member of the Board of Directors at the Annual General Meeting of 2009.
1
2
55
Remuneration to senior executives
Principles
The table below accounts for the remunerations to the Board of
Directors during the period 2008 – 2009, allocated to the respective Board of Directors members.
Auditors
The independent auditors are appointed at the Annual General
Meeting for a period of four years. The certified accountants Pricewaterhouse Coopers AB were re-appointed at the Annual General
Meeting of 2008. Certified auditor Göran Tidström is appointed
as the head Auditor and certified auditor Olov Karlsson is acting
as co-auditor. The auditor’s work is based upon an audit plan and
the auditor regularly provides reports containing his findings to the
Audit Committee, and to the Board of Directors following so called
hard-close-reviews during the fall, and in connection with the halfyear financial statements and annual accounts being established by
the Board of Directors. The auditor gathers opinions from the Audit Committee concerning risks for Trelleborg which are taken into
consideration in the audit plan. The auditor also participates at the
Annual General Meeting in order to present the auditor’s report,
describing the reviews performed and relevant findings. During
the latest three financial years, the remuneration having been paid
to Pricewaterhouse Coopers AB amounts to SEK 137 M, whereby
SEK 46 M are attributable to 2008. Other than compensation for
auditing (SEK 37 M), the remuneration for 2008 comprise mainly
of compensation for tax advise and advise in connection with
acquisitions.
CEO and Group Management
The CEO, who is also the Group Chief Executive, operations in
accordance with the Swedish Companies Act, other legislation
and regulations, applicable rules for listed companies, including
the Code, the Articles of Association and the parameters set by the
Board of Directors, including its instructions to the CEO. In consultation with the Chairman of the Board of Directors, the CEO
prepares necessary information and documentation on the basis
of which the Board of Directors can make well founded decisions,
presents matters and motivates proposed decisions, while reporting
to the Board of Directors on the development of the Company.
The CEO is responsible for leading the work conducted by Group
Management and makes decisions in consultation with other
members of the management team, which consists of the heads of
the business areas and Group staff functions.
The following principles for remuneration to senior executives in
the Group were adopted by the Annual General Meeting of 2009.
Trelleborg’s principles for remuneration to senior executives entail
that the Company shall offer market-based terms of employment
that enable the Company to recruit, develop and retain senior
executives. The remuneration structure shall comprise fixed and
variable salary, pension and other remuneration, which together
form the individual’s total remuneration package. Trelleborg
continuously gathers and evaluates information on market-based
remuneration levels for relevant industries and markets. It shall be
possible for the principles for remuneration to vary depending on
local conditions.
Remuneration to management during 2008
CEO
During 2008, the CEO, who is also the Group Chief Executive,
received a fixed salary and other remuneration as shown in the
table below. Pursuant to agreement, the CEO has the possibility
of obtaining a variable salary. The variable salary has an established
upper limit for the year 2008, which corresponds to 65 percent of
the fixed salary and is completely based on the Group’s profit before
tax, excluding the effect of structural changes approved by the
Board of Directors. The variable salary does not constitute pensionable income. In 2008, no variable salary was paid to the CEO, as
the target figures were not achieved. The CEO has a pension agreement that entitles him to retire at the age of 65. However, under
the terms of the pension agreement, both the Company and the
CEO have the right, without special justification, to request early
retirement from the age of 60, with a mutual six month notice of
termination. The employment agreement and pension agreement
shall be rendered invalid from the effective date of the CEO’s early
retirement. The pension agreement is solely premium based, and
the premium is calculated at 40 percent of the fixed annual salary.
Pension premiums were expensed in 2008 as shown in the table
below. The CEO’s employment contract stipulates that termination
of employment by the Company shall be subject to a period of notice of 24 months, which does not apply if termination is initiated
by the CEO. The period of notice for the CEO is six months.
Remuneration to group management 2008 1
SEK T
Office
Year
Fixed salary
Variable salary
Pension
Benefits
Total
CEO
2008
6,693
–
2,402
153
9,248
Deputy chief executive
2008
3,211
–
2,024
127
5,362
Group management, remaining (10 people)
2008
28,168
5,228
8,046
817
42,259
Total
2008
38,072
5,228
12,472
1,097
56,869
1
For a specifikation of the renumeration to the Board of Directors in 2008, see note 3 in Trelleborg’s 2008 annual report.
56
Other senior executives
The principles for remuneration to other senior executives are
based on both a fixed and variable salary. The variable part has an
established upper limit that amounts to about 25-60 percent of the
fixed annual salary, based mainly on earnings trends. Some of the
executives have agreements specifying mutual rights to request early
retirement from the age of 60. In this case, compensation, normally
amounting to 60 percent of the fixed annual salary, is paid until
the age of 65, when the regular pension payments become effective. The regular pension plans are defined-contribution schemes,
whereby the pension premium is calculated at 30 percent of the
fixed annual salary. For certain senior executives, extended notice
of termination periods apply when initiated by the Company, normally 12, 18 or 24 months, which do not apply when initiated by
the individual. For the President and other senior executives, there
is an opportunity to have a company car as a benefit. The Group
has a global remuneration policy that covers all managers and
senior employees. In addition, there is a policy that covers certain
provisions for remuneration to senior executives, which covers pension terms, medical expenses, insurances and company cars.
Long-term incentive program
In 2005 the Board of Directors resolved to introduce a long-term
incentive program for the CEO and certain senior executives that
hold a significant influence on the Group’s earnings per share. The
Board of Directors also resolved to introduce a similar program in
2006, 2007, 2008 and 2009. The programs are ongoing three-year
programs for which the Board of Directors will, on a yearly basis,
possibly approve new programs and define their scope, objective
and number of participants. The incentive programs are cash-based
and constitute a supplement to the annual variable salaries, provided that the executive is employed by the Group as per December
31 in the year in which the program ends.
Outcome and payment
The result is calculated annually and accumulated over the threeyear period, and potential payments are made in the first quarter
of the year after the program expires. Accordingly, for the program
approved for 2005, payment was made in the first quarter of 2008,
for the program approved in 2006, payments will be made in the
first quarter of 2009, for the program approved in 2007, payments
will be made in the first quarter of 2010, and for the program approved in 2008, payments will be made in the first quarter of 2011.
The payments do not constitute pensionable income. In 2008,
earnings were charged with SEK – T (9,964).
Other incentive programs
The Group has no ongoing convertible debenture or warrants
programs at the present time.
Call option program
Henry and Gerda Dunkers Donationsfond 2 has decided to offer
certain management executives of Trelleborg to purchase call options which carry rights to purchase shares of series B in Trelleborg
AB. The call options will be offered at market price. The offering
has been fully utilised. Nine management executives have purchased 255,000 call options at a price of SEK 10.98 per option.
Each call option will entitle to purchase one share of series B in
Trelleborg AB during the period March 15, 2008 – March 15,
2012 at an exercise price of SEK 125.50. The Company does not
participate in the offer and will not have any expenses in connection with the offer.
Purpose
The incentive program is directional and has long-term content
that aims to continue to promote commitment of senior executives to the Group’s development and thereby increase value for the
Group’s shareholders.
Target figures
The target figures for the incentive program is the Group’s earnings
per share, with an annual improvement of 10 percent, excluding
items affecting comparability and the impact of any share buyback
programs, and includes costs for the programs. For 2006, the Board
of Directors established a target of SEK 14.10 in earnings per share,
in 2007, a target of SEK 11.90 and in 2008, a target of SEK 14.40,
with the upper cap for all programs set at 25 percent of the maximum annual variable salary per year.
57
Share Capital and Ownership
Structure
Share capital etc.
Under its current Articles of Association, the Company’s share
capital shall be not less than SEK 1,500 M and not more than SEK
6,000 M, divided into not fewer than 60,000,000 shares and not
more than 240,000,000 shares. The Company may issue two series
of shares: shares of series A and shares of series B. Each Series A share
entitles the holder to 10 votes and each Series B share entitles the
holder to one vote. Shares of series A may be issued in a quantity
corresponding to no more than 1/3 of the shares in the Company
and shares of series B in a quantity corresponding to no more than
91/100 of the shares in the Company.
The Company’s registered share capital as of the date of this
prospectus is SEK 2,258,931,525 represented by 90,357,261
shares, of which 9,500,000 shares are of series A and 80,857,261
shares are of series B, each with a quota value of SEK 25. The full
quantity of shares of series A are owned by Dunker interests. The
shares in Trelleborg have been issued in accordance with Swedish
legislation and are denoted in SEK. A shareholder’s rights can only
be changed in accordance with the procedure stated in the Swedish
Companies Act (2005:551). The forthcoming rights issue will,
if full fully subscribed for, result in an increase in the number of
shares in the Company from a total of 90,357,261 shares to a total
of 271,071,783, corresponding to an increase of 200 percent. For
shareholders who refrain from subscribing for shares in the forthcoming rights issue, there will be a dilution effect of a total of not
more than 180,714,522 newly issued shares, corresponding to 67
percent of the share capital in the Company after the rights issue.
Certain rights attached to the shares
Voting rights
At General Meetings of shareholders each qualified voter is entitled
to vote for the full number of series A and shares of series B such
shareholder holds, or represents, in the Company, without limitation
of voting powers. Each series A share entitles the holder to 10 votes
and each series B share entitles the holder to one vote.
Preferential right to new shares, etc.
If the Company issues new shares of both series A and series B in a
cash issue or a set-off issue (kvittningsemission), the holders of shares
of series A and shares of series B, as the case may be, have preferential
right to subscribe for new shares of the same series in proportion to
the number of shares held prior to the rights issue (primary preferential right). Shares not subscribed for by virtue of such primary
preferential right are offered to all shareholders for subscription
(subsidiary preferential right). If the shares so offered are insufficient
58
to cover the subscription by virtue of subsidiary preferential right,
the shares are distributed among the subscribers in proportion to the
number of shares they already own, and, to the extent this cannot be
done, by drawing of lots.
If the Company decides, through a cash issue or a set-off issue,
to issue shares of one series only, such shares shall be offered to all
shareholders for subscription, irrespective of whether they hold
shares of series A or shares of series B, in proportion to the number
of shares already held by such shareholders.
If the Company issues warrants or convertibles through a cash
issue or a set-off issue, the shareholders have the same preferential
right to subscribe for warrants or convertibles as if such new shares
as the warrants or convertibles pertain to were issued.
If the Company’s share capital is increased by way of a bonus
issue (fondemission), new shares of series A and series B are to be
issued in proportion to the number of shares of the respective series
already issued. In such case old shares of a certain series shall carry
the right of new shares of the same series.
Right to Dividend and Liquidation Proceeds
All shares carry equal rights to dividends as well as to the Company’s
assets and potential surplus in the event of liquidation.
Reduction of the share capital and amendments to the
Articles of Association
In order to enable and facilitate the rights issue, the Annual General
Meeting on 23 April 2009 resolved, in accordance with a proposal
from the Board of Directors, to reduce the Company’s share capital
by SEK 2,078,217,003, without redemption of shares, for transfer of
the reduction amount to a fund to be used pursuant to a resolution
by a General Meeting. The reduction of the share capital requires
that the share capital limits in the Company’s Articles of Association to be changed. Accordingly, the Annual General Meeting on
23 April 2009 also resolved to amend Article 4 of the Articles of
Association, to the effect that the Company’s share capital limits are
changed from not less than SEK 1,500 M and not more than SEK
6,000 M to not less than SEK 175 M and not more than SEK 700
M. Following the reduction of the share capital, the Company’s share
capital will amount to SEK 180,714,522, divided into a total of
90,357,261 shares with a quota value of SEK 2 per share. The share
capital reduction can be implemented without authorization from
the Swedish Companies Registration Office or from an ordinary
court, since the Company will carry out the rights issue and a bonus
issue of SEK 2,078,217,003 simultaneously, as a consequence of
which neither the Company’s restricted equity nor its share capital
Share Capital and Ownership Structure
SEK 2,000 M and not more than SEK 8,000 M and (ii) the limits
regarding the number of shares are changed from not fewer than
60,000,000 and not more than 240,000,000 to not fewer than
175 000 000 and not more than 700 000 000. See Articles 4 and 5
in the section “Articles of Association”.
will be reduced. The rights issue will require additional amendments
to the Company’s Articles of Association. Therefore, in order to enable the rights issue, the Annual General Meeting on April 23, 2009
resolved to further amend Articles 4 and 5 of the Articles of Association to the effect that (i) the share capital limits are changed from not
less than SEK 175 M and not more than SEK 700 M to not less than
Development of the share capital
Change in number of shares
Shares of
series B
Shares of
series E *
Total number Change in share
of shares
capital (SEK)
Total share
capital (SEK)
Quota
value
(SEK)
Year
Event
Total
Shares of
series A
1991
Conversion of debenture
1,056
–
1,056
–
65,188,469
26,400
1,629,711,725
25
1991
Conversion of debenture
1,267
–
1,267
–
65,189,736
31,675
1,629,743,400
25
1992
Rights issue 1:5, rate 70
13,037,947
1,585,920
11,452,027
–
78,227,683
325,948,675
1,955,692,075
25
1993
Rights issue 1:2, rate 30
39,113,841
2,484,480
36,629,361
–
117,341,524
977,846,025
2,933,538,100
25
2000
Reduction following
share buyback
11,734,152
–
11,734,152
–
105,607,372
–293,353,800
2,640,184,300
25
2001
Rights issue
15,000,000
–
–
15,000,000
120,607,372
375,000,000
3,015,184,300
25
2001
Share reduction without
reimbursement
5,000,000
–
5,000,000
–
115,607,372
–125,000,000
2,890,184,300
25
2001
Reduction following
share buyback
10,000,000
–
10,000,000
–
105,607,372
–250,000,000
2,640,184,300
25
2001
Reduction following
share buyback
15,000,000
–
–
15,000,000
90,607,372
–375,000,000
2,265,184,300
25
2003
Conversion of debt
instruments
2,254
–
2,254
–
90,609,626
56,350
2,265,240,650
25
2003
Conversion of debt
instruments
486,158
–
486,158
–
91,095,784
12,153,950
2,277,394,600
25
2003
Conversion of debt
instruments
314,948
–
314,948
–
91,410,732
7,873,700
2,285,268,300
25
2003
Conversion of debt
instruments
19,177
–
19,177
–
91,429,909
479,425
2,285,747,725
25
2003
Utilisation of warrants
40,509
–
40,509
–
91,470,418
1,012,725
2,286,760,450
25
2004
Conversion of debt
instruments
35,612
–
35,612
–
91,506,030
890,300
2,287,650,750
25
2004
25,030
–
25,030
–
91,531,060
625,750
2,288,276,500
25
2004
1,271,928
–
1,271,928
–
92,802,988
31,798,200
2,320,074,700
25
2004
Conversion of debt
instruments
1,512,207
–
1,512,207
–
94,315,195
37,805,175
2,357,879,875
25
2004
Conversion of debt
instruments
1,609,118
–
1,609,118
–
95,924,313
40,227,950
2,398,107,825
25
2004
56,048
–
56,048
–
95,980,361
1,401,200
2,399,509,025
25
2006
Reduction following
share buyback
5,623,100
–
5,623,100
–
90,357,261
–140,577,500
2,258,931,525
25
2009
Planned reduction
–
–
–
–
90,357,261 –2,078,217,003
180,714,522
2
2009
Planned rights issue
180,714,522
19,000,000
161,714,522
–
271,071,783
361,429,044
542,143,566
2
2009
Planned bonus issue
–
–
–
–
271,071,783
2,078,217,003
2,620,360,569
9.67
* All shares of series E have been redeemed and there are no longer any outstanding shares of series E in the Company.
