Eniro_ENG_low

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Eniro_ENG_low

Focus on Eniro
ANNUAL REPORT
2011
500
ENIRO ANNUAL REPORT 2011
Focus on Eniro
CONTENTS
FOCUS ON ENIRO
ENIRO IN BRIEF AND THE YEAR IN BRIEF.................................................................................. 1
OVERVIEW OF OPERATIONS...........................................................................................................2
COMMENTS FROM THE CEO............................................................................................................4
SIGNIFICANT EVENTS IN 2011........................................................................................................6
VISION, BUSINESS CONCEPT AND FINANCIAL TARGETS.....................................................7
ENIRO’S STRATEGIES........................................................................................................................ 8
INNOVATIONS IN 2011.....................................................................................................................12
MARKET AND BUSINESS ENVIRONMENT................................................................................14
ENIRO TODAY......................................................................................................................................16
OUR BRANDS......................................................................................................................................18
OPERATIONS
19
BOARD OF DIRECTORS’ REPORT
AND CORPORATE GOVERNANCE
39
FINANCIAL
59
BUSINESS MODEL............................................................................................................................20
ONLINE/MOBILE.............................................................................................................................. 22
Print.................................................................................................................................................... 23
MEDIA PRODUCTS........................................................................................................................... 24
voice.................................................................................................................................................... 25
ENIRO’S MARKET POSITION ....................................................................................................... 26
ENIRO IN SWEDEN/FINLAND, NORWAY, DENMARK AND POLAND.............................. 27
RESPONSIBILITY AND THE ENVIRONMENT............................................................................31
ORGANIZATION................................................................................................................................. 33
EMPLOYEES AND LEADERSHIP.................................................................................................. 34
THE SHARE AND OWNERSHIP....................................................................................................36
COMMENTS FROM THE CHAIRMAN..........................................................................................38
BOARD OF DIRECTORS’ REPORT................................................................................................40
OPERATIONAL RISKS AND RISK MANAGEMENT.................................................................. 45
CORPORATE GOVERNANCE..........................................................................................................48
BOARD OF DIRECTORS................................................................................................................... 54
GROUP MANAGEMENT..................................................................................................................56
REMUNERATION OF SENIOR EXECUTIVES............................................................................. 57
CONSOLIDATED FINANCIAL STATEMENTS.............................................................................60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS............................................... 64
QUARTERLY OVERVIEW.................................................................................................................83
MULTI-YEAR OVERVIEW, INCLUDING KEY DATA PER SHARE.........................................84
PARENT COMPANY FINANCIAL STATEMENTS......................................................................86
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS........................................89
STATEMENT OF ASSURANCE BY THE BOARD OF DIRECTORS AND THE PRESIDENT.......94
AUDIT REPORT..................................................................................................................................95
ANNUAL GENERAL MEETING, REPORTING DATES AND ADDRESSES..........................96
DEFINITIONS AND GLOSSARY..................................................................................................... 97
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Focus on Eniro
ENIRO IN BRIEF
ENIRO IS a leading search company in
the media industry, with operations in
Sweden, Norway, Denmark, Finland
and Poland. In 2011, 69 percent of the
company’s revenues derived from digital
media (excluding directory assistance
services). The company specializes in local
search and Eniro’s well-known brands,
products and services create user value for
a vast number of users each day.
ENIRO’S CUSTOMERS are paying advertisers
who – via their presence in Eniro’s complementary channels – ensure access and
relevant searchability 24/7, irrespective of
the distribution form. Thanks to a local presence, Eniro’s corporate customers ensure
searchability and provide a contact interface
customers encounter the 0100100 brand.
Eniro’s operations in Sweden, Norway,
Denmark and Poland market and sell
advertisements to thousands of customers
through one of the largest sales forces in
the Nordic region. Each year, the company’s sales representatives contact millions
of existing and potential customers.
with potential customers and companies.
Better searchability means better business.
Information in Eniro’s databases is
available via various distribution channels,
Internet and mobile services, printed directories and other publications, in addition to
directory assistance and SMS services.
ENIRO MARKETS its products and services
under well-known brands. In Sweden these
are primarily eniro.se, Gula Sidorna, Din Del
and the 118 118 directory assistance service.
In Norway, Gule Sider, Proff, Kvasir and the
1880 directory assistance are the primary
brands. Danish search services are marketed
under the krak.dk, dgs.dk, Mostrup and Den
Røde Lokalbog brands, while Panorama
Firm is the brand in Poland. In Finland,
ENIRO HAS about 3,600 employees. Operations are organized on the basis of two
revenue categories: Directories, consisting
of Online/Mobile, Print, and Media Products,
and Voice.
Eniro has been listed on NASDAQ OMX
Stockholm since 2000 as part of the Mid Cap
segment. The company is index classified
under Consumer Discretionary/Advertising.
OPERATIONS ARE DIVIDED INTO TWO PRIMARY BUSINESS AREAS
DIRECTORIES
Voice
Comprises search services in the media channels Online/Mobile,
printed products in Print and search-word optimization, sponsored
links, videos, banners and displays in the Media Products area.
Comprises directory name and directory assistance services via telephone
and SMS in Sweden, Norway and Finland, as well as premium services with
personal service. Finland also offers a contact-center service. THE YEAR IN BRIEF
OPERATING REVENUES AND EBITDA MARGIN
SEK M
%
7,000
70
6,000
60
5,000
50
OPERATING REVENUES BY REVENUE CATEGORY
SEK M
2,500
2,000
4,000
40
1,500
3,000
30
1,000
2,000
20
1,000
10
2007
2008
Operating revenues, SEK M, left axis
2009
2010
500
2011*
EBITDA margin, %
right axis
l
On
* Adjusted EBITDA, excluding exchange-rate effects, restructuring costs and other items affecting comparability, amounted to SEK 1,074 M (1,266).
• Operating revenues totaled SEK 4,323 M (5,326)
• Organic revenues declined 11 percent
• EBITDA totaled SEK 991 M (605)
• The net result for the year was SEK –213 M (–4,620)
e
bil
mo
/
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Pri
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aP
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ic
Vo
di
Me
2011
• Earnings per share were SEK –2.13 (–248.43)
• Operating cash flow totaled SEK 230 M (151)
• The Board proposes that no dividend be paid for 2011
See page 97 for definitions
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Focus on Eniro
focus on eniro
OVERVIEW OF OPERATIONS
Eniro’s operations are divided up into two primary revenue streams: Directories and Voice. Directories
comprise the media channels Online/mobile, Print and Media Products. Eniro’s offering is based on
unique databases that permit searching and the use of information whatever the channel.
SHARE OF GROUP
NET SALES
PRESENCE
OFFERING
• Presence, profiling and
ranking for customers
who wish to be searchable round-the-clock, 365 days a year.
46%
DIRECTORIES
ONLINE/MOBILE
• Product searches in
which Eniro mediates
contact between the
buyer and seller.
• Advertising and search-
ability via printed regional
and local directories.
24%
DIRECTORIES
• Sponsored links, searchDIRECTORIES
MEDIA PRODUCTS
word optimization, video, establishment of websites, banners and displays.
4%
• Information services via
telephone and SMS.
• Complementary services,
21%
voice
such as “Book a table”,
“Question behind the question”, and road directions.
• Contact center operations
in Finland.
Other 4%
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Eniro
ENIRO annual
ANNUAL report
REPORT 2011
focus on eniro
Focus on Eniro
BRANDS
MARKET
DRIVING FORCES
• Advertising and searching
• Internet advertising are migrating increasingly
from printed media to
online and onward to
mobile phones and tablet
devices.
as a media channel is increasing.
• Eniro occupies a strong
position in the mobile
search market.
• The market for mobile
• Eniro has a strong searchability is expanding
sharply.
database online.
• The market for printed
• Complementary media
• Media advertising
• Eniro as an advisory
media is declining, but
remains highly relevant.
channel with high
profitability.
represents a strong
growth sector.
media agency with a
complete one-stop shop
offering for small and
midsize companies
• Sponsored links and
display advertising across
the Internet are growing
sharply.
• Falling revenue trend in
• Development of new
• Eniro has a strong position
• High profitability, stable
Eniro’s markets due to
increasing use of smart
phones.
complementary services
that boost user value and
Eniro’s sales.
in mature markets in
Sweden, Norway and
Finland, with high
profitability.
cash flow and leveraging
of the service’s potential.
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ENIRO annual
Eniro
ANNUAL report
REPORT 2011
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Focus on Eniro
COMMENTS FROM THE CEO
2011 was an intensive year for Eniro. Over the course of the year, wide-ranging efforts were made to
streamline, concentrate and clarify operations. The results of the completed organizational changes were
favorable, contributing to greater efficiency and higher cost savings. The negative trend in recent years
due to the ongoing transformation from print to online and mobile has leveled out and digital-derived
revenues (excluding Voice) now account for 69 percent of Eniro’s total revenues.
GREATER STABILITY
I have now reported on my first full fiscal
year as CEO of Eniro. When I took up the
position in September 2010, Eniro found
itself in a difficult financial situation
caused by high debt and falling revenues.
A year later, the company’s situation
has improved and Eniro’s long-term
financing is robust. In addition to regular
repayments under bank covenants, we
completed an extra repayment of more
than SEK 100 M during 2011 and the
dialog with our banks is positive. Eniro
generated positive cash flow and reported
healthy EBITDA earnings during 2011. At
year-end, debt in relation to EBITDA was
a multiple of 3.6. Loan repayments aimed
at reducing the company’s debt continue
to have precedence over dividends to
shareholders.
BUSINESS TREND DURING 2011
Organic operating revenues for 2011
declined 11 percent. Efforts to adjust
operations to changes in search behavior
– entailing an increasing share of media
consumption via digital channels – are
continuing. Digital-derived revenues
(excluding the Voice business) accounted
for 69 percent of total operating revenues.
Like other media companies, Eniro finds
itself in a transformation process due to
the transition from print to digital media;
however, compared with similar companies, we have made greater progress in
the sense that printed media currently
represent a lower share of revenues.
Considerable focus has been placed on
improving user value and quality in our
products and services.
The organizational and management
changes launched in the preceding year
were completed in 2011. The changes
resulted in substantially reduced costs, a
more effective structure and greater clarity. During the year, the cost-savings target
was raised from an original decrease of
SEK 200 M to a reported reduction of SEK
458 M compared with the preceding year.
The primary savings were achieved in con-
sultancy, printing and more efficient product development/IT. Thanks to stringent
cost control, we have succeeded, despite
lower revenues, in maintaining EBITDA at
a healthy level, with an ample margin visà-vis bank covenants. EBITDA rose to SEK
991 M (605 including nonrecurring effects
of the sale of operations in Finland). In
2011, intangible assets were charged with
impairment losses of SEK 376 M, attributable to operations in Poland and Voice in
Norway. For the full-year, Eniro generated
positive cash flow of SEK 230 M.
EVENTS DURING 2011
During the year, Eniro conducted a number of activities to consolidate its position
as a leading player in local search in the
Nordic region.
Concentration/
efficiency enhancement
• As part of Eniro’s overhaul and concen-
tration on profitable core business, the
company disposed of its assets in Findexa Førlag. The sale had limited impact
on our operations.
• Effective year-end 2012 in Norway,
the regional directory Gule Sider was
merged with the local directory Ditt
Distrikt. The merger gave rise to savings and a streamlining of Gule Sider
to make it a dedicated online brand.
A concentration of the print portfolio
in Denmark and a change of format in
Sweden are under way.
Growth/expansion
• During the autumn, Eniro and Google
signed a strategic cooperation agreement under which Eniro became authorized reseller of Google AdWords™
in the Nordic region. The agreement
permits a focus on the growing area
of sponsored links.
• At the close of the fiscal year, Eniro
acquired specific assets in De Gule Sider
(DGS) in Denmark. As a result of the acquisition, Eniro strengthens its position
as the largest online/mobile player in
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the Danish search market. The acquisition was completed at an attractive
purchase price and entails low financial
risk for Eniro.
SHIFT TOWARD GROWTH AREAS
As in the case of our colleagues in the
search industry, Eniro has entered a
transformation process caused by the
transition from printed to digital media.
The transformation entails a channel
shift, with Internet and mobile growing
at the expense of more traditional printed
publications. The rapid pace of change on
the media map demands adjustment and
adaptation as well as a more efficient cost
structure.
Eniro’s strategy remains in place. We
shall continue to be a leading force in local
search. However, to meet changing search
behavior, we are broadening our offering
to provide greater coverage in all channel
selections. It is crucial for Eniro to be the
customer’s natural preference in attaining a relevant presence, profiling and
ranking whatever the choice of channel.
To strengthen our position in the digital
segment, we are supplementing our offering both with proprietarily developed
products and the potential for advertising
via cooperation with business partners.
Cooperation with Google demonstrates
Eniro’s ambition to secure a position in
the growing search word segment. The
agreement offers Eniro an opportunity to
assume an advisory role in customer relations and one in which we can offer a total
solution for how small/midsize companies
can ensure searchability round-the-clock,
365 days year. I believe that Eniro with its
large sales force in the Nordic region has
favorable potential to expand its business in Media Products and offer attractive packages comprising search words,
displays, banners, videos, websites and a
presence on partner sites. Another sharply
expanding area is searches via the mobile
channel. In pace with the increasing use
of smart phones and tablet devices, a
growing share of total searches is moving
Focus on Eniro
via portable wireless units. In Eniro’s case,
some 15 percent of all searches move via
the mobile channel and this trend continues to rise. The company currently has a
leading Nordic position in mobile. During
the year, Eniro launched the Web2Mobile
service for mobile-tailored searches as
well as a number of mobile applications
such as På Sjön (at sea), Eniro i Stan (in
town), Eniro Akut (emergency) and Eniro
På Väg (on the road).
ENIRO’S FOCUS
Eniro has three focus areas that are pivotal
in the strategic decision-making process.
The three areas are summarized by the
terms “Market Position”, “Quality”, and
“Profitable Growth”.
Market position
A brand assessment has been completed
within the framework of the market
position. A study was performed to map
Eniro’s target group and how customers
and users view our products and services.
The insight we gained through the project
will sharpen the precision of Eniro’s future
product development and clarify the company’s position.
Quality
During 2011, Eniro focused keenly on
improving the quality of everything we do.
While efforts to enhance quality concentrated on user value, priority was also
given to securing relevant and reliable
data in Eniro’s database, viewed from the
perspective of an advertiser/customer.
When users see high functionality in our
products, traffic to our sites increases,
which in turn raises the number of searches and, thus, advertiser value. Quality
enhancement in core services is a current
and continuously ongoing process.
tions and higher third-party costs. A continuing reduction in net debt will be given
precedence ahead of dividend payments,
in line with the objective of decreasing net
debt in relation to EBITDA.
Profitable growth
POSITIVE END TO THE YEAR;
GOOD OPENING TO 2012
It is crucial for Eniro to continuously
monitor its profitability. The development of future products must progress
parallel with sustained profitability. The
company’s operations comprise two revenue categories: Directories, a collective
designation for Online/mobile, Print and
Media Products, and Voice, for directory
assistance service. In other words, priority
has been assigned to achieving optimal
distribution of internal development resources across revenue streams to achieve
optimum growth with maximum profitability. During 2012, a central aim will be
to continue the efficiency enhancement of
the sales force combined with additional
cost optimization.
OUTLOOK
For 2012, Eniro expects to return to organic growth. The assessment is that revenue
from Print and Voice will continue to
decline during 2012 while the Online/mobile and Media Products operating areas
will report growth. Including a change in
revenue mix and continuing savings, the
aim for 2012 is to retain EBITDA at the
2011 level. During 2012, the total cost
base is expected to be reduced by a further
SEK 200 M compared with 2011.
Planned cost savings exclude the effects
of divestments and acquisitions of opera-
THREE QUESTIONS TO:
johan lindgren, CEO
What are you most proud of during the past year?
“I’m most proud of the fact that Eniro reversed
the company’s negative sales trend and turned in
the direction of growth in 2012. This is the result of the combined efforts of all employees.”
What will be Eniro’s key contribution
to achieving growth in 2012?
“That Eniro succeeds in creating more satisfied users of our services and products.”
Describe your own best search on the Internet?
“Eniro’s book-a-table service, which enables you
to effectively and quickly reserve a table at a restaurant while also getting an SMS to your mobile
phone giving road directions.”
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It was gratifying for me to present the
acquisition of De Gule Sider in Denmark
towards the end of 2011. Thanks to the
acquisition, Eniro strengthens its online/
mobile position while increasing its lead
ahead of the number two in the market.
My belief and hope is that – via the two
strong brands krak.dk and degulesider.dk
– we will be able to develop even more
attractive products in the Danish searchword market.
January 2012 marked the start of sales
of combined search word packages, with
a presence on proprietary sites and on
Google.
The sales status early in the year stimulates us in our efforts to achieve our aim of
sales growth in 2012.
Stockholm March 2012
Johan Lindgren
President and CEO
DURING THE YEAR,
ENIRO CONDUCTED A
NUMBER OF ACTIVITIES
TO CONSOLIDATE ITS
POSITION AS A LEADING
PLAYER IN LOCAL
SEARCH IN THE NORDIC
REGION.
Focus on Eniro
focus on eniro
SIGNIFICANT EVENTS IN 2011
Corporate
• Extensive changes to the organization and Group management.
• Refinancing of existing loans.
• Completion of Eniro’s rights
issue.
• The company completes a 50:1
reverse stock split.
• The 2011 AGM elects Lars-Johan
• Impairment of goodwill totaling
Jarnheimer as Chairman of
the Board, along with Fredrik
Arnander, Cecilia Daun Wennborg
and Ketil Eriksen as new Board
members.
SEK 376 M in Polish operations
and Voice in Norway.
• Eniro and Google sign a strategic
cooperation agreement under
which Eniro became authorized
reseller of Google AdWords™ in
Sweden, Norway and Denmark.
• Build-up of the growth area, • Eniro divests Findexa Førlag as
Media Products, to facilitate
activities in the expanding sponsored links segment.
part of its strategy of focusing on
profitable core operations.
• The cost savings target for 2011
• Eniro acquires specific assets in
is raised from SEK 200 M to SEK 250 M.
De Gule Sider in Denmark, thus
strengthening its leading position
in the Danish search market.
• An extra loan repayment of • The cost savings goal for 2011 is
SEK 109 M is completed.
raised an additional SEK 100 M to SEK 350 M.
PRODUCTS
• Launch of Eniro’s new tool for
image searching.
• Rejta launches an Android app.
• Launch of the Web2Mobile
service, which adjusts websites
to manageable formats for
mobile searching.
• Launch of Eniro’s new Proff
• Eniro launches Eniro Deals,
IPhone app, an application that
readily offers access to corporate
information on 1.8 million
companies, and also provides
information on which people
work in which company in the
Nordic region.
marking a key strategic step,
since Eniro for the first time
takes an active role in transactions between sellers and buyers.
• Eniro and Sidewalk Express
commence cooperation covering
Sidewalk Express’ more than
1,000 computers located in various public places.
• Eniro launches a product-search
service in Denmark.
• The operations of Eniro Norway
are consolidated. During 2012,
Gule Sider in Norway will become
a dedicated online product, while
directory operations will be
concentrated to Ditt Distrikt.
• Eniro launches the mobile applications Eniro Akut (emergency), Eniro i Stan (in town) and Eniro På Väg (on the road).
• Launch of a web analytics tool
• Telia’s surf zones are introduced
into Eniro’s maps and a number
of useful functions such as timetables and traffic information are
launched.
designed to raise understanding of how the user uses Eniro’s
products and services. The tool
creates a decision-making base
and analysis for future product
launches.
• Eniro launches På Sjön (at sea)
for IPad.
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Eniro
ENIRO annual
ANNUAL report
REPORT 2011
Focus on Eniro
Vision, business concept
and financial targets
A wide-ranging restructuring plan was implemented during 2011 to reverse Eniro’s trend and
strengthen the company’s financial position. Parallel with efforts to clarify and strengthen the
customer offering, the company worked intensively to cut costs.
Vision
Eniro’s vision is to be the symbol
for local search.
BUSINESS CONCEPT
Eniro’s business concept is to provide
local information that facilitates the
interaction of buyers and sellers.
VALUES
Dedicated. Responsive. Reliable.
OBJECTIVES AND TURNAROUND PLAN
FINANCIAL
TARGETS, 2011
RESULTS,
2011
FINANCIAL
TARGETS, 2012
LONG-TERM
TARGETS
ORGANIC
GROWTH
Organic revenue
decline of some 10 percent
Organic revenues
declined 11 percent
For 2012, a return
to organic revenue
growth is expected
To outperform the
market in terms of growth
REDUCED
COSTS
Total costs to be
reduced by SEK 350 M
during the year*
Total costs were
reduced by SEK 458 M
Total costs will be cut
by SEK 200 M during
the year**
To continuously monitor
cost-effectiveness
No goal expressed
EBITDA, SEK 991 M
Retain EBITDA for
2012 at the 2011
level via a change
in revenue mix and
continuing savings
To retain favorable,
profitable growth
CAPITAL
STRUCTURE
Reduction in net debt in relation to EBITDA
Net debt in relation to
EBITDA of 3.6 times
Net debt in relation
to EBITDA will be
reduced
Longer term, to attain a
net debt level in relation
to EBITDA of about 3 times
DIVIDENDS
A reduction in net debt
has precedence over
dividends
has precedence over
dividends
has precedence over
dividends
To create dividend
capacity in the
company
RESULTS
* Excluding exchange rate effects, corporate divestments and acquisitions.
** Excluding exchange rate, corporate divestments and acquisitions, and higher third-party costs due to the shift in revenue mix toward higher revenues from third-party cooperation.
See page 97 for definitions
7
Focus on Eniro
ENIRO’S STRATEGIES
Eniro has three focus areas that distinguish everything the company does and are pivotal in the strategic
decision-making process. The three areas are summarized by the terms “Market Position”, “Quality”, and “Profitable Growth”. Primary activities in these focus areas are designed to drive the advance toward the set goals.
FOCUS AREAS
IN PRACTICE
OVERALL INITIATIVES, 2012
MARKET POSITION
With the focus on the user, we develop
our services and make our advertisers
searchable round-the-clock
• Updated brand platform
• Leading player in mobile services
• Attractive employer
QUALITY
Stability, relevance and simplicity –
in everything we do
• Quality in Focus
• Eniro Content Program
• Web Analytics – sharper precision
PROFITABLE GROWTH
Eniro will grow with a focus on both
revenue and costs
• Sales-channel optimization
• Cost optimization
• Media Products
MARKET POSITION
Eniro is the leading player in local search
with operations in the Nordic region and
Poland. The company’s well-known brands
have strong positions and are market leading or number two in each market. Brand
recognition is very high: 94 percent of local
populations recognize eniro.se of Sweden;
93 percent are familiar with the Norwegian
gulesider.no; 94 percent identify krak.dk of
Denmark; and panoramafirm.pl in Poland
is recognized by 60 percent. Core services:
eniro.se in Sweden has some 2.5 million
unique visitors (UVs) per week; the Norwegian gulesider.no 1.3 million UVs per week;
krak.dk in Denmark 1.6 million UVs; and
Polish panoramafirm.pl 1.2 million UVs.
Eniro works consistently to further develop
a product portfolio that drives growth with
profitable results. Users are migrating from
printed directories to online and further
on to mobile devices at an ever-increasing
pace. This trend is driven by user requirements, behavior and wishes.
A product portfolio in demand
Eniro works consistently to further develop
a product portfolio that drives growth with
profitable results. Users are migrating from
printed directories to online and further
on to mobile devices at an ever-increasing
pace. This trend is driven by user requirements, behavior and wishes.
At the cutting edge
of mobile technology
Eniro currently has a strong position and
attractive products in mobile search. Both
the market and usage are growing sharply.
Eniro is devoting considerable effort to continuing to develop its platform for mobile
services and products. A position at the
cutting edge of mobile technology will build
the brand. Eniro will continue to be the best
at capitalizing on mobile services.
Attractive employer
One challenge is to reduce personnel
turnover in the sales force. By means of
8
clear leadership, increased employee competencies and enhancing the status of the
sales force, Eniro will become an attractive
employer, thereby increasing the potential
to recruit market-leading talent. The Eniro
brand, as well as the company’s values, will
be made more distinct as viewed from an
employer branding perspective. Eniro will
position itself as an attractive employer
through well-defined and transparent,
strategic HR processes for careers, skills
development, leadership and remuneration
packages.
QUALITY
Using a straightforward approach, Eniro’s
services will give the user accurate, relevant and updated information, thereby
increasing the number of users and, thus,
also visitors to the sites.
Quality in Focus
Eniro seeks to provide better-quality search
hits than its competitors. Systematic analy-
Focus on Eniro
ON THE WAY
TO THE BUS
Eniro’s mobile app
includes all public
transport schedules in Sweden.
NEED TO BUY SHOE POLISH
Using the product search function, you can
promptly find what you’re looking for wherever
you may be.
LOOKING FOR
A PAINT SHOP
It’s easy to find your way around town with
Eniro’s maps and search functions.
Eniro is focusing on advancing the development of mobile services and products that are expected to show growth. It is becoming
increasingly important for Eniro’s customers to be searchable round-the-clock. Better searchability means better business.
sis of confirmed quality problems will lead
to correction by processes, systems and
databases, thereby enhancing user value.
Eniro Content Program
Eniro’s Content Program is designed to
create and deliver more efficient processes
and system solutions requiring a minimum
of manual maintenance and increasing the
relevance of the company’s other services.
Web Analytics – sharper precision
Using Web Analytics software, which
shows traffic patterns and permits analyses
of user behavior, the company aims to
improve its services from a user perspective
while also offering customers more customized solutions.
PROFITABLE GROWTH
Eniro is expected to report a return to organic growth in 2012. Optimal distribution
of internal development resources among
the two revenue streams – Directories, a
collective designation for Online/mobile,
Print and Media Products, and Voice – has
been assigned priority. Achieving maximum
growth with optimum profitability and con9
tinuing efficiency-enhancement of the sales
force, as well as cost optimization, are core
factors in attaining profitable growth.
Media Products
The market for Media Products is expected to show continuing robust growth.
Small/midsize companies need to expose
their operations through Eniro’s channels, which – via the unique database
– create the potential to be searchable
24/7. An increase in the number of
third-party cooperative ventures is driving revenues and increasing the volume
Focus on Eniro
LOOKING FOR AN ATM
The mobile app Eniro i Stan (in town)
shows, for example, where you can find
stores, restaurants, cafés and ATMs
wherever you are.
LOOKING FOR AN
EMERGENCY HOSPITAL
The mobile app Eniro Akut
(emergency) shows the location of the nearest emergency hospital,
care center, emergency dentist or
pharmacy.
Eniro’s services are highly suitable for mobile channels. An increasing number of people are expected to use mobile channels.
on sites. Meanwhile, the Group’s gross
margin for sponsored links is expected to
decline due to lower margins for partner
sites. The volume model is scalable, at
the same time as ensuring satisfactory
profitability.
Existing customers first
Customer losses – called the churn rate
– have corresponded to about 15 percent
for many years. With the new customer
report, ROI (Return on Investment), customers receive transparent information
on the customer value created by their
investment in Eniro’s channels. Retaining
existing customers and giving them value
for their investments is a key objective.
Sales-channel optimization
Eniro needs to raise revenue per salesperson to create long-term profitability. A
better-structured sales organization characterized by high competency will lead
to a decrease in personnel turnover and
higher sales. Media Products will have a
dedicated sales force. Cost-effective tel10
ephone sales are gaining greater priority
over customer visits. Meanwhile, betterdefined sales targets are being introduced
in which core factors are high quality and
analyses of customer needs.
Cost optimization
Costs in more mature operations will be
reduced to permit investments in growth
areas. Everyday cost awareness among
employees needs to be strengthened.
Continuous cost control is a prerequisite
for retaining competitiveness.
focus on eniro
Focus on Eniro
THE FIRST CHOICE FOR LOCAL SEARCHES
BROAD AND CHANNEL-INDEPENDENT OFFERING
ONLINE/MOBILE • Print • MEDIA PRODUCTS • Voice
UNIQUE
DATABASES
LARGE SALES
FORCE
DIVERSIFIED
CUSTOMER BASE
PRODUCT
INNOVATION
WELL-KNOWN
BRANDS
Eniro’s unique databases with commercially
relevant information on
companies in markets in
which Eniro is active.
The databases are updated daily, permitting
users to gain relevant
hits using current
information.
Eniro has about 2,000
sales representatives, with long-term
customer relations. To
optimize efficiency and
competency, parts of the
sales organization focus
on a particular brand/or
search service.
With users in Scandinavia and Poland, Eniro
brings together thousands of customers.
The customer base
comprises companies
of various sizes, active
in different sectors and
in different locations.
Eniro develops innovative products and services and can promptly
adapt them to meet
user preferences.
Eniro’s strong brands
are a key asset. Eniro’s
brands have the following recognition rates:
Eniro (Sweden) 94
percent, Gule Sider
(Norway) 93 percent,
and Krak (Denmark) 94 percent.*
*Mind Research, June 2011
11
ENIRO
Eniro ANNUAL
annual REPORT
report 2011
Focus on Eniro
Innovations in 2011
Over the course of 2011, Eniro launched a series of products and services designed for superior searchability via
the online and mobile channel. A number of service improvements led to enhanced user friendliness and higher
quality hits. The new customer report – the ROI Report – confirms customer value for existing and potential
customers. The Web Analytics software is another key tool for mapping user behavior in Eniro’s channels.
The challenge for the future is to retain online earnings while also developing mobile services in pace
with changing user search behavior. The shift from printed media to online is continuing further on to mobile
devices. Traffic on Eniro’s services indicates that the market is becoming increasingly fragmented.
T
A SELECTION OF NEW PRODUCTS
LAUNCHED IN 2011
Product development is divided into three
organizations focusing on:
• B2B – with products such as proff.se,
proff.dk and proff.no, the Nordic region’s
leading marketplace for companies.
• Directories products – the primary
services eniro.se, gulesider.no and krak.
dk as well as complementary channels
such as printed directories (print) and
products/services for searchability via the
mobile channel.
• Media Products – sold under the Kvasir
Media brand in Sweden and Norway, and
Krak in Denmark. In this area, Eniro offers complete searchability for small and
midsize companies, and a one-stop shop
solution through an advertising package that offers Eniro’s customers a broad
media presence in the local market. The
offering includes sponsored links, a presence on Eniro’s partner sites, establishment of corporate websites, videos,
banners and search-engine optimization.
The cooperation agreement with Google
permits Eniro to offer a complete media
solution for all Swedish, Norwegian and
Danish companies wishing to be searchable 24/7 on the net. Thanks to its attractive media products, Eniro can act as an
advisory media agency for small/midsize
companies.
Return on Investment. Eniro has an explicit aim
of being transparent in terms of the customer
value generated by an investment in Eniro’s
channels. The customer report provides a
comprehensive picture of the customer’s
advertising with Eniro. It permits the tracking of
any changes in channel mix to evaluate which
services and message provide most customer
contacts. The report permits customers to see
the trend in the number of viewings, calls and
road directions. ROI also shows how many calls
the customer has received from Eniro’s mobile
service from, for example apps and mobil.eniro.
se. The customer report is sent regularly by
e-mail.
he Group Product & Services (GPS)
department develops products and
services, provides input for Eniro’s
strategy and develops products that support
the strategy. Development work is conducted at Group level for all markets in joint
projects in an effort to offer maximum quality and be cost effective. The Group Service
Delivery (GSD) department embodies ideas
for saleable products and functioning services. GSD’s operations are also organized
as a corporate function that ensures product
deliveries, quality and processes.
CUSTOMER REPORT/ROI
12
WEB ANALYTICS
Assist Eniro in understanding how the user
applies Eniro’s services, showing patterns and
analyzing traffic via core services. Using this
tool, the company can improve its services from
a user perspective while also offering customers
a more customized concept.
Web2Mobile
A service that adapts the website to the mobile
phone’s smaller format. During the year, Eniro
launched the Gold/Silver/Bronze package as
part of its focus on Mobile.
Focus on Eniro
CORE APPS
During the year, eniro.se in Sweden, krak.dk in
Denmark and gulesider.no in Norway were all
updated to provide more simplified search functionality. The apps also received a supplement
and navigation to the Eniro Deals service.
Other new mobile apps:
• Eniro I Stan – Eniro I Stan (in town) helps the
user to promptly and easily find stores, restaurants, cafés, pharmacies and hotels nearby.
• Eniro Akut – Eniro Akut (emergency) assists
the user in the event of an accident. The
app shows the nearest emergency hospital,
care center or emergency dentist. It provides
telephone numbers so that charge cards can
be blocked should you lose your wallet and information on the location of the nearest police
station if a police report is required. The app
includes speed dialing to the Swedish Poisons
Information Center and the 112 emergency
number. Eniro Deals
A key strategic step was taken in May with the
launch of the Eniro Deals service. The service
marks the first time that Eniro has taken an
active role in the transaction between buyer and
seller. It features daily offers of goods and services at discount prices and in limited amounts.
Eniro’s large and diversified customer base, high
usage, strong brand and large sales force offer an
excellent starting position in the growing coupon
market. This service is also available as an app.
PÅ SJÖN FOR IPAD
Since summer 2011, Eniro’s planning tool På
Sjön (at sea) has also been available for IPads.
Apart from navigational charts, På Sjön also offers the potential to seek products and services
nearby or at any location in the Stockholm
archipelago. A completely new function is the
“Find the boat” button that directly links back
to the boat’s position for those that have been
looking at other maps or navigational charts.
• Eniro På Väg – Eniro På Väg (on the road) helps
the user to promptly find nearby restaurants,
street food stands, filling stations, shopping
malls, hotels, ATMs and car-repair workshops.
Proff.se
Was launched during the year also in Sweden and
Denmark, having already been available in Norway.
The site is the leading marketplace for companies
in the Nordic region. It contains information on all
Nordic companies, permits the monitoring of new
transactions and the creation of your own queries,
exposures, as well as having a buy & sell products
and equipment function. It also permits identification of executives in business and industry in each
country.
Rejta, detHitter, Anbefalt
Using Eniro’s rejta.se, detHitter.dk and
anbefalt.no services, consumers can readily find, rank and submit reviews of companies.
During 2011, an Android app was launched,
having previously been available as an IPhone
app. Rejta as an app with photo search was
launched in 2011. A photo of the sought product
taken by a mobile camera is sufficient to find
the right company.
13
The app also features speed dialing to the 112
emergency number and to 118 118 for a prompt
response to other questions. PRODUCT SEARCH
Uses new, powerful technology to make it easy
for the user to find local information on relevant
products and services and to navigate in Eniro’s
maps. Using the service, the user can, for example,
find a ski-rental store on the way to the skiing
resort and avoid queuing at holiday resorts, or find
the nearest bicycle repair workshop by entering
“bicycle repairs” in the search window. This has
been available in Sweden, Norway and Denmark
since 2011.
ENIRO’S SWEDISH MAPS
Gained several new functions during 2011:
• Ferry schedules nationwide showing ferry availability nearby, including the current schedule.
• All public transport schedules in Sweden, in
cooperation with the Swedish public transport
industry.
• Traffic information showing, for example, the
location of speed cameras on Swedish roads.
• Find a new home in cooperation with the Swedish search site Hemnet.
Focus on Eniro
MARKET AND BUSINESS ENVIRONMENT
The macroeconomic situation in Europe and in Eniro’s business environment has led to greater
uncertainty regarding the market trend and growth for 2012.
TOTAL MEDIA MARKET, 2011
Growth prospects for the media market
have been downgraded in all of Eniro’s
markets, although external forecasts continue to point towards marginal market
growth in 2012. The overall media market in Eniro’s markets (Sweden, Norway,
Denmark and Poland) is expected to
report sales of about SEK 100 billion for
2011, indicating forecast growth of about
4 percent compared with 2010.
SEARCH MARKET, 2011
Eniro’s addressable market is the search
market, which comprises the following
advertising channels in the media market:
printed products and advertising via mobile devices and Internet, in other words,
the total online market. The share of the
media market in which Eniro is a leading
player is expected to report sales of about
SEK 25 billion in 2011, corresponding to
a forecast growth rate of about 10 percent
compared with 2010. The search market is
based on the needs of individuals and com-
panies to find companies from which they
can purchase the products and services
they require. Companies pay for various
types of advertising in order to be searchable and to gain new potential customers.
Search companies provide various types of
advertising channels.
The search market is growing and
changing rapidly. In recent years, it has
developed primarily online, with new
functions and advertising potential. Technological progress online is continuing
but the enormous impact of smart phones
is dramatically affecting how we seek
information and favors rapid development
in mobile business. As a result, access to
search functions is increasing, thereby
changing user behavior. Smart phones,
mobile broadband and portable computers
make it easier to search for information
online. Not only is the supply many times
larger than just a few years ago, finding
what is being searched for is also faster
and users increasingly have access to the
information no matter where they are.
From print to online and mobile
Printed products continue to be an attractive marketing channel for advertisers
thanks to their extended reach, lengthy
service life and interested users compared
with other printed media.
The ongoing transformation entails that
the shift in online channels is occurring in
part at the expense of printed products, and
in recent years a trend of declining print revenues has been noticeable in the industry.
In the foreseeable future, however, printed
directories will continue to constitute a
profitable channel for advertising producers, as well as an attractive channel and
a complement for advertisers wanting to
reach customers representing considerable
purchasing propensity in several categories.
Mobile advertising expected
to increase
Mobile phone penetration in Eniro’s
markets is high across the board and
essentially everybody has access to a
mobile phone. Ownership of smart phones
ENIRO’S POSITION IN THE SEARCH PROCESS COMPARED WITH COMPETITORS
OBSERVATION
tv4, NEWSPAPERS
General search
INTEREST
google, pricerunner, facebook
More focused search
DEFINITE INTEREST
Where and how
DEALS
14
google, pricerunner, hitta.se
blocket, net on net
Focus on Eniro
and the data volume currently conveyed
to the mobile network is rising sharply.
User behavior is changing in pace with
advances in mobile phone technology.
Mobile phones are used increasingly to
search the Internet from locations that
previously had no Internet connections.
Consequently, searching for products and
services via mobile phones is expected to
increase. According to a US study based
on 5,000 interviews with American smart
phone owners, a full 95 percent of smart
phone users state that they search for local
information on their phones. The same
study identifies three consumer behaviors
among smart phone owners: They are
active searchers, locally focused and interested in shopping. Based on information
from their local searches, 88 percent made
a purchase within one day. The proportion of corporate advertising expenditure
on mobile solutions is expected to rise
rapidly in the years ahead. Thus, a leading
position in online and mobile services is a
prerequisite for being competitive in local
search advertising.
Reduced volume for voice services
The increasing use of smart phones
is also impacting directory assistance
operations in that the number of calls
involving queries about phone numbers
and names is declining.
Product development is also a success
factor in voice services. The trend in the
voice sector is expected to move toward
more personal service, such as tips about
good restaurants and table reservations, in
addition to providing generic names and
enabling phone number searching.
Competition and industry colleagues
The markets for online and printed products are marked by stiff competition, rapid
change, and technological innovation. In
the case of printed products, this primarily
takes the form of substitution competition,
meaning that one search channel gains
users and advertisers from another type
of search channel.
