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Annual Report 2005
Find it easy
Contents
10
Presentation of Findexa
With its multi-channel offering, Findexa is
the clear leader in the Norwegian market.
13
New products and services
User value is one of the most important
driving forces for Eniro’s continuous product
development.
31
Corporate governance report
Read more about corporate governance
at Eniro.
Eniro 2005
CEO’s comments
Eniro’s business
Business concept, strategy and
business planning
Challenges and goal achievement
Presentation of Findexa
Brand
Employees
Market overview
Sweden
Norway
Finland
Denmark
Poland
Germany
1
2
4
6
8
10
12
13
15
16
18
21
23
25
26
27
Risk factors
The share
Board of Directors and auditors
Group management
28
29
31
35
36
Board of Directors’ report
Consolidated income statement
Consolidated balance sheet
Changes in consolidated equity
Consolidated cash flow statement
Parent Company income statement
Parent Company balance sheet
Changes in equity, Parent Company
Parent Company cash flow statement
Accounting principles
Notes
Certification by the Board of Directors
and the President
Audit report
Multi-year summary
Quarterly summary
Definitions
Annual General Meeting
Addresses
37
41
42
43
43
44
45
46
46
47
52
65
65
66
67
68
69
69
DAT E S F O R F I N A N C I A L I N F O R M AT I O N
This annual report has been prepared in
Swedish and translated into English. In
the event of any discrepancies between
the Swedish and the translation, the former
shall have precedence.
Interim report, January-March
Interim report, January-June
Interim report, January-September
Year-end report for 2006
Annual Report for 2006
The formal financial report that was prepared
in accordance with the International Financial
Reporting Standards (IFRS) as adopted by
the EU is presented on pages 37 to 68. Only
the formal financial report was reviewed by the
Company’s auditors.
The financial reports are available at eniro.com.
The reports may also be ordered from:
Eniro AB, Investor Relations, SE-169 87 Stockholm, Sweden
Tel: +46 8 553 310 08, Fax: +46 8 585 90 15, E-mail: [email protected]
Read the latest news from Eniro on
April 27, 2006
July 20, 2006
October 26, 2006
February 2007
March 2007
eniro.com
Eniro – the leading Nordic search company
Sweden
SHARE OF 2005 GROUP
OPERATING REVENUES
PRO FORMA, INCLUDING FINDEXA
42%
SHARE OF
GROUP FULL-TIME
EMPLOYEES
31%
Internet
services
Directories
Eniro
chan
close
chan
Amon
Directory
Assistance
Eniro: Gula Sidorna
eniro.se
Eniro: 118 118
Din Del
gulasidorna.se
Eniro: 118 119
Emfas
emfas.com
dindel.se
passagen.se
bilweb.se
118118office.com
Norway
31%
23%
Gule Sider
gulesider.no
Telefonkatalogen
telefonkatalogen.no
Ditt Distrikt
kvasir.no/eniro.no
Bedriftskatalogen Bizkit/Proff
sol.no
Telefonkatalogen 1
yelo.no
bizkit.no/proff.no
dittdistrikt.no
Denmark
Finland
dinpris.no
10%
6%
11%
7%
Eniro Telephone Directories
eniro.fi
Eniro: 0100100
Eniro: Kaupunki-Info
yritystele.fi
118
Eniro: Yritystele
suomi24.fi
Eniro: Mostrup
eniro.dk
Eniro: Den Røde Lokalbog
Webdir local directories
Poland
Eniro: Panorama Lokalna
6%
23%
pf.pl
Eniro: Panorama Firm
Eniro: Panorama Budownictwa
Eniro: Panorama Do Samochodu
wlw.com
Germany
Core markets
dittpris.se
5%
5%
wlw.de
o is the leading search company in the Nordic media market. Eniro offers the best
nnels for buyers and sellers who want to find each other easily, thus bringing users
er to a transaction. Through deep, local and quality assured information ever present in
nnels preferred by the users, finding people, businesses and products becomes easy.
ng the channels are directories, directory assistance, Internet and mobile services.
1880
PRO FOR M A OPER ATING INCO ME FOR 20 0 5
INCLU DING FINDE X A BY M A R K E T, SEK M
Mobil
services
mobil.eniro.se
Eniro: mobile
positioning 4400
118 118 sms
INCLU DING FINDE X A BY M A R K E T
2,779
2,786
Sweden
Sweden 42%
2,094
Norway
Norway 31%
179
637
703
Finland
Denmark
396
376
Poland
375
325
Germany
347
376
Finland 10%
Denmark 6%
Poland 6%
Germany 5%
2005
2004
INCLU DING FINDE X A BY CH A NNEL
O PER ATING INCO ME BY CH A NNEL, SEK M
wap.eniro.no
wap.sol.no
Telefonkatalogen
1880 sms
GuleSider1880 sms
20051)
2,577
2004
2003
2,041
2)
4,051
2,704
1,747
Printed directories 61%
3,061
Internet, mobile services and
directory assistance 39%
Printed directories (offline)
Internet, mobile services, directory assistance (online)
1)
2)
wap.eniro.fi
Pro forma operating revenues including Findexa.
According to previous Swedish accounting principles (not IFRS).
16123 search services
ENIRO’S SHARE OF THE INTERNE T
ADVERTISING MARKE T
ENIRO’S SHARE OF THE ADVERTISING MARKE T
Market* 2005
2005
2004
Eniro: sms 1218
Sweden
SEK 19,900 M
11%
12%
mobil.eniro.dk
Norway
SEK 16,500 M
12%
1%
Finland
SEK 12,300 M
4%
6%
Denmark
SEK 12,600 M
3%
3%
Poland
SEK 13,200 M
3%
3%
SEK 202,000 M
<1%
<1%
Market 2005
2005
2004
Sweden
SEK 2 ,100 M
80%
82%
Norway
SEK 1,500 M
98%
0%
Finland
SEK 1,000 M
36%
42%
Denmark
SEK 1,500 M
22%
21%
SEK 600 M
52%
50%
SEK 10,900 M
n/a
n/a
Germany
Market 2005
2005
Sweden
SEK 1,600 M
36%
41%
Norway
SEK 1,800 M
32%
17%
Finland
SEK 500 M
19%
22%
Denmark
SEK 800 M
9%
9%
Poland
SEK 400 M
13%
13%
SEK 7,000 M
5%
7%
Germany
2004
wap.pf.pl
ENIRO’S SHARE OF THE DIRECTORY
ADVERTISING MARKE T
Poland
Germany
Sources: IRM, WARC, Zenith Optimedia, ZAW, BVDW, CR
Media Consulting and Eniro estimates.
The figures for 2004 were adjusted in consideration of
changed market data from the various institutes and changes
in sources.
* Traditional media, directories and Internet.
Traditional media include the daily press, magazines, TV, radio, cinema
and outdoor advertising.
Eniro 2005
n
n
n
n
n
The market-leading Norwegian search company Findexa was acquired and is
consolidated in the Eniro Group as of December 5, 2005
The operations in Estonia, Latvia and Lithuania were divested
Agreements were signed for the sales of the operations in Russia and Belarus
A total of SEK 538 M was transferred to the shareholders
The Board of Directors will propose to the Annual General Meeting an unchanged
dividend of SEK 2.20 per share. The proposed dividend amounts to SEK 398 M,
or 43 percent of net income for the year
KE Y DATA
O P E R AT I N G R E V E N U E S , S E K M
SEK M
2005
Operating revenues
6,628
2004
2003 5
4,827 1
4,745
4,808
Operating income before depreciation (EBITDA)
1,234 2
1,324
1,292
5000
Earnings before tax
Findexa
(1,854)
4,827
1,017
1,131
483
4000
Net income per share, SEK
5.84
4.62
1.14
3000
Cash earnings per share, SEK
6.88
5.20
5.30
2000
2.20
1.80
1000
42
35
7
0
10,564
2,832
2,462
2.1
1.9
4,752
4,595
Dividend per share, SEK
Return on equity, %
Interest-bearing net debt
Interest-bearing net debt/EBITDA, times
Average number of full-time employees
2.20
5.0
3
4
4,704
Operating income excluding Findexa amounted to SEK 4,774 M.
2
EBITDA excluding Findexa amounted to SEK 1,293 M.
3
Board of Directors’ proposal.
4
Based on pro forma accounts for the new Eniro Group, including Findexa and excluding
non-recurring costs in conjunction with the acquisition totaling SEK 113 M.
5
4,808
4,745
5
2003
2003
Findexa
(53)
2004
2004
2005
2005
2005
2005
pro forma
incl. Findexa*
1
Norway
Sweden
Finland
For definitions, see page 68.
Denmark
ENIRO PRO FORMA INCLUDING FINDE X A*
SEK M
2005
Operating revenues
6,628
Operating income before depreciation (EBITDA)
2,093
* Pro forma for the combined Eniro Group based on consolidated accounts for Eniro and
Findexa as if the acquisition had taken place on January 1, 2005. Operating income
before depreciation does not include non-recurring costs of SEK 113 M attributable to
Eniro’s acquisition and which were charged to Findexa.
Germany
Poland
Core market
Non-core market
Marbella
Eniro Annual Report 2005
CEO’S COMMENTS
The Nordic leader in local search
The past year was characterized by a rapid pace in the process of change that began in 2004 and which includes a consolidation of
the operations to the Nordic countries and Poland, intensified product development and a focus on sales and lower costs. We also
completed the strategically important acquisition of the Norwegian company Findexa at the end of 2005. Through this acquisition,
we have strengthened our position as the leading search company in the Nordic region and created a good platform in the increasingly competitive search market. The acquisition of Findexa will also increase our opportunities to further invest in Internet services
and provides us with a much more efficient capital structure. Including Findexa as of December 5, 2005, operating revenues
amounted to SEK 4,827 M, while operating income before depreciation (EBITDA) amounted to SEK 1,234 M.
with our expectations and a direct consequence of the price decline
resulting from the new competitive situation. At the same time, we failed
to control costs, resulting in an EBITDA margin, excluding restructuring
costs, of only 8 percent. In order to better deal with the situation in the
future, management of the Finnish operations was replaced during the
year and an extensive action program initiated.
When I came aboard as President and CEO in June 2004, my first task
was to develop a sustainable strategy for creating favorable growth
in value over the medium-long term. The ambition for Eniro is to be
a company capable of an annual growth of 3 to 5 percent, with good,
sustainable margins, enabling us to pay dividends to shareholders corresponding to 75 percent of net income.
The first step on our journey was to deal with the five core challenges
that we identified during 2004. The results of the actions taken in these
areas are now evident with a passing score on four of five items.
•
•
•
•
•
Printed directories in Sweden 4
Finland
Product development 4
Cost level 4
Geographic portfolio 4
Let me briefly summarize what we have achieved with respect to these
challenges, and which are also described in greater detail on page 8.
1. Printed directories in Sweden
We were very successful in breaking the negative revenue development
for printed directories in Sweden, our most important revenue source.
Our goal was that the organic decline should be halved, compared with
2004, meaning reduced from a decline of 11 percent to a decline of 5.5
percent. The outcome was significantly better, and the decline during the
year was limited to 2 percent. During the year, we also laid the necessary
foundation to stabilize these revenues in 2006.
2. Finland
In dealing with the fundamentally changed market situation in Finland,
we did not deliver the required results. Operating income for the Finnish
operations declined by 9 percent to SEK 637 M in 2005. This was in line
3. Product development
During the year we successfully developed our product portfolio and
strengthened our customer offerings. On the printed directory side, the
Swedish Yellow Pages (Gula Sidorna) underwent significant changes
to make search in the product easier, as well as to increase our customers’ returns on their investments. Our Internet services have continually
been improved to meet the needs and expectations of the users, and it
was with great pride that we accepted the award for best utility site in
the magazine Internetworld’s annual ranking of Internet services. The
strong growth in usage (for December 2005, the total number of unique
browsers to all of Eniro’s Internet services increased by 24 percent over
December 2004) of our Internet services is yet additional proof of the
appreciation that our services have earned during the year. The single
largest Internet development effort during 2005 is in product search,
which is a service that enables users to search for a specific product,
service or brand to find the right local supplier. With product search we
have further enhanced the content of our databases, enabling users and
advertisers to find each other more easily and to generate more transactions. In other words, Eniro is creating more value for both users and
advertisers. Creating this depth within our database would be impossible without our sales team, which maintains contact with advertisers
and gathers information, and the strong Eniro brand that stands for high
functionality and local information.
4. Cost level
The SEK 100 M in promised cost reductions for 2005 was delivered.
During 2006, we will save an additional SEK 150 M, with further savings
of SEK 100 M in 2007, all according to plan.
5. Geographic portfolio
The fifth core challenge for 2005 was the unfocused geographic portfolio. Strong market positions are essential for sustainable profitability
in our industry. In the 2004 Annual Report, it was clearly stated that
the geographic portfolio would be restricted to the Nordic countries
and Poland. Consequently, during 2005, divestment of all operations
in Eastern Europe was initiated. At the same time, Eniro acquired its
CEO’S COMMENTS
Norwegian counterpart Findexa. The acquisition of Findexa is of great
strategic importance. With this acquisition, Eniro secured its position as
the Nordic leader in local searches with opportunities for synergy effects
and continued investment in Internet services.
Acquisition of Findexa
The acquisition of Findexa was the single largest event for Eniro in 2005
and will strengthen the Group’s prospects for the future.
The purchase price for Findexa amounted to SEK 7.9 billion, which
was paid 70 percent in cash and 30 percent with Eniro’s own shares,
meaning that dilution for our shareholders was limited to about 13 percent. Over the short term, this means that Eniro’s borrowing increases
from 2.1 times EBITDA at year-end 2004 to 5.0 times EBITDA based
on the pro forma accounts for Eniro including Findexa but excluding
acquisition costs. Over the coming two years, a large portion of Eniro’s
cash flow will be allocated to amortize the credit facilities, meaning that
we will not be able to pay dividends in accordance with our dividend
policy. However, it is our ambition to return to dividends in line with our
policy within two years.
A successful integration requires a favorable integration effort. This
work is expected to be completed by the summer of 2006. We will realize
the initial promised costs synergies, estimated at SEK 50 M, during 2006.
By 2007, we expect these synergies to amount to SEK 100 M.
Challenges for 2006
Eniro’s market is developing rapidly. During 2005, we experienced
increasing competition within Internet-based services from both global
and local players, especially in Sweden and Norway. Our focus on product development and brand building will therefore be further increased
– we must be at the forefront and adapt the functionality of our services to
new, more sophisticated usage patterns while simultaneously improving
and enhancing offerings for advertisers. Economies of scale are significantly greater for Internet services, compared with printed directories.
It is therefore especially heartening that we now, through the acquisition of Findexa, have created a larger and stronger Group with a strong
position for the future.
As in the past, executive management and I have identified the core
challenges for our work in 2006:
1. Printed directories in Sweden and Norway
For 2005, revenues from printed directories in Sweden accounted for 24
percent of total pro forma Group revenues, including Findexa, and are
thus a major part of the value of Eniro. Consequently, during 2006 we
will continue to work on product development in our printed directories
– all with the aim of further increasing user friendliness and improving our
offerings to advertisers. For example, during the first quarter of 2006 we
have, printed and distributed a pocket edition of Gula Sidorna (the Swedish Yellow Pages) in Stockholm. We also need to better demonstrate the
value of advertising in print directories to the advertisers. On average,
each SEK 1 invested in the directories generates SEK 95 in revenue for
the advertisers. We must do a better job in conveying this to our customers. Our challenge for 2006 is to achieve unchanged revenues for printed
directories in Sweden, compared with 2005.
In Norway, the situation is currently much like the situation that Eniro
faced in Sweden during 2004. Findexa’s directory revenues in Norway
are expected to decline by 10 percent during 2006. During 2006, a
program similar to that implemented in Sweden in 2004 and 2005 will
be implemented with the goal of reducing the decline in Norwegian
directory revenues in 2007.
2. Finland
As during the preceding year, Finland remains one of Eniro’s core challenges. The challenges for the new management of Eniro Finland are to
recapture lost revenues, increase efficiency in the organization and grow
our Internet and mobile business. This is supposed to result in improved
margins and stabilized revenues in 2006.
3. Internet offering
Eniro was early to market with Internet-based services and was already
on the Internet ten years ago in 1996. User statistics have increased
steadily, and in December 2005, a total of 17.1 million unique browsers
were registered on Eniro’s Internet services in the Nordic region. The
market for paid search advertising is expected to grow by 70 percent in
Sweden in 2006, while the total Internet market is expected to increase
by 23 percent in Sweden and 30 percent in Norway. The challenge in
2006 will be to continue developing our Internet channels so that they
continue to attract users and to enhance offerings and bundled services
to our advertisers. Also in this area, we need to be better at clarifying the
value of advertising with Eniro and showing what a media investment
generates in increased sales.
As competition increases and with the increasingly rapid changes
in usage patterns for commercial Internet searches, Eniro will continue to evaluate complementary acquisitions. A good example is the
price-comparison site Din Pris that was acquired in February 2006. To
our present services we would like to add new, already developed services, that already have satisfied users. By integrating our services with
acquired services we can increase the functionality for all of our users
and, through our comprehensive customer contacts, better leverage the
commercial opportunities and increase sales. Our clearly defined goal
is to move the users closer to the actual transaction.
4. Cost level
The three-year cost reduction program initiated in 2005 continues in
2006, during which Eniro plans to reduce the cost level by SEK 150 M
and by an additional SEK 100 M in 2007.
5. Integration of Findexa
Major efforts will be made during 2006 with the aim of integrating Findexa into the Eniro Group. Over the short term, the goals established
regarding synergies will be delivered through the integration of Eniro’s
previous operations in Norway with Findexa. However, it is also important that we begin working on the more long-term synergy issues with
regards to product development, marketing and IT, with the goal of
creating additional synergies over the long term.
I am convinced that Eniro through hard work, committed employees and
with focus on users and customers will be able to successfully handle
the year’s challenges, thus strengthening Eniro’s market position for
the future.
Tomas Franzén
President and CEO
ENIRO’S BUSINESS
The leading Nordic search company
Eniro offers the best channels for buyers and sellers who want to find each other easily, thus bringing users closer to a
trasaction. Through deep, local and quality assured information in channels preferred by users, finding people, businesses
and products becomes easy. Among the channels are directories, directory assistance, Internet and mobile services.
1.1 bn
More than 1.1 billion searches
were performed in Eniro’s total
network of Internet services
during 2005.
During 2005, Eniro published some 700
titles with a total circulation of about 20
million. In Eniro’s total Internet network,
more than 1.1 billion searches were
performed during the year. Eniro has
operations in Sweden, Norway, Finland,
Denmark, Poland and Germany with a
total of about 4,900 employees.
Eniro’s sales totaled SEK 4,827 M in 2005 with an operating income
before depreciation (EBITDA) of SEK 1,234 M. The Eniro share has been
listed on the Stockholm Stock Exchange since October 2000.
Channels for different situations and needs
Eniro has its origins in printed directories and has in addition developed
Internet-based services, directory assistance by telephone and mobile
services. Eniro offers services directed to individual users, both as
private individuals and in their work. Eniro also offers more specialized
business services for companies looking for suppliers.
The foundation for Eniro’s business model is offering advertisers
exposure to users in several search channels. This means offering an
opportunity to meet users wherever and whenever they intend to find
people, businesses and products.
Buyers seeking sellers
Eniro’s users are actively searching for people, businesses and products. The user is close to a purchase decision and therefore has a clear
ambition to find the supplier of a specific product or service. With high
accessibility and motivated users, Eniro’s search channels become
effective marketing channels for advertisers.
Success factors
Success for Eniro is based on identifying and fulfilling the needs of
users and advertisers. Advertising revenues are the primary source of
revenues, and usage is what primarily determines the value for advertisers. High usage and advertising revenues constitute a positive spiral in
which the critical success factors are:
1. Content in the search channels. Through deep, local and quality
assured information that is easily accessible, value is increased for
the user and thus for the advertiser.
2. Strong brand. Through long-term work to strengthen the brand,
Eniro’s position is also strengthened as the obvious choice when
users seek information about people, businesses and products.
3. Sales force. Through an established sales force with good and comprehensive customer contacts, the depth of information is assured,
as well as the relevant content for the search channels.
See also pages 12 and 15 for a description of the brand and the sales
force.
cho
os
e
a
se
ENIRO’S CHANNELS
Internet
CLOSENES S TO TR A NSACTIO N
si
ion
at
tu
s
USER
based on n
nnel
eed
cha
sa
nd
rch
directories
Eniro’s
search channels
BUYER S SEEK ING SELLER S
classified advertising
ADVERTISER
direct advertising
telemarketing
reaches out via all
search channels
directory
assistance
mobile
services
The advertiser gains exposure via a number of search
channels – and meets the user on the user’s terms.
SELLER S SEEK ING BU YER S
TV, press and radio
In Eniro’s channels, it is the buyer who takes the initiative in finding sellers
and suppliers, as opposed to other advertising channels. The user is close
to a purchase decision and turns to a search channel with a brand that
promises the best quality, availability and usability.
The obvious choice
Eniro should be the obvious choice when users are seeking information
about people, businesses and products. Other market players in the
search market include global search engines, price comparison services,
topic-specific web sites and Internet services that provide information
about companies and private individuals. Eniro strives to differentiate itself by offering deep, local and quality assured information via a
multi-channel strategy that helps users to find what they are looking for
regardless of time or place.
Deep information means that Eniro does not just offer contact
information, but can also provide information about the products and
services that a given company offers – and where and when they can
be purchased.
Local information means that Eniro should provide the best search
assistance in each geographic market. In competing with global search
engines, there is a clear advantage in knowing more about the local
market and the companies and products that are preferred and available
where the users are located.
Quality assured information means that Eniro gathers data in a
systematic manner and organizes it so that it is searchable. The information in Eniro’s search channels is continuously enriched and enhanced
to ensure high content quality.
Eniro’s multi-channel strategy means that this information should
be available when and where users want it. Eniro should be present
where users are. Channels include directories, directory assistance,
Internet and mobile services.
Ever present
Greater value for
the advertiser
Eniro
tomorrow
Increased
advertising
Shallow
information
More business
generated
Deep content with high
quality, availability
and usability
Usage and advertising revenues are linked in a positive spiral. The greater the depth
and higher the quality of the content and the more accessible and user-friendly the
service is, the more business is generated. More business means that advertising
has greater value for advertisers, which in turn increases the number of advertisers,
thereby in turn increasing the depth and quality of the information.
Eniro
today
Deep
information
global search services
One channel
Through a multi-channel strategy and deep, local and quality assured
information, Eniro will be the obvious choice when active users seek
information about people, businesses and products.
B U S I N E S S C O N C E P T, S T R AT E G Y A N D B U S I N E S S P L A N N I N G
Eniro connects buyers and sellers
During 2004, Eniro’s strategic orientation was revised and a new desired position formulated. The desired position was
summarized in Eniro’s business concept and results in a number of strategic consequences or goals for the operation.
Business concept
• Eniro is the leading search company in the Nordic
media market.
• For active users, Eniro makes it easy to find people,
businesses and products.
• Eniro provides deep, local, quality assured
information, ever present in channels preferred by
the users – and thereby moves users closer
to transaction.
Eniro is the leading search company in the Nordic media market.
Why?
The industry is characterized by a strong correlation between market position and profitability. Eniro will therefore exploit its strengths
and apply its expertise, ability and experience
with respect to such factors as brands, sales,
content and functionality, product development and offerings that strengthen both the
user and the market position, thus increasing
profitability.
Printed directories are a relatively local business. With the Internet, economies of scale
increase between countries, particularly
countries with similar usage patterns. The
geographic portfolio will therefore be limited to
developed markets in which Eniro has strong
market positions and profitability or a potential
to achieve these goals, as well as adjoining
markets with similar usage patterns.
Consequences
The geographic portfolio will be limited to the
Nordic countries and Poland. In these markets,
Eniro will be the largest search company, thus
providing economies of scale in the development of the company’s search services particularly on the Internet and to ensure a profitable
market position.
For active users, Eniro makes it easy to find people, businesses and products.
Why?
As the pace of people’s personal and business lives increases, it becomes important for
them to find what they are looking for quickly
and easily.
Consequences
Eniro is and should be the leading player with
respect to designing new search-related products and services that are matched to users’
daily needs. Through innovative product development, Eniro will always remain at the forefront of development. A success factor is being
able to understand how different search channels can be combined in response to changing
usage patterns. To be able to remain the leader,
Eniro will continuously deepen its understanding of usage patterns, user needs and user
friendliness.
B U S I N E S S C O N C E P T, S T R AT E G Y A N D B U S I N E S S P L A N N I N G
Eniro provides deep, local, quality assured information, ever present in channels preferred by the users – and thereby
moves users closer to transaction.
Why?
In Eniro’s search channels, it is the buyer who
takes the initiative in seeking sellers or suppliers, unlike other marketing channels. The
user is close to making a purchase decision
and turns to the search channel with the brand
that promises the best quality, availability and
Consequences
Eniro ensures high quality with respect to
content and high user friendliness by continuously enriching and enhancing information.
Furthermore, Eniro works to achieve continuous improvement of the efficiency of the sales
force, while continuing its work to strength-
usability.
en the brand. Eniro will further enhance its
offering to advertisers and show advertisers
the value that their advertisements create.
Business planning work
The business concept and its strategic consequences provides the
foundation and guidelines for all operations within the Group. Based on
these prerequisites, work is performed every autumn on a Group-wide
business plan. This work includes evaluating the goals, strategy and
activities for the current year and establishing priorities for the coming
year. With consideration taken to the identified core challenges, business
plans and budgets are established at the country and department levels,
project are initiated, measures taken and activities conducted.
In conjunction with the quarterly reports, the most important measures taken within each challenge are presented. Presentations from
the quarterly reports are available at
eniro.com
A prerequisite is to keep pace with and create
knowledge of usage trends and patterns.
Eniro’s ambition to deliver search services
that are matched to user need and expectations also means that Eniro’s services will be
developed with the aim of bringing them closer
to the actual transaction.
Positioning
Strategic consequences
Core challenges
Country-specific challenges and activities
7
CHALLENGES AND GOAL ACHIEVEMENT
Satisfactory achievements on
four of five challenges
During 2005, Eniro’s management and employees
focused on five core challenges, which also provide the
basis for evaluating Eniro’s business development during
2005. The outcome was that satisfactory efforts and
results were delivered within four of the five areas, with
Finland as the only exception.
The most significant challenges were:
1. Reversing the negative revenue development for
printed directories in Sweden.
2. Successfully responding to the changed markets
conditions in Finland.
3. Enhancing the product portfolio and customer offering.
4. Focusing operations geographically and building a
leading Nordic position.
5. Reducing the Group’s cost level.
1 Negative revenue development for printed directories in Sweden
Challenge
Swedish directory operations comprise a large
portion of Eniro’s value. During 2003 and 2004,
revenues from printed directories in Sweden
accounted for 38 percent and 33 percent of
consolidated revenues. At the same time, revenues from directories declined organically by
7 percent from 2002 to 2003 and by 11 percent
from 2003 to 2004, due to both a fewer number
of advertisers and lower advertising revenues
per advertiser. The challenge for 2005 was that
the organic rate of decline in these revenues
should be limited to a decrease of 5.5 percent
during the year, compared with 2004, and that
revenues for 2006 should be unchanged compared with 2005.
Measures
To break the negative trend in directory
operations in Sweden, many measures were
implemented in the areas of product development, sales and business processes. New
features in the 2006 edition of the Swedish
Yellow Pages, Gula Sidorna, included a new
layout, new and more modern headings and
three separate guides. All of these changes
were intended to improve search functionality for users, thus increase value for advertisers. To support directory use, distribution was
expanded. To facilitate sales, new statistical
tools were developed for demonstrating customer value. A separate sales organization for
the local directory Din Del and the business
directory Emfas was established, and projects
were initiated to increase efficiency in business processes.
2 Changed market conditions in Finland
Challenge
Market conditions in Finland changed during
2004. The previous joint sales organization
with other players was phased out, and Eniro
developed its own sales organization for the
entire country. At the same time, the main
competitor Fonecta decided to publish its own
directories in Helsinki and Tampere, markets
in which Eniro was previously the main publisher, resulting in price pressures and Finnish
companies and households now receiving two
directory products.
Measures
For 2005, Eniro developed a new regional directory, Eniro Telephone Directories, which was
published in 33 retail areas with a circulation
of about 3 million copies. Eniro thus covers all
of Finland with regional directories. New management was appointed for Finnish operations,
and an action program was initiated.
Results
The new features in the Swedish Yellow Pages,
Gula Sidorna, were well received by both users
and advertisers. Revenues for Din Del and
Emfas increased during the year. The organic
decline in offline revenues was 2 percent during 2005. The partial goal for 2005 was thus
exceeded.
ORG ANIC RE VENUE DECLINE IN PRINTED
PRODUCTS IN SWEDEN
–7%
2002 2003
–11%
–2%
2004
2005
Results
The new market situation resulted in price pressures. Eniro’s directory revenues in Helsinki
and Tampere declined by 27 percent. Eniro
Telephone Directories was well received
by both users and advertisers. As a consequence of lower revenues and increased costs
for establishing a national offering, the EBITDA
margin for the Finnish operations, excluding
restructuring costs, declined to 8 percent.
CHALLENGES AND GOAL ACHIEVEMENT
3 Product portfolio and customer offering
2500
2,206
ENIRO’S TOTA L INTERNE T NE T WORK
20 0 3 – 20 0 5, UNIQUE BROWSERS,
WEEK ly AVER AGE by MONTH
8000000
8,000,000
2000
2,041
1,747
0
500
1000
1500
6000000
6,000,000
2003
Eniro also secured access to a technical platform that allows more sophisticated pricing
for sponsored links. Great emphasis was also
placed on improving the sales force’s dialogue
with advertisers with respect to the benefits
and value of advertising in Eniro’s networks.
ENIRO’S TOTA L ONLINE RE VENUES*
20 0 3 – 20 0 5, SEK M
2004
Measures
Extensive changes were implemented in the
2006 edition of the Swedish Yellow Pages,
Gula Sidorna. All development work is based
on comprehensive customer and user studies.
Internet services are being enhanced continuously, with the major new feature during 2005
being product searches that allow deeper
and filtered searches by products and brands.
Results
The feedback from the initiatives within product development from customers and users
was positive. As the leading search company
in the Nordic region, Eniro has good prerequisites for remaining at the forefront with respect
to local content and search functionality.
2005
Challenge
It is essential for Eniro to develop products and
services that satisfy user needs and create
value for advertisers.
2003** 2004 2005
4000000
4,000,000
2,000,000
2000000
00
2003
2004
2005
* Internet, mobile services and directory assistance.
** According to previous Swedish accounting principles (not IFRS).
Source: Nielsen Netratings Site Census and TNX Metrix.
Measures
A review of the geographic portfolio was initiated
based on the following evaluation criteria:
• Market maturity and traditions with respect to
search-related media
• Market position
• Synergies with core operations
• Potential for value creation
Results
Eniro focuses on the markets in the Nordic countries and Poland. As a consequence, the geographic portfolio was concentrated through the
sale of all operations in Eastern Europe, meaning
Russia, Belarus, Estonia, Latvia and Lithuania.
Furthermore, Norway’s leading search company
Findexa was acquired 2005 as part of the strategy to create the Nordic region’s leading search
company. Eniro’s German operations Wer liefert Was? may eventually be divested, but the
assessment is that the company currently creates more value for Eniro’s shareholders as part
of the Group.
in fixed currency by SEK 350 M, compared with
the cost level of SEK 3.7 billion in 2003. These
savings achieved an effect of SEK 100 M in 2005.
The effect in 2006 is expected to be SEK 250 M
and for 2007 SEK 350 M. The specified effects
are net savings.
Results
For 2005, the cost savings were well in line with
the established goal of SEK 100 M. Savings
were primarily achieved in purchasing, consulting services and other costs. The goals for
cost savings in 2006 and 2007 are retained.
4 Geographic portfolio
Challenge
A number of acquisitions in previous years resulting in broad geographic presence without market-leading positions had resulted in a loss of
focus on Eniro’s leading position in the Nordic
market, which is the market in which the major
share of the company’s revenues and operating
income are generated.
5 Cost savings
Challenge
The cost level was too high.
Measures
During 2004, a cost-savings program was initiated to reduce Eniro’s total cost level calculated
PR E SEN TAT ION OF F INDE X A
Findexa – the leading search
company in Norway
On December 5, 2005, Eniro acquired the Norwegian search company Findexa. As in Eniro’s case, Findexa was a
subsidiary to the national telecom operator, which included directory operations up until 2001. With its multi-channel
offering, Findexa is the clear leader in the Norwegian market.