59
Ownership structure
Trelleborg’s largest shareholder as per March 31, 2009 were Dunker
interests with in aggregate 12,269,774 shares (9,500,000 shares of
series A and 2,769,774 shares of series B), corresponding to 13.6
percent of the share capital and 55.6 percent of the votes in the
Company. Dunker interests have undertaken to exercise its pro rata
share of the rights issues in the rights issue, see further “Legal issues
and complementary information” / “Underwriting Agreement and
Subscription Undertaking”. The tables below show the ownership structure of Trelleborg and the distribution of the ownership
divided into order of size, according to information from SIS
Ägarservice AB as of March 31, 2009. Furthermore the distribution
of ownership divided by current ownership structure and country
is illustrated.
Largest shareholders of Trelleborg
Shares of
series A
Owner
Dunker interests
Shares of
series B
Total
Percent of share
capital
Percent
of votes
9,500,000
2,769,774
12,269,774
13.6
55.6
AFA Försäkring
–
7,975,080
7,975,080
8.8
4.5
Alecta
–
7,365,000
7,365,000
8.2
4.2
Didner & Gerge Fonder
–
6,817,900
6,817,900
7.5
3.9
Unionen
–
1,646,600
1,646,600
1.8
0.9
Milano i Malmö
–
1,600,000
1,600,000
1.8
0.9
Swedbank Robur funds
–
1,396,202
1,396,202
1.5
0.8
Sten K Johnson (indirectly through company)
–
1,172,400
1,172,400
1.3
0.7
Skandia Liv
–
1,132,684
1,132,684
1.3
0.6
SEB funds
–
1,094,515
1,094,515
1.2
0.6
Total 10 largest shareholders
–
32,970,155
42,470,155
47.0
72.7
Other shareholders
–
47,887,106
47,887,106
53.0
27.3
9,500,000
80,857,261
90,357,261
100.0
100.0
Total
Ownership structure
Number of shares
Ownership by country
Number of shareholders
Portion of the
total number of
shares, percent
Country
Portion of the
total number of
shares, percent
39,663
10.8
Sweden
77.8
3,581
9.0
United Kingdom
US
1 – 1,000
1,001 – 5,000
5,001 – 50,000
673
9.9
50,001 –
132
70.3
44,049
100.0
Total
Central securities depository affiliation
The Company and the shares are cleared through the electronic
securities system operated by Euroclear Sweden, the Swedish
central securities depository (Euroclear Sweden AB, Box 7822,
SE-103 97 Stockholm, Sweden). No share certificates have been
issued with respect to the shares or will be issued with respect
to the new shares. The ISIN-code of series B is SE0000114837.
The ISIN-code of shares of series A is SE0000114811.
Shareholders’ agreements
To the best of Trelleborg’s Board of Directors’ knowledge, with
the exception of agreements between units within Dunker interests, see “Underwriting Agreement and Subscription Underta-
60
Other countries
Total
3.3
3.2
15.7
100.0
ing” p. 65, no shareholders’ agreements or equivalent agreements
exist between shareholders in Trelleborg with the objective of
creating a joint influence over the Company. To the best of
Trelleborg’s Board of Directors’ knowledge there are no agreements or equivalent arrangements that may lead to a change in
control over the Company.
Dividends and dividend policy
Future dividends will be adjusted in line with, inter alia, Trelleborg’s profit level, financial position and future development
possibilities. The dividends policy of the Group provides that,
over the long-term, dividends will comprise 30 –50 percent of
the annual net profit. In accordance with the proposition from
the Board of Directors, the Annual General Meeting on April
23, 2009 resolved that no dividends were to be paid for the year
of 2008. The reasons presented in the proposition from the
Board of Directors were the result for the relevant year, the balance sheet of the Company and the great uncertainty as to future
market development. Dividends for the year 2007 were SEK
6.50 per share.
Dividends in Swedish companies are decided upon by the
General Meeting. Dividends may only be made if the company,
after such dividends, still enjoys full coverage of its restricted equity
and further to the extent that such dividends appear justified
taking into consideration (i) the demands with respect to size of
shareholders’ equity which are imposed by the nature, scope and
risks associated with the operations, and (ii) the company’s need
to strengthen its balance sheet, liquidity and financial position in
general (the prudence rule). As a general rule, the shareholders may
not decide upon larger dividends than those proposed or approved
by the Board of Directors.
Dividends are normally paid to shareholders as an amount in
cash through Euroclear Sweden. The right to dividends vests in any
person who is registered as a shareholder in the share register maintained by Euroclear Sweden on the record date as determined by
the General Meeting. If a shareholder cannot be contacted through
Euroclear Sweden, the shareholder’s claim on Trelleborg with
respect to the dividend remains and is limited only by the statute of
limitations rule (10 years). Where the statute of limitations applies,
the dividend amount accrues to Trelleborg. Neither the Swedish
Companies Act or Trelleborg’s Articles of Association contain any
restriction on the right to dividends with respect to shareholders
domiciled outside of Sweden. Other than in case of possible restrictions in connection with bank or clearing systems in the concerned
jurisdictions, payments of dividends to such shareholders are made
in the same way as to other shareholders domiciled in Sweden.
However, in relation to shareholders who are subject to restricted
taxation in Sweden, normally a Swedish withholding tax is payable,
see “Taxation issues in Sweden”.
Share price development
Trelleborg’s series B share is listed on the Stockholm exchange
since 1964. It is listed on NASDAQ OMX Stockholm Large
Cap. The chart set out below illustrates the share price development and the number of shares traded in the Trelleborg during
the period from January 1, 2004 up to and including April 17,
2009.
Source: SIX
61
The Articles of Association described below was adopted at the
Annual General Meeting on April 25, 2006, and is registered at the
Swedish Companies Registration Office. In italics below § 4 and
§ 5, the changes of the Articles of Association that was resolved by
the Annual General Meeting on April 23, 2009, are specified. For
further information see under the heading “Reduction of the share
capital and amendments to the Articles of Association” in the section “Share capital and ownership structure”.
Articles of Association and other information
§1. The name of the Company is Trelleborg AB. The Company is
public (publ).
§2. The registered office of the Company shall be situated in
Trelleborg.
§3. The objective of the Company’s operations - directly or indirectly - is to conduct manufacturing and sales, as well as service and
contracting operations within, primarily, the rubber and plastics
industries, as well as other operations connected with or complementary to the said fields, and to engage in finance and liquidity
management as well as management of real and movable estate.
§4. The share capital shall amount to a minimum of 1,500 million
Swedish kronor (SEK 1,500 M) and a maximum of 6,000 million
Swedish kronor (SEK 6,000 M).
§4. The share capital shall amount to a minimum of 2,000 million
Swedish kronor (SEK 2,000 M) and a maximum of 8,000 million
Swedish kronor (SEK 8,000 M). (Resolved by the Annual General
Meeting 2009, but not yet registered.)
§5. The number of shares shall amount to not less than 60,000,000
and not more than 240,000,000.
§5. The number of shares shall amount to not less than 175 000 000
and not more than 700 000 000. (Resolved by the Annual General
Meeting 2009, but not yet registered.)
§6. Shares may be issued in two series, designated series A and
B. Shares of series A can be issued in a number equivalent to a
maximum of 1/3 of the shares in the Company, shares of series B in
a number equivalent to a maximum of 91/100 of the shares in the
62
Company. One series A share carries the right to ten (10) votes, and
one series B share carries the right to one (1) vote.
Series A and shares of series B carry equal rights to participation
in the Company’s assets and profits.
If the Company decides to issue new series A and shares of series
B by a cash or offset issue, holders of series A and shares of series B
shall have preferential rights to subscribe for new shares of the same
share type, in relation to the number of shares the holder owns
prior to the new issue (primary preferential rights). Shares that are
not subscribed for by primary preferential rights shall be offered to
all shareholders for subscription (subsidiary preferential rights). If
shares offered in this way are not sufficient in number for the subscription by subsidiary preferential right, the shares shall be divided
between the subscribers in relation to the number of shares owned
by them prior to the division or, if this is not possible, by lot.
If the Company decides to issue by cash or offset issue shares
only of series A or series B, all shareholders, irrespective of whether
their shares are of series A or series B, shall have preferential rights
to subscribe for new shares in proportion to the number of shares
owned prior to the issue.
If the Company decides to issue by cash or offset issue share
warrants or convertibles, shareholders have preferential rights to
subscribe for warrants as if the issue applied to those shares that
may be subscribed on the basis of the warrants, or preferential
rights to subscribe for convertibles as if the issue applied to those
shares for which the convertibles may be exchanged.
The aforementioned shall not restrict the possibility to decide
on a cash or offset issue for which the shareholders’ preferential
rights are waived.
In the case of an increase in the share capital by a bonus issue,
new series A and shares of series B shall be issued in proportion to
the previous number of shares of these share types. Thus, old shares
of a certain share type shall carry entitlement to new shares of the
same type. The aforementioned shall not restrict the possibility of
issuing shares of a new series through a bonus issue following the
necessary amendment to the Articles of Association.
§7. The part of the Board that is elected by the Annual General
Meeting shall consist of a minimum of three and a maximum of
ten members with no deputies. Members are elected annually at the
Annual General Meeting for the period up to the end of the next
Annual General Meeting.
§8. An authorized auditing firm shall be appointed as the Group’s
auditors.
§9. Notice convening a shareholders’ meeting shall be announced
in Post- och Inrikes Tidningar and Dagens Industri.
To participate in a shareholders’ meeting, shareholders shall notify the Company not later than 3 p m on the date specified in the
notice convening the meeting. This may not be a Sunday, public
holiday, Saturday, Midsummer Eve, Christmas Eve or New Year’s
Eve, nor may it fall less than five working days prior to the meeting.
Assistants may only accompany shareholders at shareholders’
meetings if such shareholder gives notification of the number of
assistants in the manner described above in connection with notification of shareholders’ participation in shareholders’ meetings.
§10. Shareholders’ meetings shall be held in Trelleborg.
§11. The following matters shall be considered at the Annual
General Meeting:
1. Election of Chairman of the meeting.
2. Confirmation and approval of the register of voters.
3. Election of one or two officers to verify the minutes.
4. Confirmation that the meeting has been properly convened.
5. Approval of the agenda.
6. Consideration of the Annual Report and the Auditor’s Report,
and the consolidated Financial Statement and the consolidated
Auditor’s Report.
7. Resolutions concerning:
a. Adoption of the Income Statement, the Balance Sheet, the
consolidated Income Statement and the consolidated Balance
Sheet.
b. The disposition of the Company’s profit or loss in accordance with the adopted Balance Sheet.
c. The discharge of the members of the Board and the President from personal liability for the fiscal year.
8. Confirmation of the number of Board of Directors members.
9. Confirmation of fees for members of the Board and the authorized firm of auditors.
10. Election of Board of Directors members and, if applicable, the
authorized firm of auditors.
11. Other matters to be considered at the Annual General Meeting
in accordance with the Swedish Companies’ Act (2005:551) or
the articles of association of the Company.
§12. At the Annual General Meeting, each registered voter is entitled to vote for the full number of shares owned and represented
by him/her.
§13. Those who are not shareholders shall have the right to attend
or otherwise follow the proceedings of the Annual General Meeting
according to conditions determined by the Board.
§14. The calendar year shall be the Company’s fiscal year.
§15. Shareholders or trustees who, on the record date, are entered
in the shareholders’ register and noted in a control register in accordance with chapter 4 of the Swedish Financial Instruments Act
(1998:1479) or those listed in a control account, in accordance
with Chapter 4, Section 18, paragraph 1, lines 6 and 8 of the aforementioned Act shall be deemed to be authorized to exercise the
rights detailed in Chapter 4, Section 39 of the Swedish Companies
Act (2005:551).
Other information
The Company’s corporate registration number is 556006-3421
and the registered office of the Company is in the municipality of
Trelleborg. The Company was founded in Sweden on 24 August
1905 and was registered with the Swedish Companies Registration Office on 30 October 1905. The Company has managed its
operations since then. The Company is a public limited liability
company regulated by the Swedish Companies Act (2005:551).
63
Legal Considerations and Supplementary
information
Key contracts
Customers and suppliers
Trelleborg’s customer and supplier contracts are related to the
continuing operations. The Group does not depend on any single
supplier. A single supplier interruption could entail a temporary
decline in sales or increased costs for the individual company concerned, but is not considered to lead to any material consequences
for the Group as a whole as there is essentially always alternative
suppliers. Trelleborg is also not dependent on any single customer
contract within any of the business areas as the business is highly
diversified. Within Trelleborg Automotive (a business area within
the Group), which has a more concentrated customer base than the
other business areas, Renault-Nissan and Ford constitute the single
largest customers of the Group. However, Trelleborg is not dependent upon any individual contracts with any of these customers.
Credit agreements
During 2005 the Group took up a syndicated loan in the form of a
credit facility allowing for revolving facilities in several currencies.
The facility comprises two tranches; EUR 750 M (SEK 8,239 M1)
and USD 600 M (SEK 4,972 M2). A larger part of the facility (SEK
12,752 M) matures in March 2012, whilst a smaller part (SEK 459
M) matures during 2011. Other than this syndicated loan facility,
the Group has six bilateral bank loans, maturing between 2010 and
2012. Four of these loans, SEK 1,379 M in total, are credit facilities
allowing for flexible utilisation. These credit facilities together with
the syndicated loan facility constitute the major part of the confirmed credit facilities of the Group. The long-term interest-bearing
debts of the Group also include four bond loans, issued as private
placements, maturing between 2010 and 2015. Two of these bond
loans amount to EUR 90 M in total (SEK 988 M) and the remaining amount to SEK 360 M.
A part of the short-term interest-bearing debts of the Group
consists of the Group’s Swedish commercial paper program which
has a maximum limit of SEK 4,000 M, and admits terms of up to
12 months. As of March 31, 2009 SEK 807 M were outstanding
under this program. The remaining part of the Group’s short-term
interest-bearing debts is comprised of short-term bilateral bank
loans, the short-term part of the long-term bond loans, borrowings
through overdraft facilities and negative market value on derva-
1)Converted to SEK according to an exchange rate of 10.9858, as per 31 March 2009.
2)Converted to SEK according to an exchange rate of 8.2863, as per 31 March 2009.
64
tive instruments, totaling SEK 1,931 M as of March 31, 2009.
Through overdraft facilities the Group has confirmed non-committed credit facilities amounting to SEK 1,806 M.
The syndicated loan agreement contains financial covenants
regarding the ratio of net debt to equity (“Net debt to equity ratio”)
and which interest coverage ratio should be upheld should a certain
Net debt to equity ratio be exceeded. Corresponding financial
covenants can also be found in some of the Group’s other loan
and credit facility agreements. Trelleborg’s loan conditions will not
change as long as the Net debt to equity ratio is 150 percent or
lower. The basis for calculation differs from the published Net debt
to equity ratio presented in the interim report as pension liabilites
are included in the net debt under the loan agreement. Thus, by
the end of 2008, the Net debt to equity ratio according to the loan
agreement was 133 percent. By March 31, 2009 the Net debt to
equity ratio according to the same basis for calculation was 130
percent. The Net debt to equity ratio by March 31, 2009 would
have been 92 percent, if the rights issue had taken place on March
31, 2009 (given full subscription of the rights issue and after issue
costs). All of the above financing agreements also include other
standard covenants and terms.
For more detailed information regarding the debts and borrowings of the Group, please see p. 45 of this prospectus and note 27 in
the Annual Accounts for 2008.
Acquisitions and divestments
During the past two years, Trelleborg has conducted a number
of acquisitions of material importance to the Group, as well as a
smaller number of divestments as a part of the Group’s ambition to
optimise its holdings and its focus on certain segments.