Eniro’s products and services are exposed
both to direct and indirect competition
from companies that offer searchability
and relevant presence, round-the-clock
throughout the year. The company encounters direct competition from players that are
active in Eniro’s marketplaces and provide
local search services, but also in the form of
indirect competition from other alternative
channels competing for the customer’s total
media expenditure, such as daily newspapers, radio, TV and outdoor advertising.
Competitors are major global players as well
as small local companies, niche players,
media groups and conventional directory
companies.
Eniro’s competitors may be grouped as
follows:
• Generic search engines that provide
relevant hits for what the user is seeking,
such as Google and Yahoo.
• Social global network pages, such as
Facebook, Twitter and other communities
that create traffic and on whose pages
the user spends a great deal of time.
• Commercial software companies, such
as Microsoft and Apple, which provide
pre-defined operating systems.
• Vertical and e-trading sites that fulfill a
specific function within a special area
such as Monster, Amazon, Blocket and
Hemnet.
• Local search companies pursuing
operations in Eniro’s local markets.
PERCENTAGE OF DIGITAL COMPARED
WITH TOTAL REVENUES, 2011
70
60
50
40
30
20
10
*
iro
En
g
Pa
s
ne
au
J
es
ted
ibs
h
Sc
ll
Ye
AT
SE
* Excluding Voice.
INDUSTRY COLLEAGUES
NON-LISTED COMPANIES
PRIMARY MARKETS
OWNER
EDSA 1)
Netherlands, Finland, Austria, Sweden, Czech Rep., Slovakia,
Poland and Gibraltar
Bank consortium
N/A
Truvo 2)
Belgium, Portugal, South Africa and Puerto Rico
Privately owned
N/A
Bonnier
Sweden, Norway and Denmark
Bonnier Group
berlingske
Denmark
Mecom Group plc
LISTED COMPANIES
1)
3)
REVENUES, 2011
SEK 29,819 M
N/A
TRADING PLACE
Eniro
Sweden, Norway, Denmark, Finland and Poland
Nasdaq OMX
SEK 4,323 M
Pages Jaunes
France, Spain, Luxemburg and Austria
Euronext Paris
EUR 1,102 M
SEAT
Italy, UK and Germany
Borsa Italiana Telematica
N/A
Yell 3)
UK, USA, Spain, Argentina, Chile and Peru
London Stock exchange
GBP 1,170
Google INC
INC Worldwide
Nasdaq
SEK 37,905 M
schibsted
Sweden, Norway, Denmark and 22 other countries
Oslo Børs
NOK 14,378 M
EDSA was restructured in 2010 and does not publicly report ownership or revenues. 2) Truvo does not publicly report revenues. Yell had not published its earnings for 2011–2012 at the time of the publication of Eniro’s annual report. Instead, earnings are reported for the nine first months of the fiscal year, which ended on March 31, 2012.
15
Focus
on Eniro
focus on eniro
ENIRO TODAY
Eniro’s history dates back to the late 1880s. Already at that stage, the company’s task was to connect
people, through printed directories at that time. Today, Eniro is the leading search company in the
Nordic media market.
There are several channels: online and mobile, which represent development and future users;
printed directories, phone-based information and SMSs, which continue to be significant products. The most recent are the media products launched in Sweden and Denmark during the year.
ORIGINS
135 years ago – in 1877 – the first telephone call in Sweden was made in Stockholm between the Royal Telegraph Agency
and the Grand Hotel. The telephone made
a rapid breakthrough in Sweden and by
1885 Stockholm was the leading European city in terms of telephones per capita.
A year later the public telephone company
was switching more than 18,000 calls a
day. The need for a directory was obvious
and the Royal Telegraph Agency – later
Televerket, subsequently Telia, and now
TeliaSonera – published the first national
directory in 1889.
During the first 100 years, the company
had a monopoly on directories. There was
a single channel, namely, printed directories. The first advertisements in the directory appeared in 1921 but it was not until
the 1940s that advertisements became a
key revenue source.
TRANSFORMATION
A hundred years after its inception, Eniro
began to expand internationally, focusing
in the early 2000s on the Nordic region
and Poland. Today, Eniro is the leading
local search company in the Nordic countries, connecting buyers and sellers, people and people by distributing information
from a unique database through several
channels and delivering relevant results.
This development has moved Eniro
from a directories company to a media
company for small and midsize companies. Today, Eniro operates in a highly
competitive market.
Like other media companies, Eniro is
in a change process due to the transition
from printed to digital media. Compared
with similar companies, Eniro has made
considerable progress and now has a relatively low share of revenues from printed
media.
Eniro tracks users and their search
behavior to best help its customers to be
searchable round-the-clock throughout
the year. When the first online version
of eniro.se was launched in 1996 (then
called gulasidorna.se), Eniro became a
digital search company and the transformation from searchability via the printed
channel to online commenced. Nowadays,
an increasing number of consumers search
by indicating the products they wish to
buy rather than the company’s name or
industry.
To increase user value, a new version
of eniro.se was launched in Sweden in
autumn 2010 and new gulesider.no in
Norway in early 2011. No other online
service offers users the possibility to readily find a local point of purchase with such
a broad range of products and services.
One of the objectives of the new service
is to create more business for Eniro
• Telia divests directory
The Royal Telegraph
Agency publishes the
first Swedish national
directory, a list of 320
subscribers in Stockholm.
1889
1978
Televerket (Telecommunications Authority)
acquires ITT’s Yellow
Pages operation in
Sweden.
1984
Televerket publishes
the first edition of the
Swedish Yellow Pages
directory (Gula Sidorna).
1986
Televerket establishes
a separate directory
unit that introduces
directories in a large
number of markets in
Europe and the US.
1991
Televerket expands its
directory operations
and acquires the
directory company Din Del in Sweden,
Finland and France.
16
Eniro
ENIRO annual
ANNUAL report
REPORT 2011
operations in the US
and Austria.
• Panorama Polska is acquired.
• The corporate directory
changes name to Emfas and is introduced
on line, emfas.com
1996
1997
• The first online version
of gulasidorna.se is
launched.
• Eniro is the first European directory company
to offer mobile positioning services.
• Companies are acquired
in Austria and Denmark.
• Launch of the first
online version of Din Del, dindel.se.
• Restructuring of
Swedish operations.
Operations in the
Netherlands are
divested.
1998
1999
Launch of the “Strategic Initiative 1998/2000” restructuring
project, focusing on sales and
market issues, as well as Internet and new media channels.
focus on eniro
Focus on Eniro
through searchability. The quality, scope
and depth of the database are consistently
enhanced thanks to improvements suggested by users.
Targeted investments in quality and
a broadened offering with useful and
relevant content, combined with continuous improvement of the search engine,
have made eniro.se one of Sweden’s most
highly visited sites with some 2.7 million
unique web readers every week. The use
of eniro.se in mobile devices has virtually
exploded since its inception in 2005 and
it currently attracts several hundred
thousand unique visitors each month.
Android or IPhone users can also
download Eniro’s smart apps, such as
Eniro Live, which shows the distance to
and information on companies nearby
and Eniro På Sjön (at sea), which can set
a course towards filling stations and guest
harbors, for example.
The special Android app also includes
a function to identify the caller.
THE FUTURE
The search for products and services is increasing. To create customer value, Eniro
aims to establish a presence in channels in
which there are users. In September 2006,
Facebook opened to the public, but during
the same year the Torget marketplace site
was closed down. Progress is rapid and
it is difficult to forecast how it will affect
users just five years ahead.
Acquisition of the
Response company,
with the 118 118
Swedish directory and
a number of directory
assistance services in
Finland.
2000
2003
Strategic
decision to
focus operations on
the Nordic
countries
and Poland.
2004
A switchboard from 1948 in an early 1970s environment.
With the new Web Analytics tool, which
helps the company to understand how the
user utilizes Eniro’s services, the company can improve its services from a user
perspective and simultaneously offer its
customers a more customized concept.
The user volumes in the various channels are migrating from print to online
and further on to mobile at an increasing pace. Within a few years, the users’
favorite channel will probably be mobile
based, either on smart phones or on tablet
devices.
The challenge is to achieve an optimum
channel combination. For 130 years, Eniro
has had a distinct user value and it intends
to create tomorrow’s optimal searchability
for its customers.
Acquisition
of Findexa –
the leading
Norwegian
search
company.
2005
• Eniro AB is established through a spin-off
from Telia. The company is listed on the OM
Stockholm Exchange’s O-list in 2000. Operations in Russia and Germany are acquired.
• In cooperation with Ericsson and Telia, Eniro
becomes the first supplier to offer MPS, mobile positioning service.
• Eniro becomes Sweden’s largest Internet
advertising player
Krak, the leading
Danish search
service, is acquired
and German operations are divested.
2006
2007
Launch of updated
version of the
search services
eniro.se, eniro.no,
eniro.fi and eniro.dk.
17
70
60
50
40
30
20
10
2006
2007
2008
2009
Online/Mobile
Print
Voice
2008
2010
2011
Over the past six years, Eniro’s share of revenues from Online/mobile has increased from
25 to 46 percent, while the share of revenues
from Print has declined from 61 to 24 percent.
Offline and online operations in
Finland are divested or phased out.
Product Search and other products
are launched on new technology
platforms.
New strategy:
from printdependent to
online potential.
ENIRO annual
Eniro
ANNUAL report
REPORT 2011
INDUSTRY LEADER IN DIGITAL
TRANSFORMATION, %
2009
2010
New sales concept –
search opportunities,
visibility and ideas
• Cooperation
with Google
commences.
• Acquisition of
De Gule Sider
directory.
2011
Focus on Eniro
focus on eniro
OUR BRANDS
SWEDEN
One of Sweden’s
most visited websites.
Primary site in Sweden
NORWAY
One of Norway’s most
popular net services,
primary site
Eniro’s major product,
with a new A5 format
Media agency with
holistic solutions for searchability
One of the most
popular websites,
primary site
Media agency with
B2B service with business-related information
Local directory with 65 editions, plus new A5-format
Local directory, with
new A5-format
Swedish ratings site
Internal portal with
wide-ranging offering
The personal search service
Media agency with
Norwegian ratings site
Directory assistance
services, also with
premium services
finland
POLAND
Eniro’s Finnish business area
Primary site, plus printed
regional directories
Directory covering
Swedish and Finnish
telephone numbers
B2B directory for the
construction industry
in Poland
Site for discount offers
Sweden’s most popular
local directory
DENMARK
Portal for interaction
and communication
Local directory for the
country’s 114 municipalities
New acquisitions
within online/mobile
18
Eniro
ENIRO annual
ANNUAL report
REPORT 2011
OPERATIONS
OPERATIONS
19
I REACH NEW CUSTOMERS
ENIROTHROUGH
ANNUAL REPORT 2011THE “ENIRO I STAN” APP
OPERATIONS
BUSINESS MODEL
The basis for Eniro’s business model is its unique proprietary database of commercial information.
Thanks to good access and high user value in channels that consumers use for searching information,
Eniro is a key supplier for companies wishing to be searchable round-the-clock throughout the year.
CUSTOMER/ADVERTISER
PRODUCTS
• Eniro.se
• Gulesider.no
• Krak.dk
• Proff
• Anbefalt/Rejta/
• Eniro Deals
• Websites
• Search engines
print
• Gula sidorna
• Din Del
• Ditt Distrikt
• Rød Lokalbog
• Mostrup
• Panoramfirm
CHANNELS
REVENUE MODEL
CUSTOMERS
• Profiling
• Visibility
• Online ranking
• Listing
• Corporate
• Field sales
• Tele-sales
• Customer service
• Postal
• Ongoing during
• > 1,000s of
• Listing
• Logs
• Advertisements
• Field sales
• Telesales
• Postal
• Advance payment/
• > 1,000s of
• Deals
• Banners
• Video presentations
• Websites
• Sponsored links
• SEO
• Use of APIs and
• Field sales
• Tele-sales
• Postal
• Ongoing
• Fixed charge
• Variable rate
• Small and midsize
• “Questions and
• Service directly
• Per call or SMS
information
• Mobile website
• Ranking on mobile
the year
customers
correspondence
on publication
customers
correspondence
Media PRODUCTS
Det Hitter
• Panoramafirm.pl
• Apps & E-book
readers
online & MOBILE
USER
SERVICES
correspondence
companies
subscription
• Cost per click (CPC)
• Subscription
• 118 118
• 1880
• 0 100 100
USERS
voice
maps
answers”
• Voice ranking
• Name and number
Millions of people in the Nordic region
and Poland use Eniro’s services each
week. The recently completed brand project confirms that Eniro users – regardless
of geographic market – use the company’s
services in a similar manner and appreciate the value, relevance and reliability
of the service. During 2011, traffic on
Eniro’s sites contributed some SEK 111
billion to Sweden’s total GDP of SEK
3,336 billion, or 3.3 percent. Statistics
from TNF Sifo show that the conversion
rate for one or more contacts on eniro.
se is 41, with 59 percent for the Gula
Sidorna (Yellow Pages) directory. The
to end user
corresponding figures for Hitta.se are
34 percent, with 11 percent for Google.
Eniro’s progress is driven by user requirements, behavior and wishes, and the company has increased its focus on creating user
value that drives traffic, and thus customer
value. Changes in user search behavior and
high market growth – primarily in mobile
and search word advertising – are contributing to a shift in the company’s services
into new media channels.
Eniro contributes to high user value.
Those who suddenly become ill can use
Eniro Akut (emergency), the app that shows
the nearest emergency hospital, care center
or emergency dentist. The product search
20
• > 29 million calls
• > 7 million SMS
or directory assistance service helps those
who are locked out to find a locksmith
nearby. The B2B service proff.se contains
information on all Nordic companies and
executives.
CUSTOMERS
Eniro markets and sells visibility via various
media channels to hundreds of thousands
of customers. Since most of these do not
have a readily recognized brand, they need
to be searchable. Eniro creates complete
searchability for small/midsize companies
– a one-stop shop solution – by providing a
media package that offers a wide-ranging
presence in the local search market.
OPERATIONS
INFORMATION REGISTER
CUSTOMERS
USERS
WEBSITE CRAWLING
SALES REPS
PRODUCT INFORMATION
TELECOM OPERATORS
1
2
3
1. Sources that supply and maintain information in the database. 2. Eniro’s database that supplies all the company’s channels with information.
3. Eniro’s channels that provide information.
The investment in Media Products has
extended the platform from searchability
only on Eniro’s proprietary channels to
offering a presence in channels provided by the many companies with which
Eniro cooperates, such as Google, DN,
Startsidan.no, GP, Aftonbladet Sportbladet, Garmin and Hemnet. The package
offers a combination of a presence on
Eniro’s sites, sponsored links on proprietary sites and on partner sites, establishment of corporate websites, videos,
banners and search-word optimization.
PRODUCTS
With the focus on users and customers,
Eniro’s services are developing toward new
channels, products and services. The extensive organizational changes completed during the preceding year centralized product
and service development to two common
units for all countries. Joint development
facilitates a cost-effective structure, while
ensuring conformity in terms of brand and
delivery. Eniro is – and will continue to be –
the supreme player in local search.
By developing media products, the company has adopted a position as an advisory
media agency for small/midsize companies.
Eniro helps its customers with searchword optimization and in building and
ensuring the right content in their websites.
SALES REPRESENTATIVES
Eniro has one of the largest sales forces in
the Nordic region. Each year, the company’s
more than two thousand sales representatives contact millions of current and potential customers. Sales of services at Media
Products are conducted by a dedicated sales
force, which is currently being built up.
The reorganization of the sales force has
increased the number of telesales representatives, thereby contributing to increased
sales processing and higher efficiency. The
field sales force concentrates its efforts on
major customers with sophisticated requirements. Existing customers are contacted by
letter when contracts are set for renewal in
order to enhance the efficiency of the process. Customer service has also been given
the sales mandate of providing good service
to calling customers, which also benefits
add-on sales.
PRICING
Pricing differs among the various products
and channels. In the case of printed directo21
ries, a fixed price model currently applies,
through which the customer pays in advance. The products and services provided
via the Internet and the mobile channel are
paid for continuously during the year when
the service is used. There are various forms
of payment for media products, which
contain fixed and variable components.
A fixed start-up and service fee is charged
for all packages. The service fee is charged
for assisting customers to develop the right
search words on their websites. Customers
pay on an ongoing basis for actual clicks on
the exposed link to their website, sponsored
links. The end user pays in conjunction with
the use of Voice services and the ordering of
activity on Eniro Deals.
EXTERNAL AND INTERNAL CONTENT
Up until the current year, Eniro primarily focused operations on its proprietary
brands, products and services. Through the
cooperation agreement with Google within
sponsored links, Eniro will increase its
share of third-party revenues. Eniro already
had partnership cooperation with GP, DN,
Hemnet and Garmin. Eniro’s proprietary
products are strengthened and supplemented through increased external content.
OPERATIONS
ONLINE/MOBILE
Online/mobile reported operating revenues of SEK 2,008 M for 2011, up 2 percent from the preceding year.
Organic revenues rose 2 percent. Online/mobile accounts for 46 percent of the Group’s operating revenues.
OPERATIONS
Eniro increased user value by means of a
number of new products and services for
superior searchability via online and mobile
channels, including new functionalities,
better maps and new apps both for Apple
and Android mobile phones, as well as for
tablet devices.
Extensive efforts were devoted to enhancing the quality of the core product. Among
other innovations, the Product-search
service was launched in all markets. This is
a new, powerful technology that makes it
easy for the user to find local information as
well as relevant products and services and
to navigate in Eniro’s maps.
Proff.se – the leading marketplace for
companies – provides information on
all Nordic companies. This service was
previously available in Norway and is now
available in Sweden and Denmark. New
functions have been added to Eniro’s Swedish maps, such as schedules for all public
transport, traffic information on Swedish
roads and localization of defibrillators.
With Eniro Deals – nationwide and local,
time-limited discount offers – Eniro, for the
first time, takes an active role in the buyerseller transaction. This service is steadily
gaining new members.
Mobile advertising in Sweden grew
sharply, with an increase of 203 percent.
Eniro Sweden outperformed the market
and is market leader with a market share of
about 30 percent.
In Norway – where Eniro is a leading
player and has been awarded prizes for its
apps – the mobile sector expanded rapidly
and accounted for a substantial proportion
of Eniro’s total revenues.
At the end of December, Eniro Denmark
strengthened its leading position in online/
mobile through the acquisition of specific
assets in De Gule Sider (Yellow Pages).
In Poland, the market for online services
is less developed than in the Nordic region.
Nevertheless, order bookings grew sharply
during the year, albeit from a relatively low
level. Online’s share of the total customer
base was 60 percent at year-end, compared
with 30 percent in 2010.
SHARE OF GROUP REVENUES
OPERATING REVENUES
The most significant revenue sources in Online/mobile are the main sites and the apps
eniro.se in Sweden, gulesider.no in Norway,
krak.dk in Denmark and panoramafirm.pl in
Poland. Via Eniro’s online service, users can
quickly and easily find local points of purchase, while Eniro’s customers are searchable 24/7 throughout the year. Thus, Eniro
contributes to the seller-buyer interface.
As a complement to online searchability,
Eniro offers products and services that are
technically adapted for the rapidly growing
mobile channel.
Migration from printed media to online
is progressing further toward mobile channels. Within a few years it is expected that
users will primarily use mobile channels
via smartphones or tablet devices. Eniro’s
services will become even more relevant in
mobile phones.
Since the expected market growth,
combined with a position at the cutting
edge of mobile technology, will strengthen
Eniro’s brand, it is obvious for the company
to focus on the mobile channel. Also, it is
crucial that online and mobile complement
each other.
BUSINESS TREND, 2011
600 000
600,000
MSEK
SEK
M
MSEK
400 000
400,000
46%
200 000
200,000
0
0
FOCUS ON ONLINE/MOBILE
Market position – will be strengthened
through the introduction of additional
services and products that profile and
bolster the Eniro brand. The total cost
of Internet and mobile advertising is
low in relation to the percentage value
perceived among users. Thus, the area
is underpenetrated in terms of market
investment, giving Eniro the potential to
position itself and continue growing.
Quality – will be enhanced through high
relevance, quality and functionality in
the search results, making users more
satisfied and adding precision to customer advertising. The focus will be on
users. Higher use creates more traffic on
the sites and thus the incentive for Eniro’s
customers to invest in the company’s
channels. Ongoing quality programs also
create greater stability in the database.
Profitable growth – will be achieved by
means of a totally scalable model. Since
marginal costs for creating increased
mobile user value are relatively low,
this sharply growing segment is very
important for profit creation. Eniro will
continue to be the best in capitalizing on
mobile services.
OUTLOOK
The market for online search – especially
mobile services – is expected to continue
its rapid growth. Eniro’s strong position
in both these channels is positive for the
future. Small/midsize companies are
expected to need exposure via Eniro’s
channels. The unique database offers
exceptional potential for customers to ensure 24/7 searchability on the Internet.
IN BRIEF
Operating revenues, SEK M
Organic growth, %
Share of Eniro, %
2011
2,008
2
46
* excl. divested operations in Finland.
Q1
Q1
2011
2011
Q2
Q2
2010
2010
2010
Q3
Q3
22
Q4
Q4
2010
2010*
2,005
–
40
OPERATIONS
print
Print reported operating revenues of SEK 1,051 M for 2011, down 36 percent compared with the preceding year.
Organic revenues decreased 33 percent. Print accounts for 24 percent of the Group’s operating revenues.
OPERATIONS
Printed products have a large share of
variable costs. Of the SEK 485 M that Eniro
made in cost savings during 2011, lower
printing costs, centralization and mergers of
directories represent a considerable share.
The Swedish Gula Sidorna (Yellow
Pages) is Eniro’s largest product with advertisements from companies, organizations,
county councils and municipalities. This is
the most used printed product in Scandinavia. The estimated distribution for 2012
is about 2.7 million copies in a new, more
cost-efficient A5-format. This is followed
successively by the 28 regional directories.
The new, handier format does not include
numbers to private individuals, which is
an adjustment to the decline in usage by
individuals and part of the efforts to reduce
printing costs. The Din Del directory continues to list individuals.
Meanwhile, directories will continue to
be defined as advertising products, which
means they are not distributed to households that do not wish to receive advertising
materials. The change in distribution is part
of Eniro’s environmental program, which
also provides cost savings.
In Sweden and Norway, the offering has
been simplified for advertisers through the
streamlining of the number of ad formats.
In Norway, the printed regional directory
Gule Sider (Yellow Pages) will be phased
out during 2012 and will become a dedicated online product. Directory operations
will concentrate on the local directory, Ditt
Distrikt, with 73 editions in the new, more
cost-effective A5 format. The first edition
will be printed and distributed during late
summer 2012. The new, handier product
is better at meeting user expectations and
is also strengthened by including mobile
phone numbers of private individuals.
In Denmark, the transformation from
print has proceeded more slowly than
in the rest of the group. In some regions
directory sales actually continue to grow.
During 2012, the division of districts will be
changed for the local Mostrup directory to
adapt to Denmark’s division of municipalities. The number of editions will be reduced
from 274 to 114. Production will thus be
more efficient and less costly. During the
second quarter of 2012, the Den Røde
Lokalbolag directory, with 54 editions, will
also change to a new, handier and more
cost-effective A5 format.
OPERATING REVENUES
Eniro’s printed products – directories and
guides – continue to account for a substantial share of revenues although sales
are declining. To meet the fall in revenues,
a number of actions have been taken to
reduce the cost of sales, production and
distribution.
Although the transformation from
printed directories to digital media has been
in progress for many years, the trend has
taken longer than many expected, since
the usage of print as a channel continues to
be high. Growth in digital media is strong,
which will ultimately prove a challenge for
traditional print production. The transition
is most rapid in Norway, followed by Sweden, in terms of the highest digital usage.
Meanwhile, in Denmark print continues to
account for 50 percent of revenues. Poland
is placed last in the transition from print to
online.
600 000
600,000
SEK
M
MSEK
MSEK
400 000
400,000
24%
200 000
200,000
0
0
In Poland, three local directories have
been redefined and taken into production.
During 2012, the Panorama Firm directory will be efficiency enhanced through a
reduction from 39 to 19 directories to ensure increased user-friendliness and more
effective production. The nationwide
Budownictwo directory for the building
industry will continue as usual.
FOCUS ON PRINT
through the continuing long reach of
directories. A more attractive format will
favor continued high usage.
Quality – will be improved through the
continuing focus on adapting the products
to customer and user requirements and
increased cost-effectiveness. Now that the
Postal Service is sued as a distributor in
Sweden and Norway, distribution quality
will also rise.
Profitable growth – will be achieved by
consistently monitoring distribution,
which is a relatively large cost. Changes
in format and the number of directories
issued by the Group are reducing production costs. Maintaining profitability in a
declining market is a challenge.
OUTLOOK
The print area is shrinking because of a
declining market. Eniro is working actively
to adapt operations to ongoing developments, with priority being an attractive
cost-effective online product. Printed
products will continue to be produced
as long as Eniro’s costumers feel it is an
attractive form of advertising and offers
satisfactory profitability.
IN BRIEF
Organic growth, %
Share of Eniro, %
Printed catalogs, SEK M
2011 2010*
1,051 1,646
–33
–
24
33
14.4 18.8
Q1
Q1
2011
2011
Q2
Q2
2010
2010
2010
Q3
Q3
23
Q4
Q4
OPERATIONS
MEDIA PRODUCTS
Media Products reported operating revenues of SEK 188 M for 2011, up 4 percent from the preceding year.
Organic revenues rose 7 percent. Media Products accounts for 4 percent of the Group’s operating revenues.
OPERATIONS
Through the establishment of Media Products, Eniro is moving its position toward the
media market’s growth areas. The services
were launched under the name Kvasir Media in Sweden and Norway and under the
name Krak Media in Denmark. In Norway
and Sweden, Eniro has sold sponsored sites
for many years, while in Denmark Media
Products already generates relatively high
sales in display and banner advertising.
Eniro offers complete searchability for small
and midsize companies – a one stop-shop solution – by providing an advertising package
that offers Eniro’s customers a broad media
presence in the local search market. The
advertiser pays per click on the link.
The package offers sponsored links and a
presence on Eniro’s partner sites, combined
with the establishment of a corporate website, videos and search-engine optimization.
Alongside mobile, Media Products is the
fastest growing area. Search word advertising on the Internet has become an increasingly important feature of the advertising
market and is expected to grow sharply in
the Nordic market during 2012. The search
word advertising segment expanded by
about 30 percent during 2011.
Also in Poland, the segment has grown
rapidly. During 2011, a test launch was
made of Media Products in the Warsaw
area, yielding positive results. The product
will be available nationwide in Poland during 2012.
During 2011, Eniro sold more in the
search word segment than could be delivered through proprietary channels. As a
result of the cooperation agreement with
Google and other third-party cooperation,
Eniro has strengthened its potential to
promptly deliver search words. Thanks to
its focus on Media Products, Eniro can offer
a complete media solution for companies
wishing to be searchable 24/7 on the Internet. Other business partners include the
Swedish newspapers DN, GP and Aftonbladet Sportbladet, as well as the Garmin
and Hemnet sites. By means of an attractive
media product, Eniro aims to become an
advisory media agency for small/midsize
companies.
This initiative means that Eniro will
systematically and efficiently build up a
system to sell combined packages consisting
of proprietary products and external content
from partners.
Media Products has its own sales organization, with an increase in the sales force
during 2011/2012 by some 80 people, that
is 40 in Sweden, 20 in Norway and 20 in
Denmark.
FOCUS ON MEDIA PRODUCTS
Market position – will be strengthened in
2012 by Eniro gaining market share in the
rapidly growing Nordic search-word market.
In early 2012, Eniro established a sales force
in each country, which is specialized in media product sales. Eniro is positioning itself
to adopt a media advisory role for small and
midsize companies. Eniro offers a total-package solution for 24/7 searchability through
proprietary channels and services, but also
via third-party cooperation such as sponsored links in Google’s and other networks.
Quality – will be improved through an attractive total portfolio of Media Products that
OPERATING REVENUES
600 000
60,000
SEK
M
MSEK
MSEK
400 000
40,000
4%
200 000
20,000
0
0
offers customers a repayment on their investment. The result of the investment is to be
documented for the customer. The relevance
of the hits will be improved through services
that optimize the content on websites and
thus improve the customer’s searchability
on the Internet. The number of third-party
cooperation agreements will be increased to
ensure customers gain a superior effect on
their advertising investments through faster
deployment of purchased search words.
Profitable growth – will be attained by offering the best advertising solutions that contribute to higher searchability for customers.
Through several partner agreements, Eniro
will drive revenues and increase traffic
on its sites. Meanwhile, the Group’s gross
margin for sponsored links is expected to
decrease as a result of lower margins for
external partner sites. The model for volume
is scalable, while ensuring that satisfactory
profitability is achieved.
OUTLOOK
The market for Media Products is expected
to grow sharply. Small/midsize companies
are anticipated to have a need for exposure
via Eniro’s channels, which permit 24/7
searchability via the Group’s unique database. A positive response to this initiative is
important for Eniro’s ability to achieve its
growth target for 2012.
GROSS MARGIN MIX,
SPONSORED LINKS
Proprietary
content, 100%
With partners, Google
50%
Service /start-up fee, 100%
Average gross margin, 50%
IN BRIEF
Organic growth, %
Share of Eniro, %
Q1
Q1
2011
2011
Q2
Q2
2010
2010
2010
Q3
Q3
24
Q4
Q4
LOWER MARGIN
2011
188
7
4
2010*
181
–
4
OPERATIONS
voice
Voice reported operating revenues of SEK 899 M for 2011, down 7 percent from the preceding year.
Organic revenues fell 5 percent. Voice accounts for 21 percent of the Group’s operating revenues.
OPERATIONS
Voice pursues operations in Finland, Norway and Sweden and provides directory
assistance via phone and SMSs. In all three
countries, Eniro offers premium name and
number services with a personal service
24/7, in addition to traditional directory assistance. Examples of the premium services
include road directions, public transport
information and assistance in searching on
Internet sites, as well as booking hotels or
reserving tables at restaurants.
During 2011, Eniro handled about 29
million calls, both telephone calls and
SMSs.
Voice differs from other business areas in
that it is the user who pays for the service,
not the advertiser.
In Sweden, Eniro 118 118 is the marketleading player in directory assistance
services, while in Norway, Eniro’s brand,
Gule Sider (Yellow Pages) holds a challenger position. In Finland too, Eniro – via
0100100 – is number two in the market.
Voice in Finland also offers contact-center
service.
Voice has high profitability as a result of
economies of scale and efficient personnel
planning to control variable costs.
Voice services have entered a downward
trend, with volumes declining in recent
years. In Sweden, the market was deregulated in 1999, with revenues reaching
their peak in 2001. The downward trend
escalated in 2010 as a result of increased
mobile phone penetration.
The trend is similar in Norway and
Finland, with competition increasing as
a result of a deregulated market, while a
greater number of people are using the
online and mobile channel to search for
information.
Surveys show that the service is appreciated and is perceived as providing good
quality.
In October, Eniro signed a letter of intent
to acquire the Swedish 118 800 directory
assistance service. This was conditional
upon approval from the Swedish Competition Authority. The Authority elected to
commence a more detailed study, whereby
Eniro – following indications from the
Authority – decided not to complete the
acquisition.
The market for directory assistance
services is trending downward. During the
year, the volume loss in Sweden was offset
by price increases.
In Finland, the volume loss was offset by
growth in contact-center operations.
There is new market potential in selling
numbers and corporate rankings, although
the regulations and conditions differ
among the countries. In Sweden, ranking
was introduced with positive results during
the second half of the year. In Norway,
however, there are restrictions on selling
rankings.
FOCUS ON VOICE
Market position – will be strengthened by
continuing to rapidly deliver a high-quality
premium service in order to be the first
choice for customers. Meanwhile, there
will also be a focus on the development of
supplementary services. Eniro intends to
continue to play an active role in ongoing
market consolidation.
OPERATING REVENUES
600 000
300,000
SEK
M
MSEK
MSEK
200 000
100,000
0
0
OUTLOOK
Voice is expected to continue to decrease
as a result of the falling market trend.
However, the channel will continue as
long as Eniro’s customers and users perceive the service as attractive and as long
as it contributes satisfactory profitability.
Continuing market consolidation in pace
with falling volumes is expected.
IN BRIEF
Organic growth, %
Share of Eniro, %
Number of calls, millions
Number of SMSs, millions
400 000
200,000
21%
Quality – will be improved by continuing to provide premium services with an
unusually high Customer Satisfaction
Index rating. To strengthen the content of
directory assistance services in terms of
frequently asked questions via calls and
SMSs, Eniro is focusing on signing partnership agreements with other suppliers
of specific content that are suitable for
personal directory assistance services.
Profitable growth – will be achieved
through the further development of
voice services by offering personal search
services, such as Car Assistant, which is
a partnership for safe driving, or other
advanced personal search services. Continuous efficiency enhancement of the
operations will be required in order to
maintain high profitability and a strong
cash flow.
In Finland, profitable growth in
contact-center operations will be attained
through the efficiency enhancement of
production.
The challenge is to maintain profitability in a declining market. A flexible and
effective infrastructure ensures favorable
profitability. Eniro is focusing on remaining a key player and retaining its current
market volume.
Q1
Q1
2011
2011
Q2
Q2
2010
2010
2010
Q3
Q3
25
Q4
Q4
2011
899
–5
21
29.1
7.1
2010*
968
–
19
37.7
9.5
OPERATIONS
ENIRO’S
MARKET POSITION
#2
#1
#1
#2
#1
11%
30%
33%
11%
19%
5%
54%
(Sweden & Finland)
26%
11%
SHARE OF ENIRO’S FULL-TIME EMPLOYEES
SHARE OF ENIRO’S OPERATING REVENUES
26
OPERATIONS
Sweden & Finland
Eniro Sweden, including Finland, reported total operating revenues of SEK 2,331 M for 2011, down
8 percent from the preceding year. Organic revenues declined 7 percent. Eniro Sweden & Finland
accounts for 54 percent of the Group’s operating revenues.
OPERATIONS
Eniro Sweden includes all of the company’s
product areas, Online/mobile, Print, Media
Products and Finland with Voice services
and contact-center operations. Sweden is
Eniro’s largest market and, after Norway,
has made most progress in the transition
from print to online. In Sweden, mobile
advertising is growing sharply, with an
increase of 203 percent. Eniro Sweden outperformed the market in terms of growth
and with a share of about 30 percent is
the market leader. Eniro’s largest directory, Gula Sidorna (Yellow Pages), has a
distribution of some 4.3 million copies in
28 regions. Eniro.se has about 2.7 million
unique website readers each week.
Media Products, which are marketed under
the name Kvasir Media, was started up
at year-end and newly employed 30–40
sales representatives. Eniro is developing
from an advertising seller of its proprietary
products toward offering a full range, in
the same manner as a media agency with
a network of editing sites with several
partners such as the newspapers DN, GP,
Aftonbladet Sportbladet, and the Garmin
and Hemnet sites. The cooperation agreement with Google, through which Eniro
sells the Google Adwords advertising
package as a complement to its proprietary
network, gives Eniro additional potential
to offer a complete media solution for
companies wishing to be searchable 24/7
on the Internet.
In 2012, Gula Sidorna will gain a handier
and cheaper A5 format, but without numbers to private individuals. Substantial efforts were made during the year to raise the
competency of the sales force and increase
their sales efficiency. A focus on telesales
was a contributory factor. A new transparent customer report – ROI – that shows
customer value is a key tool in customer
meetings. The launch of Deals means that
for the first time Eniro is taking an active
role in the buyer-seller transaction. Operations are in the start-up stage and growing,
with an increase in users as a result.
Voice has satisfied customers and high
profitability, but is active in a declining
market, leading to falling sales.
Revenues decreased as a result of the
lack of clarity in the brand, and a number
of quality problems, with too few sales
representatives attaining their goal.
Quality – will be improved through relevant hits and a more efficient structure that
offers a superior sales technique. Customer
value will be better confirmed through the
ROI Report. Implementation of Web Analytics will facilitate superior analysis, and
thus a better decision-making platform.
Profitable growth – will be attained
through a better-structured sales organization with higher competency that leads to a
reduction in personnel turnover in the sales
force. The superior quality will contribute
to increasing the number of customers and
improving customer value.
OUTLOOK
through the ongoing brand project and the
further development of mobile services/
products.
The market for mobile services and Media
Products is expected to grow. Small/midsize companies are expected to require
exposure on Eniro’s channels, which permit
24/7 searchability via the unique database.
Eniro aims to continue to be the best player
in capitalizing on mobile services.
Print and Voice are expected to continue
their decline as a result of a falling market
trend. However, the channels will continue
as long as customers and users feel that
they are attractive media and provide good
profitability.
The Finnish contact-center operations offer favorable potential in a market expected
to grow.
THREE QUESTIONS TO:
IN BRIEF
What are you most proud of during the past
year?
“That we created a market-leading position
in mobile advertising.”
SEK M
2011
Operating revenues
2,331
Organic growth, %
–7
Share of digital, excl. Voice, % 66
Number of employees, Dec. 31 1,608
FOCUS ON ENIRO SWEDEN
MATTIAS WEDAR, CEO
What will be Eniro Sweden’s key contribution
to attaining growth in 2012?
“The focus on Media Products and the quality
of the sales force.”
What was the best search of your life on the
Internet?
“When I found a ski-rental store on the way
to a skiing resort and avoided losing half a day
in having to queue there.
2010*
2,528
–
56
1,689
NUMBER OF SEARCHES
PER MONTH
1.6
1.4
1.2
1.0
0.8
0.6
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
2011
27
2010
OPERATIONS
NORWAY
Eniro Norway reported total operating revenues of SEK 1,286 M in 2011, down 17 percent from the
preceding year. Organic revenues declined by 13 percent. Eniro Norway accounts for 30 percent of
the Group’s operating revenues.
OPERATIONS
Eniro Norway encompasses all of the company’s product areas: Online/mobile, Print,
Voice and Media Products, Along with
Sweden, Norway is Eniro’s most important
market and has made most progress in the
conversion from print to online. Eniro is the
Norwegian player with the largest revenues
from mobile and has been awarded prizes
for its apps.
In 2011, Eniro produced and distributed
the regional directory Gule Sider (Yellow
Pages) and the local directory, Ditt Distrikt.
Over a number of years, Eniro Norway has
sold sponsored link packages under the
Kvasir brand. As in other Eniro markets,
the company is focusing on building up the
Media Products area.
Eniro Norway has a broad, well-developed
and profitable B2B portfolio, which accounts
for about 15 percent of revenues in Norway.
Four of the five product areas reported
growth in 2011 compared with 2010.
Eniro Norway experienced a substantial
decline in the Print product area. As of
2012, the printed regional directory, Gule
Sider, will be phased out and will become a
dedicated online product. Directory operations will be focused on the Ditt Distrikt
directory in a new, cost-effective A5 format.
In general, Mobile, B2B and Online
developed very positively. Eniro Norway
Mobile grew sharply during 2011 and accounted for a considerable share of Eniro’s
total revenues.
During the year, additional sales
representatives were employed to take an
active role in the growing market for media
products. Cooperation with Google, which
is the most popular advertising carrier in
Norway, is a positive door opener that offers unique potential for package solutions.
Deals, with its nationwide and locally
time-limited discounts, was launched
during the year and is steadily gaining
customers.