Findexa is the leading Norwegian search company, and its multi-channel
offering includes printed directories, directory assistance, Internet and
mobile services, sms and cd-rom. Products and services are marketed
under such well-known brands as Gule Sider ®, TelefonkatalogenTM, BizKit® and DittDistrikt®. In addition, the company publishes a number of
niche products, as well as business-to-business products.
During 2005, Findexa published 115 printed directories (115) with a
total circulation of 8.5 million copies (8.9). Findexa has offices in nine
locations in Norway with about 1,060 employees.
Gule Sider
Gule Sider ® is a regional directory containing company advertisements
that is distributed in 13 editions with a total circulation of some 2.8 million
copies. Gule Sider is also one of Norway’s strongest brands. As much as
98 percent of the Norwegian population recognize the brand. Information
in the directory is also available via the gulesider.no Internet service, as
well as via directory assistance service Telefonkatalogen 1880. Some
70 percent of all Norwegian companies are represented in Gule Sider,
either in the directory or on the Internet, and most are represented in both
channels. Both the directory and the Internet service have high usage
figures. In December, gulesider.no registered an average of 0.8 million
unique browsers per week (0.6).
Yellow Pages, Gule Sider directory. Telefonkatalogen is available as an Internet
service (telefonkatalogen.no), the Telefonkatalogen 1880 directory assistance service and an Internet solution for companies. Recognition of the Telefonkatalogen
brand in Norway is 99 percent.
115
During 2005, Findexa published 115 printed directories
with a circulation of about
8.5 million copies.
DittDistrikt
Findexa publishes 73 local directories with information about private
individuals, companies and public organizations. DittDistrikt® also
contains pages targeted to children and young people and, as of 2005,
includes a leisure guide with such information as a overview of the area’s
clubs and associations. DittDistrikt is also a well known brand in Norway,
with a brand recognition of 94 percent.
BizKit
BizKit® is a directory targeted to companies that helps professional users
obtain or verify information about companies. BizKit is used as a purchasing tool in the B2B market but also contains contract services and
course and conference planning. BizKit is also available as an Internet
service and on cd-rom. During 2006, BizKit will be repositioned under
the brand Proff.
Telefonkatalogen
TelefonkatalogenTM is a directory with information about private individuals and companies that is distributed together with the Norwegian
Findexa’s head office is located in Skullerud, a few
kilometers from the center of Oslo. Some 600
employees work here, primarily in the areas of sales,
production and administration.
10
PR E SEN TAT ION OF F INDE X A
PRODUCTS AND SERVICES
The cover of the local directory Ditt Distrikt features children’s drawings, which are
selected through an annual competition for eleven- and twelve-year old children. The
theme for 2005 was “Draw your hero in everyday life”. Other products from Findexa
include Telefonkatalogen, Gule Sider and BizKit, which are all available in printed editions and on the Internet.
HISTORY
Findexa embodies a 125-year old directory tradition. The first list
of Norwegian telephone subscribers was published as early as
1880. Within the Norwegian Telephone Agency (subsequently
Telenor), telephone directories were initially published by the
telephone districts and later taken over by a separate directory
unit. Findexa has its origins in that unit, which from 1995 was
called Telenor Media.
In 2001, Texas Pacific Group (TPG) acquired Telenor Media
from Telenor and changed the company’s name to Findexa. During 2003, the company 1880 Nummeropplysningen AS which
provides directory assistance services was acquired. In May
2004, Findexa was listed on the Oslo Stock Exchange with TPG
as principal owner.
In December 2005, Enior acquired Findexa, and the Findexa
share was delisted from the Oslo Stock Exchange.
FINDEXA PRO FORMA 2005*
Operating income
SEK M
1,854
Of which:
Offline
1,443
Online
411
EBITDA
687
Costs in conjunction with Eniro’s acquisition
–113
EBITDA excluding costs in conjuction with Eniro’s acquisition
800
* In accordance with the accounting principles applied by Eniro.
11
brand
Eniro – a strong brand
To develop and strengthen its position as the leading search company in the Nordic media market, a strong brand is an
essential success factor. Brand building is intended to strengthen Eniro’s position as the obvious choice when users
seek information about people, businesses and products.
The number of services, products and brands that a consumer can keep
in mind is limited. Particularly in Internet search services, it is important
to be the user’s first choice (top-of-mind, meaning the first service that
comes to mind), since the step from a need to beginning to use a search
service is short when the user wants to find something.
The Eniro brand was established in the summer of 2000 and is thus a
relatively young brand. Not until 2003 did serious efforts begin to establish
Eniro as a brand in the entire Nordic region by ensuring that the brand
was included in all products and services. Eniro became the umbrella
brand under which all the product trademarks were gathered. Eniro was
established as a common general brand for all Internet services in the
Nordic countries.
Clear results – high recognition
Eniro’s long-term work to strengthen the Eniro brand has produced
results in the form of very high recognition among users and advertisers.
Eniro has been established as one of the strongest brands in its category,
with a strong position in its markets. Measured as total recognition (topof-mind together with what is called prompted recognition), Eniro is the
number one or number two choice in all markets.
Regular recognition measurements show a continued marked increase
in recognition of the Eniro brand. In Sweden, spontaneous recognition of
the Eniro brand, meaning spontaneous recall in response to a direct
question on awareness of companies in Eniro’s sector, from 49 percent in
December 2004 to 66 percent in December 2005. Total awareness of Eniro,
which includes both spontaneous and prompted recognition, increased in
the age group from 15 to 74 years from 85 percent in December 2004 to 93
percent in December 2005. In Norway, total recognition increased from 7
percent in December 2004 to 47 percent in December 2005.
In Finland, the corresponding recognition increased from 57 percent
in December 2004 to 69 percent in December 2005 and in Denmark from
39 percent in December 2004 to 46 percent in November 2005 (source:
Research International, Sifo).
BR AND RECOGNITION*
Sweden
Norway
Finland
Denmark
Dec 2005
Dec 2004
93%
47%
69%
46%**
85%
7%
57%
39%
* Brand recognition includes both spontaneous recognition and
prompted recognition. Source: Research International (Sifo).
** The measurement in Denmark was conducted in November 2005.
Brand work in 2005
During 2005, work was focused on increasing awareness and increasing preference for the products by emphasizing Eniro’s multi-channel
offering and strengthening awareness among users and advertisers
that the search service is available on the Internet, in directories and
via telephone. Today, Eniro is more and more seen as a search service
available in different channels.
The main message during 2005 was as previously that Eniro makes
it easy for users to find what they are looking for – “Find it easy.” This is
reflected in Eniro’s mission that achive users will easily find people, businesses and products with the help of Eniro. The overall message is that
regardless of what users are seeking, they will find the answer quickly
and easily by using Eniro’s services.
Brand strategy for 2006
The marketing during 2006 will continue to link the company name with
the products and services that Eniro offers. Going forward, the strategy is to focus even more on emphasizing the different channels – and
not least, instilling greater emotional value in the Eniro brand. This will
be accomplished through focusing on communication that describes
Eniro’s ambition to help users find what they are looking for. With the
acquisition of Findexa, Eniro in Norway has chosen to focus on the
already established brands Gule Sider and Kvasir.
Eniro is the principal sponsor for the Swedish Athletics Association
Eniro’s partnership with the Swedish Athletics Association was
extended and expanded during 2005. From previously having been a
sponsor of the national team, Eniro became the principal sponsor for
the entire Athletics Association up to and including 2009. The gains
from the partnership with Swedish athletics since 2003 have been
very substantial, since the success of Swedish athletes has resulted in
extensive exposure of the Eniro brand in several positive contexts, not
least during the Summer Olympics in Athens in 2004. The expanded
partnership includes supporting promising young athletes in what is
called Team Eniro, which is a development team for tomorrow’s stars
whose goals include the 2008 Olympics.
12
During 2004, a sponsorship agreement was also entered with the
Finnish Athletics Association that was in part intended to increase
exposure of Eniro during the World Athletic Championships in Helsinki
in 2005. This was a great success, not only for the athletes, but also in
terms of sponsorship. The total attention for Eniro in conjunction with
various athletic events was very positive during 2005. During 2006, the
European Athletic Championships will be held in Gothenburg, Sweden
and are expected to generate additional publicity and to contribute to
increased awareness of Eniro.
N e w products and services
The demand for search services is increasing and changing at an increasingly rapid pace, not least due to ever-faster advances in technology and
new usage patterns. Eniro continuously evaluates the existing service
offering and test new products and services with test panels and qualitative and quantitative studies.
The development of new products and services through Eniro’s own
product development and through alliances with various business partners is a central component in Eniro’s strategy to maintain and enhance
its position as the leading Nordic search company. The guiding principle
for product development is to create services that give users more help
in easily finding and selecting products and suppliers and which provide
better information on how to contact or locate the supplier.
Closer to the transaction
A special focus in the development work is product searches in which
the user is able to search for specific products, brands or services and
directly contact the supplier. An obvious example is booking tables at
restaurants. The acquisition of the price comparison service DinPris
is yet another step in achieving the ambition of moving the user closer
to the transaction. Another step is a service in which users can submit
opinions about advertisers, which in user surveys is ranked as valuable
information.
An important means of competition is the range of maps and road
directions. This is also an area in which functionality has been expanded
so that users can now download road directions directly to their mobile
phones via 118 118® or obtain information about public transport. At the
beginning of 2006, eniro.se was also expanded to include continuous
traffic information including images from traffic cameras on roads leading into Stockholm.
In early 2006, a click-to-call service was also launched allowing users
to click on a link in the hit list, enter their telephone number and thereafter
be called and connected to the company sought.
Mobile service receives award
During 2005, interest increased for use of Eniro’s mobile services. The
functionality of these services is continuously being enhanced with such
features as direct entry of classified ads, surfing on the Buy & Sell site
and positioning and road direction services. Eniro’s ambitions in the
mobile arena were recognized through several awards during the year,
including the prize for the most user-friendly wap service in the SurfPort
Awards arranged by TeliaSonera and Sony Ericsson.
Expanded customer offering
Another aspect of product development is to enhance the customer
offering towards advertisers and to increase the focus on return from
advertisements. During 2005, Eniro acquired a license from MIVA to use
a technical platform for paid search advertising, meaning an offering in
which the advertiser pays per click and which is sold using an auction
model with transparent pricing. The new license will enable Eniro to
expand its customer offering and to offer more sophisticated pricing
models customized to advertiser needs. At the same time, Eniro gained
access to a network of media partners through which Eniro’s advertisers
can advertise through sponsored links in editorial environments. Eniro
is also working to further enhance automated interfaces through which
advertisers can control advertising in the form of sponsored links by
increasing or decreasing the advertising budget or controlling where
the links are placed, for example.
Directory in pocket format
Eniro also enhanced the Swedish regional directory, Gula Sidorna®.
Among new features introduced in the 2006 edition are more detailed
public information, guides in the areas of restaurants, weddings and
body & soul and a clearer organization of headings that helps users find
what they are seeking faster. The 2006 edition of Gula Sidorna is also
published in a pocket format with a selection of slightly more than 280
headings that may be needed by people on the go. The pocket edition
was printed in 250,000 copies, which are distributed without charge at
gas stations and shopping centers in the Stockholm area.
13
A day in a user’s life
At home at the kitchen table
With Gula Sidorna you can find what you are looking for.
Public information, a restaurant guide, ideas for outings
and household services – everything is here.
On the town
The wap service mobil.eniro.se helps you to obtain contact information when on the go. With a map in your mobile phone it is easy to
find where you are going.
On the road
Gula Sidorna in a pocket edition will help you to find
what you need when on the road. Information needed
by many is available under more than 280 different
headings. “Gula Sidorna On the Road” is available
free of charge at gas stations and shopping centers
in the Stockholm area.
At the office
Eniro.se gathers many services in a single location.
On this fast growing web site, you can find private
persons, companies and maps. Click on a link in the
hit list, enter your telephone number, and you will
be called and connected to the party you are seeking. This is also where you search for information on
products and retailers.
When you need help fast
When things don’t go as expected and you need help – whether the dishwasher has broken down, your car needs towing or you need an emergency
dentist appointment – phone Eniro 118 118 to be guided and connected.
Environmental work in 2005
Eniro Sweden – high environmental
requirements for directories
Environmental work in 2005 was focused on developing a new environment policy for the Eniro Group. Environment work in the individual countries will be more clearly structured and coordinated. Work
is focused on implementing the environment policy and adapting it to
local legislation and conditions.
• Eniro’s directories consist entirely of chlorine-free paper, and the printing
process employs only inks, varnishes and glues that are approved by SIS
Environmental Labeling.
Systematic work gives results
Eniro was approved by the the Robur Ethics and Environment Fund
as the only company in an analysis of the Swedish media companies.
The Fund invests in companies that Robur considers leading and a
driving force in industry development with respect to environmental
issues and social responsibility. Eniro also received a higher rating in
Folksam’s climate index.
14
• Supplier of paper and printing services are of world class and certified in
accordance with ISO 14001.
• Eniro Sweden places the highest possible environmental requirements on
all distributors employed, both centrally and locally. This means, for example, that their vehicles use environmentally classed engines and tires, have
exhaust emission control devices and use environmentally classed fuels.
• Some 80 percent of all directories are reclaimed and collected for paper
recycling. Eniro Sweden also handles retrieval of directories that were
damaged and would cause littering.
• By using 25 percent recycled paper in its directories, Eniro saves
64,000 trees.
Read more on eniro.com
EMPLOYEES
Employees – the strength in a
sales-oriented company
63%
The sales organization is the core of a salesoriented company such as Eniro and an
important success factor. The sales force also
has a critical role in Eniro’s ambition to offer
In Sweden, about 63
deep, local and quality assured information in percent of all employees
its databases, since it is to a large extent the work within sales.
sales representatives who are responsible for
compiling customer information.
In Eniro’s core markets – Sweden, Norway, Finland, Denmark and
Poland – the sales force comprised the majority of Eniro’s personnel during the year, and in Sweden, some 63 percent of all employees worked
Share-savings program – complement to variable salary
The 2005 Annual General Meeting approved the introduction of a sharesavings program. The share-savings program includes all Eniro employees in Sweden, Norway and Finland, as well as senior managers in
Denmark and Poland (see also page 34). The objective of the program
is to illustrate the correlation between employees’ efforts, Eniro’s earnings and the value of the Eniro share. By thinking, acting and being
rewarded as a shareholder, employees are encouraged to contribute
to the development of the business and to make the company more
profitable. Some 300 persons, corresponding to about 13 percent of all
employees embraced by the program, participated in the share-savings
within sales including Din Del but excluding directory assistance. The
sales force’s share of total personnel was 62 percent in Findexa and 79
percent in Eniro Norway AS. Sales personnel amounted to 62 percent of
total employees in Denmark, 54 percent in Finland excluding directory
assistance, 64 percent in Poland and 45 percent in Germany (Wer liefert
Was?).
The sales organization is configured according to the conditions in
each country, based on a model with separate Internet service and directory offerings, as well as a dedicated major accounts group. Smaller
customers are normally handled by telephone and through a combined
offering. In Sweden, sales is handled by separate organizations for Gula
Sidorna and Din Del.
program during 2005.
More satisfied employees
The annual Group-wide human capital survey is an important tool for
evaluating and improving Eniro’s operations, leadership and employees.
The overall objective is that employees should be better prepared for
supporting more rapid product development, simplified business processes and increased customer orientation.
The survey during the autumn of 2005 showed that the structured work
to improve employee satisfaction based on the 2004 survey produced
favorable results. Prioritized areas during the year were customer orientation, routines and processes, as well as personnel development. Overall,
the surveys show better than average results than for similar companies.
Read more on eniro.com
COMPENSATION FORMS
As a sales-oriented company, Eniro has a tradition of variable salary.
All employees in sales have a salary that consists of both a fixed and
a variable portion. This variable salary model is intended to ensure
the company’s profitability over both the short and long term.
All sales personnel in the Group have a variable salary component.
In Sweden, Eniro has a compensation system that in addition to being
based on revenues, places a premium on quality, promotes greater
customer satisfaction and stimulates recruitment of new customers. This is accomplished in part by basing commissions on entire
campaigns and linking them both to sales results and quality in order
confirmations and by increasing commissions for performance that
exceeds targets. In Eniro Sweden, about 70 percent of compensation
is fixed, while 30 percent is variable. In Norway (excluding Findexa)
and Finland, about 60 percent of compensation is fixed and 40 percent variable. In Denmark and Poland, the distribution is about 50
percent fixed and 50 percent variable.
PROPORTION OF SALES PERSONNEL*
Sweden
Findexa
Eniro Norway AS
Finland
Denmark
Poland
Germany (Wer liefert Was?)
63%
62%
79%
54%
62%
64%
45%
* Excluding directory assistance in each country and operation.
15
MARKET OVERVIEW
Characteristics and trends in the
search market
The Nordic search market, which includes printed directories, Internet services, mobile services and directory assistance services, has undergone major changes in recent years. Technical advances and changes in usage patterns have
influenced players to continuously improve existing products and to develop new products and distribution channels.
16
The Nordic market for printed directories is mature, with high usage and
continuous development of printed products. The market is dominated
by a small number of players, and barriers to entry remain high.
Within Internet and mobile services, the advertising market is growing
rapidly. Barriers to entry in the new channels are lower but are increasing,
since service functionality, the importance of a strong brand, deep and
quality assured content and a large sales force make it difficult to suc-
Printed directories still have a strong position
Printed directories have a strong position in Europe, with high revenues
and high usage. The Kelsey Group estimates that printed directories
in 2009 will account for 65 percent of the European search companies’
revenues.
In response to changed usage patterns and high Internet penetration,
the Nordic search companies have intensified their investments in prod-
cessfully launch new products and services.
uct development for both directories and Internet and mobile services.
Market trends
The Kelsey Group (USA) estimates that Europe accounts for slightly more
than 30 percent of the global search market. Growth through 2009 is
expected to take place primarily within Internet and mobile services.
The Nordic countries, together with the USA, have the largest share of
advertising in search-related media in relation to total advertising and the
highest rate of investment in search-related media per capita.
Historically, the Nordic markets have been characterized by one company having a dominant position, which has often been a spin-off from a
telecom operator. The Finnish market deviates from the Nordic pattern as
it is characterized by strong competition between two companies, Eniro
and Fonecta. The Polish market is also characterized by strong competition, with Eniro as the market leader facing competition from two players,
PKT and TPDiTel, which are both equally strong.
Growing search market
for Internet services
With the increasing use of the Internet
being driven by accelerated broadband
penetration, the Internet becomes a nat- The market for Internet adverural channel for companies that want to tising in Sweden is estimated
advertise. In recent years, the Internet at SEK 1.6 billion (IRM).
advertising market has grown in Sweden. IRM, the Institute for Advertising
and Media Statistics, estimates that the market for Internet advertising
amounted to SEK 1.6 billion in 2005 and that this market will increase
by 23 percent in 2006.
The Swedish Internet advertising market is sub-divided into segments: advertising/alliances, online directories/classifieds and paid
search advertising. Paid search advertising means that advertisers purchase advertising space linked to a given search key on a search engine
or an Internet directory. Paid search advertising has made a substantial
1.6 bn
impact in most markets. This is also the form of advertising that shows
the highest growth figures in most markets. IRM estimates that the paid
search advertising market increased by about 60 percent in 2005.
Consolidation and new competitors
With a strong market, high margins and stable cash flows, search companies have become attractive targets for company acquisitions, and
the industry has to a large extent been consolidated in recent years.
Venture capital companies have been most active in this consolidation,
but there have also been industrial acquisitions by media companies,
for example, that have thus expanded their offering by combining news,
maps and company searches.
At the end of 2005, TDC Förlag, which is primarily active in Denmark
and Sweden, was acquired by European Directories. European Directories
is also the owner of Finnish Fonecta. European Directories is in turn owned
by the venture capital company Macquaire Capital Alliance Group.
Other trends include global Internet service companies establishing
themselves in the market and local Internet players creating services
consisting of search engines combined with directory searches. Web
sites for classified advertising, price comparisons and auctions are
increasingly popular when it comes to finding and evaluating products.
The traditional search companies are thus facing competition in the
different local markets from both global search engines and smaller,
local Internet-based search companies.
The search market faces major challenges not only in terms of usage
and products, but also in structural terms. The changes, with a consolidation of the industry, development of new and existing products
and new strategic alliances, that have taken place in recent years will
undoubtedly continue even over the coming years.
ENIRO’S INDUSTRY COLLEAGUES
Unlisted companies
Primary markets
Owner
World Directories Group
Netherlands, Belgium, Ireland
and Portugal
Apax Partners Worldwide
LLP and Cinven Limited
European Directories
Denmark, Austria, Finland
and Netherlands
Macquarie Capital
Alliance Group
Sweden, Norway, Finland, Denmark
and Poland
Listed in Stockholm
Primary market positions
No. 1 in Belgium, Ireland and Portugal
No. 1 in Denmark and Austria
Listed companies
Eniro, incl. Findexa
No. 1 in Sweden, Norway and Poland
Pages Jaunes
France and Spain
Listed in Paris
SEAT
Italy, Germany and UK
Listed in Milan
No. 1 in France
TPI
Spain, Brazil, Peru and Chile
Listed in Madrid
No. 1 in Spain, Peru and Chile
Yell
UK and USA
Listed in London
No. 1 in UK
No. 1 in Italy
17
Sweden
The year in brief
The organic decline in printed products was 2 percent in 2005. This was
thus better than the forecast issued at the end of 2004, which was an
anticipated decline of 5.5 percent for 2005. Internet revenues increased
by 11 percent, which was in line with the published forecast. During the
year, the number of calls to directory assistance declined, while sms
services increased.
Operating revenues for Sweden totaled SEK 2,779 M (2,786),
while operating income before depreciation (EBITDA) increased to
SEK 1,116 M (1,097).
Market
Sweden is Eniro’s largest market. The total Swedish advertising market relevant for Eniro (traditional media, directories and Internet) was estimated
by IRM at about SEK 19.9 billion (18.6). Eniro’s market share amounted
to about 11 percent (12). The market for printed directories amounted to
about SEK 2.1 billion (2.1), of which Eniro’s market share corresponded
to 80 percent (82). The Internet advertising market totaled some SEK 1.6
billion (1.3), of which Eniro’s market share was 36 percent (41).
The market for directory assistance service declined somewhat during
the year. The market segment for directory assistance via sms showed
strong growth, however. Eniro is the market leader in directory assistance
services in Sweden and retained its market shares during 2005.
Customers
Eniro estimates that there
are about 350,000 poten-
166,000
tial business customers in
Sweden. Eniro’s customer During 2005, the number of invoiced business customers increased by slightly more
base is comprised of small
than 2 percent to 166,000.
and medium-size companies, as well as large companies and organizations for which advertising
in printed directories and the Internet constitute important sources for
customer contacts. During 2005, the number of invoiced business customers increased by slightly more than 2 percent to 166,000, compared
with 162,000 during the preceding year. The increase constituted a
reversal of a trend in which the customer base had declined since 2001,
when Eniro had about 190,000 customers.
Customers who use Eniro’s 118 118® directory assistance are persons who are seeking help in finding people, businesses, organizations
or places. During 2005, about 56 percent of the Swedish population used
one of Eniro’s directory assistance services one or more times.
Competitors
Eniro has a complete offering in the Swedish market that includes printed
directories, Internet services, directory assistance and mobile services.
Competitors are found in the individual market segments.
With Gula Sidorna® (the Swedish Yellow Pages), Eniro has a market-leading position in regional directories. In local directories, Eniro’s
Din Del® faces competition from Lokaldelen. Competitors to Eniro’s
Offering
As the only company in the Swedish market, Eniro offers users information in all relevant search channels, meaning printed directories,
KE Y DATA SWEDEN
KE Y DATA SWEDEN E XCLUDING VOICE
SEK M
2005
2004
2003
Revenues
2,779
2,786
2,740
1)
Of which:
SEK M
2005
2004
2003 1)
Revenues
2,179
2,167
2,298
1,840
Of which:
Offline
1,598
1,645
1,840
Offline
1,598
1,645
Online
1,181
1,141
900
Online
581
522
458
EBITDA
1,116
1,097
1,107
EBITDA
994
958
1,014
EBITDA margin, %
No. of full-time employees
40
39
40
1,522
1,507
1,414
KE Y DATA SWEDEN VOICE*
2005
SEK M
Revenues
2)
EBITDA
EBITDA margin, %
2004
2003 1)
600
619
442
122
139
93
20
22
21
680
741
768
* Sweden Voice was established May 1, 2003 with the acquisition of Eniro 118 118.
1)
2)
Online revenues.
18
business-to-business directory Emfas® is for example Företagsfakta.
Competition on the Internet increased during the year. Eniro faces
competition from a number of players, including global search engines,
web sites for information about private persons and companies, topicspecific web sites and sites for classified advertisements.
In directory assistance, Eniro’s primary competitors are Ahhaaa,
Vodafone and Tele2. There are also a number of smaller players in personal directory assistance and sms-based directory assistance.
EBITDA margin, %
46
44
44
842
766
646
markets
Internet, mobile and directory assistance. With customized solutions,
Eniro meets advertisers’ needs for increased exposure in individual
search channels.
With a combined basic listing in Gula Sidorna, the advertiser’s information is included in the printed directory, as well as in Eniro’s Internet,
mobile and directory assistance services. During 2005, the price for a
combined basic insertion was SEK 2,050, while the corresponding price
in 2006 is SEK 2,060. A basic insertion in Din Del cost SEK 1,045 in 2005
and SEK 1,095 in 2006.
Within Internet services, Eniro offers advertisers a complete portfolio
of advertising opportunities – everything from info pages in Gula Sidorna
to banner ads and sponsored links in web searches.
includes information on local companies in a town or city district. During
2005, Din Del was published in local editions for 183 retail areas covering
all of Sweden and with a combined circulation of some 4.5 million copies.
The number of invoiced Din Del customers during 2005 was slightly less
than 65,000. Of the Swedish population, 80 percent use Din Del at least
once a year, according to Research International (Sifo).
Emfas ® is one of Sweden’s leading business-to-business directories
with detailed information about companies and their products. Emfas
is published in a print edition with a circulation of 160,000 copies and is
also available via the Internet. In addition to basic information, the Internet service also includes annual reports, information about credit worthiness, financial key data and information on public procurements.
Directories
Gula Sidorna ®, the Swedish Yellow Pages directory, is Eniro’s single
largest product in terms of revenues. It contains advertisements from
companies, organizations, county councils and municipalities and is
distributed to all households in 28 regions, with Stockholm, Gothenburg
and Malmö accounting for the largest editions. Total circulation in 2005
amounted to about 6.3 million copies. During the spring of 2006, a pocket
version of Gula Sidorna was published in Stockholm with a selection of
slightly more than 280 headings. The pocket edition is printed in 250,000
copies that are distributed at gas stations and shopping centers in the
Stockholm area.
During 2005, Gula Sidorna had slightly less than 150,000 invoiced
customers. The retention rate for Gula Sidorna during the year was 89
percent (90). A survey by Research International (Sifo) in 2005 showed
that 94 percent of all Swedes between the ages of 15 and 79 use Gula
Sidorna at least once a year.
DinDel ® is the most frequently used local directory in Sweden and
Internet services
Eniro’s network of Internet services includes eniro.se, gulasidorna.se,
passagen.se, bilweb.se and emfas.com. With an average of more than
2.5 million unique browsers per week in December 2005 (2.3), Eniro’s
Internet network in Sweden is one of the largest in terms of usage.
Eniro.se is one of Sweden’s most frequently used web sites, with
an average of about 1.6 million unique browsers per week in December
2005 (1.3). At eniro.se, users can search Gula Sidorna, find private
persons and classified ads, obtain maps and road directions and use
the Internet’s most comprehensive web search. There is also a wide
variety of other useful services, such as news and job searches and a
well-used link guide.
Since its launch in May 2003, eniro.se has received a very favorable
response, and the service is enhanced continuously in a dialogue with
users. During 2005, functionality was enhanced to support accurate
searches leading directly to advertisers’ products. Eniro also signed an
agreement to license a technical platform that broadened the offering
SWEDEN’S ADVERTISING MARKE T
IN 20 05, SEK 19.9 BILLION
ENIRO.SE
Number of unique browsers, weekly average by month
Internet 8%
Directories 11%
1,500,000
Traditional
media 81%
1,000,000
500,000
ENIRO’S SHARE OF THE
SWEDISH DIRECTORY
ADVERTISING MARKE T IN 20 05
SWEDISH INTERNE T
0
2003
2004
2005
Source: Nielsen Netratings Site Census.
36%
80%
Source: IRM.
19
markets
Via 118 118 sms, users can receive information via sms. By sending
a number or a name, users can obtain information about who has a
certain telephone number or the telephone number and address of a
given company or person.
Eniro’s 118 119 ® is the only directory assistance service in Sweden
that helps users with names and addresses outside Sweden. The service
is directly linked to 20 different databases with more than 500 million
numbers and can offer information from virtually the entire world.
and allowed more sophisticated pricing models for paid search services.
For the second year in a row, the magazine Internet World awarded eniro.se
the prize as Sweden’s best utility web site.
Gulasidorna.se has the same contents and advertisers as the Gula
Sidorna tab on eniro.se. Here users can find information about companies,
organizations, county councils and municipalities. Gulasidorna.se was visited on average by about 0.4 unique browsers per week in December 2005
(0.5). Eniros total “yellow search”, that is the number of unique browsers on
gulasidorna.se and the Gula Sidorna tab on eniro.se, received an average
of about 0.8 million unique browsers per week in December 2005 (0.8).
Passagen.se is one of Sweden’s largest portals, with contents created on the basis of user interests. During the year, a tool with which users
Mobile services
At mobil.eniro.se, Eniro’s search services are integrated. Via a mobile
phone, users can seek information about companies in Gula Sidorna,
can generate their own blogs attracted much attention. In December
2005, the portal was visited by an average of about 1.1 million unique
browsers per week (1.3). Bilweb.se, which is a service for sales of new
and used cars, was visited on average by about 35,000 unique browsers
per week in December 2005 (35,000). Via passagen.se and bilweb.se,
Eniro’s advertisers are offered an opportunity for exposure to a large and
attractive user group.
find information on private persons and obtain maps and travel directions. The usage of mobil.eniro.se increased sharply during 2005, with a
peak during the summer months. In December 2005, the number of visits
was about 0.2 million, a 100-percent increase, compared with December
2004 when the number of visits was about 0.1 million. Mobil.eniro.se
received a prize during the year as the most user-friendly wap service in
the SurfPort Awards arranged by TeliaSonera and SonyEricsson.
Directory assistance
118 118 ® is Sweden’s most frequently used directory assistance service.
The database contains information on names, mobile, fax and fixed
telephone numbers and addresses with postal codes and e-mail and
web addresses, as well as Gula Sidorna. 118 118 can help users to locate
what they are seeking, such as the nearest ATM or flower shop. Without
extra charge, the user can be connected, having the number sent via sms,
e-mail or fax and receive a map link. During 2005, 118 Award recognized
118 118 as the world’s best directory assistance service for mobile users.
Regardless of where in the world the user is located, the service can be
reached via +46 649 118 118.
Priorities for 2006
In order to further increase user friendliness and improve the offering,
product development and renewal of the printed directory will continue
during 2006. At the same time, offensive efforts in product development
will be made in Eniro’s search services via the Internet, mobile phones
and directory assistance to ensure continued high usage and improved
customer offerings. Increased focus will be placed on demonstrating
the value of advertising to advertisers.
E N I R O ’ S I N T E R N E T S E R V I C E S I N S W E D E N , T O TA L
GUL ASIDORNA.SE AND THE GUL A SIDORNA
TA B O N E N I R O. S E
2,500,000
2,000,000
800,000
1,500,000
600,000
1,000,000
400,000
500,000
200,000
0
2003
2004
2005
Source: Nielsen Netratings Site Census and TNS Metrix.
20
0
2003
2004
2005
markets
Norway
The year in brief
The acquisition of Findexa was completed in December 2005, and
Findexa was consolidated from December 5, 2005. No printed directories were published by Findexa in December, which limited operating
revenues from Findexa to SEK 53 M. Findexa’s contribution to operating
income before depreciation (EBITDA) amounted to a deficit of SEK 59 M,
including restructuring costs of SEK 24 M. Total operating revenues for
Norway amounted to SEK 293 M (179). Operating income before depreciation (EBITDA), including Findexa, amounted to SEK -39 M (-15).