During 2007, six acquisitions were made, all of which had
complementary attributes. The acquisitions affected Trelleborg’s
cash-flow in the amount of SEK 616 M. Trelleborg’s acquisition of
Epros and Epros International, with approximately 30 employees
and a net turnover of approximately SEK 90 M, was finalised in
January of 2007. In November of 2007 the Group acquired the assets of the sealing distributor Sealing Solutions, with approximately
40 employees and a net turnover of approximately SEK 100 M.
Within the scope of the strategic and operational program
Trelleborg divested its business operations within the business area
Trelleborg Automotive in Coventry, United Kingdom, during
Legal Considerations and Supplementary information
2007. The business had approximately 110 employees and a turnover during 2006 of approximately SEK 150 M.
During 2008 six complementary acquisitions and two acquisitions of remaining minority shares were conducted. The acquisitions affected Trelleborg’s cash-flow in the amount of SEK 802 M.
The acquisitions comprised a total turnover of approximately SEK
1,215 M and 970 employees. Among these transactions was the
acquisition of the business operations of the American company
MacDermid Offset Printing Blankets, comprising a turnover of
SEK 540 M and 400 employees.
See also p. 30 for a compilation of acquisitions conducted during, inter alia, 2007 and 2008.
Underwriting Agreement and subscription undertakings
Underwriting Agreement with the Managers
On March 22, 2009 an underwriting agreement (the “Underwriting
Agreement”) was entered into between Trelleborg and the Managers (DnB NOR Markets, Handelsbanken Capital Markets, Nordea
and SEB Enskilda) in contemplation of the rights issue. Under
reservation of certain conditions, the Managers have undertaken to
subscribe for a specified proportion of new shares which have not
been subscribed for during the subscription period, corresponding
to an aggregate maximum amount of SEK 901 M. As compensation
to the Managers for their subscription undertaking according to the
Underwriting Agreement, Trelleborg has undertaken to (i) pay an
underwriting fee to the Managers in an amount corresponding to 3.5
percent of the maximum undertaking (approximately SEK 31.5 M),
and (ii) in addition to the underwriting fee reimburse the Managers
for costs attributable to legal fees and other expenses incurred in relation to the rights issue.
Pursuant to the Underwriting Agreement, Trelleborg has provided the Managers with warranties and indemnities customary in
relation to these types of agreements. In addition, the Underwriting
Agreement contains customary conditions of termination of said
agreement for the benefit of the Managers, e.g. the right to terminate the agreement in case of violations of the warranties provided
by Trelleborg as well as the occurrence of certain adverse circumstances affecting the conditions (financial or otherwise) or prospects
of Trelleborg, or the financial markets as a whole. Termination of
the Underwriting Agreement may be effected up to and including the day when payment is made to Trelleborg for new shares
subscribed for by the Managers.
According to the Underwriting Agreement, the Managers’ undertakings are subject to certain customary terms and conditions,
including, inter alia, (i) that the Managers receive legal opinions as
well as opinions from the auditors of the Company in contemplation of the rights issue, (ii) that SFSA approves the prospectus and
(iii) that the Board of Directors and the Annual General Meeting
of Trelleborg pass certain resolutions which are necessary for the
execution of the rights issue. In addition, the Managers’ undertakings are conditional upon that none of the Larger Shareholders (as
defined below), that have undertaken to subscribe for their pro rata
share, or in addition thereof, or any of the other investors who have
undertaken to subscribe for new shares, fails to fulfill its respective
subscription undertaking or guarantee undertaking before the day
when Trelleborg publishes the final result of the rights issue.
In addition, Trelleborg has provided certain other undertakings
pursuant to the Underwriting Agreement including, inter alia, not
to issue or transfer any shares from the day of entering into the Underwriting Agreement up to and including the day falling 180 days
after the day when Trelleborg publishes the final result of the rights
issue, without the prior written consent of the Joint Lead Managers
(Handelsbanken Capital Markets, Nordea and SEB Enskilda).
Subscription undertakings
Six larger shareholders of Trelleborg, including AFA Försäkring1,
Alecta, Dunker interests (consisting of Henry and Gerda Dunker
Donation Fund No. 2, Henry and Gerda Dunker Foundation,
Henry Dunkers Förvaltnings AB, Förvaltningsaktiebolaget HD
and Aktiebolaget Hevea), Handelsbolaget Milano i Malmö, Tibia
Konsult AB and Unionen (”Larger Shareholders”), together representing 9,500,000 series A shares and 22,345,609 series B shares in
Trelleborg, have, separately and not jointly, undertaken to subscribe
for their respective pro rata share of the shares (primary preferential
right) in the rights issue. Dunker interests, AFA Försäkring1, Alecta,
Handelsbolaget Milano i Malmö and Tibia Konsult AB have
further undertaken not to reduce their respective share holdings
during the period starting on the day of entering into the respective
subscription agreements and ending on the last day of the subscription period for the rights issue. No fee is paid in compensation for
these subscription undertakings.
Additional guarantee undertakings
In addition to the undertakings according to the above, Handelsbolaget Milano i Malmö, Suollovaara Invest AB, Tibia Konsult
AB and Älvsbyhus i Bjärnum AB, have, separately and not jointly,
undertaken to subscribe and pay for additional new shares, corresponding to approximately SEK 523 M (corresponding to
approximately 25 percent of the rights issue). As compensation for
such guarantee undertakings, Trelleborg has undertaken to pay a fee
of 4 percent (approximately SEK 20.9 M).
These guarantee commitments are subject to that Trelleborg’s
Board of Directors and Annual General Meeting make certain
resolutions that are required for the completion of the rights issue.
Apart from this the guarantee commitments are unconditional.
Non-secured undertakings
The subscription undertakings and guarantee undertakings described above are not secured. Consequently there is a risk that one
or more of the Larger Shareholders, other investors or the Managers
fail to fulfill their respective undertakings. See further ”Risk Factors
– Risks Related to the Share issue”.
Assignment
New shares which have not been subscribed for as a result of primary or secondary preferential rights shall firstly be assigned to the
1) Excluding Kollektivavtalsstiftelsen Trygghetsfonden TSL, which is the owner of 183,245 shares of series B.
65
Underwriting Agreement and Subscription Undertakings
Total undertakings
as proportion
of total rights
issue proceeds
Current shareholdings
Share of subscribed new
shares with priority right
pursuant to the subscription undertaking
AFA Försäkring1
7,791,835 shares of series B
8.6%
8.6%
Alecta2
8.2%
8.2%
13.6%
13.6%
1.8%
1.8%
Subscription undertakings (corresponding to a maximum of approximately 60
percent of the rights issue)
9,500,000 shares of series A
Dunker interests3
Unionen4
Additional
guarantee
undertakings
Handelsbolaget Milano i Malmö
1.8%
150,000,000 SEK
8.7%
Tibia Konsult AB6
1.3%
73,000,000 SEK
4.7%
150,000,000 SEK
6.9%
5
Soullovaara Invest AB7
Älvsbyhus i Bjärnum AB
8
Total undertakings
35.2%
150,000,000 SEK
6.9%
523,000,000 SEK
59.4%
Total guarantee undertaMaximum guarantee kings as proportion of total
rights issue proceeds
amount
Guarantee undertakings of the Managers (corresponding to a maximum
of approximately 40 percent of the rights issue)
DnB NOR Bank ASA9
135,000,000 SEK
6.1%
Nordea Bank AB10
283,000,000 SEK
12.8%
283,000,000 SEK
12.8%
Skandinaviska Enskilda Banken AB11
Svenska Handelsbanken AB
12
Total undertakings
Larger Shareholders and other investors undertaking to subscribe
for new shares according to the above, secondly to those, not enjoying any preferential right, and, thirdly, to the Managers.
Total undertakings and fees
To summarise, the subscription undertakings and guarantee
undertakings by the Larger Shareholders, as well as other investors,
amounts to, in total, approximately 60 percent of the rights issue,
corresponding to approximately SEK 1,320 M. Provided that the
conditions of the Underwriting Agreement are met, the remainder
of the rights issue is guaranteed by the Managers, whereby the
rights issue is covered, as a whole, by subscription undertakings or
guarantee undertakings. The total fee paid as compensation for the
guarantee undertakings amounts to approximately SEK 52.4 M.
200,000,000 SEK
9.0%
901,000,000 SEK13
40.6%
Additional information
In addition to the matters accounted for above and to what is stated
in “Other information regarding the Board of Directors and Group
Management” on p. 53, none of the persons involved in the rights
issue has any additional economic, or otherwise relevant, interests
of importance to the rights issue.
Disputes
The Group conducts operations in several countries and, in connection with ongoing operations, disputes with and claims against
the companies of the Group arise from time to time. Trelleborg
considers that the disputes currently in progress are in all material
respects covered by the Group’s insurance or that provisions have
been made corresponding to the estimated risk.
1) Excluding Kollektivavtalsstiftelsen Trygghetsfonden TSL, which is the owner of 183,245 shares of series B, AFA Försäkring, contact via AFA Livförsäkringsaktiebolag, address SE-106 27
Stockholm, Sweden, visiting address Klara södra kyrkogata 18, SE-111 52 Stockholm, Sweden.
2) Alecta Pensionsförsäkring Ömsesidigt, Regeringsgatan 107, SE-103 73 Stockholm, Sweden.
3) Dunkerintressen, contact via Henry o. Gerda Dunkers Stiftelse, Stortorget 16, SE-252 23 Helsingborg, Sweden.
4) Unionen, Olof Palmes gata 17, SE-105 32 Stockholm, Sweden.
5) Handelsbolaget Milano i Malmö, Box 5322, SE-200 72 Malmö, Sweden.
6) Tibia Konsult Aktiebolag, c/o Midway Holding AB, Gustav Adolfs Torg 47, SE-211 39 Malmö, Sweden.
7) Suollovaara Invest AB, Ställverksvägen 6, SE-942 81 Älvsbyn, Sweden.
8) Älvsbyhus i Bjärnum AB, SE-942 81 Älvsbyn, Sweden.
9) DnB NOR Bank ASA, Stranden 21, N-0021 Oslo, Norway.
10) Nordea Bank AB, Smålandsgatan 17, SE-105 71 Stockholm, Sweden.
11) Skandinaviska Enskilda Banken AB, Kungsträdgårdsgatan 8, SE-106 40, Stockholm, Sweden.
12) Svenska Handelsbanken AB, Blasieholmstorg 11, SE-106 70 Stockholm, Sweden.
13) Whereas this maximum amount is based on the size of the rights issue amounting to SEK 2,200 M and whereas the rights issue was established at SEK 2,169 M, the undertaking of
the Managers is, in reality, correspondent to SEK 881 M.
66
Competition law disputes
Claims related to asbestos
One of Trelleborg’s American subsidiaries has, since 2005, been
subject to investigations by the American competition authorities
concerning price-fixing agreements on the market for marine fenders. During the course of the investigations, three former employees
of the subsidiary have confessed to having taken part in criminal
acts, and subsequently been found guilty by a court of law. The
relevant subsidiary is formally suspended as a supplier to the public
sector in the USA, in consequence of which deliveries to such customers are only effected by virtue of exemptions granted on a case
by case basis. A settlement has recently been made with the Department of Justice in the US meaning that the concerned American
subsidiary shall pay USD 7.5 M in fines for its involvement in such
unfair price-fixing agreements. Trelleborg has on-going discussions
with the relevant American authorities with the purpose of reaching
other necessary settlements regarding the price-fixing agreements
and the subsequent investigation. Trelleborg hopes to be able to
reach such settlements during 2009.
One of Trelleborg’s French subsidiaries has, since 2007, been
subject to investigations by competition authorities concerning
price-fixing agreements relating to certain types of marine oil
hoses. Two former employees of the subsidiary have confessed to
having taken part in criminal acts, and subsequently been found
guilty by an American court of law. A settlement has recently been
made with the Department of Justice in the US meaning that the
concerned French subsidiary shall pay USD 3.5 M in fines for its
involvement in such unfair price-fixing agreements. In January
2009, The European Commission imposed fines on the French
subsidiary of Trelleborg in the amount of EUR 24.5 M. Trelleborg
has appealed the decision to the Court of First Instance for the
purpose of lowering the fines. As far as the Group is aware, in addition to the investigations and actions performed by competition
authorities in the EU and the US, national authorities in Australia,
Brasil and Korea are investigating the above matters. However,
these investigations are not yet concluded, why any possible liability
for the Group, including sanctions and related costs, are uncertain.
The competition authority in Japan has completed its investigation
of the relevant matter without imposing any fines on the Group.
As none of the above mentioned issues concerning competition
law have been fully resolved, the extent of the final liability for the
Group, in relation to relevant authorities and other parties, due
to breach of the relevant competition law provisions, is uncertain.
In view of these matters, a total amount of SEK 516 M has been
charged against earnings by Trelleborg during 2007 and 2008.
Trelleborg considers this amount to be sufficient to cover all costs
arising as a result of the situation.
Competition law is a prioritized risk area within the Group and
an extensive program has been introduced containing, among other
things, clarification of group-wide guidelines and rules, a detailed
review and audit of certain types of potentially sensitive agreements
such as, for example, distribution and agency agreements, extensive
and recurrent education of employees and introduction of procedures for approving memberships of organizations.
Since the early 90’s, an American subsidiary of Trelleborg, the distribution company Goodall Rubber Company Inc., has, together
with hundreds of other American companies, been subject to
judicial proceedings concerning the handling of asbestos products,
primarily from business operations during the 1930’s and 1940’s.
Even though these lawsuits have the character of lawsuits en masse,
Goodall has not been subject to any class actions, and Goodall is regarded as highly peripheral in the proceedings. No clear and actual
connection between Goodall, its business operations and the suffering individuals has yet been shown, and the vast majority of claims
have also been dismissed. All business operations in Goodall were
sold in 2006 and the company is now dormant. Trelleborg will continue to manage these matters in the same way as it has done up till
now. In addition, the Group is involved in a case regarding claims
for exposure to asbestos in the UK, initiated by former employees.
The amounts claimed are relatively small and any possible impact
on the Group is estimated to be marginal, if not non-existent.
Tax dispute under appeal to the Supreme Administrative Court
The County Administrative Court of Skåne admitted, in a judgement from 2004, certain deductions made by Trelleborg regarding
a tax loss of approximately SEK 600 M, incurred in connection
with the divestment of certain operations during 1999. In its judgment of February 7, 2008, the Administrative Court of Appeal in
Gothenburg, after appeal by the Swedish tax authority, amended
the judgment of the County Administrative Court of Skåne, not
admitting the relevant tax deductions. The relevant tax loss, which
is calculated at approximately SEK 158 M, has not been recorded
as an asset in the accounts of the Company. The judgment by the
Administrative Court of Appeal thus did not have any impact
on the statement of results or the balance sheet of the Company.
Trelleborg has appealed the judgment of the Administrative Court
of Appeal to the Supreme Administrative Court, where the matter
is now pending.
Intellectual property
Pursuant to the assessment of the Board of Directors, Trelleborg has
the intellectual property rights necessary to carry on the relevant
business operations. The Group is not considered to be dependent
on any particular patent, even though certain segments of the production, to a greater extent than others, are based on patents and/or
protections of design. In addition, there are no single patent which
is of significant importance for the Group’s operations or profitability. Different production processes, utilised within the Group, are
to a great extent based on internal know-how. In numerous cases,
Trelleborg deliberately refrains from applying for patents in order
to avoid showing its competitors how to copy such production
processes.
Transactions with closely related parties
When Group companies deliver products or provide services to
other Group companies, such transactions are performed at market
price and on market terms.