The increased use of smartphones and
tablet devices is reducing the total number
of calls and SMS volumes for voice services.
FOCUS ON ENIRO NORWAY
Market position – will be strengthened by
streamlining the Online and Print channels. Higher sales of the new combined
media products with internal content and
sponsored links via Google will contribute
to making the sites more relevant. Continuing development of attractive new partnerships for customers has priority.
Continuing success for Mobile is also
important.
Quality – will be improved through the
development of products that increase
the number of unique visitors to the
gulesidor.no site. To achieve this aim, the
central department for product development, Group Products & Services, (GPS),
which develops Eniro’s products and the
Group Service Delivery (GSD), which
implements these, are also focusing on
this issue.
through the focus on being an attractive employer. The right leadership and
concrete sales targets will assist employees in achieving their goals and reducing
personnel turnover.
OUTLOOK
The market for online searches and mobile is growing sharply and Eniro has a
presence in both these markets, which is
positive for the future.
Competition is challenging, both
from local and global players. Strategic
partnerships to ensure distribution is a
success factor.
Print and Voice are expected to continue their decline. However, the channels
will remain active as long as customers
and users find them attractive and they
remain profitable for Eniro.
THREE QUESTIONS TO:
IN BRIEF
“My colleagues, who have been positive in assuming
so many new tasks during a tough year in a tough
market.”
SEK M
2011
Operating revenues
1,286
Organic growth, %
–13
Share of digital, excl. Voice, % 81
Number of employees, Dec. 31 688
Morten Algøy, CEO
What will be Eniro Norway’s key contribution to
attaining growth in 2012?
“90/10 – which means that online will account for
90 percent of our revenues. I hope we continue to show
growth in this product area and that success in mobile
continues.”
What was the best search of your life on the Internet?
“That was in 2001 on kvasir.no when I found the
salmon fishing spot where I spent a week each summer
over the past ten years. This resulted in a fantastic hobby
and wonderful times with friends.”
28
2010
1,557
–
72
799
NUMBER OF SEARCHES
PER MONTH
1.4
1.2
1.0
0.8
0.6
0.4
2011
2010
OPERATIONS
DENMARK
Eniro Denmark reported total operating revenues of SEK 472 M in 2011, down 21 percent from the
preceding year. Organic revenues declined by 13 percent. Eniro Denmark accounts for 11 percent of
OPERATIONS
Eniro Denmark encompasses the product
areas Online/mobile, Print and Media Products. Eniro has a strong position in Denmark
in local directories and a leading position in
search services on the Internet.
The transformation from print to online
has not progressed as fast as in Norway and
Sweden. Digital-derived revenues accounted for 53 percent of operating revenues. In
2011, Eniro distributed the local directories
Mostrup Vejviser, Den Røde Lokalbog, Kraks
Kort and Kommunalhåndbogen (municipal
directory). Brand recognition is high, with
2.5 million Danes using krak.dk. Each week,
the site has 1.8 million unique visitors, a
figure that is growing.
Online/mobile increased its customer base
sharply, from 10,000 till 22,000 customers
and saw revenue growth of 40 percent in
a market that expanded by 3 percent. In
March, sales commenced of mobile package solutions, which gained a very positive
customer response. At the end of December,
Eniro strengthened its leading position in
online/mobile in the Danish market through
the acquisition of specific assets in De Gule
Sider (Yellow Pages), such as the domain
dgs.dk, the brand, IP rights, IT systems,
worked-up order bookings and complemen-
tary customer lists for Eniro. Eniro took over
a number of people to its workforce.
The Product-search service was launched
in October on the main site, Krak.dk, complete with the film “Jagden” (The Hunt) in
which the user controls the scenario. The
advertising campaign gained considerable
attention and more than 260,000 visitors
got involved in the film and spent an average of eight minutes on the site searching
for products.
Media Products, which already has comparatively high revenues for display and
banner advertising, is expanding its sales
force in order to take an active position in a
growing market. Cooperation with Google
is a good complement to Eniro’s offering
and the goal for 2012 is to outperform the
market in terms of growth.
The transformation from the declining
print market has moved more slowly in
Denmark than in the rest of the Group.
Directory sales continue to rise in certain
regions.
As of 2012, the Mostrup directory will reduce its editions from 274 till 114, thereby
tracking the division of municipalities in
Denmark. Production will become more
effective and cheaper. Den Røde Lokalbog
directory, with 65 editions, will gain a new
and more effective A5 format from the
second quarter of 2012.
THREE QUESTIONS TO:
STEFAN KERCZA, CEO
“How positively that colleagues have accepted the
changes that I introduced when I took up my position
in early 2011; the campaign for Product Search with the
film “Jagden”; and the fact the mobile venture shows
that when we focus on some task, we manage to
deliver.”
What will be Eniro Denmark’s key contribution
“Maintaining the focus of the sales force – our
attitude should be to succeed each day at work.”
“When I wrote ‘bicycle repairs’ in the product search
window and found three places in my little area outside
Copenhagen.”
29
FOCUS ON ENIRO DENMARK
through the ROI/Customer report showing
the customer value of Eniro’s services. Cooperation with Google and sales of sponsored
links and banners, as well as Mobile and
Deals, will increase the number of customers and reduce the churn rate, as well as
establishing Eniro in new markets.
Quality – will be improved with high-quality
services and professional customer management.
Profitable growth – will be attained through
sales steering, higher sales and a focus on
costs and reduced personnel turnover.
OUTLOOK
Strategically, Mobile is a key market. Map
services are a central feature of development on the mobile platform. The
Krak.dk site is the first choice for name
and number searches in Denmark and
is acknowledged to have the best maps,
which serves as a good basis for an attractive product combination with GPS in the
mobile phone.
There is good growth potential in
Media Products through sponsored links,
banners and cooperation with Google.
One challenge is to optimize the value
chain for print and online/mobile products without cannibalizing revenue flows.
IN BRIEF
SEK M
Operating revenues
Organic growth, %
Share of digital, %
Number of employees, Dec. 31
2011
472
–13
53
403
2010
596
–
46
377
NUMBER OF SEARCHES
PER MONTH
1.0
0.8
0.6
0.4
2011
2010
OPERATIONS
POLAND
Eniro Poland reported total operating revenues of SEK 234 M in 2011, down 35 percent from the
preceding year. Organic revenues declined by 30 percent. Eniro Poland accounts for 5 percent of
OPERATIONS
Eniro Poland sells the product areas
Online/mobile, Print and Media Products. The core product is Panorama Firm
with 39 directory titles, an online site
and mobile apps. Budownictwo is a B2B
product aimed primarily at the building
industry with a nationwide directory,
online site and CD. Both Panorama Firm
and Budownictwo have their own sales
forces.
The market for digital services is less
developed than in the Nordic region. The
channel shift from print to online accelerated during 2011. In general, Internet usage is lower, although the use of mobile
Internet is high. Search behavior on the
Internet differs from that of the Nordic
countries. For the Polish user, Google
is synonymous with the Internet and is
used as a starting point for further activity on the Internet.
Eniro Poland had a difficult year, both in
terms of revenues and earnings. Organic
revenues declined by 30 percent, with
profit turning to a loss. The year was
marked by the fact that Print as an advertising channel lost its popularity faster
than what could have been predicted,
while alternative online products to offset
the fall could not be developed sufficiently
quickly.
Online is growing robustly but not
sufficiently to offset declines elsewhere.
During 2012, the regional directory
Panorama Firm was efficiency enhanced
through a merger from 39 titles to 19.
This was done to raise user friendliness
and to make the product more costeffective. The Budownictwo directory
continues to be published.
Operations are focused on developing
Online/mobile. Order bookings for Online
grew sharply during the year and Online’s
share of the total customer base was 60
percent at year-end compared with 30
percent in 2010. Online/mobile increased
user value by, for example, introducing a
new user-friendly design to the site, new
functionalities, maps and apps for both
Apple and Android mobile phones.
Media Products were tested in Warsaw
during 2011, with positive results and
will be available throughout Poland during 2012.
Technical infrastructure supporting the
switch to online is required and processes
must be developed. Small companies are
to be attracted by simple basic packages.
Larger customers must be offered an
attractive and more comprehensive solution for the Internet.
Quality – will be improved through
an improved sales support system and
processes.
partly by increasing the competency of
the sales force and also by cost optimization and efficiency enhancement. A shift
in the sales force from visit-based sales to
telesales provides scope for increased and
more cost-effective cultivation of new
customers.
OUTLOOK
through the development of core services
and a strong brand. To move customers
from Print to Online, the sales organization must increase its digital skills.
The Polish market is less developed than
the Nordic region and highly fragmented
with a number of large customers and
very many small clients. Panorama Firm
is a strong brand, but to date has been
strongly associated with printed directories.
The market is developing positively,
but slowly. Growth in Internet advertising
is on the increase, although it is subject
to stiff competition. Mobile services and
Media Products are growing very rapidly.
THREE QUESTION TO:
IN BRIEF
FOCUS ON ENIRO POLAND
ROGER ASPLUND, CEO
SEK M
2011
Operating revenues
234
Organic growth, %
–30
Share of digital, %
50
Number of employees, Dec. 31 927
What will be Eniro Poland’s key contribution
“Success in creating healthy customer
growth.”
NUMBER OF SEARCHES
PER MONTH
What are you most proud of during the past
year?
“Our sharp growth online and that we managed to develop and add attractiveness to our
site.”
What was the best search of your life on the
Internet?
“Our GPS navigation service in my mobile
phone helped me find the right address in a
newly built area in Poland for which the taxi
driver’s map had not been updated.”
30
2010
365
–
29
1,038
1.2
1.0
0.8
0.6
0.4
0.2
2011
2010
OPERATIONS
Responsibility and the environment
Eniro’s aim is to assume social responsibility and work proactively for all stakeholders – customers,
users, employees, and shareholders and suppliers. This entails accepting responsibility ethically,
socially and environmentally.
A
s part of its responsible performance, Eniro does not permit
advertisements that are discriminating or offensive in terms of ethnicity,
gender, religion or political affiliation,
sexual preferences, nationality and so
forth. The company has a restrictive
attitude to advertisements for alcohol,
in accordance with legislation, and advertising for tobacco or narcotics is not allowed. Internet services feature a “family
filter” that can be activated by the user.
Environmental programs
Eniro in Sweden and Norway is environmentally certified in accordance with
the ISO 14001 standard. During 2011,
environmental work focused primarily on the production and distribution
of directories, transport, reductions in
energy consumption and waste. The
environmental impact of the directories
throughout the chain has been mapped
in Denmark, Norway and Sweden in an
effort to place the environmental impact
of directories in a broader context.
Business travel is being replaced to a
greater extent by alternatives, such as
video- and teleconferencing, which save
employee time, contribute to lower costs
and have a less negative environmental
impact.
Eniro is seeking to adjust directory distribution to demand. Norwegian citizens
can elect not to receive Eniro’s directories, while in Sweden the 2012 directory
will be reclassified as an advertising
product, which means that it will not be
distributed to households with a sign on
the door or mail box stating that they do
31
not wish to receive advertising materials.
Overall, these measures contribute to
reducing Eniro’s carbon emissions.
In cooperation with the environmental
organizations Bellona and Klimaløftet
(climate promise), Eniro published the
Internet page Miljøfakta.no. (environmental data). Miljøfakta.no. is an Internet page with environmental information
aimed at the user.
Eniro works with selected suppliers to
guarantee high environmental awareness. The company’s purchasing policy
imposes requirements on suppliers in
terms of pro-environmental working
methods.
Eniro’s website, www.eniro.com, offers
more information on environmental
programs.
OPERATIONS
Eniro’s
workforce
SWEDEN
• 1,208
• 49%
• 37% 63%
• 96%
NORWAY
• 688
• 53%
• 46% 54%
• 95%
finland
• 400
• 31%
• 51% 49%
• 95%
POLAND
• 927
• 70%
• 53% 47%
• 91%
DENMARK
• 403
• 50%
• 40% 60%
• 96%
FULL-TIME EMPLOYEES
NUMBER AT DEC 31, 2011
SALES REPRESENTATIVES
PERCENTAGE OF
WOMEN/MEN
AS A PERCENTAGE OF THE TOTAL
WORKFORCE
IN SENIOR EXECUTIVE POSITIONS
32
WORK ATTENDANCE
RATE
OPERATIONS
ORGANIZATION
Eniro is the largest search company in the Nordic region. The company has undergone a major
change in recent years, due to the ongoing channel shift in the market from print to online as the
primary advertising medium, to being searchable online and via mobile devices 24/7 throughout
the year, and also as a result of a keener focus on costs and internal efficiency. Eniro conducts
operations in the Nordic countries and Poland.
STABILIZED ORGANIZATION
2011 saw the continuation of the
program started in 2010 to efficiency
enhance Eniro and reduce costs by adjusting the organizational structure and
increasing synergies, notably in product
development, sales concept development and the delivery organization. The
program started last year to create four
separate country-based sales organizations for each geographic market, with
defined revenue responsibility, resulted
in further cost savings, as well as greater
insight into the similarity of customers
and users, irrespective of market.
As part of efforts to capitalize on ongoing market growth in search services via
mobile devices and structured media
products, Eniro focused heavily during
the year on building up internal skills
and an organization for the development of mobile products. Toward the
end of 2011, Eniro signed an agreement with Google for sponsored links,
which resulted in the company launching a build-up of the sales force in each
country, specializing in selling complete
package solutions in Media Products,
such as sponsored links, display, websites
and search-word optimization.
From the HR viewpoint, a large share
of the year was devoted to identifying
forms of cooperation, and moving from
being separate units to utilizing the potential synergies. Establishing the efforts
to develop processes and norms that are
to apply generally in the Group requires
time and this work will continue during 2012. Significant progress has been
made in communicative leadership, for
example.
PRESIDENT AND CEO
ACCOUNTING/finance
CONTROLLING &
TRANSFORMATION
COMMUNICATIONS & IR
hr
LEGAL
ENIRO DENMARK
ENIRO NORWAY
GROUP PRODUCT
SERVICES
33
ENIRO SWEDEN
& FINLAND
GROUP SERVICE
DELIVERY
ENIRO POLAND
OPERATIONS
EMPLOYEES AND LEADERSHIP
Eniro has some 3,600 employees in five countries. A large share of the company’s employees is employed
as sales representatives, which means they travel frequently and meet existing customers and potential
new customers of Eniro. Such a dynamic and mobile organization – whereby many do not meet their
colleagues daily – imposes high demands on shared values, clear communications and target profile.
VALUES
A company’s values are one of the most
important means of governance that
an organization has. Who we are, how
we behave toward each other and the
business world are central features
underlying how a company is perceived
by all stakeholders such as employees,
customers, users and others that interact
with Eniro. By identifying the people we
are here for and the expectations they
have of us, we will become clearer in our
message. Clarity and coherence between
what is experienced and the expected
values create a joint target profile for
defining where our company is moving
and how we can jointly take the best path
there.
LEADERSHIP
Focus on communicative
leadership
The immediately superior manager is the
most reliable and, thus, the most appreciated source of information. Consequently, all Nordic executives were trained in
communicative leadership during the
autumn. This was a unique effort to ensure that the company’s overall message,
values and joint initiatives were moved
into the organization, put in a context
and made relevant for the individual
employee in everyday work.
By giving executives concrete tools and
methods to develop their communicative
leadership, a clear condition is created
for greater commitment and drive to
34
achieve the company’s operational goals.
During the year ahead, Eniro will focus
on designing tools to make communication a recurring and natural aspect of
daily activities. By means of well-defined
processes designed for executives, Eniro
is establishing a key channel for reaching
out to all 3,600 employees. In addition
to using tools for the communications
process, Eniro will focus on development
plans for individual employees.
COMPETENCY
Developing competency
The training and development of the
company’s sales skills are continuously
ongoing at the Eniro Business School.
Through cooperation with Universum,
OPERATIONS
VALUES
external groups are given the opportunity to analyze various parts of the sales
process and suggest improvements,
which are then reviewed internally,
assessed and implemented in the sales
organization.
A number of internal leadership programs have been designed to develop and
support young talented executives so that
they can take on more challenging tasks,
grow as a leader and develop to assume
more complex leadership roles.
LEADERSHIP
COMPETENCE
Product seller to media advisor
Our task is to offer small and midsize
companies the combination of products
and services that gives them the best
potential to reach out to customers and
create business, irrespective of the choice
of channel. In the complex media offering available today, many companies
need support and guidance to find the
combination that best meets their needs
and the resources they have as a small
or midsize company. This increasingly
requires a new type of sales competency
and a need for media sellers who can
perform advanced requirements analyses
and act as a trusted advisor. Consequently, Eniro is commencing cooperation
with vocational schools that offer sales
training. Ensuring a basic competency in
complex sales work is a prerequisite for
being able to develop sales personnel to
become qualified media advisors.
EXCITING EMPLOYER
Eniro is active in a changing industry
in which innovation and the capacity
Sales representatives, developers, analysts, accountants and a large number of other key functions combine to form Eniro.
Creating the conditions for cooperation, development, and enhancement is important. The core of these efforts is Eniro’s
values, good leadership and continuous competency development.
to quickly adjust to changing user and
advertiser requirements is decisive. This
makes Eniro an exciting employer for
many professional groups.
The products, services and solutions
offered to users and advertisers are based
on advanced and complex solutions, and
the need for skilled graduates is considerable. Close cooperation with Universum,
which specializes in employer branding
issues, commenced during the year.
Engineers, accountants, programmers
and many others are required to ensure
quality, rapid development and innovative solutions. Mastering Web Analytics
and conducting analyses and assessments
on the basis of this tool is an area that
also involves tough challenges for statisticians, for example.
A way in
Eniro is a large employer. We are active in
many locations and some of the professional training courses that we cooperate
with are distance courses, permitting the
trainee to continue living in a particular
area. Eniro also has a presence in the major cities and the company is frequently
a way into the labor market for young
people, or others who have not managed to establish themselves in the labor
market, but who have the drive and the
will to succeed.
Three questions to:
IN BRIEF
“I’m most proud of the work efforts devoted to communicative leadership. The results are quite noticeable
and it has had a direct impact on executives in the
organization.”
Total for all countries
2011 2010
Full-time employees, number 3,626 3,929
Percentage of sales reps,
of the total workforce 52
53
Percentage of women/men
in senior executive positions 45/55 42/58
Work attendance rate, % 95
94
Martina smedman, HR Manager
What will be Eniro’s primary challenge and
opportunity in the HR area for growth in 2012?
“Our main challenge – and which is also our primary
focus – is to continue to develop competency among
executives and employees.”
“That was last summer when my husband and I were
on holiday and had not booked a hotel. We wanted to
stay a night in Kalmar and called 118 118 and they immediately booked a very nice hotel, as well as restaurant.”
35
OPERATIONS
THE SHARE AND OWNERSHIP
Eniro’s market capitalization at December 31 amounted to SEK 1.1 billion. The share, which has been
listed since 2000 on Nasdaq OMX Stockholm Exchange’s Mid-Cap list, performed negatively during
year, decreasing by 58 percent.
SHARE PRICE TREND
with a weighting of 0.03 (0.05). Since 2000, the company has
been listed on the Nasdaq OMX Stockholm Nordic Mid-Cap list,
as part of the Consumer Discretionary/Advertising category.
During 2011, the total turnover of Eniro’s shares on the Nasdaq
OMX Stockholm Exchange was SEK 4.9 billion. In addition to
the main trading on the Stockholm Exchange, since the introduction of the MiFiD Directive also allows trading to takes place
in other marketplaces. Including the volume on other marketplaces and OTC trading, total turnover in 2011 amounted to
SEK 6.2 billion. The average turnover per day was SEK 19.3 M
(48.7), reflecting a reduction per day as a result of the lower
share price. The turnover rate – that is, the share’s liquidity –
during the year was 2.5 times (4.6), which may be compared
with the exchange average of 0.96 times (0.87) for OMXSPI
(OMX Stockholm Exchange All-Share Index), confirming that
the liquidity of Eniro’s share remains high.
Eniro’s market capitalization at the beginning of 2011
amounted to SEK 2.8 billion, and totaled SEK 1.1 billion at yearend. Thus, the share price fell 58 percent during the year, from
SEK 27.50 at the beginning of the year to SEK 11.45 at December 31, 2011, which may be compared with the OMX Stockholm
Price Index, which fell during the year by 17 percent. The peak
price for the year was quoted on February 2, 2011 when the
closing price was SEK 29.30. The lowest closing price was SEK
8.70, which was quoted on December 16, 2011.
At year-end 2011, Eniro was included in the OMXSPI index,
DIVIDEND AND DIVIDEND POLICY
The financial objective of reducing the company’s net debt in
relation to EBITDA has precedence over shareholder dividends.
The company’s objective is that net debt in relation to EBITDA
will not exceed 3.0 times. This means that a reduction in the
company’s debt continues to have priority. Consequently, the
Board of Directors of Eniro propose that no dividend be paid for
the 2011 fiscal year.
SHARE CAPITAL
To ensure long-term stable financing, reduce the financial
risk and improve the operational scope of the company, Eniro
conducted a fully guaranteed rights issue at the end of 2010,
which was finalized in January 2011. The rights issue provided
a total of SEK 2.4 billion after transaction costs, capital that
will be used entirely to reduce the company’s debt. The rights
issue entailed an increase in the total number of shares by
4,847,455,170. Thus, after the share issue, the total number
of shares outstanding in Eniro was 5,009,037 009. On January 1,
2011, after the completion of the rights issue, a 50:1 reverse
SHARE PRICE TREND AND TRADING, JANUARY 1, 2008 – DECEMBER 31, 2011
SEK
600
x 1 000
x 1,000
12 000
12 ,000
500
10 000
10 ,000
400
8 000
8 ,000
300
6 000
6 ,000
200
4 000
4 ,000
100
2 000
2 ,000
0
0
2010
2009
Eniro stängningspris,
Eniro’s
closing price SEK
2011
OMXSPI
OMXSPI
2010
0
2011
Omsatt
antal aktier
Share
turnover,
1,000si 1 000-tal
36
Omsatt antal
aktiertoi 1OMX
000-tal
* Pertains
Stockholm Exchange
OPERATIONS
ANALYSTS MONITORING ENIRO
split was conducted to increase transparency in share trading.
The reverse split entailed that 50 shares were converted into a
single share, which meant that the total number of shares outstanding declined from 5,009,037,009 to 100,180,740 shares.
The company’s share capital remained unchanged. As a result of
the reverse split, the quotient value increased from SEK 0.50 to
SEK 25. Accordingly, shareholders received a fewer number of
shares but with a higher value per share.
At December 31, the share capital in Eniro amounted to SEK
2,504 M, represented by 100,180,740 shares, including Eniro’s
holding of 3,266 treasury shares (218,480). On average, Eniro’s
holding of treasury shares was 3,680 shares during the year.
Bank
Chevreux
Citigroup Smith Barney
Deutsche Bank
Erik Penser
Handelsbanken Securities
Nordea
SEB Enskilda
Swedbank
THE TEN LARGEST SHAREHOLDERS
SHAREHOLDERS
Owner, December 31, 2011
Number of shares Capital & votes, %
Danske Capital Sverige AB
8,800,000
8.8
Länsförsäkringar Fondförvaltning AB
8,464,241
8.4
Skandinaviska Enskilda Banken S.A, NQI
6,417,440
6.4
Zimbrine Holding BV
5,186,651
5.2
Sjunde AP-Fonden
5,179,234
5.2
Livförsäkringsab Skandia 4,955,124
5.0
Swedbank Robur Fonder
4,907,469
4.9
SEB Investment Management
3,508,400
3.5
Avanza Pension
2,648,957
2.6
Case Asset Management AB
2,100,000
2.1
Total
52,167,51652.1
The number of shareholders at December 31, 2011 was 14,803
(17,472). According to information available to the company,
the ten largest shareholders represented 52.1 percent (38.7)
of the share capital. 68 percent of the total outstanding shares
were registered with Swedish owners and 32 percent (28.5)
were held by non-Swedish owners.
The company’s three largest shareholders at December 31,
2011 were Danske Capital Sverige AB, Länsförsäkringar
Fondförvaltning AB and Skandinaviska Enskilda Banken
S.A., NQI.
DISTRIBUTION OF SWEDISH/
NON-SWEDISH SHAREHOLDERS
32%
Name
Niklas Kristoffersson
Thomas Singlehurst
Stefan Lycke
Mikael Holm
Rasmus Engberg
Johan Grabe
Nicklas Fhärm
Christian Anderson
SHARE INFORMATION
Marketplace, Nasdaq OMX Stockholm, Mid-cap
AbbreviationENRO
ISIN code
SE0000718017
Trading lot
1
Market capitalization, Dec. 31, 2011, SEK M
1,147
Share price, Dec. 31, 2011
11.45
Change during the year, %
–58%
Year high, SEK
29.30
Year low, SEK
8.70
68%
Svenska ägare
Swedish
Utländska ägare
Non-Swedish
3%
Data, December 31, 2011
2011
Earnings per common share, SEK –2.13
Cash earnings per share, SEK 6.41
Shareholders’ equity per share, SEK 32.46
Dividend per common share, SEK
-
Dividend payout ratio % -
Share price at year-end, SEK 11.45
Dividend yield, % -
P/E ratio -
Share price/shareholders’ equity 0.35
Number of shares at year-end, 1,000s
100,177
Average number of shares , 1,000s
100,177
Average number of shareholders at year-end 14,803
1%
15%
5%
8%
Luxemburg 8%
Luxembourg
Holland 5% 5%
Netherlands
Storbritannien
3%
UK
3%
Switzerland
Schweiz 1% 1%
Others
Övriga
* After deductions for treasury shares
37
2010
–248.43
8.66
35.21
27.50
0.78
98,526
18,597
17,472
Source: Euroclear VPC
SHARE DATA
NON-SWEDISH OWNERSHIP BY COUNTRY
OPERATIONS
COMMENTS FROM THE CHAIRMAN
Eniro focused on user value during the year. Extensive efforts were made on all fronts to increase
quality. The company’s financial stability has increased and a number of services to achieve growth
were launched.
THE USER IN FOCUS
Improved user value does not only ensure
satisfied customers but also increases traffic to the company’s sites. Increased traffic
strengthens Eniro’s attractiveness among
customers, meaning advertisers. Eniro’s
brands have a high degree of recognition
in all local markets, which is something
we must capitalize on. For the first time
in 130 years, an extensive qualitative and
quantitative customer survey was conducted, which will form the foundation
for the Group’s strategic work.
RECREATING CREDIBILITY
Eniro has undergone a turbulent journey
in recent years. The ongoing change from
printed directories to the Internet has
compelled the company to make major
adjustments to its operations. The product and service content has been redirected and expanded, extensive organizational changes have been completed and
major cost savings of almost SEK 900 M
have been achieved. The environment
in and around the company has been
turbulent, and the brand has suffered
a few bumps, not least because of the
rights issues the company was compelled
to undertake in 2009 and 2010.
I hope that the measures we have completed will lead to a return of confidence
among customers and the stock market.
Our financial position has been
strengthened and is more stable now
than a year ago, and debt continues to be
reduced.
for mobile is building confidence in the
company’s ability to deliver an innovative
and updated product portfolio.
DIGITAL ACCOUNTS FOR
72 PERCENT OF ORDER
BOOKINGS, EXCLUDING VOICE
The work completed during 2011 creates a good starting point for achieving
the aims we have set for 2012. In the
past two years, Eniro has conducted a
major savings program, but is essentially
pursuing the same operations, which
must be viewed as impressive. That
Eniro has reached a less critical level as
regards the company’s financial position
was underscored by the approval of the
banks of two acquisitions in 2011. The
Board believes that the acquisition of De
Gule Sider in Denmark was made at an
attractive purchase price, with limited financial risk. Overall, I look forward with
confidence to 2012. I look forward to
working with the other Board members,
Eniro’s management and personnel in
continuing the efforts to advance Eniro’s
positions.
Eniro has made good progress in the
transformation from printed directories
and further into the digital media channel. At year-end, 72 percent of total order
bookings consisted of digital sales and
this share continues to rise. To increase
user value and attractiveness for customers, Eniro is moving its offering into new,
growing media channels that complement and strengthen existing operations.
To an ever-greater degree, Eniro is providing the services of a full-range media
agency, although focused on small and
midsize companies looking for a local
presence in complementary channels.
MOBILE IN FOCUS
The mobile channel for local search is
increasing sharply. During the year,
Eniro’s sales of mobile products exceeded
SEK 100 M, making the company a leading player in mobile search in the Nordic
market. A position at the cutting edge
of the mobile channel is important in
strengthening the brand’s image. Success
Three questions to:
lars-johan jarnheimer
“That I see an organization that has more satisfied
customers and is gradually beginning to regain its
self-confidence.”
What will be Eniro’s primary contribution for
attaining growth 2012?
“For the first time in the company’s almost 130-year
history, Eniro has asked what the customer wants
– this is the basis for achieving growth and satisfied
customers.”
“I was about to go out fishing with my sons, but having failed to find worms, I gave up and searched via the
Internet. 20 minutes later I had bought a can – the only
drawback was that it was the dearer alternative.”
38
STRONG BASE FOR 2012
Stockholm, March 2012
lars-johan jarnheimer
Chairman of the Board
WE WILL BE THE FIRST
LEGACY DIRECTORY
COMPANY IN EUROPE TO
INCREASE ITS REVENUES
AND PROFITABILITY.
BOARD OF DIRECTOR’S REPORT AND CORPORATE GOVERNANCE
BOARD OF DIRECTOR’S
REPORT AND CORPORATE
GOVERNANCE
39
EVERY DAY, I GET GREAT AND TREMENDOUSLY
ENIRO ANNUAL VARIED
REPORT 2011
DISCOUNT OFFERS FROM ENIRO DEALS
BOARD OF DIRECTOR’S REPORT
GROUP OPERATIONS AND STRUCTURE
Quality
ENIRO’S STRATEGY
Profitable growth
Eniro AB (publ) is the leading search company in the Nordic media
market, with operations in Sweden, Norway, Denmark, Finland
and Poland. Eniro specializes in local search operations and has
well-known brands, products and services that have a large number
of daily users. Shares in Eniro AB (publ) have been listed on the
Nasdaq OMX Stockholm exchange since October 10, 2000.
The information in Eniro’s databases is available through various distribution channels: Internet and mobile services, printed
directories and other publications and directory assistance and SMS
services. Eniro markets products and services under well-known
brands. In Sweden, it has such well-known brands as eniro.se,
Gula Sidorna, Din Del and the directory assistance service 118 118,
while in Norway, Gule Sider.se, Proff, Kvasir and the directory
assistance service 1880 set the tone. Denmark’s search services are
marketed under the brands krak.dk, dgs.dk, Mostrup and Den Røde
Lokalbog, while Panorama Firm is the brand used in Poland.
Eniro’s financial results are reported among the business areas
Directories Scandinavia, Voice and Poland.
Eniro’s services must be able to provide correct, relevant and updated information, thereby increasing the number of users and thus
visitors to the sites.
Eniro endeavors to provide better-quality search hits than its
competitors. Quality problems are identified through systematic
analysis which will be rectified through processes, systems and
databases and improve user benefits. Eniro Content Program is
designed to create and deliver more efficient processes and system
solutions that require a minimum of manual maintenance and that
increase the relevance of the company’s other services.
Using the software Web Analytics, which displays traffic patterns
and enables analyses of user behavior, the company intends to improve its services from a user perspective and simultaneously offer
customers more custom-tailored concepts. Eniro’s internal culture
and the company’s core values are to be clarified from an employer
branding perspective. By means of clear-cut and strategic HR processes for skills development and management, Eniro will attain an
efficient and advisory sales process.
Eniro has three focus areas that hallmark everything that the company does and are of key importance to the strategic decision-making
process. These three areas may be summarized as Market position,
Quality and Profitable growth. The main activities in these focus
areas are designed to move Eniro towards its established targets.
Eniro expects to be able to report a return to organic growth during
2012. Optimal allocation of internal development resources within
Online/mobile, Print, Media Products and Voice has been assigned
priority in order to achieve growth. To reach a position of profitable growth, work is also continuing on the cost front, in the form
of continued efforts to increase the efficiency of the sales force and
other cost-optimization measures.
Media Products’ market is expected to continue to grow robustly.
Small/midsize companies need to achieve exposure via Eniro’s
channels, which through the unique database creates opportunities
to be searchable 24/7. Eniro has entered into cooperation agreements with well-known players, thus enabling Media Products
to distribute its products through the network sites of business
partners in addition to proprietary channels. This leads to increased
volumes and revenues, at the same time as Eniro pays a proportion
of the advertising revenue to business partners for their distribution. Accordingly, the products and services marketed via a business
partner’s network site generate a lower margin.
In order to provide customers with transparent information concerning the customer value generated by the investment in Eniro’s
channels, Eniro has developed a new customer report ROI, Return
on Investment. Retaining existing customers and giving them value
for their investments is a key objective, thus reducing the churn rate.
To create long-term profitability, Eniro needs to increase its revenues per salesperson. By having better-structured sales organizations with higher expertise, the intention is to reduce personnel
turnover and increase sales. To a greater extent, more cost-effective
telephone sales will be prioritized ahead of customer visits. At the
same time, more clear-cut sales targets are being introduced, in
which high quality and an analysis of customer requirements are
vital components.
Market position
Eniro is the leading actor in Nordic region local search with operations in the Nordic region and Poland. The company’s well-known
brands have strong positions and are the market leader or ranked
number two in each particular market. Brand recognition is very
high and of the core services, eniro.se has approximately 2.5 million
unique visitors (UVs), Norwegian gulesider.no 1.3 million UVs,
Danish krak.dk 1.6 million UVs and Polish panoramafirm.pl 1.2
million UVs per week.
Eniro’s market position is to be strengthened by implementing
the brand platform that was formulated during 2011. The brand
platform assigns priority to the users, since the users drive traffic
and thus become Eniro’s foremost asset. Development of the product
portfolio is being guided by the users’ needs, behavior and requirements, and to a greater extent they will be able to implement their
searches via mobile channels, such as smart phones or tablets. Eniro
is investing resources in the further development of mobile services
and products, an area where market growth is expected. Eniro
intends to be the best company at capitalizing on mobile services.
To increase sales efficiency, Eniro is working actively to reduce
personnel turnover within the sales force. By means of distinct
leadership, increased employee competency, increased control of
sales, more distinct targets and by raising the status of the sales
force, Eniro aims to be an attractive employer and thus increase
the opportunities to recruit market-leading talents.
40
Earnings per share
To facilitate investments in growth areas, the cost of more mature
operations has to be reduced. Cost awareness among the employees
needs to be strengthened in terms of everyday activities. Continuous cost control is a prerequisite for maintaining competitiveness.
Earnings per share amounted to SEK –2.13 (–248.43).
Directories Scandinavia
SEK M
Operating revenues
Sweden Norway Denmark EBITDA
EBITDA margin percent BUSINESS TREND DURING 2011
SEK M
Operating revenues Directories Scandinavia
Voice
Polen
Finland Directories
Total operating revenues Operating expenses adjusted EBITDA
before items affecting comparability
and depreciation/amortization
Items affecting comparability
Depreciation/amortization
Impairment losses
Operating profit/loss Financial items, net
Taxes Net result for the year 2011
Jan-Dec 3,190
899
234
-
4,323
1,074
-83
-477
-378
136
-364
15
-213
2010
Jan-Dec
3,713
968
365
280
5,326
2011
2010
Jan-Dec
Jan-Dec
3,190
3,713
1,527
1,690
1,191
1,427
472
596
750941
23.5
25.3
Operating revenues for Directories Scandinavia amounted to
SEK 3,190 M (3,713), an organic decline of 11 percent. The
share of online revenues, calculated as the share of total revenues from Directory Database services, was 67 (58) percent.
Operating revenues in the Swedish market declined organically
by 10 percent. Operating revenues in the Norwegian market
declined organically by 12 percent. The decrease in revenues
was due to a continued downturn for printed directories, and
to Kvasir’s focus on sponsored links. Excluding the Kvasir effect,
the downturn was 6 percent. In Denmark, revenues decreased
organically by 13 percent. EBITDA for Directories Scandinavia
amounted to SEK 750 M (941) and the EBITDA margin was 24
percent (25).
1,266
-661
-517
-4,264
-4,176
-563
119
-4,620
Revenues for 2011 amounted to SEK 4,323 M (5,326), an organic
decline of 11 percent (14). Efforts to adapt operations to the
changed search behavior, whereby digital channels are accounting for an ever-increasing share of media consumption, continue.
Although Eniro is in the midst of a change process resulting from
the transition from printed to digital media, it has made considerable progress in relation to similar companies, in that printed
media account for a low proportion of Eniro’s revenues. The focus
on improving user value and the quality of Eniro’s products and
services is considerable. Operating expenses were SEK 458 M below
the level for 2010, adjusted for divested operations and exchangerate effects. Cost savings during the year derived mainly from lower
costs for employees, consultants and printing.
Adjusted EBITDA, excluding restructuring costs and other items
affecting comparability, amounted to SEK 1,074 M (1,266), down
15 percent compared with the preceding year, due to the revenue
decline in Directories Scandinavia. EBITDA for 2011 increased to
SEK 991 M (605). During the 2010 fiscal year, the operation in
Finland was discontinued, which had an adverse impact of
SEK 626 M on income.
The operating income for 2011 amounted to SEK 136 M
(–4,176), including impairment losses on goodwill of SEK 378 M
(4,264), of which SEK 167 M was attributable to the Norwegian
voice operations and SEK 209 M to the Polish operations. The
impairment loss in Norway was due to a volume decrease in the
market, while the situation in Poland was caused by the structural
decline in print. Impairment testing showed that the assets values in
Eniro’s core business had been sustained. The impairment loss has
no impact on Eniro’s loan covenants.
For 2011, net financial items amounted to an expense of SEK 364
M (563), which was adversely affected by higher interest rates and
a lower exchange-rate gain. Net debt was reduced during the year,
which resulted in a lower financial expense. The preceding year was
charged with nonrecurring items of SEK 293 M connected to the
rights issue and the closing of derivative instruments.
The result before tax for 2011 amounted to SEK –228 M (–4,739).
For 2011, Eniro recognized a positive tax expense of SEK 15 M (119)
and the net result for the year was SEK –213 M (–4,620).
Voice SEK M
Operating revenues
Sweden Norway
Finland
EBITDA
EBITDA margin percent
2011
2010
Jan-Dec
Jan-Dec
899
968
520
547
95
130
284
291
340340
37.8
35.1
Operating revenues in Voice amounted to SEK 899 M (968),
an organic decrease of 5 percent. A volume decline was noted
in all markets, which was partially offset by price increases. As
of January 1, 2011, Eniro’s remaining Finnish operations are
included in the Voice segment.
EBITDA amounted to SEK 340 M (340) and the EBITDA margin was 38 percent (35).
Poland
SEK M
Operating revenues
EBITDA
EBITDA margin, percent
2011
2010
Jan-Dec
Jan-Dec
234
365
-1645
-6.8
12.3
Operating revenues in Poland amounted to SEK 234 M (365).
Operating revenues in Poland decreased organically by 30
percent, due to the structural decline in print. Online revenues
continued to increase sharply but from low levels.