Market
Eniro has been present in Internet services in Norway since 2001 following the acquisition of Scandinavia Online. Through the acquisition of
Findexa in December 2005, Eniro has a complete multi-channel offering
in the Norwegian market.
The total Norwegian advertising market that is relevant for Eniro
(traditional media, directory and Internet) is estimated by IRM and WARC
at about SEK 16.5 billion (14.6). Eniro’s market share amounted to about
12 percent (1). The directory advertising market amounted to about SEK
1.5 billion (1.6), of which Eniro’s market share was 98 percent (0). The
Internet advertising market amounted to some SEK 1.8 billion (1.1), of
which Eniro’s share was 32 percent (17).
The Norwegian market for directory assistance was deregulated in
2002. In the same year, Findexa acquired the company that provided the
manual directory assistance service Telefonkatalogen 1880.
Competitors
After the acquisition of Findexa, Eniro is the clear market leader in printed
directories. Competitors to Eniro in Internet services consist of several
global and local search engines.
KE Y DATA NORWAY
1)
SEK M
2004
2003
293
179
115
Offline
13
n/a
n/a
Online
280
179
115
EBITDA
–39
–15
–28
Revenues
2005
2)
Customers
Eniro estimates that there are about 220,000 potential business customers in the Norwegian market. During 2005, Findexa invoiced a total of
about 150,000 customers.
Offering
By purchasing a basic insertion in the printed Yellow Pages directory
Gule Sider ®, the advertiser is also presented on the Internet service
gulesider.no. For further exposure, there are a number of profiling opportunities both in the directory and on the Internet, of which some solutions
entail publication in both channels to make the customer’s information
as accessible as possible for users. During 2005, the price of a basic
insertion in Gule Sider was about SEK 1,330, and for 2006, the corresponding price is SEK 1,370.
Advertisers in the local directory Ditt Distrikt® as well as the B2B segment
are offered exposure both in the printed directory and on the Internet.
The search services Kvasir ®, eniro.no and SOL® offer customers various opportunities for profiling their companies on the Internet.
Directories
The regional Yellow Pages directory Gule Sider ® contains information
and advertisements from companies and is published in 13 regional editions with a combined circulation of 2.8 million copies. Gule Sider is distributed together with the directory Telefonkatalogen™, which contains
an alphabetic listing of Norwegian companies and private individuals.
The local directory Ditt Distrikt ® is published in 73 editions with a
combined circulation of 1.9 million copies. In addition to information
on companies and private persons, Ditt Distrikt contains municipal
information, cultural information, a leisure guide and special pages for
children and young people.
NORWAY’S ADVERTISING MARKE T IN 20 05,
SEK 16.5 BILLION
Internet 11%
Of which:
EBITDA margin, %
–13
–8
–24
1,156
218
156
Findexa is consolidated as of December 5, 2005.
2)
1)
Directories 9%
Traditional media 80%
NORWEGIAN DIRECTORY
NORWEGIAN INTERNE T
32%
98%
Source: IRM and WARC, Eniro estimates.
21
BizKit ® is a B2B directory that is published in a single edition with a total
circulation of 50,000. BizKit is also available via the Internet and on cdrom. In 2006, the BizKit offering will be repositioned under the Proff brand,
and will be even more focused on professional users, with expanded
contents that include financial information and board members.
Internet services
Eniro has the most frequently used search services in the Norwegian
market. The main network of Internet services in Norway consists of
gulesider.no, kvasir.no, eniro.no, sol.no and bizkit.no.
Gulesider.no offers searches for company information and private
individuals, as well as a frequently used map service that shows locations and provides road directions. In December 2005, gulesider.no was
visited by an average of 0.8 million unique browsers per week (0.6).
The Kvasir ® search service, which was merged with eniro.no during
the year, offers web searches, company information, information on
private individuals, news searches, etc. Kvasir.no and eniro.no were
visited by an average of 0.8 million unique browsers per week in December 2005 (0.7).
Sol.no is a portal that was visited by an average of 0.6 million unique
browsers per week in December 2005 (0.5). The independent web site
bilguiden.no, which is a marketplace for new and used cars, is linked
to the portal.
The Telefonkatalogen 1880 ® directory assistance service provides
information on some 6 million telephone numbers, as well as contact
information for Norwegian telephone subscribers. Users are offered
connection to the number requested and can even receive the information via sms without charge. Telefonkatalogen 1880 is distinguished as
the most economical directory service in Norway.
ENIRO’S NORWEGIAN INTERNE T SERVICES IN NORWAY
E XCLUDING FINDE X A , TOTAL
1,000,000
750,000
500,000
250,000
Eniro’s Internet services in
Norway excluding Findexa, total
Kvasir/Eniro.no
0
2004
2005
22
Mobile services
In Norway, Eniro has a full spectrum of mobile services. Eniro’s largest
sms service in Norway is Telefonkatalogen 1880, which can be reached
by send an sms request to the number 1880. Use of this sms service
increased by more than 40 percent from 2004 to 2005.
The wap.eniro.no mobile service includes companies and telephone numbers and maps for both companies and private persons. The
mobile service wap.sol.no includes news summaries.
Priorities for 2006
Focus will be on reversing the negative development for printed directories during 2006. Substantial efforts will also be made in order to integrate Findexa in the Eniro Group. Over the short term, the two Norwegian
units will be integrated and work on the more long-term synergies will
be initiated.
markets
Finland
The year in brief
Operating income in Finland declined during the year by 9 percent to
SEK 637 M (703). The fierce market conditions for printed directories
persisted during the year. Excluding restructuring costs of SEK 15 M, the
underlying EBITDA margin for 2005 amounted to 8 percent, compared
with 24 percent in 2004.
Competitors
Eniro’s largest competitor in Finland is Fonecta, which together with
Eniro is the other major player in the market for regional and local directories, B2B directories and directory assistance services. In the market
for Internet services and mobile services, Eniro faces competition from
several national and international players.
Market
The total advertising market relevant for Eniro (traditional media, directories and Internet) is estimated by Zenith Optimedia and Eniro at SEK
12.3 billion (11.6). Eniro’s market share amounted to 4 percent (6). The
Finnish market for printed directories amounted to about SEK 1.0 billion (1.1), of which Eniro’s share was about 36 percent (42). The Internet
advertising market amounted to SEK 0.5 billion (0.4), of which Eniro’s
share was about 19 percent (22). In directory assistance, Eniro is the
second largest provider in Finland.
Sales of the 2005 editions of the regional directories in Helsinki and
Tampere were subject to full competition, unlike previous years when
the sale of advertisements was conducted jointly with another player.
As a result of the changed competitive situation, all Finnish households
received directories from two suppliers during 2005.
The Finnish market for Internet services is more fragmented and
less developed than the Internet markets in the other Nordic countries.
One example of this is that the Internet advertising market in Finland
accounts for a smaller share of the total media market than in Sweden,
Norway and Denmark.
In Finland, the user’s use of directory assistance service is to some
extent determined by which operator they use.
Customers
Eniro’s Finnish customers range from small to large companies. The
company estimates that there are about 200,000 active companies
that are potential customers. During 2005, Eniro invoiced about 50,000
customers, which was about as many as in the preceding year.
KE Y DATA FINL AND
SEK M
2005
2004
637
703
702
Offline
363
442
465
Online
274
261
237
EBITDA
34
167
207
5
24
29
549
589
535
Revenues
2003 1)
Offering
Eniro has a nationwide market presence in Finland and a multi-channel
offering that comprises all relevant search channels, meaning printed
directories, Internet, mobile services and directory assistance. A basic
insertion in Eniro Telephone Directories in Helsinki and Tampere costs
between SEK 1,260 and SEK 1,600, depending on heading and geographic area. The information is also available on the Internet and via
directory assistance.
Directories
Eniro has a wide range of printed directories in Finland. As the official
publisher of the telecom operator Elisa’s directory information, Eniro
publishes regional directories in Helsinki and Tampere. Eniro Telephone
Directories cover all of Finland and are published in 33 retail areas,
including the Helsinki and Tampere regions. The directories contain
information on companies and private individuals, maps and informa-
FINL AND’S ADVERTISING MARKE T IN 20 05,
SEK 12.3 BILLION
Internet 4%
Directories 8%
Of which:
EBITDA margin, %
1)
Traditional media 88%
FINNISH DIRECTORY
36%
FINNISH INTERNE T
19%
Source: Zenith Optimedia, Eniro estimates.
23
tion from municipalities and cities. Total circulation in 2005 amounted
to about 3.0 million copies.
Kaupunki-info ® is Eniro’s local directory, which contains information
on local companies and municipal service, as well as private individuals.
In conjunction with the launch of Eniro Telephone Directories during 2005,
the distribution of Kaupunki-info was reduced from 30 to 7 areas.
Yritystele ® is Finland’s most used B2B directory with information on
companies, public authorities and public service.
Eniro’s total distribution of printed directories in Finland amounts to
nearly 3.8 million copies (3.9).
Internet services
Eniro’s network of Finnish web sites includes the search services eniro.fi,
yritystele.fi and the portal suomi24.fi. In December 2005, eniro.fi was
visited by an average of about 0.4 million unique browsers per week
(0.2). The total number of unique browsers registered on Eniro Finland’s
web sites was on average about 1.1 million per week in December 2005
(0.8), which was an increase of about 30 percent, compared with the
preceding year.
Mobile services
The search service eniro.fi is also available via mobile phone. The service
offers contact information for companies and private individuals in all
ENIRO’S INTERNE T SERVICES IN FINL AND, TOTAL
1,000,000
750,000
500,000
250,000
0
Eniro’s Internet services
in Finland, total
Eniro.fi
2004
2005
24
of Finland, plus maps and links to other mobile services. With the sms
services in the 16123 search service, it is also possible to obtain information on telephone numbers, persons and companies, as well as to find
services and mms maps for all of Finland.
Eniro:0100100 ® is an operator-independent directory assistance service with information on telephone numbers, names and addresses for
companies and private individuals in all of Finland. In addition, Eniro
provides the national directory assistance service 118 that all telecom
operators offer their customers. Eniro produces this service for fixed
line subscribers from Elisa in Helsinki, Tampere and Riihimäki, for Kestel
in Jyväskylä, TikkaCom subscribers in Joensuu and for Elisa’s mobile
subscribers. During 2005, coverage was expanded through the acquisition of the directory assistance services Kymen Puhelin, Lännen Puhelin
and Oy NovaCall.
Priorities for 2006
The focus in 2006 will be on increasing efficiency in the organization and
reducing costs. At the same time, the offering in printed directories and
Internet will be further enhanced.
markets
Denmark
The year in brief
Operating income in Denmark increased to SEK 396 M (376). Improvements in online revenues and strong growth for the local directory
Mostrup contributed to the increase in revenues. Operating income
before depreciation (EBITDA) improved to SEK 37 M (22).
Market
The total Danish advertising market relevant for Eniro (traditional media,
directories and Internet) was estimated by Dansk Oplagskontrol and
Zenith Optimedia at SEK 12.6 billion (11.8), of which Eniro’s market share
amounted to 3 percent (3). The total Danish directory advertising market
was estimated at SEK 1.5 billion (1.4), of what Eniro’s share was about 22
percent (21), while the Internet advertising market is estimated at SEK
0.8 billion (0.7), of which Eniro’s shares was about 9 percent (9).
Competitors
In the Danish market for printed local directories, Eniro’s competitors
are TDC and several local publishers. In commercial Internet searches,
TDC and Krak are the largest competitors, although Eniro also faces
competition from global search engines.
contains trade listings and telephone numbers for private persons, Kommunalhåndbogen, which is a directory for municipal information, and
Mostrup Kortbog, which is a map directory with advertisements. Den
Grønne Vejviser is used at least once a year by 85 percent of those who
live in the areas in which it is distributed.
In 63 Danish retail areas, Eniro also publishes the local telephone directory Den Røde Lokalbog, which was published for the first time in 1927.
Eniro’s total distribution of directories in Denmark amounted to about 4.4
million copies in 2005. Some 88 percent of the population in areas where the
directories are published use Den Røde Lokalbog at least once a year.
Webdir’s local directories, which Eniro acquired at the beginning
of 2006, are published in 8 areas.
Internet services
The eniro.dk search service allows users to search for companies and
private persons and to obtain maps and road directions. Since July
2005, the portal sol.dk and the car sales site bilguiden.dk have been
included in eniro.dk. Toward the end of the year, eniro.dk was the most
frequently used Internet service for commercial searches in Denmark,
and in December the number of unique browsers registered per week
on eniro.dk was about 0.8 million (0.5).
Offering
Eniro has been present in Denmark since 1996. The offering is focused
on local directories and Internet and mobile services. In Denmark, a basic
insertion is free in all directories. Eniro Denmark has separate offerings for
exposure in directories and in Internet and mobile services. Eniro Denmark’s
directory customers are offered Internet exposure at no extra charge.
Directories
Eniro’s Danish directories have strong and established brands. Under
the Mostrup ® brand, Eniro publishes three directories: Den Grønne
Vejviser, which is published in 258 of Denmark’s 270 municipalities and
Mobile services
Eniro.dk is also available as a mobile service. Eniro Denmark also offers
the 1218 sms service from which users can obtain information on companies, private persons, names and telephone numbers.
Priorities for 2006
Eniro’s strategy in the Danish market is to continue to focus on local
directories and to continue to develop commercial searches on the
Internet and as mobile services.
ENIRO’S INTERNE T SERVICES IN DENMARK , TOTAL
KE Y DATA DENMARK
SEK M
2005
2004
2003
396
376
385
Offline
320
309
324
Online
76
67
61
EBITDA
37
22
–5
Revenues
1)
800,000
Of which:
EBITDA margin, %
1)
9
6
–1
331
299
342
600,000
400,000
200,000
DENMARK’S ADVERTISING
MARKE T IN 20 05,
SEK 12.6 BILLION
ENIRO’S SHARE OF
THE DANISH DIRECTORY
ADVERTISING MARKE T
IN 20 05
Internet 7%
Directories 12%
22%
Eniro’s Internet services
in Denmark, total
0
ENIRO’S SHARE OF
THE DANISH INTERNE T
ADVERTISING MARKE T
IN 20 05
Eniro.dk
2004
2005
9%
Traditional
media 81%
Source: Dansk Oplagskontrol and Zenith Optimedia.
25
markets
Poland
The year in brief
Operations in Poland showed a continued stable development during
the year. Operating income for 2005 increased to SEK 375 M (325). The
EBITDA margin was unchanged at 22 percent (22).
Market
The total Polish advertising market relevant for Eniro (traditional media,
directories and Internet) was estimated by CR Media Consulting SA
and Eniro at SEK 13.2 billion (10.5). Eniro’s share of the total Polish
advertising market was 3 percent (3). The market for printed directories
is estimated to amount to SEK 0.6 billion (0.6), of which Eniro’s share
amounted to about 52 percent (50). The Internet advertising market
totaled about SEK 0.4 billion (0.2), of which Eniro’s share was about 13
percent (13).
The Polish advertising market is expected to show continued favorable growth. At the same time, the Internet usage in Poland is expected
to increase further. Of Poland’s population of 40 million, about 27 percent
currently use the Internet, compared with 25 percent in 2004 (source:
The Kelsey Group).
Customers
The number of invoiced customers amounted to about 108,000 during
the year (105,000). Eniro estimates that there are 1.6 million companies
in Poland that are potential customers. Each year, Eniro contacts about
600,000 Polish companies.
Competitors
Eniro has a market-leading position in the Polish directory market. In
printed directories, Eniro has two competitors in the Polish market,
PKT and TPDiTel, with market shares of 24 and 23 percent, respectively.
Within Internet services, the largest competitor is the portal Onet.
Offering
In Poland, Eniro publishes directories and provides Internet and mobile
services. Exposure in directories and on the Internet are sold separately.
A basic insertion in the directory’s yellow pages costs from about SEK
1,000 to SEK 1,500, depending on the region’s size. On the Internet, the
basic insertion if free of charge for the customer.
Directories
Eniro’s regional directory Panaroma Firm ® is Poland’s leading directory for business-classified information. It is published in 33 editions
that cover the entire country. Distribution to households is based on
geographic location and above-average income levels. In the Warsaw
region, three local directories are distributed under the brand Panorama
Lokalna ®. In addition, Eniro publishes a directory targeted to motorists
and a B2B directory for the construction industry. In total, Eniro’s directory distribution in Poland amounts to about 3.0 million copies.
Internet services
Pf.pl is one of Poland’s most popular web sites and enables searches
for companies supplemented by map functions and road directions. In
December 2005, pf.pl registered an average of some 170,000 unique
browsers per week (120,000), which was an increase of more than 36
percent, compared with the preceding year.
Mobile services and directory assistance
Panorama Firm is also available via the mobile service wap.pf.pl and in
the form of a directory assistance service.
Priorities for 2006
The focus will be on continuing to strengthen both the printed directory
offering and the Internet business.
KE Y DATA POL AND
SEK M
2005
2004
375
325
309
Offline
327
295
282
Online
48
30
27
EBITDA
83
70
54
EBITDA margin, %
22
22
17
1,112
1,026
958
Revenues
2003 1)
160,000
Of which:
1)
120,000
80,000
40,000
POL AND’S ADVERTISING
MARKE T IN 20 05,
SEK 13. 2 BILLION
ENIRO’S SHARE OF
THE POLISH DIRECTORY
ADVERTISING MARKE T
IN 20 05
ENIRO’S SHARE OF
THE POLISH INTERNE T
ADVERTISING MARKE T
IN 20 05
Internet 3%
Directories 5%
52%
Traditional
media 92%
26
ENIRO’S INTERNE T SERVICES IN POL AND, TOTAL
Source: CR Media Consulting SA, Eniro estimates.
13%
0
2004 Source: Nielsen Netratings Site Census.
2005
markets
Germany
The year in brief
From 2005, Wer liefert Was? only has online revenues. The work to
change the customer offering and sales process model is continuing.
Operating revenues declined to SEK 347 M (376), while operating income
before depreciation (EBITDA) amounted to SEK 72 M (86).
Market
Eniro is active in the German market through the wholly owned subsidiary
Wer liefert Was? with its head office in Hamburg. Sales offices are located
in Austria, Croatia, the Czech Republic, Slovakia and Switzerland.
Wer liefert Was? offers a supplier search service with the same
name as the company (Who supplies what?). This search service is the
market leader in Internet-based B2B search services for the professional purchasers target group. The service has been Internet-based
since 1995, but the company’s history extends back to 1932 when the
first Wer liefert Was? directory was published. As of 2005, the offering
is entirely Internet-based.
The total advertising market in Germany is preliminarily estimated to
amount to about SEK 202 M (193), while the German Internet advertising market totals about SEK 7.0 billion (5.2). Through Wer liefert Was?
Eniro’s share of the German Internet market amounted to 5 percent (7)
at year-end 2005.
Competitors
The primary competitors to Wer liefert Was? are Google, Yahoo and
Gelbe Seiten.
Offering
During 2005, the customer base for Wer liefert Was? was significantly
expanded and the offering simplified. The database contains data on
a total of about 350,000 companies with information on product range,
sales areas, company management, etc. The information is only available via the Internet. During 2005, about 31 million (25) product and
company searches were registered on wlw.de.
Priorities for 2006
With professional purchasers as the target group, the agenda for Wer
liefert Was? for 2006 is based on three target areas: increased brand
awareness, growth in usage and a larger customer base.
Customers
During 2005, Wer liefert Was? invoiced about 19,500 customers (21,300)
in Germany alone. Customers are primarily small and medium-size
companies that are active in most industries. Through the change in
focus and the expanded offering, the number of potential customers will
increase from about 135,000 to about 350,000 companies. The information in the database is available in German and English.
KE Y DATA WER LIEFERT WAS ?
SEK M
Revenues
2005
2004
347
376
2003 1)
393
300,000
Of which:
Offline
0
13
47
Online
347
363
346
EBITDA
72
86
98
EBITDA margin, %
21
23
25
253
267
246
1)
WLW.DE
ENIRO’S SHARE OF
THE GERMAN INTERNE T
Internet 4%
100,000
0
GERMANY’S ADVERTISING
MARKE T IN 20 05,
SEK 202 BILLION
200,000
2004 2005
5%
Directories 5 %
Traditional
media 91%
Source: Bundesverband Digitale Wirtschaft, ZAW.
27
Risk factors
Eniro’s operations are affected by a number of external circumstances. Some of the company’s most prominent operative risks are described below. The presentation is not complete, but should instead be regarded as a narrow selection
of all the uncertainties that affect a company such as Eniro. The presentation does not take into consideration the risks
associated with the implementation of the company’s strategy and business plan. Eniro’s financial risk management is
described in more detail in the Board of Directors’ report, as well as in the section Accounting principles.
Business-cycle risks
Like all businesses, Eniro’s sales are affected by prevailing business
cycle. Historically, however, it has proven to be the case that investments
in Eniro’s products are less sensitive to business fluctuations than other
media investments. This could change over time, however, since Eniro’s
dependence on new media that are subject to greater competition is
increasing.
Market-related risks
Competition in the market for search services has intensified in recent
years and is characterized by rapid innovation and product development,
as well as changed usage patterns (see also pages 16-17). Competition
for both users and advertisers is increasing from global players with more
automated and transparent business models and greater possibilities
to exploit economies of scale in product development. Competition
has also increased from local and regional players who can link traffic
to and from other media. Changed usage patterns and shifting trends
in purchases of media space constitute significant risks, hence Eniro
focus on continuously increasing understanding of user behavior and
customer needs and on adapting development of products, services
and offerings thereafter.
Risks in intangible assets
Some of Eniro’s most business-critical resources are intangible assets,
such as brands and databases. Eniro has been subject to infringement
of its rights on different occasions, resulting in legal disputes. However,
Eniro has been able to protect its rights on all occasions.
Brands do not only entail a risk of infringement, their value is also
dependent on relations to the company’s stakeholders and circumstances that the company does not always control. The Eniro brand
could be damaged by negative publicity, for example, or by otherwise
poor external relations, while good customer relations, for example,
strengthen the brand.
28
Raw materials and supplier risk
During the year, a central purchasing function was established, and professional routines, processes and follow-ups for the Group’s purchases
were implemented. To limit the risk for unpredictable cost increases,
the purchasing strategy is based on stringent follow-ups of prevailing
contracts. Partnerships were established with the suppliers that are
responsible for functions that are particularly important for business success, such as suppliers of household distribution and updated contact
information. A measure that has reduced the company’s dependency
on suppliers was the investment in Eniro’s own Swedish database for
private individuals that was build up during 2004.
Customer credits
The major share of revenues is derived from sales of advertisements
for which credit is granted to customers. A large number of unpaid
invoices could result in a negative effect on the company’s operating
income. The risk for extensive credit losses is limited, however, since
Eniro’s customer base is very large and well differentiated, with many
industries represented.
Laws and regulations
Changed laws, regulations and public authority decisions could result in
changed prerequisites for the operation and thus affect Eniro.
THE SHARE
High liquidity in the Eniro share
Trading
The Eniro share (ENRO) has been listed on the Stockholm Exchange’s
O-list since 2000 and is included in the Attract 40 list. During 2005, total
turnover of the Eniro share amounted to 349 million shares (364), corresponding to a value of about SEK 29.2 billion (23.0). Average daily trading
corresponded to a value of SEK 117.4 M (91). The turnover rate, meaning
the share’s liquidity, was 2.22 (1.77), compared with a rate of 1.15 (1.14)
for the exchange as a whole. A round lot is 100 shares.
Share price trend
Eniro’s market capitalization was SEK 10.8 billion at the beginning of
2005 and SEK 18.2 billion at year-end, meaning that the market value
increased by nearly 70 percent during the year. The share price was
SEK 68.00 at the beginning of 2005 and SEK 100.00 at the end of 2005.
The OMXS30 index increased by 29.4 percent during the year, while the
OMXSPI index increased by 32.6 percent. The highest price was SEK
100.00 on December 30 and the lowest was SEK 67.50 on January 21,
2005. The beta value amounted to 0.909, indicating the Eniro share’s
co-variation with the average market trend between October 31, 2000
and December 31, 2005.
Index
At year-end, the Eniro share was included in the Stockholm Exchange’s
OMXS30 index with a weighting of 0.74 (0.55). According to the Stockholm Stock Exchange’s industry classification, Eniro belongs to the
sub-group Consumer Discretionary Media – Media Advertising, which
has the code 25401010.
Ownership
On December 31, 2005, the number of shareholders was 4,961 (4,954).
According to the information known to the company, the holdings of
the ten largest owners are equal to 29.6 (34.2) percent of the share
capital, while foreign owners hold 80 percent (72). Swedish ownership
was divided with 40.7 percent (49.3), held by institutions, 44.7 (43.3) by
mutual funds and with 14.6 percent (7.4) by private individuals.
Transfers to shareholders and changes in share capital
The Eniro Annual General Meeting on April 5, 2005 approved a dividend
of SEK 2.20 per share (1.80). In addition, authorization was granted for
repurchases of shares totaling up to 10 percent of the share capital. In
accordance with this decision, 2,339,000 shares were repurchased during May 2005. These shares were repurchased at an average price of
SEK 82.61. During 2004, 1,521,700 shares were repurchased, and after
the buy-back in May, Eniro held a total of 3,860,700 treasury shares.
With the support of authorization granted by the Extraordinary General
Meeting of Eniro on November 7, 2005 and with the objective of acquiring all shares in Findexa, the Board of Directors decided to increase
the Company’s share capital by SEK 23,950,517 through a new issue of
23,950,517 shares. At the same time, the Board of Directors approved a
transfer of 2,860,700 treasury shares.
In total, 26,811,217 Eniro shares were transferred as payment in conjunction with the acquisition of Findexa, which corresponded to 30 percent of the purchase price. At year-end 2005, the number of Eniro shares
totaled 182,102,392, of which Eniro held 1,000,000 treasury shares.
Dividend policy and proposed dividend
For 2005, the Board of Directors proposes a dividend of SEK 2.20 (2.20)
per share, corresponding to 43 percent of net income for the year, based
on the number of shares at year-end after buy-backs. The total amount
of the proposed dividend is SEK 398 M (345).
Due to the acquisition of Findexa and the resulting higher amortization
payments, the dividend in relation to net income for the year will be less
than 75 percent for the 2005 and 2006 fiscal years. The objective is to
return to a dividend of 75 percent of net income from the year 2007.
TR ANSFER OF CAPITAL TO SHAREHOLDERS
SEK M
2005
2004
2003
2002
2001
Dividend
345
301
247
123
101
Redemption of shares
n/a
795
703
n/a
n/a
Repurchase of shares
193
100
n/a
n/a
n/a
Total
538
1,196
950
123
101
he Board of Directors’ proposal for the dividend for 2005 amounts to a total of SEK 398 M
T
to be distributed in 2006.
PRICE TREND AND TURNOVER OF THE ENIRO SHARE
OCTOBER 20 0 0 – DECEMBER 20 05
SEK
130
120
110
100
90
80
70
60
120,000
50
90,000
40
60,000
30,000
30
00 01
02 Eniro share
OMXS30
03
04 05
OMXPI
Shares traded (000s), including after market
29
THE SHARE
TREND OF SHARE CAPITAL
PER SHARE DATA
SEK unless otherwise specified
2005
2004
2003
1)
2002
1)
2001
Share price on December 31
100
68
69
55
75
Highest price during the year
100
76.50
73
89
136
Lowest price during the year
67.50
55
47.30
40
45
Net income for the year
5.84
4.62
1.14
–4.34
2.80
Cash earnings
6.88
5.20
5.30
2.86
5.12
12.00
14.14
21.07
28.25
2.20
1.80
1.40
0.70
43
45
152
n/a
25
2.20
3.24
2.61
2.54
0.93
Equity
25.59
Dividend
2.20
Dividend as percentage of
net income
Direct return, %
P/E ratio on December 31, times
Number of shareholders on
December 31
1
2
2)
17.1
24.1
60.5
n/a
26.8
4,961
4,954
5,843
6,237
5,732
1)
Board of Directors’ proposal.
See page 68 for definitions.
Year
Transaction
Number
of shares
Share capital
SEK
1,000
100,000
March 2000
Eniro established
September 2000
100:1 split
September 2000
New issue1
February 2001
New issue2
155,725,287
155,725, 287
June 2001
New issue3
163,922,687
163,922, 687
176,180,952
100,000
100,000
150,000,000
150,000,000
November 2001
New issue 4
176,180,952
August 2003
Redemption5
167,397,557
167,397,557
October 2004
Redemption6
158,151,875
158,151,875
November 2005
New issue7
182,102,392
182,102,392
Directed placement to Telia Cable Holding BV. Subscription price SEK 1.21 per share.
2)
Directed placement to SBC Ameritech. Subscription price SEK 93.42 per share.
3)
Directed placement to Telia AB. Subscription price SEK 116.40 per share.
4)
Directed placement to Elisa Communications Oy. Subscription price SEK 76.15 per share.
5)
Redemption of every 20th share at SEK 80 per share.
6)
Redemption of every 18th share at SEK 86 per share.
7)
Directed placement to shareholders in Findexa Limited as partial payment for acquisition of
Findexa Limited.
1)
DISTRIBUTION OF OWNERSHIP BY COUNTRY, DECEMBER 31, 20 05
USA 43%
UK 21%
OWNERSHIP STRUCTURE ON DECEMBER 31, 20 05
Shareholding
Source: SIS Ägarservice.
ANALYSTS COVERING ENIRO
Company
Analyst
ABG Sundal Collier
Patrick Clase, Jacob Wall
Alfred Berg ABN AMRO
Henrik Fröjd
Carnegie
Daniel Ek
Cheuvreux
Niklas Ekman
Citigroup Smith Barney
Roberto Odierna
Den Danske Bank
Henrik Schultz
Deutsche Bank
Stefan Lycke
Enskilda Securities
Nicklas Fhärm
Exane BNP Paribas
Sami Kassab
Handelsbanken Securities
Rasmus Engberg
JP Morgan
Craig Watson
Kaupthing
John Hernander
Lehman Brothers
David Ferguson
Merill Lynch
Marco Gironi
Morgan Stanley
Javier Marin
Standard & Poor’s equity research/Nordea
Stefan Nelson
Swedbank Markets
Patrik Nygård
UBS Warburg
Fredrik Liljewall
Öhman
Patrik Egnell
Contact information for analysts is available on
30
No. of shareholders
1–1,000
Sweden 20%
Luxemburg 3%
Italy 3%
France 2%
Other 8%
eniro.com
% No. of shares
%
3,839
77.4
1,211,667
0.7
1,001–10,000
723
14.6
2,458,251
1.3
10,001–50,000
166
3.3
3,886,232
2.1
50,001–500,000
159
3.2
27,254,851
15.0
500,001–1,000,000
33
0.7
22,949,545
12.6
1,000,001–5,000,000
34
0.7
59,657,783
32.8
5,000,001–10,000,000
5
0.1
10,000,001–50,000,000
2
<0.1
Total
4,961 100.0
37,828,857 20.8
26,855,206
14.7
182,102,392 100.0
L ARGEST SHAREHOLDERS ON DECEMBER 31, 20 05
Shareholder
Number of shares
% of capital
Fidelity funds
16,198,372
8.9
Kairos funds
8,950,800
4.9
Egerton Capital
8,413,000
4.6
Hermes Focus Asset Management
8,166,867
4.5
SHB/SPP funds
4,629,468
2.5
SEB
3,948,150
2.2
Abu Dhabi Investment
3,562,556
2.0
Robur
2,539,764
1.4
Principal funds
2,353,883
1.3
AMF Pension
1,800,000
1.0
Other
121,539,532
66.7
Total
182,102,392
100.0
Introduction
Eniro AB (publ) applies the Swedish Code of Corporate Governance
(“the Code”). This entails, among other things, that a special report
on corporate governance matters should be attached to the annual
report. This report, which relates to the 2005 financial year, has not been
reviewed by the company’s auditors.
STRUCTURE FOR CORPOR ATE GOVERNANCE
Shareholders
Nomination
Committee
Audit Committee
Board of Directors
Auditors
Internal
Control
Remuneration
Committee
President
Group Management
The figure illustrates the organization of the corporate governance in
Eniro AB (publ). The various bodies and their work are described below.