67
No member of the Board of Directors, nor any member of Group
Management, currently, or during the period that is covered by the
historical financial information in this prospectus (i.e., the from
2006 to March 31, 2009), has participated directly or indirectly
in any transaction with the Company that is, or would have been,
unusual or made according to unusual terms. During such period,
the Company has not granted any loans or provided any guarantees
to or for the benefit of any member of the Board of Directors or
any member of the Group Management.
Reference is also made to the Underwriting Agreement and the
subscription undertakings concluded with certain of the Company’s shareholders, described in more detail under the section
“Underwriting Agreement and Subscrption Undertakings” above.
Incorporation through reference
The financial reports of the Company from 2006, 2007 and 2008
form part of this prospectus and are to be read as such. The finan-
Subsidiary
Trelleborg Sealing Solutions Germany GmbH
Trelleborg Industrie SAS
Trelleborg Sealing Solutions UK Ltd
Trelleborg Wheel Systems Spa
Trelleborg Yale South Haven Inc
Trelleborg Industri AB
cial reports referred to above are presented in Trelleborg’s annual
accounts for 2006 (with reference to p. 45–75), 2007 (with reference to p. 44–85) and 2008 (with reference to p. 71–109). Pages of
the annual accounts not referred to, contain information otherwise
presented in other parts of this prospectus. The financial reports
have been audited by the Company’s auditors and the respective
auditor’s report form part of the accounts. The relevant annual
accounts as well as the Articles of Association of the Company can
be found on the Company’s website www.trelleborg.com. Such
documentation is also provided by the Company, free of charge,
during the validity period of this prospectus.
Material subsidiaries
The Company is the parent of the Group. The schedule below sets
out the most important subsidiaries of the Company. For additional
information regarding the Company’s and Group’s holdings and
shares in subsidiaries, see note 17 in Trelleborg’s 2008 annual report.
Company of registration
Pro rata holding of
shares and votes
Germany
100%
France
100%
United Kingdom
100%
Italy
100%
United States
100%
Sweden
100%
Trelleborg Sealing Solutions US Inc
United States
100%
Trelleborg CRP Inc
United States
100%
Spain
100%
Trelleborg Automotive Spain SA
Italy
100%
Trelleborg Automotive Germany GmbH
Trelleborg Engineered Systems Italy SpA
Germany
100%
Trelleborg Sealing Solutions Helsingör A/S
Denmark
100%
Trelleborg Phoenix A/S
Denmark
100%
Trelleborg Wheel Systems GmbH
Germany
100%
Trelleborg Rubore AB
Sweden
100%
Trelleborg Wheel Systems Belgium NV
Belgium
100%
Trelleborg Treasury AB
Sweden
100%
Documents available for review
Copies of the following documents are available for review at the
head office of Trelleborg, Johan Kocksgatan 10, Trelleborg, during
business days and between regular office hours.
• Articles of association of Trelleborg
• Audited annual accounts of Trelleborg for the financial years of
2006, 2007 and 2008
• Interim report for January – March 2009.
68
Interim report January–March 2009
TRELLEBORG AB INTERIM REPORT JANUARY – MARCH 2009
Lower volume and earnings due to
continued sharp decline in demand
President and CEO
Peter Nilsson:

Net sales in the first quarter of 2009 totaled SEK 6,877 M (8,067).

Operating profit amounted to SEK 46 M (574) and was impacted negatively
by costs for capacity adjustments totaling approximately SEK 50 M

Operating cash flow amounted to SEK 478 M (neg: 388) and was
impacted positively by lower tied-up operating capital and a lower
investment level. Free cash flow amounted to SEK 26 M (neg: 698).

The debt/equity ratio improved to 122 percent, compared with 124 percent
on December 31, 2008.

The Board of Directors has resolved, subject to approval by the Annual
General Meeting, to raise SEK 2.2 billion, before transaction cost, in a
rights issue. The rights issue will strengthen Trelleborg’s financial position
and increase the ability of the Group to further improve its market
positions.
“The year 2009 began with a continued sharp decline in demand and the
prevailing sense of uncertainty regarding the demand trend during the
nearest quarters is considerable. Since the second quarter of 2008, we have
implemented extensive capacity adjustments and we are now working
aggressively to capitalize on the opportunities arising in the current market
situation. We are continuously improving our market positions.”
January - March
2009
SEK M
Net sales
Operating profit
Profit for the period
1)
Operating profit, excl. items affecting
comparability
Earnings per share, SEK, excl. items affecting
comparability 1)
6 877
46
2008
8 067
574
65
0,70
Apr 2008 Mar 2009
Full year
30 073
-154
2008
31 263
374
309
3,35
-502
-5,60
-258
-2,95
63
622
1 239
1 798
0,85
3,75
6,85
9,75
1) Profit for the period attributable to equity holders of the parent divided by the average number of shares
Market outlook for the Market outlook for the second quarter of 2009. Overall, demand is
second quarter of
expected to remain in line with the first quarter of 2009.
2009
Published April 17, 2009
1 (22)
69
Key ratios
SEK M
Net sales
Operating profit
Profit before tax
- attributable to equity holders of the parent
- attributable to minority interest
Earnings per share, SEK 1)
Jan - Mar
2009
6 877
Apr 2008 2008
8 067
574
442
46
-93
65
65
0
309
305
4
0,70
3,35
Operating key ratios
Jan - Mar
Mar 2009
30 073
-154
-701
-502
-258
-267
9
-5,60
-2,95
Apr 2008 -
Full year
2008
2009
2008
Mar 2009
Operating profit
Earnings per share, SEK 1)
63
0,85
5,0
622
3,75
1 239
6,85
7,7
0,9
10,8
7,7
31 263
374
-166
-507
5
SEK M
Excluding items affecting comparability
EBITDA, %
Full year
2008
4,1
1 798
9,75
9,1
5,7
1) Profit for the period attributable to equity holders of the parent divided by the average number of shares
The Group’s key figures
January – March 2009
Organic sales
declined by 27%
Net sales. The Trelleborg Group’s net sales for the first quarter of 2009
amounted to SEK 6,877 M (8,067), down 15 percent. Organic sales declined
by 27 percent. Based on comparable exchange rates, the total decline in
sales amounted to 25 percent.
Demand continued to weaken, particularly in the automotive sector and
in the industrial capital goods sector.
Change in net sales
%
Organic sales
Acquisitions/divestments
Currency impact
Total
Operating profit
totaled SEK 46 M
Jan - Mar
Jan - Mar
2009
-27
+2
2008
+5
+1
+10
-15
-2
+4
Operating profit and earnings per share. Operating profit during the first
quarter totaled SEK 46 M (574). Operating profit was impacted negatively by
a sharp decline in volumes and the fact that it was not possible to reduce
fixed costs in pace with the rapid decline in volumes. Earnings were also
affected by costs for capacity adjustments and personnel reductions totaling
approximately SEK 50 M.
Items affecting comparability amounted to an expense of SEK 17 M
(refer to page 4).
Exchange-rate fluctuations arising in the translation of the earnings of
foreign Group companies had a positive impact of SEK 8 M on earnings,
compared with the same period in 2008.
A net financial expense of SEK 139 M (expense: 132) was recognized,
corresponding to an average interest rate of 4.3 percent (5.0).
Loss before tax amounted to SEK 93 M (profit: 442). Net profit was
SEK 65 M (309). The Group’s tax expense was impacted positively by the
capitalization of losses carried forward in Germany and the UK totaling
70
2 (22)
SEK 123 M and the successful resolution of a tax dispute in Sweden totaling
SEK 18 M. Excluding these items, the tax rate amounted to 18 percent (30).
Earnings per share totaled SEK 0.70 (3.35).
Positive free
cash flow
Cash flow. The operating cash flow increased compared with the preceding
year and amounted to SEK 478 M (neg: 388) in the first quarter. Working
capital decreased during the first quarter of the year, partly as a result of
declining volumes and effective control over inventory levels, which had a
positive effect on cash flow. Investments declined to SEK 239 M (324),
mainly due to deferred investments.
Free cash flow amounted to SEK 26 M (neg: 698). Free cash flow was
impacted by the positive operating cash-flow trend, which was offset by the
utilization of restructuring provisions amounting to an expense of SEK 112 M
(expense: 70), taxes to an expense of SEK 8 M (expense: 86) and financial
items amounting to an expense of SEK 332 M (expense: 154). Tax items
were impacted positively by such factors as the successful resolution of a
tax dispute. Financial items were affected adversely by the accrual
difference between interest received and interest paid in connection with
interest-rate swaps totaling negative SEK 168 M.
Change in net debt
SEK M
Net debt, opening balance
Net cash flow for the period
-12 706
5
Borrowing costs
Exchange rate differences
0
-273
-12 974
Net debt, closing balance
Debt/equity ratio
amounted to 122
percent
Jan - Mar
2009
122
Full year
2008
-10 093
-736
2008
-10 093
-977
1
266
0
-1 636
-10 562
107
-12 706
124
Net debt. Net debt rose by SEK 268 M during the period to SEK 12,974 M,
an increase primarily attributable to exchange-rate differences.
The debt/equity ratio improved to 122 percent, compared with 124
percent on December 31, 2008. The impact of the exchange-rate effect on
net loans was offset by a positive translation difference on shareholders’
equity.
Financing. Trelleborg has long-term basic financing, via a syndicated loan,
that extends into 2012. Long-term credit facilities, including other long-term
loans, amounted to approximately SEK 16,600 M at the end of the quarter.
The unutilized portion amounted to approximately SEK 5,800 M.
Short-term financing totaled about SEK 2,700 M.
The equity/assets ratio was 32 percent (34). Return on capital employed
during the most recent 12-month period was negative (full-year 2008: 1.8
percent).
At the end of the period, capital employed amounted to SEK 22,480 M,
compared with SEK 22,238 M at year-end 2008.
Shareholders’ equity per share amounted to SEK 116 (108) at the end of the
period.
Negative return on
capital employed and
shareholders’ equity
Group
%
Return on capital employed
Return on shareholders’ equity
Apr 2008 Mar 2009
neg
neg
Excl. items affecting
comparability
Full year
2008
1,8
neg
Apr 2008 Mar 2009
5,6
6,0
Full year
2008
8,4
8,8
3 (22)
71
The Group’s operating key figures
January – March 2009
Operating profit of
SEK 63 M (622)
Earnings and margins. Operating profit, excluding items affecting
comparability, amounted to SEK 63 M (622). Operating profit was impacted
negatively by a sharp decline in volumes and the fact that it was not possible
to reduce fixed costs in pace with the rapid decline in volumes. Earnings
were also affected by costs for capacity adjustments and personnel
reductions totaling approximately SEK 50 M.
Adjustments made to prices of raw materials gradually impact Trelleborg
with a time lag of three to six months. Due to the sharp decline in volumes,
which resulted in low inventory turnover, falling raw material prices had only
a marginal impact during the first quarter of 2009.
Exchange-rate fluctuations arising in the translation of the earnings of
foreign Group companies and from transaction flows had a marginal impact
on the Group’s earnings.
EBITDA amounted to
SEK 349 M (871),
corresponding to a
margin of 5.0 percent
(10.8)
The operating margin was 0.9 percent (7.7). Operating profit before
depreciation (EBITDA) amounted to SEK 349 M (871). The EBITDA margin
for the quarter was 5.0 percent (10.8).
The Group recognized a loss before tax of SEK 76 M (profit: 490) and
net profit amounted to SEK 78 M (343). Earnings per share totaled SEK 0.85
(3.75).
Cash flow and capital employed. The operating cash flow increased
compared with the preceding year and amounted to SEK 478 M (neg: 388)
in the first quarter. Operating cash flow during the most recent 12-month
period amounted to SEK 2,460 M. Working capital declined during the first
quarter of the year, partly as a result of declining volumes and effective
control over inventory levels, which had a positive effect on cash flow.
Investments declined to SEK 239 M (324), mainly due to deferred
investments. At the end of the period, capital employed amounted to SEK
22,480 M (20,288).
Operating cash flow/operating profit %
Operating cash flow per share, SEK
Items affecting
comparability during
the quarter: Expense
of SEK 17 M before
tax and expense of
SEK 13 M after tax
Full year
27,25
17,65
Items affecting comparability for the calculation of operating key
figures. Items affecting comparability totaling an expense of SEK 17 M
(expense: 48) before tax have been excluded from calculations of the
Group’s operating key figures.
Items affecting comparability mainly comprise restructuring costs for the
previously announced and ongoing programs in Group’s four business
areas.
The previously announced and ongoing restructuring programs within
Trelleborg Automotive, with the aim of improving the business area’s
production structure, have now entered the completion stage. Costs for
these programs totaling SEK 8 M were charged against the first quarter of
2009. The remaining costs are estimated at approximately SEK 40 M and
will be charged against 2009.
72
Apr 2008 Mar 2009
2 460
199
4 (22)
2008
1 594
89
During the quarter, Trelleborg Sealing Solutions initiated a consolidation
of its units in Italy and the UK, respectively, and focusing its operations in
Poland. The total cost of these measures is expected to amount to about
SEK 100 M, of which SEK 2 M was charged against the first quarter of 2009.
The initiated projects are expected to have a short repayment period.
Items affecting comparability of operating profit 1)
Apr 2008 -
Full year
2009
2008
Mar 2009
2008
-5
-22
-62
-79
-8
-25
-851
-868
SEK M
Jan - Mar
-2
-
-34
-32
-2
-1
-16
-15
Legal non-recurring items
Total items affecting comparability
-
-
-430
-430
-17
-48
-1 393
-1 424
1) Main part reported as other operating expenses
The carrying amount of provisions recognized for action programs amounted
to SEK 415 M at the end of the quarter and is expected to be charged
against consolidated cash flow for 2009 and 2010. At the end of the quarter,
the carrying amount of provisions recognized for ongoing competition
investigations (see page 6) totaled SEK 375 M. While this amount is
expected to be charged against the Group’s future cash flows, the payment
date depends on ongoing procedures.
Other
Guaranteed
rights issue
of SEK 2.2 billion
Guaranteed rights issue of SEK 2.2 billion. On March 22, 2009, the Board
of Directors of Trelleborg resolved, subject to approval by the Annual
General Meeting on April 23, 2009, to raise SEK 2.2 billion in a rights issue
of class A and B shares. The rights issue will strengthen Trelleborg’s
financial position and increase the Group’s ability to further improve its
market position.
The rights issue is fully guaranteed by Trelleborg’s largest shareholders
and other parties. Subscription commitments and additional guarantees from
these parties amount to approximately 60 percent of the rights issue. In
addition, a group of institutional shareholders, collectively representing
approximately 11 percent of the share capital and 6 percent of the votes,
have expressed their support for the rights issue and announced their
intention to vote in favor of an approval of the rights issue at the Annual
General Meeting. The remainder of the rights issue is, subject to customary
conditions, underwritten by the company’s main banks.
Holders of class A and B shares will have preferential rights to subscribe
for new shares of the same series in proportion to their existing holdings
(primary subscription rights).
Background and reasons. In recent years, Trelleborg has worked actively
to position itself within attractive market segments and has initiated several
action programs. These initiatives are expected to create opportunities for
Trelleborg to further improve its market position and strengthen its earnings
moving forward.
However, the sharp decline in the global economy since autumn 2008
has resulted in increased uncertainty and significantly altered the Group’s
short-term market conditions. During the first quarter of 2009, Trelleborg’s
5 (22)
73
sales declined by 15 percent compared with the year-earlier period, despite
the positive impact of the weak SEK on sales.
Trelleborg has a financial target of maintaining a net debt/equity ratio of 75125 percent. On March 31, 2009, the net debt/equity ratio was 122 percent.