EBITDA for the Poland business area amounted to SEK –16 M
(45)
41
Financial position
Condensed consolidated balance sheet
SEK M
Tangible fixed assets Intangible fixed assets
Other fixed assets Current assets, excl. cash and cash equivalents Cash and cash equivalents Total assets
Shareholders’ equity Interest-bearing liabilities incl. derivative instruments,
excluding pension liability Other liabilities Total shareholders’ equity and liabilities
2011
Dec 31
67
7,666
369
1,050
557
9,709
3,252
2010
Dec 31
84
8,336
424
1,293
450
10,587
3,469
4,127
2,330
9,709
4,286
2,832
10,587
Of the total facility, NOK 1,350 M and SEK 360 M is hedged at a
fixed interest rate until August 2012, corresponding to about 46
percent of the utilized portion of the facility. At year-end, Eniro
had an unutilized credit facility of SEK 238 M. On December 31,
2011, cash and cash equivalents and unutilized credit facilities
totaled approximately SEK 795 M.
On November 30, 2010, Eniro renegotiated its loan agreement with the same bank consortium as under the previous
loan agreement. The new loan agreement became effective on
January 13, 2011. For more information regarding the new
credit facility, see Note 15 Borrowing.
FINANCIAL RISKS
The Group-wide financial policy that was adopted by the
Board of Directors provides 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 the company’s financial position. The
subsidiary Eniro Treasury AB has a centralized responsibility
for handling financing and risk management. According to
Eniro’s finance policy, the Board of Directors makes decisions
about the hedging of transaction risks. In connection with
net investments in foreign currency, translation risks must
be considered. Eniro has investments in NOK, EUR, PLN and
DKK, with the largest exposure in NOK. As part of efforts to
reduce exposure related to net investments in foreign currency, portions of borrowing were raised in NOK and DKK. In
the preceding year, borrowing was also conducted in EUR but
this was discontinued following the renegotiation of the loan
agreement. Approximately 93 percent of the borrowing in
NOK has been swapped at a fixed interest rate and about
15 percent of the facility in SEK has been swapped at
a fixed interest rate.
For a more detailed description of risk management, see
Note 21 Financial risk management.
The balance sheet total declined by about 8 percent to SEK
9,709 M (10,587). Fixed assets decreased because of customary depreciation/amortization during the year of SEK 477 M
(517) and impairment losses on goodwill of SEK 376 M (4,261)
resulting from reduced volumes in the Norwegian voice operations and from the structural decline in the Polish print market.
The change in fixed assets was offset in part by investments of
SEK 142 M (221) and minor acquisitions in Denmark and De
Gule Sider amounting to SEK 62 M. The exchange-rate effect
during the year was marginal. Net working capital (non-interest-bearing current assets less non-interest-bearing current liabilities) was lower at the end of 2011, due to reduced sales and
thus lower accounts receivable. The decrease in sales also had
an adverse impact on prepaid income. Cash and cash equivalents increased SEK 107 M to SEK 557 M (450), as a result of
a rise in the operating cash flow.
At year-end the Group’s shareholders’ equity amounted to
SEK 3,252 M (3,469). No dividend was paid to the shareholders
during the year. Shareholders’ equity per share amounted
to SEK 32.46 (35.21) and shareholders’ equity accounted
for 33 percent (33) of total assets.
During 2011, Eniro reduced its pension obligations in the balance sheet by paying pension premiums to Alecta, which contributed to a reduction in other non-interest-bearing liabilities.
At December 31, 2011, the Group’s interest-bearing net
indebtedness amounted to SEK 3,675 M, compared with
SEK 3,951 M at the beginning of the year. Interest-bearing net
indebtedness in relation to EBITDA, excluding other items affecting comparability items, was 3.6 (3.3 at the beginning of
the year).
CASH FLOW
Operating cash flow increased 52 percent to SEK 230 M (151).
Cash flow was affected favorably by an improvement in working
capital and lower investments. Cash flow includes a negative
impact from a one-off disbursement of pension premiums
amounting to SEK 70 M. Total tax payments for the year include
additional tax of approximately SEK 101 M in accordance with
the definitive tax notice from the Norwegian Tax Authority from
2010. The decision pertained to the period 2001–2005 and the
subsidiary Eniro Holding AS, which was acquired in 2005. Cash
flow from financing activities was affected by repayments of the
credit facility totaling SEK 363 M. Cash flow for the year was
SEK 113 M (133).
Interest-bearing net indebtedness
SEK M
2011
2010
Jan-Dec Jan-Dec
Opening balance
-3,951
-6,645
Operating cash flow 230
151
Acquisitions and divestments 0
26
Rights issue -10
2,389
Translation difference and other 56
128
Closing balance
-3,675
-3,951
Interest-bearing net indebtedness/EBITDA adjusted
for other items affecting comparability, multiple
3.6
3.3
DEVELOPMENT PROJECTS
Eniro works continuously to develop a product portfolio that
drives profitable growth. The users are transitioning from
printed directories to online solutions and then on to mobile
solutions at an ever-faster pace. The development of new
products is being driven by user needs, behavior and requirements.
During 2011, Eniro launched a series of products and
services for improved searchability via online and mobile
channels. The development work for all markets is conducted
On December 31, 2011, the debt outstanding on the credit
facility amounted to NOK 1,448 M, DKK 76 M and SEK 2,407 M.
42
through joint projects at Group level designed to offer the best
quality and be cost effective. This contributed to reducing the
Group’s development costs during 2011 despite the pursuit of
many initiatives.
A series of quality improvements of the core services eniro.
se, krak.dk and gule sider.no have resulted in increased user
friendliness and enhanced the quality of hits. In addition,
in order to be transparent and be able to demonstrate the
customer value of the various channels, Eniro has developed
a customer report that provides an overview of the customer’s
advertisements with Eniro. An additional tool is Web Analytics, which analyzes the users’ traffic and behavior online.
Within the mobile services,Web2mobile has been developed.
This is a service that adapts the advertisers’ website to the mobile phone’s smaller format. In Sweden, Eniro has developed
and launched a number of applications for smart phones and
tablet devices, including Eniro i Stan, Eniro Akut and Eniro På
Väg. These applications help the user to quickly access local
search results and will be rolled out in other countries during
2012.
towards increased revenues from third-party partnerships. The
objective for the capital structure is that net indebtedness in
relation to EBITDA should not exceed a multiple of 3.0.
PERSONNEL
On December 31, 2011, the number of full-time employees
was 3,626, compared with 3,929 at the beginning of the year.
Accordingly, the number of employees was reduced by 303.
F ull-time employees at year-end:
Sweden including Other Norway Denmark Total Directories Scandinavia incl. Other
Sweden Norway Finland Total Voice Poland Directories Finland Total Group 2011
108
2010
157
2010
920
728
377
2,025
414
71
355
840
1,038
26
3,929
ENVIRONMENT
In total, the following development costs have been capitalized in the balance sheet in the past three years.
SEK M
Development costs 2011
934
629
403
1,966
274
59
400
733
927
–
3,626
Eniro pursues systematic and target-oriented environmental
work and Eniro in Sweden and Norway are environmentally
certified in accordance with the ISO 14001standard. During
2011, environmental efforts focused primarily on the production and distribution of directories and transportation, and
reducing energy consumption and waste.
Further information on Eniro’s environmental work is available on Eniro’s website www.eniro.com.
2009
149
ACQUISITIONS AND DIVESTMENTS
Acquisitions
In December, Eniro acquired specific assets in De Gule Sider
(DGS) Denmark. Under the acquisition, Eniro purchased specific
online/mobile assets such as the domain dgs.dk, brands, IP
rights, IT systems, accrued order bookings and customer lists
that complement Eniro’s existing business. Eniro took over the
employment of 42 key individuals and salespeople. The purchase
consideration was approximately SEK 27 M, which was paid in
cash when access to the business was made. DGS was declared
bankrupt in November and Eniro took over the operation already
on December 30, 2011. The acquisition is not subject to examination in accordance with competition law.
PARENT COMPANY
Operating revenues for 2011 amounted to SEK 36 M (21). All
operating revenues pertain to intra-Group sales. The result before tax was SEK –273 M (–1,821). Investments amounted to
SEK – M (–). The Parent Company’s external interest-bearing
net indebtedness at year-end was SEK – M (171).
The Parent Company’s shareholders’ equity at the end of
2011 amounted to SEK 5,002 M (5,265), of which unrestricted
shareholders’ equity accounted for SEK 2,497 M (2,761). On
December 31, 2011, registered share capital amounted to SEK
2,504,518,500, represented by 100,180,740 shares. At the
end of 2011, the quotient value per Eniro share was SEK 25.
On December 31, 2011, Eniro AB had 3,266 treasury shares
and the average holding of treasury shares during the year
was 3,680.
At the end of the year, the Parent Company Eniro AB had 30
full-time employees (26).
Divestments
During September, Eniro divested all of the assets in Findexa Førlag, an operation within Eniro Norway that publishes
Grenseguiden, a number of niche magazines, export periodicals
and the e-portal nortrade.com to the operational manager of
the business. The agreement also included a five-year right to
use the Findexa brand. Findexa Førlag had been part of the
Eniro Group since 2005. During 2010, Findexa Førlag had sales
of approximately SEK 35 M and EBITDA of about SEK –5 M.
The operation had 38 employees. The date of transfer for the
transaction was September 1, 2011.
SIGNIFICANT AGREEMENTS THAT ARE AFFECTED
BY A PUBLIC PURCHASE OFFER
On November 30, 2010, Eniro renegotiated its loan agreement
with the same bank consortium as under the previous loan
agreement. The lenders’ obligation to provide loans under the
new credit facilities agreement was conditional upon such
considerations as the rights issue being completed no later
than January 15, 2011 and that the net proceeds were to be
used in full for the repayment of existing loans. The new credit
facility came into effect on January 13, 2011.
If an owner, or group of owners, acquires more than 30
percent of the voting rights in Eniro, Eniro and the banks in
OUTLOOK
Eniro has the objective of achieving organic revenue growth as
of 2012. Taking into account the changed revenue mix and continued savings, the objective is to achieve EBITDA in 2012 on
a par with 2011. It is expected that total costs will be reduced
by SEK 200 M compared with 2011. The planned cost savings
do not include currency effects, the effects resulting from the
divestment and acquisition of operations or increases in thirdparty costs arising from the strategic shift in the revenue mix
43
DIVIDEND
question must within 30 days reach an agreement on continuation of the loan agreement. If an agreement is not reached,
the credit agreement can expire, and the outstanding amount
must be repaid.
The Board of Directors will propose to the 2012 Annual General
Meeting that no dividend be paid for 2011. The reason for not
paying a dividend is that the net result for the year for the 2011
fiscal year was negative due to impairment losses, as well as
restrictions resulting from covenants in the new loan agreement. This is in line with the company’s objective of achieving
net indebtedness in relation to EBITDA that does not exceed a
multiple of 3.
SIGNIFICANT EVENTS AFTER YEAR-END
During October, Eniro entered into an agreement to acquire
the directory assistance service, 118 800, including relating
brands, telephone numbers and other intellectual rights. The
acquisition was conditional on the approval of the Swedish
Competition Authority.
Due to the decision in December by the Swedish Competition Authority to initiate an in-depth investigation into the
acquisition and the indications received from the Swedish
Competition Authority in the course of the process, Eniro
decided not to implement the acquisition. Eniro’s assessment
was that the acquisition could become the object of a protracted process.
As of the end of 2012, a merger will be implemented in
Norway of the regional directory Gule Sider and the local
directory Ditt Distrikt. The merger will result in savings and
a streamlining of Gule Sider into a dedicated online brand.
A concentration of the print portfolio in Denmark and a format change in Sweden are under way.
Eniro has pension insurance with PRI Pensionsgaranti (PRI)
and, for its continued obligation, Eniro will pledge bank funds
amounting to SEK 60 M pertaining to an expanded pension
guarantee to PRI. The timing of this provision will be during
the first of quarter of 2012.
BOARD OF DIRECTORS’ MOTION CONCERNING
DISTRIBUTION OF EARNINGS
The following earnings in the Parent Company are available for
distribution at the Annual General Meeting:
Net loss Earnings brought forward Total SEK
-263,111,216
2,760,138,344
2,497,027,128
The Board of Directors proposes that SEK 2,497,027,128 will be
carried forward.
44
OPERATIONAL RISKS AND
RISK MANAGEMENT
Eniro’s definition of risk
The year 2011
Eniro defines risk as the uncertainty that an event could occur
that would affect the company’s ability to achieve its established
business objectives within a given period. Risks are a natural
part of all business operations that the organization must be
able to manage effectively. Risk management is designed to
prevent risks from materializing or to limit or prevent risks
from adversely impacting operations. Eniro has an annual,
recurring risk analysis process, Enterprise Risk Management
(ERM), which includes all parts of the business, as well as business areas and Group functions. Eniro aims to identify, assess
and manage the risks it faces including industry- and marketrelated risks, commercial risks, operational risks, financial risks,
compliance risks relating to laws and regulations, and financial
reporting risks. The risk exposure is similar within the various
business areas, and during the risk analysis the various risks are
identified in a structured manner by analyzing a number of risk
drivers per risk category. For each evaluated risk, an assessment is made to determine to what extent the risk should be
monitored, eliminated, reduced or increased. The risk analysis
also provides input for annual business planning, where riskmanagement activities are planned as part of the strategic and
operational initiatives adopted.
The company’s risk analysis, including risk-management
activities, is reported to the company’s Audit Committee and
the Board of Directors for evaluation and approval. Eniro has
defined the following three primary purposes of its risk-management processes:
1. To ensure that the company’s management and Board of
Directors are well aware of the company’s risks and to ensure
that information about the company’s risk exposure is communicated effectively.
2. To support operational management by providing relevant
risk information and decision-making data to create a basis for
effective risk management and effective operational control and
monitoring to achieve established business objectives.
3. To help company management and the Board of Directors
to systematically identify, handle and monitor risks at various
levels of the organization in order to minimize damage to the
business.
In 2011, the main risks and uncertainties for the Group were
related to the impact of general economic development on
demand, the transition from print to digital media, improved
sales efficiency and alignment of the cost base.
The year 2012
The main risks and uncertainties facing the Group prior to
2012 entail development of the product portfolio, quality
improvements to the database for increased customer and user
satisfaction, the impact of general economic development on
demand and a continued focus on sales efficiency.
RISKS AFFECTING THE GROUP’S NET INCOME
Industry and market risks
Risks have been identified, both in the industry and the
market, involving:
• Technological development
• Customer satisfaction
• User experience
• Competitor behavior
• The economic situation
Technological development, customer satisfaction
and user experience in interaction
Towards the end of 2010, Eniro developed its product search
service, which was launched during the year. Eniro is continuing to strengthen its market position by introducing new services and products, primarily online and mobile channels. One
area of focus in 2012 will be the mobile product portfolio. December 2011 saw the launch of new vertical apps, Eniro Akut
(emergency), Eniro På Väg (on the road) and Eniro I Stan (in
town) for smart phones and tablet devices in Sweden, which
will be introduced into other countries. The market for search
services in the mobile channel is growing strongly and Eniro
can continue to strengthen its position by developing products
that move users closer to the purchase transaction by using
their mobile. The mobile market is evolving constantly and is
extremely fast moving. To manage the transition from online
to mobile channels and create user value, Eniro must be active
ENIRO’S MAIN RISKS AND UNCERTAINTIES
INDUSTRY AND
MARKET RISKS
• Technological
development
• Customer satisfaction
• User experience
• Competitor behavior
• The economic
situation
COMMERCIAL
RISKS
• Products and
services
OPERATIONAL
RISKS
• Sales efficiency
• Alignment of
the cost base
FINANCIAL
RISKS
• Financing
• Foreign
currencies
• Interest rates
45
COMPLIANCE
RISKS
• Laws
• Rules and
regulations
• Internal policies
FINANCIAL
REPORTING RISKS
• See the section
entitled Internal
Control on
page 52.
Product offerings
in launching new user-friendly products. The transformation
from online to mobile is moving faster than previous trends
have suggested, which gives Eniro an opportunity to position
itself in a growing market for search services. If Eniro launches
services and products that are not demanded by users and customers, this could have a material impact on Eniro’s business,
financial position and operating income.
For increased customer satisfaction and greater user experience, Eniro has worked on improving the quality of its base
data. The transition to a Nordic supply organization continues,
through clearer internal processes and automation, which will
enable the Group to pursue Group-wide management of base
data. The aim is to make it fast and easy to update customer
data for publication. Higher-quality local searches improve
the user’s search results and experiences, thus providing increased customer value. If Eniro does not maintain the quality
of its base data, this could lead to reduced traffic and poorer
customer satisfaction, which could have a material impact on
Eniro’s business, financial position and operating income.
Eniro’s business model offers advertisers valuable exposure
and requires competitive and accessible search channels with
motivated users. Changed user behaviors and shifting trends in
the purchase of media space give rise to significant risks. Eniro
is working continuously to improve understanding of user behaviors and to demonstrate the advertising value to advertisers.
For this purpose, Eniro has developed new tools, such as Return
on Investment and Web Analytics, which link traffic to the value
of the advertiser’s media investment. Eniro’s product portfolio
evolves as users move from print to digital media. Trends and
user behaviors are shifting ever faster, and the expansion of
Eniro’s online and mobile channels are exposed to a large number of challenges and risks, including:
• The mobile platform, which is the new meeting place for
users and retailers. Users in mobile channels are sensitive
to trends and quick to both adopt and abandon new services. Eniro’s investments must be made with a long-term
perspective, with a view to both capturing new users and
then retaining them.
• The markets in which Eniro operates or intends to establish
a position are characterized by rapid technological change,
product launches and improvements to competing products
and services, as well as fluctuating demand from customers
and users, who also have different technological preferences. It is possible that Eniro will be unable to upgrade,
develop and distribute its new products and systems, or
attract experts at the right time and in an efficient manner.
If Eniro fails to offer its users and customers an attractive product mix that drives traffic, this could lead to reduced demand
and hence lower growth, which could have a material impact on
Eniro’s business, financial position and operating income.
Strong competition
Eniro accounts for a large share of the Scandinavian and
Polish markets, and competes with local and international
players, both newly started and established. The competition consists of traditional local and global search companies
operating in the online and mobile channels, global social networking sites and online communities, and also verticals and
e-commerce sites in specific industries. The printed products
published by Eniro compete with other directories and other
printed forms of advertising, including traditional media such
as daily newspapers, radio, television and billboards, and also
direct marketing.
Eniro’s ability to compete successfully for both customers and users will depend on factors both within and beyond Eniro’s control. Important factors are Eniro’s capacity
to deliver relevant services to its customers and users, the
development and launching of new products at the right time
and price, as well as industry and general economic trends.
Increased competition in the Nordic and Polish markets as
a result of price reductions, the launch of new services and
products, and other factors could have negative consequences
for Eniro and lead to a loss of users and increased costs, which
in turn could have a significant impact on Eniro’s business,
OPERATIONAL RISKS
Identified risks in the operational arena involve:
• Sales efficiency
• Alignment of the cost base
Increased sales efficiency
In many cases, Eniro’s products and services are sold as complex
packages, which require qualified sales people who can act as
advisors and present the right solutions on the basis of customer
needs. The sellers must be developed continuously, and trained
with a view to Eniro’s changing product offerings. Eniro Business
School provides an opportunity for training sellers in new products and developments in the sales process. Another step towards
increased sales efficiency entails reducing employee turnover in
the sales force. Through clear leadership, enhanced employee
competencies and improved control of sales efforts, combined
with clearer goals and a raising of the status of the sales profession, Eniro will become an attractive employer and thereby offer
better opportunities to recruit market-leading talent. By providing clear and strategic HR processes for career paths, competency
development, leadership and compensation packages, Eniro
intends to position itself as an attractive employer. Eniro’s ability
to build and maintain relationships with its customers in efficient
sales channels, such as by regular mail and digital channels, is
another important factor in increasing sales efficiency. If Eniro
does not have an efficient sales process, this could lead to lower
growth, which could have a material impact on Eniro’s business,
Uncertain economic conditions
Changes in the financial market and in the global economy are
difficult to predict, and could affect demand in Eniro’s markets
in the Nordic region and Poland. Customers’ marketing plans
govern the demand for Eniro’s products and services. Eniro
operates in an industry that is located late in the business cycle, and uncertainty about economic development and growth
in the Nordic region and Poland could have a material impact
on Eniro’s business, financial position and operating income.
COMMERCIAL RISKS
Identified commercial risks are in:
• Products and services
46
Alignment of the cost base
Compliance risks
Eniro will continue to align the cost base as part of the Group’s
aim of achieving profitable growth in 2012. The earlier reorganization has provided Eniro with a centralized Nordic delivery organization for product development and operations.
Even with a centralized organization, however, it is important to focus on investments that generate growth. The market
for online and mobile services is evolving constantly and is
extremely fast moving. Prioritizing the products and services
that Eniro chooses to focus on, and which become tomorrow’s product offerings, is important. Group-wide functions
facilitate cost-efficient purchases and solutions. Continuous
cost control is a prerequisite for maintaining competitiveness.
If Eniro does not choose the right investments, and also align
its cost base in other ways to achieve efficient use, this could
have a material impact on Eniro’s business, financial position
and operating income.
Identified risks within the framework of compliance risks:
• Laws
• Regulations
• Internal policies
Changed laws, regulations and government decisions could
result in changed prerequisites for the business and thus affect
Eniro. The company has a well-established system for internal
regulations and policies, which clearly regulates and determines how the operations should be managed in various respects. The company regularly follows up its compliance with
laws, regulations and internal policies through, for example,
the activities of the internal audit, which includes monitoring
of compliance risks.
Financial reporting risks
Correct and appropriate financial reporting and sound internal controls are essential for the company’s credibility with
respect to shareholders and other stakeholders. Eniro devotes
considerable resources to the development of its processes for
risk analysis and risk management in order to maintain good
internal control over its financial reporting, in accordance with
the intentions of the Swedish Code of Corporate Governance.
The risk of material errors in the company’s financial reporting
is analyzed from the viewpoint of the consolidated income and
balance sheet and significant notes in the company’s annual
report. Key accounts are identified and a risk analysis carried
out, in which both quantitative and qualitative risk parameters
are assessed. For a detailed description of the company’s risk
analysis and risk-management activities with respect to its
financial reporting, refer to the section on internal control in
the Corporate Governance Report.
Financial risks
Identified risks within the framework of financial risks:
• Funding
• Foreign currencies
• Interest rates
Eniro’s finance policy as adopted by the Board of Directors is the
foundation for managing financial operations, the division of
responsibility and financial risks. The focus of Eniro’s risk management is to reduce or eliminate financial risks, while taking
into account costs, liquidity and financial position. In addition
to the annual risk analysis, financial risks are assessed and
monitored continuously. For a detailed description of financial
risk management, see Note 21, Financial risk management.
47
CORPORATE GOVERNANCE
Eniro is a Swedish public limited liability company that has its headquarters in Stockholm, Sweden.
This Corporate Governance Report has been reviewed by the company’s external auditors.
Election
AUDITORS
ANNUAL GENERAL
MEETING
3)
Information
Election 1)
Proposals 1)
nomination
COMMITTEE
Election
Information
BOARD OF DIRECTORS 2)
REMUNERATION COMMITTEE
AUDIT COMMITTEE
Goals, strategies, control
Information
INTERNAL AUDIT
4)
Reports, control
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
The Nomination Committee prepares proposals for resolutions, which are presented to the Annual General Meeting (AGM), The AGM determines
the manner in which the members of the Nomination Committee are to be appointed.
From among its members, the Board of Directors establishes the committees and appoints their members.
3)
Responsible for the control of the entire operation. Reports to the Board and to the shareholders.
4)
Reports to the Audit Committee.
1) 2)
Internal governance instruments
Business concept and goals, Articles of
Association, rules of procedure for the Board
of Directors, instructions for the President and
Chief Executive Officer, strategies and policies in
respect of such matters as financial, information
and insider issues, and processes for internal
control and governance.
External governance instruments
The Swedish Companies Act, the Swedish Annual
Reports Act, Nasdaq OMX Stockholm’s Rule Book for
Issuers, other relevant laws and the Swedish Code
of Corporate Governance.
Eniro is a Swedish public limited liability company. The shareholders of Eniro ultimately decide upon the Group’s corporate governance through the election of the Board of Directors at the General Meeting. The Board, in turn, is the
body that has the day-to-day responsibility for ensuring that the corporate governance functions comply with laws
and other external and internal governance instruments. All shareholders may vote for the full number of shares
held and represented at a General Meeting, without any restriction on voting rights. All shares entitle equal voting
rights. The model illustrates the structure of corporate governance within Eniro.
G
largest owners represented 52.1 percent (38.7) of the share
capital. 68 percent of total shares outstanding were registered
to Swedish shareholders, while 32 percent were owned by nonSwedish shareholders (22.9).
The company’s three largest shareholders on December 31,
2011 were Dansk Capital Sverige AB (8.8%), Länsförsäkringar
Fondförvaltning AB (8.4%) and Skandinaviska Enskilda Banken
S.A, NQI (6.4%).
Read more about Eniro’s share and ownership structure on
pages 36–37.
overnance of the Group is based on, for example, the Articles
of Association, the Swedish Companies Act and the rules and
regulations of Nasdaq OMX Stockholm. Eniro has applied the
Swedish Code of Corporate Governance since 2005. The Code is
available on the Swedish Corporate Governance Board’s website
www.corporategovernance.se. Eniro has no instances of non-compliance with the Code to report for the 2011 fiscal year.
Eniro works to ensure that the operations will generate a healthy
long-term return for shareholders and other stakeholders. Efficient
corporate governance at Eniro can be summarized in a number of interacting components, which are described in the illustration above.
Share capital and voting rights
SHAREHOLDERS
Share capital in Eniro on December 31, 2011 amounted to SEK
2,504 M, represented by 100,180,740 shares, of which treasury
shares held by Eniro accounted for 3,266 shares (218,480).
Eniro’s holding of treasury shares averaged 3,680 shares during
The number of shareholders in Eniro on December 31, 2011
was 14,803 (17,472). In accordance with details concerning
those shareholders who were known to the company, the ten
48
the year. The intention of the holding of treasury shares was
that they would be used for the share-savings program for Eniro
employees. However, the program was discontinued in 2011.
The total number of voting rights was 100,180,740. All shares
have a quotient value of SEK 25 and provide identical rights to a
share in the company’s assets and earnings.
In accordance with the proposal that was presented by the
Nomination Committee, the AGM resolved that Eniro’s Board
of Directors would comprise of six members and no deputies,
which constituted a decrease in the number of members by one.
The AGM, in accordance with the Nomination Committee’s
proposals, re-elected Members of the Board Thomas Axén and
Harald Strømme and newly elected Lars-Johan Jarnheimer,
Fredrik Arnander, Cecilia Daun Wennborg and Ketil Eriksen.
Lars-Johan Jarnheimer was elected Chairman of the Board.
The AGM also passed resolutions concerning directors’ fees,
principles for the remuneration of senior management and the
establishment of the Nomination Committee prior to the 2012
AGM.
All documents from the 2011 AGM are available at www.
eniro.com.
The share and dividend policy
Eniro is listed on Nasdaq OMX Stockholm and is traded under
the ticker ENRO. On the Nasdaq OMX Nordic list, Eniro is index
classified under Consumer Discretionary/Advertising in the
Nordic Mid Cap segment. Eniro had market capitalization of
SEK 1.1 billion on December 31, 2011.
The financial objective of reducing the company’s net debt in
relation to EBITDA has precedence over shareholder dividends.
The company’s objective is that net debt in relation to EBITDA
will not exceed 3.0 times. This means that a reduction in the
company’s debt continues to have priority. Consequently, the
Board of Directors of Eniro proposes that no dividend be paid
for the 2011 fiscal year.
nomination COMMITTEE
Since 2005 the AGM has determined that the four largest shareholders are to be offered an opportunity to appoint one representative each and that these representatives, together with the
Chairman of the Board, are to form the Nomination Committee
for the period until a new Nomination Committee has been appointed. The composition of the Nomination Committee is to be
announced in a press release as soon as the members have been
appointed. Such an announcement is to take place no later than
six months prior to the AGM.
Prior to the 2012 Annual General Meeting, the Nomination
Committee consists of Philip Wendt (Länsförsäkringar Fondförvaltning AB), Mikael Nordberg (appointed by Danske Capital
AB), Sven Zetterqvist (Skandia Liv), Marianne Nilsson (Swedbank Robur funds) and Lars-Johan Jarnheimer (Chairman of
Eniro AB’s Board of Directors). Mikael Nordberg is the Chairman of the Nomination Committee.
If a member of the Nomination Committee resigns from the
position prior to the conclusion of the Committee’s work, the
shareholder who appointed the resigning member, if considered
to be necessary, is to appoint a successor, or if that shareholder is
no longer, in terms of voting rights, one of the four largest shareholders, then such right is transferred to the new shareholder
who, following these shareholders, has the largest shareholding.
The Nomination Committee’s task ahead of the AGM on April
25, 2012 is to present proposals concerning the number of
Board Members to be elected by the AGM, directors’ fees, any
nomination for committee work, the composition of the Board,
election of Chairman of the Board, election of Chairman of the
AGM, auditors’ fees and election of auditors. The Nomination
Committee is also to present proposals to the AGM concerning
a process for establishing the following year’s Nomination Committee.
Up to March 1, 2012, the Nomination Committee had held
five meetings. The Nomination Committee has not received any
nomination proposals from other shareholders.
The annual evaluation of the Board’s work and the individual
evaluation of each Board member constitute an important part
of the Nomination Committee’s work. Since 2005, this evaluation has consisted of an in-depth evaluation conducted every
second year (odd numbered years), with a follow-up of and
evaluation based on the in-depth evaluation during the subsequent year.
During 2011, the evaluation took the form of an extensive
questionnaire combined with individual interviews of Board
GENERAL MEETING
The shareholders’ influence over the company is exercised at a
shareholders’ meeting, which constitute the company’s supreme
decision-making body. Shareholders who are registered in the
share register on the record date and who have notified their
intention to attend may participate in a General Meeting, in
person or by proxy. Resolutions taken at a General Meeting normally require a simple majority. For certain matters, however,
the Swedish Companies Act requires that a proposal be supported by a larger majority. Individual shareholders requesting
that an item of business be addressed by a General Meeting
can make such a request to Eniro’s Board of Directors under a
special address, which is published on the company’s website,
www.eniro.com, well in advance of a General Meeting.
An Annual General Meeting (AGM) must be held within six
months following the close of the fiscal year. The official notice
of the AGM must be published no later than four weeks and no
earlier than six weeks prior to the AGM. The AGM passes resolutions concerning the dividend, approval of the annual financial
statements, election of Members of the Board and auditors,
fees to be paid to Members of the Board and auditors, principles regarding remuneration and other employment terms and
conditions for senior management, amendments to the Articles
of Association and other important matters. An Extraordinary
General Meeting may be convened by the Board or at the request of the auditors or of shareholders representing at least 10
percent of all of the shares in Eniro.
2011 Annual General Meeting
Eniro’s 2011 AGM was held on April 29 at Berns Salonger,
Stockholm. A total of 32,643,833 shares and voting rights were
represented at the AGM, corresponding to approximately 32.6
percent of the total number of shares entitling the right to vote
at the Meeting. The total number of possible voting shares is
defined as the total number of shares in the company less the
number of such shares that are held in treasury.
The AGM resolved, in accordance with proposals from the
Board of Directors, that no dividend was to be paid for the 2010
fiscal year and that the company’s available funds would instead
by carried forward.
49
REMUNERATION FOR THE AUDITORS 2009–2011 (SEK M)
Members. During its 2011 evaluation, the Nomination Committee interviewed and met with all AGM-elected Board members.
This work provided the foundation for the Nomination Committee’s discussions regarding an appropriate composition for
Eniro’s Board of Directors.
The Nomination Committee aims to ensure that, given the
nature of Eniro’s business, the Board will have an appropriate
composition in terms of competency, experience and background. The Nomination Committee’s proposals are presented
in the official notice of the AGM and on the Eniro website. In
connection with the issuance of the official notice, the Nomination Committee publishes a reasoned statement regarding its
proposal concerning Board composition on the Eniro website,
www.eniro.com.
Shareholders wishing to maintain regular contact with the
Nomination Committee, can do so by e-mailing [email protected].
Year 2009
2010
2011
Other assignments Audit Total
0,9 9,210,1
1,4 9,110,5
1,4 5,16,5
In 2010, the audit fee included revision of the Rights Issue Prospectus. In 2009, the audit
fee also included revision of the Rights Issue Prospectus and the supplementary examination in conjunction with the issuance of the interim report for the first quarter in 2009.
BOARD OF DIRECTORS
The Board of Directors is to manage the company’s affairs in
the interests of the company and all shareholders. According
to the Swedish Companies Act, the Board is responsible for the
organization and the management of the affairs of the company. Eniro’s Articles of Association stipulate that the Board is
to consist of four to ten members, who are nominated by the
Nomination Committee and elected annually by the AGM for a
term until the end of the next AGM. Three of the members are
to be appointed by employee organizations pursuant to Swedish
law. The employee organizations also appoint one deputy. The
Board currently comprises six AGM-elected Board members and
three employee representatives. No Board member is a member
of company management.
Every year, the Board adopts written rules of procedure of
the Board which, together with the Swedish Companies Act,
the Articles of Association and the Swedish Code of Corporate
Governance, specify the Board’s responsibilities and distribute
those responsibilities within the Board, meaning between the
Chairman and the other Board members, as well as between the
Board and its committees.
The rules of procedure of the Board contain procedures for
the day-to-day Board work. The Board is normally to hold six
ordinary meetings annually, including one to be held with the
company’s auditors in attendance and also without the attendance of members of company management. Extra Board meetings may be held in order to deal with matters that cannot suitably be dealt with at an ordinary meeting. Such meetings may
be held by telephone, by video conference or by per capsulam.
Ordinary meetings are normally to be convened by notification
to the members one week in advance. The notice is to include
the agenda and relevant documents and background materials
regarding the items that are to be addressed at the meeting.
The Group’s auditors participated in the Board meeting
where the year-end and the interim reports for 2010 were approved. During the year, the auditors participated in all of the
meetings of the Audit Committee and presented their examination reports at the meetings held to address the year-end and
nine-month interim reports.
The Chairman is ultimately responsible for the Board’s work
and continuously oversees the operations in close consultation
with the President and CEO. The Chairman is responsible for
making sure that the other Board members receive the information they require to execute their assignments in a responsible
manner. The Chairman is also responsible for ensuring that the
annual evaluation of the Board’s work is conducted. The Chairman is to represent Eniro in ownership matters.
The rules of procedure of the Board include instructions on
the distribution of duties between the Board and the President
and CEO and procedures for the manner in which the President and CEO is to keep the Board informed of the progress of
the Group’s operations and its financial position. The Presi-
AUDITORS The AGM elects the company’s auditor. As of June 1, 2011, it is
a legal requirement that auditors are elected for a period of one
year. However, a period in office of four years may be stipulated
in the Articles of Association, which is the case with Eniro’s
Articles of Association. Eniro’s current auditor was originally
elected by the 2004 AGM and re-elected by the 2008 AGM. The
Nomination Committee submits proposals concerning the election of auditors to the AGM, which elects the auditors.
On the basis of an annually adopted audit plan, the auditor is
responsible for examining and evaluating the risks associated
with the operations and the Group’s financial reporting. The
auditor meets with the Audit Committee regularly in order to
provide information on the ongoing audit work.
The 2008 AGM re-elected PricewaterhouseCoopers AB as
auditor for the period extending to the 2012 AGM. PricewaterhouseCoopers AB, was represented by Bo Hjalmarsson and Sten
Håkansson. At the 2008 AGM, it was announced that Bo Hjalmarsson had been appointed auditor-in-charge. During 2011,
Sten Håkansson was replaced by Eva Medbrant. Prior to the
2012 AGM, the Nomination Committee proposes re-election of
PricewaterhouseCoopers AB as auditor for the period extending
to the 2013 AGM. In view of this, the Board is proposing to the
2012 AGM that it resolve on an amendment of the Articles of
Association, so that the period of office for auditors be changed
to one year.
Auditors for PricewaterhouseCoopers AB
Bo Hjalmarsson
Auditor-in-charge since 2008
Born: 1960
Authorized Public Accountant since: 1989
Other major audit assignments: Lundin Petroleum, TeliaSonera and
Vostok Nafta.
Other major assignments: Chairman of FAR’s Policy Group for Audits.
Eva Medbrant
Auditor of Eniro since 2011
Born: 1966
Authorized Public Accountant since: 2001
Other major audit assignments: Cygate Group and InfoCare Service.
Other major assignments: –
50
Audit Committee
dent and CEO participates in all Board meetings except those
dealing with the evaluation of the President and CEO’s work.
Other members of the senior management participate, when
necessary, in order to keep the Board informed, or if requested
specifically by the Board or the President and CEO.
The Board of Directors currently has two committees that
it has appointed from among its members: the Remuneration Committee, which was initially established in 2001, and
the Audit Committee, which was initially established in 2004.
During the year, the Board adopted rules of procedure for each
committee. The Board has also decided on Group-wide policies
covering financial, information and insider issues.
During the period after the 2011 AGM, the Audit Committee
has consisted of Cecilia Daun Wennborg (Chairman), Thomas
Axén and Lars-Johan Jarnheimer.
In accordance with the Swedish Code of Corporate Governance, the Audit Committee’s duties include monitoring the company’s financial reporting. In so doing, the Audit Committee is
responsible, in accordance with the Board’s rules of procedure,
for preparing the Board’s work on ensuring the quality of the
Group’s financial reporting. This includes monitoring the audit
processes and the efficiency of the internal control of financial
reporting. The Audit Committee is to continuously meet Eniro’s
auditor and keep itself informed of the focus and scope of the
audit work and to evaluate this work. The Committee is also to
continuously discuss with the auditor the views of Eniro’s risks
in terms of the financial reporting. At least one of the Committee’s members must have accounting or auditing competency.
The Audit Committee must inform Eniro’s Nomination Committee of the outcome of its evaluation of the audit work. In
connection with the election of auditors, the Audit Committee
is to assist the Nomination Committee in its work in respect of
the formulation of proposals concerning auditors and fees for
audit work.
The Board, by means of the Board’s rules of procedure,
has authorized the Audit Committee to establish guidelines
concerning the services other than audit services that Eniro is
permitted to procure from its auditor, and to annually adopt the
internal audit plan with the support of the external auditor.
The Audit Committee is entitled to request information from
and support for its work from all employees of the Group, as
well to request that specific persons participate in the meetings
of the Audit Committee. The Audit Committee is entitled to
independently seek advice from external advisors in such issues
where the Audit Committee considers it necessary.
The Audit Committee held six meetings during the year.
Meetings of the Audit Committee are minuted, appended to
Board material and an oral debriefing occurs at Board meetings.
Major matters addressed by the Audit Committee during the
year included monitoring of financial reporting, impairment
testing of intangible assets, the internal and external audit and
risk analyses.
Board of Directors’ work during 2011
During the year, the Board held 14 meetings, of which one
by telephone and five by per capsulam. At the ordinary Board
meetings, the President and CEO reported on the Group’s
results and financial position, including the outlook for the
quarters ahead.
The major matters addressed by the Board during the year included follow-up work on the rights issue that was implemented
during the final quarter of 2010, strategy matters, corporate
governance matters, the brand platform and the introduction of
new Board Members. Other matters addressed included agreements and investments, as well as acquisitions and divestments.