The Nomination Committee
The Annual General Meeting on April 5, 2005 decided that a Nomination Committee should be formed comprising of one representative
for each of the four largest shareholders in terms of voting rights and
the Chairman of the Board of Directors. If any of these shareholders
waives the right to appoint one representative, that right passes to the
shareholder who, after the above-mentioned shareholders, holds the
largest number of shares. In case that the ownership structure should
change substantially thereafter, the composition of the committee shall
change accordingly. Should a member leave the Nomination Committee
prior to the completion of its work, a replacement shall be appointed by
the shareholder responsible for appointing the departing member or, if
this shareholder no longer belongs to the four shareholders holding the
largest number of voting rights, by a new shareholder belonging to this
group. The Chairman of the Nomination Committee is appointed by the
Nomination Committee.
The composition of the Committee shall be announced through a
separate press release as soon as it has been appointed, which in this
case was October 4, 2005.
The Nomination Committee for the 2006 Annual General Meeting
consists of Wouter Rosingh, Hermes Focus Asset Management, Torsten
Johansson, Handelsbanken/SPP Fonder, Magnus Wärn, AMF Pension,
Ossian Ekdahl, First AP Fund and Lars Berg, Chairman of Eniro AB (publ).
The Chairman of the Nomination Committee is Wouter Rosingh.
The Nomination Committee’s task is to present proposals to the
Annual General Meeting with respect to the number of Board members
to be elected, the fees to be paid to the Board members, possible fees
to be paid for work in the Board’s committees, the composition of the
Board, Chairman of the Board, Chairman of the General Meeting and,
when applicable, the election of auditors and auditor fees.
Shareholders who want to make proposals to the Nomination Committee can do so by e-mail to: [email protected].
The Board of Directors
In accordance with the Code, the General Meeting shall elect a Board of
Directors where the majority of the members are independent in relation
to the company and senior management and where at least two of the
members who are independent in relation to the company and senior
management shall also be independent in relation to the company’s
major shareholders.
In accordance with the proposal of the Nomination Committee, the
2005 Annual General Meeting resolved that the following Board members be reelected: Lars Berg, Per Bystedt, Barbara Donoghue, Erik
Engström, Urban Jansson and Birgitta Klasén and that Tomas Franzén
be appointed as a new member of the Board. Lars Berg was elected
Chairman of the Board.
Bengt Sandin has been an employee representative on the Board
throughout the 2005 financial year. Johnny Fungmark resigned as Board
employee representative in January 2005 in conjunction with leaving his
position with Eniro. Johnny Fungmark was replaced by Daniel Hultenius,
who joined the Board in October 2005.
More information about each Board member can be found on page
35 of this annual report or on the Eniro website www.eniro.com.
With the exception of Eniro’s President Tomas Franzén, all Board
members elected by the General Meeting are independent in relation to
the company and senior management. All of the Board members elected
by the General Meeting are independent in relation to the company’s
major shareholders. The employee representatives on the Board are
employed within Eniro.
The Auditors
By law, the mandate period for auditors is four years. The 2004 Annual
General Meeting appointed PricewaterhouseCoopers AB (PwC) as its
auditors, with the Authorized Public Accountant Peter Bladh as auditor
in charge.
The cost of audit, audit related services and consulting services
during 2003-2005 are shown in the table below.
Year
Audit
2003*
SEK 3.7 M
2004
SEK 4.1 M
2005
SEK 5.2 M
Audit related services
–
SEK 0 M
SEK 3.6 M
Consultingservices
SEK 6.3 M
SEK 1.9 M
SEK 2.2 M
* Relates to the previous auditor Ernst & Young.
The Board has established a policy that the company’s auditors may not
provide consulting services in an amount exceeding 50 percent of their
compensation for audit or audit related services.
The cost of Eniro’s audit and consulting services provided by PwC
during 2003 were negligible. During 2004, most of the consulting services provided by PwC was for Eniro AB (publ) and included opening
balance sheet in accordance with IAS and consultations related to the
Group’s capital structure. Most of PwC’s consulting services in 2005
involved continuing work for Eniro AB (publ) regarding the Group’s
capital structure and work for Eniro AB (publ) in conjunction with the
acquisition of Findexa.
In addition to the work for Eniro, Peter Bladh is the auditor of Gambro
and Paynova, as well as auditor of the medical-technology and biotech
companies, Pharmacia Diagnostics and Biovitrum. Peter Bladh also
31
C orporate governance report
conducts assessments on behalf of the Stockholm Stock Exchange’s
Company Committee in regard to the maturity of candidates seeking
public listing.
The work of the Board
In accordance with the Swedish Companies Act, the Board of Directors’ responsibilities include among others the organization and the
management of the company’s affairs and the continuous assessment
of the company’s and Group’s financial position. This means that the
Board’s duties include the formation of strategies and deciding in strategic issues and in matters involving the company’s capital procurement
and management. The Board shall also decide on other matters of a
general nature or of particular significance, budgets and business plans,
reviewing and approving financial statements, appointing the company’s
President and ensuring that the President fulfills his or her obligations,
including implementation of all Board decisions and guidelines.
The Board has adopted a set of rules of procedure to govern its activities, instructions for the President and instructions on reporting.
In accordance with the rules of procedure, it is the duty of the Chairman to ensure that the work of the Board is conducted in an effective
manner and that the Board fulfills its obligations. The rules of procedure
also stipulate that the Chairman shall in particular organize and lead
the work of the Board, promote an open and constructive discussion
within the Board, ensure that the Board’s members update and improve
their knowledge about Eniro, including receiving any necessary training,
monitoring that Board decisions are implemented, receive opinions from
the owners and communicate them to the Board, maintain continuous
contact with the President, ensure that the Board receives adequate
documentation for its work, and ensure that the work of the Board and
its committees are evaluated on an annual basis and that the Nomination
Committee is informed about the results of the evaluations.
As part of the President’s instructions, the Board has also established a set of rules for the Group (Eniro Code of Corporate Governance,
“ECCG”) that include, among other items, levels for the President and
for the management and boards of the subsidiaries as regards to their
authority for decision in certain specified issues. The ECCG also include
rules regarding treasury management, authorization of payment, insider
issues and information and ethics policies. The President shall report
regularly on the company’s and the business’ development to the Board
in the form of so called CEO-letters. The Board shall evaluate the President’s performance annually.
According to its rules of procedure, the Board shall annually hold
six regular meetings, one of which is the statutory meeting. Four Board
meetings are coordinated with the dates of the issuance of the external
financial reports, while one is held in December and involves a review
of the business plan and budget. In addition, each year the Board
holds a two-day meeting on strategic issues. Audit-related matters are
addressed as a special item during a Board meeting once a year and
in conjunction therewith the Board meets with the company auditors
without the President and any other member of the Eniro Group or senior
management.
Extra meetings may be held to deal with issues that cannot be dealt
with at regular Board meetings.
The rules of procedure and accompanying instructions are reviewed
annually to ensure that they are relevant and updated. A revised version
of the rules of procedure and accompanying instructions is normally
approved in conjunction with the statutory Board meeting.
In 2005, a total of 26 Board meetings were held, of which twelve were
conducted by per capsulam and six by telephone.
32
In 2005, the Board devoted particular attention to the following issues:
strategy, strategic acquisitions and capital structure issues, the sale of
operations outside the Nordic region and Poland, the introduction of a
long-term incentive program for the employees, financial reporting, risk
assessment and auditing matters, and the business plan and budget for
2006. The Board also evaluated the performance of the President.
In general, the attendance at Eniro’s Board meetings has been very
high, as shown in the table below.
Member
of the Board
Attendence
at Board’s
Time as a member
meetings
of the Board during
held via
the financial year 2005 telephone
Lars Berg
The financial year
Per Bystedt
Attendence
at Board’s
meetings
per
capsulam
Attendence
at other
Board’s
meetings
6
12
8
The financial year
3
12
8
Barbara Donoghue The financial year
6
12
8
Erik Engström
The financial year
6
12
8
Tomas Franzén
From April 5, 2005
5
11
6
Johnny Fungmark To January 2005
0
1
0
Daniel Hultenius
From October 2005
0
3
2
Urban Jansson
The financial year
6
12
8
Birgitta Klasén
The financial year
6
12
8
Bengt Sandin
The financial year
6
12
8
The Board has appointed two committees within the Board: an Audit
Committee and a Remuneration Committee. Instructions for the committees and their work are incorporated in the rules of procedure for
the Board.
The Audit Committee
The Audit Committee is appointed by the Board. According to the Code,
the majority of the Committee members shall be independent in relation
to the company and its management and at least one of the members
shall be independent in relation to the company’s major shareholders.
According to the Code, no Board member who is also a member of senior
management may be a member of the Audit Committee. In order to form
a quorum, all members of the Audit Committee must participate in the
decision. The Audit Committee shall meet at least three times per annum.
The Committee shall report on its work and propose measures for the
handling of any significant risks or deficiencies to the Board.
The Board is responsible for the internal controls within the company
and the Group. The Audit Committee is responsible for the preparation of
the Board’s work to secure the quality of the financial reporting, and shall
in connection with that meet with the auditors on an ongoing basis and
be informed as to the direction and scope of the audit, to discuss risks,
establish guidelines for the procurement of other services than auditing
services from Eniro’s auditors, evaluate the audit work and inform the
Nomination Committee about the results of the evaluations, and to assist
the Nomination Committee with the preparation of proposals in regard
to the election of auditors and the fee to be paid to auditors.
The Audit Committee can request information from the employees,
decide on special investigations and commission experts.
During 2005, special attention was paid to the following issues: strategic acquisitions and capital structure issues, risk assessment, internal
control and examination of financial statements.
In 2005, the Audit Committee was comprised of Urban Jansson
(Chairman), Barbara Donoghue and Lars Berg. All of the Committee
members are independent in relation to the company and its management, and in relation to the company’s major shareholders. In 2005, the
Audit Committee held six meetings. All of the Committee members were
present on all occasions.
The Remuneration Committee
The Remuneration Committee is appointed by the Board. According to
the Code, the members of the Committee shall be independent in relation to the company and its management. The Chairman of the Board
may also be appointed Chairman of the Remuneration Committee.
The Board’s Remuneration Committee prepares the Board’s proposal to the Annual General Meeting in regard to policy for remuneration
and terms of employment for senior management. The Committee also
presents proposals to the Board for decision in regard to salary and
other remuneration, as well as pension benefits for the President and
CEO, and other bonus and incentive schemes that are intended for a
broader range of employees within the Group.
During 2005, Lars Berg (Chairman) and Birgitta Klasén were members of the Remuneration Committee. Both members are independent
in relation to the company and its management and in relation to the
company’s major shareholders.
During 2005, particular attention was paid to matters related to
structures for long-term incentive programs and replacement planning
for Group management in the event of incidents.
In 2005, the Remuneration Committee held four meetings. All of the
Committee members were present on all occasions.
basic policies, directives and instructions relating to financial reporting.
These include a Financial Manual, which includes the financial reporting
instructions (“ERAS”), the financial policy, directives and instructions
regarding levels of authorization in general and as regards payment
authorization, directives concerning insider issues, and the information
and ethics policies. The purpose of these policies, directives and instructions is to establish a foundation for a sound internal control. They are
reviewed and revised on a regular basis.
The Board has also ensured that the organizational structure is logical
and transparent, and that the roles, responsibilities and processes
involved are clearly defined and conducive to the efficient management
of the risks to which the operations are exposed. One of the aspects
of the accountability structure is that the Board regularly evaluates
the performance and financial results of the operations by means of a
focused report package. This report package contains operations and
earnings outcomes, rolling forecasts, an analysis of key ratios, and other
key operational and financial information.
The Audit Committee prepares the basic data for the Board’s regular monitoring of internal control efficiency. The activities of the Audit
Committee include evaluating and discussing key issues relating to
the reporting. The Audit Committee also assesses management’s risk
reporting to the Board and, in consultation with management, takes
appropriate measures based on this reporting.
The Audit Committee holds regular meetings with external auditors
and various experts from the company’s senior management and support functions. As part of the evaluation of internal operational control,
the Audit Committee regularly reports to the Board, and decisions are
prepared and made in accordance with established instructions.
Internal control of financial reporting
According to the Code, the Board of Directors is responsible for internal
control. This report has been prepared in accordance with Sections 3.7.2
and 3.7.3 of the Code. Accordingly, the report is restricted to the internal
control that relates to the financial reporting.
This report is not part of the formal annual report. It has not been
reviewed by the company’s auditors.
General guidelines for the Board of Directors’ reporting on internal
control relating to financial reporting were published by the Confederation of Swedish Enterprise/FAR in October 2005. According to the Code,
the Board’s evaluation must also be reviewed by the company’s auditors.
FAR is currently preparing a draft of the recommendation on the auditors’
review of internal control that is to be finalized in 2006.
In accordance with the Corporate Governance Board’s (“CG Board”)
and FAR’s statement in December 2005, a description of the organization of the internal control, that does not include any comment from
the Board as to how well it functioned during the 2005 financial year, is
provided below.
The following description of the current organization of the internal
control relating to financial reporting follows the structure outlined in the
instructions provided by the Swedish Confederation of Enterprise/FAR.
Risk assessment
In autumn 2005, the company initiated a risk analysis to evaluate the
risk of errors occurring in its financial reporting. This process will, from
and including the financial year 2006, be an annually recurring process
that the Board, following the preperation by the Audit Committee, will
evaluate and establish.
In conjunction with the risk analysis, a number of income statement
and balance sheet items that could have a greater inherent risk of significant errors, were identified. In the company’s operations, these risks are
primarily in the management of revenue reporting, production and sales
costs reporting, in the valuation of goodwill and other intangible assets,
the valuation of work in progress, the valuation of accounts receivable,
and in provisions and taxes.
Moreover, there are a number of risk-management processes established that have considerable impact on the company’s ability to ensure
correct financial reporting. These procedures primarily involve the following areas:
• Risk assessments in conjunction with strategic planning, budgeting
and acquisition activities aimed at, among other aspects, identifying
events in the market or in the operations that could cause changes in,
for example, asset valuation.
• Processes to identify changes in accounting rules and recommendations that ensure that such changes are correctly reflected in the
company’s financial statements.
Control environment
Effective work by the Board is one of the fundamental aspects of good
internal control. The Board has established clear procedures and procedural rules to govern its own and its committees’ activities. A key part
of the Board’s responsibilities is to develop and approve a number of
Control activities
Control structures are designed to manage risks that the Board deems
critical for the internal control of financial reporting. These control structures consist of an organization based on clearly defined roles permitting
an effective allocation of responsibility that is appropriate in terms of inter-
33
nal control, and specific control activities aimed at revealing or preventing,
in time, the risk of reporting errors. Examples of control activities include
clear-cut decision processes and routines for key decisions (such as
decisions involving investments, contracts, divestments, provisions, etc.),
earnings analysis and other analytical follow-ups and reconciliations.
Information and communication
The company’s key steering documents relating to financial reporting –
policies, guidelines and manuals – are updated regularly and communicated through appropriate channels such as intranets, news bulletins,
internal meetings and other channels. This communication is regularly
followed up in surveys containing questions concerning awareness of
key policies and the compliance with them. Formal and informal channels whereby employees can communicate significant information to the
relevant recipients are also available to all employees.
Communication with external parties is regulated by a clearly defined
policy that defines guidelines for such communication. The purpose of
the policy is to ensure that all communication obligations are met in a
correct and complete manner.
Monitoring
In 2006, the company plans to establish an internal control function with
main responsibility to follow up and evaluate the company’s risk management and internal control operations. One of the key functions of an
internal control function is to investigate the level of compliance with
individual policies and guidelines and to evaluate the effectiveness of
critical control activities relating to the risk of error in the financial reporting. An internal control function plans its activities in consultation with the
Audit Committee, which then decides on the focus and execution. The
internal control function regularly reports the results of the performed
investigations.
The Audit Committee also conducts an annual process to ensure that
appropriate measures are taken to address shortcomings and recommendations for actions that arise from the external audit review of activities.
Evalutation of the work of the Board and its committees
An independent evaluation of the work in the Board and its committees
was made in autumn 2005. The results of the evaluation have been
reported to the Nomination Committee and the Board.
The President
Tomas Franzén is since June 1, 2004 the President of Eniro AB (publ) and
CEO of the Group. He has also served as President of Eniro Sverige AB
since September 1, 2004. Further information about the President can
be found on page 36 in the annual report and can also be obtained from
the corporate website, www.eniro.com.
Remuneration to senior management
Matters related to the remuneration to senior management are prepared
by the Remuneration Committee, as noted above. The principles adopted most recently by the Annual General Meeting in regard to remuneration and other terms of employment for senior management, concern the
framework for senior management’s participation in the share-saving
program approved by the Annual General Meeting on April 5, 2005. The
principles are shown below under the heading Share and share-pricerelated incentive programs.
34
Share and share-price-related incentive programs
The 2005 Annual General Meeting resolved to introduce a share-savings
program for all Eniro employees in the Nordic region and senior executives in Poland in accordance with the following.
All employees in the Eniro Group in the Nordic countries and senior
executives in Poland will be offered the possibility during 2005 – 2008 to
save up to 7.5 percent of their gross salary for purchase of shares in Eniro
(“saving shares”) via the Stockholm Stock Exchange. Due to the legal
situation in Denmark, Eniro subsequently decided that in Denmark the
program would be offered exclusively to senior executives and thus not
to all employees. Senior executives in the Eniro Group (currently about
260 persons) are also being offered the possibility to purchase with their
own money additional savings shares for an amount corresponding to
3.75 percent of their annual gross salary. Newly employed personnel
shall have the right on two occasions during each year to join the sharesavings program.
Provided that savings shares are held for three years from the
respective acquisition date (“saving period”) and the employee remains
employed within the Eniro Group during the entire savings period, each
savings share will thereafter entitle the holder to receive, free of charge,
0.5 shares in Eniro (“matching shares”). Senior management will also be
entitled to receive an additional 2-8 matching shares for each savings
share held, depending on their positions and the trend of the Group’s
cash flow during the respective savings period.
Allotment of matching shares shall, however, be limited to the extent
that the market price per share in Eniro at the time of allotment of matching shares exceeds 300 percent of the acquisition price for the savings
share entitling the holder to receive matching shares. In such case
the number of matching shares shall be reduced in proportion to the
exceeded share price.
In the event that the maximum number of matching shares is allotted
in accordance with the proposed share-savings plan, the number of
shares outstanding will rise by a maximum of 2,700,000 shares. These
shares account for a maximum of approximately 1.5 percent of the total
number of shares and votes outstanding. Approximately 300 employees
have joined the program. Against this background, the Board assesses
that a maximum of 1,000,000 shares could be allotted in accordance
with the share-savings program. Eniro holds 1,000,000 own shares in
the company.
The number of shares transferred in accordance with the share-savings program could be recalculated as a result of bonus issues, splits
and similar measures. Premature allotment of matching shares may also
occur if a party makes a public offer to acquire all of the shares in the
company, or if compulsory redemption of the shares in Eniro is requested
in the event, for example, of a merger. Since the savings shares are
acquired by employees through the Stockholm Stock Exchange, no
direct dilution effect will arise.
Apart from the incentive program named above, Eniro does not have
any share or share-price-related incentive programs.
Departs from rules in the Code
The Swedish Code of Corporate Governance was not presented until
December 1, 2004 and the Code did not come into effect until July 1,
2005. As a result, parts of the Code were not fully applied prior to the
2005 Annual General Meeting.
Board of Directors and Auditors
1
2
4
7
1. Lars Berg
Chairman of the Board since 2003.
Member of the Board since 2000.
Born in 1947. M.Sc. Econ Gothenburg School
of Economics.
Former positions: Member of Mannesmann’s
executive management with responsibility
for telecom operations. President and CEO
of Telia. Formerly held various executive
positions within the Ericsson Group.
Other significant Board assignments:
Telefonica Moviles, PartyGaming, Ratos
and Net Insight.
Shareholding in Eniro*: 40,000.
2. Per Bystedt
Born in 1965. M.Sc. Econ Stockholm
School of Economics.
Main employment: President of Spray.
Former positions: Executive Vice President of
MTG. President of TV3 Broadcasting Group
Ltd and of ZTV.
Other significant Board assignments: Axel
Johnson, Servera and AIK Fotboll AB.
3. Barbara Donoghue
Born in 1951. MBA, McGill University Canada.
University Scholar. Bachelor of Commerce,
McGill University, Canada. Transportation
Development Agency Scholar.
Main employment: Director, Noventus Partners.
Former positions: Teaching Fellow, London
Business School. Member, Independent Television Commission. Managing Director,
Hawkpoint Partners.
Other significant Board assignments: Panel
Member, UK Competition Commission.
4. Tomas Franzén
Born in 1962. M.Sc. education in Industrial
Economics and Management, Linköping
Technical University.
Former positions: President and CEO of
Song Networks Holding AB. President AUSystem. Director of Sales Nokia Data AB.
Other significant Board assignments: BTS
Group AB and OEM International AB.
5. Urban Jansson
Born in 1945. Diploma in Economics.
Former positions: Leading positions within
SEB and the Incentive Group. President of
Ratos.
Addtech, Ahlstrom Corporation, Ferd A/S,
HMS, Plantasjen A/S, Siemens AB, Stockholm Stock Exchange Listing Committee, Tylö,
Clas Ohlson and SEB.
3
5
6
8
9
6. Birgitta Klasén
9. Daniel Hultenius
Born in 1949. B.Sc. Royal Institute of Technology in Stockholm. B.Sc. Econ Stockholm
University.
Former positions: Corporate CIO of EADS
(European Aeronautic Defence and Space
Company). Corporate Officer of Pharmacia
Corp., CIO of Telia AB, Executive Vice President of Responsor (IBM subsidiary), Sales &
Marketing IBM Europe.
OMX AB.
Employee representative on the Board since
2005. Born in 1974.
Main employment: Sales representative at
Eniro Sweden.
Shareholding in Eniro*: 0.
Auditors
7. Erik Engström
Born in 1963. MBA Harvard Business
School, M.Sc. Royal Institute of Technology
in Stockholm, B.Sc. Econ Stockholm School
of Economics.
Main employment: CEO Elsevier.
Former positions: General Partner, General
Atlantic Partners. President and COO of Random House Inc. President of Bantam Doubleday
Dell North America. Consultant and engagement Manager, McKinsey & Company Inc.
Other significant Board assignments: Reed
Elsevier PLC.
8. Bengt Sandin
Employee representative on the Board since
2001. Born in 1952.
Main employment: Manager of Environmental issues at Eniro.
* Own holdings of shares and other financial instruments in the company or those of related physical persons or legal entities.
Peter Bladh
Sten Håkansson
Born in 1949.
Authorized Public
Accountant and Auditor in charge.
PricewaterhouseCoopers AB.
Eniro since 2004.
LL.B and advanced
business studies,
both at Stockholm
University.
Other significant audit
assignments: Gambro,
Paynova, Pharmacia
Diagnostics and
Biovitrum.
Born in 1960.
Authorized Public
Accountant.
PricewaterhouseCoopers AB.
Eniro since 2004.
M.Sc. Business
Administration,
Sundsvall University.
Other significant audit
assignments: Biacore,
European Business
Information, Coor and
Outokumpu.
35
Group Management
1
2
3
4
5
6
7
8
9
10
11
1. Tomas Franzén
4. Mats Eklund
7. Wenche Holen
10. Boel Sundvall
President and CEO.
Eniro since 2004. Born in 1962.
M.Sc. education in Industrial Economics
and Management, Linköping Technical
University.
Previous position: President and CEO of
Song Networks Holding AB.
Board assignments: BTS Group AB and
OEM International AB.
Head of Business Development and M&A.
M.Sc. Econ Gothenburg School
of Economics.
Previous position: Founder and partner of
Accel Consult AB.
Head of Eniro Norway.
Eniro/Findexa since 1994. Born in 1964.
Gjøvik College of Engineering and
Norwegian Business School.
Previous position: COO Findexa Group AS.
Head of Communications & Investor
Relations.
M.Sc. Econ Stockholm School
of Economics.
Previous position: Vice President Investor
Relations, Swedish Match AB.
2. Roger Asplund
Head of Eniro Poland.
Market Economics, IHM Business School.
Previous position: Director of Sales Eniro
Sverige Försäljning AB.
3. Henrik Dyring
Head of Eniro Denmark.
M.Sc. Sales and Marketing, Copenhagen
Business School.
Previous position: President of People
Group A/S.
5. Ingrid Engström
Head of Purchasing, Human Resources
and Operations Sweden.
M.Sc. Applied Psychology, Uppsala
University.
Previous position: President and CEO
KnowIT.
6. Cecilia Geijer-Haeggström
Head of Products and Market.
M.Sc. Econ Stockholm School
of Economics.
Previous position: President of Telia Infomedia Interactive.
8. Joachim Jaginder
Chief Financial Officer.
M.Sc. Econ Stockholm University.
Previous position: Chief Financial Officer
of Song Networks Holding AB.
9. Bernt Lago
Chief Information Officer.
Technical Mathematics.
Previous position: Technical Director
of SOL.
* Own holdings of shares and other financial instruments in the company or those of related physical persons or legal entities.
36
11. Ilkka Wäck
Head of Eniro Finland.
M.Sc. Education, Turku University.
Previous position: President of Inoa
Finland.
Board of Directors’ Report
Group operations and structure
The Eniro Group was formed on July 1, 2000 by the combination of
several companies with similar operations within the Telia Group under
a single parent company, Eniro AB (publ). On October 10, 2000, Eniro AB
(publ) was listed on the O-List of the Stockholm Stock Exchange.
Eniro makes it easy for buyers and sellers to meet regardless of time
or place. Eniro offers products and services via several media channels
that increase availability for users and exposure for advertisers. Today
this means printed directories (offline) and directory assistance, Internet
and mobile services (online).
Eniro’s operations are organized in seven geographic market units:
Sweden excl. Voice, Sweden Voice, Norway, Finland, Denmark, Poland
and Germany. External financial information is reported by geographical
market segment and by product: offline and online.
Acquisitions and divestments
On December 5, 2005, Eniro finalized the acquisition of Findexa, the
market-leading Norwegian search company. As a result of the acquisition, Eniro strengthened its position in the Norwegian search market.
The purchase price totaled SEK 7,866 M, of which SEK 5,473 M was
paid in cash and the remainder in the form of 26,811,217 Eniro shares,
of which 23,950,517 were newly issued. Eniro’s share price at the date of
acquisition was SEK 89.25. The purchase price included directly attributable expenses of SEK 61 M. As of December 5, 2005, Findexa is consolidated in the Eniro Group, within the market unit Norway.
In order to strengthen Eniro’s market leading position in the Finnish directory assistance segment, directory assistance operations were acquired
for approximately SEK 13 M during the second quarter of 2005.
Eniro secured a license within the search-word advertising segment
during the year, through an agreement with MIVA. Eniro acquired MIVA’s
net assets for approximately SEK 5 M.
Eniro divested all operations in the Baltic region for a total of approximately SEK 80 M. The divestment of the operations in Latvia was finalized on May 31, 2005, while the sale of the operations in Estonia and
Lithuania was finalized on August 31, 2005. Combined capital gains on
the divestment of operations in the Baltic region was SEK 92 M.
In October, Eniro concluded an agreement regarding the sale of
operations in Russia for EUR 5 M, or approximately SEK 47 M. The sale
was subject to the approval of the Russian anti-monopoly authorities,
which was received in January 2006. This divestment did not give rise to
any material capital gains or losses. On December 14, 2005, Eniro also
concluded an agreement regarding the sale of operations in Belarus for
a price of EUR 850,000 or approximately SEK 8 M. The sale is subject to
the approval of the Belarus anti-monopoly authorities and certain local
registration measures.
Revenues and profit
During the year, competition remained intense in Eniro’s principal markets. The Finnish directory market was affected by the changed competition scenario for printed directories, while Internet competition increased
in the Swedish and Norwegian markets. Despite this increased competition, underlying earnings improved in all markets except in the Finnish
operations.
Operating revenues increased by 2 percent SEK 4,827 M (4,745).
Organically, operating revenues declined by 1 percent. Offline revenues
decreased by 3 percent to SEK 2,621 M (2,704). Organically, the decline
was 5 percent. Online revenues increased by 8 percent to SEK 2,206 M
(2,041). The organic increase was 5 percent.
EBITDA declined to SEK 1,234 M (1,324). Adjusted for the Findexa
acquisition, underlying EBITDA amounted to SEK 1,293 M, a decrease
of 2 percent that was mainly attributable to Finland.
Market unit Sweden, excluding Voice
Operating revenues increased marginally to SEK 2,179 M (2,167).
Adjusted primarily for changed publication dates, the organic increase
was 1 percent.
Offline revenues declined by 3 percent. The organic decline was
2 percent, which was in line with the previous guidance.
The total number of invoiced customers increased to 166,000
(162,000).
For comparable published Gula Sidorna directories, average revenue
per advertiser (ARPA) declined 5 percent and the number of advertisers
increased by 1 percent. The ARPA decline for the printed Gula Sidorna
was greatest for the 500 largest advertisers.
Din Del and Emfas posted offline revenues of approximately SEK 293
M (230), an increase of 27 percent compared with 2004. Gula Tidningen
reported operating revenues of approximately SEK 34 M (55).
Online revenues increased by 11 percent during the year, which also
applied to the organic increase and was in line with the previous guidance.
EBITDA amounted to SEK 994 M (958) and was positively affected
by lower costs.
Market unit Sweden Voice
Operating revenues declined by 3 percent, due to lower volumes in the
number of calls, which was not fully offset by the positive development
of Eniro’s sms services.
EBITDA fell 12 percent to SEK 122 M (139). However, the second quarter was charged with restructuring costs of SEK 15 M. These restructuring
costs pertained to the reduction in the number of operating locations,
which will result in annual savings of approximately SEK 20–25 M as of
2006. Savings from this downsizing came into effect as early as during
the fourth quarter.
Market unit Norway
In December, Eniro finalized the acquisition of Findexa, whereby Findexa has been consolidated since December 5. In December, no printed
directories were published by Findexa, which resulted in offline revenues
consolidated in Eniro being extremely limited at SEK 13 M. Findexa’s
online revenues in December totaled SEK 40 M.
During the year, competition increased in the sharply growing Internet advertising market in Norway. For Eniro Norway, excluding Findexa,
operating revenues increased by 34 percent to SEK 240 M (179) and,
taking into account currency effects of SEK 11 M, the organic increase
was 27 percent.
Including Findexa, an EBITDA loss of SEK 39 M (loss: 15) was reported. Excluding Findexa, Eniro Norway’s EBITDA totaled SEK 20 M (loss:
15). Findexa’s EBITDA for December 5 to December 31 was a loss of
SEK 59 M, which includes restructuring costs of SEK 24 M. Excluding
restructuring costs, Findexa’s EBITDA was a loss of SEK 35 M. The
reason for the loss was that Findexa is only included in Eniro’s EBITDA
for the month of December, when revenues were limited while costs
amounted to SEK 112 M.
For further information concerning the acquisition of Findexa, see
Note 23.
Eniro årsredovisning 2005
37
B o a rd o f d i r e c t o r s ' r e p o r t
Market unit Finland
Full-year operating revenues declined 9 percent to SEK 637 M (703).
Operating revenues from the Tampere and Helsinki directories declined
by a total of 27 percent to SEK 210 M. Other regional and local printed
directories remained unchanged compared with the preceding year.
The organic decline was 11 percent. During the year, online revenues
increased slightly.
EBITDA declined to SEK 34 M (167). Excluding restructuring costs
of SEK 15 M, the underlying EBITDA margin was 8 percent. In 2004 the
EBITDA margin was 24 percent. The reduced margin in 2005 derived
from lower operating revenues and higher costs resulting from changed
market conditions.
Market unit Denmark
Operating revenues amounted to SEK 396 M (376). The organic increase
in operating revenues was 4 percent. Improvements in online revenues
and strong growth for the Mostrup local directories contributed to the
increase in revenues.
Higher operating revenues and an improved cost control improved
EBITDA to SEK 37 M (22).
Market unit Poland
The Polish operations had a stable development and profitability
remained at the same level as in 2004.
Full-year operating revenues increased by 15 percent to SEK 375 M
(325). In local currency, the corresponding increase was 1 percent.
EBITDA increased to SEK 83 M (70). The EBITDA margin remained
unchanged at 22 percent (22). On a full-year basis, EBITDA was affected
by positive exchange rate effect amounting to SEK 10 M.
Market unit Germany
As of 2005, the company reports only online revenues. Work on changing the customer offering and the sales-process model is continuing.
Full-year operating revenues declined by 8 percent to SEK 347 M
(376). The organic decline was 9 percent.