Due to the current market conditions, the Board of Directors of Trelleborg
believes that strengthening the capital base will significantly improve the
company’s ability to ensure that the net debt/equity ratio remains within the
stated range and that the Group maintains sufficient financial flexibility
moving forward. The rights issue will strengthen the balance sheet so that,
all other things being equal, excluding transaction costs, the net debt/equity
would have been 84 percent if the rights issue had been completed on
March 31, 2009.
Preliminary timetable for the rights issue
April 21
Subscription price and terms are decided and announced
through a press release.
April 23
Annual General Meeting decides on the rights issue
adopted by the Board of Directors.
April 24
First day of trading in the shares ex-rights to participation
in the rights issue.
April 28
Record date for participation in the rights issue, meaning
that shareholders registered in Trelleborg’s share register
on this date will receive subscription rights entitling
participation in the rights issue.
April 28
Estimated date of publication of the prospectus.
April 30 – May 14 Trading in subscription rights.
April 30 – May 19 Subscription period.
For more information about the rights issue, refer to the separate press
release published on March 23, 2009 at www.trelleborg.com.
Trelleborg appeals
the decision of the
European
Commission
Competition investigation. As previously announced, two of Trelleborg’s
subsidiaries in France and the US are the subject of investigations being
conducted by the competition authorities in the US, the EU and Brazil
regarding certain types of marine oil hoses and marine fenders.
On January 28, 2009, the European Commission announced a decision
in its ongoing, previously announced competition investigation regarding
certain types of marine oil hoses. The investigation began in May 2007 and
Trelleborg has awaited the decision of the authorities for some time.
According to the Commission’s announcement, one of the Trelleborg
Group’s French subsidiaries participated in illegal price cooperation for
certain types of marine oil hoses. The European Commission set the fine for
the subsidiary at EUR 24.5 M.
Trelleborg has appealed the decision to the EU Court of First Instance.
Based on the practice of the Court to date, it is expected to take
considerable time for the matter to be settled.
The European Commission’s decision is completely independent of that
expected from the US authorities on the same issue. Trelleborg has
continuously assisted the US authorities and expects their decision on the
matter in the near future.
The subsidiary in the US has been affected by the ongoing investigations
of the US Department of Justice into the competitive conditions for certain
types of marine fenders. Since the issue was raised in 2005, Trelleborg has
74
6 (22)
continuously assisted the US authorities and expects a decision on the
matter to be announced in the near future.
Trelleborg’s total costs for the competition investigations are estimated at
SEK 516 M, which were charged against the Group’s annual accounts for
2008 and 2007. These costs include the aforementioned fines issued by the
European Commission and expenses in the US and other affected countries,
as well as damages and legal expenses. This assessment is still subject to
uncertainties relating to length and outcome of ongoing processes.
Minor changes to the
Group’s operating
structure
Minor changes were made to the Group’s operating structure in the first
quarter of 2009, which impacted reporting by business area, where certain
operations with external annual sales of approximately SEK 60 M and with
marginal earnings effect, being transferred from Trelleborg Engineered
Systems to Trelleborg Automotive and Trelleborg Sealing Solutions. The
comparative figures have been adjusted accordingly.
Proposals to the Annual General Meeting April 23, 2009
(previously published in the year-end report on February 11, 2009 and
press release regarding rights issue on March 23, 2009)
The Board proposes
no dividend for 2008
Proposal regarding dividend. In light of the Group’s earnings for 2008, the
company’s balance sheet and the considerable uncertainty regarding the
future market trend, the Board proposes that no dividend be paid for 2008.
The Board regards this decision as motivated in terms of the dividend policy
that states that the dividend in the long term must amount to 30-50 percent
of net profit for the year. The dividend for 2007 was SEK 6.50 per share.
Nominations
Committee’s proposal
for 2009 Annual
General Meeting
Proposals for the Annual General Meeting. Rolf Kjellman, originally
elected to the Trelleborg Board of Directors in 1997 and representing
Trelleborg’s principal owner Dunkerintressen, has declined re-election at the
2009 Annual General Meeting. Rolf Kjellman, born in 1939, has retired from
his position as the Executive Director of the Henry and Gerda Dunker
Foundation and Donation Fund No. 2, but remains a member of the Board.
Claes Lindqvist, also a member of the Board of Trelleborg will replace Rolf
Kjellman as Executive Director of the Henry and Gerda Dunker Foundation
and Donation Fund No. 2.
A Nominations Committee consisting of representatives of the major
shareholders, corresponding to approximately 69 percent of the votes in
Trelleborg, and the Chairman of the Board, has decided to propose to the
Annual General Meeting that Hans Biörck be elected new member of the
Board.
Hans Biörck, born in 1951, holds a degree in business administration
and is Executive Vice President and Chief Financial Officer at Skanska AB.
Among other positions, he was formerly CFO of Autoliv Inc and CFO of
Esselte AB, where he also held other positions.
Hans Biörck has been a member of the Henry and Gerda Dunker
Foundation and Donation Fund No. 2 since 2003. Hans Biörck is also a
member of the Swedish Financial Reporting Board.
Moreover, the re-election of all other Board Members, Heléne Bergquist,
Staffan Bohman, Claes Lindqvist, Sören Mellstig, Peter Nilsson and Anders
Narvinger as Chairman, is proposed.
In addition to the Chairman of the Board, the following persons formed
the Nominations Committee: Didrik Normark (Chairman of the Nominations
7 (22)
75
Committee) of the Henry and Gerda Dunker Foundation; Ramsay Brufer,
Alecta; Lars Öhrstedt, AFA Försäkring; Henrik Didner, Didner & Gerge
Funds and KG Lindvall, Swedbank Robur Fonder AB.
Rights issue
Rights issue. The Board of Directors has resolved, subject to approval by
the Annual General Meeting, to raise SEK 2.2 billion, before transaction
cost, in a rights issue. See page 5.
Trelleborg’s Annual General Meeting will be held at 5 p.m. on Thursday,
April 23, 2009 in Trelleborg.
Risk management
Risks/risk management within Trelleborg. Trelleborg focuses
continuously on identifying, evaluating and managing risks arising in various
systems and processes. During 2008, an Enterprise Risk Management
process (ERM) was established with the overall objective of ensuring that
risks are managed systematically, that the right priorities are made and that
risks are managed as efficiently as possible.
The principal risks and uncertainties currently faced by the Group pertain to
the impact of the economic situation on demand, existing financing, access
to future financing, exposure to foreign-exchange fluctuations, changes in
value of fixed assets and legal risks.
For further information about the Group’s operational and financial risks, risk
management and risk exposure, refer to Trelleborg’s Annual Report and
www.trelleborg.com.
76
8 (22)
The Group’s market outlook
Market outlook for the Market outlook for the second quarter of 2009. Overall, demand is
second quarter of
expected to remain in line with the first quarter of 2009.
2009
Outlook from the year-end report published on February 11, 2009:
Market outlook for the first quarter of 2009. Overall, lower demand is
expected compared with the fourth quarter of 2008.
Trelleborg, April 17, 2009
The Board of Directors of Trelleborg AB (publ)
_____________________________________________________________
This report was prepared in accordance with IAS 34 Interim Financial Reporting. A large
number of amendments to existing standards, new interpretations and one new standard
(IFRS 8) came into effect on January 1, 2009. Trelleborg considers the following standards and
interpretations, which took effect on January 1, 2009, to be relevant to the presentation of its
financial statements and the accounting principles:

IFRS 8: Operating Segments.
This standard requires that segment information be presented on the basis of a
management approach. Trelleborg’s segment information is already presented on the same
basis as is used for internal reporting purposes by the highest executive decision-maker
(the President). Accordingly, there is no change in Trelleborg AB’s segment division
compared with the segments previously presented in accordance with IAS 14.

IAS 1: Presentation of Financial Statements.
The amendment to this standard involves a change to the presentation of financial
statements. In accordance with IAS 1, Trelleborg has opted to present the Group’s total
earnings divided into two statements: a separate income statement and a statement of
comprehensive income. Furthermore, the consolidated statement of changes in
shareholders’ equity only includes transactions with the Group’s owners.
In all other respects, Trelleborg continues to apply the same accounting principles and
valuation methods as those described in the most recent Annual Report.
This report was not subject to special review by the company’s auditors (refer to page 20).
9 (22)
77
Jan - Mar
SEK M
Net sales
Operating profit
Operating cash flow
Operating cash flow/operating profit, %
Including items affecting comparability
Operating profit
ROS, %
2009
2008
Apr 2008 Mar 2009
Full year
2008
2 862
2 856
12 234
12 228
117
4,0
285
266
9,2
934
7,4
1 162
1 083
8,6
244
-82
neg
112
3,8
244
8,5
124
795
73
872
6,9
1 004
8,0
Additional key ratios on pages 17 - 19
Market trend
Demand in the business area’s main markets remained highly variable.
A substantial decline occurred within industrial segments, while demand in
project-related operations, offshore oil/gas and infrastructure construction
remained stable.
Sales
Organic sales fell 17 percent during the quarter. Sales in the infrastructure
construction and offshore segments were in line with the year-earlier period.
Including exchange-rate effects, sales were in line with the preceding year.
Operating profit
Operating profit fell as a result of continued decline in volumes in several
segments causing an under-absorption of fixed costs, which are addressed
by implementing capacity adjustments and personnel reductions. Profit was
impacted adversely by the costs related to these measures.
Disruptions to production in the offshore oil/gas segment continued to
have a negative impact on profit and amounted to approximately SEK 30 M.
The situation is gradually improving and operation is deemed to have
returned to a normal level during second half of 2009.
The previously announced projects aimed at improving the production
structure continue and several are now in the completion stage. The
business area also continuously reviews its opportunities to implement
further improvements to the production structure.
Operating cash flow was strong as a result of lower tied-up operating
capital.
Other
The construction of the new unit in China for infrastructure-related products
is currently in the completion stage. This operation will open up the Chinese
market and offer cost-efficient production, which also generates benefits in
other markets.
78
10 (22)
Jan - Mar
SEK M
Net sales
Operating profit
Operating cash flow
Operating profit
ROS, %
2009
2008
Apr 2008 Mar 2009
Full year
2008
1 826
2 726
8 606
9 506
-175
neg
-17
33
1,3
-587
neg
367
-379
neg
neg
-325
neg
-183
neg
8
0,3
neg
59
neg
-1 438
neg
-1 247
neg
Market trend
Car production in North America declined by approximately 53 percent in the
first quarter of 2009 compared with the same period in 2008. Car production
was down 40 percent in Western Europe and 42 percent in Eastern Europe.
Car production in Asia (excluding Japan) declined by 24 percent.
(source: JD Power/Trelleborg).
Sales
Organic sales fell 41 percent due to a continued sharp decline in global
demand, accentuated by inventory reductions by several manufacturers in
the automotive industry. Including exchange-rate effects, sales declined by
33 percent.
Operating profit
Operating profit was impacted adversely by the considerable volume
reductions in the market causing an under-absorption of fixed costs, which
are addressed by implementing extensive capacity adjustments and
personnel reductions.
The business area’s ongoing action program has now entered the
completion stage and is beginning to have effects. Compared with the first
quarter of 2008, the workforce has been reduced by approximately 2,500
positions, corresponding to about 25 percent of the business area’s
employees.
Despite falling prices, the business area managed to reduce its inventory
levels, resulting in a positive effect on cash flow. However, the inventory
levels were not reduced at a rate that would enable the effect of lower raw
material prices to be felt during the quarter, but the impact is expected to
gradually take effect from the second quarter of 2009.
Other
The business area intends to apply for any relevant government programs
pertaining to outstanding accounts receivable from certain car manufacturers
in the US.
11 (22)
79
Jan - Mar
SEK M
Net sales
Operating profit
Operating cash flow
Operating profit
ROS, %
2009
2008
Apr 2008 Mar 2009
Full year
2008
1 276
1 587
5 723
6 034
41
3,2
122
249
15,7
682
11,9
920
890
14,8
298
124
50
39
3,1
249
15,7
135
922
104
648
11,3
858
14,2
Market trend
The market conditions in most of the business area’s end markets continued
to weaken during the quarter, particularly in the industrial and automotive
sectors.
Sales
Organic sales during the quarter fell 32 percent as a result of continued
lower demand for industrial capital goods in Europe as well as the global
automotive industry. Including exchange-rate effects, sales declined by 20
percent.
Operating profit
Operating profit declined due to continued rapidly falling volumes causing an
under-absorption of fixed costs. Fixed costs were reduced through extensive
capacity reductions and personnel cutbacks, which had a negative effect on
profit during the quarter.
Other
The business area continuously improves its production structure with the
aim of streamlining its operations and reducing its fixed costs. During the
quarter, the business area initiated a consolidation of its units in Italy and the
UK, respectively, and focusing its operations in Poland. The total costs are
estimated at about SEK 100 M, of which SEK 2 M was charged against the
first quarter of 2009. The initiated projects are expected to have a short
repayment period. In addition, the business area also continuously reviews
its opportunities to implement further improvements to the production
structure.
A unit in Derbyshire in the UK was divested at carrying amount. The unit
manufactures gangways between train carriages and has approximately 80
employees and sales of about SEK 80 M. The divestment had a marginal
impact on the Group’s earnings. The divestment is part of the Group’s
portfolio management, since the operations are not deemed strategically
suitable for Trelleborg.
80
12 (22)
Jan - Mar
SEK M
Net sales
Operating profit
Operating cash flow
Operating profit
ROS, %
2009
2008
Apr 2008 Mar 2009
Full year
2008
950
962
3 696
3 708
102
10,8
122
109
11,4
356
9,6
285
363
9,8
120
-34
neg
100
10,6
108
11,3
80
129
36
340
9,2
348
9,4
Market trend
In general, a substantial slowdown occurred in the agricultural sector.
Nonetheless, the positive trend for high-performance agricultural tires
continued during the quarter, which benefited Trelleborg as the Group’s
products are well-positioned in this area. Global demand for industrial tires
continued to decline sharply as a result of the weaker industrial economy.
Sales
A 14-percent decline in organic sales was reported during the quarter. Sales
of agricultural tires varied among the different sub-segments, but remained
strong within high-performance agricultural tires. Sales of industrial tires
declined sharply. Including exchange-rate effects, total sales fell by 1
percent.
Operating profit
Operating profit for the quarter was in line with 2008. It was favorably
impacted by a high level of capacity utilization in high-performance
agricultural tires and an improved product and price mix. Earnings were
negatively affected by lower volumes in industrial tires.
More efficient management of working capital resulted in a positive operating
cash-flow trend.
Other
Work to expand and strengthen the offering of the business area continued,
including the signing of a strategic distribution agreement during the quarter,
which enables an expansion of the product portfolio in existing sales
channels in Europe.
The consolidation of the industrial tire production operations in Sri Lanka,
aimed at establishing a more efficient production structure, is now in its final
stage. This involves relocating the industrial tire production operations in
Hartville in the US, where production will be discontinued in the second
quarter of 2009.