A number of strategic transactions were completed during the
second half of 2011, including:
• Agreement with Google™, which was signed during November and meant that Eniro became an authorized reseller of
Google Adwords™ in Sweden, Norway and Denmark.
• Acquisition of specific assets from the bankruptcy estate of De
Gule Sider A/S in Denmark, which enhanced Eniro’s position as the leading online/mobile player in the Danish search
market.
Remuneration Committee
During the period after the 2011 AGM, the Remuneration Committee has consisted of Lars-Johan Jarnheimer (Chairman) and
Harald Strømme.
In accordance with the Swedish Code of Corporate Governance, the Remuneration Committee’s duties include preparing
the Board’s proposals to the AGM concerning principles for
determining salary and other remuneration of the President
and CEO and other senior executives. In accordance with the
Board’s rules of procedure, the Remuneration Committee’s
proposals are to be presented to the Board, which decides on
whether to present the proposals to the AGM. The proposals
are to comply with standard practice for listed companies. The
Board’s proposals concerning principles ahead of the AGM 2012
are presented on page 55.
The Board, by means of the Board’s rules of procedure, has
authorized the Remuneration Committee to make decisions
on individual salaries, remuneration and pension benefits for
members of senior management, excluding the President and
CEO.
The Remuneration Committee held three meetings during
the year and all members participated in all of the meetings.
The meetings of the Remuneration Committee are minuted and
an oral debriefing occurs at Board meetings.
Remuneration of the Board
The AGM resolves on the remuneration to be paid to the Members of the Board. The 2011 AGM resolved that directors’ fees
were to be paid in a total amount of SEK 4,250,000, of which
1,100,000 to the Chairman of the Board and SEK 420,000 to
each other AGM-elected member, SEK 150,000 to the Chairman
of the Board’s Audit Committee and SEK 75,000 to each of the
other four members of the Board’s committees. The AGM also
resolved that the Chairman of the Board was to receive special
remuneration of SEK 600,000 for his efforts up to the 2012
AGM, since during his first year in office the Chairman was expected to perform extraordinary duties and significantly more
extensive work was required in addition to normal Board work.
The Chairman of the Board and other AGM-elected members
have no pension benefits or agreements concerning severance
pay.
51
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
ACCOUNTING/FINANCE
CONTROL &
TRANSFORMATION
hr
COMMUNICATIONS & IR
LEGAL AFFAIRS
Eniro DENMARK
Eniro SWEDEN
& FINLAND
Eniro NORWAY
GROUP PRODUCT
& SERVICES
Eniro POLAND
GROUP SERVICE
DELIVERY
Remuneration OF MEMBERS OF THE BOARD November 7, Mathias Hedlund decided to leave Eniro and his
position as Senior Vice President Group Product & Services.
No new Deputy Managing Director has been appointed.
Name
Board work Committee work
Lars-Johan Jarnheimer, Chairman
1,700,000¹
150,000
Fredrik Arnander
420,000
n.a.
Thomas Axén
420,000
75,000
Cecilia Daun Wennborg
420,000
150,000
Ketil Eriksen
420,000
n.a.
Harald Strømme
420,000
75,000
Lina Alm 2
12,000n.a.
Susanne Olin Jönsson 2
12,000n.a.
Bengt Sandin 2
4,500n.a.
Jonas Svensson 2
15,000n.a.
Jennie Hallberg 3
3,000n.a.
Total
3,846,500450,000
THE BOARD OF DIRECTORS’ DESCRIPTION
OF THE INTERNAL CONTROL
Pursuant to the Swedish Companies Act, the Board has to
ensure that the company’s organization is structured in such
a manner that the accounting, management of funds and the
company’s financial circumstances in general are monitored in
a satisfactory manner. The Board also has to establish an Audit
Committee to monitor such items as the company’s financial
reporting and, in respect of the financial reporting, monitor the
efficiency of the company’s internal control, internal audits and
risk management. Pursuant to the Swedish Code of Corporate
Governance, the Board has to ensure that the company has
adequate internal control and formalized procedures to ensure
compliance with the approved principles for financial reporting and internal control. The Board also has to ensure that the
company’s financial reports are produced in compliance with
legislation, applicable accounting standards and other requirements for listed companies. Internal control regarding financial
reporting is intended to provide reasonable assurance of the
reliability of external financial reporting, including interim
reports, press releases and annual reports, and is also to ensure
that the external financial reports comply with laws, applicable
accounting standards and other requirements for companies
listed on Nasdaq OMX Stockholm. Eniro has implemented a
modified COSO framework for internal control regarding financial reporting and the framework is divided into five components: control environment, risk assessment, control activities,
information and communication, and monitoring.
¹ Including special remuneration of SEK 600,000.
2
Employee representative
3
Employee representative, deputy
For additional information, see Note 24 to the consolidated financial statements.
GROUP MANAGEMENT AND ORGANIZATION
Eniro’s Group Management consists of the President and Chief
Executive Officer, Senior Vice President Group Product &
Services, Senior Vice President Group Service Delivery, Senior
Vice President Group Controlling & Transformation, President
of Eniro Sweden and Finland, President of Eniro Norway,
President of Eniro Denmark, President of Eniro Poland, Chief
Financial Officer, Senior Vice President Communications and
Senior Vice President Human Resources.
The Chief Executive Officer directs the work of Group Management and makes decisions following consultation with these
members. During the year, Group Management focused its work
on actions designed to strengthen user value and the quality of
products and services, as well as conducting a comprehensive
brand survey on the basis of being a customer of the company.
Since February 1, Mattias Wedar is President of Eniro Sweden
and Finland and Stefan Kercza is President of Eniro Denmark.
On February 19, Annica Elmehagen took office as Senior Vice
President Communications. Martina Smedman took office
as Senior Vice President Human Resources on October 3. On
FRAMEWORK FOR INTERNAL CONTROL AT ENIRO
Control environment
The Board of Directors has established an Audit Committee,
which is responsible for preparing the Board’s work to ensure
the quality of the consolidated financial statements. This also
52
INFORMATION AND COMMUNICATION
External
includes monitoring audit processes, ensuring effectiveness of
internal controls for financial reporting and the follow-up on
deviation reports. Responsibility for maintaining an efficient
control environment and effective internal control of financial
reporting has been delegated to the President and CEO. The
Group has an outsourced internal audit function, which supports the company’s work on developing and improving the
Group’s internal processes. The Group’s Internal Audit function reports directly to the Audit Committee. The control environment at Eniro comprises a number of corporate policies,
guidelines and supporting frameworks related to financial
reporting. These include a financial manual with instructions
for accounting and reporting, financial policy, directives and
instructions concerning decision levels and authorization levels for various areas, directives concerning insider issues and
policies regarding information and ethics. The guidelines are
monitored and updated regularly and are communicated to all
employees involved in financial reporting.
Eniro’s communication is to be correct, open and available
to all interested parties simultaneously and without delay.
All communication must be provided in accordance with the
Nasdaq OMX Stockholm’s Rule Book for Issuers. The Board has
approved an information policy regulating the manner in which
the company is to disclose information. Information is communicated regularly to third parties through press releases and via
www.eniro.com. The Board regularly receives financial reports.
The Board reviews and approves interim reports and the annual
report at regular meetings prior to publication. Financial information about the company may only be communicated by the
President/CEO, the Chief Financial Officer and the Head of IR.
Internal
Principles and guidelines regarding financial processes are
communicated between management and other personnel via
regular meetings, intranet and email. The CFO and the manager
of the Internal Audit function report the results of their internal
control work related to financial reporting to the Audit Committee. The results of the Audit Committee’s work are reported
regularly to the Board in the form of observations, recommendations and suggestions for decisions and actions to be taken.
Risk assessment
Eniro implements an annual risk-assessment process and, based
on this assessment, the significant risks impacting the internal
control of financial reporting are identified and evaluated. This
risk assessment provides the foundation for managing risks
through an improved control environment and also results in
prioritized areas, which are to be evaluated by the internal audit.
The risk assessment forms the basis for the internal audit plan,
which is continuously updated throughout the year.
MONITORING
The Internal Audit function is responsible for monitoring and
evaluating the operational effectiveness of the company’s riskmanagement and internal control system. The Internal Audit
function plans the work in cooperation with the Audit Committee, which approves the internal audit plan. The Internal Audit
function makes independent assessments in order to systematically review and suggest improvements to the effectiveness of the
internal controls. During the year, the focus was on the forecasting process, development initiatives in the product portfolio, the
follow-up of the organizational change implemented in 2010 at
group and country level and selected checks of income recognition and the financial statements process. The results of the
Internal Audit and the self-assessments are regularly submitted
to Group Management and Audit Committee. These ongoing reports form the basis for the Board’s evaluation and assessment of
the effectiveness of internal controls related to financial reporting
and are the basis for decisions regarding any potential improvement measures.
Control activities
The primary purpose of control activities is to detect and prevent
errors and thereby ensure the quality of financial reporting.
Based on the risk analysis, control activities within the identified
processes have been implemented both in major subsidiaries and
on Group level. These processes are documented with flow charts
and detailed descriptions of control activities ensuring that the
fundamental requirements of the external financial reporting are
met. The activities are both manual and automated and largescale control activities include the review and approval of various
types of accounting transactions, analysis of key figures and
ratios, inspection of log lists, reconciling of accounts and checklists, as well as application controls for financial information in IT
systems supporting financial reporting.
53
THE BOARD OF DIRECTORS
Lars-Johan Jarnheimer
Fredrik Arnander
Thomas Axén
Ketil Eriksen
Born: 1960
Principal education/degree:
Degree in economics and business administration from the
University of Lund and Växjö.
Significant professional
commitments/employment:
Board assignments.
Other significant Board
assignments: INGKA Holding BV, CDON Group, Arvid
Nordquist HAB, Egmont
International AS, Babybjörn AB
and is the Chairman of BRIS,
the Swedish children’s rights
organization.
Former positions: CEO of Tele2,
Marketing Director Northern
Europe at Saab Automobile and
CEO of Comviq.
Shares held: 50,000 *)
Born: 1965
Degree in economics and
business administration
from Stockholm School
of Economics.
CEO and founder of
Keybroker.
assignments: Keybroker AB.
Former positions: –
Shares held: 30,500 *)
Born: 1960
Master’s degree in Economics
and Business Administration, Stockholm School of
Economics.
CEO of Axstores.
assignments: Litorina Kapital
2001 AB and Tolerans AB.
Former positions: President
of Bonnier Dagstidningar
(Bonnier Newspapers). Has
worked for McKinsey.
Shares held: –
Born: 1963
Degree in economics and
business administration from
Stockholm University.
Board assignments.
assignments: Getinge, Hakon
Invest and Proffice.
Former positions: Executive
positions in the service sector, including Carema Vård
och Omsorg, Ambea and the
Skandia Group.
Shares held: -
Born: 1963
Degree from Oslo School of
Business Administration.
Board assignments.
assignments: Polarica, Fazer
Group, Plantagen and SelStor.
Former positions: Executive
positions in consumer-oriented companies such as CEO
of Colgate-Palmolive AB and
The Absolut Company.
Shares held: –
since 2011.
Member of the Board
since 2011.
Member of the Board
since 2010.
Member of the Board
since 2011.
*) Shares and other financial instruments in Eniro held by the individual concerned or by closely related natural or legal entities
according to information available to the company.
MEMBERS OF THE BOARD Name
Member of the Board
since 2011.
Independent Born Elected Nationality No. of shares
in Eniro³
Board
of Directors
ATTENDANCE AT MEETINGS
Remuneration Committee
Audit Committee Lars-Johan Jarnheimer, ordf. 1
Yes 1960
2011
Swedish
50,000
8 of 8
1 of 1
Fredrik Arnander 1
Yes 1965
2011
Swedish
30,500
7 of 8
n/a
Thomas Axén
Yes 1960 2010
Swedish
–
12 of 14
n/a
Cecilia Daun Wennborg 1
Yes 1963
2011
Swedish
–
8 of 8
n/a
Ketil Eriksen 1
Yes 1963
2011
Norwegian
–
7 of 8
n/a
Harald Strømme
Yes 1962 2007
Norwegian
304
12 of 14
3 of 3
Yes 1947 2000
Swedish
–
6 of 6
2 of 2
Lars Berg, ordf. 2
Barbara Donoghue 2
Yes 1951 2003
Canadian/British
2,849
5 of 6
n/a
Karin Forseke 2
Yes 1955 2008
Swedish/US
–
6 of 6
n/a
Mattias Miksche 2
Yes 1968 2008
Swedish 40
5 of 6
n/a
Simon Waldman 2
Yes 1966 2008
British
–
6 of 6
n/a
Lina Alm 4
– 1981 2008
Swedish
–
12 of 14
n/a
Susanne Olin Jönsson 1,4
– 1959
2011
Swedish
–
8 of 8
n/a
Bengt Sandin 2 ,4
– 1952 2001
Swedish
186
6 of 6
n/a
Jonas Svensson 4
– 1966 2010
Swedish
–
14 of 14
n/a
Jennie Hallberg 5
– 1983 2010
Swedish
–
1 of 1
n/a
Totalt 83,879
4 of 4
n/a
4 of 4
4 of 4
n/a
n/a
2 of 2
2 of 2
2 of 2
n/a
n/a
n/a
n/a
n/a
n/a
n/a
¹ As of April 29, 2011.
² Through April 29, 2011.
³ Shares and other financial instruments in Eniro held by individual concerned or by closely related natural or legal entities according to information available to the company.
4
Employee representative.
5
Employee representative, deputy.
All members of the Board are independent in relation to the company and its senior management as well as independent in relation to the company’s major shareholders.
54
Harald Strømme
Lina Alm
Jonas Svensson
Susanne Olin Jönsson
Born: 1962
MBA, Handelshøyskolen
BI/Norwegian School of
Management. Bachelor of
Science in Journalism, School
of Journalism & Mass Communication, University of
Colorado at Boulder.
commitments/employment: Managing Director and
Editor-in-Chief, TVNorge,
MAX and FEM.
assignments: TVNorge AS,
Vega Forlag AS, Radio Norge
AS and Norwegian Press
Association.
Former positions: Managing
Director, TRY advertising
agency. Senior executive positions at TV 2 AS,
Kunnskapsforlaget and
Verdens Gang (VG).
Shares held: 304 *)
Born: 1981
Business and administration
program, Stagneliusskolan,
Kalmar. Vocational Education
in Entrepreneurship.
Sales within Eniro.
assignments:
Former positions: Salesman,
Chairman of Unionen, the
union at Eniro
Shares held: –
Born: 1966
Three years of secondary
education.
Customer Service at 118 118
and Eniro Sverige AB.
assignments: Local trade
union at Eniro, Eniro 118 118
AB’s Pension Foundation
Former positions: Project
Manager, Business & Sales
Controller Eniro 118 118 AB.
Shares held: –
Born: 1959
Secondary school transition,
leadership training.
Senior shop steward at
Unionen, the union at Eniro
assignments:
Former positions: Supervisor,
group manager, store
manager, coach and operator.
Shares held: –
Member of the Board
since 2007.
of the Board since 2008.
Jennie Hallberg
Employee representative of the Board, deputy
member since 2010.
Born: 1983
Three years of secondary
education.
Senior Work Safety Officer
and super-searcher at Eniro
118 118 AB
assignments: Local trade
union at Eniro, Regional
Branch of Unionen and
member of national steering
committee, Ung Arena
Former positions: –
Shares held: –
*) Shares and other financial instruments in Eniro held by the individual concerned or by closely related natural or legal entities
according to information available to the company.
55
GROUP MANAGEMENT
Johan Lindgren
Morten Algøy
Roger Asplund
Employed in Eniro since: 2010
Born: 1957
Nationality: Swedish
Education/degree: B. Sc.
Business Administration,
Stockholm University
Former positions: Chief
Financial Officer for Telenor’s
operation in India, CEO of
Telenor Sweden, Chief Financial
Officer for Bredbandsbolaget,
Chief Financial Officer for MTG
and Metro International
Shares held: 191 900*) **)
Employed in Eniro since:
1993
Born: 1972
Nationality: Norwegian
Education/degree: Primary
education
Former positions: Sales
director, Eniro Norway
Shares held: 76 *)
1986
Born: 1961
Education/degree: Market
Economics, IHM Business
School
Former positions: Sales
director, Eniro Sverige
Shares held: 203 *)
President and CEO
President, Eniro Norway
President, Eniro Poland
Mattias Lundqvist
Martina Smedman
Krister Skålberg
2005
Born: 1969
Education/degree: M. Sc.
Växjö University
Former positions: Group
Controller, Eniro AB and
Group Financial Director, TDC
Song
Shares held: 21 *)
Employed in Eniro since: 2011.
Born: 1963
Education/degree: B.Sc
in Human Resource
Management, Linköping
University
Former positions: Head of
Human Resources, Preem
AB, Sales Manager Oracle
Northern Europe
Shares held: –
Employed in Eniro since: 2010
Born: 1961
Engineering, Royal Institute
of Technology, Stockholm.
Former positions: CIO, Telenor
Sweden.
Shares held: –
Chief Financial Officer
Senior Vice President,
Group Human Resources
Senior Vice President
Group Service Delivery
Annica Elmehagen
Corporate
Communications
2010
Born: 1969
Education/degree: BA in
Communications, Uppsala
University.
Former positions: Vice
President Communications,
Telenor Sweden
Shares held: –
Göran Sällvin
Group Controlling and
Transformation
2006
Born: 1974
Stockholm University
Eniro Finland.
Shares held: 186 *)
Stefan Kercza
President, Eniro Denmark
2011
Born: 1964
Nationality: Danish
Business Administration, AVT
Business School.
for regions Tamil Nadu and
Kerala of Telenor India
Shares held: –
Mattias Wedar
President, Eniro Sweden
& Finland
2005
Born: 1973
Informatics and Systems
Analysis, Lund University
Former positions: CIO Eniro
and President Eniro Denmark
Shares held: 79 *)
*) Shares and other financial instruments in Eniro held by individual concerned or by closely related natural or legal entities according to information available to the company.
**) The President and CEO does not own any shares or holdings in companies with which the company has significant business relations.
.
INDIVIDUALS WHO LEFT GROUP MANAGEMENT IN 2011
Name Jan Johansson
Charlotta Wikström
Peter Hagström
Mathias Hedlund
Position
CFO SVP Group Human Resources SVP Group Sales Development SVP Group Product and Services Timing
February
February
April
November
Source: The Swedish Financial Supervisory Authority
56
REMUNERATION OF SENIOR
MANagement
The Board of Directors propose that the 2012 Annual General Meeting resolve on principles on remuneration of senior
management and approval of variable remuneration of senior
management in the form of synthetic shares.
the Company initiates employment termination, a maximum
period of notice of 12 months applies. For historical reasons,
a couple of individual agreements providing entitlement to 12
months of severance pay and a couple of agreements providing
entitlement to six months of severance pay still apply in addition to a period of notice of 12 months. Other remuneration and
benefits, such as company car and medical insurance, must be
market aligned.
The Board of Directors may deviate from the principles if
there are particular reasons for doing so in individual cases.
principles FOR REMUNERATION OF SENIOR
management
Senior management is defined as the President and Group Management, currently 11 members.
The aim of the principles for remuneration of senior management is for Eniro to offer market-aligned remuneration, comprising three components: fixed salary and variable remuneration, as well as pension provisions and other remuneration and
benefits.
The principles for remuneration proposed by the Board of
Directors have been partly revised in relation to the principles
for remuneration adopted by the 2011 Annual General Meeting.
The main difference is that senior management is to be given a
choice between two alternatives: either (i) that the executive
continues to be covered by the prior remuneration system based
on a locked fixed salary combined with an opportunity to earn
variable remuneration of 70–80 percent (for the President: 100
percent) of fixed salary (of which, half of the variable remuneration is to be paid in cash and half in the form of synthetic
shares), or (ii) that the executive will receive fixed salary that
will be revised during 2012 and variable remuneration that is
only payable in cash and is limited to 40 percent of fixed salary
(for the President: 50 percent).
The fixed salary is to be based on the individual executive’s
area of responsibility, competencies and experience. For senior
management, fixed salaries have been locked in recent years
(with the exception of changes in position, promotion, etc. or
if exceptional circumstances prevail) and for those executives
who choose alternative (i) above, in which the variable portion
of salary partly comprises synthetic shares, this will continue to
be the case.
The targets for the variable remuneration in accordance with
both alternative (i) and alternative (ii) above are to be determined by the Board of Directors starting on January 1, 2012.
The targets are to encompass the Group’s financial results and
be measured in relation to the Group’s turnover and EBITDA.
The Board of Directors will determine the variable remuneration based on semi-annual evaluations of the individual
executive’s fulfillment of the targets. Payment of part of the
variable remuneration is to be conditional upon achievement of
the underlying targets on a sustainable basis. The Company is to
be entitled to demand repayment of variable remuneration if its
payment is based on information that subsequently proves to be
obviously incorrect. For any part of variable remuneration that
comprises synthetic shares, an additional requirement is that
the locked-in period is to amount to at least three years.
Eniro’s pension policy is based either on an individual occupational pension plan or a defined-contribution pension plan corresponding to a maximum of 35 percent of fixed salary. When
Deviations from the 2011 principles for remuneration of senior
management
The Annual General Meeting 2011 authorized the Board of Directors to deviate from the principles if particular reasons would
be at hand. The Board has not deviated from the principles
during 2011.
Information on costs for variable salary 2012
The table below presents the cost for variable salary for 2012
(including costs for synthetic shares) at different outcomes,
based on the current composition of the senior management.
The calculations in the table below are based on the assumption
that everyone in the senior management will choose the alternative with a variable remuneration of both cash and synthetic
shares (and thus locked fixed salary).
COST for VARIABLE SALARY 2012 BASED ON VARIOUS
OUTCOMES (INCLUDING COSTs for SYNTHETIC SHARES)
Costs, excluding social
Share price security contributions does not change
Maximum increase
in share price (5 times)
50% performance
SEK 10.7 M SEK 32.2 M
100% performance SEK 21.5 M SEK 64.5 M
Information regarding previously decided remuneration that is not
yet due to be paid
In relation to the synthetic shares earned during 2011, the
estimated amount to be paid out is SEK 7,879,623 (according
to the term for synthetic shares) if the price per share would be
SEK 15, and at the maximum increase of the share price, the
estimated amount to be paid out is SEK 27,958,255. The payments will be made in 2015.
In relation to the synthetic shares earned during 2010, the
estimated amount to be paid out is SEK 902,936 (according to
the term for synthetic shares) if the price per share would be
SEK 15, and at the maximum increase of the share price, the estimated amount to be paid out is SEK 7,879,623. The payments
will be made in 2014.
57
APPROVAL OF VARIABLE REMUNERATION OF SENIOR
EXECUTIVES IN THE FORM OF SYNTHETIC SHARES
share price, with cash settlement after three years. The amount
to be paid for each synthetic share may not exceed five times
the share price at the date of conversion of variable remuneration into synthetic shares. This will not result in any dilution for
existing shareholders because it involves synthetic shares. The
Board of Directors is entitled to make necessary adjustments to
ensure that the economic outcome of the synthetic shares reflects such factors as dividends or changes in the share capital.
Conversion of variable remuneration for 2012 into synthetic
shares is to be effected in 2013 and any payment pertaining to
such synthetic shares is to be made in 2016.
The proposal pertaining to synthetic shares matches the system
of variable remuneration, with a combination of cash and
synthetic shares, that Eniro has had since 2006, subject to the
adjustments adopted by the 2010 Annual General Meeting.
For those senior executives who choose variable remuneration comprising both cash and synthetic shares, the two components must be equally large and may not exceed 70 or 80 percent (for the President: 100 percent) of fixed salary depending
on the individual executive’s position. In the same manner as
in prior years, the synthetic shares are to be linked to the Eniro
58
FINANCIAL
FINANCIAL
59
ENIRO PÅ SJÖN HELPS
ENIRO ANNUALYOU
REPORT 2011
NAVIGATE AT SEA
FINANCIAL
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
SEK m
Note
2011
2010
4,345
-22
5,359
-33
3
4,323
5,326
4
4
4
4, 23, 24, 25
4
-1,187
-1,260
-584
-450
-325
14
-17
-378
-1,582
-1,644
-641
-595
-263
138
-651
-4,264
136
-4,176
62
-426
143
-706
-228
-4,739
15
119
Net income
-213
-4,620
Attributable to:
Parent company shareholders
Non-controlling interest
-213
-
-4,620
0
Net income
-213
-4,620
Earnings per share, SEK (attributable to Parent
Company shareholders)
- before dilution
- after dilution
-2.13
-2.13
-248.43
-248.42
14
14
100,177
100,177
18,597
18,598
Note
2011
2010
-213
-4,620
-40
46
3
-
-824
-48
570
-3
-13
-137
-4
-442
Total comprehensive net income
Attributable to:
Parent Company shareholders
-217
-217
-
-5,062
-5,059
-3
Total comprehensive net income
-217
-5,062
Gross operating revenues
Advertising tax
Operating revenues
Production costs
Sales cost
Marketing costs
Administration costs
Product development costs
Other operating income
Other operating costs
Impairment of non-current assets
7, 8
Operating income
Financial income
Financial cost
5
5
Income before tax
Income tax
6
Average number of shares before dilution, 000s
Average number of shares after dilution, 000s
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SEK M
Net income
Other comprehensive income
Exchange-rate difference on translation of foreign
subsidiaries
Hedging of cash flow
Hedging of net investment
Change in non-controlling interest
Tax attributable to components relating to other
comprehensive income
6
Other comprehensive net income, net of income tax
60
FINANCIAL
CONSOLIDATED BALANCE SHEET
sek M
Note
Dec 31, 2011
Dec 31, 2010
7
8
9
6
67
7,666
0
311
58
84
8,336
10
323
91
8,102
8,844
75
690
185
22
70
8
557
94
842
206
29
115
7
450
Total current assets
1,607
1,743
TOTAL ASSETS
9,709
10,587
2,504
4,767
-136
-3,883
2,504
4,767
-132
-3,670
3,252
3,469
-
-
3,252
3,469
3,442
274
159
21
-
3,842
73
353
212
34
2
3,896
4,516
186
63
1,375
226
26
658
27
173
190
1,541
263
64
371
-
Total current liabilities
2,561
2,602
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
9,709
10,587
ASSETS
Non-current assets
Tangible assets
Intangible assets
Holdings in associated companies
Deferred tax assets
Other receivables
Total non-current assets
Current assets
Work in progress
Accounts receivable
Prepaid costs and accrued revenues
Current income tax receivables
Other non-interest-bearing current assets
Other interest-bearing receivables
Cash and cash equivalents
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Share capital*
Other equity contributions
Reserves
Retained earnings
11
12
11
11
13
14
Shareholders’ equity attributable to Parent
Company’s shareholders
Total shareholders’ equity
Non-current liabilities
Borrowing
Derivative instruments
Deferred tax liabilities
Pension obligations
Other provisions
Other non-interest-bearing liabilities
15
16
6
17
18
Total non-current liabilities
Current liabilities
Accounts payable
Current tax liabilities
Accrued costs and prepaid revenues
Other non-interest-bearing liabilities
Other provisions
Borrowing
19
18
15, 20
16
* 2010 includes non-registered share capital of SEK 42 M that was registered in January 2011.
61
FINANCIAL
CHANGES IN GROUP SHAREHOLDERS’ EQUITY
Attributable to equity holders of the company
SEK M
Note
Opening balance at January 1, 2010
Net income
Share
capital
Other
equity
contributions
323
-
4,529
-
-20
-
Hedging Translation
reserve
reserve
Retained
earnings
327
-
950
-4,620
Total
Noncontrolling
interest
Total shareholders’
equity
6,109
-4,620
3
0
6,112
-4,620
Cash flow hedging
Measurement of interest-rate swaps
at fair value
Tax on fair value of interest-rate swaps
Transfer to profit or loss included in financial
income and expense
Tax on transfer to profit or loss
-
-
-208
55
-
-
-208
55
-
-208
55
-
-
160
-42
-
-
160
-42
-
160
-42
Hedging of net investment:
Measurement of loan liabilities
Tax on measurement of loan liabilities
Translation of foreign subsidiaries
Divested holdings of non-controlling interest
-
-
-
570
-150
-824
-
-
570
-150
-824
-
-3
570
-150
-824
-3
Total comprehensive income
-
-
-35
-404
-4,620
-5,059
-3
-5,062
Transactions with shareholders
New share issue*)
Reduction in share capital
2,423
-242
-4
242
-
-
-
2,419
-
2,419
-
Total transactions with shareholders
2,181
238
-
-
-
2,419
-
2,419
2,504
4,767
-55
-77
-3,670
3,469
-
3,469
2,504
-
4,767
-
-55
-
-77
-
-3,670
-213
3,469
-213
-
3,469
-213
Cash flow hedging
Measurement of interest-rate swaps at fair value
Tax on fair value of interest-rate swaps
-
-
46
-12
-
-
46
-12
-
46
-12
Hedging of net investment:
Measurement of loan liabilities
Tax on measurement of loan liabilities
Translation of foreign subsidiaries
-
-
-
3
-1
-40
-
3
-1
-40
-
3
-1
-40
-
-
34
-38
-213
-217
-
-217
2,504
4,767
-21
-115
-3,883
3,252
-
3,252
Closing balance at December 31, 2010
14
Net income
14
*) 2010 includes non-registered share capital of SEK 42 M that was registered in January 2011.
62
-
FINANCIAL
CONSOLIDATED CASH FLOW STATEMENT
SEK M
Note
2011
2010
136
-4,176
855
-62
11
-5
-70
20
-367
–
-184
4,781
-2
595
-45
–
20
-383
-197
-226
Cash flow from operating activities before
changes in working capital
334
367
Cash flow from changes in working capital
Decrease / increase in work in progress
Decrease / increase in current receivables
Decrease / increase in current liabilities
18
165
-146
52
191
-238
371
372
-27
-28
-114
27
1
-44
-178
26
1
-141
-195
4,536
-4,643
-10
328
-2,761
2,389
-117
-44
Cash flow for the year
113
133
Cash and cash equivalents at the beginning of the year
Exchange rate differences in cash and cash equivalents
450
-6
350
-33
557
450
Operating activities
Operating income
Adjustment for non-cash items
Depreciation, amortization and impairments
of non-current assets
Provisions
Gain from divestments of non-current assets
Other non-cash items
Reversal of expensed pension obligations
Interest received
Interest paid
Fair value loss on derivative instruments
Income tax paid
4
Cash flow from operating activities
Investing activities
Acquisition of subsidiaries
Acquisition of tangible assets
Acquisition of intangible assets
Divestment of subsidiaries and associated companies
Divestment of tangible assets
28
7
8
9, M8
7
Cash flow from investing activities
Financing activities
Proceeds from borrowings
Repayment from borrowings
Share issue
14
Cash flow from financing activities
Cash and cash equivalents at year-end
13
63
FINANCIAL
NOTe 1 ACCOUNTING POLICIES
concerning its application when other IFRSs already require or permit fair value measurement.
The Group has yet to evaluate the entire impact of IFRS 13 on the consolidated financial statements. The Group intends to apply the new standard no later than in the fiscal year beginning
on January 1, 2013. The standard has yet to be adopted by the EU.
GENERAL
Eniro AB (publ), corporate registration number 556588-0936 and registered office in Stockholm, has its shares listed on the Nasdaq OMX Stockholm exchange. The annual accounts and
the consolidated financial statements were approved by the Board of Directors on March 19,
2012 and will be subject to adoption by the Annual General Meeting on April 25, 2012.
The consolidated financial statements include the Parent Company and its subsidiaries.
Subsidiaries are those companies in which the Parent Company, directly or indirectly, has
the right to determine financial and operative strategies in a manner that normally results
from a shareholding greater than or equal to 50 percent of the voting rights. Subsidiaries
are included in the consolidated financial statements from the date on which the controlling
influence was transferred to the Group. They are eliminated from the consolidated financial
statements on the date from which this controlling influence ceases.
GENERAL ACCOUNTING POLICIES FOR 2011
The Annual Report was prepared in accordance with the International Financial Reporting Standards (IFRS), as approved by the EU, and IFRIC Interpretations, as well as the applicable statutes of
the Swedish Annual Accounts Act and Recommendation RFR 1, Supplementary reporting rules for
corporate groups, as issued by the Swedish Financial Accounting Standards Council.
NEW AND AMENDED STANDARDS APPLIED BY THE GROUP
None of the IFRSs or IFRIC interpretations that became statutory for the first time for the
fiscal year that started on January 1, 2011 or later had any material impact on the Group.
Eniro applies the purchase method for the recognition of the Group’s business combinations.
The purchase consideration for the acquisition of a subsidiary comprises the fair value of
transferred assets, liabilities incurred by the Group in relation to the previous owner of the
acquired company and the shares issued by the Group. The purchase consideration also
includes the fair value of all assets or liabilities resulting from an agreement concerning a
conditional purchase consideration. Identifiable acquired assets and assumed liabilities in a
business combination are initially measured at fair value on the date of acquisition. For each
acquisition, meaning on an acquisition-by-acquisition basis, the Group determines whether
non-controlling interests in the acquired company are to be recognized at fair value or at the
holding’s proportional share of the carrying amount of the acquired company’s identifiable
net assets. Acquisition-related costs are expensed as they arise. If the business combination
is implemented in several stages, the previous shares in the equity of the acquired company
are remeasured at their fair value on the date of acquisition. Any resulting gain or loss is
recognized in profit or loss. Each conditional purchase consideration that is to be transferred
by the Group is recognized at fair value on the date of acquisition. Subsequent changes in
the fair value of a conditional purchase consideration that has been classified as an asset
or liability is recognized in accordance with IAS 39 either in profit or loss or in other comprehensive income. Conditional purchase considerations that are classified as shareholders’
equity are not remeasured and subsequent settlement is recognized in shareholders’ equity.
NEW AND AMENDED STANDARDS FROM 2012 AND LATER
The following standards, amendments and interpretations to existing standards have been
published and are mandatory for periods beginning on or after January 1, 2012.
IAS 19 “Employee Benefits” was amended in June 2011 and becomes effective on January 1, 2013. The amendment entails that the Group will stop applying “the corridor method”
and instead recognize all actuarial gains and losses in other comprehensive income as they
arise. Costs for prior-year employment will be recognized immediately. Interest costs and the
expected return on plan assets will be replaced by a net interest rate, which will be calculated
using the discount interest rate, based on the net surplus or the net deficit in the definedbenefit plan. The standard has yet to be adopted by the EU.
As of the first quarter of 2012 and in accordance with the existing IAS 19, Eniro will stop
applying the corridor method and instead recognize all actuarial gains and losses in other
comprehensive income when they arise. At the start of 2011, actuarial losses amounted to SEK
226 M. In connection with the transition to the new accounting policy, pension obligations in
the balance sheet will increase while shareholders’ equity will decline. Accrual accounting of
actuarial losses in operating income will cease. In 2011, operating income was charged with
SEK 40 M for this.
Goodwill is initially measured in the amount by which the total purchase consideration and
fair value for non-controlling interests is expected to exceed the fair value of identifiable
acquired assets and assumed liabilities. If the purchase consideration is lower than the fair
value of the acquired company’s net assets, the difference is recognized directly in profit or
loss.
IFRS 9 “Financial instruments” deals with the classification, measurement and recognition of
financial liabilities and assets. IFRS 9 was issued in November 2009 for financial assets and in
October 2010 for financial liabilities and replaces the components of IAS 39 that are associated
with classification and measurement of financial instruments. According to IFRS 9, financial
assets are to be classified in two categories: measurement at fair value or measurement at
accrued cost. Classification is established on the first recognition occasion, on the basis of the
company’s business model and characteristic properties of contractual cash flows. For financial
liabilities, no major changes arise compared with IAS 39. The most significant change pertains
to liabilities identified at fair value, for which the component of the fair value change that is
attributable to the company’s own credit risk must be recognized in other comprehensive
income rather than in profit or loss, unless this results in an accounting mismatch. The Group
intends to apply the new standard no later than in the fiscal year beginning on January 1, 2015
and has yet to evaluate the impact. The standard has yet to be adopted by the EU.
In companies that are not wholly owned subsidiaries, non-controlling interest is recognized
as the share of the subsidiary’s equity held by external shareholders. This item is recognized
as part of the Group’s shareholders’ equity. The shares accruing to the non-controlling interest are recognized in profit or loss. Disclosures concerning the non-controlling interests in
income are recognized in the consolidated income statement.
Intra-Group transactions and balance sheet items are eliminated, as are unrealized gains on
transactions between Group companies. Unrealized losses are also eliminated, unless the
loss corresponds to a need to recognize an impairment loss.
ASSOCIATED COMPANIES
Associated companies are those companies in which the Group has a share of the voting
rights of between 20 and 50 percent and thus a significant influence. Holdings in associated
companies are recognized in accordance with the equity method. The Group’s share of the
post-acquisition income arising in associated companies is recognized in profit or loss. Accumulated post-acquisition changes are recognized as a change in the carrying amount 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 companies.
IFRS 10 “Consolidated financial statements” is based on existing policies, since it identifies
control as the decisive factor in establishing whether a company is to be included in the
consolidated financial statements. The standard provides additional guidance for the establishment of control in cases where this is difficult to evaluate. The Group intends to apply the new
standard no later than in the fiscal year beginning on January 1, 2013 and has yet to evaluate
the entire impact. The standard has yet to be adopted by the EU.
IFRS 11 “Joint Arrangements,” which entails the discontinuation of the opportunity to apply the
proportional method for the recognition of jointly controlled companies. IFRS 11 also entails the
discontinuation of the term “joint assets” and only distinguishes between joint operations and
joint ventures. A joint operation is a joint arrangement that entitles the parties to the assets
and means that they have an obligation for the liabilities. The parties recognize their respective
shares of assets, liabilities, revenues and costs. On the other hand, a joint venture is a joint arrangement that entitles the parties to the net assets. Holdings in joint ventures are recognized
in accordance with the equity method.
JOINT VENTURE
A joint venture is defined as a contractual agreement in which two or more parties initiate
an economic activity that is subject to joint control. This may take the form of jointly owned
companies that are controlled jointly. Joint ventures are consolidated according to the proportional method. Accordingly, the Group’s share of the joint venture’s income and balance
sheet are included under the corresponding items in the consolidated financial statements.
DISCONTINUED OPERATIONS
Operations that during the holding period have constituted a cash-generating unit or group
of such units and have either been divested or are being held for sale are recognized in
accordance with IFRS 5, Fixed assets held for sale and discontinued operations. Should such
a business remain in the Group on the balance-sheet date, all assets are to be recognized as
current assets and all liabilities directly attributable to the business as current liabilities.
IFRS 12 “Disclosures of interests in other entities” encompasses disclosure requirements for
subsidiaries, joint arrangements, associated companies and non-consolidated “structured entities”. The Group intends to apply the new standard no later than in the fiscal year beginning on
January 1, 2013 and has yet to evaluate the entire impact. The standard has yet to be adopted
by the EU.
Income/loss after tax from the business during the holding period and the capital gain/loss
on the implemented sale are recognized in profit or loss as income/loss from discontinued
operations. Fixed assets held for sales are recognized at the lower of the carrying amount
and fair value less selling costs in the event that their carrying amount is primarily recovered through a sales transaction and not through continuous use.