Reported EBITDA amounted to SEK 72 M (86). In 2005, total restructuring reserves of SEK 20 M were reversed, compared with SEK 47 M
in 2004. Taking this into account, the underlying EBITDA margin was
15 percent in 2005, compared with 10 percent in 2004.
Other
This category includes costs for corporate headquarters and Groupwide projects.
EBITDA corresponded to a loss of SEK 69 M (loss: 103). Cost savings
at corporate headquarters and lower costs for Group-wide projects had
a positive impact on earnings.
Discontinued operations
The discontinued operations are operations in Estonia, Latvia, Lithuania, Russia and Belarus. Net income from the discontinued operations
amounted to SEK 81 M, of which a capital gain on the sale of the operations in the Baltic countries accounted for SEK 92 M and operating
losses for SEK 11 M.
Research and development
Eniro conducts continuous work on improving and developing services
and technical platforms. For example, a joint Nordic platform for Eniro’s
online operations was launched during the year. Total development costs
of approximately SEK 12 M were capitalized in the balance sheet.
38
Consolidated cash flow
Cash flow from operating activities amounted to SEK 1,007 M (1,016).
Cash flow from investing activities was a negative SEK 5,141 M (neg:
235), including a negative cash flow of SEK 5,055 M for the acquisition
of Findexa. Cash flow from financing activities amounted to SEK 4,468
M (neg: 769), which was mainly attributable to an increase in Group borrowings in connection with the acquisition of Findexa.
Financial position
The Group’s interest-bearing net debt totaled SEK 10,564 M (2,832) at
the end of the year. The equity/assets ratio was 24 percent (26) at yearend. The debt/equity ratio was a multiple of 2.28, compared with 1.51
at December 31, 2004. Interest-bearing net debt in relation to EBITDA
was a multiple of 5.3 (2.1) based on pro forma EBITDA for the new Eniro
Group. Excluding costs of SEK 113 M in conjunction with the acquisition
of Findexa, interest-bearing net debt in relation to EBITDA was 5.0 times
(2.1). The return on shareholders’ equity was 42 percent (35).
Net financial items amounted to an expense of SEK 56 M (expense:
101), which included an exchange rate gain of SEK 68 M (loss: 5).
In conjunction with the acquisition of Findexa, Eniro signed a loan
agreement corresponding to SEK 12,000 M with FöreningsSparbanken
AB, Nordea Bank AB, Skandinaviska Enskilda Banken AB and Svenska
Handelsbanken AB as co-arrangers. The purpose of the loan agreement
was to finance the cash portion of the acquisition of Findexa, refinance
Eniro and Findexa’s former debts, and to be used for continuing operations and working capital requirements. The facility is for five years and
will be amortized in an amount corresponding to SEK 900 M in 2006,
SEK 850 M in 2007 and by SEK 600 M for each of the remaining three years.
Financial risks
The Group-wide finance policy that is adopted by the Board of Directors
forms the foundation for the management of financial operations, the
division of responsibilities and financial risks. The focus of Eniro’s risk
management activities is to limit or eliminate financial risks in terms of
costs, liquidity and financial position. Eniro Treasury has the centralized
responsibility for financing and risk management. For a description of
risk management, see the section on Financial risk management in the
Accounting principles and the references to the relevant notes.
Equity
On the basis of the resolution of the Extraordinary General Meeting on
November 7, 2005, Eniro AB’s Board approved, on November 29, 2005,
an increase of SEK 23,950,517 in the Company’s share capital through
an issue of 23,950,517 new shares. Accordingly, on December 31, 2005,
the share capital amounted to SEK 182,102,392 corresponding to the
same number of shares. Eniro holds 1,000,000 of these issued shares.
At the start of the year, Eniro held 1,521,700 of its own shares, which
had been bought back during 2004. In 2005, 2,339,000 shares were
bought back for a total of SEK 193 M. Approximately 2,860,700 shares
were provided as part-payment for the acquisition of Findexa. The
remaining 1,000,000 shares will be retained to be utilized in the sharesavings program. The average holding of the Company’s own shares
during the year was 2,791,099.
Group equity amounted to SEK 4,634 M (1,879) at the end of 2005.
Taxes
Reported tax cost for 2005 amounted to SEK 181 M (368), with an average tax rate of 18 percent (33). Adjusted for non-recurring effects, the
average tax rate for the year was 30 percent of earnings before tax.
Eniro will benefit those aspects of Findexa’s tax structure, which will
result in favorable taxation effects in the future. In conjunction with the
acquisition, deductible non-recurring costs arose, which reduced tax
expenses for the year by approximately SEK 100 M. The acquisition of
Findexa also enhanced the possibility of utilizing earlier loss carryforwards in Eniro Norge AS. A renewed assessment was made of corresponding earlier non-capitalized tax claims, which reduced tax expenses
for the year by SEK 35 M. The tax rates in Finland and Denmark were
lowered, which resulted in non-recurring effects on the reassessment
of loss carryforwards and untaxed reserves, and led to costs being
reduced by SEK 5 M net.
Net income per share
Net income per share amounted to SEK 5.84 (4.62). Net income per
share benefited from lower tax charges. The average number of shares
is based on the average number of shares after buy-backs and new
issues on a daily basis.
Legal issues
On December 7, 2004, the Court of Appeal in Frankfurt issued a judgment in the case between Eniro Windhager Medien GmbH and DeTeMedien GmbH. The judgment related to the issue of compensation liability
for DeTeMedien, as a result of the termination of a prior partnership
agreement between the parties. According to the judgment, Eniro is
entitled to compensation except with regard to a (very limited) portion of
the agreement, which pertained to the regional directory, Örtliche Telephone Buch (ÖTB). On January 13, 2005, DeTeMedien appealed to the
Supreme Court regarding that portion of the ruling which went against
the company. Eniro attached with an appeal concerning ÖTB. The
Supreme Court is expected to rule before the end of 2006 on weather to
permit the appeal or not. If a permit to appeal is not granted, the matter
will be returned to the court of first instance to determine the amount of
compensation to be paid.
During the year, Eniro reached a settlement in the dispute regarding infringement of Eniro’s intellectual property rights by TDC Förlag AB
(TDCF) through the distribution of the telephone directory Gulan in the
Swedish market. TDCF has undertaken to refrain from infringement of
Eniro’s rights to the Gula Sidorna Internet database and the Gula Sidorna trademark. In addition, TDCF will pay damages to Eniro. The parties
agreed not to disclose the financial details of the settlement.
Employees
On December 31, the number of full-time employees, excluding Belarus
and Russia, was 4,923 (3,832). Belarus and Russia, which have a total of
556 employees, are reported as discontinued operations. The increase
in the number of employees in Norway was due to the acquisition of
Findexa.
The average number of employees, salaries and remuneration and
the benefits paid to senior executives are presented in Notes 4–6.
Parent Company
The Parent Company Eniro AB (publ) had 23 full-time employees at yearend (22).
Operating revenues in 2005 totaled SEK 30 M (34). All operating revenues pertain to intra-Group sales. In 2005, earnings before tax amounted to SEK 32 M (loss: 272). Investments amounted to SEK 8,054 M (215)
and consisted solely of capital contributions to subsidiaries. The Parent
Company’s external interest-bearing net debt at year-end amounted to
SEK 1 M (2,614). All external financing was transferred to the Group
company Eniro Treasury AB during the year.
The Parent Company’s shareholders’ equity at year-end amounted
to SEK 4,354 M (1,612), of which unrestricted shareholders’ equity
accounted for SEK 2,023 M (1,418).
Company management and work conducted by the
Board of Directors
The Board of Directors of Eniro AB (publ) consisted of seven members elected by the Annual General Meeting, of which one is the President and Chief Executive Officer Tomas Franzén. Two members are
appointed by the employees. According to its work plan, the Board of
Directors must hold at least six scheduled meetings per year, including
the board meeting following election. During 2005, the number of Board
meetings totaled 26 of which 12 were held by correspondence and six
by telephone. During 2005, the Board devoted particular attention to the
following matters: strategy, strategic acquisitions and capital structure,
the divestment of operations outside the Nordic region and Poland, the
establishment of a long-term incentive program for employees, financial
reporting, risk assessments and audit matters, as well as a business
plan and a budget for 2006. The Board of Directors also evaluated the
work performed by the President and Chief Executive Officer.
The Board of Directors has a Compensation Committee and an Audit
Committee. During 2005, the Compensation Committee consisted of
Lars Berg (chairman) and Birgitta Klasén. The Audit Committee comprised Urban Jansson (chairman), Barbara Donoghue and Lars Berg. For
a comprehensive account of the work conducted by the Board of Directors, see the separate Corporate Governance Report on page 31.
Group management consisted at the end of 2005 of 11 executives.
Operations within Din Del (local directories in Sweden) and Wer liefert
was? (B2B in Germany) report to their respective Boards of Directors, for
which Tomas Franzén is the Chairman. Joachim Jaginder was appointed
CFO on February 14, 2005, succeeding Mats Lönnqvist, who had been
acting CFO since April 23, 2004.
Capital structure and dividend
For the 2005 fiscal year, the Board proposes a dividend of SEK 2.20
(2.20) per share, which corresponds to 43 percent of net profit for the
year (based on the number of shares at year-end, after buy backs). The
amount proposed for distribution totals SEK 398 M (345). Due to the
Findexa acquisition and the resulting higher level of amortization, the
dividend will be equivalent to less than 75 percent of net profit in 2005
and 2006. As disclosed on September 26, and in the press release concerning the Findexa acquisition, the Board intends to return to a dividend of 75 percent of net profit for 2007.
Significant events after year-end
After year-end, Eniro acquired the Norwegian company, Din Pris AS.
Accordingly, Eniro entered the market for price comparisons, with the
aim of becoming the leader for price comparisons in the Nordic market.
The purchase price for Din Pris AS was approximately SEK 31 M, to
which will be added a variable portion not to exceed SEK 31 M, based
on earnings over a three-year period. The operation will be consolidated
as of February 1, 2006. This acquisition is expected to have a marginal
negative effect on Eniro’s EBITDA in 2006, but thereafter make a positive contribution.
After year-end, Webdir, which is active in local directories and publishing services in Denmark, was also acquired. The company had sales of
slightly more than SEK 20 M in 2005, and is consolidated in Eniro Denmark
from February 1, 2006. The earnings effect on Eniro’s income statement
will be marginally positive. The purchase price was SEK 32 M.
39
Market outlook
The Group’s total EBITDA is expected to increase in 2006, compared
with the 2005 pro forma consolidated accounts. EBITDA in the pro forma
accounts for 2005 totals SEK 2,093 M, excluding non-recurring expenses of SEK 113 M in Findexa.
The Swedish organic offline revenues for 2006 are expected to remain
unchanged compared with 2005. Online revenues for Sweden, excluding Voice, are expected to increase by more than 10 percent in 2006.
Norwegian organic offline revenues are expected to decline by
approximately 10 percent in 2006, compared with 2005. Online revenues for Norway are expected to increase by 20–25 percent in
2006. The merger of the two Norwegian units is expected to generate
SEK 50 M in cost savings from Norwegian operations in 2006 and
SEK 100 M in 2007.
Continued strong competition is expected in the Finnish market in
2006, with continued price pressure in the print market. Cost savings will
be implemented in Finland and the Finnish EBITDA margin is expected
to exceed 10 percent.
In 2004, a cost-savings program was implemented to reduce Eniro’s
overall cost level, calculated in terms of fixed monetary value, by SEK
350 M compared with a cost level of SEK 3.7 billion in 2003. In 2005,
cost savings achieved an impact of SEK 100 M, while the impact is
expected to be SEK 250 M in 2006 and SEK 350 M in 2007. The stated
effects are net savings.
The Board of Directors’ proposed distribution of earnings
Proposed distribution of earnings
The following earnings are at the disposal of the Annual General Meeting:
Net profit for the year
Funds to be utilised according to resolution
by Annual General Meeting
Retained earnings
Total
135,423,836
892,189,398
995,888,507
2,023,501,741
The Board of Directors proposes that:
A dividend of SEK 2.20 per share be distributed
to shareholders
To be brought forward
Total
398,425,263
1,625,076,379
2,023,501,741
The proposed record date for receiving the dividend is April 10, 2006.
Payment via VPC is expected to occur on April 13, 2006.
40
Board of Directors’ statement regarding the proposed dividend, in
accordance with Chapter 18, Section 4 of the Swedish Companies Act
The proposed dividend to shareholders will reduce the Parent Company’s
equity/assets ratio from 30 percent to 27 percent and the Group’s equity/
assets ratio from 24 to 22 percent. The equity/assets level is regarded as
satisfactory in view of the fact that the Group’s operations are continuing
to generate profitability and considerable cash flows.
On September 25, 2005, Eniro Treasury, a subsidiary of Eniro AB,
signed a loan agreement corresponding to SEK 12,000 M. The facility is
for five years and will be amortized by amounts corresponding to SEK
900 M in 2006, SEK 850 M in 2007 and SEK 600 M during each of the
remaining three years. According to the Board of Directors, the proposed dividend is compatible with the loan agreement’s requirements
regarding repayments and interest payments.
According to the Board of Directors, the proposed dividend will not
prevent the Company and other Group companies from fulfilling their
obligations in the short or long term; nor will it prevent the Company
from completing necessary investments. Accordingly, the proposed
dividend can be defended in the light of what is stated in Chapter 17,
Section 3, Paragraphs 2–3 of the Swedish Companies Act.
Consolidated income statement
SEK M
Continuing operations
2005
2004
Gross operating revenues
4,910
Advertising tax
–83
Operating revenues
1,3
4,827
Production costs
2,3,5
–1,569
Sales costs
2,3,5
–1,294
Marketing costs
2,3,5
–404
Administration costs
2,3,5,6,7
–427
Product development costs 2,3,5
–118
Other revenues
3
76
Other costs
3
–18
4,848
–103
–1,625
–1,167
–314
–371
–95
67
–8
Operating income 1,073
1,232
140
–196
26
–127
1,017
1,131
–181
–368
836
763
Financial revenues
Financial costs
Note
8
8
Earnings before tax Income tax
9
Net income for the year from continuing operations
Net income from discontinued operations 3
Net income for the year 4,745
81
1
917
764
Net income per share from continuing operations, SEK – before dilution
5,32
4,62
– after dilution
5,32
4,62
Net Income per share from discontinued operations, SEK – before dilution
0,52
– after dilution
0,51
Net Income per share, SEK – before dilution
5,84
– after dilution
5,83
Average number of shares before dilution (000s)
24
157,079
Average number of shares after dilution (000s)
24
157,231
0,00
0,00
4,62
4,62
165,327
165,327
41
Consolidated balance sheet
SEK M
Note
Dec. 31, 2005
Dec. 31, 2004
Assets
Non-current assets
Tangible non-current assets
10,11
292
193
Intangible assets
12
16,497
4,985
Deferred tax assets
9
172
193
Derivative financial instruments
16
1
–
Participations in associated companies
22
7
–
Other receivables
151
158
Total non-current assets
17,120
5,529
Current assets
Work in progress
Accounts receivable
Prepaid costs and accrued revenues
13
Income tax receivables
Other non-interest bearing current assets
Other financial assets
Cash and cash equivalents
14
Assets classified as held for sale
3
145
1,208
185
78
42
6
742
16
154
1,038
135
112
67
4
317
–
Total current assets
Total assets
2,422
19,542
1,827
7,356
Equity and liabilities
Equity Share capital
182
158
Additional paid-in capital
4,249
2,072
Reserves
–121
–103
Retained earnings
324
–248
Total equity
24
4,634
1,879
Non-current liabilities
Borrowings
15
10,123
1,785
Derivative financial instruments
16
67
–
Retirement benefit obligations
17
365
323
Deferred income tax liabilities
9
1,020
242
Other provisions
18
43
74
Total long-term liabilities
11,618
2,424
Current liabilities
Advances from customers
126
133
Accounts payable
355
308
Income tax liabilities
27
40
Accrued costs and prepaid revenues
19
1,294
989
Other non-interest bearing liabilities 564
314
Other provisions
18
24
66
Borrowings
15
876
1,203
Liabilities directly associated with assets classified as held for sale
3
24
–
Total current liabilities Total equity and liabilities
42
3,290
19,542
3,053
7,356
Changes in consolidated equity
Other capital SEK M
Note Share capital
contributions
Reserves
Opening balance as per January 1, 2004
167
2,959
–209
Hedging of net investments after tax
–
8
Exchange rate differences
–
–
98
Total transactions recognized directly in equity
–
–
106
Total revenues and costs
–
–
106
Costs for redemption of shares
–
–3
–
Recovered costs in new issue
–
2
–
Buy-back of shares
–
–100
–
–9
–786
–
Dividends
–
–
–
Closing balance as per December 31, 2004
24
158
2,072
–103
158
2,072
–103
Hedging of cash flow after tax –
–
–48
Hedging of net investments after tax
–
–
26
Foreign-currency translation differences
–
–
4
Total transactions recognized in equity
–
–
–18
–
–
–18
Share savings program – value of services provided
–
2
–
Buy-back of shares
–
–193
–
Non-cash issues in conjunction with company acquisition
23
24
2,368
–
Dividend
–
–
–
24
182
4,249
–121
Earnings brought forward
–711
–
–
–
764
764
–
–
–
–
–301
–248
–248
–
–
–
–
917
917
–
–
–
–345
324
Total equity
2,206
8
98
106
764
870
–3
2
–100
–795
–301
1,879
1,879
–48
26
4
–18
917
899
2
–193
2,392
–345
4,634
Consolidated cash flow statement
SEK M
Note
2005
2004
Current operations
Operating income
1,073
1,232
Adjustment for items excluded in cash flow
Depreciation, amortization and impairment losses on non-current assets 2
161
92
Provisions
–53
–19
Unrealized exchange rate gains
0
–7
Dividends from associated companies
22
6
–
Loss on scrapping of non-current assets
0
–2
Interest received
21
16
Interest paid
–136
–92
Income taxes paid
–179
–237
Cash flow from current operations before changes in working capital
893
983
Cash flow from changes in working capital
Decrease/Increase in work in progress
49
–50
Decrease/Increase in current receivables
58
2
Decrease/Increase in current liabilities
7
81
Cash flow from current operations 1,007
1,016
Investing activities
Acquisition of subsidiaries and associated companies
23
Acquisition of intangible assets
12
Acquisition of tangible non-current assets
10
Sale of tangible non-current assets
10
Cash flow from investing activities
–5,060
–36
–45
0
–5,141
–63
–109
–67
4
–235
Financing activities
New borrowings
11,201
Amortization of loans
–6,195
–
Buy-back of shares
–193
Dividend paid
–345
Cash flow from financing activities
4,468
428
–
–796
–100
–301
–769
Discontinued operations 3
Current operations
–3
81
Cash flow from discontinued operations
78
Cash flow for the year
412
4
–
4
16
Cash and cash equivalents at the beginning of the year
Exchange rate differences in cash and cash equivalents
Cash and cash equivalents at the end of the year
14
317
13
742
285
16
317
43
Parent Company income statement
SEK M
44
Note
2005
2004
Operating revenues
1
Production costs
2,5
Sales costs
2,5
Marketing costs
2,5
2,5,6,7
Other revenues
Other costs
30
34
–3
–
–44
–75
24
0
–10
–1
–29
–84
151
–147
Operating income 11
–68
–86
Dividends from Group companies
Impairment losses related to receivables from Group companies
Impairment losses related to shares in Group companies
21
Financial revenues
8
Financial costs
8
756
–15
–322
111
–206
9
–2
–
73
–149
Income after financial items 256
–155
Appropriations
Income tax
9
–224
103
–118
76
135
–197
Proposed dividend per share for the financial year
2,20
2,20
Parent Company balance sheet
SEK M
Dec. 31, 2005
Dec. 31, 2004
Assets
Non-current assets
10
0
Shares in subsidiaries
21
12,324
Deferred income tax assets
2
Interest-bearing receivables from Group companies
916
Other interest-bearing receivables
4
Note
1
4,592
3
937
6
Total fixed assets
13,246
5,539
Current assets
Accounts receivable
0
Receivables from Group companies
1,087
13
4
17
3
Interest-bearing receivables from Group companies
211
14
7
0
772
9
86
5
559
0
Total assets
1,329
14,575
1,431
6,970
Equity
Restricted equity
Share capital 182
Statutory reserve
2,149
Share premium reserve
–
Non-restricted equity
Funds available for distribution according to a resolution by the Annual General Meeting
892
Retained earnings
1,131
158
–
36
Total equity
24
4,354
Untaxed reserves
Tax allocation reserve
921
Provisions
Retirement-benefit obligations
17
10
Other provisions
18
–
Total provisions
830
588
1,612
697
13
6
10
19
Non-current liabilities
Borrowings
15
0
Liabilities to Group companies
9,009
1,407
1,819
Total non-current liabilities
9,009
3,226
Current liabilities
Accounts payable
65
Liabilities to Group companies
23
Accrued costs and prepaid revenues
19
25
Other non-interest bearing liabilities
49
Borrowing from Group companies
119
Other interest-bearing liabilities
15
0
8
85
27
5
91
1,200
Total current liabilities Total equity and liabilities
1,416
6,970
281
14,575
45
Changes in equity, Parent Company
Share
Statutory
Premium
SEK M
Note capital
reserve
reserve
Opening balance as per January 1, 2004 167
–
Total transactions recognized in equity
–
–
–
Group contributions received, net after tax
Buy-back of shares
–
–9
Dividend
–
Earnings
brought
forward
Other
unrestricted
reserves
Total
equity
–
–
–
–
–
–
–
–
–
752
–
–
–
–
–
–
–716
–
639
–3
–3
–197
–200
450
–
–
–301
1,000
–
–
–
–
–
–100
–70
–
2,558
–3
–3
–197
–200
450
–100
–795
–301
24
158
–
36
588
830
1,612
Group contributions received, net after tax
Buy-back of shares
New issue in conjunction with company acquisition
Divestment of previously repurchased shares in
conjunction with company acquisition
Transfer to statutory reserve
Dividend
158
–
–
–
–
24
–
–
–
–
–
–
36
–
–
–
–
2,113
588
135
135
753
–
–
830
–
–
–
–193
–
1,612
135
135
753
–193
2,137
–
–
–
–
2,149
–
–
–2,149
–
–
–
–345
255
–
–
255
–
–345
24
182
2,149
–
1,131
892
4,354
The proposed dividend is SEK 2.20 per share, totaling SEK 398 M.
Parent Company cash flow statement
SEK M
2005
2004
Current operations
Operating income
–68
Adjustment for items excluded in cash flow
–5
Interest received from Group companies
50
Interest paid to Group companies
–45
Interest received from others 1
Interest paid to others
–70
Income taxes paid
–119
Note
–86
–12
45
–42
1
–72
–179
Cash flow from current operations before changes in working capital
–256
Cash flow from changes in working capital
Decrease in current receivables
Increase in current liabilities
2
2
9
1
Cash flow from current operations –252
–335
Acquisition of subsidiaries
23
–5,406
Acquisition of tangible non-current assets
10
0
–50
0
Cash flow from investing activities
46
–345
–5,406
–50
Financing activities
New borrowings
200
Amortization of loans
–2,844
Net of intra-Group dividends, Group contributions and paid-in capital 558
Net change in financial receivables and liabilities with Group companies
8,289
Buy-back of shares
–193
–
–
Dividend paid
–345
598
–
1,035
–49
–100
–3
–795
–301
Cash flow from financing activities
5,665
7
385
0
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
14
0
7
0
0
Accounting principles
The current Annual Report for Eniro AB (publ) with corporate registration number 556588-0936 and registered offices in Stockholm and address SE-169 87
Stockholm was approved by the Board of Directors on March 6, 2006 and will
be approved by the Annual General Meeting on April 5, 2005.
General accounting principles for 2005
The Annual Report was prepared in accordance with the International Financial
Reporting Standards (IFRS), as well as the applicable statutes of the Swedish
Annual Accounts Act and Recommendation RR 30 Supplementary reporting
rules for corporate groups issued by the Swedish Financial Accounting Standards Council.
The application of general principles in many cases requires estimates for
accounting purposes and financial assessments having a significant impact
on balance sheet and income statement items. In Eniro’s case, this applies
particularly to the valuation of goodwill. In other cases, a qualified interpretation
and assessment must be made of the manner in which the principles should
be applied in the reporting of complex business transactions. One such area is
reporting of revenues. A more detailed account of the assessments and interpretations with major impact on the consolidated accounts is provided below
under the heading Significant estimates and assessments.
The most important principles applied in preparing the consolidated
accounts are discussed under the heading Summary of important accounting
principles.
The Parent Company’s accounts were prepared largely according to the
same principles as applied in the consolidated accounts. The exceptions are
primarily due to the Annual Accounts Act and the relation between accounting
and taxation. A more detailed description of these differences is provided on
the section Parent Company accounting principles.
Application of IFRS as of 2005
General
As of January 1, 2005, the consolidated accounts are prepared according to
IFRS. Up to and including 2004, Eniro applied the Swedish Annual Accounts
Act and the recommendations issued by the Swedish Financial Accounting
Standards Council. The transition to IFRS is reported in accordance with IFRS 1
First-time adoption of International Financial Reporting Standards. The transition
date was January 1, 2004, which means that the comparison year 2004 is also
reported in accordance with IFRS. Financial information for years prior to 2004
was not recalculated. The general rule is that all IFRS and IAS rules that were
approved by the EU and had taken effect on December 31, 2005 are applied
retroactively. There are some exceptions to this general rule.
One of these is that acquisitions that occurred before IFRS 3 Business Combinations took effect do not need to be recalculated. Eniro applies this rule and
therefore does not report acquisitions after March 31, 2004 in accordance with
IFRS 3. To the extent that other exceptions are applied, they are discussed
individually in the following sections.
The effects of the new accounting principles on the consolidated income
statement and balance sheet are presented in Note 25.
Goodwill and other intangible assets
IFRS 3 Business combinations requires that goodwill and other intangible assets
with an indefinite useful life are no longer amortized, but rather tested for impairment. Such impairment testing must take place in conjunction with the first-time
adoption of IFRS and then annually, or more frequently if there are indications of
an impairment of value. Impairment testing was performed on January 1, 2004,
December 31, 2004, September 30, 2005 and December 31, 2005. In this testing,
no need to write down asset values could be identified.
Costs for development work
According to the previous Swedish rules, expenses for development work were
to be capitalized as intangible assets starting in 2002, assuming that certain criteria were satisfied. The rules agree with IAS 38 Provisions, Contingent Liabilities and Contingent Assets, which also require however, that expenses incurred
prior to 2002 and which satisfy the criteria for capitalization, must be capitalized
in the first report according to IFRS. In conjunction with the transition to IFRS,
a new valuation of costs for development work was performed that resulted in
additional capitalization of costs incurred during previous years.
Translation of foreign operations
Exchange rate differences arising in the translation of foreign operations to the
Group’s reporting currency, SEK, must be reported in accordance with IAS 21
Effects of changes in foreign exchange rates as a separate item under equity.
When foreign operations are sold, the accumulated translation differences must
be reported as part of the gain or loss from the divestment. As the reporting of
total translation differences since the Group’s establishment did not pose any
practical difficulties, Eniro elected not to apply the exception to this rule that
permits the accumulated translation difference to be set to zero in the first-time
adoption of IFRS.
Financial instruments and hedge accounting – application of IAS
39 as of 2005
IAS 39 Financial instruments: Recognition and measurement (revised December 2004) was applied as of January 1, 2005. With the support of IFRS 1, Eniro
elected not to recalculate the 2004 comparison figures according to the principles of IAS 39. The differences in values between valuation according to IAS
39 and previous Swedish principles were considered insignificant for 2004 and
the beginning of 2005. See Note 16 Derivative financial instruments.
Equity
A new Swedish Companies Act took effect on January 1, 2006, whereby the previous limitation implying that dividends from the Parent Company could not exceed
the amount of disposable earnings reported in the consolidated accounts was
removed. The previous specification of equity into restricted and non-restricted
equity is no longer of central importance. As of December 31, 2005, consolidated equity is reported in the categories share capital, other capital contributions,
reserves and retained earnings.
The share premium reserve reported in the Parent Company at December
31, 2005 will be transferred to the statutory reserve in accordance with the transition rules.
Summary of important accounting principles
Basis for preparing reports
Assets and liabilities are reported in the consolidated accounts at acquisition value
reduced by depreciation, amortization and write-downs, as appropriate. Exceptions from this principle are financial assets available for sale and financial assets
and liabilities reported at fair value in the income statement and, derivative financial instruments when hedge accounting is applied.
Consolidated accounts
The consolidated accounts include the Parent Company and its subsidiaries.
Subsidiaries are considered companies in which the Parent Company directly or
indirectly has the right to determine financial and operative strategies in a manner
that normally arising from a shareholding greater than, or equal to, 50 percent of
the voting rights. Subsidiaries are included in the consolidated accounts from the
date on which the controlling influence was transferred to the Group. They are
eliminated from the consolidated accounts on the date on which this controlling
influence ceases.
Eniro’s consolidated accounts have been prepared in accordance with the
purchase method. The purchase price for an acquisition consists of the fair value
of the assets provided as payment, issued equity instruments and accrued or
assumed liabilities on the date of transfer of ownership increased by costs directly
attributable to the acquisition. Identifiable assets and liabilities in subsidiaries on
the date of acquisition are reported at fair value in the consolidated balance sheet
according to an acquisition analysis. If the acquisition price exceeds the fair value
of the company’s net assets on the acquisition date, the difference is reported
as consolidated goodwill. If the acquisition price is less than the fair value of the
acquired company’s net assets, the difference is reported directly in the income
statement.
Group-internal transactions and balance sheet items, as well as unrealized
gains on transactions between Group companies are eliminated. Unrealized
losses are also eliminated, unless the loss indicates a need for a write-down.
Untaxed reserves, which occur in the accounts of companies in certain countries,
are reported in the consolidated accounts, in part, as a deferred tax liability and, in
part, as retained earnings. Deferred income tax liabilities are calculated according
to the prevailing tax rate in each country.
47
accounting principles
Associated companies
Impairment
Associated companies are those companies in which the Group has a share of
the voting rights between 20 and 50 percent and, thus, a significant influence.
Holdings in associated companies are reported in accordance with the equity
method.
The Group’s share of income in associated companies after acquisition is
reported in the income statement. Accumulated changes after the acquisition are
reported as a change in the book value of the holding.
Unrealized gains and losses on transactions between the Group and its
associated companies are eliminated against the Group’s holdings in the associated company.
Assets with an indefinite useful lives are not depreciated, but rather tested each
year for possible impairment. Assets considered for impairment are assessed
whenever events or changed circumstances indicate that the reported value
may not be recoverable. The asset’s reported value is written down by the
amount exceeding its recovery value. Recoverable value is the higher of an
asset’s fair value, reduced by sales costs, and its value in use. In impairment
testing, assets are grouped at the lowest level at which separate cash-flow
generating units can be identified.
Translation of foreign currency
Financial reporting takes place in the currency used in the area in which the Group
company is primarily active. This is the unit’s functional currency. In the consolidated accounts, SEK is used, which is the Parent Company’s functional and
reporting currency.
Transactions in foreign currency are translated to the functional currency
according to the exchange rates applying on transaction date. Gains and losses
arising in payments for such transactions, and in the translation of monetary
assets at the closing-date rate, are reported in the income statement. Exceptions are transactions that constitute hedges and which satisfy the conditions
for hedge accounting of cash flows or net investments. Such gains or losses are
booked directly against equity.
Income statements and balance sheets for subsidiaries with a functional currency other than SEK are translated as follows:
• Assets and liabilities are translated at the closing-date rate.
• Revenues and costs are translated at the average rate or, if this does not provide a reasonable approximation, at the weighted average rate.
• Exchange rate differences are reported as a translation difference under equity.
The Group’s share of the earnings arising in the associated company after the
acquisition is reported in the income statement. Accumulated changes following
the acquisition are reported as a change in the book value of the holding.
Goodwill and other adjustments of fair value arising in the acquisition of foreign operations are treated as assets and liabilities in that operation and translated at the closing-date rate.
Leasing agreements are reported in accordance with recommendation IAS 17
Leases. Leasing in which a significant portion of the risks and benefits incident
to ownership are retained by the leaser are classified as operational leasing.
Currently the Group only has operational leasing agreements.
Work in progress
The value of work in progress consists of direct production costs and so-called
production-related sales costs. Direct production costs relate primarily to paper
purchases, printing and the binding of directories. Production-related sales
costs include costs for obtaining and processing information for publication in
printed directories, including attributable indirect costs.