13 (22)
81
Financial accounts
Income Statements
Group
SEK M
Net sales
Cost of goods sold
Gross profit
Selling expenses
Research and development costs
Jan - Mar
Apr 2008 -
2009
2008
Mar 2009
6 877
-5 375
1 502
8 067
-6 023
30 073
-22 955
7 118
2 044
-598
-740
-632
-675
Other operating income/expense
Profit from part. in assoc. companies
-167
15
3
Operating profit
46
-139
Profit before tax
Tax
-93
158
65
442
-133
65
0
Profit attributable to:
Equity holders of the parent
Minority interest
-150
17
1
574
-132
-2 471
-2 917
-620
-1 284
20
-154
-547
Full year
2008
31 263
-23 603
7 660
-2 437
-2 982
-603
-1 282
18
374
-540
-166
-92
309
-701
199
-502
305
4
-507
5
-267
9
Jan - Mar
-258
Earnings per share
SEK
2009
2008
Apr 2008 Mar 2009
Full year
2008
Earnings per share
0,70
3,35
-5,60
-2,95
End of period
90 357 261
90 357 261
90 357 261
90 357 261
Average number
90 357 261
90 357 261
90 357 261
90 357 261
Apr 2008 -
Number of shares
Statements of comprehensive income
Jan - Mar
SEK M
2009
2008
Mar 2009
Full year
2008
65
309
-502
-258
Other comprehensive income
-1
-11
-137
-147
Hedging of net investment
-140
207
-1 544
-1 197
Translation difference
Income tax relating to components of other comprehensive
income
410
-591
3 066
2 065
38
-58
449
353
Other comprehensive income, net of tax
307
-453
1 834
1 074
Total comprehensive income
372
-144
1 332
816
374
-135
1 317
808
-2
-9
15
8
Cash flow hedges
Profit attributable to:
Equity holders of the parent
Minority interest
82
14 (22)
Balance Sheets
Group
SEK M
Mar 31
Intangible assets
Financial assets
12 102
1 798
21 146
Inventories
2009
7 246
4 598
6 987
Mar 31
2008
6 185
Dec 31
2008
7 137
9 805
876
11 833
1 586
16 866
4 064
7 978
20 556
4 775
7 505
130
483
178
749
12 655
29 521
13 207
33 763
Current interest-bearing receivables
152
501
12 238
Total assets
33 384
Shareholders' equity, excluding minority share
Minority share
Total equity
10 527
83
10 610
9 797
111
9 908
10 153
85
10 238
Non-current interest-bearing liabilities
Total non-current liabilities
10 897
1 859
12 756
7 883
1 508
9 391
10 834
1 977
12 811
2 738
7 280
3 296
6 926
2 805
7 909
Total current liabilities
10 018
33 384
10 222
29 521
10 714
33 763
Specification of changes in equity
Mar 31
2009
Mar 31
2008
Dec 31
2008
Opening balance, January 1
10 153
374
9 932
-135
9 932
808
Dividend
Closing balance
Attributable to minority interest
10 527
9 797
-587
10 153
Opening balance, January 1
85
-2
120
-9
120
8
Dividend
Acquisitions
Closing balance
0
83
111
-3
-40
85
10 610
9 908
10 238
Interest-bearing current liabilities
Other current liabilities
SEK M
Attributable to equity holders of the parent
Sum total equity, closing balance
15 (22)
83
Cash flow statements
Group
SEK M
Apr 2008 -
Full year
2009
Jan - Mar
2008
Mar 2009
2008
46
574
-154
374
245
214
928
897
42
35
164
157
5
4
393
392
0
-
32
32
11
44
983
1 016
Operating activities
Operating profit
Adjustments for items not included in cash flow:
Depreciation, property, plant and equipment
Depreciation, intangible assets
Impairment losses, property, plant and equipment
Impairment losses, intangible assets
Provision for restructuring costs
Undistributed result from part. in assoc. companies
Interest received and other financial items
Interest paid and other financial items
Taxes paid
Cash flow from operating activities before changes in
working capital
7
5
-13
-15
356
876
2 333
2 853
-344
-13
-146
185
12
-141
-360
-513
-8
-86
-324
-402
16
636
1 503
2 123
Cash flow from changes in working capital:
Change in inventories
289
-180
335
-134
Change in operating receivables
598
-686
2 353
1 069
Change in operating liabilities
-531
-77
-1 202
-748
Utilization of restructuring provisions
-112
-70
-489
-447
260
-377
2 500
1 863
-802
Cash flow from operating activities
Investing activities
-21
-38
-785
Restructuring measures in acquired entities
-
0
0
-
Disposals 1)
Capital expenditure, property, plant and equipment
-
-
-2
-2
-219
-302
-1 284
-1 367
-20
-22
-157
-159
5
3
82
80
-255
-359
-2 146
-2 250
Acquisitions
Capital expenditure in intangible assets
Sale of non-current assets
Cash flow from investing activities
Financing activities
Change in interest-bearing investments
544
-34
246
-332
Change in interest-bearing liabilities
-814
748
-74
1 488
-587
-
-
-587
0
-
-3
-3
Cash flow from the financing activities
-270
714
-418
566
Cash flow for the period
-265
-22
-64
179
At beginning of the period
749
530
483
530
Exchange rate differences
17
-25
82
40
501
483
501
749
Dividend paid to minority
Cash and cash equivalents:
Cash and cash equivalents at end of period
1)
Including cash flow in entities for which an agreement regarding discontinuation has been reached
84
16 (22)
Group review
Jan - Mar
SEK M
Net sales
EBITDA
Operating profit
Net sales
SEK M
2008
Mar 2009
6 877
349
63
8 067
871
30 073
2 346
1 239
Jan - Mar
2009
2 862
1 826
1 276
950
-37
EBITDA 1)
SEK M
Other companies
Group items
Total excluding items affecting comparability
Total including items affecting comparability
622
343
78
Eliminations
Total
Apr 2008 -
2009
2008
2 856
2 726
1 587
962
624
Apr 2008 Mar 2009
12 234
8 606
5 723
3 696
-186
Full year
2008
31 263
2 868
1 798
889
Full year
2008
12 228
9 506
6 034
3 708
-64
8 067
30 073
-213
31 263
2008
Apr 2008 Mar 2009
Full year
2008
210
338
1 289
1 417
-67
98
128
138
295
-142
888
448
63
1 085
6 877
Jan - Mar
2009
-3
-17
133
-2
-31
-9
-128
453
-8
-142
349
871
2 346
2 868
0
-8
-1
-19
-25
-
-44
-464
-28
-63
-481
-27
-2
338
-1
-
-15
-430
826
-16
-430
1 364
1 852
2009
2008
Apr 2008 Mar 2009
Full year
2008
7,2
neg
7,7
11,7
5,1
10,3
neg
15,5
11,4
0,7
1) Operating profit before depreciations and impairment losses.
EBITDA 1)
%
Jan - Mar
13,5
5,0
7,2
neg
18,6
13,9
10,8
11,1
12,1
7,7
10,0
neg
18,0
12,2
9,1
10,9
7,5
13,3
4,2
18,6
13,8
15,0
11,7
neg
17,5
11,8
4,9
10,2
4,5
5,9
1) Operating profit before depreciations excluding participations in associated companies in relation to net sales.
17 (22)
85
Operating profit
SEK M
Other companies
Group items
Operating margin, (ROS) 1)
%
Jan - Mar
2009
2008
117
-175
41
266
33
102
-3
249
109
-3
-19
63
-5
-8
-2
-2
46
Full year
2008
934
-587
682
1 083
-379
356
-9
890
363
-9
-32
622
-137
1 239
-150
1 798
-22
-25
-
-62
-851
-79
-868
-1
-
-34
-16
-430
-32
-15
574
-154
-430
374
2008
Apr 2008 Mar 2009
Full year
2008
8,6
neg
Jan - Mar
2009
Apr 2008 Mar 2009
4,0
9,2
neg
3,2
10,8
1,3
15,7
7,4
neg
11,9
11,4
7,7
9,6
4,1
8,5
6,9
neg
0,9
3,8
neg
14,8
9,8
5,7
8,0
3,1
10,6
0,3
15,7
11,3
11,3
9,2
neg
14,2
9,4
0,6
7,1
neg
1,1
1) Operating profit excluding participations in associated companies in relation to net sales.
Capital employed 1)
SEK M
Mar 31
Dec 31
2008
6 351
5 407
2008
7 812
5 102
6 916
1 764
8 046
2 145
4
-790
16
51
-217
19
-3
-883
22 480
20 288
22 238
Mar 31
2009
7 866
5 079
8 118
2 182
21
Other companies
Group items
Provisions for restructuring measures
Total
1) Total assets less interest-bearing investments and non-interest bearing operating liabilities
(including pension liabilities) and excluding tax receivables and tax liabilities.
86
18 (22)
Return on capital employed, (ROCE) 1)
%
Apr 2008 Mar 2009
Apr 2007-
Full year
Mar 2008
2008
12,6
18,3
15,5
neg
9,0
18,0
3,5
12,7
neg
12,3
19,0
11,4
19,5
8,4
16,7
neg
14,5
neg
17,4
12,7
17,5
11,9
18,9
neg
9,3
1,8
5,6
11,8
neg
8,6
1) Operating profit in relation to average capital employed.
Cash flow report
SEK M
EBITDA 1)
2008
2009
354
231
-58
104
133
-3
-51
137
-3
-65
356
876
Other companies
Group items
Operating cash flow
150
303
Capital
expenditure
Sold non
current assets
Change in
working capital
Total cash flow
Jan - Mar
Apr 2008 -
2009
-80
2008
-108
2009
1
2008
-
2009
133
2008
-328
2009
285
2008
-82
Mar 2009
1 162
-101
-22
-36
-131
-35
2
2
0
2
-
140
38
25
-346
-144
-17
122
122
-325
124
367
920
285
0
0
-43
-7
-239
-324
Utilization of restructuring provisions
Dividend paid to minority
Financial items
Paid tax
Free cash flow
Acquisitions
Disposals 2)
Sum net cash flow
-
1
5
3
-1
21
-128
2
1
356
-943
-4
-30
478
-112
-332
-8
26
-21
5
-34
-1
-70
-8
-266
-388
-70
2 460
-489
-154
-86
-3
-506
-698
-38
-324
1 138
-785
-736
-2
-587
-236
1) Excluding undistributed result from associated companies and allocated group expenses
2) Including cash flow in entities for which an agreement regarding discontinuation has been reached
Acquisitions, January - March
SEK M
Purchase price
Acquisition expenses 1)
Net realizable value of acquired assets
Goodwill
Acquired assets and liabilities:
Operating assets
Total
1)
2009
-
2008
21
21
38
0
11
27
-
11
11
Acquisitions costs relating to previous years acquisitions.
19 (22)
87
Parent company
Income Statements
Parent company
SEK M
Other operating income
Operating profit
Profit before tax
Tax
Jan - Mar
Apr 2008 -
2009
-69
2008
-72
Mar 2009
-336
17
-52
-160
13
-59
267
-69
-1 309
-212
55
-303
-362
89
-157
-273
Full year
2008
-339
263
-76
-1 378
294
-1 452
-1 528
328
-1 084
-1 200
Balance Sheets
Parent company
SEK M
Mar 31
Intangible assets
Financial assets
11
33 146
33 187
Mar 31
2008
32
Dec 31
2008
30
11
32 643
12
33 084
32 686
176
1 536
33 126
92
1 956
0
1 712
0
2 048
34 398
35 174
9 929
8 645
52
6
9 929
129
5
8 645
52
6
Total non-current liabilities
Interest-bearing current liabilities
Other current liabilities
58
26 309
61
134
24 262
73
58
26 399
72
Total current liabilities
26 370
34 926
24 335
34 398
26 471
35 174
Current interest-bearing receivables
Total assets
Shareholders' equity
Total equity
Non-current interest-bearing liabilities
88
2009
30
91
1 648
0
1 739
34 926
8 498
8 498
20 (22)
Board’s assurance and Auditors’ Report
Board’s assurance
This interim report for the period January 1, 2009 to March 31, 2009
presents a fair overview of the operations, position and earnings of the
Parent Company and the Group and describes significant risks and
uncertainty factors that the company and the companies included in the
Group face.
Auditor’s Report
Anders Narvinger
Chairman of the Board
Heléne Bergquist
Staffan Bohman
Rolf Kjellman
Claes Lindqvist
Birgitta Håkansson
Sören Mellstig
Kim Davidsson
Karin Linsjö
Peter Nilsson
President and CEO
Alf Fredlund
We have reviewed this report for the period January 1, 2009 to March 31, 2009 for Trelleborg AB.
The Board of Directors and the CEO are responsible for the preparation and presentation of this
interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our
responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements
SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A
review consists of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially smaller in
scope than an audit conducted in accordance with the Standards on Auditing in Sweden (RS) and
other generally accepted auditing standards in Sweden. The procedures performed in a review do
not enable us to obtain such assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the
interim report has not been prepared, in all material respects, in accordance with IAS 34 and the
Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act,
regarding the Parent Company.
PricewaterhouseCoopers AB
Göran Tidström
Authorized Public Accountant
Olov Karlsson
Authorized Public Accountant
Auditor in Charge
21 (22)
89
Invitation to telephone conference on April 17 at
9:30 a.m.
A telephone conference will be held on April 17 at 9:30 a.m. Call +46 (0)8 – 5052 0270 or
+44 20 8817 9301 and state the password “Trelleborg.” The conference will also be
broadcast in real time on the Internet. Visit our website at
www.trelleborg.com/investors/presentations for Internet links and presentation materials.
Calendar
Annual General Meeting
Six-month report 2009
Interim report January-September 2009
April 23, 2009
July 24, 2009
October 29, 2009
For further information, please contact:
Investors/analysts
Conny Torstensson, VP, Investor Relations
Tel: +46 (0)410 – 670 70
Mobile: +46 (0)734 – 08 70 70
E-mail: [email protected]
Media
Mikael Sjöblom, VP, Media Relations
Tel: +46 (0)410 – 670 15
Mobile: +46 (0)733 – 74 70 15
E-mail: [email protected]
Annual Reports, the stakeholder magazine T-TIME and other
information on the Trelleborg Group can be ordered from:
Trelleborg AB, Corporate Communications, PO Box 153, SE-231 22
Trelleborg, by telephone on +46 (0)410-670 09, by fax on +46 (0)410427 63, by e-mail at [email protected] or can be downloaded from
the Group’s website: www.trelleborg.com
Reg. No. 556006-3421
PO Box 153, SE- 231 22 Trelleborg, Sweden
Tel: +46 (0)410-670 00, Fax: +46 (0)410-427 63
[email protected]
www.trelleborg.com
This report contains forward-looking statements that are based on the current expectations of the management
of Trelleborg. Although management believes that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations will prove correct. Accordingly,
results could differ materially from those implied in the forward-looking statements as a result of, among other
factors, changes in economic, market and competitive conditions, changes in the regulatory environment and
other government actions, fluctuations in exchange rates and other factors.
This is information of the type that Trelleborg AB (publ) is obligated to disclose in accordance with the
Swedish Securities Exchange and Clearing Operations Act and/or the Financial Instruments Trading Act.
The information was issued for publication on Friday, April 17, 2009 at 7:45 a.m.
90
22 (22)
Certain Tax Considerations in Sweden
The following is a summary of certain tax consequences of the present invitation to the Company’s shareholders to subscribe for new
shares. The summary is based on the legislation currently in force
and is intended as general information only, for holders of shares of
series B and subscription rights for shares of series B with an unlimited tax liability in Sweden, unless otherwise stated. The summary
does not address securities held by partnerships or securities held as
current assets in business operations. Moreover, the summary does
not address the specific rules on tax-exempt capital gains (including non-deductibility for capital losses) in the corporate sector that
may be applicable when shares or subscription rights are considered
to be held for business purposes by the shareholder. Special tax
rules apply to certain categories of companies. The tax treatment
of each individual shareholder depends on such investor’s particular circumstances. Each holder of shares and subscription rights
should therefore consult a tax advisor for information on the special
implications that may arise in an individual case, including the applicability and effect of foreign rules and tax treaties.