The purpose of IFRS 13 “Fair value measurement” is to make measurement at fair value more
consistent and less complex since the standard will provide an exact definition and a joint
source in IFRS to fair value measurement and associated disclosures. The requirements do
not expand the application area for when fair value is to be applied but provide guidance
64
FINANCIAL
TRANSLATION OF FOREIGN CURRENCY
Financial reporting takes place in the currency used in the area in which each Group company is primarily active. This is the unit’s functional currency. In the consolidated financial
statements, 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 the transaction date. Gains and losses arising in payments for
such transactions and in the translation of monetary assets at the exchange rate applying
on the balance-sheet date are recognized in profit or loss. 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 recognized directly in other comprehensive
income. Income statements and balance sheets for subsidiaries with another functional
currency than SEK are translated as follows:
•Assets and liabilities are translated at the exchange rate applying on the balance-sheet date.
•Revenues and costs are translated at the average rate or, if this does not provide a reasonable approximation, at the weighted average rate.
•E xchange-rate differences are recognized as a translation difference in other comprehensive
income.
In the consolidated financial statements, exchange-rate differences attributable to net
investments in foreign operations, or borrowing and other currency instruments identified
as hedges for such investments, are charged to other comprehensive income. When foreign
operations are divested, such exchange-rate differences are recognized in profit or loss as
part of the capital gain or loss. Goodwill and other adjustments of fair value arising from the
acquisition of foreign operations are treated as assets and liabilities in that operation and
translated at the exchange rate applying on the balance-sheet date.
REVENUES
Net sales mainly consist of sales of Eniro packages comprising advertising packages with
various delivery forms in the different channels: online on the Internet, printed directories,
directory assistance or mobile. Other products and services comprise services provided, as
well as such transaction-based services as sponsored links, offerings of goods and services
at a discount price and production of videos and websites. Revenue-recognition occurs
during the period in which the service is performed, on the basis of the contractual term,
delivered service or number of transactions, after deductions for discounts or other similar
deductions. Revenues are recognized when it becomes probable that the economic benefits
associated with the transaction will accrue to Eniro and when the revenue, and any associated costs, that have been incurred, can be measured in a reliable manner.
Revenues from subscription services for online and mobile products are accrued over the
period during which the service is provided, normally 12 months, but other periods (“deferral
method”) are also possible. Revenues from printed directories, print, are recognized in the
period when the directory is published (“publication method”). Revenues from services
performed, such as search optimization and production of videos and websites, are recognized as revenues on delivery of the service. Eniro also has transaction-based revenues that
are recognized as revenues when users click on a link or complete a purchase. Sponsored
links are an auction-based service, whereby advertising on Eniro’s search pages or on one
of Eniro’s business partners’ websites is provided. Eniro recognizes each transaction as
revenue, as well as the prevailing price per click. For Eniro Deals, which offers the consumer
discounted purchases, Eniro recognizes a margin on every transaction as revenues. Revenues
from directory assistance services or other voice services are recognized when the services
are provided.
Eniro packages various offerings in combination packages and allocates the revenues
in accordance with the various revenue-recognition principles based on the value in
commercial use, either on the basis of price lists or of customer surveys. The outcome
of the allocation among the various revenue-recognition methods depends on the value
of the constituent components in the particular package.
SEGMENT RECOGNITION
Operating segments are recognized in accordance with how financial information is presented internally to the chief operating decision-maker. The chief operating decision-maker
is the function responsible for allocating resources and assessing the performance of segments. In Eniro, this function is the Group Management. During 2011, segment information
was reported for the segments Directories Scandinavia, Voice and Poland. In the preceding
year, the segment allocation was different in terms of Finland, since Eniro reported the
Finnish operation in the segment Finland/Poland. Following Eniro’s divestment of the
Directory operation at the end of 2010, the remaining Voice operation in Finland has been
merged with Voice Scandinavia. In 2011, Voice consisted of the countries Sweden, Norway
and Finland. Comparative figures have been recalculated to reflect the change in the segment division. The recognition of financial information, EBITDA adjusted for items affecting
comparability, is in line with the organization and is based on management’s follow-up of
financial performance. The recognition of financial information reflects the Scandinavian
cross country organization within Directories Scandinavia, whereby Group Products and
Services has Group responsibility for the development of products and concepts, while
Group Service Delivery has responsibility for the Group’s local production and local support
functions. Voice operations and the operation in Poland are controlled separately and are not
an integral part of Directories Scandinavia’s function-based organization. Performance is followed up internally for Directories’ operations as a whole, whereby no separate performance
information is provided for online or print. As of 2012, Poland constitutes an integrated unit
in the trans-country organization and is recognized in the segment Directories, formerly
Directories Scandinavia.
TAXES
In the consolidated financial statements, both current and deferred income taxes are
recognized. In recognizing income taxes, the balance sheet method is applied in accordance
with IAS 12 Income Taxes. According to this method, deferred tax liabilities and tax assets
are recognized for all temporary differences between carrying amounts and values for tax
purposes of assets and liabilities. In addition, deferred tax assets are recognized when it is
considered probable that the related loss carryforwards can be utilized in the future. Deferred tax liabilities and tax assets are measured on the basis of the anticipated tax rate on
the expected date for reversal of the loss carryforward. The effects of changes in prevailing
tax rates are recognized during the period in which the change is adopted. No deferred taxes
are recognized on temporary differences relating to participations in subsidiaries.
TANGIBLE ASSETS
Tangible assets are recognized at cost. Cost includes expenses that can be directly attributable to the acquisition of the asset. Depreciation is applied straight line over the assets’
estimated useful life. This varies between three and five years for equipment. Equipment
consists primarily of computer equipment, office fittings and vehicles. The residual value
of assets and their useful life are impairment tested on every closing date and adjusted
as necessary.
INTANGIBLE ASSETS
Goodwill consists of the amount by which the cost exceeds the fair value of the Group’s
share of the acquired subsidiary/ associated company’s assets on the acquisition date.
Goodwill arising from the acquisition of operations in foreign subsidiaries is recognized 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 life.
Other intangible assets with indefinite useful life consist of brands that were added
through acquisitions. Goodwill and other intangible assets with indefinite useful life are
assessed annually to identify possible impairment losses and are recognized at cost
reduced by accumulated impairment losses. Gains or losses arising from the divestment
of a unit include the residual carrying amount of goodwill and other intangible assets
attributable to the divested unit.
Customer relations and other intangible assets are reduced by amortization over their
useful life. The useful life for customer relations is based on repurchasing frequency and
varies between three and seven years. Other brands have a determinable useful life that
varies between five and ten years.
Other intangible assets primarily consist of software, databases and publication rights of
a unique nature that are controlled by Eniro and provide economic benefits over a period
exceeding three years and that exceed the costs of their acquisition and development.
Other intangible assets are amortized straight line over their estimated useful life, which
varies between three and ten years. Capitalized costs include personnel costs and a
reasonable share of attributable indirect costs.
IMPAIRMENT LOSSES
Assets with an indefinite useful life are not amortized; they are impairment tested each
year or whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Assets are also impairment tested whenever there is an indication
that the asset’s value may be impaired. If the asset’s carrying amount exceeds its recoverable amount, an impairment loss is recognized for the resulting difference. Recoverable
amount 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 there are separate
identifiable cash flows (cash-generating units).
FINANCIAL ASSETS
Financial assets are classified in the following categories:
• Financial assets measured at fair value in profit or loss;
• Loans and accounts receivable;
• Financial assets held for sale.
Financial assets measured at fair value over the income statement consist primarily of assets intended to be sold shortly. At the end of 2011, there were no assets in this category.
Loans and accounts receivable are non-derivative financial assets with fixed or determinable
payments and that are not listed on an active market. Loan receivables are insignificant in
scope. Financial assets held for sale are non-derivative financial assets in which the assets
have been identified as available for sale or not classifiable in any other category. At the end
of 2011, there were no assets in this category.
Purchases and sales of financial assets are recognized on the date at which Eniro undertakes to purchase or sell the asset. Financial assets are initially measured at fair value plus
transaction costs. Financial assets measured at fair value in profit or loss are measured
65
FINANCIAL
The effective portion of changes in value of derivative instruments employed to hedge
cash flows, and that satisfy the conditions for hedge accounting, are recognized in other
comprehensive income. The gain or loss attributable to the ineffective portion is immediately recognized in profit or loss under the item Financial cost.
without transaction costs. Financial assets are derecognized from the balance sheet when
the right to receive cash flows from the instrument has expired or when virtually all risks
and benefits associated with the asset have been transferred to another party.
Loan receivables and financial assets held to maturity are recognized at accrued cost by
applying the effective interest method. Financial assets and liabilities are offset and the net
amount recognized in the balance sheet when there is a legally enforceable right to offset
the recognized amounts and there is an intention to settle on a net basis.
Accumulated amounts in other comprehensive income are restated in profit or loss in
the periods in which the hedged item affects income. If the hedged transaction results in
the recognition of a non-financial asset or liability, gains or losses previously recognized
in other comprehensive income are transferred from other comprehensive income and
included in the value of the asset or liability. 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 other comprehensive income, the accumulated
amount is also reversed, since the hedged item affects profit or loss. If the hedged transaction is no longer expected to occur, the accumulated amount is immediately recognized
in other comprehensive income.
WORK IN PROGRESS
The value of work in progress consists of direct production costs and attributable indirect
production costs. Costs for borrowing are not included. For printed directories, direct production costs primarily relate to paper purchases, printing and binding of directories, as well as
costs for obtaining and processing the information for publication in printed directories. An
individual assessment is made for expensed amounts for each individual directory. For internet services, direct production costs mainly refer to cost for the layout of advertisements.
ACCOUNTS RECEIVABLE
Accounts receivable are measured at fair value, which normally corresponds to the invoiced amount. Thereafter, accounts receivable are valued at cost without discounting and
reduced by any reserves for customer bad debt. No discounting is recognized, since the
average credit period is short and interest is thus insignificant. Credit risks are handled
through active credit checks and procedures for follow-up and debt collection. In addition,
the size of the reserves is tested regularly based primarily on confirmed losses in previous
years and taking into account current payment patterns. Amounts that are not expected
to be received are offset by reserves and recognized as sales costs in profit or loss.
Hedging of net investment in foreign operations is recognized in a similar manner as
hedging of cash flows. The effective portion of the hedge is recognized under other comprehensive income, while the ineffective portion is recognized immediately in profit or loss
under the item Financial cost. Accumulated gains and losses under other comprehensive
income are recognized as a portion of the capital gain or loss arising when a foreign unit
is divested.
PROVISIONS
Provisions refer to debts that are uncertain with respect to their amount or the date
on which they will be settled. Provisions are recognized when the Group has a legal or
informal obligation resulting from previous events and it is more likely that an outflow of
resources will be required to settle the obligation than the opposite and the amount can
be calculated in a reliable manner.
Provisions primarily relate to pension obligations, deferred tax liabilities, costs arising from changes in personnel and legal proceedings. Amounts expected to be settled
within 12 months after the balance-sheet date are recognized under the heading current
liabilities, while others are recognized as non-current liabilities. The reserved amounts
comprise the best estimate of what would be paid out on the balance-sheet date to settle
the obligation or to transfer it to a third party.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and disposable funds in bank accounts, as well
as other short-term investments with a maturity shorter than three months from the
acquisition date. The Parent Company’s cash and cash equivalents include balances on
the Group accounts.
EQUITY
Consolidated shareholders’ equity is divided into share capital, other equity contributions,
reserves and earnings brought forward.
Holdings of treasury shares purchased within frameworks approved by the Annual
General Meeting are recognized in the consolidated financial statements as a reduction
in other equity contributions. In the Parent Company, these are recognized as a reduction
of retained earnings or, where applicable, against a fund to be used in accordance with
resolutions by the Annual General Meeting. Costs in addition to the purchase price arising
in conjunction with the buyback of own shares are charged against retained earnings. This
holding is not included in shares outstanding when calculating key data per share.
ACCOUNTS PAYABLE
Accounts payable are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest method.
EMPLOYEE BENEFITS
Pension obligations
There are various pension plans within the Eniro Group. Swedish units are primarily covered by defined-benefit plans, while the Norwegian and Finnish units are partly
covered by defined-benefit plans. In all significant respects, units in other countries apply
defined-contribution plans.
Untaxed reserves, which occur in the accounts of companies in certain countries, are
recognized in the consolidated financial statements in part as a deferred tax liability
and in part as retained earnings. The deferred tax liability is calculated according to the
prevailing tax rate in each particular country.
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 the vesting of benefits.
BORROWINGS
Borrowings are initially recognized at fair value as a net amount after transaction costs.
Thereafter, borrowings are recognized at accrued cost, and any difference between the
amount received after transaction costs and the amount repaid is recognized in profit or
loss and distributed over the repayment 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 balance-sheet date. Liabilities
with maturity periods that originally exceeded 12 months are also recognized as current
liabilities according to this policy.
In defined-benefit 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 defraying the promised payment. Eniro has defined-benefit plans
in Sweden, Norway and Finland. Certain plans are funded with special assets or funds that
are held separately from the Group for future disbursement. Other plans are unfunded
and payments from these are defrayed by the Group as they become due. The pension
liability essentially pertains to employees in Sweden, of which virtually all are covered
by defined-benefit pension plans. Eniro 118 118 has assets that have been detached in
a pension foundation, while other obligations in Sweden are secured through insurance
with PRI Pensionsgaranti. The defined-benefit pension plans are funded in one case and
otherwise unfunded. The net of the estimated present value of the obligations and the
fair value of the plan assets is recognized in the balance sheet either as a provision or as
a non-current financial receivable. In cases where a surplus in a pension plan cannot be
fully utilized, the only item recognized is that portion of the surplus that the company is
able to recover through reduction of future fees or bonuses.
RECOGNITION OF DERIVATIVE INSTRUMENTS AND HEDGING MEASURES
Derivative instruments are recognized in the balance sheet on the contract date and
measured at fair value both initially and on subsequent revaluations. Derivative instruments within Eniro consist of hedges of fair value, hedges of cash flows or hedges of
net investment in foreign currency. At present, there are no hedges of fair value within
the Group.
When a hedging contract is entered, Eniro 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.
For defined-benefit plans, the pension cost and the pension obligation are calculated
according to the Projected Unit Credit method. This method distributes pension costs
over the period during which employees perform work for the company that increases
their entitlement to future compensation. The calculations are performed annually by
independent actuaries. The company’s commitments are measured at the present value
of anticipated future payments after application of a discount interest rate. In Sweden,
the discount interest rate corresponds to the yield on housing bonds with a maturity corresponding to the obligation in question. The most important actuarial assumptions are
described in the note entitled “Pension obligations.”
Hedging of fair value
Changes in value of derivative instruments employed to hedge fair value, and that satisfy
the conditions for hedge accounting, are recognized in profit or loss together with
changes in value of the hedged asset or liability. If a hedge no longer fulfills the criteria
for hedge accounting, the adjustment of the carrying amount of a hedged item will be
distributed in profit or loss over the remaining maturity period.
66
FINANCIAL
LEASING AGREEMENTS
Leasing agreements are recognized in accordance with recommendation IAS 17 Leases.
Leasing in which a significant portion of the risks and benefits resulting from ownership
are retained by the leaser are classified as operational leasing. Payments made during
the lease period are expensed on a straight-line basis over the lease period. Currently, the
Group only has operational leasing agreements.
In establishing the present value of the obligation and the fair value of plan assets, actuarial gains and losses may arise. These arise 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 that exceeds
10 percent of the present value of the largest commitment and the fair value of the plan
assets is recognized in profit or loss over the employee’s average remaining period of
employment.
NOTe 2 KEY ESTIMATES AND ASSESSMENTS
The provision for pensions also includes an allocation in Eniro 118 118 AB for early
retirement in accordance with an arrangement in collective bargaining agreements
concerning obligations in an Early Retirement Benefit plan (ERB) at 55, 60 or 63 years for
certain personnel categories. The ERB plan is a pension plan encompassing certain Eniro
employees who were previously employed by Televerket (currently TeliaSonera) prior to
its incorporation in 1991. According to the agreement, payments from this plan are to be
covered in part by the former owner, TeliaSonera. The corresponding receivable amounted
to SEK 30 M (39) on December 31, 2011. The credit risk associated with this receivable may
be regarded as negligible.
Estimates and assessments, which are evaluated continuously, are based on historical
experience and other factors, including expectations of future events that are regarded as
reasonable under prevailing conditions.
The Group makes estimates and assessments concerning the future. The estimates for accounting purposes that result from these will, by definition, rarely match actual outcome.
The estimates and assessments that give rise to a material risk of significant adjustments
of the carrying amounts for assets and liabilities during the following fiscal year are
outlined below.
Interest cost reduced by anticipated return on plan assets is classified as a financial cost.
Other cost items included in pension costs are charged against operating income.
Impairment testing of goodwill and brands
In accordance with IFRS, goodwill and brands with an indefinite useful life are not amortized;
they are impairment tested annually. Other intangible assets and other fixed assets are amortized/depreciated over the period during which company management has assessed that the
asset will generate revenues. These assets are also subject to regular impairment testing.
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
recognized for special salary tax on the difference in accordance with UFR 4. The obligation for old-age pension for salaried employees is secured through insurance in Alecta. In
accordance with a statement from the Swedish Financial Accounting Standards Council,
UFR 3, this is a defined-benefit plan that encompasses a number of employers. The Group
has not had access to the type of information that would make it possible to recognize
this as a defined-benefit plan. Accordingly, the ITP pension plan, which is secured through
insurance in Alecta, is recognized as a defined-contribution plan.
A number of estimates and assessments are made when the value in use of the asset
is calculated, such as revenue growth for the particular segment on the basis of market
conditions and the way the cost base will develop, taking into account cost-cutting initiatives. Other significant assumptions include the computed interest, which is based on
Eniro’s cost of capital and risk premium at the time of the valuation. Management arrives
at the assumptions, which are scrutinized by the Audit Committee. Additional information concerning goodwill and brands with an indefinite useful life is presented in Note 8
Intangible assets.
The accounting policies described above for defined-benefit pension plans are applied
only in the consolidated financial statements.
Share-related benefits
In 2011, a share-savings program that had been offered by the Eniro Group to permanent
employees in Sweden, Norway and Finland, as well as to senior executives in Poland and
Denmark, came to an end. Through the program, employees were invited to purchase
Eniro shares on the Nasdaq OMX Stockholm exchange through monthly savings. Purchase
of savings shares took place once each quarter for the amount allotted. After the vesting
period of three years following the purchase of savings shares, the participants were
allotted additional shares, called matching shares, without charge. In addition, senior
executives qualified for performance-based matching shares for each savings share based
on their position and the Group’s earnings. The cost of the share savings program is recognized in accordance with IFRS 2 Share-based benefits and the statement UFR 7, 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 fees are capitalized over the vesting period. In estimating
the fair value of the matching shares, the share price for purchases of the savings shares
was used after deduction of the estimated dividend during the vesting period. In estimating the fair value of social fees, the most recent share price is used to calculate social fees
for all possible matching shares on every closing date.
Income taxesr
The Group is obliged to pay tax in several countries. Comprehensive assessments are
required to be able to establish the Group’s provision for income taxes. Many transactions
and calculations involve amounts whereby the final tax payment is uncertain. In cases in
which the final tax for these matters differs from the amount initially recognized, these
differences will affect current and deferred tax assets and liabilities during the period
when such conclusions are made.
Pension benefits
The present value of pension obligations depends on a number of factors that are
established on actuarial basis assisted by a number of assumptions. The assumptions
used when establishing the net cost of pensions include the discount interest rate. Each
change in these assumptions will impact the carrying amount of pension obligations. The
Group determines an appropriate discount interest rate at the end of each year. This is
the interest rate used to determine the present value of anticipated future payments that
are expected to be required to cover the of pension obligations. When establishing an appropriate discount interest rate, the Group takes into account yields on first-class housing
bonds that are expressed in the currency in which the payments will be made and that
have maturities matching the assessments for the particular pension obligation. Other
important assumptions concerning pension obligations are based in part on prevailing
market conditions. Additional information is presented in Note 17 Pension obligations
The Eniro Group has a share-price related incentive program directed towards the
President, Group Management and certain key persons. Under the incentive program, a
maximum of 15 to 40 percent of fixed salary is reserved for allotment of what are called
synthetic shares. For the President and CEO, 50 percent of fixed salary is reserved for
synthetic shares. The number of synthetic shares, which corresponds to the amount calculated for each participant, is based on the average price paid for the Eniro share during
the five trading days following the record date. After three years, assuming that the participant is employed by Eniro on that date, the holding of synthetic shares and dividends
is converted to a cash payment. The maximum amount payable for each synthetic share
is to be limited to five times the share price at the time of the conversion to synthetic
shares. The Board of Directors has been authorized to make adjustments necessary in
order for the financial outcome of the synthetic shares to reflect such developments as
payments of dividends or changes in share capital. Accordingly, this incentive program
does not involve compensation in the form of Eniro shares. Instead, the Eniro share can
be seen as an index that regulates the amount of cash compensation. Funds are reserved
regularly in a manner similar to other variable remuneration. The reserve is based on the
current Eniro share price plus social costs.
67
FINANCIAL
NOTe 3 SEGMENT INFORMATION
Eniro recognizes its financial results distributed in the following business areas: Directories Scandinavia, Voice and Poland. In Directories Scandinavia, Sweden, Norway and Denmark, there
are cross country functions for Group Product and Services and Group Service Delivery. The Voice operation, and Poland, are governed separately and are not an integrated part of the
function-based organization. At the end of 2010, Eniro divested the Finnish Directories operation and the remaining Finland Voice is thus included in Voice. Refer also to the description of
segments in the accounting policies.
Directories
Scandinavia
Voice
Finland
Directories
Poland
Other
Total
SEK M
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
Operating revenues
Sweden
Norway
Denmark
Finland
Poland
1,527
1,191
472
-
1,690
1,427
596
-
520
95
284
-
547
130
291
-
234
365
-
280
-
-
-
2,047
1,286
472
284
234
2,237
1,557
596
571
365
Total operating revenues
3,190
3,713
899
968
234
365
-
280
-
-
4,323
5,326
818
951
340
341
-15
45
-
17
-69
-88
1,074
1,266
Items affecting comparability
Impairment
-68
-446
-2
-10
-469
-3,750
-20
-167
-1
-20
-
-1
-10
-209
-11
-500
-
-626
-16
-14
-14
-1
-24
-1
-83
-477
-378
-661
-517
-4,264
Operating Income
302
-3,278
153
320
-235
-466
-
-639
-84
-113
136
-4,176
Net financial items
Taxes
-364
15
-563
119
Net income
-213
-4,620
Adjusted EBITDA
Assets and liabilities
Goodwill
Other non-current assets
Other distributed assets
Undistributed assets
4,671
1,506
661
-
4,649
1,808
791
-
1,355
85
190
-
1,523
97
207
-
93
20
92
-
322
21
150
-
-
-
3
104
929
138
881
6,119
1,614
1,047
929
6,494
1,926
1,286
881
Total assets
6,838
7,248
1,630
1,827
205
493
-
-
1,036
1,019
9,709
10,587
Distributed liabilities
Undistributed liabilities
1,462
-
1,586
-
109
-
142
-
98
-
106
-
-
-
164
7,876
241
8,512
1,833
7,876
2,075
8,512
Total liabilities
1,462
1,586
109
142
98
106
-
-
8,040
8,753
9,709
10,587
120
198
11
16
11
7
0
0
0
0
142
221
Other information
Investments
Tangible and intangible assets in Sweden amounted to SEK 2,174 M (2,172). Revenue by category was distributed as follows:
SEK M
2011
2010
2,008
1,051
188
177
899
-
2,005
1,646
181
246
968
280
Directories
Online/mobile
Print
Media products
Other products
Voice
Finland Directories
Total operating revenues
4,323
5,326
Eniro offers a diverse portfolio of search services and products to hundreds of thousands of
customers. This means that the Group’s dependency on individual customers is non-existent.
68
FINANCIAL
External financial interest costs increased during 2011, due to effects from outstanding
interest-rate swaps amounting to SEK 52 M. For 2010, the corresponding effect increased
external financial interest cost by SEK 311 M.
NOTe 4 BREAKDOWN OF OPERATIONAL COSTS
SEK M
2011
2010
Remuneration to employees including social security costs
Paper, printing and distribution
Agents, consultants and other non-employed personnel
Advertising and marketing
Other
1,825
186
140
193
985
477
2,259
378
264
229
1,078
517
Total operational costs
3,806
NOTe 6 TAX
The following components are included in tax costs:
SEK M
Current tax on income for the year
Additional tax cost corresponding to interest on the
tax allocation reserve
Adjustment of current tax for prior years
Deferred tax cost relating to utilized loss carryforwards
Deferred tax cost relating to temporary differences
Deferred tax cost related to unutilized loss
carryforwards
4,725
Operational costs refer to production costs, sales costs, marketing costs, administration
costs and production development costs.
Depreciation and amortization by function
SEK M
2011
2010
Tangible assets
Production costs
Sales costs
Marketing costs
Administrative costs
28
8
0
5
1
37
13
1
11
5
Total tangible assets
42
67
Intangible assets
Production costs
Sales costs
Marketing costs
48
1
306
6
74
59
7
331
10
43
Total intangible assets
435
450
Total depreciation and amortization
477
517
Income
Exchange-rate gains on borrowing
Exchange-rate gains on intra-Group receivables
and liabilities
Other financial income
External financial interest income
2
8
40
1
19
115
2
18
Total financial income
62
143
Costs
Exchange-rate losses on borrowing
Exchange-rate losses on intra-Group receivables
and liabilities
Other financial costs
Interest cost for pension liabilities
External financial interest costs
Fair value result of interest-rate swaps:
0
-4
-34
-1
-8
-383
–
-80
-8
-11
-443
-160
Total financial costs
-426
-706
Total net financial items
-364
-563
–
-9
-4
-111
-17
-33
-190
–
-2
-9
104
476
Deferred tax income relating to loss carryforwards
Adjustment of prior year tax
52
-25
28
7
15
119
SEK M
2011
2010
Recognized income before tax
-228
-4,739
60
1,246
-102
68
-1,118
81
12
3
11
-34
0
16
-104
4
-9
15
119
Tax according to Swedish tax rate
Tax effect of
- operating costs not deductible for tax purposes
- revenues that are not taxable
Prior years’ losses for which loss carryforwards have now been
utilized
Prior years’ non-capitalized loss carryforwards now deemed
possible to be utilized
Adjustment of prior years’ tax
Other
Differences between Swedish and foreign tax rates
Tax recognized
2010
-78
Connection between tax cost for the year and tax cost according to applicable
Swedish tax rate:
NOTe 5 FINANCIAL INCOME AND COSTS
2011
2010
-55
Deferred tax income related to temporary
differences
Tax recognized
Impairments relating to tangible assets amounted to SEK 0 M (3).
Impairments relating to intangible assets amounted to SEK 378 M (4,261).
SEK M
2011
In November 2010, Eniro received final notification from the Norwegian tax authorities
that the tax cost for the year 2001–2005 for the subsidiary Eniro Holding AS (previously
Findexa Norway AS), which was acquired by Eniro during 2005, was to be increased by
approximately SEK 101 M. This amount was paid in January 2011.
The liquidation of the German company Eniro Windhager GmbH was completed in June
2010. Eniro has been able to utilize the tax losses of about SEK 730 M in Sweden in 2010
and the company is not expected to pay income tax in Sweden in the years ahead.
69
FINANCIAL
NOTe 6 TAX – CONT’D
The tax that is attributable to components in other comprehensive income amounted to the following:
2011
SEK M
Exchange-rate difference
Change in non-controlling interests
Total other comprehensive net income
2010
Before tax
Tax effect
After tax
Before tax
Tax effect
After tax
-40
46
3
-
-12
-1
-
-40
34
2
-
-824
-48
570
-3
13
-150
-
-824
-35
420
-3
9
-13
-4
-305
-137
-442
Current tax
Deferred tax
-
-
-13
-137
The following components are included in deferred tax assets and liabilities:
2011
2010
Deferred tax
assets
Deferred tax
liabilities
Net assets (+)
liabilities (–)
Deferred tax
assets
Deferred tax
liabilities
Net assets (+)
liabilities (–)
Tangible assets
Intangible assets
Financial assets
Current receivables
Pension provisions
Other provisions
Current liabilities
Loss carryforward
Other items
54
16
13
34
8
7
14
342
3
383
2
5
23
38
3
54
-367
11
29
-15
-31
14
342
-
44
8
9
24
18
32
10
331
5
460
7
41
0
3
44
-452
9
17
18
-9
10
331
2
Deferred tax assets/liabilities
491
454
37
481
511
-30
-180
-180
-
-158
-158
-
311
274
37
323
353
-30
SEK M
Offsetting of deferred tax assets/liabilities
Net deferred tax assets/liabilities
NOTE 7 TANGIBLE ASSETS
Changes in deferred tax
SEK M
Opening carrying amount for
deferred tax assets (+) / liabilities (-)
Recognized in profit or loss
Recognized in other comprehensive income
Translation differences
Net closing carrying amount for deferred
tax assets (+) / liabilities (-)
2011
-30
79
-13
1
37
Equipment
2010
-354
313
-137
148
-30
Most of the net deferred tax liabilities will mature after more than 12 months.
The Group has no loss carryforwards that were not valued at December 31, 2011.
SEK M
2011
2010
Accumulated cost
Accumulated depreciation
Accumulated impairment losses
409
-327
-15
438
-339
-15
Carrying amount, closing balance
67
84
At the beginning of the year
Investments for the year
Sales and disposals
Reclassifications
Depreciation for the year
Impairment losses for the year
Translation difference for the year
84
28
-2
0
-42
-1
124
44
-8
2
-67
-3
-8
67
84
1
-
Compensation received from sales
70
FINANCIAL
NOTE 8 INTANGIBLE ASSETS
Brands with indefinite
useful life
Goodwill
SEK M
Other brands
Customer relations
Other intangible assets
Total
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
11,283
-5,164
11,353
-4,859
1,255
-339
1,257
-340
61
-31
-3
46
-28
-3
2,286
-1,541
-431
2,274
-1,247
-432
1,298
-894
-114
1,223
-784
-124
16,183
-2,466
-6,051
16,153
-2,059
-5,758
6,119
6,494
916
917
27
15
314
595
290
315
7,666
8,336
Acquisitions
Investments for the year
Internally developed assets
Sales and disposals
Reclassifications
Amortization for the year
Impairment losses for the year
6,494
27
-1
-376
-25
12,088
0
-726
-4,208
-660
917
-1
998
-81
15
15
-3
0
29
0
-6
-8
595
16
-298
1
968
-310
-63
315
4
6
108
-6
0
-134
-2
-1
370
21
157
-29
-2
-134
-53
-15
8,336
62
6
108
-7
0
-435
-378
-26
14,453
21
157
-755
-2
-450
-4,261
-827
6,119
6,494
916
917
27
15
314
595
290
315
7,666
8,336
Compensation received from sales
-
-
-
-
-
-
-
-
-
0
-
0
Accumulated cost
Accumulated amortization
Accumulated impairment
Goodwill and other intangible assets with indefinite useful life are initially valued at cost.
Certain brands are deemed to have indefinite useful life, since they are market-leading and
have very high recognition. These brands are long established and used in the Directories
operations. There are currently no known legal, contractual or competitive factors limiting
their useful life. The brands referred to include Gule Sider and Ditt Distrikt in Norway, which
was added through the acquisition of Findexa in 2005, and KRAK, which was added through
acquisition in 2007.
Other brands, customer relations and other intangible assets are amortized over their useful
life. The useful life of other brands is five to ten years. Average remaining useful life for other
brands is five years. The useful life of customer relations is based on repurchase rate and
amounts to five to ten years. The average remaining useful life of customer relations is one
year (2).
The assumptions that are used as base for measuring cash-generating units result from
the Group´s annual long-term strategy process. Key data for the cash flow is the forecast
for the coming three years prepared by the segment responsible and approved by Group
Management and Board, which is also checked against external market research. Forecast
cash flows are based on the anticipated revenue trend for each segment taking into account
market conditions and the development of the cost base adjusted for cost-saving initiatives.
The investment rate varies between 1–2 percent of the revenues for each segment. The
development of working capital is estimated to have a relatively minor impact on cash flow.
Other key assumptions are cost of capital (WACC) the assumption concerning growth from
year four. From year four, growth of 2 percent is assumed i.e. in line with expected inflation. A
discount rate before tax has been prepared for each cash-generating unit, which varies between 10.3 and 14.4 percent. The computed interest rates are relatively unchanged compared
with the preceding year. Lower risk-free interest rates were offset by a higher risk premium.
Impairment testing of goodwill and brands with indefinite useful life
The Group conducts impairment tests of goodwill and brands with indefinite useful life for
cash-generating units that correspond with the segments that, at a given time, are used for
internal follow-up and external reporting. This level is the lowest level for which goodwill is
monitored in the internal control.
The impairment test showed declining future cash flows primarily due to decreased demand
for directory-information services in Norway and printed products in Poland. This resulted in
goodwill impairment in the Voice business totaling SEK 167 M in Norway and an impairment
loss of SEK 209 M in Poland. In addition, a minor impairment loss on intangible assets
totaling SEK 2 M was made in Directories Scandinavia.
Valuation included the following assumptions and resulted in the following:
Unit
Sweden Directories
Sweden Voice
Norway Directories
Norway Voice
Denmark Directories
Poland
Finland Voice
WACC before tax
Annual cash flow
growth, years 0–3
Margin based on
carrying amount
Margin at 1% higher
WACC after tax
Margin at 10%
lower cash flow
10.5%
10.5%
11.6%
11.6%
10.3%
14,4%
11.4%
0%
-24%
10%
-15%
70%
n.a.*
-9%
304%
25%
10%
26%
63%
42%
15%
248%
10%
-4%
11%
39%
28%
1%
259%
25%
-2%
13%
45%
25%
2%
* not relevant due to negative start value
In annual cash-flow growth for years 0-3, the Directories operation in Sweden is expected to stabilize. In Norway, which is further along in the migration to online compared with other units, growth is anticipated.
Denmark Directories is expected to improve significantly from a low level as a result of consolidation in the market. In the Voice operation, the cash-flow trend is expected to be negative for 0-3 years in all countries
due to changed search habits that benefit other channels, to then stabilize. Margin pertains to the difference between value in use and the carrying amount. For 2010, the Group had a WACC before tax of between
10.2 percent (Denmark) and 13.5 percent (Poland). In 2010, the Group’s annual cash-flow growth for the Voice operations was negative for 0-3 years (-14 percent in Sweden and -5 percent in Norway). For Directories
operations, annual cash-flow growth in 2010 for 0-3 years was -4 percent in Sweden and +1 percent in Norway.
71
FINANCIAL
NOTE 8 INTANGIBLE ASSETS – CONT’D
Impairment requirements based
on changed parameters
SEK M
Change in income
before amortization
NOTe 9 SHARES AND PARTICIPATIONS IN ASSOCIATED
COMPANIES
Shares and participations in associated companies at December 31, 2011
Change in WACC
0%
-5%
-10%
-20%
0%
0.50%
1.00%
2.00%
69
553
113
337
809
151
363
580
1,038
626
827
1,029
1,495
Company/operation
Spray Passagen Internet KB
Registered Number
office of shares
9697336957
Stockholm
1,000
Shareholding
Date of
acquisition
50
200801-19
Participations in
associated companies
Goodwill and other intangible assets with an indefinite useful life are recognized for
the following cash-generating units and, at December 31, the residual value consisted
of the following items:
SEK M
SEK M
Goodwill
Corp.
Reg.
No.
2011
2010
Opening cost
10
10
Decrease due to divestment
Dividend from associated
companies
-7
-
-3
-
Closing cost
0
10
2011
2010
Sweden Directories
Norway Directories
Denmark Directories
1,070
2,960
641
1,070
2,963
616
4,671
4,649
During 2011, the participation in Netclips AB was divested.
Sweden Voice
Norway Voice
Finland Voice
Voice
Poland
854
200
301
1,355
93
855
366
304
1,525
320
On December 31, 2011, current assets totaled SEK 0 M (1), current liabilities SEK 0 M (1)
and shareholders’ equity SEK 0 M (0) for all associated companies.
Total goodwill
6,119
6,494
Brands
Norway Directories
Denmark Directories
783
111
783
112
894
895
Norway Voice
22
22
Voice
22
22
916
917
7,035
7,411
Total brands
Total intangible assets with indefinite useful life
The following companies and operations were sold or liquidated during 2011.
Corp. Reg. No. Registered office
Netclips AB
Goodwill included in the recognized residual value for which amortization is deductible
for tax purposes:
2011
2010
Sweden
Denmark
Finland
SEK M
182
179
2
184
226
Total
361
412
72
556688-6080
Danderyd
FINANCIAL
NOTe 10 SHARES AND PARTICIPATIONS IN JOINT VENTURES
Provisions for customer bad debts
Shares and participations in joint ventures at December 31, 2011
Corp.
Reg. No.
Registered
office
Number
of shares
Shareholding
988 875 740
981 910 273
Oslo
Oslo
1,093,739
3,094,894
50.1
25.0
Company/operation
Scandinavia Online AS
Start Networks AS
Scandinavian Online AS is a jointly owned company with Norsk Aller AS, where Eniro owns
50.1 percent of the company and Aller owns a total of 49.9 percent. SOL is an Internet
portal in Norway, sol.no. As of May 14, 2008, Scandinavian Online AS has a joint venture
with DB Medialab AS, where Scandinavian Online owns 50 percent, meaning that Eniro
owns 25 percent of the company. Start Network is a portal that has positioned itself as
an entertainment arena primarily for young users. Eniro consolidates joint ventures in
accordance with the proportional method. Accordingly, Eniro’s share of the joint venture’s
profit/loss and balance sheet is included under the corresponding items in Eniro’s accounts.
Operating revenues
Operating costs
Net income
2011
2010
30
-31
30
-28
-1
2
2010
Non-current assets
Current assets
29
24
29
26
Total assets
53
55
5
6
Total liabilities
Net assets
210
115
-123
-8
-19
Closing provisions
108
175
SEK M
2011
2010
-not due
-due less than one month
-due 1-3 months
-due more than 3 months
54
1
15
101
14
Total
70
115
2011
Current liabilities
2010
175
67
-103
-21
-10
Assets and liabilities from joint ventures
SEK M
2011
Customer bad debts recognized as sales costs in profit or loss amounted to SEK 44 M (103).
Income from joint ventures
SEK M
SEK M
Opening provisions
New provisions
Provisions utilized during the year
Reversed unutilized provisions
Effects of exchange-rate changes
5
6
48
49
SEK M
2010
Accounts receivable
Provisions for customer bad debts
798
-108
1,017
-175
Total accounts receivable
690
842
Age analysis of accounts receivable
-not due
-due less than one month
-due 1–3 months
314
285
43
48
524
214
62
42
Total
690
842
7
0
Total
8
7
NOTe 12 PREPAID COSTS AND ACCRUED REVENUES
SEK M
NOTe 11 ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
2011
2010
4
4
The maximum exposure to credit risk on the balance-sheet date is the fair value of each
category of receivable according to the above. The Group has no collateral as security.
As of December 31, 2011, the Group’s goodwill includes SEK 23 M (23) from joint ventures.