Accounts receivable
Accounts receivable are valued at the amount that is expected to be received.
Credit risks are handled through active credit checks and routines for followup and debt collection. In addition, credit risk reserves are assessed regularly based primarily on ageing of debts. Amounts that are not expected to be
received are offset by reserves and reported as a cost in the income statement.
Reserves for doubtful receivables amounted to SEK 174 M (177) at year-end
and thus reduced accounts receivable.
Cash and cash equivalents consist of cash and disposable funds in bank
accounts, as well as current investments with a tenure shorter than three
months from the acquisition date.
Borrowings
Tangible non-current assets are reported at acquisition cost and depreciated on a
straightline basis over their estimated useful life. This varies between ten and
25 years for buildings and between three and five years for equipment. Equipment consists primarily of computer equipment, office fittings and vehicles.
Borrowings are initially reported at fair value as a net amount after transaction
costs. Thereafter, borrowings are reported at accrued acquisition cost, and
any difference between the amount received after transaction costs and the
amount repaid is reported in the income statement and distributed over the
maturity period by applying the effective-interest method. Borrowings are classified as current liabilities if Eniro does not have an unconditional right to defer
payment until at least 12 months after the closing date. Liabilities with maturity
periods that originally exceeded 12 months are also reported as current liabilities
according to this principle.
Intangible assets
Goodwill arising from the acquisition of operations in foreign subsidiaries is
reported as a separate item under intangible assets. Goodwill arising from the
acquisition of associated companies is included in the value of the associated
company. Goodwill is assumed to have an indefinite useful livese. Other intangible assets with indefinite useful lives consist of trademarks added through
acquisitions. Goodwill and other intangible assets with indefinite useful lives are
assessed annually to identify possible impairment losses and are reported at
acquisition value, reduced by accumulated impairment losses. Gains or losses
arising from the divestment of a unit include the remaining book value of goodwill and other intangible assets attributable to the divested unit.
Goodwill is distributed among cash-generating units at acquisition. These
cash-generating units correspond to operations within a geographic area.
Customer relations and other intangible assets are reduced by impairment
losses over their useful lives. The useful life for customer relations is based on
repurchasing frequency and amounts to ten years.
Other intangible assets primarily consist of software, databases and publication rights of a unique nature controlled by Eniro providing economic benefits
over a period longer than one year, and which exceed acquisition and development costs. Activated expenses are written off on a straightline basis over
the assessed useful life. This varies between three and ten years. Capitalized
expenses include personnel costs and a reasonable share of attributable indirect costs.
48
Leasing agreements
Financial instruments
Financial instruments are classed in the following categories:
• Financial assets valued at fair value in the income statement
• Loans and accounts payable
• Financial instruments held until maturity
Financial assets valued at fair value over the income statement consist primarily of assets intended to be sold in the near future. Those assets that are not
included in the Group’s central chart of accounts occur, to only a limited extent,
in foreign units. This category also includes the receivable from TeliaSonera for
its share of retirement benefit obligations.
Loan receivables and accounts receivable are non-derivative financial assets
with fixed or predictable payments which are not listed on an active market.
There are no significant loan receivables.
Financial assets held to maturity are non-derivative financial assets with
fixed or predictable payments and fixed periods that Eniro intends to hold until
maturity.
Purchases and sales of financial instruments are reported on the date at
which Eniro pledges to purchase or sell the asset. Financial instruments are
initially valued at fair value plus transaction costs. Financial assets valued at fair
value in the income statement are valued without transaction costs. Financial
instruments are eliminated from the balance sheet when the right to receive cash
flows from the instrument in question has expired, or virtually all risks and benefits associated with the instrument have been transferred to another party.
Accounts receivable are reported at acquisition value without discounting as the
average credit period is short and interest, thus, insignificant.
Loan receivables and financial assets held to maturity are reported at
accrued acquisition value by applying the effective interest method.
Redemption and buy back of shares
Holdings of the Company’s own shares, which were acquired within the framework approved by the Annual General Meeting, are reported in the consolidated
accounts as a reduction of other capital contributions. According to a resolution by the Annual General Meeting, these holdings are reported in the Parent
Company as a reduction of unutilized reserves. Costs in addition to the purchase price in conjunction with the acquisition of own shares are also charged
against retained earnings. These shareholdings are also not included in the
number of outstanding shares in calculating per-share key ratios.
Provisions
Provisions refer to debts that are uncertain with respect to their amount or the
date on which they will be settled. Provisions are reported in accordance with
IAS 37 Provisions, contingent liabilities and contingent assets. Provisions are
reported when the Group has a legal or informal obligation resulting from previous events and when it is more likely that payment will be required to settle
the obligation than the opposite, and when the amount can be calculated in a
reliable manner.
Provisions primarily relate to pension commitments, deferred income tax
liabilities, costs in conjunction with changes in personnel, legal proceedings
and disputed selective tax. Amounts expected to be settled within 12 months
after closing date are reported under the heading current liabilities, while others
are reported as non-current liabilities. The reserved amounts comprise the best
estimate of what would be paid out on closing date to settle the obligation or to
transfer it to a third party.
Revenues
Revenues from directory operations (offline) are booked when the directory is
published. Production costs are capitalized up until publication date, whereupon they are expensed. Directories are normally published once a year.
Online revenues are distributed over the contract period, which is normally
12 months.
For sales of bundled offline and online products, revenues are distributed
according to a distribution ratio reflecting the market value of each product.
The distribution ratio is based on the commercial use of each product, which
is measured continuously through customer surveys. The distribution ratio is
adjusted annually.
Operating units and geographic areas
According to IAS 14 Segment reporting, income and certain balance-sheet
items must be reported by primary segment, while revenues are reported by
secondary segment. The primary segments consist of the regions Sweden,
Nordic and Central Europe. The secondary segments are the product groups
offline and online.
Discontinued operations
Operations that were cash-generating units during the period in which they
were owned, or groups of such units that were either divested or are held for
sale, are reported in accordance with IFRS 5 Non-current assets held for sale,
and discontinued operations. In cases where the unit remains within the Group
on closing date, all assets are reported as current assets and liabilities directly
attributable to operations are reported as current liabilities.
Income after tax from such operations under the period of ownership and
capital gains or losses in conjunction with the completion of a sale are reported as a separate item in the income statement following tax expenses for the
period.
Fixed assets held for sale are reported at the lower of book value and fair
value reduced by sales costs, assuming that their book value is recovered primarily through a sales transaction and not through constant use.
Compensation to employees
Pensions
There are varying pension plans within the Eniro Group. Swedish units are
primarily covered by defined-benefit plans, while other countries, in most
respects, apply defined-contribution plans.
For defined-contribution plans, the company pays fixed fees to a separate
legal entity and has no obligation to pay further fees. Costs are charged against
consolidated earnings in pace with benefits being earned.
In defined-benefits plans, compensation is paid to employees and former
employees based on salary at the time of retirement and number of years of
employment. The Group assumes the obligation for paying the promised compensation.
One defined-benefit pension plan is funded and the others are unfunded. In the
funded plan, the assets are allocated to a separate pension fund.
The net amount of the estimated current value of the commitments and the
fair value of the managed assets is reported in the balance sheet, either as a provision or as a long-term financial receivable. In cases where a surplus in a pension plan cannot be fully utilized, only that portion of the surplus is reported that
the company is able to recover through reduction of future fees or bonuses.
For defined-benefit plans, pension costs and pension commitments are calculated according to the so-called Projected Unit Credit method. This method
distributes the costs for pensions over the periods during which employees
perform work for the company that increase their entitlement to future compensation. The calculations are performed annually by independent actuaries. The
company’s commitments are valued at the current value of anticipated payments after application of a discount factor corresponding to the rate for grade
A commercial bonds with a maturity corresponding to the commitment in question. The most important actuarial assumptions are described in Note 19.
In establishing the current value of the commitment and the fair value of
managed assets, actuarial gains and losses may arise. These occur either
because the actual outcome differs from previous assumptions or because the
assumptions have changed. That portion of the accumulated actuarial gains
and losses at the end of the preceding year exceeding 10 percent of the current value of the largest commitment and the fair value of the managed assets
is reported in the income statement over the employee’s average remaining
period of employment.
Interest expenses reduced by anticipated return on managed assets are
classified as a financial expense. Other expense items in pension costs are
charged against operating income.
If the pension costs and the pension provisions determined for the Swedish
plans in accordance with IAS 19 differ from the corresponding amount according to FAR 4, a cost is reported for special salary taxes on the difference, in
accordance with URA 43.
In the transition to IFRS, retirement-benefit obligations from previous years’
accounts were not recalculated in accordance with the exception provisions in
IFRS 1 First-time Adoption of International Financial Reporting Standards. This
means that in the five-year summary, only figures from 2003 onwards are reported according to the Swedish accounting standards in effect at the time.
The accounting principles described above for defined-benefit pension
plans are applied only in the consolidated accounts.
Share-related benefits
The Eniro Group offers a share-savings program to all permanent employees
in Sweden, Norway and Finland, as well as to senior executives in Poland
and Denmark. Through the program, employees are invited to purchase Eniro
shares on the Stockholm Stock Exchange through monthly savings. The purchase of savings shares takes place once each quarter for the amount allocated. After a qualifying period of three years following the purchase of savings
shares, participants are allocated additional shares, called matching shares,
without charge. In addition, senior executives may receive performance-based
matching shares for each savings share based on their position and the trend
for consolidated cash flow.
The costs for the share savings program are reported in accordance with
IFRS 2 Share-related benefits and the statement “URA 46, IFRS 2 and social
fees” issued by the Urgent Issues Committee of the Swedish Financial Accounting Standards Council.
This means that the calculated value of the matching shares and the calculated costs for social security contributions are capitalized over the qualifying period.
49
In estimating the fair value of the matching shares, the share price for purchase of
the savings shares is applied after deduction of the estimated dividend during the
qualifying period. In estimating the fair value of social security contributions, the
most recent share price is applied to calculate social security contributions for all
possible matching shares on every closing date.
Taxes
Both current and deferred income taxes are reported in the consolidated
accounts.
In reporting income taxes, the balance sheet method is applied in accordance with IAS 12 Income taxes. According to this method, deferred income
tax liabilities and receivables are reported for all temporary differences between
book values and values for tax purposes. Additional deferred income tax liabilities are reported when it is considered probable that there will be loss carry forwards that can be utilised in the future. Deferred income tax liabilities and receivables are estimated on the basis of the anticipated tax rate on the expected date
for reversal of the loss carry forward. The effects of changes in prevailing tax
rates are booked during the period in which the change is adopted. No deferred
taxes are reported on temporary differences relating to shares in subsidiaries.
The Parent Company’s accounting principles
The annual report was prepared in accordance with the Annual Accounts Act
and the Swedish Accounting Standards Council’s recommendation RR 32
Reporting of legal entities. In recommendation RR 32, the Council has stated
that legal entities whose securities are exchange-listed should implement the
IFRS/IAS rules as applied in the consolidated accounts. RR 32 contains certain
exceptions and amendments to this general rule.
For the Parent Company Eniro AB, the following deviations from IFRS/IAS
are applied with the support of RR 32.
• IAS 1 Presentation of financial statements is not applied in the preparation
of the balance sheet and income statement, which are, instead, prepared in
accordance with the Annual Accounts Act.
• IAS 12 Income taxes is not applied to untaxed reserves, which are reported
as gross amounts in the balance sheet. Changes in untaxed reserves are
reported in the income statement.
• IAS 17 Leases is not applied for financial leasing. Any existing financial leases
are reported in the Parent Company as operational leases. This means that
leasing contracts are reported as either assets or liabilities and that leasing
fees are included in each function’s costs. There are only operational leasing
contracts in the Parent Company and the Group.
• IAS 19 Employee benefits is not applied in the reporting of pension commitments and pension costs, which are, instead, reported in accordance with
FAR’s recommendation 4 Reporting of pension liabilities and pension costs.
The Parent Company reports defined-benefit pension plans in accordance
with the Swedish Financial Accounting Standard Council’s recommendation
RR 32 and FAR’s Recommendation 4 Reporting of pension liabilities and pension costs. The Parent Company has defined-benefit pension commitments to
employees. The Parent Company’s future obligation to pay pensions thus has a
current value determined for each employee, in part, by pension level, age, and
to the degree a full pension has been earned. This current value is calculated on
actuarial principles and is based on the salary and pension levels applying on
closing date. Pension commitments are reported as a provision in the balance
sheet. The interest portion of the year’s pension costs is reported as a financial
expense. Other pension costs are charged against operating income.
Financial risk management
Financial risks
The Group’s common finance policy as established by the Board of Directors is
the foundation for financial operations, delegation of responsibility and financial
risk management. The focus for Eniro’s risk management is to eliminate financial risks with consideration of costs, liquidity and financial position. Responsibility for financing and risk management is centralized in Eniro Treasury.
Eniro is exposed to a number of financial risks, mainly related to financing,
business operations, transactions in foreign currency and interest rate changes.
To a certain extent, Eniro is also exposed to credit risks pertaining to counterparties in derivative transactions, the investment of surplus liquidity and credit risks
associated with customer relations.
50
Financing risk
Financing risk pertains to the risk that external financing will not be available
when needed, and that the refinancing of maturing loans will be impeded or
become costly. Eniro’s goal is that 60 percent of available loan facilities will
mature later than one year. Eniro has also a stated objective of developing relations with several credit institutions with high ratings.
In conjunction with the acquisition of Findexa, Eniro signed a loan agreement corresponding to SEK 12,000 M with five Nordic banks as co-arrangers.
Of the total facility, SEK 876 M, or 7 percent, matures within one year. SEK
1,977 M or 17 percent matures within two to four years and the remaining
amount matures on September 25, 2010. For details about this facility, see
Note 15.
Currency risk
Currency risk may be divided into translation risk and the transaction risk. Translation risk is the risk that the value of the SEK, in terms of net investments in
foreign currency, will fluctuate due to exchange-rate changes. Transaction risk
pertains to the impact on net profit and cash flow resulting from changes in the
value of operating flows in foreign currency, due to exchange-rate changes.
According to Eniro’s finance policy, decisions pertaining to the hedging of
translation risk are made by the Board. Translation risks must be considered in
connection with net investments in foreign currency. Eniro mainly has investments in NOK, EUR, PLZ and DKK. In conjunction with the acquisition of Findexa, exposure to NOK increased. As part of efforts to reduce exposure, a portion
of the external financing of the acquisition and the refinancing of loans in Findexa
were raised in NOK. Eniro also has external financing in EUR to reduce its net
exposure to German and Finnish operations. In total, external loans in foreign
currency amount to NOK 7,670 M and EUR 100 M. For more details concerning
borrowing, see Note 15 and exposure to shareholders’ equity, Note 24.
In relation to translation risks, these risks are limited, as relatively few contracts are denominated in a currency other than that of the particular country’s
reporting currency. Major purchasing contracts in foreign currency are interest
rate hedged on a case-by-case basis.
Interest rate risk
Interest rate risks pertain to the risk that net profit will be affected by changes in
general interest rates. According to Eniro’s finance policy, the Company’s financial position must be taken into account when selecting interest-rate maturities.
The interest rate duration must never exceed four years.
The higher indebtedness that has arisen in conjunction with the acquisition
of Findexa, has increased exposure to interest rate risk, and to the need to
hedge future interest payments. Of total interest-bearing net indebtedness, NOK
6,815 M and EUR 100 M are interest hedged until maturity, taking scheduled
repayments into account. Of the total loan facility, corresponding to SEK 12,000 M,
75 percent is interest hedged until the various maturities.
Interest risk is primarily managed through interest swaps that transform variable interest rates to fixed interest. Interest swaps mean that Eniro enters agreements with other parties (credit institutes), normally once each quarter, to swap
the difference between the interest according to fixed contracts and the variable
interest amount. See Note 16 for management of derivates. At year-end, the
interest rate duration was 3.2 years.
Credit risk
Credit risk pertains to the risk that the counterparty will be unable to fulfill its
commitments and thus incur a loss. Eniro’s counterparties in derivative transactions are exclusively credit institutions with a high official credit rating. Surplus
liquidity may only be invested in Swedish government securities, certificates
with a rating of (AAA/P1) and with banks with a high official credit rating. At
year-end, all surplus liquidity was invested in banks.
Eniro is exposed to the risk of not being paid by its customers. However,
the risk of extensive bad debts is limited as Eniro’s customer base is extremely
large and well differentiated.
Recognition of derivative instruments and hedging measures
Derivative instruments are recognized in the balance sheet on contract date
and valued at fair value, both initially and following subsequent revaluations.
Derivative instruments within Eniro consist either of hedges of fair value and
cash flows or hedges of net investments in foreign currency.
When a hedging contract is established, Eniro Treasury documents the relationship between the hedging instrument and the hedged item, as well as the effectiveness of the derivative instrument employed in balancing fair value or cash
flow for the hedged items. Fair value of derivative instruments is presented in
Note 16. Changes in hedging reserves in equity are presented in Note 24.
If the annual future cash flow had been 10 percent lower than management’s
assessment, it would be necessary to recognize an impairment loss amounting
to SEK 1,000 M for the cash-generating unit Norway. The value in use of other
units would still have been higher than the reported value.
Assessment of brands
Hedging of fair value
Changes in the value of derivatives employed to hedge fair value satisfying
the conditions for hedge accounting are reported in the income statement,
together with changes in value of the hedged asset or liability.
Hedging of cash flow
The effective portion of changes in the value of derivatives employed to hedge
cash flows satisfying the conditions for hedge accounting are reported under
equity. Gain or loss attributable to the ineffective portion are immediately
reported in the income statement.
Accumulated amounts in equity are reversed in the income statement in
the periods in which the hedged item affects income. If the hedged transaction
results in the reporting of a non-financial asset or liability, gains or losses previously reported under equity are transferred from and included in the value of the
asset or liability. Even when a hedging instrument expires or is sold, or when the
hedge no longer satisfies the conditions for hedge accounting and accumulated
gains or losses are included in equity, the accumulated amount is reversed, as
the hedged item affects income. If the hedged transaction is no longer expected
to occur, the accumulated amount is immediately booked against equity.
Hedging of net investments
Hedging of net investments in foreign operations are reported in a similar manner as hedging of cash flows. The effective portion of the hedge is reported under equity, while the ineffective portion is immediately booked against
income.
Accumulated gains and losses in equity are reported as a portion of the
capital gain or loss when a foreign unit is divested.
Calculation of fair value
The fair value of financial instruments traded on an active market is based on
quoted market prices on closing date or, if this is not a banking day, the date
immediately prior to the date for which market prices were available. The current bid price is used for assets and the current asking price for liabilities.
The fair value of financial instruments that are not traded on an active market is established based on market conditions on the closing date. The current
market rate for corresponding maturities and risks is applied in the valuation of
non-current liabilities. Interest swaps are valued at the current value of anticipated future cash flows.
Accounts receivable and accounts payable are valued at nominal value
reduced by anticipated credits. An assessment of credit risk is also performed
for accounts receivable.
Significant estimates and assessments for
accounting purposes
Estimates and assessments are continuously evaluated and based on historical information and future assessments deemed reasonable under the prevailing circumstances.
Sensitivity analysis for certain assumptions in valuation of
significant items
In valuing balance-sheet items, assumptions are made that may deviate from
the final outcome. Such assumptions that may entail significant risk for the
revaluation of important items are discussed below.
The reported value of brands amounted to SEK 1,167 M at December 31, 2005
and corresponded to the value of brands added through the acquisition of Findexa. The brands in question are Gule Sider, Telefonkatalogen and Ditt Distrikt.
The recovery value for brands is determined by calculating their useful value.
Essential information for assessing the value of brands is comprised of generated cash flow and their quantified recognition. The brands in question are used
for both offline and online products.
Deferred income tax assets
Loss carry forwards and deferred income tax assets attributable to temporary
differences deductible for tax purposes are capitalized to the extent that it is
expected to be possible to offset them against future surpluses. These surpluses are primarily attributable to Norway, Germany and Denmark. This valuation is based on the most recent known tax rate. Reductions of tax rates or new
limitations on the right to utilize loss carry forwards may imply that reported tax
assets must be expensed.
Lower future surpluses primarily imply that the ability to utilize capitalized
loss carry forwards is delayed in time. Such a shift in time does not affect the
valuation, since deferred income tax assets and liabilities are valued without
discounting.
Significant assessments in application of accounting principles
Revenues
Revenues from directories are booked on publication. Management considers
that this complies with a correct interpretation of IAS 18 Revenue. All European competitors apply this principle or close equivalents. Another alternative is to report revenues from printed directories incrementally from the date
of publication until publication of the next directory. If the European standard
should change in favor of this alternative, either through changes in IAS 18 or
an authoritative statement, the change in accounting would result in a significant reduction in consolidated equity.
Sales of bundled products in Swedish operations amounted to approximately
SEK 450 M. In reporting these revenues as offline or online, a distribution ratio
is used that is based on the utilization of the products and this ratio is revised
annually. During 2005, the relevant distribution was 35 percent online and 65
percent offline. As of January 1, 2006, a total of 40 percent of revenues from
bundled products sold from January 1, 2006 is reported as online revenues,
while 60 percent is reported as offline revenues.
New accounting principles as of 2006
As of January 1, 2006, a change in IAS 19 Employee benefits adopted by the
EU will permit immediate booking of deficit and surplus amounts in pension
plans (actuarial losses and gains) against equity. Eniro will not avail itself of this
possibility but, instead, will continue to report such deviations from previous
assumptions in the income statement.
Other standards and interpretations adopted by the EU and effective as of
January 1, 2006 include amendments and changes to IAS 39 Financial instruments and IFRIC 4 Determining whether an arrangement contains a lease. Eniro
has elected to apply these standards as of the date on which they took effect.
Other standards and statements adopted by the EU and effective as of January
1, 2006 are deemed not to have any significant effect on the Group’s earnings
or equity.
Assessment of goodwill for possible impairment
The reported value of goodwill at December 31, 2005 amounted to SEK 12,879 M.
Certain assumptions must be made with important testing of goodwill described
above. The recovery value for cash-generating units is established by calculating value in use.
51
Notes
NOTE 1 Information by segment
Nordic Region
Other2)
Total
Sweden excluding Sweden
Central Europe
Eastern Europe1)
SEK M
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
Operating revenues
Offline
1,598
1,645
696
751
327
308
2,621
2,704
Online
1,181
1,141
630
507
395
393
2,206
2,041
Total external operating revenues 2,779
2,786
1,326
1,258
722
701
4,827
4,745
Internal operating revenues 30
34
–
–
Total operating revenues
2,779
2,786
1,326
1,258
722
701
30
34
4,827
4,745
Operating income 1,053
1,060
–47
138
137
137
–70
–103
1,073
1,232
Assets and liabilities
Goodwill
1,866
1,870
9,151
1,219
1,862
1,733
–
–
–
–
12,879
4,822
Other assets
1,187
1,192
4,791
587
730
634
19
76
–64
45
6,663
2,534
Total assets
3,053
3,062
13,942
1,806
2,592
2,367
19
76
–64
45
19,542
7,356
Specified liabilities
1,249
1,266
1,733
725
493
1,004
24
51
0
52
3,499
3,098
Non-specified liabilities
11,409
2,379
11,409
2,379
Total liabilities
1,249
1,266
1,733
725
493
1,004
24
51
11,409
2,431
14,908
5,477
Other information
Investments
37
143
33
58
13
22
1
4
1
0
85
227
Depreciation, amortization and
impairment losses
63
37
79
36
18
19
1
0
161
92
It has not been possible to specify assets and liabilities between the secondary segments offline and online in a meaningful manner.
1)
Defined according to IFRS 5 as discontinued operations. For further information, see Note 3.
2)
The Parent Company’s operating revenues (Other) are attributable in their entirety to intra-Group services valued at market value.
NOTE 2 Costs specified by type of cost
SEK M
Compensation to employees
Paper, printing, binding and distribution
Agents, consultants and other
non-employed personnel
Advertising
Depreciation, amortization and
impairment losses
Other
Total operational costs NOTE 3 Discontinued operations
Group
2005
2004
1,526
1,482
446
480
Parent Company
2005
2004
55
56
–
–
309
159
475
138
48
–
37
–
161
1,211
3,812
92
905
3,572
1
18
122
1
30
124
Operational costs refer to production cost, sales costs, marketing costs, administration
costs and product-development costs.
Depreciation, amortization and impairment losses
SEK M
Relating to tangible non-current assets
Production costs
Sales costs
Marketing costs
Product development costs
Total tangible non-current assets
Group
2005
2004
Parent Company
2005
2004
25
15
2
19
11
72
21
13
1
7
4
46
–
–
–
1
–
1
–
–
–
1
–
1
Relating to intangible non-current assets
Production costs
35
Sales costs
17
Marketing costs
37
0
0
Total intangible non-current assets
89
Total depreciation, amortization and 161
impairment losses
22
13
1
7
3
46
92
–
–
–
0
–
0
1
–
–
–
0
–
0
1
Impairment losses relating to tangible fixed assets are included in production costs
for 2005 in an amount of SEK 9 M.
Impairment losses relating to intangible fixed assets are including in marketing
costs for 2005 in an amount of SEK 22 M.
52
In November 2004, the Board of Directors decided to divest the operations in the
Eastern Europe market area. This market, which included the Baltic countries,
Belarus and Russia, is reported as a disposal group in accordance with IFRS 5.
Disposal groups are reported at the lower of book value and fair value reduced by
sales costs.
During 2005, Eniro sold all operations in the Baltic countries for a total of approximately SEK 80 M. The sale of the company in Latvia was completed on May 31,
2005, while the sales of the companies in Estonia and Lithuania were completed
on August 31, 2005. Total capital gains, from the divestments in the Baltic countries amounted to SEK 92 M. As of December 31, 2005, negotiations on the sale
of operations in Russia and Belarus had been completed, but final approval from
the competition authorities is expected during 2006. Income from the sale will be
reported thereafter.
Income from discontinued operations
2005
Operating revenues
128
Operating costs
Production costs
–39
Sales costs
–63
Marketing costs
–9
–19
–1
Other income and cost
–8
Income before tax and capital gains/losses
–11
Capital gains from divestment of operations
92
Tax on income for the year
0
Income from discontinued operations
81
Assets and liabilities in discontinued operations
Non-interest bearing current assets
Interest-bearing current assets
Total assets
Advances from customers
Accounts payable
Other non-interest bearing liabilities
Accrued cost and prepaid revenues
Total current liabilities Total Liabilities
2005
2
2
11
1
14
16
15
3
4
2
24
24
2004
173
–49
–86
–14
–24
0
1
1
–
0
1
notes
Cash flow from current operations
Cash flow from investing activities1)
Cash flow from current financing activities
Total cash flow from discontinued operations
1)
2005
2004
–3
81
–
78
4
0
–
4
elates to cash purchase price received as payment for sale of operations in the Baltic countries,
R
reduced by cash and cash equivalents in the divested companies.
NOTE 4 Employees
2005 2004
Total of whom
Total of whom
Average number of full-time employees women % women, %
Sweden
1,380
68
1,379
74
Denmark
308
49
317
49
Finland
549
72
583
71
Norway
283
44
206
37
Germany
180
27
190
34
Poland
1,059
61
952
60
Russia
383
83
395
83
Belarus
167
83
179
79
Other countries
395
70
551
73
Total
4,704
64
4,752
67
The average number of full-time employees at year-end was 5,479 (4,953). The
average number of full-time employees in the Parent Company was 22 (24), of
whom 10 (13) were women. The proportion of women is 25 percent on the Board of
Directors and 25 percent among senior executives.
Absence due to illness as a percentage of working hours1):
Swedish Group companies
Total absence due to illness
6.9%
Percentage of total absence greater than 60 days
54%
Absence, women
8.3%
Absence, men
3.7%
29 years and under (total men and women) 4.2%
30–49 years (total men and women) 7.3%
50 years and older (total men and women) 10.1%
Parent
company
5.8%
67%
9.3%
2)
2.8%
–
7.1%
1.8%
NOTE 5 Salaries and other compensation
2005
2004
Salaries and Salaries and other
Social other
Social
SEK M
compensation
costs compensation
costs
Parent Company,
34
21
30
26
of which pension costs
9
13
Subsidiaries,
1,319
368
1,151
345
106
110
Group total,
1,353
389
1,181
371
115
123
Salaries and other compensation by country and between President and
Board of Directors and other employees
2005 2004
Of which
bonus to
Board of Board of Board of
Directors Directors Directors
and
Other
and and Other
SEK M
President employees President President employees
Parent Company
8
26
2
9
21
Sweden, excluding
Parent Company
8
506
5
9
417
Denmark
2
159
0
2
155
Finland
3
191
0
2
176
Norway
9
145
0
1
97
Tyskland
5
96
2
5
104
Poland
3
104
0
2
94
Russia
1
27
1
1
24
Belarus
0
5
0
0
4
Other countries
6
49
1
6
52
Group total
45
1,308
11
37
1,144
Of which
bonus to
Board of
Directors
and
President
1
1
0
1
0
2
0
0
0
1
6
1) Normal working hours do not include leave of absence or parental leave. Part-time absence
due to illness is included in the figures.
2) Figure omitted as the group is comprised of less than 10 individuals.
NOTE 6 Compensation and other benefits, Board of Directors and senior executives
Principles
Members of the Board of Directors elected by the Annual General Meeting receive
compensation in an amount determined by the Annual General Meeting.
Compensation to employee representatives is determined by the Board of Directors.
Compensation to the President and other senior executives consists of basic salary, variable compensation, other benefits and pension allocations.
The outcome of variable compensation for 2005 is based on preliminary calculations. Final settlement and any payments will take place during 2006.
For both the President and other senior executives in the Parent Company, variable compensation for 2005 is based on a balanced scorecard in which revenues
and EBITDA determine 70% of the outcome, while the remaining 30% is determined
by the development of market capital, human capital and strategic change projects,
which represent individual targets.
For 2005, variable compensation could amount, at most, to 50% of basic salary
for the President and 15% to 40% for other senior executives. Variable compensation does not carry entitlement to a pension.
Costs for compensation and other benefits relating to 2005 (excluding statutory social security costs)
Compensation,
SEK 000s
Board fee committee work
Total
Lars Berg (Chairman)
750
–
750
Erik Engström
300
–
300
Per Bystedt
300
–
300
Barbara Donoghue
300
50
350
Urban Jansson
300
100
400
Birgitta Klasén
300
50
350
Bengt Sandin1)
16
–
16
Total
2,266
200
2,466
1)
Employee representative
President and other senior executives
Basic salary
incl. vacation
Variable Other
Pension
Other
costs compensation4)
Total
SEK 000s
benefits compensation
benefits3)
President and CEO Tomas Franzén1)
3,646
1,800
88
1,260
416
7,210
2)
Other senior executives, Parent Company, 7,773
1,863
490
2,863
305
13,294
Total, Parent Company
11,419
3,663
578
4,123
721
20,504
Other senior executives, subsidiaries 2)
15,715
3,113
967
2,614
656
23,065
Total other senior executives, Parent Company and subsidiaries2)
23,488
4,976
1,457
5,477
962
36,360
Total
27,134
No. of
share
savings
–
–
–
–
–
–
95
95
6,776
1,545
6,737
1,377
43,569
No. of
share
savings
2,909
4,035
6,944
8,669
12,704
15,613
The President Tomas Franzén has a fixed annual basic salary of SEK 3,600,000, which also includes vacation benefits.
Other senior executives (from Group perspective) are those individuals who, together with the President, constitute the management group for operations in Sweden during 2005 and the management
group for international operations (totaling 16 individuals, of whom 5 in the Parent Company). The specified amounts relate to the full-year 2005.
3)
Relates to the tax value of company cars.
4)
Relates to the cost of the share-savings program.
1)
2)
53
notes
Variable compensation
The President and CEO Tomas Franzén received variable compensation amounting
to SEK 1,800,000 (958,000) and corresponding to 50% (40) of basic salary.
Of the year’s variable compensation, SEK 900,000 was paid in cash, while
SEK 900,000 was intended for conversion to synthetic shares in accordance with
and subject to approval by the Annual General Meeting of the Board of Directors’
proposal to introduce a share price-related incentives program for Company management.
The preliminary estimate of variable compensation to senior executives amounted
to SEK 4,976,000 (2,835,000), corresponding to 21% of basic salary.
Share-savings program
In 2005, Eniro Group employees in Sweden, Norway and Finland, as well as executive management in Poland and Denmark, were invited to participate in a sharesavings program through which they may save up to 7.5% of gross salary to purchase Eniro shares on the Stockholm Stock Exchange.