Individuals
Capital gains taxation
Upon the sale or other disposition of shares or other equity-related
securities, such as subscription rights, a taxable capital gain or
deductible capital loss arises in the capital income category. The tax
rate in the capital income category is 30 percent. The capital gain
or loss is normally calculated as the difference between the sales
proceeds, after deducting sales costs, and the tax basis (for specific
information on the tax basis for subscription rights, see “Exercise
and Disposal of Subscription Rights”). The tax basis for all equityrelated securities of the same series and type is calculated together
in accordance with the average cost method. It should be noted that
the BTAs (paid subscription shares) in this context are not considered to be of the same series and type as the existing shares that entitled the shareholder to the preferential right in the rights offering
until the resolution of the rights offering has been registered with
the Swedish Companies Registration Office (Bolagsverket).
Upon the sale of listed shares, such as shares of series B in the
Company, the tax basis may alternatively be determined according
to the standard method as 20 percent of the sales proceeds after
deducting sales costs. Capital losses on listed shares are fully deductible against taxable capital gains on shares and other listed equityrelated securities, with the exception of shares in investment funds,
so-called interest funds, which consist solely of Swedish receivables.
Up to 70 percent of capital losses on shares that cannot be
offset in this way are deductible against other income in the capital
income category. If there is a net loss in the capital income category,
a tax reduction is allowed against municipal and national income
tax, as well as against real estate tax and municipal real estate
charges. A tax reduction of 30 percent is allowed on the portion of
such net loss that does not exceed SEK 100,000 and 21 percent on
the remaining portion. Such net loss cannot be carried forward to
future fiscal years.
Dividend taxation
For individuals, dividends are taxed in the capital income category.
The tax rate in the capital income category is 30 percent. A preliminary tax of 30 percent is generally withheld on dividends paid to
individuals residing in Sweden. The preliminary tax is withheld by
Euroclear Sweden or, regarding nominee-registered shares, by the
Swedish nominee.
Limited liability companies
Capital gains and dividend taxation
For a limited liability company, all income, including taxable capital gains and dividends, is taxed in the business income category
at a rate of 26.3 percent as of the financial year commencing after
31 December 2008. Capital gains and capital losses are calculated
in the same manner as set forth above with respect to individuals.
Deductible capital losses on shares may only be deducted against
taxable capital gains on shares and other equity-related securities.
Such capital losses may also, if certain conditions are fulfilled, be
offset against such capital gains in a company within the same
group, provided that the requirements for group contributions are
met. A capital loss that could not be utilized during a given year
may be carried forward and be offset against taxable capital gains
on shares and other equity-related securities during later fiscal years
without any limitations in time. Special rules may apply for certain
particular categories of corporate shareholders, for example investment funds and investment companies.
Exercise and disposal of subscription rights
The exercise of subscription rights does not give rise to any taxation. Shareholders that do not wish to utilise their preferential right
to participate in the rights offering and dispose of their subscription
rights will incur a taxable capital gain. Subscription rights based
on a shareholding of existing shares are considered to have been
acquired at SEK 0. The total sales proceeds, after deducting sales
costs, shall consequently be taxable. The standard method is not
applicable in this case. The tax basis for the original shares is not
affected.
For subscription rights purchased or otherwise acquired (i.e.
that are not received based on a shareholding of existing shares),
the payment constitutes the acquisition cost. The tax basis of such
subscription rights shall be taken into account when calculating the
tax basis for the subscribed shares.
A subscription right that is not exercised or sold, and thus
expires, is deemed disposed of at SEK 0.
Certain tax issues for shareholders and holders of subscription rights that are not tax resident in Sweden
Withholding tax
For shareholders with limited tax liability in Sweden that receive
dividends on shares held in a Swedish limited liability company, a
Swedish withholding tax is generally payable.
91
Certain Tax Considerations in Sweden
The tax rate is 30 percent. The tax rate, however, is generally
reduced for shareholders resident in other jurisdictions by tax treaties between Sweden and certain other countries for the avoidance
of double taxation. The majority of Sweden’s tax treaties enable
a reduction of the Swedish tax to the tax rate stipulated in the
treaty directly at the payment of dividends, provided the requisite
information is present concerning the tax residency of the person
entitled to such dividend. In Sweden, normally Euroclear Sweden,
or in the case of nominee-registered shares, the nominee, carries out
the deduction of withholding tax. The receipt of subscription rights
does not trigger any withholding tax.
If a 30 percent withholding tax is deducted from a payment to
a person entitled to be taxed at a lower rate, or in the case that too
much withholding tax has otherwise been withheld, a refund can
be claimed from the Swedish Tax Agency (Skatteverket) prior to the
expiry of the fifth calendar year following the dividend distribution.
Capital gains taxation
The holders of shares and subscription rights with limited tax liability in Sweden, and that do not operate a business from a permanent
establishment in Sweden, are normally not subject to tax in Sweden
for capital gains realized upon the disposal of such securities. Shareholders and holders of subscription rights may, however, be subject
to taxation in their country of domicile. According to a special tax
rule, individuals with limited tax liability in Sweden can, however,
be subject to tax in Sweden on the sale of certain Swedish securities, such as shares, BTAs and subscription rights, if they have been
resident or lived permanently in Sweden at any time during the
calendar year of such disposal or during the previous ten calendar
years. The applicability of this rule is however limited in a number
of cases by tax treaties between Sweden and other countries.
92
Restrictions on Sale and Transfer etc.
The grant of subscription rights and the offer to subscribe for new shares in the
Company by virtue of subscription rights (primary preferential right) as well as
without subscription rights (subsidiary preferential right) (the “Offering”) to persons resident in, or who are citizens of, countries other than Sweden, Denmark,
the United Kingdom and Ireland may be affected by the laws of the relevant
jurisdiction. Investors should consult their professional advisers as to whether
they require any governmental or other consents or need to observe any other
formalities to enable them to acquire new shares by virtue of subscription rights
or without subscription rights.
General
The Company is not taking any action to permit a public offering of the new shares being offered in the Offering (through the
exercise of the subscription rights or otherwise) in any jurisdiction
other than Sweden, Denmark, the United Kingdom and Ireland.
Receipt of the prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those
circumstances, this prospectus is for information only and must not
be copied or redistributed.
Except as otherwise disclosed in the prospectus, if an investor receives a copy of this prospectus in any territory other than
Sweden, Denmark, the United Kingdom and Ireland, the investor
may not treat the prospectus as constituting an invitation or offer
to it, nor should the investor in any event deal in the subscription
rights or the new shares, unless, in the relevant jurisdiction, such
an invitation or offer could lawfully be made to that investor, or
the subscription rights or the new shares could lawfully be dealt in
without contravention of any unfulfilled registration or other legal
requirements.
Accordingly, if an investor receives a copy of the prospectus,
the investor should not distribute or send the same, or transfer
subscription rights or new shares to any person, in or into any jurisdiction where to do so would or might contravene local securities
laws or regulations. If the investor forwards this prospectus into any
such territories (whether under a contractual or legal obligation or
otherwise), the investor should draw the recipient’s attention to the
contents of this section. Except as otherwise expressly noted in this
prospectus:
(i) the subscription rights and new shares being granted or offered, respectively, in the Offering may not be offered, sold,
resold, transferred or delivered, directly or indirectly, in or into,
the United States, Canada, Australia, Hong Kong, Japan or any
other jurisdiction in which it would not be permissible to offer
the subscription rights or new shares (an “Ineligible Jurisdiction”, together the “Ineligible Jurisdictions”);
(ii) the prospectus may not be sent to any person in any Ineligible
Jurisdiction; and
(iii)the crediting of subscription to an account of a shareholder
or other person in an Ineligible Jurisdiction (referred to as
“Ineligible Persons”) does not constitute an offer to such persons of the new shares and Ineligible Persons may not exercise
subscription rights.
If an investor receives, delivers or otherwise transfers subscription
rights, exercise subscription rights to obtain new shares or trades
or otherwise deals in subscription rights or the new shares being
granted or offered, respectively, in the Offering, that investor will
be deemed to have made, or, in some cases, be required to make,
the following representations and warranties to the Company and
any person acting on the Company’s behalf, unless such requirement is waived by the Company:
(a) the investor is not located in an Ineligible Jurisdiction, unless
the investor is an existing shareholder and a “qualified institutional buyer” i.e. a “QIB” as defined in, and in accordance
with, Rule 144A under United States Securities Act of 1933 as
currently in effect (the “Securities Act”);
(b) the investor is not an Ineligible Person other than an existing
shareholder and a QIB;
(c) the investor is not acting, and has not acted, for the account or
benefit of an Ineligible Person other than an existing shareholder and a QIB;
(d) unless the investor is an existing shareholder and a QIB, the
investor is located outside the United States and any person
for whose account or benefit it is acting on a non-discretionary
basis is located outside the United States, or are existing
shareholders and QIBs, and, upon acquiring new shares, the
investor and any such person will be located outside the United
States, or be existing shareholders and QIBs;
(e) the investor understands that neither the subscription rights
nor the new shares being granted and offered, respectively, in
the Offering have been or will be registered under the Securities Act and may not be offered, sold, pledged, resold, granted,
delivered, allotted, taken up or otherwise transferred within the
United States or to or for the account or benefit of US persons
except pursuant to an exemption from, or in a transaction not
subject to, registration under the Securities Act; and
(f ) the investor may lawfully be offered, take up, subscribe for and
receive subscription rights and the new shares being offered
in the Offering in the jurisdiction in which it resides or is currently located.
The Company and any persons acting on behalf of the Company
will rely upon the investor’s representations and warranties. Any
93
provision or false information or subsequent breach of these representations and warranties may subject the investor to liability.
If a person is acting on behalf of a holder of subscription rights
(including, without limitation, as a nominee, custodian or trustee),
that person will be required to provide the foregoing representations and warranties to the Company with respect to the exercise of
subscription rights on behalf of the holder. If such person cannot or
is unable to provide the foregoing representations and warranties,
the Company will not be bound to authorise the allocation of any
of the subscription rights or the new shares to that person or the
person on whose behalf the other is acting.
Subject to the specific restrictions described below, if an investor (including, without limitation, its nominees, custodians and
trustees) is outside of Sweden, Denmark, the United Kingdom and
Ireland, and wishes to exercise or otherwise deal in subscription
rights or subscribe for new shares, the investor must satisfy itself as
to full observance of the applicable laws of any relevant territory
including obtaining any requisite governmental or other consents,
observing any other requisite formalities and paying any issue,
transfer or other taxes due in such territories.
The information set out in this section is intended as a general
guide only. If the investor is in any doubt as to whether it is eligible
to exercise its subscription rights or subscribe for the new shares,
that investor should consult its professional advisers without delay.
Subscription rights will initially be credited to financial intermediaries for the accounts of shareholders that hold shares in the
Company through such intermediaries as of the record date 28
April 2009. A financial intermediary may not exercise any subscription rights on behalf of any person in the Ineligible Jurisdictions or
any Ineligible Persons and may be required in connection with any
exercise of subscription rights to certify the same.
Subject to certain exceptions, financial intermediaries are not
permitted to send this prospectus or any other information about
the Offering into any Ineligible Jurisdiction or to any Ineligible Person. The crediting of subscription rights to the account of persons
in Ineligible Jurisdictions or to Ineligible Persons does not constitute an offer of the new shares to such persons. Financial intermediaries, which include brokers, custodians and nominees, holding for
Ineligible Persons may consider selling any or all subscription rights
held for the benefit of such persons to the extent permitted under
their arrangements with such persons and applicable law and to
remit the net proceeds to the accounts of such persons.
Subject to certain exceptions, exercise instructions or certifications sent from or postmarked in any Ineligible Jurisdiction will
be deemed to be invalid and the new shares being offered in the
Offering will not be delivered to an addressee in any Ineligible
Jurisdiction. The Company reserves the right to reject any exercise
or revoke any accepted exercise made in the name of any person
who provides an address in an Ineligible Jurisdiction for acceptance,
revocation of exercise or delivery of such new shares, who is unable
to represent or warrant that such person is not in an Ineligible
Jurisdiction and is not an Ineligible Person, who is not acting
94
on a discretionary basis for such persons, or who appears to the
Company or its agents to have executed its exercise instructions or
certifications in, or dispatched them from, an Ineligible Jurisdiction. Furthermore, the Company reserves the right, with sole and
absolute discretion, to treat as invalid any exercise or purported
exercise of subscription rights which appear to it to have been
executed, effected or dispatched in a manner that may involve a
breach or violation of the laws or regulations of any jurisdiction.
Despite any other provision of this prospectus, the Company
reserves the right to permit a holder to exercise its subscription
rights if the Company in its absolute discretion is satisfied that the
transaction in question is exempt from or not subject to the laws
or regulations giving rise to the restrictions in question. Applicable
exemptions in certain jurisdictions are described further below. In
any such case, the Company does not accept any liability for any
actions that a holder takes or for any consequences that such holder
may suffer by the Company’s acceptance of the holder’s exercise of
subscription rights.
United States
The subscription rights and new shares have not been and will
not be registered under the Securities Act or with any securities
regulatory authority of any state or other jurisdiction of the United
States and may only be offered or sold within the United States to
existing shareholders who are reasonably believed to be “qualified
institutional buyers” (“QIB”) and who have executed a so called
investor letter, in the designated form, to Trelleborg and the Joint
Lead Managers.
Until 40 days after the commencement of the Offering, an
offer, sale or transfer of the subscription rights or new shares within
the United States by a dealer (whether or not participating in the
Offering) may violate the registration requirements of the Securities Act. The subscription rights and new shares have not been
approved or disapproved by any US federal or US state securities
commission or US regulatory authority. Furthermore, the foregoing authorities have not passed upon or endorsed the merits of the
Offering of the subscription rights and new shares or the accuracy,
adequacy or completeness of this prospectus. Any representation to
the contrary is a criminal offence in the United States.
Each holder of subscription rights or new shares, by accepting
delivery of the prospectus, will be deemed to have represented,
agreed and acknowledged that, among other things (terms used in
this paragraph that are defined in Rule 144A or Regulation S under
the Securities Act are used herein as defined therein):
(1) it: (i) is an existing shareholder and a “qualified institutional
buyer”, or QIB; (ii) is aware, and each beneficial owner of such
subscription rights or new shares has been advised, that the sale
of the subscription rights or the new shares to it may be made
in reliance on an exemption from the registration requirements
of the Securities Act provided by Section 4(2) thereof, or in a
transaction not subject to, the registration requirements of the
Securities Act; and (iii) is acquiring such subscription rights
or new shares for its own account or for the account of a QIB;
or it is exercising, subscribing for or otherwise acquiring the
subscription rights or new shares in an offshore transaction in
accordance with Rule 903 or 904 of Regulation S;
(2) it understands that the subscription rights and new shares are
“restricted securities” within the meaning of Rule 144(a)(3)
under the Securities Act and understands that such securities
have not been and will not be registered under the Securities
Act and, until 12 months following their issuance by the Company, may not be offered, sold, pledged or otherwise transferred
except: (i) in an offshore transaction in accordance with Rule
904 of Regulation S under the Securities Act; (ii) pursuant to
an effective registration statement under the Securities Act;
or (iii) pursuant to an exemption from registration under the
Securities Act, in each case in accordance with any applicable
securities law of any state of the United States;
(3) if, within 12 months following their issuance by the Company, the person in question decides to offer, resell, pledge or
otherwise transfer such subscription rights or new shares, such
securities may be offered, sold, pledged or otherwise transferred
only together with the following legend, which such subscription rights or new shares will bear unless otherwise determined
by the Company in accordance with applicable law:
This security has not been, and will not be, registered under
the US Securities Act of 1933 (the “Securities Act”), or with
any securities regulatory authority of any state or other jurisdiction of the United States, and until 12 months following their
issuance by Trelleborg may not be offered, sold, pledged or
otherwise transferred unless registered under the Securities Act
or such action is an offshore transaction in accordance with
Rule 904 of Regulation S under the Securities Act or is effected
pursuant to an exemption from registration under the Securities Act;
(4) any offer, sale, pledge or other transfer made other than in
compliance with the above-stated restrictions shall not be recognized by the Company in respect of the subscription rights or
the new shares;
(5) it undertakes if, within 12 months following their issuance by
the Company, it offers, resells, pledges or otherwise transfers
the subscription rights or the new shares, to notify such subsequent transferee of the transfer restrictions set out in paragraphs
(1) to (4) above;
(6) it is not an affiliate (as defined 501(b) under the Securities
Act) of Trelleborg, and is not acting on behalf of an affiliate of
Trelleborg;
(7) if the person in question is acquiring any subscription rights
or new shares for the account of one or more other investors,
it represents that it has sole investment discretion with respect
to each such account and that it has full power to make the
foregoing acknowledgments, representations and agreements
on behalf of each such account; and
(8) Trelleborg, the Joint Lead Managers and each of their respective
affiliates and agents, and others, will rely upon the truth and
accuracy of the foregoing representations, warranties, acknowledgments and agreements.