SEK M
2011
-not due
2011
2010
Prepaid interest costs
Other prepaid costs
Accrued revenues
Accrued interest income
85
100
0
103
103
0
Total
185
206
NOTe 13 CASH AND CASH EQUIVALENTS
Cash and cash equivalents mainly comprise of bank balances and minor short-term
investments in foreign entities that are not included in the Group’s central accounting
system. Short-term investments are classified as financial assets measured at fair value in
profit or loss.
SEK M
Accounts receivable subject to impairment requirements are equal to provisions for
customer bad debts.
2011
2010
Short-term investments
Cash and bank
0
557
0
450
Total cash and cash equivalents
557
450
73
FINANCIAL
NOTe 14 SHAREHOLDERS’ EQUITY
NOTe 15 BORROWING
SEK M
2011
Number of shares
On January 1, 2011, the number of shares prior to the reverse split was 5,009,037,009, of which
Non-current bank borrowings
3,442
218,480 were treasury shares, thus totaling 5,008,818,529 after the deduction of treasury
Current bank borrowings
658
shares. In January 2011, a 50:1 merger (reverse split) was implemented, resulting in the number
Other current interest-bearing liabilities
of shares outstanding, after the deduction of treasury shares, decreasing to 100,176,371 shares.
During 2011, ordinary matching as well as termination of the share-savings program resulted
Total borrowing
4,100
in a reduction of 1,104 in treasury shares, which were transferred to the employees from the
Interest-bearing loans have the following maturity
company’s deposit account. On December 31, 2010, the total number of shares was 100,180,740,
structure:
of which 3,266 treasury shares, meaning 100,177,474 after a deduction for buybacks. The carrying
amount for treasury shares at December 31, 2011 was SEK 50 M (67). The average number of
during the coming year
658
shares after the deduction of treasury shares was 100,177,060. The average number of shares
during the following five years
3,442
after the deduction of treasury shares is calculated as an average for the four quarters of the
year. The average per quarter is calculated as the opening balance plus the closing balance
Total
4,100
divided by two.
For a specification according to existing loan agreements, refer to the detailed
Revised 50:1
December 31,
description below. At the end of 2011, balanced borrowing costs amounted to
reverse split
SEK 65 M (-) in total bank loans.
January 1, 2011
January 2011
2011
Number of shares
outstanding
Treasury shares
5,009,037,009
-218,480
100,180,740
-4,370
100,180,740
-3,266
Total number of shares
outstanding after deduction of treasury shares
5,008,818,529
100,176,371
100,177,474
4,213
4,213
NOK
DKK
SEK
EUR
1,666
92
2,342
-
2,279
483
728
720
Total
4,100
4,210
due within one year
due between one and five years
due later than five years
238
-
300
-
Total granted credit facilities
238
300
3,442
3,842
Granted, unutilized credit facilities
SEK M
of which,
Registered
treasury
Registered
of which,
treasury
At January 1, 2010
161,582
Share-saving program
Reduction in share capital
New share issue
4,847,455
Reverse split
-4,908,856
226
-7
-214
323
-242
2,423
-
1
0
-1
-
At December 31, 2010
100,181
4
2,504
0
At January 1, 2011
100,181
4
2,504
0
Share-saving program
-
-1
-
0
100,181
3
2,504
0
Fair value of non-current borrowing
The carrying amount of short-term borrowing provides a reasonable approximation of
the fair value of the loans, since the loans have variable interest rates that are hedged
through interest-rate swaps.
The effective interest rates on the balancesheet date were as follows:
NOK
DKK
SEK
EUR
In connection with the new issue in December 2010, a difference arose between the
carrying amount in shareholders’ equity and paid-in cash and cash equivalents according
to the cash flow statement. The difference between the recognized value in shareholders’
equity and the cash flow in the Group and Parent Company consists of the following items:
SEK M
4,213
Carrying amounts by currency for borrowing
Share capital
At December 31, 2011, the quotient value of the Eniro share was SEK 25. The proposed
dividend is SEK 0 (0) per share, totaling SEK 0 M (0).
Number of shares (000s)
2010
3,842
368
3
2011
2010
New share issue, gross added amount
Share issue costs
Tax, share issue costs (26.3 percent)
-
2,520
-137
36
New share issue, net after issue costs adjusted for tax
recognized in shareholders’ equity
-
2,419
Non-cash settled tax, share issue costs
Paid/unpaid issue proceeds on December 31
Paid/unpaid issue costs on December 31
42
-52
-36
-42
48
New share issue, capital added, net
-10
2,389
2011
2010
8.57%
5.61%
6.91%
-
3.63%
2.23%
2.98%
2.03%
The Group’s borrowing exposure with respect to changes in interest rates and contractual dates
for interest-rate renegotiation (excluding the effect of interest-rate swaps) is shown below:
6 months
or less
6–12
months
12–36
months
36 months
or longer
Total
At December 31,
2011
Total borrowing
4,100
-
-
-
4,100
At December 31,
2010
Total borrowing
4,213
-
-
-
4,213
SEK M
Of the total borrowing of SEK 4,100 M at the end of 2011, interest on an amount
corresponding to SEK 1,913 M has been hedged to maturity on August 21, 2012. The
interest hedge occurs through interest-rate swaps; see Note 16 Derivative Instruments.
The portion of borrowing that was not interest-hedged, SEK 2,187 M at the end of 2011,
is affected by interest-rate fluctuations. An interest-rate change of 1 percentage point
affects interest costs by SEK +/- 23 M per year.
74
FINANCIAL
NOTe 15 BORROWING – CONT’D
Financing
Interest rates
The loan agreement carries a margin above IBOR and follows an interest ladder based on
the company’s debt level (defined as the consolidated net debt in relation to EBITDA).
Current loan agreement
Toward the end of 2010, Eniro renegotiated its loan agreements with the existing bank
consortium consisting of Danske Bank A/S, Denmark, Swedish branch, DnB NOR Bank
ASA, Norway, Swedish branch, Svenska Handelsbanken AB (publ), Nordea Bank AB (publ),
The Royal Bank of Scotland plc, Skandinaviska Enskilda Banken AB (publ) and Swedbank
AB (publ). The lenders’ obligation to provide loans under the new loan agreement was
conditional upon Eniro implementing a rights issue not later than January 15, 2011 and
that the entire net proceeds were to be used to repay existing loans. The renegotiated
loan agreement came into effect on January 13.
At December 30, 2011, three-month IBOR was 2.64 percent in Sweden, 2.89 percent in
Norway and 1.00 percent in Denmark.
Margin above IBOR was as follows:
Above 5.50%
Up to and including 4.0 percent but above 4.50%
Up to and including 3.0 percent but above 3.75%
Less than 2.00 percent
3.00%
Interest-rate hedging
The loan is subject to the condition that the company will hedge 40 percent of the
interest payments until the due date for the outstanding loan amount. The interest-rate
hedging requirement ceases on August 21, 2012.
Guarantees and collateral
Shares in all Group companies directly owned by Eniro, all material Group companies
(meaning each Group company that has EBITDA representing 5 percent or more of the
consolidated EBITDA, or has gross assets or sales representing 5 percent or more of
the consolidated gross assets or sales of the Group) and all Group companies that own
or hold the rights to search engines, databases or any other rights or assets that are
material to Group operations shall be provided as collateral for the new loan agreement.
In addition, collateral shall be provided to cover all the material brands and other IP
rights, material intra-Group loans and all other material assets.
The loan agreement is divided into five tranches; Tranche A of SEK 2,088 M; Tranche B
amounting to the counter-value in NOK of SEK 1,550 M; Tranche C amounting to the
counter-value in DKK of SEK 100 M; Tranche D totaling SEK 1,000 M (with the possibility
for conversion to several currencies) and Tranche E amounting to approximately
SEK 200 M. In addition to this loan, the loan agreement includes a revolving facility in
several currencies totaling SEK 300 M. The duration for Tranche A, Tranche B, Tranche C
and Tranche D and the revolving facility will be four years from the date of the new loan
agreement. The duration for Tranche E will be up to and including August 21, 2012.
The purpose of Tranche A, Tranche B, Tranche C and Tranche D was to refinance
outstanding debt under the previous loan agreement, and to pay transaction costs
attributable to the new rights issue and the new financing. Tranche B could also be used
to pay the tax liability in Norway. Tranche E could be used to pay termination costs for
existing hedging arrangements or any debt incurred for paying such costs. The purpose
of the revolving facility is to be used for general corporate and working capital purposes
in the Group.
The following major companies serve as collateral for the loan agreements and
guaranteed by Eniro AB (publ), Eniro Sverige AB, Eniro 118 118 AB, Eniro Treasury AB,
Eniro Norway AB, Eniro Holding AB, Eniro Sentraali Oy, Eniro Polska Sp. Z o.o., Eniro
Danmark A/S, Findexa Luxemburg Sarl, Eniro Holding AS, Eniro Norge AS and 1880
Nummerupplysning AS. Refer also to Note 27 “Commitments and contingent liabilities.”
Covenants
The new agreement contains the normal restrictions and covenants, such as:
a) a requirement concerning a certain ratio between the consolidated cash flow, interest
rate and amortization at Group level;
b) a requirement concerning a certain ratio between consolidated EBITDA and the net
interest rate at Group level;
c) a requirement concerning a certain ratio between consolidated total net debt and
EBITDA at Group level;
d) a requirement that investments do not exceed certain amounts for certain periods,
Tranche A, Tranche B and Tranche C will be amortized. It has been assumed that these
tranches will be repaid as follows: SEK 200 M in 2011, SEK 300 M in 2012 and SEK 400
M in 2013; in each case on a semi-annual basis, and SEK 250 M in June 2014, and the
remaining amount on the termination date for the tranches. Tranche D and Tranche E will
be repaid on their respective due date. Eniro may cancel or repay the facilities in advance
(in whole or in part) if it so desires.
The loan agreement contains provisions regarding mandatory prepayments in respect of
proceeds from divestment, insurance and issues in capital markets, as well as mezzanine
financing. The loan agreement also contains covenants pertaining to mandatory
prepayments upon ownership changed in Eniro. The level for ownership changes will be
set at more than 30 percent of the votes in Eniro being acquired by any person (other
than those who guarantee the rights issue), alone or jointly with any other person(s)
who are members of the same group or affiliated or acting together with this person. In
addition, 75 percent of the amount of the surplus cash flow must be used for mandatory
prepayment until the ratio of consolidated total net debt to consolidated EBITDA at group
level is below 3:1.
as well as restrictions and limitations pertaining to additional indebtedness, guarantee
commitments and pledges, significant changes in the operation, as well as acquisitions
and divestments.
Borrowing costs are recognized in profit or loss as interest cost distributed over the loan
period. Since Eniro renegotiated the loan agreement, the entire remaining borrowing
costs for the previous loan agreement were recognized in profit or loss as an interest
cost at the end of December 2010.
The financial loan covenants listed under A-C above shall be measured quarterly on
a rolling 12-month basis.
Termination/grounds for termination
Eniro may voluntarily terminate the loan agreement. In other respects, the agreement
contains the normal grounds for termination (falling under events of default).
75
FINANCIAL
NOTe 16 DERIVATIVE INSTRUMENTS
SEK M
Changes in plan assets during the year
2011
Assets Liabilities
SEK M
2010
Assets Liabilities
Interest-rate swaps – cash-flow hedges
Currency rate swaps – cash-flow hedges
Currency swaps – cash-flow hedges
-
27
-
-
73
-
Total
-
27
-
73
of which, long-term portion
of which, short-term portion
-
27
-
73
-
Interest-rate swaps
The interest-rate swap contracts entail the swapping of floating interest rates for fixed
interest rates. At December 31, 2011, the nominal amount for interest-rate swaps was
SEK 360 M carrying a fixed interest rate of 4.55 percent and NOK 1,350 M carrying a fixed
interest rate of 5.48 percent, while the variable rate is based on three-month IBOR. There
was no ineffective portion of interest-rate swaps in 2011 and 2010. 2011
2010
Opening balance
Anticipated return on plan assets
Actuarial gains (+)/losses (-)
Contributions from employees
Remuneration paid
535
25
-31
0
-3
0
524
25
0
1
-3
-12
Closing balance
526
535
Anticipated return on plan assets
Actuarial gains (+)/losses (-)
25
-31
25
0
Actual return on plan assets
-6
25
2011
2010
Current service costs
Actuarial net gains/losses recognized during the year
Settlements/reductions
Other
Interest cost
-22
-7
64
6
-8
-38
-7
10
-6
-11
Total costs for defined-benefit pension plans
33
-52
Specification of costs for defined-benefit pension plans
Currency interest-rate swaps
Eniro terminated its currency interest-rate swap agreement in connection with the new
rights issue and the amortization of the underlying NOK loan in December 2010. This
resulted in a loss of SEK 197 M being recognized on that date. Consequently, Eniro has no
outstanding currency interest-rate swap agreements.
SEK M
Currency swaps
Currency swaps are sometimes used to hedge the need for short term loans or surplus
liquidity in the Group. There were no outstanding currency swaps on December 31, 2011
or December 31, 2010.
NOTe 17 PENSION OBLIGATIONS
Total pension costs
The amounts recognized in the balance sheets were calculated as follows:
SEK M
2011
2010
Costs for defined-benefit plans
Costs for defined-contribution plans
Costs for special payroll tax and tax on returns
Interest cost
32
-175
-24
-8
-34
-126
-20
-11
Cost recognized in profit or loss
-175
-191
2011
2010
-38
-50
-2
-65
-12
-60
-70
-3
-34
-13
-167
-180
SEK M
2011
2010
Present value of funded obligations
Fair value of plan assets
667
-526
650
-535
141
115
Present value of unfunded obligations
Unrecognized actuarial losses
265
-247
323
-226
Net debt in the balance sheet recognized
as pension obligations
159
212
2011
2010
Opening balance
Current service costs
Interest costs
Actuarial losses (+)/gains (-)
Remuneration paid
Reductions/settlements
Early retirement costs
Other
973
23
33
22
-34
-80
-4
-1
931
22
36
26
-34
-10
11
11
-20
Closing balance
932
973
Total
Pension costs recognized in the following items in profit or loss
SEK M
Production costs
Sales costs
Marketing costs
Changes in defined-benefit obligations during the year
SEK M
Total pension costs in profit or loss
Each year, the PRI Pensionsgaranti (PRI) makes a credit assessment to establish the
terms and conditions for renewal of the credit insurance. On November 24, 2010, the
Board of PRI made a decision regarding the terms and conditions for the coming renewal
of the credit insurance. The Board of PRI decided to demand that Eniro and the Swedish
subsidiaries reduce its expensed pension obligation during 2011 by taking out insurance
in Alecta corresponding to a debt of approximately SEK 60 M. This resulted in increased
costs, mainly due to actuarial losses of approximately SEK 36 M in accordance with IFRS
being realized. The total increase in cash outflow for 2011 amounted to approximately
SEK 70 M.
76
FINANCIAL
NOTe 17 PENSION OBLIGATIONS – CONT’D
Distribution of plan assets at year-end
Sweden
2011
Norway
Finland
Total
Sweden
2010
Norway
Finland
Total
Fixed interest income including coupon interest
Shares
Alternative investments
193
91
96
13
72
14
28
2
10
5
2
-
275
110
126
15
186
135
69
12
48
21
39
9
9
5
2
-
234
156
108
21
Total
393
116
17
526
402
117
16
535
-2
1
3.7
n.a.
7
0
3.5
n.a.
Sweden
2011
Norway
Finland
Sweden
2010
Norway
Finland
3.4
2.7
1.7
2.7
4.7
2.6
3.5
0.1
3.3
4.1
4.8
3,0
2.0
4.5
3.8
3.0
2.0
3.0
4.8
4.0
4.0
1.3
3.8
5.4
4.8
3.0
2.0
4.5
SEK M
Actual return, %
Significant actuarial assumptions on balance-sheet date
Discount interest rate, %
Salary increase, %
Inflation, %
Income base amount, %
Anticipated return from pension foundation, %
Internal forecasts were used for attrition rates, while the remaining employment time was calculated individually by the PRI pension service and mortality according to the Swedish
Financial Supervisory Authority. In Sweden, a 65-year-old man is expected to live until the age of 86, while a 65-year-old woman is expected to live until 88. In Norway, corresponding
figures are a 67-year old man is expected to live until the age of 84 and a 67-year old woman is expected to live until the age of 86.
The defined-benefit plans have developed as follows over the past five-year period.
SEK M
2011
2010
2009
2008
2007
Present value of funded obligations
Fair value of plan assets
667
-526
650
-535
640
-524
646
-443
555
-386
141
115
116
203
169
Unrecognized actuarial losses
265
-247
323
-226
291
-207
290
-295
250
-162
Net debt in the balance sheet recognized as pension obligations
159
212
200
198
257
Effect of experience-based adjustments
ITP plan
Plan assets
ERB plan
-3
-2
1
-2
8
-4
-23
10
7
-6
-28
-2
-32
-15
6
Total effect of experience-based adjustments
-4
2
-6
-36
-41
Effect of changed assumptions
ITP plan
Plan assets
ERB plan
-17
0
0
-21
0
93
1
-95
-2
-4
1
Total effect of changed assumptions
-17
-21
94
-97
-3
Total unrecognized actuarial losses
-21
-19
88
-133
-44
Total
Changes in unrecognized actuarial losses were distributed as follows:
77
FINANCIAL
NOTe 18 OTHER PROVISIONS
Derivative
instruments
used for
hedging
purposes
Other
financial
liabilities
Total
Liabilities in the balance sheet
December 31, 2011
Borrowing
Accounts payable
27
-
4,100
186
4,100
27
186
Total
27
4,286
4,313
Liabilities in the balance sheet
December 31, 2010
Borrowing
Accounts payable
73
-
4,213
173
4,213
73
173
Total
73
4,386
4,459
Non-current provisions
SEK M
2011
2010
Opening provisions
Reclassifications from other balance sheet items
New provisions
Utilized provisions during the year
Effects of exchange-rate changes and other
34
0
-6
-7
0
6
8
28
-8
0
0
Closing provisions
21
34
SEK M
Current provisions
SEK M
Opening provisions
Reclassification from non-current provisions
New provisions
Effects of exchange-rate changes
Closing provisions
2011
2010
64
0
29
-60
-7
0
93
-7
66
-79
-7
-2
26
64
Eniro has no assets or liabilities measured at fair value in profit or loss or assets available
for sale. The fair value of all instruments measured in the balance sheet is attributable to
level 2 of IFRS 7, meaning that the value was calculated based on official market listings.
Note 21 FINANCIAL RISK MANAGEMENT
Financial risks
Provisions at year-end pertain to provisions for restructuring.
Eniro is exposed to various financial risks through its operations in the form of currency
risks, interest-rate risks, credit risks and liquidity risks. The focus of Eniro’s risk management is to restrict or eliminate financial risks taking into account costs, liquidity and
financial position. The Group-wide financial policy that was established by Eniro’s Board of
Directors is the basis for managing financial operations, the distribution of responsibility
and financial risks. According to Eniro’s financial policy, decisions concerning hedging of
translation risks are made by the Board of Directors. The subsidiary Eniro Treasury AB has
central responsibility for financial and risk management.
NOTe 19 ACCRUED COSTS AND PREPAID REVENUES
SEK M
2011
2010
Accrued personnel-related costs
Accrued interest costs
Other accrued costs
Prepaid revenues
237
2
105
1,031
272
2
184
1,083
CURRENCY RISKS
The Group is active internationally and exposed to currency risks arising from various currency
exposures from Eniro’s operations in Norway, Denmark, Finland and Poland. Currency risks arise
through future business transactions, recognized assets and liabilities and net investments in
foreign operations. Currency risks can be divided into transaction risk and translation risk.
Total
1,375
1,541
Transaction risk pertains to the impact on net income and cash flow resulting from changes in
the value of operating flows in foreign currencies due to exchange-rate fluctuations. Transaction
risks in business transactions in each geographic area is restricted since 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 hedged on a case-to-case basis. If the
foreign exchange rates had been 10 percent higher/lower on average in relation to SEK, EBITDA
for 2011 would have been SEK 42 M (5) higher/lower. Income after tax would have been SEK 18
M (270) higher/lower. The Group’s exposure to changes in foreign currency in relation to SEK is
monitored and analyzed regularly.
NOTe 20 FINANCIAL INSTRUMENT BY CATEGORY
MSEK
Assets in the balance sheet December 31, 2011
Accounts receivable and other receivables
Total
Assets in the balance sheet December 31, 2010
Accounts receivable and other receivables
Total
Loan and accounts receivable
768
557
In terms of net investment in foreign currency, translation risk is the risk that the value of SEK
will fluctuate due to changes in exchange rates. In respect of net investments in foreign currencies, the translation risk should be taken into account. Eniro has investments in NOK, EUR,
PLZ and DKK, of which exposure in NOK is the largest. As a feature of efforts to reduce the risk
exposure of net investment in foreign currencies, parts of the borrowing were raised in NOK
and DKK. In total, external loans in foreign currency at the end of 2011 amounted to NOK 1,448
M, and DKK 76 M. If the foreign exchange rates had been 10 percent higher/lower at the end of
2011 in relation to SEK, shareholders’ equity would have been affected by revaluation of the borrowing by SEK 130 M (256), of which SEK 123 M (168) pertains to revaluation of the NOK loan.
1,325
964
450
1,414
Translation exposure pertaining to investments in foreign subsidiaries, taking into account
currency hedging, amounted to SEK 3,998 M (2,563) according to the distribution below:
Millions in each currency 2011 2010 NOK DKK PLZ EUR 2,292 633 103
44
1,447 317 207 5
78
FINANCIAL
Fair value calculation
NOTe 21 FINANCIAL RISK MANAGEMENT–cont’d
Below is a description of the financial instruments measured at fair value based on their
classification in the fair-value hierarchy. The various levels are defined according to the
following:
INTEREST-RATE RISK
Interest-rate risks pertain to the risk that net income will be influenced by changes in general
interest rates. According to Eniro’s financial policy, the company’s financial position must be
taken into account when selecting interest-rate maturities. The relatively high indebtedness
entails exposure to interest-rate risk since borrowing is at floating interest rates. The interestrate risk is reduced by hedging a portion of future interest payments through interest-rate
swaps that convert floating interest rates to fixed interest rates. Interest-rate swaps mean that
Eniro enters agreements with other parties (credit institutions), usually on a quarterly basis, to
exchange the difference between the interest amount according to a fixed-interest contract and
the floating interest amount. Of the total interest-bearing net debt, NOK 1,350 M and SEK 360
M are hedged with swaps, meaning that 46 percent (45) of the outstanding amount according
to the loan agreement is interest-rate hedged until August 21, 2012. The interest-rate duration
at December 31, 2011 was 0.3 years (1.6).
• Level 1 - listed prices in active markets for identical assets and liabilities • Level 2 - observable data for assets or liabilities other than that included in Level 1,
either directly (price listings) or indirectly (derived price listings)
• Level 3 - data for assets and liabilities based on observable market data
(non-observable data)
At December 31, 2011, Eniro only has derivative instruments used for hedging purposes that
are classified according to the above fair value measurement hierarchy. At the end of the
year, Eniro had only interest-rate swaps and the fair value of these interest-rate swaps is
calculated as the present value of assessed future cash flows based on observable yield
curves. These instruments are classified on Level 2 and the fair value at December 31, 2011
was SEK 27 M (liability); refer also to Note 16, Derivative Instruments.
The Group continuously analyzes its exposure to interest-rate risk. Simulations of interestrate changes are performed regularly. A change in the market interest rate of 100 points (1
percentage point), taking into account the current interest-rate swaps, would increase/decrease the Group’s interest costs by SEK 22 M (23) based on current debt at December 31, 2011.
Income after tax would have been positively/negatively impacted by SEK 17 M (17). An increase
of 100 points in market interest rates would increase the market value of interest-rate swaps
and equity by SEK 7 M (19). A decrease in market interest rates by 100 points would reduce the
market value of interest-rate swaps and shareholders’ equity by SEK 4 M (19).
Capital structure
Eniro’s capital structure and dividend policy are decided by the Board of Directors. Eniro aims
to achieve an efficient capital structure, taking into account operational and financial risks
that will facilitate long-term development of the company while providing satisfactory returns
to shareholders. To adjust the capital structure, the company can change the dividend paid to
shareholders, repay capital to shareholders, issue new shares or change its borrowing.
CREDIT RISK
Credit risk pertains to the risk that a counterparty will be unable to fulfill its commitments and
thus result in a loss for the counterparty. Eniro’s counterparties in derivative transactions are
exclusively credit institutions with a high official credit rating. Surplus liquidity may only be
invested in Swedish housing bonds, 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 such banks. Eniro is
exposed to the risk of not being paid by its customers. However, the risk of extensive bad debt
losses is limited because Eniro’s customer base is extremely large and well differentiated.
The goal of the capital structure is that interest-bearing net debt in relation to EBITDA
should not exceed a factor of three. Interest-bearing net debt in relation to EBITDA is the
key ratio that company management and external stakeholders primarily assess with
respect to capital structure. At the end of 2011, interest-bearing net debt/EBITDA adjusted
for other comparative items amounted to a multiple of 3.6 (3.3). For the 2011 fiscal year,
the Board of Directors proposes that no dividend be paid, due to the company’s goal of
reducing its indebtedness.
NOTe 22 EMPLOYEES
LIQUIDITY RISK
Liquidity risk is the risk that difficulties will arise in fulfilling financial obligations due to a lack
of available funds. 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 is continuously working to ensure that cash and cash equivalents and unutilized credit
facilities are available. Eniro’s goal is that 60 percent of available loan facilities will mature after
more than one year and, at December 31, 2011, 84 percent will mature later than one year. Eniro
also has a stated policy of developing relations with a number of credit institutions with a high
rating. The Board of Directors regularly receives rolling forecasts concerning the Group’s future
cash flows that include estimates of cash and cash equivalents and unutilized credit facilities.
The cash-flow forecasts are formulated by Eniro Treasury based on information from the
Group’s operating companies.
2011
The table below shows Eniro’s financial liabilities and the net of regulating derivative instruments that constitute financial liabilities divided by contractual maturity date. The amounts
specified are non-discounted cash flows including borrowing costs. Amounts falling due within
one year correspond to carrying amounts, since the discount effect is insignificant.
SEK M
Bank loans
Accounts payable and other
liabilities
SEK M
Bank loans, existing loan agreements
Bank loans, new loan agreements
Accounts payable and other liabilities
2010
Average number of
full-time employees
Total
Portion
of
women
Sweden
Norway
Finland
Denmark
Poland
1,256
721
412
361
930
53
54
67
49
59
1,425
831
637
411
1,133
56
44
67
52
60
3,680
56
4,437
56
Totalt
Total
Portion
of
women
Total
The number of full-time employees at year-end was 3,626 (3,929). The average number
of full-time employees in the Parent Company was 28 (27), of whom 13 (16) women. The
proportion of women on the Board at year-end was 33 percent (30) and among Group
Management 20 percent (10).
658
27
3,507
–
–
–
4,165
27
NOTe 23 SALARIES AND OTHER REMUNERATION
186
–
–
186
871
3,507
–
4,378
Maturing
Maturing
within within 1 and
1 year
5 years
Maturing
later than
5 years
Total
Maturing
Maturing
within within 1 and
1 year
5 years
Maturing
later than
5 years
2011
SEK M
4,215
522
48
173
–
4,956
36
–
–
–
–
–
4,215
5,478
84
173
4,958
4,992
–
9,950
Group total
of which, pension costs
When calculating amounts in the table above, it has been assumed that exchange rates and
market interest rates at the end of each year are unchanged for future periods.
79
2010
Salaries
and other
remuneration
Social
security
costs
Salaries
and other
remuneration
Social
security
costs
1,469
431
166
1,767
519
180
FINANCIAL
NOTe 24 REMUNERATION AND OTHER BENEFITS,
BOARD OF DIRECTORS, PRESIDENT AND SENIOR
EXECUTIVES 2011
3. LONG-TERM INCENTIVE PROGRAMS
At the AGM on April 5, 2005, with an adjustment at the AGM on April 5, 2006, it was decided to introduce a share-saving program for employees in the Eniro Group. This program
also includes senior executives within the Eniro Group. The program was discontinued in
April 2011.
Principles
4. PENSION PROVISIONS AND OTHER REMUNERATION AND BENEFITS
Eniro’s pension policy is based on either an Individual Pension Plan (ITP plan or equivalent
national plan) or a defined-contribution pension plan. In the defined-contribution plan, the
premium constitutes a maximum of 35 percent of fixed salary.
The guidelines below for remuneration of senior executives were resolved by the 2011 AGM
and are in line with the guidelines adopted by the 2010 AGM.
The period of notice and severance pay for senior executives follow standard practice. The
President and CEO Johan Lindgren has a period of notice of six months, and 12 months if
notice of employment termination is served by the company. If the company terminates
his contract, he is entitled to additional severance pay of 12 months. Between the company
and other members of Group Management, there is a mutual period of notice totaling a
maximum of 12 months. Certain members of Group Management are entitled to additional
severance pay of 6 to 12 months.
Those members of the Board of Directors elected by the Annual General Meeting (AGM)
receive remuneration in an amount determined by the AGM. Remuneration to employee
representatives is proposed by the company and resolved by a General Meeting.
The aim of the guidelines for remuneration of senior executives is to allow Eniro to provide
market-based remuneration to facilitate recruiting suitable individuals and retaining them
in the Eniro Group. Remuneration of senior executives consists of several parts: (1) fixed
salary, (2) variable salary, (3) a long-term incentive program and (4) pension provisions and
other remuneration and benefits.
Other remuneration and benefits consist primarily of health insurance and the benefit of a
company car. The benefit of a company car is based on Eniro’s applicable car policy.
1. FIXED SALARY
The fixed salary is based on the individual executive’s area of responsibility, expertise and
experience. To create, as far as is possible, a transparent and fair remuneration system,
Eniro employs a so called grading system in which all positions in company management
are classified according to international standards. This also permits salary comparisons.
The salaries for senior executives are locked for 2010, 2011 and 2012 (with the exception of
change in position, promotion, etc.).
Board of Directors
SEK M
Lars-Johan Jarnheimer (Chairman)
Fredrik Arnander
Thomas Axén
Ketil Eriksen
Harald Strømme
Lina Alm 2)
Jennie Hallberg 2)
Susanne Olin-Jonsson 2)
Bengt Sandin 2)
Jonas Svensson 2)
2. VARIABLE SALARY
The overall objective of the variable salary is to contribute to achieving the Group’s commercial targets in the short and long-term and to create long-term value for shareholders.
Targets shall be determined by the Board for each fiscal year. The targets shall cover the
Group’s financial results (revenues, costs and EBITDA), results for relevant functions (development of the Eniro culture, customer satisfaction index, etc.) and personal targets for
individual participants (targets that are fixed in the strategic plan). The variable salary shall
be paid in two equal parts – one part cash and one part synthetic shares. The parts shall be
of equal size and total a maximum of 70 or 80 percent (for the President 100 per cent) of
the fixed salary. The synthetic shares shall be linked to Eniro’s share price and conversion
of the synthetic shares into cash shall occur after three years. The maximum amount to be
paid out for each synthetic share shall be limited to five times the share price at the time of
conversion to synthetic shares. The Board of Directors is authorized to make necessary adjustments in order to ensure that the financial outcome of the synthetic shares is reflected
in dividends paid and changes in share capital. The variable salary shall be determined by
the Board based on an annual evaluation of the individual executive’s performance in relation to the targets. Payment of part of the variable salary shall be conditional on achieving
the underlying targets in a manner that is sustainable in the long term. The company shall
be authorized to demand repayment of variable salary if payment later proves to have been
based on information that was clearly incorrect.
President and other senior executives
Remuneration for
Board commitfees tee work
1)
Total
Total
1.70
0.42
0.42
0.42
0.42
0.42
0.01
0.00
0.01
0.00
0.02
0.15
0.08
0.15
0.08
-
1.85
0.42
0.50
0.57
0.42
0.50
0.01
0.00
0.01
0.00
0.02
3.85
0.45
4.30
1) Board fees include special remuneration of SEK 0.6 M.
2) Employees’ representative
Basic salary
including
vacation pay
Variable
remuneration
Other
benefits
Total
Holdings of
synthetic
shares
4.6
2.4
1.8
0.1
0.1
-
1.6
0.6
1.8
8.1
4.9
84,783
-
Group Management – 12 individuals, of whom 5 full-year, 5)
19.8
8.3
0.8
4.4
3.0
36.3
318,660
Total
26.8
10.2
0.9
6.6
4.8
49.3
403,443
SEK M
President and CEO Johan Lindgren 1)
Vice President Mattias Hedlund
2)
3)
Other
Pension remuneration
4)
costs
1) In 2011, President Johan Lindgren had an annual basic salary of SEK 4.5 M. The amount above also includes vacation benefits.
2) Pertains to variable remuneration for the year and adjustment of accrued cost for synthetic shares allotted in 2009–2010.
3) Pertains to tax value of company cars.
4) Pertains to mileage allowance, as well as salary and pension costs during termination notice period.
5) For 2010, basic salary including vacation benefits of SEK 19 M, variable remuneration of SEK 3.0 M, other benefits of SEK 0.5 M, pension costs of SEK 4.8 M and other remuneration of SEK 8.3 M.
80
FINANCIAL
NOTe 27 COMMITMENTS AND CONTINGENT LIABILITIES
NOTe 24 REMUNERATION AND OTHER BENEFITS,
BOARD OF DIRECTORS, PRESIDENT AND SENIOR
EXECUTIVES 2011 – cont’d
VARIABLE REMUNERATION
Variable remuneration payable to the President and CEO Johan Lindgren for 2011 amounted
to SEK 1.8 M corresponding to 40 percent of basic salary. The 2011 outcome corresponds to
45 percent of the maximum bonus for the President and CEO.
SEK M
2011
2010
Pledged assets
Assets pledged
7,894
9,130
Total pledged assets
7,894
9,130
Internal receivables and participations in subsidiaries have been pledged as collateral for
Eniro Treasury’s external loans. Alternatively, subsidiaries and the Parent company have also
provided sureties for Eniro Treasury’s liabilities. See also Note 15 Borrowing.
The recognized value of synthetic shares allocated to Group Management, including President and CEO, amounted to SEK 5 M (3) at year-end 2010.
SHARE-SAVING PROGRAM
The annual cost for the share-saving program was SEK 0 M (4), of which SEK 0 M (0) for the
President and SEK 0 M (0) for Group Management. The program was discontinued in April
2011 when no shares were allotted to the President and 169 shares to other senior executives.
NOTe 28 ACQUIRED OPERATIONS
At the end of 2011, specific assets in De Gule Sider were acquired in Denmark. The acquisition
will simultaneously strengthen Eniro’s leading position in online/mobile, while broadening the
gap to the company ranked second in the market. The acquisition entails that Eniro acquired
specific assets in online/mobile, such as the dgs.dk domain, brands, IP rights, IT systems,
processed order bookings and customer lists to supplement Eniro’s existing operations.
Eniro took over 42 key employees and salespeople. The purchase consideration amounted to
approximately SEK 27 M, which was paid in cash on completion of the transaction. DGS was
declared bankrupt in November and Eniro took over the operation already on December 30,
2011. The acquisition will not be subject to review pertaining to competition laws.
PENSION
The pension costs for the CEO and President Johan Lindgren amounted to SEK 1.6 M corresponding to 35 percent of basic salary. The Group Management’s pension costs amounted
to SEK 4.9 M (4.8), corresponding to 23 percent of the basic salary. The President and CEO,
Johan Lindgren, has a defined-contribution pension for which the fee amounts to 35 percent of basic salary. Members of Group Management have defined-contribution pensions
with fees amounting to a maximum of 35 percent of basic salary or alternatively 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 obligations are calculated by PRI, and credit insurance is obtained
through PRI Pensionsgaranti, an insurance company that underwrites pension obligations.
The above-mentioned acquisition, from the date of acquisition, contributed SEK – M to
consolidated sales and SEK – M to consolidated EBITDA. If all acquisitions occurred on
January 1, 2011, the Eniro Group’s sales would have increased by SEK 140 M.
Related-party transactions
Remuneration to Group Management and other senior executives is presented above. In
other respects, no transactions with related parties occurred during the year..
A valuation of acquired net assets and goodwill is presented in the acquisition analysis below.
NOTe 25 AUDITING FEES
SEK M
SEK M
2011
2010
PricewaterhouseCoopers, audit assignments
PricewaterhouseCoopers, other audit assignments
PricewaterhouseCoopers, tax consultancy
PricewaterhouseCoopers, other assignments
5
0
0
1
6
3
0
1
Total auditing fees
6
10
Other auditing activities for 2010 included audits performed in connection with the
rights issue.
Purchase consideration
-Less amount not yet paid
-Less cash and cash equivalents at the
time of acquisition
27
-
-
-
-
Total
27
-
Payment pertaining to prior-year
acquisitions
-
-
Total net payment at the date of
acquisition
27
-
Identifiable assets and liabilities
Contractual leasing fees for operational contracts that
cannot be terminated
- due within one year
- due between one and five years
- due later than five years
All acquisitions
2010
Assets and liabilities
NOTe 26 leasing
SEK M
GROUP
All acquisitions
2011
2011
2010
121
256
2
127
288
20
Fair value,
acquisition
Tangible assets
Intangible assets
Other brands
Customer relations
5
-
1
20
15
16
4
Total fixed assets
26
35
Non-interest-bearing current assets
1
3
27
38
Current liabilities
-
38
Total liabilities attributable to acquired operations
-
38
Total liabilities attributable to acquired operations
The year’s operating expenses include fees for operational leasing contracts of SEK 136 M
(139). Leasing contracts for premises include standard indexation clauses.
Acquired
carrying
amount,
acquisition
Acquired identifiable net assets
Goodwill at time of acquisition
0
27
Purchase consideration
27
Acquired goodwill is primarily attributable to planned synergies arising when the operation
is integrated with the Eniro Group.
81
FINANCIAL
NOTe 29 EVENTS AFTER BALANCE-SHEET DATE
During October, Eniro entered into an agreement to acquire the directory assistance service, 118 800, including relating brands, telephone numbers and other intellectual rights.
The acquisition was conditional on the approval of the Swedish Competition Authority.
Due to the decision in December by the Swedish Competition Authority to initiate an
in-depth investigation into the acquisition and the indications received from the Swedish
Competition Authority in the course of the process, Eniro decided not to implement the
acquisition. Eniro’s assessment was that the acquisition could become the object of a
protracted process.
As of the beginning of 2012, a merger is being implemented in Norway of the regional
directory Gule Sider and the local directory Ditt Distrikt. The merger will result in savings
and a streamlining of Gule Sider into a dedicated online brand. A concentration of the
print portfolio in Denmark and a format change in Sweden are under way.
Eniro has pension insurance with PRI Pensionsgaranti (PRI) and, for its continued obligation, Eniro will pledge bank funds amounting to SEK 60 M pertaining to an expanded
pension guarantee to PRI. The timing of this provision will be during the first of quarter
of 2012.