Subject to the conditions that the share savings are held for a period of three
years from purchase date, and that the employee remains employed by Eniro, each
savings share entitles the holder to 0.5 shares (matching shares). In addition, senior
executives are entitled to 2 to 8 performance-based matching shares for each savings share, depending on their position and the development of consolidated cash
flow over the three-year period. During 2005, a total of 41,888 savings shares were
purchased, of which 2,909 by the President and 12,704 by other senior executives.
The maximum outcome of the program with respect to the year’s savings would
entitle the holders to 152,856 matching shares, of which the President is entitled to
24,728 and other senior executives to 57,169. The estimated costs for the year’s
share savings program, which were calculated assuming the maximum outcome,
amounted to SEK 2.6 M, of which SEK 0.4 M for the President and SEK 1.0 M for
other senior executives.
Pensions
Pension costs for the President, Tomas Franzén, amounted to SEK 1,260,000
(747,000) corresponding to 35 % of basic salary. Pension costs for other senior
executives amounted to SEK 5,477,000 (5,757,000) corresponding to 23 % of basic
salary.
The President and CEO, Tomas Franzén, has a premium-based pension for
which the fee amounts to 35% of basic salary. Other members of executive management have defined-contribution pensions with fees amounting to, at most, 43%
of basic salary or are subject to the normal ITP plan. All pension benefits are vested,
meaning that they are not dependent on future employment.
The Parent Company and the Swedish subsidiaries follow the ITP plan. Swedish pension commitments are calculated by PRI, and credit insurance is obtained
through FPG, an insurance company underwriting pension commitments. The Group’s
employees in other countries are usually covered by country-specific pension plans.
Fees for these plans are usually a part of the employee’s salary.
Termination and severance pay
The President and CEO Tomas Franzén has a termination period of 12 months plus an
additional 12 months’ severance pay if employment is terminated by the company.
There is a mutual notice period of a maximum of 12 months between the company and other senior executives. At termination of employment by the company, an
additional 6 to 12 months’ severance pay is paid.
Related party transactions
Compensation to senior executives is presented above. In other respects, no transactions with related parties occurred during the year.
NOTE 7 Auditing fees
Group
SEK M
2005
2004
PricewaterhouseCoopers, audit assignments
5
4
PricewaterhouseCoopers, other assignments
6
2
Other auditors, audit assignments
1
1
54
Parent Company
2005
2004
1
1
3
2
–
–
NOTE 8 Financial income and cost
Group
Parent Company
SEK M
2005
2004
2005
2004
Income
Exchange-rate gains on borrowings
81
–
–
–
Exchange-rate losses on intra-Group
receivables and liabilities
38
12
65
–
Other financial revenues
5
3
–
27
External financial interest revenues
16
11
1
1
Internal financial interest revenues
–
–
45
45
Total
140
26
111
73
Cost
Exchange-rate losses on borrowings
7
–
32
–
Exchange-rate losses on intra-Group
receivables and liabilities
44
17
62
–
Other financial cost
2
4
–
36
Interest on retirement benefit obligations
11
11
–
External financial interest cost
132
95
67
76
Internal financial interest cost
–
–
45
37
Total
196
127
206
149
Total net financial items
–56
–101
–95
–76
The Parent Company income statement includes exchange-rate differences that are
intended as hedges of equity in subsidiaries.
Such differences are booked directly against equity in the consolidated accounts.
This amounted to income of SEK 3 M (3).
NOTE 9 Tax
The following components are included in tax cost:
Group
Parent Company
SEK M
2005
2004
2005
2004
Current tax cost on income for the year
164
132
–109
–76
Additional tax cost corresponding to
interest on tax equalization reserve
5
–
6
Adjustments of current tax for prior periods
2
12
–
3
Deferred tax cost due to change
in tax rates
5
–
–
–
Deferred tax cost relating to utilized
loss carry-forward
16
4
–
–
Deferred tax cost relating to unutilized
loss carry-forward
–
34
–
–
Deferred tax cost relating to temporary
differences
211
232
1
–
Deferred tax income relating to change
in tax rates
–10
–
–
–
Deferred tax income relating to temporary
differences
–64
–51
–
–3
Deferred tax income relating to loss
carry-forward
–148
–12
–
–
Adjustments of deferred tax for prior periods
–
17
–1
–
Tax cost recognized 181
368
–103
–76
Current tax recognized directly in equity
0
0
292
175
Total tax for the year
181
368
189
99
During the year, corporate tax rates were reduced in Denmark from 30 to 28 percent
and in Finland from 29 to 26 percent, resulting in increased tax cost in Denmark
and a decrease in Finland. The effective tax rate calculated as total tax in relation to
earnings before tax amounted to 18% (33). The reason for this significant difference
compared to the previous year was, primarily, a positive tax structure in conjunction
with the acquisition of Findexa which was partially utilized.
The acquisition of Findexa resulted in positive one off effects, as well as opportunities for positive future tax effects.
The relationship between tax expenses for the year and tax expenses in accordance with prevailing Swedish tax rate.
notes
Group
SEK M
2005 2004
Reported earnings before tax
1,017 1,131
Tax at the domestic rate of 28%
285
317
Tax effect of:
– operating expenses that are not deductible for tax purposes
170
9
– revenues that are not taxable
–246
–5
Losses for which loss carry-forwards were not taken into consideration 3
6
Losses from prior periods now recognized
–1
–11
Previously unutilized loss carry-forwards now deemed possible to utilize–28
30
Adjustment of tax for prior periods
–11
29
Differences between Swedish and foreign tax rates
9
–7
Tax cost recognized in income statement
181
368
Components of deferred tax assets and deferred tax liabilities
Group
SEK M
2005
2004
Deferred tax assets
Loss carry-forwards
291
51
Temporary differences deductible for tax purposes
goodwill and other intangible assets
55
49
tangible non-current assets
34
31
work in progress
36
97
retirement benefit obligations
10
16
other provisions and accrued costs
31
22
accrued revenues
58
64
accounts receivable
13
11
other
2
financial instruments
44
Less deferred tax liabilities which can be offset
–400
–150
Total deferred tax assets
172
193
Deferred tax liabilities
Taxable temporary differences
goodwill and other intangible assets
1,000
tangible non-current assets
18
work in progress
5
retirement benefit obligations
12
untaxed reserves
361
financial instruments
12
Less deferred tax assets which can be offset
–400
Total deferred tax liabilities
1,008
Reserve for disputed tax assets
12
Total provisions for taxes
1,020
20
–
10
11
339
–
–150
230
12
242
With the acquisition of Findexa, it will be possible to utilize loss carry-forwards in
Eniro Norway against future surpluses in total Norwegian operations. It was, thus,
considered possible to utilize previously unutilized loss carry-forwards in Eniro Norway. The future tax reduction of SEK 18 M is reported as an adjustment of goodwill
against operating costs and reduced tax cost.
Loss carry-forwards and other future tax deductions without corresponding
deferred tax assets
Group
SEK M
2005
2004
Due dates
During 2006
5
6
During 2007
–
–
During 2008
–
181
During 2009
–
146
Without limitation
1,573
1,464
Total future deductions
1,578
1,797
Loss carry-forwards deemed to fail to meet the criteria for reporting as receivables,
corresponded to a potential future tax reduction of SEK 630 M (633).
NOTE 10 Tangible non-current assets
Buildings SEK M
Acquisition value on opening date Investments during the year
Sales and disposals
Translation differences for the year
Total
Accumulated depreciation at the beginning
of the year
Depreciation for the year
Sales and disposals
Total
Total residual value of buildings according
to plan on closing date
Land
SEK M
Acquisition value on opening date Translation differences for the year
Total residual value of land according
to plan on closing date
Group
2005
2004
71
71
1
0
–12
0
2
0
62
71
Parent Company
2005
2004
–
–
–
–
–
–
–
–
–
–
–16
–3
5
1
–13
–13
–3
0
0
–16
–
–
–
–
–
–
–
–
–
–
49
55
–
–
Group
2005
2004
12
12
0
0
12
12
Parent Company
2005
2004
–
–
–
–
–
–
No taxation values are reported since all property is located outside Sweden.
Equipment
Group
SEK M
2005
2004
Acquisition value at the beginning of the year 503
499
Reclassifications
–
–24
Investments during the year
42
67
Acquisitions through company purchases
138
0
Sales and disposals
–48
–43
20
4
Total
655
503
–336
–304
–60
–72
Sales and disposals
39
42
–17
–2
Total
–374
–336
Accumulated impairment losses at the
beginning of the year –40
–40
Impairment losses for the year
–9
–1
–1
0
Total
–50
–41
Residual value of equipment according
to plan at the end of the year
231
126
Residual value of tangible fixed assets
according to plan at the end of the year
292
193
Compensation received from divestment
of tangible non-current assets
0
4
Assets in discontinued operations consist of tangible
non-current assets in the following amounts
SEK M
Buildings
Land
Equipment
Total tangible non-current assets
Parent Company
2005
2004
2
1
–
–
0
1
–
–
–
–
–
–
2
2
–1
–1
–
–
–2
0
–1
–
–
–1
–
–
–
0
–
–
–
0
0
1
0
1
0
0
Group
2005
–
–
2
2
55
notes
NOTE 11 Leasing contracts
Contracted leasing fees relating to non-negotiable
operational leasing contracts
SEK M
Due within one year
Due between one and five years
Due later than five years
2005
133
367
72
Group
2004
106
240
48
Fees for operational leasing contracts amounting to SEK 124 M (118) were charged against
income for the year. Leasing contracts for premises include customary index clauses.
NOTE 12 Intangible non-current assets
Group
SEK M
2005
2004
Goodwill
Acquisition value at the beginning of the year
4,822
4,693
8,042
58
Adjustments of previous years’ acquisitions against tax claims
–18
Translation difference for the year
33
71
Total accumulated acquisition value
12,879
4,822
Residual value of goodwill according to plan
at the end of the year
12,879
4,822
Brands
2005
2004
0
–
1,191
–
–24
–
Residual value of brands according to plan
at the end of the year 1,167
Customer relations
–
–
2,268
–
–43
–
Total accumulated acquisition value of customer relations
2,225
–
Accumulated depreciation at the beginning of the year
–
–
–18
–
–
Total
–18
–
Residual value of customer relations according to
plan at the end of the year
2,207
–
Other intangible non-current assets
260
133
95
21
42
82
Reclassifications
–
24
–2
0
Total
395
260
Accumulated amortization at the beginning of the year
–94
–78
Amortization for the year
–49
–16
–1
0
Total
–144
–94
Accumulated impairment losses at the beginning of the year
–3
–
Impairment losses for the year
–4
–3
0
0
Total
–7
–3
Residual value of other intangible non-current
assets according to plan at the end of the year
244
163
Total residual value of intangible non-current
assets at the end of the year
16,497
4,985
Goodwill and other intangible non-current assets with indefinite useful lives are
reported at value in use. Brands are considered to have indefinite useful lives, as they
are market-leading and have high recognition. Brands are long established and used
56
both offline and online. At present, there are no known, contractual or competitive
factors limiting their useful lives. The brands comprise Gule Sider, Telefonkatalogen
and Ditt Distrikt, which were added with the acquisition of Findexa. The useful lives of
customer relations are based on repurchasing frequency and amount to 10 years. The
remaining useful life of customer relations amount to 9 years and 11 months.
In valuing goodwill and brands, future cash flows after tax were estimated over
the next three years. Forecasts are based on assessments of each unit’s development with consideration taken of local market prerequisites. From year 4 onward,
growth is assumed to correspond to inflation (2.0-2.5 percent). In valuing brands,
the “relief from royalty” method has been used, implying the current value of a hypothetical royalty payment of 4-5 percent. See also the section Important estimates
and assessments.
The valuation was based on the following assumptions and resulted in the following amounts for the most significant units.
Unit
Annual cash Margin for 10% Margin for 10%
flow growth, Margin over higher estimated lower estimated
years 0-3
book value
interest rate
cash flow
Sweden 10%
757%
651%
671%
Finland 84%
22%
7%
10%
Norway
5%
1%
–11%
–9%
Poland 8%
45%
26%
31%
Germany 44%
52%
35%
37%
The discount rate converted to a percentage before tax varied between 8.5% and
9.0%. The differences in discount rates were due to differences in country-specific
interest levels and tax rates. The risk-free rate used for calculating the discount rate
was 4.8% in all units except Poland, where it was 5.3%.
Goodwill and other intangible assets with indefinite useful life are reported for the
following cash-generating units. At December 31, the residual value consisted of the
following items.
Group
SEK M
2005
2004
Goodwill
Sweden
1,866
1,870
Denmark
246
234
Finland
1,013
968
Norway
7,892
17
Poland
855
770
Germany (WLW)
1,007
963
Total
12,879
4,822
Brands
Norway
1,167
–
Total intangible assets with indefinite useful lives
14,046
4,822
Goodwill included in reported residual value for which
amortization is deductible for tax purposes
Group
SEK M
2005
2004
Goodwill
Denmark
126
120
Finland
991
946
Total
1,117
1,066
NOTE 13 Prepaid cost and accrued income
SEK M
Prepaid interest cost
Other prepaid cost
Accrued interest income
Total
Group
2005
2004
2
0
183
135
0
0
185
135
Parent Company
2005
2004
–
0
3
2
1
7
4
9
NOTE 14 Cash and cash equivalents
Cash and cash equivalents consist primarily of bank balances and smaller current investments in foreign units not included in the Group’s central chart of accounts.
Group
Parent Company
SEK M
2005
2004
2005
2004
Short term investments
19
6
–
–
Cash and bank
723
311
7
0
Total cash and cash equivalents
742
317
7
0
notes
NOTE 15 Borrowing
As collateral for the loan, the Company has pledged shares in Eniro Treasury AB,
Eniro Holding AB and Findexa Luxembourg Sarl, as well as some intra-Group loans.
Group
Parent Company
SEK M
2005
2004
2005
2004
Long-term bank loans
10,123
1,785
–
1,407
Short-term bank loans
876
1,203
–
1,200
Total bank loans
10,999
2,988
–
2,607
Interest-bearing loans have the following maturity structure Due during the following year
876
1,203
–
1,200
Due during following five years
10,123
1,785
–
1,407
Total
10,999
2,988
–
2,607
Reported amounts by currency for loans
EUR
943
822
–
822
NOK
9,020
–
–
–
SEK
1,036
2,166
–
1,785
Total
10,999
2,988
–
2,607
Granted, unutilized credit facilities (fixed interest)
Due within one year
–
1,700
–
1,700
Due during following five years
833
2,167
–
1,671
Due later than five years
–
–
–
–
Total granted credit facilities
833
3,867
–
3,371
Fair value of long-term borrowing
10,123
1,785
–
1,407
The fair value of short-term borrowing is equal to book value, since the loans have
variable interest rates that are hedged through interest swaps.
Effective interest rates on the closing date were as follows:
EUR
4.70% 2.90%
– 2.90%
NOK
5.35%
–
–
–
SEK
3.51% 2.52%
– 2.50%
The portion of borrowing that was not interest-hedged (SEK 2,066 M at year-end
2005) is affected by interest-rate fluctuations. An interest-rate change of 1 percent
affects interest cost by SEK +/- 21 M per year.
New financing during 2005
In conjunction with the acquisition of Findexa, Eniro entered a five-year multicurrency borrowing agreement (with an option to borrow in different currencies)
totaling SEK 12,000 M with a bank consortium led by Svenska Handelsbanken AB
as the facility and security agent, and with FöreningsSparbanken AB, Nordea Bank
AB and Skandinaviska Enskilda AB Banken as other leading issuers.
The loan has a fixed amortization plan but may be paid prematurely, if the Company so wishes.
Transaction costs in conjunction with the borrowing agreement for SEK 12,000 M
amounted to SEK 96 M. Borrowing costs are reported in the income statement as
an interest cost from the date at which the agreement was entered on September
25, 2005 until the due date on September 25, 2010. At December 31, 2005, capitalized borrowing costs amounted to SEK 91 M for total bank loans.
Interest levels
The loans initially carry a surcharge of 1.35 percent over IBOR and will, in the future,
follow an interest ladder based on the Company’s debt level (defined as consolidated net debt in relation to EBITDA) as shown below.
At most 5.50 but above 4.50
Up to and including 4.50 but above 3.50
Up to and including 3.50 but equal to or above 3.00
Less than 3.00
1,35%
1.00%
0.75%
0.65%
Interest hedging
The loan is subject to the condition that Eniro AB will hedge 90 percent of interest
payments due on the acquisition credit of NOK 4,515 M, as well as refinancing
credits of NOK 2,300 M, EUR 100 M and SEK 900 M.
The hedging requirement ceases and other restrictions in the borrowing agreement are eased when the Company’s net debt falls below 3.5 in relation to EBITDA.
Covenants
The borrowing agreement contains the normal restrictions and conditions on financial covenants, such as:
– Consolidated net debt in relation to consolidated EBITDA
– Consolidated EBITDA in relation to interest payments
– Consolidated cash flow to consolidated interest and amortization
plus restrictions and limitations regarding further borrowing, guarantee commitments
and pledges, significant changes in operations and acquisitions and divestments.
Termination/grounds for termination
The Company is free to terminate the borrowing agreement. In other respects, the
agreement contains the usual grounds for termination falling under events of default.
Refinancing of previous credit facilities
In conjunction with the acquisition of Findexa, Eniro AB’s previous borrowing agreement ceased to apply, as prevailing covenants and key ratios were not satisfied. The
same also applied to Findexa AS’s borrowing agreement.
At the time of the acquisition, Eniro AB had a very short borrowing agreement
without hedges or forward contracts resulting in insignificant premature redemption
costs.
On the acquisition date, Findexa had a five-year interest hedge resulting in a cost
of SEK 65 M for premature redemption.
Eniro AB refinanced previous credit facilities totaling SEK 2,775 M, as well as
credit facilities in Findexa totaling NOK 2,600 M.
NOTE 16 Derivative financial instruments
2005
2004
SEK M
Assets Liabilities Assets Liabilities
Interest swaps – cash-flow hedges
1
67
–
–
Currency swaps – cash-flow hedges
–
–
0
0
Total
1
67
0
0
Less long-term portion
1
67
–
–
Total long-term derivative instruments
1
67
0
0
Short-term portion
–
–
–
–
The swap contracts entered into entail a swap of variable interest rates for fixed
rates. The nominal loan amount for swaps at December 31, 2005 was NOK 6,815
M and EUR 100 M. The fixed interest rates varied from 3.13 to 3.89 percent, while
the variable rates were based on three-month IBOR rates.
The Group’s exposure with respect to borrowing for changes in interest rates and
contracted dates for rate negotiations is shown below.
More
6 months
6–12
1–5 than 5
or less
months years years
Total
At December 31, 2004
Total borrowing
2,988
–
–
– 2,988
Effect of interest swaps
–
–
–
–
–
Total 2,988
–
–
– 2,988
At December 31, 2005
Total borrowing
437
437 10,125
– 10,999
Effect of interest swaps
–
–
66
–
66
Total
437
437 10,191
– 11,065
Financial instruments that are not reported in the balance sheets consisted of the following as of December 31, 2004
– interest swaps relating to loan amounts of SEK 100 M.
– currency swaps relating to foreign Group companies’ current investments with Eniro
AB totaling SEK 69 M.
The fair value of these instruments amounted to a deficit of SEK 0.5 M.
Guarantees and collateral
The borrowing agreement is guaranteed by Eniro AB, Eniro Sverige AB, Din Del AB,
Respons Group AB, Eniro Treasury AB, Eniro Norway AB, Eniro Holding AB, Eniro
Norge AS, Oy Eniro Finland Ab, Oy Eniro Ds Ab, Eniro Deutschland GmbH, Eniro
Polska Sp. Z o.o., Findexa Norway AS, Eniro Danmark A/S, Findexa Luxembourg
Sarl, Findexa Holding AS, Findexa AS, Findexa I AS och Findexa IV AS. The above
Group companies are parties to the borrowing agreement in the capacity of obligors.
57
notes
NOTE 17 Retirement benefit obligations
NOTE 18 Other provisions
The amounts reported in the consolidated balance sheet were calculated as follows
Group
Parent Company
SEK M
2005
2004
2005
2004
Current value of funded commitments
297
224
Actual value of managed assets
–199
–176
98
48
0
Current value of unfunded obligations
301
313
9
12
Special salary tax included in reported net debt 1
1
1
1
Unreported actuarial losses
–35
–39
–
–
Net debt in balance sheet reported
as retirement benefit obligations*
365
323
10
13
Non-current provisions
Group
Parent Company
SEK M
2005
2004
2005
2004
Provisions on opening date 74
92
–
–
Provisions utilized during the year
0
–56
–
–
New provisions
0
50
–
–
Reversal of unutilized provisions
–5
0
–
Effects of changed exchange rates
5
–1
–
–
Reclassifications
–31
–11
–
–
Provisions on closing date 43
74
–
–
Current provisions
Group
Parent Company
SEK M
2005
2004
2005
2004
Provisions on opening date 66
104
6
21
Provisions utilized during the year
–60
–56
–6
–10
New provisions
0
49
–
1
Reversal of unutilized provisions
–9
0
–
–
Effects of changed exchange rates
0
0
–
–
Reclassifications
27
–31
–
–6
Changes during the year, defined-benefit pension plans
SEK M
Net debt at the beginning of the year
Net costs reported in income statement
Obligations assumed through company
acquisitions
Pension payments
Contributions to pension fund
Net debt at year-end *
Group
2005
2004
323
299
20
42
41
–19
–
365
–
–8
–10
323
Specification of costs for defined-benefit pension plans
Group
SEK M
2005
2004
Costs relating to employment during
current year
15
26
Interest cost
17
16
Return on managed assets
–9
–5
Actuarial net gains/losses reported
during the year
0
–
Costs relating to employment during
previous years
–3
5
Total costs for retirement benefit obligations 20
42
Management costs
3
0
Total costs for defined-benefit pension plans 23
42
Parent Company
2005
2004
13
2
3
11
–
–6
–
10
–
–
–
13
Parent Company
2005
2004
2
0
–
6
–
–
–
–
–
2
0
2
5
11
0
11
* Pension provisions include provisions in Eniro 118 118 for early retirement pensions in accordance with collective agreements for negotiated pension entitlements from the ages of 55, 60 and
63 for certain personnel categories. According to the agreement, compensation will be partially
paid by the former owner Telia Sonera. On December 31, 2005, the corresponding claim amounted to SEK 115 M (140) and is reported as an interest-bearing non-current asset is not included in
managed assets. The credit risk for this receivable is considered negligible.
Pension liabilities primarily relate to employees in Sweden, of whom nearly all are
covered by defined-benefit pension plans.
Eniro 118 118 has made provisions to a pension fund, while other commitments
are guaranteed through insurance with FPG.
Retirement benefit obligations are calculated annually on the opening date applying actuarial principles according to the Projected Unit Credit Method. In so doing,
the following assumptions were made: discount factor 4.8% (4,8), salary increases
2.8% (2,8), inflation 2,0% (2,0), increase in income base amount 2.8% (2,8), return
from pension fund 5.3%(5,3). Internal data were used for attrition rates, while
remaining employment time was calculated individually by the PRI pension service
and mortality was estimated according to the law on safeguarding of retirement
benefit obligations.
Actual return on managed assets amounted to SEK 23 M (10), equivalent to
14.4% (6.2). Return on other pension-related receivables was 5.2% (5.1).
Totala pensionskostnader
Group
SEK M
2005
2004
Costs for defined-benefit plans
23
42
Costs for defined-contribution plans
92
83
Costs for special payroll tax and tax on returns 11
9
Cost reported as interest cost
–11
–11
Cost reported in operating income 115
123
Parent Company
2005
2004
2
11
6
–
3
–
–
–
11
11
The pension cost reported in the operating income is distributed by function as
follows: production SEK 41 M (40), sales SEK 46 M (59), marketing SEK 2 M (2),
administration SEK 18 M (24) and other SEK 8 M (1).
58
Provisions on closing date 24
66
0
6
Provisions utilized during 2005 related primarily to provisions from 2004 for restructuring measures of the a reorientation of German operations. No new provisions
were made in 2005.
Provisions on December 31, 2005 primarily related to remaining provisions in
conjunction with the new focus of the German operations, tax disputes in Sweden,
excise fees in Poland and legal disputes in progress.
NOTE 19 Accrued expenses and prepaid revenues
SEK M
Accrued personnel-related costs
Accrued interest cost
Other accrued cost
Prepaid online revenues
Group
2005
2004
223
172
2
3
255
187
814
627
Total
1,294
Parent Company
2005
2004
18
16
0
4
7
7
–
–
989
25
27
NOTE 20 Commitments and contingent liabilities
SEK M
Guarantees Sureties and contingent liabilities relating
to subsidiaries
Guarantees for borrowing agreements
Pledges shares in subsidiaries
Guarantee provisions FPG/PRI
Tax disputes
Total
Group
2005
2004
4
8
Parent Company
2005
2004
–
–
–
–
7,856
7
49
7,916
68
10,999
–
0
28
11,095
–
–
–
6
49
63
499
–
–
0
28
527
“Inter-Group” receivables and shares in subsidiaries have been pledged as collateral
for Eniro Treasury’s external loans. Alternatively, subsidiaries and the Parent Company have also provided guarantees for Eniro Treasury’s liabilities. See also Note 15
Borrowing.
notes
NOTE 21 Shares and participations in Group Companies
Shares and participations owned directly or indirectly by the Parent Company
Book value on Book value on
Corporate
Registered
No. of
Capital Dec. 31,2005, Dec. 31,2004,
Name registration no. office
shares
shares, %
SEK M
SEK M
TIM Varumärke AB
556580-8515
Stockholm
1,000
100
0
0
TIMI Nederlands BV
33.25.87.44
Amsterdam
50
100
Eniro Danmark A/S
18 93 69 84 Copenhagen
24,000
100
407
243
Respons Group AB
556639-2196
Stockholm
1,000
100
752
752
Respons Holding AB
556570-6115
Stockholm
1,050,915
100
Eniro 118 118
556476-5294
Stockholm
75,000
100
Gula Tidningen AB
556470-0101
Stockholm
1,000
100
52
50
Lila Tidningen i Skåne AB
556488-5191
Stockholm
1,000
100
Gula Tidningen Trader AB
556555-7153
Stockholm
1,000
100
Gula Interactive Trader AB
556573-4018
Stockholm
1,000
100
Eniro International AB
556429-6670
Stockholm
1,000
100
23
23
Budapest Projekt 92 KFT
01-09-362834
Budapest
100
Eniro Ukraine Holding
32046863
Kiev
100
Eniro Eastern Europe Holding AB
556606-0140
Stockholm
1,000
100
Eniro Estland AB
556445-0921
Stockholm
100
100
Emfas AB
556445-6894
Stockholm
100
100
Eniro Nederland AB
556474-9108
Stockholm
1,000
100
Magyar Herold Business Data KFT
01-09-164362
Budapest
100
TeleMedia International BV
33.25.94.60
Amsterdam
40
100
TeleMedia Svenska AB
556465-2013
Stockholm
1,000
100
Eniro Sverige AB
556445-1846
Stockholm
500,000
100
1,494
1,494
Eniro Sverige Försäljning AB
556580-1965
Stockholm
1,000
100
Eniro Förlagslån AB
556598-3359
Stockholm
1,000
100
Lindgren & Co Data AB
556423-9704
Stockholm
1,000
100
Emfas företagskatalogen HB
969630-7355
Stockholm
Gula Sidorna HB
969629-3753
Stockholm
Din Del AB
556053-2409
Stockholm
200,000
100
6
2
Din Del Försäljning AB
556572-1502
Stockholm
1,000
100
0
0
Eniro Norge AS
974209314
Oslo
200,000
100
163
163
Eniro Treasury AB
556688-5637
Stockholm
1,000
100
7,856
Eniro Holding AB
556688-5645
Stockholm
1,000
100
Findexa Luxembourg Sarl
B-100.546
Luxembourg
343,848
100
Eniro Norway AB
556688-5652
Stockholm
1,000
100
Findexa Norway AS
986656022
Oslo
1,100,000
100
Findexa IV AS
983689639
Oslo 10,078,431,426
100
Findexa I AS
983689949
Oslo
18,023,247
100
Findexa Holding AS
982775159
Oslo
1,000
100
Findexa AS
963815751
Oslo
55,206
100
1880 Nummeropplysning AS
976491351
Oslo
1,020
100
Index Publishing AS
976553225
Oslo
15,765
51
Kartforlaget AS
984604513
Oslo
100
100
Økonomisk Literatur Norge AS
987529547
Oslo
100
100
Yelo AS
988875740
Oslo
100
100
Rosa Index AS
983789579
Oslo
1,000
100
Telefonkatalog AS
988437565
Oslo
100
100
59
notes
Corporate
Registered
No. of
Capital
Name registration no. office
shares
shares, %
Book value on Book value on
Dec. 31,2005, Dec. 31,2004,
SEK M
SEK M
1880 Telefonkatalogen AS
988437506
Kristiansand
100
100
Rosa Sider AS
988437581
Oslo
100
100
Telefonkatalogen 1880 AS
988437476
Oslo
100
100
Hvite Sider AS
988437417
Oslo
100
100
Din Bydel AS
888437452
Oslo
100
100
Findexa Forlag AS
988271608
Oslo
100
100
Bedriftskatalogen Bizkit AS
985822883
Oslo
100
100
Gule Sider AS
968306782
Oslo
100
100
Telefonkatalogens Gule Sider AS
968306405
Oslo
100
100
Bedriftskatalogen AS
979763379
Oslo
100
100
Lokalveiviseren Informasjonsforlaget AS
979915314
Oslo
100
100
Gule Sider Internett AS
980287432
Oslo
100
100
BizKit AS
982175968
Oslo
100
100
Ditt Distrikt AS
883878752
Oslo
100
100
Grenseguiden AS
988437549
Oslo
100
100
Kvalex AS
980253341
Oslo
100
100
Index Media AS
986493492
Oslo
100
100
Nord Trans Handelshus AB
556397-6892
Halmstad
1,000
100
Scandinavia Online AB
556551-9989
Stockholm
100,000
100
0
Scandinavia Online Content AB
556549-0892
Stockholm
1,000
100
Bilguiden Sweden AB
556588-1397
Stockholm
1,000
100
Bilweb Sweden AB
556546-3758
Stockholm
1,000
100
Netbonus Holding AB
556575-7480
Stockholm
9,100
100
Netbonus Sverige AB
556546-3451
Stockholm
1,000
100
Netbonus Norge AS
981211391
Oslo
100,000
100
Scandinavia Online Passagen AB
556556-0900
Stockholm
10,000
100
Inside Finans AB
556546-3170
Stockholm
10,000
100
Eniro Svar om Sverige AB
556544-2331
Stockholm
20,000
100
Oy Eniro Finland Ab
0100130-4
Turku
60,000
100
42
EDS Media Oy
1634986-4
Helsinki
500,000
100
OY Eniro Ds Ab
1726828-1
Helsinki
8,000
100
0
Eniro Deutschland GmbH
HRB 77757
Hamburg
1
100
320
Wer Liefert Was? GmbH
HRB 44606
Hamburg
2
100
85
WLW Vermögensverwaltungs GmbH
HRB 5850
Hamburg
1
100
1)
Wer liefert was? GmbH Switzerland
CH 170.4.001.503-4
Baar
1
100
Wer liefert was? GmbH Austria
108453 Klosterneuburg
1
100
Wer liefert was? Spol. S.r.o. Czech Republic
62584669
Prague
1
100
Wer liefert was? D.o.o Slovenia
Srg 98/01016
Celie
1
100
Wer liefert was? D.o.o Croatia
80282955
Zagreb
1
100
Eniro Windhager GmbH
HRB 22085
Stuttgart
1
100
Esenza Werbeagentur, GmbH
HRB 21868
Stuttgart
1
100
Eniro Polska Sp.z.o.o
RH B 31000
Warszaw
1,035,209
100
1,124
Total
12,324
1) Of which Eniro AB (publ) directly owns 5.1%.