Persons receiving the prospectus are hereby notified that the
Company and other sellers of subscription rights or new shares are
relying on an exemption from the registration requirements of section 5 of the Securities Act.
European Economic Area
In relation to Member States of the European Economic Area
other than Sweden, Denmark, the United Kingdom and Ireland,
which have implemented the Prospectus Directive, an offer to the
public of any subscription rights or new shares contemplated by the
prospectus may not be made except that such an offer may be made
under the following exemptions under the Prospectus Directive, if
they have been implemented in that relevant member state:
(a) to legal entities which are authorised or regulated to operate
in the financial markets or, if not so authorised or regulated,
whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of
at least 250 employees during the last financial year, (2) a total
balance sheet of more than EUR 43 M and (3) an annual net
turnover of more than EUR 50 M, as shown in its last annual
or consolidated accounts; or
(c) to other persons provided that no such offer would result in a
requirement for the publication by the Company or the Joint
Lead Managers of a prospectus pursuant to Article 3 of the
Prospectus Directive.
For the purpose of this provision, the expression an “offer to the
public” in relation to any subscription rights or new shares in any
relevant member state means the communication in any form
and by any means of sufficient information on the terms of the
Offering, the subscription rights and any new shares to be offered
so as to enable an investor to decide to subscribe for or acquire any
such securities. The expression “Prospectus Directive” includes any
relevant implementing measure in each relevant member state.
Stabilization
In connection with the rights issue, SEB Enskilda, or a representative or affiliate of SEB Enskilda, may act as “Stabilization Manager”
and may effect transactions with a view to supporting the stock
exchange or market price of the shares, subscription rights, BTAs
or new shares in order to counteract any existing selling pressure
(“Stabilization Measures”).
Stabilization Measures include transactions that stabilize, maintain or otherwise effect the market price of the shares, subscription
rights, BTAs or new shares. Such transactions may include creating
a syndicate short position, and engaging in stabilizing transactions
and purchases to cover positions created by short sales. Short sales
involve the sale by the Managers of securities not owned by them.
95
Stabilizing transactions consist of certain bids or purchases made
for the purpose of preventing or retarding a decline in the market
price of the securities while an offering is in progress.
The Stabilization Manager is under no obligation to engage in
any such stabilization. Accordingly, there is no assurance that stabilization will be undertaken. If stabilization is undertaken, it may
be discontinued at any time without prior notice. Stabilization may
be carried out from the day of publication of this prospectus, up to
and including 30 days following the subscription period, which is
expected to expire on June 18, 2009 (the “Stabilization Period”).
The Stabilization Manager may not stabilize (i) the subscription
rights at a price exceeding SEK 15.75 per subscription right, equal
to the theoretical value of a subscription right at the announcement
of the subscription price or (ii) the shares, BTAs or new shares at
a price exceeding SEK 27.75 per share, BTA or new share, equal
to the sum of the subscription price and the theoretical value of a
subscription right at the announcement of the subscription price
(SEK 12.00 plus SEK 15.75).
As a result of such stabilization, the stock exchange or market
price of the shares or other securities of the Company may be
higher than would otherwise prevail in the market. Stabilization
may also result in a stock exchange or market price at a level that is
not sustainable in the long term.
Within one week after the end of the Stabilization Period, the
Company will announce, in accordance with Article 9 of Regulation (EC) No. 2273/2003, whether stabilization measures have
been taken, the date on which stabilization commenced, the date
on which the last stabilization measures were taken and for each of
the dates on which stabilization occurred, the price range within
which stabilization was taken.
glossary
Bitumen-based: Asphalt-based.
Brake shims: Rubber metal alloy rings attached to the brake
lining (to minimize screech).
CR (Corporate responsibility): Refers to the responsibilities of
companies towards their key stakeholders, such as employees,
shareholders, customers, suppliers, the local community and the
environment. Often relates to the same areas encompassed by
the term sustainability or Corporate Social Responsibility (CSR).
Cross-ply tire: A former popular type of tire in which the fiber
direction in its inner reinforcement, the tire cord, is placed diagonally against the center of the tire, facing the direction of travel.
Elastomer: A polymer with high elasticity that can be stretched
to at least double its length. Once the exerted pull force is released, the polymer returns almost entirely to its original length.
Global Compact: UN initiative that unites companies and social
institutions around universally applicable principles for environment and society. The aim is for companies to become members
of society that are involved in developing solutions for challenges arising from increasing globalization.
96
OEM (Original Equipment Manufacturer): The end producer of,
for example, a car.
Plastics: Can be divided into two main groups. Thermoplastics
are non cross-linked plastics that are solid at room temperature
but become soft and moldable when heated. Hard plastics are
cross-linked plastics that disintegrate upon heating and do not
regain their properties.
Polymer: The word is derived from the Greek “poly,” meaning
“many” and “meros” meaning “parts.” A polymer consists of
a long molecular chain of linked repeated units. Polymers are
made up of many small molecules – monomers – that are linked
in long chains. Examples of polymers are plastics and rubber.
Polymer technology: The technology relating to manufacturing
processes for polymers in combination with their unique properties.
Radial tires: Increasingly popular type of tire with the fibers of
the inner reinforcement, the tire cord, placed in a radial direction
towards the center of the tire.
Addresses
Important information
In this prospectus “Trelleborg” or “Company” means, depending on the context,
either Trelleborg AB or the group in which Trelleborg AB is the parent company. The
“Group” means Trelleborg AB and its subsidiaries.
“Joint Lead Managers” refers to Handelsbanken Capital Markets, a business unit
within Svenska Handelsbanken AB (“Handelsbanken Capital Markets”), Nordea Bank
AB (“Nordea” or “Nordea Corporate Finance”) and SEB Enskilda, Skandinaviska Enskilda Banken AB (“SEB Enskilda”). “Co-Lead Manager” refers to DnB NOR Markets,
a unit within DnB NOR Bank ASA (“DnB NOR Markets”). The Joint Lead Managers
and the Co-Lead Managers are jointly referred to as the “Managers”.
“Euroclear Sweden” refers to Euroclear Sweden AB, formerly VPC AB. “NASDAQ
OMX” refers to NASDAQ OMX Stockholm AB. “SEK” refers to Swedish crowns,
“USD” refers to American dollars and “EUR” refers to Euro.
Forward-looking statements and market data
The prospectus contains certain forward-looking statements that reflect Trelleborg’s
current views with respect to future events and financial and operational performance. The words “intend”, “estimate”, “expect”, “may”, “plan”, “anticipate” or similar
expressions regarding indications or prognoses of future developments or trends,
which are not statements based on historical facts, constitute forward-looking information. Although Trelleborg believes that these statements are based on reasonable
assumptions and expectations, Trelleborg cannot give any assurances that such statements will materialise. Because these forward-looking statements involve known
and unknown risks and uncertainties, the outcome could differ materially from those
set out in the forward-looking statement.
Factors that could cause Trelleborg’s actual results of operations or performance
to differ from the forward-looking statements include, but are not limited to, those
described under “Risk Factors”. The forward-looking statements included in this
prospectus speak only of the date of the prospectus. Trelleborg undertakes no
obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, other than as required by law.
The prospectus contains market data and industry forecasts, including information
related to the sizes of the markets in which the Group participates. The information
has been extracted from a number of sources. Although Trelleborg regards these
sources as reliable, the information contained in them has not been independently
verified. In addition to the above, certain data in the prospectus is also derived from
estimates made by Trelleborg.
Presentation of financial information
Trelleborg’s audited consolidated financial statements for 2006, 2007 and 2008,
which have been prepared in accordance with International Financial Standards
(“IFRS”) as enacted by the EU, are incorporated through reference and constitute
a part of this prospectus. Certain financial and other information presented in this
prospectus have been rounded off for the purpose of making this prospectus more
easily accessible for the reader. The figures in certain columns thus do not correspond exactly with the declared total amount.
With the exception of the Company’s audited consolidated financial statements
for 2006, 2007 and 2008, and the lucidly reviewed interim financial statement for
the first quarter of 2009, no additional information within the prospectus has been
reviewed or audited by the Company’s auditors.
Trelleborg
Head office
Trelleborg AB
Johan Kocksgatan 10
Box 153
SE-231 22 Trelleborg
Telephone: +46 410 670 00
Financial advisors
Joint Lead Managers
Visiting address
Blasieholmstorg 11-12
Mailing address
SE-106 70 Stockholm
Telephone: +46 8 701 10 00
Nordea Corporate Finance
Visiting address
Smålandsgatan 17
Mailing address
H115
SE-105 71 Stockholm
SEB Enskilda
Visiting address
Kungsträdgårdsgatan 8
Mailing address
SE-106 40 Stockholm
Telephone: +46 8 522 295 00
Co-Lead Manager
DnBNor Markets
Visiting address
Stranden 22
Mailing address
N-0021 Oslo
Telephone: +47 2222 948880
Legal advisors
Mannheimer Swartling Advokatbyrå
Visiting address
Södergatan 22
Mailing address
Box 4291
SE-203 14 Malmö
Telephone: +46 40 698 58 00
Account operator
Euroclear Sweden AB
Box 7822
SE-103 97 Stockholm
Narva/Börstryck
Information to investors
This prospectus has been prepared in compliance with the standards and requirements of the Swedish Financial Instruments Trading Act of 1991 (lagen (1991:980)
om handel med finansiella instrument) (the “Trading Act”), Directive 2003/71/EC of
the European Parliament and the Council (the “Prospectus Directive”) and the Commission Regulation (EC) No. 809/2004.
The prospectus has been approved and registered by the Swedish Financial
Supervisory Authority (Finansinspektionen) (“SFSA”) pursuant to the provisions
of Chapter 2, Sections 25 and 26 of the Trading Act. Approval and registration by
SFSA do not imply that SFSA guarantees that the factual information provided in this
prospectus is correct and complete.
The prospectus and the offering pursuant to the prospectus are governed by
Swedish law. The courts of Sweden have exclusive jurisdiction to settle any dispute
arising out of or in connection with this prospectus or the offering.
This prospectus has been prepared in Swedish and English language versions.
In case of any inconsistency between the Swedish and the English versions of the
prospectus, the Swedish version shall prevail.
None of the subscription rights, paid subscription shares (betalda tecknade aktier)
(“BTAs”) or new shares have been or will be registered under the United States
Securities Act of 1933 as currently in effect (the “Securities Act”) or under any other
jurisdiction other than Sweden. None of the subscription rights, BTAs and new shares
may, without such registration, be offered or transferred within the United States or to
US persons (as defined in Regulation S under the Securities Act) except for pursuant to
an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act. Moreover, the offering in the prospectus is not directed to shareholders domiciled in Canada, Australia, Hong Kong and Japan or in any other jurisdiction
where participation would require additional prospectuses, registration or measures
other than those pursuant to Swedish law. Accordingly, the prospectus may not be distributed in any country where the distribution or the offering requires such measures or
would conflict with regulations in such country or jurisdiction. Acquisition of subscription
rights, BTAs or new shares in violation of the restrictions described above may be void.
In relation to member states of the European Economic Area (other than Sweden,
Denmark, the United Kingdom and Ireland) which have implemented the Prospectus
Directive, the offering pursuant to this prospectus can only be made where it does
not give rise to a requirement to prepare a prospectus in such countries pursuant to
Article 3 of the Prospectus Directive.
For more information regarding restrictions in relation to the offering in the prospectus, please see “Restrictions on Sale and Transfer etc”.
This prospectus has been furnished by Trelleborg based on their own information and sources Trelleborg believes to be reliable. No representation or warranty,
expressed or implied, is made by the Managers as to the accuracy or completeness
of any of the information set out in the prospectus and nothing in the prospectus
is or shall be relied upon as a promise or representation, whether as to the past
or the future, as the Managers has conducted no independent verification of the
information.
Anyone making an investment decision must rely on its own assessment of
Trelleborg and the offering under the prospectus, including the merits and risks involved, and investors must only rely on the information contained in the prospectus
and any supplements to the prospectus. No person has been authorised to give
any information or make any representations other than those contained in the
prospectus and, if nevertheless given or made, such information or representations
must not be relied upon as having been authorised by Trelleborg. The distribution of
this prospectus does neither entail that the information contained therein is correct
and up-to-date as per any other date than the date of this prospectus, nor that the
affairs of the Company have remained unchanged since this date. In the event that
the information contained in the prospectus is subject to any material change during
the period starting with the publication and ending with the first trading day, such
material change will be published in accordance with the provisions in the Trading
Act (being the relevant legislation regarding the publication of supplements to
prospectuses).
As a condition for exercising subscription rights or purchasing new shares pursuant to the offering in the prospectus, each exercising holder or purchaser will be
deemed to have made, or, in some cases, be required to make, certain representations and warranties, that will be relied upon by Trelleborg, the Managers and
others. See “Restrictions on Sale and Transfer etc”. Trelleborg reserves the right,
in its sole and absolute discretion, to reject any exercising of subscription rights
or purchase of BTAs or new shares that it or its agents believe may give rise to a
breach or violation of any law, rule or regulation.
In connection with the offering in the prospectus SEB Enskilda, or a representative or affiliate of SEB Enskilda, (in such capacity, the “Stabilizing Manager”)
may effect transactions which stabilize or maintain the market price of the shares,
subscription rights, BTAs or new shares at levels which might not otherwise prevail.
Such transactions may be effected on the exchange where the shares are listed,
in the over-the-counter market or otherwise. The Stabilizing Manager is under no
obligations to engage in any such stabilization measures, and such stabilization, if
commenced, may be discontinued at any time without prior notice. Such stabilization
measures may be carried out from the day of publication of this prospectus, up to
and including 30 days following the subscription period, which is expected to expire
on June 18, 2009. The Stabilization Manager may not stabilize (i) the subscription
rights at a price exceeding SEK 15.75 per subscription right, equal to the theoretical
value of a subscription right at the announcement of the subscription price or (ii)
the shares, BTAs or new shares at a price exceeding SEK 27.75 per share, BTA or
new share, equal to the sum of the subscription price and the theoretical value of a
subscription right at the announcement of the subscription price (SEK 12.00 plus
SEK 15.75). For a more detailed description of the stabilization activities, see
“Restrictions on Sale and Transfer etc” / “Stabilization and Other Trading Activities”.
Invitation to subscribe for
shares in Trelleborg AB
Joint Lead Managers
Trelleborg AB (publ), Box 153, SE-231 22 Trelleborg, Sweden
Tel: +46 410-670 00 www.trelleborg.com
Co-Lead Manager