82
FINANCIAL
Quarterly summary
Full year
Q4
2011
Q3
Q2
Q1
Full year
Q4
2010
Q3
Q2
Q1
OPERATING REVENUES (SEK M)
Total
4,323
1,194
1,012
1,151
966
5,326
1,482
1,135
1,442
1,267
Directory Scandinavia
Sweden
Norway
Denmark
3,190
1,527
1,191
472
873
431
288
154
735
342
277
116
862
417
316
129
720
337
310
73
3,713
1,690
1,427
596
1,033
519
323
191
788
366
283
139
995
438
411
146
897
367
410
120
Voice
Sweden
Norway
Finland
899
520
95
284
223
127
23
73
230
133
24
73
241
142
25
74
205
118
23
64
968
547
130
291
225
127
28
70
250
142
34
74
258
147
36
75
235
131
32
72
Finland Directories
Poland
234
98
47
48
41
280
365
34
190
40
57
128
61
78
57
991
750
340
-16
-
319
206
100
28
-
267
203
101
-11
-
285
239
87
-14
-
120
102
52
-19
-
605
941
340
45
-609
409
288
70
77
-5
-371
235
93
-7
-656
397
288
94
-11
57
170
130
83
-14
-5
-83
-15
-26
-27
-15
-112
-21
-36
-31
-24
23
24
38
-7
-
27
24
45
29
-
26
28
44
-23
-
25
28
36
-29
-
12
14
25
-46
-
11
25
35
12
-218
28
28
31
41
-15
-33
30
37
-12
-1,640
28
29
36
-18
45
13
14
35
-25
-6
EBITDA (SEK M)
Total
Voice
Poland
Finland Directories
Other (Head office and Group-wide
projects)
EBITDA MARGIN (%)
Total
Voice
Poland
Finland Directories
83
FINANCIAL
MULTI-YEAR SUMMARY
CONDENSED CONSOLIDATED
INCOME STATEMENT (SEK M)
Operating revenues
Operating income before depreciation and amortization (EBITDA)
Operating income
Income after financial items
Net income (attributable to shareholders of the Parent Company)
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
4,323
5,326
6,581
6,645
6,443
6,372
4,827
4,745
4,808
4,737
991
136
-228
605
-4,176
-4,739
1,807
692
232
2,064
410
-276
2,266
1,855
1,401
2,220
1,813
1,276
1,234
1,073
1,017
1,324
1,232
1,131
1,292
569
483
940
-327
-409
-213
-4,620
616
-315
1,305
1,054
917
764
198
-764
CONDENSED CONSOLIDATED BALANCE SHEET (SEK M)
Assets
Goodwill
Other non-current assets
Current assets
Total assets
Equity and liabilities
Equity (Parent Company
shareholders)
Non-controlling interests
Current liabilities
and liabilities
6,119
1,983
1,607
9,709
6,494
2,350
1,743
10,587
12,088
3,147
1,957
17,192
11,374
3,236
2,010
16,620
12,508
3,759
2,200
18,467
12,267
3,882
2,064
18,213
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
3,252
3,896
2,561
3,469
4,516
2,602
6,109
3
8,341
2,739
2,197
17
11,379
3,027
4,051
13
11,628
2,775
5,120
10,146
2,947
4,634
11,618
3,290
1,879
2,424
3,053
2,367
2,491
2,297
3,713
2,377
1,230
9,709
10,587
17,192
16,620
18,467
18,213
19,542
7,356
7,155
7,320
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (SEK M)
Cash flow from current operations
Cash flow from discontinued
operations
371
-141
-117
372
-195
-44
1,402
-299
-1,083
1,331
-293
-1,329
1,631
-540
-2,119
1,402
-215
-1,486
1,007
-5 141
4,468
1,016
-235
-769
1,355
-983
-366
490
-356
-436
113
133
20
-291
1,118
90
69
-230
78
412
4
16
6
-302
Major changes in Group composition
2004
2010
• Acquisition of Gula Tidningen, Consolidation from April 2004.
• Divestment of Suomi24 Oy and Directories operations Finland.
• Acquisition of Sentraali Oy, Finland, consolidation from Oct. 2008.
2008
2007
• Sale of WLW in Germany (classified as discontinued operation 2006–2007). • Acquisition of KRAK in Denmark, Consolidation from June 2007. 2003
• Acquisition of directory assistance Respons (name changed to Eniro 118 118). Consolidation
from May 2003.
2002
2006
• Acquisition of Din Pris AS, Norway, Consolidation from February 2006.
• Acquisition of WebDir in Denmark, Consolidation from February 2006.
• Acquisition of Kataloger i Norr AB, Consolidation from June 2006.
2005
• Acquisition of Findexa, Norway, Consolidation from December 2005.
• Operations in Estonia, Latvia, Lithuania, Russia and Belarus were classified as of the
second quarter of 2005 and not included in operating revenue, EBITDA and EBIT for
2004–2006.
• Acquisition of directory operations in Tampere, Finland. Consolidation from October 2002. 2001
• Acquisition of Scandinavia Online. Consolidation from January 2002.
• Acquisition of Direktia, Finland. Consolidation from January 2002.
• Acquisition of Panorama Polska. Consolidation from April 2001.
• Acquisition of Windhager, Germany. Consolidation from January 2001. Discontinuation of operations as of fourth quarter 2002.
2000
• Acquisition of Wer Liefert Was, Germany. Consolidation from January 2001. 2004–2007 according to IFRS.
2000–2003 according to Swedish accounting policies, prior to IFRS.
84
FINANCIAL
KEY DATA
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
23
3
11
-78
27
11
31
6
35
29
35
28
26
22
28
26
27
12
20
-7
642
642
3,408
-6
1,723
161
4,275
-108
1,723
1,723
4,735
13
1,336
1,336
3,321
-9
1,534
1,723
5,222
25
1,392
1,472
4,804
22
997
1,081
2,195
42
855
860
2,154
35
921
921
2,839
7
503
503
4,618
-17
3,675
1.13
33
3,951
1.14
33
6,645
1.09
36
9,948
4.49
13
10,264
2.53
22
9,044
1.73
28
10,564
2.28
24
2,832
1.51
26
2,462
1.04
33
1,828
0.49
51
3.7
6.5
3.7
4.8
4.5
4.1
8.6
2.1
1.9
1.9
-2.13
-248.43
59.05
-77.03
286.63
229.56
230.26
182.27
44.97
-171.04
6.41
6.41
92.65
8.66
165.17
165.17
326.71
326.71
336.92
378.44
303.17
320.59
250.35
271.44
203.98
205.18
209.20
209.20
112.61
112.61
32.46
35.21
1,893.02
2,723.51
5,023.72
5,654.24
5,117.56
2,399.28
2,827.99
4,214.98
100,177
18,597
10,432
4,089
4,553
4,591
3,982
4,192
4,403
4,467
100,177
98,526
3,227
807
806
906
906
783
837
881
3,680
4,437
5,096
4,861
4,697
4,801
4,754
4,752
4,595
4,168
3,626
3,926
4,994
4,961
4,650
4,821
5,429
4,953
4,695
4,117
Operating margin - EBITDA, %
Operating margin %
Cash earnings continuing operations, SEK M
Cash earnings, SEK M
Average shareholders’ equity
Return on shareholders’ equity, %
Interest-bearing net liabilities,
SEK M
Debt/equity ratio, multiple
Equity/assets ratio, %
Interest-bearing net liabilities/
EBITDA, multiple
KEY DATA PER SHARE BEFORE DILUTION
Net income, SEK
(attributable to shareholders of the
Parent Company)
Cash earnings continuing
operations, SEK
Cash earnings, SEK
Shareholders’ equity, SEK
(Parent Company shareholders)
Average number of shares after
share buybacks, 000s *
Number of shares on the
balance-sheet date after share
buybacks, 000s **
OTHER KEY DATA
Average number of full time
employees
Number of full-time employees at
year end
*) Adjusted for reverse splits in July 2009 (4:1) and January 2010 (50:1) and the bonus issue element (X 5.07) in the rights issue of December 2010
**) Adjusted for reverse split in July 2009 (4:1) and January 2010 (50:1)
Years 2004–2007 according to IFRS. Years 2000–2003 according to Swedish accounting policies, prior to IFRS.
85
FINANCIAL
PARENT COMPANY
PARENT COMPANY INCOME STATEMENT
SEK M
Operating revenues
Sales costs
Marketing costs
Other revenues
Note
2011
2010
2
3, 17
3, 17, 18
3, 17
36
-17
-108
0
13
-5
21
-24
-124
136
-6
-81
3
-10
220
166
-359
18
-227
40
0
540
0
-2,949
18
-194
-273
-2,542
-
721
-273
-1,821
10
-173
-263
-1,994
-
-
-263
-1,994
-
-
-263
-1,994
Operating income
Gain/loss from sales of shares in Group Company
Gain/loss from sales of other shares
Dividends from Group companies
Dividends from associated companies
Group contribution received
Impairment loss on shares in Group companies
Financial income
Financial costs
8
4
4
Income after financial items
Appropriations
Income before tax
Income tax
5
Net income
Proposed dividend per share for the fiscal year
PARENT COMPANY STATEMENT OF COMPREHENSIVE INCOME
SEK M
Net income
Other comprehensive income
86
FINANCIAL
PARENT COMPANY BALANCE SHEET
SEK M
Note
Dec 31, 2011
Dec 31, 2010
6
7
8
9
0
2
8,546
241
18
0
2
8,905
10
231
65
16
8,807
9,229
584
1
2
0
0
1,152
702
17
2
61
1
1,010
1,739
1,793
10,546
11,022
2,504
2,504
-
-4
2,761
-263
242
4,517
-1,994
5,002
5,265
48
20
43
23
68
66
Liabilities to Group companies
5,036
5,036
Total non-current liabilities
5,036
5,036
6
390
25
9
10
-
13
387
67
2
15
171
440
655
10,546
11,022
ASSETS
Non-current assets
Tangible assets
Investments in subsidiaries
Investments in associated companies
Deferred tax assets
Interest-bearing receivables with Group companies
Other interest bearing receivables
Total non-current assets
Current assets
Receivables from Group companies
Prepaid costs and accrued revenues
Current income tax receivables
Other non-interest bearing current assets
Other interest bearing receivables
10
11
11
12
Total current assets
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity
Restricted shareholders’ equity
Share capital*
Unrestricted shareholders’ equity
Share premium reserve
Reserve to be used in accordance with General
Meeting resolution
Retained earnings
Net income
13
Provisions
Pension obligations
Other provisions
14
15
Total provisions
Current liabilities
Accounts payable
Liabilities to Group companies
Accrued costs and prepaid revenues
Other non-interest bearing liabilities
Other provisions
Borrowing
16
15
Total current liabilities
Total shareholders’ equity and liabilities
*) 2010 includes non-registered share capital of SEK 42 M that was registered in January 2011.
87
FINANCIAL
CHANGES IN SHAREHOLDERS’ EQUITY, PARENT COMPANY
SEK M
Note
Comprehensive income during the year
Transfer to retained earnings
Group contributions received, net after tax
Share savings program – value of employees’ service
New share issue*
Reduction in share capital**
13
Comprehensive income during the year
Transfer to retained earnings
Share savings program – value of employees’ service
13
Share
capital
Reserve to be
used in accordanShare premium
ce with General
reserve Meeting resolution Retained earnings
Total
shareholders’
equity
323
2,423
-242
2,142
-2,142
-4
-
104
-104
242
2,062
-1,994
2,246
209
0
-
4,631
-1,994
209
0
2,419
-
2,504
-4
242
2,523
5,265
2,504
-
-4
4
-
242
-242
-
2,523
-263
238
0
5,265
-263
0
2,504
-
-
2,498
5,002
* 2010 includes non-registered share capital of SEK 42 M that was registered in January 2011. The share issue is recognized net after costs of SEK M 101 (133) after tax.
** To facilitate a new share issue, the Annual General Meeting resolved to reduce the share capital by SEK 242,372,758.50, without canceling shares, to place in a fund for use in accordance with a resolution by a General Meeting,
as well as an amendment of the Articles of Association in respect of the limits on share capital. The proposed dividend is 0 (0) SEK per share.
PARENT COMPANY CASH FLOW STATEMENT
2011
2010
Operating activities
Operating income
Adjustment for non-cash items
Interest received from Group companies
Interest paid to Group companies
Interest received from others
Interest paid to others
Income taxes paid
SEK M
Note
-81
-3
18
-193
0
0
0
3
-102
5
-180
2
-1
-25
Cash flow from operating activities before changes in working capital
-259
-298
36
14
-35
-5
Cash flow from operating activities
-209
-338
Investing activities
Divestment of subsidiaries
Dividend from associated companies
Divestment of other shareholdings
Acquisition of tangible assets
0
0
0
0
0
0
0
502
66
-207
-10
504
651
-2,381
2,389
351
1,163
Cash flow from changes in working capital
Decrease / increase in current receivables
Decrease / increase in current liabilities
Financing activities
Net of intra-Group dividends and shareholder contributions
Net changes in financial receivables and liabilities from/to Group companies
Net changes in external financial receivables and liabilities
New share issue
13
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at year-end
12
88
142
825
1,010
185
1,152
1,010
FINANCIAL
NOTe M1 THE PARENT COMPANY’S ACCOUNTING
POLICIES
NOTe M3 BREAKDOWN OF OPERATIONS COSTS
The Annual Report of the legal entity is to be prepared in accordance with the Annual
Accounts Act and recommendation RFR 2, Reporting of Legal Entities, as issued by the
Swedish Financial Accounting Standards Council. In RFR 2, the Swedish Financial Accounting Standards Council has stated that legal entities whose securities are traded publicly
are to use the IFRSs/IASs that are applied in the consolidated financial statements. Certain
exceptions and supplements to this rule are permissible. Pursuant to RFR 2, the following
deviations from IFRS/IAS are applied for Eniro AB, the Parent Company:
SEK M
Employee benefits, incl. social security costs
Agents, consultants and other non-employed personnel
Advertising
Depreciation/amortization and impairment losses
Other
Total operational costs
IAS 1 is not applied in respect of the presentation of the balance sheet and income statement, which are instead presented in accordance with ÅRL.
2011
2010
82
28
2
0
13
76
45
2
1
24
125
148
2011
2010
0
0
Operational costs are defined as sales costs and administration costs.
IAS 12 is not applied in respect of untaxed reserves, which are recognized gross in the
balance sheet. Changes in untaxed reserves are recognized in profit or loss.
DEPRECIATION/AMORTIZATION BY
FUNCTION
IAS 17 is not applied for financial leasing. At present, no financial leasing occurs in the
Parent Company.
IAS 19 Employee Benefits is not applied in respect of the recognition of pension obligations
and pension costs. These are instead recognized in accordance with FAR’s recommendation
4 “Recognition of pension liability and pension cost.” The Parent Company has pledged its
defined-benefit pensions to employees. In this context, the Parent Company’s obligations to
pay pension in the future has been assigned a present value, determined for each employee
on the basis of such factors as pension level, age and to what extent full pension has been
vested. This present value has been calculated on an actuarial basis, using the pay pension
levels prevailing at the balance-sheet date as the starting point. Pension obligations are
recognized as a provision in the balance sheet. The interest component of the pension cost
for the year is recognized among financial costs. Other pension costs are charged against
operating income.
SEK M
Pertaining to tangible assets
IAS 39 is not applied in respect of financial guarantee agreements for the benefit of subsidiaries and associated companies.
Pertaining to intangible assets
0
1
Total depreciation/amortization
0
1
NOTe M4 FINANCIAL INCOME AND COSTS
The net of Group contributions and dividends has been recognized in profit or loss.
2011
2010
Financial income
Exchange-rate gains on intra-Group receivables and liabilities
External financial interest income
Internal financial interest income
SEK M
0
0
18
11
2
5
NOTe M2 operating revenues
Total financial income
18
18
The Parent Company’s operating revenues amounted to SEK 36 (21) M and pertained in
their entirety to remuneration for intra-Group services measured at market value.
Financial costs
Exchange-rate gains on external receivables and liabilities
Exchange-rate gains on intra-Group receivables and liabilities
Interest cost for pension liability
External financial interest costs
Internal financial interest costs
-1
0
-1
-36
-189
-10
0
-1
-183
Total financial costs
-227
-194
Net financial items, total
-209
-176
Unless otherwise stated, amounts pertain to millions of Swedish kronor (SEK M).
Important estimates and assessments
See the information for the Group, Note 2 Important estimates and assessments.
89
FINANCIAL
NOTe M5 tax
NOTe M6 TANGIBLE ASSETS
Tax costs include the following components:
Equipment
SEK M
Current tax cost on income for the year
Additional tax cost corresponding to interest on tax allocation
reserve
Deferred tax cost pertaining to utilized loss carryforwards
Adjustment for prior-year deferred tax
Recognized tax
Current tax recognized directly against shareholders’ equity
Total tax for the year
2011
2010
0
78
32
-22
-4
-247
-
10
-173
-
74
10
-99
SEK M
In 2010, the Parent Company recognized the tax effect of Group contributions directly
against shareholders’ equity in an amount of SEK 74 M (tax effect of Group contributions
paid: 265).
2011
2010
Accumulated cost
Accumulated depreciation
1
-1
-
1
-1
-
0
0
Investments during the year
Divestments and disposals
Depreciation during the year
0
0
0
0
0
0
0
0
0
NOTe M7 INTANGIBLE ASSETS
Correlation between the tax cost for the year and the tax cost in accordance with
the current Swedish tax rate:
SEK M
2011
Recognized income before tax
Tax in accordance with Swedish tax rate, 26.3%
Tax effect of
- operating costs that are not tax deductible
- revenues that are not taxable
Adjustment of prior-year tax
Recognized tax
Other intangible
assets
SEK M
2010
-273
-1,821
72
479
-97
58
-22
-306
-
10
173
2011
2010
Accumulated cost
Accumulated amortization
3
-1
-
3
-1
-
2
2
Amortization during the year
2
0
3
-1
2
2
Deferred tax assets include the following components:
2011
2010
Deferred
tax assets
Deferred
tax assets
Pension provisions
Other provisions
Tax-loss carryforwards
5
1
235
4
1
226
Deferred tax assets
241
231
SEK M
90
FINANCIAL
NOTe M8 INVESTMENTS IN SUBSIDIARIES
Investments in subsidiaries owned directly and indirectly by the Parent Company
Name
TIM Varumärke AB
Eniro Danmark A/S
Kraks Forlag A/S
Respons Group AB
Respons Holding AB
Eniro International AB
Eniro Sverige AB
Eniro Gula Sidorna AB
Eniro Gula Sidorna Försäljning AB
Eniro 118 118 AB
Eniro Passagen AB
Spray Passagen Internet AB
Eniro Initiatives AB
Starcus AB
Din Del AB
Din Del Försäljning AB
Kataloger i Norr AB
Guiden i Västerbotten AB
Alltommotor Bilweb Eniro AB
Proff AB
Leta Information Eniro AB
Eniro Treasury AB
Eniro Holding AB
Findexa Luxembourg Sarl
Eniro Norway AB
Eniro Holding AS
Eniro Norge AS
1880 Nummeropplysning AS
Kartforlaget AS
Findexa Förlag AB
Grenseguiden AS
Kvalex AS
Gule Sider 1880 AS
Telefonkatalog AS
1880 Telefonkatalogen AS
Telefonkatalogen 1880 AS
Rosa Sider AS
Hvite Sider AS
Din Bydel AS
Findexa Forlag AS
Din Pris As
Gule Sider AS
Telefonkatalogens Gule Sider AS
Bedriftskatalogen AS
Lokalveiviseren Informasjonsforlaget AS
Gule Sider Internett AS
Proff AS
Telefonkatalogen AS
Ditt Distrikt AS
Scandinavia Online AB
Oy Eniro Finland AB
Eniro Sentraali Oy
Eniro Polska Sp.z.o.o
Corporate
registration number
556580-8515
18 93 69 84
10629241
556639-2196
556570-6115
556429-6670
556445-1846
556445-6894
556580-1965
556476-5294
556750-0896
556751-3279
556763-0966
556535-8008
556053-2409
556572-1502
556670-3707
556714-3440
556723-6541
556764-1534
556591-3596
556688-5637
556688-5645
B-100.546
556688-5652
986 656 022
963 815 751
976 491 351
984 604 513
556750-9673
988 437 549
980 253 341
986 493 492
988 437 565
988 437 506
988 437 476
988 437 581
988 437 417
888 437 452
987 529 547
985 822 883
968 306 782
968 306 405
979 763 379
979 915 314
980 287 432
989 531 174
982 175 968
883 878 752
556551-9989
0100130-4
1718301-8
RH B 31000
Reg.
head office Number of shares
Stockholm
Copenhagen
Copenhagen
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Skellefteå
Skellefteå
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Luxembourg
Stockholm
Oslo
Oslo
Kristiansand
Oslo
Uddevalla
Oslo
Oslo
Oslo
Oslo
Kristiansand
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Stockholm
Esboo
Kajaani
Warsaw
Total
91
1,000
24,000
11,000
1,000
1,050,915
1,000
500,000
100
1,000
75,000
1,000
1,000
1,000
1,000
200,000
1,000
1,000
100
100,000
1,000
1,000
1,000
1,000
343,848
1,000
1,100,000
55,206
1,020
100
1,000
100
100
100,000
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100,000
60,000
1,690
1,035,209
Proportion of
share capital, %
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Carrying amount
Dec. 31, 2011
Carrying amount
Dec. 31, 2010
SEK M
SEK M
0
939
0
939
752
752
0
1,494
23
1,494
18
18
2
48
48
4,756
48
4,756
0
417
0
482
120
345
8,546
8,905
FINANCIAL
NOTe M12 CASH AND CASH EQUIVALENTS
The following companies were divested for discontinuation or liquidated during 2011
Din Del Lager 2 AB
Eniro Windhager AB
Budapest Projekt 92 KFT
Corp. Reg. No.
Reg. head office
556611-7494
556751-0028
01-09-362834
Stockholm
Stockholm
Budapest
Cash and cash equivalents mainly comprise bank balances and investments in the
Group’s central account system.
Change in participations in subsidiaries during the year
Participations in subsidiaries at Dec. 31, 2010
Impairment loss shares Din Del AB
Impairment loss shares in Eniro International AB
Impairment loss shares in Oy Eniro Finland AB
Impairment loss shares in Eniro Polska Sp.z.o.o
8,905
-46
-23
-65
-225
Participations in subsidiaries at Dec. 31, 2011
8,546
Closing cost
2010
1,152
1,010
Total cash and cash equivalents
1,152
1,010
Share capital and treasury shares
See corresponding section in the notes on the Group, Note 14 Shareholders’ equity.
NOTe M14 PENSION OBLIGATIONS
The Parent Company’s pension liability pertains to the capital value of pension
obligations in accordance with Swedish regulations, FAR’s Recommendation 4.
Shares and participations in associated companies at
Dec. 31, 2011
Opening cost
Decrease through divestment
Dividend from associated companies
2011
NOTe M13 SHAREHOLDERS’ EQUITY
NOTe M9 SHARES AND PARTICIPATIONS IN
ASSOCIATED COMPANIES
SEK M
SEK M
Cash and bank balances
The amounts recognized in the balance sheets have been calculated in accordance with:
2011
2010
10
-10
-
10
0
0
-
10
SEK M
2011
2010
48
43
Net debt in the balance sheet recognized
as pension obligations
48
43
Change in defined-benefit obligations during the year
During 2011, Netclips AB, with the video community bubblare.se, was divested.
SEK M
2011
2010
NOTe M10 PREPAID COSTS AND ACCRUED REVENUES
Opening balance
Costs of current-year service
Interest costs
Paid remuneration
Other
43
7
0
-1
-1
20
5
0
0
18
Closing balance
48
43
SEK M
2011
2010
Other prepaid costs
Accrued revenues
Accrued interest revenue
1
0
-
14
3
0
Total
1
17
Specification of costs for defined-benefit pension plans
SEK M
NOTe M11 OTHER CURRENT ASSETS
SEK M
2011
2010
- not due
- past due younger than one month
- past due 1-3 months
- past due older than three months
0
-
61
-
Total
0
61
2010
-3
0
0
-2
0
-
Total costs for defined-benefit pension plans
-3
-2
2011
2010
-3
-9
-2
0
-2
-7
-2
0
-14
-11
Total pension costs
SEK M
Costs for defined-benefit plans
Costs for defined-contribution plans
Costs for special payroll tax and yield tax
Interest cost
SEK M
2011
Costs of current-year service
Interest costs
Other
2011
2010
- not due
- past due older than three months
0
-
1
-
Total
0
1
The costs are recognized in the following items in profit or
loss
SEK M
On the balance-sheet date, the maximum exposure to credit risk was the fair value of
each category of receivables stated above. The Parent Company has not issued any
pledges as collateral.
2011
2010
Sales costs
-2
-12
-1
-10
-14
-11
92
FINANCIAL
NOTe M15 OTHER PROVISIONS
NOTe M19 OBLIGATIONS AND CONTINGENT
LIABILITIES
Non-current provisions
SEK M
SEK M
2011
2010
7
20
-4
Contingent liability
Sureties and contingent liability pertaining to subsidiaries
PRI Pensionsgaranti
Guarantee for loan agreement
26
0
4,165
35
0
4,210
20
23
Total contingent liability
4,191
4,245
2011
2010
2011
2010
Opening provisions
Reclassification from other balance-sheet items
New provisions
23
-3
Closing provisions
Current provisions
MSEK
Opening provisions
Reclassification from non-current provisions
New provisions
15
14
-15
-4
10
-7
25
-13
-
Closing provisions
10
15
Assets pledged
Pledged participations in subsidiaries
8,546
8,905
Total pledged assets
8,546
8,905
Total
12,737
13,150
Internal receivables and participations in subsidiaries have been pledged as collateral
for Eniro Treasury’s external loans. Alternatively, subsidiaries and the Parent Company
have guaranteed Eniro Treasury’s obligations. Also refer to the notes on the Group,
Note 15 Borrowing.
Provisions at the close of the years pertain to provisions for restructuring.
NOTe M16 ACCRUED COSTS AND PREPAID REVENUES
2011
2010
Accrued personnel-related costs
Accrued interest costs
Other accrued costs
Prepaid revenues
SEK M
13
1
11
-
11
3
53
-
Total
25
67
NOTe M17 EMPLOYEES, WAGES, SALARIES AND
REMUNERATION
The average number of full-time employees in the Parent Company was 28 (27),
including 13 women (16).
2011
SEK M
Parent Company
of which, pension costs
2010
Salaries
and other
remuneration
Social
security
costs
Salaries
and other
remuneration
Social
security
costs
49
29
14
52
28
11
For additional information concerning wages, salaries and remuneration, refer to the notes
on the Group, Note 23 Salaries and other remuneration.
NOTe M18 FEES TO AUDITORS
SEK M
2011
2010
PricewaterhouseCoopers, audit assignment
PricewaterhouseCoopers, audit activities in addition to audit
assignment
PricewaterhouseCoopers, other assignments
2
2
0
3
0
Total auditors’ fees
2
5
Audit activities in addition to audit assignment include examinations required in
connection with the rights issue.
93
FINANCIAL
CERTIFICATION BY THE BOARD OF
DIRECTORS AND THE PRESIDENT
T
he Board of Directors and the President declare that the
annual accounts have been prepared in accordance with
generally accepted accounting policies in Sweden and give
a fair view of the company’s financial position and the result of
its operations and that the Board of Directors’ Report gives a fair
review of the development and performance of the business, the
position and the result of the company together with a description of the principal risks and uncertainties faced by the company. Furthermore, it is declared that the consolidated annual
accounts have been prepared in accordance with Regulation (EC)
No 1606/2002 of the European Parliament and of the Council
of July 19, 2002 on the application of international accounting
standards and give a fair view of the Group’s financial position
and the results of its operations and that the Board of Directors’
Report on the Group gives a fair review of the development and
performance of the Group’s business and the position and the
results of the Group together with a description of the principal
risks and uncertainties faced by the Group.
STOCKHOLM, MARCH 19, 2012
Eniro AB (publ)
Lars-Johan Jarnheimer
Fredrik Arnander
Member of the Board
Thomas Axén
Member of the Board
Member of the Board
Ketil Eriksen
Member of the Board
Harald Strømme
Member of the Board
Lina Alm
Jonas Svensson
Susanne Olin Jönsson
Jennie Hallberg
Johan Lindgren
President and Chief Executive Officer
Our audit report was issued on March 21, 2012.
Bo Hjalmarsson
Authorized Public Accountant
Auditor-in-charge
Eva Medbrant
Authorized Public Accountant
94
FINANCIAL
AUDITORS’ REPORT
To the annual meeting of the shareholders of Eniro AB, Corporate Registration Number 556588-0936
REPORT ON THE ANNUAL ACCOUNTS AND
formance and cash flows in accordance with International Financial
Reporting Standards, as adopted by the EU, and the Annual Accounts
Act. The statutory administration report and corporate governance
report are consistent with the other parts of the annual accounts and
consolidated financial statements.
We therefore recommend that the annual meeting of shareholders
adopt the income statement and balance sheet for the Parent Company
and the Group.
We have audited the annual accounts and the consolidated financial
statements of Eniro AB for the year 2011.
The company’s annual accounts and consolidated financial statements are included in the printed version of this document on pages
40–94.
Responsibilities of the Board of Directors and the
President for the annual accounts and consolidated
financial statements
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS
The Board of Directors and the President are responsible for the preparation and fair presentation of these annual accounts and consolidated financial statements in accordance with International Financial
Reporting Standards, as adopted by the EU, and the Annual Accounts
Act, and for the internal control deemed necessary by the Board of
Directors and the President for the preparation of annual accounts and
consolidated financial statements that are free from material misstatement, whether such misstatement is due to fraud or error.
In addition to our audit of the annual accounts and consolidated
financial statements, we have examined the proposed appropriations
of the company’s profit or loss and the administration of the Board of
Directors and the President of Eniro AB for the year 2011.
Responsibilities of the Board of Directors and the President
The Board of Directors is responsible for the proposal concerning
the appropriation of the company’s profit or loss, and the Board of
Directors and the President are responsible for administration under
the Companies Act.
Auditor’s responsibility
Our responsibility is to express an opinion on the annual accounts and
consolidated financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing and
generally accepted auditing standards in Sweden. These standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance that the annual accounts and
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the annual accounts and consolidated financial statements. The auditor chooses such procedures
based on such assessments as the risk of material misstatement in
the annual accounts and consolidated financial statements, whether
such misstatement is due to fraud or error. In making these risk assessments, the auditor considers internal control measures relevant
to the company’s preparation and fair presentation of the annual accounts and consolidated financial statements in order to design audit
procedures that are appropriate taking the circumstances into account,
but not for the purpose of expressing an opinion on the effectiveness
of the company’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the
President, as well as evaluating the overall presentation of the annual
accounts and consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Auditor’s responsibility
Our responsibility is to express an opinion with reasonable assurance
on the proposed appropriations of the company’s profit or loss and on
the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss, we examined whether the
proposal complies with the Companies Act.
As a basis for our opinion concerning discharge from liability, in
addition to our audit of the annual accounts and consolidated financial
statements, we examined significant decisions, actions taken and
circumstances of the company in order to determine whether any
member of the Board of Directors or the President is liable to the
company. We also examined whether any member of the Board of
Directors or the President has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of
Association.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Opinions
We recommend to the annual meeting of shareholders that the profit
be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and
the President be discharged from liability for the fiscal year..
Opinions
STOCKHOLM, MARCH 21, 2012
PRICEWATERHOUSECOOPERS AB
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material
respects, the financial position of the Parent Company as of December
31, 2011 and its financial performance and cash flows for the year in
accordance with the Annual Accounts Act, and the consolidated financial statements have been prepared in accordance with the Annual
Accounts Act and present fairly, in all material respects, the financial
position of the Group as of December 31, 2011 and its financial per-
Bo HjalmarssonEva Medbrant
AUTHORIZED PUBLIC ACCOUNTANTAUTHORIZED
AUDITOR-IN-CHARGEPUBLIC ACCOUNTANT
95
FINANCIAL
ANNUAL GENERAL MEETING
Annual General Meeting and calendar 2012
2012 ANNUAL GENERAL MEETING
The Annual General Meeting (AGM) of Eniro AB (publ) will be held
on Wednesday April 25, 2012 at 3:00 p.m. (CET) at Näringslivets
Hus, Storgatan 19 in Stockholm. Official notification will occur
by means of an advertisement in daily newspapers and through a
press release. The official notification and other information prior
to the AGM will be available at www.eniro.com.
Date
April 25, 2012 April 25, 2012 July 13, 2012 October 25, 2012 February 7, 2013 April 25, 2013
April 25, 2013 July 16, 2013 October 23, 2013 Participation and registration
Shareholders who wish to participate in the AGM must be registered in the share register maintained by Euroclear Sweden AB
no later than April 19, 2012. They must also notify the company
of their intention to attend well in advance of April 19, 2012 via
www.eniro.com or by telephoning or mailing the company in the
following manner.
Telephone: Mail:
Event
Interim report January-March 2012
Annual General Meeting 2012
Interim report January-June 2012
Interim report January-September 2012
Year-end report January-December 2012
Interim report January-March 2013
Annual General Meeting 2013
Interim report January-June 2013
Interim report January-September 2013
The reports and other information from the company will be published continuously on the company’s website www.eniro.com.
It is also possible to register for subscription of financial reports
and other news in an electronic format. Financial reports and
press releases directed at the capital market will be published in
Swedish and English.
+46 8 402 90 44
Eniro’s Annual General Meeting
Box 7832
SE-103 98 Stockholm
CONTACT INVESTOR QUESTIONS
Trustee-registered shares
In order to participate in the AGM, shareholders whose shares
are registered in the name of a nominee must temporarily reregister their shares in their own names with Euroclear Sweden
AB. Shareholders wishing such re-registration must inform their
trustee of their intention well in advance of April 19, 2012.
Representatives and proxy form
A shareholder not attending the AGM in person at may exercise
his or her voting rights through a representative authorized with
a written and dated proxy, signed by the shareholder. Proxy
forms can be obtained at Eniro’s website, www.eniro.com. The
original proxy should be submitted to Eniro well in advance of
the AGM at the address: Eniro Annual General Meeting, Box
7832, SE-103 98 Stockholm. If the proxy is issued by a legal entity, a certified copy of the certificate of registration or equivalent
authorization document must also be submitted.
Head of Investor Relations
Cecilia Lannebo
Tel: +46 8 722-208 277
E-mail: [email protected]
address
SWEDEN
Eniro AB
Gustav III:s Boulevard 40
Solna
SE-169 87 Stockholm
Tel: +46 8 553 310 00
E-mail: [email protected]
NORWAY
Eniro Norge AS
Olof Helsets Vei 5
P.O. Box 6705 Etterstad
N-0694 Oslo
Tel: +47 81 54 44 18
DANMARK
Eniro Danmark A/S
Sydmarken 44 A
DK-2860 Söborg
Tel: +45 88 38 38 00
96
FINLAND
Eniro Sentraali Oy
Valimotie 9-11
FI-00380 Helsingfors
Tel: +358 290 100 100
POLaNd
Eniro Polska Sp. Z o. o.
ul. Domaniewska 41
PL-02-672 Warszawa
Tel: +48 22 289 2000
FINANCIAL
DEFINITIONS AND GLOSSARY
DEFINITIONS OF FINANCIAL TERMS
GLOSSARY
Adjusted EBITDA
EBITDA excluding restructuring costs and other items affecting comparability.
GOOGLE ADWORDS™
Through the partnership agreement with Google, Eniro becomes an
authorized reseller of search-word advertising in Google’s channels.
The agreement strengthens Eniro’s existing position in the search-word
market and makes the company’s total offering more attractive.
Average equity
Based on average shareholders’ equity at the beginning and end of each
quarter.
WEB2MOBILE
A service that adapts a website to the smaller format of a mobile phone.
Average number of shares for the year
Calculated as an average number of outstanding shares on a daily basis
after redemption and repurchase.
PRODUCT SEARCH
Uses a powerful new technology that makes it easy for the user to find
local information about relevant products and services, and to navigate
in Eniro’s maps.
Cash earnings
Net income plus re-entered depreciation and amortization plus
re-entered impairment loss.
WEB ANALYTICS – THE TOOL
Helps Eniro to understand how the user actually uses Eniro’s services,
shows patterns and conducts analyses of traffic via core services.
Debt/equity ratio
Interest-bearing net debt divided by shareholders’ equity.
Direct return (%)
Dividend for the fiscal year divided by the share price at year-end
multiplied by 100.
CHURN
The percentage of customers who cancel their subscription service in
relation to the total customer base.
Income after financial items per share
Income after financial items for the year divided by the average number
of shares for the year.
CUSTOMER REPORT, ROI, RETURN ON INVESTMENT
Eniro’s customer report, which shows the customer value created by an
investment in Eniro’s channels. The customer report provides an overview of
the customer’s advertising with Eniro. It is possible to track any changes in
the channel mix in order to evaluate the presence that provides the largest
number of customer contacts. Using the report, the customer is able to
identify trends in terms of the number of viewings, calls and clicks to route
descriptions. ROI also shows how many calls the customer has received from
Eniro’s mobile services, such as from apps and mobil.eniro.se. The customer
report is e-mailed regularly to subscribers.
operating income
Operating income after depreciation, amortization and impairment.
EBITDA margin (%)
EBITDA divided by operating revenues multiplied by 100.
EBITDA
Operating income before depreciation, amortization and impairment.
Equity per share
Equity per share divided by the number of shares at year-end after
redemption, repurchase and share issue.
ENIRO DEALS
A service whereby Eniro, through partnerships, offers goods and services
on a daily basis at a discount price and in a limited number. This service
is also available as an app.
Equity/assets ratio (%)
Shareholders’ equity divided by the balance sheet total multiplied by 100.
WEB CRAWLING
Systematic searches of the Internet conducted on an automated basis.
Interest-bearing net debt
Interest-bearing liabilities plus interest-bearing provisions less interestbearing assets, excluding the market value of interest-rate swaps.
PROFF.SE
This site contains information about all companies in the Nordic region
and enables monitoring of new business opportunities and the creation
of own inquiries and exposures; it also offers a service for the buying and
selling of products and equipment. It is also possible to find a particular
executive in each of the countries’ business communities.
Interest-bearing net debt/EBITDA
Interest-bearing net debt divided by EBITDA.
Operating cash flow
Cash flow from operations and cash flow from investments excluding
company acquisitions/divestments.
ONE-STOP-SHOP SOLUTION
Complete searchability for small/midsize companies; a total solution
providing a media package that enables a broad presence in the local
search market.
Operating revenues per share
Operating revenues divided by the average number of shares for the year.
Organic growth
The change in operating revenues for the year adjusted for currency effects, changed publication dates, acquisitions and divestments.
24/7
Searchability round the clock, seven days a week.
SEO
(Search Engine optimization) a service whereby Eniro helps small/
midsize companies to optimize their websites so that they contain the
right search words thus helping them to describe their businesses in an
effective manner that improves searchability for search engines.
P/E ratio
Share price at year-end divided by earnings per share for the year.
Return on equity (%)
Net income divided by average shareholders’ equity multiplied by 100.
Total operating cost
Production, sales, marketing, administration, product and development
costs excluding depreciation, amortization and impairment losses.
VERTICAL
Software that is defined by the requirements of a single niche market, or
of narrowly defined markets.
97
FINANCIAL
OTW Communication
BETTER SEARCH
FOR BETTER BUSINESS
98

Eniro_ENG_low

Transcription

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