60
322
15
0
320
85
1,123
4,592
notes
The following companies and operations were acquired during 2005
Company/operations
Acquisition Date
Capital share, %
Eniro Treasury AB
Dec. 5, 2005
100
Eniro Holding AB
Dec. 5, 2005
100
Findexa Luxembourg Sarl
Dec. 5, 2005
100
Eniro Norway AB
Dec. 5, 2005
100
Findexa Norway AS
Dec. 5, 2005
100
Findexa IV AS
Dec. 5, 2005
100
Findexa I AS
Dec. 5, 2005
100
Findexa Holding AS
Dec. 5, 2005
100
Findexa AS
Dec. 5, 2005
100
1880 Nummeropplysning AS
Dec. 5, 2005
100
Index Publishing AS
Dec. 5, 2005
100
Kartforlaget AS
Dec. 5, 2005
100
Økonomisk Literatur Norge AS
Dec. 5, 2005
100
Yelo AS
Dec. 5, 2005
100
Rosa Index AS
Dec. 5, 2005
100
Telefonkatalog AS
Dec. 5, 2005
100
1880 Telefonkatalogen AS
Dec. 5, 2005
100
Rosa Sider AS
Dec. 5, 2005
100
Telefonkatalogen 1880 AS
Dec. 5, 2005
100
Hvite Sider AS
Dec. 5, 2005
100
Din Bydel AS
Dec. 5, 2005
100
Findexa Forlag AS
Dec. 5, 2005
100
Bedriftskatalogen Bizkit AS
Dec. 5, 2005
100
Gule Sider AS
Dec. 5, 2005
100
Telefonkatalogens Gule Sider AS
Dec. 5, 2005
100
Bedriftskatalogen AS
Dec. 5, 2005
100
Lokalveiviseren Informasjonsforlaget AS
Dec. 5, 2005
100
Gule Sider Internett AS
Dec. 5, 2005
100
BizKit AS
Dec. 5, 2005
100
Ditt Distrikt AS
Dec. 5, 2005
100
Grenseguiden AS
Dec. 5, 2005
100
Kvalex AS
Dec. 5, 2005
100
Index Media AS
Dec. 5, 2005
100
Nord Trans Handelshus AB
Dec. 5, 2005
100
Changes during the year
Shares in subsidiaries on December 31, 2004 Equity contribution on establishment of Eniro Treasury AB
Equity contributions to
– Eniro Danmark A/S
– Oy Eniro Finland AB
– Other companies
Write-down of holdings in Scandinavia Online AB
Shares in subsidiaries on December 31, 2005
Parent Company
4,592
7,856
164
27
7
–322
12,324
The following companies were divested in 2005
Corporate. Company/operation
registration no
Eniro Eesti AS
10029016
AS Teabeliin 10009841
OU Ärikataloog
10656517
Eniro Lietuva UAB
UL 93-64
Eniro Infomedija UAB AB 93-888
Televerslas UAB
2290159
SIA Eniro Latvija
000308840
Registered
office
Tallinn
Tallinn
Tallinn
Vilnius
Vilnius
Vilnius
Riga
NOTE 22 Shares and participations in associated companies
Shares and participations owned directly and indirectly by the Parent company.
Name
DM Huset AS
Corporate
registration
number
974420562
Registered
office
Oslo
No. of
Capital
shares shares, %
515
34
Holdings in associated companies
Group
SEK M
2005
2004
Reported value of holdings in associated companies on Dec. 31, 2004 –
–
Share of profit
0
–
13
–
Dividend
–6
–
Reported value of holdings in associated
companies on Dec. 31, 2004
7
–
NOTE 23 Acquired operations
On December 5, 2005, Eniro acquired 100 percent of the shares in Findexa Limited,
the parent company in the Findexa group which is the leading search company in
Norway. Findexa is consolidated from this date. The purchase price amounted to
SEK 7 866 M, of which SEK 5 412 M was cash, SEK 61 M constituted acquisition
costs and 26 811 217 was paid in shares, of which 23 950 517 shares were a new
issue and 2 860 700 shares were already held by Eniro. The price of the Eniro share
at the date of acquisition was SEK 89.25.
The acquired operations contributed operating revenue of SEK 53 M and an
operating loss (EBITDA) of SEK 59 M for the period December 5 to December 31,
2005. Restructuring costs of SEK 24 M were included in EBITDA for the period as
a result of Eniro’s acquisition. If the acquisition date had been on January 1, 2005,
consolidated revenues would have amounted to SEK 6,628 M and EBITDA to
SEK 1,980 M.
Findexa is included in the cash-generating unit Norway.
The acquisition analysis below presents a preliminary valuation of acquired net
assets and goodwill. The acquisition analysis is preliminary as a result of the acquisition’s complexity and the short period between the acquisition and the year-end
report.
SEK M
Group
Parent Company
Acquisition of Findexa
Purchase price including other acquisition costs for
the year’s acquisitions
7,866
7,856
– of which through non-cash issue
–2,138
–2,138
– of which through previously repurchased own shares –255
–255
– of which amount as yet unpaid
–57
–57
Less cash and cash equivalents on acquisition date
–361
–
Total net payments for acquisition of Findexa
5,055
5,406
Net payments for other acquired operations
5
–
Total net payments for the year’s acquisitions
5,060
5,406
Assets and liabilities in Findexa Value prior to Value on
Identifiable assets and liabilities
acquisition
acquisition date
Intangible fixed assets
Trade names
939
1,191
Customer relations
440
2,268
Other intangible assets
62
95
Tangible fixed assets
36
138
Financial assets
36
36
Total fixed assets
1,513
3,728
Non-interest bearing current assets
788
634
Total assets in acquired operations
2,301
4,362
Non-current borrowings
3,116
3,116
Pension commitments
37
37
Deferred inome tax liabilities
–11
823
Total non-current liabilities
3,142
3,976
Current liabilities 1,477
562
Total liabilities attributable to acquired operations 4,619
4,538
Acquired identifiable net assets
Goodwill on acquisition date
Purchase price
–176
8,042
7,866
DM Huset AS is included in the segment Nordic countries excluding Sweden.
The following companies and operations were acquired during 2005.
Company/operation
Acquisition date
DM Huset AS
May 12, 2005
61
notes
Goodwill in Findexa on the acquisition date was attributable to the company’s high
profitability and cash flows, as well as to the opportunities for future synergies.
During the year, Eniro secured a license in search-key advertising through an
agreement with MIVA. Eniro acquired MIVA’s Swedish operations for a purchase
price of SEK 5 M. The principal net assets comprise the license for search-key
advertising. During the year, Eniro also acquired directory assistance services in
Finland for some SEK 13 M. These acquisitions are reported as acquisitions of other
intangible non-current assets.
After December 31, 2005, Eniro acquired the Norwegian company Din Pris AS,
which is active in price comparison services.
The purchase price for Din Pris AS amounted to approximately SEK 31 M. In
addition, the purchase price included a variable component based on earnings that
cannot exceed SEK 31 M over a three-year period. These operations were consolidated on February 1, 2006. After year-end, Eniro also acquired Webdir, which is
active in local directories and publication services in Denmark. The company reported sales of slightly more than SEK 20 M in 2005 and was consolidated in Eniro
Denmark as of February 1, 2006. The purchase price amounted to SEK 32 M.
Average number of shares after repurchases
(000s of shares)
calculation:
Opening balance
156,630
effect of the year’s repurchases
–1,461
(–2,339* 228/365)
effect of payment with own shares
204
(2,860.7* 26/364)
effect of non-cash issue
1,706
(23,950.517* 26/365)
Average number of shares in 2005
157,079
During the year, employees purchased a total of 41,888 shares within the framework
of the share-savings program. The year’s savings may result in a maximum dilution
of 152,856 shares.
Share capital
Parent Company
As per December 31, 2005, the quota value of the Eniro share was 1/182,102,392.
The proposed dividend is SEK 2.20 per share or a total of SEK 398 M (345).
NOTE 24 Equity
Currency exposure
The total currency exposure relating to investments in foreign subsidiaries amounted
to SEK 3,297 M (1,762) with the following distribution.
Millions in respective currency
Euro (EUR)
Danish kroner (DKK)
Norwegian kroner (NOK)
Polish zloty (PLZ)
Estonian kroon (EEK)
Lithuanian lita (LTL)
Other currencies in SEK M
2005
14
254
1,440
469
–
–
7
2004
102
214
15
424
35
11
14
Average number of shares
On January 1, 2005, the number of shares was 158,151,875, of which 1,521,700
were held by the Company, thus totaling 156,630,175 after reduction for repurchases.
During the period from May 11, 2005 to May 31, 2005, the Company repurchased 2,339,000 shares. The weighted average date for these repurchased shares
was May 17, 2005 or 228 days prior to year-end.
On December 5, 2005, or 26 days prior to year end, a non-cash issue of
23,950,517 shares was implemented as payment, together with 2,860,700 (previously repurchased) shares, to Findexa’s shareholders.
Share capital
No. of shares (000s)
SEK M
Of which Of which
Registered repurchased Registered repurchased
On January 1, 2004
167,398
167
Acquisition of own shares
1,522
2
–9,246
–9
On December 31, 2004
158,152
1,522
158
2
On January 1, 2005
158,152
1,522
158
2
Acquisition of own shares
2,339
2
New issue for company
acquisitions
23,951
–2,861
24
–3
182,102
1,000
182
1
The Extraordinary General Meeting on November 7, 2005 granted authorization to
the Board of Directors for the period up until the next Annual General Meeting to
take decision on one or more occasions on an increase of the share capital by not
more than SEK 24 M through the issues of not more than 24,000,000 shares. On
December 5, 2005, a non-cash issue of 23,950,517 shares was implemented in
conjunction with the acquisition of Findexa.
Reserves
Group
Changes in other reserves consist of the following items
Valuation of financial
Accumulated translation
instruments at fair value
differences
Total
On January 1, 2004
–1
–208
–209
Translation of foreign subsidiaries
98
98
8
8
–1
–102
–103
Cash-flow hedges
– valuation of interest swaps at fair value (Note 16)
62
–67
–
–67
– tax on fair value of losses
19
Translation of foreign subsidiaries
–
– value of borrowing
– tax on value of borrowing
–
–49
–
4
19
4
36
–10
–72
36
–10
–121
notes
NOTE 25 Effect on balance sheet and income statement of change in accounting principles All amounts in SEK M
Jan. 1, 2004
Dec. 31, 2004
Previous
Effect of Previous Effect of
GAAP
change
IFRS
GAAP
change
Assets
Non-current assets
224
224
193
Goodwilla
4,726
–33
4,693
4,534
288
Other intangible assetsb
28
24
52
108
55
Deferred tax assetc
259
63
322
243
–50
Interest-bearing non-current assets
10
10
158
5,247
54
5,301
5,236
293
Current assets
Work in progressd
156
–8
148
254
–100
Accounts receivable
1,017
1,017
1,038
166
166
135
12
12
112
117
117
67
Total non-interest bearing current assets
1,468
–8
1,460
1,606
–100
Other interest bearing receivablesh
155
155
4
Short-term deposits
8
8
6
277
277
311
Total interest bearing current assets
440
440
321
1,908
–8
1,900
1,927
–100
Total assets
7,155
46
7,201
7,163
193
Total equity 2,367
–161
2,206
1,758
121
Borrowings
1,845
1,845
1,785
Retirement benefit obligationse
331
–31
300
335
–12
Deferred income tax liabilitiesc
119
15
134
320
–78
Other provisions f
196
–104
92
140
–66
Total long-term liabilities
2,491
–120
2,371
2,580
–156
Current liabilities
Advances from customersd
194
194
133
Accounts payable
290
290
308
Income tax liabilities
38
38
40
Accrued costs and prepaid revenues d
928
29
957
960
29
Other non-interest bearing liabilities 313
313
314
Other provisions f
104
104
66
Total non-interest bearing current liabilities
1,569
327
1,896
1,622
228
Interest-bearing current liabilities 728
728
1,203
Total current liabilities 2,297
327
2,624
2,825
228
Total equity and liabilities
7,155
46
7,201
7,163
193
Summary of effects of changed accounting principles
on equity (SEK M)
Goodwill and other intangible assets
–9
Work in progress and advances from customers
–231
Deferred tax
48
Retirement-benefit obligations
31
Total effect on equity
–161
IFRS
193
4,822
163
193
158
5,529
154
1,038
135
112
67
1,506
4
6
311
321
1,827
7,356
1,879
1,785
323
242
74
2,424
133
308
40
989
314
66
1,850
1,203
3,053
7,356
343
–262
28
12
121
63
notes
Previous
Effect of
2004 Income statement
GAAP
change 1)
Gross operating revenues
5,021
–173
Advertising tax
–103
Operating revenues
4,918
–173
Production costsg
–1,539
–86
Sales costsg
–1,363
196
Marketing costs
–328
14
–395
24
–95
0
Other income
72
–5
Other cost
–12
4
Amortization of goodwilla
–347
347
Operating income after depreciation 911
321
Financial revenues
26
0
Financial costs
–127
0
Earnings before tax
810
321
Income taxc
–343
–25
Net income for the year from continuing operations
467
296
Net income from discontinued operations
1
467
297
Net income per share, SEK
2,82
Average number of shares, 000s
165,327
IFRS
4,848
–103
4,745
–1,625
–1,167
–314
–371
–95
67
–8
1,232
26
–127
1,131
–368
763
1
764
4,62
165,237
1) Includes the effects of the discoutinued operations in accordance with IFRS 5, see also Note 3.
a) Goodwill
In terms of earnings, the primary effect on the Eniro Group of the transition to IFRS
is that the amortization of goodwill has ceased and has been replaced by an annual
impairment test of fair value.
In conjunction with acquisition of the Danish operations in 2000, the Danish
subsidiary reported goodwill arising from the purchase of net assets resulting in
future tax-deductible depreciation. No consideration was taken of the value of these
future deductions in the acquisition analysis. According to IFRS, such a future tax
reduction must be reported as a deferred tax asset. The adjustment of the opening
balance for 2004 relates to goodwill deductible for tax purposes as a deferred tax
asset. See also c) below.
b) Development expenditures
In a review of all development projects, it was determined that additional projects
met the criteria for being capitalized as intangible assets. The expenditures for
theses projects have been capitalized in accordance with IAS 38.
c) Deferred taxes
Upon valuation, it was determined that the amount reallocated from goodwill in
the Danish operations could not be capitalized and this amount was written down.
Other differences in accordance with d) and e) below between the net book value
in the consolidated accounts of an asset or liability and its tax value give rise to
deferred tax assets or liabilities.
d) Work in progress
Work in progress on January 1, 2004, was reduced by SEK 8 M. The change consists of the following items:
1) Review of the calculation of direct production cost. This meant that expenditures
of SEK M 231 previously capitalized as work in progress were charged to equity.
2) Gross accounting of customer advances relating to offline products resulted in an
increase of SEK 194 M in work and progress and customer advances.
3) Gross accounting of work in progress relating to online products resulted in an
increase of SEK 29 M in work in progress and deferred revenues.
64
e) Pensions
In the final reconciliation of retirement-benefit obligations in accordance with IAS 19,
it was determined that there were certain discrepancies, compared with amounts
reported in 2004, essentially relating to retirement-benefit obligations in Sweden.
f) Provisions
Provisions reported in accordance with IAS 1 are divided into long-term and current liabilities. Provisions for costs relating to the completion of the 2002 closure of
Windhager GmbH in Germany, as well as disputed excise duties, are booked as
long-term liabilities.
g) Production and sales costs
Sales-related production costs, which were capitalized as work in progress, were
previously reported as sales costs in conjunction with the publication of the directory in question. In conjunction with the review of the calculation of direct production
costs, all costs included in work in progress are reported as production costs on the
publication date.
h) Financial Instruments
Eniro has, with support from IFRS 1, chosen not to apply the principles retroactively
on 2004 comparison figures in accordance with the principles in IAS 39. The differences in valuation between valuation in accordance with IAS 39 and earlier Swedish
GAAP are considered to be immaterial for 2004.
Certification by the Board of Directors
and the President
The Board of Directors and the President hereby certify that, to the best
of our knowledge, the annual accounts are prepared in accordance with
good accounting practises for a stock market company, that the informa-
tion presented is consistent with the actual conditions and nothing
of material value has been omitted that would affect the picture of
Eniro AB (publ) as presented in the Annual Report.
Stockholm, March 6, 2006
Eniro AB (publ)
Lars Berg
Per Bystedt Chairman of the Board of Directors
Barbara Donoghue
Erik Engström
Urban Jansson
Birgitta Klasén
Bengt Sandin
Daniel Hultenius
Tomas Franzén
President
Audit report
To the annual meeting of the shareholders of Eniro AB (publ)
Corporate identity number 556588-0936
We have audited the annual accounts, the consolidated accounts, the
accounting records and the administration of the board of directors
and the managing director of Eniro AB for the year 2005. The board of
directors and the managing director are responsible for these accounts
and the administration of the company as well as for the application
of the Annual Accounts Act when preparing the annual accounts and
the application of international financial reporting standards IFRSs as
adopted by the EU and the Annual Accounts Act when preparing the
consolidated accounts. Our responsibility is to express an opinion on
the annual accounts, the consolidated accounts and the administration
based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards in Sweden. Those standards require that we plan
and perform the audit to obtain reasonable assurance that the annual
accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the accounts. An audit also includes
assessing the accounting principles used and their application by the
board of directors and the managing director and significant estimates
made by the board of directors and the managing director when preparing the annual accounts and consolidated accounts as well as evaluating
the overall presentation of information in the annual accounts and the
consolidated accounts. As a basis for our opinion concerning discharge
from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability,
if any, to the company of any board member or the managing director.
We also examined whether any board member or the managing director
has, in any other way, acted in contravention of the Companies Act, the
Annual Accounts Act or the Articles of Association. We believe that our
audit provides a reasonable basis for our opinion set out below.
The annual accounts have been prepared in accordance with the
Annual Accounts Act and give a true and fair view of the company’s
financial position and results of operations in accordance with generally
accepted accounting principles in Sweden. The consolidated accounts
have been prepared in accordance with international financial reporting
standards IFRSs as adopted by the EU and the Annual Accounts Act
and give a true and fair view of the group’s financial position and results
of operations. The statutory administration report is consistent with the
other parts of the annual accounts and the consolidated accounts.
We recommend to the annual meeting of shareholders that the
income statements and balance sheets of the parent company and the
group be adopted, that the profit of the parent company be dealt with
in accordance with the proposal in the administration report and that
the members of the board of directors and the managing director be
discharged from liability for the financial year.
Stockholm, March 7, 2006
PricewaterhouseCoopers AB
Peter Bladh Sten Håkansson
Authorized Public Accountant Authorized Public Accountant
Auditor in charge
65
Multi-year summary
SEK M
Condensed consolidated income statement
Operating revenues
Offline
Online
Operating income before depreciation and amortization (EBITDA)
Operating income after depreciation (EBIT)
Earnings before tax
2005
2004
2003
2002
2001
2000*
4,827
2,621
2,206
1,234
1,073
1,017
917
4,745
2,704
2,041
1,324
1,232
1,131
764
4,808
3,061
1,747
1,292
569
483
198
4,737
3,415
1,322
940
–327
–409
–764
4,519
3,594
925
1,150
775
692
453
3,004
2,562
442
891
738
711
489
Condensed consolidated balance sheet
Assets
Goodwill
Other fixed assets
Current assets
Total assets
12,879
4,241
2,422
19,542
4,822
707
1,827
7,356
4,726
521
1,908
7,155
4,657
508
2,155
7,320
6,141
686
2,425
9,252
2,998
245
1,597
4,840
Equity
Minority interest
Long-term liabilities
Current liabilities
Total equity and liabilities
4,634
–
11,618
3,290
19,542
1,879
–
2,424
3,053
7,356
2,367
–
2,491
2,297
7,155
3,713
–
2,377
1,230
7,320
4,977
–
2,739
1,536
9,252
2,397
5
1,494
944
4,840
Condensed consolidated cash flow analysis
Cash flow from current operations
Cash flow from investment operations
Cash flow from financing operations
1,007
–5,141
4,468
78
412
1,016
–235
–769
4
16
1,355
–983
–366
–
6
490
–356
–436
–
–302
2005
2004
2003
2002
2001
2000*
26
22
1,081
2,195
42
10,564
2.28
24
8.6
7.0
28
26
860
2,154
35
2,832
1.51
26
2.1
10.6
27
12
921
2,839
7
2,462
1.04
33
1.9
10.2
20
–7
503
4,618
–17
1,828
0.49
51
1.9
8.1
25
17
828
3,464
13
1,960
0.39
54
1.7
7.1
30
25
642
1,492
33
969
0.40
50
1.1
15.2
Key ratios
Operating margin – EBITDA, %
Operating margin – EBIT, %
Cash earnings, SEK M
Average equity, SEK M
Return on equity, %
Interest-bearing net debt, SEK M
Debt/equity ratio, times
Equity/assets ratio, %
Interest-bearing net debt/EBITDA, times
Interest coverage ratio EBITDA, times
738
–1 416
886
–
208
Key ratios per share before dilution
Net income, SEK
5.84
4.62
1.14
–4.34
2.80
3.26
Cash Earnings, SEK
6.88
5.20
5.30
2.86
5.12
4.28
Equity, SEK
25.59
12.00
14.14
21.07
28.25
15.98
Number of shares on the closing date after buy backs, 000s
181,102
156,630
167,398
176,181
176,181
150,000
Average number of shares after buy backs, 000s
157,079
165,327
173,651
176,181
161,665
150,000
Other key data
Average number of full-time employees
Number of full-time employees on the closing date
4,704
5,479
4,752
4,953
4,595
4,695
4,168
4,117
3,606
4,151
2,142
2,381
* Proforma
Years 2004-2005 according to IFRS.
Years 2000-2003 according to previous Swedish accounting principles (not IFRS).
Major changes in the Group’s composition
2005
– Acquisition of Norway’s Findexa, which was consolidated as of December 2005.
– Operations in Estonia, Latvia, Lithuani, Russia and Belarus were classified as
operations being discontinued as of the second quarter of 2005 and are not
included in operating revenues, EBITDA or EBIT for 2005 and 2004.
2004
– Acquisition of Gula Tidningen, which was consolidated as of April 2004.
2003
– Acquisition of the directory assistance company Response (name changed to
Eniro 118 118), which was consolidated as of May 2003.
66
2002
– Acquisition of directory operations in Tampere, Finland, which were consolidated
as of October 2002.
2001
– Acquisition of Scandinavia Online, which was consolidated as of January 2002.
– Acquisition Finland’s Direktia, which was consolidated as of January 2002.
– Acquisition Panorama Polska, which was consolidated as of April 2002.
– Acquisition of Germany’s Windhager, which was consolidated as of January 2001.
These operations were discontinued as of the fourth quarter of 2002.
2000
– Acquisition of Germany’s Wer Liefert Was?, which was consolidated as of January 2001.
Quarterly Summary
2005
Full-year
Q4
Q3
Q3
Q1
OPERATING REVENUES (SEK M)
Total
Offline
Online
Sweden
Offline
Online
Sweden excl. Voice
Offline
Online
Sweden Voice
Online
Nordic (excl. Sweden)
Offline
Online
Norway
Offline
Online
Finland
Offline
Online
Denmark
Offline
Online
Central Europe
Offline
Online
Germany
Offline
Online
Poland
Offline
Online
4,827
2,621
2,206
2,779
1,598
1,181
2,179
1,598
581
600
600
1,326
696
630
293
13
280
637
363
274
396
320
76
722
327
395
347
0
347
375
327
48
1,761
1,147
614
1,017
708
309
869
708
161
148
148
409
206
203
119
13
106
168
92
76
122
101
21
335
233
102
88
0
88
247
233
14
969
413
556
547
245
302
391
245
146
156
156
262
108
154
61
–
61
103
29
74
98
79
19
160
60
100
87
0
87
73
60
13
1,292
756
536
749
448
301
591
448
143
158
158
422
283
139
57
–
57
258
194
64
107
89
18
121
25
96
85
0
85
36
25
11
805
305
500
466
197
269
328
197
131
138
138
233
99
134
56
–
56
108
48
60
69
51
18
106
9
97
87
0
87
19
9
10
2004
Full-year Q4
4,745
2,704
2,041
2,786
1,645
1,141
2,167
1,645
522
619
619
1,258
751
507
179
–
179
703
442
261
376
309
67
701
308
393
376
13
363
325
295
30
Q3
1,615
1,081
534
1,011
711
300
857
711
146
154
154
294
158
136
53
–
53
158
92
66
83
66
17
310
212
98
89
0
89
221
212
9
Q2
977
457
520
540
252
288
381
252
129
159
159
292
159
133
45
–
45
101
31
70
146
128
18
145
46
99
92
1
91
53
45
8
Q1
1,309
800
509
730
444
286
572
444
128
158
158
447
325
122
43
–
43
314
251
63
90
74
16
132
31
101
93
1
92
39
30
9
844
366
478
505
238
267
357
238
119
148
148
225
109
116
38
–
38
130
68
62
57
41
16
114
19
95
102
11
91
12
8
4
EBITDA (SEK M)
Total
1,234
548
194
380
112
1,324
579
192
415
Sweden
1,116
470
160
325
161
1,097
481
156
309
Sweden excl. Voice
994
426
119
305
144
958
448
116
279
Sweden Voice
122
44
41
20
17
139
33
40
30
32
–21
12
78
–37
174
5
42
135
Norway
–39
–48
8
5
–4
–15
–10
0
0
Finland
34
19
–12
50
–23
167
31
–6
127
Denmark
37
8
16
23
–10
22
–16
48
8
Central Europe
155
133
32
–12
2
156
124
13
12
Germany
72
9
20
14
29
86
20
12
18
Poland
83
124
12
–26
–27
70
104
1
–6
Other (Head office and Group-wide projects) –69
–34
–10
–11
–14
–103
–31
–19
–41
138
151
115
36
–8
–5
15
–18
7
36
–29
–12
67
Q UA R TE R LY SU M M A RY
2005
Full-year
Q4
Q3
Q3
Q1
2004
Full-year Q4
Q3
Q2
Q1
EBITDA–MARGIN, %
Total
26
31
20
29
14
28
36
20
32
Sweden
40
46
29
43
35
39
48
29
42
Sweden excl. voice
46
49
30
52
44
44
52
30
49
Sweden voice
20
30
26
13
12
22
21
25
19
2
–5
5
18
–16
14
2
14
30
Norway
–13
–40
13
9
–7
–8
–19
0
0
Finland
5
11
–12
19
–21
24
20
–6
40
Denmark
9
7
16
21
–14
6
–19
33
9
Central Europe
21
40
20
–10
2
22
40
9
9
Germany
21
10
23
16
33
23
22
13
19
Poland
22
50
16
–72
–142
22
47
2
–15
16
30
32
24
–4
–13
12
–32
6
35
–242
Condensed consolidated income statement (SEK M)
Operating revenues
4,827
1,761
969
1,292
805
4,745
1,615
977
1,309
Operating cost
3,754
1,291
805
939
719
3,513
1,064
806
917
Operating income (EBIT)
1,073
470
164
353
86
1,232
551
171
392
Net financial items
–56
–9
–22
–9
–16
–101
–31
–26
–31
Earnings before tax
1,017
461
142
344
70
1,131
520
145
361
844
726
118
–13
105
Major acquisitions with consequences for the consolidated income statement:
As of Q4 2005, acquisition of Findexa Nordic region (Norway).
Definitions
Average number of shares The average number of shares is for period
calculated as an average of the number of for
the period outstanding shares on a daily basis
after redemption, repurchase and share issue
Average equity Average equity is based on an average of the
values on the opening and closing dates for
each quarter
Cash Earnings
Net income for the year + re-entered depreciation and amortization + re-entered impairment
loss
Cash Earnings per share Cash Earnings
Average number of shares during the period
Debt/equity ratio Interest-bearing net debt
Equity
Direct return (%)
100 ✕
Equity
Balance sheet total
Interest coverage ratio EBITDA EBITDA + financial income
Financial expenses
Interest-bearing net debt Interest-bearing liabilities + interest-bearing
provisions less interest-bearing assets
Interest-bearing net debt/EBITDA Interest-bearing net debt
EBITDA
Net income per share Net income for the period
Average number of shares for the period
Operating revenues per share Operating revenues
Net income per share
EBIT Operating income after depreciation, amortization and impairment loss
P/E ratio Share price at year end
Net income per share for the period
EBITDA Operating income before depreciation,
amortization and impairment loss
Return on equity (%) 100 x Net income for the period
Average equity
EBITDA margin (%) Equity per share 68
100 ✕ Dividend for the year
Share price at year-end
Equity/assets ratio Eniro Annual Report 2005
100 ✕
EBITDA
Operating revenues
Equity
Number of shares at end of period after
redemption, repurchase and share issue
Time and place
The Annual General Meeting of Eniro AB (publ) will be held on Wednesday
April 5, 2006 at 3:00 p.m. (CET) in the IVA Conference Center on
Grev Turegatan 16, Stockholm, Sweden.
Participation
Shareholders of Eniro AB (publ) who wish to participate in the Annual General
Meeting must be registered in the shareholder register maintained by VPC AB
(the Swedish Securities Register Center) on March 30, 2006 and register their
intention to participate no later than 4:00 p.m. (CET) on March 31, 2006 under
the address specified below.
Registration must include the name, address, civic or corporate registration
number and telephone number of the shareholder and the number of assistants
(two at most) who will participate.
Shareholders who are represented by proxy must issue a power of attorney for
the proxy. The power of attorney must be sent to Eniro well in advance of the
Meeting at the address below. If the power of attorney is issued by a legal entity,
a copy of the registration certificate for the legal entity must be enclosed.
Payment of dividends
The proposed record date for dividends is April 10, 2005. Dividends are expected
to be paid through VPC AB on April 13, 2005.
Shares held by nominee
In order to be entitled to participate in the Meeting, shareholders whose shares
are registered in the name of a nominee, must arrange via the nominee for the
temporary registration of the shares in their own name in due time prior to
March 30, 2006.
Registration
Shareholders may register by:
Tel: +46-8 553 310 16
Fax: +46-8 585 097 25
E-mail: [email protected]
Mail: Eniro AB (publ), Corporate Legal Affairs, SE-169 87 Stockholm, Sweden
Addresses
Sweden
Norway
Finland
Poland
Eniro AB and Eniro Sverige AB
SE-169 87 Stockholm
Tel: +46 8 553 310 00
Fax: +46 8 585 090 37
[email protected]
eniro.com
Eniro Norge AS
Gjerdrumsvei 19
P.O. Box 4573 Nydalen
N-0404 Oslo
Tel: +47 22 58 38 00
Fax: +47 22 58 38 01
[email protected]
eniro.com/no
Eniro Finland Oy Ab
Säterinkatu 6
P.O. Box 290
FI-026 01 Espoo
Tel: +35 8 201 110 510
Fax: +35 8 201 110 511
[email protected]
eniro.com/fi
Eniro Polska Sp. z o.o.
ul. Domaniewska 41
PL-02-672 Warszawa
Tel: +48 22 314 2000
Fax: +48 22 314 2001
[email protected]
eniro.com/pl
Findexa AS
Olaf Helsets vei 5
P.O. Box 6705 Etterstad
N-0609 Oslo
Tel: +47 81 54 44 18
Fax: +47 22 77 10 01
[email protected]
findexa.no
Denmark
Wer liefert Was? GmbH
Normannenweg 16-20
DE-20537 Hamburg
P.O. Box 100549
D-20004 Hamburg
Tel: +49 40 2 54 40 0
Fax: +49 40 2 54 40 100
[email protected]
Eniro 118 118 AB
SE-169 87 Stockholm
Tel: +46 8 553 310 00
Fax: +46 8 553 317 60
[email protected]
eniro.com
Visiting address:
Gustav III:s Boulevard 40
Solna, Stockholm
Din Del AB
Gustavslundsvägen 141
Box 869
SE-161 24 Bromma
Tel: +46 8 585 023 00
Fax: +46 8 704 18 30
Eniro Danmark A/S
Amager Boulevard 115
P.O. Box 1921
DK-2300 Köpenhamn S
Tel: +45 88 38 38 00
Fax: +45 88 38 38 10
[email protected]
eniro.com/dk
Germany
With the help of Eniro, active users will easily find people, businesses
and products.
Vision
Eniro’s channels are the obvious choice when active users seek
information on people, businesses and products and when
sellers seek motivated buyers.
Find it easy
Eniro AB
SE-169 87 Stockholm, Sweden
Tel: +46 8 553 310 00
Fax: +46 8 585 090 37
[email protected]
eniro.com
Visiting address:
Gustav III:s Boulevard 40
Solna, Stockholm, Sweden
Production: Eniro and Intellecta Communication. Photo: Jann Lipka. Gregory Kramer, David Trood, Getty Images. Manfred Rutz, Photonica. Stefan Berg. Print: Intellecta Tryckindustri 2006.
Mission

200603232038en3 (3.71 MB PDF)

Transcription

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